<PAGE> 1
As filed with the Securities and Exchange Commission on December 16, 1997
Registration No. 333-_______________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
HOME LOAN FINANCIAL CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Ohio 6036 31-1578552
- --------------------------------- ---------------------------- ----------------------
(State or other jurisdiction (Primary Standard Industrial (I.R.S. employer
of incorporation or organization) Classification Code Number) identification number)
</TABLE>
401 MAIN STREET
COSHOCTON, OHIO 43812-1580
(614) 622-0444
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(Address, including Zip Code, and telephone number, including
area code, of registrant's principal executive offices)
ROBERT C. HAMILTON
HOME LOAN FINANCIAL CORPORATION
401 MAIN STREET
COSHOCTON, OHIO 43812-1580
(614) 622-0444
--------------------------------------
(Name, address, including Zip Code, and
telephone number, including area code,
of agent for service)
With copies to:
Terri R. Abare
Rick J. Landrum
Vorys, Sater, Seymour and Pease
Atrium Two, 221 East Fourth Street
Cincinnati, Ohio 45202
(513) 723-4000
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after the 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 of the Securities Act of
1933, check the following box: [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of each class Proposed maximum Proposed maximum
of securities to be Amount to be offering price aggregate offering Amount of
registered registered per share price(1) registration fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common shares,
without par value 2,248,250 $10.00 $22,482,500 $6,633
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Estimated solely for the purpose of calculating the registration fee.
</TABLE>
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 SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
CROSS REFERENCE SHEET
Showing the location in the Prospectus of the Items of Form S-1
<TABLE>
<CAPTION>
Form S-1 Item and Caption Prospectus Heading
- ------------------------- ------------------
<S> <C> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus........... Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus.................................... Cover Page, Back Cover Page
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges..................... PROSPECTUS SUMMARY; RISK FACTORS
4. Use of Proceeds...................................... USE OF PROCEEDS
5. Determination of Offering Price...................... Cover Page; THE CONVERSION - Pricing and Number of
Common Shares to be Sold
6. Dilution............................................. Not Applicable
7. Selling Security Holders............................. Not Applicable
8. Plan of Distribution................................. Cover Page; THE CONVERSION - General;
- Subscription Offering; - Community Offering; and
- Plan of Distribution
9. Description of Securities to be Registered........... DESCRIPTION OF AUTHORIZED SHARES
10. Interest of Named Experts and Counsel................ Not Applicable
11. Information with Respect to the Registrant
(a) Description of Business......................... THE BUSINESS OF THE BANK
(b) Description of Property......................... THE BUSINESS OF THE BANK - Properties
(c) Legal Proceedings............................... THE BUSINESS OF THE BANK - Legal Proceedings
(d) Market Price and Dividends...................... Cover Page; MARKET FOR COMMON SHARES;
DIVIDEND POLICY
(e) Financial Statements............................ FINANCIAL STATEMENTS
(f) Selected Financial Data......................... SELECTED FINANCIAL INFORMATION AND OTHER
DATA
(g) Supplementary Financial Information............. Not Applicable
(h) Management's Discussion and Analysis of
Financial Condition and Results of Operations MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(i) Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure.................................... Not Applicable
(j) Directors and Executive Officers................ MANAGEMENT
(k) Executive Compensation.......................... MANAGEMENT - Compensation; and - Stock Benefit Plans
(l) Security Ownership of Certain Beneficial
Owners and Management......................... THE CONVERSION - Shares to be Purchased by
Management Pursuant to Subscription Rights
(m) Certain Relationships and Related
Transactions.................................. Not Applicable
12. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities..... Not Applicable
</TABLE>
<PAGE> 3
PROSPECTUS
HOME LOAN FINANCIAL CORPORATION
(PROPOSED HOLDING COMPANY FOR THE HOME LOAN SAVINGS BANK)
COSHOCTON, OHIO
UP TO 1,955,000 COMMON SHARES, $10 PURCHASE PRICE PER SHARE
Home Loan Financial Corporation, an Ohio corporation (the "Holding
Company"), is hereby offering for sale up to 1,955,000 common shares, without
par value (the "Common Shares"), in connection with its acquisition of all of
the capital stock to be issued by The Home Loan Savings Bank, an Ohio mutual
savings and loan association located in Coshocton, Ohio (the "Bank"), upon the
conversion of the Bank from a mutual savings and loan association to a permanent
capital stock savings and loan association incorporated under Ohio law (the
"Conversion"). The consummation of the Conversion and the sale of the Common
Shares are subject to the approval of the Bank's Plan of Conversion (the "Plan")
and the adoption of amended articles of incorporation and an amended
constitution by the members of the Bank at a Special Meeting of Members of the
Bank to be held at ___:00 __.m., Eastern Standard Time, on March ___, 1998, at
_______________________, Coshocton, Ohio (the "Special Meeting").
Based on an independent appraisal of the pro forma market value of the
Bank, as converted, and the Holding Company as of November 28, 1997, the
aggregate purchase price of the Common Shares offered in connection with the
Conversion ranges from a minimum of $14,450,000 to a maximum of $19,550,000 (the
"Valuation Range"), resulting in a range of 1,445,000 to 1,955,000 Common Shares
at $10 per share. See "THE CONVERSION - Pricing and Number of Common Shares to
be Sold." Applicable regulations permit the Holding Company to offer additional
Common Shares in an amount not to exceed 15% above the maximum of the Valuation
Range, which would permit the issuance of up to 2,248,250 Common Shares with an
aggregate purchase price of $22,482,500. The actual number of Common Shares to
be sold in connection with the Conversion will be based upon the final valuation
of the Bank, as converted, and the Holding Company, as determined by an
independent appraiser upon the completion of this offering. (Continued on next
page)
AN INVESTMENT IN THE COMMON SHARES OFFERED HEREBY INVOLVES CERTAIN
RISKS. FOR A DISCUSSION OF THE RISKS AND OTHER FACTORS THAT SHOULD BE CONSIDERED
BY PROSPECTIVE PURCHASERS, SEE "RISK FACTORS" BEGINNING ON PAGE ___ OF THIS
PROSPECTUS.
THE COMMON SHARES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), THE OFFICE OF THRIFT
SUPERVISION (THE "OTS"), THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC"),
THE DIVISION OF FINANCIAL INSTITUTIONS OF THE DEPARTMENT OF COMMERCE OF THE
STATE OF OHIO (THE "DIVISION"), OR THE SECURITIES COMMISSION OF ANY STATE, NOR
HAS THE SEC, THE OTS, THE FDIC, THE DIVISION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE COMMON SHARES BEING OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
SAVINGS DEPOSITS AND ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY.
FOR INFORMATION ON HOW TO SUBSCRIBE, PLEASE CALL THE CONVERSION
INFORMATION CENTER AT (614) __________.
<TABLE>
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Subscription Estimated Expenses and Estimated Net
Price Underwriting Commissions (1) Proceeds
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share Minimum $10.00 $.32 $9.68
Per share Mid-point $10.00 $.29 $9.71
Per share Maximum $10.00 $.26 $9.74
Per share Maximum, as adjusted (2) $10.00 $.25 $9.75
Total Minimum $14,450,000 $456,000 $13,994,000
Total Mid-point $17,000,000 $487,000 $16,513,000
Total Maximum $19,550,000 $517,000 $19,033,000
Total Maximum, as adjusted (2) $22,482,500 $552,000 $21,930,500
============================================================================================================================
<FN>
(1) Expenses of the Conversion payable by the Bank and the Holding Company
include legal, accounting, appraisal, printing, mailing and
miscellaneous expenses. Such expenses also include sales commissions,
estimated to be between $153,000 and $249,000, and reimbursable
expenses payable to Charles Webb & Company, a division of Keefe,
Bruyette & Woods, Inc. ("Webb"). Such sales commissions may be deemed
to be underwriting fees, although Webb will solicit subscriptions for
the Common Shares on a "best efforts" basis only and has no obligation
to purchase any of the Common Shares. See "THE CONVERSION - Plan of
Distribution." Actual expenses may vary from the estimates.
(2) Gives effect to the increase in the number of Common Shares sold in
connection with the Conversion of up to 15% above the maximum of the
Valuation Range. Such shares may be sold without the resolicitation of
persons who subscribe for Common Shares in the Subscription Offering
(hereafter defined) and the Community Offering (hereafter defined). See
"THE CONVERSION - Pricing and Number of Common Shares to be Sold."
</TABLE>
The date of this Prospectus is February ___, 1998.
CHARLES WEBB & COMPANY A
Division of Keefe, Bruyette & Woods, Inc.
<PAGE> 4
In accordance with the Plan, Common Shares are offered hereby at a
price of $10 per share in a subscription offering (the "Subscription Offering"),
subject to the rights and restrictions established by the Plan, to (a) each
account holder who, at the close of business on September 30, 1996 (the
"Eligibility Record Date"), had one or more deposit accounts with deposit
balances, in the aggregate, of $50 or more (a "Qualifying Deposit") with the
Bank (the "Eligible Account Holders"), (b) the Home Loan Financial Corporation
Employee Stock Ownership Plan (the "ESOP"), (c) each account holder who, at the
close of business on ___________ (the "Supplemental Eligibility Record Date"),
had a Qualifying Deposit with the Bank (the "Supplemental Eligible Account
Holders"), and (d) members of the Bank eligible to vote at the Special Meeting
("Other Eligible Members"). ALL SUBSCRIPTION RIGHTS TO PURCHASE COMMON SHARES IN
THE SUBSCRIPTION OFFERING ARE NONTRANSFERABLE AND WILL EXPIRE AT 12:00 NOON,
EASTERN STANDARD TIME, ON MARCH ___, 1998 (THE "SUBSCRIPTION EXPIRATION DATE"),
UNLESS EXTENDED BY THE BANK AND THE HOLDING COMPANY FOR UP TO 45 DAYS TO APRIL
___, 1998. Persons found to be transferring subscription rights will be subject
to forfeiture of such rights and possible further penalties imposed by the OTS.
See "THE CONVERSION - Subscription Offering."
To the extent that all of the Common Shares are not subscribed for in
the Subscription Offering, the remaining Common Shares may be offered to the
general public in a direct community offering in which preference will be given
to natural persons residing in Coshocton County, Ohio (the "Community
Offering"). See "THE CONVERSION - Community Offering." The Subscription Offering
and the Community Offering are referred to collectively in this Prospectus as
the "Offering."
The minimum number of Common Shares any person may purchase in the
Offering is 25. Each Eligible Account Holder, Supplemental Eligible Account
Holder and Other Eligible Member may purchase in the Subscription Offering not
more than 15,000 Common Shares. In connection with the exercise of subscription
rights arising from a single deposit account in which two or more persons have
an interest, however, the aggregate maximum number of Common Shares which the
persons having an interest in such account may purchase in the Subscription
Offering in relation to such account is 15,000 Common Shares. Except for the
ESOP, which may purchase up to 10% of the total Common Shares sold in the
Offering, no person, together with his or her Associates (hereinafter defined)
and other persons Acting in Concert (hereinafter defined) with him or her, may
purchase more than 30,000 Common Shares in the Offering. Subject to OTS
regulations, the purchase limitations may be increased or decreased after the
commencement of the Offering in the sole discretion of the Boards of Directors
of the Holding Company and the Bank. If the purchase limitations are increased
after the commencement of the Subscription Offering, persons who have subscribed
for the maximum amount will be given the opportunity to increase their
subscriptions. See "THE CONVERSION - Limitations on Purchases of Common Shares."
Common Shares may be subscribed for in the Offering only by returning
the accompanying Stock Order Form and Certification Form (the "Stock Order
Form"), along with full payment of the purchase price per share for all Common
Shares subscribed for, so that it is received by the Bank no later than 12:00
noon, Eastern Standard Time, on March ___, 1998. Payment for Common Shares may
be made (i) in cash, if delivered in person; (ii) by check, bank draft, or money
order made payable to the Bank; or (iii) by authorization of withdrawal from
deposit accounts in the Bank (other than non-self-directed IRAs). No payments by
wire transfer will be accepted. See "THE CONVERSION - Use of Stock Order Forms;
and - Payment for Common Shares."
THE CONSUMMATION OF THE CONVERSION IS CONTINGENT UPON (i) THE APPROVAL OF
THE PLAN AND THE ADOPTION OF THE AMENDED ARTICLES OF INCORPORATION AND THE
AMENDED CONSTITUTION BY THE BANK'S VOTING MEMBERS, (ii) THE SALE OF THE
REQUISITE NUMBER OF COMMON SHARES AND (iii) CERTAIN OTHER FACTORS. SEE "THE
CONVERSION."
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<PAGE> 5
THE HOME LOAN SAVINGS BANK
Main Office:
401 Main Street
Coshocton, Ohio 43812-1580
Full Service Branch:
590 Walnut Street
Coshocton, Ohio 43812-1632
[Map of the State of Ohio with an outline of Coshocton County, and indicating
the location of Columbus, Ohio. Above the map of Ohio is an enlargement of
Coshocton County showing the locations of the Bank within the county.]
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<PAGE> 6
PROSPECTUS SUMMARY
The following information is not complete and is qualified in its
entirety by the detailed information and the financial statements and
accompanying notes appearing elsewhere in this Prospectus.
HOME LOAN FINANCIAL CORPORATION
The Holding Company was incorporated under Ohio law in December 1997
for the purpose of purchasing all of the capital stock of the Bank to be issued
in connection with the Conversion. The Holding Company has not conducted and
will not conduct any business before the completion of the Conversion, other
than business related to the Conversion. Upon the consummation of the
Conversion, the Holding Company will be a unitary savings and loan holding
company, the principal assets of which initially will be the capital stock of
the Bank, cash, the investments made with the net proceeds retained from the
sale of Common Shares in connection with the Conversion and a loan to be made by
the Holding Company to the ESOP to facilitate the ESOP's purchase of Common
Shares in the Conversion. See "USE OF PROCEEDS."
The office of the Holding Company is located at 401 Main Street,
Coshocton, Ohio 43812-1580, and its telephone number is (614) 622-0444.
THE HOME LOAN SAVINGS BANK
The Bank is a mutual savings and loan association organized under Ohio
law in 1882. As an Ohio savings and loan association, the Bank is subject to
supervision and regulation by the OTS, the Division and the FDIC. The Bank is a
member of the Federal Home Loan Bank (the "FHLB") of Cincinnati and the deposit
accounts of the Bank are insured up to applicable limits by the FDIC in the
Savings Association Insurance Fund (the "SAIF"). See "REGULATION."
The Bank conducts business from its main office and one full-service
branch office, both located in Coshocton, Ohio. The principal business of the
Bank is the origination of permanent mortgage loans secured by first mortgages
on one- to four-family residential real estate located in Coshocton County,
Ohio, the Bank's primary market area. The Bank also originates a limited number
of loans for the construction of one- to four-family residences and permanent
mortgage loans secured by multifamily and nonresidential real estate in its
primary market area. In addition to real estate lending, the Bank originates
commercial loans and various types of consumer credits, including home
improvement loans, education loans, loans secured by savings accounts and motor
vehicles, unsecured loans and credit cards. See "THE BUSINESS OF THE BANK -
Lending Activities." For liquidity and interest rate risk management purposes,
the Bank invests in interest-bearing deposits in other financial institutions,
U.S. Treasury securities and other investments permitted by applicable law. See
"THE BUSINESS OF THE BANK - Investment Activities." Funds for lending and other
investment activities are obtained primarily from savings deposits, which are
insured up to applicable limits by the FDIC in the SAIF, principal repayments on
loans and maturities of investment securities. See "THE BUSINESS OF THE BANK -
Deposits and Borrowings."
The main office of the Bank is located at 401 Main Street, Coshocton,
Ohio 43812-1580, and its telephone number is (614) 622-0444.
THE CONVERSION
GENERAL. The Boards of Directors of the Holding Company and the Bank
have unanimously approved the Plan, which they believe to be in the best
interests of the members of the Bank. The Plan provides for the conversion of
the Bank from a mutual savings and loan association to a permanent capital stock
savings and loan association incorporated under the laws of the State of Ohio.
The OTS and the Division have approved the Plan, subject to the approval of the
Plan by the Bank's voting members at the Special Meeting, and to the
satisfaction of certain other conditions. See "THE CONVERSION - Conditions and
Termination."
The principal factors considered by the Bank's Board of Directors in
reaching the decision to pursue a mutual-to-stock conversion were the numerous
competitive advantages which the stock form of organization offers, including
growth opportunities, employee retention through the use of stock-based benefit
plans and increased capital levels. See "THE CONVERSION - Reasons for the
Conversion." The Bank has operated as an independent community oriented savings
association since 1882. It is the intention of the Bank to continue to operate
as an independent savings association following the Conversion.
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<PAGE> 7
THE SUBSCRIPTION OFFERING AND THE COMMUNITY OFFERING. Pursuant to the
Plan, Common Shares are hereby offered at a price of $10 per share to (a)
Eligible Account Holders, (b) the ESOP, (c) Supplemental Eligible Account
Holders and (d) Other Eligible Members in the Subscription Offering. See "THE
CONVERSION - Subscription Offering."
To the extent Common Shares remain available after the satisfaction of
all subscriptions received in the Subscription Offering, the Holding Company may
offer Common Shares in the Community Offering, subject to certain limitations.
Preference will be given in the Community Offering to natural persons residing
in Coshocton County, Ohio. The Boards of Directors of the Holding Company and
the Bank have the right to reject, in whole or in part, any order for Common
Shares submitted in the Community Offering. See "THE CONVERSION - Community
Offering."
The Plan authorizes the Boards of Directors of the Holding Company and
the Bank to establish limits on the number of Common Shares which may be
purchased in the Offering. The minimum number of Common Shares any person may
purchase in the Offering is 25. Each Eligible Account Holder, Supplemental
Eligible Account Holder and Other Eligible Member may purchase in the
Subscription Offering not more than 15,000 Common Shares. In connection with the
exercise of subscription rights arising from a single deposit account in which
two or more persons have an interest, however, the aggregate maximum number of
Common Shares which the persons having an interest in such account may purchase
in the Subscription Offering in relation to such account is 15,000 Common
Shares. In addition, no person, together with his or her Associates and other
persons Acting in Concert with him or her, may purchase more than 30,000 Common
Shares in the Offering. Such limitations do not apply to the ESOP, which intends
to purchase up to 8% of the Common Shares sold in the Offering. Subject to
applicable regulations, the purchase limitations may be increased or decreased
after the commencement of the Offering in the sole discretion of the Boards of
Directors. See "THE CONVERSION - Limitations on Purchases of Common Shares."
An associate of a person (an "Associate") is: (a) any corporation or
organization (other than the Bank) of which such person is an officer, partner
or, directly or indirectly, 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; and (c) any relative or spouse of such person,
or relative of such spouse, who either has the same home as such person or who
is a director or officer of the Bank.
"Acting in Concert" is defined as "knowing participation in a joint
activity or independent conscious parallel action towards a common goal" or "a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose." Persons shall be presumed to be Acting in Concert
with each other if they have certain family or business relationships, as
described in the OTS regulations, or if one person provides credit to the other
for the purchase of Common Shares or is instrumental in obtaining that credit.
In addition, if a person is presumed to be Acting in Concert with another
person, then the person is also presumed to be Acting in Concert with anyone
else who is, or is presumed to be, Acting in Concert with that other person.
For purposes of the Plan, the directors of the Bank and the Holding
Company are not Acting in Concert solely by reason of their membership on the
Board of Directors of the Bank and the Holding Company. Executive officers and
directors of the Bank and their Associates may not purchase, in the aggregate,
more than 34.8% of the total number of Common Shares sold in the Conversion.
Shares acquired by the ESOP will not be aggregated with the shares purchased by
the directors, officers and employees of the Bank.
In addition to the purchase limitations established by the Plan, OTS
regulations impose restrictions on certain acquisitions of more than 10% of the
outstanding shares of the Bank by any person or company, individually or Acting
in Concert with others. See "RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY
AND THE BANK AND ANTI-TAKEOVER PROVISIONS." The sale of Common Shares pursuant
to subscriptions received in the Offering will be subject to the approval of the
Plan by the voting members of the Bank at the Special Meeting, to the final
valuation of the Bank and the Holding Company, as determined by the independent
appraiser upon the completion of the Offering, and to certain other conditions.
See "THE CONVERSION - Subscription Offering; - Community Offering; and - Pricing
and Number of Common Shares to be Sold."
The Subscription Offering will terminate and subscription rights will
expire if not exercised by 12:00 noon, Eastern Standard Time, on March ____,
1998. The Community Offering will be terminated on or before March ____, 1998,
unless extended. Any extension of the Community Offering beyond April ___, 1998,
will require the consent of the OTS and the Division, and persons who have
subscribed for Common Shares in the Offering will be given the right to affirm,
increase, decrease or rescind their subscriptions for Common Shares. Persons who
do not affirmatively elect to continue their
-2-
<PAGE> 8
subscription or who elect to rescind their subscriptions during any such
extension will have all of their funds promptly refunded with interest. Persons
who elect to decrease their subscriptions will have the appropriate portion of
their funds promptly refunded with interest. See "THE CONVERSION - Pricing and
Number of Common Shares to be Sold."
NON-TRANSFERABILITY OF SUBSCRIPTION RIGHTS. OTS and Ohio regulations
provide that subscription rights are non-transferable. OTS regulations
specifically prohibit any person from transferring or entering into any
agreement or understanding before the completion of the Conversion to transfer
the ownership of the subscription rights issued in the Conversion or the Common
Shares to be issued upon the exercise of such subscription rights. Persons
attempting to violate such provision may lose their rights to purchase Common
Shares in the Conversion and may be subject to penalties imposed by the OTS.
Each person exercising subscription rights will be required to certify that his
or her purchase of Common Shares is solely for the subscriber's own account and
that there is no agreement or understanding regarding the sale or transfer of
such Common Shares.
PRICING OF THE COMMON SHARES. Keller & Co., Inc. ("Keller"), a firm
experienced in valuing thrift institutions, has prepared an independent
valuation of the estimated pro forma market value of the Bank, as converted, and
the Holding Company. Keller's valuation of the estimated pro forma market value
of the Bank, as converted, and the Holding Company is $17,000,000 as of November
28, 1997 (the "Pro Forma Value"). Based on the Pro Forma Value of the Bank and
the Holding Company, the Valuation Range established in accordance with the Plan
is $14,450,000 to $19,550,000. The Holding Company will issue the Common Shares
at a fixed price of $10 per share. The number of Common Shares to be issued will
be determined by dividing the price per share into the aggregate pro forma value
of the Bank at the close of the Offering.
If, due to changing market conditions, the final valuation is less than
$14,450,000 or more than $22,482,500, subscribers will be given notice of such
final valuation and the right to affirm, increase, decrease or rescind their
subscriptions. Any person who does not affirmatively elect to continue his
subscription or elects to rescind his subscription before the date specified in
the notice will have all of his funds promptly refunded with interest. Any
person who elects to decrease his subscription will have the appropriate portion
of his funds promptly refunded with interest. See "THE CONVERSION - Pricing and
Number of Common Shares to be Sold."
USE OF PROCEEDS. The Holding Company will retain up to 50% of the net
proceeds from the sale of the Common Shares, or approximately $11.0 million at
the maximum, as adjusted, of the Valuation Range. Such proceeds will be used by
the Holding Company to make a loan to the ESOP to acquire Common Shares in the
Offering and for general corporate purposes. See "USE OF PROCEEDS."
The remainder of the net proceeds received from the sale of the Common
Shares, approximately $11.0 million at the maximum, as adjusted, of the
Valuation Range, will be invested by the Holding Company in the capital stock to
be issued by the Bank to the Holding Company as a result of the Conversion and
will initially be invested in short-term investments with maturities of one year
or less and utilized for general corporate purposes, including loan
originations. See "USE OF PROCEEDS."
TAX CONSEQUENCES
The consummation of the Conversion is expressly conditioned upon the
receipt by the Holding Company and the Bank of a private letter ruling from the
Internal Revenue Service (the "IRS") or an opinion of counsel to the effect
that, for federal income tax purposes, the Conversion will constitute a tax-free
reorganization as defined in Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code"). The Holding Company and the Bank intend to
proceed with the Conversion based upon an opinion received from Vorys, Sater,
Seymour and Pease that states, in part, that (1) no gain or loss will be
recognized by the Bank in connection with the Conversion or the receipt from the
Holding Company of proceeds from the sale of the Common Shares, (2) assuming
that the subscription rights received by deposit account holders in connection
with the Conversion have no ascertainable fair market value, no gain or loss
will be recognized to the deposit account holders of the Bank upon issuance to
them of subscription rights or interests in the Liquidation Account (hereinafter
defined) and (3) no taxable income will be realized by deposit account holders
as a result of their exercise of such subscription rights. The Holding Company
and the Bank have received an opinion from Keller that the subscription rights
have no ascertainable fair market value, although such opinion is not binding on
the IRS. See "THE CONVERSION - Principal Effects of the Conversion -- Tax
Consequences."
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<PAGE> 9
MARKET FOR THE COMMON SHARES
There is presently no market for the Common Shares. No assurance can be
given that an active or liquid market for the Common Shares will develop after
the completion of the Conversion or, if such a market does develop, that it will
continue. Investors should consider, therefore, the potentially illiquid and
long-term nature of an investment in the Common Shares. See "RISK FACTORS -
Limited Market for the Common Shares."
The Holding Company has received conditional approval from The Nasdaq
Stock Market to have the Common Shares quoted on The Nasdaq National Market
("Nasdaq") under the symbol "_______" upon the completion of the Conversion,
subject to certain conditions which the Bank and the Holding Company believe
will be satisfied, although no assurance can be provided that the conditions
will be met. One of the conditions to the Nasdaq listing is the commitment of at
least two brokerage firms to make a market in the Common Shares. Keefe, Bruyette
& Woods, Inc. ("KBW") has informed the Holding Company that it intends to make a
market in the Common Shares, but it has no obligation to do so.
DIVIDEND POLICY
The declaration and payment of dividends or other capital distributions
by the Holding Company will be subject to the discretion of the Board of
Directors of the Holding Company, to the earnings and financial condition of the
Holding Company and the Bank and to general economic conditions. If the Board of
Directors of the Holding Company determines in the exercise of its discretion
that the net income, capital and financial condition of the Holding Company and
the general economy justify the declaration and payment of dividends by the
Holding Company, dividends may be paid on the Common Shares. No assurance can be
given, however, that dividends will be paid or, if paid, will continue in the
future. In accordance with OTS policy, the Holding Company will not undertake an
extraordinary tax-free return of capital to its shareholders during the first
year following the completion of the Conversion. See "DIVIDEND POLICY" and
"REGULATION - Office of Thrift Supervision -- Limitations on Capital
Distributions."
BENEFITS OF THE CONVERSION TO DIRECTORS, OFFICERS AND EMPLOYEES OF THE HOLDING
COMPANY AND THE BANK
GENERAL. Among the factors considered by the Board of Directors of the
Bank in making the decision to pursue the Conversion is the ability of the
Holding Company and the Bank to utilize various types of stock benefit plans to
attract and retain qualified directors and employees. See "THE CONVERSION -
Reasons for the Conversion."
EMPLOYEE STOCK OWNERSHIP PLAN. In connection with the Conversion, the
Holding Company has established the ESOP, which intends to use a loan from the
Holding Company to purchase 8% of the Common Shares issued in the Conversion.
The loan will have a term of up to ten years and an interest rate equal to the
applicable federal rate published periodically by the IRS, which is currently
_____%. All full-time employees of the Holding Company and the Bank who meet
certain age and years of service criteria will be eligible to participate in the
ESOP. See "MANAGEMENT - Stock Benefit Plans -- Employee Stock Ownership Plan."
STOCK OPTION PLAN AND RECOGNITION AND RETENTION PLAN. After the
completion of the Conversion, the Holding Company intends to establish a stock
option and incentive plan (the "Stock Option Plan") and a recognition and
retention plan (the "RRP"). The Board of Directors of the Holding Company
anticipates that a number of shares equal to 10% of the Common Shares sold in
the Offering will be reserved for issuance upon the exercise of options granted
under the Stock Option Plan and a number of shares equal to 4% of the Common
Shares sold in connection with the Conversion will be purchased by, or issued
to, the RRP. See "RISK FACTORS - Potential Impact of Benefit Plans on Net
Earnings and Shareholders' Equity" for a discussion of the possible dilutive
effects of the RRP. Each plan will be administered by a committee comprised of
not fewer than three directors who are not employees of the Bank or the Holding
Company. Persons eligible for awards under the plans will consist of directors,
officers and employees of the Holding Company or the Bank who hold positions
with significant responsibilities or whose performance or potential
contribution, in the judgment of the plan committee, will contribute to the
future success of the Holding Company or the Bank. The plan committee will
consider the position, duties and responsibilities of the directors, officers
and employees of the Holding Company and the Bank, the value of their services
to the Holding Company and the Bank and any other factors the plan committee may
deem relevant.
Under OTS regulations, no stock options or RRP may be awarded during
the first year after the completion of the Conversion unless the plan is
approved by the shareholders of the Holding Company at an annual or a special
meeting of shareholders held not less than six months following the completion
of the Conversion. If the plans are approved by the Holding Company shareholders
at such meeting and implemented during the first year after the completion of
the
-4-
<PAGE> 10
Conversion, the following restrictions will apply: (i) the number of shares
which may be subject to options awarded under the Stock Option Plan or shares
awarded under the RRP to directors who are not full-time employees of the
Holding Company may not exceed 5% per person and 30% in the aggregate of the
available plan shares; (ii) the number of shares which may be subject to options
awarded under the Stock Option Plan or shares awarded under the RRP to any
individual who is a full-time employee of the Holding Company or its
subsidiaries may not exceed 25% of the available shares; (iii) stock options
must be awarded with an exercise price at least equal to the fair market value
of the common shares of the Holding Company at the time of the award; and (iv)
stock options will become exercisable and RRP awards will vest at the rate of
one-fifth per year commencing no earlier than one year from the date the plan is
approved by the shareholders, subject to acceleration of vesting only in the
event of the death or disability of a participant. No decision has been made as
to anticipated awards under the Stock Option Plan or the RRP. See "MANAGEMENT -
Stock Benefit Plans -- Stock Option Plan; and - Recognition and Retention Plan."
EMPLOYMENT AGREEMENT. In connection with the Conversion, the Bank will
enter into an employment agreement with Robert C. Hamilton, the President of the
Bank. The employment agreement will provide for a term of three years with an
annual salary of not less than $165,000. The employment agreement will also
provide for severance payments in the event the agreement is terminated prior to
the expiration of its term upon a change in control of the Bank or for any
reason other than just cause, as defined therein. See "MANAGEMENT - Employment
Agreement."
INVESTMENT RISKS
An investment in the Common Shares involves certain risks. Special
attention should be given to the matters discussed under "RISK FACTORS -
Interest Rate Risk; - Anticipated Low Return on Equity; - Competition in Primary
Market Area; Performance of Local Economy Concentration of Credit; - Limited
Market for the Common Shares; - Uncertainty of Price of the Common Shares upon
Resale; - Legislation and Regulation Which May Adversely Affect Earnings and
Operations; - Potential Impact of Benefit Plans on Net Earnings and
Shareholders' Equity; - Anti-Takeover Provisions Which May Discourage Sales of
Common Shares for Premium Prices."
-5-
<PAGE> 11
SELECTED FINANCIAL INFORMATION AND OTHER DATA
The following tables set forth certain information concerning the
financial condition, earnings and other data regarding the Bank at the dates and
for the periods indicated. Such information should be read in conjunction with
the financial statements and notes thereto appearing elsewhere herein. In the
opinion of management, financial information at September 30, 1997 and 1996, and
for the three months then ended reflect all adjustments (consisting only of
normal recurring accruals) which are necessary to present fairly the results for
such periods.
<TABLE>
<CAPTION>
SELECTED FINANCIAL CONDITION At September 30, At June 30,
AND OTHER DATA: -------------------- --------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
------ ------ ------ ------- ------ ------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Total amount of:
Assets $59,853 $56,318 $60,401 $55,366 $49,102 $48,255 $46,868
Cash and cash equivalents 2,184 4,281 4,681 5,723 2,559 3,023 2,397
Interest-bearing time
deposits 39 41 39 41 - - -
Securities available for 4,518 2,751 5,004 1,743 753 - -
sale
Securities held to maturity - 2,001 - 2,252 5,498 8,243 12,267
Loans receivable, net 51,773 45,871 49,300 44,294 39,156 35,782 31,078
FHLB stock 373 347 366 341 318 295 282
Deposits 48,208 45,491 49,235 44,884 39,543 39,558 38,936
Retained earnings 10,579 9,820 10,366 9,771 9,001 8,285 7,548
Number of full-service offices 2 2 2 2 2 2 2
SUMMARY OF EARNINGS: Three months ended
September 30, Year ended June 30,
-------------------- --------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
------ ------- ------ ------ ------ ------ ------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $1,254 $1,132 $4,609 $4,259 $3,696 $3,353 $3,506
Interest expense 517 437 1,931 1,703 1,331 1,135 1,316
------ ------ ------ ------ ------ ------ ------
Net interest income 737 695 2,678 2,556 2,365 2,218 2,190
Provision for loan losses 30 1 6 - 2 13 10
------ ------ ------ ------ ------ ------ ------
Net interest income after
provision for loan losses 707 694 2,672 2,556 2,363 2,205 2,180
Noninterest income 43 42 175 165 149 162 132
Noninterest expense (1) 415 660 1,943 1,532 1,418 1,321 1,059
------ ------ ------ ------ ------ ------ ------
Net income before provision
for income taxes 335 76 904 1,189 1,094 1,046 1,253
Provision for income taxes 122 27 309 419 378 367 430
Cumulative effect of change in
accounting principle - - - - - 58 -
------ ------ ------ ------ ------ ------ ------
Net income $ 213 $ 49 $ 595 $ 770 $ 716 $ 737 $ 823
====== ====== ====== ====== ====== ====== ======
- ------------------------------
<FN>
(1) For the three months ended September 30, 1996, and the year ended June
30, 1997, noninterest expense includes a $261,000 assessment imposed on
the Bank as a result of legislation to recapitalize the SAIF.
</TABLE>
-6-
<PAGE> 12
SELECTED FINANCIAL RATIOS:
<TABLE>
<CAPTION>
At or for the three
months ended
September 30, At or for the year ended June
-------------------- --------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
------ ------- ------ ------ ------ ------ ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Performance ratios:
Return on average assets 1.40% 0.35% 1.04% 1.47% 1.47% 1.55% 1.77%
Return on average equity 8.06 1.97 5.94 8.20 8.32 9.33 11.50
Interest rate spread 4.36 4.60 4.25 4.45 4.52 4.46 4.43
Net interest margin 5.03 5.17 4.88 5.10 5.04 4.87 4.88
Noninterest expense to
average assets 2.73 4.70 3.39 2.93 2.91 2.78 2.27
Efficiency ratio 53.19 89.46 68.09 56.30 56.41 55.52 45.60
Net interest income to
noninterest expenses 177.55 105.34 137.86 166.82 166.78 167.83 206.86
Average interest-earning
assets to average
interest-bearing liability 1.19x 1.18x 1.18x 1.19x 1.18x 1.16x 1.15x
Capital ratios:
Average equity to average
assets 17.41% 17.65% 17.51% 17.95% 17.67% 16.64% 15.36%
Equity to assets, end of
period 17.70 17.35 17.17 17.64 18.34 17.13 16.10
Asset quality ratios and other
data:
Nonperforming assets to
average assets 0.10 0.18 0.06 0.17 0.03 0.06 -
Nonperforming assets to
total assets 0.10 0.18 0.05 0.16 0.03 0.06 -
Nonperforming loans to
total loans 0.12 0.22 0.07 0.20 0.04 0.08 -
Allowance for loans losses
to gross loans (1) 0.29 0.26 0.24 0.26 0.30 0.34 0.35
Allowance for loans losses
to nonperforming loans 242.99 117.83 361.27 133.54 734.46 431.09 N/A
Net (charge-offs) recoveries
to average loans (0.01) - (0.01) - (0.01) - -
Amount of nonperforming loans $61 $101 $33 $88 $16 $28 $-
Amount of nonperforming
assets 61 101 33 88 16 28 -
- -------------------------------
<FN>
(1) Net of loans in process and deferred loan origination fees and costs.
</TABLE>
-7-
<PAGE> 13
RISK FACTORS
INVESTMENT IN THE COMMON SHARES INVOLVES CERTAIN RISKS. BEFORE
INVESTING, PROSPECTIVE PURCHASERS SHOULD CONSIDER CAREFULLY THE FOLLOWING
MATTERS.
INTEREST RATE RISK
The Bank's operating results are dependent to a significant degree on
its net interest income, which is the difference between interest income from
loans and investments and interest expense on deposits and borrowings. Like most
thrift institutions, the Bank's interest income and interest expense change as
interest rates fluctuate and assets and liabilities reprice. Interest rates
generally may change because of general economic conditions, the policies of
various regulatory authorities and other factors beyond the Bank's control. The
interest rates on specific assets and liabilities of the Bank will change or
"reprice" in accordance with the contractual terms of the asset or liability
instrument and in accordance with customer reaction to general economic trends.
See "THE BUSINESS OF THE BANK - Lending Activities; and - Deposits and
Borrowings."
The Bank manages interest rate risk by originating mortgage loans
primarily with adjustable rates. At September 30, 1997, 75.0% of the Bank's
loans contractually due after September 30, 1998, had adjustable rates of
interest. The Bank also manages its interest rate risk by maintaining capital in
excess of regulatory requirements and by maintaining a high level of liquidity
through investments in instruments with maturities of five years or less. See
"THE BUSINESS OF THE BANK - Investment Activities." For the quarter ended
September 30, 1997, the Bank's tangible capital was 17.7% of total assets and
its liquidity ratio was 13.7%. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Liquidity and Capital
Resources."
In a period of rising interest rates, the interest income earned on the
Bank's assets may not increase as rapidly as the interest expense paid on the
Bank's liabilities. As a result, the earnings of the Bank may be adversely
affected. The degree to which such earnings will be adversely affected depends
upon the rapidity and extent of the increase in interest rates. In addition,
rising interest rates could negatively affect the Bank's earnings due to
diminished loan demand. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS Asset and Liability Management."
ANTICIPATED LOW RETURN ON EQUITY
For the last five years, the Bank's return on equity has ranged from a
high of 11.55% for 1993 to a low of 5.94% for 1997, with an average of 8.7%.
Excluding the effect of the one-time special assessment to recapitalize the
SAIF, the return on equity would have been 7.7% for the year ended June 30,
1997. For the three months ended September 30, 1997, the Bank's return on equity
was 8.06%. The increased capital resulting from the Conversion is expected to
reduce the Bank's return on equity for a prolonged period after the Conversion,
which may adversely affect the market value of the Common Shares. Initially, the
Conversion proceeds will be invested in short-term investments which generally
have lower yields than loans and longer term securities, which could also
adversely affect the return on equity. See "USE OF PROCEEDS." In addition, it is
further anticipated that the ESOP and, if adopted by the Board of Directors of
the Holding Company and approved by the shareholders after the Conversion, the
Stock Option Plan and the RRP will increase compensation expense significantly,
further lowering return on equity. See "Potential Impact of Benefit Plans on Net
Earnings and Shareholders' Equity."
COMPETITION IN PRIMARY MARKET AREA
The Bank faces strong competition for deposits and loans from savings
and loan associations and commercial banks located in Coshocton, Ohio. In
addition, competing financial institutions exist in surrounding communities
located in the Bank's primary market area. The Bank's market penetration in
Coshocton County is 53.1% of thrift deposits and 13.2% of all financial
institution deposits at June 30, 1997.
PERFORMANCE OF LOCAL ECONOMY
With regard to several important economic factors, statistics for
Coshocton County, Ohio, have in recent years trailed both the State of Ohio and
the United States. In 1990, Coshocton County's per capita annual income was
lower than the per capita annual income for Ohio, $10,625 compared to $12,788.
By 1996, the County's per capita income had
-8-
<PAGE> 14
increased 14.8 percent, to $12,193, compared to a 20.2% increase, to $15,376,
for Ohio over the same period. During the same period, median annual household
incomes increased from $24,425 to $26,754 for Coshocton County and from $29,276
to $32,120 for the State of Ohio.
CONCENTRATION OF CREDIT
Most of the Bank's loans have been made to borrowers residing in, and
most of its real estate loans are secured by property located in, Coshocton
County, Ohio. The Bank also has a greater percentage of commercial and consumer
loans in its portfolio, relative to many other savings and loan associations.
Events which negatively impact the local economy, such as the loss of a major
employer, could result in increased defaults on loans made by the Bank and
decreases in the value of the Bank's collateral, making collection of such loans
more difficult.
LIMITED MARKET FOR THE COMMON SHARES
There is presently no market for the Common Shares. No assurance can be
given that an active or liquid market for the Common Shares will develop after
the completion of the Conversion or, if such a market does develop, that it will
continue. Investors should consider, therefore, the potentially illiquid and
long-term nature of an investment in the Common Shares.
The Holding Company has received conditional approval to have the
Common Shares quoted on Nasdaq under the symbol "____" upon the completion of
the Conversion, subject to certain conditions which the Holding Company and the
Bank believe will be satisfied, although no assurance can be provided that the
conditions will be met. One of the conditions of the Nasdaq listing is the
commitment of at least two brokerage firms to make a market in the Common
Shares. KBW has informed the Holding Company that it intends to make a market in
the Common Shares, but it has no obligation to do so.
UNCERTAINTY OF PRICE OF THE COMMON SHARES UPON RESALE
The offering price of the Common Shares is based upon an independent
appraisal of the Bank, as converted, and the Holding Company. The appraisal is
not a recommendation as to the advisability of purchasing Common Shares, nor
does it represent Keller's opinion as to the price at which the Common Shares
may trade. See "THE CONVERSION - Pricing and Number of Common Shares to be
Sold." There can be no assurance that the Common Shares may later be resold at
the price at which they are purchased in the Conversion.
LEGISLATION AND REGULATION WHICH MAY ADVERSELY AFFECT EARNINGS AND OPERATIONS
The Bank is subject to extensive regulation by the OTS, the Division
and the FDIC and is periodically examined by such regulatory agencies to test
compliance with various regulatory requirements. The Holding Company will also
be subject to regulation and examination by the OTS. Such supervision and
regulation of the Bank and the Holding Company are primarily for the protection
of the federal deposit insurance fund and not for the maximization of
shareholder value and may limit the ability of the Bank and the Holding Company
to engage in various business activities. See "REGULATION."
Congress is considering legislation to eliminate the federal savings
and loan charter and the separate federal regulation of savings and loan
associations. Such legislation, if enacted, could eliminate the OTS, which would
likely subject the Bank to more regulation by the FDIC. In addition, the Holding
Company might become subject to new or different holding company regulations,
including separate capital requirements and stringent limitations on activities.
Although the Holding Company cannot predict when or whether Congress may
actually pass legislation regarding the Holding Company's and the Bank's
regulatory requirements or charter, it is not anticipated that the current
business activities of the Holding Company or the Bank will be materially
affected by such legislation.
POTENTIAL IMPACT OF BENEFIT PLANS ON NET EARNINGS AND SHAREHOLDERS' EQUITY
In connection with the Conversion, the Holding Company has established
the ESOP, which intends to use a loan from the Holding Company to purchase 8% of
the Common Shares issued in connection with the Conversion. All full-time
employees of the Holding Company and the Bank who meet certain age and years of
service criteria will be eligible to participate in the ESOP.
-9-
<PAGE> 15
The shares acquired by the ESOP in the Conversion will be purchased
with the proceeds of a loan from the Holding Company to the ESOP. The ESOP loan
will be repaid through cash contributions to the ESOP from the Bank and the use
of dividends paid on the Common Shares, if any. The Bank currently anticipates
that the ESOP loan will be repaid over a period of ten years. The amount of cash
or other assets that can be contributed to the ESOP each year is limited by
certain IRS regulations. The Bank intends to make the maximum contribution to
the ESOP permitted by such regulations, which could result in repayment of the
ESOP loan in fewer than ten years. A shorter repayment period could result in
increased compensation expense during the years in which payments are made on
the ESOP loan which would adversely impact the Holding Company's earnings.
Statement of Position ("SOP") No. 93-6, "Employers' Accounting for
Employee Stock Ownership Plans," published by the American Institute of
Certified Public Accountants (the "AICPA"), requires an employer to record
compensation expense in an amount equal to the fair value of shares committed to
be released to employees from the ESOP as the loan is repaid. See "PRO FORMA
DATA" for pro forma information regarding the effects of SOP 93-6 on net
earnings and shareholders' equity. If the Common Shares acquired by the ESOP
appreciate in value over time, or if the loan is repaid in fewer than ten years,
the Holding Company may incur increased compensation expense relating to the
ESOP which would adversely affect the Holding Company's net earnings.
The ESOP may purchase Common Shares on the open market or may purchase
authorized but unissued shares from the Holding Company. If the ESOP purchases
authorized but unissued shares from the Holding Company, such purchases could
have a dilutive effect on the interests of the Holding Company's shareholders.
Following the consummation of the Conversion, the Holding Company
intends to adopt the Stock Option Plan and the RRP. The shares issued to
participants under the RRP could be newly issued shares or shares purchased in
the market. In the event the shares issued under the RRP consist of newly issued
common shares, the interests of existing shareholders will be diluted. Shares
issued pursuant to the exercise of options under the Stock Option Plan will be
authorized but unissued shares, unless the Holding Company has treasury shares
at the time of exercise and elects to use the treasury shares. At the maximum,
as adjusted, of the estimated Valuation Range, if all shares under these plans
were newly issued and the exercise price for the option shares was equal to the
$10 per share purchase price in the Conversion, the pro forma book value per
share of the outstanding common shares at September 30, 1997, would decrease
from $13.96 to $13.59. See "PRO FORMA DATA" and "MANAGEMENT - Stock Benefit
Plans."
ANTI-TAKEOVER PROVISIONS WHICH MAY DISCOURAGE SALES OF COMMON SHARES FOR PREMIUM
PRICES
The Articles of Incorporation and Code of Regulations of the Holding
Company and the Amended Articles of Incorporation of the Bank contain certain
provisions that could deter or prohibit non-negotiated changes in the control of
the Holding Company and the Bank. Such provisions include (1) a restriction on
the direct or indirect acquisition of more than 10% of the outstanding shares of
the Bank by any person during the five-year period following the effective date
of the Conversion, (2) the ability to issue additional common shares without
shareholder approval, and (3) the requirement of a 80% supermajority voting
requirement for the approval of certain matters, including mergers, acquisitions
of a majority of the shares of the Holding Company or the transfer of
substantially all of the assets of the Holding Company, if the Board of
Directors recommends against the approval of any such matter. See "DESCRIPTION
OF AUTHORIZED SHARES" and "RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY
AND THE BANK AND ANTI-TAKEOVER PROVISIONS."
The executive officers and directors of the Holding Company and their
Associates are expected to purchase approximately 9.7% of the shares issued in
connection with the Conversion, assuming the sale of 1,700,000 Common Shares at
the midpoint of the Valuation Range. In addition, executive officers of the
Holding Company will be able to vote shares allocated to their accounts under
the ESOP, which intends to purchase approximately 8% of the shares issued in
connection with the Conversion. The RRP trustees, who are expected to be
directors of the Bank, will vote shares awarded but not distributed under the
RRP in their discretion. In view of the various provisions of the Articles of
Incorporation and the stock benefit plans of the Holding Company and the Bank,
the ESOP trustee, the RRP Committee and the directors and officers of the
Holding Company and the Bank will have a significant influence over the vote on
any takeover attempt or proxy contest and may be able to defeat such a proposal.
The Boards of Directors of the Holding Company and the Bank believe that such
provisions will be in the best interests of shareholders by encouraging
prospective acquirors to negotiate a proposed acquisition with the directors.
Such provisions could, however, adversely affect the market value of the Common
Shares or restrict or eliminate the opportunity for shareholders to sell their
shares for premium prices.
-10-
<PAGE> 16
Federal and Ohio law also restrict the acquisition of control of the
Holding Company and the Bank, and regulations of the OTS restrict the ability of
any person to acquire the beneficial ownership of more than 10% of any class of
voting equity security of the Bank or the Holding Company. Any or all of these
provisions may facilitate the perpetuation of current management and discourage
proxy contests or takeover attempts not first negotiated with the Board of
Directors. See "RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND THE BANK
AND ANTI-TAKEOVER PROVISIONS."
USE OF PROCEEDS
The following table presents the estimated gross and net proceeds from
the sale of the Common Shares, based on the Valuation Range:
<TABLE>
<CAPTION>
Minimum Mid-point Maximum Maximum, as adjusted
------- --------- ------- --------------------
<S> <C> <C> <C> <C>
Gross proceeds $14,450,000 $17,000,000 $19,550,000 $22,482,500
Less estimated expenses 456,000 487,000 517,000 552,000
------------- ------------- ------------- -------------
Total net proceeds $13,994,000 $16,513,000 $19,033,000 $21,930,500
=========== =========== =========== ===========
</TABLE>
The net proceeds from the sale of the Common Shares may vary depending
upon financial and market conditions at the time of the completion of the
Offering. See "THE CONVERSION - Pricing and Number of Common Shares to be Sold."
The expenses detailed above are estimated. Actual expenses may be more than or
less than estimated. See "THE CONVERSION Plan of Distribution."
The Holding Company will retain up to 50% of the net proceeds from the
sale of the Common Shares, or approximately $11.0 million at the maximum, as
adjusted, of the Valuation Range. Such proceeds will be used to lend up to 8% of
the proceeds of the Offering to the ESOP to acquire Common Shares in the
Offering and the balance of the proceeds will be invested initially in
short-term investments. The loan to the ESOP will have a term of up to ten years
and an interest rate equal to the applicable federal rate published periodically
by the IRS, which is currently _____%. Ultimately the proceeds will be used for
general corporate purposes, which may include payments of dividends, repurchases
of Common Shares and funding of the RRP. See "THE CONVERSION - Restrictions on
Repurchase of Common Shares." OTS regulations generally prohibit stock
repurchases in the first year following the completion of the Conversion,
without prior approval of the OTS.
The remainder of the net proceeds received from the sale of the Common
Shares, approximately $11.0 million at the maximum, as adjusted, of the
Valuation Range, will be invested by the Holding Company in the capital stock to
be issued by the Bank to the Holding Company as a result of the Conversion and
will increase the regulatory capital of the Bank and will permit the Bank to
expand its lending and investment activities and to enhance customer services.
The Bank anticipates that such net proceeds will initially be invested in
short-term investments with maturities of one year or less and utilized for
general corporate purposes, including loan originations.
MARKET FOR COMMON SHARES
There is currently no market for the Common Shares. No assurance can be
given that an active or liquid market for the Common Shares will develop after
the completion of the Conversion or, if such a market does develop, that it will
continue. Investors should consider, therefore, the potentially illiquid and
long-term nature of an investment in the Common Shares.
A public trading market for the stock of any issuer, including the
Holding Company, depends upon the presence of both willing buyers and willing
sellers at any given time. The Holding Company has received conditional approval
to have the Common Shares quoted on Nasdaq under the symbol "______" upon
completion of the Conversion, subject to certain conditions which the Bank and
the Holding Company believe will be satisfied, although no assurance can be
provided that the conditions will be met. One of the conditions to the Nasdaq
listing is the commitment of at least two brokerage firms to make a market in
the Common Shares. KBW has informed the Holding Company that it intends to make
a market in the Common Shares, but it has no obligation to do so.
-11-
<PAGE> 17
The appraisal of the pro forma market value of the Bank, as converted,
and the Holding Company is not a recommendation as to the advisability of
purchasing Common Shares, nor does it represent Keller's opinion as to the price
at which the Common Shares may trade. There can be no assurance that the Common
Shares may later be resold at the price at which they are purchased in
connection with the Conversion. See "RISK FACTORS - Limited Market for the
Common Shares."
DIVIDEND POLICY
The declaration and payment of dividends by the Holding Company will be
subject to the discretion of the Board of Directors of the Holding Company, to
the earnings and financial condition of the Holding Company and to general
economic conditions. If the Board of Directors of the Holding Company determines
in the exercise of its discretion that the net income, capital and consolidated
financial condition of the Holding Company and the general economy justify the
declaration and payment of dividends by the Holding Company, the Board of
Directors of the Holding Company may authorize the payment of dividends on the
Common Shares, subject to the limitation under Ohio law that a corporation may
pay dividends only out of surplus. There can be no assurance that dividends will
be paid on the Common Shares or, if paid, that such dividends will continue to
be paid in the future. In addition, the Holding Company will not take any action
that would further the payment of a tax-free return of capital to its
shareholders during the first year following the completion of the Conversion.
Other than earnings on the investment of the proceeds retained by the
Holding Company and interest earned on the loan to the ESOP, the principal
source of income of the Holding Company will be dividends periodically declared
and paid by the Board of Directors of the Bank on the common shares of the Bank
held by the Holding Company. The declaration and payment of dividends by the
Bank to the Holding Company will be subject to the discretion of the Board of
Directors of the Bank, to the earnings and financial condition of the Bank, to
general economic conditions and to federal and state restrictions on the payment
of dividends by thrift institutions. Under regulations of the OTS applicable to
converted associations, the Bank will not be permitted to pay a cash dividend on
its capital stock after the Conversion if its regulatory capital would, as a
result of the payment of such dividend, be reduced below the amount required for
the Liquidation Account or the applicable regulatory capital requirement
prescribed by the OTS. See "THE CONVERSION Principal Effects of the Conversion
- -- Liquidation Account" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Liquidity and Capital Resources." The Bank
may not pay a dividend unless such dividend also complies with an OTS regulation
limiting capital distributions by savings and loan associations. Capital
distributions, for purposes of such regulation, include, without limitation,
payments of cash dividends, repurchases, and certain other acquisitions by an
association of its shares and payments to stockholders of another association in
an acquisition of such other association. See "REGULATION - Office of Thrift
Supervision -- Limitations on Capital Distributions."
-12-
<PAGE> 18
REGULATORY CAPITAL COMPLIANCE
The following table sets forth the historical regulatory capital of the
Bank at September 30, 1997, and the pro forma regulatory capital of the Bank at
such date based on the receipt of 50% of the net proceeds for the number of
Common Shares indicated.
<TABLE>
<CAPTION>
Pro forma capital at September 30, 1997, assuming the sale of:
-----------------------------------------------------------------------------
1,445,000 1,700,000 1,955,000 2,248,250
Common Shares Common Shares Common Shares Common Shares
Historical at (offering price (offering price (offering price (offering price
September 30, 1997 of $10 per share) of $10 per share) of $10 per share) of $10 per share)
------------------ ----------------- ----------------- ------------------ ------------------
Amount Percent(1) Amount Percent(1) Amount Percent(1) Amount Percent(1) Amount Percent (1)
------ ------- ------ ------- ------ ------- ------ ------- ------ -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital under generally $10,592 17.7% $15,855 24.4% $16,809 25.4% $17,763 26.5% $18,859 27.7%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
accepted accounting
principles, before
adjustments
Tangible capital: (1)
Capital level $10,579 17.7% $15,842 24.3% $16,796 25.4% $17,750 26.5% $18,846 27.7%
Requirement 898 1.5 977 1.5 991 1.5 1,005 1.5 1,022 1.5
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Excess $ 9,681 16.2% $14,865 22.8% $15,805 23.9% $16,745 25.0% $17,824 26.2%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
Core capital: (2)
Capital level $10,579 17.7% $15,842 24.3% $16,796 25.4% $17,750 26.5% $18,846 27.7%
Requirement 1,795 3.0 1,953 3.0 1,982 3.0 2,010 3.0 2,043 3.0
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Excess $ 8,784 14.7% $13,889 21.3% $14,814 22.4% $15,740 23.5% $16,803 24.7%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
Risk-based capital:(3)
Capital level $10,727 30.2% $15,990 41.9% $16,944 43.8% $17,898 45.7% $18,994 47.8%
Requirement 2,846 8.0 3,056 8.0 3,094 8.0 3,133 8.0 3,176 8.0
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Excess $ 7,881 22.2% $12,934 33.9% $13,850 35.8% $14,765 37.7% $15,818 39.8%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
- -------------------------------
<FN>
(1) Tangible and core capital levels are shown as a percentage of adjusted total assets; risk-based capital levels
are shown as a percentage of risk-weighted assets.
(2) Total retained earnings as calculated under generally accepted accounting principles ("GAAP"). Assumes that the
Bank receives 50% of the net proceeds, offset in part by the aggregate purchase price of Common Shares purchased
by the ESOP. The amount to be borrowed by the ESOP is deducted from pro forma capital to illustrate the possible
impact on the Bank. Also assumes that a number equal to 4% of the Common Shares will be acquired by the RRP in
the open market after the Conversion as a price of $10 per share. There can be no assurance that a sufficient
number of shares will be available in the open market for purchase by the RRP or that, if available, the price of
such shares will be $10 per share. A higher price per share, assuming the purchase of the entire 4% of the Common
Shares, would reduce retained earnings. The RRP may purchase shares in the open market or may purchase authorized
but unissued shares from the Holding Company.
(3) Includes $148,000 of general valuation allowances, all of which qualify as supplementary capital. See "REGULATION
- Regulatory Capital Requirements."
(4) Assumes reinvestment of net proceeds in 50% risk-weighted assets.
</TABLE>
-13-
<PAGE> 19
CAPITALIZATION
Set forth below is the historical capitalization of the Bank at
September 30, 1997, and the pro forma consolidated capitalization of the Holding
Company at such date; as adjusted to give effect to the sale of Common Shares
based on the Valuation Range and estimated expenses. See "USE OF PROCEEDS" and
"THE CONVERSION - Pricing and Number of Common Shares to be Sold."
<TABLE>
<CAPTION>
Pro forma capitalization of the Holding Company
at September 30, 1997, assuming the sale of:
-------------------------------------------------------------------
1,445,000 1,700,000 1,955,000 2,248,250
Historical Common Common Common Common
capitalization Shares Shares Shares Shares
of the Bank at (Offering (Offering (Offering (Offering
September 30, price of price of price of price of
1997 $10 per share) $10 per share) $10 per share) $10 per share)
-------------- -------------- -------------- -------------- --------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Deposits (1) $ 48,208 $ 48,208 $ 48,208 $ 48,208 $ 48,208
======== ======== ======== ======== ========
Capital and retained earnings:
Common Shares, no par value per
share: authorized - ________
shares; assumed outstanding - $ -- $ -- $ -- $ -- $ --
as shown (2)
Additional paid-in capital -- 13,994 16,513 19,033 21,931
Less Common Shares acquired by
the ESOP (3) -- (1,156) (1,360) (1,564) (1,799)
Less Common Shares acquired by
the RRP (4) -- (578) (680) (782) (899)
Retained earnings, net,
substantially restricted (5) 10,579 10,579 10,579 10,579 10,579
Unrealized gain on available for
sale securities, net 13 13 13 13 13
-------- -------- -------- -------- --------
Total capital and retained $ 10,592 $ 22,852 $ 25,065 $ 27,279 $ 29,825
======== ======== ======== ======== ========
earnings
- ------------------------------------
<FN>
(1) No effect has been given to withdrawals from savings accounts for the purpose of purchasing Common Shares in the
Conversion. Any such withdrawals will reduce pro forma deposits by the amount of such withdrawals.
(2) The number of Common Shares to be issued will be determined on the basis of the final valuation of the Bank. See
"THE CONVERSION - Pricing and Number of Common Shares to be Sold." Common Shares assumed outstanding does not
reflect the issuance of any common shares which may be reserved for issuance under the Stock Option Plan. See
"MANAGEMENT - Stock Benefit Plans -- Stock Option Plan." Reflects receipt of the proceeds from the sale of the
Common Shares, net of estimated expenses.
(3) Assumes that 8% of the Common Shares sold in connection with the Conversion will be acquired by the ESOP with
funds borrowed by the ESOP from the Holding Company for a term of ten years at a rate of ___%. The ESOP loan will
be secured solely by the Common Shares purchased by the ESOP. The Bank has agreed, however, to use its best
efforts to fund the ESOP based on future earnings, which best efforts funding will reduce the Bank's total
capital and retained earnings, as reflected in the table. If the ESOP purchases authorized but unissued shares
from the Holding Company, such purchases would have a dilutive effect of approximately 7.4% on the voting
interests of the Holding Company's shareholders. See "MANAGEMENT - Stock Benefit Plans -- Employee Stock
Ownership Plan."
(4) Assumes that 4% of the Common Shares will be acquired in the open market by the RRP after the Conversion at a
price of $10 per share. There can be no assurance that a sufficient number of shares will be available for
purchase by the RRP, or that shares could be purchased at a price of $10 per share. A higher price per share,
assuming the purchase of the entire 4% of the shares, would reduce retained earnings. The RRP may purchase shares
in the open market or may purchase authorized but unissued shares from the Holding Company. If authorized but
unissued shares are purchased, the voting interests of existing shareholders would be diluted approximately 3.9%.
See "MANAGEMENT - Stock Benefit Plans -- Recognition and Retention Plan."
(5) Retained earnings include restricted and unrestricted retained earnings. See "THE CONVERSION - Principal Effects
of the Conversion -- Liquidation Account" for information concerning the liquidation account to be established in
connection with the Conversion and "TAXATION - Federal Taxation" for information concerning restricted retained
earnings for federal tax purposes.
</TABLE>
-14-
<PAGE> 20
PRO FORMA DATA
Set forth below are the pro forma consolidated net earnings of the
Holding Company for the three months ended September 30, 1997, and for the year
ended June 30, 1997, and the pro forma consolidated shareholders' equity of the
Holding Company at September 30, 1997 and June 30, 1997, along with the related
pro forma earnings per share amounts, giving effect to the sale of the Common
Shares based on the Valuation Range. See "THE CONVERSION - Pricing and Number of
Common Shares to be Sold." The pro forma data is based on the following
assumptions: (i) the sale of the Common Shares occurred at the beginning of the
period and yielded the net proceeds indicated; (ii) such net proceeds were
invested at the beginning of the period to yield annualized after-tax net
returns of 3.53%; and (iii) no withdrawals from existing deposit accounts were
made to purchase the Common Shares. The assumed returns are based on the
one-year U.S. Treasury bill yield of 5.35% in effect at September 30, 1997. This
rate was used as an alternative to the arithmetic average of the Bank's
interest-earning assets and interest-bearing deposits. In calculating pro forma
net earnings, a statutory federal income tax rate of 34% has been assumed for
all periods. In the opinion of management, the assumed after-tax yield does not
differ materially from the estimated after-tax yield which will be obtained on
the initial investment of the cash proceeds in short-term interest-bearing
deposits and is viewed as being more relevant in the current low interest rate
environment than the use of an arithmetic average of the fiscal year 1997
weighted average yield on interest-earning assets and weighted average rates
paid on deposits during such period. Actual yields may differ, however, from the
assumed returns. The pro forma consolidated net earnings amounts derived from
the assumptions set forth herein should not be considered indicative of the
actual results of operations of the Holding Company that would have been
attained for any period if the Conversion had been actually consummated at the
beginning of such period.
As the table demonstrates, pro forma consolidated earnings per share
and pro forma consolidated shareholders' equity per share decrease as the amount
of Common Shares sold moves from the minimum of the Valuation Range to the
adjusted maximum of the Valuation Range. In addition, the offering price as a
multiple of pro forma earnings per share and as a percent of pro forma
shareholders' equity per share increases as the amount of Common Shares sold
moves from the minimum of the Valuation Range to the adjusted maximum of the
Valuation Range.
THE PRO FORMA DATA AND ACCOMPANYING NOTES SHOULD BE READ IN CONJUNCTION
WITH THE FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE HEREIN. NO
ASSURANCE CAN BE PROVIDED THAT THE ASSUMED YIELDS WILL BE ACHIEVED ON THE
INVESTMENT OF THE CONVERSION PROCEEDS. THE PRO FORMA DATA DOES NOT PURPORT TO
REPRESENT WHAT THE HOLDING COMPANY'S FINANCIAL POSITION OR RESULTS OF OPERATIONS
ACTUALLY WOULD HAVE BEEN HAD THE CONVERSION BEEN COMPLETED AS OF THE DATE OR AT
THE BEGINNING OF THE PERIODS INDICATED, OR TO PROJECT THE HOLDING COMPANY'S
FINANCIAL POSITION OR RESULTS OF OPERATIONS AT ANY FUTURE DATE OR FOR ANY FUTURE
PERIOD.
-15-
<PAGE> 21
<TABLE>
<CAPTION>
Three months ended September 30, 1997, assuming the sale of:
--------------------------------------------------------------------------------
1,445,000 1,700,000 1,955,000 2,248,250
Common Shares Common Shares Common Shares Common Shares
(Offering price of (Offering price of (Offering price of (Offering price of
$10 per share) $10 per share) $10 per share) $10 per share)
------------------- ------------------ ------------------ ------------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Gross proceeds $ 14,450 $ 17,000 $ 19,550 $ 22,483
Estimated expenses (456) (487) (517) (552)
-------------- -------------- -------------- --------------
Estimated net proceeds 13,994 16,513 19,033 21,931
Less Common Shares acquired by the (1,156) (1,360) (1,564) (1,799)
ESOP (1)
Less Common Shares acquired by the RRP (2) (578) (680) (782) (899)
-------------- -------------- -------------- --------------
Net cash proceeds 12,260 14,473 16,687 19,233
============== ============== ============== ==============
Net income:
Historical 213 213 213 213
Pro forma income on net proceeds 108 128 147 170
Pro forma adjustment for the ESOP (1) (19) (22) (26) (30)
Pro forma adjustment for the RRP (2) (19) (22) (26) (30)
-------------- -------------- -------------- --------------
Pro forma net income 283 297 308 323
============== ============== ============== ==============
Earnings per share:
Historical 0.16 0.14 0.12 0.10
Pro forma income on net proceeds 0.08 0.08 0.08 0.08
Pro forma adjustment for the ESOP (1) (0.01) (0.01) (0.01) (0.01)
Pro forma adjustment for the RRP (2) (0.01) (0.01) (0.01) (0.01)
-------------- -------------- -------------- --------------
Pro forma net earnings per share 0.22 0.20 0.18 0.16
============== ============== ============== ==============
Number of shares used in calculating
earnings per share 1,332,290 1,567,400 1,802,510 2,072,887
Shareholders' equity (book value): (4)
Historical 10,592 10,592 10,592 10,592
Estimated net proceeds from the
sale of Common Shares 13,994 16,513 19,033 21,931
Less unearned ESOP shares (1) (1,156) (1,360) (1,564) (1,799)
Less unearned RRP shares (2) (578) (680) (782) (899)
-------------- -------------- -------------- --------------
Pro forma shareholders' equity 22,852 25,065 27,279 29,825
============== ============== ============== ==============
Per share shareholders' equity:
Historical 7.33 6.23 5.42 4.71
Estimated net proceeds 9.68 9.71 9.74 9.75
Less unearned ESOP shares (1) (0.80) (0.80) (0.80) (0.80)
Less unearned RRP shares (2) (0.40) (0.40) (0.40) (0.40)
-------------- -------------- -------------- --------------
Pro forma shareholders' equity per share (3) $ 15.81 $ 14.74 $ 13.96 $ 13.26
============== ============== ============== ==============
Number of shares used in book value 1,445,000 1,700,000 1,955,00 2,248,250
Ratio of offering price to pro forma
shareholders' equity per share (5) 63.23% 67.82% 71.67% 75.38%
Offering price as a multiple of pro
forma earnings per share (5)(6) 11.77 13.24 14.60 16.02
</TABLE>
(Footnotes on page 18)
-16-
<PAGE> 22
<TABLE>
<CAPTION>
Three months ended September 30, 1997, assuming the sale of:
--------------------------------------------------------------------------------
1,445,000 1,700,000 1,955,000 2,248,250
Common Shares Common Shares Common Shares Common Shares
(Offering price of (Offering price of (Offering price of (Offering price of
$10 per share) $10 per share) $10 per share) $10 per share)
------------------- ------------------ ------------------ ------------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Gross proceeds $ 14,450 $ 17,000 $ 19,550 $ 22,483
Estimated expenses (456) (487) (517) (552)
-------------- -------------- -------------- --------------
Estimated net proceeds 13,994 16,513 19,033 21,931
Less Common Shares acquired by the (1,156) (1,360) (1,564) (1,799)
ESOP (1)
Less Common Shares acquired by the RRP (2) (578) (680) (782) (899)
-------------- -------------- -------------- --------------
Net cash proceeds 12,260 14,473 16,687 19,233
============== ============== ============== ==============
Net income:
Historical 595 595 595 595
Pro forma income on net proceeds 433 511 589 679
Pro forma adjustment for the ESOP (1) (76) (90) (103) (119)
Pro forma adjustment for the RRP (2) (76) (90) (103) (119)
-------------- -------------- -------------- --------------
Pro forma net income 876 926 978 1,036
============== ============== ============== ==============
Earnings per share:
Historical 0.44 0.38 0.33 0.29
Pro forma income on net proceeds 0.32 0.32 0.32 0.33
Pro forma adjustment for the ESOP(1) (0.06) (0.06) (0.06) (0.06)
Pro forma adjustment for the RRP (2) (0.06) (0.06) (0.06) (0.06)
-------------- -------------- -------------- --------------
Pro forma net earnings per share 0.64 0.58 0.53 0.50
============== ============== ============== ==============
Number of shares used in calculating
earnings per share 1,340,960 1,577,600 1,814,240 2,086,376
Shareholders' equity (book value): (4)
Historical 10,370 10,370 10,370 10,370
Estimated net proceeds from the
sale of Common Shares 13,994 16,513 19,033 21,931
Less unearned ESOP shares (1) (1,156) (1,360) (1,564) (1,799)
Less unearned RRP shares (2) (578) (680) (782) (899)
-------------- -------------- -------------- --------------
Pro forma shareholders' equity 22,630 24,843 27,057 29,603
============== ============== ============== ==============
Per share shareholders' equity:
Historical 7.18 6.10 5.30 4.61
Estimated net proceeds 9.68 9.71 9.74 9.75
Less unearned ESOP shares (1) (0.80) (0.80) (0.80) (0.80)
Less unearned RRP shares (2) (0.40) (0.40) (0.40) (0.40)
-------------- -------------- -------------- --------------
Pro forma shareholders' equity per share $ 15.66 $ 14.61 $ 13.84 $ 13.16
============== ============== ============== ==============
Number of Shares used in book value 1,445,000 1,700,000 1,955,000 2,248,250
Ratio of offering price to pro forma
shareholders' equity per share (5) 63.85% 68.43% 72.25% 75.95%
Offering price as a multiple of pro
forma earnings per share (5)(6) 15.32 17.03 18.55 20.13
</TABLE>
(Footnotes on next page)
-17-
<PAGE> 23
(1) Assumes 8.0% of the shares sold in the Conversion are purchased by the
ESOP and that the funds used to purchase such shares are borrowed from
the Holding Company. The approximate amount expected to be borrowed by
the ESOP is not reflected as a liability, but is reflected as a
reduction of capital. The Bank intends to make annual contributions to
the ESOP over a ten year period in an amount at least equal to the
principal and interest requirement of the debt. The pro forma net
income assumes that: (i) 11,560, 13,600, 15,640, and 17,986 shares at
the minimum, mid-point, maximum, and maximum, as adjusted, of the
Valuation Range, respectively, were committed to be released during the
year at an average fair value of $10 per share in accordance with SOP
93-6 of the AICPA; the three months ended September 30, 1997 has been
prepared with the same assumptions except that only one-fourth of the
shares calculated previously have been committed to be released; (ii)
the effective tax rate was 34% for such period; and (iii) only the ESOP
shares committed to be released were considered outstanding for
purposes of the per share net earnings. The pro forma shareholders'
equity per share calculation assumes all ESOP shares were outstanding,
regardless of whether such shares would have been released. Because the
Holding Company will loan to the ESOP the funds necessary to purchase
the Common Shares, only principal payments on the ESOP loan are
reflected as employee compensation and benefits expense. As a result,
to the extent the value of the Common Shares appreciates over time,
compensation expense related to the ESOP will increase. See Note 5
below. See "MANAGEMENT - Stock Benefit Plans -- Employee Stock
Ownership Plan."
(2) Assumes that 4% of the Common Shares sold in connection with the
Conversion will be purchased by the RRP after the Conversion at a price
of $10 per share and that one-fifth of the purchase price of the RRP
shares will be expensed in each of the first five years after the
Conversion. If the RRP is implemented in the first year after the
completion of the Conversion, it will be subject to various OTS
requirements, including the requirement that the RRP be approved by the
shareholders of the Holding Company. There can be no assurance that the
RRP will be approved by the shareholders, that a sufficient number of
shares will be available for purchase by the RRP or that the shares
could be purchased at $10 per share. A higher per share price, assuming
the purchase of the entire 4% of the shares, would reduce pro forma net
earnings and pro forma shareholders' equity. If an insufficient number
of shares is available in the open market to fund the RRP at the
desired level, the Holding Company may issue additional authorized
shares. The issuance of authorized but unissued shares in an amount
equal to 4% of the Common Shares issued in the Conversion would result
in a 3.9% dilution in existing shareholders' voting interests. See
"MANAGEMENT - Stock Benefit Plans -- Recognition and Retention Plan."
(3) Consolidated shareholders' equity represents the excess of the carrying
value of the assets of the Holding Company over its liabilities. The
calculations are based upon the number of shares issued in the
Conversion, without giving effect to SOP 93-6. The amounts shown do not
reflect the federal income tax consequences of the potential
restoration to income of the tax bad debt reserves for income tax
purposes, which would be required in the event of liquidation. The
amounts shown also do not reflect the amounts required to be
distributed in the event of liquidation to Eligible Account Holders and
Supplemental Eligible Account Holders from the Liquidation Account
(hereinafter defined) which will be established upon the consummation
of the Conversion. Pro forma shareholders' equity information is not
intended to represent the fair market value of the Common Shares, the
current value of the Bank's assets or liabilities, or the amounts, if
any, that would be available for distribution to shareholders in the
event of liquidation. Such pro forma data may be materially affected by
a change in the number of Common Shares to be sold in the Conversion
and by other factors. See "TAXATION - Federal Taxation."
(4) Assumes that following the consummation of the Conversion, the Holding
Company will adopt the Stock Option Plan and that the Stock Option Plan
will be considered and voted upon at a meeting of the Holding Company's
shareholders to be held no earlier than six months after the
Conversion. Under the Stock Option Plan, employees and directors could
be granted options to purchase an aggregate amount of common shares
equal up to 10% of the Common Shares issued in the Conversion at an
exercise price equal to the market price of the common shares on the
date of grant. In the event the shares issued under the Stock Option
Plan are exercised, the interests of existing shareholders would be
diluted. See "MANAGEMENT - Stock Benefit Plans --Stock Option Plan."
(5) Pro forma net income per share calculations include the number of
shares assumed to be sold in the Conversion and, in accordance with SOP
93-6, exclude ESOP shares which would not have been released during the
period. Accordingly, for the three months ended September 30, 1997,
112,710, 132,600, 152,490, and 175,363 shares, and for the year ended
June 30, 1997, 104,040, 122,400, 140,760, and 161,874 shares have been
subtracted from the shares assumed to be sold at the minimum,
mid-point, maximum, and maximum, as adjusted, of the Valuation Range.
See Note 1 above.
-18-
<PAGE> 24
SUMMARY STATEMENTS OF INCOME
The following summary sets forth certain information concerning the net
income of the Bank for the periods indicated. Such information should be read in
conjunction with the financial statements and notes thereto appearing elsewhere
herein.
<TABLE>
<CAPTION>
Three months
ended September 30, Year ended June 30,
---------------------- ----------------------------------
1997 1996 1997 1996 1995
------ ------ ----- ------ ----
(In thousands)
<S> <C> <C> <C> <C> <C>
Interest and dividend income:
Loans $1,137 $1,016 $4,163 $3,755 $3,143
Securities, interest-bearing deposits and 117 116 446 504 553
------ ------- ------- ------- -------
other
Total interest income 1,254 1,132 4,609 4,259 3,696
Interest expense on deposits 517 437 1,931 1,703 1,331
------ ------- ------ ----- ------
Net interest income before provision
for losses on loans 737 695 2,678 2,556 2,365
Provision for loan losses 30 1 6 - 2
------ -------- -------- -------- --------
Net interest income after provision
for loan losses 707 694 2,672 2,556 2,363
Other income 43 42 175 165 149
General, administrative and other expense (1) 415 660 1,943 1,532 1,418
------ ------ ------ ------ -----
Earnings before income taxes 335 76 904 1,189 1,094
Federal income taxes 122 27 309 419 378
------- ------- ------- -------- ------
Net income $ 213 $ 49 $ 595 $ 770 $ 716
====== ======= ======= ======= ======
- ----------------------------
<FN>
(1) Includes a nonrecurring pre-tax expense of $261,000 for the three months ended September 30, 1996, and for the year
ended June 30, 1997, for a special one-time assessment to recapitalize the SAIF.
</TABLE>
-19-
<PAGE> 25
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Bank is a state-chartered community-oriented financial institution
which is primarily engaged in the business of attracting savings deposits from
the general public and investing those funds in mortgage loans secured by one-
to four-family residential real estate located in the Bank's primary market
area. To a much lesser extent, the Bank also originates loans for the
construction or improvement of one- to four-family residential real estate,
loans secured by multifamily residential real estate (over four units), and
nonresidential real estate, commercial loans and consumer loans, and invests in
U.S. Treasury securities, interest-bearing deposits in other financial
institutions and other investments permitted by law.
The Bank's results of operations are primarily dependent on its net
interest income, which is the difference between the interest income earned on
its assets, primarily loans and securities, and the interest expense on its
liabilities, primarily customer deposits. Net interest income may be affected
significantly by general economic and competitive conditions and policies of
regulatory agencies, particularly those affecting market interest rates. The
Bank currently originates mortgage loans primarily with adjustable rates and
with terms up to 25 years and attempts to maintain sufficient capital and other
liquid assets to manage interest rate risk. The results of operations are also
significantly influenced by the level of noninterest expenses, such as employee
salaries and benefits, noninterest income, such as service charges, and the
Bank's provision for losses on loans.
The following discussion of the operating results and financial
condition of the Bank should be read in conjunction with the financial
statements and related footnotes and the selected financial data included
elsewhere in this Prospectus.
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 1997 AND JUNE 30, 1997
Total assets at September 30, 1997, were $59.9 million compared to
$60.4 million at June 30, 1997, a decrease of $0.5 million, or 0.8%. The slight
decrease in total assets was primarily due to decreases of $2.5 million in cash
and cash equivalents and $486,000 in securities available for sale, which were
partially offset by an increase of $2.5 million in net loans receivable. The
growth in net loans receivable occurred primarily in one- to four-family
residential real estate loans, which increased approximately $1.7 million, and
in consumer and other loans, which increased approximately $903,000. The
increase in net loans receivable is primarily due to competitive loan rates and
products and a steady local economy.
Total liabilities at September 30, 1997, were $49.3 million, compared
to $50.0 million at June 30, 1997, a decrease of $700,000, or 1.4%. Total
deposits decreased $1.0 million, from $49.2 million at June 30, 1997, to $48.2
million at September 30, 1997. The decrease was primarily in certificates of
deposit, which decreased approximately $839,000. This decrease was due in part
to maturity of a large public fund deposit, which was not renewed. The decrease
in deposits was partially offset by a $258,000 increase in accrued expenses and
other liabilities, which was primarily the result of an increase in accrued
interest payable and federal income taxes payable due to the timing of the
payment of these expenses.
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1997 AND JUNE 30, 1996
Total assets at June 30, 1997 were $60.4 million compared to $55.4
million at June 30, 1996, an increase of $5.0 million, or 9.0%. Net loans
receivable accounted for all of the $5.0 million of asset growth, increasing
from $44.3 million at June 30, 1996 to $49.3 million at June 30, 1997. The
increase in loans receivable was largely in one- to four-family residential real
estate loans, which increased $2.3 million, and consumer and other loans, which
increased $1.8 million. These increases are reflective of a steady local economy
coupled with competitive loan rates and products compared to the local
competition.
Securities available for sale increased $3.3 million, to $5.0 million
at June 30, 1997 from $1.7 million at June 30, 1996. This increase was offset by
decreases in securities held to maturity of $2.3 million and cash and cash
equivalents of $1.0 million. The change in the securities portfolio is the
result of replacing maturing held-to-maturity securities with available-for-sale
securities to increase the flexibility in managing the overall portfolio. The
decrease in cash and cash equivalents was due to investing in longer-term
securities to achieve a better yield.
-20-
<PAGE> 26
Total liabilities were $50.0 million at June 30, 1997 compared to $45.6
million at June 30, 1996, an increase of $4.4 million, or 9.6%. Total deposit
accounts increased by $4.3 million from $44.9 million at June 30, 1996 to $49.2
million at June 30, 1997. Deposit growth was primarily due to an increase in
certificates of deposit of $4.9 million, which was offset by a decrease in
savings accounts of $843,000. The increase in certificates of deposit was the
result of offering several products with very competitive interest rates
[compared to the local competition].
Members' equity at June 30, 1997 was $10.4 million compared to $9.8
million at June 30, 1996. The increase of $602,000, or 6.1%, is principally
comprised of the net income for the fiscal year ended June 30, 1997.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1997 AND SEPTEMBER 30, 1996
NET INCOME. The Bank earned net income of $213,000 for the three months
ended September 30, 1997, compared to net income of $49,000 for the three months
ended September 30, 1996. The increase in net income was primarily the result of
a special deposit insurance assessment in September 1996, as more fully
discussed below.
NET INTEREST INCOME. Net interest income totaled $737,000 for the three
months ended September 30, 1997, compared to $695,000 for the three months ended
September 30, 1996, an increase of $42,000, or 6.0%. This increase was
attributable primarily to higher yield on a larger average balance of
interest-earning assets, which was partially offset by an overall increase in
the cost of funds, for an increased average volume of deposits. See "Yields
Earned and Rates Paid."
Interest and fees on loans increased approximately $121,000, or 11.9%,
from $1.0 million for the three months ended September 30, 1996, to $1.1 million
for the three months ended September 30, 1997. The increase in interest income
was due to a higher average balance of loans receivable.
Interest earned on securities totaled $74,000 for the three months
ended September 30, 1997, compared to $71,000 for the three months ended
September 30, 1996. The increase in interest earned was a result of a higher
average balance of securities, partially offset by a decrease in yield.
Dividends on FHLB stock increased slightly for the three months ended
September 30, 1997, compared to the three months ended September 30, 1996,
primarily due to an increase in the number of shares of FHLB stock owned.
Interest on interest-bearing deposits and federal funds sold decreased
approximately $3,000 for the three months ended September 30, 1997, compared to
the three months ended September 30, 1996. This decrease was due to a lower
average balance of interest-bearing deposits and overnight deposits, partially
offset by a higher yield earned.
Interest paid on deposits increased approximately $80,000 for the three
months ended September 30, 1997, compared to the three months ended September
30, 1996. The increase in interest expense was due to an increase in average
deposit balances combined with an increase in the cost of funds. The average
cost of deposits increased from 3.85% for the three months ended September 30,
1996, to 4.20% for the three months ended September 30, 1997. The increase in
the average cost of deposits was the result of an increase in higher yielding
certificates of deposit, due to special interest rate promotions as well as a
general increase in the interest rate on certificates of deposit offered by the
Bank. Certificates of deposit increased from 55.3% of total deposits at
September 30, 1996 to 58.9% of total deposits at September 30, 1997. The yield
on certificates of deposits was 5.19% for the three months ended September 30,
1996, compared to 5.58% for the three months ended September 30, 1997, while the
average yield on savings and demand deposit accounts decreased from 2.22% to
2.19% for the same three month periods.
PROVISION FOR LOAN LOSSES. The Bank maintains an allowance for loan
losses in an amount which, in management's judgment, is adequate to absorb
reasonably foreseeable losses inherent in the loan portfolio. While management
utilizes its best judgment and information available, the ultimate adequacy of
the allowance is dependent upon a variety of factors, including the performance
of the Bank's loan portfolio, the economy and changes in real estate values and
interest rates, and the view of the regulatory authorities toward loan
classifications. The provision for loan losses is determined by management as
the amount to be added to the allowance for loan losses after net charge-offs
have been deducted to bring the allowance to a level which is considered
adequate to absorb losses inherent in the loan portfolio. The amount of the
provision is based on management's monthly review of the loan portfolio and
consideration of such factors as historical loss experience, general prevailing
economic conditions, changes in the size and composition of the loan portfolio
and specific borrower considerations, including the ability of the borrower to
repay the loan and the estimated value of the underlying collateral.
-21-
<PAGE> 27
The provision for loan losses for the three months ended September 30,
1997, totaled $30,000 compared to $1,500 for the three months ended September
30, 1996, an increase of $28,500. The increase in the provision for loan losses
was attributable to an increase in the total loan portfolio as well as
management's evaluation of the changing composition of the Bank's loan
portfolio, including the increase in nonresidential real estate loans and
consumer loans. The allowance for loan losses totaled $148,000, or 0.29% of
gross loans receivable, net of loans in process and deferred loan origination
fees and costs, and 242.6% of total nonperforming loans at September 30, 1997,
compared to $119,000, or 0.26% of gross loans, net of loans in process and
deferred loan origination fees and costs and 117.8% of total nonperforming loans
at September 30, 1996.
NONINTEREST INCOME. Noninterest income for the three months ended
September 30, 1997 was $43,300 compared to $42,500 for the three months ended
September 30, 1996, an increase of $800, or 1.9%. The increase was primarily a
result of an increase in miscellaneous operating income.
NONINTEREST EXPENSE. Noninterest expense was $415,000 for the three
months ended September 30, 1997 compared to $660,000 for the three months ended
September 30, 1996, a decrease of $245,000, or 37.1%. The decrease was primarily
a result of $261,000 accrued for a special deposit insurance assessment
resulting from legislation enacted on September 30, 1996, to recapitalize the
SAIF of the FDIC. The legislation called for a one-time assessment of $0.657 for
each $100 in deposits held as of March 31, 1995. As a result of the
recapitalization of the SAIF, the current disparity between Bank and thrift
insurance assessments was reduced. Thrifts had been paying assessments of $0.23
per $100 of deposits. For most thrifts, including the Bank, the assessment level
was reduced to $0.064 per $100 in deposits in January 1997 and is expected to be
reduced to $0.024 per $100 in deposits no later than January 2000.
INCOME TAX EXPENSE. The volatility of income tax expense is primarily
attributable to the change in net income before income taxes. The provision for
income taxes totaled $122,000 for the three months ended September 30, 1997
compared to $27,000 for the three months ended September 30, 1996, an increase
of $95,000. The increase was largely due to the tax effect of $89,000 for the
special SAIF assessment discussed above. The effective tax rates were 36.4% and
35.9% for the three months ended September 30, 1997 and 1996, respectively.
COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 1997 AND JUNE
30, 1996
NET INCOME. Net income for the year ended June 30, 1997, was $595,000,
a decrease of $175,000, or 22.7%, from net earnings of $770,000 for the year
ended June 30, 1996. The decrease was primarily a result of the special SAIF
assessment in September 1996, combined with an increase in salary and employee
benefits expense, which were partially offset by an increase in net interest
income.
NET INTEREST INCOME. Net interest income increased approximately
$122,000, or 4.8%, from $2.7 million for the year ended June 30, 1997 compared
to $2.6 million for the year ended June 30, 1996. The increase in net interest
income was the result of an increase in the average balance of interest-earning
assets, partially offset by a decrease in the rate earned on such assets and an
overall increase in the cost of funds, for an increased average volume of
deposits.
Interest and fees on loans increased approximately $408,000, or 10.9%,
from $3.8 million for the year ended June 30, 1996, to $4.2 million for the year
ended June 30, 1997. The increase in interest income was due to a higher average
loans receivable balance, partially offset by a decrease in the average yield
earned on loans receivable. The average yield declined to 8.81% for the year
ended June 30, 1997, from 8.94% for the year ended June 30, 1996.
Interest earned on securities totaled $265,000 for the year ended June
30, 1997, compared to $332,000 for the year ended June 30, 1996. The decrease
was primarily a result of a lower average balance of securities and, to a lesser
extent, a decrease in the yield earned.
Dividends on FHLB stock increased slightly for the year ended June 30,
1997, compared to the year ended June 30, 1996, primarily due to an increase in
the number of shares of FHLB stock owned.
Interest on interest-bearing deposits and federal funds sold increased
approximately $8,000, or 5.4%, from $149,000 for the year ended June 30, 1996 to
$157,000 for the year ended June 30, 1997. The increase was the result of a
higher average balance of short-term funds, which was partially offset by a
decrease in the yield earned from 5.71% for the year ended June 30, 1996, to
5.33% for the year ended June 30, 1997.
-22-
<PAGE> 28
Interest paid on deposits totaled $1.9 million for the year ended June
30, 1997, compared to $1.7 million for the year ended June 30, 1996, an increase
of $228,000, or 13.4%. The increase in interest expense was due primarily to an
increase in the average deposit balance and, to a lesser extent, an increase in
the cost of funds. The average cost of deposits increased from 4.04% for the
year ended June 30, 1996, to 4.15% for the year ended June 30, 1997. The
increase in the average cost of deposits and the resulting increase in the
average outstanding balance was the result of several interest rate promotions
for certificates of deposit and a general increase in the interest rates paid on
certificates of deposit offered by the Bank. Certificates of deposit increased
from 54.3% of total deposits at June 30, 1996, to 59.3% of total deposits at
June 30, 1997. The average rate on certificates of deposit was 5.56% for the
year ended June 30, 1996, compared to 5.62% for the year ended June 30, 1997,
while the average cost of savings and demand deposit accounts declined from
2.27% to 2.23% over the same periods.
PROVISION FOR LOAN LOSSES. The provision for loan losses for the year
ended June 30, 1997 was $6,000. There was no provision for the year ended June
30, 1996. The allowance for loan losses totaled $119,000, or 0.24% of gross
loans receivable, net of loans in process and deferred loan origination fees and
costs and 360.6% of total nonperforming loans at June 30, 1997, compared with
$118,000, or 0.26% of gross loans receivable, net of loans in process and
deferred loan origination fees and costs, and 134.1% of total nonperforming
loans at June 30, 1996. The amount of the provision and the allowance for loan
losses is influenced by current economic conditions, actual loss experience,
industry trends and other factors. The increase in the provision for loan losses
was the result of a higher volume of loans receivable during the year ended June
30, 1997 compared to the year ended June 30, 1996.
NONINTEREST INCOME. Noninterest income increased approximately $10,000,
or 6.1%, to $175,000 for the year ended June 30, 1997, compared to $165,000 for
the year ended June 30, 1996. This increase was primarily due to increases in
service charges and other fees.
NONINTEREST EXPENSE. Noninterest expense increased $411,000, or 26.8%,
from $1.5 million for the year ended June 30, 1996, to $1.9 million for the year
ended June 30, 1997. This increase was primarily due to increases in salaries
and employee benefits of $103,000, SAIF deposit insurance premiums of $228,000,
and other expense of $31,000. The salaries and employee benefits expense
increase was primarily due to increases in the Bank's short-term incentive plan,
salary increases and the addition of one full time equivalent employee. SAIF
deposit insurance premiums totaled $321,000 for the year ended June 30, 1997,
compared to $93,000 for the year ended June 30, 1996, due to the special SAIF
assessment in September 1996. The increase in other expense was primarily due to
increases in professional services fees, printing and office supplies and credit
card and ATM-related expenses, which were partially offset by decreases in
advertising and seminar and conference expenses.
INCOME TAX EXPENSE. The provision for income taxes totaled $309,000 for
the year ended June 30, 1997, compared to $419,000 for the year ended June 30,
1996, resulting in an effective tax rate of 34.2% and 35.3% for the years ended
June 30, 1997 and 1996, respectively. The volatility of income tax expense is
primarily attributable to the change in net income, before income taxes.
COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 1996 AND JUNE
30, 1995
NET INCOME. Net income for the year ended June 30, 1996 totaled
$770,000, an increase of $54,000, or 7.5%, from net earnings of $716,000 for the
year ended June 30, 1995. The increase was primarily the result of an increase
in net interest income which was partially offset by increases in noninterest
expense and the provision for income taxes.
Interest and fees on loans increased $612,000, or 19.5%, from $3.1
million for the year ended June 30, 1995, to $3,755,000 for the year ended June
30, 1996. The increase was due to a higher average loans receivable balance
combined with an increase in the average yield earned on loans receivable from
8.39% for the year ended June 30, 1995 to 8.94% for the year ended June 30,
1996.
Interest earned on securities totaled $332,000 for the year ended June
30, 1996, compared to $429,000 for the year ended June 30, 1995. The decrease
was the result of a lower average balance of securities, which was partially
offset by an increase in the yield earned.
Dividends on FHLB stock decreased slightly for the year ended June 30,
1996, compared to the year ended June 30, 1995, primarily due to a decrease in
the dividend rate on FHLB stock.
-23-
<PAGE> 29
Interest on interest-bearing deposits and federal funds sold increased
$48,000, or 47.5%, from $101,000 for the year ended June 30, 1995 to $149,000
for the year ended June 30, 1996. The increase was the result of a higher
average balance due to the temporary investment of excess funds received from
deposit growth and maturing securities in federal funds sold and overnight
deposits with the FHLB.
Interest paid on deposits totaled $1.7 million for the year ended June
30, 1996, compared to $1.3 million for the year ended June 30, 1995, an increase
of $372,000, or 27.9%. The increase in interest expense was due to an increase
in the average deposit balance combined with an increase in the cost of funds.
The increase in the overall cost of funds was a result of consumers shifting
funds from lower-yielding savings and demand deposit accounts to higher-yielding
certificates of deposit. Certificates of deposit increased from 50.9% of total
deposits at June 30, 1995, to 54.3% of total deposits at June 30, 1996.
Additionally, the yield on certificates of deposit increased from 4.52% for the
year ended June 30, 1995, to 5.56% for the year ended June 30, 1996. The average
yield on savings and demand deposit accounts decreased from 2.33% to 2.27% over
the same periods.
PROVISION FOR LOAN LOSSES. There was no provision for loan losses for
the year ended June 30, 1996 compared to a $2,000 provision for the year ended
June 30, 1995. The allowance for loan losses totaled $118,000 or 0.26% of gross
loans receivable, net of loans in process and deferred loan origination fees and
costs, and 134.1% of total nonperforming loans at June 30, 1996, compared with
$118,000, or 0.30% of gross loans receivable, net of loans in process and
deferred loan origination fees and costs, and 737.5% of total nonperforming
loans at June 30, 1995. The provision for loan losses was higher for the year
ended June 30, 1995, compared to the year ended June 30, 1996, as a result of
management's evaluation of the adequacy of the allowance.
NONINTEREST INCOME. Noninterest income increased by $16,000, or 10.7%,
totaling $165,000 for the year ended June 30, 1996, compared to $149,000 for the
year ended June 30, 1995. The increase was due to an increase in premium rebates
on credit-life insurance policies.
NONINTEREST EXPENSE. Noninterest expense totaled $1.5 million for the
year ended June 30, 1996, compared to $1.4 million for the year ended June 30,
1995, an increase of $114,000, or 8.0%. The major components of the increase
were increases in compensation and benefits expense of $35,000, an increase of
$29,000 in occupancy and equipment expense, and a $40,000 increase in other
expense. The increase in compensation and benefits was due to an increase in
short-term incentive expense and salary increases, which were offset partially
by a decrease in pension expense. The increase in occupancy and equipment
expense was due to an increase in depreciation, service contracts and other
repair and maintenance expenses, which resulted from purchases of office
equipment. The increase in other expense was primarily due to increases in
advertising, seminars and conferences and credit card-related expenses and other
professional services fees.
INCOME TAX EXPENSE. The provision for income taxes totaled $419,000 for
the year ended June 30, 1996 and $378,000 for the year ended June 30, 1995,
resulting in effective tax rates of 35.3% and 34.5%, respectively. The
volatility of income tax expense is primarily attributable to the change in net
income before income taxes.
YEAR 2000 ISSUE
The Bank is aware of the potential problems associated with the
existing programming codes in its computer systems which, upon the arrival of
the year 2000, will recognize the two-digit year "00" as the year 1900. Systems
that do not properly recognize such information could generate erroneous data or
cause a system to fail.
The Bank recognizes that rapid and accurate data processing is
essential to its operations. The data processing service provider of the Bank
has advised the Bank that it expects to successfully resolve the "Year 2000"
issue in a timely manner. If, however, the data processing service provider is
unable to resolve the problem in time, the Bank would likely experience delays,
mistakes or failures in systems or operations which could negatively impact the
Bank's financial condition and results of operations.
YIELDS EARNED AND RATES PAID
The following table sets forth certain information relating to the
Bank's average balance sheet information and reflects the average yield on
interest-earning assets and the average cost of interest-bearing liabilities for
the periods indicated. Such yields and costs are derived by dividing income or
expense by the average balances of interest-earning assets
-24-
<PAGE> 30
or interest-bearing liabilities, respectively, for the periods presented.
Average balances are derived from month-end balances. Nonaccruing loans have
been included in the table as loans carrying a zero yield. The average balance
for securities available for sale is computed using the carrying value and the
average yield on securities available for sale has been computed using the
historical amortized cost average balance.
-25-
<PAGE> 31
<TABLE>
<CAPTION>
Three months ended September
----------------------------------------------------------------------
1997 1996
---------------------------------- ---------------------------------
Average Interest Average Interest
outstanding earned/ Yield/ outstanding earned/ Yield/
balance paid rate balance paid rate
--------- -------- ----- ----------- -------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable (1) $50,667 $ 1,137 8.90% $45,314 $ 1,016 8.90%
Securities available for sale (2) 4,883 74 6.06 2,435 39 6.41
Securities held to maturity 2,125 32 5.95 845 53 6.29
FHLB stock 368 7.22 343 6.95
Interest-bearing deposits 2,193 36 6.44 3,114 39 4.97
--------- ------- ------- -------
Total interest-earning assets $58,111 1,254 8.56 $53,331 1,132 8.45
========= ------- ======= -------
Interest-bearing liabilities:
Demand and NOW deposits $ 8,426 38 1.80 $ 8,351 39 1.87
Savings deposits 11,412 71 2.48 12,132 75 2.46
Certificate accounts 28,981 408 5.58 24,632 323 5.19
--------- ------- ------- -------
Total interest-bearing liabilities $48,819 517 4.20 $45,115 437 3.85
========= ------- ======= -------
Net interest income $ 737 $ 695
======= =======
Interest rate spread (3) 4.36% 4.60%
==== ====
Net earning assets $ 9,292 $ 8,216
======= =======
Net interest margin (4) 5.03% 5.17%
==== ====
Average interest-earning assets to
average interest-bearing liabilities 1.19x 1.18x
==== ====
Year ended June 30,
------------------------------------------------------------------------------------------
1997 1996 1995
------------------------------- ---------------------------- ----------------------------
Average Interest Average Interest Average Interest
outstanding earned/ Yield/ outstanding earned/ Yield/ outstanding earned/ Yield/
balance paid rate balance paid rate balance paid rate
----------- -------- ------ ----------- -------- ------ ----------- -------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable (1) $47,225 $ 4,163 8.81% $42,016 $ 3,755 8.94% $37,465 $ 3,143 8.39%
Securities available for sale (2) 3,521 212 6.02 1,001 62 6.18 880 58 6.66
Securities held to maturity 845 53 6.29 4,193 270 6.44 6,438 370 5.75
FHLB stock 352 25 7.03 328 23 6.99 306 24 7.80
Interest-bearing deposits 2,937 156 5.33 2,609 149 5.71 1,813 101 5.59
------- ------- ------- ------- ------- -------
$54,880 4,609 8.40 $50,147 4,259 8.49 $46,902 3,696 7.88
Total interest-earning assets ======= ------- ======= ------- ======= -------
Interest-bearing liabilities:
Demand and NOW deposits $ 8,275 154 1.85 $ 7,724 152 1.97 $ 8,028 168 2.10
Savings deposits 11,840 295 2.49 11,892 294 2.47 12,940 321 2.48
Certificate accounts 26,383 1,482 5.62 22,592 1,257 5.56 18,630 842 4.52
------- ------- ------- ------- ------- -------
Total interest-bearing liabilities $46,498 1,931 4.15 $42,208 1,703 4.04 $39,598 1,331 3.36
======= ------- ======= ------- ======= -------
Net interest income $ 2,678 $ 2,556 $ 2,365
======= ======= =======
Interest rate spread (3) 4.25% 4.45% 4.52%
==== ==== ====
Net earning assets $ 8,382 $ 7,939 $ 7,304
======= ======= =======
Net interest margin (4) 4.88% 5.10% 5.04%
==== ==== ====
Average interest-earning assets to
average interest-bearing liabilities 1.18x 1.19x 1.18x
==== ==== ====
- -------------------
<FN>
(1) Amount is net of loans in process, net deferred loan origination fees and includes nonperforming loans.
(2) Includes unamortized discounts and premiums. Average balance is computed using the carrying value of securities. The average
yield has been computed using the historical amortized cost average balance for available for sale securities.
(3) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of
interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by average interest-earning assets.
</TABLE>
-26-
<PAGE> 32
The following table sets forth, at the dates indicated, the weighted
average yields earned on the Bank's interest-earning assets, the weighted
average interest rates paid on interest-bearing liabilities and the interest
rate spread between the weighted average yields and rates at the dates
presented.
<TABLE>
<CAPTION>
At September 30, At June 30,
1997 1997
---------------- -----------
<S> <C> <C>
Weighted average yield on loans (1) 8.57% 8.52%
Weighted average yield on securities portfolio 6.04 6.03
Weighted average yield on FHLB stock 7.25 7.25
Weighted average yield on interest-bearing deposits 6.65 6.07
Weighted average yield on all interest-earning assets 8.35 8.17
Weighted average rate paid on deposits 4.51 4.51
Interest rate spread 3.84 3.66
- -------------------------
<FN>
(1) Does not include loan origination fees and costs and late charges.
</TABLE>
The table below describes the extent to which changes in interest rates
and changes in volume of interest-earning assets and interest-bearing
liabilities have affected the Bank's interest income and interest expense during
the periods indicated. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume (change in volume multiplied by prior period rate), (ii)
changes in rate (change in rate multiplied by prior period volume) and (iii)
total changes in rate and volume. The combined effects of changes in both volume
and rate, which cannot be separately identified, have been attributed to the
mix:
<TABLE>
<CAPTION>
Three months ended September 30 Year ended June 30,
------------------------------- -----------------------------------------------------------
1997 vs. 1996 1997 vs. 1996 1996 vs. 1995
------------------------------- ----------------------------- -----------------------------
Increase Increase Increase
(decrease) due to Total (decrease) due to Total (decrease) due to Total
----------------- increase ----------------- increase ----------------- increase
Volume Rate (decrease) Volume Rate (decrease) Volume Rate (decrease)
--------- ------ ----------- --------- ------ ---------- -------- ------ ----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable $ 120 $ 1 $ 121 $ 460 $ (52) $ 408 $ 398 $ 214 $ 612
Securities available for 37 (2) 35 152 (2) 150 8 (4) 4
sale
Securities held to (32) -- (32) (211) (6) (217) (140) 40 (100)
maturity
FHLB stock 1 1 2 -- 2 2 (3) (1)
-------
Interest-bearing deposits (13) 10 (3) 18 (11) 7 46 2 48
------- ------- ------- ------- ------- ------- ------- ------- -------
Total interest-earning assets $ 113 $ 9 122 $ 421 $ (71) 350 $ 314 $ 249 563
======= ======= ------- ======= ======= ------- ======= ======= -------
Interest-bearing liabilities:
Demand and NOW deposits $ 1 $ (2) (1) $ 11 $ (9) 2 $ (6) $ (10) (16)
Savings deposits (5) 1 (4) (1) 2 1 (26) (1) (27)
Certificates of deposit 60 25 85 213 12 225 199 216 415
------- ------- ------- ------- ------- ------- ------- ------- -------
Total interest-bearing
liabilities $ 56 $ 24 80 $ 223 $ 5 228 $ 167 $ 205 372
======= ======= ------- ======= ======= ------- ======= ======= -------
Increase in net interest income $ 42 $ 122 $ 191
======= ======= =======
</TABLE>
ASSET AND LIABILITY MANAGEMENT
The Bank, like other financial institutions, is subject to interest
rate risk to the extent that its interest-earning assets reprice differently
than its interest-bearing liabilities. As part of its effort to monitor and
manage interest rate risk, the Bank uses the "net portfolio value" ("NPV")
methodology adopted by the OTS as part of its capital regulations. Although the
Bank is not currently subject to NPV regulation because such regulation does not
apply to institutions with less than $300 million in assets and risk-based
capital in excess of 12%, application of NPV methodology is an indicator of the
Bank's interest rate risk.
Generally, NPV is the discounted present value of the difference
between incoming cash flows on interest-earning and other assets and outgoing
cash flows on interest-bearing and other liabilities. The application of the
methodology
-27-
<PAGE> 33
attempts to quantify interest rate risk as the change in the NPV that would
result from various levels of theoretical basis point (1 basis point equals
0.01%) changes in market interest rates. The OTS considers an institution to be
subject to interest rate risk if the NPV would decrease by more than 2% of the
present value of the institution's assets with either a 200 basis point increase
or decrease in market rates. At June 30, 1997, 2% of the present value of the
Bank's assets was $1.3 million. The interest rate risk of a 200 basis point
decrease in market interest rates (which was greater than the interest rate risk
of a 200 basis point increase) was $372,000 at June 30, 1997, which was less
than 2% of the present value of the Bank's assets.
Presented below, as of June 30, 1997, is an analysis of the Bank's
interest rate risk as measured by changes in NPV for instantaneous and sustained
parallel shifts of 100 basis point increments in market interest rates.
<TABLE>
<CAPTION>
NPV as % of
portfolio value
Net portfolio value of assets
Change ------------------------------------- --------------------------
in rates $ Amount $ Change % Change NPV Ratio Change in %
-------- -------- -------- -------- --------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
+400 $11,735 $(1,056) (8.3)% 19.34% (1.05)%
+300 12,242 (549) (4.3) 19.93 (0.46)
+200 12,615 (177) (1.4) 20.33 (0.06)
+100 12,801 9 0.1 20.49 0.10
Static 12,792 - - 20.39 -
(100) 12,612 (179) (1.4) 20.07 (0.32)
(200) 12,420 (372) (2.9) 19.73 (0.65)
(300) 12,475 (317) (2.5) 19.71 (0.68)
(400) 12,716 (76) (0.6) 19.92 (0.47)
</TABLE>
As illustrated in the table, the Bank's NPV is more sensitive to
increases in interest rates than to decreases. The Bank's sensitivity to
increases in rates occurs principally because, as rates increase, borrowers
become less likely to prepay fixed-rate loans than when interest rates are
declining. In addition, loan demand is adversely effected by increases in
interest rates. Thus, in a rising interest rate environment, the amount of
interest the Bank would receive on its loans would increase relatively slowly as
loans are slowly prepaid and new loans at higher rates are made, while the
interest the Bank would pay on its deposits would increase rapidly because
deposits generally have shorter periods to repricing than loans.
As with any method of measuring interest rate risk, certain
shortcomings are inherent in the NPV approach. For example, although certain
assets and liabilities may have similar maturities or periods of 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
may lag behind changes in market rates. Further, in the event of a change in
interest rates, expected rates of prepayment on loans and early withdrawal
levels from certificates of deposit may deviate significantly from those assumed
in making risk calculations.
The Board of Directors and management of the Bank believe that certain
factors afford the Bank the ability to operate successfully despite its exposure
to interest rate risk. The Bank manages its interest rate risk by originating
mortgage loans primarily with adjustable rates and by maintaining capital well
in excess of regulatory requirements and by maintaining a high level of
investments in short-term instruments with maturities of five years or less. See
"THE BUSINESS OF THE BANK - Investment Activities." For the quarter ended
September 30, 1997, the Bank's tangible capital was 17.7% of total assets and
its liquidity ratio was 13.7%. See "Liquidity and Capital Resources."
-28-
<PAGE> 34
LIQUIDITY AND CAPITAL RESOURCES
The Bank's liquidity, primarily represented by cash and cash
equivalents, is a result of its operating, investing and financing activities.
These activities are summarized below for the three months ended September 30,
1997 and 1996, and the years ended June 30, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
Three months
ended September 30, Years ended June 30,
---------------------- -----------------------------------
1997 1996 1997 1996 1995
------- -------- -------- -------- -------
(In thousands)
<S> <C> <C> <C> <C> <C>
Net income $ 213 $ 49 $ 595 $ 770 $ 716
Adjustments to reconcile net income to net cash
from operating activities 333 240 104 80 246
------- ------- ------- -------- ------
Net cash from operating activities 546 289 699 850 962
Net cash from investing activities (2,015) (2,339) (6,093) (3,026) (1,411)
Net cash from financing activities (1,028) 608 4,352 5,340 (15)
------- -------- ------- ------- ---------
Net change in cash and cash equivalents (2,497) (1,442) (1,042) 3,164 (464)
Cash and cash equivalents at beginning of period 4,681 5,723 5,723 2,559 3,023
------- ------- ------- ------- -------
Cash and cash equivalents at end of period $ 2,184 $4,281 $ 4,681 $5,723 $2,559
======= ====== ======= ====== ======
</TABLE>
The Bank's principal sources of funds are deposits, loan repayments,
maturities of securities, and other funds provided by operations. The Bank also
has the ability to borrow from the FHLB. While scheduled loan repayments and
maturing investments are relatively predictable, deposit flows and early loan
prepayments are more influenced by interest rates, general economic conditions
and competition. The Bank maintains investments in liquid assets based upon
management's assessment of (1) need for funds, (2) expected deposit flows, (3)
yields available on short-term liquid assets and (4) objectives of the Bank's
asset and liability management program.
OTS regulations presently require the Bank to maintain an average daily
balance of investments in United States Treasury, federal agency obligations and
other investments having maturities of five years or less in an amount equal to
4% of the sum of the Bank's average daily balance of net withdrawable deposit
accounts and borrowings payable in one year or less. The liquidity requirement
is intended to provide a source of relatively liquid funds upon which the Bank
may rely, if necessary, to fund loan originations, deposit withdrawals or other
short-term funding needs. On September 30, 1997, the Bank had commitments to
originate adjustable-rate real estate mortgage loans totaling $1.3 million. Loan
commitments are generally for 30 days. The Bank considers its liquidity and
capital reserves sufficient to meet its outstanding short- and long-term needs.
The Bank is required by OTS regulations to meet certain minimum capital
requirements, which must be generally as stringent as the requirements
established for banks. Current capital requirements call for tangible capital of
1.5% of adjusted total assets, core capital (which for the Bank consists solely
of tangible capital) of 3.0% of adjusted total assets and risk-based capital
(which for the Bank consists of core capital and general valuation allowances)
of 8% of risk-weighted assets (assets are weighted at percentage levels ranging
from 0% to 100% depending on their relative risk). The OTS has proposed to amend
the core capital requirement so that those Banks that do not have the highest
examination rating and an acceptable level of risk will be required to maintain
core capital of from 4% to 5%, depending on the institution's examination rating
and overall risk. The Bank does not anticipate that it will be adversely
affected if the core capital requirements are amended as proposed.
-29-
<PAGE> 35
The following table summarizes the Bank's regulatory capital
requirements and actual capital at September 30, 1997.
<TABLE>
<CAPTION>
Excess of actual capital Applicable
Actual capital Current requirement over current requirement asset
--------------------- --------------------- ----------------------- ----------
Amount Percent Amount Percent Amount Percent total
------ ------- ------ ------- ------ ------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Tangible capital $10,579 17.7% $898 1.5% $9,681 16.2% $59,837
Core capital 10,579 17.7 1,795 3.0 8,784 14.7 59,837
Risk-based capital 10,727 30.2 2,846 8.0 7,881 22.2 35,572
</TABLE>
At September 30, 1997, the Bank had no material commitments for capital
expenditures.
IMPACT OF NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards ("SFAS") No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities," was issued by the Financial Accounting Standards Board ("FASB")
in 1996. It revises the accounting for transfers of financial assets, such as
loans and securities, and for distinguishing between sales and secured
borrowings. SFAS No. 125 was originally effective for some transactions in 1997
and others in 1998. SFAS No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125," which was issued in December 1996, defers
for one year the effective date of provisions relating to securities lending,
repurchase agreements and other similar transactions. The remaining portions of
SFAS 125 became effective January 1, 1997. SFAS No. 125 did not have a material
impact on the Bank's financial statements.
In March 1997, the FASB issued SFAS No. 128, "Earnings Per Share,"
which is effective for periods ending after December 15, 1997, including interim
periods. SFAS No. 128 simplifies the calculation of earnings per share ("EPS")
by replacing primary EPS with basic EPS. It also requires dual presentation of
basic EPS and diluted EPS for entities with complex capital structures. Basic
EPS includes no dilution and is computed by dividing income available to common
shareholders by the weighted-average common shares outstanding for the period.
Diluted EPS reflects the potential dilution of securities that could share in
earnings such as stock options, warrants or other common stock equivalents. All
prior period EPS data must be restated to conform with the new presentation.
In February 1997, the FASB issued SFAS No. 129, "Disclosures of
Information about Capital Structure." SFAS No. 129 consolidates existing
accounting guidance relating to disclosure about a company's capital structure.
Public companies generally have always been required to make disclosures now
required by SFAS No. 129 and, therefore, SFAS No. 129 should have no impact on
the Bank. SFAS No. 129 is effective for financial statements for periods ending
after December 15, 1997.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general-purpose financial statements. SFAS No. 130 requires
that all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. It does not
require a specific format for that financial statement but requires that an
enterprise display an amount representing total comprehensive income for the
period in that financial statement.
SFAS No. 130 requires that an enterprise (1) classify items of other
comprehensive income by their nature in a financial statement and (2) display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of a statement of
financial position. SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997. Reclassification of financial statements for earlier periods
provided for comparative purpose is required.
-30-
<PAGE> 36
IMPACT OF INFLATION AND CHANGING PRICES
The financial statements and notes included herein have been prepared
in accordance with GAAP. GAAP requires the Bank to measure financial position
and operating results primarily in terms of historic dollars. Changes in the
relative value of money due to inflation or recession are generally not
considered.
In management's opinion, changes in interest rates affect the financial
condition of the Bank to a far greater degree than changes in the inflation
rate. While interest rates are greatly influenced by changes in the inflation
rate, they do not change at the same rate or in the same magnitude as the
inflation rate. Rather, interest rate volatility is based on changes in the
expected rate of inflation, as well as on changes in monetary and fiscal
policies.
THE BUSINESS OF THE BANK
GENERAL
The Bank is a mutual savings and loan association which was organized
under Ohio law in 1882 as "The Home Building Loan and Savings Company." In 1937,
the name of the Bank was changed to "The Home Loan & Savings Company," and in
1996, the Bank adopted its present name. As an Ohio savings and loan
association, the Bank is subject to supervision and regulation by the OTS, the
Division and the FDIC. The Bank is a member of the FHLB of Cincinnati, and the
deposits of the Bank are insured up to applicable limits by the FDIC in the
SAIF. See "REGULATION."
The Bank conducts business from its main office and one full-service
branch, both located in Coshocton, Ohio. The principal business of the Bank is
the origination of permanent mortgage loans on one- to four-family residential
real estate located in the Bank's primary market area, Coshocton County, Ohio.
The Bank also originates a limited number of loans for the construction of one-
to four-family residences and permanent mortgage loans secured by nonresidential
real estate in its primary market area. In addition to real estate lending, the
Bank originates commercial loans and various types of consumer credits,
including home improvement loans, education loans, loans secured by savings
accounts and motor vehicles, unsecured loans and credit cards. See "Lending
Activities." For liquidity and interest rate risk management purposes, the Bank
invests in interest-bearing deposits in other financial institutions and U.S.
Treasury Securities. See "Investment Activities." Funds for lending and other
investment activities are obtained primarily from savings deposits, which are
insured up to applicable limits by the FDIC in the SAIF, principal repayments of
loans and maturities of securities. See "Deposits and Borrowings."
Interest on loans and other investments is the Bank's primary source of
income. The Bank's principal expense is interest paid on deposit accounts.
Operating results are dependent to a significant degree on the net interest
income of the Bank, which is the difference between interest earned on loans and
other investments and interest paid on deposits. Like most thrift institutions,
the Bank's interest income and interest expense are significantly affected by
general economic conditions and by the policies of various regulatory
authorities. See "RISK FACTORS - Interest Rate Risk" and "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Asset
and Liability Management."
PRIMARY MARKET AREA
The Bank's primary market area for lending and deposits is Coshocton
County, Ohio. The City of Coshocton, in which the Bank's two offices are
located, is the county seat of Coshocton County. Coshocton is approximately 35
miles north of Zanesville, Ohio, and approximately 75 miles east of Columbus,
Ohio. Major employers of residents of Coshocton County include Ansell Edmont,
Inc., AK Steel Corp (Armco), Coshocton County Memorial Hospital, Clow Water
Systems Co., American Electric Power, Jordan Industries, Inc., Stone Container
Corp., Pretty Products, Inc., General Electric Company and the Longaberger
Company.
Coshocton County has a higher unemployment rate than either Ohio or the
United States. The County's unemployment rate declined, however, from 6.1% in
1995 to 5.3% in 1996, compared to 4.9% for the state and 5.2% for the county,
and is 5.4% through the first nine months of 1997. Coshocton County's population
increased 2.9% from 35,427 residents in 1990 to 36,459 in 1996.
In 1990, Coshocton County's per capita annual income was lower than the
per capita annual income for Ohio, $10,625 compared to $12,788. By 1996, the
County's per capita income had increased 14.8 percent, to $12,193, compared to
-31-
<PAGE> 37
a 20.2% increase, to $15,376, for Ohio over the same period. During the same
period, median annual household incomes increased from $24,425 to $26,754 for
Coshocton County and from $29,276 to $32,120 for the State of Ohio.
The Bank faces competition for loan and deposit customers in Coshocton
County from a national bank, a state commmercial bank, a savings and loan
association and branch offices of two large regional banks. Management of the
Bank monitors on a continual basis the lending and deposit rates being offered
by the Bank's competitors and offers competitive rates within the parameters of
the Bank's policies
See "RISK FACTORS - Competition in Primary Market Area; - Concentration
of Credit; and - Performance of Local Economy."
LENDING ACTIVITIES
GENERAL. The Bank's principal lending activity is the origination of
conventional real estate loans secured by one- to four-family residences located
in the Bank's primary market area. The Bank also originates a limited number of
loans for the construction of one- to four-family residences and permanent
mortgage loans secured by nonresidential real estate in its primary market area.
In addition to real estate lending, the Bank originates various types of
consumer credits, including home improvement loans, education loans, loans
secured by savings accounts and motor vehicles, unsecured loans and credit
cards, and loans for commercial business purposes.
LOAN PORTFOLIO COMPOSITION. The following table presents certain
information regarding the composition of the Bank's loan portfolio at the dates
indicated:
<TABLE>
<CAPTION>
At June 30,
------------------------------------------------
At September 30, 1997 1997 1996
----------------------- --------------------- ----------------------
Percent of Percent of Percent of
Amount total loans Amount total loans Amount total loans
------ ----------- ------ ----------- ------ -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Real estate loans:
One- to four-family $36,827 70.00% $35,156 70.64% $32,882 72.63%
Home equity 826 1.57 728 1.46 979 2.16
Nonresidential 3,686 7.01 3,297 6.62 2,971 6.56
Construction and land 901 1.71 1,125 2.26 757 1.67
------- ------ ------- ------ ------- ------
Total real estate loans 42,240 80.29 40,306 80.98 37,589 83.02
Commercial loans 1,703 3.24 1,645 3.31 950 2.10
Consumer loans:
Home improvement 4,151 7.89 3,701 7.44 2,672 5.90
Automobile loans 2,678 5.09 2,506 5.03 2,054 4.54
Loans on deposits 234 0.44 219 0.44 245 0.54
Credit card 403 0.77 347 0.70 331 0.73
Other consumer loans 1,200 2.28 1,047 2.10 1,436 3.17
------- ------ ------- ------ ------- ------
Total consumer loans 8,666 16.47 7,820 15.71 6,738 14.88
------- ------ ------- ------ ------- ------
Total loans 52,609 100.00% 49,771 100.00% 45,277 100.00%
====== ====== ======
Less:
Net deferred loan fees and costs (112) (107) (104)
Loans in process (576) (245) (762)
Allowance for loan losses (148) (119) (117)
------- ------- --------
Net loans $51,773 $49,300 $44,294
======= ======= =======
</TABLE>
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<PAGE> 38
LOAN MATURITY. The following table sets forth certain information as of
June 30, 1997, regarding the dollar amount of loans maturing in the Bank's
portfolio based on their contractual terms to maturity. Demand loans and other
loans having no stated schedule of repayments or no stated maturity are reported
as due in one year or less. Mortgage loans originated by the Bank generally
include due-on-sale clauses that provide the Bank with the contractual right to
deem the loan immediately due and payable in the event the borrower transfers
the ownership of the property without the Bank's consent. The table does not
include the effects of possible prepayments or scheduled repayments.
<TABLE>
<CAPTION>
Due 2-5 Due more than
During the year ending years 5 years
June 30, 1998 after 6/30/97 after 6/30/97 Total
------------------- ------------- ------------- -------
(In thousands)
<S> <C> <C> <C> <C>
Real estate loans:
One- to four-family $ 36 $ 902 $34,218 $35,156
Home equity - 60 668 728
Nonresidential - 16 3,281 3,297
Construction and land - 40 1,085 1,125
Commercial loans 1,058 373 214 1,645
Consumer loans 1,740 4,111 1,969 7,820
------ ------ ------- -------
Total $2,834 $5,502 $41,435 $49,771
====== ====== ======= =======
</TABLE>
The next table sets forth the dollar amount of all loans due after June
30, 1998, which have predetermined interest rates and have floating or
adjustable interest rates:
<TABLE>
<CAPTION>
Due after June 30, 1998
-----------------------
(In thousands)
<S> <C>
Fixed rate of interest $13,362
Adjustable rate of interest $36,409
$49,771
</TABLE>
LOANS SECURED BY ONE- TO FOUR-FAMILY REAL ESTATE. The principal lending
activity of the Bank is the origination of conventional loans secured by first
mortgages on one- to four-family residences, primarily single-family residences,
located within the Bank's primary market area. At September 30, 1997, the Bank's
one- to four-family residential real estate loans totaled approximately $36.8
million, or 70.00% of total loans.
OTS regulations and Ohio law limit the amount which the Bank may lend
in relationship to the appraised value of the real estate and improvements which
will secure the loan at the time of loan origination. In accordance with such
regulations, the Bank makes loans on one- to four-family residences of up to 80%
of the value of the real estate and improvements thereon (the "LTV") or up to
95% for borrowers who obtain private mortgage insurance.
The Bank currently offers fixed-rate mortgage loans and adjustable-rate
mortgage loans ("ARMs") for terms of up to 25 years. The interest rate
adjustment periods on ARMs are typically one or three years, although most loans
originated by the Bank are one-year ARMs. The maximum interest rate adjustment
on most of the ARMs is 2% on any adjustment date and a total of 6% over the life
of the loan. The interest rate adjustments on one-year and three-year ARMs
presently offered by the Bank are indexed to the weekly average rate on one-year
and three-year U.S. Treasury securities, respectively. Rate adjustments are
computed by adding a stated margin, typically 2.75%, to the index.
HOME EQUITY LOANS. The Bank also makes closed-end home equity loans in
an amount which, when added to the prior indebtedness secured by the real
estate, does not exceed 80% of the estimated value of the real estate. The Bank
also offers home equity loans with a line of credit feature. Home equity loans
are made with adjustable rates of interest. Rate adjustments on home equity
loans are determined by adding 1% for loans under $20,000 or .75% for loans over
$20,000 to the National City Bank prime rate. At September 30, 1997,
approximately $826,000, or 1.57%, of the Bank's portfolio consisted of home
equity loans.
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<PAGE> 39
NONRESIDENTIAL REAL ESTATE. The Bank originates loans for the purchase
of nonresidential real estate. The Bank's nonresidential real estate loans have
fixed or adjustable rates, terms of up to 15 years and LTVs of up to 75%. Rate
adjustments on ARMs secured by nonresidential real estate are determined by
adding 3.75% to the current Treasury Index. Rates are determined for fixed-rate
loans by adding 2% to the then current rate at which fixed-rate residential
loans are offered. Among the properties securing nonresidential real estate
loans are farms, an office building and a gas station, all located in the Bank's
primary market area.
Nonresidential real estate lending is generally considered to involve a
higher degree of risk than residential lending due to the relatively larger loan
amounts and the effects of general economic conditions on the successful
operation of income-producing properties. The Bank has endeavored to reduce such
risk by evaluating the credit history of the borrower, the location of the real
estate, the financial condition of the borrower, the quality and characteristics
of the income stream generated by the property and the appraisals supporting the
property's valuation. At September 30, 1997 the Bank's largest loan secured by
nonresidential real estate was approximately $595,000 and such loan was
performing according to its terms.
At September 30, 1997, approximately $3.7 million, or 7.01%, of the
Bank's total loans were secured by mortgages on nonresidential real estate.
CONSTRUCTION AND LAND LOANS. The Bank originates a limited number of
loans for the construction of single-family residential real estate. During
recent years, all of the Bank's construction loans have been to owners for
construction of their personal residences. Due to a lack of residential
development in the Bank's primary market area, no construction loans have been
made to builders or developers. Construction loans are structured as permanent
loans with adjustable rates of interest and terms of up to 25 years. During the
first six months, while the residence is being constructed, the borrower is
required to pay interest only. Construction loans have LTVs of up to 80%, with
the value of the land counting as part of the owner's equity. At September 30,
1997, the Bank had approximately $341,000, or 1.71% of its total loans, invested
in construction and land loans.
Construction loans generally involve greater underwriting and default
risks than do loans secured by mortgages on existing properties because
construction loans are more difficult to evaluate and monitor. Loan funds are
advanced upon the security of the project under construction, which is more
difficult to value before the completion of construction. Moreover, because of
the uncertainties inherent in estimating construction costs, it is relatively
difficult to evaluate accurately the LTVs and the total loan funds required to
complete a project. In the event of a default on a construction loan occurs and
foreclosure follows, the Bank must take control of the project and attempt
either to arrange for completion of construction or dispose of the unfinished
project.
The Bank also originates a limited number of loans secured by land,
some of which is purchased for the construction of single-family houses. The
Bank's land loans are generally adjustable-rate loans for terms up to 15 years
and require an LTV of 75% or less. At September 30, 1997, approximately
$560,000, or 1.1%, of the Bank's total loans were secured by land loans made to
individuals intending to construct and occupy single-family residences on the
properties.
COMMERCIAL LOANS. The Bank makes commercial loans to businesses in its
primary market area. Most commercial loans are made with LTVs of 70-75% and
adjustable interest rates. Adjustments on commercial loans are usually indexed
to the then current prime rate.
At September 30, 1997, the Bank had approximately $1.7 million, or
3.24% of total loans, invested in commercial loans. All of the loans were made
to local businesses and are secured by property such as trucks and equipment.
The Bank intends to increase its commercial lending activity.
Commercial loans are generally deemed to entail significantly greater
risk than real estate lending. The repayment of commercial loans is typically
dependent on the income stream and successful operation of a business, which can
be affected by economic conditions.
CONSUMER LOANS. The Bank originates various types of consumer credit
loans, including home improvement loans, education loans, loans secured by
savings accounts and motor vehicles, unsecured loans and credit cards. Consumer
loans are made at fixed rates of interest for terms of up to ten years.
-34-
<PAGE> 40
The Bank requires a 20% down payment on loans secured by automobiles.
Since June 1993, the Bank has offered Mastercard(R) cards to qualified
customers. The Bank's credit cards are processed by an unaffiliated third party
which receives a fee for such service.
Consumer loans may entail greater credit risk than do residential
mortgage loans. The risk of default on consumer loans increases during periods
of recession, high unemployment, and other adverse economic conditions. Although
the Bank has not had significant delinquencies on consumer loans, no assurance
can be provided that delinquencies will not increase.
At September 30, 1997, the Bank had approximately $8.7 million, or
16.47% of its total loans, invested in consumer loans.
LOAN SOLICITATION AND PROCESSING. Loan originations are generally
obtained from existing customers and members of the local community and from
referrals from real estate brokers, lawyers, accountants, and current and former
customers. The Bank also advertises in the local print media and radio.
In underwriting real estate loans, the Bank typically obtains a credit
report, verification of employment and other documentation concerning the
creditworthiness of the borrower. An appraisal of the fair market value of the
real estate that will be given as security for the loan is prepared by a
certified fee appraiser approved by the Board of Directors. Upon the completion
of the appraisal and the receipt of information on the credit history of the
borrower, the application for a loan is submitted for review in accordance with
the Bank's underwriting guidelines, which are established annually by the Board
of Directors. The Bank's loan officers have authority to approve loans up to
$100,000. The President of the Bank has authority to approve all loans up to
$200,000. The Executive Committee of the Board of Directors may approve loans up
to $500,000 and loans over $500,000 must be approved by the full Board of
Directors.
Borrowers are required to carry satisfactory fire and casualty
insurance and flood insurance, if applicable, and to name the Bank as an insured
mortgagee. The Bank generally obtains an attorney's opinion of title and may
purchase title insurance on larger commercial loans.
The procedure for approval of construction loans is the same as for
permanent real estate loans, except that an appraiser evaluates the building
plans, construction specifications, and estimates of construction costs. The
Bank also evaluates the feasibility of the proposed construction project and the
experience and record of the builder. Once approved, the construction loan is
disbursed in installments based upon periodic inspections of construction
progress.
Consumer loans are underwritten on the basis of the borrower's credit
history and an analysis of the borrower's income and expenses, ability to repay
the loan, and the value of the collateral, if any. The President of the Bank has
authority to approve consumer loans of up to $200,000. The Bank's loan officers
have the authority to approve secured consumer loans up to $100,000, and
unsecured consumer loans up to $10,000. The Executive Committee has authority to
approve consumer loans up to $500,000. Consumer loans over $500,000 must be
approved by the full Board of Directors.
LOAN ORIGINATIONS, PURCHASES AND SALES. Currently, the Bank does not
originate loans in conformity with secondary market standards and has sold no
loans in recent years. The Bank has, however, established relationships with
entities which purchase loans in the secondary market and the Bank may, in the
future, originate loans in conformity with the standards of the Federal Home
Loan Mortgage Corporation (the "FHLMC") and may sell some of such loans, but
does not currently originate loans in conformity with FHLMC standards. The Bank
has purchased neither participation interests nor any loans in recent years.
-35-
<PAGE> 41
The following table presents the Bank's total loan origination and
repayment activity for the periods indicated:
<TABLE>
<CAPTION>
Year ended June 30,
Three months ended -----------------------
September 30, 1997 1997 1996
------------------ ---- ----
(In thousands)
<S> <C> <C> <C>
Loans originated:
One- to four-family $ 2,798 $ 9,417 $ 8,720
Home equity 286 639 868
Nonresidential 401 578 2,367
Construction and land 425 1,026 956
Commercial 394 1,511 610
Consumer 1,998 8,146 7,190
-------- ---------- -----------
Total loans originated 6,302 21,317 20,771
Loans purchased - - -
Loans sold - - -
Principal repayments (3,464) (16,823) (15,403)
Increase (decrease) in other items, net (1) 365 (512) 170
--------- ---------- -----------
Net increase $ 2,473 $ 5,006 $ 5,138
======= ======== =========
- ----------------------------
<FN>
(1) Consists of net deferred loan fees and costs, loans in process and allowance for loan losses.
</TABLE>
At September 30, 1997, the Bank had $1.3 million of outstanding
commitments to originate loans $1.6 million dollars available to borrowers under
lines of credit and $689.000 available to customers under credit card
arrangements. At September 30, 1997, the Bank had $575,000 in undisbursed funds
related to construction loans.
LOANS TO ONE BORROWER LIMITS. OTS regulations generally limit the
aggregate amount that a savings association may lend to any one borrower to an
amount equal to 15% of the Bank's unimpaired capital and unimpaired surplus (the
"Lending Limit Capital"). A savings association may lend to one borrower an
additional amount not to exceed 10% of the Bank's Lending Limit Capital if the
additional amount is fully secured by certain forms of "readily marketable
collateral." Real estate is not considered "readily marketable collateral." In
applying this limit, the regulations require that loans to certain related or
affiliated borrowers be aggregated. An exception to this limit permits loans of
any type to one borrower of up to $500,000.
Based on such limits, the Bank was able to lend approximately $1.6
million to one borrower at September 30, 1997. The largest amount the Bank had
outstanding to one borrower at September 30, 1997, was $874,364, which consisted
of nine loans, secured by a commercial property, equipment and borrowers
residences. At September 30, 1997, such loans were performing in accordance with
their terms.
DELINQUENT LOANS, NONPERFORMING ASSETS AND CLASSIFIED ASSETS. The Bank
attempts to maintain a high level of asset quality through sound underwriting
policies and aggressive collection practices.
To discourage late payments, the Bank charges a late fee of 5% of the
payment amount after 10 days and the borrower is sent a delinquency notice. The
Bank also utilizes personalized letters and telephone calls from Bank personnel
to collect payments in a timely manner. When a loan becomes 90 days delinquent,
the loan is generally referred to an attorney for foreclosure, unless the Bank
has reason to believe that repayment will be made in a reasonable period of
time.
-36-
<PAGE> 42
The following table reflects the amount of loans in a delinquent status
as of the dates indicated:
<TABLE>
<CAPTION>
At June 30,
-------------------------------------------------------------
At September 30, 1997 1997 1996
---------------------------- ----------------------------- ------------------------------
Percent Percent Percent
of total of total of total
Number Amount loans Number Amount loans Number Amount loans
------ ------ ----- ------ ------ ----- ------ ------ -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans delinquent for:
30-59 days 37 $902 1.71% 21 $532 1.07% 18 $252 0.56%
60-89 days 4 30 0.06 11 85 0.17 10 120 0.27
90 days or over 8 61 0.12 7 33 0.07 5 88 0.19
--- ----- ---- --- ------ ---- --- ------ ----
Total delinquent loans 49 $993 1.89% 39 $650 1.31% 33 $460 1.02%
== ==== ==== == ==== ==== == ==== ====
</TABLE>
Nonperforming assets include nonaccruing loans, accruing loans which
are delinquent 90 days or more, real estate acquired by foreclosure or by
deed-in-lieu thereof, in-substance foreclosures and repossessed assets.
Loans are reviewed on a monthly basis and are placed on nonaccrual
status when collection in full is considered doubtful by management. Interest
accrued and unpaid at the time a loan is placed on nonaccrual status is charged
against interest income. Subsequent cash payments are generally applied to
interest income unless, in the opinion of management, the collection of
principal and interest is doubtful. In those cases, subsequent cash payments
would be applied to principal.
None of the Bank's nonperforming loans at September 30, 1997, were on nonaccrual
status.
The following table sets forth information with respect to the accrual
and nonaccrual status of the Bank's loans and other nonperforming assets at the
dates indicated:
<TABLE>
<CAPTION>
At June 30,
----------------------------
At September 30, 1997 1997 1996
--------------------- -------- -------
(Dollars in thousands)
<S> <C> <C> <C>
Total nonaccrual loans $ - $ - $ -
Accruing loans delinquent 90 days or more 61 33 88
------ ------ ------
Total nonperforming loans 61 33 88
Real estate owned - - -
------ ------ ------
Total nonperforming assets $ 61 $ 33 $ 88
====== ====== ======
Allowance for loan losses $148 $119 $117
Nonperforming assets as a percent of total assets 0.10% 0.05% 0.16%
Nonperforming loans as a percent of total loans 0.12% 0.07% 0.20%
Allowance for loan losses as a percent of
nonperforming loans 242.99% 361.27% 133.54%
</TABLE>
Real estate acquired in settlement of loans is classified separately on
the balance sheet at fair value as of the date of acquisition. Prior to
foreclosure, the loan is written down to the value of the underlying collateral
by a charge to the allowance for loan losses, if necessary. Any subsequent
write-downs are charged against operating expenses. Operating expenses of such
properties, net of related income or loss on disposition, are included in other
expenses. At September 30, 1997, the Bank had no real estate acquired in
settlement of loans.
The Bank classifies its assets on a regular basis in accordance with
federal regulations. Problem assets are classified as "substandard," "doubtful"
or "loss." "Substandard" assets have one or more defined weaknesses and are
characterized by the distinct possibility that the Bank will sustain some loss
if the deficiencies are not corrected. "Doubtful" assets have the same
weaknesses as "substandard" assets, with the additional characteristics that (i)
the weaknesses make collection or liquidation in full, on the basis of currently
existing facts, conditions and values, questionable and (ii) there is a high
possibility of loss. An asset classified "loss" is considered uncollectible and
of such little value that its continuance as an
-37-
<PAGE> 43
asset of the Bank is not warranted. In addition, federal regulations also
contain a "special mention" category, consisting of assets which do not
currently expose an institution to a different degree of risk to warrant
classification but which possess credit deficiencies or potential weaknesses
deserving management's close attention.
The aggregate amounts of the Bank's classified assets at the dates
indicated were as follows:
<TABLE>
<CAPTION>
At September 30, At June 30,
------------------------ ------------------------
1997 1996 1997 1996
------ ------ ------ ----
(In thousands)
<S> <C> <C> <C> <C>
Classified assets:
Substandard $61 $101 $33 $88
Doubtful - - - -
Loss - - - -
--- ---- --- ---
Total classified assets $61 $101 $33 $88
=== ==== === ===
</TABLE>
The Bank analyzes each classified asset on a quarterly basis to
determine whether changes in the classifications are appropriate under the
circumstances. Such analysis focuses on a variety of factors, including the
amount of any delinquency and the reasons for the delinquency, if any, the use
of the real estate securing the loan, the status of the borrower, and the
appraised value of the real estate. As such factors change, the classification
of the asset will change accordingly. At September 30, 1997, the Bank had
classified $61,000 of assets as substandard and no assets as special mention,
doubtful or loss.
The Bank establishes a general allowance for loan losses for any loan
classified as substandard or doubtful. If an asset, or portion thereof, is
classified as loss, the Bank establishes a specific allowance for loss in the
amount of 100% of the portion of the asset classified loss or charges off the
portion of any real estate loan deemed to be uncollectible.
ALLOWANCE FOR LOAN LOSSES. Management reviews on a quarterly basis the
allowance for loan losses as it relates to a number of relevant factors,
including, but not limited to, growth and changes in the composition of the loan
portfolio, trends in the level of delinquent and problem loans, current and
anticipated economic conditions in the primary lending area, past loss
experience, and possible losses arising from specific problem assets.
While management believes that it uses the best information available
to determine the allowance for loan losses, unforeseen market conditions could
result in adjustments and net income could be significantly affected if
circumstances differ substantially from the assumptions used in making the final
determination. In addition, the Bank's determination as to the amount of its
allowance for loan losses is subject to review by the OTS, as part of its
examination process, which may result in the establishment of an additional
allowance based upon the judgment of the OTS after a review of the information
available at the time of the OTS examination.
-38-
<PAGE> 44
The following table sets forth an analysis of the Bank's allowance for
loan losses for the periods indicated:
<TABLE>
<CAPTION>
Three months ended
September 30, Year ended June 30,
------------------ -------------------
1997 1996 1997 1996
---- ----- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Balance at beginning of period $ 119 $ 117 $ 117 $ 117
Charge-offs (1) -- (4) --
Recoveries -- -- -- --
----- ----- ----- -----
Net (charge-offs) recoveries (1) -- (4) --
Provision for losses on loans 30 2 6 --
----- ----- ----- -----
Balance at end of period $ 148 $ 119 $ 119 $ 117
===== ===== ===== =====
Ratio of net (charge-offs) recoveries
to average gross loans outstanding
during the period, net of loans in
process and deferred loan fees and costs (0.01)% -- (0.01)% --
Ratio of allowance for loan losses
to gross loans, net of loans in process
and deferred loan fees and costs 0.29% 0.26% 0.24% 0.26%
</TABLE>
The following table sets forth the allocation of the allowance for loan
losses by category. The allocations are based on management's assessment of the
risk characteristics of each of the components of the total loan portfolio and
is subject to changes as and when the risk factors of each such component
changes. The allocation is not indicative of either the specific amounts or the
loan categories in which future charge-offs may be taken, nor should it be taken
as an indicator of future loss trends. The allocation of the allowance to each
category is not necessarily indicative of future loss in any particular category
and does not restrict the use of the allowance to absorb losses in any category.
<TABLE>
<CAPTION>
At June 30,
--------------------------------------------------------------
At September 30, 1997 1997 1996
-------------------------------- ----------------------------- ------------------------------
Percent of loans in Percent of loans in Percent of loans in
each category each category each category
Amount to total loans Amount to total loans Amount to total loans
------ -------------- ------ -------------- ------ --------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Real estate loans $ 94 80.29% $ 67 80.98% $ 75 83.02%
Commercial loans 14 3.24 14 3.31 9 2.10
Consumer loans 40 16.47 38 15.71 33 14.88
---- ------ ---- ------ ---- ------
Total $148 100.00% $119 100.00% $117 100.00%
==== ====== ==== ====== ==== ======
</TABLE>
INVESTMENT ACTIVITIES
GENERAL. Federal regulations and Ohio law permit the Bank to invest in
various types of investment securities, including interest-bearing deposits in
other financial institutions, U.S. Treasury and agency obligations,
mortgage-backed securities, and certain other specified investments. The Board
of Directors of the Bank has adopted an investment policy which authorizes
management to make investments in U.S. Treasury obligations, U.S. Federal agency
and federally-sponsored corporation obligations, municipal obligations, bankers'
acceptances, mutual funds, federal funds and term deposits. The Bank's
investment policy is designed primarily to provide and maintain liquidity within
regulatory guidelines, to maintain a balance of high quality investments to
minimize risk, and to maximize return without sacrificing liquidity and safety.
See "REGULATION" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Analysis of Financial Condition; and -
Liquidity and Capital Resources."
As of September 30, 1997, the Bank's investment portfolio was comprised
of FHLB stock and U.S. Treasury securities with an aggregate market value of
$4.9 million. The Bank's securities at September 30, 1997, did not include
securities of any issuer with an aggregate book value in excess of 10% of the
Bank's equity, excluding those issued by the U. S. Government.
-39-
<PAGE> 45
The following table sets forth the composition of the Bank's
interest-bearing deposits and investment securities portfolio, including those
designated as available for sale, at the dates indicated:
<TABLE>
<CAPTION>
At September 30, 1997
----------------------------------------
Carrying % of Fair % of
value total value total
---------- ----- ----- -----
<S> <C> <C> <C> <C>
Interest-bearing deposits:
Interest-bearing checking $ 223 4.13% $ 223 4.13%
Interest-bearing deposits in
other financial institutions 39 0.72 39 0.72
Overnight deposits - - - -
Federal funds 250 4.63 250 4.63
------ ------ ------- -------
Total interest-bearing deposits 512 9.48 512 9.48
Investment securities:
U.S. Treasury securities,
available for sale 4,518 83.62 4,518 83.62
U.S. Treasury securities, held
to maturity - - - -
FHLB stock 373 6.90 373 6.90
------ ------ ------- -------
Total investment securities 4,891 90.52 4,891 90.52
------ ------ ------- -------
Total $5,403 100.00% $5,403 100.00%
====== ====== ====== ======
At June 30,
--------------------------------------------------------------------------------------
1997 1996
---------------------------------------- ------------------------------------------
Carrying % of Fair % of Carrying % of Fair % of
value total value total value total value total
---------- ----- ----- ----- ---------- ----- ----- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 165 1.98% $ 165 1.98% $ 573 7.21% $ 573 7.20%
Interest-bearing deposits: 39 0.47 39 0.47 41 0.52 41 0.52
Interest-bearing checking 1,250 15.02 1,250 15.02 3,000 37.74 3,000 37.72
Interest-bearing deposits in 1,500 18.02 1,500 18.02 - - - -
other financial institutions ------- ------ ------- ------ ------ ------ ------ ------
Overnight deposits 2,954 35.49 2,954 35.49 3,614 45.47 3,614 45.44
Federal funds
Total interest-bearing deposits
5,004 60.11 5,004 60.11 1,743 21.91 1,743 21.91
Investment securities:
U.S. Treasury securities, - - - - 2,252 28.33 2,256 28.36
available for sale 366 4.40 366 4.40 341 4.29 341 4.29
U.S. Treasury securities, held ------- ------ ------- ------ ------ ------ ------ ------
to maturity 5,370 64.51 5,370 64.51 4,336 54.53 4,340 54.56
FHLB stock ------- ------ ------- ------ ------ ------ ------ ------
Total investment securities $8,324 100.00% $8,324 100.00% $7,950 100.00% $7,954 100.00%
====== ====== ====== ====== ====== ====== ====== ======
Total
</TABLE>
-40-
<PAGE> 46
The maturities of the Bank's interest-bearing deposits and securities
at September 30, 1997, excluding FHLB stock, are indicated in the following
table:
<TABLE>
<CAPTION>
At September 30, 1997
-------------------------------------------------------------------------------------
After one through
One year or less five years After five years Total
---------------- --------------- ---------------- -------------------------------
Carrying Average Carrying Average Carrying Average Carrying Market Weighted
value yield value yield value yield value value average yield
----- ----- ----- ----- ----- ----- ----- ----- -------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits:
Interest-bearing demand deposits $ 223 7.01% $ -- --% $ -- -% $ 223 $ 223 7.01%
Interest-bearing deposits in
other financial institutions 39 6.00 -- -- -- -- -- 39 6.00
Federal funds 250 6.44 -- -- -- -- 250 250 6.44
------ ------ ------ ------ ------ ------ ------ ------ ------
Total interest-bearing deposits 512 6.65 -- -- -- -- 512 512 6.65
U.S. Treasury securities,
available for sale 2,256 5.76 2,262 6.33 -- -- 4,518 4,518 6.04
------ ------ ------ ------ ------ ------ ------ ------ ------
Total interest earning assets $2,768 5.93% $2,262 6.33% $ -- -% $5,030 $5,030 6.11%
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
The maturities of the Bank's interest-bearing deposits and securities
at June 30, 1997, excluding FHLB stock, are indicated in the following table:
<TABLE>
<CAPTION>
At June 30, 1997
-------------------------------------------------------------------------------------
After one through
One year or less five years After five years Total
---------------- --------------- ---------------- -------------------------------
Carrying Average Carrying Average Carrying Average Carrying Market Weighted
value yield value yield value yield value value average yield
----- ----- ----- ----- ----- ----- ----- ----- -------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits:
Interest-bearing demand deposits $ 165 6.25% $ -- --% $ -- --% $ 165 $ 165 6.25%
Interest-bearing deposits in
other financial institutions 39 6.00 -- -- -- -- 39 39 6.00
Overnight deposits 1,250 6.20 -- -- -- -- 1,250 1,250 6.20
Federal funds 1,500 5.94 -- -- -- -- 1,500 1,500 5.94
------ ------ ------ ------ ------ ------ ------ ------ ------
Total interest-bearing deposits 2,954 6.07 -- -- -- -- 2,954 2,954 6.07
U.S. Treasury securities,
available for sale 1,500 5.91 3,504 6.08 -- -- 5,004 5,004 6.03
------ ------ ------ ------ ------ ------ ------ ------ ------
Total interest earning assets $4,454 6.01% $3,504 6.08% $ -- -% $7,958 $7,958 6.04%
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
-41-
<PAGE> 47
DEPOSITS AND BORROWINGS
GENERAL. Deposits have traditionally been the primary source of the
Bank's funds for use in lending and other investment activities. In addition to
deposits, the Bank derives funds from interest payments and principal repayments
on loans and income on earning assets. See "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS." Loan payments are a
relatively stable source of funds, while deposit inflows and outflows fluctuate
in response to general interest rates and money market conditions. The Bank may
also borrow from the FHLB as a source of funds.
DEPOSITS. Deposits are attracted principally from within the Bank's
primary market area through the offering of a selection of deposit instruments,
including regular passbook savings accounts, demand deposits, NOW accounts,
money market accounts, and certificates of deposit. Interest rates paid,
maturity terms, service fees, and withdrawal penalties for the various types of
accounts are monitored weekly by the Bank's President. The Bank does not use
brokers to attract deposits. The amount of deposits from outside the Bank's
primary market area is not significant.
The following table sets forth the dollar amount of deposits in the
various types of accounts offered by the Bank at the dates indicated:
<TABLE>
<CAPTION>
At June 30,
At September 30, -----------------------------------------------------
1997 1997 1996
---------------------- ----------------------- --------------------------
Percent Percent Percent
of total of total of total
Amount deposits Amount deposits Amount deposits
------ -------- ------ -------- ------ --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Transaction accounts:
Non-interest bearing demand
deposit accounts $ 877 1.82% $ 1,069 2.17% $ 873 1.95%
NOW accounts (1) 5,576 11.57 5,800 11.78 5,275 11.75
Savings accounts (2) 11,583 24.03 11,295 22.94 12,137 27.04
Money market accounts (3) 1,790 3.71 1,850 3.76 2,247 5.01
--------- ------- --------- ------- --------- -------
Total transaction accounts 19,826 41.13 20,014 40.65 20,532 45.74
Certificates of deposit:
4.00% or less 74 0.15 63 0.13 32 0.07
4.01% - 6.00% 21,748 45.11 22,866 46.44 20,957 46.69
6.01% - 8.00% 6,260 12.99 5,992 12.17 3,063 6.82
Over 8.01% 300 0.62 300 0.61 300 0.67
---------- ------- --------- ------- ---------- ------
Total certificates of
deposit (4) 28,382 58.87 29,221 59.35 24,352 54.26
-------- ------- -------- ------ -------- ------
Total deposits $48,208 100.00% $49,235 100.00% $44,884 100.00%
======= ====== ======= ====== ======= ======
- -----------------------------
<FN>
(1) The weighted average rate on NOW accounts was 2.02%, 2.02%, and 2.02% at September 30, 1997, and June 30, 1997 and 1996,
respectively.
(2) The weighted average rate on savings accounts was 2.49%, 2.50% and 2.50% at September 30, 1997, and June 30, 1997 and 1996,
respectively.
(3) The weighted average rate on money market accounts was 2.63%, 2.63% and 2.64% at September 30, 1997, and June 30, 1997 and
1996, respectively.
(4) The weighted average rate on all certificates of deposit was 5.93%, 5.90% and 5.65% at September 30, 1997, and June 30,
1997 and 1996, respectively.
</TABLE>
-42-
<PAGE> 48
The following table shows rate and maturity information for the Bank's
certificates of deposit at September 30, 1997:
<TABLE>
<CAPTION>
At September 30, 1997
--------------------------------------------------------
Over
Up to 1 year to Over
Rate one year 2 years 2 years Total
---- ---------- --------- --------- --------
(In thousands)
<S> <C> <C> <C> <C>
4.00% or less $ 43 $ 31 $ - $ 74
4.01% to 6.00% 15,432 4,919 1,397 21,748
6.01% to 8.00% 591 2,808 2,861 6,260
Over 8.01% - - 300 300
--------- -------- -------- --------
Total certificates of deposit $16,066 $7,758 $4,558 $28,382
========= ======== ======== ========
</TABLE>
At September 30, 1997, approximately $16.1 million of the Bank's
certificates of deposit mature within one year. Based on past experience and the
Bank's prevailing pricing strategies, management believes that a substantial
percentage of such certificates will be renewed with the Bank at maturity. If,
however, the Bank is unable to renew the maturing certificates for any reason,
borrowings of up to $22.3 million are available from the FHLB of Cincinnati. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - Liquidity and Capital Resources."
The following table presents the amount of the Bank's certificates of
deposit of $100,000 or more by the time remaining until maturity at September
30, 1997:
<TABLE>
<CAPTION>
Maturity Amount
-------- ------
(In thousands)
<S> <C>
Three months or less $ -
Over 3 months to 6 months 200
Over 6 months to 12 months 101
Over 12 months 821
-------
Total $1,122
=======
</TABLE>
Management believes that a substantial percentage of the above certificates will
be renewed with the Bank at maturity.
The following table sets forth the Bank's deposit account balance
activity for the periods indicated:
<TABLE>
<CAPTION>
Year ended June 30,
Three months ended ----------------------------------
September 30, 1997 1997 1996
------------------ ---------- ---------
(Dollars in thousands)
<S> <C> <C> <C>
Beginning balance $49,235 $44,884 $ 39,543
Deposits 31,285 119,082 124,936
Withdrawals (32,671) (116,055) (120,672)
------- -------- --------
Net deposits before interest
credited 47,849 47,911 43,807
Interest credited 359 1,324 1,077
------- -------- --------
Ending balance $48,208 $49,235 $ 44,884
======= ======= ========
Net increase (decrease) $(1,027) $ 4,351 $ 5,341
======= ======= ========
Percent increase (decrease) (2.09)% 9.69% 13.51%
======= ======= ========
</TABLE>
-43-
<PAGE> 49
BORROWINGS. The FHLB system functions as a central reserve bank
providing credit for its member institutions and certain other financial
institutions. See "REGULATION - Federal Home Loan Banks." As a member in good
standing of the FHLB of Cincinnati, the Bank is authorized to apply for advances
from the FHLB of Cincinnati, provided certain standards of creditworthiness have
been met. Under current regulations, an association must meet certain
qualifications to be eligible for FHLB advances. The extent to which an
association is eligible for such advances will depend upon whether it meets the
Qualified Thrift Lender (the "QTL") test. See "REGULATION - Office of Thrift
Supervision -- Qualified Thrift Lender Test." If an association meets the QTL
test, the Bank will be eligible for 100% of the advances it would otherwise be
eligible to receive. If an association does not meet the QTL test, the
association will be eligible for such advances only to the extent it holds
specified QTL test assets. At September 30, 1997, the Bank was in compliance
with the QTL test, but had no outstanding advances from the FHLB.
COMPETITION
The Bank faces competition for deposits and loans from other savings
and loan associations and banks in the Bank's primary market area. The primary
factors in competition for deposits are customer service, convenience of office
location and interest rates. The Bank competes for loan originations primarily
through the interest rates and loan fees it charges and through the efficiency
and quality of services it provides to borrowers. Competition is affected by,
among other things, the general availability of lendable funds, general and
local economic conditions, current interest rate levels and other factors which
are not readily predictable. The Bank does not offer all of the products and
services offered by some of its competitors, particularly commercial banks.
PROPERTIES
The following table sets forth certain information at September 30,
1997, regarding the properties on which the main office and the branch office of
the Bank are located:
<TABLE>
<CAPTION>
Owned or Date Net book
Location leased acquired value Deposits
- -------- ------ -------- ----- --------
(In thousands)
<S> <C> <C> <C> <C>
401 Main Street Owned 1924 $176,635 $39,973
Coshocton, Ohio 43812-1580
590 Walnut Street Owned 1985 $187,155 $ 8,235
Coshocton, Ohio 43812-1632
</TABLE>
EMPLOYEES
At September 30, 1997, the Bank had 19 full-time equivalent employees
and three part-time employees.
LEGAL PROCEEDINGS
The Bank is not presently involved in any material legal proceedings.
From time to time, the Bank is a party to legal proceedings incidental to its
business to enforce its security interest in collateral pledged to secure loans
made by the Bank.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
THE HOLDING COMPANY. The Board of Directors of the Holding Company
consists of five members. All of the directors of the Holding Company were
initially elected to the Board of Directors at the time the Holding Company was
formed in 1997. Each director is elected for a one-year term and until his or
her successor is elected or until his or her earlier resignation, removal from
office or death. The following persons are officers of the Holding Company:
Robert C. Hamilton, President and Chairman of the Board; and Preston W. Bair,
Secretary and Treasurer.
-44-
<PAGE> 50
THE BANK. The Amended Constitution of the Bank provides for a Board of
Directors consisting of not less than five directors. The Board of Directors of
the Bank currently consists of five directors. Each director serves for a
three-year term. The Board of Directors met 12 times during the fiscal year
ended June 30, 1997, for regular and special meetings. No director attended
fewer than 75% of the aggregate of such meetings and all meetings of the
committees of which such director was a member.
The following table presents certain information with respect to the
present directors of the Bank, each of whom is also a director of the Holding
Company, and the executive officers of the Bank:
<TABLE>
<CAPTION>
Year of
Position(s) with commencement Term
Name Age (1) the Bank of directorship expires
- ---- --- ---------------- --------------- ---------
<S> <C> <C> <C> <C>
Neal J. Caldwell 53 Director 1989 1998
Charles H. Durmis 34 Director 1996 1999
Robert C. Hamilton 54 Director and President 1982 1998
Robert D. Mauch 46 Director and Chairman 1989 2000
Douglas L. Randles 52 Director 1992 2000
Preston W. Bair 34 Secretary and Treasurer - -
- ----------------------------
<FN>
(1) As of September 30, 1997
</TABLE>
NEAL J. CALDWELL. Mr. Caldwell has practiced veterinary medicine in
Coshocton, Ohio, since 1972 and is an owner and operator of Coshocton Veterinary
Clinic.
CHARLES H. DURMIS. Since 1994, Dr. Durmis has practiced general surgery
and has maintained an office in Coshocton, Ohio. From 1990 to 1994, Dr. Durmis
was a resident in general surgery at Brentwood Hospital in Warrensville Heights,
Ohio.
ROBERT C. HAMILTON. Mr. Hamilton was employed by the Bank in 1981 as
Secretary, Treasurer and managing officer and has served as the President of the
Bank since 1983. Mr. Hamilton has worked in banking for the past 37 years.
ROBERT D. MAUCH. Mr. Mauch, a Certified Public Accountant, has provided
accounting, payroll and tax counseling through Robert D. Mauch, CPA, Inc.,
located in Coshocton, Ohio, since 1988.
DOUGLAS L. RANDLES. Mr. Randles is the President of L.W. Randles
Cheese, Inc., located in Warsaw, Ohio.
PRESTON W. BAIR. Mr. Bair has served as Secretary and Treasurer of the
Bank since 1994. Prior to 1994, Mr. Bair, a Certified Public Accountant, was a
shareholder of Brott Mardis & Co., located in Akron, Ohio.
COMMITTEES OF DIRECTORS
The Board of Directors of the Bank has Executive, Compensation, Audit,
and Proxy Committees. The Board of Directors has no separate nominating
committee.
The Executive Committee is comprised of Mr. Caldwell, Mr. Hamilton and
Mr. Mauch. The function of the Executive Committee is to consider matters of
concern to the Bank and to make recommendations thereon to the full Board of
Directors. The Executive Committee met 12 times during the year ended June 30,
1997.
The Compensation Committee is comprised of Mr. Caldwell, Mr. Hamilton
and Mr. Mauch. The function of the Compensation Committee is to determine
compensation for the Bank's employees and to make decisions regarding employee
benefits and related matters. Mr. Hamilton does not participate in any
discussions of the Compensation Committee concerning his own compensation. The
Compensation Committee met one time during the year ended June 30, 1997.
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The Audit Committee is comprised of Mr. Caldwell, Mr. Mauch and Mr.
Randles. The Audit Committee reviews audit reports and related matters to ensure
effective compliance with regulatory and internal policies and procedures. The
Audit Committee met one time during the year ended June 30, 1997.
The Proxy Committee is comprised of Mr. Caldwell, Mr. Hamilton and Mr.
Randles. The Proxy Committee serves as the inspectors of election at the Bank's
annual meeting of members.
The Board of Directors of the Holding Company does not currently have
any committees, but will establish appropriate committees upon the completion of
the Conversion.
COMPENSATION
Each director of the Bank currently receives a retainer of $10,200 per
year and $450 per meeting of the full Board attended. The Chairman receives an
additional retainer of $3,300 per year. Members of the Executive Committee
receive $250 per Executive Committee meeting attended. Director compensation is
approved by the members of the Bank at the annual meeting of members.
The following table presents certain information regarding the annual
compensation received by Mr. Hamilton during the fiscal year ended June 30,
1997. No other executive officer of the Bank received annual compensation in an
amount equal to or greater than $100,000.
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------
Annual compensation Other compensation
- -------------------------------------------------------------------------------------------------
Fiscal
Name and principal position Year Salary Bonus
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert C. Hamilton 1997 $145,500 $103,612 (1) $ - (2)
President
- -------------------------------------------------------------------------------------------------
<FN>
(1) Includes $38,000 of deferred compensation.
(2) Does not include amounts attributable to miscellaneous benefits. The cost to the Bank of providing such miscellaneous
benefits was less than 10% of Mr. Hamilton's total salary and bonus.
</TABLE>
PENSION PLAN
The Bank maintains a defined benefit pension plan administered by
trustees of the Financial Institutions Retirement Fund (the "Pension Plan").
Employees become eligible to participate in the Pension Plan following one year
of service and attainment of age 21. Participants must accrue 1,000 hours of
service in each calendar year in order to accrue benefits for that year.
Participants become 100% vested upon completion of five years of service or upon
reaching age 65. Upon retirement, vested participants are entitled to annual
benefits equal to 3% multiplied by the number of years for which the employee
was a participant in the Pension Plan, not to exceed 25 years, multiplied by the
average of the highest five consecutive years of the participant's annual
salary.
The Bank's cost related to the Pension Plan is determined annually
according to actuarial computations. The Bank recognizes pension expense equal
to contributions made to the Pension Plan. Contributions of $84,552 and $87,561
were made for the years ended June 30, 1997 and 1996.
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The following table indicates the annual retirement benefit that would
be payable under the Pension Plan upon retirement at age 65 to a participant
electing to receive his retirement benefit in the standard form of benefit:
<TABLE>
<CAPTION>
Years of credited service
Average compensation --------------------------------------------------------------
(highest 5 years) 5 10 15 20 25
------------------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
20,000 3,000 6,000 9,000 12,000 15,000
40,000 6,000 12,000 18,000 24,000 30,000
60,000 9,000 18,000 27,000 36,000 45,000
80,000 12,000 24,000 36,000 48,000 60,000
10,000 15,000 30,000 45,000 60,000 75,000
150,000 22,500 45,000 67,500 90,000 112,500
200,000 30,000 60,000 90,000 120,000 150,000
</TABLE>
Mr. Hamilton has 16 years of credited service under the Pension Plan.
The base salary and bonus for Mr. Hamilton for 1997 are reported above in the
Summary Compensation Table.
PROFIT SHARING PLAN
The Bank has a non-qualified profit sharing plan covering officers of
the Bank (the "Profit Sharing Plan"). Prior to July 1, 1996, the Bank's
contribution to the Profit Sharing Plan was based on the Bank's return on
average assets for the year then ended. Effective July 1, 1996, up to 10% of
pretax income, excluding nonrecurring items and extraordinary gains or losses
not related to operations and before deductions of awards under the Profit
Sharing Plan and the Deferred Compensation Agreement (hereafter defined) will be
contributed by the Bank annually. The total contribution is allocated to the
Bank's officers based upon percentages established by the Board of Directors. No
incentive awards are payable unless a minimum return on assets is exceeded. The
Bank's expense related to the Profit Sharing Plan amounted to $128,037, $104,000
and $90,990 for the years ended June 30, 1997, 1996 and 1995.
DEFERRED COMPENSATION AGREEMENT
In 1994, the Bank entered into a deferred compensation agreement with
Mr. Hamilton (the "Equity Appreciation Agreement"). The Equity Appreciation
Agreement provides for payment to Mr. Hamilton of an amount equal to 5% of the
Bank's increase in equity over a five-year period ending June 30, 1998. At June
30, 1997 and 1996, the Bank had accrued $146,000 and $108,000 related to the
Equity Appreciation Agreement. Expense recorded relating to the Equity
Appreciation Agreement was $38,000 and $36,000 for the years ended June 30, 1997
and 1996, respectively.
The Conversion will accelerate Mr. Hamilton's right to payment under
the Equity Appreciation Agreement. It is anticipated that the amount to be paid
to Mr. Hamilton pursuant to the Equity Appreciation Agreement will total
approximately $175,000. The actual amount will depend, however, on changes in
the Bank's financial condition which occur between September 30, 1997, and the
consummation of the Conversion.
STOCK BENEFIT PLANS
EMPLOYEE STOCK OWNERSHIP PLAN. The Holding Company intends to establish
the ESOP for the benefit of employees of the Holding Company and its
subsidiaries, including the Bank, who are age 21 or older and who have completed
at least one-year of service with the Holding Company and its subsidiaries. The
Board of Directors of the Holding Company believes that the ESOP will be in the
best interests of the Holding Company and its shareholders.
The ESOP trust intends to borrow funds from the Holding Company with
which to acquire up to 8% of the Common Shares sold in connection with the
Conversion. Such loan will be secured by the Common Shares purchased with the
proceeds from the loan and will be repaid by the ESOP over a period of
approximately ten years with discretionary contributions to the ESOP and
earnings on ESOP assets. The interest rate paid on the loan will be the
applicable federal rate published periodically by the IRS, which is currently
_____%. Common Shares purchased with such loan proceeds will be held in a
suspense account for allocation among ESOP participants as the loan is repaid.
The amount of cash or other assets that can be contributed to the ESOP
each year is limited by certain IRS regulations. The Bank intends to make the
maximum contribution to the ESOP permitted by such regulations, which could
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<PAGE> 53
result in repayment of the ESOP loan in fewer than ten years. A shorter
repayment period could result in increased compensation expense during the years
in which payments are made on the ESOP loan. See "PRO FORMA DATA."
Contributions to the ESOP and shares released from the suspense account
will be allocated pro rata to participants on the basis of compensation. Except
for participants who retire, become disabled, or die during the plan year, all
other participants must have completed at least 1,000 hours of service during a
plan year in order to receive an allocation. Benefits become fully vested after
five years of service. Vesting will be accelerated upon retirement or at age 65,
death, disability, termination of the ESOP, or change in control of the Holding
Company or the Bank. Shares allocated to the account of a participant whose
employment by the Bank terminates prior to such participant having satisfied the
vesting requirement will be forfeited. Forfeitures will be reallocated among
remaining participating employees. Benefits may be paid either in the Holding
Company common shares or in cash. Benefits may be payable upon retirement,
death, disability, or separation from service. Benefits payable under the ESOP
cannot be estimated.
A committee appointed by the Board of Directors of the Holding Company
will administer the ESOP. The Common Shares and other ESOP funds will be held by
a trustee selected and appointed by the Holding Company (the "ESOP Trustee").
The ESOP Committee may instruct the ESOP Trustee regarding investments of funds
contributed to the ESOP. The ESOP Trustee must vote all common shares of the
Holding Company held in the ESOP that are allocated to the accounts of ESOP
participants in accordance with the instructions of such participants. [Common
shares held by the ESOP that are not allocated to participants' accounts and
allocated shares for which voting instructions are not received will be voted by
the ESOP Trustee in its sole discretion.]
The tax-qualified status of the ESOP and its purchase of the Common
Shares of the Holding Company are subject to the subsequent approval of the
Commissioner of the IRS (the "Commissioner"). The Holding Company will submit to
the Commissioner an application for approval of the ESOP. Although no assurances
can be given, the Holding Company expects that the ESOP will be approved by the
Commissioner.
STOCK OPTION PLAN. After the completion of the Conversion, the Board of
Directors of the Holding Company intends to adopt the Stock Option Plan, subject
to approval by the shareholders of the Holding Company. The purposes of the
Stock Option Plan include retaining and providing incentives to the directors,
officers, and employees of the Holding Company and its subsidiaries by
facilitating their purchase of a stock interest in the Holding Company.
Options granted to the officers and employees under the Stock Option
Plan may be "incentive stock options" within the meaning of Section 422 of the
Code ("ISOs"). Options granted under the Stock Option Plan to directors who are
not full-time employees of the Holding Company or the Bank will not qualify
under the Code and thus will not be ISOs ("Non-qualified Options"). Although any
eligible director, officer, or employee of the Holding Company or the Bank may
receive Non-qualified Options, it is anticipated that the non-employee directors
will receive Non-qualified Options and other eligible participants will receive
ISOs.
The option exercise price will be determined by the Stock Option
Committee at the time of grant; provided, however, that the exercise price for
an ISO, or for any option if the Stock Option Plan is implemented by the Holding
Company during the first year following completion of the Conversion, must not
be less than 100% of the fair market value of the shares on the date of the
grant. No stock option will be exercisable after the expiration of ten years
from the date of grant, except that in the case of an ISO granted to an employee
who owns more than 10% of the Holding Company's outstanding common shares at the
time such ISO is granted under the Stock Option Plan, the exercise price of the
ISO may not be less than 110% of the fair market value of the shares on the date
of the grant and the ISO may not be exercisable after the expiration of five
years from the date of grant.
An option recipient cannot transfer or assign an option other than by
will, in accordance with the laws of descent and distribution. "Termination for
cause," as defined in the Stock Option Plan, will result in the termination of
any outstanding options.
The Holding Company will receive no monetary consideration for the
granting of options under the Stock Option Plan. Upon the exercise of options,
the Holding Company will receive a payment of cash, common shares of the Holding
Company, or a combination of cash and common shares from option recipients in
exchange for shares issued.
A number of shares equal to 10% of the Common Shares sold in the
Offering is expected to be reserved for issuance by the Holding Company upon the
exercise of options to be granted to certain directors, officers, and employees
of the
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<PAGE> 54
Holding Company and its subsidiaries from time to time under the Stock Option
Plan. No determination has been made regarding the recipients of awards under
the Stock Option Plan or the number of shares to be awarded to individual
recipients. The Stock Option Committee may grant options under the Stock Option
Plan to the directors, officers, and employees of the Holding Company and the
Bank at such times as they deem most beneficial to the Holding Company on the
basis of the individual participant's responsibility, tenure, and future
potential.
Under OTS regulations, no stock options may be awarded during the first
year after the completion of the Conversion unless the Stock Option Plan is
approved by the shareholders of the Holding Company at an annual or a special
meeting of shareholders held not less than six months following the completion
of the Conversion. If the Stock Option Plan is approved by the Holding Company
shareholders at such meeting and implemented during the first year after the
completion of the Conversion, the following restrictions will apply: (i) the
number of shares which may be subject to options awarded under the Stock Option
Plan to directors who are not full-time employees of the Holding Company may not
exceed 5% per person and 30% in the aggregate of the available shares; (ii) the
number of shares which may be subject to options awarded under the Stock Option
Plan to any individual who is a full-time employee of the Holding Company or its
subsidiaries may not exceed 25% of the available shares; (iii) stock options
must be awarded with an exercise price at least equal to the fair market value
of the common shares of the Holding Company at the time of the award; and (iv)
stock options will become exercisable at the rate of one-fifth per year
commencing no earlier than one year from the date of the award, subject to
acceleration of vesting only in the event of the death or disability of a
participant. The ultimate value of any option granted at fair market value will
depend on future appreciation in the fair market value of the shares to which
the option relates. No decision has been made as to anticipated awards under the
Stock Option Plan.
RECOGNITION AND RETENTION PLAN. After the completion of the Conversion,
the Bank intends to adopt the RRP. The purpose of the RRP is to provide
directors, officers, and certain key employees of the Bank with an ownership
interest in the Holding Company in a manner designed to compensate such
directors, officers, and key employees for services to the Bank. The Bank
expects to contribute sufficient funds to enable the RRP to purchase up to 4% of
the Common Shares sold in the Offering. The Bank will receive no monetary
consideration from the recipients for the awards of shares under the RRP.
The RRP Committee will administer the RRP and determine the number of
shares to be granted to eligible participants. Each participant granted shares
under the RRP will be entitled to the benefit of any dividends or other
distributions paid on such shares prior to the shares being earned, although
dividends or other distributions on shares held in the RRP Trust will not be
distributed to the participant until the shares are distributed to the
participant. Compensation expense in the amount of the fair market value of the
RRP shares will be recognized as the shares are earned.
No determination has been made regarding recipients of RRP awards or
the number of shares to be awarded to individual recipients. Under OTS
regulations, no RRP shares may be awarded during the first year after the
completion of the Conversion unless the RRP is approved by the shareholders of
the Holding Company at an annual meeting or a special meeting of shareholders
held not less than six months following the completion of the Conversion. If the
RRP is approved by the Holding Company shareholders at such meeting and
implemented during the first year after the completion of the Conversion, the
following restrictions will apply: (i) the number of shares which may be subject
to awards under the RRP to directors who are not full-time employees of the
Holding Company or its subsidiaries may not exceed 5% per person and 30% in the
aggregate of the available shares; (ii) the number of shares which may be
subject to awards under the RRP to any individual who is a full-time employee of
the Holding Company or its subsidiaries may not exceed 25% of the available
shares; and (iii) RRP awards will be earned at the rate of one-fifth per year
commencing no earlier than one year from the date of the award subject to
acceleration of vesting only in the event of the death or the disability of the
participant.
EMPLOYMENT AGREEMENT
The Bank currently has no employment agreements with any of its
officers. The Bank intends to enter into an employment agreement with Robert C.
Hamilton (the "Employment Agreement"). The Employment Agreement will provide for
a term of three years and a salary of not less than $165,000 and performance
reviews by the Board of Directors not less often than annually at which time the
Employment Agreement may be extended for a period of one year. The Employment
Agreement will also provide for the inclusion of Mr. Hamilton in any formally
established employee benefit, bonus, pension, and profit-sharing plans for which
senior management personnel are eligible and for vacation and sick leave in
accordance with the Bank's prevailing policies.
The Employment Agreement will be terminable by the Bank at any time. In
the event of termination by the Bank for "just cause," as defined in the
Employment Agreement, Mr. Hamilton will have no right to receive any
compensation or
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<PAGE> 55
other benefits for any period after such termination. In the event of
termination by the Bank other than for just cause, at the end of the term of the
Employment Agreement or in connection with a "change of control," as defined in
the Employment Agreement, Mr. Hamilton will be entitled to a continuation of
salary payments for a period of time equal to the remaining term of the
Employment Agreement and a continuation of benefits substantially equal to those
being provided at the date of termination of employment until the earliest to
occur of the end of the term of the Employment Agreement or the date on which
Mr. Hamilton becomes employed full-time by another employer.
The Employment Agreement also will contain provisions with respect to
the occurrence within one year of a "change of control" of (1) the termination
of Mr. Hamilton's employment for any reason other than just cause, retirement,
or termination at the end of the term of the agreement, or (2) a constructive
termination resulting from change in the capacity or circumstances in which Mr.
Hamilton is employed or a material reduction in his responsibilities, authority,
compensation, or other benefits provided under the Employment Agreement without
Mr. Hamilton's written consent. In the event of any such occurrence, Mr.
Hamilton will be entitled to payment of an amount equal to three times Mr.
Hamilton's annual compensation immediately preceding the termination of his
employment. In addition, Mr. Hamilton will be entitled to continued coverage
under all benefit plans until the earliest of the end of the term of the
Employment Agreement or the date on which he is included in another employer's
benefit plans as a full-time employee. The maximum which Mr. Hamilton may
receive, however, is limited to an amount which will not result in the
imposition of a penalty tax pursuant to Section 280G(b)(3) of the Code.
"Control," as defined in the Employment Agreement, generally refers to the
acquisition by any person or entity of the ownership or power to vote 10% or
more of the voting stock of the Bank or the Holding Company, the control of the
election of a majority of the directors of the Bank or the Holding Company, or
the exercise of a controlling influence over the management or policies of the
Bank or the Holding Company.
The aggregate payments that would have been made to Mr. Hamilton
pursuant to the Employment Agreement, assuming his termination at September 30,
1997, following a change of control, would have been approximately $495,000.
CERTAIN TRANSACTIONS WITH THE BANK
In accordance with the OTS regulations, the Bank makes loans to
executive officers and directors of the Bank in the ordinary course of business
and on the same terms and conditions, including interest rates and collateral,
as those generally available to the Bank's customers. All outstanding loans to
executive officers and directors comply with such policy, do not involve more
than the normal risk of collectibility or present other unfavorable features and
are current in their payments. Loans to directors and executive officers of the
Bank and their related interests totaled $189,000 at September 30, 1997.
REGULATION
GENERAL
As a savings and loan association incorporated under the laws of Ohio,
the Bank is subject to regulation, examination and oversight by the OTS and the
Superintendent of the Division (the "Ohio Superintendent"). Because the Bank's
deposits are insured by the FDIC, the Bank also is subject to general oversight
by the FDIC. The Bank must file periodic reports with the OTS, the Ohio
Superintendent and the FDIC concerning its activities and financial condition.
Examinations are conducted periodically by federal and state regulators to
determine whether the Bank is in compliance with various regulatory requirements
and is operating in a safe and sound manner. The Bank is a member of the FHLB of
Cincinnati.
The Holding Company will be a savings and loan holding company within
the meaning of the Home Owners Loan Act, as amended (the "HOLA"). Consequently,
the Holding Company will be subject to regulation, examination, and oversight by
the OTS and will be required to submit periodic reports to the OTS. Because the
Holding Company and the Bank are corporations organized under Ohio law, they are
also subject to the provisions of the Ohio Revised Code applicable to
corporations generally.
Congress is considering legislation to eliminate the federal savings
and loan charter and the separate federal regulation of savings and loan
associations and the Department of the Treasury is preparing a report for
Congress on the development of a common charter for all financial institutions.
Pursuant to such legislation, Congress may eliminate the OTS and the Bank may be
regulated under federal law as a bank or be required to change its charter. Such
change in regulation or charter would likely change the range of activities in
which the Bank may engage and would probably subject
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<PAGE> 56
the Bank to more regulation by the FDIC. In addition, the Holding Company might
become subject to different holding company regulations, including separate
capital requirements. At this time, the Holding Company cannot predict when or
whether Congress may actually pass legislation regarding the Holding Company's
and the Bank's regulatory requirements or charter. Although such legislation may
change the activities in which either the Holding Company and the Bank may
engage, it is not anticipated that the current activities of the Holding Company
or the Bank will be materially affected by those activity limits.
OHIO SAVINGS AND LOAN LAW
The Ohio Superintendent is responsible for the regulation and
supervision of Ohio savings and loan associations in accordance with the laws of
the State of Ohio. Ohio law prescribes the permissible investments and
activities of Ohio savings and loan associations, including the types of lending
that such associations may engage in and the investments in real estate,
subsidiaries, and corporate or government securities that such associations may
make. The ability of Ohio associations to engage in these state-authorized
investments and activities is subject to oversight and approval by the FDIC, if
such investments or activities are not permissible for a federally chartered
savings and loan association.
The Ohio Superintendent also has approval authority over any mergers
involving or acquisitions of control of Ohio savings and loan associations. The
Ohio Superintendent may initiate certain supervisory measures or formal
enforcement actions against Ohio associations. Ultimately, if the grounds
provided by law exist, the Ohio Superintendent may place an Ohio association in
conservatorship or receivership.
The Ohio Superintendent conducts regular examinations of the Bank
approximately once every eighteen months. Such examinations are usually
conducted jointly with one or both federal regulators. The Ohio Superintendent
imposes assessments on Ohio associations based on their asset size to cover the
cost of supervision and examination.
OFFICE OF THRIFT SUPERVISION
GENERAL. The OTS is an office in the Department of the Treasury and is
responsible for the regulation and supervision of all federally chartered
savings and loan associations and all other savings and loan associations the
deposits of which are insured by the FDIC. The OTS issues regulations governing
the operation of savings and loan associations, regularly examines such
associations and imposes assessments on savings associations based on their
asset size to cover the costs of this supervision and examination. The OTS also
may initiate enforcement actions against savings and loan associations and
certain persons affiliated with them for violations of laws or regulations or
for engaging in unsafe or unsound practices. If the grounds provided by law
exist, the OTS may appoint a conservator or receiver for a savings and loan
association.
Savings associations are subject to regulatory oversight under various
consumer protection and fair lending laws. These laws govern, among other
things, truth-in-lending disclosures, equal credit opportunity, fair credit
reporting and community reinvestment. Failure to abide by federal laws and
regulations governing community reinvestment could limit the ability of an
association to open a new branch or engage in a merger. Community reinvestment
regulations evaluate how well and to what extent an institution lends and
invests in its designated service area, with particular emphasis on low- to
moderate-income communities and borrowers in that area. The Bank has received a
"satisfactory" examination rating under those regulations.
REGULATORY CAPITAL REQUIREMENTS. The Bank is required by OTS
regulations to meet certain minimum capital requirements. For information
regarding the Bank's regulatory capital at September 30, 1997, and pro forma
regulatory capital after giving effect to the Conversion, see "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
Liquidity and Capital Resources" and "REGULATORY CAPITAL COMPLIANCE."
Current capital requirements call for tangible capital of 1.5% of
adjusted total assets, core capital (which for the Bank consists solely of
tangible capital) of 3.0% of adjusted total assets and risk-based capital (which
for the Bank consists of core capital and general valuation allowances) of 8.0%
of risk-weighted assets (assets, including certain off-balance sheet items, are
weighted at percentage levels ranging from 0% to 100% depending on the relative
risk).
The OTS has proposed to amend the core capital requirement so that
those associations that do not have the highest examination rating and an
acceptable level of risk will be required to maintain core capital of from 4% to
5%, depending on
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the Bank's examination rating and overall risk. The Bank does not anticipate
that it will be adversely affected if the core capital requirement regulation is
amended as proposed.
The OTS has adopted an interest rate risk component to the risk-based
capital requirement, though the implementation of that component has been
delayed. Pursuant to that requirement a savings association would have to
measure the effect of an immediate 200 basis point change in interest rates on
the value of its portfolio as determined under the methodology of the OTS. If
the measured interest rate risk is above the level deemed normal under the
regulation, the Bank will be required to deduct one-half of such excess exposure
from its total capital when determining its risk-based capital. In general, an
association with less than $300 million in assets and a risk-based capital ratio
in excess of 12% will not be subject to the interest rate risk component, and
the Bank qualifies for such exemption. Pending implementation of the interest
rate risk component, the OTS has the authority to impose a higher individualized
capital requirement on any savings association it deems to have excess interest
rate risk. The OTS also may adjust the risk-based capital requirement on an
individualized basis to take into account risks due to concentrations of credit
and non-traditional activities. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Asset and Liability Management."
The OTS has adopted regulations governing prompt corrective action to
resolve the problems of capital deficient and otherwise troubled savings and
loan associations. At each successively lower defined capital category, an
association is subject to more restrictive and numerous mandatory or
discretionary regulatory actions or limits, and the OTS has less flexibility in
determining how to resolve the problems of the institution. The OTS has defined
these capital levels as follows: (i) well-capitalized associations must have
total risk-based capital of at least 10%, core risk-based capital (consisting
only of items that qualify for inclusion in core capital) of at least 6% and
core capital of at least 5%; (ii) adequately capitalized associations are those
that meet the regulatory minimum of total risk-based capital of 8%, core
risk-based capital of 4%, and core capital of 4% (except for associations
receiving the highest examination rating, in which case the level is 3%) but are
not well-capitalized; (iii) undercapitalized associations are those that do not
meet regulatory limits, but that are not significantly undercapitalized; (iv)
significantly undercapitalized associations have total risk-based capital of
less than 6%, core risk-based capital of less than 3% or core capital of less
than 3%; and (v) critically undercapitalized associations are those with core
capital of less than 2% of total assets. In addition, the OTS generally can
downgrade an association's capital category, notwithstanding its capital level,
if, after notice and opportunity for hearing, the association is deemed to be
engaging in an unsafe or unsound practice because it has not corrected
deficiencies that resulted in it receiving a less than satisfactory examination
rating on matters other than capital or it is deemed to be in an unsafe or
unsound condition. An undercapitalized association must submit a capital
restoration plan to the OTS within 45 days after it becomes undercapitalized.
Undercapitalized associations will be subject to increased monitoring and asset
growth restrictions and will be required to obtain prior approval for
acquisitions, branching and engaging in new lines of business. Critically
undercapitalized institutions must be placed in conservatorship or receivership
within 90 days of reaching that capitalization level, except under limited
circumstances. The Bank's capital at September 30, 1997, meets the standards for
a well-capitalized institution.
Federal law prohibits a savings and loan association from making a
capital distribution to anyone or paying management fees to any person having
control of the association if, after such distribution or payment, the
association would be undercapitalized. In addition, each company controlling an
undercapitalized association must guarantee that the association will comply
with its capital plan until the association has been adequately capitalized on
an average during each of four preceding calendar quarters and must provide
adequate assurances of performance. The aggregate liability pursuant to such
guarantee is limited to the lesser of (i) an amount equal to 5% of the
association's total assets at the time the association became undercapitalized
or (ii) the amount that is necessary to bring the association into compliance
with all capital standards applicable to such association at the time the
association fails to comply with its capital restoration plan.
LIQUIDITY. OTS regulations require that savings associations maintain
an average daily balance of liquid assets (cash, certain time deposits,
association's acceptances, and specified United States Government, state or
federal agency obligations) equal to a monthly average of not less than 4% of
its net withdrawable savings deposits plus borrowings payable in one year or
less. Monetary penalties may be imposed upon member institutions failing to meet
liquidity requirements. The eligible liquidity of the Bank at September 30,
1997, was approximately $6.6 million, or 13.7%, which exceeded the then
applicable 5% liquidity requirement by approximately $4.2 million. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - Liquidity and Capital Resources."
QUALIFIED THRIFT LENDER TEST. Prior to September 30, 1996, the QTL test
required savings associations to maintain a specified level of investments in
assets that are designated as qualifying thrift investments ("QTI"), which are
generally
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related to domestic residential real estate and manufactured housing and include
stock issued by any FHLB, the FHLMC or the FNMA. Under this test 65% of an
institution's "portfolio assets" (total assets less goodwill and other
intangibles, property used to conduct business, and 20% of liquid assets) must
consist of QTI on a monthly average basis in 9 out of every 12 months. Congress
created a second QTL test, effective September 30, 1996, pursuant to which a
savings association may also qualify as a QTL thrift if at least 60% of the
institution's assets (on a tax basis) consist of specified assets (generally
loans secured by residential real estate or deposits, educational loans, cash,
and certain governmental obligations). The OTS may grant exceptions to the QTL
test under certain circumstances. If a savings association fails to meet the QTL
test, the association and its holding company become subject to certain
operating and regulatory restrictions. A savings association that fails to meet
the QTL test will not be eligible for new FHLB advances. At September 30, 1997,
the Bank met the QTL test.
LENDING LIMIT. OTS regulations generally limit the aggregate amount
that a savings association can lend to one borrower or group of related
borrowers to an amount equal to 15% of the association's Lending Limit Capital.
A savings association may lend to one borrower an additional amount not to
exceed 10% of the association's Lending Limit Capital, if the additional amount
is fully secured by certain forms of "readily marketable collateral." Real
estate is not considered "readily marketable collateral." Certain types of loans
are not subject to this limit. In applying this limit, the regulations require
that loans to certain related borrowers be aggregated. An exception to this
limit permits loans of any type to one borrower up to $500,000.
Based on such limits, the Bank was able to lend approximately $1.6
million to one borrower at September 30, 1997. The largest amount the Bank had
outstanding to one borrower at September 30, 1997, was $874,364, which consisted
of nine loans, secured by a commercial property, equipment and the borrower's
residences. At September 30, 1997, such loans were performing in accordance with
their terms. See "THE BUSINESS OF THE BANK - Lending Activities -- Loan to One
Borrower Limits."
TRANSACTIONS WITH INSIDERS AND AFFILIATES. Loans to executive officers,
directors, and principal shareholders and their related interests must conform
to the lending limit on loans to one borrower, and the total of such loans to
executive officers, directors, principal shareholders, and their related
interests cannot exceed the Bank's Lending Limit Capital (or 200% of Lending
Limit Capital for qualifying institutions with less than $100 million in
assets). Most loans to directors, executive officers, and principal shareholders
must be approved in advance by a majority of the "disinterested" members of the
board of directors of the Bank with any "interested" director not participating.
All loans to directors, executive officers, and principal shareholders must be
made on terms substantially the same as offered in comparable transactions with
the general public or as offered to all employees in a company-wide benefit
program, and loans to executive officers are subject to additional limitations.
The Bank was in compliance with such restrictions at September 30, 1997.
All transactions between a savings association and its affiliates must
comply with Sections 23A and 23B of the Federal Reserve Act (the "FRA"). An
affiliate of a savings association is any company or entity that controls, is
controlled by or is under common control with, the savings association. The
Holding Company will be an affiliate of the Bank. Generally, Sections 23A and
23B of the FRA (i) limit the extent to which a savings association 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, (ii) limit
the aggregate of all such transactions with all affiliates to an amount equal to
20% of such capital stock and surplus, and (iii) require that all such
transactions be on terms substantially the same, or at least as favorable to the
association, as those provided in transactions with a non-affiliate. The term
"covered transaction" includes the making of loans, purchase of assets, issuance
of a guarantee, and other similar types of transactions. In addition to the
limits in Sections 23A and 23B, a savings association may not make any loan or
other extension of credit to an affiliate unless the affiliate is engaged only
in activities permissible for a bank holding company and may not purchase or
invest in securities of any affiliate except shares of a subsidiary. The Bank
was in compliance with these requirements and restrictions at September 30,
1997.
LIMITATIONS ON CAPITAL DISTRIBUTIONS. The OTS imposes various
restrictions or requirements on the ability of associations to make capital
distributions, according to ratings of associations based on their capital level
and supervisory condition. Capital distributions, for purposes of such
regulation, include, without limitation, payments of cash dividends,
repurchases, and certain other acquisitions by an association of its shares and
payments to stockholders of another association in an acquisition of such other
association.
For purposes of the capital distribution regulations, each institution
is categorized in one of three tiers. Tier 1 consists of associations that,
before and after the proposed capital distribution, meet their fully phased-in
capital requirement. Associations in this category may make capital
distributions during any calendar year equal to the greater of 100% of their
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net income, current year-to-date, plus 50% of the amount by which the lesser of
such association's tangible, core or risk-based capital exceeds its fully
phased-in capital requirement for such capital component, as measured at the
beginning of the calendar year, or the amount authorized for a tier 2
association. A tier 2 association meets its current minimum, but not fully
phased-in capital requirement before and after a proposed capital distribution.
An association in this category may make capital distributions up to 75% of its
net income over the most recent four quarters. A Tier 3 association is one which
does not meet its current minimum capital requirement and must obtain OTS
approval of any capital distribution. A tier 1 association deemed to be in need
of more than normal supervision by the OTS may be downgraded to a tier 2 or tier
3 association. The Bank meets the requirements for a tier 1 association and has
not been notified of any need for more than normal supervision.
The Bank will also be prohibited from declaring or paying any dividends
or from repurchasing any of its stock if, as a result, the net worth of the Bank
would be reduced below the amount required to be maintained for the liquidation
account established in connection with the Conversion. See "THE CONVERSION -
Principal Effects of the Conversion - Liquidation Account." In addition, as a
subsidiary of the Holding Company, the Bank will also be required to give the
OTS 30 days' notice prior to declaring any dividend on its stock. The OTS may
object to the dividend during that 30-day period based on safety and soundness
concerns. Moreover, the OTS may prohibit any capital distribution otherwise
permitted by regulation if the OTS determines that such distribution would
constitute an unsafe or unsound practice. Pursuant to OTS policy, as a condition
to approval of the Conversion, the Bank will be required to state that it will
not undertake a tax-free return of capital for a period of one year following
completion of the Conversion.
In December 1994, the OTS issued a proposal to amend the capital
distributions limits. Under that proposal, an association which is not owned by
a holding company and which has an examination rating of 1 or 2 could make a
capital distribution without notice to the OTS, if it remains adequately
capitalized, as described above, after the distribution is made. Any other
association seeking to make a capital distribution that would not cause the
association to fall below the capital levels to qualify as adequately
capitalized or better, would have to provide notice to the OTS. Except under
limited circumstances and with OTS approval, no capital distributions would be
permitted if it caused the association to become undercapitalized.
HOLDING COMPANY REGULATION. After the Conversion, the Holding Company
will be a savings and loan holding company within the meaning of the HOLA. As
such, the Holding Company will register with the OTS and will be subject to OTS
regulations, examination, supervision, and reporting requirements.
The HOLA generally prohibits a savings and loan holding company from
controlling any other savings and loan association or savings and loan holding
company, without prior approval of the OTS, or from acquiring or retaining more
than 5% of the voting shares of a savings and loan association or holding
company thereof, which is not a subsidiary. Under certain circumstances, a
savings and loan holding company is permitted to acquire, with the approval of
the OTS, up to 15% of the previously unissued voting shares of an
undercapitalized savings and loan association for cash without being deemed to
control the association. Except with the prior approval of the OTS, no director
or officer of a savings and loan holding company or person owning or controlling
by proxy or otherwise more than 25% of such company's stock may also acquire
control of any savings institution, other than a subsidiary institution, or any
other savings and loan holding company.
The Holding Company will be a unitary savings and loan holding company.
Under current law, there are generally no restrictions on the activities of
unitary savings and loan holding companies and such companies are the only
financial institution holding companies which may engage in commercial,
securities, and insurance activities without limitation. The broad latitude
under current law can be restricted if the OTS determines that there is
reasonable cause to believe that the continuation by a savings and loan holding
company of an activity constitutes a serious risk to the financial safety,
soundness, or stability of its subsidiary savings and loan association. The OTS
may impose such restrictions as deemed necessary to address such risk, including
limiting (i) payment of dividends by the savings and loan association; (ii)
transactions between the savings and loan association and its affiliates; and
(iii) any activities of the savings and loan association that might create a
serious risk that the liabilities of the holding company and its affiliates may
be imposed on the savings and loan association. Notwithstanding the foregoing
rules as to permissible business activities of a unitary savings and loan
holding company, if the savings and loan association subsidiary of a holding
company fails to meet the QTL, then such unitary holding company would become
subject to the activities restrictions applicable to multiple holding companies.
At September 30, 1997, the Bank met the QTL. See "Qualified Thrift Lender Test."
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Congress is considering legislation which may limit the Holding
Company's ability to engage in these activities and the Holding Company cannot
predict if and in what form these proposals might become law. However, such
limits would not impact the Holding Company's initial activity of holding stock
of the Bank.
If the Holding Company were to acquire control of another savings
institution, other than through a merger or other business combination with the
Bank, the Holding Company would become a multiple savings and loan holding
company. Unless the acquisition is an emergency thrift acquisition and each
subsidiary savings and loan association meets the QTL, the activities of the
Holding Company and any of its subsidiaries (other than the Bank or other
subsidiary savings and loan associations) would thereafter be subject to
activity restrictions. The HOLA provides that, among other things, no multiple
savings and loan holding company or subsidiary thereof that is not a savings
institution shall commence or continue for a limited period of time after
becoming a multiple savings and loan holding company or subsidiary thereof, any
business activity other than (i) furnishing or performing management services
for a subsidiary savings institution; (ii) conducting an insurance agency or
escrow business; (iii) holding, managing or liquidating assets owned by or
acquired from a subsidiary savings institution; (iv) holding or managing
properties used or occupied by a subsidiary savings institution; (v) acting as
trustee under deeds of trust; (vi) those activities previously directly
authorized by federal regulation as of March 5, 1987, to be engaged in by
multiple holding companies; or (vii) those activities authorized by the FRB as
permissible for bank holding companies, unless the OTS by regulation prohibits
or limits such activities for savings and loan holding companies, and which have
been approved by the OTS prior to being engaged in by a multiple holding
company.
The OTS may approve an acquisition resulting in the formation of a
multiple savings and loan holding company that controls savings and loan
associations in more than one state only if the multiple savings and loan
holding company involved controls a savings and loan association that operated a
home or branch office in the state of the Bank to be acquired as of March 5,
1987, or if the laws of the state in which the institution to be acquired is
located specifically permit institutions to be acquired by state-chartered
institutions or savings and loan holding companies located in the state where
the acquiring entity is located (or by a holding company that controls such
state-chartered savings institutions). As under prior law, the OTS may approve
an acquisition resulting in a multiple savings and loan holding company
controlling savings and loan associations in more than one state in the case of
certain emergency thrift acquisitions. Bank holding companies have had more
expansive authority to make interstate acquisitions than savings and loan
holding companies since August 1995.
FDIC REGULATIONS
DEPOSIT INSURANCE. The FDIC is an independent federal agency that
insures the deposits, up to prescribed statutory limits, of federally insured
banks and thrifts and safeguards the safety and soundness of the banking and
thrift industries. The FDIC administers two separate insurance funds, the Bank
Insurance Fund (the "BIF") for commercial banks and state savings banks and the
SAIF for savings associations. The FDIC is required to maintain designated
levels of reserves in each fund. The Bank's deposit accounts are insured by the
FDIC in the SAIF up to the prescribed limits. The FDIC has examination authority
over all insured depository institutions, including the Bank, and has authority
to initiate enforcement actions against federally insured savings associations
if the FDIC does not believe the OTS has taken appropriate action to safeguard
safety and soundness and the deposit insurance fund.
The FDIC is required to maintain designated levels of reserves in each
fund. The FDIC may increase assessment rates for either fund if necessary to
restore the fund's ratio of reserves to insured deposits to its target level
within a reasonable time and may decrease such rates if such target level has
been met. The FDIC has established a risk-based assessment system for both SAIF
and BIF members. Under this system, assessments vary based on the risk the
institution poses to its deposit insurance fund. The risk level is determined
based on the institution's capital level and the FDIC's level of supervisory
concern about the institution.
Because of the differing reserve levels of the funds, deposit insurance
assessments paid by healthy savings associations were reduced significantly
below the level paid by healthy savings associations effective in mid-1995.
Assessments paid by healthy savings associations exceeded those paid by healthy
commercial banks by approximately $.19 per $100 in deposits in late 1995. Such
excess equaled approximately $.23 per $100 in deposits beginning in 1996. This
premium disparity had a negative competitive impact on the Bank and other
institutions in the SAIF.
Federal legislation which was effective September 30, 1996, provided for
the recapitalization of the SAIF by means of a special assessment of $.657 per
$100 of SAIF deposits held at March 31, 1995, in order to increase SAIF reserves
to the level required by law. Certain banks holding SAIF deposits are required
to pay the same special assessment on 80% of deposits at March 31, 1995. In
addition, the cost of prior thrift failures, which had previously been paid only
by SAIF
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members, will also be paid by BIF members. As a result, BIF assessments for
healthy banks in 1997 were $.013 per $100 in deposits, and SAIF assessments for
healthy institutions in 1997 were $.064 per $100 in deposits.
The Bank had $39.7 million in deposits at March 31, 1995. The Bank paid
a special assessment of $261,000 in November 1996, which was accounted for and
recorded as of September 30, 1996. This assessment is tax-deductible but has
reduced earnings for the year ended June 30, 1997.
FRB REGULATIONS
FRB regulations currently require savings associations to maintain
reserves of 3% of net transaction accounts (primarily NOW accounts) up to $49.3
million (subject to an exemption of up to $4.4 million), and of 10% of net
transaction accounts over $49.3 million. At September 30, 1997, the Bank was in
compliance with this reserve requirement.
FEDERAL HOME LOAN BANKS
The FHLBs provide credit to their members in the form of advances. See
"THE BUSINESS OF THE BANK - Deposits and Borrowings." The Bank is a member of
the FHLB of Cincinnati and must maintain an investment in the capital stock of
the FHLB of Cincinnati in an amount equal to the greater of 1% of the aggregate
outstanding principal amount of the Bank's residential mortgage loans, home
purchase contracts, and similar obligations at the beginning of each year, and
5% of its advances from the FHLB. The Bank is in compliance with this
requirement with an investment in stock of the FHLB of Cincinnati of $373,000 at
September 30, 1997.
Upon the origination or renewal of a loan or advance, the FHLB of
Cincinnati is required by law to obtain and maintain a security interest in
collateral in one or more of the following categories: fully disbursed, whole
first mortgage loans on improved residential property or securities representing
a whole interest in such loans; securities issued, insured or guaranteed by the
U.S. Government or an agency thereof; deposits in any FHLB; or other real estate
related collateral (up to 30% of the member association's capital) acceptable to
the applicable FHLB, if such collateral has a readily ascertainable value and
the FHLB can perfect its security interest in the collateral.
Each FHLB is required to establish standards of community investment or
service that its members must maintain for continued access to long-term
advances from the FHLBs. The standards take into account a member's performance
under the Community Reinvestment Act and its record of lending to first-time
home buyers. All long-term advances by each FHLB must be made only to provide
funds for residential housing finance.
TAXATION
FEDERAL TAXATION
The Holding Company and the Bank are each subject to the federal tax
laws and regulations which apply to corporations generally. In addition to the
regular income tax, the Holding Company and the Bank may be subject to an
alternative minimum tax. An alternative minimum tax is imposed at a minimum tax
rate of 20% on "alternative minimum taxable income" (which is the sum of a
corporation's regular taxable income, with certain adjustments, and tax
preference items), less any available exemption. Such tax preference items
include interest on certain tax-exempt bonds issued after August 7, 1986. In
addition, 75% of the amount by which a corporation's "adjusted current earnings"
exceeds its alternative minimum taxable income computed without regard to this
preference item and prior to reduction by net operating losses, is included in
alternative minimum taxable income. Net operating losses can offset no more than
90% of alternative minimum taxable income. The alternative minimum tax is
imposed to the extent it exceeds the corporation's regular income tax. Payments
of alternative minimum tax may be used as credits against regular tax
liabilities in future years. The Taxpayer Relief Act of 1997 repealed the
alternative minimum tax for certain "small corporations" for tax years beginning
after December 31, 1997. A corporation initially qualifies as a small
corporation if it had average gross receipts of $5,000,000 or less for the three
tax years ending with its first tax year beginning after December 31, 1997. Once
a corporation is recognized as a small corporation, it will continue to be
exempt from the alternative minimum tax for as long as its average gross
receipts for the prior three-year period do not exceed $7,500,000. In
determining if a corporation meets this requirement, the first year that it
achieved small corporation status is not taken into consideration.
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Based on the Bank's average gross receipts of $4.35 million for the
three tax years ending on June 30, 1997, the Bank would qualify as a small
corporation exempt from the alternative minimum tax.
Prior to the enactment of the Small Business Jobs Protection Act (the
"Small Business Act"), which was signed into law on August 21, 1996, certain
thrift institutions, were allowed deductions for bad debts under methods more
favorable than those granted to other taxpayers. Qualified thrift institutions
could compute deductions for bad debts using either the specific charge off
method of Section 166 of the Code, or one of the two reserve methods of Section
593 of the Code. The reserve methods under Section 593 of the Code permitted a
thrift institution annually to elect to deduct bad debts under either (i) the
"percentage of taxable income" method applicable only to thrift institutions, or
(ii) the "experience" method that also was available to small banks. Under the
"percentage of taxable income" method, a thrift institution generally was
allowed a deduction for an addition to its bad debt reserve equal to 8% of its
taxable income (determined without regard to this deduction and with additional
adjustments). Under the experience method, a thrift institution was generally
allowed a deduction for an addition to its bad debt reserve equal to the greater
of (i) an amount based on its actual average experience for losses in the
current and five preceding taxable years, or (ii) an amount necessary to restore
the reserve to its balance as of the close of the base year. A thrift
institution could elect annually to compute its allowable addition to bad debt
reserves for qualifying loans either under the experience method or the
percentage of taxable income method.
The Small Business Act eliminated the percentage of taxable income
reserve method of accounting for bad debts by thrift institutions, effective for
taxable years beginning after 1995. Thrift institutions that would be treated as
small banks are allowed to utilize the experience method applicable to such
institutions, while thrift institutions that are treated as large banks are
required to use only the specific charge off method.
A thrift institution required to change its method of computing
reserves for bad debts will treat such change as a change in the method of
accounting, initiated by the taxpayer, and having been made with the consent of
the Secretary of the Treasury. Section 481(a) of the Code requires certain
amounts to be recaptured with respect to such change. Generally, the amounts to
be recaptured will be determined solely with respect to the "applicable excess
reserves" of the taxpayer. The amount of the applicable excess reserves will be
taken into account ratably over a six-taxable year period, beginning with the
first taxable year beginning after 1995, subject to the residential loan
requirement described below. In the case of a thrift institution that becomes a
large bank, the amount of the institution's applicable excess reserves generally
is the excess of (i) the balances of its reserve for losses on qualifying real
property loans (generally loans secured by improved real estate) and its reserve
for losses on nonqualifying loans (all other types of loans) as of the close of
its last taxable year beginning before January 1, 1996, over (ii) the balances
of such reserves as of the close of its last taxable year beginning before
January 1, 1988 (i.e., the "pre-1988 reserves"). In the case of a thrift
institution that becomes a small bank, the amount of the institution's
applicable excess reserves generally is the excess of (i) the balances of its
reserve for losses on qualifying real property loans and its reserve for losses
on nonqualifying loans as of the close of its last taxable year beginning before
January 1, 1996, over (ii) the greater of the balance of (a) its pre-1988
reserves or (b) what the thrift's reserves would have been at the close of its
last year beginning before January 1, 1996, had the thrift always used the
experience method.
For taxable years that begin on or after January 1, 1996, and before
January 1, 1998, if a thrift meets the residential loan requirement for a tax
year, the recapture of the applicable excess reserves otherwise required to be
taken into account as a Code Section 481(a) adjustment for the year will be
suspended. A thrift meets the residential loan requirement if, for the tax year,
the principal amount of residential loans made by the thrift during the year is
not less then its base amount. The "base amount" generally is the average of the
principal amounts of the residential loans made by the thrift during the six
most recent tax years beginning before January 1, 1996. A residential loan is a
loan as described in Section 7701(a)(19)(C)(v) (generally a loan secured by
residential real and church property and certain mobile homes), but only to the
extent that the loan is made to the owner of the property.
The balance of the pre-1988 reserves is subject to the provisions of
Section 593(e) as modified by the Small Business Act which require recapture in
the case of certain excessive distributions to shareholders. The pre-1988
reserves may not be utilized for payment of cash dividends or other
distributions to a shareholder (including distributions in dissolution or
liquidation) or for any other purpose (excess to absorb bad debt losses).
Distribution of a cash dividend by a thrift institution to a shareholder is
treated as made: first, out of the institution's post-1951 accumulated earnings
and profits; second, out of the pre-1988 reserves; and third, out of such other
accounts as may be proper. To the extent a distribution by the Bank to the
Holding Company is deemed paid out of its pre-1988 reserves under these rules,
the pre-1988 reserves would be reduced and the Bank's gross income for tax
purposes would be increased by the amount which, when reduced by the income tax,
if any, attributable to the inclusion of such amount in its gross income, equals
the amount deemed paid out of the pre-1988 reserves. As of September 30, 1997,
the Bank's pre-1988 reserves for tax purposes totaled approximately
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$1,548,000. The Bank believes it had approximately $8.5 million of accumulated
earnings and profits for tax purposes as of September 30, 1997, which would be
available for dividend distributions, provided regulatory restrictions
applicable to the payment of dividends are met. See "REGULATION - Office of
Thrift Supervision -- Limitations on Capital Distributions." No representation
can be made as to whether the Bank will have current or accumulated earnings and
profits in subsequent years.
The tax returns of the Bank have been audited or closed without audit
through fiscal year 1994. In the opinion of management, any examination of open
returns would not result in a deficiency which could have a material adverse
effect on the financial condition of the Bank.
Ohio Taxation
The Holding Company is subject to the Ohio corporation franchise tax,
which, as applied to the Holding Company, is a tax measured by both net earnings
and net worth. The rate of tax is the greater of (i) 5.1% on the first $50,000
of computed Ohio taxable income and 8.9% of computed Ohio taxable income in
excess of $50,000 and (ii) 0.582% times taxable net worth. Under these
falternative measures of computing tax liability, the states to which a
taxpayer's adjusted total net income and adjusted total net worth are
apportioned or allocated are determined by complex formulas. The minimum tax is
$50 per year.
A special litter tax is also applicable to all corporations, including
the Holding Company, subject to the Ohio corporation franchise tax other than
"financial institutions." If the franchise tax is paid on the net income basis,
the litter tax is equal to .11% of the first $50,000 of computed Ohio taxable
income and .22% of computed Ohio taxable income in excess of $50,000. If the
franchise tax is paid on the net worth basis, the litter tax is equal to .014%
times taxable net worth.
Ohio corporation franchise tax law is scheduled to change markedly as a
consequences of legislative reforms enacted July 1, 1997. Tax liability,
however, continues to be measured by both net income and net worth. In general,
tax liability will be the greater of (i) 5.1% on the first $50,000 of computed
Ohio taxable income and 8.5% of computed Ohio taxable income in excess of
$50,000 or (ii) 0.40% of taxable net worth. Under these alternative measures of
computing tax liability, the states to which total net income and total net
worth will be apportioned or allocated will continue to be determined by complex
formulas, but the formulas change. The minimum tax will still be $50 per year
and maximum tax liability as measured by net worth will be limited to $150,000
per year. The special litter taxes remain in effect. Various other changes in
the tax law may affect the Holding Company. The Bank is a "financial
institution" for State of Ohio tax purposes. As such, it is subject to the Ohio
corporate franchise tax on "financial institutions," which is imposed annually
at a rate of 1.5% of the Bank's apportioned book net worth, determined in
accordance with GAAP, less any statutory deduction. This rate of tax is
scheduled to decrease in each of the years 1990 and 2000. As a "financial
institution," the Bank is not subject to any tax based upon net income or net
profits imposed by the State of Ohio.
THE CONVERSION
THE OTS AND THE DIVISION HAVE APPROVED THE PLAN, SUBJECT TO THE
APPROVAL OF THE PLAN BY THE MEMBERS OF THE BANK ENTITLED TO VOTE ON THE PLAN AND
SUBJECT TO THE SATISFACTION OF CERTAIN OTHER CONDITIONS IMPOSED BY THE OTS AND
THE DIVISION. OTS AND DIVISION APPROVAL DOES NOT CONSTITUTE A RECOMMENDATION OR
ENDORSEMENT OF THE PLAN.
GENERAL
On November 12, 1997, the Board of Directors of the Bank unanimously
adopted the Plan and recommended that the voting members of the Bank approve the
Plan at the Special Meeting. During and upon completion of the Conversion, the
Bank will continue to provide the services presently offered to depositors and
borrowers, will maintain its existing offices, and will retain its existing
management and employees.
Based on the current Valuation Range, between 1,445,000 and 1,955,000
Common Shares are expected to be offered in the Subscription Offering and the
Community Offering at a price of $10 per share. Applicable regulations permit
the Holding Company to offer additional Common Shares in an amount not to exceed
15% above the maximum of the Valuation Range, which would permit the issuance of
up to 2,248,250 Common Shares with an aggregate purchase price of $22,482,500.
Federal regulations require, with certain exceptions, that shares offered in
connection with the Conversion must be sold up to at least the minimum point of
the Valuation Range in order for the Conversion to become effective. The
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actual number of Common Shares sold in connection with the Conversion will be
determined upon completion of the Offering based on the final valuation of the
Bank, as converted. See "Pricing and Number of Common Shares to be Sold."
The Common Shares will be offered in the Subscription Offering to the
ESOP and certain present and former depositors of the Bank. Any Common Shares
not subscribed for in the Subscription Offering will be offered to the general
public in the Community Offering in a manner which will seek to achieve the
widest distribution of the Common Shares, but which will give preference to
natural persons residing in Coshocton County, Ohio. Under OTS regulations, the
Community Offering must be completed within 45 days after completion of the
Subscription Offering, unless such period is extended by the Bank with the
approval of the OTS and the Division. If the Community Offering is determined
not to be feasible, an occurrence that is not currently anticipated, the Boards
of Directors of the Holding Company and the Bank will consult with the OTS and
the Division to determine an appropriate alternative method of selling
unsubscribed Common Shares up to the minimum of the Valuation Range. No
alternative sales methods are currently planned.
OTS and Ohio regulations require the completion of the Conversion
within 24 months after the date of the approval of the Plan by the voting
members of the Bank. The commencement and completion of the Conversion will be
subject to market conditions and other factors beyond the Bank's control. Due to
changing economic and market conditions, no assurance can be given as to the
length of time that will be required to complete the sale of the Common Shares.
If delays are experienced, significant changes may occur in the estimated pro
forma market value of the Bank. In such circumstances, the Bank may also incur
substantial additional printing, legal and accounting expenses in completing the
Conversion. In the event the Conversion is not successfully completed, the Bank
will be required to charge all Conversion expenses against current earnings.
REASONS FOR THE CONVERSION
The principal factors considered by the Bank's Board of Directors in
reaching the decision to pursue a mutual-to-stock conversion were the numerous
competitive advantages which the stock form of organization offers, including
growth opportunities, employee retention through the use of stock-based benefit
plans, and increased capital levels.
If the Bank is to continue to grow and prosper, the mutual form of
organization is the least desirable form from a competitive standpoint. The
opportunities for a mutual to expand through mutual-to-mutual mergers or
acquisitions are limited. Although the Bank does not have any specific
acquisitions planned at this time, the Conversion will position the Bank to take
advantage of any acquisition opportunities which may present themselves. Because
a conversion to stock form is a time-consuming and complex process, the Bank
cannot wait until an acquisition is imminent to embark on the conversion
process.
As an increasing number of the Bank's competitors convert to stock form
and acquire the ability to use stock-based compensation programs, the Bank, in
mutual form, would be at a disadvantage when it comes to attracting and
retaining qualified management. The Bank believes that the ESOP, the Stock
Option Plan and the RRP are important tools in achieving such goals. See
"MANAGEMENT - Stock Benefit Plans."
PRINCIPAL EFFECTS OF THE CONVERSION
VOTING RIGHTS. Deposit holders who are members of the Bank in its
mutual form will have no voting rights in the Bank as converted and will not
participate, therefore, in the election of directors or otherwise control the
Bank's affairs. Voting rights in the Holding Company will be held exclusively by
its shareholders, and voting rights in the Bank will be held exclusively by the
Holding Company as the sole shareholder of the Bank. Each holder of the Holding
Company's common shares will be entitled to one vote for each share owned on any
matter to be considered by the Holding Company's shareholders. See "DESCRIPTION
OF AUTHORIZED SHARES."
DEPOSIT ACCOUNTS AND LOANS. Deposit accounts in the Bank, as converted,
will be equivalent in amount, interest rate and other terms to the present
deposit accounts in the Bank, and the existing FDIC insurance on such accounts
will not be affected by the Conversion. The Conversion will not affect the terms
of loan accounts or the rights and obligations of borrowers under their
individual contractual arrangements with the Bank.
TAX CONSEQUENCES. The consummation of the Conversion is expressly
conditioned on receipt by the Bank of a private letter ruling from the IRS or an
opinion of counsel to the effect that the Conversion will constitute a tax-free
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reorganization as defined in Section 368(a) of the Code. The Bank intends to
proceed with the Conversion based upon an opinion received from its special
counsel, Vorys, Sater, Seymour and Pease, to the following effect:
(1) The Conversion constitutes a reorganization within the
meaning of Section 368(a)(1)(F) of the Code, and no gain or loss will
be recognized by the Bank in its mutual form or in its stock form as a
result of the Conversion. The Bank in its mutual form and the Bank in
its stock form will each be a "party to a reorganization" within the
meaning of Section 368(b) of the Code;
(2) No gain or loss will be recognized by the Bank upon the
receipt of money from the Holding Company in exchange for the capital
stock of the Bank, as converted;
(3) The assets of the Bank will have the same basis in its
hands immediately after the Conversion as they had in its hands
immediately prior to the Conversion, and the holding period of the
assets of the Bank after the Conversion will include the period during
which the assets were held by the Bank before the Conversion;
(4) No gain or loss will be recognized by the deposit account
holders of the Bank upon the issuance to them, in exchange for their
respective withdrawable deposit accounts in the Bank immediately prior
to the Conversion, of withdrawable deposit accounts in the Bank
immediately after the Conversion, in the same dollar amount as their
withdrawable deposit accounts in the Bank immediately prior to the
Conversion, plus, in the case of Eligible Account Holders and
Supplemental Eligible Account Holders, the interests in the Liquidation
Account of the Bank, as described below;
(5) The basis of the withdrawable deposit accounts in the Bank
held by its deposit account holders immediately after the Conversion
will be the same as the basis of their deposit accounts in the Bank
immediately prior to the Conversion. The basis of the interests in the
Liquidation Account received by the Eligible Account Holders and
Supplemental Eligible Account Holders will be zero. The basis of the
nontransferable subscription rights received by Eligible Account
Holders, Supplemental Eligible Account Holders and Other Eligible
Members will be zero (assuming that at distribution such rights have no
ascertainable fair market value);
(6) No gain or loss will be recognized by Eligible Account
Holders, Supplemental Eligible Account Holders or Other Eligible
Members upon the distribution to them of nontransferable subscription
rights to purchase Common Shares (assuming that at distribution such
rights have no ascertainable fair market value), and no taxable income
will be realized by such Eligible Account Holders, Supplemental
Eligible Account Holders or Other Eligible Members as a result of their
exercise of such nontransferable subscription rights;
(7) The basis of the Common Shares purchased by members of the
Bank pursuant to the exercise of subscription rights will be the
purchase price thereof (assuming that such rights have no ascertainable
fair market value and that the purchase price is not less than the fair
market value of the shares on the date of such exercise), and the
holding period of such shares will commence on the date of such
exercise. The basis of the Common Shares purchased other than by the
exercise of subscription rights will be the purchase price thereof
(assuming in the case of the other subscribers that the opportunity to
buy in the Subscription Offering has no ascertainable fair market
value), and the holding period of such shares will commence on the day
after the date of the purchase;
(8) For purposes of Section 381 of the Code, the Bank will be
treated as if there had been no reorganization. The taxable year of the
Bank will not end on the effective date of the Conversion. Immediately
after the Conversion, the Bank in its stock form will succeed to and
take into account the tax attributes of the Bank in its mutual form
immediately prior to the Conversion, including the Bank's earnings and
profits or deficit in earnings and profits;
(9) The bad debt reserves of the Bank in its mutual form
immediately prior to the Conversion will not be required to be restored
to the gross income of the Bank in its stock form as a result of the
Conversion and immediately after the Conversion such bad debt reserves
will have the same character in the hands of the Bank in its stock form
as they would have had if there had been no Conversion. The Bank in its
stock form will succeed to and take into account the dollar amounts of
those accounts of the Bank in its mutual form which represent bad debt
reserves in respect of which the Bank in its mutual form has taken a
bad debt deduction for taxable years ending on or before the
Conversion; and
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(10) Regardless of book entries made for the creation of the
Liquidation Account, the Conversion will not diminish the accumulated
earnings and profits of the Bank available for the subsequent
distribution of dividends within the meaning of Section 316 of the
Code. The creation of the Liquidation Account on the records of the
Bank will have no effect on its taxable income, deductions for
additions to reserves for bad debts under Section 593 of the Code or
distributions to stockholders under Section 593(e) of the Code.
For Ohio tax purposes, the tax consequences of the Conversion
will be as follows:
(1) The Bank is a "financial institution" for State of Ohio
tax purposes, and the Conversion will not change such status;
(2) The Bank is subject to the Ohio corporate franchise tax on
"financial institutions," which is imposed annually at a rate of 1.5%
of the Bank's equity capital determined in accordance with GAAP, and
the Conversion will not change such status;
(3) As a "financial institution," the Bank is not subject to
any tax based upon net income or net profit imposed by the State of
Ohio, and the Conversion will not change such status;
(4) The Conversion will not be a taxable transaction to the
Bank in its mutual or stock form for purposes of the Ohio corporate
franchise tax. As a consequence of the Conversion, however, the annual
Ohio corporate franchise tax liability of the Bank will increase if the
taxable net worth of the Bank (i.e., book net worth computed in
accordance with GAAP at the close of the Bank's taxable year for
federal income tax purposes) increases thereby; and
(5) The Conversion will not be a taxable transaction to any
deposit account holder or borrower member of the Bank in its mutual or
stock form for purposes of the Ohio corporate franchise tax and the
Ohio personal income tax.
The Bank has received an opinion from Keller to the effect that the
subscription rights have no ascertainable fair market value because the rights
are received by specified persons at no cost, may not be transferred and are of
short duration. The IRS could challenge the assumption that the subscription
rights have no ascertainable fair market value.
Each Eligible Account Holder, Supplemental Eligible Account Holder and
Other Eligible Member is urged to consult his or her own tax advisor with
respect to the effect of such tax consequences on his or her own particular
facts and circumstances.
LIQUIDATION ACCOUNT. In the unlikely event of a complete liquidation of
the Bank in its present mutual form, each depositor in the Bank would receive a
pro rata share of any assets of the Bank remaining after payment of the claims
of all creditors, including the claims of all depositors to the withdrawable
value of their deposit accounts. A depositor's pro rata share of such remaining
assets would be the same proportion of such assets as the value of such
depositor's accounts bears to the total aggregate value of all deposits in the
Bank at the time of liquidation.
In the event of a complete liquidation of the Bank in its stock form
after the Conversion, each depositor would have a claim of the same general
priority as the claims of all other general creditors of the Bank. Except as
described below, each depositor's claim would be solely in the amount of the
balance in such depositor's account plus accrued interest. The depositor would
have no interest in the assets of the Bank above that amount. Such assets would
be distributed to the Holding Company as the sole shareholder of the Bank.
For the purpose of granting a limited priority claim to the assets of
the Bank in the event of a complete liquidation thereof to Eligible Account
Holders and Supplemental Eligible Account Holders who continue to maintain
deposit accounts at the Bank after the Conversion, the Bank will, at the time of
Conversion, establish a liquidation account in an amount equal to the net worth
of the Bank as of September 30, 1997 (the "Liquidation Account"). The
Liquidation Account will not operate to restrict the use or application of any
of the regulatory capital of the Bank.
Each Eligible Account Holder and Supplemental Eligible Account Holder
will have a separate inchoate interest (the "Subaccount") in a portion of the
Liquidation Account for Qualifying Deposits held on the Eligibility Record Date
or the Supplemental Eligibility Record Date.
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The balance of each initial Subaccount shall be an amount determined by
multiplying the amount in the Liquidation Account by a fraction, the numerator
of which is the closing balance in the account holder's account as of the close
of business on the Eligibility Record Date or the Supplemental Eligibility
Record Date, as the case may be, and the denominator of which is the total
amount of all Qualifying Deposits of Eligible Account Holders and Supplemental
Eligible Account Holders on the corresponding record date. The balance of each
Subaccount may be decreased but will never be increased. If, at the close of
business on the last day of each fiscal year of the Holding Company subsequent
to the respective record dates, the balance in the deposit account to which a
Subaccount relates is less than the lesser of (i) the deposit balance in such
deposit account at the close of business on the last day of any other annual
closing date subsequent to the Eligibility Record Date or the Supplemental
Eligibility Record Date, or (ii) the amount of the Qualifying Deposit as of the
Eligibility Record Date or the Supplemental Eligibility Record Date, the balance
of the Subaccount for such deposit account shall be adjusted proportionately to
the reduction in such deposit account balance. In the event of any such downward
adjustment, such Subaccount balance shall not be subsequently increased
notwithstanding any increase in the deposit balance of the related deposit
account. If any deposit account is closed, its related Subaccount shall be
reduced to zero upon such closing.
In the event of a complete liquidation of the converted Bank (and only
in such event), each Eligible Account Holder and Supplemental Eligible Account
Holder shall receive from the Liquidation Account a distribution equal to the
current balance in each of such account holder's Subaccounts before any
liquidation distribution may be made to the Holding Company as the sole
shareholder of the Bank. Any assets remaining after satisfaction of such
liquidation rights and the claims of the Bank's creditors would be distributed
to the Holding Company as the sole shareholder of the Bank. No merger,
consolidation, purchase of bulk assets or similar combination or transaction
with another financial institution, the deposits of which are insured by the
FDIC, will be deemed to be a complete liquidation for this purpose and, in any
such transaction, the Liquidation Account shall be assumed by the surviving
institution.
COMMON SHARES. SHARES ISSUED UNDER THE PLAN CANNOT AND WILL NOT BE
INSURED BY THE FDIC. For a description of the characteristics of the Common
Shares, see "DESCRIPTION OF AUTHORIZED SHARES."
INTERPRETATION AND AMENDMENT OF THE PLAN
To the extent permitted by law, all interpretations of the Plan by the
Boards of Directors of the Holding Company and the Bank will be final. The Plan
may be amended by the Boards of Directors of the Holding Company and the Bank at
any time with the concurrence of the OTS and the Division. If the Bank and the
Holding Company determine, upon advice of counsel and after consultation with
the OTS and the Division, that any such amendment is material, subscribers will
be notified of the amendment and will be provided the opportunity to affirm,
increase, decrease or cancel their subscriptions. Any person who does not
affirmatively elect to continue his subscription or elects to rescind his
subscription before the date specified in the notice will have all of his funds
promptly refunded with interest. Any person who elects to decrease his
subscription will have the appropriate portion of his funds promptly refunded
with interest.
CONDITIONS AND TERMINATION
The completion of the Conversion requires the approval of the Plan and
the adoption of the Amended Articles of Incorporation and the Amended
Constitution by the voting members of the Bank at the Special Meeting and the
completion of the sale of the requisite amount of Common Shares within 24 months
following the date of such approval. If these conditions are not satisfied, the
Plan will automatically terminate and the Bank will continue its business in the
mutual form of organization. The Plan may be voluntarily terminated by the Board
of Directors at any time before the Special Meeting and at any time thereafter
with the approval of the OTS and the Division.
SUBSCRIPTION OFFERING
THE SUBSCRIPTION OFFERING WILL EXPIRE AT ___:00 __.M., EASTERN STANDARD
TIME, ON MARCH __, 1998. SUBSCRIPTION RIGHTS NOT EXERCISED BEFORE ___:00 __.M.,
EASTERN STANDARD TIME, ON MARCH __, 1998, WILL BE VOID, WHETHER OR NOT THE BANK
HAS BEEN ABLE TO LOCATE EACH PERSON ENTITLED TO SUCH SUBSCRIPTION RIGHTS.
Nontransferable subscription rights to purchase Common Shares are being
issued at no cost to all eligible persons and entities in accordance with the
preference categories established by the Plan, as described below. Each
subscription right may be exercised only by the person to whom it is issued and
only for his or her own account. EACH PERSON SUBSCRIBING FOR
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COMMON SHARES MUST REPRESENT TO THE BANK THAT HE OR SHE IS PURCHASING SUCH
SHARES FOR HIS OR HER OWN ACCOUNT AND THAT HE OR SHE HAS NO AGREEMENT OR
UNDERSTANDING WITH ANY OTHER PERSON FOR THE SALE OR TRANSFER OF THE COMMON
SHARES. ANY PERSON WHO ATTEMPTS TO TRANSFER HIS OR HER SUBSCRIPTION RIGHTS MAY
BE SUBJECT TO PENALTIES AND SANCTIONS, INCLUDING LOSS OF THE SUBSCRIPTION
RIGHTS.
The number of Common Shares which a person who has subscription rights
may purchase will be determined, in part, by the total number of Common Shares
to be issued and the availability of Common Shares for purchase under the
preference categories set forth in the Plan and certain other limitations. See
"Limitations on Purchases of Common Shares." The sale of any Common Shares
pursuant to subscriptions received is contingent upon approval of the Plan by
the voting members of the Bank at the Special Meeting.
The preference categories and preliminary purchase limitations which
have been established by the Plan, in accordance with applicable regulations,
for the allocation of Common Shares are as follows:
(a) Each Eligible Account Holder shall receive,
without payment therefor, a nontransferable right to purchase in the
Subscription Offering up to the greater of (i) 15,000 Common Shares,
(ii) .10% of the total number of Common Shares sold in connection with
the Conversion, and (iii) 15 times the product (rounded down to the
next whole number) obtained by multiplying the total number of Common
Shares sold in connection with the Conversion 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 purchase
limitations set forth in the Plan and subject to adjustment by the
Board of Directors of the Holding Company and the Bank as set forth in
the Plan. If the exercise of subscription rights by Eligible Account
Holders results in an over-subscription, Common Shares will be
allocated among subscribing Eligible Account Holders in a manner which
will, to the extent possible, make the total allocation of each
subscriber equal 100 shares or the amount subscribed for, whichever is
less. Any Common Shares remaining after such allocation has been made
will be allocated among the subscribing Eligible Account Holders whose
subscriptions remain unfilled in the proportion which the amount of
their respective Qualifying Deposits on the Eligibility Record Date
bears to the total Qualifying Deposits of all Eligible Account Holders
on such date. Notwithstanding the foregoing, Common Shares in excess of
1,955,000, the maximum of the Valuation Range, may be sold to the ESOP
before fully satisfying the subscriptions of Eligible Account Holders.
No fractional shares will be issued. For purposes of this paragraph
(a), increases in the Qualifying Deposits of directors and executive
officers of the Bank during the twelve months preceding the Eligibility
Record Date shall not be considered.
(b) The ESOP shall receive, without payment therefor,
a nontransferable right to purchase in the Subscription Offering an
aggregate amount of up to 10% of the Common Shares sold in the
Conversion, provided that shares remain available after satisfying the
subscription rights of Eligible Account Holders up to the maximum of
the Valuation Range pursuant to paragraph (a) above. Although the Plan
and OTS regulations permit the ESOP to purchase up to 10% of the Common
Shares, the Holding Company anticipates that the ESOP will purchase 8%
of the Common Shares. If the ESOP is unable to purchase all or part of
the Common Shares for which it subscribes, the ESOP may purchase Common
Shares on the open market or may purchase authorized but unissued
Common Shares. If the ESOP purchases authorized but unissued Common
Shares, such purchases could have a dilutive effect on the interests of
the Holding Company's shareholders. See "RISK FACTORS - Potential
Impact of Benefit Plans on Net Earnings and Shareholders' Equity."
(c) Provided that shares remain available after
satisfying the subscription rights of Eligible Account Holders and the
ESOP pursuant to paragraphs (a) and (b) above each Supplemental
Eligible Account Holder will receive, without payment therefor, a
nontransferable right to purchase up to the greater of (i) 15,000
Common Shares, (ii) .10% of the total number of Common Shares sold in
connection with the Conversion, and (iii) 15 times the product (rounded
down to the next whole number) obtained by multiplying the total number
of Common Shares sold in connection with the Conversion by a fraction,
the numerator of which is the amount of the Supplemental Eligible
Account Holder's Qualifying Deposit 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 purchase limitations set forth in Section
10 of the Plan and subject to adjustment by the Board of Directors of
the Holding Company and the Bank as set forth in Section 10 of the
Plan. If the exercise of subscription rights by Supplemental Eligible
Account Holders results in an oversubscription, Common Shares will be
allocated among subscribing Supplemental Eligible Account Holders in a
manner which will, to the
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extent possible, make the total allocation of each subscriber equal 100
shares or the amount subscribed for, whichever is less. Any Common
Shares remaining after such allocation has been made will be allocated
among the subscribing Supplemental Eligible Account Holders whose
subscriptions remain unfilled in the proportion which the amount of
their respective Qualifying Deposits on the Supplemental Eligibility
Record Date bears to the total Qualifying Deposits of all Supplemental
Eligible Account Holders on such date. No fractional shares will be
issued.
(d) Provided that shares remain available after
satisfying the subscription rights of Eligible Account Holders, the
ESOP and Supplemental Eligible Account Holders pursuant to paragraphs
(a), (b) and (c) above, each Other Eligible Member, other than an
Eligible Account Holder or Supplemental Eligible Account Holder, shall
receive, without payment therefor, a nontransferable right to purchase
up to the greater of (i) 15,000 Common Shares, and (ii) .10% of the
total number of Common Shares sold in connection with the Conversion,
subject to adjustment by the Boards of Directors of the Bank and the
Holding Company. In the event of an oversubscription by Other Eligible
Members, the available Common Shares will be allocated among
subscribing Other Eligible Members in the same proportion that their
subscriptions bear to the total amount of subscriptions by all Other
Eligible Members; provided, however, that, to the extent sufficient
Common Shares are available, each subscribing Other Eligible Member
shall receive 25 Common Shares before the remaining available Common
Shares are allocated.
The Board of Directors may reject any one or more subscriptions if,
based upon the Board of Directors' interpretation of applicable regulations,
such subscriber is not entitled to the shares for which he or she has subscribed
or if the sale of shares subscribed for would be in violation of any applicable
statutes, regulations, or rules.
The Bank will make reasonable efforts to comply with the securities
laws of all states in the United States in which persons having subscription
rights reside. However, no such person will be offered or receive any Common
Shares under the Plan who resides in a foreign country or in a state of the
United States with respect to which each of the following apply: (i) a small
number of persons otherwise eligible to subscribe for shares under the Plan
resides in such country or state; (ii) under the securities laws of such country
or state, the granting of subscription rights or the offer or sale of Common
Shares to such persons would require the Holding Company or its officers or
directors to register as a broker or dealer or to register or otherwise qualify
its securities for sale in such country or state; and (iii) such registration or
qualification would be impracticable for reasons of cost or otherwise.
The term "resident," as used herein with respect to the Subscription
Offering, means any person who, on the date of submission of a Stock Order Form,
maintained a bona fide residence within a jurisdiction in which the Common
Shares are being offered for sale. If a person is a business entity, the
person's residence shall be the location of the principal place of business. If
the person is a personal benefit plan, the residence of the beneficiary shall be
the residence of the plan. In the case of all other benefit plans, the residence
of the trustee shall be the residence of the plan. In all cases, the
determination of a subscriber's residency shall be in the sole discretion of the
Bank and the Holding Company.
COMMUNITY OFFERING
To the extent Common Shares remain available after the satisfaction of
all subscriptions received in the Subscription Offering, the Bank is hereby
offering Common Shares in the Community Offering subject to the limitations set
forth below. If subscriptions are received in the Subscription Offering for up
to 2,248,250 Common Shares, Common Shares may not be available in the Community
Offering. All sales of the Common Shares in the Community Offering will be at
the same price per share as in the Subscription Offering.
THE COMMUNITY OFFERING WILL BE TERMINATED ON OR BEFORE MARCH ___, 1998,
UNLESS EXTENDED BY THE BANK AND THE HOLDING COMPANY WITH THE APPROVAL OF THE OTS
AND THE DIVISION, IF NECESSARY. IN ACCORDANCE WITH THE PLAN, THE OFFERING MAY
NOT BE EXTENDED BEYOND ______________, 1998.
In the event shares are available for the Community Offering, each
person, together with any Associate or groups Acting in Concert, may purchase in
the Community Offering up to 15,000 Common Shares. If an insufficient number of
Common Shares is available to fill all of the orders received in the Community
Offering, the available Common Shares will be allocated in a manner to be
determined by the Boards of Directors of the Holding Company and the Bank,
subject to the following:
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(i) Preference will be given to natural persons who are
residents of Coshocton County, Ohio, the county in which the offices of
the Bank are located;
(ii) Orders received in the Community Offering will first be
filled up to 2% of the total number of Common Shares offered, with any
remaining shares allocated on an equal number of shares per order basis
until all orders have been filled; and
(iii) The right of any person to purchase Common Shares in the
Community Offering is subject to the right of the Holding Company and
the Bank to accept or reject such purchases in whole or in part.
The term "resident," as used herein with respect to the Community
Offering, means any natural person who, on the date of submission of a Stock
Order Form, maintains a bona fide residence within, as appropriate, Coshocton
County, Ohio, or a jurisdiction in which the Common Shares are being offered for
sale.
LIMITATIONS ON PURCHASES OF COMMON SHARES
The Plan provides for certain additional limitations to be placed upon
the purchase of Common Shares. To the extent Common Shares are available, the
minimum number of Common Shares that may be purchased by any party is 25, or
$250. No fractional shares will be issued. Purchases in the Offering are further
subject to the limitation that no person, together with his or her Associates
and other persons Acting in Concert with him or her, may purchase more than
30,000 Common Shares in the Offering. In connection with the exercise of
subscription rights arising from a deposit account in which two or more persons
have an interest, the aggregate maximum number of Common Shares which the
persons having an interest in such account may purchase in the Subscription
Offering in relation to such account is 15,000 Common Shares. Such limitations
do not apply to the ESOP. Subject to applicable regulations, the purchase
limitation may be increased or decreased after the commencement of the Offering
by the Boards of Directors.
Purchases of Common Shares in the Offering are also subject to the
change in control regulations of the OTS which restrict direct and indirect
purchases of 10% or more of the stock of any savings association by any person
or group of persons acting in concert, under certain circumstances. See
"RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND THE BANK AND RELATED
ANTI-TAKEOVER PROVISIONS - Federal Law and Regulation."
After the Conversion, Common Shares, except for Common Shares purchased
by affiliates of the Holding Company and the Bank, will be freely transferable,
subject to OTS and Division regulations.
PLAN OF DISTRIBUTION
The offering of the Common Shares is made only pursuant to this
Prospectus, which is available at the offices of the Bank. See "ADDITIONAL
INFORMATION." Officers and directors of the Bank will be available to answer
questions about the Conversion and may also hold informational meetings for
interested persons. Such officers and directors will not be permitted to make
statements about the Holding Company or the Bank unless such information is also
set forth in this Prospectus, nor will they render investment advice. The
Holding Company will rely on Rule 3a4-1 under the Securities Exchange Act of
1934 (the "Exchange Act"), and sales of Common Shares will be conducted within
the requirements of Rule 3a4-1, which will permit officers, directors and
employees of the Holding Company and the Bank to participate in the sale of
Common Shares. No officer, director or employee of the Holding Company or the
Bank will be compensated in connection with his participation by the payment of
commissions or other remuneration based either directly or indirectly on the
transactions in the Common Shares.
To assist the Holding Company and the Bank in marketing the Common
Shares, the Holding Company and the Bank have retained Webb, a broker-dealer
registered with the SEC and a member of the National Association of Securities
Dealers, Inc. ("NASD"). Webb will assist the Bank in (i) training and educating
the Bank's employees regarding the mechanics and regulatory requirements of the
conversion process; (ii) conducting information meetings for subscribers and
other potential purchasers; and (iii) keeping records of all stock
subscriptions. For providing these services, the Bank has agreed to pay Webb (a)
a management fee of $25,000, all of which has been paid, and (b) a success of
1.3% of the aggregate dollar amount of Common Shares sold in the Subscription
Offering and the Community Offering, excluding shares sold by Selected Brokers,
if any, and shares purchased by the ESOP and directors, officers, and employees
of the Bank and members of their immediate families.
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The Bank has also agreed to reimburse Webb for its reasonable legal
fees and disbursements. The Bank and the Holding Company have also agreed to
indemnify Webb, under certain circumstances, against liabilities and expenses
(including legal fees) arising out of or based upon untrue statements or
omissions contained in the materials used in the Offering or in various
documents submitted to regulatory authorities in respect of the Conversion,
including liabilities under the Securities Act of 1933, as amended (the "Act"),
unless such untrue statement or omission, or alleged untrue statement or
omission, was made in reliance upon certain information furnished to the Bank by
Webb expressly for use in the Summary Proxy Statement or this Prospectus.
If Common Shares remain available after the satisfaction of all
subscriptions received in the Subscription Offering, Webb may enter into an
agreement with other NASD member firms ("Selected Brokers") to assist in the
sale of Common Shares in the Community Offering. If Selected Brokers are used,
Webb will receive commissions of no more than 5.5% of the aggregate purchase
price of the Common Shares sold in the Community Offering by the Selected
Brokers, and Webb will pay to the Selected Brokers a portion of the 5.5%
commission pursuant to selected dealer agreements. During the Community
Offering, Selected Brokers may only solicit indications of interest from their
customers to place orders with the Bank as of a certain date (the "Order Date")
for the purchase of Common Shares. When and if the Bank believes that enough
indications of interest and orders have been received in the Community Offering
to consummate the Conversion, Webb will request, as of the Order Date, Selected
Brokers to submit orders to purchase shares for which they have previously
received indications of interest from the customers. Selected Brokers will send
confirmations of the orders to such customers on the next business day after the
Order Date. Selected Brokers will debit the accounts of their customers on the
date which will be three business days from the Order Date (the "Settlement
Date"). On the Settlement Date, funds received by Selected Brokers will be
remitted to the Bank. It is anticipated that the Conversion will be consummated
on the Settlement Date. However, if consummation is delayed after payment has
been received by the Bank from Selected Brokers, funds will earn interest at the
current passbook savings account rate, which is currently 2.50%, with an annual
percentage yield of 2.53%, until the completion of the offering. Funds will be
returned promptly in the event the Conversion is not consummated.
EFFECT OF EXTENSION OF COMMUNITY OFFERING
If the Community Offering extends beyond ____________, 1998, persons
who have subscribed for Common Shares in the Subscription Offering or in the
Community Offering will receive a written notice that prior to a date specified
in the notice, they have the right to affirm, increase, decrease or rescind
their subscriptions for Common Shares. Persons who do not affirmatively elect to
continue their subscription or who elect to rescind their subscriptions during
any such extension will have all of their funds promptly refunded with interest.
Persons who elect to decrease their subscriptions will have the appropriate
portion of their funds promptly refunded with interest.
USE OF STOCK ORDER FORMS
Subscriptions for Common Shares in the Subscription Offering and in the
Community Offering may be made only by completing and submitting a Stock Order
Form. Any person who desires to subscribe for Common Shares in the Subscription
Offering must do so by delivering to the Bank by mail or in person, prior to
___:00 __.m., Eastern Standard Time, on March _____, 1998, a properly executed
and completed Stock Order Form, together with full payment of the subscription
price of $10 for each Common Share for which subscription is made. ANY STOCK
ORDER FORM WHICH IS NOT RECEIVED BY THE BANK PRIOR TO ___:00 __.M., EASTERN
STANDARD TIME, ON MARCH ______, 1998, OR FOR WHICH FULL PAYMENT HAS NOT BEEN
RECEIVED BY THE BANK PRIOR TO SUCH TIME, WILL NOT BE ACCEPTED. PHOTOCOPIES,
TELECOPIES OR OTHER REPRODUCTIONS OF STOCK ORDER FORMS WILL NOT BE accepted. See
"ADDITIONAL INFORMATION."
AN EXECUTED STOCK ORDER FORM, ONCE RECEIVED BY THE HOLDING COMPANY, MAY
NOT BE MODIFIED, AMENDED OR RESCINDED WITHOUT THE CONSENT OF THE HOLDING
COMPANY, UNLESS (i) THE COMMUNITY OFFERING IS NOT COMPLETED BY __________, 1998,
OR (ii) THE FINAL VALUATION OF THE BANK, AS CONVERTED, IS LESS THAN $14,950,000
OR MORE THAN $22,482,500. IF EITHER OF THOSE EVENTS OCCUR, PERSONS WHO HAVE
SUBSCRIBED FOR COMMON SHARES IN THE SUBSCRIPTION OFFERING OR ORDERED COMMON
SHARES IN THE COMMUNITY OFFERING WILL RECEIVE WRITTEN NOTICE THAT THEY HAVE A
RIGHT TO AFFIRM, INCREASE, DECREASE OR RESCIND THEIR SUBSCRIPTIONS OR ORDERS
PRIOR TO A DATE SPECIFIED IN THE NOTICE. ANY PERSON WHO DOES NOT AFFIRMATIVELY
ELECT TO CONTINUE HIS SUBSCRIPTION OR ELECTS TO RESCIND HIS SUBSCRIPTION DURING
ANY SUCH EXTENSION WILL HAVE ALL OF HIS FUNDS PROMPTLY REFUNDED WITH INTEREST.
ANY PERSON WHO ELECTS TO DECREASE HIS SUBSCRIPTION DURING ANY SUCH EXTENSION
WILL HAVE THE APPROPRIATE PORTION OF HIS FUNDS PROMPTLY REFUNDED WITH INTEREST.
IN ADDITION, IF THE PURCHASE LIMITATIONS ARE INCREASED, PERSONS WHO HAVE
SUBSCRIBED FOR THE MAXIMUM AMOUNT WILL BE GIVEN THE OPPORTUNITY TO INCREASE
THEIR SUBSCRIPTIONS.
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PAYMENT FOR COMMON SHARES
Payment of the subscription price for all Common Shares for which
subscription is made must accompany a completed Stock Order Form in order for
subscriptions or orders to be valid. Payment for Common Shares may be made (i)
in cash, if delivered in person; (ii) by check, bank draft, or money order made
payable to the Bank; or (iii) by authorization of withdrawal from deposit
accounts in the Bank (other than non-self-directed IRAs). No payments by wire
transfer will be accepted. The Bank cannot lend money or otherwise extend credit
to any person to purchase Common Shares.
Payments made in cash or by check, bank draft, or money order will be
placed in a segregated savings account insured by the FDIC up to applicable
limits until the Conversion is completed or terminated. Interest will be paid by
the Bank on such account at the then current passbook savings account rate,
which is currently 2.50% with an annual percentage yield of 2.53%, from the date
payment is received until the Conversion is completed or terminated. Payments
made by check will not be deemed to have been received until the check has
cleared for payment.
Instructions for authorizing withdrawals from deposit accounts,
including certificates of deposit, are provided in the Stock Order Form. Once a
withdrawal has been authorized, none of the designated withdrawal amount may be
used by a subscriber for any purpose other than to purchase Common Shares,
unless the Conversion is terminated. All sums authorized for withdrawal will
continue to earn interest at the contract rate for such account or certificate
until the completion or termination of the Conversion. Interest penalties for
early withdrawal applicable to certificate accounts will be waived in the case
of withdrawals authorized for the purchase of Common Shares. If a partial
withdrawal from a certificate account results in a balance less than the
applicable minimum balance requirement, the certificate will be canceled and the
remaining balance will earn interest at the Bank's passbook rate subsequent to
the withdrawal.
In order to utilize funds in an IRA maintained at the Bank, the funds
must be transferred to a self-directed IRA that permits the funds to be invested
in stock. There will be no early withdrawal or IRS penalties for such transfer.
The beneficial owner of the IRA must direct the trustee of the account to use
funds from such account to purchase Common Shares in connection with the
Conversion. THIS CANNOT BE DONE THROUGH THE MAIL. Persons who are interested in
utilizing IRAs at the Bank to subscribe for Common Shares should contact the
Conversion Information Center at (614) ___-___ for instructions and assistance.
Subscriptions will not be filled by the Bank until subscriptions have
been received in the Offering for up to 1,445,000 Common Shares, the minimum
point of the Valuation Range. If the Conversion is terminated, all funds
delivered to the Bank for the purchase of Common Shares will be returned with
interest, and all charges to deposit accounts will be rescinded. If
subscriptions are received for at least 1,445,000 Common Shares, subscribers and
other purchasers will be notified by mail, promptly upon completion of the sale
of the Common Shares, of the number of shares for which their subscriptions have
been accepted. The funds on deposit with the Bank for the purchase of Common
Shares will be withdrawn and paid to the Holding Company in exchange for the
Common Shares. Certificates representing Common Shares will be delivered
promptly thereafter. The Common Shares will not be insured by the FDIC.
The ESOP will not be required to pay for the shares subscribed for at
the time it subscribes but may pay for such Common Shares upon consummation of
the Conversion.
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SHARES TO BE PURCHASED BY MANAGEMENT PURSUANT TO SUBSCRIPTION RIGHTS
The following table sets forth certain information regarding the
subscription rights intended to be exercised by the directors and executive
officers of the Bank and the Holding Company and their Associates and persons
with whom they may be deemed to be Acting in Concert:
<TABLE>
<CAPTION>
Name Total shares (1) Percent of total offering (2) Aggregate purchase price (1)
- ---- ------------ ------------------------- ------------------------
<S> <C> <C> <C>
Neal J. Caldwell 30,000 1.76% $ 300,000
Charles H. Durmis 30,000 1.76 300,000
Robert C. Hamilton 30,000 1.76 300,000
Robert D. Mauch 15,000 0.88 150,000
Douglas L. Randles 30,000 1.76 300,000
Preston W. Bair 30,000 1.76 300,000
All directors and executive
officers as a group (6 persons) 165,000 9.68 1,650,000
- -----------------------------
<FN>
(1) Includes intended purchases by Associates of directors and executive
officers, to the extent known.
(2) Assumes that 1,700,000 Common Shares, the mid-point of the Valuation
Range, will be sold in connection with the Conversion at $10 per share
and that a sufficient number of Common Shares will be available to
satisfy the intended purchases by directors and executive officers. See
"Pricing and Number of Common Shares to be Sold."
</TABLE>
All purchases by executive officers and directors of the Bank are being
made for investment purposes only and with no present intent to resell.
PRICING AND NUMBER OF COMMON SHARES TO BE SOLD
The aggregate offering price of the Common Shares will be based on the
pro forma market value of the shares as determined by an independent appraisal
of the Bank, as converted, and the Holding Company. Keller, a firm which
evaluates and appraises financial institutions, has been retained by the Bank to
prepare an appraisal of the estimated pro forma market value of the Bank as
converted, and the Holding Company. Keller will receive a fee of $17,000 for its
appraisal and one update and will not be reimbursed for out-of-pocket expenses.
Keller was selected by the Board of Directors of the Bank because
Keller has extensive experience in the valuation of thrift institutions,
particularly in the mutual-to-stock conversion context. The Board of Directors
reviewed the credentials of Keller's appraisal personnel and obtained references
and recommendations from other companies which have engaged Keller. Keller is
certified by the OTS as a mutual-to-stock conversion appraiser. The Bank and
Keller have no relationships which would affect Keller's independence.
The appraisal was prepared by Keller in reliance upon the information
contained herein. Keller also considered the following factors, among others:
the economic and demographic conditions in the Bank's primary market area; the
quality and depth of the Bank's management and personnel; 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 thrift
institutions; the aggregate size of the Offering; the impact of the Conversion
on the Bank's regulatory capital and earnings potential; the trading market for
stock of comparable thrift institutions and thrift holding companies; and
general conditions in the markets for such stocks. The Boards of Directors of
the Holding Company and the Bank reviewed and deemed appropriate the assumptions
and methodology used by Keller in preparing the appraisal.
The Pro Forma Value of the Bank, as converted, determined by Keller, is
$17,000,000 as of November 28. 1997. The Valuation Range established in
accordance with the Plan is $14,450,000 to $19,550,000 which, based upon a per
share offering price of $10, will result in the sale of between 1,445,000 and
1,955,000 Common Shares. Applicable regulations permit the Holding Company to
offer additional Common Shares in an amount not to exceed 15% above the maximum
of the Valuation Range, which would permit the issuance of up to 2,248,250
Common Shares. The total number of Common
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Shares sold in the Conversion will be based on the Valuation Range. Pro forma
shareholders' equity per share and pro forma earnings per share decrease moving
from the low end to the high end of the Valuation Range. See "PRO FORMA DATA."
If, due to changing market conditions, the final valuation is less than
$14,450,000 or more than $22,482,500, subscribers will be given the right to
affirm, increase, decrease or rescind their subscriptions. Any person who does
not affirmatively elect to continue his subscription or elects to rescind his
subscription before the date specified in the notice will have all of his funds
promptly refunded with interest. Any person who elects to decrease his
subscription will have the appropriate portion of his funds promptly refunded
with interest.
THE APPRAISAL BY KELLER IS NOT INTENDED, AND MUST NOT BE CONSTRUED, AS
A RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING COMMON SHARES
OR VOTING TO APPROVE THE CONVERSION. IN PREPARING THE VALUATION, KELLER HAS
RELIED UPON AND ASSUMED THE ACCURACY AND COMPLETENESS OF THE AUDITED FINANCIAL
STATEMENTS AND STATISTICAL INFORMATION PROVIDED BY THE BANK. KELLER DID NOT
INDEPENDENTLY VERIFY THE FINANCIAL STATEMENTS AND OTHER INFORMATION PROVIDED BY
THE BANK, NOR DID KELLER VALUE INDEPENDENTLY THE ASSETS OR LIABILITIES OF THE
BANK OR THE HOLDING COMPANY. THE VALUATION CONSIDERS THE BANK ONLY 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
COMMON SHARES WILL THEREAFTER BE ABLE TO SELL SUCH SHARES AT THE CONVERSION
PURCHASE PRICE.
A copy of the complete appraisal is on file and open for inspection at
the offices of the OTS, 1700 G Street, N.W., Washington, D.C. 20552; at the
Central Regional Office of the OTS, 200 West Madison Street, Suite 1300,
Chicago, Illinois 60606; at the offices of the Division, 77 S. High Street,
Columbus, Ohio 43215; and at the offices of the Bank.
RESTRICTIONS ON REPURCHASE OF COMMON SHARES
OTS regulations generally prohibit the Holding Company from
repurchasing any of its capital stock for three years following the date of
completion of the Conversion, except as part of an open-market stock repurchase
program during the second and third years following the Conversion involving no
more than 5% of the outstanding capital stock during a twelve-month period. The
OTS may permit a repurchase during the first year following the completion of
the Conversion or may permit the Holding Company to exceed the 5% limits in the
second and third years if exceptional circumstances are established. In
addition, any repurchase during the three years following the completion of the
Conversion, the Bank's regulatory capital must equal or exceed all regulatory
capital requirements. Before the commencement of a repurchase program, the
Holding Company must provide notice to the OTS, and the OTS may disapprove the
program if the OTS determines that it would adversely affect the financial
condition of the Bank or if it determines that there is no valid business
purpose for such repurchase. Such repurchase restrictions would not prohibit the
ESOP or the RRP from purchasing Common Shares during the first year following
the Conversion.
Ohio regulations prohibit the Holding Company from repurchasing shares
during the first year after the Conversion if the effect thereof would cause the
Bank not to meet its capital requirements.
RESTRICTIONS ON TRANSFER OF COMMON SHARES BY DIRECTORS AND OFFICERS
Common Shares purchased by directors and executive officers of the
Holding Company will be subject to the restriction that such shares may not be
sold for a period of one year following completion of the Conversion, except in
the event of the death of the shareholder. The certificates evidencing Common
Shares issued by the Holding Company to directors and executive officers will
bear a legend giving appropriate notice of the restriction imposed upon them. In
addition, the Holding Company will give appropriate instructions to the transfer
agent (if any) for the Holding Company's common shares in respect of the
applicable restriction on transfer of any restricted shares. Any shares issued
as a stock dividend, stock split or otherwise in respect of restricted shares
will be subject to the same restrictions.
Subject to certain exceptions, for a period of three years following
the Conversion, no director or officer of the Holding Company or the Bank, or
any of their Associates, may purchase any common shares of the Holding Company
without the prior written approval of the OTS, except through a broker-dealer
registered with the SEC. This restriction will not apply, however, to negotiated
transactions involving more than 1% of a class of outstanding common shares of
the Holding Company or shares acquired by any stock benefit plan of the Holding
Company or the Bank.
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The Common Shares, like the stock of most public companies, are subject
to the registration requirements of the Act. Accordingly, the Common Shares may
be offered and sold only in compliance with such registration requirements or
pursuant to an applicable exemption from registration. Common Shares received in
the Conversion by persons who are not "affiliates" of the Holding Company may be
resold without registration. Common Shares received by affiliates of the Holding
Company will be subject to resale restrictions. An "affiliate" of the Holding
Company, for purposes of Rule 144, is a person who directly, or indirectly
through one or more intermediaries, controls, or is controlled by or is under
common control with, the Holding Company. Rule 144 generally requires that there
be publicly available certain information concerning the Holding Company and
that sales subject to Rule 144 be made in routine brokerage transactions or
through a market maker. If the conditions of Rule 144 are satisfied, each
affiliate (or group of persons acting in concert with one or more affiliates) is
generally entitled to sell in the public market, without registration, in any
three-month period, a number of shares which does not exceed the greater of (i)
1% of the number of outstanding shares of the Holding Company or (ii) if the
shares are admitted to trading on a national securities exchange or reported
through the automated quotation system of a registered securities association,
such as The Nasdaq Stock Market, the average weekly reported volume of trading
during the four weeks preceding the sale.
RIGHTS OF REVIEW
Any person aggrieved by a final action of the OTS which approves, with
or without conditions, or disapproves the Plan may obtain review of such action
by filing in the Court of Appeals of the United States for the circuit in which
the principal office or residence of such person is located or in the United
States Court of Appeals for the District of Columbia, a written petition praying
that the final action of the OTS be modified, terminated, or set aside. Such
petition must be filed within 30 days after the date of mailing of proxy
materials to the voting members of the Bank or within 30 days after the date of
publication in the Federal Register of notice of approval of the Plan by the
OTS, whichever is later.
RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY
AND THE BANK AND ANTI-TAKEOVER PROVISIONS
GENERAL
Federal law and regulations, Ohio law, the Articles of Incorporation
and Code of Regulations of the Holding Company, the Amended Articles of
Incorporation and Amended Constitution of the Bank, and certain employee benefit
plans to be adopted by the Holding Company and the Bank contain certain
provisions which may deter or prohibit a change of control of the Holding
Company and the Bank. Such provisions are intended to encourage any acquiror to
negotiate the terms of an acquisition with the Board of Directors of the Holding
Company, thereby reducing the vulnerability of the Holding Company to takeover
attempts and certain other transactions which have not been negotiated with and
approved by the Board of Directors.
Anti-takeover devices and provisions may, however, have the effect of
discouraging sudden and other hostile takeover attempts which are not approved
by the Board of Directors, even under circumstances in which shareholders may
deem such takeovers to be in their best interests or in which shareholders may
receive a substantial premium for their shares over then current market prices.
As a result, shareholders who might desire to participate in such a transaction
may not have an opportunity to participate by virtue of such devices and
provisions. Such provisions may also benefit management by discouraging changes
of control in which incumbent management would be removed from office. The
following is a summary of certain provisions of such laws, regulations and
documents.
FEDERAL LAW AND REGULATION
FEDERAL DEPOSIT INSURANCE ACT. The Federal Deposit Insurance Act (the
"FDIA") provides that no person, acting directly or indirectly or in concert
with one or more persons, shall acquire control of any insured savings
association or holding company unless 60 days' prior written notice has been
given to the OTS, and the OTS has not issued a notice disapproving the proposed
acquisition. Control, for purposes of the FDIA, means the power, directly or
indirectly, to direct the management or policies of an insured institution or to
vote 25% or more of any class of securities of such institution. This provision
of the FDIA is implemented by the OTS in accordance with the Regulations for
Acquisition of Control of an Insured Institution, 12 C.F.R. Part 574 (the
"Control Regulations"). Control, for purposes of the Control Regulations, exists
in situations in which the acquiring party has direct or indirect voting control
of at least 25% of the institution's voting shares or controls in any manner the
election of a majority of the directors of such institution or the Director of
the OTS determines
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that such person exercises a controlling influence over the management or
policies of such institution. In addition, control is presumed to exist, subject
to rebuttal, if the acquiring party (which includes a group "acting in concert")
has voting control of at least 10% of the institution's voting stock and any of
eight control factors specified in the Control Regulations exists. There are
also rebuttable presumptions in the Control Regulations concerning whether a
group "acting in concert" exists, including presumed action in concert among
members of an "immediate family." The Control Regulations apply to acquisitions
of Common Shares in connection with the Conversion and to acquisitions after the
Conversion.
CHANGE IN CONTROL OF CONVERTED ASSOCIATIONS. A regulation of the OTS
provides that, for a period of three years after the date of the completion of
the Conversion, no person shall, directly or indirectly, offer to acquire or
acquire beneficial ownership of more than 10% of any class of equity security of
the Holding Company or the Bank without the prior written approval of the OTS.
In addition to the actual ownership of more than 10% of a class of equity
securities, a person shall be deemed to have acquired beneficial ownership of
more than 10% of the equity securities of the Holding Company or the Bank if the
person holds any combination of stock and revocable and/or irrevocable proxies
of the Holding Company under circumstances that give rise to a conclusive
control determination or rebuttable control determination under the Control
Regulations. Such circumstances include (i) holding any combination of voting
shares and revocable and/or irrevocable proxies representing more than 25% of
any class of voting stock of the Holding Company enabling the acquirer (a) to
elect one-third or more of the directors, (b) to cause the Holding Company or
the Bank's shareholders to approve the acquisition or corporate reorganization
of the Holding Company, or (c) to exert a controlling influence on a material
aspect of the business operations of the Holding Company or the Bank, and (ii)
acquiring any combination of voting shares and irrevocable proxies representing
more than 25% of any class of voting shares.
The three-year restriction does not apply (i) to any offer with a view
toward public resale made exclusively to the Holding Company or the Bank or any
underwriter or selling group acting on behalf of the Holding Company or the
Bank, (ii) unless made applicable by the OTS by prior written advice, to any
offer or announcement of an offer which, if consummated, would result in the
acquisition by any person, together with all other acquisitions by any such
person of the same class of securities during the preceding 12-month period, of
not more than 1% of the class of securities, or (iii) to any offer to acquire or
the acquisition of beneficial ownership of more than 10% of any class of equity
security of the Holding Company or the Bank by a corporation whose ownership is
or will be substantially the same as the ownership of the Holding Company or the
Bank if made more than one year following the date of the Conversion. The
foregoing restriction does not apply to the acquisition of the capital stock of
the Holding Company or the Bank by one or more tax-qualified employee stock
benefit plans, provided that the plan or plans do not have the beneficial
ownership in the aggregate of more than 25% of any class of equity security of
the Holding Company or the Bank.
HOLDING COMPANY RESTRICTIONS. Federal law generally prohibits a savings
and loan holding company, without prior approval of the Director of the OTS,
from (i) acquiring control of any other savings association or savings and loan
holding company, (ii) acquiring substantially all of the assets of a savings
association or holding company thereof, or (iii) acquiring or retaining more
than 5% of the voting shares of a savings association or holding company thereof
which is not a subsidiary.
Under certain circumstances, a savings and loan holding company is
permitted to acquire, with the approval of the Director of the OTS, up to 15% of
the previously unissued voting shares of an undercapitalized savings association
for cash without such savings association being deemed to be controlled by the
Holding Company. Except with the prior approval of the Director of the OTS, no
director or officer of the savings and loan holding company or person owning or
controlling by proxy or otherwise more than 25% of such company's voting shares
may acquire control of any savings institution, other than a subsidiary
institution or any other savings and loan holding company.
OHIO LAW
MERGER MORATORIUM STATUTE. Ohio has a merger moratorium statute
regulating certain takeover bids affecting certain public corporations which
have significant ties to Ohio. The statute prohibits, with some exceptions, any
merger, combination or consolidation and any of certain other sales, leases,
distributions, dividends, exchanges, mortgages or transfers between such an Ohio
corporation and any person who has the right to exercise, alone or with others,
10% or more of the voting power of such corporation (an "Interested
Shareholder") for three years following the date on which such person first
becomes an Interested Shareholder. Such a business combination is permitted only
if, prior to the time such person first becomes an Interested Shareholder, the
Board of Directors of the issuing corporation has approved the purchase of
shares which resulted in such person first becoming an Interested Shareholder.
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After the initial three-year moratorium, such a business combination
may not occur unless (1) one of the exceptions referred to above applies, (2)
the holders of at least two-thirds of the voting shares, and of at least a
majority of the voting shares not beneficially owned by the Interested
Shareholder, approve the business combination at a meeting called for such
purpose, or (3) the business combination meets certain statutory criteria
designed to ensure that the issuing public corporation's remaining shareholders
receive fair consideration for their shares.
An Ohio corporation, under certain circumstances, may "opt out" of the
statute by specifically providing in its articles of incorporation that the
statute does not apply to any business combination of such corporation. The
statute still prohibits for 12 months, however, any business combination that
would have been prohibited but for the adoption of such an opt-out amendment.
The statute also provides that it will continue to apply to any business
combination between a person who became an Interested Shareholder prior to the
adoption of such an amendment as if the amendment had not been adopted. The
Articles of Incorporation of the Holding Company do not opt out of the
protection afforded by Chapter 1704.
CONTROL SHARE ACQUISITION STATUTE. Section 1701.831 of the Ohio Revised
Code (the "Control Share Acquisition Statute") requires that certain
acquisitions of voting securities which would result in the acquiring
shareholder owning 20%, 33-1/3% or 50% of the outstanding voting securities of
the Holding Company (a "Control Share Acquisition") must be approved in advance
by the holders of at least a majority of the outstanding voting shares
represented at a meeting at which a quorum is present and a majority of the
portion of the outstanding voting shares represented at such a meeting,
excluding the voting shares owned by the acquiring shareholder. The Control
Share Acquisition Statute was intended, in part, to protect shareholders of Ohio
corporations from coercive tender offers.
TAKEOVER BID STATUTE. Ohio law also contains a statute regulating
takeover bids for any Ohio corporation. Such statute provides that no offeror
may make a takeover bid unless (i) at least 20 days prior thereto the offeror
announces publicly the terms of the proposed takeover bid and files with the
Ohio Division of Securities (the "Securities Division") and provides the target
company with certain information in respect of the offeror, his ownership of the
company's shares and his plans for the company, and (ii) within ten days
following such filing either (a) no hearing is required by the Securities
Division, (b) a hearing is requested by the target company within such time but
the Securities Division finds no cause for hearing exists, or (c) a hearing is
ordered and upon such hearing the Securities Division adjudicates that the
offeror proposes to make full, fair and effective disclosure to offerees of all
information material to a decision to accept or reject the offer.
The takeover bid statute also states that no offeror shall make a
takeover bid if he owns 5% or more of the issued and outstanding equity
securities of any class of the target company, any of which were purchased
within one year before the proposed takeover bid, and the offeror, before making
any such purchase, failed to announce his intention to gain control of the
target company or otherwise failed to make full and fair disclosure of such
intention to the persons from whom he acquired such securities. The United
States District Court for the Southern District of Ohio has determined that the
Ohio takeover bid statute is preempted by federal regulation.
ARTICLES OF INCORPORATION OF THE HOLDING COMPANY
ABILITY OF THE BOARD OF DIRECTORS TO ISSUE ADDITIONAL SHARES. The
Articles of Incorporation of the Holding Company permit the Board of Directors
of the Holding Company to issue additional common shares. The ability of the
Board of Directors to issue such additional shares may create impediments to
gaining, or otherwise discourage persons from attempting to gain, control of the
Holding Company.
MATTERS REQUIRING ENLARGED SHAREHOLDER VOTE. Article Sixth of the
Articles of Incorporation of the Holding Company provides that, in the event the
Board of Directors recommends against the approval of any of the following
matters, the holders of at least 80% of the voting shares of the Holding Company
are required to approve any such matters:
(1) A proposed amendment to the Articles of Incorporation
of the Holding Company;
(2) A proposed Amendment to the Code of Regulations of
the Holding Company;
(3) A proposal to change the number of directors by
action of the shareholders;
(4) An agreement of merger or consolidation providing for
the proposed merger or consolidation of the Holding
Company with or into one or more other corporations;
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(5) A proposed combination or majority share acquisition
involving the issuance of shares of the Holding
Company and requiring shareholder approval;
(6) A proposal to sell, exchange, transfer or otherwise
dispose of all, or substantially all, of the assets,
with or without the goodwill, of the Holding Company;
or
(7) A proposed dissolution of the Holding Company.
ELIMINATION OF CUMULATIVE VOTING. Section 1701.55 of the Ohio Revised
Code provides that shareholders of a for profit corporation which is not a
savings and loan association and which is incorporated under Ohio law must
initially be granted the right to cumulate votes in the election of directors.
The right to cumulate votes in the election of directors will exist at a meeting
of shareholders if notice in writing is given by any shareholder to the
President, a Vice President or the Secretary of an Ohio corporation, not less
than 48 hours before a meeting at which directors are to be elected, that the
shareholder desires that the voting for the election of directors shall be
cumulative and if an announcement of the giving of such notice is made upon the
convening of such meeting by the Chairman or Secretary or by or on behalf of the
shareholder giving such notice. If cumulative voting is invoked, each
shareholder would have a number of votes equal to the number of directors to be
elected, multiplied by the number of shares owned by him, and would be entitled
to distribute his votes among the candidates as he sees fit.
Section 1701.69 of the Ohio Revised Code provides that an Ohio
corporation may eliminate cumulative voting in the election of directors after
the expiration of 90 days after the date of initial incorporation by filing with
the Ohio Secretary of State an amendment to the articles of incorporation
eliminating cumulative voting. The Articles of Incorporation of the Holding
Company have been amended to eliminate cumulative voting. The elimination of
cumulative voting may make it more difficult for shareholders to elect as
directors persons whose election is not supported by the Board of Directors of
the Holding Company.
EMPLOYEE BENEFIT PLANS
The Stock Option Plan, the ESOP and the RRP also may be deemed to have
certain anti-takeover effects. See "DESCRIPTION OF AUTHORIZED SHARES" and
"MANAGEMENT Employee Stock Ownership Plan; - Stock Option Plan; and -
Recognition and Retention Plan."
DESCRIPTION OF AUTHORIZED SHARES
GENERAL
The Articles of Incorporation of the Holding Company authorize the
issuance of __________ common shares, and ____ preferred shares. Neither of the
common shares and the preferred shares authorized by the Holding Company's
Articles of Incorporation have par value. Upon receipt by the Holding Company of
the purchase price therefor and subsequent issuance thereof, each Common Share
issued in the Conversion will be fully paid and nonassessable. Notwithstanding
the foregoing, until payments are received by the Holding Company from the ESOP
in accordance with the terms of a loan agreement to be entered into by and
between the Holding Company and the ESOP, Common Shares issued to the ESOP for
which payment in money has not been received will not be fully paid and
non-assessable. The Common Shares will represent nonwithdrawable capital and
will not and cannot be insured by the FDIC. Each Common Share will have the same
relative rights and will be identical in all respects to every other Common
Share.
None of the preferred shares of the Holding Company will be issued in
connection with the Conversion. The Board of Directors of the Holding Company is
authorized, without shareholder approval, to issue preferred shares and to fix
and state the designations, preferences or other special rights of such shares
and the qualifications, limitations and restrictions thereof. The preferred
shares may rank prior to the common shares as to dividend rights, liquidation
preferences or both. Each holder of preferred shares will be entitled to one
vote for each preferred share held of record on all matters submitted to a vote
of shareholders. The issuance of preferred shares and any conversion rights
which may be specified by the Board of Directors for the preferred shares could
adversely affect the voting power of holders of the common shares.
The Board of Directors has no present intention to issue any of the preferred
shares.
-73-
<PAGE> 79
The following is a summary description of the rights of the common
shares of the Holding Company, including the material express terms of such
shares as set forth in the Holding Company's Articles of Incorporation.
LIQUIDATION RIGHTS
In the event of the complete liquidation or dissolution of the Holding
Company, the holders of the Common Shares will be entitled to receive all assets
of the Holding Company available for distribution, in cash or in kind, after
payment or provision for payment of (i) all debts and liabilities of the Holding
Company, (ii) any accrued dividend claims, and (iii) any interests in the
Liquidation Account payable as a result of a liquidation of the Bank. See "THE
CONVERSION - Liquidation Account."
VOTING RIGHTS
The holders of the Common Shares will possess exclusive voting rights
in the Holding Company. Each holder of Common Shares will be entitled to one
vote for each share held of record on all matters submitted to a vote of holders
of common shares. See "RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND
THE BANK AND ANTI-TAKEOVER PROVISIONS - Articles of Incorporation of the Holding
Company -- Elimination of Cumulative Voting."
DIVIDENDS
The holders of the Common Shares will be entitled to the payment of
dividends when, as and if declared by the Board of Directors and paid out of
funds, if any, available under applicable laws and regulations for the payment
of dividends. The payment of dividends is subject to federal and state statutory
and regulatory restrictions. See "DIVIDEND POLICY," "REGULATION - Office of
Thrift Supervision -- Limitations on Capital Distributions" and "TAXATION -
Federal Taxation" for a description of restrictions on the payment of cash
dividends.
PREEMPTIVE RIGHTS
After the consummation of the Conversion, no shareholder of the Holding
Company will have, as a matter of right, the preemptive right to purchase or
subscribe for shares of any class, now or hereafter authorized, or to purchase
or subscribe for securities or other obligations convertible into or
exchangeable for such shares or which by warrants or otherwise entitle the
holders thereof to subscribe for or purchase any such share.
RESTRICTIONS ON ALIENABILITY
See "THE CONVERSION - Restrictions on Repurchase of Common Shares" for
a description of the limitations on the repurchase of stock by the Holding
Company; "THE CONVERSION - Restrictions on Transfer of Common Shares by
Directors and Officers" for a description of certain restrictions on the
transferability of Common Shares purchased by officers and directors; and
"RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND THE BANK AND
ANTI-TAKEOVER PROVISIONS" for information regarding regulatory restrictions on
acquiring Common Shares.
REGISTRATION REQUIREMENTS
The Holding Company will register its common shares pursuant to Section
12(g) of the Exchange Act prior to or promptly upon the completion of the
Conversion and will not deregister such shares for a period of three years
following the completion of the Conversion. Upon such registration, the proxy
and tender offer rules, insider trading restrictions, annual and periodic
reporting and other requirements of the Exchange Act will apply to the Holding
Company.
LEGAL MATTERS
Certain legal matters pertaining to the Common Shares and the federal
and Ohio tax consequences of the Conversion are being passed upon for the
Holding Company and the Bank by Vorys, Sater, Seymour and Pease, Cincinnati,
Ohio. Certain legal matters are being passed upon for Webb by its counsel,
Silver, Freedman & Taff, L.L.P., Washington, D.C.
-74-
<PAGE> 80
EXPERTS
Keller has consented to the publication herein of the summary of its
letter to the Bank setting forth its opinion as to the estimated pro forma
market value of the Bank as converted and to the use of its name and statements
with respect to it appearing herein.
The financial statements of the Bank as of June 30, 1997 and 1996, and
for each of the three years in the period ended June 30, 1997, have been
included herein in reliance upon the report of Crowe, Chizek and Company LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of such firm as experts in auditing and accounting.
ADDITIONAL INFORMATION
The Holding Company has filed with the SEC a Registration Statement on
Form S-1 (File No._______________) under the Act with respect to the Common
Shares offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. Such information may be
inspected at the public reference facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, and copies may be obtained from the SEC at
prescribed rates. Such information may also be inspected on the SEC's internet
website, at www.sec.gov.
The Bank has filed an Application for Conversion (the "Application")
with the OTS and the Division. This Prospectus omits certain information
contained in the Application. The Application may be inspected at the offices of
the OTS, 1700 G Street, N.W., Washington, D.C. 20552; at the Central Regional
Office of the OTS, 200 West Madison, Suite 1300, Chicago, Illinois 60606; and at
the offices of the Division, 77 S. High Street, Columbus, Ohio 43215.
-75-
<PAGE> 81
THE HOME LOAN SAVINGS BANK
Coshocton, Ohio
FINANCIAL STATEMENTS
<PAGE> 82
THE HOME LOAN SAVINGS BANK
Coshocton, Ohio
FINANCIAL STATEMENTS
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
REPORT OF INDEPENDENT AUDITORS .................................................................... F-2
FINANCIAL STATEMENTS
BALANCE SHEETS .............................................................................. F-3
STATEMENTS OF INCOME ........................................................................ F-4
STATEMENTS OF MEMBERS' EQUITY ............................................................... F-5
STATEMENTS OF CASH FLOWS .................................................................... F-6
NOTES TO FINANCIAL STATEMENTS ............................................................... F-8
</TABLE>
All schedules are omitted because the required information is not applicable or
is included in the financial statements and related notes.
The financial statements of the Holding Company have been omitted because the
Holding Company has not issued any stock, has no assets, no liabilities and has
not conducted any business other than of an organizational nature.
F-1
<PAGE> 83
REPORT OF INDEPENDENT AUDITORS
Board of Directors
The Home Loan Savings Bank
Coshocton, Ohio
We have audited the accompanying balance sheets of The Home Loan Savings Bank
(formerly The Home Loan & Savings Company) as of June 30, 1997 and 1996, and
related statements of income, members' equity and cash flows for each of the
three years in the period ended June 30, 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 audit 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 Home Loan Savings Bank as
of June 30, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended June 30, 1997 in conformity with
generally accepted accounting principles.
Crowe, Chizek and Company LLP
Columbus, Ohio
July 25, 1997
- --------------------------------------------------------------------------------
F-2
<PAGE> 84
THE HOME LOAN SAVINGS BANK
BALANCE SHEETS
September 30, 1997 (unaudited) and June 30, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, June 30,
------------- --------
1997 1997 1996
---- ---- ----
(unaudited)
ASSETS
<S> <C> <C> <C>
Cash and due from banks $ 1,711,546 $ 1,765,821 $ 2,150,422
Interest-bearing deposits in other banks 222,556 165,228 573,017
Overnight deposits -- 1,250,000 3,000,000
Federal funds sold 250,000 1,500,000 --
----------- ----------- ------------
Total cash and cash equivalents 2,184,102 4,681,049 5,723,439
Interest-bearing time deposits 39,366 38,796 40,669
Securities available for sale 4,517,892 5,004,296 1,743,506
Securities held to maturity (Fair value of
$2,255,547 in 1996) -- -- 2,251,731
Loans, net of allowance for loan losses 51,773,320 49,300,124 44,293,916
Premises and equipment, net 509,219 524,061 525,798
Federal Home Loan Bank stock 372,600 366,000 341,400
Accrued interest receivable 302,902 287,014 260,429
Other assets 153,269 199,505 185,468
----------- ----------- ------------
Total assets $59,852,670 $60,400,845 $ 55,366,356
=========== =========== ============
LIABILITIES AND MEMBERS' EQUITY
Liabilities
Deposits $48,207,603 $49,235,430 $ 44,883,857
Accrued expenses and other liabilities 1,052,926 795,151 714,403
----------- ----------- ------------
Total liabilities 49,260,529 50,030,581 45,598,260
Members' Equity
Retained earnings - substantially restricted 10,579,402 10,366,232 9,770,984
Unrealized gain (loss) on available-for-sale
securities, net 12,739 4,032 (2,888)
----------- ----------- ------------
Total members' equity 10,592,141 10,370,264 9,768,096
----------- ----------- ------------
Total liabilities and members' equity $59,852,670 $60,400,845 $ 55,366,356
=========== =========== ============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-3
<PAGE> 85
THE HOME LOAN SAVINGS BANK
STATEMENTS OF INCOME
Three months ended September 30, 1997 and 1996
(unaudited) and years ended June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three months ended
------------------
September 30, Years ended June 30,
------------- --------------------
1997 1996 1997 1996 1995
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME
Loans, including fees $1,137,188 $1,015,948 $4,162,822 $3,755,408 $3,142,843
Securities 74,490 71,222 265,148 331,584 428,716
Dividends on Federal Home
Loan Bank stock 6,688 6,007 24,721 22,924 23,852
Interest-bearing deposits and
federal funds sold 35,584 38,981 156,639 148,960 101,373
---------- ---------- ---------- ---------- ----------
Total interest income 1,253,950 1,132,158 4,609,330 4,258,876 3,696,784
INTEREST EXPENSE
Deposits 516,919 436,776 1,930,924 1,703,208 1,331,404
---------- ---------- ---------- ---------- ----------
NET INTEREST INCOME 737,031 695,382 2,678,406 2,555,668 2,365,380
Provision for loan losses 30,000 1,500 6,000 -- 2,319
---------- ---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 707,031 693,882 2,672,406 2,555,668 2,363,061
NONINTEREST INCOME
Service charges and other fees 33,910 33,801 139,297 119,461 113,999
Other income 9,437 8,716 35,491 45,907 35,002
---------- ---------- ---------- ---------- ----------
Total noninterest income 43,347 42,517 174,788 165,368 149,001
NONINTEREST EXPENSE
Salaries and employee benefits 234,659 210,739 889,697 786,868 751,554
Occupancy and equipment 34,452 36,324 140,893 129,315 100,752
State franchise taxes 36,900 35,100 138,490 126,389 113,958
Computer processing 23,880 20,859 94,951 92,854 93,373
SAIF deposit insurance
premiums 7,468 285,973 320,920 93,368 90,607
Legal, audit and supervisory
exam fees 18,076 15,538 75,817 57,334 68,896
Director fees 19,275 21,030 78,160 72,810 66,250
Other expense 40,398 34,587 203,866 173,050 132,854
---------- ---------- ---------- ---------- ----------
Total noninterest expense 415,108 660,150 1,942,794 1,531,988 1,418,244
---------- ---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 335,270 76,249 904,400 1,189,048 1,093,818
Income tax expense 122,100 27,400 309,152 419,515 377,600
---------- ---------- ---------- ---------- ----------
NET INCOME $ 213,170 $ 48,849 $ 595,248 $ 769,533 $ 716,218
========== ========== ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
F-4
<PAGE> 86
THE HOME LOAN SAVINGS BANK
STATEMENTS OF MEMBERS' EQUITY
Three months ended September 30, 1997 (unaudited) and
years ended June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Excess of Additional
Unrealized Pension
Gain (Loss) Liability over
on Securities Unrecognized Total
Retained Available Prior Members'
Earnings for Sale Service Cost Equity
-------- -------- ------------ ------
<S> <C> <C> <C> <C>
BALANCE AT JULY 1, 1994 $8,285,233 $ -- $ (16,922) $8,268,311
Net income 716,218 -- -- 716,218
Change in excess of additional pension
liability over unrecognized prior
service cost -- -- 16,922 16,922
Net change in unrealized gain (loss)
on available-for-sale securities -- 3,750 -- 3,750
---------- ---------- ---------- ----------
BALANCE AT JUNE 30, 1995 9,001,451 3,750 -- 9,005,201
Net income 769,533 -- -- 769,533
Net change in unrealized gain (loss)
on available-for-sale securities -- (6,638) -- (6,638)
---------- ---------- ---------- ----------
BALANCE AT JUNE 30, 1996 9,770,984 (2,888) -- 9,768,096
Net income 595,248 -- -- 595,248
Net change in unrealized gain (loss)
on available-for-sale securities -- 6,920 -- 6,920
---------- ---------- ---------- ----------
BALANCE AT JUNE 30, 1997 10,366,232 4,032 -- 10,370,264
Net income for the three months
ended September 30, 1997
(unaudited) 213,170 -- -- 213,170
Net change in unrealized gains (loss)
on available for sale securities
(unaudited) -- 8,707 -- 8,707
---------- ---------- ---------- ----------
BALANCE AT SEPTEMBER 30, 1997
(UNAUDITED) $10,579,402 $ 12,739 $ -- $10,592,141
========== ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
F-5
<PAGE> 87
THE HOME LOAN SAVINGS BANK
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
F-6
<PAGE> 88
THE HOME LOAN SAVINGS BANK
STATEMENTS OF CASH FLOWS
Three months ended September 30, 1997 and 1996 (unaudited)
and years ended June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three months ended
September 30, Years ended June 30,
------------- --------------------
1997 1996 1997 1996 1995
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 213,170 $ 48,849 $ 595,248 $ 769,533 $ 716,218
Adjustments to reconcile net
income to net cash from
operating activities:
Depreciation 21,150 19,200 79,329 67,370 57,317
Securities amortization
and accretion (403) 326 2,908 (7,119) (11,555)
Provision for loan losses 30,000 1,500 6,000 -- 2,319
FHLB stock dividends (6,600) (6,000) (24,600) (22,800) (23,600)
Deferred taxes (61,531) (91,429) 11,334 6,722 (9,272)
Loss on disposition of assets -- -- -- 12,201 --
Net change in accrued
interest receivable and
other assets 86,823 12,119 (55,519) (120,250) (13,471)
Net change in accrued
expenses and other
liabilities 257,775 298,519 80,748 153,634 217,995
Net change in deferred
loan fees 5,201 6,025 3,283 (9,589) 25,753
----------- ----------- ----------- ----------- -----------
Net cash from operating
activities 545,585 289,109 698,731 849,702 961,704
CASH FLOWS FROM INVESTING ACTIVITIES
Securities available for sale:
Proceeds from maturities 500,000 -- 500,000 500,000 750,000
Purchases -- (1,001,523) (3,751,484) (1,497,363) (494,609)
Securities held to maturity:
Proceeds from maturities -- 250,000 2,250,000 3,250,000 3,499,719
Purchases -- -- -- -- (1,745,316)
Purchase of time deposits in
other financial institutions -- -- (38,796) (40,669) --
Maturities of time deposits in
other financial institutions -- -- 40,669 -- --
Net change in loans (2,508,397) (1,584,600) (5,015,491) (5,128,693) (3,401,958)
Premises and equipment
expenditures (6,308) (2,645) (77,592) (109,247) (18,215)
----------- ----------- ----------- ----------- -----------
Net cash from investing
activities (2,014,705) (2,338,768) (6,092,694) (3,025,972) (1,410,379)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits (1,027,827) 607,613 4,351,573 5,340,441 (15,041)
----------- ----------- ----------- ----------- -----------
Net change in cash and cash
equivalents (2,496,947) (1,442,046) (1,042,390) 3,164,171 (463,716)
Cash and cash equivalents at
beginning of period 4,681,049 5,723,439 5,723,439 2,559,268 3,022,984
----------- ----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 2,184,102 $ 4,281,393 $ 4,681,049 $ 5,723,439 $ 2,559,268
=========== =========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
(Continued)
F-7
<PAGE> 89
THE HOME LOAN SAVINGS BANK
STATEMENTS OF CASH FLOWS
Three months ended September 30, 1997 and 1996 (unaudited)
and years ended June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three months ended
September 30, Years ended June 30,
------------- --------------------
1997 1996 1997 1996 1995
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
Supplemental disclosures of cash flow
information
Cash paid during the period for
Interest $ 441,425 $ 455,510 $1,895,362 $1,556,285 $1,231,129
Income taxes 52,849 -- 244,818 417,583 377,000
Noncash transaction
Excess of additional pension
liability $ -- $ -- $ -- $ -- $ (16,922)
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
F-8
<PAGE> 90
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS: The Bank is a mutually-owned, state-chartered savings and
loan association engaged in the business of residential and consumer banking
with operations conducted through its main and branch offices located in
Coshocton, Ohio. This community and the contiguous areas are the source of
substantially all the Bank's loan and deposit activities. The majority of the
Bank's income is derived from residential and consumer lending activities and
investments.
USE OF ESTIMATES: To prepare financial statements in conformity with generally
accepted accounting principles, management makes estimates and assumptions based
on available information. These estimates and assumptions affect amounts
reported in the financial statements and disclosures provided, and future
results could differ. The collectibility of loans, fair values of financial
instruments and status of contingencies are particularly subject to change.
CASH FLOW REPORTING: Cash and cash equivalents are defined as cash, due from
banks, overnight deposits and federal funds sold. Net cash flows are reported
for customer loan and deposit transactions and interest-bearing deposits with
other banks.
SECURITIES: Securities are classified as held to maturity and carried at
amortized cost when management has the positive intent and ability to hold them
to maturity. Securities are classified as available for sale when they might be
sold before maturity. Securities available for sale are carried at fair value,
with unrealized holding gains and losses reported separately in members' equity,
net of tax. Securities are classified as trading when held for short-term
periods in anticipation of market gains and are carried at fair value.
Securities are written down to fair value when a decline in fair value is not
temporary.
Realized gains or losses on sales are determined based on the amortized cost of
the specific security sold. Interest and dividend income includes amortization
of purchase premiums and discounts.
LOANS: Loans are reported at the principal balance outstanding, net of deferred
fees and costs and the allowance for loan losses. Interest income is accrued
over the term of the loans based on the principal balance outstanding and
includes amortization of net deferred loan fees and costs over the loan term.
Interest income is not reported when full loan repayment is in doubt, typically
when payments are past due over 90 days. Payments received on such loans are
reported as principal reductions.
- --------------------------------------------------------------------------------
(Continued)
F-9
<PAGE> 91
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
ALLOWANCE FOR LOAN LOSSES: The allowance for loan losses is a valuation
allowance, increased by the provision for loan losses and decreased by
charge-offs less recoveries. Management estimates the allowance balance required
based on past loan loss experience, known and inherent risks in the portfolio,
information about specific borrower situations and estimated collateral values,
economic conditions and other factors. Allocations of the allowance may be made
for specific loans, but the entire allowance is available for any loan that, in
management's judgment, should be charged off.
Effective July 1, 1995, the Bank adopted provisions of Statement of Financial
Accounting Standards ("SFAS") Nos. 114 and 118, which modify accounting for
impaired loans. The effect of adopting and applying these standards was not
material in any period.
Loan impairment is reported when full payment under the loan terms is not
expected. Impairment is evaluated in total for smaller-balance loans of similar
nature such as residential mortgage, consumer and credit card loans, and on an
individual basis for other loans. If a loan is impaired, a portion of the
allowance is allocated so the loan is reported, net, at the present value of
estimated future cash flows using the loan's existing rate. Loans are evaluated
for impairment when payments are delayed, typically 90 days or more, or when the
internal grading system indicates a doubtful classification.
CONCENTRATION OF CREDIT RISK: The Bank grants primarily single-family
residential mortgage loans to customers in Coshocton County, Ohio. The ability
of these customers to honor their contracts is dependent, to a certain extent,
on the economic conditions of Coshocton County. The Bank evaluates each
customer's creditworthiness on a case-by-case basis at the time of application.
Residential real estate loans comprise approximately 72% (unaudited), 72% and
75% of the Bank's loan portfolio as of September 30, 1997, June 30, 1997 and
1996.
PREMISES AND EQUIPMENT: Asset cost is reported net of accumulated depreciation.
Depreciation expense is calculated using primarily the straight-line method over
the estimated useful lives of the assets. These assets are reviewed for
impairment when events indicate the carrying amount may not be recoverable.
REAL ESTATE OWNED: Real estate acquired in settlement of loans is initially
reported at estimated fair value at acquisition. After acquisition, a valuation
allowance reduces the reported amount to the lower of the initial amount or fair
value less costs to sell. Expenses, gains and losses on disposition and changes
in the valuation allowance are reported in net gain or loss on other real
estate.
- --------------------------------------------------------------------------------
(Continued)
F-10
<PAGE> 92
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
INCOME TAXES: Income tax expense is the sum of current-year income tax due or
refundable and the change in deferred tax assets and liabilities. Deferred tax
assets and liabilities are the expected future tax consequences of temporary
differences between the carrying amounts and tax basis of assets and
liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces deferred tax assets to the amount expected to be realized.
RECLASSIFICATIONS: In connection with the Bank's initial public offering, the
Bank reclassified certain items for all periods presented to correspond with the
September 30, 1997 presentation.
INTERIM FINANCIAL INFORMATION: The unaudited balance sheet as of September 30,
1997 and the related unaudited statements of income, members' equity and cash
flows for the three months ended September 30, 1997 and 1996 have been prepared
in a manner consistent with the audited financial information presented.
Management believes that all adjustments, which were all of a normal and
recurring nature, have been recorded to the best of its knowledge and that the
unaudited financial information fairly presents the financial position and
results of operations and cash flows of the Bank in accordance with generally
accepted accounting principles.
NOTE 2 - SECURITIES
The amortized cost and fair values of securities were as follows:
<TABLE>
<CAPTION>
September 30, 1997 (unaudited)
------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE $ 4,498,589 $ 20,173 $ 870 $ 4,517,892
U.S. Treasury notes ============ ============ ============ ============
June 30, 1997
-------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury notes $ 4,998,188 $ 10,477 $ 4,369 $ 5,004,296
============ ============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
(Continued)
F-11
<PAGE> 93
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 2 - SECURITIES (Continued)
<TABLE>
<CAPTION>
June 30, 1997
-------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury notes $ 1,747,881 $ 1,446 $ 5,821 $ 1,743,506
============ ========== =========== ===========
HELD TO MATURITY
U.S. Treasury notes $ 2,251,731 $ 5,985 $ 2,169 $ 2,255,547
============ ========== =========== ===========
</TABLE>
The amortized cost and fair values of securities at September 30, 1997
(unaudited), by contractual maturity, are shown below.
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
---- -----
<S> <C> <C>
AVAILABLE FOR SALE
Due in one year or less $ 2,254,186 $ 2,256,017
Due after one year through five years 2,244,403 2,261,875
-------------- ---------------
$ 4,498,589 $ 4,517,892
============== ===============
</TABLE>
The amortized cost and fair values of securities at June 30, 1997, by
contractual maturity, are shown below.
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
<S> <C> <C>
AVAILABLE FOR SALE
Due in one year or less $ 1,498,961 $ 1,500,391
Due after one year through five years 3,499,227 3,503,905
-------------- ---------------
$ 4,998,188 $ 5,004,296
============== ===============
</TABLE>
Actual maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or prepayment
penalties.
During the three months ended September 30, 1997 (unaudited), a U.S. Treasury
security classified as available for sale was sold within ninety days of its
maturity. Proceeds from this transaction are reflected as a maturity in the
Statement of Cash Flows. The gain on this transaction was $121 (unaudited). No
other securities were sold during the three months ended September 30, 1997 and
1996.
- --------------------------------------------------------------------------------
(Continued)
F-12
<PAGE> 94
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 2 - SECURITIES (Continued)
During the year ended June 30, 1995, a U.S. Treasury security classified as held
to maturity with a carrying value of $499,718 was sold within ninety days of its
maturity. Proceeds from this transaction are reflected as a maturity in the
Statement of Cash Flows. The loss on this transaction was $188. No other
securities were sold during fiscal 1995, 1996 or 1997.
A security with par value of $1,000,000 was pledged to secure public deposits
and for other purposes as of June 30, 1997. No securities were pledged as
collateral as of September 30, 1997 (unaudited) or June 30, 1996.
NOTE 3 - LOANS
Loans were as follows:
<TABLE>
<CAPTION>
September 30, June 30,
------------- --------
1997 1997 1996
---- ---- ----
(unaudited)
<S> <C> <C> <C>
Residential real estate loans:
1 - 4 family $ 36,827,019 $ 35,155,726 $ 32,881,991
Home equity 826,287 728,416 979,108
Nonresidential real estate 3,686,202 3,297,105 2,970,666
Real estate construction 341,291 553,833 407,526
Land 559,388 570,542 349,827
------------ ------------ ------------
Total real estate loans 42,240,187 40,305,622 37,589,118
Consumer and other loans
Home improvement 4,150,571 3,701,588 2,671,881
Automobile 2,677,625 2,505,823 2,054,489
Commercial 1,702,856 1,645,091 949,636
Deposit 234,389 219,264 245,289
Credit card 403,269 346,704 330,892
Other 1,200,108 1,047,289 1,436,125
------------ ------------ ------------
Total consumer and other 10,368,818 9,465,759 7,688,312
------------ ------------ ------------
Total loans 52,609,005 49,771,381 45,277,430
Less:
Allowance for loan losses (148,222) (119,218) (117,513)
Loans in process (575,464) (245,240) (762,485)
Net deferred loan fees and costs (111,999) (106,799) (103,516)
------------ ------------ ------------
$ 51,773,320 $ 49,300,124 $ 44,293,916
============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
(Continued)
F-13
<PAGE> 95
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 3 - LOANS (Continued)
Activity in the allowance for loan losses was as follows:
<TABLE>
<CAPTION>
Three months ended
September 30, Years ended June 30,
------------- --------------------
1997 1996 1997 1996 1995
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
Beginning balance $ 119,218 $ 117,513 $ 117,513 $ 117,513 $ 120,705
Provision for losses 30,000 1,500 6,000 -- 2,319
Loans charged off (1,441) -- (4,500) -- (6,955)
Recoveries of previous
charge-offs 445 -- 205 -- 1,444
------------ ------------ ------------ ------------ -------------
Ending balance $ 148,222 $ 119,013 $ 119,218 $ 117,513 $ 117,513
============ ============ ============ ============ =============
</TABLE>
No loans were on nonaccrual status at September 30, 1997 (unaudited), June 30,
1997 or 1996. The Bank had no loans that were required to be evaluated for
impairment on an individual basis at September 30, 1997 and 1996 or during the
three months then ended (unaudited) or at June 30, 1997 and 1996 or during the
years then ended.
In the ordinary course of business, the Bank has and expects to continue to have
transactions, including borrowings, with its executive officers, directors and
their affiliates. In the opinion of management, such transactions were on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did
not involve more than a normal risk of collectibility or present any other
unfavorable features to the Bank. A summary of activity on related party loans,
excluding credit card loans, is as follows. Credit limits may not exceed $5,000
on credit card loans to executive officers and directors.
<TABLE>
<CAPTION>
Three months ended Year ended
September 30, June 30,
1997 1997
(unaudited)
<S> <C> <C>
Balance at beginning of period $ 191,772 $ 200,829
Principal repayments 2,545 9,057
-------------- ---------------
Balance at end of period $ 189,227 $ 191,772
============== ===============
</TABLE>
- --------------------------------------------------------------------------------
(Continued)
F-14
<PAGE> 96
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 3 - LOANS (Continued)
At September 30, 1997 (unaudited), June 30, 1997 and 1996, the Bank serviced
loans of approximately $19,000, $26,000 and $56,000, for the Federal Home Loan
Mortgage Corporation (FHLMC). The Bank retained a 5% interest in this package of
loans sold to the FHLMC in 1983.
NOTE 4 - ACCRUED INTEREST RECEIVABLE
Accrued interest receivable was as follows:
<TABLE>
<CAPTION>
September 30, June 30,
------------- --------
1997 1997 1996
---- ---- ----
(unaudited)
<S> <C> <C> <C>
Securities $ 48,008 $ 60,224 $ 42,455
Loans 254,894 226,790 217,974
------------ ------------ ------------
$ 302,902 $ 287,014 $ 260,429
============ ============ ============
</TABLE>
NOTE 5 - PREMISES AND EQUIPMENT
Premises and equipment were as follows:
<TABLE>
<CAPTION>
September 30, June 30,
------------- --------
1997 1997 1996
---- ---- ----
(unaudited)
<S> <C> <C> <C>
Land $ 80,434 $ 80,434 $ 80,434
Buildings and improvements 663,384 662,470 642,302
Furniture and equipment 446,690 441,296 383,872
------------ ------------ ------------
Total cost 1,190,508 1,184,200 1,106,608
Accumulated depreciation (681,289) (660,139) (580,810)
------------- ------------ ------------
$ 509,219 $ 524,061 $ 525,798
============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
(Continued)
F-15
<PAGE> 97
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 6 - DEPOSITS
Deposits consisted of the following:
<TABLE>
<CAPTION>
September 30, June 30,
------------- --------
1997 1997 1996
---- ---- ----
(unaudited)
<S> <C> <C> <C>
Noninterest-bearing demand deposits $ 876,869 $ 1,069,333 $ 873,406
NOW and money market accounts 7,366,002 7,650,333 7,521,907
Savings accounts 11,582,586 11,294,755 12,137,375
Certificates of deposit 28,382,146 29,221,009 24,351,169
--------------- ---------------- ---------------
$ 48,207,603 $ 49,235,430 $ 44,883,857
=============== ================ ===============
</TABLE>
The aggregate amount of certificates of deposit accounts with balances of
$100,000 or more at September 30, 1997 (unaudited), June 30, 1997 and 1996 was
$1,121,731, $2,481,642 and $931,670. Deposits in excess of $100,000 are not
insured by the FDIC.
At September 30, 1997 (unaudited), the scheduled maturities of certificates of
deposit were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Years ended September 30, 1998 $ 16,066,106
1999 7,758,144
2000 4,557,896
---------------
$ 28,382,146
===============
</TABLE>
At June 30, 1997, the scheduled maturities of certificates of deposits were as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Years ended June 30, 1998 $ 17,375,929
1999 7,598,042
2000 4,247,038
---------------
$ 29,221,009
===============
</TABLE>
- --------------------------------------------------------------------------------
(Continued)
F-16
<PAGE> 98
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 6 - DEPOSITS (Continued)
Interest expense on deposits is summarized as follows:
<TABLE>
<CAPTION>
Three months ended
September 30, Years ended June 30,
------------- --------------------
1997 1996 1997 1996 1995
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
NOW and money
market accounts $ 38,171 $ 39,355 $ 153,416 $ 151,981 $ 168,396
Savings accounts 71,396 75,352 295,281 294,192 321,196
Certificates of
deposit 407,352 322,069 1,482,227 1,257,035 841,812
------------ ------------- -------------- -------------- --------------
$ 516,919 $ 436,776 $ 1,930,924 $ 1,703,208 $ 1,331,404
============ ============= ============== ============== ==============
</TABLE>
NOTE 7 - SAVINGS ASSOCIATION INSURANCE FUND RECAPITALIZATION
Included in SAIF deposit insurance premium expense in the Statement of Income
for the year ended June 30, 1997 and for the three months ended September 30,
1996 (unaudited) is $260,917 for a special assessment resulting from legislation
passed and enacted into law on September 30, 1996 to recapitalize the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation. Thrifts
such as the Bank paid a one-time assessment in November 1996 of $0.657 for each
$100 in deposits as of March 31, 1995. As a result of the recapitalization, the
Bank began paying lower deposit insurance premiums in January 1997.
NOTE 8 - INCOME TAXES
The provision for federal income tax consisted of the following components:
<TABLE>
<CAPTION>
Three months ended
September 30, Years ended June 30,
------------- --------------------
1997 1996 1997 1996 1995
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
Current tax expense $ 183,631 $ 118,829 $ 297,818 $ 412,793 $ 386,872
Deferred tax expense (61,531) (91,429) 11,334 6,722 (9,272)
------------- ------------ ------------- ------------ ------------
$ 122,100 $ 27,400 $ 309,152 $ 419,515 $ 377,600
============ =========== ============= ============ ============
</TABLE>
- --------------------------------------------------------------------------------
(Continued)
F-17
<PAGE> 99
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 8 - INCOME TAXES (Continued)
The sources of gross deferred tax assets and gross deferred tax liabilities are
as follows:
<TABLE>
<CAPTION>
September 30, June 30,
------------- --------
1997 1997 1996
---- ---- ----
(unaudited)
<S> <C> <C> <C>
Deferred tax assets:
Allowance for loan losses $ 50,395 $ 40,534 $ 39,954
Deferred loan fees 38,080 36,227 35,195
Accrued benefits 96,672 77,995 67,525
Unrealized loss on securities available for sale -- -- 1,488
----------- ------------ -------------
Total deferred tax assets 185,147 154,756 144,162
----------- ------------ -------------
Deferred tax liabilities:
Depreciation 7,889 10,439 9,097
Federal Home Loan Bank stock 70,835 68,591 60,227
Accrual to cash 3,486 34,322 19,568
Security discount accretion 1,434 1,434 2,478
Unrealized gain on securities available for sale 6,563 2,077 --
----------- ------------ -------------
Total deferred tax liabilities 90,207 116,863 91,370
----------- ------------ -------------
Net deferred tax asset $ 94,940 $ 37,893 $ 52,792
=========== ============ =============
</TABLE>
The Bank has sufficient taxes paid in current and prior years to warrant
recording the full deferred tax asset without a valuation allowance.
The difference between the financial statement income tax expense and amounts
computed by applying the statutory federal income tax rate to income before
income taxes is as follows:
<TABLE>
<CAPTION>
Three months ended
September 30, Years ended June 30,
------------- --------------------
1997 1996 1997 1996 1995
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
Income taxes computed
at the statutory tax
rate on pretax income $ 113,992 $ 25,924 $ 307,496 $ 404,276 $ 371,898
Add tax effect of:
Nondeductible
expenses and other 8,108 1,476 1,656 15,239 5,702
------------ ------------ ------------- ------------ ------------
$ 122,100 $ 27,400 $ 309,152 $ 419,515 $ 377,600
============ ============ ============= ============ ============
Statutory tax rate 34.0% 34.0% 34.0% 34.0% 34.0%
==== ==== ==== ==== ====
Effective tax rate 36.4% 35.9% 34.2% 35.3% 34.5%
==== ==== ==== ==== ====
</TABLE>
- --------------------------------------------------------------------------------
(Continued)
F-18
<PAGE> 100
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 8 - INCOME TAXES (Continued)
Prior to the enactment of legislation discussed below, thrifts which met certain
tests relating to composition of assets had been permitted to establish reserves
for bad debts and to make annual additions thereto which could, within specified
formula limits, be taken as a deduction in computing taxable income for federal
income tax purposes. The amount of the bad debt reserve deductions for
"nonqualifying loans" was computed under the experience method. The amount of
the bad debt reserve deduction for "qualifying real property loans" could be
computed under either the experience method or the percentage of taxable income
method, based on an annual election.
In August 1996, legislation was enacted repealing the reserve method of
accounting used by many thrifts to calculate their bad debt reserve for federal
income tax purposes. As a result, small thrifts such as the Bank must recapture
that portion of the reserve exceeding the amount that could have been taken
under the experience method for tax years beginning after December 31, 1987. The
legislation also requires thrifts to account for bad debts for federal income
tax purposes on the same basis as commercial banks for tax years beginning after
December 31, 1995. The recapture will occur over a six-year period, the
commencement of which will be delayed until the first taxable year beginning
after December 31, 1997, provided the institution meets certain residential
lending requirements. At September 30, 1997 (unaudited) and June 30, 1997, the
Bank had no bad debt reserves subject to recapture for federal income tax
purposes.
The Bank, in accordance with SFAS No. 109, has not recorded a deferred tax
liability of approximately $526,000 related to approximately $1,548,000 of
cumulative qualifying and supplemental reserves, included in retained earnings,
arising prior to June 30, 1988, the end of the Bank's base year for purposes of
calculating the bad debt deduction for tax purposes. If this portion of retained
earnings is used in the future for any purposes other than to absorb bad debts,
it will be added to future taxable income.
NOTE 9 - PENSION PLAN
Effective July 1, 1995, the Bank amended its defined benefit pension plan and
transferred plan assets into a multiemployer plan. The Plan is administered by
trustees of the Financial Institutions Retirement Fund. The cost of the Plan is
set annually as an established percentage of wages. No changes were made
regarding benefits the participants will receive under the multiemployer plan.
The Bank recognizes pension expense equal to contributions made to the Plan.
Contributions of $12,166 and $22,148 were made for the three months ended
September 30, 1997 and 1996 (unaudited). Contributions of $84,552 and $87,561
were made for the years ended June 30, 1997 and 1996.
- --------------------------------------------------------------------------------
(Continued)
F-19
<PAGE> 101
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 9 - PENSION PLAN (Continued)
Through June 30, 1995, the Bank maintained a noncontributory defined benefit
pension plan covering substantially all employees. The Plan's funds were
invested in certificates of deposit of the Bank with varying maturities and
interest rates and life insurance policies, as selected by the trustees. The
amount of benefit was computed based upon average monthly compensation and
number of years of employment. The Bank's funding policy was to contribute
annually the maximum amount that could be deducted for federal income tax
purposes.
Net pension cost included the following components:
<TABLE>
<CAPTION>
1995
----
<S> <C>
Service cost - benefits earned during the period $ 68,735
Interest cost on projected benefit obligation 42,122
Actual return on plan assets 1,396
Net amortization and deferral (8,442)
------------
$ 103,811
============
</TABLE>
Significant assumptions used:
<TABLE>
<CAPTION>
1995
----
<S> <C>
Expected long-term rate of return on assets 7.50%
Discount rate 5.75
Rate of increase in compensation levels 5.00
</TABLE>
The unrecognized transition amount was being amortized over 26 years on a
straight-line basis.
NOTE 10 - PROFIT-SHARING PLAN
The Bank has a profit-sharing plan covering officers of the Bank. Beginning
January 1, 1996, up to 10% of pretax income excluding nonrecurring items and
extraordinary gains or losses not related to operations and before deductions of
awards under this plan and the deferred compensation agreement is contributed.
The total contribution is allocated to the officers based upon fixed percentages
established by the Board of Directors. No incentive awards are payable unless a
minimum return on assets is exceeded. Prior to January 1, 1996, the contribution
was based on the Bank's return on average assets for the year then ended. The
Plan's expense amounted to $38,740 and $32,175 for the three months ended
September 30, 1997 and 1996
- --------------------------------------------------------------------------------
(Continued)
F-20
<PAGE> 102
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
(unaudited). The Plan's expense totaled $128,037, $104,000 and $90,990 for the
years ended June 30, 1997, 1996 and 1995. NOTE 10 - PROFIT-SHARING PLAN
(Continued)
NOTE 10 - PROFIT-SHARING PLAN (Continued)
In 1994, the Bank entered into a deferred compensation agreement with an officer
of the Bank. The agreement entitles the officer to 5% of the annual increase in
equity, not including extraordinary items, for a five-year period ending June
30, 1998. The officer is entitled to receive this compensation on June 30, 1998.
At September 30, 1997 (unaudited), June 30, 1997 and 1996, the Bank had accrued
$155,750, $146,000 and $108,000 related to this agreement. Expense recognized
under this agreement was $9,750 and $9,000 for the three months ended September
30, 1997 and 1996 (unaudited) and $38,000, $36,000 and $36,000 for the years
ended June 30, 1997, 1996 and 1995.
NOTE 11 - COMMITMENTS, OFF-BALANCE-SHEET RISK
AND CONTINGENCIES
There are various contingent liabilities that are not reflected in the financial
statements, including claims and legal actions arising in the ordinary course of
business. In the opinion of management, after consultation with legal counsel,
the ultimate disposition of these matters is not expected to have a material
effect on financial condition or results of operations.
Some financial instruments are used in the normal course of business to meet the
financing needs of customers and to reduce exposure to interest rate changes.
These financial instruments include commitments to extend credit, standby
letters of credit and financial guarantees. These involve, to varying degrees,
credit and interest-rate risk in excess of the amount reported in the financial
statements.
Exposure to credit loss if the other party does not perform is represented by
the contractual amount for commitments to extend credit, standby letters of
credit and financial guarantees written. The same credit policies are used for
commitments and conditional obligations as are used for loans. The amount of
collateral obtained, if deemed necessary, on extension of credit is based upon
management's credit evaluation and generally consists of residential or
commercial real estate.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the commitment.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being used, the total commitments do not necessarily represent
future cash requirements. Standby letters of credit and financial guarantees
written are conditional commitments to guarantee a customer's performance to a
third party.
- --------------------------------------------------------------------------------
(Continued)
F-21
<PAGE> 103
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 11 - COMMITMENTS, OFF-BALANCE-SHEET RISK
AND CONTINGENCIES (Continued)
A summary of the notional or contractual amounts of financial instruments with
off-balance-sheet risk follows:
<TABLE>
<CAPTION>
September 30, June 30,
------------- --------
1997 1997 1996
---- ---- ----
(unaudited)
<S> <C> <C> <C>
Lines of credit - variable rate $ 1,590,000 $ 1,595,000 $ 799,000
1-4 family residential real estate - variable rate 722,000 446,000 920,000
Commercial real estate - variable rate 600,000 700,000 --
Credit card arrangements - fixed rate 689,000 671,000 618,000
</TABLE>
Fixed rate commitments had an interest rate of 13.90% at September 30, 1997
(unaudited), June 30, 1997 and 1996. The interest rates on variable rate
commitments range from 8.00% to 9.25% at September 30, 1997 (unaudited), 8.00%
to 9.50% at June 30, 1997, and 7.00% to 11.25% at June 30, 1996.
NOTE 12 - REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered by
the federal regulatory agencies. Failure to meet minimum capital requirements
can initiate certain mandatory actions that, if undertaken, could have a direct
material affect 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 as calculated
under regulatory accounting practices. The Bank's capital amounts and
classifications are also subject to qualitative judgments by the regulators
about the Bank's components, risk weightings and other factors. At September 30,
1997 (unaudited), June 30, 1997 and 1996, management believes the Bank is in
compliance with all regulatory capital requirements. Based on the computed
regulatory capital ratios, the Bank is considered well capitalized under the
Federal Deposit Insurance Act at September 30, 1997 (unaudited), June 30, 1997
and 1996. No conditions or events have occurred subsequent to September 30, 1997
(unaudited) that management believes have changed the Bank's category.
- --------------------------------------------------------------------------------
(Continued)
F-22
<PAGE> 104
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 12 - REGULATORY MATTERS (Continued)
The Bank's actual capital levels (in thousands) and minimum required levels
were:
<TABLE>
<CAPTION>
Minimum
Required To Be
Minimum Required Well Capitalized
For Capital Under Prompt Corrective
Actual Adequacy Purposes Action Regulations
------ ----------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
SEPTEMBER 30, 1997 (UNAUDITED)
Total capital (to risk-weighted assets) $ 10,727 30.2% $ 2,846 8.0% $ 3,557 10.0%
Tier 1 (core) capital (to
risk-weighted assets) $ 10,579 29.7% $ 1,423 4.0% $ 2,134 6.0%
Tier 1 (core) capital (to adjusted
total assets) $ 10,579 17.7% $ 1,795 3.0% $ 2,992 5.0%
Tangible capital (to adjusted total assets) $ 10,579 17.7% $ 898 1.5% N/A
JUNE 30, 1997
Total capital (to risk-weighted assets) $ 10,485 30.7% $ 2,736 8.0% $ 3,420 10.0%
Tier 1 (core) capital (to
risk-weighted assets) $ 10,366 30.3% $ 1,368 4.0% $ 2,052 6.0%
Tier 1 (core) capital (to adjusted
total assets) $ 10,366 17.2% $ 1,812 3.0% $ 3,020 5.0%
Tangible capital (to adjusted total assets) $ 10,366 17.2% $ 906 1.5% N/A
JUNE 30, 1996
Total capital (to risk-weighted assets) $ 9,888 32.7% $ 2,416 8.0% $ 3,020 10.0%
Tier 1 (core) capital (to
risk-weighted assets) $ 9,771 32.4% $ 1,208 4.0% $ 1,812 6.0%
Tier 1 (core) capital (to adjusted
total assets) $ 9,771 17.6% $ 1,661 3.0% $ 2,768 5.0%
Tangible capital (to adjusted total assets) $ 9,771 17.6% $ 830 1.5% N/A
</TABLE>
NOTE 13 - ADOPTION OF PLAN OF CONVERSION (UNAUDITED)
On November 12, 1997, the Board of Directors of the Bank, subject to regulatory
approval and approval by the members of the Bank, unanimously adopted a Plan of
Conversion from a state chartered mutual savings and loan association to a state
chartered stock savings and loan association with the concurrent formation of a
holding company. The Holding Company will acquire 100% of the Bank's common
stock. The conversion is expected to be accomplished through amendment of the
Bank's charter and the sale of the holding company's common stock in an amount
equal to the pro forma market value of the Bank after giving effect to the
conversion. A subscription offering of the shares of the holding company's
common stock will be offered to the Bank's depositors, then to an employee stock
benefit plan and then to other
- --------------------------------------------------------------------------------
(Continued)
F-23
<PAGE> 105
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
members. Any shares of the holding company's common stock not sold in the
subscription offering may be offered for sale to the general public.
- --------------------------------------------------------------------------------
(Continued)
F-24
<PAGE> 106
THE HOME LOAN SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996 (unaudited) and June 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
NOTE 13 - ADOPTION OF PLAN OF CONVERSION (UNAUDITED) (Continued)
At the time of the conversion, the Bank will establish a liquidation account in
an amount equal to its regulatory capital as of the latest practicable date
prior to the conversion at which such regulatory capital can be determined. The
liquidation account will be maintained for the benefit of eligible depositors
who continue to maintain their accounts at the Bank after the conversion. The
liquidation account will be reduced annually to the extent that eligible
depositors have reduced their qualifying deposits. Subsequent increases will not
restore an eligible account holder's interest in the liquidation account. In the
event of a complete liquidation, each eligible depositor 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 Bank may
not pay dividends that would reduce stockholders' equity below the required
liquidation account balance.
Under Office of Thrift Supervision (OTS) regulations, limitations have been
imposed on all "capital distributions" by savings institutions, including cash
dividends. The regulation establishes a three-tiered system of restrictions,
with the greatest flexibility afforded to thrifts which are both
well-capitalized and given favorable qualitative examination ratings by the OTS.
Conversion costs will be deferred and deducted from the proceeds of the shares
sold in the conversion. If the conversion is not completed, all costs will be
charged to expense. At September 30, 1997, no costs have been deferred.
- --------------------------------------------------------------------------------
F-25
<PAGE> 107
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN AS CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE HOLDING COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, ANY SECURITY, OTHER THAN THE
COMMON SHARES 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 DELIVERY OF
THIS PROSPECTUS WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS TO ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUMMARY..............................................1
SELECTED FINANCIAL INFORMATION AND OTHER
DATA.........................................................6
RISK FACTORS....................................................8
USE OF PROCEEDS................................................11
MARKET FOR COMMON SHARES.......................................11
DIVIDEND POLICY................................................12
REGULATORY CAPITAL COMPLIANCE..................................13
CAPITALIZATION.................................................14
PRO FORMA DATA.................................................15
SUMMARY STATEMENTS OF INCOME...................................19
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS..................................................20
THE BUSINESS OF THE BANK.......................................31
MANAGEMENT.....................................................44
REGULATION.....................................................50
TAXATION.......................................................56
THE CONVERSION.................................................58
RESTRICTIONS ON ACQUISITION OF THE HOLDING
COMPANY AND THE BANK AND
ANTI-TAKEOVER PROVISIONS....................................70
DESCRIPTION OF AUTHORIZED SHARES...............................73
REGISTRATION REQUIREMENTS......................................74
LEGAL MATTERS..................................................74
EXPERTS........................................................75
ADDITIONAL INFORMATION.........................................75
FINANCIAL STATEMENTS..........................................F-1
UNTIL 25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING, ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS OBLIGATION 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.
Up to 1,955,00 Common Shares
HOME LOAN FINANCIAL CORPORATION
------------
PROSPECTUS
------------
CHARLES WEBB & COMPANY
A Division of Keefe, Bruyette & Woods, Inc.
February __, 1998
<PAGE> 108
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
- -------- -------------------------------------------
<TABLE>
<S> <C>
* Legal Fees and expenses............................$110,000
* Postage.............................................$10,000
* Printing and EDGARIZING.............................$40,000
* Appraisal Fees and expenses.........................$17,000
* Accounting Fees and expenses........................$60,000
* Blue sky filing fees and expenses....................$5,000
* Federal filing fees.................................$15,000
* Conversion Agent Fees...............................$11,000
* Other Expenses.......................................$5,000
** Underwriting Fees and expenses.....................$279,000
Total estimated expenses........................$552,000
========
</TABLE>
- -----------------------------
* Estimated.
** To assist the Holding Company and the Bank in marketing the Common
Shares, the Holding Company and the Bank have retained Charles Webb &
Company ("Webb"), a division of Keefe, Bryette & Woods, Inc. Webb is a
broker-dealer registered with the SEC and a member of the NASD.
For its services, Webb has received a management fee of $25,000 and
will receive a marketing fee of 1.3% of the aggregate purchase price of
the Common Shares sold other than (i) Common Shares purchased by the
directors, officers and employees of the Bank and the Holding Company
and members of their immediate families, (ii) Common Shares purchased
by the ESOP, and (iii) Common Shares sold by Selected Brokers
(hereinafter defined).
Depending on market conditions, the Common Shares, if any, not
initially subscribed for in the Subscription Offering or the Community
Offering may be offered for sale to the general public on a best
efforts basis in a syndicated community offering by a selling group of
broker-dealers ("Selected Brokers") to be formed by Webb. If Selected
Brokers are employed, the Selected Brokers will be paid a commission
not to exceed 5.5% of the aggregate purchase price received for Common
Shares sold by such Selected Brokers.
The estimated underwriting fees are based on the following assumptions:
(i) 2,248,250 Common Shares will be sold in the Offering; (ii)
approximately 150,000 Common Shares sold in the Offering will be
purchased by directors, officers and employees of the Bank and the
Holding Company and the members of their immediate families; (iii)
179,860 Common Shares sold in the Offering will be purchased by the
ESOP; and (iv) the remaining 2,068,390 Common Shares sold in the
Offering will be sold to persons other than the ESOP and the Bank's
directors, executive officers and employees and members of their
immediate families, with sales commissions of 1.3% of the aggregate
dollar amount of such Common Shares.
The Bank will also reimburse Webb for all reasonable fees and expenses
of its legal counsel, not to exceed $30,000.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
- -------- ------------------------------------------
(a) OHIO REVISED CODE
Division (E) of Section 1701.13 of the Ohio Revised Code
governs indemnification by a corporation and provides as follows:
(E)(1) A corporation may indemnify or agree 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, whether civil,
criminal, administrative, or investigative, other than an action by or in the
right of the corporation, by reason of the fact that he 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, trustee, officer,
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<PAGE> 109
employee, or agent of another corporation, domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's 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 interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, or conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
(2) A corporation may indemnify or agree 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 or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he 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, trustee, officer, employee or
agent of another corporation, domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust, or other enterprise, against expenses,
including attorney's fees, actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any of the following:
(a) Any claim, issue, or matter as to which such person is
adjudged to be liable for negligence or misconduct in the performance
of his duty to the corporation unless, and only to the extent that
the court of common pleas or the court in which such action or suit
was brought determines upon application that, despite the
adjudication of liability, but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity
for such expenses as the court of common pleas or such other court
shall deem proper;
(b) Any action or suit in which the only liability asserted
against a director is pursuant to section 1701.95 of the Revised Code.
(3) To the extent that a director, trustee, officer, employee, or
agent has been successful on the merits or otherwise in defense of any action,
suit, or proceeding referred to in divisions (E)(1) and (2) of this section, or
in defense of any claim, issue, or matter therein, he shall be indemnified
against expenses, including attorney's fees, actually and reasonably incurred by
him in connection with the action, suit, or proceeding.
(4) Any indemnification under divisions (E)(1) and (2) of this
section, unless ordered by a court, shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, trustee, officer, employee, or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in divisions
(E)(1) and (2) of this section. Such determination shall be made as follows:
(a) By a majority vote of a quorum consisting of directors of
the indemnifying corporation who were not and are not parties to or
threatened with any such action, suit, or proceeding;
(b) If the quorum described in division (E)(4)(a) of this
section is not obtainable or if a majority vote of a quorum of
disinterested directors so directs, in a written opinion by
independent legal counsel other than an attorney, or a firm having
associated with it an attorney, who has been retained by or who has
performed services for the corporation or any person to be
indemnified within the past five years;
(c) By the shareholders; or
(d) By the court of common pleas or the court in which such
action, suit, or proceeding was brought.
Any determination made by the disinterested directors under division
(E)(4)(a) or by independent legal counsel under division (E)(4)(b) of this
section shall be promptly communicated to the person who threatened or brought
the action or suit by or in the right of the corporation under division (E)(2)
of this section, and within ten days after receipt of such notification, such
person shall have the right to petition the court of common pleas or the court
in which action or suit was brought to review the reasonableness of such
determination.
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<PAGE> 110
(5)(a) Unless at the time of a director's act or omission that is the
subject of an action, suit, or proceeding referred to in divisions (E)(1) and
(2) of this section, the articles or the regulations of a corporation state by
specific reference to this division that the provisions of this division do not
apply to the corporation and unless the only liability asserted against a
director in an action, suit, or proceeding referred to in divisions (E)(1) and
(2) of this section is pursuant to section 1701.95 of the Revised Code,
expenses, including attorney's fees, incurred by a director in defending the
action, suit, or proceeding shall be paid by the corporation as they are
incurred, in advance of the final disposition of the action, suit, or proceeding
upon receipt of an undertaking by or on behalf of the director in which he
agrees to do both of the following:
(i) Repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that his action or
failure to act involved an act or omission undertaken with deliberate
intent to cause injury to the corporation or undertaken with reckless
disregard for the best interests of the corporation;
(ii) Reasonably cooperate with the corporation concerning the
action, suit, or proceeding.
(b) Expenses, including attorney's fees, incurred by a director,
trustee, officer, employee, or agent in defending any action, suit, or
proceeding referred to in divisions (E)(1) and (2) of this section, may be paid
by the corporation as they are incurred, in advance of the final disposition of
the action, suit, or proceeding as authorized by the directors in the specific
case upon receipt of an undertaking by or on behalf of the director, trustee,
officer, employee, or agent to repay such amount, if it ultimately is determined
that he is not entitled to be indemnified by the corporation.
(6) The indemnification authorized by this section shall not be
exclusive of, and shall be in addition to, any other rights granted to those
seeking indemnification under the articles, the regulations or any agreement,
vote of shareholders or disinterested directors, or otherwise, both as to action
in their official capacities and as to action in another capacity while holding
their offices and positions, and shall continue as to a person who has ceased to
be a director, trustee, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a person.
(7) A corporation may purchase and maintain insurance or furnish
similar protection, including but not limited to trust funds, letters of credit,
or self-insurance, on behalf of or for 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, trustee, officer, employee, or agent
of another corporation, domestic or foreign, nonprofit or profit, partnership,
joint venture, trust, or other 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 have the power to indemnify
him against such liability under this section. Insurance may be purchased from
or maintained with a person in which the corporation has a financial interest.
(8) The authority of a corporation to indemnify persons pursuant to
divisions (E)(1) and (2) of this section does not limit the payment of expenses
as they are incurred, indemnification, insurance, or other protection that may
be provided pursuant to divisions (E)(5), (6), and (7) of this section.
Divisions (E)(1) and (2) of this section do not create any obligation to repay
or return payments made by the corporation pursuant to division (E)(5), (6), or
(7).
(9) As used in this division, references to "corporation" include all
constituent corporations in a consolidation or merger and the new or surviving
corporation, so that any person who is or was a director, officer, employee, or
agent of such a constituent corporation, or is or was serving at the request of
such constituent corporation as a director, trustee, officer, employee, or agent
of another corporation, domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust, or other enterprise, shall stand in the same
position under this section with respect to the new or surviving corporation as
he would if he had served the new or surviving corporation in the same capacity.
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<PAGE> 111
(B) THE HOLDING COMPANY'S CODE OF REGULATIONS
Article Five of The Holding Company's Code of Regulations
provides for the indemnification of officers and directors as follows:
SECTION 5.01. MANDATORY INDEMNIFICATION. The corporation shall
indemnify any officer or director of the corporation who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, any action threatened or instituted by or in the
right of the corporation), by reason of the fact that he 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, trustee, officer, employee or agent of
another corporation (domestic or foreign, nonprofit or for profit), partnership,
joint venture, trust or other enterprise, against expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and transcript
costs), 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 interests of the corporation, and with respect to any criminal action
or proceeding, he had no reasonable cause to believe his conduct was unlawful. A
person claiming indemnification under this Section 5.01 shall be presumed, in
respect of any act or omission giving rise to such claim for indemnification, to
have 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 with respect to any
criminal matter, to have had no reasonable cause to believe his conduct was
unlawful, and the termination of any action, suit or proceeding by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, rebut such presumption.
SECTION 5.02. COURT-APPROVED INDEMNIFICATION. Anything
contained in the Regulations or elsewhere to the contrary notwithstanding:
(A) the corporation shall not indemnify any officer
or director of the corporation who was a party to any completed action or suit
instituted by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he 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, trustee, officer, employee or agent of another corporation
(domestic or foreign, nonprofit or for profit), partnership, joint venture,
trust or other enterprise, in respect of any claim, issue or matter asserted in
such action or suit as to which he shall have been adjudged to be liable for
acting with reckless disregard for the best interests of the corporation or
misconduct (other than negligence) in the performance of his duty to the
corporation unless and only to the extent that the Court of Common Pleas of
Coshocton County, Ohio, or the court in which such action or suit was brought
shall determine upon application that, despite such adjudication of liability,
and in view of all the circumstances of the case, he is fairly and reasonably
entitled to such indemnity as such Court of Common Pleas or such other court
shall deem proper; and
(B) the corporation shall promptly make any such
unpaid indemnification as is determined by a court to be proper as contemplated
by this Section 5.02.
SECTION 5.03. INDEMNIFICATION FOR EXPENSES. Anything contained
in the Regulations or elsewhere to the contrary notwithstanding, to the extent
that an officer or director of the corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in Section
5.01, or in defense of any claim, issue or matter therein, he shall be promptly
indemnified by the corporation against expenses (including, without limitation,
attorneys' fees, filing fees, court reporters' fees and transcript costs)
actually and reasonably incurred by him in connection therewith.
SECTION 5.04 DETERMINATION REQUIRED. Any indemnification
required under Section 5.01 and not precluded under Section 5.02 shall be made
by the corporation only upon a determination that such indemnification of the
officer or director is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 5.01. Such determination may
be made only (A) by a majority vote of a quorum consisting of directors of the
corporation who were not and are not parties to, or threatened with, any such
action, suit or proceeding, or (B) if such a quorum is not obtainable or if a
majority of a quorum of disinterested directors so directs, in a written opinion
by independent legal counsel other than an attorney, or a firm having associated
with it an attorney, who has been retained by or who has performed services for
the corporation, or any person to be indemnified, within the past five years, or
(C) by the shareholders, or (D) by the Court of Common Pleas of Coshocton
County, Ohio, or (if the corporation is a party thereto) the court in which such
action, suit or proceeding was brought, if any; any such determination may be
made by a court under division (D) of this Section 5.04 at any time including,
without limitation, any time before, during or after the time when any such
determination may be requested of, be under consideration by or have been denied
or disregarded by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by the shareholders under
division (C) of this Section 5.04; and no failure for any reason to
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<PAGE> 112
make any such determination, and no decision for any reason to deny any such
determination, by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by shareholders under division
(C) of this Section 5.04 shall be evidence in rebuttal of the presumption
recited in Section 5.01. Any determination made by the disinterested directors
under division (A) or by independent legal counsel under division (B) of this
Section 5.04 to make indemnification in respect of any claim, issue or matter
asserted in an action or suit threatened or brought by or in the right of the
corporation shall be promptly communicated to the person who threatened or
brought such action or suit, and within ten (10) days after receipt of such
notification such person shall have the right to petition the Court of Common
Pleas of Coshocton County, Ohio, or the court in which such action or suit was
brought, if any, to review the reasonableness of such determination.
SECTION 5.05. ADVANCES FOR EXPENSES. Expenses (including,
without limitation, attorneys' fees, filing fees, court reporters' fees and
transcript costs) incurred in defending any action, suit or proceeding referred
to in Section 5.01 shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding to or on behalf of the officer or
director promptly as such expenses are incurred by him, but only if such officer
or director shall first agree, in writing, to repay all amounts so paid in
respect of any claim, issue or other matter asserted in such action, suit or
proceeding in defense of which he shall not have been successful on the merits
or otherwise:
(A) if it shall ultimately be determined as provided
in Section 5.04 that he is not entitled to be indemnified by the corporation as
provided under Section 5.01; or
(B) if, in respect of any claim, issue or other
matter asserted by or in the right of the corporation in such action or suit, he
shall have been adjudged to be liable for acting with reckless disregard for the
best interests of the corporation or misconduct (other than negligence) in the
performance of his duty to the corporation, unless and only to the extent that
the Court of Common Pleas of Coshocton County, Ohio, or the court in which such
action or suit was brought shall determine upon application that, despite such
adjudication of liability, and in view of all the circumstances, he is fairly
and reasonably entitled to all or part of such indemnification.
SECTION 5.06. ARTICLE FIVE NOT EXCLUSIVE. The indemnification
provided by this Article Five shall not be deemed exclusive of any other rights
to which any person seeking indemnification may be entitled under the Articles
or the Regulations or any agreement, vote of shareholders or disinterested
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be an officer or director of the corporation and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
SECTION 5.07. INSURANCE. The corporation may 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, trustee, officer, employee, or agent of another
corporation (domestic or foreign, nonprofit or for profit), partnership, joint
venture, trust or other 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 have the obligation or the power to
indemnify him against such liability under the provisions of this Article Five.
SECTION 5.08. CERTAIN DEFINITIONS. For purposes of this
Article Five, and as examples and not by way of limitation:
(A) A person claiming indemnification under this
Article 5 shall be deemed to have been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section 5.01, or in
defense of any claim, issue or other matter therein, if such action, suit or
proceeding shall be terminated as to such person, with or without prejudice,
without the entry of a judgment or order against him, without a conviction of
him, without the imposition of a fine upon him and without his payment or
agreement to pay any amount in settlement thereof (whether or not any such
termination is based upon a judicial or other determination of the lack of merit
of the claims made against him or otherwise results in a vindication of him);
and
(B) References to an "other enterprise" shall include
employee benefit plans; references to a "fine" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and references to
"serving at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee or agent with respect
to an employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the best
interests of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the corporation" within the meaning of that term as used in this Article Five.
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<PAGE> 113
SECTION 5.09. VENUE. Any action, suit or proceeding to
determine a claim for indemnification under this Article Five may be maintained
by the person claiming such indemnification, or by the corporation, in the Court
of Common Pleas of Coshocton County, Ohio. The corporation and (by claiming such
indemnification) each such person consent to the exercise of jurisdiction over
its or his person by the Court of Common Pleas of Coshocton County, Ohio, in any
such action, suit or proceeding.
(C) INSURANCE POLICIES
The Bank currently maintains a directors' and officers'
liability policy providing for insurance of directors and officers for liability
incurred in connection with performance of their duties as directors and
officers. Such policy does not, however, provide insurance for losses resulting
from willful or criminal misconduct.
(D) INDEMNIFICATION AGREEMENTS
(I) AGREEMENT WITH KELLER & CO., INC.
The Bank has agreed to indemnify Keller & Co., Inc.
("Keller"), the firm retained by the Bank to provide the appraisal of the pro
forma market value of the Bank, as converted, and the Holding Company, in
connection with certain matters related to the appraisal. The Bank will
indemnify Keller, its affiliates and the respective directors, officers, agents
and employees of Keller for certain costs and expenses, including reasonable
legal fees, in connection with claims or litigation arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
financial statements or other information supplied to Keller by the Bank or by
an omission or alleged omission by the Bank to state a material fact in the
information so provided, except where Keller has been negligent or at fault.
(II) AGREEMENT WITH WEBB
In general, the agreement with Webb (the "Agency Agreement")
provides that the Bank will indemnify and hold harmless Webb's directors,
officers, employees, agents and any controlling person against any and all loss,
liability, claim, damage or expense (including the reasonable fees and
disbursements of counsel) arising out of any untrue statement, or alleged untrue
statement, of a material fact contained in the Summary Proxy Statement or the
Prospectus, any application to regulatory authorities, any "blue sky"
application, or any other related document prepared or executed by or on behalf
of the Bank with its consent in connection with, or in contemplation of, the
transactions contemplated by the Agency Agreement, or any omission therefrom of
a material fact required to be stated therein, unless such untrue statement or
omission, or alleged untrue statement or omission, was made in reliance upon,
and in conformity with, written information regarding Webb furnished to the Bank
by Webb expressly for use in the Summary Proxy Statement or the Prospectus.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
- -------- ----------------------------------------
No securities of the Holding Company have been sold by the Holding
Company without registration pursuant to the Act, except as follows:
On December 5, 1997, in connection with the incorporation of the
Holding Company, 100 common shares, without par value, of the Holding Company
(the "Securities") were sold for an aggregate purchase price of $100 pursuant to
Section 4(2) of the Act in a transaction not involving any public offering. The
Securities were sold to Robert C. Hamilton, the President of the Holding
Company, who had access to all material information about the Holding Company.
The Securities were offered without the use of any form of general solicitation
or advertising. No underwriter was involved in the transaction, and no
commission, discount or other remuneration was paid or given in connection with
the sale of the Securities. Under the terms of the Subscription Agreement
between the Holding Company and Mr. Hamilton, the Securities will be repurchased
by the Holding Company for $100 on the effective date of the Conversion.
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<PAGE> 114
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
- -------- -------------------------------------------
(a) EXHIBITS
The exhibits filed as a part of this Registration Statement
are as follows:
1.1 Engagement letter with Charles Webb & Company
*1.2 Form of Agency Agreement with Charles Webb & Company
2 Plan of Conversion
3.1 Articles of Incorporation of Home Loan Financial Corporation
3.2 Code of Regulations of Home Loan Financial Corporation
5 Opinion of Vorys, Sater, Seymour and Pease regarding legality
of securities being registered
8 Opinion of Vorys, Sater, Seymour and Pease regarding tax
matters
10.1 Home Loan Financial Corporation 1998 Stock Option and
Incentive Plan (proposed)
10.2 Home Loan Financial Corporation Recognition and Retention Plan
and Trust Agreement (proposed)
*10.3 Home Loan Financial Corporation Employee Stock Ownership Plan
and Trust (proposed)
10.4 Employment Agreement between The Home Loan Savings Bank and
Robert C. Hamilton (proposed)
10.5 Equity Appreciation Bonus Agreement between The Home Loan
Savings Bank and Robert C. Hamilton
23.1 Consent of Crowe, Chizek and Company, LLP
23.2 Consent of Keller & Co., Inc.
23.3 Consent of Vorys, Sater, Seymour and Pease
27 Financial Data Schedule
99.1 Summary Proxy Statement
99.2 Order Form and Form of Certification
99.3 Form of Proxy
99.4 Solicitation and Marketing Material
99.5 Appraisal Agreement between The Home Loan Savings Bank and
Keller & Co., Inc.
99.6 Appraisal Report prepared by Keller & Co., Inc.
----------------------
* To be filed supplementally or by amendment
(B) FINANCIAL STATEMENT SCHEDULES:
No financial statement schedules are filed because the
required information is not applicable or is included in the consolidated
financial statements or related notes.
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<PAGE> 115
ITEM 17. UNDERTAKINGS.
- -------- -------------
(a) The undersigned, the Holding Company, 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 Act;
(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;
(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 Act, 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.
(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.
(b) Insofar as indemnification for liabilities arising under
the Act may be permitted to directors, officers and controlling persons of the
Holding Company, pursuant to the foregoing provisions or otherwise, the Holding
Company has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Holding
Company of expenses incurred or paid by a director, officer or controlling
person of the Holding Company 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 Holding Company 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 Act and
will be governed by the final adjudication of such issue.
II-8
<PAGE> 116
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, duly authorized to do so, in the City of
Coshocton, State of Ohio, on December 9, 1997.
HOME LOAN FINANCIAL CORPORATION
By: /s/ Robert C. Hamilton
------------------------------------
Robert C. Hamilton
its President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-1 has been signed below by the following
persons in the capacities and as of the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Neal J. Caldwell Director December 9, 1997
- ------------------------------------
Neal J. Caldwell
/s/ Charles H. Durmis Director December 9, 1997
- ------------------------------------
Charles H. Durmis
/s/ Robert C. Hamilton Director, Chairman and President December 9, 1997
- ------------------------------------
Robert C. Hamilton
/s/ Robert D. Mauch Director December 9, 1997
- ------------------------------------
Robert D. Mauch
/s/ Douglas L. Randles Director December 9, 1997
- ------------------------------------
Douglas L. Randles
/s/ Preston W. Bair Treasurer, Secretary, Principal Financial December 9, 1997
- ------------------------------------ Officer and Principal Accounting Officer
Preston W. Bair
</TABLE>
II-9
<PAGE> 117
HOME LOAN FINANCIAL CORPORATION
REGISTRATION STATEMENT ON FORM S-1
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C> <C>
1.1 Engagement letter with Charles Webb & Company
*1.2 Form of Agency Agreement with Charles Webb & Company
2 Plan of Conversion
3.1 Articles of Incorporation of Home Loan Financial Corporation
3.2 Code of Regulations of Home Loan Financial Corporation
5 Opinion of Vorys, Sater, Seymour and Pease regarding legality of securities
being registered
8 Opinion of Vorys, Sater, Seymour and Pease regarding tax matters
10.1 Home Loan Financial Corporation 1998 Stock Option and Incentive
Plan (proposed)
10.2 Home Loan Financial Corporation Recognition and Retention Plan and
Trust Agreement (proposed)
*10.3 Home Loan Financial Corporation Employee Stock Ownership Plan and
Trust (proposed)
10.4 Employment Agreement between The Home Loan Savings Bank and Robert
C. Hamilton (proposed)
10.5 Equity Appreciation Bonus Agreement between The Home Loan Savings
Bank and Robert C. Hamilton
23.1 Consent of Crowe, Chizek and Company, LLP
23.2 Consent of Keller & Co., Inc.
23.3 Consent of Vorys, Sater, Seymour and Pease
27 Financial Data Schedule
99.1 Summary Proxy Statement
99.2 Order Form and Form of Certification
99.3 Form of Proxy
99.4 Solicitation and Marketing Material
99.5 Appraisal Agreement between The Home Loan Savings Bank and Keller &
Co., Inc.
99.6 Appraisal Report prepared by Keller & Co., Inc.
- ----------------------
<FN>
* To be filed supplementally or by amendment
</TABLE>
<PAGE> 1
Exhibit 1.1
October 31 1997
Mr. Robert C. Hamilton
President and Chief Executive Officer
The Home Loan & Savings Bank
401 Main Street
Coshocton, Ohio 43812-1580
Dear Mr. Hamilton:
This proposal is in connection with The Home Loan & Saving Bank's (the
"Bank") intention to convert from a mutual to a capital stock form of
organization (the "Conversion"). In order to effect the Conversion, it is
contemplated that all of the Bank's common stock to be outstanding pursuant to
the Conversion will be issued to a holding company (the "Company") to be formed
by the Bank, and that the Company will offer and sell shares of its common stock
first to eligible persons (pursuant to the Bank's Plan of Conversion) in a
Subscription and Community Offering.
Charles Webb & Company (Webb"), a Division of Keefe, Bruyette and
Woods, Inc. ("KBW""), will act as the Bank's and the Company's exclusive
financial advisor and marketing agent in connection with the Conversion. This
letter sets forth selected terms and conditions of our engagement.
1. ADVISORY/CONVERSION SERVICES. As the Bank's and Company's financial
advisor and marketing agent, Webb will provide the Bank and the Company with a
comprehensive program of conversion services designed to promote an orderly,
efficient, cost-effective and long-term stock distribution. Webb will provide
financial and logistical advice to the Bank and the Company concerning the
offering and related issues. Webb will assist in providing conversion
enhancement services intended to maximize stock sales in the Subscription
Offering and to residents of the Bank's market area, if necessary, in the
Community Offering.
Webb shall provide financial advisory services to the Bank which are
typical in connection with an equity offering and include, but are not limited
to, overall financial analysis of the client with a focus on identifying factors
which impact the valuation of the common stock and provide the appropriate
recommendations for the betterment of the equity valuation.
Additionally, post conversion financial advisory services will include
advice on shareholder relations, NASDAQ listing, dividend policy (for both
regular and special dividends), stock repurchase strategy and communication with
market makers. Prior to the closing of the offering, Webb shall furnish to
client a Post-Conversion reference manual which will include specifics relative
to these items. (The nature of the services to be provided by Webb as the Bank's
and the Company's financial advisor and marketing agent are further described in
Exhibit A attached hereto.)
<PAGE> 2
2. PREPARATION OF OFFERING DOCUMENTS. The Bank, the Company and their
counsel will draft the Registration Statement, Application for Conversion,
Prospectus and other documents to be used in connection with the Conversion.
Webb will attend meetings to review these documents and advise you on their form
and content. Webb and its counsel will draft appropriate agency agreement and
related documents as well as marketing materials other than the Prospectus.
3. DUE DILIGENCE REVIEW. Prior to filing the Registration Statement,
Application for Conversion or any offering or other documents naming Webb as the
Bank's and the Company's financial advisor and marketing agent, Webb and their
representatives will undertake substantial investigations to learn about the
Bank's business and operations ("due diligence review") in order to confirm
information provided to us and to evaluate information to be contained in the
Bank's and/or the Company's offering documents. The Bank agrees that it will
make available to Webb all relevant information, whether or not publicly
available, which Webb reasonably requests, and will permit Webb to discuss with
management the operations and prospects of the Bank. Webb will treat all
material non-public information as confidential. The Bank acknowledges that Webb
will rely upon the accuracy and completeness of all information received from
the Bank, its officers, directors, employees, agents and representatives,
accountants and counsel including this letter to serve as the Bank's and the
Company's financial advisor and marketing agent.
4. REGULATORY FILINGS. The Bank and/or the Company will cause appropriate
offering documents to be filed with all regulatory agencies, including the
Securities and Exchange Commission ("SEC"), the National Bank of Securities
Dealers ("NASD"), Office of Thrift Supervision ("OTS") and such state securities
commissioners as may be determined by the Bank.
5. AGENCY AGREEMENT. The specific terms of the conversion services,
conversion offering enhancement and syndicated offering services contemplated in
this letter shall be set forth in an Agency Agreement between Webb and the Bank
and the Company to be executed prior to commencement of the offering, and dated
the date that the Company's Prospectus is declared effective and/or authorized
to be disseminated by the appropriate regulatory agencies, the SEC, the NASD,
the OTS and such state securities commissioners and other regulatory agencies as
required by applicable law.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Agency Agreement will
provide for customary representations, warranties and covenants by the Bank and
Webb, and for the Company to indemnify Webb and their controlling persons (and,
if applicable, the members of the selling group and their controlling persons),
and for Webb to indemnify the Bank and the Company against certain liabilities,
including, without limitation, liabilities under the Securities Act of 1933.
7. FEES. For the services hereunder, the Bank and/or Company shall pay the
following fees to Webb at closing unless stated otherwise:
(a) A Management Fee of $25,000 payable in four consecutive
monthly installments of $6,250 commencing with the signing of
this letter. Such fees shall be deemed to have been earned
when due. Should the Conversion be terminated for any
<PAGE> 3
reason not attributable to the action or inaction of Webb,
Webb shall have earned and be entitled to be paid fees
accruing through the stage at which point the termination
occurred.
(b) A Success Fee of 1.30% shall be charged based on the aggregate
Purchase Price of Common Stock sold in the Subscription
Offering and Community Offering excluding shares purchased by
the Bank's officers, directors, or employees (or members of
their immediate families) plus any ESOP, tax-qualified or
stock based compensation plans (except IRAs) or similar plan
created by the Bank for some or all of its directors or
employees. The Management Fee described in 7(a) will be
applied against the Success Fee.
(c) If any shares of the Company's stock remain available after
the subscription offering, at the request of the Bank, Webb
will seek to form a syndicate of registered broker-dealers to
assist in the sale of such common stock on a best efforts
basis, subject to the terms and conditions set forth in the
selected dealers agreement. Webb will endeavor to distribute
the common stock among dealers in a fashion which best meets
the distribution objectives of the Bank and the Plan of
Conversion. Webb will be paid a fee not to exceed 5.5% of the
aggregate Purchase Price of the shares of common stock sold by
them. Webb will pass onto selected broker-dealers, who assist
in the syndicated community, an amount competitive with gross
underwriting discounts charged at such time for comparable
amounts of stock sold at a comparable price per share in a
similar market environment. Fees with respect to purchases
affected with the assistance of a broker/dealer other than
Webb shall be transmitted by Webb to such broker/dealer. THE
DECISION TO UTILIZE SELECTED BROKER-DEALERS WILL BE MADE BY
THE BANK UPON CONSULTATION WITH WEBB. In the event, with
respect to any stock purchases, fees are paid pursuant to this
subparagraph 7(c), such fees shall be in lieu of, and not in
addition to, payment pursuant to subparagraph 7(a) and 7(b).
8. ADDITIONAL SERVICES. Webb further agrees to provide financial advisory
assistance to the Company and the Bank for a period of one year following
completion of the Conversion, including formation of a dividend policy and share
repurchase program, assistance with shareholder reporting and shareholder
relations matters, general advice on mergers and acquisitions and other related
financial matters, without the payment by the Company and the Bank of any fees
in addition to those set forth in Section 7 hereof. Nothing in this Agreement
shall require the Company and the Bank to obtain such services from Webb.
Following this initial one year term, if both parties wish to continue the
relationship, a fee will be negotiated and an agreement entered into at that
time.
9. EXPENSES. The Bank will bear those expenses of the proposed offering
customarily borne by issuers, including, without limitation, regulatory filing
fees, SEC, "Blue Sky," and NASD filing and registration fees; the fees of the
Bank's accountants, attorneys, appraiser, transfer agent and registrar,
printing, mailing and marketing and syndicate expenses associated with the
<PAGE> 4
Conversion; the fees set forth in Section 7; and fees for "Blue Sky" legal work.
If Webb incurs expenses on behalf of Client, Client will reimburse Webb for such
expenses.
WEBB WILL NOT REQUEST REIMBURSEMENT FOR ANY OUT-OF-POCKET EXPENSES
RELATED TO TRAVEL, MEALS, LODGING, PHOTOCOPYING, ETC. Webb will request
reimbursement for reasonable fees and expenses of their counsel (such fees of
counsel will not be incurred without the prior approval of Client). The
selection of such counsel will be done by Webb, with the approval of the Bank.
Such reimbursement of legal fees will not exceed $30,000.
10. CONDITIONS. Webb's willingness and obligation to proceed hereunder
shall be subject to, among other things, satisfaction of the following
conditions in Webb's opinion, which opinion shall have been formed in good faith
by Webb after reasonable determination and consideration of all relevant
factors: (a) full and satisfactory disclosure of all relevant material,
financial and other information in the disclosure documents and a determination
by Webb, in its sole discretion, that the sale of stock on the terms proposed is
reasonable given such disclosures; (b) no material adverse change in the
condition or operations of the Bank subsequent to the execution of the
agreement; and (c) no adverse market conditions at the time of offering which in
Webb's opinion make the sale of the shares by the Company inadvisable.
12. BENEFIT. This Agreement shall inure to the benefit of the parties
hereto and their respective successors and to the parties indemnified pursuant
to the terms and conditions of the Agency Agreement and their successors, and
the obligations and liabilities assumed hereunder by the parties hereto shall be
binding upon their respective successors provided, however, that this Agreement
shall not be assignable by Webb.
13. DEFINITIVE AGREEMENT. This letter reflects Webb's present intention of
proceeding to work with the Bank on its proposed conversion. It does not create
a binding obligation on the part of the Bank, the Company or Webb except as to
the agreement to maintain the confidentiality of non-public information set
forth in Section 3, the payment of certain fees as set forth in Section 7(a) and
7(b) and the assumption of expenses as set forth in Section 9, all of which
shall constitute the binding obligations of the parties hereto and which shall
survive the termination of this Agreement or the completion of the services
furnished hereunder and shall remain operative and in full force and effect. You
further acknowledge that any report or analysis rendered by Webb pursuant to
this engagement is rendered for use solely by the management of the Bank and its
agents in connection with the Conversion. Accordingly, you agree that you will
not provide any such information to any other person without our prior written
consent.
Webb acknowledges that in offering the Company's stock no person will
be authorized to give any information or to make any representation not
contained in the offering prospectus and related offering materials filed as
part of a registration statement to be declared effective in connection with the
offering. Accordingly, Webb agrees that in connection with the offering it will
not give any unauthorized information or make any unauthorized representation.
We will be pleased to elaborate on any of the matters discussed in this letter
at your convenience.
<PAGE> 5
If the foregoing correctly sets forth our mutual understanding, please
so indicate by signing and returning the original copy of this letter to the
undersigned.
Very truly yours,
CHARLES WEBB & COMPANY,
A DIVISION OF KEEFE, BRUYETTE & WOODS, INC.
By: Patricia A. McJoynt
Executive Vice President
THE HOME LOAN & SAVINGS BANK
By: Robert C. Hamilton
President and Chief Executive Officer
<PAGE> 6
EXHIBIT A
---------
CONVERSION SERVICES PROPOSAL
TO THE HOME LOAN SAVINGS BANK
Charles Webb & Company provides thrift institutions converting from mutual to
stock form of ownership with a comprehensive program of conversion services
designed to promote an orderly, efficient, cost-effective and long-term stock
distribution. The following list is representative of the conversion services,
if appropriate, we propose to perform on behalf of the Bank.
General Services
- ----------------
Assist management and legal counsel with the design of the transaction
structure.
Analyze and make recommendations on bids from printing, transfer agent, and
appraisal firms.
Assist officers and directors in obtaining bank loans to purchase stock, if
requested.
Assist in drafting and distribution of press releases as required or
appropriate.
Conversion Offering Enhancement Services
- ----------------------------------------
Establish and manage Stock Information Center at the Bank. Stock Information
Center personnel will track prospective investors; record stock orders; mail
order confirmations; provide the Bank's senior management with daily reports;
answer customer inquiries; and handle special situations as they arise.
Assign Webb's personnel to be at the Bank through completion of the Subscription
and Community Offerings to manage the Stock Information Center, meet with
prospective shareholders at individual and community information meetings,
solicit local investor interest through a telemarketing campaign, answer
inquiries, and otherwise assist in the sale of stock in the Subscription and
Community Offerings. This effort will be lead by a Principal of Webb/KBW.
Create target investor list based upon review of the Bank's depositor base.
Provide intensive financial and marketing input for drafting of the prospectus.
<PAGE> 7
Conversion Offering Enhancement Services- Continued
- ---------------------------------------------------
Prepare other marketing materials, including prospecting letters and brochures,
and media advertisements.
Arrange logistics of community information meeting(s) as required.
Prepare audio-visual presentation by senior management for community information
meeting(s).
Prepare management for question-and-answer period at community information
meeting(s).
Attend and address community information meeting(s) and be available to answer
questions.
Broker-Assisted Sales Services.
- -------------------------------
Arrange for broker information meeting(s) as required
Prepare audio-visual presentation for broker information meeting(s).
Prepare script for presentation by senior management at broker information
meeting(s).
Prepare management for question-and-answer period at broker information
meeting(s).
Attend and address broker information meeting(s) and be available to answer
questions.
Produce confidential broker memorandum to assist participating brokers in
selling the Bank's common stock.
Aftermarket Support Services.
- -----------------------------
Webb will use their best efforts to secure market making and on-going research
commitment from at least two NASD firms, one of which will be Keefe, Bruyette &
Woods, Inc.
<PAGE> 1
Exhibit 2
THE HOME LOAN SAVINGS BANK
PLAN OF CONVERSION
Table of Contents
-----------------
<TABLE>
<CAPTION>
<S> <C> <C>
1. Introduction.......................................................................................................1
2. Definitions........................................................................................................1
3. Procedures for the Conversion......................................................................................4
4. Purchase Price of Common Shares and Number of Shares to be Offered in Connection with the Conversion...............5
5. Subscription Rights of Eligible Account Holders....................................................................5
6. Subscription Rights of Tax-Qualified Employee Stock Benefit Plans..................................................6
7. Subscription Rights of Supplemental Eligible Account Holders.......................................................6
8. Subscription Rights of Other Eligible Members......................................................................7
9. Community Offering.................................................................................................7
10. Additional Limitations on Purchases................................................................................7
11. Procedures for the Subscription Offering and the Community Offering................................................9
12. Payment for Common Shares..........................................................................................9
13. Expiration of Subscription Rights; Undelivered, Defective or Late Order Forms; Insufficient Payment...............10
14. Compliance with Securities Laws...................................................................................11
15. Rights of Shareholders After Completion of Conversion.............................................................11
16. Establishment of Liquidation Account..............................................................................11
17. Accounts in Converted Bank........................................................................................12
18. Restrictions on Purchases and Sales of Common Shares by Officers and Directors Following Conversion...............12
19. Restrictions on Acquisition of the Bank or the Holding Company....................................................13
20. Amendment or Termination of this Plan.............................................................................13
21. Consummation of Conversion........................................................................................13
22. Tax Rulings/Opinions..............................................................................................13
23. Directors and Officers of the Bank................................................................................13
24. Stock Benefit Plans...............................................................................................13
25. Registration of Common Shares; Market for Common Shares...........................................................13
26. Expenses of Conversion............................................................................................14
27. Mailing of Proxy Materials........................................................................................14
28. Interpretation of the Plan........................................................................................14
</TABLE>
A-i
<PAGE> 2
THE HOMA LOAN SAVINGS BANK
PLAN OF CONVERSION
------------------
1. INTRODUCTION.
This Plan of Conversion, adopted by the Board of Directors of The Home
Loan Savings Bank (hereinafter referred to as the "Bank") on November 12, 1997
(hereinafter referred to as this "Plan"), provides for the conversion of the
Bank from a mutual savings and loan association incorporated under Ohio law to a
permanent capital stock savings and loan association incorporated under Ohio law
(hereinafter referred to as the "Conversion") and the acquisition by a holding
company to be formed at the direction of the Bank of all of the capital stock to
be issued by the Bank in the Conversion. The purpose of the Conversion is to
provide the Bank with additional capital to expand lending and investment
activities, enhance customer services and pursue other lawful activities which
the Board of Directors may deem to be in the best interests of the Bank.
After the completion of the Conversion, savings accounts in the Bank
will be equivalent in amount, interest rate and other terms to the savings
accounts in the Bank immediately prior to the Conversion and will continue to be
insured by the Federal Deposit Insurance Corporation to the maximum extent
permitted by law. Rights of account holders with respect to liquidation and
voting will change, however, as a result of the Conversion. As a permanent
capital stock savings and loan association, the Bank will succeed to all of the
presently existing rights, interests, duties and obligations of the Bank in
mutual form to the extent provided by law, including, but not limited to, all
rights to and interests in its assets and properties, both real and personal.
This Plan must be approved at the Special Meeting (hereinafter defined)
of Members (hereinafter defined) by the affirmative vote of a majority of the
total outstanding votes entitled to be cast at the Special Meeting. Before this
Plan may be submitted to the members of the Bank for approval at the Special
Meeting, however, this Plan must be approved by the OTS (hereinafter defined)
and the Division (hereinafter defined). The Amended Articles of Incorporation
and Amended Constitution of the Bank must also be approved at the Special
Meeting by the affirmative vote of at least three-fifths of the votes cast in
person or by proxy at the Special Meeting.
2. DEFINITIONS.
As used in this Plan, the following terms have the corresponding
meanings:
ACTING IN CONCERT means (a) knowing participation in a joint activity
or interdependent conscious parallel action towards a common goal
whether or not pursuant to an express agreement, or (b) 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.
AFFILIATE, when used to indicate a relationship with a specified Person
(hereinafter defined), means a Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by or is
under common control with the Person specified.
AMENDED ARTICLES means the Amended Articles of Incorporation of the
Bank which are in the form attached hereto as Exhibit I and which
authorize the issuance of capital stock and which will be filed with
the Ohio Secretary of State on the date on which the Conversion becomes
effective.
AMENDED CONSTITUTION means the Amended Constitution of the Bank which
is in the form attached hereto as Exhibit II and which will be filed
with the Division on the date on which the Conversion becomes
effective.
APPLICATION means the Application for Conversion on Form AC to be filed
by the Bank with the OTS pursuant to Title 12, Code of Federal
Regulations, Part 563b and with the Division pursuant to Ohio
Administrative Code Section 1301-2-1-16.
ASSOCIATE, when used to indicate a relationship with any Person, means
(i) any corporation or organization (other than the Bank, the Holding
Company (hereinafter defined) or a majority-owned subsidiary of the
Bank or the Holding Company) of which such Person is an Officer or
partner or is, directly or indirectly, the beneficial owner of 10% or
A-1
<PAGE> 3
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 capacity,
except that such term will not include a Tax-Qualified Employee Stock
Benefit Plan (hereinafter defined), 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 (hereinafter defined) of
the Bank, the Holding Company or any of their subsidiaries.
BANK means The Home Loan Savings Bank, in its mutual form or stock
form, as appropriate.
BROKER means any Person engaged in the business of effecting
transactions in securities for the account of others.
COMMON SHARES means the common shares of the Holding Company to be
offered and sold by the Holding Company in connection with the
Conversion.
COMMUNITY MEMBER means any natural person who, on the date of
submission of an Order Form (hereinafter defined), is a resident of
Coshocton County, the county in which the offices of the Bank are
located.
COMMUNITY OFFERING means the offering of Common Shares to the public
concurrently with or after the completion of the Subscription Offering
(hereinafter defined) in a manner by which Community Members are given
preference.
CONVERSION means the change in the form of the Bank from the mutual to
the permanent capital stock form upon (i) the filing of the Amended
Articles and the Amended Constitution; (ii) the sale and issuance of
Common Shares by the Holding Company in the Subscription Offering and
the Community Offering, and (iii) the purchase by the Holding Company
of the capital stock of the Bank.
DEALER means any Person who engages either for all or part of such
person's time, directly or indirectly, as an agent, Broker or
principal, in the business of offering, buying, selling or otherwise
dealing or trading in securities issued by another Person.
DIVISION means the Division of Financial Institutions of the Department
of Commerce of the State of Ohio.
ELIGIBILITY RECORD DATE means the close of business on September 30,
1996, the record date set by the Bank for determining Eligible Account
Holders (hereinafter defined).
ELIGIBLE ACCOUNT HOLDER means any Person holding a Qualifying Deposit
(hereinafter defined) in the Bank on the Eligibility Record Date.
FDIC means the Federal Deposit Insurance Corporation, an agency of the
United States Government.
HOLDING COMPANY means the corporation to be formed at the direction of
the Bank under Ohio law for the purpose of becoming a savings and loan
holding company through the acquisition of all of the capital stock to
be issued by the Bank in connection with the Conversion.
INDEPENDENT APPRAISER means the firm employed by the Bank to determine
the estimated pro forma market value of the Bank to be used as the
basis for determining the price of the Common Shares.
LIQUIDATION ACCOUNT means the account established in accordance with
Section 16 of this Plan for Eligible Account Holders and Supplemental
Eligible Account Holders (hereinafter defined) who continue to maintain
a Savings Account (hereinafter defined) at the Bank after the
Conversion.
MEMBER means any Person qualifying as a member of the Bank under its
articles of incorporation and constitution in effect on the date of the
Special Meeting.
OFFICER means an executive officer of the Holding Company or the Bank,
including the Chairman of the Board of Directors, the President, a Vice
President, the Secretary, the Treasurer or principal financial officer,
or the comptroller or principal accounting officer of the Holding
Company or the Bank and any other person performing similar functions
for the Holding Company or the Bank.
A-2
<PAGE> 4
ORDER FORMS means the original forms which will be sent to the Eligible
Account Holders, Tax-Qualified Employee Stock Benefit Plans,
Supplemental Eligible Account Holders and Other Eligible Members
(hereinafter defined) to enable such Persons to exercise their
respective Subscription Rights (hereinafter defined) in accordance with
this Plan and which may be sent to others in the Community Offering.
OTHER ELIGIBLE MEMBERS means those Persons, other than Eligible Account
Holders and Supplemental Eligible Account Holders, who are eligible to
purchase Common Shares pursuant to this Plan by reason of being Voting
Members (hereinafter defined).
OTS means the Department of the Treasury, Office of Thrift Supervision,
an agency of the United States Government.
PERSON means an individual, a corporation, a partnership, an
association, a joint-stock company, a trust, any unincorporated
organization, or a government or political subdivision thereof.
PROSPECTUS means the document describing the terms and conditions of
the Subscription Offering and the Community Offering, including a
complete description of the business and affairs of the Bank and the
Holding Company.
PROXY means the form of authorization by which a Person is, or may be
deemed to be, designated to act for a Voting Member in the exercise of
his or her voting rights in the affairs of the Bank.
PROXY MATERIALS means the Notice of Special Meeting, the Proxy
Statement and the form of Proxy used in connection with soliciting
Proxies from Members for use at the Special Meeting.
PURCHASE PRICE means the actual uniform price per share at which Common
Shares will be sold in the Subscription Offering and may be offered in
the Community Offering. Such price shall be based upon the appraised
estimated pro forma market value of such shares, determined as provided
in Section 4 of this Plan.
QUALIFYING DEPOSIT means the aggregate balance of all Savings Accounts
(hereinafter defined) owned by an Eligible Account Holder or a
Supplemental Eligible Account Holder at the close of business on the
Eligibility Record Date or the Supplemental Eligibility Record Date
(hereinafter defined), respectively; provided, however, that Savings
Accounts with aggregate deposit balances of less than $50 will not
constitute Qualifying Deposits.
RESIDENT means any person who, on the Voting Record Date, maintains a
bona fide residence within Coshocton County, Ohio, as determined in the
sole discretion of the Bank and the Holding Company.
SAVINGS ACCOUNT has the same meaning as specified in Title 12, Code of
Federal Regulations, Part 561, as in effect on the date this Plan is
adopted by the Board of Directors of the Bank, and includes
certificates of deposit.
SEC means the Securities and Exchange Commission, an agency of the
United States Government.
SPECIAL MEETING means the meeting of the Voting Members of the Bank
called for the specific purpose of submitting this Plan to the Voting
Members for approval.
SUBSCRIPTION OFFERING means the offering of Common Shares to the
holders of Subscription Rights.
SUBSCRIPTION RIGHTS means the nontransferable rights issued by the Bank
to the Eligible Account Holders, Tax-Qualified Employee Stock Benefit
Plans, Supplemental Eligible Account Holders and Other Eligible Members
to purchase Common Shares in the Subscription Offering pursuant to this
Plan.
SUPPLEMENTAL ELIGIBILITY RECORD DATE means the record date used for
determining Supplemental Eligible Account Holders. Such date will be
the last day of the calendar quarter preceding the approval of the
Application by the OTS.
SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER means any Person holding a
Qualifying Deposit at the close of business on the Supplemental
Eligibility Record Date, except Officers and directors of the Bank and
the Holding Company and their Associates.
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TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN means any defined benefit
plan or defined contribution plan of the Holding Company or the Bank,
such as an employee stock ownership plan, stock bonus plan, profit
sharing plan or other plan which, with its related trust, meets the
requirements for qualification under Section 401 of the Internal
Revenue Code of 1986, as amended.
VOTING MEMBER means any Member of the Bank eligible to vote at the
Special Meeting.
VOTING RECORD DATE means the record date fixed by the Board of
Directors of the Bank in accordance with Ohio law and the Articles of
Incorporation and Constitution of the Bank for determining the
eligibility of Members to vote on this Plan at the Special Meeting.
3. PROCEDURES FOR THE CONVERSION.
The following procedures will be followed to effect the Conversion:
(a) Promptly after the adoption of this Plan by a vote of at
least two-thirds of the members of the Board of Directors of the Bank,
the Bank will publish a notice of the adoption of this Plan in an
English language newspaper having general circulation in Coshocton,
Ohio. Copies of such notice will also be made available for inspection
by Members at the office of the Bank.
(b) The Holding Company will be incorporated, after which the
Board of Directors of the Holding Company will consent to the Plan by
at least a two-thirds vote.
(c) The Bank will submit this Plan for approval, together with
all other requisite materials, to the OTS and the Division in the form
of the Application.
(d) After the filing of the Application with the OTS and the
Division, the Bank (i) will prominently post in the office of the Bank
and publish in an English language newspaper having general circulation
in Coshocton, Ohio a notice to the effect that the Bank has filed the
Application with the OTS, and (ii) when advised by the Division, will
prominently post in the office of the Bank and publish in an English
language newspaper having general circulation in Coshocton, Ohio a
notice to the effect that the Bank has filed the Application with the
Division.
(e) After the OTS and the Division approve the Application,
the Bank will mail Proxy Materials to each of the Voting Members as of
the Voting Record Date at his or her last known address appearing on
the records of the Bank for the purpose of soliciting the Proxies of
Voting Members for use at the Special Meeting. The approval of this
Plan will require the affirmative vote, cast in person or by Proxy, of
a majority of the total outstanding votes entitled to be cast at the
Special Meeting.
(f) Subject to the approval of this Plan by the Voting Members
at the Special Meeting, the following will occur:
(i) Common Shares will be offered simultaneously to
the Eligible Account Holders, the Tax-Qualified Employee Stock
Benefit Plans, the Supplemental Eligible Account Holders and
the Other Eligible Members in the respective priorities set
forth in Sections 5, 6, 7 and 8 of this Plan. All sales of
Common Shares to Eligible Account Holders, the Tax-Qualified
Employee Stock Benefit Plans, Supplemental Eligible Account
Holders and Other Eligible Members will be completed at the
earliest practicable date following expiration of the
Subscription Rights provided for in this Plan. Notwithstanding
anything in this Plan to the contrary, the Bank, in its sole
discretion, may commence the Subscription Offering
concurrently with or at any time after the mailing to the
Voting Members of the Proxy Materials and may complete the
Subscription Offering before the Special Meeting if the
completion of the offer and sale of the Common Shares is
conditioned upon the approval of this Plan by the Voting
Members. In the event that the Bank elects, in its discretion,
to commence the Subscription Offering after the Special
Meeting, the Subscription Offering will be commenced not later
than 45 days after the date on which the Special Meeting is
adjourned, except as may otherwise be approved by the OTS.
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(ii) Concurrently with, following the commencement of
or following the completion of the Subscription Offering, the
Bank may also offer Common Shares in the Community Offering,
subject to the prior satisfaction of the Subscription Rights
of Eligible Account Holders, Tax-Qualified Employee Stock
Benefit Plans, Supplemental Eligible Account Holders and Other
Eligible Members.
(g) All other steps considered necessary or desirable by the
Boards of Directors of the Bank and the Holding Company to effect the
Conversion will be taken pursuant to applicable laws and regulations.
4. PURCHASE PRICE OF COMMON SHARES AND NUMBER OF COMMON SHARES TO BE
OFFERED IN CONNECTION WITH THE CONVERSION.
The Purchase Price will be determined by the Boards of Directors of the
Bank and the Holding Company before the commencement of the Subscription
Offering, subject to adjustment as described below. The number of Common Shares
to be sold in connection with the Conversion will be determined by the Boards of
Directors of the Bank and the Holding Company before the completion of all sales
of Common Shares contemplated by this Plan on the basis of the estimated pro
forma market value of the Bank, as converted, and the Purchase Price. No
fractional shares will be issued in connection with the Conversion.
The estimated pro forma market value of the Bank, as converted, will be
determined by the Independent Appraiser, based upon such factors as the
Independent Appraiser deems appropriate and as are consistent with the
regulations of the OTS and the Division. Immediately before the commencement of
the Subscription Offering, a range will be established for the aggregate
Purchase Price of Common Shares to be offered in the Subscription Offering and
the Community Offering. The maximum of such range shall be 15% above the pro
forma market value of the Bank and the minimum of such range shall be 15% below
the pro forma market value of the Bank. The Independent Appraiser will review,
from time to time as appropriate or as required by law or regulation,
developments subsequent to its valuation to determine whether the estimated pro
forma market value of the Bank, as converted, should be revised. If, after the
commencement of the Subscription Offering, the Independent Appraiser determines
that the estimated pro forma market value of the Bank, as converted, has
increased or decreased due to subsequent developments, the Conversion may be
completed without notifying Persons who have subscribed for Common Shares and
without a resolicitation of subscriptions from such Persons if such pro forma
market value is not less than the minimum of the valuation range approved by the
OTS and the Division and does not exceed the maximum point of the valuation
range by more than 15%. If, however, as a result of any such change, the
estimated pro forma market value of the Bank is less than the minimum of the
valuation range or exceeds the maximum point of such valuation range by more
than 15%, a new estimated pro forma market valuation range may be established
and the Board of Directors may, with the approval of the OTS and the Division,
elect to increase or decrease the number of Common Shares to be sold in
connection with the Conversion or increase or decrease the Purchase Price, in
which case Persons who have subscribed for Common Shares will be notified and
will be given the opportunity to increase, decrease or rescind their
subscriptions.
5. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS.
Eligible Account Holders will have the following rights to subscribe
for and to purchase Common Shares:
(a) Each Eligible Account Holder will receive, without payment
therefor, nontransferable Subscription Rights to purchase a number of
Common Shares up to the greater of (i) the amount which may be
purchased in the Community Offering, (ii) .10% of the total number of
Common Shares to be sold in connection with the Conversion, and (iii)
15 times the product (rounded down to the next whole number) obtained
by multiplying the total number of Common Shares to be sold in
connection with the Conversion 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 purchase limitations set forth in Section 10 of
this Plan and subject to adjustment by the Boards of Directors of the
Bank and the Holding Company as set forth in Section 10 of this Plan.
In the event that subscriptions for Common Shares are received
from Eligible Account Holders upon the exercise of Subscription Rights
pursuant to paragraph (a) of this Section 5 in excess of the number of
Common Shares available for such subscriptions, the Common Shares
available for purchase will be allocated among the subscribing Eligible
Account Holders in a manner by which each subscribing Eligible Account
Holder, to the extent possible, will be permitted to subscribe for a
number of shares sufficient to make such Eligible Account Holder's
total allocation of Common Shares equal to the lesser of (i) 100 shares
and (ii) the number of shares subscribed for by such Eligible Account
Holder. Any shares remaining after such allocation will be allocated
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among the subscribing Eligible Account Holders whose subscriptions
remain unsatisfied in the proportion which the amount of each Eligible
Account Holder's Qualifying Deposit bears to the total of the
Qualifying Deposits of all subscribing Eligible Account Holders. No
fractional shares will, however, be issued in connection with the
Conversion.
For purposes of this paragraph (a), Subscription Rights held
by Eligible Account Holders who are also Officers or directors of the
Bank or the Holding Company, and their Associates, to the extent that
they are attributable to increased deposits during the one-year period
preceding the Eligibility Record Date, will be subordinated to the
Subscription Rights of all other Eligible Account Holders.
(b) The Subscription Rights of the Eligible Account Holders
are subordinate to the limited priority rights of the Tax-Qualified
Employee Stock Benefit Plans of the Bank as set forth in Section 6 of
this Plan.
6. SUBSCRIPTION RIGHTS OF TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLANS.
The Tax-Qualified Employee Stock Benefit Plans of the Bank will receive
non-transferable Subscription Rights to purchase up to 10% of the Common Shares
to be sold in connection with the Conversion, subject to adjustment by the
Boards of Directors of the Bank and the Holding Company as set forth in Section
10 of this Plan. The Subscription Rights of the Tax-Qualified Employee Stock
Benefit Plans are subordinate to the Subscription Rights of Eligible Account
Holders pursuant to Section 5 of this Plan, except that if the final pro forma
market value of the Bank exceeds the maximum of the valuation range determined
pursuant to Section 4 of this Plan, the Tax-Qualified Employee Stock Benefit
Plans shall have first priority with respect to the amount of Common Shares sold
in excess of the maximum of the valuation range.
7. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS.
Supplemental Eligible Account Holders will have the following rights to
subscribe for and to purchase Common Shares:
(a) Each Supplemental Eligible Account Holder will receive,
without payment therefor, nontransferable Subscription Rights to
purchase a number of Common Shares up to the greater of (i) the amount
which may be purchased in the Community Offering, (ii) .10% of the
total number of Common Shares to be sold in connection with the
Conversion, and (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the total number of Common Shares
to be sold in connection with the Conversion by a fraction, the
numerator of which is the amount of the Supplemental Eligible Account
Holder's Qualifying Deposit 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 purchase limitations set forth in Section 10 of
this Plan and subject to adjustment by the Boards of Directors of the
Bank and the Holding Company as set forth in Section 10 of this Plan.
(b) In the event that subscriptions for Common Shares are
received from Supplemental Eligible Account Holders upon the exercise
of Subscription Rights pursuant to paragraph (a) of this Section 7 in
excess of the number of Common Shares available for such subscriptions,
the Common Shares available for purchase will be allocated among the
subscribing Supplemental Eligible Account Holders in a manner by which
each subscribing Supplemental Eligible Account Holder, to the extent
possible, will be permitted to subscribe for a number of Common Shares
sufficient to make such Supplemental Eligible Account Holder's total
allocation of Common Shares equal to the lesser of (i) 100 shares and
(ii) the number of Common Shares subscribed for by such Supplemental
Eligible Account Holder. Any Common Shares remaining after such
allocation will be allocated among the subscribing Supplemental
Eligible Account Holders whose subscriptions remain unsatisfied in the
proportion which the amount of each such Supplemental Eligible Account
Holder's Qualifying Deposit bears to the total amount of the Qualifying
Deposits of all such subscribing Supplemental Eligible Account Holders.
No fractional shares will be issued, however, in connection with the
Conversion.
(c) Subscription Rights received pursuant to this Section 7
are subordinate to the Subscription Rights of Eligible Account Holders
and the Tax-Qualified Employee Stock Benefit Plans pursuant to Sections
5 and 6 of this Plan. Any Subscription Rights received by an Eligible
Account Holder pursuant to Section 5 of this Plan will be applied in
partial satisfaction of Subscription Rights received pursuant to this
Section 7.
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8. SUBSCRIPTION RIGHTS OF OTHER ELIGIBLE MEMBERS.
Other Eligible Members will have the following rights to subscribe for
and to purchase Common Shares:
a) Each Other Eligible Member will receive, without payment
therefor, nontransferable Subscription Rights to purchase a number of
Common Shares up to the greater of (i) the amount of Common Shares
which may be purchased in the Community Offering, and (ii) .10% of the
total number of Common Shares to be sold in connection with the
Conversion, subject to adjustment by the Boards of Directors of the
Bank and the Holding Company as set forth in Section 10 of this Plan.
b) In the event that subscriptions for Common Shares are
received from Other Eligible Members upon the exercise of Subscription
Rights pursuant to paragraph (a) of this Section 8 in excess of the
number of Common Shares available for such subscriptions, the Common
Shares available for purchase will be allocated among the subscribing
Other Eligible Members in the same proportion that their respective
subscriptions bear to the aggregate subscriptions of all Other Eligible
Members; provided, however, that, to the extent sufficient Common
Shares are available, each subscribing Other Eligible Member shall be
permitted to purchase 25 Common Shares before the remaining available
Common Shares are allocated.
c) Subscription Rights received by Other Eligible Members
pursuant to this Section 8 are subordinate to the Subscription Rights
received by Eligible Account Holders, the Tax-Qualified Employee Stock
Benefit Plans and Supplemental Eligible Account Holders pursuant to
Sections 5, 6 and 7 of this Plan.
9. COMMUNITY OFFERING.
Concurrently with or at any time after the commencement or completion
of the Subscription Offering, the Holding Company may offer Common Shares in
the Community Offering in accordance with the following procedures and
conditions:
a) Any Common Shares not subscribed for in the Subscription
Offering may be offered and sold in the Community Offering. If
conducted, the Community Offering will be conducted in a manner which
will give Community Members a preference in the purchase of Common
Shares and will seek to achieve the widest distribution of Common
Shares.
b) The maximum number of Common Shares which may be subscribed
for or purchased in the Community Offering by any Person, together with
any Associates or group of Persons Acting in Concert, will be 15,000
Common Shares, subject to the overall purchase limitations set forth in
Section 10 of this Plan and subject to adjustment by the Boards of
Directors of the Bank and the Holding Company as set forth in Section
10 of this Plan.
c) Orders for Common Shares in the Community Offering will
first be filled up to a maximum of two percent of the Common Shares and
thereafter any remaining shares will be allocated on an equal number of
shares per order basis until all orders for Common Shares have been
filled, subject to the limitations provided in Section 10 of this Plan.
d) The Bank or the Holding Company may retain a Broker to
assist in selling the Common Shares in the Community Offering.
e) The Bank and the Holding Company reserve the right to
reject, in whole or in part, any order to purchase Common Shares from
any Person in the Community Offering.
10. ADDITIONAL LIMITATIONS ON PURCHASES
The minimum number and maximum number of Common Shares which may be
subscribed for or purchased in connection with the Conversion are as follows:
(a) A minimum of 25 Common Shares must be purchased by each Person
purchasing Common Shares in connection with the Conversion to the
extent Common Shares are available; provided, however, that if the
Purchase Price is greater than $20 per share, the minimum number of
Common Shares to which a Person may
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subscribe will be adjusted in a manner by which the aggregate Purchase
Price required to be paid for such minimum number of Common Shares does
not exceed $500. No fractional shares will be issued, however, in
connection with the Conversion.
(b) If a Qualifying Deposit is held in the name of more than
one Person, the aggregate amount of Common Shares which may be
subscribed for or purchased by all Persons having an interest in such
Qualifying Deposit shall be subject to the applicable purchase
limitations set forth in Sections 5, 7, 8, and 9 of this Plan.
(c) Eligible Account Holders, Supplemental Eligible Account
Holders and Other Eligible Members may purchase Common Shares in the
Community Offering subject to the purchase limitations set forth in
Section 9 of this Plan; provided, however, that the maximum number of
Common Shares which may be subscribed for or purchased in connection
with the Conversion by any Person, together with any Associate or group
of Persons Acting in Concert, will be the greater of (i) 30,000 Common
Shares and (ii) 1% of the number of Common Shares to be sold in
connection with the Conversion, except that any one or more of the
Tax-Qualified Employee Stock Benefit Plans may purchase in the
aggregate not more than 10% of the Common Shares to be sold in
connection with the Conversion and will be entitled to purchase such
amount regardless of the number of Common Shares purchased by other
Persons. Common Shares held by one or more Tax-Qualified Employee Stock
Benefit Plans or non-tax-qualified employee stock benefit plans and
attributed to a Person will not be aggregated with Common Shares
purchased directly by or otherwise attributable to such Person. For the
purpose of this Section 10, the members of the Boards of Directors of
the Bank and the Holding Company will not be deemed to be Associates or
a group of Persons Acting in Concert solely as a result of their
membership on such Boards of Directors.
(d) The maximum number of Common Shares which may be
subscribed for or purchased in connection with the Conversion by
Officers and directors of the Bank and their Associates will not
exceed, in the aggregate, 34% of the total number of Common Shares to
be sold in connection with the Conversion. Common Shares held by one or
more Tax-Qualified Employee Stock Benefit Plans or non-tax-qualified
employee stock benefit plans and attributed to a Person will not be
aggregated with Common Shares purchased directly by or otherwise
attributable to such Person.
(e) Subject to any required regulatory approval and the
requirements of applicable laws and regulations, but without further
approval of the Members, the purchase limitations set forth in Sections
9 and 10 of this Plan may be increased or decreased at the sole
discretion of the Boards of Directors of the Bank and the Holding
Company at any time. If such limitation is increased after the
commencement of the Subscription Offering, persons who subscribed for
the maximum amount will be given the opportunity to increase their
subscriptions up to the then applicable limit, subject to the rights
and preferences of any person who has priority Subscription Rights. The
Boards of Directors of the Bank and the Holding Company may, in their
sole discretion, increase such maximum purchase limitation up to 9.99%;
provided, however, that orders for Common Shares exceeding 5% of the
Common Shares to be sold in connection with the Conversion shall not
exceed, in the aggregate, 10% of the Common Shares to be sold in
connection with the Conversion. In the event that the purchase
limitation is decreased after commencement of the Subscription
Offering, the order of any Person who subscribed for the maximum number
of Common Shares shall be decreased by the minimum amount necessary so
that such Person shall be in compliance with the then maximum number of
Common Shares permitted to be subscribed for by such Person. The
maximum purchase limitation for Eligible Account Holders, Supplemental
Eligible Account Holders and Other Eligible Members shall not be
decreased below 1% of the total number of Common Shares to be issued in
connection with the Conversion.
(f) The Subscription Rights granted under this Plan are
nontransferable. Each Subscription Right may be exercised only by the
Person to whom it is issued and only for such Person's own account.
Each Person exercising Subscription Rights will be required to certify
that he or she is purchasing for his or her own account and that he or
she has no agreement or understanding for the sale or transfer of the
Common Shares for which he or she subscribes. The Board of Directors of
the Bank may reject any subscription which it reasonably believes
involves an impermissible transfer of a Subscription Right. The Board
of Directors of the Bank may require any Person who the Board
reasonably believes to be involved in an impermissible transfer of a
Subscription Right to provide such information or assurances as the
Board may request to verify the validity of a Subscription Right.
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11. PROCEDURES FOR THE SUBSCRIPTION OFFERING AND THE COMMUNITY OFFERING.
The Subscription Offering and the Community Offering shall be conducted
in the following manner:
(a) Prior to the commencement of the Subscription Offering,
the Holding Company will file a registration statement with the SEC. No
Prospectus may be distributed to Persons who have Subscription Rights
or to Community Members or to any other person who is not a participant
in the preparation of the Prospectus until and unless the SEC has
declared the Prospectus effective.
(b) At the time the Proxy Materials are mailed to the Voting
Members at their last known addresses appearing on the records of the
Bank, pursuant to the authorization of the OTS and the Division, the
Bank and the Holding Company may commence the Subscription Offering and
the Community Offering.
(c) The Prospectus will contain all the information required
by the OTS, the Division, the SEC and all applicable laws and
regulations necessary to enable the recipients of the Order Forms to
make informed investment decisions regarding the purchase of Common
Shares.
(d) The Order Forms will contain all the information required
by the OTS, the Division and all applicable laws and regulations.
(e) The offer of Common Shares to Persons who have
Subscription Rights, to Community Members and to others will be
conditioned upon the approval of this Plan by the Voting Members at the
Special Meeting.
(f) The Subscription Offering and the Community Offering may
be closed before the Special Meeting.
12. PAYMENT FOR COMMON SHARES.
Common Shares will be paid for in accordance with the following
procedure:
(a) Full payment for all Common Shares subscribed for must be
received by the Bank, together with properly completed and manually
signed original Order Forms therefor, before the expiration time, which
will be specified on the Order Forms, unless such date is extended by
the Bank. Order Forms which have been photocopied or reproduced in any
other manner will not be accepted. The amount of the required payment
will be the amount which equals the Purchase Price (which will be
specified in the Order Forms or accompanying materials), multiplied by
the number of Common Shares subscribed for in accordance with the terms
of this Plan.
(b) Payment for Common Shares ordered in the Subscription
Offering will be permitted to be made:
(i) In cash, if delivered in person;
(ii) By check, bank draft, money order or negotiable order
of withdrawal; provided, however, that any payment by check
will be accepted subject to payment of such check by the
drawee of such check; or
(iii) By appropriate authorization of withdrawal from any
Savings Account at the Bank.
For the purpose of determining the withdrawal balance of any Savings
Account, such withdrawals will be deemed to have been made upon receipt
of appropriate authorization therefor, but interest at the rates
applicable to such accounts will be paid by the Bank on the amounts
deemed to have been withdrawn until the date on which the Conversion is
completed or terminated, at which time the authorized withdrawal
actually will be made. Interest will be paid by the Bank on payments
for Common Shares paid in cash or by check, negotiable order of
withdrawal or money order at an annual rate equal to the passbook
account rate at the Bank or such higher rate as may be determined by
the Bank. Such interest will be paid from the date payments are
received by the Bank until consummation or termination of the
Conversion.
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(c) The Order Forms will contain appropriate means by which
authorization of withdrawals from Savings Accounts may be made to pay
for subscribed Common Shares. Once a withdrawal has been authorized,
none of the designated withdrawal amount may be withdrawn from the
designated Savings Account (except by the Bank as payment for Common
Shares) while this Plan remains in effect. Savings Accounts will be
permitted to be established for the purpose of making payment for
subscribed Common Shares. Notwithstanding any regulatory provisions
regarding penalties for early withdrawal from certificate accounts and
minimum qualifying balances for such accounts, payment for Common
Shares will be permitted through authorization of withdrawals from such
accounts without the assessment of such penalties. If, after such
withdrawal, the applicable minimum balance requirement ceases to be
met, such certificate account will be canceled and the remaining
balance thereof will earn interest only at the passbook account rate at
the Bank.
(d) The Bank will not lend funds or otherwise extend credit to
any Person to purchase Common Shares.
13. EXPIRATION OF SUBSCRIPTION RIGHTS; UNDELIVERED, DEFECTIVE OR LATE ORDER
FORMS; INSUFFICIENT PAYMENT.
Subscription Rights will expire or terminate in accordance with the
following:
(a) All Subscription Rights provided for in this Plan,
including, without limitation, the Subscription Rights of all Persons
whose Order Forms are returned by the United States Post Office as
undeliverable, will expire at a specified time on a specified date
which will be not less than 20 days nor more than 45 days following the
date on which Order Forms are first sent to Eligible Account Holders,
Supplemental Eligible Account Holders and Other Eligible Members;
provided, however, that the Bank will have the power to extend such
expiration time in its discretion only for a reasonable time beyond
such 45-day period.
(b) If the Bank is unable to locate particular persons granted
Subscription Rights under this Plan, or if Order Forms (i) are returned
as undeliverable by the United States Post Office, (ii) are not
received by the Bank prior to the expiration date specified thereon,
(iii) are defectively filled out or executed, or (iv) are not, when
received by the Bank, accompanied by the full required payment for the
Common Shares subscribed for (including cases in which Savings Accounts
from which withdrawals are authorized contain insufficient funds to
satisfy the required payment or the check, bank draft, negotiable order
of withdrawal or money order is not paid by the drawee thereof), the
Subscription Rights will lapse as though the Person to whom such rights
have been granted failed to return the completed Order Form within the
time period specified thereon. In any such case as discussed in this
paragraph (b), all payments accompanying the Order Forms will be
refunded and, in the case of payments authorized through withdrawal
from Savings Accounts as permitted by Section 12 of this Plan, such
withdrawals will not be made.
(c) The Bank may, but will not be obligated to, waive any
irregularity on any Order Form or require the submission of a corrected
Order Form or waive the remittance of full payment for shares
subscribed for by such date as it may specify. An executed Order Form,
once received by the Bank, may not be modified, amended or rescinded
without the consent of the Bank, unless (i) the Community Offering is
not completed within 45 days after the expiration time of the
Subscription Offering, or (ii) the final valuation of the Bank, as
converted, is less than the minimum of the valuation range established
by the Independent Appraiser before the commencement of the
Subscription Offering or exceeds the maximum of such valuation range by
more than 15%. If either of those events occurs, persons who have
subscribed for Common Shares in the Subscription Offering will receive
written notice that they have a right to affirm, increase, decrease or
rescind their subscriptions. Subject to the authority of the OTS and
the Division, all interpretations by the Bank and the Holding Company
of the terms and conditions of this Plan and of the Order Forms will be
final.
(d) The sale of all Common Shares must be completed within 45
days after the termination of the Subscription Offering, unless
extended by the Bank with the consent of the OTS and the Division, and
within 24 months of approval of this Plan by the Voting Members at the
Special Meeting. The 24-month period may not be extended by the Bank,
the OTS or the Division.
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14. COMPLIANCE WITH SECURITIES LAWS.
The Bank and the Holding Company will make reasonable efforts to comply
with the securities laws of the United States and all other jurisdictions in
which Eligible Account Holders, Supplemental Eligible Account Holders and Other
Eligible Members reside. No person, however, will be offered any Subscription
Rights or sold any Common Shares under this Plan if such Person resides in a
foreign country or in any jurisdiction of the United States in respect of which
(a) the granting of Subscription Rights or the offer or sale of Common Shares
under this Plan to such persons would require the Bank, the Holding Company or
their directors, Officers or employees to register under the securities laws of
such jurisdiction as a Broker, Dealer or agent or to register or otherwise
qualify the Common Shares for sale in such state or (b) the Bank determines that
compliance with the securities laws of such jurisdiction would be impracticable
for reasons of cost or otherwise. No payments will be made in lieu of the
granting of Subscription Rights to such persons.
15. RIGHTS OF SHAREHOLDERS AFTER COMPLETION OF CONVERSION.
After the Conversion, the Holding Company will be the sole shareholder
of the Bank and will exercise all rights attendant to owning the shares of the
Bank. Voting rights in respect of the Holding Company will be held and exercised
exclusively by the holders of the issued and outstanding common shares of the
Holding Company. Neither borrowers from the Bank nor holders of Savings Accounts
in the Bank will have any voting rights in the Bank or the Holding Company on
the basis of such borrowings or Savings Accounts. The shareholders of the
Holding Company will have the exclusive rights, subject to the rights of
Eligible Account Holders and Supplemental Eligible Account Holders in the
Liquidation Account provided for in Section 16 of this Plan, to receive the
distribution of any assets remaining after payment of creditors' claims,
including the claims of Savings Account holders to the withdrawal value of their
accounts, in the event of any voluntary or involuntary liquidation of the Bank
after the Conversion.
16. ESTABLISHMENT OF LIQUIDATION ACCOUNT.
A Liquidation Account will be established on the effective date of the
Conversion in accordance with the following:
(a) For purposes of granting a limited priority claim to the
assets of the Bank in the event of a complete liquidation thereof to
Eligible Account Holders and Supplemental Eligible Account Holders who
continue to maintain a Savings Account at the Bank after the
Conversion, the Bank will, at the time of the Conversion, establish the
Liquidation Account in an amount equal to the retained earnings of the
Bank as set forth in its latest statement of financial condition
contained in the Prospectus for the sale of Common Shares. The
Liquidation Account will not operate to restrict the use or application
of any of the regulatory capital of the Bank.
(b) Each Eligible Account Holder and Supplemental Eligible
Account Holder will have a separate inchoate interest in a portion of
the Liquidation Account for each Savings Account making up such account
holder's Qualifying Deposit (herein referred to as the "Subaccount").
(c) The initial balance of each Subaccount will be an amount
determined by multiplying the amount in the Liquidation Account by a
fraction, the numerator of which is the amount of the account holder's
Qualifying Deposits as of the close of business on the Eligibility
Record Date or the Supplemental Eligibility Record Date, as the case
may be, and the denominator of which is the total amount of all
Qualifying Deposits of Eligible Account Holders and Supplemental
Eligible Account Holders on the corresponding record date. For Savings
Accounts in existence on both the Eligibility Record Date and the
Supplemental Eligibility Record Date, separate Subaccounts will be
determined on the basis of the Qualifying Deposits in such Savings
Accounts on each such date. The balance of each Subaccount will never
be increased above the initial balance. If the balance in the Savings
Account to which a Subaccount relates, at the close of business on the
last day of each fiscal year of the Holding Company subsequent to the
respective record dates, is less than the lesser of (i) the deposit
balance in such Savings Account at the close of business on the last
day of each fiscal year of the Holding Company subsequent to the
Eligibility Record Date or the Supplemental Eligibility Record Date and
(ii) the amount of the Qualifying Deposit as of the Eligibility Record
Date or the Supplemental Eligibility Record Date, the balance of the
Subaccount for such Savings Account will be adjusted in proportion to
the reduction in such Savings Account balance. In the event of any such
downward adjustment, such Subaccount balance will not be subsequently
increased notwithstanding any increase in the deposit balance of the
related Savings Account. If any Savings Account is closed, its related
Subaccount will be
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<PAGE> 13
reduced to zero upon such closing. The Subaccount of an account holder
will be maintained for as long as the account holder maintains the
related Savings Account with the same Social Security or tax
identification number.
(d) In the event of a complete liquidation of the converted
Bank (and only in such event), each Eligible Account Holder and
Supplemental Eligible Account Holder will be entitled to receive from
the Liquidation Account a distribution equal to the current adjusted
balance in each of such account holder's Subaccounts before any
liquidation distribution may be made to any holders of the capital
stock of the Bank. No merger, consolidation, sale of bulk assets or
similar combination or transaction with another savings association,
the accounts of which are insured by the FDIC, will be deemed to be a
complete liquidation for this purpose and, in any such transaction, the
Liquidation Account will be assumed by the surviving insured
institution.
17. ACCOUNTS IN CONVERTED BANK.
Each Savings Account in the Bank at the time of the Conversion will
constitute, without payment or further action by the account holder, a Savings
Account in the Bank as converted, equal in withdrawable amount to the withdrawal
value, and subject to the same terms and conditions, except as to voting and
liquidation rights, as such Savings Account in the Bank immediately before the
Conversion.
18. RESTRICTIONS ON PURCHASES AND SALES OF COMMON SHARES BY OFFICERS AND
DIRECTORS FOLLOWING CONVERSION.
Purchases and sales of shares of the Holding Company after the
Conversion will be restricted in accordance with the following:
(a) All Common Shares purchased by Officers or directors of
the Holding Company or the Bank or their Associates pursuant to this
Plan will be subject to the restriction that no such shares will be
sold for a period of one year following the date of purchase of such
shares, except in the event of the death of the Officer, director or
Associate.
(b) With respect to all Common Shares subject to the
restriction on subsequent disposition pursuant to paragraph (a) of this
Section 18, each of the following provisions will apply:
(i) Each certificate representing such shares will
bear the following legend prominently stamped thereon giving
notice of such restriction on transfer:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
SOLD BY THE REGISTERED HOLDER HEREOF FOR A PERIOD OF
NOT LESS THAN ONE YEAR FROM THE DATE OF ISSUANCE
HEREOF, EXCEPT IN THE EVENT OF THE DEATH OF THE
REGISTERED HOLDER OF SUCH SHARES.
(ii) Instructions will be given to the transfer agent
for the Holding Company, if any, not to recognize or effect
any transfer of any certificates representing such shares or
any change of record ownership thereof in violation of such
restriction on transfer; and
(iii) Any shares of capital stock of the Holding
Company issued as a stock dividend, stock split or otherwise
with respect to outstanding Common Shares subject to
restrictions on transfer hereunder will be subject to the same
restrictions as are applicable to the Common Shares with
respect to which such shares of stock are issued.
(c) For a period of three years following the Conversion, no
Officer or director of the Bank or the Holding Company, or any
Associates of such Officer or director shall, without the prior written
approval of the OTS, purchase the capital stock of the Holding Company
other than from a Broker or Dealer registered with the SEC. This
provision will not apply to (i) negotiated transactions involving more
than 1% of a class of outstanding capital stock of the Holding Company
or (ii) purchases of shares of capital stock made by and held by any
one or more tax-qualified or non-tax-qualified employee stock benefit
plans which may be attributable to individual Officers or directors of
the Holding Company or the Bank.
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<PAGE> 14
19. RESTRICTIONS ON ACQUISITION OF THE BANK OR THE HOLDING COMPANY.
Acquisition of the capital stock of the Bank or the Holding Company
after the Conversion will be subject to various restrictions contained in the
Amended Articles, the Amended Constitution, the Articles of Incorporation of the
Holding Company, the Code of Regulations of the Holding Company and various
state and federal laws and regulations. In addition, the Articles of
Incorporation of the Holding Company or the Amended Articles may include the
limitation that, for a period of up to five years from the date of completion of
the Conversion of the Bank from mutual to stock form, no Person may directly or
indirectly offer to acquire or acquire beneficial ownership of more than 10% of
any class of an equity security of the Bank or the Holding Company.
20. AMENDMENT OR TERMINATION OF THIS PLAN.
If deemed necessary or desirable by the Boards of Directors of the Bank
and the Holding Company, this Plan may be amended by the Boards of Directors of
the Bank and the Holding Company in their sole discretion at any time prior to
the solicitation of Proxies from Voting Members entitled to vote on this Plan
and at any time thereafter with the concurrence of the OTS and the Division. The
Conversion pursuant to this Plan may be terminated by the Boards of Directors of
the Bank and the Holding Company in their sole discretion at any time prior to
the Special Meeting and at any time thereafter with the concurrence of the OTS
and the Division.
21. CONSUMMATION OF CONVERSION.
The Conversion of the Bank from mutual to stock form will be deemed to
have taken place and to be effective at the time and date provided in the
regulations of the OTS and the Division. The Conversion must be completed within
24 months of the approval of this Plan by the Members.
22. TAX RULINGS/OPINIONS.
The Conversion is expressly conditioned upon the prior receipt by the
Bank and the Holding Company of either rulings from the Internal Revenue Service
and the appropriate Ohio taxing authorities or opinions of legal counsel or
other tax advisors to the Bank in form and substance satisfactory to the Bank
and to the effect, among other things, that the Conversion will constitute a
tax-free "reorganization" as defined in Section 368(a) of the Internal Revenue
Code of 1986, as amended, and comparable provisions of applicable state law, or
that consummation of the transactions provided for in this Plan will not
otherwise result in any federal, state or other tax consequences to the Bank or
the converted Bank deemed materially adverse by the Board of Directors of the
Bank or the Board of Directors of the Holding Company.
23. DIRECTORS AND OFFICERS OF THE BANK.
It is not intended that the Conversion will result in any change in the
directors or Officers of the Bank. The persons serving as Officers on the date
the Application is filed with the OTS and the Division will continue to serve at
the discretion of the Board of Directors of the Bank in their respective
capacities as Officers of the converted the Bank. The persons serving as
directors of the Bank on the date the Application is filed with the OTS and the
Division will continue to serve as directors following the Conversion until
their terms expire or their earlier death, resignation or removal from office.
24. STOCK BENEFIT PLANS.
Following the completion of the Conversion, the Bank or the Holding
Company may establish one or more stock option plans and management recognition
plans to the extent permitted by OTS regulations. The Bank and the Holding
Company may make scheduled or discretionary contributions to one or more stock
benefit plans maintained by the Bank or the Holding Company for the benefit of
the directors, Officers or employees of the Bank or the Holding Company,
provided such contributions do not cause the Bank to fail to meet its regulatory
capital requirement.
25. REGISTRATION OF COMMON SHARES; MARKET FOR COMMON SHARES.
(a) Before or promptly following the Conversion, the Holding
Company will register the Common Shares with the SEC pursuant to the
Securities Exchange Act of 1934 and will not deregister such shares for
a period of three years thereafter.
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<PAGE> 15
(b) While there is no assurance that an active market for the
Common Shares will develop following the Conversion, the Holding
Company will use its best efforts to encourage and assist a market
maker to establish and maintain a market for the Common Shares and will
use its best efforts to cause such shares to be quoted on The Nasdaq
Stock Market (or any comparable quotation system which may hereafter be
developed) or listed on a national or regional securities exchange.
26. EXPENSES OF CONVERSION.
The Bank and the Holding Company will use their best efforts to ensure
that the expenses incurred in connection with the Conversion will be reasonable.
27. MAILING OF PROXY MATERIALS.
The Proxy Materials will only be sent to Voting Members as of the
Voting Record Date.
28. INTERPRETATION OF THE PLAN.
The Boards of Directors of the Bank and the Holding Company will
interpret this Plan. To the extent permitted by law, all interpretations of this
Plan by the Boards of Directors of the Bank and the Holding Company will be
final.
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<PAGE> 16
EXHIBIT I
AMENDED
ARTICLES OF INCORPORATION
OF
THE HOME LOAN SAVINGS BANK
FIRST: The name of the corporation shall be The Home Loan
Savings Bank.
SECOND: The place in Ohio where the principal office of the
corporation is to be located is Coshocton, Coshocton County.
THIRD: The purposes for which the corporation is formed are to
raise money to be loaned to its members and others and to engage in any other
lawful act or activity for which corporations may be formed under Chapter 1151
of the Ohio Revised Code.
FOURTH: The authorized capital of the corporation shall be
_____________ ($______________) divided into _____________ (_______________)
shares, ______ par value per share.
FIFTH: To the extent permitted by law, the directors of the
corporation shall have the power to cause the corporation from time to time and
at any time to purchase, hold, sell, transfer or otherwise deal with (A) shares
of any class or series issued by it, (B) any security or other obligation of the
corporation which may confer upon the holder thereof the right to convert the
same into shares of any class or series authorized by the articles of the
corporation and (C) any security or other obligation which may confer upon the
holder thereof the right to purchase shares of any class or series authorized by
the articles of the corporation. To the extent permitted by law, the corporation
shall have the right to repurchase, if and when any shareholder desires to sell,
or on the happening of any event is required to sell, shares of any class or
series issued by the corporation. The authority granted in this Article Fifth
shall not otherwise limit the authority of the directors to purchase, hold,
sell, transfer or otherwise deal with shares of any class or series, securities,
or other obligations issued by the corporation or authorized by its articles.
SIXTH: Until the expiration of five years from the date of the
acquisition by Home Loan Financial Corporation (the "Holding Company") of the
capital stock of the corporation to be issued in connection with the conversion
of the corporation from mutual to stock form, no Person (hereinafter defined)
shall directly or indirectly Offer (hereinafter defined) to Acquire (hereinafter
defined) or Acquire the Beneficial Ownership (hereinafter defined) of more than
10% of any class of any equity security of the corporation; provided, however,
that such prohibition shall not apply to the purchase of shares by underwriters
in connection with a public offering or the power of trustees to vote shares of
the corporation held by an employee stock ownership plan for the benefit of
employees of the corporation or the Holding Company. In the event that any
shares of the corporation are Acquired in violation of this Article Sixth, all
shares Beneficially Owned by any Person in excess of 10% of any class of equity
security of the corporation shall not be counted as shares entitled to vote,
shall not be voted by any Person and shall not be counted as voting shares in
connection with any matter submitted to the shareholders for a vote. For
purposes of this Article Sixth, the following terms shall have the meanings set
forth below:
(A) "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 or disposing of the equity securities of
the corporation, but does not include an employee
stock ownership plan for the benefit of employees of
the corporation or the Holding Company.
(B) "Offer" includes every offer to buy or otherwise
acquire, solicitations or an offer to sell, tender
offer for, or request or invitation for tenders of, a
security or interest in a security for value.
(C) "Acquire" includes every type of acquisition, whether
effected by purchase, exchange, operation of law or
otherwise.
I-1
<PAGE> 17
(D) "Acting in concert" means (i) participation in a
joint activity or conscious parallel action towards a
common goal, whether or not pursuant to an express
agreement, or (ii) a combination or pooling of voting
or other interests in the securities of an issuer for
a common purpose pursuant to any contracts,
understanding, relationship, agreement or other
arrangement, whether written or otherwise.
(E) "Affiliate" shall mean a Person that directly or
indirectly, through one or more intermediaries,
controls or is controlled by, or is under common
control with, another Person.
(F) "Associate" of a Person shall mean (i) any
corporation or organization (other than the
corporation or a subsidiary of the corporation) of
which the Person is an officer or partner or is,
directly or indirectly, the beneficial owner of ten
percent or more of any class of equity securities,
(ii) any trust or other estate in which the Person
has a substantial beneficial interest or as to which
the Person serves as trustee or in a similar
fiduciary capacity, except a tax-qualified employee
stock benefit plan in which the Person has a
substantial beneficial interest or serves as a
trustee or in a similar fiduciary capacity or a
tax-qualified employee stock benefit plan, and (iii)
any relative or spouse of the Person, or any relative
of such spouse, who has the same home as the Person
or is a director or officer of the corporation or any
of its parents or subsidiaries.
(G) "Beneficial Ownership" shall include, without
limitation, (i) all shares directly or indirectly
owned by a Person, by an Affiliate of such Person or
by an Associate of such Person or such Affiliate,
(ii) all shares which such Person, Affiliate or
Associate has the right to acquire through the
exercise of any option, warrant or right (whether or
not currently exercisable), through the conversion of
a security, pursuant to the power to revoke a trust,
discretionary account or similar arrangement, or
pursuant to the automatic termination of a trust,
discretionary account or similar arrangement, and
(iii) all shares as to which such Person, Affiliate
or Associate directly or indirectly through any
contract, arrangement, understanding, relationship or
otherwise (including, without limitation, any written
or unwritten agreement to act in concert) has or
shares voting power (which includes the power to
dispose or to direct the disposition of such shares)
or both.
SEVENTH: No shareholder of the corporation shall have, as a
matter of right, the pre-emptive right to purchase or subscribe for shares of
any class, now or hereafter authorized, or to purchase or subscribe for
securities or other obligations convertible into or exchangeable for such shares
or which by warrants or otherwise entitle the holders thereof to subscribe for
or purchase any such share.
EIGHTH: No shareholder of the corporation shall have the right
to vote cumulatively in the election of directors.
These Amended Articles of Incorporation supersede the existing
Articles of Incorporation of the corporation.
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<PAGE> 18
EXHIBIT II
AMENDED
CONSTITUTION
OF
THE HOME LOAN SAVINGS BANK
ARTICLE ONE
Section 1. Name. The name of this savings and loan association
shall be The Home Loan Savings Bank (this "Bank"), and the principal office of
this Bank shall be located in Coshocton County, Ohio.
ARTICLE TWO
Section 1. Purposes. The purposes for which this Bank is
formed are to raise money to be loaned to its members and others and to engage
in any other lawful act or activity for which corporations may be formed under
Chapter 1151 of the Ohio Revised Code.
ARTICLE THREE
Section 1. Authorized Shares. The authorized capital of this
Bank shall be $_________ divided into ______________ shares, _______ par value
per share.
Section 2. Repurchase of Shares. This Bank shall have the
power to repurchase its common shares to the fullest extent provided by law.
ARTICLE FOUR
Section 1. Members. Any person who subscribes for, or in any
manner according to law becomes the owner of, any of the common shares of this
Bank shall be a member of this Bank entitled to all of the benefits and
privileges and subject to all of the liabilities and duties prescribed by this
Constitution, the Bylaws of this Bank and the laws of the State of Ohio.
Section 2. Annual Meetings. The annual meeting of the
shareholders of this Bank for the election of directors, the consideration of
reports to be laid before such meeting and the transaction of such other
business as may properly come before such meeting shall be held on the second
Tuesday in October in each year, at 3:00 p.m., or on such other date and at such
time as may be fixed from time to time by the directors.
Section 3. Special Meetings. Special meetings of the
shareholders of this Bank may be called only by the chairman of the board,
president, vice president, a majority of the members of the board of directors,
or by persons who hold at least twenty-five percent of all shares outstanding
and entitled to vote thereat.
Section 4. Place of Meetings. All meetings of shareholders of
this Bank shall be held at the principal office of this Bank, unless otherwise
provided by action of the directors. Meetings of shareholders may be held at any
place within or outside the State of Ohio.
Section 5. Notice of Meetings.
(A) Written notice stating the time, place and purposes of a
meeting of the shareholders of this Bank shall be given, by or at the direction
of the president or the secretary, either by personal delivery or by mail not
less than seven nor more than sixty days before the date of the meeting to each
shareholder of record entitled to notice of the meeting. If mailed, such notice
shall be addressed to the shareholder at his address as it appears on the
records of this Bank. Notice of adjournment of a meeting need not be given if
the time and place to which it is adjourned are fixed and announced at such
meeting. In the event of a transfer of shares after the record date for
determining the shareholders who are entitled to receive notice of a meeting
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<PAGE> 19
of shareholders, it shall not be necessary to give notice to the transferee.
Nothing herein contained shall prevent the setting of a record date in the
manner provided by law, the Articles of Incorporation of this Bank (the
"Articles") or this Constitution for the determination of shareholders who are
entitled to receive notice of or to vote at any meeting of shareholders or for
any purpose required or permitted by law.
(B) Following receipt by the president or the secretary of a
request in writing, specifying the purpose or purposes for which the persons
properly making such request have called a meeting of the shareholders,
delivered either in person or by registered mail to such officer by any persons
entitled to call a meeting of shareholders, such officer shall cause to be given
to the shareholders entitled thereto notice of a meeting to be held on a date
not less than seven nor more than sixty days after the receipt of such request,
as such officer may fix. If such notice is not given within fifteen days after
the receipt of such request by the president or the secretary, then, and only
then, the persons properly calling the meeting may fix the time of the meeting
and give notice thereof in accordance with the provisions of this Constitution.
Section 6. Waiver of Notice. Notice of the time, place and
purpose or purposes of any meeting of shareholders of this Bank may be waived in
writing, either before or after the holding of such meeting, by any shareholder,
which writing shall be filed with or entered upon the records of such meeting.
The attendance of any shareholder, in person or by proxy, at any such meeting
without protesting the lack of proper notice, prior to or at the commencement of
the meeting, shall be deemed to be a waiver by such shareholder of notice of
such meeting.
Section 7. Quorum. At any meeting of shareholders of this
Bank, the holders of a majority of the voting shares of this Bank then
outstanding and entitled to vote thereat, present in person or by proxy, shall
constitute a quorum for such meeting. The holders of a majority of the voting
shares represented at a meeting, whether or not a quorum is present, or the
chairman of the board, the president, or the officer of the corporation acting
as chairman of the meeting, may adjourn such meeting from time to time, and if a
quorum is present at such adjourned meeting any business may be transacted as if
the meeting had been held as originally called.
Section 8. Votes Required. At all elections of directors the
candidates receiving the greatest number of votes shall be elected. Any other
matter submitted to the shareholders for their vote shall be decided by the vote
of such proportion of the shares, or of any class of shares, or of each class,
as is required by law, the Articles or this Constitution.
Section 9. Order of Business. The order of business at any
meeting of shareholders shall be determined by the officer of this Bank acting
as chairman of such meeting unless otherwise determined by a vote of the holders
of a majority of the voting shares of this Bank then outstanding, present in
person or by proxy, and entitled to vote at such meeting.
Section 10. Shareholders Entitled to Vote. Each shareholder of
record on the books of this Bank on the record date for determining the
shareholders who are entitled to vote at a meeting of shareholders shall be
entitled at such meeting to one vote for each share of this Bank standing in his
name on the books of this Bank on such record date. The directors may fix a
record date for the determination of the shareholders who are entitled to
receive notice of and to vote at a meeting of shareholders, which record date
shall not be a date earlier than the date on which the record date is fixed and
which record date may be a maximum of sixty days preceding the date of the
meeting of shareholders.
Section 11. Proxies. At meetings of the shareholders, any
shareholder of record entitled to vote thereat may be represented and may vote
by a proxy or proxies appointed by an instrument in writing signed by such
shareholder, but such instrument shall be filed with the secretary of the
meeting before the person holding such proxy shall be allowed to vote
thereunder. No proxy shall be valid after the expiration of eleven months after
the date of its execution, unless the shareholder executing it shall have
specified therein the length of time it is to continue in force.
Section 12. Inspectors of Election. In advance of any meeting
of shareholders of this Bank, the directors may appoint one or more inspectors
of election to act at such meeting or any adjournment thereof. If inspectors are
not so appointed, the officer of this Bank acting as chairman of any such
meeting may make such appointment. In case any person appointed as inspector
fails to appear or act, the vacancy may be filled only by appointment made by
the directors in advance of such meeting or, if not so filled, at the meeting by
the officer of this Bank acting as chairman of such meeting. No other person or
persons may appoint or require the appointment of inspectors of election.
ARTICLE FIVE
DIRECTORS
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<PAGE> 20
Section 1. Authority and Qualifications. Except where the law,
the Articles or this Constitution otherwise provide, all authority of this Bank
shall be vested in and exercised by its directors. Directors need not be
shareholders of this Bank.
Section 2. Number of Directors and Term of Office.
(A) Until changed in accordance with the provisions of this
Constitution, the number of directors of this Bank shall be five (5). Each
director shall serve for a term of one year until his successor is duly elected
and qualified or until his earlier resignation, removal from office or death.
(B) The number of directors may be fixed or changed, but in no
event to fewer than five (5), by the directors or by the shareholders at a
meeting of the shareholders of this Bank called for the purpose of electing
directors at which a quorum is present, only by the affirmative vote of the
holders of not less than a majority of the voting shares which are represented
at the meeting, in person or by proxy, and entitled to vote on such proposal.
(C) The directors may fill any director's office that is
created by an increase in the number of directors.
(D) No reduction in the number of directors shall of itself
have the effect of shortening the term of any incumbent director.
Section 3. Nomination and Election.
(A) Any nominee for election as a director of this Bank may be
proposed only by the directors or by any shareholder entitled to vote for the
election of directors. No person, other than a nominee proposed by the
directors, may be nominated for election as a director of this Bank unless such
person shall have been proposed in a written notice, delivered or mailed by
first-class United States mail, postage prepaid, to the secretary of this Bank
at the principal offices of this Bank. In the case of a nominee proposed for
election as a director at an annual meeting of shareholders, such written notice
of a proposed nominee shall be received by the secretary of this Bank not later
than the close of business on the fourteenth calendar day preceding such annual
meeting. In the case of a nominee proposed for election as a director at a
special meeting of shareholders at which directors are to be elected, such
written notice of a proposed nominee shall be received by the secretary of this
Bank not later than the close of business on the fourteenth calendar day
preceding such special meeting.
Each such written notice of a proposed nominee shall set forth
(i) the name, age, business or residence address of each nominee proposed in
such notice, (ii) the principal occupation or employment of each such nominee,
and (iii) the number of common shares of this Bank owned beneficially and/or of
record by each such nominee and the length of time any such shares have been so
owned.
(B) If a shareholder shall attempt to nominate one or more
persons for election as a director at any meeting at which directors are to be
elected without having identified each such person in a written notice given as
contemplated by, and/or without having provided therein the information
specified in, subparagraph (A) of this Section 3, each such attempted nomination
shall be invalid and shall be disregarded unless the person acting as chairman
of the meeting determines that the facts warrant the acceptance of such
nomination.
(C) The election of directors shall be by ballot whenever
requested by the person acting as chairman of the meeting or by the holders of a
majority of the outstanding shares entitled to vote at such meeting and present
in person or by proxy, but unless such request is made, the election shall be by
voice vote.
Section 4. Removal. A director or directors may be removed
from office, with or without assigning any cause, only by the vote of the
holders of shares entitling them to exercise not less than 75% of the voting
power of this Bank to elect directors in place of those to be removed. In case
of any such removal, a new director may be elected at the same meeting for the
unexpired term of each director removed. Failure to elect a director to fill the
unexpired term of any director removed shall be deemed to create a vacancy in
the board.
Section 5. Vacancies. Vacancies in the board may be filled in
the manner provided by law, the Articles or this Constitution. The directors
shall have the right to fill all vacancies occurring in the board for the
unexpired term.
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<PAGE> 21
Section 6. Meetings. A meeting of the directors shall be held
immediately following the adjournment of each annual meeting of shareholders of
this Bank at which directors are elected, and notice of such meeting need not be
given. The directors shall hold a regular meeting at least once each month at a
day and hour fixed by resolution of the board and may hold such other meetings
as may from time to time be called. Such meetings of directors may be called
only by the chairman of the board, the president, or any two directors. Meetings
of the directors may be held through any communications equipment if all persons
participating can hear each other, and participation in a meeting pursuant to
this provision shall constitute presence at such meeting.
Section 7. Notice of Meetings. Notice of the time and place of
each meeting of directors for which such notice is required by law, the
Articles, this Constitution or the Bylaws shall be given to each of the
directors by at least one of the following methods:
(A) In a writing mailed not less than three days before such
meeting and addressed to the residence or usual place of business of a director,
as such address appears on the records of the corporation; or
(B) By telegraph, facsimile or a writing sent or delivered to
the residence or usual place of business of a director as the same appears on
the records of the corporation, not later than the day before the date on which
such meeting is to be held.
Notice given to a director by either one of the methods specified in this
Constitution shall be sufficient, and the method of giving notice to all
directors need not be uniform. Notice of any meeting of directors may be given
only by the chairman of the board, the president or the secretary of this Bank.
Any such notice need not specify the purpose or purposes of the meeting. Notice
of adjournment of a meeting of directors need not be given if the time and place
to which it is adjourned are fixed and announced at such meeting.
Section 8. Waiver of Notice. Notice of any meeting of
directors may be waived in writing, either before or after the holding of such
meeting, by any director, which writing shall be filed with or entered upon the
records of the meeting. The attendance of any director at any meeting of
directors without protesting, prior to or at the commencement of the meeting,
the lack of proper notice, shall be deemed to be a waiver by him of notice of
such meeting.
Section 9. Quorum. A majority of the whole authorized number
of directors shall be necessary to constitute a quorum for a meeting of
directors, except that a majority of the directors in office shall constitute a
quorum for filling a vacancy in the board. The act of a majority of the
directors present at a meeting at which a quorum is present is the act of the
board, except as otherwise provided by law, the Articles or this Constitution.
Section 10. Executive Committee. The directors may create an
executive committee or any other committee of directors, to consist of not less
than three directors, and may authorize the delegation to such executive
committee or other committees of any of the authority of the directors, however
conferred, other than that of filling vacancies among the directors or in the
executive committee or in any other committee of the directors.
Such executive committee or any other committee of directors
shall serve at the pleasure of the directors, shall act only in the intervals
between meetings of the directors, and shall be subject to the control and
direction of the directors. Such executive committee or other committee of
directors may act by a majority of its members at a meeting or by a writing or
writings signed by all of its members.
Any act or authorization of any act by the executive committee
or any other committee within the authority delegated to it shall be as
effective for all purposes as the act or authorization of the directors. No
notice of a meeting of the executive committee or of any other committee of
directors shall be required. A meeting of the executive committee or of any
other committee of directors may be called only by the president or by a member
of such executive or other committee of directors. Meetings of the executive
committee or of any other committee of directors may be held through any
communications equipment if all persons participating can hear each other, and
participation in such a meeting shall constitute presence thereat.
Section 11. Compensation. The compensation of the directors
shall be fixed by the shareholders at the annual meeting of shareholders and
shall be reasonable in view of the services performed and the financial
condition of this Bank.
II-4
<PAGE> 22
Section 12. Directors' Bylaws. The directors shall have the
power to adopt, amend, repeal, and enforce such bylaws, resolutions and orders
as they may deem necessary to enable them to manage and control all the
business, property and rights of this Bank.
Section 13. Assessments. The directors shall have the power to
assess and collect from members and others such fines for late payment of loans
and such premiums on loans made or other assessments as they may deem
appropriate.
ARTICLE SIX
OFFICERS
Section 1. Officers. The officers of this Bank to be elected
by the directors shall include a president, a secretary and a treasurer and such
other officers and assistant officers as the directors may from time to time
elect. One officer shall be designated as the executive managing officer of the
Bank. The directors may elect a chairman of the board, who must be a director.
Officers need not be shareholders of this Bank, and may be paid such
compensation as the board of directors may determine. Any two or more offices
may be held by the same person, but no officer shall execute, acknowledge, or
verify any instrument in more than one capacity if such instrument is required
by law, the Articles, this Constitution or the Bylaws to be executed,
acknowledged, or verified by two or more officers.
Section 2. Tenure of Office. The officers of this Bank shall
hold office at the pleasure of the directors. Any officer may be removed, either
with or without cause, at any time, by the affirmative vote of a majority of all
of the directors then in office; such removal, however, shall be without
prejudice to the contract rights, if any, of the person so removed.
Section 3. Duties of the Officers. The duties of the officers
shall be established by the directors either in the Bylaws of this Bank or by
resolution.
Section 4. Compensation. The directors shall set the
compensation of the officers of this Bank. The compensation of all officers of
this Bank shall be reasonable in view of the services performed and the
financial condition of this Bank.
ARTICLE SEVEN
SHARES
Section 1. Certificates. Certificates evidencing ownership of
shares of this Bank shall be issued to those entitled to them. Each certificate
evidencing shares of this Bank shall bear a distinguishing number, the
signatures of the chairman of the board, the president, or a vice president, and
of the secretary or an assistant secretary (except that when any such
certificate is countersigned by an incorporated transfer agent or registrar,
such signatures may be facsimile, engraved, stamped or printed), and such
recitals as may be required by law. Certificates evidencing shares of this Bank
shall be of such tenor and design as the directors may from time to time adopt
and may bear such recitals as are permitted by law.
Section 2. Transfers. Where a certificate evidencing a share
or shares of this Bank is presented to this Bank or its proper agents with a
request to register transfer, the transfer shall be registered as requested if:
(1) An appropriate person signs on each certificate so
presented or signs on a separate document an assignment or transfer of shares
evidenced by each such certificate, or signs a power to assign or transfer such
shares, or when the signature of an appropriate person is written without more
on the back of each such certificate; and
(2) Reasonable assurance is given that the endorsement of each
appropriate person is genuine and effective; and
(3) All applicable laws, if any, relating to the collection of
transfer or other taxes have been complied with; and
(4) This Bank or its agents are not otherwise required or
permitted to refuse to register such transfer.
II-5
<PAGE> 23
This Bank may refuse to register a transfer of shares unless
the signature of each appropriate person is guaranteed by a commercial bank or
trust company having an office or a correspondent in the City of New York or by
a firm having membership in the New York Stock Exchange.
Section 3. Transfer Agents and Registrars. The directors may
appoint one or more agents to transfer or to register shares of this Bank, or
both.
Section 4. Lost, Wrongfully Taken or Destroyed Certificates.
Except as otherwise provided by law, where the owner of a certificate evidencing
shares of this Bank claims that such certificate has been lost, destroyed or
wrongfully taken, the directors must cause this Bank to issue a new certificate
in place of the original certificate if the owner:
(1) So requests before this Bank has notice that such original
certificate has been acquired by a bona fide purchaser; and
(2) Files with this Bank, unless waived by the directors, an
indemnity bond, with surety or sureties satisfactory to this Bank, in such sums
as the directors may, in their discretion, deem reasonably sufficient as
indemnity against any loss or liability that this Bank may incur by reason of
the issuance of each such new certificate; and
(3) Satisfies any other reasonable requirements which may be
imposed by the directors, in their discretion.
ARTICLE EIGHT
INDEMNIFICATION AND INSURANCE
Section 1. To the fullest extent permitted by applicable law,
this Bank shall indemnify or agree 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, whether civil, criminal, administrative, or
investigative, other than an action by or in the right of this Bank, by reason
of the fact that he is or was a director or officer of this Bank, or is or was
serving at the request of this Bank as a director, trustee, officer, employee,
or agent of another corporation, domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust, or other enterprise, against expenses,
including attorney's 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 interests of this Bank and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of this Bank and, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
Section 2. This Bank shall indemnify or agree 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 or suit by or in the right of this Bank
to procure a judgment in its favor by reason of the fact that he is or was a
director or officer of this Bank or is or was serving at the request of this
Bank as a director, trustee, officer, employee, or agent of another corporation,
domestic or foreign, nonprofit or for profit, partnership, joint venture, trust
or other enterprise, against expenses, including attorney's fees, actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of this Bank, except that no
indemnification shall be made in respect of any of the following:
(A) Any claim, issue or matter as to which such person is
adjudged to be liable for negligence or misconduct in the performance of his
duty to this Bank unless, and only to the extent that, the Court of Common Pleas
of Coshocton County, Ohio, or the court in which such action or suit was brought
determines upon application that, despite the adjudication of liability, but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the Court of Common Pleas of
Coshocton County, Ohio, or such other court shall deem proper;
(B) Any action or suit in which the only liability asserted
against a director is pursuant to 1701.95 of the Ohio Revised Code.
II-6
<PAGE> 24
Section 3. To the extent that a director or officer has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 1 or 2 of this Article Eight, or in defense
of any claim, issue, or matter therein, he shall be indemnified against
expenses, including attorney's fees, actually and reasonably incurred by him in
connection with the action, suit, or proceeding.
Section 4. Any indemnification under Sections 1 or 2 of this
Article Eight, unless ordered by a court, shall be made by this Bank only as
authorized in the specific case upon a determination that indemnification of the
director or officer is proper in the circumstances because he has met the
applicable standard of conduct set forth in Sections 1 or 2 of this Article
Eight. Such determination shall be made as follows:
(A) By a majority vote of a quorum consisting of directors of
this Bank who were not and are not parties to or threatened with any such
action, suit, or proceeding;
(B) If the quorum described in Subsection (A) of this Section
4 is not obtainable or if a majority vote of a quorum of disinterested directors
so directs, in a written opinion by independent legal counsel other than an
attorney, or a firm having associated with it an attorney, who has been retained
by or who has performed services for this Bank or any person to be indemnified
within the past five years;
(C) By the shareholders;
(D) By the Court of Common Pleas of Coshocton County, Ohio, or
the court in which such action, suit, or proceeding was brought.
Any determination made by the disinterested directors under
Subsection (A) of this Section 4 or by independent legal counsel under
Subsection (B) of this Section 4 shall be promptly communicated to the person
who threatened or brought the action or suit by or in the right of this Bank
under Section 2 of this Article Eight, and within ten days after receipt of such
notification, such person shall have the right to petition the Court of Common
Pleas of Coshocton County, Ohio, or the court in which such action or suit was
brought to review the reasonableness of such determination.
Section 5.
(A) Expenses, including attorney's fees, incurred by a
director in defending the action, suit, or proceeding shall be paid by this Bank
as they are incurred, in advance of the final disposition of the action, suit,
or proceeding upon receipt of an undertaking by or on behalf of the director in
which he agrees to do both of the following:
(i) Repay such amount if it is proved by clear
and convincing evidence in a court of competent jurisdiction that his action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to this Bank or undertaken with reckless disregard for the best
interests of this Bank;
(ii) Reasonably cooperate with this Bank
concerning the action, suit, or proceeding.
(B) Expenses, including attorney's fees, incurred by a
director, trustee, officer, employee, or agent in defending any action, suit, or
proceeding referred to in Section 2 of this Article Eight, may be paid by this
Bank as they are incurred, in advance of the final disposition of the action,
suit, or proceeding as authorized by the directors in the specific case upon
receipt of an undertaking by or on behalf of the director, trustee, officer,
employee, or agent to repay such amount, if it ultimately is determined that he
is not entitled to be indemnified by this Bank.
Section 6. The indemnification authorized by this Article
Eight shall not be exclusive of, and shall be in addition to, any other rights
granted to those seeking indemnification under the Articles or the Constitution
of this Bank or any agreement, vote of shareholders or disinterested directors,
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director or officer and shall inure to the benefit of the
heirs, executors, and administrators of such a person.
Section 7. This Bank may purchase and maintain insurance or
furnish similar protection, including but not limited to trust funds, letters of
credit, or self-insurance, on behalf of or for any person who is or was a
director, officer, employee, or agent of this Bank, or is or was serving at the
request of this Bank as a director, trustee, officer, employee, or agent of
another corporation, domestic or foreign, nonprofit or for profit, partnership,
joint venture, trust, or other enterprise, against
II-7
<PAGE> 25
any liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not this Bank would have the power
to indemnify him against such liability under this section. Insurance may be
purchased from or maintained with a person in which this Bank has a financial
interest.
Section 8. The authority of this Bank to indemnify persons
pursuant to Sections 1 or 2 of this Article Eight does not limit the payment of
expenses as they are incurred, indemnification, insurance, or other protection
that may be provided pursuant to Sections 5, 6 and 7 of this Article Eight.
Sections 1 and 2 of this Article Eight do not create any obligation to repay or
return payments made by this Bank pursuant to Sections 5, 6 or 7 of this Article
Eight.
Section 9. As used in this Article Eight, references to this
Bank include all constituent corporations in a consolidation or merger and the
new or surviving corporation, so that any person who is or was a director,
officer, employee, or agent of such a constituent corporation, or is or was
serving at the request of such constituent corporation as a director, trustee,
officer, employee, or agent of another corporation, domestic or foreign,
nonprofit or for profit, partnership, joint venture, trust, or other enterprise,
shall stand in the same position under this section with respect to the new or
surviving corporation as he would if he had served the new or surviving
corporation in the same capacity.
Section 10. Any action, suit or proceeding to determine a
claim for indemnification under this Article Eight may be maintained by the
person claiming such indemnification, or by the Bank, in the Court of Common
Pleas of Coshocton County, Ohio. This Bank and (by claiming such
indemnification) each such person consent to the exercise of jurisdiction over
its or his person by the Court of Common Pleas of Coshocton County, Ohio, in any
such action, suit or proceeding.
ARTICLE NINE
DISSOLUTION
Section 1. To dissolve this Bank, a resolution in writing
asking for such dissolution shall be adopted by the board of directors or
requested in writing in the form of a resolution by the holders of at least
twenty-five percent of the voting shares of this Bank.
Section 2. Upon the presentation to the board of directors of
one of the resolutions specified in Section 1 of this Article Nine, the board of
directors shall call a special meeting of the shareholders for the purpose of
considering and acting upon such resolution. If at such special meeting, the
holders of a majority of the voting shares of this Bank entitled to vote under
the provisions of this Constitution vote for dissolution, the board of directors
shall take the necessary steps to wind up the affairs of this Bank, subject to
the contract rights of its borrowers, in accordance with statutory requirements
existing at the date such action is taken.
ARTICLE TEN
MISCELLANEOUS
Section 1. Amendments. This Constitution may be amended at any
annual or special meeting of the shareholders of this Bank by the affirmative
vote of the holders of three-fifths of the shares of record represented in
person or by proxy at such meeting. All proposals to amend this Constitution
shall be presented in writing to the board of directors at a regular meeting
thereof at least thirty (30) days before such annual or special meeting of the
shareholders, and the amendment adopted shall be substantially the same as
proposed.
Section 2. Action by Shareholders or Directors Without a
Meeting. Anything contained in this Constitution to the contrary
notwithstanding, any action which may be authorized or taken at a meeting of the
shareholders or of the directors or of a committee of the directors, as the case
may be, may be authorized or taken without a meeting with the affirmative vote
or approval of, and in a writing or writings signed by, all the shareholders who
would be entitled to notice of a meeting of the shareholders held for such
purpose, or all the directors, or all the members of such committee of the
directors, respectively, which writings shall be filed with or entered upon the
records of this Bank.
II-8
<PAGE> 1
ARTICLES OF INCORPORATION
OF
HOME LOAN FINANCIAL CORPORATION
The undersigned, desiring to form a corporation for profit under
Chapter 1701 of the Ohio Revised Code, does hereby certify:
FIRST: The name of the corporation shall be Home Loan Financial
Corporation.
SECOND: The place in Ohio where the principal office of the corporation
is to be located is the City of Coshocton, County of Coshocton.
THIRD: The purpose for which the corporation is formed is to engage in
any lawful act or activity for which corporations may be formed under Section
1701.01 to 1701.98, inclusive, of the Ohio Revised Code.
FOURTH: The authorized shares of the corporation shall be one hundred
(100) common shares, each without par value. The directors of the corporation
may adopt an amendment to the Articles of Incorporation of the corporation in
respect of any unissued or treasury shares of any class and thereby fix or
change: the division of such shares into series and the designation and
authorized number of each series; the dividend rate; the dates of payment of
dividends and the dates from which they are cumulative; the liquidation price;
the redemption rights and price; the sinking fund requirements; the conversion
rights; and the restrictions on the issuance of shares of any class or series.
FIFTH: (A) The board of directors of the corporation shall have the
power to cause the corporation from time to time and at any time to purchase,
hold, sell, transfer or otherwise deal with (i) shares of any class or series
issued by it, (ii) any security or other obligation of the corporation which may
confer upon the holder thereof the right to convert the same into shares of any
class or series authorized by the Articles of Incorporation of the corporation,
and (iii) any security or other obligation which may confer upon the holder
thereof the right to purchase shares of any class or series authorized by the
Articles of Incorporation of the corporation.
(B) The corporation shall have the right to repurchase, if and when any
shareholder desires to sell, or on the happening of any event is required to
sell, shares of any class or series issued by the corporation.
<PAGE> 2
(C) The authority granted in this Article Fifth shall not limit the
plenary authority of the directors to purchase, hold, sell, transfer or
otherwise deal with shares of any class or series, securities or other
obligations issued by the corporation or authorized by the Articles of
Incorporation of the corporation.
SIXTH: Notwithstanding any provision of the Ohio Revised Code requiring
for any purpose the vote, consent, waiver or release of the holders of shares of
the corporation entitling them to exercise any proportion of the voting power of
the corporation or of any class or classes thereof, such action, unless
expressly otherwise provided by statute, may be taken by the vote, consent,
waiver or release of the holders of shares entitling them to exercise not less
than a majority of the voting power of the corporation or of such class or
classes; provided, however, that if the board of directors of the corporation
shall recommend against the approval of any of the following matters, the
affirmative vote of the holders of shares entitling them to exercise not less
than eighty percent (80%) of the voting power of any class or classes of shares
of the corporation which entitle the holders thereof to vote in respect of any
such matter as a class shall be required to adopt:
(A) A proposed amendment to the Articles of Incorporation of the
corporation;
(B) A proposed amendment to the Code of Regulations of the
corporation;
(C) A proposal to change the number of directors by action of the
shareholders;
(D) An agreement of merger or consolidation providing for the
proposed merger or consolidation of the corporation with or
into one or more other corporations;
(E) A proposed combination or majority share acquisition involving
the issuance of shares of the corporation and requiring
shareholder approval;
(F) A proposal to sell, exchange, transfer or otherwise dispose of
all, or substantially all, of the assets, with or without the
goodwill, of the corporation; or
(G) A proposed dissolution of the corporation.
SEVENTH: No shareholder of the corporation shall have, as a matter of
right, the pre-emptive right to purchase or subscribe for shares of any class,
now or hereafter authorized, or to purchase or subscribe for securities or other
obligations convertible into or exchangeable for such shares or which by
warrants or otherwise entitle the holders thereof to subscribe for or purchase
any such shares.
<PAGE> 3
IN WITNESS WHEREOF, I have hereunto signed my name this 4th
day of December, 1997.
Robert C. Hamilton, Incorporator
<PAGE> 1
Exhibit 3.2
CODE OF REGULATIONS
OF
HOME LOAN FINANCIAL CORPORATION
INDEX
<TABLE>
<CAPTION>
Section Caption Page No.
- ------- ------- --------
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
<S> <C> <C>
1.01. Annual Meetings................................................................... 1
1.02. Calling of Meetings............................................................... 1
1.03. Place of Meetings................................................................. 1
1.04. Notice of Meetings................................................................ 1
1.05. Waiver of Notice.................................................................. 2
1.06. Quorum............................................................................ 2
1.07. Votes Required.................................................................... 2
1.08. Order of Business................................................................. 2
1.09. Shareholders Entitled to Vote..................................................... 2
1.10. Cumulative Voting................................................................. 2
1.11. Proxies........................................................................... 3
1.12. Inspectors of Election............................................................ 3
ARTICLE TWO
DIRECTORS
2.01. Authority and Qualifications...................................................... 3
2.02. Number of Directors and Term of Office............................................ 3
2.03. Nomination........................................................................ 4
2.04. Election.......................................................................... 5
2.05. Removal........................................................................... 5
2.06. Vacancies......................................................................... 5
2.07. Meetings.......................................................................... 5
2.08. Notice of Meetings................................................................ 6
2.09. Waiver of Notice.................................................................. 6
2.10. Quorum............................................................................ 6
2.11. Executive Committee............................................................... 6
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
2.12. Compensation...................................................................... 7
2.13. Bylaws............................................................................ 7
ARTICLE THREE
OFFICERS
3.01. Officers.......................................................................... 7
3.02. Tenure of Office.................................................................. 7
3.03. Duties of the Chairman of the Board............................................... 7
3.04. Duties of the President........................................................... 8
3.05. Duties of the Vice Presidents..................................................... 8
3.06. Duties of the Secretary........................................................... 8
3.07. Duties of the Treasurer........................................................... 8
ARTICLE FOUR
SHARES
4.01. Certificates...................................................................... 8
4.02. Transfers......................................................................... 9
4.03. Transfer Agents and Registrars.................................................... 9
4.04. Lost, Wrongfully Taken or Destroyed Certificates.................................. 9
4.05. Uncertificated Shares............................................................. 10
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
5.01. Mandatory Indemnification......................................................... 10
5.02. Court-Approved Indemnification.................................................... 10
5.03. Indemnification for Expenses...................................................... 11
5.04 Determination Required............................................................ 11
5.05. Advances for Expenses............................................................. 12
5.06. Article Five Not Exclusive........................................................ 12
5.07. Insurance......................................................................... 12
5.08. Certain Definitions............................................................... 12
5.09. Venue............................................................................. 13
ARTICLE SIX
MISCELLANEOUS
6.01. Amendments........................................................................ 13
6.02. Action by Shareholders or Directors Without a Meeting............................. 13
</TABLE>
<PAGE> 3
CODE OF REGULATIONS
OF
HOME LOAN FINANCIAL CORPORATION
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
SECTION 1.01. ANNUAL MEETINGS. The annual meeting of the
shareholders for the election of directors, for the consideration of reports to
be laid before such meeting and for the transaction of such other business as
may properly come before such meeting shall be held on the second Tuesday in
October each year or on such other date as may be fixed from time to time by the
directors.
SECTION 1.02. CALLING OF MEETINGS. Meetings of the
shareholders may be called only by the chairman of the board; the president or,
in case of the president's absence, death, or disability, the vice president
authorized to exercise the authority of the president; the secretary; the
directors by action at a meeting, or a majority of the directors acting without
a meeting; or the holders of at least twenty-five percent of all shares
outstanding and entitled to vote thereat.
SECTION 1.03. PLACE OF MEETINGS. All meetings of shareholders
shall be held at the principal office of the corporation, unless otherwise
provided by action of the directors. Meetings of shareholders may be held at any
place within or without the State of Ohio.
SECTION 1.04. NOTICE OF MEETINGS. (A) Written notice stating
the time, place and purposes of a meeting of the shareholders shall be given
either by personal delivery or by mail not less than seven nor more than sixty
days before the date of the meeting (1) to each shareholder of record entitled
to notice of the meeting, (2) by or at the direction of the president or the
secretary. If mailed, such notice shall be addressed to the shareholder at his
address as it appears on the records of the corporation. Notice of adjournment
of a meeting need not be given if the time and place to which it is adjourned
are fixed and announced at such meeting. In the event of a transfer of shares
after the record date for determining the shareholders who are entitled to
receive notice of a meeting of shareholders, it shall not be necessary to give
notice to the transferee. Nothing herein contained shall prevent the setting of
a record date in the manner provided by law, the Articles of Incorporation of
the corporation (the "Articles") or elsewhere in this Code of Regulations (the
"Regulations") for the determination of shareholders who are entitled to receive
notice of or to vote at any meeting of shareholders or for any purpose required
or permitted by law.
(B) Following receipt by the president or the secretary of a
request in writing, specifying the purpose or purposes for which the persons
properly making such request have called
1
<PAGE> 4
a meeting of the shareholders, delivered either in person or by registered mail
to such officer by any persons entitled to call a meeting of shareholders, such
officer shall cause to be given to the shareholders entitled thereto notice of a
meeting to be held on a date not less than seven nor more than sixty days after
the receipt of such request, as such officer may fix. If such notice is not
given within fifteen days after the receipt of such request by the president or
the secretary, then, and only then, the persons properly calling the meeting may
fix the time of meeting and give notice thereof in accordance with the
provisions of the Regulations.
SECTION 1.05. WAIVER OF NOTICE. Notice of the time, place and
purpose or purposes of any meeting of shareholders may be waived in writing,
either before or after the holding of such meeting, by any shareholders, which
writing shall be filed with or entered upon the records of such meeting. The
attendance of any shareholder, in person or by proxy, at any such meeting
without protesting the lack of proper notice, prior to or at the commencement of
the meeting, shall be deemed to be a waiver by such shareholder of notice of
such meeting.
SECTION 1.06. QUORUM. At any meeting of shareholders, the
holders of a majority of the voting shares of the corporation outstanding and
entitled to vote thereat, present in person or by proxy, shall constitute a
quorum for such meeting. The holders of a majority of the voting shares
represented at a meeting, whether or not a quorum is present, or the chairman of
the board, the president, or the officer of the corporation acting as chairman
of the meeting, may adjourn such meeting from time to time, and if a quorum is
present at such adjourned meeting any business may be transacted as if the
meeting had been held as originally called.
SECTION 1.07. VOTES REQUIRED. At all elections of directors
the candidates receiving the greatest number of votes shall be elected. Any
other matter submitted to the shareholders for their vote shall be decided by
the vote of such proportion of the shares, or of any class of shares, or of each
class, as is required by law, the Articles or the Regulations.
SECTION 1.08. ORDER OF BUSINESS. The order of business at any
meeting of shareholders shall be determined by the officer of the corporation
acting as chairman of such meeting unless otherwise determined by a vote of the
holders of a majority of the voting shares of the corporation then outstanding,
present in person or by proxy, and entitled to vote at such meeting.
SECTION 1.09. SHAREHOLDERS ENTITLED TO VOTE. Each shareholder
of record on the books of the corporation on the record date for determining the
shareholders who are entitled to vote at a meeting of shareholders shall be
entitled at such meeting to one vote for each share of the corporation standing
in his name on the books of the corporation on such record date. The directors
may fix a record date for the determination of the shareholders who are entitled
to receive notice of and to vote at a meeting of shareholders, which record date
shall not be a date earlier than the date on which the record date is fixed and
which record date may be a maximum of sixty days preceding the date of the
meeting of shareholders.
SECTION 1.10. CUMULATIVE VOTING. If notice in writing shall be
given by a shareholder to the president, a vice president or the secretary of
the corporation, not less than forty-
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eight hours before the time fixed for holding a meeting of the shareholders for
the purpose of electing directors if notice of such meeting shall have been
given at least ten days prior thereto, and otherwise not less than twenty-four
hours before such time, that such shareholder desires that the voting at such
election shall be cumulative, and if an announcement of the giving of such
notice is made upon the convening of the meeting by the chairman or secretary or
by or on behalf of the shareholder giving such notice, each shareholder shall
have the right to cumulate such voting power as he possesses and to give one
candidate as many votes as is determined by multiplying the number of directors
to be elected by the number of votes to which such shareholder is entitled, or
to distribute such number of votes on the same principle among two or more
candidates, as he sees fit; provided, however, that the foregoing procedures
shall not apply if the Articles provide that no shareholder may cumulate his
voting power.
SECTION 1.11. PROXIES. At meetings of the shareholders, any
shareholder of record entitled to vote thereat may be represented and may vote
by a proxy or proxies appointed by an instrument in writing signed by such
shareholder, but such instrument shall be filed with the secretary of the
meeting before the person holding such proxy shall be allowed to vote
thereunder. No proxy shall be valid after the expiration of eleven months after
the date of its execution, unless the shareholder executing it shall have
specified therein the length of time it is to continue in force.
SECTION 1.12. INSPECTORS OF ELECTION. In advance of any
meeting of shareholders, the directors may appoint inspectors of election to act
at such meeting or any adjournment thereof; if inspectors are not so appointed,
the officer of the corporation acting as chairman of any such meeting may make
such appointment. In case any person appointed as inspector fails to appear or
act, the vacancy may be filled only by appointment made by the directors in
advance of such meeting or, if not so filled, at the meeting by the officer of
the corporation acting as chairman of such meeting. No other person or persons
may appoint or require the appointment of inspectors of election.
ARTICLE TWO
DIRECTORS
SECTION 2.01. AUTHORITY AND QUALIFICATIONS. Except where the
law, the Articles or the Regulations otherwise provide, all authority of the
corporation shall be vested in and exercised by its directors.
SECTION 2.02. NUMBER OF DIRECTORS AND TERM OF OFFICE.
(A) Until changed in accordance with the provisions of the
Regulations, the number of directors of the corporation shall be five. A term
may not exceed one year. Directors shall serve until their successors are duly
elected and qualified or until their earlier resignation, removal from office,
or death.
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(B) The number of directors may be fixed or changed at a
meeting of the shareholders called for the purpose of electing directors at
which a quorum is present, only by the affirmative vote of the holders of not
less than a majority of the voting shares which are represented at the meeting,
in person or by proxy, and entitled to vote on such proposal.
(C) The directors may fix or change the number of directors
and may fill any director's office that is created by an increase in the number
of directors; provided, however, that the directors may not increase the number
of directors to greater than ten (10) nor reduce the number of directors to
fewer than five (5) and no reduction in the number of directors shall of itself
have the effect of shortening the term of any incumbent director.
(D) If, pursuant to subsection (B) or (C) above, the number of
directors is fixed at or changed to six (6) or more, the directors may by
resolution provide for the classification of the directors into either two or
three classes and may determine the term of office of each such class; provided,
however, that no class shall consist of fewer than three (3) directors and no
term of office shall exceed three (3) years.
SECTION 2.03. NOMINATION.
(A) Any nominee for election as a director of the corporation
may be proposed only by the directors or by any shareholder entitled to vote for
the election of directors. No person, other than a nominee proposed by the
directors, may be nominated for election as a director of the corporation unless
such person shall have been proposed in a written notice, delivered or mailed by
first class United States mail, postage prepaid, to the Secretary of the
corporation at the principal offices of the corporation. In the case of a
nominee proposed for election as a director at an annual meeting of
shareholders, such written notice of a proposed nominee shall be received by the
Secretary of the corporation on or before the sixtieth (60th) day before the
first anniversary of the most recent annual meeting of shareholders of the
corporation held for the election of directors; provided, however, that if the
annual meeting for the election of directors in any year is not held on or
before the thirty-first (31st) day next following such anniversary, then the
written notice required by this subparagraph (A) shall be received by the
Secretary within a reasonable time prior to the date of such annual meeting. In
the case of a nominee proposed for election as a director at a special meeting
of shareholders at which directors are to be elected, such written notice of a
proposed nominee shall be received by the Secretary of the corporation no later
than the close of business on the seventh (7th) day following the day on which
notice of the special meeting was mailed to shareholders. Each such written
notice of a proposed nominee shall set forth (1) the name, age, business or
residence address of each nominee proposed in such notice, (2) the principal
occupation or employment of each such nominee, and (3) the number of common
shares of the corporation owned beneficially and/or of record by each such
nominee and the length of time any such shares have been so owned.
(B) If a shareholder shall attempt to nominate one or more
persons for election as a director at any meeting at which directors are to be
elected without having identified each such person in a written notice given as
contemplated by, and/or without having provided therein the information
specified in, subparagraph (A) of this Section, each such attempted nomination
shall be
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invalid and shall be disregarded unless the person acting as Chairman of the
meeting determines that the facts warrant the acceptance of such nomination.
(C) The election of directors shall be by ballot whenever
requested by the person acting as Chairman of the meeting or by the holders of a
majority of the voting shares outstanding, entitled to vote at such meeting and
present in person or by proxy, but unless such request is made, the election
shall be by voice vote.
SECTION 2.04. ELECTION. At each annual meeting of shareholders
for the election of directors, the successors to the directors whose term shall
expire in that year shall be elected, but if the annual meeting is not held or
if one or more of such directors are not elected thereat, they may be elected at
a special meeting called for that purpose. The election of directors shall be by
ballot whenever requested by the presiding officer of the meeting or by the
holders of a majority of the voting shares outstanding, entitled to vote at such
meeting and present in person or by proxy, but unless such request is made, the
election shall be viva voce.
SECTION 2.05. REMOVAL. A director or directors may be removed
from office, with or without assigning any cause, only by the vote of the
holders of shares entitling them to exercise not less than 75% of the voting
power of the corporation to elect directors in place of those to be removed;
provided, however, if the shareholders have a right to vote cumulatively in the
election of directors, unless all the directors, or all the directors of a
particular class (if the directors of the corporation are divided into classes),
are removed, no individual director shall be removed in case the votes of a
sufficient number of shares are cast against his removal that, if cumulatively
voted at an election of all directors, or all the directors of a particular
class, as the case may be, would be sufficient to elect at least one director.
In case of any such removal, a new director may be elected at the same meeting
for the unexpired term of each director removed. Failure to elect a director to
fill the unexpired term of any director removed shall be deemed to create a
vacancy in the board.
SECTION 2.06. VACANCIES. The remaining directors, though less
than a majority of the whole authorized number of directors, may, by the vote of
a majority of their number, fill any vacancy in the board for the unexpired
term. A vacancy in the board exists within the meaning of this Section 2.06 in
case the shareholders increase the authorized number of directors but fail at
the meeting at which such increase is authorized, or an adjournment thereof, to
elect the additional directors provided for, or in case the shareholders fail at
any time to elect the whole authorized number of directors.
SECTION 2.07. MEETINGS. A meeting of the directors shall be
held immediately following the adjournment of each annual meeting of
shareholders at which directors are elected, and notice of such meeting need not
be given. The directors shall hold such other meetings as may from time to time
be called, and such other meetings of directors may be called only by the
chairman of the board, the president, or any two directors. All meetings of
directors shall be held at the principal office of the corporation or at such
other place as the directors may from time to time determine by resolution.
Meetings of the directors may be held through any communications equipment if
all persons participating can hear each other, and participation in a meeting
pursuant to this provision shall constitute presence at such meeting.
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SECTION 2.08. NOTICE OF MEETINGS. Notice of the time and place
of each meeting of directors for which such notice is required by law, the
Articles, the Regulations or the By-Laws shall be given to each of the directors
by at least one of the following methods:
(A) In a writing mailed not less than three days before
such meeting and addressed to the residence or usual
place of business of a director, as such address
appears on the records of the corporation; or
(B) By telegraph, cable, radio, wireless, or a writing
sent or delivered to the residence or usual place of
business of a director as the same appears on the
records of the corporation, not later than the day
before the date on which such meeting is to be held;
or
(C) Personally or by telephone not later than the day
before the date on which such meeting is to be held.
Notice given to a director by any one of the methods specified in the
Regulations shall be sufficient, and the method of giving notice to all
directors need not be uniform. Notice of any meeting of directors may be given
only by the chairman of the board, the president or the secretary of the
corporation. Any such notice need not specify the purpose or purposes of the
meeting. Notice of adjournment of a meeting of directors need not be given if
the time and place to which it is adjourned are fixed and announced at such
meeting.
SECTION 2.09. WAIVER OF NOTICE. Notice of any meeting of
directors may be waived in writing, either before or after the holding of such
meeting, by any director, which writing shall be filed with or entered upon the
records of the meeting. The attendance of any director at any meeting of
directors without protesting, prior to or at the commencement of the meeting,
the lack of proper notice, shall be deemed to be a waiver by him of notice of
such meeting.
SECTION 2.10. QUORUM. A majority of the whole authorized
number of directors shall be necessary to constitute a quorum for a meeting of
directors, except that a majority of the directors in office shall constitute a
quorum for filling a vacancy in the board. The act of a majority of the
directors present at a meeting at which a quorum is present is the act of the
board, except as otherwise provided by law, the Articles or the Regulations.
SECTION 2.11. EXECUTIVE COMMITTEE. The directors may create an
executive committee or any other committee of directors, to consist of not less
than three directors, and may authorize the delegation to such executive
committee or other committees of any of the authority of the directors, however
conferred, other than that of filling vacancies among the directors or in the
executive committee or in any other committee of the directors.
Such executive committee or any other committee of directors
shall serve at the pleasure of the directors, shall act only in the intervals
between meetings of the directors, and shall be subject to the control and
direction of the directors. Such executive committee or other
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committee of directors may act by a majority of its members at a meeting or by a
writing or writings signed by all of its members.
Any act or authorization of any act by the executive committee
or any other committee within the authority delegated to it shall be as
effective for all purposes as the act or authorization of the directors. No
notice of a meeting of the executive committee or of any other committee of
directors shall be required. A meeting of the executive committee or of any
other committee of directors may be called only by the president or by a member
of such executive or other committee of directors. Meetings of the executive
committee or of any other committee of directors may be held through any
communications equipment if all persons participating can hear each other and
participation in such a meeting shall constitute presence thereat.
SECTION 2.12. COMPENSATION. Directors shall be entitled to
receive as compensation for services rendered and expenses incurred as directors
such amounts as the directors may determine.
SECTION 2.13. BYLAWS. The directors may adopt, and amend from
time to time, bylaws for their own government, which bylaws shall not be
inconsistent with the law, the Articles or the Regulations.
ARTICLE THREE
OFFICERS
SECTION 3.01. OFFICERS. The officers of the corporation to be
elected by the directors shall be a president, a secretary, a treasurer, and, if
desired, one or more vice presidents and such other officers and assistant
officers as the directors may from time to time elect. The directors may elect a
chairman of the board, who must be a director. Officers need not be shareholders
of the corporation and may be paid such compensation as the board of directors
may determine. Any two or more offices may be held by the same person, but no
officer shall execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required by law, the Articles, the Regulations or
the bylaws to be executed, acknowledged or verified by two or more officers.
SECTION 3.02. TENURE OF OFFICE. The officers of the
corporation shall hold office at the pleasure of the directors. Any officer of
the corporation may be removed, either with or without cause, at any time, by
the affirmative vote of a majority of all the directors then in office; such
removal, however, shall be without prejudice to the contract rights, if any, of
the person so removed.
SECTION 3.03. DUTIES OF THE CHAIRMAN OF THE BOARD. The
chairman of the board, if any, shall preside at all meetings of the directors.
He shall have such other powers and duties as the directors shall from time to
time assign to him.
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SECTION 3.04. DUTIES OF THE PRESIDENT. The president shall be
the chief executive officer of the corporation, shall exercise supervision over
the business of the corporation and shall have, among such additional powers and
duties as the directors may from time to time assign to him, the power and
authority to sign all certificates evidencing shares of the corporation and all
deeds, mortgages, bonds, contracts, notes and other instruments requiring the
signature of the president of the corporation. It shall be the duty of the
president to preside at all meetings of shareholders.
SECTION 3.05. DUTIES OF THE VICE PRESIDENTS. In the absence of
the president or in the event of his inability or refusal to act, the vice
president, if any (or in the event there be more than one vice president, the
vice presidents in the order designated, or in the absence of any designation,
then in the order of their election), shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all
restrictions upon the president. The vice presidents shall perform such other
duties and have such other powers as the directors may from time to time
prescribe.
SECTION 3.06. DUTIES OF THE SECRETARY. It shall be the duty of
the secretary, or of an assistant secretary, if any, in case of the absence or
inability to act of the secretary, to keep minutes of all the proceedings of the
shareholders and the directors and to make a proper record of the same; to
perform such other duties as may be required by law, the Articles or the
Regulations; to perform such other and further duties as may from time to time
be assigned to him by the directors or the president; and to deliver all books,
paper and property of the corporation in his possession to his successor, or to
the president.
SECTION 3.07. DUTIES OF THE TREASURER. The treasurer, or an
assistant treasurer, if any, in case of the absence or inability to act of the
treasurer, shall receive and safely keep in charge all money, bills, notes,
chooses in action, securities and similar property belonging to the corporation,
and shall do with or disburse the same as directed by the president or the
directors; shall keep an accurate account of the finances and business of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, stated capital and shares, together with such
other accounts as may be required and hold the same open for inspection and
examination by the directors; shall give bond in such sum with such security as
the directors may require for the faithful performance of his duties; shall,
upon the expiration of his term of office, deliver all money and other property
of the corporation in his possession or custody to his successor or the
president; and shall perform such other duties as from time to time may be
assigned to him by the directors.
ARTICLE FOUR
SHARES
SECTION 4.01. CERTIFICATES. Certificates evidencing ownership
of shares of the corporation shall be issued to those entitled to them. Each
certificate evidencing shares of the
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corporation shall bear a distinguishing number; the signatures of the chairman
of the board, the president, or a vice president, and of the secretary or an
assistant secretary (except that when any such certificate is countersigned by
an incorporated transfer agent or registrar, such signatures may be facsimile,
engraved, stamped or printed); and such recitals as may be required by law.
Certificates evidencing shares of the corporation shall be of such tenor and
design as the directors may from time to time adopt and may bear such recitals
as are permitted by law.
SECTION 4.02. TRANSFERS. Where a certificate evidencing a
share or shares of the corporation is presented to the corporation or its proper
agents with a request to register transfer, the transfer shall be registered as
requested if:
(1) An appropriate person signs on each certificate so
presented or signs on a separate document an assignment or transfer of shares
evidenced by each such certificate, or signs a power to assign or transfer such
shares, or when the signature of an appropriate person is written without more
on the back of each such certificate; and
(2) Reasonable assurance is given that the endorsement of each
appropriate person is genuine and effective; the corporation or its agents may
refuse to register a transfer of shares unless the signature of each appropriate
person is guaranteed by a commercial bank or trust company having an office or a
correspondent in the City of New York or by a firm having membership in the New
York Stock Exchange; and
(3) All applicable laws relating to the collection of transfer
or other taxes have been complied with; and
(4) The corporation or its agents are not otherwise required
or permitted to refuse to register such transfer.
SECTION 4.03. TRANSFER AGENTS AND REGISTRARS. The directors
may appoint one or more agents to transfer or to register shares of the
corporation, or both.
SECTION 4.04. LOST, WRONGFULLY TAKEN OR DESTROYED
CERTIFICATES. Except as otherwise provided by law, where the owner of a
certificate evidencing shares of the corporation claims that such certificate
has been lost, destroyed or wrongfully taken, the directors must cause the
corporation to issue a new certificate in place of the original certificate if
the owner:
(1) So requests before the corporation has notice that such
original certificate has been acquired by a bona fide purchaser; and
(2) Files with the corporation, unless waived by the
directors, an indemnity bond, with surety or sureties satisfactory to the
corporation, in such sums as the directors may, in their discretion, deem
reasonably sufficient as indemnity against any loss or liability that the
corporation may incur by reason of the issuance of each such new certificate;
and
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(3) Satisfies any other reasonable requirements which may be
imposed by the directors, in their discretion.
SECTION 4.05. UNCERTIFICATED SHARES. Anything contained in
this Article Fourth to the contrary notwithstanding, the directors may provide
by resolution that some or all of any or all classes and series of shares of the
corporation shall be Uncertificated shares, provided that such resolution shall
not apply to (A) shares of the corporation represented by a certificate until
such certificate is surrendered to the corporation in accordance with applicable
provisions of Ohio law or (B) any certificated security of the corporation
issued in exchange for an uncertificated security in accordance with applicable
provisions of Ohio law. The rights and obligations of the holders of
uncertificated shares and the rights and obligations of the holders of
certificates representing shares of the same class and series shall be
identical, except as otherwise expressly provided by law.
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
SECTION 5.01. MANDATORY INDEMNIFICATION. The corporation shall
indemnify any officer or director of the corporation who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, any action threatened or instituted by or in the
right of the corporation), by reason of the fact that he 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, trustee, officer, employee or agent of
another corporation (domestic or foreign, nonprofit or for profit), partnership,
joint venture, trust or other enterprise, against expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and transcript
costs), 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 interests of the corporation, and with respect to any criminal action
or proceeding, he had no reasonable cause to believe his conduct was unlawful. A
person claiming indemnification under this Section 5.01 shall be presumed, in
respect of any act or omission giving rise to such claim for indemnification, to
have 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 with respect to any
criminal matter, to have had no reasonable cause to believe his conduct was
unlawful, and the termination of any action, suit or proceeding by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, rebut such presumption.
SECTION 5.02. COURT-APPROVED INDEMNIFICATION. Anything
contained in the Regulations or elsewhere to the contrary notwithstanding:
(A) the corporation shall not indemnify any officer or
director of the corporation who was a party to any completed action or suit
instituted by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he 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,
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trustee, officer, employee or agent of another corporation (domestic or foreign,
nonprofit or for profit), partnership, joint venture, trust or other enterprise,
in respect of any claim, issue or matter asserted in such action or suit as to
which he shall have been adjudged to be liable for acting with reckless
disregard for the best interests of the corporation or misconduct (other than
negligence) in the performance of his duty to the corporation unless and only to
the extent that the Court of Common Pleas of Coshocton County, Ohio, or the
court in which such action or suit was brought shall determine upon application
that, despite such adjudication of liability, and in view of all the
circumstances of the case, he is fairly and reasonably entitled to such
indemnity as such Court of Common Pleas or such other court shall deem proper;
and
(B) the corporation shall promptly make any such unpaid
indemnification as is determined by a court to be proper as contemplated by this
Section 5.02.
SECTION 5.03. INDEMNIFICATION FOR EXPENSES. Anything contained
in the Regulations or elsewhere to the contrary notwithstanding, to the extent
that an officer or director of the corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in Section
5.01, or in defense of any claim, issue or matter therein, he shall be promptly
indemnified by the corporation against expenses (including, without limitation,
attorneys' fees, filing fees, court reporters' fees and transcript costs)
actually and reasonably incurred by him in connection therewith.
SECTION 5.04 DETERMINATION REQUIRED. Any indemnification
required under Section 5.01 and not precluded under Section 5.02 shall be made
by the corporation only upon a determination that such indemnification of the
officer or director is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 5.01. Such determination may
be made only (A) by a majority vote of a quorum consisting of directors of the
corporation who were not and are not parties to, or threatened with, any such
action, suit or proceeding, or (B) if such a quorum is not obtainable or if a
majority of a quorum of disinterested directors so directs, in a written opinion
by independent legal counsel other than an attorney, or a firm having associated
with it an attorney, who has been retained by or who has performed services for
the corporation, or any person to be indemnified, within the past five years, or
(C) by the shareholders, or (D) by the Court of Common Pleas of Coshocton
County, Ohio, or (if the corporation is a party thereto) the court in which such
action, suit or proceeding was brought, if any; any such determination may be
made by a court under division (D) of this Section 5.04 at any time including,
without limitation, any time before, during or after the time when any such
determination may be requested of, be under consideration by or have been denied
or disregarded by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by the shareholders under
division (C) of this Section 5.04; and no failure for any reason to make any
such determination, and no decision for any reason to deny any such
determination, by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by shareholders under division
(C) of this Section 5.04 shall be evidence in rebuttal of the presumption
recited in Section 5.01. Any determination made by the disinterested directors
under division (A) or by independent legal counsel under division (B) of this
Section 5.04 to make indemnification in respect of any claim, issue or matter
asserted in an action or suit threatened or brought by or in the right of the
corporation shall be promptly communicated to the person who threatened or
brought
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such action or suit, and within ten days after receipt of such notification such
person shall have the right to petition the Court of Common Pleas of Coshocton
County, Ohio, or the court in which such action or suit was brought, if any, to
review the reasonableness of such determination.
SECTION 5.05. ADVANCES FOR EXPENSES. Expenses (including,
without limitation, attorneys' fees, filing fees, court reporters' fees and
transcript costs) incurred in defending any action, suit or proceeding referred
to in Section 5.01 shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding to or on behalf of the officer or
director promptly as such expenses are incurred by him, but only if such officer
or director shall first agree, in writing, to repay all amounts so paid in
respect of any claim, issue or other matter asserted in such action, suit or
proceeding in defense of which he shall not have been successful on the merits
or otherwise:
(A) if it shall ultimately be determined as provided in
Section 5.04 that he is not entitled to be indemnified by the corporation as
provided under Section 5.01; or
(B) if, in respect of any claim, issue or other matter
asserted by or in the right of the corporation in such action or suit, he shall
have been adjudged to be liable for acting with reckless disregard for the best
interests of the corporation or misconduct (other than negligence) in the
performance of his duty to the corporation, unless and only to the extent that
the Court of Common Pleas of Coshocton County, Ohio, or the court in which such
action or suit was brought shall determine upon application that, despite such
adjudication of liability, and in view of all the circumstances, he is fairly
and reasonably entitled to all or part of such indemnification.
SECTION 5.06. ARTICLE FIVE NOT EXCLUSIVE. The indemnification
provided by this Article Five shall not be deemed exclusive of any other rights
to which any person seeking indemnification may be entitled under the Articles
or the Regulations or any agreement, vote of shareholders or disinterested
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be an officer or director of the corporation and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
SECTION 5.07. INSURANCE. The corporation may 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, trustee, officer, employee, or agent of another
corporation (domestic or foreign, nonprofit or for profit), partnership, joint
venture, trust or other 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 have the obligation or the power to
indemnify him against such liability under the provisions of this Article Five.
SECTION 5.08. CERTAIN DEFINITIONS. For purposes of this
Article Five, and as examples and not by way of limitation:
(A) A person claiming indemnification under this Article 5
shall be deemed to have been successful on the merits or otherwise in defense of
any action, suit or proceeding referred
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to in Section 5.01, or in defense of any claim, issue or other matter therein,
if such action, suit or proceeding shall be terminated as to such person, with
or without prejudice, without the entry of a judgment or order against him,
without a conviction of him, without the imposition of a fine upon him and
without his payment or agreement to pay any amount in settlement thereof
(whether or not any such termination is based upon a judicial or other
determination of the lack of merit of the claims made against him or otherwise
results in a vindication of him); and
(B) References to an "other enterprise" shall include employee
benefit plans; references to a "fine" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee or agent with respect to
an employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the best
interests of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the corporation" within the meaning of that term as used in this Article Five.
SECTION 5.09. VENUE. Any action, suit or proceeding to
determine a claim for indemnification under this Article Five may be maintained
by the person claiming such indemnification, or by the corporation, in the Court
of Common Pleas of Coshocton County, Ohio. The corporation and (by claiming such
indemnification) each such person consent to the exercise of jurisdiction over
its or his person by the Court of Common Pleas of Coshocton County, Ohio, in any
such action, suit or proceeding.
ARTICLE SIX
MISCELLANEOUS
SECTION 6.01. AMENDMENTS. The Regulations may be amended, or
new regulations may be adopted, at a meeting of shareholders held for such
purpose, only by the affirmative vote of the holders of shares entitling them to
exercise not less than a majority of the voting power of the corporation on such
proposal, or without a meeting by the written consent of the holders of shares
entitling them to exercise not less than a majority of the voting power of the
corporation on such proposal.
SECTION 6.02. ACTION BY SHAREHOLDERS OR DIRECTORS WITHOUT A
MEETING. Anything contained in the Regulations to the contrary notwithstanding,
except as provided in Section 6.01, any action which may be authorized or taken
at a meeting of the shareholders or of the directors or of a committee of the
directors, as the case may be, may be authorized or taken without a meeting with
the affirmative vote or approval of, and in a writing or writings signed by, all
the shareholders who would be entitled to notice of a meeting of the
shareholders held for such purpose, or all the directors, or all the members of
such committee of the directors, respectively, which writings shall be filed
with or entered upon the records of the corporation.
13
<PAGE> 1
Exhibit 5
(513) 723-4000
December 15, 1997
Board of Directors
Home Loan Financial Corporation
401 Main Street
Coshocton, Ohio 43812-1580
Gentleman:
We are familiar with the proceedings taken and proposed to be
taken by Home Loan Financial Corporation (the "Holding Company") in connection
with the issuance and sale by the Holding Company of up to 2,248,250 of its
common shares, without par value (the "Common Shares"). The Common Shares are
being offered by the Holding Company in connection with the conversion of The
Home Loan Savings Bank (the "Bank") from a mutual savings and loan association
incorporated under the laws of the State of Ohio to a permanent capital stock
savings and loan association incorporated under the laws of the State of Ohio
(the "Conversion").
The Holding Company has been incorporated for the purpose of
purchasing all of the capital stock to be issued by the Bank in connection with
the Conversion. We have assisted with matters related to the incorporation and
organization of the Holding Company. In addition, we have collaborated in the
preparation of the Registration Statement on Form S-1 (the "Registration
Statement") to be filed by the Holding Company with the Securities and Exchange
Commission for the registration of the Common Shares under the Securities Act of
1933, as amended. In connection therewith, we have examined, among other things,
such records and documents as we have deemed necessary in order to express the
opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that the
Holding Company is a duly organized and legally existing corporation under the
laws of the State of Ohio. Assuming compliance with applicable federal and state
securities laws,
<PAGE> 2
Board of Directors
Home Loan Financial Corporation
December 15, 1997
Page 2
we are also of the opinion that the Common Shares to be issued and sold by the
Holding Company, when purchase orders have been accepted and the purchase price
for the Common Shares has been paid in money as specified in the Registration
Statement when it shall become effective, will be validly issued and
outstanding, fully paid and non-assessable. Notwithstanding the foregoing, until
payments are received by the Holding Company from the Home Loan Financial
Corporation Employee Stock Ownership Plan (the "ESOP") in accordance with the
terms of a loan agreement to be entered into by and between the Holding Company
and the ESOP, shares for which payment in money has not been received will not
be fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to us in the Prospectus
included therein.
Very truly yours,
Vorys, Sater, Seymour and Pease
<PAGE> 1
Exhibit 8
(513) 723-4000
December 15, 1997
Board of Directors
Home Loan Financial Corporation
401 Main Street
Coshocton, Ohio 43812-1580
and
Board of Directors
The Home Loan Savings Bank
401 Main Street
Coshocton, Ohio 43812-1580
Re: Conversion from a Mutual Savings and Loan Association to a
Stock Savings and Loan Association - Federal and State Tax
Matters
Gentlemen:
You have requested our opinion regarding certain federal income and
state tax consequences resulting from the proposed conversion (the "Conversion")
of The Home Loan Savings Bank (the "Bank") from a mutual savings and loan Bank
to a stock savings and loan Bank (the "Stock Bank") incorporated under the laws
of the State of Ohio and the simultaneous acquisition by Home Loan Financial
Corporation, an Ohio corporation (the "Holding Company"), of all the capital
stock to be issued by the Stock Bank upon the Conversion.
We have reviewed the Plan of Conversion adopted by the Bank's Board of
Directors on November 12, 1997 (the "Plan"), the Application for Conversion on
Form AC (the "Application") filed with the Office of Thrift Supervision (the
"OTS") and the Ohio Department of Commerce, Division of Financial Institutions
(the "Division"), the Application H-(e)1-S filed with the OTS and the Summary
Proxy Statement, the Prospectus and other solicitation materials included in the
Application, and we have examined such other legal and factual matters as we
considered appropriate. Unless otherwise indicated, defined terms in this letter
have the same meaning as in the Plan and the Prospectus.
<PAGE> 2
Home Loan Financial Corporation
The Home Loan Savings Bank
December 15, 1997
Page 2
We have not requested on your behalf nor have we received any rulings
from the Internal Revenue Service ("IRS") in connection with the Conversion or
the attendant federal income tax consequences.
FACTS
A. The Bank
The Bank is a mutual savings and loan association which was organized
under Ohio law in 1882. As a savings and loan association, the Bank is subject
to supervision and regulation by the OTS, the Division and the Federal Deposit
Insurance Corporation ("FDIC"). The Bank is a member of the Federal Home Loan
Bank of Cincinnati. The deposits of the Bank are insured up to applicable limits
by the FDIC in the Savings Bank Insurance Fund ("SAIF").
The principal business of the Bank is the origination of permanent
mortgage loans secured by first mortgages on one- to four-family residential
real estate located in the Bank's primary market area. The Bank also originates
loans secured by multifamily real estate (over four units) and nonresidential
real estate. The Bank also originates a limited number of loans for the
construction of one- to four-family residences and permanent mortgage loans
secured by multi-family and non-residential real estate in its primary market
area. In addition to real estate lending, the Bank originates secured and
unsecured consumer loans. For liquidity and interest rate risk management
purposes, the Bank invests in interest-bearing deposits in other financial
institutions, U.S. Treasury securities, and other investments permitted by
applicable law. Funds for lending and other investment activities are obtained
primarily from savings deposits, which are insured up to applicable limits by
the FDIC, and principal repayments on loans and maturities of investment
securities.
The Bank conducts business from its main office located at 401 Main
Street, Coshocton, Ohio 43812-1580, and a full-service branch office located at
590 Walnut Street, Coschocton, Ohio.
B. Home Loan Financial Corporation
The Holding Company was incorporated under Ohio law in December 1997,
for the purpose of purchasing all of the capital stock of the Bank to be issued
in connection with the Conversion. The Holding Company has not conducted and
will not conduct any business other than business related to the Conversion
prior to the completion of the Conversion. Upon the consummation of the
Conversion, the Holding Company will be a unitary savings and loan holding
company, and its principal asset initially will be the capital stock of the
Stock Bank and
<PAGE> 3
Home Loan Financial Corporation
The Home Loan Savings Bank
December 15, 1997
Page 3
the investments made with the net proceeds retained from the sale of common
shares of the Holding Company (the "Common Shares") in connection with the
Conversion.
The office of the Holding Company is located at 401 Main Street,
Cochocton, Ohio 43812-1580.
C. The Plan of Conversion
On November 12, 1997, the Board of Directors of the Bank adopted the
Plan and recommended that the Voting Members of the Bank approve the Plan at the
Special Meeting. Under the Plan, (i) the Bank will be converted under Ohio law
from a mutual savings and loan Bank to a stock savings and loan Bank, and (ii)
the Common Shares will be offered for sale and issued to eligible persons in the
Subscription Offering and to the general public in the Community Offering, with
preference being given to residents of Coshocton County, Ohio.
The aggregate purchase price at which the Common Shares will be offered
and sold pursuant to the Plan will be based upon the estimated pro forma market
value of the Stock Bank, as determined by an independent appraisal of the Stock
Bank and the Holding Company. Keller & Co., Inc. ("Keller"), a firm experienced
in valuing thrift institutions, has prepared an independent appraisal of the pro
forma market value of the Stock Bank. Keller's valuation of the estimated pro
forma market value of the Stock Bank, as converted, and the Holding Company is
$1,700,000 as of November 28, 1997. The Valuation Range established in
accordance with the Plan is $14,450,000 to $19,550,000, which, based upon a per
share offering price of $10.00, will result in the sale of between 1,445,000 and
1,955,000 Common Shares. The total number of Common Shares sold in the
Conversion will be determined based on the Valuation Range. Applicable
regulations permit the Holding Company to offer additional Common Shares in an
amount not to exceed 15% above the maximum of the Valuation Range, which would
permit the issuance of up to 2,248,250 Common Shares with an aggregate purchase
price of $22,482,500.
D. Liquidation Account
In the event of a complete liquidation of the Bank in its present
mutual form, each depositor in the Bank would receive a pro rata share of any
assets of the Bank remaining after payment of the claims of all creditors,
including the claims of all depositors to the withdrawable value of their
savings accounts. A depositor's pro rata share of such remaining assets would be
the same proportion of such assets as the value of such depositor's savings
deposits bears to the total aggregate value of all savings deposits in the Bank
at the time of liquidation.
In the event of a complete liquidation of the Stock Bank after the
Conversion, each savings depositor would have a claim of the same general
priority as the claims of all other general creditors of the Stock Bank. Except
as described below, each depositor's claim would be solely in the amount of the
balance in such depositor's savings account plus accrued interest.
<PAGE> 4
Home Loan Financial Corporation
The Home Loan Savings Bank
December 15, 1997
Page 4
The depositor would have no interest in the assets of the Stock Bank above that
amount. Such assets would be distributed to the Holding Company as the sole
shareholder of the Stock Bank.
For the purpose of granting a limited priority claim to the assets of
the Stock Bank in the event of a complete liquidation thereof to Eligible
Account Holders and Supplemental Eligible Account Holders who maintain their
savings accounts at the Stock Bank following the Conversion, the Bank will, at
the time of Conversion, establish the Liquidation Account in an amount equal to
the regulatory capital of the Bank as of September 30, 1997. The Liquidation
Account will not operate to restrict the use or application of any of the
regulatory capital of the Stock Bank.
Each Eligible Account Holder and Supplemental Eligible Account Holder
will have a Subaccount. The balance of each initial Subaccount shall be an
amount determined by multiplying the amount in the Liquidation Account by a
fraction, the numerator of which is the closing balance in the account holder's
account as of the close of business on the applicable record date and the
denominator of which is the total amount of all Qualifying Deposits of all
Eligible Account Holders and Supplemental Eligible Account Holders on the
applicable record date. The balance of each Subaccount may be decreased but will
never be increased. If, at the close of business on any annual closing date of
the Stock Bank subsequent to the respective record dates, the balance in the
savings account to which a Subaccount relates is less than the lesser of (i) the
deposit balance in such savings account at the close of business on any other
annual closing date subsequent to the applicable record date or (ii) the amount
of the Qualifying Deposit as of the applicable record date, the balance of the
Subaccount for such savings account shall be adjusted proportionately to the
reduction in such savings account balance. In the event of any such downward
adjustment, such Subaccount balance shall not be subsequently increased
notwithstanding any increase in the deposit balance of the related savings
account. If any savings account is closed, its related Subaccount shall be
reduced to zero upon such closing.
In the event of a complete liquidation of the Stock Bank (and only in
such event), each Eligible Account Holder and Supplemental Eligible Account
Holder shall receive from the Liquidation Account a distribution equal to the
current balance in each of such account holder's Subaccounts before any
liquidation distribution may be made to the shareholders of the Stock Bank. Any
assets remaining after satisfaction of such liquidation rights and the claims of
the Stock Bank's creditors would be distributed to the Holding Company as the
sole shareholder of the Stock Bank. No merger, consolidation, purchase of bulk
assets or similar combination or transaction with another Bank, the deposits of
which are insured by the FDIC, will be deemed to be a complete liquidation for
this purpose and, in any such transaction, the Liquidation Account shall be
assumed by the surviving Bank.
<PAGE> 5
Home Loan Financial Corporation
The Home Loan Savings Bank
December 15, 1997
Page 5
E. Issuance of Shares
1. Subscription Offering
Nontransferable subscription rights to purchase Common Shares
will be granted at no cost to all eligible persons and entities in accordance
with the preference categories established by the Plan, as described below. Each
subscription right may be exercised only by the person to whom it is issued and
only for his or her own account. Each person subscribing for shares must
represent to the Stock Bank that he or she is purchasing such shares for his or
her own account and that he or she has no agreement or understanding with any
other person for the sale or transfer of such shares.
The number of Common Shares which a person who has
subscription rights may purchase will be determined, in part, by the total
number of Common Shares to be issued and the availability of Common Shares for
purchase under the preference categories set forth in the Plan and certain other
limitations. The sale of any Common Shares pursuant to subscriptions received is
contingent upon approval of the Plan by the Voting Members of the Bank at the
Special Meeting.
The preference categories which have been established by the
Plan, in accordance with applicable regulations, for the allocation of Common
Shares are as follows:
(a) Each Eligible Account Holder shall receive,
without payment therefor, a nontransferable right to purchase in the
Subscription Offering up to the greater of (i) 15,000 Common Shares, (ii) .10%
of the total number of Common Shares sold in connection with the Conversion, and
(iii) 15 times the product (rounded down to the next whole number) obtained by
multiplying the total number of Common Shares sold in connection with the
Conversion 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
number of Qualifying Deposits of all Eligible Account Holders, in each case on
the Eligibility Record Date, subject to the overall purchase limitations set
forth in the Plan. If the exercise of subscription rights by Eligible Account
Holders results in an over-subscription, Common Shares will be allocated among
subscribing Eligible Account Holders in a manner which will, to the extent
possible, make the total allocation of each subscriber equal 10 shares or the
amount subscribed for, whichever is less. Any Common Shares remaining after such
allocation has been made will be allocated among the subscribing Eligible
Account Holders whose subscriptions remain unfilled in the proportion which the
amount of their respective Qualifying Deposits on the Eligibility Record Date
bears to the total Qualifying Deposits of all Eligible Account Holders on such
date. Notwithstanding the foregoing, Common Shares in excess of 1,955,000, the
maximum of the Valuation Range, may be sold to the ESOP before fully satisfying
the subscriptions of Eligible Account Holders. No fractional shares will be
issued. For purposes of this paragraph (a),
<PAGE> 6
Home Loan Financial Corporation
The Home Loan Savings Bank
December 15, 1997
Page 6
increases in the Qualifying Deposits of directors and executive officers of the
Bank during the twelve months preceding the Eligibility Record Date shall not be
considered.
(b) The ESOP shall receive, without payment
therefor, a nontransferable right to purchase in the Subscription Offering an
aggregate amount of up to 10% of the Common Shares sold in the Conversion,
provided that shares remain available after satisfying the subscription rights
of Eligible Account Holders up to the maximum of the Valuation Range pursuant to
paragraph (a) above. Although the Plan and OTS regulations permit the ESOP to
purchase up to 10% of the Common Shares, the Holding Company anticipates that
the ESOP will purchase 8% of the Common Shares. If the ESOP is unable to
purchase all or part of the Common Shares for which it subscribes, the ESOP may
purchase Common Shares on the open market or may purchase authorized but
unissued Common Shares. If the ESOP purchases authorized but unissued Common
Shares, such purchases could have a dilutive effect on the interests of the
Holding Company's shareholders.
(c) Provided that shares remain available after
satisfying the subscription rights of Eligible Account Holders and the ESOP
pursuant to paragraphs (a) and (b) above each Supplemental Eligible Account
Holder will receive, without payment therefor, a nontransferable right to
purchase up to the greater of (i) 15,000 Common Shares, (ii) .10% of the total
number of Common Shares sold in connection with the Conversion, and (iii) 15
times the product (rounded down to the next whole number) obtained by
multiplying the total number of Common Shares sold in connection with the
Conversion by a fraction, the numerator of which is the amount of the
Supplemental Eligible Account Holder's Qualifying Deposit 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 purchase limitations set forth in Section 10 of the Plan
and subject to adjustment by the Board of Directors of the Holding Company and
the Bank as set forth in Section 10 of the Plan. If the exercise of subscription
rights by Supplemental Eligible Account Holders results in an oversubscription,
Common Shares will be allocated among subscribing Supplemental Eligible Account
Holders in a manner which will, to the extent possible, make the total
allocation of each subscriber equal 100 shares or the amount subscribed for,
whichever is less. Any Common Shares remaining after such allocation has been
made will be allocated among the subscribing Supplemental Eligible Account
Holders whose subscriptions remain unfilled in the proportion which the amount
of their respective Qualifying Deposits on the Supplemental Eligibility Record
Date bears to the total Qualifying Deposits of all Supplemental Eligible Account
Holders on such date. No fractional shares will be issued.
(d) Provided that shares remain available after
satisfying the subscription rights of Eligible Account Holders, the ESOP and
Supplemental Eligible Account Holders pursuant to paragraphs (a), (b) and (c)
above, each Other Eligible Member, other than an Eligible Account Holder or
Supplemental Eligible Account Holder, shall receive, without payment therefor, a
nontransferable right to purchase up to the greater of (i) 15,000 Common
<PAGE> 7
Home Loan Financial Corporation
The Home Loan Savings Bank
December 15, 1997
Page 7
Shares, and (ii) .10% of the total number of Common Shares sold in connection
with the Conversion, subject to adjustment by the Boards of Directors of the
Bank and the Holding Company. In the event of an oversubscription by the Other
Eligible Members, the available Common Shares will be allocated among
subscribing Other Eligible Members in the same proportion that their
subscriptions bear to the total amount of subscriptions by all Other Eligible
Members; provided, however, that, to the extent sufficient Common Shares are
available, each subscribing Other Eligible Member shall receive 25 Common Shares
before the remaining available Common Shares are allocated.
2. Community Offering
To the extent Common Shares remaining available after the
satisfaction of all subscriptions received in the Subscription Offering, the
Bank is hereby offering Common Shares in the Community Offering subject to the
limitations set forth below. If subscriptions are received in the Subscription
Offering for up to 2,248,250 Common Shares, Common Shares may not be available
in the Community Offering. All sales of the Common Shares in the Community
Offering will be at the same price per share as in the Subscription Offering.
In the event shares are available for the Community Offering,
each person, together with any Associate or groups acting in concert, may
purchase in the Community Offering up to 15,000 Common Shares. If an
insufficient number of Common Shares is available to fill all of the orders
received in the Community Offering, the available Common Shares will be
allocated in a manner to be determined by the Boards of Directors of the Holding
Company and the Bank, subject to the following:
(i) Preference will be given to natural
persons who are residents of Coshocton County, Ohio, the
county in which the offices of the Bank are located;
(ii) Orders received in the Community
Offering will first be filled up to 2% of the total number of
Common Shares offered, with any remaining shares allocated on
an equal number of shares per order basis until all orders
have been filled; and
(iii) the right of any person to purchase
Common Shares in the Community Offering is subject to the
right of the Holding Company and the Bank to accept or reject
such purchases in whole or in part.
<PAGE> 8
Home Loan Financial Corporation
The Home Loan Savings Bank
December 15, 1997
Page 8
F. Results of Conversion
Savings account holders and borrowers who are members of the Bank will
have no voting rights in the Stock Bank and will not participate, therefore, in
the election of directors or otherwise control the Stock Bank's affairs. After
the Conversion, voting rights in the Stock Bank will be vested exclusively in
the Holding Company as the sole shareholder of the Stock Bank. Each holder of
Common Shares will be entitled to one vote for each share owned on any matter to
be considered by the shareholders of the Stock Bank.
The Conversion will not interrupt the business of the Bank. During and
upon completion of the Conversion, the Bank will continue to provide the
services presently offered to depositors and borrowers, will maintain its
existing offices and will retain its existing management and employees. All
savings accounts in the Stock Bank will be equivalent in amount, interest rate
and other terms to the present savings accounts in the Bank, and the existing
FDIC insurance of such deposits will not be affected by the Conversion. The
Conversion will not affect the terms of loan accounts or the rights and
obligations of borrowers under their individual contractual arrangements with
the Bank.
ADDITIONAL REPRESENTATIONS
You have made the following additional representations upon which we
have relied:
(1) Neither the Holding Company nor the Stock Bank has any
plan or intention to redeem or otherwise acquire any of the Common Shares to be
issued in connection with the Conversion.
(2) Immediately following the consummation of the Conversion,
the Stock Bank will possess the same assets and liabilities as the Bank held
immediately prior to the Conversion, plus proceeds from the sale of the Common
Shares to the Holding Company in exchange for 50% of the net proceeds of the
Conversion. Assets used to pay expenses of the Conversion and all distributions
(except for regular, normal interest payments made by the Bank immediately
preceding the Conversion) will in the aggregate constitute less than one percent
of the net assets of the Bank and any such expenses and distributions will be
paid by the Bank and the Holding Company from the proceeds of the Subscription
Offering.
(3) Following the Conversion, the Stock Bank will continue to
engage in its business in substantially the same manner as engaged in by the
Bank prior to the Conversion and it has no plan or intention to sell or
otherwise dispose of any of its assets except in the ordinary course of
business.
<PAGE> 9
Home Loan Financial Corporation
The Home Loan Savings Bank
December 15, 1997
Page 9
(4) The Bank is not under the jurisdiction of a court in any
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
(5) The aggregate fair market value of the Qualifying Deposits
held by Eligible Account Holders and Supplemental Eligible Account Holders as of
the close of business on the Eligibility Record Date and the Supplemental
Eligibility Record Date, respectively, will equal or exceed ninety-nine percent
(99%) of the aggregate fair market value of all savings accounts (including
those accounts with less than $50) in the Bank as of the close of business on
such dates. No Common Shares will be issued to or purchased by
depositor-employees at a discount or as compensation in the Conversion.
(6) No cash or property will be given to Eligible Account
Holders, Supplemental Eligible Account Holders or Other Eligible Members in lieu
of (a) nontransferable subscription rights or (b) an interest in the Liquidation
Account of the Stock Bank.
(7) The Bank utilizes a reserve for bad debts in accordance
with Section 593 of the Code and, following the Conversion, the Stock Bank shall
likewise utilize a reserve for bad debts in accordance with Section 593 of the
Code.
(8) The Holding Company has no plan or intention to sell or
otherwise dispose of the shares of the Stock Bank purchased by it in the
Conversion.
(9) The Bank's savings depositors will pay the expenses of the
Conversion solely attributable to them, if any. The Holding Company will pay the
expenses of the transaction and will not pay any expenses solely attributable to
the savings depositors or to the Holding Company's shareholders.
(10) No amount of savings accounts or deposits as of the
Eligibility Record Date or the Supplemental Eligibility Record will be excluded
from participation in the Liquidation Account.
(11) The fair market value of the withdrawable savings
accounts plus interests in the Liquidation Account of the Stock Bank to be
constructively received under the Plan will in each instance be equal to the
fair market value of the withdrawable savings accounts of the Bank surrendered
in exchange therefor. All proprietary rights in the Bank form an integral part
of the withdrawable savings accounts being surrendered in the exchange.
(12) The Board, as defined in Section 368(a)(3)(D)(iii) of the
Code, has not made the certification described in Section 368(a)(3)(D)(ii), nor
will such certification be made prior to or otherwise in connection with the
Conversion.
<PAGE> 10
Home Loan Financial Corporation
The Home Loan Savings Bank
December 15, 1997
Page 10
STATEMENT OF LAW
In Revenue Ruling 80-105, 1980-1 C.B. 78, the IRS ruled that a
conversion of a federal mutual savings and loan Bank into a state stock savings
and loan Bank constituted a tax-free reorganization under Section 368(a)(1)(F)
of the Code. Subsequently, the IRS consistently issued letter rulings that
conversions of savings and loans qualify as tax-free reorganizations under the
Code, with the attendant tax consequences to the depositors and shareholders
that follow from such transactions. Although private rulings may not be relied
upon by taxpayers other than those to whom the ruling is directed, such rulings
do indicate the administrative position of the IRS.
OPINION OF COUNSEL
Based upon both our understanding of the facts and your representations
set forth above, and in reliance thereon, we are of the opinion that for federal
income tax purposes:
(1) The Conversion of the Bank from a mutual savings and loan
Bank incorporated under the laws of the State of Ohio to a stock savings and
loan Bank incorporated under the laws of the State of Ohio will constitute a
reorganization within the meaning of Section 368(a)(1)(F) of the Code, and no
gain or loss will be recognized to the Bank or to the Stock Bank as a result of
the Conversion. The Bank and the Stock Bank will each be a "party to a
reorganization" within the meaning of Section 368(b) of the Code.
(2) No gain or loss will be recognized to the Stock Bank upon
the receipt of money from the Holding Company in exchange for shares of the
Stock Bank.
(3) The assets of the Stock Bank will have the same basis in
its hands immediately after the Conversion as they had in the hands of the Bank
immediately prior to the Conversion, and the holding period of the assets of the
Stock Bank after the Conversion will include the period during which the assets
were held by the Bank before the Conversion.
(4) No gain or loss will be recognized to the deposit account
holders of the Bank upon the issuance to them, in exchange for their respective
withdrawable deposit accounts in the Bank immediately prior to the Conversion,
of withdrawable deposit accounts in the Stock Bank immediately after the
Conversion, in the same dollar amount as their withdrawable deposit accounts in
the Bank immediately prior to the Conversion, plus, in the case of Eligible
Account Holders and Supplemental Eligible Account Holders, the interests in the
Liquidation Account of the Stock Bank, as described above.
<PAGE> 11
Home Loan Financial Corporation
The Home Loan Savings Bank
December 15, 1997
Page 11
(5) The basis of the withdrawable deposit accounts in the
Stock Bank held by the deposit account holders of the Stock Bank immediately
after the Conversion will be the same as the basis of their deposit accounts in
the Bank immediately prior to the Conversion. The basis of the interests in the
Liquidation Account received by the Eligible Account Holders and Supplemental
Eligible Account Holders will be zero. The basis of the nontransferable
subscription rights received by members will be zero (assuming that at
distribution such rights have no ascertainable fair market value).
(6) No gain or loss will be recognized to Eligible Account
Holders, Supplemental Eligible Account Holders or Other Eligible Members upon
the distribution to them of nontransferable subscription rights to purchase
Common Shares (assuming that such rights have no readily ascertainable fair
market value), and no taxable income will be realized by such Eligible Account
Holders, Supplemental Eligible Account Holders and Other Eligible Members as a
result of their exercise of such nontransferable subscription rights.
(7) The basis of the Common Shares purchased by Eligible
Account Holders, Supplemental Eligible Account Holders and Other Eligible
Members pursuant to the exercise of subscription rights will be the purchase
price thereof (assuming the subscription rights have no ascertainable fair
market value and that the purchase price is no less than the fair market value
of the shares on the date of such exercise), and the holding period of such
Common Shares will commence on the date of such exercise. The basis of the
Common Shares purchased in the Community Offering will be the purchase price
thereof and the holding period of such Common Shares will commence on the day
after the date of the purchase.
(8) For purposes of Section 381 of the Code, the Bank will be
treated as if there had been no reorganization. The taxable year of the Bank
will not end on the effective date of the Conversion, and immediately after the
Conversion, the Stock Bank will succeed to and take into account the tax
attributes of the Bank immediately prior to the Conversion, including the Bank's
earnings and profits or deficit in earnings and profits.
(9) The bad debt reserves of the Bank immediately prior to the
Conversion will not be required to be restored to the gross income of the Bank
or the Stock Bank as a result of the Conversion, and immediately after the
Conversion, such bad debt reserves will have the same character in the hands of
the Stock Bank that they would have if there had been no Conversion. The Stock
Bank will succeed to and take into account the dollar amounts of those accounts
of the Bank which represent bad debt reserves in respect of which the Bank has
taken a bad debt deduction for taxable years ending on or before the Conversion.
(10) Regardless of book entries made for the creation of the
Liquidation Account, the Conversion will not diminish the accumulated earnings
and profits of the Bank available for the subsequent distribution of dividends
within the meaning of Section 316 of the Code. The creation of the Liquidation
Account on the records of the Stock Bank will have no
<PAGE> 12
Home Loan Financial Corporation
The Home Loan Savings Bank
December 15, 1997
Page 12
effect on its taxable income, deductions for additions to reserves for bad debts
under Section 593 of the Code or distributions to shareholders under Section
593(e).
For Ohio tax purposes, we are of the opinion that:
(1) The Bank is a "financial institution" for State of Ohio
tax purposes, and the Conversion will not change such status.
(2) The Bank is subject to the Ohio corporate franchise tax on
"financial institutions," which is currently imposed annually at a rate of 1.5%
of the Bank's apportioned book net worth, determined in accordance with GAAP,
less any statutory deductions, and the Conversion will not change such status.
This rate of tax is scheduled to decrease in each of tax years 1999 and 2000.
(3) As a "financial institution," the Bank is not subject to
any tax based upon net income or net profit imposed by the State of Ohio, and
the Conversion will not change such status.
(4) The Conversion will not be a taxable transaction to the
Bank or the Stock Bank for purposes of the Ohio corporate franchise tax;
however, as a consequences of the Conversion, the annual Ohio corporate
franchise tax liability of the Stock Bank could be affected if the taxable net
worth of the Stock Bank (i.e., apportioned book net worth computed in accordance
with GAAP at the close of the Stock Bank's taxable year for federal income tax
purposes) increases or decreases thereby.
(5) The Conversion will not be a taxable transaction to any
deposit account holder of the Bank or the Stock Bank for purposes of the Ohio
corporate franchise tax and the Ohio personal income tax.
Unlike private rulings, an opinion of counsel is not binding on the IRS
or the Ohio Department of Taxation, and the IRS or the Department could disagree
with the conclusions reached in the opinion. In the event of such disagreement,
there can be no assurance that the Service or the Department would not prevail
in a judicial proceeding, although counsel believes that the positions expressed
in its opinion should prevail if the matters are litigated.
Very truly yours,
Vorys, Sater, Seymour and Pease
<PAGE> 1
Exhibit 10.1
HOME LOAN FINANCIAL CORPORATION
1998 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE. The purpose of the Home Loan Financial Corporation 1998
Stock Option and Incentive Plan (this "Plan") is to promote and advance the
interests of Home Loan Financial Corporation (the "Company") and its
shareholders by enabling the Company to attract, retain and reward directors,
managerial and other employees of the Company and any Subsidiary (hereinafter
defined), and to strengthen the mutuality of interests between such directors
and employees and the Company's shareholders by providing the directors and
employees with a proprietary interest in pursuing the long-term growth,
profitability and financial success of the Company.
2. DEFINITIONS. For purposes of this Plan, the following terms shall
have the meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended, or any successor thereto, together with the rules, regulations
and interpretations promulgated thereunder.
(c) "Committee" means the Committee of the Board constituted
as provided in Section 3 of this Plan.
(d) "Common Shares" means the common shares, without par
value, of the Company or any security of the Company issued in
substitution, in exchange or in lieu thereof.
(e) "Company" means Home Loan Financial Corporation, an Ohio
corporation, or any successor corporation.
(f) "Employment" means regular employment with the Company or
a Subsidiary and does not include service as a director only.
(g) "Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any successor statute.
(h) "Fair Market Value" shall be determined as follows:
(i) If the Common Shares are traded on a
national securities exchange at the time of grant of the Stock
Option, then the Fair Market Value shall be the average of the
highest and the lowest selling prices on such exchange on the
date such Stock Option is granted or, if there were no sales
on such date, then on the next prior business day on which
there was a sale.
<PAGE> 2
(ii) If the Common Shares are quoted on
either The Nasdaq National Market or The Nasdaq SmallCap
Market at the time of the grant of the Stock Option, then the
Fair Market Value shall be the mean between the closing high
bid and low asked quotation with respect to a Common Share on
such date on such market.
(iii) If the Common Shares are not traded on
a national securities exchange or quoted on The Nasdaq
National Market or The Nasdaq SmallCap Market, then the Fair
Market Value shall be as determined by the Committee.
(i) "Incentive Stock Option" means any Stock Option granted
pursuant to the provisions of Section 7 of this Plan that is intended
to be and is specifically designated as an "incentive stock option"
within the meaning of Section 422 of the Code.
(j) "Non-Qualified Stock Option" means any Stock Option
granted pursuant to the provisions of Section 6 of this Plan that is
not an Incentive Stock Option.
(k) "OTS" means the Office of Thrift Supervision, Department
of the Treasury.
(l) "Participant" means an employee or director of the Company
or a Subsidiary who is granted a Stock Option under this Plan.
Notwithstanding the foregoing, for the purposes of any Incentive Stock
Option under this Plan, the term "Participant" shall include only
employees of the Company or a Subsidiary.
(m) "Plan" means the Home Loan Financial Corporation 1998
Stock Option and Incentive Plan, as set forth herein and as it may be
hereafter amended from time to time.
(n) "Stock Option" means an option to purchase Common Shares
granted pursuant to the provisions of Section 7 of this Plan.
(o) "Subsidiary" means any corporation or entity in which the
Company directly or indirectly controls 50% or more of the total voting
power of all classes of its stock having voting power and includes,
without limitation, The Home Loan Savings Bank.
(p) "Terminated for Cause" means any removal of a director or
discharge of an employee for personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of a
material provision of any law, rule or regulation (other than traffic
violations or similar offenses), a material violation of a final
cease-and-desist order or any
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<PAGE> 3
other action of a director or employee which results in a substantial
financial loss to the Company or a Subsidiary.
3. ADMINISTRATION.
(a) This Plan shall be administered by the Committee, which
shall be comprised of not less than three of the members of the Board.
The members of the Committee shall be appointed from time to time by
the Board. Members of the Committee shall serve at the pleasure of the
Board and the Board may from time to time remove members from, or add
members to, the Committee. A majority of the members of the Committee
shall constitute a quorum for the transaction of business. An action
approved in writing by a majority of the members of the Committee then
serving shall be fully as effective as if the action had been taken by
unanimous vote at a meeting duly called and held.
(b) The Committee is authorized to construe and interpret this
Plan and to make all other determinations necessary or advisable for
the administration of this Plan. The Committee may designate persons
other than members of the Committee to carry out its responsibilities
under such conditions and limitations as it may prescribe. Any
determination, decision or action of the Committee in connection with
the construction, interpretation, administration, or application of
this Plan shall be final, conclusive and binding upon all persons
participating in this Plan and any person validly claiming under or
through persons participating in this Plan. The Company shall effect
the granting of Stock Options under this Plan in accordance with the
determinations made by the Committee, by execution of instruments in
writing in such form as approved by the Committee.
4. TERM OF PLAN. This Plan shall terminate on the date which is ten
(10) years from the effective date of this Plan, except with respect to Stock
Options then outstanding. Notwithstanding the foregoing, no Incentive Stock
Option may be granted under this Plan after the date which is ten (10) years
from the date on which this Plan is adopted by the Board or the date on which
this Plan is approved by the shareholders of the Company, whichever is earlier.
5. COMMON SHARES SUBJECT TO PLAN. The maximum number of Common Shares
in respect of which Stock Options may be granted under this Plan, subject to
adjustment as provided in Section 10 of this Plan, shall be ten percent of the
total Common Shares sold in connection with the conversion of The Home Loan
Savings Bank from mutual to stock form.
For the purpose of computing the total number of Common Shares
available for Stock Options under this Plan, there shall be counted against the
foregoing limitations the number of Common Shares subject to issuance upon the
exercise or settlement of Stock Options as of the dates on which such Stock
Options are granted. If any Stock Options are forfeited, terminated or exchanged
for other Stock Options, or expire unexercised, the Common Shares which were
theretofore subject to such Stock Options shall again be available for Stock
Options under this Plan to the extent of such forfeiture, termination or
expiration of such Stock Options.
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<PAGE> 4
Common Shares which may be issued under this Plan may be either
authorized and unissued shares or issued shares which have been reacquired by
the Company. No fractional shares shall be issued under this Plan.
6. ELIGIBILITY AND GRANTS. Persons eligible for Stock Options under
this Plan shall consist of directors and managerial and other key employees of
the Company or a Subsidiary who hold positions with significant responsibilities
or whose performance or potential contribution, in the judgment of the
Committee, will benefit the future success of the Company or a Subsidiary. In
selecting the directors and employees to whom Stock Options will be awarded and
the number of shares subject to such Stock Options, the Committee shall consider
the position, duties and responsibilities of the eligible directors and
employees, the value of their services to the Company and the Subsidiaries and
any other factors the Committee may deem relevant.
7. STOCK OPTIONS. Stock Options granted under this Plan may be in the
form of Incentive Stock Options or Non-Qualified Stock Options, and such Stock
Options shall be subject to the following terms and conditions, as the Committee
shall deem desirable:
(a) Grant. Stock Options may be granted under this Plan on
terms and conditions not inconsistent with the provisions of this Plan
and in such form as the Committee may from time to time approve and
shall contain such additional terms and conditions, not inconsistent
with the express provisions of this Plan, as the Committee shall deem
desirable; provided, however, that no more than 25% of the shares
subject to Stock Options may be awarded to any individual who is an
employee of the Company or a Subsidiary, no more than 5% of such shares
may be awarded to any director who is not an employee of the Company or
a Subsidiary and no more than 30% of such shares may be awarded to
non-employee directors of the Company or a Subsidiary in the aggregate.
(b) Stock Option Price. The per share option exercise price of
a Stock Option shall be determined by the Committee at the time of
grant; provided, however, that in no event shall the exercise price of
a Stock Option be less than 100% of the Fair Market Value of the Common
Shares on the date of the grant of such Stock Option. Notwithstanding
the foregoing, in the case of a Participant who owns Common Shares
representing more than 10% of the outstanding Common Shares at the time
an Incentive Stock Option is granted, the option exercise price shall
in no event be less than 110% of the Fair Market Value of the Common
Shares at the time an Incentive Stock Option is granted to such
Participant.
(c) Stock Option Terms. Subject to the right of the Company to
provide for earlier termination in the event of any merger, acquisition
or consolidation involving the Company, the term of each Stock Option
shall be fixed by the Committee; except that the term of an Incentive
Stock Option will not exceed ten years after the date the Incentive
Stock Option is granted; provided, however, that in the case of a
Participant who owns a number of Common Shares representing more than
10% of the Common Shares
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<PAGE> 5
outstanding at the time an Incentive Stock Option is granted, the term
of the Incentive Stock Option granted to such Participant shall not
exceed five years.
(d) Exercisability. Except as set forth in Section 7(f) and
Section 8 of this Plan, Stock Options awarded under this Plan shall
become exercisable at the rate of not more than one-fifth per year
commencing on the date that is one year after the date of the grant of
the Stock Option and shall be subject to such other terms and
conditions as shall be determined by the Committee at the date of
grant.
(e) Method of Exercise. A Stock Option may be exercised, in
whole or in part, by giving written notice of exercise to the Company
specifying the number of Common Shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price in cash
or, if acceptable to the Committee in its sole discretion, in Common
Shares already owned by the Participant, or by surrendering outstanding
Stock Options. The Committee may also permit Participants, either on a
selective or aggregate basis, to simultaneously exercise Stock Options
and sell Common Shares thereby acquired, pursuant to a brokerage or
similar arrangement, approved in advance by the Committee, and use the
proceeds from such sale as payment of the purchase price of such
shares.
(f) Special Rule for Incentive Stock Options. With respect to
Incentive Stock Options granted under this Plan, to the extent the
aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of the number of shares with respect to which
Incentive Stock Options are exercisable under all plans of the Company
or a Subsidiary for the first time by a Participant during any calendar
year exceeds $100,000, or such other limit as may be required by the
Code, such Stock Options shall be Non-Qualified Stock Options to the
extent of such excess.
8. TERMINATION OF EMPLOYMENT OR DIRECTORSHIP.
(a) Except in the event of the death or disability of a
Participant, upon the resignation, removal or retirement from the board
of directors of any Participant who is a director of the Company or a
Subsidiary or upon the termination of Employment of a Participant who
is not a director of the Company or a Subsidiary, any Stock Option
which has not yet become exercisable shall thereupon terminate and be
of no further force or effect and, subject to extension by the
Committee, any Stock Option which has become exercisable shall
terminate if it is not exercised within 12 months of such resignation,
removal or retirement.
(b) Unless the Committee shall specifically state otherwise at
the time a Stock Option is granted, all Stock Options granted under
this Plan shall become exercisable in full on the date of termination
of a Participant's employment or directorship with the Company or a
Subsidiary because of his death or disability, and, subject to
extension by the Committee, all Stock Options shall terminate if not
exercised within 12 months of the Participant's death or disability.
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<PAGE> 6
(c) In the event the Employment or the directorship of a
Participant is Terminated for Cause, any Stock Option which has not
been exercised shall terminate as of the date of such termination for
cause.
9. NON-TRANSFERABILITY OF STOCK OPTIONS. No Stock Option under this
Plan and no rights or interests therein shall be assignable or transferable by a
Participant except by will or pursuant to the laws of descent and distribution.
During the lifetime of a Participant, Stock Options are exercisable only by, and
payments in settlement of Stock Options will be payable only to, the Participant
or his or her legal representative.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(a) The existence of this Plan and the Stock Options granted
hereunder shall not affect or restrict in any way the right or power of
the Board or the shareholders of the Company to make or authorize the
following: any adjustment, recapitalization, reorganization or other
change in the Company's capital structure or its business; any merger,
acquisition or consolidation of the Company; any issuance of bonds,
debentures, preferred or prior preference stocks ahead of or affecting
the Company's capital stock or the rights thereof; the dissolution or
liquidation of the Company or any sale or transfer of all or any part
of its assets or business; or any other corporate act or proceeding,
including any merger or acquisition which would result in the exchange
of cash, stock of another company or options to purchase the stock of
another company for any Stock Option outstanding at the time of such
corporate transaction or which would involve the termination of all
Stock Options outstanding at the time of such corporate transaction.
(b) In the event of any change in capitalization affecting the
Common Shares of the Company, such as a stock dividend, stock split,
recapitalization, merger, consolidation, spin-off, split-up,
combination or exchange of shares or other form of reorganization, or
any other change affecting the Common Shares, such proportionate
adjustments, if any, as the Board in its discretion may deem
appropriate to reflect such change shall be made with respect to the
aggregate number of Common Shares for which Stock Options in respect
thereof may be granted under this Plan, the maximum number of Common
Shares which may be sold or awarded to any Participant, the number of
Common Shares covered by each outstanding Stock Option, and the
exercise price per share in respect of outstanding Stock Options.
11. AMENDMENT AND TERMINATION OF THIS PLAN. Without further approval of
the shareholders, the Board may at any time terminate this Plan or may amend it
from time to time in such respects as the Board may deem advisable, except that
the Board may not, without approval of the shareholders, make any amendment
which would (a) increase the aggregate number of Common Shares which may be
issued under this Plan (except for adjustments pursuant to Section 10 of this
Plan), (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) materially increase the benefits accruing to
Participants under this Plan. The
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<PAGE> 7
above notwithstanding, the Board may amend this Plan to take into account
changes in applicable securities, federal income tax and other applicable laws.
12. MODIFICATION OF OPTIONS. The Board may authorize the Committee to
direct the execution of an instrument providing for the modification of any
outstanding Stock Option which the Board believes to be in the best interests of
the Company; provided, however, that no such modification, extension or renewal
shall reduce the exercise price or confer on the holder of such Stock Option any
right or benefit which could not be conferred on him by the grant of a new Stock
Option at such time and shall not materially decrease the Participant's benefits
under the Stock Option without the consent of the holder of the Stock Option,
except as otherwise permitted under this Plan.
13. MISCELLANEOUS.
(a) Tax Withholding. The Company shall have the right to
deduct from any settlement made under this Plan, including the delivery
or vesting of Common Shares, any federal, state or local taxes of any
kind required by law to be withheld with respect to such payments or to
take such other action as may be necessary in the opinion of the
Company to satisfy all obligations for the payment of such taxes. If
Common Shares are used to satisfy tax withholding, such shares shall be
valued based on the Fair Market Value when the tax withholding is
required to be made.
(b) No Right to Employment. Neither the adoption of this Plan
nor the granting of any Stock Option shall confer upon any employee of
the Company or a Subsidiary any right to continued Employment with the
Company or a Subsidiary, as the case may be, nor shall it interfere in
any way with the right of the Company or a Subsidiary to terminate the
Employment of any of its employees at any time, with or without cause.
(c) Annulment of Stock Options. The grant of any Stock Option
under this Plan payable in cash is provisional until cash is paid in
settlement thereof. The grant of any Stock Option payable in Common
Shares is provisional until the Participant becomes entitled to the
certificate in settlement thereof. In the event the Employment or the
directorship of a Participant is Terminated for Cause, any Stock Option
which is provisional shall be annulled as of the date of such
termination.
(d) Other Company Benefit and Compensation Programs. Payments
and other benefits received by a Participant under a Stock Option made
pursuant to this Plan shall not be deemed a part of a Participant's
regular, recurring compensation for purposes of the termination
indemnity or severance pay law of any country and shall not be included
in, nor have any effect on, the determination of benefits under any
other employee benefit plan or similar arrangement provided by the
Company or a Subsidiary unless expressly so provided by such other plan
or arrangement, or except where the Committee expressly determines that
a Stock Option or portion of a Stock Option should be included to
accurately reflect competitive compensation practices or to recognize
that
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<PAGE> 8
a Stock Option has been made in lieu of a portion of competitive annual
cash compensation. Stock Options under this Plan may be made in
combination with or in tandem with, or as alternatives to, grants,
stock options or payments under any other plans of the Company or a
Subsidiary. This Plan notwithstanding, the Company or any Subsidiary
may adopt such other compensation programs and additional compensation
arrangements as it deems necessary to attract, retain and reward
directors and employees for their service with the Company and its
Subsidiaries.
(e) Securities Law Restrictions. No Common Shares shall be
issued under this Plan unless counsel for the Company shall be
satisfied that such issuance will be in compliance with applicable
federal and state securities laws. Certificates for Common Shares
delivered under this Plan may be subject to such stock-transfer orders
and other restrictions as the Committee may deem advisable under the
rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Common Shares
are then listed, and any applicable federal or state securities law.
The Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(f) Stock Option Agreement. Each Participant receiving a Stock
Option under this Plan shall enter into an agreement with the Company
in a form specified by the Committee agreeing to the terms and
conditions of the Stock Option and such related matters as the
Committee shall, in its sole discretion, determine.
(g) Cost of Plan. The costs and expenses of administering this
Plan shall be borne by the Company.
(h) Governing Law. This Plan and all actions taken hereunder
shall be governed by and construed in accordance with the laws of the
State of Ohio, except to the extent that federal law shall be deemed
applicable.
(i) Effective Date. This Plan shall be effective upon the
later of adoption by the Board and approval by the Company's
shareholders. This Plan shall be submitted to the shareholders of the
Company for approval at an annual or special meeting of shareholders to
be held no sooner than six months after the effective date of the
Conversion.
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<PAGE> 1
Exhibit 10.2
HOME LOAN FINANCIAL CORPORATION
RECOGNITION AND RETENTION PLAN
AND TRUST AGREEMENT
ARTICLE I
DEFINITIONS
The following words and phrases when used in this Agreement with an
initial capital letter shall have the meanings set forth below. Wherever
appropriate, the masculine pronoun shall include the feminine pronoun and the
singular shall include the plural:
1.01 "Agreement" means The Home Loan Financial Corporation Recognition
and Retention Plan and Trust Agreement.
1.02 "Award" means a right granted to a Director or an Employee under
this Plan to receive Plan Shares.
1.03 "Bank" means The Home Loan Savings Bank, a savings and loan
association organized under the laws of the State of Ohio.
1.04 "Beneficiary" means the person or persons designated by a
Recipient to receive any benefits payable under this Plan in the event of such
Recipient's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's estate.
1.05 "Board" means the Board of Directors of the Corporation.
1.06 "Committee" means the Recognition and Retention Plan Committee
appointed by the Board pursuant to Article IV hereof.
1.07 "Common Shares" means common shares of the Corporation.
1.08 "Conversion" means the conversion of the Bank from mutual to stock
form.
1.09 "Corporation" means Home Loan Financial Corporation, a savings and
loan holding company incorporated under the laws of the State of Ohio for the
purpose of holding all of the common shares of the Bank issued in connection
with the Conversion, or any successor thereto.
1.10 "Director" means any person who is a member of the Board of
Directors of the Corporation, the Bank or a Subsidiary.
<PAGE> 2
1.11 "Employee" means any person who is employed by the Corporation,
the Bank or a Subsidiary.
1.12 "Person" means an individual, corporation, partnership, trust,
bank, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.
1.13 "Plan" means the Recognition and Retention Plan established by
this Agreement.
1.14 "Plan Shares" means the Common Shares held pursuant to the Trust
or which may be purchased by the Trustee pursuant to Section 5.02 of this
Agreement.
1.15 "Plan Share Reserve" means the Common Shares held by the Trustee
pursuant to Sections 5.02 and 5.03 of this Agreement.
1.16 "Recipient" means any Director or Employee who receives an Award
under the Plan.
1.17 "Subsidiary" means a subsidiary of the Bank, if any, which, with
the consent of the Board, agrees to participate in the Plan.
1.18 "Trust" means the trust established by this Agreement.
1.19 "Trustee" means the person or persons or entity approved by the
Board pursuant to Sections 4.01 and 4.02 to hold legal title to the assets of
the Plan for the purposes set forth herein.
ARTICLE II
ESTABLISHMENT OF THE PLAN AND TRUST
2.01 The Corporation hereby establishes a Recognition and Retention
Plan and Trust upon the terms and subject to the conditions set forth in this
Agreement.
2.02 The Trustee hereby accepts the Trust and agrees to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions of this Agreement.
ARTICLE III
PURPOSE OF THE PLAN
3.01 The purpose of the Plan is to reward and retain the Directors and
Employees of the Corporation, the Bank and the Subsidiaries by providing such
Directors and Employees with
2
<PAGE> 3
an equity interest in the Corporation as reasonable compensation for their
contributions to the Corporation, the Bank and any Subsidiary.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 ROLE OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee, which shall consist of not less than three members
of the Board. The Committee shall have all of the powers set forth in this Plan.
The interpretation and construction by the Committee of any provisions of this
Agreement or of any Award granted hereunder shall be final, conclusive and
binding. The Committee shall act by the vote, or the written consent, of a
majority of its members. The Committee shall report actions and decisions with
respect to the Plan to the Board upon request by the Board.
4.02 ROLE OF THE BOARD. The members of the Committee and the Trustee
shall be appointed or approved by and shall serve at the pleasure of the Board.
The Board may in its discretion from time to time remove members from or add
members to the Committee and may remove, replace or add one or more Trustees.
4.03 LIMITATION ON LIABILITY. No member of the Board or the Committee,
nor any Trustee, shall be liable for any determination made in good faith with
respect to the Plan or any Plan Shares or Awards granted under the Plan. If a
member of the Board or of the Committee or any Trustee is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of anything done or not done by such member in such capacity under or
with respect to this Plan, the Bank shall indemnify such member against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such member in connection with such action,
suit or proceeding if such member acted in good faith and in a manner such
member reasonably believed to be in or not opposed to the best interests of the
Corporation, the Bank and any Subsidiary and, with respect to any criminal
action or proceeding, had no reasonable cause to believe such member's conduct
was unlawful.
ARTICLE V
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 AMOUNT AND TIMING OF CONTRIBUTIONS. The Board shall determine the
amounts, or the method of computing the amounts, to be contributed by the
Corporation or the Bank to the Trust. Such amounts shall be paid to the Trustee
at the time of contribution. No contributions to the Trust by Directors or
Employees shall be permitted.
3
<PAGE> 4
5.02 INVESTMENT OF TRUST ASSETS. The Trust shall not purchase a number
of Common Shares greater than four percent (4%) of the number of Common Shares
issued in connection with the Conversion. After such investment, the Common
Shares purchased shall be held by the Trustee in the Plan Share Reserve until
such Common Shares are subject to one or more Awards. Any funds held by the
Trust shall be invested by the Trustee in such accounts at the Bank or elsewhere
or such other instruments or investments as the Trustee shall determine to be
appropriate.
5.03 EFFECT OF ALLOCATIONS, RETURNS AND FORFEITURES UPON PLAN SHARE
RESERVES. Upon the allocation of Awards pursuant to Section 6.02 of this
Agreement, or the decision of the Committee to return Plan Shares to the
Corporation, the Plan Share Reserve shall be reduced by the number of Plan
Shares so allocated or returned. Any Plan Shares subject to an Award which is
forfeited by the Recipient pursuant to Section 7.01(b) of this Agreement shall
be retained in the Plan Share Reserve.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 ELIGIBILITY. Directors and Employees are eligible to receive
Awards within the sole discretion of the Committee.
6.02 ALLOCATIONS. The Committee will determine in its sole discretion
which of the Directors and Employees will be granted Awards and the number of
Plan Shares covered by each Award; provided, however, if this Plan is
implemented prior to the first anniversary of the effective date of the
Conversion, the following restrictions shall apply: (a) the aggregate number of
Plan Shares covered by Awards to any one Employee shall not exceed 25% of the
total number of Plan Shares, (b) no more than 5% of the Plan Shares shall be
awarded to any Director who is not an Employee, and (c) no more than 30% of the
Plan Shares shall be awarded in the aggregate to Directors who are not
Employees. In the event that Plan Shares are forfeited for any reason, the
Committee may, from time to time, determine which of the Employees and Directors
will be granted additional Awards to be awarded from forfeited Plan Shares.
In selecting the Directors and Employees to whom Awards will be granted
and the number of shares covered by such Awards, the Committee shall consider
the position, duties and responsibilities of the eligible Directors and
Employees, the value of their services to the Corporation, the Bank and any
Subsidiary and any other factors the Committee may deem relevant.
6.03 FORM OF ALLOCATION. As promptly as practicable after a
determination is made pursuant to Section 6.02 of this Agreement that an Award
is to be made, the Committee shall notify the Recipient in writing of the grant
of the Award, the number of Plan Shares covered by the Award and the terms upon
which the Plan Shares subject to the Award may be earned. The date on which the
Committee determines that an Award is to be made or a later date designated
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<PAGE> 5
by the Committee shall be considered the date of grant of the Award. The
Committee shall maintain records as to all grants of Awards.
6.04 ALLOCATIONS NOT REQUIRED. None of the Directors or Employees,
either individually or as a group, shall have any right or entitlement to
receive an Award. The Committee may, with the approval of the Board, and shall,
if so directed by the Board, return all Common Shares and other assets in the
Plan Share Reserve to the Corporation at any time and thereafter cease issuing
Awards.
6.05 SHAREHOLDER APPROVAL. If this Plan is implemented prior to the
first anniversary of the effective date of the Conversion, this Agreement shall
be submitted to the shareholders of the Corporation for approval at an annual or
special meeting to be held no sooner than six months after the effective date of
the Conversion and no Awards shall be granted hereunder until the shareholders
of the Corporation approve this Agreement.
ARTICLE VII
EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 EARNING PLAN SHARES; FORFEITURES.
(a) GENERAL RULES. Unless the Committee shall specifically
state a longer period of time over which Awards shall be earned and
non-forfeitable at the time an Award is granted, Plan Shares covered by each
Award shall become earned and non-forfeitable by a Recipient over a period of
five years at the rate of one-fifth per year commencing on the date which is one
year after the date of the grant of such Award, if this Plan is implemented
prior to the first anniversary of the effective date of the Conversion. As Plan
Shares become earned and non-forfeitable, any cash dividends, returned capital
and earnings thereon shall also become earned and non-forfeitable.
(b) REVOCATION. Unless otherwise permitted by applicable
laws and regulations, any Plan Shares and any cash dividends, returned capital
and earnings thereon that have not become earned and non-forfeitable in
accordance with Section 7.01(a) of this Agreement shall be forfeited in the
event that a Recipient is no longer a Director or an Employee, except as
otherwise provided in subsection (c) of this Section 7.01.
(c) EXCEPTION FOR TERMINATIONS DUE TO DEATH OR DISABILITY.
All Plan Shares and cash dividends, returned capital and earnings thereon
subject to an Award held by a Recipient whose service as a Director or Employee
terminates due to (i) death or (ii) disability (as determined by the Committee)
shall be deemed fully earned and non-forfeitable as of the later of the
Recipient's last day of service as a Director or as an Employee and shall be
distributed as soon as practicable thereafter.
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<PAGE> 6
7.02 DISTRIBUTION OF PLAN SHARES.
(a) TIMING OF DISTRIBUTIONS; GENERAL RULE. Except as
otherwise provided in this Agreement, Plan Shares shall be distributed to the
Recipient or his or her Beneficiary, as the case may be, as soon as practicable
after they become earned and non-forfeitable, together with any cash
distributions, returned capital and earnings with respect to such Plan Shares.
(b) FORM OF DISTRIBUTION. All distributions of Plan Shares,
together with any shares representing stock dividends, shall be distributed in
the form of Common Shares. No fractional shares shall be distributed. Payments
representing cash dividends, returned capital and earnings thereon shall be made
in cash.
(c) WITHHOLDING. The Trustee may withhold from any cash
payment made pursuant to this Plan sufficient amounts to cover any applicable
withholding and employment taxes and, if the amount of such cash payment is not
sufficient, the Trustee may require the Recipient or Beneficiary to pay to the
Trustee the amount required to be withheld as a condition of delivering the Plan
Shares which have become earned and non-forfeitable. The Trustee shall pay over
to the Bank, the Corporation or the Subsidiary which employs or employed such
Recipient or which the Recipient serves or served as a Director, any such amount
withheld from or paid by the Recipient or Beneficiary.
(d) REGULATORY EXCEPTIONS. Notwithstanding anything to the
contrary in this Agreement, no Plan Shares, upon becoming earned and
non-forfeitable, shall be distributed unless and until all of the requirements
of all applicable laws and regulations shall have been met.
7.03 VOTING OF PLAN SHARES. All Common Shares held by the Trustee in
the Plan Share Reserve which have not yet been earned by a Recipient pursuant to
Section 7.01 of this Agreement shall be voted by the Trustee. A Recipient shall
be entitled to direct the voting of Plan Shares which have been earned pursuant
to Section 7.01 of this Agreement but have not yet been distributed to him.
ARTICLE VIII
TRUST
8.01 TRUST. The Trustee shall receive, hold, administer, invest and
make distributions and disbursements from the Trust in accordance with the
provisions of the Plan and the Trust and the applicable directions, rules,
regulations, procedures and policies established by the Committee pursuant to
this Agreement.
8.02 MANAGEMENT OF TRUST. The Trustee shall have complete authority and
discretion with respect to the management and control of the Trust. The Trustee
shall have the power to do all things and execute such instruments as may be
deemed necessary or proper with respect to the duties of the Trustee hereunder,
including the following powers:
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<PAGE> 7
(a) To invest up to 100% of all Trust assets in Common
Shares without regard to any law now or hereafter in force limiting
investments for trustees or other fiduciaries. In making such
investment, the Trustee is authorized to purchase Common Shares from
the Corporation or from any other source. Such Common Shares so
purchased may be outstanding, newly issued or treasury shares;
(b) To invest any Trust assets not otherwise invested in
Common Shares in such other investments as the Trustee considers
appropriate. Such investments may include deposit accounts and
certificates of deposit issued by the Bank;
(c) To sell, exchange or otherwise dispose of any property
at any time held or acquired by the Trust;
(d) To cause stocks, bonds or other securities to be
registered in the name of a nominee, without the addition of words
indicating that such security is an asset of the Trust (but accurate
records shall be maintained showing that such security is an asset of
the Trust);
(e) To hold cash without interest in such amounts as may be
reasonable, in the opinion of the Trustee, for the proper operation of
the Plan and the Trust;
(f) To employ brokers, agents, custodians, consultants and
accountants;
(g) To hire counsel to render advice with respect to the
rights, duties and obligations of the Trustee hereunder, and such other
legal services or representation as the Trustee may deem desirable; and
(h) To hold funds and securities representing the amounts to
be distributed to a Recipient or his or her Beneficiary as a
consequence of a dispute as to the disposition thereof, whether in a
segregated account or held in common with other assets of the Trust.
Notwithstanding anything herein contained to the contrary, the Trustee shall not
be required to make any inventory, appraisal or settlement or report to any
court, or to secure any order of court for the exercise of any power herein
contained, or to give bond.
8.03 RECORDS AND ACCOUNTS. The Trustee shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled person
or entity to the extent required by applicable law, or any other person
determined by the Committee.
8.04 EARNINGS. All earnings, gains and losses with respect to Trust
assets shall be allocated, in accordance with a reasonable procedure adopted by
the Committee, to bookkeeping accounts for Recipients or to the general account
of the Trust, depending on the nature and
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<PAGE> 8
allocation of the assets generating such earnings, gains and losses. Without
limiting the generality of the foregoing, any earnings on cash dividends or
returned capital received with respect to Plan Shares shall be allocated (a) to
accounts for Recipients, if such shares which are the subject of outstanding
Awards, and shall become earned and distributed as specified in Article VII of
this Agreement or (b) otherwise to the Plan Share Reserve if such Plan Shares
are not the subject of outstanding awards.
8.05 EXPENSES. All costs and expenses incurred in the operation and
administration of the Plan shall be paid by the Bank.
ARTICLE IX
MISCELLANEOUS
9.01 ADJUSTMENTS FOR CAPITAL CHANGES. The aggregate number of Plan
Shares available for issuance pursuant to the Awards and the number of Plan
Shares to which any Award relates shall be proportionately adjusted for any
increase or decrease in the total number of outstanding Common Shares issued
subsequent to the effective date of the Plan if such increase or decrease
resulted from any split, subdivision or consolidation of shares or other capital
adjustment, or other increase or decrease in such shares effected without
receipt or payment of consideration by the Corporation.
9.02 AMENDMENT AND TERMINATION OF PLAN. The Board may, by resolution,
at any time amend or terminate the Plan. The power to amend or terminate the
Plan shall include the power to direct the Trustee to return to the Corporation
or the Bank all or any part of the assets of the Trust, including Common Shares
held in the Plan Share Reserve, as well as Common Shares and other assets
subject to Awards which are not yet earned by the Directors or Employees to whom
they are allocated; provided, however, that the termination of the Trust shall
not affect a Recipient's right to earn Awards and to the distribution of Common
Shares relating thereto, including earnings thereon, in accordance with the
terms of this Agreement and the grant by the Committee or the Board.
9.03 NONTRANSFERABLE. Awards shall not be transferable by a Recipient.
During the lifetime of the Recipient, an Award may only be earned by and paid to
the Recipient who was notified in writing of the Award by the Committee pursuant
to Section 6.03 of this Agreement. No Recipient or Beneficiary shall have any
right in or claim to any assets of the Plan or the Trust, nor shall the
Corporation, the Bank or any Subsidiary be subject to any claim for benefits
hereunder.
9.04 DIRECTORSHIP RIGHTS. Neither this Agreement nor any grant of an
Award hereunder nor any action taken by the Trustee, the Committee or the Board
in connection with the Plan shall create any right, either express or implied,
on the part of any Director to continue to serve as a Director of the
Corporation, the Bank or any Subsidiary.
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9.05 EMPLOYMENT RIGHTS. Neither this Agreement nor any grant of an
Award hereunder nor any action taken by the Trustee, the Committee or the Board
in connection with the Plan shall create any right, either express or implied,
on the part of any Employee to continue in the employ of the Corporation, the
Bank or any Subsidiary.
9.06 VOTING AND DIVIDEND RIGHTS. No Recipient shall have any voting or
dividend rights or other rights of a shareholder in respect of any Plan Shares
covered by an Award, except as expressly provided in Sections 7.01, 7.02 and
7.03 of this Agreement, prior to the time such Plan Shares are actually
distributed to such Recipient.
9.07 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Ohio, except to the extent that federal law shall
be deemed applicable.
9.08 EFFECTIVE DATE. Subject to Section 6.05 of this Agreement, this
Agreement shall be effective as of the ___ day of ____________, 1998.
9.09 TERM OF PLAN. The Plan shall remain in effect until the earlier of
(a) the termination of the Plan by the Board or (b) the distribution of all
assets from the Trust. The termination of the Plan shall not affect any Awards
previously granted and such Awards shall remain valid and in effect until they
have been earned and paid or by their terms expire or are forfeited.
9.10 TAX STATUS OF TRUST. It is intended that the trust established
hereby be treated as a grantor trust of the Corporation under the provisions of
Section 671, et seq., of the Internal Revenue Code of 1986, as amended (26
U.S.C. ss. 671 et seq.).
IN WITNESS WHEREOF, the following Trustees execute this Agreement,
accepting and binding themselves to undertake and perform the obligations and
duties of the Trustee hereunder and consenting to the foregoing Agreement
effective the ___ day of _________________, 1998.
By: ___________________________ (Trustee)
By: ___________________________ (Trustee)
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<PAGE> 10
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officer and duly attested, all as of the ___ day
of _________________, 1998.
HOME LOAN FINANCIAL CORPORATION
By:
-------------------------------------
Robert C. Hamilton
its President
ATTEST:
- ---------------------------------
- ---------------------------------
its
------------------------------
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<PAGE> 1
Exhibit 10.4
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (hereinafter referred to as this
"AGREEMENT"), is entered into this 1st day of January, 1998, by and between The
Home Loan Savings Bank, a savings and loan association incorporated under Ohio
law (hereinafter referred to as the "BANK"), and Robert C. Hamilton, an
individual (hereinafter referred to as the "EMPLOYEE");
WITNESSETH:
WHEREAS, the EMPLOYEE is currently employed as the President of the
BANK;
WHEREAS, as a result of the skill, knowledge and experience of the
EMPLOYEE, the Board of Directors of the BANK desires to retain the services of
the EMPLOYEE as the President of the BANK;
WHEREAS, the EMPLOYEE desires to continue to serve as the President of
the BANK; and
WHEREAS, the EMPLOYEE and the BANK desire to enter into this AGREEMENT
to set forth the terms and conditions of the employment relationship between the
BANK and the EMPLOYEE;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the BANK and the EMPLOYEE hereby agree as follows:
1. Employment and Term.
-------------------
(a) TERM. Upon the terms and subject to the conditions of this
AGREEMENT, the BANK hereby employs the EMPLOYEE, and the EMPLOYEE hereby accepts
employment, as the President of the BANK. The term of this AGREEMENT shall
commence on the date hereof and shall end on December 31, 2000, unless extended
by the BANK, with the consent of the EMPLOYEE, as provided in subsection (b) of
this Section 1 (hereinafter referred to, together with such extensions, as the
"TERM").
(b) EXTENSION. On or before each anniversary of the date of this
AGREEMENT, the Board of Directors of the BANK shall review this AGREEMENT,
document its justification and approval of this AGREEMENT in the board minutes,
and the TERM shall be extended for a one-year period beyond the then effective
expiration date, provided the Board of Directors determines that this AGREEMENT
should be extended. Any such extension shall be subject to the written consent
of the EMPLOYEE.
<PAGE> 2
2. Duties of the Employee.
----------------------
(a) GENERAL DUTIES AND RESPONSIBILITIES. The EMPLOYEE shall serve as
the President of the BANK. Subject to the direction of the Board of Directors of
the BANK, the EMPLOYEE shall have responsibility for the general management of
the business and affairs of the BANK and shall perform all duties and shall have
all powers which are commonly incident to the office of President or which,
consistent therewith, are delegated to him by the Board of Directors. Such
duties shall include, but not be limited to, (i) managing the day to day
operations of the BANK, (ii) managing the efforts of the BANK to comply with
applicable laws and regulations, (iii) marketing the BANK and its services, (iv)
supervising other employees of the BANK, (v) providing reports to the Board of
Directors of the BANK regarding the affairs and conditions of the BANK, and (vi)
making recommendations to the Board of Directors of the BANK concerning the
strategies, capital structure, tactics and general operations of the BANK.
(b) DEVOTION OF ENTIRE TIME TO THE BUSINESS OF THE BANK. The EMPLOYEE
shall devote his entire productive time, ability and attention during normal
business hours throughout the TERM to the faithful performance of his duties
under this AGREEMENT. The EMPLOYEE shall not directly or indirectly render any
services of a business, commercial or professional nature to any person or
organization other than the BANK, Home Loan Financial Corporation (hereinafter
referred to as the "HOLDING COMPANY"), the sole shareholder of the BANK, or any
subsidiary of the BANK or the HOLDING COMPANY without the prior written consent
of the Board of Directors of the BANK; provided, however, that the EMPLOYEE
shall not be precluded from (i) vacations and other leave time in accordance
with Section 3(d) below, (ii) reasonable participation in community, civic,
charitable or similar organizations, (iii) reasonable participation in
industry-related activities, including, but not limited to, attending state and
national trade association meetings and serving as an officer, director or
trustee of a state or national trade association or Federal Home Loan Bank, (iv)
serving as an officer or director of the HOLDING COMPANY or any subsidiary of
the BANK or the HOLDING COMPANY and receiving a salary, director's fees or other
compensation or benefits, as appropriate, or (v) pursuing personal investments
which do not interfere or conflict with the performance of the EMPLOYEE's duties
to the BANK.
3. Compensation.
------------
(a) SALARY. The EMPLOYEE shall receive during the TERM an annual salary
payable in equal installments not less often than monthly. The amount of such
annual salary shall be $165,000 until changed by the Board of Directors of the
BANK in accordance with Section 3(b) below.
(b) ANNUAL SALARY REVIEW. On or before each anniversary of the date of
this AGREEMENT, the annual salary of the EMPLOYEE shall be reviewed by the Board
of Directors of the BANK and shall be set at an amount not less than $165,000,
based upon the EMPLOYEE's individual performance and the overall profitability
and financial condition of the BANK (hereinafter referred to as the "ANNUAL
REVIEW"). The results of the ANNUAL REVIEW shall be reflected in the minutes of
the Board of Directors of the BANK.
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<PAGE> 3
(c) EMPLOYEE BENEFIT PROGRAMS. During the TERM, the EMPLOYEE shall be
entitled to participate in all formally established employee benefit, bonus,
pension and profit sharing plans and similar programs that are maintained by the
BANK or the HOLDING COMPANY from time to time and all employee benefit plans or
programs hereafter adopted in writing by the Board of Directors of the BANK or
the HOLDING COMPANY for which senior management personnel of the BANK are
eligible, including any employee stock ownership plan, stock option plan or
other stock benefit plan (hereinafter collectively referred to as "BENEFIT
PLANS") in accordance with the terms and conditions of such BENEFIT PLANS,
including, but not limited to, satisfaction of any participation or vesting
requirements. Notwithstanding any statement to the contrary contained elsewhere
in this AGREEMENT, the BANK may at any time discontinue or terminate any BENEFIT
PLAN now existing or hereafter adopted, to the extent permitted by the terms of
such BENEFIT PLAN, and shall not be required to compensate the EMPLOYEE for such
discontinuance or termination.
(d) VACATION AND SICK LEAVE. The EMPLOYEE shall be entitled, without
loss of pay, to be absent voluntarily from the performance of his duties under
this AGREEMENT, in accordance with the policies periodically established by the
Board of Directors of the BANK for senior management officials of the BANK. The
EMPLOYEE shall be entitled to annual sick leave as established by the Board of
Directors of the BANK for senior management officials of the BANK.
(e) EXPENSES. In addition to any compensation received under Section
3(d), the BANK shall pay or reimburse the EMPLOYEE for all reasonable travel,
entertainment and miscellaneous expenses incurred in connection with the
performance of his duties under this AGREEMENT, including participation in
industry-related activities.
4. Termination of Employment.
-------------------------
(a) GENERAL. In addition to the termination of the employment of the
EMPLOYEE upon the expiration of the TERM, the employment of the EMPLOYEE shall
terminate at any other time during the TERM (i) at the option of the BANK upon
the delivery by the BANK of written notice of termination to the EMPLOYEE, or
(ii) at the option of the EMPLOYEE upon delivery by the EMPLOYEE of written
notice of termination to the BANK if, in connection with a CHANGE IN CONTROL
(hereinafter defined), the present capacity or circumstances in which the
EMPLOYEE is employed are materially adversely changed (including, but not
limited to, a material reduction in responsibilities or authority or the
assignment of duties or responsibilities substantially inconsistent with those
normally associated with the EMPLOYEE's position described in Section 2(a) of
this AGREEMENT, change of title or removal as a director of the BANK or the
HOLDING COMPANY or the requirement that the EMPLOYEE regularly perform his
principal executive functions more than thirty-five (35) miles from his primary
office as of the date of the commencement of the TERM of this AGREEMENT) or the
EMPLOYEE's compensation or other benefits provided under this AGREEMENT are
reduced, unless the benefit reductions are part of a Company-wide reduction. For
purposes of this AGREEMENT, an event shall be deemed to have occurred "in
connection
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<PAGE> 4
with a CHANGE OF CONTROL" if such event occurs within one year before or after a
CHANGE OF CONTROL. The following subsections (A), (B) and (C) of this Section
4(a) shall govern the obligations of the BANK to the EMPLOYEE upon the
occurrence of the events described in such subparagraphs:
(A) TERMINATION FOR JUST CAUSE. In the event that the BANK terminates
the employment of the EMPLOYEE during the TERM because of the EMPLOYEE's
personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure or refusal to perform the duties
and responsibilities assigned in this AGREEMENT, willful violation of any law,
rule, regulation or final cease-and-desist order (other than traffic violations
or other minor offenses), conviction of a felony or for fraud or embezzlement,
or material breach of any provision of this AGREEMENT (hereinafter collectively
referred to as "JUST CAUSE"), the EMPLOYEE shall not receive, and shall have no
right to receive, any compensation or other benefits for any period after such
termination.
(B) TERMINATION IN CONNECTION WITH CHANGE OF CONTROL. In the event that
the employment of the EMPLOYEE is terminated by the BANK in connection with a
CHANGE OF CONTROL for any reason other than JUST CAUSE or is terminated by the
EMPLOYEE as provided in Section 4(a)(ii) above, then the following shall occur:
(I) The BANK shall promptly pay to the EMPLOYEE or to his
beneficiaries, dependents or estate an amount equal to the product of 2.99
multiplied by the EMPLOYEE's "base amount" as defined in Section 280G(b)(3) of
the Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder (hereinafter collectively referred to as "SECTION 280G");
(II) The EMPLOYEE, his dependents, beneficiaries and estate shall
continue to be covered at the BANK's expense under all health, life, disability
and other benefit plans of the BANK in which the EMPLOYEE was a participant
prior to the effective date of the termination of his employment as if the
EMPLOYEE were still employed under this AGREEMENT until the earlier of the
expiration of the TERM or the date on which the EMPLOYEE is included in another
employer's benefit plans as a full-time employee; and
(III) The EMPLOYEE shall not be required to mitigate the amount of
any payment provided for in this AGREEMENT by seeking other employment or
otherwise, nor shall any amounts received from other employment or otherwise by
the EMPLOYEE offset in any manner the obligations of the BANK hereunder, except
as specifically stated in subparagraph (II) above.
(C) TERMINATION NOT IN CONNECTION WITH CHANGE OF CONTROL. In the event
that the employment of the EMPLOYEE is terminated before the expiration of the
TERM not for JUST CAUSE and not in connection with a CHANGE OF CONTROL, then the
following shall occur:
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<PAGE> 5
(I) The BANK shall be obligated to continue to pay on a monthly
basis, until the expiration of the TERM, to the EMPLOYEE, his designated
beneficiaries or his estate, the annual salary in effect at the time of
termination pursuant to Section 3 above, plus a cash bonus equal to the cash
bonus, if any, paid to the EMPLOYEE in the twelve month period prior to the
termination of employment;
(II) The BANK shall continue to provide to the EMPLOYEE, at the
BANK's expense, health, life, disability and other benefits substantially equal
to those being provided to the EMPLOYEE at the date of termination of his
employment until the earliest to occur of the expiration of the TERM or the date
on which the EMPLOYEE is included in another employer's benefit plans as a
full-time employee; and
(III) The EMPLOYEE shall not be required to mitigate the amount of
any payment provided for in this AGREEMENT by seeking other employment or
otherwise, nor shall any amounts received from other employment or otherwise by
the EMPLOYEE offset in any manner the obligations of the BANK hereunder, except
as specifically stated in subparagraph II above.
(b) DEATH OF THE EMPLOYEE. The TERM shall automatically expire upon the
death of the EMPLOYEE. In such event, the EMPLOYEE's estate shall be entitled to
receive the compensation due the EMPLOYEE through the last day of the calendar
month in which the death occurred, except as otherwise specified herein.
(c) "GOLDEN PARACHUTE" PROVISION. In the event that any payments
pursuant to this Section 4 would result in the imposition of a penalty tax
pursuant to Section 280G, such payments shall be reduced to the maximum amount
which may be paid under SECTION 280G without exceeding such limits. Payments
pursuant to this Section 4. Any payments made to the EMPLOYEE pursuant to this
AGREEMENT are subject to and conditioned upon their compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
(d) DEFINITION OF "CHANGE OF CONTROL". A "CHANGE OF CONTROL" shall mean
any one of the following events; (i) the acquisition of ownership or power to
vote more than 25% of the voting stock of the BANK or the HOLDING COMPANY; (ii)
the acquisition of the ability to control the election of a majority of the
directors of the BANK or the HOLDING COMPANY; (iii) during any period of up to
two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the BANK or the HOLDING COMPANY cease for
any reason to constitute at least two-thirds thereof; provided, however, that
any individual whose election or nomination for election as a member of the
Board of Directors of the BANK or the HOLDING COMPANY was approved by a vote of
at least two-thirds of the directors then in office shall be considered to have
continued to be a member of the Board of Directors of the BANK or the HOLDING
COMPANY; or (iv) the acquisition by any person or entity of "conclusive control"
of the BANK within the meaning of 12 C.F.R. Section 574.4(a), or the acquisition
by any person or entity of "rebuttable control" within the meaning of 12 C.F.R.
Section 574.4(b) that has not been rebutted in accordance with 12 C.F.R.
5
<PAGE> 6
Section 574.4(c). For purposes of this paragraph, the term "person" refers to an
individual or corporation, partnership, trust, association or other
organization, but does not include the EMPLOYEE and any person or persons with
whom the EMPLOYEE is "acting in concert" within the meaning of 12 C.F.R. Part
574.
5. SPECIAL REGULATORY EVENTS. Notwithstanding the provisions of Section 4
of this AGREEMENT, the obligations of the BANK to the EMPLOYEE shall be as
follows in the event of the following circumstances:
(a) If the EMPLOYEE is suspended and/or temporarily prohibited from
participating in the conduct of the BANK's affairs by a notice served under
section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act (hereinafter
referred to as the "FDIA"), 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 the notice are dismissed, the BANK shall pay the
EMPLOYEE all or part of the compensation withheld while the obligations in this
AGREEMENT were suspended and reinstate, in whole or in part, any of the
obligations that were suspended;
(b) If the EMPLOYEE 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 FDIA, all obligations of the BANK under this
AGREEMENT shall terminate as of the effective date of such order; provided,
however, that vested rights of the EMPLOYEE shall not be affected by such
termination;
(c) If the BANK is in default, as defined in section 3(x)(1) of the
FDIA, all obligations under this AGREEMENT shall terminate as of the date of
default; provided, however, that vested rights of the EMPLOYEE shall not be
affected;
(d) All obligations under this AGREEMENT shall be terminated, except to
the extent of a determination that the continuation of this AGREEMENT is
necessary for the continued operation of the BANK, (i) by the Director of the
Office of Thrift Supervision (hereinafter referred to as the "OTS"), or his or
her designee, at the time that the Federal Deposit Insurance Corporation enters
into an agreement to provide assistance to or on behalf of the BANK under the
authority contained in Section 13(c) of the FDIA or (ii) by the Director of the
OTS, or his or her designee, at any time the Director of the OTS approves a
supervisory merger to resolve problems related to the operation of the BANK or
when the BANK is determined by the Director of the OTS to be in an unsafe or
unsound condition; provided, however that no vested rights of the EMPLOYEE shall
not be affected by any such termination; and
(e) The provisions of this Section 5 are governed by the requirements
of 12 C.F.R. Section 563.39(b) and in the event that any statements in this
Section 5 are inconsistent with 12 C.F.R. Section 563.39(b), the provisions of
12 C.F.R. Section 563.39(b) shall be controlling.
6. CONSOLIDATION, MERGER OR SALE OF ASSETS. Nothing in this AGREEMENT
shall preclude the BANK or the HOLDING COMPANY from consolidating with, merging
into, or transferring
6
<PAGE> 7
all, or substantially all, of their assets to another corporation that assumes
all of their obligations and undertakings hereunder. Upon such a consolidation,
merger or transfer of assets, the term "BANK" as used herein, shall mean such
other corporation or entity, and this AGREEMENT shall continue in full force and
effect.
7. CONFIDENTIAL INFORMATION. The EMPLOYEE acknowledges that during his
employment he will learn and have access to confidential information regarding
the BANK and its customers and businesses. The EMPLOYEE agrees and covenants not
to disclose or use for his own benefit, or the benefit of any other person or
entity, any confidential information, unless or until the BANK consents to such
disclosure or use or such information is otherwise legally in the public domain.
The EMPLOYEE shall not knowingly disclose or reveal to any unauthorized person
any confidential information relating to the BANK, its subsidiaries, or
affiliates, or to any of the businesses operated by them, and the EMPLOYEE
confirms that such information constitutes the exclusive property of the BANK.
The EMPLOYEE shall not otherwise knowingly act or conduct himself to the
material detriment of the BANK, its subsidiaries, or affiliates or in a manner
which is inimical or contrary to the interests of the BANK.
8. NON-ASSIGNABILITY. Neither this AGREEMENT nor any right or interest
hereunder shall be assignable by the EMPLOYEE, his beneficiaries or legal
representatives without the BANK's prior written consent; provided, however,
that nothing in this Section VIII shall preclude the EMPLOYEE from designating a
beneficiary to receive any benefits payable hereunder upon his death or the
executors, administrators or other legal representatives of the EMPLOYEE or his
estate from assigning any rights hereunder to the person or persons entitled
thereto.
9. NO ATTACHMENT. Except as required by law, no right to receive payment
under this AGREEMENT shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy, or similar process of assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
10. BINDING AGREEMENT. This AGREEMENT shall be binding upon, and inure
to the benefit of, the EMPLOYEE and the BANK and their respective permitted
successors and assigns.
11. AMENDMENT OF AGREEMENT. This AGREEMENT may not be modified or amended,
except by an instrument in writing signed by the parties hereto.
12. WAIVER. No term or condition of this AGREEMENT shall be deemed to have
been waived, nor shall there be an estoppel against the enforcement of any
provision of this AGREEMENT, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver, unless specifically stated therein, and each waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than the act specifically waived.
7
<PAGE> 8
13. SEVERABILITY. If, for any reason, any provision of this AGREEMENT is
held invalid, such invalidity shall not affect the other provisions of this
AGREEMENT not held so invalid, and each such other provision shall, to the full
extent consistent with applicable law, continue in full force and effect. If
this AGREEMENT is held invalid or cannot be enforced, then any prior AGREEMENT
between the BANK (or any predecessor thereof) and the EMPLOYEE shall be deemed
reinstated to the full extent permitted by law, as if this AGREEMENT had not
been executed.
14. HEADINGS. The headings of the paragraphs herein are included solely
for convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this AGREEMENT.
15. GOVERNING LAW. This AGREEMENT has been executed and delivered in the
State of Ohio and its validity, interpretation, performance, and enforcement
shall be governed by the laws of the State of Ohio, except to the extent that
federal law is governing.
16. EFFECT OF PRIOR AGREEMENTS. This AGREEMENT contains the entire
understanding between the parties hereto and supersedes any prior employment
agreement between the BANK or any predecessor of the BANK and the EMPLOYEE.
17. NOTICES. Any notice or other communication required or permitted
pursuant to this AGREEMENT shall be deemed delivered if such notice or
communication is in writing and is delivered personally or by facsimile
transmission or is deposited in the United States mail, postage prepaid,
addressed as follows:
If to the BANK:
The Home Loan Savings Bank
401 Main Street
Coshocton, Ohio 43812-1580
If to the EMPLOYEE:
Mr. Robert C. Hamilton
217 S. Wall Street
West Lafayette, Ohio 43845
8
<PAGE> 9
IN WITNESS WHEREOF, the BANK has caused this AGREEMENT to be executed
by its duly authorized officer, and the EMPLOYEE has signed this AGREEMENT, each
as of the day and year first above written.
Attest: The Home Loan Savings Bank
____________________________ By: _______________________________
Robert D. Mauch
its Chairman of the Board
Attest:
____________________________ ___________________________________
Robert C. Hamilton
9
<PAGE> 1
Exhibit 10.5
EQUITY APPRECIATION BONUS AGREEMENT
This Agreement is made and entered into this 11th day of January, 1994,
by and between The Home Loan and Savings Company (the "Company"), an
Ohio-chartered, FDIC-insured savings association with its main office at 401
Main Street, Coshocton, Ohio, and Robert C. Hamilton (the "Executive").
WHEREAS, the Executive has heretofore served in the positions of
President, Chief Executive Officer and Director of the Company; and
WHEREAS, the Company has experienced a significant increase in net
worth under the Executive's tenure; and
WHEREAS, the Board of Directors of the Company wish to provide the
Executive with a meaningful incentive to continue to attain strong earnings
performance and enhanced net worth for the Company;
NOW, THEREFORE, in consideration of the performance of the
responsibilities of the Executive and upon the other terms and conditions
hereinafter provided, the parties hereto agree as follows:
1. Inasmuch as the Executive has no incentive stock options and until
such incentive stock options are made available to the Executive, the Company
agrees to pay the Executive an "Equity Appreciation Bonus" as set forth herein.
2. The "Equity Appreciation Bonus" shall be five percent (5%) of the
increase in value of the Company over and above the value of $7,547,982 as of
June 30, 1993. The increase in the Company's value after June 30, 1998 shall not
include any increase in the Company's value resulting from any nonrecurring
extraordinary items. The Executive shall be entitled to the Equity Appreciation
Bonus on June 30, 1998. The Executive would also be entitled to the "Equity
Appreciation Bonus" prior to June 30, 1998 in the event:
That the Company ceases to exist as an independent entity,
The employment of Executive is terminated for any reason, or
<PAGE> 2
The Company converts from the mutual to stock form of organization.
3. If the Executive's employment terminates by reason of the
Executive's death prior to June 30, 1998, the Company shall also pay the
Executive's beneficiary or beneficiaries or his estate, as the case may be, any
pro rata portion of benefits which pursuant to the terms of this Agreement he
would have been entitled to receive in respect of the year in which the
Executive's date of termination occurs had he continued in employment.
4. This Agreement does not constitute an employment agreement.
5. No cash payment may be made under this Agreement, if to do so, would
cause the Company not to be considered as eligible for consideration as an
adequately capitalized institution in terms of regulatory capital requirements
of its primary federal financial institution regulatory agency.
6. As consideration for this Agreement by the Company, the Executive
agrees not to compete in the financial institutions industry, including
commercial banks, savings banks and savings associations, within a fifteen (15)
mile radius of Coshocton, Ohio, as an executive during the term hereof and for a
period of one (1) year following the termination of his employment with the
Company for any reason.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first herein above written.
THE HOME LOAN AND SAVINGS COMPANY
Robert C. Mauch
Chairman of the Board of Directors
Robert C. Hamilton ("Executive")
2
<PAGE> 3
Addendum to Equity Appreciation Bonus Agreement, adopted January 11, 1994, as
approved by the Board of Directors on October 11, 1994.
ADDENDUM
EQUITY APPRECIATION BONUS AGREEMENT
Equity Appreciation Bonus Agreement paragraph numbered "2" is amended to read as
follows:
2. The "Equity Appreciation Bonus" shall be five percent (5%) of the
increase in value of the Company over and above the value of $7,547,982
as of June 30, 1993. The increase in the Company's value as of June 30,
1998 shall not include any increase in the Company's value resulting
from any nonrecurring extraordinary items NOR WILL IT BE REDUCED FOR
THE DEDUCTION OF THE BONUS WITH RESPECT TO THIS AGREEMENT. The
Executive shall be entitled to the Equity Appreciation Bonus on June
30, 1998. The Executive would also be entitled to the "Equity
Appreciation Bonus" prior to June 30, 1998 in the event:
That the Company ceases to exist as an independent entity,
The employment of Executive is terminated for any reason, or
The Company converts from the mutual to stock form of
organization.
<PAGE> 1
Exhibit 23.1
ACCOUNTANTS' CONSENT
We have issued our report dated July 25, 1997, accompanying the balance sheets
of The Home Loan Savings Bank as of June 30, 1997 and 1996, and the related
statements of income, members' equity and cash flows for each of the three years
in the period ended June 30, 1997, included in the Forms AC and S-1 to be filed
with the Office of Thrift Supervision and Securities and Exchange Commission on
or about December 16, 1997. We consent to the use of our report and our name as
it appears in the Prospectus under the caption "Expert".
Crowe, Chizek and Company LLP
Columbus, Ohio
December 16, 1997
<PAGE> 1
Exhibit 23.2
KELLER & COMPANY, INC.
555 METRO PLACE NORTH
SUITE 524
DUBLIN, OHIO 43017
(614) 766-1426
(614) 766-1459 FAX
December 9, 1997
Re: Valuation Appraisal of Home Loan Financial Corporation
The Home Loan Savings Bank
Coshocton, Ohio
We hereby consent to the use of our firm's name, Keller & Company, Inc.
("Keller"), and the reference to our firm as experts in the Application for
Conversion on Form AC to be filed by The Home Loan Savings Bank and any
amendments thereto and references to our opinion regarding subscription rights
filed as an exhibit to the applications referred to hereafter. We also consent
to the use of our firm's name in the Form S-1 to be filed by Home Loan Financial
Corporation with the Securities and Exchange Commission and any amendments
thereto, and to the statements with respect to us and the references to our
Valuation Appraisal Report and in the said Form AC and any amendments thereto
and in the notice and Application for Conversion filed by The Home Loan Savings
Bank, Coshocton, Ohio.
Very truly yours,
KELLER & COMPANY, INC.
By: Michael R. Keller
President
<PAGE> 1
Exhibit 23.3
(513) 723-4000
CONSENT
-------
Board of Directors
Home Loan Financial Corporation
401 Main Street
Coshocton, Ohio 43812-1580
Gentlemen:
We hereby consent to the use of our firm's name in the
Registration Statement on Form S-1 (the "Form S-1"), including all amendments
thereto, to be filed by Home Loan Financial Corporation (the "Company") to
register 2,248,250 common shares, without par value, of the Company, pursuant to
the Securities Act of 1933; to the statements with respect to our firm appearing
under the headings "Prospectus Summary", "Legal Matters" and "Principal Effects
of the Conversion" in the Prospectus which is included in the Form S-1; and to
the filing of our opinion regarding the legality of the common shares, included
as Exhibit 5 to the Form S-1, and our opinion regarding federal and state tax
matters, included as Exhibit 8 to the Form S-1.
Very truly yours,
VORYS, SATER, SEYMOUR AND PEASE
Cincinnati, Ohio
December 15, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,711
<INT-BEARING-DEPOSITS> 223
<FED-FUNDS-SOLD> 250
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4,518
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 51,773
<ALLOWANCE> 148
<TOTAL-ASSETS> 59,853
<DEPOSITS> 48,208
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,053
<LONG-TERM> 0
0
0
<COMMON> 0
<OTHER-SE> 10,592
<TOTAL-LIABILITIES-AND-EQUITY> 59,853
<INTEREST-LOAN> 1,137
<INTEREST-INVEST> 81
<INTEREST-OTHER> 36
<INTEREST-TOTAL> 1,254
<INTEREST-DEPOSIT> 517
<INTEREST-EXPENSE> 517
<INTEREST-INCOME-NET> 737
<LOAN-LOSSES> 30
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 415
<INCOME-PRETAX> 335
<INCOME-PRE-EXTRAORDINARY> 213
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 213
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 5.03
<LOANS-NON> 0
<LOANS-PAST> 61
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 119
<CHARGE-OFFS> 1
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 148
<ALLOWANCE-DOMESTIC> 148
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
THE HOME LOAN SAVINGS BANK
401 MAIN STREET
COSHOCTON, OHIO 43812-1580
(614) 622-0444
NOTICE OF SPECIAL MEETING OF MEMBERS
Notice is hereby given that a Special Meeting of Members of The Home Loan
Savings Bank (the "Bank") will be held at the main office of the Bank at 401
Main Street, Coshocton, Ohio, on March ___, 1998, at __:00 __.m. Eastern
Standard Time (the "Special Meeting"), for the following purposes, all of which
are more completely set forth in the accompanying Summary Proxy Statement:
1. To consider and act upon a resolution to approve the Plan of
Conversion (the "Plan"), a copy of which is attached to the Summary Proxy
Statement as Exhibit A, pursuant to which the Bank would convert from a
mutual savings and loan association incorporated under the laws of the
State of Ohio to a permanent capital stock savings and loan association
incorporated under the laws of the State of Ohio (the "Conversion") and
become a wholly-owned subsidiary of Home Loan Financial Corporation, an
Ohio corporation organized for the purpose of acquiring all of the capital
stock to be issued by the Bank in the Conversion;
2. To consider and act upon a resolution to adopt the Amended
Articles of Incorporation of the Bank, a copy of which is attached to the
Plan as Exhibit I;
3. To consider and act upon a resolution to adopt the Amended
Constitution of the Bank, a copy of which is attached to the Plan as
Exhibit II; and
4. To transact such other business as may properly come before the
Special Meeting and any adjournments thereof.
Only those members of the Bank who have a savings deposit at the Bank at
the close of business on ________, 1998, are members of the Bank entitled to
notice of and to vote at the Special Meeting and any adjournments thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, WE URGE YOU TO CONSIDER
THE ACCOMPANYING SUMMARY PROXY STATEMENT CAREFULLY, TO COMPLETE THE ENCLOSED
PROXY CARD(S) AND TO RETURN THE COMPLETED PROXY CARD(S) TO THE BANK IN THE
ENCLOSED POSTAGE-PAID RETURN ENVELOPE AS SOON AS POSSIBLE TO ASSURE THAT YOUR
VOTE(S) WILL BE COUNTED.
Coshocton, Ohio By Order of the Board of Directors
February ___, 1998
Robert C. Hamilton,
President
<PAGE> 2
THE HOME LOAN SAVINGS BANK
401 MAIN STREET
COSHOCTON, OHIO 43812-1580
(614) 622-0444
SUMMARY PROXY STATEMENT
INTRODUCTION
The enclosed proxy (the "Proxy") is being solicited by the Board of
Directors of The Home Loan Savings Bank (the "Bank") for use at a Special
Meeting of Members of the Bank to be held at the main office of the Bank at 401
Main Street, Coshocton, Ohio, on March ___, 1998, at __:00 __.m. Eastern
Standard Time, and at any adjournments thereof (the "Special Meeting"). The
Special Meeting is being held for the following purposes:
1. To consider and act upon a resolution to approve the Plan of
Conversion (the "Plan"), a copy of which is attached hereto as Exhibit A,
pursuant to which the Bank would convert from a mutual savings and loan
association incorporated under the laws of the State of Ohio to a
permanent capital stock savings and loan association incorporated under
the laws of the State of Ohio (the "Conversion") and become a wholly-owned
subsidiary of Home Loan Financial Corporation (the "Holding Company"), an
Ohio corporation organized for the purpose of acquiring all of the capital
stock to be issued by the Bank in the Conversion;
2. To consider and act upon a resolution to adopt the Amended
Articles of Incorporation of the Bank (the "Amended Articles"), a copy of
which is attached to the Plan as Exhibit I;
3. To consider and act upon a resolution to adopt the Amended
Constitution of the Bank (the "Amended Constitution"), a copy of which is
attached to the Plan as Exhibit II; and
4. To transact such other business as may properly come before the
Special Meeting.
The Board of Directors of the Bank has unanimously adopted the Plan. The
Plan has also been approved by the Office of Thrift Supervision (the "OTS") and
the Ohio Department of Commerce, Division of Financial Institutions (the
"Division"), subject to the approval of the Plan by the members of the Bank at
the Special Meeting and the satisfaction of certain other conditions.
The approval of the Plan will have the effect of (i) terminating the
voting rights of the present members of the Bank and (ii) modifying, and
eventually eliminating, their right to receive any surplus in the event of a
complete liquidation of the Bank. Except for certain rights in the special
liquidation account established by the Plan (the "Liquidation Account"), such
voting and liquidation rights after the Conversion will vest exclusively in the
holders of the common shares of the Holding Company. See "THE CONVERSION -
Principal Effects of the Conversion -- Liquidation Account."
During and upon the completion of the Conversion, the Bank will continue
to provide services to depositors and borrowers pursuant to its current
policies, at its existing offices. In addition, the Bank will continue to be a
member of the Federal Home Loan Bank (the "FHLB") of Cincinnati and savings
accounts at the Bank will continue to be insured up to applicable limits by the
Federal Deposit Insurance Corporation (the "FDIC") in the Savings Association
Insurance Fund (the "SAIF").
This Summary Proxy Statement is dated February ___, 1998, and is first
being mailed to members of the Bank, together with the Prospectus of the Holding
Company dated February ___, 1998 (the "Prospectus"), on or about February ___,
1998.
1
<PAGE> 3
VOTING RIGHTS AND VOTE REQUIRED FOR APPROVAL
All depositors at the Bank having a savings account of record with the
Bank on ____________, 1998 (the "Voting Record Date"), are members of the Bank
eligible to vote at the Special Meeting and at any adjournments thereof ("Voting
Members"). Voting Members will be entitled to cast one vote for each $100, and a
proportionate fractional vote for an amount of less than $100, of the
withdrawable value of their savings accounts on the Voting Record Date. No
Voting Member may cast more than 3,000 votes at the Special Meeting.
A savings account in which one or more persons has an interest shall be
deemed to be held by only one Voting Member for the purpose of voting at the
Special Meeting. Any questions as to the eligibility of a member to vote, the
number of votes allocated to each Voting Member or any other matter relating to
voting will be resolved at the time of the Special Meeting by reference to the
records of the Bank.
The Bank records disclose that, as of the Voting Record Date, there were
____________ votes entitled to be cast at the Special Meeting, a majority of
which are required to approve the Plan. A vote of three-fifths of the votes cast
in person or by proxy at the Special Meeting is required to adopt the Amended
Articles and the Amended Constitution of the Bank.
PROXIES
Voting Members may vote in person or by proxy at the Special Meeting. For
Voting Members wishing to vote by proxy at the Special Meeting, the enclosed
Proxy may be completed and given in accordance with this Summary Proxy
Statement. Any other proxy held by the Bank will not be used by the Bank for the
Special Meeting.
A Proxy will be voted in the manner indicated thereon or, in the absence
of specific instructions, will be voted FOR the approval of the Plan, FOR the
adoption of the Amended Articles and FOR the adoption of the Amended
Constitution. Without affecting any vote previously taken, a Voting Member may
revoke a proxy at any time before such proxy is exercised by executing and
delivering a later dated proxy or by giving the Bank notice of revocation in
writing or in open meeting at the Special Meeting. Attendance at the Special
Meeting will not, of itself, revoke a proxy.
Proxies may be solicited by the directors, officers and employees of the
Bank in person or by telephone, telegraph or mail, for use only at the Special
Meeting and any adjournments thereof and will not be used for any other meeting.
The cost of soliciting Proxies will be borne by the Bank.
MANAGEMENT'S RECOMMENDATIONS AND REASONS FOR CONVERSION
THE BOARD OF DIRECTORS RECOMMENDS THAT MEMBERS VOTE FOR THE APPROVAL OF
THE PLAN AND FOR THE ADOPTION OF THE AMENDED ARTICLES AND THE AMENDED
CONSTITUTION OF THE BANK.
The principal factors considered by the Bank's Board of Directors in
reaching the decision to pursue a mutual-to-stock conversion were the numerous
competitive advantages which the stock form of organization offers, including
growth opportunities, employee retention, and increased capital levels.
If the Bank is to continue to grow and prosper, the mutual form of
organization is the least desirable form from a competitive standpoint. The
opportunities for a mutual savings and loan association to expand through
mutual-to-mutual mergers or cash acquisitions are limited. Although the Bank
does not have any specific acquisitions planned at this time, the Conversion
will position the Bank to take advantage of any acquisition opportunities which
may present themselves. Because a conversion to stock form is a time-consuming
and complex process, the Bank cannot wait until a prospective acquisition arises
to embark on the conversion process.
As an increasing number of the Bank's competitors convert to stock form
and acquire the ability to use stock-based compensation programs, the Bank, in
mutual form, would be at a disadvantage when it comes to attracting and
retaining qualified management. The Bank believes that the Holding Company's
employee stock ownership plan (the "ESOP"), stock option plan (the "Stock Option
Plan") and recognition and retention plan (the "RRP") are important tools in
achieving such
2
<PAGE> 4
goals, even though the Holding Company will be required to wait until at least
six months after the Conversion to implement the Stock Option Plan and the RRP.
See "MANAGEMENT - Stock Benefit Plans" in the Prospectus.
THE BUSINESS OF THE HOLDING COMPANY
The Holding Company was incorporated under Ohio law in December 1997 for
the purpose of purchasing all of the capital stock of the Bank to be issued in
connection with the Conversion. The Holding Company has not conducted and will
not conduct any business before the completion of the Conversion, other than
business related to the Conversion. Upon the consummation of the Conversion, the
Holding Company will be a unitary savings and loan holding company, the
principal assets of which initially will be the capital stock of the Bank, cash,
the investments made with the net proceeds retained from the sale of common
shares of the Holding Company in connection with the Conversion (the "Common
Shares") and a loan to be made by the Holding Company to the ESOP to facilitate
the ESOP's purchase of Common Shares in the Conversion. See "USE OF PROCEEDS."
The office of the Holding Company is located at 401 Main Street,
Coshocton, Ohio 43812-1580, and its telephone number is (614) 622-0444.
THE BUSINESS OF THE BANK
The Bank is a mutual savings and loan association organized under Ohio law
in 1882. As an Ohio savings and loan association, the Bank is subject to
supervision and regulation by the OTS, the FDIC and the Division. The Bank is a
member of the FHLB of Cincinnati, and the deposit accounts of the Bank are
insured up to applicable limits by the FDIC in the SAIF. See "REGULATION" in the
Prospectus.
The Bank conducts business from its main office and one full-service
branch office, both located in Coshocton, Ohio. The principal business of the
Bank is the origination of permanent mortgage loans secured by first mortgages
on one- to four-family residential real estate located in Coshocton County,
Ohio, the Bank's primary market area. The Bank also originates a limited number
of loans for the construction of one- to four-family residences and permanent
mortgage loans secured by multifamily and nonresidential real estate in its
primary market area. In addition to real estate lending, the Bank originates
commercial loans and various types of consumer credits, including home
improvement loans, education loans, loans secured by savings accounts and motor
vehicles, unsecured loans and credit cards. See "THE BUSINESS OF THE BANK -
Lending Activities" in the Prospectus. For liquidity and interest rate risk
management purposes, the Bank invests in interest-bearing deposits in other
financial institutions, U.S. Treasury securities and other investments permitted
by applicable law. See "THE BUSINESS OF THE BANK Investment Activities" in the
Prospectus. Funds for lending and other investment activities are obtained
primarily from savings deposits, which are insured up to applicable limits by
the FDIC in the SAIF, principal repayments on loans and maturities of investment
securities. See "THE BUSINESS OF THE BANK - Deposits and Borrowings" in the
Prospectus.
The main office of the Bank is located at 401 Main Street, Coshocton, Ohio
43812-1580, and its telephone number is (614) 622-0444.
THE CONVERSION
THE OTS AND THE DIVISION HAVE APPROVED THE PLAN, SUBJECT TO THE APPROVAL
OF THE PLAN BY THE MEMBERS OF THE BANK ENTITLED TO VOTE ON THE PLAN AND SUBJECT
TO THE SATISFACTION OF CERTAIN OTHER CONDITIONS IMPOSED BY THE OTS AND THE
DIVISION. OTS AND DIVISION APPROVAL DOES NOT CONSTITUTE A RECOMMENDATION OR
ENDORSEMENT OF THE PLAN.
GENERAL
On November 12, 1997, the Board of Directors of the Bank unanimously
adopted the Plan and recommended that the voting members of the Bank approve the
Plan at the Special Meeting. During and upon completion of the Conversion, the
Bank will continue to provide the services presently offered to depositors and
borrowers, will maintain its existing offices, and will retain its existing
management and employees.
3
<PAGE> 5
Based on an independent appraisal of the pro forma market value of the
Bank, as converted, and the Holding Company as of November 28, 1997, the
aggregate purchase price of the Common Shares to be offered in a subscription
offering (the "Subscription Offering") and a community offering (the "Community
Offering") ranges from a minimum of $14,450,000 to a maximum of $19,550,000 (the
"Valuation Range"), resulting in a range of 1,445,000 to 1,955,000 Common Shares
at $10 per share. Applicable regulations permit the Holding Company to offer
additional Common Shares in an amount not to exceed 15% above the maximum of the
Valuation Range, which would permit the issuance of up to 2,248,250 Common
Shares with an aggregate purchase price of $22,482,500. Federal regulations
require, with certain exceptions, that shares offered in connection with the
Conversion must be sold up to at least the minimum of the Valuation Range in
order for the Conversion to become effective. The actual number of shares sold
in connection with the Conversion will be determined upon completion of the
Subscription Offering and the Community Offering (collectively, the "Offering")
based on the final valuation of the Bank, as converted, and the Holding Company.
See "Pricing and Number of Common Shares to be Sold."
The Common Shares will be offered in the Subscription Offering, subject to
the rights and restrictions established by the Plan, to (a) eligible depositors
of the Bank as of September 30, 1996 (the "Eligibility Record Date") who had
deposit accounts with balances, in the aggregate, of $50 or more (a "Qualifying
Deposit"), (b) the ESOP, (c) eligible depositors of the Bank who had Qualifying
Deposits as of _________________ (the "Supplemental Eligibility Record Date"),
and (d) members of the Bank eligible to vote at the Special Meeting ("Other
Eligible Members").
Any Common Shares not subscribed for in the Subscription Offering will be
offered to the general public in the Community Offering in a manner which will
seek to achieve the widest distribution of the Common Shares, but which will
give preference to natural persons residing in Coshocton County, Ohio. Under OTS
regulations, the Community Offering must be completed within 45 days after
completion of the Subscription Offering, unless such period is extended by the
Bank with the approval of the OTS and the Division. If the Community Offering is
determined not to be feasible, an occurrence that is not currently anticipated,
the Boards of Directors of the Holding Company and the Bank will consult with
the OTS and the Division to determine an appropriate alternative method of
selling unsubscribed Common Shares up to the minimum of the Valuation Range. No
alternative sales methods are currently planned.
The minimum number of Common Shares any person may purchase in the
Offering is 25. Each Eligible Account Holder (hereinafter defined), Supplemental
Eligible Account Holder (hereinafter defined) and Other Eligible Member may
purchase in the Subscription Offering not more than 15,000 Common Shares. In
connection with the exercise of subscription rights arising from a single
deposit account in which two or more persons have an interest, however, the
aggregate maximum number of Common Shares which the persons having an interest
in such account may purchase in the Subscription Offering in relation to such
account is 15,000 Common Shares. Except for the ESOP, which may purchase up to
10% of the total Common Shares sold in the Offering, no person, together with
his or her Associates (hereinafter defined) and other persons Acting in Concert
(hereinafter defined) with him or her, may purchase more than 30,000 Common
Shares in the Offering. Subject to OTS regulations, the purchase limitations may
be increased or decreased after the commencement of the Offering in the sole
discretion of the Boards of Directors of the Holding Company and the Bank. If
the purchase limitations are increased after the commencement of the
Subscription Offering, persons who have subscribed for the maximum amount will
be given the opportunity to increase their subscriptions. See "THE CONVERSION
Limitations on Purchases of Common Shares."
OTS and Ohio regulations require the completion of the Conversion within
24 months after the date of the approval of the Plan by the Voting Members of
the Bank. The commencement and completion of the Conversion will be subject to
market conditions and other factors beyond the Bank's control. Due to changing
economic and market conditions, no assurance can be given as to the length of
time that will be required to complete the sale of the Common Shares. If delays
are experienced, significant changes may occur in the estimated pro forma market
value of the Bank, as converted, and the Holding Company. In such circumstances,
the Bank may also incur substantial additional printing, legal and accounting
expenses in completing the Conversion. In the event the Conversion is not
successfully completed, the Bank will be required to charge all Conversion
expenses against current earnings.
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<PAGE> 6
PRINCIPAL EFFECTS OF THE CONVERSION
VOTING RIGHTS. Savings account holders who are members of the Bank in its
mutual form will have no voting rights in the Bank as converted and will not
participate, therefore, in the election of directors or otherwise control the
Bank's affairs. Voting rights in the Holding Company will be held exclusively by
its shareholders and voting rights in the Bank will be held exclusively by the
Holding Company as the sole shareholder of the Bank. Each holder of the Holding
Company's common shares will be entitled to one vote for each share owned on any
matter to be considered by the Holding Company's shareholders. See "DESCRIPTION
OF AUTHORIZED SHARES."
SAVINGS ACCOUNTS AND LOANS. Savings accounts in the Bank, as converted,
will be equivalent in amount, interest rate and other terms to the present
savings accounts in the Bank, and the existing FDIC insurance on such accounts
will not be affected by the Conversion. The Conversion will not affect the terms
of loan accounts or the rights and obligations of borrowers under their
individual contractual arrangements with the Bank.
TAX CONSEQUENCES. The consummation of the Conversion is expressly
conditioned on receipt by the Bank of a private letter ruling from the Internal
Revenue Service (the "IRS") or an opinion of counsel to the effect that the
Conversion will constitute a tax-free reorganization as defined in Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"). The Bank
intends to proceed with the Conversion based upon an opinion received from its
special counsel, Vorys, Sater, Seymour and Pease, to the following effect:
(1) The Conversion constitutes a reorganization within the meaning
of Section 368(a)(1)(F) of the Code, and no gain or loss will be
recognized by the Bank in its mutual form or in its stock form as a result
of the Conversion. The Bank in its mutual form and the Bank in its stock
form will each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code;
(2) No gain or loss will be recognized by the Bank upon the receipt
of money from the Holding Company in exchange for the capital stock of the
Bank, as converted;
(3) The assets of the Bank will have the same basis in its hands
immediately after the Conversion as they had in its hands immediately
prior to the Conversion, and the holding period of the assets of the Bank
after the Conversion will include the period during which the assets were
held by the Bank before the Conversion;
(4) No gain or loss will be recognized by the deposit account
holders of the Bank upon the issuance to them, in exchange for their
respective withdrawable deposit accounts in the Bank immediately prior to
the Conversion, of withdrawable deposit accounts in the Bank immediately
after the Conversion, in the same dollar amount as their withdrawable
deposit accounts in the Bank immediately prior to the Conversion, plus, in
the case of eligible depositors of the Bank as of the Eligibility Record
Date who had Qualifying Deposits ("Eligible Account Holders") and eligible
depositors of the Bank as of the Supplemental Eligibility Record Date who
had Qualifying Deposits ("Supplemental Eligible Account Holders"), the
interests in the Liquidation Account of the Bank, as described below;
(5) The basis of the withdrawable deposit accounts in the Bank held
by its deposit account holders immediately after the Conversion will be
the same as the basis of their deposit accounts in the Bank immediately
prior to the Conversion. The basis of the interests in the Liquidation
Account received by the Eligible Account Holders and Supplemental Eligible
Account Holders will be zero. The basis of the nontransferable
subscription rights received by Eligible Account Holders, Supplemental
Eligible Account Holders and Other Eligible Members will be zero (assuming
that at distribution such rights have no ascertainable fair market value);
(6) No gain or loss will be recognized by Eligible Account Holders,
Supplemental Eligible Account Holders or Other Eligible Members upon the
distribution to them of nontransferable subscription rights to purchase
Common Shares (assuming that at distribution such rights have no
ascertainable fair market value), and no taxable income will be realized
by such Eligible Account Holders, Supplemental Eligible Account Holders or
Other Eligible Members as a result of their exercise of such
nontransferable subscription rights;
(7) The basis of the Common Shares purchased by members of the Bank
pursuant to the exercise of subscription rights will be the purchase price
thereof (assuming that such rights have no ascertainable fair market
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<PAGE> 7
value and that the purchase price is not less than the fair market value
of the shares on the date of such exercise), and the holding period of
such shares will commence on the date of such exercise. The basis of the
Common Shares purchased other than by the exercise of subscription rights
will be the purchase price thereof (assuming in the case of the other
subscribers that the opportunity to buy in the Subscription Offering has
no ascertainable fair market value), and the holding period of such shares
will commence on the day after the date of the purchase;
(8) For purposes of Section 381 of the Code, the Bank will be
treated as if there had been no reorganization. The taxable year of the
Bank will not end on the effective date of the Conversion. Immediately
after the Conversion, the Bank in its stock form will succeed to and take
into account the tax attributes of the Bank in its mutual form immediately
prior to the Conversion, including the Bank's earnings and profits or
deficit in earnings and profits;
(9) The bad debt reserves of the Bank in its mutual form immediately
prior to the Conversion will not be required to be restored to the gross
income of the Bank in its stock form as a result of the Conversion and
immediately after the Conversion such bad debt reserves will have the same
character in the hands of the Bank in its stock form as they would have
had if there had been no Conversion. The Bank in its stock form will
succeed to and take into account the dollar amounts of those accounts of
the Bank in its mutual form which represent bad debt reserves in respect
of which the Bank in its mutual form has taken a bad debt deduction for
taxable years ending on or before the Conversion; and
(10) Regardless of book entries made for the creation of the
Liquidation Account, the Conversion will not diminish the accumulated
earnings and profits of the Bank available for the subsequent distribution
of dividends within the meaning of Section 316 of the Code. The creation
of the Liquidation Account on the records of the Bank will have no effect
on its taxable income, deductions for additions to reserves for bad debts
under Section 593 of the Code or distributions to stockholders under
Section 593(e) of the Code.
For Ohio tax purposes, the tax consequences of the Conversion will
be as follows:
(1) The Bank is a "financial institution" for State of Ohio tax
purposes, and the Conversion will not change such status;
(2) The Bank is subject to the Ohio corporate franchise tax on
"financial institutions," which is imposed annually at a rate of 1.5% of
the Bank's equity capital determined in accordance with generally accepted
accounting principles ("GAAP"), and the Conversion will not change such
status;
(3) As a "financial institution," the Bank is not subject to any tax
based upon net income or net profit imposed by the State of Ohio, and the
Conversion will not change such status;
(4) The Conversion will not be a taxable transaction to the Bank in
its mutual or stock form for purposes of the Ohio corporate franchise tax.
As a consequence of the Conversion, however, the annual Ohio corporate
franchise tax liability of the Bank will increase if the taxable net worth
of the Bank (i.e., book net worth computed in accordance with GAAP at the
close of the Bank's taxable year for federal income tax purposes)
increases thereby; and
(5) The Conversion will not be a taxable transaction to any deposit
account holder or borrower member of the Bank in its mutual or stock form
for purposes of the Ohio corporate franchise tax and the Ohio personal
income tax.
The Bank has received an opinion from Keller & Co., Inc. ("Keller"), a
firm experienced in valuing thrift institutions, to the effect that the
subscription rights have no ascertainable fair market value because the rights
are received by specified persons at no cost, may not be transferred and are of
short duration. The IRS could challenge the assumption that the subscription
rights have no ascertainable fair market value.
LIQUIDATION ACCOUNT. In the unlikely event of a complete liquidation of
the Bank in its present mutual form, each depositor in the Bank would receive a
pro rata share of any assets of the Bank remaining after payment of the claims
of all creditors, including the claims of all depositors to the withdrawable
value of their deposit accounts. A depositor's pro rata
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<PAGE> 8
share of such remaining assets would be the same proportion of such assets as
the value of such depositor's accounts bears to the total aggregate value of all
deposits in the Bank at the time of liquidation.
In the event of a complete liquidation of the Bank in its stock form after
the Conversion, each depositor would have a claim of the same general priority
as the claims of all other general creditors of the Bank. Except as described
below, each depositor's claim would be solely in the amount of the balance in
such depositor's account plus accrued interest. The depositor would have no
interest in the assets of the Bank above that amount. Such assets would be
distributed to the Holding Company as the sole shareholder of the Bank.
For the purpose of granting a limited priority claim to the assets of the
Bank in the event of a complete liquidation thereof to Eligible Account Holders
and Supplemental Eligible Account Holders who continue to maintain deposit
accounts at the Bank after the Conversion, the Bank will, at the time of
Conversion, establish the Liquidation Account in an amount equal to the net
worth of the Bank as of September 30, 1997. The Liquidation Account will not
operate to restrict the use or application of any of the regulatory capital of
the Bank.
Each Eligible Account Holder and Supplemental Eligible Account Holder will
have a separate inchoate interest (the "Subaccount") in a portion of the
Liquidation Account for Qualifying Deposits held on the Eligibility Record Date
or the Supplemental Eligibility Record Date.
The balance of each initial Subaccount shall be an amount determined by
multiplying the amount in the Liquidation Account by a fraction, the numerator
of which is the closing balance in the account holder's account as of the close
of business on the Eligibility Record Date or the Supplemental Eligibility
Record Date, as the case may be, and the denominator of which is the total
amount of all Qualifying Deposits of Eligible Account Holders and Supplemental
Eligible Account Holders on the corresponding record date. The balance of each
Subaccount may be decreased but will never be increased. If, at the close of
business on the last day of each fiscal year of the Holding Company subsequent
to the respective record dates, the balance in the deposit account to which a
Subaccount relates is less than the lesser of (i) the deposit balance in such
deposit account at the close of business on the last day of any other annual
closing date subsequent to the Eligibility Record Date or the Supplemental
Eligibility Record Date, or (ii) the amount of the Qualifying Deposit as of the
Eligibility Record Date or the Supplemental Eligibility Record Date, the balance
of the Subaccount for such deposit account shall be adjusted proportionately to
the reduction in such deposit account balance. In the event of any such downward
adjustment, such Subaccount balance shall not be subsequently increased
notwithstanding any increase in the deposit balance of the related deposit
account. If any deposit account is closed, its related Subaccount shall be
reduced to zero upon such closing.
In the event of a complete liquidation of the converted Bank (and only in
such event), each Eligible Account Holder and Supplemental Eligible Account
Holder shall receive from the Liquidation Account a distribution equal to the
current balance in each of such account holder's Subaccounts before any
liquidation distribution may be made to the Holding Company as the sole
shareholder of the Bank. Any assets remaining after satisfaction of such
liquidation rights and the claims of the Bank's creditors would be distributed
to the Holding Company as the sole shareholder of the Bank. No merger,
consolidation, purchase of bulk assets or similar combination or transaction
with another financial institution, the deposits of which are insured by the
FDIC, will be deemed to be a complete liquidation for this purpose and, in any
such transaction, the Liquidation Account shall be assumed by the surviving
institution.
COMMON SHARES. SHARES ISSUED UNDER THE PLAN CANNOT AND WILL NOT BE INSURED
BY THE FDIC. For a description of the characteristics of the Common Shares, see
"DESCRIPTION OF AUTHORIZED SHARES."
INTERPRETATION AND AMENDMENT OF THE PLAN
To the extent permitted by law, all interpretations of the Plan by the
Boards of Directors of the Holding Company and the Bank will be final. The Plan
may be amended by the Boards of Directors of the Holding Company and the Bank at
any time with the concurrence of the OTS and the Division. If the Bank and the
Holding Company determine, upon advice of counsel and after consultation with
the OTS and the Division, that any such amendment is material, subscribers will
be notified of the amendment and will be provided the opportunity to affirm,
increase, decrease or cancel their subscriptions. Any person who does not
affirmatively elect to continue his subscription or elects to rescind his
subscription before the date specified in the notice will have all of his funds
promptly refunded with interest. Any person who elects to decrease his
subscription will have the appropriate portion of his funds promptly refunded
with interest.
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<PAGE> 9
CONDITIONS AND TERMINATION
The completion of the Conversion requires the approval of the Plan and the
adoption of the Amended Articles of Incorporation and the Amended Constitution
by the Voting Members of the Bank at the Special Meeting and the completion of
the sale of the Common Shares within 24 months following the date of such
approval. If these conditions are not satisfied, the Plan will automatically
terminate and the Bank will continue its business in the mutual form of
organization. The Plan may be voluntarily terminated by the Board of Directors
at any time before the Special Meeting and at any time thereafter with the
approval of the OTS and the Division.
SUBSCRIPTION OFFERING
THE SUBSCRIPTION OFFERING WILL EXPIRE AT ___:00 __.M., EASTERN STANDARD
TIME, ON MARCH __, 1998. SUBSCRIPTION RIGHTS NOT EXERCISED BEFORE ___:00 __.M.,
EASTERN STANDARD TIME, ON MARCH __, 1998, WILL BE VOID, WHETHER OR NOT THE BANK
HAS BEEN ABLE TO LOCATE EACH PERSON ENTITLED TO SUCH SUBSCRIPTION RIGHTS.
Nontransferable subscription rights to purchase Common Shares are being
issued at no cost to all eligible persons and entities in accordance with the
preference categories established by the Plan, as described below. Each
subscription right may be exercised only by the person to whom it is issued and
only for his or her own account. EACH PERSON SUBSCRIBING FOR COMMON SHARES MUST
REPRESENT TO THE BANK THAT HE OR SHE IS PURCHASING SUCH SHARES FOR HIS OR HER
OWN ACCOUNT AND THAT HE OR SHE HAS NO AGREEMENT OR UNDERSTANDING WITH ANY OTHER
PERSON FOR THE SALE OR TRANSFER OF THE COMMON SHARES. ANY PERSON WHO ATTEMPTS TO
TRANSFER HIS OR HER SUBSCRIPTION RIGHTS MAY BE SUBJECT TO PENALTIES AND
SANCTIONS, INCLUDING LOSS OF THE SUBSCRIPTION RIGHTS.
The number of Common Shares which a person who has subscription rights may
purchase will be determined, in part, by the total number of Common Shares to be
issued and the availability of Common Shares for purchase under the preference
categories set forth in the Plan and certain other limitations. See "Limitations
on Purchases of Common Shares." The sale of any Common Shares pursuant to
subscriptions received is contingent upon approval of the Plan by the voting
members of the Bank at the Special Meeting.
The preference categories and preliminary purchase limitations which have
been established by the Plan, in accordance with applicable regulations, for the
allocation of Common Shares are as follows:
(a) Each Eligible Account Holder shall receive, without payment
therefor, a nontransferable right to purchase in the Subscription Offering
up to the greater of (i) 15,000 Common Shares, (ii) .10% of the total
number of Common Shares sold in connection with the Conversion, and (iii)
15 times the product (rounded down to the next whole number) obtained by
multiplying the total number of Common Shares sold in connection with the
Conversion 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 purchase limitations set forth in Section 10 of the Plan and
subject to adjustment by the Board of Directors of the Holding Company and
the Bank as set forth in Section 10 of the Plan. If the exercise of
subscription rights by Eligible Account Holders results in an
over-subscription, Common Shares will be allocated among subscribing
Eligible Account Holders in a manner which will, to the extent possible,
make the total allocation of each subscriber equal 100 shares or the
amount subscribed for, whichever is less. Any Common Shares remaining
after such allocation has been made will be allocated among the
subscribing Eligible Account Holders whose subscriptions remain unfilled
in the proportion which the amount of their respective Qualifying Deposits
on the Eligibility Record Date bears to the total Qualifying Deposits of
all Eligible Account Holders on such date. Notwithstanding the foregoing,
Common Shares in excess of 1,955,000, the maximum of the Valuation Range,
may be sold to the ESOP before fully satisfying the subscriptions of
Eligible Account Holders. No fractional shares will be issued. For
purposes of this paragraph (a), increases in the Qualifying Deposits of
directors and executive officers of the Bank during the twelve months
preceding the Eligibility Record Date shall not be considered.
(b) The ESOP shall receive, without payment therefor, a
nontransferable right to purchase in the Subscription Offering an
aggregate amount of up to 10% of the Common Shares sold in the Conversion,
provided that shares remain available after satisfying the subscription
rights of Eligible Account Holders up to the
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<PAGE> 10
maximum of the Valuation Range pursuant to paragraph (a) above. Although
the Plan and OTS regulations permit the ESOP to purchase up to 10% of the
Common Shares, the Holding Company anticipates that the ESOP will purchase
8% of the Common Shares. If the ESOP is unable to purchase all or part of
the Common Shares for which it subscribes, the ESOP may purchase Common
Shares on the open market or may purchase authorized but unissued Common
Shares. If the ESOP purchases authorized but unissued Common Shares, such
purchases could have a dilutive effect on the interests of the Holding
Company's shareholders.
(c) Provided that shares remain available after satisfying the
subscription rights of Eligible Account Holders and the ESOP pursuant to
paragraphs (a) and (b) above each Supplemental Eligible Account Holder
will receive, without payment therefor, a nontransferable right to
purchase up to the greater of (i) 15,000 Common Shares, (ii) .10% of the
total number of Common Shares sold in connection with the Conversion, and
(iii) 15 times the product (rounded down to the next whole number)
obtained by multiplying the total number of Common Shares sold in
connection with the Conversion by a fraction, the numerator of which is
the amount of the Supplemental Eligible Account Holder's Qualifying
Deposit 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 purchase
limitations set forth in Section 10 of the Plan and subject to adjustment
by the Board of Directors of the Holding Company and the Bank as set forth
in Section 10 of the Plan. If the exercise of subscription rights by
Supplemental Eligible Account Holders results in an oversubscription,
Common Shares will be allocated among subscribing Supplemental Eligible
Account Holders in a manner which will, to the extent possible, make the
total allocation of each subscriber equal 100 shares or the amount
subscribed for, whichever is less. Any Common Shares remaining after such
allocation has been made will be allocated among the subscribing
Supplemental Eligible Account Holders whose subscriptions remain unfilled
in the proportion which the amount of their respective Qualifying Deposits
on the Supplemental Eligibility Record Date bears to the total Qualifying
Deposits of all Supplemental Eligible Account Holders on such date. No
fractional shares will be issued.
(d) Provided that shares remain available after satisfying the
subscription rights of Eligible Account Holders, the ESOP and Supplemental
Eligible Account Holders pursuant to paragraphs (a), (b) and (c) above,
each Other Eligible Member, other than an Eligible Account Holder or
Supplemental Eligible Account Holder, shall receive, without payment
therefor, a nontransferable right to purchase up to the greater of (i)
15,000 Common Shares, and (ii) .10% of the total number of Common Shares
sold in connection with the Conversion, subject to adjustment by the
Boards of Directors of the Bank and the Holding Company. In the event of
an oversubscription by Other Eligible Members, the available Common Shares
will be allocated among subscribing Other Eligible Members in the same
proportion that their subscriptions bear to the total amount of
subscriptions by all Other Eligible Members; provided, however, that, to
the extent sufficient Common Shares are available, each subscribing Other
Eligible Member shall receive 25 Common Shares before the remaining
available Common Shares are allocated.
The Board of Directors may reject any one or more subscriptions if, based
upon the Board of Directors' interpretation of applicable regulations, such
subscriber is not entitled to the shares for which he or she has subscribed or
if the sale of shares subscribed for would be in violation of any applicable
statutes, regulations or rules. In connection with the exercise of subscription
rights arising from a deposit account in which two or more persons have an
interest, the aggregate maximum number of Common Shares which the persons having
an interest in such account may purchase in the Subscription Offering in
relation to such account is 15,000 Common Shares.
The Bank will make reasonable efforts to comply with the securities laws
of all states in the United States in which persons having subscription rights
reside. However, no such person will be offered or receive any Common Shares
under the Plan who resides in a foreign country or in a state of the United
States with respect to which each of the following apply: (i) a small number of
persons otherwise eligible to subscribe for shares under the Plan resides in
such country or state; (ii) under the securities laws of such country or state,
the granting of subscription rights or the offer or sale of Common Shares to
such persons would require the Holding Company or its officers or directors to
register as a broker or dealer or to register or otherwise qualify its
securities for sale in such country or state; and (iii) such registration or
qualification would be impracticable for reasons of cost or otherwise.
The term "resident," as used herein with respect to the Subscription
Offering, means any person who, on the date of submission of the Stock Order
Form and Certification Form accompanying the Prospectus (the "Stock Order
Form"), maintained a bona fide residence within a jurisdiction in which the
Common Shares are being offered for sale. If a person is
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<PAGE> 11
a business entity, the person's residence shall be the location of the principal
place of business. If the person is a personal benefit plan, the residence of
the beneficiary shall be the residence of the plan. In the case of all other
benefit plans, the residence of the trustee shall be the residence of the plan.
In all cases, the determination of a subscriber's residency shall be in the sole
discretion of the Bank and the Holding Company.
COMMUNITY OFFERING
To the extent Common Shares remain available after the satisfaction of all
subscriptions received in the Subscription Offering, the Bank is hereby offering
Common Shares in the Community Offering subject to the limitations set forth
below. If subscriptions are received in the Subscription Offering for up to
2,248,250 Common Shares, Common Shares may not be available in the Community
Offering. All sales of the Common Shares in the Community Offering will be at
the same price per share as in the Subscription Offering.
THE COMMUNITY OFFERING WILL BE TERMINATED ON OR BEFORE MARCH ___, 1998,
UNLESS EXTENDED BY THE BANK AND THE HOLDING COMPANY WITH THE APPROVAL OF THE OTS
AND THE DIVISION, IF NECESSARY. IN ACCORDANCE WITH THE PLAN, THE OFFERING MAY
NOT BE EXTENDED BEYOND ______________, 1998.
In the event shares are available for the Community Offering, each person,
together with any Associate or groups Acting in Concert, may purchase in the
Community Offering up to 15,000 Common Shares. If an insufficient number of
Common Shares is available to fill all of the orders received in the Community
Offering, the available Common Shares will be allocated in a manner to be
determined by the Boards of Directors of the Holding Company and the Bank,
subject to the following:
(i) Preference will be given to natural persons who maintain a bona
fide residence within Coshocton County, Ohio, the county in which the
offices of the Bank are located;
(ii) Orders received in the Community Offering will first be filled
up to 2% of the total number of Common Shares offered, with any remaining
shares allocated on an equal number of shares per order basis until all
orders have been filled; and
(iii) The right of any person to purchase Common Shares in the
Community Offering is subject to the right of the Holding Company and the
Bank to accept or reject such purchases in whole or in part.
LIMITATIONS ON PURCHASES OF COMMON SHARES
The Plan provides for certain additional limitations to be placed upon the
purchase of Common Shares. To the extent Common Shares are available, the
minimum number of Common Shares that may be purchased by any party is 25, or
$250. No fractional shares will be issued. Purchases in the Offering are further
subject to the limitation that no person, together with his or her Associates
and other persons Acting in Concert with him or her, may purchase more than
30,000 Common Shares in the Offering. In connection with the exercise of
subscription rights arising from a deposit account in which two or more persons
have an interest, the aggregate maximum number of Common Shares which the
persons having an interest in such account may purchase in the Subscription
Offering in relation to such account is 15,000 Common Shares. Such limitations
do not apply to the ESOP. Subject to applicable regulations, the purchase
limitation may be increased or decreased after the commencement of the Offering
by the Boards of Directors.
"Acting in Concert" is defined as "knowing participation in a joint
activity or independent conscious parallel action towards a common goal whether
or not pursuant to an express agreement" or "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." Persons shall be presumed to be Acting in Concert
with each other, subject to rebuttal through a filing with the OTS, if: (i) both
are purchasing Common Shares in the Conversion and (a) are certain executive
officers, including the president, chief executive officer, chief operating
officer or vice president, directors, trustees, partners, persons who perform,
or whose nominees or representatives perform, similar policy making functions at
a company (other than the Bank or the Holding Company), a principal business
unit or subsidiary of a company, a partnership, a joint venture or a similar
organization; (b) are persons who directly or indirectly own or control 10% or
more of the stock of a company (other than the Bank or the Holding Company); or
(c) constitute a group under the beneficial ownership reporting rules under
Section 13 or the proxy rules under Section 14 of the Exchange Act; or (ii) one
person provides credit to the other for the
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<PAGE> 12
purchase of Common Shares or is instrumental in obtaining that credit. Companies
(other than the Bank or the Holding Company), partnerships, joint ventures and
similar organizations shall be presumed to be acting in concert with their
executive officers, directors, trustees, trusts for which they serve as trustee,
partners, agents who perform, or whose nominees or representatives perform,
similar policy making functions and persons who directly or indirectly own or
control 10% or more of their stock if both are purchasing Common Shares in the
Conversion. In addition, if a person is presumed to be Acting in Concert with
another person, company or similar organization, then such person is presumed to
Act in Concert with anyone else who is, or is presumed to be, Acting in Concert
with such other person, company or similar organization.
For purposes of the Plan, (i) the directors of the Bank or the Holding
Company are not deemed to be Acting in Concert solely by reason of their
membership on the Board of Directors of the Bank or the Holding Company; (ii) an
associate of a person (an "Associate") is (a) any corporation or organization
(other than the Bank or the Holding Company) of which such person is an officer,
partner or, directly or indirectly, 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; and (c) any relative or spouse of
such person, or relative of such spouse, who either has the same home as such
person or who is a director or officer of the Bank or the Holding Company.
Purchases of Common Shares in the Offering are also subject to the change
in control regulations of the OTS which restrict direct and indirect purchases
of 10% or more of the stock of any savings association by any person or group of
persons acting in concert, under certain circumstances. See "RESTRICTIONS ON
ACQUISITION OF THE HOLDING COMPANY AND THE BANK AND ANTI-TAKEOVER PROVISIONS -
Federal Law and Regulation" in the Prospectus.
After the Conversion, Common Shares, except for Common Shares purchased by
affiliates of the Holding Company and the Bank, will be freely transferable,
subject to OTS and Division regulations.
PLAN OF DISTRIBUTION
The offering of the Common Shares is made only pursuant to the Prospectus,
which is available at the offices of the Bank. See "ADDITIONAL INFORMATION."
Officers and directors of the Bank will be available to answer questions about
the Conversion and may also hold informational meetings for interested persons.
Such officers and directors will not be permitted to make statements about the
Holding Company or the Bank unless such information is also set forth in the
Prospectus, nor will they render investment advice. The Holding Company will
rely on Rule 3a4-1 under the Securities Exchange Act of 1934 (the "Exchange
Act"), and sales of Common Shares will be conducted within the requirements of
Rule 3a4-1, which will permit officers, directors and employees of the Holding
Company and the Bank to participate in the sale of Common Shares. No officer,
director or employee of the Holding Company or the Bank will be compensated in
connection with his participation by the payment of commissions or other
remuneration based either directly or indirectly on the transactions in the
Common Shares.
To assist the Holding Company and the Bank in marketing the Common Shares,
the Holding Company and the Bank have retained Charles Webb & Company ("Webb"),
a broker-dealer registered with the Securities and Exchange Commission (the
"SEC") and a member of the National Association of Securities Dealers, Inc.
("NASD"). Webb will assist the Bank in (i) training and educating the Bank's
employees regarding the mechanics and regulatory requirements of the conversion
process; (ii) conducting information meetings for subscribers and other
potential purchasers; and (iii) keeping records of all stock subscriptions. For
providing these services, the Bank has agreed to pay Webb (a) a management fee
of $25,000, all of which has been paid, and (b) a success of 1.3% of the
aggregate dollar amount of Common Shares sold in the Subscription Offering and
the Community Offering, excluding shares sold by Selected Brokers, if any, and
shares purchased by the ESOP and directors, officers, and employees of the Bank
and members of their immediate families.
The Bank has also agreed to reimburse Webb for its reasonable legal fees
and disbursements. The Bank and the Holding Company have also agreed to
indemnify Webb, under certain circumstances, against liabilities and expenses
(including legal fees) arising out of or based upon untrue statements or
omissions contained in the materials used in the Offering or in various
documents submitted to regulatory authorities regarding the Conversion,
including liabilities under the Securities Act of 1933, as amended (the "Act"),
unless such untrue statement or omission, or alleged untrue statement or
omission, was made in reliance upon certain information furnished to the Bank by
Webb in writing expressly for use in this Summary Proxy Statement or the
Prospectus.
11
<PAGE> 13
If Common Shares remain available after the satisfaction of all
subscriptions received in the Subscription Offering, Webb may enter into an
agreement with other NASD member firms ("Selected Brokers") to assist in the
sale of Common Shares in the Community Offering. If Selected Brokers are used,
Webb will receive commissions of no more than 5.5% of the aggregate purchase
price of the Common Shares sold in the Community Offering by the Selected
Brokers, and Webb will pay to the Selected Brokers a portion of the 5.5%
commission pursuant to selected dealer agreements. During the Community
Offering, Selected Brokers may only solicit indications of interest from their
customers to place orders with the Bank as of a certain date (the "Order Date")
for the purchase of Common Shares. When and if the Bank believes that enough
indications of interest and orders have been received in the Community Offering
to consummate the Conversion, Webb will request, as of the Order Date, Selected
Brokers to submit orders to purchase shares for which they have previously
received indications of interest from the customers. Selected Brokers will send
confirmations of the orders to such customers on the next business day after the
Order Date. Selected Brokers will debit the accounts of their customers on the
date which will be three business days from the Order Date (the "Settlement
Date"). On the Settlement Date, funds received by Selected Brokers will be
remitted to the Bank. It is anticipated that the Conversion will be consummated
on the Settlement Date. However, if consummation is delayed after payment has
been received by the Bank from Selected Brokers, funds will earn interest at the
current passbook savings account rate, which is currently 2.50%, with an annual
percentage yield of 2.53%, until the completion of the offering. Funds will be
returned promptly in the event the Conversion is not consummated.
EFFECT OF EXTENSION OF COMMUNITY OFFERING
If the Community Offering extends beyond ____________, 1998, persons who
have subscribed for Common Shares in the Subscription Offering or in the
Community Offering will receive a written notice that prior to a date specified
in the notice, they have the right to affirm, increase, decrease or rescind
their subscriptions for Common Shares. Persons who do not affirmatively elect to
continue their subscription or who elect to rescind their subscriptions during
any such extension will have all of their funds promptly refunded with interest.
Persons who elect to decrease their subscriptions will have the appropriate
portion of their funds promptly refunded with interest.
USE OF STOCK ORDER FORMS
Subscriptions for Common Shares in the Subscription Offering and in the
Community Offering may be made only by completing and submitting a Stock Order
Form. Any person who desires to subscribe for Common Shares in the Subscription
Offering must do so by delivering to the Bank by mail or in person, prior to
___:00 __.m., Eastern Standard Time, on March _____, 1998, a properly executed
and completed Stock Order Form, together with full payment of the subscription
price of $10 for each Common Share for which subscription is made. ANY STOCK
ORDER FORM WHICH IS NOT RECEIVED BY THE BANK PRIOR TO ___:00 __.M., EASTERN
STANDARD TIME, ON MARCH ______, 1998, OR FOR WHICH FULL PAYMENT HAS NOT BEEN
RECEIVED BY THE BANK PRIOR TO SUCH TIME, WILL NOT BE ACCEPTED. PHOTOCOPIES,
TELECOPIES OR OTHER REPRODUCTIONS OF STOCK ORDER FORMS WILL NOT BE ACCEPTED. See
"ADDITIONAL INFORMATION."
AN EXECUTED STOCK ORDER FORM, ONCE RECEIVED BY THE HOLDING COMPANY, MAY
NOT BE MODIFIED, AMENDED OR RESCINDED WITHOUT THE CONSENT OF THE HOLDING
COMPANY, UNLESS (i) THE COMMUNITY OFFERING IS NOT COMPLETED BY __________, 1998,
OR (ii) THE FINAL VALUATION OF THE BANK, AS CONVERTED, IS LESS THAN $14,450,000
OR MORE THAN $22,482,500. IF EITHER OF THOSE EVENTS OCCUR, PERSONS WHO HAVE
SUBSCRIBED FOR COMMON SHARES IN THE SUBSCRIPTION OFFERING OR ORDERED COMMON
SHARES IN THE COMMUNITY OFFERING WILL RECEIVE WRITTEN NOTICE THAT THEY HAVE A
RIGHT TO AFFIRM, INCREASE, DECREASE OR RESCIND THEIR SUBSCRIPTIONS OR ORDERS
PRIOR TO A DATE SPECIFIED IN THE NOTICE. ANY PERSON WHO DOES NOT AFFIRMATIVELY
ELECT TO CONTINUE HIS SUBSCRIPTION OR ELECTS TO RESCIND HIS SUBSCRIPTION DURING
ANY SUCH EXTENSION WILL HAVE ALL OF HIS FUNDS PROMPTLY REFUNDED WITH INTEREST.
ANY PERSON WHO ELECTS TO DECREASE HIS SUBSCRIPTION DURING ANY SUCH EXTENSION
WILL HAVE THE APPROPRIATE PORTION OF HIS FUNDS PROMPTLY REFUNDED WITH INTEREST.
IN ADDITION, IF THE PURCHASE LIMITATIONS ARE INCREASED, PERSONS WHO HAVE
SUBSCRIBED FOR THE MAXIMUM AMOUNT WILL BE GIVEN THE OPPORTUNITY TO INCREASE
THEIR SUBSCRIPTIONS.
PAYMENT FOR COMMON SHARES
Payment of the subscription price for all Common Shares for which
subscription is made must accompany a completed Stock Order Form in order for
subscriptions to be valid. Payment for Common Shares may be made (i) in cash, if
delivered in person; (ii) by check, bank draft, or money order made payable to
the Bank; or (iii) by authorization of withdrawal from deposit accounts in the
Bank (other than non-self-directed IRAs). No payments by wire transfer will be
accepted. The Bank cannot lend money or otherwise extend credit to any person to
purchase Common Shares.
12
<PAGE> 14
Payments made in cash or by check, bank draft, or money order will be
placed in a segregated savings account insured by the FDIC up to applicable
limits until the Conversion is completed or terminated. Interest will be paid by
the Bank on such account at the then current passbook savings account rate,
which is currently 2.50% with an annual percentage yield of 2.53%, from the date
payment is received until the Conversion is completed or terminated. Payments
made by check will not be deemed to have been received until the check has
cleared for payment.
Instructions for authorizing withdrawals from deposit accounts, including
certificates of deposit, are provided in the Stock Order Form. Once a withdrawal
has been authorized, none of the designated withdrawal amount may be used by a
subscriber for any purpose other than to purchase Common Shares, unless the
Conversion is terminated. All sums authorized for withdrawal will continue to
earn interest at the contract rate for such account or certificate until the
completion or termination of the Conversion. Interest penalties for early
withdrawal applicable to certificate accounts will be waived in the case of
withdrawals authorized for the purchase of Common Shares. If a partial
withdrawal from a certificate account results in a balance less than the
applicable minimum balance requirement, the certificate will be canceled and the
remaining balance will earn interest at the Bank's passbook rate subsequent to
the withdrawal.
In order to utilize funds in an IRA maintained at the Bank, the funds must
be transferred to a self-directed IRA that permits the funds to be invested in
stock. There will be no early withdrawal or IRS penalties for such transfer. The
beneficial owner of the IRA must direct the trustee of the account to use funds
from such account to purchase Common Shares in connection with the Conversion.
THIS CANNOT BE DONE THROUGH THE MAIL. Persons who are interested in utilizing
IRAs at the Bank to subscribe for Common Shares should contact the Conversion
Information Center at (614) _________ for instructions and assistance.
Subscriptions will not be filled by the Bank until subscriptions have been
received in the Offering for up to 1,445,000 Common Shares, the minimum of the
Valuation Range. If the Conversion is terminated, all funds delivered to the
Bank for the purchase of Common Shares will be returned with interest, and all
charges to deposit accounts will be rescinded. Subscribers and other purchasers
will be notified by mail, promptly upon completion of the sale of the Common
Shares, of the number of shares for which their subscriptions have been
accepted. The funds on deposit with the Bank for the purchase of Common Shares
will be withdrawn and paid to the Holding Company in exchange for the Common
Shares. Certificates representing Common Shares will be delivered promptly
thereafter. The Common Shares will not be insured by the FDIC.
The ESOP will not be required to pay for the shares subscribed for at the
time it subscribes but may pay for such Common Shares upon consummation of the
Conversion.
13
<PAGE> 15
SHARES TO BE PURCHASED BY MANAGEMENT PURSUANT TO SUBSCRIPTION RIGHTS
The following table sets forth certain information regarding the
subscription rights intended to be exercised by the directors and executive
officers of the Bank and the Holding Company and their Associates and persons
with whom they may be deemed to be Acting in Concert:
<TABLE>
<CAPTION>
Name Total shares (1) Percent of total offering (2) Aggregate purchase price (1)
- ---- ---------------- ----------------------------- ----------------------------
<S> <C> <C> <C>
Neal J. Caldwell 30,000 1.76% $ 300,000
Charles H. Durmis 30,000 1.76 300,000
Robert C. Hamilton 30,000 1.76 300,000
Robert D. Mauch 15,000 0.88 150,000
Douglas L. Randles 30,000 1.76 300,000
Preston W. Bair 30,000 1.76 300,000
All directors and executive
officers as a group (6 persons) 165,000 9.68 1,650,000
</TABLE>
- ----------
(1) Includes intended purchases by Associates of directors and executive
officers, to the extent known.
(2) Assumes that 1,700,000 Common Shares, the midpoint of the Valuation Range,
will be sold in connection with the Conversion at $10 per share and that a
sufficient number of Common Shares will be available to satisfy the
intended purchases by directors and executive officers. See "Pricing and
Number of Common Shares to be Sold."
All purchases by executive officers and directors of the Bank are being
made for investment purposes only and with no present intent to resell.
PRICING AND NUMBER OF COMMON SHARES TO BE SOLD
The aggregate offering price of the Common Shares will be based on the pro
forma market value of the shares as determined by an independent appraisal of
the Bank, as converted, and the Holding Company. Keller, a firm which evaluates
and appraises financial institutions, has been retained by the Bank to prepare
an appraisal of the estimated pro forma market value of the Bank, as converted,
and the Holding Company. Keller will receive a fee of $17,000 for its appraisal
and one update and will not be reimbursed for out-of-pocket expenses.
Keller was selected by the Board of Directors of the Bank because Keller
has extensive experience in the valuation of thrift institutions, particularly
in the mutual-to-stock conversion context. The Board of Directors reviewed the
credentials of Keller's appraisal personnel and obtained references and
recommendations from other companies which have engaged Keller. Keller is
certified by the OTS as a mutual-to-stock conversion appraiser. The Bank and
Keller have no relationships which would affect Keller's independence.
The appraisal was prepared by Keller in reliance upon the information
contained herein and in the Prospectus. Keller also considered the following
factors, among others: the economic and demographic conditions in the Bank's
primary market area; the quality and depth of the Bank's management and
personnel; 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 thrift institutions; the aggregate size of the
Offering; the impact of the Conversion on the Bank's regulatory capital and
earnings potential; the trading market for stock of comparable thrift
institutions and thrift holding companies; and general conditions in the markets
for such stocks. The Boards of Directors of the Holding Company and the Bank
reviewed and deemed appropriate the assumptions and methodology used by Keller
in preparing the appraisal.
The Pro Forma Value of the Bank, as converted, and the Holding Company,
determined by Keller, is $17,000,000 as of November 28, 1997. The Valuation
Range established in accordance with the Plan is $14,450,000 to $19,550,000,
which, based upon a per share offering price of $10, will result in the sale of
between 1,445,000 and 1,955,000 Common Shares. Applicable regulations permit the
Holding Company to offer additional Common Shares in an amount not to exceed
14
<PAGE> 16
15% above the maximum of the Valuation Range, which would permit the issuance of
up to 2,248,250 Common Shares. The total number of Common Shares sold in the
Conversion will be based on the Valuation Range.
If, due to changing market conditions, the final valuation is less than
$14,450,000 or more than $22,482,500 subscribers will be given the right to
affirm, increase, decrease or rescind their subscriptions. Any person who does
not affirmatively elect to continue his subscription or elects to rescind his
subscription before the date specified in the notice will have all of his funds
promptly refunded with interest. Any person who elects to decrease his
subscription will have the appropriate portion of his funds promptly refunded
with interest.
THE APPRAISAL BY KELLER IS NOT INTENDED, AND MUST NOT BE CONSTRUED, AS A
RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING COMMON SHARES OR
VOTING TO APPROVE THE CONVERSION. IN PREPARING THE VALUATION, KELLER HAS RELIED
UPON AND ASSUMED THE ACCURACY AND COMPLETENESS OF THE AUDITED FINANCIAL
STATEMENTS AND STATISTICAL INFORMATION PROVIDED BY THE BANK. KELLER DID NOT
INDEPENDENTLY VERIFY THE FINANCIAL STATEMENTS AND OTHER INFORMATION PROVIDED BY
THE BANK, NOR DID KELLER VALUE INDEPENDENTLY THE ASSETS OR LIABILITIES OF THE
BANK OR THE HOLDING COMPANY. THE VALUATION CONSIDERS THE BANK ONLY 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
COMMON SHARES WILL THEREAFTER BE ABLE TO SELL SUCH SHARES AT THE CONVERSION
PURCHASE PRICE.
A copy of the complete appraisal is on file and open for inspection at the
offices of the OTS, 1700 G Street, N.W., Washington, D.C. 20552; at the Central
Regional Office of the OTS, 200 West Madison Street, Suite 1300, Chicago,
Illinois 60606; at the offices of the Division, 77 S. High Street, Columbus,
Ohio 43215; and at the offices of the Bank.
RESTRICTIONS ON REPURCHASE OF COMMON SHARES
OTS regulations generally prohibit the Holding Company from repurchasing
any of its capital stock for three years following the date of completion of the
Conversion, except as part of an open-market stock repurchase program during the
second and third years following the Conversion involving no more than 5% of the
outstanding capital stock during a twelve-month period. The OTS may permit a
repurchase during the first year following the completion of the Conversion or
may permit the Holding Company to exceed the 5% limits in the second and third
years if exceptional circumstances are established. In addition, following any
repurchase during the three years after the completion of the Conversion, the
Bank's regulatory capital must equal or exceed all regulatory capital
requirements. Before the commencement of a repurchase program, the Holding
Company must provide notice to the OTS, and the OTS may disapprove the program
if the OTS determines that it would adversely affect the financial condition of
the Bank or if it determines that there is no valid business purpose for such
repurchase. Such repurchase restrictions would not prohibit the ESOP or the RRP
from purchasing Common Shares during the first year following the Conversion.
RESTRICTIONS ON TRANSFER OF COMMON SHARES BY DIRECTORS AND OFFICERS
Common Shares purchased by directors and executive officers of the Holding
Company and their Associates will be subject to the restriction that such shares
may not be sold for a period of one year following completion of the Conversion,
except in the event of the death of the shareholder. The certificates evidencing
Common Shares issued by the Holding Company to directors and executive officers
will bear a legend giving appropriate notice of the restriction imposed upon
them. In addition, the Holding Company will give appropriate instructions to the
transfer agent for the Holding Company's common shares in respect of the
applicable restriction on transfer of any restricted shares. Any shares issued
as a stock dividend, stock split or otherwise in respect of restricted shares
will be subject to the same restrictions.
Subject to certain exceptions, for a period of three years following the
Conversion, no director or officer of the Holding Company or the Bank, or any of
their Associates, may purchase any common shares of the Holding Company without
the prior written approval of the OTS, except through a broker-dealer registered
with the SEC. This restriction will not apply, however, to negotiated
transactions involving more than 1% of a class of outstanding common shares of
the Holding Company or shares acquired by any stock benefit plan of the Holding
Company or the Bank.
The Common Shares, like the stock of most public companies, are subject to
the registration requirements of the Act. Accordingly, the Common Shares may be
offered and sold only in compliance with such registration requirements or
15
<PAGE> 17
pursuant to an applicable exemption from registration. Common Shares received in
the Conversion by persons who are not "affiliates" of the Holding Company may be
resold without registration. Common Shares received by affiliates of the Holding
Company will be subject to resale restrictions. An "affiliate" of the Holding
Company, for purposes of Rule 144 under the Exchange Act, is a person who
directly, or indirectly through one or more intermediaries, controls, or is
controlled by or is under common control with, the Holding Company. Directors
and executive officers of a company are generally presumed to be affiliates of
that company. Rule 144 generally requires that there be publicly available
certain information concerning the Holding Company and that sales subject to
Rule 144 be made in routine brokerage transactions or through a market maker. If
the conditions of Rule 144 are satisfied, each affiliate (or group of persons
acting in concert with one or more affiliates) is generally entitled to sell in
the public market, without registration, in any three-month period, a number of
shares which does not exceed the greater of (i) 1% of the number of outstanding
shares of the Holding Company or (ii) if the shares are admitted to trading on a
national securities exchange or reported through the automated quotation system
of a registered securities association, such as The Nasdaq Stock Market, the
average weekly reported volume of trading during the four weeks preceding the
sale.
RIGHTS OF REVIEW
Any person aggrieved by a final action of the OTS which approves, with or
without conditions, or disapproves the Plan may obtain review of such action by
filing in the Court of Appeals of the United States for the circuit in which the
principal office or residence of such person is located or in the United States
Court of Appeals for the District of Columbia, a written petition praying that
the final action of the OTS be modified, terminated, or set aside. Such petition
must be filed within 30 days after the date of mailing of proxy materials to the
voting members of the Bank or within 30 days after the date of publication in
the Federal Register of notice of approval of the Plan by the OTS, whichever is
later.
OTHER
THE PLAN IS ATTACHED TO THIS SUMMARY PROXY STATEMENT AS EXHIBIT A AND
SHOULD BE REVIEWED CAREFULLY. ALL STATEMENTS MADE IN THIS SUMMARY PROXY
STATEMENT AND THE PROSPECTUS ARE HEREBY QUALIFIED IN THEIR ENTIRETY BY REFERENCE
TO THE PLAN. THE ADOPTION OF THE PLAN BY THE VOTING MEMBERS AT THE SPECIAL
MEETING WILL AUTHORIZE THE BOARDS OF DIRECTORS OF THE HOLDING COMPANY AND THE
BANK TO AMEND OR TERMINATE THE PLAN. IF THE BOARDS OF DIRECTORS OF THE HOLDING
COMPANY AND THE BANK DETERMINE, UPON ADVICE OF COUNSEL AND AFTER CONSULTATION
WITH THE OTS AND THE DIVISION, THAT ANY SUCH AMENDMENT IS MATERIAL, SUBSCRIBERS
WILL BE NOTIFIED OF THE AMENDMENT AND WILL BE PROVIDED THE OPPORTUNITY TO
AFFIRM, INCREASE, DECREASE OR CANCEL THEIR SUBSCRIPTIONS.
USE OF PROCEEDS
The following table presents the estimated gross and net proceeds from the
sale of the Common Shares, based on the Valuation Range:
<TABLE>
<CAPTION>
Minimum Midpoint Maximum Maximum, as adjusted
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Gross proceeds $14,450,000 $17,000,000 $19,550,000 $22,482,500
Less estimated expenses 456,000 487,000 517,000 552,000
----------- ----------- ----------- -----------
Total net proceeds $13,994,000 $16,513,000 $19,033,000 $21,930,500
=========== =========== =========== ===========
</TABLE>
The net proceeds from the sale of the Common Shares may vary depending
upon financial and market conditions at the time of the completion of the
Offering. See "THE CONVERSION - Pricing and Number of Common Shares to be Sold."
The expenses detailed above are estimated. Actual expenses may be more than or
less than estimated. See "THE CONVERSION - Plan of Distribution."
The Holding Company will retain up to 50% of the net proceeds from the
sale of the Common Shares, or approximately $11.0 million at the maximum, as
adjusted, of the Valuation Range. Such proceeds will be used to lend up to
16
<PAGE> 18
8% of the proceeds of the Offering to the ESOP to acquire Common Shares in the
Offering and the balance of the proceeds will be invested initially in
short-term investments. The loan to the ESOP will have a term of up to ten years
and an interest rate equal to the applicable federal rate published periodically
by the IRS, which is currently _____%. Ultimately the proceeds will be used for
general corporate purposes, which may include payments of dividends, repurchases
of Common Shares and funding of the RRP. See "THE CONVERSION - Restrictions on
Repurchase of Common Shares." OTS regulations generally prohibit stock
repurchases in the first year following the completion of the Conversion,
without prior approval of the OTS.
The remainder of the net proceeds received from the sale of the Common
Shares, approximately $11.0 million at the maximum, as adjusted, of the
Valuation Range, will be invested by the Holding Company in the capital stock to
be issued by the Bank to the Holding Company as a result of the Conversion and
will increase the regulatory capital of the Bank and will permit the Bank to
expand its lending and investment activities and to enhance customer services.
The Bank anticipates that such net proceeds will initially be invested in
short-term investments with maturities of one year or less and utilized for
general corporate purposes, including loan originations.
MARKET FOR COMMON SHARES
There is currently no market for the Common Shares. No assurance can be
given that an active or liquid market for the Common Shares will develop after
the completion of the Conversion or, if such a market does develop, that it will
continue. Investors should consider, therefore, the potentially illiquid and
long-term nature of an investment in the Common Shares.
A public trading market for the stock of any issuer, including the Holding
Company, depends upon the presence of both willing buyers and willing sellers at
any given time. The Holding Company has received conditional approval to have
the Common Shares quoted on The Nasdaq National Market ("Nasdaq") under the
symbol "______" upon completion of the Conversion, subject to certain conditions
which the Bank and the Holding Company believe will be satisfied, although no
assurance can be provided that the conditions will be met. One of the conditions
to the Nasdaq listing is the commitment of at least two brokerage firms to make
a market in the Common Shares. Keefe, Bruyette & Woods, Inc., has informed the
Holding Company that it intends to make a market in the Common Shares, but it
has no obligation to do so.
The appraisal of the pro forma market value of the Bank, as converted, and
the Holding Company is not a recommendation as to the advisability of purchasing
Common Shares, nor does it represent Keller's opinion as to the price at which
the Common Shares may trade. There can be no assurance that the Common Shares
may later be resold at the price at which they are purchased in connection with
the Conversion. See "RISK FACTORS - Limited Market for the Common Shares" in the
Prospectus.
DIVIDEND POLICY
The declaration and payment of dividends by the Holding Company will be
subject to the discretion of the Board of Directors of the Holding Company, to
the earnings and financial condition of the Holding Company and to general
economic conditions. If the Board of Directors of the Holding Company determines
in the exercise of its discretion that the net income, capital and consolidated
financial condition of the Holding Company and the general economy justify the
declaration and payment of dividends by the Holding Company, the Board of
Directors of the Holding Company may authorize the payment of dividends on the
Common Shares, subject to the limitation under Ohio law that a corporation may
pay dividends only out of surplus. There can be no assurance that dividends will
be paid on the Common Shares or, if paid, that such dividends will continue to
be paid in the future. In addition, the Holding Company will not take any action
that would further the payment of a tax-free return of capital to its
shareholders during the first year following the completion of the Conversion.
Other than earnings on the investment of the proceeds retained by the
Holding Company and interest earned on the loan to the ESOP, the principal
source of income of the Holding Company will be dividends periodically declared
and paid by the Board of Directors of the Bank on the common shares of the Bank
held by the Holding Company. The declaration and payment of dividends by the
Bank to the Holding Company will be subject to the discretion of the Board of
Directors of the Bank, to the earnings and financial condition of the Bank, to
general economic conditions and to federal and state
17
<PAGE> 19
restrictions on the payment of dividends by thrift institutions. Under
regulations of the OTS applicable to converted associations, the Bank will not
be permitted to pay a cash dividend on its capital stock after the Conversion if
its regulatory capital would, as a result of the payment of such dividend, be
reduced below the amount required for the Liquidation Account or the applicable
regulatory capital requirement prescribed by the OTS. See "THE CONVERSION -
Principal Effects of the Conversion -- Liquidation Account," and "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
Liquidity and Capital Resources" in the Prospectus. The Bank may not pay a
dividend unless such dividend also complies with an OTS regulation limiting
capital distributions by savings and loan associations. Capital distributions,
for purposes of such regulation, include, without limitation, payments of cash
dividends, repurchases, and certain other acquisitions by an association of its
shares and payments to stockholders of another association in an acquisition of
such other association. See "REGULATION - Office of Thrift Supervision --
Limitations on Capital Distributions" in the Prospectus.
DESCRIPTION OF AUTHORIZED SHARES
GENERAL
Articles of Incorporation of the Holding Company authorize the issuance of
__________ common shares, and ____ preferred shares. Neither the common shares
nor the preferred shares authorized by the Holding Company's Articles of
Incorporation have par value. Upon receipt by the Holding Company of the
purchase price therefor and subsequent issuance thereof, each Common Share
issued in the Conversion will be fully paid and nonassessable. Notwithstanding
the foregoing, until payments are received by the Holding Company from the ESOP
in accordance with the terms of a loan agreement to be entered into by and
between the Holding Company and the ESOP, Common Shares issued to the ESOP for
which payment in money has not been received will not be fully paid and
non-assessable. The Common Shares will represent nonwithdrawable capital and
will not and cannot be insured by the FDIC. Each Common Share will have the same
relative rights and will be identical in all respects to every other Common
Share.
None of the preferred shares of the Holding Company will be issued in
connection with the Conversion. The Board of Directors of the Holding Company is
authorized, without shareholder approval, to issue preferred shares and to fix
and state the designations, preferences or other special rights of such shares
and the qualifications, limitations and restrictions thereof. The preferred
shares may rank prior to the common shares as to dividend rights, liquidation
preferences or both. Each holder of preferred shares will be entitled to one
vote for each preferred share held of record on all matters submitted to a vote
of shareholders. The issuance of preferred shares and any conversion rights
which may be specified by the Board of Directors for the preferred shares could
adversely affect the voting power of holders of the common shares. The Board of
Directors has no present intention to issue any of the preferred shares.
The following is a summary description of the rights of the common shares
of the Holding Company, including the material express terms of such shares as
set forth in the Holding Company's Articles of Incorporation.
LIQUIDATION RIGHTS
In the event of the complete liquidation or dissolution of the Holding
Company, the holders of the Common Shares will be entitled to receive all assets
of the Holding Company available for distribution, in cash or in kind, after
payment or provision for payment of (i) all debts and liabilities of the Holding
Company, (ii) any accrued dividend claims, and (iii) any interests in the
Liquidation Account payable as a result of a liquidation of the Bank. See "THE
CONVERSION Liquidation Account."
VOTING RIGHTS
The holders of the Common Shares will possess exclusive voting rights in
the Holding Company. Each holder of Common Shares will be entitled to one vote
for each share held of record on all matters submitted to a vote of holders of
common shares. See "RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND THE
BANK AND ANTI-TAKEOVER PROVISIONS - Articles of Incorporation of the Holding
Company -- Elimination of Cumulative Voting" in the Prospectus.
18
<PAGE> 20
DIVIDENDS
The holders of the Common Shares will be entitled to the payment of
dividends when, as and if declared by the Board of Directors and paid out of
funds, if any, available under applicable laws and regulations for the payment
of dividends. The payment of dividends is subject to federal and state statutory
and regulatory restrictions. See "DIVIDEND POLICY," "REGULATION - Office of
Thrift Supervision -- Limitations on Capital Distributions" and "TAXATION -
Federal Taxation" in the Prospectus for a description of restrictions on the
payment of cash dividends.
PREEMPTIVE RIGHTS
After the consummation of the Conversion, no shareholder of the Holding
Company will have, as a matter of right, the preemptive right to purchase or
subscribe for shares of any class of the Holding Company, now or hereafter
authorized, or to purchase or subscribe for securities or other obligations
convertible into or exchangeable for such shares or which by warrants or
otherwise entitle the holders thereof to subscribe for or purchase any such
share.
RESTRICTIONS ON ALIENABILITY
See "THE CONVERSION - Restrictions on Repurchase of Common Shares" for a
description of the limitations on the repurchase of stock by the Holding
Company; "THE CONVERSION - Restrictions on Transfer of Common Shares by
Directors and Officers" for a description of certain restrictions on the
transferability of Common Shares purchased by officers and directors; and
"RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY AND THE BANK AND
ANTI-TAKEOVER PROVISIONS" for information regarding regulatory restrictions on
acquiring Common Shares.
EXPERTS
Keller has consented to the publication herein of the summary of its
opinion as to the estimated pro forma market value of the Bank, as converted,
and the Holding Company and to the use of its name and statements with respect
to it appearing herein.
LEGAL PROCEEDINGS
The Bank is not presently involved in any material legal proceedings. From
time to time, the Bank is a party to legal proceedings incidental to its
business to enforce its security interest in collateral pledged to secure loans
made by the Bank.
ADDITIONAL INFORMATION AND STOCK ORDER FORMS
The Prospectus contains the following: audited financial statements of the
Bank, including statements of income and retained earnings, for the three fiscal
years ended June 30, 1997, unaudited financial statements for the three months
ended September 30, 1997, management's discussion and analysis of financial
condition and results of operations; selected financial information of the Bank
for the five fiscal years ended June 30, 1997, and the three months ended
September 30, 1997 and 1996; information concerning the capitalization of the
Bank; a description of the Bank's lending, savings and investment activities;
and additional information about the business and financial condition of the
Bank. A copy of the Prospectus accompanies this Summary Proxy Statement. To
obtain an additional copy of the Prospectus, contact the Bank's Conversion
Information Center at (614)____________.
The Subscription Offering will commence on February ___, 1998, and end at
___:00 __.m., Eastern Standard Time, on March ____, 1998. Stock Order Forms for
purchases of Common Shares in the Subscription Offering must be received by the
Bank on or before noon, Eastern Standard Time, on March ___, 1998.
19
<PAGE> 1
Exhibit 99.2
STOCK ORDER FORM AND HOME LOAN FINANCIAL CORPORATION
CERTIFICATION FORM
Note: Please read the Stock Order Form Guide and Instructions on the back
of this form before completion.
- -------------------------------------------------------------------------------
DEADLINE
The Subscription Offering and the Community Offering (collectively, the
"Offering") end at Noon, Coshocton, Ohio Time, on March XX, 1998. Your Stock
Order Form and Certification Form, properly executed and with the correct
payment, must be received at the address on the bottom of this form by this
deadline, or it will be considered void.
- -------------------------------------------------------------------------------
NUMBER OF SHARES
(1) Number of Shares Price Per Share (2) Total Amount Due
x $10.00 = $
The minimum number of shares that may be subscribed for is 25. Each eligible
Account Holder, Supplemental Eligible Account Holder and Other Eligible Member
may purchase in the Subscription Offering not more than 15,000 Common Shares. In
connection with the excercise of subscription rights arising from a single
deposit account in which two or more persons have an interest, however, the
aggregate maximum number of Common Shares which the persons having an interest
in such account may purchase in the Subscription Offering in relation to such
account is 15,000 Common Shares. Except for the ESOP, which may purchase up to
10% of the total Common Shares sold in the Offering, no person, together with
his or her Associates (hereinafter defined) and other persons Acting in Concert
(hereinafter defined) with him or her, may purchase more than 30,000 Common
Shares in the Offering.
- -------------------------------------------------------------------------------
METHOD OF PAYMENT
(3) [ ] Enclosed is a check, bank draft or money order payable to Home Loan
Financial Corporation of $_________________ (or cash if presented
in person).
(4) [ ] I authorize The Home Loan Savings Bank to make withdrawals from my
Home Loan Savings Bank certificate or savings account(s) shown below,
and understand that the amounts will not otherwise be available for
withdrawal:
ACCOUNT NUMBER (S) AMOUNT (S)
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
TOTAL WITHDRAWAL
---------------------
There is no penalty for early withdrawals used for this payment.
PURCHASER INFORMATION
(5) [ ] Check here if you are a depositor and enter below information for all
accounts you had at the Eligibility Record Date (September 30, 1996),
the Supplemental Eligibility Record Date (XX) or the Voting Record Date
(XXX). If additional space is needed, please use the back of this form.
Please confirm account(s) by initialing here. _______________
ACCOUNT TITLE (NAMES ON ACCOUNTS) ACCOUNT NUMBER
------------------------------------------------------------------
--------------------------------------
------------------------------------------------------------------
--------------------------------------
------------------------------------------------------------------
[ ] Check here if you are a director, officer or employee of The Home Loan
Savings Bank or a member of such person's immediate family.
- -------------------------------------------------------------------------------
(6) STOCK REGISTRATION
<TABLE>
<S> <C> <C>
[ ] Individual [ ] Uniform Transfer to Minors [ ] Partnership
[ ] Joint Tenants [ ] Uniform Gift to Minors [ ] Individual Retirement Account
[ ] Tenants in Common [ ] Corporation [ ] Fiduciary/Trust (Under Agreement Dated _________________)
- -------------------------------------------------------------------------------------------------------------------------------
Name Social Security or Tax I.D.
- -------------------------------------------------------------------------------------------------------------------------------
Name Daytime Telephone
- -------------------------------------------------------------------------------------------------------------------------------
Street Address Evening Telephone
- -------------------------------------------------------------------------------------------------------------------------------
City State Zip code County of Residence
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NASD AFFILIATION (This section only applies to those individuals who
meet the delineated criteria)
[ ] 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: (1) not to sell, transfer or hypothecate the shares
subscribed for herein for a period of three months following the issuance and
(2) to report this subscription in writing to the applicable NASD member within
one day of the payment therefor.
- -------------------------------------------------------------------------------
ACKNOWLEDGMENT By signing below, I acknowledge receipt of the Prospectus dated
XXXXXX XX, 199X and that I have reviewed all provisions therein. I understand
that I may not change or revoke my order once it is received by Home Loan
Financial Corporation. I also certify that this stock order is for my account
and there is no agreement or understanding regarding any further sale or
transfer of these shares. Federal regulations prohibit any persons from
transferring, or entering into any agreement directly or indirectly to transfer
the legal or beneficial ownership of conversion subscription rights or the
underlying securities to the account of another person. The Home Loan Savings
Bank will pursue any and all legal and equitable remedies in the event it
becomes aware of the transfer of subscription rights and will not honor orders
known by it to involve such transfer. Under penalties of perjury, I further
certify that: (1) the social security number or taxpayer identification number
given above is correct; and (2) I am not subject to backup withholding. You must
cross out this item, (2) above, if you have been notified by the Internal
Revenue Service that you are subject to backup withholding because of under-
reporting interest or dividends on your tax return. By signing below, I also
acknowledge that I have not waived any rights under the Securities Act of 1933
and the Securities Exchange Act of 1934.
- -------------------------------------------------------------------------------
SIGNATURE THIS FORM MUST BE SIGNED AND DATED. THIS ORDER IS NOT VALID IF THE
STOCK ORDER FORM AND CERTIFICATION FORM ARE NOT BOTH SIGNED. YOUR ORDER WILL BE
FILLED IN ACCORDANCE WITH THE PROVISIONS OF THE PROSPECTUS. When purchasing as a
custodian, corporate officer, etc., include your full title. An additional
signature is required only if payment is by withdrawal from an account that
requires more than one signature to withdraw funds. If you need help completing
this Form, you may call the Conversion Information Center at (614) XXX-XXXX
---------------------------------------------------------------------
Signature Title (if applicable) Date
---------------------------------------------------------------------
Signature Title (if applicable) Date
---------------------------------------------------------------------
THE COMMON SHARES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE
NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
- -------------------------------------------------------------------------------
CONVERSION INFORMATION CENTER
401 Main Street
Coshocton, Ohio 43812
(614) XXX-XXXX
OFFICE USE
Date Rec'd _____/____/____ Order # _______ Batch # _____
Check # _______________ Category _______
Amount $ _______________ Initials _______
<PAGE> 2
HOME LOAN FINANCIAL CORPORATION
ITEM INSTRUCTION
- -------------------------------------------------------------------------------
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 is 25
shares. Each Eligible Account Holder, Supplemental Eligible Account Holder and
Other Eligible Member may purchase in the Subscription Offering not more than
15,000 Common Shares. In connection with the excercise of subscription rights
arising from a single deposit account in which two or more persons have an
interest, however, the aggregate maximum number of Common Shares which the
persons having an interest in such account may purchase in the Subscription
Offering in relation to such account is 15,000 Common Shares. Except for the
ESOP, which may purchase up to 10% of the total Common Shares sold in the
Offering, no person, together with his or her Associates (hereinafter defined)
and other persons Acting in Concert (hereinafter defined) with him or her, may
purchase more than 30,000 Common Shares in the Offering.
Home Loan Financial Corporation has reserved the right to reject any order
received in the Community Offering, if any, in whole or in part.
ITEM 3- Payment for shares may be made in cash (only if delivered by you in
person) by check, bank draft or money order made payable to Home Loan Financial
Corporation. DO NOT MAIL CASH. If you choose to make a cash payment, take your
signed Stock Order Form and Certification Form and payment in person to The Home
Loan Savings Bank. Your funds will earn interest at The Home Loan Savings Bank's
current passbook rate of 2.50% (2.53% APY).
ITEM 4- To pay by withdrawal from a savings account or certificate at The Home
Loan Savings Bank, insert the account number(s) and the amount(s) you wish to
withdraw from each account. If more than one signature is required to withdraw,
each must sign in the Signature box on the front of this form. To withdraw from
an account with checking privileges, please write a check. No early withdrawal
penalty will be charged on funds used to purchase shares in the Conversion. A
hold will be placed on the account(s) for the amount(s) you show. Payments will
remain in designated account(s) until the Offering closes and will continue to
earn interest at the account rate until then. If a partial withdrawal reduces
the balance of a certificate account to less than the applicable minimum, the
remaining balance will thereafter earn interest at The Home Loan Savings Bank's
passbook rate.
ITEM 5- Please check this box if you were a depositor on the Eligibility Record
Date (September 30, 1996), the Supplemental Eligibility Record Date (XXXXXXX) or
the Voting Record Date (XXXXXXXXx). List all names on the account(s) and all
account number(s) of those accounts you had at these dates to ensure proper
identification of your purchase rights.
ITEMS 6- The stock transfer industry has developed a uniform system of
shareholder registrations that we will use in the issuance of Home Loan
Financial Corporation common shares. Print the name(s) in which you want the
shares registered and the mailing address of the registration. 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", etc. Review the Stock Ownership Guide and refer
to the instructions for Uniform Gift to Minors/Uniform Transfer to Minors and
Fiduciaries.
Subscription rights are not transferable. If you are a qualified member, to
protect your priority over other purchasers as described in the Prospectus, you
must take ownership in at least one of the account holder's names.
Enter the Social Security or Tax I.D. number of one registered owner. This
registered owner must be listed on the first "NAME" line. Be sure to include
your telephone number because we will need to contact you if we cannot execute
your order as given.
CONTINUATION FROM PAGE 1 SECTION 5, IF ADDITIONAL SPACE IS NEEDED:
ACCOUNT TITLE (NAMES ON ACCOUNTS) ACCOUNT NUMBER
- -----------------------------------------------------------------------------
- ---------------------------------------------
- -----------------------------------------------------------------------------
- ---------------------------------------------
- -----------------------------------------------------------------------------
- ---------------------------------------------
- -----------------------------------------------------------------------------
- ---------------------------------------------
- -----------------------------------------------------------------------------
<PAGE> 3
HOME LOAN FINANCIAL CORPORATION
STOCK OWNERSHIP GUIDE
- -------------------------------------------------------------------------------
Instructions: See your legal advisor if you are unsure about the correct
registration of your stock.
INDIVIDUAL- The shares are to be registered in an individual's name only. You
may not list beneficiaries for this ownership.
JOINT TENANTS- Joint tenants with right of survivorship identifies two or more
owners. When shares are held by joint tenants with rights of survivorship,
ownership automatically passes to the surviving joint tenant(s) upon the death
of any joint tenant. You may not list beneficiaries for this ownership.
TENANTS IN COMMON- Tenants in common may also identify two or more owners. When
shares are held by tenants in common, upon the death of one co-tenant, ownership
of the shares 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. You may not list beneficiaries for this ownership.
INDIVIDUAL RETIREMENT ACCOUNT- Individual Retirement Account ("IRA") holders may
make share purchases from their deposits through a pre-arranged
"trustee-to-trustee" transfer. Shares may only be held in a self-directed IRA.
The Home Loan Savings Bank does not offer a self-directed IRA. Please contact
the Conversion Information Center if you have any questions about your IRA
account. There will be no early withdrawal or IRS penalties incurred in these
transactions.
UNIFORM GIFT TO MINORS- For residents of many states, shares may be held in the
name of a custodian for the benefit of a minor under the Uniform Transfer to
Minors Act. For residents in other states, shares may be held in a similar type
of ownership under the Uniform Gift to Minors Act of the individual states. For
either type of ownership, the minor is the actual owner of the shares with the
adult custodian being responsible for the investment until the child reaches
legal age.
On the first line, print the first name, middle initial and last name of the
custodian, with the abbreviation "CUST" and "Unif Tran Min Act" or "Unif Gift
Min Act" after the name. Print the first name, middle initial and last name of
the minor on the second "NAME" line. Standard U.S. Postal Service state
abbreviations should be used to describe the appropriate state. For example,
shares held by John Doe as custodian for Susan Doe under the Ohio Transfer to
Minors Act will be abbreviated John Doe, CUST Susan Doe Unif Tran Min Act. OH.
Use the minor's Social Security Number. Only one custodian and one minor may be
designated.
CORPORATION/PARTNERSHIP- Corporation/Partnerships may purchase shares. Please
provide the Corporation/Partnership's legal name and Tax I.D. To have depositor
rights, the Corporation/Partnership must have an account in the legal name.
Please contact the Conversion Information Center to verify depositor rights and
purchase limitations.
FIDUCIARY/TRUST- Generally, fiduciary relationships (such as trusts, estates,
guardianships, etc.) are established under a form of trust agreement or pursuant
to a court order. Without a legal document establishing a fiduciary
relationship, your shares may not be registered in a fiduciary capacity.
Instructions: On the first "NAME" line, print the first name, middle initial and
last name of the fiduciary if the fiduciary is an individual. If the fiduciary
is a corporation, list the corporate title on the first "NAME" line. Following
the name, print the fiduciary "title" such as trustee, executor, personal
representative, etc.
On the second "NAME" line, print either the name of the maker, donor or testator
OR the name of the beneficiary. Following the name, indicate the type of legal
document establishing the fiduciary relationship (agreement, court order, etc.).
In the blank after "Under Agreement Dated", fill in the date of the document
governing the relationship. The date of the document need not be provided for a
trust created by a will.
An example of fiduciary ownership of stock in the case of a trust is: John D.
Smith, Trustee for Thomas A. Smith Trust Under Agreement Dated 06/09/87.
DEFINITION OF ASSOCIATE
- -------------------------------------------------------------------------------
A person's Associates consist of the following (a) any corporation or other
organization (other than Home Loan Financial Corporation (the "Holding
Company"), The Home Loan Savings Bank (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; (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, provided, however, that such term shall not
include any tax-qualified employee stock benefit plan of the Holding Company or
the Bank in which such person has a substantial beneficial interest or serves as
a trustee or in a similar fiduciary capacity; and (c) any relative or spouse of
such person, or any relative of such person's spouse, who either has the same
home as such person or who is a director or officer of the Holding Company or
the Bank or any of their subsidiaries.
<PAGE> 4
CERTIFICATION FORM
(This Form Must Accompany A Signed Stock Order Form)
I ACKNOWLEDGE THAT THE COMMON SHARES, WITHOUT PAR VALUE ("COMMON
SHARES"), OF HOME LOAN FINANCIAL CORPORATION (THE "HOLDING COMPANY") ARE NOT
DEPOSITS OR ACCOUNTS AND ARE NOT FEDERALLY INSURED, AND ARE NOT GUARANTEED BY
THE HOME LOAN SAVINGS BANK OR BY THE FEDERAL GOVERNMENT.
If anyone asserts that the Common Shares are federally insured or
guaranteed, or are as safe as an insured deposit, I should call the Office of
Thrift Supervision Central Regional Director, Ronald N.
Karr, at (312) 917-5000.
I further certify that, before purchasing the Common Shares of the
Holding Company, I received a copy of the Prospectus dated XXXXX XX, 199X which
discloses the nature of the Common Shares being offered thereby and describes
the following risks involved in an investment in the Common Shares under the
heading "Risk Factors" beginning on page 8 of the Prospectus:
1. Interest Rate Risk
2. Anticipated Low Return on Equity
3. Competition in Primary Market Area
4. Performance of Local Economy
5. Concentration of Credit
6. Limited Market for the Common Shares
7. Uncertainty of Price of the Common Shares Upon Resale
8. Legistration and Regulation Which May Adversely Affect Earnings and
Operations
9. Potential Impact of Benefit Plans on Net Earnings and Shareholders'
Equity
10. Anti-Takeover Provisions Which May Discourage Sales of Common Shares
for Premium Prices
- -------------------------------- ----------------------------------
Signature Signature
- -------------------------------- ----------------------------------
(Note: If shares are to be held jointly, both parties must sign)
Date:_____________________, 1997
<PAGE> 1
Exhibit 99.3
REVOCABLE PROXY
THE HOME LOAN SAVINGS BANK
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE HOME LOAN SAVINGS BANK
The undersigned member of The Home Loan Savings Bank, a savings and
loan association incorporated under Ohio law (the "Bank"), hereby nominates,
constitutes and appoints ____________ and _______________, or either one of
them, as proxy or proxies for the undersigned member, each with full power of
substitution and resubstitution, to vote all of the votes which the undersigned
member is entitled to cast at the Special Meeting of the Members of the Bank to
be held at ____ __.m., Eastern Standard Time, on March __, 1998, at
__________________, Coshocton, Ohio, and at any adjournments thereof (the
"Special Meeting"), on the following matters and in the manner specified below:
1. The approval of the Plan of Conversion, a copy of which is
attached as Exhibit A to the Summary Proxy Statement mailed to the
undersigned member in connection with the Special Meeting.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. The adoption of the Amended Articles of Incorporation of the Bank,
a copy of which is attached to the Plan of Conversion as Exhibit
I.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. The adoption of the Amended Constitution of the Bank, a copy of
which is attached to the Plan of Conversion as Exhibit II.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, upon such other matters as may properly come
before the Special Meeting.
This Revocable Proxy will be voted as directed by the undersigned
member. IF NO DIRECTION IS GIVEN, THIS REVOCABLE PROXY WILL BE VOTED FOR THE
APPROVAL OF THE PLAN OF CONVERSION, FOR THE ADOPTION OF THE AMENDED ARTICLES OF
INCORPORATION AND FOR THE ADOPTION OF THE AMENDED CONSTITUTION.
Without affecting any vote previously taken, this Revocable Proxy may
be revoked by the undersigned at any time before it is exercised by (i)
executing and delivering to the Bank a later dated proxy, or (ii) giving notice
of revocation in writing to the Secretary of the Bank or in open meeting to the
inspectors of election.
IMPORTANT: PLEASE SIGN AND DATE THIS
REVOCABLE PROXY ON THE REVERSE SIDE.
<PAGE> 2
PROXY
Receipt of the Summary Proxy Statement of the Bank and the Prospectus
of Home Loan Financial Corporation dated February __, 1998, is hereby
acknowledged by the undersigned.
-----------------------------------
Signature
Dated: , 1997
---------------------
NOTE: Please sign your name exactly as it appears on this Revocable Proxy. Joint
accounts require only one signature. If you are signing this Revocable Proxy as
an attorney, administrator, agent, corporation, officer, executor, trustee or
guardian, etc., please add your full title to your signature.
IMPORTANT: IF YOU RECEIVE MORE THAN ONE CARD, PLEASE SIGN AND RETURN ALL CARDS
IN THE ACCOMPANYING ENVELOPE.
<PAGE> 1
Exhibit 99.4
PROXY GRAM
We recently forwarded to you a proxy statement and related materials regarding a
proposal to convert The Home Loan Savings Bank from an Ohio mutual savings
institution to an Ohio capital stock savings institution (the "Conversion").
Your vote on our Plan of Conversion has not yet been received. FAILURE TO VOTE
HAS THE SAME EFFECT AS VOTING AGAINST THE CONVERSION.
Your vote is important to us, and we, therefore, are requesting that you sign
the enclosed proxy card and return it promptly in the enclosed postage-paid
envelope.
Voting for the Conversion does not obligate you to purchase common shares of
Home Loan Financial Corporation or affect the terms or insurance on your
accounts.
The Board of Directors unanimously recommends you vote "FOR" the Conversion.
THE HOME LOAN SAVINGS BANK
Coshocton, Ohio
Robert C. Hamilton
President and Chief Executive Officer
If you mailed the proxy, please accept our thanks and disregard this request.
For further information call (614) XXX-XXX.
- --------------------------------------------------------------------------------
The common shares being offered are not savings accounts or deposits and are not
insured by the Federal Deposit Insurance Corporation, the Bank Insurance Fund,
the Savings Association Insurance Fund or any other governmental agency. This is
not an offer to sell or a solicitation of an offer to buy shares. The offer is
made only by the Prospectus of Home Loan Financial Corporation.
<PAGE> 2
STOCK GRAM
We are pleased to announce that The Home Loan Savings Bank ("Home Loan Savings")
is converting from an Ohio savings institution to an Ohio capital stock savings
institution (the "Conversion"). In conjunction with the Conversion, Home Loan
Financial Corporation is offering common shares in a subscription and community
offering (collectively, the "Offering"). The sale of common shares in connection
with the Conversion will enable Home Loan Savings to raise additional capital to
support and enhance its current operations.
We previously mailed to you a PROSPECTUS providing detailed information about
the operations of Home Loan Savings and the proposed Offering. We urge you to
read the Prospectus carefully.
We invite our loyal customers and community members to become shareholders of
HOME LOAN FINANCIAL CORPORATION (THE PROPOSED HOLDING COMPANY FOR HOME LOAN
SAVINGS). If you are interested in purchasing the common shares of Home Loan
Financial Corporation, your signed Stock Order and Certification Form and
payment must be received by Home Loan Savings prior to NOON, COSHOCTON, OHIO
TIME, ON MARCH XX, 1998.
Should you have additional questions regarding the Offering or need additional
materials, please call the Conversion Information Center at (614) XXX-XXXX or
stop by the Conversion Information Center at 401 Main Street in Coshocton.
The common shares being offered are not savings accounts or deposits and are not
insured by the Federal Deposit Insurance Corporation, the Bank Insurance Fund,
the Savings Association Insurance Fund or any other governmental agency. This is
not an offer to sell or a solicitation of an offer to buy shares. The offer is
made only by the Prospectus of Home Loan Financial Corporation.
<PAGE> 3
XXXXX XX, 199X
Dear Member:
We are pleased to announce that The Home Loan Savings Bank ("Home Loan
Savings") is converting from an Ohio mutual savings institution to an Ohio
capital stock savings insitution (the "Conversion"). In conjunction with the
Conversion, Home Loan Financial Corporation, the newly-formed corporation that
will become the holding company for Home Loan Savings, is offering common shares
in a subscription offering and community offering (collectively, the "Offering")
to certain of our depositors, our Employee Stock Ownership Plan and certain
member of the general public, pursuant to a Plan of Conversion.
To accomplish this Conversion, we need your participation in an
important vote. Enclosed is a proxy statement describing the Plan of Conversion
and your voting and subscription rights. Home Loan Savings' Plan of Conversion
has been approved by the Office of Thrift Supervision and now must be approved
by you. YOUR VOTE IS VERY IMPORTANT.
Enclosed, as part of the proxy materials, is your proxy card, located
behind the window of your mailing envelope. This proxy card should be signed and
returned to us prior to the Special Meeting to be held on March XX, 1998. Please
take a moment now to sign the enclosed proxy card and return it to us in the
postage-paid envelope provided. FAILURE TO VOTE HAS THE SAME EFFECT AS VOTING
AGAINST THE CONVERSION.
The Board of Directors of Home Loan Savings feels that the Conversion
will offer a number of advantages, such as an opportunity for depositors of Home
Loan Savings to become shareholders. Please remember:
o Your accounts at Home Loan Savings will continue to be insured up to
the maximum legal limit by the Federal Deposit Insurance Corporation
("FDIC").
o There will be no change in the balance, interest rate, or maturity of
any deposit accounts because of the Conversion, unless you choose to
purchase shares using your account balances.
o Members have a right, but no obligation, to subscribe for common shares
before they are offered to the public.
o Like all stock, the common shares issued in the Offering WILL NOT BE
INSURED BY THE FDIC.
Enclosed are materials describing the Offering. We urge you to read
these materials carefully. If you are interested in purchasing the common shares
of Home Loan Financial Corporation, your Stock Order Form and Certification Form
and payment must be received by Home Loan Savings prior to Noon, Coshocton, Ohio
Time, on March XX, 1998.
If you have additional questions regarding the Offering, please call us
at (614) XXX-XXXX, Monday through Friday from X:XX a.m. to X:XX p.m., or stop by
the Conversion Information Center located at 401 Main Street, Coshocton, Ohio.
Sincerely,
Robert C. Hamilton
President and Chief Executive Officer
THE COMMON SHARES BEING OFFERED IN THIS OFFERING ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
BANK INSURANCE FUND OR THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY SHARES. THE OFFER WILL BE MADE ONLY BY THE PROSPECTUS.
<PAGE> 4
XXXX XX, 199X
Dear Member:
We are pleased to announce that The Home Loan Savings Bank ("Home Loan
Savings") is converting from an Ohio mutual savings institution to an Ohio
capital stock savings institution (the "Conversion"). In conjunction with the
Conversion, Home Loan Financial Corporation, the newly-formed corporation that
will become the holding company for Home Loan Savings, is offering common shares
in a subscription offering and community offering.
Unfortunately, Home Loan Financial Corporation is unable to either
offer or sell its common shares to you because the small number of eligible
subscribers in your jurisdiction makes registration or qualification of the
common shares under the securities laws of your jurisdiction impractical, for
reasons of cost or otherwise. Accordingly, this letter should not be considered
an offer to sell or a solicitation of an offer to buy the common shares of Home
Loan Financial Corporation.
However, as a member of Home Loan Savings, you have the right to vote
on the Plan of Conversion at the Special Meeting of Members to be held on March
XX, 1998. Enclosed is a proxy card, a Proxy Statement (which includes the Notice
of the Special Meeting), a Prospectus (which contains information incorporated
into the Proxy Statement) and a return envelope for your proxy card.
I invite you to attend the Special Meeting on March XX, 1998. However,
whether or not you are able to attend, please complete the enclosed proxy card
and return it in the enclosed envelope.
Sincerely,
Robert C. Hamilton
President and Chief Executive Officer
<PAGE> 5
Charles Webb & Company
KBW Logo a Division of
KEEFE, BRUYETTE & WOODS, INC.
TO MEMBERS AND FRIENDS OF
THE HOME LOAN SAVINGS BANK
- -------------------------------------------------------------------------------
Charles Webb & Company, a Division of Keefe, Bruyette & Woods, Inc. and a member
of the National Association of Securities Dealers, Inc. ("NASD"), is assisting
The Home Loan Savings Bank ("Home Loan Savings") in its conversion from an Ohio
mutual savings institution to an Ohio capital stock savings institution (the
"Conversion") and the concurrent offering of common shares by Home Loan
Financial Corporation (the "Holding Company"), the newly formed corporation that
will become the holding company of Home Loan Savings following the Conversion.
At the request of the Holding Company, we are enclosing materials explaining
this process and your options, including an opportunity to invest in the Holding
Company's common shares being offered to the customers of Home Loan Savings and
the community. Please read the enclosed offering materials carefully. The
Holding Company has asked us to forward these documents to you in view of
certain requirements of the securities laws in your state.
If you have any questions, please visit our Conversion Information Center
located at 401 Main Street, Coshocton, Ohio or feel free to call the Conversion
Information Center at (614) XXX-XXXX.
Very truly yours,
Charles Webb & Company
a Division of Keefe, Bruyette & Woods, Inc.
THE COMMON SHARES BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND,
THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY. THIS IS
NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SHARES.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
- ------------------ Investment Bankers and Financial Advisors -------------------
<PAGE> 6
XXXX XX, 199X
Dear Friend:
We are pleased to announce that The Home Loan Savings Bank ("Home Loan
Savings") is converting from an Ohio mutual savings institution to an Ohio
capital stock savings institution (the "Conversion"). In conjunction with the
Conversion, Home Loan Financial Corporation, the newly-formed corporation that
will become the holding company for Home Loan Savings, is offering common shares
in a subscription offering and community offering (collectively, the "Offering")
to certain depositors, our Employee Stock Ownership Plan and certain members of
the general public, pursuant to a Plan of Conversion. The sale of common shares
in connection with the Conversion will enable Home Loan Savings to raise
additional capital to support and enhance its current operations.
Because we believe you may be interested in learning more about the
merits of the common shares of Home Loan Financial Corporation as an investment,
we are sending you the following materials which describe the Offering.
PROSPECTUS: This document provides detailed information about
operations at Home Loan Savings and the proposed Offering.
QUESTIONS AND ANSWERS: Key questions and answers about the Offering are
found in this pamphlet.
STOCK ORDER FORM & CERTIFICATION FORM: This form is used to purchase
stock by returning it with your payment in the enclosed business reply
envelope. The deadline for ordering stock is Noon, Coshocton, Ohio
Time, on March XX, 1998.
As a friend of Home Loan Savings, you will have the opportunity to buy
common shares directly from Home Loan Financial Corporation in the Conversion
without paying a commission or a fee. If you have additional questions regarding
the Conversion and Offering, please call us at (614) XXX-XXXX Monday through
Friday from X:XX a.m. to X:XX p.m., or stop by the Conversion Information Center
at 401 Main Street, Coshocton, Ohio.
We are pleased to offer you this opportunity to become a shareholder of
Home Loan Financial Corporation.
Sincerely,
Robert C. Hamilton
President and Chief Executive Officer
THE COMMON SHARES BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND,
THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY. THIS IS
NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SHARES.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE> 7
XXX XX, 1997
Dear Prospective Investor:
We are pleased to announce that The Home Loan Savings Bank ("Home Loan
Savings") is converting from an Ohio mutual savings institution to an Ohio
capital stock savings institution (the "Conversion"). In conjunction with the
Conversion, Home Loan Financial Corporation, the newly-formed corporation that
will become the holding company for Home Loan Savings, is offering common shares
in a subscription offering and community offering (collectively, the
"Offering"). The sale of common shares in connection with the Conversion will
enable Home Loan Savings to raise additional capital to support and enhance its
current operations.
We have enclosed the following materials which will help you learn more
about the merits of the Home Loan Financial Corporation as an investment. Please
read and review the materials carefully.
PROSPECTUS: This document provides detailed information about
operations at Home Loan Savings and the proposed Offering.
QUESTIONS AND ANSWERS: Key questions and answers about the stock
offering are found in this pamphlet.
STOCK ORDER FORM & CERTIFICATION FORM: This form is used to purchase
common shares by returning it with your payment in the enclosed
business reply envelope. The deadline for ordering common shares is
Noon, Coshocton, Ohio Time, on March XX, 1998.
We invite our loyal customers and local community members to become
shareholders of Home Loan Financial Corporation. Through the Offering you have
the opportunity to buy common shares directly from Home Loan Financial
Corporation, without paying a commission or a fee. The board of directors and
senior management of Home Loan Savings fully support the Offering.
If you have additional questions regarding the Conversion and Offering,
please call us at (614) XXX-XXXX, Monday through Friday from X:XX a.m. to X:XX
p.m., or stop by the Conversion Information Center located at 401 Main Street,
Coshocton, Ohio.
Sincerely,
Robert C. Hamilton
President and Chief Executive Officer
THE COMMON SHARES BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND,
THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY. THIS IS
NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SHARES.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE> 8
FACTS ABOUT CONVERSION
The Board of Directors of The Home Loan Savings Bank ("Home Loan Savings")
unanimously adopted a Plan of Conversion to convert from an Ohio mutual savings
institution to an Ohio capital stock savings institution (the "Conversion").
This brochure answers some of the most frequently asked questions about the
Conversion and about your opportunity to invest in common shares of Home Loan
Financial Corporation (the "Holding Company"), the newly-formed corporation that
will become the holding company for Home Loan Savings following the Conversion.
Investment in the common shares of Home Loan Financial Corporation involves
certain risks. For a discussion of these risks and other factors, including a
complete description of the offering, INVESTORS ARE URGED TO READ THE
ACCOMPANYING PROSPECTUS, especially the discussion under the heading "Risk
Factors" on page 8.
WHY IS HOME LOAN SAVINGS CONVERTING TO STOCK FORM?
- --------------------------------------------------------------------------------
The stock form of ownership is used by most business corporations and an
increasing number of savings institutions. Through the sale of stock, Home Loan
Savings will raise additional capital enabling it to:
o support and expand its current financial and other services.
o allow customers and friends to purchase common shares and share in the
Holding Company's and Home Loan Savings' future.
WILL THE CONVERSION AFFECT ANY OF MY DEPOSIT ACCOUNTS OR LOANS?
- --------------------------------------------------------------------------------
No. The Conversion will have no effect on the balance or terms of any savings
account or loan, and your deposits will continue to be federally insured by the
Federal Deposit Insurance Corporation ("FDIC") to the maximum legal limit. YOUR
SAVINGS ACCOUNT IS NOT BEING CONVERTED TO STOCK.
WHO IS ELIGIBLE TO PURCHASE COMMON SHARES IN THE SUBSCRIPTION OFFERING AND THE
COMMUNITY OFFERING?
- --------------------------------------------------------------------------------
Certain past and present depositors of Home Loan Savings, the Holding Company's
Employee Stock Ownership Plan and certain members of the general public are
eligible to purchase common shares in the subscription offering and the
community offering.
HOW MANY COMMON SHARES ARE BEING OFFERED AND AT WHAT PRICE?
- --------------------------------------------------------------------------------
Home Loan Financial Corporation is offering up to 1,955,000 common shares,
subject to adjustment as described in the Prospectus, at a price of $10.00 per
share through the Prospectus.
HOW MANY SHARES MAY I BUY?
- --------------------------------------------------------------------------------
The minimum order is 25 common shares. No person, together with associates of,
and persons acting in concert with such person, may purchase more than 30,000
common shares.
WILL THE COMMON SHARES BE INSURED?
- --------------------------------------------------------------------------------
No. Like any other common shares, the Holding Company's common shares will not
be insured.
DO MEMBERS HAVE TO BUY COMMON SHARES?
- --------------------------------------------------------------------------------
No. However, the Conversion will allow depositors of Home Loan Savings an
opportunity to buy common shares and become shareholders of the holding company
for the local financial institution with which they do business.
HOW DO I ORDER COMMON SHARES?
- --------------------------------------------------------------------------------
You must complete the enclosed Stock Order Form and Certification Form.
Instructions for completing your Stock Order Form and Certification Form are
contained in this packet. Your order must be received by Noon, Coshocton, Ohio
Time on March XX, 1998.
HOW MAY I PAY FOR MY COMMON SHARES ?
- --------------------------------------------------------------------------------
First, you may pay for common shares by check, cash or money order. Interest
will be paid by Home Loan Savings on these funds at the passbook rate, which is
currently 2.50% per annum (2.53% APY), from the day the funds are received until
the completion or termination of the Conversion. Second, you may authorize us to
withdraw funds from your savings account or certificate of deposit at Home Loan
Savings for the amount of funds you specify for payment. You will not have
access to these funds from the day we receive your order until completion or
termination of the Conversion.
CAN I PURCHASE SHARES USING FUNDS IN MY HOME LOAN SAVINGS IRA ACCOUNT?
- --------------------------------------------------------------------------------
Federal regulations do not permit the purchase of common shares in connection
with the Conversion from your existing Home Loan Savings IRA account. To
accommodate our depositors, we have made arrangements with an outside trustee to
allow such purchases. Please call our Conversion Information Center for
additional information.
<PAGE> 9
WILL DIVIDENDS BE PAID ON THE COMMON SHARES?
- --------------------------------------------------------------------------------
The Board of Directors of the Holding Company will consider whether to pay a
cash dividend in the future, subject to regulatory limits and requirements. No
decision has been made as to the amount or timing of such dividends, if any.
HOW WILL THE COMMON SHARES BE TRADED?
- --------------------------------------------------------------------------------
The Holding Company's stock is expected to trade on The Nasdaq National Market.
However, no assurance can be given that an active and liquid market will
develop.
ARE OFFICERS AND DIRECTORS OF HOME LOAN SAVINGS PLANNING TO PURCHASE STOCK?
- --------------------------------------------------------------------------------
Yes! The officers and directors of Home Loan Savings plan to purchase, in the
aggregate, $1,650,000 worth of stock or approximately 9.7% of the common shares
offered at the midpoint of the offering range.
MUST I PAY A COMMISSION?
- --------------------------------------------------------------------------------
No. You will not be charged a commission or fee on the purchase of common
shares in the Conversion.
SHOULD I VOTE?
- --------------------------------------------------------------------------------
Yes. Your "YES" vote is very important!
PLEASE VOTE, SIGN AND RETURN ALL PROXY CARDS!
WHY DID I GET SEVERAL PROXY CARDS?
- --------------------------------------------------------------------------------
If you have more than one account, you could receive more than one proxy card,
depending on the ownership structure of your accounts.
HOW MANY VOTES DO I HAVE?
- --------------------------------------------------------------------------------
Your proxy card(s) show(s) the number of votes you have. Every depositor is
entitled to cast one vote for each $100, and a proportionate fractional vote for
an amount of less than $100, on deposit as of the voting record date, up to 50
votes.
MAY I VOTE IN PERSON AT THE SPECIAL MEETING?
- --------------------------------------------------------------------------------
Yes, but we would still like you to sign and mail your proxy today. If you
decide to revoke your proxy you may do so at any time before such proxy is
exercised by executing and delivering a later dated proxy or by giving written
notice of revocation in writing or in open meeting at the special meeting.
Attendance at the special meeting will not, of itself, revoke a proxy.
FOR ADDITIONAL INFORMATION YOU MAY CALL OUR CONVERSION INFORMATION CENTER
MONDAY THROUGH FRIDAY.
CONVERSION
INFORMATION CENTER
(614) XXX-XXXX
Home Loan Financial Corporation
401 Main Street
Coshocton, Ohio 43812
Phone (614) XXX-XXXX
Fax (614) XXX-XXXX
------------------
COMMON SHARE
OFFERING QUESTIONS
AND ANSWERS
------------------
Home Loan Financial Corporation
THE COMMON SHARES BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND,
THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY. THIS IS
NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SHARES.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE> 1
Exhibit 99.5
KELLER & COMPANY, INC.
555 METRO PLACE NORTH
SUITE 524
DUBLIN, OHIO 43017
(614) 766-1426
(614) 766-1459 FAX
October 15, 1997
The Board of Directors
The Home Loan Savings Bank
401 Main Street
Coshocton, Ohio 43812-1580
Re: Conversion Valuation Agreement
Attn: Robert C. Hamilton, President
Keller & Company, Inc. (hereinafter referred to as KELLER) hereby
proposes to prepare an independent conversion appraisal of The Home Loan Savings
Bank, Coshocton, Ohio (hereinafter referred to as HOME), relating to the
conversion of HOME from a mutual to a stock institution. KELLER will provide a
pro forma valuation of the market value of the shares to be sold in the proposed
conversion of HOME.
KELLER is a financial consulting firm that primarily serves the
financial institution industry. KELLER is experienced in evaluating and
appraising thrift institutions and thrift institution holding companies. KELLER
is an experienced conversion appraiser for filings with the Office of Thrift
Supervision ("OTS") and the Federal Deposit Insurance Corporation ("FDIC"), and
is also approved by the Internal Revenue Service as an expert in bank and thrift
stock valuations.
<PAGE> 2
KELLER agrees to prepare the conversion appraisal in the format
required by OTS in a timely manner for prompt filing with OTS and the Securities
and Exchange Commission and also agrees to prepare an analysis of the effect of
the establishment of a charitable foundation in connection with the conversion
in the conversion appraisal. KELLER will provide any additional information as
requested and will complete appraisal updates in accordance with regulatory
requirements.
The appraisal report will provide a detailed description of HOME,
including its financial condition, operating performance, asset quality, rate
sensitivity position, liquidity level and management qualifications. The
appraisal will include a description of HOME's market area, including both
economic and demographic characteristics and trends. An analysis of other
publicly-traded thrift institutions will be performed to determine a comparable
group, and adjustments to the appraised value will be made based on a comparison
of HOME with the comparable group.
In making its appraisal, KELLER will rely upon the information in the
Subscription and Community Offering Circular (Prospectus), including the
financial statements. Among other factors, KELLER will also consider the
following: the present and projected operating results and financial condition
of HOME; the economic and demographic conditions in HOME's existing marketing
area; pertinent historical financial and other information relating to HOME; a
comparative evaluation of the operating and financial statistics of HOME with
those of other thrift institutions; the proposed price per share; the aggregate
size of the offering of common stock; the impact of the conversion on HOME's
capital position and earnings potential; HOME's proposed dividend policy; and
the trading market for securities of comparable institutions and general
conditions in the market for such securities. In preparing the appraisal, KELLER
will rely solely upon, and assume the accuracy and completeness of, financial
and statistical information provided by HOME, and will not independently value
the assets or liabilities of HOME in order to prepare the appraisal.
Upon completion of the conversion appraisal, KELLER will make a
presentation to the board of directors of HOME to review the content of the
appraisal, the format and the assumptions. A written presentation will be
provided to each board member as a part of the overall presentation.
<PAGE> 3
For its services in making this appraisal, KELLER's fee will be
$17,000. The appraisal fee will include the preparation of two valuation updates
and any requested analysis regarding the financial impact of a charitable
foundation in the conversion appraisal. All additional valuation updates will be
subject to an additional fee of $1,000 each. Upon the acceptance of this
proposal, KELLER shall be paid a retainer of $3,000 to be applied to the total
appraisal fee of $17,000, the balance of which will be payable at the time of
the completion of the appraisal.
HOME agrees, by the acceptance of this proposal, to indemnify KELLER
and its employees and affiliates for certain costs and expenses, including
reasonable legal fees, in connection with claims or litigation relating to the
appraisal and arising out of any misstatement or untrue statement of a material
fact in information supplied to KELLER by HOME or by an intentional omission by
HOME to state a material fact in the information so provided, except where
KELLER or its employees and affiliates have been negligent or at fault.
KELLER agrees to indemnify HOME and its employees and affiliates for
certain cost and expenses, including reasonable legal fees, in connection with
claims or litigation relating to or based upon the negligence or willful
misconduct of KELLER or its employees or affiliates.
This proposal will be considered accepted upon the execution of the two
enclosed copies of this agreement and the return of one executed copy to KELLER,
accompanied by the specified retainer.
KELLER & COMPANY, INC.
By: Michael R. Keller
President
THE HOME LOAN SAVINGS BANK
By: Robert C. Hamilton
President
<PAGE> 1
EXHIBIT 99.6
CONVERSION VALUATION APPRAISAL REPORT
Prepared for:
THE HOME LOAN SAVINGS BANK
and
HOME LOAN FINANCIAL CORPORATION
Coshocton, Ohio
As Of:
November 28, 1997
Prepared By:
KELLER & COMPANY, INC.
555 Metro Place North
Suite 524
Dublin, Ohio 43017
(614) 766-1426
KELLER & COMPANY
<PAGE> 2
CONVERSION VALUATION APPRAISAL REPORT
Prepared for:
THE HOME LOAN SAVINGS BANK
and
HOME LOAN FINANCIAL CORPORATION
Coshocton, Ohio
As Of:
November 28, 1997
Prepared By:
Michael R. Keller
President
<PAGE> 3
KELLER & COMPANY, INC.
555 METRO PLACE NORTH
SUITE 524
DUBLIN, OHIO 43017
(614) 766-1426
(614) 766-1459 FAX
December 8, 1997
Board of Directors
The Home Loan Savings Bank
401 Main Street
Coshocton, OH 43810
Gentlemen:
We hereby submit an independent appraisal of the pro forma market value of the
to-be-issued stock of Home Loan Financial Corporation ("Corporation"), which is
the newly formed holding company of The Home Loan Savings Bank, Coshocton,
Ohio ("Home" or the "Bank"). The Corporation will hold all of the shares of the
common stock of the Bank. Such stock is to be issued in connection with the
Bank's conversion from a federally chartered mutual savings bank to a federally
chartered stock savings bank in accordance with the Bank's Plan of Conversion.
This appraisal was prepared and provided to the Bank in accordance with the
conversion requirements and regulations of the Office of Thrift Supervision of
the United States Department of the Treasury.
Keller & Company, Inc. is an independent financial institution consulting firm
that serves both banks and thrift institutions. The firm is a full-service
consulting organization, as described in more detail in Exhibit A specializing
in market studies, business and strategic plans, stock valuations, conversion
appraisals, and fairness opinions for thrift institutions and banks. The firm
has affirmed its independence in this transaction with the preparation of its
Affidavit of Independence, a copy of which is included as Exhibit C.
Our appraisal is based on the assumption that the data provided to us by Home
and the material provided by the independent auditor, Crowe, Chizek and
Company, Columbus, Ohio, are both accurate and complete. We did not proceed to
verify the financial statements provided to us, nor did we conduct independent
valuations of the Bank's assets and liabilities. We have also used information
from other public sources, but we cannot assure the accuracy of such material.
<PAGE> 4
Board of Directors
The Home Loan Savings Bank
December 8, 1997
Page 2
In the preparation of this appraisal we held discussions with the management of
Home, with the law firm of Vorys, Sater, Seymour & Pease, Cincinnati, Ohio, the
Bank's conversion counsel, and with Crowe, Chizek & Company. Further, we viewed
the Bank's local economy and primary market area.
The valuation must not be considered as a recommendation as to the purchase of
stock in the Corporation, and we can provide no guarantee or assurance that any
person who purchases shares of the Corporation's stock in this conversion will
be able to later sell such shares at a price equivalent to the price
designated in this appraisal.
Our valuation will be updated as required and will give consideration to any
new developments in the Bank's operation that have an impact on operations or
financial condition. Further, we will give consideration to any changes in
general market conditions and to specific changes in the market for
publicly-traded thrift institutions. Based on the material impact of any such
changes on the pro forma market value of the Bank as determined by this firm,
we will make necessary adjustments to the Bank's appraisal value in such
appraisal update.
It is our opinion that as of November 28, 1997, the pro forma market value or
appraised value of the Corporation was $17,000,000. Further, a range for this
valuation is from a minimum of $14,450,000 to a maximum of $19,550,000, with a
super-maximum of $22,482,500.
Very truly yours,
KELLER & COMPANY, INC.
/s/ Michael R. Keller
Michael R. Keller
President
<PAGE> 5
TABLE OF CONTENTS
PAGE
INTRODUCTION 1
I. DESCRIPTION OF THE HOME LOAN SAVINGS BANK
General 4
Performance Overview 7
Income and Expense 10
Yields and Costs 16
Interest Rate Sensitivity 17
Lending Activities 20
Non-Performing Assets 24
Investments 26
Deposit Activities 26
Borrowings 27
Subsidiaries 27
Office Properties 28
Management 28
II. DESCRIPTION OF PRIMARY MARKET AREA 29
III. COMPARABLE GROUP SELECTION
Introduction 35
General Parameters
Merger/Acquisition 36
Mutual Holding Companies 37
Trading Exchange 37
IPO Date 38
Geographic Location 38
Asset Size 39
Balance Sheet Parameters
Introduction 40
Cash and Investments to Assets 40
Mortgage-Backed Securities to Assets 41
One- to Four-Family Loans to Assets 41
Total Net Loans to Assets 42
Total Net Loans and Mortgage-Backed Securities to Assets 42
Borrowed Funds to Assets 43
Equity to Assets 43
Performance Parameters
Introduction 44
<PAGE> 6
TABLE OF CONTENTS (CONT.)
PAGE
III. COMPARABLE GROUP SELECTION (CONT.)
Performance Parameters (cont.)
Return on Average Assets 44
Return on Average Equity 45
Net Interest Margin 46
Operating Expenses to Assets 46
Noninterest Income to Assets 47
Asset Quality Parameters
Introduction 47
Nonperforming Assets to Asset Ratio 48
Repossessed Assets to Assets 48
Allowance for Loan Losses to Assets 48
The Comparable Group 49
Summary of Comparable Group Institutions 50
IV. ANALYSIS OF FINANCIAL PERFORMANCE 64
V. MARKET VALUE ADJUSTMENTS
Earnings Performance 67
Market Area 71
Financial Condition 72
Asset and Deposit Growth 74
Dividend Payments 75
Subscription Interest 75
Liquidity of Stock 76
Management 76
Marketing of the Issue 77
VI. VALUATION METHODS 79
Price to Book Value Ratio Method 80
Price to Earnings Method 81
Price to Net Assets Method 82
Valuation Conclusion 84
<PAGE> 7
LIST OF EXHIBITS
NUMERICAL PAGE
EXHIBITS
1 Balance Sheets - At September 30, 1997 and
June 30, 1997, 85
2 Balance Sheets - At June 30, 1993
through 1996 86
3 Statement of Income - Three months ended
September 30, 1997 and 1996, and
Year Ended June 30, 1997 87
4 Statements of Income - June 30,
1993 through 1996 88
5 Selected Financial Condition Data 89
6 Income and Expense Trends 90
7 Normalized Earnings Trend 91
8 Performance Indicators 92
9 Volume/Rate Analysis 93
10 Yield and Cost Trends 94
11 Net Portfolio Value 95
12 Loan Portfolio Composition 96
13 Loan Maturity Schedule 97
14 Loan Originations 98
15 Delinquent Loans 99
16 Nonperforming Assets 100
17 Classified Assets 101
18 Allowance for Loan Losses 102
19 Investment Portfolio Composition 103
20 Mix of Deposits 104
21 Deposit Activity 105
22 Offices of The Home Loan Savings Bank 106
23 List of Key Officers and Directors 107
24 Key Demographic Data and Trends 108
25 Key Housing Data 109
26 Major Sources of Employment 110
27 Unemployment Rates 111
28 Market Share of Deposits 112
29 National Interest Rates by Quarter 113
30 Thrift Stock Prices and Pricing Ratios 114
31 Key Financial Data and Ratios 126
32 Recently Converted Thrift Institutions 139
33 Acquisitions and Pending Acquisitions 140
<PAGE> 8
LIST OF EXHIBITS (CONT.)
NUMERICAL PAGE
EXHIBITS
34 Thrift Stock Prices and Pricing Ratios -
Mutual Holding Companies 141
35 Key Financial Data and Ratios -
Mutual Holding Companies 142
36 Balance Sheets Parameters -
Comparable Group Selection 143
37 Operating Performance and Asset Quality Parameters -
Comparable Group Selection 146
38 Balance Sheet Ratios -
Final Comparable Group 149
39 Operating Performance and Asset Quality Ratios
Final Comparable Group 150
40 Balance Sheet Totals - Final Comparable Group 151
41 Balance Sheet - Asset Composition
Most Recent Quarter 152
42 Balance Sheet - Liability and Equity
Most Recent Quarter 153
43 Income and Expense Comparison
Trailing Four Quarters 154
44 Income and Expense Comparison as a Percent of
Average Assets - Trailing Four Quarters 155
45 Yields, Costs and Earnings Ratios
Trailing Four Quarters 156
46 Dividends, Reserves and Supplemental Data 157
47 Valuation Analysis and Conclusions 158
48 Market Pricings and Financial Ratios - Stock Prices
Comparable Group 159
49 Pro Forma Minimum Valuation 160
50 Pro Forma Mid-Point Valuation 161
51 Pro Forma Maximum Valuation 162
52 Pro Forma Superrange Valuation 163
53 Summary of Valuation Premium or Discount 164
<PAGE> 9
ALPHABETICAL EXHIBITS
PAGE
A Background and Qualifications 165
B RB 20 Certification 169
C Affidavit of Independence 170
<PAGE> 10
INTRODUCTION
Keller & Company, Inc. is an independent appraisal firm for financial
institutions, and has prepared this Conversion Appraisal Report ("Report") to
provide the pro forma market value of the to-be-issued common stock of Home Loan
Financial Corporation (the "Corporation"), an Ohio corporation, formed as a
holding company to own all of the to-be-issued shares of common stock of The
Home Loan Savings Bank, Coshocton, Ohio ("Home" or the "Bank"). The stock is to
be issued in connection with the Bank's Application for Approval of Conversion
from a state chartered mutual savings and loan association to a state chartered
stock savings and loan association. The Application is being filed with the
Office of Thrift Supervision ("OTS") of the Department of the Treasury and the
Securities and Exchange Commission ("SEC"). In accordance with the Bank's
conversion, there will be a simultaneous issuance of all the Bank's stock to the
Corporation, which will be formed by the Bank. Such Application for Conversion
has been reviewed by us, including the Prospectus and related documents, and
discussed with the Bank's management and the Bank's conversion counsel, Vorys,
Sater, Seymour and Pease, Cincinnati, Ohio.
This conversion appraisal was prepared based on the guidelines provided
by OTS entitled "Guidelines for Appraisal Reports for the Valuation of Savings
Institutions Converting from the Mutual to Stock Form of Organization", in
accordance with the OTS application requirements of Regulation Sec.563b and the
OTS's Revised Guidelines for Appraisal Reports, and represents a full appraisal
report. The Report provides detailed exhibits based on the Revised Guidelines
and a discussion on each of the fourteen factors that need to be considered. Our
valuation will be updated in accordance with the Revised Guidelines and will
consider any changes in market conditions for thrift institutions.
The pro forma market value is defined as the price at which the stock
of the Corporation after conversion would change hands between a typical willing
buyer and a
1
<PAGE> 11
INTRODUCTION (CONT.)
typical willing seller when the former is not under any compulsion to buy and
the latter is not under any compulsion to sell, and with both parties having
reasonable knowledge of relevant facts in an arms-length transaction. The
appraisal assumes the Bank is a going concern and that the shares issued by the
Corporation in the conversion are sold in non-control blocks.
In preparing this conversion appraisal, we have reviewed the financial
statements for the five fiscal years ended June 30, 1993 through 1997, as well
as the financial statements for the three months ended September 30, 1996 and
1997, and discussed them with Home's management and with Home's independent
auditors, Crow, Chizek and Company, LLP, Columbus, Ohio. We have also discussed
and reviewed with management other financial matters and have reviewed internal
projections. We have reviewed the Corporation's preliminary Form S-1 and the
Bank's preliminary Form AC and discussed them with management and with the
Bank's conversion counsel.
We have visited Home's two offices and have traveled the surrounding
area. We have studied the economic and demographic characteristics of the
primary market area, and analyzed the Bank's primary market area relative to
Ohio and the United States. We have also examined the competitive market within
which Home operates, giving consideration to the area's numerous financial
institution offices, mortgage banking offices, and a credit union office and
other key characteristics, both positive and negative.
We have given consideration to the market conditions for securities in
general and for publicly-traded thrift stocks in particular. We have examined
the performance of selected publicly-traded thrift institutions and compared the
performance of Home to those selected institutions.
2
<PAGE> 12
INTRODUCTION (CONT.)
Our valuation is not intended to represent and must not be interpreted
to be a recommendation of any kind as to the desirability of purchasing the
to-be-outstanding shares of common stock of the Corporation. Giving
consideration to the fact that this appraisal is based on numerous factors that
can change over time, we can provide no assurance that any person who purchases
the stock of the Corporation in this mutual-to-stock conversion will
subsequently be able to sell such shares at prices similar to the pro forma
market value of the Corporation as determined in this conversion appraisal.
3
<PAGE> 13
I. DESCRIPTION OF THE HOME LOAN SAVINGS BANK
GENERAL
The Home Loan Savings Bank, Coshocton, Ohio, was organized in 1882 as
an Ohio-chartered mutual savings and loan association with the name of The Home
Building, Loan and Savings Company, Coshocton, Ohio. The Bank changed its name
to The Home Loan and Savings Company in 1937. In 1996, the Bank changed its name
again to The Home Loan Savings Bank but did not convert its charter to a savings
bank charter.
Home conducts its business from its main office in Coshocton, Ohio, and
its nearby branch office also in Coshocton. The Bank serves its customers from
these two offices. The Bank's market area is comprised of Coshocton County with
Coshocton City representing the core of the market area population.
Home's deposits are insured up to applicable limits by the Federal
Deposit Insurance Corporation ("FDIC") in the Savings Association Insurance Fund
("SAIF"). The Bank is also subject to certain reserve requirements of the Board
of Governors of the Federal Reserve Bank (the "FRB"). Home is a member of the
Federal Home Loan Bank (the "FHLB") of Cincinnati and is regulated by the OTS
and by the FDIC. As of September 30, 1997, Home had assets of $59,853,000,
deposits of $48,208,000 and retained earnings of $10,579,000.
Home is a community-oriented institution which has been principally
engaged in the business of serving the financial needs of the public in its
local communities and throughout its market area. Home has been actively and
consistently involved in the origination of residential mortgage loans of one-
to four-family dwellings, which represented 44.4 percent of its loan
originations during the three months ended September 30, 1997, and a similar
44.2 percent of its loan originations during the fiscal year ended June 30,
1997. Consumer loan originations represented a strong 31.7 percent and 38.2
percent of total originations for the same respective time periods. At September
30, 1997,
4
<PAGE> 14
GENERAL (CONT.)
70.0 percent of its gross loans consisted of residential real estate loans on
one- to four-family dwellings, not including residential construction loans,
compared to a higher 72.6 percent at June 30, 1993, with the primary source of
funds being retail deposits from residents in its local communities. The Bank is
also an originator of home equity loans, commercial real estate loans,
construction and land loans, commercial loans and consumer loans. Consumer loans
include new and used automobile loans, home improvement loans, loans on savings
accounts, credit card advances and secured and unsecured personal loans.
The Bank had $7.1 million, or 11.9 percent of its assets in cash and
investments including FHLB stock. The Bank had no mortgage-backed securities.
Deposits and retained earnings have been the primary sources of funds for the
Bank's lending and investment activities. The Bank has not used FHLB advances
during the past five years.
The Bank's gross amount of stock to be sold in the subscription and
community offering will be $17,000,000 or 1,700,000 shares at $10 per share
based on the midpoint of the appraised value of $17.0 million, with net
conversion proceeds of $16,513,000 reflecting conversion expenses of
approximately $487,000. The actual cash proceeds to the Bank will be $8.3
million representing fifty percent of the net conversion proceeds. The ESOP will
represent 8.0 percent of the gross shares issued or 136,000 shares at $10 per
share, representing $1,360,000. The Bank's net proceeds will be invested in
adjustable-rate and fixed-rate mortgage loans, consumer loans and commercial
loans, and initially invested in short term investments. The Bank may also use
the proceeds to expand services, expand operations or acquire other financial
service organizations, diversification into other businesses, or for any other
purposes authorized by law. The Holding Company will use its proceeds to fund
the ESOP, to invest in short- and intermediate-term government or federal agency
securities or possibly to purchase mortgage-backed and related securities.
5
<PAGE> 15
GENERAL (CONT.)
Home has seen a moderate overall deposit increase over the past four
fiscal years with deposits increasing 26.5 percent from June 30, 1993, to June
30, 1997, or an average of 6.6 percent per year. From June 30, 1997, to
September 30, 1997, deposits decreased by 2.1 percent or 8.3 percent,
annualized, compared to a 9.7 percent growth rate in fiscal 1997. The Bank has
focused on increasing its residential real estate loan portfolio and consumer
and commercial loans during the past five years, monitoring its earnings and
strengthening its equity to assets ratio. Equity to assets increased from 16.10
percent of assets at June 30, 1993, to 17.17 percent at June 30, 1997, and then
increased to 17.70 percent at September 30, 1997.
Home's primary lending strategy has been to focus on the origination of
adjustable-rate one- to four-family loans, the origination of non-residential
mortgage loans, the origination of commercial loans and construction loans and
the origination of consumer loans.
Home's share of one- to four-family mortgage loans has decreased
modestly, declining from 72.6 percent of gross loans at June 30, 1996 to 70.0
percent as of September 30, 1997. Construction and land loans increased from
1.67 percent of gross loans at June 30, 1996, to 1.71 percent at September 30,
1997. Non-residential loans increased from 6.6 percent to 7.0 percent and home
equity loans decreased from 2.2 percent to 1.6 percent from June 30, 1996, to
September 30, 1997. All types of mortgage loans as a group decreased moderately
from 83.0 percent of gross loans in 1996 to 80.2 percent at September 30, 1997.
The decrease in mortgage loans was offset by the Bank's moderate increase in
commercial loans and consumer loans. Commercial loans increased from 2.1 percent
of loans in 1996 to 3.2 percent of loans at September 30, 1997. The Bank's share
of consumer loans witnessed an increase in its share of loans from 14.9 percent
at June 30, 1996, to 16.5 percent at September 30, 1997, and the level of
consumer loans increased from $6.7 million to $8.7 million due primarily to
growth in home improvement loans and automobile loans.
6
<PAGE> 16
GENERAL (CONT.)
Management's internal strategy has also included continued emphasis on
maintaining an adequate and appropriate allowance for loan losses relative to
loans and nonperforming assets in recognition of the more stringent requirements
within the industry to establish and maintain a higher level of general
valuation allowances and also in recognition of the Bank's continued increase in
lending particularly commercial and consumer loans. At June 30, 1996, Home had
$117,000 in its loan loss allowance or 0.26 percent of gross loans, which
increased to $148,000 and represented a similar 0.29 percent of gross loans at
September 30, 1997.
Interest income from loans and investments has been the basis of
earnings with the net interest margin being the key determinant of net earnings.
With a dependence on net interest margin for earnings, current management will
focus on strengthening the Bank's net interest margin without undertaking
excessive credit risk and will not pursue any significant change in its interest
rate risk position.
PERFORMANCE OVERVIEW
Home's financial position over the past five fiscal years of June 30,
1993, through June 30, 1997, and for the three months ended September 30, 1997,
is highlighted through the use of selected financial data in Exhibit 5. Home has
focused on maintaining its retained income and overall earnings, increasing its
loan levels, reducing its investments, and maintaining its net interest margin.
Home has experienced a moderate increase in assets from 1993 to 1997 with a
similar increase in deposits, and a rise in retained earnings over the past five
fiscal years. Such increases were the result of major increases in loans, assets
and deposits 1996 and 1997 deposits and consistent growth in equity with each of
these having increased each fiscal year.
Home witnessed a total increase in assets of $13.5 million or 28.9
percent for the period of June 30, 1993, to June 30, 1997, representing an
average annual increase in assets of 7.2 percent. For the year ended June 30,
1997, assets increased $5.0 million or
7
<PAGE> 17
PERFORMANCE OVERVIEW (CONT.)
9.1 percent. For the three months ended September 30, 1997, the Bank's assets
decreased $548,000 or 0.9 percent. Over the past four fiscal periods, the Bank
experienced its largest dollar rise in assets of $6.3 million in fiscal year
1996, which represented a strong 12.8 percent increase in assets funded by a
rise in deposits. This increase was preceded by a $847,000 or 1.8 percent
increase in assets in fiscal year 1995 an increase of 3.0 percent in 1994.
The Bank's net loan portfolio, including mortgage loans and
non-mortgage loans, increased from $31.1 million at June 30, 1993, to $51.8
million at September 30, 1997, and represented a total increase of a strong
$20.7 million, or 66.6 percent. The average annual increase during that period
was 15.67 percent. That increase was primarily the result of higher levels of
loan originations of one- to four-family loans, commercial loans and consumer
loans. For the year ended June 30, 1997, loans increased $5.0 million or 11.3
percent. For the three months ended September 30, 1997, net loans then increased
$2.5 million or 5.0 percent representing 20.0 percent, annualized.
Home has pursued obtaining funds through deposits and reduction in
investments in accordance with the demand for loans. The Bank's competitive
rates for savings in its local market in conjunction with its focus on services
have been the sources for attracting retail deposits. Deposits increased 1.6
percent from 1993 to 1994, followed by a 0.03 percent decrease in fiscal year
1995, and then strong increases of 13.5 percent in 1996 and 9.7 percent in 1997,
with an average annual rate of increase of 6.2 percent from June 30, 1993, to
June 30, 1997. For the three months ended September 30, 1997, deposits decreased
by $1.0 million or 2.1 percent, annualized to 8.4 percent. The Bank's strongest
fiscal year deposit growth was in 1996, when deposits increased $5.3 million or
13.6 percent. The Bank had no FHLB advances during the past five fiscal years.
8
<PAGE> 18
PERFORMANCE OVERVIEW (CONT.)
Home has been able to increase its retained earnings each fiscal year
from 1993 through 1997. At June 30, 1993, the Bank had retained earnings of $7.5
million representing a 16.10 percent retained earnings to assets ratio and then
increasing to $10.4 million at June 30, 1997, and representing a 17.17 percent
retained earnings to assets ratio. At September 30, 1997, retained earnings was
a higher $10.6 million and a higher 17.70 percent of assets. The rise in the
equity to assets ratio from 1993 to 1997 is the result of the Bank's steady
earnings performance impacted by the Bank's moderate rise in assets. Retained
earnings increased 37.3 percent from June 30, 1993, to June 30, 1997,
representing an average annual increase of 9.3 percent and increased 2.1 percent
for the three months ended September 30, 1997, or 8.4 percent, annually.
9
<PAGE> 19
INCOME AND EXPENSE
Exhibit 6 presents selected operating data for Home, reflecting the
Bank's income and expense trends. This table provides key income and expense
figures in dollars for the fiscal years of 1993 through 1997 and income and
expense figures for the three months ended September 30, 1996 and 1997.
Home has witnessed an overall increase in its dollar level of interest
income from June 30, 1993, through June 30, 1997, due to the Bank's growth in
assets, primarily loans. Interest income ranged from a high of $4.6 million in
1997 to a low of $3.4 million in 1994, and then increasing thereafter to $4.6
million in 1997. This overall trend was a combination of a decrease of 4.4
percent from 1993 to 1994 followed by moderate increases from 1994 to 1997. In
fiscal year 1997, interest income increased $350,000 or 8.2 percent to $4.6
million. For the three months ended September 30, 1997, interest income was $1.3
million, compared to $1.1 million for the three months ended September 30, 1996,
suggesting a continuation of the fiscal 1997 increase. The overall increase in
interest income was due primarily to the Bank's increase in its loan portfolio.
The Bank's interest expense experienced a similar trend with a decrease
in 1994 followed by increases from fiscal year 1994 to 1997. Interest expense
decreased $181,000 or 13.8 percent, from 1993 to 1994, compared to a smaller
decrease in interest income of $153,000 or 4.4 percent, for the same time
period. Interest expense then increased $796,000 or 70.0 percent from 1994 to
1997, compared to an increase in interest income of $1.3 million or 37.5
percent. From 1996 to 1997, interest expense increased $228,000 or 13.4 percent
compared to an increase in interest income of $350,000 or 20.6 percent. Such
increase in interest income, notwithstanding the increase in interest expense,
resulted in a moderate dollar increase in annual net interest income of $122,000
or 4.8 percent for the fiscal year ended June 30, 1997, but a decrease in net
interest margin. Net interest income increased from $2,190,000 in 1993, its
lowest level, to $2,678,000 in 1997. For the three months ended September 30,
1997, Home's actual net interest income was $737,000, or $2.9 million,
annualized, which was modestly higher than the $695,000 for the three months
ended September 30, 1996, or $2.8 million, annualized.
10
<PAGE> 20
INCOME AND EXPENSE (CONT.)
The Bank has made provisions for loan losses in four of the past five
fiscal years of 1993 through 1997 and also in the three months ended September
30, 1997. The amounts of those provisions were determined in recognition of the
Bank's levels of nonperforming assets, charge-offs, repossessed assets, the
Bank's rise in lending activity, and industry norms. The loan loss provisions
were $10,000 in 1993, $13,000 in 1994, $2,000 in 1995, $6,000 in 1997 and
$30,000 in the three months ended September 30, 1997. The impact of these loan
loss provisions has been to provide Home with a general valuation allowance of
$148,000 at September 30, 1997, or 0.29 percent of gross loans and 243.0 percent
of nonperforming assets.
Total other income or noninterest income indicated overall stable
levels in fiscal years 1993 to 1997. The highest level of noninterest income was
in fiscal year 1997 at $175,000 or 0.29 percent of assets and the lowest level
at $137,000 was in 1993, representing 0.29 percent of assets. The average
noninterest income level for the past five fiscal years was $157,600 or a
moderate 0.31 percent of average assets. In the three months ended September 30,
1997, noninterest income was $43,000 or 0.29 percent of assets on an annualized
basis, similar to fiscal year 1997. Noninterest income consists primarily of
service charges, fees and other income.
The Bank's general and administrative expenses or noninterest expenses
increased from $1,059,000 for the fiscal year of 1993 to $1,943,000 for the
fiscal year ended June 30, 1997, which includes the one-time SAIF assessment of
$261,000, resulting in core expenses of a lower $1,682,000, when one excludes
the SAIF assessment. The dollar increase in core noninterest expenses was
$623,000 from 1993 to 1997, representing an average annual increase of $155,750
or 10.9 percent. The average annual increase in other expenses was due primarily
to the Bank's normal rise in overhead expenses. On a percent of average assets
basis, core operating expenses increased from 2.27 percent of average assets for
the fiscal year ended June 30, 1993, to 2.91 percent for the fiscal year ended
June 30, 1997, or 3.39 percent based on total expenses. For the three months
ended September 30, 1997, Home's ratio of operating expenses to average assets
was a lower 2.73 percent, but still above the industry norm.
11
<PAGE> 21
INCOME AND EXPENSE (CONT.)
The net earnings position of Home has indicated profitable performance
in each of the past five fiscal years ended June 30, 1993 through 1997, and for
the three months ended September 30, 1997. The annual net income figures for the
past five fiscal years of 1993, 1994, 1995, 1996 and 1997 have been $823,000,
$737,000, $716,000, $770,000, and $595,000, representing returns on average
assets of 1.77 percent, 1.55 percent, 1.47 percent, 1.47 percent, and 1.04
percent, respectively. For the three months ended September 30, 1997, net
earnings were $213,000, representing an annualized return on average assets of
1.40 percent.
Exhibit 7 provides the Bank's normalized earnings or core earnings for
fiscal years 1996 and 1997 and for the twelve months ended September 30, 1997.
The Bank's normalized earnings eliminate any nonrecurring income and expense
items. There were no adjustments for fiscal year 1996 or for the twelve months
ended September 30, 1997. In fiscal 1997, there was an expense adjustment of
$261,000 to eliminate the one time SAIF assessment.
The key performance indicators comprised of selected operating ratios,
asset quality ratios and capital ratios are shown in Exhibit 8 to reflect the
results of performance. The Bank's return on assets decreased from 1.77 percent
in fiscal year 1993 to 1.55 percent in 1994, decreasing to 1.47 percent in
fiscal year 1995, and then down to 1.04 percent in 1997. It was a moderately
higher level for the three months ended September 30, 1997, of 1.40 percent,
annualized.
The Bank's average net interest rate spread increased from 4.43 percent
in fiscal year 1993 to 4.46 percent in fiscal year 1994, increased to 4.52
percent in 1995 and then decreased during the next two fiscal years to 4.25
percent in 1997. For the three months ended September 30, 1997, net interest
spread was a higher 4.36 percent, annualized. The Bank's net interest margin
indicated a similar trend, increasing from 4.88 percent in fiscal year 1993 to
5.04 percent in fiscal year 1995, then decreasing to 4.88 percent in fiscal
1997, and then increasing to 5.03 percent for the three months ended September
30, 1997, annualized. Home's net interest rate spread increased 3 basis points
in 1994 to 4.46 percent
12
<PAGE> 22
INCOME AND EXPENSE (CONT.)
from 4.43 percent in 1993 and then increased 6 basis points in 1995 to 4.52
percent. Net interest rate spread then decreased 7 basis points to 4.45 percent
in fiscal year 1996 and decreased another 20 basis points to 4.25 percent for
the fiscal year ended June 30, 1997. The Bank's net interest margin followed a
similar trend, decreasing 1 basis points to 4.87 percent in 1994 and then
increasing 17 basis points to 5.04 percent in 1995. Net interest margin
increased 6 basis points to 5.10 percent in 1996 and then decreased to 4.88
percent in 1997. For the three months ended September 30, 1997, Home's
annualized net interest spread was a higher 4.36 percent, and its net interest
margin was a higher 5.03 percent.
The Bank's return on average equity decreased from 1993 to 1997. The
return on average equity decreased from 11.50 percent in 1993 to 9.33 percent in
fiscal year 1994, to 8.32 percent in fiscal year 1995. The return on average
equity then decreased to 8.20 percent in fiscal year 1996, and then decreased to
5.94 percent for the fiscal year ended June 30, 1997. For the three months ended
September 30, 1997, return on average equity was a higher 8.06 percent,
annualized.
Home's ratio of interest-earning assets to interest-bearing liabilities
increased gradually from 115.0 percent at June 30, 1993, to 118.0 percent at
June 30, 1997, to a higher 119.0 percent at September 30, 1997.
The Bank's ratio of non-interest expenses to average assets increased
from 2.27 percent in fiscal year 1993 to a higher 3.39 percent in fiscal year
1997, primarily due to the one time SAIF assessment. For the three months ended
September 30, 1997, noninterest expenses to assets decreased to 2.73 percent.
Another key noninterest expense ratio reflecting efficiency of operation is the
ratio of noninterest expenses to noninterest income plus net interest income
referred to as the "efficiency ratio". The industry norm is 64.0 percent with
the lower the ratio indicating higher efficiency. The Bank has been
characterized with a higher level of efficiency historically reflected in its
lower efficiency ratio, which increased from 45.60 percent in 1993 to 68.09
percent in 1997 as a result of
13
<PAGE> 23
INCOME AND EXPENSE (CONT.)
the one-time SAIF assessment. The ratio then decreased to 53.19 percent for the
three months ended September 30, 1997.
Earnings performance can be affected by an institution's asset quality
position. The ratio of nonperforming assets to total assets is a key indicator
of asset quality. Home witnessed an increase in its nonperforming asset ratio
from 1993 to 1997, but the ratio was minimal. Nonperforming assets consist of
loans delinquent 90 days or more, nonaccruing loans and repossessed assets. The
ratio of nonperforming assets to total assets was zero at June 30, 1993, and
increased to 0.06 percent at June 30, 1994. The ratio then decreased to 0.03
percent in 1995, increased 0.16 percent in 1996 and decreased to 0.05 percent in
1997. At September 30, 1997, Home's ratio of nonperforming assets to total
assets increased to 0.10 percent. The Bank's allowance for loan losses was 0.35
percent of loans at June 30, 1993, and decreased to 0.24 percent at June 30,
1997, resulting primarily from the increase in loans and then increased to 0.29
percent at September 30, 1997. As a percentage of nonperforming loans, Home's
allowance for loan losses was 431.09 percent in 1994 and 361.27 percent in 1997.
At September 30, 1997, the ratio decreased to 242.99 percent reflective of an
increase in the allowance for loan losses combined with a rise in nonperforming
loans.
Exhibit 9 provides the changes in net interest income due to rate and
volume changes for the past two fiscal years of 1996 and 1997 and for the three
months ended September 30, 1997. In fiscal year 1996, net interest income
increased $191,000, due to an increase in interest income of $563,000 reduced by
a $372,000 increase in interest expense. The increase in interest income was due
to an increase due to rate of $249,000 accented by an increase due to volume of
$314,000. The increase in interest expense was due to an increase due to rate of
$216,000 accented by an increase due to a change in volume of $199,000.
14
<PAGE> 24
INCOME AND EXPENSE (CONT.)
In fiscal year 1997, net interest income increased $122,000, due to a
$350,000 increase in interest income reduced by a $225,000 increase in interest
expense. The increase in interest income was due to a $421,000 increase due to
volume reduced by a $71,000 decrease due to rate. The increase in interest
expense was due to a $12,000 increase due to rate accented by $213,000 increase
due to volume.
For the three months ended September 30, 1997, compared to the three
months ended September 30, 1996, net interest income increased $42,000 due to a
$122,000 increase in interest income reduced by a $80,000 increase in interest
expense. The rise in interest income was due to a $113,000 increase due to
volume accented by a $9,000 increase due to rate. The rise in interest expense
was the result of an increase due to rate of $24,000 accented by an increase due
to volume of $56,000.
15
<PAGE> 25
YIELDS AND COSTS
The overview of yield and cost trends for the years ended June 30, 1995
to 1997, for the three months ended September 30, 1997, and at September 30,
1997, can be seen in Exhibit 10, which offers a summary of key yields on
interest-earning assets and costs of interest-bearing liabilities.
Home's weighted average yield on its loan portfolio increased 42 basis
points from fiscal year 1995 to 1997, from 8.39 percent to 8.81 percent, and
then increased 9 basis points to 8.90 percent for the three months ended
September 30, 1997. The yield on investment securities decreased 64 basis points
from 6.66 percent in 1995 to 6.02 percent in 1997 and then increased 4 basis
points to 6.06 percent for the three months ended September 30, 1997. The yield
on interest-bearing deposits decreased 26 basis points from fiscal year 1995 to
1997, from 5.59 percent to 5.33 percent and then increased 111 basis points to
6.44 percent for the three months ended September 30, 1997. The combined
weighted average yield on all interest-earning assets increased 52 basis points
to 8.40 percent from 1995 to 1997. The yield on interest-earning assets for the
three months ended September 30, 1997, was a higher 8.56 percent, while the
yield at September 30, 1997, was a lower 8.35 percent.
Home's weighted average cost of interest-bearing liabilities increased
68 basis points to 3.36 percent from fiscal year 1995 to 1996, which was greater
than the Bank's 61 basis point increase in yield, resulting in a decrease in the
Bank's interest rate spread of 7 basis points from 4.52 percent to 4.45 percent
from 1995 to 1996. The Bank's average cost of interest-bearing liabilities then
increased from 1996 to 1997 by 11 basis points to 4.15 percent compared to a 9
basis point decrease in yield on interest-earning assets. The result was a
continued decrease in the Bank's interest rate spread of 20 basis points to 4.25
percent for fiscal year 1997. For the three months ended September 30, 1997, the
Bank's cost of funds increased 5 basis points to 4.20 percent, compared to a 16
basis point
16
<PAGE> 26
YIELDS AND COSTS (CONT.)
increase in yield on interest-earning assets, resulting in a higher net interest
rate spread by 11 basis points to 4.36 percent compared to 4.25 percent for the
fiscal year ended June 30, 1997. At September 30, 1997, the Bank's net interest
rate spread decreased 52 basis points to 3.84 percent, due to a decrease in
yield of 21 basis points accented by an increase in cost of funds by 31 basis
points. The Bank's net interest margin increased from 5.04 percent in fiscal
year 1995 to 5.10 percent in fiscal year 1996, then decreasing to 4.88 percent
for the year ended June 30, 1997. The Bank's net interest margin for the three
months ended September 30, 1997, increased 15 basis points to 5.03 percent.
INTEREST RATE SENSITIVITY
Home has always monitored its interest rate sensitivity position and
focused on maintaining a higher level of rate sensitive assets by originating
primarily adjustable-rate mortgage loans accented by adjustable-rate commercial
real estate loans and short term consumer loans. Home recognized the thrift
industry's significant interest rate risk exposure in the 1980's, which caused a
negative impact on earnings and market value of portfolio equity as a result of
significant fluctuations in interest rates, specifically rising rates. Such
exposure was due to the disparate rate of maturity and/or repricing of assets
relative liabilities commonly referred to as an institution's "gap". The larger
an institution's gap, the greater the risk (interest rate risk) of earnings loss
due to a decrease in net interest margin and a decrease in market value of
equity or portfolio loss. In response to the potential impact of interest rate
volatility and negative earnings impact, many institutions have taken steps in
the 1990's to minimize their gap position. This frequently results in a decline
in the institution's net interest margin and overall earnings performance. Home
has responded to the interest rate sensitivity issue by being an active
originator of adjustable-rate mortgage loans, nonresidential adjustable-rate
mortgage loans and short term consumer loans.
17
<PAGE> 27
INTEREST RATE SENSITIVITY (CONT.)
The Bank measures its interest rate risk through the use of its net
portfolio value ("NPV") of the expected cash flows from interest-earning assets
and interest-bearing liabilities and any off-balance sheet contracts. The NPV
for the Bank is calculated on a quarterly basis, by the OTS, as well as the
change in the NPV for the Bank under rising and falling interest rates. Such
changes in NPV under changing rates is reflective of the Bank's interest rate
risk exposure.
There are numerous factors which have a measurable influence on
interest rate sensitivity in addition to changing interest rates. Such key
factors to consider when analyzing interest rate sensitivity include the loan
payoff schedule, accelerated principal payments, deposit maturities, interest
rate caps on adjustable-rate mortgage loans, deposit withdrawals, etc.
Exhibit 11 provides the Bank's NPV as of June 30, 1997, and the change
in the Bank's NPV under rising and declining interest rates. Such calculations
are provided by OTS, and the focus of this exposure table is a 200 basis points
change in interest rates either up or down.
The Bank's change in its NPV at June 30, 1997, based on a rise in
interest rates of 200 basis points was a 1.4 percent decrease, representing a
dollar decrease in equity value of $177,000. In contrast, based on a decline in
interest rates of 200 basis points, the Bank's NPV was estimated to also
decrease 2.9 percent or $372,000 at June 30, 1997. The Bank's exposure increases
to a 8.3 percent decrease under a 400 basis point rise in rates, and the NPV is
estimated to decrease 0.6 percent based on a 400 basis point decrease in rates.
18
<PAGE> 28
INTEREST RATE SENSITIVITY (CONT.)
The Bank is aware of its minimal interest rate risk exposure under
rapidly rising rates or falling rates. Due to Home's recognition of the need to
control its interest rate exposure, the Bank has focused on being active in the
origination of adjustable-rate residential mortgage loans, adjustable-rate
commercial real estate loans and short term consumer loans and plans to continue
this lending strategy with an increased emphasis on short term consumer loans.
19
<PAGE> 29
LENDING ACTIVITIES
Home has focused its lending activity on the origination of
conventional mortgage loans secured by one- to four-family dwellings with an
increasing emphasis on short term consumer loans. Exhibit 12 provides a summary
of Home's loan portfolio, by loan type, at June 30, 1996 and 1997, and at
September 30, 1997.
Residential loans secured by one- to four-family dwellings but
excluding residential construction and land loans was the primary loan type
representing 70.0 percent of the Bank's gross loans as of September 30, 1997.
This share has seen a moderate decrease from 72.6 percent at June 30, 1996. The
second largest real estate loan type as of September 30, 1997, was
nonresidential real estate loans which comprised a moderate 7.0 percent of gross
loans compared to a similar 6.6 percent as of June 30, 1996. The nonresidential
real estate loan category was also the second largest real estate loan type in
1996. The third key real estate loan type was construction and land loans, which
represented 1.71 percent of gross loans as of September 30, 1997, compared to a
similar 1.67 percent at June 30, 1996. Construction and land loans was the
fourth largest real estate loan type at June 30, 1996. Home equity loans was the
fourth largest real estate loan type representing 1.6 percent of gross loans at
September 30, 1997, and a larger 2.2 percent at June 30, 1996, making it the
third largest real estate loan type in 1996. These four largest real estate loan
categories represented 80.3 percent of gross loans at September 30, 1997,
compared to a larger 83.0 percent of gross loans at June 30, 1996.
Commercial loans represent a growing loan category for Home. Commercial
loans totaled $1,703,000 and represented 3.2 percent of gross loans at September
30, 1997, compared to 2.0 at June 30, 1996. This share of commercial loans
exceeded two real estate loan types at September 30, 1997.
The consumer loan category was the remaining loan type at September 30,
1997, and represented a strong 16.5 percent of gross loans compared to 14.9
percent at June 30, 1996. Consumer loans were the second largest overall loan
type, at September 30, 1997,
20
<PAGE> 30
LENDING ACTIVITIES (CONT.)
and also the second largest loan type in 1996. The Bank originates credit card
loans, home improvement loans, savings account loans, auto loans and secured and
unsecured personal loans. The overall mix of loans has witnessed only modest
changes from fiscal year-end 1996 to September 30, 1997, with the Bank having
decreased its share of one- to four-family and home equity loans to offset its
increases in commercial and consumer loans.
The emphasis of Home's lending activity is the origination of
conventional mortgage loans secured by one- to four-family residences. Such
residences are located in Home's market area, which includes all of Coshocton
County. The Bank also originates interim construction loans on one- to
four-family residences primarily to individual owners and to developers. At
September 30, 1997, 70.0 percent of Home's gross loans consisted of loans
secured by one- to four-family residential properties, excluding construction
and land loans. Construction and land loans represented another 1.7 percent of
gross loans.
The Bank originates adjustable-rate mortgage loans, ("ARMs") with
adjustment periods of one and three years. The interest rates on ARMs are
generally indexed to the weekly average rate on one-year and three-year U. S.
Treasury securities. ARMs have a maximum rate adjustment of 2.0 percent at each
adjustment period and a maximum adjustment of 6.0 percent with payments based on
up to a 25 year loan term. Rate adjustments are computed by adding a stated
margin, typically 2.75 percent to the index. The Bank retains all ARMs which it
originates.
The majority of ARMs have terms of up to 25 years, and fixed rate loans
have normal terms of 15 to 25 years. The Bank also retains its fixed rate loans.
Historically, the majority of Home's mortgage loan portfolio has been
adjustable-rate mortgage loans, with adjustable-rate loans representing 75.0
percent of loans due after June 30, 1998. Most of Home's consumer loans are
fixed rate. Overall, 25.0 percent of Home's loans due after June 30, 1998, are
fixed-rate.
21
<PAGE> 31
LENDING ACTIVITIES (CONT.)
The normal loan-to-value ratio for conventional mortgage loans to
purchase or refinance one- to four-family dwellings generally does not exceed 80
percent at Home, even though the Bank is permitted to make loans with higher
loan-to-value ratios. Mortgage loans originated by the Bank include due-on-sale
clauses enabling the Bank to adjust rates on fixed-rate loans in the event the
borrower transfers ownership. The Bank normally exercises its rights under these
clauses.
Home has been an originator of nonresidential real estate loans and has
also originated home equity loans in the past. The Bank will continue to make
home equity and nonresidential real estate loans. The Bank had a total of $3.7
million in nonresidential real estate loans at September 30, 1997, or 7.0
percent of gross loans, compared to $3.0 million or 6.6 percent of gross loans
at June 30, 1996. Home equity loans have decreased from $979,000 or 2.2 percent
of gross loans at June 30, 1996, to $826,000 and a lesser 1.6 percent of gross
loans at September 30, 1997. The major portion of nonresidential real estate
loans are secured by farms, office buildings, and other commercial properties
and are located in the Bank's primary market area.
The Bank also originates commercial loans to area businesses. Such
business loans include term loans and lines of credit and are generally secured
by property such as trucks and equipment. Commercial loans totaled $1.7 million
or 3.2 percent of gross loans at September 30, 1997, compared to $950,000 or
2.10 percent at June 30, 1996.
Home has been more active in consumer lending. Consumer loans
originated consist primarily of automobile loans, credit card loans, home
improvement loans, secured and unsecured personal loans and savings account
loans, which represented a combined total of $8.7 million or 16.5 percent of
gross loans at September 30, 1997, up from $6.7 million or 14.9 percent of loans
in 1996.
22
<PAGE> 32
LENDING ACTIVITIES (CONT.)
Exhibit 13 provides a loan maturity schedule and breakdown and summary
of Home's fixed- and adjustable-rate loans, indicating a majority of
adjustable-rate loans. At September 30, 1997, 75.0 percent of the Bank's total
loans due after June 30, 1998, were adjustable-rate and 25.0 percent were
fixed-rate. The Bank also has a moderate 17.0 percent of its loans at September
30, 1997, due in 5 years or less.
As indicated in Exhibit 14, Home experienced a moderate increase in its
one-to four-family loan originations and total loan originations from fiscal
year 1996 to 1997. Total loan originations in fiscal year 1997 were $21.3
million compared to $20.8 million in fiscal year 1996, reflective of higher
levels of one- to four-family, commercial and consumer loans. The increase in
one- to four-family residential loan originations from 1996 to 1997 of $697,000
constituted 127.7 percent of the $546,000 aggregate increase in total loan
originations from 1996 to 1997, reflective of the $1.8 million decrease in
nonresidential real estate loans. Consumer loan originations increased $956,000
and commercial loans increased $901,000, the largest percentage increase of any
loan category. Loan originations for the three months ended September 30, 1997,
were $6.3 million, representing $25.2 million on an annualized basis. Loan
originations on one- to four-family residences, excluding construction loans,
represented 42.0 percent of total loan originations in fiscal year 1996, and
44.2 percent in fiscal year 1997. One- to four-family loan originations
increased to 44.4 percent of total loan originations for the three months ended
September 30, 1997. Consumer loans represented 34.6 percent of total loan
originations in 1996 and a higher 38.2 percent in 1997. For the three months
ended September 30, consumer loans represented a smaller 31.7 percent.
Overall, loan originations exceeded principal payments and repayments
in fiscal 1996 by $5.1 million and then exceeded those reductions in fiscal 1997
by a similar $5.0 million. For the three months ended September 30, 1997, loan
originations exceeded reductions by $2.5 million.
23
<PAGE> 33
NONPERFORMING ASSETS
Home understands asset quality risk and the direct relationship of such
risk to delinquent loans and nonperforming assets including real estate owned.
The quality of assets has been a key concern to financial institutions
throughout many regions of the country. A number of financial institutions have
been confronted with rapid increases in their levels of nonperforming assets and
have been forced to recognize significant losses, setting aside major valuation
allowances. A sharp increase in nonperforming assets has often been related to
specific regions of the country and has frequently been associated with higher
risk loans, including purchased nonresidential real estate loans. Home has not
been faced with such problems in the past and has made a concerted effort to
control its nonperforming assets during the past five years and has been
successful.
Exhibit 15 provides a summary of Home's delinquent loans at June 30,
1996 and 1997, and at September 30, 1997, indicating a modest level of
delinquent loans. The Bank had $61,000 or 0.12 percent of loans in loans
delinquent 90 days or more at September 30, 1997, compared to $88,000 or 0.19
percent of loans at June 30, 1996. Loans delinquent 30 to 89 days totaled
$372,000 at June 30, 1996, or 0.83 percent of loans, and were a larger $617,000
or a higher 1.24 percent of gross loans at June 30, 1997. At September 30, 1997,
delinquent loans of 30 to 89 days increased in dollar level to $932,000 or a
higher 1.77 percent of gross loans.
Home's management reviews all loans delinquent 30 days or more on a
monthly basis, to assess their collectibility and to initiate any direct contact
with borrowers. The board reviews all loans delinquent 90 days or more on a
monthly basis and all real estate owned. When a loan is delinquent 10 days or
more, the Bank charges a late fee of 5.0 percent of the payment and sends the
borrower a late payment notice. The Bank then initiates both written and oral
communication with the borrower if the loan remains delinquent. When the loan
becomes delinquent at least 90 days, the Bank will commence foreclosure
proceedings. The Bank does not normally accrue interest on loans past due 90
days or more. Most loans delinquent 90 days or more are placed on a non-accrual
status, and at that point in time the Bank pursues foreclosure procedures.
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<PAGE> 34
NONPERFORMING ASSETS (CONT.)
Exhibit 16 provides a summary of Home's nonperforming assets at
September 30, 1997, and at June 30, 1996 and 1997. Nonperforming assets consist
of non-accrual loans, loans delinquent 90 days or more and real estate owned.
The Bank historically has carried a lower level of nonperforming assets. Home's
level of nonperforming assets ranged from a high dollar amount of $88,000 or
0.16 percent of total assets at June 30, 1996, to a low dollar amount of $33,000
or 0.05 percent of assets at June 30, 1997. At September 30, 1997, Home's
nonperforming assets consisted of $61,000 in loans 90 days or more past due for
a total of 0.10 percent of assets.
Home's level of nonperforming assets was identical to its level of
classified assets. The Bank's level of classified assets was $61,000 or 0.12
percent of loans at September 30, 1997 (reference Exhibit 17). The Bank's
classified assets consisted of $61,000 in substandard assets, with none
classified as doubtful or loss.
Exhibit 18 shows Home's allowance for loan losses at September 30,
1997, and for fiscal years 1996 and 1997, indicating the activity and the
resultant balances. Home has witnessed a modest increase in its balance of
allowance for loan losses from $117,000 in 1996 to $119,000 in 1997. The balance
in allowance for loan losses was increased to $148,000 at September 30, 1997,
with provisions of $6,000 in 1997 and $30,000 in the first three months ended
September 30, 1997. The Bank had net charge-offs of $4,000 in 1996 and $1,000
for the three months ended September 30, 1997. The Bank's ratio of allowance for
loan losses to gross loans was 0.26 percent at June 30, 1996, and a similar to
0.26 percent at June 30, 1997. The allowance for loan losses to gross loans was
a slightly higher 0.29 percent at September 30, 1997. Allowance for loan losses
to nonperforming loans was 133.5 percent at June 30, 1996, and a higher 243.0
percent at September 30, 1997, reflecting the modest increase in allowance for
loan losses.
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<PAGE> 35
INVESTMENTS
The investment and securities portfolio, including interest-bearing
deposits of Home has been comprised of U.S. government securities,
interest-bearing deposits, Federal Funds sold and FHLB stock. Exhibit 19
provides a summary of Home's investment portfolio at June 30, 1996 and 1997, and
at September 30, 1997, including FHLB stock. Investment securities and
interest-bearing deposits totaled $5.4 million at September 30, 1997, compared
to $8.3 million at June 30, 1997, and $8.0 million at June 30, 1996, including
FHLB stock of $373,000 at September 30, 1997. The primary component of
investment securities and interest-bearing deposits at September 30, 1997, was
U.S. government securities, representing 83.6 percent of investments and
interest-bearing deposits. The securities portfolio had a weighted average yield
of 6.04 percent, and the interest-bearing deposits had a weighted average yield
of 6.65 percent at September 30, 1997. The Bank also had cash and cash
equivalents of $1.7 million or 2.9 percent of assets at September 30, 1997, and
liquid assets representing 12.0 percent of assets at September 30, 1997.
DEPOSIT ACTIVITIES
The change in the mix of deposits from June 30, 1996, to September 30,
1997, is provided in Exhibit 20. There has been a moderate change in both total
deposits and in the deposit mix during this period. Certificates of deposit
witnessed an increase in their share of deposits, rising from a moderate 54.3
percent of total deposits at June 30, 1996, to a still moderate 58.9 percent of
total deposits at September 30, 1997. This increase is similar to the industry
norm of a rise in the share of certificates. The major component of certificates
had rates between 4.01 percent and 6.00 percent and represented 76.6 percent of
certificates at September 30, 1997. At June 30, 1996, the major component of
certificates was also the 4.01 percent to 6.00 percent category with 86.1
percent of certificates. Passbook savings accounts decreased in dollar amount
from $12.1 million to $11.6 million, and their share of total deposits decreased
from 27.0 percent to 24.0 percent from June 30, 1996, to September 30, 1997,
respectively, with no change in rates during that period. NOW accounts indicated
a modest dollar increase rising from $5.3 million
26
<PAGE> 36
DEPOSIT ACTIVITIES (CONT.)
at June 30, 1996, to $5.6 million at September 30, 1997, but their share of
total deposits decreased from 11.8 percent to 11.6 percent. MMDA accounts
witnessed a moderate decrease in deposits from $2.2 million at June 30, 1996, to
$1.8 million at September 30, 1997, with their share decreasing from 5.0 percent
to 3.7 percent over that time period. Non-interest-bearing checking accounts had
an increase in their dollar amount rising from $873,000 to $877,000, but their
share of deposits decreased from 2.0 percent to 1.8 percent during that same
time period.
Exhibit 21 shows the Bank's deposit activity for the two years ended
June 30, 1996 and 1997, and for the three months ended September 30, 1997.
Excluding interest credited, Home experienced net increases in deposits in
fiscal years 1996 and 1997 and a net decrease in deposits for the three months
ended September 30, 1997. In fiscal year 1996, there was a net increase in
deposits of $4.3 million or 10.8 percent. In fiscal year 1997, a net increase in
deposits of $3.0 million resulted in a 6.7 percent increase in deposits
excluding interest credited. For the three months ended September 30, 1997, a
net decrease in deposits of $1.4 million produced a net decline of 2.8 percent,
or 11.2 percent, annualized. Including accrued interest, deposits increased $5.3
million or 13.5 percent in 1996, $4.4 million or 9.7 percent in 1997 and
decreased $1.0 million or 2.1 percent of deposits for the three months ended
September 30, 1997.
BORROWINGS
Home made no use of FHLB advances from June 30, 1993 to September 30,
1997.
SUBSIDIARIES
Home has no wholly-owned subsidiaries.
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<PAGE> 37
OFFICE PROPERTIES
Home has two full service offices, both located in Coshocton, Ohio.
(reference Exhibit 23). Home owns both of these offices. The Bank's investment
in its office premises, including furniture, fixtures and equipment, totaled
$509,000 or 0.85 percent of assets at September 30, 1997.
MANAGEMENT
The President, Chief Executive Officer, and Managing Officer of Home is
Robert C. Hamilton, who is also a Director. Mr. Hamilton joined the Bank in 1981
serving the Bank as Secretary, Treasurer and Managing Officer. In 1983, Mr.
Hamilton became President and Chief Executive Officer. In 1982, Mr. Hamilton
became a Director. Prior to joining the Bank, Mr. Hamilton worked with Bank One
serving in numerous positions for 21 years. The Bank's Secretary and Treasurer
is Preston W. Bair who serves as the Bank's Chief Financial Officer.
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<PAGE> 38
II. DESCRIPTION OF PRIMARY MARKET AREA
Home's primary market area for retail deposits and lending activity
encompasses all of Coshocton County ("the market area"). The Bank has two
offices, both located in Coshocton City, the county seat and largest community
in Coshocton County.
The primary market area is characterized by a lower than average level
of median household income and a much lower housing value when compared to Ohio
and the United States. The unemployment rate in the market area has been higher
than Ohio and national unemployment rates but have declined over the past few
years. The market area's unemployment rates have been above Ohio's unemployment
rates, as well as the United States. The market area's strongest employment
categories are the manufacturing industry, services industry and the
wholesale/retail industry, with a noticeably higher level of residents employed
in the agriculture/mining industry category than in Ohio or the United States.
Exhibit 24 provides a summary of key demographic data and trends for
the market area, Ohio and the United States. Overall, from 1990 to 1996,
population increased in the market area as well as Ohio and the United States.
The population increased by 2.9 percent in the market area from 1990 to 1996. In
the same time period, population increased a similar 2.8 percent in Ohio, and
increased in the United States by 6.7 percent. Future population projections
indicate that population will continue to increase in the market area through
the year 2001. From 1996 to 2001, population is expected to increase by 2.3
percent in the market area, increase 2.7 percent in Ohio and 5.1 percent in the
United States.
In conformance with its modestly rising trend in population, the market
area witnessed an increase in households (families) of 3.1 percent from 1990 to
1996. During that same time period, the number of households increased in Ohio
by 2.7 percent and increased by 6.8 percent in the United States. By the year
2001, the market area's households are projected to continue to increase by 2.3
percent, while the number of
29
<PAGE> 39
DESCRIPTION OF PRIMARY MARKET AREA (CONT.)
households are expected to increase by 2.7 percent in Ohio and increase in the
United States by 5.1 percent.
In 1990, per capita income in the market area was lower than the per
capita income in Ohio and the United States. The market area had a 1990 per
capita income of $10,625 compared to Ohio at a higher $12,788 and the United
States at $12,313. From 1990 to 1996, per capita income increased in the market
area, Ohio and the United States, with the United States having the greatest
percent increase. The market area's' per capita income increased from 1990 to
1996, by 14.8 percent to $12,193, while Ohio's per capita income increased by a
larger 20.2 percent to a higher $15,376. Per capita income in the United States
also increased by a larger 35.9 percent to $16,738.
The 1990 median household income in the Bank's primary market area was
lower than the median household income in Ohio and the United States. The market
area had a 1990 median household income of $24,425, which was lower than Ohio's
median household income of $29,276 and also lower than the United States' median
household income of $28,255. From 1990 to 1996, median household income in the
primary market area, Ohio and the United States all increased, with the market
area indicating the lowest rate of increase, and the United States the highest.
Median household income increased by 9.5 percent to $26,754 in the market area
compared to a higher 9.7 percent increase to $32,102 in Ohio and a higher 22.2
percent increase to $34,530 in the United States. From 1996 to 2001, median
household income is projected to decrease by 4.5 percent in the market area
while decreasing by 7.3 percent in Ohio and decreasing 3.9 percent in the United
States. Based on those rates of change, by 2001, median household income is
expected to be a lower $25,558 in the market area, $29,751 in Ohio, while
decreasing in the United States to $33,189.
Exhibit 25 provides a summary of key housing data for the market area,
Ohio and the United States. The market area had a higher than average percent of
owner-occupancy at 75.7 percent greater than the 67.5 percent owner-occupancy
rate for Ohio. The United
30
<PAGE> 40
DESCRIPTION OF PRIMARY MARKET AREA (CONT.)
States had an owner-occupancy rate of 64.2 percent. As a result, the market area
supports a lower than average rate of renter-occupied housing at 24.3 percent
compared to 32.5 percent for Ohio and 35.8 percent for the United States.
The market area's median housing value of $44,400 is much lower than
Ohio's and also lower than the United States' median housing value. The market
area's median housing value of $44,400 is 30.0 percent lower than Ohio's median
housing value of $63,457 and 43.9 percent lower than the United States' $79,098
median housing value. The average median rent of the market area is less than
the median rent of Ohio and the United States. The market area had a median rent
of $292, which was lower than Ohio's median rent of $296 and lower than the
United States' median rent of $374.
In 1990, the major business source of employment by industry group,
based on number of employees, for the market area was the manufacturing
industry, responsible for 33.5 percent of jobs, which was higher than Ohio and
the United States with 24.5 percent and 19.2 percent, respectively (reference,
Exhibit 26). The services industry was the second major employer in the market
area at 28.2 percent. In Ohio and the United States, the services group was the
major employer with 31.6 percent and 34.0 percent, respectively. The
wholesale/retail trade group was the third major employer in the market area at
16.3 percent. In Ohio and the United States, the wholesale/retail trade group
was the second largest employer with 27.7 percent and 27.5 percent,
respectively. The construction group, finance, insurance and real estate group,
transportation/utilities group, and the agriculture/mining groups combined to
provide 22.0 percent of employment in the market area, 16.2 percent of
employment in Ohio and 19.3 percent in the United States.
The strong presence of the manufacturing group in the market area is
due to the strong presence of numerous manufacturing businesses and accented by
American Electric Power. The public school systems within Coshocton County and
Coshocton Memorial Hospital are also major employers for the area.
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<PAGE> 41
DESCRIPTION OF PRIMARY MARKET AREA (CONT.)
The following list provides some of the leading employers in the market area:
Employer Product/Service
- -------- ---------------
Pretty Products, Inc. Manufacturing
Clow Water Systems Co. Manufacturing
American Electric Power Utility
Ansell International Corp. Manufacturing
AK Steel Manufacturing
Coshocton Memorial Hospital Service
General Electric Manufacturing
Jordan Industries, Inc. Manufacturing
Lancaster Colony Corp. Manufacturing
McWane, Inc. Manufacturing
Riverview Local Board of Education Services
Stone Container Corp. Manufacturing
Muskingum County to the south also contributes major sources of
employment to Home's market area with the presence of the Longaberger Company
and its affiliated businesses.
The unemployment rate is another key economic indicator. Exhibit 27
shows the unemployment rates in the market area Ohio and the United States in
1994, 1995, 1996 and September 1997. The market area has been characterized by a
higher unemployment rate than Ohio and also higher than the United States. In
1994, the market area had an unemployment rate of 6.2 percent, compared to an
unemployment rate of 5.5 percent in Ohio and a lower 6.1 percent in the United
States. The market area's unemployment rate decreased to 6.1 percent in 1995,
compared to a lower 4.9 percent in Ohio and a decrease to 5.6 percent in the
United States. In 1996, the market area had an unemployment rate of 5.3 percent
with Ohio at 4.3 percent and the United States at 5.0 percent. By
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<PAGE> 42
DESCRIPTION OF PRIMARY MARKET AREA (CONT.)
September 1997, the unemployment rate in the market area was again higher at 5.4
percent and had also decreased to 4.1 percent in Ohio and to 4.7 percent in the
United States.
Exhibit 28 provides deposit data for banks, thrifts and credit unions
in the market area. Home's deposit base in the market area was $44.9 million or
53.1 percent of the $84.5 million total thrift deposits and a smaller 13.2
percent share of total deposits which were $240.2 million as of June 30, 1996.
The market area is dominated by the banking industry. Total bank deposits in the
market area were $254.3 million representing 74.8 percent of total deposits,
compared to a lower $84.5 million or 24.8 percent of deposits for thrifts, and
$1.4 million or 0.4 percent of total deposits held by credit unions. It is
evident from the size of both thrift deposits and bank deposits that the market
area has a relatively strong deposit base with the Bank having a strong level of
market penetration for thrift deposits but a small share of market penetration
of total deposits.
Exhibit 29 provides interest rate data for each quarter for the years
1993 through 1996 and for the first three quarters of 1997. The interest rates
tracked are the Prime Rate, as well as 90-Day, One-Year and Thirty-Year Treasury
Bills. Short term interest rates experienced a slightly rising trend in 1993.
This rising trend continued throughout all of 1994 and into the first quarter of
1995 with prime at 9.00 percent. However, throughout 1995, interest rates saw
dramatic decreases, as the prime rate fell to its 1994 year end level of 8.50
percent. Such decrease in the prime rate continued through the first quarter of
1996 as it fell to 8.25 percent and then remained at 8.25 percent through the
remainder of 1996. Rates on one-year T-bills, however, witnessed an increase in
1996 after a measurable decrease in 1995. Rates on one-year T-Bills continued to
increase in early 1997 and then stabilized later in the year with modest
fluctuations.
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<PAGE> 43
SUMMARY
To summarize, the market area represents an area with a modestly rising
population base and household level during the mid 1990s. The market area
displayed a lower per capita income and much lower median household income than
Ohio or the United States in 1996 and had a much lower median housing value and
median rent level than Ohio and the United States. Finally, the market area has
a higher unemployment rate when compared to Ohio and the United States and a
highly competitive financial institution market strongly dominated by banks,
with a relatively small presence of thrifts and credit unions, and a total
market deposit base for banks, thrifts and credit unions that exceeds $340.0
million in deposits.
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<PAGE> 44
III. COMPARABLE GROUP SELECTION
INTRODUCTION
Integral to the valuation of the Corporation is the selection of an
appropriate group of publicly-traded thrift institutions, hereinafter referred
to as the "comparable group". This section identifies the comparable group and
describes each parameter used in the selection of each institution in the group,
resulting in a comparable group based on such specific and detailed parameters,
current financials and recent trading prices. The various characteristics of the
selected comparable group provide the primary basis for making the necessary
adjustments to the Corporation's pro forma value relative to the comparable
group. There is also a recognition and consideration of financial comparisons
with all publicly-traded, FDIC-insured thrifts in the United States and all
publicly-traded, FDIC-insured thrifts in the Midwest and Ohio.
Exhibits 30 and 31 present Thrift Stock Prices and Pricing Ratios and
Key Financial Data and Ratios, respectively, both individually and in aggregate,
for the universe of 373 publicly-traded, FDIC-insured thrifts in the United
States ("all thrifts"), excluding mutual holding companies, used in the
selection of the comparable group and other financial comparisons. Exhibits 30
and 31 also subclassify all thrifts by region, including the 146 publicly-traded
Midwest thrifts ("Midwest thrifts") and the 33 publicly-traded thrifts in Ohio
("Ohio thrifts"), and by trading exchange. Exhibit 32 presents prices, pricing
ratios and price trends for all FDIC-insured thrifts completing their
conversions between January 1, 1997, and November 28, 1997.
The selection of the comparable group was based on the establishment of
both general and specific parameters using financial, operating and asset
quality characteristics of Home as determinants for defining those parameters.
The determination of parameters was also based on the uniqueness of each
parameter as a normal indicator of a thrift institution's operating philosophy
and perspective. The parameters established and
35
<PAGE> 45
INTRODUCTION (COnt.)
defined are considered to be both reasonable and reflective of Home's basic
operation. In as much as the comparable group must consist of at least ten
institutions, the parameters relating to asset size and geographic location have
been expanded as necessary in order to fulfill this requirement.
GENERAL PARAMETERS
MERGER/ACQUISITION
The comparable group will not include any institution that is in the
process of a merger or acquisition due to the price impact of such a pending
transaction. The thrift institutions that were potential comparable group
candidates but were not considered due to their involvement in a
merger/acquisition or a potential merger/acquisition include the following:
Institution State
----------- -----
GFS Bancorp, Inc. Iowa
Marshalltown Financial Corp. Iowa
Gateway Bancorp, Inc. Kentucky
No thrift institution in Home's city, county or market area is
currently involved in merger/acquisition activity or has recently been so
involved, as indicated in Exhibit 33.
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<PAGE> 46
MUTUAL HOLDING COMPANIES
The comparable group will not include any mutual holding companies.
Mutual holding companies typically demonstrate higher price to book valuation
ratios that are the result of their minority ownership structure that are
inconsistent with those of conventional, publicly-traded institutions. Exhibit
34 presents pricing ratios and Exhibit 35 presents key financial data and ratios
for all publicly-traded, FDIC-insured mutual holding companies in the United
States. The following thrift institutions were potential comparable group
candidates, but were not considered due to their mutual holding company form:
Institution State
----------- -----
Jacksonville Savings Bank, MHC Illinois
Webster City Federal Savings Bank, MHC Iowa
TRADING EXCHANGE
It is necessary that each institution in the comparable group be listed
on one of the two major stock exchanges, the New York Stock Exchange or the
American Stock Exchange, or traded over-the-counter ("OTC") and listed on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"). Such a listing indicates that an institution's stock has
demonstrated trading activity and is responsive to normal market conditions,
which are requirements for listing. Of the 396 publicly-traded, FDIC-insured
institutions, including 23 mutual holding companies, 14 are traded on the New
York Stock Exchange, 25 are traded on the American Stock Exchange and 357 are
listed on NASDAQ.
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<PAGE> 47
IPO DATE
Another general parameter for the selection of the comparable group is
the initial public offering ("IPO") date, which must be at least four quarterly
periods prior to the trading date of November 28, 1997, used in this report, in
order to insure at least four consecutive quarters of reported data as a
publicly-traded institution. The resulting parameter is a required IPO date
prior to September 30, 1996.
GEOGRAPHIC LOCATION
The geographic location of an institution is a key parameter due to the
impact of various economic and thrift industry conditions on the performance and
trading prices of thrift institution stocks. Although geographic location and
asset size are the two parameters that have been developed incrementally to
fulfill the comparable group requirements, the geographic location parameter has
definitely eliminated regions of the United States distant to Home, including
the western and southwestern states, and the New England states.
The geographic location parameter consists of Ohio and its surrounding
states of Indiana, West Virginia, Michigan, Kentucky and Pennsylvania, as well
as the states of Illinois, Iowa and Wisconsin, for a total of nine states. To
extend the geographic parameter beyond those states could result in the
selection of similar thrift institutions with regard to financial conditions and
operating characteristics, but with different pricing ratios due to their
geographic regions. The result could then be an unrepresentative comparable
group with regard to price relative to the parameters and, therefore, an
inaccurate value.
38
<PAGE> 48
ASSET SIZE
Asset size was another key parameter used in the selection of the
comparable group. The range of total assets for any potential comparable group
institution was $200 million or less, due to the greater similarity of asset mix
and operating strategies of institutions in this asset range compared to Home,
with assets of approximately $60 million. Such an asset size parameter was
necessary to obtain a comparable group of at least ten institutions.
In connection with asset size, we did not consider the number of
offices or branches in selecting or eliminating candidates since this
characteristic is directly related to operating expenses, which are recognized
as an operating performance parameter.
SUMMARY
Exhibits 36 and 37 show the 43 institutions considered as comparable
group candidates after applying the general parameters, with the shaded lines
denoting the institutions ultimately selected for the comparable group using the
balance sheet, performance and asset quality parameters established in this
section.
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BALANCE SHEET PARAMETERS
INTRODUCTION
The balance sheet parameters focused on seven balance sheet ratios as
determinants for selecting a comparable group, as presented in Exhibit 36. The
balance sheet ratios consist of the following:
1. Cash and Investments/Assets
2. Mortgage-Backed Securities/Assets
3. One- to Four-Family Loans/Assets
4. Total Net Loans/Assets
5. Total Net Loans and Mortgage-Backed Securities/Assets
6. Borrowed Funds/Assets
7. Equity/Assets
The parameters enable the identification and elimination of thrift
institutions that are distinctly and functionally different from Home with
regard to asset mix. The balance sheet parameters also distinguish institutions
with a significantly different capital position from Home. The ratio of deposits
to assets was not used as a parameter as it is directly related to and affected
by an institution's equity and borrowed funds ratios, which are separate
parameters.
CASH AND INVESTMENTS TO ASSETS
Home's ratio of cash and investments to assets was 11.3 percent at
September 30, 1997, and reflects the Bank's lower share of investments compared
to national and regional averages. The Bank's investments consist primarily of
U. S. government securities, federal funds sold and interest-bearing deposits.
During its last five fiscal years, Home's ratio of cash and investments to
assets has decreased significantly from a high of 31.3 percent at June 30, 1993,
to a low of 16.1 percent at June 30, 1997, averaging 21.3 percent for those five
years. Home's ratio of 11.3 percent at September 30, 1997,
40
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CASH AND INVESTMENTS TO ASSETS (CONT.)
represents a continuation of that decreasing trend. It should be noted that
Federal Home Loan Bank stock is not included in cash and investments, but rather
is part of other assets in order to be consistent with reporting requirements
and sources of statistical and comparative analysis.
The parameter range for cash and investments is broad due to the
volatility of this parameter, to prevent the elimination of otherwise good
potential comparable group candidates and to recognize Home's historical
activity. The range has been defined as 5.0 percent of assets to 35.0 of assets,
with a midpoint of 20.0 percent, similar to Home's five year average.
MORTGAGE-BACKED SECURITIES TO ASSETS
At September 30, 1997, Home's had no mortgage-backed securities and was
similarly absent mortgage-backed securities at the close of its most recent five
fiscal years. The national and regional average ratios of mortgage-backed
securities to total assets for publicly-traded thrifts was 11.2 percent and 8.2
percent, respectively. Inasmuch as many institutions purchase mortgage-backed
securities as an alternative to lending relative to cyclical loan demand and
prevailing interest rates, this parameter is moderately broad at 25.0 percent or
less of assets and a midpoint of 12.5 percent.
ONE- TO FOUR-FAMILY LOANS TO ASSETS
Home's lending activity is focused on the origination of residential
mortgage loans secured by one- to four-family dwellings. One- to four-family
loans, not including construction loans, represented 62.2 percent of the Bank's
assets at September 30, 1997, which is higher than the industry average of
approximately 49.0 percent. The parameter
41
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ONE- TO FOUR-FAMILY LOANS TO ASSETS (CONT.)
for this characteristic requires any comparable group institution to have from
35.0 percent to 70.0 percent of its assets in one- to four-family loans with a
midpoint of 52.5 percent.
TOTAL NET LOANS TO ASSETS
At September 30, 1997, Home had a ratio of total net loans to assets of
86.5 percent and a lower five fiscal year average of 76.4 percent, both of which
are higher than the national and regional averages of 67.2 percent and 71.8
percent, respectively, for publicly-traded thrifts. Home's ratio of net loans to
assets increased over its most recent five fiscal years in general reciprocity
to the decrease in the Bank's ratio of cash and investments.
The parameter for the selection of the comparable group is from 55.0
percent to 90.0 percent with a midpoint of 72.5 percent. The wider range is
simply due to the fact that, as the referenced national and regional averages
indicate, many larger institutions purchase a greater volume of investment
securities and/or mortgage-backed securities as a cyclical alternative to
lending, but may otherwise be similar to Home.
TOTAL NET LOANS AND MORTGAGE-BACKED SECURITIES TO ASSETS
As discussed previously, at September 30, 1997, Home was absent
mortgage-backed securities and its ratio of net loans to assets was 86.5
percent. Recognizing the average publicly-traded industry and regional ratios of
11.2 percent and 8.2 percent, respectively, of mortgage-backed securities to
assets, the parameter range for the comparable group in this category is 60.0
percent to 95.0 percent, with a midpoint of 77.5 percent.
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BORROWED FUNDS TO ASSETS
Home had no borrowed funds at September 30, 1997, and had no balance of
borrowed funds at the end of its three most recent fiscal years. The use of
borrowed funds by some thrift institutions indicates an alternative to retail
deposits and may provide a source of term funds for lending. The historically
higher federal insurance premium on deposits also increased the attractiveness
of borrowed funds.
The public demand for longer term funds increased in 1995 and the first
half of 1996 due to the higher cost of deposits. The result was competitive
rates on longer term Federal Home Loan Bank advances, and an increase in
borrowed funds by many institutions as an alternative to higher cost, long term
certificates. The ratio of borrowed funds to assets, therefore, does not
typically indicate higher risk or more aggressive lending, but primarily an
alternative to retail deposits.
The range of borrowed funds to assets is 25.0 percent or less with a
midpoint of 12.5 percent, below the national average of 14.9 percent.
EQUITY TO ASSETS
Home's equity to assets ratio as of September 30, 1997, was 17.70
percent. After conversion, based on the midpoint value of $17.0 million, with
50.0% of the net proceeds of the public offering going to the Bank, Home's
equity is projected to stabilize in the area of 28.0 percent. The consolidated
pro forma equity to assets ratio for the Corporation is projected to be 32.8
percent following conversion. Based on those equity ratios, we have defined the
equity ratio parameter to be 8.0 percent to 28.0 percent with a midpoint ratio
of 18.0 percent.
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<PAGE> 53
PERFORMANCE PARAMETERS
INTRODUCTION
Exhibit 37 presents five parameters identified as key indicators of
Home's earnings performance and the basis for such performance. The primary
performance indicator is the Bank's return on average assets ("ROAA"). The
second performance indicator is the Bank's return on average equity ("ROAE"). To
measure the Bank's ability to generate net interest income, we have used net
interest margin. The supplemental source of income for the Bank is noninterest
income, and the parameter used to measure this factor is noninterest income to
assets. The final performance indicator that has been identified is the Bank's
ratio of operating expenses, also referred to as noninterest expenses, to
assets, a key factor in distinguishing different types of operations,
particularly institutions that are aggressive in secondary market activities,
which often results in much higher operating costs and overhead ratios.
RETURN ON AVERAGE ASSETS
The key performance parameter is the ROAA. For the twelve months ended
September 30, 1997, Home's ROAA was 1.31 percent based on net earnings after
taxes, and an identical 1.31 percent based on core or normalized earnings after
taxes as detailed in Item I of this report and presented in Exhibit 7. The
Bank's ROAA over its prior five fiscal years, based on net earnings, has ranged
from a low of 1.04 percent in fiscal year 1997 to a high of 1.77 percent in
fiscal year 1993 with an average ROAA of 1.46 percent. The low ROAA in ficsal
year 1997 reflects the SAIF special assessment of $261,000 realized by the Bank
in the third quarter of 1996. Absent that non-recurring charge to earnings,
Home's ROAA for fiscal year 1997 would have been approximately 1.33 percent
based on core income of $768,000, compared to net income of $595,000, and its
five year average would have been a higher 1.52 percent. For the four quarters
following conversion in early 1998, the Bank's ROAA based on both net and core
income is projected to average approximately 1.36 percent.
44
<PAGE> 54
RETURN ON AVERAGE ASSETS (CONT.)
Considering the historical, current and projected earnings performance
of Home, the range for the ROAA parameter based on net income has been defined
as 0.90 percent to a high of 2.00 percent with a midpoint of 1.45 percent.
RETURN ON AVERAGE EQUITY
The ROAE has been used as a secondary parameter to eliminate any
institutions with an unusually high or low ROAE that is inconsistent with the
Bank's position. This parameter does not provide as much meaning for a newly
converted thrift institution as it does for established stock institutions, due
to the newness of the capital structure of the newly converted thrift and the
inability to accurately reflect a mature ROAE for the newly converted thrift
relative to other stock institutions.
The consolidated ROAE for the Bank and the Corporation on a pro forma
basis at the time of conversion will be 4.11 percent based on the midpoint
valuation. Prior to conversion, the Bank's ROAE was 7.44 percent for the twelve
months ended September 30, 1997, based on both net and core income, with a five
fiscal year average net ROAE of 8.66 percent. As in the case of ROAA, using core
income to calculate ROAE for fiscal year 1997 would have resulted in a 1997 core
ROAE of 7.63 percent, compared to a net ROAE of 5.94 percent, and a higher five
year average ROAE of 9.00 percent.
The parameter range for the comparable group, based on net income, is
from 5.0 percent to 15.0 percent with a midpoint of 10.0 percent.
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<PAGE> 55
NET INTEREST MARGIN
Home had a net interest margin of 4.75 percent for the twelve month
period ended September 30, 1997. The Bank has had a stable and consistent net
interest margin during its most recent five fiscal years, ranging from a low of
4.87 percent in 1994 to a high of 5.10 percent in 1996, with an average of 4.95
percent.
The parameter range for the selection of the comparable group is from a
low of 3.25 percent to a high of 5.25 percent with a midpoint of 4.25 percent.
OPERATING EXPENSES TO ASSETS
Home had a higher than average 2.92 percent ratio of operating expense
to average assets for the twelve months ended September 30, 1997. Historically,
the Bank's operating expenses have been generally higher than average but
stable, averaging 2.76 percent of average assets for fiscal years 1993 through
1997, again netting the $261,000 non-recurring SAIF assessment from fiscal year
1997 operating expenses. With the exception of fiscal year 1993 when the Bank's
ratio of operating expenses was similar to the industry average, Home's
operating expenses have been above the industry average, which is currently 2.34
percent for publicly-traded thrifts and 2.12 percent for all FDIC-insured
thrifts.
The operating expense to assets parameter for the selection of the
comparable group is from a low of 1.90 percent to a high of 3.50 percent with a
midpoint of 2.70 percent.
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<PAGE> 56
NONINTEREST INCOME TO ASSETS
Home has experienced a somewhat lower than average dependence on
noninterest income as a source of additional income. The Bank's noninterest
income to average assets was 0.30 percent for the twelve months ended September
30, 1997, which is below the industry average of 0.44 percent for
publicly-traded thrifts for that period. Home's noninterest income for the past
five fiscal years indicates very little fluctuation. The Bank's ratio of
noninterest income to average assets was 0.30 percent, 0.34 percent, 0.31
percent, 0.32 percent and 0.30 percent in fiscal years 1993, 1994, 1995, 1996
and 1997, respectively, averaging 0.31 percent for the five years.
The range for this parameter for the selection of the comparable group
is 0.65 percent of average assets or less, with a midpoint of 0.33 percent.
ASSET QUALITY PARAMETERS
INTRODUCTION
The final set of financial parameters used in the selection of the
comparable group are asset quality parameters, also shown in Exhibit 37. The
purpose of these parameters is to insure that any thrift institution in the
comparable group has an asset quality position reasonably similar to that of
Home. The three defined asset quality parameters are the ratios of nonperforming
assets to total assets, repossessed assets to total assets and allowance for
loan losses to total assets at the end of the most recent period.
47
<PAGE> 57
NONPERFORMING ASSETS TO ASSETS RATIO
Home's ratio of nonperforming assets to total assets was 0.10 percent
at September 30, 1997, which is lower than the national average of 0.82 percent
and also lower than the Midwest regional average of 0.63 percent, but slightly
higher than its ratio of 0.05 percent at June 30, 1997. For the five fiscal
years ended June 30, 1993 to 1997, the Bank's ratio of nonperforming assets to
total assets averaged 0.06 percent.
The parameter range for nonperforming assets to assets has been defined
as 1.00 percent of assets or less with a midpoint of 0.50 percent.
REPOSSESSED ASSETS TO ASSETS
Home was absent repossessed assets at September 30, 1997 and at the
close of its five most recent fiscal years. At September 30, 1997, national and
regional averages for publicly-traded thrifts were 0.61 percent and 0.47
percent, respectively, and the national average for all FDIC-insured thrifts was
0.22 percent.
The range for the repossessed assets to total assets parameter is 0.20
percent of assets or less with a midpoint of 0.10 percent.
ALLOWANCE FOR LOANS LOSSES TO ASSETS
Home had an allowance for loan losses of $148,000, representing a ratio
to total assets of 0.25 percent at September 30, 1997, which is higher than both
its ratios of 0.20 percent at June 30, 1997, and 0.21 percent at June 30, 1996.
The allowance for loan losses to assets parameter range used for the
selection of the comparable group focused on a minimum required ratio of 0.15
percent of assets.
48
<PAGE> 58
THE COMPARABLE GROUP
With the application of the parameters previously identified and
applied, the final comparable group represents ten institutions identified in
Exhibits 38, 39 and 40. The comparable group institutions range in size from
$47.7 million to $179.8 million with an average asset size of $102.8 million and
have an average of 2.7 offices per institution, compared to Home with assets of
$60.0 million and 2 offices. Two of the comparable group institutions were
converted in 1993, one in 1994, four in 1995, and three in 1996. Eight of the
comparable group institutions are traded on NASDAQ and two are traded on the
American Stock Exchange. Of the ten institutions, all are SAIF members. The
comparable group institutions as a unit have a ratio of equity to assets 23.8
percent higher than all publicly-traded thrift institutions in the United States
but only 5.7 percent higher than publicly-traded thrift institutions in Ohio,
and for the most recent four quarters indicated a return on average assets of
1.17 percent, higher than all publicly-traded thrifts at 0.86 percent, and also
higher than publicly-traded thrifts in Ohio at 1.01 percent.
Exhibit 41 presents a comparison of Home's market area demographic
data with that of each of the institutions in the comparable group.
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<PAGE> 59
SUMMARY OF COMPARABLE GROUP INSTITUTIONS
AMB FINANCIAL CORP., Munster, Indiana is the holding company for
American Savings, FSB, serving its market area of Lake County, Indiana, from 4
full service offices.
For the nine months ended September 30, 1997, interest income rose 21
percent to $5.3 million. Net interest income after loan loss provision rose 13%
to $2.5 million and reflects an increase in average loan balances, partially
offset by increased borrowings. Net income for the nine months ended September
30, 1997 was $770,000 as compared to $269,000 for the same period in 1996 or an
increase of $502,000. This increase was due primarily to an increase in net
interest income of $342,000, an increase in non-interest income of $408,000 and
a decrease in non-interest expense of $163,000, offset by an increase in the
loan loss provision of $46,000 and an increase in income taxes of $365,000. Net
income also reflects higher unrealized gains on the trading portfolio and lower
FDIC premiums. Total assets of the Company increased $17.3 million, or 20.1% to
$103.4 million at September 30, 1997 compared to $86.1 million at December 31,
1996. This increase was primarily due to increases in cash and cash equivalents
and growth in loans receivable, which were funded by an increase in deposits and
borrowed funds.
At the end of its most recent quarter, the Bank had total assets of
$103.4 million and equity of $14.4 million, and reported an ROAA of 1.03 percent
and an ROAE of 6.30 percent for its most recent four quarters.
ASB FINANCIAL CORP., Portsmouth, Ohio is the holding company for
American Savings Bank, FSB, a federal savings bank, serving Scioto County from
its single banking office.
For the fiscal year ended June 30, 1997, interest income rose 3 percent
to $8.4 million and net interest income after loan loss provision fell 5 percent
to $3.7 million. Net
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<PAGE> 60
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
income fell 40 percent to $667,000. Results reflect higher average balance of
loans outstanding, offset by higher interest cost due to increased average rate.
Earnings reflect the $551,000 SAIF recapitalization assessment and higher
employee compensation. Net earnings amounted to $246,000 for the three months
ended September 30, 1997, an increase of $422,000 over the $176,000 net loss
reported for the same period in 1996. The increase in earnings resulted
primarily from a $585,000 decrease in expense recorded for deposit insurance
premiums during the current quarter relating to the Savings Association
Insurance Fund ("SAIF") recapitalization charge, which was recorded during the
1996 quarter. Additionally, the Corporation experienced a $22,000 decrease in
all other components of general, administrative and other expense, which was
partially offset by a $7,000 decrease in net interest income. Net interest
income declined by $7,000 or 0.8 percent, for the three months ended September
30, 1997, compared to the 1996 period. Interest income on loans increased by
$134,000, or 9.3 percent due primarily to a $6.0 million increase in the average
balance of loans outstanding. Interest income on mortgage-backed and investment
securities and interest-bearing deposits declined by $35,000 or 5.5 percent, due
primarily to a decrease in the average portfolio yield during the year. Interest
expense on deposits increased by $83,000 or 7.5 percent, due to a $5.9 million
increase in the weighted-average deposit balance outstanding, coupled with an
increase in the cost of deposits year to year. Interest expense on borrowings
increased by $23,000 due to a $130,000 increase in the weighted-average balance
of borrowings outstanding.
At September 30, 1997, the Corporation's assets indicated a decrease of
$20,000 or 0.02 percent compared to June 30, 1997. Loans receivable increased by
$1.9 million, or 2.6 percent, during the three month period, to a total of $76.1
million at September 30, 1997. Shareholders' equity at September 30, 1997,
indicated a $189,000 or 1.1 percent decrease from June 30, 1997.
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<PAGE> 61
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
At the end of its most recent quarter, the Bank had total assets of
$112.4 million and equity of $17.5 million, and reported an ROAA of 0.97 percent
and an ROAE of 5.89 percent for its most recent four quarters.
COMMUNITY INVESTORS BANCORP, INC., Bucyrus, Ohio, is the holding
company for First Federal Savings and Loan Association of Bucyrus, serving
Crawford County, Ohio, from 3 full service offices.
For the three months ended September 30, 1997, total interest income
rose 2 percent to $1.8 million and net interest income after loan loss provision
rose 7 percent to $811,000. Net interest income increased by $11,000 or 1.4
percent for the three months ended September 30, 1997, compared to the 1996
period. Net interest income reflects increased earning asset balances and a
lower provision for loan losses. Net income totalled $236,000, an increase of
$339,000 or 329.1 percent from the $103,000 of net loss reported for the same
period in 1996. The 1996 loss resulted primarily from a one-time charge of
$458,000 recorded in the 1996 period reflecting the assessment to recapitalize
the SAIF. The increase was a result of a $17,000 increase in other income, a
$11,000 increase in net interest income, and a $44,000 decrease in the provision
for losses on loans, which were partially offset by a $35,000 increase in
general, administrative and other expense, excluding the above SAIF assessment,
and a $156,000 increase in the provision for federal income taxes.
At September 30, 1997, the Corporation's assets indicated an increase
of $2.0 million or 2.2 percent compared to assets at June 30, 1997. The increase
in assets was funded through growth in the deposit portfolio of $1.2 million
coupled with an increase in advances from the Federal Home Loan Bank of
$729,000. Loans receivable increased by $2.7 million or 3.6 percent during the
three month period, to a total of $79.2 million at September 30, 1997. Deposits
totaled $74.1 million at September 30, 1997, an increase
52
<PAGE> 62
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
of $1.2 million or 1.6 percent over June 30, 1997, levels. Management continued
its effort to achieve a moderate rate of growth in the deposit portfolio through
marketing and pricing strategies.
At the end of its most recent quarter, the Association had total assets
of $94.3 million and equity of $11.1 million, and reported an ROAA of 0.97
percent and an ROAE of 8.37 percent for its most recent four quarters.
FFD FINANCIAL CORPORATION, Dover, Ohio, is the holding company for
First Federal Savings Bank of Dover, serving its market area of Tuscarawas
County, Ohio, from a single banking office.
The Corporation reported net earnings of $224,000 for the three months
ended September 30, 1997, compared to a net loss of $22,000 for the comparable
period in 1996. The increase in net earnings resulted primarily from a $77,000
increase in net interest income and a $294,000 decrease in general,
administrative and other expense, which were partially offset by a $127,000
increase in federal income taxes. The reduction in general, administrative and
other expense resulted primarily from the one-time charge recorded in the 1996
quarter related to the recapitalization of the Savings Association Insurance
Fund ("SAIF") totaling $332,000, or $219,000 after-tax. Total interest income
increased by $145,000 or 10.2 percent to a total of $1.6 million for the three
months ended September 30, 1997. Interest income on loans increased by $181,000
or 19.9 percent due, primarily, to a $7.9 million increase in the average loan
portfolio outstanding. Interest income on mortgage-backed securities decreased
by $33,000 or 11.3 percent due, primarily, to a $2.0 million decrease in the
average balance outstanding. Interest income on investment securities and
interest-bearing deposits decreased by $3,000 or 1.4 percent due, primarily, to
a $148,000 decrease in the average balance outstanding. Interest expense on
deposits increased by $54,000 or 8.5 percent for the three months ended
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<PAGE> 63
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
September 30, 1997, compared to 1996, due, primarily, to a $4.3 million increase
in the average deposit portfolio outstanding. Interest expense on borrowings
increased by $14,000 or 13.1 percent due, primarily, to a $1.0 million increase
in average advances outstanding. As a result of the foregoing, net interest
income increased by $77,000 or 11.4 percent for the three months ended September
30, 1997, compared to 1996.
The Corporation's total assets at September 30, 1997, indicated a
$220,000 or 0.3 percent increase over the total at June 30, 1997. This increase
was funded primarily through growth in deposits of $190,000. Loans receivable
totaled $58.8 million at September 30, 1997, an increase of $3.3 million or 6.0
percent over the June 30, 1997, total. Deposits totaled $57.3 million at
September 30, 1997, a $190,000 or 0.3 percent increase over June 30, 1997. FHLB
advances totaled $8.3 million at September 30, 1997, a $101,000 or 1.2 percent
decrease from June 30, 1997. The decrease resulted from principal repayments.
Shareholders' equity indicated a $7,000 decline from June 30, 1997. The decrease
resulted from a purchase of treasury stock totaling $154,000 and dividends of
$109,000, which were partially offset by net earnings of $224,000 and an
increase in net unrealized gains on securities designated as available for sale
of $32,000.
At the end of its most recent quarter, the Bank had total assets of
$88.2 million and equity of $21.5 million, and reported an ROAA of 1.93 percent
and an ROAE of 7.93 percent for its most recent four quarters.
KENTUCKY FIRST BANCORP, INC., Cynthiana, Kentucky, is the holding
company for First Federal Savings Bank, which serves its primary market area of
Harrison County, Kentucky, from 2 full service offices.
For the three months ended September 30, 1997, interest income rose 4
percent to $1.6 million and net interest income after loan loss provisions fell
7 percent to $731,000.
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<PAGE> 64
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
Net income rose from $15,000 to $267,000. Interest income reflects loan growth,
offset by higher reserves for delinquent loans. Earnings reflect a $11,000 gain
from the sale of securities and the absence of the special SAIF assessment.
The Company's total assets at June 30, 1997, indicated an increase of
$2.6 million or 3.0 percent over the $86.3 million total at June 30, 1996. The
increase in assets was funded primarily by a $3.7 million increase in deposits
and a $3.4 million increase in advances from the Federal Home Loan Bank, which
were partially offset by a $4.2 million, or $3.00 per share, return of capital
distribution. Loans receivable totaled $48.9 million at June 30, 1997, an
increase of $5.9 million or 13.7 percent over the $43.0 million total at June
30, 1996. The growth in loans was comprised of $3.2 million in loans secured by
residential real estate, $1.1 million in loans secured by nonresidential real
estate and $1.7 million in consumer loans. During fiscal 1997, as consumer
preference has shifted to fixed-rate loan products, management elected to pursue
growth in the portfolio by meeting the demand. Deposits totaled $55.4 million at
June 30, 1997, an increase of $3.7 million or 7.1 percent over 1996 levels.
During fiscal 1997 management elected to pursue growth in the deposit portfolio
through marketing and pricing strategies. The increase in deposits consisted of
a $1.8 million or 10.0 percent increase in passbook and demand deposits and a
$1.9 million or 5.5 percent increase in certificates of deposit. Advances from
the Federal Home Loan Bank totaled $18.0 million, an increase of $3.4 million or
23.7 percent over fiscal 1996 levels. Funds received from growth in deposits and
Federal Home Loan Bank advances were primarily deployed to fund the growth in
the loan portfolio. Stockholders' equity indicated a decrease of $4.5 million or
23.5 percent from June 30, 1996 levels. The decrease resulted primarily from the
$4.2 million return of capital distribution paid in December 1996, coupled with
regular quarterly dividends totaling $626,000 and purchases of treasury shares
totaling $818,000, which were partially offset by net earnings of $762,000.
55
<PAGE> 65
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
At the end of its most recent quarter, the Bank had total assets of
$88.1 million and equity of $14.7 million, and reported an ROAA of 1.15 percent
and an ROAE of 6.64 percent for its most recent four quarters.
MARION CAPITAL HOLDINGS, INC., Marion, Indiana, is the holding company
for First Federal Savings Bank of Marion, serving Grant and Adams Counties from
2 full service offices.
For the fiscal year ended June 30, 1997, interest income remained flat
at $13.7 million. Net interest income after loan loss provision rose 2 percent
to $7 million. Net income fell 2 percent to $2.4 million. Net interest income
after loan loss provisions reflects a lower cost of interest bearing
liabilities. Net income reflects higher expenses related to the FDIC special
assessment.
Net income amounted to $660,193 for the three months ended September
30, 1997, representing a $532,705 increase from the earnings for the three
months ended September 30, 1996, of $127,488. Earnings for the three months
ended September 30, 1996, included the SAIF special assessment of $776,717 and
is included in other expense. Net income for the three months ended September
30, 1997, was $660,193 compared to $127,488 for the three months ended September
30, 1996, an increase of $532,705. During the quarter ended September 30, 1996,
net income includes expense of $469,059 after taxes for the FDIC special
assessment. Interest income for the three months ended September 30, 1997,
increased $1,178 or 0.03 percent, compared to the same period in the prior year,
while interest expense for the three months ended September 30, 1997, decreased
$5,080 or 0.3 percent compared to the same period in the prior year. As a
result, net interest income for the three months ended September 30, 1997, was
$1,723,138, an increase of $6,258 or 0.4 percent compared to the same period in
the prior year.
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SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
The Company's total assets increased 3.8 percent from June 30, 1997, to
September 30, 1997. Loans receivable were $151.8 million at September 30, 1997,
an increase of $3.8 million or 3.0 percent from June 30, 1997. Deposits
decreased to $120.6 million at September 30, 1997, compared to $121.8 million at
June 30, 1997, a 1.0 percent decrease. This $1.2 million decrease represented a
$300,000 increase in passbook and transaction accounts and an approximate $1.5
million decrease in certificate of deposit accounts. This decrease in total
deposits results primarily from an outflow of existing accounts to different
market alternatives. Shareholders' equity was $39.5 million at September 30,
1997, compared to $39.1 million at June 30, 1997. This increase was primarily
the result of the Company's earnings during the three months ended September 30,
1997.
At the end of its most recent quarter, the Bank had total assets of
$179.8 million and equity of $39.5 million, and reported an ROAA of 1.70 percent
and an ROAE of 7.49 percent for its most recent four quarters.
NORTHWEST EQUITY CORP., Amery, Wisconsin, is the holding company for
Northwest Savings Bank, a Wisconsin-chartered savings bank serving Polk, St.
Croix and Burnett Counties from 3 full service offices.
Net income for the three months ended June 30, 1997, increased $29,000
or 13.0 percent to $252,000 compared to $223,000 for the three months ended June
30, 1996. The increase in net income was primarily due to an increase in net
interest income of $31,000 from $830,000 for the three months ended June 30,
1996, to $861,000 for the three months ended June 30, 1997. A $25,000 reduction
in federal insurance premiums from $35,000 for the three months ended June 30,
1996, to $10,000 for the three months ended June 30, 1997, was partially offset
by an increase in provision for loan losses of $19,000 from $6,000 for the three
months ended June 30, 1996, to $25,000 for the three
57
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SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
months ended June 30, 1997, and a decrease in other income of $14,000 from
$48,000 for the three months ended June 30, 1996, to $34,000 for the three
months ended June 30, 1997. Net interest income increased by $31,000 from
$830,000 for the three months ended June 30, 1996, to $861,000 for the three
months ended June 30, 1997. The improvement in net interest income results from
interest income increasing $109,000 to $1.9 million for the three months ended
June 30, 1997, compared to $1.8 million for the three months ended June 30,
1996, while interest expense increased only $78,000 to $1,050,000 for the three
months ended June 30, 1997, from $972,000 for the three months ended June 30,
1996. Interest income increased $109,000 or 6.1 percent to $1.9 million for the
three months ended June 30, 1997, compared to $1.8 million for the three months
ended June 30, 1996. The increase was due to the increase in the average
outstanding balance of total loans to $77.4 million for the three months ended
June 30, 1997, compared to $72.7 million for the three months ended June 30,
1996. The increase in total loans was the result of the general decrease in
mortgage interest rates over the comparable periods which encouraged loan
activity. Interest expense increased $78,000 or 8.0 percent to $1,050,000 for
the three months ended June 30, 1997, compared to $972,000 for the three months
ended June 30, 1996. Interest on savings increased $22,000 or 3.2 percent from
$695,000 for the three months ended June 30, 1996, to $717,000 for the three
months ended June 30, 1997. The increase reflects an increase in the average
outstanding balance of total deposits to $61.6 million for the three months
ended June 30, 1997, from an average balance of $59.1 million for the three
months ended June 30, 1996. Interest on borrowings increased $56,000 or 20.2
percent from $277,000 for the three months ended June 30, 1996, to $333,000 for
the three months ended June 30, 1997. The increase reflects an increase in
average outstanding advances and other borrowings from $19.0 million for the
three months ended June 30, 1996, to $22.3 million for the three months ended
June 30, 1997. The increase in advances and other borrowings was used to fund
the increase in assets between the periods.
58
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SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
Total assets increased $1.8 million or 1.9 percent at June 30, 1997,
compared to March 31, 1997. The increase is a result of a $404,000 or 0.52
percent increase in net loans receivable to $77.6 million at June 30, 1997,
compared to $77.2 million at March 31, 1997. The increase in net loans
receivable was the result of the expected seasonal increase of loan activity
during the spring and summer months. Savings accounts increased $1.6 million
from $61.6 million at March 31, 1997, to $63.2 million at June 30, 1997.
Outstanding advances from the Federal Home Loan Bank decreased $1.0 million from
$17.6 million at March 31, 1997 to $16.6 million at June 30, 1997. Other
borrowed funds increased $788,000 from $4.5 million at June 30, 1997, to $5.3
million at March 31, 1997 as the result of increase in retail reverse repurchase
agreements. The increase in other borrowed money partially offset the decrease
in Federal Home Loan Bank advances. Shareholders' equity increased by $234,000
from March 31, 1997, to June 30, 1997.
At the end of its most recent quarter, the Bank had total assets of
$97.0 million and equity of $11.3 million, and reported an ROAA of 1.03 percent
and an ROAE of 8.75 percent for its most recent four quarters.
PENNWOOD BANCORP, INC., Pittsburgh, Pennsylvania, is the holding
company for the Pennwood Savings Bank, serving Allegheny and Armstrong Counties
from 3 full service offices.
The Bank reported net income of $128,000 for the three months ended
September 30, 1997, compared to a net loss of $17,000 during the three months
ended September 30, 1996. The $145,000 increase in net income during such period
as compared to the 1996 period was the result of a $224,000 reduction in
non-interest expenses, a $10,000 increase in non-interest income and a $6,000
increase in net interest income, which was partially offset by a $7,000 increase
in loan loss provisions and an $88,000 increase in income
59
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SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
taxes. Net interest income increased by $6,000 or 1.2 percent during the three
months ended September 30, 1997, compared to the 1996 quarter, due to a $1.7
million or 4.0 percent increase in the average balance of interest-bearing
assets, which was offset by a $2.3 million or 6.5 percent increase in the
average balance of interest-bearing liabilities. During the three months ended
September 30, 1997, total interest income increased by $63,000 or 7.0 percent,
compared to the same period in 1996. The increase in interest earned on loans
was due primarily to a $6.9 million or 32.8 percent increase in the average
balance of loans outstanding. During the three months ended September 30, 1997,
total interest expense increased by $57,000 or 13.9 percent, compared to the
same period in 1996, due to an increase of $1.1 million or 4.9 percent in the
average balance of certificates of deposit and a $1.8 million or 367.7 percent
increase in the average balance of borrowed money.
The Bank's total assets decreased by $2.3 million or 4.7 percent from
June 30, 1997 to September 30, 1997. During the three months ended September 30,
1997, the Bank's net loans receivable increased $1.7 million or 6.3% during the
quarter. During the quarter, the Savings Bank's total liabilities decreased by
$2.3 million or 5.7 percent at September 30, 1997. Borrowed money decreased by
$3.0 million or 67.4 percent, which was offset by an increase in deposit
liabilities of $720,000. Shareholders equity increased by $10,000 during the
three months ended September 30, 1997, as a result of the market value
adjustment on investments classified as available for sale of $65,000 and the
year to date net income of $128,000, which were partially offset by the purchase
of Treasury Stock of $162,500.
At the end of its most recent quarter, the Bank had total assets of
$47.6 million and equity of $8.7 million, and reported an ROAA of 0.99 percent
and an ROAE of 5.20 percent for its most recent four quarters.
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SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
POTTERS FINANCIAL CORPORATION, East Liverpool, Ohio, is the holding
company for Potters Savings and Loan Company, with five offices in Columbiana
County, Ohio. The Bank originates loans in a market area including parts of Ohio
and West Virginia.
For the nine months ended September 30, 1997, total interest income
rose 4 percent to $6.3 million and net interest income after loan loss provision
rose 36 percent to $3.4 million. Net income totalled $1 million compared to a
loss of $205,000 thousand for the same period in 1996. Net interest income
reflects an increase in yields on interest earnings assets. Earnings reflect a
decrease in deposit insurance premiums.
The Company's assets at September 30, 1997, increased $8.5 million or
7.5 percent compared to December 31, 1996. Net loans receivable increased $15.0
million, from $62.5 million at December 31, 1996, to $77.5 million at September
30, 1997. Loan purchases and local loan originations during 1997 resulted in a
net increase of $12.9 million, or 26.2%, in one- to-four family real estate
loans. Commercial and consumer loans also increased $1.5 million or 17.8 percent
during 1997, primarily from increased home equity lines of credit. Loan
purchases totaled $14.8 million of primarily adjustable-rate real estate loans
during 1997 on properties located in northwestern and southwestern Ohio. Total
deposits increased $3.6 million or 3.7 percent during the first nine months of
1997, from $97.3 million at December 31, 1996, to $100.9 million at September
30, 1997. Inflows occurred primarily in certificates of deposit. Potters has
aggressively priced selected certificates of deposit with maturities exceeding
one year in an attempt to maintain deposit levels despite strong competition for
certificates of deposit in the local area. FHLB advances totaled $9.9 million at
September 30, 1997, compared to $5.1 million at December 31, 1996. Advances
totaling $14.6 million received during the first nine months of 1997 were used
to fund loan purchases and for cash management purposes. Shareholders' equity
increased $236,000 during 1997.
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SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
At the end of its most recent quarter, the Company had total assets of
$122.7 million and equity of $10.8 million, and reported an ROAA of 0.98 percent
and an ROAE of 10.93 percent for its most recent four quarters.
THREE RIVERS FINANCIAL CORP., Three Rivers, Michigan, is the holding
company for the First Savings Bank, A Federal Savings Bank, serving St. Joseph,
Cass and Kalamazoo Counties from 4 full service offices.
Net income for the three months ended March 31, 1997, was $180,000
compared to $142,000 for the three months ended March 31, 1996, an increase of
$38,000 or 26.8 percent. Increases in interest income of $95,000 or 6.l percent
partially offset by increases in interest expense of $48,000 or 5.9 percent
primarily account for the increase in net income. Net income for the nine months
ended March 31, 1997 was $290,000 compared to $461,000 for the nine months ended
March 31, 1996, a decrease of $171,000 or 37.1 percent. This was primarily the
result of the SAIF special assessment of approximately $411,000 pretax for the
nine-month period ended March 31, 1997. Net income for the nine months ended
March 31, 1997, compared to the same period in 1996 was also impacted by an
increase of $240,000 or 33.5 percent in compensation and benefits primarily
related to additional stock-incentive and benefit plans resulting from the
conversion in August, 1995. Increases in interest expense of $109,000 or 4.5
percent in 1997 as compared to 1996 further contributed to the decline in net
income. This increase in interest expense primarily related to additional FHLB
borrowings in 1997. These increased expenses were partially offset by increases
of approximately $350,000 or 7.5 percent in interest income.
For the three months ended September 30, 1997, interest income rose 9
percent to $1.8 million and net interest income after loan loss provisions
remained flat at $824,000. Net income totalled $225,000 compared to a loss of
$92,000. Net interest income reflects increased interest-earning assets,
partially offset by a higher cost of borrowed funds. Net income reflects a
decreased SAIF deposit insurance premium.
62
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SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
The Company's total assets increased $4.0 million from June 30, 1996,
March 31, 1997. The increase was due primarily to increases in cash and cash
equivalents, loans receivable and other assets. Such increases were partially
offset by decreases in interest-earning-time deposits with other financial
institutions along with a decrease in securities available for sale and held to
maturity. Loans receivable increased $4.1 million or 7.32 percent from $56.0
million at June 30, 1996, to $60.1 million at March 31, 1997. This includes
$94,000 in loans held for sale. Total borrowed funds increased $8.1 million or
88.0% from $9.2 million at June 30, 1996 to $17.3 million at March 31, 1997.
This increase was the result of an increase in loan demand along with a decrease
in total deposits. Total deposits decreased $3.7 million to $60.0 million for
the nine-month period ended March 31, 1997. The largest decrease by deposit
categories was in time deposits and statement savings accounts.
At the end of its most recent quarter, the Bank had total assets of
$94.2 million and equity of $13.0 million, and reported an ROAA of 0.90 percent
and an ROAE of 6.48 percent for its most recent four quarters.
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IV. ANALYSIS OF FINANCIAL PERFORMANCE
This section reviews and compares the financial performance of Home to
all thrifts, regional thrifts, Ohio thrifts and the ten institutions
constituting Home's comparable group, as selected and described in the previous
section. The comparative analysis focuses on financial condition, earning
performance and pertinent ratios as shown in Exhibits 41 through 46.
As presented in Exhibits 41 and 42, at September 30, 1997, Home's total
equity of 17.70 percent of assets was higher than the 15.69 percent for the
comparable group and the 12.67 for all thrifts, but lower than the 14.27 percent
ratio for Midwest thrifts and the 14.85 percent ratio for Ohio thrifts. The Bank
had an 86.50 percent share of net loans in its asset mix, higher than the
comparable group at 70.38 percent, and also higher than all thrifts at 67.23
percent, Midwest thrifts at 71.83 percent and Ohio thrifts at 74.65 percent.
Home's share of net loans, higher than industry averages, is primarily the
result of its lower 11.26 percent share of cash and investments and its absence
of mortgage-backed securities. The comparable group had a 9.46 percent share of
mortgage-backed securities and a higher 17.30 percent share of cash and
investments. All thrifts had 11.19 percent of assets in mortgage-backed
securities and 17.85 percent in cash and investments. Home's share of deposits
of 80.54 percent was moderately higher than the comparable group and the three
geographic categories, reflecting the Bank's absence of borrowed funds. The
comparable group had deposits of 71.14 percent and borrowings of 11.68 percent.
All thrifts averaged a 70.38 percent share of deposits and 15.26 percent of
borrowed funds, while Midwest thrifts had a 69.32 percent share of deposits and
a 15.04 percent share of borrowed funds. Ohio thrifts averaged a 71.70 percent
share of deposits and a 12.41 percent share of borrowed funds. Home was absent
goodwill and other intangibles, as was the comparable group. Goodwill and
intangible assets represented 0.25 percent of total assets for all thrifts, 0.19
percent for Midwest thrifts and 0.16 percent for Ohio thrifts.
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ANALYSIS OF FINANCIAL PERFORMANCE (CONT.)
Operating performance indicators are summarized in Exhibits 43 and 44
and provide a synopsis of key sources of income and key expense items for Home
in comparison to the comparable group, all thrifts, and regional thrifts for the
trailing four quarters.
As shown in Exhibit 45, for the twelve months ended September 30, 1997,
Home had a yield on average interest-earning assets higher than the comparable
group and also higher than the three geographical categories. The Bank's yield
on interest-earning assets was 8.27 percent compared to the comparable group at
7.81 percent, all thrifts at 7.77, Midwest thrifts at 7.76 percent and Ohio
thrifts also at 7.82 percent.
The Bank's cost of funds for the twelve months ended September 30,
1997, was significantly lower than the comparable group and the three
geographical categories. Home had an average cost of interest-bearing
liabilities of 4.29 percent compared to 4.82 percent for the comparable group,
4.86 percent for all thrifts, 4.98 percent for Midwest thrifts and 5.00 for Ohio
thrifts. The Bank's interest income and interest expense ratios resulted in an
interest rate spread of 3.98 percent, which was higher than the comparable group
at 2.99 percent, all thrifts at 2.91 percent, Midwest thrifts at 2.78 percent
and Ohio thrifts at 2.82 percent. Home achieved a net interest margin of 4.75
percent based on average interest-earning assets for the twelve months ended
September 30, 1997, which was significantly higher than the comparable group
ratio of 3.72 percent. All thrifts averaged a 3.48 percent net interest margin
for the trailing four quarters, while Midwest thrifts and Ohio thrifts averaged
net interest margins of 3.43 percent and 3.47 percent, respectively.
Home's major source of income is interest earnings, as is evidenced by
the operations ratios presented in Exhibit 44. The Bank made a $35,000 provision
for loan losses during the twelve months ended September 30, 1997, representing
0.06 percent of average assets and reflecting the Bank's objective of increasing
its allowance for loan
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ANALYSIS OF FINANCIAL PERFORMANCE (CONT.)
losses as the Bank continues to to be active in the origination and retention of
non-mortgage loans. The comparable group indicated a provision representing a
lower 0.02 percent of assets, with all thrifts at 0.14 percent, Midwest thrifts
at 0.11 percent and Ohio thrifts at 0.05 percent.
The Bank's non-interest income was $176,000 or 0.30 percent of average
assets for the twelve months ended September 30, 1997. Such non-interest income
was slightly lower than the comparable group at 0.33 percent, modestly higher
than Ohio thrifts at 0.23 percent and moderately lower than all thrifts at 0.44
percent and Midwest thrifts at 0.41 percent. For the twelve months ended
September 30, 1997, Home's operating expense ratio was 2.92 percent, higher than
the comparable group and the three geographical averages. The comparable group's
operating expense ratio was 2.37 percent, while all thrifts averaged 2.34
percent, Midwest thrifts averaged 2.17 percent and Ohio thrifts averaged 2.06
percent.
The overall impact of Home's income and expense ratios is reflected in
the Bank's net income and return on average assets. The Bank had an ROAA of 1.31
percent based on net income and an identical ROAA of 1.31 percent based on core
income for the twelve months ended September 30, 1997. For its most recent four
quarters, the comparable group had a lower ROAA of 1.17 percent based on net
income and also a lower core ROAA of 1.03 percent compared to the Bank. All
thrifts also averaged a lower net ROAA of 0.86 percent, while Midwest thrifts
averaged 0.94 percent and Ohio thrifts averaged a lower 1.01 percent. All
thrifts indicated a core ROAA of 0.84 percent, while Midwest thrifts and Ohio
thrifts averaged core ROAAs of 0.93 percent and 0.98 percent, respectively.
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V. MARKET VALUE ADJUSTMENTS
This is a conclusive section where adjustments are made to determine
the pro forma market value or appraised value of the Corporation based on a
comparison of Home with the comparable group. These adjustments will take into
consideration such key items as earnings performance and growth potential,
market area, financial condition, asset and deposit growth, dividend payments,
subscription interest, liquidity of the stock to be issued, management, and
market conditions or marketing of the issue. It must be noted, however, that all
of the institutions in the comparable group have their differences, and as a
result, such adjustments become necessary.
EARNINGS PERFORMANCE AND GROWTH POTENTIAL
In analyzing earnings performance, consideration was given to the level
of net interest income, the level and volatility of interest income and interest
expense relative to changes in market area conditions and to changes in overall
interest rates, the quality of assets as it relates to the presence of problem
assets which may result in adjustments to earnings, the current and historical
levels of classified assets and real estate owned, the level of valuation
allowances to support any problem assets or nonperforming assets, the level and
volatility of non-interest income, and the level of non-interest expenses.
As discussed earlier, the Bank's historical business philosophy has
focused on maintaining and increasing its net interest income and net earnings,
maintaining its historically lower ratio of nonperforming assets, maintaining a
reasonable level of interest sensitive assets relative to interest sensitive
liabilities, maintaining its sensitivity measure and its overall interest rate
risk, strengthening its level of general valuation allowances to reduce the
impact of any unforeseen losses, and closely monitoring its overhead expenses.
The Bank's current philosophy will continue to focus on maintaining a stable net
interest spread and net interest margin, thereby increasing its net income and
return on assets;
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EARNINGS PERFORMANCE AND GROWTH POTENTIAL (CONT.)
maintaining its level of interest sensitive assets relative to interest
sensitive liabilities; strengthening its level of general valuation allowances
and controlling its overhead expenses.
Earnings are often related to an institution's ability to generate
loans. The Bank was an active originator of mortgage and non-mortgage loans in
fiscal years 1993 to 1997. During the three months ended September 30, 1997,
annualized originations of $25.2 million exceeded fiscal year 1997 originations
of $21.3 million by $3.9 million or 18.3 percent. Such 1997 originations
exceeded fiscal year 1996 originations of $20.8 million by a smaller $546,000 or
2.6 percent, with principal repayments increasing at a somewhat greater rate of
9.2 percent from 1996 to 1997. Overall, in fiscal years 1993 to 1997 and for the
three months ended September 30, 1997, originations exceeded principal
repayments, resulting in an increase of 66.6 percent in Home's net loan
portfolio since June 30, 1993. Such total of principal repayments exceeded
originations and produced a $6.2 million decrease in net loans receivable from
fiscal year 1996 to fiscal year 1997. The loan category with the largest
increase in loan originations from fiscal year 1996 to 1997 and for the three
months ended September 30, 1997, was one- to four-family mortgage loans.
Consumer loan and commercial loan originations also indicated noticeable
increases from 1996 to 1997 and then remained generally flat for the three
months ended September 30, 1997, annualized. Originations of home equity and
nonresidential mortgage loans decreased from 1996 to 1997, but increased for the
three months ended September 30, 1997, annualized.
The Bank's emphasis has been on the origination of one- to four-family
mortgage loans, with that loan category constituting 42.0 percent, 44.2 percent,
44.4 percent of total originations in fiscal years 1996 and 1997 and for the
three months ended September 30, 1997, respectively. In each of those fiscal
years, the second largest category of originations was consumer loans,
constituting 34.6 percent, 38.2 percent, 31.7 percent of
68
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EARNINGS PERFORMANCE AND GROWTH POTENTIAL (CONT.)
total originations in fiscal years 1996 and 1997 and for the three months ended
September 30, 1997, respectively.
The impact of these primary lending efforts has been to generate a
yield on average interest-earning assets of 8.27 percent for Home for the twelve
months ended September 30, 1997, compared to 7.81 percent for the comparable
group, 7.77 percent for all thrifts and 7.76 percent for Midwest thrifts. The
Bank's ratio of interest income to average assets was 8.14 percent for the
twelve months ended September 30, 1997, which was higher than the comparable
group at 7.54 percent, Midwest thrifts at 7.49 percent and all thrifts at 7.47
percent for their most recent four quarters.
The Bank's net interest margin of 4.75 percent, based on average
interest-earning assets for the twelve months ended September 30, 1997, was
significantly higher than the comparable group at 3.72 percent, all thrifts at
3.48 percent and Midwest thrifts at 3.43 percent. Home's cost of
interest-bearing liabilities of 4.29 percent for the twelve months ended
September 30, 1997, was lower than the comparable group at 4.82 percent, all
thrifts at 4.86 percent, and Midwest thrifts at 4.98 percent. Home's net
interest spread of 3.98 percent for the twelve months ended September 30, 1997,
was higher than the comparable group at 2.99 percent, all thrifts at 2.91
percent and Midwest thrifts at 2.78 percent.
The Bank's ratio of noninterest income to assets was 0.30 percent for
the twelve months ended September 30, 1997, similar to the comparable group at
0.33 percent, but lower than all thrifts at 0.44 percent and Midwest thrifts at
0.41 percent. The Bank has indicated noninterest income similar to the
comparable group, but its operating expenses were considerably higher than the
comparable group, as well as all thrifts and Midwest thrifts. For the twelve
months ended September 30, 1997, Home had an operating expense to assets ratio
of 2.92 percent compared to a lower 2.37 percent for the comparable group, 2.34
percent for all thrifts and 2.17 percent for Midwest thrifts.
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EARNINGS PERFORMANCE AND GROWTH POTENTIAL (CONT.)
For the twelve months ended September 30, 1997, Home generated a
similar ratio of noninterest income and a higher ratio of noninterest expenses,
more than offset by a considerably higher net interest margin relative to its
comparable group. As a result, the Bank's net income level was higher than its
comparable group for the twelve months ended September 30, 1997. Based on net
earnings, the Bank had a return on average assets of 1.77 percent in fiscal year
1993, 1.55 percent in fiscal year 1994, 1.47 percent in fiscal year 1995, 1.47
percent in fiscal year 1996, 1.04 percent in fiscal year 1997 and 1.31 for the
twelve months ended September 30, 1997. Absent the effect of the non-recurring
SAIF assessment in fiscal year 1997, the Bank's ROAA for that year would have
been 1.33 percent based on core income of $768,000 as previously discussed. For
its most recent four quarters, the comparable group had a lower ROAA of 1.17
percent, while all thrifts also indicated an even lower 0.86 percent. The Bank's
core or normalized earnings, as shown in Exhibit 7, were identical to its net
earnings for the most recent twelve months ended September 30, 1997. Core ROAA
of 1.31 percent was also higher than the comparable group at 1.03 percent, all
thrifts at 0.84 percent and Midwest thrifts at 0.93 percent.
Home's earnings stream will continue to be dependent on both the
overall trends in interest rates and also on the consistency and reliability of
its noninterest income, the latter indicating a moderate dollar increase since
fiscal year 1993, with the Bank's ratio of noninterest income to assets
remaining generally constant during those five fiscal years. The Bank's cost of
interest-bearing liabilities will continue to adjust upward as deposits reprice
at higher rates and continue their gradual movement toward medium term
instruments. This upward pressure on savings costs is likely to continue through
1998 based on current rates, although the rate of increase will likely subside
somewhat during subsequent few years. It has also been recognized, however, that
notwithstanding Home's current ROAA being considerably higher than that of its
comparable group for the most recent four quarters, the Bank has experienced a
decline in its ROAA, net interest margin and net interest spread for the twelve
months ended September 30, 1997, since fiscal year
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EARNINGS PERFORMANCE AND GROWTH POTENTIAL (CONT.)
1993. Further, Home's efficiency ratio has become steadily less favorable during
the last five years, changing from 45.6 percent in fiscal year 1993 to 58.60
percent for the twelve months ended September 30, 1997, although the Bank's
efficiency ratio has been consistently more favorable than the current industry
average of approximately 64.0 percent.
In recognition of the foregoing earnings related factors, a minimum
upward adjustment has been made to Home's pro forma market value for earnings
performance.
MARKET AREA
Home's primary market area for retail deposits consists of Coshocton
County, Ohio, including the city of Coshocton, the location of the Bank's home
office. As discussed in Section II, since 1990,this market area has experienced
a population and household growth similar to Ohio but lower than the United
States and reported a somewhat higher unemployment rate compared to the
comparable group markets, Ohio and the United States. The unemployment rates in
Coshocton County was 5.4 percent in September, 1997, compared to 4.1 percent for
Ohio and 4.7 percent for the United States. In Home's market area in 1996, per
capita income and median household income were both significantly lower than
both the state and national average. The market area is also characterized by a
median housing value lower than Ohio and the United States.
The market area is principally rural and agricultural, with the major
employment sector being manufacturing, followed by the services sector, with the
wholesale/retail sector third.
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MARKET AREA (CONT.)
The level of financial competition in the Bank's market area is
considerable and dominated by the banking industry, with the additional presence
of credit unions. Home had net increases in both deposits and net loans from
fiscal year 1993 to fiscal year 1997, as deposits, including interest, exceeded
withdrawals and principal repayments on loans exceeded originations. For the
three months ended September 30, 1997, however, Home experienced a deposit
decrease of 2.1 percent or 8.4 percent annualized. Nevertheless, the Bank's
share of total market area deposits is somewhat higher than the average of the
comparable group institutions.
In recognition of all these factors, we believe that a minimum downward
adjustment is warranted for the Bank's market area.
FINANCIAL CONDITION
The financial condition of Home is discussed in Section I and shown in
Exhibits 1, 2, 5, 15, 16 and 17, and is compared to the comparable group in
Exhibits 40, 41 and 42. The Bank's total equity ratio before conversion was
17.70 percent at September 30, 1997, which was modestly higher than the
comparable group at 15.69 percent, all thrifts at 12.67 percent and Midwest
thrifts at 14.27 percent. With a conversion at the midpoint, the Corporation's
pro forma equity to assets ratio will increase to approximately 32.8 percent,
and the Bank's pro forma equity to assets ratio will increase to approximately
28.5 percent.
The Bank's mix of assets indicates some areas of significant variation
from its comparable group. Home had a higher share of net loans at 86.50 percent
of total assets at September 30, 1997, compared to the comparable group at 70.38
percent and all thrifts at 67.23 percent. The Bank's share of cash and
investments was a lower 11.26 percent compared to 17.30 percent for the
comparable group and 17.85 percent for all thrifts.
72
<PAGE> 82
FINANCIAL CONDITION (CONT.)
Home had no mortgage-backed securities compared to the comparable group at 9.08
percent and all thrifts at 11.19 percent. The Bank's 80.54 percent share of
deposits and absence of FHLB advances differed from the comparable group's 71.14
percent of deposits and 11.68 percent of borrowed funds.
At September 30, 1997, the Bank was absent both intangible assets and
repossessed real estate compared to zero and 0.04 percent in intangible assets
and repossessed real estate, respectively, for the comparable group. The
financial condition of Home is further affected by its level of nonperforming
assets at 0.10 percent of assets at September 30, 1997, compared to a higher
0.63 percent for the comparable group. It should be recognized, however, that
the Bank's ratio of nonperforming assets at September 30, 1997, was the highest
of all but one of its most recent five fiscal years, increasing considerably
from 0.05 percent of total assets in fiscal year 1997. At June 30, 1993, Home's
ratio of nonperforming assets to total assets was zero.
The Bank had a modestly lower 9.04 percent share of high risk real
estate loans compared to 12.47 percent for the comparable group, and the Bank's
share was also lower than all thrifts at 13.08 percent and Midwest thrifts at
12.35 percent. Home had $148,000 in allowance for loan losses or 242.62 percent
of nonperforming assets at September 30, 1997, compared to the comparable
group's lower 152.94 percent, with all thrifts and Midwest thrifts even higher
at 102.28 percent and 131.66 percent, respectively. The Bank's ratio is
reflective of its historically lower levels of non-performing assets and
classified loans. The Bank's allowance for loan losses represented 2.81 percent
of gross loans at September 30, 1997, compared to the comparable group at a
lower 0.98 percent, all thrifts at 0.77 percent and Midwest thrifts also at a
lower 0.65 percent.
Overall, we believe that no adjustment is warranted for Home's current
financial condition.
73
<PAGE> 83
ASSET AND DEPOSIT GROWTH
During the past three years, Home has been characterized by a much
lower than average growth in assets compared to the comparable group,
publicly-traded Ohio thrifts and all publicly-traded thrifts. The Bank's assets
increased at an average annual rate of 2.86 percent from 1993 to 1997, compared
to annual growth of 6.20 percent for the comparable group, 11.22 percent for all
thrifts and 13.76 percent for Ohio thrifts. Home's asset growth rate is
reflective of its average annual deposit increase of 1.35 percent for the same
five year period, compared to a similar annual growth rate of 1.29 percent for
the comparable group. Deposits for all thrifts, however, grew at a five year
average rate of 6.38 percent, while Ohio thrifts experienced average annual
deposit growth of 6.39 percent. Finally, Home also indicates a loan growth rate
of 12.00 percent for 1993 through 1997, compared to an annual growth for the
comparable group at 6.82 percent, with all thrifts at 12.52 percent and Ohio
thrifts at 13.63 percent.
The Bank's ability to increase its asset base and deposits in the
future and to deploy its incoming conversion capital is, to a great extent,
dependent on its being able to competitively price its loan and savings products
and to maintain a high quality of service to its customers. The location of
Home's two banking offices in a rural market area with a relatively stagnant
population and household base results in greater competition with other
financial institutions for market share. With no immediate plans to expand
beyond Coshocton County, the Bank's growth potential in assets, deposits and
loans relative to the comparable group may be limited.
Based on these conditions, we have concluded that a minimum downward
adjustment to the Bank's pro forma value is warranted related to its potential
asset, deposit and loan growth.
74
<PAGE> 84
DIVIDEND PAYMENTS
Home has not indicated its intention to pay an initial cash dividend.
The future payment of cash dividends will be dependent upon such factors as
earnings performance, capital position, growth level, and regulatory
limitations. All ten of the institutions in the comparable group pay cash
dividends for an average dividend yield of 2.31 percent.
Currently, many thrifts are not committing to initial cash dividends,
compared to such a dividend commitment in the past. In our opinion, no
adjustment to the pro forma market value is warranted at this time related to
dividend payments.
SUBSCRIPTION INTEREST
In the first half of 1996, investors' interest in new issues was mixed,
with the number of conversions decreasing from the same period in 1995. The
second half of 1996 produced some renewed interest in thrift conversion
offerings and to date in 1997, the total number of completed conversions has
been fairly modest, although subscription levels have been consistently high.
Overall, however, such interest appears to be directly related to the financial
performance and condition of the thrift institution converting, the strength of
the local economy, general market conditions and aftermarket price trends.
Further, there are currently an increased number of announced and pending
conversions which will compete with Home's offering.
Home will direct its offering primarily to depositors and residents in
its market area. The board of directors and officers anticipate purchasing
approximately $1.5 million or 8.8 percent of the conversion stock offered to the
public based on the appraised midpoint valuation. The Bank will form an 8.0
percent ESOP, which plans to purchase stock in the initial offering.
Additionally, the Prospectus restricts to 30,000 shares, based on the $10.00 per
share purchase price, the total number of shares in the conversion that may be
purchased by a single person, or by persons and associates acting in concert as
part
75
<PAGE> 85
SUBSCRIPTION INTEREST (CONT.)
of either the subscription offering or the direct community offering. The Bank
has secured the services of Charles Webb & Company, a division of Keefe,
Bruyette and Woods, Inc. ("Webb") to assist the Bank in the marketing and sale
of the conversion stock.
Based on the size of the offering, current market conditions, local
market interest and the terms of the offering, and the establishment of the
charitable foundation, we believe that no adjustment is warranted for the Bank's
anticipated subscription interest.
LIQUIDITY OF THE STOCK
Home will offer its shares through concurrent subscription and
community offerings with the assistance of Webb. If necessary, Webb will conduct
a syndicated community offering upon the completion of the subscription and
community offering. Home will pursue at least two market makers for the stock.
The Bank's public offering is approximately 16.4 percent smaller than the
current market value of the comparable group and approximately 90.3 percent
smaller than the average market value of Ohio thrifts. We believe, nevertheless,
that no adjustment to the pro forma market value is warranted at this time
relative to the liquidity of the stock.
MANAGEMENT
The president and chief executive officer of Home is Robert C.
Hamilton. Mr. Hamilton joined the Bank in 1981, serving as secretary, treasurer
and managing officer from 1981 to 1983. In 1982, Mr. Hamilton became a director,
and was elected president and chief executive officer in 1983.
76
<PAGE> 86
MANAGEMENT (CONT.)
The management of Home has been able to strengthen the Bank's equity
and increase its equity ratio over the past several years. Although ROAA, net
interest spread and net interest margin have consistently been higher than the
comparable group, industry and regional averages during the past five years,
those performance measures have all decreased since June 30, 1993. During the
past five years, the Bank's ratio of operating expenses to average assets has
increased steadily, remaining above comparable group and industry averages, and
its efficiency ratio has become less favorable.
Overall, we believe the Bank to be professionally, knowledgeably and
efficiently managed, as are the comparable group institutions, although we
perceive some lack of management depth and succession potential at Home.
Overall, it is our opinion that no adjustment to the pro forma market value is
warranted for management.
MARKETING OF THE ISSUE
The necessity to build a new issue discount into the stock price of a
converting thrift institution continue to prevail in recognition of uncertainty
among investors as a result of the thrift industry's dependence on interest rate
trends, recent volatility in the stock market and pending federal legislation
related to thrift charters and regulation. Recently converted institutions seem
to have borne much of the impact of that uncertainty, in spite of strong
subscription activity. The inference is that the market has discounted those
stocks pending the seasoning and stabilization of their post-conversion
earnings. Excluding two mutual holding companies, the nine thrifts completing
their conversions in the first half of 1997, all but one of which closed at the
super-maximum of their valuation range, are currently trading at an average of
115.62 percent of book value, compared to all thrifts at 161.12 percent and Ohio
thrifts at a lower 136.67 percent, 15.2 percent below the national average.
77
<PAGE> 87
MARKETING OF THE ISSUE (CONT.)
We believe that a new issue discount applied to the price to book
valuation approach continues and is considered to be reasonable and necessary in
the pricing of the Corporation. We have made a minimum downward adjustment to
the Corporation's pro forma market value in recognition of the new issue
discount.
78
<PAGE> 88
VI. VALUATION METHODS
Historically, the most frequently used method for determining the pro
forma market value of common stock for thrift institutions by this firm has been
the price to book value ratio method, due to the volatility of earnings in the
thrift industry in the early to mid-1990s. As earnings in the thrift industry
improved in the last few years, however, more emphasis has been placed on the
price to earnings method, particularly considering increases in stock prices
during the past twelve months. Primary emphasis, therefore, has been placed on
the price to earnings method in determining the pro forma market value of Home
Loan Financial Corp., with additional analytical and correlative attention to
the price to book value method.
In recognition of the volatility and variance in earnings due to
fluctuations in interest rates, the continued differences in asset and liability
repricing and the frequent disparity in value between the price to book approach
and the price to earnings approach, a third valuation method, the price to net
assets method, has also been used. The price to net assets method is used less
often for valuing ongoing institutions; however, this method becomes more useful
in valuing converting institutions when the equity position and earnings
performance of the institutions under consideration are different.
In addition to the pro forma market value, we have defined a valuation
range with the minimum of the range being 85.0 percent of the pro forma market
value, the maximum of the range being 115.0 percent of the pro forma market
value, and a super maximum being 115.0 percent of the maximum. The pro forma
market value or appraised value will also be referred to as the "midpoint
value".
In applying each of the valuation methods, consideration was given to
the adjustments to the Bank's pro forma market value discussed in Section V. A
minimum upward adjustment was made for Home's earnings performance and growth
potential. Minimum downward adjustments were made for the Bank's asset and
deposit growth and market area, and for the marketing of the issue. No
adjustments were made for the Bank's financial condition, dividend payments,
subscription interest, liquidity of the stock and management.
79
<PAGE> 89
PRICE TO BOOK VALUE METHOD
In the valuation of thrift institutions, the price to book value method
focuses on an institution's financial condition, and does not give as much
consideration to the institution's long term performance and value as measured
by earnings. Due to the earnings volatility of many thrift stocks, the price to
book value method is frequently used by investors who rely on an institution's
financial condition rather than earnings performance. This method, therefore, is
sometimes considered less meaningful for institutions that provide a consistent
earnings trend, but remains significant and reliable as a confirmational and
correlative analysis to the price to earnings and price to assets approaches. It
should be noted that the prescribed formulary computation of value using the pro
forma price to book value method returns a price to book value ratio below
market value.
Exhibit 48 shows the average and median price to book value ratios for
the comparable group which were 126.73 percent and 126.42 percent, respectively.
The total comparable group indicated a moderately wide range, from a low of
107.02 percent (AMB Financial Corp.) to a high of 151.65 percent (Potters
Financial Corp.). The comparable group had a nominally higher average price to
tangible book value ratio of 126.78 percent, with a similar range. Excluding the
low and the high in the group, the price to book value range narrowed moderately
from a low of 119.26 percent to a high of 130.76 percent, and the range of price
to tangible book value ratio narrowed similarly.
Taking into consideration all of the previously mentioned items in
conjunction with the adjustments made in Section V, we have determined a pro
forma price to book value ratio of 67.80 percent and a price to tangible book
value ratio of 67.86 percent at the midpoint. The price to book value ratio
increases from 63.23 percent at the minimum to 75.38 percent at the super
maximum, while the price to tangible book value ratio increases from 63.27
percent at the minimum to 75.42 percent at the super maximum.
The Corporation's pro forma price to book value and price to tangible
book value ratios of 67.80 percent and 67.86 percent, respectively, are strongly
influenced by the Bank's financial condition, growth trend, local market and
subscription interest in thrift
80
<PAGE> 90
PRICE TO BOOK VALUE METHOD (CONT.)
stocks. Further, the Corporation's ratio of equity to assets after conversion at
the midpoint of the valuation range will be approximately 32.82 percent compared
to 15.69 percent for the comparable group. Based on the price to book value
ratio and the Bank's total equity of $10,592,000 at September 30, 1997, the
indicated pro forma market value for the Bank using this approach is $17,123,078
at the midpoint (reference Exhibit 47).
PRICE TO EARNINGS METHOD
The focal point of this method is the determination of the earnings
base to be used and secondly, the determination of an appropriate price to
earnings multiple. The recent earnings position of Home is displayed in Exhibit
3, indicating after tax net earnings for the twelve months ended September 30,
1997, of $759,000, and in Exhibit 7 confirming the Bank's identical core or
normalized earnings of $759,000 for that period. To arrive at the pro forma
market value of the Bank by means of the price to earnings method, we used the
net and core earnings base of $759,000.
In determining the price to earnings multiple, we reviewed the range of
price to net earnings and price to core earnings multiples for the comparable
group and all publicly-traded thrifts. The average price to net earnings
multiple for the comparable group was 16.95, while the median was 16.34. The
average price to core earnings multiple was 19.29 and the median multiple was
18.95. The comparable group's price to net earnings multiple was lower than the
average for all publicly-traded, FDIC-insured thrifts of 21.77 and also lower
than their median of 19.71. The range in the price to net earnings multiple for
the comparable group was from a low of 14.53 (Potters Financial Corp.) to a high
of 22.02 (Pennwood Bancorp, Inc.). The primary range in the price to core
earnings multiple for the comparable group, excluding the high and low ranges,
was from a low price to earnings multiple of 14.70 to a high of 18.63 times
earnings for eight of the ten institutions in the group.
81
<PAGE> 91
PRICE TO EARNINGS METHOD (CONT.)
Consideration was given to the adjustments to the Corporation's pro
forma market value discussed in Section V. In recognition of these adjustments,
we have determined a price to core earnings multiple of 16.52 at the midpoint,
based on Home's net and core earnings of $759,000 for the twelve months ended
September 30, 1997. The price to earnings multiple increases from 14.64 percent
at the minimum to 20.08 percent at the super maximum, which is moderately higher
than the 16.95 price to net earnings multiple of the comparable group.
Based on the Bank's earnings base of $759,000 (reference Exhibits 7 and
47), the pro forma market value of the Corporation using the price to earnings
method is $17,265,209 at the midpoint.
PRICE TO NET ASSETS METHOD
The final valuation method is the price to net assets method. This
method is not frequently used due to the fact that it does not incorporate an
institution's equity position or earnings performance. Additionally, the
prescribed formulary computation of value using the pro forma price to net
assets method does not recognize the runoff of deposits concurrently allocated
to the purchase of conversion stock, returning a pro forma price to net assets
ratio below its true level following conversion. Exhibit 48 indicates that the
average price to net assets ratio for the comparable group was 19.75 percent and
the median was 18.55 percent. The range in the price to net assets ratios for
the comparable group varied from a low of 13.36 percent (Potters Financial
Corp.) to a high of 30.09 percent (FFD Financial Corp.). It narrows only
modestly with the elimination of the two extremes in the group to a low of 14.92
percent and a high of 26.17 percent.
Based on the adjustments made previously for Home, it is our opinion
that an appropriate price to net assets ratio for the Corporation is 22.20
percent at the midpoint,
82
<PAGE> 92
PRICE TO NET ASSETS METHOD (CONT.)
which is modestly higher than the comparable group at 19.75 percent and ranges
from a low of 19.57 percent at the minimum to 27.49 percent at the super
maximum.
Based on the Bank's September 30, 1997, asset base of $59,853,000, the
indicated pro forma market value of the Corporation using the price to net
assets method is $16,980,641 at the midpoint (reference Exhibit 47).
83
<PAGE> 93
VALUATION CONCLUSION
Exhibit 53 provides a summary of the valuation premium or discount for
each of the valuation ranges when compared to the comparable group based on each
of the valuation approaches. At the midpoint value, the price to book value
ratio of 67.80 percent for the Corporation represents a discount of 46.51
percent relative to the comparable group and decreases to 40.52 percent at the
super maximum. The price to earnings multiple of 16.52 for the Corporation at
the midpoint value indicates a small discount of 2.52 percent, changing to a
premium of 18.47 percent at the super maximum. The price to assets ratio at the
midpoint represents a premium of 12.41 percent, changing to a premium of 39.22
percent at the super maximum.
It is our opinion that as of November 28, 1997, the pro forma market
value of the Corporation, is $17,000,000 at the midpoint, representing 1,700,000
shares at $10.00 per share. The pro forma valuation range of the Corporation is
from a minimum of $14,450,000 or 1,445,000 shares at $10.00 per share to a
maximum of $19,550,000 or 1,955,000 shares at $10.00 per share, with such range
being defined as 15 percent below the appraised value to 15 percent above the
appraised value. The super maximum is $22,482,500 or 2,248,250 shares at $10.00
per share (reference Exhibits 49 to 52).
The appraised value of Home Loan Financial Corporation as of November
28, 1997, is $17,000,000 at the midpoint.
84
<PAGE> 94
EXHIBITS
<PAGE> 95
NUMERICAL
EXHIBITS
<PAGE> 96
EXHIBIT 1
THE HOME LOAN SAVINGS BANK
COSHOCTON, OHIO
BALANCE SHEETS
SEPTEMBER 30, 1997 (UNAUDITED) AND JUNE 30, 1997
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30,
1997 1997
----------- -----------
ASSETS
<S> <C> <C>
Cash and due from banks $ 1,711,546 $ 1,765,821
Interest-bearing deposits in other banks 222,556 165,228
Overnight deposits -- 1,250,000
Federal funds sold 250,000 1,500,000
----------- -----------
Total cash and cash equivalents 2,184,102 4,681,049
Interest-bearing time deposits 39,366 38,796
Securities available-for-sale 4,517,892 5,004,296
Securities held-to-maturity -- --
Loans, net of allowance for loan losses 51,773,320 49,300,124
Premises and equipment, net 509,219 524,061
Federal Home Loan Bank stock 372,600 366,000
Accrued interest receivable 302,902 287,014
Other assets 153,269 199,505
----------- -----------
Total assets $59,852,670 $60,400,845
=========== ===========
LIABILITIES AND MEMBERS' EQUITY
Liabilities
Deposits $48,207,603 $49,235,430
Accrued expense and other liabilities 1,052,926 795,151
----------- -----------
Total liabilities 49,260,529 50,030,581
MEMBERS' EQUITY
Retained earnings, substantially restricted 10,579,402 10,366,232
Unrealized gain (loss) on available-for-sale
securities, net 12,739 4,032
----------- -----------
Total members' equity 10,592,141 10,370,264
----------- -----------
Total liabilities and members' equity $59,852,670 $60,400,845
=========== ===========
</TABLE>
Source: The Home Loan Savings Bank's audited and unaudited financial statements
<PAGE> 97
EXHIBIT 2
THE HOME LOAN SAVINGS BANK
COSHOCTON, OHIO
BALANCE SHEETS
AT JUNE 30, 1993 THROUGH 1996
<TABLE>
<CAPTION>
1996 1995 1994 1993
------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 2,150,422 $ 1,559,268 $ 1,322,984 $ 2,396,621
Interest-bearing deposits in other banks 573,017 -- -- --
Overnight deposits 3,000,000 1,000,000 1,700,000 --
Federal funds sold -- -- -- --
------------ ------------ ------------ ------------
Total cash and cash equivalents 5,723,439 2,559,268 3,022,984 2,396,621
Interest-bearing time deposits 40,669 -- -- --
Securities available-for-sale 1,743,506 753,124 -- --
Securities held-to-maturity 2,251,731 5,497,688 8,243,369 --
Investments -- -- -- 12,266,982
Loans, net of allowance for loan losses 44,293,916 39,155,634 35,781,748 31,231,453
Premises and equipment, net 525,798 496,122 535,224 444,005
Federal Home Loan Bank stock 341,400 318,600 295,000 282,100
Accrued interest receivable 260,429 235,885 225,756 --
Other assets 185,468 85,861 150,578 247,330
------------ ------------ ------------ ------------
Total assets $ 55,366,356 $ 49,102,182 $ 48,254,659 $ 46,868,491
============ ============ ============ ============
LIABILITIES AND MEMBERS' EQUITY
Liabilities
Deposits $ 44,883,857 $ 39,543,416 $ 39,558,457 $ 38,935,806
Accrued expenses and other liabilities 714,403 553,565 427,891 384,703
------------ ------------ ------------ ------------
Total liabilities 45,598,260 40,096,981 39,986,348 39,320,509
MEMBERS' EQUITY
Retained earnings, substantially restricted 9,770,984 9,001,451 8,285,233 7,547,982
Unrealized gain (loss) on available-for-sale
securities, net (2,888) 3,750 -- --
Excess of additional pension liability over
unrecognized prior service cost -- -- (16,922) --
------------ ------------ ------------ ------------
Total members' equity $ 9,768,096 $ 9,005,201 $ 8,268,311 $ 7,547,982
------------ ------------ ------------ ------------
Total liabilities and members' equity $ 55,366,356 $ 49,102,182 $ 48,254,659 $ 46,868,491
============ ============ ============ ============
</TABLE>
Source: The Home Loan Savings Bank's audited financial statements
<PAGE> 98
EXHIBIT 3
THE HOME LOAN SAVINGS BANK
COSHOCTON, OHIO
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
For the three months Year ended
ended September 30, June 30,
1997 1996 1997
---------- ---------- ------------
(Unaudited)
Interest and dividend income
<S> <C> <C> <C>
Loans, including fees $1,137,188 $1,015,948 $4,162,822
Securities 74,490 71,222 265,148
Dividends on Federal Home Loan
Bank stock 6,688 6,007 24,721
Interest-bearing deposits and federal funds sold 35,584 38,981 156,639
---------- ---------- ----------
Total interest income 1,253,950 1,132,158 4,609,330
Interest expense:
Deposits 516,919 436,776 1,930,924
---------- ---------- ----------
Net interest income 737,031 695,382 2,678,406
Provision for loan losses 30,000 1,500 6,000
---------- ---------- ----------
Net interest income after provision for loan losses 707,031 693,882 2,672,406
Noninterest income
Service charges and other fees 33,910 33,801 139,297
Other income 9,437 8,716 35,491
---------- ---------- ----------
Total noninterest income 43,347 42,517 174,788
Noninterest expense
Salaries and employee benefits 234,659 210,739 889,697
Occupancy and equipment 34,452 36,324 140,893
State franchise taxes 36,900 35,100 138,490
Computer processing 23,880 20,859 94,951
SAIF deposit insurance premiums 7,468 285,973 320,920
Legal, audit and supervisory exam fees 18,076 15,538 75,817
Director fees 19,275 21,030 78,160
Other expense 40,398 34,587 203,866
---------- ---------- ----------
Total noninterest expense 415,108 660,150 1,942,794
---------- ---------- ----------
Income before income taxes 335,270 76,249 904,400
Income tax expense 122,100 27,400 309,152
---------- ---------- ----------
Net income (loss) $ 213,170 $ 48,849 $ 595,248
========== ========== ==========
Source: The Home Loan Savings Bank's audited and unaudited financial statements.
</TABLE>
<PAGE> 99
EXHIBIT 4
THE HOME LOAN SAVINGS BANK
COSHOCTON, OHIO
STATEMENTS OF INCOME
YEARS ENDED JUNE 30, 1993 THROUGH 1996
<TABLE>
<CAPTION>
Year ended June 30,
-------------------------------------------------------------
1996 1995 1994 1993
----------- ----------- ----------- ----------
Interest and dividend income
<S> <C> <C> <C> <C>
Loans, including fees $3,755,408 $3,142,843 $2,687,317 $2,670,158
Securities 331,584 428,716 582,397 759,998
Dividends on Federal Home Loan Bank Stock 22,924 23,852 13,086 12,158
Interest-bearing deposits and federal
funds sold 148,960 101,373 70,426 63,398
---------- ---------- ---------- ----------
Total interest income 4,258,876 3,696,784 3,353,226 3,505,712
Interest expense
Deposits 1,703,208 1,331,404 1,135,480 1,135,480
---------- ---------- ---------- ----------
Net interest income 2,555,668 2,365,380 2,217,746 2,189,869
Provision for loan losses -- 2,319 12,813 9,842
---------- ---------- ---------- ----------
Net interest income after provision
for loan losses 2,555,668 2,363,061 2,204,933 2,180,027
---------- ---------- ---------- ----------
Noninterest income
Service fees and other charges 119,461 113,999 121,399 107,441
Gain on sale of investment securities -- -- 1,054 --
Other income 45,907 35,002 40,064 24,050
---------- ---------- ---------- ----------
Total noninterest income 165,368 149,001 162,517 131,491
Noninterest expense
Salaries and employee benefits 786,868 751,554 657,270 449,860
Occupancy and equipment 129,315 100,752 117,344 97,432
State franchise taxes 126,389 113,958 105,679 89,850
Computer processing 92,854 93,373 85,750 78,681
SAIF deposit insurance premiums 93,368 90,607 89,021 89,300
Legal, audit and supervisory exam fees 57,334 68,896 69,126 70,386
Director fees 72,810 66,250 65,300 61,950
Other expense 173,050 132,854 131,927 121,166
---------- ---------- ---------- ----------
Total noninterest expenses 1,531,988 1,418,244 1,321,417 1,058,625
---------- ---------- ---------- ----------
Income before income taxes and
accounting change 1,189,048 1,093,818 1,046,033 1,252,893
Income tax expense 419,515 377,600 366,586 429,631
---------- ---------- ---------- ----------
Income before accounting change 769,533 716,218 679,447 823,262
Cumulative effect of change in accounting
for income taxes -- -- 57,804 --
---------- ---------- ---------- ----------
Net income $ 769,533 $ 716,218 $ 737,251 $ 823,262
========== ========== ========== ==========
</TABLE>
<PAGE> 100
<TABLE>
<CAPTION>
EXHIBIT 5
SELECTED FINANCIAL CONDITION DATA
AT SEPTEMBER 30, 1996 AND 1997, AND AT JUNE 30, 1993 THROUGH 1997
September 30, June 30,
----------------------- ---------------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
----------- ---------- ---------------------------------------------------------------
(In thousands)
Selected Financial Condition Data:
Total amount of:
<S> <C> <C> <C> <C> <C> <C> <C>
Assets $59,853 $56,318 $60,401 $55,366 $49,102 $48,255 $46,868
Cash and cash equivalents 2,184 4,281 4,681 5,723 2,559 3,023 2,397
Interest-bearing time deposits 39 41 39 41 -- -- --
Securities available-for-sale 4,518 2,751 5,004 1,743 753 -- --
Securities held-to-maturity -- 2,001 -- 2,252 5,498 8,243 12,267
Loans receivable, net 51,773 45,871 49,300 44,294 39,156 35,782 31,078
FHLB stock 373 347 366 341 318 295 282
Deposits 48,208 45,491 49,235 44,884 39,543 39,558 38,936
Retained earnings 10,579 9,820 10,366 9,771 9,001 8,285 7,548
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 101
EXHIBIT 6
INCOME AND EXPENSE TRENDS
FOR THE YEARS ENDED JUNE 30, 1995 THROUGH 1997 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
<TABLE>
<CAPTION>
Three months ended
September 30, Year ended June 30,
------------------ --------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
------------------ --------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $1,254 $1,132 $4,609 $4,259 $3,696 $3,353 $3,506
Interest expense 517 437 1,931 1,703 1,331 1,135 1,316
------ ------ ------ ------ ------ ------ ------
Net interest income before provision
for losses on loans 737 695 2,678 2,556 2,365 2,218 2,190
Provision for loan losses 30 1 6 -- 2 13 10
------ ------ ------ ------ ------ ------ ------
Net interest income after provision
for loan losses 707 694 2,672 2,556 2,363 2,205 2,180
Other income 43 42 175 165 149 162 137
General, administrative and other expense(1) 415 660 1,943 1,532 1,418 1,321 1,059
------ ------ ------ ------ ------ ------ ------
Earnings before income taxes 335 76 904 1,189 1,094 1,046 1,253
Federal income taxes 122 27 309 419 378 367 430
Cumulative effect of change in
accounting principle -- -- -- -- -- 58 --
------ ------ ------ ------ ------ ------ ------
Net income $ 213 $ 49 $ 595 $ 770 $ 716 $ 737 $ 823
====== ====== ====== ====== ====== ====== ======
<FN>
(1) Includes a nonrecurring pre-tax expense of $261,000 for the three months ended September 30, 1996,
and for the year ended June 30, 1997, for a special one-time assessment to recapitalize the SAIF.
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 102
EXHIBIT 7
NORMALIZED EARNINGS TRENDS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1997, AND
FOR THE FISCAL YEARS ENDED JUNE 30, 1996 AND 1997
<TABLE>
<CAPTION>
Twelve months
Ended Fiscal years ended
September 30 June 30,
---------- --------------------------------
1997 1997 1996
---------- ----------- ----------
(Dollars In Thousands)
<S> <C> <C> <C>
Net income after taxes $ 759 $ 595 $ 770
Net income before taxes and effect
of accounting adjustments 1,163 904 1,189
Expense adjustments
SAIF assessment -- (261) --
Normalized earnings before taxes 1,163 1,165 1,189
Taxes 404 396 419
------- ------- -------
Normalized earnings after taxes $ 759 $ 769 $ 770
======= ======= =======
<FN>
(1) Based on tax rate of 34.00 percent
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 103
<TABLE>
<CAPTION>
EXHIBIT 8
PERFORMANCE INDICATORS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 AND
FOR THE FISCAL YEARS ENDED JUNE 30, 1993 THROUGH 1997
At or for the
three months ended
September 30, Year ended June 30,
----------------------- --------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
---------- ----------- -------- -------- ------- ------- ---------
Performance Ratios:
<S> <C> <C> <C> <C> <C> <C> <C>
Return on average assets 1.40% 0.35% 1.04% 1.47% 1.47% 1.55% 1.77%
Return on average equity 8.06% 1.97% 5.94% 8.20% 8.32% 9.33% 11.50%
Interest rate spread 4.36% 4.60% 4.25% 4.45% 4.52% 4.46% 4.43%
Net interest margin 5.03% 5.17% 4.88% 5.10% 5.04% 4.87% 4.88%
Noninterest expense to average assets 2.73% 4.70% 3.39% 2.93% 2.91% 2.78% 2.27%
Efficiency ratio 53.19% 89.46% 68.09% 56.30% 56.41% 55.52% 45.60%
Net interest income to noninterest
expenses 177.55% 105.34% 137.86% 166.82% 166.78% 167.83% 206.86%
Average interest-earning assets to
average interest-bearing liability 1.19% 1.18% 1.18% 1.19% 1.18% 1.16% 1.15%
Capital ratios:
Average equity to average assets 17.41% 17.65% 17.51% 17.95% 17.67% 16.64% 15.36%
Equity to assets, end of period 17.70% 17.35% 17.17% 17.64% 18.34% 17.13% 16.10%
Asset quality ratios and other data:
Nonperforming assets to average assets 0.10% 0.18% 0.06% 0.17% 0.03% 0.06% 0.00%
Nonperforming assets to total assets 0.01% 0.18% 0.05% 0.16% 0.03% 0.06% 0.00%
Nonperforming loans to total loans 0.12% 0.22% 0.07% 0.20% 0.04% 0.08% 0.00%
Allowance for loan losses
to gross loans (1) 0.29% 0.26% 0.24% 0.26% 0.30% 0.34% 0.35%
Allowance for loan losses to
nonperforming loans 242.99% 117.83% 361.27% 133.54% 734.46% 431.09% N/A
Net (charge-offs) recoveries to
average loans (0.01)% 0.00% (0.01)% 0.00% (0.01)% 0.00% 0.00%
Amount of nonperforming loans $61,000 $101,000 $33,000 $88,000 $16,000 $28,000 --
Amount of nonperforming assets $61,000 $101,000 $33,000 $88,000 $16,000 $28,000 --
<FN>
(1) Net of loans in process and deferred fees and costs.
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 104
<TABLE>
<CAPTION>
EXHIBIT 9
VOLUME/RATE ANALYSIS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
FOR THE FISCAL YEARS ENDED JUNE 30, 1997 AND 1996
Three months ended Year ended June 30,
September 30, -------------------------------------------------------
1996 vs. 1997 1996 vs. 1997 1995 vs. 1996
--------------------------- -------------------------- ----------------------------
Increase Increase Increase
(Decrease) (Decrease) (Decrease)
Due to Total Due to Total Due to Total
--------------- Increase --------------- Increase ----------------- Increase
Volume Rate (Decrease) Volume Rate (Decrease) Volume Rate (Decrease)
------ ------ --------- ------ ----- ---------- ------- ------ ---------
(In thousands)
Interest-earning assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans receivable $ 476 $(355) $ 121 $ 460 $ (52) $ 408 $ 398 $ 214 $ 612
Interest-bearing deposits (52) 49 (3) 18 (11) 7 46 2 48
Securities available-for-sale 148 (113) 35 152 (2) 150 8 (4) 4
Securities held-to-maturity (32) -- (32) (211) (6) (217) (140) 40 (100)
FHLB stock 2 (1) 1 2 -- 2 2 (3) (1)
----- ----- ----- ----- ----- ----- ----- ----- -----
Total interest-earning assets $ 542 $(420) $ 122 $ 421 $ (71) $ 350 $ 314 $ 249 $ 563
===== ===== ----- ===== ===== ----- ===== ===== -----
Interest bearing liabilities:
Savings deposits $ (18) $ 14 $ (4) $ (1) $ 2 $ 1 $ (26) $ (1) $ (27)
Demand and NOW deposits 1 (2) (1) 11 (9) 2 (6) (10) (16)
Certificates of deposit 237 (152) 85 213 12 225 199 216 415
----- ----- ----- ----- ----- ----- ----- ----- -----
Total interest-bearing liabilities $ 220 $(140) $ 80 $ 223 $ 5 $ 228 $ 167 $ 205 $ 372
===== ===== ----- ===== ===== ----- ===== ===== -----
Net interest income $ 42 $ 122 $ 191
===== ===== =====
</TABLE>
Source: Home Loan Financial Corporation's prospectus
<PAGE> 105
EXHIBIT 10
YIELD AND COST TRENDS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996, AND
FOR THE FISCAL YEARS ENDED JUNE 30, 1995 THROUGH 1997
<TABLE>
<CAPTION>
Three months ended
September 30, Year ended June 30,
------------------ ---------------------------------
1997 1996 1997 1996 1995
------ ------- -------- ---------- -------
Yield/ Yield/ Yield/ Yield/ Yield/
Rate Rate Rate Rate Rate
------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable(1) 8.90% 8.90% 8.81% 8.94% 8.39%
Interest-bearing deposits 6.44% 4.97% 5.33% 5.71% 5.59%
Securities available-for-sale (2) 6.06% 6.41% 6.02% 6.18% 6.66%
Securities held-to-maturity -- 5.95% 6.29% 6.44% 5.75%
FHLB stock 7.22% 6.95% 7.03% 6.99% 7.80%
------- ------- ------- ------- -------
Total interest-earning assets 8.56% 8.45% 8.40% 8.49% 7.88%
Interest-bearing liabilities:
Savings deposits 2.48% 2.46% 2.49% 2.47% 2.48%
Demand and NOW deposits 1.80% 1.87% 1.85% 1.97% 2.10%
Certificate accounts 5.58% 5.19% 5.62% 5.56% 4.52%
------- ------- ------- ------- -------
Total interest-bearing liabilities 4.20% 3.85% 4.15% 4.04% 3.36%
Net interest rate spread (3) 4.36% 4.59% 4.25% 4.45% 4.52%
Net interest margin (4) 5.03% 5.19% 4.88% 5.10% 5.04%
<FN>
(1) Amount is net of loans in process, net deferred loan origination fees and
includes non-performing loans.
(2) Includes unamortized discounts and premiums. Average balance is computed
using the carrying value of securities. The average yield has been computed
using the historical amortized cost average balance for available-for-sale
securities.
(3) Net interest rate spread represents the difference between the yield on
interest-earning assets and the cost of interest-bearing liabilities
(4) Net interest margin represents net interest income divided by average
interest-earning assets.
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 106
EXHIBIT 11
NET PORTFOLIO VALUE (NPV)
AT JUNE 30, 1996
<TABLE>
<CAPTION>
Target Limit
Under
Net Portfolio Value Asset/Liability
Change ------------------------------------------- Management
in Rates $ Amount $ Change % Change Policy
---------- ---------- ---------- ------------ -----------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
+400 $ 11,735 $ (1,056) (8.3) (40)
+300 12,242 (549) (4.3) (30)
+200 12,615 (177) (1.4) (20)
+100 12,801 9 0.1 (10)
Static 12,792 0 0 0
(100) 12,612 (179) (1.4) (10)
(200) 12,420 (372) (2.9) (20)
(300) 12,475 (317) (2.5) (30)
(400) 12,716 (76) (0.6) (40)
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 107
EXHIBIT 12
LOAN PORTFOLIO COMPOSITION
AT SEPTEMBER 30, 1997, AND AT JUNE 30, 1993 THROUGH 1997
<TABLE>
<CAPTION>
At September 30 At June 30,
------------------ ----------------------------------------------------------------
1997 1997 1996 1995
------------------ ------------------ ------------------- -------------------
Amount Percent Amount Percent Amount Percent Amount Percent
------- ------- ------ ------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Real Estate Loans:
One- to four-family $36,827 70.00% $35,156 70.64% $32,882 72.63% $30,942 77.41%
Home equity 826 1.57% 728 1.46% 979 2.16% 495 1.24%
Nonresidential 3,686 7.01% 3,297 6.62% 2,971 6.56% 2,038 5.10%
Construction 341 0.65% 554 1.11% 407 0.90% 129 0.32%
Land 560 1.06% 571 1.15% 350 0.77% 544 1.36%
------- ------ ------- ------ ------- ------ ------- ------
Total real estate loans 42,240 80.29% 40,306 80.98% 37,589 83.02% 34,148 85.43%
Commercial loans 1,703 3.24% 1,645 3.31% 950 2.10% 631 1.58%
Consumer loans:
Home improvements 4,151 7.89% 3,701 7.44% 2,672 5.90% 2,267 5.67%
Automobile loans 2,678 5.09% 2,506 5.03% 2,054 4.54% 1,358 3.40%
Loans on deposits 234 0.44% 219 0.44% 245 0.54% 251 0.63%
Credit card 403 0.77% 347 0.70% 331 0.73% 255 0.64%
Other consumer loans 1,200 2.28% 1,047 2.10% 1,436 3.17% 1,059 2.65%
------- ------ ------- ------ ------- ------ ------- ------
Total consumer loans 8,666 16.47% 7,820 15.71% 6,738 14.88% 5,190 12.99%
------- ------ ------- ------ ------- ------ ------- ------
Total loans 52,609 100.00% 49,771 100.00% 45,277 100.00% 39,969 100.00%
====== ====== ====== ======
Less:
Unearned and deferred
income (112) (107) (104) (113)
Loans in process (576) (245) (762) (583)
Allowance for loan losses (148) (119) (117) (117)
-------- --------- -------- ---------
Net loans $ 51,773 $ 49,300 $ 44,294 $ 39,156
======== ========= ======== =========
<CAPTION>
-------------------------------------------
1994 1993
------------------- -------------------
Amount Percent Amount Percent
------- -------- ------- -------
(Dollars in thousands)
Real Estate Loans:
<S> <C> <C> <C> <C>
One- to four-family $29,243 80.13 $26,115 82.50%
Home equity 348 0.95% 185 0.59%
Nonresidential 1,385 3.80% 1,344 4.25%
Construction 532 1.46% 112 0.35%
Land 209 0.57% 181 0.57%
------- ------- ------- -------
Total real estate loans 31,717 86.91% 27,937 88.26%
Commercial loans 792 2.17% 523 1.65%
Consumer loans:
Home improvements 1,939 5.31% 1,500 4.74%
Automobile loans 1,003 2.75% 854 2.70%
Loans on deposits 276 0.75% 292 0.92%
Credit card 160 0.44% 10 0.03%
Other consumer loans 609 1.67% 538 1.70%
------- ------- ------- -------
Total consumer loans 3,987 10.92% 3,194 10.09%
------- ------- ------- -------
Total loans 36,496 100.00% 31,654 100.00%
======= =======
Less:
Unearned and deferred
income (87) (38)
Loans in process (506) (429)
Allowance for loan losses (121) (109)
-------- ---------
Net loans $ 35,782 $ 31,078
======== =========
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 108
EXHIBIT 13
LOAN MATURITY SCHEDULE
AT SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Due during
the year Due 2-5 Due 5 or
ending years more years
September 30, after after
1998 9/30/97 9/30/97 Total
------------- ----------- ----------- -----------
(In thousands)
Real estate loans:
<S> <C> <C> <C> <C>
One- to four-family $ 31 $ 882 $35,914 $36,827
Home equity -- 35 791 826
Nonresidential -- 47 3,639 3,686
Construction -- -- 341 341
Land -- -- 560 560
Commercial loans 854 677 172 1,703
Consumer loans 2,008 4,429 2,229 8,666
------- ------- ------- -------
Total loans $ 2,893 $ 6,070 $43,646 $52,609
======= ======= ======= =======
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 109
EXHIBIT 14
Loan Originations
For The Three Months Ended September 30, 1996, and
For the Years Ended June 30, 1993 through 1997
<TABLE>
<CAPTION>
For the three
months ended For the years ended June 30,
September 30, ------------------------------------------------------------------
1997 1997 1996 1995 1994 1993
---------- ---------- ---------- --------- --------- ----------
(In thousands)
Loans originated:
<S> <C> <C> <C> <C> <C> <C>
One- to four-family residential $ 2,798 $ 9,417 $ 8,720 $ 6,113 $ 9,599 $ 7,287
Home equity 286 639 868 475 328 185
Nonresidential 401 578 2,367 846 435 150
Construction and land 425 1,026 956 1,023 1,004 551
Commercial 394 1,511 610 1,249 816 506
Consumer 1,998 8,146 7,190 5,497 3,723 2,966
-------- -------- -------- -------- -------- --------
Total loans originated 6,302 21,317 20,711 15,203 15,905 11,645
Loan participations purchased -- -- -- -- -- --
Reductions:
Principal repayments (3,464) (16,823) (15,403) (11,730) (11,063) (10,766)
Transfers from loans to real
estate owned and
repossessed assets -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total reductions (3,464) (16,823) (15,403) (11,730) (11,063) (10,766)
Increase (decrease) in other
items, net (1) 365 (512) 170 99 138 233
-------- -------- -------- -------- -------- --------
Net increase (decrease) $ 2,473 $ 5,006 $ 5,138 $ 3,374 $ 4,704 $ 646
======== ======== ======== ======== ======== ========
<FN>
- -----------------------------------------
(1) Consists of unearned and deferred fees, deferred costs and allowance for loan losses.
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 110
EXHIBIT 15
DELINQUENT LOANS
AT SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
At September 30, At June 30,
------------------------------------------------------ --------------------------
1997 1997 1996
------------------------- -------------------------- --------------------------
Percent Percent Percent
of total of total of total
Number Amount loans Number Amount loans Number Amount loans
------- ------- -------- ------- ------ -------- ------ ------ -------
(Dollars in thousands)
Loans delinquent for:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 - 59 days 37 $902 1.71% 21 $532 1.07% 18 $252 0.56%
60 - 89 days 4 30 0.06% 11 85 0.17% 10 120 0.27%
90 days or over 8 61 0.12% 7 33 0.07% 5 88 0.19%
---- ---- ------- ---- ---- ------- ---- ---- ------
Total delinquent loans 49 993 1.89% 39 650 1.31% 33 460 1.02%
==== ==== ======= ==== ==== ======= ==== ==== ======
<CAPTION>
At June 30,
------------------------------------------------------------------------------------
1995 1994 1993
------------------------- -------------------------- --------------------------
Percent Percent Percent
of total of total of total
Number Amount loans Number Amount loans Number Amount loans
------- ------- ------- ------- ------ -------- ------ ------ --------
(Dollars in thousands)
Loans delinquent for:
30 - 59 days 14 $148 0.37% 31 $331 0.90% 29 $558 1.76%
60 - 89 days 3 24 0.06% -- -- 0.00% 3 56 0.18%
90 days or over 2 16 0.04% 2 28 0.08% -- -- 0.00%
---- ---- -------- ---- ---- ------- ---- ---- --------
Total delinquent loans 19 188 0.47% 33 359 0.98% 32 614 1.94%
==== ==== ======== ==== ==== ======= ==== ==== ========
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 111
EXHIBIT 16
NONPERFORMING ASSETS
AT SEPTEMBER 30, 1997, AND AT JUNE 30, 1993 THROUGH 1997
<TABLE>
<CAPTION>
September 30, June 30,
------------- ------------------------------------------------------
1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Non-accruing loans:
One- to four-family $ -- $ -- $ -- $ 12 $ 27 $ --
Home equity -- -- -- -- -- --
Nonresidential -- -- -- -- -- --
Construction -- -- -- -- -- --
Land -- -- -- -- -- --
Commercial -- -- -- -- -- --
Consumer -- -- -- -- -- --
----- ----- ----- ----- ----- ------
Total -- -- -- 12 27 --
Accruing loans delinquent more than 90 days:
One- to four-family 33 10 63 -- -- --
Home equity -- -- -- -- -- --
Nonresidential -- -- -- -- -- --
Construction -- -- -- -- -- --
Land -- -- -- -- -- --
Commercial -- -- -- -- -- --
Consumer 28 23 25 4 1 --
----- ----- ----- ----- ----- ------
Total 61 33 88 4 1 --
----- ----- ----- ----- ----- ------
Foreclosed assets:
One- to four-family -- -- -- -- -- --
Home equity -- -- -- -- -- --
Nonresidential -- -- -- -- -- --
Construction -- -- -- -- -- --
Land -- -- -- -- -- --
Commercial -- -- -- -- -- --
Consumer -- -- -- -- -- --
----- ----- ----- ----- ----- ------
Total -- -- -- -- -- --
----- ----- ----- ----- ----- ------
Total non-performing assets $ 61 $ 33 $ 88 $ 16 $ 28 $ --
===== ===== ===== ===== ===== ======
Total as a percentage of total assets 0.102% 0.055% 0.159% 0.033% 0.058% 0.000%
===== ===================================================
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 112
EXHIBIT 17
<TABLE>
<CAPTION>
CLASSIFIED ASSETS
AT SEPTEMBER 30, 1997
(Dollars in thousands)
<S> <C>
Classified Assets:
Substandard $ 122
Doubtful --
Loss --
---------
Total classified assets $ 122
=========
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 113
EXHIBIT 18
ALLOWANCE FOR LOAN LOSSES
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 AND
FOR THE FISCAL YEARS ENDED JUNE 30, 1993 THROUGH 1997
<TABLE>
<CAPTION>
Three Months Ended
September 30, Year Ended June 30,
---------------------- ---------------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
--------- --------- --------- --------- -------- --------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at beginning of period
Charge-offs $ 119 $ 117 $ 117 $ 117 $ 121 $ 109 $ 100
One- to four-family (1) -- -- -- (3) -- (3)
Home equity -- -- -- -- -- -- --
Nonresidential -- -- -- -- -- -- --
Construction -- -- -- -- -- -- --
Land -- -- -- -- -- -- --
Commercial loans -- -- -- -- -- -- --
Consumer loans -- -- (4) -- (4) (1) --
--------- -------- -------- ------- ------- -------- ------
(1) -- (4) -- (7) (1) (3)
--------- -------- -------- ------- ------- -------- ------
Recoveries:
One- to four-family -- -- -- -- -- -- 2
Home equity -- -- -- -- -- -- --
Nonresidential -- -- -- -- -- -- --
Construction -- -- -- -- -- -- --
Land -- -- -- -- -- -- --
Commercial loans -- -- -- -- -- -- --
Consumer loans -- -- -- -- -- -- --
--------- -------- -------- ------- ------- -------- ------
-- -- -- -- (1) -- 2
--------- -------- -------- ------- ------- -------- ------
Net charge-offs (1) -- (4) -- (6) (1) (1)
Provision for loan losses 30 2 6 -- 2 13 10
Balance at end of period --------- -------- ------- ------- -------- -------- ------
$ 148 $ 119 $ 119 $ 117 $ 117 $ 121 $ 109
========= ======== ======= ======== ======== ======== ======
Ratio of net (charge-offs) recoveries
to average loans outstanding during
the period (0.01)% 0.00% (0.01)% 0.00% (0.02)% 0.00% 0.00%
========= ===== ======= ======== ======== ========= ======
Ratio of allowance for loan losses
to total loans less loans in process
and net deferred loan fees and costs 0.29% 0.26% 0.24% 0.26% 0.30% 0.34% 0.35%
========= ===== ======= ======= ========= ========= ======
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 114
EXHIBIT 19
INVESTMENT PORTFOLIO COMPOSITION
AT SEPTEMBER 30, 1997, AND
AT JUNE 30, 1995 THROUGH 1997
<TABLE>
<CAPTION>
At September 30, At June 30,
-------------------- -------------------------------------------------------------------
1997 1997 1996 1995
-------------------- -------------------- ---------------------- ----------------------
Carrying % of Carrying % of Carrying % of Carrying % of
Value Total Value Total Value Total Value Total
--------- -------- -------- ------- -------- --------- -------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits:
Interest-bearing demand 223 4.13% $ 165 1.98% $ 573 $ 7.21% $ 476 5.92%
Interest-bearing deposits
in other financial institutions 39 0.72% 39 0.47% 41 0.52% -- --
Overnight deposits -- 1,250 15.02% 3,000 37.74% 1,000 12.43%
Federal funds 250 4.63% 1,500 18.02% -- -- ----
------ -------- ------ -------- ------ -------- ------ --------
Total interest-bearing deposits 512 9.48% 2,954 35.49% 3,614 45.47% 1,476 18.35%
Securities:
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies,
available-for-sale 4,518 83.62% 5,004 60.11% 1,743 21.91% 753 9.36%
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies,
held-to-maturity -- -- -- -- 2,252 28.33% 5,498 68.34%
FHLB Stock 373 6.90% 366 4.40% 341 4.29% 318 3.95%
------ -------- ------ -------- ------ -------- ------ --------
Total securities 4,891 90.52% 5,370 64.51% 4,336 54.53% 6,569 81.65%
------ -------- ------ -------- ------ -------- ------ --------
Total $5,403 100.00% $8,324 100.00% $7,950 100.00% $8,045 100.00%
====== ====== ====== ======
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 115
EXHIBIT 20
MIX OF DEPOSITS
AT SEPTEMBER 30, 1997, AND AT JUNE 30, 1996 AND 1997
<TABLE>
<CAPTION>
September 30, June 30,
----------------------------------------------
1997 1997 1996
--------------------- ----------------------- ---------------------
Percent Percent Percent
Amount of Total Amount of Total Amount of Total
--------------------- ----------------------- ---------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Transaction accounts:
- ---------------------
Non-interest bearing demand deposit $ 877 1.82% $ 1,069 2.17% $ 873 1.95%
NOW Accounts 5,576 11.57% 5,800 11.78% 5,275 11.75%
Savings Accounts 11,583 24.03% 11,295 22.94% 12,137 27.04%
Money Market Accounts 1,790 3.71% 1,850 3.76% 2,247 5.01%
------- ------ ------- ------ ------- ------
Total transaction accounts $19,826 41.13% $20,014 40.65% $20,532 45.75%
Certificates of deposit:
- ------------------------
4.00% or less 74 0.15% 63 0.13% 32 0.07%
4.01% - 6.00% 21,748 45.11% 22,866 46.44% 20,957 46.69%
6.01% - 8.00% 6,260 12.99% 5,992 12.17% 3,063 6.82%
8.01% - 10.00% 300 0.62% 300 0.61% 300 0.67%
------- ------ ------- ------ ------- ------
Total Certificates 28,382 58.87% 29,221 59.35% 24,352 54.25%
------- ------ ------- ------ ------- ------
------- ------ ------- ------ ------- ------
Total Deposits $48,208 100.00% $49,235 100.00% $44,884 100.00%
======= ======= =======
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 116
EXHIBIT 21
DEPOSIT ACTIVITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997, AND
FOR THE YEARS ENDED JUNE 30, 1996 AND 1997
<TABLE>
<CAPTION>
Three months
Ended September 30, Year ended June 30,
------------------- -------------------------
1997 1997 1996
------------- ----------- -------------
(Dollars in thousands)
<S> <C> <C> <C>
Beginning balance $ 49,235 $ 44,884 $ 39,543
Deposits 31,285 119,082 124,936
Withdrawals (32,671) (116,055) (120,672)
---------- ---------- ----------
Net deposit before interest credited 47,849 47,911 43,807
Interest credited 359 1,324 1,077
------------- ------------ -------------
Ending balance $ 48,208 $ 49,235 $ 44,884
============= ============ =============
Net increase (decrease) $ (1,027) $ 4,351 $ 5,341
============= ============ =============
Percent increase (decrease) (2.09)% 9.69% 13.51%
============= ============ =============
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 117
EXHIBIT 22
OFFICES OF THE HOME LOAN SAVINGS BANK
COSHOCTON, OHIO
<TABLE>
<CAPTION>
Net Book
Owned Value at
Year or September 30,
LOCATION Opened Leased 1997
- -------------------------------------- ------------- ------------ ------------
(000)
<S> <C> <C> <C>
401 Main Street 1924 Owned $176,635
Coshocton, Ohio 43812-1580
590 Walnut Street 1985 Owned $187,155
Coshocton, Ohio 43812-1632
</TABLE>
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 118
EXHIBIT 23
LIST OF KEY OFFICERS AND DIRECTORS
AT SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME POSITION(S) HELD WITH THE BANK AGE (1) SINCE EXPIRES
--------------------------- ---------------------------------------------------------- ------------- ------------
<S> <C> <C> <C> <C>
Neal J. Caldwell Director 53 1989 1998
Charles H. Durmis Director 34 1996 1999
Robert C. Hamilton Director and President 54 1982 1998
Robert D. Mauch Director and Chairman 46 1989 2000
Douglas L. Randles Director 52 1992 2000
Preston W. Bair Secretary and Treasurer 34 -- --
</TABLE>
(1) At September 30, 1997
Source: Home Loan Financial Corporation's Prospectus
<PAGE> 119
EXHIBIT 24
KEY DEMOGRAPHIC DATA AND TRENDS
COSHOCTON COUNTY, OHIO AND THE UNITED STATES
1990, 1996 AND 2001
<TABLE>
<CAPTION>
1990 1996 % Change 2001 % Change
--------------- --------------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Population
- ----------
Coshocton County 35,427 36,459 2.9% 37,286 2.3%
Ohio 10,847,115 11,151,720 2.8% 11,457,175 2.7%
United States 248,709,873 265,294,885 6.7% 278,802,003 5.1%
Households
- ----------
Coshocton County 13,433 13,849 3.1% 14,171 2.3%
Ohio 4,087,546 4,198,418 2.7% 4,311,607 2.7%
United States 91,947,410 98,239,161 6.8% 103,293,062 5.1%
Per Capita Income
- -----------------
Coshocton County $ 10,625 $ 12,193 14.8% -- --
Ohio 12,788 15,376 20.2% -- --
United States 12,313 16,738 35.9% -- --
Median Household Income
- -----------------------
Coshocton County $ 24,425 $ 26,754 9.5% $ 25,558 (4.5)%
Ohio 29,276 32,102 9.7% 29,751 (7.3)%
United States 28,255 34,530 22.2% 33,189 (3.9)%
</TABLE>
Source: Data Users Center and CACI
<PAGE> 120
EXHIBIT 25
KEY HOUSING DATA
COSHOCTON COUNTY, OHIO AND THE UNITED STATES
1990
<TABLE>
<CAPTION>
Occupied Housing Units
- ----------------------
<S> <C>
Coshocton County 13,433
Ohio 4,087,546
United States 91,947,410
Occupancy Rate
- --------------
Coshocton County
Owner-Occupied 75.7%
Renter-Occupied 24.3%
Ohio
Owner-Occupied 67.5%
Renter-Occupied 32.5%
United States
Owner-Occupied 64.2%
Renter-Occupied 35.8%
Median Housing Values
- ---------------------
Coshocton County $ 44,400
Ohio 63,457
United States 79,098
Median Rent
- -----------
Coshocton County $ 292
Ohio 296
United States 374
</TABLE>
Source: U.S. Department of Commerce and CACI Sourcebook
<PAGE> 121
EXHIBIT 26
MAJOR SOURCES OF EMPLOYMENT BY INDUSTRY GROUP
COSHOCTON COUNTY, OHIO AND THE UNITED STATES
1990
<TABLE>
<CAPTION>
Coshocton United
Industry Group County Ohio States
------------- ------------ ------------
<S> <C> <C> <C>
Agriculture/Mining 7.2% 0.9% 1.3%
Construction 5.1% 4.2% 4.8%
Manufacturing 33.5% 24.5% 19.2%
Transportation/Utilities 6.8% 4.9% 5.9%
Wholesale/Retail 16.3% 27.7% 27.5%
Finance, Insurance, & Real Estate 2.9% 6.2% 7.3%
Services 28.2% 31.6% 34.0%
</TABLE>
Source: Bureau of the Census County Business Patterns
<PAGE> 122
EXHIBIT 27
UNEMPLOYMENT RATES
COSHOCTON COUNTY, OHIO AND THE UNITED STATES
1994, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
Location 1994 1995 1996 1997*
- ------------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Coshocton County 6.2% 6.1% 5.3% 5.4%
Ohio 5.5% 4.9% 4.3% 4.1%
United States 6.1% 5.6% 5.0% 4.7%
</TABLE>
*September 1997
Source: Ohio Bureau of Employment Services
<PAGE> 123
EXHIBIT 28
MARKET SHARE OF DEPOSITS
COSHOCTON COUNTY
JUNE 30, 1996
<TABLE>
<CAPTION>
Coshocton
County's Home's Home's
Deposits Share Share
($000) ($000) (%)
--------------- --------------- ------------
<S> <C> <C> <C>
Banks $ 254,299 --- ---
Thrifts 84,511 $ 44,886 53.1%
Credit Unions 1,376 --- ---
--------------- --------------- ------------
Total $ 340,186 $ 44,886 13.2%
</TABLE>
Source: Sheshunoff
<PAGE> 124
EXHIBIT 29
NATIONAL INTEREST RATES BY QUARTER
1993-1997
<TABLE>
<CAPTION>
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
1993 1993 1993 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Prime Rate 6.00% 6.00% 6.00% 6.00%
90-Day Treasury Bills 2.93% 3.07% 2.96% 3.05%
1-Year Treasury Bills 3.27% 3.43% 3.35% 3.58%
30-Year Treasury Notes 6.92% 6.67% 6.03% 6.35%
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
1994 1994 1994 1994
---- ---- ---- ----
Prime Rate 6.25% 7.25% 7.75% 8.50%
90-Day Treasury Bills 3.54% 4.23% 5.14% 5.66%
1-Year Treasury Bills 4.40% 5.49% 6.13% 7.15%
30-Year Treasury Notes 7.11% 7.43% 7.82% 7.88%
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
1995 1995 1995 1995
---- ---- ---- ----
Prime Rate 9.00% 9.00% 8.75% 8.50%
90-Day Treasury Bills 5.66% 5.58% 5.40% 5.06%
1-Year Treasury Bills 6.51% 5.62% 5.45% 5.14%
30-Year Treasury Notes 7.43% 6.71% 5.69% 5.97%
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
1996 1996 1996 1996
---- ---- ---- ----
Prime Rate 8.25% 8.25% 8.25% 8.25%
90-Day Treasury Bills 5.18% 5.25% 5.16% 5.07%
1-Year Treasury Bills 5.43% 5.91% 5.38% 5.57%
30-Year Treasury Notes 6.73% 7.14% 6.47% 6.67%
1st Qtr. 2nd Qtr. 3rd Qtr.
1997 1997 1997
---- ---- ----
Prime Rate 8.50% 8.50% 8.50%
90-Day Treasury Bills 4.95% 4.68% 4.98%
1-Year Treasury Bills 5.95% 5.36% 5.50%
30-Year Treasury Notes 7.06% 6.41% 6.39%
</TABLE>
Source: The Wall Street Journal
-----------------------
<PAGE> 125
KELLER & COMPANY Page 1
Dublin, Ohio
614-766-1426
EXHIBIT 30
THRIFT STOCK PRICES AND PRICING RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
PER SHARE
*********************************************************************
Latest All Time All Time Monthly Quarterly Book 12 Month
Price High Low Change Change Value Assets Div.
State Exchange ($) ($) ($) (%) (%) ($) ($) ($)
----- -------- --------- ------- ------- --------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFDB FirstFed Bancorp Inc. AL NASDAQ 22.000 22.750 8.500 -3.30 33.08 14.77 153.31 0.55
SRN Southern Banc Co. AL AMSE 16.875 17.375 11.375 -2.17 8.87 14.74 86.29 0.35
SCBS Southern Community Bancshares AL NASDAQ 18.188 18.500 13.000 1.04 14.57 13.19 61.87 NA
SZB SouthFirst Bancshares Inc. AL AMSE 19.000 20.875 10.625 -1.94 16.92 16.06 114.77 0.50
FFBH First Federal Bancshares of AR AR NASDAQ 21.375 21.750 10.000 4.27 1.79 16.64 111.75 0.16
HCBB HCB Bancshares Inc. AR NASDAQ 13.625 14.250 12.625 2.83 1.87 14.43 75.59 NA
FTF Texarkana First Financial Corp AR AMSE 24.750 27.000 10.000 -0.50 10.30 15.03 95.71 3.48
AFFFZ America First Financial Fund CA NASDAQ 47.125 50.563 14.500 9.59 19.68 29.41 374.43 1.60
BPLS Bank Plus Corp. CA NASDAQ 11.125 14.000 5.000 -10.10 3.19 9.16 202.69 0.00
BVCC Bay View Capital Corp. CA NASDAQ 33.750 35.813 5.625 12.97 29.49 14.81 254.58 0.32
BYFC Broadway Financial Corp. CA NASDAQ 13.000 13.000 9.000 2.97 18.18 14.77 150.14 0.20
CENF CENFED Financial Corp. CA NASDAQ 40.750 42.250 4.545 0.93 21.64 21.51 386.73 0.34
CSA Coast Savings Financial CA NYSE 60.000 61.438 1.625 0.52 30.97 25.21 484.89 0.00
DSL Downey Financial Corp. CA NYSE 27.500 27.563 1.321 12.53 26.80 15.61 218.81 0.31
FSSB First FS&LA of San Bernardino CA NASDAQ 9.625 14.500 6.875 1.32 16.67 13.68 315.79 0.00
FED FirstFed Financial Corp. CA NYSE 36.500 39.438 1.125 2.28 9.16 20.01 387.78 0.00
GSB Golden State Bancorp Inc. CA NYSE 33.313 589.500 5.250 -0.93 16.38 16.16 325.68 0.00
GDW Golden West Financial CA NYSE 89.625 93.813 3.875 4.44 9.63 45.36 691.00 0.44
AHM H.F. Ahmanson & Co. CA NYSE 59.500 62.063 2.688 -2.36 16.67 20.17 495.69 0.88
HTHR Hawthorne Financial Corp. CA NASDAQ 21.000 35.500 2.250 20.00 22.63 14.01 288.58 0.00
HEMT HF Bancorp Inc. CA NASDAQ 16.750 17.125 8.188 5.93 12.61 13.26 167.21 0.00
HBNK Highland Federal Bank FSB CA NASDAQ 32.000 32.750 11.000 0.00 18.52 17.20 224.33 0.00
ITLA ITLA Capital Corp. CA NASDAQ 18.000 21.250 11.375 -10.00 0.70 12.32 114.89 0.00
LFCO Life Financial Corp. CA NASDAQ 15.500 21.875 13.375 -11.43 -8.82 7.56 44.96 NA
MBBC Monterey Bay Bancorp Inc. CA NASDAQ 19.000 20.500 8.750 4.11 14.29 15.60 126.84 0.11
PFFB PFF Bancorp Inc. CA NASDAQ 18.375 21.500 10.375 -3.92 1.73 14.69 146.09 0.00
PROV Provident Financial Holdings CA NASDAQ 20.000 21.125 10.125 -0.62 1.27 17.66 132.47 0.00
QCBC Quaker City Bancorp Inc. CA NASDAQ 20.500 24.563 6.000 2.50 0.00 15.33 181.26 0.00
REDF RedFed Bancorp Inc. CA NASDAQ 20.000 21.125 7.750 6.67 15.94 11.21 134.75 0.00
SGVB SGV Bancorp Inc. CA NASDAQ 17.125 19.375 7.750 -4.86 14.17 12.98 174.61 0.00
WES Westcorp CA NYSE 17.000 23.875 3.703 -9.64 -20.24 13.00 143.11 0.40
FFBA First Colorado Bancorp Inc. CO NASDAQ 22.750 23.500 3.189 14.47 22.97 12.00 91.76 0.42
ANE Alliance Bncorp of New England CT AMSE 17.500 18.000 2.063 5.26 2.19 10.95 148.70 0.15
BKC American Bank of Connecticut CT AMSE 47.125 47.875 2.875 5.90 24.83 23.22 263.65 1.56
<CAPTION>
PRICING RATIOS
*************************************
Price/ Price/ Price/ Price/Core
Earnings Bk. Value Assets Earnings
(X) (%) (%) (X)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
FFDB FirstFed Bancorp Inc. 14.97 148.95 14.35 15.38
SRN Southern Banc Co. 40.18 114.48 19.56 40.18
SCBS Southern Community Bancshares NA 137.89 29.40 NA
SZB SouthFirst Bancshares Inc. NM 118.31 16.55 100.00
FFBH First Federal Bancshares of AR 17.67 128.46 19.13 18.59
HCBB HCB Bancshares Inc. NA 94.42 18.02 NA
FTF Texarkana First Financial Corp 18.07 164.67 25.86 14.82
AFFFZ America First Financial Fund 7.74 160.23 12.59 7.69
BPLS Bank Plus Corp. 16.36 121.45 5.49 19.52
BVCC Bay View Capital Corp. 25.57 227.89 13.26 23.28
BYFC Broadway Financial Corp. 33.33 88.02 8.66 31.71
CENF CENFED Financial Corp. 16.84 189.45 10.54 18.69
CSA Coast Savings Financial 21.35 238.00 12.37 20.00
DSL Downey Financial Corp. 18.58 176.17 12.57 19.50
FSSB First FS&LA of San Bernardino NM 70.36 3.05 NM
FED FirstFed Financial Corp. 16.98 182.41 9.41 16.98
GSB Golden State Bancorp Inc. 24.32 206.14 10.23 20.19
GDW Golden West Financial 15.22 197.59 12.97 15.45
AHM H.F. Ahmanson & Co. 17.20 294.99 12.00 20.03
HTHR Hawthorne Financial Corp. 15.91 149.89 7.28 16.80
HEMT HF Bancorp Inc. NM 126.32 10.02 55.83
HBNK Highland Federal Bank FSB 13.56 186.05 14.26 17.68
ITLA ITLA Capital Corp. 12.08 146.10 15.67 12.08
LFCO Life Financial Corp. NA 205.03 34.48 NA
MBBC Monterey Bay Bancorp Inc. 32.20 121.79 14.98 34.55
PFFB PFF Bancorp Inc. 27.84 125.09 12.58 27.43
PROV Provident Financial Holdings 20.83 113.25 15.10 43.48
QCBC Quaker City Bancorp Inc. 17.08 133.72 11.31 17.67
REDF RedFed Bancorp Inc. 15.87 178.41 14.84 16.00
SGVB SGV Bancorp Inc. 25.18 131.93 9.81 31.71
WES Westcorp 12.88 130.77 11.88 NM
FFBA First Colorado Bancorp Inc. 20.50 189.58 24.79 20.50
ANE Alliance Bncorp of New England 15.22 159.82 11.77 16.20
BKC American Bank of Connecticut 14.77 202.95 17.87 17.52
</TABLE>
<PAGE> 126
KELLER & COMPANY Page 2
Dublin, Ohio
614-766-1426
THRIFT STOCK PRICES AND PRICING RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
PER SHARE
*********************************************************************
Latest All Time All Time Monthly Quarterly Book 12 Month
Price High Low Change Change Value Assets Div.
State Exchange ($) ($) ($) (%) (%) ($) ($) ($)
----- -------- --------- ------- ------- --------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BKCT Bancorp Connecticut Inc. CT NASDAQ 40.000 40.000 2.026 8.84 33.33 17.92 166.65 0.88
BSBC Branford Savings Bank CT NASDAQ 6.000 178.750 1.625 14.29 21.51 2.69 27.88 0.08
DIBK Dime Financial Corp. CT NASDAQ 31.500 32.000 2.125 1.61 14.03 14.54 178.52 0.37
EGFC Eagle Financial Corp. CT NASDAQ 51.750 52.500 6.198 6.98 54.48 22.91 332.04 0.94
FFES First Federal of East Hartford CT NASDAQ 37.000 37.500 4.000 5.71 14.73 24.40 368.12 0.60
MECH Mechanics Savings Bank CT NASDAQ 25.625 27.250 11.000 3.02 13.26 16.33 156.94 0.00
NMSB NewMil Bancorp Inc. CT NASDAQ 14.250 15.500 1.250 16.33 9.62 8.42 82.76 0.24
NSSB Norwich Financial Corp. CT NASDAQ 29.750 31.625 2.000 2.59 17.82 15.05 129.02 0.62
NSSY NSS Bancorp Inc. CT NASDAQ 38.500 38.500 9.875 6.21 16.23 21.54 275.37 0.25
NTMG Nutmeg Federal S&LA CT NASDAQ 13.000 13.000 4.645 13.04 20.93 7.72 138.72 0.08
WBST Webster Financial Corp. CT NASDAQ 62.656 66.000 3.864 4.53 21.07 26.83 502.50 0.76
IFSB Independence Federal Svgs Bank DC NASDAQ 13.781 15.125 0.250 -0.23 6.01 14.23 196.37 0.22
WSFS WSFS Financial Corp. DE NASDAQ 19.625 20.000 1.250 12.14 30.83 6.66 120.20 0.00
BANC BankAtlantic Bancorp Inc. FL NASDAQ 14.375 17.125 0.278 6.48 13.86 7.03 127.72 8.23
BKUNA BankUnited Financial Corp. FL NASDAQ 12.938 13.750 2.320 0.49 12.50 7.94 225.06 0.00
FFLC FFLC Bancorp Inc. FL NASDAQ 22.500 23.500 7.650 7.14 19.05 13.73 99.98 0.28
FFPB First Palm Beach Bancorp Inc. FL NASDAQ 38.750 40.563 14.000 1.31 19.00 22.39 358.26 0.60
OCN Ocwen Financial Corp. FL NYSE 24.250 28.282 10.125 -14.26 14.45 6.91 48.86 0.00
CCFH CCF Holding Company GA NASDAQ 20.000 21.000 10.750 0.63 17.65 14.21 133.32 0.78
CFBC Community First Banking Co. GA NASDAQ 38.375 40.000 31.875 6.60 13.70 31.49 163.48 NA
EBSI Eagle Bancshares GA NASDAQ 19.250 20.938 1.875 6.57 16.67 12.59 154.03 0.60
FSTC First Citizens Corp. GA NASDAQ 24.000 27.167 1.970 -5.26 14.29 12.44 122.97 0.29
FGHC First Georgia Holding Inc. GA NASDAQ 8.375 9.500 0.815 3.08 11.67 4.21 51.23 0.05
FLFC First Liberty Financial Corp. GA NASDAQ 27.875 28.375 2.667 19.89 27.43 12.30 166.86 0.39
FLAG FLAG Financial Corp. GA NASDAQ 18.500 19.875 3.200 10.45 25.42 10.66 117.07 0.34
SFNB Security First Network Bank GA NASDAQ 8.000 41.500 5.500 1.59 -38.76 3.02 9.12 0.00
CASH First Midwest Financial Inc. IA NASDAQ 20.500 20.750 8.833 4.46 12.33 16.11 149.91 0.36
GFSB GFS Bancorp Inc. IA NASDAQ 16.875 17.625 5.500 -1.46 16.38 11.01 95.62 0.23
HZFS Horizon Financial Svcs Corp. IA NASDAQ 11.000 13.000 5.188 -2.22 16.55 10.27 103.14 0.16
MFCX Marshalltown Financial Corp. IA NASDAQ 17.250 17.250 8.500 1.10 2.99 14.37 88.91 0.00
MIFC Mid-Iowa Financial Corp. IA NASDAQ 10.625 11.000 2.474 -1.16 14.86 7.19 76.29 0.08
MWBI Midwest Bancshares Inc. IA NASDAQ 18.500 19.500 3.917 8.82 63.83 10.18 147.21 0.20
FFFD North Central Bancshares Inc. IA NASDAQ 18.875 19.250 8.071 7.09 13.53 15.13 66.03 0.25
PMFI Perpetual Midwest Financial IA NASDAQ 27.000 27.500 10.000 12.50 34.16 18.24 214.44 0.30
<CAPTION>
PRICING RATIOS
*************************************
Price/ Price/ Price/ Price/Core
Earnings Bk. Value Assets Earnings
(X) (%) (%) (X)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
BKCT Bancorp Connecticut Inc. 19.42 223.21 24.00 21.16
BSBC Branford Savings Bank 20.69 223.05 21.52 20.69
DIBK Dime Financial Corp. 10.68 216.64 17.65 10.94
EGFC Eagle Financial Corp. 47.92 225.88 15.59 35.69
FFES First Federal of East Hartford 19.79 151.64 10.05 17.45
MECH Mechanics Savings Bank 9.56 156.92 16.33 9.56
NMSB NewMil Bancorp Inc. 22.27 169.24 17.22 23.75
NSSB Norwich Financial Corp. 20.80 197.67 23.06 22.71
NSSY NSS Bancorp Inc. 16.59 178.74 13.98 56.62
NTMG Nutmeg Federal S&LA 59.09 168.39 9.37 38.24
WBST Webster Financial Corp. 29.42 233.53 12.47 19.04
IFSB Independence Federal Svgs Bank 12.64 96.84 7.02 29.96
WSFS WSFS Financial Corp. 15.45 294.67 16.33 15.58
BANC BankAtlantic Bancorp Inc. 15.13 204.48 11.26 28.19
BKUNA BankUnited Financial Corp. 23.96 162.95 5.75 26.95
FFLC FFLC Bancorp Inc. 25.00 163.87 22.50 26.47
FFPB First Palm Beach Bancorp Inc. 20.95 173.07 10.82 25.00
OCN Ocwen Financial Corp. 16.28 350.94 49.63 28.53
CCFH CCF Holding Company 133.33 140.75 15.00 NM
CFBC Community First Banking Co. NA 121.86 23.47 NA
EBSI Eagle Bancshares 22.38 152.90 12.50 18.16
FSTC First Citizens Corp. 11.59 192.93 19.52 12.97
FGHC First Georgia Holding Inc. 27.92 198.93 16.35 22.64
FLFC First Liberty Financial Corp. 21.28 226.63 16.71 18.22
FLAG FLAG Financial Corp. 18.50 173.55 15.80 23.13
SFNB Security First Network Bank NM 264.90 87.72 NM
CASH First Midwest Financial Inc. 16.14 127.25 13.67 16.94
GFSB GFS Bancorp Inc. 15.07 153.27 17.65 15.07
HZFS Horizon Financial Svcs Corp. 14.10 107.11 10.67 17.46
MFCX Marshalltown Financial Corp. 30.26 120.04 19.40 31.94
MIFC Mid-Iowa Financial Corp. 11.81 147.77 13.93 12.96
MWBI Midwest Bancshares Inc. 16.67 181.73 12.57 19.07
FFFD North Central Bancshares Inc. 16.41 124.75 28.59 16.41
PMFI Perpetual Midwest Financial 32.93 148.03 12.59 40.91
</TABLE>
<PAGE> 127
KELLER & COMPANY Page 3
Dublin, Ohio
614-766-1426
THRIFT STOCK PRICES AND PRICING RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
PER SHARE
*********************************************************************
Latest All Time All Time Monthly Quarterly Book 12 Month
Price High Low Change Change Value Assets Div.
State Exchange ($) ($) ($) (%) (%) ($) ($) ($)
----- -------- --------- ------- ------- --------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SFFC StateFed Financial Corp. IA NASDAQ 13.500 14.125 5.250 0.00 22.73 9.86 56.21 0.20
FBNW FirstBank Corp. ID NASDAQ 17.625 19.000 15.500 7.63 0.71 15.99 89.66 NA
ABCL Alliance Bancorp Inc. IL NASDAQ 26.250 28.375 6.000 5.53 24.51 16.10 170.96 0.29
AVND Avondale Financial Corp. IL NASDAQ 16.000 18.875 11.500 -6.57 8.47 13.18 170.81 0.00
BFFC Big Foot Financial Corp. IL NASDAQ 18.500 19.625 12.313 4.23 9.63 14.97 85.63 NA
CBCI Calumet Bancorp Inc. IL NASDAQ 31.875 34.000 6.889 -5.32 17.33 25.01 154.24 0.00
CBSB Charter Financial Inc. IL NASDAQ 22.000 22.000 6.361 4.76 7.32 13.71 94.77 0.28
CBK Citizens First Financial Corp. IL AMSE 18.250 19.500 9.500 -2.67 14.06 16.30 107.58 0.00
CSBF CSB Financial Group Inc. IL NASDAQ 12.500 12.750 8.810 1.01 6.38 12.99 51.86 0.00
EGLB Eagle BancGroup Inc. IL NASDAQ 19.750 19.750 10.500 6.76 19.70 17.03 143.72 0.00
FBCI Fidelity Bancorp Inc. IL NASDAQ 23.250 25.750 9.500 -1.06 9.41 18.66 178.13 0.30
FFBI First Financial Bancorp Inc. IL NASDAQ 19.000 20.000 9.000 -1.30 0.66 18.10 202.92 0.00
FMBD First Mutual Bancorp Inc. IL NASDAQ 20.250 21.500 11.125 6.58 35.00 16.77 114.75 0.32
FSFF First SecurityFed Financial IL NASDAQ 16.063 16.063 15.000 NA NA NA NA NA
GTPS Great American Bancorp IL NASDAQ 19.000 19.500 11.875 0.00 6.29 18.44 82.25 0.40
HMLK Hemlock Federal Financial Corp IL NASDAQ 17.250 17.500 12.500 1.47 12.20 15.06 77.98 NA
HBEI Home Bancorp of Elgin Inc. IL NASDAQ 18.000 19.313 11.813 7.46 5.88 13.77 49.96 0.20
HMCI HomeCorp Inc. IL NASDAQ 25.000 25.000 3.333 23.46 63.93 13.07 191.43 0.00
KNK Kankakee Bancorp Inc. IL AMSE 33.875 34.625 13.625 7.54 16.31 27.25 238.46 0.46
MAFB MAF Bancorp Inc. IL NASDAQ 32.500 34.750 1.818 6.56 4.84 17.22 221.04 0.26
NBSI North Bancshares Inc. IL NASDAQ 26.500 27.125 11.000 1.92 17.13 17.04 126.92 0.46
PFED Park Bancorp Inc. IL NASDAQ 17.875 18.125 10.188 0.70 7.52 16.61 71.77 0.00
PSFI PS Financial Inc. IL NASDAQ 17.250 18.000 11.625 0.73 16.95 14.76 39.55 NA
SWBI Southwest Bancshares IL NASDAQ 25.500 26.000 7.833 -0.97 25.93 16.01 141.13 0.76
SPBC St. Paul Bancorp Inc. IL NASDAQ 24.500 28.500 2.044 1.29 7.69 11.98 133.25 0.32
SFSB SuburbFed Financial Corp. IL NASDAQ 34.875 34.875 6.667 3.33 26.82 22.73 342.62 0.32
WCBI Westco Bancorp IL NASDAQ 27.500 29.250 7.667 3.77 5.26 19.42 124.93 0.60
FBCV 1ST Bancorp IN NASDAQ 40.000 41.000 3.990 3.90 11.89 32.63 377.22 0.40
AMFC AMB Financial Corp. IN NASDAQ 16.000 17.750 9.750 -4.48 10.34 14.95 107.27 0.24
ASBI Ameriana Bancorp IN NASDAQ 19.500 22.000 2.750 4.00 -3.70 13.63 121.63 0.61
ATSB AmTrust Capital Corp. IN NASDAQ 14.000 14.500 7.750 1.82 7.69 14.46 132.36 0.15
FFWC FFW Corp. IN NASDAQ 37.750 37.750 12.500 20.80 29.06 24.64 253.86 0.66
FFED Fidelity Federal Bancorp IN NASDAQ 10.000 14.773 1.534 8.11 17.65 5.15 84.32 0.50
FISB First Indiana Corporation IN NASDAQ 26.250 26.500 1.642 7.69 28.05 14.12 146.49 0.47
<CAPTION>
PRICING RATIOS
*************************************
Price/ Price/ Price/ Price/Core
Earnings Bk. Value Assets Earnings
(X) (%) (%) (X)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
SFFC StateFed Financial Corp. 18.75 136.92 24.02 18.75
FBNW FirstBank Corp. NA 110.23 19.66 NA
ABCL Alliance Bancorp Inc. 22.63 163.04 15.35 20.35
AVND Avondale Financial Corp. NM 121.40 9.37 NM
BFFC Big Foot Financial Corp. NA 123.58 21.60 NA
CBCI Calumet Bancorp Inc. 15.78 127.45 20.67 16.10
CBSB Charter Financial Inc. 21.15 160.47 23.21 20.75
CBK Citizens First Financial Corp. 31.47 111.96 16.96 35.10
CSBF CSB Financial Group Inc. 73.53 96.23 24.10 46.30
EGLB Eagle BancGroup Inc. 43.89 115.97 13.74 58.09
FBCI Fidelity Bancorp Inc. 16.85 124.60 13.05 16.85
FFBI First Financial Bancorp Inc. NM 104.97 9.36 20.88
FMBD First Mutual Bancorp Inc. 59.56 120.75 17.65 65.32
FSFF First SecurityFed Financial NA NA NA NA
GTPS Great American Bancorp 48.72 103.04 23.10 44.19
HMLK Hemlock Federal Financial Corp NA 114.54 22.12 NA
HBEI Home Bancorp of Elgin Inc. 39.13 130.72 36.03 40.91
HMCI HomeCorp Inc. 27.17 191.28 13.06 33.78
KNK Kankakee Bancorp Inc. 16.61 124.31 14.21 16.85
MAFB MAF Bancorp Inc. 13.89 188.73 14.70 13.95
NBSI North Bancshares Inc. 35.33 155.52 20.88 39.55
PFED Park Bancorp Inc. 21.80 107.62 24.91 22.63
PSFI PS Financial Inc. NA 116.87 43.62 NA
SWBI Southwest Bancshares 17.71 159.28 18.07 18.21
SPBC St. Paul Bancorp Inc. 18.15 204.51 18.39 18.01
SFSB SuburbFed Financial Corp. 17.10 153.43 10.18 20.88
WCBI Westco Bancorp 16.18 141.61 22.01 17.19
FBCV 1ST Bancorp 14.71 122.59 10.60 28.99
AMFC AMB Financial Corp. 16.00 107.02 14.92 22.86
ASBI Ameriana Bancorp 17.41 143.07 16.03 19.31
ATSB AmTrust Capital Corp. 25.00 96.82 10.58 41.18
FFWC FFW Corp. 15.35 153.21 14.87 15.66
FFED Fidelity Federal Bancorp 14.29 194.17 11.86 14.71
FISB First Indiana Corporation 16.61 185.91 17.92 20.04
</TABLE>
<PAGE> 128
KELLER & COMPANY Page 4
Dublin, Ohio
614-766-1426
THRIFT STOCK PRICES AND PRICING RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
PER SHARE
*********************************************************************
Latest All Time All Time Monthly Quarterly Book 12 Month
Price High Low Change Change Value Assets Div.
State Exchange ($) ($) ($) (%) (%) ($) ($) ($)
----- -------- --------- ------- ------- --------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HFGI Harrington Financial Group IN NASDAQ 12.375 13.750 9.750 -1.98 1.02 7.74 159.99 0.06
HBFW Home Bancorp IN NASDAQ 27.375 27.375 12.500 12.59 24.43 17.62 132.63 0.20
HBBI Home Building Bancorp IN NASDAQ 21.250 23.750 10.000 -1.73 3.66 20.43 133.95 0.30
HOMF Home Federal Bancorp IN NASDAQ 27.500 27.500 1.432 17.86 37.50 11.77 136.05 0.30
HWEN Home Financial Bancorp IN NASDAQ 16.438 17.250 9.875 0.38 4.37 15.61 88.93 0.20
INCB Indiana Community Bank SB IN NASDAQ 20.500 20.500 11.000 36.67 30.16 12.38 104.21 0.36
LOGN Logansport Financial Corp. IN NASDAQ 15.250 16.000 11.125 1.67 5.17 12.86 68.06 0.40
LSBI LSB Financial Corp. IN NASDAQ 26.000 27.375 10.714 1.96 23.81 20.24 218.55 0.32
MARN Marion Capital Holdings IN NASDAQ 26.500 28.125 14.250 -1.85 15.22 22.22 101.26 0.84
MFBC MFB Corp. IN NASDAQ 23.250 23.750 10.500 2.20 -1.06 20.31 155.05 0.32
MONT Montgomery Financial Corp. IN NASDAQ 12.313 14.000 10.000 0.51 3.14 11.81 61.70 NA
NEIB Northeast Indiana Bancorp IN NASDAQ 20.000 21.125 11.250 8.84 19.40 15.51 107.97 0.32
PFDC Peoples Bancorp IN NASDAQ 22.000 24.500 3.583 4.76 38.95 12.82 84.30 0.40
PERM Permanent Bancorp Inc. IN NASDAQ 25.625 27.375 9.750 2.50 7.89 20.25 206.19 0.43
RIVR River Valley Bancorp IN NASDAQ 18.750 18.875 13.250 15.38 13.64 14.80 116.33 NA
SOBI Sobieski Bancorp Inc. IN NASDAQ 19.625 19.625 10.000 7.53 20.77 17.26 108.12 0.22
FFSL First Independence Corp. KS NASDAQ 15.000 15.000 5.438 2.56 12.94 11.78 115.02 0.24
LARK Landmark Bancshares Inc. KS NASDAQ 24.000 27.250 9.750 0.00 0.00 18.99 134.86 0.40
MCBS Mid Continent Bancshares Inc. KS NASDAQ 41.250 43.250 9.750 8.55 34.15 19.93 208.65 0.40
CKFB CKF Bancorp Inc. KY NASDAQ 18.500 20.750 11.375 -2.63 -2.63 16.91 66.29 1.47
CLAS Classic Bancshares Inc. KY NASDAQ 17.125 17.250 10.375 10.48 21.24 15.13 101.69 0.21
FFKY First Federal Financial Corp. KY NASDAQ 22.000 23.500 3.063 0.00 -2.22 12.60 91.99 0.52
FLKY First Lancaster Bancshares KY NASDAQ 15.750 16.375 13.125 0.00 -1.56 14.62 49.60 0.25
FTSB Fort Thomas Financial Corp. KY NASDAQ 14.750 17.750 9.250 10.28 22.92 10.56 65.44 0.30
FKKY Frankfort First Bancorp Inc. KY NASDAQ 9.250 15.875 8.000 -3.90 -10.84 6.84 40.63 4.36
GWBC Gateway Bancorp Inc. KY NASDAQ 19.625 19.625 11.000 3.97 11.35 16.15 58.20 0.40
GTFN Great Financial Corp. KY NASDAQ 48.000 48.125 13.875 10.34 41.43 21.08 209.32 0.54
HFFB Harrodsburg First Fin Bancorp KY NASDAQ 17.125 19.000 12.375 7.03 15.13 15.68 53.81 0.55
KYF Kentucky First Bancorp Inc. KY AMSE 14.500 15.250 10.563 7.41 16.00 11.29 67.62 3.50
ANA Acadiana Bancshares Inc. LA AMSE 23.750 24.750 11.690 6.74 10.47 17.21 101.59 0.36
GSLA GS Financial Corp. LA NASDAQ 17.750 18.750 13.375 2.90 12.25 16.44 38.12 NA
ISBF ISB Financial Corp. LA NASDAQ 26.250 28.000 12.938 8.25 9.38 17.75 138.54 0.41
MERI Meritrust Federal SB LA NASDAQ 51.219 51.219 13.500 7.26 24.83 24.89 301.37 0.70
TSH Teche Holding Co. LA AMSE 21.875 23.500 11.375 9.38 20.69 15.53 118.18 0.50
<CAPTION>
PRICING RATIOS
*************************************
Price/ Price/ Price/ Price/Core
Earnings Bk. Value Assets Earnings
(X) (%) (%) (X)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
HFGI Harrington Financial Group 18.20 159.88 7.73 22.50
HBFW Home Bancorp 36.02 155.36 20.64 23.40
HBBI Home Building Bancorp 18.48 104.01 15.86 18.81
HOMF Home Federal Bancorp 16.37 233.64 20.21 17.86
HWEN Home Financial Bancorp 21.92 105.30 18.48 25.29
INCB Indiana Community Bank SB 39.42 165.59 19.67 39.42
LOGN Logansport Financial Corp. 16.94 118.58 22.41 16.22
LSBI LSB Financial Corp. 15.57 128.46 11.90 17.69
MARN Marion Capital Holdings 16.67 119.26 26.17 16.88
MFBC MFB Corp. 20.39 114.48 15.00 20.39
MONT Montgomery Financial Corp. NA 104.26 19.96 NA
NEIB Northeast Indiana Bancorp 16.53 128.95 18.52 16.53
PFDC Peoples Bancorp 23.91 171.61 26.10 17.19
PERM Permanent Bancorp Inc. 21.18 126.54 12.43 21.35
RIVR River Valley Bancorp NA 126.69 16.12 NA
SOBI Sobieski Bancorp Inc. 29.73 113.70 18.15 32.17
FFSL First Independence Corp. 22.06 127.33 13.04 22.06
LARK Landmark Bancshares Inc. 17.65 126.38 17.80 20.00
MCBS Mid Continent Bancshares Inc. 21.94 206.97 19.77 19.46
CKFB CKF Bancorp Inc. 14.80 109.40 27.91 19.68
CLAS Classic Bancshares Inc. 19.68 113.19 16.84 25.18
FFKY First Federal Financial Corp. 15.07 174.60 23.92 15.28
FLKY First Lancaster Bancshares 28.64 107.73 31.75 28.64
FTSB Fort Thomas Financial Corp. 18.67 139.68 22.54 18.67
FKKY Frankfort First Bancorp Inc. NM 135.23 22.77 35.58
GWBC Gateway Bancorp Inc. 33.26 121.52 33.72 33.26
GTFN Great Financial Corp. 22.02 227.70 22.93 29.81
HFFB Harrodsburg First Fin Bancorp 29.03 109.22 31.82 22.83
KYF Kentucky First Bancorp Inc. 18.13 128.43 21.44 18.35
ANA Acadiana Bancshares Inc. 22.20 138.00 23.38 22.84
GSLA GS Financial Corp. NA 107.97 46.56 NA
ISBF ISB Financial Corp. 25.00 147.89 18.95 25.49
MERI Meritrust Federal SB 15.76 205.78 17.00 15.76
TSH Teche Holding Co. 26.36 140.86 18.51 19.02
</TABLE>
<PAGE> 129
KELLER & COMPANY Page 5
Dublin, Ohio
614-766-1426
THRIFT STOCK PRICES AND PRICING RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
PER SHARE
*********************************************************************
Latest All Time All Time Monthly Quarterly Book 12 Month
Price High Low Change Change Value Assets Div.
State Exchange ($) ($) ($) (%) (%) ($) ($) ($)
----- -------- --------- ------- ------- --------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ABBK Abington Bancorp Inc. MA NASDAQ 36.000 36.750 1.250 10.77 18.03 19.43 272.65 0.40
AFCB Affiliated Community Bancorp MA NASDAQ 28.500 32.125 12.848 0.00 8.57 17.28 173.83 0.48
ANDB Andover Bancorp Inc. MA NASDAQ 37.750 40.500 1.563 6.34 23.27 20.20 248.73 0.64
BFD BostonFed Bancorp Inc. MA AMSE 20.375 22.313 10.000 -1.21 6.88 15.43 170.04 0.24
CEBK Central Co-operative Bank MA NASDAQ 26.500 26.500 2.000 17.78 36.77 18.05 182.40 0.32
EIRE Emerald Isle Bancorp Inc. MA NASDAQ 32.250 32.250 0.666 2.38 51.76 13.78 197.13 0.28
FCB Falmouth Bancorp Inc. MA AMSE 20.250 22.000 10.250 -1.22 19.12 15.40 64.56 0.15
FESX First Essex Bancorp Inc. MA NASDAQ 19.875 20.500 1.000 1.92 18.66 11.90 160.72 0.48
FAB FirstFed America Bancorp Inc. MA AMSE 20.625 22.125 13.625 5.10 3.77 15.63 118.99 NA
HIFS Hingham Instit. for Savings MA NASDAQ 27.125 29.000 1.625 -4.82 13.02 16.10 165.89 0.53
HPBC Home Port Bancorp Inc. MA NASDAQ 24.000 25.000 3.000 3.23 14.29 11.65 109.13 0.80
IPSW Ipswich Savings Bank MA NASDAQ 12.875 14.125 1.100 -0.96 7.29 4.78 85.17 0.11
LSBX Lawrence Savings Bank MA NASDAQ 13.875 18.125 0.500 3.74 21.98 7.84 82.39 0.00
MASB MASSBANK Corp. MA NASDAQ 45.000 47.750 6.375 3.45 18.81 28.25 261.97 0.83
MFLR Mayflower Co-operative Bank MA NASDAQ 24.438 26.250 2.000 3.99 39.65 13.67 141.14 0.54
MDBK Medford Savings Bank MA NASDAQ 37.000 38.500 3.250 5.71 19.35 21.96 243.63 0.86
MWBX MetroWest Bank MA NASDAQ 8.250 18.125 0.750 0.00 32.00 3.13 41.97 0.17
PBKB People's Bancshares Inc. MA NASDAQ 20.000 20.250 0.750 7.38 19.40 8.96 218.53 0.39
SWCB Sandwich Bancorp Inc. MA NASDAQ 41.750 42.000 1.875 15.97 27.48 21.16 266.68 1.20
SISB SIS Bancorp Inc. MA NASDAQ 33.625 37.000 9.625 -0.74 14.47 18.94 260.36 0.38
SOSA Somerset Savings Bank MA NASDAQ 4.875 36.563 0.313 -4.88 36.82 2.06 31.25 0.00
WRNB Warren Bancorp Inc. MA NASDAQ 20.625 21.375 0.500 1.85 16.20 10.20 95.86 0.85
EQSB Equitable Federal Savings Bank MD NASDAQ 45.000 45.750 11.250 2.56 15.94 25.80 511.79 0.00
HRBF Harbor Federal Bancorp Inc. MD NASDAQ 21.750 23.500 9.750 4.82 14.47 16.74 128.26 0.42
MFSL Maryland Federal Bancorp MD NASDAQ 26.625 26.625 2.165 17.03 20.34 15.42 181.68 0.39
WSB Washington Savings Bank, FSB MD AMSE 7.375 8.250 0.281 -3.28 9.26 5.16 61.61 0.10
WHGB WHG Bancshares Corp. MD NASDAQ 16.250 16.500 10.875 7.44 3.17 14.16 68.56 0.15
FCME First Coastal Corp. ME NASDAQ 13.875 15.750 1.500 0.91 29.07 10.66 109.31 0.00
KSBK KSB Bancorp Inc. ME NASDAQ 15.250 16.000 3.712 8.93 8.93 8.90 120.87 0.07
MCBN Mid-Coast Bancorp Inc. ME NASDAQ 28.750 29.000 8.095 2.57 11.65 22.65 263.84 0.52
NBN Northeast Bancorp ME AMSE 27.750 27.875 4.625 18.09 91.38 14.27 205.19 0.32
PHBK Peoples Heritage Finl Group ME NASDAQ 42.625 43.250 1.875 8.60 17.18 16.42 220.43 0.72
BWFC Bank West Financial Corp. MI NASDAQ 22.000 22.500 8.500 7.32 31.34 13.30 94.02 0.28
CFSB CFSB Bancorp Inc. MI NASDAQ 35.500 35.750 2.881 15.92 36.54 13.03 169.05 0.57
<CAPTION>
PRICING RATIOS
*************************************
Price/ Price/ Price/ Price/Core
Earnings Bk. Value Assets Earnings
(X) (%) (%) (X)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ABBK Abington Bancorp Inc. 17.06 185.28 13.20 19.05
AFCB Affiliated Community Bancorp 16.38 164.93 16.40 16.38
ANDB Andover Bancorp Inc. 15.16 186.88 15.18 15.53
BFD BostonFed Bancorp Inc. 18.03 132.05 11.98 19.78
CEBK Central Co-operative Bank 17.67 146.81 14.53 18.79
EIRE Emerald Isle Bancorp Inc. 20.54 234.03 16.36 19.43
FCB Falmouth Bancorp Inc. 38.94 131.49 31.37 40.50
FESX First Essex Bancorp Inc. 14.40 167.02 12.37 16.99
FAB FirstFed America Bancorp Inc. NA 131.96 17.33 NA
HIFS Hingham Instit. for Savings 13.70 168.48 16.35 13.70
HPBC Home Port Bancorp Inc. 13.64 206.01 21.99 13.71
IPSW Ipswich Savings Bank 15.33 269.35 15.12 18.93
LSBX Lawrence Savings Bank 10.13 176.98 16.84 10.13
MASB MASSBANK Corp. 16.67 159.29 17.18 17.72
MFLR Mayflower Co-operative Bank 17.58 178.77 17.31 19.71
MDBK Medford Savings Bank 15.48 168.49 15.19 16.67
MWBX MetroWest Bank 15.57 263.58 19.66 15.57
PBKB People's Bancshares Inc. 14.81 223.21 9.15 27.03
SWCB Sandwich Bancorp Inc. 17.69 197.31 15.66 18.00
SISB SIS Bancorp Inc. 16.40 177.53 12.91 16.56
SOSA Somerset Savings Bank 15.73 236.65 15.60 16.25
WRNB Warren Bancorp Inc. 10.58 202.21 21.52 13.05
EQSB Equitable Federal Savings Bank 21.84 174.42 8.79 13.64
HRBF Harbor Federal Bancorp Inc. 23.14 129.93 16.96 23.14
MFSL Maryland Federal Bancorp 23.15 172.67 14.65 16.33
WSB Washington Savings Bank, FSB 30.73 142.93 11.97 21.69
WHGB WHG Bancshares Corp. 46.43 114.76 23.70 28.02
FCME First Coastal Corp. 3.08 130.16 12.69 3.20
KSBK KSB Bancorp Inc. 11.82 171.35 12.62 11.73
MCBN Mid-Coast Bancorp Inc. 14.82 126.93 10.90 15.63
NBN Northeast Bancorp 23.32 194.46 13.52 29.52
PHBK Peoples Heritage Finl Group 16.72 259.59 19.34 16.72
BWFC Bank West Financial Corp. 23.91 165.41 23.40 42.31
CFSB CFSB Bancorp Inc. 18.98 272.45 21.00 20.29
</TABLE>
<PAGE> 130
KELLER & COMPANY Page 6
Dublin, Ohio
614-766-1426
THRIFT STOCK PRICES AND PRICING RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
PER SHARE
*********************************************************************
Latest All Time All Time Monthly Quarterly Book 12 Month
Price High Low Change Change Value Assets Div.
State Exchange ($) ($) ($) (%) (%) ($) ($) ($)
----- -------- --------- ------- ------- --------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DNFC D & N Financial Corp. MI NASDAQ 24.125 25.375 2.500 1.05 26.97 11.18 212.76 0.05
FLGS Flagstar Bancorp Inc. MI NASDAQ 18.250 21.750 13.000 -6.41 -5.81 8.89 148.74 NA
MSBF MSB Financial Inc. MI NASDAQ 19.500 19.500 5.375 10.64 22.83 10.33 62.43 0.27
MSBK Mutual Savings Bank FSB MI NASDAQ 13.000 25.500 3.000 6.12 20.93 9.73 152.86 0.00
OFCP Ottawa Financial Corp. MI NASDAQ 27.500 28.250 9.318 3.29 18.05 14.15 161.95 0.35
THR Three Rivers Financial Corp. MI AMSE 19.750 20.500 11.375 9.72 25.40 15.75 114.40 0.37
BDJI First Federal Bancorporation MN NASDAQ 28.000 28.000 10.625 13.71 33.33 17.75 165.77 0.00
FFHH FSF Financial Corp. MN NASDAQ 20.000 21.000 7.750 4.58 12.68 16.24 128.96 0.50
HMNF HMN Financial Inc. MN NASDAQ 25.875 26.500 9.313 6.70 4.02 20.09 135.06 0.00
MIVI Mississippi View Holding Co. MN NASDAQ 18.250 19.750 8.500 1.39 17.74 16.30 92.60 0.16
QCFB QCF Bancorp Inc. MN NASDAQ 28.500 28.500 11.000 0.00 11.76 18.83 114.49 0.00
WEFC Wells Financial Corp. MN NASDAQ 17.750 19.000 9.000 4.41 7.58 14.86 104.50 0.12
CMRN Cameron Financial Corp MO NASDAQ 19.625 19.875 10.688 8.28 11.35 17.18 79.23 0.28
CAPS Capital Savings Bancorp Inc. MO NASDAQ 22.375 22.500 6.125 29.71 42.06 11.70 128.06 0.24
CBES CBES Bancorp Inc. MO NASDAQ 20.375 22.375 12.625 6.54 13.99 17.60 104.04 0.30
CNSB CNS Bancorp Inc. MO NASDAQ 20.000 20.000 11.000 15.94 19.40 14.34 58.93 0.21
FBSI First Bancshares Inc. MO NASDAQ 26.250 28.000 10.250 6.60 8.25 20.74 148.97 0.20
FTNB Fulton Bancorp Inc. MO NASDAQ 20.250 26.500 12.500 5.19 -2.41 14.88 60.32 NA
GSBC Great Southern Bancorp Inc. MO NASDAQ 21.875 22.125 1.146 8.70 25.00 7.79 90.04 0.40
HFSA Hardin Bancorp Inc. MO NASDAQ 17.500 18.625 11.000 -0.71 6.06 15.75 136.57 0.44
JSBA Jefferson Savings Bancorp MO NASDAQ 43.250 44.000 13.250 8.13 32.06 24.57 251.23 0.38
JOAC Joachim Bancorp Inc. MO NASDAQ 14.750 15.625 11.500 -0.84 1.72 13.66 48.55 0.50
LXMO Lexington B&L Financial Corp. MO NASDAQ 16.750 17.250 9.500 2.29 5.51 14.73 52.03 0.15
MBLF MBLA Financial Corp. MO NASDAQ 27.000 27.000 12.750 4.85 13.68 22.35 176.63 0.40
NASB North American Savings Bank MO NASDAQ 49.938 55.625 2.500 0.38 -3.50 25.37 330.46 0.71
NSLB NS&L Bancorp Inc. MO NASDAQ 18.750 19.500 11.750 2.74 1.52 16.51 84.40 0.50
PCBC Perry County Financial Corp. MO NASDAQ 23.250 25.000 12.375 13.41 8.77 18.81 97.97 0.40
SMFC Sho-Me Financial Corp. MO NASDAQ 47.000 48.000 9.375 3.87 26.17 22.63 230.05 0.00
SMBC Southern Missouri Bancorp Inc. MO NASDAQ 19.000 19.500 8.875 7.04 11.76 16.36 101.29 0.50
CFTP Community Federal Bancorp MS NASDAQ 17.125 20.000 12.250 4.58 -4.86 13.40 46.65 2.80
FFBS FFBS BanCorp Inc. MS NASDAQ 22.500 26.000 12.000 1.98 -2.17 15.07 85.83 2.50
EFBC Empire Federal Bancorp Inc. MT NASDAQ 16.500 18.250 12.500 3.94 4.76 15.51 42.64 NA
GBCI Glacier Bancorp Inc. MT NASDAQ 20.750 22.500 0.997 3.75 16.90 8.41 84.21 0.45
UBMT United Financial Corp. MT NASDAQ 27.000 27.000 5.625 12.50 14.89 20.24 84.26 0.95
<CAPTION>
PRICING RATIOS
*************************************
Price/ Price/ Price/ Price/Core
Earnings Bk. Value Assets Earnings
(X) (%) (%) (X)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
DNFC D & N Financial Corp. 14.89 215.79 11.34 16.08
FLGS Flagstar Bancorp Inc. 40.56 205.29 12.27 NA
MSBF MSB Financial Inc. 21.91 188.77 31.23 22.67
MSBK Mutual Savings Bank FSB 86.67 133.61 8.50 NM
OFCP Ottawa Financial Corp. 22.36 194.35 16.98 22.92
THR Three Rivers Financial Corp. 18.63 125.40 17.26 19.55
BDJI First Federal Bancorporation 23.14 157.75 16.89 23.73
FFHH FSF Financial Corp. 18.87 123.15 15.51 19.05
HMNF HMN Financial Inc. 18.35 128.80 19.16 21.56
MIVI Mississippi View Holding Co. 19.01 111.96 19.71 19.21
QCFB QCF Bancorp Inc. 14.54 151.35 24.89 14.54
WEFC Wells Financial Corp. 16.14 119.45 16.99 16.28
CMRN Cameron Financial Corp 24.84 114.23 24.77 19.63
CAPS Capital Savings Bancorp Inc. 18.80 191.24 17.47 19.29
CBES CBES Bancorp Inc. 15.92 115.77 19.58 17.56
CNSB CNS Bancorp Inc. 39.22 139.47 33.94 38.46
FBSI First Bancshares Inc. 15.44 126.57 17.62 17.05
FTNB Fulton Bancorp Inc. NA 136.09 33.57 NA
GSBC Great Southern Bancorp Inc. 14.30 280.81 24.29 15.09
HFSA Hardin Bancorp Inc. 18.23 111.11 12.81 19.23
JSBA Jefferson Savings Bancorp 20.12 176.03 17.22 20.69
JOAC Joachim Bancorp Inc. 38.82 107.98 30.38 38.82
LXMO Lexington B&L Financial Corp. 29.39 113.71 32.19 22.04
MBLF MBLA Financial Corp. 20.15 120.81 15.29 19.71
NASB North American Savings Bank 12.33 196.84 15.11 13.07
NSLB NS&L Bancorp Inc. 42.61 113.57 22.22 31.25
PCBC Perry County Financial Corp. 24.22 123.60 23.73 17.22
SMFC Sho-Me Financial Corp. 17.54 207.69 20.43 18.43
SMBC Southern Missouri Bancorp Inc. 20.21 116.14 18.76 20.65
CFTP Community Federal Bancorp 24.46 127.80 36.71 24.46
FFBS FFBS BanCorp Inc. 18.75 149.30 26.21 18.75
EFBC Empire Federal Bancorp Inc. NA 106.38 38.70 NA
GBCI Glacier Bancorp Inc. 17.01 246.73 24.64 16.60
UBMT United Financial Corp. 21.95 133.40 32.04 22.13
</TABLE>
<PAGE> 131
KELLER & COMPANY Page 7
Dublin, Ohio
614-766-1426
THRIFT STOCK PRICES AND PRICING RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
PER SHARE
*********************************************************************
Latest All Time All Time Monthly Quarterly Book 12 Month
Price High Low Change Change Value Assets Div.
State Exchange ($) ($) ($) (%) (%) ($) ($) ($)
----- -------- --------- ------- ------- --------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WSTR WesterFed Financial Corp. MT NASDAQ 23.563 27.000 11.375 -4.80 8.65 19.03 179.16 0.46
CFNC Carolina Fincorp Inc. NC NASDAQ 17.375 17.875 13.000 2.21 0.00 13.92 61.61 NA
CENB Century Bancorp Inc. NC NASDAQ 80.000 84.000 62.000 -4.76 3.23 75.05 247.80 NA
COOP Cooperative Bankshares Inc. NC NASDAQ 17.375 17.750 1.734 8.59 32.38 9.27 120.51 0.00
SOPN First Savings Bancorp Inc. NC NASDAQ 24.375 25.000 13.500 3.72 16.07 18.43 80.11 0.79
GSFC Green Street Financial Corp. NC NASDAQ 18.500 20.750 12.125 2.78 -2.63 14.64 41.40 0.57
HBS Haywood Bancshares Inc. NC AMSE 21.000 22.625 9.500 -0.59 10.53 17.33 122.20 0.56
HFNC HFNC Financial Corp. NC NASDAQ 14.875 22.063 13.125 0.00 -6.30 9.48 50.42 5.28
KSAV KS Bancorp Inc. NC NASDAQ 22.500 25.500 8.719 4.65 21.62 16.44 124.17 0.94
MBSP Mitchell Bancorp Inc. NC NASDAQ 17.500 18.000 10.190 2.94 5.26 15.36 37.16 0.40
PDB Piedmont Bancorp Inc. NC AMSE 10.375 19.125 9.250 -5.68 -1.19 7.56 46.00 7.40
SSB Scotland Bancorp Inc. NC AMSE 10.250 19.250 10.188 -3.53 -43.45 7.61 33.65 6.30
SSFC South Street Financial Corp. NC NASDAQ 17.500 20.000 12.125 -1.41 -3.45 14.84 53.49 NA
SSM Stone Street Bancorp Inc. NC AMSE 20.250 27.250 16.250 0.00 -4.71 16.32 55.20 4.56
UFRM United Federal Savings Bank NC NASDAQ 11.500 12.750 1.750 1.10 -2.13 6.82 92.95 0.22
CFB Commercial Federal Corp. NE NYSE 48.063 51.188 1.083 0.00 19.04 20.59 333.95 0.28
CFX CFX Corp. NH AMSE 27.750 27.750 3.290 11.56 45.10 10.25 117.66 0.88
NHTB New Hampshire Thrift Bncshrs NH NASDAQ 21.000 22.750 1.750 -4.55 21.74 12.04 153.92 0.50
FBER 1st Bergen Bancorp NJ NASDAQ 18.625 19.500 9.000 2.05 4.93 13.57 99.40 0.14
FSNJ Bayonne Bancshares Inc. NJ NASDAQ 12.000 13.063 3.665 3.23 0.00 10.58 67.73 NA
FSPG First Home Bancorp Inc. NJ NASDAQ 23.750 23.750 1.898 5.56 18.01 13.31 193.87 0.40
FMCO FMS Financial Corp. NJ NASDAQ 29.375 31.500 1.500 3.07 16.34 15.80 243.60 0.22
IBSF IBS Financial Corp. NJ NASDAQ 17.438 18.750 7.312 8.99 1.09 11.69 67.10 0.54
LVSB Lakeview Financial NJ NASDAQ 24.125 26.000 3.668 0.26 49.61 13.71 112.19 0.12
LFBI Little Falls Bancorp Inc. NJ NASDAQ 20.000 20.000 9.500 14.29 15.11 14.53 124.40 0.13
OCFC Ocean Financial Corp. NJ NASDAQ 37.125 38.375 19.625 0.34 10.00 27.63 182.15 0.40
PBCI Pamrapo Bancorp Inc. NJ NASDAQ 23.875 26.750 2.563 5.52 13.02 16.89 130.84 0.98
PFSB PennFed Financial Services Inc NJ NASDAQ 33.188 33.500 9.063 11.32 14.94 22.43 282.83 0.28
PULS Pulse Bancorp NJ NASDAQ 24.500 29.750 4.000 -6.22 18.07 14.03 170.75 0.70
RARB Raritan Bancorp Inc. NJ NASDAQ 27.250 28.625 3.445 -1.80 22.47 12.64 171.68 0.45
SFIN Statewide Financial Corp. NJ NASDAQ 21.500 22.625 11.250 10.26 14.28 14.34 153.15 0.41
WYNE Wayne Bancorp Inc. NJ NASDAQ 22.750 24.875 10.750 1.11 -7.14 16.49 132.73 0.15
WWFC Westwood Financial Corp. NJ NASDAQ 27.625 28.000 10.250 0.45 13.92 15.95 171.14 0.25
AABC Access Anytime Bancorp Inc. NM NASDAQ 10.125 10.625 1.716 21.50 50.22 7.51 86.81 0.00
<CAPTION>
PRICING RATIOS
*************************************
Price/ Price/ Price/ Price/Core
Earnings Bk. Value Assets Earnings
(X) (%) (%) (X)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
WSTR WesterFed Financial Corp. 18.70 123.82 13.15 19.47
CFNC Carolina Fincorp Inc. NA 124.82 28.20 NA
CENB Century Bancorp Inc. NA 106.60 32.28 NA
COOP Cooperative Bankshares Inc. 25.18 187.43 14.42 25.18
SOPN First Savings Bancorp Inc. 19.82 132.26 30.43 19.82
GSFC Green Street Financial Corp. 27.61 126.37 44.69 27.61
HBS Haywood Bancshares Inc. 13.46 121.18 17.18 13.46
HFNC HFNC Financial Corp. 22.20 156.91 29.50 25.65
KSAV KS Bancorp Inc. 17.05 136.86 18.12 17.18
MBSP Mitchell Bancorp Inc. 28.23 113.93 47.09 28.23
PDB Piedmont Bancorp Inc. NM 137.24 22.55 39.90
SSB Scotland Bancorp Inc. 13.85 134.69 30.46 13.85
SSFC South Street Financial Corp. NA 117.92 32.72 NA
SSM Stone Street Bancorp Inc. 22.75 124.08 36.68 22.75
UFRM United Federal Savings Bank 18.25 168.62 12.37 23.00
CFB Commercial Federal Corp. 16.13 233.43 14.39 16.07
CFX CFX Corp. 25.69 270.73 23.58 21.35
NHTB New Hampshire Thrift Bncshrs 21.21 174.42 13.64 26.25
FBER 1st Bergen Bancorp 25.51 137.25 18.74 25.51
FSNJ Bayonne Bancshares Inc. NA 113.42 17.72 NA
FSPG First Home Bancorp Inc. 13.81 178.44 12.25 14.14
FMCO FMS Financial Corp. 12.88 185.92 12.06 12.94
IBSF IBS Financial Corp. 32.29 149.17 25.99 32.29
LVSB Lakeview Financial 20.10 175.97 21.50 27.73
LFBI Little Falls Bancorp Inc. 29.85 137.65 16.08 33.33
OCFC Ocean Financial Corp. 22.64 134.36 20.38 22.64
PBCI Pamrapo Bancorp Inc. 14.56 141.36 18.25 14.74
PFSB PennFed Financial Services Inc 15.29 147.96 11.73 15.29
PULS Pulse Bancorp 13.61 174.63 14.35 13.61
RARB Raritan Bancorp Inc. 17.69 215.59 15.87 17.93
SFIN Statewide Financial Corp. 16.93 149.93 14.04 16.93
WYNE Wayne Bancorp Inc. 21.06 137.96 17.14 21.06
WWFC Westwood Financial Corp. 23.02 173.20 16.14 21.58
AABC Access Anytime Bancorp Inc. 8.10 134.82 11.66 9.04
</TABLE>
<PAGE> 132
KELLER & COMPANY Page 8
Dublin, Ohio
614-766-1426
THRIFT STOCK PRICES AND PRICING RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
PER SHARE
*********************************************************************
Latest All Time All Time Monthly Quarterly Book 12 Month
Price High Low Change Change Value Assets Div.
State Exchange ($) ($) ($) (%) (%) ($) ($) ($)
----- -------- --------- ------- ------- --------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GUPB GFSB Bancorp Inc. NM NASDAQ 20.250 22.250 12.875 -4.71 8.00 17.60 137.33 0.40
AFED AFSALA Bancorp Inc. NY NASDAQ 19.125 19.500 11.313 2.00 21.43 15.92 109.42 NA
ALBK ALBANK Financial Corp. NY NASDAQ 46.250 47.750 9.167 1.65 20.92 26.69 288.76 0.63
ALBC Albion Banc Corp. NY NASDAQ 29.000 30.500 10.500 0.00 24.73 24.25 283.18 0.47
AHCI Ambanc Holding Co. NY NASDAQ 17.000 17.375 9.375 3.42 7.94 13.98 122.91 0.05
ASFC Astoria Financial Corp. NY NASDAQ 55.125 56.625 12.688 8.49 17.91 29.51 382.48 0.52
CNY Carver Bancorp Inc. NY AMSE 17.063 17.063 6.250 36.50 36.50 15.08 179.56 0.05
CATB Catskill Financial Corp. NY NASDAQ 17.625 19.125 9.875 0.71 6.82 15.41 62.19 0.21
DME Dime Bancorp Inc. NY NYSE 24.250 26.375 1.625 0.78 27.21 10.38 191.28 0.08
DIME Dime Community Bancorp Inc. NY NASDAQ 23.250 23.625 11.687 12.05 25.25 14.81 109.73 0.05
ESBK Elmira Savings Bank (The) NY NASDAQ 30.000 31.000 9.091 6.67 30.43 21.07 323.16 0.64
FIBC Financial Bancorp Inc. NY NASDAQ 24.813 25.750 8.500 10.28 25.64 15.71 173.69 0.38
FFIC Flushing Financial Corp. NY NASDAQ 22.250 24.000 14.125 5.33 10.56 17.08 120.27 0.20
GPT GreenPoint Financial Corp. NY NYSE 66.625 69.375 17.625 7.03 8.44 33.65 305.75 0.95
GOSB GSB Financial Corp. NY NASDAQ 15.625 16.750 14.250 4.17 6.84 NA NA NA
HAVN Haven Bancorp Inc. NY NASDAQ 43.000 45.375 10.000 2.08 16.22 25.07 417.98 0.60
JSB JSB Financial Inc. NY NYSE 46.625 49.563 10.750 -0.80 3.04 35.91 154.68 1.35
LISB Long Island Bancorp Inc. NY NASDAQ 47.125 47.500 12.090 7.71 19.30 22.74 246.88 0.60
MBB MSB Bancorp Inc. NY AMSE 29.000 29.500 10.750 5.94 25.41 22.40 272.13 0.60
NYB New York Bancorp Inc. NY NYSE 35.375 36.313 1.213 7.20 15.51 7.93 152.18 0.53
PEEK Peekskill Financial Corp. NY NASDAQ 17.500 18.250 11.125 4.48 7.69 14.81 56.76 0.36
PKPS Poughkeepsie Financial Corp. NY NASDAQ 9.938 26.750 0.875 0.00 37.08 5.91 70.18 0.10
PSBK Progressive Bank Inc. NY NASDAQ 33.750 38.000 1.667 -0.74 2.66 20.18 231.09 0.64
QCSB Queens County Bancorp Inc. NY NASDAQ 35.000 37.750 7.111 -2.10 -2.55 13.26 102.00 0.52
RELY Reliance Bancorp Inc. NY NASDAQ 33.125 33.500 8.875 8.61 10.42 19.29 233.55 0.62
RSLN Roslyn Bancorp Inc. NY NASDAQ 21.750 24.313 15.000 0.00 -1.97 14.04 79.60 NA
SFED SFS Bancorp Inc. NY NASDAQ 22.125 24.500 11.000 2.91 13.46 17.64 141.42 0.26
SKAN Skaneateles Bancorp Inc. NY NASDAQ 27.000 32.000 4.250 -10.74 21.35 18.15 259.29 0.40
TPNZ Tappan Zee Financial Inc. NY NASDAQ 19.750 22.625 11.250 -3.66 16.18 14.36 83.74 0.22
ROSE TR Financial Corp. NY NASDAQ 32.875 33.500 4.938 8.23 19.55 13.94 209.84 0.49
YFCB Yonkers Financial Corporation NY NASDAQ 18.500 22.000 9.310 -1.33 6.47 14.53 103.60 0.21
ASBP ASB Financial Corp. OH NASDAQ 13.125 18.250 11.375 -1.87 0.00 10.30 66.15 5.40
CAFI Camco Financial Corp. OH NASDAQ 24.000 24.000 4.310 6.67 34.98 14.98 156.23 0.49
COFI Charter One Financial OH NASDAQ 59.250 61.905 3.125 0.85 16.69 21.63 306.62 0.91
<CAPTION>
PRICING RATIOS
*************************************
Price/ Price/ Price/ Price/Core
Earnings Bk. Value Assets Earnings
(X) (%) (%) (X)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
GUPB GFSB Bancorp Inc. 21.09 115.06 14.75 21.09
AFED AFSALA Bancorp Inc. NA 120.13 17.48 NA
ALBK ALBANK Financial Corp. 17.39 173.29 16.02 17.45
ALBC Albion Banc Corp. 21.80 119.59 10.24 22.14
AHCI Ambanc Holding Co. NM 121.60 13.83 NM
ASFC Astoria Financial Corp. 19.07 186.80 14.41 20.19
CNY Carver Bancorp Inc. NM 113.15 9.50 51.71
CATB Catskill Financial Corp. 21.49 114.37 28.34 22.03
DME Dime Bancorp Inc. 19.56 233.62 12.68 19.88
DIME Dime Community Bancorp Inc. 21.73 156.99 21.19 23.02
ESBK Elmira Savings Bank (The) 22.06 142.38 9.28 27.27
FIBC Financial Bancorp Inc. 16.54 157.94 14.29 15.61
FFIC Flushing Financial Corp. 20.99 130.27 18.50 20.79
GPT GreenPoint Financial Corp. 18.71 197.99 21.79 19.42
GOSB GSB Financial Corp. NA NA NA NA
HAVN Haven Bancorp Inc. 17.00 171.52 10.29 16.93
JSB JSB Financial Inc. 16.36 129.84 30.14 18.36
LISB Long Island Bancorp Inc. 22.66 207.23 19.09 26.62
MBB MSB Bancorp Inc. 25.89 129.46 10.66 25.89
NYB New York Bancorp Inc. 15.72 446.09 23.25 17.34
PEEK Peekskill Financial Corp. 26.12 118.16 30.83 26.12
PKPS Poughkeepsie Financial Corp. 28.39 168.16 14.16 28.39
PSBK Progressive Bank Inc. 15.34 167.24 14.60 15.63
QCSB Queens County Bancorp Inc. 24.65 263.95 34.31 25.00
RELY Reliance Bancorp Inc. 17.34 171.72 14.18 18.40
RSLN Roslyn Bancorp Inc. NA 154.91 27.32 NA
SFED SFS Bancorp Inc. 22.35 125.43 15.64 22.35
SKAN Skaneateles Bancorp Inc. 15.17 148.76 10.41 15.70
TPNZ Tappan Zee Financial Inc. 27.43 137.53 23.58 27.82
ROSE TR Financial Corp. 17.58 235.83 15.67 19.57
YFCB Yonkers Financial Corporation 18.14 127.32 17.86 17.96
ASBP ASB Financial Corp. 18.49 127.43 19.84 19.59
CAFI Camco Financial Corp. 13.87 160.21 15.36 16.33
COFI Charter One Financial 16.41 273.93 19.32 16.78
</TABLE>
<PAGE> 133
KELLER & COMPANY Page 9
Dublin, Ohio
614-766-1426
THRIFT STOCK PRICES AND PRICING RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
PER SHARE
*********************************************************************
Latest All Time All Time Monthly Quarterly Book 12 Month
Price High Low Change Change Value Assets Div.
State Exchange ($) ($) ($) (%) (%) ($) ($) ($)
----- -------- --------- ------- ------- --------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CTZN CitFed Bancorp Inc. OH NASDAQ 50.625 55.500 6.167 2.27 16.71 23.88 380.60 0.33
CIBI Community Investors Bancorp OH NASDAQ 15.750 17.000 7.167 5.00 5.00 12.09 102.94 0.28
DCBI Delphos Citizens Bancorp Inc. OH NASDAQ 17.500 18.250 11.750 0.00 8.53 14.65 55.01 NA
EMLD Emerald Financial Corp. OH NASDAQ 19.250 19.250 7.750 8.45 37.50 9.28 118.99 0.24
EFBI Enterprise Federal Bancorp OH NASDAQ 27.750 27.750 11.250 5.71 38.75 15.82 138.42 1.75
FFDF FFD Financial Corp. OH NASDAQ 18.375 19.500 10.000 -0.68 24.58 14.86 61.06 0.25
FFYF FFY Financial Corp. OH NASDAQ 29.750 30.125 12.250 4.39 8.18 20.30 148.22 0.70
FFOH Fidelity Financial of Ohio OH NASDAQ 15.000 16.375 3.112 -3.23 -4.76 12.34 94.75 0.26
FDEF First Defiance Financial OH NASDAQ 15.250 16.000 5.790 -3.17 1.67 12.61 64.13 0.32
FFBZ First Federal Bancorp Inc. OH NASDAQ 19.250 20.500 3.125 -1.91 4.05 9.06 129.33 0.24
FFHS First Franklin Corp. OH NASDAQ 26.000 26.000 3.500 13.04 31.65 17.49 193.95 0.34
GFCO Glenway Financial Corp. OH NASDAQ 19.000 19.000 7.710 24.08 55.10 12.17 128.62 0.36
HHFC Harvest Home Financial Corp. OH NASDAQ 14.750 14.750 8.750 0.00 25.53 11.31 95.75 3.40
HCFC Home City Financial Corp. OH NASDAQ 18.000 18.000 12.000 16.13 16.13 15.20 77.50 NA
INBI Industrial Bancorp Inc. OH NASDAQ 18.000 18.250 9.875 4.35 19.01 11.76 68.46 0.34
LONF London Financial Corporation OH NASDAQ 14.750 21.000 9.750 -27.61 -1.67 14.60 74.23 0.24
MRKF Market Financial Corp. OH NASDAQ 15.250 15.750 12.250 1.67 7.49 14.89 42.02 NA
METF Metropolitan Financial Corp. OH NASDAQ 28.500 30.625 10.500 40.74 57.24 9.90 245.51 0.00
MFFC Milton Federal Financial Corp. OH NASDAQ 15.000 17.125 10.000 -1.64 7.14 12.31 91.09 3.09
OSFS Ohio State Financial Services OH NASDAQ 14.750 15.500 14.750 -1.40 NA 16.47 60.80 NA
OHSL OHSL Financial Corp. OH NASDAQ 27.750 28.250 11.500 4.72 19.35 21.42 190.02 0.85
PFFC Peoples Financial Corp. OH NASDAQ 14.000 19.000 10.875 3.70 -17.65 15.78 58.00 NA
PSFC Peoples-Sidney Financial Corp. OH NASDAQ 17.250 18.500 12.563 -1.43 7.81 15.72 57.60 NA
PTRS Potters Financial Corp. OH NASDAQ 34.000 34.000 9.000 26.51 41.21 22.42 254.43 0.32
PVFC PVF Capital Corp. OH NASDAQ 20.500 21.750 3.924 2.50 -4.09 10.63 147.96 0.00
SFSL Security First Corp. OH NASDAQ 19.500 19.500 1.083 9.09 2.63 8.31 89.69 0.31
WOFC Western Ohio Financial Corp. OH NASDAQ 25.750 29.250 14.750 5.10 8.42 23.40 168.69 1.00
WEHO Westwood Homestead Fin. Corp. OH NASDAQ 17.500 18.000 10.375 10.24 14.75 14.20 51.35 0.21
WFI Winton Financial Corp. OH AMSE 20.000 20.500 3.750 2.56 24.03 11.72 163.40 0.45
FFWD Wood Bancorp Inc. OH NASDAQ 18.500 18.750 5.333 5.71 11.28 9.77 78.60 0.29
KFBI Klamath First Bancorp OR NASDAQ 21.875 24.250 12.500 -3.31 14.38 15.64 97.83 0.30
OTFC Oregon Trail Financial Corp. OR NASDAQ 16.000 16.750 15.625 -1.54 NA NA NA NA
WFSG Wilshire Financial Services OR NASDAQ 27.625 33.500 13.500 -3.91 57.86 9.55 180.95 NA
CVAL Chester Valley Bancorp Inc. PA NASDAQ 26.250 27.500 2.955 0.96 14.84 12.89 147.22 0.38
<CAPTION>
PRICING RATIOS
*************************************
Price/ Price/ Price/ Price/Core
Earnings Bk. Value Assets Earnings
(X) (%) (%) (X)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CTZN CitFed Bancorp Inc. 17.64 212.00 13.30 17.64
CIBI Community Investors Bancorp 15.00 130.27 15.30 15.00
DCBI Delphos Citizens Bancorp Inc. NA 119.45 31.81 NA
EMLD Emerald Financial Corp. 16.18 207.44 16.18 17.34
EFBI Enterprise Federal Bancorp 22.56 175.41 20.05 26.94
FFDF FFD Financial Corp. 14.70 123.65 30.09 29.64
FFYF FFY Financial Corp. 16.08 146.55 20.07 16.35
FFOH Fidelity Financial of Ohio 19.23 121.56 15.83 16.85
FDEF First Defiance Financial 25.42 120.94 23.78 25.85
FFBZ First Federal Bancorp Inc. 16.89 212.47 14.88 17.66
FFHS First Franklin Corp. 25.49 148.66 13.41 21.49
GFCO Glenway Financial Corp. 19.19 156.12 14.77 19.79
HHFC Harvest Home Financial Corp. 56.73 130.42 15.40 27.83
HCFC Home City Financial Corp. NA 118.42 23.23 NA
INBI Industrial Bancorp Inc. 17.82 153.06 26.29 18.75
LONF London Financial Corporation 28.37 101.03 19.87 19.16
MRKF Market Financial Corp. NA 102.42 36.29 NA
METF Metropolitan Financial Corp. 19.39 287.88 11.61 20.65
MFFC Milton Federal Financial Corp. 23.81 121.85 16.47 26.79
OSFS Ohio State Financial Services NA 89.56 24.26 NA
OHSL OHSL Financial Corp. 16.92 129.55 14.60 17.45
PFFC Peoples Financial Corp. NA 88.72 24.14 NA
PSFC Peoples-Sidney Financial Corp. NA 109.73 29.95 NA
PTRS Potters Financial Corp. 14.53 151.65 13.36 14.85
PVFC PVF Capital Corp. 11.39 192.85 13.86 11.92
SFSL Security First Corp. 18.75 234.66 21.74 18.75
WOFC Western Ohio Financial Corp. 38.43 110.04 15.26 32.19
WEHO Westwood Homestead Fin. Corp. 35.00 123.24 34.08 31.82
WFI Winton Financial Corp. 12.35 170.65 12.24 14.93
FFWD Wood Bancorp Inc. 18.32 189.36 23.54 19.89
KFBI Klamath First Bancorp 24.86 139.87 22.36 24.86
OTFC Oregon Trail Financial Corp. NA NA NA NA
WFSG Wilshire Financial Services NA 289.27 15.27 NA
CVAL Chester Valley Bancorp Inc. 19.30 203.65 17.83 20.35
</TABLE>
<PAGE> 134
KELLER & COMPANY Page 10
Dublin, Ohio
614-766-1426
THRIFT STOCK PRICES AND PRICING RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
PER SHARE
*********************************************************************
Latest All Time All Time Monthly Quarterly Book 12 Month
Price High Low Change Change Value Assets Div.
State Exchange ($) ($) ($) (%) (%) ($) ($) ($)
----- -------- --------- ------- ------- --------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CMSB Commonwealth Bancorp Inc. PA NASDAQ 20.375 20.375 5.790 17.27 18.98 13.02 140.25 0.27
FSBI Fidelity Bancorp Inc. PA NASDAQ 26.625 26.625 3.415 10.94 25.29 16.65 245.02 0.33
FBBC First Bell Bancorp Inc. PA NASDAQ 17.250 18.375 11.875 0.73 9.52 11.02 104.63 3.40
FKFS First Keystone Financial PA NASDAQ 32.000 33.250 10.250 9.40 15.32 20.15 303.99 0.20
SHEN First Shenango Bancorp Inc. PA NASDAQ 33.750 35.000 12.750 -1.46 22.73 22.55 194.02 0.54
GAF GA Financial Inc. PA AMSE 19.250 19.688 10.250 3.36 1.99 14.72 100.63 0.38
HARL Harleysville Savings Bank PA NASDAQ 29.375 30.250 2.828 0.43 12.98 13.76 207.77 0.39
LARL Laurel Capital Group Inc. PA NASDAQ 27.750 28.000 3.627 7.77 23.33 15.20 145.22 0.46
MLBC ML Bancorp Inc. PA NASDAQ 28.750 29.063 6.219 4.07 41.98 14.41 195.17 0.39
PVSA Parkvale Financial Corporation PA NASDAQ 29.750 29.750 1.720 3.48 26.06 15.20 196.92 0.44
PWBC PennFirst Bancorp Inc. PA NASDAQ 18.250 19.500 3.654 2.10 16.80 12.96 154.86 0.34
PWBK Pennwood Bancorp Inc. PA NASDAQ 18.938 19.000 9.000 -0.33 13.06 15.34 83.64 0.30
PHFC Pittsburgh Home Financial Corp PA NASDAQ 20.688 20.813 9.500 10.34 6.09 14.63 138.78 0.29
PRBC Prestige Bancorp Inc. PA NASDAQ 18.406 19.375 9.750 0.85 7.48 16.88 150.66 0.09
PFNC Progress Financial Corp. PA NASDAQ 15.500 17.277 0.714 11.71 6.90 5.85 108.91 0.09
SHSB SHS Bancorp Inc. PA NASDAQ 16.000 16.370 14.750 1.59 NA NA NA NA
SVRN Sovereign Bancorp Inc. PA NASDAQ 18.938 19.250 0.837 7.83 24.69 7.33 163.55 0.08
THRD TF Financial Corp. PA NASDAQ 28.000 28.000 9.750 16.67 45.45 19.21 152.95 0.38
USAB USABancshares, Inc. PA NASDAQ 9.000 9.750 6.000 1.41 10.77 6.73 87.75 0.00
WVFC WVS Financial Corp. PA NASDAQ 31.500 34.000 13.000 1.61 17.21 19.38 161.47 3.10
YFED York Financial Corp. PA NASDAQ 26.500 27.250 3.441 26.79 38.74 11.62 131.24 0.48
CFCP Coastal Financial Corp. SC NASDAQ 23.000 27.750 1.439 -6.12 -7.07 6.97 106.32 0.35
FFCH First Financial Holdings Inc. SC NASDAQ 43.125 44.000 4.000 20.63 34.24 16.45 268.98 0.72
FSFC First Southeast Financial Corp SC NASDAQ 15.125 20.250 9.125 -4.72 0.00 8.20 79.77 0.22
FSPT FirstSpartan Financial Corp. SC NASDAQ 37.500 39.000 35.000 7.14 5.63 29.17 108.87 NA
PALM Palfed Inc. SC NASDAQ 27.000 27.000 3.500 7.46 65.51 10.74 126.15 0.11
SCCB S. Carolina Community Bancshrs SC NASDAQ 23.000 25.250 12.625 6.98 6.98 17.35 65.29 0.60
HFFC HF Financial Corp. SD NASDAQ 26.000 27.000 5.500 1.96 18.18 18.22 205.07 0.38
TWIN Twin City Bancorp TN NASDAQ 13.625 14.500 7.000 -0.91 2.19 10.87 84.04 0.43
BNKU Bank United Corp. TX NASDAQ 42.000 45.375 22.500 0.00 16.67 18.94 378.76 0.56
CBSA Coastal Bancorp Inc. TX NASDAQ 28.875 33.250 9.875 -1.70 -5.33 20.13 586.83 0.44
ETFS East Texas Financial Services TX NASDAQ 20.000 21.500 11.000 4.58 6.67 20.34 112.97 0.20
FBHC Fort Bend Holding Corp. TX NASDAQ 19.625 24.000 5.188 1.95 18.05 11.88 192.91 0.16
GLMR Gilmer Financial Svcs, Inc. TX NASDAQ NA 12.000 9.000 NA NA 19.88 220.49 0.00
<CAPTION>
PRICING RATIOS
*************************************
Price/ Price/ Price/ Price/Core
Earnings Bk. Value Assets Earnings
(X) (%) (%) (X)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CMSB Commonwealth Bancorp Inc. 20.17 156.49 14.53 26.12
FSBI Fidelity Bancorp Inc. 15.57 159.91 10.87 15.85
FBBC First Bell Bancorp Inc. 14.87 156.53 16.49 15.27
FKFS First Keystone Financial 14.10 158.81 10.53 15.38
SHEN First Shenango Bancorp Inc. 15.13 149.67 17.40 15.20
GAF GA Financial Inc. 20.05 130.77 19.13 20.48
HARL Harleysville Savings Bank 14.61 213.48 14.14 14.61
LARL Laurel Capital Group Inc. 14.16 182.57 19.11 14.68
MLBC ML Bancorp Inc. 22.82 199.51 14.73 31.94
PVSA Parkvale Financial Corporation 14.88 195.72 15.11 14.88
PWBC PennFirst Bancorp Inc. 17.55 140.82 11.78 17.55
PWBK Pennwood Bancorp Inc. 22.02 123.46 22.64 20.36
PHFC Pittsburgh Home Financial Corp 19.89 141.41 14.91 22.25
PRBC Prestige Bancorp Inc. 20.23 109.04 12.22 20.23
PFNC Progress Financial Corp. 18.02 264.96 14.23 22.79
SHSB SHS Bancorp Inc. NA NA NA NA
SVRN Sovereign Bancorp Inc. 27.85 258.36 11.58 19.52
THRD TF Financial Corp. 22.95 145.76 18.31 26.17
USAB USABancshares, Inc. 31.03 133.73 10.26 34.62
WVFC WVS Financial Corp. 15.22 162.54 19.51 15.29
YFED York Financial Corp. 21.72 228.06 20.19 25.48
CFCP Coastal Financial Corp. 19.33 329.99 21.63 22.33
FFCH First Financial Holdings Inc. 19.34 262.16 16.03 19.87
FSFC First Southeast Financial Corp 18.67 184.45 18.96 18.67
FSPT FirstSpartan Financial Corp. NA 128.56 34.44 NA
PALM Palfed Inc. 56.25 251.40 21.40 32.53
SCCB S. Carolina Community Bancshrs 29.49 132.56 35.23 29.49
HFFC HF Financial Corp. 13.90 142.70 12.68 15.12
TWIN Twin City Bancorp 18.92 125.34 16.21 22.71
BNKU Bank United Corp. 17.36 221.75 11.09 22.34
CBSA Coastal Bancorp Inc. 12.29 143.44 4.92 12.78
ETFS East Texas Financial Services 25.64 98.33 17.70 27.40
FBHC Fort Bend Holding Corp. 20.66 165.19 10.17 26.88
GLMR Gilmer Financial Svcs, Inc. NA NA NA NA
</TABLE>
<PAGE> 135
KELLER & COMPANY Page 11
Dublin, Ohio
614-766-1426
THRIFT STOCK PRICES AND PRICING RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
PER SHARE
*********************************************************************
Latest All Time All Time Monthly Quarterly Book 12 Month
Price High Low Change Change Value Assets Div.
State Exchange ($) ($) ($) (%) (%) ($) ($) ($)
----- -------- --------- ------- ------- --------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
JXVL Jacksonville Bancorp Inc. TX NASDAQ 18.750 19.500 7.141 1.35 11.94 13.55 90.83 0.50
BFSB Bedford Bancshares Inc. VA NASDAQ 28.250 28.750 10.250 22.83 16.05 18.04 121.83 0.53
CNIT CENIT Bancorp Inc. VA NASDAQ 68.000 71.000 10.875 11.02 28.91 31.01 424.15 1.00
CFFC Community Financial Corp. VA NASDAQ 24.750 24.750 4.250 13.79 13.79 18.99 143.71 0.55
ESX Essex Bancorp Inc. VA AMSE 5.000 19.250 0.750 -4.76 185.71 0.03 181.42 0.00
FFFC FFVA Financial Corp. VA NASDAQ 33.375 35.125 8.250 5.53 13.86 17.84 125.46 0.46
LIFB Life Bancorp Inc. VA NASDAQ 31.125 31.125 8.313 31.75 31.75 16.17 150.94 0.46
VABF Virginia Beach Fed. Financial VA NASDAQ 16.625 17.625 1.625 9.92 22.02 8.70 121.61 0.19
VFFC Virginia First Financial Corp. VA NASDAQ 25.250 25.250 1.250 4.12 5.76 11.89 146.82 0.10
CASB Cascade Financial Corp. WA NASDAQ 12.750 16.800 2.130 2.00 -3.77 8.36 125.97 0.00
FMSB First Mutual Savings Bank WA NASDAQ 18.250 20.167 1.628 -0.45 32.73 7.53 110.92 0.13
FWWB First SB of Washington Bancorp WA NASDAQ 25.250 26.375 12.375 4.66 3.06 15.83 107.22 0.26
HRZB Horizon Financial Corp. WA NASDAQ 16.563 18.000 1.970 1.53 10.42 11.17 71.44 0.69
IWBK InterWest Bancorp Inc. WA NASDAQ 39.500 43.250 8.478 5.69 0.32 16.13 254.24 0.59
RVSB Riverview Bancorp Inc. WA NASDAQ 15.000 15.000 3.481 12.15 51.39 9.56 46.06 NA
STSA Sterling Financial Corp. WA NASDAQ 21.125 22.500 1.878 0.60 14.19 12.98 247.19 0.00
WFSL Washington Federal Inc. WA NASDAQ 32.188 33.313 1.566 3.42 19.21 15.11 120.39 0.90
WAMU Washington Mutual Inc. WA NASDAQ 69.125 72.375 1.629 1.47 14.61 20.28 371.76 1.02
AADV Advantage Bancorp Inc. WI NASDAQ 62.250 62.250 10.600 13.18 47.34 30.60 320.62 0.38
ABCW Anchor BanCorp Wisconsin WI NASDAQ 31.500 32.250 4.900 11.50 16.67 13.82 215.91 0.28
FCBF FCB Financial Corp. WI NASDAQ 27.250 28.125 10.000 0.93 1.87 18.72 134.81 0.74
FTFC First Federal Capital Corp. WI NASDAQ 27.875 29.000 0.966 2.29 17.37 11.46 170.18 0.45
FNGB First Northern Capital Corp. WI NASDAQ 13.500 14.000 1.730 0.00 3.85 8.24 74.29 0.32
HALL Hallmark Capital Corp. WI NASDAQ 15.250 15.375 4.938 7.08 37.08 10.59 145.00 0.00
MWFD Midwest Federal Financial WI NASDAQ 26.500 27.500 4.167 10.42 24.71 11.70 130.06 0.33
NWEQ Northwest Equity Corp. WI NASDAQ 19.000 19.000 6.875 8.57 15.15 14.53 115.59 0.46
RELI Reliance Bancshares Inc. WI NASDAQ 8.875 10.125 6.500 1.43 2.90 9.18 19.01 3.00
STFR St. Francis Capital Corp. WI NASDAQ 38.250 41.250 12.625 -0.65 10.87 24.78 317.28 0.48
AFBC Advance Financial Bancorp WV NASDAQ 17.750 17.875 12.750 1.43 9.23 15.01 97.48 NA
FOBC Fed One Bancorp WV NASDAQ 24.875 27.000 5.358 3.65 24.38 17.45 150.73 0.59
CRZY Crazy Woman Creek Bancorp WY NASDAQ 15.375 15.500 10.000 4.24 6.03 14.88 62.79 0.40
TRIC Tri-County Bancorp Inc. WY NASDAQ 27.500 29.000 11.375 -0.90 20.88 23.13 151.05 0.45
<CAPTION>
PRICING RATIOS
*************************************
Price/ Price/ Price/ Price/Core
Earnings Bk. Value Assets Earnings
(X) (%) (%) (X)
-------- -------- -------- --------
JXVL Jacksonville Bancorp Inc. 24.35 138.38 20.64 8.22
BFSB Bedford Bancshares Inc. 19.22 156.60 23.19 19.35
CNIT CENIT Bancorp Inc. 20.61 219.28 16.03 21.12
CFFC Community Financial Corp. 16.50 130.33 17.22 16.50
ESX Essex Bancorp Inc. NM NM 2.76 NM
FFFC FFVA Financial Corp. 20.48 187.08 26.60 21.26
LIFB Life Bancorp Inc. 22.55 192.49 20.62 24.13
VABF Virginia Beach Fed. Financial 22.17 191.09 13.67 27.25
VFFC Virginia First Financial Corp. 19.42 212.36 17.20 36.59
CASB Cascade Financial Corp. 17.96 152.51 10.12 18.21
FMSB First Mutual Savings Bank 17.89 242.36 16.45 18.25
FWWB First SB of Washington Bancorp 19.42 159.51 23.55 20.53
HRZB Horizon Financial Corp. 14.92 148.28 23.18 15.20
IWBK InterWest Bancorp Inc. 15.93 244.89 15.54 18.12
RVSB Riverview Bancorp Inc. NM 156.90 32.57 NA
STSA Sterling Financial Corp. 17.32 162.75 8.55 19.03
WFSL Washington Federal Inc. 14.56 213.02 26.74 14.63
WAMU Washington Mutual Inc. 130.42 340.85 18.59 29.54
AADV Advantage Bancorp Inc. 20.15 203.43 19.42 22.39
ABCW Anchor BanCorp Wisconsin 15.91 227.93 14.59 17.03
FCBF FCB Financial Corp. 21.80 145.57 20.21 21.29
FTFC First Federal Capital Corp. 16.79 243.24 16.38 20.20
FNGB First Northern Capital Corp. 21.09 163.83 18.17 21.77
HALL Hallmark Capital Corp. 16.76 144.00 10.52 17.13
MWFD Midwest Federal Financial 15.68 226.50 20.38 20.38
NWEQ Northwest Equity Corp. 15.32 130.76 16.44 15.83
RELI Reliance Bancshares Inc. 34.13 96.68 46.69 35.50
STFR St. Francis Capital Corp. 14.88 154.36 12.06 17.96
AFBC Advance Financial Bancorp NA 118.25 18.21 NA
FOBC Fed One Bancorp 18.56 142.55 16.50 18.70
CRZY Crazy Woman Creek Bancorp 21.06 103.33 24.49 20.78
TRIC Tri-County Bancorp Inc. 18.21 118.89 18.21 17.86
</TABLE>
<PAGE> 136
KELLER & COMPANY Page 12
Dublin, Ohio
614-766-1426
THRIFT STOCK PRICES AND PRICING RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
PER SHARE
*********************************************************************
Latest All Time All Time Monthly Quarterly Book 12 Month
Price High Low Change Change Value Assets Div.
State Exchange ($) ($) ($) (%) (%) ($) ($) ($)
----- -------- --------- ------- ------- --------- -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALL THRIFTS
AVERAGE 24.414 28.144 7.934 4.44 16.21 15.58 153.65 0.55
MEDIAN 21.000 23.500 8.875 3.31 14.73 14.98 131.80 0.35
HIGH 89.625 589.500 62.000 40.74 185.71 75.05 691.00 8.23
LOW 4.875 8.250 0.250 -27.61 -43.45 0.03 9.12 0.00
AVERAGE FOR STATE
OH 21.928 23.270 8.467 4.86 16.16 14.58 126.06 0.83
AVERAGE BY REGION
MIDWEST 22.647 23.926 8.505 4.96 15.91 15.53 132.15 0.49
NEW ENGLAND 27.315 33.571 3.887 5.15 22.78 14.85 179.88 0.47
MID ATLANTIC 25.768 27.237 7.725 4.91 16.24 16.18 171.58 0.44
SOUTHEAST 22.894 25.802 9.872 3.61 13.80 14.91 118.49 1.23
SOUTHWEST 24.863 25.587 10.383 5.54 15.91 16.69 185.46 0.36
WEST 26.991 42.443 7.121 1.90 13.77 15.95 204.64 0.30
AVERAGE BY EXCHANGE
NYSE 43.740 89.137 4.770 0.52 13.62 20.84 302.59 0.40
AMEX 20.522 22.839 8.618 4.14 22.17 14.32 128.82 1.33
OTC/NASDAQ 23.962 26.177 8.004 4.62 15.84 15.48 149.73 0.49
<CAPTION>
PRICING RATIOS
*************************************
Price/ Price/ Price/ Price/Core
Earnings Bk. Value Assets Earnings
(X) (%) (%) (X)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ALL THRIFTS
AVERAGE 21.77 161.12 18.72 22.14
MEDIAN 18.71 149.24 16.99 19.71
HIGH 133.33 446.09 87.72 100.00
LOW 3.08 70.36 2.76 3.20
AVERAGE FOR STATE
OH 21.073 152.763 20.005 20.453
AVERAGE BY REGION
MIDWEST 22.63 147.96 19.51 22.71
NEW ENGLAND 18.89 189.13 16.20 19.94
MID ATLANTIC 20.36 166.19 16.62 21.30
SOUTHEAST 24.40 164.72 23.50 24.99
SOUTHWEST 19.94 149.77 18.47 19.28
WEST 22.20 168.91 16.17 21.76
AVERAGE BY EXCHANGE
NYSE 17.64 232.15 17.95 19.31
AMEX 22.22 143.76 18.24 27.34
OTC/NASDAQ 21.92 159.63 18.79 21.82
</TABLE>
<PAGE> 137
EXHIBIT 31
KELLER & COMPANY Page 1
Dublin, Ohio
614-766-1426
KEY FINANCIAL DATA AND RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
ASSETS AND EQUITY
*****************************************************
Total Total Total
Assets Equity Tang. Equity
State ($000) ($000) ($000)
----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
FFDB FirstFed Bancorp Inc. AL 176,464 16,996 15,553
SRN Southern Banc Co. AL 106,164 18,132 17,968
SCBS Southern Community Bancshares AL 70,370 15,005 15,005
SZB SouthFirst Bancshares Inc. AL 97,283 13,616 13,616
FFBH First Federal Bancshares of AR AR 547,119 81,468 81,468
HCBB HCB Bancshares Inc. AR 199,946 38,165 36,781
FTF Texarkana First Financial Corp AR 171,358 26,907 26,907
AFFFZ America First Financial Fund CA 2,250,517 188,268 186,285
BPLS Bank Plus Corp. CA 3,920,257 177,211 176,895
BVCC Bay View Capital Corp. CA 3,162,207 183,974 153,659
BYFC Broadway Financial Corp. CA 124,740 13,184 13,184
CENF CENFED Financial Corp. CA 2,304,678 128,179 127,976
CSA Coast Savings Financial CA 9,040,413 469,973 464,532
DSL Downey Financial Corp. CA 5,853,968 417,660 412,188
FSSB First FS&LA of San Bernardino CA 103,674 4,492 4,329
FED FirstFed Financial Corp. CA 4,104,647 211,836 209,769
GSB Golden State Bancorp Inc. CA 16,432,304 1,043,578 946,157
GDW Golden West Financial CA 39,228,359 2,575,220 2,575,220
AHM H.F. Ahmanson & Co. CA 46,799,157 2,386,357 2,099,972
HTHR Hawthorne Financial Corp. CA 891,163 54,865 54,865
HEMT HF Bancorp Inc. CA 1,050,377 83,294 69,411
HBNK Highland Federal Bank FSB CA 515,990 39,557 39,557
ITLA ITLA Capital Corp. CA 901,555 96,636 96,277
LFCO Life Financial Corp. CA 294,102 49,477 49,477
MBBC Monterey Bay Bancorp Inc. CA 409,663 47,137 43,697
PFFB PFF Bancorp Inc. CA 2,615,466 262,987 260,217
PROV Provident Financial Holdings CA 640,634 85,407 85,407
QCBC Quaker City Bancorp Inc. CA 847,024 71,634 71,634
REDF RedFed Bancorp Inc. CA 967,309 80,488 80,181
SGVB SGV Bancorp Inc. CA 408,975 30,411 29,945
WES Westcorp CA 3,757,362 341,452 340,585
PROFITABILITY
**************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
--------------------------------------------------
<S> <C> <C> <C> <C>
FFDB FirstFed Bancorp Inc. 1.03 1.01 10.60 10.32
SRN Southern Banc Co. 0.47 0.47 2.77 2.77
SCBS Southern Community Bancshares 0.55 0.90 3.18 5.16
SZB SouthFirst Bancshares Inc. -0.03 0.17 -0.20 1.24
FFBH First Federal Bancshares of AR 1.06 1.01 6.82 6.51
HCBB HCB Bancshares Inc. NA NA NA NA
FTF Texarkana First Financial Corp 1.40 1.73 8.49 10.43
AFFFZ America First Financial Fund 1.99 2.01 24.62 24.79
BPLS Bank Plus Corp. 0.36 0.30 7.52 6.27
BVCC Bay View Capital Corp. 0.56 0.61 9.02 9.92
BYFC Broadway Financial Corp. 0.29 0.29 2.61 2.61
CENF CENFED Financial Corp. 0.64 0.57 12.38 11.14
CSA Coast Savings Financial 0.62 0.66 12.54 13.39
DSL Downey Financial Corp. 0.73 0.70 9.99 9.58
FSSB First FS&LA of San Bernardino -1.18 -1.18 -24.70 -24.76
FED FirstFed Financial Corp. 0.56 0.56 11.71 11.68
GSB Golden State Bancorp Inc. 0.63 0.74 9.94 11.69
GDW Golden West Financial 0.88 0.86 13.90 13.68
AHM H.F. Ahmanson & Co. 0.83 0.73 16.75 14.58
HTHR Hawthorne Financial Corp. 1.07 1.04 19.43 18.86
HEMT HF Bancorp Inc. 0.03 0.18 0.40 2.17
HBNK Highland Federal Bank FSB 1.12 0.86 15.34 11.72
ITLA ITLA Capital Corp. 1.46 1.46 13.06 13.06
LFCO Life Financial Corp. NA NA NA NA
MBBC Monterey Bay Bancorp Inc. 0.46 0.42 4.11 3.79
PFFB PFF Bancorp Inc. 0.45 0.46 4.29 4.33
PROV Provident Financial Holdings 0.74 0.36 5.29 2.55
QCBC Quaker City Bancorp Inc. 0.72 0.69 8.10 7.79
REDF RedFed Bancorp Inc. 1.02 1.02 12.31 12.25
SGVB SGV Bancorp Inc. 0.39 0.31 5.04 3.95
WES Westcorp 0.99 -0.01 10.63 -0.11
CAPITAL ISSUES
********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FFDB FirstFed Bancorp Inc. 11-19-91 NASDAQ 1,150,998 20.43
SRN Southern Banc Co. 10-05-95 AMSE 1,230,313 19.84
SCBS Southern Community Bancshares 12-23-96 NASDAQ 1,137,350 16.63
SZB SouthFirst Bancshares Inc. 02-14-95 AMSE 847,600 13.56
FFBH First Federal Bancshares of AR 05-03-96 NASDAQ 4,896,063 104.35
HCBB HCB Bancshares Inc. 05-07-97 NASDAQ 2,645,000 36.37
FTF Texarkana First Financial Corp 07-07-95 AMSE 1,790,305 34.91
AFFFZ America First Financial Fund NA NASDAQ 6,010,589 249.44
BPLS Bank Plus Corp. NA NASDAQ 19,340,840 249.01
BVCC Bay View Capital Corp. 05-09-86 NASDAQ 12,421,260 340.03
BYFC Broadway Financial Corp. 01-09-96 NASDAQ 830,834 9.55
CENF CENFED Financial Corp. 10-25-91 NASDAQ 5,959,417 214.17
CSA Coast Savings Financial 12-23-85 NYSE 18,644,177 977.66
DSL Downey Financial Corp. 01-01-71 NYSE 26,753,970 652.13
FSSB First FS&LA of San Bernardino 02-02-93 NASDAQ 328,296 3.20
FED FirstFed Financial Corp. 12-16-83 NYSE 10,585,046 361.21
GSB Golden State Bancorp Inc. 10-01-83 NYSE 50,455,630 1507.36
GDW Golden West Financial 05-29-59 NYSE 56,770,444 5095.15
AHM H.F. Ahmanson & Co. 10-25-72 NYSE 94,411,284 5363.79
HTHR Hawthorne Financial Corp. NA NASDAQ 3,088,096 55.59
HEMT HF Bancorp Inc. 06-30-95 NASDAQ 6,281,875 103.65
HBNK Highland Federal Bank FSB NA NASDAQ 2,300,137 71.30
ITLA ITLA Capital Corp. 10-24-95 NASDAQ 7,846,984 158.90
LFCO Life Financial Corp. NA NASDAQ 6,541,716 120.20
MBBC Monterey Bay Bancorp Inc. 02-15-95 NASDAQ 3,229,679 66.21
PFFB PFF Bancorp Inc. 03-29-96 NASDAQ 17,903,344 346.88
PROV Provident Financial Holdings 06-28-96 NASDAQ 4,836,215 95.52
QCBC Quaker City Bancorp Inc. 12-30-93 NASDAQ 4,673,094 106.31
REDF RedFed Bancorp Inc. 04-08-94 NASDAQ 7,178,505 124.73
SGVB SGV Bancorp Inc. 06-29-95 NASDAQ 2,342,176 41.87
WES Westcorp 05-01-86 NYSE 26,255,925 600.60
</TABLE>
<PAGE> 138
KELLER & COMPANY Page 2
Dublin, Ohio
614-766-1426
KEY FINANCIAL DATA AND RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
ASSETS AND EQUITY
*****************************************************
Total Total Total
Assets Equity Tang. Equity
State ($000) ($000) ($000)
----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
FFBA First Colorado Bancorp Inc. CO 1,512,605 197,849 195,283
ANE Alliance Bncorp of New England CT 241,918 17,808 17,384
BKC American Bank of Connecticut CT 609,923 53,724 51,770
BKCT Bancorp Connecticut Inc. CT 423,800 45,558 45,558
BSBC Branford Savings Bank CT 182,868 17,612 17,612
DIBK Dime Financial Corp. CT 921,510 75,034 72,879
EGFC Eagle Financial Corp. CT 2,097,179 144,701 115,127
FFES First Federal of East Hartford CT 987,416 65,439 65,439
MECH Mechanics Savings Bank CT 830,741 86,445 86,445
NMSB NewMil Bancorp Inc. CT 317,407 32,295 32,295
NSSB Norwich Financial Corp. CT 700,860 81,776 74,236
NSSY NSS Bancorp Inc. CT 663,668 51,910 50,223
NTMG Nutmeg Federal S&LA CT 102,438 8,573 8,573
WBST Webster Financial Corp. CT 6,811,014 363,584 313,059
IFSB Independence Federal Svgs Bank DC 251,561 18,231 16,228
WSFS WSFS Financial Corp. DE 1,495,609 82,916 82,315
BANC BankAtlantic Bancorp Inc. FL 2,844,996 156,558 129,534
BKUNA BankUnited Financial Corp. FL 2,145,406 99,645 85,367
FFLC FFLC Bancorp Inc. FL 383,382 52,649 52,649
FFPB First Palm Beach Bancorp Inc. FL 1,808,420 113,030 110,399
OCN Ocwen Financial Corp. FL 2,956,300 418,044 407,190
CCFH CCF Holding Company GA 109,342 11,651 11,651
CFBC Community First Banking Co. GA 394,570 70,237 69,308
EBSI Eagle Bancshares GA 872,706 71,343 71,343
FSTC First Citizens Corp. GA 337,197 34,118 26,890
FGHC First Georgia Holding Inc. GA 156,383 12,849 11,791
FLFC First Liberty Financial Corp. GA 1,288,919 95,028 85,652
FLAG FLAG Financial Corp. GA 238,463 21,718 21,718
SFNB Security First Network Bank GA 78,653 27,657 27,260
CASH First Midwest Financial Inc. IA 404,589 43,477 38,614
GFSB GFS Bancorp Inc. IA 94,496 10,879 10,879
PROFITABILITY
**************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
FFBA First Colorado Bancorp Inc. 1.21 1.20 9.04 8.96
ANE Alliance Bncorp of New England 0.81 0.76 11.64 10.93
BKC American Bank of Connecticut 1.30 1.10 15.46 13.05
BKCT Bancorp Connecticut Inc. 1.36 1.24 13.21 12.06
BSBC Branford Savings Bank 1.12 1.11 11.94 11.92
DIBK Dime Financial Corp. 1.95 1.90 24.07 23.53
EGFC Eagle Financial Corp. 0.38 0.51 5.10 6.85
FFES First Federal of East Hartford 0.53 0.60 8.36 9.47
MECH Mechanics Savings Bank 1.80 1.79 17.86 17.83
NMSB NewMil Bancorp Inc. 0.86 0.82 8.31 7.93
NSSB Norwich Financial Corp. 1.16 1.07 10.30 9.54
NSSY NSS Bancorp Inc. 0.89 0.31 11.42 3.97
NTMG Nutmeg Federal S&LA 0.31 0.40 4.85 6.36
WBST Webster Financial Corp. 0.46 0.73 8.62 13.84
IFSB Independence Federal Svgs Bank 0.54 0.23 8.03 3.40
WSFS WSFS Financial Corp. 1.15 1.13 20.60 20.39
BANC BankAtlantic Bancorp Inc. 1.01 0.54 18.05 9.57
BKUNA BankUnited Financial Corp. 0.51 0.48 8.06 7.49
FFLC FFLC Bancorp Inc. 0.99 0.94 6.80 6.42
FFPB First Palm Beach Bancorp Inc. 0.59 0.50 8.71 7.31
OCN Ocwen Financial Corp. 3.07 1.74 34.49 19.54
CCFH CCF Holding Company 0.14 -0.15 1.10 -1.17
CFBC Community First Banking Co. 0.51 0.48 4.66 4.41
EBSI Eagle Bancshares 0.62 0.76 7.26 8.90
FSTC First Citizens Corp. 1.95 1.75 20.58 18.43
FGHC First Georgia Holding Inc. 0.66 0.78 7.97 9.53
FLFC First Liberty Financial Corp. 0.87 0.94 11.82 12.81
FLAG FLAG Financial Corp. 0.91 0.72 10.01 7.98
SFNB Security First Network Bank -28.08 -28.75 -68.24 -69.85
CASH First Midwest Financial Inc. 0.92 0.88 8.40 8.04
GFSB GFS Bancorp Inc. 1.27 1.27 11.01 11.03
CAPITAL ISSUES
********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
FFBA First Colorado Bancorp Inc. 01-02-96 NASDAQ 16,484,530 354.42
ANE Alliance Bncorp of New England 12-19-86 AMSE 1,626,930 27.25
BKC American Bank of Connecticut 12-01-81 AMSE 2,313,350 93.11
BKCT Bancorp Connecticut Inc. 07-03-86 NASDAQ 2,543,116 90.28
BSBC Branford Savings Bank 11-04-86 NASDAQ 6,559,396 36.08
DIBK Dime Financial Corp. 07-09-86 NASDAQ 5,161,987 161.31
EGFC Eagle Financial Corp. 02-03-87 NASDAQ 6,316,037 252.64
FFES First Federal of East Hartford 06-23-87 NASDAQ 2,682,291 97.90
MECH Mechanics Savings Bank 06-26-96 NASDAQ 5,293,266 138.95
NMSB NewMil Bancorp Inc. 02-01-86 NASDAQ 3,835,090 54.65
NSSB Norwich Financial Corp. 11-14-86 NASDAQ 5,432,341 157.54
NSSY NSS Bancorp Inc. 06-16-94 NASDAQ 2,410,118 72.91
NTMG Nutmeg Federal S&LA NA NASDAQ 738,427 6.46
WBST Webster Financial Corp. 12-12-86 NASDAQ 13,554,224 796.31
IFSB Independence Federal Svgs Bank 06-06-85 NASDAQ 1,281,083 18.10
WSFS WSFS Financial Corp. 11-26-86 NASDAQ 12,442,339 228.63
BANC BankAtlantic Bancorp Inc. 11-29-83 NASDAQ 22,275,692 350.84
BKUNA BankUnited Financial Corp. 12-11-85 NASDAQ 9,532,783 125.12
FFLC FFLC Bancorp Inc. 01-04-94 NASDAQ 3,834,625 70.75
FFPB First Palm Beach Bancorp Inc. 09-29-93 NASDAQ 5,047,746 175.73
OCN Ocwen Financial Corp. NA NYSE 60,505,220 1274.42
CCFH CCF Holding Company 07-12-95 NASDAQ 820,120 13.74
CFBC Community First Banking Co. 07-01-97 NASDAQ 2,413,562 91.11
EBSI Eagle Bancshares 04-01-86 NASDAQ 5,665,694 109.77
FSTC First Citizens Corp. 03-01-86 NASDAQ 2,742,195 63.98
FGHC First Georgia Holding Inc. 02-11-87 NASDAQ 3,052,319 23.66
FLFC First Liberty Financial Corp. 12-06-83 NASDAQ 7,724,780 166.08
FLAG FLAG Financial Corp. 12-11-86 NASDAQ 2,036,990 32.85
SFNB Security First Network Bank NA NASDAQ 8,619,873 59.26
CASH First Midwest Financial Inc. 09-20-93 NASDAQ 2,698,904 53.64
GFSB GFS Bancorp Inc. 01-06-94 NASDAQ 988,242 14.82
</TABLE>
<PAGE> 139
KELLER & COMPANY Page 3
Dublin, Ohio
614-766-1426
KEY FINANCIAL DATA AND RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
ASSETS AND EQUITY
*****************************************************
Total Total Total
Assets Equity Tang. Equity
State ($000) ($000) ($000)
----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
HZFS Horizon Financial Svcs Corp. IA 87,784 8,737 8,737
MFCX Marshalltown Financial Corp. IA 125,491 20,281 20,281
MIFC Mid-Iowa Financial Corp. IA 128,017 12,061 12,048
MWBI Midwest Bancshares Inc. IA 149,850 10,366 10,366
FFFD North Central Bancshares Inc. IA 215,133 49,303 49,303
PMFI Perpetual Midwest Financial IA 401,665 34,162 34,162
SFFC StateFed Financial Corp. IA 87,542 15,345 15,345
FBNW FirstBank Corp. ID 177,870 29,221 29,221
ABCL Alliance Bancorp Inc. IL 1,371,184 129,090 127,543
AVND Avondale Financial Corp. IL 596,918 46,070 46,070
BFFC Big Foot Financial Corp. IL 215,162 37,610 37,610
CBCI Calumet Bancorp Inc. IL 488,346 79,190 79,190
CBSB Charter Financial Inc. IL 393,268 56,901 50,347
CBK Citizens First Financial Corp. IL 277,962 38,225 38,225
CSBF CSB Financial Group Inc. IL 48,844 12,230 11,554
EGLB Eagle BancGroup Inc. IL 172,160 20,401 20,401
FBCI Fidelity Bancorp Inc. IL 497,862 52,165 52,058
FFBI First Financial Bancorp Inc. IL 84,242 7,513 7,513
FMBD First Mutual Bancorp Inc. IL 402,389 53,918 41,095
FSFF First SecurityFed Financial IL 258,115 29,261 28,909
GTPS Great American Bancorp IL 139,568 28,507 28,507
HMLK Hemlock Federal Financial Corp IL 161,905 31,262 31,262
HBEI Home Bancorp of Elgin Inc. IL 342,518 94,393 94,393
HMCI HomeCorp Inc. IL 326,877 22,322 22,322
KNK Kankakee Bancorp Inc. IL 339,937 38,852 36,632
MAFB MAF Bancorp Inc. IL 3,370,587 262,616 230,719
NBSI North Bancshares Inc. IL 122,081 16,392 16,392
PFED Park Bancorp Inc. IL 174,515 40,379 40,379
PSFI PS Financial Inc. IL 85,698 31,985 31,985
SWBI Southwest Bancshares IL 375,004 42,543 42,543
SPBC St. Paul Bancorp Inc. IL 4,548,436 409,054 407,897
PROFITABILITY
**************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
HZFS Horizon Financial Svcs Corp. 0.81 0.66 7.85 6.37
MFCX Marshalltown Financial Corp. 0.67 0.63 4.26 4.02
MIFC Mid-Iowa Financial Corp. 1.27 1.15 13.68 12.41
MWBI Midwest Bancshares Inc. 0.87 0.77 12.54 11.05
FFFD North Central Bancshares Inc. 1.84 1.84 7.58 7.57
PMFI Perpetual Midwest Financial 0.40 0.32 4.65 3.78
SFFC StateFed Financial Corp. 1.28 1.28 7.20 7.20
FBNW FirstBank Corp. 0.85 0.51 9.25 5.55
ABCL Alliance Bancorp Inc. 0.76 0.84 8.37 9.35
AVND Avondale Financial Corp. -1.91 -1.94 -20.02 -20.35
BFFC Big Foot Financial Corp. NA NA NA NA
CBCI Calumet Bancorp Inc. 1.44 1.41 9.17 8.96
CBSB Charter Financial Inc. 1.13 1.16 7.62 7.78
CBK Citizens First Financial Corp. 0.61 0.54 4.15 3.70
CSBF CSB Financial Group Inc. 0.31 0.51 1.21 1.99
EGLB Eagle BancGroup Inc. 0.32 0.24 2.62 2.00
FBCI Fidelity Bancorp Inc. 0.81 0.81 7.81 7.81
FFBI First Financial Bancorp Inc. -0.07 0.42 -0.86 5.18
FMBD First Mutual Bancorp Inc. 0.31 0.28 2.16 1.95
FSFF First SecurityFed Financial 0.18 1.16 1.50 9.67
GTPS Great American Bancorp 0.53 0.59 2.38 2.65
HMLK Hemlock Federal Financial Corp 0.37 0.80 2.45 5.32
HBEI Home Bancorp of Elgin Inc. 0.83 0.80 3.02 2.90
HMCI HomeCorp Inc. 0.51 0.41 7.95 6.43
KNK Kankakee Bancorp Inc. 0.89 0.87 8.28 8.11
MAFB MAF Bancorp Inc. 1.16 1.15 14.81 14.72
NBSI North Bancshares Inc. 0.63 0.56 4.37 3.86
PFED Park Bancorp Inc. 1.10 1.06 4.84 4.65
PSFI PS Financial Inc. 2.03 2.10 5.26 5.43
SWBI Southwest Bancshares 1.05 1.02 9.84 9.55
SPBC St. Paul Bancorp Inc. 1.07 1.07 12.09 12.11
CAPITAL ISSUES
********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
HZFS Horizon Financial Svcs Corp. 06-30-94 NASDAQ 851,080 8.51
MFCX Marshalltown Financial Corp. 03-31-94 NASDAQ 1,411,475 24.35
MIFC Mid-Iowa Financial Corp. 10-14-92 NASDAQ 1,678,088 16.36
MWBI Midwest Bancshares Inc. 11-12-92 NASDAQ 1,017,933 13.83
FFFD North Central Bancshares Inc. 03-21-96 NASDAQ 3,257,983 58.64
PMFI Perpetual Midwest Financial 03-31-94 NASDAQ 1,873,075 41.68
SFFC StateFed Financial Corp. 01-05-94 NASDAQ 1,557,446 20.05
FBNW FirstBank Corp. 07-02-97 NASDAQ 1,983,750 33.72
ABCL Alliance Bancorp Inc. 07-07-92 NASDAQ 8,020,348 194.49
AVND Avondale Financial Corp. 04-07-95 NASDAQ 3,494,545 61.15
BFFC Big Foot Financial Corp. 12-20-96 NASDAQ 2,512,750 43.66
CBCI Calumet Bancorp Inc. 02-20-92 NASDAQ 3,166,196 97.62
CBSB Charter Financial Inc. 12-29-95 NASDAQ 4,149,758 73.66
CBK Citizens First Financial Corp. 05-01-96 AMSE 2,583,793 47.48
CSBF CSB Financial Group Inc. 10-09-95 NASDAQ 941,850 11.30
EGLB Eagle BancGroup Inc. 07-01-96 NASDAQ 1,197,905 21.11
FBCI Fidelity Bancorp Inc. 12-15-93 NASDAQ 2,794,978 70.92
FFBI First Financial Bancorp Inc. 10-04-93 NASDAQ 415,149 8.10
FMBD First Mutual Bancorp Inc. 07-05-95 NASDAQ 3,506,670 64.87
FSFF First SecurityFed Financial 10-31-97 NASDAQ NA NA
GTPS Great American Bancorp 06-30-95 NASDAQ 1,696,976 32.67
HMLK Hemlock Federal Financial Corp 04-02-97 NASDAQ 2,076,325 31.92
HBEI Home Bancorp of Elgin Inc. 09-27-96 NASDAQ 6,855,799 122.55
HMCI HomeCorp Inc. 06-22-90 NASDAQ 1,707,527 29.45
KNK Kankakee Bancorp Inc. 01-06-93 AMSE 1,425,568 44.91
MAFB MAF Bancorp Inc. 01-12-90 NASDAQ 15,249,102 493.69
NBSI North Bancshares Inc. 12-21-93 NASDAQ 961,870 23.08
PFED Park Bancorp Inc. 08-12-96 NASDAQ 2,431,441 43.16
PSFI PS Financial Inc. 11-27-96 NASDAQ 2,166,625 37.10
SWBI Southwest Bancshares 06-24-92 NASDAQ 2,657,075 55.13
SPBC St. Paul Bancorp Inc. 05-18-87 NASDAQ 34,133,382 853.33
</TABLE>
<PAGE> 140
KELLER & COMPANY Page 4
Dublin, Ohio
614-766-1426
KEY FINANCIAL DATA AND RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
ASSETS AND EQUITY
*****************************************************
Total Total Total
Assets Equity Tang. Equity
State ($000) ($000) ($000)
----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
SFSB SuburbFed Financial Corp. IL 432,559 28,695 28,599
WCBI Westco Bancorp IL 309,070 48,032 48,032
FBCV 1ST Bancorp IN 260,935 22,574 22,144
AMFC AMB Financial Corp. IN 103,388 14,411 14,411
ASBI Ameriana Bancorp IN 393,028 44,054 44,028
ATSB AmTrust Capital Corp. IN 69,685 7,615 7,540
FFWC FFW Corp. IN 181,468 17,610 15,984
FFED Fidelity Federal Bancorp IN 235,336 14,381 14,381
FISB First Indiana Corporation IN 1,547,121 149,177 147,401
HFGI Harrington Financial Group IN 521,043 25,222 25,222
HBFW Home Bancorp IN 334,862 44,491 44,491
HBBI Home Building Bancorp IN 41,746 5,893 5,893
HOMF Home Federal Bancorp IN 694,109 60,080 58,308
HWEN Home Financial Bancorp IN 41,309 7,251 7,251
INCB Indiana Community Bank SB IN 96,089 11,413 11,413
LOGN Logansport Financial Corp. IN 85,801 16,211 16,211
LSBI LSB Financial Corp. IN 200,266 17,290 17,290
MARN Marion Capital Holdings IN 179,822 39,467 39,467
MFBC MFB Corp. IN 255,921 33,521 33,521
MONT Montgomery Financial Corp. IN 101,986 19,521 19,521
NEIB Northeast Indiana Bancorp IN 190,319 27,342 27,342
PFDC Peoples Bancorp IN 287,564 43,723 43,723
PERM Permanent Bancorp Inc. IN 433,568 41,026 40,489
RIVR River Valley Bancorp IN 138,461 17,611 17,359
SOBI Sobieski Bancorp Inc. IN 84,279 12,453 12,453
FFSL First Independence Corp. KS 112,523 11,529 11,529
LARK Landmark Bancshares Inc. KS 227,736 32,062 32,062
MCBS Mid Continent Bancshares Inc. KS 408,590 38,359 38,359
CKFB CKF Bancorp Inc. KY 59,868 14,171 14,171
CLAS Classic Bancshares Inc. KY 132,186 19,666 16,701
FFKY First Federal Financial Corp. KY 382,585 52,421 49,457
PROFITABILITY
**************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
SFSB SuburbFed Financial Corp. 0.66 0.54 10.11 8.28
WCBI Westco Bancorp 1.50 1.41 9.74 9.19
FBCV 1ST Bancorp 0.72 0.36 8.73 4.40
AMFC AMB Financial Corp. 1.03 0.73 6.30 4.46
ASBI Ameriana Bancorp 0.92 0.82 8.36 7.51
ATSB AmTrust Capital Corp. 0.40 0.23 3.86 2.27
FFWC FFW Corp. 1.05 1.03 10.54 10.34
FFED Fidelity Federal Bancorp 0.75 0.73 14.15 13.74
FISB First Indiana Corporation 1.15 0.95 12.00 9.90
HFGI Harrington Financial Group 0.43 0.36 9.01 7.49
HBFW Home Bancorp 0.56 0.89 3.96 6.29
HBBI Home Building Bancorp 0.75 0.73 5.76 5.65
HOMF Home Federal Bancorp 1.33 1.21 15.87 14.44
HWEN Home Financial Bancorp 0.85 0.74 4.60 4.00
INCB Indiana Community Bank SB 0.53 0.53 4.30 4.30
LOGN Logansport Financial Corp. 1.42 1.47 7.28 7.54
LSBI LSB Financial Corp. 0.78 0.69 8.67 7.65
MARN Marion Capital Holdings 1.70 1.68 7.49 7.40
MFBC MFB Corp. 0.83 0.83 5.63 5.62
MONT Montgomery Financial Corp. 0.69 0.69 5.12 5.12
NEIB Northeast Indiana Bancorp 1.20 1.20 7.78 7.78
PFDC Peoples Bancorp 1.12 1.46 7.29 9.55
PERM Permanent Bancorp Inc. 0.62 0.62 6.64 6.61
RIVR River Valley Bancorp 0.76 0.57 6.28 4.75
SOBI Sobieski Bancorp Inc. 0.62 0.57 3.88 3.56
FFSL First Independence Corp. 0.65 0.65 6.09 6.09
LARK Landmark Bancshares Inc. 1.11 0.98 7.62 6.70
MCBS Mid Continent Bancshares Inc. 1.03 1.17 9.74 11.06
CKFB CKF Bancorp Inc. 1.82 1.37 7.51 5.63
CLAS Classic Bancshares Inc. 0.81 0.62 5.53 4.25
FFKY First Federal Financial Corp. 1.64 1.62 11.99 11.85
CAPITAL ISSUES
********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
SFSB SuburbFed Financial Corp. 03-04-92 NASDAQ 1,262,507 40.08
WCBI Westco Bancorp 06-26-92 NASDAQ 2,473,953 66.80
FBCV 1ST Bancorp 04-07-87 NASDAQ 691,726 24.90
AMFC AMB Financial Corp. 04-01-96 NASDAQ 963,798 15.06
ASBI Ameriana Bancorp 03-02-87 NASDAQ 3,231,407 65.44
ATSB AmTrust Capital Corp. 03-28-95 NASDAQ 526,479 7.30
FFWC FFW Corp. 04-05-93 NASDAQ 714,847 21.80
FFED Fidelity Federal Bancorp 08-31-87 NASDAQ 2,791,051 25.12
FISB First Indiana Corporation 08-02-83 NASDAQ 10,561,326 250.83
HFGI Harrington Financial Group NA NASDAQ 3,256,738 42.34
HBFW Home Bancorp 03-30-95 NASDAQ 2,524,779 52.70
HBBI Home Building Bancorp 02-08-95 NASDAQ 311,660 6.86
HOMF Home Federal Bancorp 01-23-88 NASDAQ 5,101,692 109.69
HWEN Home Financial Bancorp 07-02-96 NASDAQ 464,526 7.75
INCB Indiana Community Bank SB 12-15-94 NASDAQ 922,039 14.75
LOGN Logansport Financial Corp. 06-14-95 NASDAQ 1,260,620 19.22
LSBI LSB Financial Corp. 02-03-95 NASDAQ 916,350 23.83
MARN Marion Capital Holdings 03-18-93 NASDAQ 1,775,812 49.72
MFBC MFB Corp. 03-25-94 NASDAQ 1,650,567 38.38
MONT Montgomery Financial Corp. 07-01-97 NASDAQ 1,653,032 19.84
NEIB Northeast Indiana Bancorp 06-28-95 NASDAQ 1,762,727 34.37
PFDC Peoples Bancorp 07-07-87 NASDAQ 3,411,042 52.30
PERM Permanent Bancorp Inc. 04-04-94 NASDAQ 2,102,805 50.47
RIVR River Valley Bancorp 12-20-96 NASDAQ 1,190,250 20.23
SOBI Sobieski Bancorp Inc. 03-31-95 NASDAQ 779,500 13.25
FFSL First Independence Corp. 10-08-93 NASDAQ 978,333 14.43
LARK Landmark Bancshares Inc. 03-28-94 NASDAQ 1,688,641 42.64
MCBS Mid Continent Bancshares Inc. 06-27-94 NASDAQ 1,958,250 55.81
CKFB CKF Bancorp Inc. 01-04-95 NASDAQ 903,175 17.16
CLAS Classic Bancshares Inc. 12-29-95 NASDAQ 1,299,950 20.47
FFKY First Federal Financial Corp. 07-15-87 NASDAQ 4,159,196 90.98
</TABLE>
<PAGE> 141
KELLER & COMPANY Page 5
Dublin, Ohio
614-766-1426
KEY FINANCIAL DATA AND RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
ASSETS AND EQUITY
*****************************************************
Total Total Total
Assets Equity Tang. Equity
State ($000) ($000) ($000)
----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
FLKY First Lancaster Bancshares KY 47,184 13,907 13,907
FTSB Fort Thomas Financial Corp. KY 97,843 15,786 15,786
FKKY Frankfort First Bancorp Inc. KY 133,255 22,426 22,426
GWBC Gateway Bancorp Inc. KY 62,609 17,370 17,370
GTFN Great Financial Corp. KY 2,893,505 291,347 279,661
HFFB Harrodsburg First Fin Bancorp KY 108,949 29,334 29,334
KYF Kentucky First Bancorp Inc. KY 88,089 14,711 14,711
ANA Acadiana Bancshares Inc. LA 274,018 46,433 46,433
GSLA GS Financial Corp. LA 131,071 56,525 56,525
ISBF ISB Financial Corp. LA 956,048 115,252 98,616
MERI Meritrust Federal SB LA 233,311 19,270 19,270
TSH Teche Holding Co. LA 406,253 53,384 53,384
ABBK Abington Bancorp Inc. MA 501,622 35,744 32,394
AFCB Affiliated Community Bancorp MA 1,128,579 110,158 109,565
ANDB Andover Bancorp Inc. MA 1,280,601 103,988 103,988
BFD BostonFed Bancorp Inc. MA 960,704 81,806 78,758
CEBK Central Co-operative Bank MA 358,424 35,472 31,944
EIRE Emerald Isle Bancorp Inc. MA 443,503 30,991 30,991
FCB Falmouth Bancorp Inc. MA 93,915 22,410 22,410
FESX First Essex Bancorp Inc. MA 1,209,698 89,542 78,333
FAB FirstFed America Bancorp Inc. MA 1,036,062 126,439 126,439
HIFS Hingham Instit. for Savings MA 216,240 20,987 20,987
HPBC Home Port Bancorp Inc. MA 201,014 21,452 21,452
IPSW Ipswich Savings Bank MA 202,509 11,370 11,370
LSBX Lawrence Savings Bank MA 352,980 33,606 33,606
MASB MASSBANK Corp. MA 932,757 100,570 99,059
MFLR Mayflower Co-operative Bank MA 125,671 12,170 11,966
MDBK Medford Savings Bank MA 1,106,345 99,739 93,463
MWBX MetroWest Bank MA 585,760 43,743 43,743
PBKB People's Bancshares Inc. MA 717,451 29,415 28,207
SWCB Sandwich Bancorp Inc. MA 511,765 40,604 39,026
PROFITABILITY
**************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
FLKY First Lancaster Bancshares 1.24 1.24 3.64 3.64
FTSB Fort Thomas Financial Corp. 1.22 1.22 7.18 7.18
FKKY Frankfort First Bancorp Inc. 0.09 0.63 0.37 2.74
GWBC Gateway Bancorp Inc. 0.94 0.94 3.60 3.59
GTFN Great Financial Corp. 1.05 0.77 10.85 8.01
HFFB Harrodsburg First Fin Bancorp 1.03 1.35 3.80 4.99
KYF Kentucky First Bancorp Inc. 1.15 1.14 6.64 6.60
ANA Acadiana Bancshares Inc. 0.98 0.95 5.62 5.44
GSLA GS Financial Corp. 1.31 1.32 3.48 3.50
ISBF ISB Financial Corp. 0.74 0.72 5.86 5.76
MERI Meritrust Federal SB 1.15 1.15 14.61 14.61
TSH Teche Holding Co. 0.70 0.96 5.06 6.97
ABBK Abington Bancorp Inc. 0.85 0.76 12.37 11.05
AFCB Affiliated Community Bancorp 1.09 1.08 11.13 11.05
ANDB Andover Bancorp Inc. 1.06 1.03 13.25 12.93
BFD BostonFed Bancorp Inc. 0.72 0.66 7.52 6.87
CEBK Central Co-operative Bank 0.88 0.83 8.71 8.20
EIRE Emerald Isle Bancorp Inc. 0.87 0.92 12.49 13.23
FCB Falmouth Bancorp Inc. 0.83 0.80 3.41 3.26
FESX First Essex Bancorp Inc. 0.90 0.77 12.42 10.65
FAB FirstFed America Bancorp Inc. 0.05 0.47 0.56 4.89
HIFS Hingham Instit. for Savings 1.25 1.25 12.96 12.96
HPBC Home Port Bancorp Inc. 1.69 1.67 15.80 15.64
IPSW Ipswich Savings Bank 1.21 0.97 20.35 16.37
LSBX Lawrence Savings Bank 1.75 1.74 20.22 20.08
MASB MASSBANK Corp. 1.10 1.03 10.53 9.90
MFLR Mayflower Co-operative Bank 1.03 0.92 10.64 9.53
MDBK Medford Savings Bank 1.07 1.00 12.00 11.19
MWBX MetroWest Bank 1.38 1.37 18.11 18.02
PBKB People's Bancshares Inc. 0.84 0.46 15.14 8.32
SWCB Sandwich Bancorp Inc. 0.97 0.95 12.19 11.95
CAPITAL ISSUES
********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
FLKY First Lancaster Bancshares 07-01-96 NASDAQ 951,262 15.22
FTSB Fort Thomas Financial Corp. 06-28-95 NASDAQ 1,495,086 19.62
FKKY Frankfort First Bancorp Inc. 07-10-95 NASDAQ 3,279,952 33.21
GWBC Gateway Bancorp Inc. 01-18-95 NASDAQ 1,075,754 19.36
GTFN Great Financial Corp. 03-31-94 NASDAQ 13,823,438 589.22
HFFB Harrodsburg First Fin Bancorp 10-04-95 NASDAQ 2,024,756 30.12
KYF Kentucky First Bancorp Inc. 08-29-95 AMSE 1,302,694 18.40
ANA Acadiana Bancshares Inc. 07-16-96 AMSE 2,697,350 60.02
GSLA GS Financial Corp. 04-01-97 NASDAQ 3,438,500 56.31
ISBF ISB Financial Corp. 04-07-95 NASDAQ 6,900,710 189.77
MERI Meritrust Federal SB NA NASDAQ 774,176 36.39
TSH Teche Holding Co. 04-19-95 AMSE 3,437,530 65.31
ABBK Abington Bancorp Inc. 06-10-86 NASDAQ 1,839,788 58.87
AFCB Affiliated Community Bancorp 10-19-95 NASDAQ 6,492,609 181.79
ANDB Andover Bancorp Inc. 05-08-86 NASDAQ 5,148,658 189.21
BFD BostonFed Bancorp Inc. 10-24-95 AMSE 5,649,937 119.00
CEBK Central Co-operative Bank 10-24-86 NASDAQ 1,965,000 44.21
EIRE Emerald Isle Bancorp Inc. 09-08-86 NASDAQ 2,249,786 55.68
FCB Falmouth Bancorp Inc. 03-28-96 AMSE 1,454,750 24.00
FESX First Essex Bancorp Inc. 08-04-87 NASDAQ 7,526,726 153.36
FAB FirstFed America Bancorp Inc. 01-15-97 AMSE 8,707,152 190.47
HIFS Hingham Instit. for Savings 12-20-88 NASDAQ 1,303,500 35.68
HPBC Home Port Bancorp Inc. 08-25-88 NASDAQ 1,841,890 43.51
IPSW Ipswich Savings Bank 05-26-93 NASDAQ 2,377,801 31.51
LSBX Lawrence Savings Bank 05-02-86 NASDAQ 4,284,500 54.09
MASB MASSBANK Corp. 05-28-86 NASDAQ 3,560,578 169.13
MFLR Mayflower Co-operative Bank 12-23-87 NASDAQ 890,400 17.36
MDBK Medford Savings Bank 03-18-86 NASDAQ 4,541,148 163.48
MWBX MetroWest Bank 10-10-86 NASDAQ 13,956,235 107.30
PBKB People's Bancshares Inc. 10-30-86 NASDAQ 3,283,086 65.66
SWCB Sandwich Bancorp Inc. 07-25-86 NASDAQ 1,919,000 71.00
</TABLE>
<PAGE> 142
KELLER & COMPANY Page 6
Dublin, Ohio
614-766-1426
KEY FINANCIAL DATA AND RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
ASSETS AND EQUITY
*****************************************************
Total Total Total
Assets Equity Tang. Equity
State ($000) ($000) ($000)
----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
SISB SIS Bancorp Inc. MA 1,453,017 106,958 106,958
SOSA Somerset Savings Bank MA 520,339 34,333 34,333
WRNB Warren Bancorp Inc. MA 364,130 38,762 38,762
EQSB Equitable Federal Savings Bank MD 308,197 15,534 15,534
HRBF Harbor Federal Bancorp Inc. MD 217,202 28,356 28,356
MFSL Maryland Federal Bancorp MD 1,175,006 99,697 98,560
WSB Washington Savings Bank, FSB MD 267,870 22,443 22,443
WHGB WHG Bancshares Corp. MD 100,235 20,704 20,704
FCME First Coastal Corp. ME 148,571 14,485 14,485
KSBK KSB Bancorp Inc. ME 149,657 11,018 10,475
MCBN Mid-Coast Bancorp Inc. ME 61,473 5,277 5,277
NBN Northeast Bancorp ME 265,442 20,465 18,319
PHBK Peoples Heritage Finl Group ME 6,056,083 451,071 385,019
BWFC Bank West Financial Corp. MI 164,854 23,322 23,322
CFSB CFSB Bancorp Inc. MI 859,962 66,271 66,271
DNFC D & N Financial Corp. MI 1,754,069 92,144 91,218
FLGS Flagstar Bancorp Inc. MI 2,033,260 121,549 116,711
MSBF MSB Financial Inc. MI 77,014 12,740 12,740
MSBK Mutual Savings Bank FSB MI 654,127 41,642 41,642
OFCP Ottawa Financial Corp. MI 866,966 75,736 61,184
THR Three Rivers Financial Corp. MI 94,216 12,973 12,927
BDJI First Federal Bancorporation MN 111,492 11,941 11,941
FFHH FSF Financial Corp. MN 388,135 43,362 43,362
HMNF HMN Financial Inc. MN 568,847 84,619 84,619
MIVI Mississippi View Holding Co. MN 68,546 12,068 12,068
QCFB QCF Bancorp Inc. MN 158,192 26,020 26,020
WEFC Wells Financial Corp. MN 204,761 29,113 29,113
CMRN Cameron Financial Corp MO 208,105 45,136 45,136
CAPS Capital Savings Bancorp Inc. MO 242,259 22,143 22,143
CBES CBES Bancorp Inc. MO 106,635 18,039 18,039
CNSB CNS Bancorp Inc. MO 97,411 23,698 23,698
PROFITABILITY
**************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
SISB SIS Bancorp Inc. 0.83 0.82 11.45 11.33
SOSA Somerset Savings Bank 1.02 0.99 16.91 16.47
WRNB Warren Bancorp Inc. 2.17 1.76 21.57 17.57
EQSB Equitable Federal Savings Ban 0.46 0.73 9.13 14.49
HRBF Harbor Federal Bancorp Inc. 0.71 0.71 5.50 5.50
MFSL Maryland Federal Bancorp 0.65 0.91 7.88 11.00
WSB Washington Savings Bank, FSB 0.44 0.62 5.07 7.14
WHGB WHG Bancshares Corp. 0.52 0.85 2.25 3.72
FCME First Coastal Corp. 4.13 3.97 46.76 44.97
KSBK KSB Bancorp Inc. 1.07 1.08 14.91 14.95
MCBN Mid-Coast Bancorp Inc. 0.76 0.72 8.73 8.25
NBN Northeast Bancorp 0.75 0.61 9.72 7.89
PHBK Peoples Heritage Finl Group 1.30 1.30 16.38 16.37
BWFC Bank West Financial Corp. 1.03 0.57 6.76 3.72
CFSB CFSB Bancorp Inc. 1.21 1.14 15.78 14.86
DNFC D & N Financial Corp. 0.90 0.83 15.93 14.74
FLGS Flagstar Bancorp Inc. 1.43 1.43 22.84 22.84
MSBF MSB Financial Inc. 1.50 1.44 8.42 8.08
MSBK Mutual Savings Bank FSB 0.10 0.02 1.57 0.35
OFCP Ottawa Financial Corp. 0.80 0.79 9.08 8.88
THR Three Rivers Financial Corp. 0.90 0.86 6.48 6.19
BDJI First Federal Bancorporation 0.65 0.63 5.87 5.72
FFHH FSF Financial Corp. 0.84 0.84 7.03 6.96
HMNF HMN Financial Inc. 1.00 0.85 6.83 5.81
MIVI Mississippi View Holding Co. 1.07 1.05 6.04 5.95
QCFB QCF Bancorp Inc. 1.65 1.65 9.33 9.33
WEFC Wells Financial Corp. 1.06 1.04 7.49 7.37
CMRN Cameron Financial Corp 1.06 1.32 4.41 5.51
CAPS Capital Savings Bancorp Inc. 0.95 0.94 10.99 10.77
CBES CBES Bancorp Inc. 1.24 1.13 6.89 6.28
CNSB CNS Bancorp Inc. 0.79 0.80 3.20 3.23
CAPITAL ISSUES
********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
SISB SIS Bancorp Inc. 02-08-95 NASDAQ 5,580,842 193.93
SOSA Somerset Savings Bank 07-09-86 NASDAQ 16,651,602 87.42
WRNB Warren Bancorp Inc. 07-09-86 NASDAQ 3,798,427 74.07
EQSB Equitable Federal Savings Ban 09-10-93 NASDAQ 602,200 22.28
HRBF Harbor Federal Bancorp Inc. 08-12-94 NASDAQ 1,693,420 38.53
MFSL Maryland Federal Bancorp 06-02-87 NASDAQ 6,467,390 139.05
WSB Washington Savings Bank, FSB NA AMSE 4,347,956 27.17
WHGB WHG Bancshares Corp. 04-01-96 NASDAQ 1,462,107 22.30
FCME First Coastal Corp. NA NASDAQ 1,359,194 17.84
KSBK KSB Bancorp Inc. 06-24-93 NASDAQ 1,238,115 16.41
MCBN Mid-Coast Bancorp Inc. 11-02-89 NASDAQ 232,991 6.29
NBN Northeast Bancorp 08-19-87 AMSE 1,293,642 24.58
PHBK Peoples Heritage Finl Group 12-04-86 NASDAQ 27,474,529 1162.53
BWFC Bank West Financial Corp. 03-30-95 NASDAQ 1,753,475 33.32
CFSB CFSB Bancorp Inc. 06-22-90 NASDAQ 5,086,891 146.88
DNFC D & N Financial Corp. 02-13-85 NASDAQ 8,244,263 174.16
FLGS Flagstar Bancorp Inc. NA NASDAQ 13,670,000 283.65
MSBF MSB Financial Inc. 02-06-95 NASDAQ 1,233,622 21.28
MSBK Mutual Savings Bank FSB 07-17-92 NASDAQ 4,279,154 62.58
OFCP Ottawa Financial Corp. 08-19-94 NASDAQ 5,353,334 145.21
THR Three Rivers Financial Corp. 08-24-95 AMSE 823,540 13.69
BDJI First Federal Bancorporation 04-04-95 NASDAQ 672,566 14.80
FFHH FSF Financial Corp. 10-07-94 NASDAQ 3,009,715 59.07
HMNF HMN Financial Inc. 06-30-94 NASDAQ 4,211,836 104.24
MIVI Mississippi View Holding Co. 03-24-95 NASDAQ 740,243 12.58
QCFB QCF Bancorp Inc. 04-03-95 NASDAQ 1,381,683 34.54
WEFC Wells Financial Corp. 04-11-95 NASDAQ 1,959,360 32.33
CMRN Cameron Financial Corp 04-03-95 NASDAQ 2,626,696 47.28
CAPS Capital Savings Bancorp Inc. 12-29-93 NASDAQ 1,891,800 33.11
CBES CBES Bancorp Inc. 09-30-96 NASDAQ 1,024,958 21.01
CNSB CNS Bancorp Inc. 06-12-96 NASDAQ 1,653,125 29.34
</TABLE>
<PAGE> 143
KELLER & COMPANY Page 7
Dublin, Ohio
614-766-1426
KEY FINANCIAL DATA AND RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
ASSETS AND EQUITY
*****************************************************
Total Total Total
Assets Equity Tang. Equity
State ($000) ($000) ($000)
----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
FBSI First Bancshares Inc. MO 162,755 22,657 22,657
FTNB Fulton Bancorp Inc. MO 103,713 25,585 25,585
GSBC Great Southern Bancorp Inc. MO 727,533 62,940 62,940
HFSA Hardin Bancorp Inc. MO 117,364 13,536 13,536
JSBA Jefferson Savings Bancorp MO 1,257,753 113,516 89,043
JOAC Joachim Bancorp Inc. MO 35,073 9,870 9,870
LXMO Lexington B&L Financial Corp. MO 59,236 16,775 16,775
MBLF MBLA Financial Corp. MO 224,013 28,347 28,347
NASB North American Savings Bank MO 736,585 56,547 54,645
NSLB NS&L Bancorp Inc. MO 59,711 11,679 11,679
PCBC Perry County Financial Corp. MO 81,105 15,570 15,570
SMFC Sho-Me Financial Corp. MO 344,849 31,138 31,138
SMBC Southern Missouri Bancorp Inc. MO 163,297 26,376 26,376
CFTP Community Federal Bancorp MS 215,953 57,701 57,701
FFBS FFBS BanCorp Inc. MS 134,952 22,544 22,544
EFBC Empire Federal Bancorp Inc. MT 110,540 40,200 40,200
GBCI Glacier Bancorp Inc. MT 573,968 57,332 55,929
UBMT United Financial Corp. MT 103,082 24,757 24,757
WSTR WesterFed Financial Corp. MT 999,203 106,148 85,632
CFNC Carolina Fincorp Inc. NC 114,069 25,764 25,764
CENB Century Bancorp Inc. NC 100,937 30,572 30,572
COOP Cooperative Bankshares Inc. NC 359,535 27,652 27,652
SOPN First Savings Bancorp Inc. NC 295,315 67,949 67,949
GSFC Green Street Financial Corp. NC 177,962 62,946 62,946
HBS Haywood Bancshares Inc. NC 152,796 21,672 20,931
HFNC HFNC Financial Corp. NC 866,859 163,027 163,027
KSAV KS Bancorp Inc. NC 109,937 14,554 14,549
MBSP Mitchell Bancorp Inc. NC 34,591 14,303 14,303
PDB Piedmont Bancorp Inc. NC 126,544 20,791 20,791
SSB Scotland Bancorp Inc. NC 64,399 14,561 14,561
SSFC South Street Financial Corp. NC 240,524 61,718 61,718
PROFITABILITY
**************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
FBSI First Bancshares Inc. 1.20 1.08 8.49 7.68
FTNB Fulton Bancorp Inc. 1.25 1.08 5.41 4.69
GSBC Great Southern Bancorp Inc. 1.85 1.74 21.01 19.81
HFSA Hardin Bancorp Inc. 0.80 0.75 5.88 5.55
JSBA Jefferson Savings Bancorp 0.79 0.76 9.60 9.32
JOAC Joachim Bancorp Inc. 0.79 0.79 2.72 2.72
LXMO Lexington B&L Financial Corp. 1.02 1.32 3.45 4.46
MBLF MBLA Financial Corp. 0.83 0.85 6.50 6.63
NASB North American Savings Bank 1.27 1.20 17.21 16.21
NSLB NS&L Bancorp Inc. 0.49 0.77 2.39 3.72
PCBC Perry County Financial Corp. 0.93 1.07 4.97 5.72
SMFC Sho-Me Financial Corp. 1.30 1.24 13.64 12.97
SMBC Southern Missouri Bancorp Inc 0.93 0.90 5.81 5.61
CFTP Community Federal Bancorp 1.46 1.45 4.73 4.71
FFBS FFBS BanCorp Inc. 1.41 1.41 7.42 7.42
EFBC Empire Federal Bancorp Inc. NA NA NA NA
GBCI Glacier Bancorp Inc. 1.50 1.54 15.68 16.10
UBMT United Financial Corp. 1.41 1.40 6.06 6.01
WSTR WesterFed Financial Corp. 0.80 0.76 6.90 6.60
CFNC Carolina Fincorp Inc. 1.20 1.16 5.52 5.32
CENB Century Bancorp Inc. 1.58 1.59 6.21 6.25
COOP Cooperative Bankshares Inc. 0.63 0.63 8.26 8.21
SOPN First Savings Bancorp Inc. 1.76 1.76 7.28 7.28
GSFC Green Street Financial Corp. 1.58 1.58 4.47 4.47
HBS Haywood Bancshares Inc. 1.37 1.37 9.41 9.41
HFNC HFNC Financial Corp. 1.21 1.05 5.28 4.55
KSAV KS Bancorp Inc. 1.21 1.20 8.84 8.77
MBSP Mitchell Bancorp Inc. 1.62 1.62 3.79 3.79
PDB Piedmont Bancorp Inc. -0.25 0.57 -1.39 3.19
SSB Scotland Bancorp Inc. 1.89 1.88 6.39 6.36
SSFC South Street Financial Corp. 1.23 1.19 6.85 6.62
CAPITAL ISSUES
********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
FBSI First Bancshares Inc. 12-22-93 NASDAQ 1,092,554 25.13
FTNB Fulton Bancorp Inc. 10-18-96 NASDAQ 1,719,250 41.26
GSBC Great Southern Bancorp Inc. 12-14-89 NASDAQ 8,080,412 153.53
HFSA Hardin Bancorp Inc. 09-29-95 NASDAQ 859,360 15.25
JSBA Jefferson Savings Bancorp 04-08-93 NASDAQ 5,006,368 202.13
JOAC Joachim Bancorp Inc. 12-28-95 NASDAQ 722,415 11.02
LXMO Lexington B&L Financial Corp. 06-06-96 NASDAQ 1,138,500 18.93
MBLF MBLA Financial Corp. 06-24-93 NASDAQ 1,268,268 33.29
NASB North American Savings Bank 09-27-85 NASDAQ 2,228,993 106.43
NSLB NS&L Bancorp Inc. 06-08-95 NASDAQ 707,482 12.20
PCBC Perry County Financial Corp. 02-13-95 NASDAQ 827,897 16.56
SMFC Sho-Me Financial Corp. 07-01-94 NASDAQ 1,499,036 63.71
SMBC Southern Missouri Bancorp Inc 04-13-94 NASDAQ 1,612,094 28.41
CFTP Community Federal Bancorp 03-26-96 NASDAQ 4,628,750 82.16
FFBS FFBS BanCorp Inc. 07-01-93 NASDAQ 1,572,244 33.41
EFBC Empire Federal Bancorp Inc. 01-27-97 NASDAQ 2,592,100 45.69
GBCI Glacier Bancorp Inc. 03-30-84 NASDAQ 6,816,066 128.65
UBMT United Financial Corp. 09-23-86 NASDAQ 1,223,312 29.05
WSTR WesterFed Financial Corp. 01-10-94 NASDAQ 5,577,127 145.01
CFNC Carolina Fincorp Inc. 11-25-96 NASDAQ 1,851,500 32.40
CENB Century Bancorp Inc. 12-23-96 NASDAQ 407,330 31.57
COOP Cooperative Bankshares Inc. 08-21-91 NASDAQ 2,983,396 50.72
SOPN First Savings Bancorp Inc. 01-06-94 NASDAQ 3,686,510 88.02
GSFC Green Street Financial Corp. 04-04-96 NASDAQ 4,298,125 89.19
HBS Haywood Bancshares Inc. 12-18-87 AMSE 1,250,356 27.04
HFNC HFNC Financial Corp. 12-29-95 NASDAQ 17,192,500 277.23
KSAV KS Bancorp Inc. 12-30-93 NASDAQ 885,356 15.94
MBSP Mitchell Bancorp Inc. 07-12-96 NASDAQ 930,902 16.06
PDB Piedmont Bancorp Inc. 12-08-95 AMSE 2,750,800 29.91
SSB Scotland Bancorp Inc. 04-01-96 AMSE 1,913,600 23.92
SSFC South Street Financial Corp. 10-03-96 NASDAQ 4,496,500 87.68
</TABLE>
<PAGE> 144
KELLER & COMPANY Page 8
Dublin, Ohio
614-766-1426
KEY FINANCIAL DATA AND RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
ASSETS AND EQUITY
*****************************************************
Total Total Total
Assets Equity Tang. Equity
State ($000) ($000) ($000)
----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
SSM Stone Street Bancorp Inc. NC 104,773 30,979 30,979
UFRM United Federal Savings Bank NC 285,744 20,954 20,954
CFB Commercial Federal Corp. NE 7,207,143 444,273 397,642
CFX CFX Corp. NH 2,821,182 245,691 236,835
NHTB New Hampshire Thrift Bncshrs NH 319,338 24,976 21,454
FBER 1st Bergen Bancorp NJ 284,739 38,881 38,881
FSNJ Bayonne Bancshares Inc. NJ 609,053 95,161 95,161
FSPG First Home Bancorp Inc. NJ 525,092 36,039 35,494
FMCO FMS Financial Corp. NJ 581,660 37,729 37,180
IBSF IBS Financial Corp. NJ 734,751 128,019 128,019
LVSB Lakeview Financial NJ 505,882 61,809 52,953
LFBI Little Falls Bancorp Inc. NJ 324,425 37,903 34,957
OCFC Ocean Financial Corp. NJ 1,489,220 225,884 225,884
PBCI Pamrapo Bancorp Inc. NJ 371,958 48,008 47,674
PFSB PennFed Financial Services Inc NJ 1,363,950 99,917 84,615
PULS Pulse Bancorp NJ 526,016 43,207 43,207
RARB Raritan Bancorp Inc. NJ 407,262 29,996 29,536
SFIN Statewide Financial Corp. NJ 703,112 65,812 65,700
WYNE Wayne Bancorp Inc. NJ 267,285 33,213 33,213
WWFC Westwood Financial Corp. NJ 110,425 10,290 9,205
AABC Access Anytime Bancorp Inc. NM 105,639 9,134 9,134
GUPB GFSB Bancorp Inc. NM 109,964 14,095 14,095
AFED AFSALA Bancorp Inc. NY 159,181 21,444 21,444
ALBK ALBANK Financial Corp. NY 3,716,954 343,512 302,611
ALBC Albion Banc Corp. NY 70,810 6,064 6,064
AHCI Ambanc Holding Co. NY 529,309 60,204 60,204
ASFC Astoria Financial Corp. NY 7,904,363 609,784 515,847
CNY Carver Bancorp Inc. NY 415,561 34,910 33,561
CATB Catskill Financial Corp. NY 289,619 71,777 71,777
DME Dime Bancorp Inc. NY 19,413,597 1,053,004 1,002,707
DIME Dime Community Bancorp Inc. NY 1,385,356 186,951 161,119
PROFITABILITY
**************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
SSM Stone Street Bancorp Inc. 1.56 1.56 4.57 4.57
UFRM United Federal Savings Bank 0.72 0.57 9.56 7.55
CFB Commercial Federal Corp. 0.94 0.94 15.97 15.97
CFX CFX Corp. 0.72 0.95 8.45 11.09
NHTB New Hampshire Thrift Bncshrs 0.74 0.60 9.98 8.11
FBER 1st Bergen Bancorp 0.77 0.77 4.94 4.94
FSNJ Bayonne Bancshares Inc. 0.37 0.53 4.05 5.77
FSPG First Home Bancorp Inc. 0.93 0.91 14.03 13.69
FMCO FMS Financial Corp. 1.03 1.02 15.86 15.74
IBSF IBS Financial Corp. 0.78 0.78 4.44 4.44
LVSB Lakeview Financial 1.28 0.93 13.09 9.48
LFBI Little Falls Bancorp Inc. 0.57 0.51 4.37 3.93
OCFC Ocean Financial Corp. 1.00 1.00 5.71 5.71
PBCI Pamrapo Bancorp Inc. 1.35 1.33 9.76 9.61
PFSB PennFed Financial Services Inc 0.82 0.82 10.96 10.96
PULS Pulse Bancorp 1.10 1.10 14.06 14.06
RARB Raritan Bancorp Inc. 1.04 1.02 13.27 13.07
SFIN Statewide Financial Corp. 0.81 0.81 8.46 8.46
WYNE Wayne Bancorp Inc. 0.86 0.86 6.01 6.01
WWFC Westwood Financial Corp. 0.73 0.78 2.34 2.50
AABC Access Anytime Bancorp Inc. 1.44 1.34 22.55 20.89
GUPB GFSB Bancorp Inc. 0.87 0.87 5.47 5.45
AFED AFSALA Bancorp Inc. NA NA NA NA
ALBK ALBANK Financial Corp. 1.05 1.05 11.40 11.35
ALBC Albion Banc Corp. 0.50 0.49 5.54 5.46
AHCI Ambanc Holding Co. -0.54 -0.61 -4.22 -4.74
ASFC Astoria Financial Corp. 0.81 0.77 10.35 9.80
CNY Carver Bancorp Inc. -0.15 0.18 -1.76 2.08
CATB Catskill Financial Corp. 1.40 1.37 5.22 5.11
DME Dime Bancorp Inc. 0.67 0.66 12.63 12.47
DIME Dime Community Bancorp Inc. 1.10 1.04 6.94 6.55
CAPITAL ISSUES
********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
SSM Stone Street Bancorp Inc. 04-01-96 AMSE 1,898,052 40.33
UFRM United Federal Savings Bank 07-01-80 NASDAQ 3,074,314 38.43
CFB Commercial Federal Corp. 12-31-84 NYSE 21,581,704 1017.04
CFX CFX Corp. 02-12-87 AMSE 23,977,304 514.03
NHTB New Hampshire Thrift Bncshrs 05-22-86 NASDAQ 2,074,683 43.05
FBER 1st Bergen Bancorp 04-01-96 NASDAQ 2,864,535 52.64
FSNJ Bayonne Bancshares Inc. 08-22-97 NASDAQ 8,993,000 112.41
FSPG First Home Bancorp Inc. 04-20-87 NASDAQ 2,708,426 59.59
FMCO FMS Financial Corp. 12-14-88 NASDAQ 2,387,766 65.07
IBSF IBS Financial Corp. 10-13-94 NASDAQ 10,949,327 186.83
LVSB Lakeview Financial 12-22-93 NASDAQ 4,509,054 74.40
LFBI Little Falls Bancorp Inc. 01-05-96 NASDAQ 2,607,921 48.25
OCFC Ocean Financial Corp. 07-03-96 NASDAQ 8,175,860 290.24
PBCI Pamrapo Bancorp Inc. 11-14-89 NASDAQ 2,842,924 67.52
PFSB PennFed Financial Services Inc 07-15-94 NASDAQ 4,822,574 151.91
PULS Pulse Bancorp 09-18-86 NASDAQ 3,080,548 73.93
RARB Raritan Bancorp Inc. 03-01-87 NASDAQ 2,372,226 59.31
SFIN Statewide Financial Corp. 10-02-95 NASDAQ 4,590,934 98.71
WYNE Wayne Bancorp Inc. 06-27-96 NASDAQ 2,013,823 49.34
WWFC Westwood Financial Corp. 06-07-96 NASDAQ 645,241 17.82
AABC Access Anytime Bancorp Inc. 08-08-86 NASDAQ 1,216,852 9.25
GUPB GFSB Bancorp Inc. 06-30-95 NASDAQ 800,700 17.01
AFED AFSALA Bancorp Inc. 10-01-96 NASDAQ 1,454,750 21.28
ALBK ALBANK Financial Corp. 04-01-92 NASDAQ 12,872,195 543.85
ALBC Albion Banc Corp. 07-26-93 NASDAQ 250,051 6.44
AHCI Ambanc Holding Co. 12-27-95 NASDAQ 4,306,418 69.44
ASFC Astoria Financial Corp. 11-18-93 NASDAQ 20,665,877 1039.76
CNY Carver Bancorp Inc. 10-25-94 AMSE 2,314,275 29.22
CATB Catskill Financial Corp. 04-18-96 NASDAQ 4,657,274 78.59
DME Dime Bancorp Inc. 08-19-86 NYSE 101,492,000 2137.73
DIME Dime Community Bancorp Inc. 06-26-96 NASDAQ 12,624,750 257.23
</TABLE>
<PAGE> 145
KELLER & COMPANY Page 9
Dublin, Ohio
614-766-1426
KEY FINANCIAL DATA AND RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
ASSETS AND EQUITY
*****************************************************
Total Total Total
Assets Equity Tang. Equity
State ($000) ($000) ($000)
----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
ESBK Elmira Savings Bank (The) NY 228,268 14,503 14,123
FIBC Financial Bancorp Inc. NY 296,956 26,856 26,729
FFIC Flushing Financial Corp. NY 960,130 136,389 130,931
GPT GreenPoint Financial Corp. NY 13,093,985 1,268,776 680,049
GOSB GSB Financial Corp. NY 154,649 12,545 12,545
HAVN Haven Bancorp Inc. NY 1,833,284 109,945 109,594
JSB JSB Financial Inc. NY 1,531,068 355,419 355,419
LISB Long Island Bancorp Inc. NY 5,930,784 546,375 541,306
MBB MSB Bancorp Inc. NY 773,991 76,137 46,403
NYB New York Bancorp Inc. NY 3,244,200 169,063 169,063
PEEK Peekskill Financial Corp. NY 181,242 47,297 47,297
PKPS Poughkeepsie Financial Corp. NY 883,981 74,436 74,436
PSBK Progressive Bank Inc. NY 884,617 77,243 69,571
QCSB Queens County Bancorp Inc. NY 1,541,049 172,847 172,847
RELY Reliance Bancorp Inc. NY 2,034,753 168,030 123,413
RSLN Roslyn Bancorp Inc. NY 3,474,150 612,813 609,850
SFED SFS Bancorp Inc. NY 174,093 21,716 21,716
SKAN Skaneateles Bancorp Inc. NY 247,643 17,337 16,838
TPNZ Tappan Zee Financial Inc. NY 124,603 21,369 21,369
ROSE TR Financial Corp. NY 3,691,564 230,213 230,213
YFCB Yonkers Financial Corporation NY 312,956 43,878 43,878
ASBP ASB Financial Corp. OH 112,449 17,512 17,512
CAFI Camco Financial Corp. OH 502,186 48,157 44,568
COFI Charter One Financial OH 15,196,993 1,071,930 984,464
CTZN CitFed Bancorp Inc. OH 3,294,554 206,713 187,844
CIBI Community Investors Bancorp OH 94,328 11,085 11,085
DCBI Delphos Citizens Bancorp Inc. OH 107,796 28,716 28,716
EMLD Emerald Financial Corp. OH 603,493 47,081 46,387
EFBI Enterprise Federal Bancorp OH 274,888 31,424 31,404
FFDF FFD Financial Corp. OH 88,220 21,473 21,473
FFYF FFY Financial Corp. OH 610,974 83,662 83,662
PROFITABILITY
**************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
ESBK Elmira Savings Bank (The) 0.42 0.34 6.67 5.40
FIBC Financial Bancorp Inc. 0.92 0.98 9.57 10.16
FFIC Flushing Financial Corp. 0.96 0.96 6.01 6.05
GPT GreenPoint Financial Corp. 1.09 1.05 10.41 10.01
GOSB GSB Financial Corp. NA NA NA NA
HAVN Haven Bancorp Inc. 0.68 0.69 11.37 11.45
JSB JSB Financial Inc. 1.93 1.72 8.62 7.67
LISB Long Island Bancorp Inc. 0.86 0.73 9.33 7.93
MBB MSB Bancorp Inc. 0.53 0.54 6.05 6.06
NYB New York Bancorp Inc. 1.64 1.49 31.49 28.61
PEEK Peekskill Financial Corp. 1.15 1.15 4.33 4.33
PKPS Poughkeepsie Financial Corp. 0.53 0.54 6.36 6.44
PSBK Progressive Bank Inc. 0.95 0.94 11.39 11.17
QCSB Queens County Bancorp Inc. 1.57 1.55 11.69 11.55
RELY Reliance Bancorp Inc. 0.89 0.84 10.86 10.22
RSLN Roslyn Bancorp Inc. 0.97 1.17 5.64 6.80
SFED SFS Bancorp Inc. 0.69 0.69 5.48 5.48
SKAN Skaneateles Bancorp Inc. 0.70 0.68 10.32 9.99
TPNZ Tappan Zee Financial Inc. 0.85 0.84 4.87 4.77
ROSE TR Financial Corp. 0.97 0.87 15.66 14.14
YFCB Yonkers Financial Corporation 1.05 1.07 6.72 6.79
ASBP ASB Financial Corp. 0.97 0.91 5.89 5.53
CAFI Camco Financial Corp. 1.16 0.99 12.08 10.23
COFI Charter One Financial 1.27 1.24 18.76 18.34
CTZN CitFed Bancorp Inc. 0.87 0.87 13.46 13.46
CIBI Community Investors Bancorp 0.97 0.97 8.37 8.37
DCBI Delphos Citizens Bancorp Inc. 1.61 1.61 8.03 8.03
EMLD Emerald Financial Corp. 1.04 0.97 13.69 12.70
EFBI Enterprise Federal Bancorp 0.93 0.78 7.35 6.14
FFDF FFD Financial Corp. 1.93 0.97 7.83 3.92
FFYF FFY Financial Corp. 1.29 1.26 8.78 8.58
CAPITAL ISSUES
********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ESBK Elmira Savings Bank (The) 03-01-85 NASDAQ 706,361 21.01
FIBC Financial Bancorp Inc. 08-17-94 NASDAQ 1,709,700 38.47
FFIC Flushing Financial Corp. 11-21-95 NASDAQ 7,983,423 191.60
GPT GreenPoint Financial Corp. 01-28-94 NYSE 42,826,000 2714.10
GOSB GSB Financial Corp. 07-09-97 NASDAQ NA NA
HAVN Haven Bancorp Inc. 09-23-93 NASDAQ 4,386,052 187.50
JSB JSB Financial Inc. 06-27-90 NYSE 9,898,160 484.40
LISB Long Island Bancorp Inc. 04-18-94 NASDAQ 24,022,924 1129.08
MBB MSB Bancorp Inc. 09-03-92 AMSE 2,844,153 82.12
NYB New York Bancorp Inc. 01-28-88 NYSE 21,318,644 638.24
PEEK Peekskill Financial Corp. 12-29-95 NASDAQ 3,193,121 53.48
PKPS Poughkeepsie Financial Corp. 11-19-85 NASDAQ 12,595,325 116.51
PSBK Progressive Bank Inc. 08-01-84 NASDAQ 3,828,059 131.11
QCSB Queens County Bancorp Inc. 11-23-93 NASDAQ 15,108,350 521.87
RELY Reliance Bancorp Inc. 03-31-94 NASDAQ 8,712,455 287.51
RSLN Roslyn Bancorp Inc. 01-13-97 NASDAQ 43,642,459 971.04
SFED SFS Bancorp Inc. 06-30-95 NASDAQ 1,230,997 27.39
SKAN Skaneateles Bancorp Inc. 06-02-86 NASDAQ 955,067 27.22
TPNZ Tappan Zee Financial Inc. 10-05-95 NASDAQ 1,488,062 27.72
ROSE TR Financial Corp. 06-29-93 NASDAQ 17,592,169 560.75
YFCB Yonkers Financial Corporation 04-18-96 NASDAQ 3,020,763 60.04
ASBP ASB Financial Corp. 05-11-95 NASDAQ 1,699,822 22.74
CAFI Camco Financial Corp. NA NASDAQ 3,214,369 73.13
COFI Charter One Financial 01-22-88 NASDAQ 49,562,991 2790.89
CTZN CitFed Bancorp Inc. 01-23-92 NASDAQ 8,656,198 438.22
CIBI Community Investors Bancorp 02-07-95 NASDAQ 916,371 13.97
DCBI Delphos Citizens Bancorp Inc. 11-21-96 NASDAQ 1,959,696 33.80
EMLD Emerald Financial Corp. NA NASDAQ 5,071,600 82.41
EFBI Enterprise Federal Bancorp 10-17-94 NASDAQ 1,985,828 47.16
FFDF FFD Financial Corp. 04-03-96 NASDAQ 1,444,750 23.84
FFYF FFY Financial Corp. 06-28-93 NASDAQ 4,122,007 114.90
</TABLE>
<PAGE> 146
KELLER & COMPANY Page 10
Dublin, Ohio
614-766-1426
KEY FINANCIAL DATA AND RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
ASSETS AND EQUITY
*****************************************************
Total Total Total
Assets Equity Tang. Equity
State ($000) ($000) ($000)
----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
FFOH Fidelity Financial of Ohio OH 528,704 68,875 61,076
FDEF First Defiance Financial OH 574,364 112,906 112,906
FFBZ First Federal Bancorp Inc. OH 203,703 15,626 15,609
FFHS First Franklin Corp. OH 231,189 20,847 20,730
GFCO Glenway Financial Corp. OH 293,245 27,750 27,418
HHFC Harvest Home Financial Corp. OH 87,596 10,349 10,349
HCFC Home City Financial Corp. OH 70,110 13,750 13,750
INBI Industrial Bancorp Inc. OH 354,116 60,848 60,848
LONF London Financial Corporation OH 38,240 7,519 7,519
MRKF Market Financial Corp. OH 56,121 19,895 19,895
METF Metropolitan Financial Corp. OH 865,572 34,911 31,859
MFFC Milton Federal Financial Corp. OH 209,958 26,385 26,385
OSFS Ohio State Financial Services OH 38,559 10,442 10,442
OHSL OHSL Financial Corp. OH 234,600 25,619 25,619
PFFC Peoples Financial Corp. OH 86,486 23,534 23,534
PSFC Peoples-Sidney Financial Corp. OH 102,835 26,014 26,014
PTRS Potters Financial Corp. OH 122,716 10,812 10,812
PVFC PVF Capital Corp. OH 383,278 27,537 27,537
SFSL Security First Corp. OH 680,827 63,059 62,084
WOFC Western Ohio Financial Corp. OH 397,425 55,105 51,442
WEHO Westwood Homestead Fin. Corp. OH 142,878 39,513 39,513
WFI Winton Financial Corp. OH 324,532 23,277 22,814
FFWD Wood Bancorp Inc. OH 166,520 20,707 20,707
KFBI Klamath First Bancorp OR 980,078 144,462 NA
OTFC Oregon Trail Financial Corp. OR 341,988 65,168 65,168
WFSG Wilshire Financial Services OR 1,369,761 99,769 99,769
CVAL Chester Valley Bancorp Inc. PA 322,321 27,917 27,917
CMSB Commonwealth Bancorp Inc. PA 2,278,099 211,483 164,822
FSBI Fidelity Bancorp Inc. PA 380,951 25,881 NA
FBBC First Bell Bancorp Inc. PA 681,215 71,762 71,762
FKFS First Keystone Financial PA 373,430 24,752 24,752
PROFITABILITY
**************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
FFOH Fidelity Financial of Ohio 0.83 0.94 6.28 7.07
FDEF First Defiance Financial 1.02 1.00 4.79 4.67
FFBZ First Federal Bancorp Inc. 1.02 0.97 13.37 12.73
FFHS First Franklin Corp. 0.55 0.65 6.18 7.31
GFCO Glenway Financial Corp. 0.80 0.77 8.37 8.14
HHFC Harvest Home Financial Corp. 0.30 0.57 2.31 4.44
HCFC Home City Financial Corp. 1.23 1.25 6.40 6.49
INBI Industrial Bancorp Inc. 1.51 1.44 8.32 7.92
LONF London Financial Corporation 0.66 0.99 3.17 4.77
MRKF Market Financial Corp. 0.99 0.99 3.66 3.66
METF Metropolitan Financial Corp. 0.64 0.60 16.23 15.21
MFFC Milton Federal Financial Corp. 0.73 0.65 5.08 4.52
OSFS Ohio State Financial Services 0.98 0.98 6.13 6.13
OHSL OHSL Financial Corp. 0.90 0.88 8.06 7.86
PFFC Peoples Financial Corp. 0.59 0.90 2.31 3.54
PSFC Peoples-Sidney Financial Corp. 1.04 1.04 6.37 6.37
PTRS Potters Financial Corp. 0.98 0.96 10.93 10.72
PVFC PVF Capital Corp. 1.37 1.31 19.66 18.82
SFSL Security First Corp. 1.36 1.37 14.62 14.73
WOFC Western Ohio Financial Corp. 0.37 0.43 2.74 3.16
WEHO Westwood Homestead Fin. Corp. 1.01 1.09 3.23 3.50
WFI Winton Financial Corp. 1.05 0.86 14.63 12.06
FFWD Wood Bancorp Inc. 1.40 1.29 11.07 10.20
KFBI Klamath First Bancorp 1.04 1.04 5.75 5.75
OTFC Oregon Trail Financial Corp. NA NA NA NA
WFSG Wilshire Financial Services 1.83 1.62 28.33 25.01
CVAL Chester Valley Bancorp Inc. 0.98 0.93 11.31 10.83
CMSB Commonwealth Bancorp Inc. 0.75 0.58 7.49 5.76
FSBI Fidelity Bancorp Inc. 0.78 0.76 11.41 11.19
FBBC First Bell Bancorp Inc. 1.12 1.09 9.47 9.27
FKFS First Keystone Financial 0.84 0.77 11.46 10.53
CAPITAL ISSUES
********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
FFOH Fidelity Financial of Ohio 03-04-96 NASDAQ 5,579,719 89.28
FDEF First Defiance Financial 10-02-95 NASDAQ 8,956,764 141.07
FFBZ First Federal Bancorp Inc. 07-13-92 NASDAQ 1,575,116 29.53
FFHS First Franklin Corp. 01-26-88 NASDAQ 1,192,029 28.01
GFCO Glenway Financial Corp. 11-30-90 NASDAQ 2,279,994 34.20
HHFC Harvest Home Financial Corp. 10-10-94 NASDAQ 914,857 9.95
HCFC Home City Financial Corp. 12-30-96 NASDAQ 904,590 13.57
INBI Industrial Bancorp Inc. 08-01-95 NASDAQ 5,172,800 93.11
LONF London Financial Corporation 04-01-96 NASDAQ 515,160 7.60
MRKF Market Financial Corp. 03-27-97 NASDAQ 1,335,725 20.04
METF Metropolitan Financial Corp. NA NASDAQ 3,525,635 66.99
MFFC Milton Federal Financial Corp. 10-07-94 NASDAQ 2,304,836 35.15
OSFS Ohio State Financial Services 09-29-97 NASDAQ 634,168 9.83
OHSL OHSL Financial Corp. 02-10-93 NASDAQ 1,234,597 32.10
PFFC Peoples Financial Corp. 09-13-96 NASDAQ 1,491,012 23.30
PSFC Peoples-Sidney Financial Corp. 04-28-97 NASDAQ 1,785,375 29.46
PTRS Potters Financial Corp. 12-31-93 NASDAQ 482,326 13.63
PVFC PVF Capital Corp. 12-30-92 NASDAQ 2,590,485 52.46
SFSL Security First Corp. 01-22-88 NASDAQ 7,591,177 144.23
WOFC Western Ohio Financial Corp. 07-29-94 NASDAQ 2,355,893 63.90
WEHO Westwood Homestead Fin. Corp. 09-30-96 NASDAQ 2,782,398 50.08
WFI Winton Financial Corp. 08-04-88 AMSE 1,986,152 34.51
FFWD Wood Bancorp Inc. 08-31-93 NASDAQ 2,118,538 36.02
KFBI Klamath First Bancorp 10-05-95 NASDAQ 10,018,502 221.66
OTFC Oregon Trail Financial Corp. 10-06-97 NASDAQ NA NA
WFSG Wilshire Financial Services 12-19-96 NASDAQ 7,570,000 197.77
CVAL Chester Valley Bancorp Inc. 03-27-87 NASDAQ 2,189,381 50.36
CMSB Commonwealth Bancorp Inc. 06-17-96 NASDAQ 16,242,691 292.37
FSBI Fidelity Bancorp Inc. 06-24-88 NASDAQ 1,554,775 34.59
FBBC First Bell Bancorp Inc. 06-29-95 NASDAQ 6,510,625 113.12
FKFS First Keystone Financial 01-26-95 NASDAQ 1,228,419 39.62
</TABLE>
<PAGE> 147
KELLER & COMPANY Page 11
Dublin, Ohio
614-766-1426
KEY FINANCIAL DATA AND RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
ASSETS AND EQUITY
*****************************************************
Total Total Total
Assets Equity Tang. Equity
State ($000) ($000) ($000)
----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
SHEN First Shenango Bancorp Inc. PA 401,437 46,654 46,654
GAF GA Financial Inc. PA 802,304 117,377 116,235
HARL Harleysville Savings Bank PA 345,239 22,872 22,872
LARL Laurel Capital Group Inc. PA 209,980 21,982 21,982
MLBC ML Bancorp Inc. PA 2,315,784 160,337 149,595
PVSA Parkvale Financial Corporation PA 1,005,440 77,610 77,108
PWBC PennFirst Bancorp Inc. PA 822,350 68,826 61,205
PWBK Pennwood Bancorp Inc. PA 47,645 8,736 8,736
PHFC Pittsburgh Home Financial Corp PA 273,304 28,814 28,511
PRBC Prestige Bancorp Inc. PA 137,834 15,445 15,445
PFNC Progress Financial Corp. PA 436,746 23,291 20,773
SHSB SHS Bancorp Inc. PA 88,460 11,797 11,797
SVRN Sovereign Bancorp Inc. PA 14,601,008 742,122 624,005
THRD TF Financial Corp. PA 625,338 72,713 64,214
USAB USABancshares, Inc. PA 64,269 5,420 5,338
WVFC WVS Financial Corp. PA 282,235 33,877 33,877
YFED York Financial Corp. PA 1,155,725 102,335 102,335
CFCP Coastal Financial Corp. SC 494,003 32,391 32,391
FFCH First Financial Holdings Inc. SC 1,712,931 104,785 104,785
FSFC First Southeast Financial Corp SC 350,038 35,978 35,978
FSPT FirstSpartan Financial Corp. SC 482,314 129,234 129,234
PALM Palfed Inc. SC 668,504 56,928 56,928
SCCB S. Carolina Community Bancshrs SC 45,619 12,126 12,126
HFFC HF Financial Corp. SD 574,889 54,185 54,182
TWIN Twin City Bancorp TN 106,931 13,840 13,840
BNKU Bank United Corp. TX 11,967,072 598,479 584,874
CBSA Coastal Bancorp Inc. TX 2,929,560 101,656 85,465
ETFS East Texas Financial Services TX 115,949 20,879 20,879
FBHC Fort Bend Holding Corp. TX 319,414 19,671 18,368
GLMR Gilmer Financial Svcs, Inc. TX 42,171 3,803 3,803
JXVL Jacksonville Bancorp Inc. TX 226,182 33,745 33,745
PROFITABILITY
**************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHEN First Shenango Bancorp Inc. 1.17 1.17 10.51 10.46
GAF GA Financial Inc. 1.09 1.07 6.26 6.10
HARL Harleysville Savings Bank 1.04 1.04 16.14 16.17
LARL Laurel Capital Group Inc. 1.46 1.41 14.07 13.60
MLBC ML Bancorp Inc. 0.72 0.51 9.90 7.09
PVSA Parkvale Financial Corporation 1.08 1.08 14.93 14.93
PWBC PennFirst Bancorp Inc. 0.66 0.66 8.60 8.61
PWBK Pennwood Bancorp Inc. 0.99 1.08 5.20 5.66
PHFC Pittsburgh Home Financial Corp 0.85 0.76 6.70 6.02
PRBC Prestige Bancorp Inc. 0.62 0.62 5.10 5.11
PFNC Progress Financial Corp. 0.89 0.71 17.19 13.62
SHSB SHS Bancorp Inc. NA NA NA NA
SVRN Sovereign Bancorp Inc. 0.53 0.65 10.12 12.46
THRD TF Financial Corp. 0.78 0.67 6.96 6.02
USAB USABancshares, Inc. 0.53 0.47 4.57 4.08
WVFC WVS Financial Corp. 1.29 1.28 10.68 10.65
YFED York Financial Corp. 0.95 0.80 11.47 9.70
CFCP Coastal Financial Corp. 1.21 1.05 19.36 16.81
FFCH First Financial Holdings Inc. 0.87 0.85 14.22 13.85
FSFC First Southeast Financial Corp 1.05 1.05 10.32 10.32
FSPT FirstSpartan Financial Corp. 1.08 1.07 7.51 7.47
PALM Palfed Inc. 0.39 0.67 4.87 8.22
SCCB S. Carolina Community Bancshrs 1.15 1.15 4.37 4.37
HFFC HF Financial Corp. 1.02 0.94 11.03 10.13
TWIN Twin City Bancorp 0.85 0.72 6.65 5.59
BNKU Bank United Corp. 0.69 0.54 13.50 10.48
CBSA Coastal Bancorp Inc. 0.42 0.40 12.44 11.94
ETFS East Texas Financial Services 0.67 0.62 3.67 3.44
FBHC Fort Bend Holding Corp. 0.66 0.51 10.61 8.12
GLMR Gilmer Financial Svcs, Inc. 0.06 0.32 0.59 3.36
JXVL Jacksonville Bancorp Inc. 1.02 1.33 6.42 8.42
CAPITAL ISSUES
********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
SHEN First Shenango Bancorp Inc. 04-06-93 NASDAQ 2,069,007 65.17
GAF GA Financial Inc. 03-26-96 AMSE 7,972,900 148.50
HARL Harleysville Savings Bank 08-04-87 NASDAQ 1,661,626 44.03
LARL Laurel Capital Group Inc. 02-20-87 NASDAQ 1,445,957 35.97
MLBC ML Bancorp Inc. 08-11-94 NASDAQ 11,865,567 324.82
PVSA Parkvale Financial Corporation 07-16-87 NASDAQ 5,105,905 133.26
PWBC PennFirst Bancorp Inc. 06-13-90 NASDAQ 5,310,173 93.59
PWBK Pennwood Bancorp Inc. 07-15-96 NASDAQ 569,622 10.11
PHFC Pittsburgh Home Financial Corp 04-01-96 NASDAQ 1,969,369 37.66
PRBC Prestige Bancorp Inc. 06-27-96 NASDAQ 914,873 17.27
PFNC Progress Financial Corp. 07-18-83 NASDAQ 4,010,116 58.90
SHSB SHS Bancorp Inc. 10-01-97 NASDAQ NA NA
SVRN Sovereign Bancorp Inc. 08-12-86 NASDAQ 89,275,475 1562.32
THRD TF Financial Corp. 07-13-94 NASDAQ 4,088,432 103.74
USAB USABancshares, Inc. NA NASDAQ 732,426 6.23
WVFC WVS Financial Corp. 11-29-93 NASDAQ 1,747,920 50.91
YFED York Financial Corp. 02-01-84 NASDAQ 8,806,398 181.41
CFCP Coastal Financial Corp. 09-26-90 NASDAQ 4,646,534 106.29
FFCH First Financial Holdings Inc. 11-10-83 NASDAQ 6,368,262 241.20
FSFC First Southeast Financial Corp 10-08-93 NASDAQ 4,388,231 70.49
FSPT FirstSpartan Financial Corp. 07-09-97 NASDAQ 4,430,375 171.68
PALM Palfed Inc. 12-15-85 NASDAQ 5,299,201 130.49
SCCB S. Carolina Community Bancshrs 07-07-94 NASDAQ 698,733 16.33
HFFC HF Financial Corp. 04-08-92 NASDAQ 2,803,400 72.19
TWIN Twin City Bancorp 01-04-95 NASDAQ 1,272,447 17.18
BNKU Bank United Corp. 08-09-96 NASDAQ 31,595,596 1398.11
CBSA Coastal Bancorp Inc. NA NASDAQ 4,992,203 161.00
ETFS East Texas Financial Services 01-10-95 NASDAQ 1,026,366 21.04
FBHC Fort Bend Holding Corp. 06-30-93 NASDAQ 1,655,754 33.12
GLMR Gilmer Financial Svcs, Inc. 02-09-95 NASDAQ 191,258 2.10
JXVL Jacksonville Bancorp Inc. 04-01-96 NASDAQ 2,490,068 37.51
</TABLE>
<PAGE> 148
KELLER & COMPANY Page 12
Dublin, Ohio
614-766-1426
KEY FINANCIAL DATA AND RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
ASSETS AND EQUITY
*****************************************************
Total Total Total
Assets Equity Tang. Equity
State ($000) ($000) ($000)
----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
BFSB Bedford Bancshares Inc. VA 139,179 19,621 19,621
CNIT CENIT Bancorp Inc. VA 701,708 48,739 44,638
CFFC Community Financial Corp. VA 183,278 24,213 24,213
ESX Essex Bancorp Inc. VA 191,886 15,028 14,853
FFFC FFVA Financial Corp. VA 567,266 75,499 73,981
LIFB Life Bancorp Inc. VA 1,486,357 159,280 154,881
VABF Virginia Beach Fed. Financial VA 605,486 43,320 43,320
VFFC Virginia First Financial Corp. VA 853,557 69,136 66,918
CASB Cascade Financial Corp. WA 426,451 28,311 28,311
FMSB First Mutual Savings Bank WA 451,120 30,637 30,637
FWWB First SB of Washington Bancorp WA 1,098,615 150,295 138,838
HRZB Horizon Financial Corp. WA 531,028 83,044 83,044
IWBK InterWest Bancorp Inc. WA 2,046,705 129,824 127,516
RVSB Riverview Bancorp Inc. WA 282,247 58,556 56,390
STSA Sterling Financial Corp. WA 1,870,513 98,250 89,924
WFSL Washington Federal Inc. WA 5,719,589 717,745 658,971
WAMU Washington Mutual Inc. WA 95,607,369 5,337,105 4,964,585
AADV Advantage Bancorp Inc. WI 1,037,462 99,004 92,102
ABCW Anchor BanCorp Wisconsin WI 1,954,749 125,150 122,971
FCBF FCB Financial Corp. WI 522,991 72,633 72,633
FTFC First Federal Capital Corp. WI 1,559,672 105,029 98,984
FNGB First Northern Capital Corp. WI 656,745 72,801 72,801
HALL Hallmark Capital Corp. WI 418,467 30,555 30,555
MWFD Midwest Federal Financial WI 211,689 19,047 18,415
NWEQ Northwest Equity Corp. WI 96,954 11,333 11,333
RELI Reliance Bancshares Inc. WI 46,987 22,698 22,698
STFR St. Francis Capital Corp. WI 1,661,916 129,797 114,976
AFBC Advance Financial Bancorp WV 105,717 16,279 16,279
FOBC Fed One Bancorp WV 357,721 39,980 38,210
CRZY Crazy Woman Creek Bancorp WY 59,952 14,210 14,210
TRIC Tri-County Bancorp Inc. WY 88,173 13,503 13,503
PROFITABILITY
**************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
BFSB Bedford Bancshares Inc. 1.20 1.19 8.39 8.34
CNIT CENIT Bancorp Inc. 0.80 0.78 11.24 10.96
CFFC Community Financial Corp. 1.12 1.13 8.18 8.22
ESX Essex Bancorp Inc. 0.12 0.02 1.41 0.30
FFFC FFVA Financial Corp. 1.40 1.35 10.37 9.97
LIFB Life Bancorp Inc. 0.92 0.86 8.70 8.10
VABF Virginia Beach Fed. Financial 0.62 0.49 9.13 7.24
VFFC Virginia First Financial Corp. 0.94 0.50 11.68 6.22
CASB Cascade Financial Corp. 0.61 0.61 9.61 9.55
FMSB First Mutual Savings Bank 1.03 1.00 15.32 15.00
FWWB First SB of Washington Bancorp 1.25 1.17 8.47 7.97
HRZB Horizon Financial Corp. 1.58 1.55 10.18 9.95
IWBK InterWest Bancorp Inc. 1.12 0.98 16.98 14.90
RVSB Riverview Bancorp Inc. 1.26 1.23 11.33 11.07
STSA Sterling Financial Corp. 0.59 0.54 10.33 9.50
WFSL Washington Federal Inc. 1.86 1.85 15.71 15.62
WAMU Washington Mutual Inc. 0.18 0.68 3.15 11.92
AADV Advantage Bancorp Inc. 1.05 0.94 11.67 10.49
ABCW Anchor BanCorp Wisconsin 1.00 0.93 15.57 14.53
FCBF FCB Financial Corp. 1.05 1.09 6.67 6.92
FTFC First Federal Capital Corp. 1.08 0.90 16.79 13.94
FNGB First Northern Capital Corp. 0.93 0.89 8.20 7.88
HALL Hallmark Capital Corp. 0.65 0.63 9.10 8.94
MWFD Midwest Federal Financial 1.45 1.11 16.71 12.82
NWEQ Northwest Equity Corp. 1.03 0.99 8.75 8.42
RELI Reliance Bancshares Inc. 1.32 1.29 2.58 2.52
STFR St. Francis Capital Corp. 0.89 0.74 10.76 8.94
AFBC Advance Financial Bancorp 0.88 0.86 6.11 5.92
FOBC Fed One Bancorp 0.94 0.94 8.31 8.26
CRZY Crazy Woman Creek Bancorp 1.28 1.30 4.74 4.79
TRIC Tri-County Bancorp Inc. 1.05 1.07 7.13 7.26
CAPITAL ISSUES
********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
BFSB Bedford Bancshares Inc. 08-22-94 NASDAQ 1,142,425 27.99
CNIT CENIT Bancorp Inc. 08-06-92 NASDAQ 1,654,391 102.16
CFFC Community Financial Corp. 03-30-88 NASDAQ 1,275,373 27.42
ESX Essex Bancorp Inc. 07-18-90 AMSE 1,057,682 5.02
FFFC FFVA Financial Corp. 10-12-94 NASDAQ 4,521,600 143.00
LIFB Life Bancorp Inc. 10-11-94 NASDAQ 9,847,581 259.73
VABF Virginia Beach Fed. Financial 11-01-80 NASDAQ 4,978,795 80.91
VFFC Virginia First Financial Corp. 01-01-78 NASDAQ 5,813,762 139.53
CASB Cascade Financial Corp. 09-16-92 NASDAQ 3,385,358 51.20
FMSB First Mutual Savings Bank 12-17-85 NASDAQ 4,067,130 72.53
FWWB First SB of Washington Bancorp 11-01-95 NASDAQ 10,246,513 253.60
HRZB Horizon Financial Corp. 08-01-86 NASDAQ 7,433,701 119.41
IWBK InterWest Bancorp Inc. NA NASDAQ 8,050,266 324.02
RVSB Riverview Bancorp Inc. 10-26-93 NASDAQ 6,127,938 78.54
STSA Sterling Financial Corp. NA NASDAQ 7,567,091 144.25
WFSL Washington Federal Inc. 11-17-82 NASDAQ 47,508,759 1407.45
WAMU Washington Mutual Inc. 03-11-83 NASDAQ 257,176,039 17938.03
AADV Advantage Bancorp Inc. 03-23-92 NASDAQ 3,235,830 184.44
ABCW Anchor BanCorp Wisconsin 07-16-92 NASDAQ 9,053,564 263.69
FCBF FCB Financial Corp. 09-24-93 NASDAQ 3,879,441 104.74
FTFC First Federal Capital Corp. 11-02-89 NASDAQ 9,164,902 265.78
FNGB First Northern Capital Corp. 12-29-83 NASDAQ 8,840,200 120.45
HALL Hallmark Capital Corp. 01-03-94 NASDAQ 2,885,900 37.16
MWFD Midwest Federal Financial 07-08-92 NASDAQ 1,627,674 38.25
NWEQ Northwest Equity Corp. 10-11-94 NASDAQ 838,754 13.52
RELI Reliance Bancshares Inc. 04-19-96 NASDAQ 2,472,075 21.01
STFR St. Francis Capital Corp. 06-21-93 NASDAQ 5,238,000 195.77
AFBC Advance Financial Bancorp 01-02-97 NASDAQ 1,084,450 17.62
FOBC Fed One Bancorp 01-19-95 NASDAQ 2,373,181 60.52
CRZY Crazy Woman Creek Bancorp 03-29-96 NASDAQ 954,845 14.38
TRIC Tri-County Bancorp Inc. 09-30-93 NASDAQ 583,749 13.50
</TABLE>
<PAGE> 149
KELLER & COMPANY Page 13
Dublin, Ohio
614-766-1426
KEY FINANCIAL DATA AND RATIOS
PUBLICLY-TRADED, FDIC-INSURED THRIFT INSTITUTIONS
(EXCLUDING MUTUAL HOLDING COMPANIES)
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
ASSETS AND EQUITY
*****************************************************
Total Total Total
Assets Equity Tang. Equity
State ($000) ($000) ($000)
----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
ALL THRIFTS
AVERAGE 1,465,609 110,687 103,408
MEDIAN 343,684 37,816 36,707
HIGH 95,607,369 5,337,105 4,964,585
LOW 34,591 3,803 3,803
AVERAGE FOR STATE
OH 820,590 70,092 66,242
AVERAGE BY REGION
MIDWEST 618,558 58,457 55,722
NEW ENGLAND 855,812 85,574 84,703
MID ATLANTIC 1,205,089 117,505 104,100
SOUTHEAST 868,922 68,412 64,135
SOUTHWEST 390,902 47,951 47,211
WEST 4,229,833 268,514 262,841
AVERAGE BY EXCHANGE
NYSE 13,281,731 858,050 773,884
AMEX 427,272 46,490 44,473
OTC/NASDAQ 1,085,390 86,522 81,704
PROFITABILITY
************************************************** **
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
-------------------------------------------------- -
<S> <C> <C> <C> <C> <C>
ALL THRIFTS 0.86 0.84 8.74 8.36
AVERAGE 0.94 0.90 8.34 7.91
MEDIAN 4.13 3.97 46.76 44.97
HIGH -28.08 -28.75 -68.24 -69.85
LOW
AVERAGE FOR STATE 1.01 0.98 8.73 8.46
OH
AVERAGE BY REGION 0.91 0.90 8.55 8.37
MIDWEST 0.89 0.79 8.41 6.90
NEW ENGLAND 1.10 1.08 8.47 8.22
MID ATLANTIC 0.52 0.47 8.63 8.00
SOUTHEAST 1.06 0.99 7.46 7.06
SOUTHWEST 0.81 0.78 9.65 9.19
WEST
AVERAGE BY EXCHANGE 1.12 0.91 15.31 12.98
NYSE 0.77 0.84 5.95 6.41
AMEX 0.86 0.83 8.70 8.34
OTC/NASDAQ
CAPITAL ISSUES
********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ALL THRIFTS 6,801,232 226.65
AVERAGE 2,669,683 55.36
MEDIAN 57,176,039 17,938.03
HIGH 191,258 2.10
LOW
AVERAGE FOR STATE 4,180,090 142.40
OH
AVERAGE BY REGION 3,911,510 94.63
MIDWEST 6,774,072 141.97
NEW ENGLAND 7,457,563 219.01
MID ATLANTIC 5,286,350 141.77
SOUTHEAST 3,515,419 65.81
SOUTHWEST 12,794,278 531.32
WEST
AVERAGE BY EXCHANGE 41,653,708 1,755.68
NYSE 3,442,219 67.63
AMEX 5,689,536 178.80
OTC/NASDAQ
</TABLE>
<PAGE> 150
KELLER & COMPANY
Dublin, Ohio
614-766-1426
EXHIBIT 32
RECENTLY CONVERTED THRIFT INSTITUTIONS
PRICES AND PRICING RATIOS
<TABLE>
<CAPTION>
IPO CLOSING RATIOS CURRENT RATIOS
************************************ *********************************
Price/ Price/ Price/ Price/
Price/ Book Tang. Bk.Price/ Price/ Book Tang. Bk.Price/
IPO Earnings Value Value Assets Earnings Value Value Assets
Date (X) (%) (%) (%) (X) (%) (%) (%)
---------- --------- --------- ------ ----- ------ ------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AFBC Advance Financial Bancorp WV 01/02/97 16.80 71.10 71.09 10.60 22.19 118.25 118.25 18.21
RSLN Roslyn Bancorp Inc. NY 01/13/97 9.30 72.00 71.98 21.00 19.42 154.91 155.69 27.32
FAB FirstFed America Bancorp Inc. MA 01/15/97 13.60 72.00 72.02 10.70 23.44 131.96 131.96 17.33
EFBC Empire Federal Bancorp Inc. MT 01/27/97 21.50 68.10 68.09 23.00 24.26 106.38 106.38 38.70
MRKF Market Financial Corp. OH 03/27/97 26.20 71.10 71.07 22.70 25.42 102.42 102.42 36.29
GSLA GS Financial Corp. LA 04/01/97 38.70 63.80 63.75 28.40 26.10 107.97 107.97 46.56
HMLK Hemlock Federal Financial Corp IL 04/02/97 37.50 71.60 71.62 12.40 19.60 114.54 114.54 22.12
PLSK Pulaski Savings Bank (MHC) NJ 04/03/97 18.20 103.20 103.15 5.70 29.30 180.98 180.98 21.68
SKBO First Carnegie Deposit (MHC) PA 04/04/97 117.30 98.80 98.80 7.10 33.26 175.54 175.54 29.12
PSFC Peoples-Sidney Financial Corp. OH 04/28/97 11.50 71.20 71.24 17.00 21.56 109.73 109.73 29.95
HCBB HCB Bancshares Inc. AR 05/07/97 29.00 72.00 71.95 13.40 30.97 94.42 97.95 18.02
* MONT Montgomery Financial Corp. IN 07/01/97 NA NA NA NA NA 104.26 104.26 19.96
CFBC Community First Banking Co. GA 07/01/97 36.10 72.70 72.74 12.00 NA 121.86 123.51 23.47
FBNW FirstBank Corp. ID 07/02/97 19.20 71.90 71.93 13.00 NA 110.23 110.23 19.66
FSPT FirstSpartan Financial Corp. SC 07/09/97 26.00 73.00 72.98 19.10 NA 128.56 128.56 34.44
GOSB GSB Financial Corp. NY 07/09/97 23.20 73.40 73.44 18.90 NA NA NA NA
PHSB Peoples Home Savings Bk (MHC) PA 07/10/97 30.10 106.20 106.17 5.80 NA 182.24 182.24 24.90
* FSNJ Bayonne Bancshares Inc. NJ 08/22/97 NA NA NA NA NA 113.42 113.42 17.72
OSFS Ohio State Financial Services OH 09/29/97 17.00 63.30 63.33 15.70 NA 89.56 89.56 24.26
SHSB SHS Bancorp Inc. PA 10/01/97 13.90 70.70 70.73 9.10 NA NA NA NA
OTFC Oregon Trail Financial Corp. OR 10/06/97 18.50 76.60 76.63 18.70 NA NA NA NA
FSFF First SecurityFed Financial IL 10/31/97 21.30 73.40 73.44 19.80 NA NA NA NA
<CAPTION>
PRICES AND CHANGE FROM IPO DATE
*****************************************************
1 Day 1 Week 1 Mo.
IPO After After After
Price IPO % IPO % IPO %
($) ($) Change ($) Change ($) Change
------ -------- ------ ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
AFBC Advance Financial Bancorp WV 10.00 12.88 28.75 12.94 29.38 14.00 40.00
RSLN Roslyn Bancorp Inc. NY 10.00 15.00 50.00 15.94 59.38 16.00 60.00
FAB FirstFed America Bancorp Inc. MA 10.00 13.63 36.25 14.13 41.25 14.88 48.75
EFBC Empire Federal Bancorp Inc. MT 10.00 13.25 32.50 13.50 35.00 13.75 37.50
MRKF Market Financial Corp. OH 10.00 12.94 29.38 12.25 22.50 12.63 26.25
GSLA GS Financial Corp. LA 10.00 13.38 33.75 13.75 37.50 14.00 40.00
HMLK Hemlock Federal Financial Corp IL 10.00 12.88 28.75 12.88 28.75 13.00 30.00
PLSK Pulaski Savings Bank (MHC) NJ 10.00 11.50 15.00 12.00 20.00 11.86 18.59
SKBO First Carnegie Deposit (MHC) PA 10.00 11.63 16.25 13.00 30.00 12.88 28.75
PSFC Peoples-Sidney Financial Corp. OH 10.00 12.56 25.63 12.88 28.75 13.25 32.50
HCBB HCB Bancshares Inc. AR 10.00 12.63 26.25 12.75 27.50 12.88 28.75
* MONT Montgomery Financial Corp. IN 10.00 11.13 11.25 11.25 12.50 12.06 20.63
CFBC Community First Banking Co. GA 20.00 31.88 59.38 33.00 65.00 34.00 70.00
FBNW FirstBank Corp. ID 10.00 15.81 58.13 15.56 55.63 17.75 77.50
FSPT FirstSpartan Financial Corp. SC 20.00 36.69 83.44 37.00 85.00 35.63 78.13
GOSB GSB Financial Corp. NY 10.00 14.63 46.25 14.88 48.75 14.38 43.75
PHSB Peoples Home Savings Bk (MHC) PA 10.00 14.00 40.00 13.75 37.50 14.00 40.00
* FSNJ Bayonne Bancshares Inc. NJ 10.00 11.75 17.50 11.88 18.75 12.69 26.88
OSFS Ohio State Financial Services OH 10.00 15.50 55.00 15.37 53.70 14.96 49.60
SHSB SHS Bancorp Inc. PA 10.00 14.75 47.50 16.25 62.50 16.00 60.00
OTFC Oregon Trail Financial Corp. OR 10.00 16.75 67.50 16.38 63.75 16.13 61.25
FSFF First SecurityFed Financial IL 10.00 15.06 50.63 15.13 51.25 16.06 60.63
</TABLE>
* Second stage conversion.
<PAGE> 151
EXHIBIT 33
KELLER & COMPANY
Dublin, Ohio
614-766-1426
ACQUISITIONS AND PENDING ACQUISITIONS
COUNTY, CITY OR MARKET AREA OF THE HOME LOAN SAVINGS BANK
NONE
<PAGE> 152
EXHIBIT 34
KELLER & COMPANY
Dublin, Ohio
614-766-1426
THRIFT STOCK PRICES AND PRICING RATIOS
PUBLICLY-TRADED, FDIC-INSURED MUTUAL HOLDING COMPANIES
AS OF NOVEMBER 28, 1997
<TABLE>
<CAPTION>
PER SHARE
**************************************************************************
Latest All Time All Time Monthly Quarterly Book 12 Month
Price High Low Change Change Value Assets Div.
State Exchange ($) ($) ($) (%) (%) ($) ($) ($)
----- -------- ----------- ------- -------- ------- --------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PFSL Pocahontas FS&LA (MHC) AR NASDAQ 34.000 37.125 9.500 -2.16 24.77 14.85 234.88 0.89
PBCT People's Bank (MHC) CT NASDAQ 33.688 37.375 1.250 2.86 21.40 11.41 126.48 0.63
CMSV Community Savings Bnkshrs(MHC) FL NASDAQ 35.000 39.750 10.000 -0.71 12.00 16.22 139.20 0.88
FFFL Fidelity Bankshares Inc. (MHC) FL NASDAQ 27.875 32.500 9.091 3.24 4.69 12.36 147.59 0.80
HARB Harbor Florida Bancorp (MHC) FL NASDAQ 65.000 69.750 11.875 4.00 19.54 19.46 227.41 1.35
FFSX First Fed SB of Siouxland(MHC) IA NASDAQ 31.875 35.000 8.239 -0.39 13.84 14.08 161.26 0.48
WCFB Webster City Federal SB (MHC) IA NASDAQ 20.250 22.000 8.813 -3.57 21.80 10.52 44.99 0.80
JXSB Jacksonville Savings Bk (MHC) IL NASDAQ 26.750 29.500 10.000 0.94 27.38 13.62 129.10 0.40
LFED Leeds Federal Savings Bk (MHC) MD NASDAQ 21.500 22.750 6.583 2.38 27.73 9.19 55.08 0.49
GFED Guaranty Federal SB (MHC) MO NASDAQ 23.750 27.875 8.000 5.56 27.52 8.76 67.24 0.60
PULB Pulaski Bank, Svgs Bank (MHC) MO NASDAQ 30.500 32.500 10.500 3.39 25.13 11.23 86.07 1.00
FSLA First Savings Bank (MHC) NJ NASDAQ 40.375 47.500 4.611 -14.10 48.04 12.39 130.45 0.39
PLSK Pulaski Savings Bank (MHC) NJ NASDAQ 18.750 24.500 11.500 2.74 11.94 10.36 86.47 NA
TSBS Trenton SB (MHC) NJ NASDAQ 34.750 39.125 11.375 5.30 19.31 11.97 70.63 0.35
PBHC Oswego City Savings Bk (MHC) NY NASDAQ 28.500 29.500 8.250 3.64 49.02 12.02 100.70 0.24
SBFL SB of the Finger Lakes (MHC) NY NASDAQ 29.250 29.500 8.125 4.46 27.17 11.92 127.71 0.40
WAYN Wayne Svgs Community Bank(MHC) OH NASDAQ 31.000 32.000 7.503 21.57 47.62 10.58 110.96 0.62
SKBO First Carnegie Deposit (MHC) PA NASDAQ 18.625 19.875 11.625 4.20 22.13 10.61 63.96 NA
GDVS Greater Delaware Valley (MHC) PA NASDAQ 31.000 32.500 9.250 9.73 49.40 8.85 76.03 0.36
HARS Harris Financial Inc. (MHC) PA NASDAQ 19.000 20.750 4.250 5.56 54.06 5.12 62.47 0.19
NWSB Northwest Savings Bank (MHC) PA NASDAQ 14.000 16.375 3.688 -3.87 25.84 4.33 44.93 0.16
PHSB Peoples Home Savings Bk (MHC) PA NASDAQ 18.625 19.750 13.625 4.93 17.32 10.22 74.79 NA
PERT Perpetual Bank (MHC) SC NASDAQ 51.000 58.000 20.250 0.00 26.71 20.14 170.29 1.60
ALL MUTUAL HOLDING COMPANIES
AVERAGE 29.785 32.848 9.039 2.60 27.15 11.75 110.38 0.63
MEDIAN 29.250 32.000 9.091 3.24 25.13 11.41 100.70 0.55
HIGH 65.000 69.750 20.250 21.57 54.06 20.14 234.88 1.60
LOW 14.000 16.375 1.250 -14.10 4.69 4.33 44.93 0.16
<CAPTION>
PRICING RATIOS
**************************************
Price/ Price/ Price/ Price/Core
Earnings Bk. Value Assets Earnings
(X) (%) (%) (X)
-------- --------- ------- -------
<S> <C> <C> <C> <C>
PFSL Pocahontas FS&LA (MHC) 23.29 228.96 14.48 23.45
PBCT People's Bank (MHC) 23.56 295.25 26.64 36.22
CMSV Community Savings Bnkshrs(MHC) 32.41 215.78 25.14 35.35
FFFL Fidelity Bankshares Inc. (MHC) 55.75 225.53 18.89 34.84
HARB Harbor Florida Bancorp (MHC) 24.44 334.02 28.58 24.62
FFSX First Fed SB of Siouxland(MHC) 26.79 226.38 19.77 27.48
WCFB Webster City Federal SB (MHC) 31.15 192.49 45.01 31.15
JXSB Jacksonville Savings Bk (MHC) 33.86 196.40 20.72 40.53
LFED Leeds Federal Savings Bk (MHC) 33.08 233.95 39.03 33.08
GFED Guaranty Federal SB (MHC) 38.31 271.12 35.32 39.58
PULB Pulaski Bank, Svgs Bank (MHC) 52.59 271.59 35.44 39.10
FSLA First Savings Bank (MHC) 36.05 325.87 30.95 34.51
PLSK Pulaski Savings Bank (MHC) NA 180.98 21.68 NA
TSBS Trenton SB (MHC) 39.94 290.31 49.20 56.97
PBHC Oswego City Savings Bk (MHC) 26.64 237.10 28.30 29.69
SBFL SB of the Finger Lakes (MHC) 66.48 245.39 22.90 100.86
WAYN Wayne Svgs Community Bank(MHC) 38.27 293.01 27.94 40.79
SKBO First Carnegie Deposit (MHC) NA 175.54 29.12 NA
GDVS Greater Delaware Valley (MHC) 45.59 350.28 40.77 45.59
HARS Harris Financial Inc. (MHC) 36.54 371.09 30.41 44.19
NWSB Northwest Savings Bank (MHC) 32.56 323.33 31.16 33.33
PHSB Peoples Home Savings Bk (MHC) NA 182.24 24.90 NA
PERT Perpetual Bank (MHC) 43.22 253.23 29.95 31.68
ALL MUTUAL HOLDING COMPANIES
AVERAGE 37.03 257.38 29.40 39.15
MEDIAN 34.96 245.39 28.58 35.10
HIGH 66.48 371.09 49.20 100.86
LOW 23.29 175.54 14.48 23.45
</TABLE>
<PAGE> 153
EXHIBIT 35
KELLER & COMPANY
Dublin, Ohio
614-766-1426
KEY FINANCIAL DATA AND RATIOS
PUBLICLY-TRADED, FDIC-INSURED MUTUAL HOLDING COMPANIES
AS OF NOVEMBER 12, 1997
<TABLE>
<CAPTION>
ASSETS AND EQUITY PROFITABILITY
************************************** *******************************
Total Total Total Core Core
Assets Equity Tang. Equity ROAA ROAA ROAE ROAE
State ($000) ($000) ($000) (%) (%) (%) (%)
----- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PFSL Pocahontas FS&LA (MHC) AR 383,417 24,246 24,246 0.63 0.62 10.07 9.98
PBCT People's Bank (MHC) CT 7,731,200 697,500 696,700 1.14 0.74 13.69 8.90
CMSV Community Savings Bnkshrs(MHC) FL 709,220 80,442 80,442 0.80 0.74 7.02 6.46
FFFL Fidelity Bankshares Inc. (MHC) FL 999,289 83,679 83,075 0.38 0.59 4.13 6.47
HARB Harbor Florida Bancorp (MHC) FL 1,131,024 96,802 93,757 1.22 1.20 14.72 14.58
FFSX First Fed SB of Siouxland(MHC) IA 456,850 39,882 39,562 0.73 0.71 8.82 8.61
WCFB Webster City Federal SB (MHC) IA 94,481 22,086 22,086 1.42 1.42 6.09 6.09
JXSB Jacksonville Savings Bk (MHC) IL 164,235 17,331 17,331 0.64 0.54 6.04 5.05
LFED Leeds Federal Savings Bk (MHC) MD 285,425 47,489 47,489 1.19 1.19 7.30 7.30
GFED Guaranty Federal SB (MHC) MO 210,139 27,360 27,360 0.99 0.97 6.95 6.78
PULB Pulaski Bank, Svgs Bank (MHC) MO 180,232 23,506 23,506 0.67 0.92 5.21 7.16
FSLA First Savings Bank (MHC) NJ 1,044,513 99,213 90,195 0.89 0.93 9.58 9.99
PLSK Pulaski Savings Bank (MHC) NJ 178,987 21,447 21,447 0.64 0.62 7.03 6.82
TSBS Trenton SB (MHC) NJ 638,942 108,239 97,405 1.28 0.90 7.47 5.26
PBHC Oswego City Savings Bk (MHC) NY 193,005 23,044 19,360 1.06 0.95 9.21 8.27
SBFL SB of the Finger Lakes (MHC) NY 227,970 21,284 21,284 0.37 0.24 3.83 2.51
WAYN Wayne Svgs Community Bank(MHC) OH 250,241 23,869 23,869 0.73 0.69 7.85 7.40
SKBO First Carnegie Deposit (MHC) PA 147,102 24,407 24,407 0.59 0.54 4.83 4.45
GDVS Greater Delaware Valley (MHC) P 248,792 28,957 28,957 0.93 0.93 7.95 7.95
HARS Harris Financial Inc. (MHC) PA 2,110,299 173,017 153,016 0.93 0.77 11.16 9.21
NWSB Northwest Savings Bank (MHC) PA 2,100,744 202,442 191,118 0.97 0.96 9.96 9.84
PHSB Peoples Home Savings Bk (MHC) PA 206,426 28,213 28,213 0.83 0.80 8.86 8.55
PERT Perpetual Bank (MHC) SC 256,211 30,302 30,302 0.79 1.11 6.46 9.03
ALL MUTUAL HOLDING COMPANIES
AVERAGE 867,337 84,555 81,962 0.86 0.83 8.01 7.68
MEDIAN 256,211 28,957 28,957 0.83 0.80 7.47 7.40
HIGH 7,731,200 697,500 696,700 1.42 1.42 14.72 14.58
LOW 94,481 17,331 17,331 0.37 0.24 3.83 2.51
<CAPTION>
CAPITAL ISSUES
*********************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
-------------------------------------------------
<S> <C> <C> <C> <C>
PFSL Pocahontas FS&LA (MHC) 04/05/94 NASDAQ 1,632,424 53.87
PBCT People's Bank (MHC) 07/06/88 NASDAQ 61,125,869 1959.88
CMSV Community Savings Bnkshrs(MHC) 10/24/94 NASDAQ 5,094,920 184.69
FFFL Fidelity Bankshares Inc. (MHC) 01/07/94 NASDAQ 6,770,654 133.72
HARB Harbor Florida Bancorp (MHC) 01/06/94 NASDAQ 4,973,428 278.51
FFSX First Fed SB of Siouxland(MHC) 07/13/92 NASDAQ 2,833,043 83.57
WCFB Webster City Federal SB (MHC) 08/15/94 NASDAQ 2,100,000 39.90
JXSB Jacksonville Savings Bk (MHC) 04/21/95 NASDAQ 1,272,140 26.71
LFED Leeds Federal Savings Bk (MHC) 05/02/94 NASDAQ 5,182,104 104.51
GFED Guaranty Federal SB (MHC) 04/10/95 NASDAQ 3,125,000 70.31
PULB Pulaski Bank, Svgs Bank (MHC) 05/11/94 NASDAQ 2,094,000 38.48
FSLA First Savings Bank (MHC) 07/10/92 NASDAQ 8,006,921 258.41
PLSK Pulaski Savings Bank (MHC) 04/03/97 NASDAQ 2,070,000 37.78
TSBS Trenton SB (MHC) 08/03/95 NASDAQ 9,045,795 299.64
PBHC Oswego City Savings Bk (MHC) 11/16/95 NASDAQ 1,916,666 42.41
SBFL SB of the Finger Lakes (MHC) 11/11/94 NASDAQ 1,785,000 42.84
WAYN Wayne Svgs Community Bank(MHC) 06/25/93 NASDAQ 2,255,287 55.82
SKBO First Carnegie Deposit (MHC) 04/04/97 NASDAQ 2,300,000 43.99
GDVS Greater Delaware Valley (MHC) 03/03/95 NASDAQ 3,272,500 82.63
HARS Harris Financial Inc. (MHC) 01/25/94 NASDAQ 33,779,325 532.02
NWSB Northwest Savings Bank (MHC) 11/07/94 NASDAQ 46,753,120 599.05
PHSB Peoples Home Savings Bk (MHC) 07/10/97 NASDAQ 2,760,000 46.92
PERT Perpetual Bank (MHC) 10/26/93 NASDAQ 1,504,601 44.39
ALL MUTUAL HOLDING COMPANIES
AVERAGE 9,202,296 220.00
MEDIAN 2,833,043 70.31
HIGH 61,125,869 1,959.88
LOW 1,272,140 26.71
</TABLE>
<PAGE> 154
EXHIBIT 36
KELLER & COMPANY Page 1
Columbus, Ohio
614-766-1426
COMPARABLE GROUP SELECTION
BALANCE SHEET PARAMETERS
General Parameters:
States: IA IL IN KY MI OH PA WI
IPO Date: less than = 09/30/97
Asset size: less than = $200,000
<TABLE>
<CAPTION>
Cash & 1-4 Fam. Total Net
Total Invest./ MBS/ Loans/ Loans/
Assets Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%) (%)
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK -- 59,853 11.26 0.00 62.18 86.50
DEFINED PARAMETERS FOR Prior to Less than 5.00 - Less than 35.00 - 55.00 -
INCLUSION IN COMPARABLE GROUP 09/30/96 200,000 35.00 25.00 70.00 90.00
LONF London Financial Corporation OH 04/01/96 38,240 11.73 9.62 57.06 77.07
HWEN Home Financial Bancorp IN 07/02/96 41,309 9.69 1.80 55.90 84.94
HBBI Home Building Bancorp IN 02/08/95 41,746 16.94 11.76 51.70 68.46
RELI Reliance Bancshares Inc. WI 04/19/96 46,987 40.26 1.11 23.65 57.54
FLKY First Lancaster Bancshares KY 07/01/96 47,184 6.92 1.09 61.76 90.37
PWBK Pennwood Bancorp Inc. PA 07/15/96 47,645 32.16 3.91 35.63 60.16
CSBF CSB Financial Group Inc. IL 10/09/95 48,844 38.20 2.73 38.19 55.41
CKFB CKF Bancorp Inc. KY 01/04/95 59,868 5.45 0.68 69.58 92.12
ATSB AmTrust Capital Corp. IN 03/28/95 69,685 18.14 5.78 39.17 70.79
MSBF MSB Financial Inc. MI 02/06/95 77,014 6.20 0.01 55.58 91.60
FFBI First Financial Bancorp Inc. IL 10/04/93 84,242 27.49 2.31 69.98 66.62
SOBI Sobieski Bancorp Inc. IN 03/31/95 84,279 4.70 15.59 54.72 76.57
LOGN Logansport Financial Corp. IN 06/14/95 85,801 13.67 10.75 46.72 71.09
PFFC Peoples Financial Corp. OH 09/13/96 86,486 14.05 23.47 41.46 60.22
SFFC StateFed Financial Corp. IA 01/05/94 87,542 16.25 0.00 50.24 77.56
HHFC Harvest Home Financial Corp. OH 10/10/94 87,596 NA NA 42.99 51.44
HZFS Horizon Financial Svcs Corp. IA 06/30/94 87,784 35.56 0.00 37.88 62.11
KYF Kentucky First Bancorp Inc. KY 08/29/95 88,089 18.33 23.01 37.36 55.99
<CAPTION>
Total
Net Loans Borrowed
& MBS/ Funds/ Equity/
Assets Assets Assets
(%) (%) (%)
-----------------------------
<S> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK 86.50 0.00 17.70
DEFINED PARAMETERS FOR 60.00 - Less than 8.00 -
INCLUSION IN COMPARABLE GROUP 95.00 25.00 28.00
LONF London Financial Corporation 86.69 2.09 19.66
HWEN Home Financial Bancorp 86.74 19.37 17.55
HBBI Home Building Bancorp 80.22 9.58 14.12
RELI Reliance Bancshares Inc. 58.64 12.86 48.31
FLKY First Lancaster Bancshares 91.46 21.02 29.47
PWBK Pennwood Bancorp Inc. 64.07 3.06 18.34
CSBF CSB Financial Group Inc. 58.14 0.00 25.04
CKFB CKF Bancorp Inc. 92.80 3.71 23.67
ATSB AmTrust Capital Corp. 76.56 18.78 10.93
MSBF MSB Financial Inc. 91.61 27.61 16.54
FFBI First Financial Bancorp Inc. 68.93 9.73 8.92
SOBI Sobieski Bancorp Inc. 92.17 15.44 14.78
LOGN Logansport Financial Corp. 81.83 6.41 18.89
PFFC Peoples Financial Corp. 83.69 0.00 27.21
SFFC StateFed Financial Corp. 77.56 21.70 17.53
HHFC Harvest Home Financial Corp. NA 22.43 11.81
HZFS Horizon Financial Svcs Corp. 62.11 25.16 9.95
KYF Kentucky First Bancorp Inc. 79.00 20.17 16.70
</TABLE>
<PAGE> 155
KELLER & COMPANY Page 2
Columbus, Ohio
614-766-1426
COMPARABLE GROUP SELECTION
BALANCE SHEET PARAMETERS
General Parameters:
States: IA IL IN KY MI OH PA WI
IPO Date: less than = 09/30/97
Asset size: less than = $200,000
<TABLE>
<CAPTION>
Cash & 1-4 Fam. Total Net
Total Invest./ MBS/ Loans/ Loans/
Assets Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%) (%)
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK - 59,853 11.26 0.00 88.50 86.50
DEFINED PARAMETERS FOR Prior to 5.00- 35.00- 55.00
INCLUSION IN COMPARABLE GROUP 09/30/96 <200,000 35.00 <25.00 70.00 90.00
FFDF FFD Financial Corp. OH 04/03/96 88,220 14.95 16.62 52.31 66.66
THR Three Rivers Financial Corp. MI 08/24/95 94,216 18.88 10.09 41.94 67.45
CIBI Community Investors Bancorp OH 02/07/95 94,328 13.14 1.71 62.89 83.92
INCB Indiana Community Bank SB IN 12/15/94 96,089 18.08 2.69 39.56 75.95
NWEQ Northwest Equity Corp. WI 10/11/94 96,954 7.70 7.20 56.27 81.69
FTSB Fort Thomas Financial Corp. KY 06/28/95 97,843 6.11 0.82 63.99 90.89
AMFC AMB Financial Corp. IN 04/01/96 103,388 21.44 3.53 44.33 72.69
HFFB Harrodsburg First Fin Bancorp KY 10/04/95 108,949 25.06 0.06 61.15 73.63
ASBP ASB Financial Corp. OH 05/11/95 112,449 22.98 7.28 43.10 67.65
NBSI North Bancshares Inc. IL 12/21/93 122,081 30.34 5.28 54.08 62.56
PTRS Potters Financial Corp. OH 12/31/93 122,716 16.71 17.42 37.30 63.13
MIFC Mid-Iowa Financial Corp. IA 10/14/92 128,017 NA NA 35.92 51.88
CLAS Classic Bancshares Inc. KY 12/29/95 132,186 NA NA 44.36 66.69
FKKY Frankfort First Bancorp Inc. KY 07/10/95 133,255 5.80 0.00 79.69 92.64
PRBC Prestige Bancorp Inc. PA 06/27/96 137,834 20.94 8.52 48.75 67.62
GTPS Great American Bancorp IL 06/30/95 139,568 14.99 0.00 35.98 78.62
<CAPTION>
Total
Net Loans Borrowed
& MBS/ Funds/ Equity/
Assets Assets Assets
(%) (%) (%)
-----------------------------
<S> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK 86.50 0.00 17.70
- ------------------------------------------------------------------------
DEFINED PARAMETERS FOR 60.00- 8.00-
INCLUSION IN COMPARABLE GROUP 95.00 <25.00 28.00
- ------------------------------------------------------------------------
FFDF FFD Financial Corp. 83.28 9.39 24.34
THR Three Rivers Financial Corp. 77.54 19.89 13.77
CIBI Community Investors Bancorp 85.63 9.05 11.75
INCB Indiana Community Bank SB 78.64 0.00 11.88
NWEQ Northwest Equity Corp. 88.89 23.09 11.69
FTSB Fort Thomas Financial Corp. 91.71 9.04 16.13
AMFC AMB Financial Corp. 76.22 13.06 13.94
HFFB Harrodsburg First Fin Bancorp 73.69 0.00 26.92
ASBP ASB Financial Corp. 74.93 3.00 15.57
NBSI North Bancshares Inc. 67.84 23.84 13.43
PTRS Potters Financial Corp. 80.55 8.03 8.81
MIFC Mid-Iowa Financial Corp. NA 19.53 9.42
CLAS Classic Bancshares Inc. NA 8.95 14.88
FKKY Frankfort First Bancorp Inc. 92.64 17.89 16.83
PRBC Prestige Bancorp Inc. 76.14 22.62 11.21
GTPS Great American Bancorp 78.62 0.00 20.43
</TABLE>
<PAGE> 156
KELLER & COMPANY Page 3
Columbus, Ohio
614-766-1426
COMPARABLE GROUP SELECTION
BALANCE SHEET PARAMETERS
General Parameters:
States: IA IL IN KY MI OH PA WI
IPO Date: <= 09/30/97
Asset size: <= $200,000
<TABLE>
<CAPTION>
Cash & 1-4 Fam. Total Net
Total Invest./ MBS/ Loans/ Loans/
Assets Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%) (%)
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK - 59,853 11.26 0.00 62.16 86.50
DEFINED PARAMETERS FOR Prior to 5.00- 35.00- 55.00-
INCLUSION IN COMPARABLE GROUP 09/30/96 <200,000 35.00 <25.00 70.00 90.00
WEHO Westwood Homestead Fin. Corp. OH 09/30/96 142,878 18.98 1.56 43.85 78.08
MWBI Midwest Bancshares Inc. IA 11/12/92 149,850 18.24 18.23 42.06 60.66
BWFC Bank West Financial Corp. MI 03/30/95 164,854 24.72 0.84 54.31 71.87
FFWD Wood Bancorp Inc. OH 08/31/93 166,520 13.95 2.48 57.88 81.70
EGLB Eagle BancGroup Inc. IL 07/01/96 172,160 18.00 6.97 37.95 72.12
PFED Park Bancorp Inc. IL 08/12/96 174,515 45.39 11.29 30.52 39.44
MARN Marion Capital Holdings IN 03/18/93 179,822 6.68 0.00 49.95 84.43
FFWC FFW Corp. IN 04/05/93 181,468 20.58 10.32 36.84 66.00
NEIB Northeast Indiana Bancorp IN 06/28/95 190,319 9.27 0.00 52.94 88.78
<CAPTION>
Total
Net Loans Borrowed
& MBS/ Funds/ Equity/
Assets Assets Assets
(%) (%) (%)
-----------------------------
<S> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK 86.50 0.00 17.70
- ----------------------------------------------------------------------
DEFINED PARAMETERS FOR 60.00- 8.00-
INCLUSION IN COMPARABLE GROUP 95.00 <25.00 28.00
- ----------------------------------------------------------------------
WEHO Westwood Homestead Fin. Corp. 79.64 11.74 27.66
MWBI Midwest Bancshares Inc. 78.89 21.69 6.92
BWFC Bank West Financial Corp. 72.70 21.23 14.15
FFWD Wood Bancorp Inc. 84.18 12.63 12.44
EGLB Eagle BancGroup Inc. 79.08 10.89 11.85
PFED Park Bancorp Inc. 50.73 1.72 23.14
MARN Marion Capital Holdings 84.43 8.06 21.95
FFWC FFW Corp. 76.32 25.79 9.70
NEIB Northeast Indiana Bancorp 88.78 34.15 14.37
</TABLE>
<PAGE> 157
EXHIBIT 37
KELLER & COMPANY Page 1
Columbus, Ohio
614-766-1426
COMPARABLE GROUP SELECTION
OPERATING PERFORMANCE AND ASSET QUALITY PARAMETERS
Most Recent Four Quarters
General Parameters:
States: IA IL IN KY MI OH PA WI
IPO Date: less than = 09/30/97
Asset size: less than = $200,000
<TABLE>
<CAPTION>
OPERATING PERFORMANCE
******************************************************
Net Operating Noninterest
Total Interest Expenses/ Income/
Assets ROAA ROAE Margin (2) Assets Assets (3)
IPO Date ($000) (%) (%) (%) (%) (%)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK -- 59,853 1.31 7.44 4.75 2.92 0.30
DEFINED PARAMETERS FOR Prior to Less than 0.90 - 5.00 - 3.25 - 1.90 - Less than
INCLUSION IN COMPARABLE GROUP 09/30/96 200,000 2.00 15.00 5.25 3.50 0.65
LONF London Financial Corporation OH 04/01/96 38,240 0.66 3.17 3.72 2.39 0.19
HWEN Home Financial Bancorp IN 07/02/96 41,309 0.85 4.60 4.42 3.13 0.28
HBBI Home Building Bancorp IN 02/08/95 41,746 0.75 5.76 3.50 2.40 0.28
RELI Reliance Bancshares Inc. WI 04/19/96 46,987 1.32 2.58 5.18 2.85 0.02
FLKY First Lancaster Bancshares KY 07/01/96 47,184 1.24 3.64 4.86 2.73 0.00
PWBK Pennwood Bancorp Inc. PA 07/15/96 47,645 0.99 5.20 4.49 2.83 0.24
CSBF CSB Financial Group Inc. IL 10/09/95 48,844 0.31 1.21 3.50 2.55 0.17
CKFB CKF Bancorp Inc. KY 01/04/95 59,868 1.82 7.51 3.81 1.77 0.10
ATSB AmTrust Capital Corp. IN 03/28/95 69,685 0.40 3.86 2.81 2.79 0.54
MSBF MSB Financial Inc. MI 02/06/95 77,014 1.50 8.42 4.85 2.83 0.43
FFBI First Financial Bancorp Inc. IL 10/04/93 84,242 -0.07 -0.86 3.01 2.72 0.59
SOBI Sobieski Bancorp Inc. IN 03/31/95 84,279 0.62 3.88 3.34 2.44 0.19
LOGN Logansport Financial Corp. IN 06/14/95 85,801 1.42 7.28 3.86 1.55 0.15
PFFC Peoples Financial Corp. OH 09/13/96 86,486 0.59 2.31 3.53 2.10 0.04
SFFC StateFed Financial Corp. IA 01/05/94 87,542 1.28 7.20 3.43 1.37 0.13
HHFC Harvest Home Financial Corp. OH 10/10/94 87,596 0.30 2.31 2.89 2.05 0.07
HZFS Horizon Financial Svcs Corp. IA 06/30/94 87,784 0.81 7.85 3.30 2.41 0.46
<CAPTION>
ASSET QUALITY (1)
******************************
NPA/ REO/ Reserves/
Assets Assets Assets
(%) (%) (%)
-----------------------------
<S> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK 0.10 0.00 0.25
DEFINED PARAMETERS FOR Less than Less than More than
INCLUSION IN COMPARABLE GROUP 1.00 0.20 0.15
LONF London Financial Corporation 0.80 0.00 0.49
HWEN Home Financial Bancorp 1.70 0.08 0.62
HBBI Home Building Bancorp 0.44 0.00 0.19
RELI Reliance Bancshares Inc. 0.00 0.00 0.33
FLKY First Lancaster Bancshares 2.28 0.00 0.32
PWBK Pennwood Bancorp Inc. 0.99 0.08 0.63
CSBF CSB Financial Group Inc. 0.56 0.00 0.32
CKFB CKF Bancorp Inc. 1.20 0.00 0.20
ATSB AmTrust Capital Corp. 2.20 0.27 0.74
MSBF MSB Financial Inc. 1.02 0.00 0.41
FFBI First Financial Bancorp Inc. 0.33 0.00 0.58
SOBI Sobieski Bancorp Inc. 0.13 0.00 0.24
LOGN Logansport Financial Corp. 0.49 0.12 0.28
PFFC Peoples Financial Corp. 0.00 0.00 0.23
SFFC StateFed Financial Corp. 2.55 0.42 0.26
HHFC Harvest Home Financial Corp. 0.11 0.00 0.13
HZFS Horizon Financial Svcs Corp. 0.94 0.14 0.42
</TABLE>
<PAGE> 158
KELLER & COMPANY Page 2
Columbus, Ohio
614-766-1426
COMPARABLE GROUP SELECTION
OPERATING PERFORMANCE AND ASSET QUALITY PARAMETERS
Most Recent Four Quarters
General Parameters:
States: IA IL IN KY MI OH PA WI
IPO Date: Less than = 09/30/97
Asset size: Less than = $200,000
<TABLE>
<CAPTION>
OPERATING PERFORMANCE
******************************************************
Net Operating Noninterest
Total Interest Expenses/ Income/
Assets ROAA ROAE Margin (2) Assets Assets (3)
IPO Date ($000) (%) (%) (%) (%) (%)
---------------------------------------------------------------------------- -
<S> <C> <C> <C> <C> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK -- 59,853 1.31 7.44 4.75 2.92 0.30
DEFINED PARAMETERS FOR Prior to Less than 0.90 - 5.00 - 3.25 - 1.90 - Less than
INCLUSION IN COMPARABLE GROUP 09/30/96 200,000 2.00 15.00 5.25 3.50 0.65
KYF Kentucky First Bancorp Inc. KY 08/29/95 88,089 1.15 6.64 3.50 1.93 0.19
FFDF FFD Financial Corp. OH 04/03/96 88,220 1.93 7.83 3.34 1.91 0.06
THR Three Rivers Financial Corp. MI 08/24/95 94,216 0.90 6.48 3.80 2.83 0.51
CIBI Community Investors Bancorp OH 02/07/95 94,328 0.97 8.37 3.45 1.99 0.17
INCB Indiana Community Bank SB IN 12/15/94 96,089 0.53 4.30 4.34 3.93 0.98
NWEQ Northwest Equity Corp. WI 10/11/94 96,954 1.03 8.75 3.82 2.30 0.42
FTSB Fort Thomas Financial Corp. KY 06/28/95 97,843 1.22 7.18 4.23 2.38 0.24
AMFC AMB Financial Corp. IN 04/01/96 103,388 1.03 6.30 3.72 2.90 0.45
HFFB Harrodsburg First Fin Bancorp KY 10/04/95 108,949 1.03 3.80 3.64 1.58 0.09
ASBP ASB Financial Corp. OH 05/11/95 112,449 0.97 5.89 3.37 2.19 0.24
NBSI North Bancshares Inc. IL 12/21/93 122,081 0.63 4.37 3.28 2.65 0.18
PTRS Potters Financial Corp. OH 12/31/93 122,716 0.98 10.93 3.36 2.44 0.28
MIFC Mid-Iowa Financial Corp. IA 10/14/92 128,017 1.27 13.68 3.03 2.16 0.95
CLAS Classic Bancshares Inc. KY 12/29/95 132,186 0.81 5.53 3.83 2.91 0.31
FKKY Frankfort First Bancorp Inc. KY 07/10/95 133,255 0.09 0.37 3.47 1.94 0.04
PRBC Prestige Bancorp Inc. PA 06/27/96 137,834 0.62 5.10 3.24 2.35 0.24
GTPS Great American Bancorp IL 06/30/95 139,568 0.53 2.38 4.36 3.44 0.49
<CAPTION>
******************************
NPA/ REO/ Reserves/
Assets Assets Assets
(%) (%) (%)
----------------------------
<S> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK 0.10 0.00 0.25
DEFINED PARAMETERS FOR Less than Less than More than
INCLUSION IN COMPARABLE GROUP 1.00 0.20 0.15
KYF Kentucky First Bancorp Inc. 0.09 0.00 0.43
FFDF FFD Financial Corp. 0.18 0.00 0.31
THR Three Rivers Financial Corp. 0.87 0.03 0.52
CIBI Community Investors Bancorp 0.53 0.04 0.50
INCB Indiana Community Bank SB NA NA 0.72
NWEQ Northwest Equity Corp. 0.93 0.04 0.48
FTSB Fort Thomas Financial Corp. 1.98 0.00 0.49
AMFC AMB Financial Corp. 0.32 0.12 0.38
HFFB Harrodsburg First Fin Bancorp 0.47 0.00 0.28
ASBP ASB Financial Corp. 0.96 0.00 0.73
NBSI North Bancshares Inc. 0.00 0.00 0.17
PTRS Potters Financial Corp. 0.44 0.00 1.72
MIFC Mid-Iowa Financial Corp. NA NA 0.24
CLAS Classic Bancshares Inc. 0.67 0.21 0.63
FKKY Frankfort First Bancorp Inc. 0.09 0.00 0.08
PRBC Prestige Bancorp Inc. 0.33 0.01 0.27
GTPS Great American Bancorp 0.26 0.00 0.34
</TABLE>
<PAGE> 159
KELLER & COMPANY Page 3
Columbus, Ohio
614-766-1426
COMPARABLE GROUP SELECTION
OPERATING PERFORMANCE AND ASSET QUALITY PARAMETERS
Most Recent Four Quarters
General Parameters:
States: IA IL IN KY MI OH PA WI
IPO Date: Less than = 09/30/97
Asset size: Less than = $200,000
<TABLE>
<CAPTION>
OPERATING PERFORMANCE
******************************************************
Net Operating Noninterest
Total Interest Expenses/ Income/
Assets ROAA ROAE Margin (2) Assets Assets (3)
IPO Date ($000) (%) (%) (%) (%) (%)
---------------------------------------------------------------------------- -
<S> <C> <C> <C> <C> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK -- 59,853 1.31 7.44 4.75 2.92 0.30
DEFINED PARAMETERS FOR Prior to Less than 0.90 - 5.00 - 3.25 - 1.90 - Less than
INCLUSION IN COMPARABLE GROUP 09/30/96 200,000 2.00 15.00 5.25 3.50 0.65
WEHO Westwood Homestead Fin. Corp. OH 09/30/96 142,878 1.01 3.23 3.56 1.90 0.09
MWBI Midwest Bancshares Inc. IA 11/12/92 149,850 0.87 12.54 2.90 1.78 0.22
BWFC Bank West Financial Corp. MI 03/30/95 164,854 1.03 6.76 3.08 2.61 0.53
FFWD Wood Bancorp Inc. OH 08/31/93 166,520 1.40 11.07 4.28 2.30 0.24
EGLB Eagle BancGroup Inc. IL 07/01/96 172,160 0.32 2.62 2.51 2.16 0.20
PFED Park Bancorp Inc. IL 08/12/96 174,515 1.10 4.84 3.59 1.95 0.10
MARN Marion Capital Holdings IN 03/18/93 179,822 1.70 7.49 4.30 2.44 0.59
FFWC FFW Corp. IN 04/05/93 181,468 1.05 10.54 3.27 1.95 0.38
NEIB Northeast Indiana Bancorp IN 06/28/95 190,319 1.20 7.78 3.58 1.73 0.27
<CAPTION>
ASSET QUALITY (1)
******************************
NPA/ REO/ Reserves/
Assets Assets Assets
(%) (%) (%)
-----------------------------
<S> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK 0.10 0.00 0.25
DEFINED PARAMETERS FOR Less than Less than More than
INCLUSION IN COMPARABLE GROUP 1.00 0.20 0.15
WEHO Westwood Homestead Fin. Corp. 0.22 0.00 0.17
MWBI Midwest Bancshares Inc. 0.81 0.32 0.48
BWFC Bank West Financial Corp. 0.21 0.01 0.15
FFWD Wood Bancorp Inc. 0.35 0.02 0.36
EGLB Eagle BancGroup Inc. 1.48 0.38 0.53
PFED Park Bancorp Inc. 0.24 0.03 0.29
MARN Marion Capital Holdings 0.98 0.04 1.13
FFWC FFW Corp. 0.18 0.02 0.40
NEIB Northeast Indiana Bancorp 0.17 0.00 0.60
</TABLE>
(1) Asset quality ratios reflect balance sheet totals at the end of the most
recent quarter.
(2) Based on average interest-earning assets.
<PAGE> 160
EXHIBIT 38
KELLER & COMPANY
Columbus, Ohio
614-766-1426
FINAL COMPARABLE GROUP
BALANCE SHEET RATIOS
<TABLE>
<CAPTION>
Cash & 1-4 Fam. Total Net
Total Invest./ MBS/ Loans/ Loans/
Assets Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%) (%)
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK -- 59,853 11.26 0.00 62.18 86.50
DEFINED PARAMETERS FOR Prior to Less than 5.00 - Less than 35.00 - 55.00 -
INCLUSION IN COMPARABLE GROUP 09/30/96 200,000 35.00 25.00 70.00 90.00
PWBK Pennwood Bancorp Inc. PA 07/15/96 47,645 32.16 3.91 35.63 60.16
KYF Kentucky First Bancorp Inc. KY 08/29/95 88,089 18.33 23.01 37.36 55.99
FFDF FFD Financial Corp. OH 04/03/96 88,220 14.95 16.62 52.31 66.66
THR Three Rivers Financial Corp. MI 08/24/95 94,216 18.88 10.09 41.94 67.45
CIBI Community Investors Bancorp OH 02/07/95 94,328 13.14 1.71 62.89 83.92
NWEQ Northwest Equity Corp. WI 10/11/94 96,954 7.70 7.20 56.27 81.69
AMFC AMB Financial Corp. IN 04/01/96 103,388 21.44 3.53 44.33 72.69
ASBP ASB Financial Corp. OH 05/11/95 112,449 22.98 7.28 43.10 67.65
PTRS Potters Financial Corp. OH 12/31/93 122,716 16.71 17.42 37.30 63.13
MARN Marion Capital Holdings IN 03/18/93 179,822 6.68 0.00 49.95 84.43
AVERAGE 102,783 17.30 9.08 46.11 70.38
MEDIAN 95,641 17.52 7.24 43.71 67.55
HIGH 179,822 32.16 23.01 62.89 84.43
LOW 47,645 6.68 0.00 35.63 55.99
<CAPTION>
Total
Net Loans Borrowed
& MBS/ Funds/ Equity/
Assets Assets Assets
(%) (%) (%)
-------------------------------
<S> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK 86.50 0.00 17.70
DEFINED PARAMETERS FOR 60.00 - Less than 8.00 -
INCLUSION IN COMPARABLE GROUP 95.00 25.00 28.00
PWBK Pennwood Bancorp Inc. 64.07 3.06 18.34
KYF Kentucky First Bancorp Inc. 79.00 20.17 16.70
FFDF FFD Financial Corp. 83.28 9.39 24.34
THR Three Rivers Financial Corp. 77.54 19.89 13.77
CIBI Community Investors Bancorp 85.63 9.05 11.75
NWEQ Northwest Equity Corp. 88.89 23.09 11.69
AMFC AMB Financial Corp. 76.22 13.06 13.94
ASBP ASB Financial Corp. 74.93 3.00 15.57
PTRS Potters Financial Corp. 80.55 8.03 8.81
MARN Marion Capital Holdings 84.43 8.06 21.95
79.45 11.68 15.69
79.77 9.22 14.76
88.89 23.09 24.34
64.07 3.00 8.81
</TABLE>
<PAGE> 161
EXHIBIT 39
KELLER & COMPANY
Columbus, Ohio
614-766-1426
FINAL COMPARABLE GROUP
OPERATING PERFORMANCE AND ASSET QUALITY RATIOS
Most Recent Four Quarters
<TABLE>
<CAPTION>
OPERATING PERFORMANCE
*****************************************************
Net Operating Noninterest
Total Interest Expenses/ Income/
Assets ROAA ROAE Margin (2) Assets Assets (3)
IPO Date ($000) (%) (%) (%) (%) (%)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK -- 59,853 1.31 7.44 4.75 2.92 0.30
DEFINED PARAMETERS FOR Prior to Less than 0.90 - 5.00 - 3.25 - 1.90 - Less than
INCLUSION IN COMPARABLE GROUP 09/30/96 200,000 2.00 15.00 5.25 3.50 0.65
PWBK Pennwood Bancorp Inc. PA 07/15/96 47,645 0.99 5.20 4.49 2.83 0.24
KYF Kentucky First Bancorp Inc. KY 08/29/95 88,089 1.15 6.64 3.50 1.93 0.19
FFDF FFD Financial Corp. OH 04/03/96 88,220 1.93 7.83 3.34 1.91 0.06
THR Three Rivers Financial Corp. MI 08/24/95 94,216 0.90 6.48 3.80 2.83 0.51
CIBI Community Investors Bancorp OH 02/07/95 94,328 0.97 8.37 3.45 1.99 0.17
NWEQ Northwest Equity Corp. WI 10/11/94 96,954 1.03 8.75 3.82 2.30 0.42
AMFC AMB Financial Corp. IN 04/01/96 103,388 1.03 6.30 3.72 2.90 0.45
ASBP ASB Financial Corp. OH 05/11/95 112,449 0.97 5.89 3.37 2.19 0.24
PTRS Potters Financial Corp. OH 12/31/93 122,716 0.98 10.93 3.36 2.44 0.28
MARN Marion Capital Holdings IN 03/18/93 179,822 1.70 7.49 4.30 2.44 0.59
AVERAGE 102,783 1.17 7.39 3.72 2.38 0.32
MEDIAN 95,641 1.01 7.07 3.61 2.37 0.26
HIGH 179,822 1.93 10.93 4.49 2.90 0.59
LOW 47,645 0.90 5.20 3.34 1.91 0.06
<CAPTION>
ASSET QUALITY (1)
**************************
NPA/ REO/ Reserves/
Assets Assets Assets
(%) (%) (%)
-----------------------------
<S> <C> <C> <C>
THE HOME LOAN
SAVINGS BANK 0.10 0.00 0.25
DEFINED PARAMETERS FOR Less than Less than Less than
INCLUSION IN COMPARABLE GROUP 1.00 0.20 0.15
PWBK Pennwood Bancorp Inc. 0.99 0.08 0.63
KYF Kentucky First Bancorp Inc. 0.09 0.00 0.43
FFDF FFD Financial Corp. 0.18 0.00 0.31
THR Three Rivers Financial Corp. 0.87 0.03 0.52
CIBI Community Investors Bancorp 0.53 0.04 0.50
NWEQ Northwest Equity Corp. 0.93 0.04 0.48
AMFC AMB Financial Corp. 0.32 0.12 0.38
ASBP ASB Financial Corp. 0.96 0.00 0.73
PTRS Potters Financial Corp. 0.44 0.00 1.72
MARN Marion Capital Holdings 0.98 0.04 1.13
0.63 0.04 0.68
0.70 0.04 0.51
0.99 0.12 1.72
0.09 0.00 0.31
</TABLE>
(1) Asset quality ratios reflect balance sheet totals at the end of
the most recent quarter.
(2) Based on average interest-earning assets.
<PAGE> 162
EXHIBIT 40
KELLER & COMPANY
Dublin, Ohio
614-766-1426
COMPARABLE GROUP CHARACTERISTICS AND BALANCE SHEET TOTALS
<TABLE>
<CAPTION>
Most Recent Quarter
--------------------------------
Total
Number Conversion Total Int. Earning Net
of (IPO) Assets Assets Loans
Offices Exchange Date ($000) ($000) ($000)
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUBJECT
THE HOME LOAN
SAVINGS BANK 2 NA NA 59,853 57,176 51,773
COMPARABLE GROUP
AMFC AMB Financial Corp. Munster IN 4 NASDAQ 04/01/96 103,388 96,781 75,150
ASBP ASB Financial Corp. Portsmouth OH 1 NASDAQ 05/11/95 112,449 110,939 76,076
CIBI Community Investors Bancorp, Inc. Bucyrus OH 3 NASDAQ 02/07/95 94,328 90,561 79,160
FFDF FFD Financial Corporation Dover OH 1 NASDAQ 04/03/96 88,220 86,961 58,810
KYF Kentucky First Bancorp, Inc. Cynthiana KY 2 AMSE 08/29/95 88,089 86,414 49,320
MARN Marion Capital Holdings, Inc. Marion IN 2 NASDAQ 03/18/93 179,822 164,550 151,816
NWEQ Northwest Equity Corporation Amery WI 3 NASDAQ 10/11/94 96,954 91,165 79,202
PWBK Pennwood Bancorp, Inc. Pittsburgh PA 3 NASDAQ 07/15/96 47,645 45,440 28,661
PTRS Potters Financial Corporation East Liverpool OH 4 NASDAQ 12/31/93 122,716 116,709 77,468
THR Three Rivers Financial Corp. Three Rivers MI 4 AMSE 08/24/95 94,216 91,754 63,551
Average 2.7 102,783 98,127 73,921
Median 3.0 95,641 91,460 75,613
High 4.0 179,822 164,550 151,816
Low 1.0 47,645 45,440 28,661
<CAPTION>
Most Recent Quarter
----------------------------------
Goodwill
and Total Total
Intang. Deposits Equity
($000) ($000) ($000)
---------------------------------
<S> <C> <C> <C>
SUBJECT
THE HOME LOAN
SAVINGS BANK 0 48,208 10,592
COMPARABLE GROUP
AMFC AMB Financial Corp. Munster IN 0 73,745 14,411
ASBP ASB Financial Corp. Portsmouth OH 0 89,254 17,512
CIBI Community Investors Bancorp, Inc. Bucyrus OH 0 74,075 11,085
FFDF FFD Financial Corporation Dover OH 0 57,280 21,473
KYF Kentucky First Bancorp, Inc. Cynthiana KY 0 54,751 14,711
MARN Marion Capital Holdings, Inc. Marion IN 0 120,579 39,467
NWEQ Northwest Equity Corporation Amery WI 0 62,613 11,333
PWBK Pennwood Bancorp, Inc. Pittsburgh PA 0 36,539 8,736
PTRS Potters Financial Corporation East Liverpool OH 0 100,857 10,812
THR Three Rivers Financial Corp. Three Rivers MI 46 60,879 12,973
Average 5 73,057 16,251
Median 0 68,179 13,692
High 46 120,579 39,467
Low 0 36,539 8,736
</TABLE>
<PAGE> 163
EXHIBIT 42
KELLER & COMPANY
Columbus, Ohio
614-766-1426
BALANCE SHEET
ASSET COMPOSITION - MOST RECENT QUARTER
<TABLE>
<CAPTION>
As a Percent of Total Assets
***************************************************************
Real
Total Cash & Net Loan Loss Estate Goodwill
Assets Invest. MBS Loans Reserves Owned & Intang.
($000) (%) (%) (%) (%) (%) (%)
------------ ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUBJECT
THE HOME LOAN
SAVINGS BANK 59,853 11.26 0.00 86.50 0.25 0.00 0.00
COMPARABLE GROUP
AMFC AMB Financial Corp. 103,388 21.44 3.53 72.69 0.38 0.12 0.00
ASBP ASB Financial Corp. 112,449 22.98 7.28 67.65 0.73 0.00 0.00
CIBI Community Investors Bancorp 94,328 13.14 1.71 83.92 0.50 0.04 0.00
FFDF FFD Financial Corp. 88,220 14.95 16.62 66.66 0.31 0.00 0.00
KYF Kentucky First Bancorp Inc. 88,089 18.33 23.01 55.99 0.43 0.00 0.00
MARN Marion Capital Holdings 179,822 6.68 0.00 84.43 1.13 0.04 0.00
NWEQ Northwest Equity Corp. 96,954 7.70 7.20 81.69 0.48 0.04 0.00
PWBK Pennwood Bancorp Inc. 47,645 32.16 3.91 60.16 0.63 0.08 0.00
PTRS Potters Financial Corp. 122,716 16.71 17.42 63.13 1.72 0.00 0.00
THR Three Rivers Financial Corp. 94,216 18.88 10.09 67.45 0.52 0.03 0.05
Average 102,783 17.30 9.08 70.38 0.68 0.04 0.00
Median 95,641 17.52 7.24 67.55 0.51 0.04 0.00
High 179,822 32.16 23.01 84.43 1.72 0.12 0.05
Low 47,645 6.68 0.00 55.99 0.31 0.00 0.00
ALL THRIFTS (373)
Average 1,465,609 17.85 11.19 67.23 0.61 0.61 0.25
MIDWEST THRIFTS (146)
Average 576,875 16.35 8.22 71.83 0.47 0.47 0.19
OHIO THRIFTS (33)
Average 820,590 14.49 7.62 74.65 0.44 0.04 0.16
<CAPTION>
As a Percent of Total Assets
*************************************************************
Interest Interest Capitalized
Other High Risk Non-Perf. Earning Bearing Loan
Assets R.E. Loans Assets Assets Liabilities Servicing
(%) (%) (%) (%) (%) (%)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUBJECT
THE HOME LOAN
SAVINGS BANK 1.99 9.04 0.10 95.52 80.54 0.00
COMPARABLE GROUP
AMFC AMB Financial Corp. 2.22 13.85 0.32 93.61 80.39 0.00
ASBP ASB Financial Corp. 2.09 12.43 0.96 98.66 82.60 0.00
CIBI Community Investors Bancorp 1.19 5.40 0.53 96.01 86.47 0.00
FFDF FFD Financial Corp. 1.78 4.24 0.18 98.57 74.27 0.00
KYF Kentucky First Bancorp Inc. 2.68 18.68 0.09 98.10 82.83 0.00
MARN Marion Capital Holdings 8.86 31.86 0.98 91.51 72.38 0.00
NWEQ Northwest Equity Corp. 3.35 11.18 0.93 94.03 87.39 0.00
PWBK Pennwood Bancorp Inc. 3.69 8.80 0.99 95.37 80.79 0.00
PTRS Potters Financial Corp. 2.75 7.41 0.44 95.10 88.22 0.00
THR Three Rivers Financial Corp. 3.01 10.84 0.87 97.39 85.08 0.00
Average 3.16 12.47 0.63 95.83 82.04 0.00
Median 2.71 11.01 0.70 95.69 82.72 0.00
High 8.86 31.86 0.99 98.66 88.22 0.00
Low 1.19 4.24 0.09 91.51 72.38 0.00
ALL THRIFTS (373)
Average 2.66 13.08 0.82 94.89 83.39 0.14
MIDWEST THRIFTS (146)
Average 2.53 12.35 0.63 95.79 83.16 0.11
OHIO THRIFTS (33)
Average 2.17 14.80 0.44 96.10 82.76 0.10
</TABLE>
<PAGE> 164
EXHIBIT 43
KELLER & COMPANY
Columbus, Ohio
614-766-1426
BALANCE SHEET COMPARISON
LIABILITIES AND EQUITY - MOST RECENT QUARTER
<TABLE>
<CAPTION>
As a Percent of Assets
****************************************************************
FASB 115
Total Total Total Total Other Preferred Common Unrealized
Liabilities Equity Deposits Borrowings Liabilities Equity Equity Gain (Loss)
($000) ($000) (%) (%) (%) (%) (%) (%)
----------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUBJECT
THE HOME LOAN
SAVINGS BANK 49,261 10,592 80.54 0.00 1.76 - - 0.02
COMPARABLE GROUP
AMFC AMB Financial Corp. 88,977 14,411 71.33 13.06 1.68 0.00 13.94 0.05
ASBP ASB Financial Corp. 94,937 17,512 79.37 3.00 2.05 0.00 15.57 0.38
CIBI Community Investors Bancorp 83,243 11,085 78.53 9.05 0.67 0.00 11.75 (0.01)
FFDF FFD Financial Corp. 66,747 21,473 64.93 9.39 1.34 0.00 24.34 0.06
KYF Kentucky First Bancorp Inc. 73,378 14,711 62.15 20.17 0.98 0.00 16.70 0.08
MARN Marion Capital Holdings 140,355 39,467 67.05 8.06 2.94 0.00 21.95 0.01
NWEQ Northwest Equity Corp. 85,621 11,333 64.58 23.09 0.64 0.00 11.69 0.00
PWBK Pennwood Bancorp Inc. 38,909 8,736 76.69 3.06 1.92 0.00 18.34 0.13
PTRS Potters Financial Corp. 111,904 10,812 82.19 8.03 0.97 0.00 8.81 (0.03)
THR Three Rivers Financial Corp. 81,243 12,973 64.62 19.89 1.72 0.00 13.77 0.00
Average 86,531 16,251 71.14 11.68 1.49 0.00 15.69 0.07
Median 84,432 13,692 69.19 9.22 1.51 0.00 14.76 0.03
High 140,355 39,467 82.19 23.09 2.94 0.00 24.34 0.38
Low 38,909 8,736 62.15 3.00 0.64 0.00 8.81 (0.03)
ALL THRIFTS (373)
Average 1,354,922 110,687 70.38 15.26 1.69 0.06 12.60 0.12
MIDWEST THRIFTS (146)
Average 523,284 53,591 69.32 15.04 1.37 0.00 14.27 0.09
OHIO THRIFTS (33)
Average 750,498 70,092 71.70 12.41 1.04 0.00 14.85 0.12
<CAPTION>
****************************************************
Reg. Reg. Reg.
Retained Total Tangible Core Tangible Risk-Based
Earnings Equity Equity Capital Capital Capital
(%) (%) (%) (%) (%) (%)
--------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUBJECT
THE HOME LOAN
SAVINGS BANK 17.67 17.70 17.67 17.67 17.67 30.15
COMPARABLE GROUP
AMFC AMB Financial Corp. 6.25 13.94 13.94 9.15 9.15 26.61
ASBP ASB Financial Corp. 8.95 15.57 15.57 12.33 12.33 36.43
CIBI Community Investors Bancorp 6.58 11.75 11.75 11.20 11.20 20.36
FFDF FFD Financial Corp. 8.75 24.34 24.34 NA NA 35.23
KYF Kentucky First Bancorp Inc. 9.13 16.70 16.70 15.14 15.14 34.80
MARN Marion Capital Holdings 10.54 21.95 21.95 20.30 20.30 33.07
NWEQ Northwest Equity Corp. 3.93 11.69 11.69 8.81 NA NA
PWBK Pennwood Bancorp Inc. 7.65 18.34 18.34 18.05 NA NA
PTRS Potters Financial Corp. 4.62 8.81 8.81 7.98 7.98 20.85
THR Three Rivers Financial Corp. 6.46 13.77 13.73 11.71 11.71 24.16
Average 7.29 15.69 15.68 12.74 12.54 28.94
Median 7.11 14.76 14.76 11.71 11.71 29.84
High 10.54 24.34 24.34 20.30 20.30 36.43
Low 3.93 8.81 8.81 7.98 7.98 20.36
ALL THRIFTS (373)
Average 5.31 12.67 12.44 11.04 11.02 23.36
MIDWEST THRIFTS (146)
Average 6.58 14.27 14.11 12.13 12.19 24.17
OHIO THRIFTS (33)
Average 6.38 14.85 14.71 11.74 11.94 22.46
</TABLE>
<PAGE> 165
EXHIBIT 44
KELLER & COMPANY
Columbus, Ohio
614-766-1426
INCOME AND EXPENSE COMPARISON
TRAILING FOUR QUARTERS
($000)
<TABLE>
<CAPTION>
Net Gain Total Goodwill Net Total
Interest Interest Interest Provision (Loss) Non-Int. & Intang Real Est. Non-Int.
Income Expense Income for Loss on Sale Income Amtz. Expense Expense
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUBJECT
THE HOME LOAN
SAVINGS BANK 4,731 2,011 2,720 35 0 176 0 0 1,698
COMPARABLE GROUP
AMFC AMB Financial Corp. 6,888 3,544 3,344 46 424 467 0 (28) 2,667
ASBP ASB Financial Corp. 8,492 4,792 3,700 6 104 273 0 0 2,447
CIBI Community Investors Bancorp 7,331 4,101 3,230 98 0 157 0 57 1,897
FFDF FFD Financial Corp. 6,025 3,169 2,856 125 1,284 54 0 0 1,564
KYF Kentucky First Bancorp Inc. 6,366 3,350 3,016 19 11 164 0 0 1,699
MARN Marion Capital Holdings 13,734 6,702 7,032 63 51 1,055 0 307 4,278
NWEQ Northwest Equity Corp. 7,661 4,206 3,455 100 57 411 0 7 2,207
PWBK Pennwood Bancorp Inc. 3,767 1,736 2,031 36 0 112 0 43 1,352
PTRS Potters Financial Corp. 8,444 4,595 3,849 (485) 34 348 0 (83) 2,893
THR Three Rivers Financial Corp. 6,941 3,580 3,361 60 57 484 8 (37) 2,596
Average 7,565 3,978 3,587 7 202 353 1 27 2,360
Median 7,136 3,841 3,353 53 54 311 0 0 2,327
High 13,734 6,702 7,032 125 1,284 1,055 8 307 4,278
Low 3,767 1,736 2,031 (485) 0 54 0 (83) 1,352
ALL THRIFTS (373)
Average 103,673 62,708 40,965 3,161 1,512 7,841 793 187 27,164
MIDWEST THRIFTS (146)
Average 40,857 24,566 16,291 663 484 3,548 211 (95) 10,933
OHIO THRIFTS (33)
Average 57,127 34,840 22,287 372 409 3,638 279 24 12,753
<CAPTION>
Net Net Inc.
Non- Income Before
Recurring Before Income Extraord. Extraord. Net Core
Expense Taxes Taxes Items Items Income Income
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUBJECT
THE HOME LOAN
SAVINGS BANK 0 1,163 404 759 0 759 759
COMPARABLE GROUP
AMFC AMB Financial Corp. 0 1,522 580 942 0 942 667
ASBP ASB Financial Corp. 0 1,624 535 1,089 0 1,089 1,021
CIBI Community Investors Bancorp 0 1,392 464 928 0 928 928
FFDF FFD Financial Corp. 0 2,505 832 1,673 0 1,673 838
KYF Kentucky First Bancorp Inc. 0 1,473 459 1,014 0 1,014 1,007
MARN Marion Capital Holdings 0 3,797 825 2,972 0 2,972 2,939
NWEQ Northwest Equity Corp. 0 1,616 633 983 0 983 946
PWBK Pennwood Bancorp Inc. 65 690 217 473 0 473 515
PTRS Potters Financial Corp. 0 1,823 666 1,157 0 1,157 1,135
THR Three Rivers Financial Corp. 0 1,246 420 826 0 826 789
Average 7 1,769 563 1,206 0 1,206 1,079
Median 0 1,569 558 999 0 999 937
High 65 3,797 832 2,972 0 2,972 2,939
Low 0 690 217 473 0 473 515
ALL THRIFTS (373)
Average 2,618 17,435 6,505 10,929 (6) 10,924 11,609
MIDWEST THRIFTS (146)
Average 160 8,587 2,996 5,591 (7) 5,584 5,367
OHIO THRIFTS (33)
Average 94 13,131 4,378 8,753 0 8,753 8,538
</TABLE>
<PAGE> 166
EXHIBIT 45
KELLER & COMPANY
Columbus, Ohio
614-766-1426
INCOME AND EXPENSE COMPARISON
AS A PERCENTAGE OF AVERAGE ASSETS
TRAILING FOUR QUARTERS
<TABLE>
<CAPTION>
Net Gain Total Goodwill Net Total
Interest Interest Interest Provision (Loss) Non-Int. & Intang. Real Est. Non-Int.
Income Expense Income for Loss on Sale Income Amtz. Expense Expense
(%) (%) (%) (%) (%) (%) (%) (%) (%)
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUBJECT
THE HOME LOAN
SAVINGS BANK 8.14 3.46 4.68 0.06 0.00 0.30 0.00 0.00 2.92
COMPARABLE GROUP
AMFC AMB Financial Corp. 7.50 3.86 3.64 0.05 0.46 0.51 0.00 (0.03) 2.90
ASBP ASB Financial Corp. 7.60 4.29 3.31 0.01 0.09 0.24 0.00 0.00 2.19
CIBI Community Investors Bancorp 7.70 4.31 3.39 0.10 0.00 0.16 0.00 0.06 1.99
FFDF FFD Financial Corp. 6.96 3.66 3.30 0.14 1.48 0.06 0.00 0.00 1.81
KYF Kentucky First Bancorp Inc. 7.22 3.80 3.42 0.02 0.01 0.19 0.00 0.00 1.93
MARN Marion Capital Holdings 7.84 3.83 4.01 0.04 0.03 0.60 0.00 0.18 2.44
NWEQ Northwest Equity Corp. 8.00 4.39 3.61 0.10 0.06 0.43 0.00 0.01 2.30
PWBK Pennwood Bancorp Inc. 7.90 3.64 4.26 0.08 0.00 0.23 0.00 0.09 2.83
PTRS Potters Financial Corp. 7.13 3.88 3.25 (0.41) 0.03 0.29 0.00 (0.07) 2.44
THR Three Rivers Financial Corp. 7.58 3.91 3.67 0.07 0.06 0.53 0.01 (0.04) 2.83
Average 7.54 3.96 3.59 0.02 0.22 0.33 0.00 0.02 2.37
Median 7.59 3.87 3.51 0.06 0.04 0.27 0.00 0.00 2.37
High 8.00 4.39 4.26 0.14 1.48 0.60 0.01 0.18 2.90
Low 6.96 3.64 3.25 (0.41) 0.00 0.06 0.00 (0.07) 1.81
ALL THRIFTS (373)
Average 7.47 4.12 3.35 0.14 0.11 0.44 0.03 (0.01) 2.34
MIDWEST THRIFTS (146)
Average 7.49 4.18 3.31 0.11 0.09 0.41 0.02 (0.01) 2.17
OHIO THRIFTS (33)
Average 7.58 4.22 3.36 0.05 0.10 0.23 0.02 0.00 2.06
<CAPTION>
Net Net Inc.
Non- Income Before
Recurring Before Income Extraord. Extraord. Net Core
Expense Taxes Taxes Items Items Income Income
(%) (%) (%) (%) (%) (%) (%)
---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUBJECT
THE HOME LOAN
SAVINGS BANK 0.00 2.01 0.70 1.31 0.00 1.31 1.31
COMPARABLE GROUP
AMFC AMB Financial Corp. 0.00 1.66 0.63 1.03 0.00 1.03 0.73
ASBP ASB Financial Corp. 0.00 1.45 0.48 0.97 0.00 0.97 0.91
CIBI Community Investors Bancorp 0.00 1.46 0.49 0.97 0.00 0.97 0.97
FFDF FFD Financial Corp. 0.00 2.89 0.96 1.93 0.00 1.93 0.97
KYF Kentucky First Bancorp Inc. 0.00 1.67 0.52 1.15 0.00 1.15 1.14
MARN Marion Capital Holdings 0.00 2.17 0.47 1.70 0.00 1.70 1.68
NWEQ Northwest Equity Corp. 0.00 1.69 0.66 1.03 0.00 1.03 0.99
PWBK Pennwood Bancorp Inc. 0.14 1.45 0.45 0.99 0.00 0.99 1.08
PTRS Potters Financial Corp. 0.00 1.54 0.56 0.98 0.00 0.98 0.96
THR Three Rivers Financial Corp. 0.00 1.36 0.46 0.90 0.00 0.90 0.86
Average 0.01 1.73 0.57 1.17 0.00 1.17 1.03
Median 0.00 1.60 0.50 1.01 0.00 1.01 0.97
High 0.14 2.89 0.96 1.93 0.00 1.93 1.68
Low 0.00 1.36 0.45 0.90 0.00 0.90 0.73
ALL THRIFTS (373)
Average 0.07 1.36 0.49 0.86 0.00 0.86 0.84
MIDWEST THRIFTS (146)
Average 0.07 1.47 0.52 0.94 (0.00) 0.94 0.93
OHIO THRIFTS (33)
Average 0.07 1.52 0.51 1.01 0.00 1.01 0.98
</TABLE>
<PAGE> 167
EXHIBIT 46
KELLER & COMPANY
Columbus, Ohio
614-766-1426
YIELDS, COSTS AND EARNINGS RATIOS
TRAILING FOUR QUARTERS
<TABLE>
<CAPTION>
Yield on Cost of Net Net
Int. Earning Int. Bearing Interest Interest Core Core
Assets Liabilities Spread Margin * ROAA ROAA ROAE ROAE
(%) (%) (%) (%) (%) (%) (%) (%)
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUBJECT
THE HOME LOAN
SAVINGS BANK 8.27 4.29 3.98 4.75 1.31 1.31 7.44 7.44
AMFC AMB Financial Corp. 7.66 4.69 2.97 3.72 1.03 0.73 6.30 4.46
ASBP ASB Financial Corp. 7.73 5.24 2.49 3.37 0.97 0.91 5.89 5.53
CIBI Community Investors Bancorp 7.84 4.92 2.92 3.45 0.97 0.97 8.37 8.37
FFDF FFD Financial Corp. 7.05 4.94 2.11 3.34 1.93 0.97 7.83 3.92
KYF Kentucky First Bancorp Inc. 7.39 4.65 2.74 3.50 1.15 1.14 6.64 6.60
MARN Marion Capital Holdings 8.40 5.16 3.24 4.30 1.70 1.68 7.49 7.40
NWEQ Northwest Equity Corp. 8.46 5.01 3.45 3.82 1.03 0.99 8.75 8.42
PWBK Pennwood Bancorp Inc. 8.33 4.60 3.73 4.49 0.99 1.08 5.20 5.66
PTRS Potters Financial Corp. 7.37 4.31 3.06 3.36 0.98 0.96 10.93 10.72
THR Three Rivers Financial Corp. 7.84 4.63 3.21 3.80 0.90 0.86 6.48 6.19
Average 7.81 4.82 2.99 3.72 1.17 1.03 7.39 6.73
Median 7.79 4.81 3.02 3.61 1.01 0.97 7.07 6.40
High 8.46 5.24 3.73 4.49 1.93 1.68 10.93 10.72
Low 7.05 4.31 2.11 3.34 0.90 0.73 5.20 3.92
ALL THRIFTS (373)
Average 7.77 4.86 2.91 3.48 0.86 0.84 8.74 8.36
MIDWEST THRIFTS (146)
Average 7.76 4.98 2.78 3.43 0.94 0.93 7.85 7.57
OHIO THRIFTS (33)
Average 7.82 5.00 2.82 3.47 1.01 0.98 8.73 8.46
</TABLE>
<PAGE> 168
EXHIBIT 47
KELLER & COMPANY
Columbus, Ohio
614-766-1426
DIVIDENDS, RESERVES AND SUPPLEMENTAL DATA
<TABLE>
<CAPTION>
DIVIDENDS
*****************************************
12 Month 12 Month
12 Month Common Current Dividend
Preferred Div./ Dividend Payout
Dividends Share Yield Ratio
($000) ($) (%) (%)
-------------------------------------------
<S> <C> <C> <C> <C>
SUBJECT
THE HOME LOAN
SAVINGS BANK - - - -
COMPARABLE GROUP
AMFC AMB Financial Corp. 0 0.25 1.75 24.00
ASBP ASB Financial Corp. 0 5.40 3.05 760.56
CIBI Community Investors Bancorp 0 0.29 2.03 26.68
FFDF FFD Financial Corp. 0 0.28 1.63 20.00
KYF Kentucky First Bancorp Inc. 0 3.50 3.45 437.50
MARN Marion Capital Holdings 0 0.86 3.32 52.83
NWEQ Northwest Equity Corp. 0 0.50 2.95 37.10
PWBK Pennwood Bancorp Inc. 0 0.30 1.69 34.88
PTRS Potters Financial Corp. 0 0.35 1.18 13.68
THR Three Rivers Financial Corp. 0 0.38 2.03 34.91
Average 0 1.21 2.31 144.21
Median 0 0.37 2.03 34.90
High 0 5.40 3.45 760.56
Low 0 0.25 1.18 13.68
ALL THRIFTS (373)
Average 202 0.45 1.27 39.49
MIDWEST THRIFTS (146)
Average 0 0.51 1.59 44.11
OHIO THRIFTS (33)
Average 0 1.00 1.95 83.18
<CAPTION>
RESERVES AND SUPPLEMENTAL DATA - MOST RECENT PERIOD
*******************************************************************************
Net
Reserves/ Reserves/ Chargeoffs/ Provisions/ 1 Year Total
Gross Non-Perf. Average Net Repricing Effective Assets/
Loans Assets Loans Chargeoffs Gap Tax Rate Employee
(%) (%) (%) (%) (%) (%) ($000)
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUBJECT
THE HOME LOAN
SAVINGS BANK 2.81 242.62 0.00 NM NA 34.74 3,150
COMPARABLE GROUP
AMFC AMB Financial Corp. 0.51 118.29 0.04 214.29 NA 38.95 NA
ASBP ASB Financial Corp. 1.07 75.72 0.00 NM NA 33.15 5,111
CIBI Community Investors Bancorp 0.59 94.97 0.06 16.67 NA 35.69 3,628
FFDF FFD Financial Corp. 0.46 NA 0.00 NM NA 33.92 NA
KYF Kentucky First Bancorp Inc. 0.76 457.83 0.00 NM NA 31.71 4,195
MARN Marion Capital Holdings 1.32 104.36 0.01 180.00 NA 23.61 NA
NWEQ Northwest Equity Corp. 0.59 33.84 0.11 119.05 -12.41 34.53 2,770
PWBK Pennwood Bancorp Inc. 1.04 42.39 -0.06 NM NA 27.68 4,331
PTRS Potters Financial Corp. 2.65 389.09 0.03 0.00 NA 33.50 2,727
THR Three Rivers Financial Corp. 0.77 59.98 0.08 125.00 NA 30.77 NA
Average 0.98 152.94 0.03 109.17 -12.41 32.35 3,794
Median 0.77 94.97 0.02 122.03 -12.41 33.33 3,911
High 2.65 457.83 0.11 214.29 -12.41 38.95 5,111
Low 0.46 33.84 -0.06 0.00 -12.41 23.61 2,727
ALL THRIFTS (373)
Average 0.77 102.28 0.13 149.81 -4.11 29.71 4,341
MIDWEST THRIFTS (146)
Average 0.65 131.66 0.21 213.13 -6.99 35.53 4,078
OHIO THRIFTS (33)
Average 0.59 115.53 0.04 169.37 -9.55 34.59 4,378
</TABLE>
<PAGE> 169
EXHIBIT 48
KELLER & COMPANY
Dublin, Ohio
614-766-1426
VALUATION ANALYSIS AND CONCLUSIONS
The Home Loan Savings Bank/Home Loan Financial Corporation
Stock Prices as of November 28, 1997
<TABLE>
<CAPTION>
Valuation assumptions: Comparable Group All Thrifts
Symbol Value Average Median Average Median
---------- ------------------------------------------------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Post conv. price to earnings P/E 16.52 16.95 16.34 21.77 18.71
Post conv. price to book value P/B 67.80% 126.73% 126.42% 161.12% 149.24%
Post conv. price to assets P/A 22.20% 19.75% 18.55% 18.72% 16.99%
Post conv. price to core earnings P/E 16.52 19.29 18.95 22.14 19.71
Pre conversion earnings ($) Y $ 759,000 For the twelve months ended September 30, 1997.
Pre conversion book value ($) B $ 10,592,000 At September 30, 1997.
Pre conversion assets ($) A $ 59,853,000 At September 30, 1997.
Pre conversion core earnings ($) $ 759,000 For the twelve months ended September 30, 1997.
Conversion expense ($) X $ 487,000
Proceeds not reinvested ($) Z $ 1,360,000 ESOP shares.
ESOP borrowings ($) E $ 1,360,000
ESOP cost of borrowings, net (%) S 6.27%
ESOP term of borrowings (yrs.) T 10
RRP amount ($) M $ 680,000
RRP expense ($) N $ 136,000
Tax rate (%) TAX 34.00%
Investment rate of return, net (%) R 3.53%
Investment rate of return, pretax (%) 5.35%
</TABLE>
<TABLE>
<CAPTION>
Formulae to indicate value after conversion:
<S> <C>
1. P/E method: Value = P/E(Y-R(X+Z)-ES-(1-TAX)E/T-(1-TAX)N)) $ = 17,012,105
-------------------------------------
1-(P/E)R
2. P/B method: Value = P/B(B-X-E-M) = $ 16,977,969
------------
1-P/B
3. P/A method: Value = P/A(A-X) = $ 16,937,236
--------
1-P/A
</TABLE>
<TABLE>
<CAPTION>
VALUATION CORRELATION AND CONCLUSIONS:
Number of Price TOTAL
Shares Per Share VALUE
------------- --------------- --------------
<S> <C> <C> <C>
Appraised value - midrange 1,700,000 $10.00 $ 17,000,000
Minimum - 85% of midrange 1,445,000 $10.00 $ 14,450,000
Maximum - 115% of midrange 1,955,000 $10.00 $ 19,550,000
Superrange - 115% of maximum 2,248,250 $10.00 $ 22,482,500
</TABLE>
<PAGE> 170
EXHIBIT 49
KELLER & COMPANY
Dublin, Ohio
614-766-1426
COMPARABLE GROUP MARKET, PRICING AND FINANCIAL RATIOS
Stock Prices as of November 28, 1997
<TABLE>
<CAPTION>
Market Data Pricing Ratios
********************************* ******************************************
Book Price/ Price/ Price/
Market Price/ 12 Mo. Value/ Price/ Book Price/ Tang. Core
Value Share EPS Share Earnings Value Assets Bk. Val. Earnings
($M) ($) ($) ($) (X) (%) (%) (%) (%)
---------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
THE HOME LOAN SAVINGS BANK
Appraised value - midpoint 17.00 10.00 0.61 14.74 16.52 67.80 22.20 67.86 16.52
Minimum of range 14.45 10.00 0.68 15.81 14.64 63.23 19.57 63.27 14.64
Maximum of range 19.55 10.00 0.55 13.95 18.25 71.67 24.78 71.70 18.25
Superrange maximum 22.48 10.00 0.50 13.27 20.08 75.38 27.49 75.42 20.08
ALL THRIFTS (372)
Average 236.38 24.41 1.27 15.58 21.77 161.12 18.72 167.47 22.14
Median 59.45 21.00 1.19 14.98 18.71 149.24 16.99 153.21 19.71
OHIO THRIFTS (33)
Average 175.06 21.93 1.28 14.58 21.07 152.76 20.01 156.49 20.45
Median 39.22 18.50 1.05 14.60 18.32 130.42 19.32 137.11 18.75
COMPARABLE GROUP (10)
Average 20.34 19.59 1.19 15.38 16.95 126.73 19.75 126.78 19.29
Median 16.33 18.66 1.06 14.91 16.34 126.42 18.55 126.66 18.95
COMPARABLE GROUP
AMFC AMB Financial Corp. 15.42 16.00 1.00 14.95 16.00 107.02 14.92 107.02 22.86
ASBP ASB Financial Corp. 21.90 13.13 0.71 10.30 18.49 127.43 19.84 127.43 19.59
CIBI Community Investors Bancorp 14.21 15.75 1.05 12.09 15.00 130.27 15.30 130.27 15.00
FFDF FFD Financial Corp. 26.55 18.38 1.25 14.86 14.70 123.65 30.09 123.65 29.64
KYF Kentucky First Bancorp Inc. 18.82 14.50 0.80 11.29 18.13 128.43 21.44 128.43 18.35
MARN Marion Capital Holdings 47.11 26.50 1.59 22.22 16.67 119.26 26.17 119.26 16.88
NWEQ Northwest Equity Corp. 15.94 19.00 1.24 14.53 15.32 130.76 16.44 130.76 15.83
PWBK Pennwood Bancorp Inc. 10.79 18.94 0.86 15.34 22.02 123.46 22.64 123.46 20.36
PTRS Potters Financial Corp. 16.40 34.00 2.34 22.42 14.53 151.65 13.36 151.65 14.85
THR Three Rivers Financial Corp. 16.26 19.75 1.06 15.75 18.63 125.40 17.26 125.88 19.55
<CAPTION>
Dividends Financial Ratios
************************ ***************************
Div./ Dividend Payout Equity/
Share Yield Ratio Assets ROAA ROAE
($) (%) (%) (%) (%) (%)
------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
THE HOME LOAN SAVINGS BANK
Appraised value - midpoint 0.00 0.00 0.00 32.82 1.35 4.11
Minimum of range 0.00 0.00 0.00 30.95 1.34 4.32
Maximum of range 0.00 0.00 0.00 34.58 1.36 3.93
Superrange maximum 0.00 0.00 0.00 36.47 1.37 3.75
ALL THRIFTS (372)
Average 0.54 1.52 48.22 12.67 0.86 8.74
Median 0.33 1.56 27.04 10.64 0.94 8.34
OHIO THRIFTS (33)
Average 1.00 1.95 83.18 14.85 1.01 8.73
Median 0.35 1.87 31.41 12.44 0.99 8.03
COMPARABLE GROUP (10)
Average 1.21 2.31 144.21 15.69 1.17 7.39
Median 0.37 2.03 34.90 14.76 1.01 7.07
COMPARABLE GROUP
AMFC AMB Financial Corp. 0.25 1.75 24.00 13.94 1.03 6.30
ASBP ASB Financial Corp. 5.40 3.05 760.56 15.57 0.97 5.89
CIBI Community Investors Bancorp 0.29 2.03 26.68 11.75 0.97 8.37
FFDF FFD Financial Corp. 0.28 1.63 20.00 24.34 1.93 7.83
KYF Kentucky First Bancorp Inc. 3.50 3.45 437.50 16.70 1.15 6.64
MARN Marion Capital Holdings 0.86 3.32 52.83 21.95 1.70 7.49
NWEQ Northwest Equity Corp. 0.50 2.95 37.10 11.69 1.03 8.75
PWBK Pennwood Bancorp Inc. 0.30 1.69 34.88 18.34 0.99 5.20
PTRS Potters Financial Corp. 0.35 1.18 13.68 8.81 0.98 10.93
THR Three Rivers Financial Corp. 0.38 2.03 34.91 13.77 0.90 6.48
</TABLE>
<PAGE> 171
EXHIBIT 50
KELLER & COMPANY
Columbus, Ohio
614-766-1426
PROJECTED EFFECT OF CONVERSION PROCEEDS
The Home Loan Savings Bank/Home Loan Financial Corporation
At the MINIMUM of the Range
<TABLE>
<S> <C> <C> <C>
1. Gross Conversion Proceeds
Minimum market value $ 14,450,000
Less: Estimated conversion expenses 456,000
Net conversion proceeds $ 13,994,000
2. Generation of Additional Income
Net conversion proceeds $ 13,994,000
Less: Proceeds not invested (1) 1,156,000
Total conversion proceeds invested $ 12,838,000
Investment rate 3.53%
Earnings increase - return on proceeds invested $ 453,310
Less: Estimated cost of ESOP borrowings 72,481
Less: Amortization of ESOP borrowings,
net of taxes 76,296
Less: RRP expense, net of taxes 76,296
Net earnings increase $ 228,237
3. Comparative Earnings
Regular Core
----------------- -----------------
Before conversion - 12 months ended 09/30/97 $ 759,000 759,000
Net earnings increase 228,237 228,237
After conversion $ 987,237 987,237
4. Comparative Net Worth (2)
Before conversion - 09/30/97 $ 10,592,000
Conversion proceeds 12,260,000
After conversion $ 22,852,000
5. Comparative Net Assets
Before conversion - 09/30/97 $ 59,853,000
Conversion proceeds 13,994,000
After conversion $ 73,847,000
<FN>
(1) Represents ESOP borrowings.
(2) ESOP borrowings and RRP are omitted from net worth.
</TABLE>
<PAGE> 172
EXHIBIT 51
KELLER & COMPANY
Columbus, Ohio
614-766-1426
PROJECTED EFFECT OF CONVERSION PROCEEDS
The Home Loan Savings Bank/Home Loan Financial Corporation
At the MIDPOINT of the Range
<TABLE>
<S> <C> <C> <C>
1. Gross Conversion Proceeds
Midpoint market value $ 17,000,000
Less: Estimated conversion expenses 487,000
Net conversion proceeds $ 16,513,000
2. Generation of Additional Income
Net conversion proceeds $ 16,513,000
Less: Proceeds not invested (1) 1,360,000
Total conversion proceeds invested $ 15,153,000
Investment rate of return 3.53%
Earnings increase - return on proceeds invested $ 535,052
Less: Estimated cost of ESOP borrowings 85,272
Less: Amortization of ESOP borrowings,
net of taxes 89,760
Less: RRP expense, net of taxes 89,760
Net earnings increase $ 270,260
3. Comparative Earnings
Regular Core
----------------- -----------------
Before conversion - 12 months ended 09/30/97 $ 759,000 759,000
Net earnings increase 270,260 270,260
After conversion $ 1,029,260 1,029,260
4. Comparative Net Worth (2)
Before conversion - 09/30/97 $ 10,592,000
Conversion proceeds 14,473,000
After conversion $ 25,065,000
5. Comparative Net Assets
Before conversion - 09/30/97 $ 59,853,000
Conversion proceeds 16,513,000
After conversion $ 76,366,000
</TABLE>
(1) Represents ESOP borrowings.
(2) ESOP borrowings and RRP are omitted from net worth.
<PAGE> 173
EXHIBIT 52
KELLER & COMPANY
Columbus, Ohio
614-766-1426
PROJECTED EFFECT OF CONVERSION PROCEEDS
The Home Loan Savings Bank/Home Loan Financial Corporation
At the MAXIMUM of the Range
<TABLE>
<S> <C> <C> <C>
1. Gross Conversion Proceeds
Maximum market value $ 19,550,000
Less: Estimated conversion expenses 517,000
Net conversion proceeds $ 19,033,000
2. Generation of Additional Income
Net conversion proceeds $ 19,033,000
Less: Proceeds not invested (1) 1,564,000
Total conversion proceeds invested $ 17,469,000
Investment rate 3.53%
Earnings increase - return on proceeds invested $ 616,830
Less: Estimated cost of ESOP borrowings 98,063
Less: Amortization of ESOP borrowings,
net of taxes 103,224
Less: RRP expense, net of taxes 103,224
Net earnings increase $ 312,320
3. Comparative Earnings
Regular Core
----------------- -----------------
Before conversion - 12 months ended 09/30/97 $ 759,000 759,000
Net earnings increase 312,320 312,320
After conversion $ 1,071,320 1,071,320
4. Comparative Net Worth (2)
Before conversion - 09/30/97 $ 10,592,000
Conversion proceeds 16,687,000
After conversion $ 27,279,000
5. Comparative Net Assets
Before conversion - 09/30/97 $ 59,853,000
Conversion proceeds 19,033,000
After conversion $ 78,886,000
</TABLE>
(1) Represents ESOP borrowings.
(2) ESOP borrowings and RRP are omitted from net worth.
<PAGE> 174
EXHIBIT 53
KELLER & COMPANY
Columbus, Ohio
614-766-1426
PROJECTED EFFECT OF CONVERSION PROCEEDS
The Home Loan Savings Bank/Home Loan Financial Corporation
At the SUPERRANGE Maximum
<TABLE>
<S> <C> <C> <C>
1. Gross Conversion Proceeds
Superrange market value $ 22,482,500
Less: Estimated conversion expenses 552,000
Net conversion proceeds $ 21,930,500
2. Generation of Additional Income
Net conversion proceeds $ 21,930,500
Less: Proceeds not invested (1) 1,798,600
Total conversion proceeds invested $ 20,131,900
Investment rate 3.53%
Earnings increase - return on proceeds invested $ 710,857
Less: Estimated cost of ESOP borrowings 112,772
Less: Amortization of ESOP borrowings,
net of taxes 118,708
Less: RRP expense, net of taxes 118,708
Net earnings increase $ 360,670
3. Comparative Earnings
Regular Core
----------------- -----------------
Before conversion - 12 months ended 09/30/97 $ 759,000 759,000
Net earnings increase 360,670 360,670
After conversion $ 1,119,670 1,119,670
4. Comparative Net Worth (2)
Before conversion - 09/30/97 $ 10,592,000
Conversion proceeds 19,232,600
After conversion $ 29,824,600
5. Comparative Net Assets
Before conversion - 09/30/97 $ 59,853,000
Conversion proceeds 21,930,500
After conversion $ 81,783,500
</TABLE>
(1) Represents ESOP borrowings.
(2) ESOP borrowings and RRP are omitted from net worth.
<PAGE> 175
EXHIBIT 54
KELLER & COMPANY
Dublin, Ohio
614-766-1426
<TABLE>
<CAPTION>
SUMMARY OF VALUATION PREMIUM OR DISCOUNT
Premium or (discount)
from comparable group.
-----------------------------
Home Average Median
---- ------- ------
<S> <C> <C> <C>
Midpoint:
Price/earnings 16.x2 (2.52)% 1.14%
Price/book value 67.%0 * (46.51)% (46.37)%
Price/assets 22.%0 12.41% 19.66%
Price/tangible book value 67.%6 (46.48)% (46.42)%
Price/core earnings 16.x2 (14.36)% (12.81)%
Minimum of range:
Price/earnings 14.x4 (13.64)% (10.40)%
Price/book value 63.%3 * (50.11)% (49.98)%
Price/assets 19.%7 (0.90)% 5.49%
Price/tangible book value 63.%7 (50.10)% (50.05)%
Price/core earnings 14.x4 (24.13)% (22.76)%
Maximum of range:
Price/earnings 18.x5 7.67% 11.71%
Price/book value 71.%7 * (43.45)% (43.31)%
Price/assets 24.%8 25.51% 33.60%
Price/tangible book value 71.%0 (43.44)% (43.39)%
Price/core earnings 18.x5 (5.40)% (3.70)%
Super maximum of range:
Price/earnings 20.x8 18.47% 22.92%
Price/book value 75.%8 * (40.52)% (40.37)%
Price/assets 27.%9 39.22% 48.20%
Price/tangible book value 75.%2 (40.52)% (40.46)%
Price/core earnings 20.x8 4.09% 5.96%
</TABLE>
* Represents pricing ratio associated with primary valuation method.
<PAGE> 176
ALPHABETICAL
EXHIBITS
<PAGE> 177
EXHIBIT A
KELLER & COMPANY, INC.
555 METRO PLACE NORTH
SUITE 524
DUBLIN, OHIO 43017
(614) 766-1426
(614) 766-1459 FAX
PROFILE OF THE FIRM
KELLER & COMPANY, INC. is a full service consulting firm to financial
institutions, serving clients throughout the United States from its office in
Dublin, Ohio. The firm consults primarily in the areas of regulatory and
compliance matters, financial analysis and strategic planning, stock valuations
and appraisals, mergers and acquisitions, mutual to stock conversions,
conversion/mergers and branching. Since its inception in 1985, KELLER & COMPANY
has provided a wide range of consulting services to over 100 financial
institutions including thrifts, banks, mortgage companies and holding companies.
KELLER & COMPANY is an affiliate member of the Community Bankers of America,
Community Bankers Association of Ohio, the Ohio League of Financial
Institutions, and the Tri State League of Financial Institutions.
Each of the firm's senior consultants has over eighteen years front line
experience and accomplishment in various areas of the financial institution and
real estate industries. Each consultant provides to clients distinct and diverse
areas of expertise. Specific services and projects have included financial
institution charter and deposit insurance applications, market studies,
institutional mergers and acquisitions, branch sales and acquisitions,
operations and performance analyses, business plans, strategic planning,
financial projections and modeling, stock valuations, fairness opinions,
conversion appraisals, capital plans, policy development and revision, lending,
underwriting and investment criteria, data processing and management information
systems, and incentive compensation programs.
It is the goal of KELLER & COMPANY to provide specific and ongoing services that
are pertinent and responsive to the needs of the individual client institution
within the changing industry environment, and to offer those services at
reasonable fees on a timely basis. In recent years, KELLER & COMPANY has become
one of the leading consulting firms in the nation.
<PAGE> 178
CONSULTANTS IN THE FIRM
MICHAEL R. KELLER has over twenty years experience as a consultant to the
financial institution industry. Immediately following his graduation from
college, he was employed by the Ohio Division of Financial Institutions, working
for two years in the northeastern Ohio district as an examiner of financial
institutions before pursuing graduate studies at the Ohio State University.
Mr. Keller later worked as an associate for a management consulting firm
specializing in services to financial institutions. During his eight years with
the firm, he specialized in mergers and acquisitions, branch acquisitions and
sales, branch feasibility studies, stock valuations, charter applications, and
site selection analyses. By the time of his departure, he had attained the
position of vice president, with experience in almost all facets of banking
operations.
Prior to forming Keller & Company, Mr. Keller also worked as a senior consultant
in a larger consulting firm. In that position, he broadened his activities and
experience, becoming more involved with institutional operations, business and
strategic planning, regulatory policies and procedures, conversion appraisals,
and fairness opinions. Mr. Keller established the firm in November 1985 to
better serve the needs of the financial institution industry.
Mr. Keller graduated from Wooster College with a B.A. in Economics in 1972, and
later received an M.B.A. in Finance in 1976 from the Ohio State University where
he took two courses in corporate stock valuations.
<PAGE> 179
Consultants in the Firm (cont.)
JOHN A. SHAFFER has over twenty years experience in banking, finance, real
estate lending, and development.
From 1971 to 1974, Mr. Shaffer was employed by a large real estate investment
trust as a lending officer, specializing in construction and development loans.
By 1974, having gained experience in loan underwriting, management and workout,
he joined Chemical Association of New York and was appointed Vice President for
Loan Administration of Chemical Mortgage Company in Columbus, Ohio. At Chemical,
he managed all commercial and residential loan servicing, administering a
portfolio in excess of $1 billion. His responsibilities also included the
analysis, management and workout of problem commercial loans and properties, and
the structuring, negotiation, acquisition and sale of loan servicing and
mortgage and equity securities.
Mr. Shaffer later formed an independent real estate and financial consulting
firm, serving corporate and institutional clients, and also investing in and
developing real estate. His primary activities have included the planning,
analysis, financing, implementation, and administration of real estate projects,
as well as financial projection and modeling, cost and profit analysis, loan
management, budgeting, cash flow management and project design.
Mr. Shaffer graduated from Syracuse University with a B.S. in Business
Administration, later receiving an M.B.A. in Finance and a Ph.D. in Economics
from New York University.
<PAGE> 180
Consultants in the Firm (cont.)
JAMES E. CAMPBELL has over twenty-five years experience in the banking and
thrift industry. He served in upper management and was involved in asset and
liability management, lending policy, retail management, public policy and
Community Reinvestment Act policy.
From 1969 to 1991, Mr. Campbell was employed by National City Bank of Columbus,
Ohio. He was appointed Executive Vice President of the Retail Banking Group in
1984. He had management responsibility for 135 banking officers with over 1,500
associates in Central and Southern Ohio. He also managed the consumer and real
estate functions of the Bank.
Mr. Campbell became Chairman, President and Chief Executive Officer of Jefferson
Savings Bank, West Jefferson, Ohio in 1993 and remained with them until the bank
was sold in 1997.
Mr. Campbell graduated from Stonier School of Bank, Rutgers University in 1979.
<PAGE> 181
EXHIBIT B
RB 20
CERTIFICATION
I HEREBY CERTIFY THAT I HAVE NOT BEEN THE SUBJECT OF ANY CRIMINAL, CIVIL OR
ADMINISTRATIVE JUDGMENTS, CONSENTS, UNDERTAKINGS OR ORDERS, OR ANY PAST
ADMINISTRATIVE PROCEEDINGS (EXCLUDING ROUTINE OR CUSTOMARY AUDITS, INSPECTIONS
AND INVESTIGATION) ISSUED BY ANY FEDERAL OR STATE COURT, ANY DEPARTMENT, AGENCY,
OR COMMISSION OF THE U.S. GOVERNMENT, ANY STATE OR MUNICIPALITY, ANY
SELF-REGULATORY TRADE OR PROFESSIONAL ORGANIZATION, OR ANY FOREIGN GOVERNMENT OR
GOVERNMENTAL ENTITY, WHICH INVOLVE:
(I) COMMISSION OF A FELONY, FRAUD, MORAL TURPITUDE, DISHONESTY OR BREACH OF
TRUST;
(II) VIOLATION OF SECURITIES OR COMMODITIES LAWS OR REGULATIONS;
(III) VIOLATION OF DEPOSITORY INSTITUTION LAWS OR REGULATIONS;
(IV) VIOLATION OF HOUSING AUTHORITY LAWS OR REGULATIONS;
(V) VIOLATION OF THE RULES, REGULATIONS, CODES OR CONDUCT OR ETHICS OF A
SELF-REGULATORY TRADE OR PROFESSIONAL ORGANIZATION;
(VI) ADJUDICATION OF BANKRUPTCY OR INSOLVENCY OR APPOINTMENT OF A RECEIVER,
CONSERVATOR, TRUSTEE, REFEREE, OR GUARDIAN.
I HEREBY CERTIFY THAT THE STATEMENTS I HAVE MADE HEREIN ARE TRUE, COMPLETE AND
CORRECT TO THE BEST OF MY KNOWLEDGE AND BELIEF.
CONVERSION APPRAISER
December 12, 1997 /s/ Michael R. Keller
- ------------------------------ -------------------------------------
DATE MICHAEL R. KELLER
<PAGE> 182
EXHIBIT C
KELLER & COMPANY, INC.
555 METRO PLACE NORTH
SUITE 524
DUBLIN, OHIO 43017
(614) 766-1426
(614) 766-1459 FAX
AFFIDAVIT OF INDEPENDENCE
-------------------------
STATE OF OHIO,
COUNTY OF FRANKLIN, ss:
I, Michael R. Keller, being first duly sworn hereby depose and say
that:
The fee which I received directly from the applicant, The Home Loan
Savings Bank, Coshocton, Ohio in the amount of $17,000 for the performance of my
appraisal was not related to the value determined in the appraisal and that the
undersigned appraiser is independent and has fully disclosed any relationships
which may have a material bearing upon the question of my independence; and that
any indemnity agreement with the applicant has been fully disclosed.
Further, affiant sayeth naught.
-------------------------
MICHAEL R. KELLER
Sworn to before me and subscribed in my presence this 12th day of
December 1997.
-------------------------
NOTARY PUBLIC
