<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 30, 1997
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO THE
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
WARWICK COMMUNITY BANCORP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 6036 06-1497903
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
</TABLE>
18 OAKLAND AVENUE
WARWICK, NEW YORK 10990-0591
(914) 986-2206
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
TIMOTHY A. DEMPSEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
WARWICK COMMUNITY BANCORP, INC.
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
WITH COPIES TO:
DOUGLAS J. MCCLINTOCK, ESQ.
THACHER PROFFITT & WOOD
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 912-7436
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ---------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per
share................................ 6,606,549 shares $10.00 $66,065,490 $20,020(3)
============================================================================================================
</TABLE>
(1) Includes the maximum number of shares that may be issued in connection with
this offering, based on various assumptions relating thereto.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Previously paid upon filing of the Registration Statement on September 19,
1997.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
================================================================================
<PAGE> 2
PROSPECTUS
[LOGO] WARWICK COMMUNITY BANCORP, INC.
(PROPOSED HOLDING COMPANY FOR THE WARWICK SAVINGS BANK)
5,577,500 SHARES OF COMMON STOCK
$10.00 PER SHARE
Warwick Community Bancorp, Inc. ("Company"), a Delaware corporation, is
offering up to 5,577,500 shares of its common stock, par value $.01 per share
("Common Stock"), in connection with the conversion of The Warwick Savings Bank
("Bank") from a New York mutual savings bank to a New York stock savings bank
pursuant to the Bank's amended plan of conversion ("Plan" or "Plan of
Conversion"). In certain circumstances, the Company may increase the amount of
Common Stock offered hereby to 6,414,125 shares. See footnote 4 to the table
below. The simultaneous conversion of the Bank to stock form, the issuance of
the Bank's stock to the Company, the offer and sale of the Common Stock by the
Company and the additional issuance to The Warwick Savings Foundation
("Foundation") equal to 3% of the number of shares sold by the Company are
referred to herein as the "Conversion." Consummation of the Conversion is
subject to, among other things, the approval of the Plan by the Bank's
depositors. See "The Conversion." (continued on following page)
------------------------
THE COMMON STOCK IS SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL INVESTED. FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY EACH PROSPECTIVE INVESTOR, SEE "RISK FACTORS" BEGINNING ON PAGE 17
OF THIS PROSPECTUS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE SUPERINTENDENT OF BANKS OF THE STATE OF NEW YORK, THE
NEW YORK STATE BANKING BOARD, THE NEW YORK STATE BANKING DEPARTMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY STATE SECURITIES COMMISSION OR ANY OTHER
AGENCY, NOR HAS SUCH COMMISSION, SUPERINTENDENT, BOARD, DEPARTMENT, CORPORATION
OR ANY STATE SECURITIES COMMISSION OR OTHER AGENCY PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
ESTIMATED
UNDERWRITING
COMMISSIONS AND ESTIMATED NET
PURCHASE PRICE(1) OTHER EXPENSES(2) PROCEEDS(3)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Minimum Per Share.................................................... $10.00 $0.43 $9.57
- ------------------------------------------------------------------------------------------------------------------------------
Midpoint Per Share................................................... $10.00 $0.39 $9.61
- ------------------------------------------------------------------------------------------------------------------------------
Maximum Per Share.................................................... $10.00 $0.36 $9.64
- ------------------------------------------------------------------------------------------------------------------------------
Total Minimum(1)..................................................... $41,225,000 $1,781,000 $39,444,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Midpoint(1).................................................... $48,500,000 $1,906,000 $46,594,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Maximum(1)..................................................... $55,775,000 $2,031,000 $53,744,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Maximum, as adjusted(4)........................................ $64,141,250 $2,175,000 $61,966,250
==============================================================================================================================
</TABLE>
(1) Determined in accordance with an independent appraisal prepared by FinPro,
Inc. ("FinPro"), dated as of September 18, 1997, and updated as of October
17, 1997 which states that the aggregate estimated pro forma market value of
the Common Stock ranged from $41,225,000 to $55,775,000 with a midpoint of
$48,500,000 ("Valuation Range"). FinPro's independent appraisal is based
upon estimates and projections that are subject to change, and the valuation
must not be construed as a recommendation as to the advisability of
purchasing the Common Stock nor an assurance that a purchaser will
thereafter be able to sell such shares at or above the $10.00 price per
share ("Purchase Price") to be paid for each share of Common Stock
subscribed for or purchased in the Offerings (as defined herein). Based on
the Valuation Range, the Board of Trustees of the Bank established the
estimated price range of $41,225,000 to $55,775,000 ("Estimated Price
Range"), or between 4,122,500 and 5,577,500 shares of Common Stock at the
Purchase Price. See "The Conversion -- Stock Pricing" and "-- Number of
Shares to be Issued."
(2) Consists of the estimated costs to the Bank and the Company arising from the
Conversion, including estimated fixed expenses of approximately $1.1 million
and marketing fees to be paid to Sandler O'Neill & Partners, L.P. ("Sandler
O'Neill") in connection with the Subscription and Community Offerings (as
defined herein), which fees are estimated to be $681,000 and $931,000,
respectively, at the minimum and the maximum of the Estimated Price Range.
See "The Conversion -- Marketing and Underwriting Arrangements." Such fees
may be deemed to be underwriting fees, and Sandler O'Neill may be deemed to
be an underwriter. See "Pro Forma Data" for the assumptions used to arrive
at these estimates. Actual fees and expenses may vary from the estimates.
(3) Actual net proceeds may vary substantially from estimated amounts depending
on the number of shares sold in each of the Offerings and other factors.
Includes the purchase of shares of Common Stock by the Warwick Community
Bancorp, Inc. Employee Stock Ownership Plan and related trust ("ESOP"),
which is intended to be funded by a loan from the Company to the ESOP, which
initially will be deducted from the Company's shareholders' equity. See "Use
of Proceeds" and "Pro Forma Data."
(4) As adjusted to give effect to the sale of up to an additional 15% of the
shares which may be offered at the Purchase Price, without resolicitation of
subscribers or any right of cancellation, due to regulatory considerations,
changes in the market and general financial and economic conditions. See
"Pro Forma Data" and "The Conversion -- Stock Pricing." For a discussion of
the distribution and allocation of the additional shares, if any, see "The
Conversion -- Subscription Offering and Subscription Rights," "-- Community
Offering" and "-- Limitations on Common Stock Purchases."
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE BANK INSURANCE FUND OR THE
SAVINGS ASSOCIATION INSURANCE FUND OF THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR BY ANY OTHER GOVERNMENT AGENCY.
Sandler O'Neill & Partners, L.P.
------------------------
The date of this Prospectus is November , 1997.
<PAGE> 3
(continued from previous page)
NON-TRANSFERABLE RIGHTS TO SUBSCRIBE FOR THE COMMON STOCK HAVE BEEN
GRANTED, IN ORDER OF PRIORITY, TO EACH OF THE BANK'S ELIGIBLE ACCOUNT HOLDERS,
TO THE EMPLOYEE PLANS, TO THE BANK'S SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS AND
TO CERTAIN OTHER DEPOSITORS (EACH AS DEFINED HEREIN) IN A SUBSCRIPTION OFFERING
("SUBSCRIPTION OFFERING"). SUBSCRIPTION RIGHTS ARE NON-TRANSFERABLE. PERSONS
FOUND TO BE TRANSFERRING OR ATTEMPTING TO TRANSFER SUBSCRIPTION RIGHTS WILL BE
SUBJECT TO THE FORFEITURE OF SUCH RIGHTS AND POSSIBLE FURTHER SANCTIONS AND
PENALTIES IMPOSED BY THE NEW YORK STATE BANKING DEPARTMENT ("NYSBD"). Upon
completion of the Subscription Offering and subject to other limitations
described herein, any shares of Common Stock not subscribed for in the
Subscription Offering will be subsequently offered by the Company for sale in a
community offering ("Community Offering") to certain members of the general
public to whom a copy of this Prospectus is delivered. The Subscription Offering
and the Community Offering are referred to, together, as the "Subscription and
Community Offerings." It is anticipated that any shares not subscribed for in
the Subscription and Community Offerings will be offered to members of the
general public in a syndicated community offering ("Syndicated Community
Offering") (the Subscription and Community Offerings and the Syndicated
Community Offering are referred to, collectively, as the "Offerings"). If shares
of Common Stock are offered by the Company in a Syndicated Community Offering,
the Company will incur additional commissions, in accordance with agreements to
be entered into at the time of such offering. See "The Conversion -- Syndicated
Community Offering."
The Warwick Community Bancorp, Inc. Employee Stock Ownership Plan ("ESOP"),
which is an Employee Plan, intends to subscribe for 8% of the total number of
shares of Common Stock to be issued in the Conversion, including shares issued
to the Foundation. To the extent not purchased in the Subscription Offering, the
ESOP intends to purchase the remaining portion of such shares in open market
transactions following the Conversion. Shares purchased by the ESOP are
anticipated to be funded by a loan from the Company to be repaid over a period
of up to 10 years at an interest rate of 8%.
No Eligible Account Holder, Supplemental Eligible Account Holder or Other
Depositor, in their capacity as such, may subscribe in the Subscription Offering
for more than $150,000 of the Common Stock offered in the Conversion; no person,
together with associates of and persons acting in concert with such person, may
purchase in the Community Offering and the Syndicated Community Offering more
than $150,000 of the Common Stock offered in the Conversion; and, except for the
Employee Plans, no person, together with associates of and persons acting in
concert with such person, may purchase in the aggregate more than the overall
maximum purchase limitation of 1.0% of the total number of shares of Common
Stock offered for sale in the Conversion. At any time during the Conversion, the
overall maximum purchase limitation may be increased up to 5% of the Common
Stock offered for sale in the Conversion and the amount that may be subscribed
for may be increased in the sole discretion of the Bank or the Company without
further approval of the Bank's depositors. Prior to the consummation of the
Conversion, if such amount is increased, subscribers for the maximum amount will
be, and certain other large subscribers in the sole discretion of the Bank may
be, given the opportunity to increase their subscriptions up to the then
applicable limit. The minimum purchase is 25 shares. THE COMPANY AND THE BANK
RESERVE THE RIGHT, IN THEIR ABSOLUTE DISCRETION, TO ACCEPT OR REJECT, IN WHOLE
OR IN PART, ANY OR ALL SUBSCRIPTIONS IN THE COMMUNITY OFFERING AND THE
SYNDICATED COMMUNITY OFFERING, EITHER AT THE TIME OF RECEIPT OF AN ORDER OR AS
SOON AS PRACTICABLE FOLLOWING THE TERMINATION OF SUCH OFFERINGS. However, no
such rejection will be in contravention of any applicable law or regulation. If
an order is rejected, the funds submitted with such order will be returned
promptly with interest. If the Company or the Bank rejects a subscription in
part, the subscriber will not have the right to cancel the remainder of such
person's subscription. See "The Conversion -- Subscription Offering and
Subscription Rights," "-- Community Offering" and "-- Limitations on Common
Stock Purchases."
Pursuant to the Plan, the Company and the Bank intend to establish a
charitable foundation in connection with the Conversion. The Plan provides that
the Bank and the Company will create the Foundation and fund the Foundation with
shares of Common Stock contributed by the Company from authorized but unissued
shares, in an amount equal to 3% of the number of shares of Common Stock sold in
the Conversion. The Foundation will be dedicated to charitable purposes within
the Bank's local community. For a discussion of the Foundation and its effects
on the Conversion, see "Risk Factors -- Establishment of Charitable Foundation,"
"Pro Forma Data" and "The Conversion -- Establishment of The Warwick Savings
Foundation."
2
<PAGE> 4
(continued from previous page)
The Bank has engaged Sandler O'Neill & Partners, L.P. ("Sandler O'Neill")
to consult with and advise the Company and the Bank in the Offerings, and
Sandler O'Neill has agreed to use its best efforts to assist the Company with
the solicitation of subscriptions and purchase orders for shares of Common Stock
in the Offerings. Sandler O'Neill is not obligated to take or purchase any
shares of Common Stock in the Offerings. The Company and the Bank have agreed to
indemnify Sandler O'Neill against certain liabilities arising under the
Securities Act of 1933, as amended ("Securities Act"). See "The
Conversion -- Marketing and Underwriting Arrangements."
THE SUBSCRIPTION OFFERING WILL TERMINATE AT , EASTERN TIME, ON
DECEMBER , 1997 ("EXPIRATION DATE") UNLESS EXTENDED BY THE BANK AND THE
COMPANY, WITH THE APPROVAL OF THE SUPERINTENDENT OF BANKS OF THE STATE OF NEW
YORK ("SUPERINTENDENT") AND THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"),
IF NECESSARY. The Community Offering, if any, shall commence upon the completion
of the Subscription Offering and shall terminate 7 days after the close of the
Subscription Offering unless extended by the Bank and the Company, with the
approval of the Superintendent and the FDIC, if necessary. Subscriptions paid by
cash, check, bank draft or money order will be placed in a segregated account at
the Bank and will earn interest at the Bank's rate of interest on passbook
accounts from the date of receipt until completion or termination of the
Conversion. Payments authorized by withdrawal from deposit accounts at the Bank
will continue to earn interest at the contractual rate until the Conversion is
completed or terminated; these funds otherwise will be unavailable to the
depositor until such time. Upon completion of the Conversion, funds withdrawn
from depositors' accounts for stock purchases will no longer be insured by the
FDIC. ORDERS SUBMITTED ARE IRREVOCABLE UNTIL THE COMPLETION OR TERMINATION OF
THE CONVERSION; provided, that, if the Conversion is not completed within 45
days after the close of the Subscription Offering, unless such period has been
extended with the consent of the Superintendent and the FDIC, if necessary, all
subscribers will have their funds returned promptly with interest, and all
withdrawal authorizations will be canceled. If an extension of time has been
granted, all subscribers will be notified (i) of such extension, (ii) of any
rights to confirm their subscriptions or to modify or rescind their
subscriptions and have their funds returned promptly with interest and (iii) of
the time period within which the subscribers must notify the Bank of their
intention to confirm, modify or rescind their subscriptions. Each such extension
may not exceed 60 days, and such extensions, in the aggregate, may not last
beyond , 1999. A resolicitation of subscribers will be made if
the pro forma market value of the Common Stock is either more than 15% above the
maximum of the Estimated Price Range or less than the minimum of the Estimated
Price Range. If an affirmative response to any resolicitation is not received by
the Bank and the Company from a subscriber, such subscriber's order will be
rescinded, and all funds will be returned promptly with interest. See "The
Conversion -- Subscription Offering and Subscription Rights" and "-- Procedure
for Purchasing Shares in Subscription and Community Offerings."
The Company has received conditional approval from the Nasdaq Stock Market,
Inc. to have its Common Stock quoted on the Nasdaq National Market of the Nasdaq
Stock Market, Inc. ("Nasdaq National Market") under the symbol "WSBI" upon
completion of the Conversion. One of the requirements for continued quotation of
the Common Stock on the Nasdaq National Market is that there be at least two
market makers for the Common Stock. The Company will seek to encourage and
assist at least two market makers to make a market in the Common Stock. Sandler
O'Neill has advised the Company that it intends to make a market in the Common
Stock, but is under no obligation to do so. Prior to this offering there has not
been a public market for the Common Stock, and there can be no assurance that an
active and liquid trading market for the Common Stock will develop or that the
Common Stock will trade at or above the Purchase Price. The absence or
discontinuance of a market may have an adverse impact on both the price and
liquidity of the Common Stock. See "Risk Factors -- Absence of Market for Common
Stock."
EXPLANATORY NOTE: This Prospectus contains certain forward looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, which statements consist of estimates with respect to the financial
condition, results of operations and business of the Company and the Bank.
Prospective investors are cautioned that such forward looking statements are not
guarantees of future performance and are subject to various factors which could
cause actual results to differ materially from these estimates. These factors
include changes in general, economic and market conditions, and the development
of an adverse interest rate environment that adversely affects the interest rate
spread or other income anticipated from the Company's and the Bank's operations
and investments. See "Risk Factors" for a discussion of other factors that might
cause actual results to differ from such estimates.
3
<PAGE> 5
[LOGO]
[THE WARWICK SAVINGS BANK]
[MAP SHOWING OFFICE LOCATIONS OF
THE WARWICK SAVINGS BANK]
[PRINTER TO PREPARE]
[Should show the following counties: Orange, Rockland, Sullivan, Ulster,
Duchess, Putnam, Passaic, Bergen and Sussex]
[Should separately identify Main Office, 3 Branch Offices and 3 Loan Production
Offices]
[Should show New York State and New Jersey with a blow-up for the counties
listed above]
4
<PAGE> 6
SUMMARY
This summary is qualified in its entirety by the more detailed information
and Financial Statements of the Bank and Notes thereto included elsewhere in
this Prospectus.
WARWICK COMMUNITY BANCORP, INC.
The Company is a Delaware corporation recently organized by the Bank for
the purpose of acquiring all of the capital stock of the Bank to be issued in
the Conversion. The Company will purchase all of the capital stock of the Bank
to be issued in the Conversion in exchange for 50% of the net proceeds from the
Offerings, with the remaining net proceeds to be retained by the Company. Funds
retained by the Company will be used for general business activities.
Immediately following the Conversion, the only significant assets of the Company
will be the capital stock of the Bank, the loan that the Company intends to make
to the ESOP to enable the ESOP to purchase up to 8% of the Common Stock to be
issued in the Conversion, including shares issued to the Foundation, and the net
conversion proceeds retained by the Company. The net proceeds from the Offerings
are expected to be invested initially in federal funds, government and federal
agency mortgage-backed securities, other debt securities, high-grade short-term
marketable securities, equity securities, deposits of or loans to the Bank or a
combination thereof. See "Use of Proceeds." The principal business of the
Company will initially consist of managing its investment in the Bank. See
"Business of the Company," "Business of the Bank" and "Regulation and
Supervision -- Holding Company Regulation."
The Company's office is located at the main office of the Bank at 18
Oakland Avenue, Warwick, New York 10990-0591. The Company's telephone number is
(914) 986-2206.
THE WARWICK SAVINGS BANK
General
The Bank was founded in 1875 as a New York mutual savings bank. The Bank is
subject to extensive regulation, supervision and examination by the NYSBD, its
primary regulator, and the FDIC, which insures its deposits. The Bank has been,
and intends to continue to be, a community-oriented savings institution offering
a variety of financial services to meet the needs of the communities it serves.
The Bank maintains its headquarters in the village of Warwick in Orange County,
New York and operates three additional branch offices located in the village of
Monroe, the town of Woodbury and the city of Middletown, Orange County, New
York. The Bank's primary deposit gathering areas are currently concentrated in
proximity to its full service banking offices. The Bank's current primary
lending market includes Orange County, New York and surrounding New York
counties. The Bank has recently obtained a license from the State of New Jersey
Department of Banking and Insurance to form a mortgage banking subsidiary, WSB
Mortgage Company of New Jersey, Inc. ("WSB Mortgage"), through which the Bank
intends to establish a mortgage banking operation in, and expand its commercial
lending into, northeastern New Jersey. See "Business of the Bank -- Market Area"
and "-- Competition."
The Bank's principal business has been and continues to be attracting
retail deposits from the general public in the area surrounding its four
branches and investing those deposits, together with funds generated from
operations and borrowings, primarily in one- to four-family residential mortgage
loans, mortgage-backed securities, commercial business and commercial real
estate loans and various debt and equity securities. The Bank's residential
lending activities are conducted through its team of commissioned loan
originators, who regularly call upon realtors, builders and others in the real
estate business to solicit mortgage loan applications. In the normal course of
business, the Bank uses off-balance sheet financial instruments, including put
options purchased and forward commitments to sell mortgage loans, primarily as
part of mortgage banking hedging strategies. When effectively used, these
instruments are designed to moderate the impact on earnings as interest rates
move up or down. Additionally, the Bank originates home equity loans (Good
Neighbor Home Loans) and lines of credit, consumer loans, student loans and its
own credit card loans.
The Bank's revenues are derived principally from the interest on its
mortgages, securities, commercial and consumer loans and, to a lesser degree,
from its mortgage banking activities, loan and securities sales,
5
<PAGE> 7
servicing fee income and income derived from investment products offered by its
wholly owned subsidiary, WSB Financial Services, Inc. ("WSB Financial"). The
Bank's primary sources of funds are deposits, borrowings, principal and interest
payments on loans and securities and proceeds from the sale of loans and
securities.
At August 31, 1997, the Bank had total assets of $290.9 million, of which
$154.7 million was comprised of mortgage and other loans and $116.3 million was
comprised of securities. At such date, total deposits were $221.7 million,
borrowings were $31.3 million and net worth was $29.2 million. At that same
date, the Bank's leverage and total risk-based capital ratios were 9.81% and
20.12%, respectively, which exceeded all applicable regulatory capital
requirements. Additionally, the Bank's regulatory capital was in excess of the
amount necessary to be considered "well-capitalized" under the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"). See "Regulatory
Capital Compliance," "Capitalization," "Pro Forma Data" and "Regulation and
Supervision -- New York Banking Regulation." The Bank's deposits are insured up
to the maximum allowable amount by the Bank Insurance Fund ("BIF") of the FDIC.
The Bank's net income was $2.87 million, $1.47 million and $504,000 for the
fiscal years ended May 31, 1997, 1996 and 1995, respectively, and $538,000 and
$848,000 for the three months ended August 31, 1997 and 1996, respectively. See
"Selected Financial and Other Data of the Bank," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business of the
Bank."
The Bank is a member of the Federal Home Loan Bank of New York ("FHLBNY"),
which is one of the 12 regional banks which comprise the Federal Home Loan Bank
("FHLB") system.
Business Strategy
The Bank has historically employed an operating strategy that emphasizes
the origination of one- to four-family residential mortgage loans in its market
area, with both fixed and adjustable rates, and, to an increasing degree over
the past 10 years, its commercial lending business, with mostly prime-rate based
loans secured by real estate located mainly in Orange County, New York. Due in
part to this strategy, the Bank historically has had profitable operations,
resulting in a strong regulatory capital position. The Bank's goal of
maintaining this position has led to an overall strategy of managed growth in
both deposits and assets. The major elements of the Bank's operating strategy
are to: (i) grow and diversify the Bank's loan portfolio by continuing to
originate owner-occupied residential mortgage, commercial business and
commercial real estate, construction and consumer loans in its market area (see
"Risk Factors -- Residential and Non-Residential Lending Risks" for a discussion
of the greater degree of credit risk associated with these types of loans); (ii)
complement the Bank's mortgage lending activities by investing in
mortgage-backed and other securities; (iii) maintain the Bank's relatively low
cost of funds; and (iv) manage the Bank's level of interest rate risk. From time
to time, the Bank employs a leveraging strategy, whereby borrowings are used to
fund specific investments. This form of leveraging allows for a reasonable net
margin of return. The Bank also seeks to attract and retain customers by
providing a high level of personal service to its retail and business customers
through extended office hours, low turnover of employees and prompt, flexible
and personalized production of a variety of loan products. In addition, it is a
goal of the Bank to increase its market share in the communities it serves
through the acquisition or establishment of branch offices and, if appropriate,
the acquisition of smaller financial institutions. Additionally, it is a goal of
the Bank to penetrate new markets. For this reason, the Bank has recently
obtained a license from the State of New Jersey Department of Banking and
Insurance to establish a mortgage banking operation in, and expand its
commercial lending into, that state through WSB Mortgage. See "Use of Proceeds,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Management Strategy" and "Business of the Bank."
In making loans, the Bank considers both the estimated value of the
collateral securing the loans and the creditworthiness of its prospective
borrowers and seeks to minimize risk of loss through its underwriting standards.
As a result of this strategy, historically, the Bank has had only minimal loss
experience in its lending operations. The Bank's ratio of non-performing loans
to total loans at year-end ranged from 0.78% to 2.42% during the five-year
period ended May 31, 1997 and was 0.94% at August 31, 1997. The Bank's ratio of
6
<PAGE> 8
allowance for loan losses to non-performing loans was 93.44% at August 31, 1997.
See "Selected Financial and Other Data of the Bank" and "Business of the
Bank -- Asset Quality."
The Bank's interest expense consists of the interest paid on savings
deposits and borrowed money. The Bank's savings deposits are derived principally
from its primary market area. The Bank's strategy has been to maintain a high
level of stable savings deposits by providing quality service to its customers
without significantly increasing its cost of funds. The Bank's low-cost deposit
base, consisting of passbook accounts, demand accounts, money market accounts,
NOW accounts and interest-on-checking demand accounts, totaled $146.0 million,
or 65.8% of total deposits, and had a weighted average effective rate of 2.89%
at August 31, 1997. The Bank has not used, and does not intend to use, brokered
deposits as a source of funds. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and "Business of the Bank -- Sources of Funds."
THE WARWICK SAVINGS FOUNDATION
In furtherance of the Bank's commitment to its local community, the Plan of
Conversion provides for the establishment of a charitable foundation in
connection with the Conversion, which will be incorporated under Delaware law as
a non-stock corporation. The Foundation will be funded with shares of Common
Stock contributed by the Company, as further described below. The Company and
the Bank believe that the funding of the Foundation with Common Stock of the
Company is a means of enhancing the common bond between the Bank and its
community and thereby enables the Bank's community to share in the potential
growth and success of the Company. While the Bank has made charitable
contributions in the past, the Bank has not previously formed a charitable
foundation nor has it made contributions to charitable organizations of the
magnitude of the contribution that will be made to the Foundation in the
Conversion. By further enhancing the Bank's visibility and reputation in its
local community, the Bank believes that the Foundation will enhance the
long-term value of the Bank's community banking franchise. See "The
Conversion -- Establishment of The Warwick Savings Foundation -- Structure of
the Foundation."
The authority for the affairs of the Foundation, including the management
of the Common Stock held by the Foundation, will be vested in the Foundation's
Board of Directors. A majority of the Board of Directors of the Foundation will
consist of individuals who are officers or directors of the Bank, and the
remaining members of the Foundation's Board of Directors will consist of certain
members of the Bank's community. However, establishment of the Foundation is
subject to certain conditions, including a requirement that the Common Stock of
the Company held by the Foundation be voted in the same ratio as all other
shares of the Company's Common Stock on all proposals considered by shareholders
of the Company. See "The Conversion -- Establishment of The Warwick Savings
Foundation -- Regulatory Conditions Imposed on the Foundation." Upon the
establishment of the Foundation, the directors of the Foundation will establish
the Foundation's policies with respect to grants or donations by the Foundation,
consistent with the purposes for which the Foundation was established.
The Company proposes to fund the Foundation by contributing to the
Foundation immediately following the Conversion a number of shares of authorized
but unissued Common Stock equal to 3% of the Common Stock sold in the Offerings,
or 123,675, 145,500 and 167,325 shares at the minimum, midpoint and maximum of
the Estimated Price Range, respectively. Such contribution, once made, will not
be recoverable by the Company or the Bank. Assuming the sale of shares at the
maximum of the Estimated Price Range, the Company will have 5,744,825 shares
issued and outstanding, of which the Foundation will own 167,325 shares, or
2.9%. DUE TO THE ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK TO THE
FOUNDATION, PERSONS PURCHASING SHARES IN THE CONVERSION WILL HAVE THEIR
OWNERSHIP AND VOTING INTERESTS IN THE COMPANY DILUTED BY 2.9%. SEE "PRO FORMA
DATA."
As a result of the establishment of the Foundation, the Company will
recognize an expense of the full amount of the contribution, offset, in part, by
a corresponding tax benefit, during the quarter in which the contribution is
made, which is expected to be the third quarter of the fiscal year ending May
31, 1998. Such expense will reduce earnings and will have a material impact on
the Company's earnings for such quarter and for the fiscal year in which such
quarter falls. Assuming a contribution of $1.7 million in Common Stock at such
time, based on the maximum of the Estimated Price Range, the Company estimates a
net tax effected
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<PAGE> 9
expense of $1.0 million, based upon a 40% tax rate and without regard to the
annual deduction limitation of 10% of the Company's taxable income. If the
Foundation had been established in the fiscal year ended May 31, 1997, the Bank
would have recorded net income of $1.9 million, rather than recording net income
of $2.9 million, for the fiscal year ended May 31, 1997, based on the same tax
assumptions. In addition to the contribution of Common Stock by the Company to
the Foundation, the Bank expects to continue making ordinary charitable
contributions within its local community in the future. The Bank does not
anticipate making future charitable contributions to the Foundation during the
first five years following the initial contribution to the Foundation. For
further discussion of the Foundation and its impact on purchasers in the
Conversion, see "Risk Factors -- Establishment of Charitable Foundation."
The establishment of the Foundation in connection with the Conversion, and
the Superintendent's approval and the FDIC's non-objection to the Plan of
Conversion, may be subject to potential challenges which could result in delays
in the Conversion. See "Risk Factors -- Establishment of Charitable Foundation."
THE CONVERSION AND THE SUBSCRIPTION AND COMMUNITY OFFERINGS
On July 10, 1997, the Board of Trustees of the Bank adopted the Plan of
Conversion (which was amended as of August 19, 1997 and October 21, 1997)
pursuant to which the Bank is converting from a New York mutual savings bank to
a New York stock savings bank, and all of the outstanding capital stock of the
Bank will be acquired by the Company in exchange for 50% of the net proceeds
from the Offerings. The Conversion and the Offerings are subject to the
Superintendent's approval, which was received on , 1997, the FDIC's
non-objection, which was received on , 1997, and approval of the
Bank's depositors at a special meeting to be held on December , 1997. See "The
Conversion -- General." The Bank is converting to increase its capital and to
structure itself in a form used by many commercial banks and other business
entities and a growing number of savings institutions. The Conversion will
enhance the Bank's ability to access capital markets, expand its current
operations, acquire other financial institutions or branch offices, provide
affordable home financing opportunities to the communities it serves and
diversify into other financial services to the extent allowable by applicable
law and regulation. The holding company form of organization will provide the
Bank with additional flexibility to diversify its business activities through
newly-formed subsidiaries or through acquisitions of or mergers with both mutual
and stock institutions, as well as other companies. Although there are no
current arrangements, understandings or agreements, written or oral, regarding
any such opportunities, the Company will be in a position after the Conversion,
subject to regulatory limitations and the Company's financial position, to take
advantage of any such opportunities that may arise. See "The
Conversion -- Purposes of Conversion." The holding company form of organization
also provides certain anti-takeover protections. See "Risk Factors -- Certain
Anti-Takeover Provisions."
The Common Stock will be offered in the Subscription Offering and, upon
completion of the Subscription Offering and subject to other limitations
described herein, to the extent shares are available, in the Community Offering
to certain members of the general public to whom a copy of this Prospectus is
delivered. To the extent that shares are available after the expiration of the
Community Offering, such shares may be offered in the Syndicated Community
Offering. See "The Conversion -- Syndicated Community Offering." Common Stock
offered in the Subscription Offering will be offered in the following order of
priority: (1) to depositors whose deposits in qualifying accounts in the Bank
totaled $100 or more on June 30, 1996 ("Eligible Account Holders"); (2) to the
Company's and the Bank's tax-qualified employee stock benefit plans ("Employee
Plans"), including the ESOP; (3) to depositors whose deposits in qualifying
accounts in the Bank totaled $100 or more on September 30, 1997, other than (i)
those depositors who would otherwise qualify as Eligible Account Holders or (ii)
trustees or executive officers of the Bank or their Associates (as defined
herein, see "The Conversion -- Limitations on Common Stock Purchases")
("Supplemental Eligible Account Holders"); and (4) to depositors of the Bank as
of October 31, 1997, the voting record date ("Voting Record Date") for the
special meeting of depositors to vote on the Conversion, other than those
depositors who would otherwise qualify as Eligible Account Holders or
Supplemental Eligible Account Holders ("Other Depositors"). Subscription rights
will expire if not exercised by, and the Subscription Offering will terminate
at, , Eastern Time, on the Expiration Date, unless extended by
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<PAGE> 10
the Bank and the Company, for an initial period of up to 45 days and with the
approval of the Superintendent and the FDIC, if necessary, for additional
periods of no more than 60 days each. Subject to the prior rights of holders of
subscription rights, Common Stock not subscribed for in the Subscription
Offering will be offered in the Community Offering to certain members of the
general public upon the completion of the Subscription Offering. The Community
Offering, if any, shall commence upon the completion of the Subscription
Offering and shall terminate 7 days after the close of the Subscription Offering
unless extended by the Bank and the Company, with the approval of the
Superintendent and the FDIC, if necessary. The Company and the Bank reserve the
absolute right to reject or accept any orders in the Community Offering, in
whole or in part, either at the time of receipt of an order or as soon as
practicable following the expiration of the Community Offering. However, no such
rejection will be in contravention of any applicable law or regulation.
The Bank and the Company have retained Sandler O'Neill as consultant and
advisor in connection with the Offerings and to assist in soliciting
subscriptions and purchase orders in the Offerings. The Bank and the Company
will pay a fee to Sandler O'Neill, which will be based on the aggregate Purchase
Price of the Common Stock sold in the Offerings. Neither Sandler O'Neill nor any
registered broker-dealer shall have any obligation to take or purchase any
shares of Common Stock in the Offerings. See "The Conversion -- Marketing and
Underwriting Arrangements."
PROSPECTUS DELIVERY AND PROCEDURE FOR PURCHASING SHARES OF COMMON STOCK
To ensure that each purchaser receives a Prospectus at least 48 hours prior
to the Expiration Date (or the expiration of the Community Offering, as the case
may be) in accordance with Rule 15c2-8 of the Securities Exchange Act of 1934,
as amended ("Exchange Act"), no prospectus will be mailed any later than five
days prior to any such date or hand delivered any later than two days prior to
any such date. Execution of the stock order form will confirm receipt of
delivery in accordance with Rule 15c2-8. Each stock order form distributed will
be accompanied by a prospectus and certification form. The Company and the Bank
are not obligated to accept or process orders that are submitted on facsimiled
or copied stock order forms. Stock order forms unaccompanied by an executed
original certification form will not be accepted. Payment by check, money order,
bank draft, cash or debit authorization to an existing account at the Bank must
accompany the stock order form and certification form. No wire transfers will be
accepted. The Bank is prohibited from lending funds to any person or entity for
the purpose of purchasing shares of Common Stock in the Conversion. See "The
Conversion -- Procedure for Purchasing Shares in Subscription and Community
Offerings."
In order to ensure that Eligible Account Holders, Supplemental Eligible
Account Holders and Other Depositors are properly identified as to their stock
purchase priorities, depositors as of the Eligibility Record Date (June 30,
1996), the Supplemental Eligibility Record Date (September 30, 1997) and the
Voting Record Date (October 31, 1997) must list all accounts on the stock order
form, giving all names on each account and the account numbers. Failure to list
all such account numbers may result in the inability of the Company and the Bank
to fill all or part of a subscription order. See "The Conversion -- Procedure
for Purchasing Shares in Subscription and Community Offerings."
RESTRICTIONS ON TRANSFER OF SUBSCRIPTION RIGHTS AND SHARES OF COMMON STOCK
Prior to the completion of the Conversion, no person may transfer or enter
into any agreement or understanding to transfer the legal or beneficial
ownership of the subscription rights issued under the Plan or the shares of
Common Stock to be issued upon their exercise. Each person exercising
subscription rights will be required to certify that any purchase of Common
Stock will be solely for the purchaser's own account and that there is no
agreement or understanding regarding the sale or transfer of any shares
purchased as a result of the exercise. The Company and the Bank will pursue any
and all legal and equitable remedies in the event they become aware of the
transfer of subscription rights and will not honor orders known by them to
involve the transfer of such rights. See "The Conversion -- Restrictions on
Transfer of Subscription Rights and Shares of Common Stock."
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<PAGE> 11
PURCHASE LIMITATIONS
The minimum purchase in the Offerings is 25 shares. Pursuant to the
subscription rights granted under the Plan, the ESOP intends to subscribe for 8%
of the shares of Common Stock to be issued in the Conversion, including shares
issued to the Foundation. No Eligible Account Holder, Supplemental Eligible
Account Holder or Other Depositor, in their capacity as such, may subscribe in
the Subscription Offering for more than $150,000 of the Common Stock offered; no
person, together with associates of or persons acting in concert with such
person, may purchase in the Community Offering and the Syndicated Community
Offering in the aggregate more than $150,000 of the Common Stock offered in the
Conversion; and, except for the Employee Plans, no person, together with
associates of or persons acting in concert with such person, may purchase more
than the overall maximum purchase limitation of 1% of the total number of shares
of Common Stock offered for sale in the Offerings. At any time during the
Conversion and without further approval of the Bank's depositors, the Company
and the Bank may, in their sole discretion, increase the overall maximum
purchase limitation and increase the amount that may be subscribed for in the
Offerings to up to 5% of the shares offered for sale in the Conversion. It is
currently anticipated that the overall maximum purchase limitation may be
increased if, after the Subscription and Community Offerings, the Company has
not received subscriptions for an aggregate amount equal to at least the minimum
of the Estimated Price Range. Prior to consummation of the Conversion, if such
amount is increased, subscribers for the maximum amount will be, and certain
other large subscribers in the sole discretion of the Bank may be, given the
opportunity to increase their subscriptions up to the then applicable limit. See
"The Conversion -- Limitations on Common Stock Purchases" and "The
Conversion -- Community Offering." In the event of an increase in the total
number of shares to up to 15% above the maximum, the additional shares will be
distributed and allocated to fill unfilled orders in the Subscription Offering
and Community Offering, if any, without any resolicitation of subscribers, as
described in "The Conversion -- Subscription Offering and Subscription Rights"
and "-- Limitations on Common Stock Purchases."
STOCK PRICING AND NUMBER OF SHARES TO BE ISSUED IN THE CONVERSION
State and federal regulations require that the aggregate purchase price of
the Common Stock to be issued in the Conversion be consistent with an
independent appraisal of the estimated pro forma market value of the Common
Stock following the Conversion. FinPro, Inc. ("FinPro"), an independent
appraiser, has advised the Bank that in its opinion, dated as of September 18,
1997 and updated as of October 17, 1997, the aggregate estimated pro forma
market value of the Common Stock ranged from $41,225,000 to $55,775,000, with a
midpoint of $48,500,000. See "The Conversion -- Stock Pricing." FinPro's
appraisal report is included as an exhibit to the Company's Registration
Statement ("Registration Statement") filed with the Securities and Exchange
Commission ("SEC" or "Commission"), of which this Prospectus is a part. See
"Additional Information." Based upon FinPro's appraisal, the Board of Trustees
of the Bank has established the Estimated Price Range of $41,225,000 to
$55,775,000, assuming the issuance of between 4,122,500 and 5,577,500 shares of
Common Stock at the Purchase Price of $10.00 per share. THE APPRAISAL OF THE
COMMON STOCK IS NOT INTENDED TO BE AND SHOULD NOT BE CONSTRUED AS A
RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING SUCH SHARES, NOR
CAN ANY ASSURANCE BE GIVEN THAT PURCHASERS OF THE COMMON STOCK IN THE CONVERSION
WILL BE ABLE TO SELL SUCH SHARES AFTER THE COMPLETION OF THE CONVERSION AT OR
ABOVE THE PURCHASE PRICE.
All shares of Common Stock issued in the Conversion will be sold at the
Purchase Price. The actual number of shares to be issued in the Conversion will
be determined by the Company and the Bank based upon FinPro's final updated
valuation of the estimated pro forma market value of the Common Stock, giving
effect to the Conversion, at the completion of the Offerings. The number of
shares to be issued is expected to range from a minimum of 4,122,500 shares to a
maximum of 5,577,500 shares. Subject to approval of the Superintendent, the
Estimated Price Range may be increased or decreased to reflect market and
economic conditions prior to the completion of the Conversion, and, under such
circumstances, the Company may increase or decrease the number of shares of
Common Stock to be issued in the Conversion. The maximum of the Estimated Price
Range may be increased by up to 15% and the number of shares of Common Stock to
be issued in the Conversion may be increased to 6,414,125 shares due to
regulatory considerations, changes in the
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<PAGE> 12
market and general financial and economic conditions. No resolicitation of
subscribers will be made, and subscribers will not be permitted to modify or
cancel their subscriptions unless the gross proceeds from the sale of the Common
Stock are less than the minimum or more than 15% above the maximum of the
current Estimated Price Range. See "Pro Forma Data," "Risk Factors -- Possible
Increase in Estimated Price Range and Number of Shares Issued" and "The
Conversion -- Stock Pricing" and "-- Number of Shares to be Issued."
The Company will issue an amount of Common Stock to the Foundation from
authorized but unissued shares equal to 3% of Common Stock sold in the
Conversion (or 123,675 to 167,325 shares based on the minimum and maximum of the
Estimated Price Range, respectively) immediately following completion of the
Conversion. As a result, the Company will have a total of 5,744,825 shares of
Common Stock outstanding (based on the issuance of 5,577,500 shares of Common
Stock being offered for sale), which will have the effect of diluting the
ownership and voting interests of persons purchasing shares in the Conversion by
2.9%, since a greater number of shares will be outstanding upon completion of
the Conversion. See "Pro Forma Data" and "Risk Factors -- Establishment of
Charitable Foundation."
USE OF PROCEEDS
Net proceeds from the sale of the Common Stock (after the expenses of the
Conversion are deducted) are estimated to be between $39.4 million and $53.7
million, with a midpoint of $46.6 million, depending on the number of shares
sold and the expenses of the Conversion. In the event that the Estimated Price
Range is increased by 15%, the net proceeds from the sale of the Common Stock
(after the expenses of the Conversion are deducted) are estimated to be $62.0
million. See "Pro Forma Data." The Company will use the net proceeds from the
sale of the Common Stock as follows:
1. The Company will purchase all of the capital stock of the Bank to
be issued in the Conversion in exchange for 50% of the net proceeds of the
Offerings.
2. The remaining net proceeds will be retained by the Company. Net
proceeds to be retained by the Company after the purchase of the capital
stock of the Bank are estimated to be between $19.7 million and $26.9
million, with a midpoint of $23.3 million. In the event that the Estimated
Price Range is increased by 15%, the net proceeds retained by the Company
are estimated to be $31.0 million. Such net proceeds will be used for
general business activities. The net proceeds retained by the Company will
be invested primarily in federal funds, government and federal agency
mortgage-backed securities, other debt securities, high-grade short-term
marketable securities, equity securities, deposits of or loans to the Bank,
or a combination thereof.
3. The Company intends to use a portion of the retained net proceeds
to make a loan directly to the ESOP to enable the ESOP to purchase 8% of
the shares to be issued in the Conversion, including shares issued to the
Foundation. The amount of the loan to the ESOP is estimated to be between
$3.4 million and $4.6 million (or $5.3 million if the Estimated Price Range
is increased by 15%), if the shares are acquired at the Purchase Price, to
be repaid over a period of up to 10 years at an interest rate of 8%. See
"Management of the Bank -- Benefits -- Employee Stock Ownership Plan and
Trust."
Upon completion of the Conversion, the Board of Directors of the Company
will have the authority to adopt stock repurchase plans, subject to statutory
and regulatory restrictions and other requirements. In the event the Company
determines to repurchase stock, of which there can be no assurance, such
repurchases will be made at market prices, which could be in excess of the
Purchase Price in the Conversion.
Any stock repurchases will be subject to the determination of the Company's
Board of Directors that both the Company and the Bank will be capitalized in
excess of all applicable regulatory requirements after any such repurchases and
that such capital will be adequate, taking into account, among other things, the
level of non-performing and other risk assets, the Company's and the Bank's
current and projected results of operations and asset/liability structure, the
economic environment and tax and other considerations.
The portion of the net proceeds received by the Bank from the Company's
purchase of the Bank's capital stock, estimated to be between $19.7 million at
the minimum of the Estimated Price Range and $26.9 million
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<PAGE> 13
at the maximum of the Estimated Price Range, will be added to the Bank's
general funds to be used for general corporate purposes, including: investment
in one- to four-family residential mortgage loans and other loans; investment
in federal funds, short-term, investment-grade marketable securities and
mortgage-backed securities; and funding the purchase of stock to be awarded
under the Company's Recognition and Retention Plan ("RRP"), which the Company
and the Bank intend to adopt subsequent to the Conversion, to the extent that
such plan is not funded with authorized but unissued Common Stock of the
Company. The net proceeds may also be used to purchase or lease additional
branch or office facilities inside or outside of Orange County, New York. See
"Use of Proceeds."
DIVIDENDS
The Board of Directors of the Company intends to consider a policy of
paying cash dividends on the Common Stock in the future. However, no decision
has been made as to the amount or timing of such dividends, if any. Declarations
of dividends by the Board of Directors will depend upon a number of factors,
including the amount of the net proceeds from the Offerings retained by the
Company, investment opportunities available to the Company or the Bank, capital
requirements, regulatory limitations, the Company's and the Bank's financial
condition and results of operations, tax considerations and general economic
conditions. See "Dividend Policy."
BENEFITS TO MANAGEMENT AND DIRECTORS
The Board of Trustees of the Bank received information about various types
of benefit plans typically utilized by public companies in general and
converting thrift institutions in particular. After reviewing the anticipated
costs of establishing a customary program of benefits and the anticipated
benefits to the Company, the Board of Trustees determined that the benefit plans
to be adopted by the Company and the Bank and described herein helped
significantly by providing a means to retain and attract executives of the
caliber needed to run a successful public company, to maintain their attention
and loyalty in change of control situations and to align their interests with
those of the Company's shareholders. Finally, the Board of Trustees concluded
that the cost of establishing and maintaining these benefit plans would be
justified by these benefits to the Company.
Stock Option Plan. Following the Conversion, the Company intends to adopt
a stock option plan ("Stock Option Plan"). If implemented within one year
following the Conversion, the adoption of the Stock Option Plan will be subject
to shareholder approval obtained at a meeting of shareholders to be held no
earlier than six months after the completion of the Conversion. Assuming such
implementation, an amount of shares of Common Stock equal to 10% of the Common
Stock to be issued in the Conversion, including shares issued to the Foundation
(424,617 shares and 574,482 shares at the minimum and maximum of the Estimated
Price Range, respectively), is expected to be reserved for issuance under the
Stock Option Plan. Upon exercise of options, shares will be acquired either from
treasury shares acquired through open market purchases, subject to the
Superintendent's approval, if necessary, or from authorized but unissued Common
Stock. See "Risk Factors -- Possible Dilutive Effect of Stock Options and
Recognition and Retention Plan." No determinations have been made by the Company
as to the specific terms of the Stock Option Plan or the amount of awards to be
made thereunder. New York Banking Board ("NYBB") regulations provide that no
individual employee may receive more than 25% of the options granted, and that
non-employee directors may not receive more than 5% individually or 30% in the
aggregate of the options granted, under option plans implemented within one year
following the Conversion. See "Management of the Bank -- Benefits -- Stock
Option Plan."
Recognition and Retention Plan. Following the Conversion, the Company also
intends to adopt the RRP for the benefit of officers, employees and non-employee
directors of the Company and the Bank. If implemented within one year following
the Conversion, the adoption of the RRP will be subject to shareholder approval
obtained at a meeting of shareholders to be held no earlier than six months
after the completion of the Conversion. Assuming such implementation, the Bank
expects to contribute funds to the RRP to enable its related trust to acquire,
in the aggregate, up to 4% of the shares of Common Stock to be issued in the
Conversion, including shares issued to the Foundation (169,847 shares and
229,793 shares at the minimum and maximum of the Estimated Price Range,
respectively). These shares will be acquired either through open
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<PAGE> 14
market purchases, subject to the Superintendent's approval, if necessary, or
from authorized but unissued Common Stock and will be awarded at no cost to the
recipient of awards under the RRP. See "Risk Factors -- Possible Dilutive Effect
of Stock Options and Recognition and Retention Plan." No determinations have
been made by the Company as to the specific terms of the RRP or the amount of
awards to be made thereunder. NYBB regulations provide that no individual
employee may receive more than 25% of the shares of any plan, and that
non-employee directors may not receive more than 5% of the shares individually
or 30% in the aggregate, in the case of plans implemented within one year
following the Conversion. Under the anticipated terms of the RRP, recipients
would receive shares without any cost and would vote any shares allocated to
them, and an independent trustee would vote unallocated shares in the same
proportion as the instructions it receives from recipients with respect to
allocated shares which have not been vested and distributed. See "Management of
the Bank -- Benefits -- Recognition and Retention Plan."
ESOP. The Bank and the Company have established the ESOP for the benefit
of eligible employees, including officers. The ESOP intends to subscribe for up
to 8% of the Common Stock to be issued in the Conversion, including shares
issued to the Foundation, and to finance its subscription with funds anticipated
to be borrowed from the Company for a period of up to 10 years at an interest
rate of 8% per annum. The Bank and the Company intend to make cash contributions
to the ESOP as required for debt service. The Common Stock acquired by the ESOP
will initially be held in a suspense account and will be allocated to eligible
employees as the loan is repaid. See "Management of the Bank --
Benefits -- Employee Stock Ownership Plan and Trust."
401(k) Plan. The Bank has amended The Warwick Savings Bank 401(k) Savings
Plan ("401(k) Plan"), in connection with the Conversion to provide that the
Bank's matching contributions will be invested in an investment fund consisting
primarily of Common Stock. In addition, participating employees may elect to
invest all or a portion of their remaining account balances in such investment
fund or the other investment funds provided under the 401(k) Plan. Common Stock
held by the 401(k) Plan may be newly issued or treasury shares acquired from the
Company or outstanding shares purchased in the open market or in private
transactions. See "Management of the Bank -- Benefits -- 401(k) Plan."
Employment Agreements and Retention Agreements. The Company intends to
enter into employment agreements ("Employment Agreements"), effective as of the
Conversion, with four senior officers of the Bank that will provide for, among
other things, certain cash payments to be made, and certain benefits to be
continued, in the event of their termination of employment in certain
circumstances and upon a change of control of the Bank or the Company. The
provisions of these agreements may have the effect of increasing the cost of
acquiring the Company, thereby discouraging future attempts to take over the
Company or the Bank. Based on current compensation and benefit costs, cash
payments to be made in the event of a change of control of the Bank or the
Company pursuant to the terms of the Employment Agreements would be
approximately $3,474,000, of which approximately $1,677,000 would be payable to
Mr. Dempsey, $795,000 would be payable to Mr. Gentile, $572,000 would be payable
to Mr. Budich and $430,000 would be payable to Ms. Sobotor-Littell. However, the
actual amount to be paid under the Employment Agreements in the event of a
change of control of the Bank or the Company cannot be estimated at this time
because the actual amount is based on the compensation and benefit costs
applicable to these individuals and other factors existing at the time of the
change of control, which cannot be determined at this time. Such figures do not
include any estimate as to amounts that may be payable on account of the Stock
Option Plan or RRP because no options or shares have been allocated under such
plans. See "Management of the Bank -- Employment Agreements."
The Bank also intends to enter into employee retention agreements
("Retention Agreements"), effective as of the Conversion, with four other key
employees of the Bank. Based on current compensation and benefit costs
applicable to the four key employees expected to be covered by the Retention
Agreements, certain cash payments to be made, and certain benefits to be
continued, in the event of a change of control of the Bank or the Company would
be approximately $580,000. However, the actual amount to be paid under the
Retention Agreements in the event of a change of control of the Bank or the
Company cannot be estimated at this time because the actual amount is based on
the compensation and benefit costs applicable to such key employees and other
factors existing at the time of the change of control, which cannot be
determined at this time. Such
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<PAGE> 15
figures do not include any estimate as to amounts that may be payable on account
of the Stock Option Plan or RRP because no options or shares have been allocated
under such plans. See "Management of the Bank -- Employee Retention Agreements."
Other Change of Control Provisions. Certain anticipated provisions of the
Stock Option Plan and the RRP (which the Company intends to adopt and which will
become effective prior to the first anniversary of the Conversion only upon
shareholder approval obtained at a meeting of shareholders to be held no earlier
than six months after completion of the Conversion) provide for cash payments
and/or accelerated vesting in the event of a change of control of the Company or
the Bank. The ESOP also provides for accelerated vesting in the event of a
change of control. These provisions may also have the effect of increasing the
cost of acquiring the Company. In addition, the existence of these provisions
could result in shareholders receiving less for their shares of Common Stock
than might otherwise be available in the event of an acquisition of the Company.
See "Restrictions on Acquisition of the Company and the Bank -- Anti-Takeover
Effects of the Company's Certificate of Incorporation and By-Laws and Management
Remuneration Plans Adopted in the Conversion," "Management of the
Bank -- Benefits -- Employee Stock Ownership Plan and Trust," "--
Benefits -- Stock Option Plan," and "-- Benefits -- Recognition and Retention
Plan."
Subscriptions by Executive Officers and Trustees. The Bank's executive
officers and trustees and their Associates (as defined herein under "The
Conversion -- Limitations on Common Stock Purchases") propose to purchase Common
Stock in the Offerings in an aggregate amount equal to $2,280,000 or 5.53%
(based on the minimum of the Estimated Price Range) or $2,280,000 or 4.09%
(based on the maximum of the Estimated Price Range) of the shares to be sold in
the Offerings. If the trustees emeritus of the Bank are included, the foregoing
amounts and percentages are $2,380,000 and 5.77%, and $2,380,000 and 4.27%,
respectively. See "Management of the Bank -- Subscriptions by Executive Officers
and Trustees."
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered by prospective investors in deciding whether to purchase the Common
Stock offered hereby, including, among other factors: the potential impact of
changes in interest rates on the Bank's financial condition and results of
operations and the Bank's interest rate sensitivity; the risks associated with
residential and non-residential lending activities; the impact of declines in
the local or national economy or real estate market on the Bank; competition for
savings deposits and loan originations; concentration of a significant amount of
the Bank's assets in securities; the establishment of the Foundation in
connection with the Conversion, including, dilution of shareholders' interests,
impact on earnings, tax considerations, comparison of valuation and other
factors assuming the Foundation is not established as part of the Conversion and
the potential anti-takeover effect of the Foundation; the impact of
technological advances on the Bank; certain anti-takeover provisions, including,
provisions in the Company's and the Bank's governing instruments, the ability of
the Board of Directors of the Company to evaluate non-economic factors in
evaluating any acquisition offer, the voting control of directors and officers
of the Company and the Bank and provisions in management contracts and benefit
plans; the absence of an established market for the Common Stock; the possible
increase in the estimated price range and number of shares issued in the
Conversion; the possible dilutive effect of the Stock Option Plan and the RRP;
and the possible adverse tax consequences of the distribution of subscription
rights.
14
<PAGE> 16
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE BANK
The selected consolidated financial and other data of the Bank set forth
below is derived in part from, and should be read in conjunction with, the
audited Consolidated Financial Statements of the Bank and Notes thereto
presented elsewhere in this Prospectus. The selected consolidated financial and
other data of the Bank at and for the three months ended August 31, 1997 and
1996 were derived from unaudited financial statements and reflect, in the
opinion of management, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the results for such periods.
The results at and for the three-month period ended August 31, 1997 are not
necessarily indicative of the results that may be expected for the year ending
May 31, 1998.
<TABLE>
<CAPTION>
AT AUGUST 31, AT MAY 31,
------------- ------------------------------------------------------------
1997 1997 1996 1995(8) 1994(8) 1993(8)
------------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA:
Total assets..................... $ 290,868 $286,545 $274,053 $258,679 $234,048 $224,851
Loans receivable, net(1)......... 154,665 138,323 108,897 122,663 108,598 108,848
Investment securities............ 116,328 126,393 144,284 110,333 105,433 93,013
Real estate owned, net........... 167 224 330 493 306 --
Deposits......................... 221,763 221,211 232,965 229,011 207,527 200,564
FHLB advances.................... 8,270 5,250 3,600 -- -- --
Securities sold under repurchase
agreements..................... 23,045 23,090 4,700 -- -- --
Retained earnings................ 29,212 28,114 24,770 23,076 21,910 20,147
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED AUGUST 31, FOR THE YEAR ENDED MAY 31,
-------------------- --------------------------------------------------------
1997 1996 1997 1996 1995 1994(8) 1993(8)
------ ------ -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Interest income............... $5,232 $4,912 $ 20,691 $ 18,333 $ 16,253 $ 15,786 $ 16,549
Interest expense.............. 2,358 2,281 9,376 8,717 6,828 5,922 6,710
------ ------ -------- -------- -------- -------- --------
Net interest income......... 2,874 2,631 11,315 9,616 9,425 9,864 9,839
Less provision for loan
losses.................... (304) (20) (130) (140) (261) (415) (548)
------ ------ -------- -------- -------- -------- --------
Net interest income after
provision for loan
losses.................... 2,570 2,611 11,185 9,476 9,164 9,449 9,291
Other income:
Service and fee income...... 492 447 1,915 1,768 1,369 1,996 536
Securities transactions..... 154 696 816 356 (429) 845 243
Loan transactions........... 23 17 137 119 14 123 113
Other income or (loss)...... 8 (176) (89) (159) (79) (17) 120
------ ------ -------- -------- -------- -------- --------
Total other income,
net................ 677 984 2,779 2,084 875 2,947 1,012
------ ------ -------- -------- -------- -------- --------
Other expense:
Salaries and employee
benefits.................. 1,295 1,276 5,256 5,050 3,958 3,877 3,572
F.D.I.C. insurance.......... 7 1 12 53 466 456 427
Occupancy and equipment..... 332 287 1,308 1,238 1,202 1,143 1,258
Data processing............. 157 164 640 484 414 341 318
Advertising................. 46 22 152 129 112 69 119
Professional fees........... 80 67 240 325 222 270 324
Other operating expenses.... 432 411 1,735 1,791 1,722 1,606 1,129
------ ------ -------- -------- -------- -------- --------
Total other
expenses........... 2,349 2,228 9,343 9,070 8,096 7,762 7,147
Income before provision for
income taxes and cumulative
effect of change in
accounting principle........ 897 1,367 4,621 2,490 1,943 4,634 3,156
Provision for income taxes.... 359 519 1,756 1,024 794 2,115 1,370
------ ------ -------- -------- -------- -------- --------
Income before cumulative
effect of change in
accounting principle........ 538 848 2,865 1,466 1,149 2,519 1,786
Cumulative effect of change in
accounting principle........ -- -- -- -- (645) -- --
------ ------ -------- -------- -------- -------- --------
Net income........... $ 538 $ 848 $ 2,865 $ 1,466 $ 504 $ 2,519 $ 1,786
====== ====== ========= ========= ========= ========= =========
</TABLE>
15
<PAGE> 17
<TABLE>
<CAPTION>
AT OR FOR
THE THREE
MONTHS ENDED AT OR FOR THE
AUGUST 31, YEAR ENDED MAY 31,
SELECTED FINANCIAL RATIOS AND --------------- ---------------------------------------------------
OTHER DATA(2): 1997 1996 1997 1996 1995(8) 1994(8) 1993(8)
----- ----- ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
PERFORMANCE RATIOS:
Return on average assets.......... 0.75% 1.20% 1.00% 0.56% 0.21% 1.11% 0.83%
Return on average retained
earnings........................ 7.62 13.74 11.02 6.29 2.32 12.11 9.33
Average retained earnings to
average assets.................. 9.89 8.76 9.12 8.94 9.18 9.14 8.91
Retained earnings to total
assets.......................... 10.04 8.97 9.81 9.04 8.92 9.36 8.96
Core deposits to total
deposits(3)..................... 65.84 65.35 66.08 63.28 59.49 77.25 74.38
Net interest spread(4)............ 3.63 3.40 3.62 3.48 3.84 3.92 4.08
Net interest margin(5)............ 4.27 3.97 4.20 3.98 4.27 4.35 4.51
Operating expense to average
assets.......................... 3.29 3.16 3.28 3.48 3.42 3.41 3.33
Average interest-earning assets to
average interest-bearing
liabilities..................... 1.18 1.16 1.17 1.14 1.14 1.16 1.13
Efficiency ratio(6)............... 69.65 76.80 71.10 80.80 75.56 65.54 68.10
REGULATORY CAPITAL RATIOS(7):
Tangible capital.................. 9.81 9.07 9.53 9.51 9.79 9.95 9.38
Core capital...................... 19.19 19.27 19.46 17.52 16.00 20.00 17.00
Risk-based capital................ 20.12 20.27 20.33 18.45 16.00 20.00 17.00
ASSET QUALITY RATIOS:
Non-performing loans to total
loans........................... 0.94 1.16 1.02 0.78 1.78 2.02 2.42
Non-performing loans to total
assets.......................... 0.50 0.49 0.50 0.31 0.85 0.95 1.18
Non-performing assets to total
assets.......................... 0.56 0.56 0.58 0.44 1.04 1.08 1.18
Allowance for loan losses to total
loans........................... 0.88 1.10 0.88 1.18 0.97 0.83 0.74
Allowance for loan losses to non-
performing loans................ 93.44 94.72 86.09 151.22 54.77 41.06 30.38
OTHER DATA:
Branch offices.................... 4 4 4 4 4 4 4
</TABLE>
- ---------------
(1) Loans receivable, net represents total loans less net deferred loan fees and
the allowance for loan losses.
(2) Regulatory Capital Ratios and Asset Quality Ratios are end of period ratios.
With the exception of period-end ratios, all ratios are based on average
monthly balances during the periods indicated.
(3) The Bank considers the following to be core deposits: checking accounts,
passbook accounts, NOW accounts and money market accounts.
(4) The interest rate spread represents the difference between the
weighted-average yield on interest-earning assets and the weighted-average
cost of interest-bearing liabilities.
(5) The net interest margin represents net interest income as a percentage of
average interest-earning assets.
(6) The efficiency ratio represents non-interest expense as a percentage of the
sum of net interest income and non-interest income excluding any gains or
losses on sales of assets.
(7) For definitions and further information relating to the Bank's regulatory
capital requirements, see "Regulation and Supervision -- Federal Banking
Regulation -- Capital Requirements." See "Regulatory Capital Compliance" for
the Bank's pro forma capital levels as a result of the Offerings.
(8) The selected financial data of the Bank as of May 31, 1995, 1994 and 1993,
and for each year in the two-year period ended May 31, 1994 are not derived
from audited financial statements.
16
<PAGE> 18
RISK FACTORS
The following risk factors, in addition to those discussed elsewhere in
this Prospectus, should be considered by prospective investors in deciding
whether to purchase the Common Stock offered hereby.
POTENTIAL IMPACT OF CHANGES IN INTEREST RATES
The Bank's profitability, like that of most financial institutions, is
dependent to a large extent upon its net interest income, which is the
difference between its interest income on interest-earning assets, such as loans
and securities, and its interest expense on interest-bearing liabilities, such
as savings deposits and borrowings. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Analysis of Net Interest
Income."
A substantial portion of the Bank's assets consists of fixed-rate one- to
four-family mortgage loans. At August 31, 1997, an aggregate of $56.3 million,
or 36.0% of gross loans, were invested in such assets. In addition, at August
31, 1997, the Bank had an aggregate of $69.0 million in mortgage-backed
securities and collateralized mortgage obligations ("CMOs"), $64.2 million of
which provided for fixed rates of interest. The Bank generally accepts savings
deposits for considerably shorter terms than its fixed-rate mortgage loans. As a
result, at August 31, 1997, the Bank's total interest-bearing liabilities
maturing or repricing within one year exceeded its total interest-earning assets
maturing or repricing in the same time period by $40.4 million, representing a
one-year interest rate sensitivity gap as a percentage of total assets of
negative 13.90%. Management anticipates that substantially all of the maturing
or repricing liabilities will be retained by the Bank at interest rates based on
then prevailing rates. As a result of the Bank's negative gap position, the
yield on interest-earning assets of the Bank will adjust to changes in interest
rates at a slower rate than the cost of the Bank's interest-bearing liabilities.
As a consequence, any significant increase in interest rates will have an
adverse effect on the Bank's results of operations. Increases in the level of
interest rates also may adversely affect the fair value of the Bank's securities
and other earning assets. Generally, the fair value of fixed-rate instruments
fluctuates inversely with changes in interest rates. As a result, increases in
interest rates could result in decreases in the fair value of interest-earning
assets, which could adversely affect the Bank's results of operations if sold
or, in the case of interest-earning assets classified as available-for-sale, the
Bank's equity if retained. Increases in interest rates also can affect the type
(fixed-rate or adjustable-rate) and amount of loans originated by the Bank and
the average life of loans and securities, which can adversely impact the yields
earned on the Bank's loan and securities portfolio. The Bank's loan sale and
servicing activity may also be adversely affected by a declining interest rate
environment to the extent such environment results in increased loan prepayment
activity of serviced loans or losses associated with the use of forward
commitment loan sale contracts. At August 31, 1997, the Bank was servicing
$126.2 million of loans for others and at such date recorded an $861,000
mortgage servicing rights asset. To the extent loan prepayment activity of
serviced loans increased, it would result in a reduction in the Bank's mortgage
servicing rights, which would adversely affect net income. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Management of Interest Rate Risk."
RESIDENTIAL AND NON-RESIDENTIAL LENDING RISKS
The Bank has historically employed an operating strategy that emphasized
the origination of one- to four-family residential mortgage loans. The
profitability of the Bank's one- to four-family residential lending business
could be adversely impacted by competitive market forces and technological
advances of its competitors. See "-- Competition" and "-- Impact of
Technological Advances." At August 31, 1997, substantially all of the Bank's
gross loans were secured by properties or made to borrowers located in the
Bank's lending area. See "Business of the Bank -- Lending Activities." This lack
of geographic diversification could have an adverse impact on the Bank and the
Bank's profitability in the event that the Bank's lending area were to suffer a
substantial economic decline or a natural disaster.
In addition to one- to four-family residential mortgage loans, the Bank
originates commercial business and real estate loans, and construction, land,
development, multi-family residential and other loans in its lending area. These
loans are generally considered to involve a higher degree of credit risk than
one- to four-family residential mortgage loans. This greater risk is
attributable to several factors, including the higher concentration of principal
in a limited number of loans and borrowers, the effects of general economic
17
<PAGE> 19
conditions on income-producing properties and the increased difficulty of
evaluating and monitoring these types of loans. Commercial loans, which comprise
16.05% of the Bank's loan portfolio at August 31, 1997, carry greater credit
risks than residential mortgage loans because their repayment is more dependent
on (i) the underlying financial condition of the borrower and the value of, or
the cash flow from, any property securing the loan or the business being
financed and (ii) general and local economic conditions. Furthermore, the
repayment of loans secured by multi-family residential and commercial real
estate is typically dependent upon sufficient cash flow from the related real
estate project to cover operating expenses and debt service. If the cash flow
from the project is reduced (for example, if leases are not obtained or
renewed), the borrower's ability to repay the loan may be impaired. See
"Business of the Bank -- Lending Activities."
IMPACT OF THE ECONOMY ON OPERATIONS
Declines in the local economy, national economy or real estate market could
adversely affect the financial condition and results of operations of the Bank
by, among other things, decreasing demand for loans, increasing competition for
good loans and increasing non-performing loans and loan losses. Although
management of the Bank believes that the current allowance for loan losses is
adequate in light of current economic conditions, many factors may require
additions to the allowance for loan losses in future periods. These factors
include: (i) adverse changes in economic conditions and changes in interest
rates that may affect the ability of borrowers to make payments on loans, (ii)
changes in the financial capacity of individual borrowers, (iii) changes in the
local real estate market and the value of the Bank's loan collateral and (iv)
future review and evaluation of the Bank's loan portfolio, internally or by
regulators. The amount of the allowance for loan losses at any time represents
estimates made by management that are susceptible to significant changes due to
changes in values of collateral, national and regional economic conditions,
prevailing interest rates and other factors. Future adjustments to the allowance
also may be necessary if economic or other conditions differ substantially from
those underlying the assumptions used in making such estimates.
COMPETITION
The Bank faces significant and increasing competition both in making loans
and in attracting savings deposits. The Bank's market area has many financial
institutions, some of which have greater financial resources, name recognition
and market presence than the Bank, and all of which are competitors of the Bank
to varying degrees. The Bank's most direct competition for savings deposits
historically has come from other savings banks, savings and loan associations,
commercial banks and credit unions. In addition, the Bank faces increasing
competition for savings deposits from non-bank institutions such as brokerage
firms, insurance companies, money market mutual funds, other mutual funds (such
as corporate and government securities funds) and annuities. The Bank's
competition for loans comes principally from commercial banks, other savings
banks, savings and loan associations, mortgage banking companies, finance
companies and credit unions. Trends toward the consolidation of the banking
industry and the lifting of interstate banking and branching restrictions may
make it more difficult for smaller institutions, such as the Bank, to compete
effectively with large national and regional banking institutions. See "Business
of the Bank."
CONCENTRATION IN SECURITIES
The Bank has invested a significant amount of its assets in mortgage-backed
and other securities, including the investment in mortgage-backed securities
created by the securitization of loans originated by the Bank. The Bank's
securities consist of securities that management intends to hold to maturity and
also securities available-for-sale. The Bank's securities totaled $116.3
million, $126.4 million, $144.3 million and $110.3 million at August 31, 1997
and May 31, 1997, 1996 and 1995, respectively. These amounts represented 40.0%,
44.1%, 52.6% and 42.7% of total assets, respectively, at those dates. As a
result of the Bank's level of securities, the Bank's net interest income and net
interest margin have been adversely affected as the average yield on the Bank's
average balance of securities has been lower than the average yield on the
average balance of its mortgage loans. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Analysis of Net Interest
Income." The Bank expects to invest a portion of the net Conversion proceeds in
securities. In addition, the Bank expects that income from securities will
initially represent an even greater percentage of total interest income after
the Conversion than in prior periods. It is expected that such securities will
earn interest at rates lower than the interest rates that would generally be
earned on loans. In
18
<PAGE> 20
addition, securities held as available-for-sale are required to be held at the
lower of cost or market value. As a result, changes in interest rates could
cause fluctuations in the value of such securities that affect the Bank's
financial condition. See "-- Potential Impact of Changes in Interest Rates." For
these reasons, the Bank intends to begin investing the net Conversion proceeds
in mortgage loans, commercial loans and consumer loans as soon as practicable
after consummation of the Conversion. However, there can be no assurance that
the economy of the counties in the Bank's market area will continue to grow at a
rate that will generate sufficient loan demand or that, even if sufficient loan
demand exists in such market area, the Bank will have the competitive position
to gain an increasing share of the loan demand permitting the investment of the
net Conversion proceeds in loan products that meet the Bank's credit quality
standards.
ESTABLISHMENT OF CHARITABLE FOUNDATION
Pursuant to the Plan, the Company intends to voluntarily establish a
charitable foundation in connection with the Conversion. The Foundation will be
incorporated under Delaware law as a non-stock corporation and will be funded
with shares of Common Stock contributed by the Company. The establishment and
funding of a charitable foundation as part of a conversion of a mutual savings
institution to stock form has, to the Bank's knowledge, been done on several
prior occasions. Nevertheless, the Foundation and the Superintendent's approval
of the Conversion and the FDIC's non-objection to the Conversion may be subject
to potential challenges notwithstanding that the Board of Directors of the
Company and the Board of Trustees of the Bank have carefully considered the
various factors involved in the establishing of the Foundation. See "The
Conversion -- Establishment of The Warwick Savings Foundation -- Purpose of the
Foundation" for a discussion of the factors considered. If challenges to the
establishment of the Foundation are raised, no assurances can be made that the
resolution of such challenges would not delay the consummation of the Conversion
or that the Company and the Bank would be successful in defending against such
challenges. Additionally, if the Company and the Bank are forced to eliminate
the Foundation, the Company may be required to resolicit subscribers in the
Offerings. The contribution of Common Stock to the Foundation will be dilutive
to the interests of shareholders, will have an adverse impact on the reported
earnings of the Company in the fiscal year ending May 31, 1998, the fiscal year
in which the Foundation is established, and will have the other effects
described below.
Dilution of Shareholders' Interests. The Company proposes to fund the
Foundation with Common Stock in an amount equal to 3% of the Common Stock to be
sold in the Conversion. At the minimum, midpoint and maximum of the Estimated
Price Range, the contribution to the Foundation would equal 123,675, 145,500 and
167,325 shares of Common Stock, with a value of $1.2 million, $1.5 million and
$1.7 million, respectively, based on the Purchase Price. Assuming the sale of
Common Stock at the maximum of the Estimated Price Range, upon completion of the
Conversion and establishment of the Foundation, the Company will have 5,744,825
shares of Common Stock issued and outstanding, of which the Foundation will own
167,325 shares, or 2.9%. AS A RESULT, PERSONS PURCHASING SHARES OF COMMON STOCK
IN THE CONVERSION WILL HAVE THEIR OWNERSHIP AND VOTING INTERESTS IN THE COMPANY
DILUTED BY 2.9%. SEE "PRO FORMA DATA."
Impact on Earnings. The contribution of Common Stock to the Foundation
will have an adverse impact on the Company's and the Bank's earnings in the
quarter and fiscal year in which the contribution is made. The Company will
recognize an expense in the amount of the contribution of Common Stock to the
Foundation in the quarter in which it occurs, which is expected to be the third
quarter of the fiscal year ending May 31, 1998. The contribution expense will be
partially offset by the tax benefit related to the expense. Assuming a
contribution of $1.7 million in Common Stock (based on the maximum of the
Estimated Price Range), the Company estimates a net tax effected expense of $1.0
million (based upon a 40% tax rate and without regard to the annual deduction
limitation of 10% of the Company's annual taxable income). If the Foundation had
been established in the fiscal year ended May 31, 1997, the Bank would have
reported net income of $1.9 million, rather than reporting net income of $2.9
million, for the fiscal year ended May 31, 1997, based on the maximum of the
Estimated Price Range and the same tax assumptions. In addition to the
contribution to the Foundation, the Bank expects to continue making ordinary
charitable contributions within its community in the future, but the Company and
the Bank do not currently anticipate making additional contributions to the
Foundation within the first five years following the initial contribution.
19
<PAGE> 21
Tax Considerations. The Company and the Bank have received an opinion of
Thacher Proffitt & Wood that an organization created for the above purposes
would qualify as a tax exempt organization under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended ("Code"), and would be classified as a
private foundation. The Foundation will submit a request to the IRS to be
recognized as an exempt organization. The opinion of Thacher Proffitt & Wood
does not consider the impact of the condition imposed by the FDIC and the
Superintendent to be agreed to by the Foundation that Common Stock issued to the
Foundation be voted in the same ratio as all other shares of the Company's
Common Stock on all proposals considered by shareholders of the Company. See
"The Conversion -- Establishment of The Warwick Savings Foundation -- Regulatory
Conditions Imposed on the Foundation." Consistent with this condition, in the
event that the Company or the Foundation receives an opinion of its legal
counsel that compliance with the voting restriction would have the effect of
causing the Foundation to lose its tax-exempt status, or would otherwise have a
material and adverse tax consequence on the Foundation or subject the Foundation
to an excise tax under Section 4941 of the Code, the FDIC and the Superintendent
shall waive such voting restriction upon submission of a legal opinion by the
Company or the Foundation that is satisfactory to the FDIC and the
Superintendent. Thacher Proffitt & Wood's opinion further provides that there is
substantial authority for the position that the Company's contribution of its
own stock to the Foundation would not constitute an act of self-dealing, and
that the Company would be entitled to a deduction in the amount of the fair
market value of the stock at the time of the contribution less the nominal par
value that the Foundation is required to pay to the Company for such stock,
subject to an annual limitation based on 10% of the Company's annual taxable
income (computed without regard to charitable contributions). The Company,
however, would be able to carry forward any unused portion of the deduction for
five years following the contribution, subject, in each such year, to the 10% of
taxable income limitation. Thus, while the Company would have received a
charitable contribution deduction of approximately $447,000 in the taxable year
ended December 31, 1996 (based upon the sale of stock at the maximum of the
Estimated Price Range and a contribution of $1.7 million of Common Stock and the
Bank's pre-tax income of approximately $4.47 million for 1996), the Company is
permitted under the Code to carry over the excess contribution to the five
following years. Assuming the sale of Common Stock at the midpoint of the
Estimated Price Range, and no subtantial decrease in the Company's income, the
Company estimates that the entire amount of the contribution should be
deductible over the six-year period. Although the Company and the Bank have
received the opinion of Thacher Proffitt & Wood that the Company will be
entitled to the deduction for the charitable contribution, there can be no
assurances that the IRS will recognize the Foundation as a Section 501(c)(3)
exempt organization or that the deduction will be permitted. If the deduction is
not permitted, the Company's tax benefit related to the Foundation would have to
be fully expensed, resulting in a further reduction in earnings in the year in
which the IRS makes such a determination.
Comparison of Valuation and Other Factors Assuming the Foundation is Not
Established as Part of the Conversion. The establishment of the Foundation was
taken into account by FinPro in determining the estimated pro forma market value
of the Common Stock of the Company. The pro forma aggregate price of the Common
Stock being offered for sale in the Conversion is currently estimated to be
between $41.2 million and $55.8 million, with a midpoint of $48.5 million. The
pro forma price to book ratio and the pro forma price to earnings ratio, at and
for the three months ended August 31, 1997, are 70.92% and 14.71x, respectively,
at the midpoint of the Estimated Price Range. In the event that the Conversion
does not include the Foundation, FinPro has estimated the pro forma market value
of the Common Stock to be $51.5 million at the midpoint based on a pro forma
price to book ratio and a pro forma price to earnings ratio that are the same as
the independent appraisal at 70.92% and 14.71x, respectively. The amount of
Common Stock being offered for sale in the Conversion at the midpoint of the
Estimated Price Range is approximately $3.0 million less than the estimated
amount of Common Stock that would be offered in the Conversion without the
Foundation based on the estimate provided by FinPro. Accordingly, certain
account holders of the Bank who subscribe to purchase Common Stock in the
Subscription Offering would receive fewer shares depending on the size of the
depositor's stock order and the amount of the depositor's qualifying deposits in
the Bank and the overall level of subscriptions. See "Comparison of Valuation
and Pro Forma Information with No Foundation." This estimate by FinPro was
prepared solely for purposes of providing Eligible Account Holders, Supplemental
Eligible Account Holders and other subscribers with information with which to
make an informed decision on
20
<PAGE> 22
the Conversion. The decrease in the amount of Common Stock being offered as a
result of the contribution of Common Stock to the Foundation will not have a
significant effect on the Company or the Bank's capital position. The Bank's
regulatory capital is significantly in excess of its regulatory capital
requirements and will further exceed such requirements following the Conversion.
The Bank's leverage and risk-based capital ratios at August 31, 1997 were 9.81%
and 20.12%, respectively. Assuming the sale of shares at the midpoint of the
Estimated Price Range, the Bank's leverage and risk-based capital ratios at
August 31, 1997 would be 15.12% and 28.83%, respectively.
Potential Anti-Takeover Effect. Upon completion of the Conversion, the
Foundation will own 2.9% of the total shares of the Common Stock outstanding.
Such shares will be owned solely by the Foundation; however, pursuant to a
condition imposed by the FDIC and the Superintendent and to be agreed to by the
Foundation, the shares of Common Stock held by the Foundation must be voted in
the same proportion as all other shares of the Common Stock on all proposals
considered by the shareholders of the Company. The Company and the Foundation
will take the necessary steps to provide for this voting restriction in the
Foundation's corporate governance documents. With such voting restriction, the
Company does not believe the Foundation will have a significant anti-takeover
effect on the Company. However, in the event that the FDIC and the
Superintendent were to waive this voting restriction for the reasons described
herein, as provided in the condition, the Foundation's Board of Directors would
exercise sole voting power over such shares and would no longer be subject to
the restriction. See "The Conversion -- Establishment of The Warwick Savings
Foundation -- Regulatory Conditions Imposed on the Foundation." As a majority of
the Foundation's Board of Directors will be comprised of individuals who are
officers or directors of the Bank, in the event the FDIC and the Superintendent
waive the voting restriction, management of the Company and the Bank may benefit
to the extent that the Board of Directors of the Foundation determines to vote
the shares of Common Stock held by the Foundation in favor of proposals
supported by the Company and the Bank. However, as the Foundation sells its
shares of Common Stock over time, its ownership interest and voting power in the
Company is expected to decrease.
IMPACT OF TECHNOLOGICAL ADVANCES
The banking industry is undergoing rapid technological changes with
frequent introductions of new technology-driven products and services. In
addition to improving customer services, the effective use of technology
increases efficiency and enables financial institutions to reduce costs. The
Company's future success will depend, in part, on its ability to address the
needs of its customers by using technology to provide products and services that
will satisfy customer demands for convenience, as well as to create additional
efficiencies in the Bank's operations. Many of the Bank's competitors have
substantially greater resources than the Bank to invest in technological
improvements. There can be no assurance that the Bank will be able to
effectively implement new technology-driven products and services or be
successful in marketing such products and services to the public.
Because its operations are dependent on computers and computer systems,
whether internally maintained or outsourced under contract, the Bank has taken
steps to ensure that such systems will properly recognize information when the
year changes to 2000. Systems that do not properly recognize the correct year
could generate erroneous data or cause a system to fail. The Bank has also taken
steps to ensure that it is in compliance with federal bank regulatory directives
in this area. There can be no assurance, however, that the Bank will be able to
effectively implement program changes to all of its systems to ensure such
compliance.
CERTAIN ANTI-TAKEOVER PROVISIONS
Provisions in the Company's and the Bank's Governing Instruments. Certain
provisions in the Company's Certificate of Incorporation and By-Laws, and the
Bank's Restated Organization Certificate and By-Laws, as well as certain federal
regulations, assist the Company in maintaining its status as an independent
publicly owned corporation. These provisions provide for, among other things,
supermajority voting on certain matters, a staggered board of directors,
non-cumulative voting for directors, limits on the calling of special meetings,
certain uniform price provisions for certain business combinations, the ability
of the Board of Directors of the Company to issue up to 5,000,000 shares of
preferred stock without shareholder action and limits on the ability to vote
shares held in excess of 10% of the outstanding shares. NYBB regulations
prohibit,
21
<PAGE> 23
for a period of one year following the Conversion, offers to acquire or the
acquisition of beneficial ownership of more than 10% of the outstanding stock of
the Bank. The Bank's Restated Organization Certificate also prohibits, for three
years, the acquisition of, directly or indirectly, the beneficial ownership of
more than 10% of the Bank's equity securities. These provisions in the Bank's
and the Company's governing instruments may discourage potential proxy contests
and other potential takeover attempts, particularly those that have not been
negotiated with the Board of Directors and, accordingly, generally may serve to
perpetuate current management. See "Restrictions on Acquisition of the Company
and the Bank."
Evaluation of Offers. The Certificate of Incorporation of the Company
provides that the Board of Directors of the Company, when evaluating certain
acquisition proposals from outside parties, may consider non-economic factors in
connection with the exercise of its judgment in determining what is in the best
interest of the Company and its shareholders. As a result, the Board of
Directors of the Company may be in a stronger position to oppose such a
transaction if the Board concludes that it would not be in the best interests of
the Company, even if the price offered is significantly greater than the then
market price of any equity security of the Company. See "Restrictions on
Acquisition of the Company and the Bank -- Restrictions in the Company's
Certificate of Incorporation and By-Laws -- Evaluation of Offers."
Voting Control of Officers and Directors. Trustees and executive officers
of the Bank and the Company and their Associates (as defined in "The
Conversion -- Limitations on Common Stock Purchases") expect to purchase
approximately 5.53% or 4.09% of the shares of Common Stock to be sold in the
Conversion, based upon the minimum and the maximum of the Estimated Price Range,
respectively. In addition, the ESOP intends to purchase 8% of the Common Stock
to be issued in the Conversion, including shares issued to the Foundation. As a
result, assuming the RRP and Stock Option Plan are implemented, trustees,
executive officers and employees have the potential to control the voting of
approximately 26% of the Common Stock on a fully diluted basis at the maximum of
the Estimated Price Range, including shares issued to the Foundation (based on
the maximum of the Estimated Price Range), thereby enabling them to prevent or
render more difficult the approval of transactions and other corporate actions
requiring a supermajority vote of shareholders, such as certain business
combinations and the amendment of certain charter provisions. Furthermore, in
the event that the FDIC and the Superintendent were to waive the Foundation's
voting restriction, when the Foundation's shares are combined with shares
purchased directly by officers and directors of the Company, shares held by the
RRP trust, and shares held by the ESOP trust, the aggregate of such shares could
approach 20% of the outstanding Common Stock, which could enable management to
defeat shareholder proposals requiring 80% approval. Consequently, such
potential voting control might preclude takeover attempts that certain
shareholders deem to be in their best interest and might tend to perpetuate
existing management. However, since the ESOP shares are allocated to, and
therefore voted by, all eligible employees of the Bank and any unallocated
shares will be voted by an independent trustee, and because the RRP must first
be approved by shareholders no sooner than six months following completion of
the Conversion, and awards under such proposed plans may be granted to employees
other than executive officers and trustees, management of the Company does not
expect to have voting control of all shares covered by the ESOP and other
stock-based benefit plans. See "Restrictions on Acquisition of the Company and
the Bank -- Restrictions in the Company's Certificate of Incorporation and
By-Laws."
Provisions in Management Contracts and Benefit Plans. Certain provisions
contained in the proposed Employment Agreements, Retention Agreements, the ESOP,
the Stock Option Plan and the RRP that provide for cash payments or the vesting
of benefits upon a change of control of the Company or the Bank may have an
anti-takeover effect and could result in shareholders receiving less for their
shares of Common Stock than otherwise might be available in the event of an
acquisition of the Company. See "Management of the Bank -- Employment
Agreements," "-- Employee Retention Agreements" and "-- Benefits -- Employee
Stock Ownership Plan and Trust," "-- Benefits -- Stock Option Plan" and
"-- Benefits -- Recognition and Retention Plan."
ABSENCE OF MARKET FOR COMMON STOCK
The Company, as a newly organized company, has never issued capital stock
and, consequently, there is no established market for the Common Stock at this
time. The Company has received conditional approval from the Nasdaq Stock Market
to have the Common Stock approved for quotation on the Nasdaq National
22
<PAGE> 24
Market under the symbol "WSBI" upon completion of the Conversion. One of the
requirements for continued quotation of the Common Stock on the Nasdaq National
Market is that at least two market makers be a market maker for the Common
Stock. The Company will seek to encourage and assist at least two market makers
to make a market in the Common Stock. Sandler O'Neill has advised the Company
that it intends to make a market in the Company's Common Stock, but is under no
obligation to do so. While the Company anticipates that there will be other
broker-dealers to act as market makers for the Common Stock, there can be no
assurance that there will be two or more market makers for the Common Stock.
Making a market in securities involves maintaining bid and asked quotations
and being able, as principal, to effect transactions in reasonable quantities at
those quoted prices, subject to various securities laws and other regulatory
requirements. The development of a public trading market depends upon the
existence of willing buyers and sellers, the presence of which is not within the
control of the Company, the Bank or any market maker. Accordingly, there can be
no assurance that an active and liquid trading market for the Common Stock will
develop, or, once developed, will continue, nor can there be any assurances that
purchasers of the Common Stock will be able to sell their shares at or above the
Purchase Price. The absence or discontinuance of a market for the Common Stock
may have an adverse impact on both the price and liquidity of the Common Stock.
See "Market for the Common Stock."
POSSIBLE INCREASE IN ESTIMATED PRICE RANGE AND NUMBER OF SHARES ISSUED
The number of shares to be sold in the Conversion may be increased as a
result of an increase in the Estimated Price Range of up to 15% to reflect
changes in market and financial conditions following the commencement of the
Subscription Offering or Community Offering, if any. In the event that the
Estimated Price Range is so increased, it is expected that the Company will
issue up to 6,414,125 shares of Common Stock at the Purchase Price for aggregate
proceeds of up to $64,141,250. An increase in the number of shares issued would
decrease a subscriber's pro forma net earnings per share and shareholders'
equity per share but would increase the Company's pro forma consolidated
shareholders' equity and net earnings. Such an increase would also increase the
Purchase Price as a percentage of pro forma shareholders' equity per share and
net earnings per share.
POSSIBLE DILUTIVE EFFECT OF STOCK OPTIONS AND RECOGNITION AND RETENTION PLAN
An amount equal to 10% of the Common Stock to be issued in the Conversion,
including shares issued to the Foundation, has been reserved for issuance under
the Stock Option Plan, the implementation of which will be subject to the
approval of the shareholders of the Company. If all of the options intended to
be granted under the Stock Option Plan were to be exercised using authorized but
unissued shares of Common Stock, the voting interests of existing shareholders
would be diluted by approximately 9.1%, and, assuming that all options were
granted at the Purchase Price, the effect on pro forma net earnings per share
and shareholders' equity per share would be as set forth under "Pro Forma Data."
Also, following the Conversion, the RRP, if implemented, will acquire up to 4%
of the shares of Common Stock issued in the Conversion, either through open
market purchases, if necessary, or from the issuance of authorized but unissued
shares. If the RRP is funded by the issuance of authorized but unissued shares,
the interests of existing shareholders would be diluted by approximately 3.8%
(assuming no options are exercised). See "Pro Forma Data" for the effect on pro
forma net earnings per share and shareholders' equity per share. If the RRP is
funded by open market purchases, the voting interests of existing shareholders
would not be diluted, and, assuming that the shares were acquired at the
Purchase Price, the effect on pro forma net earnings per share and shareholders'
equity per share would be as set forth under "Pro Forma Data."
POSSIBLE ADVERSE INCOME TAX CONSEQUENCES OF THE DISTRIBUTION OF SUBSCRIPTION
RIGHTS
The Bank has received an opinion from FinPro that subscription rights
granted to Eligible Account Holders, Supplemental Eligible Account Holders and
Other Depositors have no value. However, this opinion is not binding on the
Internal Revenue Service ("IRS"). If such subscription rights are deemed to have
an ascertainable value, Eligible Account Holders, Supplemental Eligible Account
Holders and Other Depositors could be taxed upon the receipt or exercise of the
subscription rights in an amount equal to such value. Additionally, the Bank
could recognize a gain for tax purposes on such distribution. Whether
subscription rights are considered to have ascertainable value is an inherently
factual determination. See "The Conversion -- Effects of Conversion" and
"-- Effects of Conversion -- Tax Aspects."
23
<PAGE> 25
WARWICK COMMUNITY BANCORP, INC.
The Company was recently organized at the direction of the Board of
Trustees of the Bank for the purpose of acquiring all of the capital stock to be
issued by the Bank in the Conversion. The Company has received approval from the
Board of Governors of the Federal Reserve System ("FRB") to become a bank
holding company and, as such, will be subject to regulation by the FRB. See
"Regulation and Supervision -- Holding Company Regulation" and "The
Conversion -- General." Upon consummation of the Conversion, the Company's
assets will consist of all of the outstanding shares of the Bank's capital stock
issued to the Company in the Conversion and 50% of the net proceeds of the
Offerings. The Company intends to use part of the retained net proceeds to make
a loan directly to the ESOP to enable the ESOP to purchase 8% of the Common
Stock to be issued in the Conversion, including shares issued to the Foundation.
The Company will have no significant liabilities. See "Use of Proceeds." The
management of the Company is set forth under "Management of the Company."
Initially, the Company will neither own nor lease any property, but instead will
use the premises and equipment of the Bank. At the present time, the Company
does not intend to employ any persons other than officers, but will utilize the
support staff of the Bank from time to time. Additional employees will be hired
as appropriate to the extent the Company expands its business in the future. See
"Business of the Company."
Management believes that the holding company structure will provide the
Company with additional flexibility to diversify its business activities, should
it decide to do so, through existing or newly-formed subsidiaries, or through
acquisitions of other financial institutions and financial services related
companies. Although there are no current arrangements, understandings or
agreements, written or oral, regarding any such opportunities or transactions,
the Company will be in a position after the Conversion, subject to regulatory
limitations and the Company's financial position, to take advantage of any such
acquisition and expansion opportunities that may arise. The initial activities
of the Company are anticipated to be funded by the Conversion proceeds retained
by the Company and earnings thereon or, alternatively, through dividends from
the Bank.
The Company's office is located at the main office of the Bank at 18
Oakland Avenue, Warwick, New
York 10990-0591. The Company's telephone number is (914) 986-2206.
THE WARWICK SAVINGS BANK
The Bank was founded in 1875 as a New York mutual savings bank. The Bank is
a community-oriented savings institution providing a variety of financial
services to meet the needs of the communities which it serves. The Bank conducts
business from its headquarters in the village of Warwick, New York and its
branches in the village of Monroe, the town of Woodbury and the city of
Middletown, New York. The Bank's primary deposit gathering areas are currently
concentrated in proximity to its full service banking offices. The Bank's
current primary lending market includes Orange County, New York and the
surrounding New York counties. The majority of the Bank's mortgage loans are
secured by properties located in its lending area. See "Business of the
Bank -- Market Area" and " -- Competition."
The Bank's principal business consists of gathering savings deposits from
the general public within its market area and investing those savings deposits
primarily in one- to four-family residential mortgage loans, mortgage-backed
securities and obligations of the U.S. Government. To a lesser extent, the Bank
makes commercial business and real estate loans, multi-family residential loans,
land, construction and development loans, consumer loans (including loans
secured by savings deposits and home improvement loans) and other loans. At
August 31, 1997, the Bank had total assets of $290.9 million, of which $154.7
million was comprised of mortgage and other loans and $116.3 million was
comprised of securities. At such date, total deposits were $221.7 million,
borrowings were $31.3 million and net worth was $29.2 million. The Bank's
savings deposits are insured up to the maximum allowable amount by the BIF. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business of the Bank."
The Bank is subject to extensive regulation, supervision and examination by
the NYSBD, its primary regulator, and the FDIC, which insures its savings
deposits. At August 31, 1997, the Bank exceeded all
24
<PAGE> 26
regulatory capital requirements with leverage and total risk-based capital
ratios of 9.81% and 20.12%, respectively. Additionally, the Bank's regulatory
capital was in excess of the amount necessary to be "well-capitalized" under
FDICIA. See "Regulation and Supervision -- Federal Banking Regulation." The Bank
is a member of the FHLBNY, which is one of the 12 regional banks which comprise
the FHLB system.
The Bank's main office is located at 18 Oakland Avenue, Warwick, New York
10990-0591. The Bank's telephone number is (914) 986-2206.
USE OF PROCEEDS
Although the actual net proceeds from the sale of the Common Stock cannot
be determined until the Conversion is completed, it is presently anticipated
that the net proceeds from the sale of the Common Stock (after the expenses of
the Conversion are deducted) will be between $39.4 million and $53.7 million,
with a midpoint of $46.6 million. In the event that the Estimated Price Range is
increased by 15%, the net proceeds from the sale of the Common Stock (after the
expenses of the Conversion are deducted) are estimated to be $62.0 million. See
"Pro Forma Data" and "The Conversion -- Stock Pricing" for a discussion of the
assumptions used to arrive at such amounts. The Company will be unable to
utilize any of the net proceeds of the Offerings until the consummation of the
Conversion.
The Company will use the net proceeds from the sale of Common Stock as
follows:
1. The Company will purchase all of the capital stock of the Bank to
be issued in the Conversion in exchange for 50% of the net proceeds of the
Offerings.
2. The remaining net proceeds will be retained by the Company. Net
proceeds to be retained by the Company after the purchase of the capital
stock of the Bank are estimated to be between $19.7 million and $26.9
million, with a midpoint of $23.3 million. In the event that the Estimated
Price Range is increased by 15%, the net proceeds retained by the Company
are estimated to be $31.0 million. The net proceeds retained by the Company
will initially be invested primarily in federal funds, government and
federal agency mortgage-backed securities, other debt securities,
high-grade short-term marketable securities, equity securities, deposits of
or loans to the Bank, or a combination thereof, and will be used for
general business activities.
3. The Company intends to use a portion of the retained net proceeds
to make a loan directly to the ESOP to enable the ESOP to purchase 8% of
the Common Stock to be issued in the Conversion, including shares issued to
the Foundation. Based upon the issuance of 4,122,500 shares or 5,577,500
shares at the minimum and maximum of the Estimated Price Range,
respectively, the amount of the loan to the ESOP (if the loan is made by
the Company and not a third party) would be $3.4 million or $4.6 million,
respectively (or $5.3 million if the Estimated Price Range is increased by
15%), if shares are acquired at the Purchase Price, to be repaid over a
period of up to 10 years at an interest rate of 8%. See "Management of the
Bank -- Benefits -- Employee Stock Ownership Plan and Trust."
The portion of the net proceeds received by the Bank from the Company's
purchase of the Bank's capital stock, estimated to be between $19.7 million at
the minimum of the Estimated Price Range and $26.9 million at the maximum of the
Estimated Price Range, will be added to the Bank's general funds to be used for
general corporate purposes, including: investment in one- to four-family
residential mortgage loans, commercial and other loans; investment in federal
funds, short-term, investment grade marketable securities, mortgage-backed and
equity securities; and funding the RRP. The Bank may also use such funds for the
expansion of its facilities and to expand operations through acquisitions of
other financial institutions, branch offices or other financial services
companies. The net proceeds may also be used to purchase or lease additional
branch or office facilities inside or outside of Orange County, New York. The
Bank has recently obtained a license from the New Jersey Department of Banking
and Insurance to establish a mortgage banking operation in Bergen, Passaic and
Sussex Counties, New Jersey through its mortgage banking subsidiary, WSB
Mortgage. Except for the establishment of mortgage banking operations in New
Jersey, the Bank has no current agreements, arrangements or understandings
regarding any establishment or acquisition or any other transaction related to
the possible expansion of its operations.
25
<PAGE> 27
The net proceeds retained by the Company may also be used to support the
future expansion of the Bank's operations through branch acquisitions and the
acquisition of other financial institutions or diversification into other
banking related businesses and for other business or investment purposes,
including possibly the payment of dividends and the repurchase of the Company's
Common Stock as permitted by the Superintendent. See "Dividend Policy" and
"Regulation and Supervision -- New York Banking Regulation -- Dividends." The
Company has no current arrangements, understandings or agreements, written or
oral, regarding any such transactions. The Company, upon completion of the
Conversion, will be a bank holding company under federal law, which, under
existing laws, generally would be restricted as to the types of business
activities in which it may engage. See "Regulation and Supervision -- Holding
Company Regulation" for a description of certain regulations applicable to the
Company. In determining the amount of net proceeds to be used to purchase the
capital stock of the Bank, consideration was given to such factors as the
regulatory capital position of the Bank, both before and after giving effect to
the Conversion, and the rules and regulations and policies of the NYBB and the
FDIC governing the amount of proceeds that may be retained by the Company.
Upon completion of the Conversion, the Company's Board of Directors will
have the authority to adopt stock repurchase plans, subject to statutory and
regulatory restrictions and other requirements. Based upon facts and
circumstances that may arise following the Conversion, and subject to applicable
regulatory requirements, the Company's Board of Directors may determine to
repurchase stock in the future. Such facts and circumstances may include: (i)
market and economic factors such as the price at which the stock is trading in
the market, the volume of trading, the attractiveness of other investment
alternatives in terms of the rate of return and risk involved in the investment,
the ability to increase the book value and/or earnings per share of the
remaining outstanding shares and improvement in the Company's return on equity;
(ii) the avoidance of dilution to shareholders by not having to issue additional
shares to cover the exercise of stock options or to fund employee stock benefit
plans; and (iii) any other circumstances under which repurchases would be in the
best interests of the Company and its shareholders. In the event the Company
determines to repurchase stock, such repurchases will generally be made at
market prices, which could be in excess of the Purchase Price in the Conversion.
Any stock repurchases will be subject to the determination of the Company's
Board of Directors that both the Company and the Bank will be capitalized in
excess of all applicable regulatory requirements after any such repurchases and
that such capital will be adequate, taking into account, among other things, the
level of non-performing and other risk assets, the Company's and the Bank's
current and projected results of operations and asset/liability structure, the
economic environment and tax and other considerations. In addition, the FDIC
prohibits an insured mutual state savings bank that has converted from mutual to
stock form of ownership from repurchasing its capital stock within one year
following the date of its conversion to stock form, except that stock
repurchases of no greater than 5% of a bank's outstanding capital stock may be
repurchased during this one-year period where compelling and valid business
reasons are established to the satisfaction of the FDIC. NYBB regulations also
include restrictions on repurchases of stock within the first three years
following conversion. Further, the Company may not repurchase any of its Common
Stock if the repurchases would cause the Bank to become "undercapitalized"
within the meaning of the FDIC prompt corrective action regulation. See
"Regulation and Supervision -- Federal Banking Regulation -- Prompt Corrective
Action."
The Board of Directors of the Company intends to consider a policy of
paying cash dividends on the Common Stock in the future. However, no decision
has been made as to the amount or timing of such dividends, if any. The payment
of dividends or repurchase of stock, however, would be prohibited if
shareholders' equity would be reduced below the amount required to maintain the
Bank's liquidation account. See "Dividend Policy," "The Conversion -- Certain
Restrictions on Purchase or Transfer of Shares After Conversion" and "-- Effects
of Conversion -- Liquidation Rights."
Neither the Bank nor the Company has yet determined the approximate amount
of net proceeds to be used for each of the purposes mentioned above.
26
<PAGE> 28
DIVIDEND POLICY
Upon completion of the Conversion, the Board of Directors of the Company
will have the authority to declare dividends on the Common Stock. The Board of
Directors intends to consider a policy of paying cash dividends on the Common
Stock. However, no decision has been made as to the timing or amount of such
dividends, if any. In the future, declarations of dividends by the Board of
Directors, if any, will depend upon a number of factors, including the amount of
net proceeds retained by the Company in the Conversion, investment opportunities
available to the Company or the Bank, capital requirements, regulatory
limitations, the Company's and the Bank's financial condition and results of
operations, tax considerations, general economic conditions, industry standards
and other factors. No assurances can be given, however, that any dividends will
be paid or, if payment is commenced, that such dividends will continue to be
paid.
As the principal asset of the Company, the Bank will provide the principal
source of funds for payment of dividends by the Company. The Bank will not be
permitted to pay dividends on its capital stock if, among other things, its
shareholders' equity would be reduced below the amount required for the
liquidation account. See "The Conversion -- Effects of Conversion -- Liquidation
Rights" and "Regulation and Supervision." Under the Banking Law of the State of
New York ("Banking Law"), dividends may be declared and paid only out of the net
profits of the Bank. The approval of the Superintendent is required if the total
of all dividends declared in any calendar year will exceed net profits for that
year plus the retained net profits of the preceding two years, less any required
transfer to surplus or a fund for the retirement of any preferred stock. In
addition, no dividends may be declared, credited or paid if the effect thereof
would cause the Bank's capital to be reduced below the amount required by the
Superintendent or the FDIC. See "Regulation and Supervision." As of August 31,
1997, the Bank had $4.7 million available for the payment of dividends without
prior approval of the Superintendent. Dividends or any repurchase by the Bank of
its stock in excess of the Bank's current and accumulated earnings could result
in the realization by the Bank of taxable income. See "Federal and State
Taxation -- Federal Taxation."
Unlike the Bank, the Company is not subject to the restrictions imposed by
the Banking Law on the payment of dividends to its shareholders, although the
source of such dividends will be dependent on the net proceeds retained by the
Company and earnings thereon and may be dependent, in part, upon dividends from
the Bank. The Company is subject, however, to the requirements which generally
limit dividends to an amount equal to the excess of the net assets of the
Company (the amount by which total assets exceed total liabilities) over its
statutory capital, or if there is no such excess, to its net profits for the
current and/or immediately preceding fiscal year.
Additionally, in connection with the Conversion, the Company and the Bank
have committed to the FDIC that during the one-year period following the
consummation of the Conversion, the Company will not declare an extraordinary
dividend to shareholders which would be treated by recipient shareholders as a
tax-free return of capital for federal income tax purposes without prior
approval of the FDIC. The Company has also committed to the FRB that it will not
use the net proceeds from the Conversion that are retained by the Company for
the purposes of funding any special or extraordinary dividends or for a return
of capital to shareholders.
27
<PAGE> 29
MARKET FOR THE COMMON STOCK
The Company and the Bank have not previously issued capital stock and,
consequently, there is currently no established market for the Common Stock. The
Company has received conditional approval from the Nasdaq National Market to
have the Common Stock quoted under the symbol "WSBI" upon completion of the
Conversion. One of the requirements for continued quotation of the Common Stock
on the Nasdaq National Market is that there be at least two market makers for
the Common Stock. The Company will seek to encourage and assist at least two
market makers to make a market in the Common Stock. Making a market involves
maintaining bid and asked quotations and being able, as principal, to effect
transactions in reasonable quantities at those quoted prices, subject to various
securities laws and other regulatory requirements. Sandler O'Neill has advised
the Company that it intends to make a market in the Common Stock, but is under
no obligation to do so. While the Company anticipates that there will be other
broker-dealers to act as market makers for the Common Stock, there can be no
assurance that there will be two or more market makers for the Common Stock.
Additionally, the development of a liquid public market depends on the existence
of willing buyers and sellers, the presence of which is not within the control
of the Company, the Bank or any market maker. The number of active buyers and
sellers of the Common Stock at any particular time may be limited. Under such
circumstances, investors in the Common Stock could have difficulty disposing of
their shares on short notice and should not view the Common Stock as a
short-term investment. There can be no assurance that an active and liquid
trading market for the Common Stock will develop or that, if developed, it will
continue, nor is there any assurance that persons purchasing shares will be able
to sell such shares at or above the Purchase Price or that quotations will be
available on the Nasdaq National Market as contemplated. See "Risk
Factors -- Absence of Market for Common Stock."
28
<PAGE> 30
REGULATORY CAPITAL COMPLIANCE
At August 31, 1997, the Bank exceeded all regulatory capital requirements.
See "Regulation and Supervision -- Federal Banking Regulation -- Capital
Requirements." Set forth below is a summary of the Bank's compliance with
regulatory capital standards at August 31, 1997, on a historical and pro forma
basis assuming that the indicated number of shares were sold as of such date and
receipt by the Bank of 50% of net Conversion proceeds. For purposes of the table
below, the amount expected to be borrowed by the ESOP and the cost of the shares
expected to be acquired by the RRP are deducted from pro forma regulatory
capital.
<TABLE>
<CAPTION>
PRO FORMA AT AUGUST 31, 1997 BASED UPON THE SALE AT $10.00 PER SHARE
-----------------------------------------------------------------------------------------------------------
6,414,125 SHARES
4,122,500 SHARES 4,850,000 SHARES 5,577,500 SHARES
(15% ABOVE MAXIMUM
HISTORICAL AT (MINIMUM OF THE (MIDPOINT OF THE (MAXIMUM OF THE OF THE ESTIMATED
ESTIMATED PRICE ESTIMATED PRICE ESTIMATED PRICE
AUGUST 31, 1997 RANGE) RANGE) RANGE) PRICE RANGE)(1)
------------------- ------------------- ------------------- ------------------- -------------------
PERCENT PERCENT PERCENT PERCENT PERCENT
OF OF OF OF OF
AMOUNT ASSETS(2) AMOUNT ASSETS(2) AMOUNT ASSETS(2) AMOUNT ASSETS(2) AMOUNT ASSETS(2)
------- --------- ------- --------- ------- --------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GAAP(3) Capital..... $29,212 10.04% $44,334 14.49% $47,096 15.25% $49,858 16.01% $53,036 16.85%
======= ========= ======= ========= ======= ========= ======= ========= ======= =========
Leverage Capital:
Capital
Level(4)........ $28,033 9.81% $43,155 14.34% $45,918 15.12% 48,680 15.89% $51,858 16.75%
Requirement(5).... 11,430 4.00 12,035 4.00 12,146 4.00 12,256 4.00 12,383 4.00
------- --------- ------- --------- ------- --------- ------- --------- ------- ---------
Excess............ $16,603 5.81% 31,120 10.34% $33,772 11.12% $36,424 11.89% $39,475 12.75%
======= ========= ======= ========= ======= ========= ======= ========= ======= =========
Risk-Based Capital:
Capital
Level(4)(6)..... $29,400 20.12% $44,522 27.61% $47,285 28.83% $50,047 30.01% $53,225 31.32%
Requirement....... 11,689 8.00 12,900 8.00 13,121 8.00 13,342 8.00 13,596 8.00
------- --------- ------- --------- ------- --------- ------- --------- ------- ---------
Excess............ $17,711 12.12% $31,622 19.61% $34,164 20.83% $36,705 22.01% $39,629 23.32%
======= ========= ======= ========= ======= ========= ======= ========= ======= =========
</TABLE>
- ---------------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Price Range of up to 15% as
a result of regulatory considerations or changes in market conditions or
general financial and economic conditions following the commencement of the
Subscription Offering or Community Offering, if any.
(2) Leverage capital levels are shown as a percentage of "total assets," and
risk-based capital levels are calculated on the basis of a percentage of
"risk-weighted assets," each as defined in the FDIC Regulations.
(3) GAAP is defined as Generally Accepted Accounting Principles.
(4) Pro forma capital levels assume receipt by the Bank of 50% of the net
proceeds from the shares of Common Stock sold at the minimum, midpoint and
maximum of the Estimated Price Range. These levels assume funding by the
Bank of the RRP equal to 4% of the Common Stock issued, including shares
issued to the Foundation and repayment of the Company's loan to the ESOP to
enable the ESOP to purchase 8% of the Common Stock issued, including shares
issued to the Foundation, valued at the minimum, midpoint and maximum of the
Estimated Price Range. See "Management of the Bank -- Benefits" for a
discussion of the RRP and ESOP.
(5) The current leverage capital requirement for savings banks is 3% of total
adjusted assets for savings banks that receive the highest supervisory
ratings for safety and soundness and that are not experiencing or
anticipating significant growth. The current leverage capital ratio
applicable to all other savings banks is 4% to 5%. See "Regulation and
Supervision -- Federal Banking Regulation -- Capital Requirements."
(6) Assumes net proceeds are invested in assets that carry risk-weighting equal
to the actual risk weighting of the Bank's assets as of August 31, 1997.
29
<PAGE> 31
CAPITALIZATION
The following table presents the historical capitalization of the Bank at
August 31, 1997, and the pro forma consolidated capitalization of the Company
after giving effect to the Conversion, based upon the sale of the number of
shares indicated in the table and the other assumptions set forth under "Pro
Forma Data."
<TABLE>
<CAPTION>
COMPANY PRO FORMA BASED UPON SALE AT $10.00 PER SHARE
---------------------------------------------------------------
4,122,500 5,577,500
SHARES 4,850,000 SHARES 6,414,125
(MINIMUM OF SHARES (MAXIMUM OF SHARES (15% ABOVE
ESTIMATED (MIDPOINT OF ESTIMATED MAXIMUM OF
BANK PRICE ESTIMATED PRICE ESTIMATED
HISTORICAL RANGE) PRICE RANGE) RANGE) PRICE RANGE)(1)
---------- ----------- ------------ ----------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Deposits(2)................. $ 221,763 $ 221,763 $221,763 $ 221,763 $ 221,763
======== ======== ======== ======== ========
Total deposits and borrowed
funds..................... $ 253,078 $ 253,078 $253,078 $ 253,078 $ 253,078
======== ======== ======== ======== ========
Shareholders' equity:
Preferred Stock, $.01 par
value, 5,000,000 shares
authorized; none to be
issued................. $ -- $ -- $ -- $ -- $ --
Common Stock, $.01 par
value, 15,000,000
shares authorized; to
be issued as
reflected.............. -- 42 50 57 66
Additional paid-in
capital(3)............. -- 40,639 47,999 55,360 63,824
Retained earnings(4)...... 28,033 28,033 28,033 28,033 28,033
Less:
Expense of contributions
to Foundation.......... -- (1,237) (1,455) (1,673) (1,924)
Plus:
Tax effect of contribution
to Foundation(5)....... -- 495 582 669 770
Net unrealized gain on
securities
available-for-sale, net
of taxes............... 1,179 1,179 1,179 1,179 1,179
Less:
Common Stock acquired by
the ESOP(6)............ -- (3,397) (3,996) (4,596) (5,285)
Common Stock acquired by
the RRP(7)............. (1,698) (1,998) (2,298) (2,643)
-------- -------- -------- -------- --------
Total shareholders'
equity.................... $ 29,212 $ 64,056 $ 70,394 $ 76,731 $ 84,020
======== ======== ======== ======== ========
</TABLE>
- ---------------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Price Range of up to 15% as
a result of regulatory considerations or changes in market or general
financial and economic conditions following the commencement of the
Subscription Offering or Community Offering, if any.
(2) Does not reflect withdrawals from deposit accounts for the purchase of
Common Stock in the Conversion. Such withdrawals would reduce pro forma
deposits by the amount of such withdrawals.
(3) Reflects the issuance of shares sold in the Offerings and the issuance of
additional shares of Common Stock to the Foundation at a value of $10.00 per
share. No effect has been given to the issuance of additional shares of
Common Stock pursuant to the Company's proposed Stock Option Plan intended
to be adopted by the Company and presented for approval of shareholders at a
meeting of shareholders at least six months following the Conversion. The
Stock Option Plan would provide the grant of stock options to purchase an
amount of Common Stock equal to 10% of the shares of Common Stock issued in
30
<PAGE> 32
the Conversion, including shares issued to the Foundation. See "Management
of the Bank -- Benefits -- Stock Option Plan."
(4) The retained earnings of the Bank will be substantially restricted after the
Conversion. See "The Conversion -- Effects of Conversion -- Liquidation
Rights."
(5) Represents the tax effect of the contribution of Common Stock to the
Foundation based on a 40% tax rate. The realization of the deferred tax
benefit is limited annually to 10% of the Company's annual taxable income,
subject to the ability of the Company to carry forward any unused portion of
the deduction for five years following the year in which the contribution is
made.
(6) Assumes that 8% of the shares issued in connection with the Conversion,
including shares issued to the Foundation, will be purchased by the ESOP and
the funds used to acquire the ESOP shares will be borrowed from the Company.
The Common Stock acquired by the ESOP is reflected as reduction of
shareholders' equity. See "Management of the Bank -- Benefits -- ESOP" and
"-- Recognition and Retention Plan."
(7) Assumes that, subsequent to the Conversion, an amount equal to 4% of the
shares of Common Stock issued in the Conversion, including shares issued to
the Foundation, is purchased by the RRP through open market purchases. The
Common Stock purchased by the RRP is reflected as a reduction of
shareholders' equity. See "Risk Factors -- Possible Dilutive Effect of Stock
Options and Recognition and Retention Plan," Footnote 2 to the tables under
"Pro Forma Data" and "Management of the Bank -- Benefits -- Recognition and
Retention Plan."
31
<PAGE> 33
PRO FORMA DATA
The actual net proceeds from the sale of the Common Stock cannot be
determined until the Conversion is completed. However, net proceeds are
currently estimated to be between $39.4 million and $53.7 million (or $62.0
million in the event the Estimated Price Range is increased by 15%) based upon
the following assumptions: (i) 100% of the shares of Common Stock will be sold
in the Subscription Offering, as follows: all of the shares of Common Stock will
be sold to Eligible Account Holders, Supplemental Eligible Account Holders and
Other Depositors in the Subscription Offering, other than 8%, which will be sold
to the ESOP; (ii) Sandler O'Neill will receive a fee equal to 1.875% of the
aggregate actual purchase price of the shares sold to Eligible Account Holders,
Supplemental Eligible Account Holders and Other Depositors in the Subscription
Offering, excluding shares purchased by trustees, trustees emeritus,
officers, employees and their families and shares purchased by the ESOP for
which there is no fee; and (iii) Conversion expenses, excluding the fees paid to
Sandler O'Neill, will be approximately $1.1 million. Actual Conversion expenses
may vary from these estimates.
Pro forma net earnings have been calculated assuming the Common Stock had
been sold at the beginning of the periods and the net proceeds had been invested
at an average yield of 5.78% for the three months ended August 31, 1997 and the
fiscal year ended May 31, 1997, which was the one-year U.S. Treasury bill rate
in effect in May, 1997. The one-year U.S. Treasury bill rate, rather than an
arithmetic average of the average yield on interest-earning assets and average
rate paid on interest-bearing liabilities, has been used to estimate income on
net proceeds, because management believes that the one-year U.S. Treasury bill
rate provides a more accurate estimate of the rate that would be obtained on an
initial investment of the net proceeds from the Offerings. The pro-forma
after-tax yield is assumed to be 3.47% for this period, based on an effective
tax rate of 40% for such period. The effect of withdrawals from savings deposit
accounts for the purchase of Common Stock has not been reflected. Historical and
pro forma per share amounts have been calculated by dividing historical and pro
forma amounts by the indicated number of shares of Common Stock, as adjusted (in
the case of pro forma net earnings per share) to give effect to the purchase of
shares by the ESOP. Pro forma shareholders' equity amounts have been calculated
as if the Common Stock had been sold on August 31, 1997 and May 31, 1997,
respectively, and, accordingly, no effect has been given to the assumed earnings
effect of the transactions.
The following pro forma information may not be representative of the
financial effects of the foregoing transactions at the dates on which such
transactions actually occur and should not be taken as indicative of future
results of operations. Pro forma consolidated shareholders' equity represents
the difference between the projected amount of assets and liabilities of the
Company computed in accordance with GAAP. The pro forma shareholders' equity is
not intended to represent the fair market value of the Common Stock and may be
greater than amounts that would be available for distribution to shareholders in
the event of liquidation.
The following tables summarize historical data of the Bank and pro forma
data of the Company at or for the three months ended August 31, 1997 and at or
for the fiscal year ended May 31, 1997, based on the assumptions set forth above
and in the tables, and should not be used as a basis for projections of market
value of the Common Stock following the Conversion. The tables below give effect
to the RRP, which is expected to be adopted by the Company following the
Conversion and which, if implemented prior to the first anniversary of the
Conversion, will be presented to shareholders for approval at a meeting of
shareholders to be held no earlier than six months after completion of the
Conversion. See footnote 3 to the tables. No effect has been given in the tables
to the possible issuance of additional shares reserved for future issuance
pursuant to the Stock Option Plan to be adopted by the Board of Directors of the
Company, nor does book value give any effect to the liquidation account to be
established for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders or the bad debt reserve in liquidation. See footnote 4
to the tables below and "The Conversion -- Effects of Conversion -- Liquidation
Rights" and "Management of the Bank -- Benefits -- Stock Option Plan."
32
<PAGE> 34
<TABLE>
<CAPTION>
AT OR FOR THE THREE MONTHS ENDED AUGUST 31, 1997
----------------------------------------------------------------
6,414,125
4,122,500 4,850,000 SHARES SOLD
SHARES SOLD SHARES SOLD 5,577,500 AT $10.00 PER
AT $10.00 AT $10.00 SHARES SOLD AT SHARE (15%
PER SHARE PER SHARE $10.00 PER ABOVE MAXIMUM
(MINIMUM OF (MIDPOINT OF SHARE (MAXIMUM OF ESTIMATED
ESTIMATED ESTIMATED OF ESTIMATED PRICE
PRICE RANGE) PRICE RANGE) PRICE RANGE) RANGE)(7)
------------ ------------ --------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Gross proceeds............................... $ 41,225 $ 48,500 $55,775 $64,141
Plus: Value of shares issued to Foundation
(equal to 3% of stock sold in
Conversion)................................ 1,237 1,455 1,673 1,924
------------ ------------ --------------- -------------
Pro forma market capitalization.............. $ 42,462 $ 49,955 $57,448 $66,065
Gross proceeds............................... $ 41,225 $ 48,500 $55,775 $64,141
Less: Offering expenses and commissions...... (1,781) (1,906) (2,031) (2,175)
Estimated net proceeds....................... $ 39,444 $ 46,594 $53,744 $61,966
Less: Common Stock purchased by ESOP......... (3,397) (3,996) (4,596) (5,285)
Common Stock purchased by RRP.............. (1,698) (1,998) (2,298) (2,643)
------------ ------------ --------------- -------------
Estimated net proceeds, as adjusted........ $ 34,349 $ 40,600 $46,850 $54,038
Net income(1):
Historical................................. $ 538 $ 538 $ 538 $ 538
Pro forma income on net proceeds, as
adjusted................................. 288 340 392 453
Less: Pro forma ESOP adjustment(2)......... (51) (60) (69) (79)
Less: Pro forma RRP adjustment(3).......... (51) (60) (69) (79)
------------ ------------ --------------- -------------
Pro forma net income..................... $ 724 $ 758 $ 792 $ 833
============ ============ ============== ===============
Per share net income(1):
Historical................................. $ 0.14 $ 0.12 $ 0.10 $ 0.09
Pro forma income on net proceeds, as
adjusted................................. 0.07 0.07 0.07 0.07
Pro forma ESOP adjustment(2)............... (0.01) (0.01) (0.01) (0.01)
Pro forma RRP adjustment(3)................ (0.01) (0.01) (0.01) (0.01)
------------ ------------ --------------- -------------
Pro forma net income per share........... $ 0.19 $ 0.17 $ 0.15 $ 0.14
============ ============ ============== ===============
Shareholders' equity:
Historical................................. $ 29,212 $ 29,212 $29,212 $29,212
Estimated net proceeds..................... 39,444 46,594 53,744 61,966
Plus: Shares issued to Foundation.......... 1,237 1,455 1,673 1,924
Lee: Contribution to the Foundation........ (1,237) (1,455) (1,673) (1,924)
Plus: Tax benefits of the contribution to
the Foundation........................... 495 582 669 770
Less: Common Stock acquired by ESOP(2)..... (3,397) (3,996) (4,596) (5,285)
Less: Common Stock acquired by RRP(3)...... (1,698) (1,998) (2,298) (2,643)
------------ ------------ --------------- -------------
Pro forma shareholders' equity(3)(4)(5).... $ 64,056 $ 70,394 $76,731 $84,020
============ ============ ============== ===============
Shareholders' equity per share(6):
Historical................................. $ 6.88 $ 5.85 $ 5.08 $ 4.42
Estimated net proceeds..................... 9.29 9.33 9.36 9.38
Plus: Tax benefit of the contribution to
the Foundation........................... 0.12 0.12 0.12 0.12
Less: Common Stock acquired by ESOP(2)..... (0.80) (0.80) (0.80) (0.80)
Less: Common Stock acquired by RRP(3)...... (0.40) (0.40) (0.40) (0.40)
------------ ------------ --------------- -------------
Pro forma shareholders' equity per share... $ 15.09 $ 14.10 $ 13.36 $ 12.72
============ ============ ============== ===============
Offering price as a percentage of pro forma
shareholders' equity per share............. 66.27% 70.92% 74.85% 78.62%
Offering price to pro forma net earnings per
share...................................... 13.16x 14.71x 16.67x 17.86x
</TABLE>
(See footnotes following tables)
33
<PAGE> 35
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED MAY 31, 1997
------------------------------------------------------------
6,414,125
4,122,500 4,850,000 5,577,500 SHARES SOLD
SHARES SOLD SHARES SOLD SHARES SOLD AT AT $10.00 PER
AT $10.00 AT $10.00 $10.00 SHARE (15%
PER SHARE PER SHARE PER SHARE ABOVE MAXIMUM
(MINIMUM (MIDPOINT OF (MAXIMUM OF OF ESTIMATED
OF ESTIMATED ESTIMATED ESTIMATED PRICE
PRICE RANGE) PRICE RANGE) PRICE RANGE) RANGE)(7)
------------ ------------ -------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Gross proceeds................................... $ 41,225 $ 48,500 $ 55,775 $64,141
Plus: Value of shares issued to Foundation (equal
to 3% of stock sold in Conversion)............. 1,237 1,455 1,673 1,924
------- ------- ------- -------
Pro forma market capitalization.................. $ 42,462 $ 49,955 $ 57,448 $66,065
======= ======= ======= =======
Gross proceeds................................... $ 41,225 $ 48,500 $ 55,775 $64,141
Less: Offering expenses and commissions.......... (1,781) (1,906) (2,031) (2,175)
------- ------- ------- -------
Estimated net proceeds........................... $ 39,444 $ 46,594 $ 53,744 $61,966
Less: Common Stock purchased by ESOP............. (3,397) (3,996) (4,596) (5,285)
Common Stock purchased by RRP.................. (1,698) (1,998) (2,298) (2,643)
------- ------- ------- -------
Estimated net proceeds, as adjusted............ $ 34,349 $ 40,600 $ 46,850 $54,038
Net income(1):
Historical..................................... $ 2,866 $ 2,866 $ 2,866 $ 2,866
Pro forma income on net proceeds, as
adjusted..................................... 1,192 1,409 1,626 1,875
Less: Pro forma ESOP adjustment(2)............. (204) (240) (276) (317)
Less: Pro forma RRP adjustment(3).............. (204) (240) (276) (317)
------- ------- ------- -------
Pro forma net income......................... $ 3,650 $ 3,795 $ 3,940 $ 4,107
======= ======= ======= =======
Per share net income(1):
Historical..................................... $ 0.73 $ 0.62 $ 0.54 $ 0.47
Pro forma income on net proceeds, as
adjusted..................................... 0.30 0.30 0.31 0.31
Pro forma ESOP adjustment(2)................... (0.05) (0.05) (0.05) (0.05)
Pro forma RRP adjustment (3)................... (0.05) (0.05) (0.05) (0.05)
------- ------- ------- -------
Pro forma net income per share............... $ 0.93 $ 0.82 $ 0.75 $ 0.68
======= ======= ======= =======
Shareholders' equity:
Historical..................................... $ 28,114 $ 28,114 $ 28,114 $28,114
Estimated net proceeds......................... 39,444 46,594 53,744 61,966
Plus: Shares issued to Foundation.............. 1,237 1,455 1,673 1,924
Less: Contribution to the Foundation........... (1,237) (1,455) (1,673) (1,924)
Plus: Tax benefit of the contribution to the
Foundation................................... 495 582 669 770
Less: Common Stock acquired by ESOP(2)......... (3,397) (3,996) (4,596) (5,285)
Less: Common Stock acquired by RRP (3)......... (1,698) (1,998) (2,298) (2,643)
------- ------- ------- -------
Pro forma shareholders' equity(3)(4)(5)........ $ 62,958 $ 69,296 $ 75,633 $82,922
======= ======= ======= =======
Shareholders' equity per share(6):
Historical..................................... $ 6.62 $ 5.63 $ 4.89 $ 4.26
Estimated net proceeds......................... 9.29 9.33 9.36 9.38
Plus: Tax benefit of the contribution to the
Foundation................................... 0.12 0.12 0.12 0.12
Less: Common Stock acquired by ESOP(2)......... (0.80) (0.80) (0.80) (0.80)
Less: Common Stock acquired by RRP(3).......... (0.40) (0.40) (0.40) (0.40)
------- ------- ------- -------
Pro forma shareholders' equity per share....... $ 14.83 $ 13.88 $ 13.17 $ 12.56
======= ======= ======= =======
Offering price as a percentage of pro forma
shareholders' equity per share................. 67.43% 72.05% 75.93% 79.62%
Offering price to pro forma net earnings per
share.......................................... 10.75x 12.20x 13.33x 14.71x
(See footnotes on next page)
</TABLE>
34
<PAGE> 36
- ---------------
(1) Does not give effect to the non-recurring expense that will be recognized in
the fiscal year ending May 31, 1998 as a result of the establishment of the
Foundation. The Company will recognize an after-tax expense for the amount
of the contribution to the Foundation which is expected to be approximately
$742,000, $873,000, $1.0 million and $1.2 million at the minimum, midpoint,
maximum and maximum, as adjusted, of the Estimated Price Range,
respectively. Assuming the contribution to the Foundation was expensed
during the fiscal year ended May 31, 1997, pro forma net earnings per share
would be $0.93, $0.82, $0.75 and $0.68, at the minimum, midpoint, maximum
and maximum as adjusted, respectively. Per share net income data is based on
3,940,000, 4,636,000, 5,331,000 and 6,131,000 shares outstanding which
represents shares sold in the Conversion, shares contributed to the
Foundation and shares to be allocated or distributed under the ESOP and the
RRP for the period presented.
(2) It is assumed that 8% of the shares of Common Stock issued in connection
with the Conversion, including shares issued to the Foundation, will be
purchased by the ESOP. For purposes of this table, the funds used to acquire
such shares are assumed to have been borrowed by the ESOP from the Company.
The amount to be borrowed is reflected as a reduction of shareholders'
equity. The Bank intends to make annual contributions to the ESOP in an
amount at least equal to the principal and interest requirement of the debt.
The Bank's total annual payment of the ESOP debt is based upon 10 equal
annual installments of principal, with an assumed interest rate at 8.00%.
The pro forma net earnings assume: (i) that the Bank's contribution to the
ESOP is equivalent to the debt service requirement for the three months
ended August 31, 1997 and the year ended May 31, 1997, and was made at the
end of the respective period; (ii) that 34,000, 40,000, 46,000 and 52,900
shares at the minimum, midpoint, maximum and 15% above the maximum of the
range, respectively, were committed to be released during the year ended May
31, 1997 (8,500, 10,000, 11,500 and 13,225 shares during the three months
ended August 31, 1997) at an average fair value of $10.00 per share in
accordance with SOP 93-6; and (iii) only the ESOP shares committed to be
released were considered outstanding for purposes of the net earnings per
share calculations. See "Management of the Bank -- Benefits -- Employee
Stock Ownership Plan and Trust."
(3) Gives effect to the RRP expected to be adopted by the Company following the
conversion and presented for approval at a meeting of shareholders. The RRP
intends to acquire an amount of Common Stock equal to 4% of the shares of
Common Stock issued in connection with the Conversion, including shares
issued to the Foundation, or 169,847, 199,820, 229,793 and 264,261 shares of
Common Stock at the minimum, midpoint, maximum and 15% above the maximum of
the Estimated Price Range, respectively, either through open market
purchases, if permissible, or from authorized but unissued shares of Common
Stock or treasury stock of the Company, if any. In calculating the pro forma
effect of the RRPs, it is assumed that the shares were acquired by the RRPs
at the beginning of the periods presented in open market purchases at the
Purchase Price and that 20% of the amount contributed was an amortized
expense during such period. The issuance of authorized but unissued shares
of the Company's Common Stock to the RRPs instead of open market purchases
would dilute the voting interests of existing shareholders by approximately
3.8% and pro forma net earnings per share for the year ended May 31, 1997
would be $0.83, $0.73, $0.66 and $0.60 ($0.16, $0.15, $0.13 and $0.12 for
the three months ended August 31, 1997) at the minimum, midpoint, maximum
and 15% above the maximum of the range, respectively and pro forma
stockholders equity per share at May 31, 1997 would be $14.26, $13.34,
$12.66 and $12.07 ($14.50, $13.55, $12.84 and $12.23 at August 31, 1997) at
the minimum, midpoint, maximum and 15% above the maximum of the range,
respectively. There can be no assurance that the actual purchase price of
the shares granted under the RRP will be equal to the Purchase Price. See
"Management of the Bank -- Benefits -- Recognition and Retention Plan."
(4) No effect has been given to the issuance of additional shares of Common
Stock pursuant to the Stock Option Plan expected to be adopted by the
Company following the Conversion. The Company expects to present the Stock
Option Plan for approval at a meeting of shareholders. Under the Stock
Option Plan, an amount equal to 10% of the Common Stock issued in connection
with the Conversion, including shares issued to the Foundation, or 424,617,
499,550, 574,482 and 660,654 shares at the minimum, midpoint, maximum and
15% above the maximum of the Estimated Price Range, respectively, will be
reserved for future issuance upon the exercise of options to be granted
under the Stock Option Plan. The issuance of Common Stock pursuant to the
exercise of options under the Stock Option Plan will result in the dilution
of existing shareholders' interests by approximately 9.1%. Assuming all
options were exercised at the end of the respective periods at an exercise
price of $10.00 per share, the pro forma net earnings per share for the year
ended May 31, 1997 would be $0.78, $0.69, $0.62 and $0.56, respectively
($0.16, $0.14, $0.13 and $0.11 for the three months ended August 31, 1997),
and the pro forma shareholders' equity per share at May 31, 1997 would be
$13.48, $12.61, $11.97 and $11.41, respectively ($13.71, $12.81, $12.14 and
$11.56 at August 31, 1997). See "Management of the Bank -- Benefits -- Stock
Option Plan."
(5) The retained earnings of the Bank will continue to be substantially
restricted after the Conversion. See "Dividend Policy," "The
Conversion -- Liquidation Rights" and "Regulation and Supervision -- New
York Banking Regulation."
(6) Shareholders' equity per share data is based upon 4,246,000, 4,996,000,
5,745,000 and 6,607,000 shares outstanding representing shares sold in the
conversion, shares contributed to the Foundation and shares purchased by the
ESOP and the RRP.
(7) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Price Range of up to 15% as
a result of regulatory considerations or changes in market or general
considerations or changes in market or general financial and economic
conditions following the commencement of the Subscription Offering or
Community Offering, if any.
35
<PAGE> 37
COMPARISON OF VALUATION AND PRO FORMA INFORMATION
WITH AND WITHOUT FOUNDATION
Assuming that the Foundation was not being established as part of the
Conversion, FinPro has estimated that the pro forma aggregate market
capitalization of the Company would be approximately $51.5 million at the
midpoint of the Estimated Price Range, which is approximately $1.5 million
greater than the pro forma aggregate market capitalization of the Company
including the Foundation, and would result in a $3.0 million increase in the
amount of Common Stock offered for sale in the Conversion. However, assuming the
midpoint, the pro forma price to book ratio would be the same under both the
current appraisal and the estimate of the value of the Company without the
Foundation. Further, pro forma shareholders' equity per share would be the same
at $14.10, with or without the Foundation. There is no assurance that in the
event the Foundation was not formed that the appraisal prepared at that time
would have concluded that the pro forma market value of the Company would be the
same as that estimated herein. Any appraisal prepared at that time would be
based on the facts and circumstances existing at that time, including, among
other things, market and economic conditions.
For comparative purposes only, set forth below are certain pricing ratios
and financial data and ratios, at the minimum, midpoint, maximum and maximum, as
adjusted of the Estimated Price Range, assuming the Conversion was completed at
August 31, 1997.
<TABLE>
<CAPTION>
AT THE MAXIMUM,
AT THE MINIMUM AT THE MIDPOINT AT THE MAXIMUM AS ADJUSTED
---------------------- ---------------------- ---------------------- ----------------------
WITH NO WITH NO WITH NO WITH NO
FOUNDATION FOUNDATION FOUNDATION FOUNDATION FOUNDATION FOUNDATION FOUNDATION FOUNDATION
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Estimated offering amount.... $ 41,225 $ 43,733 $ 48,500 $ 51,450 $ 55,775 $ 59,186 $ 64,141 $ 68,043
Pro forma market
capitalization............. 42,462 43,733 49,955 51,450 57,448 59,168 66,065 68,043
Total assets................. 325,712 327,527 332,050 334,185 338,387 340,843 345,676 348,500
Total liabilities............ 261,656 261,656 261,656 261,656 261,656 261,656 261,656 261,656
Pro forma shareholders'
equity..................... 64,050 65,871 70,394 72,529 76,731 79,187 84,020 86,844
Pro forma consolidated net
income..................... 724 741 758 777 792 815 833 857
Pro forma shareholders'
equity per share........... 15.09 15.06 14.10 14.10 13.36 13.39 12.72 12.76
Pro forma consolidated net
income per share........... 0.19 0.19 0.17 0.17 0.15 0.16 0.14 0.15
Pro Forma Pricing Ratios:
Offering price as a
percentage of pro forma
shareholders' equity per
share.................... 66.27% 66.40% 70.92% 70.92% 74.85% 74.68% 78.62% 78.37%
Offering price to pro forma
net income per share..... 13.16x 13.16x 14.71x 14.71x 16.67x 15.63x 17.86x 16.67x
Pro Forma Market
Capitalization to
assets................... 13.04% 13.35% 15.04% 15.40% 16.98% 17.36% 19.11% 19.52%
Pro Forma Financial Ratios:
Return on assets........... 0.89% 0.90% 0.91% 0.93% 0.94% 0.96% 0.96% 0.98%
Return on shareholders'
equity................... 4.52% 4.50% 4.31% 4.29% 4.13% 4.12% 3.97% 3.95%
Shareholders' equity to
assets................... 19.67% 20.11% 21.20% 21.70% 22.68% 23.23% 24.31% 24.92%
</TABLE>
36
<PAGE> 38
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
The following Consolidated Statements of Income of the Bank for each of the
years in the three-year period ended May 31, 1997 have been audited by Arthur
Andersen LLP, independent public accountants, whose report thereon appears
elsewhere herein. These statements should be read in conjunction with the other
financial statements and notes thereto included elsewhere in this Prospectus.
The Consolidated Statements of Income for the three-month periods ended August
31, 1997 and 1996 are unaudited, but, in the opinion of management, reflect all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results for such periods. The results for the
three-month period ended August 31, 1997 are not necessarily indicative of the
results that may be expected for the year ending May 31, 1998.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE FISCAL YEAR
ENDED AUGUST 31 ENDED MAY 31,
------------------------ -----------------------------------------
1997 1996 1997 1996 1995
---------- ---------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Interest and dividend income:
Interest on mortgage loans...................... $2,210,437 $1,590,541 $ 7,151,702 $ 8,098,219 $ 6,922,109
Interest on other loans......................... 870,431 779,910 3,457,460 3,149,131 2,833,349
Interest and dividends on securities............ 2,107,009 2,530,026 10,049,163 6,728,913 6,228,600
Interest on federal funds sold.................. 38,243 6,884 14,504 321,903 264,966
Interest on short-term money market
instruments................................... 6,274 4,339 18,290 34,870 3,633
---------- ---------- ----------- ----------- -----------
Total interest and dividend income.......... 5,232,394 4,911,700 20,691,119 18,333,036 16,252,657
---------- ---------- ----------- ----------- -----------
Interest and dividend expense:
Dividends on deposits --
Time deposits................................... 981,043 1,081,331 3,984,829 5,108,712 2,808,198
Money market deposits........................... 218,784 234,778 882,979 936,218 1,041,512
Savings deposit................................. 653,708 670,373 2,550,704 2,580,121 2,862,319
Mortgagors' deposits............................ 42,071 19,059 49,588 68,165 61,198
Interest on borrowings.......................... 463,064 275,021 1,908,062 23,882 54,556
---------- ---------- ----------- ----------- -----------
Total interest and dividend expense......... 2,358,670 2,280,562 9,376,162 8,717,098 6,827,783
---------- ---------- ----------- ----------- -----------
Net interest and dividend income............ 2,873,724 2,631,138 11,314,957 9,615,938 9,424,874
---------- ---------- ----------- ----------- -----------
Provision for loan losses........................... (304,000) (20,000) (130,000) (140,000) (261,000)
---------- ---------- ----------- ----------- -----------
Net interest income after provision for loan
losses........................................ 2,569,724 2,611,138 11,184,957 9,475,938 9,163,874
---------- ---------- ----------- ----------- -----------
Other income (loss):
Service and fee income.......................... 492,331 446,538 1,915,139 1,767,610 1,369,288
Securities transactions......................... 154,231 696,155 816,304 356,266 (428,611)
Loan transactions............................... 23,428 17,420 137,403 118,807 14,107
Other income (loss)............................. 7,148 (175,918) (89,079) (158,713) (79,105)
---------- ---------- ----------- ----------- -----------
Total other income, net..................... 677,138 984,195 2,779,767 2,083,970 875,679
---------- ---------- ----------- ----------- -----------
Other expenses:
Salaries and employee benefits.................. 1,294,884 1,275,822 5,255,869 5,049,942 3,958,063
FDIC insurance.................................. 6,865 501 12,447 53,226 466,497
Occupancy....................................... 331,823 287,361 1,307,727 1,237,485 1,201,723
Data processing................................. 156,843 164,201 639,654 483,572 413,961
Advertising..................................... 46,427 22,461 152,529 129,227 112,278
Professional fees............................... 80,349 67,119 240,513 325,392 221,754
Other........................................... 432,206 411,077 1,734,616 1,791,244 1,721,934
---------- ---------- ----------- ----------- -----------
Total other expenses........................ 2,349,397 2,228,542 9,343,355 9,070,088 8,096,210
---------- ---------- ----------- ----------- -----------
Income before provision for income taxes and
cumulative effect of change in accounting
principle..................................... 897,465 1,366,791 4,621,369 2,489,820 1,943,343
Provision for income taxes.......................... 358,986 519,381 1,755,866 1,024,240 794,394
---------- ---------- ----------- ----------- -----------
Income before cumulative effect of change in
accounting principle.......................... 538,479 847,410 2,865,503 1,465,580 1,148,949
Cumulative effect of change in accounting
principle......................................... -- -- -- -- (645,184)
---------- ---------- ----------- ----------- -----------
Net income.................................. $ 538,479 $ 847,410 $ 2,865,503 $ 1,465,580 $ 503,765
========= ========= ========== ========== ==========
</TABLE>
See the accompanying notes to the consolidated financial statements.
37
<PAGE> 39
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company has only recently been formed and, accordingly, has no results
of operations. The Bank's results of operations are dependent primarily on net
interest income, which is the difference between the interest income earned on
its interest-earning assets, such as loans and securities, and the interest
expense on its interest-bearing liabilities, such as deposits and borrowed
funds. The Bank also generates other income, such as service charges and other
fees, primarily servicing fees received from residential mortgage loans sold
with servicing retained. Other expenses primarily consist of employee
compensation and benefits, occupancy expenses, federal deposit insurance
premiums, net costs of real estate owned, data processing fees and other
operating expenses. The Bank's results of operations are also significantly
affected by general economic and competitive conditions (particularly changes in
market interest rates), government policies, changes in accounting standards and
actions of regulatory agencies. See "Risk Factors." The Bank exceeded all of its
regulatory capital requirements at August 31, 1997. See "Regulatory Capital
Compliance" for a discussion of the historical and pro forma capital of the Bank
and capital requirements.
MANAGEMENT STRATEGY
The Bank has historically employed an operating strategy that emphasizes
the origination of one- to-four-family residential mortgage loans in its market
area with both fixed and variable rates and, to an increasing degree over the
past 10 years, its commercial lending business, with mostly prime-based rate
loans secured by real estate located mainly in Orange County, New York. Due in
part to this strategy, the Bank historically has had profitable operations,
resulting in a strong regulatory capital position. The Bank's goal of
maintaining this position has lead to an overall strategy of managed growth in
both deposits and assets. The major elements of the Bank's operating strategy
are to: (i) grow and diversify the Bank's loan portfolio by continuing to
originate owner-occupied residential mortgage, commercial business and
commercial real estate, construction and consumer loans in its market area (see
"Risk Factors -- Residential and Non-Residential Lending Risks" for a discussion
of the greater degree of credit risk associated with these types of loans); (ii)
complement the Bank's mortgage lending activities by investing in
mortgage-backed and other securities; (iii) maintain the Bank's relatively low
cost of funds and (iv) manage the Bank's level of interest rate risk. From time
to time, the Bank employs a leveraging strategy, whereby borrowings are used to
fund specific investments. This form of leveraging allows for a reasonable net
margin of return. The Bank also seeks to attract and retain customers by
providing a high level of personal service to its retail and business customers
through extended office hours, low turnover of employees and prompt, flexible
and personalized production of a variety of loan products. In addition, it is a
goal of the Bank to increase its market share in the communities it serves
through the acquisition or establishment of branch offices and, if appropriate,
the acquisition of smaller financial institutions. Additionally, it is a goal of
the Bank to penetrate new markets. For this reason, the Bank has recently
applied to, and approval is currently pending from, the State of New Jersey
Department of Banking and Insurance to expand its mortgage banking operations
into that state. See "Use of Proceeds" and "Business of the Bank."
MANAGEMENT OF INTEREST RATE RISK
The principal objectives of the Bank's interest rate risk management
activities are to: (i) evaluate the interest rate risk included in certain
balance sheet accounts, (ii) determine the level of risk appropriate given the
Bank's business focus, operating environment, capital and liquidity requirements
and performance objectives, (iii) establish prudent asset concentration
guidelines and (iv) manage the risk consistent with Board approved policies and
guidelines. Through such management, the Bank seeks to reduce the vulnerability
of its operating results to changes in interest rates and to manage the ratio of
interest rate sensitive assets to interest rate sensitive liabilities within
specified maturities or repricing dates. The Bank closely monitors its interest
rate risk as such risk relates to its operating strategies. The extent of the
movement of interest rates, higher or lower, is an uncertainty that could have a
negative impact on the earnings of the Bank.
38
<PAGE> 40
Historically, the Bank had been a traditional thrift lender, but
differentiated itself from other thrifts by also focusing on commercial lending
since the late 1980's and commission-based mortgage banking operations since
1995. The Bank also adopted a more competitive pricing policy, more efficient
lock-in policies to close loans faster and more streamlined Federal National
Mortgage Association ("FNMA") approved processing and underwriting procedures.
Additionally, the Bank's array of products has expanded to include Federal
Housing Authority ("FHA"), Veterans Administration ("VA") and State of New York
Mortgage Association ("SONYMA") loans. As a result, the Bank has invested a
relatively large amount of its earning assets in fixed-rate loans and fixed-rate
mortgage-backed securities with contractual maturities of up to 30 years. At
August 31, 1997, an aggregate of $120.5 million, or 45.0% of total earning
assets, were invested in such assets. Based upon the assumptions used in the
following table, at August 31, 1997, the Bank's total interest-bearing
liabilities maturing or repricing within one year exceeded its total
interest-earning assets maturing or repricing in the same time period by $40.4
million, representing a one year cumulative "gap," as defined below, as a
percentage of total assets of negative 13.90%. Accordingly, the Bank is viewed
as having a manageable gap position, but is still slightly vulnerable to a
rising interest rate environment.
The Bank has taken several actions, under various market conditions,
designed to manage its level of interest rate risk. These actions have included:
(i) increasing the percentage of the loan portfolio consisting of
adjustable-rate mortgage loans and prime-based commercial loans through
originations, as market conditions permit, (ii) selling fixed-rate loans, but
retaining the servicing rights, (iii) purchasing shorter-term investment
securities and (iv) seeking to maintain a relatively high percentage of deposits
as checking accounts. Additionally, in the normal course of business, the Bank
uses off-balance sheet financial instruments primarily as part of mortgage
banking hedging strategies. Such instruments generally include put options
purchased and forward commitments to sell mortgage loans. As a result of
interest rate fluctuations, these financial instruments will develop unrealized
gains or losses that mitigate changes in the underlying hedged portion of the
balance sheet. When effectively used, these instruments are designed to moderate
the impact on earnings as interest rates move up or down.
Gap Analysis. The matching of assets and liabilities may be analyzed by
examining the extent to which such assets and liabilities are "interest rate
sensitive" and by monitoring an institution's interest rate sensitivity "gap."
An asset or liability is said to be interest rate sensitive within a specific
time period if it will mature or reprice within that time period. The interest
rate sensitivity gap is defined as the difference between the amount of
interest-earning assets maturing or repricing within a specific time period and
the amount of interest-bearing liabilities maturing or repricing within that
same time period. A gap is considered positive when the amount of interest rate
sensitive assets exceeds the amount of interest rate sensitive liabilities. A
gap is considered negative when the amount of interest rate sensitive
liabilities exceeds the amount of interest rate sensitive assets. During a
period of rising interest rates, therefore, a negative gap would tend to
adversely affect net interest income. Conversely, during a period of falling
interest rates, a negative gap position would tend to result in an increase in
net interest income.
The following table sets forth the amounts of interest-earning assets and
interest-bearing liabilities outstanding at August 31, 1997, which are
anticipated by the Bank, based upon certain assumptions, to reprice or mature in
each of the future time periods shown. Except as stated below, the amount of
assets and liabilities shown which reprice or mature during a particular period
were determined based on the earlier of term to repricing or the term to
repayment of the asset or liability. The table is intended to provide an
approximation of the projected repricing of assets and liabilities at August 31,
1997 on the basis of contractual maturities, anticipated prepayments and
scheduled rate adjustments within a three-month period and subsequent selected
time intervals. The loan amounts in the table reflect principal balances
expected to be reinvested and/or repriced as a result of contractual
amortization and anticipated early payoffs of adjustable-rate loans and fixed-
rate loans, and as a result of contractual rate adjustments on adjustable-rate
loans. For loans on one- to four-family residential properties and
mortgage-backed securities, assumed average annual prepayment rates of
39
<PAGE> 41
19.05% and 15.43%, respectively, were utilized. See "Business of the
Bank -- Lending Activities," "-- Investment Activities" and "-- Sources of
Funds."
<TABLE>
<CAPTION>
AT AUGUST 31, 1997
------------------------------------------------------------------------------------------------
THREE MORE THAN MORE THAN MORE THAN MORE THAN
MONTHS THREE MONTHS TO ONE YEAR THREE YEARS FIVE YEARS MORE THAN
OR LESS TWELVE MONTHS TO THREE YEARS TO FIVE YEARS TO TEN YEARS TEN YEARS TOTAL
------- --------------- -------------- ------------- ------------ --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Mortgage loans(1)(2)........... $20,968 $ 14,131 $ 12,337 $13,135 $ 2,796 $40,282 $103,649
Other loans (3)................ 12,409 7,145 5,745 14,907 10,232 2,339 52,777
Mortgage-backed securities,
fixed(2)..................... 9,909 346 -- 971 1,382 51,609 64,217
Mortgage-backed securities,
variable(2).................. 741 3,985 78 -- -- -- 4,804
Federal funds sold............. -- -- -- -- -- -- --
Mutual funds and preferred
stock........................ -- 2,000 -- -- -- 2,804 4,804
Investment securities:
held-to-maturity............. 300 3,041 2,655 106 -- -- 6,102
Investment securities:
available-for-sale........... 3,507 4,001 3,299 4,103 21,492 -- 36,402
------- -------- -------- ------- ------- ------- -------
Total interest-earning
assets............... 47,834 34,649 24,114 33,222 35,902 97,034 272,755
Net deferred loan fees and
costs(4)..................... (16) (29) (25) (37) (16) (61) (184)
Net interest-earning
assets............... 47,818 34,620 24,089 33,185 35,886 96,973 272,571
------- -------- -------- ------- ------- ------- -------
INTEREST-BEARING LIABILITIES:
Passbook accounts(5)........... -- 15,815 -- -- -- 63,258 79,073
Escrow accounts................ -- -- -- -- -- 2,256 2,256
NOW accounts................... -- -- -- -- -- 15,748 15,748
Money market accounts.......... 25,811 -- -- -- -- -- 25,811
Certificates of deposit........ 16,782 53,505 3,385 2,074 -- -- 75,746
Borrowed funds................. 8,365 2,600 15,350 5,000 -- -- 31,315
------- -------- -------- ------- ------- ------- -------
Total interest-bearing
liabilities.......... 50,958 71,920 18,735 7,074 -- 81,262 229,949
------- -------- -------- ------- ------- ------- -------
Interest rate sensitivity
gap.......................... $(3,140) $ (37,300) $ 5,354 $26,111 $ 35,886 $15,711 $ 42,622
======= ======== ======== ======= ======= ======= =======
Cumulative interest rate
sensitivity gap.............. $(3,140) $ (40,440) $(35,086) $(8,975) $ 26,911 $42,622
======= ======== ======== ======= ======= =======
Cumulative interest rate
sensitivity gap as a
percentage of total assets... (1.08)% (13.90)% (12.06)% (3.09)% 9.25% 14.65%
Cumulative net interest-earning
assets as a percentage of
cumulative interest-bearing
liabilities.................. 93.84% 67.09% 75.22% 93.96% 118.10% 118.54%
</TABLE>
- ---------------
(1) For purposes of the gap analysis, mortgage and other loans are not reduced
for the allowance for loan losses and non-performing loans.
(2) For loans on residential properties an average prepayment rate of 19.05% is
utilized. Mortgage-backed securities are assumed to prepay at an average
annual rate of 15.43%.
(3) For purposes of the gap analysis, second mortgage loans are included in the
"Other loans" category.
(4) For purposes of the gap analysis, unearned fees and deferred loan
origination costs are pro-rated.
(5) For purposes of the gap analysis, based upon the Bank's historical
experience, management traditionally and conservatively slots 20% of the
Bank's total savings account balances into the twelve month time horizon.
The remaining 80% are viewed as long-term deposits.
Certain shortcomings are inherent in the method of analysis presented in
the foregoing table. For example, although certain assets and liabilities may
have similar maturities or periods to repricing, they may react in different
degrees to changes in market interest rates. Also, the interest rates on certain
types of assets and liabilities may fluctuate in advance of changes in market
interest rates, while interest rates on other types of assets may lag behind
changes in market rates. Additionally, certain assets such as adjustable-rate
loans, have features which restrict changes in interest rates both on a
short-term basis and over the life of the asset. Further, in the event of a
change in interest rates, prepayment and early withdrawal levels would likely
deviate significantly from those assumed in calculating the table. Finally, the
ability of many borrowers to make scheduled payments on their adjustable-rate
loans may decrease in the event of an interest rate increase.
40
<PAGE> 42
ANALYSIS OF NET INTEREST INCOME
Net interest income represents the difference between income on
interest-earning assets and expense on interest-bearing liabilities. Net
interest income depends upon the relative amounts of interest-earning assets and
interest-bearing liabilities and the interest rates earned or paid on them.
Average Balance Sheets. The following tables set forth certain information
relating to the Bank at August 31, 1997, for the three months ended August 31,
1997 and 1996 and for the years ended May 31, 1997, 1996 and 1995. The yields
and costs were derived by dividing interest income or expense by the average
balance of assets or liabilities, respectively, for the periods shown. Average
balances were computed based on month-end balances. Management believes that the
use of average monthly balances instead of average daily balances does not have
a material effect on the information presented. The yields include deferred fees
and discounts which are considered yield adjustments.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED AUGUST 31,
-------------------------------------------------------------
1997 1996
AT AUGUST 31, 1997 ----------------------------- -----------------------------
----------------------- AVERAGE AVERAGE
WEIGHTED AVERAGE YIELD/ AVERAGE YIELD/
BALANCE AVERAGE RATE BALANCE INTEREST COST BALANCE INTEREST COST
-------- ------------ -------- -------- ------- -------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Mortgage loans, net(1)............... $117,297 7.59% $110,332 $ 2,210 8.01% $ 83,006 $ 1,591 7.67%
Consumer and other loans, net(1)..... 37,368 8.87 36,434 870 9.55 32,260 781 9.68
Mortgage-backed securities........... 69,055 7.72 69,181 1,293 7.48 79,545 1,436 7.22
Federal funds sold................... -- -- 2,786 38 5.46 549 7 5.10
Interest earning accounts at banks... 539 4.82 475 6 5.06 338 4 5.09
Investment securities................ 49,039 7.50 49,823 815 6.54 69,755 1,094 6.27
-------- -------- -------- -------- --------
Total interest-earning
assets....................... 273,298 7.78 269,031 5,232 7.78 265,453 4,913 7.40
-------- ------- -------- -------
Non-interest earning assets............ 17,570 16,711 16,201
-------- -------- --------
Total assets................... $290,868 $285,742 $281,654
======== ======== ========
LIABILITIES AND RETAINED EARNINGS:
Interest-bearing liabilities:
Passbook accounts.................... $ 79,072 2.98% $ 79,570 $ 594 2.99% $ 81,267 $ 610 3.00%
Escrow deposits...................... 2,256 2.00 1,819 42 9.24 1,518 19 5.01
NOW accounts......................... 15,748 1.61 14,769 60 1.62 14,761 60 1.63
Money market accounts................ 25,811 3.29 26,421 219 3.31 28,600 235 3.29
Certificate accounts................. 75,746 5.17 75,329 981 5.21 84,339 1,081 5.13
-------- -------- -------- -------- --------
Total deposits................. 198,633 3.81 197,908 1,896 3.83 210,485 2,005 3.81
Borrowed funds................. 31,315 6.15 29,218 463 6.34 17,647 275 6.23
-------- -------- -------- -------- --------
Total interest-bearing
liabilities.................. 229,948 4.07 227,126 2,359 4.15 228,132 2,280 4.00
-------- ------- -------- -------
Non-interest bearing liabilities....... 31,708 30,357 28,841
-------- -------- --------
Total liabilities.............. 261,656 257,483 256,973
Retained earnings...................... 29,212 28,259 24,681
-------- -------- --------
Total liabilities and retained
earnings..................... $290,868 $285,742 $281,654
======== ======== ========
Net interest income/interest rate
spread(2)............................ 3.71% $ 2,873 3.63% $ 2,633 3.40%
============ ======= ======= ======= =======
Net interest-earning assets/net
interest margin(3)................... $ 43,350 $ 41,905 4.27% $ 37,320 3.97%
======== ======== ======= ======== =======
Ratio of interest-earning assets to
interest-bearing liabilities......... 118.85% 118.45% 116.36%
============ ======= =======
</TABLE>
41
<PAGE> 43
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
---------------------------------------------------------------------------------------------
1997 1996 1995
----------------------------- ----------------------------- -----------------------------
AVERAGE AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST BALANCE INTEREST COST
-------- -------- ------- -------- -------- ------- -------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Mortgage loans, net(1).......... $ 90,771 $ 7,152 7.88% $103,854 $ 8,098 7.80% $ 84,338 $ 6,922 8.21%
Consumer and other loans,
net(1)........................ 36,160 3,457 9.56 33,127 3,150 9.51 30,027 2,834 9.44
Mortgage-backed securities...... 80,255 5,897 7.35 19,612 1,617 8.24 16,165 938 5.80
Federal funds sold.............. 283 15 5.30 6,058 322 5.32 5,031 265 5.27
Interest earning accounts at
banks......................... 395 18 4.56 93 5 5.38 17 1 5.88
Investment securities........... 61,508 4,152 6.75 78,681 5,141 6.53 85,344 5,293 6.20
-------- ------- -------- ------ -------- ------
Total interest-earning
assets.................. 269,372 20,691 7.68 241,425 18,333 7.59 220,922 16,253 7.36
------- ------ ------ ------ ------ ------
Non-interest earning assets....... 15,856 19,149 15,578
-------- -------- --------
Total assets.............. $285,228 $260,574 $236,500
======== ======== ========
LIABILITIES AND RETAINED EARNINGS:
Interest-bearing liabilities:
Passbook accounts............... $ 78,132 $ 2,323 2.97% $ 77,868 $ 2,365 3.04% $ 87,962 $ 2,677 3.04%
Escrow deposits................. 1,020 50 4.90 2,345 68 2.90 2,122 61 2.87
NOW accounts.................... 14,117 227 1.61 12,638 215 1.70 9,856 186 1.89
Money market accounts........... 27,016 883 3.27 28,674 936 3.26 34,225 1,042 3.04
Certificate accounts.............. 79,155 3,985 5.03 89,831 5,109 5.69 59,005 2,808 4.76
-------- ------- -------- ------ -------- ------
Total deposits............ 199,440 7,468 3.74 211,356 8,693 4.11 193,170 6,774 3.51
Borrowed funds............ 31,249 1,908 6.11 489 24 4.91 906 54 5.96
-------- ------- -------- ------ -------- ------
Total interest-bearing
liabilities............. 230,689 9,376 4.06 211,845 8,717 4.11 194,076 6,828 3.52
------- ------ ------ ------ ------ ------
Non-interest bearing
liabilities..................... 28,528 25,432 20,716
-------- -------- --------
Total liabilities......... 259,217 237,277 214,792
Retained earnings................. 26,011 23,297 21,708
-------- -------- --------
Total liabilities and
retained earnings....... $285,228 $260,574 $236,500
======== ======== ========
Net interest income/interest rate
spread(2)....................... $ 11,315 3.62% $ 9,616 3.48% $ 9,425 3.84%
======= ====== ====== ====== ====== ======
Net interest-earning assets/net
interest margin(3).............. $ 38,683 4.20% $ 29,580 3.98% $ 26,846 4.27%
======== ====== ======== ====== ======== ======
Ratio of interest-earning assets
to interest-bearing
liabilities..................... 116.77% 113.96% 113.83%
====== ====== ======
</TABLE>
- ---------------
(1) In computing the average balance of loans, non-accrual loans have been
included.
(2) Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net interest margin on interest-earning assets represents net interest
income as a percentage of average interest-earning assets.
Rate/Volume Analysis. The following table presents the extent to which
changes in interest rates and changes in the volume of interest-earning assets
and interest-bearing liabilities have affected the Bank's interest income and
interest expense during the periods indicated. Information is provided in each
category with respect to (i) changes attributable to changes in volume (changes
in volume multiplied by prior rate), (ii) changes attributable to changes in
rate (changes in rate multiplied by prior volume) and (iii) the net change. The
changes attributable to the combined impact of volume and rate have been
allocated proportionately to the changes due to volume and the changes due to
rate.
42
<PAGE> 44
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31, 1997 COMPARED
TO
THREE MONTHS ENDED YEAR ENDED MAY 31, 1997 YEAR ENDED MAY 31, 1996
AUGUST 31, 1996 COMPARED TO COMPARED TO
------------------------ YEAR ENDED MAY 31, 1996 YEAR ENDED MAY 31, 1995
--------------------------- -------------------------
INCREASE
(DECREASE) INCREASE INCREASE
IN NET (DECREASE) (DECREASE)
INTEREST IN NET INTEREST IN NET INTEREST
INCOME DUE TO INCOME DUE TO INCOME DUE TO
-------------- ---------------- ---------------
VOLUME RATE NET VOLUME RATE NET VOLUME RATE NET
------ ---- ------ ------- ----- ------- ------ ----- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Mortgage loans, net.................... $ 524 $ 96 $ 620 $(1,020) $ 74 $ (946) $1,602 $(426) $1,176
Consumer and other loans, net.......... 102 (12) 90 288 19 307 292 24 316
Mortgage-backed securities............. (187) 44 (143) 5,000 (720) 4,280 200 479 679
Federal funds sold..................... 29 2 31 (307) -- (307) 54 3 57
Interest earning accounts at banks..... 2 1 3 16 (3) 13 5 (1) 4
Investment securities.................. (313) 33 (280) (1,122) 133 (989) (413) 261 (152)
------ ---- ------ ------- ----- ------- ------ ----- ------
Total.......................... 157 164 321 2,855 (497) 2,358 1,740 340 2,080
------ ---- ------ ------- ----- ------- ------ ----- ------
INTEREST-BEARING LIABILITIES:
Passbook accounts...................... (13) (3) (16) 8 (50) (42) (307) (5) (312)
Escrow accounts........................ 4 19 23 (39) 20 (19) 6 1 7
NOW accounts........................... -- (1) (1) 25 (13) 12 53 (24) 29
Money market accounts.................. (18) 2 16 (54) 1 (53) (169) 63 (106)
Certificates of deposits............... (115) 15 (100) (607) (517) (1,124) 1,467 834 2,301
Borrowed funds......................... 180 8 188 1,510 374 1,884 (25) (5) (30)
------ ---- ------ ------- ----- ------- ------ ----- ------
Total.......................... 38 40 78 843 (185) 658 1,025 864 1,889
------ ---- ------ ------- ----- ------- ------ ----- ------
Net change in net interest income...... $ 119 $124 $ 243 $2,012 $(312) $ 1,700 $ 715 $(524) $ 191
======= ==== ====== ======= ===== ======= ======= ===== ======
</TABLE>
COMPARISON OF FINANCIAL CONDITION AT AUGUST 31, 1997 AND MAY 31, 1997
Total assets increased $4.4 million to $290.9 million at August 31, 1997,
from $286.5 million at May 31, 1997, reflecting the Bank's ongoing strategy of
managed growth. The asset growth was funded primarily through borrowings, which
increased $3.0 million to $31.3 million at August 31, 1997. As of August 31,
1997, the Bank had $23.0 million in securities sold under repurchase agreements
and $8.3 million in term loans from the FHLBNY. Deposit liabilities increased by
$552,000 to $221.8 million at August 31, 1997 from $221.2 million at May 31,
1997. FHLBNY advances and other borrowings are used by the Bank as an
alternative to traditional retail deposits and take on the form of overnight
advances, repriced daily, and one-month lines of credit, repriced daily.
Asset growth was concentrated in mortgage loans, net, which increased $14.7
million to $117.0 million at August 31, 1997 from $102.3 million at May 31,
1997. In addition, other loans, net, increased $1.5 million to $37.6 million at
August 31, 1997 from $36.1 million at May 31, 1997. Total securities were $116.3
million at August 31, 1997 compared to $126.4 million at May 31, 1997,
reflecting the reinvestment of funds from the securities portfolio into higher
yielding loans. Securities held-to-maturity at August 31, 1997 totaled $6.1
million, remaining essentially unchanged from May 31, 1997. The Bank had $110.2
million of securities available-for-sale at August 31, 1997, representing a
decline of $10.1 million from $120.3 million of securities available-for-sale at
May 31, 1997. The Bank's available-for-sale portfolio was adjusted for a net
unrealized gain of $1.2 million for the quarter ended August 31, 1997. See
"-- Impact of Accounting Standards."
Other assets decreased by $415,000 to $2.4 million at August 31, 1997,
primarily due to the reduction in the deferred tax asset account.
Other real estate owned ("OREO"), which represents properties acquired
through legal foreclosure, decreased $57,000 to $167,000 at August 31, 1997,
from $224,000 at May 31, 1997. The Bank's OREO has historically involved only a
few properties, representing a relatively insignificant percentage of total
assets.
43
<PAGE> 45
In the fiscal year ending May 31, 1996, the Bank prospectively adopted SFAS
No. 122 "Accounting for Mortgage Servicing Rights." SFAS No. 122 required that a
mortgage banking enterprise recognize rights to service mortgage loans for
others, however those servicing rights are acquired. As a result of adopting
SFAS No. 122, the Bank capitalized $861,000 of originated mortgage servicing
rights at August 31, 1997, representing an increase of $26,000 from May 31,
1997. The cost of mortgage servicing rights (purchased or originated rights with
related loans sold) is amortized in proportion to, and over the period of,
estimated net servicing revenues. Impairment of mortgage servicing rights is
assessed based on the fair value of those rights. For purposes of measuring
impairment, the servicing rights are stratified based on the predominant risk
characteristics of the underlying loans, i.e., loan type and origination or
securitization date.
Total net worth increased $1.1 million to $29.2 million at August 31, 1997
from $28.1 million at May 31, 1997, resulting from net income of $538,000 and
$559,000 of unrealized appreciation on securities available for sale, net of
taxes.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED AUGUST 31, 1997 AND
1996
General. Net income for the three months ended August 31, 1997 was
$538,000, compared to $847,000 for the three months ended August 31, 1996. The
decrease of $309,000 resulted principally from an increase in the Bank's
provision for loan losses to $304,000 from $20,000 and a reduction of $542,000
in gains realized from securities sales, which were partially offset by an
increase in net interest income before provision for loan losses of $243,000,
increased service and fee income of $46,000, elimination of $176,000 of other
loss and $160,000 reduced provision for income taxes for the three months ended
August 31, 1997, as compared to the year earlier period.
Net Interest Income. Net interest income, or the difference between
interest and dividend income and interest expense, for the quarter ended August
31, 1997 increased $243,000, or 9.2%, to $2.9 million. This increase reflects
the overall rise in the Bank's average interest rate spread of 23 basis points
to 3.63%, and a rise in the Bank's net interest margin of 30 basis points to
4.27% for quarter ended August 31, 1997, as well as a greater increase in
interest-earning assets than interest-bearing liabilities.
While the Bank realized a higher overall yield of 38 basis points on its
average interest-earning assets, cost factors on the Bank's interest-bearing
liabilities increased 15 basis points.
Interest and Dividend Income. Interest and dividend income totaled $5.2
million for the quarter ended August 31, 1997, compared to $4.9 million for the
quarter ended August 31, 1996. This increase of $320,000, or 6.5%, reflects an
increase of $620,000 in interest on mortgage loans. The increase in interest on
mortgages was offset, in part, by a decline of $423,000 in interest and
dividends on securities.
Interest Expense. Interest expense on deposits and borrowings increased
$78,000 to $2.4 million for the quarter ended August 31, 1997, compared to $2.3
million for the quarter ended August 31, 1996. This increase reflects an
increase in the average rate paid on such liabilities of 15 basis points over
the same period. The increase in the average cost of interest-bearing
liabilities is primarily attributable to an increase in the average balance of
borrowed funds to $29.2 million for the quarter ended August 31, 1997 as
compared to $17.6 million for the quarter ended August 31, 1996. Average
certificate of deposit accounts declined by approximately $9.0 million in the
quarter ended August 31, 1997, partially due to the Bank's strategy of not
offering premium rates in a highly competitive rate environment. While there was
a 10.7% decline in average certificate of deposit accounts, there was a 9.3%
decline in the interest expense associated with such accounts, from $1.1 million
in the quarter ended August 31, 1996 to $981,000 in the quarter ended August 31,
1997. However, due to increased borrowings and higher attendant costs, the
Bank's total cost of funds increased from 4.00% to 4.15%.
Provision for Loan Losses. The Bank's provision for loan losses totaled
$304,000 for the three months ended August 31, 1997, as compared to $20,000 for
the three months ended August 31, 1996, an increase of $284,000. The Bank
increased its monthly provision to $20,000 per month beginning in April of 1997,
and in June and August 1997, the Bank took additional charges of $44,000 and
$200,000, respectively. Such additional provisions were taken because loan
charge-offs for the three month period ended August 31, 1997
44
<PAGE> 46
were $171,000 as compared to $0 for the same period in 1996, and the level of
non-performing loans in the Bank's portfolio increased from $1.4 million at May
31, 1997 to $1.5 million at August 31, 1997. Management has continued to provide
loan loss reserves due to the increase in the Bank's loan portfolio, including
continued originations of commercial business and commercial real estate loans
and management's evaluation of the adequacy of such reserves in the context of
the Bank's historical loan loss experience. The Bank's allowance for possible
loan losses at August 31, 1997 was $1.37 million, as compared to $1.23 million
at May 31, 1997. At August 31, 1997, the Bank's allowance for possible loan
losses as a percentage of total loans was 0.88%, compared to 1.10% at August 31,
1996, and the Bank's allowance for possible loan losses as a percentage of
non-performing loans was 93.44% at August 31, 1997, compared to 86.09% at August
31, 1996.
Other Income. Other income, net, for the quarter ended August 31, 1997
decreased $307,000 to $677,000, as compared to $984,000 as of August 31, 1996.
This decrease was primarily attributable to reduced gains on sales of
mortgage-backed securities. Total service and fee income increased by 10.3% to
$492,000 as of the quarter ended August 31, 1997, due to service charges and
other fees reflecting increased loan and loan servicing activity.
Other Expenses. Other expenses increased $121,000 to $2.3 million for the
quarter ended August 31, 1997 from $2.2 million for the quarter ended August 31,
1996. The increase in other expenses primarily reflects increases in salaries
and employee benefits and occupancy costs. The Bank's ratio of other expenses to
average assets increased to 3.28% (annualized) in the quarter ended August 31,
1997, as compared to 3.16% (annualized) at August 31, 1996.
Income Tax Expense. Income tax expense decreased $160,000 for the quarter
ended August 31, 1997 due to reduced taxable income.
COMPARISON OF FINANCIAL CONDITION AT MAY 31, 1997 AND MAY 31, 1996
Total assets increased $12.4 million to $286.5 million at May 31, 1997,
from $274.1 million at May 31, 1996, reflecting the Bank's ongoing strategy of
managed growth. The asset growth was funded primarily through borrowings, which
increased $20.0 million to $28.3 million at May 31, 1997. As of May 31, 1997,
the Bank had $23.1 million in securities sold under repurchase agreements and
$5.2 million in term loans from the FHLBNY. Deposit liabilities declined by
$11.8 million to $221.2 million at May 31, 1997 from $233.0 million at May 31,
1996, primarily due to continued decreases in rollovers of a February 1995
offering of a nine-month certificate of deposit account, initially priced
slightly above local market rates to provide the Bank with additional liquidity
at the time of the failure of Nationar, one of the Bank's correspondent banks
("Premium Certificates"). See "-- Liquidity and Capital Resources." FHLBNY
advances and other borrowings are used by the Bank as an alternative to
traditional retail deposits and take on the form of overnight advances, repriced
daily, and one-month lines of credit, repriced monthly.
Asset growth was concentrated in mortgage loans, net, which increased $25.5
million to $97.4 million at May 31, 1997 from $71.9 million at May 31, 1996.
This loan growth (net of amortizations and satisfactions) contrasts to a
decrease of $17.6 million for the year ended May 31, 1996. In addition, other
loans, net increased $4.1 million to $36.1 million at May 31, 1997 from $32.0
million at May 31, 1996. Total securities were $126.4 million at May 31, 1997
compared to $144.3 million at May 31, 1996, reflecting the reinvestment of funds
from the securities portfolio into higher yielding loans. Securities
held-to-maturity at May 31, 1997 totaled $6.1 million, representing a $1 million
decline from $7.1 million of securities held-to-maturity at May 31, 1996. The
Bank had $120.3 million of securities available-for-sale at May 31, 1997,
representing a decline of $14.9 million from $135.2 million of securities
available-for-sale at May 31, 1996. The Bank's available-for-sale portfolio was
adjusted for an unrealized gain of $1.1 million (pre-tax, $500,000 after-tax)
for the fiscal year ended May 31, 1997. See "-- Impact of Accounting Standards."
Other assets decreased by $4.3 million to $2.8 million at May 31, 1997,
primarily due to the satisfactory liquidation of the Bank's $3.9 million claim
against the Superintendent, as receiver for Nationar, regarding the
Superintendent's seizure of Nationar in early February 1995.
OREO decreased $106,000 to $224,000 at May 31, 1997, from $330,000 at May
31, 1996.
45
<PAGE> 47
As a result of adopting SFAS No. 122, the Bank capitalized $444,000 of
originated mortgage servicing rights during fiscal year 1996.
Total net worth increased $3.3 million to $28.1 million at May 31, 1997
from $24.8 million at May 31, 1996, resulting from net income of $2.8 million
and approximately $500,000 of unrealized appreciation on securities available
for sale, net of taxes.
COMPARISON OF OPERATING RESULTS FOR THE FISCAL YEARS ENDED MAY 31, 1997 AND 1996
General. Net income for the fiscal year ended May 31, 1997 was $2.8
million, compared to $1.5 million for the fiscal year ended May 31, 1996. The
increase of $1.3 million resulted primarily from an 18% increase in the Bank's
net interest margin and greater profits on sales of mortgage-backed securities.
Also contributing to the increase in net income was a decline in the Bank's
provision for income taxes due to a change in tax regulations from an effective
tax rate of 41% in fiscal 1996 to 38% in fiscal 1997.
Net Interest Income. Net interest income, or the difference between
interest and dividend income and interest expense, for the fiscal year ended May
31, 1997 increased $1.7 million, or 17.7%, to $11.3 million. This increase
reflects the overall rise in the Bank's average interest rate spread of 14 basis
points to 3.62%, and a rise in the Bank's net interest margin of 22 basis points
to 4.20% for the 1997 fiscal year, as well as a greater increase in
interest-earning assets than interest-bearing liabilities.
Market interest rates were slightly higher in the 1997 fiscal year across
the entire U.S. Treasury yield curve than in the 1996 fiscal year. While the
Bank realized a higher overall yield of nine basis points on its average
interest-earning assets, yields on the Bank's interest-bearing liabilities
declined by five basis points.
Interest and Dividend Income. Interest and dividend income totaled $20.7
million for the fiscal year ended May 31, 1997, compared to $18.3 million for
the fiscal year ended May 31, 1996. This increase of $2.4 million, or 13.1%,
reflects an increase of more than $3.3 million in interest and dividends on
securities due to the securitization of approximately $50 million of the Bank's
mortgages in April and May 1996, offset, in part, by a decrease in the average
yield of the Bank's mortgage-backed securities of 89 basis points. The increase
in interest and dividends was offset, in part, by a decline of over $600,000 in
interest income on mortgage and other loans due to the decreased volume of such
loans resulting mainly from such securitization, mitigated somewhat by an
increase of 13 basis points in the average yield of such loans. Interest income
on federal funds sold decreased substantially in the fiscal year ended May 31,
1997, as compared to the prior years, due to management's focus on extending
maturities slightly, in its efforts to increase yield in a flattening yield
curve environment.
Interest Expense. Interest expense on deposits and borrowings increased
$660,000 to $9.4 million for the fiscal year ended May 31, 1997, compared to
$8.7 million for the fiscal year ended May 31, 1996. This increase reflects an
increase in average interest-bearing liabilities of $18.8 million during the
1997 fiscal year and a decrease in the average rate paid on such liabilities of
five basis points over the same period. The increase in average interest-bearing
liabilities is primarily attributable to an increase in the average balance of
borrowed funds to $31.2 million for the 1997 fiscal year from $489,000 for the
1996 fiscal year. Average certificate of deposit accounts declined by
approximately $10.7 million in fiscal year 1997, partially due to the maturity
of the Premium Certificates, attributable to the Bank's decision not to offer
premium rates in a highly competitive rate environment. While there was a 12%
decline in average certificate of deposit accounts, there was a 22% decline in
the interest expense associated with such accounts, from $5.1 million in the
fiscal year ended 1996 to $4.0 million in the 1997 fiscal year. As a result, the
Bank's total cost of funds decreased by five basis points, from 4.11% to 4.06%,
despite the increases in market interest rates in fiscal year 1997.
Provision for Loan Losses. The provision for loan losses decreased to
$130,000 for the fiscal year ended May 31, 1997 from $140,000 for the fiscal
year ended May 31, 1996, although there was an increase in non-performing loans
(consisting of loans over 90 days past due and non-accrual loans) to $1.4
million at May 31, 1997, from $863,000 at May 31, 1996. At May 31, 1997, the
percentage of the allowance for loan losses to total loans was 0.88%, as
compared to 1.18% as of May 31, 1996. However, management's analysis shows that
the majority of the non-performing loans are one- to-four-family residential
mortgage loans. Moreover,
46
<PAGE> 48
management believes that most of these loans are adequately secured by
properties affording low loan-to-value ratios, based upon current evaluations.
In addition, management performs a quarterly in depth analysis of its allowance
for loan losses. Based upon loan types and volumes, loan review and
classification systems, and the factors described above and various other
factors, management has made regular determinations that its allowance and
monthly provisions are adequate. See "Business of the Bank -- Asset Quality."
Other Income. Other income, net, for the fiscal year ended May 31, 1997
increased $696,000 to $2.8 million from $2.1 million for the fiscal year ended
May 31, 1996. This increase was primarily attributable to increased gains on
sales of mortgage-backed securities, emanating from the Bank's mortgage banking
operation. Total service and fee income increased by 8% to $1.9 million in the
fiscal year ended May 31, 1997, due to service charges and other fees reflecting
increased loan and loan servicing activity, as well as increases in certain
transaction fees during the 1997 fiscal year.
Other Expenses. Other expenses increased $273,000 to $9.3 million for the
fiscal year ended May 31, 1997 from $9.1 million for the fiscal year ended May
31, 1996. The increase in other expenses primarily reflects increases in
salaries and employee benefits and occupancy costs. Salaries and employee
benefits expense increased $206,000 to $5.3 million for the 1997 fiscal year
compared to $5.0 million for the 1996 fiscal year. This increase was primarily
attributable to a general increase in salaries. Data processing costs and
advertising costs increased by $156,000, or 32%, and $23,000, or 18%,
respectively. The Bank's ratio of other expenses to average assets decreased to
3.28% in the 1997 fiscal year from 3.48% in the 1996 fiscal year.
Income Tax Expense. Income tax expense increased $732,000, or 71%, for the
fiscal year ended May 31, 1997 from slightly more than $1 million for the fiscal
year ended May 31, 1996. This increase was due to the increase of $2.1 million,
or 86%, in pre-tax income, offset by savings due to a change in the Bank's
effective tax rate from 41% in fiscal 1996 to 38% in fiscal 1997.
COMPARISON OF FINANCIAL CONDITION AT MAY 31, 1996 AND MAY 31, 1995
Total assets increased $15.3 million to $274.0 million at May 31, 1996 from
$258.7 million at May 31, 1995, reflecting the Bank's ongoing strategy of
controlled growth. The asset growth was funded primarily through borrowings, in
the form of securities sold under repurchase agreements and FHLBNY advances,
which increased by $4.7 million and $3.6 million, respectively. Deposit
liabilities increased $4.0 million to $233.0 million at May 31, 1996 from $229.0
million at May 31, 1995.
Asset growth was concentrated in securities, which increased $34.0 million
to $144.3 million. Loans, net, showed a decrease of $13.8 million to $108.9
million at May 31, 1996. These changes resulted in part from the Bank's
securitization in April and May of 1996 of approximately $50 million in
self-originated residential mortgages, which had the effect of reducing loans,
net, and increasing securities. The securitization represented the pooling of
the Bank's own residential mortgages into FNMA mortgage-backed securities, held
in the Bank's investment securities portfolio, to reduce the Bank's credit risk
inherent with respect to those residential mortgage loans.
Real estate owned, net decreased $163,000 to $330,000 at May 31, 1996 from
$493,000 at May 31, 1995.
The Bank's total net worth increased $1.7 million to $24.8 million at May
31, 1996 from $23.1 million at May 31, 1995, primarily due to net income for the
fiscal year.
COMPARISON OF OPERATING RESULTS FOR THE FISCAL YEARS ENDED MAY 31, 1996 AND 1995
General. Net income for the fiscal year ended May 31, 1996 was $1.5 million
compared to $504,000 for the fiscal year ended May 31, 1995. The $1.0 million
increase was due mainly to an increase in total other income of $1.2 million and
gains on sales of securities of $356,000 in fiscal year 1996, as compared to
losses on sales of securities of $429,000 for fiscal year 1995, as well as an
increase of $191,000 in net interest income for the 1996 fiscal year.
Additionally, the Bank reduced its provision for loan losses by $121,000 for the
1996 fiscal year to $140,000, from $261,000 in the fiscal year ended in 1995.
The increase in net income was offset, in part, by an increase of $1.1 million
in salaries and employee benefits.
47
<PAGE> 49
Net Interest Income. Net interest income for the fiscal year ended May 31,
1996 increased $191,000 to $9.6 million. This increase occurred despite a
decline in the Bank's interest rate spread and margin from 3.84% and 4.27%,
respectively, for the fiscal year ended May 31, 1995 to 3.48% and 3.98%,
respectively, for the fiscal year ended May 31, 1996, due, in part, to
management's offering of the slightly higher costing Premium Certificates in
February 1995, which increased the Bank's average cost and balances on
certificates of deposit by 93 basis points and $30.8 million, respectively.
Interest and Dividend Income. Interest and dividend income increased $2.1
million to $18.3 million for the fiscal year ended May 31, 1996, compared to
$16.2 million for the fiscal year ended May 31, 1995. This increase reflects an
increase of 23 basis points in the average yield on the Bank's interest-earning
assets to 7.59% for the 1996 fiscal year from 7.36% for the 1995 fiscal year, as
well as an increase of $20.5 million in the average balance of interest-earning
assets, due primarily to an increase of $19.5 million in the average balance of
mortgage loans, net. While the level of overall interest rates was declining in
fiscal year 1996, the effects of lower rates were partially offset by the Bank's
sales of lower yielding securities and purchases of higher yielding securities
in the Bank's investment securities portfolio, which served to increase average
investment securities yields by 33 basis points from the 1995 fiscal year. In
addition, the average yields on mortgage-backed securities increased to 8.24%,
and the average balance of such securities increased $3.4 million in the 1996
fiscal year as compared to the year earlier period.
Interest Expense. Interest expense on deposits and borrowings increased
$1.9 million to $8.7 million for the fiscal year ended May 31, 1996, compared to
$6.8 million for the fiscal year ended May 31, 1995. This increase primarily
reflects an increase in the average rate paid on interest-bearing liabilities of
59 basis points during the 1996 fiscal year compared to the 1995 fiscal year,
due to the higher costing Premium Certificates offered by the Bank in February
1995. As a result of this offering, the average cost of all certificates of
deposit in fiscal year 1996 increased to 5.69% from 4.76% in fiscal year 1995.
While the average cost of passbook accounts remained unchanged between fiscal
years 1995 and 1996, average balances in this type of account declined by $10.1
million, essentially shifting to the higher cost Premium Certificates, the
average balances of which increased by more than $30.8 million in fiscal year
1996, as compared to fiscal year 1995.
Provision for Loan Losses. The provision for loan losses decreased to
$140,000 for the fiscal year ended May 31, 1996 from $261,000 for the fiscal
year ended May 31, 1995. This was attributable to a decrease in non-performing
loans to $863,000 at May 31, 1996 from $2.2 million at May 31, 1995. At May 31,
1996, the percentage of the allowance for loan losses to non-performing loans
was 151.22%, representing an increase from 54.77% at May 31, 1995. As a
percentage of total loans, the allowance for loan losses was 1.18% at May 31,
1996 compared to 0.97% at May 31, 1995. The percentage of non-performing loans
to total loans decreased to 0.78% at May 31, 1996 from 1.78% at May 31, 1995.
See "Business of the Bank -- Asset Quality."
Other Income. Other income for the fiscal year ended May 31, 1996 increased
$1.2 million to $2.1 million, an increase from $876,000 for the fiscal year
ended May 31, 1995. This increase was primarily attributable to a net gain on
sale of securities of $356,000 for the 1996 fiscal year compared to a net loss
on sale of securities of $429,000 for the 1995 fiscal year. Other income was
also affected by an increase of $399,000, or 29%, in service and fee income
associated with a newly introduced value added checking account and increased
loan servicing fees from the mortgage banking operation. Gains on loan sales
also increased by about $105,000 in fiscal year 1996, as compared to the year
earlier period.
Other Expenses. Other expenses increased $974,000 to $9.1 million for the
fiscal year ended May 31, 1996 from $8.1 million for the fiscal year ended May
31, 1995. The Bank's other expenses increased because of the start-up costs
associated with adding additional capacity to the Bank's mortgage origination
operations, including back office costs, which, in part, caused a $1.1 million
increase in salaries and employee benefits. Other operating expenses, such as
data processing fees, increased by $70,000 in fiscal year ended 1996 to
$484,000, and professional fees increased $103,000 to $325,000 for the 1996
fiscal year, compared to $414,000 and $222,000, respectively, for the 1995
fiscal year. These items were partially offset by a decline of $413,000 in FDIC
assessments to $53,000 in fiscal 1996.
48
<PAGE> 50
Income Tax Expense. Income tax expense increased $230,000 to $1.0 million
for the fiscal year ended May 31, 1996 from $794,000 for the fiscal year ended
May 31, 1995. This increase was primarily due to the $546,000 increase in
pre-tax income.
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
The Bank changed its method of accounting for the cost of post-retirement
health care and life insurance benefits in the fiscal year ended in the 1995
upon adoption of SFAS No. 106, "Employers' Accounting for Post-retirement
Benefits Other Than Pensions." The cumulative effect of this accounting change
was fully recognized as a liability in fiscal year ended 1995 equal to the full
amount of the Bank's accumulated benefit obligation. Under SFAS No. 106, the
cost of post-retirement health care and life insurance benefits is recognized on
an accrual basis as such benefits are earned by active employees. Prior to
fiscal 1995, the Bank recognized the cost of these benefits on a pay-as-you-go
(cash) basis.
LIQUIDITY AND CAPITAL RESOURCES
The Bank's primary sources of funds are retail deposits, wholesale funding
from FHLBNY or other bank borrowings, securities sold under repurchase
agreements, principal and interest payments on loans and securities and, to a
lesser extent, proceeds from the sale of securities. While maturities and
scheduled amortization of loans and securities provide an indication of the
timing of the receipt of funds, changes in interest rates, economic conditions,
and competition strongly influence mortgage prepayment rates and deposit flows,
reducing the predictability of the timing of sources of funds.
The Bank has no required regulatory liquidity ratios or balances to
maintain, however, it does adhere to a Liquidity and Funds Management policy
approved by its Board of Trustees, which sets minimum internal guidelines for
liquidity purposes. The Bank remits monthly reports to the NYSBD, including a
liquidity calculation.
The primary investing activities of the Bank are the origination of one- to
four-family residential mortgage loans, commercial real estate and commercial
business loans, a variety of consumer loans, and the purchase of mortgage-backed
and mortgage related securities, and debt and equity securities. During the
three months ended August 31, 1997 and the fiscal years ended May 31, 1997, 1996
and 1995, the Bank's disbursements for loan originations totaled $33.2 million,
$100.6 million, $108.4 million and $41.9 million, respectively. Purchases of
mortgage-backed securities totaled $10.1 million, $23.2 million and $12.1
million for the three months ended August 31, 1997 and the fiscal years ended
May 31, 1997 and 1996, respectively; no such purchases were made in the fiscal
year ended May 31, 1995. Other debt and equity securities purchased during the
three months ended August 31, 1997 and the fiscal years ended May 31, 1997,
1996, and 1995 were $8.5 million, $26.1 million, $24 million and $33.8 million,
respectively. The Bank's investing activities are funded primarily by
borrowings, net deposit inflows, sales of loans and securities and principal
repayments on loans and securities. The Bank increased borrowings at May 31,
1997 and 1996 by $20 million and $8.3 million, respectively, to fund its
investments. For the fiscal year ended May 31, 1995, the Bank experienced a net
increase in deposits of $21.5 million. This increase reflects the general
increase in market interest rates which made deposit products a more attractive
investment alternative for the Bank's customers, as well the offering of the
above market Premium Certificates to increase the Bank's liquidity at the time
of the failure of Nationar and the lack of a viable liquidity source at that
time, since the Bank had not yet become a member of the FHLBNY. During the month
of February 1995, the Bank managed to gather nearly $44 million in a nine-month
certificate of deposit at a cost of 6.82%, due to extensive advertising.
As a member of the FHLBNY, the Bank has the availability of two lines of
credit for borrowings in the amounts of $14.4 million each, one on an overnight
and the other on a 30-day term basis. In accordance with the FHLBNY's credit
policy, the Bank now has total facilities available of $86.5 million, inclusive
of the aforementioned amounts, before the delivery of qualifying collateral is
required. Additionally, the Bank has other sources of liquidity if the need
arises. One source is to borrow up to $5 million from a commercial bank on an
unsecured basis and the other is the ability to sell securities under repurchase
agreements in an amount up to $10 million from a securities investment company.
49
<PAGE> 51
On February 6, 1995, the Superintendent took possession of Nationar, a
check-clearing and trust company, freezing all of Nationar's assets. On that
date, the Bank had demand accounts with Nationar of approximately $3.9 million.
Management charged-off approximately $97,000 and of its investment in Nationar
securities in the fiscal year ended in 1995. On June 27, 1996, the Bank received
payment of $3.5 million and subsequently received additional payments totaling
$291,000 later in 1996 and early 1997. The Bank does not expect to receive any
further payments in any material amounts with respect to Nationar.
At August 31, 1997, the Bank had outstanding loan origination commitments
of $28.6 million and unadvanced/unused commercial lines of credit of $5.0
million. The Bank anticipates that it will have sufficient funds available to
meet its current origination and other lending commitments. Certificates of
deposit scheduled to mature in one year or less from August 31, 1997 totaled
$70.3 million and based upon recent experience and pricing strategy, management
believes that a significant portion of such deposits will remain with the Bank.
At August 31, 1997, the Bank exceeded all of its regulatory capital
requirements with a Tier 1 capital level of $28.0 million, or 9.81% of average
assets, which is well above the required level of $11.4 million, or 4% of
average assets. The Bank's ratio of Tier 1 capital to risk weighted assets of
19.19% at August 31, 1997 is also well above the required level of 4%. The
Bank's ratio of total capital to risk weighted assets is 20.12%, which is well
above the required level of 8%. See "Regulatory Capital Compliance" and
"Regulation and Supervision -- Federal Banking Regulation -- Capital
Requirements."
IMPACT OF INFLATION AND CHANGING PRICES
The Financial Statements and Notes thereto presented herein have been
prepared in accordance with GAAP, which require the measurement of financial
position and operating results in terms of historical dollars without
considering the changes in the relative purchasing power of money over time due
to inflation. The impact of inflation is reflected in the increased cost of the
Bank's operations. Unlike industrial companies, nearly all of the assets and
liabilities of the Bank are monetary in nature. As a result, interest rates have
a greater impact on the Bank's performance than do the effects of general levels
of inflation. Interest rates do not necessarily move in the same direction or to
the same extent as the price of goods and services.
IMPACT OF NEW ACCOUNTING STANDARDS
Accounting for Long Lived Assets. In 1995, the FASB issued Statement of
Financial Accounting Standards No. 121, "Accounting for Impairment of Long-Lived
Assets to be Disposed of" ("SFAS No. 121"). This Statement established
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to be held and
used and for long-lived assets and certain identifiable intangibles to be
disposed of. This Statement became effective for fiscal years beginning after
December 15, 1995, although earlier implementation was permitted. Adoption of
this Statement did not have a material effect on the Bank's financial
statements.
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. In June 1996, the FASB issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities" ("SFAS No. 125"), which supersedes SFAS No. 122. This Statement
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities based on consistent
application of a financial-components approach that focuses on control. It
distinguishes transfers of financial assets that are sales from transfers that
are secured borrowings. Under the financial-components approach, after a
transfer of financial assets, an entity recognizes all financial and servicing
assets it controls and liabilities it has incurred and derecognizes financial
assets it no longer controls and liabilities that have been extinguished. The
financial-components approach focuses on the assets and liabilities that exist
after the transfer. Many of these assets and liabilities are components of
financial assets that existed prior to the transfer. If a transfer does not meet
the criteria for a sale, the transfer is accounted for as a secured borrowing
with pledge of collateral. The Statement is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
December 31, 1996, and should be applied
50
<PAGE> 52
prospectively. Earlier or retroactive application of this Statement is not
permitted. Adoption of this Statement did not have a material effect on the
Bank's financial statements.
Accounting for Earnings per Share. In March 1997, the FASB issued SFAS No.
128, "Earnings per Share." SFAS No. 128 specifies the computations,
presentation, and disclosure requirements for Earnings per Share by all entities
with publicly held common stock or potential stock. SFAS 128 supersedes
Accounting Principles Board Opinion No. 15 "Earnings per Share." SFAS No. 128 is
effective for financial statements for interim and annual periods ending after
December 15, 1997.
Accounting for the Disclosure of Information about Capital Structure. In
March 1997, the FASB issued SFAS No. 129, "Disclosure of Information about
Capital Structure." SFAS No. 129 is effective for financial statements for
periods ending after December 15, 1997. SFAS No. 129 does not change disclosure
requirements for the Bank.
Accounting for Reporting Comprehensive Income and Disclosures about
Segments of an Enterprise and Related Information. In June 1997, the FASB issued
SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information." These Statements are
effective for fiscal years beginning after December 15, 1997 and restatement of
financial statements or information for earlier periods provided for comparative
purposes is required. The provisions of these Statements will not affect the
Bank's results of operations or financial condition.
51
<PAGE> 53
BUSINESS OF THE COMPANY
GENERAL
The Company was organized as a Delaware corporation on September 10, 1997
at the direction of the Board of Trustees of the Bank for the purpose of
becoming the holding company to own all of the outstanding capital stock of the
Bank upon consummation of the Conversion. The Company has received the approval
of the FRB to acquire the Bank and become a bank holding company, and, as such,
the Company will be subject to the regulations of the FRB. See "Regulation and
Supervision -- Holding Company Regulation."
BUSINESS
The Company is not an operating company. Following the Conversion, in
addition to directing, planning and coordinating the business activities of the
Bank, the Company will initially invest primarily in federal funds, government
and federal agency mortgage-backed securities, other debt securities, high-grade
short-term marketable securities, equity securities, deposits of or loans to the
Bank or a combination thereof. In addition, the Company intends to fund the loan
to the ESOP to enable the ESOP to subscribe for up to 8% of the Common Stock to
be issued in the Conversion, including shares issued to the Foundation. In the
future, the Company may acquire or organize other operating subsidiaries,
including other financial institutions, or it may merge with or acquire other
financial institutions and financial services related companies, although there
are no current arrangements, understandings or agreements, written or oral,
regarding any such expansion. See "Use of Proceeds." Initially, the Company will
neither own nor lease any property but will instead use the premises, equipment
and furniture of the Bank. At the present time, the Company does not intend to
employ any persons other than certain officers of the Bank who will not be
separately compensated by the Company. The Company may utilize the support staff
of the Bank from time to time, if needed. Additional employees will be hired as
appropriate to the extent the Company expands its business in the future.
52
<PAGE> 54
BUSINESS OF THE BANK
GENERAL
The Bank is a community-oriented mutual savings bank, which was chartered
by the State of New York in 1875. The Bank's principal business has been and
continues to be attracting retail deposits from the general public in the area
surrounding its four branches and investing those deposits, together with funds
generated from operations and borrowings, primarily in one- to four-family
residential mortgage loans, mortgage-backed securities, commercial business and
commercial real estate loans and various debt and equity securities. The Bank
also originates home equity loans (Good Neighbor Home Loans) and lines of
credit, consumer loans, student loans and its own credit card loans.
Additionally, the Bank sells Savings Bank Life Insurance.
The Bank's revenues are derived principally from the interest on its
mortgage loans, securities, commercial and consumer loans and, to a lesser
degree, from its mortgage banking activities, loan and securities sales,
servicing fee income and income derived from non-traditional investment products
offered through its wholly owned subsidiary, WSB Financial. The Bank's primary
sources of funds are deposits, borrowings, principal and interest payments on
loans and securities and proceeds from the sale of loans and securities.
MARKET AREA
The Bank has been, and intends to continue to be, a community-oriented
savings institution offering a variety of financial services to meet the needs
of the communities it serves. The Bank maintains its headquarters in the village
of Warwick in Orange County, New York and operates three additional branch
offices located in the village of Monroe, the town of Woodbury and the city of
Middletown, Orange County, New York. The Bank's primary deposit gathering areas
are currently concentrated in proximity to its full service banking offices. The
Bank's current primary lending market includes not only Orange County, New York,
but also Rockland, Dutchess, and to a lesser extent, Westchester, Putnam and
Sullivan Counties, New York, by virtue of the various loan originators servicing
these areas. In addition, with the proposed establishment of the Bank's mortgage
banking subsidiary, WSB Mortgage, and its attendant loan production office in
West Milford, Passaic County, New Jersey, the Bank anticipates that it will
penetrate into the northeastern New Jersey market.
Although the Bank's market area is predominantly rural with many small
towns, many of the area's residents work in northern New Jersey, western
Connecticut and New York City. Some of the county's major employers are ShopRite
Supermarkets, the Arden Hill Hospital and related life care complex, Horton
Memorial Hospital, Yellow Freight, the Wakefern Corporation and the United
States Military Academy at West Point.
The Bank's market area grew significantly in population during the 1980's
as rising housing prices closer to New York City, coupled with the abundance of
vacant land in Orange County, led to a boom in housing construction. As the
economy throughout the region declined in the late 1980's and early 1990's,
communities surrounding the Bank's offices, particularly in the Warwick area,
continued to experience growth, but more slowly. The conversion of Stewart
International Airport, approximately 20 miles to the northeast of the Bank's
main office in Warwick, into a full-service commercial airport in 1990 gave the
Bank's market area an additional boost. However, the health of the economy in
the New York City metropolitan area has, and will continue to have, a direct
impact on the economic well-being of residents and businesses in the Bank's
market area.
COMPETITION
The Bank faces substantial competition for both deposits and loans. The
deregulation of the financial services industry has led to increased competition
among savings banks and other financial institutions for a significant portion
of the deposit and lending activity that had traditionally been the arena of
savings banks and savings and loan associations. The Bank competes for savings
deposits with other savings banks, savings and loan associations, commercial
banks, credit unions, money market mutual funds, insurance companies, brokerage
firms and other financial institutions, many of which are substantially larger
in size than the Bank.
53
<PAGE> 55
The Bank's competition for loans comes principally from savings banks,
savings and loan associations, commercial banks, mortgage bankers, finance
companies and other institutional lenders, many of whom maintain offices in the
Bank's market area. The Bank's principal methods of competition include
providing personal customer service, a variety of financial services and
competitive loan and deposit pricing, as well as implementing advertising and
marketing programs.
While the Bank is subject to competition from other financial institutions,
some of which have much greater financial and marketing resources, the Bank
believes it benefits by its community bank orientation as well as its relatively
high core deposit base. See "Risk Factors -- Competition." Management believes
that the variety, depth and stability of the communities in which the Bank is
located support the service and lending activities conducted by the Bank. The
relative economic stability of the Bank's lending area is reflected in the small
number of mortgage delinquencies experienced by the Bank.
LENDING ACTIVITIES
Loan Portfolio Composition. The Bank's loan portfolio consists primarily of
conventional first mortgage loans secured by one- to four-family residences. At
August 31, 1997, the Bank had total gross loans outstanding of $156.2 million
(before deducting the allowance for loan losses and net deferred loan fees), of
which $96.7 million, or 61.93%, were one- to four-family, owner-occupied
residential first mortgage loans. The remainder consisted of $25.1 million of
commercial business and commercial real estate loans, or 16.04% of total loans,
$14.4 million in home equity loans, or 9.20% of total loans, $3.9 million in
residential construction mortgage loans (net of undisbursed portion), or 2.52%
of total loans, and $13.3 million in consumer loans, or 8.54% of total loans.
Additionally, the Bank originates VA guaranteed loans and FHA insured loans. For
the three months ended August 31, 1997 and the fiscal year ended May 31, 1997,
the Bank originated $1.2 million and $5.9 million, respectively, of such loans.
The Bank is active in the origination of SONYMA loans, which are subject to
certain customer eligibility requirements and are subsequently sold to the State
of New York. For the three months ended August 31, 1997 and the fiscal year
ended May 31, 1997, the Bank originated $2.6 million and $8.2 million,
respectively, in SONYMA loans. The Bank continues to service these loans for
such agency and, instead of a servicing fee, the Bank obtains a state
(franchise) income tax credit.
The types of loans that the Bank may originate are subject to federal and
state laws and regulations. Interest rates charged by the Bank on loans are
affected by the demand for such loans, the supply of money available for lending
purposes and the rates offered by competitors. These factors are in turn
affected by, among other things, economic conditions, monetary policies of the
federal government, including the FRB and legislative tax policies.
54
<PAGE> 56
The following table sets forth the composition of the Bank's loan portfolio
in dollar amounts and as a percentage of the portfolio at the dates indicated:
<TABLE>
<CAPTION>
AT MAY 31,
-----------------------------------------------------------------------
AT AUGUST 31,
1997 1997 1996 1995 1994
------------------ ------------------ ------------------ ------------------ --------
PERCENT PERCENT PERCENT PERCENT
OF OF OF OF
AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL AMOUNT
-------- ------- -------- ------- -------- ------- -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MORTGAGE LOANS:
Conventional one- to four-family
loans............................... $ 96,748 61.93% $ 81,803 58.56% $ 61,936 56.18% $ 78,562 63.34% $ 71,762
Mortgage loans held for sale......... 2,028 1.30 4,832 3.46 5,054 4.58 2,968 2.39 --
VA or FHA loans...................... 729 0.47 749 0.54 376 0.34 182 0.15 211
Home equity loans.................... 14,369 9.20 13,449 9.63 11,040 10.01 9,714 7.83 10,051
Residential construction loans....... 6,127 3.92 4,110 2.94 961 0.87 2,901 2.34 1,613
Undisbursed portion of construction
loans............................... (2,193) (1.40) (2,118) (1.52) (1,838) (1.67) (1,307) (1.05) (1,169)
-------- ------ -------- ------ -------- ------ -------- ------ --------
Total mortgage loans.............. 117,808 75.42 102,825 73.61 77,529 70.33 93,020 75.00 82,468
-------- ------ -------- ------ -------- ------ -------- ------ --------
CONSUMER AND OTHER LOANS:
Commercial........................... 25,065 16.04 23,418 16.76 19,385 17.59 17,772 14.33 15,472
Automobile........................... 7,632 4.89 7,738 5.54 7,496 6.80 7,483 6.03 6,621
Student.............................. 1,345 0.86 1,332 0.95 1,533 1.39 1,732 1.40 1,438
Credit card.......................... 1,346 0.86 1,334 0.95 1,195 1.08 1,165 0.94 1,285
Other consumer loans................. 3,020 1.93 3,054 2.19 3,102 2.81 2,855 2.30 2,410
-------- ------ -------- ------ -------- ------ -------- ------ --------
Total consumer and other loans.... 38,408 24.58 36,876 26.39 32,711 29.67 31,007 25.00 27,226
-------- ------ -------- ------ -------- ------ -------- ------ --------
Total loans................... 156,216 100.00% 139,701 100.00% 110,240 100.00% 124,027 100.00% 109,694
Discounts, premiums and deferred loan
fees, net........................... (184) (146) (38) (158) (187)
Allowance for loan loss.............. (1,367) (1,232) (1,305) (1,206) (909)
Total loans, net.............. $154,665 $138,323 $108,897 $122,663 $108,598
======== ======== ======== ======== ========
<CAPTION>
1993
------------------
PERCENT PERCENT
OF OF
TOTAL AMOUNT TOTAL
------- -------- -------
<S> <C> <C> <C>
MORTGAGE LOANS:
Conventional one- to four-family
loans............................... 65.42% $ 78,489 71.40%
Mortgage loans held for sale......... 0.00 -- 0.00
VA or FHA loans...................... 0.19 695 0.63
Home equity loans.................... 9.16 7,660 6.97
Residential construction loans....... 1.47 1,801 1.64
Undisbursed portion of construction
loans............................... (1.06) (685) (0.62)
------
Total mortgage loans.............. 75.18 87,960 80.01
------
CONSUMER AND OTHER LOANS:
Commercial........................... 14.10 10,992 10.00%
Automobile........................... 6.04 6,388 5.81
Student.............................. 1.31 1,457 1.33
Credit card.......................... 1.17 1,035 0.94
Other consumer loans................. 2.20 2,100 1.91
------
Total consumer and other loans.... 24.82 21,972 19.99
------
Total loans................... 100.00% 109,932 100.00%
Discounts, premiums and deferred loan
fees, net........................... (276)
Allowance for loan loss.............. (808)
Total loans, net.............. $108,848
</TABLE>
55
<PAGE> 57
Loan Maturity. The following table shows the contractual maturity of the
Bank's loans at August 31, 1997. The table reflects the entire unpaid principal
balance in the maturity period that includes the final loan payment date and,
accordingly, does not give effect to periodic principal repayments or possible
prepayments. Principal repayments and prepayments totaled $2.0 million for the
three months ended August 31, 1997 and $18.4 million, $23.4 million and $10.4
million for the fiscal years ended May 31, 1997, 1996 and 1995, respectively.
Additionally, since the Bank regularly sells and securitizes residential
mortgage loans as part of its mortgage banking operation, these activities have
resulted in $6.2 million and $21.6 million in loan sales and securitizations,
respectively, for the fiscal year ended in 1997 and $3.7 million and $74.7
million, respectively, for the fiscal year ended in 1996. Loan sales and
securitizations totaled $6.6 million for the three months ended August 31, 1997.
There were no loan sales or securitizations for the fiscal year ended May 31,
1995, the year in which the Bank commenced mortgage banking operations.
<TABLE>
<CAPTION>
AT AUGUST 31, 1997
--------------------------------------------------------------------------------
CONSUMER, HOME EQUITY, COMMERCIAL AND
OTHER LOANS
MORTGAGE LOANS -----------------------------------------
---------------------- HOME
ADJUSTABLE EQUITY
FIXED RATE RATE COMMERCIAL LINES OF CONSUMER OTHER TOTAL LOANS
MORTGAGES MORTGAGES LOANS CREDIT LOANS LOANS RECEIVABLE
---------- --------- ---------- -------- -------- ------ -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Amounts due:
Within one year......................... $ 2,965 $ 307 $ 4,774 $ -- $ 544 $ -- $ 8,590
After one year:
One to three years.................... 322 -- 5,024 -- 5,711 1,382 12,439
Three to five years................... 797 32 9,395 -- 6,114 -- 16,338
Five to 10 years...................... 2,465 876 4,419 349 6,374 -- 14,483
Over 10 years......................... 49,742 45,933 1,453 4,618 1,189 1,431 104,366
------- ------- ------- ------ ------- ------ --------
Total due after one year............ 53,326 46,841 20,291 4,967 19,388 2,813 147,626
------- ------- ------- ------ ------- ------ --------
Total amounts due............... $ 56,291 $47,148 $ 25,065 $4,967 $19,932 $2,813 $ 156,216
Discounts, premiums and deferred loan
fees, net............................. (184)
Allowance for loan losses............... (1,367)
--------
Loans receivable, net................... $ 154,665
========
</TABLE>
The following table sets forth the dollar amounts in each loan category at
August 31, 1997 that are contractually due after August 31, 1998, and whether
such loans have fixed interest rates or adjustable interest rates.
<TABLE>
<CAPTION>
DUE AFTER AUGUST 31, 1998
-----------------------------------
FIXED ADJUSTABLE TOTAL
------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Mortgage loans...................................... $53,326 $ 46,841 $100,167
Commercial loans.................................... 12,658 7,633 20,291
Home equity lines of credit......................... -- 4,967 4,967
Consumer loans...................................... 19,106 282 19,388
Other loans......................................... 2,813 -- 2,813
------- ------- -------
Total loans......................................... $87,903 $ 59,723 $147,626
======= ======= =======
</TABLE>
Origination, Purchase, Sale and Servicing of Loans. The Bank's residential
lending activities are conducted through its team of commissioned loan
originators, who regularly call upon realtors, builders and others in the real
estate business in an effort to solicit mortgage loan applications. The loans
are all self-originated, as the Bank does not use mortgage brokers, with
applications taken at the Bank's various branch offices and loan production
offices. Thereafter, the applications are processed, underwritten and prepared
for closing at the Monroe branch office, and the data is electronically linked
together during the various stages of the application process to facilitate
tracking and monitoring at the Bank's Warwick office.
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<PAGE> 58
The Bank originates both adjustable-rate and fixed-rate mortgage loans. Its
ability to originate loans is dependent upon the relative customer demand for
fixed-rate or adjustable-rate mortgage loans, which is affected by the current
and expected future levels of interest rates. During the fiscal year ended May
31, 1997, the Bank experienced a decrease in fixed-rate mortgage loan
originations, as compared to a slight increase in originations of
adjustable-rate mortgage loans. This was attributed to the increased refinancing
activity that occurred during the 1996 fiscal year following the generally
higher interest rate environment during the 1995 fiscal year. During the three
months ended August 31, 1997, the Bank's fixed-rate mortgage loan originations
amounted to $18.6 million, as compared to $12.0 million during the three months
ended August 31, 1996, and the Bank's adjustable-rate mortgage loan originations
during the three months ended August 31, 1997 totaled $4.1 million, as compared
to $8.9 million during the three months ended August 31, 1996. The Bank
currently holds for its portfolio all adjustable-rate, bi-weekly mortgage loans
and any non-conforming loans it originates. Periodically, the Bank considers the
possible sale of its jumbo loans; however, management believes it has the
ability to build relationships with jumbo mortgage customers to create
cross-selling opportunities. Similarly, management seeks to originate bi-weekly
mortgage loans, due to the requirement that deposit accounts be established to
enable automatic deduction from customer accounts for loan payments.
The residential loan products currently offered by the Bank include VA
guaranteed and FHA insured mortgage loans, a variety of loans that conform to
the underwriting standards specified by FNMA ("conforming loans"), SONYMA loans
and, to a much lesser extent, non-conforming loans, i.e., jumbo loans. The Bank
sells most of the conforming mortgage loans it originates to FNMA in exchange
for FNMA mortgage-backed securities through purchase and guarantee programs
sponsored by FNMA. The Bank then sells such FNMA mortgage-backed securities to
private investors and retains the servicing rights. In those cases in which
non-conforming loans are sold to private institutional investors, servicing
rights are typically released. SONYMA loans are all originated for sale back to
SONYMA, with servicing retained (in exchange for tax credits).
During the time between the processing of a residential mortgage loan
application and the final disposition or sale of such loan after it is closed,
the Bank is exposed to movements in the market price due to changes in market
interest rates. The Bank attempts to manage this risk by utilizing forward sales
of mortgage-backed securities and put options on mortgage-backed securities to
securities brokers and dealers, as well as cash sales to FNMA. Depending upon
market conditions, interest rate expectations, economic data and other factors,
the Bank's Hedging Committee, comprised of various members of senior operating
management, which meets daily, attempts to cover certain percentages of its
pipeline and warehouse. However, there can be no assurance that the Bank will be
successful in its efforts to mitigate the risk of interest rate fluctuation
between the time of application origination and the ultimate disposition or sale
of such loans. At August 31, 1997, the Bank had $1 million of forward sale
commitments representing approximately 20% of closed loans and 30-year fixed
rate conforming loan commitments, at specified interest rates at such date. See
"Risk Factors -- Potential Impact of Changes in Interest Rates."
Currently, the Bank services all of its one- to four-family loans,
commercial business and commercial real estate, home equity and consumer loans.
All FHA and VA loans are sold on a servicing-released basis, as are other
selected loans sold to private institutional investors. Additionally, the Bank
services a large volume of conforming fixed-rate and adjustable-rate loans that
it has previously securitized and kept in its securities portfolio or sold
outright to private investors. At August 31, 1997, the Bank was servicing $126.2
million of residential mortgage loans for others. For the three months ended
August 31, 1997 and 1996 and the fiscal years ended May 31, 1997, 1996 and 1995,
loan servicing fees totaled $94,000 and $66,000, $335,000, $158,000 and $97,000,
respectively. Loan servicing includes collecting and remitting loan payments,
accounting for principal and interest, making inspections as required of
mortgaged premises, contacting delinquent mortgagors, supervising foreclosures
and property dispositions in the event of unremedied defaults, ensuring the
status of insurance and tax payments on behalf of the borrowers and generally
administering the loans.
57
<PAGE> 59
The following table sets forth the Bank's loan originations, repayments and
other portfolio activity for the periods indicated.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED AUGUST 31, FOR THE YEAR ENDED MAY 31,
-------------------- --------------------------------
1997 1996 1997 1996 1995
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
MORTGAGE LOANS (GROSS):
At beginning of period................ $ 89,376 $ 66,489 $ 66,489 $ 83,306 $ 72,417
Mortgage loans originated:
Fixed rate mortgages.................. 18,581 12,021 50,250 69,928 13,910
Adjustable rate mortgages............. 4,077 8,893 18,776 15,133 7,392
-------- -------- --------
Total mortgage loans
originated.................. 22,658 20,914 69,026 85,061 21,302
Principal repayments.................. (1,967) (3,512) (18,375) (23,403) (10,413)
Sale of loans......................... (2,632) (2,256) (6,172) (3,731) --
Securitizations....................... (4,006) (6,927) (21,592) (74,744) --
-------- -------- --------
At end of period...................... $103,429 $ 74,708 $ 89,376 $ 66,489 $ 83,306
======== ======== ========
OTHER LOANS (GROSS):
At beginning of period................ $ 50,325 $ 43,751 $ 43,751 $ 40,721 $ 37,277
Commercial loans originated........... 7,062 3,049 14,966 12,326 11,585
Consumer loans originated............. 3,434 4,163 16,774 10,936 8,918
Commercial repayments................. (5,415) (3,439) (10,933) (10,573) (9,368)
Consumer repayments................... (2,619) (1,678) (9,038) (9,659) (7,691)
Other loans sold...................... -- -- (5,195) -- --
-------- -------- --------
At end of period...................... $ 52,787 $ 45,846 $ 50,325 $ 43,751 $ 40,721
======== ======== ========
</TABLE>
One- to Four-Family Mortgage Lending. The Bank offers both fixed-rate and
adjustable-rate mortgage and construction loans, with maturities up to 30 years,
which are secured by one- to four-family, owner-occupied residences. The
majority of such loans are secured by property located in Orange County, New
York, however, there are a number of loans secured by property located in
Rockland and Dutchess Counties, New York, and to a lesser extent in Westchester,
Putnam and Sullivan Counties, New York. See "-- Origination, Purchase, Sale and
Servicing of Loans."
At August 31, 1997, the Bank's total gross loans outstanding were $156.2
million, of which $103.4 million, or 66.20%, were one- to four-family
residential mortgage loans. Of the one- to four-family residential mortgage
loans outstanding at that date, 54.5%, or $56.3 million, were fixed-rate loans
and 45.5%, or $47.1 million, were adjustable-rate loans. The interest rates for
the majority of the Bank's adjustable-rate mortgage loans are indexed to the
yield on one-year U.S. Treasury securities. The Bank currently offers
adjustable-rate mortgage loan programs with interest rates that adjust either
every one or three years. An adjustable-rate mortgage loan may carry an initial
interest rate that is less than the fully-indexed rate for the loan. All
adjustable-rate mortgage loans offered have lifetime interest rate caps or
ceilings. Generally, adjustable-rate mortgage loans pose credit risks somewhat
greater than the credit risk inherent in fixed-rate loans primarily because, as
interest rates rise, the underlying payments of the borrowers rise, increasing
the potential for default. The Bank currently has no mortgage loans that are
subject to negative amortization.
Commercial Lending. As part of the Bank's commercial lending program, the
Bank originates various types of secured and unsecured commercial business loans
and lines of credit and commercial real estate and
58
<PAGE> 60
construction loans. The Bank's commercial loan portfolio consisted of the
following types of commercial loans at the dates indicated.
<TABLE>
<CAPTION>
AT MAY 31,
-------------------------------------------------------------------------------------------------
AT AUGUST 31,
1997 1997 1996 1995 1994 1993
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
PERCENT PERCENT PERCENT PERCENT PERCENT PERCENT
OF OF OF OF OF OF
TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL
AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMMERCIAL
LOANS BY
TYPE:
Non-farm
and
non-residential... $11,555 7.40% $10,372 7.42% $8,288 7.52% $6,749 5.44% $5,046 4.60% $2,495 2.27%
One-to
four-family... 1,145 0.73 1,157 0.83 1,161 1.05 1,387 1.12 1,593 1.45 1,297 1.18
Multi-family... 3,712 2.38 3,022 2.16 1,565 1.42 501 0.40 390 0.36 148 0.13
Farm....... 416 0.27 318 0.23 156 0.14 471 0.38 491 0.45 258 0.23
Acquisition,
development
&
construction... 3,059 1.96 2,781 1.99 2,414 2.19 2,819 2.27 2,393 2.18 625 0.57
Term
loans..... 345 0.22 258 0.18 108 0.10 188 0.15 494 0.45 563 0.51
Installment
loans..... 2,304 1.47 1,796 1.29 1,617 1.47 1,542 1.24 1,920 1.75 1,477 1.34
Demand
loans..... 333 0.21 498 0.36 444 0.40 456 0.37 627 0.57 218 0.20
Time
loans..... 95 0.06 300 0.21 174 0.16 150 0.12 306 0.28 109 0.10
S.B.A.
loans..... 599 0.38 636 0.46 546 0.50 657 0.53 223 0.20 391 0.36
Lines-of-credit... 1,434 0.92 2,166 1.55 2,861 2.60 2,763 2.23 1,922 1.75 3,235 2.94
Loans and
draws
disburse... 37 0.02 88 0.06 -- -- -- -- -- -- -- --
Non-accrual... 31 0.02 26 0.02 51 0.05 89 0.07 67 0.06 176 0.16
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total... $25,065 16.04% $23,418 16.76% $19,385 17.58% $17,772 14.33% $15,472 14.10% $10,992 10.00%
======== ======== ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
Commercial business loans generally carry greater credit risks than
residential mortgage loans because their repayment is more dependent on (i) the
underlying financial condition of the borrower and/or the value of any property
or the cash flow from any property securing the loan or the business being
financed and (ii) general as well as local economic conditions. See "Risk
Factors -- Residential and Non-Residential Lending Risks." Mortgage loans
secured by commercial real estate properties, including construction and
development lending, are generally larger and involve a higher degree of risk
than one- to four-family residential mortgage loans. This risk is attributable
to the uncertain realization of projected income-producing cash flows, which are
affected by vacancy rates, the ability to maintain rent levels against
competitively-priced properties and the ability to collect rent from tenants on
a timely basis. Also, in the case of construction and development lending, risk
is largely dependent upon the accuracy of the initial estimate of the property's
value at completion of construction or development compared to the estimated
cost (including interest payments) of construction and other assumptions. In
addition, commercial construction loans are subject to many of the same risks as
residential construction loans. See "-- Residential Construction Lending."
Commercial Business Lending. The Bank also offers various types of
short-term and medium-term commercial business loans on a secured and unsecured
basis to borrowers located in the Bank's market area. Borrowers in the
commercial market are generally local companies engaged in retailing and
construction that require traditional working capital financing with cyclical
repayments coming primarily from asset conversion. These loans include time and
demand loans, term loans and lines of credit. The Bank is also an approved Small
Business Administration ("SBA") lender. At August 31, 1997, the Bank's
commercial business loan portfolio amounted to $5.6 million, or 3.6% of total
gross loans outstanding. The largest commercial business loan outstanding at
August 31, 1997 was a $499,000 loan to a borrower whose business in Monroe, New
York, specializes in industrial flooring. In addition, the Bank has committed a
line of credit of $2.5 million to the Warwick Valley Telephone Company. At
August 31, 1997, there was no amount of this line outstanding. See "Management
of the Bank -- Transactions with Related Persons."
The Bank's lines of credit are typically established for one year and are
subject to renewal upon satisfactory review of the borrower's financial
statements and credit history. Secured short-term commercial business loans are
usually collateralized by real estate and are generally guaranteed by a
principal of the borrower. Interest on these loans is usually payable monthly at
fixed rates or rates that fluctuate based on a spread above the prime rate. The
Bank offers term loans with terms generally not exceeding five years or less.
59
<PAGE> 61
Typically, term loans have floating interest rates based on a spread above the
prime rate. The Bank also offers business loans on a revolving basis, whereby
the borrower pays interest only. Interest on such loans fluctuates based on the
prime rate. Normally these loans require periodic interest payments during the
loan term, with full repayment of principal and interest at maturity. The Bank
offers business and merchant credit cards to its corporate customers, however,
these services are provided through third party vendors. The Bank bears the
credit risk in the case of business cards, but credit risk is borne by the third
party on merchant credit cards, with the Bank receiving a fee in the latter
case. In approving commercial business loans the Bank will consider adequate
cash flow from the borrower to repay the loan, a secondary source of repayment
and the borrowers' credit standing.
Commercial Real Estate and Construction Lending. The Bank originates
commercial real estate mortgage loans that are generally secured by a
combination of residential property for development and retail facilities and
properties used for business purposes, such as small office buildings and
apartment buildings located in the Bank's market area. Loans are also made to
develop land and for land acquisition. The Bank's loan policy and underwriting
procedures provide that commercial real estate loans may be made in amounts up
to the lesser of (i) 80% of the lesser of the appraised value or purchase price
of the property, in the case of improved, existing commercial, investment type,
(ii) 75% of the lesser of the appraised value or purchase price of the property,
in the case of commercial, multi-family and non-residential construction types,
(iii) 70% of the lesser of the appraised value or purchase price of the
property, in the case of commercial land development, generally for subdivision
or industrial park land development types and (iv) 60% of the lesser of the
appraised value or purchase price of the property in the case of raw land. In
addition to restrictions on loan to value, the Bank's underwriting procedures
provide that commercial real estate loans may be made in amounts up to the
lesser of (i) $2.5 million or (ii) the Bank's current loans-to-one borrower
limit. Regarding (iii) and (iv), the Bank usually engages in this type of
lending only with experienced local developers operating in the Bank's primary
market. Such loans are typically offered for the construction of properties that
are pre-sold or for which permanent financing has been secured. At August 31,
1997, the Bank had $3.1 million in a variety of acquisition, development and
construction ("ADC") loans in its commercial lending area. The Bank's policy is
not to make construction loans for purposes of speculation, so that the borrower
must have secured permanent financing commitments from generally recognized
lenders for an amount greater than the amount of the loan. In most cases, the
Bank itself provides the permanent financing. While the number and volume of
this type of specialized lending is presently limited, it should be noted that
the Bank intends to continue to emphasize its commercial real estate, including
ADC loan activity, as it expands its mortgage origination operations into New
Jersey through WSB Mortgage. The largest commercial real estate loan in the
Bank's portfolio as of August 31, 1997 was a $2.3 million loan secured by a
rental apartment complex known as Highland Park Village in Middletown, New York.
The Bank's commercial mortgage loans are generally prime-based and may be
made with terms up to ten years, generally with a five-year or ten-year balloon
maturity and a 30-year amortization schedule. In reaching its decision as to
whether to make a commercial real estate loan, the Bank considers the
qualifications of the borrower as well as the underlying property. Some of the
factors considered are: the net operating income of the mortgaged premises
before debt service and depreciation, the debt service ratio (the ratio of the
property's net cash flow to debt service requirements), which must be a minimum
of 1.25, the ratio of loan amount to appraised value and the credit worthiness
of the borrower.
Residential Construction Lending. The Bank originates loans for the
acquisition and development of property to individuals in its market area. The
Bank's residential construction loans primarily have been made to finance the
construction one- to four-family, owner-occupied residential properties. The
Bank offers construction to permanent financing loans with one or two closings,
and will not make residential construction loans unless the borrower has been
approved for permanent financing. The interest rate charged during the
construction phase of the loan is based on the 30-year fixed mortgage rate. The
Bank's policies provide that construction loans may be made in amounts up to 95%
of the appraised value of the completed property. At August 31, 1997, the Bank
had $3.9 million of residential construction loans (net of undisbursed portion),
which amounted to 2.52% of the Bank's gross loans outstanding.
60
<PAGE> 62
Construction lending generally involves additional risks to the lender as
compared with residential mortgage lending. These risks are attributable to the
fact that loan funds are advanced upon the security of the project under
construction, predicated on the present value of the property and the
anticipated future value of the property upon completion of construction or
development. Moreover, because of the uncertainties inherent in delays resulting
from labor problems, materials shortages, weather conditions and other
contingencies, it is relatively difficult to evaluate the total funds required
to complete a project and to establish the loan-to-value ratio. If the Bank's
initial estimate of the property's value at completion is inaccurate, the Bank
may be confronted with a project that, when completed, has an insufficient value
to assure full repayment. See "Risk Factors -- Residential and Non-Residential
Lending."
Home Equity Lending. The Bank offers fixed-rate, fixed-term home equity
loans, called the Good Neighbor Home Loan, and adjustable-rate home equity lines
of credit in its market area. Both the loan and line of credit are offered in
amounts up to 80% of the appraised value of the property (including the first
mortgage) with a maximum loan amount of up to $100,000. The fixed-rate,
fixed-term Good Neighbor Home Loan is offered with terms of up to 15 years. The
home equity line of credit is offered for terms up to 20 years, with the first
five years being offered on a revolving basis, requiring payments of interest
only; thereafter, the line converts to an amortizing loan. As of August 31,
1997, $14.4 million, or 9.20%, of the Bank's gross loans were home equity loans.
Consumer Lending. The Bank offers various types of secured and unsecured
consumer loans, including automobile loans, home improvement loans, personal
loans, student loans and credit cards (VISA). The Bank's consumer loans have
original maturities of not more than five years. Interest rates charged on such
loans are set at competitive rates, taking into consideration the type and term
of the loan. Consumer loan applications are reviewed and approved in conformance
with the Bank's board-approved lending policy. At August 31, 1997, the Bank's
consumer loan portfolio totaled $13.3 million, or 8.54% of the total gross loans
outstanding.
Loan Approval Procedures and Authority. The Board of Trustees establishes
the lending policies and loan approval limits of the Bank. Conforming
residential mortgage loans are approved in accordance with FNMA guidelines by
the Bank's underwriting group. Certain conforming loans and all non-conforming
loans are approved by either the Bank's Executive Vice President or President.
The Board of Trustees has established the following lending authority for
commercial lending, including commercial real estate lending: (i) various
officers have limited individual authority up to $25,000; (ii) certain officers
have joint authority up to $100,000; and (iii) the Bank's Commercial Loan
Committee has authority to approve loans of up to $500,000. All of the
aforementioned loans are subsequently ratified by the Executive Committee of the
Board of Trustees. Loans in excess of $500,000 but not more than $1 million must
be approved by the Executive Committee of the Board of Trustees, which meets on
a weekly basis. Loans in excess of $1 million must be approved by the full Board
of Trustees, which meets on a monthly basis. The approval of consumer loans
generally requires the dual authorization of two lending officers for loans over
certain amounts ($5,000-unsecured and $10,000-secured for consumer). Likewise,
home equity loan or lines of credit also require dual authorizations. The
foregoing lending limits are reviewed and reaffirmed annually by the Board of
Trustees.
For all loans originated by the Bank, upon receipt of a completed loan
application from a prospective borrower, a credit report is ordered and certain
other information is verified by an independent credit agency, and, if
necessary, additional financial information is required to be submitted by the
borrower. An appraisal of any real estate intended to secure the proposed loan
is required, which appraisal currently is performed by an independent appraiser
designated and approved by the Bank. The Board of Trustees annually approves the
independent appraisers used by the Bank and approves the Bank's appraisal
policy. It is the Bank's policy to obtain title and hazard insurance on all real
estate loans. In connection with a borrower's request for a renewal of a
multi-family or commercial mortgage loan with a balloon maturity, the Bank
evaluates both the borrower's ability to service the renewed loan applying an
interest rate that reflects prevailing market conditions, as well as the value
of the underlying collateral property. The reevaluation of the property
typically requires a new appraisal, depending upon the loan amount and other
factors. It is the Bank's policy to note all exceptions to policy in the
respective credit files and report such exceptions to the original
decision-making
61
<PAGE> 63
body (i.e., Commercial Loan Committee, Executive Committee or Board of Trustees)
prior to closing if a condition of the original approval is not met.
ASSET QUALITY
Non-Performing Loans. Management and the Board of Trustees perform a
monthly review of delinquent loans. The actions taken by the Bank with respect
to delinquencies vary depending on the nature of the loan and period of
delinquency. The Bank's policies on residential mortgage loans provide that
delinquent mortgage loans be reviewed and that a late charge notice be mailed no
later than the 15th day of delinquency, with the delinquency charge assessed on
the 16th day. The Bank's collection policies on residential mortgage loans
essentially mirror those shown in the FNMA servicing agreements. On other loans,
telephone contact and various delinquency notices at different intervals are the
methods used to collect past due loans.
It is the Bank's general policy to discontinue accruing interest on all
loans when management has determined that the borrower will be unable to meet
contractual obligations or when interest or principal payments are 90 days past
due. When a loan is classified as nonaccrual, the recognition of interest income
ceases. Interest previously accrued and remaining unpaid is reversed against
income. Cash payments received are applied to principal, and interest income is
not recognized unless management determines that the financial condition and
payment record of the borrower warrant the recognition of income. If a
foreclosure action is commenced and the loan is not brought current, paid in
full or an acceptable workout arrangement is not agreed upon before the
foreclosure sale, the real property securing the loan is generally sold at
foreclosure. Property acquired by the Bank as a result of foreclosure on a
mortgage loan is classified as "real estate owned" and is recorded at the lower
of the unpaid balance or fair value less costs to sell at the date of
acquisition and thereafter. Upon foreclosure, it is the Bank's policy to
generally require an appraisal of the property and, thereafter, appraise the
property on an as-needed basis.
The following table sets forth information regarding non-accrual loans,
other past due loans and OREO. There were no troubled debt restructuring within
the meaning of SFAS No. 15 at any of the dates presented below.
<TABLE>
<CAPTION>
AT MAY 31,
AT AUGUST 31, ----------------------------------------------
1997 1997 1996 1995 1994 1993
------------- ------ ------ ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Non-accrual mortgage loans delinquent
more than 90 days.................... $ 1,349 $1,111 $ 582 $1,093 $1,217 $ 165
Non-accrual other loans delinquent more
than 90 days......................... 47 83 82 131 69 176
------ ------ ------ ------ ------
Total non-accrual loans................ 1,396 1,194 664 1,224 1,286 341
Total 90 days or more delinquent and
still accruing....................... 68 237 199 978 928 2,319
------ ------ ------ ------ ------
Total non-performing loans............. 1,464 1,431 863 2,202 2,214 2,660
Total foreclosed real estate, net of
related allowance for losses......... 167 224 330 493 306 --
Investment in real estate, net of
related allowance for losses......... -- -- -- -- -- --
Total non-performing assets............ $ 1,631 $1,655 $1,193 $2,695 $2,520 $2,660
====== ====== ====== ====== ====== ======
Non-performing loans to total loans.... 0.94% 1.02% 0.78% 1.78% 2.02% 2.42%
Total non-performing assets to total
assets............................... 0.56% 0.58% 0.44% 1.04% 1.08% 1.18%
</TABLE>
The amounts of additional interest that would have been recorded on
non-accrual loans, had they been current, totaled $32,000 and $14,000,
respectively, for the three months ended August 31, 1997 and 1996 and for the
fiscal years ended May 31, 1997, 1996 and 1995 totaled $79,400, $53,500 and
$112,200, respectively. Of these amounts $6,000, $1,000, $9,000, $62,000 and
$31,000 was included in interest income for the respective periods.
62
<PAGE> 64
Other Real Estate Owned. At August 31, 1997, the Bank's OREO, net, which
consisted of two single family residential properties, totaled $167,000 and was
held directly by the Bank.
Classified Assets. Federal regulations and the Bank's Internal Loan Review
and Grading System, which is a part of the Bank's loan policy, require that the
Bank utilize an internal asset classification system as a means of reporting
problem and potential problem assets. The Bank limits its loan review procedure
to the higher risk commercial and commercial real estate loans, commercial loans
greater than $25,000 and jumbo residential mortgage loans.
At each regularly scheduled Board of Trustees meeting, a watch list is
presented, showing all loans listed as "Special Mention," "Substandard,"
"Doubtful" and "Loss." An asset is considered Substandard if it is inadequately
protected by the current net worth and paying capacity of the obligor or of the
collateral pledged, if any. Substandard assets included those characterized by
the distinct possibility that the insured institution will sustain some loss if
the deficiencies are not corrected. Assets classified as Doubtful have all the
weaknesses inherent in those classified Substandard with the added
characteristic that the weaknesses present make collection or liquidation in
full, on the basis of currently existing facts, conditions and values, highly
questionable and improbable. Assets classified as Loss are those considered
uncollectible and viewed as non-bankable assets, worthy of charge-off. Assets
which do not currently expose the Bank to sufficient risk to warrant
classification in one of the aforementioned categories, but possess weaknesses
which may or may not be out of the control of management, are deemed to be
"Special Mention."
When an insured institution classifies one or more assets, or portions
thereof, as Substandard or Doubtful, it is required to establish a general
valuation allowance for loan losses in an amount deemed prudent by management.
General valuation allowances, which is a regulatory term, represent loss
allowances which have been established to recognize the inherent risk associated
with lending activities, but which, unlike specific allowances, have not been
allocated to specific problem assets. When an insured institution classifies one
or more assets, or proportions thereof, as "Loss," it is required either to
establish a specific allowance for losses equal to 100% of the amount of the
asset so classified or to charge-off such amount.
The Bank's determination as to the classification of its assets and the
amount of its valuation allowances is subject to review by the FDIC and the
NYSBD, which can order the establishment of additional general or specific loss
allowances. The FDIC, in conjunction with the other federal banking agencies,
has adopted an interagency policy statement on the allowance for loan and lease
losses. The policy statement provides guidance for financial institutions on
both the responsibilities of management for the assessment and establishment of
adequate allowances and guidance for banking agency examiners to use in
determining the adequacy of general valuation guidelines. Generally, the policy
statement recommends that (i) institutions have effective systems and controls
to identify, monitor and address asset quality problems; (ii) management has
analyzed all significant factors that affect the collectibility of the portfolio
in a reasonable manner; and (iii) management has established acceptable
allowance evaluation processes that meet the objectives set forth in the policy
statement. Management believes it has established an adequate allowance for
possible loan and lease losses and analyzes its process regularly, with
modifications made if needed, and reports those results four times per year at
the Bank's Board of Trustees meetings. However, there can be no assurance that
the regulators, in reviewing the Bank's loan portfolio, will not request the
Bank to materially increase its allowance for loan and lease losses at that
time. Although management believes that adequate specific and general loan loss
allowances have been established, actual losses are dependent upon future events
and, as such, further additions to the level of specific and general loan loss
allowances may become necessary.
At August 31, 1997, the Bank had $503,000 of assets classified as
Substandard and $616,000 of assets classified as Special Mention. There were no
assets classified as Doubtful or Loss as of August 31, 1997. The $503,000 of
loans classified as Substandard were also impaired under SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," as amended by SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan -- Income Recognition
Disclosures," which the Bank adopted in fiscal 1995. SFAS No. 114 defines an
impaired loan as a loan for which it is probable, based on current information,
that the lender will not collect all amounts due under the contractual terms of
the loan agreement.
63
<PAGE> 65
The following table sets forth delinquencies in the Bank's loan portfolio
at the dates indicated:
<TABLE>
<CAPTION>
AT AUGUST 31, 1997 AT MAY 31, 1997
------------------------------------------- -------------------------------------------
60-89 DAYS 90 DAYS MORE 60-89 DAYS 90 DAYS OR MORE
-------------------- -------------------- -------------------- --------------------
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
NUMBER BALANCE NUMBER BALANCE NUMBER BALANCE NUMBER BALANCE
OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS
-------- --------- -------- --------- -------- --------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
One- to four-family....... 7 $ 383 17 $ 1,349 7 $ 475 16 $ 1,214
Multi-family.............. -- -- -- -- -- -- -- --
Commercial loans.......... 4 576 4 78 5 724 5 121
Home equity lines of
credit.................. 1 8 1 16 -- -- 2 57
Other loans............... 5 9 4 21 8 16 17 39
-- -- -- --
------ ------ ------ ----
Total loans..... 17 $ 976 26 $ 1,464 20 $ 1,215 40 $ 1,431
== ====== == ====== == ====== == ====
</TABLE>
<TABLE>
<CAPTION>
AT MAY 31, 1996 AT MAY 31, 1995
------------------------------------------- -------------------------------------------
60-89 DAYS 90 DAYS MORE 60-89 DAYS 90 DAYS MORE
-------------------- -------------------- -------------------- --------------------
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
NUMBER BALANCE NUMBER BALANCE NUMBER BALANCE NUMBER BALANCE
OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS
-------- --------- -------- --------- -------- --------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
One- to four-family....... 11 $ 792 11 $ 692 13 $ 495 25 $ 1,497
Multi-family.............. -- -- -- -- -- -- -- --
Commercial loans.......... 7 710 4 58 3 167 2 586
Home equity lines of
credit.................. 1 11 2 57 -- -- 3 43
Other loans............... 9 33 28 56 13 38 29 76
-- ---- -- ------ -- ----- -- -------
Total loans..... 28 $ 1,546 45 $ 863 29 $ 700 59 $ 2,202
== ==== == ====== == ===== == =======
</TABLE>
Allowance for Loan and Lease Losses. The allowance for loan and lease
losses is based upon management's periodic evaluation of the loan portfolio
under current economic conditions, considering factors such as asset
classifications, the Bank's past loss experience, known and inherent risks in
the portfolio, adverse situations that may affect the borrower's ability to
repay and the estimated value of the underlying collateral. The allowance for
loan and lease losses is maintained at an amount management considers adequate
to cover loan and lease losses that are deemed probable and estimable. At August
31, 1997, the Bank's allowance for loan and lease losses was $1.4 million, or
0.88% of total loans, as compared to $1.2 million, or 0.88%, at May 31, 1997.
The Bank had non-performing loans of $1.5 million and $1.4 million at August 31,
1997 and May 31, 1997, respectively. The Bank will continue to monitor and
modify its allowance for loan losses as conditions dictate. Various regulatory
agencies, as an integral part of their examination process, periodically review
the Bank's allowance for loan losses. These agencies may require the Bank to
establish additional valuation allowances, based on their judgments of the
information available at the time of the examination.
64
<PAGE> 66
The following table sets forth activity in the Bank's allowance for loan
losses for the periods indicated.
<TABLE>
<CAPTION>
AT OR FOR THE
THREE MONTHS
ENDED AUGUST AT OR FOR THE
31, YEAR ENDED MAY 31,
--------------- ------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ----- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
ALLOWANCE FOR LOAN LOSSES:
Balance at beginning of
period...................... $1,232 $1,305 $1,305 $1,206 $ 909 $ 808 $ 381
CHARGE-OFFS:
Real estate mortgage loans..... (101) -- (119) (25) (61) (195) --
Commercial loans............... (1) -- -- -- -- (126) (113)
Consumer loans................. (69) -- (94) (125) (47) (58) (53)
------ ------ ------ ------ ------ ----- -----
Total charge-offs...... (171) -- (213) (150) (108) (379) (166)
RECOVERIES:
Real estate mortgage loans..... 2 -- -- 18 123 8 --
Commercial loans............... -- -- -- 74 13 33 38
Consumer loans................. -- 2 10 16 8 24 5
------ ------ ------ ------ ------ ----- -----
Total recoveries....... 2 2 10 108 145 65 44
Provision for loan losses...... 304 20 130 140 261 415 549
------ ------ ------ ------ ------ ----- -----
Balance at end of period....... $1,367 $1,327 $1,232 $1,305 $1,206 $ 909 $ 808
====== ====== ====== ====== ====== ===== =====
Ratio of net charge-offs during
the period to average loans
outstanding................. 0.11% N/A 0.16% 0.03% N/A 0.29% 0.11%
Ratio of allowance for loan
losses to total loans at end
of period................... 0.88% 1.10% 0.88% 1.18% 0.97% 0.83% 0.74%
Ratio of allowance for loan
losses to non-performing
loans....................... 93.44% 94.72% 86.09% 151.22% 54.77% 41.06% 30.38%
</TABLE>
The following table sets forth the Bank's allowance for loan losses
allocated by loan category, the percent of the allocated allowances to the total
allowance and the percent of loans in each category to total loans at the dates
indicated.
<TABLE>
<CAPTION>
AT MAY 31,
-------------------------------------------------------------------------------------------------
AT AUGUST 31, 1997 1997 1996 1995 1994 1993
------------------ ----------------- ----------------- ----------------- ----------------- -----------------
% OF % OF % OF % OF % OF % OF
LOANS IN LOANS IN LOANS IN LOANS IN LOANS IN LOANS IN
CATEGORY CATEGORY CATEGORY CATEGORY CATEGORY CATEGORY
TO TOTAL TO TOTAL TO TOTAL TO TOTAL TO TOTAL TO TOTAL
AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS
------ --------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Allowance
for
mortgage
loan
loss...... $ 398 75.41% $ 224 73.60% $ 393 70.33% $ 403 75.00% $288 75.18% $504 80.01%
Allowance
for
consumer
loan
loss...... 358 8.55 436 9.64 310 12.09 311 10.67 258 10.72 18 9.99
Allowance
for
commercial
loan
loss...... 611 16.04 572 16.76 602 17.58 493 14.33 362 14.10 286 10.00
------ --------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
Total
allowances
for loan
loss...... $1,367 100.00% $1,232 100.00% $1,305 100.00% $1,206 100.00% $909 100.00% $808 100.00%
========= ======== ======= ======= ====== ======= ====== ======= ==== ======= ==== =======
</TABLE>
ENVIRONMENTAL ISSUES
The Bank encounters certain environmental risks in its lending activities.
Under federal and state environmental laws, lenders may become liable for costs
of cleaning up hazardous materials found on properties securing their loans. In
addition, the existence of hazardous materials may make it unattractive for
65
<PAGE> 67
a lender to foreclose on such properties. Although environmental risks are
usually associated with loans secured by commercial real estate, risks also may
be substantial for residential real estate loans if environmental contamination
makes security property unsuitable for use. As of August 31, 1997, the Bank was
not aware of any environmental issues that would subject the Bank to material
liability. No assurance, however, can be given that the values of properties
securing loans in the Bank's portfolio will not be adversely affected by
unforseen environmental contamination.
INVESTMENT ACTIVITIES
Investment Policies. The investment policy of the Bank, which is
established by the Board of Trustees, is contained in the Bank's Liquidity and
Funds Management Policy. It is based upon asset/liability management goals and
emphasizes high credit quality and diversified investments while seeking to
optimize net interest income within acceptable limits of safety and liquidity.
The Bank also considers the investment advice it receives from some of its
outside investment advisers. Recently the Bank has engaged in leveraging
activities to enhance returns on equity. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Management
Strategy," "-- Management of Interest Rate Risk" and "-- Liquidity and Capital
Resources." The policy is designed to provide and maintain liquidity to meet
day-to-day, cyclical and long-term changes in the Bank's asset/liability
structure, and to provide needed flexibility to meet loan demand. Approximately
95% of the Bank's debt security portfolio at August 31, 1997 is classified as
available-for-sale.
The Bank's investment policy permits it to invest in U.S. government
obligations, securities of various government-sponsored agencies, including
mortgage-backed securities issued/guaranteed by FNMA, the Federal Home Loan
Mortgage Corporation ("FHLMC") and the Government National Mortgage Association
("GNMA"), certain types of equity securities (such as institutional mutual
funds), certificates of deposit of insured banks, federal funds and investment
grade corporate debt securities and commercial paper.
The Bank's investment policy prohibits investment in certain types of
mortgage derivative securities that management considers to be high risk. The
Bank generally purchases only short- and medium-term classes of CMOs guaranteed
by FNMA or FHLMC. At August 31, 1997, the Bank held no securities issued by any
one entity with a total carrying value in excess of 10% of the Bank's equity at
that date, except for obligations of the U.S. government and
government-sponsored agencies and certain mortgage-backed securities, which are
fully collateralized by mortgages held by single purpose entities and guaranteed
by government-sponsored agencies.
Mortgage-Backed Securities. The Bank invests in mortgage-backed securities
and uses such investments to complement its mortgage lending activities. At
August 31, 1997, the amortized cost of mortgage-backed securities totaled $67.8
million, or 23.3% of total assets. The market value of all mortgage-backed
securities totaled $69.0 million at August 31, 1997. All of the Bank's
mortgage-backed securities are included in its available-for-sale portfolio.
Additionally, at August 31, 1997, the Bank's securities portfolio included CMOs,
with an amortized cost of $107,000 and a market value of $107,000. A CMO is a
special type of debt security in which the stream of principal and interest
payments on the underlying mortgages or mortgage-backed securities is used to
create classes with different maturities and, in some cases, amortization
schedules as well as a residual interest, with each class possessing different
risk characteristics. However, management regularly monitors the risks inherent
in its CMOs and has reduced its investment in these securities over time. As of
the date of this Prospectus, the Bank did not have any investments in CMOs.
At August 31, 1997, all securities in the Bank's mortgage-backed securities
portfolio were directly or indirectly insured or guaranteed by GNMA, FNMA or
FHLMC. The Bank's mortgage-backed securities portfolio had a weighted average
yield of 7.72% at August 31, 1997.
Mortgage-backed securities generally yield less than the loans that
underlie such securities because of the cost of payment guarantees or credit
enhancements that reduce credit risk. In addition, mortgage-backed securities
are more liquid than individual mortgage loans and may be used to collateralize
borrowings of the Bank. In general, mortgage-backed securities issued or
guaranteed by GNMA, FNMA and FHLMC are
66
<PAGE> 68
weighted at no more than 20% for risk-based capital purposes, compared to the
50% risk weighting assigned to most non-securitized residential mortgage loans.
While mortgage-backed securities carry a reduced credit risk as compared to
whole loans, such securities remain subject to the risk that a fluctuating
interest rate environment, along with other factors, such as the geographic
distribution of the underlying mortgage loans, may alter the prepayment rate of
such mortgage loans and so affect both the prepayment speed and value of such
securities. In contrast to mortgage-backed pass-through securities in which cash
flow is received (and, hence, prepayment risk is shared) pro rata by all
securities holders, the cash flows from the mortgages or mortgage-backed
securities underlying CMOs are segmented and paid in accordance with a
pre-determined priority to investors holding various tranches of such securities
or obligations. A particular tranche of a CMO may therefore carry prepayment
risk that differs from that of both the underlying collateral and other
tranches. It is the Bank's strategy to purchase tranches of CMOs that are
categorized as "planned amortization classes," "targeted amortization classes"
or "very accurately defined maturities" and are intended to produce stable cash
flows in different interest rate environments.
The following table sets forth activity in the Bank's securities portfolio
for the periods indicated.
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS FOR THE YEAR
ENDED AUGUST 31, ENDED MAY 31,
------------------- ------------------------------
1997 1996 1997 1996 1995
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BEGINNING BALANCE...................................... $126,393 $144,284 $144,284 $110,333 $105,433
-------- -------- -------- -------- --------
Debt securities purchased -- held-to-maturity.......... -- -- 200 526 347
Debt securities purchased -- available-for-sale........ 6,510 10,991 23,687 18,723 27,780
Equity securities purchased -- available-for-sale...... 2,007 712 2,277 4,723 5,632
Mortgage-backed securities
purchased -- held-to-maturity........................ -- -- -- -- --
Mortgage-backed securities
purchased -- available-for-sale...................... 10,100 17,297 23,221 12,101 --
Mortgage-backed securities formed by securitizing
originated mortgage loans............................ 3,956 6,856 21,358 72,325 --
LESS:
Sale of debt securities -- available-for-sale.......... 5,298 5,088 18,199 7,184 9,500
Sale of equity securities -- available-for-sale........ 3,476 1,018 5,317 1,876 4,355
Sale of mortgage-backed securities
available-for-sale................................... 15,218 18,661 25,375 -- --
Sale of mortgage-backed securities formed by
securitizing originated mortgage loans -- trading.... 3,956 2,983 17,486 22,668 --
Principal repayments on mortgage-backed securities and
debt securities...................................... 2,638 2,593 10,469 3,637 3,421
Maturities and called debt securities.................. 3,000 3,000 12,425 39,576 12,067
Accretion of discount/amortization of (premium)........ (8) (16) (83) 75 (643)
Change in gross unrealized gains (losses) on
available-for-sale securities........................ 956 (1,061) 720 419 1,127
-------- -------- -------- -------- --------
ENDING BALANCE......................................... $116,328 $145,720 $126,393 $144,284 $110,333
======== ======== ======== ======== ========
</TABLE>
67
<PAGE> 69
The following table sets forth the amortized cost and market value of the
Bank's securities by accounting classification category and by type of security,
at the dates indicated:
<TABLE>
<CAPTION>
AT MAY 31,
------------------------------------------------------------------
AT AUGUST 31, 1997 1997 1996 1995
-------------------- -------------------- -------------------- --------------------
AMORTIZED MARKET AMORTIZED MARKET AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE COST VALUE COST VALUE
--------- -------- --------- -------- --------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Debt securities held-to-maturity:
U.S. Government obligations.... $ 721 $ 728 $ 720 $ 725 $ 717 $ 658 $ 16,891 $ 17,474
Agency securities.............. 4,975 4,980 4,965 4,981 5,887 5,910 17,249 17,205
Municipal bonds................ 406 409 407 410 432 437 485 494
Other debt obligations......... -- -- -- -- 82 83 14,187 14,201
--------- -------- --------- -------- --------- -------- --------- --------
Total debt securities
held-to-maturity........... 6,102 6,117 6,092 6,116 7,118 7,088 48,812 49,374
--------- -------- --------- -------- --------- -------- --------- --------
Debt securities
available-for-sale:
U.S. Government obligations.... 6,580 6,681 9,079 9,165 21,684 21,716 11,201 11,228
Agency securities.............. 23,508 23,730 20,822 20,856 15,328 15,206 8,461 8,419
Other debt obligations......... 5,945 5,991 7,991 8,029 16,203 16,256 20,102 20,255
--------- -------- --------- -------- --------- -------- --------- --------
Total debt securities
available-for-sale......... 36,033 36,402 37,892 38,050 53,215 53,178 39,764 39,902
--------- -------- --------- -------- --------- -------- --------- --------
Equity securities
available-for-sale:
Preferred stock................ 102 104 204 204 305 277 305 281
Mutual funds................... 4,230 4,700 5,597 6,091 8,636 8,821 5,789 5,648
--------- -------- --------- -------- --------- -------- --------- --------
Total equity securities
available-for-sale......... 4,332 4,804 5,801 6,295 8,941 9,098 6,094 5,929
--------- -------- --------- -------- --------- -------- --------- --------
Total debt and equity
securities................. 46,467 47,323 49,785 50,461 69,274 69,364 94,670 95,205
--------- -------- --------- -------- --------- -------- --------- --------
Mortgage-backed securities
trading FNMA................... -- -- -- -- 1,992 1,934 -- --
--------- -------- --------- -------- --------- -------- --------- --------
Total mortgage-backed
securities trading......... -- -- -- -- 1,992 1,934 -- --
--------- -------- --------- -------- --------- -------- --------- --------
Mortgage-backed securities
held-to-maturity
FHLMC.......................... -- -- -- -- -- -- -- --
GNMA........................... -- -- -- -- -- -- 20 20
FNMA........................... -- -- -- -- -- -- 137 131
CMOs........................... -- -- -- -- -- -- -- --
--------- -------- --------- -------- --------- -------- --------- --------
Total mortgage-backed
securities
held-to-maturity........... -- -- -- -- -- -- 157 151
--------- -------- --------- -------- --------- -------- --------- --------
Mortgage-backed securities
available-for-sale
FHLMC.......................... 12,486 12,642 11,062 11,029 10,395 10,322 7,231 7,272
GNMA........................... 29,183 29,415 29,230 29,190 4,396 4,348 640 657
FNMA........................... 26,027 26,856 32,519 33,052 52,871 53,336 -- --
CMOs........................... 107 107 2,696 2,685 4,973 4,950 7,672 7,603
--------- -------- --------- -------- --------- -------- --------- --------
Total mortgage-backed
securities
available-for-sale......... 67,803 69,020 75,507 75,956 72,635 72,956 15,543 15,532
--------- -------- --------- -------- --------- -------- --------- --------
Total mortgage-backed
securities................. 67,803 69,020 75,507 75,956 74,627 74,890 15,700 15,683
--------- -------- --------- -------- --------- -------- --------- --------
Net unrealized (losses) gains on
trading securities............. -- -- (58) --
Net unrealized (losses) gains on
available-for-sale
securities..................... 2,058 1,101 441 (37)
--------- --------- --------- ---------
Total securities......... $116,328 $116,343 $126,393 $126,417 $144,284 $144,254 $110,333 $110,888
========= ======== ========= ======== ========= ======== ========= ========
</TABLE>
68
<PAGE> 70
The following table sets forth the composition of the Bank's securities
portfolio at the dates indicated.
<TABLE>
<CAPTION>
AT AUGUST 31 AT MAY 31,
--------------------- ---------------------------------------------------------------------
1997 1997 1996 1995
--------------------- --------------------- --------------------- ---------------------
PERCENT OF CARRYING PERCENT OF CARRYING PERCENT OF CARRYING PERCENT OF
AMOUNT TOTAL VALUE TOTAL VALUE TOTAL VALUE TOTAL
-------- ---------- -------- ---------- -------- ---------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Debt securities:
U.S. Government obligations.... $ 7,402 $ 6.36% $ 9,885 7.82% $ 22,433 15.55% $ 28,119 25.49%
Agency securities.............. 28,705 24.68 25,821 20.43 21,093 14.62 25,669 23.27
Municipal bonds................ 406 0.35 407 0.32 432 0.30 485 0.44
Other debt obligations......... 5,991 5.15 8,029 6.35 16,338 11.32 34,441 31.22
-------- ------ -------- ------ -------- ------ ------ ------
Total debt securities........ 42,504 36.54 44,142 34.92 60,296 41.79 88,714 80.41
-------- ------ -------- ------ -------- ------ ------ ------
Equity securities:
Preferred stock................ 104 0.09 204 0.16 277 0.19 281 0.25
Mutual funds................... 4,700 4.04 6,091 4.82 8,821 6.11 5,648 5.12
-------- ------ -------- ------ -------- ------ ------ ------
Total equity securities...... 4,804 4.13 6,295 4.98 9,098 6.31 5,929 5.37
-------- ------ -------- ------ -------- ------ ------ ------
Mortgage-backed securities
FHLMC.......................... 12,642 10.87 11,029 8.73 10,322 7.15 7,273 6.59
GNMA........................... 29,415 25.28 29,190 23.09 4,348 3.01 677 0.61
FNMA........................... 26,856 23.09 33,052 26.15 55,270 38.31 137 0.12
CMOs........................... 107 0.09 2,685 2.12 4,950 3.43 7,603 6.89
-------- ------ -------- ------ -------- ------ ------ ------
Total mortgage-backed
securities................. 69,020 59.33 75,956 60.10 74,890 51.90 15,690 14.22
-------- ------ -------- ------ -------- ------ -------- ------
Total securities......... $116,328 100.00% $126,393 100.00% $144,284 100.00% $110,333 100.00%
======== ====== ======== ====== ======== ====== ======== ======
Debt and equity securities
available-for-sale........... 41,206 35.42% 44,345 35.09 62,276 43.16 45,831 41.54
Debt and equity securities
held-to-maturity............. 6,102 5.25 6,092 4.82 7,118 4.93 48,813 44.24
-------- ------ -------- ------ -------- ------ ------ ------
Total debt and equity
securities................. 47,308 40.67 50,437 39.90 69,394 48.10 94,644 85.78
-------- ------ -------- ------ -------- ------ ------ ------
Mortgage-backed securities
trading...................... -- 0.00 -- 0.00 1,934 1.34% -- 0.00
Mortgage-backed securities
available-for-sale........... 69,020 59.33 75,956 60.10 72,956 50.56 15,532 14.08
Mortgage-backed securities
held-to-maturity............. -- 0.00 -- 0.00 -- 0.00 157 0.14
-------- ------ -------- ------ -------- ------ ------ ------
Total mortgage-backed
securities................. 69,020 59.33 75,956 60.10 74,890 51.90 15,689 14.22
-------- ------ -------- ------ -------- ------ -------- ------
Total securities......... $116,328 100.00% $126,393 100.00% $144,284 100.00% $110,333 100.00%
======== ====== ======== ====== ======== ====== ======== ======
</TABLE>
69
<PAGE> 71
The following table sets forth certain information regarding the carrying
value and weighted average yield of the Bank's securities at August 31, 1997, by
remaining period to contractual maturity. Actual maturities may differ from
contractual maturities because certain security issuers may have the right to
call or prepay their obligations.
<TABLE>
<CAPTION>
AT AUGUST 31, 1997
-----------------------------------------------------------------------------------------------------------
MORE THAN MORE THAN
ONE YEAR FIVE YEARS MORE THAN
ONE YEAR OR LESS TO FIVE YEARS TO TEN YEARS TEN YEARS TOTAL
------------------- ------------------- ------------------- ------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED WEIGHTED WEIGHTED
CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE
VALUE YIELD VALUE YIELD VALUE YIELD VALUE YIELD VALUE YIELD
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Held-to-maturity:
Municipal bonds.... $ 300 4.93% $ 106 6.89% $ -- --% $ -- --% $ 406 5.44%
U.S. Government
obligations...... 65 4.89 656 5.98 -- -- -- -- 721 5.88
Agency
securities....... -- -- 4,975 6.16 -- -- -- -- 4,975 6.16
------- ------- ------- ------- --------
Total
held-to-maturity... 365 4.93 5,737 6.15 -- -- -- -- 6,102 6.08
------- ------- ------- ------- --------
Available-for-sale:
Mortgage backed
securities:
Variable Rate:
FHLMC.......... 1,048 7.18 97 7.30 -- -- -- -- 1,145 7.19
GNMA........... 1,115 6.82 -- -- -- -- -- -- 1,115 6.82
FNMA........... 2,544 7.13 -- -- -- -- -- -- 2,544 7.13
CMOs........... -- -- -- -- -- -- -- -- -- --
Fixed Rate:
FHLMC.......... 409 6.00 1,142 5.75 608 7.25 9,339 7.40 11,498 7.18
GNMA........... -- -- 6 8.00 58 7.86 28,235 7.84 28,299 7.84
FNMA........... -- -- -- -- 862 8.17 23,450 7.65 24,312 7.66
CMOs........... -- -- -- -- 107 4.90 -- -- 107 4.90
------- ------- ------- ------- --------
Total
mortgage-backed
securities... 5,116 6.98 1,245 5.88 1,635 7.61 61,024 7.70 69,020 7.61
------- ------- ------- ------- --------
Debt securities:
U.S. Government
obligations...... 2,507 7.01 4,174 7.79 -- -- -- -- 6,681 7.49
Agency
securities....... -- -- 3,006 7.11 20,724 7.52 -- -- 23,730 7.46
Other debt
obligations...... 5,001 6.06 222 4.92 768 7.06 -- -- 5,991 6.15
------- ------- ------- ------- --------
Total debt
securities... 7,508 6.38 7,402 7.42 21,492 7.50 -- -- 36,402 7.25
------- ------- ------- ------- --------
Equity Securities:
Preferred stock.... -- -- -- -- -- -- 104 6.65 104 6.65
Mutual funds....... 2,000 6.11 -- -- -- -- 2,700 11.52 4,700 9.22
------- ------- ------- ------- --------
Total equity
securities... 2,000 6.11 -- -- -- -- 2,804 11.34 4,804 9.16
------- ------- ------- ------- --------
Total
available-for-sale... 14,624 6.55 8,647 7.20 23,127 7.51 63,828 7.86 110,226 7.56
------- ------- ------- ------- --------
Total
securities... $14,989 6.51 $14,384 6.78 $23,127 7.51 $63,828 7.86 $116,328 7.48
======= ======= ======= ======= ========
</TABLE>
70
<PAGE> 72
SOURCES OF FUNDS
General. Deposits, borrowings, loan and security repayments and
prepayments, proceeds from sales of securities and cash flows generated from
operations are the primary sources of the Bank's funds for use in lending,
investing and for other general purposes. Management intends to increase its
deposit base through competitive pricing but continually evaluates wholesale
funding through FHLBNY advances and other sources, depending upon market
conditions. The Bank has only been a member of the FHLBNY since 1995, so this
additional source of funding was not historically available.
Deposits. The Bank offers a variety of deposit accounts with a range of
interest rates and terms. The Bank's deposits consist of regular (passbook)
savings accounts, statement savings accounts, checking accounts, NOW accounts,
basic banking accounts, money market accounts and certificates of deposit. In
recent years, the Bank has offered certificates of deposit with maturities of up
to 60 months. At August 31, 1997, the Bank's core deposits, which the Bank
considers to consist of checking accounts, NOW accounts, money market accounts,
regular savings accounts and statement savings accounts, constituted 65.8% of
total deposits. The flow of deposits is influenced significantly by general
economic conditions, changes in money market rates, prevailing interest rates
and competition. The Bank's deposits are obtained predominantly from the areas
in proximity to its office locations. The Bank relies primarily on customer
service and long-standing relationships with customers to attract and retain
these deposits; however, market interest rates and rates offered by competing
financial institutions significantly affect the Bank's ability to attract and
retain deposits. Certificate accounts in excess of $100,000 are not actively
solicited by the Bank, nor does the Bank use brokers to obtain deposits.
The following table presents the deposit activity of the Bank for the
periods indicated.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED AUGUST 31, FOR THE YEARS ENDED MAY 31,
-------------------- --------------------------------
1997 1996 1997 1996 1995
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Deposits............... $197,400 198,704 $777,214 $817,610 $770,794
Withdrawals............ (198,553) (208,806) 796,578 822,470 755,487
-------- -------- -------- -------- --------
(Withdrawals) in excess
of deposits.......... (1,153) (10,102) (19,364) (4,860) 15,307
Interest credited on
deposits............. 1,705 2,147 7,610 8,814 6,177
-------- -------- -------- -------- --------
Net increase (decrease)
in deposits.......... $ 552 $ (7,955) $(11,754) $ 3,954 $ 21,484
======== ======== ======== ======== ========
</TABLE>
At August 31, 1997 the Bank has $5.8 million in certificate of deposit
accounts in amounts of $100,000 or more, maturing as follows:
<TABLE>
<CAPTION>
WEIGHTED
AMOUNT AVERAGE RATE
------ ------------
(IN THOUSANDS)
<S> <C> <C>
Maturity Period
Three months or less................................. $1,730 4.71%
Over 3 through 6 months.............................. 2,762 5.26
Over 6 through 12 months............................. 945 5.26
Over 12 months....................................... 341 5.32
------
Total............................................. $5,778 5.14%
====== ====
</TABLE>
71
<PAGE> 73
The following table sets forth the distribution of the Bank's deposit
accounts and the related weighted average interest rates for the periods
indicated.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MAY 31,
-----------------------------------------
FOR THE THREE MONTHS ENDED
AUGUST 31, 1997 1997 1996
------------------------------ ------------------------------ --------
WEIGHTED WEIGHTED
PERCENT AVERAGE PERCENT AVERAGE
AVERAGE OF TOTAL NOMINAL AVERAGE OF TOTAL NOMINAL AVERAGE
BALANCE DEPOSITS RATE BALANCE DEPOSITS RATE BALANCE
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Checking accounts................................ $ 18,786 8.67% -- $ 18,629 8.54% -- $ 18,834
Passbook accounts................................ 79,570 36.72 3.00% 78,132 35.83 3.00% 77,868
NOW accounts..................................... 7,348 3.39 2.25 7,040 3.23 2.25 7,095
Interest-on-checking accounts.................... 7,421 3.42 1.00 7,077 3.25 1.00 5,543
-------- -------- -------- -------- --------
Total passbook, NOW and interest-on-checking
accounts....................................... 94,339 43.53 2.78 92,249 42.30 2.79 90,506
-------- -------- -------- -------- --------
Money market accounts............................ 26,421 12.19 3.29 27,017 12.39 3.27 28,674
-------- -------- -------- -------- --------
Certificate accounts:
Certificates of deposit -- one year and less... 56,448 26.05 5.16 59,118 27.11 4.98 69,453
IRA Certificates of deposit -- one year and
less......................................... 6,526 3.01 5.17 7,330 3.36 5.13 7,200
Certificates of deposit -- more than one
year......................................... 8,160 3.77 5.15 7,603 3.49 5.16 7,595
IRA Certificates of deposit -- more than one
year......................................... 4,195 1.94 5.11 5,104 2.34 5.35 5,584
-------- -------- -------- -------- --------
Total certificates........................... 75,329 34.77 5.16 79,155 36.30 5.03 89,832
-------- -------- -------- -------- --------
Escrow deposits............................ 1,819 0.84 2.00 1,020 0.47 2.00 2,346
-------- -------- -------- -------- --------
Total deposits........................... $216,694 100.00% 3.42% $218,070 100.00% 3.42% $230,192
======== ======== ======== ======== ========
<CAPTION>
1995
------------------------------
WEIGHTED WEIGHTED
PERCENT AVERAGE PERCENT AVERAGE
OF TOTAL NOMINAL AVERAGE OF TOTAL NOMINAL
DEPOSITS RATE BALANCE DEPOSITS RATE
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Checking accounts................................ 8.18% -- $ 18,362 8.68% --
Passbook accounts................................ 33.83 3.00% 87,962 41.58 3.00%
NOW accounts..................................... 3.08 2.25 6,902 3.26 2.25
Interest-on-checking accounts.................... 2.41 1.00 2,955 1.40 1.00
-------- -------- --------
Total passbook, NOW and interest-on-checking
accounts....................................... 39.32 2.82 97,819 46.24 2.89
-------- -------- --------
Money market accounts............................ 12.46 3.26 34,225 16.18 3.02
-------- -------- --------
Certificate accounts:
Certificates of deposit -- one year and less... 30.17 5.74 40,825 19.30 5.35
IRA Certificates of deposit -- one year and
less......................................... 3.12 5.83 5,970 2.82 4.82
Certificates of deposit -- more than one
year......................................... 3.30 5.17 6,879 3.25 4.29
IRA Certificates of deposit -- more than one
year......................................... 2.43 5.53 5,331 2.52 4.95
-------- -------- --------
Total certificates........................... 39.02 5.69 59,005 27.89 5.12
-------- -------- --------
Escrow deposits............................ 1.02 2.00 2,122 1.00 2.00
-------- -------- --------
Total deposits........................... 100.00% 3.76% $211,533 100.00% 3.27%
======== ======== ========
</TABLE>
72
<PAGE> 74
The following table presents, by interest rate ranges, the amount and
period to maturity from August 31, 1997 of certificate accounts outstanding at
August 31, 1997 and the amount of certificate accounts outstanding at May 31,
1997, 1996 and 1995.
<TABLE>
<CAPTION>
PERIOD TO MATURITY FROM AUGUST 31, 1997
------------------------------------------------- AT AUGUST AT MAY 31,
LESS THAN ONE TO TWO TO OVER 31, ---------------------------
ONE YEAR TWO YEARS THREE YEARS THREE YEARS 1997 1997 1996 1995
--------- --------- ----------- ----------- ---------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Certificate
accounts:
3.99% or less... $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 7,098
4.00% to
4.99%........ 13,715 694 5 -- 14,414 8,505 34,167 10,469
5.00% to
5.99%........ 56,227 2,299 350 2,103 60,979 65,816 47,516 25,846
6.00% to
6.99%........ 353 -- -- -- 353 717 3,091 48,032
7.00% to
7.99%........ -- -- -- -- -- -- 776 1,120
8.00% to
8.99%........ -- -- -- -- -- -- -- 201
--------- --------- ----------- ----------- ---------- ------- ------- -------
Total... $70,295 $ 2,993 $ 355 $ 2,103 $ 75,746 $75,038 $85,550 $92,766
======= ======== ========= ========= ======== ======= ======= =======
</TABLE>
Borrowings. The Bank historically had not used borrowings as a source of
funds. However, the Bank became a member of the FHLBNY in 1995 and has used this
source considerably since. FHLBNY advances may also be used to acquire certain
other assets as may be deemed appropriate for investment purposes, including
leveraging opportunities. This form of leveraging allows for a reasonable net
margin of return, the majority of which is locked in for a specified period.
Since the locked-in period might cover only a part of the investment's term (up
to its call date in the majority of the transactions), such a practice might
result in limited degree of interest rate risk, since the earlier maturing
borrowings are required to be rolled over to fund the remaining lives of the
particular investments. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Management of Interest Rate Risk." FHLBNY
advances are to be collateralized primarily by certain of the Bank's mortgage
loans and mortgage-backed securities and secondarily by the Bank's investment in
capital stock of the FHLBNY. See "Regulation and Supervision -- Federal Home
Loan Bank System." Such advances may be made pursuant to several different
credit programs, each of which has its own interest rate and range of
maturities. The maximum amount that the FHLBNY will advance to member
institutions, including the Bank, fluctuates from time to time in accordance
with the policies of the FHLBNY. At August 31, 1997, the Bank had $5.3 million
in FHLBNY advances and $3 million in overnight lines of credit outstanding with
the FHLBNY. The Bank also has the capability to borrow additional funds of $28.8
million upon complying with the FHLBNY collateral requirements. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
The Bank at times sells securities under agreements to repurchase, which
transactions are treated as financings, and the obligation to repurchase the
securities sold is reflected as a liability in the statements of financial
condition. The dollar amount of securities underlying the agreements remains in
the asset account and are held in safekeeping. There were $23.1 million, $4.7
million and $0 of securities sold under repurchase agreements outstanding at May
31, 1997, 1996 and 1995, respectively, and $23.0 million of such securities
outstanding at August 31, 1997.
73
<PAGE> 75
The following table sets forth certain information regarding borrowed funds
for the dates indicated.
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED AUGUST AT OR FOR THE YEAR ENDED MAY
31, 31,
------------------- -----------------------------
1997 1996 1997 1996 1995
------- ------- ------- ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
FHLBNY Advances:
Average balance outstanding............. $ 6,137 $ 4,898 $11,563 $ 388 $ --
Maximum amount outstanding at any month-
end during the period................ 8,270 7,050 17,450 3,600 --
Balance outstanding at end of period.... 8,270 7,050 5,250 3,600 --
Weighted-average interest rate during
the period........................... 5.93% 4.66% 5.53% 5.41% --
Weighted-average interest rate at end of
period............................... 5.91% 5.48% 5.71% 6.00% --
Other Borrowings:
Average balance outstanding............. $23,081 $12,799 $19,685 $ 101 $ 875
Maximum amount outstanding at any month-
end during the period................ 23,090 18,450 23,300 4,700 4,500
Balance outstanding at end of period.... 23,045 18,450 23,090 4,700 --
Weighted-average interest rate during
the period........................... 6.42% 6.42% 6.20% 6.32% 5.82%
Weighted-average interest rate at end of
period............................... 6.28% 6.42% 6.50% 6.32% --
Total Borrowings:
Average balance outstanding............. $29,218 $17,647 $31,249 $ 489 $ 875
Maximum amount outstanding at any month-
end.................................. 31,315 25,500 38,850 8,300 4,500
Balance outstanding at end of period.... 31,315 25,500 28,340 8,300 --
Weighted-average interest rate during
the period........................... 6.32% 5.94% 6.10% 5.60% 5.89%
Weighted-average interest rate at end of
period............................... 6.29% 6.16% 6.30% 6.18% --
</TABLE>
SUBSIDIARY ACTIVITIES
The Bank has three wholly owned subsidiaries, WSB Financial, Warsave
Development, Inc. ("Warsave") and WSB Mortgage. The Bank offers mutual funds and
tax deferred annuities through WSB Financial to the Bank's customers and members
of the community. WSB Financial contributed $23,000, $92,000, $90,000 and
$151,000 in net income, before taxes, to the Bank's net income in the three
months ended August 31, 1997 and the fiscal years ended May 31, 1997, 1996 and
1995, respectively.
Warsave was formed to acquire and hold real estate. Its single asset as of
August 31, 1997 is a two-story house situated adjacent to the Bank's Warwick
office. The building, which may ultimately be used for future expansion, is
presently rented for the purpose of generating rental income.
WSB Mortgage was recently formed and has received a license from the New
Jersey Department of Banking and Insurance to commence mortgage banking
operations in that state.
PROPERTIES
The Bank conducts its business through its main office in Warwick, New York
and its three branch offices located in Monroe, Woodbury and Middletown, New
York. On August 29, 1997, the Bank acquired a five-acre parcel of land located
approximately one-half mile from its present Middletown location. The Bank
intends to construct a new 14,000 square foot building and maintain a
full-service branch office with drive-up
74
<PAGE> 76
and ATM facilities and ample parking to serve its commercial and retail
customers. Upon receipt of required regulatory approvals, the Bank intends to
close its existing Middletown branch and relocate to the new facility, which is
expected to be completed and available for occupancy during the first quarter of
fiscal 1998. In addition, the Bank intends to relocate its commercial lending
operations from its Warwick office to this new facility. Management expects
approximately 7,000 square feet of the building will be rented to professional
companies, including a local accounting firm that management believes will help
to complement its business. The costs associated with the Bank's relocation of
its Middletown branch are estimated to be approximately $2.7 million.
Management believes that the Bank's current facilities, including the
relocation of the Middletown branch office, are adequate to meet the present and
immediately foreseeable needs of the Bank and the Company. However, the Bank has
plans to open additional branch offices and intends to conduct comprehensive
market studies shortly following the Conversion for the purpose of identifying
locations for the establishment or acquisition of other branch offices to expand
the Bank's activities.
The following sets forth the Bank's branches and loan production offices at
August 31, 1997, including the loan production office opened in New Jersey in
connection with its application to the New Jersey Department of Banking and
Insurance to commence mortgage banking activities in that state.
<TABLE>
<CAPTION>
LEASED DATE LEASE NET BOOK
OR LEASED OR EXPIRATION VALUE AT
OWNED ACQUIRED DATE AUGUST 31, 1997
-------- ---------- ---------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Main Office:
18 Oakland Avenue
Warwick, New York 10990................... Owned 1972 N/A $ 760.6
Branches:
591 Route 17M
Monroe, New York 10950.................... Owned 1976 N/A 455.0
556 Route 32
Highland Mills, New York 10930............ Owned 1979 N/A 202.1
The Galleria at Crystal Run
1N Galleria Drive, Suite 137
Middletown, New York 10941................ Leased 1991 06/30/98 175.7
Loan Production Offices:
Taconic Plaza Shopping Center,
Store # 10
Route 52
East Fishkill, New York 12533............. Leased 1997 01/31/98 --
151 South Main Street, Suite 104
New City, New York........................ Leased 1997 04/30/98 --
1435 Union Valley Road, 1st Floor
West Milford, New Jersey.................. Leased 1997 04/30/98 --
</TABLE>
LEGAL PROCEEDINGS
The Bank is not involved in any pending legal proceedings other than
routine legal proceedings occurring in the ordinary course of business. Such
routine legal proceedings in the aggregate are believed by management to be
immaterial to the Bank's and Company's financial condition and results of
operations.
PERSONNEL
As of August 31, 1997, the Bank had 99 full-time and 37 part-time
employees. The Bank has experienced a very low turnover rate among its employees
and, as of August 31, 1997, 54 of the Bank's employees had been with the Bank
for more than five years. The employees are not represented by a collective
bargaining unit, and the Bank considers its relationship with its employees to
be good. See "Management of the Bank -- Benefits" for a description of certain
compensation and benefit programs offered to the Bank's employees.
75
<PAGE> 77
FEDERAL AND STATE TAXATION
FEDERAL TAXATION
General. The following is a discussion of material federal income tax
matters and does not purport to be a comprehensive description of the federal
income tax rules applicable to the Bank or the Company. The Bank has been
audited by the IRS for the tax years ending December 31, 1993 and December 31,
1995 (in progress). For federal income tax purposes, after the Conversion, the
Company and the Bank may file consolidated income tax returns and report their
income on a fiscal year basis using the accrual method of accounting and will be
subject to federal income taxation in the same manner as other corporations with
some exceptions, including particularly the Bank's tax reserve for bad debts,
discussed below.
Tax Bad Debt Reserves. The Small Business Job Protection Act of 1996 ("the
1996 Act"), which was enacted on August 20, 1996, made significant changes to
provisions of the Code relating to a savings institution's use of bad debt
reserves for federal income tax purposes and requires such institutions to
recapture (i.e., take into income) certain portions of their accumulated bad
debt reserves. The effect of the 1996 Act on the Bank is discussed below. Prior
to the enactment of the 1996 Act, the Bank was permitted to establish tax
reserves for bad debts and to make annual additions thereto, which additions,
within specified formula limits, were deducted in arriving at the Bank's taxable
income. The Bank's deduction with respect to "qualifying loans," which are
generally loans secured by certain interests in real property, was permitted to
be computed using an amount based on a six-year moving average of the Bank's
charge-offs for actual losses ("Experience Method"), or a percentage equal to 8%
of the Bank's taxable income ("PTI Method"), computed without regard to this
deduction and with additional modifications and reduced by the amount of any
permitted addition to the non-qualifying reserve. The Bank's deduction with
respect to non-qualifying loans was required to be computed under the Experience
Method. Each year the Bank reviewed the most favorable way to calculate the
deduction attributable to an addition to the tax bad debt reserves.
The 1996 Act. Under the 1996 Act, the PTI Method was repealed for thrifts
and the Bank, as a "small bank" (one with assets having an adjusted basis of
$500 million or less) will be required to use the Experience Method of computing
additions to its bad debt reserves for the tax year beginning January 1, 1996.
In addition, the Bank will be required to recapture (i.e., take into income)
over a six-year period the excess of the balance of its bad debt reserves for
losses on non-qualifying and qualifying loans as of December 31, 1995 over the
greater of (a) the balance of such reserves as of December 31, 1987 or (b) an
amount that would have been the balance of such reserves as of December 31, 1995
had the Bank always computed the additions to its reserves using the Experience
Method. However, such recapture requirements were suspended for each of the two
successive taxable years beginning January 1, 1996 in which the Bank originates
a minimum amount of certain residential loans during such years that is not less
than the average of the principal amounts of such loans made by the Bank during
its six taxable years preceding January 1, 1996. The Bank's post-December 31,
1987 nonqualifying and qualifying bad debt reserves at August 31, 1997 was
approximately $850,000 which will require the Bank to report an additional tax
liability of approximately $289,000. As of August 31, 1997, this liability has
already been provided and will not require an adverse impact to the Bank's
financial condition or results of operations.
Distributions. Under the 1996 Act, if the Bank makes "non-dividend
distributions" to the Company, such distributions will be considered to have
been made from the Bank's unrecaptured tax bad debt reserves (including the
balance of its reserves as of December 31, 1987) and then from the Bank's
supplemental reserve for losses on loans, to the extent thereof, and an amount
based on the amount distributed (but not in excess of the amount of such
reserves) will be included in the Bank's income. Non-dividend distributions
include distributions in excess of the Bank's current and accumulated earnings
and profits, as calculated for federal income tax purposes, distributions in
redemption of stock, and distributions in partial or complete liquidation.
Dividends paid out of the Bank's current or accumulated earnings and profits
will not be so included in the Bank's income.
The amount of additional taxable income created from a non-dividend
distribution is an amount that, when reduced by the tax attributable to the
income, is equal to the amount of the distribution. Thus, if, after
76
<PAGE> 78
the Conversion, the Bank makes a non-dividend distribution to the Company,
approximately one and one-half times the amount of such distribution (but not in
excess of the amount of such reserves) would be includible in income for federal
income tax purposes, assuming a 34% federal corporate income tax rate. See
"Regulation and Supervision" and "Dividend Policy" for limits on the payment of
dividends by the Bank. The Bank does not intend to pay dividends that would
result in a recapture of any portion of its tax bad debt reserves.
Corporate Alternative Minimum Tax. The Code imposes a tax ("AMT") on
alternative minimum taxable income ("AMTI") at a rate of 20%. Only 90% of AMTI
can be offset by net operating loss carryovers of which the Bank currently has
none. AMTI is also adjusted by determining the tax treatment of certain items in
a manner that negates the deferral of income resulting from the regular tax
treatment of those items. Thus, the Bank's AMTI is increased by an amount equal
to 75% of the amount by which the Bank's adjusted current earnings exceeds its
AMTI (determined without regard to this adjustment and prior to reduction for
net operating losses). The Bank does not expect to be subject to the AMT.
Elimination of Dividends; Dividends Received Deduction. The Company may
exclude from its income 100% of dividends received from the Bank as a member of
the same affiliated group of corporations.
STATE TAXATION
New York State Taxation. The Bank is subject to the New York State
Franchise Tax on Banking Corporations in an annual amount equal to the greater
of (i) 9% of the Bank's "entire net income" allocable to New York State during
the taxable year, or (ii) the applicable alternative minimum tax. The
alternative minimum tax is generally the greatest of (a) 0.01% of the value of
the taxable assets allocable to New York State with certain modifications, (b)
3% of the Bank's "alternative entire net income" allocable to New York State or
(c) $250. Entire net income is similar to federal taxable income, subject to
certain modifications and alternative entire net income is equal to entire net
income without certain adjustments. For purposes of computing its entire net
income, the Bank is permitted a deduction for an addition to the reserve for
losses on qualifying real property loans. For New York State purposes, the
applicable percentage to calculate bad debt deduction under the percentage of
taxable income method is 32%.
New York State passed legislation in August 1996 that incorporated into New
York State tax law provisions for the continued use of bad debt reserves in a
manner substantially similar to the provisions that applied under federal law
prior to the enactment of the 1996 Act discussed above. This legislation enabled
the Bank to avoid the recapture of the New York State tax bad debt reserves that
otherwise would have occurred as a result of the changes in federal law and to
continue to utilize the reserve method for computing its bad debt deduction.
However, the New York bad debt reserve is subject to recapture for "non-dividend
distributions" in a manner similar to the recapture of federal bad debt reserves
for such distributions. See "-- Federal Taxation -- Distributions." Also, the
New York bad debt reserve is subject to recapture in the event that the Bank
fails to satisfy certain definitional tests relating to its assets and the
nature of its business.
A Metropolitan Business District Surcharge on banking corporations doing
business in the metropolitan district has been applied since 1982. The Bank does
all of its business within this District and is subject to this surcharge. For
the tax year ending December 31, 1997 the surcharge rate is 17%.
Delaware State Taxation. As a Delaware holding company not earning income
in Delaware, the Company is exempted from Delaware Corporate income tax but is
required to file annual returns and pay annual fees and a franchise tax to the
State of Delaware.
77
<PAGE> 79
REGULATION AND SUPERVISION
GENERAL
The Bank is a New York mutual savings bank, and its deposit accounts are
insured up to applicable limits by the FDIC under the BIF. The Bank is subject
to extensive regulation by the NYSBD as its chartering agency, and by the FDIC
as the deposit insurer. The Bank must file reports with the NYSBD and the FDIC
concerning its activities and financial condition, and it must obtain regulatory
approval prior to entering into certain transactions, such as mergers with, or
acquisitions of, other depository institutions and opening or acquiring branch
offices. The NYSBD and the FDIC conduct periodic examinations to assess the
Bank's compliance with various regulatory requirements. This regulation and
supervision establishes a comprehensive framework of activities in which a
savings bank can engage and is intended primarily for the protection of the
deposit insurance funds and depositors. The regulatory structure also gives the
regulatory authorities extensive discretion in connection with their supervisory
and enforcement activities and examination policies, including policies with
respect to the classification of assets and the establishment of adequate loan
loss reserves for regulatory purposes. Any change in such regulation, whether by
the NYSBD or the FDIC or through legislation, could have a material adverse
impact on the Company and the Bank and their operations and stockholders. The
Company is also required to file certain reports with, and otherwise comply
with, the rules and regulations of the FRB and the NYSBD and with the rules and
regulations of the SEC under the federal securities laws.
Certain of the laws and regulations applicable to the Bank and to the
Company are summarized below or elsewhere herein. These summaries do not purport
to be complete and are qualified in their entirety by reference to such laws and
regulations.
NEW YORK BANKING REGULATION
Activity Powers. The Bank derives its lending, investment and other
activity powers primarily from the applicable provisions of Banking Law and the
regulations adopted thereunder. Under these laws and regulations, savings banks,
including the Bank, may invest in real estate mortgages, consumer and commercial
loans, certain types of debt securities, including certain corporate debt
securities and obligations of federal, state and local governments and agencies,
certain types of corporate equity securities and certain other assets. A savings
bank may also exercise trust powers upon approval of the Banking Department. The
exercise of these lending, investment and activity powers are limited by federal
law and the regulations thereunder. See "-- Federal Banking
Regulation -- Activity Restrictions on State-Chartered Banks."
Loans-to-One-Borrower Limitations. With certain limited exceptions, a New
York chartered savings bank may not make loans or extend credit for commercial,
corporate or business purposes (including lease financing) to a single borrower
and to certain entities related to the borrower, the aggregate amount of which
would exceed 15% of the bank's net worth, plus an additional 10% of the bank's
net worth if secured by the requisite collateral. The Bank currently complies
with all applicable loans-to-one-borrower limitations.
Community Reinvestment Act. The Bank is also subject to provisions of the
Banking Law that, like the provisions of the federal Community Reinvestment Act
("CRA"), impose continuing and affirmative obligations upon a banking
institution organized in the State of New York to serve the credit needs of its
local community ("NYCRA"). The obligations of the NYCRA are similar to those
imposed by the CRA. Pursuant to the NYCRA, a bank must file with the Banking
Department an annual NYCRA report and copies of all federal CRA reports. The
NYCRA requires the Banking Department to make an annual written assessment of a
bank's compliance with the NYCRA, utilizing a four-tiered rating system with
respect to 5 performance categories and 12 other factors, and to make such
assessment available to the public. The Bank's latest NYCRA rating, received by
letter dated March 29, 1996 from the Banking Department, was a rating of
"Satisfactory". The NYCRA also requires the Superintendent to consider a bank's
NYCRA rating when reviewing a bank's application to engage in certain
transactions, including mergers, asset purchases and the establishment of branch
offices or automated teller machines, and provides that such assessment may
serve as a basis for the denial of any such application. The regulations
currently implementing the NYCRA
78
<PAGE> 80
require the Superintendent to the utilize a four-tiered rating system with
respect to 5 performance categories and 12 other factors, and the
Superintendent's analysis focuses on a bank's activities in complying with the
NYCRA. The Superintendent has recently proposed replacing the current
process-focused regulations with performance-focused regulations that are
intended to parallel the current CRA regulations of the federal banking agencies
and to promote consistency in CRA evaluations by considering more objective
criteria.
Dividends. Under the Banking Law, the Bank, as a stock savings bank, will
not be able to declare, credit or pay any dividends if such dividends would
result in any impairment of capital stock. In addition, the Banking Law provides
that, without regulatory approval, the Bank cannot declare and pay dividends in
any calendar year in excess of its "net profits" for such year combined with its
"retained net profits" of the two preceding years, less any required transfer to
surplus or a fund for the retirement of preferred stock.
Enforcement. Under the Banking Law, the Superintendent may issue an order
to a New York-chartered banking institution to appear and explain an apparent
violation of law, to discontinue unauthorized or unsafe practices and to keep
prescribed books and accounts. Upon a finding by the Superintendent that any
director, trustee or officer of any banking organization has violated any law,
or has continued unauthorized or unsafe practices in conducting the business of
the banking organization after having been notified by the Superintendent to
discontinue such practices, the NYBB may remove such director, trustee or
officer from office after notice and an opportunity to be heard. The Bank does
not know of any past or current practice, condition or violation that might lead
to any proceeding by the Superintendent or the NYBB against the Bank or any of
its trustees or officers.
FEDERAL BANKING REGULATION
Capital Requirements. FDIC regulations require BIF-insured banks, such as
the Bank, to maintain minimum levels of capital. The regulations establish a
minimum leverage capital requirement of not less than 3.0% Tier 1 capital to
total assets for banks in the strongest financial and managerial condition, with
a CAMEL Rating of 1 (the highest examination rating of the FDIC for banks). For
all other banks, the minimum leverage capital requirement is 3% plus an
additional cushion of at least 100 to 200 basis points. Tier 1 capital is
comprised of the sum of common stockholders' equity (excluding the net
unrealized appreciation or depreciation, net of tax, from available-for-sale
securities), non-cumulative perpetual preferred stock (including any related
surplus) and minority interests in consolidated subsidiaries, minus all
intangible assets (other than qualifying servicing rights), and any net
unrealized loss on marketable equity securities.
The FDIC also requires that savings banks meet a risk-based capital
standard. The risk-based capital standard requires the maintenance of total
capital (which is defined as Tier 1 capital and Tier 2 capital) to risk-weighted
assets of at least 8% and Tier 1 capital to risk-weighted assets of at least 4%.
In determining the amount of risk-weighted assets, all assets, plus certain off
balance sheet items, are multiplied by a risk-weight of 0% to 100%, based on the
risks the FDIC believes are inherent in the type of asset or item. The
components of Tier 1 capital are equivalent to those discussed above under the
3% leverage requirement. The components of Tier 2 capital currently include
cumulative perpetual preferred stock, certain perpetual preferred stock for
which the dividend rate may be reset periodically, mandatory convertible
securities, subordinated debt, intermediate preferred stock and allowance for
possible loan losses. Allowance for possible loan losses includible in Tier 2
capital is limited to a maximum of 1.25% of risk-weighted assets. Overall, the
amount of Tier 2 capital that may be included in total capital cannot exceed
100% of Tier 1 capital.
The federal banking agencies, including the FDIC, have also adopted
regulations to require an assessment of an institution's exposure to declines in
the economic value of a bank's capital due to changes in interest rates when
assessing the bank's capital adequacy. Under such a risk assessment, examiners
will evaluate a bank's capital for interest rate risk on a case-by-case basis,
with consideration of both quantitative and qualitative factors. According to
the agencies, applicable considerations include the quality of the bank's
interest rate risk management process, the overall financial condition of the
bank and the level of other risks at the bank for which capital is needed.
Institutions with significant interest rate risk may be required to hold
additional capital. The agencies also issued a joint policy statement providing
guidance on interest rate risk management, including a discussion of the
critical factors affecting the agencies' evaluation of interest rate risk
79
<PAGE> 81
in connection with capital adequacy. The agencies determined not to proceed with
a previously issued proposal to develop a supervisory framework for measuring
interest rate risk and an explicit capital component for interest rate risk.
The following table shows the Bank's leverage ratio, its Tier 1 risk-based
capital ratio, and its total risk-based capital ratio, at August 31, 1997 on a
historical basis and a pro forma basis assuming the sale of shares at the
maximum of the Estimated Price Range.
<TABLE>
<CAPTION>
AT AUGUST 31, 1997
---------------------------------------------------------------------------
HISTORICAL PERCENT OF PRO FORMA PERCENT OF CAPITAL PERCENT OF
CAPITAL ASSETS(1) CAPITAL ASSETS REQUIREMENT ASSETS(1)
---------- ---------- --------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Regulatory Tier 1 leverage
capital.......................... $ 28,033 9.81% $48,680 15.89% $12,256 4.0%
Tier 1 risk-based capital.......... 28,033 19.19 48,680 29.19 6,671 4.0
Total risk-based capital........... 29,400 20.12 50,047 30.01 13,342 8.0
</TABLE>
- ---------------
(1) For purpose of calculating Regulatory Tier 1 leverage capital, assets
include adjusted total average assets. In calculating Tier 1 risked-based
capital and total risk-based capital, assets include total risk-weighted
assets.
As the preceding table shows, the Bank exceeded the minimum capital adequacy
requirements at the date indicated.
Activity Restrictions on State-Chartered Banks. Section 24 of the Federal
Deposit Insurance Act, as amended ("FDIA"), which was added by FDICIA, generally
limits the activities and investments of state-chartered FDIC insured banks and
their subsidiaries to those permissible for federally chartered national banks
and their subsidiaries, unless such activities and investments are specifically
exempted by Section 24 or consented to by the FDIC.
Section 24 provides an exception for investments by a bank in common and
preferred stocks listed on a national securities exchange or the shares of
registered investment companies if (1) the bank held such types of investments
during the 14-month period from September 30, 1990 through November 26, 1991,
(2) the state in which the bank is chartered permitted such investments as of
September 30, 1991, and (3) the bank notifies the FDIC and obtains approval from
the FDIC to make or retain such investments. Upon receiving such FDIC approval,
an institution's investment in such equity securities will be subject to an
aggregate limit up to the amount of its Tier 1 capital. The Bank received
approval from the FDIC to retain and acquire such equity investments subject to
a maximum permissible investment equal to the lesser of 100% of the Bank's Tier
1 capital or the maximum permissible amount specified by the Banking Law.
Section 24 also contains an exception for certain majority owned subsidiaries,
but the activities of such subsidiaries are limited to those permissible for a
national bank, permissible under Section 24 of the FDIA and the FDIC regulations
issued pursuant thereto, or as approved by the FDIC.
Any bank that held an impermissible investment or engaged in an
impermissible activity and that did not receive FDIC approval to retain such
investment or to continue such activity was required to submit to the FDIC a
plan for divesting of such investment or activity as quickly and prudently as
possible. Before making a new investment or engaging in a new activity not
permissible for a national bank or otherwise permissible under Section 24 or the
FDIC regulations thereunder, an insured bank must seek approval from the FDIC to
make such investment or engage in such activity. The FDIC will not approve the
activity unless such bank meets its minimum capital requirements and the FDIC
determines that the activity does not present a significant risk to the FDIC
insurance funds.
Enforcement. The FDIC has extensive enforcement authority over insured
savings banks, including the Bank. This enforcement authority includes, among
other things, the ability to assess civil money penalties, to issue cease and
desist orders and to remove directors and officers. In general, these
enforcement actions may be initiated in response to violations of laws and
regulations and to unsafe or unsound practices.
80
<PAGE> 82
The FDIC is required, with certain exceptions, to appoint a receiver or
conservator for an insured state bank if that bank is "critically
undercapitalized." For this purpose, "critically undercapitalized" means having
a ratio of tangible capital to total assets of less than 2%. See "-- Prompt
Corrective Action." The FDIC may also appoint a conservator or receiver for a
state bank on the basis of the institution's financial condition or upon the
occurrence of certain events, including: (i) insolvency (whereby the assets of
the bank are less than its liabilities to depositors and others); (ii)
substantial dissipation of assets or earnings through violations of law or
unsafe or unsound practices; (iii) existence of an unsafe or unsound condition
to transact business; (iv) likelihood that the bank will be unable to meet the
demands of its depositors or to pay its obligations in the normal course of
business; and (v) insufficient capital, or the incurring or likely incurring of
losses that will deplete substantially all of the institution's capital with no
reasonable prospect of replenishment of capital without federal assistance.
Deposit Insurance. Pursuant to FDICIA, the FDIC established a system for
setting deposit insurance premiums based upon the risks a particular bank or
savings association posed to its deposit insurance funds. Under the risk-based
deposit insurance assessment system, the FDIC assigns an institution to one of
three capital categories based on the institution's financial information, as of
the reporting period ending six months before the assessment period, consisting
of (1) well capitalized, (2) adequately capitalized or (3) undercapitalized, and
one of three supervisory subcategories within each capital group. With respect
to the capital ratios, institutions are classified as well capitalized, or
adequately capitalized using ratios that are substantially similar to the prompt
corrective action capital ratios discussed below. Any institution that does not
meet these two definitions is deemed to be undercapitalized for this purpose.
The supervisory subgroup to which an institution is assigned is based on a
supervisory evaluation provided to the FDIC by the institution's primary federal
regulator and information that the FDIC determines to be relevant to the
institution's financial condition and the risk posed to the deposit insurance
funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's assessment rate depends on the
capital category and supervisory category to which it is assigned. Under the
final risk-based assessment system, there are nine assessment risk
classifications (i.e., combinations of capital groups and supervisory subgroups)
to which different assessment rates are applied. Assessments rates for deposit
insurance currently range from 0 basis points to 27 basis points. The capital
and supervisory subgroup to which an institution is assigned by the FDIC is
confidential and may not be disclosed. A bank's rate of deposit insurance
assessments will depend upon the category and subcategory to which the bank is
assigned by the FDIC. Any increase in insurance assessments could have an
adverse effect on the earnings of the Bank.
Under the Deposit Insurance Funds Act of 1996 ("Funds Act"), the assessment
base for the payments on the bonds ("FICO bonds") issued in the late 1980's by
the Financing Corporation to recapitalize the now defunct Federal Savings and
Loan Insurance Corporation was expanded to include, beginning January 1, 1997,
the deposits of BIF-insured institutions, such as the Bank. Until December 31,
1999, or such earlier date on which the last savings association ceases to
exist, the rate of assessment for BIF-assessable deposits shall be one-fifth of
the rate imposed on deposits insured by the Savings Association Insurance Fund
("SAIF"). The annual rate of assessments for the payments on the FICO bonds for
the semi-annual period beginning on January 1, 1997 was 0.0130% for
BIF-assessable deposits and 0.0648% for SAIF-assessable deposits and for the
semi-annual period beginning on July 1, 1997 was 0.0126% for BIF-assessable
deposits and 0.0630% for SAIF-assessable deposits.
Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe or unsound practices, is in
an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC. The
management of the Bank does not know of any practice, condition or violation
that might lead to termination of deposit insurance.
Transactions with Affiliates of the Bank. Transactions between an insured
bank, such as the Bank, and any of its affiliates is governed by Sections 23A
and 23B of the Federal Reserve Act. An affiliate of a bank is any company or
entity that controls, is controlled by or is under common control with the bank.
Currently, a subsidiary of a bank that is not also a depository institution is
not treated as an affiliate of the bank for purposes of Sections 23A and 23B,
but the FRB has proposed treating any subsidiary of a bank that is engaged
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in activities not permissible for bank holding companies under the Bank Holding
Company Act of 1956, as amended ("BHCA"), as an affiliate for purposes of
Sections 23A and 23B. Generally, Sections 23A and 23B (i) limit the extent to
which the bank or its subsidiaries may engage in "covered transactions" with any
one affiliate to an amount equal to 10% of such institution's capital stock and
surplus, and limit on all such transactions with all affiliates to an amount
equal to 20% of such capital stock and surplus and (ii) require that all such
transactions be on terms that are consistent with safe and sound banking
practices. The term "covered transaction" includes the making of loans, purchase
of assets, issuance of guarantees and other similar types of transactions.
Further, most loans by a bank to any of its affiliate must be secured by
collateral in amounts ranging from 100 to 130 percent of the loan amounts. In
addition, any covered transaction by a bank with an affiliate and any purchase
of assets or services by a bank from an affiliate must be on terms that are
substantially the same, or at least as favorable, to the institution as those
that would be provided to a non-affiliate.
Prohibitions Against Tying Arrangements. Banks are subject to the
prohibitions of 12 U.S.C. sec. 1972 on certain tying arrangements and extensions
of credit by correspondent banks. In general, a depository institution is
prohibited, subject to certain exceptions, from extending credit to or offering
any other service, or fixing or varying the consideration for such extension of
credit or service, on the condition that the customer obtain some additional
service from the institution or certain of its affiliates or not obtain services
of a competitor of the institution.
Uniform Real Estate Lending Standards. Pursuant to FDICIA, the federal
banking agencies adopted uniform regulations prescribing standards for
extensions of credit that are secured by liens on interests in real estate or
made for the purpose of financing the construction of a building or other
improvements to real estate. Under the joint regulations adopted by the banking
agencies, all financial institutions must adopt and maintain written policies
that establish appropriate limits and standards for extensions of credit that
are secured by liens or interests in real estate or are made for the purpose of
financing permanent improvements to real estate. These policies must establish
loan portfolio diversification standards, prudent underwriting standards
(including loan-to-value limits) that are clear and measurable, loan
administration procedures, and documentation, approval and reporting
requirements. The real estate lending policies must reflect consideration of the
Interagency Guidelines for Real Estate Lending Policies ("Interagency
Guidelines") that have been adopted by the federal bank regulators.
The Interagency Guidelines, among other things, require a depository
institution to establish internal loan-to-value limits for real estate loans
that are not in excess of the following supervisory limits: (i) for loans
secured by raw land, the supervisory loan-to-value limit is 65% of the value of
the collateral; (ii) for land development loans (i.e., loans for the purpose of
improving unimproved property prior to the erection of structures), the
supervisory limit is 75%; (iii) for loans for the construction of commercial,
multi-family or other non-residential property, the supervisory limit is 80%;
(iv) for loans for the construction of one- to four-family properties, the
supervisory limit is 85%; and (v) for loans secured by other improved property
(e.g., farmland, completed commercial property and other income-producing
property including non-owner occupied, one- to four-family property), the limit
is 85%. Although no supervisory loan-to-value limit has been established for
owner-occupied, one to four-family and home equity loans, the Interagency
Guidelines state that for any such loan with a loan-to-value ratio that equals
or exceeds 90% at origination, an institution should require appropriate credit
enhancement in the form of either mortgage insurance or readily marketable
collateral.
Community Reinvestment Act. Under the CRA, as implemented by FDIC and FRB
regulations, a savings bank has a continuing and affirmative obligation
consistent with its safe and sound operation to help meet the credit needs of
its entire community, including low and moderate income neighborhoods. The CRA
does not establish specific lending requirements or programs for financial
institutions nor does it limit an institution's discretion to develop the types
of products and services that it believes are best suited to its particular
community. The CRA requires the FDIC, in connection with its examination of a
savings institution, to assess the institution's record of meeting the credit
needs of its community and to take such record into account in its evaluation of
certain applications by such institution.
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In April 1995, the FDIC and the other federal banking agencies amended
their CRA regulations. Among other things, the amended CRA regulations
substitute for the prior process-based assessment factors a new evaluation
system that would rate an institution based on its actual performance in meeting
community needs. In particular, the proposed system would focus on three tests:
(a) a lending test, to evaluate the institution's record of making loans in its
service areas; (b) an investment test, to evaluate the institution's record of
investing in community development projects, affordable housing, and programs
benefitting low or moderate income individuals and businesses; and (c) a service
test, to evaluate the institution's delivery of services through its branches,
ATMs, and other offices. Small banks would be assessed pursuant to a streamlined
approach focusing on a lesser range of information and performance standards.
The CRA requires the FDIC to provide a written evaluation of an
institution's CRA performance utilizing a four-tiered descriptive rating system
and requires public disclosure of an institution's CRA rating. The Bank's latest
CRA rating, received from the FDIC by letter dated December 4, 1995, was a
rating of "satisfactory."
Safety and Soundness Standards. Pursuant to the requirements of FDICIA, as
amended by the Riegle Community Development and Regulatory Improvement Act of
1994, each federal banking agency, including the FDIC, has adopted guidelines
establishing general standards relating to internal controls, information and
internal audit systems, loan documentation, credit underwriting, interest rate
exposure, asset growth, asset quality, earnings, and compensation, fees and
benefits. In general, the guidelines require, among other things, appropriate
systems and practices to identify and manage the risks and exposures specified
in the guidelines. The guidelines prohibit excessive compensation as an unsafe
and unsound practice and describe compensation as excessive when the amounts
paid are unreasonable or disproportionate to the services performed by an
executive officer, employee, director, or principal shareholder. In addition,
the FDIC adopted regulations to require a bank that is given notice by the FDIC
that it is not satisfying any of such safety and soundness standards to submit a
compliance plan to the FDIC. If, after being so notified, a bank fails to submit
an acceptable compliance plan or fails in any material respect to implement an
accepted compliance plan, the FDIC may issue an order directing corrective and
other actions of the types to which a significantly undercapitalized institution
is subject under the "prompt corrective action" provisions of FDICIA. If a bank
fails to comply with such an order, the FDIC may seek to enforce such an order
in judicial proceedings and to impose civil monetary penalties.
Prompt Corrective Action. FDICIA also established a system of prompt
corrective action to resolve the problems of undercapitalized institutions. The
FDIC, as well as the other federal banking regulators, adopted regulations
governing the supervisory actions that may be taken against undercapitalized
institutions. The regulations establish five categories, consisting of "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized" and "critically undercapitalized." The FDIC's regulations
defines the five capital categories as follows: Generally, an institution will
be treated as "well capitalized" if its ratio of total capital to risk-weighted
assets is at least 10%, its ratio of Tier 1 capital to risk-weighted assets is
at least 6%, its ratio of Tier 1 capital to total assets is at least 5%, and it
is not subject to any order or directive by the FDIC to meet a specific capital
level. An institution will be treated as "adequately capitalized" if its ratio
of total capital to risk-weighted assets is at least 8%, its ratio of Tier 1
capital to risk-weighted assets is at least 4%, and its ratio of Tier 1 capital
to total assets is at least 4% (3% if the bank receives the highest rating on
the CAMEL financial institutions rating system) and it is not a well-capitalized
institution. An institution that has total risk-based capital of less than 8%,
Tier 1 risk-based-capital of less than 4% or a leverage ratio that is less than
4% (or less than 3% if the institution is rated a composite "1" under the CAMEL
rating system) would be considered to be "undercapitalized." An institution that
has total risk-based capital of less than 6%, Tier 1 capital of less than 3% or
a leverage ratio that is less than 3% would be considered to be "significantly
undercapitalized," and an institution that has a tangible capital to assets
ratio equal to or less than 2% would be deemed to be "critically
undercapitalized."
The severity of the action authorized or required to be taken under the
prompt corrective action regulations increases as a bank's capital deteriorates
within the three undercapitalized categories. All banks are prohibited from
paying dividends or other capital distributions or paying management fees to any
controlling person if, following such distribution, the bank would be
undercapitalized. The FDIC is required to
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monitor closely the condition of an undercapitalized bank and to restrict the
growth of its assets. An undercapitalized bank is required to file a capital
restoration plan within 45 days of the date the bank receives notice that it is
within any of the three undercapitalized categories, and the plan must be
guaranteed by any parent holding company. The aggregate liability of a parent
holding company is limited to the lesser of: (i) an amount equal to the five
percent of the bank's total assets at the time it became "undercapitalized," and
(ii) the amount that is necessary (or would have been necessary) to bring the
bank into compliance with all capital standards applicable with respect to such
bank as of the time it fails to comply with the plan. If a bank fails to submit
an acceptable plan, it is treated as if it were "significantly
undercapitalized." Banks that are significantly or critically undercapitalized
are subject to a wider range of regulatory requirements and restrictions.
The FDIC has a broad range of grounds under which it may appoint a receiver
or conservator for an insured depositary bank. If one or more grounds exist for
appointing a conservator or receiver for a bank, the FDIC may require the bank
to issue additional debt or stock, sell assets, be acquired by a depository bank
holding company or combine with another depository bank. Under FDICIA, the FDIC
is required to appoint a receiver or a conservator for a critically
undercapitalized bank within 90 days after the bank becomes critically
undercapitalized or to take such other action that would better achieve the
purposes of the prompt corrective action provisions. Such alternative action can
be renewed for successive 90-day periods. However, if the bank continues to be
critically undercapitalized on average during the quarter that begins 270 days
after it first became critically undercapitalized, a receiver must be appointed,
unless the FDIC makes certain findings that the bank is viable.
LOANS TO A BANK'S INSIDERS
Federal Regulation. A bank's loans to its executive officers, directors,
any owner of 10% or more of its stock (each, an "insider") and any of certain
entities affiliated with any such person (an "insider's related interest") are
subject to the conditions and limitations imposed by Section 22(h) of the
Federal Reserve Act and the FRB's Regulation O thereunder. Under these
restrictions, the aggregate amount of the loans to any insider and the insider's
related interests may not exceed the loans-to-one-borrower limit applicable to
national banks, which is comparable to the loans-to-one-borrower limit
applicable to the Bank's loans for commercial, corporate or business purposes.
See "-- New York Banking Regulation -- Loans-to-One Borrower Limitations." All
loans by a bank to all such persons and related interests in the aggregate may
not exceed the bank's unimpaired capital and unimpaired surplus. Regulation O
also requires that any proposed loan to an insider or a related interest of that
insider be approved in advance by a majority of the board of directors of the
bank, with any interested director not participating in the voting, if such
loan, when aggregated with any existing loans to that insider and the insider's
related interests, would exceed either (a) $500,000 or (b) the greater of
$25,000 or 5% of the bank's unimpaired capital and surplus. Such loans must be
made on substantially the same terms as, and follow credit underwriting
procedures that are not less stringent than, those that are prevailing at the
time for comparable transactions with other persons.
In addition, provisions of the BHCA prohibit extensions of credit to a
bank's insiders and their related interests by any other institution that has a
correspondent banking relationship with the bank, unless such extension of
credit is on substantially the same terms as those prevailing at the time for
comparable transactions with other persons and does not involve more than the
normal risk of repayment or present other unfavorable features.
New York Regulation. Applicable New York regulations impose conditions and
limitations on a stock savings bank's loans to its directors and executive
officers that are comparable in most respects to the conditions and limitations
imposed under federal law, as discussed above. However, there are a number of
differences. The New York regulations do not affect loans to shareholders owning
10% or more of the savings bank's stock. Loans to an executive officer, other
than loans for the education of the officer's children and certain loans secured
by the officer's residence, may not exceed the lesser of (a) $100,000 or (b) the
greater of $25,000 or 2.5% of the bank's capital stock, surplus fund and
undivided profits.
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FEDERAL HOME LOAN BANK SYSTEM
The Bank is a member of the FHLBNY, which is one of the 12 regional Federal
Home Loan Banks that comprise the FHLB system. Each of the Federal Home Loan
Banks are subject to supervision and regulation by the Federal Housing Finance
Board ("FHFB"), and each acts as a central credit facility primarily for its
member institutions. As a member of the FHLBNY, the Bank is required to acquire
and hold shares of capital stock in the FHLBNY in an amount at least equal to
the greater of 1% of the aggregate unpaid principal of its home mortgage loans,
home purchase contracts, and similar obligations at the beginning of each year,
or 1/20 of its advances (borrowings) from the FHLBNY. The Bank was in compliance
with this requirement with an investment in FHLBNY stock at August 31, 1997, of
$1.7 million.
Each FHLB serves as a reserve or central bank for its member institutions
within its assigned region. Each is funded primarily from proceeds derived from
the sale of consolidated obligations of the FHLB System. It offers advances to
members in accordance with policies and procedures established by the FHFB and
the board of directors of the FHLB. Long-term advances may only be made for the
purpose of providing funds for residential housing finance.
FEDERAL RESERVE SYSTEM
Under FRB regulations, the Bank is required to maintain
non-interest-earning reserves against its transaction accounts (primarily NOW
and regular checking accounts). The FRB regulations generally require that
reserves of 3% must be maintained against aggregate transaction accounts of
$49.3 million or less (subject to adjustment by the FRB) and an initial reserve
of $1,479,000 plus 10% (subject to adjustment by the FRB between 8% and 14%)
against that portion of total transaction accounts in excess of $49.3 million.
The first $4.4 million of otherwise reservable balances (subject to adjustments
by the FRB) are exempted from the reserve requirements. The Bank is in
compliance with the foregoing requirements. Because required reserves must be
maintained in the form of either vault cash, a non-interest-bearing account at a
Federal Reserve Bank or a pass-through account as defined by the FRB, the effect
of this reserve requirement is to reduce the Bank's interest-earning assets.
HOLDING COMPANY REGULATION
Federal Regulation. Following the consummation of the Conversion, the
Company will be subject to examination, regulation and periodic reporting under
the BHCA, as administered by the FRB. The FRB has adopted capital adequacy
guidelines for bank holding companies on a consolidated basis substantially
similar to those of the FDIC for the Bank. See, "Federal Regulation -- Capital
Requirements." On a pro forma basis after the Conversion, the Company's pro
forma total capital and Tier 1 capital ratios will exceed these minimum capital
requirements.
The Company will be required to obtain the prior approval of the FRB to
acquire all, or substantially all, of the assets of any bank or bank holding
company. Prior FRB approval will be required for the Company to acquire direct
or indirect ownership or control of any voting securities of any bank or bank
holding company if, after giving effect to such acquisition, it would, directly
or indirectly, own or control more than 5% of any class of voting shares of such
bank or bank holding company.
The Company will be required to give the FRB prior written notice of any
purchase or redemption of its outstanding equity securities if the gross
consideration for the purchase or redemption, when combined with the net
consideration paid for all such purchases or redemptions during the preceding 12
months, will be equal to 10% or more of the Company's consolidated net worth.
The FRB may disapprove such a purchase or redemption if it determines that the
proposal would constitute an unsafe and unsound practice, or would violate any
law, regulation, FRB order or directive, or any condition imposed by, or written
agreement with, the FRB. Such notice and approval is not required for a bank
holding company that would be treated as "well capitalized" under applicable
regulations of the FRB, that has received a composite "1" or "2" rating at its
most recent bank holding company inspection by the FRB, and that is not the
subject of any unresolved supervisory issues.
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The status of the Company as a registered bank holding company under the
BHCA does not exempt it from certain federal and state laws and regulations
applicable to corporations generally, including, without limitation, certain
provisions of the federal securities laws.
In addition, a bank holding company is generally prohibited from engaging
in, or acquiring direct or indirect control of any company engaged in,
non-banking activities. One of the principal exceptions to this prohibition is
for activities found by the FRB to be so closely related to banking or managing
or controlling banks as to be a proper incident thereto. Some of the principal
activities that the FRB has determined by regulation to be so closely related to
banking as to be a proper incident thereto are: (i) making or servicing loans;
(ii) performing certain data processing services; (iii) providing discount
brokerage services; (iv) acting as fiduciary, investment or financial advisor,
(v) leasing personal or real property; (vi) making investments in corporations
or projects designed primarily to promote community welfare; and (vii) acquiring
a savings and loan association.
Under the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 ("FIRREA"), depository institutions are liable to the FDIC for losses
suffered or anticipated by the FDIC in connection with the default of a commonly
controlled depository institution or any assistance provided by the FDIC to such
an institution in danger of default. This law would have potential applicability
if the Company ever acquired as a separate subsidiary a depository institution
in addition to the Bank. There are no current plans for such an acquisition.
Subsidiary banks of a bank holding company are subject to certain
quantitative and qualitative restrictions imposed by the Federal Reserve Act on
any extension of credit to, or purchase of assets from, or letter of credit on
behalf of, the bank holding company or its subsidiaries, and on the investment
in or acceptance of stocks or securities of such holding company or its
subsidiaries as collateral for loans. In addition, provisions of the Federal
Reserve Act and FRB regulations limit the amounts of, and establish required
procedures and credit standards with respect to, loans and other extensions of
credit to officers, directors and principal shareholders of the Bank, the
Company, any subsidiary of the Company and related interests of such persons.
Moreover, banks are prohibited from engaging in certain tie-in arrangements
(with the bank's parent holding company or any of the holding company's
subsidiaries) in connection with any extension of credit, lease or sale of
property or furnishing of services.
New York Regulation. Under the Banking Law, certain companies owning or
controlling banks are regulated as a bank holding company. For the purposes of
the Banking Law, the term "bank holding company," is defined generally to
include any "company" that, directly or indirectly, either (a) controls the
election of a majority of the directors or (b) owns, controls or holds with
power to vote more than 10% of the voting stock of a bank holding company or, if
the company is a banking institution, another banking institution, or 10% or
more of the voting stock of each of two or more banking institutions. The term
"company" is defined to include corporations, partnerships and other types of
business entities, chartered or doing business in New York, and the term
"banking institution" is defined to include commercial banks, stock savings
banks and stock savings and loan associations. A company controlling, directly
or indirectly, only one banking institution will not be deemed to be a bank
holding company for the purposes of the Banking Law. Under the Banking Law, the
prior approval of the NYBB is required before: (1) any action is taken that
causes any company to become a bank holding company; (2) any action is taken
that causes any banking institution to become or to be merged or consolidated
with a subsidiary of a bank holding company; (3) any bank holding company
acquires direct or indirect ownership or control of more than 5% of the voting
stock of a banking institution; (4) any bank holding company or subsidiary
thereof acquires all or substantially all of the assets of a banking
institution; or (5) any action is taken that causes any bank holding company to
merge or consolidate with another bank holding company. Additionally, certain
restrictions apply to New York State bank holding companies regarding the
acquisition of banking institutions that have been chartered for five years or
less and are located in smaller communities. Directors, officers and employees
of a New York State bank holding company are subject to limitations regarding
their affiliation with securities underwriting or distribution firms and with
other bank holding companies, and directors and executive officers are subject
to limitations regarding loans obtained from certain of the holding company's
banking subsidiaries. Although the Company will not be a bank holding company
for purposes of the Banking Law upon the Effective Date of the
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Conversion, any future acquisition of ownership, control, or the power to vote
10% or more of the voting stock of another banking institution or bank holding
company would cause it to become such.
ACQUISITION OF THE HOLDING COMPANY
Federal Restrictions. Under the federal Change in Bank Control Act
("CBCA"), a notice must be submitted to the FRB if any person (including a
company), or group acting in concert, seeks to acquire 10% or more of the
Company's shares of Common Stock outstanding, unless the FRB has found that the
acquisition will not result in a change in control of the Company. Under the
CBCA, the FRB has 60 days within which to act on such notices, taking into
consideration certain factors, including the financial and managerial resources
of the acquiror, the convenience and needs of the communities served by the
Company and the Bank, and the anti-trust effects of the acquisition. Under the
BHCA, any company would be required to obtain prior approval from the FRB before
it may obtain "control" of the Company within the meaning of the BHCA. Control
generally is defined to mean the ownership or power to vote 25% more of any
class of voting securities of the Company or the ability to control in any
manner the election of a majority of the Company's directors. See "Holding
Company Regulation."
New York Change in Bank Control Restrictions. In addition to the CBCA, the
Banking Law generally requires prior approval of the NYBB before any action is
taken that causes any company to acquire direct or indirect control of a banking
institution that is organized in the State of New York. For this purpose, the
term "company" is defined to include corporations, partnerships and other types
of business entities, chartered or doing-business in New York, and an individual
or combination of individuals acting in concert and residing or doing business
in New York, and the term "control" is defined generally to mean the power to
direct or cause the direction of the management and policies of the banking
institution and is presumed to exist if the company owns, controls or holds with
power to vote 10% or more of the voting stock of the banking institution.
INTERSTATE BANKING AND BRANCHING
In the past, interstate banking has been limited under the BHCA to those
states that permitted interstate banking by statute. New York was one of a
number of states that permitted, subject to the reciprocity conditions of the
Banking Law, out-of-state bank holding companies to acquire New York banks. By
1995, most states had adopted statutes permitting multistate bank holding
companies.
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
("Interstate Banking Act") was enacted on September 29, 1994. As of September
29, 1995, the Interstate Banking Act permitted approval under the BHCA of the
acquisition by a bank holding company that is well-capitalized and managed of a
bank outside of the holding company's home state regardless of whether the
acquisition was permitted under the law of the state of the bank to be acquired.
The FRB may not approve an acquisition under the BHCA that would result in the
acquiring holding company controlling more than 10% of the deposits in the
United States or more than 30% of the deposits in any particular state.
In the past, branching across state lines was not generally available to a
state bank, such as the Bank. While out-of-state branches were authorized under
the Banking Law, similar authority was not generally available under the laws of
most other states. Beginning June 1, 1997, the Interstate Banking Act, permitted
the responsible federal banking agencies to approve merger transactions between
banks located in different states, regardless of whether the merger would be
prohibited under state law. Accordingly, the Interstate Banking Act permits a
bank to have branches in more than one state.
Before any bank acquisition can be completed, prior approval thereof may
also be required to be obtained from other agencies having supervisory
jurisdiction over the bank to be acquired, including the Banking Department. See
"Acquisition of the Holding Company." The Interstate Banking Act will facilitate
the consolidation of the banking industry that has taken place over recent years
and will allow the creation of larger, presumably more efficient, banking
networks.
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FEDERAL SECURITIES LAWS
The Company has filed with the SEC a registration statement under the
Securities Act for the registration of the Common Stock to be issued pursuant to
the Conversion. Upon completion of the Conversion, the Company's Common Stock
will be registered with the SEC under the Exchange Act. The Company will then be
subject to the information, proxy solicitation, insider trading restrictions and
other requirements under the Exchange Act.
Shares of the Common Stock purchased by persons who are not affiliates of
the Company may be resold without registration. Shares purchased by an affiliate
of the Company will be subject to the resale restrictions of Rule 144 under the
Securities Act. If the Company meets the current public information requirements
of Rule 144 under the Securities Act, each affiliate of the Company who complies
with the other conditions of Rule 144 (including those that require the
affiliate's sale to be aggregated with those of certain other persons) would be
able to sell in the public market, without registration, a number of shares not
to exceed, in any three-month period, the greater of (a) 1% of the outstanding
shares of the Company or (b) the average weekly volume of trading in such shares
during the preceding four calendar weeks. Provision may be made in the future by
the Company to permit affiliates to have their shares registered for sale under
the Securities Act under certain circumstances.
In the event that the holding company form of organization is not utilized,
the shares of the Bank's common stock to be issued and sold in the Conversion
would be exempt from registration under Section 3(a)(5) of the Securities Act.
Prior to the sale of all shares of its common stock in such a case, the Bank
would register its capital stock under Section 12(g) of the Exchange Act. Upon
such registration, the proxy rules, tender offer rules, insider trading
restrictions, annual and periodic reporting and other requirements of the
Exchange Act would also be applicable to the Bank but under the jurisdiction of
the FDIC. The Bank would be required by the FDIC to maintain said registration
for a period of at least three years following Conversion and to register with
and report to the FDIC, not to the SEC.
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<PAGE> 90
MANAGEMENT OF THE COMPANY
The Board of Directors of the Company is divided into three classes, each
of which contains approximately one-third of the Board. The directors shall be
elected by the shareholders of the Company for staggered three-year terms, or
until their successors are elected and qualified. One class of directors,
consisting of Timothy A. Dempsey, Fred M. Knipp, and Henry L. Nielsen, Jr., has
a term of office expiring at the first annual meeting of shareholders; a second
class, consisting of Ronald J. Gentile, Emil R. Krahulik and Thomas F. Lawrence,
Jr. has a term of office expiring at the second annual meeting of shareholders;
and a third class, consisting of Frances M. Gorish, R. Michael Kennedy, John W.
Sanford III and Robert N. Smith has a term of office expiring at the third
annual meeting of shareholders. Biographical information with respect to each
individual is set forth under "Management of the Bank -- Biographical
Information."
The following individuals are executive officers of the Company and hold
the offices set forth below opposite their names.
<TABLE>
<CAPTION>
NAME POSITIONS HELD WITH THE COMPANY
------------------------------ -------------------------------------------------------------
<S> <C>
Timothy A. Dempsey............ President and Chief Executive Officer
Ronald J. Gentile............. Executive Vice President and Chief Operating Officer
Arthur W. Budich.............. Senior Vice President, Treasurer and Chief Financial Officer
Laurence D. Haggerty.......... Senior Vice President
Donna M. Lyons................ Senior Vice President/Auditor
Barbara A. Rudy............... Senior Vice President
Nancy L. Sobotor-Littell...... Corporate Secretary and Director of Human Resources
</TABLE>
The executive officers of the Company are elected annually and hold office
until their respective successors have been elected and qualified or until
death, resignation or removal by the Board of Directors.
Since the formation of the Company, none of the executive officers,
directors or other personnel has received remuneration from the Company. It is
currently expected that, unless and until the Company becomes actively involved
in business activities separate from those conducted by the Bank, no separate
compensation will be paid to the directors and employees of the Company.
However, directors of the Company or the Bank who are not employees of the
Company or the Bank or any of their subsidiaries ("Outside Directors") may be
entitled to participate in stock incentive plans established by the Company. See
"Management of the Bank -- Benefits -- Stock Option Plan" and "-- Recognition
and Retention Plan." The Company will also guarantee certain obligations of the
Bank to the Bank's executive officers, employees and directors, as described
below. Information concerning the principal occupations, employment and
compensation of the directors and officers of the Company during the past five
years is set forth under "Management of the Bank -- Biographical Information."
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<PAGE> 91
MANAGEMENT OF THE BANK
TRUSTEES
The directors of the Company are also the trustees of the Bank. Upon
consummation of the Conversion, the current trustees of the Bank will become
directors of the stock chartered Bank. The following table sets forth certain
information regarding the Board of Trustees of the Bank.
<TABLE>
<CAPTION>
TRUSTEE TERM
NAME AGE(1) POSITIONS HELD WITH THE BANK SINCE EXPIRES(2)
- -------------------------- ------ ----------------------------------------- ------- ----------
<S> <C> <C> <C> <C>
Timothy A. Dempsey........ 63 President, Chief Executive Officer and 1974 1998
Trustee
Ronald J. Gentile......... 48 Executive Vice President, Chief Operating 1990 1999
Officer and Trustee
Frances M. Gorish......... 70 Trustee 1979 2000
R. Michael Kennedy........ 46 Trustee 1997 2000
Fred M. Knipp............. 66 Trustee 1992 1998
Emil R. Krahulik.......... 64 Trustee 1984 1999
Thomas F. Lawrence, 69 Trustee 1965 1999
Jr. ....................
Henry L. Nielsen, Jr. .... 71 Trustee 1962 1998
John W. Sanford III....... 60 Trustee 1986 2000
Robert N. Smith........... 48 Trustee 1994 2000
</TABLE>
- ---------------
(1) At December 1, 1997.
(2) The year in which the term of the individual as a director of the Company
would expire.
EXECUTIVE OFFICERS
The executive officers of the Bank are Mr. Dempsey and Mr. Gentile who are
trustees of the Bank, and Mr. Budich, Mr. Haggerty, Ms. Lyons, Ms. Rudy and Ms.
Sobotor-Littell, who are not trustees of the Bank. See "Management of the
Company." Each of the executive officers of the Bank will retain his or her
office in the converted Bank until the annual meeting of the Board of Trustees
of the Bank held immediately after the first annual meeting of shareholders of
the Company subsequent to Conversion and until their successors are elected and
qualified or until they are removed or replaced. Officers are re-elected by the
Board of Directors annually.
BIOGRAPHICAL INFORMATION
Positions held by trustees or executive officers of the Bank have been held
for at least the past five years unless stated otherwise.
Trustees
Timothy A. Dempsey serves as the President, Chief Executive Officer and a
trustee of the Bank. Mr. Dempsey has been involved in the financial institutions
industry for more than 45 years and has served as President and Chief Executive
Officer of the Bank since 1985 and as a trustee since 1974. He also serves as
President and Chief Executive Officer of the Bank's wholly owned subsidiaries,
including Warsave, WSB Financial and WSB Mortgage. In addition, he serves as the
Executive Vice President and a director of the Institutional Investors Capital
Appreciation Fund, Inc., a director of the M.S.B. Fund Inc. and Chairman of the
Orange County Water Authority.
Ronald J. Gentile serves as the Executive Vice President, Chief Operating
Officer and a trustee of the Bank. Mr. Gentile joined the Bank and has been a
trustee since 1990. In addition, he serves as Vice President of the Bank's
wholly owned subsidiaries, including Warsave, WSB Financial and WSB Mortgage.
Prior to joining the Bank, Mr. Gentile served as a senior bank examiner for the
FDIC. He is also a member of the
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<PAGE> 92
board of directors of the TriState Health System, Inc. and Winslow Therapeutic
Riding Unlimited, and a former President and member of the board of directors of
the Warwick Valley Rotary Club.
Frances M. Gorish joined the Bank in 1944 and has served as a trustee since
1979. Now retired, she served in various capacities for the Bank, most recently
as Vice President and Corporate Secretary. In addition, she serves as treasurer
of the Salvation Army, Lorena Abbott Service Unit, and the treasurer of the
Florida Historical Society.
R. Michael Kennedy became a trustee of the Bank in 1997. Mr. Kennedy is a
general partner and manager of various real estate companies, all managed
through Kennedy Companies. He is also the general managing partner of The
Fireplace Restaurant.
Fred M. Knipp has served as a trustee of the Bank since 1992. He is the
President, Chief Executive Officer and director of the Warwick Valley Telephone
Company and a director of Centrex Communications Corporation.
Emil R. Krahulik has served as a trustee of the Bank since 1984. He is a
partner in the law firm of Beattie & Krahulik and serves as the Bank's general
counsel.
Thomas F. Lawrence, Jr. has been a trustee of the Bank since 1965. Mr.
Lawrence, now retired, formerly served as President of Warwick Auto Company Inc.
He is also President of the Warwick Cemetery Association. Mr. Lawrence is Nancy
L. Sobotor-Littell's father.
Henry L. Nielsen, Jr. has served as a trustee of the Bank since 1962. He is
the President of Nielsen Construction Co., Inc. and is a director of the Warwick
Valley Telephone Company. He is also a trustee of the Warwick Historical Society
and the Warwick Cemetery Association.
John W. Sanford III has been a trustee since 1986. Mr. Sanford also serves
as President of John W. Sanford & Son, Inc., an insurance agency, and is a
partner in Maple Terrace Farms, a dairy beef business.
Robert N. Smith has served as a trustee since 1994. He is currently the
President of Lazear-Smith and Vander-Plaat Memorial Home and Lazear-Smith
Funeral Home. Mr. Smith is also sole proprietor of Smith and Gesell Associates,
a bookkeeping and tax preparation service.
Executive Officers who are not Trustees
Arthur W. Budich, age 47, has been the Senior Vice President, Treasurer and
Chief Financial Officer of the Bank since 1992 and has been employed by the Bank
in various capacities since 1986. He also serves as Treasurer of the Bank's
wholly owned subsidiaries, which include Warsave Development, Inc., WSB
Financial Services, Inc. and WSB Mortgage Company of New Jersey, Inc.
Laurence D. Haggerty, age 54, is the Senior Vice President, Commercial Loan
Department of the Bank. He has served in such capacity since 1991.
Donna M. Lyons, age 42, has served as the Senior Vice President of the Bank
since 1992 and Auditor of the Bank since 1989.
Barbara A. Rudy, age 44, has served as Senior Vice President, Loan
Servicing since 1991. She has been employed by the Bank in various capacities
since 1972.
Nancy L. Sobotor-Littell, age 40, is the Corporate Secretary and Director
of Human Resources of the Bank, positions she has held since 1988. She has been
employed by the Bank in various capacities since 1975. In addition, she serves
as Corporate Secretary of the Bank's wholly-owned subsidiaries, including
Warsave, WSB Financial and WSB Mortgage. Ms. Sobotor-Littell is Thomas F.
Lawrence, Jr.'s daughter.
Significant Employee
Arthur S. Anderson, age 39, has served as the Executive Director of the
Bank's Mortgage Department since 1995. Mr. Anderson is also the Vice President
of WSB Mortgage. Prior to joining the Bank,
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<PAGE> 93
Mr. Anderson served as Vice President of The Bank of New York Mortgage Company
from March, 1989 until February, 1995.
COMMITTEES AND MEETINGS OF THE BOARDS OF THE COMPANY AND THE BANK
The Board of Trustees of the Bank meets on a monthly basis and may have
additional special meetings from time to time. During the fiscal year ended May
31, 1997, the Board of Trustees of the Bank met 12 times. No current trustee
attended fewer than 75% of the total number of Board meetings and committee
meetings of which such trustee was a member.
Effective as of the Conversion, the Company and/or the Bank will maintain
the following committees of each of their respective Boards of Directors:
The Executive Committee of both the Company and the Bank consists of
Messrs. Dempsey, Nielsen, Lawrence, Krahulik and Sanford and Ms. Gorish. Each
such committee generally oversees the affairs of the Bank and Company, considers
proposals from management in relation to the election of officers and makes
recommendations to the Board regarding those individuals nominated to officer
positions.
The Audit Committee of both the Company and the Bank consists of Messrs.
Nielsen, Knipp, Sanford and Kennedy. Each Audit Committee meets periodically
with its independent certified public accountants to arrange the Bank's annual
financial statement audit and to review and evaluate recommendations made during
the annual audit. The Audit Committee also reviews and evaluates the procedures
and performance of the Bank's internal auditing staff.
The Compensation Committee of both the Company and the Bank consists of
Messrs. Lawrence, Nielsen and Kennedy and Ms. Gorish. The Compensation Committee
is responsible for overseeing the development, implementation and conduct of the
Company's and the Bank's employment and personnel policies, notices and
procedures, including the administration of the Company's and the Bank's
compensation and benefit programs.
The Bank also maintains the following committees: the Building Committee,
the CRA Committee, the Public Relations Committee and the Re-Inspection
Committee.
TRUSTEES' COMPENSATION
Fee Arrangements. Currently, each trustee of the Bank who is not an
employee of the Bank receives a fee of $400 for each Board meeting attended and
$250 for each committee meeting attended. In addition, the members of the
Re-Inspection Committee each receive an annual $250 fee. The aggregate amount of
fees paid to such trustees by the Bank for the year ended May 31, 1997 was
approximately $115,475. Directors of the Company will not be separately
compensated for their services as such. It is anticipated that directors will
also be covered by the Stock Option Plan and RRP expected to be implemented by
the Company. See "-- Benefits -- Stock Option Plan" and "-- Recognition and
Retention Plan."
TRUSTEES EMERITUS
The Bank maintains a Board of Trustees Emeritus which currently consists of
four former trustees of the Bank. The four trustees emeriti are Harry C. Sayre,
Jr., M.D., John W. Sanford, Jr., Robert A. Schoonover and Wilbur L. Smith.
Pursuant to the Bank's By-Laws, trustees must retire in the year they reach age
75, and any trustee who retires because of such age limitation is eligible to be
elected as trustee emeritus. Trustees emeritus have no vote and receive the same
meeting fees as trustees of the Bank. Recognizing the importance of past
experience in present operations and future planning, the Bank has found the
trustee emeritus program extremely beneficial.
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<PAGE> 94
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the cash
compensation paid by the Bank for services rendered in all capacities during the
fiscal year ended May 31, 1997 to the Chief Executive Officer and all executive
officers of the Bank who received compensation in excess of $100,000 ("Named
Executive Officers").
<TABLE>
<CAPTION>
LONG TERM COMPENSATION AWARDS(2)
ANNUAL ------------------------------------------
COMPENSATION(1) RESTRICTED
----------------- STOCK ALL OTHER
SALARY BONUS AWARDS(3) OPTIONS(3) COMPENSATION(4)
NAME AND PRINCIPAL POSITIONS YEAR ($) ($) ($) (#) ($)
- -------------------------------- ---- -------- ----- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Timothy A. Dempsey
President and Chief Executive
Officer....................... 1997 $189,750 -- -- -- $ 5,052
Ronald J. Gentile
Executive Vice President and
Chief Operating Officer....... 1997 $123,862 -- -- -- $ 3,618
</TABLE>
- ---------------
(1) Under Annual Compensation, the column titled "Salary" includes base salary
and payroll deductions for health insurance under the Bank's health
insurance plan and for each individual's contributions under The Warwick
Savings Bank 401(k) Savings Plan ("401(k) Plan"). In addition, Mr. Gentile's
salary amount includes $108.28 per week, which the Bank has added to his
compensation in lieu of providing him with the use of an automobile.
(2) For the fiscal year ended May 31, 1997, there were no: (a) perquisites with
an aggregate value for any named individual in excess of the lesser of
$50,000 or 10% of the total of the individual's salary and bonus for the
year; (b) payments of above-market preferential earnings on deferred
compensation; (c) payments of earnings with respect to long-term incentive
plans prior to settlement or maturation; or (d) preferential discounts on
stock. For 1997 the fiscal year ended May 31, the Bank had no restricted
stock or stock related plans in existence.
(3) During the fiscal year ended May 31, 1997, the Bank did not maintain any
restricted stock, stock options or other long-term incentive plans.
(4) Reflects matching contributions made by the Bank under the 401(k) Plan.
REPORT OF INDEPENDENT COMPENSATION EXPERT
Pursuant to the NYBB regulations governing the Conversion, the Bank must
obtain the opinion of an independent compensation consultant as to whether or
not the total compensation for the executive officers and trustees of the Bank,
viewed as a whole and on an individual basis, is reasonable and proper in
comparison to the compensation provided to executive officers, directors or
trustees of similar publicly-traded financial institutions. The Bank has
obtained an opinion from William M. Mercer, Incorporated, which provides that,
based upon published professional survey data of similarly situated
publicly-traded financial institutions operating in the relevant markets, with
respect to the total cash compensation for executive officers and total
remuneration for trustees of the Bank, such compensation, viewed as a whole and
on an individual basis, is reasonable and proper in comparison to the
compensation provided to similarly situated publicly-traded financial
institutions, and that, with respect to the amount of shares of Common Stock to
be reserved under the ESOP, and expected to be reserved under the RRP and the
Stock Option Plan, as a whole, such amounts reserved for granting are reasonable
in comparison to similar publicly-traded financial institutions.
EMPLOYMENT AGREEMENTS
Effective upon the Conversion, the Company intends to enter into Employment
Agreements with each of Mr. Dempsey, Mr. Gentile, Mr. Budich and Ms.
Sobotor-Littell ("Senior Executives"). These Employment Agreements establish the
respective duties and compensation of the Senior Executives and are intended to
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<PAGE> 95
ensure that the Company will be able to maintain a stable and competent
management base after the Conversion. The continued success of the Company
depends to a significant degree on the skills and competence of the Senior
Executives.
The Employment Agreements provide for three-year terms, with automatic
daily extensions such that the remaining terms of the Employment Agreements
shall be three years unless written notice of non-renewal is given by the
Company or the Senior Executive. The Employment Agreements provide that the
Senior Executive's base salary will be reviewed annually. It is anticipated that
this review will be performed by the Company's Compensation Committee and
approved by non-employee members of the Board, and the Senior Executive's base
salary may be increased on the basis of such officer's job performance and the
overall performance of the Company. The base salaries for Mr. Dempsey, Mr.
Gentile, Mr. Budich and Ms. Sobotor-Littell for 1997 are $200,000, $125,000,
$85,000 and $63,000, respectively. The Employment Agreements also provide for,
among other things, entitlement to participation in stock, retirement and
welfare benefit plans and reimbursement for ordinary and necessary business
expenses. Senior Executives would also be entitled to reimbursement of certain
costs incurred in interpreting or enforcing the Employment Agreements. The
Employment Agreements provide for termination by the Company at any time for
"cause" as defined in the Employment Agreements.
In the event the Company chooses to terminate a Senior Executive's
employment for reasons other than for cause, in the event of a Senior
Executive's resignation from the Company for certain reasons specified in the
Employment Agreements or in the event of a "change of control" as defined in the
Employment Agreements, the Senior Executive (or, in the event of the Senior
Executive's death, such Senior Executive's estate) would be entitled to a lump
sum cash payment in an amount generally equal to (a) the Senior Executive's
earned but unpaid salary, (b) the present value of the amount the Senior
Executive would have earned in salary had he or she continued working through
the unexpired term of the Employment Agreement and (c) the present value of the
additional contributions or benefits that such Senior Executive would have been
earned under the specified employee benefit plans or programs of the Bank or the
Company during the remaining term of the Employment Agreement and payments that
would have been made under any incentive compensation plan during the remaining
term of the Employment Agreement. The Employment Agreements also provide for the
cash out of any stock options, appreciation rights or restricted stock as if the
Senior Executive was fully vested. The Bank and the Company would also continue
the Senior Executive's life, health and any disability insurance or other
benefit plan coverage for the remaining terms of the Employment Agreements.
Reasons specified as grounds for resignation for purposes of the Employment
Agreements are: failure to elect or re-elect the Senior Executive to such
officer's position; failure to vest in the Senior Executive the functions,
duties or authority associated with such position; if the Senior Executive is a
member of the Board of Directors of the Bank or Company, failure to renominate
or re-elect such Senior Executive to such Board; any material breach of contract
by the Bank or the Company which is not cured within 30 days after written
notice thereof; a change in the Senior Executive's principal place of employment
for a distance in excess of 50 miles from the Bank's principal office in
Warwick, New York. In general, for purposes of the Employment Agreements and the
plans maintained by the Company or the Bank, a "Change of Control" will
generally be deemed to occur when a person or group of persons acting in concert
acquires beneficial ownership of 25% or more of any class of equity security of
the Company or the Bank, upon shareholder approval of a merger or consolidation
of the Company or the Bank, upon liquidation or sale of substantially all the
assets of the Company or the Bank or upon a contested election of directors
which results in a change in the majority of the Board of Directors. Based on
current compensation and benefit costs, cash payments to be made in the event of
a Change of Control of the Bank or the Company pursuant to the terms of the
Employment Agreements would be approximately $3,474,000, of which approximately
$1,677,000 would be payable to Mr. Dempsey, $795,000 would be payable to Mr.
Gentile, $572,000 would be payable to Mr. Budich and $430,000 would be payable
to Ms. Sobotor-Littell. However, the actual amount to be paid under the
Employment Agreements in the event of a Change of Control of the Bank or the
Company cannot be estimated at this time, because the actual amount is based on
the compensation and benefit costs applicable to these individuals and other
factors existing at the time of the Change of Control which cannot be determined
at this time. Such figures do not include any estimate as to amounts that may be
payable on account of the Stock Option Plan or RRP because no options or shares
have been allocated under such plans.
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<PAGE> 96
Cash and benefits paid to a Senior Executive under the Employment Agreement
together with payments under other benefit plans following a Change of Control
of the Bank or the Company may constitute an "excess parachute payment" under
Section 280G of the Code, resulting in the imposition of a 20% excise tax on the
recipient and the denial of the deduction for such excess amounts to the Company
and the Bank. In the event that any amounts paid to a Senior Executive following
a Change of Control would constitute excess parachute payments, the Employment
Agreements provide that such Senior Executives will be indemnified for any
excise taxes imposed due to such excess parachute payments, and any additional
excise, income and employment taxes imposed as a result of such tax
indemnification.
EMPLOYEE RETENTION AGREEMENTS
Effective upon the Conversion, the Bank intends to enter into Retention
Agreements with the following four employees: Laurence D. Haggerty, Donna M.
Lyons, Barbara A. Rudy and Arthur S. Anderson ("Contract Employees"). The
purpose of the Retention Agreements is to secure the Contract Employees'
continued availability and attention to the Bank's affairs, relieved of
distractions arising from the possibility of a corporate change of control. The
Retention Agreements do not impose an immediate obligation on the Bank to
continue the Contract Employees' employment, but provide for a period of assured
employment ("Assurance Period") in the event of a "Change of Control" as defined
in the Retention Agreements, which definition is similar to the definition of
change of control contained in the Employment Agreement. The Retention
Agreements provide for an initial Assurance Period of one year commencing on the
date of a Change of Control. In general, the applicable Assurance Periods will
be automatically extended on a daily basis under the Retention Agreements until
written notice of non-extension is given by the Bank or the Contract Employee,
in which case an Assurance Period would end on the first anniversary of the date
such notice is given.
If a Contract Employee is discharged without "cause" as defined in the
Retention Agreements during the Assurance Period, or prior to the commencement
of the Assurance Period but within 3 months of, and in connection with a Change
of Control, or the Contract Employee voluntarily resigns during the Assurance
Period following a failure to elect or re-elect the Contract Employee to such
officer's position; failure to vest in the Contract Employee the functions,
duties or authority associated with such position; if the Contract Employee is a
member of the Board of Directors of the Bank or Company, failure to renominate
or reelect such Contract Employee such Board; any material breach of contract by
the Bank or the Company which is not cured within 30 days after written notice
thereof; a change in the Contract Employee's principal place of employment for a
distance in excess of 50 miles from the Bank's principal office in Warwick, New
York, the Contract Employee (or, in the event of such employee's death, such
employee's estate) would be entitled to a lump sum cash payment in an amount
generally equal to (a) the Contract Employee's earned but unpaid salary, (b) the
present value of the amount the Contract Employee would have earned in salary
had he or she continued working during the remaining term of the Assurance
Period and (c) the present value of the additional contributions or benefits
that such that Contract Employee would have earned under the specified employee
benefit plans or programs of the Bank or Company during the remaining term of
the Assurance Period. The Retention Agreements also provide for the cashout of
stock options, appreciation rights or restricted stock as if the Contract
employee was fully vested. Each Contract Employee's life, health and disability
coverage would also be continued during the Assurance Period. The total amount
of termination benefits payable to each Contract Employee under the Retention
Agreements is limited to three times the Contract Employee's average total
compensation for the prior five calendar years. Payments to the Contract
Employees under their respective Retention Agreements will be guaranteed by the
Company to the extent that the required payments are not made by the Bank. Based
on current compensation and benefit costs applicable to the Contract Employees
expected to be covered by the Retention Agreements, cash payments to be made in
the event of a Change of Control would be approximately $580,000. However, the
actual amount to be paid under the Retention Agreements in the event of a change
of control of the Bank or the Company cannot be estimated at this time because
it will be based on the compensation and benefit costs applicable to the
Contract Employees and other factors existing at the time of the change of
control which cannot be determined at this time. Such figures do not include any
estimate as to amounts that may be payable on account of the Stock Option Plan
or RRP because no options or shares have been allocated under such plans.
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<PAGE> 97
BENEFITS
Pension Plan. The Bank maintains The Warwick Savings Bank Defined Benefit
Pension Plan, a non-contributory, tax-qualified defined benefit pension plan
("Pension Plan") for eligible employees. All employees, except (i) those paid on
an hourly basis or contract basis, (ii) leased employees or (iii) employees
regularly employed by outside employers for maintenance of properties, are
eligible to participate in the Pension Plan upon the later of (i) the end of the
12-month period in which he or she completes 1,000 hours of service or (ii) the
date he or she attains age 21. The Pension Plan provides an annual benefit for
each participant, including the executive officers named in the Summary
Compensation Table above, equal to 2% of the participant's average annual
compensation, multiplied by the participant's years of credited service, up to a
maximum of 30 years.
Average annual compensation is the average of a Participant's compensation
over the three years of employment out of the Participant's last 10-year period
of employment during which the participant's compensation is the highest. A
participant is fully vested in his or her pension benefit after five years of
service. The Pension Plan is funded by the Bank on an actuarial basis, and all
assets are held in trust by the Pension Plan trustee.
Benefit Restoration Plan. The Bank has adopted the Benefit Restoration
Plan of The Warwick Savings Bank ("BRP") to provide eligible employees with the
benefits that would be due to such employees under the Pension Plan, the 401(k)
Plan and the ESOP if such benefits were not limited under the Code. The BRP is
also intended to make up allocations lost by participants of the ESOP who retire
prior to the complete repayment of the ESOP loan. BRP benefits to be provided
with respect to the Pension Plan are reflected in the pension table.
The Bank intends to establish an irrevocable grantor's trust to hold the
assets of the BRP. This trust would be funded with contributions of the Bank for
the purpose of providing the benefits under the BRP. The assets of the trust are
considered to be part of the general assets of the Bank and are subject to
claims of the Bank's creditors. Earnings on the trust's assets are taxable to
the Bank.
Pension Plan Table. The following table sets forth the estimated annual
benefits payable under the Pension Plan upon a participant's normal retirement
at age 65, expressed in the form of a single life annuity, and any related
amounts payable under the BRP, for the average annual compensation and years of
credited service specified.
PENSION PLAN TABLE(1)
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE AT RETIREMENT
AVERAGE ANNUAL -----------------------------------------------------------
COMPENSATION 15 20 25 30 35(2)
- -------------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $37,500 $ 50,000 $ 62,500 $ 75,000 $ 75,000
150,000 45,000 60,000 75,000 90,000 90,000
175,000(3) 52,500 70,000 87,500 105,000 105,000
200,000(3) 60,000 80,000 100,000 120,000 120,000
225,000(3) 67,500 90,000 112,500 135,000(4) 135,000(4)
250,000(3) 75,000 100,000 125,000 150,000(4) 150,000(4)
</TABLE>
- ---------------
(1) The annual benefits shown in the table above assume the participant would
receive his retirement benefits under the Pension Plan and the BRP in the
form of a straight life annuity at normal retirement age.
(2) Normal retirement benefits are limited to 60% of average annual earnings.
(3) For the Pension Plan year ending September 30, 1997, the annual compensation
for calculating benefits may not exceed $150,000 (as adjusted for subsequent
years pursuant to Code provisions). The limitation is $160,000 for the plan
year beginning October 1, 1997, and will be adjusted to reflect cost of
living increases after 1997 in accordance with Section 401(a)(17) of the
Code. The table reflects amounts payable in conjunction with the BRP.
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<PAGE> 98
(4) These are hypothetical benefits based upon the Pension Plan's normal
retirement benefit formula. The maximum annual benefit permitted under
Section 415 of the Code in 1997 is $125,000 in 1997, or, if higher, a
member's current accrued benefit as of December 31, 1982 (but not more than
$136,425). The $125,000 ceiling will be adjusted to reflect cost of living
increases after 1997 in accordance with Section 415 of the Code. The BRP
will provide the difference between the amounts appearing in this table and
the maximum amount allowed by the Code.
The following table sets forth the years of credited service and the
average monthly compensation (as defined above) determined as of May 31, 1997,
for each of the individuals named in the Summary Compensation Table. The Average
Annual Earnings includes the base salary component of the figures shown in the
salary column of the Summary Compensation Table.
<TABLE>
<CAPTION>
YEARS OF
CREDITED SERVICE
---------------- AVERAGE ANNUAL
YEARS MONTHS COMPENSATION
----- ------ --------------
<S> <C> <C> <C>
Mr. Dempsey........................................... 24 3 $178,349
Mr. Gentile........................................... 7 0 $112,168
</TABLE>
401(k) Plan. The Bank maintains The Warwick Savings Bank 401(k) Savings
Plan ("401(k) Plan"), a tax-qualified profit-sharing plan under Sections 401(a)
and 401(k) of the Code. Employees who satisfy prescribed eligibility
requirements may make pre-tax salary deferrals under section 401(k) of the Code.
Salary deferrals are made by election and are limited to 15% of compensation up
to $160,000 (for 1997), or to a limit imposed under the Code ($9,500 for 1997).
The Bank makes matching contributions equal to a percentage of salary
contributions determined annually by the Bank, up to 3% of salary. Employees are
fully vested in their salary deferrals, and become incrementally vested in the
Bank's contribution after one year and fully vested in the Bank's contributions
after seven years.
The Bank has amended the 401(k) Plan in connection with the Conversion to
provide that the Bank's matching contributions will be invested in an investment
fund consisting primarily of Common Stock of the Company. In addition,
participating employees may elect to invest all or a portion of their remaining
account balances in such investment fund or the other investment funds provided
under the 401(k) Plan. Common Stock held by the 401(k) Plan may be newly issued
or treasury shares acquired from the Company or outstanding shares purchased in
the open market or in privately negotiated transactions. All Common Stock held
by the 401(k) Plan will be held by an independent trustee and allocated to the
accounts of individual participants. Participants will control the exercise of
voting and tender rights relating to the Common Stock held in their accounts.
Employee Stock Ownership Plan and Trust. The Company has established, and
the Bank has adopted, for the benefit of eligible employees, an ESOP and related
trust to become effective upon completion of the Conversion. Substantially all
employees of the Bank or the Company who have complete 1,000 hours of service
during a consecutive 12-month period will be eligible to become participants in
the ESOP. The ESOP intends to purchase 8% of the Common Stock to be issued in
the Conversion, including shares to be issued to the Foundation. As part of the
Conversion and in order to fund the ESOP's purchase of the Common Stock to be
issued in the Conversion, the Bank or the Company expects to contribute to the
ESOP sufficient funds to pay the par value of the Common Stock to be purchased,
and the ESOP intends to borrow funds from the Company equal to the balance of
the aggregate purchase price of the Common Stock. Although contributions to the
ESOP will be discretionary, the Company and the Bank intend to make annual
contributions to the ESOP in an aggregate amount at least equal to the principal
and interest requirement on the debt. It is expected that this loan will be for
a term of up to 10 years, will bear interest at the rate of 8% per annum and
will call for annual payments of principal and all accrued but unpaid interest
on the outstanding balance of the loan; provided, however, that payments in any
year may be deferred if the Company determines that either its consolidated
return on average assets or return on average equity do not meet certain
prescribed levels or it will not be able to deduct such payments for federal
income tax purposes for such year, so long as all payments have been made by the
end of the ten-year term of the loan. It is anticipated that the loan will also
permit
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<PAGE> 99
optional pre-payment. The Company and the Bank may make additional annual
contributions to the ESOP to the maximum extent deductible for federal income
tax purposes.
Shares purchased by the ESOP will initially be pledged as collateral for
the loan and will be held in a suspense account until released for allocation
among participants in the ESOP as the loan is repaid. The pledged shares will be
released annually from the suspense account in an amount proportional to the
repayment of the ESOP loan for each plan year. The released shares will be
allocated among the accounts of participants who are employees of the Bank or
the Company on the last day of the on the basis of the participants' total
taxable compensation for the year of allocation. Benefits generally become
vested at the rate of 20% per year beginning on a participant's third year of
service with 100% vesting after seven years of service (including past service).
Participants also become immediately vested upon termination of employment due
to death, retirement at age 65 or older, permanent disability or upon the
occurrence of a change of control. Forfeitures will be reallocated among
remaining participating employees, in the same proportion as contributions.
Vested benefits may be paid in a single sum or installment payments and are
payable upon death, retirement at age 65 or older, disability or separation from
service.
In connection with the establishment of the ESOP, a Plan Administrator was
appointed to administer the ESOP ("Plan Administrator"). An unrelated corporate
trustee for the ESOP will be appointed prior to the Conversion and will continue
thereafter. The Plan Administrator may instruct the trustee regarding investment
of funds contributed to the ESOP. The ESOP trustee, subject to its fiduciary
duty, must vote all allocated shares held in the ESOP in accordance with the
instructions of the participating employees. Under the ESOP, unallocated shares
will be voted in a manner calculated to most accurately reflect the instructions
received from participants regarding the allocated stock as long as such vote is
in accordance with the provisions of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
The ESOP may purchase additional shares of Common Stock in the future, in
the open market or otherwise, and may do so either on a leveraged basis with
borrowed funds or with cash dividends, periodic employer contributions or other
cash flow. Whether such purchases will be made and the terms and conditions of
any such purchases will be determined by the ESOP's fiduciaries taking into
account such factors as they consider relevant at the time, including their
judgment as to the attractiveness of the Common Stock as an investment, the
price at which Common Stock may be purchased and, in the case of leveraged
purchases, the terms and conditions on which borrowed funds are available and
the willingness of the Company or the Bank to offer purchase money financing or
guarantee purchase money financing offered by third parties.
Stock Option Plan. Following the Conversion, the Board of Directors of the
Company intends to adopt a stock option plan ("Stock Option Plan") which would
provide for the granting of options to purchase Common Stock to eligible
officers, employees and Outside Directors of the Company and Bank. At a meeting
of shareholders of the Company following the Conversion, which under applicable
NYBB regulations may be held no earlier than six months after the completion of
the Conversion, the Board of Directors intends to present the Stock Option Plan
to shareholders for approval. An amount of shares of Common Stock equal to 10%
of the shares of Common Stock to be issued in the Conversion, including shares
to be issued to the Foundation, is expected to be reserved for issuance under
the Stock Option Plan. No determinations have been made by the Board of
Directors as to the specific terms of the Stock Option Plan or the amount of
awards thereunder. However, NYBB regulations provide that, in the event that
such plans are implemented within one year following the Conversion, no
individual officer or employee may receive more than 25% of the options granted
and that Outside Directors may not receive more than 5% individually or more
than 30% in the aggregate of the options granted. NYBB and FDIC regulations also
provide that the exercise price of any option granted must be the market price
of Common Stock as of the date of grant.
The purpose of Stock Option Plan will be to attract and retain qualified
personnel in key positions, provide directors, officers and key employees with a
proprietary interest in the Company as an incentive to contribute to the success
of the Company and its subsidiaries and reward officers and key employees for
outstanding performance. Although the terms of the Stock Option Plan have not
yet been determined, it is expected that the Stock Option Plan will provide for
the grant of: (i) options to purchase the Company's Common Stock intended to
qualify as incentive stock options under Section 422 of the Code ("Incentive
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<PAGE> 100
Stock Options"); (ii) options that do not so qualify ("Non-Statutory Stock
Options"); and (iii) Limited Rights (discussed below) which will be exercisable
only upon a change of control of the Bank or the Company. Outside Directors of
the Company are not eligible to be granted Incentive Stock Options. Unless
sooner terminated, any Stock Option Plan adopted will be in effect for a period
of 10 years.
The Stock Option Plan will be administered by a Committee of the Board of
Directors ("Stock Option Committee"), and such committee will determine which
officers and employees will be granted options and Limited Rights, whether such
options will be Incentive Stock Options or Non-Statutory Stock Options, the
number of shares subject to each option, the exercise price of each
Non-Statutory Stock Option, whether such options may be exercised by delivering
other shares of Common Stock and when such options become exercisable. It is
expected that any Stock Option Plan will permit options to be granted for terms
of up to 10 years (5 years in the case of Incentive Stock Options granted to
employees who are 10% shareholders) and at exercise prices no less than the fair
market value at date of grant (110% of fair market value in the case of
Incentive Stock Options granted to employees who are 10% shareholders). It is
expected that in the event of death or disability, upon termination of
employment as an officer or employee or upon termination of service as an
Outside Director, grants would become 100% vested.
It is anticipated that the Stock Option Plan will also provide for Limited
Rights which, upon a change of control, will allow the holder to exercise such
Limited Rights and thereby be entitled to receive a lump sum cash payment equal
to the difference between the exercise price of the related option and the fair
market value of the shares of Common Stock subject to the option on the date of
exercise of the right in lieu of purchasing the stock underlying the option. It
is also anticipated that these Limited Rights could be canceled by an acquiror
in the contract for an acquisition if such acquiror commits to substitute other
consideration (including substitute options on the acquiror's stock) having
equivalent value to the options being canceled.
An employee will not be deemed to have received taxable income upon grant
or exercise of any Incentive Stock Option; provided, however, that shares
received through the exercise of such option are not disposed of for at least
one year after the date the stock is received in connection with the option
exercise and two years after the date of grant of the option. No compensation
deduction may be taken by the Company as a result of the grant or exercise of
Incentive Stock Options, provided such shares are not disposed of before the
expiration of the period described above (a "disqualifying disposition"). In the
case of a Non-Statutory Stock Option and in the case of a disqualifying
disposition of an Incentive Stock Option, an employee will be deemed to receive
ordinary income upon exercise of the stock option in an amount equal to the
amount by which the exercise price is exceeded by the fair market value of the
Common Stock purchased on the date of exercise. The amount of any ordinary
income deemed to be received by an optionee upon the exercise of a Non-Statutory
Stock Option or due to a disqualifying disposition of an Incentive Stock Option
may be a deductible expense for tax purposes for the Company. In the case of
Limited Rights, upon exercise, the option holder would have to include the
amount paid to him or her upon exercise in his or her gross income for federal
income tax purposes in the year in which the payment is made and the Company may
be entitled to a deduction for federal income tax purposes of the amount paid.
Grants to Outside Directors under the Stock Option Plan are expected to be
self-executing. It is anticipated that the exercise price per share of each
option granted to Outside Directors will be equal to the fair market value of
the shares of Common Stock on the date the option is granted.
Recognition and Retention Plan. Following the Conversion, the Company also
intends to establish the RRP as a method of providing officers, employees and
Outside Directors of the Bank and Company with a proprietary interest in the
Company in a manner designed to encourage such persons to remain with the Bank
and the Company. The Company intends to present the RRP for shareholder approval
at a meeting of shareholders, which pursuant to applicable NYBB regulations, may
be held no earlier than six months after the completion of the Conversion.
If the RRP is implemented, the Company expects to contribute funds to the
RRP to enable the RRP trust to acquire, in the aggregate, an amount up to 4% of
the shares of Common Stock to be issued in the Conversion, including shares to
be issued to the Foundation. Shares used to fund the RRP may be acquired through
open market purchases, if permitted, or from authorized but unissued shares. No
determinations have
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<PAGE> 101
been made as to the specific terms of the RRP or the amount of awards
thereunder. Although no specific award determinations have been made, the
Company anticipates that, if the RRP is implemented, the Company will provide
awards to eligible officers, employees and directors to the extent permitted by
applicable regulations. Current NYBB regulations provide that no individual
employee may receive more than 25% of the shares of any plan and that
non-employee directors may not receive more than 5% of the shares individually
or 30% in the aggregate for all directors, in the case of plans implemented
within one year following the Conversion.
Any RRP adopted shall be administered by a Committee of the Board of
Directors ("RRP Committee"). Any grants or allocations under the RRP for the
benefit of Outside Directors are expected to be self-executing. All awards are
expected to be granted in the form of shares of Common Stock held by the RRP at
no cost to the recipients of such awards. The Board intends to appoint an
independent fiduciary to serve as trustee of the trust to be established
pursuant to any RRP. The RRP is expected to provide for the vesting of awards
granted thereunder in the manner specified by the RRP Committee. It is also
expected that, in the event of death or disability, grants would be 100% vested
upon termination of employment of an officer or employee, or upon termination of
service as a director.
When shares become vested in accordance with the RRP, the participants will
recognize income equal to the fair market value of the Common Stock at that
time. The amount of income recognized by the participants may be a deductible
expense for tax purposes for the Company. When shares become vested and are
actually distributed in accordance with the RRP, the participants will also
receive amounts equal to any accrued dividends with respect thereto. Prior to
vesting, recipients of grants may direct the voting of the shares awarded to
them. Shares not subject to grants will be voted by the trustee of the RRP in
proportion to the directions provided with respect to shares subject to grants.
Vested shares will be distributed to recipients as soon as practicable following
the day on which they are vested. Any awards to Outside Directors under the RRP
implemented prior to the first anniversary of the Conversion and the material
terms and conditions thereof, will be specified in a plan document approved by
shareholders.
In the event that additional authorized but unissued shares are acquired by
the RRP after the Conversion, the interests of existing shareholders will be
diluted. See "Pro Forma Data."
TRANSACTIONS WITH CERTAIN RELATED PERSONS
Section 22(h) of the Federal Reserve Act and the FRB's Regulation O
thereunder require that all loans or extensions of credit to executive officers
and directors must be made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with the general public and must not involve more than the normal
risk of repayment or present other unfavorable features. The Bank has made loans
or extended credit to executive officers and also to certain persons related to
executive officers and trustees. All such loans were made by the Bank in the
ordinary course of business and were not made with more favorable terms nor did
they involve more than the normal risk of collectibility or present unfavorable
features. The outstanding principal balance of such loans to executive officers
and their associates totaled $54,700 or 0.1% of the Bank's retained earnings at
August 31, 1997 and 0.01% of the Bank's pro forma stockholders' equity at August
31, 1997, after giving effect to the Conversion, and assuming the sale of Common
Stock at the maximum of the Estimated Price Range. In addition, the Bank has
committed a line of credit of $2.5 million to the Warwick Valley Telephone
Company, none of which was outstanding at August 31, 1997. Mr. Knipp is the
Chief Executive Officer and Mr. Nielsen is a director of Warwick Valley
Telephone Company.
Mr. Krahulik is a partner in the law firm of Beattie & Krahulik, which the
Bank retains to provide certain legal services. In the fiscal year ended May 31,
1997, the Bank paid $112,875 for legal services provided during such period. In
addition, the firm received fees in the amount of approximately $395,017 from
third parties pursuant to its representation of the Bank in loan closings and
other legal matters for the fiscal year ended May 31, 1997. WSB Mortgage and
Beattie & Krahulik are co-tenants on the lease for WSB Mortgage's office in West
Milford, New Jersey. See "Business of the Bank -- Properties."
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<PAGE> 102
The Company intends that all transactions in the future between the Company
and its executive officers, directors, holders of 10% or more of the shares of
any class of its common stock and affiliates thereof, will contain terms no less
favorable to the Company than could have been obtained by it in arm's-length
negotiations with unaffiliated persons and will be approved by a majority of
independent Outside Directors of the Company not having any interest in the
transaction.
SUBSCRIPTIONS BY EXECUTIVE OFFICERS AND TRUSTEES
The following table sets forth the number of shares of Common Stock the
Bank's executive officers and trustees propose to purchase in the Offerings,
assuming shares of Common Stock are issued at the minimum and maximum of the
Estimated Price Range and that sufficient shares will be available to satisfy
their subscriptions. The table also sets forth the total expected beneficial
ownership of Common Stock as to all directors and executive officers as a group.
<TABLE>
<CAPTION>
AT THE MINIMUM AT THE MAXIMUM
OF THE ESTIMATED OF THE ESTIMATED
PRICE RANGE(1)(2) PRICE RANGE(1)(2)
-------------------------- --------------------------
AS A PERCENT AS A PERCENT
NUMBER OF SHARES NUMBER OF SHARES
NAME AMOUNT OF SHARES OFFERED OF SHARES OFFERED
- ---------------------------------- ---------- --------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
Timothy A. Dempsey................ $ 300,000 30,000 0.73% 30,000 0.54%
Ronald J. Gentile................. 300,000 30,000 0.73 30,000 0.54
Frances M. Gorish................. 50,000 5,000 0.12 5,000 0.09
R. Michael Kennedy................ 500,000 50,000 1.21 50,000 0.90
Fred M. Knipp..................... 150,000 15,000 0.36 15,000 0.27
Emil R. Krahulik.................. 50,000 5,000 0.12 5,000 0.09
Thomas F. Lawrence, Jr............ 20,000 2,000 0.05 2,000 0.04
Henry L. Nielsen, Jr.............. 150,000 15,000 0.36 15,000 0.27
John W. Sanford III............... 35,000 3,500 0.08 3,500 0.06
Robert N. Smith................... 150,000 15,000 0.36 15,000 0.27
Arthur W. Budich.................. 150,000 15,000 0.36 15,000 0.27
Laurence D. Haggerty.............. 150,000 15,000 0.36 15,000 0.27
Donna M. Lyons.................... 100,000 10,000 0.24 10,000 0.18
Barbara A. Rudy................... 140,000 14,000 0.34 14,000 0.25
Nancy L. Sobotor-Littell.......... 35,000 3,500 0.08 3,500 0.06
---------- ------- ---- ------- ----
All trustees and executive
officers as a group............. $2,280,000 228,000 5.53% 228,000 4.09%
========== ======= ==== ======= ====
</TABLE>
- ---------------
(1) The individual maximum purchase limitation is equal to $150,000. The above
table, however, includes proposed subscriptions by Associates (See "The
Conversion -- Limitations on Common Stock Purchases"). Does not include
subscription orders by the ESOP. The ESOP is expected to purchase 8% of the
shares to be issued in the Conversion, including shares to be issued to the
Foundation. See "-- Benefits -- Employee Stock Ownership Plan and Trust."
(2) The table does not reflect additional shares that the following persons, who
serve as trustees emeritus of the Bank, propose to purchase in the Offerings
in the amounts indicated: Harry C. Sayre, Jr., M.D. -- $20,000, John W.
Sanford, Jr. -- $30,000, Wilbur L. Smith -- $50,000. Such purchases, when
aggregated with the purchases set forth in the table, amount to $2,380,000
or 238,000 shares (5.77% of the shares offered at the minimum of the
Estimated Price Range and 4.27% of the shares offered at the maximum of the
Estimated Price Range).
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<PAGE> 103
THE CONVERSION
THE BOARD OF TRUSTEES OF THE BANK AND THE SUPERINTENDENT OF BANKS OF THE
STATE OF NEW YORK HAVE APPROVED THE PLAN OF CONVERSION, SUBJECT TO APPROVAL BY
THE BANK'S DEPOSITORS ENTITLED TO VOTE ON THE MATTER AND THE SATISFACTION OF
CERTAIN OTHER CONDITIONS. SUCH APPROVAL, HOWEVER, DOES NOT CONSTITUTE A
RECOMMENDATION OR ENDORSEMENT OF THE PLAN BY THE SUPERINTENDENT.
GENERAL
On July 10, 1997, the Bank's Board of Trustees unanimously adopted the Plan
of Conversion pursuant to which the Bank will be converted from a New York
mutual savings bank to a New York stock savings bank. The Plan was amended by
the Board of Trustees as of August 19, 1997 and October 21, 1997. It is
currently intended that all of the outstanding capital stock issued by the Bank
pursuant to the Plan will be held by the Company, which is incorporated under
Delaware law. The Plan was approved by the Superintendent, and the Bank has
received a notice of intent not to object to the Plan from the FDIC, subject to,
among other things, approval of the Plan by the Bank's depositors. A special
meeting of depositors has been called for this purpose to be held on December
, 1997.
The Company has received approval from the FRB to become a bank holding
company and to acquire all of the capital stock of the Bank to be issued in the
Conversion. The Company plans to retain 50% of the net proceeds from the sale of
the Common Stock and to use the remaining net proceeds to purchase all of the
then to be issued and outstanding capital stock of the Bank. The Conversion will
be effected only upon completion of the sale of all of the shares of Common
Stock of the Company (or of the Bank, if the holding company form of
organization is not utilized) to be issued pursuant to the Plan.
The Plan provides that the Board of Trustees of the Bank may, at any time
prior to the issuance of the Common Stock and for any reason, decide not to use
the holding company form of organization. Such reasons may include possible
delays resulting from overlapping regulatory processing or policies which could
adversely affect the Bank's or the Company's ability to consummate the
Conversion and transact its business as contemplated herein and in accordance
with the Bank's operating policies. In the event such a decision is made, the
Bank will withdraw the Company's registration statement from the SEC and take
steps necessary to complete the Conversion without the Company, including filing
any necessary documents with the Superintendent and the FDIC. In such event, and
provided there is no regulatory action, directive or other consideration upon
which basis the Bank determines not to complete the Conversion, if permitted by
the Superintendent, the Bank will issue and sell the common stock of the Bank
and subscribers will be notified of the elimination of a holding company and
will be solicited (i.e., be permitted to affirm their orders, in which case they
will need to affirmatively reconfirm their subscriptions prior to the expiration
of the resolicitation offering or their funds will be promptly refunded with
interest at the Bank's passbook rate of interest; or be permitted to modify or
rescind their subscriptions), and notified of the time period within which the
subscriber must affirmatively notify the Bank of such subscriber's intention to
affirm, modify or rescind such subscriber's subscription. The following
description of the Plan assumes that a holding company form of organization will
be used in the Conversion. In the event that a holding company form of
organization is not used, all other pertinent terms of the Plan as described
below will apply to the conversion of the Bank from the mutual to stock form of
organization and the sale of the Bank's common stock.
The Plan provides generally that (i) the Bank will convert from a mutual
savings bank to a capital stock savings bank and (ii) the Company will offer
shares of Common Stock for sale in the Subscription Offering to the Bank's
Eligible Account Holders, Employee Plans, including the ESOP, Supplemental
Eligible Account Holders and Other Depositors. The Plan also provides that
shares not subscribed for in the Subscription Offering may be offered in a
Community Offering to certain members of the general public. It is anticipated
that all shares not subscribed for in the Subscription and Community Offerings
will be offered for sale by the Company to the general public in a Syndicated
Community Offering. The Company and the Bank have reserved the right to accept
or reject, in whole or in part, any orders to purchase shares of the Common
Stock
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<PAGE> 104
received in the Community Offering or in the Syndicated Community Offering. See
"-- Community Offering" and "-- Syndicated Community Offering."
The aggregate price of the shares of Common Stock to be issued in the
Conversion within the Estimated Price Range, currently estimated to be between
$41,225,000 and $55,775,000, is based upon an independent appraisal prepared by
FinPro, a consulting firm experienced in the valuation and appraisal of savings
institutions, of the estimated pro forma market value of the Common Stock of the
Company. All shares of Common Stock to be issued and sold in the Conversion will
be sold at the same price. The independent appraisal will be affirmed or, if
necessary, updated at the completion of the Offerings. See "-- Stock Pricing"
for additional information as to the determination of the estimated pro forma
market value of the Common Stock.
The following is a brief summary of pertinent aspects of the Conversion.
The summary is qualified in its entirety by reference to the provisions of the
Plan. A copy of the Plan is available from the Bank upon written request and is
available for inspection at the offices of the Bank and at the office of the
Superintendent. The Plan is also filed as an Exhibit to the Registration
Statement of which this Prospectus is a part, copies of which may be obtained
from the SEC. See "Additional Information."
PURPOSES OF CONVERSION
The Bank, as a New York mutual savings bank, does not have shareholders and
has no authority to issue capital stock. By converting to the capital stock form
of organization, the Bank will be structured in the form used by many commercial
banks, other business entities and a growing number of savings institutions. The
Conversion will be important to the future growth and performance of the Bank by
providing a larger capital base on which the Bank may operate, enhanced future
access to capital markets, enhanced ability to diversify into other financial
services related activities and enhanced ability to render services to the
public.
The holding company form of organization, if used, would provide additional
flexibility to diversify the Bank's business activities through newly-formed
subsidiaries, or through acquisitions of or mergers with both mutual and stock
institutions, as well as other companies. Although there are no current
arrangements, understandings or agreements, written or oral, regarding any such
opportunities, the Company will be in a position after the Conversion, subject
to regulatory limitations and the Company's financial position, to take
advantage of any such opportunities that may arise. While there are benefits
associated with the holding company form of organization, such form of
organization may involve additional costs associated with its maintenance and
regulation as a savings and loan company, such as additional administrative
expenses, taxes and regulatory filings or examination fees.
The potential impact of the Conversion upon the Bank's capital base is
significant. The Bank had Tier 1 Leverage Capital of $28.0 million, or 9.81% of
assets, at August 31, 1997. Assuming that $53.7 million of net proceeds are
realized from the sale of Common Stock (being the maximum of the Estimated Price
Range established by the Board of Directors based on the Valuation Range which
has been estimated by FinPro to be from a minimum of $41,225,000 to a maximum of
$55,775,000 (see "Pro Forma Data" for the basis of this assumption)) and
assuming that $26.9 million of the net proceeds are used by the Company to
purchase the capital stock of the Bank, the Bank's Tier 1 Leverage capital
ratio, on a pro forma basis, will increase to 15.89% after the Conversion. In
the event that the holding company form of organization is not utilized and all
of the net proceeds from the Offerings, at the maximum of the Estimated Price
Range, are retained by the Bank, the Bank's Tier 1 Leverage capital ratio on a
pro forma basis, will increase to 24.66% after Conversion. The investment of the
net proceeds from the sale of the Common Stock will provide the Bank with
additional income to further enhance its capital position. The additional
capital may also assist the Bank in offering new programs and expanded services
to its customers.
After completion of the Conversion, the unissued common and preferred stock
authorized by the Company's Certificate of Incorporation will permit the
Company, subject to market conditions and regulatory approval of an offering, to
raise additional equity capital through further sales of securities and to issue
securities in connection with possible acquisitions. At the present time, the
Company has no plans with respect to additional offerings of securities, other
than the issuance of additional shares to the Foundation or upon
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<PAGE> 105
exercise of stock options granted pursuant to the Stock Option Plan or the
possible issuance of authorized but unissued shares to the RRP. Following the
Conversion, the Company will also be able to use stock-related incentive
programs to attract and retain executive and other personnel for itself and its
subsidiaries. See "Management of the Bank -- Executive Compensation."
EFFECTS OF CONVERSION
General. Each depositor in a mutual savings bank has both a deposit
account in the institution and a pro rata ownership interest in the equity of
the institution based upon the balance in such depositor's account, which
interest may only be realized in the event of a liquidation of the institution.
However, this ownership interest is tied to the depositor's account and has no
tangible market value separate from such deposit account. Any depositor who
opens a deposit account obtains a pro rata ownership interest in the equity of
the institution without any additional payment beyond the amount of the deposit.
A depositor who reduces or closes such depositor's account receives the balance
in the account but receives nothing for such depositor's ownership interest in
the equity of the institution, which is lost to the extent that the balance in
the account is reduced.
Consequently, depositors of a mutual savings bank have no way to realize
the value of their ownership interest, which has realizable value only in the
unlikely event that the mutual savings bank is liquidated. In such event, the
depositors of record at that time, as owners, would share pro rata in any
residual surplus and reserves after other claims, including claims of depositors
to the amounts of their deposits, are paid.
When a mutual savings bank converts to stock form, permanent
non-withdrawable capital stock is created to represent the ownership of the
institution's equity and the former pro rata ownership of depositors is
thereafter represented exclusively by their liquidation rights. See "--
Liquidation Rights." Such common stock is separate and apart from deposit
accounts and cannot be and is not insured by the FDIC or any other governmental
agency. Certificates are issued to evidence ownership of the capital stock. The
stock certificates are transferable, and, therefore, the stock may be sold or
traded if a purchaser is available with no effect on any account the seller may
hold in the institution.
Continuity. While the Conversion is being accomplished, and after the
consummation of the Conversion, the normal business of the Bank of accepting
deposits and making loans will continue without interruption. The Bank will
continue to be subject to regulation by the Superintendent and the FDIC. After
Conversion, the Bank will continue to provide services for depositors and
borrowers under current policies by its present management and staff.
The trustees serving the Bank immediately before the Conversion will serve
as directors of the Bank after the Conversion. The directors of the Company will
consist of all of the individuals currently serving on the Board of Trustees of
the Bank. It is anticipated that all officers of the Bank serving immediately
before the Conversion will retain their positions after the Conversion. See
"Management of the Company" and "Management of the Bank."
Deposit Accounts and Loans. Under the Plan, each depositor in the Bank at
the time of Conversion will automatically continue as a depositor after the
Conversion, and each such deposit account will remain the same with respect to
deposit balance, interest rate and other terms, except to the extent affected by
withdrawals made to purchase Common Stock in the Conversion. See "-- Procedure
for Purchasing Shares in Subscription and Community Offerings." Each such
account will be insured by the FDIC to the same extent as before the Conversion
(i.e., up to $100,000 per depositor). Depositors will continue to hold their
existing certificates of deposit, passbooks and other evidences of their
accounts.
Furthermore, no loan outstanding from the Bank will be affected by the
Conversion, and the amount, interest rate, maturity and security for each loan
will remain as they were contractually fixed prior to the Conversion.
Voting Rights. It is current mutual form, voting rights and control of the
Bank are vested exclusively in the Board of Trustees. After the Conversion,
direction of the Bank will be under the control of the Board of Directors of the
Bank. The Company, as the holder of all of the outstanding common stock of the
Bank, will
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have exclusive voting rights with respect to any matters concerning the Bank
requiring shareholder approval, including the election of directors of the Bank.
After the Conversion, subject to the rights of the holders of preferred
stock that may be issued in the future, the holders of the Common Stock will
have exclusive voting rights with respect to any matters concerning the Company.
Each holder of Common Stock will, subject to the restrictions and limitations
set forth in the Company's Certificate of Incorporation discussed below, be
entitled to vote on any matters to be considered by the Company's shareholders,
including the election of directors of the Company.
Liquidation Rights. In the unlikely event of a complete liquidation of the
Bank in its present mutual form, each depositor would receive such depositor's
pro rata share of any assets of the Bank remaining after payment of claims of
all creditors (including the claims of all depositors to the withdrawal value of
their accounts). Each depositor's pro rata share of such remaining assets would
be in the same proportion as the value of such depositor's deposit account was
to the total value of all deposit accounts in the Bank at the time of
liquidation. After the Conversion, each depositor, in the event of a complete
liquidation, would have a claim as a creditor of the same general priority as
the claims of all other general creditors of the Bank. However, except as
described below, such depositor's claim would be solely in the amount of the
balance in such depositor's deposit account plus accrued interest. Such
depositor would not have an interest in the value or assets of the Bank above
that amount.
The Plan provides for the establishment, upon the completion of the
Conversion, of a special "liquidation account" for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders in an amount equal to
the surplus and reserves of the Bank as of the date of its latest balance sheet
contained in the final Prospectus used in connection with the Conversion. Each
Eligible Account Holder and Supplemental Eligible Account Holder, if such
account holder were to continue to maintain such account holder's deposit
account at the Bank, would be entitled, on a complete liquidation of the Bank
after the Conversion, to an interest in the liquidation account prior to any
payment to the shareholders of the Bank, whether or not such Eligible Account
Holder or Supplemental Eligible Account Holder purchased Common Stock in the
Conversion. Each Eligible Account Holder and Supplemental Eligible Account
Holder would have an initial interest in such liquidation account for each
deposit account, including passbook accounts, demand deposits transaction
accounts such as NOW/Super NOW accounts, money market deposit accounts and
certificates of deposit, with an aggregate balance of $100 or more held in the
Bank on June 30, 1996 (with respect to an Eligible Account Holder) and September
30, 1997 (with respect to a Supplemental Eligible Account Holder) (each a
"Qualifying Deposit"). Each Eligible Account Holder and Supplemental Eligible
Account Holder will have a pro rata interest in the total liquidation account
for such account holder's deposit accounts based on the proportion that the
aggregate balance of such person's Qualifying Deposits on the Eligibility Record
Date or Supplemental Eligibility Record Date, as applicable, bore to the total
amount of all Qualifying Deposits of all Eligible Account Holders and
Supplemental Eligible Account Holders.
If, however, on any annual closing date (i.e., the anniversary of the
Eligibility Record Date or the Supplemental Eligibility Record Date, as
applicable) of the Bank, commencing on or after the effective date of the
Conversion, the amount in any deposit account is less than the amount in such
deposit account on June 30, 1996 (with respect to an Eligible Account Holder),
or September 30, 1997 (with respect to a Supplemental Eligible Account Holder),
or any other annual closing date, then the interest in the liquidation account
relating to such deposit account would be reduced from time to time by the
proportion of any such reduction, and such interest will cease to exist if such
deposit account is closed. For purposes of the liquidation account, time deposit
accounts shall be deemed to be closed upon maturity regardless of renewal. In
addition, no interest in the liquidation account would ever be increased despite
any subsequent increase in the related deposit account. Any assets remaining
after the above liquidation rights of Eligible Account Holders and Supplemental
Eligible Account Holders are satisfied would be distributed to the Company as
the sole shareholder of the Bank.
Tax Aspects. Consummation of the Conversion is expressly conditioned upon
the receipt by the Bank of either a favorable ruling from the IRS and New York
taxing authorities or opinions of counsel with respect to federal and New York
income taxation, to the effect that the Conversion will not be a taxable
transaction to
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the Company, the Bank, Eligible Account Holders or Supplemental Eligible Account
Holders, except as noted below.
No private ruling will be received from the IRS with respect to the
proposed Conversion. Instead, the Bank has received an opinion of its counsel,
Thacher Proffitt & Wood, based on customary certificates delivered by management
of the Company and the Bank, that for federal income tax purposes, among other
matters: (i) the Bank's change in form from mutual to stock ownership will
constitute a reorganization under section 368(a)(1)(F) of the Code, (ii) neither
the Bank nor the Company will recognize any gain or loss as a result of the
Conversion; (iii) no gain or loss will be recognized by the Bank or the Company
upon the purchase of the Bank's capital stock by the Company or by the Company
upon the purchase of its Common Stock in the Conversion; (iv) no gain or loss
will be recognized by Eligible Account Holders Supplemental Eligible Accounts
Holders upon the issuance to them of deposit accounts in the Bank in its stock
form plus their interests in the liquidation account in exchange for their
deposit accounts in the Bank; (v) the tax basis of the depositors' deposit
accounts in the Bank immediately after the Conversion will be the same as the
basis of their deposit accounts immediately prior to the Conversion; (vi) the
tax basis of each Eligible Account Holder's and each Supplemental Eligible
Account Holders interest in the liquidation account will be zero; (vii) no gain
or loss will be recognized by Eligible Account Holders Supplemental Eligible
Account Holders upon the distribution to them of non-transferable subscription
rights to purchase shares of the Common Stock, provided, that the amount to be
paid for the Common Stock is equal to the fair market value of such stock; and
(viii) the tax basis to the shareholders of the Common Stock of the Company
purchased in the Conversion pursuant to the subscription rights will be the
amount paid therefore and the holding period for the shares of Common Stock
purchased by such persons will begin on the date on which their subscription
rights are exercised.
Thacher Proffitt & Wood has also opined, subject to the limitations and
qualifications in its opinion, that the Conversion will not be a taxable
transaction to the Company or to the Bank for New York income and franchise tax
purposes or to Eligible Account Holders or to Supplemental Eligible Account
Holders for New York income tax purposes. The opinions of Thacher Proffitt &
Wood have been filed as exhibits to the Registration Statement of which this
Prospectus is a part.
Unlike private rulings, opinions of counsel are not binding on the IRS or
the New York taxing authorities and the IRS or the New York taxing authorities
could disagree with conclusions reached therein. In the event of such
disagreement, there can be no assurance that the IRS or the New York taxing
authorities would not prevail in a judicial or administrative proceeding.
Certain portions of both the federal and the state tax opinions are based
upon the opinion of FinPro that subscription rights issued in connection with
the Conversion will have no value. In the opinion of FinPro, which opinion is
not binding on the IRS or the New York taxing authorities, the subscription
rights do not have any value based on the fact that such rights are acquired by
the recipients without cost, are non-transferable and of short duration, and
afford the recipients the right only to purchase the Common Stock at a price
equal to its estimated fair market value, which will be the same price as the
Purchase Price for the unsubscribed shares of Common Stock. If the subscription
rights granted to Eligible Account Holders, Supplemental Eligible Account
Holders and Other Depositors are deemed to have an ascertainable value, such
Eligible Account Holders, Supplemental Eligible Account Holders and Other
Depositors could be taxed upon the receipt or exercise of the subscription
rights in an amount equal to such value, and the Bank could recognize gain on
such distribution. Eligible Account Holders, Supplemental Eligible Account
Holders and Other Depositors are encouraged to consult with their own tax
advisors as to the tax consequences in the event that such subscription rights
are deemed to have an ascertainable value.
ESTABLISHMENT OF THE WARWICK SAVINGS FOUNDATION
General. In furtherance of the Bank's commitment to its local community,
the Plan of Conversion provides for the establishment of a charitable foundation
in connection with the Conversion. The Plan provides that the Bank and the
Company will incorporate the Foundation under Delaware law as a non-stock
corporation, and will fund the Foundation with Common Stock of the Company, as
further described below.
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The Company and the Bank believe that the funding of the Foundation with Common
Stock of the Company is a means to establish a common bond between the Bank and
its community, enabling the Bank's community to share in the potential growth
and success of the Company over the long term. By further enhancing the Bank's
visibility and reputation in its local community, the Bank believes that the
Foundation will enhance the long-term value of the Bank's community banking
franchise. The Foundation will be dedicated to charitable purposes within the
Bank's local community, including community development activities.
Purpose of the Foundation. The purpose of the Foundation is to provide
funding to support charitable causes and community development activities. In
recent years, the Bank has emphasized community lending and community
development activities within the Bank's local community. The Bank received a
satisfactory CRA rating in its last CRA examination. The Foundation is being
formed to complement the Bank's existing community activities, not as a
replacement for such activities. The Bank intends to continue to emphasize
community lending and community development activities following the Conversion.
However, such activities are not the Bank's sole corporate purpose. The
Foundation will be completely dedicated to community activities and the
promotion of charitable causes, and may be able to support such activities in
ways that are not presently available to the Bank. In this regard, the Board of
Trustees believes the establishment of a charitable foundation is consistent
with the Bank's commitment to community service. The Board further believes that
the funding of the Foundation with Common Stock of the Company is a means of
enabling the Bank's community to share in the potential growth and success of
the Company long after completion of the Conversion. The Foundation will
accomplish that goal by providing for continued ties between the Foundation and
Bank, thereby forming a partnership with the Bank's community. The establishment
of the Foundation will also enable the Company and the Bank to develop a unified
charitable donation strategy and will centralize the responsibility for
administration and allocation of corporate charitable funds. Charitable
foundations have been formed by other financial institutions for this purpose,
among others. The Bank, however, does not expect the contribution to the
Foundation to take the place of the Bank's traditional community lending and
charitable activities.
Although the Board of Trustees of the Bank and the Board of Directors of
the Company have carefully considered each of the above factors, the
establishment of a charitable foundation in connection with a conversion is a
relatively new concept that has only been implemented by several other
converting banks. Accordingly, certain persons may raise challenges as to the
validity of the establishment of the Foundation that, if not resolved promptly,
could delay the consummation of the Conversion or result in the elimination of
the Foundation.
Structure of the Foundation. The Foundation will be incorporated under
Delaware law as a non-stock corporation. The Foundation's Certificate of
Incorporation provides that it is organized exclusively for charitable purposes,
including community development, as set forth in Section 501(c)(3) of the Code.
The Foundation's Certificate of Incorporation further provides that no part of
the net earnings of the Foundation will inure to the benefit of, or be
distributable to its directors, officers or members. A majority of the Board of
Directors of the Foundation will consist of individuals who are officers or
trustees of the Bank, and the remaining members of the Board will consist of
civic and community leaders within the Bank's local community. A Nominating
Committee of such Board, which is to be comprised of a minimum of three members
of the Board, will nominate individuals eligible for election to the Board of
Directors. The members of the Foundation, who are comprised of its Board
members, will elect the directors at the annual meeting of the Foundation from
those nominated by the Nominating Committee. Only persons serving as directors
of the Foundation qualify as members of the Foundation, with voting authority.
Directors will be divided into three classes with each class appointed for
three-year terms.
The authority for the affairs of the Foundation will be vested in the Board
of Directors of the Foundation. The directors of the Foundation will be
responsible for establishing the policies of the Foundation with respect to
grants or donations by the Foundation, consistent with the purposes for which
the Foundation was established. Although no formal policy governing Foundation
grants exists at this time, the Foundation's Board of Directors will adopt such
a policy upon establishment of the Foundation. As directors of a non-profit
corporation, directors of the Foundation will at all times be bound by their
fiduciary duty to advance the Foundation's charitable goals, to protect the
assets of the Foundation and to act in a manner consistent with
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the charitable purpose for which the Foundation is established. The directors of
the Foundation will also be responsible for directing the activities of the
Foundation, including the management of the Common Stock of the Company held by
the Foundation. However, as a condition to receiving the non-objection of the
FDIC to the Bank's Conversion and the approval of the Conversion by the
Superintendent, the Foundation will commit in writing to the FDIC and the
Superintendent that all shares of Common Stock held by the Foundation will be
voted in the same ratio as all other shares of the Company's Common Stock on all
proposals considered by shareholders of the Company; provided, however, that,
consistent with the condition, the FDIC and the Superintendent shall waive this
voting restriction under certain circumstances if compliance with the voting
restriction would: (i) cause a violation of the law of the State of Delaware;
(ii) would cause the Foundation to lose its tax-exempt status, or cause the IRS
to deny the Foundation's request for a determination that it is an exempt
organization or otherwise have a material and adverse tax consequence on the
Foundation; or (iii) would cause the Foundation to be subject to an excise tax
under Section 4941 of the Code. In order for the FDIC and the Superintendent to
waive such voting restriction, the Company's or the Foundation's legal counsel
must render an opinion satisfactory to FDIC and the Superintendent that
compliance with the voting restriction would have an effect described in clauses
(i), (ii) or (iii) above. Under those circumstances, the FDIC and the
Superintendent shall grant a waiver of the voting requirement upon submission of
such legal opinion(s) by the Company or the Foundation that are satisfactory to
the FDIC and the Superintendent. In the event that the FDIC and the
Superintendent were to waive such voting requirement, the directors would direct
the voting of the Common Stock held by the Foundation.
The Foundation's place of business will be located at the Bank's
administrative offices and initially the Foundation is expected to have no
employees but will utilize the staff of the Company and the Bank. The Board of
Directors of the Foundation will appoint such officers as may be necessary to
manage the operations of the Foundation. In this regard, the Bank has provided
the FDIC with a commitment that, to the extent applicable, the Bank will comply
with the affiliate restrictions set forth in Sections 23A and 23B of the Federal
Reserve Act with respect to any transactions between the Bank and the
Foundation.
The Company intends to capitalize the Foundation with Common Stock of the
Company in an amount equal to 3%of the total amount of Common Stock to be sold
in connection with the Conversion. At the minimum, midpoint and maximum of the
Estimated Price Range, the contribution to the Foundation would equal 123,675,
145,500 and 167,325 shares, which would have a market value of $1.2 million,
$1.5 million and $1.7 million, respectively, assuming the Purchase Price of
$10.00 per share. The Company and the Bank determined to fund the Foundation
with Common Stock rather than cash because it desired to form a bond with its
community in a manner that would allow the community to share in the potential
growth and success of the Company and the Bank over the long term. The funding
of the Foundation with stock also provides the Foundation with a potentially
larger endowment than if the Company contributed cash to the Foundation since,
as a shareholder, the Foundation will share in the potential growth and success
of the Company. As such, the contribution of stock to the Foundation has the
potential to provide a self-sustaining funding mechanism which reduces the
amount of cash that the Company, if it were not making the stock donation, would
have to contribute to the Foundation in future years in order to maintain a
level amount of charitable grants and donations.
The Foundation will receive working capital from any dividends that may be
paid on the Company's Common Stock in the future, and subject to applicable
federal and state laws, loans collateralized by the Common Stock or from the
proceeds of the sale of any of the Common Stock in the open market from time to
time as may be permitted to provide the Foundation with additional liquidity. As
a private foundation under Section 501(c)(3) of the Code, the Foundation will be
required to distribute annually in grants or donations, a minimum of 5% of the
average fair market value of its net investment assets. One of the conditions
imposed on the gift of Common Stock by the Company is that the amount of Common
Stock that may be sold by the Foundation in any one year shall not exceed 5% of
the average market value of the assets held by the Foundation, except where the
Board of Directors of the Foundation determines that the failure to sell an
amount of common stock greater than such amount would result in a long-term
reduction of the value of the Foundation's assets and as such would jeopardize
the Foundation's capacity to carry out its charitable purposes. Upon completion
of the Conversion and the contribution of shares to the Foundation immediately
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following the Conversion, the Company would have 4,246,175, 4,995,500 and
5,744,825 shares issued and outstanding at the minimum, midpoint and maximum of
the Estimated Price Range. Because the Company will have an increased number of
shares outstanding, the voting and ownership interests of shareholders in the
Company's common stock would be diluted by 2.9%, as compared to their interests
in the Company if the Foundation was not established. For additional discussion
of the dilutive effect, see "Pro Forma Data."
Tax Considerations. The Company and the Bank have been advised by Thacher
Proffitt & Wood that an organization created for the above purposes would
qualify as an organization exempt from taxation under Section 501(c)(3) of the
Code, and would likely be classified as a private foundation. The Foundation
will submit an application to the IRS to be recognized as an exempt
organization. If the Foundation files such an application within 15 months from
the date of its organization, and if the IRS approves the application, the
effective date of the Foundation's status as a Section 501(c)(3) organization
will be retroactive to the date of its organization. Thacher Proffitt & Wood,
however, has not rendered any advice on the condition to the contribution to be
agreed to by the Foundation which requires that all shares of Common Stock of
the Company held by the Foundation must be voted in the same ratio as all other
outstanding shares of Common Stock of the Company on all proposals considered by
shareholders of the Company. Consistent with this condition, in the event that
the Company or the Foundation receives an opinion of its legal counsel that
compliance with this voting restriction would have the effect of causing the
Foundation to lose its tax-exempt status or otherwise have a material and
adverse tax consequence on the Foundation, or subject the Foundation to an
excise tax for "self-dealing" under Section 4941 of the Code, the FDIC and the
Superintendent will waive such voting restriction upon submission by the Company
or the Foundation of a legal opinion(s) to that effect satisfactory to the FDIC
and the Superintendent. See "-- Regulatory Conditions Imposed on the
Foundation."
Under the Code, the Company is entitled to a deduction for charitable
contributions in an amount not exceeding 10% of its taxable income (computed
without regard to the contributions) for the year of the contribution, and any
contributions in excess of the deductible amount may be carried forward and
deducted in the Company's five succeeding taxable years, subject, in each such
year, to the 10% of taxable income limitation. The Company and the Bank believe
that the Conversion presents a unique opportunity to establish and fund a
charitable foundation given the substantial amount of additional capital being
raised in the Conversion. In making such a determination, the Company and the
Bank considered the dilutive impact of the contribution of Common Stock to the
Foundation on the amount of Common Stock available to be offered for sale in the
Conversion. Based on such consideration, the Company and Bank believe that the
contribution to the Foundation in excess of the 10% annual limitation is
justified given the Bank's capital position and its earnings, the substantial
additional capital being raised in the Conversion and the potential benefits of
the Foundation to the Bank's community. In this regard, assuming the sale of the
Common Stock at the maximum of the Estimated Price Range, the Company would have
pro forma consolidated capital of $76.7 million or 22.68% of pro forma
consolidated assets and the Bank's pro forma leverage and risk-based capital
ratios would be 15.89% and 30.01%, respectively. See "Regulatory Capital
Compliance," "Capitalization," and "Comparison of Valuation and Pro Forma
Information with No Foundation." Thus, the amount of the contribution will not
adversely impact the financial condition of the Company and the Bank, and the
Company and the Bank therefore believe that the amount of the charitable
contribution is reasonable and will not raise safety and soundness concerns.
The Company and the Bank have received the opinion of Thacher Proffitt &
Wood that the Company's contribution of its own stock to the Foundation would
not constitute an act of self-dealing, and that the Company will be entitled to
a deduction in the amount of the fair market value of the stock at the time of
the contribution, subject to the 10% of taxable income limitation. As discussed
above, the Company will be able to carry forward and deduct any portion of the
contribution in excess of such 10% limitation for five years following the year
of the contribution. If the Company and the Foundation had been established in
the fiscal year ended May 31, 1997, the Company would have been entitled to a
charitable contribution deduction in its taxable year ended December 31, 1996 of
approximately $447,000 and would have been able to carry forward and deduct
approximately $1.2 million over its next succeeding five taxable years (based on
the Bank's pre-tax income for 1996 and a contribution in 1996 of Common Stock
equal to $1.7 million). Assuming the close of
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the Offerings at the midpoint of the Estimated Price Range, the Company
estimates that the entire amount of the contribution should be deductible over a
six-year period. Neither the Company nor the Bank expect to make any further
contributions to the Foundation within the first five years following the
initial contribution. After that time, the Company and the Bank may consider
future contributions to the Foundation. Any such decisions would be based on an
assessment of, among other factors, the financial condition of the Company and
the Bank at that time, the interests of shareholders and depositors of the
Company and the Bank, and the financial condition and operations of the
Foundation.
Although the Company and the Bank have received the opinion of Thacher
Proffitt & Wood that the Company is entitled to a deduction for the charitable
contribution, there can be no assurances that the IRS will recognize the
Foundation as an organization exempt from taxation under section 501(c)(3) of
the Code or that the deduction will be permitted. If the IRS successfully
maintains that the Foundation is not so exempt or that the deduction is not
permitted, the Company's tax benefit related to the contribution to the
Foundation would be expensed without tax benefit, resulting in a reduction in
earnings in the year in which the IRS makes such a determination. See "Risk
Factors -- Establishment of Charitable Foundation."
In general, the income of a private foundation is exempt from federal and
state taxation. However, investment income, such as interest, dividends and
capital gains, will be subject to a federal excise tax of 2.0%. The Foundation
will be required to make an annual filing with the IRS within four and one-half
months after the close of the Foundation's taxable year to maintain its
tax-exempt status. The Foundation will also be required to publish a notice that
the annual information return will be available for public inspection for a
period of 180 days after the date of such public notice. The information return
for a private foundation must include, among other things, an itemized list of
all grants made or approved, showing the amount of each grant, the recipient,
any relationship between a grant recipient and the Foundation's managers, and a
concise statement of the purpose of each grant. The Foundation will also be
required to file an annual report with the Charities Bureau of the Office of the
Attorney General of the State of New York.
Regulatory Conditions Imposed on the Foundation. Establishment of the
Foundation is subject to the following conditions to be agreed to by the
Foundation in writing as a condition to receiving the FDIC's non-objection of
the Bank's Conversion and the approval of the Conversion by the Superintendent:
(i) the Foundation will be subject to examination by the FDIC and the
Superintendent; (ii) the Foundation must comply with supervisory directives
imposed by the FDIC and the Superintendent; (iii) the Foundation will operate in
accordance with written policies adopted by the board of directors, including a
conflict of interest policy; and (iv) any shares of Common Stock of the Company
held by the Foundation must be voted in the same ratio as all other outstanding
shares of Common Stock of the Company on all proposals considered by
shareholders of the Company; provided, however, that, consistent with the
condition, the FDIC and the Superintendent shall waive this voting restriction
under certain circumstances if compliance with the voting restriction would: (a)
cause a violation of the law of the State of Delaware; (b) would cause the
Foundation to lose its tax-exempt status or otherwise have a material and
adverse tax consequence on the Foundation; or (c) would cause the Foundation to
be subject to an excise tax under Section 4941 of the Code. In order for the
FDIC and the Superintendent to waive such voting restriction, the Company's or
the Foundation's legal counsel must render an opinion satisfactory to FDIC and
the Superintendent that compliance with the voting restriction would have the
effect described in clauses (a), (b) or (c) above. Under those circumstances,
the FDIC and the Superintendent shall grant a waiver of the voting restriction
upon submission of such opinion(s) by the Company or the Foundation which are
satisfactory to the FDIC and the Superintendent. There can be no assurances that
a legal opinion addressing these issues will be rendered, or if rendered, that
the FDIC and the Superintendent will grant an unconditional waiver of the voting
restriction. In no event will the voting restriction survive the sale of shares
of the Common Stock held by the Foundation.
STOCK PRICING
The Plan of Conversion requires that the purchase price of the Common Stock
must be based on the appraised pro forma market value of the Common Stock, as
determined on the basis of an independent valuation. The Bank and the Company
have retained FinPro to make such valuation. For its services in making such
appraisal, FinPro will receive a fee of $14,000, plus out-of-pocket expenses.
The Bank and the
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Company have agreed to indemnify FinPro and its employees and affiliates against
certain losses (including any losses in connection with claims under the federal
securities laws) arising out of its services as appraiser, except where FinPro's
liability results from its negligence or bad faith.
An appraisal has been made by FinPro in reliance upon the information
contained in this Prospectus, including the financial statements. FinPro also
considered the following factors, among others: the present and projected
operating results and financial condition of the Company and the Bank, and the
economic and demographic conditions in the Bank's existing market area; certain
historical, financial and other information relating to the Bank; a comparative
evaluation of the operating and financial statistics of the Bank with those of
other similarly situated publicly-traded savings associations and savings
institutions located in the Bank's market area and the State of New York; the
aggregate size of the offering of the Common Stock; the impact of Conversion on
the Bank's equity and earnings potential; the proposed dividend policy of the
Company and the Bank; and the trading market for securities of comparable
institutions and general conditions in the market for such securities.
On the basis of the foregoing, FinPro has advised the Company and the Bank
that, in its opinion, dated as of September 18, 1997 and updated as of October
17, 1997, the estimated pro forma market value of the Common Stock ranged from a
minimum of $41,225,000 to a maximum of $55,775,000 with a midpoint of
$48,500,000. The Board of Trustees of the Bank held a meeting to review and
discuss the original appraisal report prepared by FinPro. A representative of
FinPro participated in the meeting to explain the contents of the appraisal
report. In connection with its review of the reasonableness and adequacy of such
appraisal consistent with NYBB and FDIC regulations and policies, the Board of
Trustees reviewed the methodology that FinPro employed to determine the pro
forma market value of the Common Stock and the appropriateness of the
assumptions that FinPro used in determining this value.
Based upon the Valuation Range and the Purchase Price of $10.00 per share
for the Common Stock established by the Board of Trustees, the Board of Trustees
has established the Estimated Price Range of $41,225,000 to $55,775,000, with a
midpoint of $48,500,000 million, and the Company expects to issue between
4,122,500 and 5,577,500 shares of Common Stock. The Estimated Price Range may be
amended with the approval of the Superintendent and FDIC (if required), if
necessitated by subsequent developments in the financial condition of the
Company or the Bank or market conditions generally.
THE VALUATION PREPARED BY FINPRO IS NOT INTENDED, AND MUST NOT BE
CONSTRUED, AS A RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING
SUCH SHARES. FINPRO DID NOT INDEPENDENTLY VERIFY THE FINANCIAL STATEMENTS AND
OTHER INFORMATION PROVIDED BY THE BANK, NOR DID FINPRO VALUE INDEPENDENTLY THE
ASSETS OR LIABILITIES OF THE BANK. THE VALUATION CONSIDERS THE BANK AS A GOING
CONCERN AND SHOULD NOT BE CONSIDERED AS AN INDICATION OF THE LIQUIDATION VALUE
OF THE BANK. MOREOVER, BECAUSE SUCH VALUATION IS NECESSARILY BASED UPON
ESTIMATES AND PROJECTIONS OF A NUMBER OF MATTERS, ALL OF WHICH ARE SUBJECT TO
CHANGE FROM TIME TO TIME, NO ASSURANCE CAN BE GIVEN THAT PERSONS PURCHASING SUCH
SHARES IN THE CONVERSION WILL THEREAFTER BE ABLE TO SELL SUCH SHARES AT PRICES
AT OR ABOVE THE PURCHASE PRICE OR IN THE RANGE OF THE FOREGOING VALUATION OF THE
PRO FORMA MARKET VALUE THEREOF.
Following commencement of the Subscription Offering or Community Offering,
if any, the maximum of the Estimated Price Range may be increased up to 15% and
the number of shares of Common Stock to be issued in the Conversion may be
increased to 6,414,125 shares due to regulatory considerations, changes in the
market and general financial and economic conditions, without the resolicitation
of subscribers. See "-- Limitations on Common Stock Purchases" as to the method
of distribution and allocation of additional shares that may be issued in the
event of an increase in the Estimated Price Range to fill unfilled orders in the
Subscription and Community Offerings.
No sale of shares of Common Stock may be consummated unless, prior to such
consummation, FinPro confirms to the Bank, Company, Superintendent and FDIC
that, to the best of its knowledge, nothing of a material nature has occurred
which, taking into account all relevant factors, would cause FinPro to conclude
that the value of the Common Stock at the price so determined is incompatible
with its estimate of the pro forma market value of the Common Stock at the
conclusion of the Subscription Offering and Community Offering, if any.
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If, based on FinPro's estimate, the pro forma market value of the Common
Stock, as of the date that FinPro so confirms, is not more than 15% above the
maximum and not less than the minimum of the Estimated Price Range then, (1)
with the approval of the Superintendent, if required, and the FDIC, the number
of shares of Common Stock to be issued in the Conversion may be increased or
decreased, pro rata to the increase or decrease in value, without resolicitation
of subscriptions, to no more than 6,414,125 shares or no less than 4,122,500
shares, and (2) all shares purchased in the Subscription and Community Offerings
will be purchased for the Purchase Price of $10.00 per share. If the number of
shares issued in the Conversion is increased due to an increase of up to 15% in
the Estimated Price Range to reflect changes in market or financial conditions,
persons who subscribed for the maximum number of shares will not be given the
opportunity to subscribe for an adjusted maximum number of shares, except for
the Employee Plans which will be able to subscribe for such adjusted amount up
to their 10% subscription. See "-- Limitations on Common Stock Purchases."
If the pro forma market value of the Common Stock is either more than 15%
above the maximum of the Estimated Price Range or less than the minimum of the
Estimated Price Range, the Bank and the Company, after consulting with the
Superintendent and the FDIC, may terminate the Plan and return all funds
promptly with interest at the Bank's passbook rate of interest on payments made
by check, draft or money order, extend or hold new Subscription and Community
Offerings, establish a new Estimated Price Range, commence a resolicitation of
subscribers or take such other actions as permitted by the Superintendent and
the FDIC in order to complete the Conversion. In the event that a resolicitation
is commenced, unless an affirmative response is received within a reasonable
period of time, all funds will be promptly returned to investors as described
above. A resolicitation, if any, following the conclusion of the Subscription
and Community Offerings would not exceed 45 days unless such resolicitation is
further extended by the Superintendent and the FDIC for periods of up to 60 days
not to extend beyond , 1999.
If all shares of Common Stock are not sold through the Subscription and
Community Offerings, then the Bank and the Company expect to offer the remaining
shares in a Syndicated Community Offering, which would occur as soon as
practicable following the close of the Subscription Offering or Community
Offering, if any, but may commence during the Subscription Offering and
Community Offering, if any, subject to the prior rights of subscribers. All
shares of Common Stock will be sold at the same price per share in the
Syndicated Community Offering as in the Subscription and Community Offerings.
See "-- Syndicated Community Offering."
No sale of shares of Common Stock may be consummated unless, prior to such
consummation, FinPro confirms to the Bank, the Company, Superintendent and the
FDIC that, to the best of its knowledge, nothing of a material nature has
occurred which, taking into account all relevant factors, including those which
would be involved in a cancellation of the Syndicated Community Offering, would
cause FinPro to conclude that the aggregate value of the Common Stock at the
Purchase Price is incompatible with its estimate of the pro forma market value
of the Common Stock of the Company at the time of the Syndicated Community
Offering. Any change which would result in an aggregate purchase price which is
below, or more than 15% above, the Estimated Price Range would be subject to
Superintendent and FDIC approval. If such confirmation is not received, the Bank
may extend the Conversion, extend, reopen or commence new Subscription and
Community Offerings or a Syndicated Community Offering, establish a new
Estimated Price Range and commence a resolicitation of all subscribers with the
approval of the Superintendent and FDIC or take such other actions as permitted
by the Superintendent and FDIC in order to complete the Conversion, or terminate
the Plan and cancel the Subscription and Community Offerings and/or the
Syndicated Community Offering. In the event market or financial conditions
change so as to cause the aggregate purchase price of the shares to be below the
minimum of the Estimated Price Range or more than 15% above the maximum of such
range, and the Company and the Bank determine to continue the Conversion,
subscribers will be resolicited (i.e., be permitted to continue their orders, in
which case they will need to affirmatively reconfirm their subscriptions prior
to the expiration of the resolicitation offering or their subscription funds
will be promptly refunded with interest at the Bank's passbook rate of interest,
or be permitted to decrease or cancel their subscriptions). Any change in the
Estimated Price Range must be approved by the Superintendent and FDIC. A
resolicitation, if any, following the conclusion of the Subscription Offering or
the Community Offering would not exceed
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45 days, or if following the Syndicated Community Offering, 60 days, unless
further extended by the Superintendent for periods up to 60 days not to extend
beyond , 1999. If such resolicitation is not effected, the Bank will
return with interest all funds promptly at the Bank's passbook rate of interest
on payments made by check, savings bank draft or money order.
Copies of the appraisal report of FinPro, including any amendments thereto,
and the detailed memorandum of the appraiser setting forth the method and
assumptions for such appraisal are available for inspection at the offices of
the Bank and the other locations specified under "Additional Information."
NUMBER OF SHARES TO BE ISSUED
Depending upon market or financial conditions following the commencement of
the Subscription Offering and Community Offering, if any, the total number of
shares to be issued in the Conversion may be increased or decreased without a
resolicitation of subscribers; provided, that the product of the total number of
shares times the price per share is not below the minimum or more than 15% above
the maximum of the Estimated Price Range, and the total number of shares to be
issued in the Conversion is not less than 4,122,500 or greater than 5,577,500
(or 6,414,125 if the Estimated Price Range is increased by 15%).
In the event market or financial conditions change so as to cause the
aggregate purchase price of the shares to be below the minimum of the Estimated
Price Range or more than 15% above the maximum of such range, if the Plan is not
terminated by the Company and the Bank after consultation with the
Superintendent and FDIC, purchasers will be resolicited (i.e., permitted to
continue their orders, in which case they will need to affirmatively reconfirm
their subscriptions prior to the expiration of the resolicitation offering or
their subscription funds will be promptly refunded, or be permitted to modify or
rescind their subscriptions). Any change in the Estimated Price Range must be
approved by the Superintendent and FDIC. If the number of shares issued in the
Conversion is increased due to an increase of up to 15% in the Estimated Price
Range to reflect changes in market or financial condition, persons who
subscribed for the maximum number of shares will not be given the opportunity to
subscribe for an adjusted maximum number of shares, except for the Employee
Plans, which will be able to subscribe for such adjusted amount up to its 10%
subscription. See "-- Limitations on Common Stock Purchases."
An increase in the number of shares to be issued in the Conversion as a
result of an increase in the estimated pro forma market value would decrease
both a subscriber's ownership interest and the Company's pro forma net earnings
and shareholders' equity on a per share basis while increasing pro forma net
earnings and shareholders' equity on an aggregate basis. A decrease in the
number of shares to be issued in the Conversion would increase both a
subscriber's ownership interest and the Company's pro forma net earnings and
shareholders' equity on a per share basis while decreasing pro forma net
earnings and shareholder's equity on an aggregate basis. For a presentation of
the effects of such changes see "Pro Forma Data."
To fund the Foundation, the number of shares to be issued and outstanding
as a result of the sale of Common Stock in the Conversion will be increased by a
number of shares equal to 3% of the Common Stock sold in the Conversion.
Assuming the sale of shares in the Offerings at the maximum of the Estimated
Price Range, the Company will contribute 167,325 shares of its Common Stock from
authorized but unissued shares to the Foundation immediately following the
completion of the Conversion. In that event, the Company will have total shares
of Common Stock outstanding of 5,744,825 shares. Funding the Foundation with
authorized but unissued shares will have the effect of diluting the ownership
and voting interests of persons purchasing shares in the Conversion by 2.9%
since a greater number of shares will be outstanding upon completion of the
Conversion than would be if the Foundation were not established. See "Pro Forma
Data."
SUBSCRIPTION OFFERING AND SUBSCRIPTION RIGHTS
In accordance with the Plan of Conversion, rights to subscribe for the
purchase of Common Stock have been granted under the Plan of Conversion to the
following persons in the following order of descending priority: (1) depositors
whose deposits in qualifying accounts in the Bank totaled $100 or more as of
June 30, 1996 ("Eligible Account Holders"); (2) the Employee Plans; (3)
depositors whose deposits in qualifying accounts in the Bank totaled $100 or
more as of September 30, 1997, other than (i) those depositors who
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would otherwise qualify as Eligible Account Holders or (ii) trustees or
executive officers of the Bank or their Associates, (as defined herein)
("Supplemental Eligible Account Holders"); and (4) depositors of the Bank as of
October 31, 1997, the Voting Record Date, other than those depositors who would
otherwise qualify as Eligible Account Holders or Supplemental Eligible Account
Holders ("Other Depositors"). All subscriptions received will be subject to the
availability of Common Stock after satisfaction of all subscriptions of all
persons having prior rights in the Subscription Offering and to the maximum and
minimum purchase limitations set forth in the Plan of Conversion and as
described below under "-- Limitations on Common Stock Purchases."
Priority 1: Eligible Account Holders. Each Eligible Account Holder will
receive, without payment therefor, first priority, non-transferable subscription
rights to subscribe for Common Stock in the Subscription Offering up to the
greatest of (i) the amount permitted to be purchased in the Community Offering,
which amount is currently $150,000 of the Common Stock offered, (ii) one-tenth
of one percent (0.10%) of the total offering of shares of Common Stock or (iii)
fifteen times the product (rounded down to the next whole number) obtained by
multiplying the total number of shares of Common Stock to be issued by a
fraction the numerator of which is the amount of the Eligible Account Holder's
qualifying deposit and the denominator of which is the total amount of
qualifying deposits of all Eligible Account Holders, in each case on the
Eligibility Record Date, subject to the overall maximum and minimum purchase
limitations and exclusive of an increase in the shares issued pursuant to an
increase in the Estimated Price Range of up to 15%. See "-- Limitations on
Common Stock Purchases."
In the event that Eligible Account Holders exercise subscription rights for
a number of shares in excess of the total number of shares eligible for
subscription, the shares will be allocated so as to permit each subscribing
Eligible Account Holder to purchase a number of shares sufficient to make such
Eligible Account Holder's total allocation equal to the lesser of 100 shares or
the number of shares subscribed for. Thereafter, unallocated shares will be
allocated among the remaining subscribing Eligible Account Holders whose
subscriptions remain unfilled in the proportion that the amounts of their
respective qualifying deposits bear to the total amount of qualifying deposits
of all remaining Eligible Account Holders whose subscriptions remain unfilled.
To ensure a proper allocation of stock, each Eligible Account Holder must
list on his or her stock order form all accounts in which such Eligible Account
Holder has an ownership interest. Failure to list an account could result in
fewer shares being allocated than if all accounts had been disclosed. The
subscription rights of Eligible Account Holders who are also trustees or
executive officers of the Bank or their Associates will be subordinated to the
subscription rights of other Eligible Account Holders to the extent attributable
to increased deposits in the one-year period preceding the Eligibility Record
Date.
Priority 2: The Employee Plans. To the extent that there are sufficient
shares remaining after satisfaction of the subscriptions by Eligible Account
Holders, the Employee Plans, including the ESOP, will receive, without payment
therefor, second priority, non-transferable subscription rights to purchase up
to 10% of the Common Stock to be issued in the Conversion, including shares to
be issued to the Foundation, subject to the purchase limitations set forth in
the Plan of Conversion and as described below under "-- Limitations on Common
Stock Purchases." As an Employee Plan, the ESOP intends to purchase 8% of the
shares to be issued in the Conversion, or 339,694 shares and 459,586 shares,
based on the issuance of 4,122,500 shares and 5,577,500, respectively.
Subscriptions by the ESOP will not be aggregated with shares of Common Stock
purchased directly by or which are otherwise attributable to any other
participants in the Subscription and Community Offerings, including
subscriptions of any of the Bank's trustees, officers, employees or associates
thereof. See "Management of the Bank -- Benefits -- Employee Stock Ownership
Plan and Trust."
Priority 3: Supplemental Eligible Account Holders. To the extent that
there are sufficient shares remaining after satisfaction of the subscriptions by
the Eligible Account Holders and Employee Plans, Supplemental Account Holders
will receive, without payment therefor, third priority, non-transferable
subscription rights to subscribe for Common Stock in the Subscription Offering
up to the greatest of (i) the amount permitted to be subscribed for in the
Community Offering, which amount is currently $150,000 of the Common Stock
offered, (ii) one-tenth of one percent (0.10%) of the total offering of shares
of Common Stock or (iii) fifteen times the product (rounded down to the next
whole number) obtained by multiplying the
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total number of shares of Common Stock to be issued by a fraction of which the
numerator is the amount of the Supplemental Eligible Account Holder's qualifying
deposit and the denominator is the total amount of qualifying deposits of all
Supplemental Eligible Account Holders, in each case on the Supplemental
Eligibility Record Date, subject to the overall maximum and minimum purchase
limitations and exclusive of an increase in the shares issued pursuant to an
increase in the Estimated Price Range of up to 15%. See "-- Limitations on
Common Stock Purchases."
In the event that Supplemental Eligible Account Holders exercise
subscription rights for a number of shares in excess of the total number of
shares eligible for subscription, the shares will be allocated so as to permit
each subscribing Supplemental Eligible Account Holder, to the extent possible,
to purchase a number of shares sufficient to make such Supplemental Eligible
Account Holder's total allocation equal to the lesser of 100 shares or the
number of shares subscribed for. Thereafter, unallocated shares will be
allocated among the remaining subscribing Supplemental Eligible Account Holders
whose subscriptions remain unfilled in the proportion that the amounts of their
respective qualifying deposits bear to the total amount of qualifying deposits
of all remaining Supplemental Eligible Account Holders whose subscriptions
remain unfilled.
To ensure a proper allocation of stock, each Supplemental Eligible Account
Holder must list on his or her stock order form all accounts in which such
Supplemental Eligible Account Holder has an ownership interest. Failure to list
an account could result in fewer shares being allocated than if all accounts had
been disclosed.
Priority 4: Other Depositors. To the extent that there are sufficient
shares remaining after satisfaction of the subscriptions by the Eligible Account
Holders, the Employee Plans and the Supplemental Eligible Account Holders, each
Other Depositor will receive, without payment therefor, fourth priority, non-
transferable subscription rights to subscribe for Common Stock in the
Subscription Offering up to the greater of (i) the amount permitted to be
subscribed for in the Community Offering, which amount is currently $150,000 of
the Common Stock offered, or (ii) one-tenth of one percent (0.10%) of the total
offering of shares of Common Stock, subject to the overall maximum and minimum
purchase limitations and exclusive of an increase in the shares issued pursuant
to an increase in the Estimated Price Range of up to 15%. See "-- Limitations on
Common Stock Purchases."
In the event that Other Depositors exercise subscription rights for a
number of shares in excess of the total number of shares eligible for
subscription, the shares will be allocated so as to permit each subscribing
Other Depositor, to the extent possible, to purchase a number of shares
sufficient to make such Other Depositor's total allocation equal to the lesser
of 100 shares or the number of shares subscribed for. Thereafter, unallocated
shares will be allocated among the remaining Other Depositors whose
subscriptions remain unfilled on a 100 share per order basis until all such
orders have been filled or the remaining shares have been allocated.
Expiration Date for the Subscription Offering. The Subscription Offering
will expire at 12:00 noon, Eastern Time, on , 1997, unless extended
for an initial period of up to 45 days by the Bank or additional 60 day periods
with the approval of the Superintendent and if necessary, the FDIC. Subscription
rights which have not been exercised prior to the Expiration Date will become
void.
The Bank will not execute orders until all shares of Common Stock have been
subscribed for or otherwise sold. If all shares have not been subscribed for or
sold within 45 days after the Subscription Expiration Date, unless such period
is extended with the consent of the Superintendent, all funds delivered to the
Bank pursuant to the Subscription Offering will be returned with interest
promptly to the subscribers and all withdrawal authorizations will be canceled.
If an extension beyond the 45-day period following the Subscription Expiration
Date is granted, the Bank will notify subscribers of the extension of time and
of any rights of subscribers to modify or rescind their subscriptions. Each such
extension may not exceed 60 days, and such extensions, in the aggregate, may not
last beyond , 1999.
Persons in Non-qualified States or Foreign Countries. The Company and the
Bank will make reasonable efforts to comply with the securities laws of all
states in the United States in which persons entitled to subscribe for stock
pursuant to the Plan reside. However, the Bank and the Company are not required
to offer stock in the Subscription Offering to any person who resides in a
foreign country.
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COMMUNITY OFFERING
Upon completion of the Subscription Offering, to the extent that shares
remain available for purchase after satisfaction of all subscriptions of the
Eligible Account Holders, the Employee Plans, the Supplemental Eligible Account
Holders and Other Depositors, the Bank will offer shares pursuant to the Plan in
the Community Offering to certain members of the general public to whom a copy
of this prospectus has been delivered, subject to the right of the Company and
the Bank to accept or reject any such orders, in whole or in part, in its sole
discretion. The Community Offering, if any, shall commence upon the completion
of the Subscription Offering and shall terminate 14 days after the close of the
Subscription Offering unless extended by the Bank and the Company, with the
approval of the Superintendent and the FDIC, if necessary. Such persons,
together with associates of and persons acting in concert with such persons, may
purchase up to $150,000 of Common Stock subject to the maximum purchase
limitation. See "-- Limitations on Common Stock Purchases." This amount may be
increased to up to a maximum of 5% or decreased to less than $150,000 of Common
Stock at the discretion of the Company and the Bank. THE OPPORTUNITY TO
SUBSCRIBE FOR SHARES OF COMMON STOCK IN THE COMMUNITY OFFERING CATEGORY IS
SUBJECT TO THE RIGHT OF THE BANK AND THE COMPANY, IN THEIR DISCRETION, TO ACCEPT
OR REJECT ANY SUCH ORDERS IN WHOLE OR IN PART EITHER AT THE TIME OF RECEIPT OF
AN ORDER OR AS SOON AS PRACTICABLE FOLLOWING THE EXPIRATION DATE. HOWEVER, NO
SUCH REJECTION WILL BE IN CONTRAVENTION OF ANY APPLICABLE LAW OR REGULATION. IF
THE COMPANY OR THE BANK REJECTS A SUBSCRIPTION IN PART, THE SUBSCRIBER WILL NOT
HAVE THE RIGHT TO CANCEL THE REMAINDER OF HIS OR HER SUBSCRIPTION.
Subject to the foregoing, if the amount of stock remaining is insufficient
to fill the orders of subscribers in the Community Offering after completion of
the Subscription and Community Offerings, such stock will be allocated first to
each subscriber whose order is accepted by the Bank, in an amount equal to the
lesser of 100 shares or the number of shares subscribed for by each such
subscriber, if possible. Thereafter, unallocated shares will be allocated among
such subscribers whose order remains unsatisfied on a 100 shares per order basis
until all such orders have been filled or the remaining shares have been
allocated.
MARKETING AND UNDERWRITING ARRANGEMENTS
The Bank and the Company have engaged Sandler O'Neill as a financial and
marketing advisor in connection with the offering of the Common Stock and
Sandler O'Neill has agreed to use its best efforts to assist the Company with
the solicitation of subscriptions and purchase orders for shares of Common Stock
in the Offerings. Based upon negotiations between the Bank and the Company,
Sandler O'Neill will receive a fee for services provided in connection with the
Offerings equal to 1.875% of the aggregate Purchase Price of Common Stock sold
in the Offerings. No fees will be paid to Sandler O'Neill with respect to any
shares of Common Stock purchased by any trustee, trustee emeritus, director,
executive officer or employee of the Bank or the Company or members of their
immediate families or the ESOP. In the event of a Syndicated Community Offering,
Sandler O'Neill will negotiate with the Company for the receipt of an additional
fee to be remitted to selected dealers under one or more selected dealer
agreements to be entered into by Sandler O'Neill with certain dealers; provided,
however, that the aggregate fees payable to Sandler O'Neill and any selected
dealers in connection with any Syndicated Community Offering will not exceed 7%
of the aggregate Purchase Price of the Common Stock sold in the Syndicated
Community Offering. Fees to Sandler O'Neill and to any other broker-dealer may
be deemed to be underwriting fees and Sandler O'Neill and such broker-dealers
may be deemed to be underwriters. Sandler O'Neill will also be reimbursed for
its reasonable out-of-pocket expenses, including legal fees. Notwithstanding the
foregoing, in the event the Offerings are not consummated or Sandler O'Neill
ceases, under certain circumstances after the subscription solicitation
activities are commenced, to provide assistance to the Company, Sandler O'Neill
will be entitled to reimbursement for its reasonable out-of-pocket expenses as
described above. The Company and the Bank have agreed to indemnify Sandler
O'Neill for costs and expenses in connection with certain claims or liabilities
related to or arising out of the services to be provided by Sandler O'Neill
pursuant to its engagement by the Bank and the Company as financial advisor in
connection with the Conversion, including certain liabilities under the
Securities Act. Total marketing fees to Sandler O'Neill are estimated to be
$681,000 and $951,000 at the minimum and the maximum of the Estimated Price
Range, respectively. See "Pro Forma Data" for the assumptions used to arrive at
these estimates.
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Sandler O'Neill will also perform proxy solicitation services, conversion
agent services and records management services for the Bank in the Conversion
and will receive a fee for these services of $12,500, plus reimbursement of
reasonable out-of-pocket expenses.
Directors, trustees and executive officers of the Company and the Bank may
participate in the solicitation of offers to purchase Common Stock. Questions of
prospective purchasers will be directed to executive officers or registered
representatives. Other employees of the Bank may participate in the Offerings in
ministerial capacities or provide clerical work in effecting a sales
transaction. Such other employees have been instructed not to solicit offers to
purchase Common Stock or provide advice regarding the purchase of Common Stock.
The Company will rely on Rule 3a4-1 under the Exchange Act, and sales of Common
Stock will be conducted within the requirements of Rule 3a4-1, so as to permit
officers, trustees, directors and employees to participate in the sale of Common
Stock. No officer, director or employee of the Company or the Bank will be
compensated in connection with his or her participation by the payment of
commissions or other remuneration based either directly or indirectly on the
transactions in the Common Stock.
PROCEDURE FOR PURCHASING SHARES IN SUBSCRIPTION AND COMMUNITY OFFERINGS
To ensure that each purchaser receives a Prospectus at least 48 hours prior
to the respective expiration dates for the Offerings, in accordance with Rule
15c2-8 of the Exchange Act, no Prospectus will be mailed later than five days
prior to such date or hand delivered any later than two days prior to such date.
Execution of the stock order form will confirm receipt or delivery in accordance
with Rule 15c2-8. Stock order forms will only be distributed with a Prospectus
and a certification form requiring each prospective investor to acknowledge,
among other things, that the shares of Common Stock are not insured by the Bank,
the FDIC or any other governmental agency and that such prospective investor has
received a copy of this Prospectus, which, among other things, describes the
risks involved in the investment in the Common Stock.
To purchase shares in the Subscription Offering and, if a Community
Offering is held, the Community Offering, an executed order form with the
required payment for each share subscribed for, or with appropriate
authorization for withdrawal from the Bank's deposit account (which may be given
by completing the appropriate blanks in the stock order form), must be received
by the Bank at its office by 12:00 Noon, Eastern Time, on the Expiration Date.
Stock order forms which are not received by such time or are executed
defectively or are received without full payment (or appropriate withdrawal
instructions) are not required to be accepted. In addition, the Company and Bank
are not obligated to accept orders submitted on photocopied or facsimiled order
forms and will not accept order forms unaccompanied by an executed certification
form. The Company and the Bank have the power to waive or permit the correction
of incomplete or improperly executed forms, but do not represent that they will
do so. Once received, an executed order form may not be modified, amended or
rescinded without the consent of the Bank unless the Conversion has not been
completed within 45 days after the end of the Subscription and Community
Offerings, unless such period has been extended.
In order to ensure that Eligible Account Holders, Supplemental Eligible
Account Holders and Other Depositors are properly identified as to their stock
purchase priorities, depositors must list all accounts on the stock order form
giving all names in each account and the account numbers.
Payment for subscriptions may be made (i) in cash if delivered in person to
the office of the Bank, (ii) by check, bank draft or money order, or (iii) by
authorization of withdrawal from deposit accounts maintained with the Bank. No
wire transfers will be accepted. Interest will be paid on payments made by cash,
check, cashier's check or money order at the Bank's passbook rate of interest
from the date payment is received until the completion or termination of the
Conversion. If payment is made by authorization of withdrawal from deposit
accounts, the funds authorized to be withdrawn from a deposit account will
continue to accrue interest at the contractual rates until completion or
termination of the Conversion, but a hold will be placed on such funds, thereby
making them unavailable to the depositor until completion or termination of the
Conversion. Notwithstanding the foregoing, the Company shall have the right, in
its sole discretion, to permit institutional investors to submit irrevocable
orders together with a legally binding commitment for payment and to
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thereafter pay for the shares of Common Stock for which they subscribe in the
Community Offering at any time prior to 48 hours before the completion of the
Conversion.
If a subscriber authorizes the Bank to withdraw the amount of the purchase
price from such subscriber's deposit account, the Bank will do so as of the
effective date of the Conversion. The Bank will waive any applicable penalties
for early withdrawal from certificate accounts. If the remaining balance in a
certificate account is reduced below the applicable minimum balance requirement
at the time that the funds actually are transferred under the authorization, the
certificate will be canceled at the time of the withdrawal, without penalty, and
the remaining balance will be converted into a passbook account and will earn
interest at the passbook rate. Upon completion of the Conversion, funds
withdrawn from depositors' accounts for stock purchases will no longer be
insured by the FDIC.
The ESOP will not be required to pay for the shares subscribed for at the
time it subscribes but, rather, may pay for such shares of Common Stock
subscribed for at the Purchase Price upon consummation of the Offerings;
provided, that there is in force from the time of its subscription until such
time, a loan commitment acceptable to the Company from an unrelated financial
institution or the Company to lend to the ESOP, at such time, the aggregate
Purchase Price of the shares for which it subscribed. The Company intends to
provide such a loan to the ESOP.
Owners of self-directed Individual Retirement Accounts ("IRAs") may use the
assets of such IRAs to purchase shares of Common Stock in the Subscription and
Community Offerings, provided that such IRAs are not maintained at the Bank.
Persons with IRAs maintained at the Bank must have their accounts transferred to
an unaffiliated institution or broker to purchase shares of Common Stock in the
Subscription and Community Offerings. In addition, the provisions of ERISA and
IRS regulations require that officers, trustees and ten percent shareholders who
use self-directed IRA funds to purchase shares of Common Stock in the
Subscription and Community Offerings make such purchases for the exclusive
benefit of the IRAs.
Certificates representing shares of Common Stock purchased will be mailed
to purchasers at the last address of such persons appearing on the records of
the Bank, or to such other address specified in properly completed order forms,
as soon as practicable following consummation of the sale of all shares of
Common Stock. Any certificates returned as undeliverable will be disposed of in
accordance with applicable law.
RESTRICTIONS ON TRANSFER OF SUBSCRIPTION RIGHTS AND SHARES OF COMMON STOCK
Prior to the completion of the Conversion, the NYBB conversion regulations
prohibit any person with subscription rights (i.e., the Eligible Account
Holders, the Employee Plans, the Supplemental Eligible Account Holders and the
Other Depositors) from transferring or entering into any agreement or
understanding to transfer the legal or beneficial ownership of the subscription
rights issued under the Plan or the shares of Common Stock to be issued upon
their exercise. Such rights may be exercised only by the person to whom they are
granted and only for such person's account. Each person exercising such
subscription rights will be required to certify that such person is purchasing
shares solely for such person's own account and that such person has no
agreement or understanding regarding the sale or transfer of such shares. The
regulations also prohibit any person from offering or making an announcement of
an offer or an intent to make an offer to purchase such subscription rights or
shares of Common Stock prior to the completion of the Conversion.
THE BANK AND THE COMPANY WILL PURSUE ANY AND ALL LEGAL AND EQUITABLE
REMEDIES (INCLUDING FORFEITURE) IN THE EVENT THEY BECOME AWARE OF THE TRANSFER
OF SUBSCRIPTION RIGHTS AND WILL NOT HONOR ORDERS KNOWN BY THEM TO INVOLVE THE
TRANSFER OF SUCH RIGHTS.
SYNDICATED COMMUNITY OFFERING
As a final step in the Conversion, the Plan provides that, if feasible, all
shares of Common Stock not purchased in the Subscription Offering or the
Community Offering, if any, will be offered for sale to the general public in a
Syndicated Community Offering through a syndicate of registered broker-dealers
to be formed and managed by Sandler O'Neill acting as agent of the Company.
There are no known agreements between Sandler O'Neill and any broker-dealer in
connection with a possible Syndicated Community
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Offering. As an alternative to a Syndicated Community Offering, the Company and
the Bank may instead elect to offer for sale such remaining shares to or through
underwriters in a public offering, as described under "-- Public Offering
Alternative." The Company and the Bank have reserved the right to reject orders
in whole or in part in their sole discretion in the Syndicated Community
Offering. However, no such rejection will be in contravention of any applicable
law or regulation. If the Company or the Bank rejects an order in part, the
subscriber will not have the right to cancel the remainder of his or her
subscription. Neither Sandler O'Neill nor any registered broker-dealer shall
have any obligation to take or purchase any shares of the Common Stock in the
Syndicated Community Offering; however, Sandler O'Neill has agreed to use its
best efforts in the sale of shares in the Syndicated Community Offering.
The price at which Common Stock is sold in the Syndicated Community
Offering will be determined as described above under "-- Stock Pricing." Subject
to overall purchase limitations, no person, together with any associate or group
of persons acting in concert, will be permitted to subscribe in the Syndicated
Community Offering for more than $150,000 of the Common Stock offered in the
Conversion; provided, however, that shares of Common Stock purchased in the
Community Offering by any persons, together with associates of or persons acting
in concert with such persons, will be aggregated with purchases in the
Syndicated Community Offering and be subject to a maximum purchase limitation of
$150,000 of the Common Stock offered.
Payments made in the form of a check, bank draft, money order or in cash
will earn interest at the Bank's passbook rate of interest from the date such
payment is actually received by the Bank until completion or termination of the
Conversion.
In addition to the foregoing, if a syndicate of broker-dealers ("selected
dealers") is formed to assist in the Syndicated Community Offering, a purchaser
may pay for his or her shares with funds held by or deposited with a selected
dealer. If an order form is executed and forwarded to the selected dealer or if
the selected dealer is authorized to execute the order form on behalf of a
purchaser, the selected dealer is required to forward the order form and funds
to the Bank for deposit in a segregated account on or before noon of the
business day following receipt of the order form or execution of the order form
by the selected dealer. Alternatively, selected dealers may solicit indications
of interest from their customers to place orders for shares. Such selected
dealers shall subsequently contact their customers who indicated an interest and
seek their confirmation as to their intent to purchase. Those indicating an
intent to purchase shall execute order forms and forward them to their selected
dealer or authorize the selected dealer to execute such forms. The selected
dealer will acknowledge receipt of the order to its customer in writing on the
following business day and will debit such customer's account on the third
business day after the customer has confirmed his or her intent to purchase
("debit date") and on or before noon of the next business day following the
debit date, will send order forms and funds to the Bank for deposit in a
segregated account. Although purchasers' funds are not required to be in their
accounts with selected dealers until the debit date, in the event that such
alternative procedure is employed once a confirmation of an intent to purchase
has been received by the selected dealer, the purchaser has no right to rescind
his or her order.
Certificates representing shares of Common Stock purchased, together with
any refund due, will be mailed to purchasers at the address specified in the
order form, as soon as practicable following consummation of the sale of the
Common Stock. Any certificates returned as undeliverable will be disposed of in
accordance with applicable law.
The Syndicated Community Offering will terminate no more than 45 days
following the Subscription Expiration Date, unless extended by the Company with
the approval of the Superintendent and FDIC. Such extensions may not be beyond
, 1999. See "-- Stock Pricing" above for a discussion of rights of
subscribers, if any, in the event an extension is granted.
PUBLIC OFFERING ALTERNATIVE
The Company anticipates that the shares of Common Stock will be sold in the
Subscription Offering and, if necessary, in the Community Offering. However,
shares of Common Stock not sold in the Subscription Offering or the Community
Offering may, as an alternative to a Syndicated Community Offering as described
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above, be offered for sale by the Company to or through underwriters ("Public
Offering"). Certain provisions restricting the purchase and transfer of Common
Stock shall not be applicable to sales to underwriters for purposes of such
Public Offering. Any such underwriter shall agree to purchase such shares from
the Company with a view to reoffering them to the general public, use their best
efforts to sell, for the account of the Company, such shares to the general
public or a combination of the preceding two provisions, subject to certain
terms and conditions described in the Plan. If the Public Offering is utilized,
then the Company will amend the Registration Statement, of which this Prospectus
is a part, to reflect the specific terms of such Public Offering alternative,
including, without limitation, the terms of any underwriting agreements,
commission structure and plan of distribution.
LIMITATIONS ON COMMON STOCK PURCHASES
The Plan includes the following limitations on the number of shares of
Common Stock which may be purchased during the Conversion:
(1) No subscription for fewer than 25 shares will be accepted;
(2) Each Eligible Account Holder may subscribe for and purchase Common
Stock in the Subscription Offering in an amount up to the greatest of (a)
the amount permitted to be purchased in the Community Offering, currently
$150,000 of the Common Stock offered, (b) one-tenth of one percent (0.10%)
of the total offering of shares of Common Stock or (c) fifteen times the
product (rounded down to the net whole number) obtained by multiplying the
total number of shares of Common Stock to be issued in the Conversion by a
fraction the numerator of which is the amount of the qualifying deposit of
the Eligible Account Holder and the denominator of which is the total
amount of qualifying deposits of all Eligible Account Holders in each case
on the Eligibility Record Date, subject to the overall limitation in (8)
below and exclusive of an increase in the total number of shares issued due
to an increase in the Estimated Price Range of up to 15%;
(3) The Employee Plans are permitted to purchase up to 10% of the
shares of Common Stock issued in the Conversion and as an Employee Plan,
the ESOP intends to purchase 8% of the shares of Common Stock issued in the
Conversion, in each case, including shares to be issued to the Foundation;
(4) Each Supplemental Eligible Account Holder may subscribe for and
purchase Common Stock in the Subscription Offering in an amount up to the
greatest of (a) the amount permitted to be purchased in the Community
Offering, currently $150,000 of the Common Stock offered, (b) one-tenth of
one percent (0.10%) of the total offering of shares of Common Stock or (c)
fifteen times the product (rounded down to the next whole number) obtained
by multiplying the total number of shares of Common Stock to be issued in
the Conversion by a fraction the numerator of which is the amount of the
qualifying deposit of the Supplemental Eligible Account Holder and the
denominator of which is the total amount of qualifying deposits of all
Supplemental Eligible Account Holders in each case on the Supplemental
Eligibility Record Date, subject to the overall limitation in (8) below and
exclusive of an increase in the total number of shares issued due to an
increase in the Estimated Price Range of up to 15%;
(5) Each Other Depositor may subscribe for and purchase Common Stock
in the Subscription Offering in an amount up to the greater of (a) the
amount permitted to be purchased in the Community Offering, currently
$150,000 of the Common Stock offered, or (b) one-tenth of one percent
(0.10%) of the total offering of shares of Common Stock, subject to the
overall limitation in (8) below and exclusive of an increase in the total
number of shares issued due to an increase in the Estimated Price Range of
up to 15%;
(6) Persons purchasing shares of Common Stock in the Community
Offering, together with associates of and groups of persons acting in
concert with such persons, may purchase Common Stock in the Community
Offering in an amount up to $150,000 of the Common Stock offered in the
Conversion subject to the overall limitation in (8) below;
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(7) Persons purchasing shares of Common Stock in the Syndicated
Community Offering, or the Public Offering alternative (exclusive of
underwriters), together with associates of and persons acting in concert
with such persons, may purchase Common Stock in the Syndicated Offering in
an amount up to $150,000 of the shares of Common Stock offered in the
Conversion subject to the overall limitation in (8) below; provided, that
shares of Common Stock purchased in the Community Offering by any persons,
together with associates of and persons acting in concert with such
persons, will be aggregated with purchases by such persons in the
Syndicated Community Offering in applying $150,000 purchase limitation;
(8) Eligible Account Holders, Supplemental Eligible Account Holders,
Other Depositors and certain members of the general public may purchase
stock in the Community Offering and Syndicated Community Offering or Public
Offering alternative subject to the purchase limitations described in (6)
and (7) above; provided, that, except for the Employee Plans, the maximum
number of shares of Common Stock subscribed for or purchased in all
categories of the Conversion by any person, together with associates of and
groups of persons acting in concert with such persons, shall not exceed
1.0% of the shares of Common Stock offered for sale in the Conversion; and
(9) The directors and officers of the Bank and their associates in the
aggregate, excluding purchases by the Employee Plans, may purchase up to
25% of shares offered for sale in the Conversion.
Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the depositors
of the Bank, both the individual amount permitted to be subscribed for and the
overall maximum purchase limitation may be increased to up to a maximum of 5% of
the shares offered for sale in the Offering at the sole discretion of the
Company and the Bank. It is currently anticipated that the overall maximum
purchase limitation may be increased if, after a Community Offering, the Company
has not received subscriptions for an aggregate amount equal to at least the
minimum of the Estimated Price Range. If such amount is increased, subscribers
for the maximum amount will be, and certain other large subscribers in the sole
discretion of the Company and the Bank may be, given the opportunity to increase
their subscriptions up to the then applicable limit. Requests to purchase
additional shares of Common Stock under this provision will be determined by the
Board of Directors of the Company and the Board of Trustees of the Bank and, if
approved, allocated on a pro rata basis giving priority in accordance with the
priority rights set forth in the Plan and described herein.
The overall maximum purchase limitation may not be reduced to less than
1.0%; the individual amount permitted to be subscribed for in the Offerings,
however, may be reduced by the Bank to less than $150,000 of the Common Stock
offered. An individual Eligible Account Holder, Supplemental Eligible Account
Holder or Other Depositor may not purchase individually in the Subscription
Offering the overall maximum purchase limit of 1.0% of the shares offered for
sale, but may make such purchase, together with associates of and persons acting
in concert with such person, by also purchasing in other available categories of
the Conversion, subject to availability of shares and the maximum overall
purchase limit for purchases in the Conversion.
In the event of an increase in the total number of shares offered in the
Conversion due to an increase in the Estimated Price Range of up to 15%
("Adjusted Maximum"), the additional shares will be allocated in the following
order or priority in accordance with the Plan: (i) in the event that there is an
oversubscription by Eligible Account Holders, to fill unfilled subscriptions of
Eligible Account Holders; (ii) to fill the Employee Plans' subscription of up to
10% of the Adjusted Maximum number of shares; (iii) in the event that there is
an oversubscription by Supplemental Eligible Account Holders, to fill unfilled
subscriptions of Supplemental Eligible Account Holders; (iv) in the event that
there is an oversubscription by Other Depositors, to fill unfulfilled
subscriptions of Other Depositors; and (v) to fill unfilled subscriptions in the
Community Offering, each to the extent possible and exclusive of the Adjusted
Maximum.
The term "Associate" of a person is defined to mean: (i) any corporation or
organization (other than the Company, the Bank or a majority-owned subsidiary of
the Bank) of which such person is an officer, partner or is directly or
indirectly, either alone or with one or more members of his or her immediate
family, the beneficial owner of 10% or more of any class of equity securities;
(ii) any trust or other estate in which such person has a substantial beneficial
interest or as to which such person serves as trustee or in a similar fiduciary
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capacity, except that the term "Associate" does not include any employee stock
benefit plan maintained by the Company or the Bank in which a person has a
substantial beneficial interest or serves as a trustee or in a similar fiduciary
capacity, and except that, for purposes of aggregating total shares that may be
acquired or held by officers and directors and their Associates, the term
"Associate" does not include any tax-qualified employee stock benefit plan; and
(iii) any relative or spouse of such person, or any relative of such spouse, who
has the same home as such person or who is a director or officer of the Company
or the Bank. Trustees, directors and officers are not treated as associates of
each other solely by virtue of holding such positions. For a further discussion
of limitations on purchases of a converting institution's stock at the time of
Conversion and subsequent to Conversion, see "-- Certain Restrictions on
Purchase or Transfer of Shares After Conversion," "Management of the
Bank -- Subscriptions by Executive Officers and Directors" and "Restrictions on
Acquisition of the Company and the Bank."
CERTAIN RESTRICTIONS ON PURCHASE OR TRANSFER OF SHARES AFTER CONVERSION
All shares of Common Stock purchased in connection with the Conversion by a
director or an executive officer of the Bank will be subject to a restriction
that the shares not be sold for a period of one year following the Conversion,
except in the event of the death or judicial declaration of incompetence of such
director or executive officer. Each certificate for restricted shares will bear
a legend giving notice of this restriction on transfer, and instructions will be
issued to the effect that any transfer within such time period of any
certificate or record ownership of such shares other than as provided above is a
violation of the restriction. Any shares of Common Stock issued at a later date
as a stock dividend, stock split, or otherwise, with respect to such restricted
stock will be subject to the same restrictions. The directors and executive
officers of the Company and the Bank will also be subject to the insider trading
rules promulgated pursuant to the Exchange Act and any other applicable
requirements of the federal securities laws.
Purchases of outstanding shares of Common Stock of the Company by
directors, executive officers (or any person who was an executive officer or
director of the Bank after adoption of the Plan of Conversion) and their
associates during the three-year period following Conversion may be made only
through a broker or dealer registered with the SEC, except with the prior
written approval of the Superintendent. This restriction does not apply,
however, to the purchase of stock pursuant to the Stock Option Plan or the RRP
to be established after the Conversion.
INTERPRETATION, AMENDMENT AND TERMINATION
All interpretations of the Plan by the Board of the Bank will be final,
subject to the authority of the Superintendent and FDIC. The Plan provides that,
if deemed necessary or desirable by the Board of Trustees of the Bank, the Plan
may be substantively amended prior to the solicitation of proxies from
depositors by a vote of the Board of Trustees; amendment of the Plan thereafter
requires the approval of the Superintendent and FDIC. The Plan will terminate if
the sale of all shares of stock being offered pursuant to the Plan is not
completed prior to 24 months after the date of the approval of the Plan by the
Superintendent unless a longer time period is permitted by governing laws and
regulations. The Plan may be terminated by a vote of the Board of Trustees of
the Bank at any time prior to the Special Meeting, and thereafter by such a vote
with the approval of the Superintendent and FDIC.
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RESTRICTIONS ON ACQUISITION OF THE COMPANY AND THE BANK
GENERAL
The Bank's Plan of Conversion provides for the Conversion of the Bank from
the mutual to the stock form of organization and, in connection therewith, a
Restated Organization Certificate and By-Laws to be adopted by depositors of the
Bank. The Plan also provides for the concurrent formation of a holding company,
which form of organization may or may not be utilized at the option of the Board
of Trustees of the Bank. See "The Conversion -- General." In the event that the
holding company form of organization is utilized, as described below, certain
provisions in the Company's Certificate of Incorporation and By-Laws and in its
management remuneration plans and agreements entered into in connection with the
Conversion, together with provisions of the Delaware General Corporation Law
("DGCL"), may have anti-takeover effects. In the event that the holding company
form of organization is not utilized, the Bank's Restated Organization
Certificate and By-Laws and management remuneration plans and agreements entered
into in connection with the Conversion may have anti-takeover effects as
described below. In addition, regulatory restrictions may make it difficult for
persons or companies to acquire control of either the Company or the Bank.
RESTRICTIONS IN THE COMPANY'S CERTIFICATE OF INCORPORATION AND BY-LAWS
The following discussion is a general summary of certain provisions of the
Company's Certificate of Incorporation and By-Laws and certain other statutory
and regulatory provisions relating to stock ownership and transfers, the Board
of Directors and business combinations, that might have a potential
"anti-takeover" effect. The Certificate of Incorporation and By-Laws of the
Company are filed as exhibits to the Registration Statement, of which this
Prospectus is a part, and the descriptions herein of such documents are
qualified in their entirety by reference to such documents. A number of
provisions of the Company's Certificate of Incorporation and By-Laws deal with
matters of corporate governance and certain rights of shareholders. These
provisions might have the effect of discouraging future takeover attempts which
are not approved by the Board of Directors but which individual Company
shareholders may deem to be in their best interests or in which shareholders may
receive substantial premiums for their shares over then current market prices.
As a result, shareholders who might desire to participate in such transactions
may not have an opportunity to do so. Such provisions will also render the
removal of the current Board of Directors or management of the Company more
difficult. The following description of certain of the provisions of the
Certificate of Incorporation and By-Laws of the Company is necessarily general
and reference should be made in each case to such Certificate of Incorporation
and By-Laws, which are incorporated herein by reference. See "Additional
Information" as to how to obtain a copy of these documents.
Limitation on Voting Rights. The Certificate of Incorporation of the
Company provides that any record owner of any outstanding Common Stock which is
beneficially owned, directly or indirectly, by a person who beneficially owns in
excess of 10% of the then outstanding shares of Common Stock ("Limit") shall be
entitled or permitted to only one one-hundredth (1/100) of a vote with respect
of each share held in excess of the Limit. Beneficial ownership of shares
includes shares beneficially owned by such person or any of his affiliates,
shares which such person or his affiliates have the right to acquire upon the
exercise of conversion rights or options and shares as to which such person and
his affiliates have or share investment or voting power, but shall not include
shares beneficially owned by the ESOP or shares that are subject to a revocable
proxy and that are not otherwise beneficially owned or deemed by the Company to
be beneficially owned by such person and his affiliates. The Certificate of
Incorporation further provides that this provision limiting voting rights may
only be amended upon (i) the approval of the Board of Directors, and (ii) the
affirmative vote of the holders of a majority of the total votes eligible to be
cast by the holders of all outstanding shares of capital stock entitled to vote
thereon and (iii) by the affirmative vote of either (1) not less than a majority
of the authorized number of directors and, if one or more Interested
Shareholders exist, by not less than a majority of the Disinterested Directors
(as defined in the Certificate of Incorporation) or (2) the holders of not less
than two-thirds of the total votes eligible to be cast by the holders of all
outstanding shares of the capital stock of the Company entitled to vote thereon
and, if the amendment is proposed by or on behalf of an Interested Shareholder
or a director who is an Affiliate or Associate of an Interested Shareholder, by
the affirmative vote
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of the holders of not less than a majority of the total votes eligible to be
cast by holders of all outstanding shares entitled to vote thereon not
beneficially owned by an Interested Shareholder or an Affiliate or Associate
thereof.
Board of Directors. The Board of Directors of the Company is divided into
three classes, each of which shall contain approximately one-third of the total
number of members of the Board. Each class shall serve a staggered term, with
approximately one-third of the total number of directors being elected each
year. The Company's Certificate of Incorporation and By-Laws provide that the
size of the Board shall be determined by a majority of the directors but shall
not be less than seven nor more than 20. The Certificate of Incorporation and
the By-Laws provide that any vacancy occurring in the Board, including a vacancy
created by an increase in the number of directors or resulting from death,
resignation, retirement, disqualification, removal from office or other cause,
shall be filled for the remainder of the unexpired term exclusively by a
majority vote of the directors then in office. The classified Board is intended
to provide for continuity of the Board of Directors and to make it more
difficult and time consuming for a shareholder group to fully use its voting
power to gain control of the Board of Directors without the consent of the
incumbent Board of Directors of the Company. The Certificate of Incorporation of
the Company provides that a director may be removed from the Board of Directors
prior to the expiration of his term only for cause, upon the affirmative vote of
at least 80% of the outstanding shares of voting stock. In the absence of these
provisions, the vote of the holders of a majority of the shares could remove the
entire Board, with or without cause, and replace it with persons of such
holders' choice.
Cumulative Voting, Special Meetings and Action by Written Consent. The
Certificate of Incorporation does not provide for cumulative voting for any
purpose. Moreover, special meetings of shareholders of the Company may be called
only by resolution of at least three-fourths of the Board of Directors then in
office or by the Chairman, if one has been elected by the Board, or the Chief
Executive Officer of the Company. The Certificate of Incorporation also provides
that any action required or permitted to be taken by the shareholders of the
Company may be taken only at an annual or special meeting and prohibits
shareholder action by written consent in lieu of a meeting.
Authorized Shares. The Certificate of Incorporation authorizes the
issuance of twenty million (20,000,000) shares of capital stock, consisting of
fifteen million (15,000,000) shares of Common Stock and five million (5,000,000)
shares of preferred stock ("Preferred Stock"). The shares of Common Stock and
Preferred Stock were authorized in an amount greater than that to be issued in
the Conversion to provide the Company's Board of Directors with as much
flexibility as possible to effect, among other transactions, financings,
acquisitions, stock dividends, stock splits and employee stock options. However,
these additional authorized shares may also be used by the Board of Directors,
consistent with its fiduciary duty, to deter future attempts to gain control of
the Company. The Board of Directors also has sole authority to determine the
terms of any one or more series of Preferred Stock, including voting rights,
conversion rates, and liquidation preferences. As a result of the ability to fix
voting rights for a series of Preferred Stock, the Board has the power, to the
extent consistent with its fiduciary duty, to issue a series of Preferred Stock
to persons friendly to management in order to attempt to block a post-tender
offer merger or other transaction by which a third party seeks control, and
thereby assist management to retain its position. The Company's Board of
Directors currently has no plans for the issuance of additional shares, other
than the issuance of additional shares pursuant to the terms of the RRP and upon
exercise of stock options to be issued pursuant to the terms of the Stock Option
Plan, all of which, if implemented prior to the first anniversary of the
Conversion, will be presented to shareholders for approval at a meeting of
shareholders to be held no earlier than six months after completion of the
Conversion.
Shareholder Vote Required to Approve Business Combinations with Principal
Shareholders. The Certificate of Incorporation requires the approval of the
holders of at least 80% of the Company's outstanding shares of voting stock,
together with the affirmative vote of at least 50% of the Company's outstanding
shares of voting stock not beneficially owned by an Interested Shareholder (as
defined below) to approve certain "Business Combinations," as defined therein,
and related transactions. Under Delaware law, absent this provision, Business
Combinations, including mergers, consolidations and sales of all or
substantially all of the assets of a corporation must, subject to certain
exceptions, be approved by the vote of the holders of only a
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majority of the outstanding shares of Common Stock of the Company and any other
affected class of stock. Under the Certificate of Incorporation, at least 80%
approval of shareholders is required in connection with any transaction
involving an Interested Shareholder except (i) in cases where the proposed
transaction has been approved in advance by a majority of those members of the
Company's Board of Directors who are unaffiliated with the Interested
Shareholder and were directors prior to the time when the Interested Shareholder
became an Interested Shareholder or (ii) if the proposed transaction meets
certain conditions set forth therein which are designed to afford the
shareholders a fair price in consideration for their shares in which case, if a
shareholder vote is required, approval of only a majority of the outstanding
shares of voting stock would be sufficient. The term "Interested Shareholder" is
defined to include any individual, corporation, partnership or other entity
(other than the Company or its subsidiary or any employee benefit plan
maintained by the Company or its subsidiary) which owns beneficially or
controls, directly or indirectly, 10% or more of the outstanding shares of
voting stock of the Company. This provision of the Certificate of Incorporation
applies to any "Business Combination," which is defined to include (i) any
merger or consolidation of the Company or any of its subsidiaries with or into
any Interested Shareholder or Affiliate (as defined in the Certificate of
Incorporation) of an Interested Shareholder; (ii) any sale, lease, exchange,
mortgage, pledge, transfer, or other disposition to or with any Interested
Shareholder or Affiliate of 5% or more of the assets of the Company or combined
assets of the Company and its subsidiary; (iii) the issuance or transfer to any
Interested Shareholder or its Affiliate by the Company (or any subsidiary) of
any securities of the Company other than on a pro rata basis to all
shareholders; (iv) the adoption of any plan for the liquidation or dissolution
of the Company proposed by or on behalf of any Interested Shareholder or
Affiliate thereof; (v) any reclassification of securities, recapitalization,
merger or consolidation of the Company which has the effect of increasing the
proportionate share of Common Stock or any class of equity or convertible
securities of the Company owned directly or indirectly by an Interested
Shareholder or Affiliate thereof; and (vi) the acquisition by the Company or its
subsidiary of any securities of an Interested Shareholder or its Affiliates or
Associates.
The trustees and executive officers of the Bank are purchasing in the
aggregate approximately 4.09% of the shares of the Common Stock at the maximum
of the Estimated Price Range. In addition, the ESOP intends to purchase 8% of
the Common Stock to be issued in the Conversion, including shares to be issued
to the Foundation. Additionally, if, the proposed RRP and Stock Options Plan are
implemented, the Company expects to acquire 4% of the Common Stock issued in the
Conversion, including shares to be issued to the Foundation, on behalf of the
RRP and expects to issue an amount equal to 10% of the Common Stock issued in
the Conversion, including shares to be issued to the Foundation, under the Stock
Option Plan to directors, executive officers and employees. As a result,
assuming the RRP and Stock Option Plan are implemented, the directors, executive
officers and employees have the potential to control the voting of approximately
25% of the Company's Common Stock, on a fully diluted basis at the maximum of
the Estimated Price Range, thereby enabling them to prevent the approval of the
transactions requiring the approval of at least 80% of the Company's outstanding
shares of voting stock described hereinabove.
Evaluation of Offers. The Certificate of Incorporation of the Company
further provides that the Board of Directors of the Company, when evaluating any
offer to the Company from another party to (i) make a tender or exchange offer
for any outstanding equity security of the Company, (ii) merge or consolidate
the Company with another corporation or entity or (iii) purchase or otherwise
acquire all or substantially all of the properties and assets of the Company,
shall, in connection with the exercise of its judgment in determining what is in
the best interest of the Company and the shareholders of the Company, give due
consideration to the extent permitted by law to all relevant factors, including,
without limitation, the financial and managerial resources and future prospects
of the other party, the possible effects on the business of the Company and its
subsidiaries and on the employees, customers, suppliers and creditors of the
Company and its subsidiaries, and the effects on the communities in which the
Company's and its subsidiaries' facilities are located. By having these
standards in the Certificate of Incorporation of the Company, the Board of
Directors may be in a stronger position to oppose such a transaction if the
Board concludes that the transaction would not be in the best interests of the
Company, even if the price offered is significantly greater than the then market
price of any equity security of the Company.
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Amendment of Certificate of Incorporation and By-Laws. The Certificate of
Incorporation provides that certain provisions of the Certificate of
Incorporation may not be altered, amended, repealed or rescinded without the
affirmative vote of either (1) not less than a majority of the authorized number
of directors and, if one or more Interested Shareholders exist, by not less than
a majority of the Disinterested Directors (as defined in the Certificate of
Incorporation) or (2) the holders of not less than two-thirds of the total votes
eligible to be cast by the holders of all outstanding shares of the capital
stock of the Company entitled to vote thereon and, if the alteration, amendment,
repeal, or rescission is proposed by or on behalf of an Interested Shareholder
or a director who is an Affiliate or Associate of an Interested Shareholder, by
the affirmative vote of the holders of not less than a majority of the total
votes eligible to be cast by holders of all outstanding shares entitled to vote
thereon not beneficially owned by an Interested Shareholder or an Affiliate or
Associate thereof. Amendment of the provision relating to business combinations
must also be approved by either (i) a majority of the Disinterested Directors,
or (ii) the affirmative vote of not less than eighty percent (80%) of the total
number of votes eligible to be cast by the holders of all outstanding shares of
the Voting Stock, voting together as a single class, together with the
affirmative vote of not less than fifty percent (50%) of the total number of
votes eligible to be cast by the holders of all outstanding shares of the Voting
Stock not beneficially owned by any Interested Shareholder or Affiliate or
Associate thereof, voting together as a single class. Furthermore, the Company's
Certificate of Incorporation provides that provisions of the By-Laws that
contain supermajority voting requirements may not be altered, amended, repealed
or rescinded without a vote of the Board or holders of capital stock entitled to
vote thereon that is not less than the supermajority specified in such
provision. Absent these provisions, the DGCL provides that a corporation's
certificate of incorporation and by-laws may be amended by the holders of a
majority of the corporation's outstanding capital stock. The Certificate of
Incorporation also provides that the Board of Directors is authorized to make,
alter, amend, rescind or repeal any of the Company's By-Laws in accordance with
the terms thereof, regardless of whether the Bylaw was initially adopted by the
shareholders. However, this authorization neither divests the shareholders of
their right, nor limits their power to adopt, amend, rescind or repeal any Bylaw
under the DGCL. These provisions could have the effect of discouraging a tender
offer or other takeover attempt where the ability to make fundamental changes
through Bylaw amendments is an important element of the takeover strategy of the
acquiror.
Certain By-Law Provisions. The By-Laws of the Company also require a
shareholder who intends to nominate a candidate for election to the Board of
Directors, or to raise new business at an annual shareholder meeting to give
approximately 60 days notice in advance of the anniversary of the prior year's
annual shareholders' meeting to the Secretary of the Company. The notice
provision requires a shareholder who desires to raise new business to provide
certain information to the Company concerning the nature of the new business,
the shareholder and the shareholder's interest in the business matter.
Similarly, a shareholder wishing to nominate any person for election as a
director must provide the Company with certain information concerning the
nominee and the proposing shareholder.
ANTI-TAKEOVER EFFECTS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BY-LAWS
AND MANAGEMENT REMUNERATION PLANS ADOPTED IN THE CONVERSION
The provisions described above are intended to reduce the Company's
vulnerability to takeover attempts and certain other transactions which have not
been negotiated with and approved by members of its Board of Directors. The
provisions of the Employment Agreements and Employee Retention Agreements, the
RRP and the Stock Option Plan to be established may also discourage takeover
attempts by increasing the costs to be incurred by the Bank and the Company in
the event of a takeover. See "Management of the Bank -- Employment Agreements,"
and "-- Benefits -- Stock Option Plan."
The Company's Board of Directors believes that the provisions of the
Certificate of Incorporation, By-Laws and management remuneration plans to be
established are in the best interests of the Company and its shareholders. An
unsolicited non-negotiated proposal can seriously disrupt the business and
management of a corporation and cause it great expense. Accordingly, the Board
of Directors believes it is in the best interests of the Company and its
shareholders to encourage potential acquirors to negotiate directly with
management and that these provisions will encourage such negotiations and
discourage non-negotiated takeover attempts. It
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is also the Board of Directors' view that these provisions should not discourage
persons from proposing a merger or other transaction at a price that reflects
the true value of the Company and that otherwise is in the best interests of all
shareholders.
DELAWARE CORPORATE LAW
The State of Delaware has a statute designed to provide Delaware
corporations with additional protection against hostile takeovers. The takeover
statute, which is codified in Section 203 of the DGCL ("Section 203"), is
intended to discourage certain takeover practices by impeding the ability of a
hostile acquiror to engage in certain transactions with the target company.
In general, Section 203 provides that a "Person" (as defined therein) who
owns 15% or more of the outstanding voting stock of a Delaware corporation (a
"DGCL Interested Shareholder") may not consummate a merger or other business
combination transaction with such corporation at any time during the three-year
period following the date such "Person" became a DGCL Interested Shareholder.
The term "business combination" is defined broadly to cover a wide range of
corporate transactions including mergers, sales of assets, issuances of stock,
transactions with subsidiaries and the receipt of disproportionate financial
benefits.
The statute exempts the following transactions from the requirements of
Section 203: (i) any business combination if, prior to the date a person became
a DGCL Interested Shareholder, the Board of Directors approved either the
business combination or the transaction which resulted in the shareholder
becoming a DGCL Interested Shareholder; (ii) any business combination involving
a person who acquired at least 85% of the outstanding voting stock in the
transaction in which he became a DGCL Interested Shareholder, with the number of
shares outstanding calculated without regard to those shares owned by the
corporation's directors who are also officers and by certain employee stock
plans; (iii) any business combination with an Interested Shareholder that is
approved by the Board of Directors and by a two-thirds vote of the outstanding
voting stock not owned by the DGCL Interested Shareholder; and (iv) certain
business combinations that are proposed after the corporation had received other
acquisition proposals and which are approved or not opposed by a majority of
certain continuing members of the Board of Directors. A corporation may exempt
itself from the requirement of the statute by adopting an amendment to its
Certificate of Incorporation or By-Laws electing not to be governed by Section
203 of the DGCL. At the present time, the Board of Directors does not intend to
propose any such amendment.
RESTRICTIONS IN THE BANK'S RESTATED ORGANIZATION CERTIFICATE AND BY-LAWS
Although the Board of Trustees of the Bank is not aware of any effort that
might be made to obtain control of the Bank after the Conversion, the Board of
Directors believes that it is appropriate to adopt certain provisions permitted
by the Banking Law and the conversion regulations of the NYBB to protect the
interests of the converted Bank and its shareholders from any hostile takeover.
Such provisions may, indirectly, inhibit a change in control of the Company, as
the Bank's sole stockholder. See "Risk Factors -- Certain Anti-Takeover
Provisions."
In the event that the Company is not formed and the subscription rights are
deemed to be subscriptions to purchase the common stock of the Bank, the
provisions contained in the Restated Organization Certificate and By-Laws of the
Bank, to be effective on the effective date of the Conversion, will govern
corporate procedure and certain rights of shareholders. The anti-takeover
effects of such provisions are generally similar to those described above for
the Company, except that the issuance of any additional capital stock of the
Bank would require the prior approval of the NYSBD, and the consent of the
holders of two-thirds of the outstanding shares of capital stock of the Bank
would be required prior to effecting a merger of, or certain acquisitions of
assets by, the Bank.
Limitation on Voting Rights. The Bank's Restated Organization Certificate
will contain a provision whereby the acquisition of or offer to acquire
beneficial ownership of more than 10% of the issued and outstanding shares of
any class of equity securities of the Bank by any person (i.e., any individual,
corporation, group acting in concert, trust, partnership, joint stock company or
similar organization), either directly or indirectly, will be prohibited for a
period of three years following the date of completion of the Conversion.
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Any stock in excess of 10% acquired in violation of this provision will not be
counted as outstanding for voting purposes. This limitation shall not apply to
(a) any offer or sale with a view towards public resale made exclusively by the
Bank to any underwriter acting on behalf of the Bank in connection with a public
offering of the common stock of the Bank; (b) any corporation formed by the Bank
in connection with its conversion from mutual to stock form to acquire all of
the shares of stock of the Bank to be issued in connection with such conversion;
or (c) any reclassification of securities (including any reverse stock split),
or recapitalization of the Bank, or any merger or consolidation of the Bank with
any of its subsidiaries or any other transaction or reorganization (including a
transaction in which the Bank shall form a holding company) that does not have
the effect, directly or indirectly, of changing the beneficial ownership
interests of the Bank's shareholders, other than pursuant to the exercise of any
appraisal rights.
In the event that holders of revocable proxies for more than 10% of the
shares of the Common Stock of the Company seek, among other things, to elect
one-third or more of the Company's Board of Directors, to cause the Company's
shareholders to approve the acquisition or corporate reorganization of the
Company or to exert a continuing influence on a material aspect of the business
operations of the Company, which actions could indirectly result in a change in
control of the Bank, the Board of Directors of the Bank will be able to assert
this provision of the Bank's Restated Organization Certificate against such
holders. Although the Board of Directors of the Bank is not currently able to
determine when and if it would assert this provision of the Bank's Restated
Organization Certificate, the Bank's Board of Directors, in exercising its
fiduciary duty, may assert this provision if it were deemed to be in the best
interests of the Bank, the Company and its shareholders. It is unclear, however,
whether this provision, if asserted, would be successful against such persons in
a proxy contest which could result in a change in control of the Bank indirectly
through a change in control of the Company.
Board of Directors. The Board of Directors of the Bank is divided into
three classes, each of which shall contain approximately one-third of the total
number of members of the Board of Directors. Each class shall serve a staggered
term, with approximately one-third of the total number of directors being
elected each year. The staggered terms of the Bank's Board of Directors could
have an anti-takeover effect by making it more difficult for a majority of
shares to force an immediate change in the Board since only one-third of the
Board is elected each year. The purpose of these provisions is to assure
stability and continuity of management of the Bank in the years immediately
following the Conversion. In addition, shareholders will not be permitted to
cumulate their votes in the election of directors.
The Restated Organization Certificate and By-Laws of the Bank provide that
any director, or the entire Board of Directors, may be removed at any time, but
only for cause and only by the affirmative vote of at least 80% of the
outstanding shares of voting stock. The Restated Organization Certificate and
By-Laws of the Bank also provide that any vacancy occurring in the Board of
Directors, including any vacancy created by an increase in the number of
directors, shall be filled by the shareholders of the Bank, except that
vacancies not exceeding one-third of the entire Board of Directors may be filled
by the affirmative vote of a majority of the directors then holding office.
Preferred Stock. Although the Bank has no arrangements, understandings or
plans at the present time, the Board of Directors believes that the availability
of unissued shares of Preferred Stock will provide the Bank with increased
flexibility in structuring possible future financings and acquisitions and in
meeting other corporate needs which may arise. In the event of a proposed
merger, tender offer or other attempt to gain control of the Bank of which
management does not approve, it might be possible for the Bank's Board of
Directors to authorize the issuance of one or more series of Preferred Stock
with rights and preferences which could impede the completion of such a
transaction. An effect of the possible issuance of such Preferred Stock,
therefore, may be to deter a future takeover attempt. The Bank's Board of
Directors does not intend to issue any Preferred Stock except on terms which the
Board deems to be in the best interests of the Bank and its then existing
shareholders.
Shareholder Vote Required for Certain Business Combinations. The Bank's
Restated Organization Certificate contains provisions requiring a higher
shareholder vote for certain business combinations, which provisions are
substantially identical to those contained in the Company's Certificate of
Incorporation. See
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"-- Restrictions in the Company's Certificate of Incorporation and
By-Laws -- Shareholder Vote Required to Approve Business Combinations with
Principal Shareholders."
Evaluation of Offers. The Restated Organization Certificate of the Bank
also provides that the Board of Directors of the Bank, when evaluating any offer
to the Bank or to the shareholders of the Bank from another party relating to a
change or potential change in control of the Bank, including, without
limitation, any offer to (a) purchase for cash or exchange any securities or
property for any outstanding equity securities of the Bank, (b) merge or
consolidate the Bank with another corporation or (c) purchase or otherwise
acquire all or substantially all of the properties and assets of the Bank,
shall, in connection with the exercise of its judgment in determining what is in
the best interest of the Bank and its shareholders, give due consideration not
only to the price or other consideration being offered, but also to all other
relevant factors including, without limitation, (1) both the long-term and the
short-term interests of the Bank and its shareholders and (2) the effects that
the Bank's actions may have in the short-term or in the long-term upon any of
the following: (i) the prospects for potential growth, development, productivity
and profitability of the Bank; (ii) the Bank's current employees; (iii) the
Bank's retired employees and other beneficiaries receiving or entitled to
receive retirement, welfare or similar benefits from or pursuant to any plan
sponsored, or agreement entered into, by the Bank; (iv) the Bank's customers and
creditors; and (v) the ability of the Bank to provide, as a going concern,
goods, services, employment opportunities and employment benefits and otherwise
to contribute to the communities in which is does business. By having these
standards in the Restated Organization Certificate, the Board of Directors of
the Bank may be in a stronger position to oppose such a transaction if the Board
concludes that the transaction would not be in the best interests of the Bank,
even if the price offered is significantly greater than the then market price of
any equity security of the Bank.
Amendment of Restated Organization Certificate and By-Laws. The Bank's
Restated Organization Certificate provides that certain provisions of the
Restated Organization Certificate may not be altered, amended, repealed or
rescinded without the affirmative vote of either (i) not less than a majority of
the authorized number of directors and, if one or more Interested Shareholders
exist, by not less than a majority of the Disinterested Directors, or (ii) the
holders of not less than two-thirds of the total votes eligible to be cast by
the holders of all outstanding shares of capital stock entitled to vote thereon
and, if the alteration, amendment, repeal or rescission is proposed by or on
behalf of an Interested Shareholder or a director who is an Affiliate or
Associate of an Interested Shareholder, the holders of not less than a majority
of the total votes eligible to be cast by holders of all outstanding shares of
capital stock entitled to vote thereon not beneficially owned by an Interested
Shareholder or an Affiliate or Associate thereof.
In addition, provisions of the By-Laws of the Bank that contain
supermajority voting requirements may not be altered, amended, repealed or
rescinded without a vote of the Board or holders of capital stock entitled to
vote thereon that is not less than the supermajority specified in such
provision.
REGULATORY RESTRICTIONS
New York State Banking Board Conversion Regulations. NYBB regulations
prohibit any person, prior to the completion of the Conversion, from
transferring, or from entering into any agreement or understanding to transfer,
to the account of another, legal or beneficial ownership of the subscription
rights issued under the Plan of Conversion or the Common Stock to be issued upon
their exercise. The NYBB regulations also prohibit any person, prior to the
completion of the Conversion, from offering, or making an announcement of an
offer or intent to make an offer, to purchase such subscription rights or Common
Stock. See "The Conversion -- Restrictions on Transfer of Subscription Rights
and Shares." For one year following the Conversion, NYBB regulations prohibit
any person from acquiring or making an offer to acquire more than 10% of the
stock of any converted savings institution, except with the prior approval of
the Superintendent.
New York State Change in Bank Control Regulation. Under the Banking law,
the prior approval of the NYBB is required before any action is taken that
causes any company to acquire direct or indirect control of a banking
institution. For this purpose, the term "company" is defined to include
corporations, partnerships and other types of business entities, chartered or
doing business in New York, and an individual or combination of individuals
acting in concert and residing or doing business in New York. Control is
presumed to exist if any
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company directly or indirectly owns, controls or holds with power to vote 10% or
more of the voting stock of a banking institution or of any company that owns,
controls or holds with power to vote 10% or more of the voting stock of a
banking institution or of any company that owns, controls or holds with power to
vote 10% or more of the voting stock of a banking institution. Accordingly,
prior approval of the NYBB would be required before any company could acquire
10% or more of the Common Stock of the Company.
New York State Bank Holding Company Regulation. Under the Banking Law, the
prior approval of the NYBB is required before: (1) any action is taken that
causes any company to become a bank holding company; (2) any action is taken
that causes any banking institution to become or to be merged or consolidated
with a subsidiary of a bank holding company; (3) any bank holding company
acquires direct or indirect ownership or control of more than 5% of the voting
stock of a banking institution; (4) any bank holding company or subsidiary
thereof acquires all or substantially all of the assets of a banking
institution; or (5) any action is taken that causes any bank holding company to
merge or consolidate with another bank holding company. See "Regulation and
Supervision -- Holding Company Regulation -- New York Bank Company Regulation."
Accordingly, the prior approval of the NYBB would be required before any bank
holding company, as defined under the Banking Law, could acquire 5% or more of
the Common Stock of the Company.
Federal Change in Bank Control Act. Under the CBCA and the FRB's
regulations thereunder, a person is required to give 60 days' prior written
notice to the FRB before acquiring control of a bank holding company. For this
purpose, the term "control" means the acquisition of the ownership, control or
holding of the power to vote 25% or more of any class of a bank holding
company's voting stock, and the term "person" includes an individual,
corporation, partnership, and various other entities, acting individually or in
concert. In addition, an acquiring person is presumed to acquire control if the
person acquires the ownership, control or holding of the power to vote of 10% or
more of any class of the holding company's voting stock if (i) the company's
shares are registered pursuant to Section 12 of the Exchange Act or (ii) no
other person will own, control or hold the power to vote a greater percentage of
that class of voting securities. The CBCA and the FRB's regulations authorize
the FRB to disapprove a proposed transaction on certain specified grounds.
Accordingly, the prior approval of the FRB would be required under the CBCA
before any person could acquire 10% or more of the Common Stock of the Company.
Federal Bank Holding Company Act. Under the BHCA and the FRB's regulations
thereunder, any company seeking to acquire control of a bank or bank holding
company, must acquire the prior written approval of the FRB. For this purpose,
the term "company" is defined to include banks, corporations, partnerships,
associations, and certain trusts and other entities, and the term "control" is
deemed to exist if a company has voting control of at least 25% of any class of
a bank's voting stock, and may be found to exist if a company controls in any
manner the election of a majority of the directors of the bank or has the power
to exercise a controlling influence over the management or policies of the bank.
In addition, a bank holding company must obtain FRB approval prior to acquiring
voting control of more than 5% of any class of voting stock of a bank or another
bank holding company. An acquisition of control of a bank that requires the
prior approval of the FRB under the BHCA is not subject to the notice
requirements of the Change in Bank Control Act of 1978. Accordingly, the prior
approval of the FRB under the BHCA would be required (a) before any bank holding
company could acquire 5% or more of the Common Stock of the Company and (b)
before any other company could acquire 25% or more of the Common Stock of the
Company.
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DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
GENERAL
The Company is authorized to issue fifteen million (15,000,000) shares of
Common Stock having a par value of $.01 per share and five million (5,000,000)
shares of Preferred Stock having a par value of $.01 per share. The Company
currently expects to issue 5,577,500 shares of Common Stock (or 6,414,125 in the
event of an increase of 15% in the Estimated Price Range) and does not expect to
issue any shares of Preferred Stock. Except as discussed above in "Restrictions
on Acquisition of the Company and the Bank," each share of the Company's Common
Stock will have the same relative rights as, and will be identical in all
respects with, each other share of Common Stock. Upon payment of the Purchase
Price for the common stock, in accordance with the Plan, all such stock will be
duly authorized, fully paid and non-assessable. THE COMMON STOCK OF THE COMPANY
WILL REPRESENT NON-WITHDRAWABLE CAPITAL, WILL NOT BE AN ACCOUNT OF AN INSURABLE
TYPE, AND WILL NOT BE INSURED BY THE FDIC.
COMMON STOCK
Dividends. The Company can pay dividends out of statutory surplus or from
certain net profits if, as and when declared by its Board of Directors. The
payment of dividends by the Company is subject to limitations which are imposed
by law and applicable regulation. See "Dividend Policy" and "Regulation and
Supervision." The holders of Common Stock of the Company will be entitled to
receive and share equally in such dividends as may be declared by the Board of
Directors of the Company out of funds legally available therefor. If the Company
issues Preferred Stock, the holders thereof may have a priority over the holders
of the Common Stock with respect to dividends.
Voting Rights. Upon Conversion, the holders of Common Stock of the Company
will possess exclusive voting rights in the Company. They will elect the
Company's Board of Directors and act on such other matters as are required to be
presented to them under Delaware law or the Company's Certificate of
Incorporation or as are otherwise presented to them by the Board of Directors.
Except as discussed in "Restrictions on Acquisition of the Company and the
Bank," each holder of Common Stock will be entitled to one vote per share and
will not have any right to cumulate votes in the election of directors. If the
Company issues Preferred Stock, holders of the Preferred Stock may also possess
voting rights. Certain matters require an 80% or two-thirds shareholder vote.
See "Restrictions on Acquisition of the Company and the Bank."
As a New York mutual savings bank, corporate powers and control of the Bank
are vested in its Board of Trustees, who elect the officers of the Bank and who
fill any vacancies on the Board of Trustees as it exists upon Conversion.
Subsequent to Conversion, voting rights will be vested exclusively in the owners
of the shares of capital stock of the Bank, which owner will be the Company, and
voted at the direction of the Company's Board of Directors. Consequently, the
holders of the Common Stock will not have direct control of the Bank.
Liquidation. In the event of any liquidation, dissolution or winding up of
the Bank, the Company, as holder of the Bank's capital stock, would be entitled
to receive, after payment or provision for payment of all debts and liabilities
of the Bank (including all deposit accounts and accrued interest thereon) and
after distribution of the balance in the special liquidation account to Eligible
Account Holders and Supplemental Eligible Account Holders (see "The
Conversion -- Effects of Conversion -- Liquidation Rights"), all assets of the
Bank available for distribution. In the event of liquidation, dissolution or
winding up of the Company, the holders of its Common Stock would be entitled to
receive, after payment or provision for payment of all its debts and
liabilities, all of the assets of the Company available for distribution. If
Preferred Stock is issued, the holders thereof may have a priority over the
holders of the Common Stock in the event of the liquidation or dissolution of
the Company.
Preemptive Rights. Holders of the Common Stock of the Company will not be
entitled to preemptive rights with respect to any shares which may be issued.
The Common Stock is not subject to redemption.
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PREFERRED STOCK
None of the shares of the Company's authorized Preferred Stock will be
issued in the Conversion. Such stock may be issued with such preferences and
designations as the Board of Directors may from time to time determine. The
Board of Directors can, without shareholder approval, issue preferred stock with
voting, dividend, liquidation and conversion rights which could dilute the
voting strength of the holders of the Common Stock and may assist management in
impeding an unsolicited takeover or attempted change in control.
DESCRIPTION OF CAPITAL STOCK OF THE BANK
GENERAL
The Restated Organization Certificate of the Bank, to be effective upon the
Conversion, authorizes the issuance of capital stock consisting of fifteen
million (15,000,000) shares of common stock, par value $.01 per share, and five
million (5,000,000) shares of preferred stock, par value $.01 per share, which
Preferred Stock may be issued in series and classes having such rights,
preferences, privileges and restrictions as the Board of Directors may
determine. Except as discussed above in "Restrictions on Acquisition of the
Company and the Bank," each share of common stock of the Bank will have the same
relative rights as, and will be identical in all respects with, each other share
of common stock. After the Conversion, the Board of Directors will be authorized
to approve the issuance of Common Stock up to the amount authorized by the
Restated Organization Certificate without the approval of the Bank's
shareholders, except to the extent that such approval is required by governing
law. All of the issued and outstanding common stock of the Bank (which is
currently expected to be 1,000 shares) will be held by the Company as the Bank's
sole shareholder. THE CAPITAL STOCK OF THE BANK WILL REPRESENT NON-WITHDRAWABLE
CAPITAL, WILL NOT BE AN ACCOUNT OF AN INSURABLE TYPE, AND WILL NOT BE INSURED BY
THE FDIC.
COMMON STOCK
Dividends. The holders of the Bank's common stock (the Company upon
consummation of the Conversion) will be entitled to receive and to share equally
in such dividends as may be declared by the Board of Directors of the Bank out
of funds legally available therefor. See "Dividend Policy" for certain
restrictions on the payment of dividends and "Federal and State
Taxation -- Federal Taxation" for a discussion of the consequences of the
payment of cash dividends from income appropriated to bad debt reserves.
Voting Rights. Immediately after the Conversion, the holders of the Bank's
common stock (the Company upon consummation of the Conversion) will possess
exclusive voting rights in the Bank. Each holder of shares of common stock will
be entitled to one vote for each share held. Cumulation of votes will not be
permitted. See "Restrictions on Acquisition of the Company and the
Bank -- Anti-Takeover Effects of the Company's Articles of Incorporation and
By-Laws and Management Remuneration Plans Adopted in Conversion."
Liquidation. In the event of any liquidation, dissolution, or winding up
of the Bank, the holders of its common stock (the Company upon consummation of
the Conversion) will be entitled to receive, after payment of all debts and
liabilities of the Bank (including all deposit accounts and accrued interest
thereon), and distribution of the balance in the special liquidation account to
Eligible Account Holders and Supplemental Eligible Account Holders, all assets
of the Bank available for distribution in cash or in kind. If additional
preferred stock is issued subsequent to the Conversion, the holders thereof may
also have priority over the holders of common stock in the event of liquidation
or dissolution.
Preemptive Rights and Redemption. Holders of the common stock of the Bank
(the Company upon consummation of the Conversion) will not be entitled to
preemptive rights with respect to any shares of the Bank which may be issued.
The common stock will not be subject to redemption. Upon receipt by the Bank of
the full specified purchase price therefor, the common stock will be fully paid
and non-assessable.
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PREFERRED STOCK
None of the shares of the Bank's authorized preferred stock will be issued
in the Conversion. Such stock may be issued with such preferences and
designations as the Board of Directors may from time to time determine. The
Board of Directors can, without shareholder approval, issue preferred stock with
voting, dividend, liquidation and conversion rights.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is
Registrar and Transfer Company.
EXPERTS
The financial statements of the Bank as of May 31, 1997 and 1996 and for
each of the years in the three-year period ended May 31, 1997, included in this
Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said report.
FinPro has consented to the publication herein of the summary of its report
to the Bank and Company setting forth its opinion as to the estimated pro forma
market value of the Common Stock upon Conversion and its opinion with respect to
subscription rights.
OTHER INFORMATION
In October of 1996, the Bank's Board of Trustees decided to retain Arthur
Andersen LLP as its independent public accountants and dismissed the Bank's
former auditors. The former auditors' report on the Bank's balance sheet as of
May 31, 1996 does not cover the balance sheet of the Bank included in this
Prospectus. Such report did not contain an adverse opinion or disclaimer of
opinion and was not modified as to uncertainty, audit scope or accounting
principles. There were no disagreements with the former auditors on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure at the time of the change or with respect to the
Bank's balance sheet as of May 31, 1996, which, if not resolved to the former
auditors' satisfaction, would have caused them to make reference to the subject
matter of the disagreement in connection with their report. Prior to retaining
Arthur Andersen LLP, the Bank had not consulted with Arthur Andersen LLP
regarding accounting principles.
LEGAL AND TAX OPINIONS
The legality of the Common Stock and the federal and state income tax
consequences of the Conversion will be passed upon for the Bank and the Company
by Thacher Proffitt & Wood, New York, New York, special counsel to the Bank and
the Company. Certain legal matters will be passed upon for Sandler O'Neill by
Goodwin, Procter & Hoar LLP, Boston, Massachusetts.
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ADDITIONAL INFORMATION
The Company has filed with the SEC the Registration Statement under the
Securities Act with respect to the Common Stock offered hereby. As permitted by
the rules and regulations of the SEC, this Prospectus does not contain all the
information set forth in the Registration Statement. Such information, including
the Conversion Valuation Appraisal Report, which is an exhibit to the
Registration Statement, can be examined without charge at the public reference
facilities of the SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies of such material can be obtained from the SEC at prescribed rates.
Such information is also available on the SEC's Electronic Data Gathering
Analysis and Retrieval ("EDGAR") System at the SEC's website, www.sec.gov.
The Bank has filed an application for conversion with the Superintendent
and FDIC. Pursuant to the rules and regulations of the Superintendent, this
Prospectus omits certain information contained in that application. The
application may be examined at the principal office of the Superintendent, Two
Rector Street, New York, New York 10006.
The Company has filed with the FRB an application to become a bank holding
company. This Prospectus omits certain information contained in such
application. Such application may be inspected at the offices of the Federal
Reserve Bank of New York, 59 Maiden Lane, New York, New York 10045.
In connection with the Conversion, the Company will register its Common
Stock with the SEC under Section 12(g) of the Exchange Act, and, upon such
registration, the Company and the holders of its stock will become subject to
the proxy solicitation rules, reporting requirements and restrictions on stock
purchases and sales by directors, officers and greater than 10% shareholders,
the annual and periodic reporting and certain other requirements of the Exchange
Act. Under the Plan of Conversion, the Company has undertaken that it will not
terminate such registration for a period of at least three years following the
Conversion. In the event that the Bank amends the Plan to eliminate the
concurrent formation of the Company as part of the Conversion, the Bank will
register its stock with the FDIC under Section 12(g) of the Exchange Act and,
upon such registration, the Bank and the holders of its stock will become
subject to the same obligations and restrictions.
Copies of the Certificate of Incorporation and the By-Laws of the Company
and the Restated Organization Certificate and By-Laws of the Bank are available
without charge from the Bank upon written or oral request.
134
<PAGE> 136
INDEX TO FINANCIAL STATEMENTS
THE WARWICK SAVINGS BANK
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Public Accountants.............................................. F-2
Financial Statements:
Consolidated Statements of Financial Condition as of August 31, 1997 (Unaudited) and
May 31, 1997 and 1996............................................................ F-3
Consolidated Statements of Income for the Three Months Ended August 31, 1997 and
1996 (Unaudited) and for Each of the Years in the Three-Year Period Ended May 31,
1997............................................................................. 38
Consolidated Statements of Changes in Net Worth for the Three Months Ended August
31, 1997 and 1996 (Unaudited) and for Each of the Years in the Three-Year Period
Ended May 31, 1997............................................................... F-4
Consolidated Statements of Cash Flows for the Three Months Ended August 31, 1997 and
1996 (Unaudited) and for Each of the Years in the Three-Year Period Ended May 31,
1997............................................................................. F-5
Notes to Consolidated Financial Statements............................................ F-6
</TABLE>
NOTE: All schedules are omitted as the required information is not
applicable or the information is presented in the consolidated financial
statements.
The financial statements of Warwick Community Bancorp, Inc. have been
omitted because Warwick Community Bancorp, Inc. has not yet issued any stock,
has no assets and no liabilities, and has not conducted any business other than
of an organizational nature.
F-1
<PAGE> 137
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Examining Committee of
The Warwick Savings Bank:
We have audited the accompanying consolidated statements of financial
condition of The Warwick Savings Bank and subsidiaries as of May 31, 1997 and
1996, and the related consolidated statements of income, changes in net worth
and cash flows for each of the years in the three-year period ended May 31,
1997. These financial statements are the responsibility of the Bank's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Warwick Savings Bank and
subsidiaries as of May 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the years in the three-year period ended May
31, 1997, in conformity with generally accepted accounting principles.
As discussed in Notes 1 and 11 to the consolidated financial statements,
the Bank changed its method of accounting for certain postretirement benefit
costs in fiscal 1995 upon adoption of Statement of Financial Accounting
Standards No. 106. Also, as discussed in Notes 1 and 7 to the consolidated
financial statements, in fiscal 1996, the Bank changed its method of accounting
for mortgage servicing rights upon adoption of Statement of Financial Accounting
Standards No. 122.
[Andersen Sig.]
New York, New York
July 30, 1997
F-2
<PAGE> 138
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
AUGUST 31, 1997 AND MAY 31, 1997 AND 1996
<TABLE>
<CAPTION>
MAY 31
---------------------------
1997 1996
AUGUST 31, ------------ ------------
1997
------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
ASSETS:
Cash on hand and in banks........................ $ 9,290,746 $ 10,366,711 $ 7,101,510
Federal funds sold............................... -- 1,315,000 --
Securities --
Trading, at fair value........................ -- -- 1,933,694
Available-for-sale, at fair value............. 110,226,282 120,301,288 135,232,414
Held-to-maturity, at amortized cost (fair
value of $6,116,637, $6,116,184 and
$7,087,692, respectively)................... 6,101,776 6,091,684 7,117,468
------------ ------------ ------------
Total securities......................... 116,328,058 126,392,972 144,283,576
------------ ------------ ------------
Mortgage loans, net.............................. 114,986,191 97,440,203 71,941,908
Mortgage loans held-for-sale..................... 2,028,150 4,831,500 5,053,892
Other loans, net................................. 37,650,676 36,051,438 31,901,679
Mortgage servicing rights........................ 860,890 835,079 669,945
Accrued interest receivable...................... 2,143,606 2,096,627 1,942,185
Federal Home Loan Bank stock..................... 1,731,300 1,731,300 1,178,100
Bank premises and equipment, net................. 3,260,847 2,425,831 2,539,141
Other real estate owned, net..................... 167,083 223,782 330,140
Other assets..................................... 2,420,231 2,834,743 7,110,877
------------ ------------ ------------
Total assets............................. $290,867,778 $286,545,186 $274,052,953
============ ============ ============
LIABILITIES AND NET WORTH
LIABILITIES:
Deposits......................................... $221,763,471 $221,211,137 $232,965,276
Mortgage escrow funds............................ 2,255,799 1,397,584 1,252,416
Securities sold under agreements to repurchase... 23,045,000 23,090,000 4,700,000
Federal Home Loan Bank advances.................. 8,270,000 5,250,000 3,600,000
Accrued expenses and other liabilities........... 6,321,371 7,482,034 6,764,788
------------ ------------ ------------
Total liabilities........................ 261,655,641 258,430,755 249,282,480
------------ ------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 14)
NET WORTH:
Surplus.......................................... 6,025,846 6,025,846 6,025,846
Undivided profits................................ 22,007,142 21,468,663 18,603,160
Net unrealized gain on securities, net of
taxes......................................... 1,179,149 619,922 141,467
------------ ------------ ------------
Total net worth............................... 29,212,137 28,114,431 24,770,473
------------ ------------ ------------
Total liabilities and net worth.......... $290,867,778 $286,545,186 $274,052,953
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-3
<PAGE> 139
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN NET WORTH
(FOR THE THREE MONTHS ENDED AUGUST 31, 1997 (UNAUDITED) AND FOR THE YEARS ENDED
MAY 31, 1997, 1996 AND 1995)
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON SECURITIES
UNDIVIDED AVAILABLE-
SURPLUS PROFITS FOR-SALE, NET TOTAL
---------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
BALANCE, May 31, 1994................. $6,025,846 $16,633,815 $ (750,013) $21,909,648
Net income.......................... -- 503,765 -- 503,765
Unrealized appreciation
(depreciation) on securities
available-for-sale, net.......... -- -- 662,725 662,725
---------- ----------- --------- -----------
BALANCE, May 31, 1995................. 6,025,846 17,137,580 (87,288) 23,076,138
Net income.......................... -- 1,465,580 -- 1,465,580
Unrealized appreciation
(depreciation) on securities
available-for-sale, net.......... -- -- 228,755 228,755
---------- ----------- --------- -----------
BALANCE, May 31, 1996................. 6,025,846 18,603,160 141,467 24,770,473
Net income.......................... -- 2,865,503 -- 2,865,503
Unrealized appreciation
(depreciation) on securities
available-for-sale, net.......... -- -- 478,455 478,455
---------- ----------- --------- -----------
BALANCE, May 31, 1997................. $6,025,846 $21,468,663 $ 619,922 $28,114,431
Net income.......................... -- 538,479 -- 538,479
Unrealized appreciation
(depreciation) on securities
available-for-sale, net.......... -- -- 559,227 559,227
---------- ----------- --------- -----------
BALANCE, August 31, 1997.............. $6,025,846 $22,007,142 $1,179,149 $29,212,137
========== =========== ========= ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE> 140
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED AUGUST 31 FOR THE YEARS ENDED MAY 31
--------------------------- ------------------------------------------
1997 1996 1997 1996 1995
------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................... $ 538,479 $ 847,410 $ 2,865,503 $ 1,465,580 $ 503,765
Adjustments to reconcile net income to net cash
provided by (used in) operating activities --
Cumulative effect of change in accounting
principle...................................... -- -- -- -- 645,184
Depreciation..................................... 112,361 109,972 459,171 428,008 381,190
Amortization of premium on investment
securities..................................... 38,365 87,608 264,120 497,342 848,222
Accretion of discount on investment securities... (23,909) (64,310) (189,667) (509,755) (204,763)
Net (increase) decrease in accrued interest
receivable..................................... (36,340) (400,760) (154,589) 140,166 (102,179)
Net (increase) decrease in mortgage servicing
rights and other assets........................ 129,346 3,610,828 4,111,000 (2,165,524) (3,051,086)
Provision for loan losses........................ 304,000 20,000 130,000 140,000 261,000
Net (gain) loss on sales of loans................ (23,428) (17,420) (137,403) (118,807) (14,107)
Net (gain) loss on sale of securities............ (154,231) (696,155) (816,304) (356,266) 428,611
Net increase (decrease) in accrued interest
payable........................................ 110,301 (80,326) 10,496 (174,460) 530,548
Net increase (decrease) in accrued expenses and
other liabilities.............................. (1,320,362) 676,658 706,750 1,539,027 (580,955)
Purchase of trading securities................... (3,956,789) (6,855,762) (21,358,341) (22,733,683) --
Sales of trading securities...................... 3,956,789 3,003,955 17,485,771 22,667,672 --
------------ ------------ ------------ ------------ ------------
Net cash provided by (used in) operating
activities................................ (325,418) 241,698 3,376,507 819,300 (354,570)
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and calls of securities
held-to-maturity................................. -- 1,000,000 2,222,870 22,999,141 8,067,351
Proceeds from maturities and calls of securities
available- for-sale.............................. 3,000,000 2,000,000 10,202,052 16,577,155 4,000,000
Purchases of securities held-to-maturity........... -- -- (200,000) (525,539) (17,879,756)
Purchases of securities available-for-sale......... (18,617,728) (29,000,331) (49,185,133) (85,139,186) (15,879,228)
Proceeds from sales of securities
available-for-sale............................... 24,145,840 25,442,143 48,890,431 9,059,791 13,855,143
Principal repayments from mortgage-backed
securities....................................... 2,638,308 2,593,000 10,469,393 3,637,431 3,421,464
Purchases of Federal Home Loan Bank Stock.......... -- -- (553,200) (267,600) (910,500)
Net (increase) decrease in loans................... (16,659,857) (10,113,897) (29,187,635) 14,537,389 (14,608,051)
Purchases of banking premises and equipment, net... (949,188) (42,673) (240,610) 60,174 (201,060)
------------ ------------ ------------ ------------ ------------
Net cash used in investing activities....... (6,442,625) (8,121,758) (7,581,832) (19,061,244) (20,134,637)
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits................ 536,058 (7,961,433) (11,649,533) (882,800) 21,684,849
Net increase (decrease) in mortgage escrow funds... 866,020 477,250 395,059 3,051,380 305,796
Increase in borrowed funds......................... 2,975,000 17,200,000 20,040,000 8,300,000 --
------------ ------------ ------------ ------------ ------------
Net cash provided by financing activities... 4,377,078 9,715,817 8,785,526 10,468,580 21,990,645
------------ ------------ ------------ ------------ ------------
Increase (decrease) in cash and cash
equivalents............................... (2,390,965) 1,835,757 4,580,201 (7,773,364) 1,501,438
CASH AND CASH EQUIVALENTS, beginning of year......... 11,681,711 7,101,510 7,101,510 14,874,874 13,373,436
------------ ------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS, end of year............... $ 9,290,746 $ 8,937,267 $ 11,681,711 $ 7,101,510 $ 14,874,874
============ ============ ============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for --
Interest on deposits and borrowed funds.......... $ 2,248,000 $ 2,361,000 $ 9,365,666 $ 8,891,558 $ 6,297,235
Income taxes..................................... 477,500 745,000 2,117,500 -- 1,481,740
Reclassification from held-to-maturity to
available-for-sale............................... -- -- -- 26,180,452 --
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 141
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a description of the significant accounting policies
followed by The Warwick Savings Bank and subsidiaries (the "Bank") in the
preparation of its consolidated financial statements:
Basis of Presentation
The accompanying consolidated financial statements include the accounts of
the Bank and its wholly owned subsidiaries, Warsave Development Co., Inc., WSB
Financial Services, Inc., and WSB Mortgage Company of New Jersey, Inc., and are
prepared on the accrual basis. All significant intercompany balances and
transactions are eliminated in consolidation.
Unaudited Financial Information
All information as of August 31, 1997 and for the three-month periods ended
August 31, 1997 and 1996 is unaudited. The unaudited information furnished
reflects all adjustments, which consist solely of normal recurring accruals,
which are, in the opinion of management, necessary for a fair presentation of
the financial position at August 31, 1997 and the results of operations and cash
flows for the three-month periods ended August 31, 1997 and 1996. The results of
the three-month periods are not necessarily indicative of the results of the
Bank, which may be expected for the entire year.
Use of Estimates in the Preparation of Financial Statements
In preparing the consolidated financial statements, management is required
to make estimates and assumptions that affect the reported assets and
liabilities as of the date of the consolidated statements of financial
condition. The same is true of revenues and expenses reported for the period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
The Bank generally considers short-term instruments, with original
maturities of three months or less, measured from their acquisition date, and
highly liquid instruments readily convertible to known amounts of cash to be
cash equivalents.
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, amounts due from banks and federal funds sold. Generally, federal
funds sold are sold for one-day periods.
Securities
The Bank classifies its securities as trading securities,
available-for-sale securities, or held-to-maturity securities in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Trading securities are debt
and equity securities that are bought principally for the purpose of selling
them in the near term, and securities classified as held-to-maturity consist of
debt securities for which the Bank has the positive intent and ability to hold
to maturity and are carried at amortized cost. Securities considered neither
trading nor held-to-maturity are classified as available-for-sale securities and
are carried at fair value with unrealized gains and losses excluded from
earnings and reported as a separate component of net worth (net of related
deferred taxes). Trading securities are carried at fair value with unrealized
gains and losses included in earnings.
Federal Home Loan Bank stock is considered restricted stock under SFAS No.
115 and, accordingly, is carried at cost.
In November 1995, the Financial Accounting Standards Board ("FASB") issued
a special report on the implementation of SFAS No. 115. This special report
provided an opportunity for a one-time reassessment of
F-6
<PAGE> 142
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
an institution's classification of securities as of a single measurement date
between November 15, 1995 and December 31, 1995. In December 1995, the Bank
transferred $26,180,452 of U.S. Government agency securities and other
securities to available-for-sale from the held-to-maturity portfolio.
Loans
Loans are stated at the principal amount outstanding, net of unearned
income. Loans are placed on nonaccrual status when management has determined
that the borrower will be unable to meet contractual principal or interest
obligations or when unsecured interest or principal payments are 90 days past
due. When a loan is classified as nonaccrual, the recognition of interest income
ceases. Interest previously accrued and remaining unpaid is reversed against
income. Cash payments received are applied to principal and interest income is
not recognized unless management determines that the financial condition and
payment record of the borrower warrant the recognition of income.
Allowance for Loan Losses
The allowance for loan losses is based upon management's periodic
evaluation of the loan portfolio under current economic conditions, considering
factors such as the Bank's past loss experience, known and inherent risks in the
portfolio, adverse situations that may affect the borrower's ability to repay,
and the estimated value of the underlying collateral. Establishing the allowance
for loan losses involves significant management judgment, utilizing the best
available information at the time of review. Those judgments are subject to
further review by various sources, including the Bank's regulators. While
management estimates loan losses using the best available information, future
adjustments to the allowance may be necessary based on changes in economic and
real estate market conditions, further information obtained regarding known
problem loans, the identification of additional problem loans, and other
factors.
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," as
amended by SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan -- Income Recognition and Disclosures," was adopted by the Bank in fiscal
1995. Such change in accounting was not material to the consolidated financial
statements. SFAS 114 defines an impaired loan as a loan for which it is
probable, based on current information, that the lender will not collect all
amounts due under the contractual terms of the loan agreement. The Bank applies
the impairment criteria to all loans, except for large groups of smaller balance
homogenous loans that are collectively evaluated for impairment, such as
residential mortgage and consumer installment loans. Income recognition and
charge-off policies were not changed as a result of this statement. At August
31, 1997 and May 31, 1997 and 1996, in addition to the nonaccrual loans
discussed in Notes 4 and 5, there were $503,331, $504,265 and $25,600,
respectively, of loans identified by the Bank as impaired, as defined under SFAS
No. 114 with no related reserves for losses.
Mortgage Loans Held-for-Sale
Mortgage loans originated and intended for sale in the secondary market are
carried at the lower of cost or estimated fair value in the aggregate, with net
unrealized losses (if any) reported in earnings. Realized gains and losses on
sales of loans are based on the cost of the specific loans sold.
Loan Origination Fees and Related Costs
Loan fees and certain direct loan origination costs are deferred, and the
net fee or cost is recognized in income using the level-yield method over the
contractual life of the loans. Unamortized fees and costs on loans sold or
prepaid prior to contractual maturity are recognized as an adjustment to income
in the year such loans are sold or prepaid.
F-7
<PAGE> 143
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Mortgage Servicing Rights
In fiscal 1996, the Bank prospectively adopted SFAS No. 122, "Accounting
for Mortgage Servicing Rights." SFAS No. 122 requires that a mortgage banking
enterprise recognize as separate assets rights to service mortgage loans for
others; however, those servicing rights are acquired. As a result of adopting
SFAS No. 122, the Bank capitalized $443,739 of originated mortgage servicing
rights during fiscal 1996. In June 1996, the FASB issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities," which is effective for transactions occurring after December
31, 1996 (as amended by SFAS No. 127) and which supersedes SFAS No. 122. This
standard requires that, after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and the liabilities it
has incurred, and derecognizes financial assets when control has been
surrendered.
The cost of mortgage servicing rights (purchased or originated rights with
related loans sold) is amortized in proportion to, and over the period of,
estimated net servicing revenues. Impairment of mortgage servicing rights is
assessed based on the fair value of those rights. For purposes of measuring
impairment, the servicing rights are stratified based on the following
predominant risk characteristics of the underlying loans: (a) loan type and (b)
origination or securitization date.
Bank Premises and Equipment
Bank premises and equipment are carried at cost less accumulated
depreciation and amortization. Depreciation is computed on the straight-line
method over the estimated useful lives of the related assets. Equipment under
capital leases is amortized on the straight-line method over the shorter of the
lease term or the estimated useful life of the asset. Repairs and maintenance,
as well as renewals and replacements of a routine nature, are expensed while
costs incurred to improve or extend the life of existing assets are capitalized.
Other Real Estate Owned
Other real estate owned ("OREO") represents properties acquired through
legal foreclosure. Prior to transferring a real estate loan to OREO, the loan is
written down to the lower of the recorded investment in the loan or the fair
value of the property. Any resulting write-downs are charged to the allowance
for loan losses. Thereafter, the property is carried at the lower of cost or
fair value less costs to sell, with any adjustments recorded as an increase or
decrease to the allowance for losses on OREO.
Interest Income
Interest income includes interest income on loans and investment securities
and dividend income received on investment securities.
The operations of the Bank are substantially dependent on its net interest
income, which is the difference between the interest income earned on its
interest-earning assets and the interest expense paid on its interest-bearing
liabilities. Like most savings institutions, the Bank's earnings are affected by
changes in market interest rates and the economic factors beyond its control.
Decreases in the Bank's average interest rate spread could adversely affect the
Bank's net interest income.
Net Worth
The surplus fund primarily represents accumulated mandatory transfers from
undivided profits required by New York State banking regulations. Such mandatory
transfers are computed as 10% of "net earnings" as defined, and are required in
each calendar year quarter so long as the net worth of the Bank is less than 10%
of the amount due depositors.
F-8
<PAGE> 144
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
effects attributable to "temporary differences" (differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases) and tax loss and tax credit carryforwards. Deferred
tax assets are reduced by a valuation allowance if, based on an analysis of
available evidence, management determines that it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which the temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax laws or rates is recognized in income in the
period that includes the enactment date of the change.
Postretirement Benefits Other Than Pensions
The Bank changed its method of accounting for the cost of postretirement
health care and life insurance benefits in fiscal 1995 upon adoption of SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
The cumulative effect of this accounting change was fully recognized as a
liability in fiscal 1995 equal to the full amount of the Bank's accumulated
benefit obligation. Under SFAS No. 106, the cost of postretirement health care
and life insurance benefits is recognized on an accrual basis as such benefits
are earned by active employees. Prior to fiscal 1995, the Bank recognized the
cost of these benefits on a pay-as-you-go (cash) basis.
New Accounting Pronouncements
In March 1995, the FASB issued SFAS No. 121, entitled, "Accounting for the
Impairment of Long-Lived Assets to Be Disposed Of." This statement requires that
long-lived assets and certain identifiable intangibles held and used by an
entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable. The
pronouncement is effective for fiscal years beginning after December 15, 1995,
although earlier implementation is permitted.
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities." This statement
is effective for transfers and servicing of financial assets and extinguishment
of liabilities occurring after December 31, 1996.
The adoption of SFAS Nos. 121 and 125 did not have a material effect on the
Bank's financial statements.
In March 1997, the FASB issued SFAS No. 128 "Earnings per Share." SFAS No.
128 specifies the computations, presentation, and disclosure requirements for
Earnings per Share by all entities with publicly held common stock or potential
stock. SFAS 128 supersedes Accounting Principles Board Opinion No. 15 "Earnings
per Share." SFAS No. 128 is effective for financial statements for interim and
annual periods ending after December 15, 1997.
In March 1997, the FASB also issued SFAS No. 129 "Disclosure of Information
about Capital Structure." SFAS No. 129 is effective for financial statements for
periods ending after December 15, 1997. SFAS No. 129 does not change disclosure
requirements for the Bank.
In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive Income"
and SFAS No. 131 "Disclosures about Segments of an Enterprise and Related
Information." These statements are effective for fiscal years beginning after
December 15, 1997 and restatement of financial statements or information for
earlier periods provided for comparative purposes is required. The provisions of
these statements will not affect the Bank's results of operations or financial
condition.
F-9
<PAGE> 145
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUBSEQUENT EVENT -- CONVERSION TO STOCK FORM OF OWNERSHIP
On July 10, 1997, the Board of Trustees adopted a proposed Plan of
Conversion ("Plan") to convert the Bank from a New York mutual savings bank to a
New York stock savings bank and to become a wholly owned subsidiary of a new
Delaware corporation ("Company") to be organized at the direction of the Bank.
Pursuant to the Plan, the Company will issue and offer for sale certain shares
of its common stock and use up to 50% of the net proceeds of such sale to
acquire all of the capital stock of the Bank. The proposed transaction is
subject to the approval of the Superintendent of Banks of New York State and of
the Federal Deposit Insurance Corporation, as well as to a vote of Bank's
Eligible Account Holders (depositors of the Bank having a deposit of at least
$100 as of June 30, 1996). In addition, the Company will file a registration
statement with the Securities and Exchange Commission ("SEC") with respect to
the offering of its common stock and will seek the permission of the Federal
Reserve Board ("FRB") to acquire the stock of the Bank to be issued upon the
Bank's conversion.
At the time of conversion, the Bank will establish a liquidation account in
an amount equal to the retained income of the Bank as of the date of the most
recent financial statements contained in the final conversion prospectus. The
liquidation account will be reduced annually to the extent that eligible account
holders have reduced their qualifying deposits as of each anniversary date.
Subsequent increases will not restore an eligible account holder's interest in
the liquidation account. In the event of a complete liquidation, each eligible
account holder will be entitled to receive a distribution from the liquidation
account in an amount proportionate to the current adjusted qualifying balances
for accounts then held.
The Company may not declare or pay cash dividends on or repurchase any of
its shares of common stock if the effect thereof would cause stockholders'
equity to be reduced below applicable regulatory capital maintenance
requirements, the amount required for the liquidation account, or if such
declaration and payment would otherwise violate regulatory requirements.
Pursuant to the Plan, the Company intends to establish a Charitable
Foundation, Employee Stock Ownership Plan (ESOP), Stock Option Plan, Recognition
and Retention Plan, and Employment and Retention Agreements as discussed below.
The Company proposes to fund the Charitable Foundation by contributing to
the Charitable Foundation, immediately following the conversion, a number of
shares of authorized but unissued shares of the Common Stock equal to 3% of
Common Stock sold in the Offering. Such contribution, once made, will not be
recoverable by the Company or the Bank. The Company will recognize the full
expense equal to the fair value of the stock, in the amount of the contribution
in the quarter in which it occurs. Such expense will reduce earnings and have a
material impact on the Company's and the Bank's earnings for such quarter and
for the year.
The Company plans to set up an ESOP, a tax-qualified benefit plan for
officers and employees of the Company and the Bank. It is planned that 8% of the
shares of Common Stock sold in the Offering will be purchased by the ESOP with
funds loaned by the Company. The Company and the Bank intend to make annual
contributions to the ESOP in an amount equal to the principal and interest
requirement of the debt.
Following consummation of the conversion, the Company intends to adopt a
Stock Option Plan and a Recognition and Retention Plan, pursuant to which the
Company intends to reserve a number of shares of Common Stock equal to an
aggregate of 10% and 4%, respectively, of the Common Stock issued in the
conversion for issuance pursuant to stock options and stock appreciation rights
and stock. The Stock Option Plan and Recognition and Retention Plan will not be
implemented prior to receipt of stockholder approval of the Plan.
Upon consummation of the conversion, the Company and the Bank intend to
enter into employment agreements with certain senior management personnel and
retention agreements with other key employees.
F-10
<PAGE> 146
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Conversion costs will be deferred and reduce the proceeds from the shares
sold in the conversion. If the conversion is not completed, all costs will be
charged as an expense. As of August 31, 1997, $284,473 conversion costs had been
incurred.
The conversion will not affect the terms of any loans held by borrowers of
the Bank or the balances, interest rates, federal deposit insurance or
maturities of deposit accounts at the Bank.
A registration statement relating to the securities of the Company has not
yet been filed with the SEC. These securities may not be sold nor may offers to
buy be accepted prior to the time the registration statement becomes effective,
and the offering of these securities will be made only by means of a prospectus
to be included in such registration statement.
3. SECURITIES
A summary of securities at August 31, 1997, May 31, 1997 and 1996 follows:
<TABLE>
<CAPTION>
AUGUST 31, 1997
-------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
------------ ---------- --------- ------------
<S> <C> <C> <C> <C>
Securities available-for-sale:
Debt securities --
U.S. Government and agency
obligations........................ $ 30,087,995 $ 338,728 $ (15,753) $ 30,410,970
Industrial and financial............. 5,944,844 46,396 -- 5,991,240
Collateralized mortgage
obligations........................ 106,927 -- (60) 106,867
Mortgage-backed securities........... 67,696,952 1,230,692 (14,908) 68,912,736
------------ ---------- ---------- ------------
Total debt securities........... 103,836,718 1,615,816 (30,721) 105,421,813
Preferred stock......................... 101,654 2,596 -- 104,250
Mutual fund shares...................... 4,230,405 469,814 -- 4,700,219
------------ ---------- ---------- ------------
Total securities
available-for-sale............ 108,168,777 2,088,226 (30,721) 110,226,282
------------ ---------- ---------- ------------
Securities held-to-maturity:
U.S. Government and agency
obligations.......................... 5,695,368 22,750 (10,237) 5,707,881
Obligations of state and political
subdivisions......................... 406,408 2,348 -- 408,756
------------ ---------- ---------- ------------
Total securities held-to-maturity.... 6,101,776 25,098 (10,237) 6,116,637
------------ ---------- ---------- ------------
Total securities................ $114,270,553 $2,113,324 $ (40,958) $116,342,919
============ ========== ========== ============
</TABLE>
F-11
<PAGE> 147
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
MAY 31, 1997
-------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
------------ ---------- --------- ------------
<S> <C> <C> <C> <C>
Securities available-for-sale:
Debt securities --
U.S. Government and agency
obligations........................ $ 29,901,648 $ 160,787 $ (40,877) $ 30,021,558
Public utilities..................... 999,340 -- (7,710) 991,630
Industrial and financial............. 6,991,615 51,779 (5,700) 7,037,694
Collateralized mortgage
obligations........................ 2,695,832 -- (11,354) 2,684,478
Mortgage-backed securities........... 72,811,663 770,367 (310,970) 73,271,060
------------ ---------- ---------- ------------
Total debt securities........... 113,400,098 982,933 (376,611) 114,006,420
Preferred stock......................... 203,518 1,011 (29) 204,500
Mutual fund shares...................... 5,597,002 493,366 -- 6,090,368
Total securities
available-for-sale............ 119,200,618 1,477,310 (376,640) 120,301,288
------------ ---------- ---------- ------------
Securities held-to-maturity:
U.S. Government and agency
obligations.......................... 5,684,812 38,720 (16,932) 5,706,600
Obligations of state and political
subdivisions......................... 406,872 2,712 -- 409,584
------------ ---------- ---------- ------------
Total securities held-to-maturity.... 6,091,684 41,432 (16,932) 6,116,184
------------ ---------- ---------- ------------
Total securities................ $125,292,302 $1,518,742 $(393,572) $126,417,472
============ ========== ========== ============
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1996
---------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
------------ ---------- ----------- ------------
<S> <C> <C> <C> <C>
Trading securities -- mortgage-backed
securities............................. $ 1,991,573 $ -- $ (57,879) $ 1,933,694
------------ ---------- ----------- ------------
Securities available-for-sale:
Debt securities --
U.S. Government and agency
obligations....................... 37,012,296 150,946 (241,698) 36,921,544
Public utilities.................... 2,126,095 -- (31,218) 2,094,877
Industrial and financial............ 11,991,242 106,420 (26,147) 12,071,515
Canadian Government................. 2,085,660 4,320 -- 2,089,980
Collateralized mortgage
obligations....................... 4,973,345 5,372 (28,767) 4,949,950
Mortgage-backed securities.......... 67,663,132 1,081,310 (737,460) 68,006,982
------------ ---------- ----------- ------------
Total debt securities.......... 125,851,770 1,348,368 (1,065,290) 126,134,848
Preferred stock........................ 305,420 -- (28,545) 276,875
Mutual fund shares..................... 8,636,261 239,549 (55,119) 8,820,691
------------ ---------- ----------- ------------
Total securities
available-for-sale........... 134,793,451 1,587,917 (1,148,954) 135,232,414
------------ ---------- ----------- ------------
Securities held-to-maturity:
U.S. Government and agency
obligations......................... 6,603,426 38,434 (73,914) 6,567,946
Obligations of state and political
subdivisions........................ 431,542 5,704 -- 437,246
Public utilities....................... 82,500 -- -- 82,500
------------ ---------- ----------- ------------
Total securities held-to-maturity... 7,117,468 44,138 (73,914) 7,087,692
------------ ---------- ----------- ------------
Total securities............... $143,902,492 $1,632,055 $(1,280,747) $144,253,800
============ ========== =========== ============
</TABLE>
F-12
<PAGE> 148
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the carrying value of debt securities at August 31, 1997 by
contractual maturity is shown below. Actual maturities may differ from
contractual maturities because certain security issuers may have the right to
call or prepay their obligations.
<TABLE>
<CAPTION>
AFTER ONE AFTER FIVE
ONE YEAR THROUGH THROUGH AFTER TEN
OR LESS FIVE YEARS TEN YEARS YEARS TOTAL
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Available-for-sale -- U.S. Government and
agency obligations..................... $ 2,507,660 $ 7,178,590 $20,724,720 $ -- $ 30,410,970
Industrial and financial............... 5,001,130 221,727 768,383 -- 5,991,240
Collateralized mortgage obligations.... -- -- -- 106,867 106,867
Mortgage-backed securities............. 5,115,298 1,245,788 1,527,649 61,024,001 68,912,736
----------- ----------- ----------- ----------- ------------
Total available-for-sale........ $12,624,088 $ 8,646,105 $23,020,752 $61,130,868 $105,421,813
=========== =========== =========== =========== ============
Held-to-maturity -- U.S. Government and
agency obligations..................... $ 65,075 $ 5,630,293 $ -- $ -- $ 5,695,368
Obligations of state and political
subdivisions......................... 299,996 106,412 -- -- 406,408
----------- ----------- ----------- ----------- ------------
Total held-to-maturity.......... $ 365,071 $ 5,736,705 $ -- $ -- $ 6,101,776
=========== =========== =========== =========== ============
</TABLE>
A summary of the carrying value of debt securities at May 31, 1997 by
contractual maturity is shown below. Actual maturities may differ from
contractual maturities because certain security issuers may have the right to
call or prepay their obligations.
<TABLE>
<CAPTION>
AFTER ONE AFTER FIVE
ONE YEAR THROUGH THROUGH AFTER TEN
OR LESS FIVE YEARS TEN YEARS YEARS TOTAL
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Available-for-sale --
U.S. Government and agency
obligations.......................... $ 4,340,688 $ 7,651,440 $18,029,430 $ -- $ 30,021,558
Public utilities....................... -- 991,630 -- 991,630
Industrial and financial............... 4,998,600 1,279,231 759,863 -- 7,037,694
Collateralized mortgage obligations.... 1,982,980 16,635 684,863 -- 2,684,478
Mortgage-backed securities............. 8,743,499 5,841,923 1,555,406 57,130,232 73,271,060
----------- ----------- ----------- ----------- ------------
Total available-for-sale........ $20,065,767 $15,780,859 $21,029,562 $57,130,232 $114,006,420
=========== =========== =========== =========== ============
Held-to-maturity --
U.S. Government and agency............. $ 65,111 $ 5,619,701 $ -- $ -- $ 5,684,812
Obligations of state and political
subdivisions......................... 299,986 106,886 -- -- 406,872
----------- ----------- ----------- ----------- ------------
Total held-to-maturity.......... $ 365,097 $ 5,726,587 $ -- $ -- $ 6,091,684
=========== =========== =========== =========== ============
</TABLE>
Proceeds from sales of securities (trading and available-for-sale) are
summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31 YEARS ENDED MAY 31
------------------------- ---------------------------------------
1997 1996 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Proceeds from sales..... $28,102,629 $28,446,098 $66,376,202 $31,727,463 $13,855,143
Gross gains on sales.... $ 310,929 $ 697,195 $ 1,046,199 $ 545,577 $ 2,759
Gross losses on sales... $ 156,698 $ 1,040 $ 229,895 $ 189,311 $ 431,370
</TABLE>
No securities held-to-maturity were sold during the three months ended
August 31, 1997 and 1996 and the three years ended May 31, 1997.
F-13
<PAGE> 149
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. MORTGAGE LOANS
A summary of mortgage loans at August 31, 1997 and May 31, 1997 and 1996
follows:
<TABLE>
<CAPTION>
AUGUST 31,
1997 1997 1996
------------ ------------ -----------
<S> <C> <C> <C>
Conventional 1 - 4 family residential
loans originated........................ $ 94,227,679 $ 79,096,961 $58,942,371
Conventional 1 - 4 family residential
loans purchased......................... 2,520,149 2,706,457 2,993,821
Loans partially guaranteed by VA or
insured by FHA.......................... 728,396 748,520 375,572
Home equity loans......................... 14,369,382 13,449,077 11,040,096
Construction loans........................ 6,127,116 4,109,840 961,187
----------- ----------- -----------
117,972,722 100,110,855 74,313,047
Undisbursed portion of construction
loans................................... (2,192,690) (2,117,833) (1,838,169)
Net deferred loan fees.................... (395,762) (328,740) (139,923)
Allowance for loan losses................. (398,079) (224,079) (393,047)
----------- ----------- -----------
$114,986,191 $ 97,440,203 $71,941,908
=========== =========== ===========
</TABLE>
The Bank has sold certain conventional mortgage loans without recourse and
has retained the related servicing rights. The remaining principal balances of
mortgage loans serviced for others, which are not included in the accompanying
consolidated financial statements, were approximately $126,197,000, $122,311,000
and $100,016,000 at August 31, 1997 and May 31, 1997 and 1996, respectively.
Mortgage loans in arrears three months or more were approximately
$1,349,000, $1,214,000 and $692,000 at August 31, 1997 and May 31, 1997 and
1996, respectively. Mortgage loans on nonaccrual status at August 31, 1997 and
May 31, 1997 and 1996 were approximately $1,349,000, $1,111,000 and $582,000,
respectively. Interest income that would have been recorded if the loans had
been performing in accordance with their original terms aggregated approximately
$31,000 and $13,000 for the three months ended August 31, 1997 and 1996,
respectively, and $93,000, $54,000 and $88,000 during the years ended May 31,
1997, 1996 and 1995, respectively. During fiscal 1996, the Bank securitized
approximately $70 million of mortgage loans, which were reinvested in Fannie
Mae's mortgage-backed securities program.
5. OTHER LOANS
A summary of other loans at August 31, 1997, May 31, 1997 and 1996 follows:
<TABLE>
<CAPTION>
MAY 31
AUGUST 31, ---------------------------
1997 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Commercial.......................... $25,064,754 $23,417,939 $19,384,969
Automobile.......................... 7,632,057 7,738,516 7,495,811
Student............................. 1,345,438 1,331,569 1,532,747
Credit card......................... 1,345,529 1,334,548 1,195,377
Other consumer loans................ 3,019,561 3,053,852 3,102,389
----------- ----------- -----------
38,407,339 36,876,424 32,711,293
Net deferred loan fees.............. 212,203 182,590 102,104
Allowance for loan losses........... (968,866) (1,007,576) (911,718)
----------- ----------- -----------
$37,650,676 $36,051,438 $31,901,679
=========== =========== ===========
</TABLE>
F-14
<PAGE> 150
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Commercial loans in arrears three months or more were approximately
$78,000, $121,000 and $58,000 at August 31, 1997 and May 31, 1997 and 1996,
respectively. Commercial loans on nonaccrual status at August 31, 1997 and May
31, 1997 and 1996 were approximately $31,000, $26,000 and $51,000, respectively.
Consumer loans in arrears three months or more were approximately $37,000 and
$96,000 and $113,000 at August 31, 1997 and May 31, 1997 and 1996, respectively.
6. ALLOWANCE FOR LOAN LOSSES
The activity in the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31 YEARS ENDED MAY 31
----------------------- ------------------------------------
1997 1996 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at beginning of
period..................... $1,231,655 $1,304,765 $1,304,765 $1,206,486 $ 908,915
Provision for loan
losses.................. 304,000 20,000 130,000 140,000 261,000
Charge-offs................ (171,451) -- (213,042) (149,877) (108,379)
Recoveries................. 2,741 2,359 9,932 108,156 144,950
---------- ---------- ---------- ---------- ----------
Balance at end of period..... $1,366,945 $1,327,124 $1,231,655 $1,304,765 $1,206,486
========== ========== ========== ========== ==========
</TABLE>
7. MORTGAGE SERVICING RIGHTS
Mortgage servicing rights as of August 31, 1997 and May 31, 1997 and 1996
consist of the following:
<TABLE>
<CAPTION>
AUGUST MAY 31
31, ---------------------
1997 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Mortgage Servicing Rights.................. $944,958 $885,992 $681,004
Less -- Accumulated amortization......... (84,068) (50,913) (11,059)
-------- -------- --------
$860,890 $835,079 $669,945
======== ======== ========
</TABLE>
The Bank capitalized originated mortgage servicing rights of $48,483 and
$73,203 for the three months ended August 31, 1997 and 1996, respectively, and
$216,047 and $443,739 for the years ended May 31, 1997 and 1996, respectively.
8. BANK PREMISES AND EQUIPMENT
A summary of bank premises and equipment at August 31, 1997 and May 31,
1997 and 1996 follows:
<TABLE>
<CAPTION>
MAY 31
AUGUST 31, ---------------------------
1997 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Land........................................ $ 1,169,109 $ 340,587 $ 340,587
Buildings and improvements.................. 2,752,242 2,720,751 2,606,057
Equipment................................... 2,600,456 2,522,432 2,322,898
Furniture and fixtures...................... 595,386 584,896 562,322
----------- ----------- -----------
7,117,193 6,168,666 5,831,864
Less -- Accumulated depreciation............ (3,856,346) (3,742,835) (3,292,723)
----------- ----------- -----------
$ 3,260,847 $ 2,425,831 $ 2,539,141
=========== =========== ===========
</TABLE>
F-15
<PAGE> 151
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. DEPOSITOR ACCOUNTS
Deposit account balances and stated interest rates at August 31, 1997 and
May 31, 1997 and 1996 are summarized as follows:
<TABLE>
<CAPTION>
1997 1997 1996
STATED AUGUST 31, STATED MAY 31, STATED MAY 31,
RATES 1997 RATES 1997 RATES 1996
----------- ------------ ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Demand checking
accounts............ --% $ 25,385,759 --% $ 23,854,838 --% $ 23,080,009
Negotiable order of
withdrawal accounts
(NOW)............... 1.00 - 2.25 15,747,731 1.00 - 2.25 15,023,912 1.00 - 2.25 14,771,748
Savings accounts...... 3.00 79,072,478 3.00 80,175,311 3.00 80,813,613
Money market
accounts............ 2.35 - 3.50 25,811,305 2.35 - 3.50 27,119,239 2.35 - 3.50 28,750,026
Time certificates..... 4.30 - 5.50 75,746,198 4.30 - 5.50 75,037,837 4.30 - 5.50 85,549,880
------------ ------------ ------------
Total
deposits... $221,763,471 $221,211,137 $232,965,276
============ ============ ============
</TABLE>
Time certificate balances at August 31, 1997 and May 31, 1997 and 1996 are
summarized by remaining period to contractual maturity as follows:
<TABLE>
<CAPTION>
MAY 31
AUGUST 31, ---------------------------
1997 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Under one year...................... $70,286,939 $69,248,768 $78,548,354
One year to under three years....... 3,385,351 3,792,718 5,859,727
Three years and over................ 2,073,908 1,996,351 1,141,799
----------- ----------- -----------
$75,746,198 $75,037,837 $85,549,880
=========== =========== ===========
</TABLE>
The aggregate amount of time certificates in denominations of $100,000 or
more was approximately $5,779,000, $5,174,000 and $5,460,000 at August 31, 1997
and May 31, 1997 and 1996, respectively.
F-16
<PAGE> 152
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. INCOME TAXES
The tax effects of temporary differences that give rise to the Bank's
deferred tax assets and deferred tax liabilities, on a combined basis, for
federal and state tax purposes at August 31, 1997 and May 31, 1997 and 1996 are
as follows:
<TABLE>
<CAPTION>
MAY 31
AUGUST 31, -----------------
1997 1997 1996
---------- ------ ------
(000'S OMITTED)
<S> <C> <C> <C>
Deferred tax assets:
Allowance for loan losses............................ $ 560 $ 504 $ 540
Accrued postretirement benefits...................... 618 618 520
Other deductible temporary differences............... 196 141 157
------ ------ ------
Total gross deferred tax assets.............. 1,374 1,263 1,217
------ ------ ------
Deferred tax liabilities:
Bad debt reserves for income tax purposes in excess
of the base-year reserves......................... 289 289 422
Net unrealized gain on securities
available-for-sale................................ 842 438 59
Other taxable temporary differences.................. 176 479 377
------ ------ ------
Total gross deferred tax liabilities......... 1,307 1,206 858
------ ------ ------
Net deferred tax asset (included in other
assets).................................... $ 67 $ 57 $ 359
====== ====== ======
</TABLE>
Management believes that it is more likely than not that it will realize
the net deferred tax asset.
Provision for income taxes is comprised of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31 YEARS ENDED MAY 31
------------------- ------------------------------------
1997 1996 1997 1996 1995
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Current:
Federal....................... $330,824 $385,275 $1,302,494 $ 945,021 $ 827,582
State......................... 114,517 133,365 450,864 350,741 307,154
-------- -------- ---------- ---------- ----------
445,341 518,640 1,753,358 1,295,762 1,134,736
-------- -------- ---------- ---------- ----------
Deferred:
Federal....................... (67,414) 32,362 109,410 (198,026) (248,217)
State......................... (18,941) (31,621) (106,902) (73,496) (92,125)
-------- -------- ---------- ---------- ----------
(86,355) 741 2,508 (271,522) (340,342)
-------- -------- ---------- ---------- ----------
$358,986 $519,381 $1,755,866 $1,024,240 $ 794,394
======== ======== ========== ========== ==========
</TABLE>
F-17
<PAGE> 153
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The provision for income taxes for the three months ended August 31, 1997
and 1996 and the three years ended May 31, 1997 differs from that computed at
the federal statutory rate as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31 YEARS ENDED MAY 31
------------------- ----------------------------------
1997 1996 1997 1996 1995
-------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Tax at federal statutory rate............ $305,138 $464,709 $1,571,265 $ 846,539 $660,737
State taxes, net of federal income tax
benefit................................ 64,079 97,589 322,566 182,981 141,867
Excess New York State Bad Debt Reserve... -- -- (164,817) -- --
Other.................................... (10,231) (42,917) 26,852 (5,280) (8,210)
-------- -------- ---------- ---------- --------
Total income tax expense....... $358,986 $519,381 $1,755,866 $1,024,240 $794,394
======== ======== ========== ========== ========
Effective rate........................... 40.00% 38.00% 37.99% 41.14% 40.88%
======== ======== ========== ========== ========
</TABLE>
As a thrift institution, the Bank is subject to special provisions in the
federal and New York State tax laws regarding its allowable tax bad debt
deductions and related tax bad debt reserves. These deductions historically have
been determined using methods based on loss experience or a percentage of
taxable income. Tax bad debt reserves are maintained for qualifying real
property loans and for nonqualifying loans in amounts equal to the excess of
allowable deductions over actual bad debt losses and other reserve reductions. A
supplemental reserve is also maintained. The qualifying and nonqualifying loan
reserves consist of a defined base-year amount, plus additional amounts ("excess
reserves") accumulated after the base year. SFAS No. 109 requires recognition of
deferred tax liabilities with respect to such excess reserves, as well as any
portion of the base-year amount or the supplemental reserve which is expected to
become taxable (or "recaptured") in the foreseeable future.
Certain amendments to the federal and New York State tax bad debt
provisions were enacted in July and August 1996. The federal amendments include
elimination of the percentage-of-taxable-income method for tax years beginning
after December 31, 1995 and imposition of a requirement to recapture into
taxable income (over a six-year period) the qualifying and nonqualifying loan
reserves in excess of the base-year amounts. The Bank previously established,
and will continue to maintain a deferred tax liability with respect to such
excess federal reserves. The New York State amendments redesignate the Bank's
State bad debt reserves at May 31, 1997 as the base-year amount and also provide
for future additions to the base-year reserve using the
percentage-of-taxable-income method. This change effectively eliminated the
excess New York State reserves for which a deferred tax liability had been
recognized and, accordingly, the Bank reduced its deferred tax liability by
$164,817 (with a corresponding reduction in income tax expense) during the year
ended May 31, 1997.
In accordance with SFAS No. 109, deferred tax liabilities have not been
recognized with respect to the base-year and supplemental reserves, since the
Bank does not expect that these amounts will become taxable in the foreseeable
future. Under the tax laws as amended, events that would result in taxation of
these reserves include: (i) reductions in the reserves for purposes other than
tax bad debt losses, (ii) failure of the Bank to maintain a specified
qualifying-assets ratio or meet other thrift definition tests for New York State
tax purposes and (iii) certain stock redemptions, partial or complete
liquidation or distribution in excess of post-1951 earnings and profits. The
reserve balance of $4,713,000 at December 31, 1987 has not been subject to
deferred taxes.
11. BENEFIT PLANS
Pension Plan
All eligible employees of the Bank are included in a noncontributory
defined benefit pension plan administered by Actuarial Pension Analysts, Inc.
Under the terms of the Plan, participants vest 100% upon
F-18
<PAGE> 154
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
completion of five years of service as defined in the plan document. The Bank's
policy is to fund the consulting actuary's recommended contribution.
The funded status of the Bank's pension plan was as follows at August 31,
1997 and May 31, 1997 and 1996:
<TABLE>
<CAPTION>
MAY 31
AUGUST 31, -------------------------
1997 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Actuarial present value of benefit
obligations:
Accumulated benefit obligation, including
vested benefits of $3,287,749, $3,188,237
and $2,828,423, respectively............. $(3,302,668) $(3,203,156) $(3,139,230)
Effect of projected future compensation
levels................................... (915,896) (915,896) (695,801)
----------- ----------- -----------
Projected benefit obligation............. (4,218,564) (4,119,052) (3,835,031)
Plan assets at fair value, primarily fixed
income and
equity funds................................ 5,217,096 4,990,430 4,488,632
----------- ----------- -----------
Excess of plan assets over projected
benefit obligation..................... 998,532 871,378 653,601
Unrecognized net gain from past experience
different from that assumed and effect of
changes in assumptions...................... (670,859) (515,120) (220,562)
Unrecognized past service liability........... (43,838) (45,471) (52,005)
Unrecognized net transition asset............. (14,324) (19,099) (52,410)
----------- ----------- -----------
Net prepaid pension cost (included in
other assets).......................... $ 269,511 $ 291,688 $ 328,624
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
AUGUST 31 YEARS ENDED MAY 31
----------------- ---------------------------------
1997 1996 1997 1996 1995
------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net pension cost includes the
following components:
Service costs -- benefits
earned during the period.... $58,057 $44,121 $ 228,068 $ 176,483 $ 151,059
Interest cost on projected
benefit obligation.......... 74,746 66,685 275,763 266,739 247,131
Actual return on assets........ (99,516) (80,396) (357,442) (321,582) (264,534)
Amortization of transition
assets...................... (8,328) (8,328) (33,311) (33,311) (33,311)
Amortization of prior service
cost........................ (2,782) (1,506) (6,534) (6,024) (6,024)
-------- -------- --------- --------- ---------
Net pension cost............ $22,177 $20,576 $ 106,544 $ 82,305 $ 94,321
======== ======== ========= ========= =========
Major assumptions utilized as
follows:
Discount rate.................. 7.50% 7.50% 7.50% 7.50% 8.25%
Rate of increase in
compensation levels......... 5.50 5.50 5.50 5.50 6.00
Expected long-term rate of
return on Plan assets....... 8.00 8.00 8.00 8.00 8.00
</TABLE>
Postretirement Benefits Other Than Pensions
The Bank also sponsors postretirement defined benefit plans that cover
substantially all employees and provide health care (medical and dental)
benefits and life insurance benefits. Under the current plans,
F-19
<PAGE> 155
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
substantially all employees become eligible for benefits if they meet certain
age and length of service requirements. Beginning on April 25, 1996, the plans
require a partial employee contribution. Prior to that date, the plans were
noncontributory for the Bank's employees.
The Bank adopted SFAS No. 106 in fiscal 1995 and changed its method of
accounting for these postretirement benefits. Under SFAS No. 106, the cost of
postretirement health care and life insurance benefits is recognized on an
accrual basis as such benefits are earned by active employees. Prior to the
adoption of SFAS No. 106, the Bank recognized the cost of these benefits on a
cash basis.
The accumulated obligation for these benefits, upon adoption of SFAS No.
106, may be recognized as an immediate charge to earnings, or it may be
amortized to expense over a number of years. The Bank recognized in fiscal 1995
the full amount of its accumulated benefit obligation at the time of adoption as
a charge to earnings, which amounted to approximately $645,000, after deducting
a tax benefit of approximately $455,000.
At August 31, 1997 and May 31, 1997 and 1996, the actuarial and accrued
liabilities for postretirement health care and life insurance benefits, none of
which have been funded, were as follows:
<TABLE>
<CAPTION>
MAY 31
AUGUST 31, ------------------------
1997 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Accumulated postretirement benefit obligations:
Retirees....................................... $ 664,065 $ 629,490 $ 643,752
Other active participants...................... 747,617 654,434 721,147
---------- ---------- ----------
Accumulated postretirement benefit
obligation................................ 1,411,682 1,283,924 1,364,899
Unrecognized (gain) loss......................... (98,061) (200,486) 114,332
---------- ---------- ----------
Accrued postretirement benefit cost
(including
in other liabilities)..................... $1,509,743 $1,484,410 $1,250,567
========== ========== ==========
Effect of 1% increase in health care cost trend
rate -- accumulated postretirement benefit
obligation..................................... $ 154,095 $ 154,095 $ 186,040
========== ========== ==========
</TABLE>
Net periodic postretirement benefit cost is included in the following
components:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31 YEARS ENDED MAY 31
------------------ --------------------------------
1997 1996 1997 1996 1995
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Service cost -- benefits
attributed to service during
period.......................... $14,835 $18,039 $ 59,341 $ 72,156 $ 46,115
Interest cost on accumulated
postretirement benefit
obligation...................... 25,452 25,519 101,806 102,074 92,640
Amortization of prior service
cost............................ -- -- -- -- (59,693)
Amortization of (gains) losses.... (4,285) 3,461 (17,141) 13,845 (28,689)
------- ------- -------- -------- --------
Net periodic postretirement
benefit cost............... $36,002 $47,019 $144,006 $188,075 $ 50,373
======= ======= ======== ======== ========
</TABLE>
The accumulated postretirement benefit obligation was determined using the
projected unit cost method, as required by SFAS No. 106, and a discount rate of
8.00% in 1997, 7.50% in 1996 and 8.25% in 1995. The assumed rate of increase in
future health care costs was 9.50% in 1997, 10.0% in 1996 and 10.5% in 1995,
gradually decreasing to 5.0% in the year 2006 and remaining at that level
thereafter.
F-20
<PAGE> 156
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
401(k) Plan
The Bank has a 401(k) plan (the "Plan") covering substantially all
full-time employees. The Plan provides for employer matching contributions
subject to a specified maximum. Amounts charged to operations for the three
months ended August 31, 1997 and 1996 were approximately $23,000 and $21,000,
respectively. Amounts charged to operations for the years ended May 31, 1997,
1996 and 1995 were approximately $86,000, $65,000 and $61,000, respectively.
12. BORROWED FUNDS AND REPURCHASE AGREEMENTS
Securities sold under agreements to repurchase at August 31, 1997 and May
31, 1997 and 1996 which were transacted with a major securities firm are as
follows:
<TABLE>
<CAPTION>
AUGUST 31, 1997
-------------------------------
AMOUNT RATE MATURITY
----------- ---- --------
<S> <C> <C>
$ 660,000 5.66% 11/17/97
4,685,000 5.66 11/17/97
1,300,000 5.95 06/19/98
1,300,000 6.40 06/19/98
4,700,000 6.65 07/01/98
1,000,000 6.65 06/19/99
4,700,000 6.32 05/24/99
4,700,000 6.53 08/01/99
-----------
$23,045,000
==========
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1997
-------------------------------
AMOUNT RATE MATURITY
----------- ---- --------
<S> <C> <C>
$ 705,000 5.69% 06/18/97
4,685,000 5.69 06/18/97
1,300,000 6.00 06/19/97
1,300,000 6.40 06/19/98
4,700,000 6.65 07/01/98
1,000,000 6.65 06/19/99
4,700,000 6.32 05/24/99
4,700,000 6.53 08/01/99
-----------
$23,090,000
==========
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1996
------------------------------
AMOUNT RATE MATURITY
---------- ---- --------
<S> <C> <C>
$4,700,000 6.32% 08/96
=========
</TABLE>
Information relating to borrowings under repurchase agreements are
summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31 YEARS ENDED MAY 31
------------------------- -------------------------------------
1997 1996 1997 1996 1995
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Average balance during the
year.................... $23,080,994 $12,798,924 $19,685,315 $ 101,075 $ 875,000
Average interest rates
during the year......... 6.42% 6.42% 6.20% 6.32% 5.82%
Maximum month-end balance
during the year......... 23,090,000 18,450,000 23,300,000 4,700,000 4,500,000
Securities underlying
agreement at year-end:
Amortized cost.......... 25,080,400 21,075,838 25,470,851 5,000,000 --
Estimated market
value................ 25,403,619 20,894,180 25,508,437 4,981,000 --
</TABLE>
F-21
<PAGE> 157
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Federal Home Loan Bank advances are as follows at August 31, 1997 and May
31, 1997 and 1996:
<TABLE>
<CAPTION>
AVAILABLE OUTSTANDING RATE MATURITY
----------- ----------- ----- ----------
<S> <C> <C> <C> <C>
August 31, 1997:
Revolving line of credit.......... $14,417,000 $ 3,020,000 5.69% Daily
Repricing line of credit.......... 14,417,000 -- -- Monthly
Term loans........................ -- 250,000 6.96 06/19/2000
-- 5,000,000 5.79 12/18/2001
----------- ----------
$28,834,000 $ 8,270,000
=========== ==========
May 31, 1997:
Revolving line of credit.......... $14,417,000 $ -- --% Daily
Repricing line of credit.......... 14,417,000 -- -- Monthly
Term loans........................ -- 250,000 6.96 06/19/2000
-- 5,000,000 5.79 12/18/2001
----------- ----------
$28,834,000 $ 5,250,000
=========== ==========
May 31, 1996:
Revolving line of credit.......... $12,922,000 $ 1,600,000 5.563% Daily
Repricing line of credit.......... 12,922,000 -- -- Monthly
Term loan......................... 2,000,000 2,000,000 5.500 May 1997
----------- ----------
$27,844,000 $ 3,600,000
=========== ==========
</TABLE>
In addition, the Bank has a $5 million line of credit and a $10 million
line of credit with two commercial banks which expire on November 30, 1997. As
of August 31, 1997 and May 31, 1997 and 1996, the credit lines were unused.
13. REGULATORY CAPITAL REQUIREMENTS
The Bank is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory and, possibly, additional discretionary actions
by regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities and certain off-balance sheet items calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier 1 capital (as defined in the regulations) to risk
weighted assets (as defined) and of Tier 1 capital (as defined) to average
assets (as defined). Management believes, as of August 31, 1997, that the Bank
meets all capital adequacy requirements to which it is subject.
The most recent notification from the Federal Deposit Insurance Corporation
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the Bank must
maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage ratios as
set forth in the table. There are no conditions or events since that
notification that management believes have changed the institution's category.
F-22
<PAGE> 158
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Bank's actual capital amounts and ratios are also presented in the
following table (000's omitted):
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED
UNDER
PROMPT
FOR CAPITAL CORRECTIVE
ADEQUACY ACTION
ACTUAL PURPOSES PROVISIONS
---------------- ---------------- ----------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
As of August 31, 1997:
Total Capital (to risk weighted
assets).............................. $29,400 20.12% $11,689 *8.0% $14,611 *10.0%
Tier 1 Capital (to risk weighted
assets).............................. 28,033 19.19 5,845 *4.0 8,767 *6.0
Tier 1 Capital (to average assets)...... 28,033 9.81 11,430 *4.0 14,287 *5.0
As of May 31, 1997:
Total Capital (to risk weighted
assets).............................. $28,726 20.33% $11,302 *8.0% $14,127 *10.0%
Tier 1 Capital (to risk weighted
assets).............................. 27,495 19.46 5,651 *4.0 8,476 *6.0
Tier 1 Capital (to average assets)...... 27,495 9.53 11,535 *4.0 14,419 *5.0
As of May 31, 1996:
Total Capital (to risk weighted
assets).............................. $25,934 18.45% $11,246 *8.0% $14,057 *10.0%
Tier 1 Capital (to risk weighted
assets).............................. 24,629 17.52 5,623 *4.0 8,434 *6.0
Tier 1 Capital (to average assets)...... 24,629 9.51 10,361 *4.0 12,952 *5.0
</TABLE>
14. COMMITMENTS AND CONTINGENCIES
Lease Commitments
At August 31, 1997, the Bank was obligated under noncancelable operating
leases for office space. Minimum future obligations under the leases are as
follows:
<TABLE>
<S> <C>
1998............................................ $123,935
1999............................................ 10,328
2000............................................ --
2001............................................ --
2002............................................ --
Thereafter...................................... --
--------
$134,263
========
</TABLE>
Rental expense included in the statements of income was approximately
$66,738 and $62,649 for the three-month periods ended August 31, 1997 and 1996,
respectively.
Rental expense included in the statements of income was approximately
$267,000, $249,000 and $238,000 for the years ended May 31, 1997, 1996 and 1995,
respectively.
In 1993, the Bank entered into an agreement with a company to provide data
processing services. Such agreement expires in July 2000. The commitment for
future payments fluctuates with the level of service provided. The costs
incurred in connection with this agreement are included in data processing
expenses in the accompanying statements of income.
F-23
<PAGE> 159
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Loan Commitments
Loan commitments and unused lines of credit as of August 31, 1997 and May
31, 1997 are as follows (with comparative totals as of May 31, 1996):
<TABLE>
<CAPTION>
AUGUST 31, 1997
------------------------------------------
COMMITMENTS
TO UNUSED
ORIGINATE LINES OF
LOANS CREDIT TOTAL
----------- ---------- -----------
<S> <C> <C> <C>
Mortgage loans............................... $14,243,611 $ -- $14,243,611
Construction loans........................... 6,620,376 -- 6,620,376
Commercial loans............................. 1,766,000 4,992,429 6,758,429
Other loans.................................. 5,946,410 -- 5,946,410
----------- ---------- -----------
Total as of August 31, 1997........ $28,576,397 $4,992,429 $33,568,926
=========== ========== ===========
Total as of August 31, 1996........ $22,995,659 $6,092,292 $29,087,951
=========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1997
------------------------------------------
COMMITMENTS
TO UNUSED
ORIGINATE LINES OF
LOANS CREDIT TOTAL
----------- ---------- -----------
<S> <C> <C> <C>
Mortgage loans............................... $19,189,757 $ -- $19,189,757
Construction loans........................... 4,599,600 -- 4,599,600
Commercial loans............................. 345,000 4,275,202 4,620,202
Other loans.................................. 5,877,312 -- 5,877,312
----------- ---------- -----------
Total as of May 31, 1997........... $30,011,669 $4,275,202 $34,286,871
=========== ========== ===========
Total as of May 31, 1996........... $20,765,251 $9,344,404 $30,109,655
=========== ========== ===========
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since commitments may expire, the total
commitment amounts do not necessarily represent future cash requirements.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the loan commitments is represented by their contractual amount.
The Bank controls the credit risk of loan commitments through credit approvals,
limits and monitoring procedures. The amount of collateral obtained, if deemed
necessary, is based on management's credit evaluation of the borrower.
CONCENTRATION OF CREDIT RISK
The Bank grants residential mortgage loans, construction loans, commercial
loans and consumer loans to customers located primarily in Orange County, New
York and the surrounding counties of Rockland and Dutchess in New York. The
borrowers' ability to repay loan principal and accrued interest is dependent
upon, among other things, the economic conditions prevailing in the Bank's
lending area.
HEDGING
In the normal course of business, the Bank uses off-balance sheet financial
instruments primarily as part of mortgage-banking hedging strategies. Such
instruments generally include put options purchased and forward commitments to
sell mortgage loans. As a result of interest rate fluctuations, these
off-balance sheet financial instruments will develop unrealized gains or losses
that mitigate changes in the underlying hedged
F-24
<PAGE> 160
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
portion of the balance sheet. When effectively used, these off-balance sheet
financial instruments are designed to moderate the impact on earnings as
interest rates move up or down.
Nationar
One of the Bank's correspondents was Nationar, a state-chartered trust
company. The Bank had used Nationar for in-clearing of bank checks, money orders
and ACH returns. On February 6, 1995, the New York State Superintendent of
Banking (the "Superintendent") took possession of the business and property of
Nationar. At that time, customer accounts were frozen, including approximately
$3.9 million of the Bank's assets primarily consisting of cash balances. The
Superintendent maintained the continued operations of Nationar, managed the
process of selling Nationar's assets and prepared the initial accounting of
Nationar's assets and liabilities.
On June 27, 1996, the Bank received payment of $3.5 million, and
subsequently received additional payments of $211,595, $3,800 and $75,000 on
July 18, 1996, November 12, 1996 and April 22, 1997, respectively. The Bank
wrote off its investment in Nationar securities of approximately $97,000 in
fiscal 1995.
Litigation
The Bank is involved in legal proceedings incurred in the normal course of
business. In the opinion of management, none of these proceedings are expected
to have a material effect on the consolidated financial position or results of
operations of the Bank.
15. DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
Cash and Due from Banks and Federal Funds Sold
For these short-term instruments, the carrying amount is a reasonable
estimate of fair value.
Accrued Interest and FHLB Stock
The carrying amount is a reasonable estimate of fair value.
Securities
Fair values for securities are based on quoted market prices or dealer
quotes. If a quoted market price is not available, fair value is estimated using
quoted market prices for similar securities.
Loans, net
For certain homogeneous categories of loans, such as some residential
mortgages and other consumer loans, fair value is estimated using the quoted
market prices for securities backed by similar loans, adjusted for differences
in loan characteristics.
For other loan types, fair value is based on the credit and interest rate
characteristics of individual loans. These loans are stratified by type,
maturity, interest rate, underlying collateral, where applicable, and credit
quality ratings. Fair value is estimated by discounting scheduled cash flows
through estimated maturities using discount rates which in management's opinion,
best reflect current market interest rates that would be charged on loans with
similar characteristics and credit quality. Credit risk concerns are reflected
by adjusting cash flow forecasts, by adjusting the discount rate or by adjusting
both.
F-25
<PAGE> 161
THE WARWICK SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Depositor Accounts
The fair value of demand deposits, savings accounts and certain money
market deposits is the amount payable on demand at the reporting date. The fair
value of fixed-maturity certificates of deposit is estimated using the rates
currently offered for deposits of similar remaining maturities.
Mortgage Escrow Funds and Borrowed Funds
The carrying amount is a reasonable estimate of fair value.
The following is a summary of the carrying values and estimated fair values
of the Bank's financial assets and liabilities at August 31, 1997 and May 31,
1997 and 1996 (000's omitted):
<TABLE>
<CAPTION>
MAY 31
-----------------------------------------
AUGUST 31, 1997 1997 1996
------------------- ------------------- -------------------
CARRYING FAIR CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE VALUE VALUE
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Financial assets:
Cash on hand and in banks........ $ 9,291 $ 9,291 $ 10,367 $ 10,367 $ 7,102 $ 7,102
Federal funds sold............... -- -- 1,315 1,315 -- --
Securities....................... 116,328 116,343 126,393 126,417 144,284 144,254
Loans, net....................... 154,665 155,742 138,323 139,126 108,897 109,553
Accrued interest receivable...... 2,144 2,144 2,097 2,097 1,942 1,942
Federal Home Loan Bank stock..... 1,731 1,731 1,731 1,731 1,178 1,178
Financial liabilities:
Demand, NOW, statement savings
and passbook, and money market
accounts...................... $146,017 $146,017 $146,173 $146,173 $147,415 $147,415
Time certificate accounts........ 75,746 75,821 75,038 75,003 85,550 85,886
Mortgage escrow funds............ 2,256 2,256 1,398 1,398 1,252 1,252
Borrowed funds................... 31,315 31,315 28,340 28,340 8,300 8,300
Accrued interest payable......... 1,322 1,322 1,211 1,211 1,201 1,201
</TABLE>
F-26
<PAGE> 162
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY WARWICK COMMUNITY BANCORP, INC., THE WARWICK SAVINGS BANK OR
SANDLER O'NEILL & PARTNERS, L.P. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF WARWICK COMMUNITY BANCORP, INC. OR
THE WARWICK SAVINGS BANK SINCE ANY OF THE DATES AS OF WHICH INFORMATION IS
FURNISHED HEREIN OR SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary................................... 5
Selected Consolidated Financial and Other
Data of the Bank........................ 15
Risk Factors.............................. 17
Warwick Community Bancorp, Inc. .......... 24
The Warwick Savings Bank.................. 24
Use of Proceeds........................... 25
Dividend Policy........................... 27
Market for the Common Stock............... 28
Regulatory Capital Compliance............. 29
Capitalization............................ 30
Pro Forma Data............................ 32
Comparison of Valuation and Pro Forma Data
With and Without Foundation............. 36
The Warwick Savings Bank and Subsidiaries
Consolidated Statements of Income....... 37
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 38
Business of the Company................... 52
Business of the Bank...................... 53
Federal and State Taxation................ 76
Regulation and Supervision................ 78
Management of the Company................. 89
Management of the Bank.................... 90
The Conversion............................ 102
Restrictions on Acquisition of the Company
and the Bank............................ 123
Description of Capital Stock of the
Company................................. 131
Description of Capital Stock of the
Bank.................................... 132
Transfer Agent and Registrar.............. 133
Experts................................... 133
Other Information......................... 133
Legal and Tax Opinions.................... 133
Additional Information.................... 134
Index to Financial Statements............. F-1
</TABLE>
------------------------
UNTIL THE LATER OF , 199 , OR 25 DAYS AFTER
THE COMMENCEMENT OF THE COMMUNITY OFFERING, IF ANY, ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
======================================================
5,577,500 SHARES
[LOGO]
WARWICK COMMUNITY BANCORP, INC.
(PROPOSED HOLDING COMPANY FOR
THE WARWICK SAVINGS BANK)
COMMON STOCK
------------------------
PROSPECTUS
------------------------
Sandler O'Neill & Partners, L.P.
NOVEMBER , 1997
======================================================
<PAGE> 163
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
New York State Banking Department application fee................................ $ 5,000
SEC registration fee(1).......................................................... 20,020
National Association of Securities Dealers filing fee(1)......................... 7,107
Nasdaq National Market Listing Fee(1)............................................ 34,017
Printing, postage and mailing.................................................... 225,000
Legal fees and expenses.......................................................... 480,000
Marketing fees and selling commissions(1)........................................ 1,075,000
Financial advisor expenses (excluding legal fees)................................ 5,000
Accounting fees and expenses..................................................... 250,000
Appraiser's fees and expenses (including preparing business plan)................ 25,000
Transfer agent and registrar fees and expenses................................... 8,000
Conversion agent fees and expenses............................................... 12,500
Certificate printing............................................................. 5,000
Telephone, temporary help and other equipment.................................... 10,000
Blue Sky fees and expenses (including fees of counsel)........................... 15,000
Miscellaneous.................................................................... 10,000
----------
TOTAL............................................................................ $2,186,644
==========
</TABLE>
- ---------------
(1) Actual expenses based upon the registration of 6,606,549 and sale of
6,414,125 shares each at $10.00 per share. All other expenses are estimated.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL"), inter alia,
empowers a Delaware corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (other than an action by or in the right of the corporation)
by reason of the fact that such person is or was a director, officer, employee
or agent of another corporation or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Similar indemnity is authorized for such person against expenses
(including attorneys' fees) actually and reasonably incurred in connection with
the defense or settlement of any such threatened, pending or completed action or
suit if such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and provided
further that (unless a court of competent jurisdiction otherwise provides) such
person shall not have been adjudged liable to the corporation. Any such
indemnification may be made only as authorized in each specific case upon a
determination by the stockholders or disinterested directors or by independent
legal counsel in a written opinion that indemnification is proper because the
indemnitee has met the applicable standard of conduct.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him, and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145.
II-1
<PAGE> 164
Article IX of the Certificate of Incorporation of Warwick Community
Bancorp, Inc. (the "Company") provides that a director shall not be personally
liable to the Company or its shareholders for damages for breach of his
fiduciary duty as a director, except to the extent such exemption from liability
or limitation thereof is expressly prohibited by the DGCL. Article X of the
Company's Certificate of Incorporation requires the Company, among other things,
to indemnify to the fullest extent permitted by the DGCL, any person who is or
was or has agreed to become a director or officer of the Company, who was or is
made a party to, or is threatened to be made a party to, or has become a witness
in, any threatened, pending or completed action, suit or proceeding, including
actions or suits by or in the right of the Company, by reason of such agreement
or service or the fact that such person is, was or has agreed to serve as a
director, officer, employee or agent of another corporation or organization at
the request of the Company.
Article X also empowers the Company to purchase and maintain insurance to
protect itself and its directors and officers, and those who were or have agreed
to become directors or officers, against any liability, regardless of whether or
not the Company would have the power to indemnify those persons against such
liability under the law or the provisions set forth in the Certificate of
Incorporation. The Company is also authorized by its Certificate of
Incorporation to enter into individual indemnification contracts with directors
and officers. The Warwick Savings Bank currently maintains and the Company
expects to purchase directors' and officers' liability insurance consistent with
the provisions of the Certificate of Incorporation as soon as practicable.
The Company expects to enter into employment agreements with certain
executive officers, which agreements are expected to require that the Company
will obtain a directors' and officers' liability policy for the benefit of such
officers or that the Company will indemnify such officers to the fullest extent
provided by law.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not Applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The exhibits filed as a part of this Registration Statement are as follows:
(A). LIST OF EXHIBITS. (Filed herewith unless otherwise noted.)
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------
<C> <S>
1.1 Engagement Letter, dated July 10, 1997, between The Warwick Savings Bank and
Sandler O'Neill & Partners, L.P.*
1.2 Form of Agency Agreement
2.1 Amended and Restated Plan of Conversion of The Warwick Savings Bank
3.1 Certificate of Incorporation of Warwick Community Bancorp, Inc.*
3.2 By-Laws of Warwick Community Bancorp, Inc.*
3.3 Restated Organization Certificate of The Warwick Savings Bank
3.4 By-Laws of The Warwick Savings Bank*
4.1 Certificate of Incorporation of Warwick Community Bancorp, Inc. (See Exhibit 3.1)
4.2 By-Laws of Warwick Community Bancorp, Inc. (See Exhibit 3.2)
4.3 Form of Stock Certificate of Warwick Community Bancorp, Inc.*
4.4 Form of Stock Certificate of The Warwick Savings Bank
5.1 Opinion of Thacher Proffitt & Wood regarding legality of the shares issued
8.1 Opinion of Thacher Proffitt & Wood regarding federal and New York State taxation
8.2 Opinion of FinPro, Inc. regarding Subscription Rights
10.1 Warwick Community Bancorp, Inc. Employee Stock Ownership Plan*
10.2 The Warwick Savings Bank 401(k) Savings Plan
10.3 Form of ESOP Loan Commitment Letter and ESOP Loan Documents
</TABLE>
II-2
<PAGE> 165
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------
<C> <S>
10.4 Form of Employment Agreement between Warwick Community Bancorp, Inc. and certain
executive officers
10.5 Form of Employee Retention Agreement by and among The Warwick Savings Bank and
certain employees
10.6 Benefit Restoration Plan of The Warwick Savings Bank*
10.7 Engagement Letter, dated July 11, 1997, between The Warwick Savings Bank and
FinPro, Inc. for conversion appraisal services and for services related to the
preparation of the business plan*
10.8 Engagement Letter, dated July 10, 1997, between The Warwick Savings Bank and
Sandler O'Neill & Partners, L.P. for conversion agent services*
16.1 Letter of KPMG Peat Marwick LLP certifying as to change in accountants
21.1 Subsidiaries of the Registrant*
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Thacher Proffitt & Wood (Included in Exhibits 5.1 and 8.1)
23.3 Consent of FinPro, Inc.*
23.4 Consent of William M. Mercer, Incorporated
24.1 Power of Attorney*
27.1 Financial Data Schedule (Submitted only with filing in electronic format)
99.1(a) Appraisal Report of FinPro, Inc.
99.1(b) Updated Appraisal Report of FinPro, Inc.
99.2 Form of Marketing Materials to be used in connection with the Offerings
99.3 Draft of The Warwick Savings Foundation Gift Instrument
</TABLE>
- ---------------
* Previously filed.
(B). FINANCIAL STATEMENT SCHEDULES.
All schedules have been omitted as not applicable or not required under the
rules of Regulation S-X.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-3
<PAGE> 166
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the Offering.
The undersigned Registrant hereby undertakes to provide to the agent at the
closing specified in the Agency Agreement, certificates in such denominations
and registered in such names as required by the agent to permit prompt delivery
to each purchaser.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 167
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Warwick, State of New
York, on October 30, 1997.
WARWICK COMMUNITY BANCORP, INC.
By: /s/ TIMOTHY A. DEMPSEY
------------------------------------
Timothy A. Dempsey
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement, has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------ -------------------------------- -----------------
<C> <S> <C>
/s/ TIMOTHY A. DEMPSEY Director, President and Chief October 30,1997
- ------------------------------------------ Executive Officer (Principal
Timothy A. Dempsey executive officer)
/s/ RONALD J. GENTILE Director, Executive Vice October 30, 1997
- ------------------------------------------ President and Chief Operating
Ronald J. Gentile Officer
* Senior Vice President, Treasurer October 30, 1997
- ------------------------------------------ and Chief Financial Officer
Arthur W. Budich (Principal financial and
accounting officer)
* Director October 30, 1997
- ------------------------------------------
Frances M. Gorish
* Director October 30, 1997
- ------------------------------------------
R. Michael Kennedy
* Director October 30, 1997
- ------------------------------------------
Fred M. Knipp
* Director October 30, 1997
- ------------------------------------------
Emil R. Krahulik
* Director October 30, 1997
- ------------------------------------------
Thomas F. Lawrence, Jr.
* Director October 30, 1997
- ------------------------------------------
Henry L. Nielsen, Jr.
</TABLE>
<PAGE> 168
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------ -------------------------------- -----------------
<C> <S> <C>
* Director October 30, 1997
- ------------------------------------------
John W. Sanford III
* Director October 30, 1997
- ------------------------------------------
Robert N. Smith
*By /s/ RONALD J. GENTILE
- -------------------------------
(Ronald J. Gentile)
as attorney-in-fact pursuant to
a Power of Attorney filed on
September 19, 1997.
</TABLE>
<PAGE> 169
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------------------------------------------------------------------- ------------
<C> <S> <C>
1.1 Engagement Letter, dated July 10, 1997, between The Warwick Savings
Bank and Sandler O'Neill & Partners, L.P.*
1.2 Form of Agency Agreement
2.1 Amended and Restated Plan of Conversion of The Warwick Savings Bank
3.1 Certificate of Incorporation of Warwick Community Bancorp, Inc.*
3.2 By-Laws of Warwick Community Bancorp, Inc.*
3.3 Restated Organization Certificate of The Warwick Savings Bank
3.4 By-Laws of The Warwick Savings Bank*
4.1 Certificate of Incorporation of Warwick Community Bancorp, Inc. (See
Exhibit 3.1)
4.2 By-Laws of Warwick Community Bancorp, Inc. (See Exhibit 3.2)
4.3 Form of Stock Certificate of Warwick Community Bancorp, Inc.*
4.4 Form of Stock Certificate of The Warwick Savings Bank
5.1 Opinion of Thacher Proffitt & Wood regarding legality of the shares
issued
8.1 Opinion of Thacher Proffitt & Wood regarding federal and New York State
taxation
8.2 Amended Opinion of FinPro, Inc. regarding Subscription Rights
10.1 Warwick Community Bancorp, Inc. Employee Stock Ownership Plan*
10.2 The Warwick Savings Bank 401(k) Savings Plan
10.3 Form of ESOP Loan Documents
10.4 Form of Employment Agreement between Warwick Community Bancorp, Inc.
and certain executive officers
10.5 Form of Employee Retention Agreement by and among The Warwick Savings
Bank and certain employees
10.6 Benefit Restoration Plan of The Warwick Savings Bank*
10.7 Engagement Letter, dated July 11, 1997, between The Warwick Savings
Bank and FinPro, Inc. for conversion appraisal services and for
services related to the preparation of the business plan*
10.8 Engagement Letter, dated July 10, 1997, between The Warwick Savings
Bank and Sandler O'Neill & Partners, L.P. for conversion agent
services*
16.1 Letter of KPMG Peat Marwick LLP certifying as to change in accountants
21.1 Subsidiaries of the Registrant*
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Thacher Proffitt & Wood (Included in Exhibits 5.1 and 8.1)
23.3 Consent of FinPro, Inc.*
23.4 Consent of William M. Mercer, Incorporated
24.1 Power of Attorney*
27.1 Financial Data Schedule (Submitted only with filing in electronic
format)
99.1(a) Appraisal Report of FinPro, Inc.
99.1(b) Updated Appraisal Report of FinPro, Inc.
99.2 Form of Marketing Materials to be used in connection with the Offerings
99.3 Draft of The Warwick Savings Foundation Gift Instrument
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 1.2
5,577,500 Shares
(subject to increase up to 6,414,100 shares
in the event of an oversubscription)
WARWICK COMMUNITY BANCORP, INC.
(a Delaware corporation)
Common Stock
(par value $.01 per share)
AGENCY AGREEMENT
____________ , 1997
SANDLER O'NEILL & PARTNERS, L.P.
Two World Trade Center, 104th Floor
New York, New York 10048
Ladies and Gentlemen:
Warwick Community Bancorp, Inc., a Delaware corporation (the
"Company"), and The Warwick Savings Bank, a New York mutual savings bank (the
"Bank"), hereby confirm their agreement with Sandler O'Neill & Partners, L.P.
("Sandler O'Neill" or the "Agent") with respect to the offer and sale by the
Company of 5,577,500 shares (subject to increase up to 6,414,100 shares in the
event of an oversubscription) of the Company's common stock, par value $.01 per
share (the "Common Stock"). The shares of Common Stock to be sold by the Company
are hereinafter called the "Securities." In addition, as described herein, the
Company expects to contribute shares of Common Stock in an amount equal to 3% of
the shares of Common Stock sold in the Offerings (as hereinafter defined) to The
Warwick Savings Foundation (the "Foundation"), such shares hereinafter being
referred to as the "Foundation Shares."
The Securities are being offered for sale and the Foundation Shares
are being contributed in accordance with the plan of conversion (the "Plan")
adopted by the Board of Directors of the Bank pursuant to which the Bank intends
to convert from a New York state chartered mutual savings bank to a New York
state chartered stock savings bank and issue all of its stock to the Company.
Pursuant to the Plan, the Company is offering to the Bank's tax qualified
employee benefit plans (the "Employee Plans") and to certain of the Bank's
depositors rights to subscribe for the Securities in a subscription offering
(the "Subscription Offering"). To the extent that Securities remain available
for purchase following the Subscription Offering, such
<PAGE> 2
-2-
Securities may be offered to certain members of the general public, with
preference given to certain natural persons residing in the counties in which
the Bank's offices are located, in a direct community offering (the "Community
Offering"). It is currently anticipated by the Bank and the Company that any
Securities not subscribed for in the Subscription and Community Offerings will
be offered, subject to Section 2 hereof, in a syndicated community offering (the
"Syndicated Community Offering"). The Subscription Offering, the Community
Offering and the Syndicated Community Offering are hereinafter referred to
collectively as the "Offerings," and the conversion of the Bank from mutual to
stock form, the acquisition of the capital stock of the Bank by the Company and
the Offerings are hereinafter referred to collectively as the "Conversion." It
is acknowledged that the number of Securities to be sold in the Conversion may
be increased or decreased as described in the Prospectus (as hereinafter
defined). If the number of Securities is increased or decreased in accordance
with the Plan, the term "Securities" shall mean such greater or lesser number,
where applicable. In the event that a holding company form of organization is
not utilized, all pertinent terms of this Agreement will apply to the conversion
of the Bank from the mutual to stock form of organization and the sale of the
Bank's common stock.
In connection with the Conversion and pursuant to the terms of the Plan as
described in the Prospectus, the Company will establish the Foundation.
Immediately following the consummation of the Conversion, and subject to
compliance with certain conditions as may be imposed by regulatory authorities,
the Company will contribute to the Foundation shares of Common Stock in an
amount equal to 3% of the Securities sold in the Offerings, or between 123,675
and 167,325 shares of Common Stock (subject to increase in certain circumstances
to 192,423 shares).
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (No. 333-36021),
including a related prospectus, for the registration of the Securities and the
Foundation Shares under the Securities Act of 1933, as amended (the "Securities
Act"), and such amendments thereto, if any, and such amended prospectuses as may
have been required to the date hereof by the Commission in order to declare such
registration statement effective, and will file such additional amendments
thereto and such amended prospectuses and prospectus supplements as may
hereafter be required. Such registration statement (as amended to date, if
applicable, and as from time to time amended or supplemented hereafter) and the
prospectus constituting a part thereof (including in each case all documents
incorporated or deemed to be incorporated by reference therein and the
information, if any, deemed to be part thereof pursuant to the rules and
regulations of the Commission under the Securities Act, as from time to time
amended or supplemented pursuant to the Securities Act or otherwise (the
"Securities Act Regulations")), are hereinafter referred to as the "Registration
Statement" and the "Prospectus," respectively, except that if any revised
prospectus shall be used by the Company in connection with the Subscription
Offering, the Community Offering or the Syndicated Community Offering which
differs from the Prospectus on file at the Commission at the time the
Registration Statement becomes effective (whether or not such revised prospectus
is required to be filed by the Company pursuant to Rule 424(b) of the Securities
Act Regulations), the term "Prospectus" shall refer to such revised prospectus
from and after the time it is first provided to the Agent for such use.
<PAGE> 3
-3-
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus of the Company to be used in
the Subscription Offering and, if applicable, the Community Offering. Such
prospectus contains information with respect to the Bank, the Company and the
Common Stock.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company and the Bank jointly and severally represent and
warrant to the Agent as of the date hereof as follows:
(i) The Registration Statement has been declared effective by
the Commission, no stop order has been issued with respect thereto and no
proceedings therefor have been initiated or, to the knowledge of the
Company and the Bank, threatened by the Commission. At the time the
Registration Statement became effective and at the Closing Time referred
to in Section 2 hereof, the Registration Statement complied and will
comply in all material respects with the requirements of the Securities
Act and the Securities Act Regulations and did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. The Prospectus, at the date hereof does not and at the
Closing Time referred to in Section 2 hereof will not, include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus
made in reliance upon and in conformity with information with respect to
the Agent furnished to the Company and/or the Bank in writing by the Agent
expressly for use in the Registration Statement or Prospectus (the "Agent
Information," which the Company and the Bank acknowledge appears only in
the sections captioned "Market for Common Stock" and the first two
paragraphs of the section "The Conversion -- Marketing and Underwriting
Arrangements" of the Prospectus).
(ii) The Company has filed with the Board of Governors of the
Federal Reserve Board (the "FRB") the Company's application for approval
of its acquisition of the Bank (the "Holding Company Application") on Form
FRY-3 promulgated under the Bank Holding Company Act of 1956, as amended
(the "BHCA") and the regulations promulgated thereunder. The Company has
received written notice from the FRB of its approval of the acquisition of
the Bank, such approval remains in full force and effect and no order has
been issued by the FRB suspending or revoking such approval and no
proceedings therefor have been initiated or, to the knowledge of the
Company or the Bank, threatened by the FRB. At the date of such approval
and at the Closing Time referred to in Section 2, the Holding Company
Application complied and will comply in all material respects with the
applicable provisions of the BHCA and the regulations promulgated
thereunder.
(iii) Pursuant to the General Regulations of the Banking Board of
the State of New York and the rules and regulations of the Federal Deposit
Insurance
<PAGE> 4
-4-
Corporation (the "FDIC") governing the conversion of New York state
chartered mutual savings banks to stock form banks (the "Conversion
Regulations"), the Bank has filed an application for conversion on Form
86-AC with the Superintendent of Banks of the State of New York (the
"Superintendent"), a Notice of Conversion, including the Form 86-AC, with
the FDIC and such amendments thereto and supplementary materials as may
have been required to the date hereof (such application for conversion on
Form 86-AC, as amended to date, if applicable, and as from time to time
amended or supplemented hereafter, is hereinafter referred to as the
"Conversion Application"), including copies of the Bank's Proxy Statement,
dated ______________, 199__, relating to the Conversion (the "Proxy
Statement"), and the Prospectus. The Superintendent has, by letter dated
__________, 199__, approved the Conversion Application, such approval
remains in full force and effect and no order has been issued by the
Superintendent suspending or revoking such approval and no proceedings
therefor have been initiated or, to the knowledge of the Company or the
Bank, threatened by the Superintendent. The FDIC has, by letter dated
________, 199_, issued a letter of non-objection to the Conversion
Application, and such non-objection remains in full force and effect and
no order has been issued by the FDIC suspending or revoking such approval
and no proceedings therefor have been initiated or, to the knowledge of
the Company or the Bank, threatened by the FDIC. At the date of such
approval by the Superintendent and the issuance of such letter of
non-objection by the FDIC, and at the Closing Time referred to in Section
2, the Conversion Application complied and will comply in all material
respects with the applicable provisions of the Conversion Regulations.
(iv) At the time of their use, the Proxy Statement and any other
proxy solicitation materials will comply in all material respects with any
and all applicable provisions of the Conversion Regulations and will not
contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The Bank
will promptly file the Prospectus and any supplemental sales literature
with the Commission, the Superintendent and the FDIC. The Prospectus and
all supplemental sales literature, as of the date the Registration
Statement became effective and at the Closing Time referred to in Section
2, complied and will comply in all material respects with the applicable
requirements of the Conversion Regulations and, at or prior to the time of
their first use, will have received all required authorizations of the
Superintendent and the FDIC for use in final form.
(v) None of the SEC, the Superintendent, nor the FDIC has, by
order or otherwise, prevented or suspended the use of the Prospectus or
any supplemental sales literature authorized by the Company or the Bank
for use in connection with the Offerings.
(vi) At the Closing Time referred to in Section 2, the Company
and the Bank will have completed the conditions precedent to the
Conversion and the establishment of the Foundation in accordance with the
Plan, the applicable Conversion Regulations and all other applicable laws,
regulations, decisions and orders, including all material terms,
conditions, requirements and provisions precedent to the Conversion
imposed upon the
<PAGE> 5
-5-
Company or the Bank by the FRB, the Superintendent, the FDIC, or any other
regulatory authority, other than those which the regulatory authority
permits to be completed after the Conversion.
(vii) FinPro, which prepared the valuation of the Bank as part of
the Conversion, has advised the Bank in writing that it satisfies all
requirements for an appraiser set forth in the Conversion Regulations and
any interpretations or guidelines issued by the Superintendent and the
FDIC with respect thereto. /_________/, which prepared the opinion filed
as Exhibit 9(f) of the Conversion Application as required by the
Conversion Regulations, satisfies all requirements for an "independent
executive compensation expert" within the meaning of the Conversion
Regulations.
(viii) The accountants who certified the financial statements and
supporting schedules of the Bank included in the Registration Statement
have advised the Company and the Bank in writing that they are independent
public accountants within the meaning of the Code of Ethics of the AICPA,
and such accountants are, with respect to the Company, the Bank and each
subsidiary of the Bank, independent certified public accountants as
required by the Securities Act and the Securities Act Regulations.
(ix) The consolidated financial statements and the related notes
thereto included in the Registration Statement and the Prospectus present
fairly the financial position of the Company, the Bank and its
consolidated subsidiaries at the dates indicated and the results of
operations, retained earnings and cash flows for the periods specified,
and comply as to form in all material respects with the applicable
accounting requirements of the Securities Act Regulations and the
Conversion Regulations. Except as otherwise stated in the Registration
Statement, said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis,
and the supporting schedules and tables to said financial statements
included in the Registration Statement present fairly the information
required to be stated therein.
(x) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as otherwise
stated therein: (A) there has been no material adverse change in the
financial condition, results of operations or business affairs of the
Company, the Bank and their subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business, and (B) except
for transactions specifically referred to or contemplated in the
Prospectus, there have been no transactions entered into by the Company,
the Bank or any of their subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and its
subsidiaries, considered as one enterprise.
(xi) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and
to enter into and perform its obligations under this Agreement; and the
Company is duly qualified as a foreign corporation to transact business
<PAGE> 6
-6-
and is in good standing in the State of New York and in each jurisdiction
in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where
the failure to so qualify would not have a material adverse effect on the
financial condition, results of operations or business affairs of the
Company and its subsidiaries, considered as one enterprise.
(xii) Upon consummation of the Conversion and the contribution of
the Foundation Shares as described in the Prospectus, the authorized,
issued and outstanding capital stock of the Company will be as set forth
in the Prospectus under "Capitalization" (except for subsequent issuances,
if any, pursuant to reservations, agreements or employee benefit plans
referred to in the Prospectus); no shares of Common Stock have been or
will be issued and outstanding prior to the Closing Time referred to in
Section 2; at the time of Conversion, the Securities will have been duly
authorized for issuance and, when issued and delivered by the Company
pursuant to the Plan against payment of the consideration calculated as
set forth in the Plan and stated on the cover page of the Prospectus, will
be duly and validly issued and fully paid and non-assessable; the terms
and provisions of the Common Stock and the capital stock of the Company
conform to all statements relating thereto contained in the Prospectus;
the certificates representing the shares of Common Stock conform to the
requirements of applicable law and regulations; and the issuance of the
Securities is not subject to preemptive or other similar rights.
(xiii) The Bank, as of the date hereof, is a New York state
chartered savings bank in mutual form and upon consummation of the
Conversion will be a New York state chartered savings bank in stock form,
in both instances with full corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus; the Company, the Bank and their subsidiaries have obtained all
licenses, permits and other governmental authorizations currently required
for the conduct of their respective businesses or required for the conduct
of their respective businesses as contemplated by the Holding Company
Application and the Conversion Application, except where the failure to
obtain such licenses, permits or other governmental authorizations would
not have a material adverse effect on the financial condition, results of
operations or business affairs of the Company, the Bank and their
subsidiaries considered as one enterprise; all such licenses, permits and
other governmental authorizations are in full force and effect and the
Company, the Bank and their subsidiaries are in all material respects in
compliance therewith; neither the Company, the Bank nor any of the Bank's
subsidiaries has received notice of any proceeding or action relating to
the revocation or modification of any such license, permit or other
governmental authorization which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, might have a
material adverse effect on the financial condition, results of operations
or business affairs of the Company, the Bank and their subsidiaries,
considered as one enterprise; and the Bank is in good standing under the
laws of the State of New York and is qualified as a foreign corporation in
any jurisdiction in which the failure to so qualify would have a material
adverse effect on the financial condition, results of operations or
business affairs of the Company, the Bank and their subsidiaries
considered as one enterprise.
<PAGE> 7
-7-
(xiv) The deposit accounts of the Bank are insured by the FDIC up
to applicable limits and upon consummation of the Conversion, the
liquidation account for the benefit of eligible account holders and
supplemental eligible account holders will be duly established in
accordance with the requirements of the Conversion Regulations.
(xv) Upon consummation of the Conversion, the authorized capital
stock of the Bank will be 15,000,000 shares of common stock, par value
$.01 per share (the "Bank Common Stock") and 5,000,000 shares of preferred
stock, par value $.01 per share (the "Bank Preferred Stock"), and no
shares of Bank Common Stock or Bank Preferred Stock have been or will be
issued prior to the Closing Time referred to in Section 2; and as of
Closing Time referred to in Section 2, all of the issued and outstanding
capital stock of the Bank will be duly authorized, validly issued and
fully paid and nonassessable, and all such capital stock will be owned
beneficially and of record by the Company free and clear of any mortgage,
pledge, lien, encumbrance or claim.
(xvi) The Foundation has been duly incorporated and is validly
existing as a non stock corporation in good standing under the laws of the
State of Delaware with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; the Foundation will not be a bank holding company within the
meaning of 12 C.F.R. Section 225.2(c) as a result of the issuance of
shares of Common Stock to it in accordance with the terms of the Plan and
in the amounts as described in the Prospectus; no approvals are required
to establish the Foundation and to contribute the shares of Common Stock
thereto as described in the Prospectus other than those imposed by the
Superintendent and the FDIC; except as specifically disclosed in the
Prospectus and the Proxy Statement, there are no agreements and/or
understandings, written or oral, between the Company and/or the Bank and
the Foundation with respect to the control, directly or indirectly, over
the voting and the acquisition or disposition of the Foundation Shares; at
the time of the Conversion, the Foundation Shares will have been duly
authorized for issuance and, when issued, fully paid and non-assessable;
and the issuance of the Foundation Shares is not subject to preemptive or
similar rights.
(xvii) Each direct and indirect subsidiary of the Bank has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has full
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and
Prospectus, and is duly qualified to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure to so qualify would not have a
material adverse effect on the financial condition, results of operations
or business affairs of the Company, the Bank and their subsidiaries,
considered as one enterprise; the activities of each such subsidiary are
permitted to subsidiaries of a New York state chartered savings bank by
the rules, regulations, resolutions and practices of the Superintendent
and the FDIC; all of the issued and outstanding capital stock of each such
subsidiary has been duly authorized and validly issued, is fully paid and
nonassessable
<PAGE> 8
-8-
and is owned by the Bank directly, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or any other legal or
equitable claim.
(xviii) The Company and the Bank have taken all corporate action
necessary for each of them to execute, deliver and perform this Agreement,
and this Agreement has been duly executed and delivered by, and is the
valid and binding agreement of, the Company and the Bank, enforceable in
accordance with its terms, except as may be limited by bankruptcy,
insolvency or other laws affecting the enforceability of the rights of
creditors generally and judicial limitations on the right of specific
performance and except as the enforceability of indemnification and
contribution provisions may be limited by applicable securities laws.
(xix) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus and prior to the
Closing Time, except as otherwise may be indicated or contemplated
therein, none of the Company, the Bank or any subsidiary of the Bank will
have (A) issued any securities or incurred any liability or obligation,
direct or contingent, or borrowed money, except borrowings in the ordinary
course of business from the same or similar sources and in similar amounts
as indicated in the Prospectus, or (B) entered into any transaction or
series of transactions which is material in light of the business of the
Company, the Bank and their subsidiaries, considered as one enterprise,
excluding the origination, purchase and sale of loans or the purchase or
sale of investment securities or mortgaged-backed securities in the
ordinary course of business or otherwise as indicated in the Prospectus.
(xx) No approval of any regulatory or supervisory or other public
authority is required in connection with the execution and delivery of
this Agreement or the issuance of the Securities and the Foundation Shares
that has not been obtained and a copy of which delivered to the Agent,
except as may be required under the securities laws of various
jurisdictions.
(xxi) Neither the Company, the Bank nor any of the Bank's
subsidiaries is in violation of its certificate of incorporation,
organization certificate, articles of incorporation or charter, as the
case may be, or bylaws (and the Bank will not be in violation of its
charter or bylaws in stock form upon consummation of the Conversion); and
neither the Company, the Bank nor any of the Bank's subsidiaries is in
default (nor has any event occurred which, with notice or lapse of time or
both, would constitute a default) in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company, the Bank or any of their subsidiaries is a party or by
which it or any of them may be bound, or to which any of the property or
assets of the Company, the Bank or any of their subsidiaries is subject,
except for such defaults that would not, individually or in the aggregate,
have a material adverse effect on the financial condition, results of
operations or business of the Company, the Bank and their subsidiaries,
considered as one enterprise; and there are no contracts or documents of
the Company, the Bank or any of the Bank's subsidiaries which are required
to be filed as
<PAGE> 9
-9-
exhibits to the Registration Statement or the Conversion Application which
have not been so filed.
(xxii) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate action and do not and will not
conflict with or constitute a breach of, or default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company, the Bank or any of their subsidiaries
pursuant to any contract, indenture, mortgage, loan agreement, note, lease
or other instrument to which the Company, the Bank or any of their
subsidiaries is a party or by which any of them may be bound, or to which
any of the property or assets of the Company or any of the Company's
subsidiaries is subject, except for such defaults that would not,
individually or in the aggregate, have a material adverse effect on the
financial condition, results of operations or business affairs of the
Company, the Bank and their subsidiaries considered as one enterprise; nor
will such action result in any violation of the provisions of certificate
of incorporation, organization certificate, articles of incorporation or
charter or by-laws of the Company, the Bank or any of their subsidiaries,
or any applicable law, administrative regulation or administrative or
court decree.
(xxiii) No labor dispute with the employees of the Company, the Bank
or any of their subsidiaries exists or, to the knowledge of the Company or
the Bank, is imminent; and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its principal
suppliers or contractors which might be expected to result in any material
adverse change in the financial condition, results of operations or
business affairs of the Company, the Bank and their subsidiaries
considered as one enterprise.
(xxiv) The Company, the Bank and their subsidiaries have good and
marketable title to all properties and assets for which ownership is
material to the business of the Company, the Bank or their subsidiaries
and to those properties and assets described in the Prospectus as owned by
them, free and clear of all liens, charges, encumbrances or restrictions,
except such as are described in the Prospectus or are not material in
relation to the business of the Company, the Bank or their subsidiaries
considered as one enterprise; and all of the leases and subleases material
to the business of the Company, the Bank and their subsidiaries under
which the Company, the Bank or their subsidiaries hold properties,
including those described in the Prospectus, are valid and binding
agreements of the Company, the Bank and their subsidiaries, enforceable in
accordance with their terms.
(xxv) The Company, the Bank and their subsidiaries are not in
violation of any directive from the FRB, the Superintendent or the FDIC to
make any material change in the method of conducting their respective
businesses; the Bank and its subsidiaries have conducted and are
conducting their business so as to comply in all material respects with
all applicable statutes, regulations and administrative and court
<PAGE> 10
-10-
decrees (including, without limitation, all regulations, decisions,
directives and orders of the Superintendent or the FDIC).
(xxvi) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company or the Bank, threatened against or
affecting the Company, the Bank or any of their subsidiaries which is
required to be disclosed in the Registration Statement (other than as
disclosed therein), or which might result in any material adverse change
in the financial condition, results of operations or business affairs of
the Company, the Bank and their subsidiaries considered as one enterprise,
or which might materially and adversely affect the properties or assets
thereof or which might materially and adversely affect the consummation of
the Conversion; all pending legal or governmental proceedings to which the
Company, the Bank or any subsidiary is a party, or of which any of their
respective property or assets is the subject, which are not described in
the Registration Statement, including ordinary routine litigation
incidental to the business, are considered in the aggregate not material;
and there are no contracts or documents of the Company, the Bank or any of
their subsidiaries which are required to be filed as exhibits to the
Registration Statement or the Conversion Application which have not been
so filed.
(xxvii) The Bank has obtained an opinion of its counsel, Thacher,
Proffitt & Wood ("TP&W"), with respect to the legality of the Securities
to be issued and the federal and New York state income tax consequences of
the Conversion, copies of which are filed as exhibits to the Registration
Statement; all material aspects of the aforesaid opinions are accurately
summarized in the Prospectus; the facts and representations upon which
such opinions are based are truthful, accurate and complete in all
material respects; and neither the Bank, the Company nor any of their
subsidiaries has taken or will take any action inconsistent therewith.
(xxviii) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(xxix) All of the loans represented as assets on the most recent
consolidated financial statements or consolidated selected financial
information of the Bank included in the Prospectus meet or are exempt from
all requirements of federal, state or local law pertaining to lending,
including without limitation truth in lending (including the requirements
of Regulations Z and 12 C.F.R. Part 226 and Section 563.99), real estate
settlement procedures, consumer credit protection, equal credit
opportunity and all disclosure laws applicable to such loans, except for
violations which, if asserted, would not result in a material adverse
effect on the financial condition, results of operations or business of
the Company, the Bank and their subsidiaries considered as one enterprise.
(xxx) To the knowledge of the Company and the Bank, with the
exception of the intended loan to the Bank's ESOP by the Company to enable
the ESOP to purchase shares of Common Stock in an amount of up to 8% of
the Common Stock issued in the Conversion, none of the Company, the Bank
or employees of the Bank has made any
<PAGE> 11
-11-
payment of funds of the Company or the Bank as a loan for the purchase of
the Common Stock or made any the Bank as a loan for the purchase of the
Common Stock or made any other payment of funds prohibited by law, and no
funds have been set aside to be used for any payment prohibited by law.
(xxxi) The Company, the Bank and the Bank's subsidiaries are in
compliance in all material respects with the applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transaction Reporting Act of 1970, as amended, and the rules and
regulations thereunder.
(xxxii) None of the Company, the Bank nor their subsidiaries nor any
properties owned or operated by the Company, the Bank or their
subsidiaries is in violation of, or liable under, any Environmental Law
(as defined below), except for such violations or liabilities that,
individually or in the aggregate, would not have a material adverse effect
on the financial condition, results of operations or business affairs of
the Company, the Bank and their subsidiaries considered as one enterprise.
There are no actions, suits or proceedings, or demands, claims, notices or
investigations (including, without limitation, notices, demand letters or
requests for information from any environmental agency) instituted or
pending, or to the knowledge of the Company or the Bank, threatened,
relating to the liability of any property owned or operated by the
Company, the Bank or their subsidiaries, under any Environmental Law (as
defined below). For purposes of this subsection, the term "Environmental
Law" means any federal, state, local or foreign law, statute, ordinance,
rule, regulation, code, license, permit, authorization, approval, consent,
order, judgment, decree, injunction or agreement with any regulatory
authority relating to: (i) the protection, preservation or restoration of
the environment (including, without limitation, air, water, vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil,
plant and animal life or any other natural resource), and/or (ii) the use,
storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of any substance
presently listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, whether by type or by
quantity, including any material containing any such substance as a
component.
(xxxiii) The Company, the Bank and their subsidiaries have filed all
federal income and state and local franchise tax returns required to be
filed and have made timely payments of all taxes shown as due and payable
in respect of such returns, and no deficiency has been asserted with
respect thereto by any taxing authority.
(xxxiv) The Company has received approval, subject to regulatory
approval to consummate the Offerings and issuance, to have the Securities
quoted on the National Market of The Nasdaq Stock Market, Inc. (the
"Nasdaq Stock Market") effective as of the Closing Time.
(xxxv) The Company has filed a registration statement for the Common
Stock under Section 12(g) of the Securities Exchange Act of 1934, as
amended (the
<PAGE> 12
-12-
"Exchange Act") and has requested that such registration statement be
effective concurrent with the effectiveness of the Registration Statement.
(b) Any certificate signed by any officer of the Company or the Bank
and delivered to either of the Agent to counsel for the Agent shall be deemed a
representation and warranty by the Company or the Bank to each Agent as to the
matters covered thereby.
SECTION 2. APPOINTMENT OF SANDLER O'NEILL; SALE AND DELIVERY OF THE
SECURITIES; CLOSING.
On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company hereby
appoints Sandler O'Neill as its Agent to consult with and advise the Company,
and to assist the Company with the solicitation of subscriptions and purchase
orders for Securities, in connection with the Company's sale of Common Stock in
the Subscription Offering, the Community Offering and the Syndicated Community
Offering. On the basis of the representations and warranties herein contained,
and subject to the terms and conditions herein set forth, Sandler O'Neill
accepts such appointment and agrees to use its best efforts to assist the
Company with the solicitation of subscriptions and purchase orders for
Securities in accordance with this Agreement; provided, however, that the Agent
shall not be obligated to take any action which is inconsistent with any
applicable laws, regulations, decisions or orders. The services to be rendered
by Sandler O'Neill pursuant to this appointment include the following: (i)
consulting as to the securities marketing implications of any aspect of the Plan
of Conversion or related corporate documents; (ii) reviewing with the Board of
Directors the independent appraiser's appraisal of the Common Stock; (iii)
reviewing all offering documents, including the Prospectus, stock order form and
related offering materials (it being understood that preparation and filing of
such documents is the sole responsibility of the Company and the Bank and their
counsel); (iv) assisting in the design and implementation of a marketing
strategy for the Offerings; (v) providing support to the Company and the Bank in
obtaining all requisite regulatory approvals; (vi) assisting Bank management in
preparing for meetings with potential investors and broker-dealers; and (vii)
providing such other general advice and assistance as may be requested to
promote the successful completion of the Offerings.
The appointment of the Agent hereunder shall terminate upon the
earlier to occur of (a) later of forty-five (45) days after the last day of the
Subscription Offering or, if applicable, the Community Offering, unless the
Company and the Agent agree in writing to extend such period and the
Superintendent agrees to extend the period of time in which the Shares may be
sold, or (b) the receipt and acceptance of subscriptions and purchase orders for
all of the Securities, or (c) the completion of the Syndicated Community
Offering.
If any of the Securities remain available after the expiration of
the Subscription and Community Offering, at the request of the Company and the
Bank, Sandler O'Neill will seek to form a syndicate of registered broker or
dealers ("Selected Dealers") to assist in the solicitation of purchase orders of
such Securities on a best efforts basis, subject to the terms and conditions
set forth in a selected dealers' agreement (the "Selected Dealers' Agreement"),
substantially in the form set forth in Exhibit A to this Agreement. Sandler
O'Neill will endeavor to limit the
<PAGE> 13
-13-
aggregate fees to be paid by the Company and the Bank under any such Selected
Dealers' Agreement to an amount competitive with gross underwriting discounts
charged at such time for underwritings of comparable amounts of stock sold at a
comparable price per share in a similar market environment; provided, however,
that the aggregate fees payable to Sander O'Neill and Selected Dealers shall not
exceed 7% of the aggregate Purchase Price of the Securities sold by such
Selected Dealers. Sander O'Neill will endeavor to distribute the Securities
among the Selected Dealers in a fashion which best meets the distribution
objective of the Company and the requirements of the Plan, which may result in
limiting the allocation of stock to certain Selected Dealers. It is understood
that in no event shall Sandler O'Neill be obligated to act as a Selected Dealer
or to take or purchase any Securities.
In the event the Company is unable to sell at least the total
minimum of the Securities, as set forth on the cover page of the Prospectus,
within the period herein provided, this Agreement shall terminate and the
Company shall refund to any persons who have subscribed for any of the
Securities the full amount which it may have received from them, together with
interest as provided in the Prospectus, and no party to this Agreement shall
have any obligation to the others hereunder, except for the obligations of the
Company and the Bank as set forth in Sections 4, 6(a) and 7 hereof and the
obligations of the Agent as provided in Sections 6(b) and 7 hereof. Appropriate
arrangements for placing the funds received from subscriptions for Securities or
other offers to purchase Securities in special interest-bearing accounts with
the Bank until all Securities are sold and paid for were made prior to the
commencement of the Subscription Offering, with provision for refund to the
purchasers as set forth above, or for delivery to the Company if all Securities
are sold.
If at least the total minimum of Securities, as set forth on the
cover page of the Prospectus, are sold, the Company agrees to issue or have
issued the Securities sold and to release for delivery certificates for such
Securities at the Closing Time against payment therefor by release of funds from
the special interest-bearing accounts referred to above. The closing shall be
held at the offices of TP&W, at 10:00 a.m., local time, or at such other place
and time as shall be agreed upon by the parties hereto, on a business day to be
agreed upon by the parties hereto. The Company shall notify the Agent by
telephone, confirmed in writing, when funds shall have been received for all the
Securities. Certificates for Securities shall be delivered directly to the
purchasers thereof in accordance with their directions. Notwithstanding the
foregoing, certificates for Securities purchased through Selected Dealers shall
be made available to the Agent for inspection at least 48 hours prior to the
Closing Time at such office as the Agent shall designate. The hour and date upon
which the Company shall release for delivery all of the Securities, in
accordance with the terms hereof, is herein called the "Closing Time."
The Company will pay any stock issue and transfer taxes which may be
payable with respect to the sale of the Securities.
In addition to reimbursement of the expenses specified in Section 4
hereof, the Agent will receive the following compensation for its services
hereunder:
<PAGE> 14
-14-
(a) one and seven-eighths percent (1.875%) of the aggregate Actual
Purchase Price (as defined in the Prospectus) of the Securities sold in
the Subscription Offering and Community Offering, excluding in each case
shares purchased by (i) any employee benefit plan of the Company or the
Bank established for the benefit of their respective directors, trustees,
officers and employees, and (ii) any director, trustee (including trustees
emeriti), officer or employee of the Company or the Bank or members of
their immediate families (which term shall mean parents, grandparents,
spouse, sibling, children and grandchildren); and
(b) with respect to any Securities sold by an NASD member firm
(other than Sandler O'Neill) under any selected dealers' agreement in the
Syndicated Community Offering, (i) the sales commission payable to the
selected dealers under any such selected dealers' agreement, (ii) any
sponsoring dealer's fees; and (iii) a management fee to Sandler O'Neill of
one and one-half percent (1.5%). Any fees payable to Sandler O'Neill for
Securities sold by Sandler O'Neill under any such agreement shall be
limited to an aggregate of one and seven-eighths percent (1.875%) of the
Actual Purchase Price of such Securities.
If this Agreement is terminated by the Agent in accordance with the
provisions of Section 9(a) hereof or the Conversion is terminated by the
Company, no fee shall be payable by the Company to Sandler O'Neill; however, the
Company shall reimburse the Agent for all of its reasonable out-of-pocket
expenses incurred prior to termination, including the reasonable fees and
disbursements of counsel for the Agent in accordance with the provisions of
Section 4 hereof.
All fees payable to the Agent hereunder shall be payable in
immediately available funds at Closing Time, or upon the termination of this
Agreement, as the case may be. In recognition of the long lead times involved in
the conversion process, the Bank agrees to make advance payments to the Agent in
the aggregate amount of $25,000, $[25,000] of which has been previously paid,
which shall be credited against any fees or reimbursement of expenses payable
hereunder.
SECTION 3. COVENANTS OF THE COMPANY. The Company and the Bank
covenant with the Agent as follows:
(a) The Company and the Bank will prepare and file such amendments
or supplements to the Registration Statement, the Prospectus, the
Conversion Application and the Proxy Statement as may hereafter be
required by the Securities Act Regulations or the Conversion Regulations
or as may hereafter be requested by the Agent. Following completion of the
Subscription and Community Offerings, in the event of a Syndicated
Community Offering, the Company and the Bank will: (i) promptly prepare
and file with the Commission a post-effective amendment to the
Registration Statement relating to the results of the Subscription and
Community Offerings, any additional information with respect to the
proposed plan of distribution and any revised pricing information or (ii)
if no such post-effective amendment is required, will file with, or mail
for filing to, the Commission a prospectus or prospectus supplement
containing information relating to the
<PAGE> 15
-15-
results of the Subscription and Community Offerings and pricing
information pursuant to Rule 424(c) of the Securities Act Regulations, in
either case in a form acceptable to the Agent. The Company and the Bank
will notify the Agent immediately, and confirm the notice in writing, (i)
of the effectiveness of any post-effective amendment of the Registration
Statement, the filing of any supplement to the Prospectus and the filing
of any amendment to the Conversion Application, (ii) of the receipt of any
comments from the Superintendent, the FDIC, the FRB or the Commission with
respect to the transactions contemplated by this Agreement or the Plan,
(iii) of any request by the Commission, the Superintendent, the FDIC or
the FRB for any amendment to the Registration Statement or the Conversion
Application or any amendment or supplement to the Prospectus or for
additional information, (iv) of the issuance by the Superintendent or the
FDIC of any order suspending the Offerings or the use of the Prospectus or
the initiation of any proceedings for that purpose, (v) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that
purpose, and (vi) of the receipt of any notice with respect to the
suspension of any qualification of the Securities for offering or sale in
any jurisdiction. The Company and the Bank will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) The Company and the Bank will give the Agent notice of its
intention to file or prepare any amendment to the Conversion Application
or the Registration Statement (including any post-effective amendment) or
any amendment or supplement to the Prospectus (including any revised
prospectus which the Company proposes for use in connection with the
Syndicated Community Offering of the Securities which differs from the
prospectus on file at the Commission at the time the Registration
Statement becomes effective, whether or not such revised prospectus is
required to be filed pursuant to Rule 424(b) of the Securities Act
Regulations), will furnish the Agent with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which the Agent or counsel for
the Agent may object.
(c) The Company and the Bank will deliver to the Agent as many
signed copies and as many conformed copies of the Conversion Application
and the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by reference
therein) as the Agent may reasonably request, and from time to time such
number of copies of the Prospectus as the Agent may reasonably request.
(d) During the period when the Prospectus is required to be
delivered, the Company and the Bank will comply, at their own expense,
with all requirements imposed upon them by the Superintendent and the
FDIC, by the applicable Conversion Regulations, as from time to time in
force, and by the Securities Act, the Securities Act Regulations, the
Exchange Act, and the rules and regulations of the Commission promulgated
thereunder, including, without limitation, Rule 10b-6 under the Exchange
Act, so far as
<PAGE> 16
-16-
necessary to permit the continuance of sales or dealing in shares of
Common Stock during such period in accordance with the provisions hereof
and the Prospectus.
(e) If any event or circumstance shall occur as a result of which it
is necessary, in the opinion of counsel for the Agent, to amend or
supplement the Prospectus in order to make the Prospectus not misleading
in the light of the circumstances existing at the time it is delivered to
a purchaser, the Company and the Bank will forthwith amend or supplement
the Prospectus (in form and substance satisfactory to counsel for the
Agent) so that, as so amended or supplemented, the Prospectus will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances existing at the time it is delivered to a purchaser, not
misleading, and the Company and the Bank will furnish to the Agent a
reasonable number of copies of such amendment or supplement. For the
purpose of this subsection, the Company and the Bank will each furnish
such information with respect to itself as the Agent may from time to time
reasonably request.
(f) The Company and the Bank will take all necessary action, in
cooperation with the Agent, to qualify the Securities for offering and
sale under the applicable securities laws of such states of the United
States and other jurisdictions as the Conversion Regulations may require
and as the Agent and the Company have agreed; provided, however, that the
Company and the Bank shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. In each jurisdiction in
which the Securities have been so qualified, the Company and the Bank will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not
less than one year from the effective date of the Registration Statement.
(g) The Company authorizes Sandler O'Neill and any Selected Dealers
to act as agent of the Company in distributing the Prospectus to persons
entitled to receive subscription rights and other persons to be offered
Securities having record addresses in the states or jurisdictions set
forth in a survey of the securities or "blue sky" laws of the various
jurisdictions in which the Offerings will be made (the "Blue Sky Survey").
(h) The Company will make generally available to its security
holders as soon as practicable, but not later than 60 days after the close
of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 of the Securities Act Regulations)
covering a twelve month period beginning not later than the first day of
the Company's fiscal quarter next following the "effective date" (as
defined in said Rule 158) of the Registration Statement.
(i) During the period ending on the third anniversary of the
expiration of the fiscal year during which the closing of the transactions
contemplated hereby occurs, the Company will furnish to its stockholders
as soon as practicable after the end of each such fiscal year an annual
report (including consolidated statements of financial condition and
consolidated statements of income, stockholders' equity and cash flows,
certified by
<PAGE> 17
-17-
independent public accountants) and, as soon as practicable after the end
of each of the first three quarters of each fiscal year (beginning with
the fiscal quarter ending after the effective date of the Registration
Statement), consolidated summary financial information of the Company for
such quarter in reasonable detail. In addition, such annual report and
quarterly consolidated summary financial information shall be made public
through the issuance of appropriate press releases at the same time or
prior to the time of the furnishing thereof to stockholders of the
Company.
(j) During the period ending on the third anniversary of the
expiration of the fiscal year during which the closing of the transactions
contemplated hereby occurs, the Company will furnish to the Agent (i) as
soon as available, a copy of each report or other document of the Company
furnished generally to stockholders of the Company or furnished to or
filed with the Commission under the Exchange Act or any national
securities exchange or system on which any class of securities of the
Company is listed, and (ii) from time to time, such other information
concerning the Company as the Agent may reasonably request.
(k) The Company and the Bank will conduct the Conversion in all
material respects in accordance with the Plan, the Conversion Regulations
and all other applicable regulations, decisions and orders, including all
applicable terms, requirements and conditions precedent to the Conversion
imposed upon the Company or the Bank by the Superintendent, the FDIC or
the FRB.
(l) The Company and the Bank will use the net proceeds received from
the sale of the Securities in the manner specified in the Prospectus under
the caption "Use of Proceeds."
(m) The Company will file with the Commission such reports on Form
SR as may be required pursuant to Rule 463 of the Securities Act
Regulations, if such report or substantially similar report is required by
the SEC.
(n) The Company will file a registration statement for the Common
Stock under Section 12(g) of the 1934 Act prior to completion of the
Offerings and will request that such registration statement be effective
upon completion of the Conversion. The Company will maintain the
effectiveness of such registration for not less than three years. The
Company will file with the Nasdaq Stock Market all documents and notices
required by the Nasdaq Stock Market of companies that have issued
securities that are traded in the over-the-counter market and quotations
for which are reported by the Nasdaq National Market.
(o) The Company and the Bank will take such actions and furnish such
information as are reasonably requested by the Agent in order for the
Agent to ensure compliance with the National Association of Securities
Dealers, Inc.'s "Interpretation Relating to Free-Riding and Withholding."
<PAGE> 18
-18-
(p) Other than in connection with any employee benefit plan or
arrangement described in the Prospectus, the Company will not, without the
prior written consent of the Agent, sell or issue, contract to sell or
otherwise dispose of, any shares of Common Stock, other than the
Securities, for a period of 180 days following the Closing Time.
(q) During the period beginning on the date hereof and ending on the
later of the third anniversary of the Closing Time or the date on which
the Agent receives full payment in satisfaction of any claim for
indemnification or contribution to which it may be entitled pursuant to
Sections 6 or 7, respectively, neither the Company nor the Bank shall,
without the prior written consent of the Agent, which consent shall not be
unreasonably withheld, take or permit to be taken any action that could
result in the Bank Common Stock becoming subject to any security interest,
mortgage, pledge, lien or encumbrance.
(r) The Company and the Bank will comply with the conditions imposed
by or agreed to with the FRB in connection with its approval of the
Holding Company Application and with the Superintendent or the FDIC in
connection with their approval of, or non-objection to, the Conversion
Application including those conditions relating to the establishment and
the operation of the Foundation; the Company and the Bank shall use their
best efforts to ensure that the Foundation submits within the time frames
required by applicable law a request to the Internal Revenue Service to be
recognized as a tax-exempt organization under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended (the "Code"); the Company and
the Bank will take no action which will result in the possible loss of the
Foundation's tax-exempt status; and neither the Company nor the Bank will
contribute any additional assets to the Foundation until such time that
such additional contributions will be deductible for federal and state
income tax purposes.
(s) The Company shall not deliver the Securities until the Company
and the Bank have satisfied each condition set forth in Section 5 hereof,
unless such condition is waived by the Agent.
(t) The Company or the Bank will furnish to Sandler O'Neill as early
as practicable prior to the Closing Date, but no later than two (2) full
business days prior thereto, a copy of the latest available unaudited
interim consolidated financial statements of the Bank and the Subsidiaries
which have been read by Arthur Andersen LLP, as stated in their letters to
be furnished pursuant to subsections (e) and (f) of Section 5 hereof.
SECTION 4. PAYMENT OF EXPENSES. The Company and the Bank jointly and
severally agree to pay all expenses incident to the performance of their
obligations under this Agreement, including but not limited to: (i) the cost of
obtaining all securities and bank regulatory approvals, (ii) the printing and
filing of the Registration Statement as originally filed and of each amendment
thereto, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the purchasers in the Offerings, (iv) the fees and
disbursements of the Company's and the Bank's counsel, accountants appraiser and
other advisors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees
<PAGE> 19
-19-
and the fees and disbursements of counsel in connection therewith and in
connection with the preparation of the Blue Sky Survey, (vi) the printing and
delivery to the Agent of copies of the Registration Statement as originally
filed and of each amendment thereto and the printing and delivery of the
Prospectus and any amendments or supplements thereto to the purchasers in the
Offerings and the Agent, (vii) the printing and delivery to the Agent of copies
of a Blue Sky Survey, and (viii) the fees and expenses incurred in connection
with the listing of the Securities on the Nasdaq National Market. In the event
the Agent incurs any such fees and expenses on behalf of the Bank or the
Company, the Bank will reimburse the Agent for such fees and expenses whether or
not the Conversion is consummated; provided, however, that the Agent shall not
incur any substantial expenses on behalf of the Bank or the Company pursuant to
this Section without the prior approval of the Bank.
The Company and the Bank jointly and severally agree to pay certain
expenses incident to the performance of the Agent's obligations under this
Agreement, regardless of whether the Conversion is consummated, including: (i)
the filing fees paid or incurred by the Agent in connection with all filings
with the National Association of Securities Dealers, Inc., and (ii) all
reasonable out of pocket expenses incurred by the Agent relating to the
Offerings, including, without limitation, advertising, promotional, syndication
and travel expenses and fees and expenses of the Agent's counsel. All fees and
expenses to which the Agent is entitled to reimbursement under this paragraph of
this Section 4 shall be due and payable upon receipt by the Company or the Bank
of a written accounting therefor setting forth in reasonable detail the expenses
incurred by the Agent.
SECTION 5. CONDITIONS OF AGENT'S OBLIGATIONS. The Company, the Bank
and the Agent agree that the issuance and the sale of Securities and all
obligations of the Agent hereunder are subject to the accuracy of the
representations and warranties of the Company and the Bank herein contained as
of the date hereof and the Closing Time, to the accuracy of the statements of
officers, trustees and directors, as applicable, of the Company and the Bank
made pursuant to the provisions hereof, to the performance by the Company and
the Bank of their obligations hereunder, and to the following further
conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act or proceedings
therefor initiated or threatened by the Commission, no order suspending
the Offerings or authorization for final use of the Prospectus shall have
been issued or proceedings therefor initiated or threatened by the
Superintendent or the FDIC and no order suspending the sale of the
Securities in any jurisdiction shall have been issued.
(b) At Closing Time, the Agent shall have received:
(1) The favorable opinion, dated as of Closing Time, of TP&W,
counsel for the Company and the Bank, in form and substance
satisfactory to counsel for the Agent, to the effect that:
<PAGE> 20
-20-
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the State of Delaware.
(ii) The Company has full corporate power and authority to
own, lease and operate its properties and to conduct its
business as described in the Registration Statement and
Prospectus and to enter into and perform its obligations under
this Agreement.
(iii) The Company is duly qualified as a foreign corporation
to transact business and is in good standing in the State of
New York and in each other jurisdiction in which such
qualification is required whether by reason of the ownership
or leasing of property or the conduct of business, except
where the failure to so qualify would not have a material
adverse effect upon the financial condition, results of
operations or business affairs of the Company.
(iv) Upon consummation of the Conversion, and the issuance
of the Foundation Shares to the Foundation immediately upon
completion thereof, the authorized, issued and outstanding
capital stock of the Company will be as set forth in the
Prospectus under the caption "Capitalization" and no shares of
Common Stock have been or will be issued and outstanding prior
to the Closing Time.
(v) The Securities and the Foundation Shares have been
duly and validly authorized for issuance and sale and, when
issued and delivered by the Company pursuant to the Plan
against payment of the consideration calculated as set forth
in the Plan, or contributed by the Company pursuant to the
Plan in the case of the Foundation Shares, will be duly and
validly issued and fully paid and non-assessable.
(vi) The issuance of the Securities and the Foundation
Shares is not subject to preemptive or other similar rights
arising by operation of law or, to the best of TP&W's
knowledge and information, otherwise.
(vii) The Bank has been at all times since 1875 and prior
to the Closing Time duly organized, validly existing and in
good standing under the laws of the State of New York as a New
York state chartered savings bank of mutual form, and, at
Closing Time, will be duly organized, validly existing and in
good standing under the laws of the State of New York as a New
York state chartered savings bank of stock form, in both
instances with full corporate power and authority to own,
lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus;
and the Bank is, and upon consummation of the Conversion will
be, duly qualified as a foreign corporation in each
<PAGE> 21
-21-
jurisdiction in which the failure to so qualify would have a
material adverse effect upon the financial condition, results
of operations or business affairs of the Bank.
(viii) The Bank is a member in good standing of the Federal
Home Loan Bank of New York and the deposit accounts of the
Bank are insured by the FDIC up to the applicable limits.
(ix) Each direct and indirect subsidiary of the Bank has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
jurisdiction of its incorporation, has full corporate power
and authority to own, lease and operate its properties and to
conduct its business as described in the Registration
Statement and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction
in which the failure to so qualify would have a material
adverse effect upon the financial condition, results of
operations or business of the Bank and its subsidiaries, taken
as a whole; the activities of each such subsidiary are
permitted to subsidiaries of a bank holding company and of a
New York state chartered savings bank by the rules,
regulations, resolutions and practices of the FRB and the
Superintendent; all of the issued and outstanding capital
stock of each such subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and is owned
by the Bank, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity.
(x) The Foundation has been duly incorporated and is
validly existing as a non-stock corporation in good standing
under the laws of the State of Delaware with corporate power
and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus; the
Foundation is not a bank holding company within the meaning of
12 C.F.R. Section 225.2(c) as a result of the issuance of
shares of Common Stock to it in accordance with the terms of
the Plan and the amounts as described in the Prospectus; no
approvals are required to establish the Foundation and to
contribute the shares of Common Stock thereto as described in
the Prospectus other than those set forth in any written
notice or order or approval or non-objection of the
Conversion, the Conversion Application or the Holding Company
Application, copies of which have been provided to the Agent
prior to the Closing Time.
(xi) Upon consummation of the Conversion, all of the issued
and outstanding capital stock of the Bank when issued and
delivered pursuant to the Plan against payment of
consideration calculated as set forth in the Plan and set
forth in the Prospectus, will be duly authorized and validly
issued and fully paid and nonassessable, and all such capital
stock will be
<PAGE> 22
-22-
owned beneficially and of record by the Company free and clear
of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity.
(xii) The FRB has duly approved the Holding Company
Application, the Superintendent has duly approved the
Conversion Application and the FDIC has issued a letter of
intent not to object to the Conversion, and no action is
pending, or to the best of TP&W's knowledge, threatened, with
respect to the Holding Company Application, the Conversion
Application (including the establishment of the Foundation and
the contribution of shares of Common Stock thereto) or the
acquisition by the Company of all of the Bank's issued and
outstanding capital stock; the Holding Company Application
complies with the applicable requirements of the FRB and the
Conversion Application complies as to form in all material
respects with the applicable requirements of the
Superintendent and the FDIC (including all documents required
to be filed as exhibits thereto); each of the Holding Company
Application and the Conversion Application is, to the best of
TP&W's knowledge and information, truthful, accurate and
complete; and the Company is duly authorized to become a bank
holding company and is duly authorized to own all of the
issued and outstanding capital stock of the Bank to be issued
pursuant to the Plan.
(xiii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby,
including the establishment of the Foundation and the
contribution thereto of the Foundation Shares, have been duly
and validly authorized by all necessary action on the part of
each of the Company and the Bank, and this Agreement
constitutes the legal, valid and binding agreement of each of
the Company and the Bank, enforceable in accordance with its
terms, except as rights to indemnity and contribution
hereunder may be limited under applicable law (it being
understood that TP&W may avail itself of customary exceptions
concerning the effect of bankruptcy, insolvency or similar
laws and the availability of equitable remedies); the
execution and delivery of this Agreement, the incurrence of
the obligations herein set forth and the consummation of the
transactions contemplated herein will not result in any
violation of the provisions of the charter or by-laws of the
Company, the Bank or any of their subsidiaries; to the best of
TP&W's knowledge, the execution and delivery of this
Agreement, the incurrence of the obligations herein set forth
and the consummation of the transactions contemplated herein
will not conflict with or constitute a breach of, or a
default under, and no event has occurred which, with notice or
lapse of time or both, would constitute a default under, or
result in the creation or imposition of any lien, charge or
encumbrance, upon any property or assets of the Company, the
Bank or their subsidiaries pursuant to any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument to
<PAGE> 23
-23-
which the Company, the Bank or their subsidiaries is a party
or by which any of them may be bound, or to which any of the
property or assets of the Company, the Bank or its
subsidiaries is subject that, individually or in the
aggregate, would have a material adverse effect on the
financial condition, results of operations or business affairs
of the Company, the Bank and its subsidiaries considered as
one enterprise.
(xiv) The Prospectus has been duly authorized by the
Superintendent and the FDIC for final use pursuant to the
Conversion Regulations and no action is pending, or to the
best of TP&W's knowledge, is threatened, by the Superintendent
or the FDIC to revoke such authorization.
(xv) The Registration Statement is effective under the
Securities Act and no stop order suspending the effectiveness
of the Registration Statement has been issued under the
Securities Act or, to the best of TP&W's knowledge,
proceedings therefor initiated or threatened by the
Commission.
(xvi) No further approval, authorization, consent or other
order of any public board or body is required in connection
with the execution and delivery of this Agreement, the
issuance of the Securities and the consummation of the
Conversion, except as may be required under the securities or
"Blue Sky" laws of various jurisdictions as to which no
opinion need be rendered.
(xvii) At the time the Registration Statement became
effective, the Registration Statement (other than the
financial statements and statistical data included therein, as
to which no opinion need be rendered) complied as to form in
all material respects with the requirements of the Securities
Act and the Securities Act Regulations and the Conversion
Regulations.
(xviii) The Common Stock conforms to the description thereof
contained in the Prospectus, and the form of certificate used
to evidence the Common Stock is in due and proper form and
complies with all applicable statutory requirements.
(xix) There are no legal or governmental proceedings pending
or threatened against or affecting the Company, the Bank or
their subsidiaries or the Foundation which are required,
individually or in the aggregate, to be disclosed in the
Registration Statement and Prospectus, other than those
disclosed therein, and all pending legal or governmental
proceedings to which the Company, the Bank or any of their
subsidiaries is a party or to which any of their property is
subject which are not described in the
<PAGE> 24
-24-
Registration Statement, including ordinary routine litigation
incidental to the business, are, considered in the aggregate,
not material.
(xx) The information in the Prospectus under the captions
"Dividend Policy," "Regulatory Capital Compliance," "Federal
and State Taxation," "Regulation and Supervision," "The
Conversion," "Restrictions on Acquisition of the Company and
the Bank," and "Description of Capital Stock of the Company,"
and "Description of Capital Stock of the Bank" to the extent
that it constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has
been reviewed by TP&W and is complete and accurate in all
material respects.
(xxi) To the best of TP&W's knowledge, there are no
contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or
referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to
therein or filed as exhibits thereto, the descriptions thereof
or references thereto are correct, and no default exists, and
no event has occurred which, with notice or lapse of time or
both, would constitute a default, in the due performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument so described,
referred to or filed.
(xxii) The Plan has been duly authorized by the Board of
Directors of the Company and the Board of Directors of the
Bank and, to the best of TP&W's knowledge, the
Superintendent's and the FDIC's approvals of the Plan remain
in full force and effect; the Bank's charter has been amended,
effective upon consummation of the Conversion and the filing
of such amended and restated organization certificate with the
Superintendent, to authorize the issuance of permanent capital
stock; to the best of TP&W's knowledge, the Company and the
Bank have conducted the Conversion and the establishment and
funding of the Foundation in all material respects in
accordance with applicable requirements of the Conversion
Regulations, the Plan and all other applicable regulations,
decisions and orders thereunder, including all material
applicable terms, conditions, requirements and conditions
precedent to the Conversion imposed upon the Company or the
Bank by the Superintendent or the FDIC and no order has been
issued by the Superintendent or the FDIC to suspend the
Conversion or the Offerings and no action for such purpose has
been instituted or threatened by the Superintendent, the FDIC
or the FRB; and, to the best of TP&W's knowledge, no person
has sought to obtain review of the final action of the
Superintendent or the FDIC in approving the Conversion
Application (which includes the Plan which provides for
establishment of the Foundation) or the FRB in approving the
Holding Company Application.
<PAGE> 25
-25-
(xxiii) To the best of TP&W's knowledge, the Company and the
Bank and their subsidiaries have obtained all licenses,
permits and other governmental authorizations currently
required for the conduct of their respective businesses as
described in the Registration Statement and Prospectus, and
all such licenses, permits and other governmental
authorizations are in full force and effect, and the Company
and the Bank and their subsidiaries are in all material
respects complying therewith.
(xxiv) Neither the Company, the Bank nor any of their
subsidiaries is in violation of its certificate of
incorporation, organization certificate, articles of
incorporation or charter, as the case may be, or bylaws (and
the Bank will not be in violation of its organization
certificate and bylaws in stock form upon consummation of the
Conversion) or, to the best of TP&W's knowledge, in default
(nor has any event occurred which, with notice or lapse of
time or both, would constitute a default) in the performance
or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the
Company, the Bank or any of their subsidiaries is a party or
by which the Company, the Bank or any of their subsidiaries or
any of their property may be bound.
(xxv) The Company is not required to be registered as an
investment company under the Investment Company Act of 1940.
(2) The favorable opinion, dated as of Closing Time, of
Goodwin, Proctor & Hoar LLP ("GP&H"), counsel for the Agent, with
respect to the matters set forth in Section 5(b)(1)(i), (iv), (v),
(vi) (solely as to preemptive rights arising by operation of law),
(xii), (xvi) and (xvii) and such other matters as the Agent may
reasonably require.
(3) In giving their opinions required by subsections (b)(l)
and (b)(2), respectively, of this Section, TP&W and GP&H, shall each
additionally state that nothing has come to their attention that
would lead them to believe that the Registration Statement (except
for financial statements and schedules and other financial or
statistical data included therein, as to which counsel need make no
statement), at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus (except for financial
statements and schedules and other financial or statistical data
included therein, as to which counsel need make no statement), at
the time the Registration Statement became effective or at Closing
Time, included an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. In giving their opinions, TP&W and GP&H, may
rely as to matters of fact on certificates of officers and directors
of the Company and the
<PAGE> 26
-26-
Bank and certificates of public officials, which opinions shall be
in form and substance satisfactory to counsel for the Agent, and
GP&H may also rely on the opinion of TP&W.
(c) At Closing Time referred to in Section 2, the Company and the
Bank shall have completed in all material respects the conditions
precedent to the Conversion in accordance with the Plan, the applicable
Conversion Regulations and all other applicable laws, regulations,
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Conversion imposed upon the Company or the
Bank by the FRB, the Superintendent, the FDIC, or any other regulatory
authority other than those which the FRB, the Superintendent or the FDIC
permit to be competed after the Conversion.
(d) At Closing Time, there shall not have been, since the date
hereof or since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any material adverse change
in the financial condition, results of operations or business affairs of
the Company, the Bank and their subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the Agent
shall have received a certificate of the Chief Executive Officer of the
Company and of the Bank, the President of the Company and the Bank and the
chief financial or chief accounting officer of the Company and of the
Bank, dated as of Closing Time, to the effect that (i) there has been no
such material adverse change, (ii) there shall have been no material
transaction entered into by the Company or the Bank from the latest date
as of which the financial condition of the Company or the Bank as set for
the in the Registration Statement and the Prospectus other than
transactions referred to or contemplated therein and transactions in the
ordinary cause of business, (iii) neither the Company nor the Bank shall
have received from the Superintendent, the FDIC or the FRB any direction
(oral or written) to make any material change in the method of conducting
its business with which it has not complied (which direction, if any,
shall have been disclosed to the Agent) or which materially and adversely
would affect the business, financial condition or results of operations of
the Company or the Bank, (iv) the representations and warranties in
Section 1 hereof are true and correct with the same force and effect as
though expressly made at and as of the Closing Time, (v) the Company and
the Bank have complied with all agreements and satisfied all conditions on
their part to be performed or satisfied at or prior to Closing Time, (vi)
no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been initiated or
threatened by the Commission and (vii) no order suspending the Syndicated
Community Offering or the authorization for final use of the Prospectus
has been issued and no proceedings for that purpose have been initiated or
threatened by the Superintendent or the FDIC and no person has sought to
obtain regulatory or judicial review of the action of the FRB in approving
the Plan in accordance with the Conversion Regulations nor has any
person sought to obtain regulatory or judicial review of the action of the
FRB in approving the Holding Company Application.
<PAGE> 27
-27-
(e) At the time of the execution of this Agreement, the Agent shall
have received from Arthur Andersen LLP (the "Accountant"), a letter dated
such date, in form and substance satisfactory to the Agent, to the effect
that: (i) they are independent public accountants with respect to the
Company, the Bank and their subsidiaries within the meaning of the Code of
Ethics of the American Institute of Certified Public Accountants, the
Securities Act, the Securities Act Regulations and the Conversion
Regulations; (ii) it is the Accountant's opinion that the consolidated
financial statements and supporting schedules included in the Registration
Statement and covered by the Accountant's opinions therein comply as to
form in all material respects with the applicable accounting requirements
of the Securities Act and the Securities Act Regulations; (iii) based upon
limited procedures as agreed upon by the Agent and the Accountant set
forth in detail in such letter, nothing has come to their attention which
causes them to believe that (A) the unaudited financial statements and
supporting schedules of the Bank and its subsidiaries included in the
Registration Statement do not comply as to form in all material respects
with the applicable accounting requirements of the Securities Act, the
Securities Act Regulations and the Conversion Regulations or are not
presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
financial statements included in the Registration Statement and the
Prospectus, (B) the unaudited amounts of net interest income and net
income set forth under "Selected Financial Information" in the
Registration Statement and Prospectus do not agree with the amounts set
forth in unaudited consolidated financial statements as of and for the
dates and periods presented under such captions or such amounts were not
determined on a basis substantially consistent with that used in
determining the corresponding amounts in the audited financial statements
included in the Registration Statement, (C) at a specified date not more
than five days prior to the date of this Agreement, there has been any
increase in the consolidated long term or short term debt of the Bank and
its subsidiaries or any decrease in consolidated total assets, the
allowance for loan losses, total deposits or net worth of the Bank and its
subsidiaries, in each case as compared with the amounts shown in the May
31, 1997 balance sheet included in the Registration Statement or, (D)
during the period from May 31, 1997 to a specified date not more than five
days prior to the date of this Agreement, there were any decreases, as
compared with the corresponding period in the preceding year, in total
interest income, net interest income, net interest income after provision
for loan losses, income before income tax expense or net income of the
Bank and its subsidiaries, except in all instances for increases or
decreases which the Registration Statement and the Prospectus disclose
have occurred or may occur; and (iv) in addition to the examination
referred to in the Accountant's opinions and the limited procedures
referred to in clause (iii) above, they have carried out certain specified
procedures, not constituting an audit, with respect to certain amounts,
percentages and financial information which are included in the
Registration Statement and Prospectus and which are specified by the
Agent, and have found such amounts, percentages and financial information
to be in agreement with the relevant accounting, financial and other
records of the Company, the Bank and their subsidiaries identified in such
letter.
<PAGE> 28
-28-
(e) At Closing Time, the Agent shall have received from the
Accountant a letter, dated as of Closing Time, to the effect that they
reaffirm the statements made in the letter furnished pursuant to
subsection (d) of this Section, except that the specified date referred to
shall be a date not more than five days prior to Closing Time.
(f) At Closing Time, the Securities shall have been approved for
listing on the Nasdaq Stock Market upon notice of issuance.
(g) At Closing Time, the Agent shall have received a letter from
FinPro, dated as of the Closing Time, confirming its appraisal.
(h) At Closing Time, counsel for the Agent shall have been furnished
with such documents and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Securities and the
Foundation Shares as herein contemplated and related proceedings, or in
order to evidence the accuracy of any of the representations or
warranties, or the fulfillment of any of the conditions, herein contained;
and all actions taken by the Company in connection with the issuance and
sale of the Securities and the Foundation Shares as herein contemplated
shall be satisfactory in form and substance to the Agent and counsel for
the Agent.
(i) At any time prior to Closing Time, (i) there shall not have
occurred any material adverse change in the financial markets in the
United States or elsewhere or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which, in the judgment
of the Agent, is so material and adverse as to make it impracticable to
market the Securities or to enforce contracts, including subscriptions or
orders, for the sale of the Securities, and (ii) trading generally on
either the American Stock Exchange or the New York Stock Exchange shall
not have been suspended, and minimum or maximum prices for trading shall
not have been fixed, or maximum ranges for prices for securities have been
required, by either of said Exchanges or by order of the Commission or any
other governmental authority, and a banking moratorium shall not have been
declared by either Federal or New York authorities.
SECTION 6. INDEMNIFICATION.
(a) The Company and the Bank, jointly and severally, agree to
indemnify and hold harmless the Agent, each person, if any, who controls the
Agent, within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, and its respective partners, directors, officers, employees
and agents as follows:
(i) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, related to or arising out of the
Conversion (including the establishment of the Foundation and the
contribution of the Foundation Shares thereto by the Company) or any
action taken by the Agent where acting as agent of the Company or the Bank
or otherwise as described in Section 2 hereof;
<PAGE> 29
-29-
(ii) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, based upon or arising out of any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(iii) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever described in clauses (i) or (ii) above, if such
settlement is effected with the written consent of the Company or the
Bank, which consent shall not be unreasonably withheld; and
(iv) from and against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements of
counsel chosen by the Agent), reasonably incurred in investigating,
preparing for or defending against any litigation, or any investigation,
proceeding or inquiry by any governmental agency or body, commenced or
threatened, or any claim whatsoever described in clauses (i) or (ii)
above, to the extent that any such expense is not paid under (i), (ii) or
(iii) above;
provided, however, that this indemnity shall not apply to any loss, liability,
claim, damage or expense to the extent arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading which was
made in reliance upon and in conformity with written information relating to the
Agent furnished to the Company or the Bank by the Agent expressly for use in the
Prospectus (or any amendment or supplement thereto), which information the
Company and the Bank acknowledge is included only in the sections captioned
"Market for Capital Stock" and "The Conversion--Marketing and Underwriting
Arrangements" of the Prospectus (the "Agent Information").
(b) The Agent agrees to indemnify and hold harmless the Company, the
Bank, their directors and trustees, each of their officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any and all loss, liability, claim, damage and expense described in
the indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, of a material fact made in the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with the Agent
Information.
<PAGE> 30
-30-
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability which it may have otherwise than on account of this indemnity. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to no more than one local counsel
in each separate jurisdiction in which any action or proceeding is commenced)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
(d) The Company and the Bank also agree that the Agent shall not
have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Bank, the Company, their security holders or the Bank's or the
Company's creditors relating to or arising out of the engagement of the Agent
pursuant to, or the performance by the Agent of the services contemplated by,
this Agreement, except to the extent that any loss, claim, damage or liability
is found in a final judgment by a court of competent jurisdiction to have
resulted primarily from the Agent's bad faith, willful misconduct or gross
negligence.
(e) In addition to, and without limiting, the provisions of Section
(6)(a)(iv) hereof, in the event that any Agent, any person, if any, who controls
the Agent within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act or any of its partners, directors, officers, employees or
agents is requested or required to appear as a witness or otherwise gives
testimony in any action, proceeding, investigation or inquiry brought by or on
behalf of or against the Company, the Bank, the Agent or any of their respective
affiliates or any participant in the transactions contemplated hereby in which
the Agent or such person or agent is not named as a defendant, the Company and
the Bank jointly and severally agree to reimburse the Agent for all reasonable
and necessary out-of-pocket expenses incurred by it in connection with preparing
or appearing as a witness or otherwise giving testimony and to compensate the
Agent in an amount to be mutually agreed upon.
SECTION 7. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity provided for in Section 6
hereof is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Company, the Bank and the
Agent shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity incurred by the Company or
the Bank and the Agent, as incurred, in such proportions (i) that the Agent is
responsible for that portion represented by the percentage that the maximum
aggregate marketing fees appearing on the cover page of the Prospectus bears to
the maximum aggregate gross proceeds appearing thereon and the Company and the
Bank are jointly and severally responsible for the balance or (ii) if, but only
if, the allocation provided for in clause (i) is for any reason held
unenforceable, in such proportion as is appropriate to reflect not only the
relative benefits to the Company and the Bank on the one hand and the Agent on
the other, as reflected in clause (i), but also the relative fault of the
Company and the Bank on the one hand and the Agent on the other, as well as any
other relevant equitable considerations; provided, however, that no person
guilty
<PAGE> 31
-31-
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section, each
person, if any, who controls the Agent within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Agent, and each director of the Company, each trustee of the
Bank, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company or the Bank within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Company and the Bank. Notwithstanding
anything to the contrary set forth herein, to the extent permitted by applicable
law, in no event shall the Agent be required to contribute an aggregate amount
in excess of the aggregate marketing fees to which the Agent is entitled and
actually paid pursuant to this Agreement.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company or the Bank
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Agent or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Agent may terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Time (i) if there has been, since
the date of this Agreement or since the respective dates as of which information
is given in the Registration Statement, any material adverse change in the
financial condition, results of operations or business affairs of the Company or
the Bank, or the Company, the Bank and their subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business,(ii) if
there has occurred any material adverse change in the financial markets in the
United States or elsewhere or any outbreak of hostilities or escalation thereof
or other calamity or crisis the effect of which, in the judgment of the Agent,
is so material and adverse as to make it impracticable to market the Securities
or to enforce contracts, including subscriptions or orders, for the sale of the
Securities, (iii) if trading generally on either the American Stock Exchange or
the New York Stock Exchange has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been
required, by either of said Exchanges or by order of the Commission or any other
governmental authority, or if a banking moratorium has been declared by either
Federal or New York authorities, (iv) if any condition specified in Section 5
shall not have been fulfilled when and as required to be fulfilled; (v) if there
shall have been such material adverse change in the condition or prospects of
the Company or the Bank or the prospective market for the Company's securities
as in the Agent's good faith opinion would make it inadvisable to proceed with
the offering, sale or delivery of the Securities; (vi) if in the Agent's good
faith opinion, the price for the Securities established by FinPro is not
reasonable or equitable under then prevailing market conditions, or (vii) if the
Conversion is not consummated on or prior to March 31, 1998.
<PAGE> 32
-32-
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof relating to the reimbursement of expenses and
except that the provisions of Sections 6 and 7 hereof shall survive any
termination of this Agreement.
SECTION 10. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Agent
shall be directed to the Agent at Two World Trade Center, 104th Floor, New York,
New York 10048, attention of Catherine A. Lawton, Principal, with a copy to Paul
W. Lee, P.C., Goodwin, Procter & Hoar LLP, Exchange Place, 53 State Street,
Boston, MA 02109; notices to the Company and the Bank shall be directed to
either of them at The Warwick Savings Bank, 18 Oakland Avenue, Warwick, New York
10990-0591, attention of Mr. Timothy A. Dempsey and Mr. Ronald J. Gentile, with
a copy to Douglas J. McClintock, Esq., Thacher Proffitt & Wood, Two World Trade
Center, New York, New York 10048.
SECTION 11. PARTIES. This Agreement shall inure to the benefit of
and be binding upon the Agent, the Company and the Bank and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Agent, the Company and the Bank and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein or
therein contained. This Agreement and all conditions and provisions hereof and
thereof are intended to be for the sole and exclusive benefit of the Agent, the
Company and the Bank and their respective successors, and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation.
SECTION 12. ENTIRE AGREEMENT; AMENDMENT. This Agreement represents
the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and supersedes any and all other oral or
written agreements heretofore made, except for the engagement letter dated July
10, 1997, by and between the Agent and the Company and the Bank, relating to the
Agent's providing conversion agent services to the Company and the Bank in
connection with the Conversion. No waiver, amendment or other modification of
this Agreement shall be effective unless in writing and signed by the parties
hereto.
SECTION 13. GOVERNING LAW AND TIME. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to agreements made and to be performed in said State without regard to the
conflicts of laws provisions thereof. Unless otherwise noted, specified times of
day refer to New York City time.
SECTION 14. SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any
<PAGE> 33
-33-
of the terms or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
SECTION 15. HEADINGS. Sections headings are not to be considered
part of this Agreement, are for convenience and reference only, and are not to
be deemed to be full or accurate descriptions of the contents of any paragraph
or subparagraph.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 34
-34-
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Agent, the Company and the Bank in accordance with its terms.
Very truly yours,
WARWICK COMMUNITY BANCORP, INC.
By:_________________________________
Title:
THE WARWICK SAVINGS BANK
By:_________________________________
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
SANDLER O'NEILL & PARTNERS, L.P.
By: Sandler O'Neill & Partners Corp.,
the sole general partner
By:____________________________________
Catherine A. Lawton
Vice President
<PAGE> 35
APPENDIX A
OUTLINE OF CONVERSION AGENT SERVICES
I. Consolidation of Accounts
1. Consolidate files in accordance with regulatory guidelines.
2. Accounts from various files are all linked together. The
resulting central file can then be maintained on a regular basis.
3. Our EDP format will be provided to your data processing people.
II. Proxy/Order Form/Request Card Preparation
1. Vote calculation.
2. Stenciling of proxy cards for initial mailing and any necessary
follow-up mailings.
3. Target group identification for proxy solicitation.
4. Identification of target group(s) for follow-up mailing(s).
III. Organization and Supervision of Conversion Center
1. Advising on and supervising the physical organization of the
Conversion Center, including materials requirements.
2. Assist in the training of all Bank personnel who will be staffing
the conversion center.
3. Establish reporting procedures.
4. On-site supervision of the Conversion Center during the
solicitation/offering period.
IV. Special Meeting Services
1. Direct proxy solicitation if independent solicitor not used.
2. Proxy and ballot tabulation.
3. Act as or support inspector of election.
4. Delete voting record date accounts closed prior to special
meeting.
5. Produce final report of vote.
A - 1
<PAGE> 36
V. Subscription Services
1. Produce list of depositors by state (Blue Sky report).
2. Production of subscription rights and research books.
3. Stock order form processing.
4. Acknowledgement letter to confirm receipt of stock order.
5. Daily reports and analysis.
6. Proration calculation and share allocation in the event of an
oversubscription.
7. Produce charter shareholder list.
8. Interface with Transfer Agent for Stock Certificate issuance.
9. Refund and interest calculations.
10. Confirmation letter to confirm purchase of stock.
11. Notification of full/partial rejection of orders.
12. Production of 1099/Debit tape.
A - 2
<PAGE> 1
Exhibit 2.1
PLAN OF CONVERSION
OF
THE WARWICK SAVINGS BANK
AS ADOPTED BY THE BOARD OF TRUSTEES
ON JULY 10, 1997
AS AMENDED as of AUGUST 19, 1997 and OCTOBER 21, 1997
<PAGE> 2
ARTICLE I
DEFINITIONS
ARTICLE II
PROCEDURE FOR APPROVAL OF THE CONVERSION
<TABLE>
<S> <C>
Section 2.01 Application and Notice ........................................... 8
Section 2.02 Approval of Plan by Voting Depositors;
the Special Meeting ............................................ 8
Section 2.03 Company Approvals ................................................ 9
ARTICLE III
SALE OF COMMON STOCK
Section 3.01 In General ....................................................... 10
Section 3.02 Reorganization as a Subsidiary of the Company .................... 11
Section 3.03 Pricing and Number of Shares of Common Stock;
Independent Appraiser .......................................... 11
Section 3.04 Subscription Rights .............................................. 13
Section 3.05 Community Offering ............................................... 16
Section 3.06 Subscription and Community Offering Procedures; Order Forms ...... 17
Section 3.07 Payment for Common Stock ......................................... 18
Section 3.08 Syndicated Community Offering .................................... 20
Section 3.09 Public Offering Alternative ...................................... 20
Section 3.10 Restrictions on Purchase and Transfer of Common Stock ............ 21
Section 3.11 Time Limits for Sale of Shares; Effect of Inability to Sell ...... 22
Section 3.12 Establishment and Funding of Foundation .......................... 22
Section 3.13 Enforcement of Terms and Conditions .............................. 23
ARTICLE IV
CERTAIN RESTRICTIONS
Section 4.01 Sale of Shares Purchased by Trustees, Directors or Officers ...... 24
Section 4.02 Subsequent Purchases of Shares by Trustees,
Directors and Officers ......................................... 24
Section 4.03 Acquisition of Control ........................................... 25
</TABLE>
(i)
<PAGE> 3
ARTICLE V
EFFECT OF CONVERSION; CERTAIN COVENANTS AND AGREEMENTS
<TABLE>
<S> <C>
Section 5.01 Restated Organization Certificate and
Adoption of New By-Laws ................................... 26
Section 5.02 Effect of Conversion ........................................ 26
Section 5.03 Liquidation Account ......................................... 27
Section 5.04 Voting Rights ............................................... 28
Section 5.05 Issuance of Stock ........................................... 28
Section 5.06 Directors of Converted Bank ................................. 29
Section 5.07 Employment Agreements ....................................... 29
Section 5.08 Market for the Common Stock ................................. 29
Section 5.09 Stock Repurchases and Stock Benefit Plans ................... 29
ARTICLE VI
TAX RULING REQUIREMENT; AMENDMENT AND TERMINATION;
MISCELLANEOUS
Section 6.01 Conditions to Conversion .................................... 30
Section 6.02 Amendment or Termination of the Plan ........................ 30
Section 6.03 Completion Date ............................................. 30
Section 6.04 Expenses of the Conversion .................................. 31
Section 6.05 Interpretation .............................................. 31
Section 6.06 Severability ................................................ 31
Section 6.07 Miscellaneous ............................................... 31
</TABLE>
(ii)
<PAGE> 4
PLAN OF CONVERSION
OF
THE WARWICK SAVINGS BANK
INTRODUCTORY STATEMENT
This Plan of Conversion provides for the conversion of The Warwick
Savings Bank from a New York mutual savings bank to a New York stock savings
bank. Wherever appropriate for purposes of this Plan of Conversion, capitalized
terms shall have the meanings assigned to them under Article I hereof. The Bank
is currently a mutual savings bank duly organized and validly existing under the
laws of the State of New York, having been created by an Act of the Legislature
of the State of New York, passed May 17, 1875, such Act having been amended and
supplemented from time to time thereafter. The principal office of the Bank is
located at 18 Oakland Avenue, in the Village of Warwick, County of Orange, State
of New York.
The purpose of the Conversion is to increase the Bank's equity
capital base and facilitate future access to capital markets. The Conversion
will provide the Bank with a more flexible operating structure, which will
enable the Bank to compete more effectively with other financial institutions.
The larger equity capital base resulting from the Conversion will enhance the
Bank's ability to pursue lending and investment opportunities as well as
opportunities for growth and expansion. The Bank's Board of Trustees also
believes that the decline in the number of mutual institutions, as well as the
decline in the assets and deposits of mutual institutions, will place mutual
institutions at a disadvantage to stock institutions. The Board of Trustees of
the Bank currently contemplates that all of the stock of the Bank shall be held
by Warwick Community Bancorp, Inc., a business corporation to be organized under
the laws of the State of Delaware, and that the Company will issue and sell its
capital stock pursuant to this Plan. The use of the Company will provide greater
organizational flexibility to the Bank.
In furtherance of the Bank's commitment to its communities, the Plan
provides for the establishment of a charitable Foundation as part of the
Conversion. The Foundation is intended to complement the Bank's existing
community reinvestment activities to allow the Bank's local communities to share
in the growth and profitability of the Company and the Bank over the long term.
To this end, the Company intends to donate to the charitable Foundation a number
of shares of its authorized but unissued Common Stock equal to 3% of the Common
Stock issued in the Conversion.
This Plan has been unanimously approved by the Board of Trustees of
the Bank, based upon its determination that the Conversion is in the best
interests of the Bank, its depositors and the communities served by the Bank.
This Plan sets forth the terms and conditions of the Conversion, and the
procedures for effecting the same. This Plan must be approved by the
Superintendent or his or her designees, must not be objected to by the FDIC and
certain waivers, if required, may be granted by the Banking Board. This Plan
must also be approved by the affirmative vote of at least seventy-five percent
(75%) in amount of deposit liabilities of Voting Depositors represented in
person or by proxy and eligible to vote at the Special Meeting, and by the
<PAGE> 5
affirmative vote of at least a majority of the amount of votes eligible to be
cast by Voting Depositors at the Special Meeting.
Upon the Conversion, each Person having a Deposit Account at the
Bank prior to the Conversion will continue to have a Deposit Account, without
payment therefor, in the same amount and subject to the same terms and
conditions (except for liquidation rights) as in effect prior to the Conversion.
After the Conversion, the Bank will succeed to all the rights, interests, duties
and obligations as existed before the Conversion, including, but not limited to,
all rights and interests of the Bank in and to its assets and properties,
whether real, personal or mixed. The Bank will continue to be a member of the
Federal Home Loan Bank System. All of the Bank's insured Deposit Accounts will
continue to be insured by the Bank Insurance Fund of the FDIC to the extent
provided by applicable law.
-2-
<PAGE> 6
ARTICLE I
DEFINITIONS
As used in this Plan of Conversion, the following terms shall have
the following meanings:
"Account Holder" shall mean any Person holding a Deposit Account in
the Bank.
"Acting in Concert" shall mean (i) knowing participation in a joint
activity or interdependent conscious parallel action towards a common goal
whether or not pursuant to an express agreement or understanding; or (ii) a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise. A
Person or company which acts in concert with another Person ("other party")
shall also be deemed to be acting in concert with any Person who is also acting
in concert with that other party, except that any Tax-Qualified Employee Stock
Benefit Plan will not be deemed to be acting in concert with its trustee or a
Person who serves in a similar capacity solely for the purpose of determining
whether stock held by the trustee and stock held by the plan will be aggregated,
and participants or beneficiaries of any such Tax-Qualified Employee Stock
Benefit Plan will not be deemed to be acting in concert solely as a result of
their common interests as participants or beneficiaries.
"Actual Purchase Price" shall mean the price per share at which the
Common Stock is ultimately sold in accordance with the terms hereof.
"Affiliate" shall mean a Person who, directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under common
control with the Person specified.
"Associate," when used to indicate a relationship with any Person,
shall mean (a) any corporation or organization (other than the Company, the Bank
or a majority-owned subsidiary of the Bank) of which such Person is an officer
or partner or is, directly or indirectly, either alone or with one or more
members of his or her immediate family, the beneficial owner of 10% or more of
any class of equity securities; (b) any trust or other estate in which such
Person has a substantial beneficial interest or as to which such Person serves
as trustee or in a similar fiduciary capacity, except that for the purposes of
Sections 3.04(a) and 3.10, the term "Associate" does not include any
Tax-Qualified Employee Stock Benefit Plan or any Non-Tax-Qualified Employee
Stock Benefit Plan in which a Person has a substantial beneficial interest or
serves as a trustee or in a similar fiduciary capacity, and except that, for
purposes of aggregating total shares that may be acquired or held by Officers
and Trustees and their Associates, the term "Associate" does not include any
Tax-Qualified Employee Stock Benefit Plan; and (c) any relative or spouse of
such Person, or any relative of such spouse, who has the same home as such
Person or who is a Director or Officer of the Company, the Bank or any of the
Bank's subsidiaries.
"Bank" shall mean The Warwick Savings Bank in its mutual form or in
its stock form, as the context of the reference requires.
-3-
<PAGE> 7
"Banking Board" shall mean the Banking Board of the State of New
York.
"Banking Law" shall mean the Banking Law of the State of New York.
"Benefit Plan" shall mean any Tax-Qualified Employee Stock Benefit
Plan or any Non-Tax-Qualified Employee Stock Benefit Plan.
"Common Stock" shall mean all of the shares of common stock, par
value $.01 per share, offered and issued pursuant to this Plan by the Company or
of the common stock, par value $.01 per share, offered and issued pursuant to
this Plan by the Bank if the Company is not utilized. The Common Stock will not
be insured by the FDIC.
"Community Offering" shall mean the offering for sale to certain
members of the general public directly by the Bank or the Company, if utilized,
of any shares of the Common Stock not subscribed for in the Subscription
Offering in accordance with Section 3.05.
"Company" shall mean Warwick Community Bancorp, Inc., a corporation
to be organized under the laws of the State of Delaware.
"Control" (including the terms "controlling," "controlled by" and
"under common control with") shall mean the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities of such Person, the
ownership of voting securities of any company that possesses such power, or
otherwise.
"Conversion" shall mean (a) the restatement of the Bank's
organization certificate to authorize the issuance of capital stock in
accordance with the Banking Law and the Conversion Regulations and to otherwise
conform to the requirements applicable to a New York stock savings bank and (b)
the issuance of the common stock of the Bank in accordance with this Plan.
"Conversion Regulations" shall mean Part 86 of the General
Regulations of the Banking Board of the State of New York ("Part 86") and the
regulations of the FDIC applicable to mutual to stock conversions, 12 C.F.R.
Section 303.15, to the extent such regulations preempt or supplement Part 86.
"Deposit Account" shall mean all deposits of the Bank as such term
is used in Section 9019 of the Banking Law of New York, and includes without
limitation, savings, time, demand, negotiable orders of withdrawal (NOW), money
market and passbook accounts maintained by the Bank.
"Depositor" shall mean any Person owning a Deposit Account.
"Director" shall mean a member of the Board of Trustees of the Bank
after the Conversion or a member of the Board of Directors of the Company.
"Effective Date" shall mean the effective date of the Conversion on
which all of the Common Stock is issued and sold and on which the Superintendent
endorses his or her approval
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<PAGE> 8
on the Bank's Restated Organization Certificate and causes such Certificate to
be filed in the Office of the Superintendent.
"Eligibility Record Date" shall mean June 30, 1996, the date
established by the Board of Trustees of the Bank as the date for determining
Eligible Account Holders.
"Eligible Account Holder" shall mean any Depositor of the Bank who
owned a Qualifying Deposit on the Eligibility Record Date.
"Estimated Price Range" shall mean the range of the minimum and
maximum aggregate values determined by the Board of Trustees of the Bank within
which the aggregate offering price of Common Stock sold in the Conversion will
fall. The Estimated Price Range will be within the estimated aggregate pro forma
market value of the Common Stock, as determined by the Independent Appraiser in
accordance with Section 3.04.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"FRB" shall mean the Board of Governors of the Federal Reserve
System.
"Foundation" shall mean a non-stock Delaware corporation that is a
tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code
formed by the Bank and the Company to which shares of Common Stock shall be
transferred upon the Conversion.
"Holders of Subscription Rights" shall mean the Tax-Qualified
Employee Stock Benefit Plans, Eligible Account Holders, Supplemental Eligible
Account Holders and Other Depositors who have Subscription Rights pursuant to
Section 3.04.
"Independent Appraiser" shall mean the independent Person retained
by the Bank to prepare an appraisal of the estimated pro forma market value of
the Common Stock. Such Person shall be experienced and expert in the area of
corporate appraisal and acceptable to the Superintendent.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended.
"Maximum Subscription Price" shall mean the price per share to be
remitted by subscribers for shares of Common Stock in the Subscription Offering
and the Community Offering.
"Non-Tax-Qualified Employee Stock Benefit Plan" shall mean any stock
option, bonus stock or restricted stock plan or other employee benefit plan that
is not a "Tax-Qualified Employee Stock Benefit Plan" and that is maintained by
the Company or the Bank for the benefit of officers, employees or directors of
the Company, the Bank or any Affiliate of either of them and that, by its terms,
is authorized or required to purchase Common Stock.
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<PAGE> 9
"Officer" shall mean an executive officer of the Company or the
Bank, which includes the chairman of the board, chief executive officer,
president, any vice president in charge of a principal business function or
functions or who otherwise has a policy-making function, secretary, treasurer or
principal financial officer, comptroller or principal accounting officer, and
any person performing functions similar to those performed by the foregoing
persons with respect to any incorporated or unincorporated organization.
"Order Form" shall mean the form provided by the Company or the Bank
that subscribers must use to order Common Stock in the Subscription Offering and
Community Offering.
"Other Depositors" shall mean any Depositor of the Bank (other than
an Eligible Account Holder or Supplemental Eligible Account Holder) who owns a
Qualifying Deposit on the Voting Record Date.
"Overallotment Option" shall mean the option, which may be granted
to the Underwriters in any Syndicated Community Offering or Public Offering, to
purchase, on the same terms as other shares are purchased in such Syndicated
Community Offering or Public Offering, up to an additional fifteen percent of
the shares of the Common Stock offered in the Subscription Offering.
"Oversubscription Provision" shall mean the increase in the number
of shares of Common Stock that may be offered to subscribers in the Subscription
Offering and the Community Offering pursuant to Section 3.03(b) hereof.
"Person" shall mean any corporation, partnership, trust,
unincorporated association, any other entity or any natural person.
"Plan" or "Plan of Conversion" shall mean this Plan of Conversion,
including any amendments thereto.
"Prospectus" shall mean the Prospectus to be used in offering the
Common Stock in the Subscription Offering and the Community Offering.
"Proxy Statement" shall mean the document to be used to solicit
proxies from Voting Depositors to vote at the Special Meeting.
"Public Offering" shall mean the offering of certain shares of
Common Stock in accordance with Section 3.09 hereof.
"Public Offering Price" shall mean the price at which the shares of
Common Stock are offered in the Public Offering.
"Qualifying Deposit" shall mean one or more Deposit Accounts with
the Bank totaling, in the aggregate, at least one hundred dollars ($100.00).
"SEC" shall mean the Securities and Exchange Commission.
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<PAGE> 10
"Special Meeting" shall mean the Special Meeting of Depositors to be
called for the purpose of submitting the Plan to the Voting Depositors for their
approval.
"Subaccount Balance" shall mean, with respect to each Eligible
Account Holder and Supplemental Eligible Account Holder, the portion of the
liquidation account that such Eligible Account Holder and Supplemental Eligible
Account Holder would be entitled to receive pursuant to the Conversion
Regulations in the event of a complete liquidation of the Bank subsequent to the
Conversion. The initial Subaccount Balance of each Eligible Account Holder and
Supplemental Eligible Account Holder shall be determined in accordance with
Section 86.4(f)(4) of the Conversion Regulations.
"Subscription Offering" shall mean the offering of the Common Stock
to Eligible Account Holders, Supplemental Eligible Account Holder and Other
Depositors in accordance with Section 3.04 hereof.
"Subscription Rights" shall mean the rights described in Section
3.04 hereof.
"Superintendent" shall mean the Superintendent of Banks of the State
of New York.
"Supplemental Eligibility Record Date" shall mean the Supplemental
record date for determining Supplemental Eligible Account Holders, which is the
last day of the calendar quarter preceding the Superintendent's approval of the
Plan of Conversion.
"Supplemental Eligible Account Holder" shall mean any depositor of
the Bank (other than an Eligible Account Holder) who owned a Qualifying Deposit,
except Officers, Directors and their Associates, on the Supplemental Eligibility
Record Date.
"Syndicated Community Offering" shall mean the offering of Common
Stock following the Subscription and Community Offerings through a syndicate of
broker-dealers.
"Syndicated Community Offering Price" shall mean the per share price
submitted with orders for shares of Common Stock in the Syndicated Community
Offering.
"Tax-Qualified Employee Stock Benefit Plan" shall mean any defined
benefit plan or defined contribution plan, such as an employee stock ownership
plan, stock bonus plan, profit-sharing plan or other plan, that is maintained by
the Company or the Bank for the benefit of the officers or employees of the
Company, the Bank, or any Affiliate of either of them; that, by its terms, is
authorized or required to purchase Common Stock, and that, with its related
trust, meets the requirements to be "qualified" under Section 401 of the
Internal Revenue Code. The Bank may make scheduled discretionary contributions
to a Tax-Qualified Employee Stock Benefit Plan, provided that, among other
things, such contributions do not cause the Bank to fail to meet its regulatory
capital requirements.
"Trustee" shall mean a member of the Board of Trustees of the Bank
prior to the Conversion.
"Underwriters" shall mean any investment banking firm or firms
purchasing or distributing the Common Stock to be offered in a Public Offering,
if any.
"Underwriting Agreement" shall mean the agreement between the
Company and the Underwriters pursuant to which the Underwriters agree to
purchase or distribute certain shares of the Common Stock for offering in a
Public Offering, if any.
"Voting Depositor" shall mean any Depositor of the Bank who owns a
Qualifying Deposit on the Voting Record Date.
"Voting Record Date" shall mean the date fixed by the Board of
Trustees of the Bank as the date for determining Depositors of the Bank entitled
to notice of and to vote at the Special Meeting, which date shall not be more
than 60 nor less than 10 days before the date of the Special
Meeting.
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<PAGE> 11
ARTICLE II
PROCEDURE FOR APPROVAL OF THE CONVERSION
Section 2.01 Application and Notice.
This Plan, having been duly adopted by the Board of Trustees of the
Bank, will be submitted, together with an Application for Conversion in the
forms required by the Conversion Regulations, to the Superintendent for
approval, to the Banking Board to request certain waivers, if required, and to
the FDIC for non-objection. Following approval of this Plan by the Board of
Trustees of the Bank, the Bank will cause notice of the adoption of the Plan,
and of its intention to convert to stock form and to reorganize into holding
company form, to be conspicuously posted at its home office and each of its
branch offices. The Bank will also issue a press release containing all of the
material terms of the proposed Conversion and will place an advertisement
containing such material terms in a newspaper having general circulation in the
communities in which the principal office and branches of the Bank are located.
Section 2.02 Approval of Plan by Voting Depositors; the Special
Meeting.
(a) Following (i) approval of the Bank's Application for Conversion
by the Superintendent, (ii) the non-objection of the FDIC and (iii) the receipt
of all necessary waivers of the Banking Board, the Bank shall submit the Plan to
the Bank's Voting Depositors for approval at the Special Meeting. The Bank shall
mail to each Voting Depositor, at his or her last known address appearing on the
records of the Bank, a copy of the Plan and the proposed Restated Organization
Certificate of the Bank and proposed By-Laws of the Bank, a Notice of Special
Meeting, Proxy Card and Subscription Order Form and a long-form Proxy Statement
(which contains a detailed description of the Conversion and contains offering
material relating to the Subscription Offering) in the forms required by the
Conversion Regulations, describing the Plan and certain other matters relating
to the Bank and its Conversion. Separate and readily distinguishable
postage-paid envelopes shall be provided for the return of Proxy Cards and
Subscription Order Forms.
(b) The Special Meeting shall be held upon written notice given no
less than 20 days nor more than 45 days prior to the date of the Special
Meeting. At the Special Meeting, each Voting Depositor shall be entitled to cast
one vote in person or by proxy for every one hundred dollars ($100.00) such
Voting Depositor had on deposit with the Bank as of the Voting Record Date;
provided, however, that no Voting Depositor shall be eligible to cast more than
one thousand (1,000) votes. The Board of Trustees shall appoint an independent
custodian and tabulator to receive and hold proxies to be voted at the Special
Meeting and count the votes cast in favor of and in opposition to the Plan.
(c) The Superintendent shall be notified of the results of the
Special Meeting by a certificate signed by the President and Secretary of the
Bank within five days after the conclusion of the Special Meeting. The Plan must
be approved by the affirmative vote of at least seventy-five percent (75%) in
amount of deposit liabilities of the Voting Depositors
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<PAGE> 12
represented in person or by proxy at the Special Meeting and by the affirmative
vote of at least a majority of the amount of votes entitled to be cast by Voting
Depositors at the Special Meeting. If the Plan is so approved, the Bank will
take all other necessary steps to effect the Conversion subject to the terms and
conditions of the Plan. If the Plan is not so approved, upon conclusion of the
Special Meeting and any adjournment or postponement thereof, the Plan shall not
be implemented without further vote and all funds submitted in the Subscription
Offering and Community Offering will be returned to subscribers, with interest
as provided herein, and all withdrawal authorizations will be canceled.
Section 2.03 Company Approvals.
The Board of Trustees of the Bank intends to take all necessary
steps to form the Company. The Bank will be a wholly owned subsidiary of the
Company unless the Company is not utilized in the Conversion. If the Company is
utilized, upon the Conversion, the Bank will issue its capital stock to the
Company, and the Company will issue and sell the Common Stock in accordance with
this Plan. The Company will make timely applications for any requisite
regulatory approvals, including an Application with the Superintendent, an
Application on Form FR Y-3 with the FRB, and a Registration Statement on Form
S-1 to be filed with the SEC.
ARTICLE III
SALE OF COMMON STOCK
Section 3.01 In General.
(a) As soon as practicable after adoption of the Plan by the Board
of Trustees of the Bank and the Board of Directors of the Company, the Company
shall register the Common Stock under the Securities Act of 1933, as amended,
and any applicable state laws. After registration of the Common Stock and
receipt of all required regulatory approvals, the Common Stock will be offered
for sale to the Holders of Subscription Rights in the respective priorities set
forth in Section 3.04; provided, however, that no offer for sale of the Common
Stock shall be made prior to the mailing to Voting Depositors of the Proxy
Statement for the Special Meeting. Shares of Common Stock not subscribed for in
the Subscription Offering will be offered for sale in a Community Offering. Any
Common Stock remaining unsold upon completion of the Subscription Offering and
Community Offering may be offered for sale in a Syndicated Community Offering or
a Public Offering or in some other manner as determined by the Board of Trustees
of the Bank and the Board of Directors of the Company with the approval of the
Superintendent. Any such Syndicated Community or Public Offering shall be
conducted in a manner that is intended to achieve a reasonably wide distribution
of the Common Stock.
(b) The Community Offering may be commenced concurrently with the
Subscription Offering; provided, however, that any orders received in the
Community Offering shall be subject to availability of shares upon conclusion of
the Subscription Offering. The offer and sale of Common Stock prior to the
Special Meeting shall, however, be conditioned upon approval of the Plan by the
Voting Depositors. The sale of all Common Stock subscribed
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<PAGE> 13
for in the Subscription and Community Offerings will be consummated
simultaneously on the date the sale of Common Stock in any Syndicated Community
Offering or Public Offering is consummated and only if all Common Stock is sold.
(c) The sales price per share of the Common Stock shall be a uniform
price determined in accordance with Section 86.5(c) of the Conversion
Regulations and Section 3.03 hereof, except that the price to be paid by or
through the Underwriters in connection with a Syndicated Community Offering or
Public Offering may be less a negotiated Underwriters' commission or discount.
The Bank may also elect to offer to pay fees on a per share basis to qualifying
brokers, as determined by the Bank in its sole discretion, who assist Persons in
determining to purchase shares in the Subscription and Community Offerings.
(d) The Board of Trustees of the Bank may determine for any reason
at any time prior to the issuance of the Common Stock not to utilize a holding
company form of organization in the Conversion. If the Board of Trustees of the
Bank determines not to complete the Conversion utilizing a holding company form
of organization, the capital stock of the Bank will be issued and sold in
accordance with the Plan. In such case, the Company's registration statement on
Form S-l will be withdrawn from the SEC, the Bank will take all steps necessary
to complete the Conversion from the mutual to the stock form of organization,
including filing any necessary documents with the FDIC, and will issue and sell
the Common Stock in accordance with this Plan. In such event, any subscriptions
or orders received for Common Stock of the Company shall be deemed to be
subscriptions or orders for Common Stock of the Bank on the same terms and
conditions that such provisions apply to the Common Stock of the Company. In
that event all references to the Company in this Plan shall be deemed to refer
to the Bank or shall have no effect, as the context requires, and the Bank shall
take such steps as permitted or required by the Superintendent or the SEC.
Section 3.02 Reorganization as a Subsidiary of the Company.
Upon the issuance of the Common Stock, the Company will purchase
from the Bank all of the capital stock of the Bank to be issued by the Bank in
the Conversion in exchange for 50% of the Net Conversion proceeds. The Company
will retain 50% of the net proceeds of the sale of the Common Stock. A lesser
percentage may be retained in the discretion of the Boards of Trustees of the
Bank and the Board of Directors of the Company. The Bank believes that the
Conversion proceeds will provide economic strength to the Company and the Bank
for the future in a highly competitive and regulated environment. The Conversion
will also facilitate any expansion through acquisitions of financial service
organizations, any diversification into other related businesses and any
engagement in other business and investment purposes, including the possible
payment of dividends and possible future repurchases of the Common Stock as
permitted by the Conversion Regulations. The above activities may also be
engaged in by the Bank if the Company is eliminated.
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<PAGE> 14
Section 3.03 Pricing and Number of Shares of Common Stock; Independent
Appraiser.
(a) All shares sold in the Conversion shall be sold at a uniform
price per share, the Actual Purchase Price, which shall be no more than $40.00
per share and no less than $5.00 per share. The aggregate price at which the
Common Stock shall be sold shall be consistent with the estimated pro forma
market value of such Common Stock on the Effective Date of the Conversion, based
upon an independent valuation as provided for in this Section 3.03. The Bank
shall cause the Independent Appraiser to prepare a pro forma valuation of the
aggregate market value of the Common Stock, which shall be submitted to the
Superintendent and the FDIC as part of the Bank's Application for Conversion,
such valuation to be stated in terms of an Estimated Price Range, the maximum of
which shall be no more than 15% above the average of the minimum and maximum of
such price range and the minimum of which shall be no more than 15% below such
average. From time to time, as appropriate or as required by the Conversion
Regulations or the Superintendent, the Bank shall cause the Independent
Appraiser to review developments subsequent to its valuation to determine
whether the Estimated Price Range should be revised. Such valuation shall be
prepared in accordance with the Conversion Regulations.
(b) Based on the valuation of the Independent Appraiser pursuant to
Section 3.03(a) hereof, the Board of Trustees of the Bank and the Board of
Directors of the Company shall fix the Maximum Subscription Price and the number
of shares to be offered. The total number of shares of Common Stock offered
shall be subject to increase or decrease at any time prior to any Syndicated
Community Offering or Public Offering or other method of sale to reflect changes
in market and financial conditions. In the event that the aggregate purchase
price of the Common Stock is below the minimum of the Estimated Price Range, or
materially above the maximum of the Estimated Price Range, resolicitation of
purchasers may be required; provided, that up to a 15% increase above the
maximum of the Estimated Price Range will not be deemed material so as to
require a resolicitation. Up to a 15% increase in the number of shares to be
issued which is supported by an appropriate change in the estimated pro forma
market value of the Common Stock will not be deemed to be material so as to
require a resolicitation of subscriptions. In the event that the aggregate
purchase price of the Common Stock is below the minimum of the Estimated Price
Range or in excess of 15% above the maximum of the Estimated Price Range, and a
resolicitation is required, such resolicitation shall be effected in such manner
and within such time as the Company or the Bank shall establish, with the
approval of the Superintendent or the FDIC, if required. The total number of
shares of Common Stock offered will be subject to increase in connection with
the exercise of any Overallotment Option or the Oversubscription Provision,
provided that any additional number of shares of Common Stock issued for these
purposes shall not exceed 15% of the total number of shares of the Common Stock
offered in the Subscription Offering.
(c) If the number of shares of Common Stock to be sold in the
Conversion, excluding any number of shares to be issued in connection with any
Overallotment Option or the Oversubscription Provision, is increased after
commencement of the Subscription Offering, any Person who subscribed for the
maximum number of shares of Common Stock shall be permitted to purchase an
additional number of shares such that such Person shall be permitted to
subscribe for the then maximum number of shares permitted to be subscribed for
by such Person as adjusted
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<PAGE> 15
to take into account the increase in the number of shares to be sold, subject to
the rights and preferences of any Person who has priority Subscription Rights.
If either the individual purchase limitation or the number of shares of Common
Stock, excluding any number of shares to be issued in connection with any
Overallotment Option or the Oversubscription Provision, is decreased after
commencement of the Subscription Offering, the order of any Person who
subscribed for the maximum number of shares of Common Stock shall be decreased
by the minimum amount necessary so that such Person shall be in compliance with
the then maximum number of shares permitted to be subscribed for by such Person.
The Company shall not otherwise be required to offer subscribers the right to
modify or rescind their subscriptions as a result of any increase or decrease in
the number of shares of Common Stock offered, unless otherwise required by this
Plan or by the Superintendent.
(d) In the event shares of Common Stock are sold in excess of the
maximum of the Estimated Price Range (the "Adjusted Maximum"), such shares will
be allocated in the following order of priority: (i) in the event that there is
an oversubscription at the Eligible Account Holder level, to fill unfulfilled
subscriptions of Eligible Account Holders in accordance with Section 3.04(a);
(ii) to fill the Tax-Qualified Employee Stock Benefit Plans' subscriptions in
accordance with Section 3.04(b); (iii) in the event there is an oversubscription
at the Supplemental Eligible Account Holder level, to fill unfulfilled
subscriptions of Supplemental Eligible Account Holders in accordance with
Section 3.04(c); and (iv) in the event there is an oversubscription at the
Other Depositor level, to fill unfulfilled subscriptions of Other Depositors in
accordance with Section 3.04(d); and (v) to fill unfulfilled Subscriptions in
the Community Offering in accordance with Section 3.05.
(e) If all of the shares of Common Stock are subscribed for in the
Subscription Offering and the Community Offering, or are sold in some other
manner other than a Syndicated Community Offering or Public Offering, the Board
of Trustees of the Bank and the Board of Directors of the Company, in
consultation with the Independent Appraiser, shall determine the Actual Purchase
Price, subject to approval by the Superintendent. If all shares of the Common
Stock are not subscribed for and there is a Syndicated Community Offering or
Public Offering, the Board of Trustees of the Bank and the Board of Directors of
the Company, in consultation with the Underwriters and the Independent
Appraiser, shall determine the Syndicated Offering Price or the Public Offering
Price, as the case may be, subject to the approval of the Superintendent. If
there is a Syndicated Community Offering or a Public Offering, the Syndicated
Offering Price or the Public Offering Price, as the case may be, will determine
the Actual Purchase Price. Except for the purchase price of shares sold upon the
exercise of any Overallotment Option or the Oversubscription Provision, the
aggregate purchase price of the Common Stock shall be within the Estimated Price
Range, unless subscribers are offered the right to modify or rescind their
subscriptions.
(f) The Company shall not consummate any sale unless the Independent
Appraiser shall have confirmed to the Company, the Bank and the Superintendent
that nothing of a material nature has occurred that would cause the Independent
Appraiser to conclude that the aggregate purchase price of the shares of Common
Stock sold in the Conversion, exclusive of the aggregate purchase price of
shares sold upon the exercise of the Overallotment Option or the
Oversubscription Provision, is incompatible with its estimate of the pro forma
market value of the Bank at the time of such sale. If the Independent Appraiser
is unable to so confirm, the offering may be canceled or the Bank and the
Company may extend the Conversion, establish a new Estimated Price Range, Actual
Purchase Price, extend, reopen or hold a new Subscription Offering and Community
Offering, Syndicated Community Offering or Public Offering, or take such other
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<PAGE> 16
action as the Board of Trustees of the Bank and the Board of Directors of the
Company shall determine and the Superintendent shall approve.
(g) The Common Stock to be issued pursuant to this Plan shall upon
issuance be fully paid and nonassessable.
Section 3.04 Subscription Rights.
(a) Each Eligible Account Holder shall receive, as first priority
and without payment, nontransferable subscription rights to subscribe for shares
of Common Stock equal to an amount up to the greatest of (i) the amount
permitted to be subscribed for in the Community Offering, which amount is
currently equal to $150,000 of the Common Stock offered in connection with the
Conversion, as specified in Section 3.05(d), and may be increased to 5% of the
Common Stock offered in the Conversion or decreased to less than $150,000, (ii)
one-tenth of one percent of the total offering of shares of Common Stock, or
(iii) fifteen times the product (rounded down to the next whole number) obtained
by multiplying the total number of shares of Common Stock to be issued by a
fraction of which the numerator is the amount of the Qualifying Deposit of the
Eligible Account Holder and the denominator is the total amount of Qualifying
Deposits of all Eligible Account Holders, in each case on the Eligibility Record
Date. Such subscription is subject to the maximum purchase limitation specified
in Section 3.10(a) and the minimum purchase limitation in Section 3.10(d) and
exclusive of an increase in the total number of shares issued due to an increase
in the Estimated Price Range of up to 15%. If Eligible Account Holders subscribe
for a number of shares of Common Stock that exceeds the total number of shares
of Common Stock being issued, the Common Stock shall be allocated among
subscribing Eligible Account Holders as follows:
(i) first, to the extent possible, each Eligible Account Holder
shall be entitled to subscribe for the entire amount of his or her order,
up to 100 shares;
(ii) second, each Eligible Account Holder subscribing for in excess
of 100 shares shall be entitled, with respect to such excess, to subscribe
for the same percentage of the total remaining shares to be issued as the
value of his or her Qualifying Deposits represents to the aggregate value
of the Qualifying Deposits of all remaining Eligible Account Holders whose
subscriptions remain unsatisfied; provided, however, that no fractional
shares shall be issued; and
(iii) third, any shares then remaining shall be reallocated (one or
more times if necessary) among those Eligible Account Holders whose
subscriptions are not filled pursuant to subparagraphs (i) or (ii) above,
on the basis otherwise set forth in (ii) above until all available shares
have been allocated or all subscriptions satisfied.
Subscription Rights to purchase Common Stock received by Trustees and Officers
of the Bank, and their Associates, as Eligible Account Holders that are based on
their increased Deposit Accounts in the Bank in the one-year period preceding
the Eligibility Record Date shall be subordinated to the Subscription Rights of
all other Eligible Account Holders granted pursuant to the Conversion
Regulations and this Plan.
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(b) The Tax-Qualified Employee Stock Benefit Plans shall receive,
without payment, as a second priority after the filling of subscriptions of
Eligible Account Holders, non-transferable Subscription Rights to purchase up to
a maximum of ten percent (10.0%) of the Common Stock. If, after the filling of
subscriptions of Eligible Account Holders, a sufficient number of shares is not
available to fill the subscriptions by such plan, the subscription by such plan
shall be filled to the maximum extent possible. A Tax-Qualified Employee Stock
Benefit Plan shall not be deemed to be an Associate or Affiliate of, or a Person
Acting in Concert with, any Director or Officer of the Company or the Bank.
Notwithstanding any provision contained herein to the contrary, the Bank may
make scheduled discretionary contributions to a Tax-Qualified Employee Stock
Benefit Plan; provided, among other things, that such contributions do not cause
the Bank to fail to meet its regulatory capital requirements.
(c) Each Supplemental Eligible Account Holder shall receive, as
third priority and without payment, nontransferable Subscription Rights to
subscribe for shares of Common Stock equal to an amount up to the greatest of
(i) the amount permitted to be subscribed for in the Community Offering, which
amount is currently $150,000 of the Common Stock offered in the Conversion, as
specified in Section 3.05(d), and may be increased to 5% of the Common Stock
offered in the Conversion or decreased to less than $150,000, (ii) one-tenth of
one percent of the total offering of shares of Common Stock, or (iii) fifteen
times the product (rounded down to the next whole number) obtained by
multiplying the total number of shares of Common Stock to be issued by a
fraction of which the numerator is the amount of the Qualifying Deposit of the
Supplemental Eligible Account Holder and the denominator is the total amount of
Qualifying Deposits of all Supplemental Eligible Account Holders, in each case
on the Supplemental Eligibility Record Date. Such subscription is subject to
the maximum purchase limitation specified in Section 3.10(a) and the minimum
purchase limitation in Section 3.10(d) and exclusive of an increase in the
total number of shares issued due to an increase in the Estimated Price Range
of up to 15%. If Supplemental Eligible Account Holders subscribe for a number
of shares of Common Stock that exceeds the total number of shares of Common
Stock being issued and available after purchases by Eligible Account Holders
and Tax-Qualified Employee Stock Benefit Plans, the Common Stock shall be
allocated among subscribing Supplemental Eligible Account Holders as follows:
(i) first, to the extent possible, each Supplemental Eligible
Account Holder shall be entitled to subscribe for the entire amount of his
or her order, up to 100 shares;
(ii) second, each Supplemental Eligible Account Holder subscribing
for in excess of 100 shares shall be entitled, with respect to such
excess, to subscribe for the same percentage of the total remaining shares
to be issued as the value of his or her Qualifying Deposits represents to
the aggregate value of the Qualifying Deposits of all remaining
Supplemental Eligible Account Holders whose subscriptions remain
unsatisfied; provided, however, that no fractional shares shall be issued;
and
(iii) third, any shares then remaining shall be reallocated (one or
more times if necessary) among those Supplemental Eligible Account Holders
whose subscriptions are not filled pursuant to subparagraphs (i) or (ii)
above, on the basis otherwise set forth in (ii) above until all available
shares have been allocated or all subscriptions satisfied.
(d) Each Other Depositor shall receive, as fourth priority and
without payment, nontransferable Subscription Rights to subscribe for shares of
Common Stock equal to an amount up to the greater of (i) the amount permitted
to be subscribed for in the Community Offering, which amount is currently
$150,000 of the Common Stock offered in the Conversion, as specified in Section
3.05(d), and may be increased to 5% of the Common Stock offered in the
Conversion or decreased to less than $150,000, and (ii) one-tenth of one
percent of the total offering of shares of Common Stock. Such subscription is
subject to the maximum purchase limitation specified in Section 3.10(a) and the
minimum purchase limitation in Section 3.10(d) and exclusive of an increase in
the total number of shares issued due to an increase in the Estimated Price
Range of up to 15%. If Other Depositors subscribe for a number of shares of
Common Stock that exceeds the total number of shares of Common Stock being
issued and available after purchases by Eligible Account Holders, the
Tax-Qualified Employee Stock Benefit Plans and Supplemental Eligible Account
Holders, the Common Stock shall be allocated among subscribing Other Depositors
as follows:
(i) first, to the extent possible, each Other Depositor shall be
entitled to subscribe for the entire amount of his or her order, up to 100
shares; and
(ii) second, remaining shares will be allocated to each Other
Depositor whose subscription remains unsatisfied on a 100 share per order
basis until all such orders have been filled or the remaining shares have
been allocated.
(e) Subscription Rights are non-transferable and may not be
exercised by or on behalf of any Person other than the Holder of Subscription
Rights. Prior to the Effective Date, no Person shall offer to transfer, enter
into any agreement or understanding to transfer, or transfer the legal or
beneficial ownership of any shares of Common Stock, except pursuant to or as con
templated by this Plan.
(f) The Bank shall make reasonable efforts to comply with the
securities laws of all States in the United States in which Persons entitled to
subscribe for shares of Common Stock pursuant to the Plan reside. No person
will be offered or sold any Common Stock in the Subscription Offering if such
Person resides in a foreign jurisdiction.
No payment will be made in lieu of the granting of Subscription Rights to any
such Person.
Section 3.05 Community Offering.
Shares of Common Stock not subscribed for in the Subscription
Offering may be offered in a Community Offering, commencing concurrently with or
subsequent to the commencement of the Subscription Offering, subject to the
following terms and conditions:
(a) The Community Offering may be made to the those persons that the
Bank determines to be members of its community, including without limitation,
customers, employees,
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Officers, and Trustees of the Bank and their immediate families, trusts or
custodial arrangements forming part of an Individual Retirement Account
established pursuant to Section 408 of the Internal Revenue Code, or part of a
qualified retirement plan established pursuant to Section 401(a) of the Internal
Revenue Code and maintained for the benefit of any such natural person, and
certain institutional investors.
(b) The Community Offering shall be completed no later than 45 days
following the termination of the Subscription Offering, unless extended with the
approval of the Superintendent.
(c) The Community Offering shall be by means of a direct marketing
program. The Bank or the Company may, if the Board of Trustees of the Bank and
the Board of Directors of the Company deem it advisable, engage the services of
a registered broker-dealer, consultant or investment banking firm, experienced
and expert in the sale of savings institution securities, to assist the Company
in the direct marketing program. The Company and the Bank shall make
distribution of the Common Stock to be sold in the Community Offering in such a
manner as to promote a reasonably wide distribution of Common Stock.
(d) Any Person subscribing for Common Stock pursuant to the
provisions of this Section 3.05 shall be required to purchase a minimum of 25
shares to the extent such shares are available for purchase. The maximum amount
that any Person, together with any Associate or group of Persons Acting in
Concert, may subscribe for in the Community Offering shall be $150,000 of the
Common Stock offered in the Conversion; provided, however, that the amount
permitted to be purchased in the Community Offering may be increased to 5% of
the Common Stock offered in the Conversion or decreased to less than $150,000
without the further approval of depositors or resolicitation of subscribers. If
there are not sufficient shares available to fill all subscription requests, the
total number of shares available in the Community Offering shall be allocated to
each subscriber whose order is accepted, the shares available to such subscriber
will be allocated in the manner which permits each such person, to the extent
possible, to purchase the number of shares necessary to make his total
allocation of Common Stock equal to the lesser of 100 shares or the number of
shares subscribed for by such persons, thereafter, unallocated shares will be
allocated among such persons whose subscriptions remain unsatisfied on a 100
shares per order basis until all such orders have been filled or the remaining
shares have been allocated.
(e) The Bank shall make reasonable efforts to comply with the
securities laws of all States in the United States in which Persons entitled to
subscribe for shares of Common Stock pursuant to the Plan reside.
No Person will be offered or sold any shares of Common Stock in
the Community Offering if such Person resides in a foreign jurisdiction;
and
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(f) Notwithstanding the foregoing the Company reserves the absolute
right to accept or reject any or all orders in the Community Offering in
whole or in part for any reason not in contravention of any applicable law
or regulation.
Section 3.06 Subscription and Community Offering Procedures; Order Forms
(a) After the registration statement for the Common Stock has been
declared effective and all other required regulatory approvals have been
obtained, the Company shall distribute or make available the Prospectus,
together with Order Forms for the purchase of Common Stock, to the Holders of
Subscription Rights for the purpose of enabling them to exercise their
respective Subscription Rights. Such notice may be included with the Proxy
Statement for the Special Meeting and may also be included in a notice of the
pendency of the Conversion and the Special Meeting sent to all Voting
Depositors. Each Order Form must be preceded or accompanied by the Prospectus
describing the Company, the Bank, the Common Stock, the Subscription Offering
and the Community Offering. Each Order Form shall contain such information as
may be required by the Conversion Regulations.
(b) The Holders of Subscription Rights shall have a period of time
within which to complete and deliver an Order Form to the Company. The exact
date and time by which completed Order Forms must be received by the Company
shall be set forth on the Order Form; provided, that if the Holders of
Subscription Rights are required to return a postage-paid request card to
receive a Prospectus and Order Form, the Subscription Offering shall not
terminate until the expiration of five days after the Special Meeting unless a
shorter period of time is approved by the New York State Banking Department.
Failure of any Holder of Subscription Rights to deliver a properly executed
Order Form to the Company, together with full payment (or authorization for full
payment by withdrawal from a Deposit Account with the Bank) for the shares of
Common Stock subscribed for, within the time limits prescribed shall be deemed a
waiver and release by such Person of any Subscription Rights.
(c) The Company shall also distribute or make available the
Prospectus, together with Order Forms for the purchase of Common Stock, to
certain other Persons described in Section 3.05. A subscriber in the Community
Offering shall have a period of time within which to complete and deliver an
Order Form to the Company, which period of time shall end at the same time that
the Subscription Offering terminates, unless extended pursuant to Section
3.05(b). The exact date and time by which completed Order Forms must be received
by the Company shall be set forth on the Order Form.
(d) The Company may, subject to the provisions of this Plan and any
required approval of the Superintendent, extend the period during which an Order
Form must be completed and delivered to the Company. Any such extension shall be
for a period that the Board of Trustees of the Bank and the Board of Directors
of the Company determine is appropriate.
(e) The Company reserves the right to accept or reject orders on
photocopied or facsimilied order forms. The Company may, but will not be
required to, waive any irregularity on any Order Form, or require the submission
of corrected Order Forms or the remittance of full payment for subscribed shares
of Common Stock by such date as set forth in the Prospectus. The
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<PAGE> 20
interpretation by the Company of the terms and conditions of the Order Forms
will be final and binding on all subscribers.
Section 3.07 Payment for Common Stock.
(a) Payment for shares of Common Stock subscribed for in the
Subscription Offering and in any Community, Syndicated Community or Public
Offerings shall be equal to the Maximum Subscription Price multiplied by the
number of shares that are being subscribed for. Such payment must, except as
noted below, be made at the time the Order Form is delivered to the Company and
may be made:
(i) in cash, if delivered in person, or by check, bank draft, or
money order, or
(ii) if the subscriber has a Deposit Account in the Bank, the
subscriber may authorize the Bank to withdraw from such Deposit Account an
amount equal to the aggregate Maximum Subscription Price of the shares for
which the Person subscribed.
If the subscriber is a Benefit Plan, the subscribing Benefit Plan may pay for
the shares of Common Stock at the Actual Purchase Price on or prior to the
Effective Date. If the subscribing Benefit Plan is an employee stock ownership
plan, it may pay on or prior to the Effective Date only if it has received a
loan commitment from the Company or a source of funding acceptable to the
Company, committing to advance to the Benefit Plan on or before the Effective
Date the aggregated Maximum Subscription Price of the shares for which the
Benefit Plan subscribed. Notwithstanding the foregoing, the Bank and the Company
shall have the right, in their sole discretion, to permit institutional
investors to submit contractually irrevocable orders in the Community Offering
and to thereafter submit payment for the Common Stock for which they are
subscribing in the Community Offering at any time prior to 48 hours before the
completion of the Conversion, unless such 48-hour period is waived by the Bank
and the Company, in their sole discretion.
(b) If the Actual Purchase Price is less than the Maximum
Subscription Price, the difference will either be promptly refunded to all
subscribers (or withdrawal authorizations from time or Deposit Accounts shall be
reduced) or, if the subscriber has so elected on a space that may be provided on
the Order Form, the difference (excluding accrued interest) will be applied to
the purchase of additional whole shares of Common Stock to the extent available,
and any remaining difference will be promptly refunded to all subscribers (or
withdrawal authorizations from time or Deposit Accounts shall be reduced).
(c) If a subscriber authorizes a withdrawal of the amount of the
Maximum Subscription Price multiplied by the number of shares that are being
subscribed for from a time or Deposit Account with the Bank as payment for the
shares subscribed for, the Bank will have the right upon receipt of the Order
Form by the Company to make such withdrawal immediately or to place a hold on
such account equal to such aggregate Maximum Subscription Price. The Bank will
allow withdrawal from certificates of deposit for such payment without the
assessment of penalties; however, if the withdrawal results in the certificate
failing to meet any applicable
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<PAGE> 21
minimum balance requirement, the certificate evidencing the account may be
canceled and the remaining balance transferred to a statement savings account
that will earn interest at the regular passbook rate. Where any applicable
required minimum balance is maintained in such certificate account, the rate of
return on the balance of the certificate account will remain the same as prior
to such early withdrawal. If the Bank withdraws funds from a subscriber's time
account, or places a hold on such account, in accordance with this Section 3.07,
and the time account matures prior to the date the Conversion is completed or
terminated, the funds so withdrawn or placed under a hold shall be transferred
upon maturity of the time account to a statement savings account that will earn
interest at the regular passbook rate.
(d) The Bank will pay interest, at not less than the passbook rate,
for all amounts paid in cash, by check, bank draft or money order to purchase
shares of the Common Stock in the Subscription Offering or Community Offering
from the date payment is received until the date the Conversion is completed or
terminated. If any withdrawal from a time or Deposit Account made pursuant to
paragraph (c) above is made at any time prior to the date the Conversion is
completed or terminated, the Bank shall pay interest to the subscriber on the
amount withdrawn as if such amount had remained in the account from which it was
withdrawn until the date the Conversion is completed or terminated.
(e) The Bank will not knowingly loan funds or otherwise extend
credit to any Person for the purpose of purchasing shares of the Common Stock.
Section 3.08 Syndicated Community Offering.
(a) Shares of Common Stock not sold in the Subscription Offering or
the Community Offering may be offered for sale in a Syndicated Community
Offering, subject to such terms, conditions and procedures as may be determined
by the Bank, in a manner that is intended to achieve the a reasonably wide
distribution of the Common Stock subject to the right of the Bank to accept or
reject in whole or in part all subscriptions in the Syndicated Community
Offering.
(b) In the Syndicated Community Offering, any Person together with
any Associate or group of Persons Acting in Concert may purchase up to $150,000
of the Common Stock offered in the Conversion subject to the maximum purchase
limitation specified in Section 3.10(a) and the minimum purchase limitation
specified in Section 3.10(d) and exclusive of an increase in the total number of
shares issued due to an increase in the Estimated Price Range of up to 15%.
However, the shares purchased in the Community Offering by any Person together
with an Associate or group of Persons Acting in Concert pursuant to Section 3.06
shall be counted toward meeting the maximum purchase limitation found in this
Section 3.08.
(c) Provided that the Subscription Offering has commenced, the Bank
may commence the Syndicated Community Offering at any time after the mailing to
the depositors of the Proxy Statement to be used in connection with the special
meeting of depositors, provided that the completion of the offer and sale of the
Common Stock shall be conditioned upon the approval of this Plan by Voting
Depositors. If the Syndicated Community Offering is not sooner commenced
pursuant to the provisions of the preceding sentence, the Syndicated Community
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<PAGE> 22
Offering will be commenced as soon as practicable following the date upon which
the Subscription and Community Offerings terminate.
Section 3.09 Public Offering Alternative.
(a) Shares of Common Stock not sold in the Subscription Offering or
the Community Offering may, as an alternative to a Syndicated Community Offering
pursuant to Section 3.08, be offered for sale by the Company to or through
Underwriters. The provisions of Section 3.10 shall not be applicable to sales to
Underwriters for purposes of such a Public Offering. Any such Underwriter shall
agree to (a) purchase such shares from the Company with a view to reoffering
them to the general public; (b) use their best efforts to sell, for the account
of the Company, such shares to the general public; or (c) a combination of (a)
and (b), subject to the following terms and conditions:
(b) Any Underwriting Agreement shall provide that the Underwriters
shall agree to purchase all shares of the Common Stock not sold in the
Subscription Offering or the Community Offering, if any such shares are
purchased.
(c) The price paid to the Company by or through the Underwriters for
the Common Stock shall be the aggregate Public Offering Price for the shares of
Common Stock so offered, less discounts and commissions as negotiated between
the Bank, the Company and the Underwriters and approved by the Superintendent
and the National Association of Securities Dealers, Inc.
(d) The Underwriting Agreement shall be subject to the following
conditions and such other conditions as may be acceptable to the Bank, the
Company and the Superintendent:
(i) purchases in the Public Offering shall be subject to the
limitations of Section 3.10; and
(ii) the Company and its Underwriters shall use reasonable efforts
to assure that the stock to be offered and sold in the Public Offering
shall be offered and sold in a manner that, to the extent practicable,
will achieve a reasonably wide distribution of such stock.
(e) If for any reason a Syndicated Community Offering or a Public
Offering of shares of Common Stock not sold in the Subscription and Community
Offerings cannot be effected, or if any insignificant residue of shares of
Common Stock is not sold in the Subscription and Community Offerings or in the
Syndicated Community or Public Offering, other arrangements will be made for the
disposition of unsubscribed shares by the Bank, if possible. Such other purchase
arrangements will be subject to the approval of the Superintendent.
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Section 3.10 Restrictions on Purchase and Transfer of Common Stock.
The following limitations shall apply to all purchases of Common
Stock:
(a) No Person, acting alone, acting together with any other Person,
or Acting in Concert with any group of Persons, shall be entitled to purchase
more than 1.0% of the Common Stock offered, provided, however, that in the event
the maximum purchase limitations set forth in this Section 3.10(a) are increased
pursuant to Section 3.10(e) below to more than 1.0% of the shares of Common
Stock offered, orders for Common Stock in the Community Offering and in the
Syndicated Community Offering (or the Public Offering), if any, shall, as
determined by the Bank and the Holding Company, first be filled to a maximum of
1.0% of the total number of shares of Common Stock offered and thereafter
remaining shares shall be allocated on an equal number of shares per order basis
until all orders have been filled. For purposes of applying this purchase
limitation, the purchases of any Tax-Qualified Employee Stock Benefit Plan shall
not be subject to such purchase limitation, and the purchases of any Benefit
Plan shall not be aggregated with those of any other Benefit Plan or other
Person; provided, however, that any one or more Tax-Qualified Employee Stock
Benefit Plans may subscribe for up to and including 10% of the Common Stock
issued.
(b) The Officers and Trustees of the Bank and Officers and Directors
of the Company and their Associates, collectively, shall be entitled to purchase
up to and including 25% of the Common Stock issued. In applying this limitation,
Common Stock purchased by any one or more Tax-Qualified Employee Stock Benefit
Plan shall not be counted.
(c) Shares of Common Stock subscribed for in the Subscription
Offering, the Community Offering and any Syndicated Community Offering or Public
Offering or otherwise purchased shall be aggregated for purposes of determining
if the limitations of Section 3.10(a) and (b) have been violated.
(d) Any Person exercising Subscription Rights to purchase Common
Stock shall be required to purchase a minimum of 25 shares to the extent such
shares are available for purchase. However, in the event the minimum number of
shares of Common Stock that must be purchased times the price per share exceeds
five hundred dollars ($500.00), then the minimum purchase requirement shall be
reduced to such number of shares that, when multiplied by the price per share,
the aggregate price for any such minimum purchase of shares of Common Stock
shall not exceed five hundred dollars ($500.00).
(e) Depending upon market or financial conditions, the Board of
Trustees of the Bank and the Board of Directors of the Company, without further
approval of the subscribers, may decrease or increase the purchase limitations
in this Plan, provided that the maximum purchase limitations may not be
increased to a percentage in excess of 5%. If the Bank and the Company increase
such maximum purchase limitations, the Bank and the Company are only required to
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<PAGE> 24
resolicit Persons who subscribed for the maximum purchase amount and may, in the
sole discretion of the Bank and the Company, resolicit certain other large
subscribers.
(f) Each Person purchasing Common Stock in the Conversion shall be
deemed to confirm that such purchase does not conflict with the purchase
limitations set forth in this Plan.
(g) As used in this Section 3.10, the Officers, Directors and
Trustees of the Bank and the Company shall not be deemed to be Associates or a
group affiliated with each other or otherwise Acting in Concert solely as a
result of their being Officers, Trustees or Directors of the Bank or the
Company.
Section 3.11 Time Limits for Sale of Shares; Effect of Inability to Sell.
All shares of Common Stock not subscribed for at the completion of
the Subscription Offering shall be sold within 45 days after completion of the
Subscription Offering, or such longer period as the Superintendent may approve.
If all shares are not sold as provided for herein, the Bank and the Company will
consult with the Superintendent to determine an alternative method of sale. In
such event and if required by the Superintendent or the SEC, a resolicitation of
those Persons who have subscribed for shares will be made. If such an
alternative method is not agreed upon, the Conversion will not be effected, the
Bank will remain in mutual form, all funds submitted to the Bank and the Company
as payment for shares of the Common Stock will be returned to subscribers, with
interest as provided herein, and all withdrawal authorizations will be canceled.
Section 3.12 Establishment and Funding of Foundation.
(a) As part of the Conversion, the Company and the Bank intend to
establish the Foundation and to donate to the Foundation from authorized but
unissued shares up to 3.0% of the number of shares of Common Stock sold in the
Conversion. The Foundation is being formed in connection with the Conversion in
order to complement the Bank's existing community reinvestment activities and to
share with the Bank's local communities a part of the Bank's financial success
as a locally headquartered, community-minded, financial services institution.
The funding of the Foundation with Common Stock of the Company accomplishes this
goal as it enables the community to share in the growth and profitability of the
Company and the Bank over the long-term.
(b) The Foundation will be dedicated to the promotion of charitable
purposes including community development, grants or donations to support housing
assistance, not-for-profit community groups and other types of organizations or
civic-minded projects. The Foundation will annually distribute total grants to
assist charitable organizations or to fund projects within its local community
of not less than 5% of the average fair value of Foundation assets each year. In
order to serve the purposes for which it was formed and to maintain its
qualification under Section 501(c)(3) of the Internal Revenue Code, the
Foundation may sell, on an annual basis, a limited portion of the Common Stock
contributed to it by the Company.
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<PAGE> 25
(c) A majority of the board of directors of the Foundation will be
comprised of individuals who are Officers or Directors of the Bank and the
remaining board members will be comprised of civic and community leaders from
within the Bank's local community. The board of directors of the Foundation will
be responsible for establishing the policies of the Foundation with respect to
grants or donations, consistent with the stated purposes of the Foundation. The
establishment and funding of the Foundation as part of the Conversion is subject
to the approval of the Superintendent and, if applicable, the FDIC, as more
fully described in the Prospectus.
Section 3.13 Enforcement of Terms and Conditions.
The Bank and the Company shall have the right to take all such
action as they may, in their sole discretion, deem necessary, appropriate, or
advisable in order to monitor and enforce the terms, conditions, limitations and
restrictions contained in this Article III and elsewhere in this Plan and the
terms, conditions and representations contained in the Order Forms, including,
but not limited to, the right to require any subscriber or purchaser to provide
evidence, in a form satisfactory to the Bank, of such Person's eligibility to
subscribe for or purchase shares of the Common Stock under the terms of this
Plan and the absolute right (subject only to any necessary regulatory approvals
or concurrence) to reject, limit, or revoke acceptance of any subscription or
order and to delay, terminate, or refuse to consummate any sale of Common Stock
that they believe might violate, or is designed to, or is any part of a plan to
evade or circumvent such terms, conditions, limitations, restrictions, and
representations. Any such action shall be final, conclusive, and binding on all
Persons, and the Bank and the Company and their respective Board of Trustees and
Board of Directors shall be free from any liability to any Person on account of
any such action.
ARTICLE IV
CERTAIN RESTRICTIONS
Section 4.01 Sale of Shares Purchased by Trustees, Directors or Officers.
All shares of the Common Stock purchased or acquired (either
directly or indirectly) by the Trustees or Officers of the Bank or of the
Company on original issue in the Conversion either directly from the Company (by
subscription or otherwise) or from the Underwriters (or otherwise beneficially
owned by such Trustees or Officers immediately after such original issuance)
shall be subject to the restriction that the shares shall not be sold for a
period of one year following the date of purchase. Such restriction shall not
apply to the shares of any such Trustee or Officer in the event of the death or
judicial declaration of incompetence of such Person or any exchange of such
shares in connection with a merger or acquisition of the Company or the Bank. In
addition, such restriction shall not apply to shares held by any Tax-Qualified
Employee Stock Benefit Plan. In connection with the shares of the Common Stock
that are subject to this restriction on resale:
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(a) Each certificate for such shares shall bear a legend giving
appropriate notice of such restriction;
(b) Appropriate instructions shall be issued to the transfer agent
for the Common Stock with respect to applicable restrictions on transfer
of any such restricted stock; and
(c) Any shares issued as a stock dividend, stock split or otherwise
with respect to any such restricted stock shall be subject to the same
restrictions as applicable to such originally restricted stock until the
restrictions respecting such originally restricted stock are terminated,
and any certificate for such shares shall bear a legend advising of such
restrictions.
Section 4.02 Subsequent Purchases of Shares by Trustees, Directors and
Officers.
For a period of three years following the Effective Date, no Officer
or Trustee of the Bank or no Officer or Director of the Company (or any person
who was an Officer or Trustee of the Bank or an Officer of Director of the
Company at any time after the date on which the Board of Trustees of the Bank
adopted this Plan), or Associate of any of them, shall, without the prior
written approval of the Superintendent, purchase or acquire direct or indirect
beneficial ownership of any shares of the capital stock of the Company, except
through a broker or dealer registered with the SEC. This restriction shall not
apply to any purchase or acquisition effected pursuant to any Benefit Plan or
the exercise of any options to purchase Common Stock granted pursuant to a stock
option plan.
Section 4.03 Acquisition of Control.
(a) In accordance with the Conversion Regulations, for a period of
not less than three years (or such longer period as may be subsequently
authorized under the Conversion Regulations) following the Effective Date, no
Person or group of Persons Acting in Concert shall, directly or indirectly,
offer to acquire or acquire the beneficial ownership of more than ten percent
(10%) of any class of any equity security of the Company or the Bank without the
prior consent of the Superintendent.
(b) The Restated Organization Certificate of the Bank will contain a
provision stipulating that, for a period of three years following the Effective
Date, no Person or group of Persons Acting in Concert, except the Company (if a
holding company form of organization is utilized), shall directly or indirectly
offer to acquire or acquire the beneficial ownership of more than ten percent
(10%) of any class of an equity security of the Bank, without the prior written
approval of the Superintendent. In addition, such Restated Organization
Certificate may also provide that, for a period of three years following the
Conversion, shares beneficially owned in violation of the above-described
Restated Organization Certificate provision shall not be entitled to vote and
shall not be voted by any Person or counted as voting stock in connection with
any matter submitted to shareholders for a vote. In addition, the Restated
Organization Certificate will contain provisions providing that special meetings
of the shareholders relating to changes in
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control or amendment of the Restated Organization Certificate may only be called
by the Board of Directors and that shareholders shall not be permitted to
cumulate their votes for the election of directors.
(c) The Certificate of Incorporation of the Company contains a
provision to the effect that any record owner of any outstanding shares of the
Company's common stock who beneficially owns in excess of 10% of such
outstanding shares shall be entitled to cast only one one-hundredth (1/100) of
one vote per share with respect to any shares held in excess of 10%. In
addition, the Certificate of Incorporation and By-Laws of the Company contain
provisions for staggered terms of the directors, noncumulative voting for
directors, limitations on the calling of special meetings, a fair price
provision for certain business combinations and certain notice requirements.
(d) For the purposes of this Section 4.03:
(i) The term "Person" includes an individual, a group Acting in
Concert, a corporation, a partnership, an association, a joint stock
company, a trust, an unincorporated organization or similar company, a
syndicate, or any other group formed for the purpose of acquiring, holding
or disposing of securities of an insured institution, and the term
"Person" does not include the Company or any majority-owned subsidiary
thereof, or any Tax-Qualified Employee Stock Benefit Plan or any trust or
custodial arrangement established in connection with any such plan;
provided, that the plan or plans do not have beneficial ownership in the
aggregate of more than twenty-five percent (25%) of any class of equity
security of the Bank or the Company;
(ii) The term "offer" includes every offer to buy or acquire,
solicitation of an offer to sell, tender offer for, or request or
invitation for tenders of, a security or interest in a security for value;
(iii) The term "acquire" includes every type of acquisition, whether
effected by purchase, exchange, operation of law or otherwise; and
(iv) The term "security" includes non-transferable subscription
rights issued pursuant to a plan of conversion as well as a "security" as
defined in 15 U.S.C. Section 8c(a)(10).
ARTICLE V
EFFECT OF CONVERSION; CERTAIN COVENANTS AND AGREEMENTS
Section 5.01 Restated Organization Certificate and Adoption of New
By-Laws.
The Bank shall take all appropriate steps to restate its
Organization Certificate to read in the form of an Organization Certificate for
a New York stock savings bank
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as specified in the Banking Law and the regulations of the New York Banking
Board and approved by the Board of Trustees of the Bank. By their approval of
the Plan, the Voting Depositors of the Bank will thereby approve and adopt such
Restated Organization Certificate. The Bank shall also take all appropriate
steps to adopt By-Laws sufficient and appropriate for a New York stock savings
bank.
Section 5.02 Effect of Conversion.
On the Effective Date of the Conversion, the Bank shall cease to be
a mutual institution and shall simultaneously become a stock institution. All of
the property, rights, powers, franchises, debts, liabilities, obligations and
duties of the mutual institution shall continue as such in the stock institution
and all deposits in the mutual institution shall remain as deposits of equal
character and value in the stock institution. The corporate existence of the
Bank shall not terminate, and the converted Bank shall be a continuation of the
mutual institution that existed immediately before the filing of the Restated
Organization Certificate.
Section 5.03 Liquidation Account.
(a) A liquidation account shall be established and maintained for
the benefit of Eligible Account Holders and supplemental Eligible Account
Holders who continue to maintain an account in the Bank in the event of a
complete liquidation of the Bank following the Conversion. Each Eligible Account
Holder and Supplemental Eligible Account Holder shall, with respect to each
account held, have a related inchoate interest in a portion of the liquidation
account balance ("Subaccount Balance"). The initial liquidation account balance
shall be equal to the net worth of the Bank (determined in accordance with
generally accepted accounting principles) as set forth in its most recent
statement of financial condition contained in the Proxy Statement.
(b) In the event of a complete liquidation of the Bank (and only in
such event), each Eligible Account Holder and Supplemental Eligible Account
Holder shall be entitled to receive a liquidation distribution from the
liquidation account in the amount of the then-current adjusted Subaccount
Balance for each account of such holder after the Conversion, before any
liquidation distribution may be made with respect to capital stock.
(c) The initial Subaccount Balance for an account held by an
Eligible Account Holder or a Supplemental Eligible Account Holder shall be
determined by multiplying the aggregate opening balance in the liquidation
account by a fraction of which the numerator is the amount of deposits or shares
in the account of such Eligible Account Holder and Supplemental Eligible Account
Holder on the Eligibility Record Date or Supplemental Eligibility Record Date,
as applicable, and the denominator is the total amount of deposits or shares
owned by all Eligible Account Holders or Supplemental Eligible Account Holders
of the Bank on such applicable date. Such initial Subaccount Balance shall not
be increased, and it shall be subject to downward adjustments as follows: If the
deposit balance in any account of an Eligible Account Holder or Supplemental
Eligible Account Holder at the end of any period for which the Bank has prepared
audited financial statements subsequent to the Eligibility Record Date is less
than the lesser of: (i) the deposit balance in such account at the end of any
period for which the Bank has prepared audited financial statements subsequent
to the Eligibility Record Date; or (ii) the amount of the deposits as of the
Eligibility Record Date or Supplemental Eligibility Record Date, as applicable,
the Subaccount Balance for such account shall be adjusted by reducing such
Subaccount Balance in an amount
-25-
<PAGE> 29
proportionate to the reduction in such deposit balance. In the event of such a
downward adjustment, the Subaccount Balance shall not be subsequently increased,
notwithstanding any increase in the deposit balance of the related account. If
any such account is closed, the related Subaccount Balance shall be reduced to
zero.
(d) Subsequent to the completion of the Conversion, the Bank shall
not declare or pay a cash dividend on any of its capital stock if the effect
thereof would cause the net worth of the Bank to be reduced below the amount
required to maintain the liquidation account. For purposes of Section 86.4(g)(5)
of the Conversion Regulations, a time account shall be deemed to be closed upon
its maturity date regardless of any renewal thereof. The Bank shall not be
required to set aside funds for the purpose of establishing the liquidation
account and, except as provided in this Section 5.03, the existence of such
account shall not operate to restrict the use or application of any of the net
worth accounts of the Bank subsequent to the Conversion.
Section 5.04 Voting Rights.
Except as may be provided in the Restated Organization Certificate
of the Bank pursuant to any amendment thereto subsequent to the Effective Date
of the Conversion, the holders of the capital stock of the Bank shall have
exclusive voting rights in the Bank upon the Effective Date of the Conversion.
Except as may be provided in the Certificate of Incorporation of the Company
pursuant to any amendment thereto subsequent to the Effective Date of the
Conversion, the holders of the Common Stock of the Company shall have exclusive
voting rights in the Company upon the Effective Date of the Conversion.
Section 5.05 Issuance of Stock.
(a) Subsequent to the Effective Date of the Conversion, the Board of
Directors of the Bank, subject to the provisions of the Restated Organization
Certificate and the By-Laws of the Bank, shall have the authority to issue any
of the authorized, unissued and unreserved shares of common and preferred stock
and to fix the relative rights, preferences and limitations of such preferred
stock. Except as may be required by the Banking Law or otherwise, the Board of
Directors of the Bank shall have sole discretion in the decision to issue such
shares and no shareholder approval will be required for the issuance of such
shares.
(b) Subsequent to the Effective Date of the Conversion, the Board of
Directors of the Company, subject to the provisions of the Certificate of
Incorporation and the By-Laws of the Company, shall have the authority to issue
any of the authorized, unissued and unreserved shares of common and preferred
stock and to fix the relative designations, powers, preferences, rights,
qualifications, limitations and restrictions of such preferred stock. Except as
may be required by the Delaware General Corporation Law or otherwise, the Board
of Directors of the Company shall have sole discretion in the decision to issue
such shares and no shareholder approval will be required for the issuance of
such shares.
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<PAGE> 30
Section 5.06 Directors of Converted Bank.
Following the Conversion, the business and affairs of the Bank shall
be managed by a Board of Directors, the members of which shall be the same
individuals who constituted the Board of Trustees of the Bank immediately prior
to the Conversion. Upon the Effective Date of the Conversion, the Board of
Directors of the Bank shall be divided into three classes with respect to term
of office, each class to contain, as near as may be possible, one-third of the
entire Board of Directors of the Bank. Each person serving as a Trustee of the
Bank on the Effective Date of the Conversion shall be appointed by the Board of
Directors to one of the three classes and shall serve as a director until the
expiration of his term and until his successor is elected and qualified. One
class of directors shall have a term of office expiring at the first annual
meeting of share holders, the second class shall have a term of office expiring
at the second annual meeting of shareholders and the third class shall have a
term of office expiring at the third annual meeting of shareholders. Directors
elected at each annual meeting of shareholders (other than directors elected to
fill vacancies) shall be elected to serve for a term of three years and until
their successors are elected and qualified.
Section 5.07 Employment Agreements.
The Bank and the Company may enter into employment agreements with
such officers and employees and upon such terms and conditions as the Board of
Trustees of the Bank and the Board of Directors of the Company shall determine.
Section 5.08 Market for the Common Stock.
Upon the Effective Date of the Conversion, or as soon thereafter as
practicable, the Common Stock shall be registered pursuant to the Securities
Exchange Act of 1934, as amended, and shall not be deregistered for a period of
three years following such registration. Additionally, the Company shall use its
best efforts to list the Common Stock on a national or regional securities
exchange or on the National Association of Securities Dealers Automated
Quotation System and to encourage and assist a market maker to establish and
maintain a market for the Common Stock.
Section 5.09 Stock Repurchases and Stock Benefit Plans.
The Company, or the Bank if the Company is not utilized, will
restrict repurchases of Common Stock and the implementation of stock option and
management and employee stock benefit plans as required by the Conversion
Regulations, unless such requirements are waived by the appropriate regulatory
agency or agencies.
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<PAGE> 31
ARTICLE VI
TAX RULING REQUIREMENT; AMENDMENT AND TERMINATION;
MISCELLANEOUS
Section 6.01 Conditions to Conversion.
The conversion of the Bank pursuant to this Plan is expressly
conditioned upon the following:
(a) Prior receipt by the Bank of rulings of the United States
Internal Revenue Service and the State of New York taxing authorities, or
opinions of counsel, substantially to the effect that the Conversion will
not result in any adverse federal or state tax consequences to Eligible
Account Holders, Supplemental Eligible Account Holders or Other Depositors
or to the Bank and the Company before or after the Conversion;
(b) The sale of all of the Common Stock offered in the Conversion;
(c) The completion of the Conversion within the time period
specified in Section 6.03; and
(d) The non-objection of the FDIC to the Conversion, the approval of
the Conversion by the Superintendent, the approval of the FRB of the
Company's acquisition of the capital stock of the Bank and the Company's
Registration Statement on Form S-1 is declared effective by the SEC.
Section 6.02 Amendment or Termination of the Plan.
This Plan will not, at the Effective Date of the Conversion, contain
any provision that has been determined by the Superintendent, in writing, to be
inequitable or detrimental to the Bank or its depositors, or contrary to the
public interest. If deemed necessary or desirable by the Board of Trustees of
the Bank, this Plan may be substantively amended, as a result of comments from
regulatory authorities or otherwise, at any time prior to solicitation of
proxies from Voting Depositors to vote on the Plan and at any time thereafter
with the concurrence of the Superintendent. This Plan may be terminated by the
Board of Trustees of the Bank at any time prior to the Special Meeting and at
any time thereafter with the concurrence of the Superintendent. By adoption of
the Plan, the Voting Depositors of the Bank authorize the Board of Trustees of
the Bank to amend or terminate the Plan under the circumstances set forth in
this Section.
Section 6.03 Completion Date.
The Conversion shall be completed within 24 months from the date of
approval of this Plan by the Superintendent.
Section 6.04 Expenses of the Conversion.
The expenses incurred in the Conversion shall be reasonable.
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<PAGE> 32
Section 6.05 Interpretation.
Subject to applicable law as set forth in Section 6.07, all
interpretations of this Plan and all applications of the provisions of this Plan
to particular circumstances by a majority of the Board of Trustees of the Bank
shall be final, subject to the authority of the Superintendent and the FDIC.
Section 6.06 Severability.
If any term, provision, covenant or restriction contained in this
Plan is held by a court or a federal or state regulatory agency of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions contained in this Plan shall remain in
full force and effect, and shall in no way be affected, impaired or invalidated.
Section 6.07 Miscellaneous.
This Plan is to be governed by and construed in accordance with the
laws of the State of New York, without giving effect to any conflicts of laws
principles. None of the cover page, the table of contents or the article or
section headings are to be considered a part of this Plan, but are included
solely for convenience of reference and shall in no way define, limit, extend or
describe the scope or intent of any of the provisions hereof. Any reference to a
Section number or Article shall refer to a section or article of this Plan,
unless otherwise stated. Except for such rights as are set forth herein for
Eligible Account Holders, Supplemental Eligible Account Holders and Other
Depositors, this Plan shall create no rights in any Person. The terms defined in
this Plan have the meanings assigned to them in this Plan and include the plural
as well as the singular, and words of any gender shall include each other gender
where appropriate.
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<PAGE> 1
Exhibit 3.3
RESTATED ORGANIZATION CERTIFICATE
OF
THE WARWICK SAVINGS BANK
UNDER SECTION 8007 OF THE BANKING LAW
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
NAME.......................................................1
ARTICLE II
PRINCIPAL OFFICE.................................................1
ARTICLE III
CAPITAL STOCK
Section 1. Shares, Classes and Series Authorized...........................................................2
Section 2. Designations, Powers, Preferences, Rights, Qualifications,
Limitations and Restrictions Relating to the Capital Stock...................................2
ARTICLE IV
LIMITATION ON BENEFICIAL OWNERSHIP OF STOCK
Section 1. Prohibitions Relating to Beneficial Ownership of Voting Stock...................................4
Section 2. Excess Shares...................................................................................4
Section 3. Powers of the Board.............................................................................6
Section 4. Severability....................................................................................6
Section 5. Exclusions......................................................................................7
ARTICLE V
BOARD OF DIRECTORS
Section 1. Number of Directors.............................................................................7
Section 2. Classification of Board.........................................................................7
Section 3. Vacancies.......................................................................................8
Section 4. Removal of Directors............................................................................8
Section 5. Evaluation of Acquisition Proposals.............................................................8
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE VI
ACTION BY SHAREHOLDERS BY WRITTEN CONSENT....................................9
ARTICLE VII
CERTAIN BUSINESS COMBINATIONS
Section 1. Higher Vote Required for Certain Business Combinations..........................................9
Section 2. When Higher Vote is Not Required................................................................9
Section 3. Definitions....................................................................................12
Section 4. Powers of the Disinterested Directors..........................................................16
Section 5. Effect on Fiduciary Obligations of Interested Shareholders.....................................16
Section 6. Amendment, Repeal, Etc.........................................................................16
ARTICLE VIII
INDEMNIFICATION
Section 1. Right to Indemnification.......................................................................17
Section 2. Accrual of Right to Indemnification............................................................17
Section 3. Individual Indemnification Agreements..........................................................17
Section 4. Insurance......................................................................................18
Section 5. Subsequent Amendment and Subsequent Legislation................................................18
ARTICLE IX
AMENDMENTS
Section 1. Amendments of Restated Organization Certificate................................................18
Section 2. Amendments of By-Laws..........................................................................19
</TABLE>
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<PAGE> 4
RESTATED ORGANIZATION CERTIFICATE
OF
THE WARWICK SAVINGS BANK
UNDER SECTION 8007 OF THE BANKING LAW
WE, TIMOTHY A. DEMPSEY and NANCY L. SOBOTOR-LITTELL, being the
President and Chief Executive Officer and the Corporate Secretary, respectively,
of The Warwick Savings Bank (the "Corporation"), in accordance with Section 8007
of the Banking Law of the State of New York (the "Banking Law"), do hereby
certify as follows:
FIRST, The name of the Corporation is THE WARWICK SAVINGS
BANK.
SECOND, The Corporation was created under the name "The
Warwick Savings Bank" by an Act of the Legislature of the State of New York,
passed May 17, 1875, such Act having been amended and supplemented from time to
time thereafter. Under Section 1001(5) of the Banking Law, such Act is the
Organization Certificate of the Corporation.
THIRD, The text of the Organization Certificate of the
Corporation is hereby amended and restated in its entirety to read as follows:
ARTICLE I
NAME
The name by which the Corporation is to be known is THE
WARWICK SAVINGS BANK.
ARTICLE II
PRINCIPAL OFFICE
The principal office of the Corporation is to be located at 18
Oakland Avenue, in the Village of Warwick, County of Orange, State of New York.
<PAGE> 5
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ARTICLE III
CAPITAL STOCK
SECTION 1. SHARES, CLASSES AND SERIES AUTHORIZED. The total
number of shares of all classes of capital stock that the Corporation shall have
authority to issue is twenty million (20,000,000) shares, of which five million
(5,000,000) shares shall be preferred stock, par value one cent ($.01) per share
(the "Preferred Stock"), and fifteen million (15,000,000) shares shall be common
stock, par value one cent ($.01) per share (the "Common Stock"). The Preferred
Stock and Common Stock are sometimes hereinafter collectively referred to as the
"Capital Stock."
SECTION 2. DESIGNATIONS, POWERS, PREFERENCES, RIGHTS,
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS RELATING TO THE CAPITAL STOCK. The
following is a statement of the designations, powers, preferences and rights in
respect of the classes of the Capital Stock, and the qualifications, limitations
or restrictions thereof, and of the authority with respect thereto expressly
vested in the Board of Directors of the Corporation (the "Board"):
(a) Preferred Stock. The Preferred Stock may be issued from
time to time in one or more series, the number of shares and any designation of
each series and the powers, preferences and rights of the shares of each series,
and the qualifications, limitations or restrictions thereof, to be as stated and
expressed in a resolution or resolutions providing for the issue of such series
adopted by the Board, subject to the limitations prescribed by law. The Board in
any such resolution or resolutions is expressly authorized to state for each
such series:
(i) the voting powers, if any, of the holders of shares of
such series in addition to any voting rights affirmatively required by
law;
(ii) the rights of shareholders in respect of dividends,
including, without limitation, the rate or rates per annum and the time
or times at which (or the formula or other method pursuant to which
such rates and such time or times may be determined) and conditions
upon which the holders of shares of such series shall be entitled to
receive dividends and other distributions, and whether any such
dividends shall be cumulative or non-cumulative and, if cumulative, the
terms upon which such dividends shall be cumulative;
(iii) whether the shares of each such series shall be
redeemable by the Corporation at the option of the Corporation or the
holder thereof, and, if redeemable, the terms upon which the shares of
such series may be redeemed;
(iv) the amount payable and the rights or preferences to which
the holders of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation;
(v) the terms, if any, upon which shares of such series shall
be convertible into, or exchangeable for, shares of any other class or
classes or of any other series of the same
<PAGE> 6
-3-
or any other class or classes, including the price or prices or the
rate or rates of conversion or exchange and the terms of adjustment, if
any; and
(vi) any other powers, designations, preferences, and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, so far as they are
not inconsistent with the provisions of this Restated Organization
Certificate and to the full extent now or hereafter permitted by the
laws of the State of New York.
All shares of the Preferred Stock of any one series shall be
identical to each other in all respects, except that shares of any one series
issued at different times may differ as to the dates from which dividends
thereon, if cumulative, shall be cumulative.
Subject to any limitations or restrictions stated in the
resolution or resolutions of the Board originally fixing the number of shares
constituting a series, the Board may by resolution or resolutions likewise
adopted increase (but not above the total number of authorized shares of that
class) or decrease (but not below the number of shares of the series then
outstanding) the number of shares of the series subsequent to the issue of
shares of that series; and in case the number of shares of any series shall be
so decreased, the shares constituting the decrease shall resume that status that
they had prior to the adoption of the resolution originally fixing the number of
shares constituting such series.
(b) Common Stock. All shares of Common Stock shall be
identical to each other in every respect. Subject to Article IV hereof, the
shares of Common Stock shall entitle the holders thereof to one vote for each
share on all matters upon which shareholders have the right to vote. The holders
of shares of Common Stock shall not be permitted to cumulate their votes for the
election of directors. Notwithstanding the foregoing, except as otherwise
required by law, holders of Common Stock, as such, shall not be entitled to vote
on any amendment to this Restated Organization Certificate (including any
Certificate of Designations relating to any series of Preferred Stock) that
relates solely to the terms of one or more outstanding series of Preferred Stock
if the holders of such affected series are entitled, either separately or
together with the holders of one or more other such series, to vote thereon
pursuant to this Restated Organization Certificate (including any Certificate of
Designations relating to any series of Preferred Stock) or pursuant to the laws
of the State of New York.
Subject to the preferences, privileges and powers with respect
to each class of Capital Stock of the Corporation having any priority over the
Common Stock, and the qualifications, limitations or restrictions thereof, the
holders of the Common Stock shall have and possess all rights pertaining to the
Capital Stock.
No holder of shares of Common Stock shall be entitled as such,
as a matter of preemptive right, to subscribe for, purchase or otherwise acquire
any part of any new or additional issue of shares of any class or series
whatsoever of the Corporation, or of securities convertible into shares of any
class or series whatsoever of the Corporation, or of any warrants or other
instruments evidencing rights or options to subscribe for, purchase or otherwise
acquire such
<PAGE> 7
-4-
shares or securities, whether now or hereafter authorized or whether issued for
cash or other consideration or by way of dividend.
ARTICLE IV
LIMITATION ON BENEFICIAL OWNERSHIP OF STOCK
SECTION 1. PROHIBITIONS RELATING TO BENEFICIAL OWNERSHIP OF
VOTING STOCK. No Person, for a period of not less than three years following the
date of filing by the Superintendent of Banks of the State of New York (the
"Superintendent") of this Restated Organization Certificate, shall directly or
indirectly acquire or hold the beneficial ownership of more than ten percent
(10%) of the issued and outstanding Voting Stock of the Corporation. Any Person
so prohibited who directly or indirectly acquires or holds the beneficial
ownership of more than ten percent (10%) of the issued and outstanding Voting
Stock in violation of this Section 1 shall be subject to the provisions of
Sections 2 and 3 of this Article IV, below. All terms used in this Article IV
and not otherwise defined herein shall have the meanings ascribed to such terms
in Section 3 of Article VII, below, except that the term "Person" shall not
include the Corporation, any subsidiary of the Corporation or any pension,
profit-sharing, stock bonus or other compensation plan maintained by the
Corporation or by a member of a controlled group of corporations or trades or
businesses of which the Corporation is a member for the benefit of the employees
of the Corporation, and/or any subsidiary, or any trust or custodial arrangement
established in connection with any such plan.
SECTION 2. EXCESS SHARES. The transfer of any shares of Voting
Stock that would result in a violation of Section 1 of this Article IV is
prohibited and shall be null and void. If, notwithstanding the foregoing
prohibition, a Person shall, voluntarily or involuntarily, become or attempt to
become the purported beneficial owner (the "Purported Owner") of shares of
Voting Stock in excess of ten percent (10%) of the issued and outstanding shares
of Voting Stock, the number of shares in excess of ten percent (10%) shall be
deemed to be "Excess Shares," and all of the following provisions (a) through
(g) shall apply to such Excess Shares:
(a) The Purported Owner shall not obtain any rights in and to
the Excess Shares, and the purported transfer of the Excess Shares to the
Purported Owner shall not be recognized by the transfer agent for such shares
(the "Transfer Agent"). Until such time as the Excess Shares are transferred to
a person whose acquisition thereof will not violate the limitation set forth in
Section 1 of this Article IV (a "Permitted Transferee"), the transferor of the
Excess Shares to the Purported Owner (the "Purported Owner's Transferor") shall
be deemed to have retained the Excess Shares and shall hold and be entitled to
exercise all rights incident to ownership of such Excess Shares. All Excess
Shares will continue to be issued and outstanding.
(b) If the Transfer Agent obtains possession of a certificate
or certificates representing Excess Shares, the Transfer Agent shall deliver
such certificate or certificates to a trustee nominated and appointed by the
Board to hold Excess Shares (the "Share Trustee"). Upon receipt of notice from
the Corporation of the existence of Excess Shares and the identity of the
<PAGE> 8
-5-
Purported Owner of such Excess Shares, the Share Trustee shall take all lawful
action to cause the Purported Owner to deliver or cause delivery of the Excess
Shares and any indicia of ownership thereof to the Share Trustee. Upon obtaining
possession of such Excess Shares, the Share Trustee shall sell or cause the sale
of the Excess Shares to a Permitted Transferee in the then existing public
market or in such other commercially reasonable fashion as the Corporation shall
direct. In performing the duties herein imposed upon it, the Share Trustee shall
act at all times as the agent for the Purported Owner's Transferor.
(c) Upon acquisition of the Excess Shares by a Permitted
Transferee, the Permitted Transferee shall have and be entitled to exercise all
rights incident to the ownership of such Excess Shares.
(d) The proceeds realized from the sale of the Excess Shares
to the Permitted Transferee (the "Proceeds") shall be distributed as follows:
(i) first, to the Share Trustee for any costs incurred in respect of its
administration of the Excess Shares, (ii) second, to the Purported Owner, if
known, in an amount up to the amount paid by the Purported Owner, if
determinable, for the Excess Shares and (iii) the remaining Proceeds, if any,
shall be distributed to the Purported Owner's Transferor, if known, and, if the
Purported Owner's Transferor is not known, such remaining Proceeds shall be held
by the Corporation for the benefit of the Purported Owner's Transferor or such
other persons or entities, as their interests may appear. Notwithstanding
anything in this Article IV to the contrary, the Corporation shall at all times
be entitled to make application to any court of competent jurisdiction within
the State of New York for an adjudication of the respective rights and interests
of any Person in and to the Proceeds pursuant to this Article IV and applicable
law and for leave to pay the Proceeds into such court.
(e) Immediately upon the purported acquisition of any Excess
Shares, the Purported Owner thereof shall give, or cause to be given, written
notice of such acquisition to the Corporation. In addition, at the request of
the Corporation, each owner of shares of Voting Stock shall furnish to the
Corporation all information reasonably requested with respect to all shares of
Voting Stock directly and indirectly owned by such Person.
(f) Upon a determination by the Board that a Person has
attempted or may attempt to transfer or to acquire Excess Shares, the Board may
take such action as it deems advisable to refuse to give effect to such transfer
or acquisition on the books and records of the Corporation, including, without
limitation, any such action that shall cause the Transfer Agent to record the
Purported Owner's Transferor as the record owner of the Excess Shares, and to
institute proceedings to enjoin or rescind any such transfer or acquisition.
(g) The restrictions set forth in this Article IV shall be
noted conspicuously on all certificates evidencing ownership of shares of Voting
Stock.
<PAGE> 9
-6-
SECTION 3. POWERS OF THE BOARD.
(a) The Board may, to the extent permitted by law, from time
to time establish, modify, amend or rescind, by By-Law or otherwise, regulations
and procedures not inconsistent with the express provisions of this Article IV
for the orderly application, administration and implementation of the provisions
of this Article IV. Such procedures and regulations shall be kept on file with
the Secretary of the Corporation and with the Transfer Agent, shall be made
available for inspection by the public and, upon request, shall be mailed to any
holder of shares of Voting Stock.
(b) When it appears that a particular Person has become a
Purported Owner of Excess Shares in violation of Section 1 of this Article IV
and that the provisions of this Article IV, or any of the rules and regulations
of the Board with respect to this Article IV, require application,
interpretation or construction, then a majority of the directors of the
Corporation shall have the power and duty to interpret all of the terms and
provisions of this Article IV and to determine on the basis of information known
to them after reasonable inquiry all facts necessary to ascertain compliance
with this Article IV, including, without limitation, (i) the number of shares of
Voting Stock beneficially owned by any Person or Purported Owner, (ii) whether a
Person or Purported Owner is an Affiliate or Associate of, or is acting in
concert with, any other Person or Purported Owner, (iii) whether a Person or
Purported Owner has an agreement, arrangement or understanding with any other
Person or Purported Owner as to the voting or disposition of any shares of
Voting Stock, (iv) the application of any other definition or operative
provision of this Article IV to the given facts or (v) any other matter relating
to the applicability or effect of this Article IV.
The Board shall have the right to demand that any Person who
is reasonably believed to be a Purported Owner of Excess Shares (or who holds of
record Voting Stock beneficially owned by any Person reasonably believed to be a
Purported Owner) supply the Corporation with complete information as to (i) the
record owner(s) of all shares of Voting Stock beneficially owned by such Person
or Purported Owner and (ii) any other factual matter relating to the
applicability or effect of this Article IV as may reasonably be requested of
such Person or Purported Owner.
Any applications, interpretations, constructions or any other
determinations made by the Board pursuant to this Article IV, in good faith and
on the basis of such information and assistance as was then reasonably available
for such purpose, shall be conclusive and binding upon the Corporation and its
shareholders and neither the Corporation nor any of its shareholders shall have
the right to challenge any such application, interpretation, construction or
determination.
SECTION 4. SEVERABILITY. In the event any provision (or
portion thereof) of this Article IV shall be found to be invalid, prohibited or
unenforceable for any reason, the remaining provisions (or portions thereof) of
this Article IV shall remain in full force and effect, and shall be construed as
if such invalid, prohibited or unenforceable provision had been stricken
herefrom or otherwise rendered inapplicable, it being the intent of this
Corporation and its shareholders that each such remaining provision (or portion
thereof) of this Article IV remain, to the fullest extent
<PAGE> 10
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permitted by law, applicable and enforceable as to all shareholders, including
Purported Owners, if any, notwithstanding any such finding.
SECTION 5. EXCLUSIONS. This Article IV shall not apply to (a)
any offer or sale with a view towards public resale made exclusively by the
Corporation to any underwriter or underwriters acting on behalf of the
Corporation, or to the selling group acting on such underwriter's or
underwriters' behalf, in connection with a public offering of the Common Stock;
(b) any corporation formed by the Corporation in connection with its conversion
from mutual to stock form to acquire all of the shares of capital stock of the
Corporation to be issued in connection with such conversion; or (c) any
reclassification of securities (including any reverse stock split), or
recapitalization of the Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any other transaction or
reorganization (including a transaction in which the Corporation shall form a
holding company) that does not have the effect, directly or indirectly, of
changing the beneficial ownership interests of the Corporation's shareholders,
other than pursuant to the exercise of any appraisal rights, except as a result
of immaterial changes due to fractional share adjustments, which changes do not
exceed, in the aggregate, one percent (1%) of the issued and outstanding shares
of such class of equity or convertible securities.
ARTICLE V
BOARD OF DIRECTORS
SECTION 1. NUMBER OF DIRECTORS. The number of directors of the
Corporation shall not be less than seven (7) nor more than twenty (20). Within
such limitations, the number of directors shall be determined by the By-Laws of
the Corporation or by resolution of the Board.
SECTION 2. CLASSIFICATION OF BOARD. Subject to the rights of
any holders of shares of any series of Preferred Stock that may be issued by the
Corporation pursuant to a resolution or resolutions of the Board providing for
such issuance, the directors of the Corporation shall be divided into three
classes with respect to term of office, each class to contain, as near as may be
possible, one-third of the entire number of the Board, with the terms of office
of one class expiring each successive year. At each annual meeting of
shareholders, the successors to the class of directors whose term expires at
that time shall be elected by the shareholders to serve until the annual meeting
of shareholders held three years next following and until their successors shall
be elected and qualified.
In the event of any intervening changes in the authorized
number of directors, the Board shall designate the class or classes to which the
increase or decrease in directorships shall be apportioned and may designate one
or more directorships as directorships of another class in order to achieve, as
near as may be possible, equality of number of directors among the classes;
provided, however, that no such apportionment or redesignation shall shorten the
term of any incumbent director.
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Unless and to the extent that the By-Laws so provide,
elections of directors need not be by written ballot.
SECTION 3. VACANCIES. Subject to the limitations prescribed by
law, the ByLaws and this Restated Organization Certificate, all vacancies in the
office of director, including vacancies created by newly created directorships
resulting from an increase in the number of directors, shall be filled by the
shareholders, except that vacancies not exceeding one-third of the entire Board
may be filled by the affirmative vote of a majority of the directors then in
office. No person shall be elected a director unless nominated at a previous
regular or special meeting, called for that purpose, upon the recommendation of
the Board, or a committee appointed by the Board. Any director so elected shall
serve for the remainder of the full term of the class of directors in which the
new directorship was created or the vacancy occurred and until his successor
shall be elected and qualified.
SECTION 4. REMOVAL OF DIRECTORS. Any or all of the directors
may be removed at any time, but only for cause, and any such removal shall
require the vote, in addition to any vote required by law, of not less than
eighty percent (80%) of the total votes eligible to be cast by the holders of
all outstanding shares of Capital Stock entitled to vote generally in the
election of directors at a meeting of shareholders expressly called for that
purpose. For purposes of this Section 4, conduct worthy of removal for "cause"
shall mean (a) conduct as a director of the Corporation or any subsidiary of the
Corporation that involves willful material misconduct, breach of fiduciary duty
involving personal pecuniary gain or gross negligence in the performance of
duties, or (b) conduct, whether or not as a director of the Corporation or a
subsidiary of the Corporation, that involves dishonesty or breach of fiduciary
duty and is punishable by imprisonment for a term exceeding one year under state
or federal law.
SECTION 5. EVALUATION OF ACQUISITION PROPOSALS. The Board,
when evaluating any offer to the Corporation or to the shareholders of the
Corporation from another party relating to a change or potential change in
control of the Corporation, including, without limitation, any offer to (a)
purchase for cash or exchange any securities or property for any outstanding
equity securities of the Corporation, (b) merge or consolidate the Corporation
with another corporation or (c) purchase or otherwise acquire all or
substantially all of the properties and assets of the Corporation, in connection
with the exercise of its judgment in determining what is in the best interest of
the Corporation and its shareholders, may give due consideration not only to the
price or other consideration being offered, but also to all other relevant
factors, including, without limitation, (1) both the long-term and the
short-term interests of the Corporation and its shareholders and (2) the effects
that the Corporation's actions may have in the short-term or in the long-term
upon any of the following: (i) the prospects for potential growth, development,
productivity and profitability of the Corporation; (ii) the Corporation's
current employees; (iii) the Corporation's retired employees and other
beneficiaries receiving or entitled to receive retirement, welfare or similar
benefits from or pursuant to any plan sponsored, or agreement entered into, by
the Corporation; (iv) the Corporation's customers and creditors; and (v) the
ability of the Corporation to provide, as a going concern, goods, services,
employment opportunities and employment benefits and otherwise to contribute to
the communities in which is does business.
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ARTICLE VI
ACTION BY SHAREHOLDERS BY WRITTEN CONSENT
Whenever shareholders of the Corporation are required or
permitted to take any action by vote at any annual or special meeting, such
action may be taken without a meeting upon written consent, setting forth the
action so taken, signed by the holders of all outstanding shares of Capital
Stock entitled to vote thereon.
ARTICLE VII
CERTAIN BUSINESS COMBINATIONS
SECTION 1. HIGHER VOTE REQUIRED FOR CERTAIN BUSINESS
COMBINATIONS. In addition to any affirmative vote required by law, this Restated
Organization Certificate or by the provisions of any series of Preferred Stock
that may at the time be outstanding, and except as otherwise expressly provided
for in Section 2 of this Article VII, any Business Combination shall require the
affirmative vote of not less than eighty percent (80%) of the total number of
votes eligible to be cast by the holders of all outstanding shares of Voting
Stock, voting together as a single class (it being understood that for purposes
of this Article VII each share of Voting Stock shall have the number of votes
granted to it pursuant to Article III of this Restated Organization Certificate
or in any resolution or resolutions of the Board for issuance of shares of
Preferred Stock), together with the affirmative vote of at least fifty percent
(50%) of the total number of votes eligible to be cast by the holders of all
outstanding shares of Voting Stock not beneficially owned by the Interested
Shareholder involved or any Affiliate or Associate thereof, voting together as a
single class. Such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage may be specified, by
law or in any agreement with any national securities exchange or otherwise.
SECTION 2. WHEN HIGHER VOTE IS NOT REQUIRED. The provisions of
Section 1 of this Article VII shall not be applicable to any particular Business
Combination, and such Business Combination shall require only such affirmative
vote as is required by law or any other provision of this Restated Organization
Certificate, if the Business Combination shall have been approved by a majority
of the Disinterested Directors then in office or all of the conditions specified
in the following subsections (a) through (g) are met:
(a) The aggregate amount of the cash and the Fair Market Value
as of the Consummation Date of consideration other than cash to be received per
share by holders of Common Stock in such Business Combination shall be at least
equal to the higher of the following:
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes, soliciting dealers' fees,
dealer-management compensation and other expenses, including, but not
limited to, costs of newspaper advertisements, printing expenses and
attorneys' fees) paid by the Interested Shareholder for any shares of
Common
<PAGE> 13
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Stock acquired by it (A) within the two-year period immediately prior
to the Announcement Date or (B) in the transaction in which it became
an Interested Shareholder, whichever is higher, plus interest
compounded annually from the Determination Date through the
Consummation Date at the prime rate of interest of Citibank, N.A. (or
other major bank headquartered in New York City selected by a majority
of the Disinterested Directors then in office) from time to time in
effect in New York City, less the aggregate amount of any cash
dividends paid and the Fair Market Value of any dividends paid other
than in cash, per share of Common Stock from the Determination Date
through the Consummation Date in an amount up to but not exceeding the
amount of such interest payable per share of Common Stock; or
(ii) the Fair Market Value per share of Common Stock on the
Announcement Date or on the Determination Date, whichever is higher.
(b) The aggregate amount of the cash and the Fair Market Value
as of the Consummation Date of consideration other than cash to be received per
share by holders of shares of any class or series of outstanding Voting Stock,
other than Common Stock, in such Business Combination shall be at least equal to
the highest of the following (such requirement being applicable to each such
class or series of outstanding Voting Stock, whether or not the Interested
Shareholder has previously acquired any shares of such class or series of Voting
Stock):
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes, soliciting dealers' fees,
dealer-management compensation and other expenses, including, but not
limited to, costs of newspaper advertisements, printing expenses and
attorneys' fees) paid by the Interested Shareholder for any shares of
such class or series of Voting Stock acquired by it (A) within the
two-year period immediately prior to the Announcement Date or (B) in
the transaction in which it became an Interested Shareholder, whichever
is higher, plus interest compounded annually from the Determination
Date through the Consummation Date at the prime rate of interest of
Citibank, N.A. (or other major bank headquartered in New York City
selected by a majority of the Disinterested Directors then in office)
from time to time in effect in New York City, less the aggregate amount
of any cash dividends paid, and the Fair Market Value of any dividends
paid other than in cash, per share of such class or series of Voting
Stock from the Determination Date through the Consummation Date in an
amount up to but not exceeding the amount of such interest payable per
share of such class or series of Voting Stock;
(ii) (if applicable) the highest preferential amount per share
to which the holders of shares of such class or series of Voting Stock
are entitled in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; or
(iii) the Fair Market Value per share of such class or series
of Voting Stock on the Announcement Date or on the Determination Date,
whichever is higher.
<PAGE> 14
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(c) The consideration to be received by holders of any
particular class or series of outstanding Voting Stock (including Common Stock)
in such Business Combination shall be in cash or in the same form as the
Interested Shareholder has previously paid for shares of such class or series of
Voting Stock. If the Interested Shareholder has paid for shares of any class or
series of Voting Stock with varying forms of consideration, the form of
consideration for such class or series of Voting Stock shall be either cash or
the form used to acquire the largest number of shares of such class or series of
Voting Stock previously acquired by it.
(d) The holders of all outstanding shares of Voting Stock not
beneficially owned by the Interested Shareholder immediately prior to the
Consummation Date shall be entitled to receive in such Business Combination cash
or other consideration for their shares in compliance with subsections (a), (b)
and (c) of this Section 2.
(e) After the Determination Date and prior to the Consummation
Date:
(i) except as approved by a majority of the Disinterested
Directors then in office, there shall have been no failure to declare
and pay, or set aside for payment, at the regular date therefor any
full quarterly dividends (whether or not cumulative) on any outstanding
Preferred Stock;
(ii) there shall have been (A) no reduction in the annual rate
of dividends paid on the Common Stock (except as necessary to reflect
any subdivision of the Common Stock), except as approved by a majority
of the Disinterested Directors then in office, and (B) an increase in
such annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split), recapitalization,
reorganization or any similar transaction that has the effect of
reducing the number of outstanding shares of the Common Stock, unless
the failure to increase such annual rate is approved by a majority of
the Disinterested Directors then in office; and
(iii) such Interested Shareholder shall not have become the
beneficial owner of any additional shares of Voting Stock except as
part of the transaction that results in such Interested Shareholder
becoming an Interested Shareholder or as the result of a stock dividend
paid by the Corporation.
(f) After the Determination Date, the Interested Shareholder
shall not have received the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances, guarantees, pledges
or other financial assistance or any tax credits or other tax advantages
provided by or through the Corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
(g) A proxy or information statement describing the proposed
Business Combination in accordance with the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the
Corporation is then subject to such requirements, and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules or
regulations) shall be mailed to shareholders of the Corporation at least thirty
<PAGE> 15
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(30) days prior to the consummation of such Business Combination (whether or not
such proxy or information statement is required to be mailed pursuant to such
Act or subsequent provisions). The first page of such proxy or information
statement shall prominently display the recommendation, if any, that a majority
of the Disinterested Directors then in office may choose to make to the holders
of Voting Stock regarding the proposed Business Combination. Such proxy or
information statement shall also contain, if a majority of the Disinterested
Directors then in office so requests, an opinion of a reputable investment
banking firm (which firm shall be engaged solely on behalf of the shareholders
of the Corporation other than the Interested Shareholder and shall be selected
by a majority of the Disinterested Directors then in office, furnished with all
information it reasonably requests and paid a reasonable fee for its services by
the Corporation upon the Corporation's receipt of such opinion) as to the
fairness (or lack of fairness) of the terms of the proposed Business Combination
from the point of view of the holders of Voting Stock other than the Interested
Shareholder.
SECTION 3. DEFINITIONS. For purposes of this Article VII, the
following terms shall have the following meanings:
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of filing by the
Superintendent of this Restated Organization Certificate whether or not the
Corporation was then subject to such rule.
(b) "Announcement Date" shall mean the date of the first
public announcement of the proposal of the Business Combination.
(c) A Person shall be deemed the "beneficial owner," or to
have "beneficial ownership," of any shares of Voting Stock that:
(i) such Person or any of its Affiliates or Associates
beneficially owns, directly or indirectly;
(ii) such Person or any or its Affiliates or Associates has
(A) the right to acquire (whether such right is exercisable immediately
or only after the passage of time) pursuant to any agreement,
arrangement or understanding (but a Person shall not be deemed to be
the beneficial owner of any Voting Stock solely by reason of an
agreement, arrangement or understanding with the Corporation to effect
a Business Combination) or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (B) the right to
vote, or to direct the vote of, pursuant to any agreement, arrangement
or understanding (but neither such Person nor any Affiliate or
Associate shall be deemed to be the beneficial owner of any shares of
Voting Stock solely by reason of a revocable proxy granted for a
particular meeting of shareholders, pursuant to a public solicitation
of proxies for such meeting, and with respect to which shares neither
such Person nor any Affiliate or Associate is otherwise deemed the
beneficial owner); or
<PAGE> 16
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(iii) is beneficially owned, directly or indirectly, by any
other Person with which such first mentioned Person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (except to
the extent contemplated by the parenthetical clause of Section
3(c)(ii)(B)) or disposing of any shares of Voting Stock;
provided, however, that no director or officer of the Corporation (nor any
Affiliate or Associate of any such director or officer) (y) shall, solely by
reason of any or all of such directors or officers acting in their capacities as
such, be deemed, for any purposes hereof, to beneficially own any Voting Stock
of the Corporation beneficially owned by any other such director or officer (or
any Affiliate or Associate thereof) or (z) shall be deemed to beneficially own
any Voting Stock of the Corporation owned by any pension, profit-sharing, stock
bonus or other compensation plan maintained by the Corporation or by a member of
a controlled group of corporations or trades or businesses of which the
Corporation is a member for the benefit of employees of the Corporation and/or
any Subsidiary, or any trust or custodial arrangement established in connection
with any such plan, not specifically allocated to such Person's personal
account.
(d) The term "Business Combination" shall mean any transaction
that is referred to in any one or more of the following paragraphs (i) through
(vi):
(i) any merger or consolidation of the Corporation or any
Subsidiary with (A) any Interested Shareholder or (B) any other entity
(whether or not such other entity is itself an Interested Shareholder)
which is, or after such merger or consolidation would be, an Affiliate
or Associate of any Interested Shareholder;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to
or with any Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder of any assets of the Corporation or any
Subsidiary having an aggregate Fair Market Value equal to five percent
(5%) or more of the total assets of the Corporation or the Subsidiary
in question as of the end of its most recent fiscal year ending prior
to the time the determination is being made;
(iii) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Shareholder or any Affiliate or Associate of any Interested Shareholder
having an aggregate Fair Market Value equal to twenty percent (20%) or
more of the aggregate Fair Market Value of all of the outstanding
Capital Stock other than on a pro rata basis to all holders of Voting
Stock and other than in connection with the exercise or conversion of
securities issued pro rata that are exercisable for, or convertible
into, securities of the Corporation or any Subsidiary;
(iv) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation proposed by or on behalf of any
Interested Shareholder or any Affiliate or Associate of any Interested
Shareholder;
<PAGE> 17
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(v) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any Subsidiary or any other
transaction (whether or not with or into or otherwise involving an
Interested Shareholder) which has the effect, directly or indirectly,
of increasing the proportionate share of the outstanding shares of any
class or series of equity or convertible securities of the Corporation
or any Subsidiary that is directly or indirectly owned by any
Interested Shareholder or any Affiliate or Associate of any Interested
Shareholder, except as a result of immaterial changes due to fractional
share adjustments, which changes do not exceed, in the aggregate, one
percent (1%) of the issued and outstanding shares of such class or
series of equity or convertible securities; or
(vi) the acquisition by the Corporation or a Subsidiary of any
securities of an Interested Shareholder.
(e) "Consummation Date" shall mean the date of the
consummation of the Business Combination.
(f) "Determination Date" shall mean the date on which the
Interested Shareholder became an Interested Shareholder.
(g) "Disinterested Director" shall mean any member of the
Board of the Corporation who is not affiliated with the Interested Shareholder
and who either was a member of the Board prior to the Determination Date or was
recommended for election by a majority of the Disinterested Directors in office
at the time such director was nominated for election.
(h) "Fair Market Value" shall mean (i) in the case of stock,
the highest closing price during the 30-day period immediately preceding the
date in question of a share of such stock on the Composite Tape for New York
Stock Exchange listed stocks, or, if such stock is not quoted on such Composite
Tape or if such stock is not listed on such Exchange, then on the principal
United States securities exchange registered under the Exchange Act, on which
such stock is listed, or, if such stock is not listed on any such exchange, then
the highest closing bid quotation with respect to a share of such stock during
the 30-day period preceding the date in question on the Nasdaq Stock Market or
any system then in use, or if no such quotation is available, then the fair
market value on the date in question of a share of such stock as determined in
good faith by a majority of the Disinterested Directors then in office, in each
case with respect to any class of stock, appropriately adjusted for any dividend
or distribution in shares of such stock or any stock split or reclassification
of outstanding shares of such stock into a greater number of shares of such
stock or any combination or reclassification of outstanding shares of such stock
into a smaller number of shares of such stock; and (ii) in the case of property
other than cash or stock, the fair market value of such property on the date in
question as determined in good faith by a majority of the Disinterested
Directors then in office.
(i) References to "highest per share price" shall in each case
with respect to any class of stock reflect an appropriate adjustment for any
dividend or distribution in shares of such stock or any stock split or
reclassification of outstanding shares of such stock into a greater
<PAGE> 18
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number of shares of such stock or any combination or reclassification of
outstanding shares of such stock into a smaller number of shares of such stock.
(j) "Interested Shareholder" shall mean any Person (other than
the Corporation, any parent of the Corporation, any Subsidiary or any pension,
profit-sharing, stock bonus or other compensation plan maintained by the
Corporation or by a member of a controlled group of corporations or trades or
businesses of which the Corporation is a member for the benefit of employees of
the Corporation, any parent of the Corporation or any Subsidiary, or any trust
or custodial arrangement established in connection with any such plan or holding
Voting Stock for the purpose of funding any such plan or funding employee
lending for employees of the Corporation or any Subsidiary) who or which:
(i) is the beneficial owner of ten percent (10%) or more of
the Voting Stock;
(ii) is an Affiliate of the Corporation and at any time within
the two-year period immediately prior to the date in question was the
beneficial owner of ten percent (10%) or more of the then outstanding
Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any
shares of Voting Stock that were at any time within the two-year period
immediately prior to the date in question beneficially owned by any
other Interested Shareholder, if such assignment or succession shall
have occurred in the course of a transaction or series of transactions
not involving a public offering within the meaning of the Securities
Act of 1933, as amended.
In determining whether a Person is an Interested Shareholder
pursuant to this subsection (j), the number of shares of Voting Stock deemed to
be outstanding shall include shares deemed owned through application of
subsection (c) of this Section 3, but shall not include any other shares of
Voting Stock that may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options, or
otherwise.
(k) "Person" shall mean any corporation, partnership, trust,
unincorporated organization or association, syndicate, any other entity or a
natural person, together with any Affiliate or Associate of such person or any
other person acting in concert with such person (which shall include, without
limitation, persons seeking to combine or pool their voting or other interests
in the Voting Stock for a common purpose, pursuant to any contract,
understanding, relationship, agreement or otherwise, but shall not include the
directors or officers of the Corporation acting solely in their capacities as
such).
(l) "Subsidiary" shall mean any corporation of which a
majority of any class or series of equity security is owned, directly or
indirectly, by the Corporation; provided, however, that for the purposes of the
definition of Interested Shareholder set forth in subsection (j) of this Section
3, the term "Subsidiary" shall mean only a corporation of which a majority of
each class or series of voting securities is owned, directly or indirectly, by
the Corporation.
<PAGE> 19
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(m) "Voting Stock" shall mean all of the outstanding shares of
Capital Stock entitled to vote generally in the election of directors.
SECTION 4. POWERS OF THE DISINTERESTED DIRECTORS. When it
appears that a particular Person may be an Interested Shareholder and that the
provisions of this Article VII need to be applied or interpreted, then a
majority of the directors of the Corporation who would qualify as Disinterested
Directors shall have the power and duty to interpret all of the terms and
provisions of this Article VII and to determine on the basis of information
known to them after reasonable inquiry all facts necessary to ascertain
compliance with this Article VII, including, without limitation, (a) whether a
Person is an Interested Shareholder, (b) the number of shares of Voting Stock
beneficially owned by any Person, (c) whether a Person is an Affiliate or
Associate of another, (d) the Fair Market Value of (i) the assets that are the
subject of any Business Combination, (ii) the securities to be issued or
transferred by the Corporation or any Subsidiary in any Business Combination,
(iii) the consideration other than cash to be received by holders of shares of
any class or series of Common Stock or Voting Stock other than Common Stock in
any Business Combination, (iv) the outstanding Capital Stock or (v) any other
item the Fair Market Value of which requires determination pursuant to this
Article VII and (e) whether all of the applicable conditions set forth in
Section 2 of this Article VII have been met with respect to any Business
Combination.
Any constructions, applications, or determinations made by the
Board pursuant to this Article VII, in good faith and on the basis of such
information and assistance as was then reasonably available for such purpose,
shall be conclusive and binding upon the Corporation and its shareholders, and
neither the Corporation nor any of its shareholders shall have the right to
challenge any such construction, application or determination.
SECTION 5. EFFECT ON FIDUCIARY OBLIGATIONS OF INTERESTED
SHAREHOLDERS. Nothing contained in this Article VII shall be construed to
relieve any Interested Shareholder from any fiduciary obligations imposed by
law.
SECTION 6. AMENDMENT, REPEAL, ETC. Notwithstanding any other
provisions of this Restated Organization Certificate or the By-Laws (and
notwithstanding the fact that a lesser percentage may be specified by law, this
Restated Organization Certificate or the By-Laws of the Corporation), in
addition to any affirmative vote required by applicable law and any voting
rights granted to or held by holders of Preferred Stock, any amendment,
alteration, repeal or rescission of any provision of this Article VII must be
approved by either (i) a majority of the authorized number of directors and, if
one or more Interested Shareholders exist, by a majority of the Disinterested
Directors, or (ii) by the affirmative vote of not less than eighty percent (80%)
of the total number of votes eligible to be cast by the holders of all
outstanding shares of the Voting Stock, voting together as a single class,
together with the affirmative vote of not less than fifty percent (50%) of the
total number of votes eligible to be cast by the holders of all outstanding
shares of the Voting Stock not beneficially owned by any Interested Shareholder
or Affiliate or Associate thereof, voting together as a single class.
<PAGE> 20
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ARTICLE VIII
INDEMNIFICATION
SECTION 1. RIGHT TO INDEMNIFICATION. The Corporation shall, to
the maximum extent authorized or permitted and in the manner provided by the
Banking Law and any applicable federal law, indemnify any person who is made, or
threatened to be made, a party to any action, suit or proceeding, whether civil,
criminal or administrative, by reason of the fact that such person, or such
person's testator or intestate, is or was a trustee, director or officer of the
Corporation or one of the Corporation's subsidiaries, or any predecessor of the
Corporation, or serves or served any other corporation, or any partnership,
association, joint venture, trust, employee benefit plan, conference or other
group or enterprise in any capacity at the request of the Corporation or one of
the Corporation's subsidiaries, or any predecessor of the Corporation, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees actually and reasonably incurred, and the Corporation shall
advance any related expense in full. Employees or agents of the Corporation may
be similarly indemnified. Such right of indemnification and advancement shall be
in addition to and not exclusive of any other rights or remedies to which such
person may be or become entitled under any statute, insurance policy, agreement,
by-law or otherwise.
SECTION 2. ACCRUAL OF RIGHT TO INDEMNIFICATION. In addition to
the Corporation's obligation to indemnify under Section 1 of this Article VIII,
the Corporation's obligation to indemnify, and any person's right to
indemnification, under this Article VIII shall accrue as of the time of the
accrual of the cause of action asserted in the threatened or pending action,
suit, or proceeding, and no subsequent change in this Restated Organization
Certificate or the By-Laws of the Corporation shall have any effect on the
Corporation's obligation to indemnify or a person's right to indemnification.
The provisions of this Article VIII shall be deemed to be a contract between the
Corporation and each director, trustee and officer of the Corporation who serves
in such capacity at any time while this Article VIII is in effect, and any
subsequent change of this Article VIII shall not affect the rights or
obligations then existing with respect to any state of facts then or theretofore
existing as it relates to any action or proceeding therefore or thereafter
brought or threatened based in whole or in part upon any such state of facts.
SECTION 3. INDIVIDUAL INDEMNIFICATION AGREEMENTS. In addition
to the Corporation's obligation to indemnify under Sections 1 and 2 of this
Article VIII, the Board may also, to the maximum extent permitted by law, in its
discretion, approve agreements between the Corporation and one or more
directors, officers or employees of the Corporation under which the Corporation
would indemnify such directors, officers and employees in the event that any
such person is made, or threatened to be made, a party to any action or
proceeding, whether civil, criminal or administrative, by reason of the fact
that such person is or was a trustee, director, officer or employee of the
Corporation or one of the Corporation's subsidiaries, or any predecessor of the
Corporation, or serves or served any other corporation, or any partnership,
association, joint venture, trust, employee benefit plan, conference or other
group or enterprise in any capacity at the request of the Corporation or one of
the Corporation's subsidiaries, or any
<PAGE> 21
-18-
predecessor of the Corporation, against judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees actually and
reasonably incurred.
SECTION 4. INSURANCE. The Corporation may, but shall not be
obliged to, purchase and maintain insurance on behalf of any person who is or
was a director, trustee or officer of the Corporation or is or was serving at
the request of the Corporation as a director, trustee or officer of another
corporation of any type or kind, domestic or foreign, against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under the
provisions of this Article VIII.
SECTION 5. SUBSEQUENT AMENDMENT AND SUBSEQUENT LEGISLATION.
Neither the amendment, termination or repeal of this Article VIII or of relevant
provisions of the Banking Law or any other applicable laws, nor the adoption of
any provision of this Restated Organization Certificate or the By-Laws of the
Corporation or of any statute inconsistent with this Article VIII shall
eliminate, affect or diminish in any way the rights of any director, officer,
employee or agent of the Corporation to indemnification under the provisions of
this Article VIII with respect to any action, suit or proceeding arising out of,
or relating to, any actions, transactions or facts occurring prior to the final
adoption of such amendment, termination or repeal.
If the Banking Law is amended to expand further the
indemnification permitted to directors, officers, employees or agents of the
Corporation, then the Corporation shall indemnify such persons to the fullest
extent permitted by the Banking Law as so amended.
ARTICLE IX
AMENDMENTS
SECTION 1. AMENDMENTS OF RESTATED ORGANIZATION CERTIFICATE. In
addition to any affirmative vote required by applicable law and any voting
rights granted to or held by holders of shares of Preferred Stock, any
alteration, amendment, repeal or rescission (collectively, any "Change") of any
provision of this Restated Organization Certificate must be approved by a
majority of the directors of the Corporation then in office and by the
affirmative vote of the holders of a majority (or such greater proportion as may
otherwise be required pursuant to any specific provision of this Restated
Organization Certificate) of the total votes eligible to be cast by the holders
of all outstanding shares of Capital Stock entitled to vote thereon; provided,
however, that if any such Change relates to Section 5 of Article VIII or
Articles IV, V, VI or IX of this Restated Organization Certificate, such Change
must be approved either (i) by not less than a majority of the authorized number
of directors and, if one or more Interested Shareholders (as defined in Article
VII hereof) exist, by not less than a majority of the Disinterested Directors
(as defined in Article VII hereof), or (ii) by the affirmative vote of the
holders of not less than two-thirds of the total votes eligible to be cast by
the holders of all outstanding shares of Capital Stock entitled to vote thereon
and, if the Change is proposed by or on behalf of an Interested Shareholder or a
director who is an Affiliate or Associate (as such terms are defined in Article
VII hereof) of
<PAGE> 22
-19-
an Interested Shareholder, by the affirmative vote of the holders of not less
than a majority of the total votes eligible to be cast by the holders of all
outstanding shares of Capital Stock entitled to vote thereon not beneficially
owned by an Interested Shareholder or an Affiliate or Associate thereof. Subject
to the foregoing, the Corporation reserves the right to amend this Restated
Organization Certificate from time to time in any and as many respects as may be
desired and as may be lawfully contained in an original organization certificate
filed at the time of making such amendment.
Except as may otherwise be provided in this Restated
Organization Certificate, the Corporation reserves the right at any time, and
from time to time, to amend, alter, change or repeal any provision contained in
this Restated Organization Certificate, and to add or insert herein any other
provisions authorized by the laws of the State of New York at the time in force,
in the manner now or hereafter prescribed by law, and all rights, preferences
and privileges of any nature conferred upon shareholders, directors or any other
persons whomsoever by and pursuant to this Restated Organization Certificate in
its present form or hereafter amended are granted subject to the rights reserved
in this Section 1.
SECTION 2. AMENDMENTS OF BY-LAWS. The By-Laws of the
Corporation, except as provided by applicable law or this Restated Organization
Certificate, or as otherwise provided by the By-Laws, may be amended or repealed
by the Board or by vote of the shareholders entitled to vote in the election of
directors; provided, however, that no amendment to the By-Laws shall be made by
the Board unless notice of the proposed amendment shall have been given at the
previous meeting of the Board.
FOURTH, This amendment and restatement of the Organization
Certificate was authorized by a majority vote of the members of the Board of
Trustees of the Corporation.
<PAGE> 23
IN WITNESS WHEREOF, we have made, signed and acknowledged this
certificate in duplicate, this ___th day of _______________, 1997.
------------------------------
Timothy A. Dempsey
President and
Chief Executive Officer
-------------------------------
Nancy L. Sobotor-Littell
Corporate Secretary
<PAGE> 24
STATE OF NEW YORK )
ss.:
COUNTY OF ORANGE )
On the __th day of _______________, 1997, before me personally
came TIMOTHY A. DEMPSEY, to me known and known to me to be the individual
described in and who executed the foregoing instrument, and he duly acknowledged
to me that he executed the same.
- -------------------------
Notary Public
(Seal)
STATE OF NEW YORK )
ss.:
COUNTY OF ORANGE )
On the __th day of _______________, 1997, before me personally
came NANCY L. SOBOTOR-LITTELL, to me known and known to me to be the individual
described in and who executed the foregoing instrument, and she duly
acknowledged to me that she executed the same.
- -------------------------
Notary Public
(Seal)
<PAGE> 1
Exhibit 4.4
NO. 1 1,000 SHARES
THE WARWICK SAVINGS BANK
A STOCK SAVINGS BANK ORGANIZED UNDER THE LAWS OF THE STATE OF NEW YORK
THIS CERTIFIES THAT WARWICK COMMUNITY BANCORP, INC. is the owner of
one thousand (1,000)
fully paid and non-assessable Shares, par value $.01 per share, of the COMMON
STOCK of
THE WARWICK SAVINGS BANK
("Bank"), a stock savings bank organized under the laws of the State of New
York. The shares represented by this Certificate are transferable only on the
stock transfer books of the Bank by the holder hereof in person or by his or her
duly authorized attorney or legal representative upon surrender of this
Certificate properly endorsed. The shares represented by this Certificate are
not insured by the Federal Deposit Insurance Corporation or by any other
government agency.
IN WITNESS WHEREOF, the Bank has caused this Certificate to be executed by the
signature of its duly authorized officers and has caused its corporate seal to
be hereunto affixed.
Dated: December ____, 1997
________________________ ________________________
Nancy L. Sobotor-Littell Timothy A. Dempsey
Corporate Secretary President and Chief
Executive Officer
<PAGE> 2
THE WARWICK SAVINGS BANK
The shares represented by this Certificate are issued subject to all the
provisions of the Restated Organization Certificate and By-Laws of THE WARWICK
SAVINGS BANK ("Bank") as from time to time amended (copies of which are on file
at the principal office of the Bank), to all of which the holder by acceptance
hereof assents. The following description constitutes a summary of certain
provisions of, and is qualified in its entirety by reference to, the Restated
Organization Certificate.
The Restated Organization Certificate of the Bank contains a provision,
applicable upon the effective date of the conversion of the Bank from a New York
mutual savings bank to a New York stock savings bank ("Conversion"), whereby the
acquisition of or offer to acquire beneficial ownership of more than 10% of the
issued and outstanding shares of any class of equity securities of the Bank
entitled to vote generally in the election of directors ("Voting Stock") by any
person (i..e., any individual, corporation, group acting in concert, trust,
partnership, joint stock company or similar organization), either directly or
indirectly, will be prohibited for a period of three years following the date of
completion of the Conversion. The transfer of any shares of Voting Stock that
would result in a violation of this provision is prohibited and shall be null
and void. If, notwithstanding the foregoing prohibition, a person shall,
voluntarily or involuntarily, become or attempt to become the purported
beneficial owner of shares of Voting Stock in excess of 10%, the number of
shares in excess of 10% shall be deemed to be "Excess Shares." The purported
beneficial owner of such Excess Shares shall not obtain any rights in and to the
Excess Shares, and the purported transfer of the Excess Shares to the purported
beneficial owner shall not be recognized by the transfer agent for such shares.
Until such time as the Excess Shares are transferred to a person whose
acquisition thereof will not violate the above limitation, the transferor of the
Excess Shares to the purported beneficial owner shall be deemed to have retained
the Excess Shares and shall hold and be entitled to exercise all rights incident
to ownership of such Excess Shares. This limitation shall not apply to (a) any
offer or sale with a view towards public resale made exclusively by the Bank to
any underwriter acting on behalf of the Bank in connection with a public
offering of the common stock of the Bank; (b) any corporation formed by the Bank
in connection with its conversion from mutual to stock form to acquire all of
the shares of stock of the Bank to be issued in connection with such conversion;
or (c) any reclassification of securities (including any reverse stock split),
or recapitalization of the Bank, or any merger or consolidation of the Bank with
any of its subsidiaries or any other transaction or reorganization (including a
transaction in which the Bank shall form a holding company) that does not have
the effect, directly or indirectly, of changing the beneficial ownership
interests of the Bank's shareholders, other than pursuant to the exercise of any
appraisal rights. For purposes of the above limitation, the term "person" does
not included the Bank or any subsidiary of the Bank, any pension,
profit-sharing, stock bonus or other compensation plan maintained by the Bank or
by a member of a controlled group of corporations or trades or businesses of
which the Bank is a member for the benefit of the employees of the Bank and for
any subsidiary, or any trust or custodial arrangement established in connection
with any such plan.
The Restated Organization Certificate of the Bank contains provisions
requiring the affirmative vote of the holders of at least 80% of the Voting
Stock to approve certain business combinations and other transactions with
persons who directly or indirectly acquire or hold the beneficial ownership of
in excess of 10% of the Voting Stock of the Bank.
The Bank will furnish to any shareholder upon written request and without
charge, a statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights. Such request may be made to the Bank or to its transfer agent and
registrar.
For value received, ___________________________ hereby sell(s), assign(s)
and transfer(s) unto __________________________________ shares of capital
stock evidenced by this Certificate, and do(es) hereby irrevocably
constitute(s) and appoint(s) __________________________________ as Attorney,
to transfer the said shares on the books of the herein named Bank, with full
power of substitution.
Date: ___________________________
Signature_________________________________________
Signature_________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon
the face of the Certificate, in every
particular, without alteration or
enlargement, or any change whatsoever.
<PAGE> 1
Exhibit 5.1
[Letterhead Of Thacher Proffitt & Wood]
Writer's Direct Dial
(212) 912-7436
October 30, 1997
Warwick Community Bancorp, Inc.
18 Oakland Avenue
Warwick, New York 10990
Ladies and Gentlemen:
We have acted as special counsel to Warwick Community Bancorp, Inc.,
a Delaware corporation ("Company"), in connection with the registration under
the Securities Act of 1933, as amended, by the Company of an aggregate of
6,606,549 shares of Common Stock, par value $.01 per share ("Shares"), of the
Company and the related preparation and filing by the Company with the
Securities and Exchange Commission of a Registration Statement on Form S-1
("Registration Statement"). In rendering the opinion set forth below, we do not
express any opinion concerning law other than the federal law of the United
States and the corporate law of the State of Delaware.
We have examined originals or copies, certified or otherwise
identified, of such documents, corporate records and other instruments, and have
examined such matters of law, as we have deemed necessary or advisable for
purposes of rendering the opinion set forth below. As to matters of fact, we
have examined and relied upon the representations of the Company contained in
the Registration Statement and, where we have deemed appropriate,
representations or certificates of officers of the Company or public officials.
We have assumed the authenticity of all documents submitted to us as originals,
the genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents submitted to us as copies. In
making our examination of any documents, we have assumed that all parties, other
than the Company, had the corporate power and authority to enter into and
perform all obligations thereunder, and, as to such parties, we have also
assumed the due authorization by all requisite action, the due execution and
delivery of such documents and the validity and binding effect and
enforceability thereof.
<PAGE> 2
Based on the foregoing, we are of the opinion that the Shares to be
issued and sold by the Company have been duly authorized and, when issued and
sold as contemplated in the Registration Statement and the Plan of Conversion of
The Warwick Savings Bank ("Bank"), will be validly issued and outstanding, fully
paid and non-assessable.
In rendering the opinion set forth above, we have not passed upon
and do not purport to pass upon the application of securities or "blue-sky" laws
of any jurisdiction (except federal securities laws).
This opinion is given solely for the benefit of the Company and
investors who purchase Shares pursuant to the Registration Statement and may not
be relied upon by any other person or entity, nor quoted in whole or in part, or
otherwise referred to in any document without our express written consent.
We consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the Bank's Application for Conversion on Form
86-AC ("Form 86-AC"), and to the reference to our firm under the heading "Legal
Matters" in the prospectus which is part of such Registration Statement and to
the reference to our firm in the Form 86-AC.
Very truly yours,
THACHER PROFFITT & WOOD
By /s/ Douglas J. McClintock
-----------------------------
Douglas J. McClintock
<PAGE> 1
Exhibit 8.1
[Letterhead of Thacher Proffitt & Wood]
(212) 912-7633
October 29, 1997
Warwick Community Bancorp, Inc.
18 Oakland Avenue
Warwick, New York 10990-0591
The Warwick Savings Bank
18 Oakland Avenue
Warwick, New York 10990-0591
Dear Sirs:
You have requested our opinion regarding certain federal income
tax consequences and New York State personal income and franchise tax
consequences of the proposed conversion of The Warwick Savings Bank (the "Bank")
from a New York mutual savings bank to a New York stock savings bank (the
"Conversion"), the sale of all of the outstanding capital stock of the Bank to
Warwick Community Bancorp, Inc., a Delaware corporation (the "Company"), and the
sale by the Company of up to 5,577,500 shares of its common stock, par value of
$.01 per share, (the "Common Stock") to the Bank's Eligible Account Holders, the
Tax Qualified Employee Stock Benefit Plans, the Supplemental Eligible Account
Holders, Other Depositors and to certain other parties, pursuant to the Plan of
Conversion of The Warwick Savings Bank, adopted by the Board of Trustees of the
Bank on July 10, 1997 and amended as of August 19, 1997 (the "Plan"). Under
certain circumstances, the number of shares sold may be increased to up to
6,414,125 shares. In addition, the Company will issue an additional number of
shares of Common Stock, equal to 3% of the shares of Common Stock sold in the
Conversion, to The Warwick Savings Foundation. These and related transactions
are described in the Plan and in the Prospectus included in the Company's
Registration Statement filed on Form S-1 with the Securities and Exchange
Commission in connection with the Conversion (the "Prospectus"). We are
rendering this opinion pursuant to Article VI of the Plan. All capitalized terms
used but not defined in this letter shall have the meanings set forth in the
Plan or Prospectus.
<PAGE> 2
Warwick Community Bancorp, Inc.
The Warwick Savings Bank
October 29, 1997
Page 2.
In connection with the opinions expressed below, we have examined
and relied upon originals, or copies certified or otherwise identified to our
satisfaction, of the Plan and the Prospectus and of such corporate records of
the Bank and the Company as we have deemed appropriate. We have also relied,
without independent verification, upon the October 29, 1997 letter of the
Bank and the Company to Thacher Proffitt & Wood containing certain
representations. We have assumed that the Bank, the Company and other parties
will act in accordance with the Plan, and that the representations made by the
Bank and the Company in the foregoing letter are true. In addition, we have made
such investigations of law as we have deemed appropriate to form a basis for the
opinions expressed below.
Based on and subject to the foregoing, it is our opinion that,
for federal income tax purposes, under current law:
1. The Bank's change in form from mutual to stock ownership will
constitute a reorganization under section 368(a)(1)(F) of the Internal Revenue
Code of 1986.
2. Neither the Bank nor the Company will recognize any gain or
loss as a result of the Conversion.
3. No gain or loss will be recognized by the Bank or the Company
upon the purchase of the Bank's capital stock by the Company in the Conversion,
or by the Company upon the purchase of shares of Common Stock pursuant to the
Plan.
4. No gain or loss will be recognized by Eligible Account Holders
or by Supplemental Eligible Account Holders upon the issuance to them of deposit
accounts in the Bank in its stock form, plus interests in the liquidation
account of the Bank in exchange for their deposit accounts in the Bank in its
mutual form.
5. The tax basis of the depositors' deposit accounts in the Bank
immediately after the Conversion will be the same as the basis of their deposit
accounts in the Bank immediately prior to the Conversion.
6. The tax basis of each Eligible Account Holder's and each
Supplemental Eligible Account Holder's interest in the liquidation account of
the Bank will be zero.
7. No gain or loss will be recognized by Eligible Account Holders
or by Supplemental Eligible Account Holders upon the distribution to them of
nontransferable subscription rights to purchase shares of Common Stock, provided
that the amount to be paid for the Common Stock pursuant to such subscription
rights is equal to the fair market value of such stock.
<PAGE> 3
Warwick Community Bancorp, Inc.
The Warwick Savings Bank
October 29, 1997
Page 3.
8. The tax basis to the shareholders of the shares of Common
Stock purchased in the Conversion pursuant to the subscription rights will be
the amount paid therefor, and the holding period for such shares of Common Stock
will begin on the date on which such subscription rights are exercised.
In rendering opinion 6, above, and our opinion regarding the tax
basis of shares of Common Stock in 8, above, we have relied, without independent
verification, on the opinion of FinPro, Inc. that the nontransferable
subscription rights have no value.
Based on and subject to the foregoing, it is also our opinion
that, under current law:
1. For purposes of the New York State Franchise Tax on Banking
Corporations, the Bank will not recognize any gain or loss by reason of the
Conversion.
2. For purposes of the New York State Franchise on Business
Corporations, the Company will not recognize any gain or loss by reason of the
Conversion.
3. For purposes of the New York State income taxes and corporate
franchise taxes, gain or loss will not be recognized by Eligible Account Holders
by reason of the Conversion.
Although the matter is not free from doubt, it appears unlikely
that the Conversion will cause the Bank or the Company to incur any New York
State real estate transfer tax; if any such tax is incurred, it is unlikely to
be in a material amount.
This opinion is given solely for the benefit of the parties to
the Plan and Eligible Account Holders and other investors who purchase shares
pursuant to the Company's Registration Statement on Form S-1 (the "Registration
Statement"), and may not be relied upon by any other party or entity or referred
to in any document without our express written consent. We consent to the filing
of this opinion as an exhibit to the Registration Statement and to the Bank's
Application for Conversion on Form 86-AC.
Very truly yours,
THACHER PROFFITT & WOOD
By: /s/ Albert J. Cardinali
Albert J. Cardinali
AJC:tas
<PAGE> 1
October 30, 1997 Exhibit 8.2
Board of Trustees
The Warwick Savings Bank
18 Oakland Avenue
Warwick, New York 10990
Dear Board Members:
All capitalized terms not otherwise defined in this letter have the meanings
given such terms in the Plan of Conversion, as amended (the "Plan") adopted by
the Board of Trustees of The Warwick Savings Bank (the "Bank"), whereby the Bank
will convert from a New York mutual savings bank to a New York stock savings
bank and issue all of the Bank's outstanding capital stock to Warwick Community
Bancorp, Inc. (the "Company"). Simultaneously, the Company will issue shares of
its common stock.
We understand that in accordance with the Plan, Subscription Rights to purchase
shares of Common Stock of the Company are to be issued to (i) Eligible Account
Holders; (ii) the ESOP; (iii) Supplemental Eligible Account Holders; and (iv)
Other Depositors; together collectively referred to as the "Recipients". Based
solely on our observation that the Subscription Rights will be available to such
Recipients without cost, will be legally non-transferable and of short duration,
and will afford the Recipients the right only to purchase shares of Conversion
Stock at the same price as will be paid by members of the general public in the
Community Offering, but without undertaking any independent investigation of
state or federal law or the position of the Internal Revenue Service with
respect to this issue, we are of the belief that:
(1) the Subscription Rights will have no ascertainable market value;
and
(2) the price at which the Subscription Rights are excercisable will
not be more or less than the pro forma market value of the shares
upon issuance.
Changes in the local and national economy, the legislative and regulatory
environment, the stock market, interest rates, and other external forces (such
as natural disasters or significant world events) may occur from time to time,
often with great unpredictability and may materially impact the value of thrift
stocks as a whole or the Company's value alone. Accordingly, no assurance can be
given that persons who subscribe to shares of Conversion Stock in the conversion
will thereafter be able to buy or sell such shares at the same price paid in the
Subscription Offering.
Very Truly Yours,
FinPro, Inc.
/s/ Donald J. Musso
-----------------------
Donald J. Musso
President
<PAGE> 1
Exhibit 10.2
DATAIR MASS-SUBMITTER PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST
<PAGE> 2
TABLE OF CONTENTS
Page No.
PART I
ARTICLE I
INTRODUCTION ................................................................ 1
1.1.1 CREATION AND TITLE......................................... 1
1.1.2 EFFECTIVE DATE............................................. 1
1.1.3 PURPOSE.................................................... 1
ARTICLE II
DEFINITIONS.................................................................. 2
PART II................................. 13
ARTICLE I
PARTICIPATION............................................................... 13
2.1.1 ELIGIBILITY REQUIREMENTS................................... 13
2.1.2 COMMENCEMENT OF PARTICIPATION.............................. 13
2.1.3 PARTICIPATION UPON RE-EMPLOYMENT........................... 13
2.1.4 TERMINATION OF PARTICIPATION............................... 13
2.1.5 EMPLOYER'S DETERMINATION................................... 13
2.1.6 OMISSION OF ELIGIBLE EMPLOYEE.............................. 13
2.1.7 INCLUSION OF INELIGIBLE PARTICIPANT........................ 13
2.1.8 ELECTION NOT TO PARTICIPATE................................ 14
2.1.9 CHANGE IN STATUS........................................... 14
2.1.10 EXISTING PARTICIPANTS...................................... 14
ARTICLE II
CONTRIBUTIONS................................................................ 15
2.2.1 "EMPLOYER CONTRIBUTIONS"................................... 15
2.2.2 ELECTIVE CONTRIBUTIONS BY THE EMPLOYER ON BEHALF OF ELECTING
EMPLOYEES
16
2.2.3 EMPLOYEE CONTRIBUTIONS..................................... 17
2.2.4 RETURN OF CONTRIBUTIONS.................................... 18
ARTICLE III
ALLOCATIONS.................................................................. 19
2.3.1 PROFIT SHARING AND MONEY PURCHASE PENSION PLANS............ 19
2.3.2 CASH OR DEFERRED PLANS..................................... 19
2.3.3 INTEGRATION WITH SOCIAL SECURITY........................... 19
<PAGE> 3
2.3.4 LIMITATION................................................ 20
2.3.5 MINIMUM ALLOCATION........................................ 21
2.3.6 FAIL-SAFE ALLOCATION...................................... 21
ARTICLE IV
BENEFITS.................................................................... 22
2.4.1 DISTRIBUTABLE BENEFIT..................................... 22
2.4.2 VESTING................................................... 22
2.4.3 LEAVE OF ABSENCE.......................................... 23
2.4.4 RE-EMPLOYMENT............................................. 23
2.4.5 DISTRIBUTION DATE......................................... 23
2.4.6 FORFEITURES............................................... 24
ARTICLE V
DISTRIBUTIONS............................................................... 26
2.5.1 COMMENCEMENT OF DISTRIBUTION.............................. 26
2.5.2 METHOD OF DISTRIBUTION.................................... 31
2.5.3 NATURE OF DISTRIBUTIONS................................... 38
2.5.4 ADVANCE DISTRIBUTIONS..................................... 39
2.5.5 HARDSHIP DISTRIBUTIONS.................................... 40
2.5.6 IN SERVICE DISTRIBUTIONS.................................. 41
ARTICLE VI
CONTINGENT TOP HEAVY PROVISIONS............................................. 43
2.6.1 TOP HEAVY REQUIREMENTS.................................... 43
2.6.2 TOP HEAVY DEFINITIONS..................................... 44
2.6.3 PAIRING REQUIREMENTS...................................... 48
ARTICLE VII
SPECIAL CODA LIMITATIONS.................................................... 49
2.7.1 LIMITATION ON DEFERRAL PERCENTAGE FOR HIGHLY COMPENSATED
EMPLOYEES
49
2.7.2 MULTIPLE PLAN LIMITATIONS................................. 50
2.7.3 LIMITATION ON MATCHING CONTRIBUTIONS...................... 50
2.7.4 SPECIAL RULES............................................. 51
2.7.5 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS................. 52
2.7.6 DISTRIBUTION OF EXCESS CONTRIBUTIONS...................... 53
2.7.7 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS............ 53
2.7.8 LIMITATION ON DISTRIBUTIONS............................... 54
2.7.9 LIMITATION ON ELECTIVE DEFERRALS.......................... 55
<PAGE> 4
PART III
ARTICLE I
ACCOUNTING.................................................................. 56
3.1.1 ACCOUNTS.................................................. 56
3.1.2 ADJUSTMENTS............................................... 56
ARTICLE II
LIMITATIONS................................................................. 59
3.2.1 LIMITATIONS ON ANNUAL ADDITIONS........................... 59
3.2.2 CONTROLLED BUSINESSES..................................... 66
ARTICLE III
FIDUCIARIES................................................................. 67
3.3.1 STANDARD OF CONDUCT....................................... 67
3.3.2 INDIVIDUAL FIDUCIARIES.................................... 67
3.3.3 DISQUALIFICATION FROM SERVICE............................. 67
3.3.4 BONDING................................................... 67
3.3.5 PRIOR ACTS................................................ 67
3.3.6 INSURANCE AND INDEMNITY................................... 67
3.3.7 EXPENSES.................................................. 68
3.3.8 AGENTS, ACCOUNTANTS AND LEGAL COUNSEL..................... 68
3.3.9 INVESTMENT MANAGER........................................ 68
3.3.10 FINALITY OF DECISIONS OR ACTS............................. 68
3.3.11 CERTAIN CUSTODIAL ACCOUNTS AND CONTRACTS.................. 69
ARTICLE IV
PLAN ADMINISTRATOR.......................................................... 70
3.4.1 ADMINISTRATION OF PLAN.................................... 70
3.4.2 DISCLOSURE REQUIREMENTS................................... 71
3.4.3 INFORMATION GENERALLY AVAILABLE........................... 71
3.4.4 STATEMENT OF ACCRUED BENEFIT.............................. 71
ARTICLE V
TRUSTEE..................................................................... 73
3.5.1 ACCEPTANCE OF TRUST....................................... 73
3.5.2 TRUSTEE CAPACITY - CO-TRUSTEES............................ 73
3.5.3 RESIGNATION, REMOVAL, AND SUCCESSORS...................... 73
3.5.4 CONSULTATIONS............................................. 73
3.5.5 RIGHTS, POWERS AND DUTIES................................. 73
3.5.6 TRUSTEE INDEMNIFICATION................................... 75
3.5.7 CHANGES IN TRUSTEE AUTHORITY.............................. 75
<PAGE> 5
ARTICLE VI
TRUST ASSETS................................................................ 77
3.6.1 TRUSTEE EXCLUSIVE OWNER................................... 77
3.6.3 ADMINISTRATION OF TRUST ASSETS............................ 78
3.6.4 SEGREGATED FUNDS.......................................... 79
3.6.5 INVESTMENT CONTROL OPTION................................. 80
ARTICLE VII
LOANS....................................................................... 82
3.7.1 Authorization............................................. 82
3.7.2 SPOUSAL CONSENT........................................... 82
3.7.3 LIMITATIONS............................................... 83
3.7.4 AVAILABILITY.............................................. 83
3.7.5 PROHIBITIONS.............................................. 83
ARTICLE VIII
BENEFICIARIES............................................................... 84
3.8.1 DESIGNATION OF BENEFICIARIES.............................. 84
3.8.2 ABSENCE OR DEATH OF BENEFICIARIES......................... 84
3.8.3 SURVIVING SPOUSE ELECTION................................. 84
ARTICLE IX
CLAIMS...................................................................... 85
3.9.1 CLAIM PROCEDURE........................................... 85
3.9.2 APPEAL.................................................... 85
ARTICLE X
AMENDMENT AND TERMINATION................................................... 86
3.10.2 MANNER OF AMENDING........................................ 86
3.10.3 LIMITATIONS ON AMENDMENTS................................. 86
3.10.4 VOLUNTARY TERMINATION..................................... 87
3.10.5 INVOLUNTARY TERMINATION................................... 87
3.10.6 WITHDRAWAL BY EMPLOYER.................................... 88
3.10.7 POWERS PENDING FINAL DISTRIBUTION......................... 88
3.10.8 DELEGATION TO SPONSOR..................................... 88
ARTICLE XI
PORTABILITY................................................................. 89
3.11.1 CONTINUANCE BY SUCCESSOR.................................. 89
3.11.3 TRANSFER FROM OTHER PLANS................................. 89
<PAGE> 6
3.11.4 TRANSFER TO OTHER PLANS................................... 90
ARTICLE XII
MISCELLANEOUS............................................................... 91
3.12.1 NO REVERSION TO EMPLOYER.................................. 91
3.12.2 EMPLOYER ACTIONS.......................................... 91
3.12.3 EXECUTION OF RECEIPTS AND RELEASES........................ 91
3.12.4 RIGHTS OF PARTICIPANTS LIMITED............................ 91
3.12.5 PERSONS DEALING WITH TRUSTEE PROTECTED.................... 91
3.12.6 PROTECTION OF THE INSURER................................. 91
3.12.7 NO RESPONSIBILITY FOR ACT OF INSURER...................... 92
3.12.8 INALIENABILITY............................................ 92
3.12.9 DOMESTIC RELATIONS ORDERS................................. 92
3.12.10 AUTHORIZATION TO WITHHOLD TAXES........................... 94
3.12.11 MISSING PERSONS........................................... 94
3.12.12 NOTICES................................................... 94
3.12.13 GOVERNING LAW............................................. 94
3.12.14 SEVERABILITY OF PROVISIONS................................ 95
3.12.15 GENDER AND NUMBER......................................... 95
3.12.16 BINDING EFFECT............................................ 95
3.12.17 QUALIFICATION UNDER INTERNAL REVENUE LAWS................. 95
<PAGE> 7
PART I
ARTICLE I
INTRODUCTION
1.1.1 CREATION AND TITLE. The parties hereby create a Plan and Trust
to be known by the name set forth in the Adoption Agreement.
1.1.2 EFFECTIVE DATE. The provisions of this Plan and Trust shall be
effective as of the Effective Date set forth in the Adoption Agreement.
1.1.3 PURPOSE. This Plan and Trust is established for the purpose of
providing retirement benefits to eligible employees in accordance with the Plan
and the Adoption Agreement. If the Employer designates the Plan as a Cash or
Deferred Profit Sharing Plan in the Adoption Agreement, the Plan is also
intended to enable eligible Employees to supplement their retirement by electing
to have the Employer contribute amounts to the Plan and Trust in lieu of
payments to such Employees in cash and the Plan and Trust are intended to
satisfy the provisions of Section 401(k) of the Internal Revenue Code of 1986,
as amended.
ARTICLE II
DEFINITIONS
As used in this Plan and the Adoption Agreement, the following terms
shall have the following meanings:
1.2.1 "ACCOUNT": The Employer Account, Controlled Account, Elective
Contribution Account, Matching Account, Qualified Non-Elective Contribution
Account, Voluntary Account or Segregated Account of a Participant, as the
context requires, established and maintained for accounting purposes.
1.2.2 "ACP": The average contribution percentage determined in
accordance with the provisions of Part II, Article VII.
1.2.3 "ACT": The Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.2.4 "ADP": The actual deferral percentage determined in accordance
with the provisions of Part II, Article VII.
1.2.5 "ANNIVERSARY DATE": Unless otherwise specified in the Adoption
Agreement, the last day of each Plan Year.
1.2.6 "BENEFICIARY": The person or persons entitled hereunder to
receive the benefits which may be payable upon or after a Participant's death.
<PAGE> 8
1.2.7 "BOARD OF DIRECTORS": The board of directors of an incorporated
Employer.
1.2.8 "BREAK IN SERVICE": The failure of a Participant to complete
more than five hundred (500) Hours of Service or such lesser number specified in
the Adoption Agreement during any 12 consecutive month computation period,
beginning with a Participant's first computation period after becoming a
Participant. A Year of Service and a Break in Service for vesting purposes shall
be measured on the same computation period. The Eligibility Computation Period
and a Break in Service for eligibility purposes shall be measured on the same
computation period.
1.2.9 "CODE": The Internal Revenue Code of 1986, as amended from time
to time.
1.2.10 "COMPENSATION": The compensation as defined in the Plan and as
specified in the Adoption Agreement (or Earned Income in the case of a
self-employed individual) which is actually paid to the Participant by the
Employer during the Compensation Computation Period; provided that if specified
by the Employer in the Adoption Agreement, compensation shall also include any
amount which is contributed by the Employer pursuant to a salary reduction
agreement and which is not includible in the gross income of the Employee under
Sections 125, 402(a)(8), 402(h), 403(b) or 457(b) of the Code; provided further
that for years beginning after December 31, 1988, the annual gross compensation
taken into account for purposes of the Plan shall not exceed $200,000, as such
amount may be adjusted by the Secretary of the Treasury at the same time and in
the same manner as under Section 415(d) of the Code, except that the dollar
increase in effect on January 1 of any calendar year is effective for years
beginning in such calendar year and the first adjustment to the $200,000
limitation is effected on January 1, 1990. If the plan determines compensation
on a period of time that contains less than twelve (12) calendar months, then
the annual compensation limit is an amount equal to the annual compensation
limit for the calendar year in which the compensation period begins multiplied
by the ratio obtained by dividing the number of full months in the period by 12.
For purposes of this dollar limitation, the rules of Section 414(q)(6) of the
Code requiring the aggregation of the compensation of family members shall
apply, except that in applying such rules, the term "family" shall include only
the spouse of the Participant and any lineal descendants of the Participant who
have not attained age nineteen (19) before the close of the year. If, as a
result of the application of such rules the adjusted $200,000 limitation is
exceeded, then (except for purposes of determining the portion of compensation
up to the Social Security Integration Level if this Plan provides for permitted
disparity), the limitation shall be prorated among the affected individuals in
proportion to each such individual's compensation as determined under this
Section prior to the application of this limitation. If compensation for any
prior plan year is taken into account in determining an employee's contributions
or benefits for the current year, the compensation for such prior year is
subject to the applicable annual compensation limit in effect for that prior
year. For this purpose, for years beginning before January 1, 1990, the
applicable annual compensation limit is $200,000.
1.2.11 "COMPENSATION COMPUTATION PERIOD": The period specified as the
Compensation Computation Period in the Adoption Agreement.
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<PAGE> 9
1.2.12 "CONTROLLED ACCOUNT": An account established and maintained for
a Participant to account for his interest in a Segregated Fund over which he
exercises investment control.
1.2.13 "DATE OF HIRE": The date an Employee first completes an Hour of
Service for the Employer.
1.2.14 "DISTRIBUTABLE BENEFIT": The benefit to which a Participant is
entitled following termination of his employment.
1.2.15 "DISTRIBUTION DATE": The date as of which the Distributable
Benefit of a Participant is determined.
1.2.16 "EARLY RETIREMENT AGE": The age specified as the Early
Retirement Age, if any, in the Adoption Agreement.
1.2.17 "EARLY RETIREMENT DATE": The date specified as the Early
Retirement Date, if any, in the Adoption Agreement.
1.2.18 "EARNED INCOME": The net earnings from self-employment in the
trade or business with respect to which the Plan is established for which
personal services of the Participant are a material income-producing factor. Net
earnings shall be determined without regard to items not included in gross
income and the deductions allocable to such items but, in the case of taxable
years beginning after 1989, with regard to the deduction allowed to the taxpayer
by Section 164(f) of the Code. Net earnings shall be reduced by contributions to
a qualified plan to the extent deductible under Section 404 of the Code.
1.2.19 "ELECTIVE CONTRIBUTION ACCOUNT": An Account established and
maintained for a Participant to account for the Elective Contributions made on
his behalf.
1.2.20 "ELECTIVE CONTRIBUTION": A contribution to a cash or deferred
profit sharing plan by the Employer on behalf of an electing Employee.
1.2.21 "ELECTIVE DEFERRALS": Any Employer contributions made to the
Plan at the election of the Participant, in lieu of cash compensation, including
contributions made pursuant to a salary reduction agreement or other deferral
mechanism. With respect to any taxable year, a Participant's Elective Deferral
is the sum of all Employer contributions made on behalf of the Participant
pursuant to an election to defer under any qualified CODA as described in
Section 401(k) of the Code, any simplified employee pension cash or deferred
arrangement as described in Section 402(h)(1)(B), any eligible deferred
compensation plan under Section 457, any plan as described under Section
501(c)(18), and any employer contributions made on the behalf of a participant
for the purchase of an annuity contract under Section 403(b) pursuant to a
salary reduction agreement. Elective Deferrals shall not include any deferrals
properly distributed as excess annual additions.
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<PAGE> 10
1.2.22 "ELIGIBILITY COMPUTATION PERIOD": For purposes of determining
Years of Service and Breaks in Service for purposes of eligibility, the initial
eligibility computation period is the twelve (12) consecutive month period
beginning with the employment commencement date on which the Employee first
renders an Hour of Service for the Employer, and unless otherwise specified in
the Adoption Agreement, the subsequent eligibility computation periods are each
subsequent twelve (12) consecutive month period commencing on the annual
anniversary of such employment commencement date. If in accordance with the
election in the Adoption Agreement, the subsequent periods commence with the
first Plan Year which commences prior to the first anniversary of the Employee's
employment commencement date, an Employee who is credited with 1,000 Hours of
Service in both the initial eligibility computation period and the first Plan
Year which commences prior to the first anniversary of the Employee's initial
eligibility computation period shall be credited with two (2) years of service
for purposes of eligibility to participate.
1.2.23 "EMPLOYEE": A person who is currently or hereafter employed by
the Employer, or by any other employer aggregated under section 414(b), (c), (m)
or (o) of the Code and the regulations thereunder, including a Leased Employee
subject to section 414(n) of the Code and a self-employed owner of an
unincorporated Employer, but, unless otherwise provided in the Adoption
Agreement, excluding (a) an independent contractor; (b) an employee who is a
non-resident alien (within the meaning of section 7701(b)(1)(B) of the Code)
deriving no earned income (within the meaning of section 911(d)(2) of the Code)
from the Employer which constitutes income from sources within the United States
(within the meaning of section 861(a)(3) of the Code); and (c) employees who are
included in the unit of employees covered by a collective bargaining agreement
between the Employer and employee representatives, provided benefits were the
subject of good faith bargaining and two percent or less of the employees of the
Employer who are covered pursuant to that agreement are professionals as defined
in Treasury Regulation Section 1.410(b)-9(g). For this purpose, the term
"employee representatives" does not include any organization more than half of
whose members are employees who are owners, officers, or executives of the
employer.
1.2.24 "EMPLOYER": The Employer that is a party to this Plan, or any
of its affiliates, successors or assigns which adopt the Plan; provided,
however, that no mere change in the identity, form or organization of the
Employer shall affect its status under the Plan in any manner, and, if the name
of the Employer is hereafter changed, a corresponding change shall be deemed to
have been made in the name of the Plan and references herein to the Employer
shall be deemed to refer to the Employer as it is then known.
1.2.25 "EMPLOYER ACCOUNT": An Account established and maintained for a
Participant for accounting purposes to which his share of Employer contributions
and forfeitures are added.
1.2.26 "EMPLOYER CONTRIBUTION": A contribution to a money purchase
pension plan or profit sharing plan other than a cash or deferred profit sharing
plan by the Employer.
1.2.27 "ENTRY DATE": The date or dates specified as the Entry Date in
the Adoption Agreement.
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<PAGE> 11
1.2.28 "EXCESS AGGREGATE CONTRIBUTIONS": With respect to any Plan
Year, the excess of:
(a) The aggregate contribution percentage amounts taken into
account in computing the numerator of the contribution percentage actually
made on behalf of Highly Compensated Employees for such Plan Year, over
(b) The maximum contribution percentage amounts permitted by the
ACP test (determined by reducing contributions made on behalf of Highly
Compensated Employees in order of their contribution percentages beginning
with the highest of such percentages). Such determination shall be made
after first determining Excess Elective Deferrals and then determining
Excess Contributions.
1.2.29 "EXCESS CONTRIBUTIONS": With respect to any Plan Year, the
excess of:
(a) The aggregate amount of Employer Contributions actually taken
into account in computing the ADP of Highly Compensated Employees for such
Plan Year, over
(b) The maximum amount of such contributions permitted by the ADP
test (determined by reducing contributions made on behalf of Highly
Compensated Employees) in order of the ADPs, beginning with the highest of
such percentages.
1.2.30 "EXCESS ELECTIVE DEFERRALS": Those Elective Deferrals that are
includible in a Participant's gross income under section 402(g) of the Code to
the extent such participant's Elective Deferrals for a taxable year exceed the
dollar limitation under such Code section. Excess Elective Deferrals shall be
treated as annual additions under the Plan, unless such amounts are distributed
no later than the first April 15 following the close of the Participant's
taxable year.
1.2.31 "EXCESSIVE ANNUAL ADDITION": The portion of the allocation of
contributions and forfeitures that cannot be added to a Participant's Accounts
due to the limitations on annual additions contained in the Plan.
1.2.32 "FAMILY": The spouse and lineal ascendants or descendants of an
Employee and the spouses of such lineal ascendants and descendants.
1.2.33 "FIDUCIARY": The Plan Administrator, the Trustee and any other
person who has discretionary authority or control in the management of the Plan
or the disposition of Trust assets.
1.2.34 "HIGHLY COMPENSATED EMPLOYEE": A highly compensated active
employee and a highly compensated former employee. A highly compensated active
employee includes: any Employee who performs service for the Employer during the
determination year and who, during the look-back year: (i) received compensation
from the Employer in excess of $75,000 (as adjusted pursuant to Section 415(d)
of the Code); (ii) received compensation from the Employer in excess of $50,000
(as adjusted pursuant to Section 415(d) of the Code) and was a member of the
top-paid
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<PAGE> 12
group for such year; or (iii) was an officer of the Employer and received
compensation during such year that is greater than 50 percent of the dollar
limitation as in effect under Section 415(b)(1)(A) of the Code. The term highly
compensated employee also includes: (i) employees who are both described in the
preceding sentence if the term "determination year" is substituted for the term
"look-back year" and the employee is one of the 100 employees who received the
most compensation from the Employer during the determination year; and (ii)
employees who are 5 percent owners at any time during the look-back year or
determination year. If no officer has satisfied the compensation requirement of
(iii) above during either a determination year or look-back year, the highest
paid officer for such year shall be treated as a highly compensated employee.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the twelve-month period immediately preceding the
determination year and compensation is as defined in Section 415(c)(3) of the
Code including amounts contributed by the Employer pursuant to a salary
reduction agreement and which is not includible in gross income under Sections
125, 402(a)(8), 402(h) or 403(b) of the Code.
A highly compensated former employee includes any employee who
separated from service (or was deemed to have separated) prior to the
determination year, performs no service for the employer during the
determination year, and was a highly compensated active employee for either the
separation year or any determination year ending on or after the employee's 55th
birthday.
If an Employee is, during a Plan Year or the preceding Plan Year, a
family member of either a 5 percent owner who is an active or former employee or
a Highly Compensated Employee who is one of the 10 most highly compensated
employees ranked on the basis of compensation paid by the Employer during such
year, then the family member and the 5 percent owner or top-ten highly
compensated employee shall be aggregated. In such case, the family member and 5
percent owner or top-ten highly compensated employee shall be treated as a
single employee receiving compensation and plan contributions or benefits equal
to the sum of such compensation and contributions or benefits of the family
member and 5 percent owner or top-ten highly compensated employee. For purposes
of this section, family member includes the spouse, lineal ascendants and
descendants of the employee or former employee and the spouses of such lineal
ascendants and descendants.
An Employee is in the top-paid group of employees for any year if the
Employee is in the group consisting of the top twenty (20%) percent of the
employees when ranked on the basis of compensation paid during such year.
For purposes of determining whether an Employee is a highly compensated
employee, Sections 414(b), (c), (m), (n) and (o) of the Code shall be applied.
The determination of who is a highly compensated employee, including
the determination of the number and identity of employees in the top-paid group,
the top 100 employees, the number of employees treated as officers and the
compensation that is considered, will be made in accordance with Section 414(q)
of the Code and the regulations thereunder.
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<PAGE> 13
1.2.35 "HOUR OF SERVICE": An hour for which (a) the Employee is paid,
or entitled to payment by the Employer for the performance of duties, (b) the
Employee is paid or entitled to payment by the Employer during which no duties
are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence, or (c) back
pay, irrespective of mitigation of damages, has been either awarded or agreed to
by the Employer. Hours of Service shall be credited to the Employee under (a),
above, for the period in which the duties are performed, under (b), above, in
the period in which the period during which no duties are performed occurs,
beginning with the first Hour of Service to which the payment relates, and under
(c), above, for the period to which the award or agreement pertains rather than
the period in which the award, agreement or payment is made; provided, however,
that Hours of Service shall not be credited under both (a) and (b), above, as
the case may be, and under (c) above. Notwithstanding the preceding sentences,
(i) no more than five hundred one (501) Hours of Service shall be credited under
(b), above, on account of any single continuous period during which the Employee
performs no duties whether or not such period occurs in a single computation
period, (ii) no Hours of Service shall be credited to the Employee by reason of
a payment made or due under a plan maintained solely for the purpose of
complying with applicable worker's compensation, or unemployment compensation or
disability insurance laws, and (iii) no Hours of Service shall be credited by
reason of a payment which solely reimburses an employee for medical or medically
related expenses incurred by the Employee. The determination of Hours of Service
for reasons other than the performance of duties and the crediting of Hours of
Service to computation periods shall be made in accord with the provisions of
Labor Regulation Sections 2530.200b-2(b) and (c) which are incorporated herein
by reference.
Solely for the purposes of determining whether an Employee has incurred
a Break in Service, an Employee shall be credited with the number of Hours of
Service which would otherwise have been credited to such individual but for the
absence or in any case in which such Hours cannot be determined with eight (8)
Hours of Service for any day that the Employee is absent from work by reason of
the Employee's pregnancy, the birth of a child of the Employee, the placement of
a child with the Employee in connection with the adoption of such child by the
Employee or for purposes of caring for such child for a period beginning
immediately following such birth or placement. Such Hours of Service shall be
credited only in the computation period in which the absence from work begins if
the Employee would be prevented from incurring a Break in Service in such
computation period solely because credit is given for such period of absence
and, in any other case, in the immediately following computation period.
Notwithstanding the foregoing, no credit shall be given for such service unless
the Employee furnishes to the Plan Administrator information to establish that
the absence from work is for the reasons indicated and the number of days for
which there was such an absence.
In the event the Employer does not maintain records of the actual hours
for which an Employee is paid or entitled to payment, credit for service shall
be given in accordance with the method selected in the Adoption Agreement.
Service with another business entity that is, along with the Employer,
a member of a controlled group of corporations under Section 414(b) of the Code,
an affiliated service group under Section 414(m) of the Code or trades or
businesses under common control under Section 414(c) of
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<PAGE> 14
the Code, or which is otherwise required to be aggregated with the Employer
pursuant to Section 414(o) of the Code and the regulations issued thereunder
shall be treated as service for the Employer. Hours of Service shall be credited
for any individual considered an employee for purposes of this Plan under
Section 414(n) or Section 414(o) of the Code and the regulations issued
thereunder.
If the Employer maintains the plan of a predecessor employer, service
with such predecessor shall be treated as service for the Employer.
1.2.36 "INSURER": Any insurance company which has issued a Life
Insurance Policy.
1.2.37 "JOINT AND SURVIVOR ANNUITY": An immediate annuity for the life
of the Participant with a survivor annuity for the life of the spouse which is
not less than fifty (50%) percent and not more than one hundred (100%) percent
of the amount of the annuity which is payable during the joint lives of the
Participant and the spouse and which is the amount of benefit which can be
purchased with the Participant's vested Account balances. The percentage of the
survivor annuity shall be fifty (50%) percent unless a different percentage is
elected by the Employer in the Adoption Agreement.
1.2.38 "LEASED EMPLOYEE": Any person (other than an employee of the
recipient) who pursuant to an agreement between the recipient and any other
person has performed services for the recipient (or for the recipient and
related persons determined in accordance with Section 414(n)(6) of the Code) on
a substantially full time basis for a period of at least one (1) year and such
services are of a type historically performed by employees in the business field
of the recipient employer; provided that any such person shall not be taken into
account if (a) such person is covered by a money purchase pension plan providing
(i) a nonintegrated employer contribution rate of at least ten (10%) percent of
compensation, as defined in Section 415(c)(3) of the Code and Section
3.2.1(h)(iii) of the Plan, but including amounts contributed by the employer
pursuant to a salary reduction agreement which are excludable from the person's
gross income under Sections 125, 402(a)(8), 402(h) or 403(b) of the Code; (ii)
immediate participation; and (iii) full and immediate vesting; and (b) leased
employees do not constitute more than twenty (20%) percent of the workforce of
the recipient who are not Highly Compensated Employees. Contributions or
benefits provided a leased employee by the leasing organization which are
attributable to services performed for the recipient employer shall be treated
as provided by the recipient employer.
1.2.39 "LIFE INSURANCE POLICY": A life insurance, annuity or endowment
policy or contract which is owned by the Trust and is on the life of a
Participant.
1.2.40 "LIMITATION YEAR": Unless otherwise specified in the Adoption
Agreement, the Plan Year; provided that all qualified plans maintained by the
Employer use the same Limitation Year.
1.2.41 "MASS SUBMITTER": DATAIR Employee Benefits Systems Inc.
-8-
<PAGE> 15
1.2.42 "MATCHING ACCOUNT": An Account established and maintained for a
Participant for accounting purposes to which his share of Matching Contributions
are added.
1.2.43 "MATCHING CONTRIBUTION": A contribution to the Plan by the
Employer which matches in whole or in part an Elective Contribution on behalf of
an electing Employee.
1.2.44 "NON-ELECTIVE CONTRIBUTION": A contribution to a cash or
deferred profit sharing plan by the Employer which is neither a Qualified
Non-Elective Contribution, a Matching Contribution nor an Elective Contribution.
1.2.45 "NORMAL RETIREMENT AGE": The earlier of the date specified as
the Normal Retirement Age in the Adoption Agreement or the mandatory retirement
age enforced by the Employer.
1.2.46 "NORMAL RETIREMENT DATE": The date specified in the Adoption
Agreement as the Normal Retirement Date.
1.2.47 "OWNER-EMPLOYEE": An individual who is a sole proprietor or who
is a partner owning more than ten percent (10%) of either the capital or profits
interest of the partnership.
1.2.48 "PARTICIPANT": Any eligible Employee who becomes entitled to
participate in the Plan.
1.2.49 "PLAN": The defined contribution plan for Employees as set forth
in this Agreement and the Adoption Agreement, together with any amendments or
supplements thereto.
1.2.50 "PLAN ADMINISTRATOR": The person, persons or entity appointed by
the Employer to administer the Plan, or, if the Employer fails to make such
appointment, the Employer.
1.2.51 "PLAN SPONSOR": The Plan Sponsor specified in the Adoption
Agreement.
1.2.52 "PLAN YEAR" OR "YEAR": The 12-consecutive month period
designated by the Employer in the Adoption Agreement.
1.2.53 "PRERETIREMENT SURVIVOR ANNUITY": A survivor annuity for the
life of the surviving spouse of the Participant, the actuarial equivalent of
which is equal to the portion of the Account balance of the Participant as of
the date of death to which the Participant had a vested and nonforfeitable
right, provided that any security interest held by the Plan by reason of a loan
outstanding to the Participant for which a valid spousal consent has been
obtained, if necessary, shall be taken into account.
1.2.54 "QUALIFIED NON-ELECTIVE CONTRIBUTION": A contribution to a cash
or deferred profit sharing plan by the Employer which is neither a Matching
Contribution nor an Elective Contribution, is one hundred percent (100%) vested
and nonforfeitable when made, which a Participant may not elect to have paid in
cash instead of being contributed to the Plan and which
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<PAGE> 16
may not be distributed from the Plan (except in the case of a hardship
distribution) prior to the termination of employment or death of the
Participant, attainment of age 59-1/2 by the Participant or termination of the
Plan without establishment of a successor plan.
1.2.55 "QUALIFIED NON-ELECTIVE CONTRIBUTION ACCOUNT": An Account
established and maintained for a Participant to account for the Qualified
Non-Elective Contributions made on his behalf.
1.2.56 "QUALIFYING EMPLOYER SECURITIES OR REAL PROPERTY": Securities or
real property of the Employer which the Trustee may acquire and hold pursuant to
the applicable provisions of the Code and the Act.
1.2.57 "SEGREGATED ACCOUNT": An Account established and maintained for
a Participant to account for his interest in a Segregated Fund.
1.2.58 "SEGREGATED FUND": Assets held in the name of the Trustee which
have been segregated from the Trust Fund in accordance with any of the
provisions of the Plan.
1.2.59 "SELF-EMPLOYED INDIVIDUAL": An individual who has Earned Income
for the taxable year from the trade or business for which the Plan is
established or who would have had Earned Income but for the fact that the trade
or business had no net profits for the taxable year.
1.2.60 "SOCIAL SECURITY INTEGRATION LEVEL": The Social Security
Integration Level shall be equal to the taxable wage base or such lesser amount
specified in the Adoption Agreement. The "taxable wage base" is the contribution
and benefit base in effect under Section 230 of the Social Security Act on the
first day of the Plan Year for which allocations of Employer contributions and
forfeitures are made (referred to as the Social Security Wage Base). The Social
Security Integration Level shall be deemed to be the full amount of such Social
Security Integration Level, even though a Participant's Compensation may include
less than a full year's compensation because of either his participation
commencing after the first day of the Compensation Computation Period or his
service terminating prior to the end of the Compensation Computation Period.
1.2.61 "TRUST FUND": All money and property of every kind and character
held by the Trustee pursuant to the Plan, excluding assets held in Segregated
Funds.
1.2.62 "TRUSTEE": The persons, corporations, associations or
combination of them who shall at the time be acting as such from time to time
hereunder.
1.2.63 "VALUATION DATE": The date or dates specified as the Valuation
Date in the Adoption Agreement.
1.2.64 "VOLUNTARY ACCOUNT": An Account established and maintained for a
Participant for accounting purposes to which his voluntary Employee
contributions made prior to Plan Years beginning after 1986 have been added.
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1.2.65 "YEAR OF SERVICE": The 12-consecutive month period (computation
period) specified in the Adoption Agreement during which an employee completes
at least one thousand (1,000) Hours of Service or such lesser number specified
in the Adoption Agreement. Unless otherwise specified in the Adoption Agreement,
all Years of Service shall be taken into account.
PART II
ARTICLE I
PARTICIPATION
2.1.1 ELIGIBILITY REQUIREMENTS. Each Employee shall be eligible to
participate in this Plan and receive an appropriate allocation of contributions
upon satisfying the eligibility requirements set forth in the Adoption
Agreement.
2.1.2 COMMENCEMENT OF PARTICIPATION. An eligible Employee shall
become a Participant in the Plan on the applicable Entry Date selected in the
Adoption Agreement.
2.1.3 PARTICIPATION UPON RE-EMPLOYMENT. A Participant whose
employment terminates and who is subsequently re-employed shall re-enter the
Plan as a Participant immediately on the date of his re-employment. In the event
that an Employee completes the eligibility requirements set forth in the
Adoption Agreement, his employment terminates prior to becoming a Participant
and he is subsequently re-employed, such Employee shall be deemed to have met
the eligibility requirements as of the date of his re-employment and shall
become a Participant on the date of his re-employment; provided, however, that
if he is re-employed prior to the date he would have become a Participant if his
employment had not terminated, he shall become a Participant as of the date he
would have become a Participant if his employment had not terminated. Any other
Employee whose employment terminates and who is subsequently re-employed shall
become a Participant in accordance with the provisions of Sections 2.1.1 and
2.1.2.
2.1.4 TERMINATION OF PARTICIPATION. An Employee who has become a
Participant shall remain a Participant until the entire amount of his
Distributable Benefit is distributed to him or his Beneficiary in the event of
death.
2.1.5 EMPLOYER'S DETERMINATION. In the event any question shall arise
as to the eligibility of any person to become a Participant or the commencement
of participation, the Employer shall determine such question and the Employer's
decision shall be conclusive and binding, except to the extent of a claimant's
right to appeal the denial of a claim.
2.1.6 OMISSION OF ELIGIBLE EMPLOYEE. If an Employee who should be
included as a Participant in the Plan is erroneously omitted and discovery of
the omission is made after the contribution by the Employer is made and
allocated, the Employer shall make an additional contribution on behalf of the
omitted Employee in the amount which the Employer would have contributed on his
behalf had he not been omitted.
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2.1.7 INCLUSION OF INELIGIBLE PARTICIPANT. If any person is
erroneously included as a Participant in the Plan and discovery of the erroneous
inclusion is made after the contribution by the Employer is made and allocated,
the Employer may elect to treat the amount contributed on behalf of the
ineligible person plus any earnings thereon as a forfeiture for the Plan Year in
which the discovery is made and apply such amount in the manner specified in the
Adoption Agreement.
2.1.8 ELECTION NOT TO PARTICIPATE. With respect only to
non-standardized plans and notwithstanding anything contained in the Plan to the
contrary, an Employee may elect with the approval of the Employer not to
participate in the Plan if the election does not jeopardize the qualified or
tax-exempt status of the Plan under sections 401(a) and 501(a) of the Code,
respectively. The Employee shall sign such documents as may be reasonably
required by the Employer to evidence the election. If it is subsequently
determined that either the qualified or the tax-exempt status of the Plan has
been jeopardized, the Employer may elect to treat such Employee as having been
erroneously omitted. An Employee may revoke the election only with respect to
any subsequent Plan Year by written notice of revocation to the Employer prior
to the end of the Plan Year for which the revocation is effective.
2.1.9 CHANGE IN STATUS. If any Participant continues in the employ of
the Employer or an affiliate for which service is required to be taken into
account but ceases to be an Employee for any reason (such as becoming covered by
a collective bargaining agreement unless the collective bargaining agreement
otherwise provides) the Participant shall continue to be a Participant until the
entire amount of his benefit is distributed but the individual shall be deemed
not to have completed any "Years of Service" for purposes of Article V
("Benefits") during the period that the Participant is not an Employee for such
reason. Such Participant shall continue to receive credit for Years of Service
completed during the period for purposes of determining his vested and
nonforfeitable interest in his Accounts. In the event that the individual
subsequently again becomes a member of an eligible class of employees, the
individual shall participate immediately upon the date of such change in status.
If such Participant incurs a Break in Service and is subsequently reemployed,
eligibility to participate shall be determined in accordance with Section 2.1.3.
In the event that an individual who is not a member of an eligible class of
employees becomes a member of an eligible class, the individual shall
participate immediately if such individual has satisfied the eligibility
requirements and would have otherwise previously become a participant.
2.1.10 EXISTING PARTICIPANTS. An Employee who, on the Effective Date,
was a Participant under the provisions of the Plan as in effect immediately
prior to the Effective Date shall be a Participant on the Effective Date and the
provisions of Sections 2.1.1 and 2.1.2, pertaining to participation, shall not
be applicable to such Employee. The rights of a Participant whose employment
terminated prior to the Effective Date shall be determined under the provisions
of the Plan as in effect at the time of such termination.
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ARTICLE II
CONTRIBUTIONS
2.2.1 "EMPLOYER CONTRIBUTIONS".
(a) AMOUNT OF CONTRIBUTION.
(1) MONEY PURCHASE PENSION PLAN. The Employer shall contribute
to the Trust Fund each Plan Year such amount, including any forfeitures to
be applied, set forth in the Adoption Agreement.
(2) PROFIT SHARING PLAN. The Employer shall contribute to the
Trust Fund each Plan Year such amount as it may determine.
(3) CASH OR DEFERRED PROFIT SHARING PLAN.
(i) AMOUNT OF NON-ELECTIVE CONTRIBUTION. The Employer
shall contribute to the Trust Fund each Plan Year such amount
as a Non-Elective Contribution as the Employer may determine.
(ii) AMOUNT OF MATCHING CONTRIBUTION. Subject to
applicable limitations provided by the Plan, the Employer shall
contribute to the Trust Fund each Plan Year with respect to the
amount of Elective Contributions on behalf of each electing
Employee a Matching Contribution determined in the manner set
forth in the Adoption Agreement.
(iii) AMOUNT OF QUALIFIED NON-ELECTIVE CONTRIBUTION. The
Employer shall contribute to the Trust Fund each Plan Year such
amount as a Qualified Non-Elective Contribution as the Employer
may determine. In addition, in lieu of distributing Excess
Contributions or Excess Aggregate Contributions as provided in
Article VII, below, and to the extent elected by the Employer
in the Adoption Agreement, the Employer may make Qualified
Non-Elective Contributions on behalf of Employees who are not
Highly Compensated Employees that are sufficient to satisfy
either the ADP test or the ACP test, or both, pursuant to
regulations under the Code.
(b) LIMITATION. The contribution for any Plan Year by the Employer
shall not exceed the maximum amount deductible from the Employer's income
for such Year for federal income tax purposes under the applicable sections
of the Code.
(c) TIME OF CONTRIBUTION. All contributions by the Employer shall
be delivered to the Trustee not later than the date fixed by law for the
filing of the Employer's federal
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income tax return for the Year for which such contribution is made
(including any extensions of time granted by the Internal Revenue Service
for filing such return).
(d) DETERMINATION OF AMOUNT TO BE FINAL. The determination by
the Employer as to the amount to be contributed by the Employer hereunder
shall be in all respects final, binding, and conclusive on all persons or
parties having or claiming any rights under this agreement or under the
Plan and Trust created hereby. Under no circumstances and in no event shall
any Participant, Beneficiary, or other person or party have any right to
examine the books or records of the Employer.
(e) RIGHTS OF TRUSTEE AS TO CONTRIBUTIONS. The Trustee shall have
no duty to report any contribution to be made or to determine whether
contributions delivered to the Trustee by the Employer comply with the
provisions of this Agreement. The Trustee shall be accountable only for
funds actually received by the Trustee.
2.2.2 ELECTIVE CONTRIBUTIONS BY THE EMPLOYER ON BEHALF OF ELECTING
EMPLOYEES.
(a) AMOUNT OF CONTRIBUTION. If the Plan is designated in the
Adoption Agreement as a Cash or Deferred Profit Sharing Plan, each Employee
may elect to have the Employer contribute to the Trust on his behalf for
any Plan Year during which he is a Participant such amounts expressed
either in dollars or in whole percentages of his Compensation as he may
elect which would otherwise be payable by the Employer as Compensation (but
not to exceed the dollar limitation provided by Section 402(g) of the Code
as in effect at the beginning of the taxable year); provided that the
Employer may impose reasonable limitations in a uniform, nondiscriminatory
manner on the amounts which may be so contributed in order to satisfy
applicable legal requirements and to assure the deductibility of amounts
contributed by the Employer to the Plan and any other qualified plan of
deferred compensation.
(b) ELECTION. The Plan Administrator shall determine the manner
in which a Participant may elect to have Elective Contributions made to the
Plan on his behalf. The Plan Administrator shall establish reasonable
periods during which the election may be made, modified or revoked. Unless
the Plan Administrator establishes another period during which the election
may be made, modified or revoked, any such election may be made, modified
or revoked during the first and last months of the Plan Year. An election
by an Employee may not be made retroactively and once made shall remain in
effect until modified or terminated.
(c) PAYMENT OF CONTRIBUTION. Elective Contributions shall be
remitted by the Employer within a reasonable period after such amount would
have otherwise been payable to the Participant. The Employer shall
designate, in accordance with the Participant's election, the Plan Year to
which any such contributions which are made after the end of the Plan Year
pertain.
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(d) SEGREGATED FUND. Unless an Elective Contribution on behalf of
a Participant is received by the Trustee within the time prescribed by the
Plan Administrator prior to a Valuation Date, the Plan Administrator shall
direct the Trustee to establish a Segregated Fund with respect to such
contribution. The funds contained in such Segregated Fund shall be
transferred to the Trust Fund in accordance with the instructions of the
Plan Administrator and such transfer shall be deemed to have been made as
of such next succeeding Valuation Date. If an Elective Contribution on
behalf of a Participant is received by the Trustee within the period
prescribed by the Plan Administrator, such contribution shall be added to
the Trust Fund. Notwithstanding the foregoing, if the Trust Fund is
invested in such a manner that the Plan Administrator can determine, with a
reasonable degree of certainty, that portion of the adjustment to fair
market value which is attributable to Elective Contributions received by
the Trustee other than within such period, then the Plan Administrator
shall direct the Trustee to add any such Elective Contributions to the
Trust Fund at the time the Trustee receives such Elective Contributions.
(e) HARDSHIP DISTRIBUTIONS. An Employee may not have Elective
Contributions made on his or her behalf for the taxable year following the
taxable year of a hardship distribution in excess of the applicable limit
under Section 402(g) of the Code for such taxable year less the amount of
the Employee's Elective Deferrals for the taxable year of the hardship
distribution.
2.2.3 EMPLOYEE CONTRIBUTIONS.
(a) AMOUNT OF CONTRIBUTION. An Employee is neither required
nor permitted to contribute to the Plan for any Plan Year beginning after
the Plan Year in which the prototype Plan is adopted by the Employer.
Employee contributions for Plan Years beginning after 1986 shall be limited
so as to meet the nondiscriminatory test of Section 401(m) of the Code. The
Plan Administrator shall not accept deductible employee contributions which
are made for a taxable year beginning after December 31, 1986.
Contributions made prior to that date will be maintained in a separate
account which will be non-forgettable at all times. The account will share
in the gains and losses of the trust in the same manner as provided in
Section 3.1.2 of the Plan. No part of the deductible voluntary contribution
account will be used to purchase life insurance.
(b) WITHDRAWAL OF CONTRIBUTIONS. In accordance with the provisions
of the Plan as in effect prior to Plan Years beginning after 1986, all or
any portion of an Employee's contributions may be withdrawn by giving to
the Plan Administrator written notice of any proposed withdrawal. The Plan
Administrator may adopt such procedures with respect to such withdrawals as
may be necessary or appropriate. At the Plan Administrator's direction, the
Trustee shall distribute any such withdrawal to the Participant in
accordance with the procedures adopted by the Plan Administrator. Except in
the case of the voluntary deductible contribution account, such withdrawals
shall not include any interest or other increment earned on such
contributions. No forfeitures shall occur as a result of withdrawal of an
Employee's contributions. Notwithstanding the foregoing, a withdrawal of an
Employee's contributions must be consented to in writing by the
Participant's spouse.
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2.2.4 RETURN OF CONTRIBUTIONS. Contributions by the Employer,
including Employer, Qualified Non-Elective, Non-Elective and Matching
Contributions shall be returned to the Employer in the following instances:
(a) If a contribution by the Employer, including an Employer,
Qualified Non-Elective, Non-Elective or Matching Contribution is made by
the Employer by mistake of fact, then the contribution shall be returned
within one year after its payment upon the Employer's written request.
(b) If a contribution by the Employer, including an Employer,
Qualified Non-Elective, Non-Elective or Matching Contribution is
conditioned on initial qualification of the Plan under the applicable
sections of the Code, and the Commissioner of Internal Revenue determines
that the Plan does not qualify, then the contribution made incident to the
initial qualification by the Employer shall be returned within one year
after the date of denial of initial qualification of the Plan; provided
that the application for initial qualification is made by the time
prescribed by law for filing the Employer's tax return for the taxable year
in which the Plan is adopted, or such later date as the Secretary of the
Treasury may prescribe.
(c) Each contribution by the Employer, including an Employer,
Qualified Non-Elective, Non-Elective and Matching Contribution is
conditioned upon the deductibility of the contribution under the applicable
sections of the Code and to the extent of a disallowance of the deduction
for part or all of the contribution, the contribution shall be returned
within one year after such disallowance upon the Employer's written
request.
ARTICLE III
ALLOCATIONS
2.3.1 PROFIT SHARING AND MONEY PURCHASE PENSION PLANS. As of each
Anniversary Date, the Employer Contributions made by the Employer with respect
to the preceding Plan Year, and forfeitures shall be allocated among the
Employer Accounts of Participants during the Plan Year in the manner set forth
in the Adoption Agreement; provided that if a Profit Sharing Plan is integrated
with Social Security, Section 2.3.3 shall also apply.
2.3.2 CASH OR DEFERRED PLANS.
(a) NON-ELECTIVE CONTRIBUTIONS. As of each Anniversary Date,
the Non-Elective Contributions made by the Employer with respect to the
preceding Plan Year, and forfeitures, shall be allocated among the Employer
Accounts of Participants during the Plan Year in the manner specified in
the Adoption Agreement; provided that if the Plan is integrated with Social
Security, Section 2.3.3 shall also apply.
(b) MATCHING CONTRIBUTIONS. Unless otherwise specified in the
Adoption Agreement, as of each Anniversary Date, the Matching Contribution
made by the Employer
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with respect to the preceding Plan Year, and forfeitures, shall be
allocated to the Matching Accounts of Participants for whom Elective
Contributions were made in the manner specified in the Adoption Agreement.
(c) ELECTIVE CONTRIBUTIONS. The Elective Contributions by the
Employer on behalf of an electing Employee shall be allocated to the
Elective Contribution Account of such electing Employee as of each
Valuation Date of the Plan Year to which the Elective Contribution
pertains.
(d) QUALIFIED NON-ELECTIVE CONTRIBUTIONS. As of each Anniversary
Date, the Qualified Non-Elective Contributions made by the Employer with
respect to the preceding Plan Year shall be allocated to the Qualified
Non-Elective Contribution Account of Participants during the Plan Year in
the manner specified in the Adoption Agreement.
2.3.3 INTEGRATION WITH SOCIAL SECURITY. If the Employer has elected
in the Adoption Agreement that the Plan shall be integrated with Social
Security, then the applicable contributions and forfeitures shall be allocated
to Participants' accounts as follows (provided that Steps One and Two, below,
shall apply only in years in which the Plan is Top-Heavy):
STEP ONE: Contributions and forfeitures shall be allocated to each
Participant's account in the ratio that each Participant's Compensation
bears to all Participant's Compensation, but not in excess of 3% of
each Participant's Compensation.
STEP TWO: Any contributions and forfeitures remaining after the
allocation in Step One will be allocated to each Participant's account
in the ratio that each Participant's Compensation for the Plan Year in
excess of the Social Security Integration Level bears to the excess
compensation of all Participants, but not in excess of 3%.
STEP THREE: Any contributions and forfeitures remaining after the
allocation in Step Two shall be allocated to each Participant's account
in the ratio that the sum of each Participant's Compensation and
Compensation in excess of the Social Security Integration Level bears
to the sum of all Participants' Compensation and Compensation in excess
of the Social Security Integration Level, but not in excess of the
maximum profit sharing disparity rate.
STEP FOUR: Any remaining contributions and forfeitures shall be
allocated to each Participant's account in the ratio that each
Participant's Compensation for the Plan Year bears to all Participants'
Compensation for that year.
The maximum profit sharing disparity rate is equal to the lesser of:
(a) 5.7% (minus the percentage of Compensation allocated in Step
One, if any); or,
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(b) 5.4% (minus the percentage of Compensation allocated in Step
One, if any) if the Social Security Integration Level (SSIL) is
more than 80% but less than 100% of the taxable wage base under
Section 230 of the Social Security Act at the beginning of the
Plan Year (TWB); or 4.3% (minus the percentage of Compensation
allocated in Step One, if any) if the SSIL is greater than 20%
of the TWB, but not more than 80% of the TWB, and greater than
$10,000.
If the Social Security Integration Level selected by the Employer in
the Adoption Agreement is the taxable wage base under Section 230 of the
Social Security in effect as of the first day of the Plan Year, the
applicable percentage shall be 5.7% (2.7% if the Plan is Top-Heavy).
2.3.4 LIMITATION. The allocation of Employer contributions must
satisfy the requirements of Section 416 of the Code regardless of how the
Adoption Agreement is completed. Elective Contributions and Matching
Contributions allocated to key employees (as defined in Section 416(i) of the
Code) are taken into account for the purpose of determining the minimum
contribution under Code Section 416. However, Elective Contributions and
Matching Contributions made on behalf of non-key employees (as defined in Code
Section 416(i)) may not be taken into account for the purpose of satisfying the
minimum contribution requirement under Code Section 416.
2.3.5 MINIMUM ALLOCATION. In the event the Plan becomes a Top-Heavy
Plan during any Plan Year, the provisions of Section 2.6.1(a) shall apply.
2.3.6 FAIL-SAFE ALLOCATION. With respect only to non-standardized
plans and notwithstanding any provision of the Plan or Adoption Agreement to the
contrary, for Plan Years beginning after December 31, 1989, if the Plan would
otherwise fail to satisfy the requirements of Section 401(a)(26), 410(b)(1) or
410(b)(2)(A)(i) of the Code and the regulations thereunder because Employer
contributions have not been allocated to a sufficient number or percentage of
Participants for the Plan Year, an additional contribution shall be made by the
Employer and shall be allocated to the Employer Accounts of affected
Participants subject to the following provisions:
(a) The Participants eligible to share in the allocation of the
Employer's contribution shall be expanded to include the minimum number
of Participants who are not otherwise eligible to the extent necessary to
satisfy the applicable test under the relevant Section of the Code. The
specific Participant who shall become eligible are those Participants who
are actively employed on the last day of the Plan Year who have completed
the greatest number of Hours of Service during the Plan Year.
(b) If the applicable test is still not satisfied, the Participants
eligible to share in the allocation shall be further expanded to include
the minimum number of Participants who are not employed on the last day of
the Plan Year as are necessary to satisfy the applicable test. The
specific Participants who shall become eligible are those Participants who
have completed the greatest number of Hours of Service during the Plan
Year.
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(c) A Participant's accrued benefit shall not be reduced by
any reallocation of amounts that have previously been allocated. To the
extent necessary, the Employer shall make an additional contribution equal
to the amount such affected Participants would have received if they had
originally shared in the allocations without regard to the deductibility of
the contribution. Any adjustment to the allocations pursuant to this
paragraph shall be considered a retroactive amendment adopted by the last
day of the Plan Year.
ARTICLE IV
BENEFITS
2.4.1 DISTRIBUTABLE BENEFIT. At such time that the employment of a
Participant terminates for any reason, he or his Beneficiary shall be entitled
to a benefit equal to the vested and nonforfeitable interest in his Accounts as
of the Distribution Date. Such Accounts shall include the allocable share of
contributions and forfeitures, if any, which may be allocated to said Accounts
as of such Distribution Date and shall be determined after making the
adjustments for which provision is made in the Plan.
2.4.2 VESTING. A Participant shall at all times be one hundred
percent (100%) vested and have a nonforfeitable interest in his Elective
Contribution Account, Qualified Non-Elective Contribution Account, Voluntary
Account and Segregated Account. The vested and nonforfeitable interest of the
Participant in his Controlled Account shall be determined by reference to the
Account from which the funds were originally transferred. The vested and
nonforfeitable interest in a Participant's Employer Account and Matching Account
shall be determined as hereinafter provided.
(a) NORMAL RETIREMENT. If a Participant terminates employment at
his Normal Retirement Age, he shall be one hundred percent (100%) vested
and have a nonforfeitable interest in his Employer Account and Matching
Account.
(b) DEFERRED RETIREMENT. If a Participant continues in
active employment following his Normal Retirement Age, he shall continue to
participate under the Plan. From and after his Normal Retirement Age, he
shall be one hundred percent (100%) vested and have a nonforfeitable
interest in his Employer Account and Matching Account.
(c) DISABILITY. If the employment of a Participant is terminated
prior to his Normal Retirement Age as a result of a medically determinable
physical or mental impairment which may be expected to result in death or
to last for a continuous period of not less than twelve (12) months and
which renders him incapable of performing his duties, he shall be one
hundred percent (100%) vested and have a nonforfeitable interest in his
Employer Account and Matching Account. All determinations in connection
with the permanence and degree of such disability shall be made by the Plan
Administrator in a uniform, nondiscriminatory manner on the basis of
medical evidence.
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(d) DEATH. In the event of the death of a Participant, he shall be
one hundred percent (100%) vested and have a nonforfeitable interest in his
Employer Account and Matching Account.
(e) TERMINATION OF PLAN. In the event of termination of the
Plan (including termination resulting from a complete discontinuance of
contributions by the Employer), each Participant shall be one hundred
percent (100%) vested and have a nonforfeitable interest in his Employer
Account and Matching Account. In the event of a partial termination of the
Plan, each Participant with respect to whom such partial termination has
occurred shall be one hundred percent (100%) vested and have a
nonforfeitable interest in his Employer Account and Matching Account.
(f) EARLY RETIREMENT, RESIGNATION OR DISCHARGE. If the employment
of a Participant terminates by reason of early retirement, resignation or
discharge prior to his Normal Retirement Age, he shall be vested and have a
nonforfeitable interest in a percentage of his Employer Account and
Matching Account determined by, except as provided below, taking into
account all of his Years of Service as of such termination date in
accordance with the schedule set forth in the Adoption Agreement.
2.4.3 LEAVE OF ABSENCE. A temporary cessation from active employment
with the Employer pursuant to an authorized leave of absence in accordance with
the nondiscriminatory policy of the Employer, whether occasioned by illness,
military service or any other reason shall not be treated as either a
termination of employment or a Break in Service provided that the Employee
returns to employment prior to the end of the authorized leave of absence.
2.4.4 RE-EMPLOYMENT. Unless otherwise elected by the Employer in the
Adoption Agreement, in the case of a Participant who has five (5) or more
consecutive Breaks in Service, all Years of Service after such Breaks in Service
shall be disregarded for the purposes of vesting the employer-derived account
balance that accrued before such breaks, but both pre-break and post-break
service shall count for the purposes of vesting the employer-derived account
balance that accrues after such breaks. Both accounts shall share in the
earnings and losses of the Trust Fund. In the case of a Participant who does not
have five (5) consecutive Breaks in Service, both the pre-break and post-break
service shall count in vesting both the pre-break and post-break
employer-derived account balance.
2.4.5 DISTRIBUTION DATE. The Distribution Date shall be determined as
hereinafter provided.
(a) GENERAL. For purposes of determining the amount to be
distributed, the Distribution Date shall be determined in the manner
specified in the Adoption Agreement.
(b) TERMINATION OF PLAN. In the event of termination of the
Plan (including termination resulting from a complete discontinuance of
contributions by the Employer), the Distribution Date shall be the date of
such termination. In the event of a partial termination of the Plan, as to
each Participant with respect to whom such partial termination has
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occurred, the Distribution Date shall be the Anniversary Date coinciding
with or immediately following the date of such partial termination.
(c) DISTRIBUTIONS FOLLOWING DISTRIBUTION DATE. Subject to
the necessity, if any, of obtaining the consent of a Participant and
spouse, distribution of a Participant's Distributable Benefit shall
commence within a reasonable period after the Distribution Date, unless
otherwise elected by the Participant in accordance with the provisions of
the Plan or as required by the provisions of the Plan.
2.4.6 FORFEITURES. If an Employee terminates service, and the value
of the Employee's vested account balance derived from employer and employee
contributions is not greater than $3,500 and the Employee receives a
distribution of the value of the entire vested portion of such account balance,
the non-vested portion shall be treated as a forfeiture as of the last day of
the Plan Year in which the Participant's entire vested interest is distributed
from the Plan. If the value of an Employee's vested account balance is zero, the
Employee shall be deemed to have received a distribution of such vested account
balance. A participant's vested account balance shall not include accumulated
deductible employee contributions within the meaning of Section 72(o)(5)(B) of
the Code for plan years beginning prior to January 1, 1989.
Unless otherwise elected in the Adoption Agreement, if an Employee terminates
service, and elects, in accordance with the provisions of the Plan, to receive
the value of the employee's vested account balance, the nonvested portion shall
be treated as a forfeiture. If the Employee elects to have distributed less than
the entire vested portion of the account balance derived from employer
contributions, the part of the nonvested portion that will be treated as a
forfeiture is the total nonvested portion multiplied by a fraction, the
numerator of which is the amount of the distribution attributable to employer
contributions and the denominator of which is the total value of the vested
employer derived account balance.
If an Employee receives a distribution and the Employee resumes employment
covered under the Plan, the Employee's employer-derived account balance shall be
restored to the amount on the date of distribution if the Employee repays to the
Plan the full amount of the distribution attributable to Employer contributions
before the earlier of five (5) years after the first date on which the
Participant is subsequently re-employed by the Employer, or the date the
Participant incurs five (5) consecutive Breaks in Service following the date of
the distribution. If an Employee is deemed to receive a distribution pursuant to
this section, and the Employee resumes employment covered under the Plan before
the date the Participant incurs five (5) consecutive Breaks in Service, upon the
reemployment of such Employee, the employer-derived account balance of the
Employee will be restored to the amount on the date of such deemed distribution.
Unless otherwise elected in the Adoption Agreement, such forfeiture shall be
allocated in the same manner as a contribution by the Employer for the Year in
which said forfeiture occurred. Notwithstanding any provision herein to the
contrary, forfeitures resulting from contributions by an Employer shall not be
reallocated for the benefit of another adopting Employer.
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If a Participant is re-employed following a Break in Service and is entitled to
restoration of any amount of his Accounts which was forfeited as a result of
such Break in Service, such amount shall be restored in the manner specified in
the Adoption Agreement.
ARTICLE V
DISTRIBUTIONS
2.5.1 COMMENCEMENT OF DISTRIBUTION.
(a) IMMEDIATE DISTRIBUTION. A Participant whose employment
is terminated for any reason, other than resignation or discharge prior to
his Early Retirement Date or his Normal Retirement Date, may elect upon his
termination of employment to begin distribution of his Distributable
Benefit within a reasonable period after the Distribution Date as of which
his Distributable Benefit is determined, or as of the date determined under
subsection (b), below, if that date is earlier. If a Participant does not
so elect, distribution of the Participant's Distributable Benefit shall in
no event begin later than the date determined under subsection (b), below.
(b) DEFERRED DISTRIBUTION. Except in the case of amounts subject
to Section 2.5.2(h) for which a Participant's consent is not required,
unless the Employer elects in the Adoption Agreement to permit the Employee
to elect earlier commencement and the Employee so elects or the Employee
elects to further defer distribution, if the employment of a Participant is
terminated by reason of resignation or discharge prior to either his Early
Retirement Date or his Normal Retirement Date, distribution of his
Distributable Benefit shall be deferred and commenced on the sixtieth
(60th) day after the close of the later of the following Plan Years:
(i) The Plan Year during which the Participant attains the
earlier of age sixty-five (65) or the Normal Retirement Age;
(ii) The Plan Year during which the tenth (10th) anniversary
of the commencement of the Participant's participation in the Plan
occurs; or
(iii) The Plan Year during which the Participant terminates
service with the Employer.
If, however, the Employer selects an Early Retirement Date in the Adoption
Agreement, a Participant who terminates employment before satisfying the
age requirement for early retirement but has satisfied any service
requirement shall be entitled to a distribution of his Distributable
Benefit in accordance with subsection (a) above upon attaining such age. If
distribution is so deferred, unless otherwise determined by the Plan
Administrator, the Trustee at the Plan Administrator's direction shall
transfer the Distributable Benefit to a Segregated Fund from which
distribution shall thereafter be made. Such transfer shall be made as of
the Distribution Date. Notwithstanding the foregoing, the failure of a
Participant
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and spouse to consent to a distribution while a benefit is immediately
distributable, within the meaning of Section 2.5.2(j), shall be deemed to
be an election to defer commencement of payment of any benefit sufficient
to satisfy this section.
(c) REQUIRED DISTRIBUTION. Notwithstanding anything herein to
the contrary, unless the Participant has made an appropriate election by
December 31, 1983 to defer distribution which has not been revoked or
modified, the Participant's benefit shall be distributed to the Participant
not later than April 1 of the calendar year following the calendar year in
which he attains age 70 1/2 (the required beginning date) or shall be
distributed, commencing not later than April 1 of such calendar year in
accordance with regulations prescribed by the Secretary of the Treasury
over a period not extending beyond the life expectancy of the Participant
or the life expectancy of the Participant and a beneficiary designated by
the Participant. The amount required to be distributed for each calendar
year, beginning with distributions for the first distribution calendar
year, must at least equal the quotient obtained by dividing the
Participant's benefit by the applicable life expectancy. Unless otherwise
elected by the Participant (or spouse, if distributions begin after death
and the spouse is the designated beneficiary) by the time distributions are
required to begin, the life expectancy of the Participant and the
Participant's spouse shall be recalculated annually. Other than for a life
annuity, such election shall be irrevocable as to the Participant or spouse
and shall apply to all subsequent years. The life expectancy of a
non-spouse beneficiary may not be recalculated. Life expectancy and joint
and last survivor expectancy shall be computed by use of the expected
return multiples in Tables V and VI of Section 1.72-9 of the Treasury
Regulations. For calendar years beginning after December 31, 1988, the
amount to be distributed each year, beginning with distributions for the
first distribution calendar year shall not be less than the quotient
obtained by dividing the Participant's benefit by the lesser of (1) the
applicable life expectancy or (2) if the Participant's spouse is not the
designated beneficiary, the applicable divisor then determined from the
table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the proposed
regulations. Distributions after the death of the Participant shall be
distributed using the applicable life expectancy as the relevant divisor
without regard to Proposed Regulations Section 1.401(a)(9)-2. The minimum
distribution for subsequent calendar years, including the minimum
distribution for the distribution calendar year in which the Participant's
required beginning date occurs, must be made on or before December 31 of
that distribution calendar year.
(d) DISTRIBUTION AFTER DEATH. Unless the Participant has made
an appropriate election by December 31, 1983 to extend the period of
distribution after his death and the election has not been revoked or
modified, the following provisions shall apply. If distribution of the
Participant's benefit has begun and the Participant dies before his entire
benefit has been distributed to him, the remaining portion of such benefit
shall be distributed at least as rapidly as under the method of
distribution being used as of the date of the Participant's death.
If the Participant dies before the distribution of his benefit has begun,
the entire interest of the Participant shall be distributed by December 31
of the calendar year containing the fifth (5th) anniversary of the death of
such Participant, provided that if any portion of the
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Participant's benefit is payable to or for the benefit of a designated
beneficiary and such portion is to be distributed in accordance with
regulations issued by the Secretary of the Treasury over the life of, or
over a period not extending beyond the life expectancy of such designated
beneficiary, such distributions shall begin not later than December 31 of
the calendar year immediately following the calendar year of the
Participant's death or such later date as may be provided by regulations
issued by the Secretary of the Treasury. If the designated beneficiary is
the surviving spouse of the Participant the date on which the distributions
are required to begin shall not be earlier than the later of December 31 of
the calendar year immediately following the calendar year in which the
Participant had died and December 31 of the calendar year in which the
Participant would have attained age 70-1/2. If the surviving spouse
thereafter dies before the distributions to such spouse begin and any
benefit is payable to a contingent beneficiary, the date on which
distributions are required to begin shall be determined as if the surviving
spouse were the Participant.
If the Participant has not specified the manner in which benefits are
payable by the time of his or her death, the Participant's designated
beneficiary must elect the method of distribution no later than the earlier
of (1) December 31 of the calendar year in which distributions would be
required to begin under this section, or (2) December 31 of the calendar
year which contains the fifth anniversary of the date of death of the
Participant. If the Participant has no designated beneficiary, or if the
designated beneficiary does not elect a method of distribution,
distribution of the Participant's entire interest must be completed by
December 31 of the calendar year containing the fifth anniversary of the
Participant's death.
(e) PAYMENTS TO CHILDREN. In accordance with regulations issued by
the Secretary of the Treasury, any amount paid to a child shall be treated
as if it had been paid to the surviving spouse if such amount shall become
payable to the surviving spouse upon such child reaching majority (or other
designated event permitted under such regulations).
(f) INCIDENTAL DEATH BENEFIT DISTRIBUTIONS. Any distribution
required by the rules applicable to incidental death benefits shall be
treated as a distribution required by this Section. All distributions
required under this Section shall be determined and made in accordance with
the proposed regulations under Section 401(a)(9) of the Code, including the
minimum distribution incidental benefit requirement of Section
1.401(a)(9)-2 of the proposed regulations.
(g) DISTRIBUTIONS. For the purposes of this section, distribution
of a Participant's interest is considered to begin on the Participant's
required beginning date or the date distribution is required to begin to
the surviving spouse. If distribution in the form of an annuity irrevocably
commences to the Participant before the required beginning date, the date
distribution is considered to begin is the date distribution actually
commences.
(h) DEFINITIONS.
(1) APPLICABLE LIFE EXPECTANCY. The life expectancy (or
joint and last survivor expectancy) calculated using the attained age
of the Participant (or designated
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beneficiary) as of the Participant's (or designated beneficiary's) birthday
in the applicable calendar year reduced by one for each calendar year which
has elapsed since the date life expectancy was first calculated. If life
expectancy is being recalculated, the applicable life expectancy shall be
the life expectancy as so recalculated. The applicable calendar year shall
be the first distribution calendar year, and if life expectancy is being
recalculated such succeeding calendar year.
(2) DESIGNATED BENEFICIARY. The individual who is designated as
the beneficiary under the Plan in accordance with Section 401(a)(9) and
the proposed regulations thereunder.
(3) DISTRIBUTION CALENDAR YEAR. A calendar year for which a
minimum distribution is required. For distributions beginning before
the Participant's death, the first distribution calendar year is the
calendar year immediately preceding the calendar year which contains
the Participant's required beginning date. For distributions beginning
after the Participant's death, the first distribution calendar year is
the calendar year in which distributions are required to begin.
(4) PARTICIPANT'S BENEFIT.
(i) The account balance as of the last valuation date in
the calendar year immediately preceding the distribution
calendar year (valuation calendar year) increased by the amount
of any contributions or forfeitures allocated to the account
balance as of dates in the valuation calendar year after the
valuation date and decreased by distributions made in the
valuation calendar year after the valuation date.
(ii) Exception for second distribution calendar year. For
purposes of paragraph (i) above, if any portion of the minimum
distribution for the first distribution calendar year is made
in the second distribution calendar year on or before the
required beginning date, the amount of the minimum distribution
made in the second distribution calendar year shall be treated
as if it had been made in the immediately preceding
distribution calendar year.
(5) REQUIRED BEGINNING DATE.
(i) GENERAL RULE. The required beginning date of a
Participant is the first day of April of the calendar year
following the calendar year in which the Participant attains
age 70 1/2.
(ii) TRANSITIONAL RULES. The required beginning date of a
Participant who attains age 70 1/2 before January 1, 1988,
shall be determined in accordance with (I) or (II) below:
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(I) NON-5-PERCENT OWNERS. The required beginning
date of a Participant who is not a 5-percent owner is the
first day of April of the calendar year following the
calendar year in which the later of retirement or
attainment of age 70 1/2 occurs.
(II) 5-PERCENT OWNERS. The required beginning date
of a Participant who is a 5-percent owner during any year
beginning after December 31, 1979, is the first day of
April following the later of:
(A) the calendar year in which the Participant
attains age 70 1/2, or
(B) the earlier of the calendar year with or
within which ends the Plan Year in which the
Participant becomes a 5-percent owner, or the calendar
year in which the Participant retires.
The required beginning date of a Participant who is not a
5-percent owner who attains age 70 1/2 during 1988 and who
has not retired as of January 1, 1989, is April 1, 1990.
(iii) 5-PERCENT OWNER. A Participant is treated as a
5-percent owner for purposes of this section if such
Participant is a 5-percent owner as defined in Section 416(i)
of the Code (determined in accordance with Section 416 but
without regard to whether the Plan is top-heavy) at any time
during the Plan Year ending with or within the calendar year in
which such owner attains age 66 1/2 or any subsequent Plan
Year.
(iv) Once distributions have begun to a 5-percent owner
under this section, they must continue to be distributed, even
if the Participant ceases to be a 5-percent owner in a
subsequent year.
(i) TRANSITIONAL RULE.
(1) Notwithstanding the other requirements of this Section
and subject to the requirements of Section 2.5.2, distribution on
behalf of any employee, including a 5-percent owner, may be made in
accordance with all of the following requirements (regardless of when
such distribution commences):
(a) The distribution by the trust is one which would
not have disqualified such trust under Section 401(a)(9) of the
Internal Revenue Code as in effect prior to amendment by the
Deficit Reduction Act of 1984.
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(b) The distribution is in accordance with a method of
distribution designated by the employee whose interest in the
trust is being distributed or, if the employee is deceased, by
a beneficiary of such employee.
(c) Such designation was in writing, was signed by the
employee or the beneficiary, and was made before January 1,
1984.
2.5.2 METHOD OF DISTRIBUTION. Subject to the provisions of Section
2.5.1 above and any security interest in a loan from the Plan for which any
necessary spousal consent has been obtained (to the extent such security
interest is used as repayment of the loan), distribution shall be made by one of
the following methods, as determined in accordance with the election of the
Participant (or in the case of death, his Beneficiary) with such spousal
consents as may be required by law:
(a) In a single distribution, as designated by the Employer in
the Adoption Agreement;
(b) In substantially equal annual, quarterly or monthly
installments over a period of more than one year but which does not exceed
the period designated in the Adoption Agreement, as selected by the
Participant (provided that such period is not greater than the
Participant's life expectancy as of the annuity starting date), plus
accrued net income. If distribution is to be so made in installments, the
Plan Administrator shall cause the undistributed portion of the
Distributable Benefit to be transferred to a Segregated Fund, from which
installment payments shall thereafter be withdrawn from time to time.
(c) By the purchase and delivery of a single premium,
nontransferable, fully refundable, annuity policy issued by a legal reserve
life insurance company providing for payments over such period as may be
designated in the Adoption Agreement as selected by the Participant;
provided, however, unless the Employer has designated a life annuity
distribution option in the Adoption Agreement in the event of distribution
of such an annuity policy to a Participant, such duration shall be for a
fixed duration which is less than the Participant's life expectancy as of
the annuity starting date. The refund feature under such annuity policy
following the death of the Participant shall inure to the benefit of the
person or persons designated by the Participant as his Beneficiary.
(d) Any alternative method of equivalent value contained in the
Plan at any time on or after the first day of the first Plan Year beginning
after 1988 to which the Participant consents.
(e) ANNUITY PAYMENTS.
(1) REQUIREMENT OF ANNUITY PAYMENT. The provisions of this
Section 2.5.2(e) shall apply to any Participant who is credited with at
least one Hour of Service with the Employer on or after August 23,
1984, and such other Participants as provided in Section 2.5.2(k).
Unless an optional form of benefit is selected pursuant to a qualified
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election within the 90-day period ending on the annuity starting date,
a married Participant's vested Account balance will be paid in the form
of a Joint and Survivor Annuity and an unmarried Participant's vested
Account balance will be paid in the form of a life annuity.
Unless an optional form of benefit has been selected within the
election period pursuant to a qualified election, if a Participant dies
before the annuity starting date then the Participant's vested Account
balance shall be applied toward the purchase of a Preretirement
Survivor Annuity.
Notwithstanding the other provisions of this Section 2.5.2(e), if the
Plan is designated in the Adoption Agreement as a Cash or Deferred
Profit Sharing Plan or a Profit Sharing Plan and the Employer does not
designate a life annuity distribution option in the Adoption Agreement,
the Qualified Joint and Survivor Annuity and Preretirement Survivor
Annuity forms of distribution shall not be available. However, a
Participant's surviving spouse shall be entitled to elect distribution
of the Participant's vested Account balance in the manner provided by
Section 3.8.3.
A Participant's vested Account balance is the aggregate value of the
Participant's vested account balances derived from employer and
employee contributions (including rollovers), whether vested before or
upon death, including the proceeds of insurance contracts, if any, on
the Participant's life. The provisions hereof shall apply to a
Participant who is vested in amounts attributable to employer
contributions, employee contributions (or both) at the time of death or
distribution.
The Participant may elect to have such annuity distributed upon
attainment of the earliest retirement age under the Plan. A surviving
spouse may elect to have such annuity distributed within the ninety
(90) day period commencing on the date of the Participant's death.
(2) ELECTION TO WAIVE ANNUITY PAYMENT. A Participant may elect
at any time during the applicable election period to waive the Joint
and Survivor Annuity form of benefit or the Preretirement Survivor
Annuity form of benefit (or both) and may revoke any such election at
any time during the applicable election period.
(3) SPOUSAL CONSENT REQUIRED. An election to waive any annuity
form of benefit shall not take effect unless the spouse of the
Participant consents in writing to the election, such election
designates a specific beneficiary, including any class of beneficiaries
or contingent beneficiaries, or, solely in the case of a waiver of a
Joint and Survivor Annuity, a form of benefits which may not be changed
without spousal consent (or the consent of the spouse expressly permits
designations by the Participant without any requirement of further
consent by the spouse), and the spouse's consent acknowledges the
effect of such election and is witnessed by a Plan representative or a
notary public, or it is established to the satisfaction of the Plan
Administrator that such
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consent cannot be obtained because there is no spouse or because the
spouse cannot be located. A spouse may not revoke the consent without
the approval of the Participant.
Any consent by a spouse obtained under this provision (or establishment
that the consent of a spouse may not be obtained) shall be effective
only with respect to such spouse. A consent that permits designations
by the Participant without any requirement of further consent by such
spouse must acknowledge that the spouse has the right to limit consent
to a specific beneficiary, and a specific form of benefit where
applicable, and that the spouse voluntarily elects to relinquish either
or both of such rights. A revocation of a prior waiver may be made by a
Participant without the consent of the spouse at any time before the
commencement of benefits. The number of revocations shall not be
limited. No consent obtained under this provision shall be valid unless
the Participant has received notice as provided in subsection (4)
below.
(4) WRITTEN EXPLANATIONS. The Plan Administrator shall
provide each Participant no less than 30 days and no more than 90 days
before the annuity starting date a written explanation of -
(a) the terms and conditions of a Joint and Survivor
Annuity;
(b) the Participant's right to make and the effect of an
election to waive the Joint and Survivor Annuity form of
benefit;
(c) the rights of the Participant's spouse to consent to
a Participant's election;
(d) the right to make and the effect of a revocation of
an election.
The Plan Administrator shall provide to each Participant within the
applicable period a written explanation of a Preretirement Survivor
Annuity comparable to that provided with respect to a Joint and
Survivor Annuity.
(5) APPLICABLE PERIOD. The applicable period means with
respect to a Participant, whichever of the following periods ends last:
(a) The period beginning with the first day of the Plan
Year in which the Participant attains age 32 and ending with
the close of the Plan Year preceding the Plan Year in which
the Participant attains age 35.
(b) A reasonable period ending after the individual
becomes a Participant.
(c) A reasonable period ending after the Plan increases
to fully subsidize costs.
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(d) A reasonable period ending after Section 401(a)(11)
of the Code first applies to the Participant.
(e) A reasonable period ending after separation from
service in case of a Participant who separates before
attaining age 35.
For purposes of applying the foregoing, a reasonable period
ending after the enumerated events described in (b), (c) and
(d) is the end of the two-year period beginning one year prior
to the date the applicable event occurs and ending one year
after that date. In the case of a Participant who separates
from service before the Plan Year in which age 35 is attained,
notice shall be provided within the two-year period beginning
prior to separation and ending one year after separation. If
such a Participant thereafter returns to employment with the
Employer, the applicable period for such Participant shall be
redetermined.
(6) APPLICABLE ELECTION PERIOD. The applicable election period
means -
(a) in the case of an election to waive a Joint and
Survivor Annuity, the ninety (90) day period ending on the
annuity starting date; and
(b) in the case of an election to waive a Preretirement
Survivor Annuity, the period which begins on the first day of
the Plan Year in which the Participant attains age thirty-five
(35) and ends on the date of the Participant's death; provided
that in the case of a Participant who is separated from
service, such period shall not begin later than the date of
such separation from service.
A Participant who will not yet attain age 35 as of the end of
any current Plan Year may make a special qualified election to
waive the Preretirement Survivor Annuity for the period
beginning on the date of such election and ending on the first
day of the Plan Year in which the Participant will attain age
35. Such election shall not be valid unless the Participant
receives a written explanation of the Preretirement Survivor
Annuity in such terms as are comparable to the explanation
required under subsection (4).
Preretirement Survivor Annuity coverage will be automatically
reinstated as of the first day of the Plan Year in which the
Participant attains age 35. Any new waiver on or after such
date shall be subject to the full requirements of this
section.
(7) ANNUITY STARTING DATE. The annuity starting date means the
first day of the first period for which an amount is payable as an
annuity or any other form.
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(8) MARRIAGE REQUIREMENT. Notwithstanding the foregoing, the
benefits under the Plan shall not be provided in the form of a Joint
and Survivor Annuity or a Preretirement Survivor Annuity unless the
Participant and his spouse have been married throughout the one (1)
year period ending on the earlier of the Participant's annuity starting
date or the date of the Participant's death. If a Participant marries
within one (1) year before the annuity starting date and the
Participant and his spouse in such marriage have been married for at
least a one (1) year period ending on or before the date of the
Participant's death, the Participant and such spouse shall be treated
as having been married throughout the required period. A former spouse
shall be treated as the spouse or surviving spouse and a current spouse
will not be treated as the spouse or surviving spouse to the extent
provided under a qualified domestic relations order as described in
Section 414(p) of the Code.
(f) TERMS OF ANNUITY CONTRACTS. Any annuity contract distributed
from the Plan must be nontransferable. The terms of any annuity contract
purchased and distributed by the Plan to a Participant or spouse shall
comply with the requirements of the Plan. If the Participant's benefit is
distributed in the form of an annuity purchased from an insurance company,
distributions thereunder shall be made in accordance with the requirements
of Section 401(a)(9) of the Code and the proposed regulations thereunder.
(g) INCIDENTAL DEATH BENEFITS. For calendar years beginning
before January 1, 1989, if the Participant's spouse is not the designated
Beneficiary, the method of distribution selected must assure that at least
fifty (50%) percent of the present value of the amount available for
distribution is paid within the life expectancy of the Participant.
(h) CONSENTS. If the value of a Participant's vested account
balance derived from Employer and Employee contributions does not exceed
(and at the time of any prior distribution did not exceed) $3,500, the
consent of the Participant and his or her spouse shall not be required;
provided that if such value exceeds $3,500, the Participant and spouse (or
where either has died, the survivor) must consent to any distribution of
such account balance. The consent shall be obtained in writing within the
90 day period ending on the annuity starting date. Neither the consent of
the Participant nor the Participant's spouse shall be required to the
extent that a distribution is required to satisfy Section 401(a)(9) or
Section 415 of the Code. In addition, upon termination of the Plan if the
Plan does not offer an annuity option (purchased from a commercial
provider) and if the Employer or any entity within the same controlled
group does not maintain another defined contribution plan (other than an
employee stock ownership plan as defined in Section 4975(e)(7) of the
Code), the Participant's account balance in the Plan will, without the
Participant's consent, be distributed to the Participant. However, if any
entity within the same controlled group as the Employer maintains another
defined contribution plan (other than an employee stock ownership plan as
defined in Section 4975(e)(7) of the Code), then the Participant's account
balance will be transferred, without the Participant's consent, to the
other Plan if the Participant does not consent to an immediate
distribution.
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<PAGE> 38
(i) ZERO BENEFITS. If the value of the Participant's vested
and nonforfeitable interest in the Plan at the time of his termination of
employment is zero, the Participant shall be deemed to have received a
distribution of such interest.
(j) RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS. The Plan
Administrator shall notify the Participant and the Participant's spouse of
the right to defer any distribution until the Participant's account balance
in the Plan is no longer immediately distributable.
Such notification shall include a general description of the
material features and an explanation of the relative values of the optional
forms of benefit available under the Plan in a manner that would satisfy
the notice requirements of Section 417(a)(3)of the Code and shall be
provided no less than 30 days and no more than 90 days prior to the annuity
starting date. Notwithstanding the foregoing, only the Participant need
consent to the commencement of a distribution in the form of a qualified
joint and survivor annuity while the Participant's account balance in the
Plan is immediately distributable. Furthermore, if payment in the form of a
qualified joint and survivor annuity is not required with respect to the
Participant pursuant to the Plan, only the Participant need consent to the
distribution of an account balance that is immediately distributable. The
Participant's account balance is immediately distributable if any part of
the Participant's account balance could be distributed to the Participant
(or surviving spouse) before the Participant attains (or would have
attained if not deceased) the later of age 62 or the Normal Retirement Age.
(k) TRANSITIONAL RULES.
(1) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed by the
previous sections of the article must be given the opportunity to elect
to have the prior sections of this article apply if such Participant is
credited with at least one hour of service under this Plan or a
predecessor plan in a Plan Year beginning on or after January 1, 1976,
and such Participant has at least 10 years of vesting service when he
or she separated from service.
(2) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one hour of service under this
Plan or a predecessor plan on or after September 2, 1974, and who is
not otherwise credited with any service in a Plan Year beginning on or
after January 1, 1976, must be given the opportunity to have his or her
benefits paid in accordance with Section (4) below.
(3) The respective opportunities to elect (as described above)
must be afforded to the appropriate Participants during the period
commencing on August 23, 1984, and ending on the date benefits would
otherwise commence to said Participants.
(4) Any Participant who has elected pursuant to Section (2)
above and any Participant who does not elect under Section (1) or who
meets the requirements of Section (1) except that such Participant does
not have at least 10 years of vesting service
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<PAGE> 39
when he or she separates from service, shall have his or her benefits
distributed in accordance with all of the following requirements if
benefits would have been payable in the form of a life annuity:
(i) AUTOMATIC JOINT AND SURVIVOR ANNUITY. If benefits
in the form a life annuity become payable to a married
Participant who:
(1) begins to receive payments under the Plan on
or after normal retirement age; or
(2) dies on or after normal retirement age while
still working for the Employer; or
(3) begins to receive payments on or after the
qualified early retirement age; or
(4) separates from service on or after attaining
normal retirement age (or the qualified early retirement
age) and after satisfying the eligibility requirements
for the payment of benefits under the plan and thereafter
dies before beginning to receive such benefits; then such
benefits will be received under this Plan in the form of
a qualified joint and survivor annuity, unless the
Participant has elected otherwise during the election
period. The election period must begin at least 6 months
before the Participant attains qualified early retirement
age and end not more than 90 days before the commencement
of benefits. Any election hereunder will be in writing
and may be changed by the Participant at any time.
(ii) ELECTION OF EARLY SURVIVOR ANNUITY. A Participant
who is employed after attaining the qualified early retirement
age will be given the opportunity to elect, during the election
period, to have a survivor annuity payable on death. If the
Participant elects the survivor annuity, payments under such
annuity must not be less than the payments which would have
been made to the spouse under the qualified joint and survivor
annuity if the Participant had retired on the day before his or
her death. Any election under this provision will be in writing
and may be changed by the Participant at any time. The election
period begins on the later of (1) the 90th day before the
Participant attains the qualified early retirement age, or (2)
the date on which participation begins, and ends on the date
the Participant terminates employment.
(iii) FOR PURPOSES OF THIS SECTION (4):
(1) Qualified early retirement age is the later
of:
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(i) the earliest date, under the Plan, on
which the Participant may elect to receive
retirement benefits,
(ii) the first day of the 120th month
beginning before the Participant reaches normal
retirement age, or
(iii) the date the Participant begins
participation.
(2) Qualified joint and survivor annuity is an
annuity for the life of the Participant with a survivor
annuity for the life of the spouse as otherwise described
in the Plan.
2.5.3 NATURE OF DISTRIBUTIONS. The nature of the distribution of a
Participant's Distributable Benefit shall be as hereinafter provided.
(a) TRUST FUND AND SEGREGATED FUNDS. Subject to the Joint and
Survivor Annuity requirements, except as provided in subsection (b) with
regard to Life Insurance Policies, distribution of a Participant's
Distributable Benefit shall consist of cash or property, or an annuity
contract as provided in Section 2.5.2 above.
(b) INSURANCE POLICIES. In the event that the Trustee has
purchased Life Insurance Policies on the life of the Participant, the
values and benefits available with respect to each such Policy shall be
distributed as follows:
(i) If the Participant's employment terminates for any
reason other than death, then the Trustee shall either surrender the
Life Insurance Policy for its available cash value and distribute the
proceeds as provided in subsection (a) above or, at the election of the
Participant, distribute the Life Insurance Policy to the Participant,
provided the Participant has a vested and nonforfeitable interest in
his Accounts in an amount at least equal to the cash value thereof.
(ii) If the Participant's employment terminates by reason of
death, the beneficiary designated by the Participant in accordance with
the terms of the Plan shall be entitled to receive from the Trustee the
full amount of the proceeds thereof.
The Trustee shall apply for and be the owner of any Policies purchased
under the terms of the Plan. The Policies must provide that the
proceeds are payable to the Trustee subject to the Trustee's obligation
to pay over the proceeds to the designated Beneficiary. A Participant's
spouse will be the designated beneficiary of the proceeds of such
Policies unless a qualified election has been made in accordance with
Section 2.5.2(e) of the Plan, if applicable. Under no circumstances
shall the trust retain any part of the proceeds. In the event of any
conflict between the terms of the Plan and the terms of any Policies
purchased hereunder, the Plan provisions shall control.
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2.5.4 ADVANCE DISTRIBUTIONS. If the Employer elects in the Adoption
Agreement to permit advance distribution to a Participant or his Beneficiary
after his employment has terminated and before he is otherwise entitled to
distribution of his Distributable Benefit but in no event earlier than a
reasonable period following the Distribution Date, the Trustee upon the request
of the Participant or Beneficiary shall make advance distributions to him or to
his Beneficiary. The aggregate of such an advance distribution shall not exceed
the sum of the vested and nonforfeitable interest in the Participant's Accounts.
If the Employer elects in the Adoption Agreement to forfeit non-vested amounts
immediately upon distribution of the Employee's entire vested account balance on
termination of service, an Employee who terminates service and elects to receive
the value of the Employee's vested account balance shall forfeit the non-vested
portion. If the Employee elects to have distributed less than the entire vested
portion of the account balance derived from Employer contributions, the part of
the non-vested portion that is treated as a forfeiture is the total non-vested
portion multiplied by a fraction, the numerator of which is the amount of the
distribution attributable to Employer contributions and the denominator of which
is the total value of the vested Employer derived account balance.
Except as provided in the preceding paragraph, if a Participant receives a
distribution which reduces the balance in his Employer Account when he has less
than a one hundred percent (100%) vested and nonforfeitable interest in the
Account, the amount, if any, of the Participant's vested and nonforfeitable
interest in the undistributed balance of said Account on his Accrual Date shall
be transferred to a Segregated Account and shall not be less than an amount
("X") determined by the formula: X = P (AB + (R x D)) - (R x D). For purposes of
applying the formula: P is the vested percentage at the relevant time; AB is the
account balance at the relevant time; and D is the amount of the distribution;
and R is the ratio of the account balance at the relevant time to the account
balance after distribution.
2.5.5 HARDSHIP DISTRIBUTIONS. If the Plan is designated in the
Adoption Agreement as a Cash or Deferred Profit Sharing Plan or a Profit Sharing
Plan and the Employer elects in the Adoption Agreement to permit hardship
distributions, a Participant may request a distribution from the Plan as a
result of immediate and heavy financial needs of the Participant to the extent
that the distribution is necessary to satisfy such financial needs. Hardship
distributions are subject to the spousal consent requirements contained in
Sections 401(a)(11) and 417 of the Code. The determination of whether a
Participant has an immediate and heavy financial need shall be made by the Plan
Administrator on the basis of all relevant facts and circumstances. A
distribution shall be deemed to be made on account of an immediate and heavy
financial need if the distribution is on account of:
(a) Deductible medical expenses described in Section 213(d) of the
Code incurred or necessary for medical care of the Participant, his spouse
or dependents;
(b) Purchase (excluding mortgage payments) of a principal residence
for the Participant;
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(c) Cost of tuition and related educational fees for the next 12
months of post-secondary education for the Participant, his spouse,
children or dependents; or
(d) The need to prevent the eviction of the Participant from
his principal residence or foreclosure on the mortgage of the Participant's
principal residence.
A distribution shall be considered as necessary to satisfy an immediate and
heavy financial need of the Participant only if:
(a) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans under all plans maintained
by the Employer;
(b) All plans maintained by the Employer provide that the
Participant's elective Deferrals and employee contributions shall be
suspended for twelve (12) months after the receipt of the hardship
distribution;
(c) The distribution is not in excess of the amount of an immediate
and heavy financial need (including amounts necessary to pay any federal,
state or local income taxes or penalties reasonably anticipated to result
from the distribution); and
(d) All plans maintained by the Employer provide that the
Participant may not make Elective Deferrals for the Participant's taxable
year immediately following the taxable year of the hardship distribution in
excess of the applicable limit under Section 402(g) of the Code for such
taxable year less the amount of such Participant's Elective Deferrals for
the taxable year of the hardship distribution.
In the event of such distribution, when a Participant is less than one
hundred percent (100%) vested in his Employer Account or Matching Account,
the vested interest in the Employer Account or Matching Account shall
thereafter be determined in accordance with Section 2.5.4 of the Plan.
2.5.6 IN SERVICE DISTRIBUTIONS.
(a) CASH OR DEFERRED PROFIT SHARING PLANS. If the Plan is
designated in the Adoption Agreement as a Cash or Deferred Profit Sharing
plan and if the Employer elects in the Adoption Agreement to permit
distributions to a Participant after attaining age 59 1/2 but prior to his
termination of employment, a Participant shall be entitled to receive a
distribution of all or a part of his interest in the Plan upon filing a
written request with the Plan Administrator; provided that no distribution
shall be made unless the interest of the Participant in the Account from
which the distribution is to be made is fully vested and nonforfeitable and
the balance in the Account to be distributed has accumulated for at least
two (2) years or the individual has been a Participant for five (5) or more
Plan Years; and the distribution of Elective Deferrals and Qualified
Non-Elective Contributions satisfy the
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limitations imposed by Part II, Article VII. Any distribution shall be
subject to the written consent of the Participant's spouse.
(b) PROFIT SHARING PLANS. If the Plan is designated in the
Adoption Agreement as a Profit Sharing Plan and if the Employer elects in
the Adoption Agreement to permit distributions to a Participant prior to
his termination of employment, a Participant shall be entitled to receive a
distribution of all or part of his interest in the Plan upon filing a
written request with the Plan Administrator; provided that no distribution
shall be made unless the interest of the Participant in the Account from
which the distribution is to be made is fully vested and nonforfeitable and
the balance in the Account to be distributed has accumulated for at least
two (2) years or the individual has been a Participant for five (5) or more
Plan Years; provided further that in-service distributions shall be
permitted subject to the terms of Section 2.5.5 if the Employer elects in
the Adoption Agreement to have such provision apply. Any distribution shall
be subject to the written consent of the Participant's spouse.
(c) ALL PLANS. Upon attainment of his Normal Retirement Date,
a Participant shall be entitled to receive a distribution of all or a part
of his interest in the Plan upon filing a written request with the Plan
Administrator. In service distributions are permitted at the election of
the Participant for amounts held in a Segregated Account attributable to a
rollover from another plan regardless of age or periods of participation.
Any distribution shall be subject to the written consent of the
Participant's spouse.
ARTICLE VI
CONTINGENT TOP HEAVY PROVISIONS
2.6.1 TOP HEAVY REQUIREMENTS. If the Plan becomes a Top Heavy Plan
during any Plan Year, the following provisions shall supersede any conflicting
provisions in the Plan or Adoption Agreement and apply for such Plan Year:
(a) Except as otherwise provided below, the Employer contributions
and forfeitures allocated on behalf of any Participant who is not a Key
Employee shall not be less than the lesser of three percent of such
Participant's Compensation or in the case where the Employer has no defined
benefit plan which designates this plan to satisfy Section 401 of the Code,
the largest percentage of Employer contributions and forfeitures, as a
percentage of the first $200,000 of the Key Employee's compensation,
allocated on behalf of any Key Employee for that year. The minimum
allocation is determined without regard to any Social Security
contribution. This minimum allocation shall be made even though, under
other plan provisions, the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation for the
year because of (i) the Participant's failure to complete 1,000 Hours of
Service (or any equivalent provided in the plan), or (ii) the Participant's
failure to make mandatory employee contributions to the plan, or (iii)
compensation less than a stated amount.
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Neither Elective Deferrals nor Matching Contributions may be taken into
account for the purpose of satisfying the minimum allocation.
For purposes of computing the minimum allocation, Compensation shall mean a
Participant's compensation as defined in Section 3.2.1(h) of the Plan.
The minimum allocation provided above shall not apply to any Participant
who was not employed by the Employer on the last day of the Plan Year.
The minimum allocation provided above shall not apply to any Participant to
the extent the Participant is covered under any other plan or plans of the
Employer and Employer has provided in the Adoption Agreement that the
minimum allocation or benefit requirement applicable to top-heavy plans
will be met in the other plan or plans.
(b) References in Section 3.2.1(d), pertaining to combined
plan limitations, to "1.25" shall be applied by substituting "1.0" for
"1.25" therein. Reference in Section 3.2.1(e), pertaining to a special
transition rule, to "$51,875" shall be applied by substituting "$41,500"
for "$51,875" therein.
(c) The vested and nonforfeitable interest of each Participant
shall be equal to the percentage determined under the vesting schedule
specified in the Adoption Agreement if the Plan becomes a Top Heavy Plan,
or if non-vesting schedule is specified, the percentage determined under
the following schedule:
<TABLE>
<CAPTION>
YEARS OF SERVICE PERCENTAGE
<S> <C>
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
</TABLE>
The top-heavy minimum vesting schedule applies to all benefits within the
meaning of Section 411(a)(7) of the Code, except those attributable to
employee contributions, including benefits accrued before the effective
date of Section 416 of the Code and benefits accrued before the Plan
becomes top-heavy.
No decrease in a Participant's nonforfeitable percentage may occur in the
event the Plan's status as top-heavy changes for any Plan Year. Any minimum
allocation required (to the extent required to be nonforfeitable under
Section 416(b)) may not be forfeited under Section 411(a)(3)(B) or (D) of
the Code.
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2.6.2 TOP HEAVY DEFINITIONS. The following terms, as used in this
Plan, shall have the following meaning:
(a) "KEY EMPLOYEE": An Employee or former employee who, at any
time during the Determination Period is either:
(i) an officer of the Employer having an Annual Compensation
greater than fifty (50%) percent of the amount in effect under
Section 415(b)(l)(A) of the Code;
(ii) an owner (or a person considered an owner under Section
318 of the Code) of one of the ten largest interests in the Employer
if such individual's Annual Compensation from the Employer is more
than the limitation in effect under Section 415(c)(l)(A) of the
Code;
(iii) any person who owns directly or indirectly more than five
(5%) percent of the outstanding stock of the Employer or stock
possessing more than five (5%) percent of the total combined voting
power of all stock of the Employer or, in the case of an
unincorporated Employer, the capital or profits interest in the
Employer;
(iv) any person who owns directly or indirectly more than one
(1%) percent of the outstanding stock of the Employer or stock
possessing more than one (1%) percent of the total combined voting
power of all stock of the Employer or, in the case of an
unincorporated Employer, the capital or profits interest in the
Employer and having an Annual Compensation from the Employer of more
than $150,000; or
(v) any beneficiary of a Key Employee. The determination of
who is a Key Employee shall be made in accordance with Section
416(i)(1) of the Code and the regulations thereunder.
(b) "AGGREGATION GROUP": Each qualified retirement plan of the
Employer in which a Key Employee is a participant and each other
qualified retirement plan of the Employer which enables any plan in
which a Key Employee is a participant to meet the requirements of
Section 401(a)(4) or Section 410 of the Code.
(c) "ANNUAL COMPENSATION": Compensation as defined in Section
415(c)(3) of the Code, but including amounts contributed by the
Employer pursuant to a salary reduction agreement which are excludable
from the Employee's gross income under Section 125, Section 402(a)(8),
Section 402(h) or Section 403(b) of the Code.
(d) "TOP-HEAVY PLAN": For any Plan Year beginning after December
31, 1983, the plan is top-heavy if any of the following conditions
exists:
(i) If the top-heavy ratio for the plan exceeds 60 percent
and the plan is not part of any required aggregation group or
permissive aggregation group of plans.
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(ii) If the plan is a part of a required aggregation group of
plans but not part of a permissive aggregation group and the
top-heavy ratio for the group of plans exceeds 60 percent.
(iii) If the plan is a part of a required aggregation group and
part of a permissive aggregation group of plans and the top-heavy
ratio for the permissive aggregation group exceeds 60 percent.
(e) "TOP-HEAVY RATIO":
(i) If the Employer maintains one or more defined
contribution plans (including any simplified employee pension plan)
and the Employer has not maintained any defined benefit plan which
during the 5-year period ending on the Determination Date(s) has or
has had accrued benefits, the top-heavy ratio for this plan alone or
for the required or permissive aggregation group as appropriate is a
fraction, the numerator of which is the sum of the account balances
of all Key Employees as of the Determination Date(s) (including any
part of any account balance distributed in the 5-year period ending
on the Determination Date(s)), and the denominator of which is the
sum of all account balances (including any part of any account
balance distributed in the 5-year period ending on the Determination
Date(s)), both computed in accordance with Section 416 of the Code
and the regulations hereunder.
Both the numerator and denominator of the top-heavy ratio are
increased to reflect any contribution not actually made as of the
Determination Date, but which is required to be taken into account
on that date under Section 416 of the Code and the regulations
thereunder.
(ii) If the Employer maintains one or more defined
contribution plans (including any simplified employee pension plan)
and the Employer maintains or has maintained one or more defined
benefit plans which during the 5-year period ending on the
Determination Date(s) has or has had any accrued benefits, the
top-heavy ratio for any required or permissive aggregation group as
appropriate is a fraction, the numerator of which is the sum of
account balances under the aggregated defined contribution plan or
plans for all Key Employees, determined in accordance with (i)
above, and the present value of accrued benefits under the
aggregated defined benefit plan or plans for all Key Employees as of
the Determination Date(s), and the denominator of which is the sum
of the account balances under the aggregated defined contribution
plan or plans for all Participants, determined in accordance with
(i) above, and the present value of accrued benefits under the
defined benefit plan or plans for all Participants as of the
Determination Date(s), all determined in accordance with Section 416
of the Code and the regulations thereunder. The accrued benefits
under a defined benefit plan in both the numerator and denominator
of the top-heavy ratio are increased for any distribution of an
accrued benefit made in the five-year period ending on the
Determination Date.
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(iii) For purposes of (i) and (ii) above, the value of account
balances and the present value of accrued benefits will be
determined as of the most recent valuation date that falls within or
ends with the 12-month period ending on the Determination Date,
except as provided in Section 416 of the Code and the regulations
thereunder for the first and second plan years of a defined benefit
plan.
The account balances and accrued benefits of a Participant (1) who
is not a Key Employee but was a Key Employee in a prior year, or (2)
who has not been credited with at least one hour of service with any
Employer maintaining the plan at any time during the 5-year period
ending on the Determination Date will be disregarded. The
calculation of the top-heavy ratio, and the extent to which
distributions, rollovers, and transfers are taken into account will
be made in accordance with Section 416 of the Code and the
regulations thereunder. Deductible employee contributions will not
be taken into account for purposes of computing the top-heavy ratio.
When aggregating plans, the value of account balances and accrued
benefits will be calculated with reference to the Determination
Dates that fall within the same calendar year.
The accrued benefit of a Participant other than a Key Employee shall
be determined under (a) the method, if any, that uniformly applies
for accrual purposes under all defined benefit plans maintained by
the Employer, or (b) if there is no such method, as if such benefit
accrued not more rapidly than the slowest accrual rate permitted
under the fractional rule of Section 411(b)(1)(C) of the Code.
(f) "PERMISSIVE AGGREGATION GROUP": The required aggregation group
of plans plus any other plan or plans of the Employer which, when
considered as a group with the required aggregation group, would
continue to satisfy the requirements of Sections 401(a)(4) and 410 of
the Code.
(g) "REQUIRED AGGREGATION GROUP":
(i) Each qualified plan of the Employer in which at least one
Key Employee participates or participated at any time during the
Determination Period (regardless of whether the plan has
terminated).
(ii) Any other qualified plan of the Employer which enables a
plan described in (i) to meet the requirements of Sections 401(a)(4)
or 410 of the Code.
(h) "DETERMINATION DATE": For any plan year subsequent to the
first plan year, the last day of the preceding plan year. For the first
plan year of the plan, the last day of that year.
(i) "VALUATION DATE": The date elected by the Employer in the
Adoption Agreement as of which account balances or accrued benefits are
valued for purposes of calculating the top-heavy ratio.
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<PAGE> 48
(j) "PRESENT VALUE": Present value shall be based only on the
interest and mortality rates specified in the Adoption Agreement.
(k) "DETERMINATION PERIOD": The Plan Year containing the
Determination Date and the four (4) preceding Plan Year.
(l) "NON-KEY EMPLOYEE": An Employee who is not a Key Employee.
2.6.3 PAIRING REQUIREMENTS. If an Employer adopts two or more
defined contribution plans by executing Adoption Agreements pursuant to this
Plan or another prototype plan for which the Mass Submitter is the same, the
following provisions shall apply:
(a) Only one of the Adoption Agreements may provide for permitted
disparity by integration with Social Security.
(b) For each Plan Year in which the paired plans are top-heavy
the Employer shall provide a minimum contribution equal to three (3%)
percent of Compensation for each Non-Key Employee (i) under the paired
plan designated by the Employer in the Adoption Agreement if the plans
benefit the same Participants, or in the case of a plan subject to Code
Section 401(k) or 401(m), the same Participants are eligible to make
elective deferrals or employee contributions, or (ii) under both paired
plans if the plans benefit the same Participants. Note: The same
eligibility requirements in Section A of the Adoption Agreement must be
selected.
(c) In any Plan Year in which the paired plans are top-heavy,
i.e. the top-heavy ratio exceeds sixty (60%) percent, the denominators
of the defined benefit fraction and defined contribution fraction in
Section 3.2.1(d) shall be computed by multiplying the dollar limitation
by 1.0 instead of by 1.25.
ARTICLE VII
SPECIAL CODA LIMITATIONS
2.7.1 LIMITATION ON DEFERRAL PERCENTAGE FOR HIGHLY COMPENSATED
EMPLOYEES. Notwithstanding any provision herein to the contrary, the actual
deferral percentage for all Highly Compensated Employees for each Plan Year must
not exceed the actual deferral percentage for all other Employees eligible to
participate by more than the greater of:
(a) the actual deferral percentage of such other Employees
multiplied by 1.25; or
(b) the actual deferral percentage of such other Employees
multiplied by 2.0, but in no event more than two (2) percentage points
greater than the actual deferral percentage of such other Employees.
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<PAGE> 49
For purposes hereof, the actual deferral percentages for a Plan Year
for all Highly Compensated Employees and for all other Employees
respectively are the averages of the ratios, calculated separately for
each Employee in the respective group, of the amount of Elective
Contributions and Qualified Non-Elective Contributions paid under the
Plan on behalf of each such Employee for such Plan Year including
Excess Elective Deferrals to the Employee's Compensation for such Plan
Year(whether or not the Employee was a Participant for the entire Plan
Year) but excluding Elective Deferrals that are taken into account in
the Contribution Percentage test (provided the ADP test is satisfied
both with and without exclusion of those Elective Deferrals). An
Employee who would be a Participant but for the failure to have
Elective Contributions made on his behalf shall be treated as a
Participant on whose behalf no Elective Contributions are made. For
purposes of calculating the actual deferral percentages of Highly
Compensated Employees who are 5 percent owners or among the ten most
highly paid employees, Elective Contributions and Qualified
Non-Elective contributions on behalf of a member of the Family of such
highly Compensated Employees shall be taken into account and
compensation of such Employees shall include the Elective deferrals and
Qualified Non-Elective Contributions and compensation for the Plan Year
of members of his Family (as determined in Section 414(q)(6) of the
Code). A member of the family of such Highly Compensated Employees
shall be disregarded as a separate Employee in determining the actual
deferral percentage both for Participants who are Highly compensated
Employees and for all other Employees.
For purposes of determining the actual deferral percentage test,
Elective Contributions and Qualified Non-Elective contributions must be
made before the last day of the twelve month period immediately
following the Plan Year to which the contributions relate.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the actual deferral percentage test and the amount of
Qualified Non-Elective Contributions used in such test.
The determination and treatment of the actual deferral percentage
amounts of any Participant shall satisfy such other requirements as may
be prescribed by the Secretary of the treasury.
2.7.2 MULTIPLE PLAN LIMITATIONS.
(a) The actual deferral percentage for any Participant who is a
Highly Compensated Employee for the Plan Year and who is eligible to
have Elective Contributions (and Qualified Non-Elective Contributions
if treated as Elective Deferrals for purposes of the actual deferral
percentage test) allocated to his or her Accounts under two or more
arrangements described in Section 401(k) of the Code, that are
maintained by the Employer, shall be determined as if such Elective
Deferrals (and, if applicable, such qualified Non-Elective
Contributions) were made under a single arrangement. If a Highly
Compensated Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or deferred
arrangements ending with or within the same calendar year shall be
treated as a single arrangement. Notwithstanding the foregoing, certain
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<PAGE> 50
plans shall be treated as separate if mandatorily disaggregated under
regulations under Section 401(k) of the Code.
(b) In the event that this Plan satisfies the requirements of Section
401(k), 401(a)(4) or 410(b) of the Code only if aggregated with one or more
other plans, or if one or more other plans satisfy the requirements of such
sections of the Code only if aggregated with this Plan, then this section shall
be applied by determining the actual deferral percentage of Employees as if all
such plans were a single plan. For Plan Years beginning after December 31, 1989,
plans may be aggregated in order to satisfy Section 401(k) of the Code only if
they have the same Plan Year.
2.7.3 LIMITATION ON MATCHING CONTRIBUTIONS. Notwithstanding any
provision herein to the contrary, the average contribution percentage for all
Highly Compensated Employees for each Plan Year must not exceed the average
contribution percentage for all other Employees eligible to participate by more
than the greater of:
(a) the average contribution percentage of such other Employees
multiplied by 1.25; or
(b) the average contribution percentage of such other Employees
multiplied by 2.0, but in no event more than two (2) percentage points
greater than the average contribution percentage of such other
Employees.
For purposes hereof, the average contribution percentages for a Plan Year for
all Highly Compensated Employees and for all other Employees respectively are
the averages of the ratios, calculated separately for each Employee in the
respective group, of the amount of Matching Contributions paid under the Plan on
behalf of each such Employee for such Plan Year, to the Employee's Compensation
for such Plan Year whether or not the Employee was a Participant for the entire
Plan Year. Such contribution percentage amounts shall include forfeitures of
Excess Aggregate Contributions or Matching Contributions allocated to the
Participant's Accounts which shall be taken into account in the Plan Year in
which such forfeiture is allocated. Forfeitures of Matching Contributions shall
be included as contribution percentage amounts only to the extent such
forfeitures are used to reduce or supplement the Matching Contributions, as
specified in the Adoption Agreement. If so elected in the Adoption Agreement,
the Employer may include Qualified Non-Elective Contributions in the
contribution percentage amounts.
The Employer may also elect to use Elective Deferrals in the contribution
percentage amounts so long as the ADP test is met before the Elective Deferrals
are used in the ACP test and continues to be met following the exclusion of
those Elective Deferrals that are used to meet the ACP test. If an Elective
Contribution or other contribution by an Employee is required as a condition of
participation in the Plan, any Employee who would be a Participant if such
Employee made such a contribution shall be treated as an eligible Participant on
behalf of whom no such contributions are made.
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<PAGE> 51
The Employer shall maintain records sufficient to demonstrate satisfaction of
the average contribution percentage test and the amount of Qualified
Non-Elective Contributions used in such test.
The determination and treatment of the contribution percentage of any
Participant shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
2.7.4 SPECIAL RULES.
(a) MULTIPLE USE: If one or more Highly Compensated Employees
participate in both a CODA and a plan subject to the ACP test
maintained by the Employer and the sum of the ADP and ACP of those
Highly Compensated Employees subject to either or both tests exceeds
the Aggregate Limit, then the ACP of those Highly Compensated Employees
who also participate in a CODA shall be reduced (beginning with such
Highly Compensated Employee whose ACP is the highest) so that the limit
is not exceeded. The amount by which each Highly Compensated Employee's
contribution percentage amounts is reduced shall be treated as an
Excess Aggregate Contribution. The ADP and ACP of the Highly
Compensated Employees are determined after any corrections required to
meet the ADP and ACP tests. Multiple use does not occur if either the
ADP or ACP of the Highly Compensated Employees does not exceed 1.25
multiplied by the ADP and ACP of the Employees who are not Highly
Compensated Employees.
(b) The contribution percentage for any Participant who is a
Highly Compensated Employee and who is eligible to have contribution
percentage amounts allocated to his or her Accounts under two or more
plans described in Section 401(a) of the Code, or arrangements
described in Section 401(k) of the Code that are maintained by the
Employer, shall be determined as if the total of such contribution
percentage amounts was made under each plan. If a Highly Compensated
Employee participates in two or more cash or deferred arrangements that
have different plan years, all cash or deferred arrangements ending
with or within the same calendar year shall be treated as a single
arrangement. Notwithstanding the foregoing, certain plans shall be
treated as separate if mandatorily disaggregated under regulations
under Section 401(m) of the Code.
(c) In the event that this Plan satisfies the requirements of
Sections 401(m), 401(a)(4) or 410(b) of the Code only if aggregated
with one or more other plans, or if one or more other plans satisfy the
requirements of such Sections of the Code only if aggregated with this
plan, then this section shall be applied by determining the
contribution percentages of Employees as if all such plans were a
single plan. For Plan Years beginning after December 31, 1989, plans
may be aggregated in order to satisfy Section 401(m) of the Code only
if they have the same Plan Year.
(d) For purposes of determining the contribution percentage of a
Participant who is a five-percent owner or one of the ten most
highly-paid Highly Compensated Employees, the contribution percentage
amounts and Compensation of such participant shall include the
contribution percentage amounts and Compensation for the Plan Year of
members of the
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<PAGE> 52
Family of such Highly Compensated Employees. Family members, with
respect to Highly Compensated Employees, shall be disregarded as
separate employees in determining the contribution percentage both for
Participants who are Highly Compensated Employees and for all other
Employees.
(e) For purposes of determining the contribution percentage test,
Employee Contributions are considered to have been made in the Plan
Year in which contributed to the trust. Matching Contributions and
Qualified Non-Elective Contributions shall be considered made for a
Plan Year if made no later than the end of the twelve month period
beginning the day after the close of the Plan Year.
2.7.5 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS. A Participant may
assign to the Plan any Excess Elective Deferrals made during a taxable year of
the Participant by notifying the Plan Administrator on or before March 15 of
each calendar year of the amount of the Excess Elective Deferrals to be assigned
to the Plan. A Participant is deemed to notify the Plan Administrator of any
Excess Elective Deferrals that arise by taking into account only those Elective
Deferrals made to this Plan and any other plans of the Employer.
Notwithstanding any other provision of the Plan, Excess Elective Deferrals, plus
any income and minus any loss allocable thereto, shall be distributed no later
than April 15 to any Participant to whose account Excess Elective Deferrals were
assigned for the preceding year and who claims Excess Elective Deferrals for
such taxable year.
Excess Elective Deferrals distributed under this section shall be adjusted for
any income or loss based on a reasonable method of computing the allocable
income or loss. The method selected must be applied consistently to all
Participants and used for all corrective distributions under the Plan for the
Plan Year, and must be the same method that is used by the Plan for allocating
income or loss to Participants' Accounts. Income or loss allocable to the period
between the end of the taxable year and the date of distribution may be
disregarded in determining income or loss.
2.7.6 DISTRIBUTION OF EXCESS CONTRIBUTIONS. Notwithstanding any other
provision of this Plan, Excess Contributions, plus any income and minus any loss
allocable thereto, shall be distributed no later than the last day of each Plan
Year to Participants to whose Accounts such Excess Contributions were allocated
for the preceding Plan Year. If such excess amounts are distributed more than 2
1/2 months after the last day of the Plan Year in which such excess amounts
arose, a ten (10) percent excise tax will be imposed on the Employer maintaining
the Plan with respect to such amounts. Such distributions shall be made to
Highly Compensated Employees on the basis of the respective portions of the
Excess Contributions attributable to each of such Employees. Excess
Contributions of Participants who are subject to the family member aggregation
rules shall be allocated among the family members in proportion to the Elective
Deferrals (and any amounts treated as Elective Deferrals) of each family member
that is combined to determine the combined ADP.
Excess Contributions distributed under this section shall be adjusted for any
income or loss based on a reasonable method of computing the allocable income or
loss. The method selected must be
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applied consistently to all Participants and used for all corrective
distributions under the Plan for the Plan Year, and must be the same method that
is used by the Plan for allocating income or loss to Participants' Accounts.
Income or loss allocable to the period between the end of the taxable year and
the date of distribution may be disregarded in determining income or loss.
Excess Contributions shall be distributed from the Participant's Elective
Contribution Account in proportion to the Participant's Elective Deferrals for
the Plan Year. Excess Contributions attributable to Qualified Non-Elective
Contributions shall be distributed from the Participant's Qualified Non-Elective
Contribution Account only to the extent that such Excess Contributions exceed
the balance in the Participant's Elective Contribution Account.
2.7.7 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS. Notwithstanding
any other provision of this Plan, Excess Aggregate Contributions, plus any
income and minus any loss allocable thereto, shall be forfeited, if forfeitable,
or if not forfeitable, distributed no later than the last day of each Plan Year
to Participants to whose accounts such Excess Aggregate Contributions were
allocated for the preceding Plan Year. Excess Aggregate Contributions of
Participants who are subject to the family member aggregation rules shall be
allocated among the family members in proportion to the Employee and Matching
Contributions (or amounts treated as Matching Contributions) of each family
member that is combined to determine the combined ACP. Such distributions shall
be made to Highly Compensated Employees on the basis of the respective portions
of the Excess Aggregate Contributions attributable to each of such Employees. If
such Excess Aggregate Contributions are distributed more than 2 1/2 months after
the last day of the Plan Year in which such excess amounts arose, a ten (10)
percent excise tax will be imposed on the Employer maintaining the Plan with
respect to those amounts.
Excess Aggregate Contributions distributed under this section shall be adjusted
for any income or loss based on a reasonable method of computing the allocable
income or loss. The method selected must be applied consistently to all
Participants and used for all corrective distributions under the Plan for the
plan Year, and must be the same method that is used by the plan for allocating
income or loss to Participants' Accounts. Income or loss allocable to the period
between the end of the taxable year and the date of distribution may be
disregarded in determining income or loss.
Forfeitures of Excess Aggregate Contributions may either be reallocated to the
accounts of Employees who are not Highly Compensated Employees or applied to
reduce Employer Contributions, as elected by the Employer in the Adoption
Agreement.
Excess Aggregate Contributions shall be forfeited, if forfeitable or distributed
on a pro-rata basis from the Participant's Matching Account and Voluntary
Account (and, if applicable, the Participant's Qualified Non-Elective
Contribution Account or Elective Contribution Account).
2.7.8 LIMITATION ON DISTRIBUTIONS. Except as otherwise provided in
this Article, Elective Deferrals and Qualified Non-Elective Contributions and
income allocable thereto are not distributable to a Participant or his or her
Beneficiary in accordance with such Participant's or Beneficiary's election
prior to separation from service, death or disability. Such amounts may,
however, be distributed upon:
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(a) Termination of the Plan without the establishment of another
defined contribution plan, other than an employee stock ownership plan
(as defined in Section 4975(e) or Section 409 of the Code) or a
simplified employee pension plan as defined in Section 408(k) of the
Code.
(b) The disposition by a corporation to an unrelated corporation
of substantially all of the assets (within the meaning of Section
409(d)(2) of the Code) used in a trade or business of such corporation
if such corporation continues to maintain this Plan after the
disposition, but only with respect to employees who continue employment
with the corporation acquiring such assets.
(c) The disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary (within the meaning of
Section 409(d)(3) of the Code) If such corporation continues to
maintain this Plan, but only with respect to employees who continue
employment with such subsidiary.
(d) The attainment of age 59 1/2.
(e) The Hardship of a Participant in accordance with Section
2.5.5.
All such distributions are subject to the spousal and Participant consent
requirements, if applicable, contained in Sections 401(a)(11) and 417 of the
Code. In addition, distributions after March 31, 1988 that are triggered by any
of the first three events enumerated above must be made in a lump sum.
2.7.9 LIMITATION ON ELECTIVE DEFERRALS. No Participant shall be
permitted to have Elective Deferrals made under this Plan, or any other
qualified plan maintained by the Employer, during any taxable year, in excess of
the dollar limitation contained in Section 402(g) of the Code in effect at the
beginning of such taxable year.
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PART III
ARTICLE I
ACCOUNTING
3.1.1 ACCOUNTS. All income, profits, recoveries, contributions and
any and all monies, securities and properties of any kind at any time received
or held by the Trustee shall be held as a commingled Trust Fund, except to the
extent such assets are transferred to a Segregated Fund. For accounting
purposes, the Plan Administrator shall establish and maintain certain Accounts
for each Participant. An Employer Account shall be established and maintained
for each Participant to which shall be added the Participant's share of Employer
or Non-Elective Contributions and forfeitures. A matching Account shall be
established and maintained for each Participant to which shall be added the
Participant's share of Matching Contributions and forfeitures. A Qualified
Non-Elective Contribution Account shall be established and maintained for each
Participant to which shall be added the Participant's share of Qualified
Non-Elective Contributions. If a Participant has previously made voluntary
nondeductible employee contributions, the Plan Administrator shall establish and
maintain a Voluntary Account for the Participant. If, in accordance with any of
the provisions of the Plan, assets are either deposited initially or transferred
to a Segregated Fund for the benefit of a Participant, the Plan Administrator
shall establish and maintain a Segregated Account for the Participant. If a
Participant elects to exercise investment control over all or a portion of his
Accounts, the Plan Administrator shall establish and maintain a Controlled
Account for the Participant.
3.1.2 ADJUSTMENTS. As of each Valuation Date, each Participant's
Accounts shall be adjusted in the following order and manner.
(a) DISTRIBUTIONS. Any distribution made to or on behalf of a
Participant since the last preceding Valuation Date shall be deducted
from the Participant's Account from which the distribution was made.
(b) INSURANCE PREMIUMS. Payments made since the last preceding
Valuation Date for Life Insurance Policies on the life of a Participant
(including without limitation payments of premiums and interest on
policy loans) shall be deducted from the Account of the Participant
from which the payment was made.
(c) ADJUSTMENT TO FAIR MARKET VALUE. The value of all monies,
securities and other property in the Trust Fund, excluding Life
Insurance Policies, shall be appraised by the Trustee at the then fair
market value. In determining such value, all income and contributions,
if any, received by the Trustee from the Employer or Participants on
account of such Year calculated under the method of accounting of the
Trust shall be included and there shall be deducted all expenses
determined in accordance with the method of accounting adopted by the
Plan Administrator.
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If the total net value of the Trust Fund so determined exceeds (or is
less than) the total amount in the affected Accounts of all
Participants, the excess (or deficiency) shall be added to (or deducted
from) the respective Accounts of all Participants in the ratio that
each such Participant's Account bears to the total amount in all such
Accounts.
(d) ADJUSTMENT OF SEGREGATED AND CONTROLLED ACCOUNTS. The value
of all monies, securities and other property in each Participant's
Segregated Account or Controlled Account, if any, but exclusive of Life
Insurance Policies, shall be appraised by the Trustee at the then fair
market value. In determining such value, all income calculated under
the method of accounting of the Trust shall be included and all
expenses shall be deducted.
If the total net value of a Participant's Segregated Account or
Controlled Account, as the case may be, so determined exceeds (or is
less than) the previous balance in such Account, the excess (or
deficiency) shall be added to (or deducted from) the Participant's
respective Account.
(e) INSURANCE DIVIDENDS. Dividends or credits received since the
last preceding Valuation Date on any Life Insurance Policy on the life
of a Participant shall be added to the Account of the Participant from
which the premiums for such Life Insurance Policy have been paid.
(f) CONTRIBUTIONS AND FORFEITURES. Each Participant's Account
shall be increased by that portion of the contribution and forfeitures
which is allocated to him.
(g) TRANSFERS TO SEGREGATED FUNDS. To the extent that funds in
the Trust Fund attributable to a Participant's Accounts were
transferred since the last preceding Valuation Date or are to be
transferred to a Segregated Fund pursuant to any of the provisions of
the Plan, the Account from which the funds were transferred shall be
decreased and the Account to which the funds were transferred shall be
increased.
(h) TRANSFERS FROM SEGREGATED FUNDS. To the extent that funds are
transferred from a Segregated Fund of a Participant to the Trust Fund
pursuant to any of the provisions of the Plan, the Account from which
the funds were transferred shall be decreased and the Account to which
the funds were transferred shall be increased.
(i) TIME OF ADJUSTMENTS. Every adjustment to be made pursuant to
this Section shall be considered as having been made as of the
applicable Valuation Date regardless of the actual dates of entries,
receipt by the Trustee of contributions by the Participant or the
Employer for such Year, or the transfers of funds to or from Segregated
Funds. The Trustee's determination as to valuation of trust assets and
charges or credits to the individual Accounts of the respective
Participants shall be conclusive and binding on all persons. If funds
are transferred from the trust Fund to a Segregated Fund as of any date
other than a Valuation Date pursuant to the terms of the Plan, the
adjustment to be made pursuant to this Section shall be made as of the
date as of which such transfer is made, as if such date is a Valuation
Date.
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If any Participant receives a distribution pursuant to the terms of the
Plan as of any date other than a Valuation Date, then the adjustments
to be made pursuant to this Section shall be made in the manner
specified in the Adoption Agreement.
ARTICLE II
LIMITATIONS
3.2.1 LIMITATIONS ON ANNUAL ADDITIONS. If the Participant does not
participate in, and has never participated in, another qualified plan maintained
by the Employer, or a welfare benefit fund, as defined in Section 419(e) of the
Code, maintained by the Employer, or an individual medical account, as defined
in Section 415(l)(2) of the Code, maintained by the Employer, which provides an
annual addition, then subject to the adjustments hereinafter set forth, the
amount of annual additions which may be credited to a Participant's Accounts
during any Limitation Year shall not exceed the maximum permissible amount,
which shall equal the lesser of: (a) thirty thousand dollars ($30,000.00) or, if
greater, one-fourth of the dollar limitation under Section 415(b)(1)(A) of the
Code as in effect for the Limitation Year, or (b) twenty-five percent (25%) of
the Participant's Compensation for the Plan Year. The compensation limitation
referred to in (b) shall not apply to any contribution for medical benefits
(within the meaning of Section 401(h) or Section 419A(f)(2) of the Code) which
is otherwise treated as an annual addition under Sections 415(l)(1) or
419A(d)(2) of the Code.
If the Employer contribution that would otherwise be contributed or allocated to
the Participant's Account would cause the annual additions for the Limitation
Year to exceed the maximum permissible amount, the amount contributed or
allocated shall be reduced so that the annual additions for the Limitation Year
shall equal the maximum permissible amount.
(a) ANNUAL ADDITIONS. The term "annual additions" shall mean the
sum of the following amounts credited to a Participant's Accounts for
the Limitation Year:
(i) Employer contributions;
(ii) Employee contributions;
(iii) Forfeitures;
(iv) Excess Elective Deferrals, Excess Contributions and
Excess Aggregate Contributions; and
(v) Payments allocated after March 31, 1984, to an
individual medical account, as defined in section 415(l)(2) of the
Code, which is part of a pension or annuity plan maintained by the
Employer and amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after such date,
which are attributable to post-retirement medical benefits,
allocated to the separate account of a
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key employee, as defined in Section 419A(d)(3) of the Code, under
a welfare benefit fund as defined in Section 419(e) of the Code,
maintained by the Employer.
Any excess amounts applied under subsections (b) and (c) below to
reduce Employer contributions are considered annual additions for
such Limitation Year.
(b) EXCESSIVE ANNUAL ADDITIONS. Prior to determining a
Participant's actual Compensation for a Limitation Year, the Employer
may determine the maximum permissible Annual Addition for the
Participant on the basis of a reasonable estimation of the
Participant's Compensation for the Limitation Year, uniformly
determined for all Participants similarly situated. As soon as is
administratively feasible after the end of the Limitation Year, the
maximum permissible amount for the Limitation Year shall be determined
on the basis of the Participant's actual Compensation for the
Limitation Year. Any Excessive Annual Addition attributable to
nondeductible voluntary employee contributions made by a Participant to
the extent they reduce the excess amount shall be returned to the
Participant before any other adjustments are made. Any Excessive Annual
Addition attributable to a reasonable error in determining the amount
of Elective Deferrals that may be made on behalf of a Participant under
the limits of Section 415 of the Code shall next be returned to the
Participant.
If an excess amount still exists, and the Participant is covered by the
Plan at the end of the Limitation Year, the excess amount in the
Participant's Account shall be used to reduce Employer contributions
(including any allocation of forfeitures) for such Participant in the
next Limitation Year, and each succeeding Limitation Year, if
necessary. If an excess amount still exists, and the Participant is not
covered by the Plan at the end of a Limitation Year, the excess amount
shall be held unallocated in a suspense account. The suspense account
shall be applied to reduce future Employer contributions for all
remaining Participants in the next Limitation Year, and each succeeding
Limitation Year, if necessary.
If a suspense account is in existence at any time during a particular
Limitation Year, all amounts in the suspense account must be allocated
and reallocated to Participants' Accounts before any Employer or any
Employee contributions may be made to the Plan for that Limitation
Year. Excess amounts may not be distributed to Participants or former
Participants. If a suspense account is in existence at anytime during a
Limitation Year, it shall not participate in the allocation of the
Trust's investment gains and losses.
(c) PARTICIPATION IN CERTAIN OTHER PLANS. If in addition to this
Plan, the Participant is covered under another qualified regional
prototype defined contribution plan maintained by the Employer, a
welfare benefit fund, as defined in Section 419(e) of the code
maintained by the Employer, or an individual medical account, as
defined in Section 415(l)(2) of the Code, maintained by the Employer,
which provides an Annual Addition during any Limitation Year, the
annual additions which may be credited to a Participant's account under
this Plan for any such Limitation Year shall not exceed the maximum
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permissible amount reduced by the Annual Additions credited to a
Participant's Account under the other plans and welfare benefit funds
for the same Limitation Year.
If the Annual Additions with respect to the Participant under other
defined contribution plans and welfare benefit funds maintained by the
Employer are less than the maximum permissible amount and the Employer
contribution that would otherwise be contributed or allocated to the
Participant's Account under this Plan would cause the Annual Additions
for the Limitation Year to exceed this limitation, the amount
contributed or allocated shall be reduced so that the Annual Additions
under all such plans and funds for the Limitation Year shall equal the
maximum permissible amount. If the Annual Additions with respect to the
Participant under such other defined contribution plans and welfare
benefit funds in the aggregate are equal to or greater than the maximum
permissible amount, no amount will be contributed or allocated to the
Participant's Account under this Plan for the Limitation Year.
Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the maximum permissible
amount for a Participant in the manner described in subsection (b)
above. As soon as is administratively feasible after the end of the
Limitation Year, the maximum permissible amount for the Limitation Year
shall be determined on the basis of the Participant's actual
Compensation for the Limitation Year.
If a Participant's Annual Additions under this Plan and such other
plans would result in an excess amount for a Limitation Year, the
excess amount shall be deemed to consist of the Annual Additions last
allocated, except that Annual Additions attributable to a welfare
benefit fund or individual medical account will be deemed to have been
allocated first regardless of the actual allocation date.
If the excess amount was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another
plan, the excess amount attributed to this Plan will be the product of:
(i) the total excess amount allocated as of such date, times
(ii) the ratio of (I) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this Plan to
(II) the total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all the other qualified
regional prototype defined contribution plans. Any excess amount
attributed to this Plan will be disposed in the manner described in
subsection (b), above
If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a regional
prototype plan, Annual Additions which may be credited to the
Participant's Account under this Plan for any Limitation Year shall be
limited as provided above as though the other plan were a regional
prototype plan unless the Employer specifies other limitations in the
Adoption Agreement.
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For purposes hereof, the excess amount is the excess of the
Participant's annual additions for the Limitation Year over the maximum
permissible amount and a regional prototype plan is a plan the form of
which is the subject of a favorable opinion letter from the Internal
Revenue Service.
If the Employer maintains, or at any time maintained, a qualified
defined benefit plan covering any Participant in this Plan, the sum of
the Participant's defined benefit plan fraction and defined
contribution plan fraction will not exceed 1.0 in any Limitation Year.
The Annual Additions which may be credited to the Participant's account
under this Plan for any Limitation Year shall be limited in the manner
specified in the Adoption Agreement.
(d) COMBINED PLAN LIMITATION. In the event that a Participant in
this Plan participates in a defined benefit plan (as defined in the
applicable sections of the Code) maintained by the Employer, the sum of
the "defined benefit plan fraction" plus the "defined contribution plan
fraction" shall at no time exceed 1.0.
The "defined benefit plan fraction" for any year is a fraction (i) the
numerator of which is the projected annual benefit of the Participant
under all the defined benefit plans (whether or not terminated)
maintained by the Employer (determined as of the close of the year),
and (ii) the denominator of which is the lesser of (A) the product of
1.25 multiplied by the dollar limitation determined for the Limitation
Year under Sections 415(b) and (d) of the Code, or (B) the product of
1.4 multiplied by one hundred (100%) percent of the Participant's
average compensation for the three (3) consecutive Years of Service
with the Employer that produces the highest average, including any
adjustments under Section 415(b) of the Code. Notwithstanding the
above, if the Participant was a Participant as of the first day of the
first Limitation Year beginning after December 31, 1986, in one or more
defined benefit plans maintained by the Employer which were in
existence on May 6, 1986, the denominator of this fraction shall not be
less than 125 percent of the sum of the annual benefits under such
plans which the Participant had accrued as of the close of the last
Limitation Year beginning before January 1, 1987, disregarding any
changes in the terms and conditions of the Plan after May 5, 1986. The
preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Section
415 for all Limitation Years beginning before January 1, 1987. The
"defined contribution fraction" for any year is a fraction (i) the
numerator of which is the sum of the annual additions to the
Participant's accounts under all defined contribution plans (whether or
not terminated) maintained by the Employer for the current and all
prior Limitation Years, including the annual additions attributable to
the Participant's nondeductible employee contributions to all defined
benefit plans, whether or not terminated, maintained by the Employer,
and the annual additions attributable to all welfare benefit funds and
individual medical accounts (as defined in Sections 419(e) and
415(l)(2) of the Code) maintained by the Employer, and (ii) the
denominator of which is the sum of the lesser of the following amounts
determined for the current year and for all prior limitation years of
service with the Employer, regardless of whether a defined contribution
plan was maintained by the Employer: (A) the product of 1.25 multiplied
by the dollar limitation determined under Sections 415(b) and (d) of
the Code in effect under Section 415(c)(1)(A) of the Code, or (B)
thirty-five (35%) percent of the
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Participant's compensation from the Employer for such plan year. If the
Employee was a Participant as of the end of the first day of the first
Limitation Year beginning after December 31, 1986, in one or more
defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the defined benefit fraction
would otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (1) the excess of the sum
of the fractions over 1.0 times (2) the denominator of this fraction,
shall be permanently subtracted from the numerator of this fraction.
The adjustment is calculated using the fractions as they would be
computed as of the end of the last Limitation Year beginning before
January 1, 1987, and disregarding any changes in the terms and
conditions of the Plan made after May 5, 1986, but using the Section
415 limitation applicable to the first Limitation Year beginning on or
after January 1, 1987.
The annual addition for any Limitation Year beginning before January 1,
1987, shall not be recomputed to treat all employee contributions as
annual additions.
The projected annual benefits under a defined benefit plan is the
annual retirement benefit (adjusted to an actuarially equivalent
straight life annuity if such benefit is expressed in a form other than
a straight life annuity) or qualified joint and survivor annuity to
which the Participant would be entitled under the terms of the Plan
assuming the Participant continues employment until normal retirement
age under the plan (or current age, if later), and the Participant's
compensation for the current Limitation Year and all other relevant
factors used to determine benefits under the Plan remain constant for
all future Limitation Years.
(e) SPECIAL TRANSITION RULE FOR DEFINED CONTRIBUTION FRACTION. At
the election of the Plan Administrator, in applying the provisions of
subsection (d) above with respect to the defined contribution plan
fraction for any year ending after December 31, 1982, the amount taken
into account for the denominator for each Participant for all years
ending before January 1, 1983 shall be an amount equal to the product
of the amount of the denominator determined under subsection (d) above
for the year ending in 1982, multiplied by the "transition fraction".
The "transition fraction" is a fraction (i) the numerator of which is
the lesser of (A) $51,875 or (B) 1.4 multiplied by twenty-five (25%)
percent of the Participant's compensation for the year ending in 1981,
and (ii) the denominator of which is the lesser of (A) $41,500 or (B)
twenty-five (25%) percent of the Participant's compensation for the
year ending in 1981.
(f) SPECIAL TRANSITION RULE FOR EXCESS BENEFITS. Provided that the
Plan satisfied the requirements of Section 415 of the Code for the last
Plan Year beginning before January 1, 1983, an amount shall be
subtracted from the numerator of the defined contribution plan fraction
(not exceeding such numerator) so that the sum of the defined benefit
plan fraction and the defined contribution fraction computed in
accordance with Section 415(e)(l) of the Code (as amended by the Tax
Equity and Fiscal Responsibility Act of 1982) does not exceed 1.0 for
such year, in accordance with regulations issued by the Secretary of
the Treasury pursuant to the applicable provisions of the Code.
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(g) EMPLOYER. For purposes of this Section, employer shall mean
the Employer that adopts this Plan and all members of a group of
employers which constitutes a controlled group of corporations or
trades or businesses under common control (as defined in Sections
414(b) and (c)of the Code, as modified by Section 415(h) of the Code),
or an affiliated service group (as defined in Section 414(m) of the
Code) of which the adopting employer is part and another entity
required to be aggregated with the Employer under Section 414(o) of the
Code and the regulations issued thereunder.
(h) COMPENSATION. For purposes of this Section as elected in
the Adoption Agreement by the Employer, Compensation shall mean all of
a Participant's:
(i) WAGES, TIPS AND OTHER COMPENSATION BOX ON FORM W-2. Wages
as defined in Section 3401(a) and all other payments of
compensation to an employee by the employer (in the course of the
employer's trade or business) for which the employer is required
to furnish the employee a written statement under Sections
6041(d) and 6051(a)(3) of the Code. Compensation must be
determined without regard to any rules under Section 3401(a) that
limit the remuneration included in wages based on the nature or
location of the employment or the services rendered (such as the
exception for agricultural labor in Section 3401(a)(2) of the
Code).
(ii) SECTION 3401(A) WAGES. Wages as defined in Section
3401(a) of the Code for the purposes of income-tax withholding at
the source but determined without regard to any rules that limit
the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the
exception for agricultural labor in Section 3401(a)(2)of the
Code).
(iii) SECTION 415 SAFE-HARBOR COMPENSATION. Wages, salaries
and fees for professional services and other amounts received
without regard to whether or not an amount is paid in cash for
personal services actually rendered in the course of employment
for the Employer maintaining the Plan to the extent that the
amounts are includible in gross income (including but not limited
to commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits, and reimbursements or
other expense allowances under a non-accountable plan (as
described in Section 1.62-2(c) of the Regulations)), but
excluding:
(I) Employer contributions to a plan of deferred compensation
which are not includible in the Employee's gross income for the
taxable year in which contributed, or employer contributions
under a simplified employee pension plan to the extent such
contributions are deductible by the Employee or any distributions
from a plan of deferred compensation;
(II) Amounts realized from the exercise of a non-qualified
stock option or when restricted stock or property held by the
Employee is no longer subject to a substantial risk of forfeiture
or becomes freely transferable.
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(III) Amounts realized from the sale, exchange or other
disposition of stock acquired under an incentive stock option;
and
(IV) Other amounts which received special tax benefits or
contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract
described in Section 403(b) of the Code (whether or not the
contributions are actually excludable from the gross income of
the Employee).
For any self-employed individual, Compensation shall mean earned
income. For limitation years beginning after December 31, 1991,
for purposes of applying the limitations of this Article,
Compensation for a Limitation Year is the Compensation actually
paid or made available during such Limitation Year.
Notwithstanding the preceding sentence, Compensation for a
Participant who is permanently and totally disabled (as defined
in section 22(e)(3) of the Code) is the compensation such
Participant would have received for the Limitation Year if the
Participant had been paid at the rate of compensation paid
immediately before becoming permanently and totally disabled;
such imputed compensation for the disabled Participant may be
taken into account only if the Participant is not a Highly
Compensated Employee and contributions made on behalf of such
Participant are nonforfeitable when made.
(i) SHORT LIMITATION YEAR. If the Limitation Year is amended
to a different twelve (12) consecutive month period, the new Limitation
Year must begin within the Limitation Year in which the amendment is
made. If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different twelve (12) consecutive
month period, the maximum annual addition shall not exceed the defined
contribution dollar limitation determined in accordance with Section
415(c)(1)(A) of the Code then in effect multiplied by a fraction, the
numerator of which is the number of months in the short Limitation Year
and the denominator of which is twelve (12).
3.2.2 CONTROLLED BUSINESSES. If this plan provides contributions or
benefits for one or more owner-employees who control both the business for which
this plan is established and one or more other trades or businesses, this plan
and the plan established for other trades or businesses must, when looked at as
a single plan, satisfy Sections 401(a) and (d) for the employees of this and all
other trades or businesses.
If the plan provides contributions or benefits for one or more owner-employees
who control one or more other trades or businesses, the employees of the other
trades or businesses must be included in a plan which satisfies Sections 401(a)
and (d) and which provides contributions and benefits not less favorable than
provided for owner-employees under this plan.
If an individual is covered as an owner-employee under the plans of two or more
trades or businesses which are not controlled and the individual controls a
trade or business, then the contributions or
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benefits of the employees under the plan of the trades or businesses which are
controlled must be as favorable as those provided for him under the most
favorable plan of the trade or business which is not controlled.
For purposes of the preceding paragraphs, an owner-employee, or two or more
owner-employees, will be considered to control a trade or business if the
owner-employee, or two or more owner-employees together:
(a) own the entire interest in an unincorporated trade or business,
or
(b) in the case of a partnership, own more than 50 percent of either
the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an owner-employee, or two or more
owner-employees shall be treated as owning any interest in a partnership which
is owned, directly or indirectly, by a partnership which such owner-employee, or
such two or more owner-employees, are considered to control within the meaning
of the preceding sentence.
ARTICLE III
FIDUCIARIES
3.3.1 STANDARD OF CONDUCT. The duties and responsibilities of the Plan
Administrator and the Trustee with respect to the Plan shall be discharged (a)
in a non-discriminatory manner; (b) for the exclusive benefit of Participants
and their Beneficiaries; (c) by defraying the reasonable expenses of
administering the Plan; (d) with the care, skill, prudence, and diligence under
the circumstances then prevailing that a prudent man acting in a like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims; (e) by diversifying the investments of the
Plan so as to minimize the risk of large losses, unless under the circumstances
it is clearly prudent not to do so; and (f) in accordance with the documents and
instruments governing the Plan insofar as such documents and instruments are
consistent with the provisions of the Act.
3.3.2 INDIVIDUAL FIDUCIARIES. At any time that a group of individuals
is acting as Plan Administrator or Trustee, the number of such persons who shall
act in such capacity from time to time shall be determined by the Employer. Such
persons shall be appointed by the Employer and may or may not be Participants or
Employees of the Employer. Any action taken by a group of individuals acting as
either Plan Administrator or Trustee shall be taken at the direction of a
majority of such persons, or, if the number of such persons is two (2), by
unanimous consent.
3.3.3 DISQUALIFICATION FROM SERVICE. No person shall be permitted to
serve as a Fiduciary, custodian, counsel, agent or employee of the Plan or as a
consultant to the Plan who has been convicted of any of the criminal offenses
specified in the Act.
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3.3.4 BONDING. Except as otherwise permitted by law, each Fiduciary or
person who handles funds or other property or assets of the Plan shall be bonded
in accordance with the requirements of the Act.
3.3.5 PRIOR ACTS. No Fiduciary shall be liable for any acts occurring
prior to the period of time during which the Fiduciary was actually serving in
such capacity with respect to the Plan.
3.3.6 INSURANCE AND INDEMNITY. The Employer may purchase or cause the
Trustee to purchase and keep current as an authorized expense liability
insurance for the Plan, its Fiduciaries, and any other person to whom any
financial responsibility with respect to the Plan and Trust is allocated or
delegated, from and against any and all liabilities, costs and expenses incurred
by such persons as a result of any act or omission to act in connection with the
performance of the duties, responsibilities and obligations under the Plan and
under the Act; provided that any such insurance policy purchased with Plan
assets permits subrogation by the Insurer against the Fiduciary in the case of
breach by such Fiduciary. Unless otherwise determined and communicated to
affected parties by the Employer, the Employer shall indemnify and hold harmless
each such person, other than a corporate trustee, for and from any such
liabilities, costs and expenses which are not covered by any such insurance,
except to the extent that any such liabilities, costs or expenses are judicially
determined to be due to the gross negligence or willful misconduct of such
person. No Plan assets may be used for any such indemnification.
3.3.7 EXPENSES. Expenses incurred by the Plan Administrator or the
Trustee in the administration of the Plan and the Trust, including fees for
legal services rendered, such compensation to the Trustee as may be agreed upon
in writing from time to time between the Employer and the Trustee, and all other
proper charges and expenses of the Plan Administrator or the Trustee and of
their agents and counsel shall be paid by the Employer, or at its election at
any time or from time to time, may be charged against the assets of the Trust,
but until so paid shall constitute a charge upon the assets of the Trust. The
Trustee shall have the authority to charge the Trust Fund for its compensation
and reasonable expenses unless paid or contested by written notice by the
Employer within sixty (60) days after mailing of the written billing by the
Trustee. All taxes of any and all kinds whatsoever which may be levied or
assessed under existing or future laws upon the assets of the Trust or the
income thereof shall be paid from such assets. Notwithstanding the foregoing, no
compensation shall be paid to any Employee for services rendered under the Plan
and Trust as a Trustee.
3.3.8 AGENTS, ACCOUNTANTS AND LEGAL COUNSEL. The Plan Administrator
shall have authority to employ suitable agents, custodians, investment counsel,
accountants and legal counsel who may, but need not be, legal counsel for the
Employer. The Plan Administrator and the Trustee shall be fully protected in
acting upon the advice of such persons. The Trustee shall at no time be obliged
to institute any legal action or to become a party to any legal action unless
the Trustee has been indemnified to the Trustee's satisfaction for any fees,
costs and expenses to be incurred in connection therewith.
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3.3.9 INVESTMENT MANAGER. The Employer may employ as an investment
manager or managers to manage all or any part of the Trust Fund any (i)
investment advisor registered under the Investment Advisors Act of 1940; (ii)
bank as defined in said Act; or (iii) insurance company qualified to perform
investment management services in more than one state. Any investment manager
shall have all powers of the Trustee in the management of such part of the Trust
Fund, including the power to acquire or dispose of assets. In the event an
investment manager is so appointed, the Trustee shall not be liable for the acts
or omissions of such investment manager or be under any obligation to invest or
otherwise manage that part of the Trust Fund which is subject to the management
of the investment manager. The Employer shall notify the Trustee in writing of
any appointment of an investment manager, and shall provide the Trustee with the
investment manager's written acknowledgment that it is a fiduciary with respect
to the Plan.
3.3.10 FINALITY OF DECISIONS OR ACTS. Except for the right of a
Participant or Beneficiary to appeal the denial of a claim, any decision or
action of the Plan Administrator or the Trustee made or done in good faith upon
any matter within the scope of authority and discretion of the Plan
Administrator or the Trustee shall be final and binding upon all persons. In the
event of judicial review of actions taken by any Fiduciary within the scope of
his duties in accordance with the terms of the Plan and Trust, such actions
shall be upheld unless determined to have been arbitrary and capricious.
3.3.11 CERTAIN CUSTODIAL ACCOUNTS AND CONTRACTS. The term "Trustee" as
used herein will also include a person holding the assets of a custodial
account, an annuity contract or other contract which is treated as a qualified
trust pursuant to Section 401(f) of the Code and references to the Trust Fund
shall be construed to apply to such custodial account, annuity contract or other
contract.
ARTICLE IV
PLAN ADMINISTRATOR
3.4.1 ADMINISTRATION OF PLAN. The Plan Administrator shall be
designated by the Employer from time to time. The primary responsibility of the
Plan Administrator is to administer the Plan for the exclusive benefit of the
Participants and their Beneficiaries, subject to the specific terms of the Plan.
The Plan Administrator shall administer the Plan and shall construe and
determine all questions of interpretation or policy in a manner consistent with
the Plan and the Adoption Agreement. The Plan Administrator may correct any
defect, supply any omission, or reconcile any inconsistency in such manner and
to such extent as he shall deem necessary or advisable to carry out the purpose
of the Plan; provided, however, that any interpretation or construction shall be
done in a nondiscriminatory manner and shall be consistent with the intent that
the Plan shall continue to be a qualified Plan pursuant to the Code, and shall
comply with the terms of the Act. The Plan Administrator shall have all powers
necessary or appropriate to accomplish his duties under the Plan.
(a) The Plan Administrator shall be charged with the duties of
the general administration of the Plan, including but not limited to
the following:
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(1) To determine all questions relating to the eligibility of an
Employee to participate in the Plan or to remain a Participant
hereunder.
(2) To compute, certify and direct the Trustee with respect to
the amount and kind of benefits to which any Participant shall be
entitled hereunder.
(3) To authorize and direct the Trustee with respect to all
disbursements from the Trust Fund.
(4) To maintain all the necessary records for the administration
of the Plan.
(5) To interpret the provisions of the Plan and to make and
publish rules and regulations for the Plan as the Plan Administrator
may deem reasonably necessary for the proper and efficient
administration of the Plan and consistent with its terms.
(6) To select the Insurer to provide any Life Insurance Policy
to be purchased for any Participant hereunder.
(7) To advise the Fiduciary with investment authority regarding
the short and long-term liquidity needs of the Plan in order that
the Fiduciary might direct its investment accordingly.
(8) To advise, counsel and assist any Participant regarding any
rights, benefits or elections available under the Plan.
(9) To instruct the Trustee as to the management, investment and
reinvestment of the Trust Fund unless the investment authority has
been delegated to the Trustee or an Investment Manager.
(b) The Plan Administrator shall also be responsible for preparing
and filing such annual disclosure reports and tax forms as may be
required from time to time by the Secretary of Labor, the Secretary of
the Treasury or other governmental authorities.
(c) Whenever it is determined by the Plan Administrator to be in the
best interest of the Plan and its Participants or Beneficiaries, the
Plan Administrator may request such variances, deferrals, extensions,
or exemptions or make such elections for the Plan as may be available
under the law.
(d) The Plan Administrator shall be responsible for procuring
bonding for all persons dealing with the Plan or its assets as may be
required by law.
(e) In the event this Plan is required to file reports or pay
premiums to the Pension Benefit Guaranty Corporation, the Plan
Administrator shall have the duty to prepare and make such filings, to
pay any premiums required, whether for basic or contingent
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liability coverage, and shall be charged with the responsibility of
notifying all necessary parties of such events and under such
circumstances as may be required by law.
3.4.2 DISCLOSURE REQUIREMENTS. Every Participant covered under the Plan
and every Beneficiary receiving benefits under the Plan shall receive from the
Plan Administrator a summary plan description, and such other information as may
be required by law or by the terms of the Plan.
3.4.3 INFORMATION GENERALLY AVAILABLE. The Plan Administrator shall
make copies of this Plan and Trust, the Adoption Agreement, the summary plan
description, latest annual report, Life Insurance Policies, or other instruments
under which the Plan was established or is operated available for examination by
any Participant or Beneficiary in the principal office of the Plan Administrator
and such other locations as may be necessary to make such information reasonably
accessible to all interested parties. Subject to a reasonable charge to defray
the cost of furnishing such copies, the Plan Administrator shall, upon written
request of any Participant or Beneficiary, furnish a copy of any of the above
documents to the respective party.
3.4.4 STATEMENT OF ACCRUED BENEFIT. Upon written request to the Plan
Administrator once during any twelve (12) month period, a Participant or
Beneficiary shall be furnished with a written statement, based on the latest
available information, of his then vested accrued benefit and the earliest date
upon which the same will become fully vested and nonforfeitable. The statement
shall also include a notice to the Participant of any benefits which are
forfeitable if the Participant dies before a certain date.
3.4.5 EXPLANATION OF ROLLOVER TREATMENT. The Plan Administrator shall,
when making a distribution eligible for rollover treatment, provide a written
explanation to the recipient of the provisions under which such distribution
will not be subject to tax if transferred to an eligible retirement plan within
sixty (60) days after the date on which the recipient received the distribution
and, if applicable, the provisions of law pertaining to the tax treatment of
lump sum distributions.
ARTICLE V
TRUSTEE
3.5.1 ACCEPTANCE OF TRUST. The Trustee, by joining in the execution of
the Adoption Agreement to the Plan, agrees to act in accordance with the express
terms and conditions hereof.
3.5.2 TRUSTEE CAPACITY - CO-TRUSTEES. The Trustee may be a bank, trust
company or other corporation possessing trust powers under applicable state or
federal law or one or more individuals or any combination thereof. When there
are two or more Trustees, they may allocate specific responsibilities,
obligations or duties among themselves by their written agreement. An executed
copy of such written agreement shall be delivered to and retained by the Plan
Administrator.
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3.5.3 RESIGNATION, REMOVAL, AND SUCCESSORS. Any Trustee may resign at
any time by delivering to the Employer a written notice of resignation to take
effect at a date specified therein, which shall not be less than thirty (30)
days after the delivery thereof; the Employer may waive such notice. The Trustee
may be removed by the Employer with or without cause, by tendering to the
Trustee a written notice of removal to take effect at a date specified therein.
Upon such removal or resignation of a Trustee, the Employer shall either appoint
a successor Trustee who shall have the same powers and duties as those conferred
upon the resigning or discharged Trustee, or, if a group of individuals is
acting as Trustee, determine that a successor shall not be appointed and the
number of Trustees shall be reduced by one (1).
3.5.4 CONSULTATIONS. The Trustee shall be entitled to advice of
counsel, which may be counsel for the Plan or the Employer, in any case in which
the Trustee shall deem such advice necessary. The Trustee shall not be liable
for any action taken or omitted in good faith reliance upon the advice of such
counsel. With the exception of those powers and duties specifically allocated to
the Trustee by the express terms of the Plan, it shall not be the responsibility
of the Trustee to interpret the terms of the Plan and the Trustee may request,
and is entitled to receive, guidance and written direction from the Plan
Administrator on any point requiring construction or interpretation of the Plan
documents.
3.5.5 RIGHTS, POWERS AND DUTIES. The rights, powers and duties of the
Trustee shall be as follows:
(a) The Trustee shall be responsible for the safekeeping of the
assets of the Trust Fund in accordance with the provisions of the Plan
and any amendments hereto. The duties of the Trustee under the Plan
shall be determined solely by the express provisions hereof and no
other further duties or responsibilities shall be implied. Subject to
the terms of this Plan, the Trustee shall be fully protected and shall
incur no liability in acting in reliance upon the written instructions
or directions of the Employer, the Plan Administrator, a duly
designated investment manager, or any other named Fiduciary.
(b) The Trustee shall have all powers necessary or convenient for the
orderly and efficient performance of its duties hereunder, including
but not limited to those specified in this Section. The Trustee shall
have the power generally to do all acts, whether or not expressly
authorized, which the Trustee in the exercise of its fiduciary
responsibility may deem necessary or desirable for the protection of
the Trust Fund and the assets thereof.
(c) The Trustee shall have the power to collect and receive any and
all monies and other property due hereunder and to give full discharge
and release therefore; to settle, compromise or submit to arbitration
any claims, debts or damages due to or owing to or from the Trust Fund;
to commence or defend suits or legal proceedings wherever, in the
Trustee's judgment, any interest of the Trust Fund requires it; and to
represent the Trust Fund in all suits or legal proceedings in any court
of law or equity or before any other body or tribunal.
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(d) The Trustee shall cause any Life Insurance Policies or assets of
the Trust Fund to be registered in its name as Trustee and shall be
authorized to exercise any and all ownership rights regarding these
assets, subject to the terms of the Plan.
(e) The Trustee may temporarily hold cash balances and shall be
entitled to deposit any funds received in a bank account in the name of
the Trust Fund in any bank selected by the Trustee, including the
banking department of a corporate Trustee, if any, pending disposition
of such funds in accordance with the Plan. Any such deposit may be made
with or without interest.
(f) The Trustee shall pay the premiums and other charges due and
payable at any time on any Life Insurance Policies as it may be
directed by the Plan Administrator, provided funds for such payments
are then available in the Trust. The Trustee shall be responsible only
for such funds and Life Insurance Policies as shall actually be
received by it as Trustee hereunder, and shall have no obligation to
make payments other than from such funds and cash values of Life
Insurance Policies.
(g) If the whole or any part of the Trust Fund shall become liable
for the payment of any estate, inheritance, income or other tax which
the Trustee shall be required to pay, the Trustee shall have full power
and authority to pay such tax out of any monies or other property in
its hands for the account of the person whose interest hereunder is so
liable. Prior to making any payment, the Trustee may require such
releases or other documents from any lawful taxing authority as it
shall deem necessary. The Trustee shall not be liable for any
nonpayment of tax when it distributes an interest hereunder on
instructions from the Plan Administrator.
(h) The Trustee shall keep a full, accurate and detailed record of
all transactions of the Trust which the Employer and the Plan
Administrator shall have the right to examine at any time during the
Trustee's regular business hours. As of the close of each Plan Year,
the Trustee shall furnish the Plan Administrator with a statement of
account setting forth all receipts, disbursements and other
transactions effected by the Trustee during the year. The Plan
Administrator shall promptly notify the Trustee in writing of his
approval or disapproval of the account.
The Plan Administrator's failure to disapprove the account within sixty
(60) days after receipt shall be considered an approval. Except as
otherwise required by law, the approval by the Plan Administrator shall
be binding as to all matters embraced in any statement to the same
extent as if the account of the Trustee had been settled by judgment or
decree of a court of competent jurisdiction under which the Trustee,
Employer and all persons having or claiming any interest in the Trust
Fund were parties; provided, however, that the Trustee may have its
account judicially settled if it so desires.
(i) The Trustee is hereby authorized to execute all necessary
receipts and releases to any parties concerned.
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(j) If, at any time, as the result of the death of the Participant
there shall be a dispute as to the person to whom payment or delivery
of monies or property should be made by the Trustee, or regarding any
action to be taken by the Trustee, the Trustee may postpone such
payment, delivery or action, retaining the funds or property involved,
until such dispute shall have been resolved in a court of competent
jurisdiction or the Trustee shall have been indemnified to its
satisfaction or until it has received written direction from the Plan
Administrator.
(k) Anything in this instrument to the contrary notwithstanding, the
Trustee shall have no duty or responsibility with respect to the
determination of matters pertaining to the eligibility of any Employee
to become or remain a Participant hereunder, the amount of benefit to
which any Participant or Beneficiary shall be entitled hereunder, or
the size and type of any Life Insurance Policy to be purchased from any
Insurer for any Participant hereunder; all such responsibilities being
vested in the Plan Administrator.
3.5.6 TRUSTEE INDEMNIFICATION. The Employer shall indemnify and hold
harmless the Trustee for and from the assertion or occurrence of any liability
to a Participant or Beneficiary for any action taken or omitted by the Trustee
pursuant to any written direction to the Trustee from the Employer or the Plan
Administrator. Such indemnification obligation of the Employer shall not be
applicable to the extent that any such liability is covered by insurance.
3.5.7 CHANGES IN TRUSTEE AUTHORITY. If a successor Trustee is
appointed, neither an Insurer nor any other person who has previously had
dealings with the Trustee shall be chargeable with knowledge of such appointment
or such change until furnished with notice thereof. Until such notice, the
Insurer and any other such party shall be fully protected in relying on any
action taken or signature presented which would have been proper in accordance
with that information previously received.
ARTICLE VI
TRUST ASSETS
3.6.1 TRUSTEE EXCLUSIVE OWNER. All assets held by the Trustee, whether
in the Trust Fund or Segregated Funds, shall be owned exclusively by the Trustee
and no Participant or Beneficiary shall have any individual ownership thereof.
Participants and their Beneficiaries shall share in the assets of the Trust, its
net earnings, profits and losses, only as provided in this Plan.
3.6.2 INVESTMENTS. The Trustee shall invest and reinvest the Trust Fund
without distinction between income or principal in one or more of the following
ways as the Trustee shall from time to time determine:
(a) The Trustee may invest the Trust Fund or any portion thereof
in obligations issued or guaranteed by the United States of America
or of any instrumentalities thereof, or in other bonds, notes,
debentures, mortgages, preferred or common stocks, options to buy or
sell stocks or other securities, mutual fund shares, limited
partnership interests,
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commodities, real estate or any interest therein, or in such other
property, real or personal, as the Trustee shall determine.
(b) The Trustee may cause the Trust Fund or any portion thereof
to be invested in a common trust fund established and maintained by a
national or other bank for the collective investment of fiduciary
funds even though the bank is acting as the Trustee or Investment
Manager, providing such common trust fund is a qualified trust under
the applicable section of the Code, or corresponding provisions of
future federal internal revenue laws and is exempt from income tax
under the applicable section of the Code. In the event any assets of
the Trust Fund are invested in such a common trust fund, the
Declaration of Trust creating such common trust fund, as it may be
amended from time to time, shall be incorporated into this Plan
preference and made a part hereof.
(c) The Trustee may deposit any portion of the Trust Fund in
savings accounts in federally insured banks or savings and loan
associations or invest in certificates of deposit issued by any such
bank or savings and loan association. The Trustee may, without
liability for interest, retain any portion of the Trust Fund in cash
balances pending investment thereof or payment of expenses.
(d) The Trustee may buy and sell put and call options, covered or
uncovered, engage in spreads, straddles, ratio writing and other
forms of options trading, including sales of options against
convertible bonds, and sales of Standard & Poor futures contracts,
and trade in and maintain a brokerage account on a cash or margin
basis.
(e) The Trustee may invest any portion or all of the assets of
the Trust Fund which are attributable to the vested and
nonforfeitable interest in the Accounts of a Participant in the
purchase of group or individual Life Insurance Policies issued on the
life of and for the benefit of the Participant with the consent of
the Participant, subject to the following conditions:
(i) The aggregate premiums paid for ordinary whole Life
Insurance Policies with both nondecreasing death benefits and
nonincreasing premiums on the life of any Participant shall not
at any time exceed forty-nine percent (49%) of the aggregate
amount of Employer contributions which have been allocated to the
Accounts of such Participant.
(ii) The aggregate Premiums paid for Life Insurance Policies
on the life of any Participant which are either term, universal
or any other contracts which are not ordinary whole life Policies
shall not at any time exceed twenty-five percent (25%) of the
aggregate amount of Employer contributions which have been
allocated to the Accounts of such Participant.
(iii) The sum of one-half of the aggregate premiums for
ordinary whole Life Insurance Policies and all premiums for other
Life Insurance Policies shall not at
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any time exceed twenty-five percent (25%) of the aggregate
amount of Employer contributions which have been allocated to
the Accounts of such Participant.
(iv) If the Plan permits in-service distributions to a
Participant prior to his Normal Retirement Date in accordance
with Section 2.5.6(a) or (b) and the Plan does not take into
account contributions to provide benefits under Social Security
in the allocation of contributions by the Employer, the amount
which may be distributed to the Participant may be applied to the
purchase of Life Insurance Policies.
(f) The Trustee may invest the Trust Fund or any portion thereof
to acquire or hold Qualifying Employer Securities or Real Property,
provided that the portion so invested shall not exceed the amount
allowed as an investment under the Act.
3.6.3 ADMINISTRATION OF TRUST ASSETS. Subject to the limitations herein
expressly set forth, the Trustee shall have the following powers and authority
in connection with the administration of the assets of the Trust:
(a) To hold and administer all contributions made by the Employer
to the Trust Fund and all income or other property derived therefrom
as a single Trust Fund, except as otherwise provided in the Plan.
(b) To manage, control, sell, convey, exchange, petition, divide,
subdivide, improve, repair, grant options, sell upon deferred
payments, lease without limit as determined for any purpose,
compromise, arbitrate or otherwise settle claims in favor of or
against the Trust Fund, institute, compromise and defend actions and
proceedings, and to take any other action necessary or desirable in
connection with the administration of the Trust Fund.
(c) To vote any stock, bonds, or other securities of any
corporation or other issuer; otherwise consent to or request any
action on the part of any such corporation or other issuer; to give
general or special proxies or powers of attorney, with or without
power of substitution; to participate in any reorganization,
recapitalization, consolidation, merger or similar transaction with
respect to such securities; to deposit such stocks or other
securities in any voting trusts, or with any protective or like
committee, or with the trustee, or with the depositories designated
thereby; to exercise any subscription rights and conversion
privileges or other options and to make any payments incidental
thereto; and generally to do all such acts, execute all such
instruments, take all such proceedings and exercise all such rights,
powers and privileges with respect to the stock or other securities
or property constituting the Trust Fund as if the Trustee were the
absolute owner thereof.
(d) To apply for and procure, at the election of any Participant,
Life Insurance Policies on the life of the Participant; to exercise
whatever rights and privileges maybe granted to the Trustee under
such Policies, and to cash in, receive and collect such Policies or
the proceeds therefrom as and when entitled to do so under the
provisions thereof;
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(e) To make, execute, acknowledge and deliver any and all
documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out the
powers herein granted;
(f) To register any investment held in the Trust in the Trustee's
own name or in the name of a nominee and to hold any investment in
bearer form, but the books and records of the Trustee shall at all
times show that all such investments are part of the Trust;
(g) To borrow money for the purposes of the Plan in such amounts
and upon such terms and conditions as the Trustee deems appropriate;
(h) To commingle the assets of the Trust Fund with the assets of
other similar trusts which are exempt from income tax, whether
sponsored by the Employer, an affiliate of the Employer or an
unrelated employer, provided that the books and records of the
Trustee shall at all times show the portion of the commingled assets
which are part of the Trust; and
(i) To do all acts whether or not expressly authorized which the
Trustee may deem necessary or proper for the protection of the
property held hereunder.
3.6.4 SEGREGATED FUNDS. Unless otherwise determined by the Trustee to
be prudent, the Trustee shall invest and reinvest each Segregated Fund without
distinction between income or principal in one or more appropriately identified
interest-bearing accounts or certificates of deposit in the name of the Trustee
and subject solely to the dominion of the Trustee in a banking institution
(which may or may not be the Trustee, if the Trustee is a banking institution)
or savings and loan association.
Any such account or certificate shall bear interest at a rate not less than the
rate of interest currently being paid upon regular savings accounts by that
banking corporation principally situated in the community in which the Employer
has its principal business location, which has capital, surplus and undivided
profits exceeding those of any other bank so situated. Such accounts shall be
held for the benefit of the Participant for whom such Segregated Fund is
established in accordance with the terms of the Plan and the Segregated Account
of the Participant shall be credited with any interest earned in connection with
such accounts. If the Trustee determines that an alternative investment is
appropriate, the Trustee may invest the Segregated Fund in any manner permitted
with respect to the Trust Fund and such Segregated Fund shall be credited with
the net income or loss or net appreciation or depreciation in value of such
investments. No Segregated Fund shall share in any Employer contributions or
forfeitures, any net income or loss from, or net appreciation or depreciation in
value of, any investments of the Trust Fund, or any allocation for which
provision is made in this Plan which is not specifically attributable to the
Segregated Fund.
3.6.5 INVESTMENT CONTROL OPTION. If the Employer elects in the
Adoption Agreement to permit Participants to direct the investment of their
Accounts, each Participant may elect to have transferred to a Segregated Fund
and exercise investment control by appropriate direction to the Trustee with
respect to funds in the Trust Fund which do not exceed the balances in his
Accounts. To the extent that the balance in the Participant's Account with
respect to which a
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transfer is to be made includes his share of an Employer contribution which has
not been received by the Trustee, such transfer shall not be made until such
contribution is received by the Trustee. Funds so transferred to a Segregated
Fund on behalf of the Participant shall be thereafter invested by the Trustee in
such bonds, notes, debentures, commodities, mortgages, equipment trust
certificates, investment trust certificates, preferred or common stocks,
partnership interests, life insurance policies, including universal life
insurance policies, or in such other property, real or personal (other than
collectibles), wherever situated, as the Participant shall direct from time to
time in writing; provided, however, that the Participant may not direct the
Trustee to make loans to himself, nor to make loans to the Employer; and
provided further that the Trustee may limit the investment alternatives
available to the Participant in a uniform and nondiscriminatory manner but
taking into account whether the interest of the Participant is fully vested and
nonforfeitable. Any such election shall be made by the Participant giving notice
thereof to the Trustee as the Trustee deems necessary and such notice shall
specify the amount of such funds to be transferred and the Account from which
the transfer is to be made. Any such election shall be at the absolute
discretion of the individual Participant and shall be binding upon the Trustee.
Upon any such election being made, the amount of such funds to be transferred
shall be deducted from his Account as appropriate and added to a Controlled
Account of the Participant. All dividends and interest thereafter received with
respect to such transferred funds, as well as any appreciation or depreciation
in his investments, shall be added to or deducted from his Controlled Account.
If a Participant wishes to make such an election to transfer funds from the
Trust Fund to a Segregated Fund as of a date other than a Valuation Date, the
Trustee may defer such transfer until the next succeeding Valuation Date or, in
the Trustee's discretion, make such transfer, provided that the Trustee
determines that the nature of the assets in the Trust Fund is such that it is
feasible and practical to make, as of the date of such transfer, the adjustments
to Participants' Accounts for which provision is made in the Plan, as if such
date is a Valuation Date.
The Trustee shall not have any investment responsibility with respect to a
Participant's Segregated Fund. In the event that a Participant elects to have
any such funds transferred to a Segregated Fund and invested in particular
securities or assets pursuant to this Section, the Trustee shall not be liable
for any loss or damage resulting from the investment decision of the
Participant. As of any Valuation Date, the Participant may elect to have all or
any portion of any cash contained in his Segregated Fund transferred back to the
Trust Fund, in which case such cash shall be invested by the Trustee together
with other assets held in the Trust Fund. Any such election shall be made by
giving notice thereof to the Trustee as the Trustee deems necessary, and the
notice shall specify the amount of cash to be transferred.
As of the said Valuation Date, the amount of such funds to be so transferred
which is attributable to the balance in the Participant's Controlled Account
shall be deducted from such Account and added to the appropriate Account of the
Participant.
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ARTICLE VII
LOANS
3.7.1 AUTHORIZATION. If the Employer elects in the Adoption Agreement
to permit loans to Participants or Beneficiaries, the Trustee shall establish a
participant loan program in compliance with Labor Regulation section 2550.408b.
The terms of such participant loan program shall be in writing and shall
constitute part of the Plan. Such terms shall include:
(a) The identity of the person or positions authorized to
administer the participant loan program;
(b) A procedure for applying for loans;
(c) The basis on which loans will be approved or denied;
(d) Limitations (if any) on the types and amount of loans
offered;
(e) The procedure under the program for determining a reasonable
rate of interest;
(f) The types of collateral which may secure a participant loan;
and
(g) The events constituting default and the steps that will be
taken to preserve plan assets in the event of default.
3.7.2 SPOUSAL CONSENT. A Participant must obtain the written consent of
his spouse, if any, to the use of the Participant's interest in the Plan as
security for the loan within ninety (90) days before the date on which the loan
is to be so secured. A new consent must be obtained whenever the amount of the
loan is increased or if the loan is renegotiated, extended, renewed or otherwise
revised. The form of the consent must acknowledge the effect of such consent and
be witnessed by a Plan representative or a notary public but shall be deemed to
meet any such requirements relating to the consent of any subsequent spouse.
Such consent shall thereafter be binding with respect to the consenting spouse
or any subsequent spouse with respect to that loan.
If a valid spousal consent has been obtained, then notwithstanding any other
provision of the Plan, the portion of the Participant's vested Account balance
used as a security interest held by the Plan by reason of a loan outstanding to
the Participant shall be taken into account for purposes of determining the
amount of the Account balance payable at the time of death or distribution but
only if the reduction is used as repayment of the loan. If less than the entire
amount of the Participant's vested Account balance (determined without regard to
the preceding sentence) is payable to the surviving spouse, the Account balance
shall be adjusted by first reducing the vested Account balance by the amount of
the security used as repayment of the loan and then determining the benefit
payable to the surviving spouse.
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3.7.3 LIMITATIONS. Except to the extent provided in the participant
loan program, in no event shall the amount loaned to any Participant or
Beneficiary exceed the lesser of (a) fifty thousand dollars ($50,000.00)
(reduced by the excess, if any, of the highest outstanding balance of loans from
the Plan) during the one year period ending on the day before the date on which
the loan was made over the outstanding balance of loans from the Plan on the
date on which such loan was made) or (b) one-half of the sum of the vested and
nonforfeitable interest in his Accounts, determined as of the Valuation Date
coinciding with or immediately preceding such loan. For the purposes hereof, all
loans from all plans of the Employer and other members of a group of employers
described in Sections 414(b), (c), (m) and (o) of the Code shall be aggregated.
All loans must be adequately secured and bear a reasonable interest rate. No
Participant loan shall exceed the present value of the Participant's vested
Account balance. In the event of a default, foreclosure on the note evidencing
the loan and attachment of the security shall not occur until a distributable
event occurs.
3.7.4 AVAILABILITY. Loans, if any, must be available to all
Participants and Beneficiaries without regard to any individual's race, color,
religion, sex, age or national origin. Loans shall be made available to all
Participants and Beneficiaries and loans shall not be made available to Highly
Compensated Employees in an amount greater than the amount made available to
other Employees.
3.7.5 PROHIBITIONS. A loan shall not be made to a five (5%) percent or
greater shareholder-employee of an S corporation, an owner of more than ten
(10%) percent of either the capital interest or the profits interest of an
unincorporated Employer, a family member (as defined in section 267(c)(4) of the
Code) of such persons, or a corporation controlled by such persons through the
ownership, directly or indirectly, of fifty (50%) percent or more of the total
voting power or value of all shares of all classes of stock of the corporation,
unless an exemption for the loan is obtained pursuant to section 408 of the Act.
ARTICLE VIII
BENEFICIARIES
3.8.1 DESIGNATION OF BENEFICIARIES. Each Participant shall have the
right to designate a Beneficiary or Beneficiaries and contingent or successive
Beneficiaries to receive any benefits provided by this Plan which become payable
upon the Participant's death. The Beneficiaries may be changed at any time or
times by the filing of a new designation with the Plan Administrator, and the
most recent designation shall govern. Notwithstanding the foregoing and subject
to the provisions of Section 2.5.2(e)(3), the designated Beneficiary shall be
the surviving spouse of the Participant, unless such surviving spouse consents
in writing to an alternate designation and the terms of such consent acknowledge
the effect of such alternate designation and the consent is witnessed by a
representative of the Plan or by a notary public. A spouse may not revoke the
consent without the approval of the Participant. The designation of a
Beneficiary other than the spouse of the Participant or a form of benefits with
the consent of such spouse may not be changed without the consent of such spouse
and any consent must acknowledge the specific non-spouse Beneficiary, including
any class of Beneficiaries or any contingent Beneficiaries.
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3.8.2 ABSENCE OR DEATH OF BENEFICIARIES. If a Participant dies without
having a beneficiary designation then in force, or if all of the Beneficiaries
designated by a Participant predecease him, his Beneficiary shall be his
surviving spouse, or if none, his surviving children, equally, or if none, such
other heirs or the executor or administrator of his estate as the Plan
Administrator shall select.
If a Participant dies survived by Beneficiaries designated by him and if all
such surviving Beneficiaries thereafter die before complete distribution of such
deceased Participant's interest, the estate of the last of such designated
Beneficiaries to survive shall be deemed to be the Beneficiary of the
undistributed portion of such interest.
3.8.3 SURVIVING SPOUSE ELECTION. If the Plan is designated in the
Adoption Agreement as a Cash or Deferred Profit Sharing Plan or a Profit Sharing
Plan and the Employer does not elect a life annuity form of distribution in the
Adoption Agreement, a surviving spouse, who has not consented to an alternate
designation under Section 3.8.1, above, may elect to have distribution of the
Participant's vested Account balance commence within the 90-day period following
the date of the Participant's death. The Account balance shall be adjusted for
gains or losses occurring after the Participant's death in accordance with the
provisions of the Plan governing the adjustment of account balances for other
types of distributions.
ARTICLE IX
CLAIMS
3.9.1 CLAIM PROCEDURE. Any Participant or Beneficiary who is entitled
to a payment of a benefit for which provision is made in this Plan shall file a
written claim with the Plan Administrator on such forms as shall be furnished to
him by the Plan Administrator and shall furnish such evidence of entitlement to
benefits as the Plan Administrator may reasonably require. The Plan
Administrator shall notify the Participant or Beneficiary in writing as to the
amount of benefit to which he is entitled, the duration of such benefit, the
time the benefit is to commence and other pertinent information concerning his
benefit. If a claim for benefit is denied by the Plan Administrator, in whole or
in part, the Plan Administrator shall provide adequate notice in writing to the
Participant or Beneficiary whose claim for benefit has been denied within ninety
(90) days after receipt of the claim unless special circumstances require an
extension of time for processing the claim. If such an extension of time for
processing is required, written notice indicating the special circumstances and
the date by which a final decision is expected to be rendered shall be furnished
to the Participant or Beneficiary. In no event shall the period of extension
exceed one hundred eighty (180) days after receipt of the claim. The notice of
denial of the claim shall set forth (a) the specific reason or reasons for the
denial; (b) specific reference to pertinent Plan provisions on which the denial
is based; (c) a description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why such material or
information is necessary; and (d) a statement that any appeal of the denial must
be made by giving to the Plan Administrator, within sixty (60) days after
receipt of the notice of the denial, written notice of such appeal, such notice
to include a full description of the pertinent issues and basis of the claim.
The Participant or Beneficiary (or his duly authorized representative) may
review pertinent documents and submit
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issues and comments in writing to the Plan Administrator. If the Participant or
Beneficiary fails to appeal such action to the Plan Administrator in writing
within the prescribed period of time, the Plan Administrator's adverse
determination shall be final, binding and conclusive.
3.9.2 APPEAL. If the Plan Administrator receives from a Participant or
a Beneficiary, within the prescribed period of time, a notice of an appeal of
the denial of a claim for benefit, such notice and all relevant materials shall
immediately be submitted to the Employer. The Employer may hold a hearing or
otherwise ascertain such facts as it deems necessary and shall render a decision
which shall be binding upon both parties. The decision of the Employer shall be
made within sixty (60) days after the receipt by the Plan Administrator of the
notice of appeal, unless special circumstances require an extension of time for
processing, in which case a decision of the Employer shall be rendered as soon
as possible but not later than one hundred twenty (120) days after receipt of
the request for review. If such an extension of time is required, written notice
of the extension shall be furnished to the claimant prior to the commencement of
the extension. The decision of the Employer shall be in writing, shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant, as well as specific references to the pertinent Plan
provisions on which the decision is based and shall be promptly furnished to the
claimant.
ARTICLE X
AMENDMENT AND TERMINATION
3.10.1 RIGHT TO AMEND.
(a) The Employer may at any time or times amend the Plan and the
provisions of the Adoption Agreement, in whole or in part. Subject to subsection
(b), an Employer that amends the Plan shall no longer participate in this
prototype plan and shall be considered to have an individually designed plan.
(b) The Employer may change the choice of options in the Adoption
Agreement, add overriding language in the Adoption Agreement when such language
is necessary to satisfy Section 415 or 416 of the Code because of the required
aggregation of multiple plans and add certain model amendments published by the
Internal Revenue Service which specifically provide that their adoption shall
not cause the Plan to be treated as individually designed. An Employer that
amends the Plan for any other reason, including a waiver of the minimum funding
requirements under Section 412(d) of the Code, shall no longer participate in
this prototype plan and shall be considered to have an individually designed
plan.
An Employer that has adopted a standardized regional prototype plan may amend
the trust or custodial account document provided such amendment merely involves
the specifications of the names of the Plan, Employer, trustee or custodian,
Plan Administrator or other fiduciaries, the trust year, or the name of any
pooled trust in which the Plan's trust will participate.
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An Employer that has adopted a non-standardized regional prototype plan will not
be considered to have an individually designed plan merely because the Employer
amends administrative provisions of the trust or custodial account document
(such as provisions relating to investments and duties of trustees) so long as
the amended provisions are not in conflict with any other provision of the Plan
and do not cause the Plan to fail to qualify under Section 401(a) of the Code.
3.10.2 MANNER OF AMENDING. Each amendment of this Plan shall be made by
delivery to the Trustee of a copy of the resolution of the Employer which sets
forth such amendment.
3.10.3 LIMITATIONS ON AMENDMENTS. No amendment shall be made to this
Plan which shall:
(a) Directly or indirectly operate to give the Employer any interest
whatsoever in the assets of the Trust or to deprive any Participant or
Beneficiary of his vested and nonforfeitable interest in the assets of
the Trust as then constituted, or cause any part of the income or
corpus of the Trust to be used for, or diverted to purposes other than
the exclusive benefit of Employees or their Beneficiaries;
(b) Increase the duties or liabilities of the Trustee without the
Trustee's prior written consent;
(c) Change the vesting schedule under the Plan if the nonforfeitable
percentage of the accrued benefit derived from Employer contributions
(determined as of the later of the date such amendment is adopted or
the date such amendment becomes effective) of any Participant is less
than such nonforfeitable percentage computed without regard to such
amendment; or
(d) Reduce the accrued benefit of a Participant within the meaning
of Section 411(d)(6) of the Code, except to the extent permitted under
Section 412(c)(8) of the Code. An amendment which has the effect of
decreasing a Participant's account balance or eliminating an optional
form of benefit with respect to benefits attributable to service before
the amendment shall be treated as reducing an accrued benefit.
If a Plan amendment changes the vesting schedule or the Plan is amended
in any way that directly or indirectly affects the computation of the
Participant's nonforfeitable percentage or if the Plan is deemed
amended by an automatic change to or from a top-heavy vesting schedule,
each Participant who has completed three (3) or, in the case of
Participants who do not have at least one (1) Hour of Service in any
Plan Year beginning after 1988, five (5) or more Years of Service may
elect within a reasonable period after the adoption of such amendment
to have his nonforfeitable percentage computed without regard to such
amendment or change. The period during which the election may be made
shall commence with the date the amendment is adopted or deemed to be
made and shall end on the latest of sixty (60) days after:
(i) the amendment is adopted;
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(ii) the amendment becomes effective; or
(iii) the Participant is issued written notice of the
amendment by the Employer or Plan Administrator.
3.10.4 VOLUNTARY TERMINATION. The Employer may terminate the Plan at
any time by delivering to the Trustee an instrument in writing which designates
such termination. Following termination of the Plan, the Trust will continue
until the Distributable Benefit of each Participant has been distributed.
3.10.5 INVOLUNTARY TERMINATION. The Plan shall terminate if (a) the
Employer is dissolved or adjudicated bankrupt or insolvent in appropriate
proceedings, or if a general assignment is made by the Employer for the benefit
of creditors, or (b) the Employer loses its identity by consolidation or merger
into one or more corporations or organizations, unless within ninety (90) days
after such consolidation or merger, such corporations or organization select to
continue the Plan.
3.10.6 WITHDRAWAL BY EMPLOYER. The Employer may withdraw from
participation under the Plan without terminating the Trust upon making a
transfer of the Trust assets to another Plan which shall be deemed to constitute
an amendment in its entirety of the Trust.
3.10.7 POWERS PENDING FINAL DISTRIBUTION. Until final distribution of
the assets of the Trust, the Plan Administrator and Trustee shall continue to
have all the powers provided under this Plan as are necessary for the orderly
administration, liquidation and distribution of the assets of the Trust.
3.10.8 DELEGATION TO SPONSOR. The Employer expressly delegates
authority to the Plan Sponsor the right to amend any part of the Plan on its
behalf to the extent necessary to preserve the qualified status of the Plan. For
purposes of amendments by the Plan Sponsor, the Mass Submitter shall be
recognized as the agent of the Plan Sponsor. If the Plan Sponsor does not adopt
the amendments made by the Mass Submitter, the Plan shall no longer be identical
to or a minor modifier of the mass submitter plan. The Plan Sponsor shall submit
a copy of the amendment to each Employer who has adopted the Plan after first
having received a ruling or favorable determination from the Internal Revenue
Service that the Plan as amended satisfies the applicable requirements of the
Code. The Employer may revoke the authority of the Plan Sponsor to amend the
Plan on its behalf by written notice to the Plan Sponsor of such revocation.
ARTICLE XI
PORTABILITY
3.11.1 CONTINUANCE BY SUCCESSOR. In the event of the dissolution,
consolidation or merger of the Employer, or the sale by the Employer of its
assets, the resulting success or person or persons, firm or corporations may
continue this Plan by (a) adopting the Plan by appropriate resolution; (b)
appointing a new Trustee as though the Trustee (including all members of a group
of
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individuals acting as Trustee) had resigned; and (c) executing a proper
agreement with the new Trustee. In such event, each Participant in this Plan
shall have an interest in the Plan after the dissolution, consolidation, merger,
or sale of assets, at least equal to the interest which he had in the Plan
immediately before the dissolution, consolidation, merger or sale of assets. Any
Participants who do not accept a position with such successor within a
reasonable time shall be deemed to be terminated. If, within ninety (90) days
from the effective date of such dissolution, consolidation, merger, or sale of
assets, such successor does not adopt this Plan, as provided herein, the Plan
shall automatically be terminated and deemed to be an involuntary termination.
3.11.2 MERGER WITH OTHER PLAN. In the event of the merger or
consolidation with, or transfer of assets or liabilities to, any other deferred
compensation plan and trust, each Participant shall have an interest in such
other plan which is equal to or greater than the interest which he had in this
Plan immediately before such merger, consolidation or transfer, and if such
other plan thereafter terminates, each Participant shall be entitled to a
Distributable Benefit which is equal to or greater than the Distributable
Benefit to which he would have been entitled immediately before such merger,
consolidation or transfer if this Plan had then been terminated.
3.11.3 TRANSFER FROM OTHER PLANS. The Employer may cause all or any of
the assets held in connection with any other plan or trust which is maintained
by the Employer for the benefit of its employees and satisfies the applicable
requirements of the Code relating to qualified plans and trusts to be
transferred to the Trustee, whether such transfer is made pursuant to a merger
or consolidation of this Plan with such other plan or trust or for any other
allowable purpose. In addition, the Employer, by appropriate election in the
Adoption Agreement, may permit rollover to the Trustee of assets held for the
benefit of an Employee in a conduit Individual Retirement Account, a terminated
plan of the Employer, or any other plan or trust which is maintained by some
other employer for the benefit of its employees and satisfies the applicable
requirements of the Code relating to qualified plans and trusts. Any such assets
so transferred to the Trustee shall be accompanied by written instructions from
the employer, or the trustee, custodian or individual holding such assets,
setting forth the name of each Employee for whose benefit such assets have been
transferred and showing separately the respective contributions by the employer
and by the Employee and the current value of the assets attributable thereto.
Upon receipt by the Trustee of such assets, the Trustee shall place such assets
in a Segregated Fund for the Participant and the Employee shall be deemed to be
one hundred percent (100%) vested and have a nonforfeitable interest in any such
assets. Notwithstanding any provisions herein to the contrary, unless the Plan
provides a life annuity distribution option, the Plan shall not be a direct or
indirect transferee of a defined benefit pension plan, money purchase pension
plan, target benefit pension plan, stock bonus or profit sharing plan which is
subject to the survivor annuity requirements of Section 401(a)(11) and Section
417 of the Code.
3.11.4 TRANSFER TO OTHER PLANS. The Trustee, upon written direction by
the Employer, shall transfer some or all of the assets held under the Trust to
another plan or trust of the Employer meeting the requirements of the Code
relating to qualified plans and trusts, whether such transfer is made pursuant
to a merger or consolidation of this Plan with such other plan or trust or for
any other allowable purpose. In addition, upon the termination of employment of
any Participant and receipt by the Plan Administrator of a request in writing,
the Participant may request that any
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distribution from the Trust to which he is entitled shall be transferred to an
Individual Retirement Account, an Individual Retirement Annuity, or any other
plan or trust which is maintained by some other employer for the benefit of its
employees and satisfies the applicable requirements of the Code relating to
qualified plans and trusts. Upon receipt of any such written request, the Plan
Administrator shall cause the Trustee to transfer the assets so directed and, as
appropriate, shall direct the Insurer to transfer to the new trustee any
applicable insurance policies issued by it.
ARTICLE XII
MISCELLANEOUS
3.12.1 NO REVERSION TO EMPLOYER. Except as specifically provided in the
Plan, no part of the corpus or income of the Trust shall revert to the Employer
or be used for, or diverted to purposes other than for the exclusive benefit of
Participants and their Beneficiaries.
3.12.2 EMPLOYER ACTIONS. Any action by the Employer pursuant to the
provisions of the Plan shall be evidenced by appropriate resolution or by
written instrument executed by any person authorized by the Employer to take
such action.
3.12.3 EXECUTION OF RECEIPTS AND RELEASES. Any payment to any person
eligible to receive benefits under this Plan, in accordance with the provisions
of the Plan, shall, to the extent thereof, be in full satisfaction of all claims
hereunder. The Plan Administrator may require such person, as a condition
precedent to such payment, to execute a receipt and release therefore in such
form as he shall determine.
3.12.4 RIGHTS OF PARTICIPANTS LIMITED. Neither the creation of this
Plan and Trust nor anything contained in this Plan or the Adoption Agreement
shall be construed as giving any Participant, Beneficiary or Employee any equity
or other interest in the assets, business or affairs of the Employer, or the
right to complain about any action taken by or about any policy adopted or
pursued by, the Employer, or as giving any Employee the right to be retained in
the service of the Employer; and all Employees shall remain subject to discharge
to the same extent as if the Plan had never been executed. Prior to the time
that distributions are made in conformity with the provisions of the Plan,
neither the Participants, nor their spouses, Beneficiaries, heirs-at-law, or
legal representatives shall receive or be entitled to receive cash or any other
thing of current exchangeable value, from either the Employer or the Trustee as
a result of the Plan or the Trust.
3.12.5 PERSONS DEALING WITH TRUSTEE PROTECTED. No person dealing with
the Trustee shall be required or entitled to see to the application of any money
paid or property delivered to the Trustee, or determine whether or not the
Trustee is acting pursuant to the authorities granted to the Trustee hereunder
or to authorizations or directions herein required. The certificate of the
Trustee that the Trustee is acting in accordance with the Plan shall protect any
person relying thereon.
3.12.6 PROTECTION OF THE INSURER. An Insurer shall not be responsible
for the validity of the Plan or Trust and shall have no responsibility for
action taken or not taken by the Trustee, for
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determining the propriety of accepting premium payments or other contributions,
for making payments in accordance with the direction of the Trustee, or for the
application of such payments. The Insurer shall be fully protected in dealing
with any representative of the Employer or any one of a group of individuals
acting as Trustee. Until written notice of a change of Trustee has been received
by an Insurer at its home office, the Insurer shall be fully protected in
dealing with any party acting as Trustee according to the latest information
received by the Insurer at its home office.
3.12.7 NO RESPONSIBILITY FOR ACT OF INSURER. Neither the Employer, the
Plan Administrator nor the Trustee shall be responsible for any of the
following, nor shall they be liable for instituting action in connection with:
(a) The validity of policies or policy provisions;
(b) Failure or refusal by the Insurer to provide benefits
under a policy;
(c) An act by a person which may render a policy invalid or
unenforceable; or
(d) Inability to perform or delay in performing an act, which
inability or delay is occasioned by a provision of a policy or a
restriction imposed by the Insurer.
3.12.8 INALIENABILITY. The right of any Participant or his Beneficiary
in any distribution hereunder or to any separate Account shall not be subject to
alienation, assignment or transfer, voluntarily or involuntarily, by operation
of law or otherwise, except as may be expressly permitted herein. No Participant
shall assign, transfer, or dispose of such right nor shall any such right be
subjected to attachment, execution, garnishment, sequestration, or other legal,
equitable, or other process. The preceding shall also apply to the creation,
assignment, or recognition of a right to any benefit payable with respect to a
Participant pursuant to a domestic relations order, unless such order is
determined to be a qualified domestic relations order, as defined in Section
414(p) of the Code, or any domestic relations order entered before January 1,
1985.
In the event a Participant's benefits are attached by order of any court, the
Plan Administrator may bring an action for a declaratory judgment in a court of
competent jurisdiction to determine the proper recipient of the benefits to be
paid by the Plan. During the pendency of the action, the Plan Administrator
shall cause any benefits payable to be paid to the court for distribution by the
court as it considers appropriate.
3.12.9 DOMESTIC RELATIONS ORDERS. The Plan Administrator shall adhere
to the terms of any judgment, decree or order (including approval of a property
settlement agreement) which relates to the provision of child support, alimony
payments, or marital property rights to a spouse, former spouse, child or other
dependent of a Participant and is made pursuant to a state domestic relations
law (including a community property law) and which creates or recognizes the
existence of an alternate payee's right to, or assigns to an alternate payee the
right to, receive all or a portion of the benefits payable with respect to a
Participant.
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Any such domestic relations order must clearly specify the name and last known
mailing address of the Participant and the name and mailing address of each
alternate payee covered by the order, the amount or percentage of the
Participant's benefit to be paid by the Plan to each such alternate payee, or
the manner in which such amount or percentage is to be determined, the number of
payments or period to which such order applies, and each plan to which such
order applies.
Any such domestic relations order shall not require the Plan to provide any type
or form of benefit, or any option not otherwise provided under the Plan, to
provide increased benefits (determined on the basis of actuarial value) or the
payment of benefits to an alternate payee which are required to be paid to
another alternate payee under another order previously determined to be a
qualified domestic relations order. Notwithstanding the foregoing sentence, a
domestic relations order may require the payment of benefits to an alternate
payee before the Participant has separated from service on or after the date on
which the Participant attains or would have attained the earliest retirement age
under the plan as if the Participant had retired on the date on which such
payment is to begin under such order (but taking into account only the present
value of the benefits actually accrued and not taking into account the present
value of any Employer subsidy for early retirement) and in any form in which
such benefits may be paid under the Plan to the Participant (other than the form
of a joint and survivor annuity with respect to the alternate payee and his or
her subsequent spouse). The interest rate assumption used in determining the
present value shall be five (5%) percent. For these purposes, the earliest
retirement age under the Plan means the earlier of: (a) the date on which the
Participant is entitled to a distribution under the Plan, or (b) the later of
the date the Participant attains age 50, or the earliest date on which the
Participant could begin receiving benefits under the Plan if the Participant
separated from service.
If the Employer so elects in the Adoption Agreement, distributions may be made
to an alternate payee even though the Participant may not receive a distribution
because he continues to be employed by the Employer.
To the extent provided in the qualified domestic relations order, the former
spouse of a Participant shall be treated as a surviving spouse of such
Participant for purposes of Sections 401(a)(11) and 417 of the Code (and any
spouse of the Participant shall not be treated as a spouse of the Participant
for such purposes) and if married for at least one (1) year, the surviving
former spouse shall be treated as meeting the requirements of Section 417(d) of
the Code.
The Plan Administrator shall promptly notify the Participant and each alternate
payee of the receipt of a domestic relations order by the Plan and the Plan's
procedures for determining the qualified status of domestic relations orders.
Within a reasonable period after receipt of a domestic relations order, the Plan
Administrator shall determine whether such order is a qualified domestic
relations order and shall notify the Participant and each alternate payee of
such determination. If the Participant or any affected alternate payee disagrees
with the determinations of the Plan Administrator, the disagreeing party shall
be treated as a claimant and the claims procedure of the Plan shall be followed.
The Plan Administrator may bring an action for a declaratory judgment in a court
of competent jurisdiction to determine the proper recipient of the benefits to
be paid by the Plan.
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During any period in which the issue of whether a domestic relations order is a
qualified domestic relations order is being determined (by the Plan
Administrator, by a court of competent jurisdiction or otherwise), the Plan
Administrator shall separately account for the amounts which would have been
payable to the alternate payee during such period if the order had been
determined to be a qualified domestic relations order. If, within the eighteen
(18) month period beginning on the date on which the first payment would be
required to be made under the domestic relations order, the order (or
modification thereof) is determined to be a qualified domestic relations order,
the Plan Administrator shall pay the segregated amounts, including any interest
thereon, to the person or persons entitled thereto. If within such eighteen (18)
month period it is determined that the order is not a qualified domestic
relations order or the issue as to whether such order is a qualified domestic
relations order is not resolved, then the Plan Administrator shall pay the
segregated amounts, including any interest thereon, to the person or persons who
would have been entitled to such amounts if there had been no order. Any
determination that an order is a qualified domestic relations order which is
made after the close of the eighteen (18) month period shall be applied
prospectively only.
3.12.10 AUTHORIZATION TO WITHHOLD TAXES. The Trustee is authorized in
accordance with applicable law to withhold from distribution to any payee such
sums as may be necessary to cover federal and state taxes which may be due with
respect to such distributions.
3.12.11 MISSING PERSONS. If the Trustee mails by registered or
certified mail, postage prepaid, to the last known address of a Participant or
Beneficiary, a notification that the Participant or Beneficiary is entitled to a
distribution and if (a) the notification is returned by the post office because
the addressee cannot be located at such address and if neither the Employer, the
Plan Administrator nor the Trustee shall have any knowledge of the whereabouts
of such Participant or Beneficiary within three (3) years from the date such
notification was mailed, or (b) within three (3) years after such notification
was mailed to such Participant or beneficiary, he does not respond thereto by
informing the Trustee of his whereabouts, the ultimate disposition of the then
undistributed balance of the Distributable Benefit of such Participant or
Beneficiary shall be determined in accordance with the then applicable Federal
laws, rules and regulations. If any portion of the Distributable Benefit is
forfeited because the Participant or Beneficiary cannot be found, such portion
shall be reinstated if a claim is made by the Participant or Beneficiary.
3.12.12 NOTICES. Any notice or direction to be given in accordance with
the Plan shall be deemed to have been effectively given if hand delivered to the
recipient or sent by certified mail, return receipt requested, to the recipient
at the recipient's last known address. At any time that a group of individuals
is acting as Trustee, notice to the Trustee may be given by giving notice to any
one or more of such individuals.
3.12.13 GOVERNING LAW. The provisions of this Plan shall be construed,
administered and enforced in accordance with the provisions of the Act and, to
the extent applicable, the laws of the state in which the Employer has its
principal place of business. All contributions to the Trust shall be deemed to
take place in such state.
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3.12.14 SEVERABILITY OF PROVISIONS. In the event that any provision of
this Plan shall be held to be illegal, invalid or unenforceable for any reason,
said illegality, invalidity or unenforceability shall not affect the remaining
provisions, but shall be fully severable and the Plan shall be construed and
enforced as if said illegal, invalid or unenforceable provisions had never been
inserted herein.
3.12.15 GENDER AND NUMBER. Whenever appropriate, words used in the
singular shall include the plural, and the masculine gender shall include the
feminine gender.
3.12.16 BINDING EFFECT. The Plan and Adoption Agreement, and all
actions and decisions hereunder, shall be binding upon the heirs, executors,
administrators, successors and assigns of any and all parties hereto and
Participants, present and future.
3.12.17 QUALIFICATION UNDER INTERNAL REVENUE LAWS. The Employer intends
that the Trust qualify under the applicable provisions of the Code. Until
advised to the contrary, the Trustee may assume that the Trust is so qualified
and is entitled to tax exemption under the Code. If the Plan of the Employer
fails to attain or retain qualification, the Plan of the Employer shall no
longer participate in this prototype and shall be considered an individually
designed plan.
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MODEL SECTION 401(a)(31) AMENDMENT TO
THE WARWICK SAVINGS BANK 401(K) SAVINGS PLAN
SECTION 1. This Article applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the plan to the
contrary that would otherwise limit a distributee's election under this
Article, a distributee may elect, at the time and in the manner
prescribed by the plan administrator, to have any portion of an
eligible rollover distribution paid directly to an eligible retirement
plan specified by the distributee in a direct rollover.
SECTION 2. Definitions.
SECTION 2.1. Eligible rollover distribution: An eligible
rollover distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an eligible
rollover distribution does not include: any distribution that is one of
a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent
such distribution is required under section 401(a)(9) of the Code; and
the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
SECTION 2.2. Eligible retirement plan: An eligible retirement
plan is an individual retirement account described in section 408(a) of
the Code, an individual retirement annuity described in section 408(b)
of the Code, an annuity plan described in section 403(a) of the Code,
or a qualified trust described in section 401(a) of the Code, that
accepts the distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the surviving spouse,
an eligible retirement plan is an individual retirement account or
individual retirement annuity.
SECTION 2.3. Distributee: A distributee includes an employee
or former employee. In addition, the Employee's or former employee's
surviving spouse and the employee's or the former employee's spouse or
former spouse who is the alternate payee under a qualified domestic
relations order, as defined in section 414(p) of the Code, are
distributees with regard to the interest of the spouse or former
spouse.
SECTION 2.4. Direct rollover: A direct rollover is a payment
by the plan to the eligible retirement plan specified by the
distributee.
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MODEL SECTION 401(a)(17) AMENDMENT TO
THE WARWICK SAVINGS BANK 401(K) SAVINGS PLAN
SECTION 401(a)(17) LIMITATION
In addition to other applicable limitations set forth in the
plan, and notwithstanding any other provision of the plan to contrary,
for plan years beginning on or after January 1, 1994, the annual
compensation of each employee taken into account under the plan shall
not exceed the OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner for
increases in the cost of living in accordance with section
401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not
exceeding 12 months, over which compensation is determined
(determination period) beginning in such calendar year. If a
determination period consist of fewer than 12 months, the OBRA '93
annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period,
and the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any
reference in this plan to the limitation under section 401(a)(17) of
the Code shall mean the OBRA '93 annual compensation limit set forth in
the provision.
If compensation for any prior determination period is taken
into account in determining an employee's benefits accruing in the
current plan year, the compensation for that prior determination period
is subject to the OBRA '93 annual compensation limit in effect for that
prior determination period. For this purpose, for determination periods
beginning before the first day of the first plan year beginning on or
after January 1, 1994, the OBRA '93 annual compensation limit is
$150,000.
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REVENUE PROCEDURE 93-47 AMENDMENT TO
THE WARWICK SAVINGS BANK 401(K) SAVINGS PLAN
The following language, applicable to distributions made on or after January 1,
1993, is hereby inserted following the final sentence of section 2.5.2(j) of the
DATAIR Employee Benefit Systems, Inc. Defined Contribution Plan and Trust.
"If a distribution is one to which sections 401(a)(11)and 417 of the
Internal Revenue Code do not apply, such distribution may commence less
than 30 days after the notice required under section 1.411(a)-11(c) of
the Income Tax Regulations is given, provided that:
(1) the plan administrator clearly informs the Participant
that the participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not to
elect a distribution (and if applicable, a particular distribution
option), and
(2) the participant, after receiving the notice, affirmatively
elects a distribution."
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ADOPTION AGREEMENT
FOR THE DATAIR MASS-SUBMITTER PROTOTYPE
NON-STANDARDIZED CASH OR DEFERRED PROFIT SHARING PLAN AND TRUST
The DATAIR Mass-Submitter Prototype Non-Standardized Cash or Deferred Profit
Sharing Plan and Trust ("the Plan and Trust")is hereby adopted by:
THE WARWICK SAVINGS BANK (the "Employer").
The Plan and Trust as applicable to the Employer shall be known as:
THE WARWICK SAVINGS BANK 401(k) SAVINGS PLAN
The Plan and Trust is effective as of: MAY 6, 1996.
(Specify, if applicable.)
( ) a. The Plan and Trust is an amendment of a preexisting Plan which
was originally effective as of:
-------------------.
(X) b. The Plan and Trust is an amendment and restatement of a
preexisting Plan which was originally effective as of:
MARCH 1, 1987.
-------------------.
*** CAUTION ***
FAILURE TO FILL OUT THE ADOPTION AGREEMENT PROPERLY MAY
RESULT IN DISQUALIFICATION OF THE PLAN
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PART I. The following identifying information pertains to the Employer and the
Plan and Trust:
1. EMPLOYER ADDRESS: 18 OAKLAND AVENUE
P.O. BOX 591
WARWICK, NY 10990-0591
2. EMPLOYER TELEPHONE: (914) 986-2206
3. EMPLOYER TAX ID: 14-1160460
4. EMPLOYER FISCAL YEAR: JANUARY 1 TO DECEMBER 31
5. THREE DIGIT PLAN NUMBER: 002
6. TRUST ID NUMBER: APPLIED FOR
7. PLAN FISCAL YEAR (MUST JANUARY 1 TO DECEMBER 31
BE 12 CONSECUTIVE MOS.):
8. SHORT INITIAL PLAN YEAR: N/A
9. PLAN AGENT: THE WARWICK SAVINGS BANK
18 OAKLAND AVENUE
P.O. BOX 591
WARWICK, NY 10990-0591
10. PLAN ADMINISTRATOR: THE WARWICK SAVINGS BANK
18 OAKLAND AVENUE
P.O. BOX 591
WARWICK, NY 10990-0591
11. PLAN ADMINISTRATOR 14-1160460
ID NUMBER:
12. PLAN TRUSTEES: TIMOTHY A. DEMPSEY
RONALD J. GENTILE
NANCY L. SOBOTOR-LITTELL
ARTHUR W. BUDICH
BARBARA A. RUDY
18 OAKLAND AVENUE
P.O. BOX 591
WARWICK, NY 10990-0591
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13. IRS DETERMINATION FEBRUARY 10, 1995
LETTER DATE:
(LEAVE BLANK FOR A NEW PLAN)
14. IRS FILE FOLDER NUMBER: 143000766
(Leave blank for a New Plan)
15. LEGAL ORGANIZATION OF EMPLOYER:
( ) a. Sole Proprietorship
( ) b. Partnership
(X) c. C Corporation
( ) d. S Corporation
( ) e. Not for Profit Corporation
( ) f. Personal Service Corporation
( ) g. Other-- Explain :
16. BUSINESS CODE: 6030
17. STATE OF LEGAL NEW YORK
CONSTRUCTION:
18. OTHER MEMBERS OF A CONTROLLED GROUP OR AFFILIATED SERVICE GROUP:
(If any, each member should sign Adoption Agreement or otherwise
satisfy applicable participation requirements. Leave blank if not
applicable)
Controlled Group
( ) a. Not Applicable
(X) b. Other Members
WSB FINANCIAL SERVICES, INC.
Affiliated Service Group
(X) a. Not Applicable
( ) b. Other Members
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PART II. The Plan contains certain predetermined design features intended to
provide the statutory requirement or most commonly adopted feature but permits
the selection of alternative features. If an Employer desires to retain the
predetermined design feature, select the provision designated Plan Provision. If
an alternative design feature is desired, select the appropriate provision.
Unless specifically provided to the contrary, only one selection may be made for
each design category. Section references are to relevant Plan Sections. Defined
terms have the meanings provided in the Plan.
A. ELIGIBILITY AND SERVICE PROVISIONS
1. ELIGIBLE EMPLOYEES-- Section 1.2.23 provides that all employees,
including employees of certain related businesses and leased employees
are eligible except for certain union members and non-resident aliens.
(Specify all applicable)
( ) a. Plan Provision
( ) b. Include members of collective bargaining unit
(X) c. Exclude self-employed persons
(X) d. Exclude Employees not employed by the Employer
( ) e. Exclude commissioned Employees
( ) f. Exclude hourly Employees
( ) g. Exclude salaried Employees
( ) h. Other-- Specify. (Cannot discriminate in favor of
Highly Compensated Employees).
2. ELIGIBILITY REQUIREMENTS (SEE SECTION 2.1.1)-- An Employee is eligible
to participate in Non-Elective Contribution portions of the Plan if he
satisfies the following requirements during the Eligibility Computation
Period. (Specify one option or any combination other than c and d.
Selecting more than one option means that an Employee must meet all
indicated requirements for eligibility, except for option e. Option e
overrides all other requirements):
( ) a. Date of hire, i.e. no age or service required (no other
choices may be selected)
( ) b. Minimum Age of _____ years (Not to exceed 21, partial
years may be used)
( ) c. Minimum of _____ months of service (Cannot require more
than 24 months, or more than 12 months if full vesting
after not more than 2 Years of Service is not selected;
if periods other than whole years are selected an
Employee cannot be required to complete any specified
number of Hours of Service to receive credit for the
fractional year)
( ) d. _____ Hours of Service required during each 12 month
Eligibility Computation Period (cannot exceed 1000)
( ) e. Employed on ___/___/___. (For new plans only, select an
additional option if this provision is selected)
(X) f. Not applicable. Non-Elective Contributions are not
permitted.
3. FOR THE PURPOSES OF HAVING ELECTIVE CONTRIBUTIONS made on the
Employee's behalf, Section 2.1.1 provides that, unless the Employer
specifies otherwise in the Adoption Agreement, an Employee must
complete 1000 Hours of Service during the Eligibility
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Computation Period. For these purposes, an Employee is eligible if he
satisfies the following requirements: (Select all applicable. Selecting
more than one option means that an Employee must meet all indicated
requirements for eligibility, except for option e. Option e overrides
all other requirements):
( ) a. Date of hire, i.e. no age or service requirement (No
other choices may be selected)
(X) b. Minimum Age of 21 years (Not to exceed 21, partial years
may be specified)
(X) c. Minimum of 12 months of service (Not to exceed 12, if
other than full years are selected hours may not be
specified)
(X) d. 1,000 Hours of Service required during each 12 month
Eligibility Computation Period (cannot exceed 1000)
( ) e. Employed on ___/___/___. (For new plans only, select an
additional option if this provision is selected)
4. MATCHING ELIGIBILITY REQUIREMENTS (SEE SECTION 2.1.1) -- An Employee is
eligible to participate in the Matching Contributions portion of the
Plan if he satisfies the following requirements during the Eligibility
Computation Period. (Specify one option or any combination other than c
and d. Selecting more than one option means that an Employee must meet
all indicated requirements for eligibility, except for option e. Option
e overrides all other requirements):
( ) a. Date of hire, i.e. no age or service required (No other
choices may be selected)
(X) b. Minimum Age of 21 years (Not to exceed 21, partial years
may be used)
(X) c. Minimum of 12 months of service (Cannot require more than
24 months, or more than 12 months if full vesting after
not more than 2 Years of Service is not selected; if
periods other than whole years are selected an Employee
cannot be required to complete any specified number
of Hours of Service to receive credit for the
fractional year)
(X) d. 1,000 Hours of Service required during each 12 month
Eligibility Computation Period (cannot exceed 1000)
( ) e. Employed on ___/___/___. (For new plans only, select an
additional option if this provision is selected)
( ) f. Not applicable. Matching Contributions are not permitted.
5. ELIGIBILITY COMPUTATION PERIOD -- Section 1.2.22 provides that the
initial eligibility computation period begins on the date of hire and
the subsequent periods commence on each annual anniversary of such
date. (Select one)
( ) a. Plan Provision
(X) b. The eligibility computation periods subsequent to the
initial eligibility computation period are the Plan Year
beginning with the first Plan Year commencing prior to
the first anniversary of the employment commencement
date.
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6. HOUR OF SERVICE -- Section 1.2.35 provides that service will be
credited on the basis of actual hours for which the employee is paid or
entitled to payment. If records of actual hours are not maintained,
credit is given on the basis of: (Select one)
(X) a. Plan Provision -- Records are maintained
( ) b. Days Worked -- An Employee will be credited with 10 Hours
of Service if he is credited with at least 1 Hour of
Service during the day
( ) c. Weeks Worked-- An Employee will be credited with 45 Hours
of Service if he is credited with at least 1 Hour of
Service during the week
( ) d. Semi-Monthly Payroll Period-- An Employee will be
credited with 95 Hours of Service if he is credited with
at least 1 Hour of Service during the payroll period
( ) e. Months worked -- An Employee will be credited with 190
Hours of Service if he is credited with at least 1 Hour
of Service during the month
7. SERVICE WITH PREDECESSOR EMPLOYERS -- Section 1.2.35 provides that
service with predecessor employers is treated as service for the
Employer. Where applicable, identify the predecessor employer(s) and
any document(s) which provides for the crediting of service with such
predecessor(s):
( ) a. Not applicable.
(X) b. Service with the following entities shall be credited as
service under this plan:
ANY AFFILIATED EMPLOYER
Service with the above entities has been determined
under the terms of the following documents:
_________________________________
8. ENTRY DATE -- Section 2.1.2 provides that an Employee who satisfies any
eligibility requirements enters the Plan on the Entry Date. For this
purpose the Entry Date is the:(Select one)
( ) a. First day of next Plan Year or _____ months (Not to
exceed 6) after satisfying the eligibility requirements,
if earlier
( ) b. First day of _____ month (Not more than 6) after
satisfying eligibility requirements or the first day of
the next Plan Year, if earlier
( ) c. Date of satisfying the eligibility requirements
( ) d. First day of Plan Year in which the eligibility
requirements are satisfied
( ) e. First day of Plan Year nearest to the date the
eligibility requirements are satisfied
(X) f. Semiannual -- (X) first or ( ) last day of 6 month
periods, beginning with first of Plan Year, coincident
with or after satisfying eligibility requirements
( ) g. Quarterly-- ( ) first or ( ) last day of 3 month periods,
beginning with first of Plan Year, coincident with or
after satisfying eligibility requirements
( ) h. Monthly-- ( ) first or ( ) last day of each month of the
Plan Year, coincident with or after satisfying
eligibility requirements
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<PAGE> 97
( ) i. First day of the Plan Year coincident with or immediately
following the date the eligibility requirements are
satisfied. (May be selected only if eligibility
requirements of Plan do not require more than 6 months of
service (18 months if 100% immediate vesting) and
attainment of age 20 1/2.)
( ) j. Last day of the Plan Year coincident with or after
satisfying the eligibility requirements. (May be selected
only if eligibility requirements of Plan do not require
more than 6 months of service (18 months if 100%
immediate vesting) and attainment of age 20-1/2).
NOTE: The Entry Date should be coordinated with the Compensation
Computation Period.
9. BREAK IN SERVICE -- Section 1.2.8 provides that a Break in Service
occurs if an Employee fails to complete more than 500 hours of service
during the applicable computation period unless a lesser number is
specified. (Select one)
(X) a. Plan Provision
( ) b. A Break will occur if the Employee fails to complete more
than ____ (Not to exceed 500) Hours of Service
B. DATE PROVISIONS
1. ANNIVERSARY DATE -- Section 1.2.5 provides that the Anniversary Date is
the last day of the Plan Year unless another date is specified. (Select
one)
(X) a. Plan Provision -- No other date is specified.
( ) b. The first day of the Plan Year.
( ) c. Other-- Specify. (Must be at least annually)
2. VALUATION DATE -- Section 1.2.63 provides that the Valuation Date is
the date or dates specified in the Adoption Agreement. (Select one)
( ) a. Anniversary Date
( ) b. Semiannually on the last day of each 6 month period
beginning with the first of the Plan Year
( ) c. Quarterly on the last day of each 3 month period
beginning with the first of the Plan Year
( ) d. Monthly on the last day of each month of the Plan Year
( ) e. Last day of Plan Year (use option (a) if Anniversary
Date is last day of the Plan Year
(X) f. Other -- Specify. (Must be at least annually)
DAILY (INDIVIDUAL INVESTMENT CONTRACTS)
3. NORMAL RETIREMENT DATE -- Section 1.2.46 permits the adoption of a
Normal Retirement Date. (Select one)
( ) a. Date Normal Retirement Age is attained
( ) b. First day of month in which Normal Retirement Age is
attained
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<PAGE> 98
( ) c. First day of month nearest date Normal Retirement Age is
attained
(X) d. First day of month coincident with or next following the
date Normal Retirement Age is attained
( ) e. Anniversary Date nearest date Normal Retirement Age is
attained
( ) f. Anniversary Date coincident with or next following date
Normal Retirement Age is attained
4. NORMAL RETIREMENT AGE -- For each Participant the Normal Retirement Age
is:
( ) a. Age ____ (not to exceed 65)
(X) b. The later of age 65 (not to exceed 65) or the 5 (not to
exceed the fifth (5th))anniversary of the participation
commencement date, if later. The participation
commencement date is the first day of the Plan Year in
which a Participant commenced participation in the Plan.
Solely for Plan Years beginning before 1988, if the normal
retirement age was determined by reference to the
anniversary of the participation commencement date, the
anniversary for participants who first commenced
participation before the first Plan Year beginning on or
after January 1, 1988 is the earlier of the tenth
anniversary of the date the participant commenced
participation in the Plan (or such anniversary as had
been elected by the Employer if less than ten) or the
fifth anniversary of the first day of the first Plan
Year beginning on or after January 1, 1988.
( ) c. Age ____ and the ____ anniversary of the participation
commencement date, if both requirements are met earlier
than the later age of 65 or the fifth (5th) anniversary of
participation
5. EARLY RETIREMENT DATE -- Section 1.2.17 permits the adoption of an
Early Retirement Date: (Select one)
( ) a. The Plan does not provide an early retirement date
( ) b. The actual date the Participant attains the Early
Retirement Age
( ) c. The Anniversary Date coincident with or next following the
date the Participant attains the Early Retirement Age
( ) d. The Valuation Date coincident with or next following the
date the Participant attains the Early Retirement Age
(X) e. The (X) first ( ) last day of the month coincident with or
next following the date the Participant attains the Early
Retirement Age
( ) f. Other-- Specify. (Cannot discriminate in favor of Highly
Compensated Employees)
6. EARLY RETIREMENT AGE: (Select all applicable. If more than one option
is selected, Early Retirement Age is attained on the first date the
requirements of any option are met.)
( ) a. Age _____ (not to exceed 65)
(X) b. Age 60 and 5 Years of Service
( ) c. Age ____ and ____ Years of Service while a Participant
( ) d. _____ years prior to the Normal Retirement Age
( ) e. Sum of age and Years of Service equals _____
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<PAGE> 99
( ) f. Not Applicable
NOTE: Cannot discriminate in favor of Highly Compensated
Employees.
C. COMPENSATION
1. COMPENSATION -- See Section 1.2.10. For purposes of the Plan a
Participant's compensation is based on the Compensation Computation
Period and shall: (Select a, b, or c and all of d and e which are
applicable)
( ) a. Equal compensation as defined in Section 3401(a) except as
indicated below
( ) b. Equal compensation as defined in Section 415(c)(3) except
as indicated below
(X) c. Equal compensation as defined for the Wages, Tips, and
Other Compensation Box on Form W-2 except as indicated
below
(X) d. Include compensation which is not includible in gross
income by reason of Section
(X) Sections 402(h)(1)(B)(SEP deferrals)
(X) 125 (Cafeteria Plan)
(X) 402(a)(8) (401(k) deferrals)
(X) 403(b)
(X) 457(b)
Effective January 1, 1997:
( ) e. Exclude compensation which is for
( ) overtime
( ) discretionary bonuses
( ) Bonuses
( ) taxable employee benefits
( ) in excess of $_______
( ) Other exclusion-- Specify. (Cannot discriminate in favor
of Highly Compensated Employees)
NOTE: Exclusions are permissible if the Plan is not integrated with
Social Security. Exclusions may cause the Plan to be
impermissibly discriminatory.
2. THE COMPENSATION COMPUTATION PERIOD IS:
(X) a. The Plan Year
( ) b. The calendar year ending with or within the Plan Year
3. FOR THE INITIAL PLAN YEAR OF PARTICIPATION, include Compensation from:
(Select one)
(X) a. Entry Date as a Participant
( ) b. First day of the Compensation Computation Period which
ends during the initial Plan Year of participation
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D. CONTRIBUTION AND ALLOCATION
1. NON-ELECTIVE CONTRIBUTION FORMULA -- The Employer's Non-Elective
contribution to the Plan shall be: (Select one)
( ) a. Discretionary, out of profits
( ) b. Discretionary, but not limited to profits
( ) c. ______% of each Participant's Compensation (not to exceed
15%).
(X) d. Not applicable. Non-Elective Contributions are not
permitted.
2. ALLOCATION METHOD -- The Employer Non-Elective contribution is
allocated to Participants: (Select one)
( ) a. Proportionate to Salary. Based upon each Participant's
Compensation in proportion to the Compensation of all
Participants.
( ) b. Integrated with Social Security. See Sections 2.3.1 and
2.3.3. (Select one of d. through h., below.)
(X) c. Not applicable -- No Non-Elective Contributions.
The Social Security Integration Level is equal to:
( ) d. The taxable wage base under Section 230 of the Social
Security Act in effect as of the first day of the Plan
Year.
( ) e. $_____ (Not to exceed the taxable wage base under Section
230 of the Social Security Act in effect as of the first
day of the Plan Year).
( ) f. _____% (Not to exceed 100) of the taxable wage base
under Section 230 of the Social Security act in effect as
of the first day of the Plan Year.
( ) g. The greater of $10,000 or 20% of the taxable wage base
under Section 230 of the Social Security Act in effect as
of the first day of the Plan Year.
( ) h. 80% of the taxable wage base under Section 230 of the
Social Security Act in effect as of the first day of the
Plan Year plus $1.00.
3. REQUIREMENT TO SHARE IN NON-ELECTIVE CONTRIBUTION ALLOCATION. In order
to share in the allocation of the Employer's Non-Elective Contribution
a Participant: (Select all applicable)
( ) a. must complete ____ Hours (cannot exceed 1000), but
( ) is eligible regardless of Hours if the Employee dies
during the Plan Year
( ) is eligible regardless of Hours of Service if the
Employee retires during the Plan Year
( ) is eligible regardless of Hours of Service if the
Employee becomes totally disabled during the Plan Year
( ) b. must complete ____ (cannot exceed 1000) Hours and be
employed at Plan Year end but
( ) is eligible if Employee dies during the plan year,
( ) regardless of Hours of Service.
( ) only if employee meets Hours requirement
( ) is eligible if Employee retires during the Plan Year,
( ) regardless of Hours of Service.
( ) only if Employee meets Hours requirement.
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( ) is eligible if Employee becomes totally disabled during
the Plan Year
( ) regardless of the Hours of Service.
( ) only if Employee meets Hours requirement.
(X) c. Not applicable -- No Non-Elective Contributions.
4. REQUIREMENT TO SHARE IN MATCHING CONTRIBUTION ALLOCATION -- In order to
share in the allocation of the Employer's Matching Contribution a
Participant: (Select all applicable)
(X) a. must complete 1 Hours (cannot exceed 1000), but
(X) is eligible regardless of Hours if the Employee dies
during the Plan Year
(X) is eligible regardless of Hours of Service if the
Employee retires during the Plan Year
(X) is eligible regardless of Hours of Service if the
Employee becomes totally disabled during the Plan Year
( ) b. must complete ____ (cannot exceed 1000) Hours and be
employed at Plan Year end but
( ) is eligible if Employee dies during the plan year,
( ) regardless of Hours of Service.
( ) only if employee meets Hours requirement
( ) is eligible if Employee retires during the Plan Year,
( ) regardless of Hours of Service.
( ) only if Employee meets Hours requirement.
( ) is eligible if Employee becomes totally disabled during
the Plan Year
( ) regardless of the Hours of Service.
( ) only if Employee meets Hours requirement.
( ) c. Not Applicable
5. MATCHING CONTRIBUTIONS -- The Matching Contribution by the Employer for
the Plan Year in accordance with Section 2.2.1(a)(3)(ii) is
( ) a. Matching Contributions are not permitted
(X) b. Discretionary each Plan Year
( ) c. Based upon the Allocation Method set forth below
( ) d. Based upon the Allocation Method set forth below plus
a supplemental discretionary Matching contribution
6. ALLOCATION METHOD FOR MATCHING CONTRIBUTIONS -- Matching Contributions
shall be allocated to eligible Participants in an amount:
(X) a. Proportionate to the Elective Contributions made on
behalf of a Participant
( ) b. Equal to ______% of the Elective Contributions made on
behalf of a Participant
( ) c. Graded based on the dollar amount of the Elective
Contribution of each Participant as follows:
_____% of the first $_____ plus
_____% of the next $_____ plus
_____% of the next $_____ plus
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_____% of the next $_____.
( ) d. Graded based on the percentage of compensation of the
Elective Contribution of each Participant as follows:
_____% of the first _____% plus
_____% of the next _____% plus
_____% of the next _____% plus
_____% of the next _____% .
( ) e. Graded based on the dollar amount of the Elective
Contribution of each Participant as follows:
_____% if contribution is $_____ or more;
_____% if contribution is $_____ or more;
_____% if contribution is $_____ or more;
_____% if contribution is $_____ or more.
( ) f. Graded based on the percentage of compensation of the
Elective Contribution of each Participant as follows:
_____% if contribution is _____% or more
_____% if contribution is _____% or more
_____% if contribution is _____% or more
_____% if contribution is _____% or more
( ) g. Not applicable
NOTE: Graded percentages entered in c. through f. must
decrease as percentage or amount of compensation
increases.
7. IF A SUPPLEMENTAL DISCRETIONARY MATCHING CONTRIBUTION is made, Matching
Contributions shall be allocated to eligible Participants in an amount:
( ) a. Proportionate to the Elective Contributions made on
behalf of a Participant
( ) b. According to the method selected in 6b.- f. above
(X) c. Not applicable
8. MATCHING CONTRIBUTION ALLOCATION DATE -- Matching Contributions are
allocated as of the Anniversary Date unless an alternate date is
selected. For the purposes of this Plan the Matching Contribution is
allocated as of:
(Select one)
( ) a. Plan Provision -- the Anniversary Date.
( ) b. The next Valuation Date.
(X) c. Other -- Specify. (Must be allocated at least
annually)
PER PAY PERIOD, AS ELECTIVE CONTRIBUTIONS ARE DEPOSITED.
( ) d. Not applicable
9. LIMITATIONS ON MATCHING CONTRIBUTIONS -- The Employer shall not make
Matching
Contributions: (Select all applicable)
(X) a. With respect to Elective Contributions in excess of 3
percent of a
Participant's Compensation
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( ) b. In excess of $______ for any Participant
( ) c. To Key Employees
( ) d. Not applicable.
10. ALLOCATION OF QUALIFIED NON-ELECTIVE CONTRIBUTIONS -- (Select a or b.
If a is selected, do not complete the remainder of this section)
( ) a. Qualified Non-Elective Contributions are not
permitted.
(X) b. Qualified Non-Elective Contributions shall be made at
the Employer's discretion.
Qualified Non-Elective Contributions shall be allocated (complete c and
d):
(X) c. On behalf of
( ) All Participants
( ) Solely on behalf of Participants who are not
Highly Compensated
Employees
(X) Solely on behalf of Participants who are not
Highly Compensated
Employees to the extent necessary to satisfy
the ACP or the ADP test
( ) d. Who are eligible to receive an allocation of
( ) Non-Elective Contributions
( ) Matching Contributions
Qualified Non-Elective Contributions shall be allocated: (Select e or
f; also select g, if
applicable)
(X) e. In proportion to a Participant's Compensation.
( ) f. As a uniform dollar amount.
(X) g. To the extent necessary to satisfy the ACP test or
the ADP test.
11. LIMITATION YEAR -- Section 1.2.40 provides that unless otherwise
specified the Limitation Year for purposes of the limitation imposed by
IRC Section 415 is the Plan Year.
(Select one)
( ) a. Plan Provision
(X) b. Calendar year coinciding with or ending within the
Plan Year
( ) c. Twelve consecutive month period ending ___/___.
E. VESTING PROVISIONS
1. YEARS OF SERVICE -- Section 1.2.65 provides that a Year of Service is
the 12 consecutive month period specified in the Adoption Agreement in
which at least 1000 Hours of Service are performed unless a lesser
number is specified. (Select all applicable)
(X) a. Use the Plan Year as the computation period
( ) b. Use Eligibility Computation Period as the computation
period
( ) c. Use _____ in lieu of 1000 Hours of Service (Not to
exceed 1000 hours)
2. EXCLUDED YEARS -- Section 1.2.65 provides unless otherwise specified
all Years of Service are taken into account.
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(X) a. Plan Provision -- Include all Years of Service
( ) b. Exclude Plan Years prior to age 18
( ) c. Exclude Plan years prior to adoption of plan or
predecessor plan. Effective
date of (prior) plan:___/___/___
3. VESTING SCHEDULE -- Section 2.4.2(f) provides that benefits will vest
in accordance with the method specified in the Adoption Agreement.
(Select one of a, b, c, d, f, or g. Also select e if applicable.)
Employer Accounts:
( ) a. At the rate of 20% each year after 3 Years of
Service.(20% vested in third year)
( ) b. At the rate of 20% each year after 2 Years of
Service.(20% vested in second year)
( ) c. 100% vesting upon participation.
( ) d. 100% vesting after ____ Year(s) of Service (Not to
exceed 5)
( ) e. 100% vesting at Early Retirement Date (Must also
select another alternative)
( ) f. Other: (Optional vesting schedule must be at least
as favorable as a. or d.)
Year(s) of Service Percent Vesting
------------------ ---------------
Less than 1 _______
1 but less than 2 _______
2 but less than 3 _______
3 but less than 4 _______
4 but less than 5 _______
5 but less than 6 _______
6 but less than 7 _______
7 or More _______
(X) g. Not applicable -- No Non-Elective Employer
Contributions
Matching Accounts:
( ) a. At the rate of 20% each year after 3 Years of
Service.(20% vested in third year)
( ) b. At the rate of 20% each year after 2 Years of
Service.(20% vested in second year)
( ) c. 100% vesting upon participation.
( ) d. 100% vesting after ____ Year(s) of Service (Not to
exceed 5)
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( ) e. 100% vesting at Early Retirement Date (Must also
select another alternative)
(X) f. Other: (Optional vesting schedule must be at least
as favorable as a. or d.)
Year(s) of Service Percent Vesting
------------------ ---------------
Less than 1 0%
_
1 but less than 2 20%
__
2 but less than 3 40%
__
3 but less than 4 60%
__
4 but less than 5 80%
__
5 but less than 6 100%
___
6 but less than 7 100%
___
7 or More 100%
___
( ) g. Not applicable-- No Matching Contributions
4. PRIOR VESTING SCHEDULE -- Section 3.10.3 provides that if the Vesting
schedule has been amended to a less favorable schedule, participants
are entitled to have their vested interest calculated under the prior
schedule under certain instances.
(X) a. Not applicable. Either not amended or new schedule is
more favorable.
( ) b. The prior schedule was
Employer
Year(s) of Service Percent Vesting
------------------ ---------------
Less than 1 _______
1 but less than 2 _______
2 but less than 3 _______
3 but less than 4 _______
4 but less than 5 _______
5 but less than 6 _______
6 but less than 7 _______
7 or More _______
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Matching
Year(s) of Service Percent Vesting
------------------ ---------------
Less than 1 _______
1 but less than 2 _______
2 but less than 3 _______
3 but less than 4 _______
4 but less than 5 _______
5 but less than 6 _______
6 but less than 7 _______
7 or More _______
5. TOP HEAVY VESTING SCHEDULE -- Section 2.6.1(c) provides that if the
Plan becomes Top Heavy, unless the Employer specifies otherwise,
vesting will be at a rate of 20% per year beginning with the second
Year of Service.
Employer Accounts:
( ) a. Plan Provision
( ) b. 100% vested after ____ Year(s) of Service (Not to
exceed 3)
(X) c. Same as non-Top Heavy vesting schedule (Must be at
least as favorable as a or b)
( ) d. Other: (Optional vesting schedule must be at least
as favorable as a. or b.)
Year(s) of Service Percent Vesting
------------------ ---------------
Less than 1 _______
1 but less than 2 _______
2 but less than 3 _______
3 but less than 4 _______
4 but less than 5 _______
5 but less than 6 _______
6 but less than 7 _______
7 or More _______
( ) e. Not Applicable-- No Employer Non-Elective
Contributions
Matching Accounts:
( ) a. Plan Provision
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( ) b. 100% vested after ____ Year(s) of Service (Not to
exceed 3)
(X) c. Same as non-Top Heavy vesting schedule (Must be at
least as favorable as a or b)
( ) d. Other: (Optional vesting schedule must be at least
as favorable as a. or b.)
Year(s) of Service Percent Vesting
------------------ ---------------
Less than 1 _______
1 but less than 2 _______
2 but less than 3 _______
3 but less than 4 _______
4 but less than 5 _______
5 but less than 6 _______
6 but less than 7 _______
7 or More _______
( ) e. Not Applicable-- No Matching Contributions.
6. RE-EMPLOYMENT -- Section 2.4.4 provides that Years of Service completed
after a Break in Service are not counted for purposes of increasing the
vested percentage attributable to service before the Break unless
reemployed within 5 years.
(X) a. Plan Provision
( ) b. Count all service after the Break
( ) c. Not applicable -- 100% immediate vesting
7. FORFEITURES -- Section 2.4.6 provides that forfeitures are determined
as of the last day of the Plan Year in which the Participant's entire
interest is distributed from the Plan.
(X) a. Plan Provision.
( ) b. Determine in Plan Year of 5th consecutive Break in
Service.
( ) c. Determination as of the Valuation Date coincident
with or next following the Distribution Date
( ) d. Not applicable-- All benefits are fully vested. Leave
the remaining items in this Section E blank.
8. FORFEITURES OF NON-ELECTIVE CONTRIBUTIONS shall be applied to (select
all applicable):
( ) a. Supplement Non-Elective Contributions
( ) b. Reduce Non-Elective Contributions
( ) c. Reduce Qualified Non-Elective Contributions
( ) d. Supplement Matching Contributions
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( ) e. Reduce Matching Contributions
9. FORFEITURES OF NON-ELECTIVE CONTRIBUTIONS shall be reallocated to
participants:
( ) a. In the same manner as Non-Elective Contributions
( ) b. In proportion to each participant's Compensation
(X) c. Not applicable. Forfeitures are applied to reduce
contributions.
NOTE: If the Plan provides for permitted disparity,
forfeitures must be allocated under the Plan's
allocation formula.
10. FORFEITURES OF MATCHING CONTRIBUTIONS SHALL BE APPLIED TO: (Select all
applicable)
( ) a. Supplement Matching Contributions
(X) b. Reduce Matching contributions
( ) c. Reduce Qualified Non-Elective contributions
( ) d. Supplement Non-Elective Contributions
( ) e. Reduce Non-Elective Contributions
11. FORFEITURES OF MATCHING CONTRIBUTIONS SHALL BE REALLOCATED to
participants:
( ) a. In the same manner as Non-Elective Contributions
( ) b. In proportion to each participant's Compensation
( ) c. In proportion to Matching Contributions
( ) d. In proportion to Elective Contributions
(X) e. Not applicable. Forfeitures are applied to reduce
contributions.
12. REQUIREMENT TO SHARE IN ALLOCATION OF FORFEITURES -- In order to share
in the allocation of Forfeitures which supplement rather than reduce
other contributions, a Participant: (Select all applicable)
( ) a. Must be eligible to receive an allocation of the
respective type of
contribution, i.e. Matching or Non-elective
( ) b. Must be employed on the date the forfeiture is
determined.
(X) c. Not applicable. Forfeitures reduce contributions.
13. RESTORATION OF FORFEITURES -- If a Participant is entitled to a
restoration of a forfeiture, the amount to be restored shall be
restored by:
( ) a. An additional contribution by the Employer
specifically allocated to the Participant's Account.
(X) b. Allocating other forfeitures arising in the year of
restoration to the Participant's Account to the
extent thereof and an additional contribution by the
Employer specifically allocated to the Participant's
Account to the extent that allocable forfeitures are
insufficient.
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F. CODA LIMITATION PROVISIONS
1. ACTUAL DEFERRAL PERCENTAGES -- Qualified Non-Elective Contributions may
be taken into account for purposes of calculating the ADP-Actual
Deferral Percentages. For purposes of the ADP test in Section 2.7.1,
the amount taken into account shall be:
( ) a. All Qualified Non-Elective Contributions.
(X) b. The Qualified Non-Elective Contributions that are
needed to meet the ADP test.
2. AVERAGE CONTRIBUTION PERCENTAGE -- The amount of Elective Deferrals and
Qualified Non-Elective Contributions taken into account as contribution
percentage amounts for the purpose of calculating the ACP-Average
Contribution Percentage, subject to such other requirements as may be
prescribed by the Secretary of the Treasury, shall be:
For elective deferrals:
( ) a. All such Elective Deferrals.
(X) b. Only those Elective Deferrals that are needed to meet
the Average Contribution Percentage test.
( ) c. Elective Deferrals are not to be included in the ACP
test.
( ) d. Not applicable.
For Qualified Non-Elective Contributions:
( ) e. All such Qualified Non-Elective contributions.
(X) f. Only those Qualified Non-Elective Contributions that
are needed to meet the Average Contribution
Percentage test.
( ) g. Qualified Non-Elective Contributions are not to be
included in the ACP test.
( ) h. Not applicable.
3. EXCESS AGGREGATE CONTRIBUTIONS -- Forfeitures of Excess Aggregate
Contributions pursuant to Section 2.7.7 shall be:
(X) a. Applied to reduce Employer contributions.
( ) b. Allocated, after all other forfeitures under the
Plan, to each Participant's Matching Contribution
Account in the ratio which each Participant's
Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year.
Such forfeitures will not be allocated to the Account
of any Highly Compensated Employee.
G. DISTRIBUTION PROVISIONS
1. FORM OF DISTRIBUTIONS -- Section 2.5.2 provides that the Employer may
elect to permit Plan distributions to be made in the form of: (Select
all applicable)
(X) a. Lump sum without regard to amount.
( ) b. Lump sum but not to exceed $________.
( ) c. Installments over ____ years payable: (Select one or
more)
( ) c.1. annually
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( ) c.2. quarterly
( ) c.3. monthly
( ) d. Installments over a period of years certain selected
by the Participant that is less than the life of the
Participant payable (Select one or more.)
( ) d.1. annually
( ) d.2. quarterly
( ) d.3. monthly
( ) e. An annuity for not more than ____
( ) f. An annuity for the life of: (Select one or more)
( ) f.1. the Participant
( ) f.2. the Participant and spouse
( ) f.3. the Participant and a designated
beneficiary
( ) g. An annuity for ____ years certain and thereafter for
the life of: (Select one or more)
( ) g.1. the Participant
( ) g.2. the Participant and spouse
( ) g.3. the Participant and a designated
beneficiary
( ) h. An annuity for a period certain selected by the
Participant that is less than the life of: (Select
one or more)
( ) h.1. the Participant
( ) h.2. the Participant and spouse
( ) h.3. the Participant and a designated
beneficiary
NOTE: Any number of options may be selected. Once selected,
however, any option may not thereafter be eliminated.
If an annuity option of life or longer is selected
Qualified Joint and Survivor Annuity provisions are
required.
2. SURVIVOR ANNUITY PERCENTAGE -- If a Joint and Survivor Annuity is
payable, Section 1.2.37 provides that the normal survivor annuity is
50% of the amount payable during the joint lives of the participant and
spouse, unless the Employer elects a different percentage (Select one):
( ) a. Plan Provision -- 50%
( ) b. Other Percentage -- ____% (Not less than 50% nor more
than 100%)
( ) c. Other Percentage selected by the Participant (Not
less than 50% or more than 100%
3. TIME OF DISTRIBUTION -- Section 2.5.1(b) provides that distributions
are deferred to Participants who resign or are discharged prior to
retirement until the retirement date unless the employer elects to
permit distributions in advance of such date.
( ) a. Plan Provision without advance distribution election.
(X) b. Distributions may be made at the Participant's
election within a reasonable period following the
Distribution Date.
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4. DISTRIBUTION DATE -- Section 2.4.5 provides that, subject to the
necessity of obtaining the consent of a Participant and spouse, for the
purposes of determining the amount to be distributed, the Distribution
Date:
For a Participant who is not fully vested, is
( ) a. The Anniversary Date coinciding with or following the
date of termination.
(X) b. The Valuation Date coinciding with or following the
date of termination
( ) c. As soon as practical but prior to the Anniversary
Date coinciding with or following the date of
termination, based on the preceding Valuation Date.
( ) d. the ( ) Valuation Date ( ) Anniversary Date
following ____consecutive Breaks in Service
( ) e. The Participant's Normal or Early Retirement Date
For a Participant who is fully vested but who terminates employment
prior to death, total and permanent disability or retirement at his
retirement date is:
( ) a. The Anniversary Date coinciding with or following the
date of termination
(X) b. The Valuation Date coinciding with or following the
date of termination
( ) c. As soon as practical but prior to the Anniversary
Date following the date of termination, based upon
the preceding Valuation Date
( ) d. The Participant's Normal or Early Retirement Date
For a Participant who terminates employment as a result of death, total
and permanent disability or retirement at his retirement date, is:
( ) a. The Anniversary Date coinciding with or following the
date of termination.
(X) b. The Valuation Date coinciding with or following the
date of termination
( ) c. As soon as practical but prior to the Anniversary
Date following the date of termination, based upon
the preceding Valuation Date
In the case of a Participant's interest in an Elective Account,
Voluntary Account or Segregated Account attributable to a rollover
contribution from another plan, notwithstanding the foregoing, the
Distribution Date, is:
( ) a. Not applicable -- The Distribution Date is determined
in the manner
indicated above for the fully vested Participants
( ) b. The Anniversary Date coinciding with or following the
date of termination
(X) c. The Valuation Date coinciding with or following the
date of termination
( ) d. As soon as practical but prior to the Anniversary
Date following the date of termination, based upon
the preceding Valuation Date.
5. HARDSHIP DISTRIBUTIONS -- Section 2.5.5 provides that an Employer may
permit distributions to Participants while employed in the event of
financial hardship as specified in the Plan:
(X) a. Hardship distributions are permitted.
( ) b. Hardship distributions are not permitted.
Hardship Distributions may be made from a Participant's Account as
elected below in c and d, provided that Hardship Distributions of
earnings on elective Deferrals may only be made
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on such earnings credited to the Participant's account as of the end of
the last Plan Year ending before July 1,1989. Therefore, subject to
such limitation, Hardship Distributions may be taken from:
(X) c. all of Participant's Accounts.
( ) d. only the Participant's Account balances attributable
to the following accounts:
( ) d.1. Employer Account
( ) d.2. Qualified Non-Elective Contribution
Account
( ) d.3. Elective Contribution Account
( ) d.4. Matching Account
( ) d.5. Segregated Account (attributable to a
rollover)
( ) d.6. Voluntary Account
6. IN SERVICE DISTRIBUTIONS-- Section 2.5.6 provides that an Employer may
permit distributions to fully vested Participants over the age of 59-
1/2 prior to termination of employment if the amounts withdrawn have
been allocated to the Participant for two (2) or more years or the
Participant has been a Participant for at least five (5)years. (Select
all applicable)
(X) a. Plan Provision.
( ) b. Require that amounts have been allocated for ____
years.(Must be at least 2)
( ) c. Require participation for at least ____ years. (Must
be at least 5)
( ) d. In Service Distributions are permitted upon reaching
Normal Retirement Date
( ) e. In Service Distribution are permitted for amounts
attributable to a rollover from another plan
regardless of age or periods of participation
( ) f. In Service Distributions are not permitted.
7. QUALIFIED DOMESTIC RELATIONS ORDERS -- Section 3.12.9 provides that the
Employer may elect to permit distributions to an alternate payee
pursuant to the terms of a qualified domestic relations order even if
the Participant continues to be employed. (Select one)
( ) a. Distributions to an alternate payee are not permitted
while the Participant continues to be employed.
(X) b. Distributions to an alternate payee are permitted
while the Participant continues to be employed.
H. OTHER ADMINISTRATIVE PROVISIONS
1. EARNINGS -- Section 3.1.2 permits the Employer to specify the manner in
which earnings are allocated to Participants who receive distributions
on any date other than a Valuation Date.
Select any of the following:
( ) a. Earnings will be credited solely as of the
immediately preceding Valuation Date.
(X) b. Actual earnings will be credited to the date of
distribution.
( ) c. Earnings will be credited solely as of the
immediately preceding Valuation Date if distribution
is within ____ days of such Valuation Date and will
be credited to date of distribution otherwise.
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( ) d. Earnings will be credited to the date of distribution
based upon an estimate of earnings equal to ______%
annually.
( ) e. Earnings will be credited to the date of distribution
based upon an estimate of earnings equal to the
average rate of earnings during the preceding
( ) e.1. Valuation Period.
( ) e.2. Plan Year.
( ) e.3. ____ Valuation Periods.
2. LOANS -- Section 3.7.1 provides that the Employer may elect to permit
loans to Participants and Beneficiaries in accordance with a
participant loan program adopted by the Trustee.
(X) a. Loans are permitted.
( ) b. Loans are not permitted.
3. ROLLOVERS -- Section 3.11.3 authorizes the Employer to permit the
transfer of interests in other qualified plans to the Plan.
( ) a. Rollover contributions are not permitted.
( ) b. Rollover contributions are permitted only from other
plans of the Employer
(X) c. Rollover contributions are permitted only by
Employees who have satisfied the conditions for
participation.
( ) d. Rollover contributions are permitted from any
employee even if not otherwise eligible to be a
Participant.
4. INVESTMENT CONTROL -- Section 3.6.5 provides that the Employer may
elect to permit Participants to control the investment of their
Accounts.
( ) a. Participants may not control their investments.
( ) b. Participants may control the investment of their
Accounts if fully vested in the Account.
( ) c. Participants may control the investment of their
Accounts to the extent vested.
(X) d. Participants may control their investments without
regard to their vested interest.
(X) e. Participants may control their investments solely
with respect to amounts attributable to: (Select all
applicable)
( ) e.1. Non-Elective Contributions
(X) e.2. Qualified Non-Elective Contributions
(X) e.3. Elective Contributions
(X) e.4. Matching Contributions
( ) e.5. Voluntary Contributions
(X) e.6. Amounts rolled over and held in a
Segregated Account
5. TOP HEAVY ASSUMPTIONS -- (This question applies only if the Employer
has a Defined Benefit plan.) The interest rate used to establish the
Present Value of Accrued Benefits in order to calculate the top heavy
ratio under IRC Section 416 shall be 7% and the mortality tables used
shall be UP84.
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6. VALUATION DATE -- For purposes of computing the top-heavy ratio, the
Valuation Date is (Select one):
( ) a. the first day of Plan Year.
(X) b. the last day of the Plan Year.
( ) c. Other-- Specify. ___/___ (Must be at least annually)
7. SINGLE PLAN MINIMUM TOP-HEAVY ALLOCATION -- For purposes of minimum
top-heavy allocations, contributions and forfeitures equal to the
following percentage of each non-Key Employee's compensation will be
allocated to the Employee's account when the Plan is top-heavy (Select
one):
(X) a. 3% or the highest percentage allocated to any Key
Employee if less.
( ) b. ______% (Must be at least 3).
8. MULTIPLE PLANS PROVISION -- The Employer which maintains or ever
maintained another qualified defined benefit plan or welfare benefit
fund or individual medical account in which any participant in the Plan
is, was or could become a participant adds the following optional
provision which it deems necessary to satisfy Section 415 or 416 of the
Code because of the required aggregation of multiple plans: (Select
one)
( ) a. Not applicable (No other plan or other plan
terminated prior to the Effective
Date of this Adoption Agreement).
( ) b. A minimum contribution allocation of 5% of each Non-
Key Participant's total compensation shall be
provided in a defined contribution plan of the
Employer.
( ) c. A minimum contribution allocation of 7.5% of each Non
-Key Participant's total compensation shall be
provided in a defined contribution plan of the
Employer.
(X) d. A minimum benefit of 2% (must be at least the
lesser of 2% times years of service or 20%) of each
Non-Key Participant's total compensation shall be
provided in a defined benefit plan of the Employer.
( ) e. A minimum benefit of _____ (must be the lesser of 2%
times years of service or 20%) of each Non-Key
Participant's total compensation shall be provided
in a defined benefit plan of the Employer but offset
by the amount contributed on such participant's
behalf under any defined contribution plan of the
Employer.
( ) f. Other -- Specify.
NOTE: The method selected must preclude Employer discretion
and the Employer must obtain a determination letter
in order to continue reliance on the Plan's qualified
status.
9. MULTIPLE DEFINED CONTRIBUTION PLANS -- If the Participant is covered
under another qualified defined contribution plan maintained by the
Employer, other than a master or prototype plan: (Select one)
(X) a. Not applicable.
-24-
<PAGE> 115
( ) b. The provisions of this Plan limiting annual additions
will apply as if the other plan is a master or
prototype plan.
( ) c. Other -- Specify.
NOTE: Specify the method under which the plans will limit
total annual additions to the maximum permissible
amount, and will properly reduce any excess amounts
in a manner that precludes Employer discretion.
10. TOP HEAVY DUPLICATIONS -- The Employer who maintains two or more
Defined Contribution plans makes the following election:
(X) a. Not applicable.
( ) b. A minimum non-integrated contribution of 3% of each
Non-Key Participant's Compensation shall be provided
by:
( ) b.1. this Plan.
( ) b.2. the following defined contribution
plan:
( ) c. Other -- Specify.
NOTE: The method selected must preclude Employer discretion
and avoid inadvertent omissions, including any
adjustments required under Code Section 415(e). The
Employer must obtain a determination letter in order
to continue reliance on the Plan's qualified status.
11. ANNUAL ADDITION LIMITATION -- If a Participant is or has ever been a
participant in a defined benefit pension plan maintained by the
Employer, Section 3.2.1(c) provides that Annual Additions shall be
limited.
( ) a. Not applicable
(X) b. The contribution to the Plan allocable to the
Participant shall be reduced so that the limitations
are not exceeded.
( ) c. Other -- Specify
NOTE: Specify the method under which the plans will limit
total additions to the maximum permissible amount,
and will properly reduce any excess amounts in a
manner that precludes employer discretion.
12. SECTION 415 COMPENSATION DEFINITION. For purposes of calculating an
Employee's compensation pursuant to Section 3.2.1(h), relating to
limitations on contributions and benefits, Compensation means all of
each Participant's
(X) a. Wages as computed for Wages, Tips, and Other
Compensation Box on Form W-2.
( ) b. Section 3401(a) wages.
( ) c. Section 415 safe harbor compensation.
-25-
<PAGE> 116
The name, address and telephone number of the Plan Sponsor is:
DATAIR Employee Benefit Systems, Inc.
735 N. Cass Avenue
Westmont, IL 60559-1100
(708) 325-2600
Applicable requirements mandate that the use of this Prototype Document be
registered by the Plan Sponsor with the Internal Revenue Service. Unregistered
use may cause the Plan to become disqualified because it may not be maintained
as required bylaw.
The Plan Sponsor will inform the Employer of any amendments made to the Plan or
of the discontinuance or abandonment of the Plan.
NOTE: An employer may not rely on a notification letter issued by the National
Office of the Internal Revenue Service as evidence that the plan as adopted is
qualified under Section 401 of the Internal Revenue Code. In order to obtain
reliance with respect to plan qualification, the employer must apply to the
appropriate key district for a determination letter. This Adoption Agreement may
be used only in conjunction with the DATAIR Mass-Submitter Defined Contribution
Plan and Trust, Revised 05/06/92.
* * *
The Employer and Trustee hereby adopt the Plan and Trust as evidenced by the
foregoing Adoption Agreement on this 16th day of April, 1996.
Employer: Trustee:
The Warwick Savings Bank Timothy A. Dempsey, Trustee
WSB Financial Services, Inc. Ronald J. Gentile, Trustee
Nancy L. Sobotor-Littell, Trustee
Arthur W. Budich, Trustee
Barbara A. Rudy, Trustee
-26-
<PAGE> 117
The Following Amendments to The Warwick Savings Bank 401(k) Savings Plan are
word-for-word identical to the Model Amendments provided in "IRS Revenue
Procedure 96-49 Model Amendments under Section 414(u) of the Internal Revenue
Code, as it appeared in Internal Revenue Bulletin 1996-43, dated October 8,
1996," and are hereby adopted March 1, 1997.
Uniformed Services Employment and Reemployment Rights Act
Model Amendments
Amendment 1:
"Notwithstanding any provision of this plan to the contrary,
contributions, benefits and service credit with respect to qualified
military service will be provided in accordance with section 414(u) of
the Internal Revenue Code."
Amendment 2:
"Loan repayments will be suspended under this plan as permitted under
section 414(u)(4) of the Internal Revenue Code."
--*pp 240X Warning: This amendment will not be effective if this plan
has accepted transfers from a pension plan subsequent to the plan's
most recent determination letter and the adoption of this amendment. In
this case the amendment will be prospective only and the plan will not
have extended reliance. You should read Rev. Rul. 94-76 and Rev. Proc.
96-55 to develop an understanding how this amendment works in
conjunction with your most recent Determination Letter.
The Warwick Savings Bank 401(k) Savings Plan
Money Purchase Plan to Profit Sharing Plan Transfers
Model Amendment
(For all Profit Sharing and 401(k) Plans)
The following Model Plan Amendment is word for word identical to the language
provided in IRS Revenue Procedure 96-55.
This amendment is effective March 1, 1997.
Notwithstanding any provision of this plan to the contrary, to the
extent that any optional form of benefit under this plan permits a
distribution prior to the employee's retirement, death, disability, or
severance from employment and prior to plan termination, the optional
form of benefit is not available with respect to benefits attributable
to assets (including the post-transfer earnings thereon) and
liabilities that are transferred, within the meaning of Section 414(l)
of the Internal Revenue Code, to this plan from a money purchase
pension qualified under Section 401(a) of the Internal Revenue Code
(other than any portion of those assets and liabilities attributable to
voluntary employee contributions).
-27-
<PAGE> 118
THE WARWICK SAVINGS BANK
PROPOSED RESOLUTIONS OF THE
BOARD OF TRUSTEES
OCTOBER 21, 1997
401(K) SAVINGS PLAN
RESOLVED, that in connection with the Conversion, an
additional investment fund (the "Employer Stock Fund") consisting
primarily of shares of Common Stock ("Shares") will be established
under The Warwick Savings Bank 401(k) Savings Plan ("401(k) Savings
Plan"), the purpose of which is to facilitate the investment of a
portion of the 401(k) Savings Plan's assets in Qualifying Employer
Securities as allowable under paragraph 3.6.2(f) of the 401(k) Savings
Plan; and
FURTHER RESOLVED, that 100% of the Employer Matching
Contributions and any Qualified Non-Elective Contributions (as defined
in the 401(k) Savings Plan), if any, made on or after the Effective
Date shall be invested in the Employer Stock Fund; and
FURTHER RESOLVED, that, effective as of the Effective Date,
item H.4.e.4. of the Adoption Agreement for the Datair Mass-Submitter
Prototype NonStandardized Cash or Deferred Profit Sharing Plan and
Trust, as adopted by the Bank on April 16, 1996, shall be modified to
reflect the fact that Participants may no longer control the investment
of their Matching Contributions and Qualified Non-Elective
Contributions on or after the Effective Date; and that a true copy of
item H.4.e.4., as modified, be attached hereto as Exhibit E; and
FURTHER RESOLVED, that effective as of the Effective Date,
subject to such terms and conditions as may be established by the plan
administrator of the 401(k) Savings Plan ("Plan Administrator"), 401(k)
Savings Plan Participants may invest all or a specified portion, in
whole percentages, of their prospective Elective Contributions and
Individual Rollover Contributions in the Employer Stock Fund and may
transfer all or a specified portion, in whole percentages, of their
existing account balances to the Employer Stock Fund; provided,
however, that any 401(k) Savings Plan Participant who elects to
transfer amounts invested in an existing investment option under the
401(k) Savings Plan to the Employer Stock Fund shall bear any deferred
sales charge or similar transaction charges incurred as a result of
such transfer, unless such transfer is mandated by the Plan
Administrator; and
<PAGE> 119
FURTHER RESOLVED, that, following the Effective Date, any
elections to invest in, or transfer funds to, the Employer Stock Fund
may be made once during each calender quarter; and
FURTHER RESOLVED, that each person with investments in the
Employer Stock Fund will have the right to vote the Shares representing
such individual's proportionate interest in the Employer Stock Fund,
provided that such person has an interest in the Employer Stock Fund as
of the Valuation Date coincident with or preceding the applicable
record date, by completing a written direction on a form that will be
provided by the Plan Administrator and filing such direction at least
10 days before the date of the shareholders' meeting with the
independent party selected by the Compensation Committee to tabulate
such directions on a confidential basis and who will instruct the
Trustee to cast affirmative and negative votes in proportion to the
aggregate interests in the Employer Stock Fund of those persons
expressing preferences for affirmative or negative votes, and, with
respect to those Shares for which no voting instructions have been
received, to cast affirmative and negative votes in the same proportion
as those Shares for which votes were received; and
FURTHER RESOLVED, that each person with investments in the
Employer Stock Fund will have the right to decide whether the Shares
representing such individual's proportionate interest in the Employer
Stock Fund will be sold in response to a tender offer, provided that
such individual has an interest in such Fund as of the Valuation Date
coincident with or preceding the first day for delivering Shares or
responding to such offer, by completing a written direction on a form
that will be provided by the Plan Administrator and filing such
direction at least 10 days before the last day for delivering shares or
responding to such offer with the independent party selected by the
Compensation Committee to tabulate such responses on a confidential
basis and who will direct the Trustee to tender for sale a number of
Shares held in the Employer Stock Fund in proportion to the aggregate
interests in the Employer Stock Fund of those persons expressing a
preference to sell shares and, with respect to those Shares for which
no response to such offer has been received, to tender such Shares in
the same proportion as those Shares for which responses to such offer
were received; and
FURTHER RESOLVED, that each person with investments in the
Employer Stock Fund will have the right to exercise dissent and
appraisal rights, provided that such individual has an interest in such
Fund as of the Valuation Date coincident with or immediately preceding
the applicable date for exercising such dissent or appraisal rights, by
completing a written direction on a form that will be provided by the
Plan Administrator and filing such direction at least 10 days prior to
the latest date for exercising such dissent and appraisal rights with
the independent party selected by the Compensation Committee to
tabulate such responses on a confidential basis and who will direct the
Trustee to exercise such dissent and appraisal rights in proportion to
the aggregate interests in the Employer Stock Fund
-2-
<PAGE> 120
of those persons exercising dissent and appraisal rights and, with
respect to Shares for which persons fail to exercise such dissent and
appraisal rights, such rights shall be exercised by the Committee in
its discretion; and
FURTHER RESOLVED, that, subject to such terms and conditions
as may be established by the Plan Administrator, Participants receiving
distributions from the 401(k) Savings Plan who have an interest in the
Employer Stock Fund may elect to receive the portion of such
distribution attributable to such Participant's interests in the
Employer Stock Fund in the form of cash, Shares or a combination of
cash and Shares; and
FURTHER RESOLVED, that the Designated Officers be, and each of
them hereby is, authorized, empowered and directed to negotiate and
enter into an agreement with Marine Midland to serve as trustee of the
assets held in the trust established for the Employer Stock Fund
established for the 401(k) Savings Plan; and
FURTHER RESOLVED, that the trust agreement ("401(k) Trust
Agreement") by and between the Bank and Marine Midland, as trustee for
the Employer Stock Fund, in the form presented at this meeting and
ordered filed with the minutes hereof as Exhibit F, and pursuant to
which the 401(k) Savings Plan Trust will be established ("401(k)
Trust") be, and it hereby is, approved and adopted, to become effective
upon the Effective Date of the Bank's Conversion and Marine Midland be,
and it hereby is, appointed to serve as trustee of the 401(k) Trust;
and
FURTHER RESOLVED, that the Designated Officers be, and each of
them hereby is, authorized, empowered and directed, for and in the name
and on behalf of the Bank, to cause to be prepared, executed and
delivered or filed all such instruments, documents, agreements,
certificates, notices and applications, and to incur all such costs and
to do or cause to be done all such acts and things as they, in their
discretion and upon the advice of counsel, deem necessary, desirable or
appropriate to effect the intent and to accomplish the purposes of each
of the foregoing resolutions, including, but not limited to, preparing
a registration statement to register the Shares and plan interests to
be offered under the 401(k) Savings Plan and a summary of material
modifications to the summary plan description for the 401(k) Savings
Plan, causing the 401(k) Trust Agreement to be amended in any manner
not inconsistent with the intent and purpose of the foregoing
resolutions that does not materially increase the cost of the 401(k)
Savings Plan to the Company and the Bank and executing and delivering
the 401(k) Trust Agreement.
-3-
<PAGE> 121
3. ROLLOVERS - Section 3.11.3 authorizes the Employer to permit the
transfer of interests in other qualified plans to the Plan.
( ) a. Rollover contributions are not permitted.
( ) b. Rollover contributions are permitted only from other plans of
the Employer
(x) c. Rollover contributions are permitted only by Employees who
have satisfied the conditions for participation.
( ) d. Rollover contributions are permitted from any employee even if
not otherwise eligible to be a Participant.
4. INVESTMENT CONTROL - Section 3.6.5 provides that the Employee may elect
to permit Participants to control the investment of their Accounts.
( ) a. Participants may not control their investments.
( ) b. Participants may control the investment of their Accounts if
fully vested in the Account.
( ) c. Participants may control the investment of their Accounts to
the extent vested.
(x) e. Participants may control their investments solely with respect
to amounts attributable to:
(Select all applicable)
( ) e.1 Non-Elective Contributions
( ) e.2 Qualified Non-Elective Contributions
(x) e.3 Elective Contributions
( ) e.4 Matching Contributions
( ) e.5 Voluntary Contributions
(x) e.6 Amounts rolled over and held in a Segregated
Account
Effective Date ______________
5. TOP HEAVY ASSUMPTIONS - (This question applies only if the Employer has
a Defined Benefit plan.) The interest rate used to establish the
Present Value of Accrued Benefits in order to calculate the top heavy
ratio under the IRC Section 416 shall be 7% and the mortality tables
used shall be UP84.
-4-
<PAGE> 1
EXHIBIT 10.3
LOAN AGREEMENT
BY AND BETWEEN
WARWICK COMMUNITY BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
AND
WARWICK COMMUNITY BANCORP, INC.
MADE AND ENTERED INTO AS OF
[ ], 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
<S> <C>
SECTION 1.1 BUSINESS DAY.......................................... 1
SECTION 1.2 CODE.................................................. 1
SECTION 1.3 DEFAULT............................................... 2
SECTION 1.4 ERISA................................................. 2
SECTION 1.5 EVENT OF DEFAULT...................................... 2
SECTION 1.6 FISCAL YEAR........................................... 2
SECTION 1.7 INDEPENDENT COUNSEL................................... 2
SECTION 1.8 LOAN.................................................. 2
SECTION 1.9 LOAN DOCUMENTS........................................ 2
SECTION 1.10 PLEDGE AGREEMENT...................................... 2
SECTION 1.11 PRINCIPAL AMOUNT...................................... 2
SECTION 1.12 PROMISSORY NOTE....................................... 2
SECTION 1.13 REGISTER.............................................. 2
ARTICLE II
THE LOAN; PRINCIPAL AMOUNT;
INTEREST; SECURITY; INDEMNIFICATION
SECTION 2.1 THE LOAN; PRINCIPAL AMOUNT............................ 2
SECTION 2.2 INTEREST.............................................. 3
SECTION 2.3 PROMISSORY NOTE....................................... 4
SECTION 2.4 PAYMENT OF TRUST LOAN................................. 4
SECTION 2.5 PREPAYMENT............................................ 5
SECTION 2.6 METHOD OF PAYMENTS.................................... 5
SECTION 2.7 USE OF PROCEEDS OF LOAN............................... 6
SECTION 2.8 SECURITY.............................................. 7
SECTION 2.9 REGISTRATION OF THE PROMISSORY NOTE................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 3.1 POWER, AUTHORITY, CONSENTS............................ 7
SECTION 3.2 DUE EXECUTION, VALIDITY, ENFORCEABILITY............... 7
SECTION 3.3 PROPERTIES, PRIORITY OF LIENS......................... 7
SECTION 3.4 NO DEFAULTS, COMPLIANCE WITH LAWS..................... 8
SECTION 3.5 PURCHASES OF COMMON STOCK............................. 8
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE LENDER
<S> <C>
SECTION 4.1 POWER, AUTHORITY, CONSENTS..................................... 8
SECTION 4.2 DUE EXECUTION, VALIDITY, ENFORCEABILITY........................ 9
SECTION 4.3 ESOP; CONTRIBUTIONS............................................ 9
SECTION 4.4 TRUSTEE; COMMITTEE............................................. 9
SECTION 4.5 COMPLIANCE WITH LAWS; ACTIONS.................................. 9
SECTION 4.6 EXEMPT LOAN RULES.............................................. 9
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.1 EVENTS OF DEFAULT UNDER LOAN AGREEMENT........................ 10
SECTION 5.2 LENDER'S RIGHTS UPON EVENT OF DEFAULT......................... 10
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1 PAYMENTS DUE TO THE LENDER.................................... 11
SECTION 6.2 PAYMENTS...................................................... 11
SECTION 6.3 SURVIVAL...................................................... 11
SECTION 6.4 MODIFICATIONS, CONSENTS AND WAIVERS; ENTIRE AGREEMENT......... 11
SECTION 6.5 REMEDIES CUMULATIVE........................................... 12
SECTION 6.6 FURTHER ASSURANCES; COMPLIANCE WITH COVENANTS................. 12
SECTION 6.7 NOTICES....................................................... 12
SECTION 6.8 COUNTERPARTS.................................................. 14
SECTION 6.9 CONSTRUCTION; GOVERNING LAW................................... 14
SECTION 6.10 SEVERABILITY.................................................. 14
SECTION 6.11 BINDING EFFECT; NO ASSIGNMENT OR DELEGATION................... 14
EXHIBIT A FORM OF PROMISSORY NOTE............................................... A-1
EXHIBIT B FORM OF PLEDGE AGREEMENT.............................................. B-1
EXHIBIT C FORM OF ASSIGNMENT.................................................... C-1
EXHIBIT D FORM OF IRREVOCABLE PROXY............................................. D-1
</TABLE>
(ii)
<PAGE> 4
LOAN AGREEMENT
This LOAN AGREEMENT ("Loan Agreement") is made and entered
into as of the [ ] day of [ ],1997, by and between the WARWICK COMMUNITY
BANCORP, INC. EMPLOYEE STOCK OWNERSHIP PLAN TRUST ("Borrower"), a trust forming
part of the Warwick Community Bancorp, Inc. Employee Stock Ownership Plan
("ESOP"), acting through and by its Trustee, MARINE MIDLAND BANK ("Trustee"), a
banking corporation organized under the laws of the State of New York and having
an office at 140 Broadway, New York, New York 10005; and WARWICK COMMUNITY
BANCORP, INC. ("Lender"), a corporation organized and existing under the laws of
the state of Delaware, having an office at 18 Oakland Avenue, Warwick, New York
10990-0591.
W I T N E S S E T H :
WHEREAS, the Compensation Committee of the Lender
("Committee") has authorized the Borrower to purchase shares of common stock of
Warwick Community Bancorp, Inc. ("Common Stock"), either directly from Warwick
Community Bancorp, Inc. or in open market purchases in an amount not to exceed
[ ] shares of Common Stock or, if less, shares of Common Stock having an
aggregate purchase price of [ ] ($ );
WHEREAS, the Committee has further authorized the Borrower to
borrow funds from the Lender for the purpose of financing authorized purchases
of Common Stock; and
WHEREAS, the Lender is willing to make a loan to the Borrower
for such purpose;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following definitions shall apply for purposes of this
Loan Agreement, except to the extent that a different meaning is plainly
indicated by the context:
SECTION 1.1 BUSINESS DAY means any day other than a Saturday,
Sunday or other day on which banks are authorized or required to close under
federal law or the laws of the State of New York.
SECTION 1.2 CODE means the Internal Revenue Code of 1986
(including the corresponding provisions of any succeeding law).
<PAGE> 5
SECTION 1.3 DEFAULT means an event or condition which would
constitute an Event of Default. The determination as to whether an event or
condition would constitute an Event of Default shall be determined without
regard to any applicable requirement of notice or lapse of time.
SECTION 1.4 ERISA means the Employee Retirement Income
Security Act of 1974, as amended (including the corresponding provisions of any
succeeding law).
SECTION 1.5 EVENT OF DEFAULT means an event or condition
described in Article 5.
SECTION 1.6 FISCAL YEAR means the fiscal year of Warwick
Community Bancorp.
SECTION 1.7 INDEPENDENT COUNSEL means Thacher Proffitt & Wood
or other counsel mutually satisfactory to both the Lender and the Borrower.
SECTION 1.8 LOAN means the loan described in section 2.1.
SECTION 1.9 LOAN DOCUMENTS means, collectively, this Loan
Agreement, the Promissory Note and the Pledge Agreement and all other documents
now or hereafter executed and delivered in connection with such documents,
including all amendments, modifications and supplements of or to all such
documents.
SECTION 1.10 PLEDGE AGREEMENT means the agreement described in
section 2.8(a).
SECTION 1.11 PRINCIPAL AMOUNT means the face amount of the
Promissory Note, determined as set forth in section 2.1(c).
SECTION 1.12 PROMISSORY NOTE means the promissory note
described in section 2.3.
SECTION 1.13 REGISTER means the register described in section
2.9.
ARTICLE II
THE LOAN; PRINCIPAL AMOUNT;
INTEREST; SECURITY; INDEMNIFICATION
SECTION 2.1 THE LOAN; PRINCIPAL AMOUNT.
(a) The Lender hereby agrees to lend to the Borrower such
amounts, and at such times, as shall be determined under this section 2.1;
provided, however, that in no event shall the aggregate amount lent under this
Loan Agreement from time to time exceed the lesser of (i) [ ] ($ )
or (ii) the aggregate amount paid by the Borrower, exclusive of commissions,
fees and other charges, to purchase [ ] shares of Common Stock.
<PAGE> 6
(b) Subject to the limitations of section 2.1(a), the Borrower
shall determine the amounts borrowed under this Agreement, and the times at
which such borrowings are effected. Each such determination shall be evidenced
in a writing which shall set forth the amount to be borrowed and the date on
which the Lender shall disburse such amount, and such writing shall be furnished
to the Lender by notice from the Borrower. The Lender shall disburse to the
Borrower the amount specified in each such notice on the date specified therein
or, if later, as promptly as practicable following the Lender's receipt of such
notice; provided, however, that the Lender shall have no obligation to disburse
funds pursuant to this Agreement following the occurrence of a Default or an
Event of Default until such time as such Default or Event of Default shall have
been cured.
(c) For all purposes of this Loan Agreement, the Principal
Amount on any date shall be equal to the excess, if any, of:
(i) the aggregate amount disbursed by the Lender
pursuant to section 2.1(b) on or before such date; over
(ii) the aggregate amount of any repayments of such
amounts made before such date.
The Lender shall maintain on the Register a record of, and shall record on the
Promissory Note, the Principal Amount, any changes in the Principal Amount and
the effective date of any changes in the Principal Amount.
SECTION 2.2 INTEREST.
(a) The Borrower shall pay to the Lender interest on the
Principal Amount, for the period commencing on the date of this Loan Agreement
and continuing until the Principal Amount shall be paid in full at the rate of
eight percent (8%) per annum. Interest payable under this Agreement shall be
computed on the basis of a year of 365 days and actual days elapsed (including
the first day but excluding the last) occurring in the period to which the
computation relates.
(b) Except as otherwise provided in this section 2.2(b),
accrued interest on the Principal Amount shall be payable by the Borrower
quarterly in arrears commencing on the last Business Day of the first calendar
quarter to end following the date of this Agreement and continuing on the last
Business Day of each calendar quarter thereafter and upon the payment or
prepayment of such Loan. All interest on the Principal Amount shall be paid by
the Borrower in immediately available funds. The Lender shall remit to the
Borrower, at least three (3) Business Days before the end of each calendar
quarter, a statement of the interest payment due under section 2.2(a) for such
quarter; provided, however, that a delay or failure by the Lender in providing
the Borrower with such statement shall not alter the Borrower's obligation to
make such payment.
(c) Anything in this Loan Agreement or the Promissory Note to
the contrary notwithstanding, the obligation of the Borrower to make payments of
interest shall be subject to
<PAGE> 7
the limitation that payments of interest shall not be required to be made to the
Lender to the extent that the Lender's receipt thereof would not be permissible
under the law or laws applicable to the Lender limiting rates of interest which
may be charged or collected by the Lender. Any such payment referred to in the
preceding sentence shall be made by the Borrower to the Lender on the earliest
interest payment date or dates on which the receipt thereof would be permissible
under the laws applicable to the Lender limiting rates of interest which may be
charged or collected by the Lender. Such deferred interest shall not bear
interest.
SECTION 2.3 PROMISSORY NOTE.
The Loan shall be evidenced by a Promissory Note of the
Borrower in substantially the form of Exhibit A attached hereto, dated the date
hereof, payable to the order of the Lender in the Principal Amount and otherwise
duly completed.
SECTION 2.4 PAYMENT OF TRUST LOAN.
(a) The Principal Amount of the Loan shall be repaid in annual
installments payable on the last Business Day of each Fiscal Year ending after
the date of this Agreement. The amount of each such annual installment shall be
equal to a fraction of the Principal Amount on the due date of such installment,
determined in accordance with the following schedule:
<TABLE>
<CAPTION>
INSTALLMENT DUE ON FRACTION OF OUTSTANDING
LAST BUSINESS DAY OF PRINCIPAL AMOUNT
-------------------- ----------------
FISCAL YEAR ENDING
------------------
IN
--
<S> <C>
1997 1/10
1998 1/10
1999 1/10
2000 1/10
2001 1/10
2002 1/10
2003 1/10
2004 1/10
2005 1/10
2006 1/10
</TABLE>
provided, however, that the Borrower shall not be required to make any payment
of principal due to be made in any Fiscal Year to the extent that (i) following
such payment, the consolidated return on average assets of Warwick Community
Bancorp. Inc. for such Fiscal Year would be less than one-half of one percent
(0.5%) or the consolidated return on average equity for such Fiscal Year would
be less than four percent (4%) or (ii) such payment would not be deductible for
federal income tax purposes for such Fiscal Year under section 404 of the Code.
<PAGE> 8
(b) Any payment not required to made pursuant to the clause
(i) of the proviso in section 2.4(a) shall be deferred to and be payable on the
earlier of the tenth (10th) anniversary of the loan origination date or the last
day of the first Fiscal Year in which such proviso would not apply to alleviate
a requirement of payment; and payment not required to be made pursuant to clause
(ii) of section 2.4(a) shall be deferred to and be payable on the last day of
the first Fiscal Year in which such payment may be made on a tax deductible
basis.
SECTION 2.5 PREPAYMENT.
The Borrower shall be entitled to prepay the Loan in whole or
in part, at any time and from time to time; provided, however, that the Borrower
shall give notice to the Lender of any such prepayment; and provided, further,
that any partial prepayment of the Loan shall be in an amount not less than TEN
THOUSAND DOLLARS ($10,000.00). Any such prepayment shall be: (a) permanent and
irrevocable: (b) accompanied by all accrued interest through the date of such
prepayment; (c) made without premium or penalty; and (d) applied in the inverse
order of the maturity of the installments thereof unless the Lender and the
Borrower agree to apply such prepayments in some other order.
SECTION 2.6 METHOD OF PAYMENTS.
(a) All payments of principal, interest, other charges
(including indemnities) and other amounts payable by the Borrower hereunder
shall be made in lawful money of the United States, in immediately available
funds, to the Lender at the address specified in or pursuant to this Loan
Agreement for notices to the Lender, not later than 3:00 P.M., New York time, on
the date on which such payment shall become due. Any such payment made on such
date but after such time shall, if the amount paid bears interest, and except as
expressly provided to the contrary herein, be deemed to have been made on, and
interest shall continue to accrue and be payable thereon until, the next
succeeding Business Day. If any payment of principal or interest becomes due on
a day other than a Business Day, such payment may be made on the next succeeding
Business Day, and when paid, such payment shall include interest to the day on
which such payment is in fact made.
(b) Notwithstanding anything to the contrary contained in this
Loan Agreement or the Promissory Note, neither the Borrower nor the Trustee
shall be obligated to make any payment, repayment or prepayment on the
Promissory Note or take or refrain from taking any other action hereunder or
under the Promissory Note if doing so would cause the ESOP to cease to be an
employee stock ownership plan within the meaning of section 4975(e)(7) of the
Code or qualified under section 401(a) of the Code or cause the Borrower to
cease to be a tax exempt trust under section 501(a) of the Code or if such act
or failure to act would cause the Borrower or the Trustee to engage in any
"prohibited transaction" as such term is defined in section 4975(c) of the Code
and the regulations promulgated thereunder which is not exempted by section
4975(c)(2) or (d) of the Code and the regulations promulgated thereunder or in
section 406 of ERISA and the regulations promulgated thereunder which is not
exempted by section 408(b) of ERISA and the regulations promulgated thereunder;
provided, however, that in each case, the Borrower or the Trustee or both, as
the case may be, may act or refrain from acting pursuant to this section 2.6(b)
on the basis of an opinion of Independent Counsel. The Borrower and the Trustee
may consult
<PAGE> 9
with Independent Counsel, and any opinion of such Independent Counsel shall be
full and complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance with such
opinion of Independent Counsel. Nothing contained in this section 2.6(b) shall
be construed as imposing a duty on either the Borrower or the Trustee to consult
with Independent Counsel. Any obligation of the Borrower or the Trustee to make
any payment, repayment or prepayment on the Promissory Note or to take or
refrain from taking any other act hereunder or under the Promissory Note which
is excused pursuant to this section 2.6(b) shall be considered a binding
obligation of the Borrower or the Trustee, or both, as the case may be, for the
purposes of determining whether a Default or Event of Default has occurred
hereunder or under the Promissory Note and nothing in this section 2.6(b) shall
be construed as providing a defense to any remedies otherwise available upon a
Default or an Event of Default hereunder (other than the remedy of specific
performance).
SECTION 2.7 USE OF PROCEEDS OF LOAN.
The entire proceeds of the Loan shall be used solely for
acquiring shares of Common Stock, and for no other purpose whatsoever.
SECTION 2.8 SECURITY.
(a) In order to secure the due payment and performance by the
Borrower of all of its obligations under this Loan Agreement, simultaneously
with the execution and delivery of this Loan Agreement by the Borrower, the
Borrower shall:
(i) pledge to the Lender as Collateral (as defined in the
Pledge Agreement), and grant to the Lender a first priority lien on and
security interest in, the Common Stock purchased with the Principal
Amount, by the execution and delivery to the Lender of a Pledge
Agreement in the form attached hereto as Exhibit B; and
(ii) execute and deliver, or cause to be executed and
delivered, such other agreements, instruments and documents as the
Lender may reasonably require in order to effect the purposes of the
Pledge Agreement and this Loan Agreement.
(b) The Lender shall release from encumbrance under the Pledge
Agreement and transfer to the Borrower, as of the date on which any payment or
prepayment of the Principal Amount is made, a number of shares of Common Stock
held as Collateral pursuant to section 6.4 of the ESOP.
SECTION 2.9 REGISTRATION OF THE PROMISSORY NOTE.
(a) The Lender shall maintain a Register providing for the
registration of the Principal Amount and any stated interest and of transfer and
exchange of the Promissory Note. Transfer of the Promissory Note may be effected
only by the surrender of the old instrument and either the reissuance by the
Borrower of the old instrument to the new holder or the issuance by
<PAGE> 10
the Borrower of a new instrument to the new holder. The old Promissory Note so
surrendered shall be cancelled by the Lender and returned to the Borrower after
such cancellation.
(b) Any new Promissory Note issued pursuant to section 2.9(a)
shall carry the same rights to interest (unpaid and to accrue) carried by the
Promissory Note so transferred or exchanged so that there will not be any loss
or gain of interest on the note surrendered. Such new Promissory Note shall be
subject to all of the provisions and entitled to all of the benefits of this
Agreement. Prior to due presentment for registration or transfer, the Borrower
may deem and treat the registered holder of any Promissory Note as the holder
thereof for purposes of payment and all other purposes. A notation shall be made
on each new Promissory Note of the amount of all payments of principal and
interest theretofore paid.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower hereby represents and warrants to the Lender as
follows:
SECTION 3.1 POWER, AUTHORITY, CONSENTS.
The Borrower has the power to execute, deliver and perform
this Loan Agreement, the Promissory Note and the Pledge Agreement, all of which
have been duly authorized by all necessary and proper corporate or other action.
SECTION 3.2 DUE EXECUTION, VALIDITY, ENFORCEABILITY.
Each of the Loan Documents, including, without limitation,
this Loan Agreement, the Promissory Note and the Pledge Agreement, have been
duly executed and delivered by the Borrower; and each constitutes the valid and
legally binding obligation of the Borrower, enforceable in accordance with its
terms.
SECTION 3.3 PROPERTIES, PRIORITY OF LIENS.
The liens which have been created and granted by the Pledge
Agreement constitute valid, first liens on the properties and assets covered by
the Pledge Agreement, subject to no prior or equal lien.
SECTION 3.4 NO DEFAULTS, COMPLIANCE WITH LAWS.
The Borrower is not, to the actual knowledge of the Trustee,
in default in any material respect under any agreement, ordinance, resolution,
decree, bond, note, indenture, order or judgment to which it is a party or by
which it is bound, or any other agreement or other instrument by which any of
the properties or assets owned by it is materially affected.
<PAGE> 11
SECTION 3.5 PURCHASES OF COMMON STOCK.
Upon consummation of any purchase of Common Stock by the
Borrower with the proceeds of the Loan, the Borrower shall acquire valid, legal
and marketable title to all of the Common Stock so purchased, free and clear of
any liens, other than a pledge to the Lender of the Common Stock so purchased
pursuant to the Pledge Agreement. To the actual knowledge of the Trustee, (a)
neither the execution and delivery of the Loan Documents nor the performance of
any obligation thereunder violates any provision of law or conflicts with or
results in a breach of or creates (with or without the giving of notice or lapse
of time, or both) a default under any agreement to which the Borrower is a party
or by which it is bound or any of its properties is affected, and (b) no consent
of any federal, state or local governmental authority, agency or other
regulatory body, the absence of which could have a materially adverse effect on
the Borrower or the Trustee, is or was required to be obtained in connection
with the execution, delivery or performance of the Loan Documents and the
transactions contemplated therein or in connection therewith, including, without
limitation, with respect to the transfer of the shares of Common Stock purchased
with the proceeds of the Loan pursuant thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE LENDER
The Lender hereby represents and warrants to the Borrower as
follows:
SECTION 4.1 POWER, AUTHORITY, CONSENTS.
The Lender has the power to execute, deliver and perform this
Loan Agreement, the Pledge Agreement and all documents executed by the Lender in
connection with the Loan, all of which have been duly authorized by all
necessary and proper corporate or other action. No consent, authorization or
approval or other action by any governmental authority or regulatory body, and
no notice by the Lender to, or filing by the Lender with, any governmental
authority or regulatory body is required for the due execution, delivery and
performance of this Loan Agreement.
SECTION 4.2 DUE EXECUTION, VALIDITY, ENFORCEABILITY.
This Loan Agreement and the Pledge Agreement have been duly
executed and delivered by the Lender; and each constitutes a valid and legally
binding obligation of the Lender, enforceable in accordance with its terms.
SECTION 4.3 ESOP; CONTRIBUTIONS.
The ESOP and the Borrower have been duly created, organized
and maintained by the Lender in compliance with all applicable laws, regulations
and rulings. The ESOP qualifies
<PAGE> 12
as an "employee stock ownership plan" as defined in section 4975(e)(7) the Code.
The ESOP provides that the Lender may make contributions to the ESOP in an
amount necessary to enable the Trustee to amortize the Loan in accordance with
the terms of the Promissory Note and this Loan Agreement, and the Lender will
make such contributions; provided, however, that no such contributions shall be
required if they would adversely affect the qualification of the ESOP under
section 401(a) of the Code.
SECTION 4.4 TRUSTEE; COMMITTEE.
The Lender has taken such action as is required to be taken by
it to duly appoint the Trustee and the members of the Committee. The Lender
expressly acknowledges and agrees that this Loan Agreement, the Promissory Note
and the Pledge Agreement are being executed by the Trustee not in its individual
capacity but solely as trustee of and on behalf of the Borrower.
SECTION 4.5 COMPLIANCE WITH LAWS; ACTIONS.
Neither the execution and delivery by the Lender of this Loan
Agreement or any instruments required thereby, nor compliance with the terms and
provisions of any such documents by the Lender, constitutes a violation of any
provision of any law or any regulation, order, writ, injunction or decree or any
court or governmental instrumentality, or an event of default under any
agreement, to which the Lender is a party or by which the Lender is bound or to
which the Lender is subject, which violation or event of default would have a
material adverse effect on the Lender. There is no action or proceeding pending
or threatened against either of the ESOP or the Borrower before any court or
administrative agency.
SECTION 4.6 EXEMPT LOAN RULES.
The Loan will be an "exempt loan," as that phrase is defined
in Treasury Regulation section 54.4975-7 and Department of Labor Regulation
section 2550.408b-3, and the transactions contemplated by the Loan Documents are
not nonexempt "prohibited transactions" under section 4975 of the Code and
section 406 of ERISA.
<PAGE> 13
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.1 EVENTS OF DEFAULT UNDER LOAN AGREEMENT.
Each of the following events shall constitute an "Event of
Default" hereunder:
(a) Failure to make any payment or mandatory prepayment of
principal of the Promissory Note when due, or failure to make any payment of
interest on the Promissory Note not later than five (5) Business Days after the
date when due.
(b) Failure by the Borrower to perform or observe any term,
condition or covenant of this Loan Agreement or of any of the other Loan
Documents, including, without limitation, the Promissory Note and the Pledge
Agreement; provided, however, that such failure is not cured by the Borrower
within five (5) Business Days after notice of such failure is provided to the
Borrower by the Lender.
(c) Any representation or warranty made in writing to the
Lender in any of the Loan Documents or any certificate, statement or report made
or delivered in compliance with this Loan Agreement, shall have been false or
misleading in any material respect when made or delivered.
SECTION 5.2 LENDER'S RIGHTS UPON EVENT OF DEFAULT.
If an Event of Default under this Loan Agreement shall occur
and be continuing, the Lender shall have no rights to assets of the Borrower
other than: (a) contributions (other than contributions of Common Stock) that
are made by the Lender to enable the Borrower to meet its obligations pursuant
to this Loan Agreement and earnings attributable to the investment of such
contributions and (b) "Eligible Collateral" (as defined in the Pledge
Agreement); provided, however, that: (i) the value of the Borrower's assets
transferred to the Lender following an Event of Default in satisfaction of the
due and unpaid amount of the Loan shall not exceed the amount in default
(without regard to amounts owing solely as a result of any acceleration of the
Loan); (ii) the Borrower's assets shall be transferred to the Lender following
an Event of Default only to the extent of the failure of the Borrower to meet
the payment schedule of the Loan; and (iii) all rights of the Lender to the
Common Stock purchased with the proceeds of the Loan covered by the Pledge
Agreement following an Event of Default shall be governed by the terms of the
Pledge Agreement.
<PAGE> 14
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1 PAYMENTS DUE TO THE LENDER.
If any amount is payable by the Borrower to the Lender
pursuant to any indemnity obligation contained herein, then the Borrower shall
pay, at the time or times provided therefor, any such amount and shall indemnify
the Lender against and hold it harmless from any loss or damage resulting from
or arising out of the nonpayment or delay in payment of any such amount. If any
amounts as to which the Borrower has so indemnified the Lender hereunder shall
be assessed or levied against the Lender, the Lender may notify the Borrower and
make immediate payment thereof, together with interest or penalties in
connection therewith, and shall thereupon be entitled to and shall receive
immediate reimbursement therefor from the Borrower, together with interest on
each such amount as provided in section 2.2(c). Notwithstanding any other
provision contained in this Loan Agreement, the covenants and agreements of the
Borrower contained in this section 6.1 shall survive: (a) payment of the
Promissory Note and (b) termination of this Loan Agreement.
SECTION 6.2 PAYMENTS.
All payments hereunder and under the Promissory Note shall be
made without set-off or counterclaim and in such amounts as may be necessary in
order that all such payments shall not be less than the amounts otherwise
specified to be paid under this Loan Agreement and the Promissory Note, subject
to any applicable tax withholding requirements. Upon payment in full of the
Promissory Note, the Lender shall mark such Promissory Note "Paid" and return it
to the Borrower.
SECTION 6.3 SURVIVAL.
All agreements, representations and warranties made herein
shall survive the delivery of this Loan Agreement and the Promissory Note.
SECTION 6.4 MODIFICATIONS, CONSENTS AND WAIVERS; ENTIRE
AGREEMENT.
No modification, amendment or waiver of or with respect to any
provision of this Loan Agreement, the Promissory Note, the Pledge Agreement, or
any of the other Loan Documents, nor consent to any departure from any of the
terms or conditions thereof, shall in any event be effective unless it shall be
in writing and signed by the party against whom enforcement thereof is sought.
Any such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No consent to or demand on a party in any case
shall, of itself, entitle it to any other or further notice or demand in similar
or other circumstances. This Loan Agreement embodies the entire agreement and
understanding between the Lender and the Borrower and supersedes all prior
agreements and understandings relating to the subject matter hereof.
<PAGE> 15
SECTION 6.5 REMEDIES CUMULATIVE.
Each and every right granted to the Lender hereunder or under
any other document delivered hereunder or in connection herewith, or allowed it
by law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of the Lender or the holder of the Promissory Note to
exercise, and no delay in exercising, any right shall operate as a waiver
thereof, nor shall any single or partial exercise of any right preclude any
other or future exercise thereof or the exercise of any other right. The due
payment and performance of the obligations under the Loan Documents shall be
without regard to any counterclaim, right of offset or any other claim
whatsoever which the Borrower may have against the Lender and without regard to
any other obligation of any nature whatsoever which the Lender may have to the
Borrower, and no such counterclaim or offset shall be asserted by the Borrower
in any action, suit or proceeding instituted by the Lender for payment or
performance of such obligations.
SECTION 6.6 FURTHER ASSURANCES; COMPLIANCE WITH COVENANTS.
At any time and from time to time, upon the request of the
Lender, the Borrower shall execute, deliver and acknowledge or cause to be
executed, delivered and acknowledged, such further documents and instruments and
do such other acts and things as the Lender may reasonably request in order to
fully effect the terms of this Loan Agreement, the Promissory Note, the Pledge
Agreement, the other Loan Documents and any other agreements, instruments and
documents delivered pursuant hereto or in connection with the Loan.
SECTION 6.7 NOTICES.
Except as otherwise specifically provided for herein, all
notices, requests, reports and other communications pursuant to this Loan
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger service or sent by registered or certified mail, return receipt
requested, except for routine reports delivered in compliance with Article VI
hereof which may be sent by ordinary first-class mail) or telex or facsimile,
addressed as follows:
(a) If to the Borrower:
Warwick Community Bancorp, Inc.
Employee Stock Ownership Plan Trust
c/o The Warwick Savings Bank
18 Oakland Avenue
Warwick, New York 10990-0591
Attention: Mr. Timothy A. Dempsey
President and Chief Executive Officer
-------------------------------------
<PAGE> 16
with copies to:
Marine Midland Bank
140 Broadway
New York, New York 10005
Attention: Mr. Richard A. Glover
Vice President
---------------------
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: Douglas J. McClintock, Esq.
---------------------------
Helm, Shapiro, Anito & McCale, P.C.
20 Corporate Woods Boulevard
Albany, New York 12211-2350
Attention: Brian P. Goldstein, Esq.
------------------------
(b) If to the Lender:
Warwick Community Bancorp, Inc.
18 Oakland Avenue
Warwick, New York 10990-0591
Attention: Mr. Timothy A. Dempsey
President and Chief Executive Officer
-------------------------------------
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: Douglas J. McClintock, Esq.
---------------------------
Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand or by commercial messenger
service, or sent by telex or facsimile, to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail, postage prepaid, addressed as aforesaid. Any party may change the
person or address to whom or which notices are to be given hereunder, by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have been given only when actually received by the party to whom it is
addressed.
SECTION 6.8 COUNTERPARTS.
This Loan Agreement may be signed in any number of
counterparts which, when taken together, shall constitute one and the same
document.
<PAGE> 17
SECTION 6.9 CONSTRUCTION; GOVERNING LAW.
The headings used in the table of contents and in this Loan
Agreement are for convenience only and shall not be deemed to constitute a part
hereof. All uses herein of any gender or of singular or plural terms shall be
deemed to include uses of the other genders or plural or singular terms, as the
context may require. All references in this Loan Agreement to an Article or
section shall be to an Article or section of this Loan Agreement, unless
otherwise specified. This Loan Agreement, the Promissory Note, the Pledge
Agreement and the other Loan Documents shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
SECTION 6.10 SEVERABILITY.
Wherever possible, each provision of this Loan Agreement shall
be interpreted in such manner as to be effective and valid under applicable law;
however, the provisions of this Loan Agreement are severable, and if any clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision in this Loan Agreement in any jurisdiction. Each of
the covenants, agreements and conditions contained in this Loan Agreement is
independent, and compliance by a party with any of them shall not excuse
non-compliance by such party with any other. The Borrower shall not take any
action the effect of which shall constitute a breach or violation of any
provision of this Loan Agreement.
SECTION 6.11 BINDING EFFECT; NO ASSIGNMENT OR DELEGATION.
This Loan Agreement shall be binding upon and inure to the
benefit of the Borrower and its successors and the Lender and its successors and
assigns. The rights and obligations of the Borrower under this Agreement shall
not be assigned or delegated without the prior written consent of the Lender,
and any purported assignment or delegation without such consent shall be void.
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed as of the date first above written.
WARWICK COMMUNITY BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
BY: MARINE MIDLAND BANK, AS TRUSTEE
BY: _________________________________
TITLE: _________________________________
WARWICK COMMUNITY BANCORP, INC.
BY: _________________________________
TITLE: _________________________________
<PAGE> 19
EXHIBIT A
TO LOAN AGREEMENT
BY AND BETWEEN
WARWICK COMMUNITY BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
AND
WARWICK COMMUNITY BANCORP, INC.
FORM OF PROMISSORY NOTE
$[ ] Warwick, New York
PRINCIPAL AMOUNT [ ], 1997
FOR VALUE RECEIVED, the undersigned, Warwick Community
Bancorp, Inc. Employee Stock Ownership Plan Trust ("Borrower"), acting by and
through its Trustee, Marine Midland Bank ("Trustee"), hereby promises to pay to
the order of Warwick Community Bancorp, Inc. ("Lender") [ ($ )]
payable in accordance with the Loan Agreement made and entered into between the
Borrower and the Lender as of [ ], 1997 ("Loan Agreement") pursuant to
which this Promissory Note is issued, in ten annual installments of $[ ],
commencing on the last Business Day of December, 1997 and continuing on the last
Business Day of December of each calendar year until the last Business Day of
December, 2006, at which time the entire Principal Amount then outstanding and
all accrued interest shall become due and payable; provided, however, that the
Borrower shall not be required to make any payment of principal due to be made
in any Fiscal Year to the extent that (i) following such payment, the
consolidated return on average assets of Warwick Community Bancorp, Inc. for
such Fiscal Year would be less than one-half of one percent (0.5%) or the
consolidated return on average equity for such Fiscal Year would be less than
four percent (4%) or (ii) such payment would not be deductible for federal
income tax purposes for such Fiscal Year under section 404 of the Code. Any
payment not required to be made pursuant to the clause (i) of the above
provision shall be deferred to and be payable on the earlier of the tenth (10th)
anniversary of the loan origination date or the last day of the first Fiscal
Year in which such proviso would not apply to alleviate a requirement of
payment; and payment not required to be made pursuant to clause (ii) of the
above proviso shall be deferred to and be payable on the last day of the first
Fiscal Year in which such payment may be made on a tax deductible basis.
This Promissory Note shall bear interest at the rate per annum
set forth or established under the Loan Agreement, such interest to be payable
quarterly in arrears, commencing on December 31, 1997 and thereafter on the
last Business Day of each calendar quarter and upon payment or prepayment of
this Promissory Note.
Anything herein to the contrary notwithstanding, the
obligation of the Borrower to make payments of interest shall be subject to the
limitation that payments of interest shall not be required to be made to the
Lender to the extent that the Lender's receipt thereof would not be permissible
under the law or laws applicable to the Lender limiting rates of interest which
may be
<PAGE> 20
A-2
charged or collected by the Lender. Any such payments of interest which are not
made as a result of the limitation referred to in the preceding sentence shall
be made by the Borrower to the Lender on the earliest interest payment date or
dates on which the receipt thereof would be permissible under the laws
applicable to the Lender limiting rates of interest which may be charged or
collected by the Lender. Such deferred interest shall not bear interest.
Payments of both principal and interest on this Promissory
Note are to be made at the principal office of the Lender at 18 Oakland Avenue,
Warwick, New York 10990-0591 or such other place as the holder hereof shall
designate to the Borrower in writing, in lawful money of the United States of
America in immediately available funds.
Failure to make any payment of principal on this Promissory
Note when due, or failure to make any payment of interest on this Promissory
Note not later than five (5) Business Days after the date when due, shall
constitute a default hereunder, whereupon the principal amount of and accrued
interest on this Promissory Note shall immediately become due and payable in
accordance with the terms of the Loan Agreement.
This Promissory Note is subject, in all respects, to the terms
and provisions of the Loan Agreement, which is incorporated herein by this
reference, and is secured by a Pledge Agreement between the Borrower and the
Lender of even date herewith and is entitled to the benefits thereof.
WARWICK COMMUNITY BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
BY: MARINE MIDLAND BANK, AS TRUSTEE
AND NOT IN ANY OTHER CAPACITY
BY: ____________________________________
TITLE: _________________________________
<PAGE> 21
EXHIBIT B
TO LOAN AGREEMENT
BY AND BETWEEN
WARWICK COMMUNITY BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
AND
WARWICK COMMUNITY BANCORP, INC.
FORM OF PLEDGE AGREEMENT
This PLEDGE AGREEMENT ("Pledge Agreement") is made as of the
[ ] day of [ ], 1997, by and between the WARWICK COMMUNITY BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST, acting by and through its Trustee, MARINE
MIDLAND BANK, a banking corporation organized under the laws of the State of New
York and having office at 140 Broadway, New York, New York 10005 ("Pledgor"),
and Warwick Community Bancorp, Inc., corporation organized and existing under
the laws of the State of New York, having an office at 18 Oakland Avenue,
Warwick, New York 10990-0591 ("Pledgee").
W I T N E S S E T H :
WHEREAS, this Pledge Agreement is being executed and delivered
to the Pledgee pursuant to the terms of a Loan Agreement of even date herewith
("Loan Agreement"), by and between the Pledgor and the Pledgee;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and in the Loan Agreement, the parties hereto do hereby
covenant and agree as follows:
SECTION 1. DEFINITIONS. The following definitions shall apply
for purposes of this Pledge Agreement, except to the extent that a different
meaning is plainly indicated by the context; all capitalized terms used but not
defined herein shall have the respective meanings assigned to them in the Loan
Agreement:
(a) Collateral shall mean the Pledged Shares and, subject to
section 5 hereof, and to the extent permitted by applicable law, all
rights with respect thereto, and all proceeds of such Pledged Shares
and rights.
(b) Event of Default shall mean an event so defined in the
Loan Agreement.
(c) Liabilities shall mean all the obligations of the Pledgor
to the Pledgee, howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent, now or hereafter existing, or due
or to become due, under the Loan Agreement and the Promissory Note.
<PAGE> 22
B-2
(d) Pledged Shares shall mean all the shares of Common Stock
of Warwick Community Bancorp, Inc. purchased by the Pledgor with the
proceeds of the loan made by the Pledgee to the Pledgor pursuant to the
Loan Agreement, but excluding any such shares previously released
pursuant to section 4.
SECTION 2. PLEDGE. To secure the payment of and performance of
all the Liabilities, the Pledgor hereby pledges to the Pledgee, and grants to
the Pledgee a security interest in and lien upon, the Collateral.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The
Pledgor represents, warrants, and covenants to the Pledgee as follows:
(a) the execution, delivery and performance of this Pledge
Agreement and the pledging of the Collateral hereunder do not and will
not conflict with, result in a violation of, or constitute a default
under any agreement binding upon the Pledgor;
(b) the Pledged Shares are and will continue to be owned by
the Pledgor free and clear of any liens or rights of any other person
except the lien hereunder and under the Loan Agreement in favor of the
Pledgee, and the security interest of the Pledgee in the Pledged Shares
and the proceeds thereof is and will continue to be prior to and senior
to the rights of all others;
(c) this Pledge Agreement is the legal, valid, binding and
enforceable obligation of the Pledgor in accordance with its terms;
(d) the Pledgor shall, from time to time, upon request of the
Pledgee, promptly deliver to the Pledgee such stock powers, proxies,
and similar documents, satisfactory in form and substance to the
Pledgee, with respect to the Collateral as the Pledgee may reasonably
request; and
(e) subject to the first sentence of section 4(b), the Pledgor
shall not, so long as any Liabilities are outstanding, sell, assign,
exchange, pledge or otherwise transfer or encumber any of its rights in
and to any of the Collateral.
SECTION 4. ELIGIBLE COLLATERAL.
(a) As used herein the term "Eligible Collateral" shall mean
that amount of Collateral which has an aggregate fair market value equal to the
amount by which the Pledgor is in default (without regard to any amounts owing
solely as the result of an acceleration of the Loan Agreement) or such lesser
amount of Collateral as may be required pursuant to section 2 of this Pledge
Agreement.
(b) The Pledged Shares shall be released from this Pledge
Agreement in a manner conforming to the requirements of Treasury Regulations
Section 54.4975-7(b)(8), as the same may be from time to time amended or
supplemented, and section 6.4(a) of the ESOP.
<PAGE> 23
B-3
Subject to such Regulations, the Pledgee may from time to time, after any
Default or Event of Default, and without prior notice to the Pledgor, transfer
all or any part of the Eligible Collateral into the name of the Pledgee or its
nominee, with or without disclosing that such Eligible Collateral is subject to
any rights of the Pledgor and may from time to time, whether before or after any
of the Liabilities shall become due and payable, without notice to the Pledgor,
take all or any of the following actions: (i) notify the parties obligated on
any of the Eligible Collateral to make payment to the Pledgee of any amounts due
or to become due thereunder, (ii) release or exchange all or any part of the
Eligible Collateral, or compromise or extend or renew for any period (whether or
not longer than the original period) any obligations of any nature of any party
with respect thereto, and (iii) take control of any proceeds of the Eligible
Collateral.
SECTION 5. DELIVERY.
(a) The Pledgor shall deliver to the Pledgee upon execution of
this Pledge Agreement (i) an assignment by the Pledgor of all the Pledgor's
rights to and interest in the Pledged Shares and (ii) an irrevocable proxy, in
form and substance satisfactory to the Pledgee, signed by the Pledgor with
respect to the Pledged Shares.
(b) So long as no Default or Event of Default shall have
occurred and be continuing, (i) the Pledgor shall be entitled to exercise any
and all voting and other rights pertaining to the Collateral or any part thereof
for any purpose not inconsistent with the terms of this Pledge Agreement, and
(ii) the Pledgor shall be entitled to receive any and all cash dividends or
other distributions paid in respect of the Collateral.
SECTION 6. EVENTS OF DEFAULT.
(a) If a Default or an Event of Default shall be existing, in
addition to the rights it may have under the Loan Agreement, the Promissory Note
and this Pledge Agreement, or by virtue of any other instrument, (i) the Pledgee
may exercise, with respect to the Eligible Collateral, from time to time any
rights and remedies available to it under the Uniform Commercial Code as in
effect from time to time in the State of New York or otherwise available to it
and (ii) the Pledgee shall have the right, for and in the name, place and stead
of the Pledgor, to execute endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or any of the Eligible
Collateral. Written notification of intended disposition of any of the Eligible
Collateral shall be given by the Pledgee to the Pledgor at least three (3)
Business Days before such disposition. Subject to section 13 below, any proceeds
of any disposition of Eligible Collateral may be applied by the Pledgee to the
payment of expenses in connection with the Eligible Collateral, including,
without limitation, reasonable attorneys' fees and legal expenses, and any
balance of such proceeds may be applied by the Pledgee toward the payment of
such of the Liabilities as are in Default, and in such order of application, as
the Pledgee may from time to time elect. No action of the Pledgee permitted
hereunder shall impair or affect its rights in and to the Eligible Collateral.
All rights and remedies of the Pledgee expressed hereunder are in addition to
all other rights and remedies possessed by it, including, without limitation,
those contained in the documents referred to in the definition of Liabilities in
section 1 hereof.
<PAGE> 24
B-4
(b) In any sale of any of the Eligible Collateral after a
Default or an Event of Default shall have occurred, the Pledgee is hereby
authorized to comply with any limitation or restriction in connection with such
sale as it may be advised by counsel is necessary in order to avoid any
violation of applicable law (including, without limitation, compliance with such
procedures as may restrict the number of prospective bidders and purchasers or
further restrict such prospective bidders or purchasers to persons who will
represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such Eligible
Collateral), or in order to obtain such required approval of the sale or of the
purchase by any governmental regulatory authority or official, and the Pledgor
further agrees that such compliance shall not result in such sale's being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall the Pledgee be liable or accountable to the Pledgor for any discount
allowed by reason of the fact that such Eligible Collateral is sold in
compliance with any such limitation or restriction.
SECTION 7. PAYMENT IN FULL. Upon the payment in full of all
outstanding Liabilities, this Pledge Agreement shall terminate and the Pledgee
shall forthwith assign, transfer and deliver to the Pledgor, against receipt and
without recourse to the Pledgee, all Collateral then held by the Pledgee
pursuant to this Pledge Agreement.
SECTION 8. NO WAIVER. No failure or delay on the part of the
Pledgee in exercising any right or remedy hereunder or under any other document
which confers or grants any rights in the Pledgee in respect of the Liabilities
shall operate as a waiver thereof nor shall any single or partial exercise of
any such right or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy of the Pledgee.
SECTION 9. BINDING EFFECT; NO ASSIGNMENT OR DELEGATION. This
Pledge Agreement shall be binding upon and inure to the benefit of the Pledgor,
the Pledgee and their respective successors and assigns, except that the
Pledgor may not assign or transfer its rights hereunder without the prior
written consent of the Pledgee (which consent shall not unreasonably be
withheld). Each duty or obligation of the Pledgor to the Pledgee pursuant to the
provisions of this Pledge Agreement shall be performed in favor of any person or
entity designated by the Pledgee, and any duty or obligation of the Pledgee to
the Pledgor may be performed by any other person or entity designated by the
Pledgee.
SECTION 10. GOVERNING LAW. Except to the extent preempted by
federal law, this Pledge Agreement shall be governed by and construed in
accordance with the laws of the State of New York and interpreted without regard
to conflicts of law principles.
SECTION 11. NOTICES. All notices, requests, instructions or
documents hereunder shall be in writing and delivered personally or sent by
United States mail, registered or certified, return receipt requested, with
proper postage prepaid, as follows:
<PAGE> 25
B-5
(a) If to the Pledgee:
Warwick Community Bancorp, Inc.
18 Oakland Avenue
Warwick, New York 10990-0591
Attention: Mr. Timothy A. Dempsey
President and Chief Executive Officer
-------------------------------------
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center, 38th Floor
New York, New York 10048
Attention: Douglas J. McClintock, Esq.
---------------------------
(b) If to the Pledgor:
Warwick Community Bancorp, Inc.
Employee Stock Ownership Plan Trust
c/o The Warwick Savings Bank
18 Oakland Avenue
Warwick, New York 10990-0591
Attention: Mr. Timothy A. Dempsey
President and Chief Executive Officer
-------------------------------------
with copies to:
Marine Midland Bank
149 Broadway
New York, New York 10005
Attention: Mr. Richard A. Glover
Vice President
--------------
Thacher Proffitt & Wood
Two World Trade Center, 38th Floor
New York, New York 10048
Attention: Douglas J. McClintock, Esq.
---------------------------
Helm, Shapiro, Anito & McCale, P.C.
20 Corporate Woods Boulevard
Albany, New York 12211-2350
Attention: Brian P. Goldstein, Esq.
------------------------
Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand or by commercial messenger
service, or sent by telex or facsimile, to such party at its address specified
above, or, if sent by mail, on the third Business
<PAGE> 26
B-6
Day after the day deposited in the mail, postage prepaid, addressed as
aforesaid. Any party may change the person or address to whom or which notices
are to be given hereunder, by notice duly given hereunder; provided, however,
that any such notice shall be deemed to have been given only when actually
received by the party to whom it is addressed.
SECTION 12. INTERPRETATION. Wherever possible each provision
of this Pledge Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision hereof shall be prohibited
by or invalid under such law, such provisions shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions hereof.
SECTION 13. CONSTRUCTION. All provisions hereof shall be
construed so as to maintain (a) the ESOP as a qualified leveraged employee stock
ownership plan under section 401(a) and 4975(e)(7) of the Internal Revenue Code
of 1986, as amended (the "Code"), (b) the Trust as exempt from taxation under
section 501(a) of the Code and (c) the Trust Loan as an exempt loan under
section 54.4975-7(b) of the Treasury Regulations and as described in Department
of Labor Regulation section 2550.408b-3.
IN WITNESS WHEREOF, this Pledge Agreement has been duly
executed by the parties hereto as of the day and year first above written.
WARWICK COMMUNITY BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
BY: MARINE MIDLAND BANK, AS TRUSTEE
AND NOT IN ANY OTHER CAPACITY
BY: _________________________________
TITLE: _________________________________
WARWICK COMMUNITY BANCORP, INC.
BY: _________________________________
TITLE: _________________________________
<PAGE> 27
EXHIBIT C
TO LOAN AGREEMENT
BY AND BETWEEN
WARWICK COMMUNITY BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
AND
WARWICK COMMUNITY BANCORP, INC.
FORM OF ASSIGNMENT
In consideration of the loan made by Warwick Community
Bancorp, Inc. ("Lender") to the Warwick Community Bancorp, Inc. Employee Stock
Ownership Plan Trust ("Borrower") pursuant to the Loan Agreement of even date
herewith between the Lender and the Borrower ("Loan Agreement") and pursuant to
the Pledge Agreement between the Lender and the Borrower of even date herewith
pertaining thereto, the undersigned Borrower hereby transfers, assigns and
conveys to Lender, subject to the terms and provisions of the Loan Agreement,
all its right, title and interest in and to those certain shares of common stock
of the Lender which it shall purchase with the proceeds of the loan made
pursuant to the Loan Agreement, and agrees to transfer and endorse to Lender the
certificates representing such shares as and when required pursuant to the Loan
Agreement or Pledge Agreement.
WARWICK COMMUNITY BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
BY: MARINE MIDLAND BANK, AS TRUSTEE
AND NOT IN ANY OTHER CAPACITY
BY: ____________________________________
TITLE: ____________________________________
[ ], 1997
<PAGE> 28
EXHIBIT D
TO LOAN AGREEMENT
BY AND BETWEEN
WARWICK COMMUNITY BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
AND
WARWICK COMMUNITY BANCORP, INC.
FORM OF IRREVOCABLE PROXY
In consideration of the loan made by Warwick Community Bancorp, Inc.
("Lender") to the Warwick Community Bancorp, Inc. Employee Stock Ownership Plan
Trust ("Borrower") pursuant to the Loan Agreement of even date herewith between
the Lender and the Borrower ("Loan Agreement") and the Pledge Agreement between
the Lender and the Borrower of even date herewith pertaining thereto, and
subject to the terms and conditions of the Loan Agreement, the undersigned
Borrower hereby appoints the Lender as its proxy, with power of substitution, to
represent and to vote those certain shares of common stock of the Lender which
it shall purchase with the proceeds of the loan made pursuant to the Loan
Agreement. This proxy, when properly executed, shall be irrevocable and shall
give the Lender full power and authority to vote on any and all matters for
which other holders of shares of common stock of the Lender are entitled to
vote.
WARWICK COMMUNITY BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
BY: MARINE MIDLAND BANK, AS TRUSTEE
AND NOT IN ANY OTHER CAPACITY
BY: _________________________________
TITLE: _________________________________
[ ], 1997
<PAGE> 1
Exhibit 10.4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as
of ______________, 1997 by and between WARWICK COMMUNITY BANCORP, INC., a
business corporation organized and existing under the laws of the State of
Delaware and having an office at 18 Oakland Avenue, Warwick, New York 10990-0591
("Company") and _______________, an individual residing at
_________________________________________ (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive currently serves as the ________ of the
Company and as the __________ of The Warwick Savings Bank (the "Bank") and
effective as of the date of this Agreement, the Bank has converted from a mutual
savings bank to a stock savings bank and has become the wholly owned subsidiary
of the Company; and
WHEREAS, the Company desires to assure for itself, the Bank and
their respective subsidiaries and affiliates the continued availability of the
Executive's services as provided in this Agreement and the ability of the
Executive to perform such services with a minimum of personal distraction in the
event of a pending or threatened Change of Control (as hereinafter defined); and
WHEREAS, the Executive is willing to continue to serve the Company,
the Bank and their respective subsidiaries and affiliates on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions hereinafter set forth, the Company, the Bank and the
Executive hereby agree as follows:
SECTION 1. EMPLOYMENT.
The Company and the Bank agree to continue to employ the Executive,
and the Executive hereby agrees to such continued employment, during the period
and upon the terms and conditions set forth in this Agreement.
SECTION 2. EMPLOYMENT PERIOD; REMAINING UNEXPIRED EMPLOYMENT PERIOD.
(a) The terms and conditions of this Agreement shall be and remain
in effect during the period of employment established under this section 2
("Employment Period"). The Employment Period shall be for an initial term of
three years beginning on the date of this Agreement and ending on the third
anniversary date of this Agreement (each, an "Anniversary Date"), plus such
extensions, if any, as are provided pursuant to section 2(b).
(b) Except as provided in section 2(c) and subject to Section
11(b), beginning on the date of this Agreement, the Employment Period shall
automatically be extended for one additional day each day, unless either the
Company or the Executive elects not to extend the Agreement further by giving
written notice thereof to the other party, in which case the Employment Period
shall end on the third
<PAGE> 2
anniversary of the date on which such written notice is given; provided,
however, that notwithstanding the foregoing, the Employment Period shall end on
the last day of the month in which the Executive attains the age of 68. For all
purposes of this Agreement, the term "Remaining Unexpired Employment Period" as
of any date shall mean the period beginning on such date and ending on the last
day of the Employment Period taking into account any extensions under this
section 2(b). Upon termination of the Executive's employment with the Company or
the Bank for any reason whatsoever, any daily extensions provided pursuant to
this section 2(b), if not theretofore discontinued, shall automatically cease.
(c) Nothing in this Agreement shall be deemed to prohibit the
Company or the Bank at any time from terminating the Executive's employment
during the Employment Period with or without notice for any reason; provided,
however, that the relative rights and obligations of the Company and the
Executive in the event of any such termination shall be determined under this
Agreement.
SECTION 3. DUTIES.
The Executive shall serve as _________ of the Company and as
_________ of the Bank, having such power, authority and responsibility and
performing such duties as are prescribed by or under the By-Laws of the Company
and as are customarily associated with such position. The Executive shall devote
his full business time and attention (other than during weekends, holidays,
approved vacation periods, and periods of illness or approved leaves of absence)
to the business and affairs of the Company and shall use his best efforts to
advance the interests of the Company.
SECTION 4. CASH COMPENSATION.
In consideration for the services to be rendered by the Executive
hereunder, the Company shall pay to him a salary at an initial annual rate of
_______________________ dollars ($_______), payable in approximately equal
installments in accordance with the Company's customary payroll practices for
senior officers. The Board shall review the Executive's annual rate of salary at
such times during the Employment Period as it deems appropriate, but not less
frequently than once every twelve months, and may, in its discretion, approve an
increase therein. In addition to salary, the Executive may receive other cash
compensation from the Company or the Bank for services hereunder at such times,
in such amounts and on such terms and conditions as the Board may determine from
time to time.
SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS.
During the Employment Period, the Executive shall be treated as an
employee of the Company and the Bank and shall be entitled to participate in and
receive benefits under any and all qualified or non-qualified retirement,
pension, savings, profit-sharing or stock bonus plans, any and all group life,
health (including hospitalization, medical and major medical), dental, accident
and long term disability insurance plans, and any other employee benefit and
compensation plans (including, but not limited to, any incentive compensation
plans or programs,
-2-
<PAGE> 3
stock option and appreciation rights plans and restricted stock plans) as may
from time to time be maintained by, or cover employees of, the Company and the
Bank, in accordance with the terms and conditions of such employee benefit plans
and programs and compensation plans and programs and consistent with the
Company's and the Bank's customary practices.
SECTION 6. INDEMNIFICATION AND INSURANCE.
(a) During the Employment Period and for a period of six years
thereafter, the Company or the Bank shall cause the Executive to be covered by
and named as an insured under any policy or contract of insurance obtained by it
to insure its directors and officers against personal liability for acts or
omissions in connection with service as an officer or director of the Company,
the Bank or service in other capacities at the request of the Company. The
coverage provided to the Executive pursuant to this section 6 shall be of the
same scope and on the same terms and conditions as the coverage (if any)
provided to other officers or directors of the Company and the Bank.
(b) To the maximum extent permitted under applicable law, during the
Employment Period and for a period of six years thereafter, the Company and the
Bank shall indemnify the Executive against and hold him harmless from any costs,
liabilities, losses and exposures to the fullest extent and on the most
favorable terms and conditions that similar indemnification is offered to any
director or officer of the Company and the Bank or any subsidiary or affiliate
thereof.
SECTION 7. OUTSIDE ACTIVITIES.
The Executive may serve as a member of the boards of directors of
such business, community and charitable organizations as he may disclose to and
as may be approved by the Board (which approval shall not be unreasonably
withheld); provided, however, that such service shall not materially interfere
with the performance of his duties under this Agreement. The Executive may also
engage in personal business and investment activities which do not materially
interfere with the performance of his duties hereunder; provided, however, that
such activities are not prohibited under any code of conduct or investment or
securities trading policy established by the Company or the Bank and generally
applicable to all similarly situated Executives. The Executive may also serve as
an officer or director of the Bank on such terms and conditions as the Company
and the Bank may mutually agree upon, and such service shall not be deemed to
materially interfere with the Executive's performance of his duties hereunder or
otherwise result in a material breach of this Agreement. If the Executive is
discharged or suspended, or is subject to any regulatory prohibition or
restriction with respect to participation in the affairs of the Bank, he shall
continue to perform services for the Company in accordance with this Agreement
but shall not directly or indirectly provide services to or participate in the
affairs of the Bank in a manner inconsistent with the terms of such discharge or
suspension or any applicable regulatory order.
-3-
<PAGE> 4
SECTION 8. WORKING FACILITIES AND EXPENSES.
The Executive's principal place of employment shall be at the
Company's and the Bank's executive offices at the address first above written,
or at such other location within 50 miles of the address at which the Company
shall maintain its principal executive offices, or at such other location as the
Company and the executive may mutually agree upon. The Company shall provide the
Executive at his principal place of employment with a private office,
secretarial services and other support services and facilities suitable to his
position with the Company and the Bank and necessary or appropriate in
connection with the performance of his assigned duties under this Agreement. The
Company shall reimburse the Executive for his ordinary and necessary business
expenses, including, without limitation, the Executive's travel and
entertainment expenses incurred in connection with the performance of his duties
under this Agreement, in each case upon presentation to the Company of an
itemized account of such expenses in such form as the Company may reasonably
require.
SECTION 9. TERMINATION OF EMPLOYMENT WITH SEVERANCE BENEFITS.
(a) The Executive's shall be entitled to the severance benefits
described in section 9(b) in the event that:
(i) his employment with the Company or the Bank terminates during
the Employment Period as a result of the Executive's voluntary resignation
within 90 days following:
(A) the failure of the Board or the Board of Directors of the
Bank ("Bank Board") as the case may be, to appoint or re-appoint or
elect or re-elect the Executive to the position with the Company or
the Bank stated in section 3 of this Agreement (or a more senior
office);
(B) if the Executive is a member of the Board or the Bank
Board as the case may be, the failure of the shareholders of the
Company or the Bank to elect or re-elect the Executive to the Board
or the Bank Board or the failure of the Board or the Bank Board (or
the nominating committee thereof) to nominate the Executive for such
election or re-election;
(C) the expiration of a 30-day period following the date on
which the Executive gives written notice to the Company of its or
the Bank's material failure, whether by amendment of the Company's
Certificate of Incorporation, the Bank's Restated Organization
Certificate, the Company's By-Laws or the Bank's By-Laws, action of
the Board or the Bank Board or the Company's shareholders or the
Bank's shareholders or otherwise, to vest in the Executive the
functions, duties, or responsibilities prescribed in section 3 of
this Agreement, unless, during such 30-day period, the Company or
the Bank cures such failure; or
-4-
<PAGE> 5
(D) the expiration of a 30-day period following the date on
which the Executive gives written notice to the Company of its or
the Bank's material breach of any term, condition or covenant
contained in this Agreement (including, without limitation any
reduction of the Executive's rate of base salary in effect from time
to time and any change in the terms and conditions of any
compensation or benefit program in which the Executive participates
which, either individually or together with other changes, has a
material adverse effect on the aggregate value of his total
compensation package), unless, during such 30-day period, the
Company or the Bank cures such failure;
(F) a change in the Executive's principal place of employment
for a distance in excess of 50 miles from the Bank's principal
office in Warwick, New York; or
(ii) the Executive's employment with the Company or the Bank is
terminated by the Company or the Bank for any reason other than for
"cause" as provided in section 10(a); or
(iii) a Change of Control as defined in section 11 has occurred.
(b) Upon the occurrence of any of the events described in section
9(a) of this Agreement, the Company shall pay and provide to the Executive (or,
in the event of his death, to his estate):
(i) his earned but unpaid salary (including, without limitation, all
items which constitute wages under applicable law and the payment of which
is not otherwise provided for in this section 9(b)) as of the date of the
termination of his employment with the Company and the Bank, such payment
to be made at the time and in the manner prescribed by law applicable to
the payment of wages but in no event later than 30 days after termination
of employment;
(ii) the benefits, if any, to which he is entitled as a former
employee under the employee benefit plans and programs and compensation
plans and pro grams maintained for the benefit of the Company's and the
Bank's officers and employees;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accident and long term disability
insurance benefits, in addition to that provided pursuant to section
9(b)(ii), and after taking into account the coverage provided by any
subsequent employer, if and to the extent necessary to provide for the
Executive, for the Remaining Unexpired Employment Period,
-5-
<PAGE> 6
coverage equivalent to the coverage to which he would have been entitled
under such plans (as in effect on the date of his termination of
employment, or, if his termination of employment occurs after a Change of
Control, on the date of such Change of Control, whichever benefits are
greater), if he had continued working for the Company and the Bank during
the Remaining Unexpired Employment Period at the highest annual rate of
salary achieved during the Employment Period;
(iv) within 30 days following the Executive's termination of
employment with the Company or the Bank, a lump sum payment, in an amount
equal to the present value of the salary (excluding any additional
payments made to the Executive in lieu of the use of an automobile) that
the Executive would have earned if he had continued working for the
Company and the Bank during the Remaining Unexpired Employment Period at
the highest annual rate of salary achieved during the Employment Period,
where such present value is to be determined using a discount rate equal
to the applicable short-term federal rate prescribed under section 1274(d)
of the Internal Revenue Code of 1986, as amended ("Code"), compounded
using the compounding periods corresponding to the Company's regular
payroll periods for its officers, such lump sum to be paid in lieu of all
other payments of salary provided for under this Agreement in respect of
the period following any such termination;
(v) within 30 days following the Executive's termination of
employment with the Company or the Bank, a lump sum payment in an amount
equal to the excess, if any, of:
(A) the present value of the aggregate benefits to which he
would be entitled under The Warwick Savings Bank Defined Benefit
Pension Plan (together with the defined benefit portion of the
Benefit Restoration Plan of The Warwick Savings Bank and any other
supplemental defined benefit plan) and any and all other qualified
and non-qualified defined benefit pension plans maintained by, or
covering employees of, the Company or the Bank, if he were 100%
vested thereunder and had continued working for the Company and the
Bank during the Remaining Unexpired Employment Period at the highest
annual rate of salary achieved during the Employment Period; over
(B) the present value of the benefits to which he is actually
entitled under such defined benefit pension plans as of the date of
his termination;
where such present values are to be determined using the mortality tables
prescribed under section 415(b)(2)(E)(v) of the Code and a discount rate,
compounded monthly equal to the annualized rate of interest prescribed by
the Pension Benefit Guaranty Corporation for the valuation of immediate
annuities payable under
-6-
<PAGE> 7
terminating single-employer defined benefit plans for the month in which
the Executive's termination of employment occurs ("Applicable PBGC Rate");
(vi) within 30 days following the Executive's termination of
employment with the Company or the Bank, a lump sum payment in an amount
equal to the present value of the additional employer contributions to
which he would have been entitled under The Warwick Savings Bank 401(k)
Savings Plan, the Employee Stock Ownership Plan of Warwick Community
Bancorp, Inc. (together with the defined contribution portion of the
Benefit Restoration Plan of The Warwick Savings Bank or any other
supplemental defined contribution plan) and any and all other qualified
and non-qualified defined contribution plans maintained by, or covering
employees of, the Company or the Bank, as if he were 100% vested
thereunder and had continued working for the Company and the Bank during
the Remaining Unexpired Employment Period at the highest annual rate of
salary achieved during the Employment Period and making the maximum amount
of employee contributions, if any, required under such plan or plans,
such present value to be determined on the basis of a discount rate,
compounded using the compounding period that corresponds to the frequency
with which employer contributions are made to the relevant plan, equal to
the Applicable PBGC Rate;
(vii) the payments that would have been made to the Executive under
any cash or stock bonus or long-term or short-term cash incentive
compensation plan maintained by, or covering employees of, the Company or
the Bank if he had continued working for the Company and the Bank during
the Remaining Unexpired Employment Period and had earned the maximum bonus
or incentive award in each calendar year that ends during the Remaining
Unexpired Employment Period, such payments to be equal to the product of:
(A) the maximum percentage rate at which an award was ever
available to the Executive under such incentive compensation plan;
multiplied by
(B) the salary that would have been paid to the Executive
during each such calendar year at the highest annual rate of salary
achieved during the Employment Period;
such payments to be made (without discounting for early payment) within 30
days following the Executive's termination of employment;
(viii)at the election of the Company made within 30 days following
the occurrence of the event described in section 9(a), upon the surrender
of options or appreciation rights issued to the Executive under any stock
option and appreciation rights plan or program maintained by, or covering
employees of, the Company or the Bank, a lump sum payment in an amount
equal to the product of:
-7-
<PAGE> 8
(A) the excess of (I) the fair market value of a share of
stock of the same class as the stock subject to the option or
appreciation right, determined as of the date of termination of
employment, over (II) the exercise price per share for such option
or appreciation right, as specified in or under the relevant plan or
program; multiplied by
(B) the number of shares with respect to which options or
appreciation rights are being surrendered.
For purposes of this section 9(b)(viii), the Executive shall be deemed
fully vested in all options and appreciation rights under any stock option
or appreciation rights plan or program maintained by, or covering
employees of, the Company or the Bank, even if he is not vested under such
plan or program; and
(ix) at the election of the Company made within 30 days following
the occurrence of the event described in section 9(a), upon the surrender
of any shares awarded to the Executive under any restricted stock plan
maintained by, or covering employees of, the Company or the Bank, a lump
sum payment in an amount equal to the product of:
(A) the fair market value of a share of stock of the same
class of stock granted under such plan, determined as of the date of
the Executive's termination of employment; multiplied by
(B) the number of shares which are being surrendered.
For purposes of this section 9(b)(ix), the Executive shall be deemed fully
vested in all shares awarded under any restricted stock plan maintained
by, or covering employees of, the Company or the Bank, even if he is not
vested under such plan.
The Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this section 9(b) constitute reasonable
damages under the circumstances and shall be payable without any requirement of
proof of actual damage and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive further agree that the Company
may condition the payments and benefits (if any) due under sections 9(b)(iii),
(iv), (v), (vi) and (vi) on the receipt of the Executive's resignation from any
and all positions which he holds as an officer, director or committee member
with respect to the Company, the Bank or any subsidiary or affiliate of either
of them.
SECTION 10. TERMINATION WITHOUT ADDITIONAL COMPANY LIABILITY. In the
event that the Executive's employment with the Company shall terminate during
the Employment Period on account of:
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<PAGE> 9
(a) the discharge of the Executive for "cause," which, for purposes
of this Agreement, shall mean a discharge because the Board and the Bank
Board determine that the Executive: (i) has willfully and intentionally
failed to perform his assigned duties under this Agreement (including for
these purposes, the Executive's inability to perform such duties as a
result of drug or alcohol dependency); (ii) has willfully and
intentionally engaged in dishonest or illegal conduct in connection with
his performance of services for the Company or the Bank or has been
convicted of a felony; (iii) has willfully violated, in any material
respect, any law, rule, regulation, written agreement or final
cease-and-desist order with respect to his performance of services for the
Company or the Bank, as determined by the Board and the Bank Board; or
(iv) has willfully and intentionally breached the material terms of this
Agreement; provided, however, that, if the Executive engages in any of the
acts described in section 10(a)(i) or (a)(iv) above, the Company shall
provide the Executive with written notice of its intent to discharge the
Executive for cause, and the Executive shall have 30 days from the date on
which the Executive receives such notice to cure any such acts; and
provided, further, that on and after the date that a Change of Control
occurs, a determination under this section 10 shall require the
affirmative vote of at least three-fourths of the members of the Board and
the Bank Board acting in good faith and such vote shall not be made prior
to the expiration of a 60-day period following the date on which the Board
and the Bank Board shall, by written notice to the Executive, furnish to
him a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the
Board and the Bank Board, and to be represented by his legal counsel at
such presentations, to refute the grounds for the proposed determination;
(b) the Executive's voluntary resignation from employment with the
Company and the Bank for reasons other than those specified in section
9(a)(i); or
(c) the death of the Executive while employed by the Company or the
termination of the Executive's employment because of "total and permanent
disability" within the meaning of the Company's long-term disability plan
for employees;
then the Company shall have no further obligations under this Agreement, other
than the payment to the Executive of his earned but unpaid salary as of the date
of the termination of his employment and the provision of such other benefits,
if any, to which he is entitled as a former employee under the Company's and the
Bank's employee benefit plans and programs and compensation plans and programs.
For purposes of this section 10, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company and the
Bank. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board and the Bank Board or based upon the
written advice of counsel for the Company or the Bank shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and
in the best interests of the Company and the Bank. The cessation of employment
of the Executive shall not be deemed to be for "cause" within the meaning of
section 10(a) unless and until there shall have been delivered to the Executive
a copy of a resolution duly adopted by the affirmative vote of three-fourths of
the members of the Board and the Bank Board at a meeting of the Board and the
Bank Board called and held for such purpose (after reasonable notice is provided
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board and the Bank Board),
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<PAGE> 10
finding that, in the good faith opinion of the Board and the Bank Board, the
Executive is guilty of the conduct described in section 10(a) above, and
specifying the particulars thereof in detail.
SECTION 11. TERMINATION UPON OR FOLLOWING A CHANGE OF CONTROL.
(a) A Change of Control of the Company ("Change of Control") shall
be deemed to have occurred upon the happening of any of the following events:
(i) the reorganization, merger or consolidation of the Company with
one or more other persons, other than a transaction following which:
(A) at least 51% of the equity ownership interests of the
entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act")) in substantially
the same relative proportions by persons who, immediately prior to
such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the
outstanding equity ownership interests in the Company; and
(B) at least 51% of the securities entitled to vote generally
in the election of directors of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) in substantially the same
relative proportions by persons who, immediately prior to such
transaction, beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the
Company;
(ii) the acquisition of all or substantially all of the assets of
the Company or beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of the outstanding
securities of the Company entitled to vote generally in the election of
directors by any person or by any persons acting in concert;
(iii) a complete liquidation or dissolution of the Company;
(iv) the occurrence of any event if, immediately following such
event, at least 50% of the members of the Board do not belong to any of
the following groups:
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<PAGE> 11
(A) individuals who were members of the Board on the date of
this Agreement; or
(B) individuals who first became members of the Board after
the date of this Agreement either:
(1) upon election to serve as a member of the Board by
affirmative vote of three-quarters of the members of such
board, or of a nominating committee thereof, in office at the
time of such first election; or
(2) upon election by the shareholders of the Board to
serve as a member of the Board, but only if nominated for
election by affirmative vote of three-quarters of the members
of the board of directors of the Board, or of a nominating
committee thereof, in office at the time of such first
nomination;
provided, however, that such individual's election or nomination did
not result from an actual or threatened election contest (within the
meaning of Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies
or consents (within the meaning of Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) other than by or on behalf of
the Board of the Company; or
(v) any event which would be described in section 11(a)(i), (ii),
(iii) or (iv) if the term "Bank" were substituted for the term "Company"
therein and the term "Bank Board" were substituted for the term "Board"
therein.
In no event, however, shall a Change of Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Company, the Bank, or a
subsidiary of either of them, by the Company, the Bank, or any subsidiary of
either of them, or by any employee benefit plan maintained by any of them. For
purposes of this section 11(a), the term "person" shall have the meaning
assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(b) In the event of a Change of Control, the Executive shall be
entitled to the payments and benefits described in section 9(b), regardless of
whether his employment terminates; provided, however, that the term "Remaining
Unexpired Employment Period" shall mean three years beginning on the effective
date of the Change of Control, even if such three-year period extends beyond
the date the Executive attains age 68.
SECTION 12. TAX INDEMNIFICATION.
(a) This section 12 shall apply if the Executive's employment is
terminated upon or following (i) a Change of Control (as defined in section 11
of this Agreement); or (ii) a change "in the ownership or effective control" of
the Company or the Bank or "in the ownership of a substantial portion of the
assets" of the Company or the Bank within the meaning of section 280G of the
Code. If this section 12 applies, then, if for any taxable year, the Executive
shall be liable for the payment of an excise tax under section 4999 of the Code
with respect to any payment in
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<PAGE> 12
the nature of compensation made by the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company or the Bank to (or for the
benefit of) the Executive, the Company shall pay to the Executive an amount
equal to X determined under the following formula:
E x P
X = ------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under section
4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this section 12;
FI = the highest marginal rate of income tax applicable to the
Executive under the Code for the taxable year in question;
SLI = the sum of the highest marginal rates of income tax
applicable to the Executive under all applicable state and
local laws for the taxable year in question; and
M = the highest marginal rate of Medicare tax applicable to the
Executive under the Code for the taxable year in question.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) the Executive under the terms of this Agreement, or
otherwise, and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this 12(a) shall be made to the Executive
on the earlier of (i) the date the Company, the Bank or any direct or indirect
subsidiary or affiliate of the Company or the Bank is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this section 12 to the contrary, in
the event that the Executive's liability for the excise tax under section 4999
of the Code for a taxable year is subsequently determined to be different than
the amount determined by the formula (X + P) x E, where X, P and E have the
meanings provided in section 12(a), the Executive or the Company, as the case
may be, shall pay to the other party at the time that the amount of such excise
tax is finally determined, an appropriate amount, plus interest, such that the
payment made under section 12(a), when increased by the amount of the payment
made to the Executive under this section 12(b) by the Company, or when reduced
by the amount of the payment made to the Company under this section 12(b) by the
Executive, equals the amount that should have properly been paid to the
Executive under section 12(a). The interest paid under this section 12(b) shall
be determined at the rate provided under section 1274(b)(2)(B) of the Code. To
confirm that the proper amount, if any, was paid to the Executive under this
section 12, the Executive shall furnish to the Company a copy of each tax return
which reflects a liability for an excise tax payment made
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<PAGE> 13
by the Company, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service.
SECTION 13. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that, in the event of his
termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one year following the date of his
termination of employment with the Company or the Bank (or, if less, for the
Remaining Unexpired Employment Period), he shall not, without the written con
sent of the Company, become an officer, employee, consultant, director or
trustee of any savings bank, savings and loan association, savings and loan
holding company, bank or bank holding company, or any direct or indirect
subsidiary or affiliate of any such entity, that entails working within Orange,
Dutchess, Rockland or Putnam counties or any other county in which the Company
or the Bank maintains an office; provided, however, that this section 13 shall
not apply if the Executive's employment is terminated for the reasons set forth
in section 9(a).
SECTION 14. CONFIDENTIALITY.
Unless he obtains the prior written consent of the Company, the
Executive shall keep confidential and shall refrain from using for the benefit
of himself, or any person or entity other than the Company or any entity which
is a subsidiary of the Company or of which the Company is a subsidiary, any
material document or information obtained from the Company, or from its parent
or subsidiaries, in the course of his employment with any of them concerning
their properties, operations or business (unless such document or information is
readily ascertainable from public or published information or trade sources or
has otherwise been made available to the public through no fault of his own)
until the same ceases to be material (or becomes so ascertainable or available);
provided, however, that nothing in this section 14 shall prevent the Executive,
with or without the Company's consent, from participating in or disclosing
documents or information in connection with any judicial or administrative
investigation, inquiry or proceeding to the extent that such participation or
disclosure is required under applicable law.
SECTION 15. SOLICITATION.
The Executive hereby covenants and agrees that, for a period of one
year following his termination of employment with the Company or the Bank, he
shall not, without the written consent of the Company and the Bank, either
directly or indirectly:
(a) solicit, offer employment to, or take any other action intended,
or that a reasonable person acting in like circumstances would expect, to
have the effect of causing any officer or employee of the Company, the
Bank or any of their respective subsidiaries or affiliates to terminate
his or her employment and accept employment or become affiliated with, or
provide services for compensation in any capacity whatsoever to, any
savings bank, savings and loan Bank, bank, bank holding company, savings
and loan holding company, or other institution engaged
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<PAGE> 14
in the business of accepting deposits, making loans or doing business
within the counties specified in section 13;
(b) provide any information, advice or recommendation with respect
to any such officer or employee of any savings bank, savings and loan
Bank, bank, bank holding company, savings and loan holding company, or
other institution engaged in the business of accepting deposits, making
loans or doing business within the counties specified in section 13; that
is intended, or that a reasonable person acting in like circumstances
would expect, to have the effect of causing any officer or employee of the
Company, the Bank, or any of their respective subsidiaries or affiliates
to terminate his employment and accept employment or become affiliated
with, or provide services for compensation in any capacity what soever to,
any savings bank, savings and loan association, bank, bank holding
company, savings and loan holding company, or other institution engaged in
the business of accepting deposits, making loans or doing business within
the counties specified in section 13;
(c) solicit, provide any information, advice or recommendation or
take any other action intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any customer of
the Company to terminate an existing business or commercial relationship
with the Company.
SECTION 16. NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.
The termination of the Executive's employment during the term of
this Agreement or thereafter, whether by the Company, by the Bank or by the
Executive, shall have no effect on the rights and obligations of the parties
hereto under the Company's or the Bank's qualified or non-qualified retirement,
pension, savings, thrift, profit-sharing or stock bonus plans, group life,
health (including hospitalization, medical and major medical), dental, accident
and long term disability insurance plans or such other employee benefit plans
or programs, or compensation plans or programs, as may be maintained by, or
cover employees of, the Company or the Bank from time to time; provided,
however, that nothing in this Agreement shall be deemed to duplicate any
compensation or benefits provided under any agreement, plan or program covering
the Executive to which the Company is a party and any duplicative amount payable
under any such agreement, plan or program shall be applied as an offset to
reduce the amounts otherwise payable hereunder.
SECTION 17. SUCCESSORS AND ASSIGNS.
This Agreement will inure to the benefit of and be binding upon the
Executive, his legal representatives and testate or intestate distributees, and
the Company and the Bank and their respective successors and assigns, including
any successor by merger or consolidation or a statutory receiver or any other
person or firm or corporation to which all or substantially all of the assets
and business of the Company may be sold or otherwise transferred. Failure of the
Company to obtain from any successor its express written assumption of the
Company's obligations
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<PAGE> 15
hereunder at least 60 days in advance of the scheduled effective date of any
such succession shall be deemed a material breach of this Agreement.
SECTION 18. NOTICES.
Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:
If to the Executive:
----------------------
----------------------
----------------------
If to the Company or the Bank:
Warwick Community Bancorp, Inc.
18 Oakland Avenue
Warwick, New York 10990-0591
Attention: President
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: Douglas J. McClintock, Esq.
SECTION 19. INDEMNIFICATION FOR ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees and expenses, incurred
by him in connection with or arising out of any action, suit or proceeding in
which he may be involved, as a result of his efforts, in good faith, to defend
or enforce the terms of this Agreement. For purposes of this Agreement, any
settlement agreement which provides for payment of any amounts in settlement of
the Company's or the Bank's obligations hereunder shall be conclusive evidence
of the Executive's entitlement to indemnification hereunder, and any such
indemnification payments shall be in addition to amounts payable pursuant to
such settlement agreement, unless such settlement agreement expressly provides
otherwise.
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<PAGE> 16
(b) The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and such amounts shall not be
reduced whether or not the Executive obtains other employment. Unless it is
determined that a claim made by the Executive was either frivolous or made in
bad faith, the Company agrees to pay as incurred, to the full extent permitted
by law, all legal fees and expenses which the Executive may reasonably incur as
a result of or in connection with his consultation with legal counsel or arising
out of any action, suit, proceeding or contest (regardless of the outcome
thereof) by the Company, the Executive or others regarding the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in section 7872(f)(2)(A) of the Code. This section 19(b) shall
apply whether such consultation, action, suit, proceeding or contest arises
before, on, after or as a result of a Change of Control.
SECTION 20. SEVERABILITY.
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
SECTION 21. WAIVER.
Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
SECTION 22. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one and the
same Agreement.
SECTION 23. GOVERNING LAW.
Except to the extent preempted by federal law, this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of New York applicable to contracts entered into and to be performed
entirely within the State of New York.
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<PAGE> 17
SECTION 24. HEADINGS AND CONSTRUCTION.
The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section. Any
reference to a section number shall refer to a section of this Agreement, unless
otherwise stated.
SECTION 25. ENTIRE AGREEMENT; MODIFICATIONS.
This instrument contains the entire agreement of the parties
relating to the subject matter hereof, and supersedes in its entirety any and
all prior agreements, understandings or representations relating to the subject
matter hereof. No modifications of this Agreement shall be valid unless made in
writing and signed by the parties hereto.
SECTION 26. NON-DUPLICATION.
In the event that the Executive shall perform services for the Bank
or any other direct or indirect subsidiary or affiliate of the Company or the
Bank, any compensation or benefits provided to the Executive by such other
employer shall be applied to offset the obligations of the Company hereunder, it
being intended that this Agreement set forth the aggregate compensation and
benefits payable to the Executive for all services to the Company, the Bank and
all of their respective direct or indirect subsidiaries and affiliates.
SECTION 27. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and any
regulations promulgated thereunder.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Executive has hereunto set his hand, all as of the day and year
first above written.
________________________________________
EXECUTIVE
ATTEST: WARWICK COMMUNITY BANCORP, INC.
By_____________________________
Secretary By______________________________________
Name:
Title:
[Seal]
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<PAGE> 18
STATE OF NEW YORK )
: ss.:
COUNTY OF ORANGE )
On this ________ day of ____________________, 1997, before me
personally came __________________, to me known, and known to me to be the
individual described in the foregoing instrument, who, being by me duly sworn,
did depose and say that he resides at the address set forth in said instrument,
and that he signed his name to the foregoing instrument.
___________________________________
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF ORANGE )
On this ________ day of ____________________, 1997, before me
personally came ___________, to me known, who, being by me duly sworn, did
depose and say that he resides at
______________________________________________, that he is a member of the Board
of Directors of WARWICK COMMUNITY BANCORP, INC., the Delaware corporation de
scribed in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such seal; that
it was so affixed by order of the Board of Directors of said corporation; and
that he signed his name thereto by like order.
___________________________________
Notary Public
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<PAGE> 1
Exhibit 10.5
EMPLOYEE RETENTION AGREEMENT
This EMPLOYEE RETENTION AGREEMENT ("Agreement") is made and
entered into as of _____________, 1997, by and among THE WARWICK SAVINGS BANK, a
stock savings bank organized and existing under the laws of the state of New
York and having its executive offices at 18 Oakland Avenue, Warwick, New York
10990-0591 ("Bank"); WARWICK COMMUNITY BANCORP, INC., a business corporation
organized and existing under the laws of the State of Delaware and also having
its executive offices at 18 Oakland Avenue, Warwick, New York 10990-0591
("Company"); and _______________________, an individual residing at
_______________________________________________________________ ("Officer").
W I T N E S S E T H :
WHEREAS, effective as of the date of this Agreement, the Bank
has converted from a mutual savings bank to a stock savings bank and has become
a wholly owned subsidiary of the Company; and
WHEREAS, the Officer currently serves as the _______ of the
Bank and the Bank desires to assure for itself the continued availability of the
Officer's services and the ability of the Officer to perform such services with
a minimum of distraction in the event of a pending or threatened Change of
Control (as defined herein); and
WHEREAS, for purposes of securing the Officer's services for
the Bank, the Board of Directors of the Bank ("Board") has authorized the proper
officers of the Bank to enter into an employee retention agreement with the
Officer on the terms and conditions set forth herein, and the Board of Directors
of the Company has authorized the Company to guarantee the Bank's obligations
under such an employee retention agreement; and
WHEREAS, the Officer is willing to continue to serve the Bank
on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and obligations hereinafter set forth, the Bank, the Company
and the Officer hereby agree as follows:
SECTION 1. EFFECTIVE DATE.
(a) This Agreement shall be effective as of the date first
above written and shall remain in effect during the term of this Agreement which
shall be for a period of one year commencing on the date of this Agreement, plus
such extensions, if any, as are provided pursuant to section 1(b); provided,
however, that if the term of this Agreement has not otherwise terminated, the
term of this Agreement will terminate on the date of the Officer's termination
of employment with the Bank; and provided, further, that the obligations under
section 8 of this Agreement shall survive the term of this Agreement if payments
become due hereunder.
<PAGE> 2
(b) Except as provided in section 1(c) and subject to section
10(c), beginning on the date of this Agreement, the term of this Agreement shall
automatically be extended for one additional day each day, unless either the
Bank or the Officer elects not to extend the Agreement further by giving written
notice thereof to the other party, in which case the term of this Agreement
shall end on the first anniversary of the date on which such written notice is
given; provided, however, that notwithstanding the foregoing, the term of this
Agreement shall end on the last day of the month in which the Officer attains
the age of 68. Upon termination of the Officer's employment with the Bank for
any reason whatsoever, any daily extensions provided pursuant to this section
1(b), if not theretofore discontinued, shall automatically cease.
(c) Notwithstanding anything herein contained to the contrary:
(i) nothing in this Agreement shall be deemed to prohibit the Bank at any time
from terminating the Officer's employment at any time, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Officer's employment following the expiration
of the Assurance Period upon such terms and conditions as the Bank and the
Officer may mutually agree upon.
SECTION 2. ASSURANCE PERIOD.
(a) The assurance period ("Assurance Period") shall be for a
period commencing on the date of a Change of Control, as defined in section 10
of this Agreement, and ending on the first anniversary of the date on which the
Assurance Period commences, plus such extensions as are provided pursuant to the
following sentence. The Assurance Period shall be automatically extended for one
additional day each day, unless either the Bank or the Officer elects not to
extend the Assurance Period further by giving written notice to the other party,
in which case the Assurance Period shall become fixed and shall end on the first
anniversary of the date on which such written notice is given.
(b) Upon termination of the Officer's employment with the
Bank, any daily extensions provided pursuant to the preceding sentence, if not
theretofore discontinued, shall cease and the remaining unexpired Assurance
Period under this Agreement shall be a fixed period ending on the later of the
first anniversary of the date of the Change of Control, as defined in section 10
of this Agreement, or the first anniversary of the date on which the daily
extensions were discontinued.
SECTION 3. DUTIES.
During the period of the Officer's employment that falls
within the Assurance Period, the Officer shall: (a) except to the extent allowed
under section 6 of this Agreement, devote his full business time and attention
(other than during weekends, holidays, vacation periods, and periods of illness,
disability or approved leave of absence) to the business and affairs of the Bank
and use his best efforts to advance the Bank's interests; (b) serve in the
position to which the Officer is appointed by the Bank, which, during the
Assurance Period, shall be the position that the Officer held on the day before
the Assurance Period commenced or any higher office at the Bank to which he may
subsequently be appointed; and (c) subject to the direction of the Board
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<PAGE> 3
and the By-Laws of the Bank, have such functions, duties, responsibilities and
authority commonly associated with such position.
SECTION 4. COMPENSATION.
In consideration for the services rendered by the Officer
during the Assurance Period, the Bank shall pay to the Officer during the
Assurance Period a salary at an annual rate equal to the greater of:
(a) the annual rate of salary in effect for the Officer on the
day before the Assurance Period commenced; or
(b) such higher annual rate as may be prescribed by or under
the authority of the Board;
provided, however, that in no event shall the Officer's annual rate of salary
under this Agreement in effect at a particular time during the Assurance Period
be reduced without the Officer's prior written consent. The annual salary
payable under this section 4 shall be subject to review at least once annually
and shall be paid in approximately equal installments in accordance with the
Bank's customary payroll practices. Nothing in this section 4 shall be deemed to
prevent the Officer from receiving additional compensation other than salary for
his services to the Bank, or additional compensation for his services to the
Company, upon such terms and conditions as may be prescribed by or under the
authority of the Board or the Board of Directors of the Company.
SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS.
Except as otherwise provided in this Agreement, the Officer
shall, during the Assurance Period, be treated as an employee of the Bank and be
eligible to participate in and receive benefits under group life, health
(including hospitalization, medical and major medical), dental, accident and
long term disability insurance plans, and such other employee benefit plans and
programs, including, but not limited to, any incentive compensation plans or
programs (whether or not employee benefit plans or programs), any stock option
and appreciation rights plan, employee stock ownership plan and restricted stock
plan, as may from time to time be maintained by, or cover employees of, the
Bank, in accordance with the terms and conditions of such employee benefit plans
and programs and compensation plans and programs and with the Bank's customary
practices.
SECTION 6. BOARD MEMBERSHIPS.
The Officer may serve as a member of the boards of directors
of such business, community and charitable organizations as he may disclose to
and as may be approved by the Board (which approval shall not be unreasonably
withheld); provided, however, that such service shall not materially interfere
with the performance of his duties under this Agreement. The Officer may also
engage in personal business and investment activities which do not materially
interfere with the performance of his duties hereunder; provided, however, that
such activities are
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<PAGE> 4
not prohibited under any code of conduct or investment or securities trading
policy established by the Bank and generally applicable to all similarly
situated Officers.
SECTION 7. WORKING FACILITIES AND EXPENSES.
During the Assurance Period, the Officer's principal place of
employment shall be at the Bank's executive offices at the address first above
written, or at such other location within 50 miles of the address at which the
Bank shall maintain its principal executive offices, or at such other location
as the Bank and the Officer may mutually agree upon. The Bank shall provide the
Officer, at his principal place of employment, with a private office,
stenographic services and other support services and facilities suitable to his
position with the Bank and necessary or appropriate in connection with the
performance of his assigned duties under this Agreement. The Bank shall
reimburse the Officer for his ordinary and necessary business expenses,
including, without limitation, the Officer's travel and entertainment expenses,
incurred in connection with the performance of the Officer's duties under this
Agreement, upon presentation to the Bank of an itemized account of such expenses
in such form as the Bank may reasonably require.
SECTION 8. TERMINATION OF EMPLOYMENT WITH BANK LIABILITY.
(a) In the event that the Officer's employment with the Bank
shall terminate either during the Assurance Period, or prior to the commencement
of the Assurance Period but within three months of a Change of Control (as
defined in section 10 of this Agreement); provided, however, that if the
Officer's employment is terminated prior to the commencement of the Assurance
Period, it is reasonably demonstrated by the Officer that such termination of
employment was at the request of a third party who has taken steps reasonably
calculated to effect such Change of Control or otherwise arose in connection
with or anticipation of such Change of Control, on account of:
(i) The Officer's voluntary resignation from employment with
the Bank within 90 days following:
(A) the failure of the Board to appoint or re-appoint
or elect or re-elect the Officer to serve in the same position
in which the Officer was serving on the day before the
Assurance Period commenced (or a more senior office);
(B) if the Officer is a member of the Board on the
day before the Assurance Period commenced, the failure of the
shareholders of the Bank to elect or re-elect the Officer as a
member of the Board or the failure of the Board (or the
nominating committee thereof) to nominate the Officer for such
election or re-election;
(C) the expiration of a 30-day period following the
date on which the Officer gives written notice to the Bank of
its material failure, whether by amendment of the Bank's
Organization Certificate or By-Laws, action
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<PAGE> 5
of the Board or the Bank's shareholders or otherwise, to vest
in the Officer the functions, duties, or responsibilities
vested in the Officer on the day before the Assurance Period
commenced (or the functions, duties and responsibilities of a
more senior office to which the Officer may be appointed),
unless during such 30-day period, the Bank fully cures such
failure;
(D) the failure of the Bank to cure a material breach
of this Agreement by the Bank, within 30 days following
written notice from the Officer of such material breach;
(E) a reduction in the salary provided to the
Officer, or a material reduction in the benefits provided to
the Officer under the Bank's program of employee benefits,
other than in connection with an across-the-board reduction in
salary and benefits uniformly applied to all employees of the
Bank and all subsidiaries and affiliates of the Bank, compared
with the salary and benefits that were provided to the Officer
on the day before the Assurance Period commenced;
(F) a change in the Officer's principal place of
employment for a distance in excess of 50 miles from the
Bank's principal office in Warwick, New York; or
(ii) the Officer's employment with the Bank is terminated by
the Bank for any reason other than for "cause" as provided in section
9(a);
then, subject to section 21, the Bank shall provide the benefits and pay to the
Officer the amounts described in section 8(b) of this Agreement; provided,
however, that if benefits or payments become due hereunder as a result of the
Officer's termination of employment prior to the commencement of the Assurance
Period, the benefits and payments provided for under section 8(b) of this
Agreement shall be determined as though the Officer had remained in the service
of the Bank (upon the terms and conditions in effect at the time of his actual
termination of service) and had not terminated employment with the Bank until
the date on which the Officer's Assurance Period would have commenced.
(b) Upon the termination of the Officer's employment with the
Bank under circumstances described in section 8(a) of this Agreement, the Bank
shall pay and provide to the Officer (or, in the event of the Officer's death,
to the Officer's estate):
(i) the Officer's earned but unpaid salary (including, without
limitation, all items which constitute wages under applicable law and
the payment of which is not otherwise provided for in this section
8(b)) as of the date of the termination of the Officer's employment
with the Bank, such payment to be made at the time and in the manner
prescribed by law applicable to the payment of wages but in no event
later than 30 days after termination of employment;
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<PAGE> 6
(ii) the benefits, if any, to which the Officer is entitled as
a former employee under the employee benefit plans and programs and
compensation plans and programs maintained for the benefit of the
Bank's officers and employees;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accident and long term disability
insurance benefits, in addition to that provided pursuant to section
8(b)(ii), and after taking into account the coverage provided by any
subsequent employer, if and to the extent necessary to provide for the
Officer, for the remaining unexpired Assurance Period, coverage
equivalent to the coverage to which the Officer would have been
entitled under such plans (as in effect on the date of his termination
of employment, or, if his termination of employment occurs after a
Change of Control, on the date of such Change of Control, whichever
benefits are greater) if the Officer had continued working for the Bank
during the remaining unexpired Assurance Period at the highest annual
rate of salary achieved during the Officer's period of actual employ
ment with the Bank;
(iv) within 30 days following the Officer's termination of
employment with the Bank, a lump sum payment, in an amount equal to the
present value of the salary (which, in the case of an Officer who is
compensated in the form of both salary and commissions, shall be equal
to the annual average of the total salary and commissions paid to such
Officer during the two calendar years prior to such Officer's
termination of employment) that the Officer would have earned if the
Officer had continued working for the Bank during the remaining
unexpired Assurance Period at the highest annual rate of salary
achieved during the Officer's period of actual employment with the
Bank, where such present value is to be determined using a discount
rate equal to the applicable short-term federal rate prescribed under
section 1274(d) of the Internal Revenue Code of 1986, as amended
("Code"), compounded using the compounding periods corresponding to the
Bank's regular payroll periods for its officers, such lump sum to be
paid in lieu of all other payments of salary provided for under this
Agreement in respect of the period following any such termination;
(v) within 30 days following the Officer's termination of
employment with the Bank, a lump sum payment in an amount equal to the
excess, if any, of:
(A) the present value of the aggregate benefits to
which he would be entitled under The Warwick Savings Bank
Defined Benefit Pension Plan (together with the defined
benefit portion of the Benefit Restoration Plan of The Warwick
Savings Bank and any other supplemental defined benefit plan)
and any and all other qualified and non-qualified defined
benefit pension plans maintained by, or covering employees of,
the Bank, if the Officer were 100% vested thereunder and had
continued working for the Bank during the remaining unexpired
Assurance Period at the highest annual rate of salary achieved
during the Assurance Period; over
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<PAGE> 7
(B) the present value of the benefits to which he is
actually entitled under such defined benefit pension plans as
of the date of his termination;
where such present values are to be determined using the mortality
tables prescribed under section 415(b)(2)(E)(v) of the Code and a
discount rate, compounded monthly equal to the annualized rate of
interest prescribed by the Pension Benefit Guaranty Corporation for the
valuation of immediate annuities payable under terminating
single-employer defined benefit plans for the month in which the
Officer's termination of employment occurs ("Applicable PBGC Rate");
(vi) within 30 days following the Officer's termination of
employment with the Bank, a lump sum payment in an amount equal to the
present value of the additional employer contributions to which he
would have been entitled under The Warwick Savings Bank 401(k) Savings
Plan, the Employee Stock Ownership Plan of Warwick Community Bancorp,
Inc. (together with the defined contribution portion of the Benefit
Restoration Plan of The Warwick Savings Bank or any other supplemental
defined contribution plan) and any and all other qualified and
non-qualified defined contribution plans maintained by, or covering
employees of, the Bank, as if he were 100% vested thereunder and had
continued working for the Bank during the remaining unexpired Assurance
Period at the highest annual rate of salary achieved during the
Assurance Period and making the maximum amount of employee
contributions, if any, required under such plan or plans, such present
value to be determined on the basis of a discount rate, compounded
using the compounding period that corresponds to the frequency with
which employer contributions are made to the relevant plan, equal to
the Applicable PBGC Rate;
(vii) the payments that would have been made to the Officer
under any cash bonus or long-term or short-term cash incentive
compensation plan maintained by, or covering employees of, the Bank if
he had continued working for the Bank during the remaining unexpired
Assurance Period and had earned the maximum bonus or incentive award in
each calendar year that ends during the remaining unexpired Assurance
Period, such payments to be equal to the product of:
(A) the maximum percentage rate at which an award was
ever available to the Officer under such incentive
compensation plan; multiplied by
(B) the salary that would have been paid to the
Officer during each such calendar year at the highest annual
rate of salary achieved during the Assurance Period;
such payments to be made (without discounting for early payment) within
30 days following the Officer's termination of employment;
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<PAGE> 8
(viii) at the election of the Bank made within 30 days
following the occurrence of the event described in section 8(a), upon
the surrender of options or appreciation rights issued to the Officer
under any stock option and appreciation rights plan or program
maintained by, or covering employees of, the Bank, a lump sum payment
in an amount equal to the product of:
(A) the excess of (I) the fair market value of a
share of stock of the same class as the stock subject to the
option or appreciation right, determined as of the date of
termination of employment, over (II) the exercise price per
share for such option or appreciation right, as specified in
or under the relevant plan or program; multiplied by
(B) the number of shares with respect to which
options or appreciation rights are being surrendered.
For purposes of this section 8(b)(viii), the Officer shall be deemed
fully vested in all options and appreciation rights under any stock
option or appreciation rights plan or program maintained by, or
covering employees of, the Bank, even if he is not vested under such
plan or program; and
(ix) at the election of the Bank made within 30 days following
the occurrence of the event described in section 8(a), upon the
surrender of any shares awarded to the Officer under any restricted
stock plan maintained by, or covering employees of, the Bank, a lump
sum payment in an amount equal to the product of:
(A) the fair market value of a share of stock of the
same class of stock granted under such plan, determined as of
the date of the Officer's termination of employment;
multiplied by
(B) the number of shares which are being surrendered.
For purposes of this section 8(b)(ix), the Officer shall be deemed
fully vested in all shares awarded under any restricted stock plan
maintained by, or covering employees of, the Bank, even if he is not
vested under such plan.
The Bank and the Officer hereby stipulate that the damages which may be incurred
by the Officer following any such termination of employment are not capable of
accurate measurement as of the date first above written and that the payments
and benefits contemplated by this section 8(b) constitute reasonable damages
under the circumstances and shall be payable without any requirement of proof of
actual damage and without regard to the Officer's efforts, if any, to mitigate
damages. The Bank and the Officer further agree that the Bank may condition the
payments and benefits (if any) due under sections 8(b)(iii), (iv), (v), (vi) and
(vi) on the receipt of the Officer's resignation from any and all positions
which he holds as an officer, director or committee member with respect to the
Bank or any subsidiary or affiliate of the Bank.
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<PAGE> 9
SECTION 9. TERMINATION WITHOUT ADDITIONAL BANK LIABILITY.
In the event that the Officer's employment with the Bank shall
terminate during the Assurance Period on account of:
(a) the discharge of the Officer for "cause," which, for
purposes of this Agreement, shall mean a discharge because the Board
determine that the Officer: (i) has willfully and intentionally failed
to perform his assigned duties under this Agreement (including for
these purposes, the Officer's inability to perform such duties as a
result of drug or alcohol dependency); (ii) has willfully and
intentionally engaged in dishonest or illegal conduct in connection
with his performance of services for the Bank or has been convicted of
a felony; (iii) has willfully violated, in any material respect, any
law, rule, regulation, written agreement or final cease-and-desist
order with respect to his performance of services for the Bank, as
determined by the Board; or (iv) has willfully and intentionally
breached the material terms of this Agreement; provided, however, that,
if the Officer engages in any of the acts described in section 9(a)(i)
or (a)(iv) above, the Bank shall provide the Officer with written
notice of its intent to discharge the Officer for cause, and the
Executive shall have 30 days from the date on which the Officer
receives such notice to cure any such acts; and provided, further, that
on and after the date that a Change of Control occurs, a determination
under this section 9 shall require the affirmative vote of at least
three-fourths of the members of the Board acting in good faith and such
vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the
Officer, furnish to him a statement of its grounds for proposing to
make such determination, during which period the Officer shall be
afforded a reasonable opportunity to make oral and written
presentations to the members of the Board, and to be represented by his
legal counsel at such presentations, to refute the grounds for the pro
posed determination;
(b) the Officer's voluntary resignation from employment with
the Bank for reasons other than those specified in section 8(a)(i); or
(c) the death of the Officer while employed by the Bank or the
termination of the Officer's employment because of "total and permanent
disability" within the meaning of the Bank's long-term disability plan
for employees;
then the Bank shall have no further obligations under this Agreement, other than
the payment to the Officer of his earned but unpaid salary as of the date of the
termination of his employment and the provision of such other benefits, if any,
to which he is entitled as a former employee under the Bank's employee benefit
plans and programs and compensation plans and programs. For purposes of this
section 9, no act or failure to act, on the part of the Officer, shall be
considered "willful" unless it is done, or omitted to be done, by the Officer in
bad faith or without reasonable belief that the Officer's action or omission was
in the best interests of the Bank. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or based upon
the written advice of counsel for the Bank shall be conclusively presumed to be
done, or omitted to be done, by the Officer in good faith and in the best
interests of the Bank. The cessation of employment of the Officer shall not be
deemed to be for "cause" within the meaning of section 9(a) unless and until
there shall have been delivered to the Officer a copy of a resolution duly
adopted by the affirmative vote of three-fourths of the members of the Board at
a meeting of the Board called and held for such purpose (after reasonable notice
is provided to the Officer and the
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<PAGE> 10
Officer is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Officer is
guilty of the conduct described in section 9(a) above, and specifying the
particulars thereof in detail.
SECTION 10. CHANGE OF CONTROL.
(a) A Change of Control of the Bank ("Change of Control")
shall be deemed to have occurred upon the happening of any of the following
events:
(i) the reorganization, merger or consolidation of the Bank
with one or more other persons, other than a transaction following which:
(A) at least 51% of the equity ownership interests of
the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"))
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank; and
(B) at least 51% of the securities entitled to vote
generally in the election of directors of the entity resulting
from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) in
substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) at least 51% of the securities entitled to vote
generally in the election of directors of the Bank;
(ii) the acquisition of substantially all of the assets of the
Bank or beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of the outstanding
securities of the Bank entitled to vote generally in the election of
directors by any person or by any persons acting in concert; or
(iii) a complete liquidation or dissolution of the Bank;
(iv) the occurrence of any event if, immediately following
such event, at least 50% of the members of the Board do not belong to
any of the following groups:
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<PAGE> 11
(A) individuals who were members of the Board on the
date of this Agreement; or
(B) individuals who first became members of the Board
after the date of this Agreement either:
(1) upon election to serve as a member of
the Board by affirmative vote of three-quarters of
the members of such Board, or a nominating committee
thereof, in office at the time of such first
election; or
(2) upon election by the shareholders of the
Board to serve as a member of the Board, but only if
nominated for election by affirmative vote of
three-quarters of the members of the Board, or of a
nominating committee thereof, in office at the time
of such first nomination;
provided, however, that such individual's election or nomination did
not result from an actual or threatened election contest (within the
meaning of Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents
(within the meaning of Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) other than by or on behalf of the Board of the Bank;
(v) any event which would be described in section 10(a)(i),
(ii), (iii) or (iv) if the term "Company" were substituted for the term
"Bank" therein and the term "Board of Directors of the Company" were
substituted for the term "Board" therein.
For purposes of this section 10(a), the term "person" shall have the meaning
assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(b) In no event, however, shall a Change of Control be deemed
to have occurred as a result of any acquisition of securities or assets of the
Company, the Bank or any subsidiary of either of them, by the Company, the Bank
or any subsidiary of either of them, or by any employee benefit plan maintained
by any of them.
(c) In the event of a Change of Control, the term "remaining
unexpired Assurance Period" shall mean one year beginning on the effective date
of such Change of Control, even if such one-year period extends beyond the date
the Officer attains age 68.
SECTION 11. NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.
The termination of the Officer's employment during the
Assurance Period or thereafter, whether by the Bank or by the Officer, shall
have no effect on the rights and obligations of the parties hereto under the
Bank's qualified or non-qualified retirement, pension, savings, thrift,
profit-sharing or stock bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans or such other employee benefit plans or programs, or
compensation plans or programs (whether or not employee
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<PAGE> 12
benefit plans or programs), as may be maintained by, or cover employees of, the
Bank from time to time; provided, however, that nothing in this Agreement shall
be deemed to duplicate any compensation or benefits provided under any
agreement, plan or program covering the Officer to which the Bank or the Company
is a party and any duplicative amount payable under any such agreement, plan or
program shall be applied as an offset to reduce the amounts otherwise payable
hereunder.
SECTION 12. SUCCESSORS AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Officer, his legal representatives and testate or intestate
distributees, and the Bank and the Company, their respective successors and
assigns, including any successor by merger or consolidation or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the respective assets and business of the Bank or the
Company may be sold or otherwise transferred. Failure of the Bank to obtain from
any successor its express written assumption of the Bank's obligations hereunder
at least 60 days in advance of the scheduled effective date of any such
succession shall be deemed a material breach of this Agreement.
SECTION 13. NOTICES.
Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:
If to the Officer:
------------------------
------------------------
------------------------
If to the Bank or the Company:
The Warwick Savings Bank
18 Oakland Avenue
Warwick, New York 10990-0591
Attention: President
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<PAGE> 13
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: Dougals J. McClintock, Esq.
SECTION 14. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) To the extent permitted by the Banking Law of the State
of New York, the Bank shall indemnify, hold harmless and defend the Officer
against reasonable costs, including legal fees, incurred by the Officer in
connection with or arising out of any action, suit or proceeding in which the
Officer may be involved, as a result of the Officer's efforts, in good faith, to
defend or enforce the terms of this Agreement. For purposes of this Agreement,
any settlement agreement which provides for payment of any amounts in settlement
of the Bank's obligations hereunder shall be conclusive evidence of the
Officer's entitlement to indemnification hereunder, and any such indemnification
payments shall be in addition to amounts payable pursuant to such settlement
agreement, unless such settlement agreement expressly provides otherwise.
(b) The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Officer or others. In no event
shall the Officer be obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to the Officer under any of the
provisions of this Agreement and such amounts shall not be reduced whether or
not the Officer obtains other employment. Unless it is determined that a claim
made by the Officer was either frivolous or made in bad faith, the Bank agrees
to pay as incurred, to the full extent permitted by law, all legal fees and
expenses which the Officer may reasonably incur as a result of or in connection
with his consultation with legal counsel or arising out of any action, suit,
proceeding or contest (regardless of the outcome thereof) by the Bank, the
Officer or others regarding the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Officer about the amount of any
payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable federal rate provided for in section 7872(f)(2)(A) of
the Code. This section 14(b) shall apply whether such consultation, action,
suit, proceeding or contest arises before, on, after or as a result of a Change
of Control.
SECTION 15. SEVERABILITY.
A determination that any provision of this Agreement is
invalid or unenforceable shall not affect the validity or enforceability of any
other provision hereof.
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<PAGE> 14
SECTION 16. WAIVER.
Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
SECTION 17. COUNTERPARTS.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, and all of which shall constitute one
and the same Agreement.
SECTION 18. GOVERNING LAW.
Except to the extent preempted by federal law, this Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of New York applicable to contracts entered into and to be performed
entirely within the State of New York.
SECTION 19. HEADINGS AND CONSTRUCTION.
The headings of sections in this Agreement are for convenience
of reference only and are not intended to qualify the meaning of any section.
Any reference to a section number shall refer to a section of this Agreement,
unless otherwise stated.
SECTION 20. ENTIRE AGREEMENT; MODIFICATIONS.
This instrument contains the entire agreement of the parties
relating to the subject matter hereof, and supersedes in its entirety any and
all prior agreements, understandings or representations relating to the subject
matter hereof. No modifications of this Agreement shall be valid unless made in
writing and signed by the parties hereto.
SECTION 21. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purposes of
complying with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary,
in no event shall the aggregate amount of compensation payable to the
Officer under section 8(b) hereof (exclusive of amounts described in
section 8(b)(i)) exceed the three times the Officer's average annual
total compensation for the last five consecutive calendar years to end
prior to his termination of employment with the
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<PAGE> 15
Bank (or for his entire period of employment with the Bank if less than
five calendar years).
(b) Notwithstanding anything herein contained to the contrary,
any payments to the Officer by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C. Section1828(k), and any regulations promulgated
thereunder.
(c) Notwithstanding anything herein contained to the contrary,
if the Officer is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant
to a notice served under section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. Section 1818(e)(3) or 1818(g)(1), the Bank's obligations under
this Agreement shall be suspended as of the date of service of such
notice, unless stayed by appropriate proceedings. If the charges in
such notice are dismissed, the Bank, in its discretion, may (i) pay to
the Officer all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary,
if the Officer is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued
under section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C.
Section 1818(e)(4) or (g)(1), all prospective obligations of the Bank
under this Agreement shall terminate as of the effective date of the
order, but vested rights and obligations of the Bank and the Officer
shall not be affected.
(e) Notwithstanding anything herein contained to the contrary,
if the Bank is in default (within the meaning of section 3(x)(1) of the
FDI Act, 12 U.S.C. Section 1813(x)(1), all prospective obligations of
the Bank under this Agreement shall terminate as of the date of
default, but vested rights and obligations of the Bank and the Officer
shall not be affected.
(f) Notwithstanding anything herein contained to the contrary,
all prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Federal Deposit
Insurance Corporation ("FDIC"), at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in section 13(c) of the FDI Act, 12 U.S.C.
Section 1823(c); (ii) by the FDIC or its designee at the time the FDIC
or its designee approves a supervisory merger to resolve problems
related to the operation of the Bank or when the Bank is determined by
the FDIC to be in an unsafe or unsound condition. The vested rights and
obligations of the parties shall not be affected.
-15-
<PAGE> 16
SECTION 22. GUARANTY.
The Company hereby irrevocably and unconditionally guarantees
to the Officer the payment of all amounts, and the performance of all other
obligations, due from the Bank in accordance with the terms of this Agreement as
and when due without any requirement of presentment, demand of payment, protest
or notice of dishonor or nonpayment.
IN WITNESS WHEREOF, the Bank and the Company have caused this
Agreement to be executed and the Officer has hereunto set his hand, all as of
the day and year first above written.
----------------------------------------
OFFICER
ATTEST: THE WARWICK SAVINGS BANK
By
---------------------------
Secretary By
--------------------------------------
Name:
[Seal] Title:
ATTEST: WARWICK COMMUNITY BANCORP, INC..
By
---------------------------
Secretary By
--------------------------------------
Name:
[Seal] Title:
-16-
<PAGE> 17
STATE OF NEW YORK )
: ss.:
COUNTY OF ORANGE )
On this ____ day of ______________, 19__, before me personally
came _____________________, to me known, and known to me to be the individual
described in the foregoing instrument, who, being by me duly sworn, did depose
and say that he resides at the address set forth in said instrument, and that he
signed his name to the foregoing instrument.
________________________________________
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF ORANGE )
On this _____ day of _________________, 19__, before me
personally came _____________________, to me known, who, being by me duly sworn,
did depose and say that he resides at _________________________________________,
that he is a member of the Board of Directors of THE WARWICK SAVINGS BANK, the
savings bank described in and which executed the foregoing instrument; that he
knows the seal of said savings bank; that the seal affixed to said instrument is
such seal; that it was so affixed by authority of the Board of Directors of said
savings bank; and that he signed his name thereto by like authority.
________________________________________
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF ORANGE )
On this _____ day of __________________, 19__, before me
personally came __________________, to me known, who, being by me duly sworn,
did depose and say that he resides at __________ ______________________________,
that he is a member of the Board of Directors of WARWICK COMMUNITY BANCORP,
INC., the Delaware corporation described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such seal; that it was so affixed by order of the Board of
Directors of said corporation; and that he signed his name thereto by like
order.
________________________________________
Notary Public
-17-
<PAGE> 1
EXHIBIT 16.1
[Letterhead of KPMG Peat Marwick LLP]
September 19, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Ladies and Gentlemen:
We were previously principal accountants for the Warwick Savings Bank and
subsidiaries (the Company) and, under the date of July 12, 1996, we reported on
the consolidated balance sheet of the Company as of May 31, 1996. On December
18, 1996, our appointment as principal accountants was terminated. We have read
the Company's statements included under the section entitled "Other Information"
in the Registration Statement on Form S-1 filed by the Company and we agree with
such statements.
Very truly yours,
/s/ KPMG Peat Marwick LLP
- -------------------------
KPMG Peat Marwick LLP
<PAGE> 1
Exhibit 23.1
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated July 30, 1997 (and to all references to our Firm) included in or made part
of this Prospectus which is included in the Application for Conversion on Form
86-AC, the Notice and Application for Conversion for The Warwick Savings Bank,
the Registration Statement on Form S-1, and related Prospectus of Warwick
Community Bancorp, Inc. as amended to date.
/s/ Arthur Andersen LLP
New York, New York
October 24, 1997
<PAGE> 1
Exhibit 23.4
CONSENT
We hereby consent to the reference to this firm and our opinion in
the Registration Statement on Form S-1 filed by Warwick Community Bancorp, Inc.,
Warwick, New York (the "Company"), and all amendments thereto; in the
Application for Conversion on Form 86-AC filed by The Warwick Savings Bank (the
"Bank"), and all amendments thereto, and in the Notice and Application for
Conversion filed with the Federal Deposit Insurance Company and all amendments
thereto.
/S/ WILLIAM M. MERCER, INCORPORATED
-----------------------------------
WILLIAM M. MERCER, INCORPORATED
Philadelphia, Pennsylvania
Dated this 29 day of October 1997
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1997
<PERIOD-END> AUG-31-1997
<CASH> 8752
<INT-BEARING-DEPOSITS> 539
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 110226
<INVESTMENTS-CARRYING> 6102
<INVESTMENTS-MARKET> 6117
<LOANS> 156032<F1>
<ALLOWANCE> 1367
<TOTAL-ASSETS> 290868
<DEPOSITS> 221763
<SHORT-TERM> 10965
<LIABILITIES-OTHER> 8578
<LONG-TERM> 20350
0
0
<COMMON> 0
<OTHER-SE> 29212
<TOTAL-LIABILITIES-AND-EQUITY> 290868
<INTEREST-LOAN> 3081
<INTEREST-INVEST> 2107
<INTEREST-OTHER> 44
<INTEREST-TOTAL> 5232
<INTEREST-DEPOSIT> 1895
<INTEREST-EXPENSE> 2358
<INTEREST-INCOME-NET> 2874
<LOAN-LOSSES> 304
<SECURITIES-GAINS> 154
<EXPENSE-OTHER> 2349
<INCOME-PRETAX> 897
<INCOME-PRE-EXTRAORDINARY> 897
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 538
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 4.27<F2>
<LOANS-NON> 1396
<LOANS-PAST> 67
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 227
<ALLOWANCE-OPEN> 1232
<CHARGE-OFFS> 171
<RECOVERIES> 3
<ALLOWANCE-CLOSE> 1367
<ALLOWANCE-DOMESTIC> 1367
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>LOANS INCLUDES UNEARNED INCOME OF $184
<F2>AVERAGE BALANCES WERE USED TO COMPUTE YIELD ACTUAL
</FN>
</TABLE>
<PAGE> 1
Exhibit 99.1(a)
===============================================================================
The Warwick Savings Bank
Conversion
Valuation
Appraisal
Date Issued: September 18, 1997
Date of Market Prices: September 8, 1997
===============================================================================
<PAGE> 2
Table of Contents
The Warwick Savings Bank
Warwick, New York
INTRODUCTION 1
- -----------------------------------------------------------------------------
1. OVERVIEW AND FINANCIAL ANALYSIS 3
- -----------------------------------------------------------------------------
GENERAL OVERVIEW 3
STRATEGIC DIRECTION 5
BALANCE SHEET TRENDS 6
LOAN PORTFOLIO 9
SECURITIES 12
INVESTMENTS AND MORTGAGE-BACKED SECURITIES 13
ASSET QUALITY 15
FUNDING COMPOSITION 18
ASSET/LIABILITY MANAGEMENT 20
NET WORTH AND CAPITAL 21
INCOME AND EXPENSE TRENDS 22
SUBSIDIARIES 26
LEGAL PROCEEDINGS 26
2. MARKET AREA ANALYSIS 27
- -----------------------------------------------------------------------------
BRANCH FACILITIES 28
MARKET AREA DEMOGRAPHICS 29
MARKET AREA DEPOSIT CHARACTERISTICS 34
3. COMPARISONS WITH PUBLICLY TRADED THRIFTS 38
- -----------------------------------------------------------------------------
INTRODUCTION 38
SELECTION SCREENS 38
SELECTION CRITERIA 39
COMPARABLE GROUP PROFILES 42
CORPORATE DATA 47
KEY FINANCIAL DATA 48
CAPITAL DATA 49
ASSET QUALITY DATA 50
PROFITABILITY DATA 51
INCOME STATEMENT DATA 52
GROWTH DATA 53
MARKET CAPITALIZATION DATA 54
DIVIDEND DATA 55
- -----------------------------------------------------------------------------
<PAGE> 3
PRICING DATA 56
4. MARKET VALUE DETERMINATION 57
- -----------------------------------------------------------------------------
INTRODUCTION 57
FINANCIAL STRENGTH 58
EARNINGS QUALITY, PREDICTABILITY AND GROWTH 60
MARKET AREA 64
MANAGEMENT 65
DIVIDENDS 66
LIQUIDITY OF THE ISSUE 67
SUBSCRIPTION INTEREST 68
RECENT REGULATORY MATTERS 69
MARKET FOR SEASONED THRIFT STOCKS 70
ACQUISITION MARKET 74
ADJUSTMENTS TO VALUE 81
VALUATION APPROACH 82
VALUATION CONCLUSION 86
- -----------------------------------------------------------------------------
<PAGE> 4
List of Figures
The Warwick Savings Bank
Warwick, New York
FIGURE 1 - CURRENT BRANCH LIST 3
FIGURE 2 - HISTORICAL TIMELINE 4
FIGURE 3 - ASSET AND RETAINED EARNINGS CHART 6
FIGURE 4 - AVERAGE YIELDS AND COSTS 7
FIGURE 5 - KEY BALANCE SHEET DATA 8
FIGURE 6 - KEY OPERATIONS DATA 8
FIGURE 7 - LOAN MIX AS OF MAY 31, 1997 CHART 9
FIGURE 8 - NET LOANS RECEIVABLE CHART 10
FIGURE 9 - LOAN MIX 11
FIGURE 10 - SECURITIES CHART 12
FIGURE 11 - INVESTMENT MIX 13
FIGURE 12 - INVESTMENT PORTFOLIO MATURITY 13
FIGURE 13 - MBS PORTFOLIO 14
FIGURE 14 - MBS PORTFOLIO MATURITY 14
FIGURE 15 - NON-PERFORMING ASSETS CHART 15
FIGURE 16 - NON-PERFORMING LOANS 16
FIGURE 17 - ALLOWANCE FOR POSSIBLE LOAN AND LEASE LOSSES CHART 17
FIGURE 18 - DEPOSIT MIX 18
FIGURE 19 - DEPOSIT AND BORROWING TREND CHART 19
FIGURE 20 - GAP CHART 20
FIGURE 21 - CAPITAL ANALYSIS 21
FIGURE 22 - NET INCOME CHART 22
FIGURE 23 - SPREAD AND MARGIN CHART 23
FIGURE 24 - INCOME STATEMENT TRENDS 24
FIGURE 25 - PROFITABILITY TREND CHART 25
FIGURE 26 - TARGET MARKETS 27
FIGURE 27 - BRANCH FACILITY TABLE 28
FIGURE 28 - POPULATION DEMOGRAPHICS 30
FIGURE 29 - HOUSEHOLD DEMOGRAPHICS 31
FIGURE 30 - EMPLOYMENT DEMOGRAPHICS 32
FIGURE 31 - HOUSING DEMOGRAPHICS 33
FIGURE 32 - DEPOSIT TRENDS AND MARKET SHARE TABLE 34
FIGURE 33 - DEPOSIT TRENDS AND MARKET SHARE TABLE 35
FIGURE 34 - DEPOSIT TRENDS AND MARKET SHARE TABLE 36
FIGURE 35 - DEPOSIT TRENDS AND MARKET SHARE TABLE 37
FIGURE 36 - KEY FINANCIAL INDICATORS 45
FIGURE 37 - COMPARABLE CORPORATE DATA 47
FIGURE 38 - COMPARABLE KEY FINANCIAL DATA 48
FIGURE 39 - COMPARABLE CAPITAL DATA 49
FIGURE 40 - COMPARABLE ASSET QUALITY DATA 50
FIGURE 41 - COMPARABLE PROFITABILITY DATA 51
FIGURE 42 - COMPARABLE INCOME STATEMENT DATA 52
FIGURE 43 - COMPARABLE GROWTH DATA 53
FIGURE 44 - COMPARABLE MARKET CAPITALIZATION DATA 54
FIGURE 45 - COMPARABLE DIVIDEND DATA 55
FIGURE 46 - COMPARABLE PRICING DATA 56
FIGURE 47 - NET INCOME CHART 61
- -----------------------------------------------------------------------------
<PAGE> 5
FIGURE 48 - SPREAD AND MARGIN CHART 62
FIGURE 49- SNL THRIFT INDEX CHART 70
FIGURE 50 - HISTORICAL SNL INDEX 71
FIGURE 51 - EQUITY INDICES 72
FIGURE 52 - HISTORICAL RATES 73
FIGURE 53 - DEALS FOR LAST FIVE QUARTERS 74
FIGURE 54 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO BOOK 75
FIGURE 55 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO TANGIBLE BOOK 76
FIGURE 56 - THRIFT ACQUISITION MULTIPLES, PRICE TO EARNINGS 77
FIGURE 57 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO ASSETS 78
FIGURE 58 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO DEPOSITS 79
FIGURE 59 - DEAL MULTIPLES 80
FIGURE 60 -ACQUISITION TABLE 80
FIGURE 61 - VALUE RANGE OFFERING DATA 83
FIGURE 62 - COMPARABLE PRICING MULTIPLES 84
FIGURE 63 - RECENT STANDARD CONVERSION MULTIPLES 84
FIGURE 64 - ADJUSTED SUPERMAX TO RECENT CONVERSION COMPARISON 84
FIGURE 65 - SUPERMAX TO GOSHEN SAVINGS BANK 85
FIGURE 66 - P/E ADJUSTED FOR SAIF ASSESSMENT 85
FIGURE 67 - BANK VS. SAIF ADJUSTED COMPARABLES 85
- -----------------------------------------------------------------------------
<PAGE> 6
List of Exhibits
The Warwick Savings Bank
Warwick, New York
EXHIBIT
- -----------
1 Consolidated Statements of Financial Condition
2 Consolidated Statements of Income
3 Consolidated Statements of Changes in Net Worth
4 Consolidated Statements of Cash Flows
5 Selected Data on All Public Thrifts, New York Thrifts, and Comparables
6 Market Multiples - All Public Thrifts, New York Thrifts, and
Comparables
7 Standard Conversions - 1996-to-Date - Selected Market Data
8 Appraisal May 31, 1997 12 Months Data No Foundation
9 Appraisal May 31, 1997 12 Months Data With Foundation
10 Profile of FinPro, Inc.
- -----------------------------------------------------------------------------
<PAGE> 7
Conversion Valuation Appraisal Report Page: 1 - 1
================================================================================
INTRODUCTION
This report represents FinPro, Inc.'s ("FinPro") independent appraisal of the
estimated pro-forma market value of the common stock ( the "Common Stock") of
The Warwick Savings Bank (the "Bank" or "Warwick") in connection with the Plan
of Conversion ("Conversion") of Warwick from a state chartered mutual savings
bank to a state chartered stock savings bank. Pursuant to the Plan of
Conversion, (i) the Bank will convert from a state chartered savings bank
organized in mutual form to a state chartered savings bank organized in the
stock form, (ii) the Bank will offer and sell shares of its common stock in a
subscription and community offering. In conjunction with the offering the Bank
will establish a charitable foundation by donating common stock equal to three
percent of the gross proceeds.
It is our understanding that the Bank will offer its stock in a subscription and
community offering to the Bank's Eligible Account Holders, to Supplemental
Eligible Account Holders of the Bank, to Other Participants, to the board
members, officers and employees of the Bank, and to the community. This
appraisal has been prepared in accordance with Regulation 563b.7 and with the
"Guidelines for Appraisal Reports for the Valuation of Savings and Loan
Associations Converting from Mutual to Stock Form of Organization" of the Office
of Thrift Supervision ("OTS") which have been adopted in practice by the Federal
Deposit Insurance Corporation ("FDIC"), including the most recent revisions as
of October 21, 1994, and applicable regulatory interpretations thereof.
In the course of preparing our report, we reviewed the audited financial
statements of the Bank's operations for the twelve month period ended May 31,
1997 and the Bank's operations and financials for the prior three years ending
May 31, 1997. We also reviewed the Bank's Application for Approval of Conversion
including the Proxy Statement and the Company's Form S-1 registration statement
as filed with the Securities and Exchange Commission ("SEC"). We have conducted
due diligence analysis of the Bank and the Company (hereinafter, collectively
referred to as "the Bank") and held due diligence related discussions with the
Bank's management and board, Arthur Andersen, LLP. (the Bank's independent audit
firm), Sandler O'Neill & Partners, L.P. (the Bank's underwriter), and Thacher
Proffitt & Wood (the Bank's special counsel). The valuation parameters set forth
in the appraisal were predicated on these discussions but all conclusions
related to the valuation were reached and made independent of such discussions.
<PAGE> 8
Conversion Valuation Appraisal Report Page: 1 - 2
================================================================================
Where appropriate, we considered information based upon other publicly available
sources, which we believe to be reliable; however, we cannot guarantee the
accuracy or completeness of such information. We visited the Bank's primary
market area and reviewed the market area economic condition. We also reviewed
the competitive environment in which the Bank operates and its relative
strengths and weaknesses. We compared the Bank's performance with selected
publicly traded thrift institutions. We reviewed conditions in the securities
markets in general and in the market for savings institutions in particular. Our
analysis included a review of the estimated effects of the Conversion on the
Bank, operation and expected financial performance as they related to the Bank's
estimated pro-forma value.
In preparing our valuation, we relied upon and assumed the accuracy and
completeness of financial and other information provided to us by the Bank and
its independent accountants. We did not independently verify the financial
statements and other information provided by the Bank and its independent
accountants, nor did we independently value any of the Bank's assets or
liabilities. This estimated valuation considers the Bank only as a going concern
and should not be considered as an indication of its liquidation value.
OUR VALUATION IS NOT INTENDED, AND MUST NOT BE CONSTRUED, TO BE A RECOMMENDATION
OF ANY KIND AS THE ADVISABILITY OF PURCHASING SHARES OF COMMON STOCK IN THE
CONVERSION. MOREOVER, BECAUSE SUCH VALUATION IS NECESSARILY BASED UPON ESTIMATES
AND PROJECTIONS OF A NUMBER OF MATTERS, ALL OF WHICH ARE SUBJECT TO CHANGE FROM
TIME TO TIME, NO ASSURANCE CAN BE GIVEN THAT PERSONS WHO PURCHASE SHARES OF
COMMON STOCK IN THE CONVERSION WILL THEREAFTER BE ABLE TO SELL SUCH SHARES AT
PRICES RELATED TO THE FOREGOING VALUATION OF THE PRO-FORMA MARKET VALUE THEREOF.
FINPRO IS NOT A SELLER OF SECURITIES WITHIN THE MEANING OF ANY FEDERAL OR STATE
SECURITIES LAWS AND ANY REPORT PREPARED BY FINPRO SHALL NOT BE USED AS AN OFFER
OR SOLICITATION WITH RESPECT TO THE PURCHASE OR SALE OF ANY SECURITIES.
The estimated valuation herein will be updated as appropriate. These updates
will consider, among other factors, any developments or changes in the Bank
financial condition, operating performance, management policies and procedures,
and current conditions in the securities market for thrift institution common
stock. Should any such developments or changes, in our opinion, be material to
the estimated pro-forma market value of the Bank, appropriate adjustments to the
estimated pro-forma market value will be made. The reasons for any such
adjustments will be explained at that time.
<PAGE> 9
Conversion Valuation Appraisal Report Page: 1 - 3
================================================================================
1. OVERVIEW AND FINANCIAL ANALYSIS
GENERAL OVERVIEW
The Bank after the Conversion, will be a state chartered stock savings bank. As
of May 31, 1997, the Bank had $286.5 million in total assets, $221.2 million in
deposits, $126.4 million in net loans and $28.1 million in equity.
The following table shows the Bank's branch network as of May 31, 1997.
FIGURE 1 - CURRENT BRANCH LIST
BRANCH OFFICE TOWN
- ---------------------------------- ----------------------------
18 Oakland Avenue Warwick
Route 17M Monroe
Route 32 & Hollet Avenue Highland Mills
1 Galleria Drive - Gallaria Middletown
<PAGE> 10
Conversion Valuation Appraisal Report Page: 1 - 4
================================================================================
FIGURE 2 - HISTORICAL TIMELINE
1875 The Bank was incorporated June 15, 1875.
1970 A plan of merger was adopted between the Orange County Savings
and Loan Association and The Warwick Savings Bank.
1992 The Bank opened a branch in the Galleria Mall at Crystal Run
in Middletown, New York.
1997 The Bank's Board of Trustees adopted a plan of conversion to
convert from a New York mutual savings bank to a New York
Stock savings bank and to become a wholly-owned subsidiary of
a new Delaware Corporation (Warwick Community Bancorp, Inc.)
<PAGE> 11
Conversion Valuation Appraisal Report Page: 1 - 5
================================================================================
STRATEGIC DIRECTION
The Bank has historically employed an operating strategy that emphasizes the
origination of one-to-four family residential mortgage loans in its market area
with both fixed and variable rates and, to an increasing degree over the past 10
years, its commercial lending business, with mostly prime-based rate loans
secured by real estate located mainly in Orange county, New York. Due in part to
this strategy, the Bank historically has had profitable operations, resulting in
a strong regulatory capital position. The Bank's goal of maintaining this
position has lead to an overall strategy of managed growth in both deposits and
assets. The major elements of the Bank's operating strategy are to: (i) maintain
diversification of the Bank's loan portfolio by continuing to originate
owner-occupied residential mortgage, commercial and commercial real estate,
construction and consumer loans in its market area; (ii) complement the Bank's
mortgage lending activities by investing in mortgage-backed and other
securities; (iii) maintain the Bank's relatively low cost of funds and (iv)
manage the Bank's level of interest rate risk. From time to time, the Bank
employs a leveraging strategy, whereby borrowings are used to fund specific
investments. This form of leveraging allows for a reasonable net margin of
return, the majority of which is locked in for a specific period. The Bank also
seeks to attract and retain customers by providing a high level of personal
service to its retail and business customers through extended office hours, low
turnover of employees and prompt, flexible and personalized production of a
variety of loan products, In addition, it is a goal of the Bank to increase its
market share in the communities it serves through the acquisition or
establishment of branch offices and, if appropriate, the acquisition of smaller
financial institutions. Additionally, it is a goal of the Bank to penetrate new
markets. For this reason, the Bank has recently applied to, and approval is
currently pending from , the State of New Jersey Department of Banking to expand
its mortgage banking operations into that state.
<PAGE> 12
Conversion Valuation Appraisal Report Page: 1 - 6
================================================================================
BALANCE SHEET TRENDS
The asset size of the Bank has increased steadily since May 31, 1993, at which
time the Bank had assets of $224.9 million. Since that time, assets have grown
$61.7 million, or 27.44%, to $286.5 million at May 31, 1997. Retained earnings
has followed a similar trend growing from $20.1 million at May 31, 1993 to $27.5
million at May 31, 1997, or 36.47%.
FIGURE 3 - ASSET AND RETAINED EARNINGS CHART
<TABLE>
<CAPTION>
ASSETS RETAINED EARNINGS
-------- -------------------
$ In thousands $ In thousands
<S> <C> <C>
May-93............ $224,851 $20,147
May-94............ $234,048 $21,910
May-95............ $258,679 $23,076
May-96............ $274,053 $24,629
May-97............ $286,545 $27,495
</TABLE>
Source: Offering Prospectus
<PAGE> 13
Conversion Valuation Appraisal Report Page: 1 - 7
================================================================================
Both spread and margin have increased for the year ending May 31, 1997, when
compared to the same period ending May 31, 1996.
FIGURE 4 - AVERAGE YIELDS AND COSTS
<TABLE>
<CAPTION>
CONSOLIDATED AVERAGE BALANCE SHEETS
FOR THE YEAR ENDED MAY 31,
--------------------------------------------------------------------------------------
1997 1996 1995
--------------------------- --------------------------- ---------------------------
AVERAGE AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST BALANCE INTEREST COST
-------- -------- ------- -------- -------- ------- -------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Mortgage loans, net.............. $ 90,771 $ 7,152 7.88% $103,854 $ 8,098 7.80% $ 84,338 $ 6,922 8.21%
Consumer and other loans, net.... 36,160 3,457 9.56% 33,127 3,150 9.51% 30,027 2,834 9.44%
Mortgage-backed securities....... 80,255 5,897 7.35% 19,612 1617 8.24% 16,165 938 5.80%
Federal funds sold............... 283 15 5.30% 6,058 322 5.32% 5,031 265 5.27%
Interest earning accounts
at banks....................... 395 18 4.56% 93 5 5.38% 17 1 5.88%
Investment securities............ 61,508 4,152 6.75% 78,681 5,141 6.53% 85,344 5,293 6.20%
-------- ------- ----- -------- ------- ----- -------- ------ -----
Total interest-earning assets.. 269,372 20,691 7.68% 241,425 18,333 7.59% 220,822 16,253 7.36%
Non-interest earning assets........ 15,856 19,149 15,578
-------- -------- --------
Total assets................... $285,228 $260,574 $236,500
======== ======== ========
Liabilities and retained earnings:
Interest-bearing liabilities:
Passbook accounts................ $ 78,132 2,323 2.97% $ 77,868 2,365 3.04% $ 87,962 2,677 3.04%
Escrow deposits.................. 1,020 50 4.90% 2,345 68 2.90% 2,122 61 2.87%
NOW accounts..................... 14,117 227 1.61% 12,638 215 1.70% 9,856 186 1.89%
Money market accounts............ 27,016 883 3.27% 28,674 936 3.26% 34,225 1,042 3.04%
Certificates..................... 79,155 3,985 5.03% 89,831 5,109 5.69% 59,005 2,808 4.76%
Borrowed funds................... 31,249 1,908 6.11% 489 24 4.91% 906 54 5.68%
-------- ------- ----- -------- ------- ----- -------- ------ -----
Total interest-bearing
liabilities.................. 230,689 9,376 4.06% 211,845 8,717 4.11% 194,076 6,828 3.52%
------- ------- ------
Non-interest bearing liabilities... 28,528 25,432 20,716
-------- -------- --------
Total liabilities.............. 259,217 237,277 214,792
-------- -------- --------
Retained earnings.................. 26,011 23,297 21,708
-------- -------- --------
Total liabilities and retained
earnings..................... $285,228 $ 260,574 $236,500
======== ========= ========
Net interest income/interest
rate spread...................... $11,315 3.62% $ 9,616 3.48% $ 9,425 3.84%
======= ----- ======= ------ ======= -----
Non interest-earning assets/
net interest margin.............. $ 38,683 4.20% $29,580 3.98% $ 26,846 4.27%
----- ----- -----
Assets to liabilities.............. 116.77% 113.96% 113.83%
-------- -------- --------
</TABLE>
(1) In computing the average balance of loans, non-accrual loans have been
included.
(2) Interest rate spread represents the difference between the average rate on
interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net interest margin on interest-earning assets represents net interest
income as a percentage of average interest-earning assets.
Source: Offering Prospectus
<PAGE> 14
Conversion Valuation Appraisal Report Page: 1 - 8
================================================================================
The following tables set forth certain information concerning the financial
position of the Bank along with operations data at the dates indicated.
FIGURE 5 - KEY BALANCE SHEET DATA
<TABLE>
<CAPTION>
At May 31,
------------------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
In thousands
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA:
Total assets $286,545 $274,053 $258,679 $234,048 $224,851
Loans receivable, net 138,323 108,897 122,663 108,608 108,848
Investment securities 126,393 144,284 110,333 105,433 93,013
Real estate owned, net 224 330 493 306 --
Deposits 221,211 232,965 229,011 207,527 200,564
FHLB Advances 5,250 3,600 -- -- --
Securities sold under repurchase
agreements 23,090 4,700 -- -- --
Retained earnings 27,495 24,629 23,076 21,910 20,147
</TABLE>
Source: Offering Prospectus
FIGURE 6 - KEY OPERATIONS DATA
<TABLE>
<CAPTION>
For the Year Ended May 31,
------------------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
In thousands Unaudited
<S> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Interest income $ 20,691 $ 18,333 $ 16,253 $ 15,786 $ 16,549
Interest expense 9,376 8,717 6,828 5,922 6,710
-------- -------- -------- -------- --------
Net interest income 11,315 9,616 9,425 9,864 9,839
Provision for loan losses 130 140 261 415 548
-------- -------- -------- -------- --------
Net interest income after
provision for loan losses 11,185 9,476 9,164 9,449 9,291
-------- -------- -------- -------- --------
Non-interest income:
Service and fee income 1,915 1,768 1,369 1,996 536
Securities transactions 816 356 (429) 845 243
Loan transactions 137 119 14 123 113
Other income or (loss) (89) (159) (79) (17) 120
-------- -------- -------- -------- --------
Total other income, net 2,779 2,084 875 2,947 1,012
Non-interest expense:
Salaries and employees benefits 5,256 5,050 3,958 3,877 3,572
FDIC insurance 12 53 466 456 427
Occupancy and equipment 1,308 1,238 1,202 1,141 879
Data processing 640 484 414 341 318
Advertising 152 129 112 69 119
Professional fees 240 325 222 270 324
Other operating expenses 1,735 1,791 1,722 1,608 1,508
-------- -------- -------- -------- --------
Total other expenses 9,343 9,070 8,096 7,762 7,147
Income (loss) before cumulative
effect of change in accounting
principle 4,621 2,490 1,943 4,634 3,156
Income tax expense (benefit) 1,756 1,024 794 2,115 1,370
-------- -------- -------- -------- --------
Income (loss) before cumulative
effect of change in accounting
principle 2,865 1,466 1,149 2,519 1,786
Cumulative effect of change in
accounting principle -- -- (645) -- --
-------- -------- -------- -------- --------
Net income (loss) $ 2,865 $ 1,466 $ 504 $ 2,519 $ 1,786
======== ======== ======== ======== ========
</TABLE>
Source: Offering Prospectus
<PAGE> 15
Conversion Valuation Appraisal Report Page: 1 - 9
================================================================================
LOAN PORTFOLIO
The Bank originates one-to-four family, consumer, and commercial loans.
FIGURE 7 - LOAN MIX AS OF MAY 31, 1997 CHART
<TABLE>
<S> <C>
One-to-four family 62.55%
Home equity 9.63%
Construction 1.43%
Commercial 16.76%
Automobile 5.54%
Student 0.95%
Credit Card 0.95%
Other 2.19%
</TABLE>
Source: Offering Prospectus
<PAGE> 16
Conversion Valuation Appraisal Report Page: 1 - 10
================================================================================
The Bank increased its lending portfolio in its fiscal years ending May 31,
1995, 1996, and 1997. The decrease in the loan portfolio in 1996 is attributable
to the securitization of approximately $52 million in conventional mortgages. A
corresponding increase can be seen in the mortgage-backed security portfolio in
that year. The Bank's net loan to asset ratio was 48% at May 31, 1997.
FIGURE 8 - NET LOANS RECEIVABLE CHART
<TABLE>
<CAPTION>
LOANS RECEIVABLE, NET NET LOANS TO ASSETS
--------------------- -------------------
($ IN THOUSANDS) (%)
<S> <C> <C>
May-93 $108,848 [Line graph showing
May-94 108,721 percentage of net loans
May-95 122,672 to assets at May 31, 1993,
May-96 108,897 1994, 1995, 1996 and 1997.]
May-97 138,322
</TABLE>
Source: Offering Prospectus
<PAGE> 17
Conversion Valuation Appraisal Report Page: 1 - 11
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Over the five year period presented below, the Bank's loan mix has shifted
toward consumer and other loans.
FIGURE 9 - LOAN MIX
<TABLE>
<CAPTION>
May 31,
-------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------------- ----------------- ---------------- ---------------- -----------------
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ ------- ------ ------- ------ -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Conventional 1-4 family loans $ 81,803 58.56% $ 61,936 56.18% $ 78,571 63.35% $ 71,885 65.46% $ 78,489 71.40%
Mortgage loans held for sale 4,832 3.46% 5,054 4.58% 2,968 2.39% -- 0.00% -- 0.00%
VA or FHA loans 749 0.54% 376 0.34% 182 0.15% 211 0.19% 695 0.63%
Home equity loans 13,449 9.63% 11,040 10.01% 9,714 7.83% 10,051 9.15% 7,660 6.97%
Residential construction loans 4,110 2.94% 961 0.87% 2,901 2.34% 1,613 1.47% 1,801 1.64%
Unsecured portion of
construction loans (2,118) -1.52% (1,838) -1.67% (1,307) -1.05% (1,169) -1.06% (685) -0.62%
-------- ------ -------- ------ ------- ------ -------- ------ -------- ------
Total mortgage loans 102,825 73.60% 77,529 70.33% 93,029 75.00% 82,591 75.21% 87,960 80.01%
Consumer and other loans:
Commercial 23,418 16.76% 19,385 17.58% 17,772 14.33% 15,472 14.09% 10,992 10.00%
Automobile 7,738 5.54% 7,496 6.80% 7,483 6.03% 6,621 6.03% 6,388 5.81%
Student 1,332 0.95% 1,533 1.39% 1,732 1.40% 1,438 1.31% 1,457 1.33%
Credit Card 1,334 0.95% 1,195 1.08% 1,165 0.94% 1,285 1.17% 1,035 0.94%
Other consumer loans 3,054 2.19% 3,102 2.81% 2,855 2.30% 2,410 2.19% 2,100 1.91%
-------- ------ -------- ------ -------- ------ -------- ------ -------- ------
Total consumer and
other loans 36,876 26.40% 32,711 29.67% 31,007 25.00% 27,226 24.79% 21,972 19.99%
-------- ------ -------- ------ -------- ------ -------- ------ -------- ------
Total loans 139,701 100.00% 110,240 100.00% 124,036 100.00% 109,817 100.00% 109,982 100.00%
Less:
Discounts, premiums, and
deferred loan fees, net 147 38 158 187 276
Allowance for loan loss 1,232 1,305 1,206 909 808
-------- -------- -------- -------- --------
Total loans, net $138,322 $108,897 $122,672 $108,721 $108,848
======== ======== ======== ======== ========
</TABLE>
Source: Offering Prospectus
<PAGE> 18
Conversion Valuation Appraisal Report Page: 1 - 12
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SECURITIES
The securitization of one-to-four family residential mortgages mentioned on Page
10 is evident in the large increase of the MBS, AFS portfolio from May 31, 1995
to May 31, 1996. Concurrently, the Bank decreased its reliance on Investment
Securities.
FIGURE 10 - SECURITIES CHART
[Bar graph showing the amount
of the Bank's MBS and Investment
Securities portfolios at May 31,
1994, 1995, 1996 and 1997.]
Source: Offering Prospectus
<PAGE> 19
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INVESTMENTS AND MORTGAGE-BACKED SECURITIES
The Bank's investment portfolio has decreased from $82.6 million at May 31, 1995
to $50.4 million at May 31, 1997, a 40% decrease over the three year period. The
mix has shifted toward agency securities.
FIGURE 11 - INVESTMENT MIX
<TABLE>
<CAPTION>
1997 1996 1995
---------------------- --------------------- ----------------
CARRYING % OF CARRYING % OF CARRYING % OF
VALUE TOTAL VALUE TOTAL VALUE TOTAL
-------- ----- -------- ----- -------- -------
(Dollars in Thousands)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Debt securities held-to-maturity:
U.S. Government obligations $ -- 0.00% $ -- 0.00% $16,891 17.85%
Agency securities 5,685 11.27% 6,604 9.52% 17,249 18.23%
Municipal bonds 407 0.81% 432 0.62% 485 0.51%
Other debt obligations -- 0.00% 82 0.12% 14,186 14.99%
------- ------ ------- ------ ------- ------
6,092 12.08% 7,118 10.26% 48,811 51.57%
Debt securities available-for-sale:
US Government securities 9,165 18.17% 21,716 31.29% 11,228 11.88%
Agency securities 20,856 41.35% 15,206 21.91% 8,419 8.90%
Other debt obligations 8,029 15.92% 16,256 23.43% 20,255 21.40%
------- ------ ------- ------ ------- ------
38,050 75.44% 53,178 76.63% 39,902 42.18%
Equity securities available-for-sale:
Preferred stock 204 0.40% 277 0.40% 281 0.30%
Mutual funds 6,091 12.08% 8,821 12.71% 5,648 5.97%
------- ------ ------- ------ ------- ------
6,295 12.48% 9,098 13.11% 5,929 6.28%
------- ------ ------- ------ ------- ------
Total debt and equity securities $50,437 100.00% $69,394 100.00% $94,642 100.00%
======= ====== ======= ====== ======= ======
</TABLE>
Source: Offering Prospectus
FIGURE 12 - INVESTMENT PORTFOLIO MATURITY
<TABLE>
<CAPTION>
INVESTMENT SECURITIES MAY 31, 1997
------------------------------------------------------------
DUE IN
-------------------------------------------------- TOTAL
LESS THAN 1 TO 5 5 TO 10 OVER CARRYING
1 YEAR YEARS YEARS 10 YEARS VALUE
-------------------------------------------------------------
(IN THOUSANDS)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Debt securities:
U.S. Government securities $ 3,516 $4,654 $ 995 $ -- $ 9,165
Agency securities 824 2,998 17,034 -- 20,856
Other debt obligations 4,999 2,271 760 -- 8,030
------- ------ ------- ------ -------
Total debt securities 9,339 9,923 18,789 -- 38,051
Equity securities:
Preferred stock -- -- -- 205 205
Mutual funds 1,996 -- -- 4,094 6,090
------- ------ ------- ------ -------
Total equity securities 1,996 -- -- 4,299 6,295
------- ------ ------- ------ -------
Total debt and equity securities $11,335 $9,923 $18,789 $4,299 $44,346
======= ====== ======= ====== =======
</TABLE>
Source: Offering Prospectus
<PAGE> 20
Conversion Valuation Appraisal Report Page: 1 - 14
================================================================================
The mortgaged-backed securities portfolio has increased from $15.7 million to
$76.0 million from May 31, 1995 to May 31, 1997.
FIGURE 13 - MBS PORTFOLIO
<TABLE>
<CAPTION>
1997 1996 1995
-------------------- -------------------- ------------------
Carrying % of Carrying % of Carrying % of
Value Total Value Total Value Total
-------- ----- -------- ----- -------- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage-backed and mortgage
related securities, held-to-maturity
FHLMC $ -- 0.00% $ -- 0.00% $ -- 0.00%
GNMA -- 0.00% -- 0.00% 20 0.13%
FNMA -- 0.00% -- 0.00% 131 0.84%
CMOs -- 0.00% -- 0.00% -- 0.00%
-------- ------ -------- ------ -------- ------
-- 0.00% -- 0.00% 151 0.96%
Mortgage-backed and mortgage
related securities, available-for-sale
FHLMC 11,029 14.52% 10,322 14.15% 7,272 46.37%
GNMA 29,190 38.43% 4,348 5.96% 657 4.19%
FNMA 33,052 43.51% 53,336 73.11% -- 0.00%
CMOs 2,685 3.53% 4,950 6.78% 7,603 48.48%
-------- ------ -------- ------ -------- ------
75,956 100.00% 72,956 100.00% 15,532 99.04%
-------- ------ -------- ------ -------- ------
Total mortgage-backed securities $ 75,956 100.00% $ 72,956 100.00% $ 15,683 100.00%
======== ====== ======== ====== ======== ======
</TABLE>
Source: Offering Prospectus
The investment portfolio is weighted toward the long term with $57.1 million, or
75.21%, maturing in over ten years.
FIGURE 14 - MBS PORTFOLIO MATURITY
<TABLE>
<CAPTION>
AT MAY 31, 1997
------------------------------------------------------------------
MORTGAGE-BACKED SECURITY MATURITIES DUE IN
---------------------------------------------------- TOTAL
ONE YEAR 1 TO 5 5 TO 10 OVER 10 CARRYING
OR LESS YEARS YEARS YEARS VALUE
-------- ------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Federal Home Loan Mortgage Corporation $ 2,276 $ 3,815 $ 616 $ 4,322 $ 11,029
Government National Mortgage Association 3,593 7 59 25,530 29,189
Federal National Mortgage Association 2,874 2,020 881 27,277 33,052
CMO's 1,983 17 685 -- 2,685
-------- ------- ------- -------- --------
Total $ 10,726 $ 5,859 $ 2,241 $ 57,129 $ 75,955
======== ======= ======= ======== ========
</TABLE>
Source: Offering Prospectus
<PAGE> 21
Conversion Valuation Appraisal Report Page: 1 - 15
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ASSET QUALITY
Non-performing loans, as defined in the offering prospectus, have decreased from
$2.8 million at May 31, 1993 to $2.4 million at May 31, 1997. As a percentage of
assets, total nonperforming assets have decreased from 1.23% at May 31, 1993 to
0.91% at May 31, 1997.
FIGURE 15 - NON-PERFORMING ASSETS CHART
<TABLE>
<CAPTION>
NON-PERFORMING LOANS REO NPAS TO PD END ASSETS
-------------------- --- ---------------------
($ IN THOUSANDS)
<S> <C> <C> <C>
May-93 $2,767 $ 0 [Line graph showing the
May-94 3,365 121 percentage of non-
May-95 3,382 101 performing assets to total
May-96 1,495 331 assets at May 31, 1993, 1994,
May-97 2,381 224 1995, 1996 and 1997.]
</TABLE>
Source: Offering Prospectus
<PAGE> 22
Conversion Valuation Appraisal Report Page: 1 - 16
================================================================================
FIGURE 16 - NON-PERFORMING LOANS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
AT MAY 31, 1997
($ IN THOUSANDS)
- ------------------------------------------------------------------------------
<S> <C>
Non-performing loans $2,381
- ------------------------------------------------------------------------------
Real estate owned, net 224
- ------------------------------------------------------------------------------
Total non-performing assets $2,605
- ------------------------------------------------------------------------------
Non-performing loans as a percentage of total loans 1.87%
- ------------------------------------------------------------------------------
Non-performing assets to total assets 0.91%
- ------------------------------------------------------------------------------
</TABLE>
Source: Offering Prospectus
<PAGE> 23
Conversion Valuation Appraisal Report Page: 1 - 17
================================================================================
The Bank has grown its allowance for loan and lease losses from $0.8 million at
May 31, 1993 to $1.2 million at May 31, 1997. ALLL to non-performing assets was
47.3% as of May 31, 1997.
FIGURE 17 - ALLOWANCE FOR POSSIBLE LOAN AND LEASE LOSSES CHART
<TABLE>
<CAPTION>
ALLL ALLL TO NPA
---- -----------
($ IN THOUSANDS)
<S> <C> <C>
May-93 $ 808 [Line graph showing the
May-94 909 percentage of ALLL to
May-95 1,206 non-performing assets at
May-96 1,305 May 31, 1993, 1994, 1995, 1996
May-97 1,232 and 1997.]
</TABLE>
Source: Offering Prospectus
<PAGE> 24
Conversion Valuation Appraisal Report Page: 1 - 18
================================================================================
FUNDING COMPOSITION
The Bank's deposit mix as of May 31, 1997 is presented below.
FIGURE 18 - DEPOSIT MIX
<TABLE>
<CAPTION>
MAY 31,
1997 % OF
CATEGORY ($ IN 000'S) DEPOSITS
- --------- ------------ --------
<S> <C> <C>
Demand checking accounts $ 23,855 10.8%
NOW Accounts 15,024 6.8%
Money Market Accounts 27,119 12.3%
Savings accounts 80,175 36.2%
-------- ------
Total Non-Certificates 146,173 66.0%
Certificates of Deposits 75,038 34.0%
-------- ------
Total $221,211 100.0%
======== ======
</TABLE>
Source: Offering Prospectus
<PAGE> 25
Conversion Valuation Appraisal Report Page: 1 - 19
================================================================================
Though deposits have grown $20.6 million from May 31, 1993 to $221.2 million at
May 31, 1997, the bank has offset the deposit decline in fiscal 1997 with
borrowings of $28.3 million.
FIGURE 19 - DEPOSIT AND BORROWING TREND CHART
<TABLE>
<CAPTION>
TOTAL DEPOSITS BORROWED FUNDS
-------------- --------------
($ IN THOUSANDS)
<S> <C> <C>
May-93 $200,564 $ 0
May-94 $207,527 $ 0
May-95 $229,011 $ 0
May-96 $232,965 $ 8,300
May-97 $221,211 $28,340
</TABLE>
Source: Offering Prospectus
<PAGE> 26
Conversion Valuation Appraisal Report Page: 1 - 20
================================================================================
ASSET/LIABILITY MANAGEMENT
The Bank manages its interest rate risk through normal balance sheet activities
and does not utilize any hedging techniques. The following chart indicates that
the Bank has reduced its cumulative one and three year gap positions.
FIGURE 20 - GAP CHART
<TABLE>
<CAPTION>
CUMULATIVE GAP TRENDS
1 Year 3 Year
------ ------
<S> <C> <C>
Mar-97 -13.78% -12.05%
May-97 -12.29% -5.61%
</TABLE>
Source: The Warwick Savings Bank.
<PAGE> 27
Conversion Valuation Appraisal Report Page: 1 - 21
================================================================================
NET WORTH AND CAPITAL
At May 31, 1997, the Bank had capital in excess of the minimum requirements for
all three measures.
FIGURE 21 - CAPITAL ANALYSIS
<TABLE>
<CAPTION>
REGULATORY CAPITAL POSITION
AT PERCENT OF
MAY 31, 1997 ADJ. ASSETS
- --------------------------------------------------------------------
$ IN THOUSANDS
<S> <C> <C>
GAAP Capital $28,114 9.81%
======= =====
LEVERAGE RATIO:
Capital Level $27,495 9.53%
Required $11,535 4.00%
------- -----
Excess: $15,960 5.53%
======= =====
TIER 1 CAPITAL RATIO:
Capital Level $27,495 19.46%
Required $ 5,651 4.00%
------- -----
Excess: $21,844 15.46%
======= =====
TOTAL CAPITAL RATIO:
Capital Level $28,726 20.33%
Required $11,302 8.00%
------- -----
Excess: $17,424 12.33%
======= =====
</TABLE>
Source: Offering Prospectus
<PAGE> 28
Conversion Valuation Appraisal Report Page: 1 - 22
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INCOME AND EXPENSE TRENDS
The chart below shows the Bank's net income for the past five fiscal years. On
February 6, 1995, Nationar, which was then the Bank's principal correspondent
bank, was closed by the New York Superintendent of Banks. Warwick's deposits of
$2.9 million were frozen pending Nationar's liquidation. In order to meet its
liquidity needs Warwick initiated a program in February of 1995 to attract
additional funds, raising $44 million at a yield of 6.8%. The net interest
income dropped in 1995 due the short term increase in the cost of funds.
FIGURE 22 - NET INCOME CHART
<TABLE>
<S> <C>
May-93 $1,786
May-94 2,519
May-95 504
May-96 1,466
May-97 2,865
</TABLE>
Source: Offering Prospectus
<PAGE> 29
Conversion Valuation Appraisal Report Page: 1 - 23
================================================================================
Spread and margin have, as shown in the following chart.
FIGURE 23 - SPREAD AND MARGIN CHART
<TABLE>
<CAPTION>
SPREAD MARGIN
------ ------
<S> <C> <C>
May-95 [Line graph showing the interest
May-96 rate spread and interest rate margin
May-97 at May 31, 1995, 1996 and 1997.]
</TABLE>
Source: Offering Prospectus
<PAGE> 30
Conversion Valuation Appraisal Report Page: 1 - 24
================================================================================
A summary of the Bank's income statement is presented below.
FIGURE 24 - INCOME STATEMENT TRENDS
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED MAY 31,
---------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
($ in Thousands)
<S> <C> <C> <C> <C> <C>
Total interest Income................................. $20,691 $18,333 $16,253 $15,786 $16,549
Total interest Expense................................ 9,376 8,717 6,828 5,922 6,710
------- ------- ------- ------- -------
Net interest income............................... 11,315 9,616 9,425 9,864 9,839
Provision for loan losses............................. 130 140 261 415 548
------- ------- ------- ------- -------
Net interest income after provision for loan losses... 11,185 9,476 9,164 9,449 9,291
------- ------- ------- ------- -------
Total non-interest income............................. 2,779 2,084 875 2,947 1,012
Total non-interest expense............................ 9,343 9,070 8,096 7,762 7,147
------- ------- ------- ------- -------
Income before taxes................................... 4,621 2,490 1,943 4,634 3,156
------- ------- ------- ------- -------
Income tax provision.................................. 1,756 1,024 794 2,115 1,370
Cumulative effect of change in accounting principle... -- -- (645) -- --
------- ------- ------- ------- -------
Net income............................................ $ 2,865 $ 1,466 $ 504 $ 2,519 $ 1,786
======= ======= ======= ======= =======
</TABLE>
Source: Offering Prospectus
<PAGE> 31
Conversion Valuation Appraisal Report Page: 1 - 25
================================================================================
The ROA and ROE trends reflect the increased cost of funds for the periods
ending May 31, 1995 and May 31, 1996.
FIGURE 25 - PROFITABILITY TREND CHART
[Line graph showing ROA and ROE at May 31,
1993, 1994, 1995, 1996 and 1997.]
Source: Offering Prospectus
<PAGE> 32
Conversion Valuation Appraisal Report Page: 1 - 26
================================================================================
SUBSIDIARIES
The Bank has three wholly owned subsidiaries, WSB Financial, Warsave
Development, Inc. and WSB Mortgage. The Bank offers mutual funds and tax
deferred annuities through WSB Financial to the Bank's customers and members of
the community. WSB Financial contributed $92 thousand, $90 thousand, and $151
thousand net income, before taxes, to the Bank's net income in the fiscal years
ended May 31, 1997, 1996, and 1995, respectively.
Warsave was formed to acquire and hold real estate. Its single asset as of May
31, 1997 is a two-story house situated adjacent to the Bank's Warwick office.
The building, which may ultimately be used for future expansion, is presently
rented for the purpose of generating rental income.
WSB Mortgage was recently formed and has applied for the approval of the New
Jersey Department of Banking to commence mortgage banking operations in that
state.
LEGAL PROCEEDINGS
The Bank is not currently involved in any legal proceedings other than routine
legal proceedings that occur in the ordinary course of business, which, in
aggregate, involve amounts that are believed to be immaterial to the financial
condition of the Bank.
<PAGE> 33
Conversion Valuation Appraisal Report Page: 1 - 27
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2. MARKET AREA ANALYSIS
For presentation purposes, market areas have been defined as a 5 mile radius
around each of the Bank's branch facilities (with the two Western Ave. branches
included as one branch). Data for each demographic element is aggregated for the
market area around each branch and displayed in comparison to the other markets.
The Bank's four market areas are defined as follows (note that only portions of
the communities/towns may be included in the radius markets):
FIGURE 26 - TARGET MARKETS
[May showing the Bank's market areas.]
<PAGE> 34
Conversion Valuation Appraisal Report Page: 1 - 28
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BRANCH FACILITIES
The Bank operates four branches in New York State. The Warwick location serves
as the main office.
FIGURE 27 - BRANCH FACILITY TABLE
BRANCH OFFICE OWNED/LEASED
------------------------------------------------------------------
18 Oakland Avenue, Warwick Owned
Route 17M, Monroe Owned
Route 32 & Hollet Avenue, Highland Mills Owned
1 Galleria Drive - Galleria, Middletown Leased
<PAGE> 35
Conversion Valuation Appraisal Report Page: 1 - 29
================================================================================
MARKET AREA DEMOGRAPHICS
For presentation purposes, market areas have been defined as a 5 mile radius
around each of the Bank's branch facilities. Data for each demographic element
is aggregated for the market area around each branch and displayed in comparison
to the other markets. The Bank's four market areas are defined as follows (note
that only portions of the communities/towns may be included in the radius
markets):
<PAGE> 36
Conversion Valuation Appraisal Report Page: 1 - 30
================================================================================
FIGURE 28 - POPULATION DEMOGRAPHICS
<TABLE>
<CAPTION>
HIGHLAND ORANGE
WARWICK MIDDLETOWN MONROE MILLS COUNTY
<S> <C> <C> <C> <C> <C>
POPULATION CHARACTERISTICS
LAND AREA (miles) 77.96 77.97 77.97 77.97 837.34
POPULATION
1980 CENSUS 17,740 43,720 25,827 26,718 259,603
1990 CENSUS 22,985 49,818 36,645 37,264 307,647
1996 ESTIMATE 24,966 52,487 41,409 41,534 325,625
2001 PROJECTION 26,351 54,615 44,705 44,618 339,552
GROWTH 1980 TO 1990 29.56% 13.95% 41.88% 39.47% 18.51%
PROJECTED GROWTH 1990 TO 2001 14.84% 9.63% 22.00% 19.73% 10.37%
POPULATION DENSITY 1996 (persons/sq mile) 294.8 683.9 470.0 478.0 367.4
POPULATION BY URBAN VS. RURAL 20,506 49,674 36,649 37,263 307,647
URBAN 45.55% 76.29% 46.12% 49.56% 58.91%
RURAL 54.45% 23.71% 53.88% 50.44% 41.09%
POPULATION BY SEX -- 1996 EST 24,966 52,487 41,409 41,534 325,625
MALE 51.19% 49.03% 50.55% 51.91% 50.15%
FEMALE 48.81% 50.97% 49.45% 48.09% 49.85%
MARITAL STATUS 17,577 38,628 25,724 26,295 235,176
SINGLE 23.66% 29.28% 27.38% 30.31% 27.70%
MARRIED 62.89% 52.07% 62.56% 60.19% 56.80%
SEPARATED/DIVORCED 8.76% 11.32% 5.96% 5.51% 8.59%
WIDOWED 4.70% 7.34% 4.10% 3.99% 6.90%
POPULATION BY RACE -- 1996 EST 24,966 52,487 41,409 41,534 325,625
WHITE 89.04% 75.25% 92.89% 92.24% 82.51%
BLACK 3.50% 9.11% 1.19% 1.57% 7.19%
INDIAN 0.45% 0.33% 0.11% 0.13% 0.22%
ASIAN 0.71% 1.91% 1.63% 1.74% 1.39%
OTHER 0.08% 0.14% 0.02% 0.02% 0.09%
HISPANIC 6.23% 13.25% 4.17% 4.31% 8.61%
POPULATION BY AGE -- 1996 EST 24,966 52,487 41,409 41,534 325,625
UNDER 5 YEARS 8.31% 7.81% 10.29% 10.14% 8.15%
5 TO 14 YEARS 14.46% 14.81% 19.33% 18.83% 15.15%
15 TO 24 YEARS 11.52% 12.93% 14.65% 17.14% 13.65%
25 T0 34 YEARS 15.50% 15.91% 12.98% 13.08% 14.77%
35 TO 44 YEARS 18.72% 16.85% 15.76% 15.31% 16.77%
45 TO 54 YEARS 13.31% 12.50% 12.84% 12.11% 12.83%
55 TO 64 YEARS 7.41% 7.13% 6.66% 6.27% 7.65%
65 + YEARS 10.76% 12.07% 7.50% 7.12% 11.03%
MEDIAN AGE 35.3 35.4 35.7 33.2 33.9
MEDIAN AGE OF HOUSEHOLDER 46.4 46.6 46.1 44.6 45.7
POPULATION 25+ BY EDUCATION LEVEL 14,995 31,216 19,884 19,374 189,949
ELEMENTARY 6.35% 9.80% 6.22% 5.96% 8.24%
SOME HIGH SCHOOL 12.14% 16.44% 11.94% 11.85% 14.58%
HIGH SCHOOL GRADUATE 33.31% 32.60% 28.61% 28.03% 32.18%
SOME COLLEGE 19.56% 16.86% 20.85% 21.35% 18.38%
ASSOCIATES DEGREE ONLY 5.55% 7.91% 7.80% 7.67% 7.10%
BACHELORS DEGREE ONLY 14.19% 9.76% 14.55% 14.32% 11.53%
GRADUATE DEGREE 8.90% 6.64% 10.02% 10.83% 7.98%
POPULATION ENROLLED IN SCHOOL 5,611 12,885 12,885 13,953 84,728
PRE-PRIMARY -- PUBLIC 5.25% 5.24% 3.23% 2.98% 4.80%
PRE-PRIMARY -- PRIVATE 6.64% 3.93% 6.14% 5.49% 3.95%
ELEM/HIGH -- PUBLIC 59.89% 62.51% 39.01% 34.60% 56.69%
ELEM/HIGH -- PRIVATE 7.26% 4.42% 28.13% 26.50% 8.33%
COLLEGE -- PUBLIC 15.32% 19.21% 13.34% 19.51% 18.92%
COLLEGE -- PRIVATE 5.64% 4.70% 10.15% 10.91% 7.32%
</TABLE>
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FIGURE 29 - HOUSEHOLD DEMOGRAPHICS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
HIGHLAND ORANGE
WARWICK MIDDLETOWN MONROE MILLS COUNTY
- --------------------------------------------------------------------------------------------
HOUSEHOLD CHARACTERISTICS
<S> <C> <C> <C> <C> <C>
HOUSEHOLDS
1980 CENSUS 5,737 14,723 7,330 7,252 84,251
1990 CENSUS 7,646 17,109 10,519 10,371 101,506
1996 ESTIMATE 8,362 18,170 11,960 11,682 108,298
2001 PROJECTION 8,856 18,972 12,943 12,597 113,280
GROWTH 1980 TO 1990 33.27% 16.21% 43.51% 43.02% 20.48%
PROJECTED GROWTH 1990 TO 2001 15.81% 10.88% 23.04% 21.47% 11.60%
HOUSEHOLD SIZE
AVG PERSONS PER HH 1980 3.09 2.97 3.52 3.68 3.08
AVG PERSONS PER HH 1990 3.01 2.91 3.48 3.59 3.03
AVG PERSONS PER HH 1996 EST 2.99 2.89 3.46 3.56 3.01
AVG PERSONS PER HH 2001 PROJ 2.98 2.88 3.45 3.54 3.00
CHANGE 1980 TO 1996 -0.11 -0.08 -0.06 -0.13 -0.07
POPULATION BY HOUSEHOLD TYPE 8,362 18,170 11,960 11,682 108,298
FAMILY HOUSEHOLDS 76.45% 70.66% 82.02% 81.63% 75.00%
HOUSEHOLDS BY TYPE 7,646 17,109 10,519 10,371 101,506
SINGLE MALE 7.48% 8.76% 5.71% 6.10% 8.05%
SINGLE FEMALE 11.01% 13.85% 7.54% 7.57% 11.62%
MARRIED COUPLE 67.89% 55.22% 73.99% 73.69% 62.27%
OTHER FAMILY - MALE HEAD 2.52% 3.98% 2.65% 2.63% 3.45%
OTHER FAMILY - FEMALE HEAD 7.20% 12.36% 6.54% 6.47% 10.25%
NON FAMILY - MALE HEAD 2.51% 3.68% 2.27% 2.31% 2.74%
NON FAMILY - FEMALE HEAD 1.40% 2.14% 1.29% 1.23% 1.61%
HOUSEHOLDS WITH CHILDREN 7,618 17,271 10,532 10,387 101,730
MARRIED COUPLE FAMILY 68.38% 55.57% 75.07% 74.30% 63.49%
OTHER FAMILY - MALE HEAD 2.01% 3.97% 2.17% 2.31% 3.13%
OTHER FAMILY - FEMALE HEAD 7.51% 12.66% 6.58% 6.70% 9.95%
NON FAMILY 22.10% 27.80% 16.18% 16.68% 23.43%
HOUSEHOLDS BY INCOME - 1996 EST 8,362 18,170 11,960 11,682 108,298
UNDER $5,000 1.73% 2.46% 2.71% 2.89% 2.76%
$5,000 TO 10,000 4.34% 6.74% 5.24% 5.47% 6.11%
$10,000 TO $15,000 5.01% 6.93% 5.23% 5.29% 5.91%
$15,000 TO $25,000 9.26% 12.52% 8.04% 7.96% 10.75%
$25,000 TO $35,000 9.36% 13.79% 7.52% 7.82% 11.46%
$35,000 TO $50,000 16.27% 18.18% 12.87% 13.78% 17.32%
$50,000 TO $75,000 26.27% 24.31% 27.31% 27.68% 24.75%
$75,000 TO $100,000 14.21% 8.79% 15.48% 15.09% 11.36%
$100,000 OR MORE 13.54% 6.29% 15.60% 14.03% 9.56%
MEDIAN HOUSEHOLD INCOME - 1996 EST $56,664 $49,215 $61,403 $58,459 $46,139
MEDIAN FAMILY INCOME - 1996 EST $62,443 $54,251 $66,486 $62,567 $53,307
PER CAPITA INCOME - 1996 EST $21,779 $19,054 $25,553 $21,437 $18,624
PUBLIC ASSISTANCE INCOME 7,618 17,271 10,532 10,387 101,730
WITH PUBLIC ASSISTANCE INCOME 2.92% 6.08% 3.98% 3.93% 5.00%
NO PUBLIC ASSISTANCE INCOME 97.08% 93.92% 96.02% 96.07% 95.00%
RETIREMENT INCOME 7,618 17,271 10,532 10,387 101,730
WITH RETIREMENT INCOME 15.45% 16.80% 14.94% 15.12% 16.93%
NO RETIREMENT INCOME 87.56% 89.67% 89.20% 88.97% 88.33%
HOUSEHOLDS BY NUMBER OF VEHICLES 7,643 16,904 10,282 10,139 101,506
NO VEHICLES 5.63% 13.13% 11.74% 12.13% 10.75%
1 VEHICLE 24.69% 34.24% 24.04% 24.52% 29.29%
2 VEHICLES 48.06% 38.51% 45.49% 45.10% 41.45%
3+ VEHICLES 21.62% 14.11% 18.73% 18.25% 18.51%
ESTIMATED TOTAL VEHICLES 15,009 27,501 19,453 18,917 178,450
</TABLE>
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FIGURE 30 - EMPLOYMENT DEMOGRAPHICS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
HIGHLAND ORANGE
WARWICK MIDDLETOWN MONROE MILLS COUNTY
- -----------------------------------------------------------------------------------------
EMPLOYMENT CHARACTERISTICS
<S> <C> <C> <C> <C> <C>
FAMILIES BY NUMBER OF WORKERS 5,934 12,469 8,827 8,654 77,895
NO WORKERS 8.67% 10.02% 6.76% 6.43% 9.41%
ONE WORKER 26.59% 29.91% 31.88% 31.95% 28.17%
TWO WORKERS 48.14% 45.56% 45.54% 46.30% 46.69%
THREE WORKERS 16.61% 14.51% 15.82% 15.32% 15.73%
POPULATION 16+ BY OCCUPATION 11,059 23,582 15,406 14,962 141,415
EXECUTIVE AND MANAGERIAL 14.52% 10.10% 16.24% 15.95% 12.68%
PROFESSIONAL & SPECIALTY 16.18% 13.92% 17.18% 16.91% 14.82%
TECHNICAL SUPPORT 3.36% 3.17% 3.95% 4.01% 3.59%
SALES 10.83% 11.75% 14.27% 14.04% 11.67%
ADMINISTRATIVE SUPPORT 16.37% 16.16% 15.14% 15.33% 15.90%
SERVICE: PRIVATE HOUSEHOLD 0.29% 0.23% 0.40% 0.40% 0.27%
SERVICE: PROTECTIVE 2.98% 3.81% 3.61% 3.51% 3.26%
SERVICE: OTHER 7.86% 12.69% 7.54% 8.16% 10.26%
FARMING, FORESTRY & FISHING 2.50% 2.12% 1.28% 1.31% 1.94%
PRECISION PRODUCTION & CRAFT 14.35% 11.13% 11.65% 11.19% 12.10%
MACHINE OPERATOR 3.33% 5.71% 2.29% 2.59% 5.08%
TRANS AND MATERIAL MOVING 3.53% 4.34% 3.64% 3.63% 4.17%
LABORERS 3.89% 4.87% 2.82% 2.97% 4.25%
POPULATION BY TRANSPORTATION TO WORK 10,851 23,217 15,384 15,502 141,664
DRIVE 89.51% 88.56% 84.06% 82.74% 87.69%
PUBLIC TRANSPORTATION 3.90% 4.58% 8.65% 7.62% 4.42%
WALKED 2.57% 4.04% 4.37% 6.65% 4.61%
OTHER MEANS 0.95% 0.77% 0.48% 0.63% 0.87%
WORKED AT HOME 3.07% 2.04% 2.45% 2.36% 2.40%
POPULATION BY TRAVEL TIME TO WORK 10,518 22,743 15,008 15,136 138,258
UNDER 15 MINUTES/WORK AT HOME 29.18% 40.68% 27.25% 31.09% 34.55%
10 TO 30 MINUTES 18.90% 30.05% 18.18% 17.55% 27.76%
30 TO 45 MINUTES 15.16% 10.25% 18.84% 18.22% 15.12%
45 TO 60 MINUTES 13.60% 6.44% 11.90% 11.34% 8.51%
60 TO 90 MINUTES 17.00% 7.92% 14.76% 13.64% 8.81%
90+ MINUTES 6.17% 4.67% 9.07% 8.16% 5.24%
</TABLE>
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FIGURE 31 - HOUSING DEMOGRAPHICS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
HIGHLAND ORANGE
WARWICK MIDDLETOWN MONROE MILLS COUNTY
- -----------------------------------------------------------------------------------------
HOUSING UNIT CHARACTERISTICS
<S> <C> <C> <C> <C> <C>
HOUSING UNITS BY OCCUPANCY STATUS 8,569 18,426 11,987 11,842 110,814
OCCUPIED 89.19% 92.80% 87.76% 87.41% 91.60%
VACANT 10.81% 7.20% 12.24% 12.59% 8.40%
VACANT UNITS 926 1,327 1,467 1,491 9,308
FOR RENT 10.04% 43.12% 15.89% 16.79% 25.11%
FOR SALE ONLY 16.74% 25.08% 12.77% 10.74% 18.50%
SEASONAL 50.93% 10.19% 58.03% 57.92% 31.09%
OTHER 22.28% 21.62% 13.31% 14.56% 25.30%
OCCUPIED UNITS 7,643 17,099 10,520 10,350 101,506
OWNER OCCUPIED 78.30% 58.70% 73.33% 69.90% 67.46%
RENTER OCCUPIED 21.70% 41.30% 26.67% 30.10% 32.54%
YEAR ROUND UNITS IN STRUCTURE 8,564 18,426 11,987 11,842 110,814
SINGLE UNITS DETACHED 75.76% 50.44% 63.46% 60.42% 60.54%
SINGLE UNITS ATTACHED 6.90% 6.97% 5.38% 6.71% 5.77%
2 TO 4 UNITS 9.71% 19.46% 13.79% 14.44% 17.35%
4 TO 49 UNITS 5.72% 18.71% 13.94% 14.66% 10.77%
50+ UNITS 0.00% 0.46% 0.00% 0.00% 0.52%
MOBILE HOME OR TRAILER 0.46% 2.59% 2.17% 2.69% 3.84%
ALL OTHER 1.45% 1.36% 1.27% 1.08% 1.22%
SINGLE/MULTIPLE RATIO 4.9 1.5 2.4 2.3 2.3
OWNER OCCUPIED PROPERTY VALUES ('97 EST) 5,624 8,708 7,055 6,574 58,777
UNDER $50,000 1.22% 2.38% 0.90% 0.93% 1.79%
$50,000 TO $100,000 6.50% 14.25% 4.43% 4.91% 11.06%
$100,000 TO $150,000 24.63% 38.33% 14.59% 16.34% 28.07%
$150,000 TO $200,000 33.31% 31.74% 33.85% 34.84% 31.93%
$200,000 TO $300,000 25.04% 10.70% 35.51% 33.79% 20.32%
$300,000 TO $400,000 5.74% 1.70% 6.32% 5.89% 4.16%
$400,000 TO $500,000 2.47% 0.60% 2.58% 2.07% 1.62%
$500,000 + 1.10% 0.29% 1.82% 1.23% 1.05%
MEDIAN PROPERTY VALUE $186,072 $154,947 $212,883 $191,795 $163,046
MEDIAN OWNER COST $ 1,104 $ 907 $ 1,171 $ 987 $ 1,008
MEDIAN OWNER COST AS % OF INC NA NA NA NA 23.30
MEDIAN RENT $ 684 $ 622 $ 711 $ 674 $ 595
MEDIAN RENT AS % OF INC NA NA NA NA 29.00
HOUSING UNITS BY YEAR BUILT 8,582 18,426 11,987 11,842 110,814
BUILT 1989 TO MARCH 1990 2.36% 2.71% 1.86% 1.79% 2.05%
BUILT 1985 TO 1988 14.85% 9.69% 15.56% 14.91% 10.87%
BUILT 1980 TO 1984 7.26% 4.05% 11.12% 11.09% 5.78%
BUILT 1970 TO 1979 16.30% 25.53% 20.69% 19.42% 17.53%
BUILT 1960 TO 1969 13.49% 12.72% 16.36% 17.21% 15.48%
BUILT 1950 TO 1959 14.29% 9.53% 9.76% 10.09% 12.70%
BUILT 1940 TO 1949 8.64% 5.27% 6.52% 6.02% 6.88%
BUILT 1939 OR EARLIER 22.81% 30.50% 18.13% 19.48% 28.71%
MEDIAN YEAR BUILT 1964 1966 1964 1961 1961
NUMBER OF YEARS OWNER LIVED IN UNIT 7,643 17,099 10,520 10,350 101,506
1 Yr or less 13.30% 21.65% 14.86% 16.15% 16.96%
2-5 Yrs 32.54% 28.10% 31.38% 32.82% 29.64%
6-10 Yrs 16.84% 14.17% 16.92% 16.27% 15.27%
11-20 Yrs 19.43% 18.41% 21.82% 20.09% 19.16%
21-30 Yrs 8.76% 8.14% 9.25% 8.85% 9.37%
More than 30 Yrs 9.13% 9.53% 5.77% 5.83% 9.59%
</TABLE>
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MARKET AREA DEPOSIT CHARACTERISTICS
HIGHLAND MILLS MARKET AREA
The following table illustrates that there is a low level of
competition for deposits in this market area, with 3 institutions each
operating one active branch office competing for $67.3 million in
deposits. This has been a stable market with no new branches or branch
closures.
Total deposits in the market have decreased by 11.33% in this market
over the last four years. The Bank had a market share of 47.88% at June
30, 1996 and has experienced an increase of 24.46% in deposits over the
last four years.
FIGURE 32 - DEPOSIT TRENDS AND MARKET SHARE TABLE
($ IN 000'S)
HIGHLAND MILLS: MARKET SHARE BY INSTITUTION
<TABLE>
<CAPTION>
TOTAL MKT SHARE $ GROWTH % GROWTH AVG BRANCH EFFICIENCY
INSTITUTION 1996 1996 1992-1996 1992-1996 1996 COUNT RATIO
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TOTAL $67,253 100.00% ($8,596) -11.33% $22,418 3 100.0%
- -----------------------------------------------------------------------------------------------
FLEET BK OF NY $15,323 22.78% $ 3,635 31.10% $15,323 1 68.4%
MIDDLETOWN SVGS BK $19,731 29.34% ($18,559) -48.47% $19,731 1 88.0%
WARWICK SVGS BK $32,199 47.88% $ 6,328 24.46% $32,199 1 143.6%
</TABLE>
Source: FDIC, data
<PAGE> 41
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MIDDLETOWN MARKET AREA
The following table illustrates that there is a high level of
competition for deposits in this market area, with 14 institutions
operating 19 active branch offices competing for $668.5 million in
deposits. This has been a stable market with two branch closings and
one new entrant over the last four years.
Total deposits have decreased by 0.35% over the last four years. The
Bank had a market share of 3.14% at June 30, 1996.
FIGURE 33 - DEPOSIT TRENDS AND MARKET SHARE TABLE
($ IN 000'S)
MIDDLETOWN: Market Share by Institution
<TABLE>
<CAPTION>
TOTAL MKT SHARE $ GROWTH % GROWTH AVG BRANCH EFFICIENCY
INSTITUTION 1996 1996 1992-1996 1992-1996 1996 COUNT RATIO
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TOTAL $668,486 100.00% ($2,315) *0.35% $35,183 19 100.0%
- -----------------------------------------------------------------------------------------------
MANUFACTURERS & TRAD $ 18,590 2.78% ($2,161) -10.41% $18,590 1 52.8%
MARINE MIDLAND BK $ 24,760 3.70% $ 5,882 31.02% $24,760 1 70.4%
BANK OF NEW YORK $ 91,673 13.71% ($9,503) - 9.39% $45,837 2 130.3%
KEY BK OF NY $ 35,769 5.35% $ 5,681 18.88% $17,885 2 50.8%
FLEET BK OF NY $ 14,858 2.22% ($1,661) -10.06% $14,858 1 42.2%
ORANGE COUNTY TRUST $ 94,788 14.18% $18,740 24.64% $47,394 2 134.7%
WARWICK SVGS BK $ 20,959 3.14% $19,047 996.18% $20,959 1 59.6%
MIDDLETOWN SVGS BK $207,869 31.10% ($35,821) -14.70% $69,290 3 196.9%
ELLENVILLE NB $ 10,851 1.62% $10,851 0.00% $10,851 1 30.8%
FIRST UNION NB $ 7,405 1.11% ($10,371) -58.34% $ 7,405 1 21.0%
HILLTOP FCU $ 6,795 1.02% ($665) - 8.91% $ 6,795 1 19.3%
MIDDLETOWN FCU $ 4,798 0.72% $ 1,163 31.99% $ 4,798 1 13.6%
FIRST FS&LA OF ROCHE $ 33,279 4.98% $13,963 72.29% $33,279 1 94.6%
FIRST FEDERAL SAVINGS $ 96,092 14.37% ($17,440) -15.36% $96,092 1 273.1%
</TABLE>
Source: FDIC, data
<PAGE> 42
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MONROE MARKET AREA
The following table illustrates that there is a moderate level of
competition for deposits in this immediate market area, with 6
institutions operating 7 active branch offices competing for $307.1
million in deposits. This has been a relatively stable market with two
new entrants and no branch closures.
Total deposits have increased by 8.65% over the last four years. The
Bank had market share of 20.17% at June 30, 1996, and has experienced
growth of 16.96%.
FIGURE 34 - DEPOSIT TRENDS AND MARKET SHARE TABLE
($ IN 000'S)
MONROE: MARKET SHARE BY INSTITUTION
<TABLE>
<CAPTION>
TOTAL MKT SHARE $ GROWTH % GROWTH AVG BRANCH EFFICIENCY
INSTITUTION 1996 1996 1992-1996 1992-1996 1996 COUNT RATIO
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TOTAL $307,125 100.00% $24,459 8.65% $43,875 7 100.0%
- -----------------------------------------------------------------------------------------------
MANUFACTURERS & TRAD $ 64,214 20.91% ($17,474) -21.39% $32,107 2 73.2%
CHASE MANHATTAN BK N $ 73,206 23.84% $23,373 46.90% $73,206 1 166.9%
BANK OF NEW YORK $ 45,575 14.84% $ 5,129 12.68% $45,575 1 103.9%
WARWICK SVGS BK $ 61,961 20.17% $ 8,986 16.96% $61,961 1 141.2%
MIDDLETOWN SVGS BK $ 42,407 13.81% $ 5,274 14.20% $42,407 1 96.7%
FIRST FEDERAL SAVING $ 19,762 6.43% ($829) -4.03% $19,762 1 45.0%
</TABLE>
Source: FDIC, data
<PAGE> 43
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WARWICK MARKET AREA
This table illustrates that there is a moderate level of competition
for deposits in this immediate market area, with 5 institutions each
operating one active branch office competing for $226.4 million in
deposits. This has been a stable market with one new entrant,
Middletown Savings who acquired the First Nationwide facility in 1996.
As the following table illustrates, total deposits have increased by
9.94% over the last four years. The Bank had market share of 54.74% at
June 30, 1996.
FIGURE 35 - DEPOSIT TRENDS AND MARKET SHARE TABLE
($ IN 000'S)
WARWICK: MARKET SHARE BY INSTITUTION
<TABLE>
<CAPTION>
TOTAL MKT SHARE $ GROWTH % GROWTH AVG BRANCH EFFICIENCY
INSTITUTION 1996 1996 1992-1996 1992-1996 1996 COUNT RATIO
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TOTAL $226,421 100.00% $20,472 9.94% $ 45,284 5 100.0%
- ------------------------------------------------------------------------------------------------
BANK OF NEW YORK $ 28,804 12.72% $ 1,663 6.13% $ 28,804 1 63.6%
KEY BK OF NY $ 32,634 14.41% $ 8,266 33.92% $ 32,634 1 72.1%
WARWICK SVGS BK $123,933 54.74% $11,045 9.78% $123,933 1 273.7%
MIDDLETOWN SVGS BK $ 40,456 17.87% $40,456 0.00% $ 40,456 1 89.3%
ST ANTHONY COMM HOSP $ 594 0.26% $ 78 15.12% $ 594 1 1.3%
FIRST NATIONWIDE BAN $ 0 0.00% ($41,036) -100.00% $ 0 0 0.0%
</TABLE>
Source: FDIC, data
<PAGE> 44
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3. COMPARISONS WITH PUBLICLY TRADED THRIFTS
INTRODUCTION
This chapter presents an analysis of the Bank's operations against a Comparable
Group of publicly traded savings institutions. The Comparable Group ("Comparable
Group") was selected from a universe of 409 public thrifts as of September 8,
1997. The Comparable Group was selected based upon similarity of characteristics
to the Bank. The Comparable Group multiples provide the basis for the fair
market valuation of the Bank. Factors that influence the Bank's value such as
balance sheet structure and size, profitability, income and expense trends,
capital levels, credit risk, interest rate risk and recent operating results can
be measured against the Comparable Group. The Comparable Group current market
pricing, coupled with the appropriate adjustments for differences between the
Bank and the Comparable Group, will then be utilized as the basis for the
pro-forma valuation of the Bank to-be-issued common stock.
SELECTION SCREENS
THE SELECTION SCREENS UTILIZED TO IDENTIFY POSSIBLE COMPARABLES FROM THE LIST OF
409 PUBLIC THRIFTS AT SEPTEMBER 8, 1997 INCLUDED:
1. The institution had to be traded on either the AMEX or NASDAQ to ensure
liquidity. This eliminated tightly held and "pink sheet" organizations
who lack liquidity.
2. The IPO date had to be on or before May 31, 1996, eliminating any new
conversions.
3. The total asset size had to be greater than or equal to $250 million
and less than or equal to $400 million.
4. The Conversion had to be a full standard conversion.
5. The institution had to be located in the North East or Mid Atlantic
regions.
6. The current Price to Tangible Book multiple had to be less than 160%.
7. The current Return on Assets had to be greater than 4%.
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Utilizing these screens, the 409 possibilities were narrowed down to 15
candidates. After scanning these candidates the following institutions were
eliminated from the Comparable Group for the reasons shown:
<TABLE>
<CAPTION>
TICKER SHORT NAME CITY STATE
- ------------------------------------------ ---------------------------
<S> <C> <C>
HIGH OR LOW LOAN TO ASSET RATIO
- -------------------------------
CVAL Chester Valley Bancorp Inc. Downingtown PA
YFCB Yonkers Financial Corporation Yonkers NY
TOO MANY BRANCHES
- -----------------
NMSB NewMil Bancorp Inc. New Milford CT
HIGH NONPERFORMING ASSETS TO TOTAL ASSETS
- -----------------------------------------
IFSB Independence Federal Svgs Bank Washington DC
</TABLE>
This resulted in a Comparable Group of 11 institutions.
<TABLE>
<CAPTION>
NUMBER TOTAL
OF COMMERCE ASSETS
TICKER SHORT NAME CITY STATE OFFICES IPO DATE TYPE ($000)
- -------------------------------------------- -------------------------------------------------- -------
<S> <C> <C> <C> <C> <C> <C>
CATB Catskill Financial Corp. Catskill NY 4 04/18/96 Regular 284,238
CEBK Central Co-operative Bank Somerville MA 8 10/24/86 Regular 344,420
FBER 1st Bergen Bancorp Wood-Ridge NJ 4 04/01/96 Regular 284,765
FIBC Financial Bancorp Inc. Long Island NY 5 08/17/94 Regular 282,485
FKFS First Keystone Financial Media PA 5 01/26/95 Regular 320,797
FSBI Fidelity Bancorp Inc. Pittsburgh PA 8 06/24/88 Regular 363,302
LFBI Little Falls Bancorp Inc. Little Falls NJ 6 01/05/96 Regular 299,989
LSBX Lawrence Savings Bank North Andover MA 5 05/02/86 Regular 366,318
PBCI Pamrapo Bancorp Inc. Bayonne NJ 8 11/14/89 Regular 370,987
PHFC Pittsburgh Home Financial Corp. Pittsburgh PA 7 04/01/96 Regular 256,265
WVFC WVS Financial Corp. Pittsburgh PA 5 11/29/93 Regular 294,693
</TABLE>
SELECTION CRITERIA
To be eligible for selection to the Comparable Group, thrifts had to be publicly
traded on either the American Stock Exchange or traded on the national
over-the-counter ("OTC") markets listed on the National Association of
Securities Dealers Automated Quotation ("NASDAQ") System. Each company selected
is a member of one of the exchanges listed above.
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Also excluded from the Comparable Group were institutions that were pending
mergers or acquisitions along with companies whose prices appear to be distorted
by speculative factors or unusual operating conditions. Finally, institutions
that completed their conversions within the last year were also excluded as the
earnings of newly converted institutions do not reflect a full years benefit
from the reinvestment of proceeds, and thus the price/earnings multiples and
return on equity measures for these institutions tend to be skewed upward and
downward respectively.
In an ideal world, all of the Comparable Group would contain the exact
characteristics of the Bank. The goal of the selection criteria process is to
find those institutions that most closely match those of the Bank. None of the
Comparables selected will be exact clones of the Bank.
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The members of the Comparable Group were selected based upon the following
criteria:
1. Liquidity of the issue
2. Asset size
3. Profitability
4. Capital level
5. Asset mix
6. Operating strategy
7. Date of conversion
1. LIQUIDITY OF THE ISSUE The existence of an active and regular trading market
for a stock is critical to the reliability of share price data. Weak or thinly
traded stocks are questionable due to an irregular frequency of trades or highly
varied trading prices. Thinly traded stocks also tend to exhibit a very wide
bid/ask range. As such, companies exhibiting thin liquidity were excluded from
the selection. Also, institutions involved in an acquisition and/or companies
with market prices that appear to be influenced by announced or rumored
acquisitions have been excluded as the stock prices could be either artificially
high or low. For selection of the Comparable Group, only those institutions
listed on AMEX or NASDAQ were selected. All eleven of the members of the
Comparable Group are listed on NASDAQ.
2. ASSET SIZE The Comparable Group should have a similar asset size to the Bank.
Large institutions are not appropriate for the peer group due to a more
extensive branch network, greater financial strength, more access to diverse
markets and more capacity in terms of infrastructure. The Comparable Group
ranged from $256.3 million to $371.0 million in total assets. The Bank's asset
size was $286.5 million as of May 31, 1997 and will be $327.7 million on a pro
forma basis at the midpoint of the valuation range.
3. PROFITABILITY The Comparable Group should have similar financial conditions
and recent earnings that are comparable to the Bank. They should show a
comparable return on equity and return on assets measures. As such, the
Comparable Group have ROAs averaging 1.02% and ROEs averaging 9.47% for the most
recent quarter available. The Comparable Group profitability measures had a
dispersion about the mean for the ROA measure ranging from a low of 0.63% to a
high of 1.62% while the ROE measure ranged from a low of 4.75% to a high of
18.78%. The Bank had an ROA of 1.00% and ROE of 11.20% for the year ending May
31, 1997.
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4. CAPITAL LEVEL The Comparable Group should have a capital level similar to the
Bank's. Capital is important in that it is a determinant of asset size and
regulatory rating. Institutions with capital in a similar range as the Bank were
selected. The average equity to assets ratio for the Comparable Group was 11.76%
with a high of 25.04% and a low of 6.75%. At May 31, 1997, the Bank had an
equity to assets ratio of 9.81%.
5. ASSET MIX The asset mix is very important in the selection criteria for
Comparables. At May 31, 1997, the Bank had a total net loan to asset ratio of
48.27%. The average loan to asset ratio for the Comparables was 52.92%, ranging
from a low of 43.07% to a high of 68.13%.
6. OPERATING STRATEGY An institution's operating characteristics are important
because they determine future performance. They also affect expected rates of
return and investor's general perception of the quality, risk and attractiveness
of a given company. Specific operating characteristics include profitability,
balance sheet growth, asset quality, capitalization, and non-financial factors
such as management strategies and lines of business.
7. DATE OF CONVERSION Recent conversions, those completed after May 31, 1996,
were excluded since the earnings of a newly converted institution do not reflect
a full year's benefits of reinvestment of conversion proceeds. Additionally, new
issues tend to trade at a discount to the market averages.
COMPARABLE GROUP PROFILES
- CATSKILL FINANCIAL CORP. CATB is a BIF insured institution
that operates 4 offices and is headquartered in Catskill, New
York. CATB had the highest Equity ratios and the lowest
Borrowing/Asset, 3.37%, NPA/Equity, 1.865, Interest
Expense/Average Assets, 3.22%, Efficiency, 45.69%, and
Overhead, 43.82%, ratios of the Comparable Group. CATB was one
of the six Comparables that had no intangibles. CATB was
included in the Comparable Group based on its balance sheet
mix and income statement ratios.
- CENTRAL CO-OPERATIVE BANK CEBK is a BIF insured, Massachusetts
institution that operates 8 branches. CEBK had the highest
Loans/Assets, 68.13%, Intangible Assets/Equity, 10.53%,
Efficiency, 64.92%, Overhead, 62.48%, and Deposit Growth,
11.33%, ratios of the Comparable Group. CEBK was included in
the Comparable Group based on balance sheet mix, capital,
asset quality, and income statement ratios.
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- - 1ST BERGEN BANCORP FBER is a SAIF insured institution that operates 4
branches and has its headquarters in Wood-Ridge, New Jersey. FBER had
no intangibles, the highest Reserves/Loans, 2.50%, and Asset Growth,
51.48%, ratios and the lowest Noninterest Income/Average Assets, 0.08%,
and Loan Growth, (5.42%), ratios. It was selected as a Comparable based
on its balance sheet mix, and income statement ratios.
- - FINANCIAL BANCORP INC. FBC, a Long Island, New York institution with 5
branches, is a SAIF insured institution. FBC had the lowest Regulatory
Core Capital/Assets, 7.32%, ratio of the Comparable Group. FBC was
included in the Comparable Group based on its balance sheet mix,
capital, profitability, and income statement ratios.
- - FIRST KEYSTONE FINANCIAL FKFS is a SAIF insured institution with 5
branches located in Media, Pennsylvania. FKFS had the highest
NPA/Equity, 21.90%, and Noninterest Income/Average Assets, 0.31%,
ratios of the Comparable Group. FKFS was included with the Comparable
Group based on its balance sheet mix, capital, profitability, and
income statement ratios.
- - FIDELITY BANCORP INC. FSBI is a SAIF insured institution that operates
8 offices in Pittsburgh, Pennsylvania. FSBI had the highest Loan
Growth, 50.26%, ratio and lowest Equity/Assets, 6.75%, Tangible
Equity/Assets, 6.75%, and Equity + Reserves/Assets, 7.25%, ratios in
the Comparable Group. FSBI was included in the Comparable Group based
on its asset mix, capital, asset quality, profitability, and income
statement ratios.
- - LITTLE FALLS BANCORP, INC. LFBI is a SAIF insured thrift that operates
6 branches in Little Falls, New Jersey. LFBI had the lowest
Loans/Deposits, 57.38%, Loans/Assets, 43.07%, Return on Average Assets,
0.63%, Return on Average Equity, 4.75%, Net Interest Margin, 2.69%,
Interest Income/Average Assets, 6.64%, Net Interest Income/Average
Assets, 2.59%, Noninterest Expense/Average Assets, 1.71%, and Asset
Growth, (4.48%) ratios in the Comparable Group. LFBI was selected based
on its balance sheet mix, asset quality, efficiency, and loan growth
ratios.
- - LAWRENCE SAVINGS BANK LSBX is a BIF insured bank that operates 5
offices in North Andover, Massachusetts. LSBX had no intangibles and
was the only member of the Comparable Group that paid no dividends.
LSBX had the highest Reserves/NPLs, 642.25%, Reserves/NPLs + 90,
328.94%, Return on Average Assets, 1.62%, and Return on Average Equity,
18.78%, and lowest NPLs/Loans, 0.36%, and Deposit Growth, (4.97%),
ratios of the Comparable Group. LSBX was selected based on its balance
sheet mix, capital, and income statement ratios.
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- PAMRAPO BANCORP INC. PBCI is a SAIF insured institution that
operates 8 branches in Bayonne, New Jersey. PBCI is the
largest member of the Comparable Group at $371.0 million in
assets. PBCI had the highest Deposits/Assets, 81.50%,
NPLs/Loans, 3.12%, NPAs/Assets, 2.14%, Net Interest Margin,
4.75%, Interest Income/Average Assets, 7.77%, Net Interest
Income/Average Assets, 4.53%, Noninterest Expense/Average
Assets, 2.48%, and Dividend Yield, 4.651%, and lowest
Reserves/NPAs +90, 26.10%, ratio in the Comparable Group. PBCI
was selected based on its asset mix, capital, and income
statement ratios.
- PITTSBURGH HOME FINANCIAL CORP. PHFC is a SAIF insured
institution that operates 7 branches in Pittsburgh,
Pennsylvania. PHFC was the smallest bank with $256.3 million
in assets. PHFC had the highest Loans/Deposits, 124.69%,
Borrowings/Assets, 32.86%, Regulatory Core Capital/Assets,
24.02%, and Interest Expense/Average Assets, 4.59%, ratios and
the lowest Deposits/Assets, 54.15%, Total Capital/Risk
Adjusted Assets, 10.60%, Reserves/Loans, 36.82%, and
Reserves/NPLs, 0.76%, ratios in the Comparable Group. PHFC was
included in the Comparable Group based on its capital,
profitability, income statement, and growth ratios.
- WVS FINANCIAL CORP. WVFC is a SAIF insured institution that
operates 5 branches in Pittsburgh, Pennsylvania. WVFC had no
intangibles and had the lowest NPAs/Assets ratio, 0.30%, of
the Comparable Group. It also had the highest Dividend Payout
ratio of 177.51%. WVFC was included in the Comparable Group
based on its balance sheet mix, capital, profitability, income
statement, and growth ratios.
All data presented in figures 36 through 46 is from SNL Securities utilizing the
most recent quarter for balance sheet and income statement related items. All
data for the Bank is from the prospectus or the audited financials. The market
pricing data for the Comparables is as of September 8, 1997.
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FIGURE 36 - KEY FINANCIAL INDICATORS
THE BANK AND THE COMPARABLE GROUP
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
THE BANK AT COMPARABLE GROUP
MAY 31, 1997 QUARTER AVERAGE (MOST
RECENT QUARTER)
==========================================================================================
BALANCE SHEET DATA
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Gross Loans to Deposits 63.09% 77.02%
Total Net Loans to Assets 48.27% 52.92%
Deposits to Assets 77.20% 70.06%
Borrowed Funds to Assets 9.89% 16.77%
- ------------------------------------------------------------------------------------------
BALANCE SHEET GROWTH
- ------------------------------------------------------------------------------------------
Asset Growth Rate 4.56% 22.55
Loan Growth Rate 27.02% 13.79%
Deposit Growth Rate (5.05)% 4.67%
- ------------------------------------------------------------------------------------------
CAPITAL
- ------------------------------------------------------------------------------------------
Equity to Assets 9.81% 11.76%
Tangible Equity to Assets 9.81% 11.57%
Intangible Assets to Equity 0.00% 1.87%
Regulatory Core Capital to Assets 9.60% 12.09%
Equity + Reserves to Assets 10.24% 12.42%
Total Capital to Risk Adjusted Assets 20.33% 25.37%
- ------------------------------------------------------------------------------------------
</TABLE>
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================================================================================
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
THE BANK COMPARABLE GROUP
- ------------------------------------------------------------------------------------------------
ASSET QUALITY
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Non-Performing Loans to Loans 1.72% 1.43%
Reserves to Non-Performing Loans 51.74% 155.19%
Non-Performing Assets to Assets 0.91% 1.01%
Non-Performing Assets to Equity 9.27% 9.64%
Reserves to Loans 0.88% 1.30%
Reserves to Non-Performing Assets + 90 Days Del. 47.29% 108.14%
- ------------------------------------------------------------------------------------------------
PROFITABILITY
- ------------------------------------------------------------------------------------------------
Return on Average Assets 1.00% 1.02%
Return on Average Equity 11.20% 9.47%
- ------------------------------------------------------------------------------------------------
INCOME STATEMENT
- ------------------------------------------------------------------------------------------------
Net Interest Margin 4.20% 3.55%
Interest Income to Average Assets 7.25% 7.28%
Interest Expense to Average Assets 3.29% 3.85%
Net Interest Income to Average Assets 3.97% 3.43%
Noninterest Income to Average Assets 0.97% 0.20%
Noninterest Expense to Average Assets 3.28% 2.04%
Efficiency Ratio 66.29% 56.04%
Overhead Ratio 58.01% 53.53%
- ------------------------------------------------------------------------------------------------
</TABLE>
Source: The Bank Offering Prospectus, FinPro calculations and SNL Securities
Note: All of the Bank data is for the year ending May 31, 1997.
Note: All of the Comparable data is as of the most recent quarter.
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CORPORATE DATA
FIGURE 37 - COMPARABLE CORPORATE DATA
<TABLE>
<CAPTION>
CORPORATE
--------------------------------------------------------------------------
DEPOSIT
NUMBER INSURANCE
OF AGENCY CONVERSION
TICKER SHORT NAME EXCHANGE CITY STATE OFFICES IPO DATE (BIF/SAIF) TYPE
- ------------------------------------------ --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CATB Catskill Financial Corp. NASDAQ Catskill NY 4 04/18/96 BIF Regular
CEBK Central Co-operative Bank NASDAQ Somerville MA 8 10/24/86 BIF Regular
FBER 1st Bergen Bancorp NASDAQ Wood-Ridge NJ 4 04/01/96 SAIF Regular
FIBC Financial Bancorp Inc. NASDAQ Long Island NY 5 08/17/94 SAIF Regular
FKFS First Keystone Financial NASDAQ Media PA 5 01/26/95 SAIF Regular
FSBI Fidelity Bancorp Inc. NASDAQ Pittsburgh PA 8 06/24/88 SAIF Regular
LFBI Little Falls Bancorp Inc. NASDAQ Little Falls NJ 6 01/05/96 SAIF Regular
LSBX Lawrence Savings Bank NASDAQ North Andov MA 5 05/02/86 BIF Regular
PBCI Pamrapo Bancorp Inc. NASDAQ Bayonne NJ 8 11/14/89 SAIF Regular
PHFC Pittsburgh Home Financial Corp. NASDAQ Pittsburgh PA 7 04/01/96 SAIF Regular
WVFC WVS Financial Corp. NASDAQ Pittsburgh PA 5 11/29/93 SAIF Regular
</TABLE>
Source: SNL Securities
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KEY FINANCIAL DATA
Selected balance sheet ratios for the Comparable Group are shown in the
following table:
FIGURE 38 - COMPARABLE KEY FINANCIAL DATA
<TABLE>
<CAPTION>
KEY FINANCIAL DATA AS OF THE MOST RECENT QUARTER
--------------------------------------------------------
TOTAL LOANS/ LOANS/ DEPOSITS/ BORROWINGS/
ASSETS DEPOSITS ASSETS ASSETS ASSETS
TICKER SHORT NAME ($000) (%) (%) (%) (%)
- ------------------------------------- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CATB Catskill Financial Corp. 284,238 62.94 44.12 70.10 3.31
CEBK Central Co-operative Bank 344,420 88.08 68.13 77.36 11.90
FBER 1st Bergen Bancorp 284,765 57.50 43.27 75.25 9.60
FIBC Financial Bancorp Inc. 282,485 73.84 54.73 74.12 15.21
FKFS First Keystone Financial 320,797 82.17 58.59 71.31 19.42
FSBI Fidelity Bancorp Inc. 363,302 74.48 48.92 65.69 26.26
LFBI Little Falls Bancorp Inc. 299,989 57.38 43.07 75.05 11.17
LSBX Lawrence Savings Bank 366,318 63.97 43.58 68.12 22.11
PBCI Pamrapo Bancorp Inc. 370,987 68.48 55.81 81.50 3.94
PHFC Pittsburgh Home Financial Corp. 256,265 124.69 67.52 54.15 32.86
WVFC WVS Financial Corp. 294,693 93.72 54.34 57.99 28.72
---------------------------------------------------------
Average 315,296 77.02 52.92 70.06 16.77
Maximum 370,987 124.69 68.13 81.50 32.86
Minimum 256,265 57.38 43.07 54.15 3.31
</TABLE>
Source: SNL Securities
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CAPITAL DATA
FIGURE 39 - COMPARABLE CAPITAL DATA
<TABLE>
<CAPTION>
CAPITAL AS OF THE MOST RECENT QUARTER
-----------------------------------------------------------------------------------
TANGIBLE INTANGIBLE REGULATORY EQUITY+ TOTAL CAPITAL/
EQUITY/ EQUITY/ ASSETS/ CORE CAP/ RESERVES/ RISK ADJUSTED
ASSETS TANG ASSETS EQUITY ASSETS ASSETS ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%)
- ---------------------------------------- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CATB Catskill Financial Corp. 25.04 25.04 0.00 20.72 25.69 61.36
CEBK Central Co-operative Bank 9.93 8.98 10.53 NA 10.75 NA
FBER 1st Bergen Bancorp 14.19 14.19 0.00 10.30 15.27 29.40
FIBC Financial Bancorp Inc. 9.36 9.32 0.50 7.32 9.85 18.86
FKFS First Keystone Financial 7.31 7.31 0.00 7.33 7.80 16.92
FSBI Fidelity Bancorp Inc. 6.75 6.75 0.00 9.17 7.25 18.91
LFBI Little Falls Bancorp Inc. 13.27 12.39 7.63 9.00 13.63 27.17
LSBX Lawrence Savings Bank 8.69 8.69 0.00 9.07 9.68 17.71
PBCI Pamrapo Bancorp Inc. 12.74 12.65 0.77 12.49 13.46 27.04
PHFC Pittsburgh Home Financial Corp. 10.92 10.81 1.11 24.02 11.44 10.60
WVFC WVS Financial Corp. 11.16 11.16 0.00 11.44 11.84 25.77
--------------------------------------------------------------------------------------
Average 11.76 11.57 1.87 12.09 12.42 25.37
Maximum 25.04 25.04 10.53 24.02 25.69 61.36
Minimum 6.75 6.75 0.00 0.00 7.25 0.00
</TABLE>
Source: SNL Securities
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ASSET QUALITY DATA
FIGURE 40 - COMPARABLE ASSET QUALITY DATA
<TABLE>
<CAPTION>
ASSET QUALITY AS OF THE MOST RECENT QUARTER
-----------------------------------------------------------------------------------
NPLs/ RESERVES/ NPAs/ NPAs/ RESERVES/ RESERVES/
LOANS NPLs ASSETS EQUITY LOANS NPAs + 90
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- ---------------------------------------- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CATB Catskill Financial Corp. 0.76 195.59 0.47 1.86 1.48 140.85
CEBK Central Co-operative Bank 1.24 97.49 0.85 8.52 1.21 97.49
FBER 1st Bergen Bancorp 1.76 141.84 0.83 5.87 2.50 129.82
FIBC Financial Bancorp Inc. 1.62 54.85 1.71 18.29 0.89 26.91
FKFS First Keystone Financial 1.75 47.78 1.60 21.90 0.84 30.58
FSBI Fidelity Bancorp Inc. 0.57 176.3 0.31 4.65 1.01 112.57
LFBI Little Falls Bancorp Inc. 1.93 42.62 0.98 7.39 0.82 33.93
LSBX Lawrence Savings Bank 0.36 642.25 0.30 3.48 2.29 328.94
PBCI Pamrapo Bancorp Inc. 3.12 41.42 2.14 16.82 1.29 26.10
PHFC Pittsburgh Home Financial Corp. 2.07 36.82 1.60 14.64 0.76 32.18
WVFC WVS Financial Corp. 0.55 230.13 0.30 2.65 1.25 230.13
--------------------------------------------------------------------------------------
Average 1.43 155.19 1.01 9.64 1.30 108.14
Maximum 3.12 642.25 2.14 21.90 2.50 328.94
Minimum 0.36 36.82 0.30 1.86 0.76 26.10
</TABLE>
Source: SNL Securities
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PROFITABILITY DATA
FIGURE 41 - COMPARABLE PROFITABILITY DATA
<TABLE>
<CAPTION>
PROFITABILITY AS OF THE MOST RECENT QUARTER
-------------------------------------------
RETURN ON RETURN ON
AVG ASSETS AVG EQUITY
TICKER SHORT NAME (%) (%)
- ------------------------------------------------- -------------------------------------------
<S> <C> <C> <C>
CATB Catskill Financial Corp. 1.36 5.28
CEBK Central Co-operative Bank 0.73 7.16
FBER 1st Bergen Bancorp 0.85 5.57
FIBC Financial Bancorp Inc. 0.97 10.07
FKFS First Keystone Financial 0.86 11.94
FSBI Fidelity Bancorp Inc. 0.76 11.08
LFBI Little Falls Bancorp Inc. 0.63 4.75
LSBX Lawrence Savings Bank 1.62 18.78
PBCI Pamrapo Bancorp Inc. 1.37 10.69
PHFC Pittsburgh Home Financial Corp. 0.89 7.93
WVFC WVS Financial Corp. 1.21 10.92
-------------------------------------------
Average 1.02 9.47
Maximum 1.62 18.78
Minimum 0.63 4.75
</TABLE>
Source: SNL Securities
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INCOME STATEMENT DATA
FIGURE 42 - COMPARABLE INCOME STATEMENT DATA
<TABLE>
<CAPTION>
INCOME STATEMENT AS OF THE MOST RECENT QUARTER
----------------------------------------------------------------------------------------------
NET INTEREST INTEREST NET INTEREST NONINTEREST NONINTEREST
INTEREST INCOME/ EXPENSE/ INCOME/ INCOME/ EXPENSE/ EFFICIENCY OVERHEAD
MARGIN AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS RATIO RATIO
TICKER SHORT NAME (%) (%) (%) (%) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CATB Catskill Financial Corp. 4.15 7.31 3.22 4.09 0.14 1.90 45.69 43.82
CEBK Central Co-operative Bank 3.60 6.98 3.60 3.38 0.23 2.43 64.92 62.48
FBER 1st Bergen Bancorp 3.58 7.24 3.78 3.46 0.08 2.07 60.27 59.30
FIBC Financial Bancorp Inc. 3.89 7.41 3.69 3.71 0.23 2.09 53.37 50.09
FKFS First Keystone Financial 3.35 7.33 4.11 3.22 0.31 2.18 61.48 57.76
FSBI Fidelity Bancorp Inc. 3.02 6.91 3.97 2.93 0.24 1.86 58.76 55.42
LFBI Little Falls Bancorp Inc. 2.69 6.64 4.05 2.59 0.09 1.71 58.57 57.20
LSBX Lawrence Savings Bank 3.29 7.27 4.07 3.20 0.30 2.14 61.03 57.37
PBCI Pamrapo Bancorp Inc. 4.75 7.77 3.24 4.53 0.31 2.48 49.66 46.22
PHFC Pittsburgh Home Financial Corp. 3.10 7.59 4.59 3.00 0.15 1.81 56.23 54.05
WVFC WVS Financial Corp. 3.66 7.61 4.00 3.61 0.12 1.73 46.43 44.67
----------------------------------------------------------------------------------------------
Average 3.55 7.28 3.85 3.43 0.20 2.04 56.04 53.53
Maximum 4.75 7.77 4.59 4.53 0.31 2.48 64.92 62.48
Minimum 2.69 6.64 3.22 2.59 0.08 1.71 45.69 43.82
</TABLE>
Source: SNL Securities
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GROWTH DATA
FIGURE 43 - COMPARABLE GROWTH DATA
<TABLE>
<CAPTION>
BALANCE SHEET GROWTH AS OF THE MOST RECENT QUARTER
---------------------------------------------------
ASSET LOAN DEPOSIT
GROWTH GROWTH GROWTH
RATE RATE RATE
TICKER SHORT NAME (%) (%) (%)
- --------------------------------------- ---------------------------------------------------
<S> <C> <C> <C> <C>
CATB Catskill Financial Corp. 15.04 1.78 4.26
CEBK Central Co-operative Bank 29.25 (0.46) 11.33
FBER 1st Bergen Bancorp 51.48 (5.42) 10.61
FIBC Financial Bancorp Inc. 19.74 16.48 6.21
FKFS First Keystone Financial 7.83 12.41 9.55
FSBI Fidelity Bancorp Inc. 43.19 50.26 6.78
LFBI Little Falls Bancorp Inc. (4.48) 19.59 (4.22)
LSBX Lawrence Savings Bank 28.40 9.63 (4.97)
PBCI Pamrapo Bancorp Inc. 3.95 (1.82) 1.96
PHFC Pittsburgh Home Financial Corp 32.52 30.99 3.11
WVFC WVS Financial Corp. 21.15 18.25 6.71
--------------------------------------------------
Average 22.55 13.79 4.67
Maximum 51.48 50.26 11.33
Minimum (4.48) (5.42) (4.97)
</TABLE>
Source: SNL Securities
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MARKET CAPITALIZATION DATA
FIGURE 44 - COMPARABLE MARKET CAPITALIZATION DATA
<TABLE>
<CAPTION>
MARKET DATA AS OF THE MOST RECENT QUARTER
-----------------------------------------------------------------------------------
MRQ MRQ MRQ MRQ MRQ PUBLICLY MRQ TANGIBLE
MARKET PRICE PRICE PRICE REPORTED PUBLICLY REP
VALUE PER SHARE HIGH LOW BOOK VALUE BOOK VALUE
TICKER SHORT NAME ($) ($) ($) ($) ($) ($)
- ---------------------------------------- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CATB Catskill Financial Corp. 79.60 15.500 16.000 13.938 15.08 15.08
CEBK Central Co-operative Bank 40.77 18.000 18.500 15.875 17.40 15.57
FBER 1st Bergen Bancorp 55.51 15.250 15.750 12.875 13.47 13.47
FIBC Financial Bancorp Inc. 39.61 18.250 18.250 14.875 15.35 15.27
FKFS First Keystone Financial 34.99 23.375 23.375 21.250 19.09 19.09
FSBI Fidelity Bancorp Inc. 34.10 20.250 21.500 18.409 15.83 15.83
LFBI Little Falls Bancorp Inc. 44.01 15.625 15.625 12.750 14.51 13.40
LSBX Lawrence Savings Bank 51.14 11.250 11.250 9.125 7.45 7.45
PBCI Pamrapo Bancorp Inc. 61.12 21.000 21.000 18.500 16.62 16.49
PHFC Pittsburgh Home Financial Corp. 37.30 15.250 15.250 14.000 14.21 14.05
WVFC WVS Financial Corp. 48.71 25.875 27.250 23.500 18.82 18.82
--------------------------------------------------------------------------------------
Average 47.90 18.15 18.52 15.92 15.26 14.96
Maximum 79.60 25.88 27.25 23.50 19.09 19.09
Minimum 34.10 11.25 11.25 9.13 7.45 7.45
</TABLE>
Source: SNL Securities
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DIVIDEND DATA
FIGURE 45 - COMPARABLE DIVIDEND DATA
<TABLE>
<CAPTION>
DIVIDENDS
------------------------------------
CURRENT LTM DIVIDEND
DIVIDEND PAYOUT
YIELD RATIO
TICKER SHORT NAME ($) (%)
- ----------------------------------------------------------- -----------------------------------
<S> <C> <C> <C>
CATB Catskill Financial Corp. 1.723 17.07
CEBK Central Co-operative Bank 1.542 16.44
FBER 1st Bergen Bancorp 1.081 28.57
FIBC Financial Bancorp Inc. 1.739 38.46
FKFS First Keystone Financial 0.702 10.42
FSBI Fidelity Bancorp Inc. 1.636 29.92
LFBI Little Falls Bancorp Inc. 1.185 25.81
LSBX Lawrence Savings Bank 0.000 0.00
PBCI Pamrapo Bancorp Inc. 4.651 87.16
PHFC Pittsburgh Home Financial Corp. 1.267 38.89
WVFC WVS Financial Corp. 2.870 177.51
------------------------------------
Average 1.67 42.75
Maximum 4.65 177.51
Minimum 0.00 0.00
</TABLE>
Source: SNL Securities
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PRICING DATA
FIGURE 46 - COMPARABLE PRICING DATA
<TABLE>
<CAPTION>
CURRENT PRICING DATA AS OF 9/8/97
______________________________________________________________________________
PRICE/ PRICE/ PRICE/TANG
LTM PRICE/ PRICE/ PRICE/ PUBLICLY REP PUBLICLY REP
CORE EPS ASSETS EARNINGS LTM EPS BOOK VALUE BOOK VALUE
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
_____________________________________ ______________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C>
CATB Catskill Financial Corp. 20.06 26.98 19.35 19.82 107.76 107.76
CEBK Central Co-operative Bank 14.12 11.84 16.73 14.21 119.25 133.27
FBER 1st Bergen Bancorp 26.81 19.49 22.02 44.05 137.34 137.34
FIBC Financial Bancorp Inc. 14.56 14.02 14.38 25.27 149.84 150.62
FKFS First Keystone Financial 13.97 10.91 11.88 19.79 149.29 148.29
FSBI Fidelity Bancorp Inc. 13.17 9.39 13.41 20.75 138.98 138.98
LFBI Little Falls Bancorp Inc. 31.84 15.44 23.44 54.44 116.30 125.93
LSBX Lawrence Savings Bank 8.78 13.93 9.33 8.78 160.24 160.24
PBCI Pamrapo Bancorp Inc. 14.73 16.48 12.22 19.72 129.36 130.38
PHPC Pittsburgh Home Financial Corp. 20.58 14.55 15.78 26.30 133.27 134.79
WVPC WVS Financial Corp. 13.27 16.53 13.94 16.49 148.11 148.11
_____________________________________________________________________________
Average 17.44 15.41 15.68 24.51 135.43 137.88
Maximum 31.84 26.98 23.44 54.44 160.24 160.24
Minimum 8.78 9.39 9.33 8.78 107.76 107.76
</TABLE>
Source: SNL Securities
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4. MARKET VALUE DETERMINATION
INTRODUCTION
The estimated pro-forma market value of the Bank, along with certain adjustments
to its value relative to market values for the Comparable Group are delineated
in this section. The adjustments delineated in this section are made from
potential investors' viewpoints. A potential investor includes depositors
holding subscription rights and unrelated parties who may purchase stock in the
community offering and who are assumed to be aware of all relevant and necessary
facts as they pertain to the value of the Bank relative to other publicly traded
thrift institutions and relative to alternative investment opportunities.
There are numerous criteria on which the market value adjustments are based, but
the major ones utilized for purposes of this report include:
- Financial Strength
- Earnings Quality, Predictability and Growth
- Market Area
- Management
- Dividends
- Liquidity of the Issue
- Subscription Interest
- Recent Regulatory Matters
- Market for Seasoned Thrift Stocks
- Acquisition Market
After identifying the adjustments that should be made to market value, the
pro-forma market value for the Bank is computed and adjusted. The estimated
pro-forma market value for the Bank is then compared with the market valuation
ratios of the Comparable Group, recently converted public thrifts and the
aggregate ratios for all public thrifts.
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FINANCIAL STRENGTH
The financial strength of an institution is an important market value
determinant, as the investment community considers such factors as bank
liquidity, capitalization, asset composition, funding mix, intangible levels and
interest rate risk in assessing the attractiveness of investing in the common
stock of a thrift. Following is a synopsis of the key financial elements of the
Bank measured against the Comparable Group. The numbers utilized for the Bank in
this comparison were on a pro-forma basis.
Liquidity - The liquidity of the Bank and the Comparable Group appear
similar and were sufficient to meet all regulatory guidelines.
Capitalization - The Comparable Group's average equity to assets ratio
of 11.76% is slightly higher than the Bank's ratio of 9.81%, but will
be below the Bank's pro forma equity to assets ratio of 21.14% at the
midpoint of the valuation range.
Asset Composition - The Bank's net loan to asset ratio of 48.27% is
lower than the average for the Comparable Group of 52.92%. Management
anticipates growing the current ratio.
Asset Quality - The Bank's ALLL to loans ratio of 0.88% is less than
that of the Comparable Group's 1.30%.
Funding Mix - The Bank is funded through deposits, borrowings, and
retained earnings. The Comparable Group had 16.77% of its funding base
from borrowings as compared to the Bank's 9.89%. The Bank's low level
leaves room for additional borrowings in the future.
Intangible Levels - One of the most important factors influencing
market values is the level of intangibles that an institution carries
on its books. Thrifts trade more on tangible book than on book. The
Bank had no intangibles on its books at May 31, 1997.
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Interest Rate Risk - The Bank has an average level of interest rate
risk.
Based on these factors, the Bank's market value should not be adjusted in
comparison to the Comparable Group for these measures.
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EARNINGS QUALITY,
PREDICTABILITY AND GROWTH
The earnings quality, predictability and growth are critical components in the
establishment of market values for thrifts. Thrift earnings are primarily a
function of:
- net interest income
- loan loss provision
- non-interest income
- non-interest expense
The quality and predictability of earnings is dependent on both internal and
external factors. Some internal factors include the mix of the balance sheet,
the interest rate sensitivity of the balance sheet, the asset quality, and the
infrastructure in place to deliver the assets and liabilities to the public.
External factors include the competitive market for both assets and liabilities,
the global interest rate scenario, local economic factors and regulatory issues.
Each of these factors can influence the earnings of an institution, and each of
these factors is volatile. Investors prefer stability and consistency. As such,
solid, consistent earnings are preferred to high but risky earnings. Investors
also prefer earnings to be diversified and not entirely dependent on interest
income.
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================================================================================
The Bank earnings have been erratic over the last five fiscal years due to the
high interest expense incurred in 1995, as discussed on Page 22.
FIGURE 47 - NET INCOME CHART
<TABLE>
<S> <C>
May-93 $1,786
May-94 $2,519
May-95 $ 504
May-96 $1,466
May-97 $2,865
</TABLE>
Source: Offering Prospectus
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The Bank's net interest spread and margin declined in fiscal 1996 but reversed
the downward trend in fiscal 1997.
FIGURE 48 - SPREAD AND MARGIN CHART
[Line graph showing the Bank's net interest spread and
margin at May 31, 1995, 1996 and 1997.]
Source: Offering Prospectus
The Bank has been posting loan loss provisions sufficient to cover period
charge-offs and to maintain reserve ratios. At May 31, 1997, the Bank had an
allowance for loan and lease losses (ALLL) to total loans ratio of 0.88%, which
is less than that of the Comparable Group's 1.30%.
The Bank has generated more non-interest income than the Comparable Group. For
the year ended May 31, 1997, the Bank had 0.97% of non-interest income to
average assets compared to the Comparable average of 0.20%.
For the year ended May 31, 1997, the Bank had non-interest expense to average
assets of 3.28% which was greater than the 2.04% average of the Comparable
Group. On a percentage basis, non-interest expense, net of non-interest income
of 0.97%, is 2.31%, which puts the Bank at a disadvantage of 47 basis points
with respect to the Comparable Group's net of 1.84%.
Currently, investors are focusing on earnings sustainability as the interest
rate volatility has caused wide variation in income levels. With the intense
competition for both assets and deposits, banks can not easily replace lost
spread and margin with balance sheet growth. Additionally, the lower market
values of most thrifts relative to banks make acquisitions by thrifts more
difficult.
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================================================================================
Warwick has experienced fluctuations in its net interest income and has a high
level of noninterest expense. Therefore, a downward adjustment is warranted to
the market value for earnings.
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MARKET AREA
The market area that an institution serves has a significant impact on value, as
future success is interrelated with the economic, demographic and competitive
aspects of the market. Specifics on the Bank's market were delineated in Section
2 - Market Area Analysis.
Two of the Bank's markets - Highland Mills and Middletown - are experiencing
deposit runoff. While the other two markets - Warwick and Monroe - have
experienced modest deposit growth.
Population and households have increased and are projected to increase in all
four markets.
The demographic growth offsets the deposit decreases, therefore, the valuation
is not adjusted for this measure.
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MANAGEMENT
The Bank has developed a good management team with considerable banking
experience and length of service with the bank.
The Board is active and oversees and advises on all key strategic and policy
decisions. The organization chart appears reasonable for an institution of the
Bank's size and complexity.
As such, no adjustment appears to be warranted for this factor.
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DIVIDENDS
Historically, banks typically have not established dividend policies immediately
at or after conversion to stock ownership. Rather, newly converted institutions,
in general, have preferred to establish an earnings track record, fully invest
the conversion proceeds, and allow for seasoning of the stock before
establishing a dividend policy. In the late 1980's and early 1990's however,
there has been a tendency toward initiating dividend policies concurrent with
the conversion as a means of increasing the attractiveness of the issue and to
utilize the proceeds.
The last few years have seen yet another shift away from dividend policies
concurrent with conversion. Recent issues have been fully or over subscribing
without the need for the additional enticement of dividends. After conversion is
another issue however. Recent pressures on ROE and on internal rate of returns
to investors has prompted the industry toward cash dividends. This trend is
exacerbated by the lack of growth potential. Typically, when institutions are in
a growth mode, they issue stock dividends or do not declare a dividend. When
growth is stunted, these institutions shift toward reducing equity levels and
thus utilize cash dividends as a tool in this regard.
Ten of the eleven comparable institutions had declared dividends. The average
dividend payout ratio for the Comparable Group was 42.75%, ranging from a high
of 177.51% to a low of 0.00%.
The Bank will have the earnings and capital levels to afford to pay dividends.
As such, no adjustment is indicated for this factor.
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LIQUIDITY OF THE ISSUE
The Comparable Group is by definition composed only of companies that trade in
the public markets with all eleven of the Comparables trading on NASDAQ.
Typically, the number of shares outstanding and the market capitalization
provides an indication of how much liquidity there will be in a given stock. The
actual liquidity can be measured by volume traded over a given period of time.
The market capitalization values of the Comparable Group range from a low of
$34.10 million to a high of $79.60 million with an average market capitalization
of $47.90 million. The Bank expects to have $69.3 million of market capital at
the midpoint on a pro-forma basis.
Based on the comparison with the Comparable Group and the above data, no
adjustment appears warranted.
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SUBSCRIPTION INTEREST
The outcome of subscription offerings has been, historically, difficult to
predict. Since 1992, however, the conversions have experienced robust
subscription interest with the exception of late 1994 when the pricing multiples
were high. During late 1994, many subscriptions had the need to resolicit due to
lack of professional investor demand. During 1995, the investor demand returned
and the subscription interest increased, primarily the result of lower market
multiples. There were some offerings in May and June 1996 that went off at or
below the midpoint, indicating a possible shift away from interest in thrift
public offerings at that time. The vast majority of recent conversions have
oversubscribed and gone off at the maximum or super-maximum.
Of more importance is the general strength of the aftermarket. Thrift stock
prices have soared upwards in recent months (see Figure 49) and is showing
strength across the board. Additionally, as shown in Exhibit 7, the most recent
conversions (within the last 3 months) have demonstrated a strong price
appreciation.
As such, an upward adjustment for subscription interest is warranted at this
time.
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RECENT REGULATORY MATTERS
As a result of large after-market price increases of conversions during 1993 and
early 1994, the regulatory agencies have issued guidelines on appraisals for
conversions. The regulators publicly indicated that only modest immediate
after-market price increases are appropriate for converting institutions. The
guidelines issued November 22, 1994, indicate that the reasonableness and
adequacy of an appraisal will be partially judged by the immediate price
movement of the conversion stock in the after-market, using a very short time
frame of the second day of trading following closing. The guidelines further
discuss that the average price appreciation for all IPOs has been between 10 and
15%, which was deemed to be too high.
At around the same time period, IPO pricing was elevated on a book basis and
IPOs in late 1994 did not experience much appreciation. In fact, numerous IPOs
actually depreciated. 1995 brought back lower premiums to book but they have
been rising throughout 1996 to approximately the same levels as late 1994. 1997
has continued the trend with IPOs popping over 40% on average, for the first day
of trading.
The recent interest in thrift IPOs has caused large oversubscriptions, which in
turn have caused large price appreciations in the aftermarket. These factors may
cause regulators to force pricing increases.
Regulatory agencies are also considering limiting stock buy backs to: 0% in the
first year, 5% in the second year and 5% in the third year.
As such, a downward adjustment for this measure is warranted, as newly converted
thrifts will not trade at the same multiples as seasoned thrifts because
investors do not have a proven track record on which to base investment
decisions. Additionally, newly converted thrifts need time to reinvest proceeds
and leverage the capital raised in the IPO.
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MARKET FOR SEASONED THRIFT
STOCKS
Data for all public thrifts as of September 8, 1997 is provided in Exhibit 5. A
common measure utilized as a proxy for the performance of the thrift industry is
the SNL thrift index graphically shown below and tabularly shown on the
following page:
FIGURE 49- SNL THRIFT INDEX CHART
<TABLE>
<CAPTION>
<S> <C>
Jan - 92 143.9
Jul - 92 175.1
Jan - 93 201.1
Jul - 93 220.5
Jan - 94 252.5
Jul - 94 273.8
Jan - 95 256.1
Jul - 95 328.2
Jan - 96 370.7
Jul - 96 389.9
Jan - 97 520.1
Jul - 97 638.8
Sep - 97 695.9
</TABLE>
Source: SNL Securities
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FIGURE 50 - HISTORICAL SNL INDEX
<TABLE>
<CAPTION>
SNL THRIFT INDEX MONTHLY PERFORMANCE
JANUARY 2, 1992 TO SEPTEMBER 8, 1997
SNL % CHANGE % CHANGE % CHANGE % CHANGE % CHANGE % CHANGE
THRIFT SINCE SINCE SINCE SINCE SINCE SINCE
DATE INDEX 1/2/92 1/4/93 1/3/94 12/30/94 12/29/95 12/31/96
---- ------ ------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1992 2-Jan 143.9 -- -- -- -- -- --
3-Feb 153.3 6.5% -- -- -- -- --
2-Mar 164.3 14.2% -- -- -- -- --
1-Apr 157.6 9.5% -- -- -- -- --
1-May 160.8 11.7% -- -- -- -- --
1-Jun 170.4 18.4% -- -- -- -- --
1-Jul 175.1 21.7% -- -- -- -- --
1-Aug 179.7 24.9% -- -- -- -- --
1-Sep 169.6 17.9% -- -- -- -- --
1-Oct 167.0 16.1% -- -- -- -- --
2-Nov 172.4 19.8% -- -- -- -- --
1-Dec 186.2 29.4% -- -- -- -- --
1993 4-Jan 201.1 39.7% -- -- -- -- --
1-Feb 219.1 52.3% 9.0% -- -- -- --
1-Mar 221.1 53.6% 9.9% -- -- -- --
1-Apr 228.2 58.6% 13.5% -- -- -- --
3-May 215.9 50.0% 7.4% -- -- -- --
1-Jun 214.7 49.2% 6.8% -- -- -- --
1-Jul 220.5 53.2% 9.6% -- -- -- --
2-Aug 234.7 63.1% 16.7% -- -- -- --
1-Sep 246.7 71.4% 22.7% -- -- -- --
1-Oct 259.9 80.6% 29.2% -- -- -- --
1-Nov 258.6 79.7% 28.6% -- -- -- --
1-Dec 245.7 70.7% 22.2% -- -- -- --
1994 3-Jan 252.5 75.5% 25.6% -- -- -- --
1-Feb 257.2 78.7% 27.9% 1.9% -- -- --
1-Mar 245.4 70.5% 22.0% -2.8% -- -- --
1-Apr 241.6 67.9% 20.1% -4.3% -- -- --
2-May 249.3 73.2% 24.0% -1.3% -- -- --
1-Jun 263.3 83.0% 30.9% -4.3% -- -- --
6-Jul 273.8 90.3% 36.2% 8.4% -- -- --
1-Aug 277.2 92.6% 37.8% 9.8% -- -- --
1-Sep 286.4 99.0% 42.4% 13.4% -- -- --
3-Oct 277.3 92.7% 37.9% 9.8% -- -- --
1-Nov 258.9 79.9% 28.7% 2.5% -- -- --
1-Dec 242.3 68.4% 20.5% -4.0% -- -- --
1995 31-Jan 256.1 78.0% 27.3% 1.4% 5.7% -- --
28-Feb 277.0 92.5% 37.7% 9.7% 14.3% -- --
31-Mar 278.4 93.5% 38.4% 10.3% 14.9% -- --
28-Apr 295.4 105.3% 46.9% 17.0% 21.9% -- --
31-May 307.6 113.8% 53.0% 21.8% 27.0% -- --
30-Jun 313.5 117.9% 55.9% 24.2% 29.4% -- --
30-Jul 328.2 128.1% 63.2% 30.0% 35.5% -- --
31-Aug 355.5 147.0% 76.8% 40.8% 46.7% -- --
30-Sep 362.3 151.8% 80.2% 43.5% 49.5% -- --
31-Oct 354.1 146.1% 76.1% 40.2% 46.1% -- --
30-Nov 370.2 157.3% 84.1% 46.6% 52.8% -- --
29-Dec 376.5 161.6% 87.2% 49.1% 55.4% -- --
1996 31-Jan 370.7 157.6% 84.3% 46.8% 53.0% -1.5% --
29-Feb 373.6 159.6% 83.8% 48.0% 54.2% -0.8% --
29-Mar 382.1 165.5% 90.0% 51.3% 57.7% 1.5% --
30-Apr 380.3 164.3% 89.1% 50.6% 57.0% 1.0% --
31-May 383.0 166.2% 90.5% 51.7% 58.1% 1.7% --
28-Jun 387.2 169.1% 92.5% 53.3% 59.8% 2.8% --
31-Jul 389.9 171.0% 93.9% 54.4% 60.9% 3.6% --
30-Aug 408.3 183.7% 103.0% 61.7% 68.5% 8.4% --
30-Sep 429.3 198.3% 113.5% 70.0% 77.2% 14.0% --
31-Oct 456.7 217.4% 127.1% 80.9% 88.5% 21.3% --
29-Nov 485.8 217.6% 141.6% 92.4% 100.5% 29.0% --
31-Dec 483.6 236.1% 140.5% 91.5% 99.6% 28.4% --
1997 31-Jan 520.1 261.4% 158.6% 106.0% 114.7% 38.1% 7.5%
31-Mar 527.7 266.7% 162.4% 109.0% 117.8% 40.2% 9.1%
10-Jun 594.8 313.4% 195.8% 135.6% 145.5% 58.0% 23.0%
10-Jul 638.8 343.9% 217.6% 153.0% 163.6% 69.7% 32.1%
8-Sep 695.9 383.6% 246.0% 175.6% 187.2% 84.8% 43.9%
</TABLE>
Source: SNL Securities
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FIGURE 51 - EQUITY INDICES
[Line graph showing index comparisons.]
INDEX COMPARISONS
<TABLE>
<CAPTION>
- -------------------------------------------------------
SNL S&P DJIA
- -------------------------------------------------------
<S> <C> <C> <C>
6/30/94 269.6 444.3 3,625.0
12/30/94 244.7 459.3 3,834.4
6/30/95 313.5 544.8 4,556.1
12/29/95 376.5 615.9 5,117.1
6/28/96 387.2 670.6 5,654.6
12/31/96 483.6 740.7 6,448.3
6/10/97 594.8 865.3 7,539.3
7/10/97 638.8 913.8 7,886.8
9/8/97 695.9 931.2 7,835.2
</TABLE>
As the Figures 49 and 50 illustrate, the performance of the SNL index has been
robust through 1992, 1993, 1994 and 1995. The dip in the index, occurring in
late 1994, was the product of the interest rate rise during that period along
with the overall uneasiness in the stock market in general. The rate scenario
covering the same period as the SNL index can be seen in the chart on the
following page.
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FIGURE 52 - HISTORICAL RATES
[Line graph showing 3 month, 1 year and
30 year historical interest rates.]
Source: Prudential Bache Securities
As the graph demonstrates, the rate rise in late 1994 correlates closely to the
fall in thrift prices. The drop in rates in 1995 was one of the primary drivers
of the rapid rise in the SNL index. During 1996, rates increased slightly and
then remained stable, fueling the rise in the conversion prices. 1997 has seen a
continuation of this trend, with the average IPO pricing at 70.9%, 69.6%, and
72.8% of book value for the first, second, and third quarters of 1997
respectively.
Thrift pricing in general was robust in 1995 due to the falling interest rates,
the industry consolidation and renewed earnings. Contrasting this view, in late
1994 investors faced shrinking spreads and margins due to rising rates and
consolidation that was tailing off and slowing down. The blockbuster level of
consolidations have led many investors to think that all institutions are fair
game for acquisitions and prices have risen accordingly.
As Figures 51 and 52 show, the SNL index has continued to increase despite the
slack in the growth of both the DJIA and S&P and despite the flat interest rate
environment, providing further evidence of the market's acquisition speculation.
As such, a downward adjustment for this measure is warranted, as newly converted
thrifts will not trade at the same multiples as seasoned thrifts because
investors do not have a proven track record on which to base investment
decisions. Additionally, newly converted thrifts need time to reinvest proceeds
and leverage the capital raised in the IPO.
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ACQUISITION MARKET
The level of deals in 1997 is below that of 1996, but the second quarter did
increase modestly from the first quarter's level.
FIGURE 53 - DEALS FOR LAST FIVE QUARTERS
[GRAPHIC]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BANK: 85 92 80 79 87 91 79 55 68 50
THRIFT: 35 27 22 22 29 21 19 26 29 10
1995-2 1995-3 1995-4 1996-1 1996-2 1996-3 1996-4 1997-1 1997-2 1997-3
</TABLE>
Source: SNL Securities
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From 1994 through July 1997, thrift deal prices remained high. As illustrated by
the following graphs and tables, thrift deal prices as a multiple of book value
and earnings continue to climb through September 8, 1997, for all thrifts,
thrifts in the Mid-Atlantic region, and similar deal size thrifts. Price to
assets and price to deposits rose for all thrifts and for the similar deal size,
however, both multiples decreased in 1997 for the region.
FIGURE 54 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO BOOK
[GRAPHIC OMITTED]
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FIGURE 55 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO TANGIBLE BOOK
[GRAPHIC OMITTED]
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FIGURE 56 - THRIFT ACQUISITION MULTIPLES, PRICE TO EARNINGS
[GRAPHIC OMITTED]
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FIGURE 57 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO ASSETS
[GRAPHIC OMITTED]
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FIGURE 58 - CURRENT THRIFT ACQUISITION MULTIPLES, PRICE TO DEPOSITS
[GRAPHIC OMITTED]
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FIGURE 59 - DEAL MULTIPLES
<TABLE>
<CAPTION>
1994 1995 1996 1997YTD
<S> <C> <C> <C> <C>
MEDIAN PRICE TO LTM EARNINGS
Thrifts - Nationwide 13.8 18.6 17.7 25.3
Thrifts - Mid-Atlantic 13.3 17.9 17.0 18.3
Thrifts - Deal Value $50-$100 Million 14.1 19.6 17.5 21.6
AVERAGE PRICE TO BOOK
Thrifts - Nationwide 154.6 144.7 149.5 168.7
Thrifts - Mid-Atlantic 153.9 156.5 156.9 188.0
Thrifts - Deal Value $50-$100 Million 147.7 157.9 162.2 179.6
AVERAGE PRICE TO TANGIBLE BOOK
Thrifts - Nationwide 158.9 149.1 153.6 172.4
Thrifts - Mid-Atlantic 160.4 157.6 159.4 193.1
Thrifts - Deal Value $50-$100 Million 152.5 158.7 166.2 183.7
AVERAGE PRICE TO ASSETS
Thrifts - Nationwide 13.9 14.8 15.0 18.0
Thrifts - Mid-Atlantic 13.2 15.3 17.7 15.1
Thrifts - Deal Value $50-$100 Million 14.9 19.6 15.3 16.5
AVERAGE PRICE TO DEPOSITS
Thrifts - Nationwide 17.0 19.2 19.9 24.0
Thrifts - Mid-Atlantic 16.2 20.3 24.5 22.4
Thrifts - Deal Value $50-$100 Million 18.6 24.7 20.2 23.0
</TABLE>
Currently there are no local pending thrift acquisitions announced. The
acquisition multiples associated with all deals are shown below.
FIGURE 60 -ACQUISITION TABLE
<TABLE>
<CAPTION>
At Announcement Offer Divided By
--------------------------------
Book Value LTM EPS
---------- -------
<S> <C> <C>
Pending Merger Median 188 23.7
Completed Merger Median 152 26.0
</TABLE>
Source: SNL Securities
A downward adjustment is warranted for this factor at time of conversion, since
new conversions are not readily available for acquisition for well over one year
from the date of conversion and since the market prices of the Comparables
already have this acquisition premium built in their prices.
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ADJUSTMENTS TO VALUE
Overall, FinPro believes that the Bank pro-forma market value should be
discounted relative to the Comparable Group, reflecting the following
adjustments.
Key Valuation Parameters Valuation Adjustment
- --------------------------------------------------------------------------------
Financial Strength No Adjustment
Earnings Quality No Adjustment
Market Area No Adjustment
Management No Adjustment
Dividends No Adjustment
Liquidity of the Issue No Adjustment
Subscription Interest Upward
Recent Regulatory Matters No Adjustment
Market for Seasoned Thrift Stocks Downward
Acquisition Market Downward
As such, and as a result of all the factors discussed, a full offering discount
in the 40% - 45% range from the average trading values of the comparable
companies appears to be reasonable.
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VALUATION APPROACH
In applying the accepted valuation methodology promulgated by the regulators,
i.e., the pro-forma market value approach, four key pricing multiples were
considered. The four multiples include:
Price to earnings ("P/E")
Price to tangible book value ("P/TB")
Price to book value ("P/B")
Price to assets ("P/A")
All of the approaches were calculated on a pro-forma basis including the effects
of the conversion proceeds. All of the assumptions utilized are presented in
Exhibits 8 and 9.
To ascertain the pro-forma estimated market value of the Bank, the market
multiples for the Comparable Group, all publicly traded thrifts and the recent
(1996 to date) standard conversion group were assessed.
Since thrift earnings in general have had a high degree of volatility over the
past decade, the P/B approach had gained in importance and is utilized
frequently as the benchmark for market value. It is interesting to note that the
P/B approach is more of a benchmark than a reliable valuation technique. A
better approach is the P/TB approach. In general, investors tend to price
financial institutions on a tangible book basis, because it incorporates the P/B
approach adjusted for intangibles. Most recently, the P/E approach has regained
favor among investors.
As such, in estimating the market value for the Bank, the most emphasis was
placed on the P/E approach. The P/B and P/TB were given much less weight and the
P/A ratio was not given much weight at all.
In terms of the market multiples, most weight was given to the Comparable Group
and the recent (1996 to date) standard conversions. Less weight was ascribed to
all public thrifts and all New York thrifts. The multiples for the Comparable
Group, all publicly traded thrifts, and New York publicly traded thrifts are
shown in Exhibit 6.
<PAGE> 89
Conversion Valuation Appraisal Report Page: 1 - 83
================================================================================
Based upon the approximately 45% discount defined in the section above, the Bank
pricing at the midpoint is estimated to be $48,500,000. Based upon a range below
and above the midpoint value, the relative values are $41,225,000 at the minimum
and $55,775,000 at the maximum respectively. At the supermaximum of the range
the offering value would be $64,141,000.
At the various levels of the estimated value range, the offering would result in
the following offering data:
FIGURE 61 - VALUE RANGE OFFERING DATA
<TABLE>
<CAPTION>
SHARES SHARES ISSUED
ISSUED AND PRICE PER TO TOTAL
EXCHANGED SHARE FOUNDATION SHARES
<S> <C> <C> <C> <C>
Minimum 4,123 $10 124 4,246
Midpoint 4,850 $10 146 4,996
Maximum 5,578 $10 167 5,745
Supermaximum 6,414 $10 192 6,607
</TABLE>
Source: FinPro Inc. Proforma Model
<PAGE> 90
Conversion Valuation Appraisal Report Page: 1 - 84
================================================================================
This equates to the following multiples:
FIGURE 62 - COMPARABLE PRICING MULTIPLES
<TABLE>
<CAPTION>
Price Relative to
---------------------------------------------
Earnings Book Tangible Book Assets
---------------------------------------------
<S> <C> <C> <C> <C>
The Bank (at midpoint) 12.20 72.05% 72.05% 15.23%
Comparable Group Average 24.51 135.43% 137.88% 15.41%
(Discount) Premium -50.24% -46.80% -47.75% -1.14%
</TABLE>
Source: FinPro Calculations
FIGURE 63 - RECENT STANDARD CONVERSION MULTIPLES
<TABLE>
<CAPTION>
Recent Standard Conversions
---------------------------------------------
Price Relative to
---------------------------------------------
Earnings Book Tangible Book Assets
---------------------------------------------
<S> <C> <C> <C> <C>
The Bank (at midpoint) 12.20 72.05% 72.05% 15.23%
Recent Standard Conversions 23.70 71.10% 71.10% 17.10%
(Discount) Premium -48.54% 1.33% 1.33% -10.91%
</TABLE>
Source: FinPro Calculations
As the tables above demonstrate, a discount is applied to the Bank relative to
the Comparable Group on price to earnings and price to assets and at a premium
on a price to book and price to tangible book basis.
FIGURE 64 - ADJUSTED SUPERMAX TO RECENT CONVERSION COMPARISON
<TABLE>
<CAPTION>
Price Relative to
----------------------------------------------
Earnings Book Tangible Book Assets
---------------------------------------------
<S> <C> <C> <C> <C>
The Bank (at the supermax) 14.71 79.62% 79.62% 19.34%
SAIF Adj. Comp. Group 15.99 135.43% 137.88% 15.41%
(Discount) Premium -8.05% -41.21% -42.26% 25.51%
</TABLE>
Source: FinPro Calculations
The price to earnings discounts in Figures 62 and 63 are magnified due to the
impact of the one time SAIF assessment on the Comparables. The assessment is
included in 8 of the 11 members of the Comparable Group and in the Recent
Conversion's multiples, thereby overstating the relationship.
In addition, the Recent Conversion multiple is based on public offerings which
have typically subscribed at the supermaximum. Figure 64 adjusts for these
factors by calculating the discount or premium in comparison to the Bank's
multiples at the supermaximum.
<PAGE> 91
Conversion Valuation Appraisal Report Page: 1 - 85
================================================================================
An excellent comparison for the Bank is the recent conversion of Goshen Savings
Bank, located in the same general market as the Bank and of similar size and
operating characteristics. Goshen is not in the Comparable Group because of the
recency of its IPO.
FIGURE 65 - SUPERMAX TO GOSHEN SAVINGS BANK
<TABLE>
<CAPTION>
Goshen Savings Bank (GSB Financial Corporation)
-----------------------------------------------
Price Relative to
-----------------------------------------------
Earnings Book Tangible Book Assets
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Bank (at the supermax) 14.71 79.62% 79.62% 19.34%
- --------------------------------------------------------------------------
GSB Financial Corporation 21.28 73.48% 73.48% 18.90%
- --------------------------------------------------------------------------
(Discount) Premium -30.89% 8.35% 8.35% 2.33%
- --------------------------------------------------------------------------
</TABLE>
GSB Financial Corporation adjusted Price to earnings when imputing effect of
one-time SAIF assessment is 13.88, which would indicate that Warwick is priced
at a discount at the Supermax of the EVR.
When compared to GSB Financial Corporation (Goshen Savings Bank), a
geographically proximate and similar institution, that underwent a full
standard conversion in June 1997, the Bank is priced at a discount on a P/E
basis and a premium on a P/B basis. It is important to note that GSB's price
relative to earnings was artificially high due to the SAIF assessment in
September 1996.
FIGURE 66 - P/E ADJUSTED FOR SAIF ASSESSMENT
<TABLE>
<CAPTION>
LTM LTM
PRICE/ LTM NET TOTAL DEPOSITS/ TOTAL SAIF NET ADJUSTED
PRICE LTM EPS EPS INCOME ASSETS ASSETS DEPOSITS ADJUSTMENTS INCOME LTM EPS
TICKER SHORT NAME ($) (X) ($) ($) ($) (%) ($) ($) ($) (X)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CATB Catskill Financial Corp. 16,250 19.82 1.22 4,022 284,238 70.10 199,251 -- 4,022 13.32
CEBK Central Co-operative Bank 20,750 14.21 0.68 2,842 344,420 77.36 266,443 -- 2,842 30.30
FBER 1st Bergin Bancorp 18,500 44.05 2.38 1,137 284,765 75.25 214,286 1,126 2,263 3.90
FIBC Financial Bancorp Inc. 23,000 25.27 1.10 1,503 282,485 74.12 209,378 1,100 2,603 12.09
FKFS First Keystone Financial 28,500 19.79 0.69 1,663 320,797 71.31 228,760 1,202 2,865 23.82
FSBI Fidelity Bancorp Inc. 22,000 20.75 0.94 1,681 363,302 65.69 238,653 1,254 2,935 13.36
LFBI Little Falls Bancorp Inc. 16,875 54.44 3.23 789 299,989 75.05 225,142 1,183 1,972 2.09
LSBX Lawrence Savings Bank 11,938 8.78 0.74 5,970 366,318 68.12 249,536 -- 5,970 16.23
PBCI Pamrago Bancorp Inc. 21,500 19.72 0.92 3,292 370,987 81.50 302,354 1,589 4,881 15.81
PHFC Pittsburgh Home Financial Corp. 18,938 26.3 1.39 1,355 256,265 54.15 138,767 729 2,084 8.66
WVFC WVS Financial Corp. 27,875 16.49 0.59 2,959 294,693 57.99 170,892 898 3,857 36.15
Average 24,511 15,994
Median 19,820 13,358
</TABLE>
As mentioned earlier, the earnings for the SAIF insured institutions reflected
the one time assessment. Figure 66 calculates an adjustment to the Price/LTM
EPS for the one time assessment. The following table presents the pricing for
the Bank compared to the Comparable Group, as adjusted in Figure 66:
FIGURE 67 - BANK VS. SAIF ADJUSTED COMPARABLES
<TABLE>
<CAPTION>
Price Relative to
-----------------------------------------------
Earnings Book Tangible Book Assets
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Bank (at the supermax) 14.71 79.62% 79.62% 19.34%
- -------------------------------------------------------------------------
SAIF Adj. Comp. Group 15.99 135.43% 137.88% 15.41%
- --------------------------------------------------------------------------
(Discount) Premium -8.05% -41.21% -42.26% 25.51%
- --------------------------------------------------------------------------
</TABLE>
<PAGE> 92
Conversion Valuation Appraisal Report Page: 1 - 86
================================================================================
VALUATION CONCLUSION
It is, therefore, our opinion that as of September 18, 1997, the estimated
pro-forma market value of the Bank in a full offering was $48,500,000 at the
midpoint of a range with a minimum of $41,225,000 to a maximum of $55,775,000 at
15% below and 15% above the midpoint of the range respectively. Assuming an
adjusted maximum value of 15% above the maximum value, the adjusted maximum
value or supermaximum value in a full offering is $64,141,000. The stock will be
issued at $10.00 per share.
Pro-forma comparisons of the Bank's value range with the Comparable Group, all
public thrifts, New York public thrifts and the recent standard conversion group
is shown in Exhibits 8 and 9.
<PAGE> 93
EXHIBIT 1
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
ASSETS MAY 31,
------ --------------------------------
1997 1996
--------------------------------
<S> <C> <C>
Assets:
Cash on hand and in banks $ 10,366,711 $ 7,101,510
Federal funds sold 1,315,000 --
Securities-
Trading, at fair value -- 1,933,694
Available-for-sale, at fair value 120,301,288 135,232,414
Held-to-maturity, at amortized cost (fair value of $6,116,184 in 1997
and $7,087,692 in 1996) 6,091,684 7,117,468
------------ ------------
Total securities 126,392,972 144,283,576
Mortgage loans, net 97,440,203 71,941,908
Mortgage loans held-for-sale 4,831,500 5,053,892
Other loans, net 36,051,438 31,901,679
Mortgage servicing rights 835,079 669,945
Accrued interest receivable 2,096,627 1,942,185
Federal Home Loan Bank stock 1,731,300 1,178,100
Bank premises and equipment, net 2,425,831 2,539,141
Other real estate owned, net 223,782 330,140
Other assets 2,834,743 7,110,877
------------ ------------
Total assets $286,545,186 $274,052,953
============ ============
LIABILITIES AND NET WORTH
Liabilities:
Deposits $221,211,137 $232,965,276
Mortgage escrow funds 1,397,584 1,252,416
Securities sold under agreements to repurchase 23,090,000 4,700,000
Federal Home Loan Bank advances 5,250,000 3,600,000
Accrued expenses and other liabilities 7,482,034 6,764,788
------------ ------------
Total liabilities 258,430,755 249,282,480
------------ ------------
Net Worth:
Surplus 6,025,846 6,025,846
Undivided profits 21,468,663 18,603,160
Net unrealized gain on securities, net of taxes 619,922 141,467
------------ ------------
Total net worth 28,114,431 24,770,473
------------ ------------
Total liabilities and net worth $286,545,186 $274,052,953
============ ============
</TABLE>
Source: Audited Financial Statements
<PAGE> 94
EXHIBIT 2
CONSOLIDATED STATEMENTS OF INCOME
$ IN 000'S
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
MAY 31,
--------------------------------------------------
1997 1996 1995
--------------------------------------------------
<S> <C> <C> <C>
Interest and dividend income:
Interest on mortgage loans $ 7,151,702 $ 8,098,219 $ 6,922,109
Interest on other loans 3,457,460 3,149,131 2,833,349
Interest and dividends on securities 10,049,163 6,728,913 6,228,600
Interest on federal funds sold 14,504 321,903 264,966
Interest on short-term money market instruments 18,290 34,870 3,633
------------ ------------ ------------
Total interest and dividend income 20,691,119 18,333,036 16,252,657
Interest and dividend expense:
Dividends on deposits-
Time Deposits 3,984,829 5,108,712 2,808,198
Money market deposits 882,979 936,218 1,041,512
Savings deposits 2,550,704 2,580,121 2,862,319
Mortgagors' escrow funds 49,588 68,165 61,198
Interest on borrowings 1,908,062 23,882 54,556
------------ ------------ ------------
Total interest and dividend expense 9,376,162 8,717,098 6,827,783
------------ ------------ ------------
Net interest and dividend income 11,314,957 9,615,938 9,424,874
------------ ------------ ------------
Provision for loan losses 130,000 140,000 261,000
------------ ------------ ------------
Net interest income after provision for loan losses 11,184,957 9,475,938 9,163,874
Other income (loss):
Service and fee income 1,915,139 1,767,610 1,369,288
Securities transactions 816,304 356,266 (428,611)
Net gain (loss) on sale of loans 137,403 118,807 14,107
Other income (loss) (89,079) (158,713) (79,105)
------------ ------------ ------------
Total other income, net 2,779,767 2,083,970 875,679
Other expenses:
Salaries and employee benefits 5,255,869 5,049,942 3,958,063
FDIC Insurance 12,447 53,226 466,497
Occupancy 1,307,727 1,237,485 1,201,723
Data processing 639,654 483,572 413,961
Advertising 152,529 129,227 112,278
Professional fees 240,513 325,392 221,754
Other 1,734,616 1,791,244 1,721,934
------------ ------------ ------------
Total other expenses 9,343,355 9,070,088 8,096,210
------------ ------------ ------------
Income before provision for income taxes and cumulative
effect of change in accounting principle 4,621,369 2,489,820 1,943,343
Provision for income taxes 1,755,866 1,024,240 794,394
------------ ------------ ------------
Income before cumulative effect of change in accounting principle 2,865,503 1,465,580 1,148,949
Cumulative effect of change in accounting principle -- -- 645,184
------------ ------------ ------------
Net income $ 2,865,503 $ 1,465,580 $ 503,765
============ ============ ============
</TABLE>
Source: Audited Financial Statements
<PAGE> 95
EXHIBIT 3
CONSOLIDATED STATEMENTS OF CHANGES IN NET WORTH
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON SECURITIES
UNDIVIDED AVAILABLE-
SURPLUS PROFITS FOR-SALE, NET TOTAL
------- ------- ------------- -----
<S> <C> <C> <C> <C>
Balance at May 31, 1994 $6,025,846 $16,633,815 $(750,013) $21,909,648
Net income -- 503,765 -- 503,765
Unrealized appreciation (depreciation) on securities
available-for-sale, net -- -- 662,725 662,725
---------- ----------- --------- -----------
Balance at May 31, 1995 6,025,846 17,137,580 (87,288) $23,076,138
Net income -- 1,465,580 -- 1,465,580
Unrealized appreciation (depreciation) on securities
available-for-sale, net -- -- 228,755 228,755
---------- ----------- --------- -----------
Balance at May 31, 1996 6,025,846 18,603,160 141,467 $24,770,473
Net income -- 2,865,503 -- 2,865,503
Unrealized appreciation (depreciation) on securities
available-for-sale, net -- -- 478,455 478,455
---------- ----------- --------- -----------
Balance at May 31, 1997 6,025,846 21,468,663 619,922 28,114,431
</TABLE>
Source: Audited Financial Statements
<PAGE> 96
EXHIBIT 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
MAY 31,
---------------------------------------------------
1997 1996 1995
---------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,865,503 $ 1,465,580 $ 503,765
Adjustments to reconcile net income to net cash provided by
operating activities:
Cumulative effect of change in accounting principle -- -- 645,184
Depreciation 459,171 428,008 381,190
Amortization of premium on investment securities 264,120 497,342 848,222
Accretion of discount on investment securities (189,667) (509,755) (204,763)
Net (increase) decrease in accrued interest receivable (154,589) 140,166 (102,179)
Net (increase) decrease in mortgage servicing rights and other assets 4,111,000 (2,165,524) (3,051,086)
Provision for loan losses 130,000 140,000 261,000
Net (gain) loss on sales of loans (137,403) (118,807) (14,107)
Net (gain) loss on sales of securities (816,304) (356,266) 428,611
Net increase (decrease) in accrued interest payable 10,496 (174,460) 530,548
Net increase (decrease) in accrued expenses and other liabilities 706,750 1,539,027 (580,955)
------------ ------------- ------------
Net cash provided by operating activities 7,249,077 885,311 (354,570)
Cash flows from investing activities:
Proceeds from maturities of securities 11,222,870 17,775,000 12,067,351
Purchases of securities (70,743,474) (102,233,209) (33,862,224)
Proceeds from sales of trading securities and securities available-for-sale 68,394,558 47,885,026 13,444,143
Principal repayments from mortgage-backed securities 10,428,393 3,897,431 3,497,464
Purchases of Federal Home Loan Bank stock (553,200) (267,600) (910,500)
Net (increase) decrease in loans (29,962,939) 13,755,923 (14,169,811)
Purchases of banking premises and equipment (240,610) 60,174 (201,060)
------------ ------------- ------------
Net cash used in investing activities (11,454,402) (19,127,255) (20,134,637)
Cash flows from financing activities:
Net increase (decrease) in deposits (11,649,533) (882,800) 21,684,849
Net increase (decrease) in mortgage escrow funds 395,059 3,051,380 305,796
Increase in borrowed funds 20,040,000 8,300,000 --
------------ ------------- ------------
Net cash provided by financing activities 8,785,526 10,468,580 21,990,645
------------ ------------- ------------
Increase (decrease) in cash and cash equivalents 4,580,201 (7,773,364) 1,501,438
Cash and cash equivalents, beginning of year 7,101,510 14,874,874 13,373,436
------------ ------------- ------------
Cash and cash equivalents, end of year $ 11,681,711 $ 7,101,510 $ 14,874,874
------------ ------------- ------------
Supplemental disclosure of cash flow information: Cash paid during the year for:
Interest on deposits and borrowed funds $ 9,365,666 $ 8,891,558 $ 6,297,235
Income taxes 2,117,500 -- 1,481,740
Reclassification from held-to-maturity to available-for-sale -- 26,180,452 --
</TABLE>
Source: Audited Financial Statements
<PAGE> 97
Page 1 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
CORPORATE
-------------------------------------------------------------------------------------
DEPOSIT
NUMBER INSURANCE
OF AGENCY CONVERSION
TICKER SHORT NAME EXCHANGE CITY STATE OFFICES IPO DATE (BIF/SAIF) TYPE
- ------------------------------------------ -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB Private San Francisco CA 227 NA SAIF Not Avail.
%CCMD Chevy Chase Bank, FSB Private Chevy Chase MD 107 NA SAIF Not Avail.
AABC Access Anytime Bancorp, Inc. NASDAQ Clovis NM 3 08/08/86 SAIF Regular
AADV Advantage Bancorp Inc. NASDAQ Kenosha WI 15 03/23/92 SAIF Regular
ABBK Abington Bancorp Inc. NASDAQ Abington MA 7 06/10/86 BIF Regular
ABCL Alliance Bancorp Inc. NASDAQ Hinsdale IL 14 07/07/92 SAIF Regular
ABCW Anchor BanCorp Wisconsin NASDAQ Madison WI 35 07/16/92 SAIF Regular
AFBC Advance Financial Bancorp NASDAQ Wellsburg WV 2 01/02/97 SAIF Regular
AFCB Affiliated Community Bancorp NASDAQ Waltham MA 12 10/19/95 SAIF Not Avail.
AFED AFSALA Bancorp Inc. NASDAQ Amsterdam NY 5 10/01/96 SAIF Regular
AFFFZ America First Financial Fund NASDAQ San Francisco CA 36 NA SAIF Not Avail.
AHCI Ambanc Holding Co. NASDAQ Amsterdam NY 12 12/27/95 BIF Regular
AHM Ahmanson & Company (H.F.) NYSE Irwindale CA 368 10/25/72 SAIF Regular
ALBC Albion Banc Corp. NASDAQ Albion NY 2 07/26/93 SAIF Regular
ALBK ALBANK Financial Corp. NASDAQ Albany NY 72 04/01/92 SAIF Regular
AMFC AMB Financial Corp. NASDAQ Munster IN 4 04/01/96 SAIF Regular
ANA Acadiana Bancshares Inc. AMSE Lafayette LA 4 07/16/96 SAIF Regular
ANBK American National Bancorp NASDAQ Baltimore MD 10 10/31/95 SAIF Not Avail.
ANDB Andover Bancorp Inc. NASDAQ Andover MA 12 05/08/86 BIF Regular
ASBI Ameriana Bancorp NASDAQ New Castle IN 8 03/02/87 SAIF Regular
ASBP ASB Financial Corp. NASDAQ Portsmouth OH 1 05/11/95 SAIF Regular
ASFC Astoria Financial Corp. NASDAQ Lake Success NY 45 11/18/93 SAIF Regular
ATSB AmTrust Capital Corp. NASDAQ Peru IN 2 03/28/95 SAIF Regular
AVND Avondale Financial Corp. NASDAQ Chicago IL 5 04/07/95 SAIF Regular
BANC BankAtlantic Bancorp Inc. NASDAQ Fort Lauderdale FL 57 11/29/83 SAIF Regular
BDJI First Federal Bancorporation NASDAQ Bemidji MN 5 04/04/95 SAIF Regular
BFD BostonFed Bancorp Inc. AMSE Burlington MA 10 10/24/95 SAIF Regular
BFFC Big Foot Financial Corp. NASDAQ Long Grove IL 3 12/20/96 SAIF Regular
BFSB Bedford Bancshares Inc. NASDAQ Bedford VA 3 08/22/94 SAIF Regular
BKC American Bank of Connecticut AMSE Waterbury CT 15 12/01/81 BIF Regular
BKCT Bancorp Connecticut Inc. NASDAQ Southington CT 3 07/03/86 BIF Regular
BKUNA BankUnited Financial Corp. NASDAQ Coral Gables FL 14 12/11/85 SAIF Regular
BNKU Bank United Corp. NASDAQ Houston TX 70 08/09/96 SAIF Not Avail.
BPLS Bank Plus Corp. NASDAQ Los Angeles CA 38 NA SAIF Not Avail.
BSBC Branford Savings Bank NASDAQ Branford CT 5 11/04/86 BIF Regular
BTHL Bethel Bancorp NASDAQ Portland ME 8 08/19/87 BIF Regular
BVCC Bay View Capital Corp. NASDAQ San Mateo CA 45 05/09/86 SAIF Regular
BWFC Bank West Financial Corp. NASDAQ Grand Rapids MI 3 03/30/95 SAIF Regular
BYFC Broadway Financial Corp. NASDAQ Los Angeles CA 3 01/09/96 SAIF Regular
CAFI Camco Financial Corp. NASDAQ Cambridge OH 11 NA SAIF Not Avail.
CAPS Capital Savings Bancorp Inc. NASDAQ Jefferson City MO 8 12/29/93 SAIF Regular
CASB Cascade Financial Corp. NASDAQ Everett WA 8 09/16/92 SAIF Regular
CASH First Midwest Financial Inc. NASDAQ Storm Lake IA 12 09/20/93 SAIF Regular
CATB Catskill Financial Corp. NASDAQ Catskill NY 4 04/18/96 BIF Regular
CBCI Calumet Bancorp Inc. NASDAQ Dolton IL 5 02/20/92 SAIF Regular
CBES CBES Bancorp Inc. NASDAQ Excelsior Springs MO 2 09/30/96 SAIF Regular
CBK Citizens First Financial Corp. AMSE Bloomington IL 6 05/01/96 SAIF Regular
CBSA Coastal Bancorp Inc. NASDAQ Houston TX 37 NA SAIF Not Avail.
CBSB Charter Financial Inc. NASDAQ Sparta IL 8 12/29/95 SAIF Not Avail.
CCFH CCF Holding Company NASDAQ Jonesboro GA 5 07/12/95 SAIF Regular
CEBK Central Co-operative Bank NASDAQ Somerville MA 8 10/24/86 BIF Regular
CENB Century Bancorp Inc. NASDAQ Thomasville NC 1 12/23/96 SAIF Regular
CENF CENFED Financial Corp. NASDAQ Pasadena CA 18 10/25/91 SAIF Regular
CFB Commercial Federal Corp. NYSE Omaha NE 107 12/31/84 SAIF Regular
CFBC Community First Banking Co. NASDAQ Carrollton GA 12 07/01/97 SAIF Regular
CFCP Coastal Financial Corp. NASDAQ Myrtle Beach SC 9 09/26/90 SAIF Regular
CFFC Community Financial Corp. NASDAQ Staunton VA 4 03/30/88 SAIF Regular
CFNC Carolina Fincorp Inc. NASDAQ Rockingham NC 4 11/25/96 SAIF Regular
CFSB CFSB Bancorp Inc. NASDAQ Lansing MI 17 06/22/90 SAIF Regular
CFTP Community Federal Bancorp NASDAQ Tupelo MS 1 03/26/96 SAIF Regular
CFX CFX Corp. AMSE Keene NH 43 02/12/87 BIF Regular
CIBI Community Investors Bancorp NASDAQ Bucyrus OH 3 02/07/95 SAIF Regular
CKFB CKF Bancorp Inc. NASDAQ Danville KY 1 01/04/95 SAIF Regular
CLAS Classic Bancshares Inc. NASDAQ Ashland KY 3 12/29/95 SAIF Regular
</TABLE>
<TABLE>
<CAPTION>
KEY FINANCIAL DATA AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------
TOTAL LOANS/ LOANS/ DEPOSITS/ BORROWINGS/
ASSETS DEPOSITS ASSETS ASSETS ASSETS
TICKER SHORT NAME ($000) (%) (%) (%) (%)
- ------------------------------------------ ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB 30,876,284 124.48 67.16 53.95 34.54
%CCMD Chevy Chase Bank, FSB 6,167,982 72.67 56.98 78.42 11.47
AABC Access Anytime Bancorp, Inc. 104,653 55.84 51.10 91.51 0.29
AADV Advantage Bancorp Inc. 1,019,510 87.47 56.28 64.34 24.50
ABBK Abington Bancorp Inc. 501,256 97.38 60.34 61.97 30.20
ABCL Alliance Bancorp Inc. 1,404,263 100.21 72.86 72.70 16.28
ABCW Anchor BanCorp Wisconsin 1,925,866 114.52 78.87 68.87 23.23
AFBC Advance Financial Bancorp 103,578 107.58 82.37 76.57 7.49
AFCB Affiliated Community Bancorp 1,090,431 101.35 62.87 62.03 27.57
AFED AFSALA Bancorp Inc. 159,181 55.4 47.07 84.96 0.95
AFFFZ America First Financial Fund 2,190,646 78.65 67.82 86.23 4.54
AHCI Ambanc Holding Co. 484,979 83.26 55.99 67.25 18.11
AHM Ahmanson & Company (H.F.) 47,532,068 95.04 65.47 68.88 23.24
ALBC Albion Banc Corp. 68,628 93.78 71.50 76.24 13.50
ALBK ALBANK Financial Corp. 3,602,227 87.49 72.53 82.91 3.69
AMFC AMB Financial Corp. 94,179 108.84 75.67 69.53 14.33
ANA Acadiana Bancshares Inc. 267,000 104.30 74.02 70.97 10.96
ANBK American National Bancorp 505,318 99.12 64.64 65.21 24.13
ANDB Andover Bancorp Inc. 1,250,943 96.83 71.23 73.56 17.68
ASBI Ameriana Bancorp 397,730 89.66 73.66 82.16 5.46
ASBP ASB Financial Corp. 112,264 83.51 66.77 79.95 3.01
ASFC Astoria Financial Corp. 7,664,495 67.88 40.25 59.30 31.91
ATSB AmTrust Capital Corp. 71,031 99.62 71.64 71.92 17.12
AVND Avondale Financial Corp. 607,273 91.05 57.29 62.92 25.14
BANC BankAtlantic Bancorp Inc. 2,730,474 110.92 71.83 64.75 26.60
BDJI First Federal Bancorporation 110,589 64.71 48.18 74.46 13.38
BFD BostonFed Bancorp Inc. 975,922 133.98 79.87 59.61 30.88
BFFC Big Foot Financial Corp. 212,245 69.60 41.04 58.97 21.96
BFSB Bedford Bancshares Inc. 135,455 116.16 85.79 73.86 10.70
BKC American Bank of Connecticut 605,857 81.16 59.96 73.88 17.31
BKCT Bancorp Connecticut Inc. 428,362 83.30 60.64 72.79 16.02
BKUNA BankUnited Financial Corp. 1,807,192 135.29 82.42 60.92 24.75
BNKU Bank United Corp. 11,439,050 158.30 72.65 45.89 43.99
BPLS Bank Plus Corp. 3,534,002 105.38 80.56 76.45 16.12
BSBC Branford Savings Bank 186,555 74.94 65.63 87.58 1.61
BTHL Bethel Bancorp 218,187 114.79 77.14 67.20 22.23
BVCC Bay View Capital Corp. 3,096,213 147.59 75.23 50.97 41.72
BWFC Bank West Financial Corp. 155,675 110.82 73.22 66.07 18.63
BYFC Broadway Financial Corp. 122,245 91.92 80.87 87.98 0.00
CAFI Camco Financial Corp. 489,833 111.65 84.57 75.75 13.35
CAPS Capital Savings Bancorp Inc. 242,518 111.64 78.73 70.53 19.17
CASB Cascade Financial Corp. 368,126 126.12 83.87 66.50 25.39
CASH First Midwest Financial Inc. 374,824 108.06 69.21 64.04 23.54
CATB Catskill Financial Corp. 284,238 62.94 44.12 70.10 3.31
CBCI Calumet Bancorp Inc. 496,561 106.81 76.17 71.31 11.07
CBES CBES Bancorp Inc. 95,219 120.99 90.20 74.55 5.25
CBK Citizens First Financial Corp. 271,573 115.64 84.33 72.92 11.93
CBSA Coastal Bancorp Inc. 2,964,082 98.47 45.34 46.04 48.80
CBSB Charter Financial Inc. 393,268 106.54 74.28 69.72 14.83
CCFH CCF Holding Company 100,801 105.60 81.76 77.42 9.72
CEBK Central Co-operative Bank 344,420 88.08 68.13 77.36 11.90
CENB Century Bancorp Inc. 99,948 85.80 59.65 69.53 0.00
CENF CENFED Financial Corp. 2,295,523 101.89 68.54 67.27 26.78
CFB Commercial Federal Corp. 7,096,665 121.20 74.78 61.70 30.77
CFBC Community First Banking Co. 450,650 78.91 63.32 80.24 3.74
CFCP Coastal Financial Corp. 502,761 120.29 79.43 66.03 26.58
CFFC Community Financial Corp. 175,414 132.84 88.79 66.84 18.24
CFNC Carolina Fincorp Inc. 111,515 94.41 70.91 75.11 0.45
CFSB CFSB Bancorp Inc. 845,438 133.77 88.66 66.28 24.18
CFTP Community Federal Bancorp 209,035 94.93 60.37 63.59 6.71
CFX CFX Corp. 1,859,030 103.37 69.97 67.69 23.92
CIBI Community Investors Bancorp 92,304 105.51 83.34 78.99 8.46
CKFB CKF Bancorp Inc. 60,812 131.25 91.11 69.42 5.32
CLAS Classic Bancshares Inc. 130,525 87.73 66.61 75.93 8.41
</TABLE>
<PAGE> 98
Page 2 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
CORPORATE
-------------------------------------------------------------------------------------
DEPOSIT
NUMBER INSURANCE
OF AGENCY CONVERSION
TICKER SHORT NAME EXCHANGE CITY STATE OFFICES IPO DATE (BIF/SAIF) TYPE
- ------------------------------------------ -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp NASDAQ Cameron MO 3 04/03/95 SAIF Regular
CMSB Commonwealth Bancorp Inc. NASDAQ Norristown PA 56 06/17/96 SAIF Not Avail.
CMSV Community Savings FA (MHC) NASDAQ North Palm Beach FL 19 10/24/94 SAIF Mutual HC
CNIT CENIT Bancorp Inc. NASDAQ Norfolk VA 19 08/06/92 SAIF Regular
CNSB CNS Bancorp Inc. NASDAQ Jefferson City MO 5 06/12/96 SAIF Regular
CNY Carver Bancorp Inc. AMSE New York NY 7 10/25/94 SAIF Regular
COFI Charter One Financial NASDAQ Cleveland OH 175 01/22/88 SAIF Regular
CONE Conestoga Bancorp, Inc. NASDAQ Roslyn NY 8 03/30/94 SAIF Regular
COOP Cooperative Bankshares Inc. NASDAQ Wilmington NC 17 08/21/91 SAIF Regular
CRZY Crazy Woman Creek Bancorp NASDAQ Buffalo WY 1 03/29/96 SAIF Regular
CSA Coast Savings Financial NYSE Los Angeles CA 91 12/23/85 SAIF Regular
CSBF CSB Financial Group Inc. NASDAQ Centralia IL 2 10/09/95 SAIF Regular
CTZN CitFed Bancorp Inc. NASDAQ Dayton OH 35 01/23/92 SAIF Regular
CVAL Chester Valley Bancorp Inc. NASDAQ Downingtown PA 7 03/27/87 SAIF Regular
DCBI Delphos Citizens Bancorp Inc. NASDAQ Delphos OH 1 11/21/96 SAIF Regular
DIBK Dime Financial Corp. NASDAQ Wallingford CT 11 07/09/86 BIF Regular
DIME Dime Community Bancorp Inc. NASDAQ Brooklyn NY 15 06/26/96 BIF Regular
DME Dime Bancorp Inc. NYSE New York NY 91 08/19/86 BIF Regular
DNFC D & N Financial Corp. NASDAQ Hancock MI 37 02/13/85 SAIF Regular
DSL Downey Financial Corp. NYSE Newport Beach CA 84 01/01/71 SAIF Not Avail.
EBSI Eagle Bancshares NASDAQ Tucker GA 14 04/01/86 SAIF Regular
EFBC Empire Federal Bancorp Inc. NASDAQ Livingston MT 3 01/27/97 SAIF Regular
EFBI Enterprise Federal Bancorp NASDAQ West Chester OH 5 10/17/94 SAIF Regular
EGFC Eagle Financial Corp. NASDAQ Bristol CT 30 02/03/87 SAIF Regular
EGLB Eagle BancGroup Inc. NASDAQ Bloomington IL 3 07/01/96 SAIF Regular
EIRE Emerald Isle Bancorp Inc. NASDAQ Quincy MA 9 09/08/86 BIF Regular
EMLD Emerald Financial Corp. NASDAQ Strongsville OH 14 NA SAIF Regular
EQSB Equitable Federal Savings Bank NASDAQ Wheaton MD 4 09/10/93 SAIF Supervisory
ESBK Elmira Savings Bank (The) NASDAQ Elmira NY 6 03/01/85 BIF Regular
ESX Essex Bancorp Inc. AMSE Norfolk VA 4 07/18/90 SAIF Not Avail.
ETFS East Texas Financial Services NASDAQ Tyler TX 2 01/10/95 SAIF Regular
FAB FirstFed America Bancorp Inc. AMSE Fall River MA 13 01/15/97 SAIF Regular
FBBC First Bell Bancorp Inc. NASDAQ Pittsburgh PA 7 06/29/95 SAIF Regular
FBCI Fidelity Bancorp Inc. NASDAQ Chicago IL 5 12/15/93 SAIF Regular
FBCV 1ST Bancorp NASDAQ Vincennes IN 1 04/07/87 SAIF Regular
FBER 1st Bergen Bancorp NASDAQ Wood-Ridge NJ 4 04/01/96 SAIF Regular
FBHC Fort Bend Holding Corp. NASDAQ Rosenberg TX 6 06/30/93 SAIF Regular
FBNW FirstBank Corp. NASDAQ Lewiston ID 5 07/02/97 SAIF Regular
FBSI First Bancshares Inc. NASDAQ Mountain Grove MO 6 12/22/93 SAIF Regular
FCB Falmouth Co-Operative Bank AMSE Falmouth MA 2 03/28/96 BIF Regular
FCBF FCB Financial Corp. NASDAQ Neenah WI 13 09/24/93 SAIF Regular
FCME First Coastal Corp. NASDAQ Westbrook ME 7 NA BIF Not Avail.
FDEF First Defiance Financial NASDAQ Defiance OH 9 10/02/95 SAIF Not Avail.
FED FirstFed Financial Corp. NYSE Santa Monica CA 24 12/16/83 SAIF Regular
FESX First Essex Bancorp Inc. NASDAQ Andover MA 15 08/04/87 BIF Regular
FFBA First Colorado Bancorp Inc. NASDAQ Lakewood CO 26 01/02/96 SAIF Not Avail.
FFBH First Federal Bancshares of AR NASDAQ Harrison AR 13 05/03/96 SAIF Regular
FFBI First Financial Bancorp Inc. NASDAQ Belvidere IL 2 10/04/93 SAIF Regular
FFBS FFBS BanCorp Inc. NASDAQ Columbus MS 3 07/01/93 SAIF Regular
FFBZ First Federal Bancorp Inc. NASDAQ Zanesville OH 6 07/13/92 SAIF Regular
FFCH First Financial Holdings Inc. NASDAQ Charleston SC 33 11/10/83 SAIF Regular
FFDB FirstFed Bancorp Inc. NASDAQ Bessemer AL 8 11/19/91 SAIF Regular
FFDF FFD Financial Corp. NASDAQ Dover OH 1 04/03/96 SAIF Regular
FFED Fidelity Federal Bancorp NASDAQ Evansville IN 4 08/31/87 SAIF Regular
FFES First Federal of East Hartford NASDAQ East Hartford CT 12 06/23/87 SAIF Regular
FFFC FFVA Financial Corp. NASDAQ Lynchburg VA 12 10/12/94 SAIF Regular
FFFD North Central Bancshares Inc. NASDAQ Fort Dodge IA 4 03/21/96 SAIF Not Avail.
FFFG F.F.O. Financial Group Inc. NASDAQ St. Cloud FL 11 10/13/88 SAIF Regular
FFFL Fidelity Bankshares Inc. (MHC) NASDAQ West Palm Beach FL 20 01/07/94 SAIF Mutual HC
FFHC First Financial Corp. NASDAQ Stevens Point WI 128 12/24/80 SAIF Regular
FFHH FSF Financial Corp. NASDAQ Hutchinson MN 11 10/07/94 SAIF Regular
FFHS First Franklin Corporation NASDAQ Cincinnati OH 7 01/26/88 SAIF Regular
FFIC Flushing Financial Corp. NASDAQ Flushing NY 7 11/21/95 BIF Regular
FFKY First Federal Financial Corp. NASDAQ Elizabethtown KY 8 07/15/87 SAIF Regular
</TABLE>
<TABLE>
<CAPTION>
KEY FINANCIAL DATA AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------
TOTAL LOANS/ LOANS/ DEPOSITS/ BORROWINGS/
ASSETS DEPOSITS ASSETS ASSETS ASSETS
TICKER SHORT NAME ($000) (%) (%) (%) (%)
- ------------------------------------------ ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp 208,105 141.36 84.79 59.98 16.94
CMSB Commonwealth Bancorp Inc. 2,288,986 81.38 54.00 66.36 20.65
CMSV Community Savings FA (MHC) 699,787 76.31 58.95 77.24 9.22
CNIT CENIT Bancorp Inc. 709,550 95.48 68.71 71.96 20.18
CNSB CNS Bancorp Inc. 98,351 89.13 66.40 74.50 0.00
CNY Carver Bancorp Inc. 413,777 87.99 57.32 65.14 26.11
COFI Charter One Financial 14,564,703 116.77 62.35 53.40 38.18
CONE Conestoga Bancorp, Inc. 494,348 28.70 23.21 80.86 2.02
COOP Cooperative Bankshares Inc. 352,438 99.67 80.03 80.30 11.41
CRZY Crazy Woman Creek Bancorp 54,275 97.48 51.47 52.80 20.41
CSA Coast Savings Financial 9,102,743 95.95 67.59 70.45 23.37
CSBF CSB Financial Group Inc. 48,844 74.99 55.73 74.31 0.00
CTZN CitFed Bancorp Inc. 3,097,515 109.92 61.24 55.71 36.61
CVAL Chester Valley Bancorp Inc. 323,673 99.71 80.33 80.56 9.51
DCBI Delphos Citizens Bancorp Inc. 107,166 104.80 74.25 70.85 0.00
DIBK Dime Financial Corp. 873,878 51.53 44.57 86.49 4.92
DIME Dime Community Bancorp Inc. 1,315,026 77.91 57.08 73.26 10.61
DME Dime Bancorp Inc. 20,087,176 88.66 58.86 66.39 26.40
DNFC D & N Financial Corp. 1,608,837 116.07 73.61 63.42 29.77
DSL Downey Financial Corp. 5,885,670 116.96 92.03 78.68 13.55
EBSI Eagle Bancshares 848,490 104.65 71.43 68.25 19.34
EFBC Empire Federal Bancorp Inc. 108,566 66.68 40.36 60.52 0.92
EFBI Enterprise Federal Bancorp 264,266 126.44 69.79 55.20 32.16
EGFC Eagle Financial Corp. 2,013,359 82.30 56.63 68.81 20.40
EGLB Eagle BancGroup Inc. 174,310 92.20 69.49 75.37 12.08
EIRE Emerald Isle Bancorp Inc. 425,014 80.38 68.51 85.23 7.22
EMLD Emerald Financial Corp. 603,080 87.17 75.47 86.58 5.10
EQSB Equitable Federal Savings Bank 308,197 87.64 69.79 79.63 14.44
ESBK Elmira Savings Bank (The) 227,828 83.09 75.63 91.03 2.00
ESX Essex Bancorp Inc. 190,085 108.75 83.53 76.81 14.24
ETFS East Texas Financial Services 112,697 61.43 48.68 79.24 1.74
FAB FirstFed America Bancorp Inc. 1,020,876 121.96 86.76 71.13 14.81
FBBC First Bell Bancorp Inc. 714,366 111.56 79.68 71.42 15.12
FBCI Fidelity Bancorp Inc. 489,843 113.79 77.90 68.46 18.68
FBCV 1ST Bancorp 270,490 121.79 64.98 53.35 37.08
FBER 1st Bergen Bancorp 284,765 57.50 43.27 75.25 9.60
FBHC Fort Bend Holding Corp. 318,668 60.34 50.85 84.28 5.70
FBNW FirstBank Corp. 154,143 112.69 82.01 72.78 17.92
FBSI First Bancshares Inc. 163,973 114.36 82.08 71.77 14.37
FCB Falmouth Co-Operative Bank 93,838 72.70 54.43 74.87 0.81
FCBF FCB Financial Corp. 526,203 128.08 77.31 60.36 22.27
FCME First Coastal Corp. 152,386 88.68 68.35 77.07 13.55
FDEF First Defiance Financial 552,225 111.92 77.70 69.43 8.58
FED FirstFed Financial Corp. 4,193,203 162.79 76.11 46.75 47.32
FESX First Essex Bancorp Inc. 1,245,415 98.72 57.78 58.53 32.88
FFBA First Colorado Bancorp Inc. 1,510,376 96.74 73.37 75.85 9.43
FFBH First Federal Bancshares of AR 535,204 93.72 77.77 82.99 1.12
FFBI First Financial Bancorp Inc. 84,531 79.68 64.59 81.07 9.11
FFBS FFBS BanCorp Inc. 130,762 89.92 71.38 79.38 0.00
FFBZ First Federal Bancorp Inc. 201,262 134.02 85.95 64.13 27.55
FFCH First Financial Holdings Inc. 1,667,178 129.87 83.29 64.13 27.92
FFDB FirstFed Bancorp Inc. 176,528 80.41 71.11 88.44 0.57
FFDF FFD Financial Corp. 85,286 97.24 62.33 64.10 10.06
FFED Fidelity Federal Bancorp 250,285 113.22 84.05 74.24 19.53
FFES First Federal of East Hartford 983,594 31.27 18.42 58.90 34.09
FFFC FFVA Financial Corp. 558,886 80.89 59.30 73.31 13.06
FFFD North Central Bancshares Inc. 212,869 128.09 81.99 64.01 12.47
FFFG F.F.O. Financial Group Inc. 323,020 82.41 71.78 87.10 4.39
FFFL Fidelity Bankshares Inc. (MHC) 999,289 94.64 73.83 78.01 11.51
FFHC First Financial Corp. 5,931,501 79.46 60.52 76.16 15.31
FFHH FSF Financial Corp. 378,233 119.41 65.35 54.73 33.28
FFHS First Franklin Corporation 226,944 77.75 68.34 87.89 2.73
FFIC Flushing Financial Corp. 860,031 80.56 55.31 68.66 14.67
FFKY First Federal Financial Corp. 377,380 117.12 87.31 74.55 11.00
</TABLE>
<PAGE> 99
Page 3 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
CORPORATE
-------------------------------------------------------------------------------------
DEPOSIT
NUMBER INSURANCE
OF AGENCY CONVERSION
TICKER SHORT NAME EXCHANGE CITY STATE OFFICES IPO DATE (BIF/SAIF) TYPE
- ------------------------------------------ -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FFLC FFLC Bancorp Inc. NASDAQ Leesburg FL 9 01/04/94 SAIF Regular
FFOH Fidelity Financial of Ohio NASDAQ Cincinnati OH 11 03/04/96 SAIF Not Avail.
FFPB First Palm Beach Bancorp Inc. NASDAQ West Palm Beach FL 44 09/29/93 SAIF Regular
FFSL First Independence Corp. NASDAQ Independence KS 2 10/08/93 SAIF Regular
FFSX First Fed SB of Siouxland(MHC) NASDAQ Sioux City IA 13 07/13/92 SAIF Mutual HC
FFWC FFW Corp. NASDAQ Wabash IN 4 04/05/93 SAIF Regular
FFWD Wood Bancorp Inc. NASDAQ Bowling Green OH 7 08/31/93 SAIF Regular
FFYF FFY Financial Corp. NASDAQ Youngstown OH 10 06/28/93 SAIF Regular
FGHC First Georgia Holding Inc. NASDAQ Brunswick GA 7 02/11/87 SAIF Regular
FIBC Financial Bancorp Inc. NASDAQ Long Island City NY 5 08/17/94 SAIF Regular
FISB First Indiana Corporation NASDAQ Indianapolis IN 26 08/02/83 SAIF Regular
FKFS First Keystone Financial NASDAQ Media PA 5 01/26/95 SAIF Regular
FKKY Frankfort First Bancorp Inc. NASDAQ Frankfort KY 3 07/10/95 SAIF Regular
FLAG FLAG Financial Corp. NASDAQ LaGrange GA 4 12/11/86 SAIF Regular
FLFC First Liberty Financial Corp. NASDAQ Macon GA 31 12/06/83 SAIF Regular
FLGS Flagstar Bancorp Inc. NASDAQ Bloomfield Hills MI 19 NA SAIF Not Avail.
FLKY First Lancaster Bancshares NASDAQ Lancaster KY 1 07/01/96 SAIF Regular
FMBD First Mutual Bancorp Inc. NASDAQ Decatur IL 12 07/05/95 SAIF Regular
FMCO FMS Financial Corporation NASDAQ Burlington NJ 19 12/14/88 SAIF Regular
FMSB First Mutual Savings Bank NASDAQ Bellevue WA 8 12/17/85 BIF Regular
FNGB First Northern Capital Corp. NASDAQ Green Bay WI 20 12/29/83 SAIF Regular
FOBC Fed One Bancorp NASDAQ Wheeling WV 9 01/19/95 SAIF Not Avail.
FPRY First Financial Bancorp NASDAQ Tallahassee FL 6 03/29/88 SAIF Regular
FRC First Republic Bancorp NYSE San Francisco CA 13 NA BIF Not Avail.
FSBI Fidelity Bancorp Inc. NASDAQ Pittsburgh PA 8 06/24/88 SAIF Regular
FSFC First Southeast Financial Corp NASDAQ Anderson SC 11 10/08/93 SAIF Regular
FSLA First Savings Bank (MHC) NASDAQ Woodbridge NJ 17 07/10/92 SAIF Mutual HC
FSNJ Bayonne Bancshares Inc. NASDAQ Bayonne NJ 4 08/22/97 SAIF Mutual HC
FSPG First Home Bancorp Inc. NASDAQ Pennsville NJ 10 04/20/87 SAIF Regular
FSPT FirstSpartan Financial Corp. NASDAQ Spartanburg SC 5 07/09/97 SAIF Regular
FSSB First FS&LA of San Bernardino NASDAQ San Bernardino CA 4 02/02/93 SAIF Regular
FSTC First Citizens Corp. NASDAQ Newnan GA 9 03/01/86 SAIF Regular
FTF Texarkana First Financial Corp AMSE Texarkana AR 5 07/07/95 SAIF Regular
FTFC First Federal Capital Corp. NASDAQ La Crosse WI 45 11/02/89 SAIF Regular
FTNB Fulton Bancorp Inc. NASDAQ Fulton MO 2 10/18/96 SAIF Regular
FTSB Fort Thomas Financial Corp. NASDAQ Fort Thomas KY 2 06/28/95 SAIF Regular
FWWB First SB of Washington Bancorp NASDAQ Walla Walla WA 21 11/01/95 SAIF Regular
GAF GA Financial Inc. AMSE Pittsburgh PA 13 03/26/96 SAIF Regular
GBCI Glacier Bancorp Inc. NASDAQ Kalispell MT 18 03/30/84 SAIF Regular
GDVS Greater Delaware Valley (MHC) NASDAQ Broomall PA 7 03/03/95 SAIF Mutual HC
GDW Golden West Financial NYSE Oakland CA 249 05/29/59 SAIF Not Avail.
GFCO Glenway Financial Corp. NASDAQ Cincinnati OH 5 11/30/90 SAIF Regular
GFED Guaranty Federal SB (MHC) NASDAQ Springfield MO 4 04/10/95 SAIF Mutual HC
GFSB GFS Bancorp Inc. NASDAQ Grinnell IA 1 01/06/94 SAIF Regular
GOSB GSB Financial Corp. NASDAQ Goshen NY 2 07/09/97 BIF Regular
GPT GreenPoint Financial Corp. NYSE New York NY 74 01/28/94 BIF Regular
GRTR Greater New York Savings Bank NASDAQ New York NY 14 06/17/87 BIF Regular
GSB Golden State Bancorp Inc. NYSE Glendale CA 171 10/01/83 SAIF Regular
GSBC Great Southern Bancorp Inc. NASDAQ Springfield MO 25 12/14/89 SAIF Regular
GSFC Green Street Financial Corp. NASDAQ Fayetteville NC 3 04/04/96 SAIF Regular
GSLA GS Financial Corp. NASDAQ Metairie LA 3 04/01/97 SAIF Regular
GTFN Great Financial Corporation NASDAQ Louisville KY 45 03/31/94 SAIF Regular
GTPS Great American Bancorp NASDAQ Champaign IL 3 06/30/95 SAIF Regular
GUPB GFSB Bancorp Inc. NASDAQ Gallup NM 1 06/30/95 SAIF Regular
GWBC Gateway Bancorp Inc. NASDAQ Catlettsburg KY 2 01/18/95 SAIF Regular
HALL Hallmark Capital Corp. NASDAQ West Allis WI 3 01/03/94 SAIF Regular
HARB Harbor Florida Bancorp (MHC) NASDAQ Fort Pierce FL 23 01/06/94 SAIF Mutual HC
HARL Harleysville Savings Bank NASDAQ Harleysville PA 4 08/04/87 SAIF Regular
HARS Harris Savings Bank (MHC) NASDAQ Harrisburg PA 33 01/25/94 SAIF Mutual HC
HAVN Haven Bancorp Inc. NASDAQ Woodhaven NY 30 09/23/93 SAIF Regular
HBBI Home Building Bancorp NASDAQ Washington IN 2 02/08/95 SAIF Regular
HBEI Home Bancorp of Elgin Inc. NASDAQ Elgin IL 5 09/27/96 SAIF Regular
HBFW Home Bancorp NASDAQ Fort Wayne IN 9 03/30/95 SAIF Regular
HBNK Highland Federal Bank FSB NASDAQ Burbank CA 8 NA SAIF Not Avail.
</TABLE>
<TABLE>
<CAPTION>
KEY FINANCIAL DATA AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------
TOTAL LOANS/ LOANS/ DEPOSITS/ BORROWINGS/
ASSETS DEPOSITS ASSETS ASSETS ASSETS
TICKER SHORT NAME ($000) (%) (%) (%) (%)
- ------------------------------------------ ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FFLC FFLC Bancorp Inc. 387,097 90.65 70.69 77.98 7.75
FFOH Fidelity Financial of Ohio 524,743 100.88 82.76 82.04 4.28
FFPB First Palm Beach Bancorp Inc. 1,666,396 91.77 67.59 73.65 17.69
FFSL First Independence Corp. 110,876 98.53 66.00 66.99 21.01
FFSX First Fed SB of Siouxland(MHC) 468,568 104.99 73.21 69.73 20.59
FFWC FFW Corp. 180,056 98.81 63.72 64.49 24.88
FFWD Wood Bancorp Inc. 163,918 109.41 80.46 73.54 13.28
FFYF FFY Financial Corp. 599,249 102.99 77.38 75.13 9.97
FGHC First Georgia Holding Inc. 156,383 105.35 85.03 80.71 8.85
FIBC Financial Bancorp Inc. 282,485 73.84 54.73 74.12 15.21
FISB First Indiana Corporation 1,520,762 117.07 84.21 71.93 17.29
FKFS First Keystone Financial 320,797 82.17 58.59 71.31 19.42
FKKY Frankfort First Bancorp Inc. 132,451 141.24 91.66 64.90 16.61
FLAG FLAG Financial Corp. 221,926 86.05 69.94 81.28 7.61
FLFC First Liberty Financial Corp. 1,288,919 93.15 68.83 73.89 17.43
FLGS Flagstar Bancorp Inc. 1,596,289 157.37 89.15 56.65 26.13
FLKY First Lancaster Bancshares 40,448 159.08 86.38 54.30 10.34
FMBD First Mutual Bancorp Inc. 417,695 93.25 73.58 78.90 7.06
FMCO FMS Financial Corporation 554,925 65.42 56.01 85.61 6.84
FMSB First Mutual Savings Bank 432,034 101.49 80.97 79.77 11.95
FNGB First Northern Capital Corp. 637,725 119.73 89.72 74.94 12.12
FOBC Fed One Bancorp 356,718 61.64 44.24 71.77 16.55
FPRY First Financial Bancorp 240,379 88.86 77.63 87.36 5.41
FRC First Republic Bancorp 2,238,033 140.78 88.35 62.76 29.11
FSBI Fidelity Bancorp Inc. 363,302 74.48 48.92 65.69 26.26
FSFC First Southeast Financial Corp 334,751 92.78 78.38 84.48 4.48
FSLA First Savings Bank (MHC) 1,032,809 67.71 53.44 78.93 10.69
FSNJ Bayonne Bancshares Inc. 602,201 53.32 39.21 73.53 16.78
FSPG First Home Bancorp Inc. 522,396 88.70 52.47 59.16 33.74
FSPT FirstSpartan Financial Corp. 388,311 103.08 89.77 87.09 0.00
FSSB First FS&LA of San Bernardino 103,674 75.29 71.56 95.05 0.00
FSTC First Citizens Corp. 338,857 92.52 76.61 82.80 5.11
FTF Texarkana First Financial Corp 171,358 103.60 84.72 81.78 0.91
FTFC First Federal Capital Corp. 1,571,981 111.91 76.88 68.70 23.76
FTNB Fulton Bancorp Inc. 99,464 127.14 85.77 67.46 6.54
FTSB Fort Thomas Financial Corp. 96,940 124.04 90.05 72.60 9.95
FWWB First SB of Washington Bancorp 1,074,166 129.63 66.56 51.35 32.96
GAF GA Financial Inc. 749,748 61.19 37.44 61.18 22.52
GBCI Glacier Bancorp Inc. 567,610 123.89 72.03 58.14 29.76
GDVS Greater Delaware Valley (MHC) 244,384 80.75 62.15 76.96 11.09
GDW Golden West Financial 39,095,082 133.29 81.95 61.48 30.27
GFCO Glenway Financial Corp. 287,088 106.00 83.76 79.02 9.79
GFED Guaranty Federal SB (MHC) 199,554 105.99 80.34 75.79 9.10
GFSB GFS Bancorp Inc. 92,063 132.86 85.94 64.69 22.77
GOSB GSB Financial Corp. 154,649 NA NA 62.41 0.00
GPT GreenPoint Financial Corp. 13,300,046 73.82 62.04 84.04 1.78
GRTR Greater New York Savings Bank 2,579,098 59.67 38.02 63.71 26.73
GSB Golden State Bancorp Inc. 16,218,259 128.98 74.42 57.69 34.33
GSBC Great Southern Bancorp Inc. 707,841 130.48 84.66 64.88 25.52
GSFC Green Street Financial Corp. 174,605 117.35 72.88 62.10 0.00
GSLA GS Financial Corp. 123,245 80.11 37.51 46.82 6.49
GTFN Great Financial Corporation 3,046,227 106.99 66.51 62.16 27.40
GTPS Great American Bancorp 136,977 94.74 73.57 77.65 0.00
GUPB GFSB Bancorp Inc. 86,911 82.01 52.16 63.61 18.93
GWBC Gateway Bancorp Inc. 63,828 45.52 33.04 72.57 0.00
HALL Hallmark Capital Corp. 409,820 97.80 67.18 68.69 22.47
HARB Harbor Florida Bancorp (MHC) 1,116,718 91.75 74.35 81.03 9.00
HARL Harleysville Savings Bank 336,666 89.80 72.79 81.05 10.78
HARS Harris Savings Bank (MHC) 2,044,294 76.42 43.46 56.87 33.87
HAVN Haven Bancorp Inc. 1,781,545 79.55 55.20 69.39 23.16
HBBI Home Building Bancorp 45,064 80.40 62.83 78.14 8.21
HBEI Home Bancorp of Elgin Inc. 352,577 112.76 79.66 70.65 1.42
HBFW Home Bancorp 334,862 95.19 81.78 85.92 0.00
HBNK Highland Federal Bank FSB 504,381 109.32 79.66 72.87 18.34
</TABLE>
<PAGE> 100
Page 4 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
CORPORATE
-------------------------------------------------------------------------------------
DEPOSIT
NUMBER INSURANCE
OF AGENCY CONVERSION
TICKER SHORT NAME EXCHANGE CITY STATE OFFICES IPO DATE (BIF/SAIF) TYPE
- ------------------------------------------ -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HBS Haywood Bancshares Inc. AMSE Waynesville NC 4 12/18/87 BIF Not Avail.
HCBB HCB Bancshares Inc. NASDAQ Camden AR 6 05/07/97 SAIF Regular
HCFC Home City Financial Corp. NASDAQ Springfield OH 1 12/30/96 SAIF Regular
HEMT HF Bancorp Inc. NASDAQ Hemet CA 19 06/30/95 SAIF Regular
HFFB Harrodsburg First Fin Bancorp NASDAQ Harrodsburg KY 2 10/04/95 SAIF Regular
HFFC HF Financial Corp. NASDAQ Sioux Falls SD 19 04/08/92 SAIF Regular
HFGI Harrington Financial Group NASDAQ Richmond IN 4 NA SAIF Not Avail.
HFNC HFNC Financial Corp. NASDAQ Charlotte NC 9 12/29/95 SAIF Regular
HFSA Hardin Bancorp Inc. NASDAQ Hardin MO 3 09/29/95 SAIF Regular
HHFC Harvest Home Financial Corp. NASDAQ Cheviot OH 3 10/10/94 SAIF Regular
HIFS Hingham Instit. for Savings NASDAQ Hingham MA 5 12/20/88 BIF Regular
HMCI HomeCorp Inc. NASDAQ Rockford IL 9 06/22/90 SAIF Regular
HMLK Hemlock Federal Financial Corp NASDAQ Oak Forest IL 3 04/02/97 SAIF Regular
HMNF HMN Financial Inc. NASDAQ Spring Valley MN 7 06/30/94 SAIF Regular
HOMF Home Federal Bancorp NASDAQ Seymour IN 16 01/23/88 SAIF Regular
HPBC Home Port Bancorp Inc. NASDAQ Nantucket MA 2 08/25/88 BIF Regular
HRBF Harbor Federal Bancorp Inc. NASDAQ Baltimore MD 9 08/12/94 SAIF Regular
HRZB Horizon Financial Corp. NASDAQ Bellingham WA 12 08/01/86 BIF Regular
HTHR Hawthorne Financial Corp. NASDAQ El Segundo CA 6 NA SAIF Not Avail.
HVFD Haverfield Corp. NASDAQ Cleveland OH 10 03/19/85 SAIF Regular
HWEN Home Financial Bancorp NASDAQ Spencer IN 1 07/02/96 SAIF Regular
HZFS Horizon Financial Svcs Corp. NASDAQ Oskaloosa IA 3 06/30/94 SAIF Regular
IBSF IBS Financial Corp. NASDAQ Cherry Hill NJ 10 10/13/94 SAIF Regular
IFSB Independence Federal Svgs Bank NASDAQ Washington DC 2 06/06/85 SAIF Regular
INBI Industrial Bancorp NASDAQ Bellevue OH 10 08/01/95 SAIF Regular
INCB Indiana Community Bank SB NASDAQ Lebanon IN 3 12/15/94 SAIF Regular
IPSW Ipswich Savings Bank NASDAQ Ipswich MA 5 05/26/93 BIF Regular
ISBF ISB Financial Corporation NASDAQ New Iberia LA 27 04/07/95 SAIF Regular
ITLA ITLA Capital Corp. NASDAQ La Jolla CA 6 10/24/95 BIF Not Avail.
IWBK InterWest Bancorp Inc. NASDAQ Oak Harbor WA 38 NA SAIF Not Avail.
JOAC Joachim Bancorp Inc. NASDAQ De Soto MO 1 12/28/95 SAIF Regular
JSB JSB Financial Inc. NYSE Lynbrook NY 13 06/27/90 BIF Regular
JSBA Jefferson Savings Bancorp NASDAQ Ballwin MO 32 04/08/93 SAIF Regular
JXSB Jacksonville Savings Bk (MHC) NASDAQ Jacksonville IL 4 04/21/95 SAIF Mutual HC
JXVL Jacksonville Bancorp Inc. NASDAQ Jacksonville TX 6 04/01/96 SAIF Not Avail.
KFBI Klamath First Bancorp NASDAQ Klamath Falls OR 33 10/05/95 SAIF Regular
KNK Kankakee Bancorp Inc. AMSE Kankakee IL 9 01/06/93 SAIF Regular
KSAV KS Bancorp Inc. NASDAQ Kenly NC 4 12/30/93 SAIF Regular
KSBK KSB Bancorp Inc. NASDAQ Kingfield ME 8 06/24/93 BIF Regular
KYF Kentucky First Bancorp Inc. AMSE Cynthiana KY 2 08/29/95 SAIF Regular
LARK Landmark Bancshares Inc. NASDAQ Dodge City KS 5 03/28/94 SAIF Regular
LARL Laurel Capital Group Inc. NASDAQ Allison Park PA 6 02/20/87 SAIF Regular
LFBI Little Falls Bancorp Inc. NASDAQ Little Falls NJ 6 01/05/96 SAIF Regular
LFCO Life Financial Corp. NASDAQ Riverside CA 5 NA SAIF Not Avail.
LFED Leeds Federal Savings Bk (MHC) NASDAQ Baltimore MD 1 05/02/94 SAIF Mutual HC
LIFB Life Bancorp Inc. NASDAQ Norfolk VA 20 10/11/94 SAIF Regular
LISB Long Island Bancorp Inc. NASDAQ Melville NY 35 04/18/94 SAIF Regular
LOGN Logansport Financial Corp. NASDAQ Logansport IN 1 06/14/95 SAIF Regular
LONF London Financial Corporation NASDAQ London OH 1 04/01/96 SAIF Regular
LSBI LSB Financial Corp. NASDAQ Lafayette IN 4 02/03/95 BIF Regular
LSBX Lawrence Savings Bank NASDAQ North Andover MA 5 05/02/86 BIF Regular
LVSB Lakeview Financial NASDAQ West Paterson NJ 8 12/22/93 SAIF Regular
LXMO Lexington B&L Financial Corp. NASDAQ Lexington MO 1 06/06/96 SAIF Regular
MAFB MAF Bancorp Inc. NASDAQ Clarendon Hills IL 21 01/12/90 SAIF Regular
MARN Marion Capital Holdings NASDAQ Marion IN 2 03/18/93 SAIF Regular
MASB MASSBANK Corp. NASDAQ Reading MA 15 05/28/86 BIF Regular
MBB MSB Bancorp Inc. AMSE Goshen NY 16 09/03/92 BIF Regular
MBBC Monterey Bay Bancorp Inc. NASDAQ Watsonville CA 7 02/15/95 SAIF Regular
MBLF MBLA Financial Corp. NASDAQ Macon MO 2 06/24/93 SAIF Regular
MBSP Mitchell Bancorp Inc. NASDAQ Spruce Pine NC 1 07/12/96 SAIF Regular
MCBN Mid-Coast Bancorp Inc. NASDAQ Waldoboro ME 2 11/02/89 SAIF Regular
MCBS Mid Continent Bancshares Inc. NASDAQ El Dorado KS 10 06/27/94 SAIF Regular
MDBK Medford Savings Bank NASDAQ Medford MA 16 03/18/86 BIF Regular
MECH Mechanics Savings Bank NASDAQ Hartford CT 14 06/26/96 BIF Regular
</TABLE>
<TABLE>
<CAPTION>
KEY FINANCIAL DATA AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------
TOTAL LOANS/ LOANS/ DEPOSITS/ BORROWINGS/
ASSETS DEPOSITS ASSETS ASSETS ASSETS
TICKER SHORT NAME ($000) (%) (%) (%) (%)
- ------------------------------------------ ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HBS Haywood Bancshares Inc. 150,416 96.18 74.69 77.65 6.98
HCBB HCB Bancshares Inc. 180,417 63.16 54.19 85.79 5.54
HCFC Home City Financial Corp. 68,235 108.24 78.99 72.98 5.87
HEMT HF Bancorp Inc. 984,749 NA NA 85.27 5.08
HFFB Harrodsburg First Fin Bancorp 108,950 102.71 73.91 71.96 0.00
HFFC HF Financial Corp. 561,664 107.14 79.77 74.45 13.31
HFGI Harrington Financial Group 446,797 69.15 21.08 30.48 63.02
HFNC HFNC Financial Corp. 895,394 150.04 74.37 49.57 30.94
HFSA Hardin Bancorp Inc. 108,018 75.38 51.76 68.66 17.59
HHFC Harvest Home Financial Corp. 87,596 79.16 51.58 65.15 22.43
HIFS Hingham Instit. for Savings 217,586 104.60 76.01 72.67 15.83
HMCI HomeCorp Inc. 331,608 88.11 80.95 91.88 0.60
HMLK Hemlock Federal Financial Corp 164,913 44.11 34.63 78.50 0.91
HMNF HMN Financial Inc. 566,865 95.57 61.60 64.46 20.17
HOMF Home Federal Bancorp 682,796 110.63 85.52 77.30 13.53
HPBC Home Port Bancorp Inc. 198,748 125.20 82.61 65.98 22.60
HRBF Harbor Federal Bancorp Inc. 216,370 86.74 68.38 78.84 6.24
HRZB Horizon Financial Corp. 518,661 95.31 78.74 82.61 0.00
HTHR Hawthorne Financial Corp. 863,096 98.07 85.72 87.41 6.08
HVFD Haverfield Corp. 346,157 110.43 86.47 78.30 10.40
HWEN Home Financial Bancorp 42,508 131.32 80.81 61.53 21.17
HZFS Horizon Financial Svcs Corp. 85,969 91.02 61.03 67.05 22.22
IBSF IBS Financial Corp. 733,344 36.08 27.79 77.04 4.85
IFSB Independence Federal Svgs Bank 258,460 79.51 61.17 76.93 15.03
INBI Industrial Bancorp 346,596 114.30 87.32 76.40 5.19
INCB Indiana Community Bank SB 91,329 90.47 78.66 86.95 0.00
IPSW Ipswich Savings Bank 189,379 91.28 73.64 80.68 12.14
ISBF ISB Financial Corporation 947,107 79.96 65.57 82.00 4.99
ITLA ITLA Capital Corp. 850,201 102.31 82.91 81.04 7.23
IWBK InterWest Bancorp Inc. 1,832,582 94.61 60.61 64.06 28.48
JOAC Joachim Bancorp Inc. 34,938 98.81 69.59 70.43 0.00
JSB JSB Financial Inc. 1,531,115 79.56 58.86 73.97 0.00
JSBA Jefferson Savings Bancorp 1,292,021 91.00 75.80 83.29 6.75
JXSB Jacksonville Savings Bk (MHC) 162,746 90.73 79.48 87.60 0.15
JXVL Jacksonville Bancorp Inc. 226,182 NA NA 82.06 0.88
KFBI Klamath First Bancorp 727,903 127.99 73.18 57.18 21.42
KNK Kankakee Bancorp Inc. 341,678 84.40 68.65 81.35 7.00
KSAV KS Bancorp Inc. 106,121 107.99 85.31 79.00 6.60
KSBK KSB Bancorp Inc. 145,888 104.44 74.98 71.79 19.44
KYF Kentucky First Bancorp Inc. 88,959 88.91 55.41 62.32 20.20
LARK Landmark Bancshares Inc. 228,100 107.40 67.53 62.87 21.98
LARL Laurel Capital Group Inc. 211,987 84.81 70.02 82.56 5.21
LFBI Little Falls Bancorp Inc. 299,989 57.38 43.07 75.05 11.17
LFCO Life Financial Corp. 195,290 98.61 68.94 69.91 5.12
LFED Leeds Federal Savings Bk (MHC) 281,899 75.56 61.67 81.62 0.24
LIFB Life Bancorp Inc. 1,488,257 89.20 44.26 49.62 38.95
LISB Long Island Bancorp Inc. 5,908,737 98.33 61.68 62.73 25.64
LOGN Logansport Financial Corp. 83,152 98.87 71.82 72.64 5.41
LONF London Financial Corporation 38,240 100.24 77.55 77.37 2.09
LSBI LSB Financial Corp. 194,117 131.61 88.68 67.38 23.55
LSBX Lawrence Savings Bank 366,318 63.97 43.58 68.12 22.11
LVSB Lakeview Financial 481,646 56.35 43.70 77.55 12.20
LXMO Lexington B&L Financial Corp. 59,236 107.94 76.69 71.05 0.00
MAFB MAF Bancorp Inc. 3,321,464 111.28 77.11 69.30 21.12
MARN Marion Capital Holdings 173,304 123.23 86.59 70.26 4.75
MASB MASSBANK Corp. 905,417 32.04 28.25 88.19 0.10
MBB MSB Bancorp Inc. 813,902 49.66 43.98 88.55 0.03
MBBC Monterey Bay Bancorp Inc. 412,810 80.11 61.81 77.16 10.85
MBLF MBLA Financial Corp. 234,824 124.64 54.12 43.42 43.81
MBSP Mitchell Bancorp Inc. 33,038 160.59 85.90 53.49 0.00
MCBN Mid-Coast Bancorp Inc. 59,739 117.77 83.57 70.96 19.99
MCBS Mid Continent Bancshares Inc. 408,590 92.61 55.99 60.45 28.41
MDBK Medford Savings Bank 1,072,557 69.40 53.36 76.88 13.64
MECH Mechanics Savings Bank 823,575 83.18 66.62 80.09 8.49
</TABLE>
<PAGE> 101
Page 5 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
CORPORATE
-------------------------------------------------------------------------------------
DEPOSIT
NUMBER INSURANCE
OF AGENCY CONVERSION
TICKER SHORT NAME EXCHANGE CITY STATE OFFICES IPO DATE (BIF/SAIF) TYPE
- ------------------------------------------ -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MERI Meritrust Federal SB NASDAQ Thibodaux LA 8 NA SAIF Not Avail.
METF Metropolitan Financial Corp. NASDAQ Mayfield Heights OH 15 NA SAIF Not Avail.
MFBC MFB Corp. NASDAQ Mishawaka IN 5 03/25/94 SAIF Regular
MFCX Marshalltown Financial Corp. NASDAQ Marshalltown IA 3 03/31/94 SAIF Regular
MFFC Milton Federal Financial Corp. NASDAQ West Milton OH 2 10/07/94 SAIF Regular
MFLR Mayflower Co-operative Bank NASDAQ Middleboro MA 4 12/23/87 BIF Regular
MFSL Maryland Federal Bancorp NASDAQ Hyattsville MD 26 06/02/87 SAIF Regular
MGNL Magna Bancorp Inc. NASDAQ Hattiesburg MS 62 03/13/91 SAIF Regular
MIFC Mid-Iowa Financial Corp. NASDAQ Newton IA 6 10/14/92 SAIF Regular
MIVI Mississippi View Holding Co. NASDAQ Little Falls MN 1 03/24/95 SAIF Regular
MLBC ML Bancorp Inc. NASDAQ Villanova PA 26 08/11/94 SAIF Regular
MONT Montgomery Financial Corp. NASDAQ Crawfordsville IN 4 07/01/97 SAIF Mutual HC
MRKF Market Financial Corp. NASDAQ Mount Healthy OH 2 03/27/97 SAIF Regular
MSBF MSB Financial Inc. NASDAQ Marshall MI 2 02/06/95 SAIF Regular
MSBK Mutual Savings Bank FSB NASDAQ Bay City MI 22 07/17/92 SAIF Regular
MWBI Midwest Bancshares Inc. NASDAQ Burlington IA 4 11/12/92 SAIF Regular
MWBX MetroWest Bank NASDAQ Framingham MA 11 10/10/86 BIF Regular
MWFD Midwest Federal Financial NASDAQ Baraboo WI 9 07/08/92 SAIF Regular
NASB North American Savings Bank NASDAQ Grandview MO 7 09/27/85 SAIF Not Avail.
NBN Northeast Bancorp AMSE Portland ME 8 08/19/87 BIF Regular
NBSI North Bancshares Inc. NASDAQ Chicago IL 2 12/21/93 SAIF Regular
NEIB Northeast Indiana Bancorp NASDAQ Huntington IN 3 06/28/95 SAIF Regular
NHTB New Hampshire Thrift Bncshrs NASDAQ New London NH 10 05/22/86 SAIF Regular
NMSB NewMil Bancorp Inc. NASDAQ New Milford CT 14 02/01/86 BIF Regular
NSLB NS&L Bancorp Inc. NASDAQ Neosho MO 2 06/08/95 SAIF Regular
NSSB Norwich Financial Corp. NASDAQ Norwich CT 17 11/14/86 BIF Regular
NSSY Norwalk Savings Society NASDAQ Norwalk CT 7 06/16/94 BIF Regular
NTMG Nutmeg Federal S&LA NASDAQ Danbury CT 3 NA SAIF Not Avail.
NWEQ Northwest Equity Corp. NASDAQ Amery WI 3 10/11/94 SAIF Regular
NWSB Northwest Savings Bank (MHC) NASDAQ Warren PA 57 11/07/94 SAIF Mutual HC
NYB New York Bancorp Inc. NYSE Douglaston NY 33 01/28/88 SAIF Regular
OCFC Ocean Financial Corp. NASDAQ Toms River NJ 10 07/03/96 SAIF Regular
OCN Ocwen Financial Corp. NYSE West Palm Beach FL 1 NA SAIF Not Avail.
OFCP Ottawa Financial Corp. NASDAQ Holland MI 26 08/19/94 SAIF Regular
OHSL OHSL Financial Corp. NASDAQ Cincinnati OH 5 02/10/93 SAIF Regular
PALM Palfed Inc. NASDAQ Aiken SC 22 12/15/85 SAIF Regular
PAMM PacificAmerica Money Center NASDAQ Woodland Hills CA 1 06/25/96 BIF Not Avail.
PBCI Pamrapo Bancorp Inc. NASDAQ Bayonne NJ 8 11/14/89 SAIF Regular
PBCT People's Bank (MHC) NASDAQ Bridgeport CT 106 07/06/88 BIF Mutual HC
PBHC Oswego City Savings Bk (MHC) NASDAQ Oswego NY 5 11/16/95 BIF Mutual HC
PBKB People's Bancshares Inc. NASDAQ New Bedford MA 14 10/30/86 BIF Regular
PCBC Perry County Financial Corp. NASDAQ Perryville MO 1 02/13/95 SAIF Regular
PCCI Pacific Crest Capital NASDAQ Agoura Hills CA 3 NA BIF Not Avail.
PDB Piedmont Bancorp Inc. AMSE Hillsborough NC 1 12/08/95 SAIF Regular
PEEK Peekskill Financial Corp. NASDAQ Peekskill NY 3 12/29/95 SAIF Regular
PERM Permanent Bancorp Inc. NASDAQ Evansville IN 12 04/04/94 SAIF Regular
PERT Perpetual Bank (MHC) NASDAQ Anderson SC 6 10/26/93 SAIF Mutual HC
PETE Primary Bank NASDAQ Peterborough NH 9 10/14/93 BIF Regular
PFDC Peoples Bancorp NASDAQ Auburn IN 6 07/07/87 SAIF Regular
PFED Park Bancorp Inc. NASDAQ Chicago IL 3 08/12/96 SAIF Regular
PFFB PFF Bancorp Inc. NASDAQ Pomona CA 23 03/29/96 SAIF Regular
PFFC Peoples Financial Corp. NASDAQ Massillon OH 2 09/13/96 SAIF Regular
PFNC Progress Financial Corp. NASDAQ Blue Bell PA 10 07/18/83 SAIF Regular
PFSB PennFed Financial Services Inc NASDAQ West Orange NJ 17 07/15/94 SAIF Regular
PFSL Pocahontas FS&LA (MHC) NASDAQ Pocahontas AR 6 04/05/94 SAIF Mutual HC
PHBK Peoples Heritage Finl Group NASDAQ Portland ME 135 12/04/86 BIF Regular
PHFC Pittsburgh Home Financial Corp NASDAQ Pittsburgh PA 7 04/01/96 SAIF Regular
PHSB Peoples Home Savings Bk (MHC) NASDAQ Beaver Falls PA 9 07/10/97 SAIF Mutual HC
PKPS Poughkeepsie Financial Corp. NASDAQ Poughkeepsie NY 15 11/19/85 SAIF Regular
PLSK Pulaski Savings Bank (MHC) NASDAQ Springfield NJ 6 04/03/97 SAIF Mutual HC
PMFI Perpetual Midwest Financial NASDAQ Cedar Rapids IA 5 03/31/94 SAIF Regular
PRBC Prestige Bancorp Inc. NASDAQ Pleasant Hills PA 3 06/27/96 SAIF Regular
PROV Provident Financial Holdings NASDAQ Riverside CA 9 06/28/96 SAIF Regular
PSBK Progressive Bank Inc. NASDAQ Fishkill NY 17 08/01/84 BIF Regular
</TABLE>
<TABLE>
<CAPTION>
KEY FINANCIAL DATA AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------
TOTAL LOANS/ LOANS/ DEPOSITS/ BORROWINGS/
ASSETS DEPOSITS ASSETS ASSETS ASSETS
TICKER SHORT NAME ($000) (%) (%) (%) (%)
- ------------------------------------------ ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MERI Meritrust Federal SB 228,485 58.88 53.16 90.29 0.00
METF Metropolitan Financial Corp. 821,280 104.49 84.55 80.92 12.79
MFBC MFB Corp. 248,241 111.63 75.33 67.48 17.69
MFCX Marshalltown Financial Corp. 127,528 59.70 49.81 83.44 0.00
MFFC Milton Federal Financial Corp. 199,886 87.20 60.50 69.38 16.82
MFLR Mayflower Co-operative Bank 125,671 73.08 58.45 79.98 9.55
MFSL Maryland Federal Bancorp 1,157,445 125.32 87.42 69.75 19.74
MGNL Magna Bancorp Inc. 1,353,242 102.53 69.35 67.64 19.10
MIFC Mid-Iowa Financial Corp. 125,541 81.26 52.80 64.98 24.29
MIVI Mississippi View Holding Co. 69,775 81.70 64.81 79.33 0.00
MLBC ML Bancorp Inc. 2,071,285 100.16 43.70 43.63 45.88
MONT Montgomery Financial Corp. 93,627 115.47 89.62 77.61 11.14
MRKF Market Financial Corp. 56,578 72.14 45.80 63.48 0.00
MSBF MSB Financial Inc. 74,698 165.90 92.63 55.83 25.94
MSBK Mutual Savings Bank FSB 673,398 71.78 43.14 60.10 31.92
MWBI Midwest Bancshares Inc. 146,542 82.34 60 72.87 19.45
MWBX MetroWest Bank 566,517 93.51 77.48 82.86 8.79
MWFD Midwest Federal Financial 207,050 96.58 74.49 77.13 12.99
NASB North American Savings Bank 736,585 125.19 86.56 69.14 22.12
NBN Northeast Bancorp 247,525 128.03 80.00 62.49 29.03
NBSI North Bancshares Inc. 119,586 108.41 64.94 59.90 23.25
NEIB Northeast Indiana Bancorp 176,309 178.79 88.96 49.76 34.60
NHTB New Hampshire Thrift Bncshrs 315,280 98.89 82.76 83.69 7.93
NMSB NewMil Bancorp Inc. 323,061 62.31 53.11 85.24 4.02
NSLB NS&L Bancorp Inc. 59,711 75.61 55.74 73.72 5.02
NSSB Norwich Financial Corp. 712,699 80.92 68.81 85.04 2.51
NSSY Norwalk Savings Society 663,668 104.64 67.81 64.81 26.37
NTMG Nutmeg Federal S&LA 102,438 106.37 88.13 82.85 5.24
NWEQ Northwest Equity Corp. 96,891 124.23 81.05 65.24 22.59
NWSB Northwest Savings Bank (MHC) 2,091,363 94.47 74.12 78.46 10.68
NYB New York Bancorp Inc. 3,283,653 119.70 61.64 51.50 41.03
OCFC Ocean Financial Corp. 1,448,122 76.21 50.56 66.35 16.76
OCN Ocwen Financial Corp. 2,786,879 84.47 66.64 78.89 10.30
OFCP Ottawa Financial Corp. 861,334 115.53 85.33 73.86 16.13
OHSL OHSL Financial Corp. 230,035 95.77 72.64 75.85 12.52
PALM Palfed Inc. 664,863 97.56 82.50 84.56 6.41
PAMM PacificAmerica Money Center 136,110 97.01 62.09 64.01 2.41
PBCI Pamrapo Bancorp Inc. 370,987 68.48 55.81 81.50 3.94
PBCT People's Bank (MHC) 7,870,000 95.87 68.11 71.05 19.07
PBHC Oswego City Savings Bk (MHC) 190,899 70.88 58.89 83.09 4.46
PBKB People's Bancshares Inc. 585,678 82.58 47.31 57.30 33.62
PCBC Perry County Financial Corp. 81,105 21.97 16.44 74.83 5.55
PCCI Pacific Crest Capital 371,126 74.46 61.18 82.17 9.94
PDB Piedmont Bancorp Inc. 122,761 118.98 82.25 69.13 13.44
PEEK Peekskill Financial Corp. 182,560 34.84 25.27 72.53 0.00
PERM Permanent Bancorp Inc. 433,239 76.32 49.98 65.49 24.40
PERT Perpetual Bank (MHC) 256,211 90.61 68.28 75.36 10.93
PETE Primary Bank 431,683 79.63 57.47 72.18 20.35
PFDC Peoples Bancorp 287,564 95.85 79.92 83.38 0.99
PFED Park Bancorp Inc. 175,569 53.49 39.00 72.92 3.42
PFFB PFF Bancorp Inc. 2,631,413 109.87 71.97 65.51 22.99
PFFC Peoples Financial Corp. 86,486 84.64 60.45 71.43 0.00
PFNC Progress Financial Corp. 418,658 97.20 70.10 72.11 19.00
PFSB PennFed Financial Services Inc 1,321,751 101.73 70.67 69.47 21.81
PFSL Pocahontas FS&LA (MHC) 378,700 109.61 40.83 37.25 55.33
PHBK Peoples Heritage Finl Group 5,591,180 92.37 69.61 75.37 14.10
PHFC Pittsburgh Home Financial Corp 256,265 124.69 67.52 54.15 32.86
PHSB Peoples Home Savings Bk (MHC) 214,759 55.61 46.83 84.21 0.98
PKPS Poughkeepsie Financial Corp. 880,196 109.12 74.37 68.15 22.03
PLSK Pulaski Savings Bank (MHC) 177,348 67.66 57.02 84.27 3.23
PMFI Perpetual Midwest Financial 397,229 103.02 79.14 76.82 13.14
PRBC Prestige Bancorp Inc. 135,721 102.58 67.19 65.50 22.31
PROV Provident Financial Holdings 615,500 106.98 88.43 82.66 1.11
PSBK Progressive Bank Inc. 878,823 74.79 67.90 90.79 0.00
</TABLE>
<PAGE> 102
Page 6 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
CORPORATE
-------------------------------------------------------------------------------------
DEPOSIT
NUMBER INSURANCE
OF AGENCY CONVERSION
TICKER SHORT NAME EXCHANGE CITY STATE OFFICES IPO DATE (BIF/SAIF) TYPE
- ------------------------------------------ -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PSFC Peoples-Sidney Financial Corp. NASDAQ Sidney OH 1 04/28/97 SAIF Regular
PSFI PS Financial Inc. NASDAQ Chicago IL 1 11/27/96 SAIF Regular
PTRS Potters Financial Corp. NASDAQ East Liverpool OH 4 12/31/93 SAIF Regular
PULB Pulaski Bank, Svgs Bank (MHC) NASDAQ St. Louis MO 5 05/11/94 SAIF Mutual HC
PULS Pulse Bancorp NASDAQ South River NJ 4 09/18/86 SAIF Regular
PVFC PVF Capital Corp. NASDAQ Bedford Heights OH 9 12/30/92 SAIF Supervisory
PVSA Parkvale Financial Corporation NASDAQ Monroeville PA 29 07/16/87 SAIF Regular
PWBC PennFirst Bancorp Inc. NASDAQ Ellwood City PA 11 06/13/90 SAIF Regular
PWBK Pennwood Bancorp Inc. NASDAQ Pittsburgh PA 3 07/15/96 SAIF Regular
QCBC Quaker City Bancorp Inc. NASDAQ Whittier CA 8 12/30/93 SAIF Regular
QCFB QCF Bancorp Inc. NASDAQ Virginia MN 2 04/03/95 SAIF Regular
QCSB Queens County Bancorp Inc. NASDAQ Flushing NY 10 11/23/93 BIF Regular
RARB Raritan Bancorp Inc. NASDAQ Raritan NJ 6 03/01/87 BIF Regular
RCSB RCSB Financial Inc. NASDAQ Rochester NY 38 04/29/86 BIF Regular
REDF RedFed Bancorp Inc. NASDAQ Redlands CA 14 04/08/94 SAIF Regular
RELI Reliance Bancshares Inc. NASDAQ Milwaukee WI 1 04/19/96 SAIF Regular
RELY Reliance Bancorp Inc. NASDAQ Garden City NY 28 03/31/94 SAIF Regular
RIVR River Valley Bancorp NASDAQ Madison IN 6 12/20/96 SAIF Regular
ROSE TR Financial Corp. NASDAQ Garden City NY 15 06/29/93 BIF Regular
RSLN Roslyn Bancorp Inc. NASDAQ Roslyn NY 8 01/13/97 BIF Regular
RVSB Riverview Savings Bank (MHC) NASDAQ Camas WA 9 10/26/93 SAIF Mutual HC
SBFL SB of the Finger Lakes (MHC) NASDAQ Geneva NY 4 11/11/94 SAIF Mutual HC
SBOS Boston Bancorp (The) NASDAQ South Boston MA 7 11/09/83 BIF Regular
SCBS Southern Community Bancshares NASDAQ Cullman AL 1 12/23/96 SAIF Regular
SCCB S. Carolina Community Bancshrs NASDAQ Winnsboro SC 3 07/07/94 SAIF Regular
SECP Security Capital Corp. NASDAQ Milwaukee WI 42 01/03/94 SAIF Regular
SFED SFS Bancorp Inc. NASDAQ Schenectady NY 4 06/30/95 SAIF Regular
SFFC StateFed Financial Corporation NASDAQ Des Moines IA 2 01/05/94 SAIF Regular
SFIN Statewide Financial Corp. NASDAQ Jersey City NJ 16 10/02/95 SAIF Regular
SFNB Security First Network Bank NASDAQ Atlanta GA 1 NA SAIF Not Avail.
SFSB SuburbFed Financial Corp. NASDAQ Flossmoor IL 12 03/04/92 SAIF Regular
SFSL Security First Corp. NASDAQ Mayfield Heights OH 14 01/22/88 SAIF Regular
SGVB SGV Bancorp Inc. NASDAQ West Covina CA 8 06/29/95 SAIF Regular
SHEN First Shenango Bancorp Inc. NASDAQ New Castle PA 4 04/06/93 SAIF Regular
SISB SIS Bancorp Inc. NASDAQ Springfield MA 24 02/08/95 BIF Regular
SKAN Skaneateles Bancorp Inc. NASDAQ Skaneateles NY 8 06/02/86 BIF Regular
SKBO First Carnegie Deposit (MHC) NASDAQ Carnegie PA 3 04/04/97 SAIF Mutual HC
SMBC Southern Missouri Bancorp Inc. NASDAQ Poplar Bluff MO 8 04/13/94 SAIF Regular
SMFC Sho-Me Financial Corp. NASDAQ Mt. Vernon MO 8 07/01/94 SAIF Regular
SOBI Sobieski Bancorp Inc. NASDAQ South Bend IN 3 03/31/95 SAIF Regular
SOPN First Savings Bancorp Inc. NASDAQ Southern Pines NC 5 01/06/94 SAIF Regular
SOSA Somerset Savings Bank NASDAQ Somerville MA 5 07/09/86 BIF Regular
SPBC St. Paul Bancorp Inc. NASDAQ Chicago IL 52 05/18/87 SAIF Regular
SRN Southern Banc Company Inc. AMSE Gadsden AL 4 10/05/95 SAIF Regular
SSB Scotland Bancorp Inc AMSE Laurinburg NC 2 04/01/96 SAIF Regular
SSFC South Street Financial Corp. NASDAQ Albemarle NC 2 10/03/96 SAIF Regular
SSM Stone Street Bancorp Inc. AMSE Mocksville NC 2 04/01/96 SAIF Regular
STFR St. Francis Capital Corp. NASDAQ Milwaukee WI 23 06/21/93 SAIF Regular
STND Standard Financial Inc. NASDAQ Chicago IL 14 08/01/94 SAIF Regular
STSA Sterling Financial Corp. NASDAQ Spokane WA 41 NA SAIF Not Avail.
SVRN Sovereign Bancorp Inc. NASDAQ Wyomissing PA 149 08/12/86 SAIF Regular
SWBI Southwest Bancshares NASDAQ Hometown IL 6 06/24/92 SAIF Regular
SWCB Sandwich Co-operative Bank NASDAQ Sandwich MA 11 07/25/86 BIF Regular
SZB SouthFirst Bancshares Inc. AMSE Sylacauga AL 2 02/14/95 SAIF Regular
TBK Tolland Bank AMSE Tolland CT 7 12/19/86 BIF Regular
THR Three Rivers Financial Corp. AMSE Three Rivers MI 4 08/24/95 SAIF Regular
THRD TF Financial Corporation NASDAQ Newtown PA 14 07/13/94 SAIF Regular
TPNZ Tappan Zee Financial Inc. NASDAQ Tarrytown NY 1 10/05/95 SAIF Regular
TRIC Tri-County Bancorp Inc. NASDAQ Torrington WY 2 09/30/93 SAIF Regular
TSBS Peoples Bancorp Inc. (MHC) NASDAQ Lawrenceville NJ 14 08/03/95 BIF Mutual HC
TSH Teche Holding Co. AMSE Franklin LA 9 04/19/95 SAIF Regular
TWIN Twin City Bancorp NASDAQ Bristol TN 3 01/04/95 SAIF Regular
UBMT United Financial Corp. NASDAQ Great Falls MT 4 09/23/86 SAIF Regular
UFRM United Federal Savings Bank NASDAQ Rocky Mount NC 13 07/01/80 SAIF Regular
</TABLE>
<TABLE>
<CAPTION>
KEY FINANCIAL DATA AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------
TOTAL LOANS/ LOANS/ DEPOSITS/ BORROWINGS/
ASSETS DEPOSITS ASSETS ASSETS ASSETS
TICKER SHORT NAME ($000) (%) (%) (%) (%)
- ------------------------------------------ ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PSFC Peoples-Sidney Financial Corp. 93,734 106.43 92.40 86.82 2.67
PSFI PS Financial Inc. 82,662 87.09 44.28 50.84 5.44
PTRS Potters Financial Corp. 121,189 76.51 62.76 82.03 8.11
PULB Pulaski Bank, Svgs Bank (MHC) 180,232 95.56 79.58 83.28 1.22
PULS Pulse Bancorp 520,203 29.55 23.46 79.39 11.71
PVFC PVF Capital Corp. 356,251 121.66 93.42 76.79 14.41
PVSA Parkvale Financial Corporation 991,239 82.29 73.15 88.90 2.04
PWBC PennFirst Bancorp Inc. 816,954 84.41 40.41 47.87 42.90
PWBK Pennwood Bancorp Inc. 49,981 76.11 54.54 71.67 8.93
QCBC Quaker City Bancorp Inc. 801,402 118.11 81.53 69.03 19.68
QCFB QCF Bancorp Inc. 149,637 56.99 39.97 70.13 10.59
QCSB Queens County Bancorp Inc. 1,466,906 124.22 87.32 70.29 14.79
RARB Raritan Bancorp Inc. 379,428 76.04 66.90 87.98 2.68
RCSB RCSB Financial Inc. 4,104,367 94.89 54.16 57.08 29.87
REDF RedFed Bancorp Inc. 912,237 98.43 86.80 88.19 1.58
RELI Reliance Bancshares Inc. 47,009 158.84 59.45 37.43 12.76
RELY Reliance Bancorp Inc. 1,976,764 63.68 46.26 72.65 17.80
RIVR River Valley Bancorp 140,442 98.29 81.20 82.61 3.56
ROSE TR Financial Corp. 3,551,783 78.18 52.76 67.49 24.21
RSLN Roslyn Bancorp Inc. 3,159,301 38.81 21.76 56.06 21.91
RVSB Riverview Savings Bank (MHC) 229,652 92.04 67.58 73.43 14.28
SBFL SB of the Finger Lakes (MHC) 216,700 57.15 46 80.49 8.82
SBOS Boston Bancorp (The) 1,715,070 24.42 19.25 78.85 7.61
SCBS Southern Community Bancshares 70,370 75.43 58.98 78.19 0.00
SCCB S. Carolina Community Bancshrs 46,412 105.88 77.65 73.34 0.00
SECP Security Capital Corp. 3,673,401 119.86 76.78 64.06 16.89
SFED SFS Bancorp Inc. 172,849 84.38 72.25 85.62 0.00
SFFC StateFed Financial Corporation 85,679 NA NA 58.76 22.18
SFIN Statewide Financial Corp. 673,214 73.72 49.11 66.62 22.86
SFNB Security First Network Bank 78,653 18.26 10.24 56.08 1.38
SFSB SuburbFed Financial Corp. 426,705 85.29 63.56 74.51 17.49
SFSL Security First Corp. 653,226 126.63 90.14 71.18 18.39
SGVB SGV Bancorp Inc. 409,340 99.22 69.89 70.44 21.34
SHEN First Shenango Bancorp Inc. 411,417 97.46 63.55 65.20 22.62
SISB SIS Bancorp Inc. 1,434,545 65.22 46.17 70.78 19.54
SKAN Skaneateles Bancorp Inc. 247,697 101.38 85.28 84.12 7.37
SKBO First Carnegie Deposit (MHC) 147,122 80.07 42.40 52.96 28.84
SMBC Southern Missouri Bancorp Inc. 165,688 85.32 64.02 75.03 8.17
SMFC Sho-Me Financial Corp. 328,803 144.87 88.02 60.76 29.30
SOBI Sobieski Bancorp Inc. 81,754 103.28 75.02 72.64 11.62
SOPN First Savings Bancorp Inc. 294,217 94.38 65.54 69.44 6.80
SOSA Somerset Savings Bank 514,502 87.17 76.58 87.85 4.95
SPBC St. Paul Bancorp Inc. 4,611,394 95.74 68.41 71.46 18.41
SRN Southern Banc Company Inc. 104,978 NA NA 82.46 0.00
SSB Scotland Bancorp Inc 69,479 113.46 69.32 61.10 0.00
SSFC South Street Financial Corp. 241,744 77.97 45.88 58.84 14.48
SSM Stone Street Bancorp Inc. 106,115 129.54 81.51 62.93 0.00
STFR St. Francis Capital Corp. 1,645,539 68.28 43.76 64.09 26.85
STND Standard Financial Inc. 2,574,675 86.04 61.32 71.27 16.86
STSA Sterling Financial Corp. 1,686,395 103.44 59.12 57.16 35.72
SVRN Sovereign Bancorp Inc. 10,898,572 116.84 62.79 53.74 39.87
SWBI Southwest Bancshares 378,325 98.35 72.36 73.57 13.44
SWCB Sandwich Co-operative Bank 501,894 87.47 70.02 80.05 11.07
SZB SouthFirst Bancshares Inc. 97,283 114.80 73.80 64.29 19.01
TBK Tolland Bank 238,227 68.88 61.76 89.66 3.11
THR Three Rivers Financial Corp. 91,165 101.03 66.49 65.81 19.02
THRD TF Financial Corporation 640,746 68.97 49.61 71.92 15.35
TPNZ Tappan Zee Financial Inc. 124,150 56.31 45.75 81.25 0.00
TRIC Tri-County Bancorp Inc. 89,457 79.63 41.70 52.36 31.40
TSBS Peoples Bancorp Inc. (MHC) 631,000 79.26 61.28 77.31 4.75
TSH Teche Holding Co. 406,253 123.89 84.95 68.56 17.35
TWIN Twin City Bancorp 107,345 85.05 71.61 84.20 0.93
UBMT United Financial Corp. 105,600 46.46 32.59 70.13 5.63
UFRM United Federal Savings Bank 275,530 90.13 80.07 88.84 0.00
</TABLE>
<PAGE> 103
Page 7 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
CORPORATE
-------------------------------------------------------------------------------------
DEPOSIT
NUMBER INSURANCE
OF AGENCY CONVERSION
TICKER SHORT NAME EXCHANGE CITY STATE OFFICES IPO DATE (BIF/SAIF) TYPE
- ------------------------------------------ -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
USAB USABancshares, Inc. NASDAQ Philadelphia PA 1 NA BIF Not Avail.
VABF Virginia Beach Fed. Financial NASDAQ Virginia Beach VA 14 11/01/80 SAIF Not Avail.
VFFC Virginia First Financial Corp. NASDAQ Petersburg VA 24 01/01/78 SAIF Not Avail.
WAMU Washington Mutual Inc. NASDAQ Seattle WA 523 03/11/83 BIF Regular
WAYN Wayne Savings & Loan Co. (MHC) NASDAQ Wooster OH 6 06/25/93 SAIF Mutual HC
WBST Webster Financial Corp. NASDAQ Waterbury CT 83 12/12/86 SAIF Regular
WCBI Westco Bancorp NASDAQ Westchester IL 1 06/26/92 SAIF Regular
WCFB Webster City Federal SB (MHC) NASDAQ Webster City IA 1 08/15/94 SAIF Mutual HC
WEFC Wells Financial Corp. NASDAQ Wells MN 7 04/11/95 SAIF Regular
WEHO Westwood Homestead Fin. Corp. NASDAQ Cincinnati OH 2 09/30/96 SAIF Regular
WES Westcorp NYSE Irvine CA 26 05/01/86 SAIF Not Avail.
WFI Winton Financial Corp. AMSE Cincinnati OH 5 08/04/88 SAIF Regular
WFSG Wilshire Financial Services NASDAQ Portland OR 2 12/19/96 SAIF Not Avail.
WFSL Washington Federal Inc. NASDAQ Seattle WA 104 11/17/82 SAIF Regular
WHGB WHG Bancshares Corp. NASDAQ Lutherville MD 5 04/01/96 SAIF Regular
WOFC Western Ohio Financial Corp. NASDAQ Springfield OH 10 07/29/94 SAIF Regular
WRNB Warren Bancorp Inc. NASDAQ Peabody MA 6 07/09/86 BIF Regular
WSB Washington Savings Bank, FSB AMSE Waldorf MD 4 NA SAIF Not Avail.
WSFS WSFS Financial Corporation NASDAQ Wilmington DE 16 11/26/86 BIF Regular
WSTR WesterFed Financial Corp. NASDAQ Missoula MT 35 01/10/94 SAIF Regular
WVFC WVS Financial Corp. NASDAQ Pittsburgh PA 5 11/29/93 SAIF Regular
WWFC Westwood Financial Corporation NASDAQ Westwood NJ 2 06/07/96 SAIF Not Avail.
WYNE Wayne Bancorp Inc. NASDAQ Wayne NJ 5 06/27/96 SAIF Regular
YFCB Yonkers Financial Corporation NASDAQ Yonkers NY 4 04/18/96 SAIF Regular
YFED York Financial Corp. NASDAQ York PA 22 02/01/84 SAIF Regular
-------------------------------------------------------------------------------------
Average 409
</TABLE>
<TABLE>
<CAPTION>
KEY FINANCIAL DATA AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------
TOTAL LOANS/ LOANS/ DEPOSITS/ BORROWINGS/
ASSETS DEPOSITS ASSETS ASSETS ASSETS
TICKER SHORT NAME ($000) (%) (%) (%) (%)
- ------------------------------------------ ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
USAB USABancshares, Inc. 48,303 54.38 43.42 79.84 8.71
VABF Virginia Beach Fed. Financial 617,818 123.17 77.10 62.60 30.03
VFFC Virginia First Financial Corp. 817,313 124.32 90.53 72.81 18.01
WAMU Washington Mutual Inc. 48,763,153 136.35 67.06 49.18 44.51
WAYN Wayne Savings & Loan Co. (MHC) 254,230 98.46 82.42 83.71 6.30
WBST Webster Financial Corp. 5,943,766 89.74 60.49 67.41 26.02
WCBI Westco Bancorp 311,613 91.35 75.08 82.19 0.00
WCFB Webster City Federal SB (MHC) 94,699 76.73 57.85 75.40 0.29
WEFC Wells Financial Corp. 202,035 128.62 91.48 71.13 13.86
WEHO Westwood Homestead Fin. Corp. 134,655 124.70 76.43 61.29 9.10
WES Westcorp 3,678,193 93.99 51.03 54.29 21.81
WFI Winton Financial Corp. 317,392 117.25 86.50 73.77 18.24
WFSG Wilshire Financial Services 1,196,092 192.59 71.71 37.23 55.82
WFSL Washington Federal Inc. 5,760,385 146.15 72.81 49.82 36.31
WHGB WHG Bancshares Corp. 100,235 108.52 79.50 73.26 3.99
WOFC Western Ohio Financial Corp. 396,492 127.93 77.47 60.55 25.32
WRNB Warren Bancorp Inc. 358,021 72.30 63.47 87.79 0.93
WSB Washington Savings Bank, FSB 258,330 58.07 50.63 87.18 3.87
WSFS WSFS Financial Corporation 1,508,540 123.84 62.02 50.08 43.15
WSTR WesterFed Financial Corp. 955,639 100.64 66.44 66.02 20.85
WVFC WVS Financial Corp. 294,693 93.72 54.34 57.99 28.72
WWFC Westwood Financial Corporation 111,394 45.55 37.15 81.56 8.98
WYNE Wayne Bancorp Inc. 261,027 93.13 65.99 70.86 15.25
YFCB Yonkers Financial Corporation 288,089 51.38 36.41 70.87 13.84
YFED York Financial Corp. 1,162,393 101.61 86.82 85.44 3.98
-----------------------------------------------------------------
Average 1,392,682 95.58 66.95 71.35 14.70
</TABLE>
<PAGE> 104
Page 8 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
CORPORATE
----------------------------------------------------------------------------------------
DEPOSIT
NUMBER INSURANCE
OF AGENCY CONVERSION
TICKER SHORT NAME EXCHANGE CITY STATE OFFICES IPO DATE (BIF/SAIF) TYPE
- ------------------------------------------ ----------------------------------------------------------------------------------------
COMPARABLE THRIFT DATA
CORPORATE
----------------------------------------------------------------------------------------
DEPOSIT
NUMBER INSURANCE
OF AGENCY CONVERSION
TICKER SHORT NAME EXCHANGE CITY STATE OFFICES IPO DATE (BIF/SAIF) TYPE
- ------------------------------------------ ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CATB Catskill Financial Corp. NASDAQ Catskill NY 4 04/18/96BIF Regular
CEBK Central Co-operative Bank NASDAQ Somerville MA 8 10/24/86BIF Regular
FBER 1st Bergen Bancorp NASDAQ Wood-Ridge NJ 4 04/01/96SAIF Regular
FIBC Financial Bancorp Inc. NASDAQ Long Island City NY 5 08/17/94SAIF Regular
FKFS First Keystone Financial NASDAQ Media PA 5 01/26/95SAIF Regular
FSBI Fidelity Bancorp Inc. NASDAQ Pittsburgh PA 8 06/24/88SAIF Regular
LFBI Little Falls Bancorp Inc. NASDAQ Little Falls NJ 6 01/05/96SAIF Regular
LSBX Lawrence Savings Bank NASDAQ North Andover MA 5 05/02/86BIF Regular
PBCI Pamrapo Bancorp Inc. NASDAQ Bayonne NJ 8 11/14/89SAIF Regular
PHFC Pittsburgh Home Financial Corp NASDAQ Pittsburgh PA 7 04/01/96SAIF Regular
WVFC WVS Financial Corp. NASDAQ Pittsburgh PA 5 11/29/93SAIF Regular
-------------------------- ------------------------------------------------------------
Average 11
Maximum
Minimum
</TABLE>
<TABLE>
<CAPTION>
KEY FINANCIAL DATA AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------
TOTAL LOANS/ LOANS/ DEPOSITS/ BORROWINGS/
ASSETS DEPOSITS ASSETS ASSETS ASSETS
TICKER SHORT NAME ($000) (%) (%) (%) (%)
- ------------------------------------------ ------------------------------------------------------------------
COMPARABLE THRIFT DATA
KEY FINANCIAL DATA AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------
TOTAL LOANS/ LOANS/ DEPOSITS/ BORROWINGS/
ASSETS DEPOSITS ASSETS ASSETS ASSETS
TICKER SHORT NAME ($000) (%) (%) (%) (%)
- ------------------------------------------ ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CATB Catskill Financial Corp. 284,238 62.94 44.12 70.10 3.31
CEBK Central Co-operative Bank 344,420 88.08 68.13 77.36 11.90
FBER 1st Bergen Bancorp 284,765 57.50 43.27 75.25 9.60
FIBC Financial Bancorp Inc. 282,485 73.84 54.73 74.12 15.21
FKFS First Keystone Financial 320,797 82.17 58.59 71.31 19.42
FSBI Fidelity Bancorp Inc. 363,302 74.48 48.92 65.69 26.26
LFBI Little Falls Bancorp Inc. 299,989 57.38 43.07 75.05 11.17
LSBX Lawrence Savings Bank 366,318 63.97 43.58 68.12 22.11
PBCI Pamrapo Bancorp Inc. 370,987 68.48 55.81 81.50 3.94
PHFC Pittsburgh Home Financial Corp 256,265 124.69 67.52 54.15 32.86
WVFC WVS Financial Corp. 294,693 93.72 54.34 57.99 28.72
---------------------------------------------------------------
Average 315,296 77.02 52.92 70.06 16.77
Maximum 370,987 124.69 68.13 81.50 32.86
Minimum 256,265 57.38 43.07 54.15 3.31
</TABLE>
<PAGE> 105
Page 9 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
CAPITAL AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------------------
TANGIBLE INTANGIBLE REGULATORY EQUITY + TOTAL CAPITAL/
EQUITY/ EQUITY/ ASSETS/ CORE CAP/ RESERVES/ RISK ADJUSTED
ASSETS TANG ASSETS EQUITY ASSETS ASSETS ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%)
- --------------------------------------- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB 7.38 5.23 30.65 5.63 8.67 11.72
%CCMD Chevy Chase Bank, FSB 5.60 5.02 10.86 6.48 7.19 13.21
AABC Access Anytime Bancorp, Inc. 7.45 7.45 0.00 7.16 7.92 17.13
AADV Advantage Bancorp Inc. 9.21 8.67 6.51 6.41 9.78 14.90
ABBK Abington Bancorp Inc. 6.92 6.27 9.93 6.18 7.34 13.48
ABCL Alliance Bancorp Inc. 8.91 8.81 1.26 7.77 9.30 15.15
ABCW Anchor BanCorp Wisconsin 6.22 6.11 1.88 5.63 7.39 10.53
AFBC Advance Financial Bancorp 15.45 15.45 0.00 15.44 15.78 26.03
AFCB Affiliated Community Bancorp 9.78 9.73 0.58 9.98 10.53 19.18
AFED AFSALA Bancorp Inc. 13.47 13.47 0.00 13.48 14.15 32.75
AFFFZ America First Financial Fund 8.44 8.35 1.23 7.32 8.77 16.66
AHCI Ambanc Holding Co. 12.94 12.94 0.00 10.00 13.72 23.85
AHM Ahmanson & Company (H.F.) 5.18 4.60 11.88 5.78 6.00 11.1
ALBC Albion Banc Corp. 8.73 8.73 0.00 NA 9.12 NA
ALBK ALBANK Financial Corp. 9.20 8.14 12.60 7.23 9.92 12.80
AMFC AMB Financial Corp. 14.96 14.96 0.00 12.50 15.36 24.40
ANA Acadiana Bancshares Inc. 17.37 17.37 0.00 13.78 18.37 27.19
ANBK American National Bancorp 8.97 8.97 0.00 8.26 9.72 17.37
ANDB Andover Bancorp Inc. 8.06 8.06 0.00 8.2 9.06 15.01
ASBI Ameriana Bancorp 10.96 10.95 0.08 10.07 11.24 19.04
ASBP ASB Financial Corp. 15.56 15.56 0.00 11.86 16.29 27.32
ASFC Astoria Financial Corp. 7.83 6.66 16.01 5.69 8.02 15.98
ATSB AmTrust Capital Corp. 10.17 10.07 1.07 10.20 10.83 16.58
AVND Avondale Financial Corp. 9.12 9.12 0.00 8.90 12.18 16.27
BANC BankAtlantic Bancorp Inc. 5.62 4.67 17.85 6.79 6.62 11.28
BDJI First Federal Bancorporation 10.87 10.87 0.00 9.64 11.24 19.07
BFD BostonFed Bancorp Inc. 8.79 8.52 3.31 NA 9.38 NA
BFFC Big Foot Financial Corp. 16.98 16.98 0.00 12.27 17.13 35.4
BFSB Bedford Bancshares Inc. 14.16 14.16 0.00 12.45 14.64 22.92
BKC American Bank of Connecticut 8.29 7.98 4.01 NA 9.16 NA
BKCT Bancorp Connecticut Inc. 10.25 10.25 0.00 10.19 11.45 16.29
BKUNA BankUnited Financial Corp. 5.61 4.94 12.63 8.08 5.78 14.04
BNKU Bank United Corp. 5.09 4.97 2.46 7.65 5.43 14.07
BPLS Bank Plus Corp. 5.07 5.06 0.18 6.15 6.76 11.75
BSBC Branford Savings Bank 9.28 9.28 0.00 9.29 11.29 17.56
BTHL Bethel Bancorp 8.48 7.36 14.28 7.38 9.63 13.39
BVCC Bay View Capital Corp. 6.34 5.37 16.08 5.54 7.47 10.26
BWFC Bank West Financial Corp. 14.51 14.51 0.00 12.20 14.66 23.37
BYFC Broadway Financial Corp. 10.75 10.75 0.00 8.69 11.57 15.22
CAFI Camco Financial Corp. 9.57 8.89 7.74 9.21 9.83 16.91
CAPS Capital Savings Bancorp Inc. 8.80 8.80 0.00 7.89 9.10 16.60
CASB Cascade Financial Corp. 6.13 6.13 0.00 6.19 6.92 10.79
CASH First Midwest Financial Inc. 11.40 10.23 11.42 9.20 12.04 14.90
CATB Catskill Financial Corp. 25.04 25.04 0.00 20.72 25.69 61.36
CBCI Calumet Bancorp Inc. 15.50 15.50 0.00 9.24 16.69 15.52
CBES CBES Bancorp Inc. 18.39 18.39 0.00 13.54 18.80 17.70
CBK Citizens First Financial Corp. 14.08 14.08 0.00 10.57 14.30 18.44
CBSA Coastal Bancorp Inc. 3.33 2.78 16.87 5.49 3.56 11.74
CBSB Charter Financial Inc. 14.47 13.02 11.52 11.65 15.06 21.47
CCFH CCF Holding Company 11.69 11.69 0.00 10.22 12.28 NA
CEBK Central Co-operative Bank 9.93 8.98 10.53 NA 10.75 NA
CENB Century Bancorp Inc. 29.94 29.94 0.00 19.10 30.48 43.47
CENF CENFED Financial Corp. 5.20 5.19 0.17 5.49 5.96 11.08
CFB Commercial Federal Corp. 6.00 5.36 11.31 6.47 6.69 13.81
CFBC Community First Banking Co. 15.40 15.22 1.37 10.30 15.92 17.00
CFCP Coastal Financial Corp. 6.17 6.17 0.00 6.08 7.09 10.94
CFFC Community Financial Corp. 13.71 13.71 0.00 11.61 14.29 17.48
CFNC Carolina Fincorp Inc. 22.82 22.82 0.00 NA 23.18 NA
CFSB CFSB Bancorp Inc. 7.62 7.62 0.00 7.33 8.16 13.14
CFTP Community Federal Bancorp 27.45 27.45 0.00 24.82 27.73 58.37
CFX CFX Corp. 7.44 6.99 6.45 7.49 8.30 13.29
CIBI Community Investors Bancorp 12.04 12.04 0.00 11.29 12.56 22.07
CKFB CKF Bancorp Inc. 23.96 23.96 0.00 20.96 24.15 36.66
CLAS Classic Bancshares Inc. 14.87 12.87 15.44 11.70 15.49 24.00
</TABLE>
<TABLE>
<CAPTION>
ASSET QUALITY AS OF THE MOST RECENT QUARTER
-----------------------------------------------------------
NPLS/ RESERVES/ NPAS/ NPAS/ RESERVES/ RESERVES/
LOANS NPLS ASSETS EQUITY LOANS NPAS + 90
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- --------------------------------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB 1.60 120.38 1.31 17.82 1.93 98.69
%CCMD Chevy Chase Bank, FSB 0.73 378.42 2.11 37.76 2.78 74.92
AABC Access Anytime Bancorp, Inc. 3.04 30.20 1.60 21.49 0.92 29.31
AADV Advantage Bancorp Inc. 0.35 293.23 0.44 4.83 1.01 128.03
ABBK Abington Bancorp Inc. 0.29 241.34 0.17 2.50 0.69 211.97
ABCL Alliance Bancorp Inc. 0.16 335.46 0.15 1.70 0.53 257.09
ABCW Anchor BanCorp Wisconsin 0.67 219.76 0.92 14.85 1.48 126.05
AFBC Advance Financial Bancorp 0.45 89.84 0.37 2.40 0.40 89.84
AFCB Affiliated Community Bancorp 0.63 191.79 0.39 4.02 1.20 191.75
AFED AFSALA Bancorp Inc. 0.95 150.77 0.45 3.32 1.43 150.77
AFFFZ America First Financial Fund 0.51 94.78 0.40 4.79 0.49 81.55
AHCI Ambanc Holding Co. 0.93 151.19 0.58 4.47 1.40 124.04
AHM Ahmanson & Company (H.F.) 2.28 54.74 1.90 36.74 1.25 42.9
ALBC Albion Banc Corp. 1.01 53.94 0.72 8.26 0.54 53.94
ALBK ALBANK Financial Corp. 0.85 116.56 0.71 7.71 0.99 78.77
AMFC AMB Financial Corp. 0.94 56.74 0.81 5.44 0.53 49.41
ANA Acadiana Bancshares Inc. 0.69 194.73 0.52 3.01 1.35 190.96
ANBK American National Bancorp 1.06 110.45 0.71 7.96 1.17 102.82
ANDB Andover Bancorp Inc. 1.26 111.66 1.01 12.54 1.41 99.08
ASBI Ameriana Bancorp 0.48 80.09 0.40 3.61 0.38 71.19
ASBP ASB Financial Corp. 1.32 82.74 0.88 5.67 1.09 71.62
ASFC Astoria Financial Corp. 0.77 62.53 0.45 5.73 0.48 37.96
ATSB AmTrust Capital Corp. 3.66 25.47 2.84 27.96 0.93 23.48
AVND Avondale Financial Corp. 5.11 104.39 3.18 34.82 5.33 96.19
BANC BankAtlantic Bancorp Inc. 0.97 142.52 0.87 15.43 1.39 102.98
BDJI First Federal Bancorporation 0.02 NM 0.23 2.13 0.76 137.04
BFD BostonFed Bancorp Inc. 0.53 139.5 0.52 5.87 0.74 114.29
BFFC Big Foot Financial Corp. 0.00 NM 0.00 0.00 0.34 151.52
BFSB Bedford Bancshares Inc. 0.00 NM 0.00 0.00 0.56 79.85
BKC American Bank of Connecticut 2.56 56.83 1.81 21.83 1.45 48.13
BKCT Bancorp Connecticut Inc. 1.60 124.01 1.19 11.63 1.98 100.82
BKUNA BankUnited Financial Corp. 0.65 32.20 0.60 10.71 0.21 28.73
BNKU Bank United Corp. 0.65 71.59 0.66 12.91 0.46 51.25
BPLS Bank Plus Corp. 2.74 76.87 2.88 56.76 2.11 58.99
BSBC Branford Savings Bank 2.11 144.53 1.42 15.30 3.06 141.26
BTHL Bethel Bancorp NA NA NA NA 1.48 NA
BVCC Bay View Capital Corp. 0.66 227.01 0.79 12.46 1.51 137.32
BWFC Bank West Financial Corp. 0.37 54.2 0.28 1.93 0.20 51.72
BYFC Broadway Financial Corp. 1.05 96.54 2.06 19.20 1.01 39.74
CAFI Camco Financial Corp. 0.38 83.57 0.34 3.56 0.32 54.74
CAPS Capital Savings Bancorp Inc. 0.18 216.08 0.17 1.94 0.39 97.24
CASB Cascade Financial Corp. 0.22 426.09 0.39 6.36 0.95 203.69
CASH First Midwest Financial Inc. 1.19 78.15 0.85 7.46 0.93 75.48
CATB Catskill Financial Corp. 0.76 195.59 0.47 1.86 1.48 140.85
CBCI Calumet Bancorp Inc. 0.96 163.97 1.16 7.51 1.57 102.51
CBES CBES Bancorp Inc. 0.83 55.57 0.77 4.16 0.46 54.05
CBK Citizens First Financial Corp. 0.24 108.66 0.39 2.79 0.26 37.65
CBSA Coastal Bancorp Inc. 0.92 55.35 0.54 16.13 0.51 39.81
CBSB Charter Financial Inc. 0.58 135.95 0.56 3.89 0.79 104.84
CCFH CCF Holding Company 0.22 325.68 0.18 1.55 0.72 325.68
CEBK Central Co-operative Bank 1.24 97.49 0.85 8.52 1.21 97.49
CENB Century Bancorp Inc. 0.44 207.22 0.39 1.31 0.91 139.39
CENF CENFED Financial Corp. 1.26 87.02 1.28 24.60 1.10 58.93
CFB Commercial Federal Corp. 0.88 104.32 0.89 14.90 0.91 76.36
CFBC Community First Banking Co. 1.42 58.68 2.02 13.12 0.83 26.1
CFCP Coastal Financial Corp. 0.13 905.51 0.21 3.39 1.15 436.85
CFFC Community Financial Corp. 0.41 157.01 0.39 2.82 0.65 148.67
CFNC Carolina Fincorp Inc. 0.20 254.78 0.14 0.62 0.51 254.78
CFSB CFSB Bancorp Inc. 0.14 431.15 0.17 2.26 0.61 308.01
CFTP Community Federal Bancorp 0.50 91.63 0.30 1.10 0.46 91.63
CFX CFX Corp. 0.59 207.53 0.72 9.66 1.23 120.07
CIBI Community Investors Bancorp 0.66 95.08 0.63 5.21 0.63 83.42
CKFB CKF Bancorp Inc. 0.69 29.35 0.63 2.64 0.20 14.79
CLAS Classic Bancshares Inc. 0.56 165.98 0.66 4.41 0.93 65.45
</TABLE>
<TABLE>
<CAPTION>
PROFITABILITY AS OF THE MOST RECENT QUARTER
-------------------------------------------
RETURN ON RETURN ON
AVG ASSETS AVG EQUITY
TICKER SHORT NAME (%) (%)
- --------------------------------------- -------------------------------------------
<S> <C> <C> <C>
%CAL California Federal Bank, a FSB 0.82 11.17
%CCMD Chevy Chase Bank, FSB 0.18 3.30
AABC Access Anytime Bancorp, Inc. 0.52 7.23
AADV Advantage Bancorp Inc. 1.10 12.06
ABBK Abington Bancorp Inc. 0.89 12.80
ABCL Alliance Bancorp Inc. 0.78 8.52
ABCW Anchor BanCorp Wisconsin 0.97 14.91
AFBC Advance Financial Bancorp 0.90 5.77
AFCB Affiliated Community Bancorp 1.10 11.26
AFED AFSALA Bancorp Inc. 0.79 5.83
AFFFZ America First Financial Fund 1.18 14.17
AHCI Ambanc Holding Co. 0.47 3.71
AHM Ahmanson & Company (H.F.) 0.96 19.32
ALBC Albion Banc Corp. 0.30 3.36
ALBK ALBANK Financial Corp. 1.07 11.59
AMFC AMB Financial Corp. 1.04 6.68
ANA Acadiana Bancshares Inc. 0.94 5.43
ANBK American National Bancorp 0.79 8.75
ANDB Andover Bancorp Inc. 1.03 12.91
ASBI Ameriana Bancorp 0.89 8.16
ASBP ASB Financial Corp. 1.06 6.80
ASFC Astoria Financial Corp. 0.79 10.30
ATSB AmTrust Capital Corp. 0.42 4.16
AVND Avondale Financial Corp. 1.44 16.65
BANC BankAtlantic Bancorp Inc. 1.00 17.51
BDJI First Federal Bancorporation 0.69 6.40
BFD BostonFed Bancorp Inc. 0.72 7.90
BFFC Big Foot Financial Corp. 0.70 4.13
BFSB Bedford Bancshares Inc. 1.22 8.52
BKC American Bank of Connecticut 1.28 15.60
BKCT Bancorp Connecticut Inc. 1.42 13.99
BKUNA BankUnited Financial Corp. 0.48 8.02
BNKU Bank United Corp. 0.62 11.98
BPLS Bank Plus Corp. 0.39 7.91
BSBC Branford Savings Bank 1.18 12.54
BTHL Bethel Bancorp 0.56 6.48
BVCC Bay View Capital Corp. 0.58 9.27
BWFC Bank West Financial Corp. 0.88 5.99
BYFC Broadway Financial Corp. 0.48 4.33
CAFI Camco Financial Corp. 1.21 12.55
CAPS Capital Savings Bancorp Inc. 0.97 11.16
CASB Cascade Financial Corp. 0.65 10.48
CASH First Midwest Financial Inc. 0.98 8.53
CATB Catskill Financial Corp. 1.36 5.28
CBCI Calumet Bancorp Inc. 1.67 10.81
CBES CBES Bancorp Inc. 1.10 5.90
CBK Citizens First Financial Corp. 0.65 4.55
CBSA Coastal Bancorp Inc. 0.39 11.51
CBSB Charter Financial Inc. 1.93 13.68
CCFH CCF Holding Company 0.07 0.63
CEBK Central Co-operative Bank 0.73 7.16
CENB Century Bancorp Inc. 1.80 9.12
CENF CENFED Financial Corp. 0.67 13.05
CFB Commercial Federal Corp. 0.98 16.45
CFBC Community First Banking Co. 0.62 5.37
CFCP Coastal Financial Corp. 1.23 20.03
CFFC Community Financial Corp. 1.15 8.36
CFNC Carolina Fincorp Inc. 1.24 5.33
CFSB CFSB Bancorp Inc. 1.33 17.42
CFTP Community Federal Bancorp 1.25 4.26
CFX CFX Corp. 1.10 13.96
CIBI Community Investors Bancorp 0.96 8.28
CKFB CKF Bancorp Inc. 3.28 13.77
CLAS Classic Bancshares Inc. 0.72 4.89
</TABLE>
<PAGE> 106
Page 10 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
CAPITAL AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------------------
TANGIBLE INTANGIBLE REGULATORY EQUITY + TOTAL CAPITAL/
EQUITY/ EQUITY/ ASSETS/ CORE CAP/ RESERVES/ RISK ADJUSTED
ASSETS TANG ASSETS EQUITY ASSETS ASSETS ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%)
- --------------------------------------- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp 21.69 21.69 0.00 17.11 22.51 25.59
CMSB Commonwealth Bancorp Inc. 9.63 7.69 21.81 6.70 10.06 14.10
CMSV Community Savings FA (MHC) 11.24 11.24 0.00 11.30 11.61 23.49
CNIT CENIT Bancorp Inc. 7.24 6.69 8.17 NA 7.76 NA
CNSB CNS Bancorp Inc. 24.94 24.94 0.00 19.70 25.33 41.27
CNY Carver Bancorp Inc. 8.35 8.04 4.06 7.10 8.93 16.18
COFI Charter One Financial 6.71 6.31 6.37 5.36 7.16 10.59
CONE Conestoga Bancorp, Inc. 16.18 16.18 0.00 12.17 16.22 27.71
COOP Cooperative Bankshares Inc. 7.63 7.63 0.00 7.70 7.86 14.54
CRZY Crazy Woman Creek Bancorp 25.82 25.82 0.00 19.64 26.35 48.12
CSA Coast Savings Financial 4.92 4.86 1.27 5.33 5.84 11.07
CSBF CSB Financial Group Inc. 25.04 23.99 5.53 25.34 25.36 54.92
CTZN CitFed Bancorp Inc. 6.37 5.77 9.93 5.88 6.95 13.22
CVAL Chester Valley Bancorp Inc. 8.36 8.36 0.00 8.26 9.24 14.82
DCBI Delphos Citizens Bancorp Inc. 28.40 28.40 0.00 20.40 28.50 42.40
DIBK Dime Financial Corp. 7.96 7.72 3.22 8.13 9.37 20.58
DIME Dime Community Bancorp Inc. 14.52 12.76 13.85 9.87 15.33 19.99
DME Dime Bancorp Inc. 5.27 5.04 4.64 5.66 5.78 12.03
DNFC D & N Financial Corp. 5.58 5.52 1.06 5.12 6.26 9.45
DSL Downey Financial Corp. 6.93 6.84 1.39 6.24 7.46 12.05
EBSI Eagle Bancshares 8.30 8.30 0.00 6.41 8.98 10.30
EFBC Empire Federal Bancorp Inc. 37.36 37.36 0.00 23.94 37.55 66.91
EFBI Enterprise Federal Bancorp 11.96 11.95 0.09 11.30 12.16 20.30
EGFC Eagle Financial Corp. 6.87 5.44 21.92 7.69 7.36 17.83
EGLB Eagle BancGroup Inc. 11.85 11.85 0.00 9.69 12.38 17.59
EIRE Emerald Isle Bancorp Inc. 7.07 7.07 0.00 7.07 7.68 12.01
EMLD Emerald Financial Corp. 7.58 7.47 1.58 7.25 7.84 12.29
EQSB Equitable Federal Savings Bank 5.04 5.04 0.00 5.04 5.22 11.24
ESBK Elmira Savings Bank (The) 6.30 6.05 4.10 6.04 6.94 10.12
ESX Essex Bancorp Inc. 8.16 8.07 1.23 8.13 9.28 14.48
ETFS East Texas Financial Services 18.16 18.16 0.00 16.30 18.41 41.10
FAB FirstFed America Bancorp Inc. 12.16 12.16 0.00 10.23 13.12 19.72
FBBC First Bell Bancorp Inc. 9.82 9.82 0.00 9.49 9.92 21.86
FBCI Fidelity Bancorp Inc. 10.39 10.37 0.23 8.60 10.56 18.30
FBCV 1ST Bancorp 8.26 8.10 2.04 8.29 8.68 15.98
FBER 1st Bergen Bancorp 14.19 14.19 0.00 10.30 15.27 29.40
FBHC Fort Bend Holding Corp. 6.03 5.64 6.85 6.59 6.56 13.88
FBNW FirstBank Corp. 7.32 7.32 0.00 7.31 7.96 13.39
FBSI First Bancshares Inc. 13.54 13.53 0.14 NA 13.84 NA
FCB Falmouth Co-Operative Bank 23.88 23.88 0.00 24.16 24.41 44.13
FCBF FCB Financial Corp. 14.55 14.55 0.00 12.31 15.18 19.80
FCME First Coastal Corp. 9.23 9.23 0.00 9.16 10.95 16.33
FDEF First Defiance Financial 21.32 21.32 0.00 14.2 21.76 23.00
FED FirstFed Financial Corp. 4.83 4.78 1.12 5.93 6.70 11.68
FESX First Essex Bancorp Inc. 6.97 6.11 13.13 6.11 7.80 11.70
FFBA First Colorado Bancorp Inc. 12.92 12.77 1.35 11.59 13.20 22.14
FFBH First Federal Bancshares of AR 14.97 14.97 0.00 11.99 15.20 23.10
FFBI First Financial Bancorp Inc. 8.65 8.65 0.00 8.16 9.24 15.52
FFBS FFBS BanCorp Inc. 19.23 19.23 0.00 16.20 19.67 29.90
FFBZ First Federal Bancorp Inc. 7.55 7.54 0.11 6.74 8.41 11.44
FFCH First Financial Holdings Inc. 6.11 6.11 0.00 6.54 6.81 10.89
FFDB FirstFed Bancorp Inc. 9.42 8.65 8.84 8.67 9.83 15.60
FFDF FFD Financial Corp. 24.74 24.74 0.00 15.80 24.91 34.10
FFED Fidelity Federal Bancorp 5.14 5.14 0.00 6.63 5.85 10.89
FFES First Federal of East Hartford 6.43 6.43 0.00 6.66 6.69 22.00
FFFC FFVA Financial Corp. 13.18 12.94 2.10 10.16 13.76 20.69
FFFD North Central Bancshares Inc. 22.67 22.67 0.00 17.15 23.65 32.31
FFFG F.F.O. Financial Group Inc. 6.73 6.73 0.00 6.20 8.45 12.60
FFFL Fidelity Bankshares Inc. (MHC) 8.37 8.32 0.72 8.10 8.58 16.30
FFHC First Financial Corp. 7.13 6.95 2.60 6.58 7.51 14.19
FFHH FSF Financial Corp. 11.35 11.35 0.00 10.30 11.57 20.10
FFHS First Franklin Corporation 9.02 8.97 0.63 6.58 9.44 14.37
FFIC Flushing Financial Corp. 15.47 15.47 0.00 11.74 16.11 26.57
FFKY First Federal Financial Corp. 13.70 13.01 5.85 12.14 14.16 19.87
</TABLE>
<TABLE>
<CAPTION>
ASSET QUALITY AS OF THE MOST RECENT QUARTER
-----------------------------------------------------------
NPLS/ RESERVES/ NPAS/ NPAS/ RESERVES/ RESERVES/
LOANS NPLS ASSETS EQUITY LOANS NPAS + 90
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- --------------------------------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp 0.28 347.55 0.24 1.09 0.97 111.82
CMSB Commonwealth Bancorp Inc. 0.84 94.24 0.50 5.15 0.79 86.54
CMSV Community Savings FA (MHC) 0.61 103.17 0.55 4.93 0.63 67.15
CNIT CENIT Bancorp Inc. 0.25 310.20 0.42 5.83 0.76 103.23
CNSB CNS Bancorp Inc. 0.80 72.14 0.53 2.14 0.58 72.14
CNY Carver Bancorp Inc. 0.97 104.82 0.58 6.90 1.02 42.60
COFI Charter One Financial 0.29 246.91 0.22 3.23 0.73 164.80
CONE Conestoga Bancorp, Inc. 0.23 80.00 0.16 0.99 0.18 26.87
COOP Cooperative Bankshares Inc. 0.11 254.69 0.30 3.90 0.29 50.09
CRZY Crazy Woman Creek Bancorp 0.76 136.15 0.39 1.52 1.04 136.15
CSA Coast Savings Financial 1.28 106.68 1.4 28.54 1.37 65.7
CSBF CSB Financial Group Inc. NA NA NA NA 0.57 57.14
CTZN CitFed Bancorp Inc. 0.41 230.97 0.41 6.37 0.95 143.79
CVAL Chester Valley Bancorp Inc. 0.29 381.68 0.23 2.76 1.10 381.68
DCBI Delphos Citizens Bancorp Inc. 0.47 27.76 0.35 1.22 0.13 27.76
DIBK Dime Financial Corp. 0.72 437.39 0.38 4.75 3.17 355.33
DIME Dime Community Bancorp Inc. 1.05 136.45 0.73 5.01 1.43 112.22
DME Dime Bancorp Inc. 2.47 34.61 1.57 29.82 0.85 31.98
DNFC D & N Financial Corp. 0.34 274.04 0.34 6.18 0.93 198.09
DSL Downey Financial Corp. 0.76 75.59 0.95 13.71 0.58 55.76
EBSI Eagle Bancshares 1.12 84.96 1.07 12.84 0.95 63.66
EFBC Empire Federal Bancorp Inc. 0.00 NM 0.00 0.00 0.46 312.50
EFBI Enterprise Federal Bancorp 0.05 576.09 0.03 0.29 0.29 576.09
EGFC Eagle Financial Corp. 0.50 172.38 0.52 7.52 0.86 94.68
EGLB Eagle BancGroup Inc. 1.59 47.98 1.48 12.48 0.76 35.83
EIRE Emerald Isle Bancorp Inc. 0.53 167.57 0.40 5.69 0.89 151.40
EMLD Emerald Financial Corp. 0.11 317.94 0.14 1.83 0.35 106.84
EQSB Equitable Federal Savings Bank 0.01 NM 0.15 2.99 0.26 36.72
ESBK Elmira Savings Bank (The) 0.49 172.63 0.65 10.39 0.85 97.39
ESX Essex Bancorp Inc. 1.61 83.19 2.42 29.70 1.34 42.63
ETFS East Texas Financial Services 0.30 169.14 0.17 0.94 0.50 141.97
FAB FirstFed America Bancorp Inc. 0.40 274.23 0.40 3.33 1.10 235.98
FBBC First Bell Bancorp Inc. 0.07 182.86 0.07 0.69 0.13 147.42
FBCI Fidelity Bancorp Inc. 1.00 22.38 0.80 7.74 0.22 21.76
FBCV 1ST Bancorp 1.21 54.29 0.94 11.33 0.66 45.77
FBER 1st Bergen Bancorp 1.76 141.84 0.83 5.87 2.50 129.82
FBHC Fort Bend Holding Corp. 0.70 147.02 0.37 6.18 1.03 141.08
FBNW FirstBank Corp. 2.22 35.35 2.07 28.23 0.78 31.12
FBSI First Bancshares Inc. 0.04 845.61 0.10 0.77 0.36 52.51
FCB Falmouth Co-Operative Bank 0.12 806.45 0.07 0.28 0.98 806.45
FCBF FCB Financial Corp. 0.17 479.37 0.15 1.05 0.82 412.16
FCME First Coastal Corp. 2.68 94.15 1.95 21.18 2.52 85.72
FDEF First Defiance Financial 0.52 108.45 0.45 2.12 0.57 96.96
FED FirstFed Financial Corp. 1.41 173.96 1.39 28.83 2.46 134.39
FESX First Essex Bancorp Inc. 0.77 186.66 0.56 8.08 1.43 146.94
FFBA First Colorado Bancorp Inc. 0.20 191.75 0.23 1.76 0.38 121.82
FFBH First Federal Bancshares of AR 0.20 147.56 0.19 1.29 0.30 119.50
FFBI First Financial Bancorp Inc. 0.61 149.25 0.39 4.55 0.91 147.92
FFBS FFBS BanCorp Inc. 0.04 NM 0.03 0.16 0.62 118.76
FFBZ First Federal Bancorp Inc. 0.55 182.67 0.47 6.27 1.01 163.59
FFCH First Financial Holdings Inc. 1.02 82.01 1.61 26.42 0.84 41.99
FFDB FirstFed Bancorp Inc. 0.40 146.03 0.72 7.62 0.59 49.36
FFDF FFD Financial Corp. 0.01 NM 0.00 0.01 0.27 NM
FFED Fidelity Federal Bancorp 0.11 748.74 0.12 2.30 0.85 455.75
FFES First Federal of East Hartford 1.62 87.96 0.31 4.86 1.42 71.33
FFFC FFVA Financial Corp. 0.30 327.95 0.18 1.38 0.98 318.63
FFFD North Central Bancshares Inc. 0.08 NM 0.12 0.53 1.19 814.90
FFFG F.F.O. Financial Group Inc. 3.86 62.23 3.28 48.79 2.40 52.54
FFFL Fidelity Bankshares Inc. (MHC) 0.38 75.03 0.34 4.01 0.29 62.82
FFHC First Financial Corp. 0.32 201.44 0.26 3.65 0.64 148.86
FFHH FSF Financial Corp. 0.02 NM 0.03 0.31 0.34 636.64
FFHS First Franklin Corporation 0.60 104.00 0.41 4.52 0.62 82.31
FFIC Flushing Financial Corp. 0.46 252.00 0.29 1.85 1.15 223.21
FFKY First Federal Financial Corp. 0.00 NM 0.23 1.68 0.52 71.13
</TABLE>
<TABLE>
<CAPTION>
PROFITABILITY AS OF THE MOST RECENT QUARTER
-------------------------------------------
RETURN ON RETURN ON
AVG ASSETS AVG EQUITY
TICKER SHORT NAME (%) (%)
- --------------------------------------- -------------------------------------------
<S> <C> <C> <C>
CMRN Cameron Financial Corp 1.26 5.63
CMSB Commonwealth Bancorp Inc. 0.65 6.88
CMSV Community Savings FA (MHC) 0.80 7.12
CNIT CENIT Bancorp Inc. 0.88 12.22
CNSB CNS Bancorp Inc. 0.88 3.52
CNY Carver Bancorp Inc. 0.30 3.61
COFI Charter One Financial 1.28 18.85
CONE Conestoga Bancorp, Inc. 0.60 3.72
COOP Cooperative Bankshares Inc. 0.62 8.17
CRZY Crazy Woman Creek Bancorp 1.31 4.92
CSA Coast Savings Financial 0.56 11.46
CSBF CSB Financial Group Inc. 0.43 1.71
CTZN CitFed Bancorp Inc. 0.89 13.89
CVAL Chester Valley Bancorp Inc. 0.94 11.13
DCBI Delphos Citizens Bancorp Inc. 1.68 5.91
DIBK Dime Financial Corp. 1.97 25.26
DIME Dime Community Bancorp Inc. 0.84 57.03
DME Dime Bancorp Inc. 0.56 10.67
DNFC D & N Financial Corp. 0.91 16.08
DSL Downey Financial Corp. 0.59 8.24
EBSI Eagle Bancshares 0.77 8.97
EFBC Empire Federal Bancorp Inc. 1.54 4.14
EFBI Enterprise Federal Bancorp 0.85 6.97
EGFC Eagle Financial Corp. (0.88) (12.36)
EGLB Eagle BancGroup Inc. 0.39 3.30
EIRE Emerald Isle Bancorp Inc. 0.93 13.23
EMLD Emerald Financial Corp. 1.02 13.66
EQSB Equitable Federal Savings Bank 0.70 13.94
ESBK Elmira Savings Bank (The) 0.44 6.99
ESX Essex Bancorp Inc. 0.84 10.18
ETFS East Texas Financial Services 0.68 3.66
FAB FirstFed America Bancorp Inc. 0.66 5.35
FBBC First Bell Bancorp Inc. 1.07 11.07
FBCI Fidelity Bancorp Inc. 0.84 8.12
FBCV 1ST Bancorp 0.79 9.73
FBER 1st Bergen Bancorp 0.85 5.57
FBHC Fort Bend Holding Corp. 0.68 11.04
FBNW FirstBank Corp. 0.62 8.08
FBSI First Bancshares Inc. 1.02 7.35
FCB Falmouth Co-Operative Bank 0.75 3.09
FCBF FCB Financial Corp. 0.69 4.45
FCME First Coastal Corp. 0.93 10.01
FDEF First Defiance Financial 1.10 5.15
FED FirstFed Financial Corp. 0.51 10.76
FESX First Essex Bancorp Inc. 0.84 11.88
FFBA First Colorado Bancorp Inc. 1.20 9.33
FFBH First Federal Bancshares of AR 1.00 6.50
FFBI First Financial Bancorp Inc. (0.86) (10.59)
FFBS FFBS BanCorp Inc. 1.17 6.06
FFBZ First Federal Bancorp Inc. 1.23 16.30
FFCH First Financial Holdings Inc. 0.88 14.38
FFDB FirstFed Bancorp Inc. 0.98 10.05
FFDF FFD Financial Corp. 0.90 3.61
FFED Fidelity Federal Bancorp 0.84 16.26
FFES First Federal of East Hartford 0.58 9.17
FFFC FFVA Financial Corp. 1.39 10.68
FFFD North Central Bancshares Inc. 1.86 7.86
FFFG F.F.O. Financial Group Inc. 0.90 13.04
FFFL Fidelity Bankshares Inc. (MHC) 0.61 7.07
FFHC First Financial Corp. 1.37 19.44
FFHH FSF Financial Corp. 0.88 7.64
FFHS First Franklin Corporation 0.78 8.74
FFIC Flushing Financial Corp. 1.01 6.49
FFKY First Federal Financial Corp. 1.68 12.28
</TABLE>
<PAGE> 107
Page 11 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
CAPITAL AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------------------
TANGIBLE INTANGIBLE REGULATORY EQUITY + TOTAL CAPITAL/
EQUITY/ EQUITY/ ASSETS/ CORE CAP/ RESERVES/ RISK ADJUSTED
ASSETS TANG ASSETS EQUITY ASSETS ASSETS ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%)
- --------------------------------------- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FFLC FFLC Bancorp Inc. 13.48 13.48 0.00 10.90 13.79 23.10
FFOH Fidelity Financial of Ohio 12.94 11.60 11.74 9.90 13.25 19.30
FFPB First Palm Beach Bancorp Inc. 6.57 6.42 2.45 7.47 6.98 14.77
FFSL First Independence Corp. 10.43 10.43 0.00 8.33 11.03 19.44
FFSX First Fed SB of Siouxland(MHC) 8.29 8.23 0.84 8.25 8.68 17.00
FFWC FFW Corp. 9.52 8.66 9.89 6.62 9.84 12.71
FFWD Wood Bancorp Inc. 12.30 12.30 0.00 8.71 12.65 15.20
FFYF FFY Financial Corp. 13.71 13.71 0.00 9.56 14.21 17.04
FGHC First Georgia Holding Inc. 8.22 7.59 8.23 8.21 8.85 10.29
FIBC Financial Bancorp Inc. 9.36 9.32 0.50 7.32 9.85 18.86
FISB First Indiana Corporation 9.56 9.46 1.23 8.73 10.93 12.48
FKFS First Keystone Financial 7.31 7.31 0.00 7.33 7.80 16.92
FKKY Frankfort First Bancorp Inc. 17.18 17.18 0.00 25.88 17.26 50.81
FLAG FLAG Financial Corp. 9.58 9.58 0.00 9.07 11.62 14.30
FLFC First Liberty Financial Corp. 7.37 6.69 9.87 6.50 8.26 11.48
FLGS Flagstar Bancorp Inc. 7.23 NA NA 7.19 7.51 13.35
FLKY First Lancaster Bancshares 34.24 34.24 0.00 31.06 34.49 58.13
FMBD First Mutual Bancorp Inc. 12.84 10.04 24.24 18.95 13.18 19.61
FMCO FMS Financial Corporation 6.56 6.45 1.75 7.51 7.07 16.23
FMSB First Mutual Savings Bank 6.83 6.83 0.00 6.90 7.85 11.94
FNGB First Northern Capital Corp. 11.27 11.27 0.00 10.37 11.75 17.14
FOBC Fed One Bancorp 11.07 10.61 4.64 9.87 11.47 24.43
FPRY First Financial Bancorp 6.35 6.35 0 6.20 7.00 10.80
FRC First Republic Bancorp 7.17 7.17 0.07 7.16 8.00 14.12
FSBI Fidelity Bancorp Inc. 6.75 6.75 0.00 9.17 7.25 18.91
FSFC First Southeast Financial Corp 10.23 10.23 0.00 9.87 10.62 20.76
FSLA First Savings Bank (MHC) 9.42 8.49 10.82 8.46 9.98 21.7
FSNJ Bayonne Bancshares Inc. 8.42 8.42 0.00 8.85 8.95 26.48
FSPG First Home Bancorp Inc. 6.66 6.56 1.65 6.46 7.39 17.00
FSPT FirstSpartan Financial Corp. 11.81 11.81 0.00 11.80 12.24 20.30
FSSB First FS&LA of San Bernardino 4.33 4.18 3.63 4.29 5.38 8.52
FSTC First Citizens Corp. 9.73 7.73 22.25 7.98 10.86 11.82
FTF Texarkana First Financial Corp 15.70 15.70 0.00 15.69 16.37 26.24
FTFC First Federal Capital Corp. 6.44 6.08 5.91 NA 6.94 NA
FTNB Fulton Bancorp Inc. 25.01 25.01 0.00 16.40 25.87 29.40
FTSB Fort Thomas Financial Corp. 16.04 16.04 0.00 14.90 16.53 23.90
FWWB First SB of Washington Bancorp 14.23 13.29 7.64 13.65 14.88 24.77
GAF GA Financial Inc. 15.18 15.04 1.04 13.10 15.34 37.00
GBCI Glacier Bancorp Inc. 9.74 9.51 2.61 9.78 10.35 16.85
GDVS Greater Delaware Valley (MHC) 11.57 11.57 0.00 11.83 12.77 26.80
GDW Golden West Financial 6.37 6.37 0.00 6.13 6.93 13.30
GFCO Glenway Financial Corp. 9.49 9.37 1.35 8.50 9.77 13.40
GFED Guaranty Federal SB (MHC) 13.78 13.78 0.00 13.00 14.87 23.32
GFSB GFS Bancorp Inc. 11.45 11.45 0.00 NA 12.15 NA
GOSB GSB Financial Corp. 8.11 8.11 0.00 NA NA NA
GPT GreenPoint Financial Corp. 10.31 6.07 43.78 6.66 11.11 15.17
GRTR Greater New York Savings Bank 8.40 8.40 0.00 NA 9.05 NA
GSB Golden State Bancorp Inc. 6.24 5.66 9.83 5.67 7.25 11.17
GSBC Great Southern Bancorp Inc. 8.53 8.53 0.00 7.70 10.72 11.60
GSFC Green Street Financial Corp. 36.25 36.25 0.00 36.25 36.39 85.91
GSLA GS Financial Corp. 45.64 45.64 0.00 34.82 45.95 108.27
GTFN Great Financial Corporation 9.23 8.88 4.24 7.82 9.71 17.75
GTPS Great American Bancorp 21.44 21.44 0.00 16.78 21.76 29.53
GUPB GFSB Bancorp Inc. 16.30 16.30 0.00 NA 16.66 NA
GWBC Gateway Bancorp Inc. 27.04 27.04 0.00 24.70 27.17 80.20
HALL Hallmark Capital Corp. 7.24 7.24 0.00 6.47 7.67 11.98
HARB Harbor Florida Bancorp (MHC) 8.39 8.14 3.31 7.04 9.41 14.77
HARL Harleysville Savings Bank 6.53 6.53 0.00 6.56 7.09 13.73
HARS Harris Savings Bank (MHC) 8.01 7.08 12.52 6.80 8.43 13.73
HAVN Haven Bancorp Inc. 5.95 5.93 0.36 6.71 6.58 14.69
HBBI Home Building Bancorp 12.81 12.81 0.00 9.97 13.00 20.97
HBEI Home Bancorp of Elgin Inc. 26.70 26.70 0.00 20.27 26.98 39.45
HBFW Home Bancorp 13.29 13.29 0.00 10.18 13.70 22.3
HBNK Highland Federal Bank FSB 7.47 7.47 0.00 7.52 9.17 11.53
</TABLE>
<TABLE>
<CAPTION>
ASSET QUALITY AS OF THE MOST RECENT QUARTER
-----------------------------------------------------------
NPLS/ RESERVES/ NPAS/ NPAS/ RESERVES/ RESERVES/
LOANS NPLS ASSETS EQUITY LOANS NPAS + 90
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- --------------------------------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FFLC FFLC Bancorp Inc. 0.18 241.01 0.19 1.40 0.44 163.65
FFOH Fidelity Financial of Ohio 0.10 381.04 0.08 0.62 0.37 381.04
FFPB First Palm Beach Bancorp Inc. 0.94 63.50 0.70 10.72 0.60 55.75
FFSL First Independence Corp. 0.49 187.11 0.37 3.59 0.91 69.37
FFSX First Fed SB of Siouxland(MHC) 0.07 742.15 0.05 0.62 0.52 342.10
FFWC FFW Corp. 0.22 230.65 0.16 1.64 0.50 203.56
FFWD Wood Bancorp Inc. 0.00 NM 0.02 0.15 0.44 143.64
FFYF FFY Financial Corp. 0.86 74.18 0.67 4.86 0.64 74.18
FGHC First Georgia Holding Inc. 1.48 50.53 1.41 17.21 0.75 20.52
FIBC Financial Bancorp Inc. 1.62 54.85 1.71 18.29 0.89 26.91
FISB First Indiana Corporation 1.48 109.61 1.50 15.64 1.62 91.12
FKFS First Keystone Financial 1.75 47.78 1.60 21.90 0.84 30.58
FKKY Frankfort First Bancorp Inc. 0.00 NM 0.00 0.00 0.08 86.21
FLAG FLAG Financial Corp. 5.79 50.24 4.27 44.56 2.91 47.62
FLFC First Liberty Financial Corp. 0.75 172.78 0.81 10.97 1.29 110.00
FLGS Flagstar Bancorp Inc. 2.95 10.70 3.41 47.23 0.32 8.26
FLKY First Lancaster Bancshares 0.53 54.35 0.45 1.33 0.29 32.89
FMBD First Mutual Bancorp Inc. 0.09 512.64 0.10 0.78 0.46 187.34
FMCO FMS Financial Corporation 1.34 68.51 1.06 16.16 0.92 48.60
FMSB First Mutual Savings Bank 0.00 NM 0.00 0.00 1.27 NM
FNGB First Northern Capital Corp. 0.05 NM 0.06 0.53 0.53 798.69
FOBC Fed One Bancorp 0.29 316.70 0.15 1.37 0.93 101.18
FPRY First Financial Bancorp NA NA NA NA 0.84 NA
FRC First Republic Bancorp 1.00 93.61 1.01 14.08 0.94 69.68
FSBI Fidelity Bancorp Inc. 0.57 176.30 0.31 4.65 1.01 112.57
FSFC First Southeast Financial Corp 0.10 476.73 0.11 1.05 0.50 362.15
FSLA First Savings Bank (MHC) 0.93 113.54 0.65 6.87 1.06 83.02
FSNJ Bayonne Bancshares Inc. NA NA NA NA 1.36 43.59
FSPG First Home Bancorp Inc. 0.96 144.92 0.64 9.55 1.39 114.23
FSPT FirstSpartan Financial Corp. NA NA NA NA 0.49 NA
FSSB First FS&LA of San Bernardino 1.43 102.26 2.31 53.29 1.47 45.41
FSTC First Citizens Corp. 1.30 112.66 NA NA 1.47 NA
FTF Texarkana First Financial Corp 0.00 NM 0.12 0.77 0.79 145.12
FTFC First Federal Capital Corp. 0.11 569.72 NA NA 0.65 NA
FTNB Fulton Bancorp Inc. 0.71 141.38 0.81 3.24 1.01 106.69
FTSB Fort Thomas Financial Corp. 1.54 34.90 1.42 8.85 0.54 32.73
FWWB First SB of Washington Bancorp 0.27 366.82 0.29 2.02 0.97 215.39
GAF GA Financial Inc. 0.32 132.49 0.12 0.80 0.43 132.49
GBCI Glacier Bancorp Inc. 0.14 623.92 0.12 1.26 0.85 229.89
GDVS Greater Delaware Valley (MHC) 1.63 118.86 2.51 21.73 1.93 43.15
GDW Golden West Financial 1.37 49.50 1.31 20.50 0.68 42.43
GFCO Glenway Financial Corp. 0.12 288.73 0.11 1.2 0.34 91.62
GFED Guaranty Federal SB (MHC) 0.50 273.84 0.50 3.66 1.36 216.62
GFSB GFS Bancorp Inc. NA NA NA NA 0.82 NA
GOSB GSB Financial Corp. NA NA NA NA NA NA
GPT GreenPoint Financial Corp. 4.37 29.69 2.89 28.03 1.30 27.84
GRTR Greater New York Savings Bank 18.46 9.25 7.52 89.53 1.71 NA
GSB Golden State Bancorp Inc. 1.42 95.56 1.46 23.32 1.36 69.38
GSBC Great Southern Bancorp Inc. 1.32 197.01 1.91 22.42 2.59 114.73
GSFC Green Street Financial Corp. 0.22 83.63 0.16 0.44 0.18 83.63
GSLA GS Financial Corp. 0.00 NM 0.01 0.02 0.84 293.18
GTFN Great Financial Corporation 0.45 161.27 0.36 3.87 0.72 15.68
GTPS Great American Bancorp 0.02 NM 0.01 0.07 0.44 140.69
GUPB GFSB Bancorp Inc. 0.34 199.36 0.18 1.1 0.69 199.36
GWBC Gateway Bancorp Inc. 2.09 18.37 0.76 2.81 0.38 14.14
HALL Hallmark Capital Corp. 0.22 296.63 0.15 2.07 0.64 273.18
HARB Harbor Florida Bancorp (MHC) 0.27 512.26 0.46 5.47 1.37 222.68
HARL Harleysville Savings Bank 0.00 NM 0.00 0.00 0.77 NM
HARS Harris Savings Bank (MHC) 0.61 158.94 0.62 7.73 0.97 64.15
HAVN Haven Bancorp Inc. 1.19 96.49 0.74 12.38 1.15 86.28
HBBI Home Building Bancorp 0.61 47.98 0.38 3.00 0.29 47.98
HBEI Home Bancorp of Elgin Inc. 0.43 82.78 0.41 1.53 0.36 69.84
HBFW Home Bancorp 0.00 NM 0.00 0.00 0.51 835.54
HBNK Highland Federal Bank FSB 3.38 63.08 3.09 41.33 2.13 55
</TABLE>
<TABLE>
<CAPTION>
PROFITABILITY AS OF THE MOST RECENT QUARTER
-------------------------------------------
RETURN ON RETURN ON
AVG ASSETS AVG EQUITY
TICKER SHORT NAME (%) (%)
- --------------------------------------- -------------------------------------------
<S> <C> <C> <C>
FFLC FFLC Bancorp Inc. 0.96 6.91
FFOH Fidelity Financial of Ohio 0.94 7.20
FFPB First Palm Beach Bancorp Inc. 0.58 8.73
FFSL First Independence Corp. 0.64 6.17
FFSX First Fed SB of Siouxland(MHC) 0.73 8.88
FFWC FFW Corp. 0.94 9.50
FFWD Wood Bancorp Inc. 1.44 11.53
FFYF FFY Financial Corp. 1.34 9.70
FGHC First Georgia Holding Inc. 1.00 11.97
FIBC Financial Bancorp Inc. 0.97 10.07
FISB First Indiana Corporation 1.07 11.04
FKFS First Keystone Financial 0.86 11.94
FKKY Frankfort First Bancorp Inc. (2.55) (10.73)
FLAG FLAG Financial Corp. 0.92 9.95
FLFC First Liberty Financial Corp. 1.11 14.89
FLGS Flagstar Bancorp Inc. 1.30 20.55
FLKY First Lancaster Bancshares 1.48 4.15
FMBD First Mutual Bancorp Inc. 0.42 3.25
FMCO FMS Financial Corporation 1.05 16.37
FMSB First Mutual Savings Bank 1.03 15.30
FNGB First Northern Capital Corp. 0.93 8.16
FOBC Fed One Bancorp 0.93 8.36
FPRY First Financial Bancorp 0.43 6.80
FRC First Republic Bancorp 0.79 10.65
FSBI Fidelity Bancorp Inc. 0.76 11.08
FSFC First Southeast Financial Corp 1.08 10.56
FSLA First Savings Bank (MHC) 0.95 10.25
FSNJ Bayonne Bancshares Inc. 0.57 6.79
FSPG First Home Bancorp Inc. 0.88 13.22
FSPT FirstSpartan Financial Corp. 1.08 9.13
FSSB First FS&LA of San Bernardino (0.12) (2.83)
FSTC First Citizens Corp. 3.88 41.13
FTF Texarkana First Financial Corp 1.87 11.77
FTFC First Federal Capital Corp. 1.10 16.88
FTNB Fulton Bancorp Inc. 0.91 3.65
FTSB Fort Thomas Financial Corp. 1.38 8.60
FWWB First SB of Washington Bancorp 1.26 8.64
GAF GA Financial Inc. 1.11 7.03
GBCI Glacier Bancorp Inc. 1.64 17.10
GDVS Greater Delaware Valley (MHC) 0.88 7.66
GDW Golden West Financial 0.90 14.24
GFCO Glenway Financial Corp. 0.83 8.67
GFED Guaranty Federal SB (MHC) 1.02 7.41
GFSB GFS Bancorp Inc. 1.37 11.88
GOSB GSB Financial Corp. 0.40 4.05
GPT GreenPoint Financial Corp. 1.07 10.04
GRTR Greater New York Savings Bank 0.74 8.84
GSB Golden State Bancorp Inc. 0.62 9.64
GSBC Great Southern Bancorp Inc. 1.72 20.30
GSFC Green Street Financial Corp. 1.66 4.85
GSLA GS Financial Corp. 1.78 3.75
GTFN Great Financial Corporation 1.05 11.40
GTPS Great American Bancorp 0.56 2.64
GUPB GFSB Bancorp Inc. 0.81 4.76
GWBC Gateway Bancorp Inc. 0.96 3.60
HALL Hallmark Capital Corp. 0.72 10.13
HARB Harbor Florida Bancorp (MHC) 1.23 14.86
HARL Harleysville Savings Bank 1.09 16.89
HARS Harris Savings Bank (MHC) 1.04 12.80
HAVN Haven Bancorp Inc. 0.53 8.83
HBBI Home Building Bancorp 0.77 6.09
HBEI Home Bancorp of Elgin Inc. 0.81 2.92
HBFW Home Bancorp 0.89 6.61
HBNK Highland Federal Bank FSB 1.10 14.97
</TABLE>
<PAGE> 108
Page 12 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
CAPITAL AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------------------
TANGIBLE INTANGIBLE REGULATORY EQUITY + TOTAL CAPITAL/
EQUITY/ EQUITY/ ASSETS/ CORE CAP/ RESERVES/ RISK ADJUSTED
ASSETS TANG ASSETS EQUITY ASSETS ASSETS ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%)
- --------------------------------------- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
HBS Haywood Bancshares Inc. 13.93 13.50 3.60 13.55 14.42 27.27
HCBB HCB Bancshares Inc. 7.76 7.01 10.40 NA 8.55 NA
HCFC Home City Financial Corp. 20.61 20.61 0.00 15.59 21.29 29.31
HEMT HF Bancorp Inc. 8.23 NA NA 6.36 NA 16.55
HFFB Harrodsburg First Fin Bancorp 26.92 26.92 0.00 21.10 27.21 43.05
HFFC HF Financial Corp. 9.43 9.43 0.01 7.57 10.24 12.87
HFGI Harrington Financial Group 5.59 5.59 0.00 6.96 5.64 31.14
HFNC HFNC Financial Corp. 17.99 17.99 0.00 18.85 18.84 36.68
HFSA Hardin Bancorp Inc. 12.48 12.48 0.00 10.73 12.64 27.53
HHFC Harvest Home Financial Corp. 11.81 11.81 0.00 NA 11.95 NA
HIFS Hingham Instit. for Savings 9.36 9.36 0.00 9.83 10.03 15.67
HMCI HomeCorp Inc. 6.54 6.54 0.00 4.99 7.02 8.28
HMLK Hemlock Federal Financial Corp 18.34 18.34 0.00 12.75 18.79 39.21
HMNF HMN Financial Inc. 14.43 14.43 0.00 10.95 14.87 25.46
HOMF Home Federal Bancorp 8.48 8.24 3.10 8.07 9.02 12.06
HPBC Home Port Bancorp Inc. 10.56 10.56 0.00 10.56 11.84 18.20
HRBF Harbor Federal Bancorp Inc. 12.89 12.89 0.00 11.61 13.08 25.51
HRZB Horizon Financial Corp. 15.60 15.60 0.00 15.38 16.26 30.39
HTHR Hawthorne Financial Corp. 5.94 5.94 0.00 7.21 7.37 11.67
HVFD Haverfield Corp. 8.54 8.54 0.00 7.31 9.40 11.27
HWEN Home Financial Bancorp 16.93 16.93 0.00 14.14 17.47 25.02
HZFS Horizon Financial Svcs Corp. 9.79 9.79 0.00 7.40 10.10 14.43
IBSF IBS Financial Corp. 17.40 17.40 0.00 17.00 17.55 62.94
IFSB Independence Federal Svgs Bank 6.88 6.14 11.58 6.11 7.08 14.94
INBI Industrial Bancorp 17.70 17.70 0.00 16.11 18.18 31.50
INCB Indiana Community Bank SB 12.39 12.39 0.00 12.38 12.95 19.00
IPSW Ipswich Savings Bank 5.71 5.71 0.00 5.66 6.58 12.57
ISBF ISB Financial Corporation 12.04 10.43 14.93 10.21 12.56 20.04
ITLA ITLA Capital Corp. 10.99 10.95 0.41 10.60 12.23 13.40
IWBK InterWest Bancorp Inc. 6.78 6.64 2.15 6.79 7.25 NA
JOAC Joachim Bancorp Inc. 28.16 28.16 0.00 23.10 28.38 46.20
JSB JSB Financial Inc. 22.85 22.85 0.00 NA 23.22 NA
JSBA Jefferson Savings Bancorp 8.54 6.75 22.42 7.03 9.18 13.20
JXSB Jacksonville Savings Bk (MHC) 10.49 10.49 0.00 10.22 10.98 15.17
JXVL Jacksonville Bancorp Inc. 14.92 14.92 0.00 13.77 NA 27.9
KFBI Klamath First Bancorp 19.55 19.55 0.00 16.77 19.72 35.32
KNK Kankakee Bancorp Inc. 11.09 10.49 6.01 8.83 11.72 16.32
KSAV KS Bancorp Inc. 13.52 13.52 0.05 NA 13.81 13.18
KSBK KSB Bancorp Inc. 7.18 6.81 5.43 6.87 7.95 11.15
KYF Kentucky First Bancorp Inc. 16.55 16.55 0.00 14.74 16.97 27.84
LARK Landmark Bancshares Inc. 13.79 13.79 0.00 12.15 14.18 26.59
LARL Laurel Capital Group Inc. 10.03 10.03 0.00 9.91 10.95 20.61
LFBI Little Falls Bancorp Inc. 13.27 12.39 7.63 9.00 13.63 27.17
LFCO Life Financial Corp. 21.38 21.38 0.00 7.47 22.20 18.61
LFED Leeds Federal Savings Bk (MHC) 16.18 16.18 0.00 15.91 16.37 35.48
LIFB Life Bancorp Inc. 10.55 10.28 2.86 8.70 11.20 21.38
LISB Long Island Bancorp Inc. 8.99 8.91 0.98 7.5 9.56 15.57
LOGN Logansport Financial Corp. 19.19 19.19 0.00 19.26 19.47 35.88
LONF London Financial Corporation 19.66 19.66 0.00 15.60 20.15 30.10
LSBI LSB Financial Corp. 8.85 8.85 0.00 8.15 9.60 11.12
LSBX Lawrence Savings Bank 8.69 8.69 0.00 9.07 9.68 17.71
LVSB Lakeview Financial 9.52 7.76 20.04 7.60 10.17 14.50
LXMO Lexington B&L Financial Corp. 28.32 28.32 0.00 23.30 28.69 44.10
MAFB MAF Bancorp Inc. 7.78 6.87 12.61 7.00 8.33 14.84
MARN Marion Capital Holdings 22.54 22.54 0.00 20.56 23.71 32.25
MASB MASSBANK Corp. 10.64 10.64 0.00 10.06 10.88 35.44
MBB MSB Bancorp Inc. 8.92 5.36 42.21 5.76 9.20 12.94
MBBC Monterey Bay Bancorp Inc. 11.33 10.54 7.81 8.88 11.70 18.89
MBLF MBLA Financial Corp. 12.15 12.15 0.00 11.19 12.42 31.65
MBSP Mitchell Bancorp Inc. 43.36 43.36 0.00 33.26 43.89 57.90
MCBN Mid-Coast Bancorp Inc. 8.60 8.60 0.00 8.34 9.12 14.69
MCBS Mid Continent Bancshares Inc. 9.39 9.39 0.00 8.52 9.49 22.60
MDBK Medford Savings Bank 8.99 8.43 6.82 8.54 9.64 16.03
MECH Mechanics Savings Bank 10.23 10.23 0.00 NA 11.95 18.71
</TABLE>
<TABLE>
<CAPTION>
ASSET QUALITY AS OF THE MOST RECENT QUARTER
-----------------------------------------------------------
NPLS/ RESERVES/ NPAS/ NPAS/ RESERVES/ RESERVES/
LOANS NPLS ASSETS EQUITY LOANS NPAS + 90
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- --------------------------------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
HBS Haywood Bancshares Inc. 1.04 62.25 1.97 14.13 0.65 24.62
HCBB HCB Bancshares Inc. NA NA NA NA 1.47 NA
HCFC Home City Financial Corp. 0.79 110.38 0.62 3.02 0.87 110.38
HEMT HF Bancorp Inc. NA NA NA NA NA NA
HFFB Harrodsburg First Fin Bancorp 0.00 NM 0.00 0.00 0.38 59.81
HFFC HF Financial Corp. 0.28 361.50 0.33 3.50 1.01 244.25
HFGI Harrington Financial Group 0.36 63.39 0.25 4.50 0.23 18.93
HFNC HFNC Financial Corp. 1.05 109.34 0.87 4.86 1.14 97.22
HFSA Hardin Bancorp Inc. 0.18 179.21 0.09 0.75 0.32 179.21
HHFC Harvest Home Financial Corp. 0.22 117 0.11 0.97 0.26 117
HIFS Hingham Instit. for Savings 0.54 165.13 0.41 4.38 0.89 165.13
HMCI HomeCorp Inc. 0.1 587.36 2.91 44.5 0.59 14.24
HMLK Hemlock Federal Financial Corp 0.00 NM 0.00 0.00 1.30 NM
HMNF HMN Financial Inc. 0.11 662.83 0.08 0.57 0.71 531.97
HOMF Home Federal Bancorp 0.50 124.50 0.45 5.30 0.62 117.33
HPBC Home Port Bancorp Inc. 0.00 NM 0.00 0.00 1.56 NM
HRBF Harbor Federal Bancorp Inc. 0.07 379.63 0.05 0.39 0.28 379.63
HRZB Horizon Financial Corp. 0.00 NM 0.00 0.00 0.84 NM
HTHR Hawthorne Financial Corp. 6.10 27.42 7.17 120.79 1.67 19.99
HVFD Haverfield Corp. 1.19 83.08 1.04 12.16 0.99 82.48
HWEN Home Financial Bancorp 1.63 41.18 1.74 10.25 0.67 31.3
HZFS Horizon Financial Svcs Corp. 0.89 57.78 0.96 9.81 0.52 25.93
IBSF IBS Financial Corp. 0.30 171.10 0.08 0.48 0.52 171.10
IFSB Independence Federal Svgs Bank 2.39 13.56 2.02 29.30 0.32 9.82
INBI Industrial Bancorp 0.25 217.50 0.22 1.26 0.55 156.98
INCB Indiana Community Bank SB NA NA NA NA 0.71 NA
IPSW Ipswich Savings Bank 1.04 113.11 1.52 26.64 1.18 56.87
ISBF ISB Financial Corporation NA NA NA NA 0.80 NA
ITLA ITLA Capital Corp. 1.09 136.80 1.47 13.4 1.50 84.2
IWBK InterWest Bancorp Inc. 0.43 179.94 0.64 9.40 0.78 73.79
JOAC Joachim Bancorp Inc. 0.25 130.00 0.17 0.61 0.32 109.86
JSB JSB Financial Inc. NA NA NA NA 0.62 NA
JSBA Jefferson Savings Bancorp 0.18 462.46 0.46 5.34 0.84 140.15
JXSB Jacksonville Savings Bk (MHC) 0.75 81.07 0.66 6.32 0.61 72.96
JXVL Jacksonville Bancorp Inc. NA NA 0.78 5.23 NA NA
KFBI Klamath First Bancorp 0.11 213.23 0.08 0.41 0.23 213.23
KNK Kankakee Bancorp Inc. 0.27 344.18 0.61 5.46 0.92 67.06
KSAV KS Bancorp Inc. 0.41 80.53 0.35 2.61 0.33 80.53
KSBK KSB Bancorp Inc. 2.29 44.86 1.75 24.36 1.03 43.20
KYF Kentucky First Bancorp Inc. 0.00 NM 0.00 0.00 0.75 630.51
LARK Landmark Bancshares Inc. 0.07 873.27 0.04 0.32 0.57 123.70
LARL Laurel Capital Group Inc. 0.62 212.35 0.43 4.30 1.31 212.35
LFBI Little Falls Bancorp Inc. 1.93 42.62 0.98 7.39 0.82 33.93
LFCO Life Financial Corp. 1.98 60.20 1.92 8.99 1.19 42.75
LFED Leeds Federal Savings Bk (MHC) 0.03 977.36 0.02 0.12 0.30 977.36
LIFB Life Bancorp Inc. 0.77 191.74 0.39 3.73 1.48 166.43
LISB Long Island Bancorp Inc. 1.46 63.10 1.03 11.50 0.92 55.02
LOGN Logansport Financial Corp. 0.84 45.60 0.61 3.18 0.38 44.88
LONF London Financial Corporation 1.03 61.11 0.80 4.07 0.63 61.11
LSBI LSB Financial Corp. 1.32 63.71 1.17 13.20 0.84 63.71
LSBX Lawrence Savings Bank 0.36 642.25 0.30 3.48 2.29 328.94
LVSB Lakeview Financial 1.44 104.43 0.98 10.34 1.50 66.74
LXMO Lexington B&L Financial Corp. 0.62 78.37 0.48 1.68 0.49 78.37
MAFB MAF Bancorp Inc. 0.53 134.75 0.43 5.50 0.71 120.51
MARN Marion Capital Holdings 0.94 144.01 0.81 3.61 1.35 144.01
MASB MASSBANK Corp. 0.46 191.35 0.16 1.55 0.87 149.80
MBB MSB Bancorp Inc. 1.14 54.87 0.71 7.97 0.63 38.66
MBBC Monterey Bay Bancorp Inc. 0.38 156.67 0.33 2.93 0.60 111.47
MBLF MBLA Financial Corp. 0.45 109.19 0.25 2.02 0.50 109.19
MBSP Mitchell Bancorp Inc. 2.05 30.29 2.03 4.69 0.62 26.19
MCBN Mid-Coast Bancorp Inc. 0.88 70.32 0.73 8.52 0.62 70.32
MCBS Mid Continent Bancshares Inc. 0.25 73.49 0.15 1.55 0.19 71.76
MDBK Medford Savings Bank 0.68 180.05 0.37 4.09 1.22 176.45
MECH Mechanics Savings Bank 1.42 181.81 1.13 11.05 2.58 152.02
</TABLE>
<TABLE>
<CAPTION>
PROFITABILITY AS OF THE MOST RECENT QUARTER
-------------------------------------------
RETURN ON RETURN ON
AVG ASSETS AVG EQUITY
TICKER SHORT NAME (%) (%)
- --------------------------------------- -------------------------------------------
<S> <C> <C> <C>
HBS Haywood Bancshares Inc. 1.12 7.99
HCBB HCB Bancshares Inc. 0.27 3.46
HCFC Home City Financial Corp. 1.04 5.08
HEMT HF Bancorp Inc. (0.50) (6.11)
HFFB Harrodsburg First Fin Bancorp 1.39 5.23
HFFC HF Financial Corp. 1.07 11.34
HFGI Harrington Financial Group 0.37 7.18
HFNC HFNC Financial Corp. 0.94 5.09
HFSA Hardin Bancorp Inc. 0.89 6.93
HHFC Harvest Home Financial Corp. 0.80 6.60
HIFS Hingham Instit. for Savings 1.27 13.18
HMCI HomeCorp Inc. 0.57 8.88
HMLK Hemlock Federal Financial Corp 1.13 6.19
HMNF HMN Financial Inc. 0.95 6.57
HOMF Home Federal Bancorp 1.24 14.60
HPBC Home Port Bancorp Inc. 1.70 15.91
HRBF Harbor Federal Bancorp Inc. 0.74 5.80
HRZB Horizon Financial Corp. 1.54 9.99
HTHR Hawthorne Financial Corp. 1.59 28.95
HVFD Haverfield Corp. 1.06 12.24
HWEN Home Financial Bancorp 0.95 5.34
HZFS Horizon Financial Svcs Corp. 0.48 4.71
IBSF IBS Financial Corp. 0.88 5.09
IFSB Independence Federal Svgs Bank 0.99 14.77
INBI Industrial Bancorp 1.51 8.43
INCB Indiana Community Bank SB 0.60 4.77
IPSW Ipswich Savings Bank 1.23 20.98
ISBF ISB Financial Corporation 0.74 6.16
ITLA ITLA Capital Corp. 1.52 13.13
IWBK InterWest Bancorp Inc. 1.13 16.81
JOAC Joachim Bancorp Inc. 0.93 3.25
JSB JSB Financial Inc. 1.86 8.25
JSBA Jefferson Savings Bancorp 0.83 9.86
JXSB Jacksonville Savings Bk (MHC) 0.56 5.41
JXVL Jacksonville Bancorp Inc. 1.75 11.48
KFBI Klamath First Bancorp 1.16 5.77
KNK Kankakee Bancorp Inc. 0.88 8.16
KSAV KS Bancorp Inc. 1.39 10.15
KSBK KSB Bancorp Inc. 0.98 13.70
KYF Kentucky First Bancorp Inc. 1.17 7.19
LARK Landmark Bancshares Inc. 1.10 7.89
LARL Laurel Capital Group Inc. 1.42 14.00
LFBI Little Falls Bancorp Inc. 0.63 4.75
LFCO Life Financial Corp. 3.45 22.88
LFED Leeds Federal Savings Bk (MHC) 1.23 7.61
LIFB Life Bancorp Inc. 0.89 8.38
LISB Long Island Bancorp Inc. 0.86 9.42
LOGN Logansport Financial Corp. 1.49 7.68
LONF London Financial Corporation 0.85 4.30
LSBI LSB Financial Corp. 0.75 8.44
LSBX Lawrence Savings Bank 1.62 18.78
LVSB Lakeview Financial 1.12 11.44
LXMO Lexington B&L Financial Corp. 1.52 5.43
MAFB MAF Bancorp Inc. 1.25 15.83
MARN Marion Capital Holdings 1.72 7.53
MASB MASSBANK Corp. 1.09 10.54
MBB MSB Bancorp Inc. 0.54 6.07
MBBC Monterey Bay Bancorp Inc. 0.36 3.33
MBLF MBLA Financial Corp. 0.79 6.21
MBSP Mitchell Bancorp Inc. 1.60 3.73
MCBN Mid-Coast Bancorp Inc. 0.75 8.84
MCBS Mid Continent Bancshares Inc. 1.18 11.85
MDBK Medford Savings Bank 1.16 13.14
MECH Mechanics Savings Bank 3.57 36.54
</TABLE>
<PAGE> 109
Page 13 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
CAPITAL AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------------------
TANGIBLE INTANGIBLE REGULATORY EQUITY + TOTAL CAPITAL/
EQUITY/ EQUITY/ ASSETS/ CORE CAP/ RESERVES/ RISK ADJUSTED
ASSETS TANG ASSETS EQUITY ASSETS ASSETS ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%)
- --------------------------------------- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MERI Meritrust Federal SB 8.20 8.20 0.00 8.20 8.51 18.44
METF Metropolitan Financial Corp. 3.96 3.59 9.60 5.56 4.58 8.36
MFBC MFB Corp. 13.65 13.65 0.00 13.00 13.80 27.78
MFCX Marshalltown Financial Corp. 15.74 15.74 0.00 12.12 15.83 33.14
MFFC Milton Federal Financial Corp. 13.14 13.14 0.00 11.08 13.42 24.87
MFLR Mayflower Co-operative Bank 9.68 9.54 1.68 9.68 10.57 16.70
MFSL Maryland Federal Bancorp 8.38 8.29 1.25 7.75 8.78 15.28
MGNL Magna Bancorp Inc. 10.23 9.98 2.68 8.48 11.00 16.90
MIFC Mid-Iowa Financial Corp. 9.35 9.34 0.12 7.57 9.59 19.10
MIVI Mississippi View Holding Co. 18.88 18.88 0.00 15.67 20.11 32.86
MLBC ML Bancorp Inc. 6.98 6.87 1.73 6.18 7.73 14.32
MONT Montgomery Financial Corp. 9.83 9.83 0.00 9.40 10.01 13.80
MRKF Market Financial Corp. 35.00 35.00 0.00 NA 35.09 NA
MSBF MSB Financial Inc. 16.99 16.99 0.00 12.78 17.39 20.88
MSBK Mutual Savings Bank FSB 6.07 6.07 0.00 6.25 6.36 16.23
MWBI Midwest Bancshares Inc. 6.91 6.91 0.00 6.02 7.39 14.46
MWBX MetroWest Bank 7.45 7.45 0.00 7.51 8.60 10.82
MWFD Midwest Federal Financial 8.81 8.52 3.58 7.09 9.60 10.32
NASB North American Savings Bank 7.68 7.44 3.36 7.70 8.52 13.00
NBN Northeast Bancorp 7.76 6.88 12.17 7 8.81 12.2
NBSI North Bancshares Inc. 14.14 14.14 0.00 12.15 14.31 32.31
NEIB Northeast Indiana Bancorp 15.19 15.19 0.00 12.68 15.82 21.49
NHTB New Hampshire Thrift Bncshrs 7.65 6.59 14.83 6.23 8.52 10.64
NMSB NewMil Bancorp Inc. 9.82 9.82 0.00 10.25 11.51 19.85
NSLB NS&L Bancorp Inc. 19.56 19.56 0.00 15.00 19.63 35.10
NSSB Norwich Financial Corp. 11.17 10.19 9.72 10.15 13.11 14.35
NSSY Norwalk Savings Society 7.82 7.59 3.25 7.76 8.86 15.30
NTMG Nutmeg Federal S&LA 8.37 8.37 0.00 8.25 8.86 13.81
NWEQ Northwest Equity Corp. 11.45 11.45 0.00 8.37 11.93 13.68
NWSB Northwest Savings Bank (MHC) 9.49 8.99 5.84 9.17 10.14 18.54
NYB New York Bancorp Inc. 5.08 5.08 0.00 4.75 5.68 11.18
OCFC Ocean Financial Corp. 16.26 16.26 0.00 12.23 16.69 30.90
OCN Ocwen Financial Corp. 8.75 8.39 4.53 9.40 9.64 13.81
OFCP Ottawa Financial Corp. 8.73 7.13 19.76 6.73 9.09 11.10
OHSL OHSL Financial Corp. 11.03 11.03 0.00 9.13 11.25 19.24
PALM Palfed Inc. 8.24 8.24 0.00 7.10 9.32 11.10
PAMM PacificAmerica Money Center 21.57 21.57 0.00 NA 22.95 NA
PBCI Pamrapo Bancorp Inc. 12.74 12.65 0.77 12.49 13.46 27.04
PBCT People's Bank (MHC) 8.48 8.47 0.10 8.5 9.57 13.8
PBHC Oswego City Savings Bk (MHC) 11.73 9.95 16.81 9.70 12.26 17.02
PBKB People's Bancshares Inc. 5.71 5.51 3.79 7.79 6.46 16.62
PCBC Perry County Financial Corp. 19.20 19.20 0.00 16.20 19.23 72.60
PCCI Pacific Crest Capital 7.08 7.08 0.00 7.49 8.11 11.25
PDB Piedmont Bancorp Inc. 16.63 16.63 0.00 15.66 17.28 28.82
PEEK Peekskill Financial Corp. 25.73 25.73 0.00 24.87 26.07 96.81
PERM Permanent Bancorp Inc. 9.16 9.04 1.46 8.20 9.66 20.57
PERT Perpetual Bank (MHC) 11.83 11.83 0.00 10.90 12.42 19.00
PETE Primary Bank 6.93 6.93 0.15 6.82 7.56 13.17
PFDC Peoples Bancorp 15.20 15.20 0.00 12.85 15.51 26.83
PFED Park Bancorp Inc. 22.53 22.53 0.00 17.67 22.81 48.04
PFFB PFF Bancorp Inc. 10.32 10.22 1.06 8.29 11.37 16.26
PFFC Peoples Financial Corp. 27.21 27.21 0.00 20.00 27.44 45.30
PFNC Progress Financial Corp. 5.26 4.68 11.67 6.68 6.02 10.56
PFSB PennFed Financial Services Inc 7.36 6.23 16.36 5.64 7.56 12.22
PFSL Pocahontas FS&LA (MHC) 6.36 6.36 0.00 6.36 6.82 16.56
PHBK Peoples Heritage Finl Group 7.72 6.59 15.73 8.62 8.88 14.36
PHFC Pittsburgh Home Financial Corp 10.92 10.81 1.11 24.02 11.44 10.60
PHSB Peoples Home Savings Bk (MHC) 8.04 8.04 0.00 NA 8.70 NA
PKPS Poughkeepsie Financial Corp. 8.37 8.37 0.00 6.89 9.45 11.95
PLSK Pulaski Savings Bank (MHC) 11.91 11.91 0.00 11.91 12.37 29.15
PMFI Perpetual Midwest Financial 8.53 8.53 0.00 8.00 9.28 12.60
PRBC Prestige Bancorp Inc. 11.13 11.13 0.00 11.29 11.39 24.58
PROV Provident Financial Holdings 13.88 13.88 0.00 9.89 15.04 16.15
PSBK Progressive Bank Inc. 8.55 7.71 10.67 7.58 9.67 14.79
</TABLE>
<TABLE>
<CAPTION>
ASSET QUALITY AS OF THE MOST RECENT QUARTER
-----------------------------------------------------------
NPLS/ RESERVES/ NPAS/ NPAS/ RESERVES/ RESERVES/
LOANS NPLS ASSETS EQUITY LOANS NPAS + 90
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- --------------------------------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MERI Meritrust Federal SB 0.34 173.71 0.22 2.74 0.58 83.87
METF Metropolitan Financial Corp. 0.29 253.69 0.49 12.41 0.74 117.94
MFBC MFB Corp. 0.00 NM 0.00 0.00 0.19 177.07
MFCX Marshalltown Financial Corp. 0.00 NM 0.00 0.00 0.19 NM
MFFC Milton Federal Financial Corp. 0.25 183.01 0.15 1.17 0.46 86.42
MFLR Mayflower Co-operative Bank 1.19 127.05 0.81 8.36 1.52 92.14
MFSL Maryland Federal Bancorp 0.33 139.56 0.44 5.21 0.46 85.38
MGNL Magna Bancorp Inc. 2.00 55.54 2.08 20.31 1.11 26.42
MIFC Mid-Iowa Financial Corp. 0.03 NM 0.02 0.17 0.45 NM
MIVI Mississippi View Holding Co. 0.43 447.15 0.28 1.47 1.91 370.39
MLBC ML Bancorp Inc. 0.89 193.13 0.46 6.57 1.71 163.34
MONT Montgomery Financial Corp. 0.00 NM 0.12 1.18 0.20 20.00
MRKF Market Financial Corp. 0.00 NM 0.00 0.00 0.20 12.24
MSBF MSB Financial Inc. 0.02 NM 0.06 0.36 0.44 61.34
MSBK Mutual Savings Bank FSB 0.21 316.18 0.11 1.75 0.67 272.91
MWBI Midwest Bancshares Inc. 0.74 109.06 0.77 11.1 0.81 63.17
MWBX MetroWest Bank 0.62 239.76 0.70 9.39 1.48 126.64
MWFD Midwest Federal Financial 0.07 NM 0.12 1.35 1.05 658.13
NASB North American Savings Bank 2.97 32.94 3.11 40.56 0.98 27.16
NBN Northeast Bancorp 1.4 94.76 1.37 17.69 1.32 77.15
NBSI North Bancshares Inc. 0.00 NM 0.00 0.00 0.27 NM
NEIB Northeast Indiana Bancorp 0.42 170.55 0.40 2.60 0.71 159.54
NHTB New Hampshire Thrift Bncshrs 0.60 175.73 0.70 9.11 1.05 125.20
NMSB NewMil Bancorp Inc. 1.36 234.19 0.87 8.83 3.18 152.08
NSLB NS&L Bancorp Inc. 0.03 466.67 0.02 0.08 0.13 210.00
NSSB Norwich Financial Corp. 1.49 189.44 1.29 11.52 2.83 151.12
NSSY Norwalk Savings Society 1.88 81.61 1.35 17.25 1.54 NA
NTMG Nutmeg Federal S&LA 0.54 101.63 0.77 9.23 0.55 40.69
NWEQ Northwest Equity Corp. 1.53 38.70 1.25 10.93 0.59 38.04
NWSB Northwest Savings Bank (MHC) 0.67 130.5 0.72 7.55 0.88 90.87
NYB New York Bancorp Inc. 1.67 58.08 1.09 21.47 0.97 48.76
OCFC Ocean Financial Corp. 0.91 94.78 0.55 3.38 0.87 79.68
OCN Ocwen Financial Corp. 1.33 100.26 5.11 58.42 1.34 17.43
OFCP Ottawa Financial Corp. 0.18 230.99 0.16 1.86 0.42 112.76
OHSL OHSL Financial Corp. 0.01 NM 0.01 0.06 0.31 161.25
PALM Palfed Inc. 1.45 90.96 2.12 25.72 1.32 51.22
PAMM PacificAmerica Money Center 2.33 95.13 3.47 16.11 2.22 27.75
PBCI Pamrapo Bancorp Inc. 3.12 41.42 2.14 16.82 1.29 26.1
PBCT People's Bank (MHC) 1.23 130.44 0.9 10.58 1.60 121.39
PBHC Oswego City Savings Bk (MHC) 1.52 60.13 1.17 10.01 0.91 45.83
PBKB People's Bancshares Inc. 1.51 103.99 0.82 14.27 1.57 91.19
PCBC Perry County Financial Corp. 0.00 NM 0.00 0.00 0.19 NM
PCCI Pacific Crest Capital 1.27 132.05 1.29 18.21 1.67 79.26
PDB Piedmont Bancorp Inc. 0.80 99.13 0.65 3.93 0.79 71.58
PEEK Peekskill Financial Corp. 2.33 57.97 0.71 2.75 1.35 27.98
PERM Permanent Bancorp Inc. 2.12 46.62 1.09 11.90 0.99 45.43
PERT Perpetual Bank (MHC) 0.15 570.30 0.12 1.00 0.87 502.32
PETE Primary Bank 0.84 129.30 0.82 11.88 1.08 75.47
PFDC Peoples Bancorp 0.31 121.58 0.34 2.24 0.38 83.87
PFED Park Bancorp Inc. 0.46 160.26 0.21 0.94 0.73 134.41
PFFB PFF Bancorp Inc. 1.94 75.14 1.73 16.78 1.46 59.73
PFFC Peoples Financial Corp. 0.00 NM 0.00 0.00 0.39 NM
PFNC Progress Financial Corp. 0.75 143.11 1.46 27.66 1.08 51.92
PFSB PennFed Financial Services Inc 0.74 37.80 0.59 8.04 0.28 33.53
PFSL Pocahontas FS&LA (MHC) 0.23 481.94 0.10 1.52 1.12 308.72
PHBK Peoples Heritage Finl Group 0.98 170.32 0.83 10.71 1.66 126.66
PHFC Pittsburgh Home Financial Corp 2.07 36.82 1.6 14.64 0.76 32.18
PHSB Peoples Home Savings Bk (MHC) NA NA 0.56 7.02 1.40 NA
PKPS Poughkeepsie Financial Corp. 4.08 35.65 3.81 45.51 1.45 25.28
PLSK Pulaski Savings Bank (MHC) 1.14 71.47 0.65 5.46 0.81 71.47
PMFI Perpetual Midwest Financial 0.47 201.97 0.39 4.63 0.95 185.58
PRBC Prestige Bancorp Inc. 0.44 87.47 0.30 2.71 0.38 85.33
PROV Provident Financial Holdings NA NA NA NA 1.31 NA
PSBK Progressive Bank Inc. 1.01 163.37 0.84 9.86 1.65 131.46
</TABLE>
<TABLE>
<CAPTION>
PROFITABILITY AS OF THE MOST RECENT QUARTER
-------------------------------------------
RETURN ON RETURN ON
AVG ASSETS AVG EQUITY
TICKER SHORT NAME (%) (%)
- --------------------------------------- -------------------------------------------
<S> <C> <C> <C>
MERI Meritrust Federal SB 1.27 15.91
METF Metropolitan Financial Corp. 0.64 16.35
MFBC MFB Corp. 0.84 6.05
MFCX Marshalltown Financial Corp. 0.64 4.08
MFFC Milton Federal Financial Corp. 0.74 5.44
MFLR Mayflower Co-operative Bank 1.05 11.03
MFSL Maryland Federal Bancorp 0.82 9.76
MGNL Magna Bancorp Inc. 1.68 16.90
MIFC Mid-Iowa Financial Corp. 1.62 17.62
MIVI Mississippi View Holding Co. 1.19 6.92
MLBC ML Bancorp Inc. 0.75 10.64
MONT Montgomery Financial Corp. 0.62 6.43
MRKF Market Financial Corp. 1.15 3.30
MSBF MSB Financial Inc. 1.50 8.84
MSBK Mutual Savings Bank FSB 0.08 1.29
MWBI Midwest Bancshares Inc. 0.81 11.75
MWBX MetroWest Bank 1.39 18.74
MWFD Midwest Federal Financial 1.48 16.98
NASB North American Savings Bank 1.57 20.06
NBN Northeast Bancorp 0.74 9.51
NBSI North Bancshares Inc. 0.58 4.07
NEIB Northeast Indiana Bancorp 1.20 7.88
NHTB New Hampshire Thrift Bncshrs 0.99 13.27
NMSB NewMil Bancorp Inc. 0.85 8.50
NSLB NS&L Bancorp Inc. 0.94 4.78
NSSB Norwich Financial Corp. 1.12 10.07
NSSY Norwalk Savings Society 0.72 9.02
NTMG Nutmeg Federal S&LA 0.63 8.64
NWEQ Northwest Equity Corp. 1.06 9.33
NWSB Northwest Savings Bank (MHC) 0.99 10.31
NYB New York Bancorp Inc. 1.64 32.37
OCFC Ocean Financial Corp. 1.03 6.10
OCN Ocwen Financial Corp. 2.75 32.29
OFCP Ottawa Financial Corp. 0.90 10.32
OHSL OHSL Financial Corp. 0.90 8.25
PALM Palfed Inc. 0.88 10.80
PAMM PacificAmerica Money Center 13.21 58.78
PBCI Pamrapo Bancorp Inc. 1.37 10.69
PBCT People's Bank (MHC) 1.13 13.51
PBHC Oswego City Savings Bk (MHC) 1.35 11.70
PBKB People's Bancshares Inc. 0.91 16.19
PCBC Perry County Financial Corp. 1.14 6.10
PCCI Pacific Crest Capital 1.04 14.25
PDB Piedmont Bancorp Inc. 1.15 6.72
PEEK Peekskill Financial Corp. 1.13 4.38
PERM Permanent Bancorp Inc. 0.60 6.48
PERT Perpetual Bank (MHC) 1.06 8.77
PETE Primary Bank (0.13) (1.91)
PFDC Peoples Bancorp 1.53 10.08
PFED Park Bancorp Inc. 1.04 4.71
PFFB PFF Bancorp Inc. 0.57 5.47
PFFC Peoples Financial Corp. 0.92 3.39
PFNC Progress Financial Corp. 0.86 16.19
PFSB PennFed Financial Services Inc 0.83 11.06
PFSL Pocahontas FS&LA (MHC) 0.66 10.39
PHBK Peoples Heritage Finl Group 1.30 16.19
PHFC Pittsburgh Home Financial Corp 0.89 7.93
PHSB Peoples Home Savings Bk (MHC) 0.68 8.44
PKPS Poughkeepsie Financial Corp. 0.56 6.59
PLSK Pulaski Savings Bank (MHC) 0.70 7.67
PMFI Perpetual Midwest Financial 0.51 5.97
PRBC Prestige Bancorp Inc. 0.68 5.98
PROV Provident Financial Holdings 0.74 5.27
PSBK Progressive Bank Inc. 1.00 11.92
</TABLE>
<PAGE> 110
Page 14 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
CAPITAL AS OF THE MOST RECENT QUARTER
------------------------------------------------------------------------------
TANGIBLE INTANGIBLE REGULATORY EQUITY + TOTAL CAPITAL/
EQUITY/ EQUITY/ ASSETS/ CORE CAP/ RESERVES/ RISK ADJUSTED
ASSETS TANG ASSETS EQUITY ASSETS ASSETS ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%)
- --------------------------------------- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PSFC Peoples-Sidney Financial Corp. 10.15 10.15 0.00 10.20 10.57 16.10
PSFI PS Financial Inc. 38.69 38.69 0.00 38.67 38.91 107.93
PTRS Potters Financial Corp. 8.83 8.83 0.00 8.52 10.57 19.16
PULB Pulaski Bank, Svgs Bank (MHC) 13.04 13.04 0.00 13.00 13.31 30.20
PULS Pulse Bancorp 8.05 8.05 0.00 7.46 8.50 28.02
PVFC PVF Capital Corp. 7.02 7.02 0 7.34 7.76 10.42
PVSA Parkvale Financial Corporation 7.58 7.53 0.74 7.01 9.02 14.65
PWBC PennFirst Bancorp Inc. 8.08 7.59 6.50 7.01 8.68 20.82
PWBK Pennwood Bancorp Inc. 17.46 17.46 0.00 17.46 18.02 34.37
QCBC Quaker City Bancorp Inc. 8.77 8.76 0.05 7.34 9.73 12.64
QCFB QCF Bancorp Inc. 18.09 18.09 0.00 11.01 18.99 27.97
QCSB Queens County Bancorp Inc. 11.85 11.85 0.00 10.32 12.50 17.55
RARB Raritan Bancorp Inc. 7.93 7.81 1.62 7.64 8.79 14.05
RCSB RCSB Financial Inc. 7.62 7.45 2.41 7.25 8.26 11.49
REDF RedFed Bancorp Inc. 8.46 8.42 0.41 7.99 9.46 11.97
RELI Reliance Bancshares Inc. 48.85 48.85 0.00 NA 49.17 NA
RELY Reliance Bancorp Inc. 8.23 6.07 27.95 5.6 8.49 15.16
RIVR River Valley Bancorp 12.39 12.23 1.49 16.13 13.23 31.25
ROSE TR Financial Corp. 6.20 6.20 0.00 6.22 6.63 18.25
RSLN Roslyn Bancorp Inc. 20.14 20.06 0.49 13.75 20.90 34.55
RVSB Riverview Savings Bank (MHC) 11.24 10.36 8.71 10.62 11.62 21.30
SBFL SB of the Finger Lakes (MHC) 9.58 9.58 0.00 9.56 10.12 24.8
SBOS Boston Bancorp (The) 12.34 12.34 0.00 10.06 12.45 26.75
SCBS Southern Community Bancshares 21.32 21.32 0.00 NA 22.47 NA
SCCB S. Carolina Community Bancshrs 25.96 25.96 0.00 23.2 26.59 48.9
SECP Security Capital Corp. 16.20 16.20 0.00 12.87 17.30 19.21
SFED SFS Bancorp Inc. 12.47 12.47 0 12.45 12.89 24.21
SFFC StateFed Financial Corporation 17.78 17.78 0.00 NA NA NA
SFIN Statewide Financial Corp. 9.73 9.71 0.18 9.36 10.13 24.62
SFNB Security First Network Bank 35.16 34.83 1.44 40.30 35.29 NA
SFSB SuburbFed Financial Corp. 6.48 6.46 0.38 5.82 6.68 13.58
SFSL Security First Corp. 9.42 9.28 1.63 7.92 10.19 11.40
SGVB SGV Bancorp Inc. 7.31 7.19 1.65 6.34 7.61 14.43
SHEN First Shenango Bancorp Inc. 10.95 10.95 0.00 8.89 11.68 18.17
SISB SIS Bancorp Inc. 7.20 7.20 0.00 6.99 8.34 13.13
SKAN Skaneateles Bancorp Inc. 6.85 6.65 3.08 6.73 7.64 11.26
SKBO First Carnegie Deposit (MHC) 16.45 16.45 0.00 16.40 16.73 59.00
SMBC Southern Missouri Bancorp Inc. 15.67 15.67 0.00 12.61 16.08 25.01
SMFC Sho-Me Financial Corp. 9.03 9.03 0.00 7.92 9.61 14.80
SOBI Sobieski Bancorp Inc. 15.12 15.12 0.00 NA 15.36 NA
SOPN First Savings Bancorp Inc. 22.84 22.84 0.00 22.78 23.04 52.15
SOSA Somerset Savings Bank 6.33 6.33 0.00 6.29 7.71 10.22
SPBC St. Paul Bancorp Inc. 8.60 8.58 0.30 8.49 9.35 16.99
SRN Southern Banc Company Inc. 16.89 16.75 1.04 NA NA NA
SSB Scotland Bancorp Inc 37.03 37.03 0.00 29.27 37.38 58.40
SSFC South Street Financial Corp. 25.25 25.25 0.00 24.98 25.42 73.53
SSM Stone Street Bancorp Inc. 28.85 28.85 0.00 25.34 29.36 46.98
STFR St. Francis Capital Corp. 7.88 7.03 11.64 6.53 8.23 11.61
STND Standard Financial Inc. 10.77 10.76 0.15 8.26 11.07 19.26
STSA Sterling Financial Corp. 5.54 5.04 9.48 7.78 6.03 13.83
SVRN Sovereign Bancorp Inc. 4.90 3.95 20.23 4.82 5.35 14.43
SWBI Southwest Bancshares 11.00 11.00 0.00 8.23 11.20 16.97
SWCB Sandwich Co-operative Bank 7.95 7.63 4.28 7.77 8.71 14.48
SZB SouthFirst Bancshares Inc. 14.00 14.00 0.00 13.05 14.29 21.47
TBK Tolland Bank 6.94 6.76 2.87 7.00 8.10 13.10
THR Three Rivers Financial Corp. 13.76 13.71 0.40 11.65 14.29 22.81
THRD TF Financial Corporation 11.12 9.89 12.27 9.00 11.43 20.80
TPNZ Tappan Zee Financial Inc. 17.02 17.02 0.00 13.50 17.56 37.70
TRIC Tri-County Bancorp Inc. 15.32 15.32 0.00 12.79 15.78 39.77
TSBS Peoples Bancorp Inc. (MHC) 16.88 15.71 8.25 15.55 17.29 27.49
TSH Teche Holding Co. 13.14 13.14 0.00 11.60 13.96 21.93
TWIN Twin City Bancorp 12.86 12.86 0.00 11.87 13.06 21.80
UBMT United Financial Corp. 23.29 23.29 0.00 NA 23.36 NA
UFRM United Federal Savings Bank 7.47 7.47 0.00 7.47 8.26 11.27
</TABLE>
<TABLE>
<CAPTION>
ASSET QUALITY AS OF THE MOST RECENT QUARTER
-----------------------------------------------------------
NPLS/ RESERVES/ NPAS/ NPAS/ RESERVES/ RESERVES/
LOANS NPLS ASSETS EQUITY LOANS NPAS + 90
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- --------------------------------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PSFC Peoples-Sidney Financial Corp. 0.76 60.06 0.70 6.89 0.45 42.00
PSFI PS Financial Inc. 1.77 28.66 0.79 2.03 0.51 28.66
PTRS Potters Financial Corp. 0.79 350.66 0.50 5.63 2.78 350.66
PULB Pulaski Bank, Svgs Bank (MHC) NA NA NA NA 0.33 NA
PULS Pulse Bancorp 2.32 83.23 0.57 7.03 1.93 65.20
PVFC PVF Capital Corp. 0.95 83.44 0.90 12.84 0.79 61.53
PVSA Parkvale Financial Corporation 0.34 573.16 0.27 3.53 1.97 537.53
PWBC PennFirst Bancorp Inc. 1.46 102.33 0.65 8.01 1.49 93.15
PWBK Pennwood Bancorp Inc. 1.00 103.30 0.62 3.55 1.03 57.43
QCBC Quaker City Bancorp Inc. 1.34 88.64 1.31 14.93 1.19 74.10
QCFB QCF Bancorp Inc. 0.55 411.04 0.27 1.51 2.24 221.49
QCSB Queens County Bancorp Inc. 0.55 134.79 0.57 4.84 0.74 95.23
RARB Raritan Bancorp Inc. 0.39 328.18 0.29 3.65 1.29 297.45
RCSB RCSB Financial Inc. 0.85 138.85 0.61 8.02 1.18 83.90
REDF RedFed Bancorp Inc. 1.7 67.61 2.19 25.85 1.15 45.7
RELI Reliance Bancshares Inc. NA NA NA NA 0.53 NA
RELY Reliance Bancorp Inc. 1.62 34.96 0.77 9.39 0.57 33.33
RIVR River Valley Bancorp 0.53 193.60 0.49 3.97 1.03 170.62
ROSE TR Financial Corp. 0.80 99.87 0.45 7.18 0.80 90.99
RSLN Roslyn Bancorp Inc. 1.12 308.55 0.27 1.34 3.46 278.21
RVSB Riverview Savings Bank (MHC) 0.20 278.46 0.14 1.20 0.56 278.46
SBFL SB of the Finger Lakes (MHC) 1.35 86.35 0.69 7.25 1.16 76.89
SBOS Boston Bancorp (The) 1.41 42.86 0.65 5.23 0.61 18.09
SCBS Southern Community Bancshares 3.67 52.99 2.16 10.15 1.94 46.17
SCCB S. Carolina Community Bancshrs 1.60 50.96 1.78 6.85 0.81 35.52
SECP Security Capital Corp. 0.15 939.03 0.12 0.74 1.44 918.65
SFED SFS Bancorp Inc. 0.87 66.24 0.68 5.44 0.57 57.17
SFFC StateFed Financial Corporation NA NA NA NA NA NA
SFIN Statewide Financial Corp. 0.69 120.69 0.38 3.89 0.83 95.58
SFNB Security First Network Bank NA NA NA NA 1.28 NA
SFSB SuburbFed Financial Corp. 0.76 41.27 0.48 7.44 0.31 41.27
SFSL Security First Corp. 0.31 274.51 0.28 2.98 0.85 273.91
SGVB SGV Bancorp Inc. NA NA NA NA 0.44 NA
SHEN First Shenango Bancorp Inc. 0.57 202.57 0.53 4.88 1.15 135.75
SISB SIS Bancorp Inc. 0.90 275.22 0.43 5.97 2.48 244.29
SKAN Skaneateles Bancorp Inc. 1.38 67.83 1.46 21.25 0.93 41.79
SKBO First Carnegie Deposit (MHC) NA NA NA NA 0.68 NA
SMBC Southern Missouri Bancorp Inc. 1.60 40.26 1.10 7.01 0.64 37.60
SMFC Sho-Me Financial Corp. 0.13 506.95 0.13 1.41 0.66 425.11
SOBI Sobieski Bancorp Inc. 0.21 158.73 0.15 1.02 0.33 158.73
SOPN First Savings Bancorp Inc. 0.13 241.60 0.08 0.37 0.31 241.60
SOSA Somerset Savings Bank 6.54 27.63 6.28 99.23 1.81 22.01
SPBC St. Paul Bancorp Inc. 0.24 459.15 0.21 2.46 1.09 232.75
SRN Southern Banc Company Inc. NA NA 0.00 0.00 NA NA
SSB Scotland Bancorp Inc 0.00 NM 0.00 0.00 0.50 NM
SSFC South Street Financial Corp. 0.57 67.30 0.27 1.07 0.39 65.44
SSM Stone Street Bancorp Inc. 0.00 NM 0.00 0.00 0.62 187.50
STFR St. Francis Capital Corp. 0.34 236.32 0.16 2.03 0.80 181.58
STND Standard Financial Inc. 0.36 139.53 0.22 2.07 0.50 136.61
STSA Sterling Financial Corp. 0.60 136.19 0.61 10.96 0.82 79.43
SVRN Sovereign Bancorp Inc. 0.71 101.34 0.53 10.72 0.72 78.85
SWBI Southwest Bancshares 0.41 67.34 0.30 2.72 0.28 67.34
SWCB Sandwich Co-operative Bank 1.08 101.16 0.81 10.19 1.09 92.55
SZB SouthFirst Bancshares Inc. 0.50 78.95 0.53 3.81 0.40 39.15
TBK Tolland Bank 2.93 63.86 2.13 30.73 1.87 54.09
THR Three Rivers Financial Corp. 1.07 75 1.21 8.80 0.8 44.02
THRD TF Financial Corporation 0.61 102.59 0.33 3.00 0.62 92.84
TPNZ Tappan Zee Financial Inc. 2.59 45.58 1.28 7.55 1.18 31.27
TRIC Tri-County Bancorp Inc. 0.00 NM 0.00 0.00 1.11 NM
TSBS Peoples Bancorp Inc. (MHC) 0.81 83.09 0.52 3.08 0.67 55.92
TSH Teche Holding Co. 0.30 319.98 0.27 2.04 0.96 304.97
TWIN Twin City Bancorp 0.00 NM 0.08 0.60 0.29 130.95
UBMT United Financial Corp. NA NA NA NA 0.22 NA
UFRM United Federal Savings Bank 0.66 147.82 0.54 7.22 0.98 135.44
</TABLE>
<TABLE>
<CAPTION>
PROFITABILITY AS OF THE MOST RECENT QUARTER
-------------------------------------------
RETURN ON RETURN ON
AVG ASSETS AVG EQUITY
TICKER SHORT NAME (%) (%)
- --------------------------------------- -------------------------------------------
<S> <C> <C> <C>
PSFC Peoples-Sidney Financial Corp. 0.90 8.70
PSFI PS Financial Inc. 2.09 5.20
PTRS Potters Financial Corp. 1.01 11.31
PULB Pulaski Bank, Svgs Bank (MHC) 1.19 9.16
PULS Pulse Bancorp 1.15 14.43
PVFC PVF Capital Corp. 1.39 20.03
PVSA Parkvale Financial Corporation 1.07 14.75
PWBC PennFirst Bancorp Inc. 0.71 8.98
PWBK Pennwood Bancorp Inc. 0.80 4.34
QCBC Quaker City Bancorp Inc. 0.75 8.49
QCFB QCF Bancorp Inc. 1.55 8.53
QCSB Queens County Bancorp Inc. 1.54 12.67
RARB Raritan Bancorp Inc. 1.05 13.26
RCSB RCSB Financial Inc. 0.82 10.67
REDF RedFed Bancorp Inc. 1.07 12.70
RELI Reliance Bancshares Inc. 0.24 0.49
RELY Reliance Bancorp Inc. 0.90 11.10
RIVR River Valley Bancorp 0.91 7.51
ROSE TR Financial Corp. 0.96 15.91
RSLN Roslyn Bancorp Inc. 1.42 6.74
RVSB Riverview Savings Bank (MHC) 1.31 11.72
SBFL SB of the Finger Lakes (MHC) 0.40 4.19
SBOS Boston Bancorp (The) 3.18 28.19
SCBS Southern Community Bancshares 1.20 5.55
SCCB S. Carolina Community Bancshrs 1.05 4.04
SECP Security Capital Corp. 1.60 10.04
SFED SFS Bancorp Inc. 0.63 5.07
SFFC StateFed Financial Corporation 1.55 8.78
SFIN Statewide Financial Corp. 0.82 8.78
SFNB Security First Network Bank (33.43) (85.49)
SFSB SuburbFed Financial Corp. 0.67 10.28
SFSL Security First Corp. 1.35 14.52
SGVB SGV Bancorp Inc. 0.49 6.70
SHEN First Shenango Bancorp Inc. 1.21 11.04
SISB SIS Bancorp Inc. 0.85 11.88
SKAN Skaneateles Bancorp Inc. 0.73 10.62
SKBO First Carnegie Deposit (MHC) 0.62 4.88
SMBC Southern Missouri Bancorp Inc. 1.02 6.41
SMFC Sho-Me Financial Corp. 1.38 15.06
SOBI Sobieski Bancorp Inc. 0.57 3.72
SOPN First Savings Bancorp Inc. 1.80 7.60
SOSA Somerset Savings Bank 1.33 21.70
SPBC St. Paul Bancorp Inc. 1.11 12.65
SRN Southern Banc Company Inc. 0.49 2.93
SSB Scotland Bancorp Inc 1.50 4.08
SSFC South Street Financial Corp. 1.22 4.89
SSM Stone Street Bancorp Inc. 0.98 2.77
STFR St. Francis Capital Corp. 0.95 11.55
STND Standard Financial Inc. 0.77 7.02
STSA Sterling Financial Corp. 0.57 10.41
SVRN Sovereign Bancorp Inc. 0.82 16.45
SWBI Southwest Bancshares 1.08 10.01
SWCB Sandwich Co-operative Bank 0.93 11.61
SZB SouthFirst Bancshares Inc. 0.52 3.73
TBK Tolland Bank 0.83 11.83
THR Three Rivers Financial Corp. 0.80 5.68
THRD TF Financial Corporation 0.79 7.17
TPNZ Tappan Zee Financial Inc. 0.86 4.98
TRIC Tri-County Bancorp Inc. 1.10 7.24
TSBS Peoples Bancorp Inc. (MHC) 1.46 8.62
TSH Teche Holding Co. 0.93 6.90
TWIN Twin City Bancorp 0.98 7.64
UBMT United Financial Corp. 1.41 6.14
UFRM United Federal Savings Bank 0.62 8.34
</TABLE>
<PAGE> 111
Page 15 of 32
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
CAPITAL AS OF THE MOST RECENT QUARTER
---------------------------------------------------------------
TANGIBLE INTANGIBLE REGULATORY EQUITY +
EQUITY/ EQUITY/ ASSETS/ CORE CAP/ RESERVES/
ASSETS TANG ASSETS EQUITY ASSETS ASSETS
TICKER SHORT NAME (%) (%) (%) (%)
- ------------------------------------------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
USAB USABancshares, Inc. 10.76 10.58 1.89 10.80 11.19
VABF Virginia Beach Fed. Financial 6.85 6.85 0.00 6.75 7.56
VFFC Virginia First Financial Corp. 8.06 7.80 3.47 7.66 9.14
WAMU Washington Mutual Inc. 5.24 5.00 4.84 NA 5.99
WAYN Wayne Savings & Loan Co. (MHC) 9.25 9.25 0.00 9.23 9.62
WBST Webster Financial Corp. 5.02 4.32 14.57 5.98 5.90
WCBI Westco Bancorp 15.24 15.24 0.00 12.90 15.53
WCFB Webster City Federal SB (MHC) 23.35 23.35 0.00 23.35 23.75
WEFC Wells Financial Corp. 14.19 14.19 0.00 10.82 14.53
WEHO Westwood Homestead Fin. Corp. 29.41 29.41 0.00 24.49 29.57
WES Westcorp 9.05 9.03 0.27 10.43 10.05
WFI Winton Financial Corp. 7.11 6.97 2.12 6.80 7.38
WFSG Wilshire Financial Services 5.76 5.76 0.00 NA 11.59
WFSL Washington Federal Inc. 12.08 11.15 8.66 10.34 12.52
WHGB WHG Bancshares Corp. 20.66 20.66 0.00 15.11 20.89
WOFC Western Ohio Financial Corp. 13.79 12.98 6.78 12.69 14.24
WRNB Warren Bancorp Inc. 10.37 10.37 0.00 9.73 11.50
WSB Washington Savings Bank, FSB 8.30 8.30 0.00 7.81 8.77
WSFS WSFS Financial Corporation 5.20 5.16 0.83 6.41 6.85
WSTR WesterFed Financial Corp. 10.91 8.92 19.99 8.54 11.40
WVFC WVS Financial Corp. 11.16 11.16 0.00 11.44 11.84
WWFC Westwood Financial Corporation 9.13 8.21 10.90 6.84 9.33
WYNE Wayne Bancorp Inc. 13.35 13.35 0.00 10.13 14.12
YFCB Yonkers Financial Corporation 14.90 14.90 0.00 12.60 15.27
YFED York Financial Corp. 8.61 8.61 0.00 7.48 9.16
---------------------------------------------------------------
Average 12.33 12.12 2.92 10.78 12.94
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
CAPITAL AS OF THE MOST RECENT QUARTER
--------------------------------------
TOTAL CAPITAL/
RISK ADJUSTED
ASSETS
TICKER SHORT NAME (%)
- ------------------------------------------------- --------------------------------------
<S> <C> <C>
USAB USABancshares, Inc. 26.70
VABF Virginia Beach Fed. Financial 12.51
VFFC Virginia First Financial Corp. 11.77
WAMU Washington Mutual Inc. NA
WAYN Wayne Savings & Loan Co. (MHC) 17.80
WBST Webster Financial Corp. 13.71
WCBI Westco Bancorp 28.00
WCFB Webster City Federal SB (MHC) 53.43
WEFC Wells Financial Corp. 19.09
WEHO Westwood Homestead Fin. Corp. 40.57
WES Westcorp 10.65
WFI Winton Financial Corp. 11.00
WFSG Wilshire Financial Services NA
WFSL Washington Federal Inc. 18.88
WHGB WHG Bancshares Corp. 32.25
WOFC Western Ohio Financial Corp. 24.21
WRNB Warren Bancorp Inc. 14.61
WSB Washington Savings Bank, FSB 19.59
WSFS WSFS Financial Corporation 10.45
WSTR WesterFed Financial Corp. 14.54
WVFC WVS Financial Corp. 25.77
WWFC Westwood Financial Corporation 19.26
WYNE Wayne Bancorp Inc. 23.31
YFCB Yonkers Financial Corporation 35.18
YFED York Financial Corp. 11.95
--------------------------------------
Average 22.20
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
ASSET QUALITY AS OF THE MOST RECENT QUARTER
----------------------------------------------------------------------
NPLS/ RESERVES/ NPAS/ NPAS/ RESERVES/ RESERVES/
LOANS NPLS ASSETS EQUITY LOANS NPAS + 90
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- ------------------------------------------------- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
USAB USABancshares, Inc. 1.55 63.50 0.67 6.27 0.99 63.50
VABF Virginia Beach Fed. Financial 0.14 658.51 0.68 9.97 0.93 56.59
VFFC Virginia First Financial Corp. 1.76 67.88 2.29 28.37 1.19 47.29
WAMU Washington Mutual Inc. 0.93 120.37 0.81 15.36 1.12 93.26
WAYN Wayne Savings & Loan Co. (MHC) 0.49 92.46 0.72 7.83 0.45 50.94
WBST Webster Financial Corp. 1.04 139.92 0.85 16.89 1.45 103.47
WCBI Westco Bancorp 0.54 69.42 0.60 3.95 0.38 47.07
WCFB Webster City Federal SB (MHC) 0.23 293.75 0.26 1.11 0.69 152.85
WEFC Wells Financial Corp. 0.21 176.10 0.21 1.49 0.37 121.72
WEHO Westwood Homestead Fin. Corp. 0.00 NM 0.00 0.00 0.21 255.81
WES Westcorp 1.04 186.87 0.74 8.19 1.95 134.25
WFI Winton Financial Corp. 0.14 220.20 0.29 4.05 0.32 78.21
WFSG Wilshire Financial Services NA NA NA NA 8.13 NA
WFSL Washington Federal Inc. 0.62 96.71 0.73 6.05 0.60 59.65
WHGB WHG Bancshares Corp. 0.18 160.96 0.15 0.71 0.29 160.96
WOFC Western Ohio Financial Corp. 0.43 135.80 0.34 2.50 0.58 NA
WRNB Warren Bancorp Inc. 1.00 178.96 1.08 10.44 1.79 98.45
WSB Washington Savings Bank, FSB NA NA NA NA 0.92 NA
WSFS WSFS Financial Corporation 2.41 109.64 1.66 31.85 2.65 96.79
WSTR WesterFed Financial Corp. 0.24 306.59 0.17 1.53 0.73 191.01
WVFC WVS Financial Corp. 0.55 230.13 0.30 2.65 1.25 230.13
WWFC Westwood Financial Corporation 0.00 NM 0.00 0.00 0.55 159.15
WYNE Wayne Bancorp Inc. 1.38 83.64 0.91 6.83 1.15 83.50
YFCB Yonkers Financial Corporation 1.17 87.61 0.57 3.85 1.02 65.11
YFED York Financial Corp. 0.09 675.05 1.24 14.38 0.64 23.05
----------------------------------------------------------------------
Average 0.90 158.71 0.77 8.88 0.96 128.26
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
PROFITABILITY AS OF THE MOST RECENT QUARTER
-------------------------------------------
RETURN ON RETURN ON
AVG ASSETS AVG EQUITY
TICKER SHORT NAME (%) (%)
- ------------------------------------------------- ------------------------------------------
<S> <C> <C> <C>
USAB USABancshares, Inc. 0.98 8.43
VABF Virginia Beach Fed. Financial 0.65 9.65
VFFC Virginia First Financial Corp. 1.11 13.59
WAMU Washington Mutual Inc. 1.01 19.07
WAYN Wayne Savings & Loan Co. (MHC) 0.79 8.62
WBST Webster Financial Corp. 0.84 16.69
WCBI Westco Bancorp 1.49 9.78
WCFB Webster City Federal SB (MHC) 1.45 6.18
WEFC Wells Financial Corp. 1.07 7.51
WEHO Westwood Homestead Fin. Corp. 0.99 3.23
WES Westcorp 1.12 12.12
WFI Winton Financial Corp. 1.02 14.30
WFSG Wilshire Financial Services 1.78 30.72
WFSL Washington Federal Inc. 1.89 15.84
WHGB WHG Bancshares Corp. 0.93 4.37
WOFC Western Ohio Financial Corp. 0.45 3.34
WRNB Warren Bancorp Inc. 1.83 17.88
WSB Washington Savings Bank, FSB 0.73 8.78
WSFS WSFS Financial Corporation 1.12 21.27
WSTR WesterFed Financial Corp. 0.90 8.23
WVFC WVS Financial Corp. 1.21 10.92
WWFC Westwood Financial Corporation 0.88 9.45
WYNE Wayne Bancorp Inc. 0.83 6.02
YFCB Yonkers Financial Corporation 1.11 7.37
YFED York Financial Corp. 0.95 11.27
-------------------------------------------
Average 0.94 9.59
</TABLE>
<PAGE> 112
Page 16 of 32
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
CAPITAL AS OF THE MOST RECENT QUARTER
----------------------------------------------------------------------------------
TANGIBLE INTANGIBLE REGULATORY EQUITY + TOTAL CAPITAL/
EQUITY/ EQUITY/ ASSETS/ CORE CAP/ RESERVES/ RISK ADJUSTED
TICKER SHORT NAME ASSETS TANG ASSETS EQUITY ASSETS ASSETS ASSETS
COMPARABLE THRIFT DATA (%) (%) (%) (%) (%) (%)
- -------------------------------------------- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CATB Catskill Financial Corp. 25.04 25.04 0.00 20.72 25.69 61.36
CEBK Central Co-operative Bank 9.93 8.98 10.53 NA 10.75 NA
FBER 1st Bergen Bancorp 14.19 14.19 0.00 10.30 15.27 29.40
FIBC Financial Bancorp Inc. 9.36 9.32 0.50 7.32 9.85 18.86
FKFS First Keystone Financial 7.31 7.31 0.00 7.33 7.80 16.92
FSBI Fidelity Bancorp Inc. 6.75 6.75 0.00 9.17 7.25 18.91
LFBI Little Falls Bancorp Inc. 13.27 12.39 7.63 9.00 13.63 27.17
LSBX Lawrence Savings Bank 8.69 8.69 0.00 9.07 9.68 17.71
PBCI Pamrapo Bancorp Inc. 12.74 12.65 0.77 12.49 13.46 27.04
PHFC Pittsburgh Home Financial Corp 10.92 10.81 1.11 24.02 11.44 10.60
WVFC WVS Financial Corp. 11.16 11.16 0.00 11.44 11.84 25.77
----------------------------------------------------------------------------------
Average 11.76 11.57 1.87 12.09 12.42 25.37
Maximum 25.04 25.04 10.53 24.02 25.69 61.36
Minimum 6.75 6.75 0.00 0.00 7.25 0.00
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
ASSET QUALITY AS OF THE MOST RECENT QUARTER
-------------------------------------------------------------------
NPLS/ RESERVES/ NPAS/ NPAS/ RESERVES/ RESERVES/
TICKER SHORT NAME LOANS NPLS ASSETS EQUITY LOANS NPAS + 90
COMPARABLE THRIFT DATA (%) (%) (%) (%) (%) (%)
- -------------------------------------------- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CATB Catskill Financial Corp. 0.76 195.59 0.47 1.86 1.48 140.85
CEBK Central Co-operative Bank 1.24 97.49 0.85 8.52 1.21 97.49
FBER 1st Bergen Bancorp 1.76 141.84 0.83 5.87 2.50 129.82
FIBC Financial Bancorp Inc. 1.62 54.85 1.71 18.29 0.89 26.91
FKFS First Keystone Financial 1.75 47.78 1.60 21.90 0.84 30.58
FSBI Fidelity Bancorp Inc. 0.57 176.30 0.31 4.65 1.01 112.57
LFBI Little Falls Bancorp Inc. 1.93 42.62 0.98 7.39 0.82 33.93
LSBX Lawrence Savings Bank 0.36 642.25 0.30 3.48 2.29 328.94
PBCI Pamrapo Bancorp Inc. 3.12 41.42 2.14 16.82 1.29 26.1
PHFC Pittsburgh Home Financial Corp 2.07 36.82 1.6 14.64 0.76 32.18
WVFC WVS Financial Corp. 0.55 230.13 0.30 2.65 1.25 230.13
-------------------------------------------------------------------
Average 1.43 155.19 1.01 9.64 1.30 108.14
Maximum 3.12 642.25 2.14 21.90 2.50 328.94
Minimum 0.36 36.82 0.30 1.86 0.76 26.10
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
PROFITABILITY AS OF THE MOST RECENT QUARTER
-------------------------------------------
RETURN ON RETURN ON
TICKER SHORT NAME AVG ASSETS AVG EQUITY
COMPARABLE THRIFT DATA (%) (%)
- -------------------------------------------- -------------------------------------------
<S> <C> <C> <C>
CATB Catskill Financial Corp. 1.36 5.28
CEBK Central Co-operative Bank 0.73 7.16
FBER 1st Bergen Bancorp 0.85 5.57
FIBC Financial Bancorp Inc. 0.97 10.07
FKFS First Keystone Financial 0.86 11.94
FSBI Fidelity Bancorp Inc. 0.76 11.08
LFBI Little Falls Bancorp Inc. 0.63 4.75
LSBX Lawrence Savings Bank 1.62 18.78
PBCI Pamrapo Bancorp Inc. 1.37 10.69
PHFC Pittsburgh Home Financial Corp 0.89 7.93
WVFC WVS Financial Corp. 1.21 10.92
-------------------------------------------
Average 1.02 9.47
Maximum 1.62 18.78
Minimum 0.63 4.75
</TABLE>
<PAGE> 113
Page 17 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
INCOME STATEMENT AS OF THE MOST RECENT QUARTER
--------------------------------------------------------------------------
NET INTEREST INTEREST NET INTEREST NONINTEREST NONINTEREST
INTEREST INCOME/ EXPENSE/ INCOME/ INCOME/ EXPENSE/
MARGIN AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- --------------------------------------------- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB 2.73 6.87 4.38 2.49 0.95 2.31
%CCMD Chevy Chase Bank, FSB 4.55 7.73 3.92 3.81 4.65 7.16
AABC Access Anytime Bancorp, Inc. 3.05 6.90 3.94 2.96 0.67 3.05
AADV Advantage Bancorp Inc. 3.20 7.57 4.49 3.08 0.65 2.19
ABBK Abington Bancorp Inc. 3.40 7.30 4.05 3.25 0.79 2.59
ABCL Alliance Bancorp Inc. 2.73 6.93 4.29 2.64 1.23 2.61
ABCW Anchor BanCorp Wisconsin 3.02 7.59 4.69 2.90 0.70 2.12
AFBC Advance Financial Bancorp 3.82 7.55 3.83 3.73 0.27 2.53
AFCB Affiliated Community Bancorp 3.38 7.50 4.21 3.30 0.16 1.61
AFED AFSALA Bancorp Inc. 3.55 6.97 3.59 3.38 0.22 2.24
AFFFZ America First Financial Fund 2.92 7.14 4.34 2.81 0.35 1.79
AHCI Ambanc Holding Co. 3.42 7.22 3.92 3.30 0.24 2.73
AHM Ahmanson & Company (H.F.) 2.68 7.08 4.52 2.56 0.53 1.74
ALBC Albion Banc Corp. 3.53 7.53 4.14 3.39 0.46 3.20
ALBK ALBANK Financial Corp. 4.00 7.44 3.65 3.79 0.35 2.27
AMFC AMB Financial Corp. 3.65 7.48 3.90 3.58 0.59 2.92
ANA Acadiana Bancshares Inc. 3.68 7.61 4.01 3.60 0.37 2.47
ANBK American National Bancorp 3.30 7.64 4.45 3.19 0.16 2.13
ANDB Andover Bancorp Inc. 3.20 7.23 4.15 3.08 0.44 1.88
ASBI Ameriana Bancorp 3.16 7.41 4.38 3.03 0.55 2.22
ASBP ASB Financial Corp. 3.31 7.58 4.33 3.26 0.30 1.99
ASFC Astoria Financial Corp. 2.62 7.02 4.45 2.56 0.18 1.38
ATSB AmTrust Capital Corp. 2.85 7.03 4.30 2.73 0.47 2.74
AVND Avondale Financial Corp. 4.93 9.35 4.63 4.72 1.20 4.12
BANC BankAtlantic Bancorp Inc. 3.77 7.61 4.15 3.46 0.88 2.84
BDJI First Federal Bancorporation 3.25 7.23 4.14 3.09 0.48 2.42
BFD BostonFed Bancorp Inc. 3.47 7.19 3.87 3.32 0.39 2.32
BFFC Big Foot Financial Corp. 3.21 6.61 3.49 3.11 0.14 2.19
BFSB Bedford Bancshares Inc. 4.04 7.73 3.86 3.87 0.46 2.29
BKC American Bank of Connecticut 3.32 7.22 4.03 3.19 0.52 1.79
BKCT Bancorp Connecticut Inc. 3.83 7.60 3.85 3.75 0.32 2.01
BKUNA BankUnited Financial Corp. 2.23 7.32 5.18 2.14 0.22 1.49
BNKU Bank United Corp. 2.55 7.30 4.90 2.40 0.78 1.96
BPLS Bank Plus Corp. 2.50 6.96 4.54 2.42 0.34 2.29
BSBC Branford Savings Bank 4.33 7.63 3.38 4.25 0.40 3.35
BTHL Bethel Bancorp 4.39 8.43 4.25 4.18 0.73 3.83
BVCC Bay View Capital Corp. 2.87 7.70 4.87 2.82 0.49 2.18
BWFC Bank West Financial Corp. 3.13 7.32 4.36 2.95 0.51 2.49
BYFC Broadway Financial Corp. 4.49 7.60 3.26 4.34 0.50 3.86
CAFI Camco Financial Corp. 3.61 7.65 4.23 3.42 0.54 2.39
CAPS Capital Savings Bancorp Inc. 3.22 7.63 4.46 3.17 0.55 2.08
CASB Cascade Financial Corp. 2.77 7.68 5.01 2.68 0.32 2.07
CASH First Midwest Financial Inc. 3.30 7.87 4.68 3.19 0.37 1.99
CATB Catskill Financial Corp. 4.15 7.31 3.22 4.09 0.14 1.90
CBCI Calumet Bancorp Inc. 3.92 7.89 4.26 3.63 0.14 1.17
CBES CBES Bancorp Inc. 4.42 7.95 3.68 4.27 0.53 3.02
CBK Citizens First Financial Corp. 3.33 7.49 4.30 3.19 0.49 2.61
CBSA Coastal Bancorp Inc. 2.05 6.98 4.98 1.99 0.22 1.47
CBSB Charter Financial Inc. 3.87 7.66 4.04 3.62 0.61 2.17
CCFH CCF Holding Company 4.01 7.49 3.72 3.76 0.83 5.11
CEBK Central Co-operative Bank 3.60 6.98 3.60 3.38 0.23 2.43
CENB Century Bancorp Inc. 4.07 7.61 3.75 3.85 0.08 1.16
CENF CENFED Financial Corp. 2.32 7.26 5.02 2.25 0.35 1.43
CFB Commercial Federal Corp. 2.54 7.40 4.95 2.45 0.87 1.71
CFBC Community First Banking Co. 3.83 7.56 3.88 3.68 0.94 3.47
CFCP Coastal Financial Corp. 3.95 7.95 4.22 3.72 0.65 2.46
CFFC Community Financial Corp. 3.97 7.84 4.03 3.81 0.40 2.30
CFNC Carolina Fincorp Inc. 3.97 7.41 3.55 3.87 0.50 2.41
CFSB CFSB Bancorp Inc. 3.09 7.37 4.34 3.02 0.65 1.88
CFTP Community Federal Bancorp 3.64 7.00 3.40 3.60 0.19 1.78
CFX CFX Corp. 3.94 7.37 3.77 3.61 0.75 2.92
CIBI Community Investors Bancorp 3.51 7.70 4.29 3.41 0.17 1.99
CKFB CKF Bancorp Inc. 3.86 7.63 3.83 3.79 0.09 1.67
CLAS Classic Bancshares Inc. 3.86 7.23 3.60 3.63 0.33 2.81
</TABLE>
<TABLE>
<CAPTION>
INCOME STATEMENT AS
OF THE MOST BALANCE SHEET GROWTH AS OF MARKET DATA AS OF THE
RECENT QUARTER THE MOST RECENT QUARTER MOST RECENT QUARTER
--------------------- -------------------------- ----------------------------
ASSET LOAN DEPOSIT MRQ MRQ MRQ
EFFICIENCY OVERHEAD GROWTH GROWTH GROWTH MARKET PRICE PRICE
RATIO RATIO RATE RATE RATE VALUE PER SHARE HIGH
TICKER SHORT NAME (%) (%) (%) (%) (%) ($) ($) ($)
- --------------------------------------------- --------------------- -------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB 63.24 49.16 7.26 (9.37) (8.46) NA NA NA
%CCMD Chevy Chase Bank, FSB 80.49 56.67 0.13 (14.05) 41.61 NA NA NA
AABC Access Anytime Bancorp, Inc. 83.94 80.31 (6.91) 39.96 (11.31) 7.75 5.938 5.938
AADV Advantage Bancorp Inc. 55.93 46.61 (0.76) 0.46 (9.54) 145.52 38.250 40.750
ABBK Abington Bancorp Inc. 62.37 53.25 7.48 0.52 6.48 60.73 25.500 25.750
ABCL Alliance Bancorp Inc. 67.38 52.24 27.76 (25.91) 6.53 180.39 30.125 30.656
ABCW Anchor BanCorp Wisconsin 58.61 48.62 8.68 7.90 4.23 248.84 24.375 25.000
AFBC Advance Financial Bancorp 63.36 60.70 13.45 6.24 16.77 17.08 14.000 14.500
AFCB Affiliated Community Bancorp 47.51 44.90 13.43 10.52 6.80 172.25 23.500 25.000
AFED AFSALA Bancorp Inc. 62.20 59.76 18.20 8.16 21.47 23.64 14.625 14.813
AFFFZ America First Financial Fund 64.04 59.59 1.39 13.76 (0.33) 241.93 39.125 39.563
AHCI Ambanc Holding Co. 73.97 72.08 5.74 31.38 18.84 65.24 16.250 16.625
AHM Ahmanson & Company (H.F.) 48.49 37.77 (9.57) (2.46) (19.27) 5,323.10 43.188 47.125
ALBC Albion Banc Corp. 83.05 80.77 13.95 6.41 16.03 5.81 23.000 23.000
ALBK ALBANK Financial Corp. 51.99 47.55 12.12 7.45 (0.21) 510.15 39.500 41.000
AMFC AMB Financial Corp. 70.14 65.24 2.29 10.93 (12.37) 13.98 14.000 15.000
ANA Acadiana Bancshares Inc. 62.54 58.67 8.12 19.71 (4.51) 59.42 19.813 20.000
ANBK American National Bancorp 57.64 55.47 10.41 19.55 9.69 70.91 14.375 14.750
ANDB Andover Bancorp Inc. 51.22 44.21 13.67 7.09 27.31 159.60 30.375 31.125
ASBI Ameriana Bancorp 62.00 55.17 (4.41) 7.79 5.76 70.26 16.500 17.000
ASBP ASB Financial Corp. 56.10 52.11 10.42 14.98 11.12 22.59 11.750 12.250
ASFC Astoria Financial Corp. 45.55 41.67 (1.30) 44.32 4.54 1,024.54 47.500 47.500
ATSB AmTrust Capital Corp. 85.66 83.20 (6.58) (2.97) 10.48 6.71 12.125 12.250
AVND Avondale Financial Corp. 69.01 61.11 (17.73) (36.74) 23.78 51.11 14.500 17.500
BANC BankAtlantic Bancorp Inc. 63.10 53.69 (6.15) 17.80 (12.30) 283.13 14.125 14.500
BDJI First Federal Bancorporation 68.40 63.49 10.67 11.47 3.33 14.59 20.250 20.250
BFD BostonFed Bancorp Inc. 64.26 60.05 14.84 9.50 27.11 107.35 17.688 17.750
BFFC Big Foot Financial Corp. 66.76 65.27 4.11 26.48 (2.43) 44.60 14.875 15.000
BFSB Bedford Bancshares Inc. 52.90 47.30 12.01 10.92 9.01 27.42 23.875 23.875
BKC American Bank of Connecticut 46.25 37.43 11.74 (0.10) 7.81 85.31 35.938 36.000
BKCT Bancorp Connecticut Inc. 49.49 45.13 14.15 13.85 10.98 82.35 25.500 26.250
BKUNA BankUnited Financial Corp. 61.17 57.19 97.45 92.92 35.37 109.76 9.875 10.375
BNKU Bank United Corp. 51.00 35.12 15.87 11.62 14.54 1,291.47 38.000 38.375
BPLS Bank Plus Corp. 74.91 71.38 29.06 22.56 29.35 220.85 10.875 11.500
BSBC Branford Savings Bank 70.75 68.03 20.58 (7.69) 14.44 33.21 4.688 4.750
BTHL Bethel Bancorp 75.36 71.06 3.68 (5.87) (7.28) 15.15 13.250 13.250
BVCC Bay View Capital Corp. 63.53 57.25 6.78 1.58 (18.75) 343.95 26.250 26.750
BWFC Bank West Financial Corp. 71.93 67.05 23.55 33.45 9.56 32.00 13.500 14.250
BYFC Broadway Financial Corp. 76.99 74.31 11.73 (4.55) 14.75 9.19 11.000 11.250
CAFI Camco Financial Corp. 59.81 53.51 14.73 18.67 8.22 57.05 17.738 17.857
CAPS Capital Savings Bancorp Inc. 55.84 48.16 7.74 5.90 4.25 29.80 17.375 18.250
CASB Cascade Financial Corp. 68.12 64.34 17.94 28.82 22.87 33.42 12.000 16.800
CASH First Midwest Financial Inc. 52.83 47.43 5.02 17.48 7.69 51.26 16.625 17.500
CATB Catskill Financial Corp. 45.69 43.82 15.04 1.78 4.26 79.60 15.500 16.000
CBCI Calumet Bancorp Inc. 46.83 44.83 1.62 (3.00) 5.23 89.71 38.000 39.500
CBES CBES Bancorp Inc. 62.53 57.92 15.48 12.47 38.31 18.19 16.813 17.500
CBK Citizens First Financial Corp. 70.90 66.47 (0.06) 11.77 (3.49) 43.02 15.500 16.750
CBSA Coastal Bancorp Inc. 62.31 58.21 15.61 35.32 14.90 149.15 29.750 29.750
CBSB Charter Financial Inc. 47.05 38.18 (1.57) 0.43 (0.83) 84.03 17.750 18.000
CCFH CCF Holding Company 111.24 113.71 63.77 63.22 32.40 13.94 16.500 16.750
CEBK Central Co-operative Bank 64.92 62.48 29.25 (0.46) 11.33 40.77 18.000 18.500
CENB Century Bancorp Inc. 29.58 28.09 7.47 10.97 7.69 32.38 69.500 71.000
CENF CENFED Financial Corp. 52.78 45.36 5.68 (2.19) (5.66) 205.87 34.500 34.500
CFB Commercial Federal Corp. 47.98 29.52 11.29 11.19 (3.64) 991.43 37.125 37.625
CFBC Community First Banking Co. 74.86 68.41 93.10 7.50 51.79 76.33 NA NA
CFCP Coastal Financial Corp. 55.62 47.90 14.98 7.71 (0.24) 112.54 23.000 23.000
CFFC Community Financial Corp. 54.51 49.69 18.38 15.50 2.24 27.74 22.750 23.250
CFNC Carolina Fincorp Inc. 55.12 49.34 10.43 22.25 11.82 32.63 15.375 15.375
CFSB CFSB Bancorp Inc. 50.86 40.29 5.36 9.1 0.51 135.06 23.25 24.75
CFTP Community Federal Bancorp 47.02 44.26 5.80 7.64 3.00 79.85 18.000 19.875
CFX CFX Corp. 65.90 58.83 26.27 44.04 11.39 272.73 21.000 21.000
CIBI Community Investors Bancorp 55.61 53.43 (21.11) 12.51 4.98 14.41 12.750 13.500
CKFB CKF Bancorp Inc. 42.86 41.46 4.09 9.34 (5.97) 18.05 19.250 20.500
CLAS Classic Bancshares Inc. 68.49 65.63 (3.13) 21.40 (5.61) 18.43 14.000 14.750
</TABLE>
<TABLE>
<CAPTION>
MARKET DATA AS OF THE
MOST RECENT QUARTER
----------------------------------
MRQ MRQ PUBLICLY MRQ TANGIBLE
PRICE REPORTED PUBLICLY REP
LOW BOOK VALUE BOOK VALUE
TICKER SHORT NAME ($) ($) ($)
- --------------------------------------------- ----------------------------------
<S> <C> <C> <C>
%CAL California Federal Bank, a FSB NA NA NA
%CCMD Chevy Chase Bank, FSB NA NA NA
AABC Access Anytime Bancorp, Inc. 5.250 6.53 6.53
AADV Advantage Bancorp Inc. 36.500 29.04 27.15
ABBK Abington Bancorp Inc. 20.500 18.73 16.87
ABCL Alliance Bancorp Inc. 27.750 23.40 23.11
ABCW Anchor BanCorp Wisconsin 21.000 26.49 25.99
AFBC Advance Financial Bancorp 12.750 14.75 14.75
AFCB Affiliated Community Bancorp 19.200 16.75 16.65
AFED AFSALA Bancorp Inc. 12.563 15.92 15.92
AFFFZ America First Financial Fund 29.500 28.97 28.61
AHCI Ambanc Holding Co. 12.688 14.29 14.29
AHM Ahmanson & Company (H.F.) 35.250 20.35 17.34
ALBC Albion Banc Corp. 18.125 23.96 23.96
ALBK ALBANK Financial Corp. 34.000 25.85 22.59
AMFC AMB Financial Corp. 13.125 14.62 14.62
ANA Acadiana Bancshares Inc. 17.500 16.98 16.98
ANBK American National Bancorp 12.625 13.08 13.08
ANDB Andover Bancorp Inc. 26.250 19.58 19.58
ASBI Ameriana Bancorp 15.250 13.49 13.48
ASBP ASB Financial Corp. 11.500 10.15 10.15
ASFC Astoria Financial Corp. 34.750 28.59 24.01
ATSB AmTrust Capital Corp. 10.000 13.72 13.57
AVND Avondale Financial Corp. 12.750 15.85 15.85
BANC BankAtlantic Bancorp Inc. 12.125 6.83 5.61
BDJI First Federal Bancorporation 17.750 17.61 17.61
BFD BostonFed Bancorp Inc. 14.375 15.37 14.86
BFFC Big Foot Financial Corp. 13.250 14.35 14.35
BFSB Bedford Bancshares Inc. 19.000 17.75 17.75
BKC American Bank of Connecticut 31.125 21.77 20.90
BKCT Bancorp Connecticut Inc. 22.000 17.33 17.33
BKUNA BankUnited Financial Corp. 8.500 7.59 6.15
BNKU Bank United Corp. 28.250 18.44 17.99
BPLS Bank Plus Corp. 9.625 9.27 9.25
BSBC Branford Savings Bank 3.625 2.64 2.64
BTHL Bethel Bancorp 11.000 13.71 11.51
BVCC Bay View Capital Corp. 22.625 15.12 12.69
BWFC Bank West Financial Corp. 11.250 12.88 12.88
BYFC Broadway Financial Corp. 10.750 14.65 14.65
CAFI Camco Financial Corp. 16.667 14.58 13.45
CAPS Capital Savings Bancorp Inc. 12.750 11.28 11.28
CASB Cascade Financial Corp. 11.600 8.78 8.78
CASH First Midwest Financial Inc. 15.000 15.62 13.84
CATB Catskill Financial Corp. 13.938 15.08 15.08
CBCI Calumet Bancorp Inc. 34.250 36.47 36.47
CBES CBES Bancorp Inc. 14.000 17.08 17.08
CBK Citizens First Financial Corp. 14.625 16.14 16.14
CBSA Coastal Bancorp Inc. 22.750 19.63 16.32
CBSB Charter Financial Inc. 16.750 13.71 12.13
CCFH CCF Holding Company 15.750 14.36 14.36
CEBK Central Co-operative Bank 15.875 17.40 15.57
CENB Century Bancorp Inc. 62.000 73.45 73.45
CENF CENFED Financial Corp. 26.375 20.85 20.81
CFB Commercial Federal Corp. 32.125 19.77 17.53
CFBC Community First Banking Co. NA NA NA
CFCP Coastal Financial Corp. 16.125 6.69 6.69
CFFC Community Financial Corp. 21.500 18.86 18.86
CFNC Carolina Fincorp Inc. 14.125 13.74 13.74
CFSB CFSB Bancorp Inc. 19.318 12.65 12.65
CFTP Community Federal Bancorp 17.125 13.96 13.96
CFX CFX Corp. 15.500 10.52 9.84
CIBI Community Investors Bancorp 11.500 11.96 11.96
CKFB CKF Bancorp Inc. 18.000 16.97 16.97
CLAS Classic Bancshares Inc. 12.250 14.87 12.57
</TABLE>
<PAGE> 114
Page 18 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
INCOME STATEMENT AS OF THE MOST RECENT QUARTER
--------------------------------------------------------------------------
NET INTEREST INTEREST NET INTEREST NONINTEREST NONINTEREST
INTEREST INCOME/ EXPENSE/ INCOME/ INCOME/ EXPENSE/
MARGIN AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- --------------------------------------------- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp 4.08 8.00 4.10 3.90 0.09 1.84
CMSB Commonwealth Bancorp Inc. 3.40 6.93 3.76 3.18 0.54 2.97
CMSV Community Savings FA (MHC) 3.52 7.26 3.94 3.32 0.56 2.61
CNIT CENIT Bancorp Inc. 3.26 7.29 4.22 3.07 0.66 2.39
CNSB CNS Bancorp Inc. 3.66 7.22 3.70 3.53 0.16 2.14
CNY Carver Bancorp Inc. 2.97 6.49 3.65 2.84 0.30 2.45
COFI Charter One Financial 2.82 7.36 4.62 2.74 0.49 1.32
CONE Conestoga Bancorp, Inc. 2.84 6.42 3.68 2.73 0.16 2.05
COOP Cooperative Bankshares Inc. 3.02 7.35 4.42 2.92 0.14 2.03
CRZY Crazy Woman Creek Bancorp 3.71 7.37 3.73 3.64 0.13 1.75
CSA Coast Savings Financial 2.73 7.04 4.61 2.43 0.55 1.69
CSBF CSB Financial Group Inc. 3.40 6.68 3.40 3.28 0.19 2.58
CTZN CitFed Bancorp Inc. 2.51 7.01 4.62 2.39 1.13 2.00
CVAL Chester Valley Bancorp Inc. 3.86 7.65 3.87 3.78 0.38 2.53
DCBI Delphos Citizens Bancorp Inc. 3.96 7.32 3.45 3.86 0.19 1.70
DIBK Dime Financial Corp. 3.44 7.34 3.97 3.37 0.23 1.61
DIME Dime Community Bancorp Inc. 4.07 7.38 3.50 3.87 0.27 2.22
DME Dime Bancorp Inc. 2.51 6.87 4.45 2.41 0.44 1.52
DNFC D & N Financial Corp. 3.09 7.74 4.73 3.02 0.41 2.13
DSL Downey Financial Corp. 2.75 7.29 4.66 2.63 0.26 1.76
EBSI Eagle Bancshares 4.15 8.39 4.55 3.85 1.55 3.96
EFBC Empire Federal Bancorp Inc. 4.46 7.13 2.75 4.38 0.65 2.40
EFBI Enterprise Federal Bancorp 2.98 7.70 4.77 2.93 0.04 1.58
EGFC Eagle Financial Corp. 3.31 7.05 3.88 3.17 0.33 2.38
EGLB Eagle BancGroup Inc. 2.64 7.27 4.72 2.55 0.20 2.18
EIRE Emerald Isle Bancorp Inc. 3.58 7.78 4.30 3.48 0.17 2.10
EMLD Emerald Financial Corp. 2.87 7.54 4.74 2.80 0.27 1.52
EQSB Equitable Federal Savings Bank 2.38 7.22 4.91 2.31 0.52 1.75
ESBK Elmira Savings Bank (The) 3.73 7.56 4.04 3.52 0.83 3.42
ESX Essex Bancorp Inc. 3.14 7.90 4.94 2.96 1.29 3.63
ETFS East Texas Financial Services 3.06 6.97 3.96 3.01 0.23 2.20
FAB FirstFed America Bancorp Inc. 3.06 7.19 4.24 2.96 0.47 1.89
FBBC First Bell Bancorp Inc. 2.39 7.02 4.66 2.36 0.09 0.73
FBCI Fidelity Bancorp Inc. 3.00 7.33 4.40 2.94 0.24 1.88
FBCV 1ST Bancorp 2.69 7.57 5.01 2.56 0.31 2.58
FBER 1st Bergen Bancorp 3.58 7.24 3.78 3.46 0.08 2.07
FBHC Fort Bend Holding Corp. 3.38 7.01 3.95 3.07 1.87 3.93
FBNW FirstBank Corp. 4.04 7.95 4.12 3.83 0.78 4.06
FBSI First Bancshares Inc. 3.52 7.62 4.27 3.35 0.34 2.10
FCB Falmouth Co-Operative Bank 3.70 6.64 3.03 3.61 0.12 2.63
FCBF FCB Financial Corp. 3.76 8.40 4.71 3.69 0.40 1.97
FCME First Coastal Corp. 4.35 7.97 3.94 4.02 0.38 3.26
FDEF First Defiance Financial 4.25 7.80 3.76 4.04 0.23 2.45
FED FirstFed Financial Corp. 2.32 7.11 4.89 2.21 0.23 1.01
FESX First Essex Bancorp Inc. 3.32 7.58 4.38 3.19 0.23 2.00
FFBA First Colorado Bancorp Inc. 3.35 7.17 3.96 3.21 0.35 1.57
FFBH First Federal Bancshares of AR 3.25 7.62 4.42 3.20 0.25 2.19
FFBI First Financial Bancorp Inc. 3.08 7.42 4.44 2.97 0.60 2.99
FFBS FFBS BanCorp Inc. 3.74 7.51 3.83 3.68 0.43 1.97
FFBZ First Federal Bancorp Inc. 3.96 7.71 4.14 3.58 0.54 2.47
FFCH First Financial Holdings Inc. 3.11 7.50 4.50 3.00 0.73 2.25
FFDB FirstFed Bancorp Inc. 3.72 7.70 4.11 3.59 0.52 2.50
FFDF FFD Financial Corp. 3.34 6.88 3.58 3.30 0.07 1.83
FFED Fidelity Federal Bancorp 2.59 7.81 5.38 2.43 1.85 3.11
FFES First Federal of East Hartford 2.40 6.79 4.45 2.34 0.16 1.42
FFFC FFVA Financial Corp. 3.82 7.87 4.16 3.71 0.22 1.82
FFFD North Central Bancshares Inc. 4.07 7.61 3.67 3.94 1.16 2.17
FFFG F.F.O. Financial Group Inc. 3.78 7.61 4.03 3.58 0.75 3.09
FFFL Fidelity Bankshares Inc. (MHC) 3.31 7.26 4.13 3.13 0.41 2.49
FFHC First Financial Corp. 3.42 7.56 4.27 3.29 0.78 1.85
FFHH FSF Financial Corp. 3.13 7.44 4.40 3.04 0.42 1.96
FFHS First Franklin Corporation 2.76 7.24 4.57 2.68 0.17 1.73
FFIC Flushing Financial Corp. 3.92 7.55 3.79 3.77 0.21 2.10
FFKY First Federal Financial Corp. 4.24 7.95 3.96 3.98 0.58 2.09
</TABLE>
<TABLE>
<CAPTION>
INCOME STATEMENT AS
OF THE MOST BALANCE SHEET GROWTH AS OF MARKET DATA AS OF THE
RECENT QUARTER THE MOST RECENT QUARTER MOST RECENT QUARTER
--------------------- -------------------------- ----------------------------
ASSET LOAN DEPOSIT MRQ MRQ MRQ
EFFICIENCY OVERHEAD GROWTH GROWTH GROWTH MARKET PRICE PRICE
RATIO RATIO RATE RATE RATE VALUE PER SHARE HIGH
TICKER SHORT NAME (%) (%) (%) (%) (%) ($) ($) ($)
- --------------------------------------------- --------------------- -------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp 46.10 44.87 21.07 17.08 0.59 46.95 18.000 18.000
CMSB Commonwealth Bancorp Inc. 72.23 67.51 9.48 25.68 5.69 295.98 16.375 16.625
CMSV Community Savings FA (MHC) 67.33 61.80 10.24 13.48 1.88 166.70 22.000 22.375
CNIT CENIT Bancorp Inc. 62.06 53.93 1.56 35.33 18.26 81.41 48.750 48.750
CNSB CNS Bancorp Inc. 58.17 56.24 1.01 19.65 0.07 28.93 16.625 17.000
CNY Carver Bancorp Inc. 76.07 73.53 (9.19) 73.95 4.61 27.63 11.750 12.250
COFI Charter One Financial 40.05 29.39 14.94 25.48 (3.16) 2,612.42 53.875 53.875
CONE Conestoga Bancorp, Inc. 70.85 69.16 4.86 (4.86) 5.85 NA 20.625 20.780
COOP Cooperative Bankshares Inc. 66.40 64.75 4.52 8.81 4.02 41.77 22.000 22.000
CRZY Crazy Woman Creek Bancorp 46.48 44.58 17.16 0.98 7.49 13.85 13.500 13.750
CSA Coast Savings Financial 54.81 44.52 13.90 2.17 (4.96) 923.81 45.438 46.000
CSBF CSB Financial Group Inc. 70.71 69.02 7.07 (4.82) 6.29 11.18 12.000 12.500
CTZN CitFed Bancorp Inc. 53.83 32.06 21.82 48.77 9.92 401.69 38.750 38.750
CVAL Chester Valley Bancorp Inc. 60.57 56.63 24.23 20.85 30.47 45.40 20.250 21.750
DCBI Delphos Citizens Bancorp Inc. 41.95 39.03 0.35 16.10 (0.39) 34.66 15.000 15.000
DIBK Dime Financial Corp. 42.94 39.02 29.20 (3.31) 39.99 152.00 25.500 26.000
DIME Dime Community Bancorp Inc. 47.83 44.17 25.14 39.70 0.47 252.86 20.000 20.000
DME Dime Bancorp Inc. 51.74 42.86 35.15 29.36 15.11 2,087.34 17.500 19.000
DNFC D & N Financial Corp. 61.89 56.68 21.03 33.47 5.08 172.03 19.250 19.250
DSL Downey Financial Corp. 62.33 58.66 29.26 38.03 12.16 614.87 23.625 23.625
EBSI Eagle Bancshares 75.30 65.37 11.95 15.22 15.34 94.80 17.875 17.922
EFBC Empire Federal Bancorp Inc. 47.65 39.83 2.33 7.50 (7.96) 40.83 14.375 14.625
EFBI Enterprise Federal Bancorp 52.98 52.39 11.78 32.92 8.00 39.02 19.125 19.125
EGFC Eagle Financial Corp. 57.59 53.22 132.62 129.04 111.26 226.54 30.375 30.750
EGLB Eagle BancGroup Inc. 79.66 78.09 8.86 24.56 (2.73) 20.58 15.500 15.875
EIRE Emerald Isle Bancorp Inc. 57.41 55.31 12.49 17.64 16.66 56.76 19.625 19.625
EMLD Emerald Financial Corp. 48.88 43.98 9.82 8.18 8.21 70.27 14.500 15.000
EQSB Equitable Federal Savings Bank 60.61 51.69 16.48 19.84 9.65 22.58 37.000 38.500
ESBK Elmira Savings Bank (The) 77.15 71.79 9.36 (6.59) 5.95 17.13 19.875 21.250
ESX Essex Bancorp Inc. 75.22 64.40 22.58 3.74 26.28 2.05 1.000 1.625
ETFS East Texas Financial Services 68.06 65.60 3.61 21.39 (2.18) 19.61 18.000 18.375
FAB FirstFed America Bancorp Inc. 54.61 47.46 16.80 27.61 1.23 176.32 17.750 18.250
FBBC First Bell Bancorp Inc. 29.78 27.24 3.02 12.24 10.48 103.77 16.750 16.750
FBCI Fidelity Bancorp Inc. 58.76 55.39 3.15 9.90 6.01 62.47 18.500 19.500
FBCV 1ST Bancorp 86.62 85.02 (3.81) (12.70) (6.34) 24.43 30.063 33.250
FBER 1st Bergen Bancorp 60.27 59.30 51.48 (5.42) 10.61 55.51 15.250 15.750
FBHC Fort Bend Holding Corp. 80.47 68.57 31.98 54.59 29.35 28.85 29.250 30.500
FBNW FirstBank Corp. 88.21 85.82 47.92 43.49 17.03 34.47 NA NA
FBSI First Bancshares Inc. 56.38 51.93 9.81 14.08 12.06 26.57 20.000 20.500
FCB Falmouth Co-Operative Bank 70.61 69.65 15.82 34.54 18.19 25.09 16.500 16.500
FCBF FCB Financial Corp. 48.16 42.61 376.15 319.48 429.52 108.96 25.250 25.500
FCME First Coastal Corp. 72.04 69.41 3.29 9.99 2.85 14.61 9.750 10.000
FDEF First Defiance Financial 56.31 53.84 4.52 5.24 5.43 137.78 14.625 14.625
FED FirstFed Financial Corp. 42.35 36.35 6.15 5.24 (14.43) 369.00 31.063 31.063
FESX First Essex Bancorp Inc. 54.87 51.56 34.38 4.12 13.16 135.07 17.500 17.500
FFBA First Colorado Bancorp Inc. 44.53 38.56 0.23 6.65 (3.08) 311.61 19.125 19.875
FFBH First Federal Bancshares of AR 66.37 63.71 11.88 11.04 11.81 103.74 20.125 20.625
FFBI First Financial Bancorp Inc. 83.79 80.54 (37.03) (100.44) 4.34 7.89 18.125 18.750
FFBS FFBS BanCorp Inc. 47.98 41.83 6.48 13.97 4.17 35.82 24.500 24.500
FFBZ First Federal Bancorp Inc. 60.34 54.36 19.98 12.90 1.72 29.08 18.250 19.000
FFCH First Financial Holdings Inc. 60.32 50.73 16.27 8.76 2.31 218.51 32.000 32.000
FFDB FirstFed Bancorp Inc. 59.26 53.40 (3.58) (7.44) (4.68) 20.43 17.750 18.500
FFDF FFD Financial Corp. 54.43 53.47 (4.05) 13.06 1.61 21.46 14.000 14.000
FFED Fidelity Federal Bancorp 72.52 51.53 (15.20) (2.83) (5.16) 23.32 9.000 10.000
FFES First Federal of East Hartford 57.14 54.26 3.65 17.96 3.73 91.74 29.250 30.375
FFFC FFVA Financial Corp. 45.64 42.44 6.63 3.72 2.84 135.62 27.250 27.250
FFFD North Central Bancshares Inc. 42.48 25.59 18.42 8.40 11.74 54.16 15.500 16.000
FFFG F.F.O. Financial Group Inc. 70.89 64.79 3.74 10.25 (6.05) 52.79 4.875 5.125
FFFL Fidelity Bankshares Inc. (MHC) 68.67 64.53 31.24 27.45 19.20 191.28 19.750 20.250
FFHC First Financial Corp. 44.06 30.76 8.47 7.28 2.19 1,185.86 29.375 29.375
FFHH FSF Financial Corp. 56.68 50.62 11.89 17.69 (5.90) 53.83 17.375 17.500
FFHS First Franklin Corporation 59.32 56.68 1.25 3.33 1.30 23.54 19.750 20.750
FFIC Flushing Financial Corp. 52.71 50.05 24.08 43.49 (0.40) 175.04 22.000 23.500
FFKY First Federal Financial Corp. 44.41 36.31 5.46 7.34 5.98 90.70 18.500 21.000
</TABLE>
<TABLE>
<CAPTION>
MARKET DATA AS OF THE
MOST RECENT QUARTER
----------------------------------
MRQ MRQ PUBLICLY MRQ TANGIBLE
PRICE REPORTED PUBLICLY REP
LOW BOOK VALUE BOOK VALUE
TICKER SHORT NAME ($) ($) ($)
- --------------------------------------------- ----------------------------------
<S> <C> <C> <C>
CMRN Cameron Financial Corp 15.875 17.18 17.18
CMSB Commonwealth Bancorp Inc. 13.500 12.89 10.08
CMSV Community Savings FA (MHC) 19.625 15.95 15.95
CNIT CENIT Bancorp Inc. 40.000 31.12 28.58
CNSB CNS Bancorp Inc. 15.000 14.84 14.84
CNY Carver Bancorp Inc. 9.125 14.93 14.32
COFI Charter One Financial 42.250 21.15 19.80
CONE Conestoga Bancorp, Inc. 20.125 17.58 17.58
COOP Cooperative Bankshares Inc. 20.500 18.03 18.03
CRZY Crazy Woman Creek Bancorp 13.000 14.68 14.68
CSA Coast Savings Financial 38.500 24.06 23.75
CSBF CSB Financial Group Inc. 11.000 12.99 12.27
CTZN CitFed Bancorp Inc. 33.000 22.83 20.56
CVAL Chester Valley Bancorp Inc. 16.500 13.15 13.15
DCBI Delphos Citizens Bancorp Inc. 12.438 14.93 14.93
DIBK Dime Financial Corp. 18.000 13.52 13.08
DIME Dime Community Bancorp Inc. 16.625 14.58 12.56
DME Dime Bancorp Inc. 14.875 10.21 9.74
DNFC D & N Financial Corp. 17.250 10.84 10.72
DSL Downey Financial Corp. 18.095 15.26 15.05
EBSI Eagle Bancshares 15.250 12.45 12.45
EFBC Empire Federal Bancorp Inc. 12.500 15.65 15.65
EFBI Enterprise Federal Bancorp 15.250 15.79 15.78
EGFC Eagle Financial Corp. 26.750 22.02 17.19
EGLB Eagle BancGroup Inc. 14.750 16.69 16.69
EIRE Emerald Isle Bancorp Inc. 17.000 13.39 13.39
EMLD Emerald Financial Corp. 11.375 9.03 8.89
EQSB Equitable Federal Savings Bank 33.250 25.80 25.80
ESBK Elmira Savings Bank (The) 19.250 20.72 19.87
ESX Essex Bancorp Inc. 1.000 0.49 0.31
ETFS East Texas Financial Services 16.875 19.97 19.97
FAB FirstFed America Bancorp Inc. 13.625 15.35 15.35
FBBC First Bell Bancorp Inc. 14.500 10.78 10.78
FBCI Fidelity Bancorp Inc. 18.500 18.22 18.18
FBCV 1ST Bancorp 30.000 32.00 31.35
FBER 1st Bergen Bancorp 12.875 13.47 13.47
FBHC Fort Bend Holding Corp. 23.750 23.23 21.64
FBNW FirstBank Corp. NA NA NA
FBSI First Bancshares Inc. 19.000 20.27 20.24
FCB Falmouth Co-Operative Bank 13.250 15.40 15.40
FCBF FCB Financial Corp. 20.125 18.80 18.80
FCME First Coastal Corp. 8.875 10.35 10.35
FDEF First Defiance Financial 12.375 12.60 12.60
FED FirstFed Financial Corp. 22.5 19.14 18.93
FESX First Essex Bancorp Inc. 14.500 11.57 10.05
FFBA First Colorado Bancorp Inc. 16.000 11.79 11.63
FFBH First Federal Bancshares of AR 17.500 16.36 16.36
FFBI First Financial Bancorp Inc. 15.500 17.62 17.62
FFBS FFBS BanCorp Inc. 21.500 16.97 16.97
FFBZ First Federal Bancorp Inc. 17.000 8.81 8.80
FFCH First Financial Holdings Inc. 23.750 16.03 16.03
FFDB FirstFed Bancorp Inc. 14.375 14.48 13.20
FFDF FFD Financial Corp. 13.000 14.51 14.51
FFED Fidelity Federal Bancorp 8.750 5.17 5.17
FFES First Federal of East Hartford 23.000 23.63 23.63
FFFC FFVA Financial Corp. 20.500 17.41 17.04
FFFD North Central Bancshares Inc. 15.000 14.81 14.81
FFFG F.F.O. Financial Group Inc. 3.875 2.57 2.57
FFFL Fidelity Bankshares Inc. (MHC) 18.750 12.36 12.27
FFHC First Financial Corp. 24.500 11.67 11.37
FFHH FSF Financial Corp. 16.375 16.04 16.04
FFHS First Franklin Corporation 17.000 17.17 17.06
FFIC Flushing Financial Corp. 18.000 16.68 16.68
FFKY First Federal Financial Corp. 18.250 12.40 11.67
</TABLE>
<PAGE> 115
Page 19 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
INCOME STATEMENT AS OF THE MOST RECENT QUARTER
--------------------------------------------------------------------------
NET INTEREST INTEREST NET INTEREST NONINTEREST NONINTEREST
INTEREST INCOME/ EXPENSE/ INCOME/ INCOME/ EXPENSE/
MARGIN AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- ------------------------------------- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FFLC FFLC Bancorp Inc. 3.55 7.35 4.00 3.35 0.23 2.01
FFOH Fidelity Financial of Ohio 3.15 7.32 4.29 3.03 0.21 1.76
FFPB First Palm Beach Bancorp Inc. 3.00 7.47 4.59 2.88 0.38 2.18
FFSL First Independence Corp. 2.86 7.37 4.58 2.80 0.25 1.95
FFSX First Fed SB of Siouxland(MHC) 3.12 7.46 4.47 2.98 0.60 2.39
FFWC FFW Corp. 3.25 7.69 4.54 3.15 0.46 2.05
FFWD Wood Bancorp Inc. 4.26 8.09 3.98 4.11 0.25 2.27
FFYF FFY Financial Corp. 3.77 7.82 4.15 3.67 0.18 1.85
FGHC First Georgia Holding Inc. 4.31 8.37 4.45 3.92 0.79 3.11
FIBC Financial Bancorp Inc. 3.89 7.41 3.69 3.71 0.23 2.09
FISB First Indiana Corporation 4.36 8.39 4.23 4.17 0.81 2.78
FKFS First Keystone Financial 3.35 7.33 4.11 3.22 0.31 2.18
FKKY Frankfort First Bancorp Inc. 3.69 7.25 3.64 3.61 0.04 2.05
FLAG FLAG Financial Corp. 3.68 7.38 4.04 3.34 1.26 3.38
FLFC First Liberty Financial Corp. 3.92 7.88 4.31 3.58 0.81 2.67
FLGS Flagstar Bancorp Inc. 2.80 7.09 4.63 2.46 4.01 3.99
FLKY First Lancaster Bancshares 4.99 8.08 3.16 4.93 0.00 2.64
FMBD First Mutual Bancorp Inc. 2.98 6.93 4.17 2.76 0.35 2.45
FMCO FMS Financial Corporation 3.77 7.28 3.68 3.60 0.44 2.36
FMSB First Mutual Savings Bank 3.70 8.37 4.70 3.67 0.34 2.23
FNGB First Northern Capital Corp. 3.28 7.26 4.10 3.16 0.44 2.12
FOBC Fed One Bancorp 3.44 7.26 3.91 3.35 0.16 1.99
FPRY First Financial Bancorp 3.15 7.62 4.63 2.98 0.52 2.92
FRC First Republic Bancorp 2.52 7.80 5.30 2.50 0.16 1.53
FSBI Fidelity Bancorp Inc. 3.02 6.91 3.97 2.93 0.24 1.86
FSFC First Southeast Financial Corp 3.32 7.50 4.30 3.20 0.33 1.75
FSLA First Savings Bank (MHC) 3.21 7.10 3.99 3.11 0.20 1.73
FSNJ Bayonne Bancshares Inc. 2.48 6.71 4.28 2.43 0.26 1.76
FSPG First Home Bancorp Inc. 3.06 7.59 4.61 2.98 0.22 1.83
FSPT FirstSpartan Financial Corp. 3.53 7.51 4.06 3.45 0.40 2.06
FSSB First FS&LA of San Bernardino 3.67 7.74 4.33 3.41 0.89 4.27
FSTC First Citizens Corp. 4.56 7.90 3.57 4.33 0.66 (0.81)
FTF Texarkana First Financial Corp 4.02 8.01 4.09 3.92 0.45 1.39
FTFC First Federal Capital Corp. 3.07 7.47 4.56 2.91 1.22 2.54
FTNB Fulton Bancorp Inc. 3.69 7.50 3.87 3.63 0.49 2.43
FTSB Fort Thomas Financial Corp. 4.27 8.66 4.47 4.19 0.30 2.33
FWWB First SB of Washington Bancorp 3.79 7.82 4.18 3.64 0.3 1.93
GAF GA Financial Inc. 3.67 7.27 3.74 3.54 0.23 1.99
GBCI Glacier Bancorp Inc. 4.65 7.85 3.56 4.29 1.44 2.99
GDVS Greater Delaware Valley (MHC) 3.53 7.14 3.72 3.42 0.23 2.28
GDW Golden West Financial 2.31 7.13 4.89 2.24 0.17 0.81
GFCO Glenway Financial Corp. 3.27 7.52 4.37 3.15 0.26 2.03
GFED Guaranty Federal SB (MHC) 3.55 7.78 4.39 3.39 0.32 2.13
GFSB GFS Bancorp Inc. 3.59 8.21 4.64 3.56 0.24 1.79
GOSB GSB Financial Corp. 2.89 5.52 2.72 2.81 0.20 2.31
GPT GreenPoint Financial Corp. 3.94 7.36 3.69 3.67 0.35 2.01
GRTR Greater New York Savings Bank 3.12 7.00 4.04 2.96 0.27 1.99
GSB Golden State Bancorp Inc. 2.68 7.05 4.50 2.55 0.61 1.80
GSBC Great Southern Bancorp Inc. 3.97 8.02 4.21 3.81 1.53 2.59
GSFC Green Street Financial Corp. 4.47 7.41 3.00 4.41 0.05 1.79
GSLA GS Financial Corp. 5.02 7.09 2.26 4.83 0.02 2.03
GTFN Great Financial Corporation 2.91 7.41 4.67 2.74 0.87 2.33
GTPS Great American Bancorp 4.21 7.25 3.29 3.96 0.51 3.39
GUPB GFSB Bancorp Inc. 3.13 7.07 3.97 3.10 0.05 1.76
GWBC Gateway Bancorp Inc. 3.37 6.91 3.58 3.33 0.01 1.80
HALL Hallmark Capital Corp. 2.51 7.63 5.18 2.45 0.23 1.52
HARB Harbor Florida Bancorp (MHC) 3.74 7.75 4.12 3.63 0.31 1.88
HARL Harleysville Savings Bank 2.89 7.46 4.64 2.82 0.12 1.21
HARS Harris Savings Bank (MHC) 2.67 7.18 4.62 2.56 0.28 1.71
HAVN Haven Bancorp Inc. 3.21 7.26 4.19 3.07 0.65 2.65
HBBI Home Building Bancorp 3.48 7.51 4.13 3.38 0.24 2.39
HBEI Home Bancorp of Elgin Inc. 4.29 7.06 2.93 4.13 0.28 3.06
HBFW Home Bancorp 2.95 7.44 4.56 2.89 0.08 1.41
HBNK Highland Federal Bank FSB 4.40 8.76 4.70 4.05 0.35 2.08
</TABLE>
<TABLE>
<CAPTION>
INCOME STATEMENT AS
OF THE MOST BALANCE SHEET GROWTH AS OF MARKET DATA AS OF THE
RECENT QUARTER THE MOST RECENT QUARTER MOST RECENT QUARTER
--------------------- -------------------------- ----------------------------
ASSET LOAN DEPOSIT MRQ MRQ MRQ
EFFICIENCY OVERHEAD GROWTH GROWTH GROWTH MARKET PRICE PRICE
RATIO RATIO RATE RATE RATE VALUE PER SHARE HIGH
TICKER SHORT NAME (%) (%) (%) (%) (%) ($) ($) ($)
- ------------------------------------ --------------------- -------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FFLC FFLC Bancorp Inc. 56.13 53.11 31.86 46.54 14.33 73.58 27.250 28.500
FFOH Fidelity Financial of Ohio 50.09 46.55 9.09 19.03 9.99 89.27 14.875 15.000
FFPB First Palm Beach Bancorp Inc. 64.93 60.25 27.77 22.33 3.38 176.08 34.000 34.000
FFSL First Independence Corp. 63.23 59.90 6.03 12.51 0.72 13.64 11.500 12.250
FFSX First Fed SB of Siouxland(MHC) 66.35 59.62 4.96 6.63 (4.24) 79.19 23.750 24.000
FFWC FFW Corp. 56.90 50.65 54.57 15.75 72.93 20.98 27.000 27.000
FFWD Wood Bancorp Inc. 52.02 49.08 1.03 (0.19) 8.90 33.37 11.250 11.333
FFYF FFY Financial Corp. 48.04 45.50 0.39 5.05 2.18 111.11 26.000 26.375
FGHC First Georgia Holding Inc. 64.51 57.32 25.26 18.60 19.25 23.66 7.750 8.250
FIBC Financial Bancorp Inc. 53.37 50.49 19.74 16.48 6.21 39.61 18.250 18.250
FISB First Indiana Corporation 56.08 47.54 10.70 11.63 6.27 242.91 22.500 22.500
FKFS First Keystone Financial 61.48 57.76 7.83 12.41 9.55 34.99 23.375 23.375
FKKY Frankfort First Bancorp Inc. 56.05 55.56 12.85 9.43 (0.24) 36.08 8.469 12.250
FLAG FLAG Financial Corp. 72.44 62.07 (0.26) 8.16 (4.65) 31.06 14.375 14.375
FLFC First Liberty Financial Corp. 58.06 48.52 13.10 6.61 32.78 171.88 21.500 22.500
FLGS Flagstar Bancorp Inc. 61.79 (0.44) 20.33 27.37 71.43 266.57 16.250 16.625
FLKY First Lancaster Bancshares 53.57 53.57 38.96 29.59 4.07 15.04 15.500 16.000
FMBD First Mutual Bancorp Inc. 75.01 71.83 (6.50) 6.11 (9.75) 54.35 15.000 15.750
FMCO FMS Financial Corporation 55.93 50.50 0.96 (2.82) 0.56 65.06 23.500 25.500
FMSB First Mutual Savings Bank 55.65 51.59 5.39 17.20 9.28 56.74 19.000 19.000
FNGB First Northern Capital Corp. 58.89 53.21 12.83 10.93 8.99 121.47 11.000 11.000
FOBC Fed One Bancorp 54.40 52.21 12.14 35.13 4.39 47.48 20.250 21.250
FPRY First Financial Bancorp 82.09 78.98 15.07 16.41 12.26 NA 20.75 21.125
FRC First Republic Bancorp 49.11 45.84 10.00 8.55 7.75 236.27 23.250 23.250
FSBI Fidelity Bancorp Inc. 58.76 55.42 43.19 50.26 6.78 34.10 20.250 21.500
FSFC First Southeast Financial Corp 50.19 45.00 10.72 10.10 6.73 68.02 10.125 11.500
FSLA First Savings Bank (MHC) 49.34 46.04 3.16 19.32 4.43 236.07 28.000 28.000
FSNJ Bayonne Bancshares Inc. 65.61 61.90 17.47 (4.47) (1.22) 112.42 9.206 9.206
FSPG First Home Bancorp Inc. 55.44 52.13 11.14 10.48 18.70 54.51 19.375 19.375
FSPT FirstSpartan Financial Corp. 53.35 47.94 NA NA NA 156.72 NA NA
FSSB First FS&LA of San Bernardino 100.81 101.02 12.49 (10.05) 13.89 3.16 9.750 10.500
FSTC First Citizens Corp. 61.28 55.39 15.31 16.76 15.97 58.85 26.375 27.000
FTF Texarkana First Financial Corp 32.33 24.60 7.77 13.50 4.02 44.09 19.500 19.500
FTFC First Federal Capital Corp. 60.99 44.63 10.91 18.07 9.95 217.51 24.500 24.500
FTNB Fulton Bancorp Inc. 59.22 53.66 0.01 (5.46) (3.72) 36.96 17.875 18.500
FTSB Fort Thomas Financial Corp. 51.95 48.45 9.54 12.22 10.88 16.66 11.125 11.500
FWWB First SB of Washington Bancorp 46.6 42.14 26.41 38.24 4.86 258.34 22.25 22.25
GAF GA Financial Inc. 51.99 48.83 47.38 83.50 2.97 146.72 19.000 19.500
GBCI Glacier Bancorp Inc. 51.69 35.51 11.03 17.08 8.37 121.76 18.750 20.250
GDVS Greater Delaware Valley (MHC) 62.30 59.76 9.55 29.31 (2.40) 79.36 14.500 14.500
GDW Golden West Financial 33.70 28.57 5.87 14.64 19.05 4,957.53 70.000 73.250
GFCO Glenway Financial Corp. 57.00 53.49 8.94 12.42 (1.17) 31.63 26.500 26.500
GFED Guaranty Federal SB (MHC) 57.50 53.55 7.18 19.64 14.19 62.89 16.750 20.500
GFSB GFS Bancorp Inc. 47.20 43.71 17.74 12.57 8.39 14.08 13.875 14.250
GOSB GSB Financial Corp. 76.75 75.06 246.95 NA 67.93 32.60 NA NA
GPT GreenPoint Financial Corp. 42.04 36.55 1.17 22.89 (1.91) 2,734.13 66.563 66.563
GRTR Greater New York Savings Bank 59.13 55.36 1.33 6.91 (5.84) 317.21 22.438 22.438
GSB Golden State Bancorp Inc. 54.77 43.94 21.43 21.55 7.45 1,545.10 26.125 26.750
GSBC Great Southern Bancorp Inc. 48.46 27.73 16.90 3.16 (3.16) 142.85 16.125 17.750
GSFC Green Street Financial Corp. 40.12 39.47 0.55 8.75 (2.54) 80.05 17.625 18.000
GSLA GS Financial Corp. 41.88 41.63 (35.74) 9.87 (188.91) 55.02 15.375 15.625
GTFN Great Financial Corporation 63.38 51.79 5.87 12.32 12.65 491.78 35.125 35.125
GTPS Great American Bancorp 76.22 73.16 (2.67) 14.80 (3.71) 31.24 16.500 17.000
GUPB GFSB Bancorp Inc. 56.02 55.28 25.12 21.6 10.63 15.08 17.5 17.5
GWBC Gateway Bancorp Inc. 53.69 53.52 (11.96) 19.83 (16.87) 19.30 17.500 17.750
HALL Hallmark Capital Corp. 56.77 52.78 0.52 1.78 18.15 31.74 21.375 22.500
HARB Harbor Florida Bancorp (MHC) 47.80 43.30 4.27 7.64 2.36 289.36 45.750 45.750
HARL Harleysville Savings Bank 42.08 39.68 4.94 8.89 7.37 42.55 22.750 22.750
HARS Harris Savings Bank (MHC) 56.99 52.21 20.78 14.06 (4.39) 498.01 21.25 21.297
HAVN Haven Bancorp Inc. 70.56 64.36 12.44 23.02 25.01 171.50 37.500 37.500
HBBI Home Building Bancorp 65.93 63.52 (14.87) 0.54 (20.46) 6.39 21.000 22.000
HBEI Home Bancorp of Elgin Inc. 69.36 67.27 (6.82) 27.58 (6.25) 123.40 16.500 16.500
HBFW Home Bancorp 47.51 46.08 8.63 17.84 12.85 56.81 20.875 20.875
HBNK Highland Federal Bank FSB 46.71 42.17 20.15 10.30 21.29 69.58 25.750 25.750
</TABLE>
<TABLE>
<CAPTION>
MARKET DATA AS OF THE
MOST RECENT QUARTER
----------------------------------
MRQ MRQ PUBLICLY MRQ TANGIBLE
PRICE REPORTED PUBLICLY REP
LOW BOOK VALUE BOOK VALUE
TICKER SHORT NAME ($) ($) ($)
- ------------------------------------ ----------------------------------
<S> <C> <C> <C>
FFLC FFLC Bancorp Inc. 25.000 22.52 22.52
FFOH Fidelity Financial of Ohio 12.375 12.17 10.74
FFPB First Palm Beach Bancorp Inc. 26.563 21.76 21.23
FFSL First Independence Corp. 10.875 11.60 11.60
FFSX First Fed SB of Siouxland(MHC) 20.750 13.74 13.62
FFWC FFW Corp. 25.500 24.11 21.73
FFWD Wood Bancorp Inc. 10.583 9.52 9.52
FFYF FFY Financial Corp. 25.500 19.83 19.83
FGHC First Georgia Holding Inc. 7.000 4.21 3.86
FIBC Financial Bancorp Inc. 14.875 15.35 15.27
FISB First Indiana Corporation 17.375 13.77 13.60
FKFS First Keystone Financial 21.250 19.09 19.09
FKKY Frankfort First Bancorp Inc. 8.000 6.94 6.94
FLAG FLAG Financial Corp. 11.750 10.44 10.44
FLFC First Liberty Financial Corp. 21.000 12.30 11.09
FLGS Flagstar Bancorp Inc. 13.000 8.44 NA
FLKY First Lancaster Bancshares 14.500 14.44 14.44
FMBD First Mutual Bancorp Inc. 13.750 16.73 12.67
FMCO FMS Financial Corporation 18.750 15.24 14.97
FMSB First Mutual Savings Bank 15.909 10.91 10.91
FNGB First Northern Capital Corp. 9.125 8.14 8.14
FOBC Fed One Bancorp 17.625 17.25 16.45
FPRY First Financial Bancorp 20.25 17.07 17.07
FRC First Republic Bancorp 19.875 16.56 16.55
FSBI Fidelity Bancorp Inc. 18.409 15.83 15.83
FSFC First Southeast Financial Corp 9.375 7.80 7.80
FSLA First Savings Bank (MHC) 21.000 13.39 11.94
FSNJ Bayonne Bancshares Inc. 7.927 NA NA
FSPG First Home Bancorp Inc. 18.000 12.85 12.64
FSPT FirstSpartan Financial Corp. NA NA NA
FSSB First FS&LA of San Bernardino 9.000 13.68 13.18
FSTC First Citizens Corp. 23.250 17.99 13.99
FTF Texarkana First Financial Corp 15.625 15.03 15.03
FTFC First Federal Capital Corp. 16.833 11.08 10.42
FTNB Fulton Bancorp Inc. 14.750 14.47 14.47
FTSB Fort Thomas Financial Corp. 9.250 10.40 10.40
FWWB First SB of Washington Bancorp 18.75 15.68 14.48
GAF GA Financial Inc. 14.875 14.25 14.10
GBCI Glacier Bancorp Inc. 15.333 8.12 7.91
GDVS Greater Delaware Valley (MHC) 12.250 8.64 8.64
GDW Golden West Financial 59.875 43.90 43.90
GFCO Glenway Financial Corp. 20.500 23.89 23.57
GFED Guaranty Federal SB (MHC) 12.375 8.80 8.80
GFSB GFS Bancorp Inc. 11.500 10.66 10.66
GOSB GSB Financial Corp. NA NA NA
GPT GreenPoint Financial Corp. 51.750 34.27 19.27
GRTR Greater New York Savings Bank 16.750 11.74 11.74
GSB Golden State Bancorp Inc. 22.500 15.63 13.89
GSBC Great Southern Bancorp Inc. 16.125 7.45 7.45
GSFC Green Street Financial Corp. 17.000 14.73 14.73
GSLA GS Financial Corp. 13.375 16.36 16.36
GTFN Great Financial Corporation 29.375 20.40 19.54
GTPS Great American Bancorp 15.500 18.36 18.36
GUPB GFSB Bancorp Inc. 15.75 16.88 16.88
GWBC Gateway Bancorp Inc. 14.500 16.05 16.05
HALL Hallmark Capital Corp. 17.500 20.56 20.56
HARB Harbor Florida Bancorp (MHC) 35.000 18.85 18.23
HARL Harleysville Savings Bank 20.250 13.31 13.31
HARS Harris Savings Bank (MHC) 18.125 14.59 12.76
HAVN Haven Bancorp Inc. 30.500 24.20 24.11
HBBI Home Building Bancorp 20.500 20.16 20.16
HBEI Home Bancorp of Elgin Inc. 14.125 13.73 13.73
HBFW Home Bancorp 20.125 17.62 17.62
HBNK Highland Federal Bank FSB 20.500 16.39 16.39
</TABLE>
<PAGE> 116
Page 20 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
INCOME STATEMENT AS OF THE MOST RECENT QUARTER
-----------------------------------------------------------------------------------------
NET INTEREST INTEREST NET INTEREST NONINTEREST NONINTEREST
INTEREST INCOME/ EXPENSE/ INCOME/ INCOME/ EXPENSE/ EFFICIENCY
MARGIN AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS RATIO
TICKER SHORT NAME (%) (%) (%) (%) (%) (%) (%)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
HBS Haywood Bancshares Inc. 3.44 7.44 4.17 3.28 0.32 1.81 57.61
HCBB HCB Bancshares Inc. 2.76 7.17 4.51 2.65 0.27 2.26 72.89
HCFC Home City Financial Corp. 3.93 8.14 4.30 3.84 0.13 2.18 54.80
HEMT HF Bancorp Inc. 2.50 6.97 4.56 2.40 0.23 2.29 76.94
HFFB Harrodsburg First Fin Bancorp 3.65 7.13 3.54 3.59 0.10 1.53 41.46
HFFC HF Financial Corp. 3.69 8.01 4.50 3.51 1.22 3.02 61.26
HFGI Harrington Financial Group 1.51 6.72 5.23 1.48 0.05 1.04 67.79
HFNC HFNC Financial Corp. 3.27 7.60 4.46 3.14 0.12 1.86 57.40
HFSA Hardin Bancorp Inc. 2.94 7.52 4.65 2.87 0.24 1.75 56.61
HHFC Harvest Home Financial Corp. 2.82 7.24 4.47 2.77 0.07 1.63 57.52
HIFS Hingham Instit. for Savings 4.08 7.78 3.83 3.96 0.30 2.12 49.89
HMCI HomeCorp Inc. 3.17 7.20 4.30 2.90 0.62 2.61 85.80
HMLK Hemlock Federal Financial Corp 3.59 6.91 3.35 3.56 0.24 2.01 53.04
HMNF HMN Financial Inc. 2.81 7.24 4.49 2.76 0.16 1.52 51.92
HOMF Home Federal Bancorp 3.71 7.91 4.38 3.53 0.85 2.33 54.83
HPBC Home Port Bancorp Inc. 4.70 8.23 3.68 4.55 0.44 2.15 43.18
HRBF Harbor Federal Bancorp Inc. 3.04 7.38 4.40 2.98 0.11 1.83 59.14
HRZB Horizon Financial Corp. 3.58 7.69 4.17 3.52 0.27 1.39 36.65
HTHR Hawthorne Financial Corp. 3.79 8.72 5.04 3.68 0.39 2.22 59.90
HVFD Haverfield Corp. 3.65 7.96 4.38 3.58 0.57 2.55 61.35
HWEN Home Financial Bancorp 4.14 8.54 4.56 3.98 0.52 3.18 71.80
HZFS Horizon Financial Svcs Corp. 3.19 7.64 4.52 3.12 0.42 2.31 65.47
IBSF IBS Financial Corp. 3.19 7.02 3.93 3.09 0.11 1.85 57.85
IFSB Independence Federal Svgs Bank 2.64 7.18 4.71 2.47 1.03 3.12 83.64
INBI Industrial Bancorp 4.09 8.03 4.02 4.02 0.13 1.79 43.29
INCB Indiana Community Bank SB 4.45 7.76 3.44 4.32 0.90 3.97 76.08
IPSW Ipswich Savings Bank 3.77 7.27 3.69 3.58 0.60 2.36 57.74
ISBF ISB Financial Corporation 3.64 7.23 3.84 3.39 0.68 2.71 62.98
ITLA ITLA Capital Corp. 5.01 9.98 5.02 4.96 0.17 2.25 43.28
IWBK InterWest Bancorp Inc. 3.33 7.62 4.49 3.13 0.69 2.08 54.28
JOAC Joachim Bancorp Inc. 4.23 7.20 3.05 4.15 0.12 2.74 66.05
JSB JSB Financial Inc. 4.57 7.05 2.59 4.46 0.27 1.64 37.17
JSBA Jefferson Savings Bancorp 3.22 7.74 4.62 3.12 0.19 1.81 51.32
JXSB Jacksonville Savings Bk (MHC) 3.58 7.54 4.24 3.30 0.41 2.76 74.36
JXVL Jacksonville Bancorp Inc. 4.37 8.28 4.02 4.26 0.58 2.02 46.59
KFBI Klamath First Bancorp 3.32 7.39 4.12 3.26 0.06 1.38 41.55
KNK Kankakee Bancorp Inc. 3.29 7.28 4.13 3.15 0.44 2.38 64.07
KSAV KS Bancorp Inc. 4.21 8.37 4.36 4.01 0.14 1.89 45.11
KSBK KSB Bancorp Inc. 4.38 8.20 3.96 4.24 0.77 3.31 64.56
KYF Kentucky First Bancorp Inc. 3.47 7.11 3.73 3.38 0.18 1.80 50.63
LARK Landmark Bancshares Inc. 3.11 7.44 4.38 3.06 0.24 1.48 44.69
LARL Laurel Capital Group Inc. 3.75 7.46 3.80 3.66 0.28 1.73 43.60
LFBI Little Falls Bancorp Inc. 2.69 6.64 4.05 2.59 0.09 1.71 58.57
LFCO Life Financial Corp. 4.41 9.41 5.58 3.83 7.70 5.62 48.59
LFED Leeds Federal Savings Bk (MHC) 2.98 7.02 4.09 2.93 0.10 0.98 32.45
LIFB Life Bancorp Inc. 2.69 7.40 4.78 2.61 0.22 1.34 45.14
LISB Long Island Bancorp Inc. 2.88 6.96 4.18 2.78 0.40 1.90 61.13
LOGN Logansport Financial Corp. 3.91 7.52 3.75 3.77 0.15 1.58 40.15
LONF London Financial Corporation 3.71 7.56 3.89 3.68 0.15 2.59 67.86
LSBI LSB Financial Corp. 3.54 7.76 4.44 3.32 0.34 2.46 67.16
LSBX Lawrence Savings Bank 3.29 7.27 4.07 3.20 0.30 2.14 61.03
LVSB Lakeview Financial 3.57 7.02 3.62 3.41 0.83 2.39 49.11
LXMO Lexington B&L Financial Corp. 3.99 7.77 3.85 3.91 0.13 1.69 41.86
MAFB MAF Bancorp Inc. 2.99 7.19 4.34 2.84 0.46 1.44 47.79
MARN Marion Capital Holdings 4.35 7.86 3.80 4.06 0.26 2.20 44.44
MASB MASSBANK Corp. 2.94 6.71 3.82 2.89 0.23 1.43 44.73
MBB MSB Bancorp Inc. 3.34 6.76 3.69 3.07 0.50 2.50 56.98
MBBC Monterey Bay Bancorp Inc. 2.81 7.12 4.44 2.69 0.32 2.30 69.99
MBLF MBLA Financial Corp. 2.19 7.02 4.85 2.17 0.00 0.64 29.44
MBSP Mitchell Bancorp Inc. 5.32 7.87 2.70 5.17 0.00 2.41 46.17
MCBN Mid-Coast Bancorp Inc. 3.97 7.87 4.22 3.65 0.43 2.84 69.12
MCBS Mid Continent Bancshares Inc. 2.67 7.00 4.50 2.49 1.99 2.43 54.28
MDBK Medford Savings Bank 3.29 6.97 3.80 3.17 0.24 1.71 47.22
MECH Mechanics Savings Bank 3.90 7.13 3.42 3.71 0.95 2.96 63.40
</TABLE>
<TABLE>
<CAPTION>
INCOME STATEMENT AS BALANCE SHEET GROWTH AS OF
OF THE MOST RECENT QUARTER THE MOST RECENT QUARTER MARKET DATA AS OF THE MOST RECENT QUARTER
------------- ------------------------------ ---------------------------------------------
ASSET LOAN DEPOSIT MRQ MRQ MRQ MRQ
OVERHEAD GROWTH GROWTH GROWTH MARKET PRICE PRICE PRICE
RATIO RATE RATE RATE VALUE PER SHARE HIGH LOW
TICKER SHORT NAME (%) (%) (%) (%) ($) ($) ($) ($)
- --------------------------------------------------- ------------------------------ ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HBS Haywood Bancshares Inc. 53.50 11.17 4.49 12.58 23.76 17.125 17.125 15.625
HCBB HCB Bancshares Inc. 70.18 NA NA NA 36.37 NA NA NA
HCFC Home City Financial Corp. 53.28 0.56 23.09 1.90 14.76 13.500 14.250 12.000
HEMT HF Bancorp Inc. 74.74 0.12 NA (0.39) 95.01 14.375 14.750 12.250
HFFB Harrodsburg First Fin Bancorp 39.84 2.82 2.03 0.46 30.88 14.875 16.000 14.875
HFFC HF Financial Corp. 47.80 0.27 13.56 (0.04) 72.25 21.000 21.000 18.750
HFGI Harrington Financial Group 66.63 (53.22) 37.83 15.95 40.71 12.125 12.375 10.500
HFNC HFNC Financial Corp. 55.80 24.90 25.67 (3.59) 281.53 16.500 19.875 15.875
HFSA Hardin Bancorp Inc. 52.95 18.05 8.65 22.59 14.50 15.750 15.750 13.500
HHFC Harvest Home Financial Corp. 56.51 21.63 10.5 -3.41 10.98 10.875 11.5 10.25
HIFS Hingham Instit. for Savings 46.08 23.18 20.19 9.31 32.26 21.750 21.750 18.000
HMCI HomeCorp Inc. 82.75 (5.75) 7.91 (7.62) 28.36 14.500 15.000 13.500
HMLK Hemlock Federal Financial Corp 49.93 1.02 20.46 (3.79) 31.79 13.500 13.875 12.500
HMNF HMN Financial Inc. 49.08 10.01 5.35 1.39 103.72 23.000 23.750 19.000
HOMF Home Federal Bancorp 43.93 11.53 11.95 9.79 105.29 28.500 28.750 25.000
HPBC Home Port Bancorp Inc. 37.70 20.18 16.42 12.34 42.13 19.500 20.375 16.500
HRBF Harbor Federal Bancorp Inc. 57.58 (5.64) 7.92 (2.07) 33.45 19.000 19.000 15.500
HRZB Horizon Financial Corp. 31.88 2.58 5.85 3.45 114.96 16.250 16.500 11.957
HTHR Hawthorne Financial Corp. 55.69 11.99 15.70 26.14 52.72 12.250 12.250 9.250
HVFD Haverfield Corp. 55.21 5.26 2.94 (3.19) 53.58 25.875 26.000 21.500
HWEN Home Financial Bancorp 68.14 31.08 18.98 36.31 7.72 15.75 15.75 14.75
HZFS Horizon Financial Svcs Corp. 60.78 38.80 1.90 8.56 8.03 19.250 19.500 17.000
IBSF IBS Financial Corp. 56.32 (3.61) 8.22 (4.05) 190.00 18.125 18.125 14.250
IFSB Independence Federal Svgs Bank 76.86 (6.54) 6.71 (2.31) 17.94 9.031 9.250 7.500
INBI Industrial Bancorp 41.45 15.28 12.83 5.81 80.47 13.688 14.000 12.000
INCB Indiana Community Bank SB 71.08 9.48 (5.47) 11.40 14.52 16.500 19.000 15.750
IPSW Ipswich Savings Bank 50.69 57.69 44.36 43.94 31.48 16.500 16.500 13.750
ISBF ISB Financial Corporation 55.62 3.47 16.49 3.72 175.97 26.000 26.000 21.188
ITLA ITLA Capital Corp. 41.29 19.60 24.06 11.61 143.18 16.250 16.250 14.000
IWBK InterWest Bancorp Inc. 44.25 13.79 24.23 (0.72) 317.42 39.500 39.500 27.625
JOAC Joachim Bancorp Inc. 65.03 (8.05) 7.85 (3.53) 10.57 15.250 15.250 14.000
JSB JSB Financial Inc. 33.33 0.06 10.39 (2.93) 467.17 43.250 46.500 40.000
JSBA Jefferson Savings Bancorp 48.41 (1.51) 0.49 (0.69) 177.06 30.250 30.625 27.750
JXSB Jacksonville Savings Bk (MHC) 71.15 (2.65) 4.01 (3.57) 28.63 17.000 17.625 16.000
JXVL Jacksonville Bancorp Inc. 39.26 14.35 NA 15.21 41.61 15.063 15.125 13.250
KFBI Klamath First Bancorp 40.51 25.78 18.17 1.32 199.12 19.125 19.125 16.500
KNK Kankakee Bancorp Inc. 59.05 (0.82) 5.30 (0.49) 42.93 29.375 30.000 26.625
KSAV KS Bancorp Inc. 43.15 21.31 23.98 8.91 16.38 19.125 19.125 15.375
KSBK KSB Bancorp Inc. 58.11 16.84 27.85 (1.43) 15.48 14.667 14.667 9.000
KYF Kentucky First Bancorp Inc. 47.94 0.16 0.61 6.43 16.82 10.750 11.500 10.563
LARK Landmark Bancshares Inc. 40.30 7.69 22.51 (16.02) 46.62 20.000 20.125 18.750
LARL Laurel Capital Group Inc. 39.26 6.54 1.92 9.89 33.91 21.125 22.500 20.125
LFBI Little Falls Bancorp Inc. 57.20 (4.48) 19.59 (4.22) 44.01 15.625 15.625 12.750
LFCO Life Financial Corp. (54.67) 95.32 320.23 17.46 110.01 13.500 13.500 13.375
LFED Leeds Federal Savings Bk (MHC) 30.15 5.16 25.81 2.84 104.51 18.000 19.000 15.500
LIFB Life Bancorp Inc. 40.62 22.84 6.04 (0.15) 241.87 25.875 26.125 16.875
LISB Long Island Bancorp Inc. 55.49 6.50 6.21 4.26 1,060.60 36.313 36.688 33.000
LOGN Logansport Financial Corp. 37.73 19.44 18.11 6.81 19.22 13.250 14.000 12.500
LONF London Financial Corporation 66.57 3.19 7.03 3.79 7.65 14.750 17.500 14.625
LSBI LSB Financial Corp. 63.82 12.96 22.09 13.80 20.39 20.250 20.875 19.048
LSBX Lawrence Savings Bank 57.37 28.40 9.63 (4.97) 51.14 11.250 11.250 9.125
LVSB Lakeview Financial 36.65 8.35 21.39 13.52 79.93 27.625 33.500 27.625
LXMO Lexington B&L Financial Corp. 39.86 (3.43) 5.15 (2.59) 18.22 16.625 16.625 14.125
MAFB MAF Bancorp Inc. 39.25 10.51 10.62 1.85 488.94 27.917 28.417 24.833
MARN Marion Capital Holdings 40.82 (2.55) 1.72 2.08 41.55 23.250 23.250 21.250
MASB MASSBANK Corp. 40.24 1.91 6.67 1.78 141.00 47.750 47.750 39.875
MBB MSB Bancorp Inc. 50.05 1.59 14.80 (4.83) 67.37 20.125 20.125 16.375
MBBC Monterey Bay Bancorp Inc. 66.44 (9.06) 32.79 1.56 53.91 16.875 17.000 15.500
MBLF MBLA Financial Corp. 29.32 47.75 35.74 14.26 30.19 23.500 24.750 20.250
MBSP Mitchell Bancorp Inc. 46.17 (10.10) 11.81 (11.09) 15.94 16.375 16.750 15.250
MCBN Mid-Coast Bancorp Inc. 65.45 5.53 4.76 1.99 5.81 19.500 19.500 18.500
MCBS Mid Continent Bancshares Inc. 17.87 40.33 52.18 23.34 73.92 28.500 28.500 25.250
MDBK Medford Savings Bank 43.31 7.01 1.20 12.92 146.45 29.250 30.500 24.750
MECH Mechanics Savings Bank 54.02 17.79 18.96 12.93 127.62 18.875 19.000 17.000
</TABLE>
<TABLE>
<CAPTION>
MARKET DATA AS OF THE MOST RECENT QUARTER
---------------------------------------------
MRQ PUBLICLY MRQ TANGIBLE
REPORTED PUBLICLY REP
BOOK VALUE BOOK VALUE
TICKER SHORT NAME ($) ($)
- ----------------------------------------- ----------------------------------------------
<S> <C> <C>
HBS Haywood Bancshares Inc. 16.76 16.16
HCBB HCB Bancshares Inc. NA NA
HCFC Home City Financial Corp. 16.05 16.05
HEMT HF Bancorp Inc. 12.90 NA
HFFB Harrodsburg First Fin Bancorp 15.68 15.68
HFFC HF Financial Corp. 17.78 17.78
HFGI Harrington Financial Group 7.67 7.67
HFNC HFNC Financial Corp. 9.37 9.37
HFSA Hardin Bancorp Inc. 15.68 15.68
HHFC Harvest Home Financial Corp. 11.31 11.31
HIFS Hingham Instit. for Savings 15.62 15.62
HMCI HomeCorp Inc. 12.81 12.81
HMLK Hemlock Federal Financial Corp 14.57 14.57
HMNF HMN Financial Inc. 19.42 19.42
HOMF Home Federal Bancorp 17.05 16.52
HPBC Home Port Bancorp Inc. 11.39 11.39
HRBF Harbor Federal Bancorp Inc. 16.48 16.48
HRZB Horizon Financial Corp. 10.91 10.91
HTHR Hawthorne Financial Corp. 13.07 13.07
HVFD Haverfield Corp. 15.51 15.51
HWEN Home Financial Bancorp 15.33 15.33
HZFS Horizon Financial Svcs Corp. 19.77 19.77
IBSF IBS Financial Corp. 11.59 11.59
IFSB Independence Federal Svgs Bank 13.89 12.28
INBI Industrial Bancorp 11.63 11.63
INCB Indiana Community Bank SB 12.27 12.27
IPSW Ipswich Savings Bank 9.11 9.11
ISBF ISB Financial Corporation 17.61 14.98
ITLA ITLA Capital Corp. 11.92 11.87
IWBK InterWest Bancorp Inc. 15.46 15.13
JOAC Joachim Bancorp Inc. 13.62 13.62
JSB JSB Financial Inc. 35.54 35.54
JSBA Jefferson Savings Bancorp 23.96 18.59
JXSB Jacksonville Savings Bk (MHC) 13.42 13.42
JXVL Jacksonville Bancorp Inc. 13.55 13.55
KFBI Klamath First Bancorp 15.57 15.57
KNK Kankakee Bancorp Inc. 26.59 24.99
KSAV KS Bancorp Inc. 16.21 16.20
KSBK KSB Bancorp Inc. 8.46 8.00
KYF Kentucky First Bancorp Inc. 11.16 11.16
LARK Landmark Bancshares Inc. 18.39 18.39
LARL Laurel Capital Group Inc. 14.74 14.74
LFBI Little Falls Bancorp Inc. 14.51 13.40
LFCO Life Financial Corp. 6.83 6.83
LFED Leeds Federal Savings Bk (MHC) 13.21 13.21
LIFB Life Bancorp Inc. 15.94 15.48
LISB Long Island Bancorp Inc. 22.17 21.95
LOGN Logansport Financial Corp. 12.66 12.66
LONF London Financial Corporation 14.60 14.60
LSBI LSB Financial Corp. 19.80 19.80
LSBX Lawrence Savings Bank 7.45 7.45
LVSB Lakeview Financial 19.91 15.92
LXMO Lexington B&L Financial Corp. 14.73 14.73
MAFB MAF Bancorp Inc. 16.79 14.67
MARN Marion Capital Holdings 22.09 22.09
MASB MASSBANK Corp. 35.92 35.92
MBB MSB Bancorp Inc. 21.15 10.38
MBBC Monterey Bay Bancorp Inc. 15.46 14.25
MBLF MBLA Financial Corp. 21.98 21.98
MBSP Mitchell Bancorp Inc. 15.39 15.39
MCBN Mid-Coast Bancorp Inc. 22.10 22.10
MCBS Mid Continent Bancshares Inc. 19.93 19.93
MDBK Medford Savings Bank 21.24 19.79
MECH Mechanics Savings Bank 15.93 15.93
</TABLE>
<PAGE> 117
Page 21 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
INCOME STATEMENT AS OF THE MOST RECENT QUARTER
--------------------------------------------------------------------------------------
NET INTEREST INTEREST NET INTEREST NONINTEREST NONINTEREST
INTEREST INCOME/ EXPENSE/ INCOME/ INCOME/ EXPENSE/
MARGIN AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- -------------------------------------- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MERI Meritrust Federal SB 3.68 7.37 3.83 3.53 0.75 2.26
METF Metropolitan Financial Corp. 3.40 8.17 4.94 3.23 0.41 2.42
MFBC MFB Corp. 3.21 7.50 4.34 3.16 0.18 1.92
MFCX Marshalltown Financial Corp. 2.71 6.96 4.29 2.67 0.09 1.71
MFFC Milton Federal Financial Corp. 3.08 7.35 4.36 2.99 0.13 2.00
MFLR Mayflower Co-operative Bank 3.98 7.46 3.70 3.76 0.35 2.45
MFSL Maryland Federal Bancorp 2.74 7.28 4.59 2.68 0.22 1.56
MGNL Magna Bancorp Inc. 5.54 8.42 3.51 4.91 2.80 5.13
MIFC Mid-Iowa Financial Corp. 3.02 7.35 4.39 2.96 1.07 2.20
MIVI Mississippi View Holding Co. 3.90 7.41 3.56 3.85 0.25 2.22
MLBC ML Bancorp Inc. 3.26 7.33 4.25 3.08 0.50 2.38
MONT Montgomery Financial Corp. 3.03 7.75 4.84 2.91 0.01 1.81
MRKF Market Financial Corp. 3.84 6.83 3.03 3.80 0.01 2.08
MSBF MSB Financial Inc. 4.79 8.22 3.59 4.63 0.38 2.55
MSBK Mutual Savings Bank FSB 1.71 6.37 4.71 1.67 0.44 2.12
MWBI Midwest Bancshares Inc. 2.91 7.47 4.64 2.83 0.22 1.73
MWBX MetroWest Bank 4.08 7.68 3.79 3.89 0.52 2.64
MWFD Midwest Federal Financial 3.96 8.09 4.27 3.83 0.83 2.83
NASB North American Savings Bank 3.51 8.29 4.85 3.44 0.79 2.08
NBN Northeast Bancorp 4.05 8.39 4.47 3.92 0.94 3.54
NBSI North Bancshares Inc. 3.30 7.33 4.09 3.24 0.21 2.66
NEIB Northeast Indiana Bancorp 3.58 7.84 4.31 3.53 0.35 1.76
NHTB New Hampshire Thrift Bncshrs 4.07 8.22 4.40 3.82 0.65 2.90
NMSB NewMil Bancorp Inc. 3.87 7.29 3.55 3.74 0.45 2.66
NSLB NS&L Bancorp Inc. 3.23 6.62 3.48 3.14 0.24 1.96
NSSB Norwich Financial Corp. 4.41 7.53 3.36 4.17 0.53 2.79
NSSY Norwalk Savings Society 2.95 7.00 4.13 2.87 0.69 2.45
NTMG Nutmeg Federal S&LA 4.15 7.25 3.30 3.95 1.14 3.80
NWEQ Northwest Equity Corp. 3.83 8.02 4.41 3.61 0.48 2.35
NWSB Northwest Savings Bank (MHC) 4.01 8.02 4.23 3.79 0.29 2.34
NYB New York Bancorp Inc. 3.91 7.72 3.87 3.85 0.37 1.48
OCFC Ocean Financial Corp. 3.15 6.93 3.85 3.08 0.16 1.67
OCN Ocwen Financial Corp. 4.81 9.80 5.69 4.11 0.78 3.28
OFCP Ottawa Financial Corp. 3.44 7.45 4.28 3.18 0.43 2.15
OHSL OHSL Financial Corp. 3.23 7.70 4.53 3.16 0.13 1.99
PALM Palfed Inc. 4.09 8.25 4.38 3.87 0.59 2.99
PAMM PacificAmerica Money Center 8.34 8.77 3.59 5.18 61.45 41.43
PBCI Pamrapo Bancorp Inc. 4.75 7.77 3.24 4.53 0.31 2.48
PBCT People's Bank (MHC) 3.42 6.62 3.48 3.15 2.29 4.06
PBHC Oswego City Savings Bk (MHC) 4.19 7.35 3.54 3.81 0.66 2.77
PBKB People's Bancshares Inc. 3.48 7.35 4.05 3.30 0.32 2.82
PCBC Perry County Financial Corp. 2.99 6.90 3.96 2.94 0.04 1.08
PCCI Pacific Crest Capital 4.41 9.36 5.03 4.33 0.17 2.43
PDB Piedmont Bancorp Inc. 3.99 7.85 3.97 3.88 0.25 2.09
PEEK Peekskill Financial Corp. 3.73 6.79 3.10 3.69 0.13 1.81
PERM Permanent Bancorp Inc. 2.72 7.15 4.53 2.62 0.43 1.97
PERT Perpetual Bank (MHC) 3.84 7.73 4.02 3.72 1.07 3.03
PETE Primary Bank 3.79 7.31 3.77 3.54 0.76 3.16
PFDC Peoples Bancorp 3.79 7.78 4.02 3.76 0.21 1.46
PFED Park Bancorp Inc. 3.59 7.08 3.62 3.46 0.07 2.19
PFFB PFF Bancorp Inc. 2.91 7.23 4.41 2.83 0.48 1.98
PFFC Peoples Financial Corp. 3.71 7.00 3.38 3.62 0.02 2.26
PFNC Progress Financial Corp. 4.58 8.24 3.98 4.26 1.19 3.93
PFSB PennFed Financial Services Inc 2.66 7.13 4.57 2.55 0.16 1.37
PFSL Pocahontas FS&LA (MHC) 2.05 7.01 5.01 2.00 0.31 1.25
PHBK Peoples Heritage Finl Group 4.74 7.71 3.33 4.38 0.90 3.26
PHFC Pittsburgh Home Financial Corp 3.10 7.59 4.59 3.00 0.15 1.81
PHSB Peoples Home Savings Bk (MHC) 3.43 7.22 3.90 3.32 0.36 2.71
PKPS Poughkeepsie Financial Corp. 3.31 7.67 4.51 3.16 0.40 2.45
PLSK Pulaski Savings Bank (MHC) 3.07 6.91 3.93 2.98 0.07 1.89
PMFI Perpetual Midwest Financial 2.96 7.72 4.90 2.82 0.40 2.11
PRBC Prestige Bancorp Inc. 3.25 7.01 3.85 3.16 0.29 2.27
PROV Provident Financial Holdings 3.23 7.10 4.01 3.09 0.66 2.98
PSBK Progressive Bank Inc. 4.14 7.82 3.90 3.92 0.37 2.44
</TABLE>
<TABLE>
<CAPTION>
INCOME STATEMENT AS OF BALANCE SHEET GROWTH AS MARKET DATA AS OF THE
THE MOST RECENT QUARTER OF THE MOST RECENT QUARTER MOST RECENT QUARTER
----------------------- ------------------------------ --------------------------------
ASSET LOAN DEPOSIT MRQ MRQ MRQ
EFFICIENCY OVERHEAD GROWTH GROWTH GROWTH MARKET PRICE PRICE
RATIO RATIO RATE RATE RATE VALUE PER SHARE HIGH
TICKER SHORT NAME (%) (%) (%) (%) (%) ($) ($) ($)
- ----------------------------------------- ----------------------- ------------------------------ --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MERI Meritrust Federal SB 53.40 43.50 (0.19) 5.53 (1.73) 33.97 40.000 41.500
METF Metropolitan Financial Corp. 65.37 60.92 7.05 9.38 3.41 63.90 15.500 16.250
MFBC MFB Corp. 57.60 55.19 23.82 28.26 10.27 38.87 19.000 19.750
MFCX Marshalltown Financial Corp. 62.36 61.16 1.32 5.95 1.51 23.64 15.500 16.625
MFFC Milton Federal Financial Corp. 64.41 62.82 47.28 21.70 8.37 32.56 13.750 14.250
MFLR Mayflower Co-operative Bank 58.64 54.85 3.15 (3.26) (1.61) 17.59 19.500 19.500
MFSL Maryland Federal Bancorp 52.52 48.69 10.27 6.13 9.34 146.06 37.750 38.250
MGNL Magna Bancorp Inc. 61.72 39.94 (8.64) 11.70 1.64 371.37 27.375 27.375
MIFC Mid-Iowa Financial Corp. 54.94 38.68 6.37 5.71 (20.09) 16.14 9.000 9.000
MIVI Mississippi View Holding Co. 55.94 53.06 0.11 2.93 (4.23) 13.00 14.625 15.625
MLBC ML Bancorp Inc. 65.50 59.89 22.74 25.94 13.85 217.93 19.375 20.250
MONT Montgomery Financial Corp. 64.77 64.62 (4.21) (0.09) 1.79 19.84 13.000 13.000
MRKF Market Financial Corp. 54.46 54.38 1.67 7.09 (2.17) 18.95 13.750 13.750
MSBF MSB Financial Inc. 51.02 47.03 (4.93) 20.07 3.19 16.86 11.625 11.625
MSBK Mutual Savings Bank FSB 101.82 102.30 6.56 35.02 (2.77) 55.56 10.125 10.125
MWBI Midwest Bancshares Inc. 56.92 53.60 21.69 22.23 8.97 12.25 32.000 32.000
MWBX MetroWest Bank 56.62 50.85 8.36 12.49 9.76 93.32 5.750 5.750
MWFD Midwest Federal Financial 59.58 50.82 11.90 11.95 7.45 34.59 19.750 20.750
NASB North American Savings Bank 49.48 37.85 27.47 19.39 10.55 116.29 47.750 47.750
NBN Northeast Bancorp 70.52 63.49 15.21 19.97 32.77 21.89 13.750 14.250
NBSI North Bancshares Inc. 77.13 75.67 (1.42) 18.04 (2.72) 22.11 19.750 20.125
NEIB Northeast Indiana Bancorp 45.22 39.75 7.95 11.72 (17.19) 29.97 14.750 16.000
NHTB New Hampshire Thrift Bncshrs 61.63 55.09 2.86 4.58 (0.83) 40.51 15.250 15.500
NMSB NewMil Bancorp Inc. 65.08 60.88 7.63 6.23 9.63 49.84 11.500 11.500
NSLB NS&L Bancorp Inc. 58.03 54.76 11.17 15.69 12.96 13.27 17.250 17.250
NSSB Norwich Financial Corp. 54.86 49.12 6.54 1.20 1.40 150.89 21.625 22.625
NSSY Norwalk Savings Society 67.72 59.96 30.00 17.10 10.97 87.97 30.250 31.000
NTMG Nutmeg Federal S&LA 74.18 66.74 37.56 19.71 42.17 8.12 8.750 8.750
NWEQ Northwest Equity Corp. 56.10 50.29 7.55 2.11 10.76 13.52 15.000 15.000
NWSB Northwest Savings Bank (MHC) 55.66 52.29 18.78 13.15 4.43 596.09 15.500 15.625
NYB New York Bancorp Inc. 34.46 28.19 13.69 13.52 (4.27) 672.03 26.063 26.156
OCFC Ocean Financial Corp. 51.39 48.81 17.38 15.42 6.41 280.02 35.250 35.250
OCN Ocwen Financial Corp. 84.26 81.29 20.74 9.68 17.42 1,169.13 32.625 32.625
OFCP Ottawa Financial Corp. 55.63 49.56 1.12 5.14 0.16 126.51 22.375 22.75
OHSL OHSL Financial Corp. 60.56 58.91 0.39 6.88 1.91 28.85 25.250 25.250
PALM Palfed Inc. 62.61 56.96 5.59 6.78 7.83 94.45 16.750 17.500
PAMM PacificAmerica Money Center 61.93 (389.68) 84.64 179.12 73.21 86.44 16.000 16.000
PBCI Pamrapo Bancorp Inc. 49.66 46.22 3.95 (1.82) 1.96 61.12 21.000 21.000
PBCT People's Bank (MHC) 72.79 52.96 17.61 20.50 13.00 1,793.44 25.875 26.875
PBHC Oswego City Savings Bk (MHC) 58.35 51.18 1.10 6.51 0.08 37.37 13.000 14.000
PBKB People's Bancshares Inc. 75.89 73.57 26.90 17.58 8.82 54.40 15.250 15.250
PCBC Perry County Financial Corp. 36.33 35.47 6.98 29.54 (9.68) 17.59 20.000 20.000
PCCI Pacific Crest Capital 53.66 51.85 33.12 20.80 26.80 44.81 13.250 13.375
PDB Piedmont Bancorp Inc. 50.61 47.41 14.32 16.98 14.36 29.23 10.250 11.000
PEEK Peekskill Financial Corp. 47.41 45.53 (0.07) 13.15 (0.90) 52.29 15.000 15.250
PERM Permanent Bancorp Inc. 63.88 57.97 9.01 7.97 4.25 49.89 24.250 25.500
PERT Perpetual Bank (MHC) 63.44 52.90 17.16 23.38 17.24 79.74 29.500 29.750
PETE Primary Bank 72.04 66.06 (3.70) 9.14 4.37 56.13 25.250 25.250
PFDC Peoples Bancorp 36.84 33.30 6.10 9.75 5.30 57.99 23.000 23.000
PFED Park Bancorp Inc. 67.39 66.75 (5.42) 13.88 1.51 41.33 16.250 16.625
PFFB PFF Bancorp Inc. 56.45 48.99 15.09 10.01 2.97 353.59 18.750 18.750
PFFC Peoples Financial Corp. 61.97 61.73 (14.28) 33.49 (17.68) 24.73 15.625 15.625
PFNC Progress Financial Corp. 70.90 62.75 18.28 29.14 (10.37) 57.57 10.500 10.500
PFSB PennFed Financial Services Inc 43.42 39.96 22.15 21.80 13.86 144.66 27.250 27.500
PFSL Pocahontas FS&LA (MHC) 54.24 47.16 5.83 20.02 53.05 46.52 20.750 20.750
PHBK Peoples Heritage Finl Group 59.08 50.63 9.76 12.80 6.55 1,084.56 37.875 37.875
PHFC Pittsburgh Home Financial Corp 56.23 54.05 32.52 30.99 3.11 37.30 15.250 15.250
PHSB Peoples Home Savings Bk (MHC) 73.01 70.06 NA NA NA 39.30 NA NA
PKPS Poughkeepsie Financial Corp. 66.40 62.11 8.85 0.57 11.49 99.18 7.313 7.313
PLSK Pulaski Savings Bank (MHC) 60.95 60.04 (31.49) 7.56 2.32 35.97 13.875 13.875
PMFI Perpetual Midwest Financial 65.23 60.30 (0.55) 19.50 18.59 39.30 19.125 20.500
PRBC Prestige Bancorp Inc. 65.78 62.62 28.03 40.04 7.42 15.55 15.625 16.125
PROV Provident Financial Holdings 79.10 74.64 4.47 22.74 5.00 98.10 16.625 17.250
PSBK Progressive Bank Inc. 52.02 47.49 0.53 1.26 1.51 125.14 31.500 31.500
</TABLE>
<TABLE>
<CAPTION>
MARKET DATA AS OF THE MOST RECENT QUARTER
------------------------------------------------
MRQ MRQ PUBLICLY MRQ TANGIBLE
PRICE REPORTED PUBLICLY REP
LOW BOOK VALUE BOOK VALUE
TICKER SHORT NAME ($) ($) ($)
- ----------------------------------------- ------------------------------------------------
<S> <C> <C> <C>
MERI Meritrust Federal SB 34.000 24.21 24.21
METF Metropolitan Financial Corp. 10.750 9.22 8.34
MFBC MFB Corp. 18.750 20.05 20.05
MFCX Marshalltown Financial Corp. 15.000 14.22 14.22
MFFC Milton Federal Financial Corp. 13.250 12.26 12.26
MFLR Mayflower Co-operative Bank 15.750 13.67 13.44
MFSL Maryland Federal Bancorp 34.375 30.22 29.84
MGNL Magna Bancorp Inc. 16.750 10.06 9.79
MIFC Mid-Iowa Financial Corp. 7.313 7.00 6.99
MIVI Mississippi View Holding Co. 14.000 16.09 16.09
MLBC ML Bancorp Inc. 15.000 13.68 13.44
MONT Montgomery Financial Corp. 11.000 NA NA
MRKF Market Financial Corp. 12.250 14.83 14.83
MSBF MSB Financial Inc. 10.375 10.17 10.17
MSBK Mutual Savings Bank FSB 6.500 9.57 9.57
MWBI Midwest Bancshares Inc. 28.000 29.06 29.06
MWBX MetroWest Bank 4.625 3.02 3.02
MWFD Midwest Federal Financial 17.625 11.21 10.81
NASB North American Savings Bank 38.000 25.37 24.52
NBN Northeast Bancorp 13.250 13.49 11.66
NBSI North Bancshares Inc. 19.125 16.96 16.96
NEIB Northeast Indiana Bancorp 13.250 15.19 15.19
NHTB New Hampshire Thrift Bncshrs 11.750 11.78 10.03
NMSB NewMil Bancorp Inc. 8.875 8.27 8.27
NSLB NS&L Bancorp Inc. 16.250 16.51 16.51
NSSB Norwich Financial Corp. 18.500 14.70 13.27
NSSY Norwalk Savings Society 23.000 21.54 20.84
NTMG Nutmeg Federal S&LA 7.000 7.72 7.72
NWEQ Northwest Equity Corp. 13.750 14.23 14.23
NWSB Northwest Savings Bank (MHC) 14.250 8.49 7.99
NYB New York Bancorp Inc. 20.813 7.73 7.73
OCFC Ocean Financial Corp. 27.625 27.35 27.35
OCN Ocwen Financial Corp. 26.000 9.10 8.69
OFCP Ottawa Financial Corp. 20.5 15.31 12.29
OHSL OHSL Financial Corp. 22.625 21.21 21.21
PALM Palfed Inc. 15.250 10.37 10.37
PAMM PacificAmerica Money Center 12.000 15.45 15.45
PBCI Pamrapo Bancorp Inc. 18.500 16.62 16.49
PBCT People's Bank (MHC) 19.000 10.93 10.92
PBHC Oswego City Savings Bk (MHC) 10.875 11.68 9.72
PBKB People's Bancshares Inc. 11.625 9.31 8.96
PCBC Perry County Financial Corp. 18.750 18.81 18.81
PCCI Pacific Crest Capital 12.250 8.95 8.95
PDB Piedmont Bancorp Inc. 10.125 7.42 7.42
PEEK Peekskill Financial Corp. 13.375 14.71 14.71
PERM Permanent Bancorp Inc. 20.750 19.74 19.45
PERT Perpetual Bank (MHC) 24.125 20.14 20.14
PETE Primary Bank 16.750 14.33 14.31
PFDC Peoples Bancorp 21.750 19.23 19.23
PFED Park Bancorp Inc. 14.250 16.27 16.27
PFFB PFF Bancorp Inc. 13.625 14.51 14.36
PFFC Peoples Financial Corp. 15.000 15.78 15.78
PFNC Progress Financial Corp. 8.063 5.83 5.15
PFSB PennFed Financial Services Inc 22.250 21.83 18.26
PFSL Pocahontas FS&LA (MHC) 17.750 14.76 14.76
PHBK Peoples Heritage Finl Group 27.500 15.77 13.29
PHFC Pittsburgh Home Financial Corp 14.000 14.21 14.05
PHSB Peoples Home Savings Bk (MHC) NA NA NA
PKPS Poughkeepsie Financial Corp. 5.438 5.85 5.85
PLSK Pulaski Savings Bank (MHC) 11.500 10.20 10.20
PMFI Perpetual Midwest Financial 19.000 18.00 18.00
PRBC Prestige Bancorp Inc. 15.500 16.51 16.51
PROV Provident Financial Holdings 14.125 17.37 17.37
PSBK Progressive Bank Inc. 23.375 19.67 17.57
</TABLE>
<PAGE> 118
Page 22 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
INCOME STATEMENT AS OF THE MOST RECENT QUARTER
-------------------------------------------------------------------------------
NET INTEREST INTEREST NET INTEREST NONINTEREST NONINTEREST
INTEREST INCOME/ EXPENSE/ INCOME/ INCOME/ EXPENSE/
MARGIN AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- ------------------------------------------ -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PSFC Peoples-Sidney Financial Corp. 3.27 7.69 4.49 3.20 0.07 1.67
PSFI PS Financial Inc. 5.16 7.45 2.38 5.08 0.08 1.72
PTRS Potters Financial Corp. 3.36 7.12 3.87 3.25 0.31 2.41
PULB Pulaski Bank, Svgs Bank (MHC) 3.77 7.59 3.91 3.68 0.26 2.31
PULS Pulse Bancorp 2.73 7.05 4.38 2.67 0.07 1.03
PVFC PVF Capital Corp. 4.11 8.79 4.70 4.09 0.28 2.36
PVSA Parkvale Financial Corporation 2.98 7.22 4.28 2.95 0.23 1.47
PWBC PennFirst Bancorp Inc. 2.24 6.95 4.78 2.18 0.12 1.13
PWBK Pennwood Bancorp Inc. 4.51 7.90 3.65 4.25 0.22 2.56
QCBC Quaker City Bancorp Inc. 3.12 7.71 4.65 3.06 0.35 1.91
QCFB QCF Bancorp Inc. 4.05 7.09 3.07 4.02 0.35 1.82
QCSB Queens County Bancorp Inc. 4.60 8.20 3.73 4.46 0.15 1.93
RARB Raritan Bancorp Inc. 3.63 7.24 3.75 3.50 0.25 1.99
RCSB RCSB Financial Inc. 3.56 7.57 4.25 3.32 1.57 3.23
REDF RedFed Bancorp Inc. 3.38 7.03 3.85 3.18 0.73 2.83
RELI Reliance Bancshares Inc. 5.14 7.72 2.63 5.10 0.04 5.06
RELY Reliance Bancorp Inc. 3.40 7.15 3.92 3.23 0.17 1.76
RIVR River Valley Bancorp 4.17 7.34 3.46 3.88 0.54 2.73
ROSE TR Financial Corp. 2.61 7.19 4.63 2.56 0.22 1.31
RSLN Roslyn Bancorp Inc. 3.38 7.20 3.91 3.30 0.22 1.42
RVSB Riverview Savings Bank (MHC) 4.45 8.15 3.96 4.18 0.75 2.89
SBFL SB of the Finger Lakes (MHC) 3.13 7.19 4.15 3.04 0.22 2.67
SBOS Boston Bancorp (The) 2.95 6.88 4.00 2.87 0.15 1.27
SCBS Southern Community Bancshares 4.24 7.11 2.90 4.20 0.43 2.76
SCCB S. Carolina Community Bancshrs 4.03 7.54 3.60 3.94 0.27 2.56
SECP Security Capital Corp. 3.71 7.64 4.06 3.58 0.56 1.78
SFED SFS Bancorp Inc. 3.47 7.22 3.84 3.37 0.24 2.47
SFFC StateFed Financial Corporation 3.53 7.79 4.45 3.34 0.26 1.09
SFIN Statewide Financial Corp. 3.79 7.46 3.78 3.68 0.23 2.51
SFNB Security First Network Bank 4.26 5.39 2.10 3.29 15.25 51.80
SFSB SuburbFed Financial Corp. 2.87 7.12 4.33 2.79 0.68 2.56
SFSL Security First Corp. 4.02 8.26 4.39 3.87 0.26 2.03
SGVB SGV Bancorp Inc. 2.61 7.20 4.67 2.53 0.21 2.17
SHEN First Shenango Bancorp Inc. 3.28 7.48 4.26 3.22 0.17 1.44
SISB SIS Bancorp Inc. 3.76 7.11 3.55 3.56 0.78 2.84
SKAN Skaneateles Bancorp Inc. 4.12 7.72 3.82 3.90 0.71 3.34
SKBO First Carnegie Deposit (MHC) 2.76 6.70 4.00 2.69 0.06 1.53
SMBC Southern Missouri Bancorp Inc. 3.04 6.94 3.95 2.99 0.32 1.86
SMFC Sho-Me Financial Corp. 3.42 7.91 4.60 3.31 0.42 1.66
SOBI Sobieski Bancorp Inc. 3.42 7.23 3.91 3.32 0.05 2.29
SOPN First Savings Bancorp Inc. 3.93 7.71 3.86 3.85 0.19 1.19
SOSA Somerset Savings Bank 4.13 8.19 4.28 3.91 0.20 3.03
SPBC St. Paul Bancorp Inc. 3.13 7.08 4.08 3.00 0.92 2.24
SRN Southern Banc Company Inc. 2.86 7.02 4.21 2.80 0.06 2.07
SSB Scotland Bancorp Inc 4.68 7.49 2.90 4.60 0.10 2.28
SSFC South Street Financial Corp. 3.40 7.33 4.03 3.29 0.05 1.40
SSM Stone Street Bancorp Inc. 4.78 7.75 3.18 4.58 0.20 3.20
STFR St. Francis Capital Corp. 2.83 7.28 4.64 2.64 0.32 2.02
STND Standard Financial Inc. 2.65 6.98 4.39 2.59 0.18 1.55
STSA Sterling Financial Corp. 2.90 7.68 4.93 2.76 0.55 2.36
SVRN Sovereign Bancorp Inc. 2.56 7.05 4.60 2.45 0.31 1.46
SWBI Southwest Bancshares 3.40 7.47 4.27 3.20 0.18 1.81
SWCB Sandwich Co-operative Bank 3.69 7.24 3.70 3.53 0.48 2.46
SZB SouthFirst Bancshares Inc. 3.85 7.52 3.94 3.58 1.51 4.13
TBK Tolland Bank 3.65 7.21 3.73 3.48 0.49 2.82
THR Three Rivers Financial Corp. 3.66 7.36 3.83 3.53 0.52 2.83
THRD TF Financial Corporation 3.23 6.95 3.84 3.11 0.21 2.08
TPNZ Tappan Zee Financial Inc. 3.78 7.37 3.68 3.69 0.13 2.32
TRIC Tri-County Bancorp Inc. 3.10 7.24 4.21 3.03 0.18 1.73
TSBS Peoples Bancorp Inc. (MHC) 3.70 6.93 3.41 3.52 0.25 1.95
TSH Teche Holding Co. 3.43 7.65 4.29 3.36 0.65 2.54
TWIN Twin City Bancorp 3.92 7.75 3.96 3.80 0.39 2.51
UBMT United Financial Corp. 3.82 7.09 3.41 3.68 0.56 1.98
UFRM United Federal Savings Bank 3.79 8.10 4.56 3.54 1.11 3.51
</TABLE>
<TABLE>
<CAPTION>
INCOME STATEMENT AS OF BALANCE SHEET GROWTH AS MARKET DATA AS OF THE
THE MOST RECENT QUARTER OF THE MOST RECENT QUARTER MOST RECENT QUARTER
----------------------- ------------------------------ ------------------------
ASSET LOAN DEPOSIT MRQ MRQ
EFFICIENCY OVERHEAD GROWTH GROWTH GROWTH MARKET PRICE
RATIO RATIO RATE RATE RATE VALUE PER SHARE
TICKER SHORT NAME (%) (%) (%) (%) (%) ($) ($)
- ------------------------------------------ ----------------------- ------------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PSFC Peoples-Sidney Financial Corp. 50.92 49.80 6.23 4.89 0.75 29.01 NA
PSFI PS Financial Inc. 33.40 32.35 40.17 9.02 1.51 33.82 14.500
PTRS Potters Financial Corp. 67.64 64.52 14.60 35.62 5.91 12.16 22.000
PULB Pulaski Bank, Svgs Bank (MHC) 58.54 55.64 5.41 13 1.08 55.23 18.375
PULS Pulse Bancorp 37.77 36.09 3.31 (20.62) 3.22 66.23 20.250
PVFC PVF Capital Corp. 54.47 51.31 9.98 11.72 (6.62) 52.39 15.227
PVSA Parkvale Financial Corporation 45.57 41.36 7.67 23.74 6.42 122.67 27.625
PWBC PennFirst Bancorp Inc. 45.99 42.91 62.71 191.09 64.83 82.90 14.432
PWBK Pennwood Bancorp Inc. 53.42 50.97 17.13 87.45 (6.53) 9.71 15.250
QCBC Quaker City Bancorp Inc. 52.15 46.68 10.53 4.53 5.35 97.59 17.563
QCFB QCF Bancorp Inc. 41.66 36.64 7.39 5.36 8.18 35.66 19.125
QCSB Queens County Bancorp Inc. 41.81 39.88 27.27 33.51 3.33 549.64 45.5
RARB Raritan Bancorp Inc. 51.99 48.51 4.57 11.49 4.06 57.88 19.667
RCSB RCSB Financial Inc. 66.70 50.95 7.14 34.51 (4.30) 756.70 40.938
REDF RedFed Bancorp Inc. 69.17 62.06 1.57 6.52 2.92 124.65 16.375
RELI Reliance Bancshares Inc. 98.51 98.49 1.48 8.90 (9.95) 21.49 8.375
RELY Reliance Bancorp Inc. 46.41 43.65 10.37 22.03 8.95 280.84 29.438
RIVR River Valley Bancorp 60.51 54.96 6.12 15.39 (8.90) 19.64 14.750
ROSE TR Financial Corp. 46.81 42.21 17.33 23.78 (1.04) 475.30 25.188
RSLN Roslyn Bancorp Inc. 39.71 35.69 43.50 21.00 11.00 992.87 22.875
RVSB Riverview Savings Bank (MHC) 55.67 47.75 9.39 6.78 (1.87) 67.11 21.000
SBFL SB of the Finger Lakes (MHC) 78.70 77.16 7.29 28.39 40.07 44.63 17.250
SBOS Boston Bancorp (The) 42.96 39.99 (36.27) (23.33) 3.59 NA 41.750
SCBS Southern Community Bancshares 59.46 55.28 1.51 17.18 4.60 18.06 14.625
SCCB S. Carolina Community Bancshrs 60.70 58.02 4.29 3.05 6.45 16.55 19.000
SECP Security Capital Corp. 43.06 34.12 2.90 3.23 6.64 973.78 94.500
SFED SFS Bancorp Inc. 68.46 66.18 9.50 19.07 10.05 24.31 16.750
SFFC StateFed Financial Corporation 56.51 53.16 1.86 NA (2.49) 17.24 19.000
SFIN Statewide Financial Corp. 64.15 61.92 (2.46) 0.42 (8.90) 92.74 18.000
SFNB Security First Network Bank 275.63 NM (4.66) 194.17 56.30 103.44 6.875
SFSB SuburbFed Financial Corp. 73.65 67.24 18.54 32.89 (9.84) 34.71 26.500
SFSL Security First Corp. 49.02 45.61 11.64 11.06 17.79 134.58 15.000
SGVB SGV Bancorp Inc. 76.08 74.12 9.57 (4.62) 9.05 35.72 13.969
SHEN First Shenango Bancorp Inc. 41.70 38.61 10.48 7.31 (1.56) 57.76 26.250
SISB SIS Bancorp Inc. 65.01 57.30 8.78 18.67 3.39 172.88 29.250
SKAN Skaneateles Bancorp Inc. 71.50 66.30 10.39 7.16 9.26 22.19 20.750
SKBO First Carnegie Deposit (MHC) 55.77 54.80 (37.91) 2.27 (45.05) 36.80 14.500
SMBC Southern Missouri Bancorp Inc. 59.96 55.64 15.12 12.75 18.77 28.05 16.250
SMFC Sho-Me Financial Corp. 44.38 37.28 31.93 33.48 17.51 58.45 38.000
SOBI Sobieski Bancorp Inc. 67.85 67.37 13.53 23.75 2.65 12.59 14.750
SOPN First Savings Bancorp Inc. 29.63 26.17 34.07 10.93 3.92 74.50 22.250
SOSA Somerset Savings Bank 63.96 62.11 (5.86) (0.69) 4.74 65.04 2.750
SPBC St. Paul Bancorp Inc. 58.52 45.79 11.28 25.35 (11.78) 819.96 22.083
SRN Southern Banc Company Inc. 70.78 70.15 (1.01) NA (2.00) 19.99 14.375
SSB Scotland Bancorp Inc 48.65 47.55 3.22 5.11 (0.43) 36.84 16.125
SSFC South Street Financial Corp. 41.81 41.00 4.95 (0.72) 3.47 83.19 16.500
SSM Stone Street Bancorp Inc. 66.96 65.54 2.37 4.18 3.00 40.69 21.813
STFR St. Francis Capital Corp. 65.50 61.31 16.86 12.05 14.11 197.54 38.750
STND Standard Financial Inc. 55.64 52.48 13.79 15.67 12.84 415.31 24.5
STSA Sterling Financial Corp. 67.17 60.66 33.18 5.92 12.10 112.72 18.625
SVRN Sovereign Bancorp Inc. 49.24 42.92 23.89 15.76 8.38 1,388.65 15.250
SWBI Southwest Bancshares 56.74 54.27 7.28 8.40 0.36 53.67 20.750
SWCB Sandwich Co-operative Bank 58.32 52.67 22.43 18.37 17.61 68.95 30.500
SZB SouthFirst Bancshares Inc. 81.08 73.11 18.83 27.83 (7.99) 13.56 16.000
TBK Tolland Bank 66.07 61.25 1.54 2.61 9.30 27.89 14.813
THR Three Rivers Financial Corp. 69.51 64.99 8.49 7.37 (2.48) 13.28 14.375
THRD TF Financial Corporation 57.93 55.09 (2.25) (2.53) (0.05) 83.70 19.625
TPNZ Tappan Zee Financial Inc. 60.41 59.05 7.58 7.34 10.33 26.01 17.500
TRIC Tri-County Bancorp Inc. 53.81 51.05 16.20 16.29 (16.91) 14.31 21.250
TSBS Peoples Bancorp Inc. (MHC) 48.90 45.21 2.97 3.26 2.49 271.11 19.125
TSH Teche Holding Co. 63.60 56.56 12.90 10.35 8.74 63.16 19.000
TWIN Twin City Bancorp 60.25 56.17 10.94 (1.63) 22.95 17.28 19.375
UBMT United Financial Corp. 46.73 38.63 (7.88) (14.32) (15.43) 29.36 22.250
UFRM United Federal Savings Bank 75.33 67.59 7.92 39.04 5.87 35.35 11.750
</TABLE>
<TABLE>
<CAPTION>
MARKET DATA AS OF THE
MOST RECENT QUARTER
-------------------------------------------------------
MRQ MRQ MRQ PUBLICLY MRQ TANGIBLE
PRICE PRICE REPORTED PUBLICLY REP
HIGH LOW BOOK VALUE BOOK VALUE
TICKER SHORT NAME ($) ($) ($) ($)
- ---------------------------------------- -------------------------------------------------------
<S> <C> <C> <C> <C>
PSFC Peoples-Sidney Financial Corp. NA NA NA NA
PSFI PS Financial Inc. 14.875 12.875 14.66 14.66
PTRS Potters Financial Corp. 22.000 19.000 21.97 21.97
PULB Pulaski Bank, Svgs Bank (MHC) 19.625 17.375 11.23 11.23
PULS Pulse Bancorp 20.250 17.875 13.63 13.63
PVFC PVF Capital Corp. 16.364 13.636 9.79 9.79
PVSA Parkvale Financial Corporation 28.750 26.000 18.54 18.40
PWBC PennFirst Bancorp Inc. 14.432 12.273 12.44 11.63
PWBK Pennwood Bancorp Inc. 15.250 13.750 15.05 15.05
QCBC Quaker City Bancorp Inc. 17.563 14.400 14.94 14.93
QCFB QCF Bancorp Inc. 19.750 17.500 18.98 18.98
QCSB Queens County Bancorp Inc. 48 35.667 19.83 19.83
RARB Raritan Bancorp Inc. 20.500 16.333 12.48 12.28
RCSB RCSB Financial Inc. 41.125 29.500 21.42 20.90
REDF RedFed Bancorp Inc. 16.500 12.375 10.75 10.71
RELI Reliance Bancshares Inc. 8.375 7.125 9.08 9.08
RELY Reliance Bancorp Inc. 29.438 22.000 18.54 13.36
RIVR River Valley Bancorp 15.000 13.625 14.62 14.40
ROSE TR Financial Corp. 25.938 16.688 13.45 13.45
RSLN Roslyn Bancorp Inc. 22.875 15.875 14.58 14.51
RVSB Riverview Savings Bank (MHC) 24.000 18.000 10.67 9.74
SBFL SB of the Finger Lakes (MHC) 17.250 14.750 11.63 11.63
SBOS Boston Bancorp (The) 42.250 36.250 40.29 40.29
SCBS Southern Community Bancshares 14.625 13.500 13.19 13.19
SCCB S. Carolina Community Bancshrs 20.500 15.000 17.11 17.11
SECP Security Capital Corp. 96.750 83.750 60.81 60.81
SFED SFS Bancorp Inc. 17.375 16.000 17.44 17.44
SFFC StateFed Financial Corporation 19.125 18.000 19.44 19.44
SFIN Statewide Financial Corp. 18.125 14.750 13.90 13.87
SFNB Security First Network Bank 9.375 5.500 3.02 2.97
SFSB SuburbFed Financial Corp. 26.500 22.250 21.92 21.84
SFSL Security First Corp. 15.000 12.000 8.12 7.99
SGVB SGV Bancorp Inc. 14.250 11.375 12.77 12.56
SHEN First Shenango Bancorp Inc. 26.750 21.750 21.75 21.75
SISB SIS Bancorp Inc. 29.625 23.375 18.31 18.31
SKAN Skaneateles Bancorp Inc. 20.750 18.375 17.79 17.24
SKBO First Carnegie Deposit (MHC) 14.750 11.625 10.52 10.52
SMBC Southern Missouri Bancorp Inc. 17.250 14.250 15.85 15.85
SMFC Sho-Me Financial Corp. 40.250 28.750 21.62 21.62
SOBI Sobieski Bancorp Inc. 15.250 14.500 17.24 17.24
SOPN First Savings Bancorp Inc. 24.000 19.375 18.26 18.26
SOSA Somerset Savings Bank 2.750 2.250 1.96 1.96
SPBC St. Paul Bancorp Inc. 22.833 17.583 11.67 11.64
SRN Southern Banc Company Inc. 14.625 13.125 14.42 14.27
SSB Scotland Bancorp Inc 16.375 14.875 13.45 13.45
SSFC South Street Financial Corp. 16.750 15.125 14.69 14.69
SSM Stone Street Bancorp Inc. 27.250 20.938 16.13 16.13
STFR St. Francis Capital Corp. 38.750 29.000 24.18 21.37
STND Standard Financial Inc. 25 22.625 17.11 17.08
STSA Sterling Financial Corp. 19.000 15.250 12.17 10.61
SVRN Sovereign Bancorp Inc. 15.250 11.375 6.85 5.16
SWBI Southwest Bancshares 21.000 18.750 15.68 15.68
SWCB Sandwich Co-operative Bank 32.000 27.250 20.83 19.94
SZB SouthFirst Bancshares Inc. 16.000 13.875 16.06 16.06
TBK Tolland Bank 15.000 10.406 10.60 10.30
THR Three Rivers Financial Corp. 15.250 13.750 15.23 15.17
THRD TF Financial Corporation 19.625 16.625 18.86 16.54
TPNZ Tappan Zee Financial Inc. 17.500 14.000 14.11 14.11
TRIC Tri-County Bancorp Inc. 21.250 18.500 22.51 22.51
TSBS Peoples Bancorp Inc. (MHC) 20.375 18.000 11.79 10.82
TSH Teche Holding Co. 19.375 15.500 15.53 15.53
TWIN Twin City Bancorp 19.750 18.000 16.17 16.17
UBMT United Financial Corp. 22.250 19.000 20.10 20.10
UFRM United Federal Savings Bank 12.000 9.500 6.70 6.70
</TABLE>
<PAGE> 119
Page 23 of 32
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
INCOME STATEMENT AS OF THE MOST RECENT QUARTER
---------------------------------------------------------------------
NET INTEREST INTEREST NET INTEREST NONINTEREST
INTEREST INCOME/ EXPENSE/ INCOME/ INCOME/
MARGIN AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%)
- -------------------------------------------- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
USAB USABancshares, Inc. 4.79 9.40 4.75 4.65 0.76
VABF Virginia Beach Fed. Financial 3.25 8.03 4.88 3.16 0.40
VFFC Virginia First Financial Corp. 4.01 8.31 4.43 3.87 0.65
WAMU Washington Mutual Inc. 2.85 7.41 4.67 2.74 0.62
WAYN Wayne Savings & Loan Co. (MHC) 3.31 7.51 4.32 3.20 0.24
WBST Webster Financial Corp. 3.25 7.04 3.92 3.11 0.47
WCBI Westco Bancorp 3.70 7.61 4.01 3.60 0.26
WCFB Webster City Federal SB (MHC) 3.66 7.11 3.52 3.58 0.20
WEFC Wells Financial Corp. 3.41 7.56 4.19 3.37 0.47
WEHO Westwood Homestead Fin. Corp. 3.48 7.51 4.07 3.44 0.10
WES Westcorp 3.77 7.74 4.52 3.22 5.17
WFI Winton Financial Corp. 3.14 8.01 4.93 3.08 0.13
WFSG Wilshire Financial Services 2.03 9.13 7.22 1.90 0.98
WFSL Washington Federal Inc. 3.67 8.13 4.57 3.56 0.08
WHGB WHG Bancshares Corp. 3.93 7.25 3.48 3.77 0.12
WOFC Western Ohio Financial Corp. 3.05 7.45 4.57 2.88 0.12
WRNB Warren Bancorp Inc. 5.16 8.07 3.14 4.94 0.29
WSB Washington Savings Bank, FSB 2.70 8.06 5.47 2.59 0.21
WSFS WSFS Financial Corporation 3.44 8.12 4.74 3.38 0.69
WSTR WesterFed Financial Corp. 3.58 7.37 4.06 3.31 0.69
WVFC WVS Financial Corp. 3.66 7.61 4.00 3.61 0.12
WWFC Westwood Financial Corporation 2.98 7.01 4.10 2.91 0.16
WYNE Wayne Bancorp Inc. 3.58 7.26 3.78 3.49 0.23
YFCB Yonkers Financial Corporation 3.94 7.48 3.63 3.85 0.30
YFED York Financial Corp. 3.30 7.58 4.47 3.11 0.45
-------------------------------------------------------------------
Average 3.51 7.49 4.12 3.36 0.66
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
INCOME STATEMENT AS OF THE MOST RECENT QUARTER
----------------------------------------------
NONINTEREST
EXPENSE/ EFFICIENCY OVERHEAD
AVG ASSETS RATIO RATIO
TICKER SHORT NAME (%) (%) (%)
- -------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C>
USAB USABancshares, Inc. 4.16 72.13 67.58
VABF Virginia Beach Fed. Financial 2.59 72.42 68.92
VFFC Virginia First Financial Corp. 3.35 73.67 69.25
WAMU Washington Mutual Inc. 1.66 48.27 36.63
WAYN Wayne Savings & Loan Co. (MHC) 2.30 66.97 64.52
WBST Webster Financial Corp. 2.10 55.08 48.24
WCBI Westco Bancorp 1.61 41.69 37.41
WCFB Webster City Federal SB (MHC) 1.40 36.70 33.18
WEFC Wells Financial Corp. 1.94 50.46 43.50
WEHO Westwood Homestead Fin. Corp. 1.93 54.38 53.05
WES Westcorp 7.39 87.53 67.51
WFI Winton Financial Corp. 1.91 58.82 57.04
WFSG Wilshire Financial Services 3.57 142.50 164.41
WFSL Washington Federal Inc. 0.75 18.87 17.13
WHGB WHG Bancshares Corp. 2.32 59.46 58.16
WOFC Western Ohio Financial Corp. 2.24 74.67 73.66
WRNB Warren Bancorp Inc. 2.67 50.43 47.53
WSB Washington Savings Bank, FSB 1.60 64.23 61.33
WSFS WSFS Financial Corporation 2.35 54.65 45.43
WSTR WesterFed Financial Corp. 2.86 67.25 60.37
WVFC WVS Financial Corp. 1.73 46.43 44.67
WWFC Westwood Financial Corporation 1.61 49.45 46.67
WYNE Wayne Bancorp Inc. 2.31 62.11 59.63
YFCB Yonkers Financial Corporation 2.19 52.97 49.36
YFED York Financial Corp. 2.34 63.41 58.15
----------------------------------------------
Average 2.49 59.20 52.17
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
BALANCE SHEET GROWTH AS OF THE MOST RECENT QUARTER
--------------------------------------------------
ASSET LOAN DEPOSIT
GROWTH GROWTH GROWTH
RATE RATE RATE
TICKER SHORT NAME (%) (%) (%)
- ------------------------------------------- --------------------------------------------------
<S> <C> <C> <C> <C>
USAB USABancshares, Inc. 91.62 62.27 98.30
VABF Virginia Beach Fed. Financial 6.88 11.60 (23.99)
VFFC Virginia First Financial Corp. 4.34 6.36 10.44
WAMU Washington Mutual Inc. 23.56 1.26 (5.19)
WAYN Wayne Savings & Loan Co. (MHC) 3.26 (1.50) 2.58
WBST Webster Financial Corp. 25.80 4.83 (4.69)
WCBI Westco Bancorp 2.18 10.98 2.88
WCFB Webster City Federal SB (MHC) 6.61 8.04 9.78
WEFC Wells Financial Corp. 0.30 6.90 (3.41)
WEHO Westwood Homestead Fin. Corp. 14.46 32.24 17.47
WES Westcorp 32.00 11.06 18.45
WFI Winton Financial Corp. 13.31 12.98 7.75
WFSG Wilshire Financial Services 36.91 19.19 (15.25)
WFSL Washington Federal Inc. (1.98) 2.68 5.26
WHGB WHG Bancshares Corp. 7.22 4.57 12.00
WOFC Western Ohio Financial Corp. (3.57) 11.67 2.77
WRNB Warren Bancorp Inc. (3.60) 5.22 (4.97)
WSB Washington Savings Bank, FSB 2.65 3.38 1.95
WSFS WSFS Financial Corporation 8.23 26.51 (1.26)
WSTR WesterFed Financial Corp. 9.95 22.07 (2.23)
WVFC WVS Financial Corp. 21.15 18.25 6.71
WWFC Westwood Financial Corporation 12.64 8.18 13.64
WYNE Wayne Bancorp Inc. 25.41 44.71 8.97
YFCB Yonkers Financial Corporation 5.19 56.29 12.75
YFED York Financial Corp. 1.74 2.34 6.30
--------------------------------------------------
Average 12.97 17.05 7.56
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
MARKET DATA AS OF THE MOST RECENT QUARTER
----------------------------------------------------------------------
MRQ MRQ MRQ MRQ MRQ PUBLICLY
MARKET PRICE PRICE PRICE REPORTED
VALUE PER SHARE HIGH LOW BOOK VALUE
TICKER SHORT NAME ($) ($) ($) ($) ($)
- -------------------------------------------- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
USAB USABancshares, Inc. 6.06 7.406 8.063 6.563 6.44
VABF Virginia Beach Fed. Financial 69.67 13.375 13.500 9.750 8.50
VFFC Virginia First Financial Corp. 139.02 14.750 16.250 12.375 11.35
WAMU Washington Mutual Inc. 16,113.22 59.750 62.688 45.375 20.60
WAYN Wayne Savings & Loan Co. (MHC) 50.58 17.000 18.500 17.000 10.45
WBST Webster Financial Corp. 759.43 45.500 45.500 35.250 24.91
WCBI Westco Bancorp 65.62 26.375 26.375 22.000 19.18
WCFB Webster City Federal SB (MHC) 37.28 15.500 15.500 13.750 10.54
WEFC Wells Financial Corp. 32.33 15.000 15.500 14.000 14.63
WEHO Westwood Homestead Fin. Corp. 43.33 14.500 14.500 12.500 14.17
WES Westcorp 571.39 18.375 19.000 13.250 12.71
WFI Winton Financial Corp. 32.27 13.125 14.500 12.000 11.36
WFSG Wilshire Financial Services 164.65 16.25 16.25 13.5 9.11
WFSL Washington Federal Inc. 1,317.25 25.688 27.688 22.500 14.66
WHGB WHG Bancshares Corp. 23.03 15.250 15.250 13.750 14.16
WOFC Western Ohio Financial Corp. 56.72 21.250 22.250 21.000 23.38
WRNB Warren Bancorp Inc. 69.13 18.000 19.000 15.000 9.82
WSB Washington Savings Bank, FSB 30.79 4.938 5.625 4.875 5.05
WSFS WSFS Financial Corporation 190.21 13.750 13.875 10.625 6.32
WSTR WesterFed Financial Corp. 125.21 20.500 20.625 17.625 18.74
WVFC WVS Financial Corp. 48.71 25.875 27.250 23.500 18.82
WWFC Westwood Financial Corporation 13.71 20.750 21.500 17.000 15.76
WYNE Wayne Bancorp Inc. 49.84 19.875 20.250 16.000 16.44
YFCB Yonkers Financial Corporation 60.04 15.250 15.750 14.375 14.14
YFED York Financial Corp. 169.08 19.875 20.000 17.750 14.28
----------------------------------------------------------------------
Average 217.44 20.90 21.45 17.82 15.72
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
MARKET DATA AS OF THE MOST RECENT QUARTER
-----------------------------------------
MRQ TANGIBLE
PUBLICLY REP
BOOK VALUE
TICKER SHORT NAME ($)
- -------------------------------------------- -----------------------------------------
<S> <C> <C>
USAB USABancshares, Inc. 6.32
VABF Virginia Beach Fed. Financial 8.50
VFFC Virginia First Financial Corp. 10.96
WAMU Washington Mutual Inc. 19.55
WAYN Wayne Savings & Loan Co. (MHC) 10.45
WBST Webster Financial Corp. 21.28
WCBI Westco Bancorp 19.18
WCFB Webster City Federal SB (MHC) 10.54
WEFC Wells Financial Corp. 14.63
WEHO Westwood Homestead Fin. Corp. 14.17
WES Westcorp 12.68
WFI Winton Financial Corp. 11.12
WFSG Wilshire Financial Services 9.11
WFSL Washington Federal Inc. 13.39
WHGB WHG Bancshares Corp. 14.16
WOFC Western Ohio Financial Corp. 21.80
WRNB Warren Bancorp Inc. 9.82
WSB Washington Savings Bank, FSB 5.05
WSFS WSFS Financial Corporation 6.27
WSTR WesterFed Financial Corp. 14.99
WVFC WVS Financial Corp. 18.82
WWFC Westwood Financial Corporation 14.04
WYNE Wayne Bancorp Inc. 16.44
YFCB Yonkers Financial Corporation 14.14
YFED York Financial Corp. 14.28
-----------------------------------------
Average 15.24
</TABLE>
<PAGE> 120
Page 24 of 32
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
INCOME STATEMENT AS OF THE MOST RECENT QUARTER
--------------------------------------------------------------------------------
NET INTEREST INTEREST NET INTEREST NONINTEREST NONINTEREST
INTEREST INCOME/ EXPENSE/ INCOME/ INCOME/ EXPENSE/
MARGIN AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS AVG ASSETS
TICKER SHORT NAME (%) (%) (%) (%) (%) (%)
- ------------------------------------------ --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
COMPARABLE THRIFT DATA
CATB Catskill Financial Corp. 4.15 7.31 3.22 4.09 0.14 1.90
CEBK Central Co-operative Bank 3.60 6.98 3.60 3.38 0.23 2.43
FBER 1st Bergen Bancorp 3.58 7.24 3.78 3.46 0.08 2.07
FIBC Financial Bancorp Inc. 3.89 7.41 3.69 3.71 0.23 2.09
FKFS First Keystone Financial 3.35 7.33 4.11 3.22 0.31 2.18
FSBI Fidelity Bancorp Inc. 3.02 6.91 3.97 2.93 0.24 1.86
LFBI Little Falls Bancorp Inc. 2.69 6.64 4.05 2.59 0.09 1.71
LSBX Lawrence Savings Bank 3.29 7.27 4.07 3.20 0.30 2.14
PBCI Pamrapo Bancorp Inc. 4.75 7.77 3.24 4.53 0.31 2.48
PHFC Pittsburgh Home Financial Corp 3.10 7.59 4.59 3.00 0.15 1.81
WVFC WVS Financial Corp. 3.66 7.61 4.00 3.61 0.12 1.73
-------------------------------------------------------------------------------
Average 3.55 7.28 3.85 3.43 0.20 2.04
Maximum 4.75 7.77 4.59 4.53 0.31 2.48
Minimum 2.69 6.64 3.22 2.59 0.08 1.71
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
INCOME STATEMENT AS OF THE MOST RECENT QUARTER
----------------------------------------------
EFFICIENCY OVERHEAD
RATIO RATIO
TICKER SHORT NAME (%) (%)
- ------------------------------------------ ----------------------------------------------
<S> <C> <C> <C>
COMPARABLE THRIFT DATA
CATB Catskill Financial Corp. 45.69 43.82
CEBK Central Co-operative Bank 64.92 62.48
FBER 1st Bergen Bancorp 60.27 59.30
FIBC Financial Bancorp Inc. 53.37 50.49
FKFS First Keystone Financial 61.48 57.76
FSBI Fidelity Bancorp Inc. 58.76 55.42
LFBI Little Falls Bancorp Inc. 58.57 57.20
LSBX Lawrence Savings Bank 61.03 57.37
PBCI Pamrapo Bancorp Inc. 49.66 46.22
PHFC Pittsburgh Home Financial Corp 56.23 54.05
WVFC WVS Financial Corp. 46.43 44.67
----------------------------------------------
Average 56.04 53.53
Maximum 64.92 62.48
Minimum 45.69 43.82
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
BALANCE SHEET GROWTH AS OF THE MOST RECENT QUARTER
--------------------------------------------------
ASSET LOAN EPOSIT
GROWTH GROWTH GROWTH
RATE RATE RATE
TICKER SHORT NAME (%) (%) (%)
- ------------------------------------------- --------------------------------------------------
<S> <C> <C> <C> <C>
COMPARABLE THRIFT DATA
CATB Catskill Financial Corp. 15.04 1.78 4.26
CEBK Central Co-operative Bank 29.25 (0.46) 11.33
FBER 1st Bergen Bancorp 51.48 (5.42) 10.61
FIBC Financial Bancorp Inc. 19.74 16.48 6.21
FKFS First Keystone Financial 7.83 12.41 9.55
FSBI Fidelity Bancorp Inc. 43.19 50.26 6.78
LFBI Little Falls Bancorp Inc. (4.48) 19.59 (4.22)
LSBX Lawrence Savings Bank 28.40 9.63 (4.97)
PBCI Pamrapo Bancorp Inc. 3.95 (1.82) 1.96
PHFC Pittsburgh Home Financial Corp 32.52 30.99 3.11
WVFC WVS Financial Corp. 21.15 18.25 6.71
--------------------------------------------------
Average 22.55 13.79 4.67
Maximum 51.48 50.26 11.33
Minimum (4.48) (5.42) (4.97)
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
MARKET DATA AS OF THE MOST RECENT QUARTER
--------------------------------------------------------------------------------
MRQ MRQ MRQ MRQ MRQ PUBLICLY MRQ TANGIBLE
MARKET PRICE PRICE PRICE REPORTED PUBLICLY REP
VALUE PER SHARE HIGH LOW BOOK VALUE BOOK VALUE
TICKER SHORT NAME ($) ($) ($) ($) ($) ($)
- ------------------------------------------- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
COMPARABLE THRIFT DATA
CATB Catskill Financial Corp. 79.60 15.500 16.000 13.938 15.08 15.08
CEBK Central Co-operative Bank 40.77 18.000 18.500 15.875 17.40 15.57
FBER 1st Bergen Bancorp 55.51 15.250 15.750 12.875 13.47 13.47
FIBC Financial Bancorp Inc. 39.61 18.250 18.250 14.875 15.35 15.27
FKFS First Keystone Financial 34.99 23.375 23.375 21.250 19.09 19.09
FSBI Fidelity Bancorp Inc. 34.10 20.250 21.500 18.409 15.83 15.83
LFBI Little Falls Bancorp Inc. 44.01 15.625 15.625 12.750 14.51 13.40
LSBX Lawrence Savings Bank 51.14 11.250 11.250 9.125 7.45 7.45
PBCI Pamrapo Bancorp Inc. 61.12 21.000 21.000 18.500 16.62 16.49
PHFC Pittsburgh Home Financial Corp 37.30 15.250 15.250 14.000 14.21 14.05
WVFC WVS Financial Corp. 48.71 25.875 27.250 23.500 18.82 18.82
--------------------------------------------------------------------------------
Average 47.90 18.15 18.52 15.92 15.26 14.96
Maximum 79.60 25.88 27.25 23.50 19.09 19.09
Minimum 34.10 11.25 11.25 9.13 7.45 7.45
</TABLE>
<PAGE> 121
Page 25 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
<TABLE>
<CAPTION>
DIVIDENDS CURRENT PRICING DATA AS OF 9/8/97
------------------------- -------------------------------------------------------------
CURRENT LTM DIVIDEND PRICE/ PRICE/
DIVIDEND PAYOUT LTM PRICE/ PRICE/ PRICE/ PUBLICLY REP
YIELD RATIO CORE EPS ASSETS EARNINGS LTM EPS BOOK VALUE
TICKER SHORT NAME ($) (%) (X) (%) (X) (X) (%)
- -------------------------------------------------------------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB NA NA NA NA NA NA NA
%CCMD Chevy Chase Bank, FSB NA NA NA NA NA NA NA
AABC Access Anytime Bancorp, Inc. 0.000 0.00 NM 7.41 14.77 NM 99.54
AADV Advantage Bancorp Inc. 0.889 29.51 17.44 14.27 13.89 36.89 154.96
ABBK Abington Bancorp Inc. 1.212 19.90 18.44 12.19 15.00 16.42 176.19
ABCL Alliance Bancorp Inc. 1.956 24.76 19.07 12.85 18.34 31.84 144.23
ABCW Anchor BanCorp Wisconsin 1.164 18.55 9.23 6.46 7.09 11.27 103.81
AFBC Advance Financial Bancorp 2.032 NA NA 16.49 NA NA 106.78
AFCB Affiliated Community Bancorp 1.803 30.40 15.57 15.79 15.13 17.75 158.96
AFED AFSALA Bancorp Inc. 0.985 NA NA 14.85 17.66 NA 102.07
AFFFZ America First Financial Fund 3.975 34.33 7.30 11.04 10.94 8.64 138.94
AHCI Ambanc Holding Co. 1.280 0.00 NM 14.15 27.90 NM 109.34
AHM Ahmanson & Company (H.F.) 1.609 49.72 19.46 11.20 13.54 30.90 268.74
ALBC Albion Banc Corp. 1.376 114.81 23.97 8.47 29.06 86.11 97.04
ALBK ALBANK Financial Corp. 1.811 27.01 15.35 14.15 14.61 18.84 153.77
AMFC AMB Financial Corp. 1.655 35.82 21.32 14.84 13.43 21.64 99.18
ANA Acadiana Bancshares Inc. 1.650 NA NA 22.31 20.97 NA 128.46
ANBK American National Bancorp 0.611 23.68 22.56 14.03 17.52 51.64 150.04
ANDB Andover Bancorp Inc. 2.194 23.06 11.65 12.76 12.50 12.02 158.32
ASBI Ameriana Bancorp 2.943 79.73 21.32 17.66 20.14 29.39 161.23
ASBP ASB Financial Corp. 3.048 NM 21.88 20.12 17.27 31.25 129.31
ASFC Astoria Financial Corp. 1.220 25.13 17.38 13.46 17.08 25.75 172.05
ATSB AmTrust Capital Corp. 1.569 11.36 47.22 9.45 21.25 28.98 92.93
AVND Avondale Financial Corp. 0.000 0.00 NM 8.42 5.63 NM 92.27
BANC BankAtlantic Bancorp Inc. 1.056 973.67 18.38 10.29 13.02 15.82 183.02
BDJI First Federal Bancorporation 0.000 0.00 19.61 13.19 16.19 36.85 121.38
BFD BostonFed Bancorp Inc. 1.474 28.95 19.59 11.58 15.83 25.00 123.62
BFFC Big Foot Financial Corp. 0.000 NA NA 21.01 27.73 NA 123.69
BFSB Bedford Bancshares Inc. 2.333 41.32 15.38 20.24 15.79 19.83 135.21
BKC American Bank of Connecticut 3.892 50.16 14.07 14.08 11.42 12.05 169.96
BKCT Bancorp Connecticut Inc. 3.077 41.37 17.47 19.22 14.77 16.50 187.54
BKUNA BankUnited Financial Corp. 0.000 0.00 21.71 6.07 22.10 45.83 163.04
BNKU Bank United Corp. 1.370 NA NA 11.29 18.92 NA 221.66
BPLS Bank Plus Corp. 0.000 0.00 NM 6.25 15.89 NM 123.39
BSBC Branford Savings Bank 1.580 19.35 16.33 17.80 15.82 16.33 191.78
BTHL Bethel Bancorp 2.560 20.83 16.89 6.89 16.45 13.02 91.17
BVCC Bay View Capital Corp. 1.208 33.51 17.79 11.11 19.49 28.19 175.26
BWFC Bank West Financial Corp. 1.753 53.85 38.83 20.56 21.73 35.10 141.69
BYFC Broadway Financial Corp. 1.818 NM 26.83 7.52 17.19 NM 75.09
CAFI Camco Financial Corp. 2.790 44.02 13.25 11.65 9.86 16.75 121.74
CAPS Capital Savings Bancorp Inc. 1.524 27.78 14.19 12.29 12.70 19.44 139.63
CASB Cascade Financial Corp. 0.000 0.00 20.63 9.08 16.25 30.95 148.06
CASH First Midwest Financial Inc. 1.920 35.76 13.59 13.68 14.20 19.53 120.04
CATB Catskill Financial Corp. 1.723 17.07 20.06 26.98 19.35 19.82 107.76
CBCI Calumet Bancorp Inc. 0.000 0.00 15.12 18.07 11.81 17.93 116.53
CBES CBES Bancorp Inc. 2.254 NA NA 19.11 16.44 NA 103.92
CBK Citizens First Financial Corp. 0.000 0.00 33.56 17.31 28.32 64.73 112.30
CBSA Coastal Bancorp Inc. 1.600 29.79 12.99 5.03 13.64 21.28 152.83
CBSB Charter Financial Inc. 1.580 26.92 19.1 21.37 11.25 19.47 147.70
CCFH CCF Holding Company 3.235 NM NM 13.83 212.50 NM 118.38
CEBK Central Co-operative Bank 1.542 16.44 14.12 11.84 16.73 14.21 119.25
CENB Century Bancorp Inc. 2.516 NA NA 32.40 16.99 NA 108.24
CENF CENFED Financial Corp. 1.002 17.04 13.12 8.97 14.04 18.72 172.36
CFB Commercial Federal Corp. 0.609 13.77 16.20 13.97 14.74 22.89 232.68
CFBC Community First Banking Co. 0.000 NA NA NA NA NA NA
CFCP Coastal Financial Corp. 1.485 37.09 25 22.38 19.56 26.65 362.48
CFFC Community Financial Corp. 2.575 40.91 12.87 15.81 13.94 16.48 115.32
CFNC Carolina Fincorp Inc. 1.362 NA NA 29.26 23.19 NA 128.28
CFSB CFSB Bancorp Inc. 2.264 39.12 16.67 15.97 12.74 20.54 209.49
CFTP Community Federal Bancorp 1.739 444.44 22.70 38.20 28.75 27.38 123.57
CFX CFX Corp. 4.241 75.27 15.26 14.67 14.02 18.36 197.24
CIBI Community Investors Bancorp 2.065 40.42 15.66 15.61 14.90 23.48 129.60
CKFB CKF Bancorp Inc. 2.632 118.03 21.11 28.91 8.48 15.57 111.96
CLAS Classic Bancshares Inc. 1.982 36.36 19.35 14.12 17.66 25.68 94.99
</TABLE>
<TABLE>
<CAPTION>
PRODUCTIVITY
--------------- -----------------
PRICE/ TANG FULL TIME
PUBLICLY REP EQUIVALENT
BOOK VALUE EMPLOYEES
TICKER SHORT NAME (%) MOST RECENT QTR
- ---------------------------------------------------------- -----------------
<S> <C> <C> <C>
%CAL California Federal Bank, a FSB NA NA
%CCMD Chevy Chase Bank, FSB NA NA
AABC Access Anytime Bancorp, Inc. 99.54 NA
AADV Advantage Bancorp Inc. 165.75 289
ABBK Abington Bancorp Inc. 195.61 156
ABCL Alliance Bancorp Inc. 146.04 442
ABCW Anchor BanCorp Wisconsin 105.81 553
AFBC Advance Financial Bancorp 106.78 NA
AFCB Affiliated Community Bancorp 159.91 205
AFED AFSALA Bancorp Inc. 102.07 44
AFFFZ America First Financial Fund 140.69 401
AHCI Ambanc Holding Co. 109.34 184
AHM Ahmanson & Company (H.F.) 315.39 7755
ALBC Albion Banc Corp. 97.04 NA
ALBK ALBANK Financial Corp. 175.96 1,220
AMFC AMB Financial Corp. 99.18 NA
ANA Acadiana Bancshares Inc. 128.46 NA
ANBK American National Bancorp 150.04 NA
ANDB Andover Bancorp Inc. 158.32 284
ASBI Ameriana Bancorp 161.35 145
ASBP ASB Financial Corp. 129.31 23
ASFC Astoria Financial Corp. 204.86 934
ATSB AmTrust Capital Corp. 93.96 NA
AVND Avondale Financial Corp. 92.27 214
BANC BankAtlantic Bancorp Inc. 222.82 1,009
BDJI First Federal Bancorporation 121.38 39
BFD BostonFed Bancorp Inc. 127.86 256
BFFC Big Foot Financial Corp. 123.69 NA
BFSB Bedford Bancshares Inc. 135.21 36
BKC American Bank of Connecticut 177.03 133
BKCT Bancorp Connecticut Inc. 187.54 109
BKUNA BankUnited Financial Corp. 201.22 240
BNKU Bank United Corp. 227.21 NA
BPLS Bank Plus Corp. 123.65 477
BSBC Branford Savings Bank 191.78 74
BTHL Bethel Bancorp 108.60 NA
BVCC Bay View Capital Corp. 208.83 631
BWFC Bank West Financial Corp. 141.69 56
BYFC Broadway Financial Corp. 75.09 54
CAFI Camco Financial Corp. 131.97 175
CAPS Capital Savings Bancorp Inc. 139.63 77
CASB Cascade Financial Corp. 148.06 100
CASH First Midwest Financial Inc. 135.48 105
CATB Catskill Financial Corp. 107.76 64
CBCI Calumet Bancorp Inc. 116.53 135
CBES CBES Bancorp Inc. 103.92 45
CBK Citizens First Financial Corp. 112.30 100
CBSA Coastal Bancorp Inc. 183.82 455
CBSB Charter Financial Inc. 166.94 104
CCFH CCF Holding Company 118.38 68
CEBK Central Co-operative Bank 133.27 NA
CENB Century Bancorp Inc. 108.24 11
CENF CENFED Financial Corp. 172.70 360
CFB Commercial Federal Corp. 262.41 1541
CFBC Community First Banking Co. NA 179
CFCP Coastal Financial Corp. 362.48 177
CFFC Community Financial Corp. 115.32 NA
CFNC Carolina Fincorp Inc. 128.28 41
CFSB CFSB Bancorp Inc. 209.49 227
CFTP Community Federal Bancorp 123.57 28
CFX CFX Corp. 210.87 752
CIBI Community Investors Bancorp 129.60 22
CKFB CKF Bancorp Inc. 111.96 8
CLAS Classic Bancshares Inc. 112.37 NA
</TABLE>
<TABLE>
<CAPTION>
INCOME
----------------------------------------------------------------
NET INCOME CORE INCOME CORE EPS PRICE/
TICKER SHORT NAME MOST RECENT QTR MOST RECENT QTR MOST RECENT QTR CORE EPS
- ------------------------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB 63,309 57,250 NA NA
%CCMD Chevy Chase Bank, FSB 2,796 (11,488) NA NA
AABC Access Anytime Bancorp, Inc. 136 118 0.10 16.25
AADV Advantage Bancorp Inc. 2,781 2,484 0.72 15.63
ABBK Abington Bancorp Inc. 1,096 1,000 0.50 16.50
ABCL Alliance Bancorp Inc. 2,636 2,583 0.45 18.75
ABCW Anchor BanCorp Wisconsin 4,621 4,317 0.91 7.55
AFBC Advance Financial Bancorp 229 224 NA NA
AFCB Affiliated Community Bancorp 2,942 2,922 0.44 15.13
AFED AFSALA Bancorp Inc. 310 310 0.23 17.66
AFFFZ America First Financial Fund 6,476 6,731 0.96 10.48
AHCI Ambanc Holding Co. 572 456 0.11 35.51
AHM Ahmanson & Company (H.F.) 115,656 88,227 0.75 18.23
ALBC Albion Banc Corp. 50 45 0.18 32.29
ALBK ALBANK Financial Corp. 9,441 9,262 0.67 14.83
AMFC AMB Financial Corp. 245 157 0.17 21.32
ANA Acadiana Bancshares Inc. 625 615 0.26 20.97
ANBK American National Bancorp 981 976 0.28 17.52
ANDB Andover Bancorp Inc. 3,182 3,090 0.60 12.92
ASBI Ameriana Bancorp 889 828 0.25 21.75
ASBP ASB Financial Corp. 295 294 0.19 17.27
ASFC Astoria Financial Corp. 15,207 14,467 0.68 18.08
ATSB AmTrust Capital Corp. 76 55 0.11 28.98
AVND Avondale Financial Corp. 2,285 (436) (0.12) NM
BANC BankAtlantic Bancorp Inc. 6,821 4,478 0.16 19.53
BDJI First Federal Bancorporation 189 188 0.33 16.19
BFD BostonFed Bancorp Inc. 1,705 1,541 0.27 17.59
BFFC Big Foot Financial Corp. 371 371 0.16 27.73
BFSB Bedford Bancshares Inc. 407 407 0.38 15.79
BKC American Bank of Connecticut 1,927 1,744 0.73 12.67
BKCT Bancorp Connecticut Inc. 1,494 1,358 0.50 16.25
BKUNA BankUnited Financial Corp. 1,991 1,986 0.14 22.10
BNKU Bank United Corp. 17,280 16,818 0.52 19.65
BPLS Bank Plus Corp. 3,250 2,590 0.14 20.43
BSBC Branford Savings Bank 537 528 0.08 15.82
BTHL Bethel Bancorp 302 263 0.16 19.53
BVCC Bay View Capital Corp. 4,504 4,622 0.35 18.93
BWFC Bank West Financial Corp. 336 234 0.15 30.42
BYFC Broadway Financial Corp. 145 145 0.16 17.19
CAFI Camco Financial Corp. 1,453 1,226 0.38 11.68
CAPS Capital Savings Bancorp Inc. 585 575 0.30 13.13
CASB Cascade Financial Corp. 579 548 0.19 17.11
CASH First Midwest Financial Inc. 913 854 0.31 15.12
CATB Catskill Financial Corp. 949 943 0.21 19.35
CBCI Calumet Bancorp Inc. 2,065 1,986 0.87 12.21
CBES CBES Bancorp Inc. 257 232 0.24 18.49
CBK Citizens First Financial Corp. 444 396 0.14 32.37
CBSA Coastal Bancorp Inc. 2,819 2,819 0.55 13.64
CBSB Charter Financial Inc. 1,909 1,071 0.25 20.25
CCFH CCF Holding Company 17 (99) (0.12) NM
CEBK Central Co-operative Bank 606 606 0.31 16.73
CENB Century Bancorp Inc. 439 444 1.18 16.84
CENF CENFED Financial Corp. 3,796 3,409 0.57 15.76
CFB Commercial Federal Corp. 17,060 16,951 0.78 14.74
CFBC Community First Banking Co. 636 641 NA NA
CFCP Coastal Financial Corp. 1,516 1,368 0.28 21.65
CFFC Community Financial Corp. 495 498 0.39 13.94
CFNC Carolina Fincorp Inc. 341 341 0.19 23.19
CFSB CFSB Bancorp Inc. 2,796 2,554 0.47 14.10
CFTP Community Federal Bancorp 650 657 0.15 28.75
CFX CFX Corp. 4,807 4,201 0.32 16.21
CIBI Community Investors Bancorp 230 230 0.26 14.90
CKFB CKF Bancorp Inc. 496 222 0.25 19.00
CLAS Classic Bancshares Inc. 237 237 0.20 17.66
</TABLE>
<PAGE> 122
<TABLE>
<CAPTION>
Page 26 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
DIVIDENDS CURRENT PRICING DATA AS OF 9/8/97
------------------------- ------------------------------------------------------------
CURRENT LTM DIVIDEND PRICE/ PRICE/
DIVIDEND PAYOUT LTM PRICE/ PRICE/ PRICE/ PUBLICLY REP
YIELD RATIO CORE EPS ASSETS EARNINGS LTM EPS BOOK VALUE
TICKER SHORT NAME ($) (%) (X) (%) (X) (X) (%)
- -------------------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp 1.566 35.44 17.88 22.56 17.88 22.63 104.05
CMSB Commonwealth Bancorp Inc. 1.617 36.11 20.86 12.93 18.82 24.05 134.31
CMSV Community Savings FA (MHC) 2.748 116.44 29.50 23.82 30.32 44.86 205.33
CNIT CENIT Bancorp Inc. 2.030 42.99 16.09 11.45 13.68 22.29 158.26
CNSB CNS Bancorp Inc. 1.371 55.56 35.71 29.42 31.25 64.81 117.92
CNY Carver Bancorp Inc. 1.675 NM NM 6.68 21.32 NM 79.96
COFI Charter One Financial 1.768 32.07 15.50 17.94 14.73 19.50 267.44
CONE Conestoga Bancorp, Inc. NA 28.17 NA NA NA NA NA
COOP Cooperative Bankshares Inc. 0.000 0 82.35 11.85 20.59 NM 155.30
CRZY Crazy Woman Creek Bancorp 2.759 70.18 20.71 25.51 19.08 25.44 98.77
CSA Coast Savings Financial 0.000 0.00 20.85 10.15 19.09 54.53 206.26
CSBF CSB Financial Group Inc. 0.000 0.00 43.98 22.90 49.48 69.85 91.42
CTZN CitFed Bancorp Inc. 0.774 15.60 17.68 12.97 15.5 24.73 203.68
CVAL Chester Valley Bancorp Inc. 1.996 39.76 15.91 13.36 14.58 22.58 159.70
DCBI Delphos Citizens Bancorp Inc. 0.000 NA NA 32.34 17.71 NA 113.86
DIBK Dime Financial Corp. 1.356 12.68 10.89 17.38 9.58 10.69 218.20
DIME Dime Community Bancorp Inc. 0.932 4.79 19.71 19.23 22.99 20.55 132.46
DME Dime Bancorp Inc. 0.795 3.92 15.60 10.39 19.35 19.73 197.11
DNFC D & N Financial Corp. 0.952 0.00 15.00 10.69 12.50 19.81 193.73
DSL Downey Financial Corp. 1.391 36.74 16.20 10.45 18.55 27.38 150.72
EBSI Eagle Bancshares 3.582 95.24 16.26 11.17 15.51 26.59 134.54
EFBC Empire Federal Bancorp Inc. 1.905 NA NA 37.61 23.16 NA 100.64
EFBI Enterprise Federal Bancorp 5.128 163.04 18.57 14.76 17.41 21.2 123.50
EGFC Eagle Financial Corp. 2.778 187.76 23.23 11.23 NM 73.47 163.49
EGLB Eagle BancGroup Inc. 0.000 NA NA 11.81 29.69 NA 99.61
EIRE Emerald Isle Bancorp Inc. 1.109 17.62 15.88 13.34 15.03 16.72 188.57
EMLD Emerald Financial Corp. 1.730 29.63 13.88 11.64 11.56 17.13 153.65
EQSB Equitable Federal Savings Bank 0.000 0 11.36 7.33 11.3 18.2 145.35
ESBK Elmira Savings Bank (The) 2.639 56.14 21.85 7.52 16.84 21.27 117.04
ESX Essex Bancorp Inc. 0.000 0.00 NM 1.08 NM NM 395.51
ETFS East Texas Financial Services 1.046 51.28 27.32 17.40 23.91 49.04 95.77
FAB FirstFed America Bancorp Inc. 0.000 NA NA 17.27 25.31 NA 131.92
FBBC First Bell Bancorp Inc. 2.510 336.63 13.86 14.53 12.85 15.78 147.85
FBCI Fidelity Bancorp Inc. 1.430 29.17 17.08 12.75 15.12 23.31 122.80
FBCV 1ST Bancorp 1.143 33.37 68.63 9.03 11.51 29.91 109.38
FBER 1st Bergen Bancorp 1.081 28.57 26.81 19.49 22.02 44.05 137.34
FBHC Fort Bend Holding Corp. 1.147 38.89 23.56 9.05 17.79 48.44 150.13
FBNW FirstBank Corp. 0.000 NA NA NA NA NA NA
FBSI First Bancshares Inc. 0.825 16.13 16.17 16.20 16.39 19.56 119.63
FCB Falmouth Co-Operative Bank 1.159 28.85 34.50 26.74 35.94 33.17 112.01
FCBF FCB Financial Corp. 2.991 80.00 22.48 20.71 33.44 29.72 142.29
FCME First Coastal Corp. 0.000 0 2.45 9.59 10.75 2.38 103.86
FDEF First Defiance Financial 2.169 72.09 26.34 24.95 23.05 34.30 117.06
FED FirstFed Financial Corp. 0.000 0 17.18 8.8 17.44 31.42 182.21
FESX First Essex Bancorp Inc. 2.667 33.10 14.17 10.85 13.64 12.41 155.57
FFBA First Colorado Bancorp Inc. 2.339 46.91 17.10 20.63 16.80 23.23 159.57
FFBH First Federal Bancshares of AR 1.133 11.49 18.59 19.38 18.27 24.35 129.51
FFBI First Financial Bancorp Inc. 0.000 0.00 21.35 9.33 NM NM 107.83
FFBS FFBS BanCorp Inc. 2.174 51.55 18.70 27.39 23.00 23.71 135.53
FFBZ First Federal Bancorp Inc. 1.297 29.38 17.45 14.45 13.21 23.13 209.99
FFCH First Financial Holdings Inc. 2.095 48.61 16.53 13.11 15.08 23.87 214.44
FFDB FirstFed Bancorp Inc. 2.817 61.05 13.45 11.54 13.05 20.64 122.58
FFDF FFD Financial Corp. 2.034 NA NA 25.16 26.34 NA 101.65
FFED Fidelity Federal Bancorp 4.267 466.67 34.72 9.33 11.72 62.5 181.33
FFES First Federal of East Hartford 1.750 40.27 13.94 9.33 16.80 23.01 145.07
FFFC FFVA Financial Corp. 1.600 34.92 20.00 24.27 17.86 23.81 172.31
FFFD North Central Bancshares Inc. 1.504 25.77 14.98 25.44 13.85 17.14 112.26
FFFG F.F.O. Financial Group Inc. 0.000 0.00 18.94 16.34 19.53 23.15 243.19
FFFL Fidelity Bankshares Inc. (MHC) 3.186 160.00 35.31 19.14 32.10 56.50 228.56
FFHC First Financial Corp. 1.832 39.04 16.62 19.99 15.16 22.43 280.63
FFHH FSF Financial Corp. 2.817 61.73 17.75 14.23 15.30 21.91 110.66
FFHS First Franklin Corporation 1.620 91.43 16.74 10.37 13.72 56.43 115.03
FFIC Flushing Financial Corp. 1.094 18.75 22.62 20.35 18.91 22.85 131.52
FFKY First Federal Financial Corp. 2.575 43.86 16.11 24.03 14.31 19.08 175.40
</TABLE>
<TABLE>
<CAPTION>
PRODUCTIVITY
-------------- -----------------
PRICE/ TANG FULL TIME
PUBLICLY REP EQUIVALENT
BOOK VALUE EMPLOYEES
TICKER SHORT NAME (%) MOST RECENT QTR
- --------------------------------------------------------- -----------------
<S> <C> <C> <C>
CMRN Cameron Financial Corp 104.05 52
CMSB Commonwealth Bancorp Inc. 171.76 749
CMSV Community Savings FA (MHC) 205.33 258
CNIT CENIT Bancorp Inc. 172.32 NA
CNSB CNS Bancorp Inc. 117.92 27
CNY Carver Bancorp Inc. 83.37 103
COFI Charter One Financial 285.67 2,626
CONE Conestoga Bancorp, Inc. NA 105
COOP Cooperative Bankshares Inc. 155.30 115
CRZY Crazy Woman Creek Bancorp 98.77 10
CSA Coast Savings Financial 208.95 1488
CSBF CSB Financial Group Inc. 96.78 NA
CTZN CitFed Bancorp Inc. 226.17 740
CVAL Chester Valley Bancorp Inc. 159.70 108
DCBI Delphos Citizens Bancorp Inc. 113.86 22
DIBK Dime Financial Corp. 225.54 145
DIME Dime Community Bancorp Inc. 153.77 248
DME Dime Bancorp Inc. 206.62 3,011
DNFC D & N Financial Corp. 195.90 NA
DSL Downey Financial Corp. 152.82 1,181
EBSI Eagle Bancshares 134.54 529
EFBC Empire Federal Bancorp Inc. 100.64 NA
EFBI Enterprise Federal Bancorp 123.57 NA
EGFC Eagle Financial Corp. 209.42 418
EGLB Eagle BancGroup Inc. 99.61 50
EIRE Emerald Isle Bancorp Inc. 188.57 112
EMLD Emerald Financial Corp. 156.07 135
EQSB Equitable Federal Savings Bank 145.35 NA
ESBK Elmira Savings Bank (The) 122.04 126
ESX Essex Bancorp Inc. 625.16 NA
ETFS East Texas Financial Services 95.77 28
FAB FirstFed America Bancorp Inc. 131.92 NA
FBBC First Bell Bancorp Inc. 147.85 60
FBCI Fidelity Bancorp Inc. 123.07 110
FBCV 1ST Bancorp 111.64 88
FBER 1st Bergen Bancorp 137.34 55
FBHC Fort Bend Holding Corp. 161.16 141
FBNW FirstBank Corp. NA NA
FBSI First Bancshares Inc. 119.81 NA
FCB Falmouth Co-Operative Bank 112.01 28
FCBF FCB Financial Corp. 142.29 NA
FCME First Coastal Corp. 103.86 68
FDEF First Defiance Financial 117.06 147
FED FirstFed Financial Corp. 184.23 442
FESX First Essex Bancorp Inc. 179.10 284
FFBA First Colorado Bancorp Inc. 161.76 293
FFBH First Federal Bancshares of AR 129.51 154
FFBI First Financial Bancorp Inc. 107.83 37
FFBS FFBS BanCorp Inc. 135.53 31
FFBZ First Federal Bancorp Inc. 210.23 71
FFCH First Financial Holdings Inc. 214.44 553
FFDB FirstFed Bancorp Inc. 134.47 NA
FFDF FFD Financial Corp. 101.65 16
FFED Fidelity Federal Bancorp 181.33 118
FFES First Federal of East Hartford 145.07 187
FFFC FFVA Financial Corp. 176.06 133
FFFD North Central Bancshares Inc. 112.26 NA
FFFG F.F.O. Financial Group Inc. 243.19 NA
FFFL Fidelity Bankshares Inc. (MHC) 230.24 286
FFHC First Financial Corp. 288.04 1776
FFHH FSF Financial Corp. 110.66 90
FFHS First Franklin Corporation 115.77 49
FFIC Flushing Financial Corp. 131.52 174
FFKY First Federal Financial Corp. 186.38 100
</TABLE>
<TABLE>
<CAPTION>
INCOME
----------------------------------------------------------------
NET INCOME CORE INCOME CORE EPS PRICE/
TICKER SHORT NAME MOST RECENT QTR MOST RECENT QTR MOST RECENT QTR CORE EPS
- ------------------------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CMRN Cameron Financial Corp 637 637 0.25 17.88
CMSB Commonwealth Bancorp Inc. 3,680 2,680 0.17 25.46
CMSV Community Savings FA (MHC) 1,383 1,383 0.27 30.32
CNIT CENIT Bancorp Inc. 1,548 1,421 0.83 14.83
CNSB CNS Bancorp Inc. 215 215 0.14 31.25
CNY Carver Bancorp Inc. 310 310 0.14 21.32
COFI Charter One Financial 45,731 45,516 0.96 14.73
CONE Conestoga Bancorp, Inc. 742 334 0.07 NA
COOP Cooperative Bankshares Inc. 543 535 0.33 21.21
CRZY Crazy Woman Creek Bancorp 172 177 0.20 18.13
CSA Coast Savings Financial 12,646 12,612 0.65 19.09
CSBF CSB Financial Group Inc. 52 51 0.06 49.48
CTZN CitFed Bancorp Inc. 6,666 6,663 0.75 15.50
CVAL Chester Valley Bancorp Inc. 740 702 0.34 15.44
DCBI Delphos Citizens Bancorp Inc. 449 449 0.24 17.71
DIBK Dime Financial Corp. 4,150 4,146 0.77 9.58
DIME Dime Community Bancorp Inc. 2,655 2,208 0.17 28.40
DME Dime Bancorp Inc. 27,772 26,440 0.25 20.13
DNFC D & N Financial Corp. 3,579 3,106 0.36 14.58
DSL Downey Financial Corp. 8,310 8,096 0.30 19.17
EBSI Eagle Bancshares 1,560 1,550 0.27 15.51
EFBC Empire Federal Bancorp Inc. 416 416 0.17 23.16
EFBI Enterprise Federal Bancorp 551 551 0.28 17.41
EGFC Eagle Financial Corp. (4,315) (1,466) (0.23) NM
EGLB Eagle BancGroup Inc. 170 123 0.10 41.56
EIRE Emerald Isle Bancorp Inc. 972 977 0.42 15.03
EMLD Emerald Financial Corp. 1,536 1,469 0.29 11.96
EQSB Equitable Federal Savings Bank 532 528 0.82 11.43
ESBK Elmira Savings Bank (The) 248 243 0.35 17.32
ESX Essex Bancorp Inc. 390 254 (0.01) NM
ETFS East Texas Financial Services 191 183 0.19 25.16
FAB FirstFed America Bancorp Inc. 1,647 1,574 0.19 26.64
FBBC First Bell Bancorp Inc. 1,914 1,746 0.28 14.23
FBCI Fidelity Bancorp Inc. 1,032 1,032 0.37 15.12
FBCV 1ST Bancorp 536 224 0.32 27.34
FBER 1st Bergen Bancorp 570 570 0.21 22.02
FBHC Fort Bend Holding Corp. 519 456 0.43 20.28
FBNW FirstBank Corp. 225 108 NA NA
FBSI First Bancshares Inc. 408 390 0.35 17.32
FCB Falmouth Co-Operative Bank 172 164 0.11 39.20
FCBF FCB Financial Corp. 690 1,072 0.31 21.57
FCME First Coastal Corp. 351 277 0.20 13.44
FDEF First Defiance Financial 1,521 1,493 0.16 23.05
FED FirstFed Financial Corp. 5,348 5,332 0.50 17.44
FESX First Essex Bancorp Inc. 2,526 2,167 0.28 16.07
FFBA First Colorado Bancorp Inc. 4,529 4,488 0.28 16.80
FFBH First Federal Bancshares of AR 1,320 1,064 0.23 23.03
FFBI First Financial Bancorp Inc. (194) 85 0.21 22.62
FFBS FFBS BanCorp Inc. 380 380 0.25 23.00
FFBZ First Federal Bancorp Inc. 608 549 0.32 14.45
FFCH First Financial Holdings Inc. 3,603 3,426 0.54 15.91
FFDB FirstFed Bancorp Inc. 434 434 0.34 13.05
FFDF FFD Financial Corp. 192 220 0.16 23.05
FFED Fidelity Federal Bancorp 529 505 0.19 12.34
FFES First Federal of East Hartford 1,417 1,561 0.56 15.30
FFFC FFVA Financial Corp. 1,930 1,873 0.41 18.29
FFFD North Central Bancshares Inc. 959 959 0.30 13.85
FFFG F.F.O. Financial Group Inc. 709 581 0.07 22.32
FFFL Fidelity Bankshares Inc. (MHC) 1,465 1,460 0.22 32.10
FFHC First Financial Corp. 19,980 19,527 0.53 15.45
FFHH FSF Financial Corp. 823 813 0.29 15.30
FFHS First Franklin Corporation 442 413 0.34 14.52
FFIC Flushing Financial Corp. 2,123 2,125 0.29 18.91
FFKY First Federal Financial Corp. 1,571 1,571 0.38 14.31
</TABLE>
<PAGE> 123
<TABLE>
<CAPTION>
Page 27 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
DIVIDENDS CURRENT PRICING DATA AS OF 9/8/97
------------------------- ------------------------------------------------------------
CURRENT LTM DIVIDEND PRICE/ PRICE/
DIVIDEND PAYOUT LTM PRICE/ PRICE/ PRICE/ PUBLICLY REP
YIELD RATIO CORE EPS ASSETS EARNINGS LTM EPS BOOK VALUE
TICKER SHORT NAME ($) (%) (X) (%) (X) (X) (%)
- -------------------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FFLC FFLC Bancorp Inc. 1.512 43.14 21.90 19.01 20.35 31.13 140.99
FFOH Fidelity Financial of Ohio 1.750 46.15 19.28 17.01 17.39 30.77 131.47
FFPB First Palm Beach Bancorp Inc. 1.714 NM NM 10.57 19.02 NM 160.85
FFSL First Independence Corp. 1.818 50.00 19.37 12.36 19.10 30.56 118.53
FFSX First Fed SB of Siouxland(MHC) 1.714 67.99 23.53 16.90 23.33 40.58 203.78
FFWC FFW Corp. 2.441 33.16 12.45 11.65 13.41 15.53 122.36
FFWD Wood Bancorp Inc. 2.540 31.54 17.90 20.36 14.58 21.28 165.44
FFYF FFY Financial Corp. 2.593 56.72 16.17 18.67 13.50 22.69 136.16
FGHC First Georgia Holding Inc. 0.688 17.77 20.95 15.13 16.15 25.83 184.09
FIBC Financial Bancorp Inc. 1.739 38.46 14.56 14.02 14.38 25.27 149.84
FISB First Indiana Corporation 2.087 40.35 NA 15.97 15.54 20.00 167.03
FKFS First Keystone Financial 0.702 10.42 13.97 10.91 11.88 19.79 149.29
FKKY Frankfort First Bancorp Inc. 3.273 NM 47.83 27.24 NM NM 158.50
FLAG FLAG Financial Corp. 2.230 NM 08.93 14.00 15.25 NM 146.07
FLFC First Liberty Financial Corp. 1.798 29.52 14.54 13.33 12.36 16.98 180.89
FLGS Flagstar Bancorp Inc. 0.000 NA NA 16.70 NM NA 231.04
FLKY First Lancaster Bancshares 3.187 NA NA 37.18 24.51 NA 108.64
FMBD First Mutual Bancorp Inc. 2.065 266.67 51.67 13.01 29.81 129.17 92.65
FMCO FMS Financial Corporation 1.028 13.16 12.27 11.72 11.35 17.93 178.81
FMSB First Mutual Savings Bank 0.952 12.52 14.48 13.13 13.13 14.09 192.48
FNGB First Northern Capital Corp. 2.327 79.41 12.85 19.05 21.48 20.22 168.92
FOBC Fed One Bancorp 2.900 61.05 14.49 13.30 14.71 21.05 115.94
FPRY First Financial Bancorp NA 39.66 NA NA NA NA NA
FRC First Republic Bancorp 0.000 0 18.75 10.56 14.86 16.04 147.19
FSBI Fidelity Bancorp Inc. 1.636 29.92 13.17 9.39 13.41 20.75 138.98
FSFC First Southeast Financial Corp 1.548 NM 21.83 20.32 18.45 NM 198.72
FSLA First Savings Bank (MHC) 1.477 51.51 26.42 22.86 24.62 41.67 242.72
FSNJ Bayonne Bancshares Inc. 1.363 NA NA NA NA NA NA
FSPG First Home Bancorp Inc. 1.988 24.07 11.37 10.43 12.27 12.42 156.61
FSPT FirstSpartan Financial Corp. 0 NA NA NA NA NA NA
FSSB First FS&LA of San Bernardino 0.000 0.00 NM 3.05 NM NM 70.36
FSTC First Citizens Corp. 1.375 15.60 11.43 17.31 4.88 11.35 177.88
FTF Texarkana First Financial Corp 2.274 253.83 14.75 25.73 13.10 17.97 163.84
FTFC First Federal Capital Corp. 2.021 37.62 15.03 13.81 14.14 20.30 214.35
FTNB Fulton Bancorp Inc. 0.930 NA NA 37.17 38.39 NA 148.58
FTSB Fort Thomas Financial Corp. 2.128 NM 23.50 18.12 12.77 36.72 112.98
FWWB First SB of Washington Bancorp 1.137 23.08 21.41 24.11 18.66 23.68 157.05
GAF GA Financial Inc. 2.612 38.75 20.65 19.57 17.67 22.97 128.95
GBCI Glacier Bancorp Inc. 2.685 40.01 14.53 21.45 13.14 16.25 220.14
GDVS Greater Delaware Valley (MHC) 1.485 156.52 57.74 32.47 37.89 105.43 280.67
GDW Golden West Financial 0.504 6.41 10.95 12.68 14.18 13.18 199.03
GFCO Glenway Financial Corp. 2.883 63.39 15.68 11.02 13.34 26.18 116.16
GFED Guaranty Federal SB (MHC) 2.186 102.7 36.59 31.51 31.45 54.39 228.69
GFSB GFS Bancorp Inc. 1.825 25.29 13.83 15.30 11.88 16.76 133.68
GOSB GSB Financial Corp. 0.000 NA NA NA NA NA NA
GPT GreenPoint Financial Corp. 1.584 26.47 19.30 21.38 18.35 18.57 184.20
GRTR Greater New York Savings Bank 0.865 17.86 31.68 12.30 28.91 27.53 196.98
GSB Golden State Bancorp Inc. 0.000 0.00 21.16 9.53 21.92 49.50 196.34
GSBC Great Southern Bancorp Inc. 2.270 35.23 14.10 20.18 11.91 16.02 236.58
GSFC Green Street Financial Corp. 2.362 94.92 25.87 45.85 27.39 31.57 126.44
GSLA GS Financial Corp. 1.750 NA NA 44.64 NA NA 97.80
GTFN Great Financial Corporation 1.684 32.69 23.59 16.13 15.63 22.84 174.63
GTPS Great American Bancorp 2.254 210.53 43.29 22.81 40.34 93.42 96.68
GUPB GFSB Bancorp Inc. 2.133 111.94 22.32 18.11 22.32 27.99 111.08
GWBC Gateway Bancorp Inc. 2.230 78.43 NA 30.23 32.03 35.17 111.76
HALL Hallmark Capital Corp. 0.000 0.00 13.10 7.75 10.78 16.54 107.00
HARB Harbor Florida Bancorp (MHC) 2.405 63.73 22.14 25.91 21.40 28.54 308.85
HARL Harleysville Savings Bank 1.553 25.92 13.21 12.64 12.15 18.13 193.46
HARS Harris Savings Bank (MHC) 1.307 72.5 44.82 24.36 24.65 55.47 304.15
HAVN Haven Bancorp Inc. 1.534 29.70 12.38 9.61 19.56 19.37 161.67
HBBI Home Building Bancorp 1.463 88.24 25.63 14.18 17.08 60.29 101.69
HBEI Home Bancorp of Elgin Inc. 2.222 NA NA 35.00 40.91 NA 131.10
HBFW Home Bancorp 0.889 26.32 19.23 16.96 18.15 29.61 127.70
HBNK Highland Federal Bank FSB 0.000 0.00 21.76 13.80 13.04 32.18 184.56
</TABLE>
<TABLE>
<CAPTION>
PRODUCTIVITY
--------------- -----------------
PRICE/ TANG FULL TIME
PUBLICLY REP EQUIVALENT
BOOK VALUE EMPLOYEES
TICKER SHORT NAME (%) MOST RECENT QTR
- ---------------------------------------------------------- -----------------
<S> <C> <C> <C>
FFLC FFLC Bancorp Inc. 140.99 125
FFOH Fidelity Financial of Ohio 148.98 118
FFPB First Palm Beach Bancorp Inc. 164.86 415
FFSL First Independence Corp. 118.53 24
FFSX First Fed SB of Siouxland(MHC) 205.58 171
FFWC FFW Corp. 135.76 46
FFWD Wood Bancorp Inc. 165.44 47
FFYF FFY Financial Corp. 136.16 180
FGHC First Georgia Holding Inc. 200.78 82
FIBC Financial Bancorp Inc. 150.62 60
FISB First Indiana Corporation 169.12 542
FKFS First Keystone Financial 149.29 73
FKKY Frankfort First Bancorp Inc. 158.50 25
FLAG FLAG Financial Corp. 146.07 111
FLFC First Liberty Financial Corp. 200.63 543
FLGS Flagstar Bancorp Inc. NA NA
FLKY First Lancaster Bancshares 108.64 8
FMBD First Mutual Bancorp Inc. 122.34 173
FMCO FMS Financial Corporation 182.03 274
FMSB First Mutual Savings Bank 192.48 113
FNGB First Northern Capital Corp. 168.92 218
FOBC Fed One Bancorp 121.58 124
FPRY First Financial Bancorp NA NA
FRC First Republic Bancorp 147.28 171
FSBI Fidelity Bancorp Inc. 138.98 106
FSFC First Southeast Financial Corp 198.72 121
FSLA First Savings Bank (MHC) 272.19 218
FSNJ Bayonne Bancshares Inc. NA NA
FSPG First Home Bancorp Inc. 159.22 118
FSPT FirstSpartan Financial Corp. NA NA
FSSB First FS&LA of San Bernardino 73.03 51
FSTC First Citizens Corp. 228.73 NA
FTF Texarkana First Financial Corp 163.84 35
FTFC First Federal Capital Corp. 227.93 NA
FTNB Fulton Bancorp Inc. 148.58 39
FTSB Fort Thomas Financial Corp. 112.98 19
FWWB First SB of Washington Bancorp 170.06 NA
GAF GA Financial Inc. 130.32 202
GBCI Glacier Bancorp Inc. 225.98 252
GDVS Greater Delaware Valley (MHC) 280.67 67
GDW Golden West Financial 199.03 4,476
GFCO Glenway Financial Corp. 117.73 65
GFED Guaranty Federal SB (MHC) 228.69 67
GFSB GFS Bancorp Inc. 133.68 NA
GOSB GSB Financial Corp. NA NA
GPT GreenPoint Financial Corp. 327.58 1,911
GRTR Greater New York Savings Bank 196.98 NA
GSB Golden State Bancorp Inc. 220.94 NA
GSBC Great Southern Bancorp Inc. 236.58 425
GSFC Green Street Financial Corp. 126.44 31
GSLA GS Financial Corp. 97.80 33
GTFN Great Financial Corporation 182.32 831
GTPS Great American Bancorp 96.68 NA
GUPB GFSB Bancorp Inc. 111.08 16
GWBC Gateway Bancorp Inc. 111.76 9
HALL Hallmark Capital Corp. 107.00 76
HARB Harbor Florida Bancorp (MHC) 319.36 310
HARL Harleysville Savings Bank 193.46 52
HARS Harris Savings Bank (MHC) 347.77 501
HAVN Haven Bancorp Inc. 162.28 547
HBBI Home Building Bancorp 101.69 15
HBEI Home Bancorp of Elgin Inc. 131.10 115
HBFW Home Bancorp 127.70 81
HBNK Highland Federal Bank FSB 184.56 115
</TABLE>
<TABLE>
<CAPTION>
INCOME
----------------------------------------------------------------
NET INCOME CORE INCOME CORE EPS PRICE/
TICKER SHORT NAME MOST RECENT QTR MOST RECENT QTR MOST RECENT QTR CORE EPS
- ------------------------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FFLC FFLC Bancorp Inc. 902 902 0.39 20.35
FFOH Fidelity Financial of Ohio 1,221 1,216 0.23 17.39
FFPB First Palm Beach Bancorp Inc. 2,352 2,101 0.41 21.34
FFSL First Independence Corp. 177 177 0.18 19.10
FFSX First Fed SB of Siouxland(MHC) 851 832 0.29 24.14
FFWC FFW Corp. 391 385 0.54 13.66
FFWD Wood Bancorp Inc. 590 530 0.24 16.41
FFYF FFY Financial Corp. 2,007 1,991 0.50 13.50
FGHC First Georgia Holding Inc. 381 381 0.12 16.15
FIBC Financial Bancorp Inc. 661 659 0.40 14.38
FISB First Indiana Corporation 3,973 3,314 0.31 18.55
FKFS First Keystone Financial 673 616 0.55 12.95
FKKY Frankfort First Bancorp Inc. (831) (116) (0.04) NM
FLAG FLAG Financial Corp. 509 378 0.19 20.07
FLFC First Liberty Financial Corp. 3,496 3,195 0.41 13.57
FLGS Flagstar Bancorp Inc. 5,141 5,141 NA
FLKY First Lancaster Bancshares 143 143 0.16 24.51
FMBD First Mutual Bancorp Inc. 436 405 0.12 32.29
FMCO FMS Financial Corporation 1,457 1,456 0.60 11.35
FMSB First Mutual Savings Bank 1,109 1,067 0.38 13.82
FNGB First Northern Capital Corp. 1,459 1,398 0.15 22.92
FOBC Fed One Bancorp 818 818 0.34 14.71
FPRY First Financial Bancorp 257 141 0.15 NA
FRC First Republic Bancorp 4,352 3,566 0.34 17.92
FSBI Fidelity Bancorp Inc. 656 645 0.40 13.75
FSFC First Southeast Financial Corp 899 899 0.21 18.45
FSLA First Savings Bank (MHC) 2,454 2,426 0.33 24.62
FSNJ Bayonne Bancshares Inc. 838 838 NA NA
FSPG First Home Bancorp Inc. 1,122 1,095 0.40 12.58
FSPT FirstSpartan Financial Corp. 1,046 1,046 NA NA
FSSB First FS&LA of San Bernardino (32) (32) (0.10) NM
FSTC First Citizens Corp. 3,228 3,058 1.55 5.16
FTF Texarkana First Financial Corp 797 795 0.47 13.10
FTFC First Federal Capital Corp. 4,209 3,592 0.36 16.49
FTNB Fulton Bancorp Inc. 226 226 0.14 38.39
FTSB Fort Thomas Financial Corp. 331 331 0.23 12.77
FWWB First SB of Washington Bancorp 3,245 3,113 0.32 19.24
GAF GA Financial Inc. 2,018 2,000 0.26 17.67
GBCI Glacier Bancorp Inc. 2,292 2,292 0.34 13.14
GDVS Greater Delaware Valley (MHC) 533 533 0.16 37.89
GDW Golden West Financial 87,277 85,287 1.50 14.56
GFCO Glenway Financial Corp. 586 586 0.52 13.34
GFED Guaranty Federal SB (MHC) 506 481 0.15 33.54
GFSB GFS Bancorp Inc. 308 308 0.30 11.88
GOSB GSB Financial Corp. 125 124 NA NA
GPT GreenPoint Financial Corp. 35,129 36,721 0.90 17.53
GRTR Greater New York Savings Bank 4,746 4,699 0.20 28.91
GSB Golden State Bancorp Inc. 24,294 29,125 0.43 17.84
GSBC Great Southern Bancorp Inc. 3,030 2,934 0.36 12.24
GSFC Green Street Financial Corp. 728 728 0.17 27.39
GSLA GS Financial Corp. 519 527 NA NA
GTFN Great Financial Corporation 7,921 5,815 0.42 21.21
GTPS Great American Bancorp 193 192 0.11 40.34
GUPB GFSB Bancorp Inc. 171 170 0.21 22.32
GWBC Gateway Bancorp Inc. 155 155 0.14 32.03
HALL Hallmark Capital Corp. 737 684 0.47 11.70
HARB Harbor Florida Bancorp (MHC) 3,416 3,358 0.67 21.72
HARL Harleysville Savings Bank 909 909 0.53 12.15
HARS Harris Savings Bank (MHC) 5,065 3,698 0.33 33.62
HAVN Haven Bancorp Inc. 2,300 2,295 0.50 19.56
HBBI Home Building Bancorp 87 81 0.28 18.30
HBEI Home Bancorp of Elgin Inc. 719 719 0.11 40.91
HBFW Home Bancorp 738 738 0.31 18.15
HBNK Highland Federal Bank FSB 1,353 1,353 0.58 13.04
</TABLE>
<PAGE> 124
<TABLE>
<CAPTION>
Page 28 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
DIVIDENDS CURRENT PRICING DATA AS OF 9/8/97
------------------------- ------------------------------------------------------------
CURRENT LTM DIVIDEND PRICE/ PRICE/
DIVIDEND PAYOUT LTM PRICE/ PRICE/ PRICE/ PUBLICLY REP
YIELD RATIO CORE EPS ASSETS EARNINGS LTM EPS BOOK VALUE
TICKER SHORT NAME ($) (%) (X) (%) (X) (X) (%)
- -------------------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HBS Haywood Bancshares Inc. 2.947 61.80 15.20 15.79 14.39 21.35 113.37
HCBB HCB Bancshares Inc. 0.000 NA NA NA NA NA NA
HCFC Home City Financial Corp. 2.065 NA NA 21.63 19.38 NA 96.57
HEMT HF Bancorp Inc. 0.000 0.00 47.27 9.65 NM NM 117.25
HFFB Harrodsburg First Fin Bancorp 2.623 93.22 20.33 28.34 19.06 25.85 97.26
HFFC HF Financial Corp. 1.732 30.25 15.16 12.86 12.63 20.38 136.39
HFGI Harrington Financial Group 0.960 4.92 18.38 9.11 22.32 20.49 162.97
HFNC HFNC Financial Corp. 1.710 NM 25.99 31.44 31.49 35.60 174.76
HFSA Hardin Bancorp Inc. 2.844 70.00 19.40 13.42 15.07 28.13 107.62
HHFC Harvest Home Financial Corp. 3.333 NM 22.64 12.53 15.79 46.15 106.1
HIFS Hingham Instit. for Savings 1.939 26.88 13.31 14.83 12.13 13.31 158.45
HMCI HomeCorp Inc. 0.000 0.00 21.20 8.55 16.11 72.83 130.76
HMLK Hemlock Federal Financial Corp 1.567 NA NA 19.28 NA NA 105.10
HMNF HMN Financial Inc. 0.000 0.00 20.87 18.30 18.11 24.63 126.80
HOMF Home Federal Bancorp 1.613 20.83 13.60 15.42 13.14 15.82 181.82
HPBC Home Port Bancorp Inc. 3.497 46.24 13.30 21.20 12.71 13.22 200.83
HRBF Harbor Federal Bancorp Inc. 2.025 66.67 21.24 15.46 19.75 32.92 119.84
HRZB Horizon Financial Corp. 2.581 62.18 14.76 22.17 14.35 14.49 142.07
HTHR Hawthorne Financial Corp. 0.000 0.00 25.93 6.11 7.90 NM 132.94
HVFD Haverfield Corp. 2.004 53.92 16.83 15.39 14.86 27.39 180.13
HWEN Home Financial Bancorp 1.217 NA NA 18.16 20.55 NA 107.23
HZFS Horizon Financial Svcs Corp. 1.695 47.06 17.48 9.34 20.52 27.76 95.47
IBSF IBS Financial Corp. 2.319 143.76 29.24 25.90 28.75 50.74 148.84
IFSB Independence Federal Svgs Bank 1.571 33.33 25.45 6.94 6.86 21.21 100.79
INBI Industrial Bancorp 3.148 68.09 18.83 23.22 14.66 32.45 131.13
INCB Indiana Community Bank SB 2.286 NM 32.81 15.90 26.25 05.00 128.36
IPSW Ipswich Savings Bank 0.906 13.04 10.43 8.31 7.53 8.23 145.44
ISBF ISB Financial Corporation 1.569 45.12 22.77 18.58 23.61 31.10 144.80
ITLA ITLA Capital Corp. 0.000 0 12.85 16.82 12.01 12.85 153.10
IWBK InterWest Bancorp Inc. 1.519 31.11 17.10 17.32 15.67 21.94 255.50
JOAC Joachim Bancorp Inc. 3.419 227.27 39.53 30.24 33.24 66.48 107.38
JSB JSB Financial Inc. 2.959 48.69 18.70 30.42 17.14 17.72 133.13
JSBA Jefferson Savings Bancorp 1.131 38.30 16.53 13.70 15.79 37.63 147.64
JXSB Jacksonville Savings Bk (MHC) 1.778 117.65 35.16 17.59 31.25 66.18 167.66
JXVL Jacksonville Bancorp Inc. 2.963 64.94 7.40 18.58 10.29 21.92 124.54
KFBI Klamath First Bancorp 1.509 50.00 23.38 27.35 22.59 34.27 127.65
KNK Kankakee Bancorp Inc. 1.593 28.76 15.37 12.57 15.06 19.69 113.29
KSAV KS Bancorp Inc. 3.243 87.38 12.01 15.43 12.17 17.96 114.13
KSBK KSB Bancorp Inc. 0.640 9.27 9.84 10.61 10.42 10.87 147.75
KYF Kentucky First Bancorp Inc. 3.922 583.33 16.35 18.91 15.94 21.25 114.25
LARK Landmark Bancshares Inc. 1.468 37.74 21.29 20.44 19.46 25.71 148.18
LARL Laurel Capital Group Inc. 2.213 29.73 12.57 16.00 11.99 15.88 159.43
LFBI Little Falls Bancorp Inc. 1.185 25.81 31.84 15.44 23.44 54.44 116.30
LFCO Life Financial Corp. 0.000 NA NA 56.34 9.57 NA 263.54
LFED Leeds Federal Savings Bk (MHC) 2.512 107.81 33.99 37.07 30.25 47.27 228.99
LIFB Life Bancorp Inc. 1.954 42.86 18.61 16.25 18.61 23.39 154.10
LISB Long Island Bancorp Inc. 1.356 37.67 26.18 17.95 20.87 30.31 199.59
LOGN Logansport Financial Corp. 2.623 465.75 16.22 23.12 15.89 20.89 120.46
LONF London Financial Corporation 1.600 46.15 19.48 20.21 22.06 28.85 102.74
LSBI LSB Financial Corp. 1.528 19.35 15.67 10.68 13.57 13.91 112.37
LSBX Lawrence Savings Bank 0.000 0.00 8.78 13.93 9.33 8.78 160.24
LVSB Lakeview Financial 0.709 9.51 20.14 16.85 16.32 14.04 177.05
LXMO Lexington B&L Financial Corp. 1.875 26.32 21.05 30.75 18.18 28.07 108.62
MAFB MAF Bancorp Inc. 0.882 14.37 13.93 14.71 12.40 18.25 189.10
MARN Marion Capital Holdings 3.745 63.08 15.16 23.97 14.69 18.08 106.38
MASB MASSBANK Corp. 2.438 28.65 15.49 15.55 14.75 14.75 146.16
MBB MSB Bancorp Inc. 2.533 153.85 22.14 8.28 21.15 60.74 112.00
MBBC Monterey Bay Bancorp Inc. 0.722 33.33 29.69 13.06 34.64 55.42 107.54
MBLF MBLA Financial Corp. 1.720 38.46 17.48 12.86 18.16 22.36 105.78
MBSP Mitchell Bancorp Inc. 2.336 NA NA 48.25 28.54 NA 111.27
MCBN Mid-Coast Bancorp Inc. 2.080 48.15 14.97 9.73 12.76 23.15 113.12
MCBS Mid Continent Bancshares Inc. 1.060 21.28 17.81 18.09 16.00 20.08 189.41
MDBK Medford Savings Bank 2.233 36.17 14.73 13.65 12.40 13.72 151.84
MECH Mechanics Savings Bank 0.000 0.00 8.55 15.50 4.40 8.55 151.44
</TABLE>
<TABLE>
<CAPTION>
PRODUCTIVITY
--------------- -----------------
PRICE/ TANG FULL TIME
PUBLICLY REP EQUIVALENT
BOOK VALUE EMPLOYEES
TICKER SHORT NAME (%) MOST RECENT QTR
- ---------------------------------------------------------- -----------------
<S> <C> <C> <C>
HBS Haywood Bancshares Inc. 117.57 34
HCBB HCB Bancshares Inc. NA NA
HCFC Home City Financial Corp. 96.57 14
HEMT HF Bancorp Inc. NA NA
HFFB Harrodsburg First Fin Bancorp 97.26 15
HFFC HF Financial Corp. 136.39 274
HFGI Harrington Financial Group 162.97 58
HFNC HFNC Financial Corp. 174.76 125
HFSA Hardin Bancorp Inc. 107.62 19
HHFC Harvest Home Financial Corp. 106.1 NA
HIFS Hingham Instit. for Savings 158.45 63
HMCI HomeCorp Inc. 130.76 184
HMLK Hemlock Federal Financial Corp 105.10 52
HMNF HMN Financial Inc. 126.80 116
HOMF Home Federal Bancorp 187.65 251
HPBC Home Port Bancorp Inc. 200.83 51
HRBF Harbor Federal Bancorp Inc. 119.84 48
HRZB Horizon Financial Corp. 142.07 120
HTHR Hawthorne Financial Corp. 132.94 193
HVFD Haverfield Corp. 180.13 99
HWEN Home Financial Bancorp 107.23 16
HZFS Horizon Financial Svcs Corp. 95.47 28
IBSF IBS Financial Corp. 148.84 135
IFSB Independence Federal Svgs Bank 114.01 NA
INBI Industrial Bancorp 131.13 84
INCB Indiana Community Bank SB 128.36 48
IPSW Ipswich Savings Bank 145.44 58
ISBF ISB Financial Corporation 170.23 NA
ITLA ITLA Capital Corp. 153.75 141
IWBK InterWest Bancorp Inc. 261.07 588
JOAC Joachim Bancorp Inc. 107.38 14
JSB JSB Financial Inc. 133.13 NA
JSBA Jefferson Savings Bancorp 190.29 NA
JXSB Jacksonville Savings Bk (MHC) 167.66 80
JXVL Jacksonville Bancorp Inc. 124.54 NA
KFBI Klamath First Bancorp 127.65 111
KNK Kankakee Bancorp Inc. 120.55 114
KSAV KS Bancorp Inc. 114.20 29
KSBK KSB Bancorp Inc. 156.25 NA
KYF Kentucky First Bancorp Inc. 114.25 22
LARK Landmark Bancshares Inc. 148.18 45
LARL Laurel Capital Group Inc. 159.43 50
LFBI Little Falls Bancorp Inc. 125.93 NA
LFCO Life Financial Corp. 263.54 184
LFED Leeds Federal Savings Bk (MHC) 228.99 27
LIFB Life Bancorp Inc. 158.68 220
LISB Long Island Bancorp Inc. 201.59 1,492
LOGN Logansport Financial Corp. 120.46 13
LONF London Financial Corporation 102.74 9
LSBI LSB Financial Corp. 112.37 61
LSBX Lawrence Savings Bank 160.24 101
LVSB Lakeview Financial 221.42 NA
LXMO Lexington B&L Financial Corp. 108.62 NA
MAFB MAF Bancorp Inc. 216.43 NA
MARN Marion Capital Holdings 106.38 31
MASB MASSBANK Corp. 146.16 188
MBB MSB Bancorp Inc. 228.21 241
MBBC Monterey Bay Bancorp Inc. 116.67 92
MBLF MBLA Financial Corp. 105.78 11
MBSP Mitchell Bancorp Inc. 111.27 6
MCBN Mid-Coast Bancorp Inc. 113.12 23
MCBS Mid Continent Bancshares Inc. 189.41 160
MDBK Medford Savings Bank 162.96 255
MECH Mechanics Savings Bank 151.44 233
</TABLE>
<TABLE>
<CAPTION>
INCOME
----------------------------------------------------------------
NET INCOME CORE INCOME CORE EPS PRICE/
TICKER SHORT NAME MOST RECENT QTR MOST RECENT QTR MOST RECENT QTR CORE EPS
- ------------------------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HBS Haywood Bancshares Inc. 416 416 0.33 14.39
HCBB HCB Bancshares Inc. 121 135 NA NA
HCFC Home City Financial Corp. 178 190 0.21 18.45
HEMT HF Bancorp Inc. (1,236) 696 0.12 31.51
HFFB Harrodsburg First Fin Bancorp 378 378 0.20 19.06
HFFC HF Financial Corp. 1,478 1,377 0.45 13.47
HFGI Harrington Financial Group 445 365 0.11 28.41
HFNC HFNC Financial Corp. 2,033 2,033 0.13 31.49
HFSA Hardin Bancorp Inc. 231 200 0.24 17.58
HHFC Harvest Home Financial Corp. 171 170 0.19 15.79
HIFS Hingham Instit. for Savings 663 663 0.51 12.13
HMCI HomeCorp Inc. 476 422 0.23 18.21
HMLK Hemlock Federal Financial Corp 467 467 NA NA
HMNF HMN Financial Inc. 1,332 1,216 0.31 19.86
HOMF Home Federal Bancorp 2,078 1,907 0.54 14.35
HPBC Home Port Bancorp Inc. 820 811 0.45 12.71
HRBF Harbor Federal Bancorp Inc. 404 404 0.25 19.75
HRZB Horizon Financial Corp. 1,991 2,031 0.28 13.84
HTHR Hawthorne Financial Corp. 3,424 3,424 0.55 7.90
HVFD Haverfield Corp. 912 887 0.46 15.18
HWEN Home Financial Bancorp 97 74 0.15 27.40
HZFS Horizon Financial Svcs Corp. 98 88 0.21 22.47
IBSF IBS Financial Corp. 1,616 1,616 0.15 28.75
IFSB Independence Federal Svgs Bank 645 37 0.03 116.67
INBI Industrial Bancorp 1,283 1,283 0.26 14.66
INCB Indiana Community Bank SB 135 135 0.15 26.25
IPSW Ipswich Savings Bank 546 456 0.37 8.95
ISBF ISB Financial Corporation 1,752 1,785 0.28 22.77
ITLA ITLA Capital Corp. 3,014 3,014 0.38 12.01
IWBK InterWest Bancorp Inc. 5,141 5,005 0.61 16.19
JOAC Joachim Bancorp Inc. 82 82 0.11 33.24
JSB JSB Financial Inc. 7,109 7,100 0.69 17.14
JSBA Jefferson Savings Bancorp 2,671 2,618 0.55 16.08
JXSB Jacksonville Savings Bk (MHC) 229 178 0.14 40.18
JXVL Jacksonville Bancorp Inc. 974 974 0.41 10.29
KFBI Klamath First Bancorp 2,050 2,050 0.22 22.59
KNK Kankakee Bancorp Inc. 759 755 0.50 15.06
KSAV KS Bancorp Inc. 359 359 0.38 12.17
KSBK KSB Bancorp Inc. 351 351 0.30 10.42
KYF Kentucky First Bancorp Inc. 261 261 0.20 15.94
LARK Landmark Bancshares Inc. 627 548 0.31 21.98
LARL Laurel Capital Group Inc. 746 730 0.48 12.24
LFBI Little Falls Bancorp Inc. 469 388 0.15 28.13
LFCO Life Financial Corp. 1,523 1,523 0.47 9.57
LFED Leeds Federal Savings Bk (MHC) 861 861 0.25 30.25
LIFB Life Bancorp Inc. 3,201 3,183 0.33 18.61
LISB Long Island Bancorp Inc. 12,426 10,266 0.44 25.14
LOGN Logansport Financial Corp. 303 297 0.24 15.89
LONF London Financial Corporation 81 81 0.17 22.06
LSBI LSB Financial Corp. 361 337 0.38 14.64
LSBX Lawrence Savings Bank 1,435 1,419 0.32 9.33
LVSB Lakeview Financial 1,339 1,353 0.55 16.02
LXMO Lexington B&L Financial Corp. 226 226 0.22 18.18
MAFB MAF Bancorp Inc. 10,210 10,150 0.64 12.40
MARN Marion Capital Holdings 746 746 0.40 14.69
MASB MASSBANK Corp. 2,449 2,522 0.92 14.27
MBB MSB Bancorp Inc. 1,085 1,139 0.30 19.74
MBBC Monterey Bay Bancorp Inc. 375 374 0.12 34.64
MBLF MBLA Financial Corp. 442 442 0.32 18.16
MBSP Mitchell Bancorp Inc. 133 133 0.15 28.54
MCBN Mid-Coast Bancorp Inc. 113 112 0.49 12.76
MCBS Mid Continent Bancshares Inc. 1,127 1,127 0.59 16.00
MDBK Medford Savings Bank 3,092 2,662 0.56 14.40
MECH Mechanics Savings Bank 7,124 7,179 1.38 4.37
</TABLE>
<PAGE> 125
<TABLE>
<CAPTION>
Page 29 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
DIVIDENDS CURRENT PRICING DATA AS OF 9/8/97
------------------------- ------------------------------------------------------------
CURRENT LTM DIVIDEND PRICE/ PRICE/
DIVIDEND PAYOUT LTM PRICE/ PRICE/ PRICE/ PUBLICLY REP
YIELD RATIO CORE EPS ASSETS EARNINGS LTM EPS BOOK VALUE
TICKER SHORT NAME ($) (%) (X) (%) (X) (X) (%)
- -------------------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MERI Meritrust Federal SB 1.595 35.53 14.92 14.87 12.32 23.09 181.23
METF Metropolitan Financial Corp. 0.000 0.00 14.98 7.78 12.25 26.27 196.58
MFBC MFB Corp. 1.391 39.47 21.10 15.66 19.17 30.26 114.71
MFCX Marshalltown Financial Corp. 0.000 0.00 29.39 18.54 29.91 57.76 117.79
MFFC Milton Federal Financial Corp. 4.248 730.95 25.22 16.32 22.07 33.63 115.21
MFLR Mayflower Co-operative Bank 3.443 38.85 15.93 13.99 13.34 14.21 144.48
MFSL Maryland Federal Bancorp 1.758 33.43 14.35 12.62 15.80 21.06 150.56
MGNL Magna Bancorp Inc. 2.222 44.78 18.24 27.44 16.46 20.15 268.39
MIFC Mid-Iowa Financial Corp. 0.831 11.43 NA 12.85 8.30 13.75 137.50
MIVI Mississippi View Holding Co. 1.008 26.67 18.25 18.63 15.26 26.46 98.66
MLBC ML Bancorp Inc. 1.939 30.56 18.25 10.52 15.63 16.37 150.77
MONT Montgomery Financial Corp. 0.000 NA NA NA NA NA NA
MRKF Market Financial Corp. 1.973 NA NA 33.49 27.28 NA 95.67
MSBF MSB Financial Inc. 2.074 38.43 16.67 22.57 14.06 20.15 132.74
MSBK Mutual Savings Bank FSB 0.000 0.00 NM 8.25 108.33 72.22 135.84
MWBI Midwest Bancshares Inc. 1.667 34.32 12.81 8.56 11.54 21.30 123.88
MWBX MetroWest Bank 1.794 31.37 13.11 16.47 11.94 13.11 221.46
MWFD Midwest Federal Financial 1.600 24.62 17.14 16.70 12.07 16.35 189.56
NASB North American Savings Bank 1.538 17.60 13.61 15.74 10.48 12.84 204.97
NBN Northeast Bancorp 1.889 44.44 25.66 8.72 14.60 23.53 125.56
NBSI North Bancshares Inc. 2.133 77.19 29.22 18.75 31.25 39.47 132.67
NEIB Northeast Indiana Bancorp 1.882 31.5 14.66 17.00 13.28 17 111.92
NHTB New Hampshire Thrift Bncshrs 2.548 96.15 23.64 12.75 14.43 37.74 166.60
NMSB NewMil Bancorp Inc. 1.846 37.70 22.41 15.43 20.31 21.31 157.19
NSLB NS&L Bancorp Inc. 2.667 113.64 31.25 22.22 24.67 42.61 113.57
NSSB Norwich Financial Corp. 2.009 43.48 21.44 21.17 19.91 20.20 189.63
NSSY Norwalk Savings Society 1.096 10.78 53.68 13.25 19.01 15.73 169.45
NTMG Nutmeg Federal S&LA 0.000 34.09 32.35 7.93 22.92 50.00 142.49
NWEQ Northwest Equity Corp. 3.225 46.74 15.07 13.96 12.22 17.53 113.32
NWSB Northwest Savings Bank (MHC) 1.255 54.24 30.72 28.50 28.98 43.22 300.35
NYB New York Bancorp Inc. 1.928 25.54 16.13 20.47 13.42 16.73 402.65
OCFC Ocean Financial Corp. 2.336 NA NA 20.35 19.46 NA 125.23
OCN Ocwen Financial Corp. 0.000 0.00 27.27 41.95 15.81 16.65 479.40
OFCP Ottawa Financial Corp. 1.553 45.68 20.12 14.68 16.51 31.79 168.19
OHSL OHSL Financial Corp. 3.648 76.64 16.19 12.54 14.36 22.55 113.74
PALM Palfed Inc. 0.671 90.91 24.16 14.21 16.55 162.50 172.37
PAMM PacificAmerica Money Center 0.000 0.00 5.85 31.75 3.35 5.85 147.25
PBCI Pamrapo Bancorp Inc. 4.651 87.16 14.73 16.48 12.22 19.72 129.36
PBCT People's Bank (MHC) 2.315 43.00 28.52 22.79 20.40 21.29 268.76
PBHC Oswego City Savings Bk (MHC) 1.436 26.83 23.49 19.58 14.34 23.78 166.95
PBKB People's Bancshares Inc. 2.627 27.56 20.94 10.28 11.96 13.19 179.91
PCBC Perry County Financial Corp. 1.882 41.67 15.74 21.69 17.71 22.14 112.97
PCCI Pacific Crest Capital 0.000 0 15.25 12.07 12.71 14.12 170.39
PDB Piedmont Bancorp Inc. 3.765 NM 35.42 23.81 20.43 NM 143.19
PEEK Peekskill Financial Corp. 2.198 64.29 22.13 28.64 24.08 29.24 111.32
PERM Permanent Bancorp Inc. 1.684 44.78 19.79 11.02 18.55 35.45 120.31
PERT Perpetual Bank (MHC) 2.642 135.59 32.92 31.12 30.11 44.92 263.16
PETE Primary Bank 0.000 0.00 18.66 13.00 NM 22.40 187.54
PFDC Peoples Bancorp 2.353 43.48 13.71 20.16 13.28 18.48 132.61
PFED Park Bancorp Inc. 0.000 NA NA 23.54 21.25 NA 104.49
PFFB PFF Bancorp Inc. 0.000 0.00 31.35 14.05 23.51 85.87 136.11
PFFC Peoples Financial Corp. 2.963 NA NA 29.09 30.13 NA 106.94
PFNC Progress Financial Corp. 0.796 15.69 22.12 13.10 16.34 28.19 246.57
PFSB PennFed Financial Services Inc 0.933 14.58 14.35 10.94 13.64 20.83 137.43
PFSL Pocahontas FS&LA (MHC) 3.158 63.97 18.27 12.29 18.75 20.96 193.09
PHBK Peoples Heritage Finl Group 1.924 28.81 16.06 19.34 15.43 16.26 250.48
PHFC Pittsburgh Home Financial Corp 1.267 38.89 20.58 14.55 15.78 26.30 133.27
PHSB Peoples Home Savings Bk (MHC) 0.000 NA NA NA NA NA NA
PKPS Poughkeepsie Financial Corp. 1.270 45.45 21.88 11.27 21.88 35.80 134.62
PLSK Pulaski Savings Bank (MHC) 1.727 NA NA 20.28 NA NA 170.34
PMFI Perpetual Midwest Financial 1.437 125.00 35.99 9.89 20.07 86.98 115.97
PRBC Prestige Bancorp Inc. 0.706 11.76 19.54 11.46 15.74 33.33 102.97
PROV Provident Financial Holdings 0.000 0.00 55.38 15.94 20.77 48.63 114.78
PSBK Progressive Bank Inc. 2.076 26.61 14.62 14.24 14.12 14.36 166.50
</TABLE>
<TABLE>
<CAPTION>
PRODUCTIVITY
--------------- -----------------
PRICE/ TANG FULL TIME
PUBLICLY REP EQUIVALENT
BOOK VALUE EMPLOYEES
TICKER SHORT NAME (%) MOST RECENT QTR
- ---------------------------------------------------------- -----------------
<S> <C> <C> <C>
MERI Meritrust Federal SB 181.23 92
METF Metropolitan Financial Corp. 217.33 271
MFBC MFB Corp. 114.71 67
MFCX Marshalltown Financial Corp. 117.79 32
MFFC Milton Federal Financial Corp. 115.21 51
MFLR Mayflower Co-operative Bank 146.95 47
MFSL Maryland Federal Bancorp 152.48 259
MGNL Magna Bancorp Inc. 275.79 1,046
MIFC Mid-Iowa Financial Corp. 137.70 36
MIVI Mississippi View Holding Co. 98.66 21
MLBC ML Bancorp Inc. 153.46 425
MONT Montgomery Financial Corp. NA 28
MRKF Market Financial Corp. 95.67 NA
MSBF MSB Financial Inc. 132.74 18
MSBK Mutual Savings Bank FSB 135.84 242
MWBI Midwest Bancshares Inc. 123.88 39
MWBX MetroWest Bank 221.46 170
MWFD Midwest Federal Financial 196.58 92
NASB North American Savings Bank 212.07 245
NBN Northeast Bancorp 145.27 121
NBSI North Bancshares Inc. 132.67 32
NEIB Northeast Indiana Bancorp 111.92 40
NHTB New Hampshire Thrift Bncshrs 195.66 122
NMSB NewMil Bancorp Inc. 157.19 134
NSLB NS&L Bancorp Inc. 113.57 NA
NSSB Norwich Financial Corp. 210.06 239
NSSY Norwalk Savings Society 175.14 NA
NTMG Nutmeg Federal S&LA 142.49 NA
NWEQ Northwest Equity Corp. 113.32 36
NWSB Northwest Savings Bank (MHC) 319.15 785
NYB New York Bancorp Inc. 402.65 493
OCFC Ocean Financial Corp. 125.23 229
OCN Ocwen Financial Corp. 502.01 823
OFCP Ottawa Financial Corp. 209.52 261
OHSL OHSL Financial Corp. 113.74 59
PALM Palfed Inc. 172.37 NA
PAMM PacificAmerica Money Center 147.25 NA
PBCI Pamrapo Bancorp Inc. 130.38 98
PBCT People's Bank (MHC) 269.00 2825
PBHC Oswego City Savings Bk (MHC) 200.62 75
PBKB People's Bancshares Inc. 186.94 220
PCBC Perry County Financial Corp. 112.97 NA
PCCI Pacific Crest Capital 170.39 62
PDB Piedmont Bancorp Inc. 143.19 30
PEEK Peekskill Financial Corp. 111.32 25
PERM Permanent Bancorp Inc. 122.11 124
PERT Perpetual Bank (MHC) 263.16 113
PETE Primary Bank 187.81 182
PFDC Peoples Bancorp 132.61 78
PFED Park Bancorp Inc. 104.49 NA
PFFB PFF Bancorp Inc. 137.53 498
PFFC Peoples Financial Corp. 106.94 19
PFNC Progress Financial Corp. 279.13 178
PFSB PennFed Financial Services Inc 164.29 190
PFSL Pocahontas FS&LA (MHC) 193.09 63
PHBK Peoples Heritage Finl Group 297.22 2,400
PHFC Pittsburgh Home Financial Corp 134.79 58
PHSB Peoples Home Savings Bk (MHC) NA NA
PKPS Poughkeepsie Financial Corp. 134.62 277
PLSK Pulaski Savings Bank (MHC) 170.34 40
PMFI Perpetual Midwest Financial 115.97 103
PRBC Prestige Bancorp Inc. 102.97 33
PROV Provident Financial Holdings 114.78 NA
PSBK Progressive Bank Inc. 186.40 279
</TABLE>
<TABLE>
<CAPTION>
INCOME
----------------------------------------------------------------
NET INCOME CORE INCOME CORE EPS PRICE/
TICKER SHORT NAME MOST RECENT QTR MOST RECENT QTR MOST RECENT QTR CORE EPS
- ------------------------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MERI Meritrust Federal SB 725 725 0.89 12.32
METF Metropolitan Financial Corp. 1,293 1,198 0.34 13.33
MFBC MFB Corp. 508 509 0.30 19.17
MFCX Marshalltown Financial Corp. 204 204 0.14 29.91
MFFC Milton Federal Financial Corp. 356 334 0.15 23.54
MFLR Mayflower Co-operative Bank 330 294 0.33 14.96
MFSL Maryland Federal Bancorp 2,348 2,309 0.71 16.02
MGNL Magna Bancorp Inc. 5,698 4,465 0.32 21.09
MIFC Mid-Iowa Financial Corp. 506 362 0.21 11.46
MIVI Mississippi View Holding Co. 208 205 0.26 15.26
MLBC ML Bancorp Inc. 3,754 2,614 0.23 22.42
MONT Montgomery Financial Corp. 147 147 NA NA
MRKF Market Financial Corp. 162 162 0.13 27.28
MSBF MSB Financial Inc. 279 265 0.23 14.67
MSBK Mutual Savings Bank FSB 130 1 -- NM
MWBI Midwest Bancshares Inc. 290 290 0.78 11.54
MWBX MetroWest Bank 1,940 1,900 0.14 11.94
MWFD Midwest Federal Financial 755 567 0.33 16.10
NASB North American Savings Bank 2,796 2,216 0.98 13.27
NBN Northeast Bancorp 451 402 0.26 16.29
NBSI North Bancshares Inc. 175 171 0.18 31.25
NEIB Northeast Indiana Bancorp 522 522 0.32 13.28
NHTB New Hampshire Thrift Bncshrs 699 618 0.30 16.35
NMSB NewMil Bancorp Inc. 677 643 0.15 21.67
NSLB NS&L Bancorp Inc. 139 139 0.19 24.67
NSSB Norwich Financial Corp. 1,965 1,864 0.33 21.12
NSSY Norwalk Savings Society 1,150 1,045 0.44 20.74
NTMG Nutmeg Federal S&LA 155 132 0.10 27.50
NWEQ Northwest Equity Corp. 252 242 0.32 12.60
NWSB Northwest Savings Bank (MHC) 5,036 5,071 0.22 28.98
NYB New York Bancorp Inc. 13,164 13,088 0.58 13.42
OCFC Ocean Financial Corp. 3,606 3,416 0.41 20.88
OCN Ocwen Financial Corp. 18,792 5,225 0.19 57.40
OFCP Ottawa Financial Corp. 1,962 1,903 0.38 16.94
OHSL OHSL Financial Corp. 516 495 0.40 15.08
PALM Palfed Inc. 1,457 1,348 0.25 17.88
PAMM PacificAmerica Money Center 4,003 4,003 1.70 3.35
PBCI Pamrapo Bancorp Inc. 1,260 1,260 0.44 12.22
PBCT People's Bank (MHC) 21,900 12,930 0.21 34.97
PBHC Oswego City Savings Bk (MHC) 642 530 0.28 17.41
PBKB People's Bancshares Inc. 1,276 698 0.19 22.04
PCBC Perry County Financial Corp. 230 233 0.30 17.71
PCCI Pacific Crest Capital 906 906 0.30 12.71
PDB Piedmont Bancorp Inc. 342 344 0.13 20.43
PEEK Peekskill Financial Corp. 513 513 0.17 24.08
PERM Permanent Bancorp Inc. 638 622 0.31 19.15
PERT Perpetual Bank (MHC) 661 662 0.44 30.11
PETE Primary Bank (140) 366 0.18 37.33
PFDC Peoples Bancorp 1,093 1,093 0.48 13.28
PFED Park Bancorp Inc. 460 391 0.17 25.00
PFFB PFF Bancorp Inc. 3,683 3,675 0.21 23.51
PFFC Peoples Financial Corp. 202 197 0.14 30.13
PFNC Progress Financial Corp. 867 851 0.22 16.34
PFSB PennFed Financial Services Inc 2,631 2,631 0.55 13.64
PFSL Pocahontas FS&LA (MHC) 622 622 0.38 18.75
PHBK Peoples Heritage Finl Group 17,788 17,788 0.64 15.43
PHFC Pittsburgh Home Financial Corp 547 448 0.25 18.94
PHSB Peoples Home Savings Bk (MHC) 350 298 NA NA
PKPS Poughkeepsie Financial Corp. 1,202 1,248 0.09 21.88
PLSK Pulaski Savings Bank (MHC) 324 324 NA NA
PMFI Perpetual Midwest Financial 505 448 0.23 22.69
PRBC Prestige Bancorp Inc. 224 224 0.27 15.74
PROV Provident Financial Holdings 1,133 633 0.13 38.34
PSBK Progressive Bank Inc. 2,212 2,151 0.56 14.62
</TABLE>
<PAGE> 126
<TABLE>
<CAPTION>
Page 30 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
DIVIDENDS CURRENT PRICING DATA AS OF 9/8/97
------------------------- ------------------------------------------------------------
CURRENT LTM DIVIDEND PRICE/ PRICE/
DIVIDEND PAYOUT LTM PRICE/ PRICE/ PRICE/ PUBLICLY REP
YIELD RATIO CORE EPS ASSETS EARNINGS LTM EPS BOOK VALUE
TICKER SHORT NAME ($) (%) (X) (%) (X) (X) (%)
- -------------------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PSFC Peoples-Sidney Financial Corp. 1.231 NA NA NA NA NA NA
PSFI PS Financial Inc. 2.065 NA NA 40.92 18.45 NA 105.73
PTRS Potters Financial Corp. 1.455 25.22 12.38 9.94 9.98 21.52 112.65
PULB Pulaski Bank, Svgs Bank (MHC) 3.791 172.41 33.81 30.64 25.36 45.47 234.86
PULS Pulse Bancorp 3.256 59.83 12.57 12.69 11.44 18.38 157.74
PVFC PVF Capital Corp. 0.000 0 8.58 14.71 11.39 14.64 209.4
PVSA Parkvale Financial Corporation 1.719 31.33 12.40 12.38 12.20 18.22 163.16
PWBC PennFirst Bancorp Inc. 2.094 47.72 14.47 10.15 14.47 21.70 125.60
PWBK Pennwood Bancorp Inc. 1.910 NA NA 19.42 24.63 NA 111.30
QCBC Quaker City Bancorp Inc. 0.000 0 20.75 12.18 16.21 34.02 138.89
QCFB QCF Bancorp Inc. 0.000 0.00 13.97 23.83 13.89 17.12 131.72
QCSB Queens County Bancorp Inc. 1.848 33.82 26.53 37.56 25.06 26.15 272.95
RARB Raritan Bancorp Inc. 2.000 30.74 15.89 15.26 15.38 17.02 192.31
RCSB RCSB Financial Inc. 1.165 22.89 21.02 18.31 23.41 20.68 240.43
REDF RedFed Bancorp Inc. 0.000 0.00 23.48 13.66 13.16 157.95 161.63
RELI Reliance Bancshares Inc. 0.000 NM 30.36 45.72 06.25 34.00 93.61
RELY Reliance Bancorp Inc. 2.000 49.59 17.88 14.21 16.67 26.45 172.60
RIVR River Valley Bancorp 0.970 NA NA 13.98 13.75 NA 112.86
ROSE TR Financial Corp. 2.222 23.50 16.36 13.32 14.06 14.75 200.74
RSLN Roslyn Bancorp Inc. 1.055 NA NA 31.43 21.88 NA 156.04
RVSB Riverview Savings Bank (MHC) 0.865 24.38 25.23 29.22 22.38 31.53 260.07
SBFL SB of the Finger Lakes (MHC) 1.600 266.67 96.15 20.59 52.08 166.67 214.96
SBOS Boston Bancorp (The) NA 10.89 NA NA NA NA NA
SCBS Southern Community Bancshares 1.890 NA NA 25.66 18.90 NA 120.36
SCCB S. Carolina Community Bancshrs 2.553 111.11 33.57 35.66 32.64 43.52 137.35
SECP Security Capital Corp. 1.135 20.40 18.68 26.51 17.06 22.12 173.90
SFED SFS Bancorp Inc. 1.418 39.06 17.95 14.12 21.47 30.86 113.25
SFFC StateFed Financial Corporation 1.818 33.33 15.17 20.12 12.79 18.33 113.17
SFIN Statewide Financial Corp. 2.235 48.19 14.37 13.78 14.92 23.72 141.64
SFNB Security First Network Bank 0.000 0.00 NM 31.58 NM NM 397.35
SFSB SuburbFed Financial Corp. 1.164 27.59 16.27 8.13 13.22 23.71 125.46
SFSL Security First Corp. 1.803 37.02 17.07 20.58 17.07 21.91 218.60
SGVB SGV Bancorp Inc. 0.000 0.00 26.75 8.73 17.33 47.66 119.42
SHEN First Shenango Bancorp Inc. 2.152 30.72 NA 14.04 12.02 16.79 128.16
SISB SIS Bancorp Inc. 1.806 7.23 9.39 12.05 14.62 9.34 169.31
SKAN Skaneateles Bancorp Inc. 1.720 20.45 13.6 8.95 12.37 13.21 130.69
SKBO First Carnegie Deposit (MHC) 1.875 NA NA 25.01 NA NA 152.09
SMBC Southern Missouri Bancorp Inc. 2.920 69.44 16.79 16.93 16.47 23.78 108.04
SMFC Sho-Me Financial Corp. 0.000 0.00 17.26 17.78 13.18 19.12 180.39
SOBI Sobieski Bancorp Inc. 1.969 43.75 26.64 15.40 29.02 50.78 94.26
SOPN First Savings Bancorp Inc. 3.951 75.51 17.31 25.32 15.82 20.66 110.90
SOSA Somerset Savings Bank 0.000 0.00 15.62 12.64 9.77 15.62 199.29
SPBC St. Paul Bancorp Inc. 1.658 32.36 18.28 17.78 16.75 27.11 206.73
SRN Southern Banc Company Inc. 2.154 228.26 30.09 19.04 33.85 70.65 112.69
SSB Scotland Bancorp Inc 1.558 52.63 27.50 53.02 32.08 33.77 143.12
SSFC South Street Financial Corp. 2.162 NA NA 34.41 25.69 NA 125.94
SSM Stone Street Bancorp Inc. 2.099 542.26 21.23 38.34 38.28 25.52 132.91
STFR St. Francis Capital Corp. 1.289 26.14 19.30 12.02 13.50 21.16 154.05
STND Standard Financial Inc. 1.561 47.37 22.67 16.13 21.35 33.71 149.74
STSA Sterling Financial Corp. 0.000 0.00 24.40 6.68 16.88 96.43 166.39
SVRN Sovereign Bancorp Inc. 0.513 12.00 NA 10.02 14.44 23.99 227.65
SWBI Southwest Bancshares 3.753 74.26 14.78 14.20 13.68 20.05 129.15
SWCB Sandwich Co-operative Bank 3.333 50.44 15.45 13.74 15.52 15.79 172.83
SZB SouthFirst Bancshares Inc. 3.125 NM 84.21 13.94 26.67 NM 99.63
TBK Tolland Bank 1.119 9.11 15.96 11.71 14.90 16.71 168.63
THR Three Rivers Financial Corp. 2.481 52.38 17.34 14.57 17.53 25.60 105.88
THRD TF Financial Corporation 1.951 42.86 18.14 13.06 16.53 24.4 108.70
TPNZ Tappan Zee Financial Inc. 1.612 33.33 20.93 20.95 24.13 28.96 123.14
TRIC Tri-County Bancorp Inc. 2.553 49.55 17.03 15.99 14.69 21.17 104.40
TSBS Peoples Bancorp Inc. (MHC) 1.167 40.70 41.10 42.97 30.00 34.88 254.45
TSH Teche Holding Co. 2.721 60.24 15.98 15.55 16.41 22.14 118.32
TWIN Twin City Bancorp 3.160 94.12 20.88 16.10 15.82 29.78 125.23
UBMT United Financial Corp. 4.083 100.00 19.83 27.80 19.35 25.81 119.40
UFRM United Federal Savings Bank 2.087 110.53 34.85 12.83 20.54 60.53 171.64
</TABLE>
<TABLE>
<CAPTION>
PRODUCTIVITY
--------------- -----------------
PRICE/ TANG FULL TIME
PUBLICLY REP EQUIVALENT
BOOK VALUE EMPLOYEES
TICKER SHORT NAME (%) MOST RECENT QTR
- ---------------------------------------------------------- -----------------
<S> <C> <C> <C>
PSFC Peoples-Sidney Financial Corp. NA 18
PSFI PS Financial Inc. 105.73 15
PTRS Potters Financial Corp. 112.65 46
PULB Pulaski Bank, Svgs Bank (MHC) 234.86 NA
PULS Pulse Bancorp 157.74 53
PVFC PVF Capital Corp. 209.4 124
PVSA Parkvale Financial Corporation 164.40 235
PWBC PennFirst Bancorp Inc. 134.35 131
PWBK Pennwood Bancorp Inc. 111.30 11
QCBC Quaker City Bancorp Inc. 138.98 142
QCFB QCF Bancorp Inc. 131.72 NA
QCSB Queens County Bancorp Inc. 272.95 283
RARB Raritan Bancorp Inc. 195.44 87
RCSB RCSB Financial Inc. 246.41 NA
REDF RedFed Bancorp Inc. 162.23 282
RELI Reliance Bancshares Inc. 93.61 NA
RELY Reliance Bancorp Inc. 239.52 389
RIVR River Valley Bancorp 114.58 55
ROSE TR Financial Corp. 200.74 442
RSLN Roslyn Bancorp Inc. 156.79 385
RVSB Riverview Savings Bank (MHC) 284.91 85
SBFL SB of the Finger Lakes (MHC) 214.96 68
SBOS Boston Bancorp (The) NA NA
SCBS Southern Community Bancshares 120.36 NA
SCCB S. Carolina Community Bancshrs 137.35 9
SECP Security Capital Corp. 173.90 959
SFED SFS Bancorp Inc. 113.25 64
SFFC StateFed Financial Corporation 113.17 NA
SFIN Statewide Financial Corp. 141.95 NA
SFNB Security First Network Bank 404.04 16
SFSB SuburbFed Financial Corp. 125.92 153
SFSL Security First Corp. 222.15 157
SGVB SGV Bancorp Inc. 121.42 87
SHEN First Shenango Bancorp Inc. 128.16 110
SISB SIS Bancorp Inc. 169.31 483
SKAN Skaneateles Bancorp Inc. 134.86 103
SKBO First Carnegie Deposit (MHC) 152.09 NA
SMBC Southern Missouri Bancorp Inc. 108.04 43
SMFC Sho-Me Financial Corp. 180.39 78
SOBI Sobieski Bancorp Inc. 94.26 22
SOPN First Savings Bancorp Inc. 110.90 40
SOSA Somerset Savings Bank 199.29 150
SPBC St. Paul Bancorp Inc. 207.26 1,101
SRN Southern Banc Company Inc. 113.88 NA
SSB Scotland Bancorp Inc 143.12 14
SSFC South Street Financial Corp. 125.94 38
SSM Stone Street Bancorp Inc. 132.91 18
STFR St. Francis Capital Corp. 174.31 336
STND Standard Financial Inc. 150 434
STSA Sterling Financial Corp. 190.86 488
SVRN Sovereign Bancorp Inc. 302.21 1,585
SWBI Southwest Bancshares 129.15 95
SWCB Sandwich Co-operative Bank 180.54 153
SZB SouthFirst Bancshares Inc. 99.63 45
TBK Tolland Bank 173.54 88
THR Three Rivers Financial Corp. 106.30 NA
THRD TF Financial Corporation 123.94 157
TPNZ Tappan Zee Financial Inc. 123.14 14
TRIC Tri-County Bancorp Inc. 104.40 19
TSBS Peoples Bancorp Inc. (MHC) 277.26 141
TSH Teche Holding Co. 118.32 153
TWIN Twin City Bancorp 125.23 53
UBMT United Financial Corp. 119.40 NA
UFRM United Federal Savings Bank 171.64 144
</TABLE>
<TABLE>
<CAPTION>
INCOME
----------------------------------------------------------------
NET INCOME CORE INCOME CORE EPS PRICE/
TICKER SHORT NAME MOST RECENT QTR MOST RECENT QTR MOST RECENT QTR CORE EPS
- ------------------------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PSFC Peoples-Sidney Financial Corp. 210 210 NA NA
PSFI PS Financial Inc. 418 424 0.21 18.45
PTRS Potters Financial Corp. 301 315 0.65 9.52
PULB Pulaski Bank, Svgs Bank (MHC) 534 460 0.22 29.97
PULS Pulse Bancorp 1,478 1,413 0.45 11.94
PVFC PVF Capital Corp. 1,222 1,095 0.40 12.81
PVSA Parkvale Financial Corporation 2,609 2,609 0.62 12.20
PWBC PennFirst Bancorp Inc. 1,454 1,460 0.27 14.47
PWBK Pennwood Bancorp Inc. 97 139 0.24 17.45
QCBC Quaker City Bancorp Inc. 1,489 1,380 0.30 17.29
QCFB QCF Bancorp Inc. 574 574 0.45 13.89
QCSB Queens County Bancorp Inc. 5,341 5,341 0.54 25.06
RARB Raritan Bancorp Inc. 982 928 0.37 16.22
RCSB RCSB Financial Inc. 8,236 8,236 0.55 23.41
REDF RedFed Bancorp Inc. 2,407 2,397 0.33 13.16
RELI Reliance Bancshares Inc. 28 14 0.01 212.50
RELY Reliance Bancorp Inc. 4,338 4,338 0.48 16.67
RIVR River Valley Bancorp 324 312 0.29 14.22
ROSE TR Financial Corp. 8,414 7,737 0.44 15.34
RSLN Roslyn Bancorp Inc. 10,467 10,130 0.25 22.75
RVSB Riverview Savings Bank (MHC) 745 730 0.30 23.13
SBFL SB of the Finger Lakes (MHC) 214 168 0.09 69.44
SBOS Boston Bancorp (The) 14,315 5,073 0.95 NA
SCBS Southern Community Bancshares 211 211 0.21 18.90
SCCB S. Carolina Community Bancshrs 121 121 0.18 32.64
SECP Security Capital Corp. 14,555 15,000 1.60 16.52
SFED SFS Bancorp Inc. 268 268 0.23 21.47
SFFC StateFed Financial Corporation 332 332 0.43 12.79
SFIN Statewide Financial Corp. 1,391 1,391 0.33 14.92
SFNB Security First Network Bank (6,533) (6,533) (0.77) NM
SFSB SuburbFed Financial Corp. 700 578 0.43 15.99
SFSL Security First Corp. 2,189 2,189 0.26 17.07
SGVB SGV Bancorp Inc. 494 274 0.12 31.77
SHEN First Shenango Bancorp Inc. 1,207 1,202 0.58 12.02
SISB SIS Bancorp Inc. 2,990 2,927 0.52 14.90
SKAN Skaneateles Bancorp Inc. 447 437 0.46 12.64
SKBO First Carnegie Deposit (MHC) 239 242 NA NA
SMBC Southern Missouri Bancorp Inc. 415 392 0.25 17.13
SMFC Sho-Me Financial Corp. 1,099 1,007 0.68 14.34
SOBI Sobieski Bancorp Inc. 114 114 0.14 29.02
SOPN First Savings Bancorp Inc. 1,272 1,272 0.32 15.82
SOSA Somerset Savings Bank 1,708 1,698 0.10 9.77
SPBC St. Paul Bancorp Inc. 12,397 12,355 0.36 16.75
SRN Southern Banc Company Inc. 130 130 0.12 33.85
SSB Scotland Bancorp Inc 260 255 0.15 32.08
SSFC South Street Financial Corp. 744 744 0.18 25.69
SSM Stone Street Bancorp Inc. 258 258 0.14 38.28
STFR St. Francis Capital Corp. 3,686 3,052 0.57 16.34
STND Standard Financial Inc. 4,812 4,647 0.29 22.09
STSA Sterling Financial Corp. 2,288 1,971 0.25 20.25
SVRN Sovereign Bancorp Inc. 21,506 20,536 0.26 14.99
SWBI Southwest Bancshares 1,011 960 0.35 14.46
SWCB Sandwich Co-operative Bank 1,147 1,129 0.57 15.79
SZB SouthFirst Bancshares Inc. 124 125 0.15 26.67
TBK Tolland Bank 481 477 0.30 14.90
THR Three Rivers Financial Corp. 180 174 0.22 18.32
THRD TF Financial Corporation 1,265 1,164 0.29 17.67
TPNZ Tappan Zee Financial Inc. 265 258 0.18 24.13
TRIC Tri-County Bancorp Inc. 243 238 0.39 15.06
TSBS Peoples Bancorp Inc. (MHC) 2,276 1,683 0.18 41.67
TSH Teche Holding Co. 911 909 0.28 16.41
TWIN Twin City Bancorp 261 242 0.30 16.88
UBMT United Financial Corp. 376 376 0.31 19.35
UFRM United Federal Savings Bank 428 113 0.04 71.88
</TABLE>
<PAGE> 127
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
DIVIDENDS CURRENT PRICING DATA AS OF 9/8/97
------------------------- ------------------------------------------------------------
CURRENT LTM DIVIDEND PRICE/ PRICE/
DIVIDEND PAYOUT LTM PRICE/ PRICE/ PRICE/ PUBLICLY REP
YIELD RATIO CORE EPS ASSETS EARNINGS LTM EPS BOOK VALUE
TICKER SHORT NAME ($) (%) (X) (%) (X) (X) (%)
- -------------------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
USAB USABancshares, Inc. 0.000 0.00 33.00 12.54 14.73 30.56 128.11
VABF Virginia Beach Fed. Financial 1.429 69.23 24.56 11.28 17.50 53.85 164.71
VFFC Virginia First Financial Corp. 0.418 5.56 27.83 17.00 15.75 13.30 210.91
WAMU Washington Mutual Inc. 1.689 84.48 24.98 16.57 16.65 55.12 310.38
WAYN Wayne Savings & Loan Co. (MHC) 2.756 180.85 30.41 19.90 25.57 66.18 215.31
WBST Webster Financial Corp. 1.429 37.76 17.78 11.29 14.29 28.57 224.81
WCBI Westco Bancorp 2.264 44.88 16.67 21.06 15.41 20.87 138.16
WCFB Webster City Federal SB (MHC) 4.507 163.27 NA 39.37 27.73 36.22 168.41
WEFC Wells Financial Corp. 2.909 0.00 15.14 16.00 14.73 22.30 112.78
WEHO Westwood Homestead Fin. Corp. 1.806 NA NA 32.18 32.29 NA 109.39
WES Westcorp 1.834 36.04 83.90 15.53 14.35 19.65 171.62
WFI Winton Financial Corp. 2.831 38.26 12.90 10.17 10.16 14.13 143.05
WFSG Wilshire Financial Services 0.000 NA NA 13.77 8.24 NA 238.75
WFSL Washington Federal Inc. 3.315 44.76 12.73 22.86 12.39 14.16 189.29
WHGB WHG Bancshares Corp. 1.270 42.86 27.16 22.97 23.16 45.00 111.23
WOFC Western Ohio Financial Corp. 4.124 175.44 31.49 14.31 30.31 42.54 103.72
WRNB Warren Bancorp Inc. 2.849 43.01 11.13 19.28 11.13 9.46 185.85
WSB Washington Savings Bank, FSB 1.379 35.71 17.68 11.92 18.13 25.89 143.56
WSFS WSFS Financial Corporation 0.000 0.00 11.02 12.61 11.60 11.10 242.29
WSTR WesterFed Financial Corp. 1.956 44.06 18.6 13.10 14.80 23.44 120.06
WVFC WVS Financial Corp. 2.870 177.51 13.27 16.53 13.94 16.49 148.11
WWFC Westwood Financial Corporation 0.941 25.64 15.98 12.31 14.36 27.24 134.84
WYNE Wayne Bancorp Inc. 0.808 18.87 22.3 20.10 22.92 46.7 150.55
YFCB Yonkers Financial Corporation 1.208 25.64 19.3 20.94 18.40 25.48 140.56
YFED York Financial Corp. 2.487 59.23 19.15 14.55 15.87 24.37 168.94
--------------------------------------------------------------------------------------
Average 1.654 53.57 20.78 17.84 18.55 27.94 154.36
</TABLE>
<TABLE>
<CAPTION>
PRODUCTIVITY
---------------- -----------------
PRICE/ TANG FULL TIME
PUBLICLY REP EQUIVALENT
BOOK VALUE EMPLOYEES
TICKER SHORT NAME (%) MOST RECENT QTR
- ----------------------------------------------------------- -----------------
<S> <C> <C> <C>
USAB USABancshares, Inc. 130.54 NA
VABF Virginia Beach Fed. Financial 164.71 217
VFFC Virginia First Financial Corp. 218.41 398
WAMU Washington Mutual Inc. 327.05 9077
WAYN Wayne Savings & Loan Co. (MHC) 215.31 93
WBST Webster Financial Corp. 263.16 1137
WCBI Westco Bancorp 138.16 57
WCFB Webster City Federal SB (MHC) 168.41 21
WEFC Wells Financial Corp. 112.78 NA
WEHO Westwood Homestead Fin. Corp. 109.39 19
WES Westcorp 172.03 2743
WFI Winton Financial Corp. 146.13 78
WFSG Wilshire Financial Services 238.75 NA
WFSL Washington Federal Inc. 207.24 660
WHGB WHG Bancshares Corp. 111.23 NA
WOFC Western Ohio Financial Corp. 111.24 103
WRNB Warren Bancorp Inc. 185.85 140
WSB Washington Savings Bank, FSB 143.56 NA
WSFS WSFS Financial Corporation 244.23 289
WSTR WesterFed Financial Corp. 150.10 369
WVFC WVS Financial Corp. 148.11 58
WWFC Westwood Financial Corporation 151.35 13
WYNE Wayne Bancorp Inc. 150.55 60
YFCB Yonkers Financial Corporation 140.56 59
YFED York Financial Corp. 168.94 396
--------------- ------------
Average 160.81 307
</TABLE>
<TABLE>
<CAPTION>
INCOME
- ----------------------------------------------------------------
NET INCOME CORE INCOME CORE EPS PRICE/
TICKER SHORT NAME MOST RECENT QTR MOST RECENT QTR MOST RECENT QTR CORE EPS
- -------------------------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
USAB USABancshares, Inc. 107 88 0.12 17.19
VABF Virginia Beach Fed. Financial 987 816 0.17 20.59
VFFC Virginia First Financial Corp. 2,214 1,094 0.19 31.50
WAMU Washington Mutual Inc. 118,765 115,016 0.93 17.19
WAYN Wayne Savings & Loan Co. (MHC) 504 467 0.20 28.13
WBST Webster Financial Corp. 12,038 11,764 0.96 14.58
WCBI Westco Bancorp 1,153 1,108 0.41 16.16
WCFB Webster City Federal SB (MHC) 341 341 0.16 27.73
WEFC Wells Financial Corp. 539 534 0.28 14.73
WEHO Westwood Homestead Fin. Corp. 325 325 0.12 32.29
WES Westcorp 9,885 1,968 0.08 68.17
WFI Winton Financial Corp. 796 668 0.34 11.95
WFSG Wilshire Financial Services 5,112 (2,178) (0.28) NM
WFSL Washington Federal Inc. 27,015 26,794 0.56 12.39
WHGB WHG Bancshares Corp. 231 231 0.17 23.16
WOFC Western Ohio Financial Corp. 452 441 0.20 30.31
WRNB Warren Bancorp Inc. 1,624 1,643 0.41 11.13
WSB Washington Savings Bank, FSB 470 464 0.10 18.13
WSFS WSFS Financial Corporation 4,169 4,168 0.33 11.60
WSTR WesterFed Financial Corp. 2,139 1,958 0.35 16.07
WVFC WVS Financial Corp. 883 880 0.50 13.94
WWFC Westwood Financial Corporation 237 237 0.37 14.36
WYNE Wayne Bancorp Inc. 525 525 0.27 22.92
YFCB Yonkers Financial Corporation 793 805 0.27 18.40
YFED York Financial Corp. 2,760 2,440 0.34 17.74
---------------------------------------------------------------
Average 3,228 2,908 0.34 20.04
</TABLE>
<PAGE> 128
<TABLE>
<CAPTION>
Page 32 of 32
EXHIBIT 5
SELECTED DATA ON ALL PUBLIC THRIFTS
DIVIDENDS CURRENT PRICING DATA AS OF 9/8/97
------------------------- ------------------------------------------------------------
CURRENT LTM DIVIDEND PRICE/ PRICE/
DIVIDEND PAYOUT LTM PRICE/ PRICE/ PRICE/ PUBLICLY REP
YIELD RATIO CORE EPS ASSETS EARNINGS LTM EPS BOOK VALUE
TICKER SHORT NAME ($) (%) (X) (%) (X) (X) (%)
- -------------------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMPARABLE THRIFT DATA
CATB Catskill Financial Corp. 1.723 17.07 20.06 26.98 19.35 19.82 107.76
CEBK Central Co-operative Bank 1.542 16.44 14.12 11.84 16.73 14.21 119.25
FBER 1st Bergen Bancorp 1.081 28.57 26.81 19.49 22.02 44.05 137.34
FIBC Financial Bancorp Inc. 1.739 38.46 14.56 14.02 14.38 25.27 149.84
FKFS First Keystone Financial 0.702 10.42 13.97 10.91 11.88 19.79 149.29
FSBI Fidelity Bancorp Inc. 1.636 29.92 13.17 9.39 13.41 20.75 138.98
LFBI Little Falls Bancorp Inc. 1.185 25.81 31.84 15.44 23.44 54.44 116.30
LSBX Lawrence Savings Bank 0.000 0.00 8.78 13.93 9.33 8.78 160.24
PBCI Pamrapo Bancorp Inc. 4.651 87.16 14.73 16.48 12.22 19.72 129.36
PHFC Pittsburgh Home Financial Corp 1.267 38.89 20.58 14.55 15.78 26.30 133.27
WVFC WVS Financial Corp. 2.870 177.51 13.27 16.53 13.94 16.49 148.11
--------------------------------------------------------------------------------------
Average 1.67 42.75 17.44 15.41 15.68 24.51 135.43
Maximum 4.65 177.51 31.84 26.98 23.44 54.44 160.24
Minimum 0.00 0.00 8.78 9.39 9.33 8.78 107.76
</TABLE>
<TABLE>
<CAPTION>
PRODUCTIVITY
--------------- -----------------
PRICE/ TANG FULL TIME
PUBLICLY REP EQUIVALENT
BOOK VALUE EMPLOYEES
TICKER SHORT NAME (%) MOST RECENT QTR
- ---------------------------------------------------------- -----------------
<S> <C> <C> <C>
COMPARABLE THRIFT DATA
CATB Catskill Financial Corp. 107.76 64
CEBK Central Co-operative Bank 133.27 NA
FBER 1st Bergen Bancorp 137.34 55
FIBC Financial Bancorp Inc. 150.62 60
FKFS First Keystone Financial 149.29 73
FSBI Fidelity Bancorp Inc. 138.98 106
LFBI Little Falls Bancorp Inc. 125.93 NA
LSBX Lawrence Savings Bank 160.24 101
PBCI Pamrapo Bancorp Inc. 130.38 98
PHFC Pittsburgh Home Financial Corp 134.79 58
WVFC WVS Financial Corp. 148.11 58
------------- ------------
Average 137.88 74.78
Maximum 160.24 106.00
Minimum 107.76 0.00
</TABLE>
<TABLE>
<CAPTION>
INCOME
----------------------------------------------------------------
NET INCOME CORE INCOME CORE EPS PRICE/
TICKER SHORT NAME MOST RECENT QTR MOST RECENT QTR MOST RECENT QTR CORE EPS
- ------------------------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMPARABLE THRIFT DATA
CATB Catskill Financial Corp. 949 943 0.21 19.35
CEBK Central Co-operative Bank 606 606 0.31 16.73
FBER 1st Bergen Bancorp 570 570 0.21 22.02
FIBC Financial Bancorp Inc. 661 659 0.40 14.38
FKFS First Keystone Financial 673 616 0.55 12.95
FSBI Fidelity Bancorp Inc. 656 645 0.40 13.75
LFBI Little Falls Bancorp Inc. 469 388 0.15 28.13
LSBX Lawrence Savings Bank 1,435 1,419 0.32 9.33
PBCI Pamrapo Bancorp Inc. 1,260 1,260 0.44 12.22
PHFC Pittsburgh Home Financial Corp 547 448 0.25 18.94
WVFC WVS Financial Corp. 883 880 0.50 13.94
-------------------------------------------------------------
Average 792 767 0.34 16.52
Maximum 1,435 1,419 0.55 28.13
Minimum 469 388 0.15 9.33
</TABLE>
<PAGE> 129
Exhibit 6
Market Multiples
Pricing Data as of September 8, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------
Current Price in Relation to
Current Current --------------------------------------------------------------
Stock Market Tangible
Price Value Earnings LTM EPS Book Value Book Value Assets
Ticker Short Name ($) ($M) (x) (x) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
%CAL California Federal Bank, a FSB NA NA NA NA NA NA NA
%CCMD Chevy Chase Bank, FSB NA NA NA NA NA NA NA
AABC Access Anytime Bancorp, Inc. 6.500 7.75 14.77 NM 99.54 99.540 7.41
AADV Advantage Bancorp Inc. 45.000 145.52 13.89 36.89 154.96 165.750 14.27
ABBK Abington Bancorp Inc. 33.000 60.73 15.00 16.42 176.19 195.610 12.19
ABCL Alliance Bancorp Inc. 33.750 180.39 18.34 31.84 144.23 146.040 12.85
ABCW Anchor BanCorp Wisconsin 27.500 248.84 7.09 11.27 103.81 105.810 6.46
AFBC Advance Financial Bancorp 15.750 17.08 NA NA 106.78 106.780 16.49
AFCB Affiliated Community Bancorp 26.625 172.25 15.13 17.75 158.96 159.910 15.79
AFED AFSALA Bancorp Inc. 16.250 23.64 17.66 NA 102.07 102.070 14.85
AFFFZ America First Financial Fund 40.250 241.93 10.94 8.64 138.94 140.690 11.04
AHCI Ambanc Holding Co. 15.625 65.24 27.90 NM 109.34 109.340 14.15
AHM Ahmanson & Company (H.F.) 54.688 5,323.10 13.54 30.90 268.74 315.390 11.20
ALBC Albion Banc Corp. 23.250 5.81 29.06 86.11 97.04 97.040 8.47
ALBK ALBANK Financial Corp. 39.750 510.15 14.61 18.84 153.77 175.960 14.15
AMFC AMB Financial Corp. 14.500 13.98 13.43 21.64 99.18 99.180 14.84
ANA Acadiana Bancshares Inc. 21.813 59.42 20.97 NA 128.46 128.460 22.31
ANBK American National Bancorp 19.625 70.91 17.52 51.64 150.04 150.040 14.03
ANDB Andover Bancorp Inc. 31.000 159.60 12.50 12.02 158.32 158.320 12.76
ASBI Ameriana Bancorp 21.750 70.26 20.14 29.39 161.23 161.350 17.66
ASBP ASB Financial Corp. 13.125 22.59 17.27 31.25 129.31 129.310 20.12
ASFC Astoria Financial Corp. 49.188 1,024.54 17.08 25.75 172.05 204.860 13.46
ATSB AmTrust Capital Corp. 12.750 6.71 21.25 28.98 92.93 93.960 9.45
AVND Avondale Financial Corp. 14.625 51.11 5.63 NM 92.27 92.270 8.42
BANC BankAtlantic Bancorp Inc. 12.500 283.13 13.02 15.82 183.02 222.820 10.29
BDJI First Federal Bancorporation 21.375 14.59 16.19 36.85 121.38 121.380 13.19
BFD BostonFed Bancorp Inc. 19.000 107.35 15.83 25.00 123.62 127.860 11.58
BFFC Big Foot Financial Corp. 17.750 44.60 27.73 NA 123.69 123.690 21.01
BFSB Bedford Bancshares Inc. 24.000 27.42 15.79 19.83 135.21 135.210 20.24
BKC American Bank of Connecticut 37.000 85.31 11.42 12.05 169.96 177.030 14.08
BKCT Bancorp Connecticut Inc. 32.500 82.35 14.77 16.50 187.54 187.540 19.22
BKUNA BankUnited Financial Corp. 12.375 109.76 22.10 45.83 163.04 201.220 6.07
BNKU Bank United Corp. 40.875 1,291.47 18.92 NA 221.66 227.210 11.29
BPLS Bank Plus Corp. 11.438 220.85 15.89 NM 123.39 123.650 6.25
BSBC Branford Savings Bank 5.063 33.21 15.82 16.33 191.78 191.780 17.8
BTHL Bethel Bancorp 12.500 15.15 16.45 13.02 91.17 108.600 6.89
BVCC Bay View Capital Corp. 26.500 343.95 19.49 28.19 175.26 208.830 11.11
BWFC Bank West Financial Corp. 18.250 32.00 21.73 35.10 141.69 141.690 20.56
BYFC Broadway Financial Corp. 11.000 9.19 17.19 NM 75.09 75.090 7.52
CAFI Camco Financial Corp. 17.750 57.05 9.86 16.75 121.74 131.970 11.65
CAPS Capital Savings Bancorp Inc. 15.750 29.80 12.70 19.44 139.63 139.630 12.29
CASB Cascade Financial Corp. 13.000 33.42 16.25 30.95 148.06 148.060 9.08
CASH First Midwest Financial Inc. 18.750 51.26 14.20 19.53 120.04 135.480 13.68
CATB Catskill Financial Corp. 16.250 79.60 19.35 19.82 107.76 107.760 26.98
CBCI Calumet Bancorp Inc. 42.500 89.71 11.81 17.93 116.53 116.530 18.07
CBES CBES Bancorp Inc. 17.750 18.19 16.44 NA 103.92 103.920 19.11
CBK Citizens First Financial Corp. 18.125 43.02 28.32 64.73 112.30 112.300 17.31
CBSA Coastal Bancorp Inc. 30.000 149.15 13.64 21.28 152.83 183.820 5.03
CBSB Charter Financial Inc. 20.250 84.03 11.25 19.47 147.70 166.940 21.37
CCFH CCF Holding Company 17.000 13.94 212.50 NM 118.38 118.380 13.83
CEBK Central Co-operative Bank 20.750 40.77 16.73 14.21 119.25 133.270 11.84
CENB Century Bancorp Inc. 79.500 32.38 16.99 NA 108.24 108.240 32.40
CENF CENFED Financial Corp. 35.938 205.87 14.04 18.72 172.36 172.700 8.97
CFB Commercial Federal Corp. 46.000 991.43 14.74 22.89 232.68 262.410 13.97
CFBC Community First Banking Co. 34.375 76.33 NA NA NA NA NA
CFCP Coastal Financial Corp. 24.250 112.54 19.56 26.65 362.48 362.480 22.38
</TABLE>
<TABLE>
<CAPTION>
Current LTM
Dividend Dividend
Yield Payout Ratio
Ticker Short Name (%) (%)
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
%CAL California Federal Bank, a FSB NA NA
%CCMD Chevy Chase Bank, FSB NA NA
AABC Access Anytime Bancorp, Inc. 0.000 0.00
AADV Advantage Bancorp Inc. 0.889 29.51
ABBK Abington Bancorp Inc. 1.212 19.90
ABCL Alliance Bancorp Inc. 1.956 24.76
ABCW Anchor BanCorp Wisconsin 1.164 18.55
AFBC Advance Financial Bancorp 2.032 NA
AFCB Affiliated Community Bancorp 1.803 30.40
AFED AFSALA Bancorp Inc. 0.985 NA
AFFFZ America First Financial Fund 3.975 34.33
AHCI Ambanc Holding Co. 1.280 0.00
AHM Ahmanson & Company (H.F.) 1.609 49.72
ALBC Albion Banc Corp. 1.376 114.81
ALBK ALBANK Financial Corp. 1.811 27.01
AMFC AMB Financial Corp. 1.655 35.82
ANA Acadiana Bancshares Inc. 1.650 NA
ANBK American National Bancorp 0.611 23.68
ANDB Andover Bancorp Inc. 2.194 23.06
ASBI Ameriana Bancorp 2.943 79.73
ASBP ASB Financial Corp. 3.048 NM
ASFC Astoria Financial Corp. 1.220 25.13
ATSB AmTrust Capital Corp. 1.569 11.36
AVND Avondale Financial Corp. 0.000 0.00
BANC BankAtlantic Bancorp Inc. 1.056 973.67
BDJI First Federal Bancorporation 0.000 0.00
BFD BostonFed Bancorp Inc. 1.474 28.95
BFFC Big Foot Financial Corp. 0.000 NA
BFSB Bedford Bancshares Inc. 2.333 41.32
BKC American Bank of Connecticut 3.892 50.16
BKCT Bancorp Connecticut Inc. 3.077 41.37
BKUNA BankUnited Financial Corp. 0.000 0.00
BNKU Bank United Corp. 1.370 NA
BPLS Bank Plus Corp. 0.000 0.00
BSBC Branford Savings Bank 1.580 19.35
BTHL Bethel Bancorp 2.560 20.83
BVCC Bay View Capital Corp. 1.208 33.51
BWFC Bank West Financial Corp. 1.753 53.85
BYFC Broadway Financial Corp. 1.818 NM
CAFI Camco Financial Corp. 2.790 44.02
CAPS Capital Savings Bancorp Inc. 1.524 27.78
CASB Cascade Financial Corp. 0.000 0.00
CASH First Midwest Financial Inc. 1.920 35.76
CATB Catskill Financial Corp. 1.723 17.07
CBCI Calumet Bancorp Inc. 0.000 0.00
CBES CBES Bancorp Inc. 2.254 NA
CBK Citizens First Financial Corp. 0.000 0.00
CBSA Coastal Bancorp Inc. 1.600 29.79
CBSB Charter Financial Inc. 1.580 26.92
CCFH CCF Holding Company 3.235 NM
CEBK Central Co-operative Bank 1.542 16.44
CENB Century Bancorp Inc. 2.516 NA
CENF CENFED Financial Corp. 1.002 17.04
CFB Commercial Federal Corp. 0.609 13.77
CFBC Community First Banking Co. 0.000 NA
CFCP Coastal Financial Corp. 1.485 37.09
</TABLE>
Page 1 of 10
<PAGE> 130
Exhibit 6
Market Multiples
Pricing Data as of September 8, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------
Current Price in Relation to
Current Current --------------------------------------------------------------
Stock Market Tangible
Price Value Earnings LTM EPS Book Value Book Value Assets
Ticker Short Name ($) ($M) (x) (x) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CFFC Community Financial Corp. 21.750 27.74 13.94 16.48 115.32 115.320 15.81
CFNC Carolina Fincorp Inc. 17.625 32.63 23.19 NA 128.28 128.280 29.26
CFSB CFSB Bancorp Inc. 26.500 135.06 12.74 20.54 209.49 209.490 15.97
CFTP Community Federal Bancorp 17.250 79.85 28.75 27.38 123.57 123.570 38.20
CFX CFX Corp. 20.750 272.73 14.02 18.36 197.24 210.870 14.67
CIBI Community Investors Bancorp 15.500 14.41 14.90 23.48 129.60 129.600 15.61
CKFB CKF Bancorp Inc. 19.000 18.05 8.48 15.57 111.96 111.960 28.91
CLAS Classic Bancshares Inc. 14.125 18.43 17.66 25.68 94.99 112.370 14.12
CMRN Cameron Financial Corp 17.875 46.95 17.88 22.63 104.05 104.050 22.56
CMSB Commonwealth Bancorp Inc. 17.313 295.98 18.82 24.05 134.31 171.760 12.93
CMSV Community Savings FA (MHC) 32.750 166.70 30.32 44.86 205.33 205.330 23.82
CNIT CENIT Bancorp Inc. 49.250 81.41 13.68 22.29 158.26 172.320 11.45
CNSB CNS Bancorp Inc. 17.500 28.93 31.25 64.81 117.92 117.920 29.42
CNY Carver Bancorp Inc. 11.938 27.63 21.32 NM 79.96 83.370 6.68
COFI Charter One Financial 56.563 2,612.42 14.73 19.50 267.44 285.670 17.94
CONE Conestoga Bancorp, Inc. NA NA NA NA NA NA NA
COOP Cooperative Bankshares Inc. 28.000 41.77 20.59 NM 155.30 155.300 11.85
CRZY Crazy Woman Creek Bancorp 14.500 13.85 19.08 25.44 98.77 98.770 25.51
CSA Coast Savings Financial 49.625 923.81 19.09 54.53 206.26 208.950 10.15
CSBF CSB Financial Group Inc. 11.875 11.18 49.48 69.85 91.42 96.780 22.90
CTZN CitFed Bancorp Inc. 46.5 401.69 15.5 24.73 203.68 226.17 12.97
CVAL Chester Valley Bancorp Inc. 21.000 45.40 14.58 22.58 159.70 159.700 13.36
DCBI Delphos Citizens Bancorp Inc. 17.000 34.66 17.71 NA 113.86 113.860 32.34
DIBK Dime Financial Corp. 29.500 152.00 9.58 10.69 218.20 225.540 17.38
DIME Dime Community Bancorp Inc. 19.313 252.86 22.99 20.55 132.46 153.770 19.23
DME Dime Bancorp Inc. 20.125 2,087.34 19.35 19.73 197.11 206.620 10.39
DNFC D & N Financial Corp. 21.000 172.03 12.50 19.81 193.73 195.900 10.69
DSL Downey Financial Corp. 23.000 614.87 18.55 27.38 150.72 152.820 10.45
EBSI Eagle Bancshares 16.750 94.80 15.51 26.59 134.54 134.540 11.17
EFBC Empire Federal Bancorp Inc. 15.750 40.83 23.16 NA 100.64 100.640 37.61
EFBI Enterprise Federal Bancorp 19.500 39.02 17.41 21.2 123.50 123.570 14.76
EGFC Eagle Financial Corp. 36.000 226.54 NM 73.47 163.49 209.420 11.23
EGLB Eagle BancGroup Inc. 16.625 20.58 29.69 NA 99.61 99.610 11.81
EIRE Emerald Isle Bancorp Inc. 25.250 56.76 15.03 16.72 188.57 188.570 13.34
EMLD Emerald Financial Corp. 13.875 70.27 11.56 17.13 153.65 156.070 11.64
EQSB Equitable Federal Savings Bank 37.500 22.58 11.3 18.2 145.35 145.350 7.33
ESBK Elmira Savings Bank (The) 24.250 17.13 16.84 21.27 117.04 122.040 7.52
ESX Essex Bancorp Inc. 1.938 2.05 NM NM 395.51 625.160 1.08
ETFS East Texas Financial Services 19.125 19.61 23.91 49.04 95.77 95.770 17.4
FAB FirstFed America Bancorp Inc. 20.250 176.32 25.31 NA 131.92 131.920 17.27
FBBC First Bell Bancorp Inc. 15.938 103.77 12.85 15.78 147.85 147.850 14.53
FBCI Fidelity Bancorp Inc. 22.375 62.47 15.12 23.31 122.80 123.070 12.75
FBCV 1ST Bancorp 35.000 24.43 11.51 29.91 109.38 111.640 9.03
FBER 1st Bergen Bancorp 18.500 55.51 22.02 44.05 137.34 137.340 19.49
FBHC Fort Bend Holding Corp. 34.875 28.85 17.79 48.44 150.13 161.160 9.05
FBNW FirstBank Corp. 17.375 34.47 NA NA NA NA NA
FBSI First Bancshares Inc. 24.250 26.57 16.39 19.56 119.63 119.810 16.20
FCB Falmouth Co-Operative Bank 17.250 25.09 35.94 33.17 112.01 112.010 26.74
FCBF FCB Financial Corp. 26.750 108.96 33.44 29.72 142.29 142.290 20.71
FCME First Coastal Corp. 10.750 14.61 10.75 2.38 103.86 103.860 9.59
FDEF First Defiance Financial 14.750 137.78 23.05 34.30 117.06 117.060 24.95
FED FirstFed Financial Corp. 34.875 369.00 17.44 31.42 182.21 184.230 8.8
FESX First Essex Bancorp Inc. 18.000 135.07 13.64 12.41 155.57 179.100 10.85
FFBA First Colorado Bancorp Inc. 18.813 311.61 16.80 23.23 159.57 161.760 20.63
FFBH First Federal Bancshares of AR 21.188 103.74 18.27 24.35 129.51 129.510 19.38
FFBI First Financial Bancorp Inc. 19.000 7.89 NM NM 107.83 107.830 9.33
</TABLE>
<TABLE>
<CAPTION>
Current LTM
Dividend Dividend
Yield Payout Ratio
Ticker Short Name (%) (%)
- -------------------------------------------------------------------
<S> <C> <C> <C>
CFFC Community Financial Corp. 2.575 40.91
CFNC Carolina Fincorp Inc. 1.362 NA
CFSB CFSB Bancorp Inc. 2.264 39.12
CFTP Community Federal Bancorp 1.739 444.44
CFX CFX Corp. 4.241 75.27
CIBI Community Investors Bancorp 2.065 40.42
CKFB CKF Bancorp Inc. 2.632 118.03
CLAS Classic Bancshares Inc. 1.982 36.36
CMRN Cameron Financial Corp 1.566 35.44
CMSB Commonwealth Bancorp Inc. 1.617 36.11
CMSV Community Savings FA (MHC) 2.748 116.44
CNIT CENIT Bancorp Inc. 2.030 42.99
CNSB CNS Bancorp Inc. 1.371 55.56
CNY Carver Bancorp Inc. 1.675 NM
COFI Charter One Financial 1.768 32.07
CONE Conestoga Bancorp, Inc. NA 28.17
COOP Cooperative Bankshares Inc. 0.000 0
CRZY Crazy Woman Creek Bancorp 2.759 70.18
CSA Coast Savings Financial 0.000 0.00
CSBF CSB Financial Group Inc. 0.000 0.00
CTZN CitFed Bancorp Inc. 0.774 15.60
CVAL Chester Valley Bancorp Inc. 1.996 39.76
DCBI Delphos Citizens Bancorp Inc. 0.000 NA
DIBK Dime Financial Corp. 1.356 12.68
DIME Dime Community Bancorp Inc. 0.932 4.79
DME Dime Bancorp Inc. 0.795 3.92
DNFC D & N Financial Corp. 0.952 0.00
DSL Downey Financial Corp. 1.391 36.74
EBSI Eagle Bancshares 3.582 95.24
EFBC Empire Federal Bancorp Inc. 1.905 NA
EFBI Enterprise Federal Bancorp 5.128 163.04
EGFC Eagle Financial Corp. 2.778 187.76
EGLB Eagle BancGroup Inc. 0.000 NA
EIRE Emerald Isle Bancorp Inc. 1.109 17.62
EMLD Emerald Financial Corp. 1.730 29.63
EQSB Equitable Federal Savings Bank 0.000 0
ESBK Elmira Savings Bank (The) 2.639 56.14
ESX Essex Bancorp Inc. 0.000 0.00
ETFS East Texas Financial Services 1.046 51.28
FAB FirstFed America Bancorp Inc. 0.000 NA
FBBC First Bell Bancorp Inc. 2.510 336.63
FBCI Fidelity Bancorp Inc. 1.430 29.17
FBCV 1ST Bancorp 1.143 33.37
FBER 1st Bergen Bancorp 1.081 28.57
FBHC Fort Bend Holding Corp. 1.147 38.89
FBNW FirstBank Corp. 0.000 NA
FBSI First Bancshares Inc. 0.825 16.13
FCB Falmouth Co-Operative Bank 1.159 28.85
FCBF FCB Financial Corp. 2.991 80.00
FCME First Coastal Corp. 0.000 0
FDEF First Defiance Financial 2.169 72.09
FED FirstFed Financial Corp. 0.000 0
FESX First Essex Bancorp Inc. 2.667 33.10
FFBA First Colorado Bancorp Inc. 2.339 46.91
FFBH First Federal Bancshares of AR 1.133 11.49
FFBI First Financial Bancorp Inc. 0.000 0.00
</TABLE>
Page 2 of 10
<PAGE> 131
Exhibit 6
Market Multiples
Pricing Data as of September 8, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------
Current Price in Relation to
Current Current --------------------------------------------------------------
Stock Market Tangible
Price Value Earnings LTM EPS Book Value Book Value Assets
Ticker Short Name ($) ($M) (x) (x) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FFBS FFBS BanCorp Inc. 23.000 35.82 23.00 23.71 135.53 135.530 27.39
FFBZ First Federal Bancorp Inc. 18.500 29.08 13.21 23.13 209.99 210.230 14.45
FFCH First Financial Holdings Inc. 34.375 218.51 15.08 23.87 214.44 214.440 13.11
FFDB FirstFed Bancorp Inc. 17.750 20.43 13.05 20.64 122.58 134.470 11.54
FFDF FFD Financial Corp. 14.750 21.46 26.34 NA 101.65 101.650 25.16
FFED Fidelity Federal Bancorp 9.375 23.32 11.72 62.5 181.33 181.330 9.33
FFES First Federal of East Hartford 34.281 91.74 16.80 23.01 145.07 145.070 9.33
FFFC FFVA Financial Corp. 30.000 135.62 17.86 23.81 172.31 176.060 24.27
FFFD North Central Bancshares Inc. 16.625 54.16 13.85 17.14 112.26 112.260 25.44
FFFG F.F.O. Financial Group Inc. 6.250 52.79 19.53 23.15 243.19 243.190 16.34
FFFL Fidelity Bankshares Inc. (MHC) 28.250 191.28 32.10 56.50 228.56 230.240 19.14
FFHC First Financial Corp. 32.750 1,185.86 15.16 22.43 280.63 288.040 19.99
FFHH FSF Financial Corp. 17.750 53.83 15.30 21.91 110.66 110.660 14.23
FFHS First Franklin Corporation 19.750 23.54 13.72 56.43 115.03 115.770 10.37
FFIC Flushing Financial Corp. 21.938 175.04 18.91 22.85 131.52 131.520 20.35
FFKY First Federal Financial Corp. 21.750 90.70 14.31 19.08 175.40 186.380 24.03
FFLC FFLC Bancorp Inc. 31.750 73.58 20.35 31.13 140.99 140.990 19.01
FFOH Fidelity Financial of Ohio 16.000 89.27 17.39 30.77 131.47 148.980 17.01
FFPB First Palm Beach Bancorp Inc. 35.000 176.08 19.02 NM 160.85 164.860 10.57
FFSL First Independence Corp. 13.750 13.64 19.10 30.56 118.53 118.530 12.36
FFSX First Fed SB of Siouxland(MHC) 28.000 79.19 23.33 40.58 203.78 205.580 16.90
FFWC FFW Corp. 29.500 20.98 13.41 15.53 122.36 135.760 11.65
FFWD Wood Bancorp Inc. 15.750 33.37 14.58 21.28 165.44 165.440 20.36
FFYF FFY Financial Corp. 27.000 111.11 13.50 22.69 136.16 136.160 18.67
FGHC First Georgia Holding Inc. 7.750 23.66 16.15 25.83 184.09 200.780 15.13
FIBC Financial Bancorp Inc. 23.000 39.61 14.38 25.27 149.84 150.620 14.02
FISB First Indiana Corporation 23.000 242.91 15.54 20.00 167.03 169.120 15.97
FKFS First Keystone Financial 28.500 34.99 11.88 19.79 149.29 149.290 10.91
FKKY Frankfort First Bancorp Inc. 11.000 36.08 NM NM 158.50 158.500 27.24
FLAG FLAG Financial Corp. 15.250 31.06 15.25 NM 146.07 146.070 14.00
FLFC First Liberty Financial Corp. 22.250 171.88 12.36 16.98 180.89 200.630 13.33
FLGS Flagstar Bancorp Inc. 19.500 266.57 NM NA 231.04 NA 16.70
FLKY First Lancaster Bancshares 15.688 15.04 24.51 NA 108.64 108.640 37.18
FMBD First Mutual Bancorp Inc. 15.500 54.35 29.81 129.17 92.65 122.340 13.01
FMCO FMS Financial Corporation 27.250 65.06 11.35 17.93 178.81 182.030 11.72
FMSB First Mutual Savings Bank 21.000 56.74 13.13 14.09 192.48 192.480 13.13
FNGB First Northern Capital Corp. 13.750 121.47 21.48 20.22 168.92 168.920 19.05
FOBC Fed One Bancorp 20.000 47.48 14.71 21.05 115.94 121.580 13.30
FPRY First Financial Bancorp NA NA NA NA NA NA NA
FRC First Republic Bancorp 24.375 236.27 14.86 16.04 147.19 147.280 10.56
FSBI Fidelity Bancorp Inc. 22.000 34.10 13.41 20.75 138.98 138.980 9.39
FSFC First Southeast Financial Corp 15.500 68.02 18.45 NM 198.72 198.720 20.32
FSLA First Savings Bank (MHC) 32.500 236.07 24.62 41.67 242.72 272.190 22.86
FSNJ Bayonne Bancshares Inc. 12.500 112.42 NA NA NA NA NA
FSPG First Home Bancorp Inc. 20.125 54.51 12.27 12.42 156.61 159.220 10.43
FSPT FirstSpartan Financial Corp. 35.375 156.72 NA NA NA NA NA
FSSB First FS&LA of San Bernardino 9.625 3.16 NM NM 70.36 73.030 3.05
FSTC First Citizens Corp. 32.000 58.85 4.88 11.35 177.88 228.730 17.31
FTF Texarkana First Financial Corp 24.625 44.09 13.10 17.97 163.84 163.840 25.73
FTFC First Federal Capital Corp. 23.750 217.51 14.14 20.30 214.35 227.930 13.81
FTNB Fulton Bancorp Inc. 21.500 36.96 38.39 NA 148.58 148.580 37.17
FTSB Fort Thomas Financial Corp. 11.750 16.66 12.77 36.72 112.98 112.980 18.12
FWWB First SB of Washington Bancorp 24.625 258.34 18.66 23.68 157.05 170.060 24.11
GAF GA Financial Inc. 18.375 146.72 17.67 22.97 128.95 130.320 19.57
GBCI Glacier Bancorp Inc. 17.875 121.76 13.14 16.25 220.14 225.980 21.45
GDVS Greater Delaware Valley (MHC) 24.250 79.36 37.89 105.43 280.67 280.670 32.47
</TABLE>
<TABLE>
<CAPTION>
Current LTM
Dividend Dividend
Yield Payout Ratio
Ticker Short Name (%) (%)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
FFBS FFBS BanCorp Inc. 2.174 51.55
FFBZ First Federal Bancorp Inc. 1.297 29.38
FFCH First Financial Holdings Inc. 2.095 48.61
FFDB FirstFed Bancorp Inc. 2.817 61.05
FFDF FFD Financial Corp. 2.034 NA
FFED Fidelity Federal Bancorp 4.267 466.67
FFES First Federal of East Hartford 1.750 40.27
FFFC FFVA Financial Corp. 1.600 34.92
FFFD North Central Bancshares Inc. 1.504 25.77
FFFG F.F.O. Financial Group Inc. 0.000 0.00
FFFL Fidelity Bankshares Inc. (MHC) 3.186 160.00
FFHC First Financial Corp. 1.832 39.04
FFHH FSF Financial Corp. 2.817 61.73
FFHS First Franklin Corporation 1.620 91.43
FFIC Flushing Financial Corp. 1.094 18.75
FFKY First Federal Financial Corp. 2.575 43.86
FFLC FFLC Bancorp Inc. 1.512 43.14
FFOH Fidelity Financial of Ohio 1.750 46.15
FFPB First Palm Beach Bancorp Inc. 1.714 NM
FFSL First Independence Corp. 1.818 50.00
FFSX First Fed SB of Siouxland(MHC) 1.714 67.99
FFWC FFW Corp. 2.441 33.16
FFWD Wood Bancorp Inc. 2.540 31.54
FFYF FFY Financial Corp. 2.593 56.72
FGHC First Georgia Holding Inc. 0.688 17.77
FIBC Financial Bancorp Inc. 1.739 38.46
FISB First Indiana Corporation 2.087 40.35
FKFS First Keystone Financial 0.702 10.42
FKKY Frankfort First Bancorp Inc. 3.273 NM
FLAG FLAG Financial Corp. 2.230 NM
FLFC First Liberty Financial Corp. 1.798 29.52
FLGS Flagstar Bancorp Inc. 0.000 NA
FLKY First Lancaster Bancshares 3.187 NA
FMBD First Mutual Bancorp Inc. 2.065 266.67
FMCO FMS Financial Corporation 1.028 13.16
FMSB First Mutual Savings Bank 0.952 12.52
FNGB First Northern Capital Corp. 2.327 79.41
FOBC Fed One Bancorp 2.900 61.05
FPRY First Financial Bancorp NA 39.66
FRC First Republic Bancorp 0.000 0
FSBI Fidelity Bancorp Inc. 1.636 29.92
FSFC First Southeast Financial Corp 1.548 NM
FSLA First Savings Bank (MHC) 1.477 51.51
FSNJ Bayonne Bancshares Inc. 1.363 NA
FSPG First Home Bancorp Inc. 1.988 24.07
FSPT FirstSpartan Financial Corp. 0 NA
FSSB First FS&LA of San Bernardino 0.000 0.00
FSTC First Citizens Corp. 1.375 15.60
FTF Texarkana First Financial Corp 2.274 253.83
FTFC First Federal Capital Corp. 2.021 37.62
FTNB Fulton Bancorp Inc. 0.930 NA
FTSB Fort Thomas Financial Corp. 2.128 NM
FWWB First SB of Washington Bancorp 1.137 23.08
GAF GA Financial Inc. 2.612 38.75
GBCI Glacier Bancorp Inc. 2.685 40.01
GDVS Greater Delaware Valley (MHC) 1.485 156.52
</TABLE>
Page 3 of 10
<PAGE> 132
Exhibit 6
Market Multiples
Pricing Data as of September 8, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------
Current Price in Relation to
Current Current --------------------------------------------------------------
Stock Market Tangible
Price Value Earnings LTM EPS Book Value Book Value Assets
Ticker Short Name ($) ($M) (x) (x) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GDW Golden West Financial 87.375 4,957.53 14.18 13.18 199.03 199.030 12.68
GFCO Glenway Financial Corp. 27.750 31.63 13.34 26.18 116.16 117.730 11.02
GFED Guaranty Federal SB (MHC) 20.125 62.89 31.45 54.39 228.69 228.690 31.51
GFSB GFS Bancorp Inc. 14.250 14.08 11.88 16.76 133.68 133.680 15.30
GOSB GSB Financial Corp. 14.500 32.60 NA NA NA NA NA
GPT GreenPoint Financial Corp. 63.125 2,734.13 18.35 18.57 184.20 327.580 21.38
GRTR Greater New York Savings Bank 23.125 317.21 28.91 27.53 196.98 196.980 12.3
GSB Golden State Bancorp Inc. 30.688 1,545.10 21.92 49.50 196.34 220.940 9.53
GSBC Great Southern Bancorp Inc. 17.625 142.85 11.91 16.02 236.58 236.580 20.18
GSFC Green Street Financial Corp. 18.625 80.05 27.39 31.57 126.44 126.440 45.85
GSLA GS Financial Corp. 16.000 55.02 NA NA 97.80 97.800 44.64
GTFN Great Financial Corporation 35.625 491.78 15.63 22.84 174.63 182.320 16.13
GTPS Great American Bancorp 17.750 31.24 40.34 93.42 96.68 96.680 22.81
GUPB GFSB Bancorp Inc. 18.750 15.08 22.32 27.99 111.08 111.080 18.11
GWBC Gateway Bancorp Inc. 17.938 19.30 32.03 35.17 111.76 111.760 30.23
HALL Hallmark Capital Corp. 22.000 31.74 10.78 16.54 107.00 107.000 7.75
HARB Harbor Florida Bancorp (MHC) 58.219 289.36 21.40 28.54 308.85 319.360 25.91
HARL Harleysville Savings Bank 25.750 42.55 12.15 18.13 193.46 193.460 12.64
HARS Harris Savings Bank (MHC) 44.375 498.01 24.65 55.47 304.15 347.770 24.36
HAVN Haven Bancorp Inc. 39.125 171.50 19.56 19.37 161.67 162.280 9.61
HBBI Home Building Bancorp 20.500 6.39 17.08 60.29 101.69 101.690 14.18
HBEI Home Bancorp of Elgin Inc. 18.000 123.40 40.91 NA 131.10 131.100 35.00
HBFW Home Bancorp 22.500 56.81 18.15 29.61 127.70 127.700 16.96
HBNK Highland Federal Bank FSB 30.250 69.58 13.04 32.18 184.56 184.560 13.80
HBS Haywood Bancshares Inc. 19.000 23.76 14.39 21.35 113.37 117.570 15.79
HCBB HCB Bancshares Inc. 13.750 36.37 NA NA NA NA NA
HCFC Home City Financial Corp. 15.500 14.76 19.38 NA 96.57 96.570 21.63
HEMT HF Bancorp Inc. 15.125 95.01 NM NM 117.25 NA 9.65
HFFB Harrodsburg First Fin Bancorp 15.250 30.88 19.06 25.85 97.26 97.260 28.34
HFFC HF Financial Corp. 24.250 72.25 12.63 20.38 136.39 136.390 12.86
HFGI Harrington Financial Group 12.500 40.71 22.32 20.49 162.97 162.970 9.11
HFNC HFNC Financial Corp. 16.375 281.53 31.49 35.60 174.76 174.760 31.44
HFSA Hardin Bancorp Inc. 16.875 14.50 15.07 28.13 107.62 107.620 13.42
HHFC Harvest Home Financial Corp. 12.000 10.98 15.79 46.15 106.1 106.100 12.53
HIFS Hingham Instit. for Savings 24.750 32.26 12.13 13.31 158.45 158.450 14.83
HMCI HomeCorp Inc. 16.750 28.36 16.11 72.83 130.76 130.760 8.55
HMLK Hemlock Federal Financial Corp 15.313 31.79 NA NA 105.10 105.100 19.28
HMNF HMN Financial Inc. 24.625 103.72 18.11 24.63 126.80 126.800 18.30
HOMF Home Federal Bancorp 31.000 105.29 13.14 15.82 181.82 187.650 15.42
HPBC Home Port Bancorp Inc. 22.875 42.13 12.71 13.22 200.83 200.830 21.20
HRBF Harbor Federal Bancorp Inc. 19.750 33.45 19.75 32.92 119.84 119.840 15.46
HRZB Horizon Financial Corp. 15.500 114.96 14.35 14.49 142.07 142.070 22.17
HTHR Hawthorne Financial Corp. 17.375 52.72 7.90 NM 132.94 132.940 6.11
HVFD Haverfield Corp. 27.938 53.58 14.86 27.39 180.13 180.130 15.39
HWEN Home Financial Bancorp 16.438 7.72 20.55 NA 107.23 107.230 18.16
HZFS Horizon Financial Svcs Corp. 18.875 8.03 20.52 27.76 95.47 95.470 9.34
IBSF IBS Financial Corp. 17.250 190.00 28.75 50.74 148.84 148.840 25.90
IFSB Independence Federal Svgs Bank 14.000 17.94 6.86 21.21 100.79 114.010 6.94
INBI Industrial Bancorp 15.250 80.47 14.66 32.45 131.13 131.130 23.22
INCB Indiana Community Bank SB 15.750 14.52 26.25 105.00 128.36 128.360 15.90
IPSW Ipswich Savings Bank 13.250 31.48 7.53 8.23 145.44 145.440 8.31
ISBF ISB Financial Corporation 25.500 175.97 23.61 31.10 144.80 170.230 18.58
ITLA ITLA Capital Corp. 18.250 143.18 12.01 12.85 153.10 153.750 16.82
IWBK InterWest Bancorp Inc. 39.500 317.42 15.67 21.94 255.50 261.070 17.32
JOAC Joachim Bancorp Inc. 14.625 10.57 33.24 66.48 107.38 107.380 30.24
JSB JSB Financial Inc. 47.313 467.17 17.14 17.72 133.13 133.130 30.42
</TABLE>
<TABLE>
<CAPTION>
Current LTM
Dividend Dividend
Yield Payout Ratio
Ticker Short Name (%) (%)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
GDW Golden West Financial 0.504 6.41
GFCO Glenway Financial Corp. 2.883 63.39
GFED Guaranty Federal SB (MHC) 2.186 102.7
GFSB GFS Bancorp Inc. 1.825 25.29
GOSB GSB Financial Corp. 0.000 NA
GPT GreenPoint Financial Corp. 1.584 26.47
GRTR Greater New York Savings Bank 0.865 17.86
GSB Golden State Bancorp Inc. 0.000 0.00
GSBC Great Southern Bancorp Inc. 2.270 35.23
GSFC Green Street Financial Corp. 2.362 94.92
GSLA GS Financial Corp. 1.750 NA
GTFN Great Financial Corporation 1.684 32.69
GTPS Great American Bancorp 2.254 210.53
GUPB GFSB Bancorp Inc. 2.133 111.94
GWBC Gateway Bancorp Inc. 2.230 78.43
HALL Hallmark Capital Corp. 0.000 0.00
HARB Harbor Florida Bancorp (MHC) 2.405 63.73
HARL Harleysville Savings Bank 1.553 25.92
HARS Harris Savings Bank (MHC) 1.307 72.5
HAVN Haven Bancorp Inc. 1.534 29.70
HBBI Home Building Bancorp 1.463 88.24
HBEI Home Bancorp of Elgin Inc. 2.222 NA
HBFW Home Bancorp 0.889 26.32
HBNK Highland Federal Bank FSB 0.000 0.00
HBS Haywood Bancshares Inc. 2.947 61.80
HCBB HCB Bancshares Inc. 0.000 NA
HCFC Home City Financial Corp. 2.065 NA
HEMT HF Bancorp Inc. 0.000 0.00
HFFB Harrodsburg First Fin Bancorp 2.623 93.22
HFFC HF Financial Corp. 1.732 30.25
HFGI Harrington Financial Group 0.960 4.92
HFNC HFNC Financial Corp. 1.710 NM
HFSA Hardin Bancorp Inc. 2.844 70.00
HHFC Harvest Home Financial Corp. 3.333 NM
HIFS Hingham Instit. for Savings 1.939 26.88
HMCI HomeCorp Inc. 0.000 0.00
HMLK Hemlock Federal Financial Corp 1.567 NA
HMNF HMN Financial Inc. 0.000 0.00
HOMF Home Federal Bancorp 1.613 20.83
HPBC Home Port Bancorp Inc. 3.497 46.24
HRBF Harbor Federal Bancorp Inc. 2.025 66.67
HRZB Horizon Financial Corp. 2.581 62.18
HTHR Hawthorne Financial Corp. 0.000 0.00
HVFD Haverfield Corp. 2.004 53.92
HWEN Home Financial Bancorp 1.217 NA
HZFS Horizon Financial Svcs Corp. 1.695 47.06
IBSF IBS Financial Corp. 2.319 143.76
IFSB Independence Federal Svgs Bank 1.571 33.33
INBI Industrial Bancorp 3.148 68.09
INCB Indiana Community Bank SB 2.286 NM
IPSW Ipswich Savings Bank 0.906 13.04
ISBF ISB Financial Corporation 1.569 45.12
ITLA ITLA Capital Corp. 0.000 0
IWBK InterWest Bancorp Inc. 1.519 31.11
JOAC Joachim Bancorp Inc. 3.419 227.27
JSB JSB Financial Inc. 2.959 48.69
</TABLE>
Page 4 of 10
<PAGE> 133
Exhibit 6
Market Multiples
Pricing Data as of September 8, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------
Current Price in Relation to
Current Current --------------------------------------------------------------
Stock Market Tangible
Price Value Earnings LTM EPS Book Value Book Value Assets
Ticker Short Name ($) ($M) (x) (x) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JSBA Jefferson Savings Bancorp 35.375 177.06 15.79 37.63 147.64 190.290 13.70
JXSB Jacksonville Savings Bk (MHC) 22.500 28.63 31.25 66.18 167.66 167.660 17.59
JXVL Jacksonville Bancorp Inc. 16.875 41.61 10.29 21.92 124.54 124.540 18.58
KFBI Klamath First Bancorp 19.875 199.12 22.59 34.27 127.65 127.650 27.35
KNK Kankakee Bancorp Inc. 30.125 42.93 15.06 19.69 113.29 120.550 12.57
KSAV KS Bancorp Inc. 18.500 16.38 12.17 17.96 114.13 114.200 15.43
KSBK KSB Bancorp Inc. 12.500 15.48 10.42 10.87 147.75 156.250 10.61
KYF Kentucky First Bancorp Inc. 12.750 16.82 15.94 21.25 114.25 114.250 18.91
LARK Landmark Bancshares Inc. 27.250 46.62 19.46 25.71 148.18 148.180 20.44
LARL Laurel Capital Group Inc. 23.500 33.91 11.99 15.88 159.43 159.430 16.00
LFBI Little Falls Bancorp Inc. 16.875 44.01 23.44 54.44 116.30 125.930 15.44
LFCO Life Financial Corp. 18.000 110.01 9.57 NA 263.54 263.540 56.34
LFED Leeds Federal Savings Bk (MHC) 30.250 104.51 30.25 47.27 228.99 228.990 37.07
LIFB Life Bancorp Inc. 24.563 241.87 18.61 23.39 154.10 158.680 16.25
LISB Long Island Bancorp Inc. 44.250 1,060.60 20.87 30.31 199.59 201.590 17.95
LOGN Logansport Financial Corp. 15.250 19.22 15.89 20.89 120.46 120.460 23.12
LONF London Financial Corporation 15.000 7.65 22.06 28.85 102.74 102.740 20.21
LSBI LSB Financial Corp. 22.250 20.39 13.57 13.91 112.37 112.370 10.68
LSBX Lawrence Savings Bank 11.938 51.14 9.33 8.78 160.24 160.240 13.93
LVSB Lakeview Financial 35.250 79.93 16.32 14.04 177.05 221.420 16.85
LXMO Lexington B&L Financial Corp. 16.000 18.22 18.18 28.07 108.62 108.620 30.75
MAFB MAF Bancorp Inc. 31.750 488.94 12.40 18.25 189.10 216.430 14.71
MARN Marion Capital Holdings 23.500 41.55 14.69 18.08 106.38 106.380 23.97
MASB MASSBANK Corp. 52.500 141.00 14.75 14.75 146.16 146.160 15.55
MBB MSB Bancorp Inc. 23.688 67.37 21.15 60.74 112.00 228.210 8.28
MBBC Monterey Bay Bancorp Inc. 16.625 53.91 34.64 55.42 107.54 116.670 13.06
MBLF MBLA Financial Corp. 23.250 30.19 18.16 22.36 105.78 105.780 12.86
MBSP Mitchell Bancorp Inc. 17.125 15.94 28.54 NA 111.27 111.270 48.25
MCBN Mid-Coast Bancorp Inc. 25.000 5.81 12.76 23.15 113.12 113.120 9.73
MCBS Mid Continent Bancshares Inc. 37.750 73.92 16.00 20.08 189.41 189.410 18.09
MDBK Medford Savings Bank 32.250 146.45 12.40 13.72 151.84 162.960 13.65
MECH Mechanics Savings Bank 24.125 127.62 4.40 8.55 151.44 151.440 15.50
MERI Meritrust Federal SB 43.875 33.97 12.32 23.09 181.23 181.230 14.87
METF Metropolitan Financial Corp. 18.125 63.90 12.25 26.27 196.58 217.330 7.78
MFBC MFB Corp. 23.000 38.87 19.17 30.26 114.71 114.710 15.66
MFCX Marshalltown Financial Corp. 16.750 23.64 29.91 57.76 117.79 117.790 18.54
MFFC Milton Federal Financial Corp. 14.125 32.56 22.07 33.63 115.21 115.210 16.32
MFLR Mayflower Co-operative Bank 19.750 17.59 13.34 14.21 144.48 146.950 13.99
MFSL Maryland Federal Bancorp 45.500 146.06 15.80 21.06 150.56 152.480 12.62
MGNL Magna Bancorp Inc. 27.000 371.37 16.46 20.15 268.39 275.790 27.44
MIFC Mid-Iowa Financial Corp. 9.625 16.14 8.30 13.75 137.50 137.700 12.85
MIVI Mississippi View Holding Co. 15.875 13.00 15.26 26.46 98.66 98.660 18.63
MLBC ML Bancorp Inc. 20.625 217.93 15.63 16.37 150.77 153.460 10.52
MONT Montgomery Financial Corp. 12.000 19.84 NA NA NA NA NA
MRKF Market Financial Corp. 14.188 18.95 27.28 NA 95.67 95.670 33.49
MSBF MSB Financial Inc. 13.500 16.86 14.06 20.15 132.74 132.740 22.57
MSBK Mutual Savings Bank FSB 13.000 55.56 108.33 72.22 135.84 135.840 8.25
MWBI Midwest Bancshares Inc. 36.000 12.25 11.54 21.30 123.88 123.880 8.56
MWBX MetroWest Bank 6.688 93.32 11.94 13.11 221.46 221.460 16.47
MWFD Midwest Federal Financial 21.250 34.59 12.07 16.35 189.56 196.580 16.70
NASB North American Savings Bank 52.000 116.29 10.48 12.84 204.97 212.070 15.74
NBN Northeast Bancorp 16.938 21.89 14.60 23.53 125.56 145.270 8.72
NBSI North Bancshares Inc. 22.500 22.11 31.25 39.47 132.67 132.670 18.75
NEIB Northeast Indiana Bancorp 17.000 29.97 13.28 17 111.92 111.920 17
NHTB New Hampshire Thrift Bncshrs 19.625 40.51 14.43 37.74 166.60 195.660 12.75
NMSB NewMil Bancorp Inc. 13.000 49.84 20.31 21.31 157.19 157.190 15.43
</TABLE>
<TABLE>
<CAPTION>
Current LTM
Dividend Dividend
Yield Payout Ratio
Ticker Short Name (%) (%)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
JSBA Jefferson Savings Bancorp 1.131 38.30
JXSB Jacksonville Savings Bk (MHC) 1.778 117.65
JXVL Jacksonville Bancorp Inc. 2.963 64.94
KFBI Klamath First Bancorp 1.509 50.00
KNK Kankakee Bancorp Inc. 1.593 28.76
KSAV KS Bancorp Inc. 3.243 87.38
KSBK KSB Bancorp Inc. 0.640 9.27
KYF Kentucky First Bancorp Inc. 3.922 583.33
LARK Landmark Bancshares Inc. 1.468 37.74
LARL Laurel Capital Group Inc. 2.213 29.73
LFBI Little Falls Bancorp Inc. 1.185 25.81
LFCO Life Financial Corp. 0.000 NA
LFED Leeds Federal Savings Bk (MHC) 2.512 107.81
LIFB Life Bancorp Inc. 1.954 42.86
LISB Long Island Bancorp Inc. 1.356 37.67
LOGN Logansport Financial Corp. 2.623 465.75
LONF London Financial Corporation 1.600 46.15
LSBI LSB Financial Corp. 1.528 19.35
LSBX Lawrence Savings Bank 0.000 0.00
LVSB Lakeview Financial 0.709 9.51
LXMO Lexington B&L Financial Corp. 1.875 26.32
MAFB MAF Bancorp Inc. 0.882 14.37
MARN Marion Capital Holdings 3.745 63.08
MASB MASSBANK Corp. 2.438 28.65
MBB MSB Bancorp Inc. 2.533 153.85
MBBC Monterey Bay Bancorp Inc. 0.722 33.33
MBLF MBLA Financial Corp. 1.720 38.46
MBSP Mitchell Bancorp Inc. 2.336 NA
MCBN Mid-Coast Bancorp Inc. 2.080 48.15
MCBS Mid Continent Bancshares Inc. 1.060 21.28
MDBK Medford Savings Bank 2.233 36.17
MECH Mechanics Savings Bank 0.000 0.00
MERI Meritrust Federal SB 1.595 35.53
METF Metropolitan Financial Corp. 0.000 0.00
MFBC MFB Corp. 1.391 39.47
MFCX Marshalltown Financial Corp. 0.000 0.00
MFFC Milton Federal Financial Corp. 4.248 730.95
MFLR Mayflower Co-operative Bank 3.443 38.85
MFSL Maryland Federal Bancorp 1.758 33.43
MGNL Magna Bancorp Inc. 2.222 44.78
MIFC Mid-Iowa Financial Corp. 0.831 11.43
MIVI Mississippi View Holding Co. 1.008 26.67
MLBC ML Bancorp Inc. 1.939 30.56
MONT Montgomery Financial Corp. 0.000 NA
MRKF Market Financial Corp. 1.973 NA
MSBF MSB Financial Inc. 2.074 38.43
MSBK Mutual Savings Bank FSB 0.000 0.00
MWBI Midwest Bancshares Inc. 1.667 34.32
MWBX MetroWest Bank 1.794 31.37
MWFD Midwest Federal Financial 1.600 24.62
NASB North American Savings Bank 1.538 17.60
NBN Northeast Bancorp 1.889 44.44
NBSI North Bancshares Inc. 2.133 77.19
NEIB Northeast Indiana Bancorp 1.882 31.5
NHTB New Hampshire Thrift Bncshrs 2.548 96.15
NMSB NewMil Bancorp Inc. 1.846 37.70
</TABLE>
Page 5 of 10
<PAGE> 134
Exhibit 6
Market Multiples
Pricing Data as of September 8, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------
Current Price in Relation to
Current Current --------------------------------------------------------------
Stock Market Tangible
Price Value Earnings LTM EPS Book Value Book Value Assets
Ticker Short Name ($) ($M) (x) (x) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NSLB NS&L Bancorp Inc. 18.750 13.27 24.67 42.61 113.57 113.570 22.22
NSSB Norwich Financial Corp. 27.875 150.89 19.91 20.20 189.63 210.060 21.17
NSSY Norwalk Savings Society 36.500 87.97 19.01 15.73 169.45 175.140 13.25
NTMG Nutmeg Federal S&LA 11.000 8.12 22.92 50.00 142.49 142.490 7.93
NWEQ Northwest Equity Corp. 16.125 13.52 12.22 17.53 113.32 113.320 13.96
NWSB Northwest Savings Bank (MHC) 25.500 596.09 28.98 43.22 300.35 319.150 28.50
NYB New York Bancorp Inc. 31.125 672.03 13.42 16.73 402.65 402.650 20.47
OCFC Ocean Financial Corp. 34.250 280.02 19.46 NA 125.23 125.230 20.35
OCN Ocwen Financial Corp. 43.625 1,169.13 15.81 16.65 479.40 502.010 41.95
OFCP Ottawa Financial Corp. 25.750 126.51 16.51 31.79 168.19 209.520 14.68
OHSL OHSL Financial Corp. 24.125 28.85 14.36 22.55 113.74 113.740 12.54
PALM Palfed Inc. 17.875 94.45 16.55 162.50 172.37 172.370 14.21
PAMM PacificAmerica Money Center 22.750 86.44 3.35 5.85 147.25 147.250 31.75
PBCI Pamrapo Bancorp Inc. 21.500 61.12 12.22 19.72 129.36 130.380 16.48
PBCT People's Bank (MHC) 29.375 1,793.44 20.40 21.29 268.76 269.000 22.79
PBHC Oswego City Savings Bk (MHC) 19.500 37.37 14.34 23.78 166.95 200.620 19.58
PBKB People's Bancshares Inc. 16.750 54.40 11.96 13.19 179.91 186.940 10.28
PCBC Perry County Financial Corp. 21.250 17.59 17.71 22.14 112.97 112.970 21.69
PCCI Pacific Crest Capital 15.250 44.81 12.71 14.12 170.39 170.390 12.07
PDB Piedmont Bancorp Inc. 10.625 29.23 20.43 NM 143.19 143.190 23.81
PEEK Peekskill Financial Corp. 16.375 52.29 24.08 29.24 111.32 111.320 28.64
PERM Permanent Bancorp Inc. 23.750 49.89 18.55 35.45 120.31 122.110 11.02
PERT Perpetual Bank (MHC) 53.000 79.74 30.11 44.92 263.16 263.160 31.12
PETE Primary Bank 26.875 56.13 NM 22.40 187.54 187.810 13.00
PFDC Peoples Bancorp 25.500 57.99 13.28 18.48 132.61 132.610 20.16
PFED Park Bancorp Inc. 17.000 41.33 21.25 NA 104.49 104.490 23.54
PFFB PFF Bancorp Inc. 19.750 353.59 23.51 85.87 136.11 137.530 14.05
PFFC Peoples Financial Corp. 16.875 24.73 30.13 NA 106.94 106.940 29.09
PFNC Progress Financial Corp. 14.375 57.57 16.34 28.19 246.57 279.130 13.10
PFSB PennFed Financial Services Inc 30.000 144.66 13.64 20.83 137.43 164.290 10.94
PFSL Pocahontas FS&LA (MHC) 28.500 46.52 18.75 20.96 193.09 193.090 12.29
PHBK Peoples Heritage Finl Group 39.500 1,084.56 15.43 16.26 250.48 297.220 19.34
PHFC Pittsburgh Home Financial Corp 18.938 37.30 15.78 26.30 133.27 134.790 14.55
PHSB Peoples Home Savings Bk (MHC) 16.375 39.30 NA NA NA NA NA
PKPS Poughkeepsie Financial Corp. 7.875 99.18 21.88 35.80 134.62 134.620 11.27
PLSK Pulaski Savings Bank (MHC) 17.375 35.97 NA NA 170.34 170.340 20.28
PMFI Perpetual Midwest Financial 20.875 39.30 20.07 86.98 115.97 115.970 9.89
PRBC Prestige Bancorp Inc. 17.000 15.55 15.74 33.33 102.97 102.970 11.46
PROV Provident Financial Holdings 19.938 98.10 20.77 48.63 114.78 114.780 15.94
PSBK Progressive Bank Inc. 32.750 125.14 14.12 14.36 166.50 186.400 14.24
PSFC Peoples-Sidney Financial Corp. 16.250 29.01 NA NA NA NA NA
PSFI PS Financial Inc. 15.500 33.82 18.45 NA 105.73 105.730 40.92
PTRS Potters Financial Corp. 24.750 12.16 9.98 21.52 112.65 112.650 9.94
PULB Pulaski Bank, Svgs Bank (MHC) 26.375 55.23 25.36 45.47 234.86 234.860 30.64
PULS Pulse Bancorp 21.500 66.23 11.44 18.38 157.74 157.740 12.69
PVFC PVF Capital Corp. 20.500 52.39 11.39 14.64 209.4 209.400 14.71
PVSA Parkvale Financial Corporation 30.250 122.67 12.20 18.22 163.16 164.400 12.38
PWBC PennFirst Bancorp Inc. 15.625 82.90 14.47 21.70 125.60 134.350 10.15
PWBK Pennwood Bancorp Inc. 16.750 9.71 24.63 NA 111.30 111.300 19.42
QCBC Quaker City Bancorp Inc. 20.750 97.59 16.21 34.02 138.89 138.980 12.18
QCFB QCF Bancorp Inc. 25.000 35.66 13.89 17.12 131.72 131.720 23.83
QCSB Queens County Bancorp Inc. 54.125 549.64 25.06 26.15 272.95 272.950 37.56
RARB Raritan Bancorp Inc. 24.000 57.88 15.38 17.02 192.31 195.440 15.26
RCSB RCSB Financial Inc. 51.500 756.70 23.41 20.68 240.43 246.410 18.31
REDF RedFed Bancorp Inc. 17.375 124.65 13.16 157.95 161.63 162.230 13.66
RELI Reliance Bancshares Inc. 8.500 21.49 106.25 34.00 93.61 93.610 45.72
</TABLE>
<TABLE>
<CAPTION>
Current LTM
Dividend Dividend
Yield Payout Ratio
Ticker Short Name (%) (%)
- ------------------------------------------------------------------------
<S> <C> <C> <C>
NSLB NS&L Bancorp Inc. 2.667 113.64
NSSB Norwich Financial Corp. 2.009 43.48
NSSY Norwalk Savings Society 1.096 10.78
NTMG Nutmeg Federal S&LA 0.000 34.09
NWEQ Northwest Equity Corp. 3.225 46.74
NWSB Northwest Savings Bank (MHC) 1.255 54.24
NYB New York Bancorp Inc. 1.928 25.54
OCFC Ocean Financial Corp. 2.336 NA
OCN Ocwen Financial Corp. 0.000 0.00
OFCP Ottawa Financial Corp. 1.553 45.68
OHSL OHSL Financial Corp. 3.648 76.64
PALM Palfed Inc. 0.671 90.91
PAMM PacificAmerica Money Center 0.000 0.00
PBCI Pamrapo Bancorp Inc. 4.651 87.16
PBCT People's Bank (MHC) 2.315 43.00
PBHC Oswego City Savings Bk (MHC) 1.436 26.83
PBKB People's Bancshares Inc. 2.627 27.56
PCBC Perry County Financial Corp. 1.882 41.67
PCCI Pacific Crest Capital 0.000 0
PDB Piedmont Bancorp Inc. 3.765 NM
PEEK Peekskill Financial Corp. 2.198 64.29
PERM Permanent Bancorp Inc. 1.684 44.78
PERT Perpetual Bank (MHC) 2.642 135.59
PETE Primary Bank 0.000 0.00
PFDC Peoples Bancorp 2.353 43.48
PFED Park Bancorp Inc. 0.000 NA
PFFB PFF Bancorp Inc. 0.000 0.00
PFFC Peoples Financial Corp. 2.963 NA
PFNC Progress Financial Corp. 0.796 15.69
PFSB PennFed Financial Services Inc 0.933 14.58
PFSL Pocahontas FS&LA (MHC) 3.158 63.97
PHBK Peoples Heritage Finl Group 1.924 28.81
PHFC Pittsburgh Home Financial Corp 1.267 38.89
PHSB Peoples Home Savings Bk (MHC) 0.000 NA
PKPS Poughkeepsie Financial Corp. 1.270 45.45
PLSK Pulaski Savings Bank (MHC) 1.727 NA
PMFI Perpetual Midwest Financial 1.437 125.00
PRBC Prestige Bancorp Inc. 0.706 11.76
PROV Provident Financial Holdings 0.000 0.00
PSBK Progressive Bank Inc. 2.076 26.61
PSFC Peoples-Sidney Financial Corp. 1.231 NA
PSFI PS Financial Inc. 2.065 NA
PTRS Potters Financial Corp. 1.455 25.22
PULB Pulaski Bank, Svgs Bank (MHC) 3.791 172.41
PULS Pulse Bancorp 3.256 59.83
PVFC PVF Capital Corp. 0.000 0
PVSA Parkvale Financial Corporation 1.719 31.33
PWBC PennFirst Bancorp Inc. 2.094 47.72
PWBK Pennwood Bancorp Inc. 1.910 NA
QCBC Quaker City Bancorp Inc. 0.000 0
QCFB QCF Bancorp Inc. 0.000 0.00
QCSB Queens County Bancorp Inc. 1.848 33.82
RARB Raritan Bancorp Inc. 2.000 30.74
RCSB RCSB Financial Inc. 1.165 22.89
REDF RedFed Bancorp Inc. 0.000 0.00
RELI Reliance Bancshares Inc. 0.000 NM
</TABLE>
Page 6 of 10
<PAGE> 135
Exhibit 6
Market Multiples
Pricing Data as of September 8, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------
Current Price in Relation to
Current Current --------------------------------------------------------------
Stock Market Tangible
Price Value Earnings LTM EPS Book Value Book Value Assets
Ticker Short Name ($) ($M) (x) (x) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RELY Reliance Bancorp Inc. 32.000 280.84 16.67 26.45 172.60 239.520 14.21
RIVR River Valley Bancorp 16.500 19.64 13.75 NA 112.86 114.580 13.98
ROSE TR Financial Corp. 27.000 475.30 14.06 14.75 200.74 200.740 13.32
RSLN Roslyn Bancorp Inc. 22.750 992.87 21.88 NA 156.04 156.790 31.43
RVSB Riverview Savings Bank (MHC) 27.750 67.11 22.38 31.53 260.07 284.910 29.22
SBFL SB of the Finger Lakes (MHC) 25.000 44.63 52.08 166.67 214.96 214.960 20.59
SBOS Boston Bancorp (The) NA NA NA NA NA NA NA
SCBS Southern Community Bancshares 15.875 18.06 18.90 NA 120.36 120.360 25.66
SCCB S. Carolina Community Bancshrs 23.500 16.55 32.64 43.52 137.35 137.350 35.66
SECP Security Capital Corp. 105.750 973.78 17.06 22.12 173.90 173.900 26.51
SFED SFS Bancorp Inc. 19.750 24.31 21.47 30.86 113.25 113.250 14.12
SFFC StateFed Financial Corporation 22.000 17.24 12.79 18.33 113.17 113.170 20.12
SFIN Statewide Financial Corp. 19.688 92.74 14.92 23.72 141.64 141.950 13.78
SFNB Security First Network Bank 12.000 103.44 NM NM 397.35 404.040 131.58
SFSB SuburbFed Financial Corp. 27.500 34.71 13.22 23.71 125.46 125.920 8.13
SFSL Security First Corp. 17.750 134.58 17.07 21.91 218.60 222.150 20.58
SGVB SGV Bancorp Inc. 15.250 35.72 17.33 47.66 119.42 121.420 8.73
SHEN First Shenango Bancorp Inc. 27.875 57.76 12.02 16.79 128.16 128.160 14.04
SISB SIS Bancorp Inc. 31 172.88 14.62 9.34 169.31 169.31 12.05
SKAN Skaneateles Bancorp Inc. 23.250 22.19 12.37 13.21 130.69 134.860 8.95
SKBO First Carnegie Deposit (MHC) 16.000 36.80 NA NA 152.09 152.090 25.01
SMBC Southern Missouri Bancorp Inc. 17.125 28.05 16.47 23.78 108.04 108.040 16.93
SMFC Sho-Me Financial Corp. 39.000 58.45 13.18 19.12 180.39 180.390 17.78
SOBI Sobieski Bancorp Inc. 16.250 12.59 29.02 50.78 94.26 94.260 15.40
SOPN First Savings Bancorp Inc. 20.250 74.50 15.82 20.66 110.90 110.900 25.32
SOSA Somerset Savings Bank 3.906 65.04 9.77 15.62 199.29 199.290 12.64
SPBC St. Paul Bancorp Inc. 24.125 819.96 16.75 27.11 206.73 207.260 17.78
SRN Southern Banc Company Inc. 16.250 19.99 33.85 70.65 112.69 113.880 19.04
SSB Scotland Bancorp Inc 19.250 36.84 32.08 33.77 143.12 143.120 53.02
SSFC South Street Financial Corp. 18.500 83.19 25.69 NA 125.94 125.940 34.41
SSM Stone Street Bancorp Inc. 21.438 40.69 38.28 25.52 132.91 132.910 38.34
STFR St. Francis Capital Corp. 37.250 197.54 13.50 21.16 154.05 174.310 12.02
STND Standard Financial Inc. 25.620 415.31 21.35 33.71 149.74 150.000 16.13
STSA Sterling Financial Corp. 20.250 112.72 16.88 96.43 166.39 190.860 6.68
SVRN Sovereign Bancorp Inc. 15.594 1,388.65 14.44 23.99 227.65 302.210 10.02
SWBI Southwest Bancshares 20.250 53.67 13.68 20.05 129.15 129.150 14.20
SWCB Sandwich Co-operative Bank 36.000 68.95 15.52 15.79 172.83 180.540 13.74
SZB SouthFirst Bancshares Inc. 16.000 13.56 26.67 NM 99.63 99.630 13.94
TBK Tolland Bank 17.875 27.89 14.90 16.71 168.63 173.540 11.71
THR Three Rivers Financial Corp. 16.125 13.28 17.53 25.60 105.88 106.300 14.57
THRD TF Financial Corporation 20.500 83.70 16.53 24.4 108.70 123.940 13.06
TPNZ Tappan Zee Financial Inc. 17.375 26.01 24.13 28.96 123.14 123.140 20.95
TRIC Tri-County Bancorp Inc. 23.500 14.31 14.69 21.17 104.40 104.400 15.99
TSBS Peoples Bancorp Inc. (MHC) 30.000 271.11 30.00 34.88 254.45 277.260 42.97
TSH Teche Holding Co. 18.375 63.16 16.41 22.14 118.32 118.320 15.55
TWIN Twin City Bancorp 20.250 17.28 15.82 29.78 125.23 125.230 16.10
UBMT United Financial Corp. 24.000 29.36 19.35 25.81 119.40 119.400 27.80
UFRM United Federal Savings Bank 11.500 35.35 20.54 60.53 171.64 171.640 12.83
USAB USABancshares, Inc. 8.250 6.06 14.73 30.56 128.11 130.540 12.54
VABF Virginia Beach Fed. Financial 14.000 69.67 17.50 53.85 164.71 164.710 11.28
VFFC Virginia First Financial Corp. 23.938 139.02 15.75 13.30 210.91 218.410 17.00
WAMU Washington Mutual Inc. 63.938 16,113.22 16.65 55.12 310.38 327.050 16.57
WAYN Wayne Savings & Loan Co. (MHC) 22.500 50.58 25.57 66.18 215.31 215.310 19.90
WBST Webster Financial Corp. 56.000 759.43 14.29 28.57 224.81 263.160 11.29
WCBI Westco Bancorp 26.500 65.62 15.41 20.87 138.16 138.160 21.06
WCFB Webster City Federal SB (MHC) 17.750 37.28 27.73 36.22 168.41 168.410 39.37
</TABLE>
<TABLE>
<CAPTION>
Current LTM
Dividend Dividend
Yield Payout Ratio
Ticker Short Name (%) (%)
- ------------------------------------------------------------------------
<S> <C> <C> <C>
RELY Reliance Bancorp Inc. 2.000 49.59
RIVR River Valley Bancorp 0.970 NA
ROSE TR Financial Corp. 2.222 23.50
RSLN Roslyn Bancorp Inc. 1.055 NA
RVSB Riverview Savings Bank (MHC) 0.865 24.38
SBFL SB of the Finger Lakes (MHC) 1.600 266.67
SBOS Boston Bancorp (The) NA 10.89
SCBS Southern Community Bancshares 1.890 NA
SCCB S. Carolina Community Bancshrs 2.553 111.11
SECP Security Capital Corp. 1.135 20.40
SFED SFS Bancorp Inc. 1.418 39.06
SFFC StateFed Financial Corporation 1.818 33.33
SFIN Statewide Financial Corp. 2.235 48.19
SFNB Security First Network Bank 0.000 0.00
SFSB SuburbFed Financial Corp. 1.164 27.59
SFSL Security First Corp. 1.803 37.02
SGVB SGV Bancorp Inc. 0.000 0.00
SHEN First Shenango Bancorp Inc. 2.152 30.72
SISB SIS Bancorp Inc. 1.806 7.23
SKAN Skaneateles Bancorp Inc. 1.720 20.45
SKBO First Carnegie Deposit (MHC) 1.875 NA
SMBC Southern Missouri Bancorp Inc. 2.920 69.44
SMFC Sho-Me Financial Corp. 0.000 0.00
SOBI Sobieski Bancorp Inc. 1.969 43.75
SOPN First Savings Bancorp Inc. 3.951 75.51
SOSA Somerset Savings Bank 0.000 0.00
SPBC St. Paul Bancorp Inc. 1.658 32.36
SRN Southern Banc Company Inc. 2.154 228.26
SSB Scotland Bancorp Inc 1.558 52.63
SSFC South Street Financial Corp. 2.162 NA
SSM Stone Street Bancorp Inc. 2.099 542.26
STFR St. Francis Capital Corp. 1.289 26.14
STND Standard Financial Inc. 1.561 47.37
STSA Sterling Financial Corp. 0.000 0.00
SVRN Sovereign Bancorp Inc. 0.513 12.00
SWBI Southwest Bancshares 3.753 74.26
SWCB Sandwich Co-operative Bank 3.333 50.44
SZB SouthFirst Bancshares Inc. 3.125 NM
TBK Tolland Bank 1.119 9.11
THR Three Rivers Financial Corp. 2.481 52.38
THRD TF Financial Corporation 1.951 42.86
TPNZ Tappan Zee Financial Inc. 1.612 33.33
TRIC Tri-County Bancorp Inc. 2.553 49.55
TSBS Peoples Bancorp Inc. (MHC) 1.167 40.70
TSH Teche Holding Co. 2.721 60.24
TWIN Twin City Bancorp 3.160 94.12
UBMT United Financial Corp. 4.083 100.00
UFRM United Federal Savings Bank 2.087 110.53
USAB USABancshares, Inc. 0.000 0.00
VABF Virginia Beach Fed. Financial 1.429 69.23
VFFC Virginia First Financial Corp. 0.418 5.56
WAMU Washington Mutual Inc. 1.689 84.48
WAYN Wayne Savings & Loan Co. (MHC) 2.756 180.85
WBST Webster Financial Corp. 1.429 37.76
WCBI Westco Bancorp 2.264 44.88
WCFB Webster City Federal SB (MHC) 4.507 163.27
</TABLE>
Page 7 of 10
<PAGE> 136
Exhibit 6
Market Multiples
Pricing Data as of September 8, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------
Current Price in Relation to
Current Current --------------------------------------------------------------
Stock Market Tangible
Price Value Earnings LTM EPS Book Value Book Value Assets
Ticker Short Name ($) ($M) (x) (x) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WEFC Wells Financial Corp. 16.500 32.33 14.73 22.30 112.78 112.780 16.00
WEHO Westwood Homestead Fin. Corp. 15.500 43.33 32.29 NA 109.39 109.390 32.18
WES Westcorp 21.813 571.39 14.35 19.65 171.62 172.030 15.53
WFI Winton Financial Corp. 16.250 32.27 10.16 14.13 143.05 146.130 10.17
WFSG Wilshire Financial Services 21.750 164.65 8.24 NA 238.75 238.750 13.77
WFSL Washington Federal Inc. 27.750 1,317.25 12.39 14.16 189.29 207.240 22.86
WHGB WHG Bancshares Corp. 15.750 23.03 23.16 45.00 111.23 111.230 22.97
WOFC Western Ohio Financial Corp. 24.250 56.72 30.31 42.54 103.72 111.240 14.31
WRNB Warren Bancorp Inc. 18.250 69.13 11.13 9.46 185.85 185.850 19.28
WSB Washington Savings Bank, FSB 7.250 30.79 18.13 25.89 143.56 143.560 11.92
WSFS WSFS Financial Corporation 15.313 190.21 11.60 11.10 242.29 244.230 12.61
WSTR WesterFed Financial Corp. 22.500 125.21 14.80 23.44 120.06 150.100 13.10
WVFC WVS Financial Corp. 27.875 48.71 13.94 16.49 148.11 148.110 16.53
WWFC Westwood Financial Corporation 21.250 13.71 14.36 27.24 134.84 151.350 12.31
WYNE Wayne Bancorp Inc. 24.750 49.84 22.92 46.70 150.55 150.550 20.10
YFCB Yonkers Financial Corporation 19.875 60.04 18.40 25.48 140.56 140.560 20.94
YFED York Financial Corp. 24.125 169.08 15.87 24.37 168.94 168.940 14.55
Count 404 381 338 395 393 395
</TABLE>
<TABLE>
<CAPTION>
Current LTM
Dividend Dividend
Yield Payout Ratio
Ticker Short Name (%) (%)
- ------------------------------------------------------------------------
<S> <C> <C> <C>
WEFC Wells Financial Corp. 2.909 0.00
WEHO Westwood Homestead Fin. Corp. 1.806 NA
WES Westcorp 1.834 36.04
WFI Winton Financial Corp. 2.831 38.26
WFSG Wilshire Financial Services 0.000 NA
WFSL Washington Federal Inc. 3.315 44.76
WHGB WHG Bancshares Corp. 1.270 42.86
WOFC Western Ohio Financial Corp. 4.124 175.44
WRNB Warren Bancorp Inc. 2.849 43.01
WSB Washington Savings Bank, FSB 1.379 35.71
WSFS WSFS Financial Corporation 0.000 0.00
WSTR WesterFed Financial Corp. 1.956 44.06
WVFC WVS Financial Corp. 2.870 177.51
WWFC Westwood Financial Corporation 0.941 25.64
WYNE Wayne Bancorp Inc. 0.808 18.87
YFCB Yonkers Financial Corporation 1.208 25.64
YFED York Financial Corp. 2.487 59.23
Count 338 294
</TABLE>
Page 8 of 10
<PAGE> 137
Exhibit 6
Market Multiples
Pricing Data as of September 8, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------
Current Price in Relation to
Current Current --------------------------------------------------------------
Stock Market Tangible
Price Value Earnings LTM EPS Book Value Book Value Assets
Ticker Short Name ($) ($M) (x) (x) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
New York
AFED AFSALA Bancorp Inc. 16.250 23.64 17.66 NA 102.07 102.070 14.85
AHCI Ambanc Holding Co. 15.625 65.24 27.90 NM 109.34 109.340 14.15
ALBC Albion Banc Corp. 23.250 5.81 29.06 86.11 97.04 97.040 8.47
ALBK ALBANK Financial Corp. 39.750 510.15 14.61 18.84 153.77 175.960 14.15
ASFC Astoria Financial Corp. 49.188 1,024.54 17.08 25.75 172.05 204.860 13.46
CATB Catskill Financial Corp. 16.250 79.60 19.35 19.82 107.76 107.760 26.98
CNY Carver Bancorp Inc. 11.938 27.63 21.32 NM 79.96 83.370 6.68
CONE Conestoga Bancorp, Inc. NA NA NA NA NA NA NA
DIME Dime Community Bancorp Inc. 19.313 252.86 22.99 20.55 132.46 153.770 19.23
DME Dime Bancorp Inc. 20.125 2,087.34 19.35 19.73 197.11 206.620 10.39
ESBK Elmira Savings Bank (The) 24.250 17.13 16.84 21.27 117.04 122.040 7.52
FFIC Flushing Financial Corp. 21.938 175.04 18.91 22.85 131.52 131.520 20.35
FIBC Financial Bancorp Inc. 23.000 39.61 14.38 25.27 149.84 150.620 14.02
GOSB GSB Financial Corp. 14.500 32.60 NA NA NA NA NA
GPT GreenPoint Financial Corp. 63.125 2,734.13 18.35 18.57 184.20 327.580 21.38
GRTR Greater New York Savings Bank 23.125 317.21 28.91 27.53 196.98 196.980 12.3
HAVN Haven Bancorp Inc. 39.125 171.50 19.56 19.37 161.67 162.280 9.61
JSB JSB Financial Inc. 47.313 467.17 17.14 17.72 133.13 133.130 30.42
LISB Long Island Bancorp Inc. 44.250 1,060.60 20.87 30.31 199.59 201.590 17.95
MBB MSB Bancorp Inc. 23.688 67.37 21.15 60.74 112.00 228.210 8.28
NYB New York Bancorp Inc. 31.125 672.03 13.42 16.73 402.65 402.650 20.47
PBHC Oswego City Savings Bk (MHC) 19.500 37.37 14.34 23.78 166.95 200.620 19.58
PEEK Peekskill Financial Corp. 16.375 52.29 24.08 29.24 111.32 111.320 28.64
PKPS Poughkeepsie Financial Corp. 7.875 99.18 21.88 35.8 134.62 134.620 11.27
PSBK Progressive Bank Inc. 32.750 125.14 14.12 14.36 166.50 186.400 14.24
QCSB Queens County Bancorp Inc. 54.125 549.64 25.06 26.15 272.95 272.950 37.56
RCSB RCSB Financial Inc. 51.500 756.70 23.41 20.68 240.43 246.410 18.31
RELY Reliance Bancorp Inc. 32.000 280.84 16.67 26.45 172.60 239.520 14.21
ROSE TR Financial Corp. 27.000 475.30 14.06 14.75 200.74 200.740 13.32
RSLN Roslyn Bancorp Inc. 22.750 992.87 21.88 NA 156.04 156.790 31.43
SBFL SB of the Finger Lakes (MHC) 25.000 44.63 52.08 166.67 214.96 214.960 20.59
SFED SFS Bancorp Inc. 19.750 24.31 21.47 30.86 113.25 113.250 14.12
SKAN Skaneateles Bancorp Inc. 23.250 22.19 12.37 13.21 130.69 134.860 8.95
TPNZ Tappan Zee Financial Inc. 17.375 26.01 24.13 28.96 123.14 123.140 20.95
YFCB Yonkers Financial Corporation 19.875 60.04 18.40 25.48 140.56 140.560 20.94
Count 34 34 33 29 33 33 33
</TABLE>
<TABLE>
<CAPTION>
Current LTM
Dividend Dividend
Yield Payout Ratio
Ticker Short Name (%) (%)
- -------------------------------------------------------------------
<S> <C> <C> <C>
New York
AFED AFSALA Bancorp Inc. 0.985 NA
AHCI Ambanc Holding Co. 1.280 0
ALBC Albion Banc Corp. 1.376 114.81
ALBK ALBANK Financial Corp. 1.811 27.01
ASFC Astoria Financial Corp. 1.220 25.13
CATB Catskill Financial Corp. 1.723 17.07
CNY Carver Bancorp Inc. 1.675 NM
CONE Conestoga Bancorp, Inc. NA 28.17
DIME Dime Community Bancorp Inc. 0.932 4.79
DME Dime Bancorp Inc. 0.795 3.92
ESBK Elmira Savings Bank (The) 2.639 56.14
FFIC Flushing Financial Corp. 1.094 18.75
FIBC Financial Bancorp Inc. 1.739 38.46
GOSB GSB Financial Corp. 0.000 NA
GPT GreenPoint Financial Corp. 1.584 26.47
GRTR Greater New York Savings Bank 0.865 17.86
HAVN Haven Bancorp Inc. 1.534 29.7
JSB JSB Financial Inc. 2.959 48.69
LISB Long Island Bancorp Inc. 1.356 37.67
MBB MSB Bancorp Inc. 2.533 153.85
NYB New York Bancorp Inc. 1.928 25.54
PBHC Oswego City Savings Bk (MHC) 1.436 26.83
PEEK Peekskill Financial Corp. 2.198 64.29
PKPS Poughkeepsie Financial Corp. 1.270 45.45
PSBK Progressive Bank Inc. 2.076 26.61
QCSB Queens County Bancorp Inc. 1.848 33.82
RCSB RCSB Financial Inc. 1.165 22.89
RELY Reliance Bancorp Inc. 2.000 49.59
ROSE TR Financial Corp. 2.222 23.5
RSLN Roslyn Bancorp Inc. 1.055 NA
SBFL SB of the Finger Lakes (MHC) 1.600 266.67
SFED SFS Bancorp Inc. 1.418 39.06
SKAN Skaneateles Bancorp Inc. 1.720 20.45
TPNZ Tappan Zee Financial Inc. 1.612 33.33
YFCB Yonkers Financial Corporation 1.208 25.64
Count 33 30
</TABLE>
Page 9 of 10
<PAGE> 138
Exhibit 6
Market Multiples
Pricing Data as of September 8, 1997
<TABLE>
<CAPTION>
--------------------------------------------------------------
Current Price in Relation to
Current Current --------------------------------------------------------------
Stock Market Tangible
Price Value Earnings LTM EPS Book Value Book Value Assets
Ticker Short Name ($) ($M) (x) (x) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Comparable Group
CATB Catskill Financial Corp. 16.250 79.60 19.35 19.82 107.76 107.760 26.98
CEBK Central Co-operative Bank 20.750 40.77 16.73 14.21 119.25 133.270 11.84
FBER 1st Bergen Bancorp 18.500 55.51 22.02 44.05 137.34 137.340 19.49
FIBC Financial Bancorp Inc. 23.000 39.61 14.38 25.27 149.84 150.620 14.02
FKFS First Keystone Financial 28.500 34.99 11.88 19.79 149.29 149.290 10.91
FSBI Fidelity Bancorp Inc. 22.000 34.10 13.41 20.75 138.98 138.980 9.39
LFBI Little Falls Bancorp Inc. 16.875 44.01 23.44 54.44 116.30 125.930 15.44
LSBX Lawrence Savings Bank 11.938 51.14 9.33 8.78 160.24 160.240 13.93
PBCI Pamrapo Bancorp Inc. 21.500 61.12 12.22 19.72 129.36 130.380 16.48
PHFC Pittsburgh Home Financial Corp 18.938 37.30 15.78 26.3 133.27 134.790 14.55
WVFC WVS Financial Corp. 27.875 48.71 13.94 16.49 148.11 148.110 16.53
11 11 11 11 11 11
Comparable Average 47.90 15.68 24.51 135.43 137.88 15.41
Comparable Median 44.01 14.38 19.82 137.34 137.34 14.55
All Public Average 217.44 18.99 29.59 154.36 160.81 17.84
All Public Median 54.77 16.25 23.05 142.29 145.44 15.50
New York Average 393.46 20.69 31.29 160.15 174.96 17.11
New York Median 112.16 19.35 23.78 149.84 156.79 14.24
</TABLE>
<TABLE>
<CAPTION>
Current LTM
Dividend Dividend
Yield Payout Ratio
Ticker Short Name (%) (%)
- -------------------------------------------------------------------
<S> <C> <C> <C>
Comparable Group
CATB Catskill Financial Corp. 1.723 17.07
CEBK Central Co-operative Bank 1.542 16.44
FBER 1st Bergen Bancorp 1.081 28.57
FIBC Financial Bancorp Inc. 1.739 38.46
FKFS First Keystone Financial 0.702 10.42
FSBI Fidelity Bancorp Inc. 1.636 29.92
LFBI Little Falls Bancorp Inc. 1.185 25.81
LSBX Lawrence Savings Bank 0.000 0
PBCI Pamrapo Bancorp Inc. 4.651 87.16
PHFC Pittsburgh Home Financial Corp 1.267 38.89
WVFC WVS Financial Corp. 2.870 177.51
11 11
Comparable Average 1.67 42.75
Comparable Median 1.54 28.57
All Public Average 1.98 65.77
All Public Median 1.68 35.34
New York Average 1.60 45.07
New York Median 1.56 27.01
</TABLE>
Page 10 of 10
<PAGE> 139
Exhibit 7
Standard Conversions - 1996 to Date
Selected Market Data
Market Data as of 9/08/97
<TABLE>
<CAPTION>
Pro-Forma
Gross Conversion Total
IPO Price Proceeds Assets Equity
Ticker Short Name IPO Date ($) ($000) ($000) ($000)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FSPT FirstSpartan Financial Corp. 07/09/97 20.000 88,608 375,526 121,408
GOSB GSB Financial Corp. 07/09/97 10.000 22,483 96,323 30,613
FBNW FirstBank Corp. 07/02/97 10.000 19,838 133,194 27,578
CFBC Community First Banking Co. 07/01/97 20.000 48,271 352,532 66,357
-----------------------------------------------------------------------------------------------------------
Q3 '97 Average
Median
-----------------------------------------------------------------------------------------------------------
HCBB HCB Bancshares Inc. 05/07/97 10.000 26,450 171,241 36,760
PSFC Peoples-Sidney Financial Corp. 04/28/97 10.000 17,854 86,882 25,061
HMLK Hemlock Federal Financial Corp 04/02/97 10.000 20,763 146,595 28,989
GSLA GS Financial Corp. 04/01/97 10.000 34,385 86,521 53,934
-----------------------------------------------------------------------------------------------------------
Q2 '97 Average
Median
-----------------------------------------------------------------------------------------------------------
MRKF Market Financial Corp. 03/27/97 10.000 13,357 45,547 18,795
EFBC Empire Federal Bancorp Inc. 01/27/97 10.000 25,921 86,810 38,067
FAB FirstFed America Bancorp Inc. 01/15/97 10.000 87,126 723,778 120,969
RSLN Roslyn Bancorp Inc. 01/13/97 10.000 423,714 1,596,744 588,624
AFBC Advance Financial Bancorp 01/02/97 10.000 10,845 91,852 15,256
-----------------------------------------------------------------------------------------------------------
Q1 '97 Average
Median
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
1997 YTD Average
Median
-----------------------------------------------------------------------------------------------------------
HCFC Home City Financial Corp. 12/30/96 10.000 9,522 55,728 13,373
CENB Century Bancorp Inc. 12/23/96 50.000 20,367 81,304 28,246
SCBS Southern Community Bancshares 12/23/96 10.000 11,374 64,381 15,290
BFFC Big Foot Financial Corp. 12/20/96 10.000 25,128 194,624 34,576
RIVR River Valley Bancorp 12/20/96 10.000 11,903 86,604 16,314
PSFI PS Financial Inc. 11/27/96 10.000 21,821 53,520 30,338
CFNC Carolina Fincorp Inc. 11/25/96 10.000 18,515 94,110 24,052
DCBI Delphos Citizens Bancorp Inc. 11/21/96 10.000 20,387 88,022 28,226
FTNB Fulton Bancorp Inc. 10/18/96 10.000 17,193 85,496 23,705
SSFC South Street Financial Corp. 10/03/96 10.000 44,965 166,978 58,917
AFED AFSALA Bancorp Inc. 10/01/96 10.000 14,548 133,046 20,281
-----------------------------------------------------------------------------------------------------------
Q4 '96 Average
Median
-----------------------------------------------------------------------------------------------------------
CBES CBES Bancorp Inc. 09/30/96 10.000 10,250 86,168 16,788
WEHO Westwood Homestead Fin. Corp. 09/30/96 10.000 28,434 96,638 38,512
HBEI Home Bancorp of Elgin Inc. 09/27/96 10.000 70,093 304,520 96,498
PFFC Peoples Financial Corp. 09/13/96 10.000 14,910 78,078 23,187
PFED Park Bancorp Inc. 08/12/96 10.000 27,014 158,939 40,524
ANA Acadiana Bancshares Inc. 07/16/96 12.000 32,775 225,248 45,564
PWBK Pennwood Bancorp Inc. 07/15/96 10.000 6,101 41,592 9,034
MBSP Mitchell Bancorp Inc. 07/12/96 10.000 9,799 28,222 13,991
OCFC Ocean Financial Corp. 07/03/96 20.000 167,762 1,036,445 235,685
HWEN Home Financial Bancorp 07/02/96 10.000 5,059 33,462 7,436
EGLB Eagle BancGroup Inc. 07/01/96 10.000 13,027 150,974 22,288
FLKY First Lancaster Bancshares 07/01/96 10.000 9,588 35,361 12,840
-----------------------------------------------------------------------------------------------------------
Q3 '96 Average
Median
-----------------------------------------------------------------------------------------------------------
PROV Provident Financial Holdings 06/28/96 10.000 51,252 570,691 82,149
PRBC Prestige Bancorp Inc. 06/27/96 10.000 9,630 91,841 15,172
WYNE Wayne Bancorp Inc. 06/27/96 10.000 22,314 207,997 35,926
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------- -------------------------------
Price to Pro-Forma Percent Change from IPO
-------------------------------------------------------- -------------------------------
Pro-Forma Pro-Forma Pro-Forma Adjusted After After After After
Book Value Tang. Book Earnings Assets 1 Day 1 Week 1 Month 3 Months
(%) (%) (x) (%) (%) (%) (%) (%)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FSPT FirstSpartan Financial Corp. 73.0 73.0 26.0 19.1 83.44% 85.00% 78.13% NA
GOSB GSB Financial Corp. 73.4 73.4 23.2 18.9 46.25% 48.75% 43.75% NA
FBNW FirstBank Corp. 71.9 71.9 19.2 13.0 58.13% 55.63% 77.50% NA
CFBC Community First Banking Co. 72.7 72.7 36.1 12.0 59.38% 65.00% 70.00% NA
---------------------------------------------------------------------------------------------------------------------
Q3 '97 Average 72.8 72.8 26.1 15.8 61.80% 63.60% 67.34% 0.00%
Median 72.9 72.9 24.6 16.0 58.75% 60.32% 73.75% 0.00%
---------------------------------------------------------------------------------------------------------------------
HCBB HCB Bancshares Inc. 72.0 72.0 29.0 13.4 26.25% 27.50% 28.75% 38.75%
PSFC Peoples-Sidney Financial Corp. 71.2 71.2 11.5 17.0 25.63% 28.75% 32.50% 55.00%
HMLK Hemlock Federal Financial Corp 71.6 71.6 37.5 12.4 28.75% 28.75% 30.00% 40.00%
GSLA GS Financial Corp. 63.8 63.8 38.7 28.4 33.75% 37.50% 40.00% 51.25%
---------------------------------------------------------------------------------------------------------------------
Q2 '97 Average 69.7 69.6 29.2 17.8 28.60% 30.63% 32.81% 46.25%
Median 71.4 71.4 33.3 15.2 27.50% 28.75% 31.25% 45.63%
---------------------------------------------------------------------------------------------------------------------
MRKF Market Financial Corp. 71.1 71.1 26.2 22.7 29.38% 22.50% 26.25% 37.50%
EFBC Empire Federal Bancorp Inc. 68.1 68.1 21.5 23.0 32.50% 35.00% 37.50% 31.25%
FAB FirstFed America Bancorp Inc. 72.0 72.0 13.6 10.7 36.25% 41.25% 48.75% 38.75%
RSLN Roslyn Bancorp Inc. 72.0 72.0 9.3 21.0 50.00% 59.38% 60.00% 58.75%
AFBC Advance Financial Bancorp 71.1 71.1 16.8 10.6 28.75% 29.38% 40.00% 40.00%
---------------------------------------------------------------------------------------------------------------------
Q1 '97 Average 70.9 70.9 17.5 17.6 35.38% 37.50% 42.50% 41.25%
Median 71.1 71.1 16.8 21.0 32.50% 35.00% 40.00% 38.75%
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
1997 YTD Average 71.1 71.1 23.7 17.1 41.42% 43.41% 47.16% 43.47%
Median 71.9 71.9 23.2 17.0 33.75% 37.50% 40.00% 40.00%
---------------------------------------------------------------------------------------------------------------------
HCFC Home City Financial Corp. 71.2 71.2 13.7 14.6 NA 25.00% 35.00% 35.00%
CENB Century Bancorp Inc. 72.1 72.1 18.9 20.0 25.25% 32.00% 30.25% 36.00%
SCBS Southern Community Bancshares 74.4 74.4 14.5 15.0 30.00% 37.50% 35.00% 40.00%
BFFC Big Foot Financial Corp. 72.7 72.7 33.1 11.4 23.13% 25.00% 38.75% 41.25%
RIVR River Valley Bancorp 73.0 73.0 15.2 12.1 36.88% 38.75% 50.00% 45.00%
PSFI PS Financial Inc. 71.9 71.9 17.2 29.0 16.41% 16.88% 25.00% 37.50%
CFNC Carolina Fincorp Inc. 77.0 77.0 17.2 16.4 30.00% 30.00% 36.25% 47.50%
DCBI Delphos Citizens Bancorp Inc. 72.2 72.2 14.6 18.8 21.25% 21.25% 20.63% 41.25%
FTNB Fulton Bancorp Inc. 72.5 72.5 14.6 16.7 25.00% 28.75% 47.50% 65.00%
SSFC South Street Financial Corp. 76.3 76.3 26.1 21.2 NA 25.00% 23.75% 41.25%
AFED AFSALA Bancorp Inc. 71.7 71.7 13.7 9.9 13.75% 13.13% 15.63% 20.00%
---------------------------------------------------------------------------------------------------------------------
Q4 '96 Average 73.2 73.2 18.1 16.8 24.63% 26.66% 32.52% 40.89%
Median 72.5 72.5 15.2 16.4 25.00% 25.00% 35.00% 41.25%
---------------------------------------------------------------------------------------------------------------------
CBES CBES Bancorp Inc. 61.1 61.1 13.2 10.6 26.25% 34.38% 32.50% 42.50%
WEHO Westwood Homestead Fin. Corp. 73.8 73.8 NA 22.7 7.50% 6.25% 5.00% 21.25%
HBEI Home Bancorp of Elgin Inc. 72.6 72.6 24.9 18.7 18.13% 25.00% 26.25% 33.75%
PFFC Peoples Financial Corp. 64.3 64.3 28.6 16.0 8.75% 15.00% 27.50% 30.00%
PFED Park Bancorp Inc. 66.7 66.7 26.2 14.5 2.50% 4.38% 5.00% 20.00%
ANA Acadiana Bancshares Inc. 71.9 71.9 NA 12.7 0.00% -2.08% 3.13% 15.63%
PWBK Pennwood Bancorp Inc. 67.5 67.5 14.5 12.8 -5.00% -8.75% -3.75% 11.88%
MBSP Mitchell Bancorp Inc. 70.0 70.0 NA 25.8 NA 6.25% 10.00% 21.25%
OCFC Ocean Financial Corp. 71.2 71.2 13.4 13.9 6.25% 0.63% 5.00% 18.13%
HWEN Home Financial Bancorp 68.0 68.0 11.4 13.1 2.50% -1.25% 5.00% 20.00%
EGLB Eagle BancGroup Inc. 58.4 58.4 100.1 7.9 12.50% 12.50% 11.25% 30.00%
FLKY First Lancaster Bancshares 74.7 74.7 18.5 21.3 35.00% 33.75% 37.50% 38.75%
---------------------------------------------------------------------------------------------------------------------
Q3 '96 Average 68.4 68.4 27.9 15.8 12.71% 14.01% 14.94% 25.26%
Median 69.0 69.0 18.5 14.2 7.50% 6.25% 7.50% 21.25%
---------------------------------------------------------------------------------------------------------------------
PROV Provident Financial Holdings 62.4 62.4 19.9 8.2 9.70% 8.10% 1.25% 23.75%
PRBC Prestige Bancorp Inc. 63.5 63.5 28.8 9.5 3.75% 2.50% -2.50% 22.50%
WYNE Wayne Bancorp Inc. 62.1 62.1 18.9 9.7 11.25% 13.75% 12.50% 36.25%
</TABLE>
<PAGE> 140
EXHIBIT 7
STANDARD CONVERSIONS - 1996 TO DATE
SELECTED MARKET DATA
MARKET DATA AS OF 9/08/97
<TABLE>
<CAPTION>
PRO-FORMA
GROSS CONVERSION TOTAL
IPO PRICE PROCEEDS ASSETS EQUITY
TICKER SHORT NAME IPO DATE ($) ($000) ($000) ($000)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DIME Dime Community Bancorp Inc. 06/26/96 10.000 145,475 665,187 204,706
MECH Mechanics Savings Bank 06/26/96 10.000 52,900 662,482 73,516
CNSB CNS Bancorp Inc. 06/12/96 10.000 16,531 85,390 23,176
LXMO Lexington B&L Financial Corp. 06/06/96 10.000 12,650 49,981 17,802
FFBH First Federal Bancshares of AR 05/03/96 10.000 51,538 454,479 79,239
CBK Citizens First Financial Corp. 05/01/96 10.000 28,175 227,872 37,414
RELI Reliance Bancshares Inc. 04/19/96 8.000 20,499 32,260 27,465
CATB Catskill Financial Corp. 04/18/96 10.000 56,868 230,102 76,844
YFCB Yonkers Financial Corporation 04/18/96 10.000 35,708 208,283 46,227
GSFC Green Street Financial Corp. 04/04/96 10.000 42,981 151,028 58,793
FFDF FFD Financial Corp. 04/03/96 10.000 14,548 58,955 20,239
AMFC AMB Financial Corp. 04/01/96 10.000 11,241 68,851 15,421
FBER 1st Bergen Bancorp 04/01/96 10.000 31,740 223,167 41,156
LONF London Financial Corporation 04/01/96 10.000 5,290 34,152 7,515
PHFC Pittsburgh Home Financial Corp 04/01/96 10.000 21,821 157,570 29,090
SSB Scotland Bancorp Inc 04/01/96 10.000 18,400 57,718 23,853
SSM Stone Street Bancorp Inc. 04/01/96 15.000 27,376 84,996 35,445
WHGB WHG Bancshares Corp. 04/01/96 10.000 16,201 85,027 22,144
--------------------------------------------------------------------------------------------------------------------
Q2 '96 AVERAGE
MEDIAN
--------------------------------------------------------------------------------------------------------------------
CRZY Crazy Woman Creek Bancorp 03/29/96 10.000 10,580 37,510 14,752
PFFB PFF Bancorp Inc. 03/29/96 10.000 198,375 1,899,412 279,603
FCB Falmouth Co-Operative Bank 03/28/96 10.000 14,548 73,735 21,169
CFTP Community Federal Bancorp 03/26/96 10.000 46,288 162,042 63,020
GAF GA Financial Inc. 03/26/96 10.000 89,000 476,259 122,643
BYFC Broadway Financial Corp. 01/09/96 10.000 8,927 102,512 12,768
LFBI Little Falls Bancorp Inc. 01/05/96 10.000 30,418 196,394 41,370
--------------------------------------------------------------------------------------------------------------------
Q1 '96 AVERAGE
MEDIAN
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
1996 YTD AVERAGE
MEDIAN
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
1/1/96 TO AVERAGE
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
9/8/97 MEDIAN
--------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------- ---------------------------------------
PRICE TO PRO-FORMA PERCENT CHANGE FROM IPO
---------------------------------------------- ---------------------------------------
PRO-FORMA PRO-FORMA PRO-FORMA ADJUSTED AFTER AFTER AFTER AFTER
BOOK VALUE TANG. BOOK EARNINGS ASSETS 1 DAY 1 WEEK 1 MONTH 3 MONTHS
TICKER SHORT NAME (%) (%) (X) (%) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DIME Dime Community Bancorp Inc. 71.1 71.1 15.5 17.9 16.87% 20.00% 18.75% 33.75%
MECH Mechanics Savings Bank 72.0 72.0 NA 7.4 15.00% 15.00% 12.50% 45.00%
CNSB CNS Bancorp Inc. 71.3 71.3 24.4 16.2 10.00% 16.25% 15.00% 30.00%
LXMO Lexington B&L Financial Corp. 71.1 71.1 20.8 20.2 -5.00% -2.50% 1.25% 0.63%
FFBH First Federal Bancshares of AR 65.0 65.0 10.5 10.2 30.00% 32.50% 36.90% 36.25%
CBK Citizens First Financial Corp. 75.3 75.3 15.7 11.0 5.00% 0.00% 1.25% -1.25%
RELI Reliance Bancshares Inc. 74.6 74.6 32.3 38.9 4.69% 3.13% -0.75% 3.13%
CATB Catskill Financial Corp. 74.0 74.0 18.6 19.8 3.75% 6.25% 3.75% 0.00%
YFCB Yonkers Financial Corporation 77.2 77.2 15.9 14.6 -2.50% 1.25% -0.60% -2.50%
GSFC Green Street Financial Corp. 73.1 73.1 14.6 22.2 28.75% 22.50% 23.10% 30.60%
FFDF FFD Financial Corp. 71.9 71.9 25.4 19.8 5.00% 5.00% 3.10% 1.25%
AMFC AMB Financial Corp. 72.9 72.9 17.9 14.0 5.00% 5.00% 5.00% 5.00%
FBER 1st Bergen Bancorp 77.1 77.1 21.0 12.5 0.00% -5.00% -3.75% -7.50%
LONF London Financial Corporation 70.4 70.4 24.5 13.4 8.12% 6.25% 1.25% 3.10%
PHFC Pittsburgh Home Financial Corp 75.0 75.0 17.0 12.2 10.00% 10.00% 6.25% 1.90%
SSB Scotland Bancorp Inc 77.1 77.1 16.9 24.2 22.50% 25.00% 17.50% 23.75%
SSM Stone Street Bancorp Inc. 77.2 77.2 19.1 24.4 16.67% 20.00% 18.33% 12.50%
WHGB WHG Bancshares Corp. 73.2 73.2 15.2 16.0 11.25% 10.60% 12.50% 10.00%
------------------------------------------------------------------------------------------------------------------------
Q2 '96 AVERAGE 71.8 71.8 19.6 16.3 11.66% 11.98% 10.74% 18.12%
MEDIAN 72.9 72.9 18.8 14.6 9.70% 8.10% 5.00% 10.00%
------------------------------------------------------------------------------------------------------------------------
CRZY Crazy Woman Creek Bancorp 71.7 71.7 15.8 22.0 NA 7.50% 5.00% 1.25%
PFFB PFF Bancorp Inc. 70.9 70.9 25.0 9.5 13.75% 16.25% 16.25% 11.25%
FCB Falmouth Co-Operative Bank 68.7 68.7 17.6 16.5 7.50% 12.50% 7.50% 3.75%
CFTP Community Federal Bancorp 73.4 73.4 13.6 22.2 26.25% 28.75% 26.25% 33.75%
GAF GA Financial Inc. 72.6 72.6 13.5 15.7 13.75% 15.00% 10.00% 10.00%
BYFC Broadway Financial Corp. 69.9 69.9 13.0 8.0 3.75% 2.50% 2.50% 3.75%
LFBI Little Falls Bancorp Inc. 73.5 73.5 36.4 13.4 13.13% 13.75% 10.00% 8.10%
------------------------------------------------------------------------------------------------------------------------
Q1 '96 AVERAGE 71.5 71.6 19.3 15.3 13.02% 13.75% 11.07% 10.26%
MEDIAN 71.7 71.7 15.8 15.7 13.44% 13.75% 10.00% 8.10%
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
1996 YTD AVERAGE 71.2 71.3 20.8 16.2 14.86% 16.25% 17.00% 24.10%
MEDIAN 72.0 72.0 17.2 15.0 11.25% 13.75% 12.50% 21.25%
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
1/1/96 TO AVERAGE 71.2 71.2 21.4 16.4 21.14% 22.34% 23.65% 27.22%
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
9/8/97 MEDIAN 72.0 71.9 18.2 15.4 15.71% 16.57% 17.92% 30.00%
------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 141
EXHIBIT 7
STANDARD CONVERSIONS - 1996 TO DATE
SELECTED MARKET DATA
MARKET DATA AS OF 9/08/97
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
CURRENT PRICE TO
--------------------------------------------------------------------------
CURRENT
STOCK PRICE BOOK VALUE TANG. BOOK LTM EARNINGS EARNINGS CORE EPS LTM EPS ASSETS
TICKER SHORT NAME 9/8/97 (%) (%) (X) (X) (X) (X) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FSPT FirstSpartan Financial Corp. 35.375 NA NA NA NA NA NA NA
GOSB GSB Financial Corp. 14.500 NA NA NA NA NA NA NA
FBNW FirstBank Corp. 17.375 NA NA NA NA NA NA NA
CFBC Community First Banking Co. 34.375 NA NA NA NA NA NA NA
------------------------------------------------------------------------------------------------------------------------
Q3 '97 AVERAGE - - - - - - -
MEDIAN - - - - - - -
------------------------------------------------------------------------------------------------------------------------
HCBB HCB Bancshares Inc. 13.750 NA NA NA NA NA NA NA
PSFC Peoples-Sidney Financial Corp. 16.250 NA NA NA NA NA NA NA
HMLK Hemlock Federal Financial Corp 15.313 105.1 105.1 NA NA NA NA 19.3
GSLA GS Financial Corp. 16.000 97.8 97.8 NA NA NA NA 44.6
------------------------------------------------------------------------------------------------------------------------
Q2 '97 AVERAGE 101.5 101.5 - - - - 32.0
MEDIAN 101.5 101.5 - - - - 32.0
------------------------------------------------------------------------------------------------------------------------
MRKF Market Financial Corp. 14.188 95.7 95.7 NA 27.3 27.3 NA 33.5
EFBC Empire Federal Bancorp Inc. 15.750 100.6 100.6 NA 23.2 23.2 NA 37.6
FAB FirstFed America Bancorp Inc. 20.250 131.9 131.9 NA 25.3 26.6 NA 17.3
RSLN Roslyn Bancorp Inc. 22.750 156.0 156.8 NA 21.9 22.8 NA 31.4
AFBC Advance Financial Bancorp 15.750 106.8 106.8 NA NA NA NA 16.5
------------------------------------------------------------------------------------------------------------------------
Q1 '97 AVERAGE 118.2 118.4 - 24.4 25.0 - 27.3
MEDIAN 106.8 106.8 - 24.2 24.9 - 31.4
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
1997 YTD AVERAGE 113.4 113.5 - 24.4 25.0 - 28.6
MEDIAN 105.1 105.1 - 24.2 24.9 - 31.4
------------------------------------------------------------------------------------------------------------------------
HCFC Home City Financial Corp. 15.500 96.6 96.6 NA 19.4 18.5 NA 21.6
CENB Century Bancorp Inc. 79.500 108.2 108.2 NA 17.0 16.8 NA 32.4
SCBS Southern Community Bancshares 15.875 120.4 120.4 NA 18.9 18.9 NA 25.7
BFFC Big Foot Financial Corp. 17.750 123.7 123.7 NA 27.7 27.7 NA 21.0
RIVR River Valley Bancorp 16.500 112.9 114.6 NA 13.8 14.2 NA 14.0
PSFI PS Financial Inc. 15.500 105.7 105.7 NA 18.5 18.5 NA 40.9
CFNC Carolina Fincorp Inc. 17.625 128.3 128.3 NA 23.2 23.2 NA 29.3
DCBI Delphos Citizens Bancorp Inc. 17.000 113.9 113.9 NA 17.7 17.7 NA 32.3
FTNB Fulton Bancorp Inc. 21.500 148.6 148.6 NA 38.4 38.4 NA 37.2
SSFC South Street Financial Corp. 18.500 125.9 125.9 NA 25.7 25.7 NA 34.4
AFED AFSALA Bancorp Inc. 16.250 102.1 102.1 NA 17.7 17.7 NA 14.9
------------------------------------------------------------------------------------------------------------------------
Q4 '96 AVERAGE 116.9 117.1 - 21.6 21.6 - 27.6
MEDIAN 113.9 114.6 - 18.9 18.5 - 29.3
------------------------------------------------------------------------------------------------------------------------
CBES CBES Bancorp Inc. 17.750 103.9 103.9 NA 16.4 18.5 NA 19.1
WEHO Westwood Homestead Fin. Corp. 15.500 109.4 109.4 NA 32.3 32.3 NA 32.2
HBEI Home Bancorp of Elgin Inc. 18.000 131.1 131.1 NA 40.9 40.9 NA 35.0
PFFC Peoples Financial Corp. 16.875 106.9 106.9 NA 30.1 30.1 NA 29.1
PFED Park Bancorp Inc. 17.000 104.5 104.5 NA 21.3 25.0 NA 23.5
ANA Acadiana Bancshares Inc. 21.813 128.5 128.5 NA 21.0 21.0 NA 22.3
PWBK Pennwood Bancorp Inc. 16.750 111.3 111.3 NA 24.6 17.5 NA 19.4
MBSP Mitchell Bancorp Inc. 17.125 111.3 111.3 NA 28.5 28.5 NA 48.3
OCFC Ocean Financial Corp. 34.250 125.2 125.2 NA 19.5 20.9 NA 20.4
HWEN Home Financial Bancorp 16.438 107.2 107.2 NA 20.6 27.4 NA 18.2
EGLB Eagle BancGroup Inc. 16.625 99.6 99.6 NA 29.7 41.6 NA 11.8
FLKY First Lancaster Bancshares 15.688 108.6 108.6 NA 24.5 24.5 NA 37.2
------------------------------------------------------------------------------------------------------------------------
Q3 '96 AVERAGE 112.3 112.3 - 25.8 27.3 - 26.4
MEDIAN 109.0 109.0 - 24.6 26.2 - 22.9
------------------------------------------------------------------------------------------------------------------------
PROV Provident Financial Holdings 19.938 114.8 114.8 48.6 20.8 38.3 55.4 15.9
PRBC Prestige Bancorp Inc. 17.000 103.0 103.0 33.3 15.7 15.7 19.5 11.5
WYNE Wayne Bancorp Inc. 24.750 150.6 150.6 46.7 22.9 22.9 22.3 20.1
</TABLE>
<PAGE> 142
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
CURRENT PRICE TO
--------------------------------------------------------------------------
CURRENT
STOCK PRICE BOOK VALUE TANG. BOOK LTM EARNINGS EARNINGS CORE EPS LTM EPS ASSETS
TICKER SHORT NAME 9/8/97 (%) (%) (X) (X) (X) (X) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DIME Dime Community Bancorp Inc. 19.313 132.5 153.8 20.6 23.0 28.4 19.7 19.2
MECH Mechanics Savings Bank 24.125 151.4 151.4 8.6 4.4 4.4 8.6 15.5
CNSB CNS Bancorp Inc. 17.500 117.9 117.9 64.8 31.3 31.3 35.7 29.4
LXMO Lexington B&L Financial Corp. 16.000 108.6 108.6 28.1 18.2 18.2 21.1 30.8
FFBH First Federal Bancshares of AR 21.188 129.5 129.5 24.4 18.3 23.0 18.6 19.4
CBK Citizens First Financial Corp. 18.125 112.3 112.3 64.7 28.3 32.4 33.6 17.3
RELI Reliance Bancshares Inc. 8.500 93.6 93.6 34.0 106.3 212.5 30.4 45.7
CATB Catskill Financial Corp. 16.250 107.8 107.8 19.8 19.4 19.4 20.1 27.0
YFCB Yonkers Financial Corporation 19.875 140.6 140.6 25.5 18.4 18.4 19.3 20.9
GSFC Green Street Financial Corp. 18.625 126.4 126.4 31.6 27.4 27.4 25.9 45.9
FFDF FFD Financial Corp. 14.750 101.7 101.7 NA 26.3 23.1 NA 25.2
AMFC AMB Financial Corp. 14.500 99.2 99.2 21.6 13.4 21.3 21.3 14.8
FBER 1st Bergen Bancorp 18.500 137.3 137.3 44.1 22.0 22.0 26.8 19.5
LONF London Financial Corporation 15.000 102.7 102.7 28.9 22.1 22.1 19.5 20.2
PHFC Pittsburgh Home Financial Corp 18.938 133.3 134.8 26.3 15.8 18.9 20.6 14.6
SSB Scotland Bancorp Inc 19.250 143.1 143.1 33.8 32.1 32.1 27.5 53.0
SSM Stone Street Bancorp Inc. 21.438 132.9 132.9 25.5 38.3 38.3 21.2 38.3
WHGB WHG Bancshares Corp. 15.750 111.2 111.2 45.0 23.2 23.2 27.2 23.0
-----------------------------------------------------------------------------------------------------------------------
Q2 '96 AVERAGE 121.4 122.5 33.8 26.1 33.0 24.7 25.1
MEDIAN 117.9 117.9 30.2 22.1 23.0 21.3 20.2
-----------------------------------------------------------------------------------------------------------------------
CRZY Crazy Woman Creek Bancorp 14.500 98.8 98.8 25.4 19.1 18.1 20.7 25.5
PFFB PFF Bancorp Inc. 19.750 136.1 137.5 85.9 23.5 23.5 31.4 14.1
FCB Falmouth Co-Operative Bank 17.250 112.0 112.0 33.2 35.9 39.2 34.5 26.7
CFTP Community Federal Bancorp 17.250 123.6 123.6 27.4 28.8 28.8 22.7 38.2
GAF GA Financial Inc. 18.375 129.0 130.3 23.0 17.7 17.7 20.7 19.6
BYFC Broadway Financial Corp. 11.000 75.1 75.1 NM 17.2 17.2 26.8 7.5
LFBI Little Falls Bancorp Inc. 16.875 116.3 125.9 54.4 23.4 28.1 31.8 15.4
------------------------------------------------------------------------------------------------------------------------
Q1 '96 AVERAGE 113.0 114.7 41.5 23.7 24.7 26.9 21.0
MEDIAN 116.3 123.6 30.3 23.4 23.5 26.8 19.6
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
1996 YTD AVERAGE 117.2 117.9 35.6 24.7 28.1 25.3 25.4
MEDIAN 112.9 113.9 30.2 22.1 23.1 22.3 22.3
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
1/1/96 TO AVERAGE 116.7 117.4 35.6 24.7 27.8 25.3 25.8
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
9/8/97 MEDIAN 112.2 112.2 30.2 22.9 23.2 22.3 22.6
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 143
May 31, 1997 12 Months Earnings
No Foundation
Exhibit 8
THE WARWICK SAVINGS BANK
PRO-FORMA ANALYSIS SHEET - TWELVE MONTHS ENDED
31-MAY-97
INCLUDES SOP 93-6
Name of Association: THE WARWICK SAVINGS BANK
Date of Letter to Association: 9/21/97
Date of Market Prices: 9/15/97
<TABLE>
<CAPTION>
Comparable All Publicly Recent Standard
Companies State Thrifts Traded Thrifts Conversion Thrifts
Warwick --------- ------------- -------------- ------------------
Symbols Value Mean Median Mean Median Mean Median Mean Median
------- ----- ---- ------ ---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Price-Earnings Ratio P/E
- --------------------
Last Twelve Months N/A
At Minimum of Range 10.87
At Midpoint of Range 12.35 24.51 19.82 31.29 23.78 29.59 23.05 23.70 23.20
At Maximum of Range 13.51
At SuperMaximum of Range 14.93
Price-Book Ratio P/B
- ----------------
Last Twelve Months N/A
At Minimum of Range 67.57%
At Midpoint of Range 72.05% 135.43% 137.34% 160.15% 149.84% 154.36% 142.29% 71.10% 71.90%
At Maximum of Range 75.76%
At SuperMaximum of Range 79.37%
Price-Tangible Book Ratio P/TB
- -------------------------
Last Twelve Months N/A
At Minimum of Range 67.57%
At Midpoint of Range 72.05% 137.88% 137.34% 174.96% 156.79% 160.81% 145.44% 71.10% 71.90%
At Maximum of Range 75.76%
At SuperMaximum of Range 79.37%
Price-Assets Ratio P/A
- ------------------
Last Twelve Months N/A
At Minimum of Range 13.54%
At Midpoint of Range 15.61% 15.41% 14.55% 17.11% 14.24% 17.84% 15.50% 17.10% 17.00%
At Maximum of Range 17.60%
At SuperMaximum of Range 19.79%
</TABLE>
Page 1
<PAGE> 144
<TABLE>
<CAPTION>
Valuation Parameters
- --------------------
<S> <C> <C> <C>
Prior Twelve Mos. Earning Base Y
Period Ended May 31, 1997 $ 2,866 (1)
Pre-Conversion Book Value B
As of May 31, 1997 $ 28,114
Pre-Conversion Assets A
As of May 31, 1997 $ 286,545
Return on Money R 3.47%(2)
Conversion Expenses $ 1,960 300
X 3.81%(3)
Proceeds Not Invested $ 6,180 (4)
Estimated ESOP Borrowings $ 4,120
ESOP Purchases E 8.00%(5)
Cost of ESOP Borrowings $ 412 (5)
Cost of ESOP Borrowings S 0.00%(5)
Amort of ESOP Borrowings T 10 Years
Amort of MRP Amount N 5 Years
Estimated MRP Amount $ 2,060 (6)
MRP Purchases M 4.00%
MRP Expense $ 412
Foundation Amount $ -
Foundation Amount F 0.00%
Tax Rate TAX 40.00%
Percentage Sold PCT 100.00%
Tax Benefit Z $ 0
Earnings Multiplier 1.00
</TABLE>
(1) Net income for the twelve months ended May 31, 1997
(2) Net Return assumes a reinvestment rate of 5.78 percent (the 1 year Treasury
at May 31, 1997), and a tax rate of 40%.
(3) Conversion expenses reflect estimated expenses as presented in the offering
document.
(4) Includes Stock from ESOP and MRP.
(5) Assumes ESOP is amortized straight line over ten years.
(6) Assumes MRP is amortized straight line over five years.
PRO FORMA CALCULATION
Calculation of Estimated Value (V) at Midpoint Value
3. V= P/E*Y = $51,500,000
-----
1-P/E*PCT*((1-X-E-M-F)*R-(1-TAX)*E/T-(1-TAX)*M/N)
2. V= P/B*(B+Z) = $51,500,000
---------
1-P/B*PCT*(1-X-E-M-F)
1. V= P/A*A = $51,500,000
-----
1-P/A*PCT*(1-X-E-M-F)
<TABLE>
<CAPTION>
Full
Total Price per Conversion Exchange Conversion Gross Exchange Exchange
Conclusion Shares Share Value Shares Percent Shares Percent Proceeds Value Ratio
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Appraised Value - Midpoint 5,150 $10 $51,500 0 0.00% 5,150 100.00% $51,500 $0 #DIV/0!
Appraised Value - Minimum 4,378 $10 $43,775 0 0.00% 4,378 100.00% $43,775 $0 #DIV/0!
Appraised Value - Maximum 5,923 $10 $59,225 0 0.00% 5,923 100.00% $59,225 $0 #DIV/0!
Appraised Value - SuperMaximum * 6,811 $10 $68,109 0 0.00% 6,811 100.00% $68,109 $0 #DIV/0!
</TABLE>
* SuperMaximum is an overallotment option that is 15% above the maximum amount.
Page 2
<PAGE> 145
<TABLE>
<CAPTION>
PROFORMA EFFECT OF CONVERSION PROCEEDS
AS OF MAY 31, 1997
(DOLLARS IN THOUSANDS)
-----------------------------------------------------------------------
Minimum Midpoint Maximum SuperMax
- ----------------------------------------- -----------------------------------------------------------------------
Conversion Proceeds
- -----------------------------------------
<S> <C> <C> <C> <C>
Total Shares Offered 4,378 5,150 5,923 6,811
Conversion Shares Offered 4,378 5,150 5,923 6,811
Price Per Share $ 10 $ 10 $ 10 $ 10
-----------------------------------------------------------------------
Gross Proceeds $ 43,775 $ 51,500 $ 59,225 $ 68,109
Less: Est. Conversion Expenses $ 1,827 $ 1,960 $ 2,094 $ 2,247
-----------------------------------------------------------------------
Net Proceeds $ 41,948 $ 49,540 $ 57,131 $ 65,862
- -----------------------------------------
Estimated Income from Proceeds
- -----------------------------------------
Net Conversion Proceeds $ 41,948 $ 49,540 $ 57,131 $ 65,862
Less: ESOP Adjustment (3) $3,502 $ 4,120 $ 4,738 $ 5,449
Less: MRP Adjustment (3) $1,751 $ 2,060 $ 2,369 $ 2,724
-----------------------------------------------------------------------
Net Proceeds Reinvested $ 36,695 $ 43,360 $ 50,024 $ 57,689
Estimated Incremental Rate of Return 3.47% 3.47% 3.47% 3.47%
-----------------------------------------------------------------------
Estimated Incremental Return $ 1,273 $ 1,505 $ 1,736 $ 2,002
Less: Cost of ESOP (4) $ 0 $ 0 $ 0 $ 0
Less: Amortization of ESOP (7) $ 210 $ 247 $ 284 $ 327
Less: MRP Adjustment (7) $ 210 $ 247 $ 284 $ 327
-----------------------------------------------------------------------
Pro-forma Net Income $ 853 $ 1,011 $ 1,168 $ 1,348
Earnings Before Conversion $ 2,866 $ 2,866 $ 2,866 $ 2,866
-----------------------------------------------------------------------
Earnings Excluding Adjustment $ 3,719 $ 3,877 $ 4,034 $ 4,214
Earnings Adjustment (6) $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------
Earnings After Conversion $ 3,719 $ 3,877 $ 4,034 $ 4,214
- -----------------------------------------
Pro-forma Net Worth
- -----------------------------------------
Net Worth at May 31, 1997 $ 28,114 $ 28,114 $ 28,114 $ 28,114
Net Conversion Proceeds 41,948 49,540 57,131 65,862
Plus: MHC Adjustment (7) 0 0 0 0
Less: ESOP Adjustment (1) (3,502) (4,120) (4,738) (5,449)
Less: MRP Adjustment (2) (1,751) (2,060) (2,369) (2,724)
-----------------------------------------------------------------------
Pro-forma Net Worth $ 64,809 $ 71,474 $ 78,138 $ 85,803
- -----------------------------------------
Pro-forma Tangible Net Worth
- -----------------------------------------
Pro-forma Net Worth $ 64,809 $ 71,474 $ 78,138 $ 85,803
Less: Intangible (5) $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------
Pro-forma Tangible Net Worth $ 64,809 $ 71,474 $ 78,138 $ 85,803
- -----------------------------------------
Pro-forma Assets
- -----------------------------------------
Total Assets at May 31, 1997 $286,545 $286,545 $286,545 $286,545
Net Conversion Proceeds $ 41,948 $ 49,540 $ 57,131 $ 65,862
Plus: MHC Adjustment (7) 0 0 0 0
Less: ESOP Adjustment (1) (3,502) (4,120) (4,738) (5,449)
Less: MRP Adjustment (2) (1,751) (2,060) (2,369) (2,724)
-----------------------------------------------------------------------
Pro-forma Assets Excluding Adjustment 323,240 329,905 336,569 344,234
Plus: Adjustment (6) 0 0 0 0
-----------------------------------------------------------------------
Pro-forma Total Assets $323,240 $329,905 $336,569 $344,234
- -----------------------------------------
Stockholder's Equity Per Share
- -----------------------------------------
Net Worth at May 31, 1997 $ 6.42 $ 5.46 $ 4.75 $ 4.13
Estimated Net Proceeds $ 9.58 $ 9.62 $ 9.65 $ 9.67
Plus: MHC Adjustment $ 0.00 $ 0.00 $ 0.00 $ 0.00
Less: ESOP Stock ($ 0.80) ($ 0.80) ($ 0.80) ($ 0.80)
Less: MRP Stock ($ 0.40) ($ 0.40) ($ 0.40) ($ 0.40)
-------- -------- -------- --------
Pro-forma Net Worth Per Share $ 14.80 $ 13.88 $ 13.20 $ 12.60
Less: Intangible $ 0.00 $ 0.00 $ 0.00 $ 0.00
-------- -------- -------- --------
Pro-forma Tangible Net Worth Per Share $ 14.80 $ 13.88 $ 13.20 $ 12.60
- -----------------------------------------
Net Earnings Per Share
- -----------------------------------------
Historical Earnings Per Share (8) $ 0.71 $ 0.60 $ 0.52 $ 0.45
Incremental return Per Share (8) $ 0.31 $ 0.31 $ 0.32 $ 0.32
ESOP Adjustment Per Share (8) ($ 0.05) ($ 0.05) ($ 0.05) ($ 0.05)
MRP Adjustment Per Share (8) ($ 0.05) ($ 0.05) ($ 0.05) ($ 0.05)
Normalizing Adjustment Per Share $ 0.00 $ 0.00 $ 0.00 $ 0.00
-------- -------- -------- --------
Proforma Earnings Per Share (8) $ 0.92 $ 0.81 $ 0.74 $ 0.67
- -----------------------------------------
Shares Utilized
- -----------------------------------------
Shares Utilized 4,063 4,779 5,496 6,320
- -----------------------------------------
Pro-forma Ratios
- -----------------------------------------
Price/EPS without Adjustment 10.87 12.35 13.51 14.93
Price/EPS with Adjustment 10.87 12.35 13.51 14.93
Price/Book Value per Share 67.57% 72.05% 75.76% 79.37%
Price/Tangible Book Value 67.57% 72.05% 75.76% 79.37%
Market Value/Assets 13.54% 15.61% 17.60% 19.79%
-----------------------------------------------------------------------
</TABLE>
(1) ESOP Borrowings are deducted from net worth and assets, and amortized over
10 years.
(2) MRP Borrowings are omitted from net worth and assets, and amortized over 5
years.
(3) Consists of ESOP and MRP amortization.
(4),(5) Not applicable.
(6) Not applicable.
(7) ESOP and MRP are amortized over 10 and 5 years respectively, and tax
impacted at 40%. (8) All EPS computations are done in accordance with SOP
93-6.
Page 3
<PAGE> 146
<TABLE>
<S> <C> <C> <C> <C>
Total Shares Offered 4,378 5,150 5,923 6,811
Price Per Share $ 10 $ 10 $ 10 $ 10
----------------------------------------------------------------------
Gross Proceeds 43,775 51,500 59,225 68,109
Estimated Insider Purchases -1,500 -1,500 -1,500 -1,500
ESOP Purchases -3,502 -4,120 -4,738 -5,449
----------------------------------------------------------------------
Proceeds to Base Fee On 38,773 45,880 52,987 61,160
Underwriters Percentage 1.88% 1.88% 1.88% 1.88%
----------------------------------------------------------------------
Underwriters Fee 727 860 994 1,147
Advisory Fee 0 0 0 0
----------------------------------------------------------------------
Total Underwriters Fee 727 860 994 1,147
All Other Expenses 1,100 1,100 1,100 1,100
----------------------------------------------------------------------
Total Expense 1,827 1,960 2,094 2,247
Shares Outstanding 4,378 5,150 5,923 6,811
Less: New ESOP Adjustment 350 412 474 545
Less: Old ESOP Adjustment (1) 0 0 0 0
Plus: New SOP 93-6 ESOP Shares (2) 35 41 47 54
Plus: Old SOP 93-6 ESOP Shares (2) 0 0 0 0
-- -- -- --
Shares for all EPS Calculations 4,063 4,779 5,496 6,320
</TABLE>
<TABLE>
<S> <C>
Dilution of Stock Options 10.78%
Dilution of MRP 4.31%
</TABLE>
Page 4
<PAGE> 147
May 31, 1997 12 Months Earnings
With Foundation
EXHIBIT 9
THE WARWICK SAVINGS BANK
PRO-FORMA ANALYSIS SHEET WITH FOUNDATION
INCLUDES SOP 93-6
Name of Association: THE WARWICK SAVINGS BANK
Date of Letter to Association: 9/21/97
Date of Market Prices: 9/15/97
<TABLE>
<CAPTION>
Comparable All Publicly Recent Standard
Companies State Thrifts Traded Thrifts Conversion Thrifts
Warwick --------- ------------- -------------- ------------------
Symbols Value Mean Median Mean Median Mean Median Mean Median
------- ----- ---- ------ ---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Price-Earnings Ratio P/E
- --------------------
Last Twelve Months N/A
At Minimum of Range 10.75
At Midpoint of Range 12.20 24.51 19.82 31.29 23.78 29.59 23.05 23.70 23.20
At Maximum of Range 13.51
At SuperMaximum of Range 14.71
Price-Book Ratio P/B
- ----------------
Last Twelve Months N/A
At Minimum of Range 67.43%
At Midpoint of Range 72.05% 135.43% 137.34% 160.15% 149.84% 154.36% 142.29% 71.10% 71.90%
At Maximum of Range 75.93%
At SuperMaximum of Range 79.62%
Price-Tangible Book Ratio P/TB
- -------------------------
Last Twelve Months N/A
At Minimum of Range 67.43%
At Midpoint of Range 72.05% 137.88% 137.34% 174.96% 156.79% 160.81% 145.44% 71.10% 71.90%
At Maximum of Range 75.93%
At SuperMaximum of Range 79.62%
Price-Assets Ratio P/A
- ------------------
Last Twelve Months N/A
At Minimum of Range 13.21%
At Midpoint of Range 15.23% 15.41% 14.55% 17.11% 14.24% 17.84% 15.50% 17.10% 17.00%
At Maximum of Range 17.19%
At SuperMaximum of Range 19.34%
</TABLE>
Page 1
<PAGE> 148
<TABLE>
<CAPTION>
Valuation Parameters
- --------------------
<S> <C> <C>
Twelve Mos. Earning Base Y
Period Ended May 31, 1997 $ 2,866 (1)
Pre-Conversion Book Value B
As of May 31, 1997 $ 28,114
Pre-Conversion Assets A
As of May 31, 1997 $286,545
Return on Money R 3.47%(2)
Conversion Expenses $ 1,906
X 3.93%(3)
Proceeds Not Invested $ 5,994 (4)
Estimated ESOP Borrowings $ 3,996
ESOP Purchases E 8.24%
Cost of ESOP Borrowings $ 400 (5)
Cost of ESOP Borrowings S 0.00%
Amort of ESOP Borrowings T 10 Years
Amort of MRP Amount N 5 Years
Estimated MRP Amount $ 1,998 (6)
MRP Purchases M 4.12%
MRP Expense $ 400
Foundation Amount $ 1,455 (7)
Foundation Amount F 3.00% 3.00%
Foundation Opportunity Cost $ 50
Tax Benefit Z $ 582 (8)
Tax Rate TAX 40.00%
Percentage Sold PCT 100.00%
Amount to be Issued to Public $ 48,500 (9)
Earnings Multiplier 1.00
</TABLE>
(1) The expenses of the Foundation are not considered.
(2) Net Return assumes a reinvestment rate of 5.78 percent (the 1 year Treasury
at May 31, 1997), and a tax rate of 40%.
(3) Conversion expenses reflect estimated expenses as presented in the offering
document.
(4) Includes Stock from ESOP and MRP
(5) Assumes ESOP is amortized straight line over ten years.
(6) Assumes MRP is amortized straight line over five years.
(7) The Foundation is assumed to be 3.0% of the gross proceeds.
(8) The after-tax benefit of the Foundation is assumed to be 40% of Foundation.
(9) The amount to be offered to public.
Page 2
<PAGE> 149
PRO FORMA CALCULATION
Calculation of Estimated Value (V) at Midpoint Value
3. V= P/E*Y = $48,500
-----
1-P/E*PCT*((1-X-E-M-F)*R-(1-TAX)*E/T-(1-TAX)*M/N)
2. V= P/B*(B+Z) = $48,500
1-P/B*PCT*(1-X-E-M-F)
1. V= P/A*A $48,500
-----
1-P/A*PCT*(1-X-E-M-F)
<TABLE>
<CAPTION>
PRE-FOUNDATION
- ---------------------------------------------------------------------------------------------------------------------
Implied
Total Price per Total Exchange Conversion Exchange Gross Exchange
Conclusion Shares Share Value Shares Shares Ratio Proceeds Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Appraised Value - Midpoint 4,850 $10 $48,500 - 4,850 #DIV/0! $48,500 $0
Appraised Value - Minimum 4,123 $10 $41,225 - 4,123 #DIV/0! $41,225 $0
Appraised Value - Maximum 5,578 $10 $55,775 - 5,578 #DIV/0! $55,775 $0
Appraised Value - Superrange 6,414 $10 $64,141 - 6,414 #DIV/0! $64,141 $0
</TABLE>
Page 3
<PAGE> 150
<TABLE>
<CAPTION>
PROFORMA EFFECT OF CONVERSION PROCEEDS
AS OF MAY 31, 1997
(DOLLARS IN THOUSANDS)
---------------------------------------------------------
MINIMUM MIDPOINT MAXIMUM SUPERMAX
---------------------------------------------------------
<S> <C> <C> <C> <C>
Conversion Proceeds
- -------------------
Total Shares Offered 4,123 4,850 5,578 6,414
Conversions Shares Offered 4,123 4,850 5,578 6,414
Price Per Share $10 $10 $10 $10
---------------------------------------------------------
Gross Proceeds $ 41,225 $ 48,500 $ 55,775 $ 64,141
Plus: Value issued to Foundation (9) 1,237 1,455 1,673 1,924
---------------------------------------------------------
Pro Forma Market Capitalization $ 42,462 $ 49,955 $ 57,448 $ 66,065
=========================================================
Gross Proceeds $ 41,225 $ 48,500 $ 55,775 $ 64,141
Less: Est. Conversion Expenses $ 1,781 $ 1,906 $ 2,031 $ 2,175
---------------------------------------------------------
Net Cash Proceeds $ 39,444 $ 46,594 $ 53,744 $ 61,966
=========================================================
Net Cash Proceeds $ 39,444 $ 46,594 $ 53,744 $ 61,966
Less: ESOP Adjustment (3) $ 3,397 $ 3,996 $ 4,596 $ 15,285
Less: MRP Adjustment (3) $ 1,698 $ 1,996 $ 2,298 $ 2,643
---------------------------------------------------------
Net Proceeds Reinvested $ 34,349 $ 40,600 $ 46,850 $ 54,038
=========================================================
Earnings Before Conversion $ 2,866 $ 2,866 $ 2,866 $ 2,866
Estimated Incremental Return $ 1,191 $ 1,408 $ 1,625 $ 1,874
Less: Cost of ESOP (4) $ 0 $ 0 $ 0 $ 0
Less: Amortization of ESOP (7) $ 204 $ 240 $ 276 $ 317
Less: MRP Adjustment (8) $ 204 $ 240 $ 276 $ 317
---------------------------------------------------------
Pro-forma Incremental Net Income $ 783 $ 928 $ 1,073 $ 1,240
---------------------------------------------------------
Pro Forma Earnings Excluding Adjustment $ 3,649 $ 3,794 $ 3,939 $ 4,106
Earnings Adjustment $ 0 $ 0 $ 0 $ 0
---------------------------------------------------------
Earnings After Conversion $ 3,649 $ 3,794 $ 3,939 $ 4,106
Pro-forma Net Worth
- -------------------
Net Worth at May 31, 1997 $ 28,114 $ 28,114 $ 28,114 $ 28,114
Net Conversion Proceeds $ 39,444 $ 46,594 $ 53,744 $ 61,966
Plus: MHC Adjustment $ 0 $ 0 $ 0 $ 0
Plus: After tax Foundation Contribution $ 495 $ 582 $ 669 $ 770
Less: ESOP Adjustment (1) (3,397) (3,996) (4,596) (5,285)
Less: MRP Adjustment (2) (1,698) (1,998) (2,298) (2,643)
---------------------------------------------------------
Pro-forma Net Worth $ 62,958 $ 69,296 $ 75,633 $ 82,922
Pro-forma Tangible Net Worth
- ----------------------------
Pro-forma Net Worth $ 62,958 $ 69,296 $ 75,633 $ 82,922
Less: Intangible (5) $ 0 $ 0 $ 0 $ 0
---------------------------------------------------------
Pro-forma Tangible Net Worth $ 62,958 $ 69,296 $ 75,633 $ 82,922
Pro-forma Assets
- ----------------
Total Assets at May 31, 1997 $286,545 $286,545 $286,545 $286,545
Net Conversion Proceeds $ 39,444 $ 46,594 $ 53,744 $ 61,966
Plus: MHC Adjustment $ 0 $ 0 $ 0 $ 0
Plus: Tax Benefit of Foundation $ 495 $ 582 $ 669 $ 770
Less: ESOP Adjustment (1) (3,397) (3,996) (4,596) (5,285)
Less: MRP Adjustment (2) (1,698) (1,998) (2,298) (2,643)
---------------------------------------------------------
Pro-forma Assets Excluding Adjustment 321,389 327,727 334,064 341,353
Plus: Adjustment 0 0 0 0
---------------------------------------------------------
Pro-forma Total Assets $321,389 $327,727 $334,064 $341,353
Pre Share Data
- --------------
Net Worth at May 31, 1997 $ 6.62 $ 5.63 $ 4.89 $ 4.26
Estimated Net Proceeds $ 9.29 $ 9.33 $ 9.36 $ 9.38
Plus: MHC Adjustment $ 0.00 $ 0.00 $ 0.00 $ 0.00
Plus: Foundation Contribution $ 0.12 $ 0.12 $ 0.12 $ 0.12
Less: ESOP Stock $ (0.80) $ (0,80) $ (0.80) $ (0.80)
Less: MRP Stock $ (0.40) $ (0.40) $ (0.40) $ (0.40)
---------------------------------------------------------
Pro-forma Net Worth Per Share $ 14.83 $ 13.88 $ 13.17 $ 12.56
Less: Intangible $ 0.00 $ 0.00 $ 0.00 $ 0.00
---------------------------------------------------------
Pro-forma Tangible Net Worth Per Share $ 14.83 $ 13.88 $ 13.17 $ 12.56
Historical Earnings Per Share (8) $ 0.73 $ 0.62 $ 0.54 $ 0.47
Incremental return Per Share (8) $ 0.30 $ 0.30 $ 0.30 $ 0.31
ESOP Adjustment Per Share (8) $ (0.05) $ (0.05) $ (0.05) $ (0.05)
MRP Adjustment Per Share (8) $ (0.05) $ (0.05) $ (0.05) $ (0.05)
Earnings Adjustment (8) $ 0.00 $ 0.00 $ 0.00 $ 0.00
---------------------------------------------------------
Proforma Earnings Per Share (8) $ 0.93 $ 0.82 $ 0.74 $ 0.68
Shares Utilized 3,940 4,636 5,331 6,131
Pro-forma Ratios
- ----------------
Price/EPS without Adjustment 10.75 12.20 13.51 14.71
Price/EPS with Adjustment 10.75 12.20 13.51 14.71
Price/Book Value per Share 67.43% 72.05% 75.93% 79.62%
Price/Tangible Book Value 67.43% 72.05% 75.93% 79.62%
Market Value/Assets 13.21% 15.23% 17.19% 19.34%
---------------------------------------------------------
</TABLE>
(1) ESOP Borrowings are deducted from net worth and assets, and amortized over
10 years.
(2) MRP Borrowings are omitted from net worth and assets, and amortized over
5 years.
(3) Consists of ESOP and MRP amortization.
(4) The ESOP loan is from Holding Company and therefore, there are no costs.
(5) Not applicable
(6) Not applicable
(7) ESOP and MRP are amortized over 10 and 5 years respectively, and tax
impacted at 40%.
(8) All EPS computations are done in accordance with SOP 93-6.
(9) The Foundation is assumed to be 3.0% of Gross Proceeds.
<PAGE> 151
<TABLE>
<S> <C> <C> <C> <C>
Total Shares Offered 4,123 4,850 5,578 6,414
Price Per Share 10 10 10 10
-----------------------------------------------------------------------------
Gross Proceeds 41,225 48,500 55,775 64,141
Estimated Insider Purchases -1,500 -1,500 -1,500 -1,500
ESOP Purchases -3,397 -3,996 -4,596 -5,285
-----------------------------------------------------------------------------
Proceeds to Base Fee On 36,328 43,004 49,679 57,356
Underwriters Percentage 1.88% 1.88% 1.88% 1.88%
-----------------------------------------------------------------------------
Underwriters Fee 681 806 931 1,075
Advisory Fee 0 0 0 0
-----------------------------------------------------------------------------
Total Underwriters Fee 681 806 931 1,075
All Other Expenses 1,100 1,100 1,100 1,100
-----------------------------------------------------------------------------
Total Expense 1,781 1,906 2,031 2,175
Shares Outstanding 4,246 4,996 5,745 6,607
Less: New ESOP Adjustment 340 400 460 529
Less: Old ESOP Adjustment 0 0 0 0
Plus: New SOP 93-6 ESOP Shares 34 40 46 53
Plus: Old SOP 93-6 ESOP Shares 0 0 0 0
-- -- -- --
Shares for all EPS Calculations 3,940 4,636 5,331 6,131
</TABLE>
Dilution of Stock Options 10.78%
Dilution of RRP 4.31%
Page 5
<PAGE> 152
<TABLE>
<CAPTION>
POST FOUNDATION
- --------------------------------------------------------------------------------------------------------------------------------
SHARES SHARES ISSUED IMPLIED
ISSUED AND PRICE PER TO TOTAL EXCHANGE CONVERSION EXCHANGE GROSS EXCHANGE
EXCHANGED SHARE FOUNDATION SHARES SHARES SHARES RATIO PROCEEDS VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Minimum 4,123 $10 124 4,246 - 4,123 #DIV/0! $41,225 $0
Midpoint 4,850 $10 146 4,996 - 4,850 #DIV/0! $48,500 $0
Maximum 5,578 $10 167 5,745 - 5,578 #DIV/0! $55,775 $0
Supermaximum 6,414 $10 192 6,607 - 6,414 #DIV/0! $64,141 $0
</TABLE>
Page 6
<PAGE> 153
EXHIBIT 10
[FINPRO LOGO]
ABOUT THE FIRM
FinPro, Inc. was established in 1988 as a full service management consulting
firm specializing in providing advisory services to the Financial Institutions
Industry. FinPro provides management advisory services for Banks, Thrifts,
Finance Companies and NonBank Banks. Additionally, FinPro has performed work for
the Federal Bankruptcy Court, Federal Deposit Insurance Corporation, Office of
Thrift Supervision and the Resolution Trust Corporation. FinPro is recognized as
an expert in banking and in loan analysis by the Federal Bankruptcy Court.
FinPro is independently owned, not associated or affiliated with any transaction
oriented firm. This provides FinPro with an unbiased platform from which to make
analytical recommendations. FinPro believes that a client deserves to be told
all of the alternatives, along with their associated benefits and downsides and
that a decision should be made on its merits. This uniquely positions FinPro as
an objective third party willing to suggest the unpopular strategies, unlike its
competitors who rely on a transaction to get paid.
FinPro is headquartered in Liberty Corner, New Jersey and has a branch office in
Buffalo, New York. FinPro focuses geographically on the Mid-Atlantic region, but
has performed work in all other regions across the nation.
FinPro principals are frequent speakers and presenters at financial institution
trade association functions. In addition, FinPro designed the STATISTICAL REPORT
ANALYSIS currently produced quarterly by the New Jersey Savings League for its
members. FinPro also hosts a tri-annual President's Breakfast for Presidents of
New Jersey Community Banks.
FinPro maintains a library of databases encompassing bank and thrift capital
markets data, census data, branch deposit data, national peer data, market
research data along with many other related topics. As such, FinPro can provide
quick, current and precise analytical assessments based on timely data. In
addition, FinPro's geographic mapping capabilities give it a unique capability
to thematically illustrate multiple issues and to provide targeted marketing
opportunities to its clients.
<PAGE> 154
About the Firm Page 2
- -------------------------------------------------------------------------------
FinPro has also designed and built PC-based software programs to utilize as
tools in its work.
Examples include:
- A proprietary software program (LaRS (R)) to perform loan review
analytics.
- A duration based asset/liability model.
- A five year strategic planning, three year business planning, and one
year budgetary model that completely simulates an entire institution.
- A branch and product profitability model.
- A market performance grid and branch improvement grid model.
Using systems such as these, FinPro provides state-of-the-art end products in
all of its product and service areas.
<PAGE> 155
- ----------------------
KEY PLAYER BIOGRAPHIES
- ----------------------
DONALD J. MUSSO -- MANAGING DIRECTOR AND PRESIDENT
Donald founded FinPro, Inc. in 1987 as a consulting and investment
banking firm located in New Jersey that specializes in providing
advisory services to the financial institutions industry. Mr. Musso
has a broad background in capital markets, bank valuations, enhancing
franchise value, corporate finance, mergers and acquisitions,
asset/liability management, strategic planning, market feasibility and
differentiation, branch acquisition, sales, consolidation and
profitability, financial modeling and analysis, balance sheet
restructuring, product and segment profitability, business development
and project management. Besides his consulting experience, he has
solid industry experience, having worked for two $10 billion plus east
coast financial institutions.
Mr. Musso has provided expert testimony on financial institutions
matters for the Federal Bankruptcy Court, the Office of Thrift
Supervision and the United States Attorney's Office.
He is a frequent speaker on Financial Institution related topics and
has assisted trade groups in various activities.
Prior to establishing FinPro, Donald had direct industry experience
having managed the Corporate Planning and Mergers and Acquisitions
departments for Meritor Financial Group, a $20 billion institution in
Philadelphia. Before that, he had responsibility for the banking,
thrift and real estate consulting practice in the State of New Jersey
for Deloitte Haskins & Sells.
Donald has a B.S. in Finance from Villanova University and a M.B.A. in
Finance from Fairleigh Dickenson University.
<PAGE> 156
FinPro, Inc.
About the Firm Page: 4
- -------------------------------------------------------------------------------
STEVEN P. MUSSO -- MANAGING DIRECTOR
Steve joined FinPro in 1989 and is one of the founding members of the firm.
He has extensive experience in performing a wide array of market
feasibility studies, branch profitability analysis, CRA analysis, loan
reviews and work-outs and strategic planning engagements.
Steve manages the FinPro office in Western New York. Additionally, he is
responsible for managing many strategic planning, loan reviews, market
feasibility and CRA engagements.
Steve is responsible for the development of FinPro's CRA, market
feasibility and Loan Review products.
Steve is currently a licensed real estate agent in New Jersey. Prior to
joining FinPro he practiced real estate in Philadelphia, Pennsylvania.
Mr. Musso has a B.S. in Finance from Syracuse University.
<PAGE> 157
FinPro, Inc.
About the Firm Page: 5
- -------------------------------------------------------------------------------
KENNETH G. EMERSON, CPA -- DIRECTOR
Ken joined FinPro in October 1996 and has concentrated on bank valuations,
strategic plans, and branch profitability. His twelve years of experience
at banks and brokerage firms, with respect to accounting, reporting, and
information systems serve him well in this capacity. Ken's prior employers
include Summit Bancorp, Valley Savings Bank, Howard Savings Bank, Cateret
Mortgage Company, CIT Data Corp., and Mahler & Emerson Inc. While at those
institutions his responsibilities included asset/liability, cash, back
office, operations, objective, and LAN management, in addition to
regulatory reporting (FRB, FDIC, OTS, State of New Jersey Department of
Banking, and NASD), SEC reporting, shareholder reporting, budgeting,
acquisitions, sales, conversions, interfaces, and FASB implementation.
Mr. Emerson has a B.A. in Accounting from Franklin & Marshall College.
<PAGE> 158
FinPro, Inc.
About the Firm Page: 6
- -------------------------------------------------------------------------------
DENNIS E. GIBNEY -- SENIOR FINANCIAL ANALYST
Dennis has been concentrating on the firm's asset/liability products.
Market feasibility, competitive analysis, branch profitability and branch
sales/acquisitions are other areas of specialization.
Dennis joined the firm in June of 1996. He received a B.S. from Babson
College with a triple-major in Finance, Investments and Economics. Prior to
joining the firm, Dennis received broad based experience in the securities
industry.
Dennis worked for Merrill Lynch & Co. supporting their Mortgage-Backed
trading desk in New York as an Allocations Specialist and for Sandler
O'Neill & Partners, where he provided sales and trade support.
<PAGE> 1
Exhibit 99.1b
[Letterhead of Finpro]
October 17, 1997
Board of Directors
The Warwick Savings Bank
18 Oakland Avenue
Warwick, New York 10990
Dear Board Members:
This report represents FinPro, Inc.'s ("FinPro") updated independent appraisal
of the estimated pro-forma market value of the common stock ( the "Common
Stock") of The Warwick Savings Bank ( the "Bank") in connection with the Plan of
Conversion of Warwick from a state chartered mutual savings bank to a state
chartered stock savings bank. This updated appraisal is furnished pursuant to
the Bank's results of operations for the three months ending August 31, 1997 and
the market pricing is as of October 10, 1997. FinPro's original appraisal report
dated September 18, 1997 included the Bank's results for the twelve month period
ended May 31, 1997. FinPro's original appraisal report is incorporated herein by
reference.
Pursuant to the Plan of Conversion, (i) Warwick will convert from a state
chartered mutual savings bank organized in the mutual form to a state chartered
savings bank organized in the stock form, (ii) Warwick will sell its capital
stock to the Holding Company, a Delaware Corporation, and become a wholly owned
subsidiary of the Holding Company, and (iii) the Holding Company will offer and
sell shares of its common stock in a subscription and community offering.
In preparing this appraisal update, FinPro reviewed its original appraisal and
the Bank's prospectus. FinPro considered, among other factors, recent
developments in stock market conditions and changes in the interest rate
environment as well as recent developments in the Bank's financial performance.
FinPro reviewed the Bank's most recent financial performance with its management
as well as other sources of public information that FinPro believes are
reliable; however, FinPro cannot guarantee the accuracy and completeness of such
information.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 1
<PAGE> 2
FinPro's appraisal update is based upon the Bank's representation that the
information contained in its prospectus and additional information furnished to
us by same is truthful, accurate, and complete. FinPro did not independently
verify the financial statements, and other information provided by the Bank, nor
did FinPro independently value any of the Bank's assets or liabilities. This
final appraisal considers the Bank only as a going concern and should not be
considered as an indication of its liquidation value.
FinPro's valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing shares of common
stock in the conversion. Moreover, because such valuation is necessarily based
upon estimates and projections of a number of matters, all of which are subject
to change from time to time, no assurance can be given that persons who purchase
shares of common stock in the conversion will thereafter be able to sell such
shares at prices related to the foregoing estimate of the Bank's pro-forma
market value. FinPro, Inc. is not a seller of securities within the meaning of
any federal or state securities laws, and any report prepared by FinPro, Inc.
shall not be used as an offer or solicitation with respect to the purchase or
sale of any securities.
FinPro's opinion is based upon circumstances as of the date hereof, including
current conditions in the United States securities markets. Events occurring
after the date hereof, including, but not limited to, changes affecting the
United States securities markets and subsequent results of operations of The
Warwick Savings Bank could materially affect the assumptions used in preparing
this opinion.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 2
<PAGE> 3
- ----------------
RECENT FINANCIAL
PERFORMANCE
- ----------------
The Bank's August 31, 1997 unaudited financials are included in exhibits 1
through 4. Selected financial highlights as of August 31, 1997, include:
FIGURE 1 - BALANCE SHEET AND RETAINED EARNINGS TREND
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
At August 3l, At May 31,
------------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------------------------------------------------------
Selected Financial Data: In thousands
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total assets $290,868 $286,545 $274,053 $258,679 $234,048 $224,851
Loans receivable, net 154,665 138,323 108,897 122,663 108,598 108,848
Investment securities 116,328 126,393 144,284 110,333 105,433 93,013
Real estate owned, net 167 224 330 493 306 --
Deposits 221,763 221,211 232,965 229,011 207.527 200,564
FHLB Advances 8,270 5,250 3,600 -- -- --
Securities sold under repurchase agreements 23,045 23,090 4,700 -- -- --
Retained earnings 29,212 27,495 24,629 23,076 21,910 20,147
- -------------------------------------------------------------------------------------------------------
</TABLE>
Source: Offering Prospectus
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 3
<PAGE> 4
As Figure 2 demonstrates, the Bank's balance sheet grew $4.3 million or 1.51%
for the three month period ending August 31, 1997, from $286.5 million at May
31, 1997 to $290.9 million at August 31, 1997.
FIGURE 2 - BALANCE SHEET AND RETAINED EARNINGS TREND
[Graphics omitted]
Source: Offering Prospectus
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 4
<PAGE> 5
The increase in the balance sheet was primarily due to an increase in borrowings
of $3.0 million over the same period.
FIGURE 3 - DEPOSIT TREND
<TABLE>
<CAPTION>
Total Deposits Borrowed Funds
-------------- --------------
$ in thousands
<S> <C> <C>
May-93 $200,564 $ 0
May-94 $207,527 $ 0
May-95 $229,011 $ 0
May-96 $232,965 $ 8,300
May-97 $221,211 $28,340
Aug-97 $221,763 $31,315
</TABLE>
Source: Offering Prospectus
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 5
<PAGE> 6
The securities portfolio decreased by $10.1 million, or 7.96%, for the three
month period ending August 31, 1997.
FIGURE 4 - INVESTMENT SECURITIES TREND
[GRAPHICS OMITTED]
Source: Offering Prospectus
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 6
<PAGE> 7
Loans grew $16.3 million or 11.82% for the three month period ending August 31,
1997. At August 31, 1997, the loan to asset ratio was to 53.17%.
FIGURE 5 - NET LOANS TREND
[GRAPHICS OMITTED]
Source: Offering Prospectus
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 7
<PAGE> 8
The $309 thousand reduction in net income from $848 thousand for the three month
period ending August 31, 1996, to $538 thousand for the same period ended August
31, 1997, is primarily due to the $304 thousand provision in 1997 coupled with
lower total other income, net and higher operating expenses offset by lower
income taxes.
FIGURE 6- INCOME STATEMENT DATA
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
For the Three Months
Ended August 31, For the Year Ended May 31,
------------------------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
------------------------------------------------------------------------
Selected Operating Data: In thousands Unaudited
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $5,232 $ 4,912 $ 20,691 $ 18,333 $ 16,253 $ 15,786 $16,549
Interest expense 2,359 2,281 9,376 8,717 6,828 5,922 6,710
------ ------- -------- -------- -------- -------- -------
Net interest income 2,873 2,631 11,315 9,616 9,425 9,864 9,839
Provision for loan losses 304 20 130 140 261 415 548
------ ------- -------- -------- -------- -------- -------
Net interest income after provision for loan losses 2,569 2,611 11,185 9,476 9,164 9,449 9,291
------ ------- -------- -------- -------- -------- -------
Non-interest income:
Service and fee income 492 447 1,915 1,768 1,369 1,996 536
Securities transactions 154 696 816 356 (429) 845 243
Loan transactions 23 17 137 119 14 123 113
Other income or (loss) 8 (176) (89) (159) (79) (17) 120
------ ------- -------- -------- -------- -------- -------
Total other income, net 677 984 2,779 2,084 875 2,947 1,012
Non-interest expense:
Salaries and employees benefits 1,295 1,276 5,256 5,050 3,958 3,877 3,572
FDIC insurance 7 1 12 53 466 456 427
Occupancy and equipment 332 287 1,308 1,238 1,202 1,141 879
Data processing 157 164 640 484 414 341 318
Advertising 46 22 152 129 112 69 119
Professional fees 80 67 240 325 222 270 324
Other operating expenses 432 411 1,735 1,791 1,722 1,608 1,508
------ ------- -------- -------- -------- -------- -------
Total other expenses 2,349 2,228 9,343 9,070 8,096 7,762 7,147
Income (loss) before cumulative effect of change in
accounting principle 897 1,367 4,621 2,490 1,943 4,634 3,156
Income tax expense (benefit) 359 519 1,756 1,024 794 2,115 1,370
------ ------- -------- -------- -------- -------- -------
Income (loss) before cumulative effect of change in
accounting principle 538 848 2,865 1,466 1,149 2,519 1,786
Cumulative effect of change in accounting principle -- -- -- -- (645) -- --
------ ------- -------- -------- -------- -------- -------
Net income (loss) $ 538 $ 848 $ 2,865 $ 1,466 $ 504 $ 2,519 $ 1,786
====== ======= ======== ======== ======== ======== =======
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Source: Offering Prospectus
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 8
<PAGE> 9
The chart below shows the Bank's net income for the past five fiscal years. The
net interest income dropped in 1995 due to a short term increase in the cost of
funds and a significant drop in noninterest income.
FIGURE 7- NET INCOME TREND
[Graphics omitted]
Source: Offering Prospectus
Note: August 31, 1997 data is for the three month period and is not annualized,
on an annualized basis net income would approximate $2.2 million.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 9
<PAGE> 10
The lower ROA and ROE in 1995 and 1996 is the result of the increased cost of
funds for these periods.
FIGURE 8 - PROFITABILITY TRENDS
[LINE GRAPH SHOWING THE BANKS ROA AND ROE AT MAY 31, 1993, 1994, 1995,
1996 AND 1997 AND AT AUGUST 31, 1997.]
Source: Offering Prospectus
Note: August 31, 1997 data is for the three month period annualized.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 10
<PAGE> 11
Despite the 21 basis point decrease in the spread from 3.84% at May 31, 1995 to
3.63% at August 31, 1996, the margin has returned to the its original level of
4.27%. On February 6, 1995, Nationar, which was then the Bank's principal
correspondent bank, was closed by the New York Superintendent of Banks.
Warwick's deposits of $2.9 million were frozen pending Nationar's liquidation.
In order to meet its liquidity needs Warwick initiated a program in February of
1995 to attract additional funds, raising $44 million at a yield of 6.8%.
FIGURE 9 - SPREAD AND MARGIN TRENDS
[LINE GRAPH SHOWING THE BANK'S SPREAD AND MARGIN TRENDS.]
Source: Offering Prospectus
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 11
<PAGE> 12
The Bank's efficiency ratio ( noninterest expense divided by the sum of net
interest income and noninterest income) improved slightly during the three
months ending August 31, 1997 to 66.17%.
FIGURE 10 - EFFICIENCY TRENDS
Efficiency Ratio
----------------
May-93 65.86%
May-94 60.59%
May-95 78.60%
May-96 77.52%
May-97 66.29%
Aug-97 66.17%
Source: Offering Prospectus
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 12
<PAGE> 13
- ------------------------
UPDATED COMPARABLE GROUP
FINANCIAL COMPARISONS
- ------------------------
The Comparable Group ("Comparable Group") was originally selected from a
universe of 409 public thrifts as of September 8, 1997. Each of the chosen
Comparables was tested against the selection criteria as of October 10, 1997 and
it was ascertained that all, except one, still met the criteria (with a small
variance allowed for multiple appreciation). The one exception is Lawrence
Savings Bank. Lawrence Savings Bank's stock price was $11.938 at September 8,
1997 and has appreciated to $15.813 at October 10, 1997. There is no discernible
explanation for the appreciation at this time. However, Lawrence's price to
tangible book multiple has increased to 271.67%, well above the 160% guideline
set to eliminate thrifts rumored to be acquisition targets.
Each ratio for the Comparable Group has been updated through October 10, 1997.
The Comparable Group was selected based upon similarity of characteristics to
the Bank. The Comparable Group multiples provide the basis for the fair market
valuation of the Bank. Factors that influence the Bank's value such as balance
sheet structure and size, profitability, income and expense trends, capital
levels, credit risk, interest rate risk and recent operating results can be
measured against the Comparable Group. The Comparable Group current market
pricing, coupled with the appropriate adjustments for differences between the
Bank and the Comparable Group, will then be utilized as the basis for the
pro-forma valuation of the Bank to-be-issued common stock.
- -----------------
SELECTION SCREENS
- -----------------
The selection screens utilized to identify possible Comparables from the list of
409 public thrifts at September 8, 1997 included:
1. The institution had to be traded on either the AMEX or NASDAQ to ensure
liquidity. This eliminated tightly held and "pink sheet" organizations who
lack liquidity.
2. The IPO date had to be on or before May 31, 1996, eliminating any new
conversions.
3. The total asset size had to be greater than or equal to $250 million and
less than or equal to $400 million.
4. The Conversion had to be a full standard conversion.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 13
<PAGE> 14
5. The institution had to be located in the North East or Mid Atlantic
regions.
6. The current Price to Tangible Book multiple had to be less than 160%.
7. The current Return on Equity had to be greater than 4%.
Utilizing these screens, the 409 possibilities were narrowed down to 15
candidates. After scanning these candidates the following institutions were
eliminated from the Comparable Group for the reasons shown:
Ticker Short Name City State
------------------------ ----------------
High or Low Loan to Asset Ratio
CVAL Chester Valley Bancorp Inc. Downingtown PA
YFCB Yonkers Financial Corporation Yonkers NY
Too Many Branches
NMSB NewMil Bancorp Inc. New Milford CT
High Nonperforming Assets to Total Assets
IFSB Independence Federal Svgs Bank Washington DC
Rapid Price Appreciation - High Tangible Book Value
LSBX Lawrence Savings Bank North Andover MA
This resulted in a Comparable Group of 10 institutions.
Ticker Short Name Exchange City State
- ------------------------------------------- -----------------------------
CATB Catskill Financial Corp. NASDAQ Catskill NY
CEBK Central Co-operative Bank NASDAQ Somerville MA
FBER 1st Bergen Bancorp NASDAQ Wood-Ridge NJ
FIBC Financial Bancorp Inc. NASDAQ Long Island NY
FKFS First Keystone Financial NASDAQ Media PA
FSBI Fidelity Bancorp Inc. NASDAQ Pittsburgh PA
LFBI Little Falls Bancorp Inc. NASDAQ Little Falls NJ
PBCI Pamrapo Bancorp Inc. NASDAQ Bayonne NJ
PHFC Pittsburgh Home Financial Corp NASDAQ Pittsburgh PA
WVFC WVS Financial Corp. NASDAQ Pittsburgh PA
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 14
<PAGE> 15
- ------------------
SELECTION CRITERIA
- ------------------
To be eligible for selection to the Comparable Group, thrifts had to be publicly
traded on either the American Stock Exchange or traded on the national
over-the-counter ("OTC") markets listed on the National Association of
Securities Dealers Automated Quotation ("NASDAQ") System. Each company selected
is a member of one of the exchanges listed above.
Also excluded from the Comparable Group were institutions that were pending
mergers or acquisitions along with companies whose prices appear to be distorted
by speculative factors or unusual operating conditions. Finally, institutions
that completed their conversions within the last year were also excluded as the
earnings of newly converted institutions do not reflect a full years benefit
from the reinvestment of proceeds, and thus the price/earnings multiples and
return on equity measures for these institutions tend to be skewed upward and
downward respectively.
In an ideal world, all of the Comparable Group would contain the exact
characteristics of the Bank. The goal of the selection criteria process is to
find those institutions that most closely match those of the Bank. None of the
Comparables selected will be exact clones of the Bank.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 15
<PAGE> 16
The members of the Comparable Group were selected based upon the following
criteria:
1. Liquidity of the issue
2. Asset size
3. Profitability
4. Capital level
5. Asset mix
6. Operating strategy
7. Date of conversion
1. Liquidity of the Issue The existence of an active and regular trading market
for a stock is critical to the reliability of share price data. Weak or thinly
traded stocks are questionable due to an irregular frequency of trades or highly
varied trading prices. Thinly traded stocks also tend to exhibit a very wide
bid/ask range. As such, companies exhibiting thin liquidity were excluded from
the selection. Also, institutions involved in an acquisition and/or companies
with market prices that appear to be influenced by announced or rumored
acquisitions have been excluded as the stock prices could be either artificially
high or low. For selection of the Comparable Group, only those institutions
listed on AMEX or NASDAQ were selected. All ten of the members of the Comparable
Group are listed on NASDAQ.
2. Asset size The Comparable Group should have a similar asset size to the Bank.
Large institutions are not appropriate for the peer group due to a more
extensive branch network, greater financial strength, more access to diverse
markets and more capacity in terms of infrastructure. The Comparable Group
ranged from $256 million to $371 million in total assets. The Bank's asset size
was $291 million as of August 31, 1997 and will be $332 million on a pro forma
basis at the midpoint of the valuation range.
3. Profitability The Comparable Group should have similar financial conditions
and recent earnings that are comparable to the Bank. They should show a
comparable return on equity and return on assets measures. As such, the
Comparable Group have ROAs averaging 0.96% and ROEs averaging 8.54% for the most
recent quarter available. The Comparable Group profitability measures had a
dispersion about the mean for the ROA measure ranging from a low of 0.63% to a
high of 1.37% while the ROE measure ranged from a low of 4.75% to a high of
11.94%. The Bank had an ROA of 0.75% and ROE of 7.62% for the three months ended
August 31, 1997.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 16
<PAGE> 17
4. Capital level The Comparable Group should have a capital level similar to the
Bank's. Capital is important in that it is a determinant of asset size and
regulatory rating. Institutions with capital in a similar range as the Bank were
selected. The average equity to assets ratio for the Comparable Group was 12.07%
with a high of 25.04% and a low of 6.75%. At August 31, 1997, the Bank had an
equity to assets ratio of 10.04%.
5. Asset Mix The asset mix is very important in the selection criteria for
Comparables. At August 31, 1997, the Bank had a total net loan to asset ratio of
52.48%. The average loan to asset ratio for the Comparables was 53.85%, ranging
from a low of 43.07% to a high of 68.13%.
6. Operating strategy An institution's operating characteristics are important
because they determine future performance. They also affect expected rates of
return and investor's general perception of the quality, risk and attractiveness
of a given company. Specific operating characteristics include profitability,
balance sheet growth, asset quality, capitalization, and non-financial factors
such as management strategies and lines of business.
7. Date of conversion Recent conversions, those completed after May 31, 1996,
were excluded since the earnings of a newly converted institution do not reflect
a full year's benefits of reinvestment of conversion proceeds. Additionally, new
issues tend to trade at a discount to the market averages.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 17
<PAGE> 18
The following figure presents a summary of the comparative indicators for the
Bank and the Comparable Group.
FIGURE 11 - KEY FINANCIAL INDICATORS
Warwick as of August 31, 1997 and the Comparable Group Using Most Recent Data
- --------------------------------------------------------------------------------
Comparable
Warwick Warwick Group Most Comparable
August 31, May 31, Recent Group as
1997 1997 Quarter Filed
================================================================================
Balance Sheet Data
- --------------------------------------------------------------------------------
Gross Loans to Deposits 69.45% 63.09% 78.32% 77.02%
- --------------------------------------------------------------------------------
Net Loans to Assets 52.48% 48.27% 53.85% 52.92%
- --------------------------------------------------------------------------------
Deposits to Assets 76.24% 77.20% 70.26% 70.06%
- --------------------------------------------------------------------------------
Borrowings to Assets 10.77% 9.89% 15.96% 16.77%
- --------------------------------------------------------------------------------
Balance Sheet Growth
- --------------------------------------------------------------------------------
Asset Growth Rate 6.03% 4.56% 21.97% 22.55%
- --------------------------------------------------------------------------------
Loan Growth Rate 57.37% 27.02% 14.21% 13.79%
- --------------------------------------------------------------------------------
Deposit Growth Rate 1.00% (5.05%) 5.67% 4.67%
- --------------------------------------------------------------------------------
Capital
- --------------------------------------------------------------------------------
Equity to Assets 10.04% 9.81% 12.07% 11.76%
- --------------------------------------------------------------------------------
Tangible Capital 10.04% 9.81% 11.86% 11.57%
- --------------------------------------------------------------------------------
Intangible Assets to Equity 0.00% 0.0% 2.05% 1.87%
- --------------------------------------------------------------------------------
Regulatory Core Capital to 9.53% 9.60% 12.42% 12.09%
Assets
- --------------------------------------------------------------------------------
Equity plus Reserves to 10.51% 10.24% 12.70% 12.42%
Assets
- --------------------------------------------------------------------------------
Total Capital to Risk 20.12% 20.33% 26.23% 25.37%
Adjusted Assets
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 18
<PAGE> 19
- --------------------------------------------------------------------------------
Comparable
Warwick Warwick Group Most Comparable
August 31, May 31, Recent Group as
1997 1997 Quarter Filed
================================================================================
Asset Quality
- --------------------------------------------------------------------------------
Non-Performing Loans to 0.94% 1.72% 1.50% 1.43%
Loans
- --------------------------------------------------------------------------------
Reserves to Non-Performing 93.44% 51.74% 157.51% 155.19%
Loans
- --------------------------------------------------------------------------------
Non-Performing Assets to 0.56% 0.91% 1.06% 1.01%
Assets
- --------------------------------------------------------------------------------
Non-Performing Assets to 5.58% 9.27% 10.06% 9.64%
Equity
- --------------------------------------------------------------------------------
Reserves to Loans 0.89% 0.88% 1.21% 1.30%
- --------------------------------------------------------------------------------
Reserves to Non-Performing 83.87% 47.29% 136.65% 108.14%
Assets + 90 Days Del.
- --------------------------------------------------------------------------------
Profitability
- --------------------------------------------------------------------------------
Return on Average Assets 0.75% 1.00% 0.96% 1.02%
- --------------------------------------------------------------------------------
Return on Average Equity 7.62% 11.20% 8.54% 9.47%
- --------------------------------------------------------------------------------
Income Statement
- --------------------------------------------------------------------------------
Net Interest Margin 4.27% 4.20% 3.58% 3.55%
- --------------------------------------------------------------------------------
Interest Income to Average 7.32% 7.25% 7.28% 7.28%
Assets
- --------------------------------------------------------------------------------
Interest Expense to Average 3.30% 3.29% 3.83% 3.85%
Assets
- --------------------------------------------------------------------------------
Net Interest Income to 4.02% 3.97% 3.45% 3.43%
Average Assets
- --------------------------------------------------------------------------------
Noninterest Income to 0.95% 0.97% 0.19% 0.20%
Average Assets
- --------------------------------------------------------------------------------
Noninterest Expense to 3.29% 3.28% 2.03% 2.04%
Average Assets
- --------------------------------------------------------------------------------
Efficiency Ratio 66.15% 66.29% 55.54% 56.04%
- --------------------------------------------------------------------------------
Overhead Ratio 58.18% 58.01% 53.17% 53.53%
- --------------------------------------------------------------------------------
Source: Offering Prospectus, August 1997 Financials and SNL Securities
Note: The August 1997 growth rates for assets, loans and deposits are three
month figures annualized.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 19
<PAGE> 20
On a comparable basis using August 31, 1997 data for Warwick and the most recent
quarter for the Comparable Group, the Bank had a similar loan to asset ratio,
52.48%, when compared to the Comparable Group's average of 53.85%. On the
liability side, the Bank had borrowings of 10.77% of assets, while the
Comparable Group had an average of 15.96%.
In terms of growth, the Bank grew loans by 57.37% on an annualized basis, which
was significantly faster than the growth rate of the Comparable Group's average
of 14.21%.
The Bank had a tangible equity to asset ratio of 10.04% while the Comparable
Group had an average tangible equity to asset ratio of 11.86%. The Bank will
have significantly higher tangible capital after the conversion.
The Bank's ROA, 0.75%, and ROE, 7.62%, are less than the Comparable Group's
average ratios of 0.96% and 8.54%, respectively.
Though the Bank compares favorably to the Comparable Group with respect to the
net interest margin, 4.27% versus 3.58%, and the noninterest income to average
asset ratio, 0.95% versus 0.19%, the noninterest expense to average asset ratio
compares unfavorably, 3.29% versus 2.03%, resulting in an efficiency ratio that
is 10.61 points higher, 66.15% versus 55.54%.
Overall, the Bank's financial performance for the three month period ending
August 31, 1997 was in line with projections assumed in the September 18, 1997
appraisal and continues to demonstrate relative consistency when compared to the
Comparable Group.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 20
<PAGE> 21
- ---------------------
VALUATION ADJUSTMENTS
- ---------------------
The estimated pro-forma market value of the Bank, along with certain adjustments
to its value relative to market values for the Comparable Group are delineated
in this section. The adjustments delineated in this section are made from
potential investors' viewpoints. A potential investor includes depositors
holding subscription rights and unrelated parties who may purchase stock in the
community offering and who are assumed to be aware of all relevant and necessary
facts as they pertain to the value of the Bank relative to other publicly traded
thrift institutions and relative to alternative investment opportunities.
There are numerous criteria on which the market value adjustments are based, but
the major ones utilized for purposes of this report include:
o Financial Strength
o Earnings Quality, Predictability and Growth
o Market Area
o Management
o Dividends
o Liquidity of the Issue
o Subscription Interest
o Recent Regulatory Matters
o Market for Seasoned Thrift Stocks
o Acquisition Market
After identifying the adjustments that should be made to market value, the
pro-forma market value for the Bank is computed and adjusted. The estimated
pro-forma market value for the Bank is then compared with the market valuation
ratios of the Comparable Group, recently converted public thrifts and the
aggregate ratios for all public thrifts.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 21
<PAGE> 22
- ------------------
FINANCIAL STRENGTH
- ------------------
The financial strength of an institution is an important market value
determinant, as the investment community considers such factors as bank
liquidity, capitalization, asset composition, funding mix, intangible levels and
interest rate risk in assessing the attractiveness of investing in the common
stock of a thrift. Following is a synopsis of the key financial elements of the
Bank measured against the Comparable Group. The numbers utilized for the Bank in
this comparison were on a pro-forma basis.
Liquidity - The liquidity of the Bank and the Comparable Group appear
similar and were sufficient to meet all regulatory guidelines.
Capitalization - The Comparable Group's average equity to assets ratio of
12.07% is slightly higher than the Bank's ratio of 10.04%, but will be
below the Bank's pro forma equity to assets ratio of 21.20% at the
midpoint of the valuation range.
Asset Composition - The Bank's net loan to asset ratio of 52.48% is lower
than the average for the Comparable Group of 53.85%. Management
anticipates growing the current ratio.
Asset Quality - The Bank's ALLL to loans ratio of 0.89% is less than that
of the Comparable Group's 1.21%.
Funding Mix - The Bank is funded through deposits, borrowings, and
retained earnings. The Comparable Group had 15.96% of its funding base
from borrowings as compared to the Bank's 10.77%. The Bank's low level
leaves room for additional borrowings in the future.
Intangible Levels - One of the most important factors influencing market
values is the level of intangibles that an institution carries on its
books. The Comparable Group has a limited level of intangibles averaging
2.05%. Thrifts trade more on tangible book than on book. The Bank had no
intangibles on its books at August 31, 1997.
Interest Rate Risk - The Bank has an average level of interest rate risk.
Based on these factors, the Bank's market value should not be adjusted in
comparison to the Comparable Group for these measures.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 22
<PAGE> 23
- ------------------
EARNINGS QUALITY,
PREDICTABILITY AND
GROWTH
- ------------------
The earnings quality, predictability and growth are critical components in the
establishment of market values for thrifts. Thrift earnings are primarily a
function of:
o net interest income
o loan loss provision
o non-interest income
o non-interest expense
The quality and predictability of earnings is dependent on both internal and
external factors. Some internal factors include the mix of the balance sheet,
the interest rate sensitivity of the balance sheet, the asset quality, and the
infrastructure in place to deliver the assets and liabilities to the public.
External factors include the competitive market for both assets and liabilities,
the global interest rate scenario, local economic factors and regulatory issues.
Each of these factors can influence the earnings of an institution, and each of
these factors is volatile. Investors prefer stability and consistency. As such,
solid, consistent earnings are preferred to high but risky earnings. Investors
also prefer earnings to be diversified and not entirely dependent on interest
income.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 23
<PAGE> 24
The Bank earnings have been erratic over the last five fiscal years due to the
high interest expense incurred in 1995, as discussed on Page 9.
FIGURE 12 - NET INCOME CHART
<TABLE>
<CAPTION>
NET INCOME
----------------
($ in Thousands)
<S> <C>
May-93 $1,786
May-94 $2,519
May-95 $ 504
May-96 $1,466
May-97 $2,865
Aug-97 $ 538
</TABLE>
Source: Offering Prospectus
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 24
<PAGE> 25
The Bank's net interest spread and margin declined in fiscal 1996 but reversed
the downward trend in fiscal 1997.
FIGURE 13 - SPREAD AND MARGIN CHART
[Line graph showing the Bank's net interest spread and margins
from May 31, 1995 through August 31, 1997]
Source: Offering Prospectus
The Bank has been posting loan loss provisions sufficient to cover period
charge-offs and to maintain reserve ratios. At August 31, 1997, the Bank had an
allowance for loan and lease losses (ALLL) to total loans ratio of 0.89%, which
is less than that of the Comparable Group's 1.21%.
The Bank has generated more non-interest income than the Comparable Group. For
the year ended August 31, 1997, the Bank had 0.95% of non-interest income to
average assets compared to the Comparable average of 0.19%. For the year ended
August 31, 1997, the Bank had non-interest expense to average assets of 3.29%
which was greater than the 2.03% average of the Comparable Group.
Currently, investors are focusing on earnings sustainability as the interest
rate volatility has caused wide variation in income levels. With the intense
competition for both assets and deposits, banks can not easily replace lost
spread and margin with balance sheet growth. Additionally, the lower market
values of most thrifts relative to banks make acquisitions by thrifts more
difficult.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 25
<PAGE> 26
Warwick has experienced fluctuations in its net interest income and has a high
level of noninterest expense. Therefore, no adjustment is warranted to the
market value for earnings.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 26
<PAGE> 27
- -----------
MARKET AREA
- -----------
The market area that an institution serves has a significant impact on value, as
future success is interrelated with the economic, demographic and competitive
aspects of the market. Specifics on the Bank's market were delineated in Section
2 - Market Area Analysis of the original appraisal.
Two of the Bank's markets - Highland Mills and Middletown - are experiencing
deposit runoff. While the other two markets - Warwick and Monroe - have
experienced modest deposit growth.
Population and households have increased and are projected to increase in all
four markets.
The demographic growth offsets the deposit decreases, therefore, the valuation
is not adjusted for this measure.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 27
<PAGE> 28
- ----------
MANAGEMENT
- ----------
The Bank has developed a good management team with considerable banking
experience and length of service with the bank.
The Board is active and oversees and advises on all key strategic and policy
decisions. The organization chart appears reasonable for an institution of the
Bank's size and complexity.
As such, no adjustment appears to be warranted for this factor.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 28
<PAGE> 29
- ---------
DIVIDENDS
- ---------
Historically, banks typically have not established dividend policies immediately
at or after conversion to stock ownership. Rather, newly converted institutions,
in general, have preferred to establish an earnings track record, fully invest
the conversion proceeds, and allow for seasoning of the stock before
establishing a dividend policy. In the late 1980's and early 1990's however,
there has been a tendency toward initiating dividend policies concurrent with
the conversion as a means of increasing the attractiveness of the issue and to
utilize the proceeds.
The last few years have seen yet another shift away from dividend policies
concurrent with conversion. Recent issues have been fully or over subscribing
without the need for the additional enticement of dividends. After conversion is
another issue however. Recent pressures on ROE and on internal rate of returns
to investors has prompted the industry toward cash dividends. This trend is
exacerbated by the lack of growth potential. Typically, when institutions are in
a growth mode, they issue stock dividends or do not declare a dividend. When
growth is stunted, these institutions shift toward reducing equity levels and
thus utilize cash dividends as a tool in this regard.
Ten of the eleven comparable institutions had declared dividends. The average
dividend payout ratio for the Comparable Group was 47.03%, ranging from a high
of 177.51% to a low of 10.42%.
The Bank will have the earnings and capital levels to afford to pay dividends.
As such, no adjustment is indicated for this factor.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 29
<PAGE> 30
- ----------------------
LIQUIDITY OF THE ISSUE
- ----------------------
The Comparable Group is by definition composed only of companies that trade in
the public markets with all eleven of the Comparables trading on NASDAQ.
Typically, the number of shares outstanding and the market capitalization
provides an indication of how much liquidity there will be in a given stock. The
actual liquidity can be measured by volume traded over a given period of time.
The market capitalization values of the Comparable Group range from a low of
$36.4 million to a high of $80.83 million with an average market capitalization
of $51.39 million. The Bank expects to have $70.4 million of market capital at
the midpoint on a pro-forma basis.
Based on the comparison with the Comparable Group and the above data, no
adjustment appears warranted.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 30
<PAGE> 31
- ---------------------
SUBSCRIPTION INTEREST
- ---------------------
The outcome of subscription offerings has been, historically, difficult to
predict. Since 1992, however, the conversions have experienced robust
subscription interest with the exception of late 1994 when the pricing multiples
were high. During late 1994, many subscriptions had the need to resolicit due to
lack of professional investor demand. During 1995, the investor demand returned
and the subscription interest increased, primarily the result of lower market
multiples. There were some offerings in May and June 1996 that went off at or
below the midpoint, indicating a possible shift away from interest in thrift
public offerings at that time. The vast majority of recent conversions have
oversubscribed and gone off at the maximum or super-maximum.
Of more importance is the general strength of the aftermarket. Thrift stock
prices have soared upwards in recent months (see Figure 14) and is showing
strength across the board. Additionally, as shown in Exhibit 8, the most recent
conversions (within the last 3 months) have demonstrated a strong price
appreciation.
As such, an upward adjustment for subscription interest is warranted at this
time.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 31
<PAGE> 32
- -----------------
RECENT REGULATORY
MATTERS
- -----------------
As a result of large after-market price increases of conversions during 1993 and
early 1994, the regulatory agencies have issued guidelines on appraisals for
conversions. The regulators publicly indicated that only modest immediate
after-market price increases are appropriate for converting institutions. The
guidelines issued November 22, 1994, indicate that the reasonableness and
adequacy of an appraisal will be partially judged by the immediate price
movement of the conversion stock in the after-market, using a very short time
frame of the second day of trading following closing. The guidelines further
discuss that the average price appreciation for all IPOs has been between 10 and
15%, which was deemed to be too high.
At around the same time period, IPO pricing was elevated on a book basis and
IPOs in late 1994 did not experience much appreciation. In fact, numerous IPOs
actually depreciated. 1995 brought back lower premiums to book but they have
been rising throughout 1996 to approximately the same levels as late 1994. 1997
has continued the trend with IPOs popping over 40% on average, for the first day
of trading.
The recent interest in thrift IPOs has caused large oversubscriptions, which in
turn have caused large price appreciations in the aftermarket. These factors may
cause regulators to force pricing increases.
Regulatory agencies are also considering limiting stock buy backs to: 0% in the
first year, 5% in the second year and 5% in the third year.
No adjustment is necessary for this factor since all thrifts are subject to
these regulatory issues
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 32
<PAGE> 33
- -------------------
MARKET FOR SEASONED
THRIFT STOCKS
- -------------------
Data for all public thrifts as of October 10, 1997 is provided in Exhibit 5. A
common measure utilized as a proxy for the performance of the thrift industry is
the SNL thrift index graphically shown below and tabularly shown on the
following page:
FIGURE 14 - SNL THRIFT INDEX CHART
[Graphics omitted]
Source: SNL Securities
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 33
<PAGE> 34
FIGURE 15 - HISTORICAL SNL INDEX
- --------------------------------------------------------------------------------
SNL THRIFT INDEX MONTHLY PERFORMANCE
January 2, 1992 to October 10, 1997
- --------------------------------------------------------------------------------
SNL % Change % Change % Change % Change % Change % Change
Thrift Since Since Since Since Since Since
Date Index 1/2/92 1/4/93 1/3/94 12/30/94 12/29/95 12/31/96
---- ----- ------ ------ ------ -------- -------- --------
Jan-92 143.9 - - - - - -
Jul-92 175.1 21.7% - - - - -
Jan-93 201.1 39.7% - - - - -
Jul-93 220.5 53.2% 9.6% - - - -
Jan-94 252.5 75.5% 25.6% - - - -
Jul-94 273.8 90.3% 36.2% 8.4% - - -
Jan-95 256.1 78.0% 27.3% 1.4% - - -
Jul-95 328.2 128.1% 63.2% 30.0% 28.2% - -
Jan-96 370.7 157.6% 84.3% 46.8% 44.7% - -
Jul-96 389.9 171.0% 93.9% 54.4% 52.2% 5.2% -
Jan-97 520.1 261.4% 158.6% 106.0% 103.1% 40.3% -
Jul-97 638.8 343.9% 217.6% 153.0% 149.4% 72.3% 22.8%
10-Oct-97 762.9 430.1% 279.4% 202.1% 197.9% 105.8% 46.7%
Source: SNL Securities
FIGURE 16 - EQUITY INDICES
[LINE GRAPH SHOWING EQUITY INDICES FROM 6/30/94 TO 10/10/97.]
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 34
<PAGE> 35
Index Comparisons
============================================
SNL S&P DJIA
--------------------------------------------
6/30/94 269.6 444.3 3,625.0
12/30/94 244.7 459.3 3,834.4
6/30/95 313.5 544.8 4,556.1
12/29/95 376.5 615.9 5,117.1
6/28/96 387.2 670.6 5,654.6
12/31/96 483.6 740.7 6,448.3
6/10/97 594.8 865.3 7,539.3
7/10/97 638.8 913.8 7,886.8
9/8/97 695.9 931.2 7,835.2
10/10/97 762.9 967.0 8,045.2
============================================
As the Figures 14 and 15 illustrate, the performance of the SNL index has been
robust through 1992, 1993, 1994 and 1995. The dip in the index, occurring in
late 1994, was the product of the interest rate rise during that period along
with the overall uneasiness in the stock market in general. The rate scenario
covering the same period as the SNL index can be seen in the following chart.
FIGURE 17 - HISTORICAL RATES
[Line graph showing historical interest rates from the fourth quarter of 1993
to the third quarter of 1997.]
Source: Prudential Bache Securities
As the graph demonstrates, the rate rise in late 1994 correlates closely to the
fall in thrift prices. The drop in rates in 1995 was one of the primary drivers
of the rapid rise in the SNL index. During 1996, rates increased slightly and
then remained stable, fueling the rise in the conversion prices. 1997 has seen a
continuation of this trend, with the average IPO pricing at 70.9%, 69.7%, 70.9%,
and 73.7% of book value for the first, second, third, and fourth quarters of
1997 respectively.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 35
<PAGE> 36
Thrift pricing in general was robust in 1995 due to the falling interest rates,
the industry consolidation and renewed earnings. Contrasting this view, in late
1994 investors faced shrinking spreads and margins due to rising rates and
consolidation that was tailing off and slowing down. The blockbuster level of
consolidations have led many investors to think that all institutions are fair
game for acquisitions and prices have risen accordingly.
As Figure 16 shows, the SNL index has continued to increase despite the slack in
the growth of both the DJIA and S&P and despite the flat interest rate
environment, providing further evidence of the market's acquisition speculation.
As such, a downward adjustment for this measure is warranted, as newly converted
thrifts will not trade at the same multiples as seasoned thrifts because
investors do not have a proven track record on which to base investment
decisions. Additionally, newly converted thrifts need time to reinvest proceeds
and leverage the capital raised in the IPO.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 36
<PAGE> 37
- ------------------
ACQUISITION MARKET
- ------------------
The acquisition market is following a consistent cycle for both bank and thrift
deals, peaking every fourth quarter. For the thrifts, the peak is in the second
quarter of each year, followed by the banks, peaking in the third quarter of
each year.
FIGURE 18 - DEALS BY COUNT FOR LAST TEN QUARTERS
<TABLE>
<CAPTION>
Bank Thrift
---- ------
<S> <C> <C>
1995-2 85 35
1995-3 92 27
1995-4 80 22
1996-1 79 22
1996-2 87 29
1996-3 91 21
1996-4 79 19
1997-1 55 26
1997-2 68 29
1997-3 79 17
1997-4 1 3
</TABLE>
Source: SNL Securities
* - October 10, 1997 quarter to date.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 37
<PAGE> 38
During the same period of time, from September 8, 1997 through October 10, 1997,
thrift deal prices on a tangible book basis were up for the industry, the
region, and the displayed deal size range. The price to earnings multiple was,
however, flat for the industry and increasing for the region and the size range.
FIGURE 19 - CURRENT THRIFT ACQUISITION MULTIPLES
<TABLE>
<CAPTION>
Total Thrift Deals YTD Mid-Atlantic Thrift Deals YTD Thrift Deals $50-$100 Million YTD
As of 9/8/97 As of 10/10/97 As of 9/8/97 As of 10/10/97 As of 9/8/97 As of 10/10/97
<S> <C> <C> <C> <C> <C> <C>
Price to Book 168.7 175.0 188.0 200.1 179.6 182.2
Price to Tangible Book 172.4 178.8 193.1 206.3 183.7 186.5
Price to Earnings 25.3 25.3 18.3 20.8 21.6 19.5
Price to Assets 18.0 16.5 15.1 16.5 16.5 16.1
Price to Deposits 24.0 23.8 2.4 25.4 23.0 22.2
</TABLE>
Since the original appraisal was filed, North Fork Bancorporation announced its
definitive merger agreement to acquire New York Bancorp for a price to tangible
book multiple of 480.1% and a price to LTM EPS multiple of 20.0x.
A downward adjustment is warranted for this factor at time of conversion, since
new conversions are not readily available for acquisitions for well over a year
from the date of conversion and since the market prices of the Comparables
already have this acquisition premium built in their prices.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 38
<PAGE> 39
- ------------------------
PREMIUM/DISCOUNT SUMMARY
- ------------------------
Overall, FinPro believes that the Bank pro-forma market value should be
discounted relative to the Comparable Group, reflecting the following
adjustments.
Key Valuation Parameters Valuation Adjustment
================================================================================
Financial Strength No Adjustment
Earnings Quality No Adjustment
Market Area No Adjustment
Management No Adjustment
Dividends No Adjustment
Liquidity of the Issue No Adjustment
Subscription Interest Upward
Recent Regulatory Matters No Adjustment
Market for Seasoned Thrift Stocks Downward
Acquisition Market Downward
All of the adjustments above were held consistent with the original appraisal as
of September 18, 1997.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 39
<PAGE> 40
- --------------------
THRIFT EQUITY MARKET
- --------------------
This section presents an analysis of the change in the equity market from
September 8, 1997 to October 10, 1997. Since September 8, 1997, (the date of the
market prices in FinPro's original appraisal), thrift stock prices, as measured
by the SNL Thrift Index, have experienced a price increase of 9.62%. This data
indicates that thrift stock prices are outperforming the S&P 500 and Dow Jones
indices which grew 3.84% and 2.68% from September 8, 1997, through October 10,
1997, respectively. Between September 8, 1997, and October 10, 1997, the index
changes were as follows:
FIGURE 20 - PERIOD INDEX CHANGE
<TABLE>
<CAPTION>
Index 9/8/97 10/10/97 % Change % Change
<S> <C> <C> <C> <C>
SNL Index 695.9 762.9 67.0 9.62%
S&P 500 931.2 967.0 35.8 3.84%
Dow Jones Indusrial Average 7,835.2 8,045.2 210.0 2.68%
All Public Thrifts Average Price to LTM Earnings 29.59 33.79 4.20 14.18%
New York Public Thrifts Average Price to LTM Earnings 31.29 35.58 4.29 13.71%
Comparables Average Price to LTM Earnings 26.08 28.44 2.36 9.05%
All Public Thrifts Average Price to Book 154.36 170.51 16.15 10.46%
New York Public Thrifts Average Price to Book 160.15 173.02 12.87 8.04%
Comparables Average Price to Book 132.95 142.21 9.26 6.97%
All Public Thrifts Average Price to Tangible Book 160.81 177.20 16.39 10.19%
New York Public Thrifts Average Price to Tangible Book 174.96 189.95 14.99 8.57%
Comparables Average Price to Tangible Book 135.65 145.37 9.72 7.17%
All Public Thrifts Average Price to Assets 17.84 19.67 1.83 10.26%
New York Public Thrifts Average Price to Assets 17.11 18.78 1.67 9.76%
Comparables Average Price to Assets 15.56 16.77 1.21 7.78%
</TABLE>
Source: SNL Securities
The increase in all of the pricing multiples in Figure 20 support the conclusion
that thrift prices are in a period of appreciation. The Comparable Group's
multiples increased by a consistent amount, but are still within an acceptable
range for the EVR.
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 40
<PAGE> 41
The market for thrift stocks within New York has under-performed the SNL Index.
On a price basis, New York stocks have appreciated by 5.09% on average from
September 8, 1997 to October 10, 1997. Only two New York thrifts out of the
thirty-five experienced a decline in stock price.
FIGURE 21 - NEW YORK THRIFT PRICE CHANGE
<TABLE>
<CAPTION>
10/10/97 10/10/97 9/8/97
Market Stock Stock Dollar Percentage
Value Price Price Change Change
Ticker Short Name ($M) ($) ($)
- -----------------------------------------------------------------------------------------------------------
New York
<S> <C> <C> <C> <C> <C> <C>
AFED AFSALA Bancorp Inc. 27.64 19.00 16.25 2.75 14.47%
AHCI Ambanc Holding Co. 71.50 17.13 15.63 1.50 8.76%
ALBC Albion Banc Corp. 7.28 29.13 23.25 5.88 20.17%
ALBK ALBANK Financial Corp. 577.53 45.00 39.75 5.25 11.67%
ASFC Astoria Financial Corp. 1,176.84 56.50 49.19 7.31 12.94%
CATB Catskill Financial Corp. 80.83 16.50 16.25 0.25 1.52%
CNY Carver Bancorp Inc. 29.51 12.75 11.94 0.81 6.37%
CONE Conestoga Bancorp, Inc. NA NA NA NA NA
DIME Dime Community Bancorp Inc. 294.59 22.50 19.31 3.19 14.16%
DME Dime Bancorp Inc. 2,423.20 23.63 20.13 3.50 14.81%
ESBK Elmira Savings Bank (The) 21.19 30.00 24.25 5.75 19.17%
FFIC Flushing Financial Corp. 184.01 23.06 21.94 1.13 4.88%
FIBC Financial Bancorp Inc. 38.75 22.50 23.00 (0.50) -2.22%
GOSB GSB Financial Corp. 34.85 15.50 14.50 1.00 6.45%
GPT GreenPoint Financial Corp. 2,772.03 64.00 63.13 0.88 1.37%
GRTR GreenPoint Financial Corp. NA NA 23.13 NA NA
HAVN Haven Bancorp Inc. 196.16 44.75 39.13 5.63 12.57%
JSB JSB Financial Inc. 481.35 48.75 47.31 1.44 2.95%
LISB Long Island Bancorp Inc. 1,116.04 46.56 44.25 2.31 4.97%
MBB MSB Bancorp Inc. 78.04 27.44 23.69 3.75 13.67%
NYB New York Bancorp Inc. 757.05 35.06 31.13 3.94 11.23%
PBHC Oswego City Savings Bk (MHC) 40.25 21.00 19.50 1.50 7.14%
PEEK Peekskill Financial Corp. 54.68 17.13 16.38 0.75 4.38%
PKPS Poughkeepsie Financial Corp. 124.37 9.88 7.88 2.00 20.25%
PSBK Progressive Bank Inc. 134.69 35.25 32.75 2.50 7.09%
QCSB Queens County Bancorp Inc. 567.41 37.25 54.13 (16.88) -45.30%
RCSB RCSB Financial Inc. NA NA 51.50 NA NA
RELY Reliance Bancorp Inc. 289.62 33.00 32.00 1.00 3.03%
ROSE TR Financial Corp. 569.92 32.38 27.00 5.38 16.60%
RSLN Roslyn Bancorp Inc. 1,022.89 23.44 22.75 0.69 2.94%
SBFL SB of the Finger Lakes (MHC) 47.75 26.75 25.00 1.75 6.54%
SFED SFS Bancorp Inc. 27.74 22.53 19.75 2.78 12.34%
SKAN Skaneateles Bancorp Inc. 27.68 29.00 23.25 5.75 19.83%
TPNZ Tappan Zee Financial Inc. 31.06 20.75 17.38 3.38 16.27%
YFCB Yonkers Financial Corporation 61.55 20.38 19.88 0.50 2.45%
Count 32 29 31 29 29
New York Average 417.75 29.01 27.54 1.48 5.09%
New York Median 102.60 25.19 23.19 2.00 7.94%
</TABLE>
Source: SNL Securities and FinPro Calculations
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 41
<PAGE> 42
On a price appreciation basis, the Comparable Group is slightly less than the
SNL Index, but greater than the New York Averages.
FIGURE 22 - COMPARABLE PRICE CHANGE
<TABLE>
<CAPTION>
10/10/97 10/10/97 9/8/97
Market Stock Stock Dollar Percentage
Value Price Price Change Change
Ticker Short Name ($M) ($) ($)
- -----------------------------------------------------------------------------------------------------------
Comparable Group
<S> <C> <C> <C> <C> <C> <C>
CATB Catskill Financial Corp. 80.83 16.50 16.25 0.250 1.54%
CEBK Central Co-operative Bank 47.16 24.00 20.75 3.250 15.66%
FBER 1st Bergen Bancorp 53.63 17.88 18.5 (0.625) -3.38%
FIBC Financial Bancorp Inc. 38.75 22.50 23 (0.500) -2.17%
FKFS First Keystone Financial 40.21 32.75 28.5 4.250 14.91%
FSBI Fidelity Bancorp Inc. 36.42 23.50 22 1.500 6.82%
LFBI Little Falls Bancorp Inc. 48.25 18.50 16.875 1.625 9.63%
PBCI Pamrapo Bancorp Inc. 73.21 25.75 21.5 4.250 19.77%
PHFC Pittsburgh Home Financial Corp 73.21 25.75 18.938 6.812 35.97%
WVFC WVS Financial Corp. 38.65 19.63 27.875 (8.250) -29.60%
Count 10 10 10 10 10
Comparable Average 53.03 22.68 21.42 1.256 5.54%
Comparable Median 47.71 23.00 21.13 1.875 8.15%
</TABLE>
Source: SNL Securities and FinPro Calculations
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 42
<PAGE> 43
The average price to tangible book ratio for New York thrifts has increased by
8.57%, while the price to LTM earnings per share ratio for New York thrifts
increased by 13.68%.
FIGURE 23 - STATE MULTIPLE CHANGES
<TABLE>
<CAPTION>
10/10/97 9/8/97 10/10/97 9/8/97
10/10/97 9/8/97 Percentage Book Book Percentage Tangible Tangible Percentage
LTM EPS LTM EPS Change Value Value Change Bk Value Bk Value Change
Ticker Short Name (x) (x) (x) (%) (%) (%) (%) (%) (%)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
New York
AFED AFSALA Bancorp Inc. NA NA NA 119.35 102.07 16.93% 119.35 102.07 16.93%
AHCI Ambanc Holding Co. NM NM NA 119.84 109.34 9.60% 119.84 109.34 9.60%
ALBC Albion Banc Corp. 107.87 86.11 25.27% 121.56 97.04 25.27% 121.56 97.04 25.27%
ALBK ALBANK Financial Corp. 21.33 18.84 13.22% 174.08 153.77 13.2l% 199.20 175.96 13.21%
ASFC Astoria Financial Corp. 29.58 25.75 14.87% 197.62 172.05 14.86% 235.32 204.86 14.87%
CATB Catskill Financial Corp. 20.12 19.82 1.51% 109.42 107.76 1.54% 109.42 107.76 1.54%
CNY Carver Bancorp Inc. NM NM NA 85.40 79.96 6.80% 89.04 83.37 6.80%
CONE Conestoga Bancorp. Inc. NA NA NA NA NA NA NA NA NA
DIME Dime Community Bancorp Inc. 23.94 20.55 16.50% 154.32 132.46 16.50% 179.14 153.77 16.50%
DME Dime Bancorp Inc. 23.16 19.73 17.38% 231.39 197.11 17.39% 242.56 206.62 17.39%
ESBK Elmira Savings Bank (The) 26.32 21.27 23.74% 144.79 117.04 23.71% 150.98 122.04 23.71%
FFIC Flushing Financial Corp. 24.02 22.85 5.12% 138.27 131.52 5.13% 138.27 131.52 5.13%
FIBC Financial Bancorp Inc. 24.73 25.27 -2.14% 146.58 149.84 -2.18% 147.35 150.62 -2.17%
GOSB GSB Financial Corp. NA NA NA NA NA NA NA NA NA
GPT GreenPoint Financial Corp. 18.82 18.57 1.35% 186.75 184.20 1.38% 332.12 327.58 1.39%
GRTR GreenPoint Financial Corp. NA 27.53 NA NA 196.98 NA NA 196.98 NA
HAVN Haven Bancorp Inc. 22.15 19.37 14.35% 184.92 161.67 14.38% 185.61 162.28 14.38%
JSB JSB Financial Inc. 18.26 17.72 3.05% 137.17 133.13 3.03% 137.17 133.13 3.03%
LISB Long Island Bancorp Inc. 31.89 30.31 5.21% 210.03 199.59 5.23% 212.13 201.59 5.23%
MBB MSB Bancorp Inc. 70.35 60.74 15.82% 129.73 112.00 15.83% 264.34 228.21 15.83%
NYB New York Bancorp Inc. 18.85 16.73 12.67% 453.60 402.65 12.65% 453.60 402.65 12.65%
PBHC Oswego City Savings Bk (MHC) 25.61 23.78 7.70% 179.79 166.95 7.69% 216.05 200.62 7.69%
PEEK Peekskill Financial Corp. 30.58 29.24 4.58% 116.42 111.32 4.58% 116.42 111.32 4.58%
PKPS Poughkeepsie Financial Corp. 44.89 35.80 25.39% 168.80 134.62 25.39% 168.80 134.62 25.39%
PSBK Progressive Bank Inc. 15.46 14.36 7.66% 179.21 166.50 7.63% 200.74 186.40 7.69%
QCSB Queens County Bancorp Inc. 26.99 26.15 3.21% 281.77 272.95 3.23% 281.77 272.95 3.23%
RCSB RCSB Financial Inc. NA 20.68 NA NA 240.43 NA NA 246.41 NA
RELY Reliance Bancorp Inc. 27.27 26.45 3.10% 177.99 172.60 3.12% 247.01 239.52 3.13%
ROSE TR Financial Corp. 17.69 14.75 19.93% 240.71 200.74 19.91% 240.71 200.74 19.91%
RSLN Roslyn Bancorp Inc. NA NA NA 160.75 156.04 3.02% 161.53 156.79 3.02%
SBFL SB of the Finger Lakes (MHC) 178.33 166.67 7.00% 230.01 214.96 7.00% 230.01 214.96 7.00%
SFED SFS Bancorp Inc. 35.20 30.86 14.06% 129.19 113.25 14.08% 129.19 113.25 14.08%
SKAN Skaneateles Bancorp Inc. 16.48 13.21 24.75% 163.01 130.69 24.73% 168.21 134.86 24.73%
TPNZ Tappan Zee Financial Inc. 34.58 28.96 19.41% 147.06 123.14 19.43% 147.06 123.14 19.43%
YFCB Yonkers Financial Corporation 26.12 25.48 2.51% 144.09 140.56 2.51% 144.09 140.56 2.51%
Count 26 28 24 28 30 28 28 30 28
New York Average 35.58 31.29 13.68% 173.02 160.15 8.04% 189.95 174.96 8.57%
New York Median 25.61 23.78 7.70% 160.75 149.84 7.28% 168.80 156.79 7.66%
</TABLE>
10/10/97 9/8/97 Percentage
Assets Assets Change
Ticker Short Name (%) (%) (%)
- ------------------------------------------------------------------
New York
AFED AFSALA Bancorp Inc. 17.36 14.85 16.90%
AHCI Ambanc Holding Co. 15.51 14.15 9.61%
ALBC Albion Banc Corp. 10.61 8.47 25.27%
ALBK ALBANK Financial Corp. 16.02 14.15 13.22%
ASFC Astoria Financial Corp. 15.46 13.46 14.86%
CATB Catskill Financial Corp. 27.40 26.98 1.56%
CNY Carver Bancorp Inc. 7.13 6.68 6.74%
CONE Conestoga Bancorp. Inc. NA NA NA
DIME Dime Community Bancorp Inc. 22.40 19.23 16.48%
DME Dime Bancorp Inc. 12.20 10.39 17.42%
ESBK Elmira Savings Bank (The) 9.30 7.52 23.67%
FFIC Flushing Financial Corp. 21.40 20.35 5.16%
FIBC Financial Bancorp Inc. 13.72 14.02 -2.14%
GOSB GSB Financial Corp. NA NA NA
GPT GreenPoint Financial Corp. 21.68 21.38 1.40%
GRTR GreenPoint Financial Corp. NA 12.30 NA
HAVN Haven Bancorp Inc. 11.00 9.61 14.46%
JSB JSB Financial Inc. 31.34 30.42 3.02%
LISB Long Island Bancorp Inc. 18.89 17.95 5.24%
MBB MSB Bancorp Inc. 9.59 8.28 15.82%
NYB New York Bancorp Inc. 23.06 20.47 12.65%
PBHC Oswego City Savings Bk (MHC) 21.08 19.58 7.66%
PEEK Peekskill Financial Corp. 29.95 28.64 4.57%
PKPS Poughkeepsie Financial Corp. 14.13 11.27 25.38%
PSBK Progressive Bank Inc. 15.33 14.24 7.65%
QCSB Queens County Bancorp Inc. 38.78 37.56 3.25%
RCSB RCSB Financial Inc. NA 18.31 NA
RELY Reliance Bancorp Inc. 14.65 14.21 3.10%
ROSE TR Financial Corp. 15.97 13.32 19.89%
RSLN Roslyn Bancorp Inc. 32.38 31.43 3.02%
SBFL SB of the Finger Lakes (MHC) 21.94 20.59 6.56%
SFED SFS Bancorp Inc. 16.11 14.12 14.09%
SKAN Skaneateles Bancorp Inc. 11.16 8.95 24.69%
TPNZ Tappan Zee Financial Inc. 25.02 20.95 19.43%
YFCB Yonkers Financial Corporation 21.47 20.94 2.53%
Count 28 30 28
New York Average 18.78 17.11 9.71%
New York Median 16.11 14.24 13.13%
Source SNL Securities and FinPro Calculations
The Comparable Group's price to LTM earnings per share and price to tangible
book increased by 6.97% and 9.02%, respectively.
FIGURE 24 - COMPARABLE MULTIPLE CHANGES
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Price Multiple Changes
-------------------------------------------------------------------------------------------
10/10/97 9/8/97 10/10/97 9/8/97
10/10/97 9/8/97 Percentage Book Book Percentage Tangible Tangible Percentage
LTM EPS LTM EPS Change Value Value Change Bk Value Bk Value Change
Ticker Short Name (x) (x) (x) (%) (%) (%) (%) (%) (%)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Comparable Group
CATB Catskill Financial Corp. 20.12 19.82 1.51% 109.42 107.76 1.54% 109.42 107.76 1.54%
CEBK Central Co-operative Bank 16.44 14.21 15.69% 137.93 119.25 15.66% 154.14 133.27 15.66%
FBER 1st Bergen Bancorp 42.56 44.05 -3.38% 132.70 137.34 -3.38% 132.70 137.34 -3.38%
FIBC Financial Bancorp Inc. 24.73 25.27 -2.14% 146.58 149.84 -2.18% 147.35 150.62 -2.17%
FKFS First Keystone Financial 22.74 19.79 14.91% 171.56 149.29 14.92% 171.56 149.29 14.92%
FSBI Fidelity Bancorp Inc. 22.17 20.75 6.84% 148.45 138.98 6.81% 148.45 138.98 6.81%
LFBI Little Falls Bancorp Inc. 59.68 54.44 9.63% 127.50 116.30 9.63% 138.06 125.93 9.63%
PBCI Pamrapo Bancorp Inc. 25.06 19.72 27.08% 154.93 129.36 19.77% 156.16 130.38 19.77%
PHFC Pittsburgh Home Financial Corp 23.62 26.30 -10.19% 154.93 133.27 16.25% 156.16 134.79 15.85%
WVFC WVS Financial Corp. 27.26 16.49 65.31% 138.11 148.11 -6.75% 139.68 148.11 -5.69%
Count 10 10 10 10 10 10 10 10 10
Comparable Average 28.44 26.08 9.02% 142.21 132.95 6.97% 145.37 135.65 7.17%
Comparable Median 24.18 20.29 19.18% 142.35 135.31 5.20% 147.90 136.07 8.70%
</TABLE>
------------------------------
Price Multiple Changes
------------------------------
10/10/97 9/8/97 Percentage
Assets Assets Change
Ticker Short Name (%) (%) (%)
- ------------------------------------------------------------------
Comparable Group
CATB Catskill Financial Corp. 27.40 26.98 1.56%
CEBK Central Co-operative Bank 13.69 11.84 15.63%
FBER 1st Bergen Bancorp 18.83 19.49 -3.39%
FIBC Financial Bancorp Inc. 13.72 14.02 -2.14%
FKFS First Keystone Financial 12.54 10.91 14.94%
FSBI Fidelity Bancorp Inc. 10.03 9.39 6.82%
LFBI Little Falls Bancorp Inc. 16.93 15.44 9.65%
PBCI Pamrapo Bancorp Inc. 19.73 16.48 19.72%
PHFC Pittsburgh Home Financial Corp 19.73 14.55 35.60%
WVFC WVS Financial Corp. 15.08 16.53 -8.77%
Count 10 10 10
Comparable Average 16.77 15.56 7.74%
Comparable Median 16.01 15.00 6.74%
Source SNL Securities and FinPro Calculations
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 43
<PAGE> 44
- -------------------------
VALUATION
DETERMINATION
- -------------------------
As in our initial appraisal, FinPro has analyzed the pro-forma price to
earnings, pro-forma price to tangible book and pro-forma price to book ratios in
combination with one another in determining an appropriate pro-forma estimated
market value for Warwick. FinPro has considered the price to assets ratio as
well in its valuation approach. Additional supporting data is as follows:
Exhibit 5 - Selected Data on All Public Thrifts
Exhibit 6 - Industry Multiples - Pricing Data as of October 10, 1997
Exhibit 7 - Multiples of the Comparable Group - Pricing data as of
September 8, 1997 and October 10, 1997
Exhibit 8 - Standard Conversions - 1996 to Date
As discussed earlier, the financial condition of the Bank has not materially
changed since the original appraisal dated September 18, 1997. Since the date of
the original appraisal, Comparable Group stock prices have increased 5.54%
(Figure 22).
Based upon these factors, FinPro believes that its original valuation range of
$48,500,000 at the midpoint, $41,225,000 at the minimum and $55,775,000 million
at the maximum ($64,141,250 million at the adjusted maximum) is still
appropriate. The resulting pro-forma pricing ratios and discounts (premiums) to
the Comparative Group are as follows:
FIGURE 22 - PRICING MULTIPLES TO THE COMPARABLE GROUP
----------------------------------------------------
Price Relative to
----------------------------------------------------
LTM EPS Core EPS Book Tangible Book Assets
----------------------------------------------------
Averages:
- --------------------------------------------------------------------------------
The Bank (at midpoint) 13.51 13.51 70.92% 70.92% 15.04%
- --------------------------------------------------------------------------------
Comparable Group Average 27.86 19.63 143.99% 147.02% 16.72%
- --------------------------------------------------------------------------------
(Discount) Premium -51.51% -31.18% -50.75% -51.76% -10.05%
- --------------------------------------------------------------------------------
Medians:
- --------------------------------------------------------------------------------
The Bank (at midpoint) 13.51 13.51 70.92% 70.92% 15.04%
- --------------------------------------------------------------------------------
Comparable Group Average 23.18 16.99 142.35% 147.90% 16.01%
- --------------------------------------------------------------------------------
(Discount) Premium -41.72% -20.48% -50.18% -52.05% -6.06%
- --------------------------------------------------------------------------------
Source: FinPro Computations
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 44
<PAGE> 45
FIGURE 23 - SUPERMAX PRICING MULTIPLES VS. RECENT CONVERSIONS
Recent Standard Conversions
------------------------------------------------
Price Relative to
------------------------------------------------
Averages: Earnings Book Tangible Book Assets
- --------------------------------------------------------------------------------
The Bank (at the supermax) 16.13 78.62% 78.62% 19.11%
- --------------------------------------------------------------------------------
Recent Standard Conversions 22.40 70.90% 70.90% 16.60%
- --------------------------------------------------------------------------------
(Discount) Premium -27.99% 10.89% 10.89% 15.12%
- --------------------------------------------------------------------------------
Medians:
- --------------------------------------------------------------------------------
The Bank (at the supermax) 16.13 78.62% 78.62% 19.11%
- --------------------------------------------------------------------------------
Recent Standard Conversions 20.40 71.80 71.80% 16.40%
- --------------------------------------------------------------------------------
(Discount) Premium -20.93% -98.91% 9.50% 16.52%
- --------------------------------------------------------------------------------
FIGURE 24 - VALUE RANGE OFFERING DATA
-------------------------------------------------------
Appraised Value
-------------------------------------------------------
Conclusion Minimum Midpoint Maximum SuperMaximum*
-------------------------------------------------------
Total Shares 4,122,500 4,850,000 5,577,500 6,414,125
Price per Share $10 $10 $10 $10
Full Conversion Value $41,225,000 $48,500,000 $55,775,000 $64,141,250
Exchange Shares 0 0 0 0
Exchange Percent 0.00% 0.00% 0.00% 0.00%
Conversion Shares 4,122,500 4,850,000 5,577,500 6,414,125
Conversion Percent 100.00% 100.00% 100.00% 100.00%
Gross Proceeds $41,225,000 $48,500,000 $55,775,000 $64,141,250
Exchange Value $0 $0 $0 $0
Exchange Ratio 0.000 0.000 0.000 0.000
-------------------------------------------------------
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 45
<PAGE> 46
--------------------------
VALUATION CONCLUSION
--------------------------
As of October 10, 1997, it is FinPro's opinion that the estimated value range
established at September 8, 1997 is still valid. Additionally, the upward change
in the Comparable Group of 6.97% to 9.05% is well within the EVR.
It is therefore our opinion that, as of October 10, 1997, that the original
valuation range of $48,500,000 at the midpoint, $41,225,000 at the minimum and
$55,775,000 million at the maximum ($64,141,250 million at the adjusted maximum)
is still appropriate.
Respectfully Submitted,
FinPro, Inc.
Donald J. Musso
President
- --------------------------------------------------------------------------------
The Warwick Savings Bank Appraisal Update Page 46
<PAGE> 1
[WARWICK COMMUNITY BANCORP, INC.]
Dear Depositor:
The Board of Trustees of The Warwick Savings Bank has voted unanimously in favor
of a plan to convert from a state chartered mutual savings bank to a state
chartered stock savings bank. As part of this plan, we have formed a holding
company, Warwick Community Bancorp, Inc., which will become the parent company
of The Warwick Savings Bank. We are converting so that The Warwick Savings Bank
will be structured in the form of ownership used by a growing number of savings
institutions and to allow our Bank to become even stronger.
In addition, as part of the Conversion and in keeping with the Bank's
long-standing commitment to its local community, The Warwick Savings Bank
intends to establish a charitable foundation to be known as The Warwick Savings
Foundation. The Foundation will be dedicated to charitable purposes within the
Bank's local community, including community development activities.
TO ACCOMPLISH THE CONVERSION, YOUR PARTICIPATION IS EXTREMELY IMPORTANT. On
behalf of the Board, I ask that you help us meet our goal by reading the
enclosed materials and then casting your vote in favor of the Plan of Conversion
and mailing your signed proxy card immediately in the postage-paid
envelope provided. Should you choose to attend the Special Meeting of Depositors
and wish to vote in person, you may do so by revoking any previously executed
proxy. If you have an IRA or other Qualified Plan account for which the Bank
acts as trustee and we do not receive a proxy from you, the Bank intends, as
trustee for such account, to vote in favor of the Plan of Conversion on your
behalf.
If the Plan of Conversion is approved let me assure you that:
- Deposit accounts will continue to be federally insured to the same extent
they are today.
- Existing deposit accounts and loans will not undergo any change as a
result of the Conversion.
- Voting for approval will not obligate you to buy any shares of Common
Stock.
As a qualifying account holder, you may also take advantage of your
nontransferable rights to subscribe for shares of Warwick Community Bancorp
Inc.'s Common Stock on a priority basis, before the stock is offered to the
general public. The enclosed Proxy Statement and Prospectus describes the stock
offering and the operations of The Warwick Savings Bank. If you wish to purchase
stock, please complete the stock order and certification form and return it to
any branch office of The Warwick Savings Bank, or mail it to The Warwick Savings
Bank in the enclosed postage-paid envelope marked "STOCK ORDER
RETURN". Your order must be received no later than 12:00 noon Eastern time on
Day, Month X, 1997. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE MAKING AN
INVESTMENT DECISION.
If you wish to use funds in your IRA or Qualified Plan at The Warwick Savings
Bank to subscribe for Common Stock, please be aware that applicable law requires
that such funds first be transferred to a self-directed retirement account with
a trustee other than The Warwick Savings Bank. The transfer of such funds to a
new trustee takes time, so please make arrangements as soon as possible.
If you have any questions after reading the enclosed materials, please call our
Conversion Center at (914) 988-0854, Monday through Friday, between the hours of
10:00 a.m. to 4:00 p.m. Please note that the Conversion Center will be closed
from 12:00 noon Day, Month X, through 12:00 noon Day, Month X, in observance of
the holiday.
Sincerely,
Timothy A. Dempsey
President and Chief Executive Officer
The shares of Common Stock offered in the Conversion are not savings accounts or
deposits and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
<PAGE> 2
[WARWICK COMMUNITY BANCORP, INC.]
Dear Depositor:
The Board of Trustees of The Warwick Savings Bank has voted unanimously in favor
of a plan to convert from a state chartered mutual savings bank to a state
chartered stock savings bank. As part of this plan, we have formed a holding
company, Warwick Community Bancorp, Inc., which will become the parent company
of The Warwick Savings Bank. We are converting so that The Warwick Savings Bank
will be structured in the form of ownership used by a growing number of savings
institutions and to allow our Bank to become even stronger.
In addition, as part of the Conversion and in keeping with the Bank's
long-standing commitment to its local community, The Warwick Savings Bank
intends to establish a charitable foundation to be known as The Warwick Savings
Foundation. The Foundation will be dedicated to charitable purposes within the
Bank's local community, including community development activities.
TO ACCOMPLISH THE CONVERSION, YOUR PARTICIPATION IS EXTREMELY IMPORTANT. On
behalf of the Board, I ask that you help us meet our goal by reading the
enclosed materials and then casting your vote in favor of the Plan of Conversion
and mailing your signed proxy card immediately in the
postage-paid envelope provided. Should you choose to attend the Special Meeting
of Depositors and wish to vote in person, you may do so by revoking any
previously executed proxy. If you have an IRA or other Qualified Plan account
for which the Bank acts as trustee and we do not receive a proxy from you, the
Bank intends, as trustee for such account, to vote in favor of the Plan of
Conversion on your behalf.
If the Plan of Conversion is approved let me assure you that:
- Deposit accounts will continue to be federally insured to the same extent
they are today.
- Existing deposit accounts and loans will not undergo any change as a
result of the Conversion.
We regret that we are unable to offer you Common Stock in the Subscription
Offering, because the laws of your state or jurisdiction require us to register
either (1) the to-be-issued Common Stock of Warwick Community Bancorp Inc., or
(2) an agent of The Warwick Savings Bank to solicit the sale of such stock, and
the number of eligible subscribers in your state or jurisdiction does not
justify the expense of such registration.
If you have any questions after reading the enclosed materials, please call our
Conversion Center at (914) 988-0854, Monday through Friday, between the hours of
10:00 a.m. to 4:00 p.m. Please note that the Conversion Center will be closed
from 12:00 noon Day, Month X, through 12:00 noon Day, Month X, in observance of
the holiday.
Sincerely,
Timothy A. Dempsey
President and Chief Executive Officer
The shares of Common Stock offered in the Conversion are not savings accounts or
deposits and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
<PAGE> 3
[WARWICK COMMUNITY BANCORP, INC.]
Dear Friend:
The Warwick Savings Bank is in the process of converting from a state chartered
mutual savings bank to a state chartered stock savings bank. As part of this
plan, we have formed a holding company, Warwick Community Bancorp, Inc., which
will become the parent company of The Warwick Savings Bank. We are converting so
that The Warwick Savings Bank will be structured in the form of ownership used
by a growing number of savings institutions and to allow our Bank to become even
stronger. The Conversion will in no way affect the insurance of deposit accounts
or the services offered by the Bank.
In addition, as part of the Conversion and in keeping with the Bank's
long-standing commitment to its local community, The Warwick Savings Bank
intends to establish a charitable foundation to be known as The Warwick Savings
Foundation. The Foundation will be dedicated to charitable purposes within the
Bank's local community, including community development activities.
As a former account holder, you may take advantage of your nontransferable
rights to subscribe for shares of Warwick Community Bancorp Inc.'s Common Stock
on a priority basis, before the stock is offered to the general public. The
enclosed Prospectus describes the stock offering and the operations of The
Warwick Savings Bank. If you wish to purchase stock, please complete the stock
order and certification form and return it to any branch office of The Warwick
Savings Bank, or mail it to The Warwick Savings Bank in the enclosed
postage-paid envelope marked "STOCK ORDER RETURN". Your order must
be received no later than 12:00 noon Eastern time on Day, Month X, 1997. PLEASE
READ THE PROSPECTUS CAREFULLY BEFORE MAKING AN INVESTMENT DECISION.
If you have any questions after reading the enclosed materials, please call our
Conversion Center at (914) 988-0854, Monday through Friday, between the hours of
10:00 a.m. to 4:00 p.m. Please note that the Conversion Center will be closed
from 12:00 noon Day, Month X, through 12:00 noon Day, Month X, in observance of
the holiday.
Sincerely,
Timothy A. Dempsey
President and Chief Executive Officer
The shares of Common Stock offered in the Conversion are not savings accounts or
deposits and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
<PAGE> 4
[WARWICK COMMUNITY BANCORP, INC.]
Dear Potential Investor:
We are pleased to provide you with the enclosed material regarding the
conversion of The Warwick Savings Bank from a state chartered mutual savings
bank to a state chartered stock savings bank.
This information packet includes the following:
PROSPECTUS: This document provides detailed information about The Warwick
Savings Bank's operations, the proposed stock offering by Warwick Community
Bancorp Inc., a holding company formed by the Bank to become its parent
company upon completion of the Conversion, and the establishment of a
charitable foundation as part of the Conversion. Please read it carefully
prior to making an investment decision.
QUESTION AND ANSWER BROCHURE: This answers commonly asked questions about
the stock offering and establishment of the charitable foundation.
STOCK ORDER AND CERTIFICATION FORMS: Use these forms to subscribe for stock
and return them together with your payment in the postage-paid envelope
provided. The deadline to subscribe for stock is 12:00 noon, Eastern time
on Day, Month X, 1997.
We are pleased to offer you this opportunity to become one of our charter
stockholders. If you have any questions regarding the Conversion or the
Prospectus, please call our Conversion Center at (914) 988-0854, Monday through
Friday, between the hours of 10:00 a.m. to 4:00 p.m. Please note that the
Conversion Center will be closed from 12:00 noon Day, Month X, through 12:00
noon Day, Month X, in observance of the holiday.
Sincerely,
Timothy A. Dempsey
President and Chief Executive Officer
The shares of Common Stock offered in the Conversion are not savings accounts or
deposits and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
<PAGE> 5
[SANDLER O'NEILL & PARTNERS, L.P. LETTERHEAD]
Dear Customer of The Warwick Savings Bank:
At the request of The Warwick Savings Bank and Warwick Community Bancorp, Inc.,
a holding company formed by the Bank to become its parent company, we have
enclosed material regarding the offering of Common Stock in connection with the
Conversion of the Bank from a state chartered mutual savings bank to a state
chartered stock savings bank. These materials include a Prospectus, stock order
and certification forms which offer you the opportunity to subscribe for shares
of Common Stock of Warwick Community Bancorp Inc.
We recommend that you study this material carefully. If you decide to subscribe
for shares, you must return the properly completed stock order form and signed
certification form, along with full payment for the shares (or appropriate
instructions authorizing withdrawal from a deposit account at The Warwick
Savings Bank), no later than 12:00 noon, Eastern time on Day, Month X, 1997 in
the accompanying postage-paid envelope. If you have any questions
after reading the enclosed material, please call the Conversion Center at (914)
988-0854, Monday through Friday, between the hours of 10:00 a.m. and 4:00 p.m.,
and ask for a Sandler O'Neill representative. Please note that the Conversion
Center will be closed from 12:00 noon Day, Month X through 12:00 noon Day, Month
X, in observance of the holiday.
We have been asked to forward these documents to you in view of certain
requirements of the securities laws of your jurisdiction. We should not be
understood as recommending or soliciting in any way any action by you with
regard to the enclosed materials.
Sincerely,
SANDLER O'NEILL & PARTNERS, L.P.
The shares of Common Stock offered in the Conversion are not savings accounts or
deposits and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Enclosure
<PAGE> 6
[THE WARWICK SAVINGS BANK]
PROXY REQUEST
WE NEED YOUR VOTE!
DEAR CUSTOMER:
YOUR VOTE ON OUR PLAN OF CONVERSION HAS NOT YET BEEN RECEIVED. YOUR VOTE IS VERY
IMPORTANT TO US. PLEASE VOTE AND MAIL THE ENCLOSED PROXY TODAY.
REMEMBER: VOTING FOR THE PLAN OF CONVERSION DOES NOT OBLIGATE YOU TO BUY
STOCK. THE BOARD OF TRUSTEES OF THE WARWICK SAVINGS BANK HAS UNANIMOUSLY
APPROVED THE PLAN OF CONVERSION, INCLUDING THE ESTABLISHMENT OF THE
CHARITABLE FOUNDATION, AND URGES YOU TO VOTE IN FAVOR OF THE PLAN OF
CONVERSION. YOUR WARWICK SAVINGS BANK DEPOSIT ACCOUNTS OR LOANS WILL NOT BE
AFFECTED IN ANY WAY. DEPOSIT ACCOUNTS WILL CONTINUE TO BE FEDERALLY
INSURED.
A POSTAGE-PAID ENVELOPE IS ENCLOSED WITH THE PROXY FORM. IF YOU HAVE ANY
QUESTIONS, PLEASE CALL OUR CONVERSION CENTER AT (914) 988-0854.
IF YOU HAVE MORE THAN ONE ACCOUNT YOU MAY RECEIVE MORE THAN ONE PROXY.
PLEASE VOTE TODAY BY RETURNING ALL PROXY FORMS RECEIVED.
SINCERELY,
THE WARWICK SAVINGS BANK
<PAGE> 7
QUESTIONS AND
ANSWERS
About Conversion
The Board of Trustees of The Warwick Savings Bank has unanimously adopted the
Plan of Conversion whereby the Bank will convert from a New York State chartered
mutual savings bank to a New York State chartered stock savings bank and at the
same time become a wholly-owned subsidiary of Warwick Community Bancorp, Inc., a
Delaware corporation formed by The Warwick Savings Bank to acquire all the
outstanding stock of the Bank. As part of the Conversion, Warwick Community
Bancorp, Inc. will be offering its Common Stock for sale pursuant to the terms
of the Plan of Conversion.
The Warwick Savings Bank is converting to stock ownership in order to be in the
corporate form used by a growing number of financial institutions and to allow
The Warwick Savings Bank to become even stronger. In addition, as part of the
Conversion, the Bank intends to establish The Warwick Savings Foundation which
will be dedicated to charitable purposes within the Bank's local communities.
It is necessary for The Warwick Savings Bank to receive the approval of: 1) at
least 75% in amount of deposit liabilities of Voting Depositors represented in
person or by proxy at the Special Meeting; and 2) at least a majority of the
votes eligible to be cast at the Special Meeting, so YOUR VOTE IS VERY
IMPORTANT. Please return your proxy in the enclosed postage-paid envelope.
YOUR BOARD OF TRUSTEES OF THE WARWICK SAVINGS BANK URGE YOU TO VOTE "FOR" THE
CONVERSION AND RETURN YOUR PROXY TODAY.
Effect on Deposits and Loans
Q. WILL THE CONVERSION AFFECT ANY OF MY DEPOSIT ACCOUNTS OR LOANS?
A. No. The Conversion will have no effect on the balance or terms of any deposit
account or loan. Your deposits will continue to be federally insured to the
fullest extent permissible.
7-1
<PAGE> 8
About Voting
Q. WHO IS ELIGIBLE TO VOTE ON THE CONVERSION?
A. Only Depositors with accounts totaling $100 or more on XXX, XX, 1997 ("Voting
Record Date") who continue to be Voting Depositors of the Bank as of the date
of the Special Meeting are eligible to vote.
Q. AM I REQUIRED TO VOTE?
A. No. Voting Depositors are not required to vote. However, because the
Conversion will produce a fundamental change in The Warwick Savings Bank's
corporate structure, all Voting Depositors are encouraged to vote.
Q. WHY DID I RECEIVE SEVERAL PROXIES?
A. If you have more than one account you may have received more than one proxy
depending upon the ownership structure of your accounts. Please vote, sign
and return all proxy cards that you received.
Q. HOW DO I VOTE?
A. You may vote by mailing your signed proxy card in the postage-paid
envelope provided. Should you choose to attend the Special Meeting of
Depositors and decide to change your vote, you may do so by revoking any
previously executed proxy.
Q. DOES MY VOTE FOR CONVERSION MEAN THAT I MUST BUY COMMON STOCK OF WARWICK
COMMUNITY BANCORP, INC.?
A. No. Voting for the Plan of Conversion does not obligate you to buy shares of
Common Stock of Warwick Community Bancorp, Inc.
Q. I HAVE A JOINT SAVINGS ACCOUNT. MUST BOTH PARTIES SIGN THE PROXY CARD?
A. Only one signature is required, but both parties should sign if possible.
Q. WHO MUST SIGN FOR TRUST OR CUSTODIAN ACCOUNTS?
A. The trustee or custodian must sign such accounts, not the beneficiary.
7-2
<PAGE> 9
Q. I AM THE EXECUTOR (ADMINISTRATOR) FOR A DECEASED DEPOSITOR. CAN I SIGN THE
PROXY CARD?
A. Yes. Please indicate on the card the capacity in which you are signing the
card.
About The Foundation
Q. WHAT IS THE WARWICK SAVINGS FOUNDATION AND WHY IS IT BEING ESTABLISHED?
A. In keeping with The Warwick Savings Bank's long standing commitment to its
local community, the Bank's Plan of Conversion provides for the establishment
of a charitable foundation to be known as The Warwick Savings Foundation. The
Foundation will be dedicated to charitable purposes within the Bank's local
community, including community development activities.
Q. HOW WILL THE FOUNDATION BE FUNDED?
A. The Company will fund the Foundation with shares of its Common Stock.
Immediately following the Conversion a number of shares of authorized but
unissued Common Stock equal to 3% of the Common Stock sold in the Offerings,
or XXX,XXX, XXX,XXX and XXX,XXX shares at the minimum, midpoint and maximum
of the Estimated Price Range, respectively, will be contributed to the
Foundation.
Q. WHAT IS THE IMPACT OF THE FOUNDATION ON THE COMPANY'S STOCKHOLDERS' EQUITY
AND EARNINGS?
A. The funding of the Foundation will impact the Company's stockholders' equity
and will have an adverse effect on the Company's earnings in the period in
which the Foundation is funded, which is expected to be the quarter of
199X.
The establishment of the Foundation, however, was considered in the independent
appraisal of the aggregate pro forma market value of the Company's Common Stock.
In addition, there are certain tax effects, regulatory considerations and other
matters with respect to the Foundation. A prospective shareholder should
carefully review "Risk Factors -- Establishment of Charitable Foundation" and
"The Conversion -- Establishment of The Warwick Savings Foundation" in the
Prospectus.
7-3
<PAGE> 10
Q. IF I PURCHASE SHARES OF COMMON STOCK IN THE CONVERSION, WILL MY INTEREST IN
THE COMPANY BE DILUTED AS A RESULT OF THE ESTABLISHMENT OF THE FOUNDATION?
A. Yes. Upon completion of the Conversion and the establishment of the
Foundation, the Foundation will receive an amount of Common Stock equal to 3%
of the Company's Common Stock sold in the Offerings. As a result, persons
purchasing shares in the Conversion will have their ownership and voting
interests in the Company diluted by 2.9% upon funding of the Foundation.
About The Stock
Investment in Common Stock involves certain risks. For a discussion of the risks
and other factors, investors are urged to read the accompanying Prospectus.
Q. WHAT ARE THE PRIORITIES OF PURCHASING THE COMMON STOCK?
A. The Common Stock of Warwick Community Bancorp, Inc. will be offered in the
following order to: The Warwick Savings Bank's Eligible Account Holders
(depositors with accounts totaling $100 or more as of June 30, 1996); the
Employee Plans, including the ESOP; Supplemental Eligible Account Holders
(depositors with accounts totaling $100 or more as of September 30, 1997 and
who are not Eligible Account Holders or directors, officers or their
associates); and Other Depositors (depositors with amounts totalling $100 or
more as of the Voting Record Date and who are not Eligible Account Holders or
Supplemental Eligible Account Holders) in a Subscription Offering. Upon
completion of the Subscription Offering, Common Stock that is not sold in the
Subscription Offering will be offered to certain members of the general
public in a Community Offering, and if there are still unsold shares, they
will then be offered to the general public in a Syndicated Community
Offering.
Q. WILL ANY ACCOUNT I HOLD WITH THE BANK BE CONVERTED INTO STOCK?
A. No. All accounts remain as they were prior to the Conversion. As an Eligible
Account Holder, Supplemental Eligible Account Holder or Other Depositor, you
receive priority over the general public in exercising your right to
subscribe for shares of Common Stock.
Q. WILL I RECEIVE A DISCOUNT ON THE PRICE OF THE STOCK?
A. No. Conversion regulations require that the offering price of the stock be
the same for everyone: customers, trustees, officers, employees of the Bank,
and the general public.
7-4
<PAGE> 11
Q. HOW MANY SHARES OF STOCK ARE BEING OFFERED, AND AT WHAT PRICE?
A. Warwick Community Bancorp, Inc. is offering for sale up to XX,XXX,XXX shares
of Common Stock at a subscription price of $10 per share. Under certain
circumstances, Warwick Community Bancorp, Inc. may sell up to XX,XXX,XXX
shares (not including any shares contributed to the Foundation).
Q. HOW MUCH STOCK CAN I PURCHASE?
A. The minimum purchase is 25 shares; the maximum purchase by any person in the
Subscription Offering is $XXX,XXX (XX,XXX shares); in the Community Offering
and Syndicated Community Offering, if either is held, the maximum purchase by
any person, including purchases by associates of such person or entity, is
$XXX,XXX (XX,XXX shares); and the maximum purchase by any person, including
purchases by associates of such person or entity in the Subscription and
Community Offerings is X% of the shares offered, or XX,XXX shares.
Q. HOW DO I ORDER STOCK?
A. You may subscribe for shares of Common Stock by completing and returning the
stock order form and certification form, together with your payment, either
in person to any branch office of The Warwick Savings Bank, or by mail in the
postage-paid envelope that has been provided.
Q. HOW CAN I PAY FOR MY SHARES OF STOCK?
A. You can pay for the Common Stock by check, cash, money order or withdrawal
from your deposit account at The Warwick Savings Bank. If you choose to pay
by cash, you must deliver the stock order form and payment in person to any
branch office of The Warwick Savings Bank and it will be converted to a bank
check or a money order. PLEASE DO NOT SEND CASH IN THE MAIL.
Q. WHEN IS THE DEADLINE TO SUBSCRIBE FOR STOCK?
A. An executed order form and certification form with the required full payment
must be received by the Bank by 12:00 noon Eastern time, on Day, Month Date,
1997.
7-5
<PAGE> 12
Q. CAN I SUBSCRIBE FOR SHARES USING FUNDS IN MY IRA/QUALIFIED PLAN AT THE
WARWICK SAVINGS BANK?
A. Applicable regulations do not permit the purchase of Common Stock with your
existing IRA or Qualified Plan at The Warwick Savings Bank. To use such funds
to subscribe for Common Stock, you need to establish a "self-directed" trust
account with an outside trustee. Please call our Conversion Center if you
require additional information. TRANSFER OF SUCH FUNDS TAKES TIME, SO, PLEASE
MAKE ARRANGEMENTS AS SOON AS POSSIBLE.
Q. CAN I SUBSCRIBE FOR SHARES AND ADD SOMEONE ELSE WHO IS NOT ON MY ACCOUNT TO
MY STOCK REGISTRATION?
A. No. Applicable regulations prohibit the transfer of subscription rights.
Adding the names of other qualifying account holders who are not owners of
your qualifying account(s) will result in your order becoming null and void.
Q. WILL PAYMENTS FOR COMMON STOCK EARN INTEREST UNTIL THE CONVERSION CLOSES?
A. Yes. Any payments made by cash, check or money order will earn interest at
the Bank's passbook rate from the date of receipt to the completion or
termination of the Conversion. Withdrawals from a deposit account or a
certificate of deposit at the Bank to buy Common Stock may be made without
penalty. Depositors who elect to pay for their Common Stock by withdrawal
will receive interest at the contract rate on the account until the
completion or termination of the Conversion.
Q. WILL DIVIDENDS BE PAID ON THE STOCK?
A. No dividends are expected to be paid initially. Following the Conversion,
however, the Board of Directors of Warwick Community Bancorp, Inc. may
consider a policy of paying cash dividends on the Common Stock.
Q. WILL MY STOCK BE COVERED BY DEPOSIT INSURANCE?
A. No. The Common Stock cannot be insured by the Bank Insurance Fund or the
Savings Association Insurance Fund of the FDIC or any other government agency
nor is it insured or guaranteed by The Warwick Savings Bank or Warwick
Community Bancorp, Inc.
Q. WHERE WILL THE STOCK BE TRADED?
A. Upon completion of the Conversion, Warwick Community Bancorp, Inc. expects
the stock to be traded over-the-counter and to be quoted on the Nasdaq
National Market under the symbol "WSBI".
7-6
<PAGE> 13
Q. CAN I CHANGE MY MIND AFTER I PLACE AN ORDER TO SUBSCRIBE FOR STOCK?
A. No. After receipt, your order may not be modified or withdrawn.
Additional Information
Q. WHAT IF I HAVE ADDITIONAL QUESTIONS OR REQUIRE MORE INFORMATION?
A. The Bank's Proxy Statement and Prospectus describe the Conversion and the
Foundation in detail. Please read the Proxy Statement and Prospectus
carefully before voting. If you have any questions after reading the enclosed
material you may call our Conversion Center at (914) 988-0854, Monday through
Friday, between the hours of 10:00 a.m. and 4:00 p.m. The Conversion Center
will be closed for the holiday, from 12:00 noon Day, Month Date,
through 12:00 noon Day, Month Date. TO ENSURE THAT EACH PURCHASER RECEIVES A
PROSPECTUS AT LEAST 48 HOURS PRIOR TO THE EXPIRATION DATE OF ,
1997 IN ACCORDANCE WITH RULE 15C2-8 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED, NO PROSPECTUS WILL BE MAILED ANY LATER THAN FIVE DAYS PRIOR TO
SUCH DATE OR HAND DELIVERED ANY LATER THAN TWO DAYS PRIOR TO SUCH DATE.
The shares of Common Stock offered in the Conversion are not savings accounts or
deposits and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency nor is the Common Stock insured or
guaranteed by The Warwick Savings Bank or Warwick Community Bancorp, Inc.
This is not an offer to sell or a solicitation of an offer to buy Common Stock.
The offer is made only by the Prospectus.
7-7
<PAGE> 14
[WARWICK COMMUNITY BANCORP, INC.]
____________________, 1997
Mr. John Smith
00-00 00 Drive
City, State 00000
Dear Mr. Smith:
We are pleased to announce that the Board of Trustees of The Warwick Savings
Bank has adopted a plan to convert from a state chartered mutual savings bank to
a state chartered stock savings bank. As part of this plan, we have formed a
holding company, Warwick Community Bancorp, Inc., which will become the parent
company of The Warwick Savings Bank upon completion of the conversion. We are
converting so that the Bank will be structured in the form of ownership used by
a growing number of savings institutions and to allow our Bank to become
stronger.
You are cordially invited to join members of our senior management team at an
informational meeting to be held on at 7:30 P.M. to learn more about the
Conversion and the stock offering.
A member of our staff will be calling to confirm your interest in attending the
meeting.
If you would like additional information regarding the meeting or our
Conversion, please call our Conversion Center number at (914) 988-0854, Monday
through Friday between the hours of 10:00 a.m. to 4:00 p.m. Please note that the
Conversion Center will be closed from 12:00 noon Day, Month Date through 12:00
noon Day, Month Date, in observance of the ______________________ holiday.
Sincerely,
Timothy A. Dempsey
President and Chief Executive Officer
The shares of Common Stock offered in the Conversion are not savings accounts or
deposits and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
This is not an offer to sell or a solicitation of an offer to buy Common Stock.
The offer is made only by the Prospectus.
(Printed by Conversion Center)
#8
<PAGE> 15
[WARWICK COMMUNITY BANCORP, INC.]
____________________, 1997
Dear Subscriber:
We hereby acknowledge receipt of your order for shares of Common Stock in
Warwick Community Bancorp, Inc.
At this time, we cannot confirm the number of shares of Warwick Community
Bancorp, Inc. Common Stock that will be issued to you. Such allocation will be
made in accordance with the Plan of Conversion following completion of the stock
offering.
If you have any questions, please call our Conversion Center at (914) 988-0854.
Sincerely,
WARWICK COMMUNITY BANCORP, INC.
Conversion Center
The shares of Common Stock offered in the Conversion are not savings accounts or
deposits and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
(Printed by Conversion Center)
#9
<PAGE> 16
[WARWICK COMMUNITY BANCORP, INC.]
____________________, 1997
Dear Charter Shareholder:
We appreciate your interest in the stock offering of Warwick Community Bancorp,
Inc. Due to the excellent response from our qualifying account holders, we are
unable to fill all orders in full. Consequently, in accordance with the
provisions of the Plan of Conversion, you were allocated ______ shares at a
price of $10.00 per share. If your subscription was paid for by check, a refund
of any balance due you with interest will be mailed to you promptly.
The purchase date and closing of the transaction occurred on December __, 1997.
Trading will commence on the Nasdaq National Market under the symbol "WSBI" on
_____, December __, 1997. Your stock certificate will be mailed to you shortly.
We thank you for your interest in Warwick Community Bancorp, Inc., and welcome
you as a charter shareholder.
Sincerely,
WARWICK COMMUNITY BANCORP, INC.
Conversion Center
The shares of Common Stock offered in the Conversion are not savings accounts or
deposits and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
(Printed by Conversion Center)
#10
<PAGE> 17
[WARWICK COMMUNITY BANCORP, INC.]
____________________, 1997
Dear Interested Investor:
We recently completed our Subscription and Community Offerings. Unfortunately,
due to the excellent response from our Eligible Account Holders, stock was not
available for our Supplemental Eligible Account Holders, Other Depositors or
community friends. If your subscription was paid for by check, a refund of any
balance due you with interest will be mailed to you promptly.
We appreciate your interest in Warwick Community Bancorp, Inc. and hope you
become an owner of our stock in the future. The stock trades on the Nasdaq
National Market under the symbol "WSBI".
Sincerely,
WARWICK COMMUNITY BANCORP, INC.
Conversion Center
The shares of Common Stock offered in the Conversion are not savings accounts or
deposits and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
(Printed by Conversion Center)
#11
<PAGE> 18
[WARWICK COMMUNITY BANCORP, INC.]
____________________, 1997
Welcome Shareholder:
We are pleased to enclose the stock certificate that represents your share of
ownership in Warwick Community Bancorp, Inc., the parent company of The Warwick
Savings Bank.
Please examine your stock certificate to be certain that it is properly
registered. If you have any questions about your certificate, you should contact
the Transfer Agent immediately at the following address:
Transfer Agent
Address
Telephone Number
Also, please remember that your certificate is a negotiable security which
should be stored in a secure place, such as a safe deposit box or on deposit
with your stockbroker.
On behalf of the Board of Directors of Warwick Community Bancorp, Inc. and the
employees of The Warwick Savings Bank, I would like to thank you for supporting
our offering.
Sincerely,
Timothy A. Dempsey
President and Chief Executive Officer
The shares of Common Stock offered in the Conversion are not savings accounts or
deposits and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
(Printed by Conversion Center)
#12
<PAGE> 19
[WARWICK COMMUNITY BANCORP, INC.]
____________________, 1997
Dear Interested Subscriber:
We regret to inform you that The Warwick Savings Bank and Warwick Community
Bancorp, Inc., the parent company for The Warwick Savings Bank, have decided not
to accept your order for shares of Warwick Community Bancorp, Inc. Common Stock
in our Community Offering. This action is in accordance with our Plan of
Conversion which gives the Bank and the Holding Company the absolute right to
reject the subscription of any Community Member, in whole or in part, in the
Community Offering.
Enclosed, therefore, is a check representing your subscription and interest
earned thereon.
Sincerely,
WARWICK COMMUNITY BANCORP, INC.
Conversion Center
(Printed by Conversion Center)
#13
<PAGE> 20
[SANDLER O'NEILL & PARTNERS, L.P. LETTERHEAD]
____________________, 1997
To Our Friends:
We are enclosing the offering material for The Warwick Savings Bank, which is
now in the process of converting to stock form and forming a holding company
called Warwick Community Bancorp, Inc.
Sandler O'Neill & Partners, L.P. is managing Warwick's Subscription Offering,
which will conclude at 12:00 noon, _____________ time on , 1997.
Sandler O'Neill is also providing conversion agent and proxy solicitation
services. In the event that all the stock is not subscribed for in the
Subscription Offering (and Community Offering, if held), Sandler O'Neill will
form and manage a syndicate of broker/dealers to sell the remaining stock.
Members of the general public, other than residents of , are eligible to
participate. If you have any questions about this transaction, please do not
hesitate to call or write.
Sincerely,
SANDLER O'NEILL & PARTNERS, L.P.
The shares of Common Stock offered in the Conversion are not savings accounts or
deposits and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
(Printed by Sandler O'Neill)
#14
<PAGE> 21
- ------------------------------------
- ------------------------------------
LOGO: WARWICK COMMUNITY BANCORP, INC.
Subscription & Community Offering Stock Order Form
- ------------------------------------- ------------------------------------
Bank Use THE WARWICK SAVINGS BANK
- -------- CONVERSION CENTER
XX STREET
CITY, STATE, ZIP CODE
- ------------------------------------- (XXX) XXX-XXXX
IMPORTANT-PLEASE NOTE: A properly ------------------------------------
completed original stock order form EXPIRATION DATE
must be used to subscribe for Common for Stock Order Forms:
Stock. Copies of this form are not Day, Month XX, 1997
required to be accepted. Please read 12:00 Noon, Eastern Time
the Stock Ownership Guide and Stock
Order Form Instructions as you
complete this Form.
- --------------------------------------------------------------------------------
(1) NUMBER OF SHARES (2) TOTAL PAYMENT DUE
- --------------------------------- ---------------------------------
X $10.00 =
- --------------------------------- ---------------------------------
- --------------------------------------------------------------------------------
[ ] (3) EMPLOYEE/OFFICER/TRUSTEE INFORMATION
Check here if you are an employee, officer or trustee of The Warwick
Savings Bank or a member of such person's immediate family living in
the same household.
- --------------------------------------------------------------------------------
(4) METHOD OF PAYMENT/CHECK ------------------
Enclosed is a check, bank draft or money Check Amount
order made payable to The Warwick Savings
Bank in the amount indicated in this box. ------------------
- --------------------------------------------------------------------------------
(5) METHOD OF PAYMENT/WITHDRAWAL
The undersigned authorizes withdrawal from the following account(s) at The
Warwick Savings Bank. Individual Retirement Accounts maintained at The
Warwick Savings Bank cannot be used. There is no penalty for early
withdrawal used for this payment.
---------------------------------------------------------------------------
Account Number(s) Withdrawal Amount(s) Bank Use
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Total Withdrawal Amount
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The minimum number of shares that may be subscribed for is 25 and the
maximum number of shares that may be subscribed for in the Subscription
and Community Offering is XX,XXX shares. See instructions.
- --------------------------------------------------------------------------------
(6) PURCHASER INFORMATION
a. [ ] Check here if you are an Eligible Account Holder with a deposit
account(s) totaling $100.00 or more on June 30, 1996. List account(s)
below.
b. [ ] Check here if you are a Supplemental Eligible Account Holder with a
deposit account(s) totaling $100.00 or more on September 30, 1997.
List account(s) below.
c. [ ] Check here if you are an Other Depositor with a deposit account(s)
totaling $100.00 or more on October 31, 1997. List account(s) below.
---------------------------------------------------------------------------
Account Title (Names on Accounts) Account Number(s) Bank Use
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
PLEASE NOTE: FAILURE TO LIST ALL YOUR ACCOUNTS MAY RESULT IN THE LOSS OF
PART OR ALL OF YOUR SUBSCRIPTION RIGHTS. IF ADDITIONAL SPACE IS NEEDED,
PLEASE UTILIZE THE BACK OF THIS STOCK ORDER FORM.
- --------------------------------------------------------------------------------
(7) STOCK REGISTRATION/FORM OF STOCK OWNERSHIP
[ ] [ ] [ ] - [ ] [ ] - [ ] [ ] [ ] [ ]
[ ] Individual
[ ] Joint Tenants
[ ] Tenants in Common
[ ] Fiduciary (i.e. trust, estate, etc.)
[ ] Company/Corp/Partnership
[ ] Uniform Transfer to Minors Act
[ ] IRA or other Qualified Plan - Beneficial Owners SS#
(8) NAME(S) IN WHICH STOCK IS TO BE REGISTERED (PLEASE PRINT CLEARLY) -
ONLY THE OWNER(S) OF THE QUALIFYING ACCOUNT AS REGISTERED ON THE TOP OF THE
STOCK ORDER FORM ABOVE MAY SUBSCRIBE FOR STOCK. QUALIFYING ACCOUNT HOLDERS WHO
ARE NOT REGISTERED ON THE TOP OF THE STOCK ORDER FORM MAY NOT BE ADDED.
- --------------------------------------------------------------------------------
Name(s) Social Security # or Tax ID
- --------------------------------------------------------------------------------
Name(s) continued Social Security # or Tax ID
- --------------------------------------------------------------------------------
Street Address County of Residence
- --------------------------------------------------------------------------------
City State Zip Code
- ---------------------------------------------------------
(9) TELEPHONE -
Daytime ( ) Evening ( )
- ---------------------------------------------------------
- --------------------------------------------------------------------------------
[ ] (10) NASD AFFILIATION - Check here if you are a member of the National
Association of Securities Dealers, Inc. ("NASD"), a person associated with an
NASD member, a member of the immediate family of any such person to whose
support such person contributes, directly or indirectly, or the holder of an
account in which an NASD member or person associated with an NASD member has a
beneficial interest. To comply with conditions under which an exemption from the
NASD's Interpretation With Respect to Free-Riding and Withholding is available,
you agree, if you have checked the NASD Affiliation box, (i) not to sell,
transfer or hypothecate the stock for a period of 90 days following issuance,
and (ii) to report this subscription in writing to the applicable NASD member
within one day of payment therefor.
- --------------------------------------------------------------------------------
[ ] (11) ASSOCIATES - ACTING IN CONCERT Check here, and complete the reverse
side of this Form, if you or any associates (as defined on the reverse side of
this Form) or persons acting in concert with you have submitted other orders for
shares in the Subscription and/or Community Offerings.
- --------------------------------------------------------------------------------
(12) ACKNOWLEDGMENT - To be effective, this Stock Order Form and
accompanying Certification Form must be properly completed and actually received
by The Warwick Savings Bank no later than 12:00 Noon, Eastern time, on Day,
Month, Date, 1997, unless extended; otherwise this Stock Order Form and all
subscription rights will be void. The undersigned agrees that after receipt by
The Warwick Savings Bank, this Stock Order Form may not be modified, withdrawn
or canceled without the Bank's consent and if authorization to withdraw from
deposit accounts at the Bank has been given as payment for shares; the amount
authorized for withdrawal shall not otherwise be available for withdrawal by the
undersigned. Under penalty of perjury, I hereby certify that the Social Security
or Tax ID Number and the information provided on this Stock Order Form is true,
correct and complete, that I am not subject to back-up withholding, and that I
am purchasing solely for my own account and that there is no agreement or
understanding regarding the sale or transfer of such shares, or my right to
subscribe for shares herewith. It is understood that this Stock Order Form
will be accepted in accordance with, and subject to, the terms and conditions of
the Plan of Conversion of the Bank described in the accompanying Prospectus. The
undersigned hereby acknowledges receipt of the Prospectus at least 48 hours
prior to delivery of this Stock Order Form to the Bank.
APPLICABLE REGULATIONS PROHIBIT ANY PERSON FROM TRANSFERRING, OR ENTERING INTO
ANY AGREEMENT, DIRECTLY OR INDIRECTLY, TO TRANSFER THE LEGAL OR BENEFICIAL
OWNERSHIP OF SUBSCRIPTION RIGHTS OR THE UNDERLYING SECURITIES TO THE ACCOUNT OF
ANOTHER. THE WARWICK SAVINGS BANK AND WARWICK COMMUNITY BANCORP, INC. WILL
PURSUE ANY AND ALL LEGAL AND EQUITABLE REMEDIES IN THE EVENT THEY BECOME AWARE
OF THE TRANSFER OF SUBSCRIPTION RIGHTS AND WILL NOT HONOR ORDERS KNOWN BY THEM
TO INVOLVE SUCH TRANSFER.
- ------------------------------------------------------- ---------------
Signature Date BANK USE ONLY
===============
- -------------------------------------------------------
- ------------------------------------------------------- ===============
Signature Date
- ------------------------------------------------------- ---------------
A SIGNED CERTIFICATION FORM MUST ACCOMPANY BANK USE ONLY
ALL STOCK ORDER FORMS ===============
(SEE REVERSE SIDE)
---------------
<PAGE> 22
ITEM (6) a,b,c - (CONTINUED)
<TABLE>
<S> <C> <C> <C>
Account Title (Names on Accounts) Account Number(s) Account Title (Names on Accounts) Account Number(s)
- --------------------------------- ----------------- --------------------------------- -----------------
- --------------------------------- ----------------- --------------------------------- -----------------
- --------------------------------- ----------------- --------------------------------- -----------------
- --------------------------------- ----------------- --------------------------------- -----------------
- --------------------------------- ----------------- --------------------------------- -----------------
ITEM (11) - (CONTINUED)
List below all other orders submitted
by you or Associates (as defined) or
by persons acting in concert with you. "Associate" is defined as: (i) any corporation or
organization (other than the Company or the Bank or a
majority-owned subsidiary of the Bank) of which such person
is a director, officer or partner or is, directly or
indirectly, the beneficial owner of 10% or more of any class
of equity securities; (ii) any trust or other estate in which
such person has a substantial beneficial interest or as to
which such person serves as trustee or in a similar fiduciary
Number of Shares capacity; provided, however, that such term shall not include
Name(s) listed on other Stock Order Forms Ordered Warwick Community Bancorp. Inc.'s or The Warwick Savings
- ----------------------------------------- ---------------- Bank's employee benefit plans in which such person has a
substantial beneficial interest or serves as a trustee or in
- ----------------------------------------- ---------------- a similar fiduciary capacity; and (iii) ANY RELATIVE OR
SPOUSE OF SUCH PERSON, OR ANY RELATIVE OF SUCH SPOUSE, WHO
- ----------------------------------------- ---------------- EITHER HAS THE SAME HOME AS SUCH PERSON or who is a director
or officer of the Company or the Bank or any subsidiaries
- ----------------------------------------- ---------------- thereof. Trustees, directors and officers of the Company or
the Bank are not treated as Associates solely because of
- ----------------------------------------- ---------------- their Board memberships.
</TABLE>
YOU MUST SIGN THE FOLLOWING CERTIFICATION IN ORDER TO PURCHASE STOCK
CERTIFICATION FORM
I ACKNOWLEDGE THAT THIS SECURITY IS NOT A DEPOSIT OR ACCOUNT AND IS NOT
FEDERALLY INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
AND IS NOT INSURED OR GUARANTEED BY THE WARWICK SAVINGS BANK, THE FEDERAL
GOVERNMENT OR BY ANY GOVERNMENT AGENCY. THE ENTIRE AMOUNT OF AN INVESTOR'S
PRINCIPLE IS SUBJECT TO LOSS.
I further certify that, before purchasing the Common Stock of Warwick Community
Bancorp, Inc. (the "Company"), the proposed holding company for The Warwick
Savings Bank, I received a Prospectus of the Company dated ________, 1997
relating to such offer of Common Stock.
The Prospectus that I received contains disclosure concerning the nature of the
Common Stock being offered by the Company and describes in the "Risk Factors"
section of the Prospectus the risks involved in the investment in this Common
Stock, including but not limited to the:
<TABLE>
<S> <C>
1. (page )
2. (page )
3. (page )
4. (page )
5. (page )
6. (page )
7. (page )
8. (page )
9. (page )
10. (page )
</TABLE>
THIS CERTIFICATION MUST BE SIGNED IN ORDER TO PURCHASE STOCK
Signature Date Signature Date
- ------------------------------------ ------------------------------------
Name (Please Print) Name (Please Print)
- ------------------------------------ ------------------------------------
<PAGE> 23
[LOGO] WARWICK COMMUNITY BANCORP, INC.
STOCK OWNERSHIP GUIDE
INDIVIDUAL
Include the first name, middle initial and last name of the shareholder. Avoid
the use of two initials. Please omit words that do not affect ownership rights,
such as "Mrs.", "Mr.", "Dr.", "special account", "single person", etc.
JOINT TENANTS
Joint tenants with right of survivorship may be specified to identify two or
more owners. When stock is held by joint tenants with right of survivorship,
ownership is intended to pass automatically to the surviving joint tenant(s)
upon the death of any joint tenant. All parties must agree to the transfer or
sale of shares held by joint tenants.
TENANTS IN COMMON
Tenants in common may also be specified to identify two or more owners. When
stock is held by tenants in common, upon the death of one co-tenant, ownership
of the stock will be held by the surviving co-tenant(s) and by the heirs of the
deceased co-tenant. All parties must agree to the transfer or sale of shares
held by tenants in common.
UNIFORM TRANSFER TO MINORS ACT ("UTMA")
Stock may be held in the name of a custodian for a minor under the Uniform
Transfer to Minors Act of each state. There may be only one custodian and one
minor designated on a stock certificate. The standard abbreviation for
Custodian is "CUST", while the Uniform Transfer to Minors Act is "UTMA".
Standard U.S. Postal Service state abbreviations should be used to describe the
appropriate state. For example, stock held by John Doe as custodian for Susan
Doe under the New York Uniform Transfer to Minors Act will be abbreviated John
Doe, CUST Susan Doe UTMA NY (use minor's social security number).
FIDUCIARIES
Information provided with respect to stock to be held in a fiduciary capacity
must contain the following:
- - The name(s) of the fiduciary. If an individual, list the first name, middle
initial and last name. If a corporation, list the full corporate title
(name). If an individual and a corporation, list the corporation's title
before the individual.
- - The fiduciary capacity, such as administrator, executor, personal
representative, conservator, trustee, committee, etc.
- - A description of the document governing the fiduciary relationship, such as a
trust agreement or court order. Documentation establishing a fiduciary
relationship may be required to register your stock in a fiduciary capacity.
- - The date of the document governing the relationship, except that the date of
a trust created by a will need not be included in the description.
- - The name of the maker, donor or testator and the name of the beneficiary.
An example of fiduciary ownership of stock in the case of a trust is: John Doe,
Trustee Under Agreement Dated 10-1-87 for Susan Doe.
STOCK ORDER FORM INSTRUCTIONS
ITEMS 1 AND 2-
Fill in the number of shares that you wish to purchase and the total payment
due. The amount due is determined by multiplying the number of shares by the
subscription price of $10.00 per share. The minimum purchase in the Subscription
and Community Offerings is 25 shares. In the Subscription Offering, the maximum
purchase by each Eligible Account Holder, Supplemental Eligible Account Holder
and Other Depositor is $XXX,XXX (XX,XXX shares), and the maximum purchase in the
Community Offering by any person, together with associates or persons acting in
concert is $XXX,XXX (XX,XXX shares). However, no person, together with
associates and persons acting in concert with such person, may purchase in the
aggregate more than X.0% of the shares offered. Based on the offering of
XX,XXX,XXX shares X.0% amounts to XXX,XXX shares. Eligible Account Holders,
Supplemental Eligible Account Holders and Other Depositors desiring to purchase
shares in the Community Offering must do so by obtaining from the Conversion
Center an additional Stock Order Form and submitting a completed additional
Stock Order Form which indicates the number of shares to be purchased in the
Community Offering. The Warwick Savings Bank and Warwick Community Bancorp,
Inc. have reserved the right to reject the subscription of any order received
in the Community Offering, in whole or in part.
ITEM 3-
Please check this box to indicate whether you are an employee, officer or
trustee of The Warwick Savings Bank or a member of such person's immediate
family living in the same household.
ITEM 4-
Payment for shares may be made in cash (only if delivered by you in person to a
branch office of Warwick) or by check, bank draft or money order payable to The
Warwick Savings Bank. Your funds will earn interest at the Bank's passbook rate
of interest until the Conversion is completed. DO NOT MAIL CASH TO PURCHASE
STOCK! Please insert the total check(s) amount in this box if your method of
payment is by check, bank draft or money order.
ITEM 5-
If you pay for your stock by a withdrawal from a deposit account at The Warwick
Savings Bank, insert the account number(s) and the amount of your withdrawal
authorization for each account. The total amount withdrawn should equal the
amount of your stock purchase. There will be no penalty assessed for early
withdrawals from certificate accounts used for stock purchases. THIS FORM OF
PAYMENT MAY NOT BE USED IF YOUR ACCOUNT IS AN INDIVIDUAL RETIREMENT ACCOUNT OR
QUALIFIED PLAN.
ITEM 6-
a. Please check this box if you are an Eligible Account Holder with a deposit
account(s) totaling $100.00 or more on June 30, 1996.
b. Please check this box if you are a Supplemental Eligible Account Holder with
a deposit account(s) totaling $100.00 or more on September 30, 1997.
c. Please check this box if you are an Other Depositor with a deposit
account(s) totaling $100.00 or more on October 31, 1997.
Please list all names on the account(s) and all account number(s) of accounts
you had on this date in order to insure proper identification of your purchase
rights. PLEASE NOTE: FAILURE TO LIST ALL YOUR ACCOUNTS MAY RESULT IN THE LOSS
OF PART OR ALL OF YOUR SUBSCRIPTION RIGHTS.
ITEM 7, 8 AND 9-
The stock transfer industry has developed a uniform system of shareholder
registrations that will be used in the issuance of your Warwick Community
Bancorp, Inc. Common Stock. Please complete items 7, 8 and 9 as fully and
accurately as possible, and be certain to supply your social security or Tax
I.D. number(s) and your daytime and evening telephone number(s). We will need
to call you if we cannot execute your order as given. If you have any questions
regarding the registration of your stock, please consult your legal advisor.
Stock ownership must be registered in one of the ways described above under
"Stock Ownership Guide".
ITEM 10-
Please check this box if you are a member of the NASD or if this item otherwise
applies to you.
ITEM 11-
Please check this box if you or any associate (as defined on the reverse side
of the Stock Order Form) or person acting in concert with you has submitted
another order for shares and complete the reverse side of the Stock Order Form.
ITEM 12-
Please sign and date the Stock Order Form and Certification Form where
indicated. Before you sign, review the Stock Order Form, including the
acknowledgement, and the Certification Form. Normally, one signature is
required. An additional signature is required only when payment is to be made
by withdrawal from a deposit account that requires multiple signatures to
withdraw funds.
You may mail your completed Stock Order Form and Certification Form in the
envelope that has been provided, or you may deliver your Stock Order Form and
Certification Form to any branch of The Warwick Savings Bank. Your Stock Order
From and Certification Form, properly completed, and payment in full (or
withdrawal authorization) at the subscription price must be received by The
Warwick Savings Bank no later than 12:00 noon, Eastern time, on
________________ 1997 or it will become void. If you have any remaining
questions, or if you would like assistance in completing your Stock Order Form
and Certification Form, you may call our conversion Center Monday through
Friday from 10:00 a.m. to 4:00 p.m.
<PAGE> 1
Exhibit 99.3
GIFT INSTRUMENT
CHARITABLE GIFT TO THE WARWICK SAVINGS FOUNDATION
Warwick Community Bancorp, Inc., 18 Oakland Avenue, Warwick, New
York ("Company"), desires to make a gift of its common stock, par value $.01 per
share ("Common Stock"), to The Warwick Savings Foundation ("Foundation"), a
nonprofit corporation organized under the laws of the State of Delaware. The
purpose of the donation is to establish a bond between the Company and the
community in which it and its affiliates operate to enable the community to
share in the potential growth and success of the Company and its affiliates over
the long term. To that end, the Company now gives, transfers, and delivers to
the Foundation ______ shares of its Common Stock for consideration of $.01 per
share, or total consideration of $__________, subject to the following
conditions:
1. The Foundation shall use the donation solely for charitable
purposes as provided by Section 501(c)(3) of the Internal Revenue Code of 1986,
as amended ("Code"), including, without limitation, to further community
development, expand home ownership opportunities and provide access to
affordable housing in the local communities served by the Company's subsidiary,
The Warwick Savings Bank ("Bank") and to support community organizations that
contribute to the quality of life in the Bank's local communities;
2. Consistent with the Company's intent to form a long-term bond
between the Company and the community, the amount of Common Stock that may be
sold by the Foundation in any one year shall not exceed 5% of the market value
(measured as of the first business day of each year), of the assets held by the
Foundation or such amount as may be necessary to maintain the Foundation's
designation as a tax-exempt organization under Section 501(c) of the Code,
except that this restriction shall not prohibit the Board of Directors of the
Foundation from selling a greater amount of Common Stock in any one year if the
Board of Directors of the Foundation determines that the failure to sell a
greater amount of the Common Stock held by the Foundation would result in a
long-term reduction of the value of the Foundation's assets relative to their
then current value that would jeopardize the Foundation's capacity to carry out
its charitable purposes; and
3. The Common Stock contributed to the Foundation by the Company
shall, for so long as such shares are held by the Foundation, be voted in the
same ratio as all other shares of Common Stock of the Company which are voted on
each and every proposal considered by stockholders of the Company, provided,
however, that if this Condition No. 3 is waived by the Federal Deposit Insurance
Corporation pursuant to Federal Deposit Insurance Corporation Order No. ____,
dated _______________, 1997 (a copy of which attached hereto), then this
Condition No. 3 shall become void and of no effect.
Dated: ___________, 1997 Warwick Community Bancorp, Inc.
By: ____________________________________
Timothy A. Dempsey
President and Chief Executive Officer
