<PAGE> 1
As filed with the Securities and Exchange Commission on December 17, 1997
Registration No. ______________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
COLUMBIA FINANCIAL OF KENTUCKY, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Ohio 6036 Applied For
_______________________________ ____________________________ ________________
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. employer
incorporation or organization) Classification Code Number) identification
number)
</TABLE>
2497 DIXIE HIGHWAY
FT. MITCHELL, KENTUCKY 41017-3085
(606) 331-2419
_____________________________________________________________
(Address, including Zip Code, and telephone number, including
area code, of registrant's principal executive offices)
ROBERT V. LYNCH
COLUMBIA FINANCIAL OF KENTUCKY, INC.
2497 DIXIE HIGHWAY
FT. MITCHELL, KENTUCKY 41017-3085
(606) 331-2419
_________________________________________________________
(Name, address, including Zip Code, and telephone number,
including area code, of agent for service)
With copies to:
Cynthia A. Shafer
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 this Registration Statement becomes
effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, check the following box: [x]
CALCULATION OF REGISTRATION FEE
______________________________________________________________________________
<TABLE>
<CAPTION>
Title of each class Proposed maximum Proposed maximum
of securities to be Amount to offering price aggregate Amount of
registered be registered per share offering price(1) registration fee
_____________________________________________________________________________________________
<S> <C> <C> <C> <C>
Common shares,
without par value 2,671,450 shares $10.00 $26,714,500 $8,096.00
=============================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
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>
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. Plans 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............... COLUMBIA FINANCIAL OF KENTUCKY, INC.;
COLUMBIA FEDERAL SAVINGS BANK; THE
BUSINESS OF COLUMBIA FEDERAL
(b) Description of Property............... THE BUSINESS OF COLUMBIA FEDERAL -
Properties
(c) Legal Proceedings..................... THE BUSINESS OF COLUMBIA FEDERAL - Legal
Proceedings
(d) Market Price and Dividends............ Cover Page; MARKET FOR COMMON SHARES;
DIVIDEND POLICY
(e) Financial Statements.................. Index to Financial Statements
(f) Selected Financial Data............... SELECTED CONSOLIDATED FINANCIAL
INFORMATION AND OTHER DATA
(g) Supplementary Financial Information... Not Applicable
(h) Management's Discussion and Analysis MANAGEMENT'S DISCUSSION AND ANALYSIS OF
of Financial Condition and Results of FINANCIAL CONDITION AND RESULTS OF
Operations............................. OPERATIONS
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
(i) Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure.............................. Not Applicable
(j) Directors and Executive Officers....... MANAGEMENT OF CFKY;
MANAGEMENT OF COLUMBIA FEDERAL
(k) Executive Compensation................. MANAGEMENT OF COLUMBIA FEDERAL -
Compensation; Employee Stock Ownership
Plan; Stock Option Plan; Recognition and
Retention Plan and Trust; Retirement
Benefit Plans; and Employment and
Severance Agreements
(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.......................... MANAGEMENT OF COLUMBIA FEDERAL -
Certain Transactions with Columbia Federal
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liability.................................. Not Applicable
</TABLE>
<PAGE> 4
PROSPECTUS
COLUMBIA FINANCIAL OF KENTUCKY, INC.
(PROPOSED HOLDING COMPANY FOR COLUMBIA FEDERAL SAVINGS BANK)
UP TO 2,323,000 COMMON SHARES
$10.00 PURCHASE PRICE PER SHARE
Columbia Financial of Kentucky, Inc., an Ohio corporation ("CFKY"), is
hereby offering for sale up to 2,323,000 common shares, without par value (the
"Common Shares"), in connection with its acquisition of all of the capital stock
to be issued by Columbia Federal Savings Bank ("Columbia Federal"), upon the
conversion of Columbia Federal from a federal mutual savings bank to a federal
stock savings bank (the "Conversion"). The consummation of the Conversion and
the sale of the Common Shares are subject to the approval of Columbia Federal's
Amended Plan of Conversion (the "Plan") and the adoption of the Federal Stock
Charter of Columbia Federal at a Special Meeting of the members of Columbia
Federal to be held at ___ _.m., Eastern Time, on _________, 1998, at
_____________________________________ (the "Special Meeting").
THE COMMON SHARES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), THE OFFICE OF THRIFT
SUPERVISION OF THE DEPARTMENT OF THE TREASURY (THE "OTS"), THE FEDERAL
DEPOSIT INSURANCE CORPORATION (THE "FDIC"), OR THE SECURITIES COMMISSION OF
ANY STATE, NOR HAS THE SEC, THE OTS, THE FDIC OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Based on an independent appraisal of the pro forma market value of
Columbia Federal, as converted, as of November 28, 1997, the aggregate
purchase price of the Common Shares offered in connection with the Conversion
ranges from a minimum of $17,170,000 to a maximum of $23,230,000 (the
"Valuation Range"), resulting in a range of 1,717,000 to 2,323,000 Common
Shares at $10.00 per share. Applicable regulations permit CFKY 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 2,671,450
Common Shares with an aggregate purchase price of $26,714,500. The actual
number of Common Shares sold in connection with the Conversion will be based
upon the final valuation of Columbia Federal, as determined by the
independent appraiser upon the completion of this offering.
In accordance with the Plan, Common Shares are offered hereby in a
subscription offering to (a) each account holder who, as of September 30,
1996 (the "Eligibility Record Date"), had deposit accounts with deposit
balances, in the aggregate, of $50 or more (a "Qualifying Deposit") with
Columbia Federal; (b) the Columbia Financial of Kentucky, Inc., Employee
Stock Ownership Plan (the "ESOP"); (c) each account holder who as of December
31, 1997 (the "Supplemental Eligibility Record Date"), had a Qualifying
Deposit at Columbia Federal; and (d) each account holder and certain
borrowers as of _____________, 1998 (the "Subscription Offering"). All
subscription rights to purchase Common Shares in the Subscription Offering
are nontransferable and will expire at ___ _.m., Eastern Time, on ______,
1998 (the "Subscription Expiration Date"), unless extended. 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."
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.
AN INVESTMENT IN THE COMMON SHARES OFFERED HEREBY INVOLVES CERTAIN
RISKS. FOR A DISCUSSION OF CERTAIN RISKS AND OTHER FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON SHARES, SEE "RISK FACTORS"
BEGINNING AT PAGE __ OF THIS PROSPECTUS.
FOR INFORMATION ON HOW TO SUBSCRIBE, CALL THE STOCK INFORMATION CENTER
AT ______________.
<TABLE>
<CAPTION>
=======================================================================================
Estimated Underwriting
Purchase Commissions Estimated Net
Price And Other Expenses(1) Proceeds
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share Minimum $10 $0.36 $9.64
Per share Mid-Point $10 $0.33 $9.67
Per share Maximum $10 $0.30 $9.70
Per share Maximum, as adjusted (2) $10 $0.28 $9.72
Total Minimum $17,170,000 $620,000 $16,550,000
Total Mid-point $20,200,000 $658,000 $19,542,000
Total Maximum $23,230,000 $695,000 $22,535,000
Total Maximum, as adjusted (2) $26,714,500 $737,000 $25,977,500
=======================================================================================
</TABLE>
(1) Consists of estimated printing, postage, legal, accounting, filing fee,
appraisal and miscellaneous costs to Columbia Federal and CFKY in
connection with the Conversion, as well as estimated fees, sales
commissions and reimbursable expenses to be paid to Charles Webb &
Company, a division of Keefe, Bruyette & Woods, Inc., which has been
engaged by Columbia Federal to consult, advise and assist in the sale of
the Common Shares on a best effort basis. Actual Conversion expenses
may be more or less than estimated amounts. See "THE CONVERSION - Plan
of Distribution."
(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 offered without the resolicitation
of persons who subscribe for Common Shares. See "THE CONVERSION -
Pricing and Number of Common Shares to be Sold."
The date of this Prospectus is _____, 1998.
CHARLES WEBB & COMPANY
A DIVISION OF KEEFE, BRUYETTE & WOODS, INC.
<PAGE> 5
To the extent that all of the Common Shares are not subscribed for in
the Subscription Offering, the remaining shares are hereby concurrently being
offered to the general public in a direct community offering in which
preference will be given to natural persons who reside in either Boone County
or Kenton County, Kentucky (the "Community Offering"). See "THE CONVERSION -
Community Offering." The Community Offering may end at any time after orders
for at least 2,323,000 Common Shares have been received, but in no event
later than 45 days after the Subscription Expiration Date or ________, 1998,
unless extended by CFKY and Columbia Federal with the approval of the OTS, if
necessary. In accordance with the Plan, the Subscription Offering and the
Community Offering may not be extended beyond ________, 2000. See "THE
CONVERSION - Subscription Offering; - Community Offering; and - Plan of
Distribution."
Columbia Federal has engaged Charles Webb & Company, a division of
Keefe, Bruyette & Woods, Inc. ("Webb"), to consult, advise and assist in the
sale of the Common Shares on a best efforts basis in the Subscription
Offering and the Community Offering (together, the "Offering"). See "THE
CONVERSION - Plan of Distribution."
The Plan and federal regulations limit the number of Common Shares which
may be purchased by various categories of persons, including the limitation
that no person may purchase fewer than 25 shares, nor more than 15,000 of the
Common Shares sold in connection with the Conversion. Such limitation does
not apply to the ESOP. In addition, no person together with such person's
Associates (hereinafter defined) and persons Acting in Concert (hereinafter
defined) with such person, may purchase more than 30,000 of the Common Shares
sold in connection with the Conversion. SUBJECT TO APPLICABLE OTS
REGULATIONS, THE LIMITATIONS SET FORTH IN THE PLAN MAY BE CHANGED AT ANY TIME
IN THE SOLE DISCRETION OF THE BOARD OF DIRECTORS OF CFKY AND COLUMBIA
FEDERAL. See "THE CONVERSION - Limitations on Purchases of Common Shares."
Common Shares may be subscribed for in the Subscription Offering or
ordered in the Community Offering only by returning the accompanying Stock
Order Form and Certification Form (the "Order Form"), along with full payment
of the purchase price per share for all shares for which subscription is made
or order is submitted, no later than ___ _.m., Eastern Time, ______, 1998.
See "THE CONVERSION - Use of Order Forms." Payment may be made in cash or by
check or money order and will be held in a segregated account at Columbia
Federal, insured by the FDIC up to the applicable limit and earning interest
at Columbia Federal's passbook rate, currently ____ annual percentage yield,
from the date of receipt until the completion of the Conversion. Payment may
also be made by authorized withdrawal from an existing Columbia Federal
savings account, the amount in which will continue to earn interest until
completion of the Conversion at the rate normally in effect from time to time
for such account. Neither payments made in cash or by check or money order,
nor payments made by authorized withdrawal from an account at Columbia
Federal will be available during the Subscription Offering and the Community
Offering. See "THE CONVERSION - Payment for Common Shares."
AN EXECUTED ORDER FORM, ONCE RECEIVED BY CFKY, MAY NOT BE MODIFIED,
AMENDED OR RESCINDED WITHOUT THE CONSENT OF CFKY, UNLESS (I) THE COMMUNITY
OFFERING IS NOT COMPLETED WITHIN 45 DAYS AFTER THE SUBSCRIPTION EXPIRATION
DATE, OR (II) THE FINAL VALUATION OF COLUMBIA FEDERAL, AS CONVERTED, IS LESS
THAN $17,170,000 OR MORE THAN $26,714,500. IF EITHER OF THOSE EVENTS OCCURS,
PERSONS WHO HAVE SUBSCRIBED FOR COMMON SHARES IN THE OFFERING WILL RECEIVE
WRITTEN NOTICE THAT, UNTIL A DATE SPECIFIED IN THE NOTICE, THEY HAVE A 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 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 MAXIMUM
PURCHASE LIMITATION IS INCREASED TO MORE THAN 15,000 COMMON SHARES, PERSONS
WHO HAVE SUBSCRIBED FOR 15,000 COMMON SHARES WILL BE GIVEN THE OPPORTUNITY TO
INCREASE THEIR SUBSCRIPTIONS.
CFKY has received approval to have the Common Shares quoted on the
Nasdaq National Market ("Nasdaq") under the symbol ["CFKY"], subject to
certain conditions which CFKY and Columbia Federal believe will be satisfied,
although no assurance can be provided that the conditions will be met. The
aggregate offering price for the Common Shares is based upon an independent
appraisal of Columbia Federal performed by Keller & Company, Inc. ("Keller").
The appraisal is not a recommendation as to the advisability of purchasing
Common Shares. See "THE CONVERSION - Pricing and Number of Common Shares to
be Sold." No assurance can be given that persons purchasing Common Shares
will thereafter be able to sell such shares at a price at or above the
offering price. See "RISK FACTORS - Limited Market for the Common Shares."
There is presently no market for the Common Shares.
THE CONVERSION OF COLUMBIA FEDERAL FROM A MUTUAL SAVINGS BANK TO A
PERMANENT CAPITAL STOCK SAVINGS BANK IS CONTINGENT UPON (I) THE APPROVAL OF
THE PLAN AND THE ADOPTION OF THE FEDERAL STOCK CHARTER AND FEDERAL STOCK
BYLAWS BY COLUMBIA FEDERAL'S VOTING MEMBERS, (II) THE SALE OF THE REQUISITE
NUMBER OF COMMON SHARES, AND (III) THE SATISFACTION OR WAIVER OF CERTAIN
OTHER CONDITIONS. SEE "THE CONVERSION."
-ii-
<PAGE> 6
COLUMBIA FEDERAL SAVINGS BANK
FT. MITCHELL, KENTUCKY
[Map of the region of Southeastern Indiana, Southwestern Ohio and Northern
Kentucky (the "Tri-State") with an outline of each county, indicating the
location of Cincinnati, and below the map of the Tri-State is an
enlargement of Boone County and Kenton County, Kentucky, showing the
location of Covington, Ft. Mitchell, Crescent Springs, Erlanger & Florence
within those counties.]
-iii-
<PAGE> 7
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.
COLUMBIA FINANCIAL OF KENTUCKY, INC.
CFKY was incorporated under Ohio law in October 1997 at the direction of
Columbia Federal for the purpose of purchasing all of the capital stock of
Columbia Federal to be issued in connection with the Conversion. CFKY 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, CFKY will be a unitary savings and loan holding
company, the principal assets of which initially will be the capital stock of
Columbia Federal, a loan to the ESOP and the investments made with 50% of the
net proceeds retained from the sale of CFKY shares in connection with the
Conversion. See "USE OF PROCEEDS."
The main office of CFKY is located at 2497 Dixie Highway, Ft. Mitchell,
Kentucky, 41017-3085, and its telephone number is (606) 331-2419.
COLUMBIA FEDERAL SAVINGS BANK
Columbia Federal is a mutual savings bank which has served Northern
Kentucky since 1884. Organized in 1884 under Kentucky law as Columbia Building
Association, Columbia Federal converted to a federally chartered savings and
loan association in 1934, at which time the name Columbia Federal Savings and
Loan Association of Covington was adopted. Star Federal Savings and Loan
Association ("Star Federal") was merged into Columbia Federal in 1970 and
American Federal Savings and Loan ("American") was merged into Columbia Federal
in 1981, with the combined entities retaining Columbia Federal's name.
Columbia Federal became a federal savings bank in 1995, adopting at that time
the name Columbia Federal Savings Bank.
As a federal savings bank, Columbia Federal is subject to supervision and
regulation by the OTS and the FDIC and is a member of the Federal Home Loan
Bank (the "FHLB") of Cincinnati. The deposits of Columbia Federal are insured
up to applicable limits by the FDIC in the Savings Association Insurance Fund
(the "SAIF"). See "REGULATION." At September 30, 1997, $53.6 million, or
approximately 83.8% of Columbia Federal's loan portfolio, consisted of loans
secured by first mortgages on one- to four-family homes, virtually all of which
were located within Boone County and Kenton County, Kentucky. See "THE
BUSINESS OF COLUMBIA FEDERAL - Lending Activities -- One- to Four-Family
Residential Real Estate Loans."
Columbia Federal conducts business from its main office located in Ft.
Mitchell, Kentucky, and four branch offices located in Covington, Crescent
Springs, Erlanger and Florence, Kentucky. Columbia Federal's primary market
area consists of Boone County and Kenton County, Kentucky. The main office of
Columbia Federal is located at 2497 Dixie Highway, Ft. Mitchell, Kentucky
41017-3085, and its telephone number is (606) 331-2419.
THE CONVERSION
On October 9, 1997, the Board of Directors of Columbia Federal unanimously
approved the Plan. The OTS approved the Plan, subject to the approval of the
Plan by Columbia Federal's voting members at a special meeting to be held at
___ _.m., Eastern Time, on ________, 1998, at ____________________________
____________________________________________. The Plan provides for the
conversion of Columbia Federal from a federal mutual savings bank to a
federal stock savings bank. Columbia Federal has operated as an independent
community oriented savings association since 1884. It is the intention of
Columbia Federal to continue to operate as an independent community oriented
savings association after the Conversion.
THE SUBSCRIPTION AND COMMUNITY OFFERINGS
The Plan provides for the formation of CFKY for the purpose of acquiring
all of the capital stock to be issued by Columbia Federal in the Conversion.
Pursuant to the Plan, Common Shares are hereby offered at a price of $10.00 per
share to (a) depositors of Columbia Federal with Qualifying Deposits as of
September 30, 1996 ("Eligible Account Holders"), (b) the ESOP, (c) depositors
of Columbia Federal with Qualifying Deposits as of December 31, 1997, the
Supplemental Eligibility Record Date ("Supplemental Eligible Account Holders"),
and (d) account holders of Columbia Federal having savings deposits
-1-
<PAGE> 8
of record on ____________ (the "Voting Record Date") and borrowers of record on
the Voting Record Date whose loans were in existence on December 16, 1995 (such
depositors and borrowers as of ___________, collectively, the "Voting
Members"). See "THE CONVERSION - Subscription Offering." Common Shares not
subscribed for in the Subscription Offering are hereby being concurrently
offered to those members of the general public receiving this Prospectus in the
Community Offering in which preference will be given to natural persons who
reside in either Boone County or Kenton County, Kentucky. See "THE CONVERSION
- - Community Offering."
The Plan authorizes the Board of Directors of CFKY and Columbia Federal to
establish limits on the number of Common Shares that may be purchased by
various categories of persons. The Plan also permits the Board of Directors of
CFKY and Columbia Federal, subject to any required regulatory approval and the
requirements of applicable laws and regulations, to increase or decrease such
purchase limitations in their sole discretion. The Boards of Directors have
established the limitation that, generally, an Eligible Account Holder, a
Supplemental Eligible Account Holder, or a Voting Member, together with any
Associate or persons Acting in Concert, may purchase in the Subscription
Offering a number of Common Shares equal to the greater of (i) 15,000 Common
Shares or (ii) 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 such Eligible Account Holder's or Supplemental Eligible Account
Holder's Qualifying Deposit and the denominator of which is the total amount of
Qualifying Deposits of all Eligible Account Holders or Supplemental Eligible
Account Holders, as the case may be. A person participating solely in the
Community Offering, together with any Associates or persons Acting in Concert,
may purchase a maximum of 15,000 Common Shares. Such limitation does not apply
to the ESOP, which intends to purchase 8% of the Common Shares sold in
connection with the Conversion. The ESOP may purchase Common Shares if shares
remain available after satisfying the subscriptions of Eligible Account Holders
up to $23,230,000, the maximum of the Valuation Range. If Common Shares in
excess of the maximum of the Valuation Range are sold, the ESOP will have the
first right to purchase such excess 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 in the open market or may purchase authorized but
unissued Common Shares from CFKY. If the ESOP purchases authorized but
unissued Common Shares from CFKY, such purchases would have a dilutive effect
on the interest of CFKY's shareholders.
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. Subject
to applicable regulations, the purchase limitation 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" and "RESTRICTIONS ON ACQUISITION OF COLUMBIA FEDERAL AND CFKY AND
RELATED ANTI-TAKEOVER PROVISIONS." The sale of Common Shares will be subject
to the approval of the Plan by the voting members of Columbia Federal at the
Special Meeting, to the sale of the requisite number of Common Shares and to
certain other conditions. See "THE CONVERSION - Subscription Offering; -
Community Offering; and - Pricing and Number of Common Shares to be Sold."
Columbia Federal has retained Webb to consult, advise and assist in the
sale of the Common Shares in the Subscription Offering and in the Community
Offering. For its services, Webb will receive a commission equal to 1.50% of
the aggregate purchase price paid for shares sold to residents of Boone County
and Kenton County, Kentucky, 1.25% of the aggregate purchase price of Common
Shares sold to residents of counties contiguous to Boone County or Kenton
County, Kentucky, and 0.75% of the aggregate purchase price of Common Shares
sold to persons not residents of Boone County or Kenton County, Kentucky, or
counties contiguous thereto. No commission will be paid on Common Shares
purchased by Columbia Federal's directors, officers and employees, and their
immediate family members, and the ESOP. In the event that Columbia Federal
requests Webb to obtain the assistance of other broker-dealers to sell Common
Shares in the Community Offering, Webb will be paid a commission of 5.5% of the
aggregate purchase price of Common Shares sold by such broker-dealers, from
which such broker-dealers will be paid, instead of the commission based upon
the residence of the purchasers. A management fee of $25,000 has already been
paid to Webb, and such amount will be deducted from the commission. Columbia
Federal will reimburse Webb for legal fees in an amount not to exceed $35,000.
See "THE CONVERSION - Plan of Distribution."
The Subscription Offering will terminate at ____ _.m., Eastern Time, on
_____, 1998. The Community Offering may be terminated at any time after orders
for at least 2,323,000 shares have been received, but in no event later than
______, 1998, unless extended. If the Community Offering extends beyond 45
days after the Subscription Expiration Date, persons who have subscribed for or
ordered Common Shares in the Subscription Offering or in the Community Offering
will receive a notice that, until a date specified in the notice, they have the
right to affirm, increase, decrease or rescind their subscriptions or orders
for Common Shares. Any person who does not affirmatively elect to continue his
subscription or order or elects to rescind his subscription or order during
such time will have all of his funds promptly refunded with interest. Any
person who elects to decrease his subscription or order will have the
appropriate portion of his funds promptly refunded with interest.
-2-
<PAGE> 9
The directors and executive officers of CFKY and Columbia Federal and their
Associates intend to purchase an aggregate of 200,500 Common Shares in
connection with the Conversion, which would constitute 9.9% of the Common Shares
sold assuming the sale of 2,020,000 Common Shares in connection with the
Conversion. The aggregate number of Common Shares proposed to be purchased by
the directors, the executive officers and the ESOP is 362,100, which would
constitute 17.9% of the Common Shares sold assuming the sale of 2,020,000 Common
Shares in connection with the Conversion. See "THE CONVERSION -- Shares to be
Purchased by Management Pursuant to Subscription Rights."
Federal regulations 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 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 a
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, an independent firm experienced in valuing thrift institutions,
has prepared a valuation of the estimated pro forma market value of Columbia
Federal, as converted. Keller's valuation of the estimated pro forma market
value of Columbia Federal, as converted, is $20,200,000 as of November 28, 1997
(the "Pro Forma Value"). CFKY will issue the Common Shares at a fixed price of
$10.00 per share and, by dividing the price per share into the Pro Forma Value,
will determine the number of shares to be issued. Applicable regulations
require, however, that Columbia Federal establish a range of 15% above and
below the Pro Forma Value to allow for fluctuations in the aggregate value of
the Common Shares due to changes in the market for thrift shares and other
factors from the time of the commencement of the Subscription Offering until
the completion of the offering of the Common Shares. Based on the Pro Forma
Value of Columbia Federal as of November 28, 1997, the Valuation Range is
$17,170,000 to $23,230,000, resulting in the offer of between 1,717,000 and
2,323,000 Common Shares at a purchase price of $10.00 per share.
The actual number of Common Shares sold in connection with the Conversion
will be determined upon the completion of the Subscription Offering and the
Community Offering, if any, and will be based upon the final valuation of
Columbia Federal, as converted. The final valuation will be determined by
Keller at the time of the closing of this Offering. If the final valuation is
within the Valuation Range, or does not exceed the maximum of the Valuation
Range by more than 15%, the number of Common Shares to be issued in connection
with the Conversion will not be less than 1,717,000 or more than 2,671,450. If
the final valuation is not between the minimum of the Valuation Range and 15%
above the maximum of the Valuation Range, subscribers will be given the
opportunity to affirm, increase, decrease or rescind their subscriptions. See
"THE CONVERSION - Pricing and Number of Common Shares to be Sold."
USE OF PROCEEDS
CFKY will retain 50% of the net proceeds from the sale of the Common
Shares, or $9,771,000 at the mid-point of the Valuation Range, including the
value of a promissory note from the ESOP which CFKY intends to accept in
exchange for the issuance of Common Shares to the ESOP. Such proceeds will be
used to fund the Columbia Financial of Kentucky, Inc., Recognition and
Retention Plan (the "RRP") after approval of the RRP by the shareholders of
CFKY and will be invested in short-term and intermediate-term government
securities. The remainder of the net proceeds received from the sale of the
Common Shares, $9,771,000 at the mid-point of the Valuation Range, will be
invested by CFKY in the capital stock to be issued by Columbia Federal to CFKY
as a result of the Conversion. Such investment will increase the regulatory
capital of Columbia Federal and will permit Columbia Federal to expand its
lending and investment activities and to enhance customer services.
Enhancements of customer services may include the origination of additional
types of loans including commercial loans and additional types of consumer
loans, such as home equity loans. Columbia Federal anticipates that such net
proceeds initially will be invested in mortgage-backed securities. Eventually,
however, Columbia Federal will attempt to use such net proceeds to originate
loans. Although CFKY and Columbia Federal could use the increase in capital to
acquire other financial institutions or for CFKY to purchase its own
outstanding shares, CFKY and Columbia Federal have no current plans to do so.
See "USE OF PROCEEDS."
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<PAGE> 10
OFFICER AND DIRECTOR BENEFITS
In connection with the Conversion, CFKY will establish the ESOP. Common
Shares will be purchased by the ESOP in the Conversion with a loan from CFKY.
The ESOP intends to repay the loan with discretionary contributions made by
Columbia Federal to the ESOP. As the loan is repaid, the Common Shares held by
the ESOP will be allocated to the accounts of employees of Columbia Federal and
CFKY, including executive officers. See "MANAGEMENT OF COLUMBIA FEDERAL -
Employee Stock Ownership Plan."
The Boards of Directors of CFKY and Columbia Federal also intend to adopt
and present to the shareholders for approval at a meeting of the shareholders
of CFKY, to be held at least six months after the consummation of the
Conversion, the RRP and the Columbia Financial of Kentucky, Inc., 1998 Stock
Option and Incentive Plan (the "Stock Option Plan"). If the RRP is approved at
such meeting, CFKY will form a trust (the "RRP Trust") to which CFKY will
contribute sufficient amounts for the purchase by the RRP Trust of an
unspecified number of CFKY common shares equal to up to 4% of the number of
Common Shares sold in the Conversion. Such CFKY common shares may be purchased
after shareholder approval of the RRP in the open market or from the authorized
but unissued common shares of CFKY, and will be awarded at no cost to the
recipient by a committee of CFKY's Board of Directors to the officers and
directors of CFKY and Columbia Federal for services rendered to Columbia
Federal. See "MANAGEMENT OF COLUMBIA FEDERAL - Stock Option Plan; and -
Recognition and Retention Plan and Trust."
If the Stock Option Plan is approved at a meeting of shareholders
following the Conversion, directors, officers and employees of CFKY and
Columbia Federal will be granted options to purchase, in the aggregate, a
number of Common Shares equal to up to 10% of the Common Shares sold in the
Conversion. The exercise price for options granted will equal the market price
for the Common Shares on the date of the grant. The grant of such options, in
combination with purchases of Common Shares by such officers and directors and
certain anti-takeover provisions in the Articles of Incorporation and Code of
Regulations of CFKY and the Amended Charter of Columbia Federal, may facilitate
the perpetuation of current management and discourage proxy contests and
takeover attempts. See "RESTRICTIONS ON ACQUISITIONS OF COLUMBIA FEDERAL AND
CFKY AND RELATED ANTI-TAKEOVER PROVISIONS."
Assuming the sale of 2,020,000 Common Shares in connection with the
Conversion, the purchase by directors and executive officers of 200,500 of the
Common Shares in the Conversion, the purchase by the RRP of a number of Common
Shares equal to 4% of the Common Shares sold in the Conversion, the exercise by
directors and executive officers of all options authorized pursuant to the
Stock Option Plan and the control by directors and executive officers of the 8%
of the Common Shares purchased by the ESOP in the Conversion, directors and
executive officers could own or control up to 29% of the outstanding common
shares of CFKY. See "RISK FACTORS-Anti-Takeover Provisions Which May
Discourage Sales of Common Shares for Premium Prices and Controlling Influence
of Management."
Columbia Federal also intends to execute an employment agreement with
Robert V. Lynch, the President of Columbia Federal, and severance agreements
with five other executive officers of Columbia Federal, all to be effective
upon the closing of the Conversion. See "MANAGEMENT OF COLUMBIA FEDERAL -
Employment and Severance Agreements."
MARKET FOR THE COMMON SHARES
There is presently no market for the Common Shares. The aggregate
offering price for the Common Shares is based upon an independent appraisal of
Columbia Federal. The appraisal is not a recommendation as to the advisability
of purchasing Common Shares. See "THE CONVERSION - Pricing and Number of
Common Shares to be Sold." No assurance can be given that persons purchasing
Common Shares will thereafter be able to sell such shares at a price at or
above the offering price.
CFKY has received approval to have the Common Shares quoted on Nasdaq
under the symbol ["CFKY"] upon the closing of the Conversion, subject to
certain conditions which CFKY and Columbia Federal believe will be satisfied,
although no assurance can be provided that the conditions will be met. In
connection with such approval, Webb has informed Columbia Federal that Keefe,
Bruyette & Woods, Inc. ("KBWI"), intends to make a market in the Common Shares.
No assurance can be given, however, 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 such market 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."
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<PAGE> 11
DIVIDEND POLICY
The declaration and payment of dividends by CFKY will be subject to the
discretion of the Board of Directors of CFKY and will be based on the earnings
and financial condition of CFKY and general economic conditions. Other than
the earnings on the investment of proceeds retained by CFKY, the only source of
income of CFKY will be dividends periodically declared and paid by the Board of
Directors of Columbia Federal on the common stock of Columbia Federal held by
CFKY. The payment of dividends by Columbia Federal to CFKY will be subject to
various regulatory restrictions. On a pro forma basis, as of September 30,
1997, assuming (i) receipt by Columbia Federal of $9.8 million of net
conversion proceeds, (ii) the investment of such net proceeds in assets having
a risk weighting of 20% and (iii) the establishment of a Liquidation Account
(hereinafter defined) in the amount of $13.1 million (the regulatory capital of
Columbia Federal at September 30, 1997), Columbia Federal would have $9.7
million available for the payment of dividends to CFKY. In an effort to manage
the capital of CFKY, the Board of Directors of CFKY may determine that the
payment of a regular or a special cash dividend or both may be prudent. No
assurance can be given, however, that any dividend will be declared, what the
amount will be or whether such dividends, if declared, will continue in the
future. See "DIVIDEND POLICY."
INVESTMENT RISKS
Special attention should be given to the matters discussed under "RISK
FACTORS."
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<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA
The following tables set forth certain information concerning the
consolidated financial condition, earnings and other data regarding Columbia
Federal at the dates and for the periods indicated. The financial information
should be read in conjunction with the consolidated financial statements and
notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
At September 30,
SELECTED FINANCIAL CONDITION ---------------------------------------------------------------------
AND OTHER DATA: 1997 1996 1995 1994 1993
-------- --------- ---------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Total amount of:
Assets $104,006 $108,098 $108,376 $106,099 $107,739
Cash and amounts due from banks 612 549 543 568 612
Interest-bearing deposits in banks 6,215 2,498 6,304 2,202 6,621
Investment securities held to maturity 13,069 13,995 12,493 13,495 12,428
Investment securities available for sale 1,003 1,002 988 - -
Mortgage-backed securities 17,862 18,751 16,800 16,744 18,264
Loans receivable, net 61,578 67,741 68,270 70,288 67,026
FHLB stock, at cost 1,260 1,174 1,095 1,026 974
Deposits 90,195 94,657 95,806 93,807 97,278
Retained earnings - substantially
restricted 13,090 12,537 12,149 11,333 10,068
Number of offices (1) 5 5 5 5 5
</TABLE>
<TABLE>
<CAPTION>
Year ended September 30,
--------------------------------------------------------------------
SUMMARY OF EARNINGS: 1997 1996 1995 1994 1993
------- ------- ------- ------- -------
(In thousands)
<S> <C> <C> <C> <C> <C>
Interest income $7,996 $8,198 $7,943 $7,939 $8,355
Interest expense 4,451 4,578 4,446 3,853 4,370
------ ------ ------ ------ ------
Net interest income 3,545 3,620 3,497 4,086 3,985
Provision for losses on loans 113 8 13 34 47
------ ------ ------ ------ ------
Net interest income after provision for
losses on loans 3,432 3,612 3,484 4,052 3,938
Non-interest income 88 96 92 108 174
Non-interest expense 2,667 3,120 (2) 2,371 2,272 2,190
------ ------ ------ ------ ------
Income before federal income tax expense 853 588 1,205 1,888 1,922
Federal income tax expense 300 200 389 623 593
------ ------ ------ ------ ------
Net income $553 $388 $ 816 $1,265 $1,329
====== ====== ====== ====== ======
</TABLE>
(Footnotes on next page)
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<PAGE> 13
<TABLE>
<CAPTION>
At or for the year ended September 30,
------------------------------------------------
SELECTED FINANCIAL RATIOS: 1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Performance ratios:
Return on average assets (3) 0.53% 0.36% 0.77% 1.17% 1.23%
Return on average equity (4) 4.30 3.10 6.92 11.78 14.12
Interest rate spread (5) 2.97 2.94 2.93 3.53 3.45
Net interest margin (6) 3.46 3.41 3.38 3.87 3.76
Non-interest expense to average total assets 2.53 2.87 2.24 2.15 2.07
Capital ratios:
Average equity to average assets 12.22 11.50 11.15 9.96 8.70
Equity to assets at end of period 12.59 11.60 11.21 10.68 9.34
Asset quality ratios and other data:
Nonperforming loans to total net loans at end
of period 0.98 0.26 - 0.71 0.39
Nonperforming assets to total assets at end of
period 0.58 0.16 0.03 0.56 0.46
Allowance for losses on loans to total net loans
at end of period 0.49 0.28 0.28 0.27 0.28
Allowance for losses on loans to nonperforming
loans at end of period 49.92 106.78 - 38.03 72.97
Net charge-offs to average loans - 0.01 0.02 0.05 0.07
</TABLE>
____________
(1) All offices are full-service except that loan applications are accepted
only at the main office.
(2) Includes a non-recurring pre-tax expense of $592,000 for a special
one-time assessment to recapitalize the SAIF. See "REGULATION - FDIC
Regulations -- Deposit Insurance."
(3) Net income divided by average total assets.
(4) Net income divided by average total equity.
(5) Average yield on interest-earning assets less average cost of
interest-bearing liabilities.
(6) Net interest income as a percentage of average interest-earning assets.
-7-
<PAGE> 14
RISK FACTORS
Investment in the Common Shares involves certain risks. Before investing,
prospective purchasers should consider carefully the following matters:
LOW RETURN ON ASSETS AND LOW RETURN ON EQUITY
During the fiscal years ended September 30, 1997, 1996 and 1995, the
return on assets of Columbia equaled .53%, .36% and .77%, respectively. During
the same periods, the return on equity of Columbia equaled 4.30%, 3.10% and
6.92%, respectively. The low return on assets and equity of Columbia Federal
may be attributed to a variety of factors. In 1996, for example, non-interest
expense increased by $749,000 due primarily to the $592,000 one-time SAIF
recapitalization assessment. Moreover, Columbia Federal increased the
provision for losses on loans in fiscal year 1997 by $105,000 over the
provision in fiscal year 1996. Both the 1996 SAIF assessment and the 1997
provision for losses on loans had a material impact on the return on equity and
assets of Columbia Federal. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
In addition, Columbia Federal did not originate sufficient loans to
replace existing loans which matured or were refinanced elsewhere during fiscal
years 1997, 1996 and 1995. While loan originations have increased from $6.8
million in fiscal 1995 to $10.2 million in fiscal 1996 and $11.7 million in
fiscal 1997, the balance of net loans receivable has declined from $68.3
million in fiscal 1995 to $67.7 million in fiscal 1996 and $61.6 million in
fiscal 1997. In June through August 1997, four multifamily and nonresidential
real estate loans with balances totaling $7.1 million were repaid. Funds from
loan repayments that could not immediately be used to originate loans were
invested in lower yielding investments, thus reducing Columbia Federal's return
on assets and return on equity. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
To continue the increase in loan originations, Columbia Federal has
recently hired a new loan officer and has pursued a plan to increase the
awareness of realtors and others involved in the residential real estate
business in Kenton and Boone Counties of Columbia Federal's products and
services. Columbia Federal is also considering originating new types of loans,
including home equity loans and commercial loans. In view of the highly
competitive market for residential mortgage loans, however, there can be no
assurance that such plan will materially increase new loan originations in the
near or long term. Moreover, even if loan originations are increased, there
can be no assurance that such increase will positively affect the return on
equity or assets of Columbia Federal.
REDUCTION IN RETURN ON EQUITY DUE TO PROCEEDS OF OFFERING
The significant proceeds from the sale of the Common Shares in the
Conversion will reduce further the return on equity of CFKY on a consolidated
basis until the Conversion proceeds are effectively invested. See "Low Return
on Assets and Low Return on Equity." At September 30, 1997, the pro forma
return on equity at the minimum, mid-point, maximum and maximum, as adjusted,
of the Valuation Range, would be 3.23%, 3.16%, 3.09% and 3.03%, respectively.
See "PRO FORMA DATA" for the pro forma net earnings and the pro forma
shareholders' equity at the different levels of the Valuation Range. Although
a low return on equity is not unusual for recently converted, well-capitalized
thrifts, CFKY's return on equity after the Conversion may adversely affect the
market price of the Common Shares.
While both CFKY and Columbia Federal intend to invest the proceeds from
the sale of Common Shares in various ways, the overall objective of CFKY and
Columbia Federal is to increase the return on equity of Columbia Federal in the
future. However, the historic difficulty of Columbia Federal in investing
available funds in higher yield mortgage loans may be increased upon the
receipt of the proceeds from the Offering. To the extent that CFKY and
Columbia Federal do not invest the proceeds from the sale of Common Shares in
higher yielding mortgage loans, the return on equity of Columbia Federal will
remain at lower levels, as a result of which an investment in the Common Shares
will be adversely affected.
COMPETITION IN MARKET AREA
Columbia Federal faces strong competition for deposits and loans from
commercial banks, other savings associations, credit unions and mortgage
banking companies. In addition, competing financial institutions exist in
surrounding communities located in Columbia Federal's market area. Columbia
Federal is at a competitive disadvantage due to its small size, which results
in limited marketing capability and restricted ability to take advantage of
technological advancements. Columbia Federal's market share in Boone County
and Kenton County was 53% of thrift deposits and 4.4% of all financial
institution deposits at
-8-
<PAGE> 15
June 30, 1996. Such competition will negatively affect the ability of Columbia
Federal to grow and to increase its return on assets and return on equity.
INTEREST RATE RISK
Columbia Federal'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. Like most thrift
institutions, the interest income and interest expense of Columbia Federal
change as the interest rates on mortgages, securities and other assets and on
deposits and other liabilities change. Interest rates may change because of
general economic conditions, the policies of various regulatory authorities and
other factors beyond Columbia Federal's control. The interest rates on
specific assets and liabilities of Columbia Federal 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.
Columbia Federal, 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. In a rising interest rate
environment, the amount of interest Columbia Federal would receive on its loans
would increase relatively slowly as loans are slowly prepaid and new loans at
higher rates are made. Moreover, the interest Columbia Federal would pay on
its deposits would increase rapidly because Columbia Federal's deposits
generally have shorter periods to repricing.
Columbia Federal's portfolio value is more sensitive to rising rates than
declining rates. Such difference in sensitivity occurs principally because, as
rates rise, borrowers do not prepay fixed-rate loans as quickly as they do when
interest rates are declining. At September 30, 1997, 80.7% of Columbia
Federal's net loans receivable balance was comprised of fixed-rate loans. In
addition, 79.3% of Columbia Federal's mortgage-backed securities balance at
September 30, 1997, had maturities of more than ten years after such date, and
40.1% of the mortgage-backed securities portfolio consisted of pools of
fixed-rate loans.
In addition, although Columbia Federal originates its mortgage loans in
accordance with secondary market guidelines, many of such loans may not be sold
readily in order to decrease interest rate risk because the loans are secured
by non-owner occupied or two- to four-family property.
If interest rates rise from the recent historically low levels, Columbia
Federal's net interest income will be negatively affected. Moreover, rising
interest rates may negatively affect Columbia Federal's earnings due to
diminished loan demand. A negative effect on interest income and earnings will
adversely affect the value of an investment in the Common Shares.
DILUTIVE EFFECT AND INCREASED EXPENSE OF THE ESOP, THE STOCK OPTION PLAN AND
THE RRP.
In connection with the Conversion, CFKY has established the ESOP which
intends to use a loan from CFKY to purchase 8% of the Common Shares issued in
connection with the Conversion. All full-time employees of CFKY and Columbia
Federal who meet certain age and years of service criteria will be eligible to
participate in the ESOP.
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 an employee stock ownership plan. 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, CFKY may incur increased compensation expense
relating to the ESOP, which would adversely affect CFKY's net earnings.
The shares acquired by the ESOP in the Conversion will be purchased with
the proceeds of a loan from CFKY to the ESOP. The ESOP loan will be repaid
through cash contributions to the ESOP from Columbia Federal and the use of
dividends paid on the Common Shares, if any. Columbia Federal currently
anticipates that the ESOP loan will be repaid over a period of 11 years. The
amount of cash or other assets that can be contributed to the ESOP each year is
limited by certain Internal Revenue Service ("IRS") regulations. Columbia
Federal 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 11
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 CFKY's earnings.
-9-
<PAGE> 16
The ESOP may purchase Common Shares on the open market or may purchase
authorized but unissued shares from CFKY. If the ESOP purchases authorized but
unissued shares from CFKY, such purchases would have a dilutive effect on the
interests of CFKY's shareholders.
Following the consummation of the Conversion, CFKY intends to adopt the
Stock Option Plan and the RRP. CFKY expects to contribute sufficient funds to
the RRP to enable it to purchase common shares of CFKY in an amount equal to
four percent of the Common Shares sold in connection with the Conversion. 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 CFKY has
treasury shares at the time of exercise and elects to use the treasury shares.
At the mid-point of the estimated Valuation Range, if all shares under the
ESOP, the Stock Option Plan and the RRP were newly issued, the interests of
shareholders will be diluted by 18.03%. Equity per share and earnings per
share will also be negatively affected. See "PRO FORMA DATA" and MANAGEMENT OF
COLUMBIA FEDERAL - Employee Stock Ownership Plan; - Stock Option Plan; -
Recognition and Retention Plan and Trust."
LIMITED MARKET FOR THE COMMON SHARES
There is presently no market for the Common Shares. The aggregate
offering price for the Common Shares is based upon an independent appraisal of
Columbia Federal. The appraisal is not a recommendation as to the advisability
of purchasing Common Shares. See "THE CONVERSION - Pricing and Number of
Common Shares to be Sold." No assurance can be given that persons purchasing
Common Shares will thereafter be able to sell such shares at a price at or
above the purchase price paid in the Offering.
CFKY has received approval to have the Common Shares quoted on Nasdaq
under the symbol ["CFKY"] upon the closing of the Conversion, subject to
certain conditions which CFKY and Columbia Federal believe will be satisfied,
although no assurance can be provided that the conditions will be met. In
connection with such approval, Webb has informed Columbia Federal that KBWI
intends to make a market in the Common Shares. No assurance can be given,
however, 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.
LEGISLATION AND REGULATION WHICH MAY ADVERSELY AFFECT COLUMBIA FEDERAL'S
EARNINGS AND OPERATIONS
Columbia Federal is subject to extensive regulation by the OTS and the
FDIC and is periodically examined by such regulatory agencies to test
compliance with various regulatory requirements. As a savings and loan holding
company, CFKY will also be subject to regulation and examination by the OTS.
Such supervision and regulation of Columbia Federal and CFKY are intended
primarily for the protection of depositors and not for the maximization of
shareholder value and may affect the ability of CFKY to engage in various
business activities. The assessments, filing fees and other costs associated
with reports, examinations and other regulatory matters are significant and may
have an adverse effect on CFKY's net earnings. See "REGULATION."
The FDIC is authorized to establish separate annual assessment rates for
deposit insurance each for members of the Bank Insurance Fund (the "BIF") and
the SAIF. 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 BIF
and SAIF members. Under such system, assessments may vary depending upon the
risk the institution poses to its deposit insurance fund. Such risk level is
determined by reference to the institution's capital level and the FDIC's level
of supervisory concern about the institution.
Legislation to recapitalize the SAIF and to eliminate a significant
premium disparity between the BIF and the SAIF effective September 30, 1996,
provides for the merger of the BIF and the SAIF effective January 1, 1999,
assuming that the federal savings and loan charter has been eliminated.
Columbia Federal cannot predict the impact of such a merger on Columbia
Federal's net earnings and capital.
Congress is considering legislation to eliminate the federal savings and
loan charter and the separate regulation of federal thrifts, including federal
savings banks. Pursuant to such legislation, Congress may develop a common
charter for all financial institutions, eliminate the OTS and regulate Columbia
Federal under federal law as a bank or require Columbia Federal
-10-
<PAGE> 17
to change its charter, which would likely change the type of activities in
which Columbia Federal may engage and would probably subject Columbia Federal
to more regulation by the FDIC. In addition, CFKY may become subject to
different holding company regulations, including separate capital requirements
and limitations on activities. Although CFKY cannot predict whether or when
Congress may actually pass legislation regarding CFKY's and Columbia Federal's
regulatory requirements or charter, it is not anticipated that the current
activities of CFKY or Columbia Federal will be materially affected by such
legislation.
ANTI-TAKEOVER PROVISIONS WHICH MAY DISCOURAGE SALES OF COMMON SHARES FOR
PREMIUM PRICES AND CONTROLLING INFLUENCE OF MANAGEMENT
The Articles of Incorporation and Code of Regulations of CFKY and the
Amended Charter of Columbia Federal contain certain provisions that could deter
or prohibit non-negotiated changes in the control of CFKY and Columbia Federal.
Such provisions include a restriction on the acquisition of more than 10% of
the outstanding shares of CFKY by any person during the five-year period
following the effective date of the Conversion, the ability to issue preferred
shares and additional common shares and a 75% voting requirement for certain
transactions, including mergers and acquisitions of a majority of the
outstanding equity securities of CFKY. See "DESCRIPTION OF AUTHORIZED SHARES"
and "RESTRICTIONS ON ACQUISITION OF COLUMBIA FEDERAL AND CFKY AND RELATED
ANTI-TAKEOVER PROVISIONS."
Officers and directors of CFKY are expected to purchase approximately 9.9%
of the shares issued in connection with the Conversion at the mid-point of the
Valuation Range. In addition, the ESOP intends to purchase 8% of the shares
issued in connection with the Conversion. The ESOP trustee must vote shares
allocated under the ESOP as directed by the participants to whom the shares are
allocated and vote unallocated shares in its sole discretion in the best
interest of the participants. The RRP may acquire Common Shares in the open
market or acquire authorized but unissued common shares from CFKY following
approval of the RRP by the shareholders of CFKY at a meeting of the
shareholders in an amount equal to up to 4% of the Common Shares issued in
connection with the Conversion. The RRP trustees, who are expected to be two
directors of CFKY, will vote shares awarded but not distributed under the RRP
in their discretion. Additionally, options to purchase a number of Common
Shares equal to up to 10% of the Common Shares sold in the Conversion may be
granted to directors, officers and employees of CFKY and Columbia Federal
pursuant to the Stock Option Plan.
In view of the various provisions of the Articles of Incorporation and the
stock benefit plans of CFKY and Columbia Federal, the aggregate ownership by
the ESOP, the RRP and the directors and officers of CFKY and Columbia Federal
may have the effect of facilitating the perpetuation of current management and
discouraging proxy contests and takeover attempts. Thus, officers and
directors, who are anticipated to be allocated or awarded shares under such
plans, will have a significant influence over the vote on such a transaction
and may be able to defeat such a proposal. The Boards of Directors of CFKY and
Columbia Federal believe that such provisions will be in the best interests of
shareholders by encouraging prospective acquirers to negotiate a proposed
acquisition with the directors. Such provisions could, however, adversely
affect the market value of the Common Shares or deprive shareholders of the
opportunity to sell their shares for premium prices.
Federal and Ohio law also restrict the acquisition of control of CFKY and
Columbia Federal. 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 COLUMBIA FEDERAL AND CFKY AND RELATED ANTI-TAKEOVER
PROVISIONS."
Regulations of the OTS also restrict the ability of any person to acquire
the beneficial ownership of more than 10% of any class of voting equity
security of Columbia Federal or CFKY without the prior written approval of or
lack of objection by the OTS. Such restrictions could restrict the use of
revocable proxies. See "RESTRICTIONS ON ACQUISITION OF COLUMBIA FEDERAL AND
CFKY AND RELATED ANTI-TAKEOVER PROVISIONS."
RISK OF DELAYED OFFERING
CFKY and Columbia Federal expect to complete the Conversion by March 31,
1998. It is possible, however, that adverse market, economic or other factors
could delay the completion of the Conversion. If the Community Offering is
extended beyond ________, 1998, each subscriber will be given a notice of such
delay and the right to affirm, increase, decrease or rescind his subscription.
In such event, any person who does not affirmatively elect to continue his
subscription or elects to rescind his subscription 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. If the Community Offering is
-11-
<PAGE> 18
extended, the cost of the Conversion could increase and the valuation of
Columbia Federal could change. Extensions of the Community Offering will not
extend past _______, 2000.
DILUTIVE EFFECT OF INCREASE IN VALUATION RANGE
The number of Common Shares to be sold in the Conversion may be as much as
15% greater than the maximum of the Valuation Range due to changes in market,
financial and regulatory circumstances following the commencement of the
Offering. An increase in the number of Common Shares sold will decrease net
earnings per share and shareholders' equity per share on a pro forma basis.
See "CAPITALIZATION" and "PRO FORMA DATA."
POSSIBLE TAX LIABILITY RELATED TO SUBSCRIPTION RIGHTS
As part of the Conversion, subscription rights have been granted to (i)
Eligible Account Holders, (ii) the ESOP, (iii) Supplemental Eligible Account
Holders and (iv) Voting Members. Columbia Federal has received an opinion from
Keller to the effect that the subscription rights to be received by Eligible
Account Holders and other eligible subscribers do not have any value because
they are acquired by the recipients without cost, are non-transferable and of
short duration and afford the recipients a right only to purchase Common Shares
at a price equal to their estimated fair market value, the same price as the
purchase price for unsubscribed Common Shares.
Notwithstanding the opinion from Keller, if the subscription rights are
subsequently found to have a fair market value, income may be recognized by the
recipients of the subscription rights (in certain cases, whether or not the
rights are exercised) and CFKY and/or Columbia Federal may be taxed on the
distribution of such subscription rights. In this regard, the subscription
rights may be taxed partially or entirely at ordinary income tax rates.
COLUMBIA FINANCIAL OF KENTUCKY, INC.
CFKY was incorporated under Ohio law in October 1997 at the direction of
Columbia Federal for the purpose of serving as a holding company for Columbia
Federal. CFKY has not conducted and will not conduct any business other than
business related to the Conversion prior to the completion of the Conversion.
CFKY has received approval of the OTS to acquire the capital stock to be issued
by Columbia Federal in the Conversion. Upon the consummation of the
Conversion, CFKY will be a unitary savings and loan holding company, and its
principal assets initially will be the capital stock of Columbia Federal and
the investments made with the proceeds retained by CFKY from the sale of Common
Shares. See "USE OF PROCEEDS." As a savings and loan holding company, CFKY
will be required to register with, and will be subject to examination and
supervision by, the OTS. See "REGULATION - OTS Regulations -- Holding Company
Regulation." The types of business activities in which a unitary savings and
loan holding company may engage are virtually unrestricted. See, however,
"RISK FACTORS - Legislation and Regulation Which May Adversely Affect Columbia
Federal's Earnings and Operations."
COLUMBIA FEDERAL SAVINGS BANK
Columbia Federal is a mutual savings bank which has served Northern
Kentucky since 1884. Organized under Kentucky law as Columbia Building
Association, Columbia Federal converted to a federally chartered savings and
loan association in 1934, at which time the name Columbia Federal Savings and
Loan Association of Covington was adopted. Columbia Federal became a federal
savings bank in 1995, at which time the name Columbia Federal Savings Bank was
adopted. As a savings bank chartered under the laws of the United States,
Columbia Federal is subject to supervision and regulation by the OTS and the
FDIC and is a member of the FHLB of Cincinnati. The deposits of Columbia
Federal are insured up to applicable limits by the FDIC in the SAIF. See
"REGULATION."
Columbia Federal is principally engaged in the business of making
permanent first mortgage loans secured by one- to four-family residential real
estate located within Boone County and Kenton County, Kentucky, and investing
in U.S. Government agency obligations, interest-bearing deposits in other
financial institutions and mortgage-backed and related securities. Columbia
Federal also makes construction loans and loans secured by multifamily real
estate (over four units) and nonresidential real estate. Loan funds are
obtained primarily from savings deposits and loan repayments. See "THE
BUSINESS OF COLUMBIA FEDERAL - Lending Activities; and - Investment
Activities."
-12-
<PAGE> 19
Interest on loans, mortgage-backed and related securities and investments
is Columbia Federal's primary source of income. The principal expense of
Columbia Federal is interest paid on deposit accounts. Operating results are
dependent to a significant degree on the net interest income of Columbia
Federal, which is the difference between interest earned on loans,
mortgage-backed and related securities and other investments and interest paid
on deposits. Like most thrift institutions, Columbia Federal's interest income
and interest expense are significantly affected by general economic conditions
and by the policies of various regulatory authorities. See "RISK FACTORS" and
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF COLUMBIA FEDERAL."
Columbia Federal conducts business from its main office located in Ft.
Mitchell, Kentucky, and four branch offices located in Boone County and Kenton
County, Kentucky. Columbia Federal's primary market area consists of Boone
County and Kenton County, Kentucky. See "THE BUSINESS OF COLUMBIA FEDERAL -
General."
USE OF PROCEEDS
The following table presents the estimated gross and net proceeds from the
sale of the Common Shares in connection with the Conversion based on the
Valuation Range:
<TABLE>
<CAPTION>
15% above
Minimum Mid-point Maximum Maximum
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Gross proceeds $17,170,000 $20,200,000 $23,230,000 $26,714,500
Less estimated expenses 620,000 658,000 695,000 737,000
----------- ----------- ----------- -----------
Total net proceeds $16,550,000 $19,542,000 $22,535,000 $25,977,500
</TABLE>
The expenses are estimated assuming that (a) all of the indicated number of
Common Shares are sold in the Subscription Offering; (b) the directors,
officers and their associates purchase 200,500 shares; (c) the ESOP purchases
8% of the Common Shares sold; and (d) 60% of the Common Shares are sold to
residents of Boone County or Kenton County, Kentucky, 20% of the Common Shares
are sold to residents of counties contiguous to either Boone County or Kenton
County, Kentucky, and 20% of the Common Shares are sold to persons not
residents of Boone County or Kenton County, Kentucky, or any county contiguous
to either of such counties. Actual expenses may be more or less than
estimated. See "THE CONVERSION - Plan of Distribution."
CFKY will retain 50% of the net proceeds from the sale of the Common
Shares, or $9,771,000 at the mid-point of the Valuation Range, including the
value of a promissory note from the ESOP, which CFKY intends to accept in
exchange for the issuance of Common Shares to the ESOP. Such proceeds will be
used to fund the RRP and, initially, will be invested in short-term and
intermediate-term government securities. The remainder of the net proceeds
received from the sale of the Common Shares, $9,771,000 at the mid-point of the
Valuation Range, will be invested by CFKY in the capital stock to be issued by
Columbia Federal to CFKY as a result of the Conversion. Such investment will
increase the regulatory capital of Columbia Federal and will permit Columbia
Federal to expand its lending and investment activities and to enhance customer
services. Enhanced customer services may include the origination of additional
types of loans, including commercial loans and additional types of consumer
loans, such as home equity loans.
Columbia Federal anticipates that such net proceeds initially will be
invested in mortgage-backed securities. Eventually, however, Columbia Federal
will attempt to use the net proceeds to originate loans. Such use will be
consistent with Columbia Federal's effort to improve its interest rate risk
position as well as increase its income. See "THE BUSINESS OF COLUMBIA FEDERAL
- - General."
Although CFKY and Columbia Federal could use the increase in capital to
acquire other financial institutions or for CFKY to repurchase its own
outstanding shares, CFKY and Columbia Federal have no current plans or
agreements, written or oral, and are not negotiating, to acquire any other
institution and have no current plans for CFKY to repurchase any of its shares.
-13-
<PAGE> 20
MARKET FOR COMMON SHARES
There is presently no market for the Common Shares. The aggregate
offering price for the Common Shares is based upon an independent appraisal of
Columbia Federal. The appraisal is not a recommendation as to the advisability
of purchasing Common Shares. See "THE CONVERSION - Pricing and Number of
Common Shares to be Sold." No assurance can be given that persons purchasing
Common Shares will thereafter be able to sell such shares at a price at or
above the offering price.
CFKY has received approval to have the Common Shares quoted on Nasdaq
under the symbol ["CFKY"] upon the closing of the Conversion, subject to
certain conditions which CFKY and Columbia Federal believe will be satisfied,
although no assurance can be provided that the conditions will be met. In
connection with such approval, Webb has informed Columbia Federal that KBWI
intends to make a market in the Common Shares, although it is under no
obligation to do so. No assurance can be given, however, 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 such market 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."
DIVIDEND POLICY
The declaration and payment of dividends by CFKY will be subject to the
discretion of the Board of Directors of CFKY and will be based on the earnings
and financial condition of CFKY and general economic conditions. If the Board
of Directors of CFKY determines in the exercise of its discretion that the net
income, capital, and consolidated financial condition of CFKY and the general
economy justify the declaration and payment of dividends by CFKY, the Board of
Directors of CFKY 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 declared
and paid on the Common Shares or, if declared and paid, that such dividends
will continue to be paid in the future. In addition, pursuant to a requirement
of the OTS, CFKY 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 CFKY,
the only source of income of CFKY will be dividends periodically declared and
paid by the Board of Directors of Columbia Federal on the common stock of
Columbia Federal held by CFKY. The declaration and payment of dividends by
Columbia Federal to CFKY will be subject to the discretion of the Board of
Directors of Columbia Federal, to the earnings and financial condition of
Columbia Federal, to general economic conditions and to federal restrictions on
the payment of dividends by thrift institutions. Under regulations of the OTS
applicable to converted associations, Columbia Federal 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." Columbia Federal may not pay a dividend unless such
dividend also complies with a regulation of the OTS limiting capital
distributions by savings 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."
-14-
<PAGE> 21
REGULATORY CAPITAL COMPLIANCE
The following table sets forth the historical and pro forma regulatory
capital of Columbia Federal at September 30, 1997, based on the receipt of
proceeds for the number of Common Shares indicated, less estimated expenses of
$620,000, $658,000, $695,000, $737,000 at the minimum, mid-point, maximum and
maximum, as adjusted, of the Valuation Range, assuming all of such shares are
sold in the Subscription Offering.
<TABLE>
<CAPTION>
Historical at
September 30, 1997 (1)
------------------------
Amount Percent
----------- -----------
(Dollars in thousands)
<S> <C> <C>
Capital under generally
accepted accounting
principles, before
adjustments (2)(3) $13,091 12.59%
======= =====
Current tangible
capital (2)(3):
Capital level $13,090 12.59%
Requirement 1,560 1.50
------- -----
Excess $11,530 11.09%
======= =====
Current core
capital (2)(3):
Capital level $13,090 12.59%
Requirement 3,120 3.00
------- -----
Excess $ 9,970 9.59%
======= =====
Current risk-based
capital (4):
Capital level $13,390 30.37%
Requirement 3,527 8.00
------- -----
Excess $ 9,863 22.37%
======= =====
Pro forma capital at September 30, 1997, assuming the sale of
--------------------------------------------------------------------------------------
1,717,000 2,020,000 2,323,000 2,671,450
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)
-------------------- -------------------- -------------------- --------------------
Amount Percent Amount Percent Amount Percent Amount Percent
--------- --------- --------- --------- --------- --------- --------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Capital under generally
accepted accounting
principles, before
adjustments (2)(3) $21,366 19.03% $22,862 20.09% $24,359 21.13% $26,080 22.29%
======= ===== ======= ===== ======= ===== ======= =====
Current tangible
capital (2)(3):
Capital level $21,365 19.03% $22,861 20.09% $24,358 21.13% $26,079 22.29%
Requirement 1,684 1.50 1,707 1.50 1,730 1.50 1,755 1.50
------- ----- ------- ----- ------- ----- ------- -----
Excess $19,681 17.53% $21,154 18.59% $22,628 19.63% $24,324 20.79%
======= ===== ======= ===== ======= ===== ======= =====
Current core
capital (2)(3):
Capital level $21,365 19.03% $22,861 20.09% $24,358 21.13% $26,079 22.29%
Requirement 3,368 3.00 3,413 3.00 3,459 3.00 3,510 3.00
------- ----- ------- ----- ------- ----- ------- -----
Excess $17,997 16.03% $19,448 17.09% $20,899 18.13% $22,569 19.29%
======= ===== ======= ===== ======= ===== ======= =====
Current risk-based
capital (4):
Capital level $21,665 47.36% $23,161 50.30% $24,658 53.21% $26,379 56.50%
Requirement 3,660 8.00 3,683 8.00 3,708 8.00 3,735 8.00
------- ----- ------- ----- ------- ----- ------- -----
Excess $18,005 39.36% $19,478 42.30% $20,950 45.21% $22,644 48.50%
======= ===== ======= ===== ======= ===== ======= =====
</TABLE>
____________
(1) See Note 18 of the Notes to the Financial Statements.
(2) Pro forma amounts assume Columbia Federal will receive 50% of the net
conversion proceeds before reduction for the ESOP loan. Also reflects a
deduction from capital for unearned ESOP shares equal to 8% of the shares
offered and unearned RRP shares equal to 4% of the shares offered.
(3) Historical tangible and core capital percentages are based on adjusted
total assets of $104.0 million. Pro forma tangible and core capital
percentages are based on adjusted total assets of $112.3 million, $113.8
million, $115.3 million, and $117.0 million, which assumes the receipt by
Columbia Federal of net proceeds from the sale of Common Shares of $8.3
million, $9.8 million, $11.3 million and $13.0 million, respectively. The
OTS has proposed a new regulation which would increase the core capital
requirement to between 4% and 5% of adjusted total assets, with the
specific requirement to be determined on a case-by-case basis. See
"REGULATION - OTS Regulations -- Regulatory Capital Requirements."
(4) Historical risk-based capital percentages are based on risk-weighted
assets of $44.1 million. Pro forma risk-based capital percentages are
based on risk-weighted assets of $45.7 million, $46.0 million, $46.3
million and $46.7 million, and assumes the net proceeds will be invested
in mortgage-backed securities having a risk weighting of 20%.
-15-
<PAGE> 22
CAPITALIZATION
Set forth below is the capitalization of Columbia Federal as of September
30, 1997, and the consolidated pro forma capitalization of CFKY, as adjusted
to give effect to the sale of Common Shares based on the Valuation Range and
estimated expenses. A change in the number of Common Shares sold in the
Conversion would materially affect such pro forma capitalization. See "USE OF
PROCEEDS" and "THE CONVERSION - Pricing and Number of Common Shares to be
Sold."
<TABLE>
<CAPTION>
Pro forma capitalization of CFKY
at September 30, 1997, assuming the sale of:
--------------------------------------------------------------
1,717,000 2,020,000 2,323,000 2,671,450
Historical Common Common Common Common
capitalization Shares Shares Shares Shares
of Columbia Federal (Offering (Offering (Offering (Offering
at 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) $90,195 $90,195 $90,195 $90,195 $90,195
Borrowings - - - - -
Capital and retained earnings:
Preferred Shares, no par value per
share: authorized - 1,000,000
shares, assumed outstanding - none - - - - -
Common Shares, no par value per
share: authorized - 6,000,000
shares; assumed outstanding - as
shown (2) - - - - -
Additional paid-in capital - 16,550 19,542 22,535 25,978
Less Common Shares acquired by the
ESOP (3) - (1,374) (1,616) (1,858) (2,137)
Less Common Shares acquired by the
RRP (4) - (687) (808) (929) (1,069)
Retained earnings, net,
substantially restricted (5) 13,090 13,090 13,090 13,090 13,090
Unrealized gain on securities
available for sale, net 1 1 1 1 1
------- ------- ------- ------- -------
Total capital and retained earnings $13,091 $27,580 $30,209 $32,839 $35,863
======= ======= ======= ======= =======
</TABLE>
____________
(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 Columbia Federal. 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 that may be
reserved for issuance under the Stock Option Plan. See "MANAGEMENT OF
COLUMBIA FEDERAL - Stock Benefit Plans -- Stock Option Plan." Reflects
receipt of the proceeds from the sale of the Common Shares, net of
estimated expenses. Estimated expenses include estimated sales
commissions payable to Webb. Such sales commissions have been computed
based on the following assumptions: (i) 200,500 Common Shares sold in the
Offering will be purchased by directors, officers and employees of
Columbia Federal and the members of their immediate families; (ii) 8% of
the Common Shares sold in the Offering will be purchased by the ESOP; and
(iii) the remaining 1,657,900 Common Shares sold in connection with the
Conversion will be purchased in the Subscription Offering with sales
commissions of 1.50%, 1.25% and 0.75% on 60%, 20% and 20%, respectively,
of the aggregate dollar amount paid for such Common Shares.
(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 CFKY for a term of 11 years at a rate of 9.5%. The ESOP loan will be
secured solely by the Common Shares purchased by the ESOP. Columbia
Federal has agreed, however, to use its best efforts to fund the ESOP
based on future earnings, which best efforts funding will reduce Columbia
Federal's total capital and retained earnings, as reflected in the table.
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 shares of CFKY. If the
ESOP purchases authorized but unissued shares from CFKY, such purchases
would have a dilutive effect of approximately 7.41% on the voting
interests of CFKY's shareholders. See "MANAGEMENT OF COLUMBIA FEDERAL -
Employee Stock Ownership Plan" and "RISK FACTORS - Dilutive Effect and
Negative Effect on Earnings of Purchases by the ESOP and the RRP."
(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 $10.00 per share. There can
be no assurance that the RRP will be implemented, that a sufficient number
of shares will be available for purchase by the RRP or that shares could
be purchased at a price of $10.00. A higher price per share, assuming the
purchase of the entire 4% of the shares, would reduce pro forma
shareholders' equity. The RRP may purchase shares in the open market or
may purchase authorized but unissued shares from CFKY. If authorized but
unissued shares are purchased, the voting interests of existing
shareholders would be diluted approximately 3.85%. See "MANAGEMENT OF
COLUMBIA FEDERAL - Recognition and Retention Plan and Trust."
(5) Retained earnings include restricted and unrestricted retained earnings
and unrealized gain on securities designated as available for sale. 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.
-16-
<PAGE> 23
PRO FORMA DATA
Set forth below are the pro forma consolidated net earnings of CFKY for
the year ended September 30, 1997, and the pro forma shareholders' equity of
CFKY at such dates, along with the related pro forma per share amounts, giving
effect to the sale of the Common Shares in connection with the Conversion. The
computations are based on the assumed issuance of 1,717,000 Common Shares
(minimum point of the Valuation Range), 2,020,000 Common Shares (mid-point of
the Valuation Range), 2,323,000 Common Shares (maximum point of the Valuation
Range) and 2,671,450 Common Shares (15% above the maximum point of 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 periods and yielded
the net proceeds indicated; (ii) such net proceeds were invested by CFKY and
Columbia Federal at the beginning of the specified period at 5.35%; (iii) no
withdrawals from existing deposit accounts were made to purchase the Common
Shares; (iv) CFKY will accept a promissory note from the ESOP in exchange for
the issuance of Common Shares; and (v) a portion of the cash proceeds retained
by CFKY will be used to fund the RRP and, pending such investment, be invested
in short-term and intermediate-term government securities. The assumed return
is based upon the yield for one year United States Treasury bills at November
28, 1997, because management intends to invest the initial cash proceeds in
government securities and mortgage-backed securities. In calculating pro forma
net earnings, a statutory federal income tax rate of 34% has been assumed for
the period, resulting in an after tax yield of 3.53%. 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 government securities and mortgage-backed securities 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. Management also believes that utilization of savings
withdrawals to fund stock purchases would not have a material impact on the pro
forma data presented.
NO ASSURANCE CAN BE PROVIDED THAT THE YIELDS OR RESULTS SET FORTH IN THE
PRO FORMA DATA WILL BE ACHIEVED ON INVESTMENT OF THE CONVERSION PROCEEDS.
MOREOVER, THE PRO FORMA NET EARNINGS AMOUNTS DERIVED FROM THE ASSUMPTIONS SET
FORTH HEREIN SHOULD NOT BE CONSIDERED INDICATIVE OF THE ACTUAL RESULTS OF
OPERATIONS OF CFKY THAT WOULD HAVE BEEN ATTAINED FOR ANY PERIOD IF THE
CONVERSION HAD BEEN ACTUALLY CONSUMMATED AT THE BEGINNING OF SUCH PERIOD.
FURTHER, THE RATIO OF SHARE OFFERING PRICE TO THE PRO FORMA BOOK VALUE IS NOT
REPRESENTATIVE OF ANY POTENTIAL PRICE APPRECIATION ON THE COMMON SHARES. NO
EFFECT HAS BEEN GIVEN IN THE PRO FORMA SHAREHOLDERS' EQUITY FOR ANY ASSUMED
EARNINGS ON THE NET PROCEEDS OF THE CONVERSION.
-17-
<PAGE> 24
<TABLE>
<CAPTION>
At and for the year ended September 30, 1997, assuming the sale of:
------------------------------------------------------------------------------
1,717,000 2,020,000 2,323,000 2,671,450
Common Shares Common Shares Common Shares Common Shares
(Offering price of (Offering price of (Offering price of (Offering price of
$10.00 per share) $10.00 per share) $10.00 per share) $10.00 per share)
------------------ ------------------ ------------------ ------------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Gross proceeds $17,170 $20,200 $23,230 $26,715
Estimated expenses 620 658 695 737
------- ------- ------- -------
Estimated net proceeds $16,550 $19,542 $22,535 $25,978
------- ------- ------- -------
Less Common Shares acquired by the RRP (1) (687) (808) (929) (1,069)
Less Common Shares acquired by the ESOP (2) (1,374) (1,616) (1,858) (2,137)
------- ------- ------- -------
Net cash proceeds $14,489 $17,118 $19,748 $22,772
======= ======= ======= =======
Net earnings:
Historical $ 553 $ 553 $ 553 $ 553
Pro forma income on net proceeds 512 604 697 804
Pro forma adjustment for the RRP (1) (91) (107) (123) (141)
Pro forma adjustment for the ESOP (2) (82) (97) (111) (128)
------- ------- ------- -------
Pro forma net earnings $ 892 $ 953 $ 1,016 $ 1,088
======= ======= ======= =======
Earnings per share:
Historical $ 0.35 $ 0.30 $ 0.26 $ 0.22
Pro forma income on net proceeds 0.32 0.32 0.32 0.33
Pro forma adjustment for the RRP (1) (0.05) (0.05) (0.05) (0.05)
Pro forma adjustment for the ESOP (2) (0.06) (0.06) (0.06) (0.06)
------- ------- ------- -------
Pro forma earnings per share (3)(4) $ 0.56 $ 0.51 $ 0.47 $ 0.44
======= ======= ======= =======
Offering price as a multiple of pro forma
earnings per share 17.76 19.53 21.31 22.65
Shareholders' equity: (5)
Historical $13,091 $13,091 $13,091 $13,091
Estimated net proceeds from the sale of
Common Shares 16,550 19,542 22,535 25,978
Less unearned RRP shares (1) (687) (808) (929) (1,069)
Less unearned ESOP shares (2) (1,374) (1,616) (1,858) (2,137)
------- ------- -------
Pro forma shareholders' equity $27,580 $30,209 $32,839 $35,863
======= ======= ======= =======
Per share shareholders' equity:
Historical $ 7.62 $ 6.48 $ 5.64 $ 4.90
Estimated net proceeds 9.64 9.67 9.70 9.72
Less unearned RRP shares (1) (0.40) (0.40) (0.40) (0.40)
Less unearned ESOP shares (2) (0.80) (0.80) (0.80) (0.80)
------- ------- ------- -------
Pro forma shareholders' equity per
share (3) $ 16.06 $ 14.95 $ 14.14 $ 13.42
======= ======= ======= =======
Ratio of offering price to pro forma
shareholders' equity per share 62.27% 66.89% 70.72% 74.52%
</TABLE>
____________
(Footnotes on next page)
-18-
<PAGE> 25
(1) 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
$10.00 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 CFKY. 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
$10.00 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, CFKY 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 3.85% dilution in existing shareholders'
voting interests. See "MANAGEMENT OF COLUMBIA FEDERAL - Recognition and
Retention Plan and Trust."
(2) Assumes that 8% of the Common Shares sold in connection with the
Conversion will be purchased by the ESOP and that the funds used to
acquire such shares will be borrowed by the ESOP from CFKY with repayment
thereof secured solely by the Common Shares purchased by the ESOP.
Columbia Federal has agreed, however, to use its best efforts to fund the
ESOP based on future earnings, which best efforts funding will reduce the
income on the equity raised in connection with the Conversion, as
reflected in the table. Assumes the level amortization of the ESOP loan
over an eleven-year period with assumed tax benefits of 34%. See
"MANAGEMENT OF COLUMBIA FEDERAL - Employee Stock Ownership Plan." The
Board of Directors may elect to issue the ESOP shares from authorized but
unissued shares. The issuance of authorized but unissued shares to the
ESOP would have the effect of diluting the voting interest of existing
shareholders by 7.41%.
(3) No effect has been given to shares reserved for issuance upon the
exercise of options pursuant to the Stock Option Plan. See "MANAGEMENT OF
COLUMBIA FEDERAL - Stock Option Plan."
(4) In accordance with SOP 93-6 of the American Institute of Certified Public
Accountants ("SOP 93-6"), which requires that only those ESOP shares that
are committed to be released to the accounts of recipients be counted as
outstanding shares, per share amounts are based upon a number of shares
outstanding of 1,583,761, 1,863,248, 2,142,735, 2,464,145 at the minimum,
mid-point, maximum and 15% above the maximum of the Valuation Range,
respectively. The table reflects the ESOP cost at the $10.00 per share
offering price of the Common Shares in the Conversion, which may be more
or less than the fair value at which the shares are ultimately allocated.
(5) The effect of the Liquidation Account is not included in these
computations. For additional information concerning the Liquidation
Account, see "THE CONVERSION - Principal Effects of the Conversion --
Liquidation Account." The amounts shown do not reflect the federal income
tax consequences of the potential restoration of the bad debt reserves to
income for tax purposes, which would be required in the event of
liquidation. See "TAXATION - Federal Taxation."
-19-
<PAGE> 26
SUMMARY STATEMENTS OF INCOME
The following Summary Statements of Income set forth information
concerning Columbia Federal for the periods indicated:
<TABLE>
<CAPTION>
Year ended September 30,
----------------------------
1997 1996 1995
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
Interest income:
Loans $5,802 $5,869 $6,014
Mortgage-backed securities 1,143 1,214 981
Investments and deposits 051 1,115 948
------ ------ ------
Total interest income 7,996 8,198 7,943
------ ------ ------
Interest expense:
Deposits 4,426 4,578 4,383
FHLB advances 25 - 63
------ ------ ------
Total interest expense 4,451 4,578 4,446
------ ------ ------
Net interest income 3,545 3,620 3,497
Provision for losses on loans 113 8 13
------ ------ ------
Net interest income after provision for loan
losses 3,432 3,612 3,484
------ ------ ------
Non-interest income 88 96 92
------ ------ ------
Non-interest expense 2,667 3,120 2,371
------ ------ ------
Income before federal income tax expense 853 588 1,205
Federal income tax expense 300 200 389
------ ------ ------
Net income $ 553 $ 388 $ 816
====== ====== ======
</TABLE>
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<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Columbia Federal is primarily engaged in the business of attracting
savings deposits from the general public and investing such funds in mortgage
loans secured by one- to four-family residential real estate located primarily
in Kenton and Boone Counties, Kentucky. Columbia Federal also originates loans
secured by multifamily real estate (over four units), nonresidential real
estate and unimproved land, home improvement loans, and loans secured by
deposits. In recent years, Columbia Federal has made significant investments
in U.S. Government agency obligations as loan repayments have exceeded loan
originations.
Columbia Federal's profitability is primarily dependent upon its net
interest income, which is the difference between interest income on Columbia
Federal's loan, investment and mortgage-backed securities ("MBSs") portfolios
and interest paid on deposits and borrowed funds. Net interest income is
directly affected by the relative amounts of interest-earning assets and
interest-bearing liabilities and the interest rates earned or paid on such
amounts. Columbia Federal's profitability is also affected by its provision for
losses on loans and the level of non-interest income and non-interest expense.
Non-interest income consists primarily of service charges. Non-interest
expense includes salaries and employee benefits, occupancy of premises, federal
deposit insurance premiums, data processing services, advertising and other.
The operating results of Columbia Federal are also affected by general
economic conditions, the monetary and fiscal policies of federal agencies and
the regulatory policies of agencies that regulate financial institutions.
Columbia Federal's cost of funds is influenced by interest rates on competing
investments and general market rates of interest. Lending activities are
influenced by the demand for real estate loans and other types of loans, which
is in turn affected by the interest rates at which such loans are made, general
economic conditions and the availability of funds for lending activities.
CHANGES IN FINANCIAL CONDITION FROM SEPTEMBER 30, 1996, TO SEPTEMBER 30, 1997
Columbia Federal's total assets at September 30, 1997, were approximately
$104.0 million, a $4.1 million, or 3.8%, decrease from $108.1 million at
September 30, 1996. The decrease resulted primarily from a decrease in
mortgage loans. Although loan originations increased, loans were repaid more
rapidly than loans were originated.
Liquid assets (cash and cash equivalents and investment securities
available for sale) totaled $7.8 million at September 30, 1997, an increase of
$3.8 million over the total at September 30, 1996. This increase resulted
primarily from repayments on loans and mortgage-backed securities that Columbia
Federal was unable to immediately invest in loans during the fiscal year.
Loans receivable totaled $61.6 million at September 30, 1997, a decrease
of $6.1 million, or 9.0%, from $67.7 million at September 30, 1996. This
decrease resulted primarily from principal repayments of $18.9 million, which
exceeded loan originations of $11.7 million. Loan repayments included four
multifamily and nonresidential mortgage loans with total balances of $7.1
million.
Deposits totaled $90.2 million at September 30, 1997, a decrease of
approximately $4.5 million, or 4.7%, from the total at September 30, 1996.
Such decrease was a result of a determination by management not to offer highly
competitive rates on deposits in light of the declining balance of loans
receivable. NOW, money market and passbook savings accounts decreased in
aggregate by approximately $2.5 million, or 7.8%, and certificates of deposit
decreased by $2.0 million, or 3.2%, during fiscal year ended September 30,
1997. At September 30, 1997, certificates of deposits that will mature within
one year accounted for 37.0% of Columbia Federal's assets.
COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1996
GENERAL. Columbia Federal's net income for the year ended September 30,
1997, was $553,000, an increase of approximately $165,000, or 42.5%, from the
$388,000 in net income recorded for the year ended September 30, 1996. The
increase in earnings resulted primarily from a one-time deposit insurance
assessment of $592,000 in 1996, which was partially offset by a $202,000
reduction in interest income. Net income for the year ended September 30,
1996, would have been $779,000 if the one-time assessment had not reduced it.
-21-
<PAGE> 28
NET INTEREST INCOME. Total interest income was $8.0 million for the year
ended September 30, 1997, a $202,000, or 2.5%, decrease from the comparable 1996
period. Interest income on loans totaled $5.8 million in 1997, a decrease of
$67,000, or 1.1%, from 1996. The decrease resulted primarily from the decline
of $864,000 in average balances outstanding due to the repayment of loans more
rapidly than loans were originated. See "Changes in Financial Condition from
September 30, 1996, to September 30, 1997." Interest income on investment
securities and interest-bearing deposits totaled $1.1 million in 1997, a
decrease of $64,000, or 5.7%, from 1996. The decrease resulted primarily from
the decline of $1.7 million in average balances outstanding to $18.3 million at
September 30, 1997. Interest income on mortgage-backed securities decreased by
$71,000, or 5.8%, during fiscal 1997, as compared to 1996, as a result of a
decline of $1.2 million in the average balance outstanding.
Interest expense on deposits totaled $4.4 million for the year ended
September 30, 1997, a decrease of $152,000, or 3.3%, from the comparable 1996
period. This decrease was due primarily to a $4.1 million decrease in the
average balances outstanding, coupled with a 6 basis point (100 basis points
equals 1%) increase in the average cost of deposits, from 4.78% in the 1996
period to 4.84% in the 1997 period.
As a result of the foregoing changes in interest income and interest
expense, net interest income declined by $75,000, or 2.1%, for the year ended
September 30, 1997, compared to fiscal 1996. The interest rate spread
increased by 3 basis points, from 2.94% in 1996 to 2.97% in 1997, while the net
interest margin increased by 5 basis points, from 3.41% in 1996 to 3.46% in
1997.
PROVISION FOR LOSSES ON LOANS. The provision for losses on loans for the
year ended September 30, 1997, was $113,000 compared to $8,000 for the year
ended September 30, 1996. The allowance for losses on loans was increased in
fiscal year 1997 due, in part, to an increase in nonperforming loans.
Nonperforming loans totaled $601,000 at September 30, 1997, and $177,000 at
September 30, 1996. Columbia Federal's allowance for losses on loans totaled
$300,000 at September 30, 1997, an increase of $111,000 over the balance at
September 30, 1996. The increase is primarily due to delinquencies by one
individual with eighteen loans. These loans were brought current in October
1997. The allowance represented .49% and .28% of total loans at September 30,
1997 and 1996, respectively. See "THE BUSINESS OF COLUMBIA FEDERAL -
Delinquent Loans, Non-Performing Assets and Classified Assets." Historically,
management has emphasized Columbia Federal's loss experience over other factors
in establishing provisions for losses on loans. During the year ended
September 30, 1997, management determined that other factors should also be
considered in determining reasonably estimable loan losses. Among the many
factors to be considered are the nature of the portfolio, credit
concentrations, an analysis of specific loans in the portfolio, known and
inherent risks in the portfolio, the estimated value of the underlying
collateral, the assessment of general trends in relevant real estate markets,
and current and prospective economic conditions, including property values,
employment and occupancy rates, interest rates and other conditions that may
affect a borrower's ability to comply with repayment terms. The amount of the
provision for losses on loans for the year ended September 30, 1997, was
determined to be necessary by management to bring the reserve to a level
considered to be appropriate based on these additional factors. The $105,000
increase in the provision for losses on loans equaled approximately 25% of the
increase in the amount of loans delinquent more than 90 days, which were in the
process of collection. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review Columbia
Federal's allowance for losses on loans. Such agencies may require Columbia
Federal to provide additions to the allowance based upon judgments different
from those of management. Although management uses the best information
available, future adjustments to the allowance may be necessary due to
economic, operating, regulatory and other conditions that may be beyond
Columbia Federal's control. There can be no assurance that the amount of past
or future provisions for losses on loans or the balance of the allowance for
losses on loans account will be adequate to absorb actual loan losses in the
future.
NON-INTEREST INCOME. Non-interest income, primarily service fees from NOW
accounts, safe-deposit box rental receipts and fees on the sale of money orders
and traveler's checks, totaled $88,000 for the year ended September 30, 1997, a
decrease of $8,000, or 8.3%, from the 1996 amount.
NON-INTEREST EXPENSE. Non-interest expense totaled $2.7 million for the
year ended September 30, 1997, a decrease of $453,000, or 14.5%, under the 1996
fiscal year amount. The decrease resulted primarily from a $721,000, or 89.1%,
decrease in federal deposit insurance premiums, which was partially offset by a
$222,000, or 15.2%, increase in salaries and employee benefits, a $14,000, or
6.1%, increase in occupancy expense and a $27,000, or 6.6%, increase in other
expenses. The decrease in federal deposit insurance premiums was primarily
attributable to the one-time SAIF recapitalization assessment of approximately
$592,000 in 1996 and the decrease in premiums in 1997. The increase in
salaries and employee benefits resulted primarily from normal merit increases,
bonuses and the addition of a loan officer. Non-interest expense can be
expected to increase after the Conversion due to the expense associated with
the ESOP and the
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<PAGE> 29
RRP, as well as the increased costs associated with the SEC reporting
requirements and other expenses for a public company. See "RISK FACTORS -
Dilutive Effect and Negative Effect on Earnings of Purchases by the ESOP and
the RRP."
FEDERAL INCOME TAX EXPENSE. The provision for federal income taxes was
$300,000 for the year ended September 30, 1997, an increase of $100,000, or
50.0%, from the provision recorded in fiscal 1996. The increase resulted
primarily from a $265,000, or 45.1%, increase in earnings before taxes. The
effective tax rates were 35.2% and 34.0% for the years ended September 30, 1997
and 1996, respectively.
COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED SEPTEMBER 30, 1996 AND 1995
GENERAL. Net income for the year ended September 30, 1996, was $388,000,
a decrease of $428,000, or 52.5%, from the $816,000 in net income recorded in
1995. The decrease in net income resulted primarily from a $132,000 increase
in interest expense and a $749,000 increase in non-interest expense due
primarily to the $592,000 one-time SAIF recapitalization assessment, which were
partially offset by an increase of $255,000 in interest income and a decrease
of $189,000 in the provision for federal income taxes.
NET INTEREST INCOME. Total interest income was $8.2 million for the year
ended September 30, 1996, an increase of $255,000, or 3.2%, over fiscal year
1995. Interest income on loans totaled $5.9 million, a decrease of $145,000,
or 2.4%, from the 1995 total. This decrease resulted primarily from a decrease
of $2.2 million in the average balance outstanding as loans were repaid faster
than loans were originated, which was partially offset by an increase in the
average yield of 6 basis points, to 8.60% in fiscal year 1996. Interest income
on mortgage-backed securities increased by $233,000, or 23.8%, from the 1995
amount, due to a $2.8 million increase in the average balance outstanding,
coupled with a 28 basis point increase in yield, from 6.51% to 6.79% in 1996.
Interest income on investment securities and interest-bearing deposits
increased by $167,000, or 17.6%, over 1995. This increase resulted primarily
from an increase of $2.0 million in the average balance outstanding, coupled
with an increase in the average yield of 30 basis points.
Interest expense on deposits increased for the year ended September 30,
1996, by $195,000, or 4.4%, to a total of $4.6 million, compared to $4.4
million in 1995. The increase resulted primarily from a $3.1 million increase
in the average balance outstanding, coupled with a 5 basis point increase in
the average cost of deposits, from 4.73% in 1995 to 4.78% in 1996. The
increase in rates paid on Columbia Federal's deposits generally reflect the
increase in interest rates in the overall economy during 1996.
As a result of the foregoing changes in interest income and interest
expense, net interest income increased during 1996 by $123,000, or 3.5%, to a
total of $3.6 million. The interest rate spread and net interest margin
remained virtually unchanged between fiscal years 1995 and 1996.
PROVISION FOR LOSSES ON LOANS. The provision for losses on loans
decreased by $5,000 for the year ended September 30, 1996, compared to fiscal
1995.
NON-INTEREST INCOME. Non-interest income, primarily service fees from NOW
accounts, totaled $96,000 for the year ended September 30, 1996, an increase of
$4,000, or 4.3%, from the 1995 amount.
NON-INTEREST EXPENSE. Non-interest expense was $3.1 million for the year
ended September 30, 1996, an increase of $749,000, or 31.6%, over the amount
recorded for 1995. The increase resulted primarily from a $596,000, or 279.8%,
increase in federal insurance premiums, an $86,000, or 6.3%, increase in
salaries and employee benefits, a $22,000, or 10.7%, increase in occupancy
expense and a $45,000, or 76.3%, increase in advertising expenses. The
increase in federal insurance premiums was due to the one-time SAIF
recapitalization assessment. The increase in salaries and employee benefits
resulted primarily from an increase in staffing levels and normal merit
increases. The increase in occupancy and equipment expense resulted generally
from increases in the cost of equipment maintenance contracts and repairs and
maintenance expenses. The increase in advertising expenses resulted from
expenses incurred in conjunction with the change of Columbia Federal's name,
coupled with expenses incurred in conjunction with the opening of a new branch
office building.
FEDERAL INCOME TAX EXPENSE. The provision for federal income taxes
totaled $200,000 for the year ended September 30, 1996, a decrease of $189,000,
or 48.6%, from the 1995 amount. The decrease resulted primarily from a
$617,000, or 51.2%, decrease in income before federal income taxes. The
effective tax rates were 34.0% and 32.3% for the years ended September 30, 1996
and 1995, respectively.
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<PAGE> 30
The following table presents certain information relating to Columbia
Federal's average balance sheet information and reflects the average yield on
interest-earning assets and the average cost of customer deposits for the
periods indicated. Such yields and costs are derived by dividing annual income
or expense by the average monthly balance of interest-earning assets or customer
deposits, respectively, for the years presented. Average balances are derived
from monthly balances, net of the allowance for losses on loans.
<TABLE>
<CAPTION>
Year ended September 30,
-----------------------------------------------------------------------
1997 1996
---------------------------------- -----------------------------------
Average Interest Average Interest
balance earned/paid Yield/rate balance earned/paid Yield/rate
--------- ----------- ---------- ---------- ----------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets
Interest bearing deposits $ 3,755 $ 197 5.25% $ 4,494 $ 239 5.32%
Investment securities (1) 14,508 854 5.89 15,498 876 5.65
Mortgage-backed securities 16,723 1,143 6.83 17,884 1,214 6.79
Loans receivable, net 67,405 5,802 8.61 68,269 5,869 8.60
-------- ------ ------ -------- ------ ------
Total interest earning assets 102,391 7,996 7.81 106,145 8,198 7.72
Non-interest earning assets
Cash and amounts due from depository institutions 601 590
Premises and equipment, net 1,566 1,033
Other nonearning assets 769 870
-------- --------
2,936 2,493
Total assets $105,327 $108,638
======== ========
Interest-bearing liabilities
NOW accounts $ 4,068 100 2.46 $ 4,375 109 2.49
Money market accounts 12,512 383 3.06 14,438 453 3.14
Passbook savings accounts 13,361 403 3.02 13,423 412 3.07
Certificates of deposit 61,646 3,540 5.74 63,483 3,604 5.68
-------- --------
Total deposits 91,587 95,719
FHLB advances 417 25 6.00 - - -
-------- ------ ------ -------- ------ ------
Total interest-bearing liabilities 92,004 4,451 4.84 95,719 4,578 4.78
Non-interest bearing liabilities 448 422
-------- --------
Total liabilities 92,452 96,141
Retained earnings 12,875 12,497
-------- --------
Total liabilities and retained earnings $105,327 $108,638
======== ========
Net interest income; interest rate spread $3,545 2.97% $3,620 2.94%
====== ====== ====== ======
Net interest margin (net interest income as a
percent of average interest-earning assets) 3.46% 3.41%
====== ======
Average interest-earning assets to average
interest-bearing liabilities 111.29% 110.89%
====== ======
Amortized loan fees included in interest income $ 191 $ 186
====== ======
<CAPTION>
Year ended September 30,
--------------------------------
1995
--------------------------------
Average Interest
balance earned/paid Yield/rate
------- ----------- ----------
(Dollars in thousands)
<S> <C> <C> <C>
Interest earning assets
Interest bearing deposits $ 3,427 $ 171 4.99%
Investment securities (1) 14,543 777 5.34
Mortgage-backed securities 15,060 981 6.51
Loans receivable, net 70,433 6,014 8.54
-------- ------ ------
Total interest earning assets 103,463 7,943 7.68
Non-interest earning assets
Cash and amounts due from depository institutions 568
Premises and equipment, net 770
Other nonearning assets 991
--------
2,329
Total assets $105,792
========
Interest-bearing liabilities
NOW accounts $ 4,032 117 2.90
Money market accounts 17,125 600 3.50
Passbook savings accounts 13,578 467 3.44
Certificates of deposit 57,858 3,199 5.53
--------
Total deposits 92,593
FHLB advances 1,083 63 5.82
-------- ------ ------
Total interest-bearing liabilities 93,676 4,446 4.75
Non-interest bearing liabilities 319
--------
Total liabilities 93,995
Retained earnings 11,797
--------
Total liabilities and retained earnings $105,792
========
Net interest income; interest rate spread $3,497 2.93%
====== ======
Net interest margin (net interest income as a
percent of average interest-earning assets) 3.38%
======
Average interest-earning assets to average
interest-bearing liabilities 110.45%
======
Amortized loan fees included in interest income $ 152
======
</TABLE>
____________
(1) Includes dividends on FHLB stock.
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<PAGE> 31
The following table sets forth, for the periods and at the date indicated,
the weighted average yields earned on Columbia Federal's interest-earning
assets, the weighted average interest rates paid on interest-bearing
liabilities, the interest rate spread and the net interest margin on
interest-earning assets. Such yields and costs are derived by dividing income or
expense by the average balances of assets or liabilities, respectively, for the
periods presented.
<TABLE>
<CAPTION>
Year ended September 30,
At September 30, ----------------------------
1997 1997 1996 1995
---------------- -------- -------- --------
<S> <C> <C> <C> <C>
Weighted average yield on loan portfolio 8.23% 8.61 8.60 8.54
Weighted average yield on mortgage-backed securities 6.81 6.83 6.79 6.51
Weighted average yield on investment securities 5.73 5.89 5.65 5.34
Weighted average yield on interest-bearing deposits 5.36 5.25 5.32 4.99
Weighted average yield on all interest-earning assets 7.44 7.81 7.72 7.68
Weighted average interest rate on deposits 4.94 4.83 4.78 4.73
Weighted average interest rate on FHLB advances - 6.00 - 5.82
Weighted average interest rate paid on all
interest-bearing liabilities 4.94 4.84 4.78 4.75
Interest rate spread (spread between weighted
average interest rate on all interest-bearing assets
and all interest-bearing liabilities) 2.50 2.97 2.94 2.93
Net interest margin (net interest income as a
percentage of average interest-earning assets) 3.06 3.46 3.41 3.38
</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 Columbia Federal's interest income and expense during
the years 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 year rate), (ii)
changes in rate (change in rate multiplied by prior year 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 allocated
proportionately to the change due to volume and the change due to rate:
<TABLE>
<CAPTION>
Year ended September 30,
------------------------------------------------------------------------------
1997 vs. 1996 1996 vs. 1995
-------------------------------------- --------------------------------------
Increase Increase Total Increase Increase Total
(decrease) (decrease) increase (decrease) (decrease) increase
due to rate due to volume (decrease) due to rate due to volume (decrease)
----------- ------------- ---------- ----------- ------------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest income attributable to:
Interest-bearing deposits $ (3) $ (39) $ (42) $ 15 $ 53 $ 68
Investment securities 34 (56) (22) 48 51 99
Mortgage-backed securities 8 (79) (71) 49 184 233
Loans receivable 7 (74) (67) 40 (185) (145)
---- ----- ----- ---- ----- -----
Total interest income 46 (248) (202) 152 103 255
---- ----- ----- ---- ----- -----
Interest expense attributable to:
NOW accounts (1) (8) (9) (18) 10 (8)
Money market accounts (10) (60) (70) (53) (94) (147)
Passbook savings accounts (7) (2) (9) (50) (5) (55)
Certificates of deposit 40 (104) (64) 94 311 405
FHLB Advances - 25 25 - (63) (63)
---- ----- ----- ---- ----- -----
Total interest expense 22 (149) (127) (27) 159 132
---- ----- ----- ---- ----- -----
Increase (decrease) in net
interest income $ 24 $ (99) $ (75) $179 $ (56) $ 123
==== ===== ===== ==== ===== =====
</TABLE>
ASSET AND LIABILITY MANAGEMENT
Columbia Federal, 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, Columbia Federal uses the Net Portfolio
Value ("NPV") methodology recently adopted by the OTS as part of its capital
-25-
<PAGE> 32
regulations. Although the implementation of such regulation has been delayed
and Columbia Federal is not subject to the NPV regulation because the
regulation does not apply to institutions with less than $300 million in assets
and risk-based capital in excess of 12%, the application of the NPV methodology
may illustrate Columbia Federal'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 attempts to quantify interest rate risk as the change in the NPV
which would result from a theoretical 200 basis point (1 basis point equals
.01%) change in market interest rates. Both a 200 basis point increase in
market interest rates and a 200 basis point decrease in market interest rates
are considered. If the NPV would decrease more than 2% of the present value of
the institution's assets with either an increase or a decrease in market rates,
the institution must deduct 50% of the amount of the decrease in excess of such
2% in the calculation of the institution's risk-based capital. See "Liquidity
and Capital Resources."
At September 30, 1997, 2% of the present value of Columbia Federal's
assets was approximately $2.1 million. Because the interest rate risk of a 200
basis point increase in market interest rates (which was greater than the
interest rate risk of a 200 basis point decrease) was $3.3 million at September
30, 1997, had the regulation applied, Columbia Federal would have been required
to deduct approximately $600,000 (50% of the approximate $1.2 million
difference) from its capital in determining whether Columbia Federal met its
risk-based capital requirement. Regardless of such reduction, however,
Columbia Federal's risk-based capital at September 30, 1997, would still have
exceeded the regulatory requirement by $9.3 million.
Presented below, as of September 30, 1997 is an analysis of Columbia
Federal's interest rate risk as measured by changes in NPV for instantaneous
and sustained parallel shifts of 100 basis points in market interest rates.
The table also contains the policy limits set by the Board of Directors of
Columbia Federal as the maximum change in NPV that the Board of Directors deems
advisable in the event of various changes in interest rates. Such limits have
been established with consideration of the dollar impact of various rate
changes and Columbia Federal's strong capital position.
As illustrated in the table, Columbia Federal's NPV is more sensitive to
rising rates than declining rates. Such difference in sensitivity occurs
principally because, as rates rise, borrowers do not prepay fixed-rate loans as
quickly as they do when interest rates are declining. As a result, in a rising
interest rate environment, the amount of interest Columbia Federal would
receive on its loans would increase relatively slowly as loans are slowly
prepaid and new loans at higher rates are made. Moreover, the interest
Columbia Federal would pay on its deposits would increase rapidly because
Columbia Federal's deposits generally have shorter periods to repricing.
Assumptions used in calculating the amounts in this table are OTS assumptions.
<TABLE>
<CAPTION>
At September 30, 1997
---------------------------
Change in Interest Rate Board Limit $ Change % Change
(Basis Points) % Change in NPV in NPV
- ----------------------- ----------- -------- --------
(In thousands)
<S> <C> <C> <C>
+400 (60)% $(7,137) (43)%
+300 (45) (5,232) (32)
+200 (30) (3,322) (20)
+100 (15) (1,498) (9)
-
-100 (15) 838 5
-200 (30) 1,333 8
-300 (45) 2,109 13
-400 (60) 3,260 20
</TABLE>
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 mortgage-backed securities and
early withdrawal levels from certificates of deposit would likely deviate
significantly from those assumed in making the risk calculations.
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<PAGE> 33
If interest rates rise from the recent historically low levels, Columbia
Federal's net interest income will be negatively affected. Moreover, rising
interest rates may negatively affect Columbia Federal's earnings due to
diminished loan demand. Although Columbia Federal originates loans in
accordance with secondary market guidelines in order to be able to sell loans if
necessary for interest rate risk management, many of the loans are not readily
saleable because they are secured by non-owner occupied real estate. Moreover
the sale of loans would further reduce net income as the proceeds from the sale
would be directed into lower yielding investments.
To the extent that proceeds from the conversion are invested in
adjustable-rate mortgage-backed securities, Columbia Federal may reduce its
exposure to interest rate risk.
LIQUIDITY AND CAPITAL RESOURCES. Columbia Federal's liquidity, primarily
represented by cash equivalents, is a result of its operating, investing and
financing activities. These activities are summarized below for the periods
presented.
<TABLE>
<CAPTION>
Year Ended September 30,
-------------------------------------------
1997 1996 1995
------------- ------------- -------------
(In thousands)
<S> <C> <C> <C>
Net income $ 553 $ 388 $ 816
Adjustments to reconcile net income to net cash
from operating activities (20) 423 70
------- ------- ------
Net cash provided by operating activities 533 811 886
Net cash provided by (used in) investing activities 7,512 (3,424) 1,766
Net cash provided by (used in) financing activities (4,265) (1,186) 1,423
------- ------- ------
Net change in cash and cash equivalents 3,780 (3,799) 4,075
------- ------- ------
Cash and cash equivalents at beginning of period 3,047 6,846 2,771
------- ------- ------
Cash and cash equivalents at end of period $ 6,827 $ 3,047 $6,846
======= ======= ======
</TABLE>
Columbia Federal's principal sources of funds are deposits, loan and
mortgage-backed securities repayments, maturities of securities and other funds
provided by operations. Columbia Federal also has the ability to sell certain
investments held available for sale and borrow from the FHLB of Cincinnati.
While scheduled loan repayments and maturing investments are relatively
predictable, deposit flows and early loan and mortgage-backed security
prepayments are more influenced by interest rates, general economic conditions
and competition. Columbia Federal maintains investments in liquid assets based
upon management's assessment of (i) the need for funds, (ii) expected deposit
flows, (iii) the yields available on short-term liquid assets and (iv) the
objectives of the asset/liability management program.
At September 30, 1997, OTS regulations required Columbia Federal 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 5% of the sum of Columbia Federal's average
daily balance of net withdrawable deposit accounts and borrowings payable in
one year or less. The liquidity requirement, which may be changed from time to
time by the OTS to reflect changing economic conditions, is intended to provide
a source of relatively liquid funds upon which Columbia Federal may rely if
necessary to fund deposit withdrawals or other short-term funding needs. At
September 30, 1997, Columbia Federal's regulatory liquidity ratio was 23.5%.
At such date, Columbia Federal had commitments to originate loans totaling
$474,000 and no commitments to purchase or sell loans. At September 30, 1997,
certificates of deposit maturing within one year totaled $38.5 million.
Effective November 24, 1997, the OTS reduced the liquidity requirement to 4%.
Columbia Federal considers its liquidity and capital reserves sufficient to
meet its outstanding short- and long-term needs. See Note 18 of the Notes to
the Financial Statements.
Columbia Federal is required by applicable law and regulations to meet
certain minimum capital standards. Such capital standards include a tangible
capital requirement, a core capital requirement or leverage ratio and a
risk-based capital requirement. See "REGULATION - OTS Regulations --
Regulatory Capital Requirements." Columbia Federal exceeded all of its capital
requirements at September 30, 1997, 1996 and 1995.
The tangible capital requirement requires savings associations to maintain
"tangible capital" of not less than 1.5% of the association's adjusted total
assets. Tangible capital is defined in OTS regulations as core capital minus
any intangible assets.
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<PAGE> 34
"Core capital" is comprised of common stockholders' equity (including
retained earnings), noncumulative preferred stock and related surplus, minority
interests in consolidated subsidiaries, certain nonwithdrawable accounts and
pledged deposits of mutual associations. OTS regulations require savings
associations to maintain core capital of at least 3% of the association's total
assets. The OTS has proposed to increase such requirement to 4% to 5%, except
for those associations with the highest examination rating and acceptable levels
of risk. See "REGULATION - OTS Regulations -- Regulatory Capital Requirements."
OTS regulations require that savings associations maintain "risk-based
capital" in an amount not less than 8% of risk-weighted assets. Risk-based
capital is defined as core capital plus certain additional items of capital,
which in the case of Columbia Federal includes a general allowance for losses
on loans of $300,000 at September 30, 1997.
The following table summarizes Columbia Federal's regulatory capital
requirements and actual capital (see Note _ of the Notes to the Financial
Statements for a reconciliation of capital under GAAP and regulatory capital
amounts) at September 30, 1997.
<TABLE>
<CAPTION>
Excess of actual
capital over current
Actual capital Current requirement requirement
---------------- ---------------------- ---------------------- Applicable
Amount Percent Amount Percent Amount Percent asset total
------- ------- ---------- ---------- ---------- ---------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Tangible Capital $13,090 12.59% $1,560 1.5% $11,530 11.09% $104,006
Core Capital 13,090 12.59 3,120 3.0 9,970 9.59 104,006
Risk-based Capital 13,390 30.37 3,527 8.0 9,863 22.37 44,089
</TABLE>
For information concerning regulatory capital on a pro forma basis after
the Conversion, see "REGULATORY CAPITAL COMPLIANCE."
At September 30, 1997, Columbia Federal had no material commitments for
capital expenditures.
YEAR 2000 ISSUES
Columbia Federal has conducted a review of its computer systems to
identify any year 2000 adverse consequences resulting from computer programs
being written using two digits rather than four to define the applicable year.
Any of Columbia Federal's programs that have time-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000. This
problem could result in a major system failure or miscalculations. Columbia
Federal believes that, with certain modifications, which are not expected to
require material expense, the year 2000 issue will not result in significant
operational problems for Columbia Federal's computer systems. If such
modifications are not completed timely, however, or if Columbia Federal fails
to identify all computer systems affected by the year 2000 problem, Columbia
Federal's operations and financial condition may be negatively affected.
IMPACT OF RECENT ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income," which establishes standards for reporting and displaying
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 and requires
that an enterprise (a) classify items of other comprehensive income by their
nature in a financial statement and (b) display the accumulated balance of
other comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of the statement of financial position.
Under existing accounting standards, other comprehensive income shall be
classified separately into foreign currency items, minimum pension liability
adjustments and unrealized gains and losses on certain investments in debt and
equity securities. The provisions of SFAS No. 130 are effective for fiscal
years beginning after December 15, 1997. Management does not believe the
adoption of SFAS No. 130 will have a material impact on the disclosure
requirements of CFKY.
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<PAGE> 35
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share," which
establishes standards for computing and presenting earnings per share ("EPS") by
entities with publicly held common stock or potential common stock. SFAS No. 128
simplifies the standards for computing earnings per share previously found in
Accounting Principles Board ("APB") Opinion No. 15, "Earnings Per Share." Basic
EPS excludes dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. Diluted EPS is computed similarly to fully
diluted EPS pursuant to APB Opinion No. 15. SFAS No. 128 supersedes APB Opinion
No. 15 and is effective for financial statements issued for periods ending after
December 15, 1997, including interim periods. Management does not believe the
adoption of SFAS No. 128 will have a material impact on the disclosure
requirements of CFKY.
In February 1997, the FASB issued SFAS No. 129, which incorporates the
disclosure requirements of APB Opinion No. 15, and makes them applicable to all
public and nonpublic entities that have issued securities addressed by SFAS No.
129. APB Opinion No. 15 requires disclosure of descriptive information about
securities that is not necessarily related to the computation of EPS. SFAS No.
129 continues the previous requirements to disclose certain information about
an entity's capital structure found in APB Opinions No. 19, "Omnibus Opinion -
1966," and No. 15, and SFAS No. 47, "Disclosure of Long-Term Obligations," for
entities that were subject to the requirements of those standards. SFAS No.
129 eliminates the exemption of nonpublic entities from certain disclosure
requirements of APB Opinion No. 15 as provided by SFAS No. 21, "Suspension of
the Reporting of Earnings per Share, and Segment Information by Nonpublic
Enterprises." SFAS No. 129 supersedes specific disclosure requirements of APB
Opinions Nos. 10 and 15 and SFAS No. 47 and consolidates them in SFAS No. 129
for ease of retrieval and for greater visibility to nonpublic entities. SFAS
No. 129 is effective for financial statements for periods ending after December
15, 1997. Columbia Federal has not previously issued any common shares and
SFAS No. 129 will be adopted by CFKY in the initial period after December 15,
1997. Management believes the adoption of SFAS No. 129 will not have a
material impact on the disclosure requirements of CFKY.
In December 1996, the FASB issued SFAS No. 126, which amends SFAS No. 107,
"Disclosures About Fair Value of Financial Instruments," to make the
disclosures about fair value of financial instruments prescribed in SFAS No.
107 optional for nonpublic entities with total assets less than $100 million on
the date of the financial statement. SFAS No. 126 also requires that the
entity has not held or issued any derivative financial instruments, as defined
in SFAS No. 119, "Disclosure About Derivative Financial Instruments and Fair
Value of Financial Instruments," other than loan commitments, during the
reporting periods. Management believes the adoption of SFAS No. 126 will not
impact the disclosure requirements of CFKY based on Columbia Federal's
compliance with SFAS No. 107 disclosure requirements in prior periods.
In June 1996, the FASB issued SFAS No. 125, which is effective, on a
prospective basis, for fiscal years beginning after December 31, 1996. SFAS
No. 125 provides accounting and reporting standards for transfers and servicing
of financial assets and extinguishment of liabilities based on consistent
application of a financial-components approach that focuses on control. SFAS
No. 125 extends the "available for sale" and "trading" approach of SFAS No. 115
to non-security financial assets that can be contractually prepaid or otherwise
settled in such a way that the holder of the asset would not recover
substantially all of its recorded investment. In addition, SFAS No. 125 amends
SFAS No. 115 to prevent a security from being classified as held-to-maturity if
the security can be prepaid or settled in such a manner that the holder of the
security would not recover substantially all of its recorded investment. The
extension of the SFAS No. 115 approach to certain non-security financial assets
and the amendment to SFAS No. 115 are effective for financial assets held on or
acquired after January 1, 1997. Effective January 1,1997, SFAS No. 125
superseded SFAS No. 122, which is discussed above. Management does not believe
the adoption of SFAS No. 125 will have a material impact on the disclosure
requirements of CFKY.
IMPACT OF INFLATION AND CHANGING PRICES
The financial statements and notes included herein have been prepared in
accordance with GAAP. GAAP requires Columbia Federal to measure financial
position and operating results in terms of historical dollars, and 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 a financial institution to a far greater degree than changes in
the inflation rate. While interest rates are greatly influenced by changes in
the inflation rate,
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<PAGE> 36
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 COLUMBIA FEDERAL
GENERAL
Columbia Federal is principally engaged in the business of making
permanent first and second mortgage loans secured by one- to four-family
residential real estate located in Columbia Federal's primary lending area and
investing in U.S. Government and agency obligations, interest-bearing deposits
in other financial institutions and mortgage-backed securities. Columbia
Federal also originates loans for the construction of residential real estate
and loans secured by multifamily real estate (over four units) and
nonresidential real estate. The origination of consumer loans, including loans
secured by deposits and home improvement loans, constitutes a small portion of
Columbia Federal's lending activities. Loan funds are obtained primarily from
deposits, which are insured up to applicable limits by the FDIC, and loan and
mortgage-backed and related securities repayments.
MARKET AREA
Columbia Federal conducts business from its main office located in Ft.
Mitchell, Kentucky, a branch office in each of the municipalities of Covington,
Crescent Springs and Erlanger, which are located in Kenton County, Kentucky,
and a branch office in Florence, which is located in Boone County, Kentucky.
Columbia Federal's primary market area consists of Boone County and Kenton
County, Kentucky.
The economic base of Columbia Federal's primary market area is comprised
primarily of wholesale and retail industries with some manufacturing
industries. Unemployment rates in the market area historically have been lower
than both state and national unemployment rates. For the nine months ended
September 30, 1997, the combined unemployment rate for Boone and Kenton
Counties was 3.6% compared to 5.0% for the Commonwealth of Kentucky and 4.7%
nationally. The population of Boone and Kenton Counties increased by 9.5%
between 1990 and 1996, compared to a 5.7% increase for the Commonwealth of
Kentucky and a 6.7% increase nationally. Per capita and median household
income in Boone and Kenton Counties were $15,364 and $36,301, respectively,
compared to per capita and median household income of $12,744 and $25,703,
respectively, for the Commonwealth of Kentucky and $16,738 and $34,530,
respectively, for the United States.
LENDING ACTIVITIES
GENERAL. Columbia Federal's primary lending activity is the origination
of conventional mortgage loans secured by one- to four-family homes located in
Columbia Federal's primary lending area. Loans for the construction of one- to
four-family homes and mortgage loans on multifamily properties containing five
units or more and nonresidential properties are also offered by Columbia
Federal. Except for Title I home improvement loans which are insured by the
Federal Housing Administration ("FHA"), Columbia Federal does not originate
loans insured by the FHA or loans guaranteed by the Veterans Administration.
In addition to mortgage lending, Columbia Federal makes consumer loans secured
by deposits and home improvement loans. Columbia Federal originates its loans
in accordance with traditional secondary market guidelines, but has not sold
any loans during the past five years.
-30-
<PAGE> 37
LOAN PORTFOLIO COMPOSITION. The following table presents certain
information with respect to the composition of Columbia Federal's loan portfolio
at the dates indicated:
<TABLE>
<CAPTION>
At September 30,
---------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------------- ----------------- ----------------- ----------------- -----------------
Percent Percent Percent Percent Percent
of total of total of total of total of total
Amount loans Amount loans Amount loans Amount loans Amount loans
------- -------- ------- -------- ------- -------- ------- -------- ------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential real estate loans:
One- to four-family residential $53,584 83.80% $52,691 75.92% $53,552 75.92% $54,297 74.39% $54,123 78.12%
Multifamily residential 5,487 8.58 8,769 12.64 8,918 12.64 8,973 12.29 6,793 9.80
Nonresidential real estate loans 1,711 2.68 6,011 8.66 5,630 7.98 6,434 8.82 5,467 7.89
Construction loans 3,117 4.87 1,878 2.71 2,405 3.41 3,235 4.43 2,818 4.07
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Total real estate loans 63,899 99.92 69,349 99.93 70,505 99.95 72,939 99.93 69,201 99.88
Consumer loans:
Loans on deposits 42 0.07 42 0.06 22 0.03 35 0.05 61 0.09
Home improvement loans 7 0.01 8 0.01 14 0.02 13 0.02 24 0.03
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Total consumer loans 49 0.08 50 0.07 36 0.05 48 0.07 85 0.13
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
Total loans 63,948 100.00% 69,399 100.00% 70,541 100.00% 72,987 100.00% 69,286 100.00%
====== ====== ====== ====== ======
Less:
Loans in process 1,202 605 1,196 1,589 1,296
Deferred loan fees 868 864 886 921 775
Allowance for loes on loans 300 189 189 189 189
------- ------- ------- ------- -------
Loans receivable, net $61,578 $67,741 $68,270 $70,288 $67,026
======= ======= ======= ======= =======
</TABLE>
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<PAGE> 38
LOAN MATURITY SCHEDULE. The following table sets forth certain
information as of September 30, 1997, regarding the dollar amount of loans
maturing in Columbia Federal's portfolio based on their contractual terms to
maturity. Demand loans and loans having no stated schedule of repayments and
no stated maturity are reported as due in one year or less.
<TABLE>
<CAPTION>
Due during the year ending
September 30, Due 4-5 Due 6-10 Due 11-20 Due more than
--------------------------------- years after years after years after 20 years after
1998 1999 2000 9/30/97 9/30/97 9/30/97 9/30/97 Total
------ ------ ------ --------- --------- --------- --------- -------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FIXED-RATE LOANS
Residential real estate loans:
One- to four-family (first
mortgage) $ 16 $29 $111 $ 830 $ 6,438 $22,766 $13,690 $43,880
Home equity (second mortgage) - - 2 11 5 31 - 49
Multifamily - - 13 78 297 2,775 154 3,317
Nonresidential real estate
loans - - - 39 134 965 79 1,217
Construction loans 3,117 - - - - - - 3,117
------ --- ---- ------ ------- ------- ------- -------
Total real estate loans 3,133 29 126 958 6,874 26,537 13,923 51,580
Consumer loans:
Loans on deposits 42 - - - - - - 42
Other consumer loans - - 2 - 5 - - 7
------ --- ---- ------ ------- ------- ------- -------
Total consumer loans 42 - 2 - 5 - - 49
------ --- ---- ------ ------- ------- ------- -------
Total fixed-rate loans 3,175 29 128 958 6,879 26,537 13,923 51,629
ADJUSTABLE-RATE LOANS
Residential real estate loans:
One- to four-family (first
mortgage) $ - $19 $ 56 $ 126 $ 853 $ 4,505 $ 3,967 $ 9,526
Home equity (second mortgage) - 9 3 8 109 - - 129
Multifamily - - 18 - 909 694 549 2,170
Nonresidential real estate
loans - - 13 33 131 229 88 494
Construction loans - - - - - - - -
------ --- ---- ------ ------- ------- ------- -------
Total real estate loans - 28 90 167 2,002 5,428 4,604 12,319
Consumer loans:
Loans on deposits - - - - - - - -
Other consumer loans - - - - - - - -
------ --- ---- ------ ------- ------- ------- -------
Total consumer loans - - - - - - - -
Total adjustable-rate loans - 28 90 1,67 2,002 5,428 4,604 12,319
------ --- ---- ------ ------- ------- ------- -------
Total loans $3,175 $57 $218 $1,125 $ 8,881 $31,965 $18,527 $63,948
====== === ==== ====== ======= ======= ======= =======
</TABLE>
ONE- TO FOUR-FAMILY RESIDENTIAL REAL ESTATE LOANS. The primary lending
activity of Columbia Federal has been the origination of permanent conventional
loans secured by one- to four-family residences, primarily single-family
residences, located within Columbia Federal's primary market area. Each of
such loans is secured by a mortgage on the underlying real estate and
improvements thereon, if any. Of the total outstanding balance of one- to
four-family mortgage loans at September 30, 1997, approximately $20.3 million
was secured by non-owner occupied properties and $53,000 was secured by
single-family unimproved lots. Loans secured by non-owner-occupied properties
are considered to carry greater risk of loss because the borrower typically
depends upon income generated by the property to cover operating expenses and
debt service. The profitability of a property can be affected by economic
conditions, governmental policies and other factors beyond the control of the
borrower.
OTS regulations limit the amount that Columbia Federal may lend in
relationship to the appraised value of the real estate and improvements at the
time of loan origination. In accordance with such regulations, Columbia
Federal makes fixed-rate first mortgage loans on single-family or duplex, owner
occupied residences in amounts up to 80% of the value of the real estate and
improvements (the "Loan-to-Value Ratio" or "LTV"). Fixed-rate residential real
estate loans are offered by Columbia Federal for terms of up to 25 years, or 30
years for first-time homebuyers.
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<PAGE> 39
Columbia Federal commenced the origination of adjustable-rate mortgage
loans ("ARMs") in 1982. ARMs are offered by Columbia Federal on single-family
residences, two- to four-family properties and non-owner occupied one- to
four-family properties, in amounts up to 90% LTV for terms of up to 25 years
and with various alternative features. Columbia Federal requires private
mortgage insurance ("PMI") for the amount of fixed-rate loans and ARM loans in
excess of 85% of the value of the real estate securing such loans. The
interest rate adjustment periods on the ARMs are either one year or three
years. The interest rate adjustments on ARMs presently originated by Columbia
Federal are tied to changes in the monthly average yield on the one- and
three-year U.S. Treasury constant maturities index, respectively. Rate
adjustments are computed by adding a stated margin, usually a minimum of 2.5%,
to the index. The maximum allowable adjustment for one-year adjustment periods
is usually 1.5% with a maximum adjustment of 6% over the term of the loan. The
maximum allowable adjustment for three-year adjustment periods is usually 2%
with a maximum adjustment of 5% over the term of the loan. The initial rate is
dependent, in part, on how often the rate can be adjusted.
Columbia Federal offers ARMs secured by single-family unimproved lots.
Such loans are made for five-year terms, with an LTV of up to 80% on properties
of up to five acres, and require proof, including an affidavit, that the owner
intends to build on the lot during the term of the loan. Interest rates for
ARMs secured by two- to four-family, non-owner-occupied or unimproved property
are between 0.50% and 1.00% higher than the interest rates for ARMs secured by
single-family, owner-occupied properties. Columbia Federal originates ARMs
which have initial interest rates lower than the sum of the index plus the
margin. Such loans are subject to increased risk of delinquency or default due
to increasing monthly payments as the interest rates on such loans increase to
the fully-indexed level, although such increase is considered in Columbia
Federal's underwriting of any such loans.
The aggregate amount of Columbia Federal's one- to four-family residential
real estate loans equaled approximately $53.6 million at September 30, 1997,
and represented 83.8% of loans at such date. Of such amount, approximately
18.0% were ARMs. The largest individual loan balance on a one- to four-family
loan at such date was $368,000. At such date, loans secured by one- to
four-family residential real estate with outstanding balances of $601,000, or
1.1% of its one- to four-family residential real estate loan balance, were more
than 90 days delinquent. See "Delinquent Loans, Non-performing Assets and
Classified Assets."
MULTIFAMILY RESIDENTIAL REAL ESTATE LOANS. In addition to loans on one-
to four-family properties, Columbia Federal makes loans secured by multifamily
properties containing over four units. Such loans are made with fixed or
adjustable interest rates, a maximum LTV of 75% and a maximum term of 25 years.
Multifamily lending is generally considered to involve a higher degree of
risk because the loan amounts are larger and the borrower typically depends
upon income generated by the project to cover operating expenses and debt
service. The profitability of a project can be affected by economic
conditions, government policies and other factors beyond the control of the
borrower. Columbia Federal attempts to reduce the risk associated with
multifamily lending by evaluating the credit-worthiness of the borrower and the
projected income from the project and by obtaining personal guarantees on loans
made to corporations and partnerships. Columbia Federal currently requests
financial statements annually to enable Columbia Federal to monitor the loans
and requires annual financial statements for larger multifamily loans.
At September 30, 1997, loans secured by multifamily properties totaled
approximately $5.5 million, or 8.6% of total loans, all of which were secured
by property located within Columbia Federal's primary market area, and all of
which were performing in accordance with their terms. The largest property
securing such a loan is an apartment complex. The balance of multi-family
loans decreased between September 30, 1996, and September 30, 1997, due to the
repayment of two large multi-family loans in fiscal year 1997. At September
30, 1997, approximately $3.3 million or 5.2% of total loans, were fixed-rate
multifamily loans.
CONSTRUCTION LOANS. Columbia Federal makes loans for the construction of
residential and nonresidential real estate. Such loans are structured as
permanent loans with fixed rates or adjustable rates of interest and for terms
of up to 30 years. All of the construction loans originated by Columbia
Federal have been made to borrowers who intended to occupy the
newly-constructed real estate or to developers who had a purchaser for the
property at the time the loan was made. Approximately 65% of the construction
loan balance at September 30, 1997, was secured by property owned by
developers. All construction loans are written as permanent loans but require
the payment of only interest until the construction is completed. Construction
is required to be completed within one year.
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<PAGE> 40
Construction loans generally involve greater underwriting and default
risks than do loans secured by mortgages on existing properties because such
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 LTV and the total loan funds required to
complete a project. In the event a default on a construction loan occurs and
foreclosure follows, Columbia Federal must take control of the project and
attempt either to arrange for completion of construction or dispose of the
unfinished project. Columbia Federal attempts to reduce such risks on loans to
developers by requiring personal guarantees and reviewing current personal
financial statements and tax returns and other projects undertaken by the
developers.
At September 30, 1997, $3.1 million, or approximately 4.9% of Columbia
Federal's total loans, consisted of construction loans. All of Columbia
Federal's construction loans are secured by property located within Columbia
Federal's primary market area, and the economy of such lending area has been
relatively stable or growing. At September 30, 1997, all of such loans were
performing in accordance with their terms.
NONRESIDENTIAL REAL ESTATE LOANS. Columbia Federal also makes loans
secured by nonresidential real estate located in Northern Kentucky, including
retail stores, warehouses, churches, motels, restaurants and a self-storage
facility. Such loans generally are originated with terms of up to 20 years and
may have fixed or adjustable rates. Such loans have a maximum LTV of 75%.
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. If the cash flow on the property is
reduced, for example, as leases are not obtained or renewed, the borrower's
ability to repay may be impaired. Columbia Federal has endeavored to reduce
such risk by evaluating the credit history and past performance of the
borrower, the location of the real estate, the quality of the management
constructing and operating the property, the debt service ratio, the quality
and characteristics of the income stream generated by the property and
appraisals supporting the property's valuation. Columbia Federal also requires
personal guarantees on such loans.
At September 30, 1997, Columbia Federal had a total of $1.7 million
invested in nonresidential real estate loans, all of which were secured by
property located within Northern Kentucky. Such loans comprised approximately
2.7% of Columbia Federal's total loans at such date. At such date, Columbia
Federal had no delinquent nonresidential real estate loans. See "Delinquent
Loans, Non-performing Assets and Classified Assets."
Federal regulations limit the amount of nonresidential mortgage loans
which an association may make to 400% of its tangible capital. At September
30, 1997, Columbia Federal's nonresidential mortgage loans totaled 13.1% of
Columbia Federal's tangible capital.
CONSUMER LOANS. Columbia Federal makes loans secured by deposits and a
limited number of home improvement loans not secured by mortgages. Home
improvement loans are made only at fixed rates of interest for terms of up to
five years. Loans secured by deposits are made with adjustable rates that vary
with the interest paid on the deposit and have a margin of three percent over
the interest rate being paid on the deposit. See "RISK FACTORS" and
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."
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
Columbia Federal has not had significant delinquencies on consumer loans, no
assurance can be provided that delinquencies will not increase.
At September 30, 1997, Columbia Federal had approximately $49,000, or less
than one percent of its total loans, invested in consumer loans, and none of
such loans were more than 90 days delinquent or nonaccruing. See "Delinquent
Loans, Non-performing Assets and Classified Assets."
COMMERCIAL LOANS. Although Columbia Federal is considering offering
commercial loans, Columbia Federal does not currently issue any letters of
credit or originate or purchase any loans for commercial, business or
agricultural purposes, other than loans secured by real estate.
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<PAGE> 41
LOAN SOLICITATION AND PROCESSING. Loan originations are developed from a
number of sources, including continuing business with depositors, borrowers and
real estate developers, periodic newspaper advertisements, solicitations by
Columbia Federal's lending staff and walk-in customers. Columbia Federal does
not use third-party brokers or originators.
Loan applications for permanent mortgage loans are taken by loan
personnel. Columbia Federal obtains a credit report concerning the
credit-worthiness of the borrower. Columbia Federal limits the ratio of
mortgage loan payments to the borrower's income to 28% and the ratio of the
borrower's total debt payments to income to 36%. An appraisal of the fair
market value of the real estate on which Columbia Federal will be granted a
mortgage to secure the loan is usually prepared by an employee of Columbia
Federal. As part of the appraisal and prior to foreclosure on any delinquent
loan, a visual inspection is performed to identify obvious environmental
concerns. If the visual inspection or the history of the property provides
reason to believe an environmental problem might exist, Columbia Federal will
conduct further investigations, which may include a Phase I Environmental Site
Assessment by an approved environmental consultant.
For multifamily and nonresidential mortgage loans, a personal guarantee of
the borrower's obligation to repay the loan is required. Columbia Federal also
obtains the borrower's financial statement, tax returns and information with
respect to prior projects completed by the borrower. Upon the completion of
the appraisal and the receipt of information on the borrower, the application
for a loan is submitted to the Loan Committee, comprised of certain management
officials, for approval or rejection if the loan amount does not exceed
$250,000. If the loan amount exceeds $250,000, or if the application does not
conform in all respects with Columbia Federal's underwriting guidelines, the
application is accepted or rejected by the Board of Directors.
If a mortgage loan application is approved, Columbia Federal does not
require title insurance but does obtain an attorney's opinion of title.
Borrowers are required to carry satisfactory fire and casualty insurance and
flood insurance, if applicable, and to name Columbia Federal as an insured
mortgagee.
The procedure for approval of construction loans is the same as for
permanent mortgage loans, except that an appraiser evaluates the building
plans, construction specifications and estimates of construction costs.
Columbia Federal also evaluates the feasibility of the proposed construction
project and the experience and record of the builder.
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.
Columbia Federal's loans provide that the entire balance of the loan is
due upon sale of the property securing the loan, and Columbia Federal generally
enforces such due-on-sale provisions. Columbia Federal's adjustable-rate loans
carry no prepayment penalties, but fixed-rate loans carry a 2% prepayment
penalty if the property is refinanced with another lender within five years of
the loan's origination.
LOAN ORIGINATIONS, PURCHASES AND SALES. Columbia Federal originated only
fixed-rate loans until 1982. Columbia Federal has not generally sold loans,
although Columbia Federal does originate its loans in accordance with secondary
market guidelines. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Asset and Liability Management."
Columbia Federal has occasionally purchased loans and participated in loans
originated by other institutions but had only one participation during the
three years ended September 30, 1997, and such participation was paid in full
in fiscal year 1997. For a discussion of Columbia Federal's strategy for loan
originations, see "THE BUSINESS OF COLUMBIA FEDERAL - General."
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<PAGE> 42
The following table presents Columbia Federal's mortgage loan origination
and purchase activity for the periods indicated:
<TABLE>
<CAPTION>
Year ended September 30,
------------------------------
1997 1996 1995
-------- ---------- --------
(In thousands)
<S> <C> <C> <C>
Loan originations:
One- to four-family residential $ 7,493 $ 6,925 $ 3,802
Multifamily residential 684 553 358
Nonresidential 232 125 49
Construction 3,170 2,584 2,544
Consumer 80 70 32
------- ------- -------
Total loans originated 11,659 10,257 6,785
Loan purchases - 160(2) -
------- ------- -------
Total loans originated and purchased 11,659 10,417 6,785
Principal repayments 18,904 12,818 11,213
------- ------- -------
Loan originations, net (7,245) (2,401) (4,428)
Increase (decrease) due to other items, net (1) 1,082 1,872 2,410
------- ------- -------
Net increase (decrease) in net loan portfolio $(6,163) $ (529) $(2,018)
======= ======= =======
</TABLE>
____________
(1) Consists of unearned and deferred fees, costs and the allowance for loan
losses.
(2) Consisted of one- to four-family residential loans purchased from the
Federal Home Loan Mortgage Corporation ("FHLMC").
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
association's total capital under the regulatory capital requirements plus any
additional loan reserve not included in total capital. A savings association
may lend to one borrower an additional amount not to exceed 10% of total
capital plus additional reserves if the additional amount is fully secured by
certain forms of "readily marketable collateral." Real estate is not
considered "readily marketable collateral." In addition, the regulations
require that loans to certain related or affiliated borrowers be aggregated for
purposes of such limits. An exception to these limits permits loans to one
borrower of up to $500,000 "for any purpose."
Based on such limits, Columbia Federal was able to lend approximately $2.0
million to one borrower at September 30, 1997. The largest amount Columbia
Federal had outstanding to one borrower at September 30, 1997, was $1.3
million, owed on several loans. Such loans were one- to four-family real
estate, nonresidential real estate and construction loans. All of such loans
were current at September 30, 1997.
DELINQUENT LOANS, NON-PERFORMING ASSETS AND CLASSIFIED ASSETS. When a
borrower fails to make a required payment on a loan, Columbia Federal attempts
to cause the delinquency to be cured by contacting the borrower. In most
cases, delinquencies are cured promptly.
When a loan is nineteen days delinquent, the borrower is assessed a late
penalty. When a loan is thirty days delinquent, Columbia Federal sends the
borrower a delinquency notice. Depending upon the circumstances, Columbia
Federal may also inspect the property and inform the borrower of the
availability of credit counseling from Columbia Federal and counseling
agencies. After a loan is delinquent for 45 to 60 days, an attorney
representing Columbia Federal will send the borrower a notice advising the
borrower of Columbia Federal's intention to foreclose on the property in thirty
days. Columbia Federal may, depending upon the circumstances, arrange
appropriate alternative payment arrangements. A decision as to whether and
when to initiate foreclosure proceedings is based on such factors as the amount
of the outstanding loan in relation to the original indebtedness, the extent of
the delinquency and the borrower's ability and willingness to cooperate in
curing delinquencies. If a foreclosure occurs, the real estate is sold at
public sale and may be purchased by Columbia Federal.
Real estate acquired by Columbia Federal as a result of foreclosure
proceedings is classified as real estate owned ("REO") until it is sold. When
property is so acquired, or deemed to have been acquired, it is initially
recorded by Columbia
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<PAGE> 43
Federal at the lower of cost or fair value of the real estate, less estimated
costs to sell. Any reduction in fair value is reflected in a valuation
allowance account established by a charge to income. Costs incurred to carry
other real estate are charged to expense. Columbia Federal had no REO at
September 30, 1997.
Columbia Federal does not place a loan on nonaccrual status until
foreclosure has occurred, although it does write it down to fair market value.
The following table reflects the amount of loans in a delinquent status as
of the dates indicated:
<TABLE>
<CAPTION>
At September 30,
-----------------------------------------------------------------------------------
1997 1996 1995
--------------------------- --------------------------- -------------------------
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 (1):
30 - 59 days 15 $ 549 .86 23 $ 792 1.14 22 $668 .95
60 - 89 days 10 591 .92 2 132 .19 - - -
90 days and over 23 601(2) .94 4 177 .26 - - -
-- ------ ---- -- ------ ---- -- ---- ---
Total delinquent loans 48 $1,741(3) 2.72 29 $1,101(4) 1.59 22 $668(5) .95
-- ====== ==== == ====== ==== == ==== ===
</TABLE>
____________
(1) The number of days a loan is delinquent is measured from the day the
payment was due under the terms of the loan agreement.
(2) Of such amount, $473,000 was due from one borrower with 18 loans, which
were all brought current in October 1997.
(3) Of such amount, $1,651,000 is secured by one- to four-family residential
real estate, and $90,000 is secured by multifamily residential real
estate.
(4) All such amount is secured by one- to four-family residential real
estate.
(5) Of such amount, $559,000 is secured by one- to four-family residential
real estate, and $109,000 is secured by multifamily residential real
estate.
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<PAGE> 44
The following table sets forth information with respect to Columbia
Federal's loans which are 90 days or more past due and other non-performing
assets at the dates indicated. At such dates, Columbia Federal had no
non-accruing loans.
<TABLE>
<CAPTION>
At September 30,
---------------------------------------
1997 1996 1995 1994 1993
------ ------- ------ ------ ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Accruing loans greater than 90 days
delinquent:
Real estate:
Residential $ 601 $ 177 $ - $ 286 $ 259
Nonresidential - - - 211 -
Consumer - - - - -
----- ------ ----- ----- -----
Total nonperforming loans 601 177 - 497 259
Real estate owned - - 32 101 239
----- ------ ----- ----- -----
Total nonperforming assets $ 601 $ 177 $ 32 $ 598 $ 498
===== ====== ===== ===== =====
Total nonperforming loans as a
percentage of total net loans 0.98% 0.26% - 0.71% 0.39%
===== ====== ===== ===== =====
Total nonperforming assets as a
percentage of total assets 0.58% 0.16% 0.03% 0.56% 0.46%
===== ====== ===== ===== =====
Allowance for losses on loans as a
percentage of nonperforming loans 49.92% 106.78% N/M(1) 38.03% 72.97%
===== ====== ===== ===== =====
</TABLE>
____________
(1) Not meaningful as there were no nonperforming loans at September 30, 1995.
During the periods shown, Columbia Federal had no restructured loans
within the meaning of SFAS No. 15, as amended by SFAS No. 114. There are no
loans which are not currently classified as nonaccrual, more than 90 days past
due or restructured but which may be so classified in the near future because
management has concerns as to the ability of the borrowers to comply with
repayment terms.
OTS regulations require that each thrift institution classify its own
assets on a regular basis. 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 insured institution
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
asset of the institution is not warranted. The regulations also contain a
"special mention" category, consisting of assets which do not currently expose
an institution to a sufficient degree of risk to warrant classification but
which possess credit deficiencies or potential weaknesses deserving
management's close attention.
Generally, Columbia Federal classifies as "substandard" all loans that are
delinquent more than 90 days, unless management believes the delinquency status
is short-term due to unusual circumstances. Loans delinquent fewer than 90
days may also be classified if the loans have the characteristics described
above rendering classification appropriate.
-38-
<PAGE> 45
The aggregate amount of Columbia Federal's classified assets at the dates
indicated were as follows:
<TABLE>
<CAPTION>
September 30,
---------------------------
1997 1996 1995
----- ----- -----
(In thousands)
<S> <C> <C> <C>
Classified assets:
Substandard $972 $178 $32
Doubtful - - -
Loss - - -
---- ---- ---
Total classified assets $972 $178 $32
==== ==== ===
</TABLE>
Federal examiners are authorized to classify an association's assets. If
an association does not agree with an examiner's classification of an asset, it
may appeal this determination to the Regional Director of the OTS. Columbia
Federal had no disagreements with the examiners regarding the classification of
assets at the time of the last examination.
OTS regulations require that Columbia Federal establish prudent general
allowances for loan losses for any loan classified as substandard or doubtful.
If an asset, or portion thereof, is classified as loss, the association must
either establish specific allowances for losses in the amount of 100% of the
portion of the asset classified loss, or charge off such amount.
ALLOWANCE FOR LOSSES ON LOANS. Columbia Federal maintains an allowance
for loan losses based upon a number of relevant factors, including, but not
limited to, the nature of the portfolio, credit concentrations, an analysis of
specific loans in the portfolio, known and inherent risks in the portfolio, the
estimated value of the underlying collateral, the assessment of general trends
in relevant real estate markets, and current and prospective economic
conditions, including property values, employment and occupancy rates, interest
rates and other conditions that may affect a borrower's ability to comply with
repayment terms.
The single largest component of Columbia Federal's loan portfolio consists
of one- to four-family residential real estate loans. Substantially all of
these loans are secured by residential real estate and require a down payment
of 20% of the lower of the sales price or appraised value of the real estate.
In addition, these loans are secured by property in Columbia Federal's lending
area of Boone County and Kenton County, Kentucky. Columbia Federal's practice
of making loans only in its local market area and requiring a 20% down payment
have contributed to a low historical charge-off history.
In addition to one- to four-family residential real estate loans, Columbia
Federal makes multifamily residential real estate, nonresidential real estate
and construction loans. These real estate loans are secured by property in
Columbia Federal's lending area and also require the borrower to provide a down
payment. Columbia Federal has not had any charge-offs from these other real
estate loan categories in the last 10 years. See "Delinquent Loans,
Non-performing Assets and Classified Assets."
A small portion of Columbia Federal's total loans consists of consumer
loans. Columbia Federal has recorded no charge-offs on consumer loans during
the last five years.
The allowance for loan losses is reviewed quarterly by the Board of
Directors. While the Board of Directors believes that it uses the best
information available to determine the allowance for loan losses, unforeseen
market conditions could result in material adjustments, and net earnings could
be significantly adversely affected, if circumstances differ substantially from
the assumptions used in making the final determination.
-39-
<PAGE> 46
The following table sets forth an analysis of Columbia Federal's allowance
for loan losses for the periods indicated.
<TABLE>
<CAPTION>
For the year ended September 30,
----------------------------------------------------
1997 1996 1995 1994 1993
-------- --------- --------- --------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Total net loans outstanding $61,578 $67,741 $68,270 $70,288 $67,026
------- ------- ------- ------- -------
Average loans outstanding 67,405 68,269 70,433 69,611 68,740
------- ------- ------- ------- -------
Allowance for loan losses
Balance at beginning of period 189 189 189 189 189
------- ------- ------- ------- -------
Charge-offs
Real estate:
Residential 2 8 13 34 47
Nonresidential - - - - -
Consumer - - - - -
Recoveries
Real estate:
Residential - - - - -
Nonresidential - - - - -
Consumer - - - - -
------- ------- ------- ------- -------
Net charge-offs 2 8 13 34 47
Provision for losses on loans 113 8 13 34 47
------- ------- ------- ------- -------
Balance at end of period $ 300 $ 189 $ 189 $ 189 $ 189
======= ======== ======== ======== ========
Ratio of allowance for losses
on loans as a percent of
total loans outstanding 0.49% 0.28% 0.28 0.27% 0.28%
==== ==== ==== ==== ====
Ratio of net charge-offs
(recoveries) to average net
loans outstanding during the
period - 0.01% 0.02% 0.05% 0.07%
==== ==== ==== ==== ====
</TABLE>
During the past five years, the allowance for loan losses was unallocated
among the various types of loans made by Columbia Federal.
MORTGAGE-BACKED SECURITIES
Columbia Federal maintains a significant portfolio of mortgage-backed
securities in the form of FHLMC, FNMA and GNMA participation certificates.
Mortgage-backed securities generally entitle Columbia Federal to receive a
portion of the cash flows from an identified pool of mortgages. FHLMC, FNMA
and GNMA securities are each guaranteed by their respective agencies as to
principal and interest.
The FHLMC is a corporation chartered by the U.S. Government and guarantees
the timely payment of interest and the ultimate return of principal on
participation certificates. The FNMA is a corporation chartered by the U.S.
Congress and guarantees the timely payment of principal and interest on FNMA
securities. Although FHLMC and FNMA securities are not backed by the full faith
and credit of the U.S. Government, these securities are generally considered
among the highest quality investments with minimal credit risk. The GNMA is a
government agency. GNMA securities are backed by Federal Housing
Authority-insured and Veterans Administration-guaranteed loans. The timely
payment of principal and interest on GNMA securities is guaranteed by the GNMA
and backed by the full faith and credit of the U.S. Government.
Mortgage-backed securities generally yield less than individual loans
originated by Columbia Federal. In addition, a high rate of prepayment of the
underlying loans could have a material negative effect on the yield on the
securities, which are purchased at a premium over their original principal
amounts. Mortgage-backed securities present less credit risk than loans
-40-
<PAGE> 47
originated by Columbia Federal and held in its portfolio, and Columbia Federal
has purchased some adjustable-rate mortgage-backed securities as part of its
effort to reduce its interest rate risk. If interest rates rise in general,
including the interest paid by Columbia Federal on its liabilities, the
interest rates on the loans backing the mortgage-backed securities will also
adjust upward. At September 30, 1997, $10.8 million of Columbia Federal's
mortgage-backed securities had adjustable rates. See "RISK FACTORS - Interest
Rate Risk" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF COLUMBIA FEDERAL - Asset and Liability Management."
The following table sets forth the carrying value and market value of
Columbia Federal's mortgage-backed securities at the dates indicated. All of
such securities are designated as held to maturity.
<TABLE>
<CAPTION>
At September 30,
----------------------------------------------------------
1997 1996 1995
------------------ ------------------ ------------------
Carrying Market Carrying Market Carrying Market
Value Value Value Value Value Value
-------- -------- -------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
FNMA certificates $ 9,297 $ 9,208 $ 9,229 $ 9,023 $ 9,290 $ 8,515
GNMA certificates 5,048 5,136 4,536 4,570 3,858 3,914
FHLMC certificates 3,517 3,549 4,986 4,992 3,652 3,681
------- ------- ------- ------- ------- -------
Total mortgage-backed
and related securities $17,862 $17,893 $18,751 $18,585 $16,800 $16,110
======= ======= ======= ======= ======= =======
</TABLE>
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<PAGE> 48
The following table sets forth information regarding scheduled
maturities, amortized costs, market value and weighted average yields of
Columbia Federal's mortgage-backed securities at September 30, 1997.
Expected maturities will differ from contractual maturities due to
scheduled repayments and because borrowers may have the right to call or
prepay obligations with or without prepayment penalties. The following
table does not take into consideration the effects of scheduled repayments
or the effects of possible prepayments.
<TABLE>
<CAPTION>
At September 30, 1997
--------------------------------------------------------------------------
One year or less After one to five years After five to ten years
------------------ -------------------------- --------------------------
Carrying Average Carrying Average Carrying Average
value yield value yield value yield
-------- -------- ------------ ------------ ------------ ------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
FNMA certificates $ - $ - $ - - $1,752 6.34%
GNMA certificates - - 1 5.50 74 8.00
FHLMC certificates - - 1,229 7.65 639 8.02
------ ------ ------ ---- ------ ----
Total $ - $ - $1,230 7.65% $2,465 6.83%
====== ====== ====== ==== ====== ====
At September 30, 1997
-----------------------------------------------
Total mortgage-backed
After ten years portfolio
------------------ ---------------------------
Carrying Average Carrying Market Average
value yield value value yield
-------- -------- -------- -------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
FNMA certificates $ 7,545 6.51% $ 9,297 $ 9,208 6.48%
GNMA certificates 4,973 6.76 5,048 5,136 6.78
FHLMC certificates 1,649 7.77 3,517 3,549 7.77
------- ---- ------- ------- ----
Total $14,167 6.74% $17,862 $17,893 6.82%
======= ==== ======= ======= ====
</TABLE>
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<PAGE> 49
INVESTMENT ACTIVITIES
OTS regulations require that Columbia Federal maintain a minimum amount of
liquid assets, which may be invested in U. S. Treasury obligations, securities
of various federal agencies, certificates of deposit at insured banks, bankers'
acceptances and federal funds. Columbia Federal is also permitted to make
investments in certain commercial paper, corporate debt securities rated in one
of the four highest rating categories by one or more nationally recognized
statistical rating organizations, and mutual funds, as well as other
investments permitted by federal regulations. See "REGULATION" and
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."
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<PAGE> 50
The following table sets forth the composition of Columbia Federal's
investment securities at the dates indicated:
<TABLE>
<CAPTION>
At September 30,
---------------------------------------------------------------------------------------------------
1997 1996 1995
------------------------------- --------------------------------- -------------------------------
Carrying % of Market % of Carrying % of Market % of Carrying % of Market % of
value Total value Total value Total value Total value Total value Total
-------- ----- ------- ----- -------- ----- ------- ----- -------- ----- ------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. government and
federal agency securities $14,072 92% $14,071 92% $14,997 93% $14,951 93% $13,481 92% $13,089 92%
FHLB stock 1,260 8 1,260 8 1,174 7 1,174 7% 1,095 8% 1,095 8%
------- --- ------- --- ------- --- ------- --- ------- --- ------- ---
Total investment securities $15,332 100% $15,331 100% $16,171 100% $16,125 100% $14,576 100% $14,184 100%
======= === ======= === ======= === ======= === ======= === ======= ===
</TABLE>
-44-
<PAGE> 51
The following tables set forth the contractual maturities, carrying
values, market values and average yields for Columbia Federal's investment
securities at September 30, 1997.
<TABLE>
<CAPTION>
At September 30, 1997
-----------------------------------------------------------------------------------------------------------
One year or less After one to five years After five to ten years After ten years
----------------------- ------------------------------ -------------------------- ----------------------
Carrying Average Carrying Average Carrying Average Carrying Average
value yield value yield value yield value yield
-------------- ------- -------------- -------------- ------------ ------------ ------------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and
federal agency
securities $6,503 5.45% $5,997 5.87% - - $1,572 6.50%
FHLB stock (1) 1,260 7.06% - - - - - -
------ ------ --- ------
Total $7,763 % $5,997 % $- % $1,572 %
====== ------ ====== ---- === --- ====== ----
</TABLE>
<TABLE>
<CAPTION>
At September 30, 1997
--------------------------------------------------------
Weighted Weighted
average life Carrying Market average
in years value value yield
------------------ ----------- ----------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C>
U.S. Government and
federal agency
securities 3 $14,072 $14,071 5.73%
FHLB stock N/A 1,260 1,260 7.06%(1)
----------- ----------- ---------
Total $15,332 $15,331
=========== ===========
</TABLE>
____________
(1) The FHLB stock has no stated maturity. Columbia Federal is required by
regulation to maintain an investment in FHLB stock. The yield indicated
is the actual yield during fiscal 1997; there is not stated yield.
DEPOSITS AND BORROWINGS
GENERAL. Deposits have traditionally been the primary source of Columbia
Federal's funds for use in lending and other investment activities. In
addition to deposits, Columbia Federal derives funds from FHLB advances,
interest payments and principal repayments on loans and mortgage-backed
securities, service charges and gains on the sale of 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 more in response to general interest rates and money
market conditions.
DEPOSITS. Deposits are attracted principally from within Columbia
Federal's primary market area through the offering of a broad selection of
deposit instruments, including NOW accounts, money market accounts, passbook
savings accounts and term certificate accounts. At September 30, 1997, $16.2
million of Columbia Federal's deposits were individual retirement accounts
("IRAs"). Interest rates paid, maturity terms, service fees and withdrawal
penalties for the various types of accounts are established periodically by the
management of Columbia Federal based on Columbia Federal's liquidity
requirements, growth goals and interest rates paid by competitors. Columbia
Federal does not use brokers to attract deposits.
At September 30, 1997, Columbia Federal's certificates of deposit totaled
$61.1 million, or 67.7% of total deposits. Of such amount, approximately $38.5
million in certificates of deposit mature within one year. Based on past
experience and Columbia Federal's prevailing pricing strategies, management
believes that a substantial percentage of such certificates will renew with
Columbia Federal at maturity. If there is a significant deviation from
historical experience, Columbia Federal can utilize borrowings from the FHLB as
an alternative to this source of funds.
-45-
<PAGE> 52
The following table sets forth the dollar amount of deposits in the
various types of savings programs offered by Columbia Federal at the dates
indicated:
<TABLE>
<CAPTION>
At September 30,
-----------------------------------------------------------
1997 1996 1995
------------------ ------------------- ------------------
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:
- ---------------------
NOW accounts (1) $ 3,952 4.38% $ 4,339 4.58% $ 4,267 4.45%
Money market accounts (2) 11,919 13.21 13,641 14.41 15,624 16.31
Club Accounts 66 0.07 73 0.08 77 0.08
Passbook savings account (3) 13,167 14.60 13,519 14.28 13,478 14.07
------- ------ ------- ------ ------- ------
Total transaction accounts 29,104 32.26 31,572 33.35 33,446 34.91
Certificates of deposit:
- ------------------------
2.01 - 4.00% 42 0.05 42 0.04 50 0.05
4.01 - 6.00% 31,457 34.88 54,925 58.03 30,274 31.60
6.01 - 8.00% 29,592 32.81 8,118 8.58 32,036 33.44
------- ------ ------- ------ ------- ------
Total certificates of
deposit 61,091 67.74 63,085 66.65 62,360 65.09
------- ------ ------- ------ ------- ------
Total deposits (4) $90,195 100.00% $94,657 100.00% $95,806 100.00%
======= ====== ======= ====== ======= ======
</TABLE>
____________
(1) Columbia Federal's weighted average interest rate paid on NOW accounts
fluctuates with the general movement of interest rates. At September 30,
1997, 1996 and 1995, the weighted average rates on NOW accounts were
2.46%, 2.49% and 2.90%, respectively.
(2) Columbia Federal's weighted average interest rate paid on money market
accounts fluctuates with the general movement of interest rates. At
September 30, 1997, 1996 and 1995, the weighted average rates on money
market accounts were 3.06%, 3.14% and 3.50%, respectively.
(3) Columbia Federal's weighted average rate on passbook savings accounts
fluctuates with the general movement of interest rates. The weighted
average interest rate on passbook accounts was 3.02%, 3.07% and 3.44% at
September 30, 1997, 1996 and 1995, respectively.
(4) IRAs are included in the various certificates of deposit balances. IRAs
totaled $16.2 million, $16.5 million and $15.9 million as of September 30,
1997, 1996 and 1995, respectively.
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<PAGE> 53
The following table shows rate and maturity information for Columbia
Federal's certificates of deposit as of September 30, 1997:
<TABLE>
<CAPTION>
Amount Due
---------------------------------------------------------
Over Over
Up to 1 year to 2 years to Over
Rate one year 2 years 3 years 3 years Total
- ---- --------- ------------ ---------- --------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C>
2.01 - 4.00% $ 40 $2 $ - $ - $ 42
4.01 - 6.00% 22,982 5,484 2,991 - 31,457
6.01 - 8.00% 15,455 9,165 2,081 2,891 29,592
------- ------- ------ ------ -------
Total $38,477 $14,651 $5,072 $2,891 $61,091
======= ======= ====== ====== =======
</TABLE>
The following table presents the amount of Columbia Federal's certificates
of deposit of $100,000 or more by the time remaining until maturity as of
September 30, 1997:
<TABLE>
<CAPTION>
Average
Amount interest rate
------ -------------
(In thousands)
<S> <C> <C>
In quarter ended
December 31, 1997 $ 507 5.77%
March 31, 1998 820 5.91
June 30, 1998 271 6.05
September 30, 1998 500 5.78
After September 30, 1998 1,613 6.34
------ ----
Total time deposits $100,000 or greater $3,711 6.06%
====== ====
</TABLE>
The following table sets forth Columbia Federal's deposit account balance
activity for the periods indicated:
<TABLE>
<CAPTION>
Year ended September 30,
---------------------------------
1997 1996 1995
---------- ---------- ---------
(Dollars in thousands)
<S> <C> <C> <C>
Beginning balance $ 94,657 $ 95,806 $ 93,807
Deposits 59,497 60,704 66,213
Withdrawals (67,647) (65,719) (67,956)
-------- -------- --------
Net increases (decreases) before interest
credited (8,150) (5,015) 1,743
Interest credited 3,688 3,866 3,742
-------- -------- --------
Ending balance $ 90,195 $ 94,657 $ 95,806
======== ======== ========
Net increase (decrease) $ (4,462) $ (1,149) $ 1,999
Percent increase (decrease) (4.71)% (1.20)% 2.13%
</TABLE>
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, Columbia Federal 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
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<PAGE> 54
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
Test (the "QTL Test"). See "REGULATION - OTS Regulations -- Qualified Thrift
Lender Test." If an association meets the QTL Test, it will be eligible for
100% of the advances it would otherwise be eligible to receive. If an
association does not meet the QTL Test, it will be eligible for such advances
only to the extent it holds specified QTL Test assets. At September 30, 1997,
Columbia Federal was in compliance with the QTL Test.
Columbia Federal obtained advances from the FHLB of Cincinnati as set
forth in the following table:
<TABLE>
<CAPTION>
At September 30,
----------------------------
1997 1996 1995
-------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C>
Average balance outstanding $ 417 $- $1,083
Maximum amount outstanding at any month end
during the period 1,000 - 2,750
Balance outstanding at end of period - - -
Weighted average interest rate during the period 6.00 - 5.82
Weighted average interest rate at end of period - - -
</TABLE>
COMPETITION
Columbia Federal competes for deposits with other savings associations,
commercial banks and credit unions and with the issuers of commercial paper and
other securities, such as shares in money market mutual funds. The primary
factors in competing for deposits are interest rates and convenience of office
location. In making loans, Columbia Federal competes with other savings
associations, commercial banks, consumer finance companies, credit unions,
leasing companies, mortgage companies and other lenders. Columbia Federal
competes for loan originations primarily through the interest rates and loan
fees offered and through the efficiency and quality of services provided.
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. Seven savings
associations, twelve banks and seven credit unions have offices in Boone and
Kenton Counties. At June 30, 1996, Columbia Federal had approximately 4.4% of
all financial institution deposits in Boone and Kenton Counties and 14.5% of
all financial institution deposits in Ft. Mitchell, Kentucky. Quantitative
information regarding deposits and competing institutions is reported in The
Branches of Kentucky, compiled by Sheshunoff Information Services, Inc.
The size of financial institutions competing with Columbia Federal is
likely to increase as a result of changes in statutes and regulations
eliminating various restrictions on interstate and inter-industry branching and
acquisitions. Such increased competition may have an adverse effect upon
Columbia Federal.
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<PAGE> 55
PROPERTIES
The following table sets forth certain information at September 30, 1997,
regarding the properties on which the main office and the branch offices of
Columbia Federal are located:
<TABLE>
<CAPTION>
Owned Date Square Net
Location or leased acquired footage book value(1) Deposits
- -------- --------- -------- ------- ------------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
Main Office:
2497 Dixie Highway
Ft. Mitchell, Kentucky
41017-3085 Owned 1957 8,536 $231 $34,200
Branch Offices:
Pike Street and Lee Street
Covington, Kentucky 41011 Owned 1937 4,520 141 18,324
612 Buttermilk Pike
Crescent Springs, Kentucky 41017 Owned 1981 1,848 134 10,240
3522 Dixie Highway
Erlanger, Kentucky 41018 Owned 1981 2,392 52 18,550
7550 Dixie Highway
Florence, Kentucky 41042 Owned 1996 3,025 748 8,881
</TABLE>
(1) At September 30, 1997, Columbia Federal's office premises and equipment
had a total net book value of $1.6 million. For additional information
regarding Columbia Federal's office premises and equipment, see Note 8 of
Notes to the Financial Statements.
PERSONNEL
As of September 30, 1997, Columbia Federal had 38 full-time employees.
Columbia Federal believes that relations with its employees are good. Columbia
Federal offers health and life insurance benefits, a 401(k) plan and a defined
benefit pension plan. None of the employees of Columbia Federal are
represented by a collective bargaining unit.
LEGAL PROCEEDINGS
Columbia Federal is not presently involved in any legal proceedings of a
material nature. From time to time, Columbia Federal is a party to legal
proceedings incidental to its business to enforce its security interest in
collateral pledged to secure loans made by Columbia Federal.
MANAGEMENT OF CFKY
The Board of Directors of CFKY consists of seven members divided into two
classes. Each of the directors of CFKY is also a director of Columbia Federal.
The terms of Messrs. Mistler and Tobergte and Ms. Zembrodt expire in 1999, and
the terms of Messrs. Bluemlein, Kelly, Layne and Lynch expire in 2000.
The following persons are officers of CFKY: Kenneth R. Kelly, Chairman of
the Board; Robert V. Lynch, President; Carol S. Margrave, Secretary; Edward
Schwartz, Vice President; and Abijah Adams, Treasurer. After the consummation
of the Conversion, CFKY intends to have quarterly meetings of the Board of
Directors. CFKY does not currently pay directors' fees.
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<PAGE> 56
MANAGEMENT OF COLUMBIA FEDERAL
DIRECTORS AND EXECUTIVE OFFICERS
The Charter of Columbia Federal provides for a Board of Directors
consisting of not less than five nor more than 15 directors, such number to be
fixed or changed in the Bylaws or by the members. The Board of Directors
currently consists of seven directors divided into three classes. One class of
directors is elected each year. Each director serves for a three-year term.
The Board of Directors met 13 times during the fiscal year ended September 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 and executive officers of Columbia Federal:
<TABLE>
<CAPTION>
Date of Term
Name Age(1) Position with Columbia Federal service expires
- ---- ------ ------------------------------ ------- -------
<S> <C> <C> <C> <C>
J. Robert Bluemlein 79 Director 1970 1999
Kenneth R. Kelly 76 Director, Chairman of the Board 1965 2000
John C. Layne 48 Director 1995 1998
Robert V. Lynch 52 Director, President, CEO 1971 1999
Daniel T. Mistler 55 Director 1997 2000
Fred A. Tobergte, Sr. 79 Director 1981 1999
Geraldine Zembrodt 53 Director 1993 1998
Mary Jane Lucas 61 Senior Vice President 1971 -
George Raybourne 44 Vice President 1972 -
Edward Schwartz 48 Vice President 1972 -
Harold E. Taylor 56 Vice President 1996
Abijah Adams 52 Controller 1978 -
Carol S. Margrave 42 Secretary, Treasurer 1979 -
</TABLE>
____________
(1) At September 30, 1997.
Mr. Bluemlein retired in 1983 after serving as Vice President of Columbia
Federal from 1970 to 1983. Prior to becoming Vice President and Director of
Columbia Federal, Mr. Bluemlein was Executive Vice President of Star Federal.
Mr. Kelly has been Chairman of the Board of Columbia Federal since 1983.
He has served as President and co-owner of Kelly Brothers Lumber Co., a lumber
and building supply store in Covington, Kentucky, since its founding in 1947.
Mr. Layne has been a partner in Rafalske & Layne, LLP, Certified Public
Accountants, which has its offices in Cincinnati, Ohio, since 1982.
Mr. Lynch has been employed by Columbia Federal since 1971, served as
Treasurer from 1974 to 1977, has served as President and Chief Executive
Officer since 1977 and has been a director since 1978.
Mr. Mistler is an attorney who joined Deters, Benzinger & LaVelle, PSC, a
law firm located in Covington, Kentucky, in 1984 and now serves on its Board of
Directors and manages its residential real estate department.
Mr. Tobergte served the Kentucky Department of Transportation for twenty
years, where he held various positions, including that of Enforcement Officer,
prior to his retirement in 1981.
Ms. Zembrodt has co-owned and operated The Village Gallerie, an art and
framing gallery located in Ft. Wright, Kentucky, since May 1995. Ms. Zembrodt
previously co-owned and operated The Sample Shop, a gift shop then located in
Ft. Wright, Kentucky, from 1982 to May 1994.
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<PAGE> 57
Ms. Lucas has served Columbia Federal since 1971, having served as
Secretary and Treasurer from 1979 until 1993, when she became Vice President.
Ms. Lucas became Columbia Federal's Senior Vice President in 1994 and heads
Columbia Federal's Loan Department.
Mr. Raybourne has been employed by Columbia Federal since 1972, serving as
Assistant Vice President from 1979 to 1993, when he became Vice President. Mr.
Raybourne is responsible for property appraisals, which he performs, and
property management.
Mr. Schwartz has been employed by Columbia Federal since 1972, serving as
Assistant Vice President until 1994, when he became Vice President. Mr.
Schwartz is responsible for IRA's and mortgage servicing.
Mr. Taylor joined Columbia Federal in July 1996 as Vice President in
charge of lending. Prior to joining Columbia Federal, Mr. Taylor was employed
by Lexington Federal Savings Bank in Lexington, Kentucky, serving as its Vice
President and Loan Department Manager since 1991.
Mr. Adams joined Columbia Federal as Accountant in 1978 and became
Controller in 1987.
Ms. Margrave has been employed by Columbia Federal since 1979, serving as
Branch Manager from 1983 to 1992 and Assistant Secretary from 1992 to 1993,
when she became Secretary and Treasurer.
COMMITTEES OF DIRECTORS
The Board of Directors of Columbia Federal has an Audit Committee. The
Audit Committee recommends audit firms to the full Board of Directors and
reviews and approves the annual independent audit report. The members of the
Audit Committee are Messrs. Bluemlein, Kelly and Tobergte. During fiscal year
1997, the Audit Committee met four times.
The full Board of Directors periodically serves as a compensation
committee to determine compensation for executive officers. The Board of
Directors did not meet in such a capacity in fiscal 1997.
Columbia Federal does not have a nominating committee.
COMPENSATION
Each director of Columbia Federal, except for the Chairman of the Board,
receives a retainer fee of $1,025 per month for service as a director of
Columbia Federal. Each director also receives $100 per Audit Committee meeting
attended. The Chairman of the Board receives a monthly fee of $1,260. During
fiscal year 1997, Columbia Federal paid a total of $86,465 in directors'
compensation.
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<PAGE> 58
The following table presents certain information regarding the cash
compensation received by the President and Chief Executive Officer of Columbia
Federal. No other executive officer of Columbia Federal received compensation
exceeding $100,000 during the fiscal year ended September 30, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Name and Annual Compensation
Principal ------------------------- All Other
Position Year Salary ($)(1) Bonus ($) Compensation
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert V. Lynch, 1997 $133,800(2) $7,075 $3,799(4)
President and Chief
Executive Officer 1996 117,442(3) 2,075 3,168(4)
</TABLE>
- ------------
(1) Does not include amounts attributable to other miscellaneous benefits
received by executive officers. The cost to Columbia Federal of providing
such benefits to Mr. Lynch was less than 10% of his cash compensation
(2) Includes a salary of $121,650 and directors' fees of $12,150.
(3) Includes a salary of $105,842 and directors' fees of $11,600.
(4) Consists of Columbia Federal's contribution to Mr. Lynch's 401(k) defined
contribution plan account.
EMPLOYEE STOCK OWNERSHIP PLAN
CFKY has established the ESOP for the benefit of employees of CFKY and
Columbia Federal age 21 or older who have completed at least one year of
full-time service with CFKY or Columbia Federal. The establishment of the ESOP
and the purchase by the ESOP of the Common Shares of CFKY are subject to the
receipt of a favorable determination letter on the qualified status of the ESOP
under applicable provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), from the Commissioner of Internal Revenue ("Commissioner"). CFKY
will submit to the Commissioner an application for a favorable determination
letter on the qualified status of the ESOP. Although no assurances can be
given, CFKY expects that the ESOP will receive a favorable determination letter
from the Commissioner.
CFKY intends to accept a promissory note from the ESOP in payment for 8%
of the Common Shares sold in connection with the Conversion. The loan will be
secured by the shares purchased with the loan proceeds and will be repaid by
the ESOP with funds from Columbia Federal's discretionary contributions to the
ESOP and earnings on ESOP assets. Shares purchased with such loan proceeds
will be held in a suspense account for allocation among participants as the
loan is repaid. As payments are made and the shares are released from the
suspense account, such shares will be validly issued, fully paid and
non-assessable.
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 and be employed on the last day of the plan year in order to receive an
allocation. Benefits are immediately fully vested. Benefits may be paid
either in CFKY 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. Pursuant to SOP 93-6, the fair market
value of ESOP shares allocated during a period are expensed during the period.
A committee appointed by the Board of Directors of CFKY will administer
the ESOP. The Common Shares and other ESOP funds will be held and invested by
a trustee (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 allocated shares held in the ESOP in accordance with the
instructions of the participating employees. Shares for which employees do not
give instructions and unallocated shares will be voted by the ESOP Trustee in
its sole discretion.
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<PAGE> 59
From time to time, the ESOP may purchase additional Common Shares of CFKY
through purchases in the market or directly from CFKY. No such purchases are
currently contemplated. If the ESOP purchases newly issued shares from CFKY,
such purchases would have a dilutive effect on the interests of CFKY's
shareholders.
STOCK OPTION PLAN
The Board of Directors of CFKY expects to adopt the Stock Option Plan,
subject to the approval by the shareholders of CFKY. A number of Common Shares
equal to 10% of the Common Shares to be issued in connection with the
Conversion is expected to be reserved for issuance by CFKY upon the exercise of
options to be granted to certain directors, officers and employees of Columbia
Federal and CFKY from time to time under the Stock Option Plan. The purposes
of the Stock Option Plan include retaining and providing incentives to the
directors, officers and employees of CFKY and Columbia Federal by facilitating
their purchase of a stock interest in CFKY.
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
(an "ISO"). Options granted under the Stock Option Plan to directors who are
not full-time employees of CFKY or Columbia Federal will not qualify under the
Code and thus will not be incentive stock options ("non-qualified stock
options"). Although any eligible director, officer or employee of Columbia
Federal and CFKY may receive non-qualified stock options, Columbia Federal
anticipates that the non-employee directors of Columbia Federal and CFKY will
receive non-qualified stock options, and other eligible participants will
receive incentive stock options.
The option exercise price of each option granted under the Stock Option
Plan will be determined by the committee of directors appointed to administer
the Stock Option Plan at the time of the grant, with the exception that the
exercise price for an option 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 that it is granted,
except that in the case of an ISO granted to an employee who owns more than 10%
of CFKY's outstanding Common Shares at the time an ISO is granted under the
Stock Option Plan, the exercise price of such an ISO may not be less than 110%
of the fair market value of the shares on the date of the grant, and the ISO
shall not be exercisable after the expiration of five years from the date it is
granted. Options will become first exercisable to the extent of no more than
one fifth per year.
An option cannot be transferred or assigned other than by will or in
accordance with the laws of descent and distribution. "Termination for cause,"
as defined in the Stock Option Plan, will result in the annulment of any
outstanding options.
CFKY will receive no monetary consideration for the granting of options
under the Stock Option Plan. Upon the exercise of options, CFKY will receive
payment of cash, CFKY Common Shares or a combination of cash and Common Shares
from option recipients in exchange for shares issued.
The Stock Option Plan will be administered by a committee of directors
composed of at least three directors of CFKY (the "Committee"). The Committee
may grant options under the Stock Option Plan at such times as the committee
members deem most beneficial to Columbia Federal and CFKY on the basis of the
individual participant's position, duties and responsibilities, the value of
his or her services to Columbia Federal and CFKY and any other factors deemed
relevant. A grant of options under the Stock Option Plan is expected to occur
on the date of approval of the Stock Option Plan by the shareholders of CFKY.
The members of the Committee have not yet been appointed, and specific grants
have not been proposed. The directors of CFKY intend, however, to make such
grants in accordance with OTS regulations which provide that no individual may
receive options to purchase more than 25% of the shares which may be the
subject of options pursuant to the Stock Option Plan, and directors who are not
employees of CFKY or Columbia Federal may not receive options to purchase more
than 5% of such shares individually or 30% in the aggregate.
Pursuant to OTS regulations, the Stock Option Plan may not be approved by
the shareholders of CFKY until at least six months after the Conversion is
completed. It is expected that options will be granted immediately after the
shareholders approve the Stock Option Plan.
RECOGNITION AND RETENTION PLAN AND TRUST
The Board of Directors of CFKY intends to adopt the RRP, subject to
approval of the shareholders of CFKY as a means of providing directors and
certain key employees of Columbia Federal with an ownership interest in CFKY in
a manner designed
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<PAGE> 60
to compensate such directors and key employees for services to Columbia
Federal. CFKY expects to contribute sufficient funds to enable the RRP to
purchase Common Shares in the open market or to purchase authorized but
unissued shares from CFKY in an amount equal to up to 4% of the Common Shares
sold in connection with the Conversion. Assuming the sale of 2,020,000 shares
in connection with the Conversion, 80,800 shares would be purchased by the RRP.
The purchase of authorized but unissued shares would have a dilutive effect on
the interests of CFKY's shareholders. See "CAPITALIZATION" and "PRO FORMA
DATA." While no specific awards have yet been proposed, the directors of
Columbia Federal intend to make such awards in accordance with OTS regulations
which provide that no individual may receive more than 25% of the shares
awarded pursuant to the RRP, and directors who are not employees of CFKY or
Columbia Federal may not receive more than 5% of such shares individually or
30% in the aggregate.
Until shares awarded are earned by the participant, such shares will be
forfeited in the event that the employment of the employee is terminated for
cause. One-fifth of such shares will be earned and nonforfeitable on each of
the first five anniversaries of the date of the awards. In the event of the
death or disability of a participant, however, the participant's shares will be
deemed to be earned and nonforfeitable upon such date. A committee to be
appointed by the Board of Directors of Columbia Federal will administer the RRP
and determine the number of shares to be awarded to eligible participants. Two
directors of Columbia Federal are expected to serve as the trustees of the RRP
Trust. Each participant will be entitled to the benefit of any dividends or
other distributions paid on shares awarded but not yet earned, but such
unearned shares will be voted by the trustees in their discretion.
Compensation expense in the amount of the fair market value of the Common
Shares at the date of the award to the employee will be recognized as the
shares are earned. In the event of a termination of a participant's employment
following a change in control of Columbia Federal or CFKY, all shares awarded
to such participant in the RRP become earned and nonforfeitable.
The RRP must be approved by the shareholders of CFKY. Pursuant to OTS
regulations, the shareholders may not approve the RRP until six months after
the completion of the Conversion. It is expected that the RRP will purchase
shares of CFKY and that awards will be made immediately after shareholder
approval of the RRP.
RETIREMENT BENEFIT PLANS
Columbia Federal provides a 401(k) defined contribution plan (the "401(k)
Plan") and a defined benefit pension plan (the "Pension Plan") for all
employees who have completed one year of service with Columbia Federal and have
attained age 21.
Pursuant to the 401(k) Plan, a participant may elect to contribute up to
15% of the participant's annual compensation on a tax-deferred basis. Columbia
Federal contributes an amount equal to 50% of a participant's contribution, up
to the first 3% of the participant's salary. The matching percentage is
subject to change in the discretion of Columbia Federal's Board of Directors.
All participants are fully vested.
The normal Pension Plan retirement benefit payable upon retirement at or
after age 65 is the product of (a) 1% times (b) years of service times (c)
average annual salary for the five consecutive years of highest salary.
Employees become 100% vested in the Pension Plan after five years of service.
Participants are automatically 100% vested at 65 years of age regardless of
years of service. The Pension Plan also includes provisions for early
retirement, disability retirement and a death benefit. The compensation
covered by the Pension Plan includes the sum of (a) the employee's total
taxable compensation and (b) any pre-tax contributions to the 401(k) Plan less
(c) the amount of any compensation deferred from a prior year.
During the fiscal year ended September 30, 1997, Columbia Federal
contributed $75,000 to the Pension Plan. The estimated annual benefit payable
upon retirement at normal retirement age to Mr. Lynch is $29,400 per year.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Columbia Federal intends to enter into an employment agreement with Robert
V. Lynch (the "Employment Agreement"). Columbia Federal currently has no
employment agreements with any of its officers. The Employment Agreement,
which will become effective upon completion of the Conversion, provides for a
term of three years and a salary and performance review by the Board of
Directors not less often than annually, as well as inclusion of the employee in
any formally established employee benefit, bonus, pension and profit-sharing
plans for which senior management personnel are eligible. The Employment
Agreement also provides for vacation and sick leave.
The Employment Agreement is terminable by Columbia Federal at any time.
In the event of termination by Columbia Federal for "just cause," as defined in
the Employment Agreement, Mr. Lynch will have no right to receive any
compensation or
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<PAGE> 61
other benefits for any period after such termination. In the event of
termination by Columbia Federal 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. Lynch will be entitled to a
continuation of salary payments for a period of time equal to the 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 the employee becomes employed full-time by another employer.
The Employment Agreement also contains provisions with respect to the
occurrence of a "change of control" within six months after or within one year
before (1) the termination of employment of Mr. Lynch for any reason other than
just cause, retirement or termination at the end of the term of the agreement,
(2) a change in the capacity or circumstances in which he is employed or (3) a
material reduction in his responsibilities, authority, compensation or other
benefits provided under the Employment Agreement without his written consent.
In the event of any such occurrence, Mr. Lynch will be entitled to payment of
an amount equal to three times the greater of his annual salary set forth in
the Employment Agreement or the annual salary payable to Mr. Lynch as a result
of any annual salary review. In addition, Mr. Lynch would 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 he 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 or exceed limitations
imposed by the OTS. "Control," as defined in the Employment Agreement,
generally refers to the acquisition by any person or entity of the ownership or
power to vote 25% or more of the voting stock of Columbia Federal or CFKY, the
control of the election of a majority of Columbia Federal's or CFKY's directors
or the exercise of a controlling influence over the management or policies of
Columbia Federal or CFKY.
The aggregate payment that would have been made to Mr. Lynch assuming his
termination at September 30, 1997, following a change of control, would have
been approximately $286,596.
Columbia Federal also intends to enter into severance agreements with five
other executive officers of Columbia Federal. Such severance agreements will
contain provisions for payments upon a change of control as are contained in
Mr. Lynch's employment agreement. The aggregate payment that would have been
made under such severance agreements assuming the termination of all five of
such officers at September 30, 1997, assuming such a change of control, would
have been approximately $727,998.
CERTAIN TRANSACTIONS WITH COLUMBIA FEDERAL
Columbia Federal makes loans to directors who are not full-time employees
of Columbia Federal in the ordinary course of business and on the same terms
and conditions, including interest rates and collateral, as those of comparable
loans to other persons. On February 13, 1997, Columbia Federal adopted a
policy whereby Columbia Federal will make first mortgage loans to its full-time
employees, including directors and officers who are full-time employees,
without closing costs and at an interest rate that is one percent less than the
interest rate charged for comparable loans to other persons, subject to the
following conditions: (i) the employee must sign an agreement that the
interest rate will be increased by one percent should the employee's employment
with Columbia Federal terminate for any reason; (ii) the employee must
reimburse Columbia Federal for any related out-of-pocket expenses that are paid
to a third party; (iii) the loan must be for the employee's personal
single-family residence; (iv) the loan must satisfy all of Columbia Federal's
normal underwriting criteria; (v) each employee may only have one outstanding
loan on favorable terms at any one time; and, (vi) Columbia Federal's Board of
Directors must approve the loan.
The following table sets forth certain information regarding loans, made
on terms more favorable that those offered to the public, to executive officers
of Columbia Federal whose indebtedness to Columbia Federal exceeded $60,000 at
any time since October 1, 1995:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Largest balance Balance at
Loan origination during 2 years September 30,
Name Position date Collateral ended 9/30/97 1997
- ----------------- -------------------- ---------------- ------------------ ------------------ -------------
George Raybourne Vice President 7/1/97 Personal Residence $128,000 $127,822
Carol S. Margrave Secretary, Treasurer 5/9/97 Personal Residence 92,000 91,637
</TABLE>
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Loans made to directors and executive officers of Columbia Federal and their
related interests in amounts of at least $60,000 and made on the same terms and
conditions, including interest rates and collateral, as those of comparable
loans to other persons totaled $70,323 at September 30, 1997. None of the
outstanding loans to directors and executive officers involve more than the
normal risk of collectibility or present other unfavorable features, and all
are current in their payments.
REGULATION
GENERAL
As a savings association organized under the laws of the United States,
Columbia Federal is subject to regulatory oversight by the OTS. Because
Columbia Federal's deposits are insured by the FDIC, Columbia Federal is also
subject to examination and regulation by the FDIC. Columbia Federal must file
periodic reports with the OTS concerning its activities and financial
condition. Examinations are conducted periodically by the OTS to determine
whether Columbia Federal is in compliance with various regulatory requirements
and is operating in a safe and sound manner. Columbia Federal is a member of
the FHLB of Cincinnati.
CFKY will be a savings and loan holding company within the meaning of the
Home Owners Loan Act, as amended (the "HOLA"). Consequently, CFKY will be
subject to regulation, examination and oversight by the OTS as the holding
company of Columbia Federal and will be required to submit periodic reports to
the OTS. Because CFKY is a corporation organized under Ohio law, CFKY is also
subject to the provisions of the Ohio Revised Code applicable to corporations
generally.
Congress is considering legislation to eliminate the federal savings
association charter and the separate federal regulation of savings
associations. 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 Columbia
Federal 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 Columbia Federal may engage and would probably
subject Columbia Federal to more regulation by the FDIC. In addition, CFKY may
become subject to different holding company regulations, including separate
capital requirements. At this time, CFKY cannot predict whether or when
Congress may actually pass legislation regarding CFKY's and Columbia Federal's
regulatory requirements or charter. Although such legislation may change or
limit the activities in which either CFKY or Columbia Federal may engage, it is
not anticipated that the current activities of CFKY or Columbia Federal will be
materially affected by such changes or limitations.
OTS REGULATIONS
GENERAL. The OTS is an office in the Department of the Treasury and is
responsible for the regulation and supervision of all savings associations the
deposits of which are insured by the FDIC in the SAIF and all federally
chartered savings institutions. The OTS issues regulations governing the
operation of savings associations, regularly examines such institutions and
imposes assessments on savings associations based on their asset size to cover
the costs of this supervision and examination. It also promulgates regulations
that prescribe the permissible investments and activities of federally
chartered savings associations, including the type of lending that such
associations may engage in and the investments in real estate, subsidiaries and
securities they may make. The OTS also may initiate enforcement actions
against savings 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 association.
Federally chartered savings associations are subject to regulatory
oversight by the OTS under various consumer protection and fair lending laws.
These laws govern, among other things, truth-in-lending disclosure, 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
transaction. 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 areas and borrowers. Columbia
Federal has received a "Satisfactory" examination rating under those
regulations.
REGULATORY CAPITAL REQUIREMENTS. Columbia Federal is required by OTS
regulations to meet certain minimum capital requirements. These requirements
call for tangible capital of 1.5% of adjusted total assets, core capital (which
for
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Columbia Federal is equal to tangible capital) of 3% of adjusted total assets,
and risk-based capital (which for Columbia Federal consists of core capital and
general valuation allowances) equal to 8% of risk-weighted assets. Assets and
certain off balance sheet items 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
associations that do not have the highest examination rating and exceed an
acceptable level of risk will be required to maintain core capital of from 4%
to 5%, depending on the association's examination rating and overall risk.
Columbia Federal does not anticipate that it will be adversely affected if the
core capital requirement regulation is amended as proposed. Columbia Federal's
core capital ratio at September 30, 1997, was 12.59% and will increase to
17.96% on a pro forma basis at September 30, 1997, assuming the receipt of
approximately $19.5 million in net proceeds from the sale of the Common Shares
at the mid-point of the Valuation Range and the investment of 50% of the net
proceeds by CFKY in Columbia Federal. For information concerning Columbia
Federal's capital, see "REGULATORY CAPITAL COMPLIANCE."
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 association 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 Columbia Federal currently 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.
The OTS has adopted regulations governing prompt corrective action to
resolve the problems of capital deficient and otherwise troubled savings
associations. At each successively lower capital category, an institution 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. In addition, the OTS can downgrade an
association's designation notwithstanding its capital level, based on less than
satisfactory examination ratings in areas other than capital or, after notice
and an opportunity for hearing, if the institution is deemed to be in an unsafe
or unsound condition or to be engaging in an unsafe or unsound practice. Each
undercapitalized association must submit a capital restoration plan to the OTS
within 45 days after it becomes undercapitalized. Such institution 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. A critically undercapitalized institution must be
placed in conservatorship or receivership within 90 days after reaching such
capitalization level, except under limited circumstances. Columbia Federal's
capital at September 30, 1997, met the standards for a well-capitalized
association.
Federal law prohibits an insured institution from making a capital
distribution to anyone or paying management fees to any person having control
of the institution if, after such distribution or payment, the institution
would be undercapitalized. In addition, each company controlling an
undercapitalized institution must guarantee that the institution will comply
with the terms of an OTS-approved capital plan until the institution has been
adequately capitalized on an average during each of four consecutive calendar
quarters and must provide adequate assurances of performance. The aggregate
liability pursuant to such guarantee is limited to the lesser of (a) an amount
equal to 5% of the institution's total assets at the time the institution
became undercapitalized or (b) the amount which is necessary to bring the
institution into compliance with all capital standards applicable to such
institution at the time the institution fails to comply with its capital
restoration plan.
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 into one of three tiers. The first rating category is Tier 1,
consisting 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 (i) 100% of its net income, current year-to-date, plus 50% of
the amount by which the lesser of the 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 (ii)
the amount authorized for a Tier 2 association. The second category, Tier 2,
consists of associations
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that, before and after the proposed capital distribution, meet their current
minimum, but not fully phased-in capital requirement. Associations in this
category may make capital distributions up to 75% of their net income over the
most recent four quarters. Tier 3 associations do not meet their 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 treated as a Tier 2 or a Tier 3 association.
Columbia Federal meets the requirements for a Tier 1 association and has
not been notified of any need for more than normal supervision. Columbia
Federal will be prohibited from declaring or paying any dividends or from
purchasing any of its stock if, as a result of such dividend or such purchase,
Columbia Federal's net worth would be reduced below the amount required to be
maintained for the liquidation account established in connection with the
conversion. As a subsidiary of CFKY, Columbia Federal will also be required to
give the OTS 30 days' notice prior to declaring any dividend on its common
shares. 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.
In December 1994, the OTS issued a proposal to amend the capital
distribution limits. Under that proposal, an association not owned by a
holding company and having 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 distribution would be permitted if it caused
the association to become undercapitalized.
LIQUIDITY. OTS regulations require that each savings association maintain
an average daily balance of liquid assets (cash, certain time deposits,
bankers' acceptances and specified United States government, state or federal
agency obligations) equal to a monthly average of not less than 5% 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
these liquidity requirements. The eligible liquidity of Columbia Federal, as
computed under current regulations, at September 30, 1997, was approximately
$21.1 million, or 23.5%, and exceeded the then applicable 5% liquidity
requirement by approximately $16.6 million, or 18.5%. Effective November 24,
1997, the liquidity requirement was reduced to 4%. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
Liquidity and Capital Resources."
QUALIFIED THRIFT LENDER TEST. Savings associations are required to meet
the QTL 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
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, Columbia Federal met the QTL Test.
LENDING LIMIT. OTS regulations generally limit the aggregate amount that
a savings association may lend to one borrower to an amount equal to 15% of the
savings association's total capital under the regulatory capital requirements
plus any additional loan reserve not included in total capital. A savings
association may loan to one borrower an additional amount not to exceed 10% of
total capital plus additional reserves if the additional loan 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 these limits. In applying these limits, loans to certain borrowers
may be aggregated. Notwithstanding the specified limits, an association may
lend to one borrower up to $500,000 "for any purpose." See "THE BUSINESS OF
COLUMBIA FEDERAL - Lending Activities -- Loan Originations, Purchases and
Sales."
TRANSACTIONS WITH INSIDERS AND AFFILIATES. Loans to executive officers,
directors and principal shareholders and their related interests must conform
to the lending limits on loans to one borrower and the total of such loans
cannot exceed the association's total regulatory capital plus additional loan
reserves (or 200% of such capital amount for qualifying institutions with less
than $100 million in assets). Most loans to directors, executive officers and
principal shareholders must be approved in
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advance by a majority of the "disinterested" members of the board of directors
of the association 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 to the
general public or as offered to all employees in a company-wide benefit
program. Loans to executive officers are subject to additional limitations.
Columbia Federal was in compliance with such restrictions at September 30,
1997. See "MANAGEMENT OF COLUMBIA FEDERAL - Certain Transactions with Columbia
Federal."
Savings associations must comply with Sections 23A and 23B of the Federal
Reserve Act (the "FRA") pertaining to transactions with affiliates. 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. After
the Conversion, CFKY will be an affiliate of Columbia Federal. Generally,
Sections 23A and 23B of the FRA (i) limit the extent to which the savings
institution 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 institution, 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. Columbia Federal was in compliance with these
requirements and restrictions at September 30, 1997.
HOLDING COMPANY REGULATION. Upon consummation of the Conversion, CFKY
will be a savings and loan holding company within the meaning of the Home
Owners' Loan Act (the "HOLA"). As such, CFKY 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 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 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 association
for cash without such savings association being deemed to be controlled by the
holding company. 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 Board of Directors presently intends to operate CFKY as a unitary
savings and loan holding company. There are generally no restrictions on the
activities of a unitary savings and loan holding company, and such companies
are the only financial institution holding companies which may engage in
commercial, securities and insurance activities without limitation. Congress
is considering legislation which may limit CFKY's ability to engage in such
activities and CFKY cannot predict if and in what form these proposals might
become law. However, such limits would not impact CFKY's initial activity of
holding stock of Columbia Federal. The broad latitude to engage in activities
under current law can be restricted, however, 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 association. The OTS
may impose such restrictions as deemed necessary to address such risk,
including limiting (i) payment of dividends by the savings association, (ii)
transactions between the savings association and its affiliates, and (iii) any
activities of the savings association that might create a serious risk that the
liabilities of the holding company and its affiliates may be imposed on the
savings association. Notwithstanding the foregoing rules as to permissible
business activities of a unitary savings and loan holding company, if the
savings association subsidiary of a holding company fails to meet the QTL
Tests, then such unitary holding company would become subject to the activities
restrictions applicable to multiple holding companies. At September 30, 1997,
Columbia Federal met the QTL Tests. See "Qualified Thrift Lender Test."
If CFKY were to acquire control of another savings institution other than
through a merger or other business combination with Columbia Federal, CFKY
would thereupon become a multiple savings and loan holding company. Except
where such acquisition is pursuant to the authority to approve emergency thrift
acquisitions and where each subsidiary savings association meets the QTL Test,
the activities of CFKY and any of its subsidiaries (other than Columbia Federal
or other subsidiary savings associations) would thereafter be subject to
further restrictions. The HOLA provides that, among other things, no multiple
savings and loan holding company or subsidiary thereof which is not a savings
institution shall commence, or shall continue 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
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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. Those activities described in (vii) above
must also be approved by the OTS prior to being engaged in by a multiple
holding company.
The OTS may also approve an acquisition resulting in the formation of a
multiple savings and loan holding company that controls savings associations in
more than one state only, if the multiple savings and loan holding company
involved controls a savings association which operated a home or branch office
in the state of the association 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
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 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.
Columbia Federal is a member of the SAIF and its deposit accounts are insured
by the FDIC up to the prescribed limits. The FDIC has examination authority
over all insured depository institutions, including Columbia Federal, 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.
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 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.
These rates are not expected to change in 1998.
Columbia Federal is a member of the SAIF and its deposit accounts are
insured by the FDIC up to the prescribed limits. Columbia Federal had $90.0
million in SAIF-insured deposits at March 31, 1995. Columbia Federal paid a
special assessment of $592,000 in November 1996, which was accounted for and
recorded as of September 30, 1996. This assessment was tax-deductible but
reduced earnings for the year ended September 30, 1996.
The FDIC has examination authority over all insured depository
institutions, including Columbia Federal, 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.
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FRB REGULATIONS
FRB regulations currently require savings associations to maintain
reserves of 3% of net transaction accounts (primarily NOW accounts) up to $47.8
million (subject to an exemption of $4.7 million), and of 10% of net
transaction accounts in excess of $47.8 million. At September 30, 1997,
Columbia Federal was in compliance with its reserve requirements.
FEDERAL HOME LOAN BANKS
The FHLBs provide credit to their members in the form of advances. See
"THE BUSINESS OF COLUMBIA FEDERAL - Deposits and Borrowings." Columbia Federal
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 Columbia Federal's residential
mortgage loans, home purchase contracts, and similar obligations at the
beginning of each year, and 5% of its advances from the FHLB. Columbia Federal
is in compliance with this requirement with an investment in stock of the FHLB
of Cincinnati of $1,260,000 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
CFKY and Columbia Federal are each subject to the federal tax laws and
regulations which apply to corporations generally. In addition to the regular
income tax, CFKY and Columbia Federal 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. However, 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,
1996. 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 does 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.
Columbia Federal's average gross receipts for the three tax years ending
on September 30, 1997, is $8.0, and as a result, Columbia Federal does not
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, including Columbia Federal, 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
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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. For tax years 1995, 1994 and 1993,
Columbia Federal used the percentage of taxable income method because such
method provided a higher bad debt deduction than the experience 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 debt 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 after December 31, 1995, 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 Columbia
Federal to CFKY is deemed paid out of its pre-1988 reserves under these rules,
the pre-1988 reserves would be reduced and Columbia Federal'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, Columbia Federal's pre-1988 reserves for tax purposes totaled
approximately $800,000. Columbia Federal believes it had approximately $3.1
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 Columbia Federal
will have current or accumulated earnings and profits in subsequent years.
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The tax returns of Columbia Federal have been audited or closed without
audit through fiscal year 1993. 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 Columbia Federal.
OHIO TAXATION
Under Ohio law, Columbia Federal would be subject to the special Ohio
corporation franchise tax applicable only to financial institutions if, among
other factors, it has sufficient nexus with Ohio for such tax to be permissible
under the United States Constitution. Columbia Federal believes that presently
it does not have such nexus with Ohio and is not subject to the Ohio tax.
Because it is a corporation organized under Ohio law, CFKY is subject to the
Ohio corporation franchise tax, which, as applied to CFKY, is a tax measured by
both net earnings and net worth. Tax liability 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 or (ii) 0.582% of taxable net worth. Under
these alternative 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
CFKY, 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
consequence 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 CFKY.
KENTUCKY TAXATION
The Commonwealth of Kentucky imposes no income or franchise taxes on
savings institutions. However, CFKY (on an unconsolidated basis) must pay a
Kentucky state income tax, as well as a tax on capital. The tax on income is
4.0% for the first $25,000 of taxable income, 5.0% for the next $25,000, 6.0%
for the next $50,000, 7.0% for the next $150,000 and 8.25% for all income over
$250,000. The tax on capital is .0021 times the capital employed.
Columbia Federal is subject to an annual Kentucky ad valorem tax. Assessed
at the beginning of each calendar year, this tax is 0.1% of Columbia Federal's
savings accounts, common stock, capital and retained income with certain
deductions allowed for amounts borrowed by depositors and for securities
guaranteed by the U.S. Government or certain of its agencies. During the year
ended September 31, 1996, the amount of such expense for Columbia Federal was
$95,000.
THE CONVERSION
THE OTS HAS APPROVED THE PLAN, SUBJECT TO THE APPROVAL OF THE PLAN BY THE
MEMBERS OF COLUMBIA FEDERAL ENTITLED TO VOTE ON THE PLAN AND SUBJECT TO THE
SATISFACTION OF CERTAIN OTHER CONDITIONS IMPOSED BY THE OTS. OTS APPROVAL DOES
NOT CONSTITUTE A RECOMMENDATION OR ENDORSEMENT OF THE PLAN.
GENERAL
On October 9, 1997, the Board of Directors of Columbia Federal unanimously
adopted a Plan of Conversion, which it amended on December 11, 1997, and
recommended that the voting members of Columbia Federal approve the Plan at the
Special Meeting to be held on _______________, 1998. During and upon completion
of the Conversion, Columbia Federal will continue to provide the
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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 1,717,000 and 2,323,000
Common Shares are expected to be offered in the Subscription Offering and the
Community Offering. In the Community Offering, preference will be given to
natural persons residing in Boone County and Kenton County, Kentucky, at a
price of $10 per share. 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 actual number of shares sold in connection with the
Conversion will be determined based upon the final determination of the pro
forma market value of Columbia Federal at the completion of the Subscription
Offering and the Community Offering. See "Pricing and Number of Common Shares
to be Sold."
The Common Shares will be offered in the Subscription Offering to (1) each
account holder of Columbia Federal who, as of September 30, 1996, had a
Qualifying Deposit ("Eligible Account Holders"), (2) the ESOP, (3) each account
holder of Columbia Federal who, as of December 31, 1997, had a Qualifying
Deposit ("Supplemental Eligible Account Holders"), and (4) each account holder
of Columbia Federal having a savings deposit of record with Columbia Federal on
________ (the "Voting Record Date") and borrowers of record on the Voting
Record Date whose loans were in existence on December 16, 1995 (such depositors
and borrowers as of _________, collectively, the "Voting Members"). Any Common
Shares not subscribed for in the Subscription Offering may be sold 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 either Boone County or Kenton County, Kentucky.
Under OTS regulations, the Community Offering must be completed within 45 days
after completion of the Subscription Offering, unless such period is extended
by Columbia Federal with the approval of the OTS. If the Community Offering is
determined not to be feasible, an occurrence that is not currently anticipated,
the Board of Directors of Columbia Federal will consult with the OTS to
determine an appropriate alternative method of selling unsubscribed Common
Shares. No alternative sales methods are currently planned.
OTS regulations require the completion of the Conversion within 24 months
after the date of the approval of the Plan by the Voting Members of Columbia
Federal. The completion of the Conversion will be subject to market conditions
and other factors beyond Columbia Federal'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 Columbia Federal. In such circumstances, Columbia Federal may also
incur substantial additional printing, legal and accounting expenses in
completing the Conversion. In the event the Conversion is not successfully
completed, Columbia Federal will be required to charge all Conversion expenses
against current earnings.
The following is a summary of the material aspects of the Conversion. The
summary is qualified in its entirety by reference to the provisions of the
Plan, a copy of which may be inspected at each office of Columbia Federal and
at the office of the OTS. The Plan is also filed as an exhibit to the
Registration Statement of which this Prospectus is a part, and copies of the
Registration Statement may be obtained from the SEC. See "ADDITIONAL
INFORMATION."
PRINCIPAL EFFECTS OF THE CONVERSION
VOTING RIGHTS. Deposit holders who are members of Columbia Federal in its
mutual form will have no voting rights in Columbia Federal as converted and
will not participate, therefore, in the election of directors or otherwise
control Columbia Federal's affairs. After the Conversion, voting rights in
Columbia Federal will be vested exclusively in CFKY as the sole shareholder of
Columbia Federal. Voting rights in CFKY will be held exclusively by its
shareholders. Each holder of CFKY's Common Shares will be entitled to one vote
for each Common Share owned on any matter to be considered by CFKY's
shareholders. See "DESCRIPTION OF AUTHORIZED SHARES."
DEPOSIT ACCOUNTS AND LOANS. Savings accounts in Columbia Federal, as
converted, will be equivalent in amount, interest rate and other terms to the
present savings accounts in Columbia Federal, and the existing FDIC insurance
on 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 Columbia
Federal.
TAX CONSEQUENCES. The consummation of the Conversion is expressly
conditioned on receipt by Columbia Federal of a private letter ruling from 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 Code. Columbia
Federal intends to proceed with the Conversion based upon an opinion rendered
by its special counsel, Vorys, Sater, Seymour and Pease, to the following
effect:
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(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 Columbia Federal in its mutual form or in its stock form as a result of
the Conversion. Columbia Federal in its mutual form and Columbia Federal
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 Columbia Federal upon the
receipt of money from CFKY in exchange for the capital stock of Columbia
Federal, as converted;
(3) The assets of Columbia Federal will have the same basis in its
hands immediately after the Conversion as it had in its hands immediately
prior to the Conversion, and the holding period of the assets of Columbia
Federal after the Conversion will include the period during which the
assets were held by Columbia Federal before the Conversion;
(4) No gain or loss will be recognized to the deposit account holders
of Columbia Federal upon the issuance to them, in exchange for their
respective withdrawable deposit accounts in Columbia Federal immediately
prior to the Conversion, of withdrawable deposit accounts in Columbia
Federal immediately after the Conversion, in the same dollar amount as
their withdrawable deposit accounts in Columbia Federal 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 Columbia Federal, as described below;
(5) The basis of the withdrawable deposit accounts in Columbia
Federal held by its deposit account holders immediately after the
Conversion will be the same as the basis of their deposit accounts in
Columbia Federal 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
(hereinafter defined) 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 Columbia
Federal 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, Columbia Federal will be
treated as if there had been no reorganization. The taxable year of
Columbia Federal will not end on the effective date of the Conversion and,
immediately after the Conversion, Columbia Federal in its stock form will
succeed to and take into account the tax attributes of Columbia Federal in
its mutual form immediately prior to the Conversion, including Columbia
Federal's earnings and profits or deficit in earnings and profits;
(9) The bad debt reserves of Columbia Federal in its mutual form
immediately prior to the Conversion will not be required to be restored to
the gross income of Columbia Federal 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 Columbia Federal in its stock
form as they would have had if there had been no Conversion. Columbia
Federal in its stock form will succeed to and take into account the dollar
amounts of those accounts of Columbia Federal in its mutual form which
represent bad debt reserves in respect of which Columbia Federal 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 Columbia Federal available for the subsequent
distribution of dividends within
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the meaning of Section 316 of the Code. The creation of the
Liquidation Account on the records of Columbia Federal 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.
Columbia Federal 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.
Columbia Federal has also received an opinion from VonLehman & Company
Inc., Ft. Mitchell, Kentucky, to the effect that the tax effects of the
Conversion under Kentucky law are substantially the same as they are under
federal law.
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
Columbia Federal in its present mutual form, each depositor in Columbia Federal
would receive a pro rata share of any assets of Columbia Federal 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 Columbia Federal at the time of
liquidation.
In the event of a complete liquidation of Columbia Federal in its stock
form after the Conversion, each savings depositor as of September 30, 1996, and
December 31, 1997, would have a claim of the same general priority as the
claims of all other general creditors of Columbia Federal. 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. The depositor would
have no interest in the assets of Columbia Federal above that amount. Such
assets would be distributed to CFKY as the sole shareholder of Columbia
Federal.
For the purpose of granting a limited priority claim to the assets of
Columbia Federal in the event of a complete liquidation thereof to Eligible
Account Holders and Supplemental Eligible Account Holders who continue to
maintain savings accounts at Columbia Federal after the Conversion, Columbia
Federal will, at the time of Conversion, establish the Liquidation Account in
an amount equal to the regulatory capital of Columbia Federal as of the latest
practicable date prior to the Conversion at which such regulatory capital can
be determined. For this purpose, Columbia Federal shall use the regulatory
capital figure no later than that set forth in its latest statement of
financial condition contained in the Prospectus. The Liquidation Account will
not operate to restrict the use or application of any of the regulatory capital
of Columbia Federal.
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, as the case may be.
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 any annual closing date of Columbia Federal 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 Eligibility Record Date or 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 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 converted Columbia Federal
(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 CFKY as the sole
shareholder of Columbia Federal. Any assets remaining after satisfaction of
such liquidation rights and the claims of
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Columbia Federal's creditors would be distributed to CFKY as the sole
shareholder of Columbia Federal. No merger, consolidation, purchase of bulk
assets or similar combination or transaction with another 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
The Boards of Directors of Columbia Federal and CFKY will interpret the
Plan. To the extent permitted by law, all interpretations of the Plan by the
Boards of Directors of Columbia Federal and CFKY will be final. The Plan may
be amended by the Boards of Directors of Columbia Federal and CFKY at any time
before completion of the Conversion with the concurrence of the OTS. If
Columbia Federal and CFKY determine upon advice of counsel and after
consultation with the OTS 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 or
her funds promptly refunded with interest. Any person who elects to decrease
his subscription will have the appropriate portion of his or her funds promptly
refunded with interest.
CONDITIONS AND TERMINATION
The completion of the Conversion requires the approval of the Plan and the
adoption of the Federal Stock Charter and Federal Stock Bylaws by the Voting
Members of Columbia Federal at the Special Meeting and 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 Columbia Federal 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.
SUBSCRIPTION OFFERING
THE SUBSCRIPTION OFFERING WILL EXPIRE AT ___ _.M., EASTERN TIME, ON THE
SUBSCRIPTION EXPIRATION DATE. SUBSCRIPTION RIGHTS NOT EXERCISED BEFORE THE
SUBSCRIPTION EXPIRATION DATE WILL BE VOID, WHETHER OR NOT CFKY 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 shares must
represent to CFKY that the subscriber is purchasing such shares for the
subscriber's own account and that the subscriber 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 such 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 Columbia Federal at the Special Meeting.
The preference categories for the allocation of Common Shares, which have
been established by the Plan in accordance with applicable regulations, are as
follows:
Category 1. Eligible Account Holders will receive, without payment,
nontransferable subscription rights to purchase up to the greater of (i)
the number of Common Shares permitted to be purchased in the Community
Offering, (ii) .10% of the total number of Common Shares sold in
connection with the Conversion, or (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 of
which the numerator 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
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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. See "Limitations on Purchases of Common Shares."
If the exercise of subscription rights in this Category 1 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 lesser. 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. No fractional shares will be
issued. The subscription rights of the Eligible Account Holders are
subordinate to the limited priority right of the ESOP set forth in the
following paragraph.
Category 2. The ESOP will receive, without payment, nontransferable
subscription rights to purchase up to 10% of the Common Shares sold in
connection with the Conversion. The subscription rights of the ESOP will be
subordinate to the subscription rights in Category 1, except that if the
final pro forma market value of Columbia Federal exceeds the maximum of the
Valuation Range, the ESOP shall have first priority with respect to the
amount sold in excess of the maximum of the Valuation Range. If the ESOP
is unable to purchase all or part of the Common Shares for which it
subscribes due to an oversubscription in Category 1, the ESOP may purchase
Common Shares on the open market or may purchase authorized but unissued
shares of CFKY. If the ESOP purchases authorized but unissued shares from
CFKY, such purchases would have a dilutive effect on the interests of
CFKY's shareholders.
Category 3. Supplemental Eligible Account Holders will receive,
without payment, non-transferable subscription rights to purchase up to the
greater of (i) the number of Common Shares permitted to be purchased in the
Community Offering, (ii) .10% of the total number of Common Shares sold in
connection with the Conversion, or (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 of which
the numerator 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. See "Limitations
on Purchases of Common Shares."
If the exercise of subscription rights in this Category 3 results in
an over-subscription, 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 lesser. 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.
Subscription rights received in this Category 3 will be subordinate to
the subscription rights in Categories 1 and 2.
Category 4. All Voting Members who are not Eligible Account
Holders or Supplemental Eligible Account Holders ("Other Eligible Members")
will receive nontransferable subscription rights to purchase Common Shares
in an amount up to the greater of the number permitted to be purchased in
the Community Offering or .10% of the total number of Common Shares sold in
connection with the Conversion, subject to the overall purchase limitations
set forth in Section 10 of the Plan. See "Limitations on Purchases of
Common Shares." In the event of an oversubscription in this Category 4,
the available shares will be allocated among subscribing Other Eligible
Members on an equitable basis in the same proportion that their respective
subscriptions bear to the total amount of all subscriptions in this
Category 4.
Subscription rights received in this Category 4 will be subordinate to
the subscription rights in Categories 1 through 3.
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 sales of the shares subscribed for would be in violation of any
applicable statutes, regulations or rules.
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CFKY 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 all of the following apply: (i) a small number of
persons otherwise eligible to subscribe for Common 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 CFKY 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 Columbia Federal and CFKY.
COMMUNITY OFFERING
Concurrently with the Subscription Offering, CFKY is hereby offering
Common Shares in the Community Offering, subject to the limitations set forth
below, to the extent such shares remain available based upon the final Pro
Forma Value and after the satisfaction of all orders received in the
Subscription Offering. If subscriptions are received in the Subscription
Offering for at least 2,323,000 Common Shares, Common Shares may not be offered
in the Community Offering. If subscriptions for at least 2,323,000 Common
Shares have not been received by the Subscription Expiration Date, CFKY
anticipates offering Common Shares in the Community Offering to the extent such
shares remain available after the satisfaction of all orders received in the
Subscription Offering. All sales of Common Shares in the Community Offering
will be at the same price per share as the sales of Common Shares in the
Subscription Offering. THE COMMUNITY OFFERING MAY EXPIRE AT ANY TIME WHEN
ORDERS FOR AT LEAST 2,323,000 COMMON SHARES HAVE BEEN RECEIVED, BUT IN NO EVENT
LATER THAN 45 DAYS AFTER THE SUBSCRIPTION EXPIRATION DATE, OR ___, 1998, UNLESS
EXTENDED BY COLUMBIA FEDERAL AND CFKY WITH THE APPROVAL OF THE OTS, IF
NECESSARY. IN ACCORDANCE WITH THE PLAN, THE OFFERING MAY NOT BE EXTENDED
BEYOND ______, 2000.
In the event shares are available in the Community Offering, members of
the general public may purchase up to 15,000 Common Shares. See "Limitations
on Purchases of Common Shares." If an insufficient number of shares is
available to fill all of the orders received in the Community Offering, the
available shares will be allocated in the Community Offering in a manner to be
determined by the Board of Directors of CFKY, subject to the following:
(i) In the Community Offering, preference will be given to natural
persons who reside in either Boone County or Kenton County, Kentucky, the
counties in which the offices of Columbia Federal are located;
(ii) Orders received in the Community Offering will first be filled
up to a maximum of two percent 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;
(iii) No person, together with any Associate and groups Acting in
Concert, may purchase more than 15,000 Common Shares in the Community
Offering; and
(iv) The right of any person to purchase Common Shares in the
Community Offering is subject to the right of CFKY and Columbia Federal 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,
maintained a bona fide residence within, as appropriate, Boone County or Kenton
County, Kentucky, or a jurisdiction in which the Common Shares are being
offered for sale.
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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 such shares are available, the
minimum number of shares that may be purchased by any party is 25. No
fractional shares will be issued.
Currently, no person, together with Associates and groups Acting in
Concert, may purchase more than 30,000 Common Shares. Subject to any required
regulatory approval and the requirements of applicable laws and regulations,
but without further approval of the members of Columbia Federal, purchase
limitations may be increased or decreased at the sole discretion of the Boards
of Directors of CFKY and Columbia Federal at any time. If such amount is
increased, 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 CFKY and Columbia Federal may,
in their sole discretion, increase the maximum purchase limitation referred to
above up to 10% of the Common Shares sold in connection with the Conversion,
provided that orders for shares exceeding 5% of the shares to be issued in the
Conversion shall not exceed, in the aggregate, 10% of the shares to be issued
in 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 shares permitted to be subscribed for by such person.
"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 Columbia Federal or CFKY), 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 Columbia Federal or CFKY); or
(c) constituted 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 purchase of Common Shares or is
instrumental in obtaining that credit. Companies (other than Columbia Federal
or CFKY), 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 Columbia Federal are not
deemed to be Acting in Concert solely by reason of their membership on the
Board of Directors of Columbia Federal; (ii) an associate of a person (an
"Associate") is (a) any corporation or organization (other than Columbia
Federal) 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 Columbia Federal. Executive officers and directors
of Columbia Federal and their Associates may not purchase, in the aggregate,
more than 33.7% of the total number of Common Shares sold in the Conversion.
Shares acquired by the ESOP will not, pursuant to regulations governing the
Conversion, be aggregated with the shares purchased by the directors, officers
and employees of Columbia Federal.
Purchases of Common Shares are also subject to the change in control
regulations of the OTS. Such regulations 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. See "RESTRICTIONS ON ACQUISITION OF
COLUMBIA FEDERAL AND CFKY AND RELATED ANTI-TAKEOVER PROVISIONS - Federal Law
and Regulation."
After the Conversion, Common Shares, except for shares purchased by
officers and directors of CFKY, will be freely transferable, subject to OTS
regulations. See "Restrictions on Transferability of Common Shares by
Directors and Officers."
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PLAN OF DISTRIBUTION
The offering of the Common Shares is made only pursuant to this
Prospectus, which is available to all eligible subscribers by mail. See
"ADDITIONAL INFORMATION." Additional copies are available at the offices of
Columbia Federal. Sales of Common Shares will be made primarily by registered
representatives affiliated with Webb. CFKY 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 CFKY and Columbia Federal to
participate in the sale of Common Shares, except that officers, directors and
employees will not participate in the sale of Common Shares to residents of any
state in which such persons have not met such state's requirements for
participation. No officer, director or employee of CFKY or Columbia Federal
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 CFKY in marketing the Common Shares, CFKY has retained Webb,
which is a broker-dealer registered with the SEC and a member of the National
Association of Securities Dealers, Inc. (the "NASD"). Webb will consult with
and advise CFKY and assist with the sale of the Common Shares on a best efforts
basis in connection with the Conversion. The services to be rendered by Webb
include assisting CFKY in conducting the Subscription Offering and the
Community Offering and educating Columbia Federal personnel about the
Conversion process. Webb has no obligation to purchase any of the Common
Shares.
For its services, Webb will receive a commission equal to 1.50% of the
aggregate purchase price paid for shares sold to residents of Boone County and
Kenton County, Kentucky; 1.25% of the aggregate purchase price of Common Shares
sold to residents of counties contiguous to Boone County or Kenton County,
Kentucky; and 0.75% of the aggregate purchase price of Common Shares sold to
persons not residents of Boone County or Kenton County, Kentucky, or counties
contiguous thereto. No commission will be paid on shares purchased by Columbia
Federal's directors, executive officers or employees or their immediate family
members or the ESOP. In the event that Columbia Federal requests Webb to
obtain the assistance of other broker-dealers ("Selected Dealers") to sell
Common Shares in the Community Offering, Webb will be paid a commission of 5.5%
of the aggregate purchase price of Common Shares sold by Selected Dealers, from
which the Selected Dealers will be paid, instead of the commission based upon
the residence of the purchasers. A management fee of $25,000 has already been
paid to Webb, and such amount will be deducted from the commission. Columbia
Federal will reimburse Webb for legal fees in an amount not to exceed $35,000.
See "THE CONVERSION - Plan of Distribution."
Columbia Federal has agreed to indemnify Webb against certain claims or
liabilities, including certain liabilities under the Securities Act of 1933, as
amended (the "Securities Act").
EFFECT OF EXTENSION OF COMMUNITY OFFERING
If the Community Offering extends beyond 45 days after the Subscription
Expiration Date, persons who have subscribed for Common Shares in the
Subscription Offering or in the Community Offering will receive a written
notice that until a date specified in the notice, they have the right to
increase, decrease or rescind their subscriptions for Common Shares. 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 shall have the appropriate portion of
his funds promptly refunded with interest.
USE OF ORDER FORMS
Subscriptions for Common Shares in the Subscription Offering and the
Community Offering may be made only by completing and submitting an Order Form.
Any person who desires to subscribe for Common Shares in the Subscription
Offering must do so by delivering to CFKY at 2497 Dixie Highway, Ft. Mitchell,
Kentucky 41017-3085, or at any of its branches by mail or in person, prior to
___ _.m., Eastern Time, on ______, 1998, a properly executed and completed
original Order Form, together with full payment of the subscription price of
$10.00 for each share for which subscription is made. Photocopies or
telecopies of Order Forms will not be accepted. See "ADDITIONAL INFORMATION."
THE FAILURE TO DELIVER A PROPERLY EXECUTED ORIGINAL ORDER FORM AND FULL PAYMENT
IN A MANNER BY WHICH THEY ARE ACTUALLY RECEIVED BY CFKY NO LATER THAN ___ _.M.
ON THE SUBSCRIPTION EXPIRATION DATE WILL PRECLUDE THE PURCHASE OF COMMON SHARES
IN THE OFFERING.
AN EXECUTED ORDER FORM, ONCE RECEIVED BY CFKY, MAY NOT BE MODIFIED,
AMENDED OR RESCINDED WITHOUT THE CONSENT OF CFKY, UNLESS (I) THE COMMUNITY
OFFERING IS NOT COMPLETED WITHIN 45 DAYS AFTER THE SUBSCRIPTION EXPIRATION
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DATE, OR (II) THE FINAL VALUATION OF COLUMBIA FEDERAL, AS CONVERTED, IS LESS
THAN $17,170,000 OR MORE THAN $26,714,500. IF EITHER OF THOSE EVENTS OCCUR,
PERSONS WHO HAVE SUBSCRIBED FOR COMMON SHARES IN THE SUBSCRIPTION OFFERING OR
IN THE COMMUNITY OFFERING WILL RECEIVE WRITTEN NOTICE THAT UNTIL A DATE
SPECIFIED IN THE NOTICE, THEY HAVE A RIGHT TO AFFIRM, INCREASE, DECREASE OR
RESCIND THEIR SUBSCRIPTIONS. ANY PERSON WHO DOES NOT AFFIRMATIVELY ELECT TO
CONTINUE HIS OR HER SUBSCRIPTION OR ELECTS TO RESCIND HIS OR HER SUBSCRIPTION
DURING ANY SUCH EXTENSION WILL HAVE ALL OF HIS OR HER FUNDS PROMPTLY REFUNDED
WITH INTEREST. ANY PERSON WHO ELECTS TO DECREASE HIS OR HER SUBSCRIPTION
DURING ANY SUCH EXTENSION WILL HAVE THE APPROPRIATE PORTION OF HIS OR HER FUNDS
PROMPTLY REFUNDED WITH INTEREST.
PAYMENT FOR COMMON SHARES
Payment of the subscription price for all Common Shares for which
subscription is made must accompany all completed Order Forms and Forms of
Certification 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 payable to the order of Columbia Federal, or (iii) by
authorization of withdrawal from savings accounts in Columbia Federal (other
than non-self-directed IRAs). Wire transfers will not be accepted. Columbia
Federal cannot lend money or otherwise extend credit to any person to purchase
Common Shares, other than the ESOP.
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. Interest will be paid by Columbia Federal on such accounts at Columbia
Federal's passbook rate, currently ______% annual percentage yield, 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 such
check has cleared for payment.
During the Community Offering, Selected Dealers may only solicit
indications of interest from their customers to place orders with Columbia
Federal as of a certain date (the "Order Date") for the purchase of Common
Shares. When and if Columbia Federal believes that enough indications of
interest and orders have been received to consummate the Conversion, Webb will
request, as of the Order Date, Selected Dealers submit orders to purchase
shares for which Selected Dealers have previously received indications of
interest from the Selected Dealers' customers. The Selected Dealers will send
confirmations of the orders to such customers on the next business day after
the Order Date. The Selected Dealers 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
Dealers will be remitted to Columbia Federal. Funds will be returned promptly
in the event the Conversion is not consummated.
Instructions for authorizing withdrawals from savings accounts are
provided in the 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 cancelled and the remaining balance will earn interest at
Columbia Federal's passbook rate subsequent to the withdrawal.
Persons who are beneficial owners of IRAs maintained at Columbia Federal
do not personally have subscription rights related to such account. The
account itself, however, may have subscription rights. In order to utilize
funds in an IRA maintained at Columbia Federal, the funds must be transferred
to a self-directed IRA that permits the IRA funds to be invested in stock. The
beneficial owner of the IRA must direct the trustee of the IRA to use funds
from such account to purchase Common Shares in connection with the Conversion.
Persons who are interested in utilizing IRAs at Columbia Federal to subscribe
for Common Shares should contact the Columbia Federal Stock Information Center
at (___) ___-____ for instructions and assistance.
Subscriptions will not be filled by CFKY until subscriptions have been
received in the Subscription Offering and the Community Offering for up to
1,717,000 Common Shares, the minimum point of the Valuation Range. If the
Conversion is terminated, all funds delivered to CFKY for the purchase of
Common Shares will be returned with interest, and all charges to savings
accounts will be rescinded. Subscribers and other purchasers will be notified
by mail, promptly on completion of the sale of the Common Shares, of the number
of shares for which their subscriptions have been accepted. Certificates
representing Common Shares will be delivered promptly thereafter.
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If the ESOP subscribes for Common Shares in the Subscription Offering, 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.
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 Columbia Federal and their Associates. For purposes of this table,
it has been assumed that 2,020,000 Common Shares will be sold in connection
with the Conversion at $10 per share, that the purchase limitations are not
changed 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>
<CAPTION>
Percent Aggregate
Total of total purchase
Name shares offering price
- ---- ------- -------- ----------
<S> <C> <C> <C>
J. Robert Bluemlein - -% $ -
Kenneth R. Kelly 30,000 1.49 300,000
John C. Layne 10,000 .50 100,000
Daniel T. Mistler 10,000 .50 100,000
Fred A. Tobergte, Sr. 30,000 1.49 300,000
Geraldine Zembrodt 20,000 .99 200,000
Robert V. Lynch 30,000 1.49 300,000
Mary Jane Lucas 5,000 .25 50,000
George Raybourne 2,500 .12 25,000
Edward Schwartz 20,000 .99 200,000
Harold E. Taylor 30,000 1.49 300,000
Abijah Adams 10,000 .50 100,000
Carol S. Margrave 3,000 .15 30,000
------- ---- ----------
200,500 9.93% $2,005,000
</TABLE>
All purchases by executive officers and directors of Columbia Federal are
made for investment purposes only and with no 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
Columbia Federal. Keller, a firm which evaluates and appraises financial
institutions, was retained by Columbia Federal to prepare an appraisal of the
estimated pro forma market value of Columbia Federal as converted. Keller will
receive a fee of $17,000 for its appraisal, which amount includes out-of-pocket
expenses.
The appraisal was prepared by Keller in reliance upon the information
contained herein. Keller also considered the following factors, among others:
the present and projected operating results and financial condition of Columbia
Federal and the economic and demographic conditions in Columbia Federal's
existing market area; the quality and depth of Columbia Federal's management
and personnel; certain historical financial and other information relating to
Columbia Federal and a comparative evaluation of the operating and financial
statistics of Columbia Federal with those of other thrift institutions; the
aggregate size of the offering; the impact of the Conversion on Columbia
Federal's regulatory capital and earnings potential; the trading market for
stock of comparable thrift institutions; the effect of Columbia Federal
becoming a subsidiary of CFKY; and general conditions in the markets for such
stocks.
The Pro Forma Value of Columbia Federal, as converted, is $20,200,000 as
of November 28, 1997. CFKY will issue the Common Shares at a fixed price of
$10.00 per share and, by dividing the price per share into the final Pro Forma
Value, determined at the completion of the Conversion, will determine the
number of shares to be issued. Applicable regulations also require, however,
that the appraiser establish the Valuation Range of 15% on either side of the
Pro Forma Value to allow for fluctuations in the aggregate value of the Common
Shares due to changes in the market for thrift shares and other factors from
the time of commencement of the Subscription Offering until the completion of
the Conversion.
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As of September 30, 1997, the Valuation Range was from $17,170,000 to
$23,230,000, which, based upon a per share offering price of $10.00, will
result in the sale of between 1,717,000 and 2,323,000 Common Shares. In the
event that Keller determines at the close of the Conversion that the aggregate
pro forma value of Columbia Federal is higher or lower than the Pro Forma Value
as of November 28, 1997, but is nevertheless within the Valuation Range, or is
not more than 15% above the maximum point of the Valuation Range, CFKY will
make an appropriate adjustment by raising or lowering the total number of
Common Shares sold in the Conversion consistent with the final Pro Form Value.
If, due to changing market conditions, the final valuation is not between the
minimum of the Valuation Range and 15% above the maximum of the Valuation
Range, subscribers will be given a 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.
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 FINANCIAL AND
STATISTICAL INFORMATION PROVIDED BY COLUMBIA FEDERAL AND ITS INDEPENDENT
AUDITORS. KELLER DID NOT INDEPENDENTLY VERIFY THE FINANCIAL STATEMENTS AND
OTHER INFORMATION PROVIDED BY COLUMBIA FEDERAL AND ITS INDEPENDENT AUDITORS,
NOR DID KELLER VALUE INDEPENDENTLY THE ASSETS OR LIABILITIES OF COLUMBIA
FEDERAL OR CFKY. THE VALUATION CONSIDERS COLUMBIA FEDERAL ONLY AS A GOING
CONCERN AND SHOULD NOT BE CONSIDERED AS AN INDICATION OF THE LIQUIDATION VALUE
OF COLUMBIA FEDERAL. 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 PRICES WITHIN THE
ESTIMATED PRICE RANGE.
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, DC 20552, at the Central
Regional Office of the OTS, 111 East Wacker Drive, Chicago, Illinois 60601, and
at each of the offices of Columbia Federal. It has also been filed as an
exhibit to the Registration Statement.
RESTRICTION ON REPURCHASE OF COMMON SHARES
Federal regulations prohibit CFKY 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 CFKY's
outstanding capital stock during a twelve-month period or except as such a
repurchase would be otherwise approved by the OTS. In addition, after such a
repurchase, Columbia Federal's regulatory capital must equal or exceed all
regulatory capital requirements. Before commencement of such a program, CFKY
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
Columbia Federal 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
Conversion.
RESTRICTIONS ON TRANSFERABILITY OF COMMON SHARES BY DIRECTORS AND OFFICERS
Common Shares purchased by directors or executive officers of CFKY or
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 CFKY to directors, executive officers and their Associates
will bear a legend giving appropriate notice of the restriction imposed upon
the transfer of such Common Shares. In addition, CFKY will give appropriate
instructions to the transfer agent (if any) for CFKY's Common Shares in respect
of the applicable restriction for 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 CFKY or Columbia Federal, or any of their
Associates, may purchase any common shares of CFKY 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 CFKY or shares acquired
by any stock benefit plan of Columbia Federal or CFKY.
The Common Shares, like the stock of most public companies, are subject to
the registration requirements of the Securities Act. Accordingly, the Common
Shares may be offered and sold only in compliance with such registration
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requirements or pursuant to an applicable exemption from registration. Common
Shares received in the Conversion by persons who are not "affiliates" of CFKY
may be resold without registration. Common Shares received by affiliates of
CFKY will be subject to resale restrictions. An "affiliate" of CFKY, 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, CFKY. Rule 144 generally requires that there be publicly available
certain information concerning CFKY 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 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 CFKY 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, 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 Columbia Federal 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 COLUMBIA FEDERAL AND CFKY
AND RELATED ANTI-TAKEOVER PROVISIONS
GENERAL
Federal law and regulation, Ohio law, the Articles of Incorporation and
Code of Regulations of CFKY, the Amended Charter of Columbia Federal and
certain employee benefit plans to be adopted by Columbia Federal and CFKY
contain certain provisions which may deter or prohibit a change of control of
Columbia Federal or CFKY. Such provisions are intended to encourage any
acquiror to negotiate the terms of an acquisition with the Board of Directors
of CFKY, thereby reducing the vulnerability of CFKY 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 have the effect, however, of
discouraging sudden or hostile takeover attempts, 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
because of such devices and provisions. Moreover, such devices and 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, may acquire control of any insured savings
association or holding company unless both (i) 60 days' prior written notice
has been given to the OTS and (ii) 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 either (a)
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 (b) the Director of the OTS
determines 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
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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 Columbia Federal or CFKY 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 is deemed to have acquired beneficial ownership of more
than 10% of the equity securities of CFKY or Columbia Federal if the person
holds any combination of stock and revocable and/or irrevocable proxies of CFKY
under circumstances that give rise to a conclusive control determination or
rebuttable control determination under the OTS' change of 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 CFKY enabling the acquirer (a) to elect one-third or more of
the directors, (b) to cause CFKY's or Columbia Federal's shareholders to
approve the acquisition or corporate reorganization of CFKY or Columbia
Federal, or (c) to exert a controlling influence over a material aspect of the
business operations of CFKY or Columbia Federal, and (ii) acquiring any
combination of voting shares and irrevocable proxies representing more than 25%
of any class of voting shares.
Such three-year restriction does not apply (i) to any offer with a view
toward public resale made exclusively to Columbia Federal or CFKY or to any
underwriter or selling group acting on behalf of Columbia Federal or CFKY, (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 Columbia Federal or CFKY by a corporation whose ownership is or
will be substantially the same as the ownership of Columbia Federal or CFKY if
made more than one year following the date of the Conversion. The foregoing
restriction does not apply to the acquisition of Columbia Federal or CFKY's
capital stock by one or more tax-qualified employee stock benefit plans of CFKY
or Columbia Federal, provided that the plan or plans do not have beneficial
ownership in the aggregate of more than 25% of any class of equity security of
Columbia Federal or CFKY. See "Articles of Incorporation of Columbia Federal"
for a discussion of a five-year restriction on direct or indirect beneficial
ownership of 10% of the outstanding common stock of Columbia Federal.
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. Acquisitions under the Holding Company Act
are governed by the Control Regulations. See "Federal Deposit Insurance Act."
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 a 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 adopted a merger moratorium statute
regulating certain takeover bids affecting certain public corporations with
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 that resulted in such person first becoming an Interested Shareholder.
After the initial three-year moratorium, such a business combination may
not occur unless (1) an exception specifically enumerated in the statute is
applicable to the combination, (2) the combination is approved, at a meeting
held for such purpose, by the affirmative vote of the holders of the issuing
public corporation entitling them to exercise at least two-thirds of the voting
power of the issuing public corporation in the election of directors or of such
different proportion as the articles may provide,
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provided the combination is also approved by the affirmative vote of the
holders of at least a majority of the disinterested shares, 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 may, under certain circumstances, "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.
However, the statute still prohibits for twelve months 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 CFKY do not opt out of the
protection afforded by Chapter 1704. Therefore, the merger moratorium statute
may apply to CFKY.
CONTROL SHARE ACQUISITION. Section 1701.831 of the Ohio Revised Code (the
"Control Share Acquisition Statute") requires that, with certain exceptions,
acquisitions of voting securities which would result in the acquiring
shareholder owning 20%, 33 1/3%, or 50% of the outstanding voting securities of
an Ohio corporation (a "Control Share Acquisition") must be approved in advance
by (a) the holders of at least a majority of the outstanding voting shares of
such corporation represented at a meeting at which a quorum is present, and (b)
a majority of the portion of the outstanding voting shares represented at such
a meeting excluding the voting shares owned by the acquiring shareholder, by
certain other persons who acquire or transfer voting shares after public
announcement of the acquisition or by certain officers of the corporation or
directors of the corporation who are employees of the corporation. The Control
Share Acquisition Statute was intended, in part, to protect shareholders of
Ohio corporations from coercive tender offers.
TAKEOVER BID STATUTE. Ohio law provides that an offeror may not make a
tender offer or request or invitation for tenders that would result in the
offeror beneficially owning more than ten percent of any class of the target
company's equity securities unless such offeror files certain information with
the Ohio Division of Securities (the "Securities Division") and provides such
information to the target company and the offerees within Ohio. The Securities
Division may suspend the continuation of the control bid if the Securities
Division determines that the offeror's filed information does not provide full
disclosure to the offerees of all material information concerning the control
bid. The statute also provides that an offeror may not acquire any equity
security of a target company within two years of the offeror's previous
acquisition of any equity security of the same target company pursuant to a
control bid unless the Ohio offerees may sell such security to the offeror on
substantially the same terms as provided by the previous control bid. The
statute does not apply to a transaction if either the offeror or the target
company is a savings and loan holding company and the proposed transaction
requires federal regulatory approval.
ARTICLES OF INCORPORATION OF CFKY
RESTRICTION ON ACQUISITION OF MORE THAN 10% OF THE COMMON SHARES. The
Articles of Incorporation of CFKY provide that for five years after the
effective date of the Conversion, no person, except the ESOP, may offer to
acquire or acquire the beneficial ownership of more than 10% of any class of
outstanding equity securities of CFKY. If such a prohibited acquisition
occurs, the securities owned by such person in excess of the 10% limit may not
be voted on any matter submitted to the shareholders of CFKY. The term
"person" is defined as an individual, a group acting in concert, a corporation,
a partnership, an association, a joint stock company, a trust, an
unincorporated organization or similar company, a syndicate or any other group
formed for the purpose of acquiring, holding or disposing of the equity
securities of CFKY, but does not include an employee stock ownership plan for
the benefit of the employees of Columbia Federal or CFKY. The term "offer"
includes every offer to buy or otherwise acquire, solicitation of an offer to
sell, tender offer for, or request or invitation for tenders of CFKY's Common
Shares. The ability of management or any other person to solicit revocable
proxies from shareholders will not be restricted by such 10% limit.
ABILITY OF THE BOARD OF DIRECTORS TO ISSUE ADDITIONAL SHARES. The Articles
of Incorporation of CFKY permit the Board of Directors of CFKY to issue
additional common shares and preferred shares. See "DESCRIPTION OF AUTHORIZED
SHARES - General." 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 CFKY.
MATTERS REQUIRING ENLARGED SHAREHOLDER VOTE. Generally, matters requiring
a vote of the shareholders of CFKY may be approved by the holders of a majority
of the voting shares of CFKY. Article Sixth of the Articles of Incorporation
of CFKY provides, however, that, in the event the Board of Directors recommends
against the approval of any of the following matters, the holders of at least
75% of the voting shares of CFKY are required to adopt any such matters.
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<PAGE> 84
(1) A proposed amendment to the Articles of Incorporation of CFKY;
(2) A proposed amendment to the Code of Regulations of CFKY;
(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 CFKY with or into
one or more other corporations;
(5) A proposed combination or majority share
acquisition involving the issuance of shares of CFKY 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 CFKY; or
(7) A proposed dissolution of CFKY.
Officers and directors of CFKY are expected to purchase approximately 9.9%
of the shares issued in connection with the Conversion at the mid-point of the
Valuation Range. In addition, the ESOP intends to purchase 8% of the Common
Shares, and it is anticipated that upon shareholder approval of the RRP, the
RRP will purchase 4% of the outstanding Common Shares. The ESOP trustee must
vote shares allocated under the ESOP as directed by the participants to whom
the shares are allocated and vote unallocated shares in his sole discretion on
mergers, sales of substantially all of CFKY's assets and similar transactions.
The RRP trustees, who are expected to be two directors of CFKY, will vote
shares held by the RRP Trust in their discretion. Thus, officers and directors
will have a significant influence over the vote on such a transaction and may
be able to defeat such a proposal.
ELIMINATION OF CUMULATIVE VOTING. Section 1701.55 of the Ohio Revised
Code provides in substance and effect that shareholders of a for profit
corporation which is not a savings bank 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 CFKY 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.
FEDERAL STOCK CHARTER OF COLUMBIA FEDERAL
For a five-year period following the date of the completion of the
Conversion, no person may, directly or indirectly, acquire or offer to acquire
the beneficial ownership of more than 10% of Columbia Federal's outstanding
common shares. The acquisition of more than 10% of the Common Shares of CFKY
would constitute an indirect acquisition of the common shares of Columbia
Federal and would, therefore, be prohibited by the Federal Stock Charter of
Columbia Federal. The beneficial ownership limitation prohibition does not
apply, however, to purchases of Columbia Federal's common shares by one or more
tax-qualified employee stock benefit plans of Columbia Federal. Any holder of
shares of CFKY or Columbia Federal beneficially owned in violation of such
prohibition will not be entitled to vote on matters submitted to a vote of
shareholders, and such shares shall not be voted by any person or be counted as
voting shares in connection with any matter submitted to shareholders for a
vote. The term "person" includes an individual, a group acting in concert, a
corporation, a partnership, an association, a joint stock company, a trust, an
unincorporated organization or similar company, a syndicate or any other group
formed for the purpose of acquiring, holding or disposing of the equity
securities of CFKY or Columbia Federal. The term
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<PAGE> 85
"offer" includes every offer to buy or otherwise acquire, solicitation of an
offer to sell, tender offer for, or request or invitation for tenders of CFKY's
Common Shares or Columbia Federal's common shares.
EMPLOYEE BENEFIT PLANS
Adoption of the ESOP may also have an anti-takeover effect. The ESOP may
become the owner of a sufficient percentage of the total outstanding Common
Shares that the decision whether to tender the shares held by the ESOP to a
potential acquirer may prevent a takeover. See "DESCRIPTION OF AUTHORIZED
SHARES" and "MANAGEMENT OF COLUMBIA FEDERAL - Employee Stock Ownership Plan."
DESCRIPTION OF AUTHORIZED SHARES
GENERAL
The Articles of Incorporation of CFKY authorize the issuance of six
million common shares and one million preferred shares. The common shares and
the preferred shares authorized by CFKY's Articles of Incorporation have no par
value. Upon receipt by CFKY of the purchase price therefor and subsequent
issuance thereof, each Common Share will be fully paid and nonassessable. The
Common Shares of CFKY 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 CFKY will be issued in connection with the
Conversion. The Board of Directors of CFKY 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 CFKY, including the material express terms of such shares as set forth in
CFKY's Articles of Incorporation.
LIQUIDATION RIGHTS
In the event of the complete liquidation or dissolution of CFKY, the
holders of the Common Shares will be entitled to receive all assets of CFKY
available for distribution, in cash or in kind, after payment or provision for
payment of (i) all debts and liabilities of CFKY, (ii) any accrued dividend
claims, and (iii) any interests in the Liquidation Account.
VOTING RIGHTS
The holders of the Common Shares will possess exclusive voting rights in
CFKY, unless preferred shares are issued. 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.
Section 1701.55 of the Ohio Revised Code provides in substance and effect
that shareholders of a for profit corporation which is not a savings bank and
which is incorporated under Ohio law must initially be granted the right to
cumulate votes in the election of directors. 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 CFKY have been amended to eliminate cumulative voting. See
"RESTRICTIONS ON ACQUISITION OF COLUMBIA FEDERAL AND CFKY AND RELATED
ANTI-TAKEOVER PROVISIONS - Articles of Incorporation of CFKY -- Elimination of
Cumulative Voting."
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<PAGE> 86
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" 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 CFKY 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 CFKY; "THE
CONVERSION - Restrictions on Transferability 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 COLUMBIA FEDERAL AND CFKY AND RELATED ANTI-TAKEOVER PROVISIONS"
for information regarding regulatory restrictions on acquiring Common Shares.
REGISTRATION REQUIREMENTS
CFKY will register its common shares with the SEC pursuant to Section
12(g) of the Exchange Act prior to or promptly upon 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.
LEGAL MATTERS
Certain legal matters pertaining to the Common Shares and the federal tax
consequences of the Conversion will be passed upon for Columbia Federal by
Vorys, Sater, Seymour and Pease, 221 E. Fourth Street, Cincinnati, Ohio 45202.
Kentucky tax consequences of the Conversion will be passed upon for Columbia
Federal by VonLehman & Company Inc., certified public accountants. Certain
legal matters will be passed upon for Webb by its counsel, Breyer & Aguggia,
Suite 470 East, 1300 I Street, N.W., Washington, DC 20005.
EXPERTS
The financial statements of Columbia Federal for the years ended September
30, 1997, 1996 and 1995, included in this Prospectus have been audited by
VonLehman & Company Inc., certified public accountants, as stated in their
report appearing herein and have been so included in reliance upon such report
given upon the authority of that firm as experts in accounting and auditing.
Keller has consented to the publication herein of the summary of its
letter to Columbia Federal setting forth its opinion as to the estimated pro
forma market value of Columbia Federal as converted and to the use of its name
and statements with respect to it appearing herein.
ADDITIONAL INFORMATION
CFKY has filed with the SEC a Registration Statement on Form S-1 (File No.
________) under the Securities 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
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<PAGE> 87
information may be inspected at the public reference facilities maintained by
the SEC at 450 Fifth Street, N.W., Washington, DC 20549, and copies may be
obtained from the SEC at prescribed rates. The SEC maintains a World Wide Web
site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file with the SEC,
including CFKY.
Columbia Federal has filed an Application for Approval of Conversion (the
"Application") with the OTS. This document omits certain information contained
in the Application. The Application, the exhibits and the financial statements
that are part thereof may be inspected at the offices of the OTS, 1700 G
Street, N.W., Washington, DC 20552, and the Central Regional Office, 200 W.
Madison Street, Suite 1300, Chicago, Illinois 60606.
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COLUMBIA FEDERAL SAVINGS BANK
FORT MITCHELL, KENTUCKY
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
SEPTEMBER 30, 1997
PAGE
Independent Auditors' Report F-2
Financial Statements
Statements of Financial Condition F-3
Statements of Income F-4
Statements of Retained Earnings F-5
Statements of Cash Flows F-6
Notes to the Financial Statements F-7 - F-23
F-1
<PAGE> 89
INDEPENDENT AUDITORS' REPORT
Board of Directors
Columbia Federal Savings Bank
Fort Mitchell, Kentucky
We have audited the accompanying statements of financial condition of
Columbia Federal Savings Bank as of September 30, 1997 and 1996 and the
related statements of income, retained earnings, and cash flows for the years
ended September 30, 1997, 1996 and 1995. These financial statements are the
responsibility of the Savings 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 Columbia Federal Savings
Bank at September 30, 1997 and 1996, and the results of its operations and
its cash flows for the years ended September 30, 1997, 1996 and 1995 in
conformity with generally accepted accounting principles.
Fort Mitchell, Kentucky
October 30, 1997
F-2
<PAGE> 90
COLUMBIA FEDERAL SAVINGS BANK
FORT MITCHELL, KENTUCKY
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
ASSETS
September 30,
------------------
1997 1996
--------- --------
(In Thousands)
<S> <C> <C>
ASSETS
Cash and due from Banks $ 612 $ 549
Interest Bearing Deposits in Other Banks 6,215 2,498
Total Cash and Cash Equivalents 6,827 3,047
Investment Securities
Held to Maturity, At Cost (Market Value of
$13,068 for 1997 and $13,949 for 1996) 13,069 13,995
Available-for-Sale, At Market Value 1,003 1,002
Mortgage-Backed Securities, At Cost (Market Value of
$17,893 for 1997 and $18,585 for 1996) 17,862 18,751
Loans Receivable, Net 61,578 67,741
Interest Receivable 712 818
Premises and Equipment, Net 1,595 1,329
Federal Home Loan Bank Stock, At Cost 1,260 1,174
Deferred Federal Income Tax Asset - 66
Federal Income Tax - Refund Receivable 13 -
Other Assets 87 175
-------- --------
TOTAL ASSETS $104,006 $108,098
======== ========
LIABILITIES AND EQUITY
LIABILITIES
Deposits $ 90,195 $ 94,657
Advances from Borrowers for Taxes
and Insurance 460 263
Accrued Federal Income Tax Liability - 7
Deferred Federal Income Tax Liability 162 -
Other Liabilities 98 634
-------- --------
TOTAL LIABILITIES 90,915 95,561
-------- --------
EQUITY
Retained Earnings - Substantially Restricted 13,090 12,537
Unrealized Gain on Available-for-Sale Securities,
Net of Related Taxes 1 -
-------- --------
TOTAL EQUITY 13,091 12,537
-------- --------
TOTAL LIABILITIES AND EQUITY $104,006 $108,098
======== ========
</TABLE>
See auditors' report and accompanying notes.
F-3
<PAGE> 91
COLUMBIA FEDERAL SAVINGS BANK
FORT MITCHELL, KENTUCKY
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------
1997 1996 1995
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
INTEREST INCOME
Loans $5,802 $5,869 $6,014
Mortgage-Backed Securities 1,143 1,214 981
Investments 854 876 777
Interest-Bearing Deposits 197 239 171
------ ------ ------
Total Interest Income 7,996 8,198 7,943
------ ------ ------
INTEREST EXPENSE
Deposits 4,426 4,578 4,383
FHLB Advances 25 - 63
------ ------ ------
Total Interest Expense 4,451 4,578 4,446
------ ------ ------
NET INTEREST INCOME 3,545 3,620 3,497
------ ------ ------
PROVISION FOR LOSSES ON LOANS 113 8 13
------ ------ ------
Net Interest Income After Provision for
Losses on Loans 3,432 3,612 3,484
------ ------ ------
NON-INTEREST INCOME 88 96 92
------ ------ ------
NON-INTEREST EXPENSE
Salaries and Employee Benefits 1,680 1,458 1,372
Occupancy Expense of Premises 242 228 206
Federal Deposit Insurance Premiums 88 809 213
Data Processing Services 112 109 103
Advertising 106 104 59
Other 439 412 418
------ ------ ------
Total Non-Interest Expense 2,667 3,120 2,371
------ ------ ------
Income Before Federal Income Tax Expense 853 588 1,205
FEDERAL INCOME TAX EXPENSE 300 200 389
------ ------ ------
NET INCOME $ 553 $ 388 $ 816
====== ====== ======
</TABLE>
See auditors' report and accompanying notes.
F-4
<PAGE> 92
COLUMBIA FEDERAL SAVINGS BANK
FORT MITCHELL, KENTUCKY
STATEMENTS OF RETAINED EARNINGS
<TABLE>
<CAPTION>
Unrealized Gain
on Available-for-
Sale Securities,
Retained Net of Related
Earnings Taxes Total
-------- ----------------- -------
(In Thousands)
<S> <C> <C> <C>
BALANCE, SEPTEMBER 30, 1994 $11,333 $ - $11,333
NET INCOME FOR THE YEAR 816 - 816
------- ------- -------
BALANCE, SEPTEMBER 30, 1995 12,149 - 12,149
NET INCOME FOR THE YEAR 388 - 388
------- ------- -------
BALANCE, SEPTEMBER 30, 1996 12,537 - 12,537
------- ------- -------
NET INCOME FOR THE YEAR 553 - 553
UNREALIZED GAIN ON
AVAILABLE-FOR-SALE SECURITIES,
NET OF RELATED TAXES 0 1 1
------- ------- -------
BALANCE, SEPTEMBER 30, 1997 $13,090 $ 1 $13,091
======= ======= =======
</TABLE>
See auditors' report and accompanying notes.
F-5
<PAGE> 93
COLUMBIA FEDERAL SAVINGS BANK
FORT MITCHELL, KENTUCKY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended September 30,
---------------------------
1997 1996 1995
------- ------- -------
(In Thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 553 $ 388 $ 816
Reconciliation of Net Income with
Cash Flows from Operations
Depreciation 86 54 53
Provision for Losses on Loans 113 8 13
Amortization of Premiums and Discounts 1 (14) (17)
FHLB Stock Dividends (86) (79) (70)
Deferred Federal Income Tax 228 (139) 66
Changes In
Interest Receivable 106 (111) 52
Other Assets 88 19 (81)
Federal Income Tax Receivable / Liability (20) 100 80
Other Liabilities (536) 585 (26)
------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 533 811 886
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment Securities
Purchased (6,074) (2,501) (974)
Matured 7,000 1,000 1,004
Mortgage-Backed Securities
Purchased (2,377) (5,247) (2,226)
Principal Collected 3,266 3,298 2,170
Loan Originations and Repayments, Net 5,939 529 1,872
Purchase Costs of Real Estate Owned - - (3)
Proceeds from Sale of Real Estate Owned 110 23 206
Purchases of Property and Equipment (352) (526) (283)
------- ------- -------
NET CASH (USED) PROVIDED BY INVESTING
ACTIVITIES 7,512 (3,424) 1,766
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from Borrowers for
Taxes and Insurance 197 (37) (77)
Change in Deposits (4,462) (1,149) 2,000
Payments on Advances From FHLB (2,000) - (6,500)
Proceeds from FHLB Advances 2,000 - 6,000
------- -------- -------
NET CASH (USED) PROVIDED BY FINANCING
ACTIVITIES (4,265) (1,186) 1,423
------- ------- -------
CHANGE IN CASH AND CASH EQUIVALENTS 3,780 (3,799) 4,075
BEGINNING BALANCE, CASH AND CASH EQUIVALENTS 3,047 6,846 2,771
------- ------- -------
ENDING BALANCE, CASH AND CASH EQUIVALENTS $ 6,827 $ 3,047 $ 6,846
======= ======= =======
</TABLE>
See auditors report and accompany notes.
F-6
<PAGE> 94
COLUMBIA FEDERAL SAVINGS BANK
FORT MITCHELL, KENTUCKY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
Columbia Federal Savings Bank is a federally chartered mutual, FDIC insured
association doing business in the Northern Kentucky area. Their accounting
policies follow those prescribed for savings banks. A summary of these
significant accounting policies are as follows:
USE OF ESTIMATES
The financial statements have been prepared in conformity with generally
accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the statement
of financial condition and revenues and expenses for the year. Actual
results could differ significantly from those estimates.
Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for losses on loans and the
valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans. In connection with the determination of the
allowances for losses on loans and foreclosed real estate, management
obtains appraisals for significant properties.
A substantial portion of the Savings Bank's loans are secured by real
estate in local markets. In addition, foreclosed real estate is located in
this same market. Accordingly, the ultimate collectibility of a
substantial portion of the Savings Bank's loan portfolio and the recovery
of a substantial portion of the carrying amount of foreclosed real estate
are susceptible to changes in local market conditions.
While management uses available information to recognize losses on loans
and foreclosed real estate, future additions to the allowances may be
necessary based on changes in local economic conditions. In addition,
regulatory agencies, as an integral part of their examination process,
periodically review the Savings Bank's allowances for losses on loans and
foreclosed real estate. Such agencies may require the Savings Bank to
recognize additions to the allowances based on their judgments about
information available to them at the time of their examination.
INVESTMENT SECURITIES
The Savings Bank's investments in securities are classified in three
categories and accounted for as follows:
TRADING SECURITIES
Government bonds held principally for resale in the near term and
mortgaged-backed securities held for sale in conjunction with the Savings
Bank's mortgage banking activities are classified as trading securities and
recorded at their fair market values. Unrealized gains and losses on
trading securities are included in other income. The Savings Bank
currently has no investments in this category.
F-7
<PAGE> 95
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 1 - ACCOUNTING POLICIES (CONTINUED)
SECURITIES HELD TO MATURITY
Bonds, notes and debentures which the Savings Bank has the positive
intent and ability to hold until maturity are reported at cost, adjusted
for amortization of premiums and accretion of discounts which are
recognized in interest income using the interest method over the period
to maturity.
SECURITIES AVAILABLE-FOR-SALE
Securities available-for-sale consist of bonds, notes, debentures, and
certain equity securities not classified as trading securities or as
securities to be held to maturity. Unrealized holding gains and losses,
net of tax, on securities available-for-sale are reported as a net
amount in a separate component of equity until realized.
Gains and losses on the sale of securities available-for-sale are
determined using the specific-identification method.
FEDERAL HOME LOAN BANK STOCK
The Savings Bank, as a member of the Federal Home Loan Bank System, is
required to maintain an investment in capital stock of the Federal Home Loan
Bank of Cincinnati (FHLB). The stock is recorded at cost, which represents
anticipated redemption value.
MORTGAGE-BACKED SECURITIES
These assets are carried at cost, adjusted for amortization of premiums and
accretion of discounts on purchases. They are not adjusted to the lower of
cost or market because management has the intention and ability to hold these
assets until maturity. Premiums and discounts, if any, are amortized to
income using the interest method over the life of the securities.
FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK
The Savings Bank does not participate in interest-rate exchange agreements,
hedging or other similar financial instruments.
LOANS RECEIVABLE
Loans receivable are stated at unpaid principal balances less the allowance
for loan losses, loans in process and deferred loan origination fees.
F-8
<PAGE> 96
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 1 - ACCOUNTING POLICIES (CONTINUED)
Loan origination and commitment fees, as well as certain direct origination
costs, are deferred and amortized as a yield adjustment over the lives of
the related loans using the interest method. Amortization of deferred loan
fees is discontinued when a loan is placed on a nonaccrual status.
The allowance for loan losses is maintained at a level which, in
management's judgment, is adequate to absorb potential losses inherent in
the loan portfolio. The amount of the allowance is based on management's
evaluation of the collectibility of the loan portfolio, including the
nature of the portfolio, credit concentrations, trends in historical loss
experience, specific impaired loans, and economic conditions. The
allowance is increased by a provision for loan losses, which is charged to
expense, and reduced by charge-offs, net of recoveries. Changes in the
allowance relating to impaired loans are charged or credited to the
provision for loan losses.
In May 1993, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 114, "Accounting by
Creditors for Impairment of a Loan." This Statement, which was amended by
SFAS No. 118 as to certain income recognition provisions and financial
statement disclosure requirements, requires that impaired loans be measured
based upon the present value of expected future cash flows discounted at
the loans' effective interest rate or, as an alternative, at the loans'
observable market price or fair value of the collateral. SFAS No. 114 was
effective for years beginning after December 15, 1994 (October 1, 1995, as
to the Savings Bank). The Savings Bank adopted SFAS No. 114 effective
October 1, 1995, without material effect on financial condition or results
of operations.
A loan is defined under SFAS No. 114 as impaired when, based on current
information and events, it is probable that a creditor will be unable to
collect all amounts due according to the contractual terms of the loan
agreement. In applying the provisions of SFAS No. 114, the Savings Bank
considers its investment in one-to-four family residential loans and
consumer installment loans to be homogeneous and, therefore, excluded from
separate identification for evaluation of impairment. With respect to the
Savings Bank investment in impaired nonresidential and multifamily
residential real estate loans, such loans are generally collateral
dependent and, as a result, are carried as a practical expedient at the
lower of cost or fair value. Collateral dependent loans which are more than
ninety days delinquent are considered to constitute more than a minimum
delay in repayment and are evaluated for impairment under SFAS No. 114 at
that time.
At September 30, 1997 and 1996, the Savings Bank had no loans that would be
defined as impaired under SFAS No. 114.
F-9
<PAGE> 97
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 1 - ACCOUNTING POLICIES (CONTINUED)
PROVISION FOR LOSSES ON LOANS
Provision for losses on loans includes charges to reduce the recorded
balances of mortgage loans receivable, uncollected interest and real estate
to their estimated net realizable value or fair value, as applicable. Such
provisions are based on management's estimate of net realizable value or
fair value of the collateral, as applicable, considering the current and
currently anticipated future operating or sales conditions, thereby causing
these estimates to be particularly susceptible to changes that could result
in a material adjustment to results of operations in the near term.
Recovery of the carrying value of such loans and real estate is dependent
to a great extent on economic, operating and other conditions that may be
beyond the Savings Bank's control. It is the opinion of management,
however, that adequate provisions have been made for losses on loans and
real estate.
PREMISES AND EQUIPMENT
The cost of property and equipment is depreciated over the estimated useful
lives of the related assets. Depreciation is computed on the straight-line
and accelerated methods.
Maintenance and repairs are charged to operations when incurred.
Significant betterments and renewals are capitalized. When property and
equipment is sold or otherwise disposed of, the asset account and related
accumulated depreciation account are relieved, and any gain or loss is
included in operations.
The useful lives of property and equipment for purposes of computing
depreciation are:
<TABLE>
<S> <C> <C>
Office Properties 5-40 Years
Equipment 5-10 Years
</TABLE>
REAL ESTATE OWNED
Real estate acquired in settlement of loans is carried at the lower of cost
or fair value at the date of acquisition. Costs include the uncollected
loan balance as well as other out-of-pocket costs of acquiring the
property.
ADVERTISING
Advertising costs are expensed as incurred.
RECLASSIFICATIONS
Certain amounts in the prior-year financial statements have been
reclassified for comparative purposes to conform to the current year
financial statements.
F-10
<PAGE> 98
COLUMBIA FEDERAL SAVINGS BANK
______________________________________________________________________________
NOTE 2 - CASH FLOWS INFORMATION
For purposes of the cash flows statement, cash and cash equivalents
includes cash on hand and in demand and time accounts.
Cash paid for interest and income taxes was as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
Interest $4,451 $4,578 $4,446
====== ====== ======
Income Taxes $ 92 $ 239 $ 302
====== ====== ======
</TABLE>
The Savings Bank had non-cash investing or financing activities as follows:
<TABLE>
<S> <C> <C> <C>
Real Estate Acquired Through
Foreclosure of Mortgage Loans $111 $ - $150
==== === ====
Stock Dividends Received $86 $79 $ 70
==== === ====
</TABLE>
NOTE 3 - INVESTMENT SECURITIES
Investment securities as of September 30, 1997 and 1996 consist of the
following:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- -------
(In Thousands)
<S> <C> <C> <C> <C>
1997
U.S. Government and Federal Agency
Obligations Held to Maturity $13,069 $ 55 $ (56) $13,068
======= ==== ===== =======
U.S. Government Treasury Bills
Available-for-Sale $ 1,002 $ 1 $ - $ 1,003
======= ==== ===== =======
1996
U.S. Government and Federal Agency
Obligations Held to Maturity $13,995 $114 $(158) $13,949
======= ==== ===== =======
U.S. Government Treasury Bills
Available-for-Sale $ 1,002 $ - $ - $ 1,002
======= ==== ===== =======
</TABLE>
The following is a summary of maturities of securities held-to-maturity as
of September 30, 1997:
<TABLE>
<CAPTION>
Amounts maturing in: Cost Market Value
------- ------------
(In Thousands)
<S> <C> <C>
One year or less $ 5,500 $ 5,524
After one year through five years 5,996 ,971
After ten years 1,573 1,573
------- -------
Totals $13,069 $13,068
======= =======
</TABLE>
F-11
<PAGE> 99
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 3 - INVESTMENT SECURITIES (CONTINUED)
The following is a summary of maturities of securities available-for-sale
as of September 30, 1997:
<TABLE>
<CAPTION>
Amounts maturing in: Cost Market Value
------ ------------
<S> <C> <C>
One year or less $1,002 $1,003
====== ======
</TABLE>
The following is a summary of interest earned on investments:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
U.S. Government and Agency Securities $768 $797 $707
Dividends on FHLB Stock 86 79 70
---- ---- ----
$854 $876 $777
==== ==== ====
</TABLE>
NOTE 4 - MORTGAGE-BACKED SECURITIES
The balances in mortgage-backed securities as of September 30, 1997 and
1996 was comprised of:
<TABLE>
<CAPTION>
Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ------
(In Thousands)
<S> <C> <C> <C> <C>
1997
Government National Mortgage
Association $5,048 $93 $(5) $5,136
Federal National Mortgage Association 9,297 30 (119) 9,208
Federal Home Loan Mortgage Corporation 3,517 40 (8) 3,549
------- ---- ------ -------
Totals $17,862 $163 $(132) $17,893
======= ==== ====== =======
1996
Government National Mortgage Association $4,536 $52 $(18) $4,570
Federal National Mortgage Association 9,229 32 (238) 9,023
Federal Home Loan Mortgage Corporation 4,986 36 (30) 4,992
------- ---- ------ -------
Totals $18,751 $120 $(286) $18,585
======= ==== ====== =======
</TABLE>
F-12
<PAGE> 100
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 4 - MORTGAGE-BACKED SECURITIES (CONTINUED)
The following is a summary of maturities of mortgaged-backed securities
held to maturity as of September 30, 1997:
<TABLE>
<CAPTION>
Amounts maturing in: Cost Market Value
------ -------------
(In Thousands)
<S> <C> <C>
One year or less $ - $ -
After one year through five years 1,230 1,235
After five years through ten years 2,465 2,447
After ten years 14,167 14,211
------- -------
Totals $17,862 $17,893
======= =======
</TABLE>
NOTE 5 - LOANS RECEIVABLE AND ALLOWANCE FOR LOSSES ON LOANS
The balances in loans receivable as of September 30, 1997 and 1996 was
comprised of:
<TABLE>
<CAPTION>
1997 1996
---- ----
(In Thousands)
<S> <C> <C>
Mortgage Loans $63,899 $69,349
Home Improvements Loans 7 8
Loans on Deposits 42 42
------- -------
63,948 69,399
Less Net Deferred Loan Origination Fees (867) (864)
Loans in Process (1,203) (605)
Allowance for Loss on Loans (300) (189)
------- ------
Loans Receivable, Net $61,578 $67,741
======= =======
</TABLE>
A summary of activity in the allowance for loan losses for September 30,
1997, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
Balance at Beginning of the Year $189 $189 $189
Additions to Allowance 113 8 13
Charge Offs During the Year (2) (8) (13)
---- ---- ----
Balance at End of the Year $300 $189 $189
==== ==== ====
</TABLE>
The Savings Bank had no loans on non-accrual status as of September 30,
1997 and 1996.
F-13
<PAGE> 101
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 6 - LOAN COMMITMENTS
As of September 30, 1997, the Savings Bank had fixed and adjustable rate
loan commitments as follows:
<TABLE>
<CAPTION>
Fixed Adjustable Total
----- ---------- -----
(In Thousands)
<S> <C> <C> <C>
First Mortgage Loans
on One-to-Four Family
Residential Property $399 $75 $474
==== === ====
Weighted Average Interest Rates 8.11% 5.5% 7.78%
==== === ====
</TABLE>
NOTE 7 - ACCRUED INTEREST RECEIVABLE
Accrued interest at September 30, 1997 and 1996 consisted of the following:
<TABLE>
<CAPTION>
1997 1996
---- ----
(In Thousands)
<S> <C> <C>
Loans $440 $478
Mortgage-Backed Securities 124 140
Investments and Other 147 200
---- ----
Totals $712 $818
==== ====
</TABLE>
NOTE 8 - PROPERTY AND EQUIPMENT
Property and equipment as of September 30, 1997 and 1996 was comprised of:
<TABLE>
<CAPTION>
1997 1996
---- ----
(In Thousands)
<S> <C> <C>
Land $ 347 $ 347
Buildings and Improvements 1,879 1,690
Furniture and Equipment 574 504
------- -------
2,800 2,541
Accumulated Depreciation (1,205) (1,212)
------- -------
Property and Equipment, Net $ 1,595 $ 1,329
======= =======
</TABLE>
F-14
<PAGE> 102
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 9 - DEPOSITS
A breakdown of deposits by interest rates and types as of September 30,
1997 and 1996 follows:
<TABLE>
<CAPTION>
1997 1996
---------------- ----------------
Balances by Interest Rate Amount Percent Amount Percent
------------------------- ------- ------- ------- -------
(In Thousands)
<S> <C> <C> <C> <C>
Passbooks (1997 - 3.00%,
1996 - 3.00%) $13,167 14.6% $13,519 14.3%
Money Market Deposit Accounts
(1997 - 2.75%, 1996 - 3.04%) 11,919 13.2 13,641 14.4
Now Accounts (1997 - 2.25%,
1996 - 2.40%) 3,952 4.4 4,339 4.6
Christmas Club
(Non-Interest Bearing) 66 .1 73 .1
Certificates of Deposit:
3.00% - 4.00% 42 - 42 -
4.01% - 5.00% - - 23,551 25.0
5.01% - 6.00% 31,457 34.9 31,374 33.1
6.01% - 7.00% 26,579 29.5 7,898 8.3
7.01% - 8.00% 3,013 3.3 220 .2
------- ----- ------- -----
Totals $90,195 100.0% $94,657 100.0%
======= ===== ======= =====
</TABLE>
For NOW accounts and money market accounts, bonus interest rates are paid
on balances over $2,500 of .15% and .25%, respectively.
The scheduled maturities of certificate accounts are as follows:
<TABLE>
<CAPTION>
Years Ended September 30,
------------------------------------------------
1998 1999 2000 2001 Total
---- ---- ---- ---- -----
(In Thousands)
<S> <C> <C> <C> <C> <C>
3.00% and under $ 40 $ 2 $ - $ - $ 42
5.01%-5.50% 18,742 182 - - 18,924
5.51%-6.00% 4,239 5,302 2,991 - 12,532
6.01%-6.50% 12,231 5,997 2,081 23,200
6.51%-7.00% 2,722 658 - - 3,380
7.01%-7.50% 503 2,281 - - 2,784
7.51% - 8.00% - 229 - - 229
------- ------- ------ ------- -------
Totals $38,477 $14,651 $5,072 $ 2,891 $61,091
======= ======= ====== ======= =======
</TABLE>
The total deposit accounts with a balance of $100,000 or more was
$5,113,000 and $4,732,000 at September 30, 1997 and 1996, respectively.
Savings deposit customers are primarily Northern Kentucky area individuals
and businesses.
F-15
<PAGE> 103
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 9 - DEPOSITS (CONTINUED)
Interest expense on deposits is summarized as follows:
<TABLE>
<CAPTION>
Years Ended September 30,
------------------------------
1997 1996 1995
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
Passbook Savings Accounts $ 402 $ 411 $ 465
Money Market Deposit Accounts 378 446 664
Certificates of Deposit 3,548 3,613 3,138
Now Accounts 98 108 116
------ ------ ------
Interest Expense on Deposits $4,426 $4,578 $4,383
====== ====== ======
</TABLE>
NOTE 10 - FEDERAL HOME LOAN BANK (FHLB) ADVANCES
The Savings Bank had no outstanding FHLB advances at September 30, 1997 and
1996. The Savings Bank did have outstanding advances during 1997 to meet
current liquidity needs. The FHLB advances were 90 day advances which
carry an adjustable interest rate. The advances were collateralized by the
Savings Bank's first mortgage loans.
NOTE 11 - RETIREMENT PLAN
The Savings Bank maintains a 401(k) retirement plan for the benefit of all
its employees. Employees can contribute up to fifteen percent (15%) of
their compensation to the plan. The Savings Bank matches one-half of the
employees' contributions up to a maximum employer match of three percent
(3%) of compensation. By its nature, the plan is fully funded.
The Savings Bank participates in a non-contributory multi-employer defined
benefit retirement plan covering substantially all employees. Accumulated
benefit and net assets available for benefits is unavailable for the
Savings Bank's portion. The plan is funded through annuity contracts.
Employee and employer contributions to the 401(k) plan and retirement plan
expense were as follows:
<TABLE>
<CAPTION>
Years Ended September 30,
------------------------------
1997 1996 1995
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
401(k) Plan
Employee Contributions $82 $72 $67
Employer Contributions $30 $27 $27
Multi-Employer Defined
Benefit Retirement Plan $75 $89 $79
</TABLE>
F-16
<PAGE> 104
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 12 - RETAINED EARNINGS
Through 1996, the Savings Bank was allowed a special bad debt deduction for
federal income tax purposes limited to a certain percentage of otherwise
taxable income. This deduction was subject to certain limitations based on
aggregate loans and savings account balances. If the amounts that qualify
for this deduction are later used for purposes other than for bad debt
losses, they will be subject to federal income tax at the then current
corporate rate.
Retained earnings include approximately $3.1 million for which federal
income tax has not been provided.
NOTE 13 - INCOME TAXES
Deferred income taxes arise from temporary differences resulting from
income and expense items reported for financial accounting and tax purposes
in different periods. The principal source of temporary differences are
depreciation methods, allowance for loan losses, different methods of
recognizing income on loan closing fees, accrued expense, and nontaxable
stock dividends. The net deferred tax asset (liability) include the
following components:
<TABLE>
<CAPTION>
1997 1996
---- ----
(In Thousands)
<S> <C> <C>
Deferred Federal Income Tax Liability $(328) $(262)
Deferred Federal Income Tax Assets 166 328
----- -----
Total Deferred Federal Income
Tax (Liability) Asset $(162) $ 66
===== =====
</TABLE>
No valuation allowance has been provided for deferred tax assets because
management expects to be able to benefit from these temporary deductible
differences.
A reconciliation of income tax expense at the statutory rate to income tax
expense at the Savings Bank's effective rate is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
Computed Tax at the Expected
Statutory Rate $290 $200 $410
Nondeductible Expenses 2 1 1
Other Differences 8 (1) (22)
---- ---- ----
$300 $200 $389
==== ==== ====
</TABLE>
F-17
<PAGE> 105
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 13 - INCOME TAXES (CONTINUED)
The components of income tax expense at September 30 are summarized as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
Current Tax Expense $ 72 $339 $323
Deferred Tax (Benefit) Expense 228 (139) 66
---- ---- ----
Income Tax Expense $300 $200 $389
==== ==== ====
</TABLE>
For the Savings Bank's 1997 tax year, a new tax law will require the
Savings Bank to recapture, over a six year period, approximately $300,000
of bad debt deductions taken between 1988 and 1996. This new tax law will
not have a significant effect on the Savings Bank's financial statements.
NOTE 14 - RELATED PARTY TRANSACTIONS
The Savings Bank has mortgage loans outstanding with various officers,
directors, employees and their relatives. The activity on these loans is
shown below:
<TABLE>
<CAPTION>
(In Thousands)
<S> <C>
Balance at September 30, 1996 $799
New Loans Made 363
Payment of Principal (253)
----
Balance At September 30, 1997 $909
====
</TABLE>
During 1997, the Savings Bank adopted a policy that loans are granted to
officers and employees on their primary residence at interest rates which
are discounted by 1% from the Savings Bank's normal lending rate. The rate
is only in effect while the person is affiliated with the Savings Bank.
Also, this policy allows officers and employees to finance investment
property at rates and costs available to the general public. All of these
loans require board approval and will be repaid with regular monthly
payments in the ordinary course of business.
The Savings Bank had deposits from various officers and directors totaling
$1,464,000 and $1,232,000 as of September 30, 1997 and 1996, respectively.
NOTE 15 - LEASES
The Savings Bank leased facilities for one of its branches. The lease
expired on November 30, 1996.
The total lease expense for the years ended September 30, 1997, 1996 and
1995 was $8,000, $17,000 and $15,000, respectively.
F-18
<PAGE> 106
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 16 - INTEREST RATE RISK
The Savings Bank is engaged principally in providing first mortgage loans
to individuals on residential properties. At September 30, 1997, the
Savings Bank's assets consist of significant amounts of mortgages which
earned interest at fixed interest rates. Those assets were funded
primarily with short-term liabilities which have interest rates which vary
with market rates over time.
At September 30, 1997, the Savings Bank had interest earning loans and
interest bearing deposits as follows:
<TABLE>
<CAPTION>
Effective
Interest Maximum
Amount Rate Terms/Duration
------ --------- --------------
(In millions, except percents)
<S> <C> <C> <C>
INTEREST EARNING LOANS
Fixed Mortgages and Participations $51.3 8.33% 30 Years
Adjustable Mortgages and Participations $12.6 7.86% 30 Years
INTEREST BEARING LIABILITIES
Deposit Accounts $90.2 4.94% 5 Years
</TABLE>
NOTE 17 - RECONCILIATION OF NET INCOME AND RETAINED EARNINGS
A reconciliation of net income and retained earnings per these audited
financial statements with reports filed with the Office of Thrift
Supervision as of September 30, 1997, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
Years Ended September 30,
-----------------------------------
1997 1996 1995
------- --------- -------
(In Thousands)
<S> <C> <C> <C>
Net Income
Per Office of Thrift
Supervision Report $ 553 $ 409 $ 795
Audit Adjustments
Accrued Liabilities - (21) 21
------- ------- -------
Net Income Per Statements
of Income $ 553 $ 388 $ 816
======= ======= =======
Retained Earnings
Per Office of Thrift
Supervision Report $13,090 $12,537 $12,128
Audit Adjustments
Accrued Liabilities - - 21
------- ------- -------
Retained Earnings Per
Balance Sheets $13,090 $12,537 $12,149
======= ======= =======
</TABLE>
F-19
<PAGE> 107
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 18 - REGULATORY CAPITAL REQUIREMENTS
Savings banks are required to maintain capital at least sufficient to meet
three separate requirements: (i) tangible capital equal to 1.5% of adjusted
total assets, (ii) core capital equal to 3.0% of adjusted total assets, and
(iii) risk-based capital equal to 8.0% of risk-weighted assets. The OTS
has proposed to amend the core capital requirement to a range of 4% to 5%
of adjusted total assets, depending on the examination rating and overall
risk. The Savings Bank's management does not anticipate any adverse
financial effect of the core capital requirement regulation is amended as
proposed.
Any savings bank that is not in compliance with the capital standards may
have growth restrictions placed on it by the OTS. Additionally, the OTS
has discretion to treat the failure of any savings bank to maintain capital
at or above the minimum required level as an "unsafe and unsound practice"
subject to a number of enforcement actions.
At September 30, 1997 information with respect to the Savings Bank's
capital ratios is summarized as follows:
<TABLE>
<CAPTION>
Tangible Core Risk-Based
Capital Capital Capital
-------- ------- ----------
(In Thousands)
<S> <C> <C> <C>
Capital under Generally Accepted
Accounting Principles
Additional Capital Items: $13,090 $13,090 $13,090
General Valuation Allowances - - 300
------- ------- -------
Regulatory Capital 13,090 13,090 13,390
Less Minimum Capital Requirements 1,560 3,120 3,527
Capital in Excess of
Minimum Requirements $11,530 $ 9,970 $ 9,863
======= ======= =======
Regulatory Capital as a Percentage
of Applicable Total Assets 12.59% 12.59% 30.37%
Less Minimum Capital as a Percentage
of Applicable Total Assets 1.50% 3.00% 8.00%
Regulatory Capital as a Percentage of
Applicable Total Assets in Excess
of Requirements 11.09% 9.59% 22.37%
</TABLE>
The Savings Bank's management believes that, under the current regulations,
the Savings Bank will continue to meet its minimum capital requirements in
the foreseeable future. However, events beyond the control of the Savings
Bank, such as increased interest rates or a downturn in the economy in
areas where the Savings Bank has most of its loans, could adversely affect
future earnings and, consequently, the ability of the Savings Bank to meet
its future minimum capital requirements.
F-20
<PAGE> 108
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 19 - FAIR VALUES OF FINANCIAL INSTRUMENTS
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the statement of financial condition. In
cases where quoted market prices are not available, fair values are based
on estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. In that regard, the
derived fair value estimates cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in immediate
settlement of the instruments. SFAS No. 107 excludes certain financial
instruments and all nonfinancial instruments from its disclosure
requirements. Accordingly, the aggregate fair value amounts presented do
not represent the underlying value of the Savings Bank.
The following methods and assumptions were used by the Savings Bank in
estimating its fair value disclosures for financial instruments:
Cash and Cash Equivalents: The carrying amounts reported in the
statement of financial condition for cash and cash equivalents
approximate those assets' fair values.
Investment Securities and Mortgage-Backed Securities: Fair values for
these securities are based on quoted market prices, where available.
If quoted market prices are not available, fair values are based on
quoted market prices of comparable instruments.
Loans: For variable-rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying
amounts. The fair values for other loans (for example, fixed rate
commercial real estate and rental property mortgage loans and
commercial and industrial loans) are estimated using discounted cash
flow analysis, based on interest rates currently being offered for
loans with similar terms to borrowers of similar credit quality. Loan
fair value estimates include judgments regarding future expected loss
experience and risk characteristics. The carrying amount of accrued
interest receivable approximates its fair value.
Deposits: The fair values disclosed for demand deposits (for example,
interest- bearing checking accounts and passbook accounts) are, by
definition, equal to amount payable on demand at the reporting date
(that is, their carrying amounts). The fair values for certificates
of deposit are estimated using a discounted cash flow calculation that
applies interest rates currently being offered on certificates to a
schedule of aggregated contractual maturities on such time deposits.
The carrying amount of accrued interest payable approximates fair
value.
F-21
<PAGE> 109
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 19 - FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The estimated fair values of the Savings Bank's financial instruments are
as follows:
<TABLE>
<CAPTION>
September 30, 1997
---------------------
Amount Value
------- -----
(In Thousands)
<S> <C> <C>
Financial Assets:
Cash and Cash Equivalents $ 6,827 $ 6,827
Investment Securities 14,072 14,071
Mortgage-backed Securities 17,862 17,893
Loans, Net 61,578 64,261
Financial Liabilities:
Deposits 90,195 90,299
</TABLE>
The carrying amounts in the preceding table are included in the statement
of financial condition under the applicable captions.
NOTE 20 - DEPOSIT INSURANCE
Deposits of the Savings Bank are currently insured by the Savings
Association Insurance Fund ("SAIF"). Both the SAIF and the Bank Insurance
Fund ("BIF"), the deposit insurance fund that covers most commercial bank
deposits, are statutorily required to be recapitalized to a ratio of 1.25%
of insured reserve deposits.
On September 30, 1996 a law was passed to recapitalize the SAIF with a one-
time assessment of SAIF-insured institutions of 65.7c. for every $100 of
assessable deposits. The assessment to the Savings Bank was $591,600.
This assessment was accrued in the year ended September 30, 1996 and was
paid in November, 1996.
Congress is considering legislation that would merge the SAIF and BIF on
January 1, 1999. The proposed legislation currently provides for the
elimination of the thrift charter or separate thrift regulation under
Federal law prior to the merger of the deposit insurance funds. The
Savings Bank would then be regulated as a bank under Federal law and
subject to the more restrictive activity limits imposed on national banks.
F-22
<PAGE> 110
COLUMBIA FEDERAL SAVINGS BANK
_______________________________________________________________________________
NOTE 21 - CORPORATE REORGANIZATION (UNAUDITED)
On October 9, 1997, the Board of Directors of the Savings Bank unanimously
adopted a Plan of Conversion (Plan) to convert from a federally chartered
mutual savings bank to a federally chartered capital stock savings bank.
The Plan, which includes the formation of a holding company, is subject to
regulatory approval and approval by the members of the Savings Bank. The
conversion is expected to be accomplished through amendment of the Savings
Bank's Charter and the sale of the holding company's common shares. A
subscription offering of the holding company's shares will be offered
initially to eligible account holders, the holding company's employee stock
ownership plan, supplemental eligible account holders and certain other
members. Any common shares not sold in the subscription offering will be
offered to the general public with preference given to residents of Boone
County or Kenton County, Kentucky.
At the time of conversion, the Savings Bank will establish a liquidation
account in an amount equal to its regulatory capital as reflected in the
latest statement of financial condition used in the final conversion
prospectus. The liquidation account will be maintained for the benefit of
eligible depositors who continue to maintain their accounts at the Savings
Bank after conversion. The liquidation account will be reduced annually to
the extent the eligible depositors have reduced their qualifying deposits.
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 Savings Bank may not declare or pay a cash
dividend on its common shares or repurchase any of its common shares if
after the payment of such dividend or the repurchase of such shares, the
Savings Bank's stockholders' equity would be reduced below the amount
required for the liquidation account or the Savings Bank's regulatory
capital would fail to satisfy applicable regulatory capital requirements.
Conversion costs will be deferred and will reduce the proceeds form the
shares sold in the conversion. If the conversion is not completed, all
costs will be charged to expense. As of September 30, 1997, the Savings
Bank had incurred approximately $3,000 of conversion costs.
F-23
<PAGE> 111
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 CFKY. 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
<TABLE>
<CAPTION>
Page
<S> <C>
PROSPECTUS SUMMARY......................... 1
SELECTED CONSOLIDATED FINANCIAL
INFORMATION AND OTHER DATA................. 6
RISK FACTORS............................... 8
COLUMBIA FINANCIAL OF KENTUCKY, INC........ 12
COLUMBIA FEDERAL SAVINGS BANK.............. 12
USE OF PROCEEDS............................ 13
MARKET FOR COMMON SHARES................... 14
DIVIDEND POLICY............................ 14
REGULATORY CAPITAL COMPLIANCE.............. 15
CAPITALIZATION............................. 16
PRO FORMA DATA............................. 17
SUMMARY STATEMENTS OF INCOME............... 20
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.............................. 21
ASSET AND LIABILITY MANAGEMENT............. 25
THE BUSINESS OF COLUMBIA FEDERAL........... 30
MANAGEMENT OF CFKY......................... 49
MANAGEMENT OF COLUMBIA FEDERAL............. 50
REGULATION................................. 56
TAXATION................................... 61
THE CONVERSION............................. 63
RESTRICTIONS ON ACQUISITION OF
COLUMBIA FEDERAL AND CFKY AND
RELATED ANTI-TAKEOVER PROVISIONS........... 75
DESCRIPTION OF AUTHORIZED SHARES........... 79
REGISTRATION REQUIREMENTS.................. 80
LEGAL MATTERS.............................. 80
EXPERTS.................................... 80
ADDITIONAL INFORMATION..................... 80
FINANCIAL STATEMENTS....................... F-1
</TABLE>
Until the later of ___ or 25 days after 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 2,323,000 Common Shares
COLUMBIA FINANCIAL OF KENTUCKY, INC.
(Holding Company for Columbia Federal
Savings Bank)
____________
PROSPECTUS
____________
CHARLES WEBB & COMPANY, A
DIVISION OF KEEFE, BRUYETTE & WOODS, INC.
___________, 1998
<PAGE> 112
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<CAPTION>
<S> <C>
* Legal Fees and Expenses $177,000
* Printing, EDGAR Formatting, Postage and Mailing 79,049
Appraisal Fees and Expenses 17,000
* Accounting Fees and Expenses 40,000
* Blue Sky Filing Fees and Expenses 10,000
Federal Filing Fees 16,496
NASD Filing Fees 3,171
Conversion Agent Fees 9,500
* Other Expenses 20,257
** Underwriting Fees and Expenses 285,527
--------
Total estimated expenses $658,000
========
</TABLE>
____________
* Estimated.
** Columbia Federal and CFKY have retained Charles Webb & Company, a division
of Keefe, Bruyette & Woods, Inc. ("Webb"), to assist in the marketing of
the Common Shares. Webb will consult with and advise Columbia Federal and
CFKY and assist with the sale of the Common Shares in connection with the
Conversion on a best efforts basis. The services to be rendered by Webb
include assisting CFKY in conducting the Subscription Offering and the
Community Offering and educating Columbia Federal personnel about the
Conversion process.
For its services, Webb will receive a commission equal to 1.50% of the
aggregate purchase price paid for shares sold to residents of Boone County
or Kenton County, Kentucky; 1.25% of the aggregate purchase price of Common
Shares sold to residents of counties contiguous to Boone County or Kenton
County, Kentucky; and 0.75% of the aggregate purchase price of Common
Shares sold to persons not residents of Boone County or Kenton County,
Kentucky, or counties contiguous thereto. No commission will be paid on
amounts paid by Columbia Federal's directors, executive officers or
employees and their immediate family members and the ESOP. In the event
that Columbia Federal requests Webb to obtain the assistance of other
broker-dealers to sell Common Shares in the Community Offering, Webb will
be paid a commission of 5.5% of the aggregate purchase price of Common
Shares sold by such broker-dealers, from which such broker-dealers will be
paid, instead of the commission based upon the residence of the purchasers.
Sales commissions payable to Webb have been computed based upon the
following assumptions: (i) 2,020,000 Common Shares will be sold in
connection with the Conversion; (ii) 200,500 of such Common Shares will be
purchased by directors, officers and employees of Columbia Federal and the
members of their immediate families, (iii) eight percent of such Common
Shares will be purchased by the ESOP; and (iv) the remaining 1,657,900
Common Shares sold in connection with the Conversion will be purchased with
sales commissions of 1.50%, 1.25% and 0.75% on 60%, 20% and 20%,
respectively, of the aggregate dollar amount paid for such Common Shares.
A management fee of $25,000 has already been paid to Webb and such amount
will be deducted from the commission. Columbia Federal will reimburse Webb
for all reasonable out-of-pocket expenses, including legal fees, not to
exceed $35,000.
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS OF COLUMBIA FEDERAL.
(A) FEDERAL REGULATIONS
As a federal savings and loan association, Columbia Federal is subject to
federal regulations which provide that any person against whom any action, suit
or other judicial or administrative proceeding, or threatened proceeding,
whether civil, criminal, or otherwise, including any appeal or other proceeding
for review (an
<PAGE> 113
"Action"), is brought by reason of the fact that such person is or was a
director, officer or employee of Columbia Federal shall be indemnified by
Columbia Federal for the following:
(i) Reasonable costs and expenses, including reasonable attorney's fees
actually paid or incurred by such person in connection with proceedings related
to the defense or settlement of an Action:
(ii) Any amount for which such person becomes liable by reason of any
judgment in an Action; and
(iii) Reasonable costs and expenses, including reasonable attorney's fees,
actually paid or incurred in any Action to enforce his rights under this
section if the person attains a final judgment in favor of such person in such
Action.
Such indemnification shall be made to such officer, director or employee
only if the following requirements are met:
(i) Columbia Federal shall make the indemnification in connection with any
Action which results in a final judgment on the merits in favor of such
director, officer or employee; and
(ii) Columbia Federal shall make the indemnification in case of (A)
settlement of any Action, (B) final judgment against such director, officer or
employee, or (C) final judgment in favor of such director, officer or employee
other than on the merits, only if a majority of the directors of Columbia
Federal determines that such director, officer or employee was acting in good
faith within what he or she reasonably believed under the circumstances was the
scope of his or her employment or authority and for a purpose which he or she
reasonably believed under the circumstances was in the best interest of
Columbia Federal or its stockholders.
Columbia Federal may authorize payment of reasonable costs and expenses,
including reasonable attorney's fees arising from the defense or settlement of
any Action, to any director, officer or employee if a majority of the directors
of Columbia Federal conclude that such person may become entitled to
indemnification. The directors of Columbia Federal may impose conditions on
such payment, and, before making an advance payment, Columbia Federal shall
obtain an agreement from such person that Columbia Federal will be repaid if
the person on whose behalf payment is made is later determined not to be
entitled to such indemnification.
Columbia Federal currently maintains a directors' and officers' liability
policy with CNA Insurance Companies 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.
(B) CFKY'S CODE OF REGULATIONS
Article Five of CFKY's Code of Regulations provides for the
indemnification of officers and directors as follows:
Section 5.01. 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, agent or volunteer of the corporation, or is or
was serving at the request of the corporation as a director, trustee, officer,
employee, member, manager, agent or volunteer of another corporation (domestic
or foreign, nonprofit or for profit), limited liability company, 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 his act
or omission giving rise to any claim for indemnification under this Section
5.01 was not occasioned by his intent to cause injury to the corporation or by
his reckless disregard for the best interests of the corporation, and in
respect of any criminal action or proceeding, he had no
<PAGE> 114
reasonable cause to believe his conduct was unlawful. It shall be presumed
that no act or omission of a person claiming indemnification under this Section
5.01 that gives rise to such claim was occasioned by an intent to cause injury
to the corporation or by a reckless disregard for the best interests of the
corporation and, in respect of any criminal matter, that such person had no
reasonable cause to believe his conduct was unlawful; the presumption recited
in this Section 5.01 can be rebutted only by clear and convincing evidence, 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, agent or volunteer of
the corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee, member, manager, agent or volunteer of
another corporation (domestic or foreign, nonprofit or for profit), limited
liability company, 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 an act or omission
occasioned by his deliberate intent to cause injury to the corporation or by
his reckless disregard for the best interests of the corporation, unless and
only to the extent that the Court of Common Pleas of Hamilton 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 is proper in
the circumstances because the officer or director 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
Hamilton 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 the 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
<PAGE> 115
receipt of such notification such person shall have the right to petition the
Court of Common Pleas of Hamilton 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. The provisions of Section
1701.13(E)(5)(a) of the Ohio Revised Code do not apply to the corporation.
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 if it is proved by clear and
convincing evidence in a court of competent jurisdiction that, in respect of
any such claim, issue or other matter, his relevant action or failure to act
was occasioned by his deliberate intent to cause injury to the corporation or
his reckless disregard for the best interests of the corporation, unless, and
only to the extent that, the Court of Common Pleas of Hamilton County, Ohio, or
the court in which such action or suit was brought shall determine upon
application that, despite such determination, and in view of all of 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 exclusive of, and shall be in addition to,
any other rights to which any person seeking indemnification may be entitled
under the Articles, the Regulations, any agreement, a vote of 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, or furnish similar protection, including but not limited to trust
funds, letters of credit, or self-insurance, for or on behalf of any person who
is or was a director, officer, employee, agent or volunteer of the corporation,
or is or was serving at the request of the corporation as a director, trustee,
officer, employee, member, manager, agent or volunteer of another corporation
(domestic or foreign, nonprofit or for profit), limited liability company,
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. Insurance may be purchased from or maintained with a person
in which the corporation has a financial interest.
Section 5.08. Certain Definitions. For purposes of this Article Five,
and as an example and not by way of limitation:
(A) A person claiming indemnification under this Article Five 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).
(B) References to an "other enterprise" shall include employee tax 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.
Section 5.09. Venue. Any action, suit or proceeding to determine a claim
for, or for repayment to the corporation of, 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 Hamilton County, Ohio. The
corporation
<PAGE> 116
and (by claiming or accepting such indemnification) each such person consent to
the exercise of jurisdiction over its or his person by the Court of Common
Pleas of Hamilton County, Ohio, in any such action, suit or proceeding.
The Board of Directors is authorized, at their discretion, to obtain
policies of insurance insuring the Association against loss caused by the acts
of its directors, officers or employees and insuring its directors, officers or
employees for those expenses which an association may indemnify such director,
officer or employee under the authority of Revised Code Section 1151.151.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
No securities of CFKY have been sold by CFKY without registration pursuant
to the Act, except as follows:
Effective October 14, 1997, in connection with the incorporation of CFKY,
100 common shares, without par value, of CFKY (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 V. Lynch, the President of CFKY, who had access to all material
information about CFKY. 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 CFKY and Mr. Lynch, the Securities will be
repurchased by CFKY on the effective date of the Conversion.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
The exhibits filed as a part of this Registration Statement are as follows:
<TABLE>
<CAPTION>
<S> <C>
1.1 Engagement letter with Charles Webb & Company, a division of Keefe, Bruyette &
Woods, Inc. ("Webb")
*1.2 Agency Agreement with Webb (proposed)
2 Plan of Conversion
3.1 Articles of Incorporation of Columbia Financial of Kentucky, Inc.
3.2 Code of Regulations of Columbia Financial of Kentucky, Inc.
5 Opinion of Vorys, Sater, Seymour and Pease regarding legality of securities
being offered
8.1 Opinion of Vorys, Sater, Seymour and Pease regarding tax matters
8.2 Opinion of VonLehman & Company Inc. regarding tax matters
10.1 Columbia Financial of Kentucky, Inc., 1998 Stock Option and Incentive Plan (proposed)
10.2 Columbia Financial of Kentucky, Inc., Recognition and Retention Plan (proposed)
10.3 Employment Agreement between Columbia Federal Savings Bank and Robert V. Lynch
(proposed)
10.4 Severance Agreement between Columbia Federal Savings Bank and five other executive
officers of Columbia Federal Savings Bank (proposed)
10.5 Tax Allocation Agreement between Columbia Federal Savings Bank and Columbia
Financial of Kentucky, Inc. (proposed)
21 Subsidiaries
23.1 Consent of VonLehman & Company Inc.
23.2 Consent of Keller & Company, 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 Columbia Federal Savings Bank and Keller & Company,
Inc.
99.6 Appraisal Report prepared by Keller & Company, Inc.
</TABLE>
_________________________
* To be filed supplementally or by amendment.
<PAGE> 117
(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.
ITEM 17. UNDERTAKINGS.
(a) The undersigned, CFKY, 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 CFKY,
pursuant to the foregoing provisions or otherwise, CFKY 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 CFKY of expenses incurred or paid by a director, officer or
controlling person of CFKY 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, CFKY 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.
<PAGE> 118
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 Ft.
Mitchell, Commonwealth of Kentucky, on December 11, 1997.
By: /s/ Robert V. Lynch
----------------------------------
Robert V. Lynch
President, Chief Executive Officer
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>
<S> <C> <C>
Signature Title Date
- --------- ----- -----
/s/ Robert V. Lynch President, Chief Executive Officer December 11, 1997
- ------------------- (Principal Executive Officer)
Robert V. Lynch and Director
/s/ Abijah Adams Treasurer
- ---------------- (Principal Financial and Accounting Officer) December 11, 1997
Abijah Adams
/s/ J. Robert Bluemlein
- ----------------------- Director December 11, 1997
J. Robert Bluemlein
/s/ Kenneth R. Kelly
- -------------------- Director December 11, 1997
Kenneth R. Kelly
/s/ John C. Layne
- ----------------- Director December 11, 1997
John C. Layne
/s/ Daniel T. Mistler
- --------------------- Director December 11, 1997
Daniel T. Mistler
/s/ Fred A. Tobergte, Sr.
- ------------------------- Director December 11, 1997
Fred A. Tobergte, Sr.
/s/ Geraldine Zembrodt
- ---------------------- Director December 11, 1997
Geraldine Zembrodt
</TABLE>
<PAGE> 119
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
EXHIBIT
NUMBER DESCRIPTION
- ------- ------------------------------------------------------------------------------
1.1 Engagement letter with Charles Webb & Company, a division of Keefe, Bruyette &
Woods, Inc. ("Webb")
*1.2 Form of Agency Agreement with Webb (proposed)
2 Plan of Conversion
3.1 Articles of Incorporation of Columbia Financial of Kentucky, Inc.
3.2 Code of Regulations of Columbia Financial of Kentucky, Inc.
5 Opinion of Vorys, Sater, Seymour and Pease regarding legality of
securities being offered
8.1 Opinion of Vorys, Sater, Seymour and Pease regarding tax matters
8.2 Opinion of VonLehman & Company Inc. regarding tax matters
10.1 Columbia Financial of Kentucky, Inc. 1998 Stock Option and Incentive
Plan (proposed)
10.2 Columbia Financial of Kentucky, Inc., Recognition and Retention Plan
(proposed)
10.3 Employment Agreement between Columbia Federal Savings Bank and Robert V.
Lynch (proposed)
10.4 Severance Agreement between Columbia Federal Savings Bank and five other
executive officers of Columbia Federal Savings Bank (proposed)
10.5 Tax Allocation Agreement between Columbia Federal Savings Bank and
Columbia Financial of Kentucky, Inc. (proposed)
21 Subsidiaries
23.1 Consent of VonLehman & Company Inc.
23.2 Consent of Keller & Company, 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 Materials
</TABLE>
<PAGE> 120
<TABLE>
<CAPTION>
<S> <C>
99.5 Appraisal Agreement between Columbia Federal Savings Bank and Keller &
Company, Inc.
99.6 Appraisal Report prepared by Keller & Company, Inc.
</TABLE>
* To be filed supplementally or as an amendment
<PAGE> 1
EXHIBIT 1.1
Charles Webb & Company
A Division of
KEEFE, BRUYETTE & WOODS, INC.
August 18, 1997
Mr. Robert V. Lynch
President and Chief Executive Officer
Columbia Federal Savings Bank
2497 Dixie Highway
Fort Mitchell, KY 41017-3085
Dear Mr. Lynch:
This proposal is in connection with Columbia Federal Savings 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.
Investment Bankers and Financial Advisors
211 Bradenton o Dublin, Ohio o 43017-3541 o (614) 766-8400 o
Fax: (614) 766-8406
<PAGE> 2
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.)
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
<PAGE> 3
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 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 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 Success Fee is calculated as
follows: (i) 1.50% of stock sold to residents of the Bank's primary
market area, (ii) 1.25% of stock sold to residents of counties
contiguous to the Bank's primary market area, (iii) .75% of all
stock sold to individuals not included in (i) or (ii). 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
<PAGE> 4
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
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 $35,000.
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
<PAGE> 5
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.
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: /s/ Harold T. Hanley III
------------------------
Harold T. Hanley III
Senior Vice President
COLUMBIA FEDERAL SAVINGS BANK
By: s/s Robert V. Lynch Date: October 3, 1997
-------------------------------------
Robert V. Lynch,
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.
Investment Bankers and Financial Advisors
211 Bradenton . Dublin, Ohio . 43017-3541 . (614) 766-8400 .
Fax: (614) 766-8406
<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
COLUMBIA FEDERAL SAVINGS BANK
AMENDED PLAN OF CONVERSION
Table of Contents
<TABLE>
<S> <C>
Introduction 6
Definitions 6
Procedures for the Conversion 9
Purchase Price of Common Shares and Number of Common Shares to be Offered in Connection
with the Conversion 10
Subscription Rights of Eligible Account Holders 11
Subscription Rights of Tax-Qualified Employee Stock Benefit Plans 12
Subscription Rights of Supplemental Eligible Account Holders 12
Subscription Rights of Other Eligible Members 12
Community Offering 13
Additional Limitations on Purchases 13
Procedures for the Subscription Offering and the Community Offering 14
Payment for Common Shares 15
Expiration of Subscription Rights; Undelivered, Defective or Late Order Forms; Insufficient Payment 16
Compliance with Securities Laws 17
Rights of Shareholders After Completion of Conversion 17
Establishment of Liquidation Account 17
Accounts in Converted Association 18
Restrictions on Purchases and Sales of Common Shares by Officers and Directors Following Conversion 18
Restrictions on Acquisition of Columbia Federal or the Holding Company 19
Amendment or Termination of this Plan 19
Consummation of Conversion 19
Tax Rulings/Opinions 20
Directors and Officers of Columbia Federal 20
Stock Benefit Plans 20
Registration of Common Shares; Market for Common Shares 20
Expenses of Conversion 20
Mailing of Proxy Materials 20
Interpretation of the Plan 21
</TABLE>
<PAGE> 2
COLUMBIA FEDERAL SAVINGS BANK
AMENDED PLAN OF CONVERSION
1. INTRODUCTION.
The Board of Directors of Columbia Federal Savings Bank (hereinafter
referred to as "Columbia Federal") adopted a Plan of Conversion on October 9,
1997. On December 11, 1997, the Board of Directors approved certain amendments
to the Plan of Conversion, all of which are incorporated into this Amended Plan
of Conversion. This Amended Plan of Conversion is hereinafter referred to as
this "Plan."
This Plan provides for the conversion of Columbia Federal from a mutual
savings and loan association to a permanent capital stock savings association
chartered under the laws of the United States (hereinafter referred to as the
"Conversion") and the acquisition by a holding company to be formed at the
direction of Columbia Federal of all of the capital stock to be issued by
Columbia Federal in the Conversion. The purpose of the Conversion is to
provide Columbia Federal with additional capital to increase its regulatory
capital, 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 Columbia Federal.
After the completion of the Conversion, savings accounts in Columbia
Federal will be equivalent in amount, interest rate and other terms to the
present savings accounts in Columbia Federal and will continue to be insured by
the Federal Deposit Insurance Corporation to the maximum amount 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 association, Columbia Federal will succeed to all of the presently
existing rights, interests, duties and obligations of the mutual savings and
loan association 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 at the Special Meeting to the members of Columbia
Federal for approval, however, this Plan must be approved by the Office of
Thrift Supervision (hereinafter referred to as the "OTS"). The Amended Charter
and the Amended Bylaws of Columbia Federal must also be approved at the Special
Meeting by the affirmative vote of at least a majority of the total outstanding
votes entitled to be 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 toward 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,
means a Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control
with, the Person specified.
AMENDED BYLAWS means the Federal Bylaws of Columbia Federal in the form
which is attached hereto as Exhibit II and which will be filed with the
OTS on the date on which the Conversion becomes effective.
AMENDED CHARTER means the Federal Stock Charter of Columbia Federal in
the form which is attached hereto as Exhibit I and which will be filed
with the OTS on the date on which the Conversion becomes effective.
<PAGE> 3
APPLICATION means the Application for Conversion on Form AC to be filed
by Columbia Federal with the OTS pursuant to Title 12, Code of Federal
Regulations, Part 563b.
ASSOCIATE, when used to indicate a relationship with any Person, means
(i) any corporation or organization (other than Columbia Federal, the
Holding Company or a majority-owned subsidiary of Columbia Federal or the
Holding Company) of which such Person is an officer or partner or is,
directly or indirectly, the beneficial owner of 10% or more of any class
of equity securities, (ii) any trust or other estate in which such Person
has a substantial beneficial interest or as to which such Person serves
as trustee or in a similar fiduciary capacity, except that such term will
not include a Tax-Qualified Employee Stock Benefit Plan, and (iii) any
relative or spouse of such Person, or any relative of such spouse, who
has the same home as such Person or who is a director or Officer of
Columbia Federal, the Holding Company or any of their subsidiaries.
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, is a Resident of either Boone County or Kenton County,
the counties in which Columbia Federal's offices are located.
COMMUNITY OFFERING means the offering of Common Shares to the public
concurrently with or after the completion of the Subscription Offering in
a manner by which Community Members are given preference.
CONVERSION means the change in the form of Columbia Federal from the
mutual to the permanent capital stock form upon (i) the filing of the
Amended Charter; (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
Columbia Federal.
DEALER means any Person who engages either for all or part of such
person's time, directly or indirectly, as agent, broker or principal, in
the business of offering, buying, selling or otherwise dealing or trading
in securities issued by another Person.
ELIGIBILITY RECORD DATE means the close of business on September 30,
1996, the record date set by Columbia Federal for determining Eligible
Account Holders.
ELIGIBLE ACCOUNT HOLDER means any person holding a Qualifying Deposit in
Columbia Federal on the Eligibility Record Date.
FDIC means the Federal Deposit Insurance Corporation, an agency of the
United States government.
HOLDING COMPANY means a corporation to be formed at the direction of
Columbia Federal 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 Columbia Federal in connection with the Conversion.
COLUMBIA FEDERAL means Columbia Federal Savings Bank, in its mutual or
stock form, as appropriate.
INDEPENDENT APPRAISER means the firm employed by Columbia Federal to make
the estimated pro forma market valuation of Columbia Federal which will
be used as the basis for determining the price of the Common Shares.
<PAGE> 4
LIQUIDATION ACCOUNT means the account established in accordance with
Section 16 of this Plan for Eligible Account Holders and Supplemental
Eligible Account Holders who continue to maintain a Savings Account at
Columbia Federal after the Conversion.
MEMBER means any Person qualifying as a member of Columbia Federal under
its present Charter and Bylaws and any borrower as of December 16, 1995,
who retains membership rights pursuant to Title 12, Code of Federal
Regulations, Section 544.1.
OFFICER means an executive officer of the Holding Company or Columbia
Federal, including the Chairman of the Board of Directors, the President,
a Vice President, the Secretary, the Treasurer or principal financial
officer, the comptroller or principal accounting officer and any other
person performing similar functions for the Holding Company or Columbia
Federal.
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 to enable such
Persons to exercise their respective Subscription Rights 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 a Voting
Member.
OTS means the 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 Columbia Federal 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 Columbia Federal.
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
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, respectively; provided, however,
that Savings Accounts with aggregate deposit balances of less than $50
will not constitute a Qualifying Deposit.
RESIDENT means any person who, on the Voting Record Date, maintains a
bona fide residence within Kenton County or Boone County, Kentucky, as
determined in the sole discretion of Columbia Federal and the Holding
Company.
SEC means the Securities and Exchange Commission, an agency of the United
States government.
<PAGE> 5
SAVINGS ACCOUNT has the same meaning as that 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 Columbia Federal, and includes
certificates of deposit.
SPECIAL MEETING means the meeting of the Voting Members of Columbia
Federal 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 Columbia
Federal to the Eligible Account Holders, the 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 by the OTS of the
Application.
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 Columbia
Federal and the Holding Company and their Associates.
TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN means any defined benefit plan
or defined contribution plan of the Holding Company or Columbia Federal,
such as an employee stock ownership plan, stock bonus plan, profit
sharing plan or other plan which, with its related trust, meets the
requirements to be "qualified" under Section 401 of the Internal Revenue
Code of 1986, as amended.
VOTING MEMBER means any Member of Columbia Federal eligible to vote at
the Special Meeting.
VOTING RECORD DATE means the record date fixed by the Board of Directors
in accordance with applicable OTS regulations and the Charter and Bylaws
of Columbia Federal 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:
Promptly after the adoption of this Plan by a vote of at least
two-thirds of the members of the Board of Directors of Columbia Federal,
Columbia Federal will publish a notice of the adoption of this Plan in an
English language newspaper having general circulation in each community
in which an office of Columbia Federal is located. Copies of such notice
will also be made available for inspection by Members at each office of
Columbia Federal.
The Holding Company will be incorporated under Ohio law, after which
the Board of Directors of the Holding Company will consent to the Plan by
at least a two-thirds vote.
Columbia Federal will submit this Plan for approval, together with
all other requisite materials, to the OTS in the form of the Application.
After the filing of the Application with the OTS, Columbia Federal
will prominently post in each office of Columbia Federal and publish in
an English language newspaper having general circulation in each
community in which an office of Columbia Federal is located a notice to
the effect that Columbia Federal has filed the Application with the OTS.
<PAGE> 6
After the OTS approves the Application, Columbia Federal will mail
Proxy Materials to each of the Voting Members as of the Voting Record
Date at their last known addresses appearing on the records of Columbia
Federal 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.
Subject to the approval of this Plan by the Voting Members at the
Special Meeting, the following will occur:
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, Columbia Federal, 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 Columbia Federal 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.
Concurrently with, following the commencement of or following the
completion of the Subscription Offering, Columbia Federal may also
offer Common Shares in the Community Offering, subject to the prior
satisfaction of the Subscription Rights of the Eligible Account
Holders, Tax-Qualified Employee Stock Benefit Plans, Supplemental
Eligible Account Holders and Other Eligible Members.
All other steps considered necessary or desirable by the Board of
Directors of Columbia Federal and the Board of Directors of the Holding
Company will be taken pursuant to applicable laws and regulations to
effect the Conversion.
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 Board of Directors of
Columbia Federal and the Board of Directors of the Holding Company before the
commencement of the Subscription Offering, subject to adjustment as described
below. The number of Common Shares to be issued in connection with the
Conversion will be determined by the Board of Directors of the Holding Company
and the Board of Directors of Columbia Federal before the completion of all
sales of Common Shares contemplated by this Plan on the basis of the estimated
pro forma market value of Columbia Federal, as converted, and the Purchase
Price. No fractional shares will be issued in connection with the Conversion.
The estimated pro forma market value of Columbia Federal, as converted,
will be determined for such purpose by the Independent Appraiser, based upon
such factors as the Independent Appraiser deems appropriate and as are
consistent with the regulations of the OTS. 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 Columbia Federal, and the minimum of such
range shall be 15% below the pro forma market value of Columbia Federal. The
Independent Appraiser will review, from time to time as appropriate, or as
required by law or regulation,
<PAGE> 7
developments subsequent to its valuation to determine whether the estimated pro
forma market value of Columbia Federal, 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 Columbia Federal, 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 if such pro forma
market value is not less than the minimum of the valuation range approved by
the OTS or 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 Columbia Federal 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, elect to increase or
decrease the number of Common Shares to be issued 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 to
and to purchase Common Shares:
A. Each Eligible Account Holder will receive, without payment, a
nontransferable Subscription Right to purchase a number of Common Shares
up to the greater of (i) the amount permitted to be purchased in the
Community Offering, (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 of which the numerator 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 Holding Company and Columbia
Federal as set forth in Section 10 of this Plan.
B. 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 to 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 or (ii)
the number of shares subscribed for by such Eligible Account Holder. Any
shares remaining after such allocation will be allocated 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.
C. Subscription Rights held by Eligible Account Holders who are also
Officers and directors of the Holding Company or Columbia Federal, 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.
D. The subscription rights of the Eligible Account Holders are
subordinate to the limited priority right of Columbia Federal' s
Tax-Qualified Employee Stock Benefit Plans set forth in Section 6 of this
Plan.
<PAGE> 8
6. SUBSCRIPTION RIGHTS OF TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLANS.
The Tax-Qualified Employee Stock Benefit Plans of Columbia Federal will
receive non-transferable subscription rights to purchase up to 10% of the
Common Shares offered in connection with the Conversion, subject to adjustment
by the Boards of Directors of the Holding Company and Columbia Federal 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 the
Eligible Account Holders pursuant to Section 5 of this Plan, except that if the
final pro forma market value of Columbia Federal exceeds the maximum of the
valuation range, the ESOP shall have first priority with respect to the amount
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 to and to purchase Common Shares:
A. Each Supplemental Eligible Account Holder will receive, without
payment, a nontransferable Subscription Right to purchase a number of
Common Shares up to the greater of (i) the amount permitted to be
purchased in the Community Offering, (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 of which the numerator 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 Holding Company and Columbia Federal 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 to 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 or (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 will be
subordinate to all 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 nontransferable Subscription Rights to purchase
Common Shares 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.
8. SUBSCRIPTION RIGHTS OF OTHER ELIGIBLE MEMBERS.
Other Eligible Members will have the following rights to subscribe to and
to purchase Common Shares:
A. Each Other Eligible Member will receive, without payment,
nontransferable Subscription Rights to purchase a number of Common Shares
up to the greater of (i) the amount permitted to be purchased in the
Community Offering, and (ii) .10% of the total number of Common Shares
sold in
<PAGE> 9
connection with the Conversion, subject to adjustment by the
Boards of Directors of the Holding Company and Columbia Federal 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 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 Other Eligible Members from whom
subscriptions are received in the same proportion that their respective
subscriptions bear to the total subscriptions of 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.
C. Subscription Rights received by Other Eligible Members pursuant
to this Section 8 are subordinate to all 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 equal to the
quantity obtained by dividing $150,000 by the Purchase Price, subject to
the overall purchase limitations set forth in Section 10 of this Plan and
subject to adjustment by the Board of Directors of the Holding Company
and Columbia Federal 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 2% of the Common Shares sold in the Conversion,
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. Columbia Federal or the Holding Company may retain a Broker to
assist in selling the Common Shares in the Community Offering.
E. Columbia Federal 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 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.
<PAGE> 10
B. 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 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,
shall not exceed the quantity obtained by dividing $300,000 by the
purchase price, 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 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
Board of Directors of the Holding Company and the Board of Directors of
Columbia Federal 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.
C. The maximum number of Common Shares which may be subscribed for
or purchased in connection with the Conversion by Officers and directors
of Columbia Federal and their Associates in the aggregate shall not
exceed 33.7% of the total number of Common Shares. 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.
D. Subject to any required regulatory approval and the requirements
of applicable laws and regulations, but without further approval of the
members of Columbia Federal, purchase limitations may be increased or
decreased at the sole discretion of the Boards of Directors of the
Holding Company and Columbia Federal at any time. If such amount is
increased, 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 Holding
Company and Columbia Federal 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 issued in the
Conversion shall not exceed, in the aggregate, 10% of the Common Shares
to be issued in 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 shares to be sold in the Conversion.
E. 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 stock to which
he or she subscribes. The Board of Directors of Columbia Federal may
reject any subscription which such Board reasonably believes involves an
impermissible transfer of a Subscription Right. The Board of Directors
of Columbia Federal 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.
11. PROCEDURES FOR THE SUBSCRIPTION OFFERING AND THE COMMUNITY OFFERING.
The Subscription Offering and the Community Offering shall be conducted
in the following manner:
<PAGE> 11
A. At the time the Proxy Materials are, pursuant to the
authorization of the OTS, mailed to Voting Members at their last known
addresses appearing on the records of Columbia Federal, Columbia Federal
and the Holding Company may commence the Subscription Offering and the
Community Offering.
B. 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 others until and unless the SEC has declared the
Prospectus effective.
C. 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.
D. The Subscription Offering and the Community Offering may be
closed before the Special Meeting.
E. Orders for Common Shares received in the Subscription Offering
and the Community Offering will first be filled, in the order of priority
set forth in this Plan, by the orders of Persons holding Subscription
Rights.
F. The Prospectus will contain all the information required by the
OTS, 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.
G. The Order Forms will contain all the information required by the
OTS and all applicable laws and regulations.
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 Columbia Federal, together with properly completed and
executed original Order Forms therefor, before the expiration time, which
will be specified on the Order Forms, unless such time is extended by
Columbia Federal. Photocopied or telecopied Order Forms will not be
accepted. The amount of such 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, bank draft,
money order or negotiable order of withdrawal will be accepted subject to
payment by the drawee of such check, bank draft, money order or negotiable
order of withdrawal; or
(iii) By appropriate authorization of withdrawal from any Savings
Account in Columbia Federal.
For the purpose of determining the withdrawal balance of any Savings
Accounts, 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 Columbia Federal on the
amounts deemed to have been withdrawn
<PAGE> 12
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 Columbia Federal on payments for Common Shares paid in
cash or by check, negotiable order of withdrawal or money order at an
annual rate equal to Columbia Federal's passbook account rate or such
higher rate as may be determined by Columbia Federal. Such interest will
be paid from the date payments are received by Columbia Federal until
consummation or termination of the Conversion.
(c) The Order Forms will contain appropriate means by which
authorization of withdrawals from Savings Accounts may be made to pay for
subscribed shares. Once a withdrawal has been authorized, none of the
designated withdrawal amount may be withdrawn from the designated Savings
Account (except by Columbia Federal 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 Columbia Federal's passbook account rate.
(d) Columbia Federal 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
Columbia Federal will have the power to extend such expiration time in
its discretion only for a reasonable time beyond such 45-day period.
B. If Columbia Federal 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 Columbia Federal prior to the expiration date specified
thereon, (iii) are defectively filled out or executed, or (iv) are not
accompanied by the full required payment for the Common Shares subscribed
for (including cases in which Savings Accounts from which withdrawals are
authorized are insufficient to cover the amount of the required payment
or the check, bank draft, negotiable order of withdrawal or money order
does not clear by the expiration time), 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 deposits as permitted by
Section 12 above, such withdrawals will not be made.
C. Columbia Federal 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 Columbia Federal, may not be modified, amended or rescinded
without the consent of Columbia Federal, unless (i) the Community
Offering is not completed within 45 days after the expiration of the
Subscription Offering, or (ii) the final valuation of Columbia Federal,
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
<PAGE> 13
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 Columbia Federal 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
Columbia Federal with the consent of the OTS, 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 Columbia Federal or the OTS.
14. COMPLIANCE WITH SECURITIES LAWS.
Columbia Federal 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 in the event
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 Columbia Federal, 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) Columbia Federal 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
Columbia Federal and will exercise all rights attendant to owning the stock of
Columbia Federal. Persons owning common shares of the Holding Company will
have the following rights after the Conversion:
A. Voting rights in respect of the Holding Company will be held and
exercised exclusively by the holders of the issued and outstanding
capital stock of the Holding Company. Neither borrowers from Columbia
Federal nor holders of Savings Accounts in Columbia Federal will have any
voting rights in Columbia Federal or the Holding Company on the basis of
such borrowings or Savings Accounts.
B. 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 Columbia Federal after the Conversion. The
shareholders of the Holding Company will have the exclusive right to
receive the distribution of any assets remaining after the payment of
creditors' claims.
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 Columbia Federal 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 Columbia Federal after the
Conversion, Columbia Federal will, at the time of Conversion, establish
the Liquidation Account in an amount equal to the regulatory capital of
Columbia Federal as set forth in its latest statement of financial
condition contained in its 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 Columbia Federal.
<PAGE> 14
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 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 Savings Account will be adjusted
proportionate 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 reduced to zero upon such closing.
The Subaccount of an account holder will be maintained for as long as
the account holder maintains an account with the same Social Security or
tax identification number.
D. In the event of a complete liquidation of the converted Columbia
Federal (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 Columbia
Federal. 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 ASSOCIATION.
Each Savings Account in Columbia Federal at the time of the Conversion
will constitute, without payment or further action by the account holder, a
Savings Account in Columbia Federal 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 Columbia
Federal 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 Columbia Federal 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 restriction on
subsequent disposition pursuant to paragraph (a) of this Section 18, each
of the following provisions will apply:
<PAGE> 15
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.
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
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 Columbia Federal 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 Columbia Federal.
19. RESTRICTIONS ON ACQUISITION OF COLUMBIA FEDERAL OR HOLDING COMPANY.
Acquisition of capital stock of Columbia Federal or the Holding Company
after the Conversion will be subject to various restrictions contained in the
Amended Charter and Amended Bylaws of Columbia Federal, the articles of
incorporation and 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 Charter of Columbia Federal
may include the limitation that, for a period of up to five years from the date
of completion of the Conversion of Columbia Federal from mutual to stock form,
no Person may directly or indirectly offer to acquire or acquire the beneficial
ownership of more than 10% of any class of an equity security of Columbia
Federal or the Holding Company.
20. AMENDMENT OR TERMINATION OF THIS PLAN.
If deemed necessary or desirable by the Board of Directors of Columbia
Federal and the Holding Company, this Plan may be amended by the Board of
Directors of Columbia Federal 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. The Conversion pursuant to this Plan may be terminated by the Board of
Directors of Columbia Federal and the Board of Directors of 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.
21. CONSUMMATION OF CONVERSION.
The Conversion of the mutual Columbia Federal into the stock Columbia
Federal will be deemed to have taken place and to be effective at the time and
date provided in the regulations of the OTS. The Conversion must be completed
within 24 months of the approval of this Plan by the Members.
<PAGE> 16
22. TAX RULINGS/OPINIONS.
The Conversion is expressly conditioned upon the prior receipt by Columbia
Federal and the Holding Company of either rulings from the Internal Revenue
Service and the appropriate Kentucky taxing authorities or opinions of legal
counsel or other tax advisors to Columbia Federal in form and substance
satisfactory to Columbia Federal 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 Columbia Federal or the converted Columbia Federal
deemed materially adverse by the Board of Directors of Columbia Federal or the
Board of Directors of the Holding Company.
23. DIRECTORS AND OFFICERS OF COLUMBIA FEDERAL.
It is not intended that the Conversion will result in any change in the
directors or Officers of Columbia Federal. The persons serving as Officers on
the date the Application is filed with the OTS will continue to serve at the
discretion of the Board of Directors of Columbia Federal in their respective
capacities as Officers of the converted Columbia Federal. The persons serving
as directors of Columbia Federal on the date the Application is filed with the
OTS will continue to serve as directors following the Conversion until the
expiration of their terms or their earlier death, resignation or removal from
office.
24. STOCK BENEFIT PLANS.
Following the completion of the Conversion, Columbia Federal or the
Holding Company may establish one or more stock option plans and management
recognition plans to the extent permitted by OTS regulations. Columbia Federal
and the Holding Company may make scheduled or discretionary contributions to
one or more stock benefit plans maintained by Columbia Federal or the Holding
Company for the benefit of the directors, officers or employees of Columbia
Federal or the Holding Company, provided such contributions do not cause
Columbia Federal to fail to meet its regulatory capital requirements.
25. REGISTRATION OF COMMON SHARES; MARKET FOR COMMON SHARES.
A. Before or promptly following the Conversion, the Holding Company
will register with the SEC the Common Shares issued in connection with
the Conversion pursuant to the Securities Exchange Act of 1934 and will
not deregister such shares for a period of three years thereafter.
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.
Columbia Federal and the Holding Company will use their best efforts to
assure 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.
<PAGE> 17
28. INTERPRETATION OF THE PLAN.
The Boards of Directors of Columbia Federal 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 Columbia Federal and the Holding
Company will be final.
<PAGE> 18
COLUMBIA FEDERAL SAVINGS BANK
FEDERAL STOCK CHARTER
SECTION 1. CORPORATE TITLE. The full corporate title of the association is
Columbia Federal Savings Bank.
SECTION 2. OFFICE. The home office shall be located in Ft. Mitchell,
Kentucky.
SECTION 3. DURATION. The duration of the association is perpetual.
SECTION 4. PURPOSE AND POWERS. The purpose of the association is to
pursue any or all of the lawful objectives of a federal savings association
chartered under section 5 of the Home Owners' Loan Act and to exercise all of
the express, implied, and incidental powers conferred thereby and by all acts
amendatory thereof and supplemental thereto, subject to the Constitution and
laws of the United States as they are now in effect, or as they may hereafter be
amended, and subject to all lawful and applicable rules, regulations, and orders
of the Office of Thrift Supervision ("Office").
SECTION 5. CAPITAL STOCK. The total number of shares of all classes of the
capital stock which the association has the authority to issue is ten million
(10,000,000), all of which shall be common stock with no par value. The shares
may be issued from time to time as authorized by the board of directors without
the approval of its shareholders, except as otherwise provided in this Section
5 or to the extent that such approval is required by governing law, rule, or
regulation. The consideration for the issuance of the shares shall be paid in
full before their issuance. Neither promissory notes nor future services shall
constitute payment or part payment for the issuance of shares of the
association. The consideration for the shares shall be cash, tangible or
intangible property (to the extent direct investment in such property would be
permitted to the association), labor, or services actually performed for the
association, or any combination of the foregoing. In the absence of actual
fraud in the transaction, the value of such property, labor, or services, as
determined by the board of directors of the association, shall be conclusive.
Upon payment of such consideration, such shares shall be deemed to be fully
paid and nonassessable. In the case of a stock dividend, that part of the
retained earnings of the association that is transferred to common stock or
paid-in capital accounts upon the issuance of shares as a stock dividend shall
be deemed to be the consideration for their issuance.
Except for shares issued in connection with the conversion of the
association from the mutual to the stock form of capitalization, no shares of
capital stock (including shares issuable upon conversion, exchange, or exercise
of other securities) shall be issued, directly or indirectly, to officers,
directors, or controlling persons of the association other than as part of a
general public offering or as qualifying shares to a director, unless the
issuance or the plan under which they would be issued has been approved by a
majority of the total votes eligible to be cast at a legal meeting.
The holders of the common stock shall exclusively possess all voting power.
Each holder of shares of common stock shall be entitled to one vote for each
share held by such holder, except as to the cumulation of votes for the election
of directors, unless the charter provides that there shall be no such cumulative
voting. Subject to any provision for a liquidation account, in the event of any
liquidation, dissolution, or winding up of the association, the holders of the
common stock shall be entitled, after payment or provision for payment of all
debts and liabilities of the association, to receive the remaining assets of the
association available for distribution, in cash or in kind. Each share of
common stock shall have the same relative rights as and be identical in all
respects with all the other shares of common stock.
SECTION 6. PREEMPTIVE RIGHTS. Holders of the capital stock of the
association shall not be entitled to preemptive rights with respect to any
shares of the association which may be issued.
SECTION 7. LIQUIDATION ACCOUNT. Pursuant to the requirements of the Office's
regulations (12 C.F.R. Part 563b), the association shall establish and maintain
a liquidation account for the benefit of its savings accountholders
<PAGE> 19
as of September 30, 1996 and ____________________ ("eligible savers"). In the
event of a complete liquidation of the association, it shall comply with such
regulations with respect to the amount and the priorities on liquidation of
each of the association's eligible savers' inchoate interest in the liquidation
account, to the extent it is still in existence; provided, that an eligible
saver's inchoate interest in the liquidation account shall not entitle such
eligible saver to any voting rights at any meetings of the association's
stockholders.
SECTION 8. CERTAIN PROVISIONS APPLICABLE FOR FIVE YEARS. Notwithstanding
anything contained in the association's charter or bylaws to the contrary, for
a period of five years from the date of completion of the conversion of the
association from mutual to stock form, the following provisions shall apply:
A. BENEFICIAL OWNERSHIP LIMITATION. No person shall directly or
indirectly offer to acquire or acquire the beneficial ownership of more
than 10% of any class of an equity security of the association. This
limitation shall not apply to a transaction in which the association
forms a holding company without change in the respective beneficial
ownership interests of its stockholders other than pursuant to the
exercise of any dissenter and appraisal rights, the purchase of shares by
underwriters in connection with a public offering, or the purchase of
shares by a tax-qualified employee stock benefit plan which is exempt
from the approval requirements under Section 574.3(c)(1)(vi) of the
Office's regulations.
In the event shares are acquired in violation of this Section 8, all
shares beneficially owned by any person in excess of 10% shall be
considered "excess shares" and shall not be counted as shares entitled to
vote and shall not be voted by any person or counted as voting shares in
connection with any matters submitted to the stockholders for a vote.
For purposes of this Section 8, the following definitions apply:
1. The term "person" includes an individual, a group acting in
concert, a corporation, a partnership, an association, a joint stock
company, a trust, an unincorporated organization or similar company, a
syndicate or any other group formed for the purpose of acquiring,
holding, or disposing of the equity securities of the association.
2. The term "offer" includes every offer to buy or otherwise
acquire, solicitation of an offer to sell, tender offer for, or request
or invitation for tenders of, a security or interest in a security for
value.
3. The term "acquire" includes every type of acquisition, whether
effected by purchase, exchange, operation of law or otherwise.
4. The term "acting in concert" means (a) knowing participation in a
joint activity or 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 arrangements, whether written or otherwise.
B. CUMULATIVE VOTING LIMITATION. Stockholders shall not be permitted to
cumulate their votes for election of directors.
C. CALL FOR SPECIAL MEETINGS. Special meetings of stockholders relating
to changes in control of the association or amendments to its charter
shall be called only upon direction of the board of directors.
SECTION 9. DIRECTORS. The association shall be under the direction of a board
of directors. The authorized number of directors, as stated in the
association's bylaws, shall not be fewer than five nor more than fifteen except
when a greater or lesser number is approved by the Director of the Office, or
his or her delegate.
SECTION 10. AMENDMENT OF CHARTER. Except as provided in Section 5, no
amendment, addition, alteration, change, or repeal of this charter shall be
made, unless such is proposed by the board of directors of the association,
<PAGE> 20
approved by the shareholders by a majority of the votes eligible to be cast at a
legal meeting, unless a higher vote is otherwise required, and approved as
preapproved by the Office. Any amendment, addition, alteration, change, or
repeal so acted upon shall be effective upon filing with the Office in
accordance with regulatory procedures or on such other date as the Office may
specify in its preliminary approval.
Attest: _______________________________ By: ________________________________
Secretary President
Columbia Federal Savings Bank Columbia Federal Savings Bank
Attest: _______________________________ By: ________________________________
Secretary of the Office Director of the Office
of Thrift Supervision of Thrift Supervision
Effective Date: _________________
<PAGE> 21
COLUMBIA FEDERAL SAVINGS BANK
FEDERAL STOCK BYLAWS
ARTICLE I - HOME OFFICE
The home office of Columbia Federal Savings Bank shall be at 2497 Dixie
Highway, Ft. Mitchell, Kentucky, 41017 in the County of Kenton, in the
Commonwealth of Kentucky.
ARTICLE II - SHAREHOLDERS
SECTION 1. PLACE OF MEETINGS. All annual and special meetings of
shareholders shall be held at the home office of the association or at such
other place in the state in which the principal place of business of the
association is located as the board of directors may determine.
SECTION 2. ANNUAL MEETING. A meeting of the shareholders of the
association for the election of directors and for the transaction of any other
business of the association shall be held annually within 150 days after the
end of the association's fiscal year on the third Thursday in January, if not a
legal holiday, and if a legal holiday, then on the next day following which is
not a legal holiday, at 2:00 p.m., or at such other date and time within such
150-day period as the board of directors may determine.
SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders for
any purpose or purposes, unless otherwise prescribed by the regulations of the
Office of Thrift Supervision ("Office"), may be called at any time by the
chairman of the board, the president, or a majority of the board of directors,
and shall be called by the chairman of the board, the president, or the
secretary upon the written request of the holders of not less than one-tenth of
all of the outstanding capital stock of the association entitled to vote at the
meeting. Such written request shall state the purpose or purposes of the
meeting and shall be delivered to the home office of the association addressed
to the chairman of the board, the president, or the secretary.
SECTION 4. CONDUCT OF MEETINGS. Annual and special meetings shall be
conducted in accordance with rules and procedures adopted by the board of
directors. The board of directors shall designate, when present, either the
chairman of the board or the president to preside at such meetings.
SECTION 5. NOTICE OF MEETINGS. Written notice stating the place, day,
and hour of the meeting and the purpose(s) for which the meeting is called
shall be delivered not fewer than 20 nor more than 50 days before the date of
the meeting, either personally or by mail, by or at the direction of the
chairman of the board, the president, or the secretary, or the directors
calling the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the mail, addressed to the shareholder at the address as it appears on the
stock transfer books or records of the association as of the record date
prescribed in Section 6 of this Article II with postage prepaid. When any
shareholders' meeting, either annual or special, is adjourned for 30 days or
more, notice of the adjourned meeting shall be given as in the case of an
original meeting. It shall not be necessary to give any notice of the time and
place of any meeting adjourned for less than 30 days or of the business to be
transacted at the meeting, other than an announcement at the meeting at which
such adjournment is taken.
SECTION 6. FIXING OF RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment, or shareholders entitled to receive payment of any dividend,
or in order to make a determination of shareholders for any other proper
purpose, the board of directors shall fix in advance a date as the record date
for any such determination of shareholders. Such date in any case shall be not
more than 60 days and, in case of a meeting of shareholders, not fewer than 10
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. When a determination of
shareholders entitled to vote at any meeting of the shareholders has been made
as provided in this section, such determination shall apply to any adjournment.
SECTION 7. VOTING LISTS. At least 20 days before each meeting of the
shareholders, the officer or agent having charge of the stock transfer books
for shares of the association shall make a complete list of the shareholders
entitled to vote at such meeting, or any adjournment, arranged in alphabetical
order, with the address and the number of shares held by each. This list of
shareholders shall be kept on file at the home office of the association and
shall be subject to inspection by any shareholder of record or the
shareholder's agent at any time during usual business hours for a period of 20
days prior to such meeting. Such list
<PAGE> 22
shall also be produced and kept open at the time and place of the meeting and
shall be subject to inspection by any shareholder of record or any
shareholder's agent during the entire time of the meeting. The original stock
transfer book shall constitute prima facie evidence of the shareholders
entitled to examine such list or transfer books or to vote at any meeting of
shareholders.
In lieu of making the shareholder list available for inspection by
shareholders as provided in the preceding paragraph, the board of directors may
elect to follow the procedures prescribed in Section 552.6(d) of the Office's
regulations as now or hereafter in effect.
SECTION 8. QUORUM. A majority of the outstanding shares of the
association entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of
the outstanding shares is represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally notified. The shareholders present at a duly organized meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to constitute less than a quorum. If a
quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on the subject matter shall be
the act of the shareholders, unless a vote of a greater number of shareholders
voting together or voting by classes is required by law or the charter.
Directors, however, are elected by a plurality of the votes cast at an election
of directors.
SECTION 9. PROXIES. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his or her duly
authorized attorney in fact. Proxies may be given telephonically or
electronically as long as the holder uses a procedure for verifying the
identity of the shareholder. Proxies solicited on behalf of the management
shall be voted as directed by the shareholder or, in the absence of such
direction, as determined by a majority of the board of directors. No proxy
shall be valid more than eleven months from the date of its execution except
for a proxy coupled with an interest.
SECTION 10. VOTING OF SHARES IN THE NAME OF TWO OR MORE PERSONS. When
ownership stands in the name of two or more persons, in the absence of written
directions to the association to the contrary, at any meeting of the
shareholders of the association, any one or more of such shareholders may cast,
in person or by proxy, all votes to which such ownership is entitled. In the
event an attempt is made to cast conflicting votes, in person or by proxy, by
the several persons in whose names shares of stock stand, the vote or votes to
which those persons are entitled shall be cast as directed by a majority of
those holding such and present in person or by proxy at such meeting, but no
votes shall be cast for such stock if a majority cannot agree.
SECTION 11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation may be voted by any officer, agent, or proxy as the
bylaws of such corporation may prescribe, or, in the absence of such provision,
as the board of directors of such corporation may determine. Shares held by an
administrator, executor, guardian or conservator may be voted by him or her,
either in person or by proxy, without a transfer of such shares into his or her
name. Shares standing in the name of a trustee may be voted by him or her,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him or her without a transfer of such shares into his or her name.
Shares held in trust in an IRA or Keogh Account, however, may be voted by the
association if no other instructions are received. Shares standing in the name
of a receiver may be voted by such receiver, and shares held by or under the
control of a receiver may be voted by such receiver without the transfer into
his or her name if authority to do so is contained in an appropriate order of
the court or other public authority by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the association nor
shares held by another corporation, if a majority of the shares entitled to
vote for the election of directors of such other corporation are held by the
association, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time for purposes of any meeting.
SECTION 12. CUMULATIVE VOTING. Subject to the provisions of Section 8.B.
of the Charter of the association prohibiting cumulative voting in the election
of directors for a period of five years from the date of completion of the
conversion of the association from mutual to stock form, every shareholder
entitled to vote at an election for directors shall have the right to vote, in
person or by proxy, the number of shares owned by the shareholder for as many
persons as there are directors to be elected and for whose election the
shareholder has a right to vote, or to cumulate the votes by giving one
candidate as many votes as the number of such directors to be elected
multiplied by the number of shares shall equal or by distributing such votes on
the same principle among any number of candidates.
<PAGE> 23
SECTION 13. INSPECTORS OF ELECTION. In advance of any meeting of
shareholders, the board of directors may appoint any persons other than
nominees for office as inspectors of election to act at such meeting or any
adjournment. The number of inspectors shall be either one or three. Any such
appointment shall not be altered at the meeting. If inspectors of election are
not so appointed, the chairman of the board or the president may, or on the
request of not fewer than 10 percent of the votes represented at the meeting
shall, make such appointment at the meeting. If appointed at the meeting, the
majority of the votes present shall determine whether one or three inspectors
are to be appointed. In case any person appointed as inspector fails to appear
or fails or refuses to act, the vacancy may be filled by appointment by the
board of directors in advance of the meeting or at the meeting by the chairman
of the board or the president.
Unless otherwise prescribed by regulations of the Office, the duties of
such inspectors shall include: determining the number of shares and the voting
power of each share, the shares represented at the meeting, the existence of a
quorum, and the authenticity, validity and effect of proxies; receiving votes,
ballots or consents; hearing and determining all challenges and questions in
any way arising in connection with the rights to vote; counting and tabulating
all votes or consents; determining the result; and such acts as may be proper
to conduct the election or vote with fairness to all shareholders.
SECTION 14. NOMINATING COMMITTEE. The board of directors shall act as a
nominating committee for selecting the management nominees for election as
directors. Except in the case of a nominee substituted as a result of the
death or other incapacity of a management nominee, the nominating committee
shall deliver written nominations to the secretary at least 20 days prior to
the date of the annual meeting. Upon delivery, such nominations shall be
posted in a conspicuous place in each office of the association. No
nominations for directors except those made by the nominating committee shall
be voted upon at the annual meeting unless other nominations by shareholders
are made in writing and delivered to the secretary of the association at least
five days prior to the date of the annual meeting. Upon delivery, such
nominations shall be posted in a conspicuous place in each office of the
association. Ballots bearing the names of all persons nominated by the
nominating committee and by shareholders shall be provided for use at the
annual meeting. However, if the nominating committee shall fail or refuse to
act at least 20 days prior to the annual meeting, nominations for directors may
be made at the annual meeting by any shareholder entitled to vote and shall be
voted upon.
SECTION 15. NEW BUSINESS. Any new business to be taken up at the annual
meeting shall be stated in writing and filed with the secretary of the
association at least five days before the date of the annual meeting, and all
business so stated, proposed, and filed shall be considered at the annual
meeting; but no other proposal shall be acted upon at the annual meeting. Any
shareholder may make any other proposal at the annual meeting and the same may
be discussed and considered, but unless stated in writing and filed with the
secretary at least five days before the meeting, such proposal shall be laid
over for action at an adjourned, special, or annual meeting of the shareholders
taking place 30 days or more thereafter. This provision shall not prevent the
consideration and approval or disapproval at the annual meeting of reports of
officers, directors and committees; but in connection with such reports, no new
business shall be acted upon at such annual meeting unless stated and filed as
herein provided.
SECTION 16. INFORMAL ACTION BY SHAREHOLDERS. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of shareholders, may be taken without a meeting if consent in
writing, setting forth the action so taken, shall be given by all of the
shareholders entitled to vote with respect to the subject matter.
ARTICLE III - BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the association
shall be under the direction of its board of directors. The board of directors
shall annually elect a chairman of the board and a president from among its
members and shall designate, when present, either the chairman of the board or
the president to preside at its meetings.
SECTION 2. NUMBER AND TERM. The board of directors shall consist of
seven members and shall be divided into three classes as nearly equal in number
as possible. The members of each class shall be elected for a term of three
years and until their successors are elected and qualified. One class shall be
elected by ballot annually.
SECTION 3. REGULAR MEETINGS. A regular meeting of the board of directors
shall be held without other notice than this bylaw following the annual meeting
of shareholders. The board of directors may provide, by resolution, the time
and place, for the holding of additional regular meetings without other notice
than such resolution. Directors may participate in a meeting by means of a
conference telephone or similar communications device through which all persons
participating can hear each other at the same time. Participation by such
means shall constitute presence in person for all purposes.
<PAGE> 24
SECTION 4. QUALIFICATION. Each director shall at all times be the
beneficial owner of not less than 100 shares of capital stock of the
association unless the association is a wholly owned subsidiary of a holding
company.
SECTION 5. SPECIAL MEETINGS. Special meetings of the board of directors
may be called by or at the request of the chairman of the board, the president,
or one-third of the directors. The persons authorized to call special meetings
of the board of directors may fix any place, within the association's normal
lending territory, as the place for holding any special meeting of the board of
directors called by such persons.
Members of the board of directors may participate in special meetings by
means of conference telephone or similar communications equipment by which all
persons participating in the meeting can hear each other. Such participations
shall constitute presence in person for all purposes.
SECTION 6. NOTICE. Written notice of any special meeting shall be given
to each director at least two days prior thereto when delivered personally or
by telegram or at least five days prior thereto when delivered by mail at the
address at which the director is most likely to be reached. Such notice shall
be deemed to be delivered when deposited in the mail so addressed, with postage
prepaid if mailed or when delivered to the telegraph company if sent by
telegram or when the association receives notice of delivery if electronically
transmitted. Any director may waive notice of any meeting by a writing filed
with the secretary. The attendance of a director at a meeting shall constitute
a waiver of notice of such meeting, except where a director attends a meeting
for the express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any meeting of the board of directors need
be specified in the notice or waiver of notice of such meeting.
SECTION 7. QUORUM. A majority of the number of directors fixed by
section 2 of this article III shall constitute a quorum for the transaction of
business at any meeting of the board of directors; but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time. Notice of any adjourned meeting shall
be given in the same manner as prescribed by section 5 of this article III.
SECTION 8. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless a greater number is prescribed by regulation of the Office
or by these bylaws.
SECTION 9. ACTION WITHOUT A MEETING. Any action required or permitted to
be taken by the board of directors at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the directors.
SECTION 10. RESIGNATION. Any director may resign at any time by sending
a written notice of such resignation to the home office of the association
addressed to the chairman of the board or the president. Unless otherwise
specified, such resignation shall take effect upon receipt by the chairman of
the board or the president. More than three consecutive absences from regular
meetings of the board of directors, unless excused by resolution of the board
of directors, shall automatically constitute a resignation, effective when such
resignation is accepted by the board of directors.
SECTION 11. VACANCIES. Any vacancy occurring on the board of directors
may be filled by the affirmative vote of a majority of the remaining directors
although less than a quorum of the board of directors. A director elected to
fill a vacancy shall be elected to serve until the next election of directors
by the shareholders. Any directorship to be filled by reason of an increase in
the number of directors may be filled by election by the board of directors for
a term of office continuing only until the next election of directors by the
shareholders.
SECTION 12. COMPENSATION. Directors, as such, may receive a stated
salary for their services. By resolution of the board of directors, a
reasonable fixed sum, and reasonable expenses of attendance, if any, may be
allowed for actual attendance at each regular or special meeting of the board
of directors. Members of either standing or special committees may be allowed
such compensation for attendance at committee meetings as the board of
directors may determine.
SECTION 13. PRESUMPTION OF ASSENT. A director of the association who is
present at a meeting of the board of directors at which action on any
association matter is taken shall be presumed to have assented to the action
taken unless his or her dissent or abstention shall be entered in the minutes
of the meeting or unless he or she shall file a written dissent to such action
with the person acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to
<PAGE> 25
the secretary of the association within five days after the date a copy of the
minutes of the meeting is received. Such right to dissent shall not apply to a
director who voted in favor of such action.
SECTION 14. REMOVAL OF DIRECTORS. At a meeting of shareholders called
expressly for that purpose, any director may be removed for cause by a vote of
the holders of a majority of the shares then entitled to vote at an election of
directors. If less than the entire board is to be removed, no one of the
directors may be removed if the votes cast against the removal would be
sufficient to elect a director if then cumulatively voted at an election of the
class of directors of which such director is a part. Whenever the holders of
the shares of any class are entitled to elect one or more directors by the
provisions of the charter or supplemental sections thereto, the provisions of
this section shall apply, in respect to the removal of a director or directors
so elected, to the vote of the holders of the outstanding shares of that class
and not to the vote of the outstanding shares as a whole.
ARTICLE IV - EXECUTIVE AND OTHER COMMITTEES
SECTION 1. APPOINTMENT. The board of directors, by resolution adopted by
a majority of the full board, may designate the chief executive officer and two
or more of the other directors to constitute an executive committee. The
designation of any committee pursuant to this Article IV and the delegation of
authority shall not operate to relieve the board of directors, or any director,
of any responsibility imposed by law or regulation.
SECTION 2. AUTHORITY. The executive committee, when the board of
directors is not in session, shall have and may exercise all of the authority
of the board of directors except to the extent, if any, that such authority
shall be limited by the resolution appointing the executive committee; and
except also that the executive committee shall not have the authority of the
board of directors with reference to: the declaration of dividends; the
amendment of the charter or bylaws of the association, or recommending to the
stockholders a plan of merger, consolidation, or conversion; the sale, lease,
or other disposition of all or substantially all of the property and assets of
the association otherwise than in the usual and regular course of its business;
a voluntary dissolution of the association; a revocation of any of the
foregoing; or the approval of a transaction in which any member of the
executive committee, directly or indirectly, has any material beneficial
interest.
SECTION 3. TENURE. Subject to the provisions of section 8 of this
article IV, each member of the executive committee shall hold office until the
next regular annual meeting of the board of directors following his or her
designation and until a successor is designated as a member of the executive
committee.
SECTION 4. MEETINGS. Regular meetings of the executive committee may be
held without notice at such times and places as the executive committee may fix
from time to time by resolution. Special meetings of the executive committee
may be called by any member thereof upon not less than one day's notice stating
the place, date, and hour of the meeting, which notice may be written or oral.
Any member of the executive committee may waive notice of any meeting and no
notice of any meeting need be given to any member thereof who attends in
person. The notice of a meeting of the executive committee need not state the
business proposed to be transacted at the meeting.
SECTION 5. QUORUM. A majority of the members of the executive committee
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the executive committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
SECTION 6. ACTION WITHOUT A MEETING. Any action required or permitted to
be taken by the executive committee at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the members of the executive committee.
SECTION 7. VACANCIES. Any vacancy in the executive committee may be
filled by a resolution adopted by a majority of the full board of directors.
SECTION 8. RESIGNATIONS AND REMOVAL. Any member of the executive
committee may be removed at any time with or without cause by resolution
adopted by a majority of the full board of directors. Any member of the
executive committee may resign from the executive committee at any time by
giving written notice to the president or secretary of the association. Unless
otherwise specified, such resignation shall take effect upon its receipt; the
acceptance of such resignation shall not be necessary to make it effective.
<PAGE> 26
SECTION 9. PROCEDURE. The executive committee shall elect a presiding
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these bylaws. It shall keep regular minutes of its
proceedings and report the same to the board of directors for its information
at the meeting held next after the proceedings shall have occurred.
SECTION 10. OTHER COMMITTEES. The board of directors may by resolution
establish an audit, loan, or other committee composed of directors as they may
determine to be necessary or appropriate for the conduct of the business of the
association and may prescribe the duties, constitution, and procedures thereof.
ARTICLE V - OFFICERS
SECTION 1. POSITIONS. The officers of the association shall be a
president, one or more vice presidents, a secretary and a treasurer or
comptroller, each of whom shall be elected by the board of directors. The
board of directors may also designate the chairman of the board as an officer.
The president shall be the chief executive officer, unless the board of
directors designates the chairman of the board as chief executive officer. The
president shall be a director of the association. The offices of the secretary
and treasurer or comptroller may be held by the same person and a vice
president may also be either the secretary or the treasurer or comptroller.
The board of directors may designate one or more vice presidents as executive
vice president or senior vice president. The board of directors may also elect
or authorize the appointment of such other officers as the business of the
association may require. The officers shall have such authority and perform
such duties as the board of directors may from time to time authorize or
determine. In the absence of action by the board of directors, the officers
shall have such powers and duties as generally pertain to their respective
offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the association
shall be elected annually at the first meeting of the board of directors held
after each annual meeting of the shareholders. If the election of officers is
not held at such meeting, such election shall be held as soon thereafter as
possible. Each officer shall hold office until a successor has been duly
elected and qualified or until the officer's death, resignation, or removal in
the manner hereinafter provided. Election or appointment of an officer,
employee, or agent shall not of itself create contractual rights. The board of
directors may authorize the association to enter into an employment contract
with any officer in accordance with regulations of the Office; but no such
contract shall impair the right of the board of directors to remove any officer
at any time in accordance with section 3 of this article V.
SECTION 3. REMOVAL. Any officer may be removed by the board of directors
whenever in its judgment the best interests of the association will be served
thereby, but such removal, other than for cause, shall be without prejudice to
the contractual rights, if any, of the person so removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise may be filled by the board
of directors for the unexpired portion of the term.
SECTION 5. REMUNERATION. The remuneration of the officers shall be fixed
from time to time by the board of directors.
ARTICLE VI - CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. To the extent permitted by regulations of the
Office, and except as otherwise prescribed by these bylaws with respect to
certificates for shares, the board of directors may authorize any officer,
employee, or agent of the association to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the association. Such
authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
association and no evidence of indebtedness shall be issued in its name unless
authorized by the board of directors. Such authority may be general or
confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes, or other evidences of indebtedness issued in the
name of the association shall be signed by one or more officers, employees or
agents of the association in such manner as shall from time to time be
determined by the board of directors.
<PAGE> 27
SECTION 4. DEPOSITS. All funds of the association not otherwise employed
shall be deposited from time to time to the credit of the association in any
duly authorized depositories as the board of directors may select.
ARTICLE VII - CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
capital stock of the association shall be in such form as shall be determined
by the board of directors and approved by the Office. Such certificates shall
be signed by the chief executive officer or by any other officer of the
association authorized by the board of directors, attested by the secretary or
an assistant secretary, and sealed with the corporate seal or a facsimile
thereof. The signatures of such officers upon a certificate may be facsimiles
if the certificate is manually signed on behalf of a transfer agent or a
registrar other than the association itself or one of its employees. Each
certificate for shares of capital stock shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
are issued, with the number of shares and date of issue, shall be entered on
the stock transfer books of the association. All certificates surrendered to
the association for transfer shall be cancelled and no new certificate shall be
issued until the former certificate for a like number of shares has been
surrendered and cancelled, except that in the case of a lost or destroyed
certificate, a new certificate may be issued upon such terms and indemnity to
the association as the board of directors may prescribe.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of capital stock of
the association shall be made only on its stock transfer books. Authority for
such transfer shall be given only by the holder of record or by his or her
legal representative, who shall furnish proper evidence of such authority, or
by his or her attorney authorized by a duly executed power of attorney and
filed with the association. Such transfer shall be made only on surrender for
cancellation of the certificate for such shares. The person in whose name
shares of capital stock stand on the books of the association shall be deemed
by the association to be the owner for all purposes.
ARTICLE VIII - FISCAL YEAR
The fiscal year of the association shall end on the 30th day of September
of each year. The appointment of such accountants shall be subject to annual
ratification by the shareholders.
ARTICLE IX - DIVIDENDS
Subject to the terms of the association's charter and the regulations and
orders of the Office, the board of directors may, from time to time, declare,
and the association may pay, dividends on its outstanding shares of capital
stock.
ARTICLE X - CORPORATE SEAL
The board of directors shall provide a association seal which shall be two
concentric circles between which shall be the name of the association. The
year of incorporation or an emblem may appear in the center.
ARTICLE XI - AMENDMENTS
These bylaws may be amended in a manner consistent with regulations of the
Office and shall be effective after: (i) approval of the amendment and (ii)
receipt of any applicable regulatory approval. When an association fails to
meet its quorum requirements, solely due to vacancies on the board, then the
affirmative vote of a majority of the sitting board will be required to amend
the by laws by a majority vote of the authorized board of directors, or by a
majority vote of the votes cast by the shareholders of the association at any
legal meeting.
EFFECTIVE DATE: _______________________, 1998
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
COLUMBIA FINANCIAL OF KENTUCKY, INC.
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 Columbia Financial of
Kentucky, Inc.
SECOND: The place in Ohio where the principal office of the corporation is
to be located is the City of Cincinnati, County of Hamilton.
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 eight hundred
fifty (850) 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 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 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.
(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 its articles.
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
<PAGE> 2
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
seventy-five percent (75%) 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: Until the expiration of five years from the date of the
acquisition by the corporation of the capital stock of Columbia Federal Savings
Bank (the "Bank") to be issued in connection with the conversion of the Bank
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 Bank or the corporation. In the event that any shares of the
corporation are Acquired in violation of this Article Seventh, 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 Seventh, 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 Bank
or the corporation.
<PAGE> 3
(B) "Offer" includes every offer to buy or otherwise acquire, solicitation
of an offer to sell, tender offer for, or request or invitation for
tenders of, a security or interest in a security for value.
(C) "Acquire" includes every type of acquisition, whether effected by
purchase, exchange, operation of law or otherwise.
(D) "Acting in concert" means (i) knowing participation in a joint
activity or conscious parallel action toward 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 contract, understanding, relationship,
agreement or other arrangement, whether written or otherwise.
(E) "Beneficial Ownership" shall include, without limitation, (i) all
shares directly or indirectly owned by a Person, by an Affiliate
(hereinafter defined) of such Person or by an Associate (hereinafter
defined) 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.
<PAGE> 4
(F) "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.
(G) "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.
EIGHTH: 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.
IN WITNESS WHEREOF, I have hereunto signed my name this 9th day of
October, 1997.
/s/ Robert V. Lynch
------------------------------------
Robert V. Lynch,
its Incorporator
<PAGE> 1
EXHIBIT 3.2
CODE OF REGULATIONS
OF
COLUMBIA FINANCIAL OF KENTUCKY, INC.
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 third Thursday of
January in 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
vote at 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 or 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 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
<PAGE> 2
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 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 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-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
<PAGE> 3
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.
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. Directors need not be
shareholders of the corporation.
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 seven. Directors shall be
divided into two (2) classes, each of which shall consist of such number of
directors, not less than three, as may be determined by the shareholders or
directors in the manner described in paragraphs (B) and (C) of this Section.
The number of directors in each class need not be uniform. At the time of the
adoption of these Regulations, four persons shall be elected to serve as
directors until the annual meeting of the shareholders in 1998 and until their
successors are duly elected and qualified and three persons shall be elected to
serve as directors until the annual meeting of the shareholders in 1999 and
until their successors are duly elected and qualified. At each annual meeting
of shareholders beginning with the 1998 annual meeting, a class of directors
shall be elected to serve a term of two years to succeed the class of directors
whose terms shall expire at each such annual meeting in a manner by which the
term of office of only one class of directors shall expire in each such year;
provided, however, that each director elected at any time shall hold office
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 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.
<PAGE> 4
(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.
(D) No reduction in the number of directors shall of itself have the
effect of shortening the term of any incumbent director.
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
must 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 director 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) must 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 must be received by the Secretary of the
corporation no later than the close of business on the seventh 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 invalid and shall be disregarded unless the person acting as Chairman
of the meeting determines that the facts warrant the acceptance of such
nomination.
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 by voice vote.
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 a majority of the voting power
of the corporation to elect directors in place of those to be removed, provided
that 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
<PAGE> 5
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 2.05 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 in or at such other place
within or without the State of Ohio, as the directors may from time to time
determine by a 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.
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.
<PAGE> 6
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. 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 2.12. By-Laws. The directors may adopt, and amend from time to
time, By-Laws for their own government, which By-Laws 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 By-Laws 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.
Section 3.04. Duties of the President. The president shall be the chief
executive officer of the corporation and 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.
<PAGE> 7
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, choses 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 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, or the treasurer or an
assistant treasurer (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
<PAGE> 8
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 an "eligible guarantor institution" as defined in Rule 17Ad-15
under the Securities Act of 1934 or any successor rule or regulation; 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
(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
Four 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.
<PAGE> 9
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
Section 5.01. 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, agent or volunteer of the corporation, or is or
was serving at the request of the corporation as a director, trustee, officer,
employee, member, manager, agent or volunteer of another corporation (domestic
or foreign, nonprofit or for profit), limited liability company, 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 his act
or omission giving rise to any claim for indemnification under this Section
5.01 was not occasioned by his intent to cause injury to the corporation or by
his reckless disregard for the best interests of the corporation, and in
respect of any criminal action or proceeding, he had no reasonable cause to
believe his conduct was unlawful. It shall be presumed that no act or omission
of a person claiming indemnification under this Section 5.01 that gives rise to
such claim was occasioned by an intent to cause injury to the corporation or by
a reckless disregard for the best interests of the corporation and, in respect
of any criminal matter, that such person had no reasonable cause to believe his
conduct was unlawful; the presumption recited in this Section 5.01 can be
rebutted only by clear and convincing evidence, 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, agent or volunteer of
the corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee, member, manager, agent or volunteer of
another corporation (domestic or foreign, nonprofit or for profit), limited
liability company, 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 an act or omission
occasioned by his deliberate intent to cause injury to the corporation or by
his reckless disregard for the best interests of the corporation, unless and
only to the extent that the Court of Common Pleas of Hamilton 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.
<PAGE> 10
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 is proper in
the circumstances because the officer or director 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
Hamilton 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 the 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 Hamilton 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. The provisions of Section
1701.13(E)(5)(a) of the Ohio Revised Code do not apply to the corporation.
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 if it is proved by clear and
convincing evidence in a court of competent jurisdiction that, in respect of
any such claim, issue or other matter, his relevant action or failure to act
was occasioned by his deliberate intent to cause injury to the corporation or
his reckless disregard for the best interests of the corporation, unless, and
only to the extent that, the Court of Common Pleas of Hamilton County, Ohio or
the court in which such action
<PAGE> 11
or suit was brought shall determine upon application that, despite such
determination, and in view of all of 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 exclusive of, and shall be in addition to,
any other rights to which any person seeking indemnification may be entitled
under the Articles, the Regulations, any agreement, a vote of 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, or furnish similar protection, including but not limited to trust
funds, letters of credit, or self-insurance, for or on behalf of any person who
is or was a director, officer, employee, agent or volunteer of the corporation,
or is or was serving at the request of the corporation as a director, trustee,
officer, employee, member, manager, agent or volunteer of another corporation
(domestic or foreign, nonprofit or for profit), limited liability company,
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. Insurance may be purchased from or maintained with a person
in which the corporation has a financial interest.
Section 5.08. Certain Definitions. For purposes of this Article Five,
and as an example and not by way of limitation:
(A) A person claiming indemnification under this Article Five 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).
(B) References to an "other enterprise" shall include employee tax 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.
Section 5.09. Venue. Any action, suit or proceeding to determine a claim
for, or for repayment to the corporation of, 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 Hamilton County, Ohio. The
corporation and (by claiming or accepting such indemnification) each such
person consent to the exercise of jurisdiction over its or his person by the
Court of Common Pleas of Hamilton County, Ohio in any such action, suit or
proceeding.
<PAGE> 12
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.
<PAGE> 1
Exhibit 5
VORYS, SATER, SEYMOUR AND PEASE
221 East Fourth Street, Suite 2100
Atrium II
P.O. Box 0236
Cincinnati, OH 45201-0236
(513) 723-4000
(513) 723-4056 (Fax)
December 16, 1997
Board of Directors
Columbia Financial of Kentucky, Inc.
2497 Dixie Highway
Ft. Mitchell, Kentucky 41017-3085
Dear Ladies and Gentlemen:
We are familiar with the proceedings taken and proposed to be taken by
Columbia Financial of Kentucky, Inc. ("CFKY"), in connection with the issuance
and sale by CFKY of up to 2,671,450 of its common shares, without par value (the
"Common Shares"). The Common Shares are being offered by CFKY in connection with
the conversion of Columbia Federal Savings Bank ("Columbia Federal") from a
federally chartered mutual savings bank to a federally chartered permanent
capital stock savings bank (the "Conversion").
CFKY has been incorporated at the direction of Columbia Federal for the
purpose of purchasing all of the capital stock to be issued by Columbia Federal
in connection with the Conversion. We have assisted Columbia Federal with
matters related to the incorporation and organization of CFKY. In addition, we
have collaborated in the preparation of the Registration Statement on Form S-1
(the "Registration Statement") to be filed by CFKY 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 CFKY 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, we
are also of the opinion that the Common Shares to be issued and sold by CFKY,
when the purchase orders have been accepted and the purchase price for the
Common Shares has been paid in money as specified in the Registration Statement
<PAGE> 2
Board of Directors
December 16, 1997
Page 2
when it shall become effective, will be validly issued and outstanding,
fully paid and non-assessable. Notwithstanding the foregoing, until
payments are received by CFKY from the Columbia Financial of Kentucky, Inc.,
Employee Stock Ownership Plan (the "ESOP") in accordance with the terms of a
loan agreement to be entered into by and between CFKY 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,
/s/Vorys, Sater, Seymour and Pease
<PAGE> 1
VORYS, SATER, SEYMOUR AND PEASE
221 East Fourth Street, Suite 2100
Atrium II
P.O. Box 0236
Cincinnati, OH 45201-0236
(513) 723-4000
(513) 723-4056 (Fax)
December 16, 1997
Board of Directors
Columbia Financial of Kentucky, Inc.
2497 Dixie Highway
Ft. Mitchell, Kentucky 41017-3085
and
Board of Directors
Columbia Federal Savings Bank
2497 Dixie Highway
Ft. Mitchell, Kentucky 41017-3085
Re: Conversion from a Federal Mutual Savings Bank to a Federal
Permanent Capital Stock Savings Bank - Federal and Tax Matters
Dear Directors:
You have requested our opinion regarding certain federal
income tax consequences resulting from the proposed conversion (the
"Conversion") of Columbia Federal Savings Bank (the "Bank"), from a mutual
savings bank to a permanent capital stock savings bank (the "Stock Bank")
chartered under the laws of the United States and the simultaneous acquisition
by Columbia Financial of Kentucky, Inc., an Ohio corporation (the "Holding
Company"), of all of 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 October 9, 1997, and amended on December 11, 1997 (the
"Plan"), the Application for Conversion on Form AC (the "Application") to be
filed with the Office of Thrift Supervision (the "OTS"), 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
have considered appropriate. Unless otherwise indicated, defined terms in this
letter have the same meaning as in the Plan and the Prospectus.
<PAGE> 2
Board of Directors
December 16, 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 bank which has served Northern
Kentucky since 1884. Organized in 1884 under Kentucky law as Columbia Building
Association, the Bank later converted to a federally chartered savings and loan
association in 1934, at which time the name Columbia Federal Savings and Loan
Association of Covington was adopted. Star Federal Savings and Loan Association
("Star Federal") was merged into the Bank in 1970 and American Federal Savings
and Loan ("American") was merged into the Bank in 1981, with the combined
entities retaining the Bank's name. The Bank became a federal savings bank in
1995, adopting the name Columbia Federal Savings Bank.
As a federal savings bank, the Bank is subject to supervision
and regulation by the OTS and the Federal Deposit Insurance Corporation (the
"FDIC") and is a member of the Federal Home Loan Bank ("FHLB") of Cincinnati.
The deposits of the Bank are insured up to applicable limits by the Savings
Association Insurance Fund ("SAIF") administered by the FDIC.
The Bank is principally engaged in the business of making
permanent first and second mortgage loans secured by one- to four-family
residential real estate located within the Bank's primary lending area and
investing in U.S. Government and agency obligations, interest-bearing deposits
in other financial institutions and mortgage-backed securities. The Bank also
originates loans for the construction of residential real estate and loans
secured by multifamily real estate (over four units) and nonresidential real
estate. The origination of consumer loans, including loans secured by deposits
and home improvement loans, constitutes a small part of the lending activity of
the Bank. Loan funds are obtained primarily from deposits, which are insured up
to applicable limits by the FDIC, and loan and mortgage-backed and related
securities repayments.
The Bank conducts business from its main office located at
2497 Dixie Highway, Ft. Mitchell, Kentucky 41017-3085, at branch offices in each
of the municipalities of Covington, Crescent Springs and Erlanger, which are
located in Kenton County, Kentucky, and at a branch office in Florence, which is
located in Boone County, Kentucky. The Bank's primary market area consists of
Boone County and Kenton County, Kentucky.
<PAGE> 3
Board of Directors
December 16, 1997
Page 3
B. The Holding Company
The Holding Company was incorporated under Ohio law in October
1997 at the direction of the Bank for the purpose of purchasing all of the
capital stock of the Stock 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. The Holding Company is applying to the OTS for approval to acquire
the capital stock to be issued by the Stock Bank in the Conversion. Upon the
consummation of the Conversion, the Holding Company will be a unitary savings
and loan holding company, and its principal assets initially will be the capital
stock of the Stock Bank, a loan to the Columbia Financial of Kentucky, Inc.,
Employee Stock Ownership Plan (the "ESOP") and the investments made with the
remainder of the 50% of the net proceeds retained from the sale of Holding
Company shares in connection with the Conversion. As a savings and loan holding
company, the Holding Company will be required to register with, and be subject
to, examination and supervision by the OTS.
The office of the Holding Company is located at 2497 Dixie Highway, Ft.
Mitchell, Kentucky 41017-3085.
C. The Plan of Conversion
On October 9, 1997, and December 11, 1997, the Board of
Directors of the Bank unanimously adopted and amended, respectively, the Plan
and recommended that the voting members of the Bank approve the Plan at a
special meeting of members of the Bank to be held after the Bank receives
approval of the Application from the OTS (the "Special Meeting"). The OTS is
expected to approve the Plan, subject to the approval of the Plan by the Bank's
voting members. Under the Plan, (i) the Bank will be converted from a federal
mutual savings bank to a federal permanent capital stock savings bank, (ii) all
of the capital stock of the Stock Bank, which will be one class of voting common
shares, will be issued to the Holding Company, and (iii) the Holding Company
will offer for sale and issue common shares of the Holding Company (the "Common
Shares") to eligible persons in a subscription offering (the "Subscription
Offering") and to the general public in a community offering (the "Community
Offering").
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 Bank, as determined by an independent appraiser.
Keller & Company, Inc. ("Keller"), a firm experienced in valuing thrift
institutions, has prepared an independent appraisal of the pro forma market
value of the Bank. Keller's valuation of the estimated pro forma market value of
the Bank, as converted, is $20,200,000 as of November 28, 1997 (the "Pro Forma
Value"). The Bank will issue the Common Shares at a fixed price of $10 per share
and, by dividing the price per share into the Pro Forma Value, will determine
the number of Common Shares to be issued.
<PAGE> 4
Board of Directors
December 16, 1997
Page 4
Applicable regulations require, however, that the Bank establish a range of 15%
above and below the Pro Forma Value (the "Valuation Range") to allow for
fluctuations in the aggregate value of the Common Shares due to changes in the
market for thrift shares and other factors from the time of commencement of the
Subscription Offering until the completion of the offering of the Common Shares.
Based on the Pro Forma Value of the Bank as of November 28, 1997, the Valuation
Range is $17,170,000 to $23,230,000, resulting in the sale of between 1,717,000
and 2,322,000 Common Shares at a purchase price of $10 per share.
The actual number of Common Shares sold in connection with the
Conversion will be determined upon the completion of the Subscription Offering
and the Community Offering and will be based upon the final valuation of the
Bank, as converted. The final valuation will be determined by Keller at the time
of the closing of the Offering. If the final valuation is within the Valuation
Range, or does not exceed the maximum of the Valuation Range by more than 15%,
the number of Common Shares to be issued in connection with the Conversion will
not be less than 1,717,000 or more than 2,671,450. If, due to changing market
conditions, the final valuation is not between the minimum of the Valuation
Range and 15% above the maximum of the Valuation Range, subscribers will be
given the opportunity to affirm, increase, decrease or rescind their
subscriptions.
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 in the Stock Bank as of the Eligibility
Record Date and the Supplemental Eligibility Record Date 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. 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 continue
to maintain savings accounts at the Stock Bank after the Conversion, the Bank
will, at the time of the Conversion, establish the Liquidation Account in an
amount equal to the regulatory capital of the Bank as of the latest practicable
date prior to the
<PAGE> 5
Board of Directors
December 16, 1997
Page 5
Conversion at which such regulatory capital can be determined. For this purpose,
the Bank shall use the regulatory capital figure no later than that set forth in
its latest statement of financial condition contained in the Prospectus. 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 separate inchoate interest (the "Subaccount") in a portion of
the Liquidation Account for Qualifying Deposits held on Eligibility Record Date
or the Supplemental Eligibility Record Date, as the case may be.
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 or
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 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 Eligibility Record Date or the Supplemental Eligibility Record
Date, as the case may be, or (ii) the amount of the Qualifying Deposit as of the
Eligibility Record Date or the Supplemental Eligibility Record Date, as the case
may be, 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 Holding Company as the sole
shareholder 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 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.
<PAGE> 6
Board of Directors
December 16, 1997
Page 6
E. Issuance of Shares
1. Subscription Offering.
Nontransferable subscription rights to purchase Common Shares
will be 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 shares must
represent to the Holding Company 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 such 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 for the allocation of Common Shares,
which have been established by the Plan in accordance with applicable
regulations, are as follows:
Category 1. Eligible Account Holders will receive,
without payment, nontransferable subscription rights to purchase a
number of Common Shares up to the greater of (i) the number of shares
permitted to be purchased in the Community Offering, (ii) .10% of the
total number of Common Shares sold in connection with the Conversion,
or (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.
If the exercise of subscription rights in Category 1 results
in an over-subscription, the Common Shares available for purchase will
be allocated among the 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
lesser. Any Common Shares remaining after such allocation has been made
will be allocated among the subscribing Eligible Account Holders whose
subscriptions remain unsatisfied in the proportion which the amount of
their respective Qualifying Deposits on the Eligibility Record Date
bears to the total of the Qualifying Deposits of all subscribing
Eligible Account Holders on such date. No fractional shares will be
issued in connection
<PAGE> 7
Board of Directors
December 16, 1997
Page 7
with the Conversion. The subscription rights of the Eligible Account
Holders are subordinate to the limited priority right of the ESOP set
forth in Category 2.
Category 2. The ESOP will receive, without payment,
non-transferable subscription rights to purchase up to 10% of the
Common Shares offered in connection with the Conversion. The
subscription rights of the ESOP will be subordinate to the subscription
rights in Category 1, except that if the final pro formal market value
of the Bank exceeds the maximum of the Valuation Range, the ESOP shall
have first priority with respect to the amount sold in excess of the
maximum of the Valuation Range. If the ESOP is unable to purchase all
or part of the Common Shares for which it subscribes due to an
over-subscription in Category 1, the ESOP may purchase Common Shares on
the open market or may purchase authorized but unissued shares of the
Holding Company. If the ESOP purchases authorized but unissued shares
from the Holding Company, such purchases would have a dilutive effect
on the interests of the Holding Company's shareholders.
Category 3. Supplemental Eligible Account Holders will
receive, without payment, nontransferable subscription rights to
purchase a number of Common Shares up to the greater of (i) the number
of Common Shares permitted to be purchased in the Community Offering,
(ii) .10% of the total number of Common Shares sold in connection with
the Conversion, or (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.
If the exercise of subscription rights in Category 3 results
in an over-subscription, the Common Shares available for purchase will
be allocated among the subscribing Supplemental Eligible Account
Holders in a manner which will, to the extent possible, make the total
allocation of each subscriber 100 shares or the amount subscribed for,
whichever is lesser. 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 amount of
the Qualifying Deposits of all such subscribing Supplemental Eligible
Account Holders on such date. No fractional shares will be issued in
connection with the Conversion.
Subscription rights received in Category 3 will be subordinate
to the subscription rights in Categories 1 and 2.
<PAGE> 8
Board of Directors
December 16, 1997
Page 8
Category 4. All Other Eligible Members will receive, without
payment, nontransferable subscription rights to purchase a number of
Common Shares up to the greater of the amount permitted to be purchased
in the Community Offering or .10% of the total number of Common Shares
sold in connection with the Conversion, subject to the overall purchase
limitations set forth in Section 10 of the Plan. In the event of an
over-subscription in this Category 4, the Common Shares available for
purchase will be allocated among subscribing Other Eligible Members on
an equitable basis in the same proportion that their respective
subscriptions bear to the total subscriptions of all Other Eligible
Members in this Category 4.
Subscription rights received in this Category 4 will be
subordinate to the subscription rights in Categories 1 through 3.
The Board of Directors of the Holding Company may reject any
one or more of the subscriptions if, based upon the Board or Directors'
interpretation of applicable regulations, such subscriber is not entitled to the
Common Shares for which he or she has subscribed or if the sales of the Common
Shares subscribed for would be in violation of any applicable statutes,
regulations or rules.
2. Community Offering.
Concurrently with the Subscription Offering, the Holding
Company may offer Common Shares in the Community Offering, subject to the
limitations set forth below, to the extent such shares remain available after
the satisfaction of all orders received in the Subscription Offering. If
subscriptions are received in the Subscription Offering for at least 2,323,000
Common Shares, Common Shares may not be offered in the Community Offering. If
subscriptions for at least 2,323,000 Common Shares have not been received by the
Subscription Expiration Date, the Holding Company anticipates offering Common
Shares in the Community Offering to the extent such shares remain available
after the satisfaction of all orders received in the Subscription Offering. All
sales of Common Shares in the Community Offering will be at the same price per
shares as the sales of Common Shares in the Subscription Offering. The Community
Offering may expire at any time when orders for at least 2,323,000 Common Shares
have been received, but in no event later than 45 days after the Subscription
Expiration Date, unless extended by the Stock Bank and the Holding Company with
the approval of the OTS, if necessary. In accordance with the Plan, the Offering
may not be extended beyond two years from the date of approval of the Plan by
the members of the Bank.
In the event shares are available in the Community Offering,
members of the general public may purchase up to 15, 000 Common Shares. If an
insufficient number of shares is available to fill all of the order received in
the Community Offering, the available shares will be allocated in a manner to be
determined by the Board of Directors of the Holding Company, subject to the
following:
<PAGE> 9
Board of Directors
December 16, 1997
Page 9
i In the Community Offering, preference will be given to natural
persons who reside in either Boone County or Kenton County, Kentucky,
the counties in which the offices of the Bank are located;
ii. Orders received in the Community Offering will first be filled up
to a maximum of two percent 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;
iii. In the Community Offering, no person, together with any Associate
and groups Acting in Concert, may purchase more than 15,000 Common
Shares; and
iv. 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.
F. Results of Conversion
Deposit holders 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. Voting rights in the
Holding Company will be held exclusively by its shareholders. 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 Holding Company.
The Conversion will not interrupt the business of the Bank.
During and upon completion of the Conversion, the Stock 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 deposit accounts in the Stock Bank 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 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) The Holding Company and the Bank have no current plan or
intention to redeem or otherwise acquire any of the Common Shares to be issued
in connection with the Conversion.
<PAGE> 10
Board of Directors
December 16, 1997
Page 10
(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 approximately 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 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.
(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
Internal Revenue Code of 1986, as amended (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 deposit 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 directly to or purchased by
depositor-employees at a discount.
(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 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
<PAGE> 11
Board of Directors
December 16, 1997
Page 11
will not pay any expenses solely attributable to the depositors or to the
Holding Company's shareholders.
(10) No Qualifying Deposits as of the Eligibility Record Date
or the Supplemental Eligibility Record Date will be excluded from participation
in the Liquidation Account.
(11) The fair market value of the withdrawable deposit
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 deposit accounts of the Bank surrendered
in exchange therefore. All proprietary rights in the Bank form an integral part
of the withdrawable deposit 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.
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 association into a state stock
savings and loan association constituted a tax-free reorganization under Section
368(a)(1)(F) of the Code. Subsequently, the IRS consistently issued private
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
letter 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
Service.
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 federal mutual savings
bank to a federal permanent capital stock savings bank constitutes 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 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.
<PAGE> 12
Board of Directors
December 16, 1997
Page 12
(2) 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.
(3) No gain or loss will be recognized to the deposit account
holders 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.
(4) The basis of the withdrawable deposit accounts in the
Stock 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).
(5) 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 at distribution 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.
(6) 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 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 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 shares will commence on the day after the date of the purchase.
(7) 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
<PAGE> 13
Board of Directors
December 16, 1997
Page 13
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.
(8) 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 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 had 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.
(9) Regardless of book entries made for the creation of the
Liquidation Account, the Conversion will not diminish the accumulated earnings
and profits of the Stock 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 effect on its
taxable income, deductions for additions to reserves for bad debts under Section
593 of the Code or distribution to shareholders under Section 593(e) of the
Code.
Unlike private rulings, an opinion of counsel is not binding
on the IRS, and the IRS could disagree with the conclusions reached in this
opinion. In the event of such disagreement, there can be no assurance that the
IRS 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 8.2
VonLehman & Company Inc.
Certified Public Accountants and Business Advisors
250 Grandview Drive Suite 300
Fort Mitchell, Kentucky 41017-5610
4221 Malsbary Road Suite 102
Cincinnati, Ohio 45242-5502
December 16, 1997
Columbia Federal Savings Bank
2497 Dixie Highway
Ft. Mitchell, KY 41017-3085
To Whom It May Concern:
For Kentucky tax purposes, VonLehman & Company Inc., Ft. Mitchell, Kentucky
renders an opinion that the conversion constitutes a tax-free reorganization
which Kentucky recognizes under 368(a) of the Internal Revenue Code.
Kentucky defines taxable net income for corporations and individuals as that
recognized for federal purposes with certain adjustments. In all respects, the
tax effects of the conversion for federal purposes as described in the
prospectus under principal effects of the conversion, tax consequences, (i.e.,
no gain or loss recognized by Columbia Federal upon receipt of money from CFKY
in exchange for capital stock of Columbia Federal, as converted, etc.) are
substantially the same for Kentucky purposes given the stated facts of the
conversion and current Kentucky law.
Sincerely,
/s/ VonLehman & Company Inc.
<PAGE> 1
EXHIBIT 10.1
COLUMBIA FINANCIAL OF KENTUCKY, INC.,
1998 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE. The purpose of the Columbia Financial of Kentucky, Inc.,
Stock Option and Incentive Plan (this "Plan") is to promote and advance the
interests of Columbia Financial of Kentucky, Inc. (the "Company") and its
shareholders by enabling the Company to attract, retain and reward directors,
managerial and other key 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 such
persons 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 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 Columbia Financial of Kentucky, Inc., an Ohio
corporation, or any successor corporation.
(f) "Conversion" means the conversion of Columbia Federal Savings
Bank from a federally-chartered mutual savings bank to a permanent
capital stock savings bank chartered under federal law.
(g) "Employment" means regular employment with the Company or a
Subsidiary and does not include service as a director only.
(h) "ERISA" means the Employee Retirement Income Security Act, as
amended, or any successor thereto, together with rules, regulations and
interpretations promulgated thereunder.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
(j) "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 price 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.
(ii) If the Common Shares are quoted on The Nasdaq Stock
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
The Nasdaq Stock Market.
(iii) If the Common Shares are not traded on a national
securities exchange or quoted on The Nasdaq Stock Market, then the
Fair Market Value shall be as determined by the Committee.
(k) "Incentive Stock Option" means any Stock Option granted pursuant
to the provisions of Section 6 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.
<PAGE> 2
(l) "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.
(m) "OTS" means the Office of Thrift Supervision, Department of the
Treasury.
(n) "Participant" means an employee or director of the Company or a
Subsidiary who is granted an Award under this Plan. Notwithstanding the
foregoing, for the purposes of the granting of any Incentive Stock Option
under this Plan, the term "Participant" shall include only employees of
the Company or a Subsidiary.
(o) "Plan" means the Columbia Financial of Kentucky, Inc., 1998
Stock Option and Incentive Plan, as set forth herein and as it may be
hereafter amended from time to time.
(p) "Stock Option" means an award to purchase Common Shares granted
pursuant to the provisions of Section 6 of this Plan.
(q) "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, Columbia Federal Savings Bank.
(r) "Terminated for Cause" means any removal of a director or
discharge of an employee for the 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) or a material violation of a final
cease-and-desist order or for any 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 to be comprised
of not fewer 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. DURATION OF, AND COMMON SHARES SUBJECT TO, THIS PLAN.
(a) Term. This Plan shall terminate on the date which is ten (10)
years from the effective date of the 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.
(b) 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 9 of this Plan, shall be ten
percent of the total Common Shares sold in connection with the conversion
of Columbia Federal Savings Bank from mutual to stock form.
<PAGE> 3
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 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, to the extent permissible under Rule 16b-3 promulgated under the
Exchange Act, or any successor rule or regulation thereto as in effect from
time to time.
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.
5. 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.
6. 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 and in such form
as the Committee may from time to time approve and shall contain such
additional terms and conditions as the Committee shall deem desirable, not
inconsistent with the express provisions of the Plan:
(a) Grant. Stock Options may be granted under this Plan on terms
and conditions not inconsistent with the provisions of this Plan;
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
in the aggregate.
(b) Stock Option Price. The option exercise price per Common Share
purchasable under a Stock Option granted to a non-employee director shall
be the Fair Market Value of the Common Shares on the date of grant. The
option exercise price for Common Shares purchasable under a Stock Option
granted to an employee 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 the Incentive Stock Option is granted.
(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; provided, however, that the term of
Incentive Stock Options will not exceed ten years after the date the
Incentive Stock Option is granted; provided further, however, that in the
case of a Participant who owns a number of Common Shares representing
more than 10% of the Common Shares outstanding at the time the Incentive
Stock Option is granted, the term of the Incentive Stock Option shall not
exceed five years.
(d) Exercisability. Except as set forth in Section 6(f) and Section
7 of this Plan, Stock Options awarded under this Plan shall become
exercisable at the rate of 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 Options
<PAGE> 4
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.
7. 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 an Option is granted, all 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
Options shall terminate if not exercised within 12 months of the
Participant's death or disability.
(c) In the event the Employment or the directorship of a Participant
is Terminated for Cause (hereinafter defined), any Option which has not
been exercised shall terminate as of the date of such termination for
cause.
8. 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 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.
9. 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.
<PAGE> 5
10. 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 9 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 above notwithstanding, the Board may amend
this Plan to take into account changes in applicable securities, federal income
tax and other applicable laws.
11. 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 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.
12. MISCELLANEOUS.
(a) Tax Withholding. The Company shall have the right to deduct
from any settlement, including the delivery or vesting of Common Shares,
made under this Plan 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
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 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 stop-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.
<PAGE> 6
(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
Commonwealth of Kentucky, 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.
<PAGE> 1
EXHIBIT 10.2
COLUMBIA FINANCIAL OF KENTUCKY, INC.
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, unless the
context clearly indicates otherwise. Wherever appropriate, the masculine
pronoun shall include the feminine pronoun and the singular shall include the
plural:
1.01 "Agreement" means the Columbia Financial of Kentucky, Inc.,
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 or their cash equivalent.
1.03 "Bank" means Columbia Federal Savings Bank, a savings bank chartered
under the laws of the United States.
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 Columbia Financial of Kentucky, Inc., 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.
1.11 "Employee" means any person who is employed by the Corporation, the
Bank or a Subsidiary.
<PAGE> 2
1.12 "Person" means an individual, corporation, partnership, trust,
association, 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 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 "Subsidiaries" means subsidiaries of the Corporation or the Bank
which, with the consent of the Board, agree to participate in the Plan.
1.18 "Trust" means the trust established by this Agreement.
1.19 "Trustee(s)" means the person(s) or entity approved by the Board
pursuant to Sections 4.01 and 4.02 to hold legal title to the Plan assets 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 Directors and
Employees of the Corporation, the Bank and the Subsidiaries by providing such
Directors and Employees with an equity interest in the Corporation as
reasonable compensation for their contributions to the Corporation, the Bank
and the Subsidiaries.
<PAGE> 3
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(s)
shall be appointed or approved by and will 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 Trustee(s).
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 Corporation 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 the Subsidiaries 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 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.
5.02 INVESTMENT OF TRUST ASSETS. The Trust shall not purchase a number of
Common Shares equal to more than 3% of the number of Common Shares issued in
connection with the Conversion, except that if the Bank's tangible capital
exceeds 10%, the Trust may purchase a number of Common Shares equal to up to 4%
of the Common Shares issued in connection with the Conversion. After such
investment, the Common Shares 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, while not invested in Common Shares, shall be invested by
the Trustee in such interest-bearing account or accounts at the Bank as the
Trustee shall determine to be appropriate.
<PAGE> 4
5.03 EFFECT OF ALLOCATIONS, RETURNS AND FORFEITURES UPON PLAN SHARE
RESERVES. Upon the allocation of Awards under 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 subject to
forfeiture by the Recipient pursuant to Section 7.01 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 which of the Directors and
Employees will be granted Awards and the number of Plan Shares covered by each
Award; provided, however, that if this Agreement 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, and (b) Directors who are not Employees may not be awarded more than 5%
of the total number of Plan Shares individually or more than 30% in the
aggregate.
No Award shall be granted if such grant would result in a violation or
possible violation of federal or state securities laws. In the event Plan
Shares are forfeited for any reason or additional Plan Shares are purchased by
the Trustee, the Committee may, from time to time, determine which of the
Directors and Employees will be granted additional Awards to be awarded from
forfeited or additional 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 the
Subsidiaries 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 by
the Committee shall be considered the date of grant of the Awards. The
Committee shall maintain records as to all grants of Awards under the Plan.
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 under the Plan. 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.
<PAGE> 5
6.05 SHAREHOLDER APPROVAL. This Agreement shall be submitted to the
shareholders of the Corporation at an annual or special meeting to be held no
sooner than six months after the effective date of the Conversion, and, if this
Agreement is implemented prior to the first anniversary of the effective date
of the Conversion, 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 shall be 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. As Plan Shares become earned and non-forfeitable, any cash dividends,
returned capital and earnings thereon shall also be 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 been earned and are not non-forfeitable in
accordance with Section 7.01(a) of this Agreement shall be forfeited in the
event that (i) a Recipient who is a Director ceases to serve on the Board of
Directors of both the Corporation and the Bank or (ii) a Recipient who is not a
Director of the Corporation or the Bank ceases to be an Employee of the
Corporation or the Bank, 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 of the
Corporation, the Bank or a Subsidiary 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.
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
Beneficiary, as the case may be, as soon as practicable after they have been
earned, together with any cash dividends, returned capital and earnings thereon
with respect to Plan Shares that have been earned.
(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.
<PAGE> 6
(c) WITHHOLDING. The Trustee may withhold from any cash payment made
under 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.
The Trustee shall pay over to the Corporation, the Bank 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 fully 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, control and investment of the Trust,
and the Trustee shall invest all assets of the Trust, except those attributable
to cash dividends paid with respect to Plan Shares not held in the Plan Share
Reserve, in Common Shares to the fullest extent practicable, and except to the
extent that the Trustee determines that the holding of monies in cash or cash
equivalents is necessary to meet the obligations of the Trust. The Trustee
shall have the power to do all things and execute such instruments as may be
deemed necessary or proper, including the following powers:
(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. The investment authorized herein may
constitute the only investment of the Trust, and, 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 accordance
with Section 8.02(a) of this Agreement in such deposit accounts and
certificates of deposit (including those issued by the Bank), obligations
of the United States government or its agencies or such other investments
as shall be considered the equivalent of cash;
(c) To sell, exchange or otherwise dispose of any property at any
time held or acquired by the Trust;
<PAGE> 7
(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 Trustee's
rights, duties and obligations 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 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 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 Common Shares shall be allocated (a) to accounts for Recipients, if
such shares are the subject of outstanding Awards, and shall become earned and
be 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 Corporation.
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,
<PAGE> 8
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 Board may also direct the Trustee to
return to the Corporation 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 have not yet been 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 Bank or a
Subsidiary.
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 a 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 Bank under the provisions of
Section 671, et seq., of the Internal Revenue Code of 1986, as amended (26
U.S.C. Section 671 et seq.).
<PAGE> 9
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)
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 ____________, 1997.
COLUMBIA FINANCIAL OF KENTUCKY, INC.
By: ______________________________
Robert V. Lynch
its President and Chief Executive Officer
ATTEST:
____________________________
Carol S. Margrave
its Secretary and Treasurer
<PAGE> 1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (hereinafter referred to as this "AGREEMENT") is
entered into as of the ___ day of ___________, 199_, by and between Columbia
Federal Savings Bank, a savings bank chartered under the laws of the United
States (hereinafter referred to as the "EMPLOYER"), and Robert V. Lynch, an
individual (hereinafter referred to as the "EMPLOYEE");
WITNESSETH:
WHEREAS, the EMPLOYEE is currently employed as the President and Chief
Executive Officer of the EMPLOYER;
WHEREAS, as a result of the skill, knowledge and experience of the
EMPLOYEE, the Board of Directors of the EMPLOYER desires to retain the services
of the EMPLOYEE as the President and Chief Executive Officer of the EMPLOYER;
WHEREAS, the EMPLOYEE desires to continue to serve as the President and
Chief Executive Officer of the EMPLOYER; and
WHEREAS, the EMPLOYEE and the EMPLOYER desire to enter into this AGREEMENT
to set forth the terms and conditions of the employment relationship between
the EMPLOYER and the EMPLOYEE;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the EMPLOYER 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 EMPLOYER hereby employs the EMPLOYEE, and the EMPLOYEE hereby accepts
employment, as the President and Chief Executive Officer of the EMPLOYER. The
TERM of this AGREEMENT shall commence on the effective date of the EMPLOYER's
conversion from mutual to stock form and shall end thirty-six (36) months
thereafter, subject to extension pursuant to subsection (b) of this Section 1
(hereinafter, including any such extensions, referred to as the "TERM"), and to
earlier termination as provided herein.
(b) Extension. Prior to each anniversary of the date of this AGREEMENT,
the Board of Directors of the EMPLOYER shall review this AGREEMENT and document
its approval of this AGREEMENT in the board minutes. In connection with such
annual review, the TERM shall be extended for a one-year period beyond the
then-effective expiration date, provided the Board of Directors of the EMPLOYER
determines in a duly adopted resolution that this AGREEMENT should be extended.
Any such extension shall be subject to the written consent of the EMPLOYEE.
2. Duties of EMPLOYEE.
<PAGE> 2
(a) General Duties and Responsibilities. The EMPLOYEE shall serve as the
President and Chief Executive Officer of the EMPLOYER. Subject to the
direction of the Board of Directors of the EMPLOYER, the EMPLOYEE shall have
responsibility for the general management and control of the business and
affairs of the EMPLOYER and shall perform all duties and shall have all powers
which are commonly incident to the office of President and Chief Executive
Officer or which, consistent therewith, are delegated to him by the Board of
Directors. Such duties shall include, but not be limited to, (1) managing the
day-to-day operations of the EMPLOYER, (2) managing the efforts of the EMPLOYER
to comply with applicable laws and regulations, (3) marketing of the EMPLOYER
and its services,
(4) supervising other employees of the EMPLOYER, (5) providing prompt and
accurate reports to the Board of Directors of the EMPLOYER regarding the
affairs and conditions of the EMPLOYER, and (6) making recommendations to the
Board of Directors of the EMPLOYER concerning the strategies, capital
structure, tactics, and general operations of the EMPLOYER.
(b) Devotion of Entire Time to the Business of the EMPLOYER. 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 EMPLOYER and its holding company and their
subsidiaries and affiliates without the prior written consent of the Board of
Directors of the EMPLOYER; provided, however, that the EMPLOYEE shall not be
precluded from (i) reasonable participation in community, civic, charitable or
similar organizations; or (ii) the pursuit of personal investments which do not
interfere or conflict with the performance of the EMPLOYEE's duties to the
EMPLOYER. Nothing in this section shall limit the EMPLOYEE's right to invest
in securities of any business that does not provide services or products of the
type or competing with those provided by the EMPLOYER or its subsidiaries or
affiliates.
3. Compensation, Benefits and Reimbursements.
(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 $___________ until changed by the Board of Directors of
the EMPLOYER in accordance with Section 3(b) of this AGREEMENT.
(b) Annual Salary Review. On or before each anniversary of the effective
date of this AGREEMENT, the annual salary of the EMPLOYEE shall be reviewed by
the Board of Directors of the EMPLOYER and may be maintained or increased, in
its discretion, based upon the EMPLOYEE's individual performance and the
overall profitability and financial condition of the EMPLOYER. The results of
the annual salary review shall be reflected in the minutes of the appropriate
meetings of the Board of Directors of the EMPLOYER.
(c) Expenses. In addition to any compensation received under Section 3(a)
or (b) of this AGREEMENT, the EMPLOYER 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. Such
reimbursement shall be made in accordance with the existing policies and
procedures of the EMPLOYER pertaining to reimbursement of expenses to senior
management officials.
<PAGE> 3
(d) Employee Benefit Programs.
(i) 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 EMPLOYER from time to
time, including programs in respect of group health, disability or life
insurance, and all employee benefit plans or programs hereafter adopted in
writing by the Board of Directors of the EMPLOYER, for which senior management
personnel are eligible, including any employee stock ownership plan, stock
option plan or other stock benefit plan (hereinafter collectively referred to as
the "BENEFIT PLANS"). Notwithstanding any statement to the contrary contained
elsewhere in this Agreement, the EMPLOYER may discontinue or terminate at any
time any such BENEFIT PLANS, now existing or hereafter adopted, to the extent
permitted by the terms of such plans and applicable law, and shall not be
required to compensate the EMPLOYEE for such discontinuance or termination; and
(ii) After the termination of the employment of the EMPLOYEE in
accordance with Section 4(a) of this AGREEMENT, for any reason other than JUST
CAUSE (as defined hereinafter), the EMPLOYER shall provide, until both the
EMPLOYEE and his spouse become sixty-five (65) years of age, or the earlier date
the EMPLOYEE obtains substantially equivalent coverage from another full-time
employer, substantially the same health insurance benefits as are available to
retired employees of the EMPLOYER on the date of this AGREEMENT; provided,
however, that all premiums for such benefits shall be paid by the EMPLOYEE
and/or his spouse after the EMPLOYEE's termination; provided further, however,
that the EMPLOYER'S obligation under this Section 3(d)(ii) shall terminate in
the event that the EMPLOYER no longer makes available an employee group health
insurance program which permits the EMPLOYER to make coverage available for
retirees.
(e) 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, subject to the following conditions:
(i) The EMPLOYEE shall be entitled to annual vacation and annual
sick leave in accordance with the policies periodically established by
the Board of Directors of the EMPLOYER for senior management officials of
the EMPLOYER; and
<PAGE> 4
(ii) In addition to paid vacations and sick leave, the EMPLOYEE
shall be entitled, without loss of pay, to absent himself voluntarily
from the performance of his employment with the EMPLOYER for such
additional period of time and for such valid and legitimate reasons as
the Board may, in its discretion, determine, and the Board may grant to
the EMPLOYEE a leave or leaves of absence, with or without pay, at such
time or times and upon such terms and conditions as such Board, in its
discretion, may determine.
4. Termination of Employment.
(a) General. The employment of the EMPLOYEE shall terminate at any time
during the TERM (i) at the option of the EMPLOYER upon the delivery by the
EMPLOYER of written notice of employment termination to the EMPLOYEE, or (ii)
at the option of the EMPLOYEE upon the delivery by the EMPLOYEE of written
notice of termination to the EMPLOYER if, unless consented to in writing by the
EMPLOYEE, (A) the present capacity or circumstances in which the EMPLOYEE is
employed are materially changed (including, without limitation, a material
reduction in responsibilities or authority, or the assignment of duties or
responsibilities substantially inconsistent with those normally associated with
EMPLOYEE's position described in Section 2(a) of this AGREEMENT), (B) the
EMPLOYEE is no longer the President and Chief Executive Officer of the EMPLOYER
and Columbia Financial of Kentucky, Inc., (C) the EMPLOYEE is required to move
his personal residence, or 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 (D) the EMPLOYER otherwise
breaches this AGREEMENT in any material respect.
(b) Termination for JUST CAUSE. In the event that the EMPLOYER terminates
the employment of the EMPLOYEE before the expiration of 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 (other than traffic violations or
similar offenses) or final cease-and-desist order, 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.
(c) Termination in Connection with a CHANGE OF CONTROL.
(i) In the event that, in connection with a CHANGE OF CONTROL
(including, without limitation, a termination other than for JUST CAUSE within
six months prior to a CHANGE OF CONTROL) or within one year after a CHANGE OF
CONTROL, the employment of the EMPLOYEE is terminated by the EMPLOYER for any
reason other than JUST CAUSE before the expiration of the TERM, then the
following shall occur:
(A) The EMPLOYER shall promptly pay to the EMPLOYEE or to his
beneficiaries, dependents or estate an amount equal to the product of
three multiplied by the greater of the annual salary set forth in Section
3(a) of this AGREEMENT or the annual salary payable to the EMPLOYEE as a
result of any annual salary review in accordance with Section 3 (b) of
this AGREEMENT;
<PAGE> 5
(B) The EMPLOYEE, his dependents, beneficiaries and estate shall
continue to be covered under all BENEFIT PLANS in which the EMPLOYEE is a
participant immediately prior to the CHANGE OF CONTROL of the EMPLOYER at
the EMPLOYER's expense as if the EMPLOYEE were still employed under this
AGREEMENT until the earliest 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 shall be entitled thereafter to the benefits
described in Section 3(d)(ii) of this AGREEMENT; and
(C) 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
EMPLOYER hereunder, except as specifically stated in subparagraph (B).
(ii) In the event that, within six months prior to or within one year
after a CHANGE OF CONTROL, the employment of the EMPLOYEE is terminated by the
EMPLOYEE in accordance with Section 4(a)(ii) of this AGREEMENT before the
expiration of the TERM, then the following shall occur:
(A) The EMPLOYER shall promptly pay to the EMPLOYEE or to his
beneficiaries, dependents or estate an amount equal to the product of
three multiplied by the greater of the annual salary set forth in Section
3(a) of this AGREEMENT or the annual salary payable to the EMPLOYEE as a
result of any annual salary review in accordance with Section 3(b) of
this AGREEMENT;
(B) The EMPLOYEE, his dependents, beneficiaries and estate shall
continue to be covered under all BENEFIT PLANS in which the EMPLOYEE is a
participant immediately prior to the CHANGE OF CONTROL of the EMPLOYER at
the EMPLOYER's expense as if the EMPLOYEE were still employed under this
AGREEMENT until the earliest 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 shall be entitled thereafter to the benefits
described in Section 3(d)(ii) of this AGREEMENT; and
<PAGE> 6
(C) 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
EMPLOYER hereunder, except as specifically stated in subparagraph (B).
In the event that payments pursuant to this subsection (c) would result in
the imposition of a penalty tax pursuant to 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"), such payments shall
be reduced to the maximum amount which may be paid under SECTION 280G without
exceeding such limits. Payments pursuant to this subsection (c) also may not
exceed applicable limits established by the Office of Thrift Supervision
(hereinafter referred to as the "OTS"). In the event a reduction in payments
is necessary in order to comply with the requirements of this AGREEMENT
relating to the limitations of SECTION 280G or applicable OTS limits, the
EMPLOYEE may determine, in his sole discretion, which categories of payments
are to be reduced or eliminated.
(d) Termination Without CHANGE OF CONTROL. In the event that the
employment of the EMPLOYEE is terminated by the EMPLOYER or is terminated by
the EMPLOYEE in accordance with Section 4(a)(ii) of this AGREEMENT before the
expiration of the TERM other than (i) for JUST CAUSE or (ii) in connection with
or after a CHANGE OF CONTROL, the EMPLOYER shall be obligated (A) to pay to
the EMPLOYEE, his designated beneficiaries or his estate, for the remainder of
the TERM, the salary set forth in Section 3(a) of this AGREEMENT or the salary
payable to the EMPLOYEE as a result of any annual salary review in accordance
with Section 3(b) of this AGREEMENT; (B) to provide to the EMPLOYEE, at the
EMPLOYER's expense, health, life, disability, and other benefits as provided in
Section 3(d)(i) of this Agreement, until the expiration of the TERM or until
the earlier date the EMPLOYEE obtains substantially equivalent coverage from
another full-time employer; and (C) to provide to the EMPLOYEE the benefits set
forth under Section 3(d)(ii) of this AGREEMENT. In the event that payments
pursuant to this subsection (d) 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 those limits. Payments
pursuant to this subsection also may not exceed the applicable limits
established by the OTS. In the event a reduction in payments is necessary in
order to comply with the requirements of this AGREEMENT relating to the
limitations of SECTION 280G or applicable OTS limits, the EMPLOYEE may
determine, in his sole discretion, which categories of payments are to be
reduced or eliminated.
(e) Death of the EMPLOYEE. The TERM shall automatically terminate upon
the death of the EMPLOYEE. In the event of such death, 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.
(f) "Golden Parachute" Provision. Any payments made to the EMPLOYEE
pursuant to this AGREEMENT or otherwise are subject to and conditioned upon
their compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated
thereunder.
(g) 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 EMPLOYER or Columbia Financial of
Kentucky, Inc.; (ii) the acquisition of the
<PAGE> 7
ability to control the election of a majority of the directors of the EMPLOYER
or Columbia Financial of Kentucky, Inc.; (iii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the EMPLOYER or Columbia Financial of Kentucky, Inc.,
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 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; or (iv) the acquisition by any person or
entity of "conclusive control" of the EMPLOYER 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. 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.
(h) Legal Fees. EMPLOYER shall promptly pay all legal fees and expenses
which EMPLOYEE may incur as a result of EMPLOYEE or EMPLOYER contesting the
validity or enforceability of this AGREEMENT if a court of competent
jurisdiction renders a final decision in favor of EMPLOYEE with respect to any
such contest, or to the extent agreed to by EMPLOYER and EMPLOYEE in an
agreement of settlement with respect to any such contest.
5. Special Regulatory Events. Notwithstanding Section 4 of this AGREEMENT, the
obligations of the EMPLOYER 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 EMPLOYER's affairs by a notice served under
Section 8(e) (3) or (g) (1) of the Federal Deposit Insurance Act (hereinafter
referred to as the "FDIA"), the EMPLOYER'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
EMPLOYER shall (i) pay the EMPLOYEE all of the compensation withheld while the
obligations in this AGREEMENT were suspended and (ii) reinstate any of the
obligations that were suspended.
(b) If the EMPLOYEE is removed and/or permanently prohibited from
participating in the conduct of the EMPLOYER's affairs by an order issued under
Section 8(e) (4) or (g) (1) of the FDIA, all obligations of the EMPLOYER 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 EMPLOYER 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 EMPLOYER, (i) by the Director of
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 EMPLOYER 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, or his or her designee, approves a supervisory merger
<PAGE> 8
to resolve problems related to the operation of the EMPLOYER or when the
EMPLOYER is determined by the Director of the OTS to be in an unsafe or unsound
condition. No vested rights of the EMPLOYEE shall be affected by any such
action.
6. Consolidation, Merger or Sale of Assets. Nothing in this AGREEMENT shall
preclude the EMPLOYER from consolidating with, merging into, or transferring
all, or substantially all, of its assets to another corporation that assumes
all of the EMPLOYER's obligations and undertakings hereunder. Upon such a
consolidation, merger or transfer of assets, the term "EMPLOYER," 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 EMPLOYER 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
EMPLOYER consents to such disclosure or use or such information becomes common
knowledge in the industry or 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 EMPLOYER, its parent, 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
EMPLOYER. The EMPLOYEE shall not otherwise knowingly act or conduct himself
(a) to the material detriment of the EMPLOYER, its subsidiaries, or affiliates,
or (b) in a manner which is inimical or contrary to the interests of the
EMPLOYER.
8. Nonassignability. Neither this AGREEMENT nor any right or interest
hereunder shall be assignable by the EMPLOYEE, his beneficiaries, or legal
representatives without the EMPLOYER's prior written consent; provided,
however, that nothing in this Section 8 shall preclude (a) the EMPLOYEE from
designating a beneficiary to receive any benefits payable hereunder upon his
death, or (b) 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. Indemnification; Insurance.
(a) Indemnification. The EMPLOYER agrees to indemnify the EMPLOYEE and
his heirs, executors, and administrators to the fullest extent permitted under
applicable law and regulations, including, without limitation, 12 U.S.C.
Section 1828(k), against any and all expenses and liabilities reasonably
incurred by the EMPLOYEE in connection with or arising out of any action, suit
or proceeding in which the EMPLOYEE may be involved by reason of his having
been a director or officer of the EMPLOYER or any of its subsidiaries, whether
or not the EMPLOYEE is a director or officer at the time of incurring any such
expenses or liabilities. Such expenses and liabilities shall include, but
shall not be limited to, judgments, court costs and attorney's fees and the
cost of reasonable settlements. The EMPLOYEE shall be entitled to
indemnification in respect of a settlement only if the Board of
<PAGE> 9
Directors of the EMPLOYER has approved such settlement. Notwithstanding
anything herein to the contrary, (i) indemnification for expenses shall not
extend to matters for which the EMPLOYEE has been terminated for JUST CAUSE,
and (ii) the obligations of this Section 10 shall survive the TERM of this
AGREEMENT. Nothing contained herein shall be deemed to provide indemnification
prohibited by applicable law or regulation.
(b) Insurance. During the TERM, the EMPLOYER shall provide the EMPLOYEE
(and his heirs, executors, and administrators) with coverage under a directors'
and officers' liability policy, at the EMPLOYER's expense, at least equivalent
to such coverage provided to directors and senior officers of the EMPLOYER.
11. Binding Agreement. This AGREEMENT shall be binding upon, and inure to the
benefit of, the EMPLOYEE and the EMPLOYER and their respective permitted
successors and assigns.
12. Amendment of AGREEMENT. This AGREEMENT may not be modified or amended,
except by an instrument in writing signed by the parties hereto.
13. 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.
14. 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 EMPLOYER (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.
15. 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.
16. Governing Law; Regulatory Authority. This AGREEMENT has been executed and
delivered in the Commonwealth of Kentucky and its validity, interpretation,
performance and enforcement shall be governed by the laws of the Commonwealth
of Kentucky, except to the extent that federal law is governing. References to
the OTS included herein shall include any successor primary federal regulatory
authority of the EMPLOYER.
17. Effect of Prior Agreements. This AGREEMENT contains the entire
understanding between the parties hereto and supersedes any prior employment
agreement between the EMPLOYER or any predecessor of the EMPLOYER and the
EMPLOYEE.
18. 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
<PAGE> 10
personally or by facsimile transmission or is deposited in the United States
mail, postage prepaid, addressed as follows:
If to the EMPLOYER:
Columbia Federal Savings Bank
2497 Dixie Highway
Fort Mitchell, Kentucky 41017-3085
Attention: Chairman of the Board
If to the EMPLOYEE:
Robert V. Lynch
___________________________
___________________________
<PAGE> 11
IN WITNESS WHEREOF, the EMPLOYER 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: COLUMBIA FEDERAL SAVINGS BANK
________________________________ By_________________________________
Attest:
________________________________ ___________________________________
Robert V. Lynch
<PAGE> 1
EXHIBIT 10.4
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (hereinafter referred to as this "AGREEMENT") is
entered into as of the ___ day of ___________, 199_, by and between Columbia
Federal Savings Bank, a savings bank chartered under the laws of the United
States (hereinafter referred to as the "EMPLOYER"), and __________________, an
individual (hereinafter referred to as the "EMPLOYEE");
WITNESSETH:
WHEREAS, the EMPLOYEE is currently employed as a Vice President of the
EMPLOYER;
WHEREAS, as a result of the skill, knowledge and experience of the
EMPLOYEE, the Board of Directors of the EMPLOYER desires to retain the services
of the EMPLOYEE as a Vice President of the EMPLOYER;
WHEREAS, the EMPLOYEE desires to continue to serve as a Vice President of
the EMPLOYER; and
WHEREAS, the EMPLOYEE and the EMPLOYER desire to enter into this AGREEMENT
to set forth their understanding as to their respective rights and obligations
in the event of the termination of EMPLOYEE's employment under the
circumstances set forth in this AGREEMENT.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the EMPLOYER and the EMPLOYEE hereby agree as follows:
1. Employment and Term.
(a) Term. This AGREEMENT shall commence on the effective date of the
EMPLOYER's conversion from mutual to stock form and shall end thirty-six
(36) months thereafter, subject to extension pursuant to subsection (b)
of this Section 1 (hereinafter, including any such extensions, referred
to as the "TERM"), and to earlier termination as provided herein.
(b) Extension. Prior to each anniversary of the date of this AGREEMENT,
the Board of Directors of the EMPLOYER shall review this AGREEMENT and
document its approval of this AGREEMENT in the minutes of the Board of
Directors. In connection with such annual review, the TERM shall be
extended for a one-year period beyond the then-effective expiration date,
provided the Board of Directors of the EMPLOYER determines in a duly
adopted resolution that this AGREEMENT should be extended. Any such
extension shall be subject to the written consent of the EMPLOYEE.
<PAGE> 2
2. Termination of Employment.
(a) Termination for JUST CAUSE. In the event that the EMPLOYER
terminates the employment of the EMPLOYEE before the expiration of 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 (other than traffic violations or similar offenses) or final
cease-and-desist order, 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 a CHANGE OF CONTROL.
(i) In the event that in connection with a CHANGE OF CONTROL
(hereinafter defined), including, without limitation, a
termination other than for JUST CAUSE within six months prior to a
CHANGE OF CONTROL, or within one year after a CHANGE OF CONTROL
the employment of the EMPLOYEE is terminated by the EMPLOYER for
any reason other than JUST CAUSE before the expiration of the
TERM, then the following shall occur:
(A) The EMPLOYER shall promptly pay to the EMPLOYEE or to
his beneficiaries, dependents or estate an amount equal to
the product of three multiplied by the amount of his then
current annual salary;
(B) The EMPLOYEE, his dependents, beneficiaries and estate
shall continue to be covered under all BENEFIT PLANS in
which the EMPLOYEE is a participant immediately prior to
the CHANGE OF CONTROL of the EMPLOYER at the EMPLOYER's
expense as if the EMPLOYEE were still employed under this
AGREEMENT until the earliest 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
(C) 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
EMPLOYER hereunder, except as specifically stated in
subparagraph (B).
(ii) The EMPLOYEE may voluntarily terminate his employment
pursuant to this AGREEMENT within twelve months following a CHANGE
OF CONTROL and shall be entitled to compensation as set forth in
Section 2(b)(i) of this AGREEMENT in the event that:
(A) the present capacity or circumstances in which the
EMPLOYEE is employed are materially changed (including,
without limitation, a material reduction in
responsibilities or authority, or the assignment of duties
or
<PAGE> 3
responsibilities substantially inconsistent with those
normally associated with the position of Vice President);
(B) the EMPLOYEE is no longer a Vice President of the
EMPLOYER;
(C) the EMPLOYEE is required to move his personal
residence, or 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
(D) the EMPLOYER otherwise breaches this AGREEMENT in any
material respect.
In the event that payments pursuant to this subsection (b) would result
in the imposition of a penalty tax pursuant to 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"), such payments shall be reduced to the maximum amount which may be
paid under SECTION 280G without exceeding such limits. Payments pursuant
to this subsection (b) also may not exceed applicable limits established
by the Office of Thrift Supervision (hereinafter referred to as the
"OTS"). In the event a reduction in payments is necessary in order to
comply with the requirements of this AGREEMENT relating to the
limitations of SECTION 280G or applicable OTS limits, the EMPLOYEE may
determine, in his sole discretion, which categories of payments are to be
reduced or eliminated.
(c) Death of the EMPLOYEE. The TERM shall automatically terminate upon
the death of the EMPLOYEE. In the event of such death, 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.
(d) "Golden Parachute" Provision. Any payments made to the EMPLOYEE
pursuant to this AGREEMENT or otherwise are subject to and conditioned
upon their compliance with 12 U.S.C. Section 1828(k) and any regulations
promulgated thereunder.
(e) 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 EMPLOYER or
Columbia Financial of Kentucky, Inc.; (ii) the acquisition of the ability
to control the election of a majority of the directors of the EMPLOYER or
Columbia Financial of Kentucky, Inc.; (iii) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the EMPLOYER or Columbia Financial
of Kentucky, Inc., 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 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; or (iv) the acquisition by any person or entity of "conclusive
control" of the EMPLOYER 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. Section 574.4(c). For
purposes of this paragraph, the term
<PAGE> 4
"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.
(f) Legal Fees. EMPLOYER shall promptly pay all legal fees and expenses
which EMPLOYEE may incur as a result of EMPLOYEE or EMPLOYER contesting
the validity or enforceability of this AGREEMENT if a court of competent
jurisdiction renders a final decision in favor of EMPLOYEE with respect
to any such contest, or to the extent agreed to by EMPLOYER and EMPLOYEE
in an agreement of settlement with respect to any such contest.
3. Special Regulatory Events. Notwithstanding Section 2 of this
AGREEMENT, the obligations of the EMPLOYER 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 EMPLOYER's affairs by a notice served
under Section 8(e) (3) or (g) (1) of the Federal Deposit Insurance Act
(hereinafter referred to as the "FDIA"), the EMPLOYER'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 EMPLOYER shall (i) pay the EMPLOYEE all of the
compensation withheld while the obligations in this AGREEMENT were
suspended and (ii) reinstate any of the obligations that were suspended.
(b) If the EMPLOYEE is removed and/or permanently prohibited from
participating in the conduct of the EMPLOYER's affairs by an order issued
under Section 8(e) (4) or (g) (1) of the FDIA, all obligations of the
EMPLOYER 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 EMPLOYER 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 EMPLOYER, (i) by the
Director of the OTS, or his or his designee at the time that the Federal
Deposit Insurance Corporation enters into an agreement to provide
assistance to or on behalf of the EMPLOYER under the authority contained
in Section 13(c) of the FDIA or (ii) by the Director of the OTS, or his
or his designee, at any time the Director of the OTS, or his or his
designee, approves a supervisory merger to resolve problems related to
the operation of the EMPLOYER or when the EMPLOYER is determined by the
Director of the OTS to be in an unsafe or unsound condition. No vested
rights of the EMPLOYEE shall be affected by any such action.
4. Consolidation, Merger or Sale of Assets. Nothing in this AGREEMENT
shall preclude the EMPLOYER from consolidating with, merging into, or
transferring all, or substantially all, of its assets to another corporation
that assumes all of the EMPLOYER's obligations and undertakings
<PAGE> 5
hereunder. Upon such a consolidation, merger or transfer of assets, the term
"EMPLOYER," as used herein, shall mean such other corporation or entity, and
this AGREEMENT shall continue in full force and effect.
5. Confidential Information. The EMPLOYEE acknowledges that during his
employment he will learn and have access to confidential information regarding
the EMPLOYER 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
EMPLOYER consents to such disclosure or use or such information becomes common
knowledge in the industry or 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 EMPLOYER, its parent, 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
EMPLOYER. The EMPLOYEE shall not otherwise knowingly act or conduct himself
(a) to the material detriment of the EMPLOYER, its subsidiaries, or affiliates,
or (b) in a manner which is inimical or contrary to the interests of the
EMPLOYER.
6. Nonassignability. Neither this AGREEMENT nor any right or interest
hereunder shall be assignable by the EMPLOYEE, his beneficiaries or his legal
representatives without the EMPLOYER's prior written consent; provided,
however, that nothing in this Section 6 shall preclude (a) the EMPLOYEE from
designating a beneficiary to receive any benefits payable hereunder upon his
death, or (b) 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.
<PAGE> 6
7. 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.
8. Binding Agreement. This AGREEMENT shall be binding upon, and inure to
the benefit of, the EMPLOYEE and the EMPLOYER and their respective permitted
successors and assigns.
9. Amendment of AGREEMENT. This AGREEMENT may not be modified or amended,
except by an instrument in writing signed by the parties hereto.
10. 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.
11. 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.
12. 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.
13. Governing Law; Regulatory Authority. This AGREEMENT has been executed
and delivered in the Commonwealth of Kentucky and its validity, interpretation,
performance and enforcement shall be governed by the laws of the Commonwealth
of Kentucky, except to the extent that federal law is governing. References to
the OTS included herein shall include any successor primary federal regulatory
authority of the EMPLOYER.
14. Effect of Prior Agreements. This AGREEMENT contains the entire
understanding between the parties hereto and supersedes any prior employment
agreement between the EMPLOYER or any predecessor of the EMPLOYER and the
EMPLOYEE.
<PAGE> 7
15. 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 EMPLOYER:
Columbia Federal Savings Bank
2497 Dixie Highway
Fort Mitchell, Kentucky 41017-3085
Attention: President
If to the EMPLOYEE:
_____________________
_____________________
_____________________
IN WITNESS WHEREOF, the EMPLOYER 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: COLUMBIA FEDERAL SAVINGS BANK
________________________________ By_________________________________
Attest:
________________________________ ___________________________________
<PAGE> 1
EXHIBIT 10.5
TAX ALLOCATION AGREEMENT
This Tax Allocation Agreement (the "Agreement") is made between Columbia
Financial of Kentucky, Inc., a savings and loan holding company incorporated
under the laws of the State of Ohio ("CFKY"), and Columbia Federal Savings
Bank, a savings bank chartered under the laws of the United States ("Columbia
Federal").
WHEREAS, CFKY owns all of the issued and outstanding shares of capital
stock of Columbia Federal;
WHEREAS, Columbia Federal has become a member of an affiliated group (the
"Group") within the meaning of Section 1504(a) of the Internal Revenue Code of
1986, as amended (the "Code"), of which CFKY is the common parent corporation;
WHEREAS, CFKY proposes to include Columbia Federal in filing consolidated
federal income tax returns for its tax years; and
WHEREAS, CFKY and Columbia Federal have considered that Columbia Federal
should be liable to CFKY for taxes as if Columbia Federal filed a separate tax
return and desire to formalize the method for allocating the consolidated tax
liability of the Group among its members and establish the procedure for future
payments to CFKY of such tax liability attributable to members of the Group
other than CFKY;
NOW, THEREFORE, CFKY and Columbia Federal agree as follows:
1. Consolidated Return Election.
If at any time and from time to time CFKY is required to file a
consolidated federal tax return with Columbia Federal or is permitted to
do so and so elects, Columbia Federal will join in the filing of such
consolidated federal income tax return for any taxable period for which
the Group is required or permitted to file such a return under the rules
of Section 1502-1552 of the Code and the Treasury regulations promulgated
thereunder. Columbia Federal agrees to file such consents, elections,
and other required documents and take such other action as may be
necessary or appropriate to carry out the purpose of this Section 1. Any
period for which Columbia Federal is included in a consolidated federal
income tax return filed by CFKY is referred to in this Agreement as a
"Consolidated Return Year."
2. Columbia Federal Liability to CFKY for Consolidated Return
Years.
(a) For each Consolidated Return Year, Columbia Federal shall
compute the amount which would have been its tax liability for such
period as though Columbia Federal filed a separate return for such
Consolidated Return Year. The separate return of Columbia Federal shall
mean a return for Columbia Federal consolidated with its
<PAGE> 2
subsidiaries includable in a consolidated return, unless (if such
consolidation is not otherwise required) CFKY and Columbia Federal
mutually agree that for any Consolidated Return Year the separate return
shall mean an unconsolidated, Columbia Federal-only return or any other
permissible return.
(b) Columbia Federal shall pay to CFKY, as provided in Section 4
below, the amount computed pursuant to paragraph (a) of this Section.
(c) Notwithstanding any provision of this Agreement to the contrary,
at no time shall Columbia Federal pay or become obligated to pay to CFKY
deferred income taxes and at no time shall CFKY forgive any portion of
Columbia Federal's deferred tax liability.
3. Tax Benefits of Columbia Federal
To the extent that a taxable loss, tax credit or other tax attribute
("Tax Attribute") is incurred by Columbia Federal for a Consolidated
Return Year, as computed pursuant to paragraph (a) of Section 2, and to
the extent a tax benefit arising from such Tax Attribute could be
achieved by Columbia Federal if it filed a separate return, CFKY shall
pay to Columbia Federal the amount of such tax benefit. CFKY shall pay
the benefit as provided in Section 4 below as if the benefit could be
achieved in the current Consolidated Return Year. Notwithstanding the
above, CFKY is not obligated to pay benefits to Columbia Federal which
Columbia Federal can obtain directly from the Internal Revenue Service
(the "Service").
4. Payments
(a) Prior to the end of any Consolidated Return Year, Columbia
Federal shall advance to CFKY, at the approximate time estimated federal
income taxes are to be submitted, the amount of such estimated tax for
any such Consolidated Return Year period attributable to Columbia Federal
as computed in accordance with Section 2 of this Agreement. The payment
of the amount of such estimated tax to CFKY by Columbia Federal shall not
be made significantly prior to the payment date on which CFKY's
consolidated federal tax liability is required to be paid.
(b) After the end of any Consolidated Return Year, Columbia Federal
shall pay to CFKY, at the approximate time federal income taxes are to be
submitted: (i) the amount of tax for such Consolidated Return Year
attributable to Columbia Federal as computed in accordance with Section 2
of this Agreement minus (ii) the amount of any estimated tax payments for
such Consolidated Return Year previously advanced to CFKY pursuant to
paragraph (a) of this Section. If the amount of estimated payments or
advances (i.e., (ii) above) is greater than the tax obligations of
Columbia Federal (i.e., (i) above), then CFKY shall pay the amount of
such excess of estimated payments over actual obligation to Columbia
Federal as soon as reasonably determined and possible after the end of
the Consolidated Return Year.
<PAGE> 3
(c) For tax benefits of Columbia Federal governed by Section 3 of
this Agreement, CFKY shall make advances or payments for estimated tax
benefits to Columbia Federal in the same manner and at the same time as
Columbia Federal would make advances or payments to CFKY for tax
liability under paragraphs (a) and (b) above, and Columbia Federal shall
repay to CFKY any excess of such advances for estimated tax benefits paid
to it by CFKY over the amount of the tax benefit for the Consolidated
Return Year in the manner and at the same time as CFKY would make
repayments to Columbia Federal for excess estimated advances under
paragraph (b) above.
(d) CFKY shall confirm to Columbia Federal the payment of taxes and
estimated taxes to the Service within five days after such payment is
made.
5. Tax Adjustments.
In the event of any adjustment to the tax returns of CFKY and
Columbia Federal as filed (by reason of an amended return, claim for
refund, or an audit by the Service), the liability of CFKY and Columbia
Federal under Sections 2, 3, and 4 shall be redetermined to give effect
to any such adjustment as if it had been made as part of the original
computation of tax liability, and payments between CFKY and Columbia
Federal shall be made at the approximate time such payments are made to,
or refunds are received from, the Service.
6. State and Local Taxes.
To the extent required by applicable state law or permitted thereby
and so elected by CFKY, Columbia Federal will also join in the filing of
any state or local consolidated income tax return of CFKY in the same
manner as for a federal income tax return pursuant to Section 1 and, in
such case, the state and local income tax liability shall be allocated
and payments made between CFKY and Columbia Federal in accordance with
the rules provided in this Agreement with regard to federal income taxes.
7. Liability to the Service or State Authorities.
This Agreement does not affect the liability of any party under the
applicable provisions of the Code or state law; it merely allocates how
the members of the Group share among the Group such tax liabilities and
benefits. To the extent Columbia Federal has made tax or estimated tax
payments to CFKY, CFKY is obligated to Columbia Federal to pay to the
Service the tax liability of Columbia Federal.
8. Consolidated Returns Not Filed.
Where a consolidated income tax return of CFKY which includes
Columbia Federal is not filed, Columbia Federal is responsible for the
filing of its individual
<PAGE> 4
income tax returns and payment of related income taxes, CFKY is
responsible for the filing of its own return.
9. Successors.
This Agreement shall be binding on and inure to the benefit of any
successor, by merger, acquisition of assets or otherwise, to any of the
parties hereto to the same extent as if such successor had been an
original party to the Agreement.
10. Termination.
Either party may terminate this Agreement upon thirty days prior
written notice to the other party.
IN WITNESS WHEREOF, CFKY and Columbia Federal have executed this
Agreement by the authorized officers thereof as of _________________, 199_.
Columbia Financial of Kentucky, Inc.
By:_______________________________
Robert V. Lynch,
its President
Columbia Federal Savings Bank
By:_______________________________
Robert V. Lynch,
its President
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
- ---- ---------------
<S> <C>
Columbia Federal Savings Bank United States
</TABLE>
<PAGE> 1
EXHIBIT 23.1
VonLehman and Company Inc.
Certified Public Accountants and Business Advisors
250 Grandview Drive Suite 300
Fort Mitchell, Kentucky 41017-5610
4221 Malsbary Road Suite 102
Cincinnati, Ohio 45242-5502
December 16, 1997
Columbia Federal Savings Bank
2497 Dixie Highway
Ft. Mitchell, KY 41017-3085
ACCOUNTANTS' CONSENT
We have issued our report dated October 30, 1997, accompanying the financial
statements of Columbia Federal Savings Bank as of September 30, 1997, 1996 and
1995, and for the years ended September 30, 1997, 1996 and 1995, included in
the Form AC, Form OC and Form S-1 to be filed with the Office of Thrift
Supervision and Securities and Exchange Commission on or about December 17,
1997. We consent to the use of our report; to the statements with respect to
our firm appearing under the heading "Legal Matters" in the Prospectus which is
included in the Form S-1; to the reference to our firm name under the heading
"Principal Effects of the Conversion" in the Prospectus which is included in
the Form S-1; to the reference to our firm name under the heading "Experts" in
the Prospectus which is included in the Form S-1; and to the filing of our
opinion regarding state tax matters, included as Exhibit 8.2 to the Form S-1.
/s/ VonLehman & Company Inc.
<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 16, 1997
Re: Valuation Appraisal of Columbia Financial of Kentucky, Inc.
Columbia Federal Savings Bank
Fort Mitchell, Kentucky
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 Columbia Federal 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 Columbia Financial
of Kentucky, Inc. 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 Columbia
Federal Savings Bank, Fort Mitchell, Kentucky.
Very truly yours,
KELLER & COMPANY, INC.
By: /s/ Michael R. Keller
-----------------------
Michael R. Keller
President
<PAGE> 1
EXHIBIT 23.3
VORYS, SATER, SEYMOUR AND PEASE
221 East Fourth Street, Suite 2100
Atrium II
P.O. Box 0236
Cincinnati, OH 45201-0236
(513) 723-4000
(513) 723-4056 (Fax)
CONSENT
Board of Directors
Columbia Federal of Kentucky, Inc.
2497 Dixie Highway
Ft. Mitchell, Kentucky, 41017-3085
Ladies and Gentlemen:
We hereby consent to the use of our firm's name in the Registration
Statement on Form S-1 (the "Form S-1") filed by Columbia Financial of Kentucky,
Inc. ("CFKY"), to register 2,671,450 common shares, without par value, of CFKY;
to the statements with respect to our firm appearing under the heading "Legal
Matters" in the Prospectus which is included in the Form S-1; to the reference
to our firm name under the heading "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 8.1 to the Form S-1.
Very truly yours,
/s/ VORYS, SATER, SEYMOUR AND PEASE
Cincinnati, Ohio
December 16, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 612
<INT-BEARING-DEPOSITS> 6,215
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,003
<INVESTMENTS-CARRYING> 30,931
<INVESTMENTS-MARKET> 30,961
<LOANS> 61,878
<ALLOWANCE> 300
<TOTAL-ASSETS> 104,006
<DEPOSITS> 90,195
<SHORT-TERM> 0
<LIABILITIES-OTHER> 720
<LONG-TERM> 0
<COMMON> 0
0
0
<OTHER-SE> 13,091
<TOTAL-LIABILITIES-AND-EQUITY> 104,006
<INTEREST-LOAN> 5,802
<INTEREST-INVEST> 1,997
<INTEREST-OTHER> 197
<INTEREST-TOTAL> 7,996
<INTEREST-DEPOSIT> 4,426
<INTEREST-EXPENSE> 4,451
<INTEREST-INCOME-NET> 3,545
<LOAN-LOSSES> 113
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,667
<INCOME-PRETAX> 853
<INCOME-PRE-EXTRAORDINARY> 853
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 553
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 7.81
<LOANS-NON> 0
<LOANS-PAST> 601
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 189
<CHARGE-OFFS> 2
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 300
<ALLOWANCE-DOMESTIC> 300
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
COLUMBIA FEDERAL SAVINGS BANK
2497 DIXIE HIGHWAY
FT. MITCHELL, KENTUCKY 41017-3085
(606) 331-2419
NOTICE OF SPECIAL MEETING OF MEMBERS
Notice is hereby given that a Special Meeting of Members of Columbia
Federal Savings Bank ("Columbia Federal") will be held at
_______________________________________________________________________, on
__________, 1998, at ____ _.m., Eastern 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 Amended Plan
of Conversion (the "Plan"), a copy of which is attached hereto as Exhibit
A, pursuant to which Columbia Federal would convert from a mutual savings
bank chartered under the laws of the United States to a permanent capital
stock savings bank chartered under the laws of the United States (the
"Conversion") and become a wholly-owned subsidiary of Columbia Financial
of Kentucky, Inc., an Ohio corporation organized for the purpose of
purchasing all of the capital stock to be issued by Columbia Federal in
the Conversion;
2. To consider and act upon a resolution to adopt the Federal Stock
Charter of Columbia Federal, a copy of which is attached to the Plan as
Exhibit I;
3. To consider and act upon a resolution to adopt the Federal Stock
Bylaws of Columbia Federal, 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 Columbia Federal who have a deposit account with
Columbia Federal at the close of business on ________, 1998 (the "Voting Record
Date"), and borrowers of record on the Voting Record Date whose loans were in
existence on December 16, 1995, are members of Columbia Federal 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 COLUMBIA
FEDERAL IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE AS SOON AS POSSIBLE TO
ASSURE THAT YOUR VOTE(S) WILL BE COUNTED.
By Order of the Board of Directors
Ft. Mitchell, Kentucky
___________, 1998 Robert V. Lynch, President
<PAGE> 2
COLUMBIA FEDERAL SAVINGS BANK
2497 DIXIE HIGHWAY
FT. MITCHELL, KENTUCKY 41017-3085
(606) 331-2419
SUMMARY PROXY STATEMENT
INTRODUCTION
The enclosed proxy (the "Proxy") is being solicited by the Board of
Directors of Columbia Federal Savings Bank ("Columbia Federal") for use at the
special meeting of members of Columbia Federal to be held at
_______________________________________________________, on _____________,
1998, at ____ _.m., Eastern 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 Amended Plan
of Conversion (the "Plan"), a copy of which is attached hereto as Exhibit
A, pursuant to which Columbia Federal would convert from a mutual savings
bank chartered under the laws of the United States to a permanent capital
stock savings bank chartered under the laws of the United States (the
"Conversion") and become a wholly-owned subsidiary of Columbia Financial
of Kentucky, Inc. ("CFKY"), an Ohio corporation organized for the purpose
of purchasing all of the capital stock to be issued by Columbia Federal in
the Conversion;
2. To consider and act upon a resolution to adopt the Federal Stock
Charter of Columbia Federal, a copy of which is attached to the Plan as
Exhibit I;
3. To consider and act upon a resolution to adopt the Federal Stock
Bylaws of Columbia Federal, 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 Columbia Federal has unanimously adopted the
Plan. The Plan has also been approved by the United States Department of the
Treasury, Office of Thrift Supervision (the "OTS"), subject to the approval of
the Plan by the members of Columbia Federal at the Special Meeting and the
satisfaction of certain other conditions.
Pursuant to the Plan, Columbia Federal will become a wholly-owned
subsidiary of CFKY, a corporation which was incorporated under Ohio law for the
purpose of acquiring all of the capital stock to be issued by Columbia Federal
in connection with the Conversion. See "THE BUSINESS OF CFKY." CFKY will
conduct a subscription offering (the "Subscription Offering") in which up to
2,323,000 common shares, no par value, of CFKY (the "Common Shares") will be
offered to subscribers in the following priority categories:
(i) Eligible depositors of Columbia Federal as of September 30, 1996
("Eligible Account Holders");
(ii) The Columbia Financial of Kentucky, Inc., Employee Stock
Ownership Plan (the "ESOP");
(iii) Eligible depositors of Columbia Federal as of December 31, 1997
("Supplemental Eligible Account Holders"); and
(iv) Certain other depositors and borrowers of Columbia Federal.
See "THE CONVERSION - Subscription Offering." Common shares not subscribed for
the Subscription Offering may be offered to the general public in a direct
community offering (the "Community Offering") in the manner established
pursuant to the Plan and described in this Summary Proxy Statement. See "THE
CONVERSION - Community Offering." The offering of the Common Shares is made
only through the Prospectus of CFKY dated ________, 1998, a copy of which is
included with this Summary Proxy Statement (the "Prospectus"). See "ADDITIONAL
INFORMATION."
The aggregate purchase price of the Common Shares to be offered by CFKY
under the Plan is currently estimated to be between $17,170,000 and $23,230,000
(the "Valuation Range"). The total number of Common Shares sold in connection
<PAGE> 3
with the Conversion will be determined in the sole discretion of the Board of
Directors of CFKY if the aggregate value of the Common Shares sold is within
the Valuation Range or does not exceed the maximum of the Valuation Range by
more than 15%. The Valuation Range was determined by reference to an
independent appraisal of Columbia Federal's estimated pro forma market value,
as converted, prepared by Keller & Company, Inc. ("Keller"). See "THE
CONVERSION - Pricing and Number of Common Shares to be Sold."
Upon the consummation of the Conversion, the Federal Stock Charter of
Columbia Federal, a copy of which is attached to the Plan as Exhibit I, and the
Federal Stock Bylaws, a copy of which is attached to the Plan as Exhibit II,
will be the Charter and Bylaws of Columbia Federal as a stock savings and loan
association.
The approval of the Plan will have the effect of (i) terminating the
voting rights of the present members of Columbia Federal and (ii) modifying,
and eventually eliminating, the rights of the present members of Columbia
Federal to receive any surplus in the event of a complete liquidation of
Columbia Federal. 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 CFKY. See "THE CONVERSION - Principal Effects of the
Conversion."
During and upon the completion of the Conversion, Columbia Federal will
continue to provide services to depositors and borrowers pursuant to its
current policies at its existing offices. In addition, Columbia Federal will
continue to be a member of the Federal Home Loan Bank (the "FHLB") system, and
savings accounts at Columbia Federal will continue to be insured up to
applicable limits by the Savings Association Insurance Fund (the "SAIF")
administered by the Federal Deposit Insurance Corporation (the "FDIC").
This Summary Proxy Statement is dated _____________, 1998, and is first
being mailed to members of Columbia Federal on or about _____________, 1998.
VOTING RIGHTS AND VOTE REQUIRED FOR APPROVAL
All depositors having a deposit account of record with Columbia Federal on
_________, 1998 (the "Voting Record Date"), and all borrowers having a loan of
record with Columbia Federal on the Voting Record Date whose loans were in
existence on December 16, 1995, are members of Columbia Federal eligible to
vote at the Special Meeting ("Voting Members"). Voting Members who are
depositors will be entitled to cast one vote for each $100, or fraction
thereof, of the withdrawable value of their deposit accounts on the Voting
Record Date; provided, however, that no member shall be entitled to less than
one vote nor more than 1,000 votes.
A deposit 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 Columbia Federal. Voting members who are borrowers will be entitled
to cast one vote for each loan in existence on December 16, 1995, and still
outstanding on the Voting Record Date.
Columbia Federal's 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 majority of the votes
cast at the Special Meeting is necessary to adopt the Federal Stock Charter and
the Federal Stock Bylaws of Columbia Federal.
Columbia Federal, as the trustee of the Individual Retirement Accounts
("IRAs") at Columbia Federal, is empowered to vote at the Special Meeting all
votes eligible to be cast with respect to each IRA. The Board of Directors has
indicated that it intends to cast all of the votes under IRAs in favor of the
approval of the Plan, unless contrary instructions are received from IRA
holders. IRA holders who wish to give such instructions may do so by returning
the enclosed Proxy.
<PAGE> 4
PROXIES
Voting Members may vote in person or by proxy at the Special Meeting. For
Voting Members wishing to vote in person, ballots will be distributed 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 Columbia Federal will not be
used by Columbia Federal 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 Federal Stock Charter and FOR the adoption of the Federal Stock
Bylaws. Without affecting any vote previously taken, a Voting Member may
revoke a Proxy at any time before such proxy is exercised by executing a later
dated proxy or by giving Columbia Federal 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
Columbia Federal in person or by telephone, telegraph, telecopy 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
Columbia Federal.
MANAGEMENT'S RECOMMENDATIONS AND REASONS FOR CONVERSION
THE BOARD OF DIRECTORS RECOMMENDS THAT MEMBERS VOTE FOR THE APPROVAL OF
THE PLAN, FOR THE ADOPTION OF THE FEDERAL STOCK CHARTER AND FOR THE ADOPTION OF
THE FEDERAL STOCK BYLAWS.
In unanimously adopting the Plan, the Board of Directors determined that
Columbia Federal will derive substantial benefits from the Conversion and that
the Conversion is in the best interests of Columbia Federal, its members and
the public. The principal factors considered by Columbia Federal's Board of
Directors in reaching the decision to pursue a mutual-to-stock conversion are
the numerous competitive disadvantages which Columbia Federal faces if it
continues in mutual form. These disadvantages relate to a variety of factors,
including growth opportunities, employee retention and regulatory uncertainty.
If Columbia Federal is to grow and continue to prosper, the mutual form of
organization is the least desirable form from a competitive standpoint.
Although Columbia Federal does not have any specific acquisitions planned at
this time, the Conversion will position Columbia Federal to take advantage of
any acquisition opportunities which may present themselves. Because a
conversion to stock form is a time-consuming and complex process, Columbia
Federal cannot wait until an acquisition is imminent to embark on the
conversion process.
As an increasing number of Columbia Federal's competitors convert to stock
form and can use stock based compensation programs, Columbia Federal, as a
mutual, is at a disadvantage when it comes to attracting and retaining
qualified management. Columbia Federal believes that the ESOP for all
employees and the Columbia Financial of Kentucky, Inc., 1998 Stock Option and
Incentive Plan (the "Stock Option Plan") and the Columbia Financial of
Kentucky, Inc., Recognition and Retention Plan (the "RRP") for directors and
management are important tools, even though Columbia Federal will be required
to wait until after the Conversion to implement the Stock Option Plan and the
RRP.
Another benefit of the Conversion will be an increase in capital.
Notwithstanding Columbia Federal's current capital position, the importance of
higher levels of capital cannot be ignored. As has been amply demonstrated in
the past, changing accounting principles, interest rate shifts and changing
regulations can threaten even well-capitalized institutions. As a mutual
institution, Columbia Federal can increase capital only through retained
earnings or the issuance of subordinated debentures, which do not count as Tier
I capital for regulatory capital purposes. Capital that may seem unnecessary
now may support future growth and help Columbia Federal withstand future
threats to its capital.
In view of the competitive disadvantages and the ongoing debate about the
future of mutual institutions in the wake of regulatory consolidation and other
forces, Columbia Federal is choosing to reject the uncertainty inherent in the
mutual structure in favor of the more widely used, recognized and understood
stock form of ownership.
The Conversion will also give members of Columbia Federal, at their
option, the opportunity to become shareholders of CFKY. No member of Columbia
Federal will be obligated to subscribe or not to subscribe to common shares of
CFKY (the "Common Shares") by voting on the Plan, nor will any member's deposit
account be converted into
<PAGE> 5
Common Shares by such vote. After completion of the Conversion, Columbia
Federal 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.
Upon the consummation of the Conversion, the Federal Stock Charter of
Columbia Federal, a copy of which is attached to the Plan as Exhibit I, and the
Federal Stock Bylaws of Columbia Federal, a copy of which is attached to the
Plan as Exhibit II, will be the Charter and Bylaws of Columbia Federal as a
stock savings bank.
THE BUSINESS OF CFKY
CFKY was incorporated under Ohio law in 1997 at the direction of Columbia
Federal for the purpose of serving as a holding company for Columbia Federal.
CFKY 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, CFKY will be a unitary savings and loan holding
company, the principal assets of which initially will be the capital stock of
Columbia Federal and the investments made with the proceeds retained by CFKY
from the sale of the Common Shares in connection with the Conversion. See "USE
OF PROCEEDS."
The main office of CFKY is located at 2497 Dixie Highway, Ft. Mitchell,
Kentucky 41017-3085, and its telephone number is (606) 331-2419 .
THE BUSINESS OF COLUMBIA FEDERAL
GENERAL
Columbia Federal is principally engaged in the business of making
permanent first and second mortgage loans secured by one- to four-family
residential real estate located in Columbia Federal's primary lending area and
investing in U.S. Government and agency obligations, interest-bearing deposits
in other financial institutions and mortgage-backed securities. Columbia
Federal also originates loans for the construction of residential real estate
and loans secured by multifamily real estate (over four units) and
nonresidential real estate. The origination of consumer loans, including loans
secured by deposits and home improvement loans, constitutes a small portion of
Columbia Federal's lending activities. Loan funds are obtained primarily from
deposits, which are insured up to applicable limits by the FDIC, and loan and
mortgage-backed securities repayments.
Interest on loans, mortgage-backed securities and investments is Columbia
Federal's primary source of income. Columbia Federal's principal expense is
interest paid on deposit accounts. Operating results are dependent to a
significant degree on the net interest income of Columbia Federal, which is the
difference between interest earned on loans, mortgage-backed securities and
other investments and interest paid on deposits. Like most thrift
institutions, Columbia Federal's interest income and interest expense are
significantly affected by general economic conditions and by the policies of
various regulatory authorities.
Columbia Federal conducts business from its main office located in Ft.
Mitchell, Kentucky, a branch office in each of the municipalities of Covington,
Crescent Springs and Erlanger, which are located in Kenton County, Kentucky,
and a branch office in Florence, which is located in Boone County, Kentucky.
Columbia Federal's primary market area consists of Boone County and Kenton
County, Kentucky.
For a more detailed discussion of Columbia Federal's business and its
operating strategy, see "THE BUSINESS OF COLUMBIA FEDERAL," "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and
"RISK FACTORS" in the Prospectus.
<PAGE> 6
THE CONVERSION
THE OTS HAS APPROVED THE PLAN, SUBJECT TO THE APPROVAL OF THE PLAN BY THE
MEMBERS OF COLUMBIA FEDERAL ENTITLED TO VOTE ON THE PLAN AND SUBJECT TO THE
SATISFACTION OF CERTAIN OTHER CONDITIONS IMPOSED BY THE OTS. OTS APPROVAL DOES
NOT CONSTITUTE A RECOMMENDATION OR ENDORSEMENT OF THE PLAN.
GENERAL
On October 9, 1997, the Board of Directors of Columbia Federal unanimously
adopted a Plan of Conversion, which it amended on December 11, 1997. The Board
of Directors recommends that the voting members of Columbia Federal approve the
Plan at the Special Meeting to be held on _______________, 1998. During and
upon completion of the Conversion, Columbia Federal 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 1,717,000 and 2,323,000
Common Shares are expected to be offered in the Subscription Offering and the
Community Offering. In the Community Offering, preference will be given to
natural persons residing in Boone County and Kenton County, Kentucky, at a
price of $10 per share. 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 actual number of shares sold in connection with the
Conversion will be determined based upon the final determination of the pro
forma market value of Columbia Federal at the completion of the Subscription
Offering and the Community Offering. See "Pricing and Number of Common Shares
to be Sold."
The Common Shares will be offered in the Subscription Offering to (1)
Eligible Account Holders, (2) the ESOP, (3) Supplemental Eligible Account
Holders and (4) Voting Members. Any Common Shares not subscribed for in the
Subscription Offering may be sold 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
either Boone County or Kenton County, Kentucky. Under OTS regulations, the
Community Offering must be completed within 45 days after completion of the
Subscription Offering, unless such period is extended by Columbia Federal with
the approval of the OTS. If the Community Offering is determined not to be
feasible, an occurrence that is not currently anticipated, the Board of
Directors of Columbia Federal will consult with the OTS to determine an
appropriate alternative method of selling unsubscribed Common Shares. No
alternative sales methods are currently planned.
OTS regulations require the completion of the Conversion within 24 months
after the date of the approval of the Plan by the Voting Members of Columbia
Federal. The completion of the Conversion will be subject to market conditions
and other factors beyond Columbia Federal'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 Columbia Federal. In such circumstances, Columbia Federal may also
incur substantial additional printing, legal and accounting expenses in
completing the Conversion. In the event the Conversion is not successfully
completed, Columbia Federal will be required to charge all Conversion expenses
against current earnings.
PRINCIPAL EFFECTS OF THE CONVERSION
VOTING RIGHTS. Deposit holders who are members of Columbia Federal in its
mutual form will have no voting rights in Columbia Federal as converted and
will not participate, therefore, in the election of directors or otherwise
control Columbia Federal's affairs. After the Conversion, voting rights in
Columbia Federal will be vested exclusively in CFKY as the sole shareholder of
Columbia Federal. Voting rights in CFKY will be held exclusively by its
shareholders. Each holder of CFKY's Common Shares will be entitled to one vote
for each Common Share owned on any matter to be considered by CFKY's
shareholders. See "DESCRIPTION OF AUTHORIZED SHARES."
DEPOSIT ACCOUNTS AND LOANS. Savings accounts in Columbia Federal, as
converted, will be equivalent in amount, interest rate and other terms to the
present savings accounts in Columbia Federal, and the existing FDIC insurance
on 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 Columbia
Federal.
<PAGE> 7
TAX CONSEQUENCES. The consummation of the Conversion is expressly
conditioned on receipt by Columbia Federal 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").
Columbia Federal intends to proceed with the Conversion based upon an opinion
rendered by 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 Columbia Federal in its mutual form or in its stock form as a result of
the Conversion. Columbia Federal in its mutual form and Columbia Federal
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 Columbia Federal upon the
receipt of money from CFKY in exchange for the capital stock of Columbia
Federal, as converted;
(3) The assets of Columbia Federal will have the same basis in its hands
immediately after the Conversion as it had in its hands immediately prior
to the Conversion, and the holding period of the assets of Columbia
Federal after the Conversion will include the period during which the
assets were held by Columbia Federal before the Conversion;
(4) No gain or loss will be recognized to the deposit account holders of
Columbia Federal upon the issuance to them, in exchange for their
respective withdrawable deposit accounts in Columbia Federal immediately
prior to the Conversion, of withdrawable deposit accounts in Columbia
Federal immediately after the Conversion, in the same dollar amount as
their withdrawable deposit accounts in Columbia Federal 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 Columbia Federal, as described below;
(5) The basis of the withdrawable deposit accounts in Columbia Federal
held by its deposit account holders immediately after the Conversion will
be the same as the basis of their deposit accounts in Columbia Federal
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
(hereinafter defined) 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 Columbia
Federal 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, Columbia Federal will be
treated as if there had been no reorganization. The taxable year of
Columbia Federal will not end on the effective date of the Conversion and,
immediately after the Conversion, Columbia Federal in its stock form will
succeed to and take into account the tax attributes of Columbia Federal in
its mutual form immediately prior to the Conversion, including Columbia
Federal's earnings and profits or deficit in earnings and profits;
(9) The bad debt reserves of Columbia Federal in its mutual form
immediately prior to the Conversion will not be required to be restored to
the gross income of Columbia Federal 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 Columbia Federal in its stock
form as they would have had if there had been no Conversion. Columbia
Federal in its stock form will succeed to and take into account the dollar
amounts of those accounts of Columbia Federal in its mutual form which
<PAGE> 8
represent bad debt reserves in respect of which Columbia Federal 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 Columbia Federal 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 Columbia Federal 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.
Columbia Federal 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.
Columbia Federal has also received an opinion from VonLehman & Company
Inc., Ft. Mitchell, Kentucky, to the effect that the tax effects of the
Conversion under Kentucky law are substantially the same as they are under
federal law.
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
Columbia Federal in its present mutual form, each depositor in Columbia Federal
would receive a pro rata share of any assets of Columbia Federal 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 Columbia Federal at the time of
liquidation.
In the event of a complete liquidation of Columbia Federal in its stock
form after the Conversion, each savings depositor as of September 30, 1996 (the
"Eligibility Record Date"), and December 31, 1997 (the "Supplemental
Eligibility Record Date"), would have a claim of the same general priority as
the claims of all other general creditors of Columbia Federal. 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. The
depositor would have no interest in the assets of Columbia Federal above that
amount. Such assets would be distributed to CFKY as the sole shareholder of
Columbia Federal.
For the purpose of granting a limited priority claim to the assets of
Columbia Federal in the event of a complete liquidation thereof to Eligible
Account Holders and Supplemental Eligible Account Holders who continue to
maintain savings accounts at Columbia Federal after the Conversion, Columbia
Federal will, at the time of Conversion, establish the Liquidation Account in
an amount equal to the regulatory capital of Columbia Federal as of the latest
practicable date prior to the Conversion at which such regulatory capital can
be determined. For this purpose, Columbia Federal shall use the regulatory
capital figure no later than that set forth in its latest statement of
financial condition contained in the Prospectus. The Liquidation Account will
not operate to restrict the use or application of any of the regulatory capital
of Columbia Federal.
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, as the case may be.
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 any annual closing date of Columbia Federal 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 Eligibility Record Date or 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 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
<PAGE> 9
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 converted Columbia Federal
(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 CFKY as the sole
shareholder of Columbia Federal. Any assets remaining after satisfaction of
such liquidation rights and the claims of Columbia Federal's creditors would be
distributed to CFKY as the sole shareholder of Columbia Federal. No merger,
consolidation, purchase of bulk assets or similar combination or transaction
with another 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
The Boards of Directors of Columbia Federal and CFKY will interpret the
Plan. To the extent permitted by law, all interpretations of the Plan by the
Boards of Directors of Columbia Federal and CFKY will be final. The Plan may
be amended by the Boards of Directors of Columbia Federal and CFKY at any time
before completion of the Conversion with the concurrence of the OTS. If
Columbia Federal and CFKY determine upon advice of counsel and after
consultation with the OTS 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 or
her funds promptly refunded with interest. Any person who elects to decrease
his subscription will have the appropriate portion of his or her funds promptly
refunded with interest.
CONDITIONS AND TERMINATION
The completion of the Conversion requires the approval of the Plan and the
adoption of the Federal Stock Charter and Federal Stock Bylaws by the Voting
Members of Columbia Federal at the Special Meeting and 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 Columbia Federal 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.
SUBSCRIPTION OFFERING
THE SUBSCRIPTION OFFERING WILL EXPIRE AT ___ _.M., EASTERN TIME, ON THE
SUBSCRIPTION EXPIRATION DATE. SUBSCRIPTION RIGHTS NOT EXERCISED BEFORE THE
SUBSCRIPTION EXPIRATION DATE WILL BE VOID, WHETHER OR NOT CFKY 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 shares must
represent to CFKY that the subscriber is purchasing such shares for the
subscriber's own account and that the subscriber 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 such 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 Columbia Federal at the Special Meeting.
The preference categories for the allocation of Common Shares, which have
been established by the Plan in accordance with applicable regulations, are as
follows:
<PAGE> 10
Category 1. Eligible Account Holders will receive, without payment,
nontransferable subscription rights to purchase up to the greater of (i)
the number of Common Shares permitted to be purchased in the Community
Offering, (ii) .10% of the total number of Common Shares sold in
connection with the Conversion, or (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 of
which the numerator 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. See "Limitations on Purchases of Common
Shares."
If the exercise of subscription rights in this Category 1 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 lesser. 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. No fractional shares will be
issued. The subscription rights of the Eligible Account Holders are
subordinate to the limited priority right of the ESOP set forth in the
following paragraph.
Category 2. The ESOP will receive, without payment, nontransferable
subscription rights to purchase up to 10% of the Common Shares sold in
connection with the Conversion. The subscription rights of the ESOP will be
subordinate to the subscription rights in Category 1, except that if the
final pro forma market value of Columbia Federal exceeds the maximum of the
Valuation Range, the ESOP shall have first priority with respect to the
amount sold in excess of the maximum of the Valuation Range. If the ESOP
is unable to purchase all or part of the Common Shares for which it
subscribes due to an oversubscription in Category 1, the ESOP may purchase
Common Shares on the open market or may purchase authorized but unissued
shares of CFKY. If the ESOP purchases authorized but unissued shares from
CFKY, such purchases would have a dilutive effect on the interests of
CFKY's shareholders.
Category 3. Supplemental Eligible Account Holders will receive,
without payment, non-transferable subscription rights to purchase up to the
greater of (i) the number of Common Shares permitted to be purchased in the
Community Offering, (ii) .10% of the total number of Common Shares sold in
connection with the Conversion, or (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 of which
the numerator 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. See "Limitations
on Purchases of Common Shares."
If the exercise of subscription rights in this Category 3 results in
an over-subscription, 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 lesser. 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.
Subscription rights received in this Category 3 will be subordinate
to the subscription rights in Categories 1 and 2.
Category 4. All Voting Members who are not Eligible Account Holders
or Supplemental Eligible Account Holders ("Other Eligible Members") will
receive nontransferable subscription rights to purchase Common Shares in an
amount up to the greater of the number permitted to be purchased in the
Community Offering or .10% of the total number of Common Shares sold in
connection with the Conversion, subject to the overall purchase limitations
set forth in Section 10 of the Plan. See "Limitations on Purchases of
Common Shares." In the event of an oversubscription in this Category 4,
the available shares will be allocated among subscribing Other Eligible
Members on an equitable basis in the same proportion that their respective
subscriptions bear to the total amount of all subscriptions in this
Category 4.
<PAGE> 11
Subscription rights received in this Category 4 will be subordinate to the
subscription rights in Categories 1 through 3.
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 sales of the shares subscribed for would be in violation of any
applicable statutes, regulations or rules.
CFKY 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 all of the following apply: (i) a small number of
persons otherwise eligible to subscribe for Common 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 CFKY 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 Columbia Federal and CFKY.
COMMUNITY OFFERING
Concurrently with the Subscription Offering, CFKY is hereby offering
Common Shares in the Community Offering, subject to the limitations set forth
below, to the extent such shares remain available based upon the final
appraisal of Columbia Federal on a pro forma basis and after the satisfaction
of all orders received in the Subscription Offering. If subscriptions are
received in the Subscription Offering for at least 2,323,000 Common Shares,
Common Shares may not be offered in the Community Offering. If subscriptions
for at least 2,323,000 Common Shares have not been received by the Subscription
Expiration Date, CFKY anticipates offering Common Shares in the Community
Offering to the extent such shares remain available after the satisfaction of
all orders received in the Subscription Offering. All sales of Common Shares
in the Community Offering will be at the same price per share as the sales of
Common Shares in the Subscription Offering. THE COMMUNITY OFFERING MAY EXPIRE
AT ANY TIME WHEN ORDERS FOR AT LEAST 2,323,000 COMMON SHARES HAVE BEEN
RECEIVED, BUT IN NO EVENT LATER THAN 45 DAYS AFTER THE SUBSCRIPTION EXPIRATION
DATE, OR ___, 1998, UNLESS EXTENDED BY COLUMBIA FEDERAL AND CFKY WITH THE
APPROVAL OF THE OTS, IF NECESSARY. IN ACCORDANCE WITH THE PLAN, THE OFFERING
MAY NOT BE EXTENDED BEYOND ______, 2000.
In the event shares are available in the Community Offering, members of
the general public may purchase up to 15,000 Common Shares. See "Limitations
on Purchases of Common Shares." If an insufficient number of shares is
available to fill all of the orders received in the Community Offering, the
available shares will be allocated in the Community Offering in a manner to be
determined by the Board of Directors of CFKY, subject to the following:
(i) In the Community Offering, preference will be given to natural persons
who reside in either Boone County or Kenton County, Kentucky, the counties
in which the offices of Columbia Federal are located;
(ii) Orders received in the Community Offering will first be filled up to
a maximum of two percent 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;
(iii) No person, together with any Associate and groups Acting in Concert,
may purchase more than 15,000 Common Shares in the Community Offering; and
(iv) The right of any person to purchase Common Shares in the Community
Offering is subject to the right of CFKY and Columbia Federal to accept or
reject such purchases in whole or in part.
<PAGE> 12
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,
maintained a bona fide residence within, as appropriate, Boone County or Kenton
County, Kentucky, 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 such shares are available, the
minimum number of shares that may be purchased by any party is 25. No
fractional shares will be issued.
Currently, no person, together with Associates (hereinafter defined) and
groups Acting in Concert (hereinafter defined), may purchase more than 30,000
Common Shares. Subject to any required regulatory approval and the
requirements of applicable laws and regulations, but without further approval
of the members of Columbia Federal, purchase limitations may be increased or
decreased at the sole discretion of the Boards of Directors of CFKY and
Columbia Federal at any time. If such amount is increased, 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 CFKY and Columbia Federal may, in their sole discretion, increase
the maximum purchase limitation referred to above up to 10% of the Common
Shares sold in connection with the Conversion, provided that orders for shares
exceeding 5% of the shares to be issued in the Conversion shall not exceed, in
the aggregate, 10% of the shares to be issued in 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 shares
permitted to be subscribed for by such person.
"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 Columbia Federal or CFKY), 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 Columbia Federal or CFKY); or
(c) constituted a group under the beneficial ownership reporting rules under
Section 13 or the proxy rules under Section 14 of the Securities Exchange Act
of 1934 (the "Exchange Act"); or (ii) one person provides credit to the other
for the purchase of Common Shares or is instrumental in obtaining that credit.
Companies (other than Columbia Federal or CFKY), 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 Columbia Federal are not
deemed to be Acting in Concert solely by reason of their membership on the
Board of Directors of Columbia Federal; (ii) an associate of a person (an
"Associate") is (a) any corporation or organization (other than Columbia
Federal) 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 Columbia Federal. Executive officers and directors
of Columbia Federal and their Associates may not purchase, in the aggregate,
more than 33.7% of the total number of Common Shares sold in the Conversion.
Shares acquired by the ESOP will not, pursuant to regulations governing the
Conversion, be aggregated with the shares purchased by the directors, officers
and employees of Columbia Federal.
Purchases of Common Shares are also subject to the change in control
regulations of the OTS. Such regulations 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
<PAGE> 13
Concert. See "RESTRICTIONS ON ACQUISITION OF COLUMBIA FEDERAL AND CFKY AND
RELATED ANTI-TAKEOVER PROVISIONS - Federal Law and Regulation" in the
Prospectus.
After the Conversion, Common Shares, except for shares purchased by
officers and directors of CFKY, will be freely transferable, subject to OTS
regulations. See "Restrictions on Transferability of Common Shares by
Directors and Officers."
PLAN OF DISTRIBUTION
The offering of the Common Shares is made only pursuant to this
Prospectus, which is available to all eligible subscribers by mail. See
"ADDITIONAL INFORMATION." Additional copies are available at the offices of
Columbia Federal. Sales of Common Shares will be made primarily by registered
representatives affiliated with Charles Webb & Company, a division of Keefe,
Bruyette & Woods, Inc. ("Webb"). CFKY will rely on Rule 3a4-1 under 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 CFKY and Columbia Federal to participate in the sale of Common Shares,
except that officers, directors and employees will not participate in the sale
of Common Shares to residents of any state in which such persons have not met
such state's requirements for participation. No officer, director or employee
of CFKY or Columbia Federal 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 CFKY in marketing the Common Shares, CFKY has retained Webb,
which is a broker-dealer registered with the Securities and Exchange Commission
(the "SEC") and a member of the National Association of Securities Dealers,
Inc. (the "NASD"). Webb will consult with and advise CFKY and assist with the
sale of the Common Shares on a best efforts basis in connection with the
Conversion. The services to be rendered by Webb include assisting CFKY in
conducting the Subscription Offering and the Community Offering and educating
Columbia Federal personnel about the Conversion process. Webb has no
obligation to purchase any of the Common Shares.
For its services, Webb will receive a commission equal to 1.50% of the
aggregate purchase price paid for shares sold to residents of Boone County and
Kenton County, Kentucky; 1.25% of the aggregate purchase price of Common Shares
sold to residents of counties contiguous to Boone County or Kenton County,
Kentucky; and 0.75% of the aggregate purchase price of Common Shares sold to
persons not residents of Boone County or Kenton County, Kentucky, or counties
contiguous thereto. No commission will be paid on shares purchased by Columbia
Federal's directors, executive officers or employees or their immediate family
members or the ESOP. In the event that Columbia Federal requests Webb to
obtain the assistance of other broker-dealers ("Selected Dealers") to sell
Common Shares in the Community Offering, Webb will be paid a commission of 5.5%
of the aggregate purchase price of Common Shares sold by Selected Dealers, from
which the Selected Dealers will be paid, instead of the commission based upon
the residence of the purchasers. A management fee of $25,000 has already been
paid to Webb, and such amount will be deducted from the commission. Columbia
Federal will reimburse Webb for all reasonable out-of-pocket expenses,
including legal fees, not to exceed $35,000.
Columbia Federal has agreed to indemnify Webb against certain claims or
liabilities, including certain liabilities under the Securities Act of 1933, as
amended (the "Securities Act").
EFFECT OF EXTENSION OF COMMUNITY OFFERING
If the Community Offering extends beyond 45 days after the Subscription
Expiration Date, persons who have subscribed for Common Shares in the
Subscription Offering or in the Community Offering will receive a written
notice that until a date specified in the notice, they have the right to
increase, decrease or rescind their subscriptions for Common Shares. 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 shall have the appropriate portion of
his funds promptly refunded with interest.
USE OF ORDER FORMS
Subscriptions for Common Shares in the Subscription Offering and the
Community Offering may be made only by completing and submitting an Order Form.
Any person who desires to subscribe for Common Shares in the Subscription
Offering must do so by delivering to CFKY at 2497 Dixie Highway, Ft. Mitchell,
Kentucky 41017-3085, or at any of its branches by mail or in person, prior to
_____.m., Eastern Time, on ______, 1998, a properly executed and completed
original Order Form, together with full payment of the subscription price of
$10.00 for each share for which subscription is made.
<PAGE> 14
Photocopies or telecopies of Order Forms will not be accepted. THE FAILURE TO
DELIVER A PROPERLY EXECUTED ORIGINAL ORDER FORM AND FULL PAYMENT IN A MANNER BY
WHICH THEY ARE ACTUALLY RECEIVED BY CFKY NO LATER THAN ___ _.M. ON THE
SUBSCRIPTION EXPIRATION DATE WILL PRECLUDE THE PURCHASE OF COMMON SHARES IN THE
OFFERING.
AN EXECUTED ORDER FORM, ONCE RECEIVED BY CFKY, MAY NOT BE MODIFIED,
AMENDED OR RESCINDED WITHOUT THE CONSENT OF CFKY, UNLESS (I) THE COMMUNITY
OFFERING IS NOT COMPLETED WITHIN 45 DAYS AFTER THE SUBSCRIPTION EXPIRATION
DATE, OR (II) THE FINAL VALUATION OF COLUMBIA FEDERAL, AS CONVERTED, IS LESS
THAN $17,170,000 OR MORE THAN $26,714,500. IF EITHER OF THOSE EVENTS OCCUR,
PERSONS WHO HAVE SUBSCRIBED FOR COMMON SHARES IN THE SUBSCRIPTION OFFERING OR
IN THE COMMUNITY OFFERING WILL RECEIVE WRITTEN NOTICE THAT UNTIL A DATE
SPECIFIED IN THE NOTICE, THEY HAVE A RIGHT TO AFFIRM, INCREASE, DECREASE OR
RESCIND THEIR SUBSCRIPTIONS. ANY PERSON WHO DOES NOT AFFIRMATIVELY ELECT TO
CONTINUE HIS OR HER SUBSCRIPTION OR ELECTS TO RESCIND HIS OR HER SUBSCRIPTION
DURING ANY SUCH EXTENSION WILL HAVE ALL OF HIS OR HER FUNDS PROMPTLY REFUNDED
WITH INTEREST. ANY PERSON WHO ELECTS TO DECREASE HIS OR HER SUBSCRIPTION
DURING ANY SUCH EXTENSION WILL HAVE THE APPROPRIATE PORTION OF HIS OR HER FUNDS
PROMPTLY REFUNDED WITH INTEREST.
PAYMENT FOR COMMON SHARES
Payment of the subscription price for all Common Shares for which
subscription is made must accompany all completed Order Forms and Forms of
Certification 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 payable to the order of Columbia Federal, or (iii) by
authorization of withdrawal from savings accounts in Columbia Federal (other
than non-self-directed IRAs). Wire transfers will not be accepted. Columbia
Federal cannot lend money or otherwise extend credit to any person to purchase
Common Shares, other than the ESOP.
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. Interest will be paid by Columbia Federal on such accounts at Columbia
Federal's passbook rate, currently ______% annual percentage yield, 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 such
check has cleared for payment.
During the Community Offering, Selected Dealers may only solicit
indications of interest from their customers to place orders with Columbia
Federal as of a certain date (the "Order Date") for the purchase of Common
Shares. When and if Columbia Federal believes that enough indications of
interest and orders have been received to consummate the Conversion, Webb will
request, as of the Order Date, Selected Dealers submit orders to purchase
shares for which Selected Dealers have previously received indications of
interest from the Selected Dealers' customers. The Selected Dealers will send
confirmations of the orders to such customers on the next business day after
the Order Date. The Selected Dealers 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
Dealers will be remitted to Columbia Federal. Funds will be returned promptly
in the event the Conversion is not consummated.
Instructions for authorizing withdrawals from savings accounts are
provided in the 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 cancelled and the remaining balance will earn interest at
Columbia Federal's passbook rate subsequent to the withdrawal.
Persons who are beneficial owners of IRAs maintained at Columbia Federal
do not personally have subscription rights related to such account. The
account itself, however, may have subscription rights. In order to utilize
funds in an IRA maintained at Columbia Federal, the funds must be transferred
to a self-directed IRA that permits the IRA funds to be invested in stock. The
beneficial owner of the IRA must direct the trustee of the IRA to use funds
from such account to purchase Common Shares in connection with the Conversion.
Persons who are interested in utilizing IRAs at Columbia Federal to subscribe
for Common Shares should contact the Columbia Federal Stock Information Center
at (___) ___-____ for instructions and assistance.
<PAGE> 15
Subscriptions will not be filled by CFKY until subscriptions have been
received in the Subscription Offering and the Community Offering for up to
1,717,000 Common Shares, the minimum point of the Valuation Range. If the
Conversion is terminated, all funds delivered to CFKY for the purchase of
Common Shares will be returned with interest, and all charges to savings
accounts will be rescinded. Subscribers and other purchasers will be notified
by mail, promptly on completion of the sale of the Common Shares, of the number
of shares for which their subscriptions have been accepted. Certificates
representing Common Shares will be delivered promptly thereafter.
If the ESOP subscribes for Common Shares in the Subscription Offering, 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.
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 Columbia Federal and their Associates. For purposes of this table,
it has been assumed that 2,020,000 Common Shares will be sold in connection
with the Conversion at $10 per share, that the purchase limitations are not
changed 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>
<CAPTION>
Percent Aggregate
Total of total purchase
Name shares offering price
- ---- ------ -------- ---------
<S> <C> <C> <C>
J. Robert Bluemlein - -% $ -
Kenneth R. Kelly 30,000 1.49 300,000
John C. Layne 10,000 .50 100,000
Daniel T. Mistler 10,000 .50 100,000
Fred A. Tobergte, Sr. 30,000 1.49 300,000
Geraldine Zembrodt 20,000 .99 200,000
Robert V. Lynch 30,000 1.49 300,000
Mary Jane Lucas 5,000 .25 50,000
George Raybourne 2,500 .12 25,000
Edward Schwartz 20,000 .99 200,000
Harold E. Taylor 30,000 1.49 300,000
Abijah Adams 10,000 .50 100,000
Carol S. Margrave 3,000 .15 30,000
------ ---- ----------
Total 200,500 9.93% $2,005,000
</TABLE>
All purchases by executive officers and directors of Columbia Federal are
made for investment purposes only and with no 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
Columbia Federal. Keller, a firm which evaluates and appraises financial
institutions, was retained by Columbia Federal to prepare an appraisal of the
estimated pro forma market value of Columbia Federal as converted. Keller will
receive a fee of $17,000 for its appraisal, which amount includes out-of-pocket
expenses.
The appraisal was prepared by Keller in reliance upon the information
contained herein. Keller also considered the following factors, among others:
the present and projected operating results and financial condition of Columbia
Federal and the economic and demographic conditions in Columbia Federal's
existing market area; the quality and depth of Columbia Federal's management
and personnel; certain historical financial and other information relating to
Columbia Federal and a comparative evaluation of the operating and financial
statistics of Columbia Federal with those of other thrift institutions; the
aggregate size of the offering; the impact of the Conversion on Columbia
Federal's regulatory capital and earnings potential; the trading market for
stock of comparable thrift institutions; the effect of Columbia Federal
becoming a subsidiary of CFKY; and general conditions in the markets for such
stocks.
<PAGE> 16
Keller's valuation of the estimated pro forma market value of Columbia
Federal, as converted, is $20,200,000 as of November 28, 1997 (the "Pro Forma
Value"). CFKY will issue the Common Shares at a fixed price of $10.00 per
share and, by dividing the price per share into the final Pro Forma Value,
determined at the completion of the Conversion, will determine the number of
shares to be issued. Applicable regulations also require, however, that the
appraiser establish the Valuation Range of 15% on either side of the Pro Forma
Value to allow for fluctuations in the aggregate value of the Common Shares due
to changes in the market for thrift shares and other factors from the time of
commencement of the Subscription Offering until the completion of the
Conversion.
As of September 30, 1997, the Valuation Range was from $17,170,000 to
$23,230,000, which, based upon a per share offering price of $10.00, will
result in the sale of between 1,717,000 and 2,323,000 Common Shares. In the
event that Keller determines at the close of the Conversion that the aggregate
pro forma value of Columbia Federal is higher or lower than the Pro Forma Value
as of November 28, 1997, but is nevertheless within the Valuation Range, or is
not more than 15% above the maximum point of the Valuation Range, CFKY will
make an appropriate adjustment by raising or lowering the total number of
Common Shares sold in the Conversion consistent with the final Pro Form Value.
If, due to changing market conditions, the final valuation is not between the
minimum of the Valuation Range and 15% above the maximum of the Valuation
Range, subscribers will be given a 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.
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 FINANCIAL AND
STATISTICAL INFORMATION PROVIDED BY COLUMBIA FEDERAL AND ITS INDEPENDENT
AUDITORS. KELLER DID NOT INDEPENDENTLY VERIFY THE FINANCIAL STATEMENTS AND
OTHER INFORMATION PROVIDED BY COLUMBIA FEDERAL AND ITS INDEPENDENT AUDITORS,
NOR DID KELLER VALUE INDEPENDENTLY THE ASSETS OR LIABILITIES OF COLUMBIA
FEDERAL OR CFKY. THE VALUATION CONSIDERS COLUMBIA FEDERAL ONLY AS A GOING
CONCERN AND SHOULD NOT BE CONSIDERED AS AN INDICATION OF THE LIQUIDATION VALUE
OF COLUMBIA FEDERAL. 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 PRICES WITHIN THE
ESTIMATED PRICE RANGE.
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, DC 20552, at 200 W.
Madison Street, Suite 1300, Chicago, Illinois 60606, and at each of the offices
of Columbia Federal. It has also been filed as an exhibit to the Registration
Statement.
RESTRICTION ON REPURCHASE OF COMMON SHARES
Federal regulations prohibit CFKY 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 CFKY's
outstanding capital stock during a twelve-month period or except as such a
repurchase would be otherwise approved by the OTS. In addition, after such a
repurchase, Columbia Federal's regulatory capital must equal or exceed all
regulatory capital requirements. Before commencement of such a program, CFKY
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
Columbia Federal 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
Conversion.
RESTRICTIONS ON TRANSFERABILITY OF COMMON SHARES BY DIRECTORS AND OFFICERS
Common Shares purchased by directors or executive officers of CFKY or
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 CFKY to directors, executive officers and their Associates
will bear a legend giving appropriate notice of the restriction imposed upon
the transfer of such Common Shares. In addition, CFKY will give appropriate
instructions to the transfer agent (if any) for CFKY's Common Shares in respect
of the applicable restriction for 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.
<PAGE> 17
Subject to certain exceptions, for a period of three years following the
Conversion, no director or officer of CFKY or Columbia Federal, or any of their
Associates, may purchase any common shares of CFKY 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 CFKY or shares acquired
by any stock benefit plan of Columbia Federal or CFKY.
The Common Shares, like the stock of most public companies, are subject to
the registration requirements of the Securities 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 CFKY
may be resold without registration. Common Shares received by affiliates of
CFKY will be subject to resale restrictions. An "affiliate" of CFKY, 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, CFKY. Rule 144 generally requires that there be publicly available
certain information concerning CFKY 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 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 CFKY 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, 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 Columbia Federal 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.
USE OF PROCEEDS
The following table presents the estimated gross and net proceeds from the
sale of the Common Shares in connection with the Conversion based on the
Valuation Range:
<TABLE>
<CAPTION>
15% above
Minimum Mid-point Maximum Maximum
--------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Gross proceeds $17,170,000 $20,200,000 $23,230,000 $26,714,500
Less estimated expenses 620,000 658,000 695,000 737,000
----------- ----------- ----------- -----------
Total net proceeds $16,550,000 $19,542,000 $22,535,000 $25,977,500
</TABLE>
The final Pro Forma Value may be outside the Valuation Range, depending upon
financial, market and regulatory conditions at the time of the completion of
the offering. See "THE CONVERSION - Pricing and Number of Common Shares to be
Sold." The expenses are estimated assuming that (a) all of the indicated
number of Common Shares are sold in the Subscription Offering; (b) the
directors, officers and their associates purchase 200,500 shares; (c) the ESOP
purchases 8% of the Common Shares sold; and (d) 60% of the Common Shares are
sold to residents of Boone County or Kenton County, Kentucky, 20% of the Common
Shares are sold to residents of counties contiguous to either Boone County or
Kenton County, Kentucky, and 20% of the Common Shares are sold to persons not
residents of Boone County or Kenton County, Kentucky, or any county contiguous
to either of such counties. Actual expenses may be more or less than
estimated. See "THE CONVERSION - Plan of Distribution."
CFKY will retain 50% of the net proceeds from the sale of the Common
Shares, or $9,771,000 at the mid-point of the Valuation Range, including the
value of a promissory note from the ESOP, which CFKY intends to accept in
exchange for the issuance of Common Shares to the ESOP. Such proceeds will be
used to fund the RRP and, initially, will be invested in short-term and
intermediate-term government securities. The remainder of the net proceeds
received from the sale of the Common
<PAGE> 18
Shares, $9,771,000 at the mid-point of the Valuation Range, will be invested by
CFKY in the capital stock to be issued by Columbia Federal to CFKY as a result
of the Conversion. Such investment will increase the regulatory capital of
Columbia Federal and will permit Columbia Federal to expand its lending and
investment activities and to enhance customer services. Enhanced customer
services may include the origination of additional types of loans, including
commercial loans and additional types of consumer loans, such as home equity
loans.
Columbia Federal anticipates that such net proceeds initially will be
invested in mortgage-backed securities. Eventually, however, Columbia Federal
will attempt to use the net proceeds to originate loans. Such use will be
consistent with Columbia Federal's effort to increase its income. See "RISK
FACTORS - Low Return on Assets and Low Return on Equity" in the Prospectus.
Although CFKY and Columbia Federal could use the increase in capital to
acquire other financial institutions or for CFKY to repurchase its own
outstanding shares, CFKY and Columbia Federal have no current plans or
agreements, written or oral, and are not negotiating, to acquire any other
institution and have no current plans for CFKY to repurchase any of its shares.
MARKET FOR COMMON SHARES
There is presently no market for the Common Shares. The aggregate
offering price for the Common Shares is based upon an independent appraisal of
Columbia Federal. The appraisal is not a recommendation as to the advisability
of purchasing Common Shares. See "THE CONVERSION - Pricing and Number of
Common Shares to be Sold." No assurance can be given that persons purchasing
Common Shares will thereafter be able to sell such shares at a price at or
above the offering price.
CFKY has received approval to have the Common Shares quoted on the Nasdaq
National Market System under the symbol ["CFKY"] upon the closing of the
Conversion, subject to certain conditions which CFKY and Columbia Federal
believe will be satisfied, although no assurance can be provided that the
conditions will be met. In connection with such approval, Webb has informed
Columbia Federal that Keefe, Bruyette & Woods, Inc., intends to make a market
in the Common Shares, although it is under no obligation to do so. No
assurance can be given, however, 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 such market 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"
in the Prospectus.
DIVIDEND POLICY
The declaration and payment of dividends by CFKY will be subject to the
discretion of the Board of Directors of CFKY and will be based on the earnings
and financial condition of CFKY and general economic conditions. If the Board
of Directors of CFKY determines in the exercise of its discretion that the net
income, capital, and consolidated financial condition of CFKY and the general
economy justify the declaration and payment of dividends by CFKY, the Board of
Directors of CFKY 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 declared
and paid on the Common Shares or, if declared and paid, that such dividends
will continue to be paid in the future. In addition, pursuant to a requirement
of the OTS, CFKY 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 CFKY,
the only source of income of CFKY will be dividends periodically declared and
paid by the Board of Directors of Columbia Federal on the common stock of
Columbia Federal held by CFKY. The declaration and payment of dividends by
Columbia Federal to CFKY will be subject to the discretion of the Board of
Directors of Columbia Federal, to the earnings and financial condition of
Columbia Federal, to general economic conditions and to federal restrictions on
the payment of dividends by thrift institutions. Under regulations of the OTS
applicable to converted associations, Columbia Federal 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. Columbia Federal may not pay a dividend
unless such dividend also complies with a regulation of the OTS limiting capital
distributions by savings associations. Capital distributions, for purposes of
such regulation, include, without limitation, payments
<PAGE> 19
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.
CAPITALIZATION
Set forth below is the capitalization of Columbia Federal as of September
30, 1997, and the consolidated pro forma capitalization of CFKY, as adjusted
to give effect to the sale of Common Shares based on the Valuation Range and
estimated expenses. A change in the number of Common Shares sold in the
Conversion would materially affect such pro forma capitalization. See "USE OF
PROCEEDS" and "THE CONVERSION - Pricing and Number of Common Shares to be
Sold."
<TABLE>
Pro forma capitalization of CFKY
at September 30, 1997, assuming the sale of:
---------------------------------------------------------------
1,717,000 2,020,000 2,323,000 2,671,450
Historical Common Common Common Common
capitalization Shares Shares Shares Shares
of Columbia Federal (Offering (Offering (Offering (Offering
at 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) $90,195 $90,195 $90,195 $90,195 $90,195
Borrowings - - - - -
Capital and retained earnings:
Preferred Shares, no par value per
share: authorized - 1,000,000
shares, assumed outstanding - none - - - - -
Common Shares, no par value per
share: authorized - 6,000,000
shares; assumed outstanding - as
shown (2) - - - - -
Additional paid-in capital - 16,550 19,542 22,535 25,978
Less Common Shares acquired by the
ESOP (3) - (1,374) (1,616) (1,858) (2,137)
Less Common Shares acquired by the
RRP (4) - (687) (808) (929) (1,069)
Retained earnings, net, substantially
restricted (5) 13,090 13,090 13,090 13,090 13,090
Unrealized gain on securities
available for sale, net 1 1 1 1 1
------- ------- ------- ------- -------
Total capital and retained earnings $13,091 $27,580 $30,209 $32,839 $35,863
======= ======= ======= ======= =======
</TABLE>
____________
(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 Columbia Federal. 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 that may be
reserved for issuance under the Stock Option Plan. See "MANAGEMENT OF
COLUMBIA FEDERAL - Stock Benefit Plans -- Stock Option Plan" in the
Prospectus. Reflects receipt of the proceeds from the sale of the Common
Shares, net of estimated expenses. Estimated expenses include estimated
sales commissions payable to Webb. Such sales commissions have been
computed based on the following assumptions: (i) 200,500 Common Shares
sold in the Offering will be purchased by directors, officers and
employees of Columbia Federal and the members of their immediate families;
(ii) 8% of the Common Shares sold in the Offering will be purchased by the
ESOP; and (iii) the remaining 1,657,900 Common Shares sold in connection
with the Conversion will be purchased in the Subscription Offering with
sales commissions of 1.50%, 1.25% and 0.75% on 60%, 20% and 20%,
respectively, of the aggregate dollar amount paid for such Common Shares.
(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 CFKY for a term of 11 years at a rate of 9.5%. The ESOP loan will be
secured solely by the Common Shares purchased by the ESOP. Columbia
Federal has agreed, however, to use its best efforts to fund the ESOP
based on future earnings, which best efforts funding will reduce Columbia
Federal's total capital and retained earnings, as reflected in the table.
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 shares of CFKY. If the
ESOP purchases authorized but unissued shares from CFKY, such purchases
would have a dilutive effect of approximately 7.41% on the voting
interests of CFKY's shareholders. See "MANAGEMENT OF COLUMBIA FEDERAL -
Employee Stock Ownership Plan" and "RISK FACTORS - Dilutive Effect and
Negative Effect on Earnings of Purchases by the ESOP and the RRP" in the
Prospectus.
(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 $10.00 per share. There can
be no assurance that the RRP will be implemented, that a sufficient number
of shares will be available for purchase by the RRP or that shares could
be purchased at a price of $10.00. A higher price per share, assuming the
purchase of the entire 4% of the shares, would reduce pro forma
shareholders' equity. The RRP may purchase shares in the open market or
may purchase authorized but unissued shares from CFKY. If authorized
<PAGE> 20
but unissued shares are purchased, the voting interests of existing
shareholders would be diluted approximately 3.85%. See "MANAGEMENT OF
COLUMBIA FEDERAL - Recognition and Retention Plan and Trust" in the
Prospectus.
(5) Retained earnings include restricted and unrestricted retained earnings
and unrealized gain on securities designated as available for sale. 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" in the Prospectus for information concerning restricted retained
earnings for federal tax purposes.
PRO FORMA DATA
Set forth below are the pro forma consolidated net earnings of CFKY for
the year ended September 30, 1997, and the pro forma shareholders' equity of
CFKY at such dates, along with the related pro forma per share amounts, giving
effect to the sale of the Common Shares in connection with the Conversion. The
computations are based on the assumed issuance of 1,717,000 Common Shares
(minimum point of the Valuation Range), 2,020,000 Common Shares (mid-point of
the Valuation Range), 2,323,000 Common Shares (maximum point of the Valuation
Range) and 2,671,450 Common Shares (15% above the maximum point of 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 periods and yielded
the net proceeds indicated; (ii) such net proceeds were invested by CFKY and
Columbia Federal at the beginning of the specified period at 5.35%; (iii) no
withdrawals from existing deposit accounts were made to purchase the Common
Shares; (iv) CFKY will accept a promissory note from the ESOP in exchange for
the issuance of Common Shares; and (v) a portion of the cash proceeds retained
by CFKY will be used to fund the RRP and, pending such investment, be invested
in short-term and intermediate-term government securities. The assumed return
is based upon the yield for one year United States Treasury bills at November
28, 1997, because management intends to invest the initial cash proceeds in
government securities and mortgage-backed securities. In calculating pro forma
net earnings, a statutory federal income tax rate of 34% has been assumed for
the period, resulting in an after tax yield of 3.53%. 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 government securities and mortgage-backed securities 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. Management also believes that utilization of savings
withdrawals to fund stock purchases would not have a material impact on the pro
forma data presented.
NO ASSURANCE CAN BE PROVIDED THAT THE YIELDS OR RESULTS SET FORTH IN THE
PRO FORMA DATA WILL BE ACHIEVED ON INVESTMENT OF THE CONVERSION PROCEEDS.
MOREOVER, THE PRO FORMA NET EARNINGS AMOUNTS DERIVED FROM THE ASSUMPTIONS SET
FORTH HEREIN SHOULD NOT BE CONSIDERED INDICATIVE OF THE ACTUAL RESULTS OF
OPERATIONS OF CFKY THAT WOULD HAVE BEEN ATTAINED FOR ANY PERIOD IF THE
CONVERSION HAD BEEN ACTUALLY CONSUMMATED AT THE BEGINNING OF SUCH PERIOD.
FURTHER, THE RATIO OF SHARE OFFERING PRICE TO THE PRO FORMA BOOK VALUE IS NOT
REPRESENTATIVE OF ANY POTENTIAL PRICE APPRECIATION ON THE COMMON SHARES. NO
EFFECT HAS BEEN GIVEN IN THE PRO FORMA SHAREHOLDERS' EQUITY FOR ANY ASSUMED
EARNINGS ON THE NET PROCEEDS OF THE CONVERSION.
<PAGE> 21
<TABLE>
<CAPTION>
At and for the year ended September 30, 1997, assuming the sale of:
--------------------------------------------------------------------------------
1,717,000 2,020,000 2,323,000 2,671,450
Common Shares Common Shares Common Shares Common Shares
(Offering price of (Offering price of (Offering price of (Offering price of
$10.00 per share) $10.00 per share) $10.00 per share) $10.00 per share)
------------------ ------------------ ------------------ ------------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Gross proceeds $17,170 $20,200 $23,230 $26,715
Estimated expenses 620 658 695 737
------- ------- ------- -------
Estimated net proceeds $16,550 $19,542 $22,535 $25,978
------- ------- ------- -------
Less Common Shares acquired by the RRP (1) (687) (808) (929) (1,069)
Less Common Shares acquired by the ESOP (2) (1,374) (1,616) (1,858) (2,137)
------- ------- ------- -------
Net cash proceeds $14,489 $17,118 $19,748 $22,772
======= ======= ======= =======
Net earnings:
Historical $ 553 $ 553 $ 553 $ 553
Pro forma income on net proceeds 512 604 697 804
Pro forma adjustment for the RRP (1) (91) (107) (123) (141)
Pro forma adjustment for the ESOP (2) (82) (97) (111) (128)
------- ------- ------- -------
Pro forma net earnings $ 892 $ 953 $ 1,016 $ 1,088
======= ======= ======= =======
Earnings per share:
Historical $ 0.35 $ 0.30 $ 0.26 $ 0.22
Pro forma income on net proceeds 0.32 0.32 0.32 0.33
Pro forma adjustment for the RRP (1) (0.05) (0.05) (0.05) (0.05)
Pro forma adjustment for the ESOP (2) (0.06) (0.06) (0.06) (0.06)
------- ------- ------- -------
Pro forma earnings per share (3)(4) $ 0.56 $ 0.51 $ 0.47 $ 0.44
======= ======= ======= =======
Offering price as a multiple of pro forma earnings
per share 17.76 19.53 21.31 22.65
Shareholders' equity: (5)
Historical $13,091 $13,091 $13,091 $13,091
Estimated net proceeds from the sale of
Common Shares 16,550 19,542 22,535 25,978
Less unearned RRP shares (1) (687) (808) (929) (1,069)
Less unearned ESOP shares (2) (1,374) (1,616) (1,858) (2,137)
------- ------- ------- -------
Pro forma shareholders' equity $27,580 $30,209 $32,839 $35,863
======= ======= ======= =======
Per share shareholders' equity:
Historical $ 7.62 $ 6.48 $ 5.64 $ 4.90
Estimated net proceeds 9.64 9.67 9.70 9.72
Less unearned RRP shares (1) (0.40) (0.40) (0.40) (0.40)
Less unearned ESOP shares (2) (0.80) (0.80) (0.80) (0.80)
------- ------- ------- -------
Pro forma shareholders' equity per share (3) $ 16.06 $ 14.95 $ 14.14 $ 13.42
======= ======= ======= =======
Ratio of offering price to pro forma shareholders'
equity per share 62.27% 66.89% 70.72% 74.52%
</TABLE>
____________
(Footnotes on next page)
<PAGE> 22
(1) 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
$10.00 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 CFKY. 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
$10.00 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, CFKY 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 3.85% dilution in existing shareholders'
voting interests. See "MANAGEMENT OF COLUMBIA FEDERAL- Recognition and
Retention Plan and Trust" in the Prospectus.
(2) Assumes that 8% of the Common Shares sold in connection with the
Conversion will be purchased by the ESOP and that the funds used to
acquire such shares will be borrowed by the ESOP from CFKY with repayment
thereof secured solely by the Common Shares purchased by the ESOP.
Columbia Federal has agreed, however, to use its best efforts to fund the
ESOP based on future earnings, which best efforts funding will reduce the
income on the equity raised in connection with the Conversion, as
reflected in the table. Assumes the level amortization of the ESOP loan
over an eleven-year period with assumed tax benefits of 34%. See
"MANAGEMENT OF COLUMBIA FEDERAL - Employee Stock Ownership Plan" in the
Prospectus. The Board of Directors may elect to issue the ESOP shares
from authorized but unissued shares. The issuance of authorized but
unissued shares to the ESOP would have the effect of diluting the voting
interest of existing shareholders by 7.41%.
(3) No effect has been given to shares reserved for issuance upon the
exercise of options pursuant to the Stock Option Plan. See "MANAGEMENT OF
COLUMBIA FEDERAL - Stock Option Plan" in the Prospectus.
(4) In accordance with SOP 93-6 of the American Institute of Certified Public
Accountants ("SOP 93-6"), which requires that only those ESOP shares that
are committed to be released to the accounts of recipients be counted as
outstanding shares, per share amounts are based upon a number of shares
outstanding of 1,583,761, 1,863,248, 2,142,735, 2,464,145 at the minimum,
mid-point, maximum and 15% above the maximum of the Valuation Range,
respectively. The table reflects the ESOP cost at the $10.00 per share
offering price of the Common Shares in the Conversion, which may be more
or less than the fair value at which the shares are ultimately allocated.
(5) The effect of the Liquidation Account is not included in these
computations. For additional information concerning the Liquidation
Account, see "THE CONVERSION - Principal Effects of the Conversion --
Liquidation Account." The amounts shown do not reflect the federal income
tax consequences of the potential restoration of the bad debt reserves to
income for tax purposes, which would be required in the event of
liquidation. See "TAXATION - Federal Taxation" in the Prospectus.
<PAGE> 23
SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA
The following tables set forth certain information concerning the
consolidated financial condition, earnings and other data regarding Columbia
Federal at the dates and for the periods indicated. The financial information
should be read in conjunction with the consolidated financial statements and
notes thereto included elsewhere herein.
SELECTED FINANCIAL CONDITION AND OTHER DATA:
<TABLE>
<CAPTION>
At September 30,
----------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Total amount of:
Assets $104,006 $108,098 $108,376 $106,099 $107,739
Cash and amounts due from banks 612 549 543 568 612
Interest-bearing deposits in banks 6,215 2,498 6,304 2,202 6,621
Investment securities held to maturity 13,069 13,995 2,493 13,495 12,428
Investment securities available for sale 1,003 1,002 988 - -
Mortgage-backed securities 17,862 18,751 16,800 16,744 18,264
Loans receivable, net 61,578 67,741 68,270 70,288 67,026
FHLB stock, at cost 1,260 1,174 1,095 1,026 974
Deposits 90,195 94,657 95,806 93,807 97,278
Retained earnings - substantially
restricted 13,090 12,537 12,149 11,333 10,068
Number of offices (1) 5 5 5 5 5
</TABLE>
<TABLE>
<CAPTION>
At September 30,
-------------------------------------------------------
SUMMARY OF EARNINGS: 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C>
Interest income $7,996 $8,198 $7,943 $7,939 $8,355
Interest expense 4,451 4,578 4,446 3,853 4,370
------ ------ ------ ------ ------
Net interest income 3,545 3,620 3,497 4,086 3,985
Provision for losses on loans 113 8 13 34 47
------ ------ ------ ------ ------
Net interest income after provision for
losses on loans 3,432 3,612 3,484 4,052 3,938
Non-interest income 88 96 92 108 174
Non-interest expense 2,667 3,120(2) 2,371 2,272 2,190
------ ------ ------ ------ ------
Income before federal income tax expense 853 588 1,205 1,888 1,922
Federal income tax expense 300 200 389 623 593
------ ------ ------ ------ ------
Net income $ 553 $ 388 $ 816 $1,265 $1,329
====== ====== ====== ====== ======
</TABLE>
___________
(Footnotes on next page)
<PAGE> 24
<TABLE>
<CAPTION>
At or for the year ended September 30,
----------------------------------------------
SELECTED FINANCIAL RATIOS: 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Performance ratios:
Return on average assets (3) 0.53% 0.36% 0.77% 1.17% 1.23%
Return on average equity (4) 4.30 3.10 6.92 11.78 14.12
Interest rate spread (5) 2.97 2.94 2.93 3.53 3.45
Net interest margin (6) 3.46 3.41 3.38 3.87 3.76
Non-interest expense to average total assets 2.53 2.87 2.24 2.15 2.07
Capital ratios:
Average equity to average assets 12.22 11.50 11.15 9.96 8.70
Equity to assets at end of period 12.59 11.60 11.21 10.68 9.34
Asset quality ratios and other data:
Nonperforming loans to total net loans at end
of period 0.98 0.26 - 0.71 0.39
Nonperforming assets to total assets at end of
period 0.58 0.16 0.03 0.56 0.46
Allowance for losses on loans to total net loans
at end of period 0.49 0.28 0.28 0.27 0.28
Allowance for losses on loans to nonperforming
loans at end of period 49.92 106.78 - 38.03 72.97
Net charge-offs to average loans - 0.01 0.02 0.05 0.07
</TABLE>
____________
(1) All offices are full-service except that loan applications are accepted
only at the main office.
(2) Includes a non-recurring pre-tax expense of $592,000 for a special
one-time assessment to recapitalize the SAIF. See "REGULATION - FDIC
Regulations -- Deposit Insurance" in the Prospectus.
(3) Net income divided by average total assets.
(4) Net income divided by average total equity.
(5) Average yield on interest-earning assets less average cost of
interest-bearing liabilities.
(6) Net interest income as a percentage of average interest-earning assets.
LEGAL PROCEEDINGS
Columbia Federal is not presently involved in any legal proceedings of a
material nature. From time to time, Columbia Federal is a party to legal
proceedings incidental to its business to enforce its security interest in
collateral pledged to secure loans made by Columbia Federal.
MANAGEMENT OF CFKY
The Board of Directors of CFKY consists of seven members divided into two
classes. Each of the directors of CFKY is also a director of Columbia Federal.
The terms of Messrs. Mistler and Tobergte and Ms. Zembrodt expire in 1999, and
the terms of Messrs. Bluemlein, Kelly, Layne and Lynch expire in 2000.
<PAGE> 25
The following persons are officers of CFKY: Kenneth R. Kelly, Chairman of
the Board; Robert V. Lynch, President; Carol S. Margrave, Secretary; Edward
Schwartz, Vice President; and Abijah Adams, Treasurer. After the consummation
of the Conversion, CFKY intends to have quarterly meetings of the Board of
Directors. CFKY does not currently pay directors' fees.
MANAGEMENT OF COLUMBIA FEDERAL
DIRECTORS AND EXECUTIVE OFFICERS
The Charter of Columbia Federal provides for a Board of Directors
consisting of not less than five nor more than 15 directors, such number to be
fixed or changed in the Bylaws or by the members. The Board of Directors
currently consists of seven directors divided into three classes. One class of
directors is elected each year. Each director serves for a three-year term.
The Board of Directors met 13 times during the fiscal year ended September 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 and executive officers of Columbia Federal:
<TABLE>
<CAPTION>
Date of Term
Name Age(1) Position with Columbia Federal service expires
- ---- ------ ------------------------------- ------- --------
<S> <C> <C> <C> <C>
J. Robert Bluemlein 79 Director 1970 1999
Kenneth R. Kelly 76 Director, Chairman of the Board 1965 2000
John C. Layne 48 Director 1995 1998
Robert V. Lynch 52 Director, President, CEO 1971 1999
Daniel T. Mistler 55 Director 1997 2000
Fred A. Tobergte, Sr. 79 Director 1981 1999
Geraldine Zembrodt 53 Director 1993 1998
Mary Jane Lucas 61 Senior Vice President 1971 -
George Raybourne 44 Vice President 1972 -
Edward Schwartz 48 Vice President 1972 -
Harold E. Taylor 56 Vice President 1996
Abijah Adams 52 Controller 1978 -
Carol S. Margrave 42 Secretary, Treasurer 1979 -
</TABLE>
____________
(1) At September 30, 1997.
Mr. Bluemlein retired in 1983 after serving as Vice President of Columbia
Federal from 1970 to 1983. Prior to becoming Vice President and Director of
Columbia Federal, Mr. Bluemlein was Executive Vice President of Star Federal
Savings and Loan Association.
Mr. Kelly has been Chairman of the Board of Columbia Federal since 1983.
He has served as President and co-owner of Kelly Brothers Lumber Co., a lumber
and building supply store in Covington, Kentucky, since its founding in 1947.
Mr. Layne has been a partner in Rafalske & Layne, LLP, Certified Public
Accountants, which has its offices in Cincinnati, Ohio, since 1982.
<PAGE> 26
Mr. Lynch has been employed by Columbia Federal since 1971, served as
Treasurer from 1974 to 1977, has served as President and Chief Executive
Officer since 1977 and has been a director since 1978.
Mr. Mistler is an attorney who joined Deters, Benzinger & LaVelle, PSC, a
law firm located in Covington, Kentucky, in 1984 and now serves on its Board of
Directors and manages its residential real estate department.
<PAGE> 27
Mr. Tobergte served the Kentucky Department of Transportation for twenty
years, where he held various positions, including that of Enforcement Officer,
prior to his retirement in 1981.
Ms. Zembrodt has co-owned and operated The Village Gallerie, an art and
framing gallery located in Ft. Wright, Kentucky, since May 1995. Ms. Zembrodt
previously co-owned and operated The Sample Shop, a gift shop then located in
Ft. Wright, Kentucky, from 1982 to May 1994.
Ms. Lucas has served Columbia Federal since 1971, having served as
Secretary and Treasurer from 1979 until 1993, when she became Vice President.
Ms. Lucas became Columbia Federal's Senior Vice President in 1994 and heads
Columbia Federal's Loan Department.
Mr. Raybourne has been employed by Columbia Federal since 1972, serving as
Assistant Vice President from 1979 to 1993, when he became Vice President. Mr.
Raybourne is responsible for property appraisals, which he performs, and
property management.
Mr. Schwartz has been employed by Columbia Federal since 1972, serving as
Assistant Vice President until 1994, when he became Vice President. Mr.
Schwartz is responsible for IRA's and mortgage servicing.
Mr. Taylor joined Columbia Federal in July 1996 as Vice President in
charge of lending. Prior to joining Columbia Federal, Mr. Taylor was employed
by Lexington Federal Savings Bank in Lexington, Kentucky, serving as its Vice
President and Loan Department Manager since 1991.
Mr. Adams joined Columbia Federal as Accountant in 1978 and became
Controller in 1987.
Ms. Margrave has been employed by Columbia Federal since 1979, serving as
Branch Manager from 1983 to 1992 and Assistant Secretary from 1992 to 1993,
when she became Secretary and Treasurer.
DESCRIPTION OF AUTHORIZED SHARES
GENERAL
The Articles of Incorporation of CFKY authorize the issuance of six
million common shares and one million preferred shares. The common shares and
the preferred shares authorized by CFKY's Articles of Incorporation have no par
value. Upon receipt by CFKY of the purchase price therefor and subsequent
issuance thereof, each Common Share will be fully paid and nonassessable. The
Common Shares of CFKY 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 CFKY will be issued in connection with the
Conversion. The Board of Directors of CFKY 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 CFKY, including the material express terms of such shares as set forth in
CFKY's Articles of Incorporation.
LIQUIDATION RIGHTS
In the event of the complete liquidation or dissolution of CFKY, the
holders of the Common Shares will be entitled to receive all assets of CFKY
available for distribution, in cash or in kind, after payment or provision for
payment of (i) all debts and liabilities of CFKY, (ii) any accrued dividend
claims, and (iii) any interests in the Liquidation Account.
<PAGE> 28
VOTING RIGHTS
The holders of the Common Shares will possess exclusive voting rights in
CFKY, unless preferred shares are issued. 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.
Section 1701.55 of the Ohio Revised Code provides in substance and effect
that shareholders of a for profit corporation which is not a savings bank and
which is incorporated under Ohio law must initially be granted the right to
cumulate votes in the election of directors. 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 CFKY have been amended to eliminate cumulative voting. See
"RESTRICTIONS ON ACQUISITION OF COLUMBIA FEDERAL AND CFKY AND RELATED
ANTI-TAKEOVER PROVISIONS - Articles of Incorporation of CFKY -- Elimination of
Cumulative Voting" in the Prospectus.
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" 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 CFKY 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 CFKY; "THE
CONVERSION - Restrictions on Transferability 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 COLUMBIA FEDERAL AND CFKY AND RELATED ANTI-TAKEOVER PROVISIONS"
in the Prospectus for information regarding regulatory restrictions on
acquiring Common Shares.
REGISTRATION REQUIREMENTS
CFKY will register its common shares with the SEC pursuant to Section
12(g) of the Exchange Act prior to or promptly upon 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.
LEGAL MATTERS
Certain legal matters pertaining to the Common Shares and the federal tax
consequences of the Conversion will be passed upon for Columbia Federal by
Vorys, Sater, Seymour and Pease, 221 E. Fourth Street, Cincinnati, Ohio 45202.
Kentucky tax consequences of the Conversion will be passed upon for Columbia
Federal by VonLehman & Company Inc., certified public accountants. Certain
legal matters will be passed upon for Webb by its counsel, Breyer & Aguggia,
Suite 470 East, 1300 I Street, N.W., Washington, DC 20005.
<PAGE> 29
EXPERTS
The financial statements of Columbia Federal for the years ended September
30, 1997, 1996 and 1995, included in this Prospectus have been audited by
VonLehman & Company Inc., certified public accountants, as stated in their
report appearing herein and have been so included in reliance upon such report
given upon the authority of that firm as experts in accounting and auditing.
Keller has consented to the publication herein of the summary of its
letter to Columbia Federal setting forth its opinion as to the estimated pro
forma market value of Columbia Federal as converted and to the use of its name
and statements with respect to it appearing herein.
ADDITIONAL INFORMATION
CFKY has filed with the SEC a Registration Statement on Form S-1 (File No.
________) under the Securities 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, DC 20549, and copies may be obtained from the SEC at
prescribed rates. The SEC maintains a World Wide Web site (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding registrants that file with the SEC, including CFKY.
Columbia Federal has filed an Application for Approval of Conversion (the
"Application") with the OTS. This document omits certain information contained
in the Application. The Application, the exhibits and the financial statements
that are part thereof may be inspected at the offices of the OTS, 1700 G
Street, N.W., Washington, DC 20552, and the Central Regional Office, 200 W.
Madison Street, Suite 1300, Chicago, Illinois 60606.
<PAGE> 30
EXHIBIT A
COLUMBIA FEDERAL SAVINGS BANK
AMENDED PLAN OF CONVERSION
Table of Contents
<TABLE>
<S> <C>
Introduction........................................................ 6
Definitions......................................................... 6
Procedures for the Conversion....................................... 9
Purchase Price of Common Shares and Number of Common Shares
to be Offered in Connection with the Conversion.................... 10
Subscription Rights of Eligible Account Holders..................... 11
Subscription Rights of Tax-Qualified Employee Stock
Benefit Plans...................................................... 12
Subscription Rights of Supplemental Eligible Account Holders........ 12
Subscription Rights of Other Eligible Members....................... 12
Community Offering.................................................. 13
Additional Limitations on Purchases................................. 13
Procedures for the Subscription Offering and the
Community Offering................................................. 14
Payment for Common Shares........................................... 15
Expiration of Subscription Rights; Undelivered, Defective or
Late Order Forms; Insufficient Payment............................. 16
Compliance with Securities Laws..................................... 17
Rights of Shareholders After Completion of Conversion............... 17
Establishment of Liquidation Account................................ 17
Accounts in Converted Association................................... 18
Restrictions on Purchases and Sales of Common Shares by
Officers and Directors Following Conversion........................ 18
Restrictions on Acquisition of Columbia Federal or
the Holding Company................................................ 19
Amendment or Termination of this Plan............................... 19
Consummation of Conversion.......................................... 19
Tax Rulings/Opinions................................................ 20
Directors and Officers of Columbia Federal.......................... 20
Stock Benefit Plans................................................. 20
Registration of Common Shares; Market for Common Shares............. 20
Expenses of Conversion.............................................. 20
Mailing of Proxy Materials.......................................... 20
Interpretation of the Plan.......................................... 21
</TABLE>
<PAGE> 31
COLUMBIA FEDERAL SAVINGS BANK
AMENDED PLAN OF CONVERSION
1. INTRODUCTION.
The Board of Directors of Columbia Federal Savings Bank (hereinafter
referred to as "Columbia Federal") adopted a Plan of Conversion on October 9,
1997. On December 11, 1997, the Board of Directors approved certain amendments
to the Plan of Conversion, all of which are incorporated into this Amended Plan
of Conversion. This Amended Plan of Conversion is hereinafter referred to as
this "Plan."
This Plan provides for the conversion of Columbia Federal from a mutual
savings and loan association to a permanent capital stock savings association
chartered under the laws of the United States (hereinafter referred to as the
"Conversion") and the acquisition by a holding company to be formed at the
direction of Columbia Federal of all of the capital stock to be issued by
Columbia Federal in the Conversion. The purpose of the Conversion is to
provide Columbia Federal with additional capital to increase its regulatory
capital, 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 Columbia Federal.
After the completion of the Conversion, savings accounts in Columbia
Federal will be equivalent in amount, interest rate and other terms to the
present savings accounts in Columbia Federal and will continue to be insured by
the Federal Deposit Insurance Corporation to the maximum amount 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 association, Columbia Federal will succeed to all of the presently
existing rights, interests, duties and obligations of the mutual savings and
loan association 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 at the Special Meeting to the members of Columbia
Federal for approval, however, this Plan must be approved by the Office of
Thrift Supervision (hereinafter referred to as the "OTS"). The Amended Charter
and the Amended Bylaws of Columbia Federal must also be approved at the Special
Meeting by the affirmative vote of at least a majority of the total outstanding
votes entitled to be 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 toward 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,
means a Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control
with, the Person specified.
AMENDED BYLAWS means the Federal Bylaws of Columbia Federal in the form
which is attached hereto as Exhibit II and which will be filed with the
OTS on the date on which the Conversion becomes effective.
AMENDED CHARTER means the Federal Stock Charter of Columbia Federal in
the form which is attached hereto as Exhibit I and which will be filed
with the OTS on the date on which the Conversion becomes effective.
APPLICATION means the Application for Conversion on Form AC to be filed
by Columbia Federal with the OTS pursuant to Title 12, Code of Federal
Regulations, Part 563b.
<PAGE> 32
ASSOCIATE, when used to indicate a relationship with any Person, means
(i) any corporation or organization (other than Columbia Federal, the
Holding Company or a majority-owned subsidiary of Columbia Federal or the
Holding Company) of which such Person is an officer or partner or is,
directly or indirectly, the beneficial owner of 10% or more of any class
of equity securities, (ii) any trust or other estate in which such Person
has a substantial beneficial interest or as to which such Person serves
as trustee or in a similar fiduciary capacity, except that such term will
not include a Tax-Qualified Employee Stock Benefit Plan, and (iii) any
relative or spouse of such Person, or any relative of such spouse, who
has the same home as such Person or who is a director or Officer of
Columbia Federal, the Holding Company or any of their subsidiaries.
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, is a Resident of either Boone County or Kenton County,
the counties in which Columbia Federal's offices are located.
COMMUNITY OFFERING means the offering of Common Shares to the public
concurrently with or after the completion of the Subscription Offering in
a manner by which Community Members are given preference.
CONVERSION means the change in the form of Columbia Federal from the
mutual to the permanent capital stock form upon (i) the filing of the
Amended Charter; (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
Columbia Federal.
DEALER means any Person who engages either for all or part of such
person's time, directly or indirectly, as agent, broker or principal, in
the business of offering, buying, selling or otherwise dealing or trading
in securities issued by another Person.
ELIGIBILITY RECORD DATE means the close of business on September 30,
1996, the record date set by Columbia Federal for determining Eligible
Account Holders.
ELIGIBLE ACCOUNT HOLDER means any person holding a Qualifying Deposit in
Columbia Federal on the Eligibility Record Date.
FDIC means the Federal Deposit Insurance Corporation, an agency of the
United States government.
HOLDING COMPANY means a corporation to be formed at the direction of
Columbia Federal 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 Columbia Federal in connection with the Conversion.
COLUMBIA FEDERAL means Columbia Federal Savings Bank, in its mutual or
stock form, as appropriate.
INDEPENDENT APPRAISER means the firm employed by Columbia Federal to make
the estimated pro forma market valuation of Columbia Federal which will
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 who continue to maintain a Savings Account at
Columbia Federal after the Conversion.
<PAGE> 33
MEMBER means any Person qualifying as a member of Columbia Federal under
its present Charter and Bylaws and any borrower as of December 16, 1995,
who retains membership rights pursuant to Title 12, Code of Federal
Regulations, Section 544.1.
OFFICER means an executive officer of the Holding Company or Columbia
Federal, including the Chairman of the Board of Directors, the President,
a Vice President, the Secretary, the Treasurer or principal financial
officer, the comptroller or principal accounting officer and any other
person performing similar functions for the Holding Company or Columbia
Federal.
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 to enable such
Persons to exercise their respective Subscription Rights 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 a Voting
Member.
OTS means the 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 Columbia Federal 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 Columbia Federal.
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
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, respectively; provided, however,
that Savings Accounts with aggregate deposit balances of less than $50
will not constitute a Qualifying Deposit.
RESIDENT means any person who, on the Voting Record Date, maintains a
bona fide residence within Kenton County or Boone County, Kentucky, as
determined in the sole discretion of Columbia Federal and the Holding
Company.
SEC means the Securities and Exchange Commission, an agency of the United
States government.
SAVINGS ACCOUNT has the same meaning as that 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 Columbia Federal, and includes
certificates of deposit.
SPECIAL MEETING means the meeting of the Voting Members of Columbia
Federal called for the specific purpose of submitting this Plan to the
Voting Members for approval.
<PAGE> 34
SUBSCRIPTION OFFERING means the offering of Common Shares to the holders
of Subscription Rights.
SUBSCRIPTION RIGHTS means the nontransferable rights issued by Columbia
Federal to the Eligible Account Holders, the 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 by the OTS of the
Application.
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 Columbia
Federal and the Holding Company and their Associates.
TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN means any defined benefit plan
or defined contribution plan of the Holding Company or Columbia Federal,
such as an employee stock ownership plan, stock bonus plan, profit
sharing plan or other plan which, with its related trust, meets the
requirements to be "qualified" under Section 401 of the Internal Revenue
Code of 1986, as amended.
VOTING MEMBER means any Member of Columbia Federal eligible to vote at
the Special Meeting.
VOTING RECORD DATE means the record date fixed by the Board of Directors
in accordance with applicable OTS regulations and the Charter and Bylaws
of Columbia Federal 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:
Promptly after the adoption of this Plan by a vote of at least
two-thirds of the members of the Board of Directors of Columbia Federal,
Columbia Federal will publish a notice of the adoption of this Plan in an
English language newspaper having general circulation in each community
in which an office of Columbia Federal is located. Copies of such notice
will also be made available for inspection by Members at each office of
Columbia Federal.
The Holding Company will be incorporated under Ohio law, after which
the Board of Directors of the Holding Company will consent to the Plan by
at least a two-thirds vote.
Columbia Federal will submit this Plan for approval, together with
all other requisite materials, to the OTS in the form of the Application.
After the filing of the Application with the OTS, Columbia Federal
will prominently post in each office of Columbia Federal and publish in
an English language newspaper having general circulation in each
community in which an office of Columbia Federal is located a notice to
the effect that Columbia Federal has filed the Application with the OTS.
After the OTS approves the Application, Columbia Federal will mail
Proxy Materials to each of the Voting Members as of the Voting Record
Date at their last known addresses appearing on the records of Columbia
Federal 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.
<PAGE> 35
Subject to the approval of this Plan by the Voting Members at the
Special Meeting, the following will occur:
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, Columbia Federal, 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 Columbia Federal 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.
Concurrently with, following the commencement of or following the
completion of the Subscription Offering, Columbia Federal may also
offer Common Shares in the Community Offering, subject to the prior
satisfaction of the Subscription Rights of the Eligible Account
Holders, Tax-Qualified Employee Stock Benefit Plans, Supplemental
Eligible Account Holders and Other Eligible Members.
All other steps considered necessary or desirable by the Board of
Directors of Columbia Federal and the Board of Directors of the Holding
Company will be taken pursuant to applicable laws and regulations to
effect the Conversion.
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 Board of Directors of
Columbia Federal and the Board of Directors of the Holding Company before the
commencement of the Subscription Offering, subject to adjustment as described
below. The number of Common Shares to be issued in connection with the
Conversion will be determined by the Board of Directors of the Holding Company
and the Board of Directors of Columbia Federal before the completion of all
sales of Common Shares contemplated by this Plan on the basis of the estimated
pro forma market value of Columbia Federal, as converted, and the Purchase
Price. No fractional shares will be issued in connection with the Conversion.
The estimated pro forma market value of Columbia Federal, as converted,
will be determined for such purpose by the Independent Appraiser, based upon
such factors as the Independent Appraiser deems appropriate and as are
consistent with the regulations of the OTS. 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 Columbia Federal, and the minimum of such
range shall be 15% below the pro forma market value of Columbia Federal. 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 Columbia Federal, 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 Columbia Federal, 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 if such pro forma market value is not less than the minimum of
the valuation range approved by the OTS or does not exceed the maximum point of
the valuation
<PAGE> 36
range by more than 15%. If, however, as a result of any such change, the
estimated pro forma market value of Columbia Federal 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,
elect to increase or decrease the number of Common Shares to be issued 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 to
and to purchase Common Shares:
A. Each Eligible Account Holder will receive, without payment, a
nontransferable Subscription Right to purchase a number of Common Shares
up to the greater of (i) the amount permitted to be purchased in the
Community Offering, (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 of which the numerator 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 Holding Company and Columbia
Federal as set forth in Section 10 of this Plan.
B. 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 to 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 or (ii)
the number of shares subscribed for by such Eligible Account Holder. Any
shares remaining after such allocation will be allocated 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.
C. Subscription Rights held by Eligible Account Holders who are also
Officers and directors of the Holding Company or Columbia Federal, 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.
D. The subscription rights of the Eligible Account Holders are
subordinate to the limited priority right of Columbia Federal' s
Tax-Qualified Employee Stock Benefit Plans 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 Columbia Federal will
receive non-transferable subscription rights to purchase up to 10% of the
Common Shares offered in connection with the Conversion, subject to adjustment
by the Boards of Directors of the Holding Company and Columbia Federal 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 the
Eligible Account Holders pursuant to Section 5 of this Plan, except that if the
final pro forma market value of Columbia Federal exceeds the maximum of the
valuation range, the ESOP shall have first priority with respect to the amount
sold in excess of the maximum of the valuation range.
<PAGE> 37
7. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS.
Supplemental Eligible Account Holders will have the following rights to
subscribe to and to purchase Common Shares:
A. Each Supplemental Eligible Account Holder will receive, without
payment, a nontransferable Subscription Right to purchase a number of
Common Shares up to the greater of (i) the amount permitted to be
purchased in the Community Offering, (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 of which the numerator 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 Holding Company and Columbia Federal 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 to 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 or (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 will be
subordinate to all 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 nontransferable Subscription Rights to purchase
Common Shares 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.
8. SUBSCRIPTION RIGHTS OF OTHER ELIGIBLE MEMBERS.
Other Eligible Members will have the following rights to subscribe to and
to purchase Common Shares:
A. Each Other Eligible Member will receive, without payment,
nontransferable Subscription Rights to purchase a number of Common Shares
up to the greater of (i) the amount permitted to be purchased in the
Community Offering, 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 Holding Company and Columbia Federal 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 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 Other Eligible Members from whom
subscriptions are received in the same proportion that their respective
subscriptions bear to the total subscriptions of 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.
<PAGE> 38
C. Subscription Rights received by Other Eligible Members pursuant
to this Section 8 are subordinate to all 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 equal to the
quantity obtained by dividing $150,000 by the Purchase Price, subject to
the overall purchase limitations set forth in Section 10 of this Plan and
subject to adjustment by the Board of Directors of the Holding Company
and Columbia Federal 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 2% of the Common Shares sold in the Conversion,
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. Columbia Federal or the Holding Company may retain a Broker to
assist in selling the Common Shares in the Community Offering.
E. Columbia Federal 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 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. 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 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, shall not exceed the quantity obtained by dividing $300,000 by
the purchase price, 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 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
<PAGE> 39
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 Board of Directors of the Holding Company
and the Board of Directors of Columbia Federal 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.
C. The maximum number of Common Shares which may be subscribed for
or purchased in connection with the Conversion by Officers and directors
of Columbia Federal and their Associates in the aggregate shall not
exceed 33.7% of the total number of Common Shares. 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.
D. Subject to any required regulatory approval and the requirements
of applicable laws and regulations, but without further approval of the
members of Columbia Federal, purchase limitations may be increased or
decreased at the sole discretion of the Boards of Directors of the
Holding Company and Columbia Federal at any time. If such amount is
increased, 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 Holding
Company and Columbia Federal 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 issued in the
Conversion shall not exceed, in the aggregate, 10% of the Common Shares
to be issued in 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 shares to be sold in the Conversion.
E. 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 stock to which
he or she subscribes. The Board of Directors of Columbia Federal may
reject any subscription which such Board reasonably believes involves an
impermissible transfer of a Subscription Right. The Board of Directors
of Columbia Federal 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.
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. At the time the Proxy Materials are, pursuant to the
authorization of the OTS, mailed to Voting Members at their last known
addresses appearing on the records of Columbia Federal, Columbia Federal
and the Holding Company may commence the Subscription Offering and the
Community Offering.
B. 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 others until and unless the SEC has declared the
Prospectus effective.
<PAGE> 40
C. 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.
D. The Subscription Offering and the Community Offering may be
closed before the Special Meeting.
E. Orders for Common Shares received in the Subscription Offering
and the Community Offering will first be filled, in the order of priority
set forth in this Plan, by the orders of Persons holding Subscription
Rights.
F. The Prospectus will contain all the information required by the
OTS, 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.
G. The Order Forms will contain all the information required by the
OTS and all applicable laws and regulations.
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 Columbia Federal, together with properly completed and
executed original Order Forms therefor, before the expiration time, which
will be specified on the Order Forms, unless such time is extended by
Columbia Federal. Photocopied or telecopied Order Forms will not be
accepted. The amount of such 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, bank draft,
money order or negotiable order of withdrawal will be accepted subject to
payment by the drawee of such check, bank draft, money order or
negotiable order of withdrawal; or
(iii) By appropriate authorization of withdrawal from any Savings
Account in Columbia Federal.
For the purpose of determining the withdrawal balance of any Savings
Accounts, 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 Columbia Federal 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 Columbia
Federal on payments for Common Shares paid in cash or by check,
negotiable order of withdrawal or money order at an annual rate equal to
Columbia Federal's passbook account rate or such higher rate as may be
determined by Columbia Federal. Such interest will be paid from the date
payments are received by Columbia Federal until consummation or
termination of the Conversion.
<PAGE> 41
(c) The Order Forms will contain appropriate means by which
authorization of withdrawals from Savings Accounts may be made to pay for
subscribed shares. Once a withdrawal has been authorized, none of the
designated withdrawal amount may be withdrawn from the designated Savings
Account (except by Columbia Federal 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 Columbia Federal's passbook account rate.
(d) Columbia Federal 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
Columbia Federal will have the power to extend such expiration time in
its discretion only for a reasonable time beyond such 45-day period.
B. If Columbia Federal 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 Columbia Federal prior to the expiration date specified
thereon, (iii) are defectively filled out or executed, or (iv) are not
accompanied by the full required payment for the Common Shares subscribed
for (including cases in which Savings Accounts from which withdrawals are
authorized are insufficient to cover the amount of the required payment
or the check, bank draft, negotiable order of withdrawal or money order
does not clear by the expiration time), 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 deposits as permitted by
Section 12 above, such withdrawals will not be made.
C. Columbia Federal 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 Columbia Federal, may not be modified, amended or rescinded
without the consent of Columbia Federal, unless (i) the Community
Offering is not completed within 45 days after the expiration of the
Subscription Offering, or (ii) the final valuation of Columbia Federal,
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 Columbia Federal 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
Columbia Federal with the consent of the OTS, and
<PAGE> 42
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 Columbia
Federal or the OTS.
14. COMPLIANCE WITH SECURITIES LAWS.
Columbia Federal 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 in the event
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 Columbia
Federal, 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) Columbia Federal 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
Columbia Federal and will exercise all rights attendant to owning the stock of
Columbia Federal. Persons owning common shares of the Holding Company will
have the following rights after the Conversion:
A. Voting rights in respect of the Holding Company will be held and
exercised exclusively by the holders of the issued and outstanding
capital stock of the Holding Company. Neither borrowers from Columbia
Federal nor holders of Savings Accounts in Columbia Federal will have any
voting rights in Columbia Federal or the Holding Company on the basis of
such borrowings or Savings Accounts.
B. 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 Columbia Federal after the Conversion. The
shareholders of the Holding Company will have the exclusive right to
receive the distribution of any assets remaining after the payment of
creditors' claims.
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 Columbia Federal 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 Columbia Federal after the
Conversion, Columbia Federal will, at the time of Conversion, establish
the Liquidation Account in an amount equal to the regulatory capital of
Columbia Federal as set forth in its latest statement of financial
condition contained in its 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 Columbia Federal.
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
<PAGE> 43
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
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 Savings Account will
be adjusted proportionate 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 reduced to zero upon
such closing. The Subaccount of an account holder will be maintained for
as long as the account holder maintains an account with the same Social
Security or tax identification number.
D. In the event of a complete liquidation of the converted Columbia
Federal (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 Columbia
Federal. 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 ASSOCIATION.
Each Savings Account in Columbia Federal at the time of the Conversion
will constitute, without payment or further action by the account holder, a
Savings Account in Columbia Federal 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 Columbia
Federal 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 Columbia Federal 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 restriction on
subsequent disposition pursuant to paragraph (a) of this Section 18, each
of the following provisions will apply:
Each certificate representing such shares will bear the
following legend prominently stamped thereon giving notice of such
restriction on transfer:
<PAGE> 44
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.
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
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 Columbia Federal 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 Columbia Federal.
19. RESTRICTIONS ON ACQUISITION OF COLUMBIA FEDERAL OR HOLDING COMPANY.
Acquisition of capital stock of Columbia Federal or the Holding Company
after the Conversion will be subject to various restrictions contained in the
Amended Charter and Amended Bylaws of Columbia Federal, the articles of
incorporation and 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 Charter of Columbia Federal
may include the limitation that, for a period of up to five years from the date
of completion of the Conversion of Columbia Federal from mutual to stock form,
no Person may directly or indirectly offer to acquire or acquire the beneficial
ownership of more than 10% of any class of an equity security of Columbia
Federal or the Holding Company.
20. AMENDMENT OR TERMINATION OF THIS PLAN.
If deemed necessary or desirable by the Board of Directors of Columbia
Federal and the Holding Company, this Plan may be amended by the Board of
Directors of Columbia Federal 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. The Conversion pursuant to this Plan may be terminated by the Board of
Directors of Columbia Federal and the Board of Directors of 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.
21. CONSUMMATION OF CONVERSION.
The Conversion of the mutual Columbia Federal into the stock Columbia
Federal will be deemed to have taken place and to be effective at the time and
date provided in the regulations of the OTS. The Conversion must be completed
within 24 months of the approval of this Plan by the Members.
22. TAX RULINGS/OPINIONS.
<PAGE> 45
The Conversion is expressly conditioned upon the prior receipt by Columbia
Federal and the Holding Company of either rulings from the Internal Revenue
Service and the appropriate Kentucky taxing authorities or opinions of legal
counsel or other tax advisors to Columbia Federal in form and substance
satisfactory to Columbia Federal 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 Columbia Federal or the converted Columbia Federal
deemed materially adverse by the Board of Directors of Columbia Federal or the
Board of Directors of the Holding Company.
23. DIRECTORS AND OFFICERS OF COLUMBIA FEDERAL.
It is not intended that the Conversion will result in any change in the
directors or Officers of Columbia Federal. The persons serving as Officers on
the date the Application is filed with the OTS will continue to serve at the
discretion of the Board of Directors of Columbia Federal in their respective
capacities as Officers of the converted Columbia Federal. The persons serving
as directors of Columbia Federal on the date the Application is filed with the
OTS will continue to serve as directors following the Conversion until the
expiration of their terms or their earlier death, resignation or removal from
office.
24. STOCK BENEFIT PLANS.
Following the completion of the Conversion, Columbia Federal or the
Holding Company may establish one or more stock option plans and management
recognition plans to the extent permitted by OTS regulations. Columbia Federal
and the Holding Company may make scheduled or discretionary contributions to
one or more stock benefit plans maintained by Columbia Federal or the Holding
Company for the benefit of the directors, officers or employees of Columbia
Federal or the Holding Company, provided such contributions do not cause
Columbia Federal to fail to meet its regulatory capital requirements.
25. REGISTRATION OF COMMON SHARES; MARKET FOR COMMON SHARES.
A. Before or promptly following the Conversion, the Holding Company
will register with the SEC the Common Shares issued in connection with
the Conversion pursuant to the Securities Exchange Act of 1934 and will
not deregister such shares for a period of three years thereafter.
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.
Columbia Federal and the Holding Company will use their best efforts to
assure 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 Columbia Federal 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 Columbia Federal and the Holding
Company will be final.
<PAGE> 46
EXHIBIT I
COLUMBIA FEDERAL SAVINGS BANK
FEDERAL STOCK CHARTER
SECTION 1. CORPORATE TITLE. The full corporate title of the association is
Columbia Federal Savings Bank.
SECTION 2. OFFICE. The home office shall be located in Ft. Mitchell,
Kentucky.
SECTION 3. DURATION. The duration of the association is perpetual.
SECTION 4. PURPOSE AND POWERS. The purpose of the association is to pursue any
or all of the lawful objectives of a federal savings association chartered
under section 5 of the Home Owners' Loan Act and to exercise all of the
express, implied, and incidental powers conferred thereby and by all acts
amendatory thereof and supplemental thereto, subject to the Constitution and
laws of the United States as they are now in effect, or as they may hereafter
be amended, and subject to all lawful and applicable rules, regulations, and
orders of the Office of Thrift Supervision ("Office").
SECTION 5. CAPITAL STOCK. The total number of shares of all classes of the
capital stock which the association has the authority to issue is ten million
(10,000,000), all of which shall be common stock with no par value. The shares
may be issued from time to time as authorized by the board of directors without
the approval of its shareholders, except as otherwise provided in this Section
5 or to the extent that such approval is required by governing law, rule, or
regulation. The consideration for the issuance of the shares shall be paid in
full before their issuance. Neither promissory notes nor future services shall
constitute payment or part payment for the issuance of shares of the
association. The consideration for the shares shall be cash, tangible or
intangible property (to the extent direct investment in such property would be
permitted to the association), labor, or services actually performed for the
association, or any combination of the foregoing. In the absence of actual
fraud in the transaction, the value of such property, labor, or services, as
determined by the board of directors of the association, shall be conclusive.
Upon payment of such consideration, such shares shall be deemed to be fully
paid and nonassessable. In the case of a stock dividend, that part of the
retained earnings of the association that is transferred to common stock or
paid-in capital accounts upon the issuance of shares as a stock dividend shall
be deemed to be the consideration for their issuance.
Except for shares issued in connection with the conversion of the
association from the mutual to the stock form of capitalization, no shares of
capital stock (including shares issuable upon conversion, exchange, or exercise
of other securities) shall be issued, directly or indirectly, to officers,
directors, or controlling persons of the association other than as part of a
general public offering or as qualifying shares to a director, unless the
issuance or the plan under which they would be issued has been approved by a
majority of the total votes eligible to be cast at a legal meeting.
The holders of the common stock shall exclusively possess all voting
power. Each holder of shares of common stock shall be entitled to one vote for
each share held by such holder, except as to the cumulation of votes for the
election of directors, unless the charter provides that there shall be no such
cumulative voting. Subject to any provision for a liquidation account, in the
event of any liquidation, dissolution, or winding up of the association, the
holders of the common stock shall be entitled, after payment or provision for
payment of all debts and liabilities of the association, to receive the
remaining assets of the association available for distribution, in cash or in
kind. Each share of common stock shall have the same relative rights as and be
identical in all respects with all the other shares of common stock.
SECTION 6. PREEMPTIVE RIGHTS. Holders of the capital stock of the association
shall not be entitled to preemptive rights with respect to any shares of the
association which may be issued.
<PAGE> 47
SECTION 7. LIQUIDATION ACCOUNT. Pursuant to the requirements of the Office's
regulations (12 C.F.R. Part 563b), the association shall establish and maintain
a liquidation account for the benefit of its savings accountholders as of
September 30, 1996 and ____________________ ("eligible savers"). In the event
of a complete liquidation of the association, it shall comply with such
regulations with respect to the amount and the priorities on liquidation of
each of the association's eligible savers' inchoate interest in the liquidation
account, to the extent it is still in existence; provided, that an eligible
saver's inchoate interest in the liquidation account shall not entitle such
eligible saver to any voting rights at any meetings of the association's
stockholders.
SECTION 8. CERTAIN PROVISIONS APPLICABLE FOR FIVE YEARS. Notwithstanding
anything contained in the association's charter or bylaws to the contrary, for
a period of five years from the date of completion of the conversion of the
association from mutual to stock form, the following provisions shall apply:
A. BENEFICIAL OWNERSHIP LIMITATION. No person shall directly or
indirectly offer to acquire or acquire the beneficial ownership of more
than 10% of any class of an equity security of the association. This
limitation shall not apply to a transaction in which the association
forms a holding company without change in the respective beneficial
ownership interests of its stockholders other than pursuant to the
exercise of any dissenter and appraisal rights, the purchase of shares by
underwriters in connection with a public offering, or the purchase of
shares by a tax-qualified employee stock benefit plan which is exempt
from the approval requirements under Sec.574.3(c)(1)(vi) of the Office's
regulations.
In the event shares are acquired in violation of this Section 8, all
shares beneficially owned by any person in excess of 10% shall be
considered "excess shares" and shall not be counted as shares entitled to
vote and shall not be voted by any person or counted as voting shares in
connection with any matters submitted to the stockholders for a vote.
For purposes of this Section 8, the following definitions apply:
1. The term "person" includes an individual, a group acting in
concert, a corporation, a partnership, an association, a joint stock
company, a trust, an unincorporated organization or similar company, a
syndicate or any other group formed for the purpose of acquiring,
holding, or disposing of the equity securities of the association.
2. The term "offer" includes every offer to buy or otherwise
acquire, solicitation of an offer to sell, tender offer for, or request
or invitation for tenders of, a security or interest in a security for
value.
3. The term "acquire" includes every type of acquisition, whether
effected by purchase, exchange, operation of law or otherwise.
4. The term "acting in concert" means (a) knowing participation in a
joint activity or 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 arrangements, whether written or otherwise.
B. CUMULATIVE VOTING LIMITATION. Stockholders shall not be permitted to
cumulate their votes for election of directors.
C. CALL FOR SPECIAL MEETINGS. Special meetings of stockholders relating
to changes in control of the association or amendments to its charter
shall be called only upon direction of the board of directors.
SECTION 9. DIRECTORS. The association shall be under the direction of a board
of directors. The authorized number of directors, as stated in the
association's bylaws, shall not be fewer than five nor more than fifteen except
when a greater or lesser number is approved by the Director of the Office, or
his or her delegate.
<PAGE> 48
SECTION 10. AMENDMENT OF CHARTER. Except as provided in Section 5, no
amendment, addition, alteration, change, or repeal of this charter shall be
made, unless such is proposed by the board of directors of the association,
approved by the shareholders by a majority of the votes eligible to be cast at
a legal meeting, unless a higher vote is otherwise required, and approved as
preapproved by the Office. Any amendment, addition, alteration, change, or
repeal so acted upon shall be effective upon filing with the Office in
accordance with regulatory procedures or on such other date as the Office may
specify in its preliminary approval.
Attest: _______________________________ By: ________________________________
Secretary President
Columbia Federal Savings Columbia Federal Savings
Bank Bank
Attest: _______________________________ By: ________________________________
Secretary of the Office Director of the Office
of Thrift Supervision of Thrift Supervision
Effective Date: ___________________
<PAGE> 49
EXHIBIT II
COLUMBIA FEDERAL SAVINGS BANK
FEDERAL STOCK BYLAWS
ARTICLE I - HOME OFFICE
The home office of Columbia Federal Savings Bank shall be at 2497 Dixie
Highway, Ft. Mitchell, Kentucky, 41017 in the County of Kenton, in the
Commonwealth of Kentucky.
ARTICLE II - SHAREHOLDERS
SECTION 1. PLACE OF MEETINGS. All annual and special meetings of
shareholders shall be held at the home office of the association or at such
other place in the state in which the principal place of business of the
association is located as the board of directors may determine.
SECTION 2. ANNUAL MEETING. A meeting of the shareholders of the
association for the election of directors and for the transaction of any other
business of the association shall be held annually within 150 days after the
end of the association's fiscal year on the third Thursday in January, if not a
legal holiday, and if a legal holiday, then on the next day following which is
not a legal holiday, at 2:00 p.m., or at such other date and time within such
150-day period as the board of directors may determine.
SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders for
any purpose or purposes, unless otherwise prescribed by the regulations of the
Office of Thrift Supervision ("Office"), may be called at any time by the
chairman of the board, the president, or a majority of the board of directors,
and shall be called by the chairman of the board, the president, or the
secretary upon the written request of the holders of not less than one-tenth of
all of the outstanding capital stock of the association entitled to vote at the
meeting. Such written request shall state the purpose or purposes of the
meeting and shall be delivered to the home office of the association addressed
to the chairman of the board, the president, or the secretary.
SECTION 4. CONDUCT OF MEETINGS. Annual and special meetings shall be
conducted in accordance with rules and procedures adopted by the board of
directors. The board of directors shall designate, when present, either the
chairman of the board or the president to preside at such meetings.
SECTION 5. NOTICE OF MEETINGS. Written notice stating the place, day,
and hour of the meeting and the purpose(s) for which the meeting is called
shall be delivered not fewer than 20 nor more than 50 days before the date of
the meeting, either personally or by mail, by or at the direction of the
chairman of the board, the president, or the secretary, or the directors
calling the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the mail, addressed to the shareholder at the address as it appears on the
stock transfer books or records of the association as of the record date
prescribed in Section 6 of this Article II with postage prepaid. When any
shareholders' meeting, either annual or special, is adjourned for 30 days or
more, notice of the adjourned meeting shall be given as in the case of an
original meeting. It shall not be necessary to give any notice of the time and
place of any meeting adjourned for less than 30 days or of the business to be
transacted at the meeting, other than an announcement at the meeting at which
such adjournment is taken.
SECTION 6. FIXING OF RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment, or shareholders entitled to receive payment of any dividend,
or in order to make a determination of shareholders for any other proper
purpose, the board of directors shall fix in advance a date as the record date
for any such determination of shareholders. Such date in any case shall be not
more than 60 days and, in case of a meeting of shareholders, not fewer than 10
days prior to the date on which the particular
<PAGE> 50
action, requiring such determination of shareholders, is to be taken. When a
determination of shareholders entitled to vote at any meeting of the
shareholders has been made as provided in this section, such determination
shall apply to any adjournment.
SECTION 7. VOTING LISTS. At least 20 days before each meeting of the
shareholders, the officer or agent having charge of the stock transfer books
for shares of the association shall make a complete list of the shareholders
entitled to vote at such meeting, or any adjournment, arranged in alphabetical
order, with the address and the number of shares held by each. This list of
shareholders shall be kept on file at the home office of the association and
shall be subject to inspection by any shareholder of record or the
shareholder's agent at any time during usual business hours for a period of 20
days prior to such meeting. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to inspection by any
shareholder of record or any shareholder's agent during the entire time of the
meeting. The original stock transfer book shall constitute prima facie
evidence of the shareholders entitled to examine such list or transfer books or
to vote at any meeting of shareholders.
In lieu of making the shareholder list available for inspection by
shareholders as provided in the preceding paragraph, the board of directors may
elect to follow the procedures prescribed in Sec.552.6(d) of the Office's
regulations as now or hereafter in effect.
SECTION 8. QUORUM. A majority of the outstanding shares of the
association entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of
the outstanding shares is represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally notified. The shareholders present at a duly organized meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to constitute less than a quorum. If a
quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on the subject matter shall be
the act of the shareholders, unless a vote of a greater number of shareholders
voting together or voting by classes is required by law or the charter.
Directors, however, are elected by a plurality of the votes cast at an election
of directors.
SECTION 9. PROXIES. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his or her duly
authorized attorney in fact. Proxies may be given telephonically or
electronically as long as the holder uses a procedure for verifying the
identity of the shareholder. Proxies solicited on behalf of the management
shall be voted as directed by the shareholder or, in the absence of such
direction, as determined by a majority of the board of directors. No proxy
shall be valid more than eleven months from the date of its execution except
for a proxy coupled with an interest.
SECTION 10. VOTING OF SHARES IN THE NAME OF TWO OR MORE PERSONS. When
ownership stands in the name of two or more persons, in the absence of written
directions to the association to the contrary, at any meeting of the
shareholders of the association, any one or more of such shareholders may cast,
in person or by proxy, all votes to which such ownership is entitled. In the
event an attempt is made to cast conflicting votes, in person or by proxy, by
the several persons in whose names shares of stock stand, the vote or votes to
which those persons are entitled shall be cast as directed by a majority of
those holding such and present in person or by proxy at such meeting, but no
votes shall be cast for such stock if a majority cannot agree.
SECTION 11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation may be voted by any officer, agent, or proxy as the
bylaws of such corporation may prescribe, or, in the absence of such provision,
as the board of directors of such corporation may determine. Shares held by an
administrator, executor, guardian or conservator may be voted by him or her,
either in person or by proxy, without a transfer of such shares into his or her
name. Shares standing in the name of a trustee may be voted by him or her,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him or her without a transfer of such shares into his or her name.
Shares held in trust in an IRA or Keogh Account, however, may be voted by the
association if no other instructions are received. Shares standing in the name
of a receiver may be voted by such receiver, and shares held by or under the
control of a receiver may be voted by such receiver without the transfer into
his or her name if authority to do so is contained in an appropriate order of
the court or other public authority by which such receiver was appointed.
<PAGE> 51
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the association nor
shares held by another corporation, if a majority of the shares entitled to
vote for the election of directors of such other corporation are held by the
association, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time for purposes of any meeting.
SECTION 12. CUMULATIVE VOTING. Subject to the provisions of Section 8.B.
of the Charter of the association prohibiting cumulative voting in the election
of directors for a period of five years from the date of completion of the
conversion of the association from mutual to stock form, every shareholder
entitled to vote at an election for directors shall have the right to vote, in
person or by proxy, the number of shares owned by the shareholder for as many
persons as there are directors to be elected and for whose election the
shareholder has a right to vote, or to cumulate the votes by giving one
candidate as many votes as the number of such directors to be elected
multiplied by the number of shares shall equal or by distributing such votes on
the same principle among any number of candidates.
SECTION 13. INSPECTORS OF ELECTION. In advance of any meeting of
shareholders, the board of directors may appoint any persons other than
nominees for office as inspectors of election to act at such meeting or any
adjournment. The number of inspectors shall be either one or three. Any such
appointment shall not be altered at the meeting. If inspectors of election are
not so appointed, the chairman of the board or the president may, or on the
request of not fewer than 10 percent of the votes represented at the meeting
shall, make such appointment at the meeting. If appointed at the meeting, the
majority of the votes present shall determine whether one or three inspectors
are to be appointed. In case any person appointed as inspector fails to appear
or fails or refuses to act, the vacancy may be filled by appointment by the
board of directors in advance of the meeting or at the meeting by the chairman
of the board or the president.
Unless otherwise prescribed by regulations of the Office, the duties of
such inspectors shall include: determining the number of shares and the voting
power of each share, the shares represented at the meeting, the existence of a
quorum, and the authenticity, validity and effect of proxies; receiving votes,
ballots or consents; hearing and determining all challenges and questions in
any way arising in connection with the rights to vote; counting and tabulating
all votes or consents; determining the result; and such acts as may be proper
to conduct the election or vote with fairness to all shareholders.
SECTION 14. NOMINATING COMMITTEE. The board of directors shall act as a
nominating committee for selecting the management nominees for election as
directors. Except in the case of a nominee substituted as a result of the
death or other incapacity of a management nominee, the nominating committee
shall deliver written nominations to the secretary at least 20 days prior to
the date of the annual meeting. Upon delivery, such nominations shall be
posted in a conspicuous place in each office of the association. No
nominations for directors except those made by the nominating committee shall
be voted upon at the annual meeting unless other nominations by shareholders
are made in writing and delivered to the secretary of the association at least
five days prior to the date of the annual meeting. Upon delivery, such
nominations shall be posted in a conspicuous place in each office of the
association. Ballots bearing the names of all persons nominated by the
nominating committee and by shareholders shall be provided for use at the
annual meeting. However, if the nominating committee shall fail or refuse to
act at least 20 days prior to the annual meeting, nominations for directors may
be made at the annual meeting by any shareholder entitled to vote and shall be
voted upon.
SECTION 15. NEW BUSINESS. Any new business to be taken up at the annual
meeting shall be stated in writing and filed with the secretary of the
association at least five days before the date of the annual meeting, and all
business so stated, proposed, and filed shall be considered at the annual
meeting; but no other proposal shall be acted upon at the annual meeting. Any
shareholder may make any other proposal at the annual meeting and the same may
be discussed and considered, but unless stated in writing and filed with the
secretary at least five days before the meeting, such proposal shall be laid
over for action at an adjourned, special, or annual meeting of the shareholders
taking place 30 days or more thereafter. This provision shall not prevent the
consideration and approval or disapproval at the annual
<PAGE> 52
meeting of reports of officers, directors and committees; but in connection
with such reports, no new business shall be acted upon at such annual meeting
unless stated and filed as herein provided.
SECTION 16. INFORMAL ACTION BY SHAREHOLDERS. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of shareholders, may be taken without a meeting if consent in
writing, setting forth the action so taken, shall be given by all of the
shareholders entitled to vote with respect to the subject matter.
ARTICLE III - BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the association
shall be under the direction of its board of directors. The board of directors
shall annually elect a chairman of the board and a president from among its
members and shall designate, when present, either the chairman of the board or
the president to preside at its meetings.
SECTION 2. NUMBER AND TERM. The board of directors shall consist of
seven members and shall be divided into three classes as nearly equal in number
as possible. The members of each class shall be elected for a term of three
years and until their successors are elected and qualified. One class shall be
elected by ballot annually.
SECTION 3. REGULAR MEETINGS. A regular meeting of the board of directors
shall be held without other notice than this bylaw following the annual meeting
of shareholders. The board of directors may provide, by resolution, the time
and place, for the holding of additional regular meetings without other notice
than such resolution. Directors may participate in a meeting by means of a
conference telephone or similar communications device through which all persons
participating can hear each other at the same time. Participation by such
means shall constitute presence in person for all purposes.
SECTION 4. QUALIFICATION. Each director shall at all times be the
beneficial owner of not less than 100 shares of capital stock of the
association unless the association is a wholly owned subsidiary of a holding
company.
SECTION 5. SPECIAL MEETINGS. Special meetings of the board of directors
may be called by or at the request of the chairman of the board, the president,
or one-third of the directors. The persons authorized to call special meetings
of the board of directors may fix any place, within the association's normal
lending territory, as the place for holding any special meeting of the board of
directors called by such persons.
Members of the board of directors may participate in special meetings by
means of conference telephone or similar communications equipment by which all
persons participating in the meeting can hear each other. Such participations
shall constitute presence in person for all purposes.
SECTION 6. NOTICE. Written notice of any special meeting shall be given
to each director at least two days prior thereto when delivered personally or
by telegram or at least five days prior thereto when delivered by mail at the
address at which the director is most likely to be reached. Such notice shall
be deemed to be delivered when deposited in the mail so addressed, with postage
prepaid if mailed or when delivered to the telegraph company if sent by
telegram or when the association receives notice of delivery if electronically
transmitted. Any director may waive notice of any meeting by a writing filed
with the secretary. The attendance of a director at a meeting shall constitute
a waiver of notice of such meeting, except where a director attends a meeting
for the express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any meeting of the board of directors need
be specified in the notice or waiver of notice of such meeting.
SECTION 7. QUORUM. A majority of the number of directors fixed by
section 2 of this article III shall constitute a quorum for the transaction of
business at any meeting of the board of directors; but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time. Notice of any adjourned meeting shall
be given in the same manner as prescribed by section 5 of this article III.
<PAGE> 53
SECTION 8. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless a greater number is prescribed by regulation of the Office
or by these bylaws.
SECTION 9. ACTION WITHOUT A MEETING. Any action required or permitted to
be taken by the board of directors at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the directors.
SECTION 10. RESIGNATION. Any director may resign at any time by sending
a written notice of such resignation to the home office of the association
addressed to the chairman of the board or the president. Unless otherwise
specified, such resignation shall take effect upon receipt by the chairman of
the board or the president. More than three consecutive absences from regular
meetings of the board of directors, unless excused by resolution of the board
of directors, shall automatically constitute a resignation, effective when such
resignation is accepted by the board of directors.
SECTION 11. VACANCIES. Any vacancy occurring on the board of directors
may be filled by the affirmative vote of a majority of the remaining directors
although less than a quorum of the board of directors. A director elected to
fill a vacancy shall be elected to serve until the next election of directors
by the shareholders. Any directorship to be filled by reason of an increase in
the number of directors may be filled by election by the board of directors for
a term of office continuing only until the next election of directors by the
shareholders.
SECTION 12. COMPENSATION. Directors, as such, may receive a stated
salary for their services. By resolution of the board of directors, a
reasonable fixed sum, and reasonable expenses of attendance, if any, may be
allowed for actual attendance at each regular or special meeting of the board
of directors. Members of either standing or special committees may be allowed
such compensation for attendance at committee meetings as the board of
directors may determine.
SECTION 13. PRESUMPTION OF ASSENT. A director of the association who is
present at a meeting of the board of directors at which action on any
association matter is taken shall be presumed to have assented to the action
taken unless his or her dissent or abstention shall be entered in the minutes
of the meeting or unless he or she shall file a written dissent to such action
with the person acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the secretary of
the association within five days after the date a copy of the minutes of the
meeting is received. Such right to dissent shall not apply to a director who
voted in favor of such action.
SECTION 14. REMOVAL OF DIRECTORS. At a meeting of shareholders called
expressly for that purpose, any director may be removed for cause by a vote of
the holders of a majority of the shares then entitled to vote at an election of
directors. If less than the entire board is to be removed, no one of the
directors may be removed if the votes cast against the removal would be
sufficient to elect a director if then cumulatively voted at an election of the
class of directors of which such director is a part. Whenever the holders of
the shares of any class are entitled to elect one or more directors by the
provisions of the charter or supplemental sections thereto, the provisions of
this section shall apply, in respect to the removal of a director or directors
so elected, to the vote of the holders of the outstanding shares of that class
and not to the vote of the outstanding shares as a whole.
ARTICLE IV - EXECUTIVE AND OTHER COMMITTEES
SECTION 1. APPOINTMENT. The board of directors, by resolution adopted by
a majority of the full board, may designate the chief executive officer and two
or more of the other directors to constitute an executive committee. The
designation of any committee pursuant to this Article IV and the delegation of
authority shall not operate to relieve the board of directors, or any director,
of any responsibility imposed by law or regulation.
SECTION 2. AUTHORITY. The executive committee, when the board of
directors is not in session, shall have and may exercise all of the authority
of the board of directors except to the extent, if any, that such authority
shall be limited
<PAGE> 54
by the resolution appointing the executive committee; and except also that the
executive committee shall not have the authority of the board of directors with
reference to: the declaration of dividends; the amendment of the charter or
bylaws of the association, or recommending to the stockholders a plan of
merger, consolidation, or conversion; the sale, lease, or other disposition of
all or substantially all of the property and assets of the association
otherwise than in the usual and regular course of its business; a voluntary
dissolution of the association; a revocation of any of the foregoing; or the
approval of a transaction in which any member of the executive committee,
directly or indirectly, has any material beneficial interest.
SECTION 3. TENURE. Subject to the provisions of section 8 of this
article IV, each member of the executive committee shall hold office until the
next regular annual meeting of the board of directors following his or her
designation and until a successor is designated as a member of the executive
committee.
SECTION 4. MEETINGS. Regular meetings of the executive committee may be
held without notice at such times and places as the executive committee may fix
from time to time by resolution. Special meetings of the executive committee
may be called by any member thereof upon not less than one day's notice stating
the place, date, and hour of the meeting, which notice may be written or oral.
Any member of the executive committee may waive notice of any meeting and no
notice of any meeting need be given to any member thereof who attends in
person. The notice of a meeting of the executive committee need not state the
business proposed to be transacted at the meeting.
SECTION 5. QUORUM. A majority of the members of the executive committee
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the executive committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
SECTION 6. ACTION WITHOUT A MEETING. Any action required or permitted to
be taken by the executive committee at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the members of the executive committee.
SECTION 7. VACANCIES. Any vacancy in the executive committee may be
filled by a resolution adopted by a majority of the full board of directors.
SECTION 8. RESIGNATIONS AND REMOVAL. Any member of the executive
committee may be removed at any time with or without cause by resolution
adopted by a majority of the full board of directors. Any member of the
executive committee may resign from the executive committee at any time by
giving written notice to the president or secretary of the association. Unless
otherwise specified, such resignation shall take effect upon its receipt; the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 9. PROCEDURE. The executive committee shall elect a presiding
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these bylaws. It shall keep regular minutes of its
proceedings and report the same to the board of directors for its information
at the meeting held next after the proceedings shall have occurred.
SECTION 10. OTHER COMMITTEES. The board of directors may by resolution
establish an audit, loan, or other committee composed of directors as they may
determine to be necessary or appropriate for the conduct of the business of the
association and may prescribe the duties, constitution, and procedures thereof.
ARTICLE V - OFFICERS
SECTION 1. POSITIONS. The officers of the association shall be a
president, one or more vice presidents, a secretary and a treasurer or
comptroller, each of whom shall be elected by the board of directors. The
board of directors may also designate the chairman of the board as an officer.
The president shall be the chief executive officer, unless the board of
directors designates the chairman of the board as chief executive officer. The
president shall be a director of the association. The offices of the secretary
and treasurer or comptroller may be held by the same person and a vice
president may also be either the secretary or the treasurer or comptroller.
The board of directors may designate one or
<PAGE> 55
more vice presidents as executive vice president or senior vice president. The
board of directors may also elect or authorize the appointment of such other
officers as the business of the association may require. The officers shall
have such authority and perform such duties as the board of directors may from
time to time authorize or determine. In the absence of action by the board of
directors, the officers shall have such powers and duties as generally pertain
to their respective offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the association
shall be elected annually at the first meeting of the board of directors held
after each annual meeting of the shareholders. If the election of officers is
not held at such meeting, such election shall be held as soon thereafter as
possible. Each officer shall hold office until a successor has been duly
elected and qualified or until the officer's death, resignation, or removal in
the manner hereinafter provided. Election or appointment of an officer,
employee, or agent shall not of itself create contractual rights. The board of
directors may authorize the association to enter into an employment contract
with any officer in accordance with regulations of the Office; but no such
contract shall impair the right of the board of directors to remove any officer
at any time in accordance with section 3 of this article V.
SECTION 3. REMOVAL. Any officer may be removed by the board of directors
whenever in its judgment the best interests of the association will be served
thereby, but such removal, other than for cause, shall be without prejudice to
the contractual rights, if any, of the person so removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise may be filled by the board
of directors for the unexpired portion of the term.
SECTION 5. REMUNERATION. The remuneration of the officers shall be fixed
from time to time by the board of directors.
ARTICLE VI - CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. To the extent permitted by regulations of the
Office, and except as otherwise prescribed by these bylaws with respect to
certificates for shares, the board of directors may authorize any officer,
employee, or agent of the association to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the association. Such
authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
association and no evidence of indebtedness shall be issued in its name unless
authorized by the board of directors. Such authority may be general or
confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes, or other evidences of indebtedness issued in the
name of the association shall be signed by one or more officers, employees or
agents of the association in such manner as shall from time to time be
determined by the board of directors.
SECTION 4. DEPOSITS. All funds of the association not otherwise employed
shall be deposited from time to time to the credit of the association in any
duly authorized depositories as the board of directors may select.
ARTICLE VII - CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
capital stock of the association shall be in such form as shall be determined by
the board of directors and approved by the Office. Such certificates shall be
signed by the chief executive officer or by any other officer of the association
authorized by the board of directors, attested by the secretary or an assistant
secretary, and sealed with the corporate seal or a facsimile thereof. The
signatures of such officers upon a certificate may be facsimiles if the
certificate is manually signed on behalf of a transfer agent or a registrar
other than the association itself or one of its employees. Each certificate for
shares of
<PAGE> 56
capital stock shall be consecutively numbered or otherwise identified. The
name and address of the person to whom the shares are issued, with the number
of shares and date of issue, shall be entered on the stock transfer books of
the association. All certificates surrendered to the association for transfer
shall be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares has been surrendered and cancelled,
except that in the case of a lost or destroyed certificate, a new certificate
may be issued upon such terms and indemnity to the association as the board of
directors may prescribe.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of capital stock of
the association shall be made only on its stock transfer books. Authority for
such transfer shall be given only by the holder of record or by his or her
legal representative, who shall furnish proper evidence of such authority, or
by his or her attorney authorized by a duly executed power of attorney and
filed with the association. Such transfer shall be made only on surrender for
cancellation of the certificate for such shares. The person in whose name
shares of capital stock stand on the books of the association shall be deemed
by the association to be the owner for all purposes.
ARTICLE VIII - FISCAL YEAR
The fiscal year of the association shall end on the 30th day of September
of each year. The appointment of such accountants shall be subject to annual
ratification by the shareholders.
ARTICLE IX - DIVIDENDS
Subject to the terms of the association's charter and the regulations and
orders of the Office, the board of directors may, from time to time, declare,
and the association may pay, dividends on its outstanding shares of capital
stock.
ARTICLE X - CORPORATE SEAL
The board of directors shall provide a association seal which shall be two
concentric circles between which shall be the name of the association. The
year of incorporation or an emblem may appear in the center.
ARTICLE XI - AMENDMENTS
These bylaws may be amended in a manner consistent with regulations of the
Office and shall be effective after: (i) approval of the amendment and (ii)
receipt of any applicable regulatory approval. When an association fails to
meet its quorum requirements, solely due to vacancies on the board, then the
affirmative vote of a majority of the sitting board will be required to amend
the by laws by a majority vote of the authorized board of directors, or by a
majority vote of the votes cast by the shareholders of the association at any
legal meeting.
EFFECTIVE DATE: _________________________ , 1998
<PAGE> 1
Exhibit 99.2
COLUMBIA FINANCIAL OF
KENTUCKY, INC.
Proposed Holding Company for Columbia Federal Savings Bank
Stock Information Center
2497 Dixie Highway
Ft. Mitchell, Kentucky 41017-3085
(606) XXX-XXXX
STOCK ORDER FORM
________________________________________________________________________________
DEADLINE The Subscription Offering ends at X:XX P.M., Eastern time, on March XX,
1998. Your Stock Order and Certification Form, properly executed and with the
correct payment, must be received at the address on the top of this form or at
any other office of Columbia Federal Savings Bank by this deadline, or it will
be considered void.
________________________________________________________________________________
<TABLE>
<S> <C> <C> <C>
The minimum number of shares that may be subscribed
(1) Number of Shares Price Per Share (2) Total Amount Due for is 25. The maximum individual subscription is
------------------- ----------------------- 15,000 shares. No person, together with associates
| | x $10.00 = | | and persons acting in concert with such person may
------------------- ----------------------- purchase more than 30,000 of the shares sold in
the Conversion. There are additional purchase
limitations for associates and groups acting in
concert as defined in the Prospectus.
</TABLE>
_______________________________________________________________________________
METHOD OF PAYMENT
(3) / /Enclosed is a check, bank draft or money order payable to Columbia
Financial of Kentucky, Inc., for $_________________ (or cash if
presented in person).
(4)/ / I authorize Columbia Federal Savings Bank to make withdrawals from my
Columbia Federal Savings Bank certificate or savings account(s) shown
below, understand that there will be no penalty for early withdrawal
and understand that the amounts will not otherwise be available for
withdrawal:
<TABLE>
<CAPTION>
ACCOUNT NUMBER(S) AMOUNT(S)
<S> <C>
________________________________________________________________________________
|
________________________________________________________|_______________________
|
________________________________________________________|_______________________
|
________________________________________________________|_______________________
|
________________________________________________________|_______________________
|
TOTAL WITHDRAWAL |_______________________
</TABLE>
________________________________________________________________________________
(5)/ / Check here if you are a director, officer or employee of Columbia Federal
Savings Bank or a member of such person's immediate family.
________________________________________________________________________________
(6)/ / ASSOCIATE - ACTING IN CONCERT
Check here, and complete the reverse side of this form, if you or any
associate (as defined on the reverse side of this form) or persons acting in
concert with you have submitted other orders for shares in the Subscription
Offering and/or Direct Community Offering.
________________________________________________________________________________
(7) PURCHASER INFORMATION
a./ / Eligible Account Holder Check here if you were a depositor with $50.00 or
more on deposit with Columbia Federal Savings Bank as of 09/30/96. Enter
information below for all deposit accounts that you had at Columbia
Federal Savings Bank on 09/30/96.
b./ / Supplemental Eligible Account Holder - Check here if you were a depositor
with $50.00 or more on deposit with Columbia Federal Savings Bank as of
12/31/97 but are not an Eligible Account Holder. Enter information below
for all deposit accounts that you had at Columbia Federal Savings Bank on
12/31/97.
c./ / Other Member - Check here if you were a depositor of Columbia Federal
Savings Bank as of XX/XX/XX, or a borrower of Columbia Federal Savings
Bank as of XX/XX/XX whose loan was in existence on 12/16/95, but are
not an Eligible Account Holder or a Supplemental Eligible Account
Holder. Enter information below for all deposit and loan accounts that you
had at Columbia Federal Savings Bank on XX/XX/XX.
d./ / Local Community - Check here if you are a permanent resident of either
Boone County or Kenton County, Kentucky.
<TABLE>
<CAPTION>
ACCOUNT TITLE (NAMES ON ACCOUNTS) AMOUNT NUMBER
<S> <C>
________________________________________________________________________________
|
___________________________________________|____________________________________
|
___________________________________________|____________________________________
|
___________________________________________|____________________________________
</TABLE>
(additional space on back of form)
________________________________________________________________________________
(8) 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 |Social Security or Tax I.D.
___________________________________________________________________________________________|_______________________________________
|
Street |Daytime
Address |Telephone
___________________________________________________________________________________________|_______________________________________
|
Zip |Evening
City State Code County |Telephone
___________________________________________________________________________________________|_______________________________________
</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: (i) not to sell, transfer or hypothecate the stock for a
period of three months following the issuance and (ii) 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
XXXXX XX, 199X and understand I may not change or revoke my order once it is
received by Columbia Financial of Kentucky, Inc. 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. Applicable 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. Columbia Federal
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 TWICE: HERE AND ON THE
CERTIFICATION FORM ON THE REVERSE HEREOF. 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.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE SAVINGS
ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
________________________________________________________________________________
Signature Title (if applicable) Date
________________________________________________________________________________
Signature Title (if applicable) Date
________________________________________________________________________________
________________________________________________________________________________
FOR OFFICE Date Rec'd____/____/____ Check # ____________________
USE Amount $________________ Category ___________________
Batch # _________ - _____________Order # Deposit $___________________
________________________________________________________________________________
<PAGE> 2
COLUMBIA FINANCIAL OF KENTUCKY, INC.
Proposed Holding Company for Columbia Federal Savings Bank
________________________________________________________________________________
<TABLE>
<S> <C> <C>
ITEM (6) CONTINUED; ASSOCIATE - ACTING IN CONCERT DEFINITION OF ASSOCIATE
The term "associate" of a person is defined to mean (i) any
ASSOCIATE LISTED ON NUMBER OF corporation or other organization (other than Columbia Financial
OTHER STOCK ORDERS SHARES ORDERED of Kentucky, Inc. ("Company"), Columbia Federal Savings Bank
____________________________________________________________ ("Columbia Federal Savings"), or a majority owned subsidiary of
_________________________________|__________________________ Columbia Federal Savings, of which such person is a director,
_________________________________|__________________________ officer or partner or is directly or indirectly the beneficial
_________________________________|__________________________ owner of 10% or more of any class of equity securities; (ii) any
trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as trustee
ITEM (7) CONTINUED; PURCHASER INFORMATION or in a similar fiduciary capacity, provided, however, that such
____________________________________________________________ term shall not include any tax-qualified employee stock benefit
ACCOUNT TITLE (NAMES ON ACCOUNT) ACCOUNT NUMBER plan of the Company or Columbia Federal Savings in which such
____________________________________________________________ person has a substantial beneficial interest or serves as a
_________________________________|__________________________ trustee or in a similar fiduciary capacity; and (iii) any relative
_________________________________|__________________________ or spouse of such person, or any relative of such person, who
_________________________________|__________________________ either has the same home as such person or who is a director or
_________________________________|__________________________ officer of the Company or Columbia Federal Savings or any of their
subsidiaries.
</TABLE>
________________________________________________________________________________
CERTIFICATION FORM
(This Certification Must Be Signed
In Addition to the Stock Order Form On Reverse Hereof)
I ACKNOWLEDGE THAT THE SHARES OF COMMON STOCK, NO PAR VALUE PER SHARE, OF
COLUMBIA FINANCIAL OF KENTUCKY, INC.,IS NOT A DEPOSIT OR AN ACCOUNT AND IS NOT
FEDERALLY INSURED, AND IS NOT GUARANTEED BY COLUMBIA FEDERAL SAVINGS BANK OR BY
THE FEDERAL GOVERNMENT.
If anyone asserts that the shares of common stock 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 shares of common stock of Columbia
Financial of Kentucky, Inc., I received a copy of the Prospectus dated XXXXXX
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" on page 1 of the Prospectus:
1. Low Return on Assets and Low Return on Equity
2. Reduction on Return on Equity Due to Proceeds of Offering
3. Competition in Market Area
4. Interest Rate Risk
5. Dilutive Effect and Expense of the ESOP, the Stock Option Plan and the
RRP
6. Limited Market for the Common Shares
7. Legislation and Regulation Which May Adversely Affect Columbia Federal's
Earnings and Operations
8. Anti-Takeover Provisions Which May Discourage Sales of Common Shares for
Premium Prices and Controlling Influence of Management
9. Risk of Delayed Offering
10. Dilutive Effect of Increase in Valuation Range
11. Possible Tax Liability Related to Subscription Rights
____________________________________ _____________________________________
Signature Date Signature Date
____________________________________ _____________________________________
(NOTE: IF STOCK IS TO BE HELD JOINTLY, BOTH PARTIES MUST SIGN)
----
<PAGE> 1
EXHIBIT 99.3
REVOCABLE PROXY
COLUMBIA FEDERAL SAVINGS BANK
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF COLUMBIA FEDERAL SAVINGS BANK
The undersigned member of Columbia Federal Savings Bank, a savings bank
chartered under the laws of the United States ("Columbia Federal"), 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 Columbia Federal to be held at ______ __.m, Eastern Time, on
________ __, 1998, at ________________, ____________, __________, 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, pursuant
to which Columbia Federal would convert from a mutual savings bank
chartered under the laws of the United States to a permanent
capital stock savings bank chartered under the laws of the United
States and become a wholly-owned subsidiary of Columbia Financial
of Kentucky, Inc., an Ohio corporation organized for the purpose of
purchasing all of the capital stock to be issued by Columbia
Federal in connection with the Conversion.
FOR [ ] AGAINST [ ]
2. The adoption of the Federal Stock Charter of Columbia
Federal, a copy of which is attached to the Plan of Conversion as
Exhibit I.
FOR [ ] AGAINST [ ]
3. The adoption of the Federal Stock Bylaws of Columbia
Federal, a copy of which is attached to the Plan of Conversion as
Exhibit II.
FOR [ ] AGAINST [ ]
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 AND FOR THE ADOPTION OF THE FEDERAL STOCK CHARTER OF
COLUMBIA FEDERAL.
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 Columbia Federal a later dated proxy, (ii) attending the
Special Meeting and voting in person or (iii) giving written notice of
revocation to the Secretary of Columbia Federal.
IMPORTANT: PLEASE SIGN AND DATE THIS REVOCABLE PROXY ON THE REVERSE SIDE
<PAGE> 2
PROXY
The receipt of the Summary Proxy Statement of Columbia Federal Savings
Bank and the Prospectus of Columbia Financial of Kentucky, Inc., dated
___________, 1998, is hereby acknowledged by the undersigned.
NOTE: Please sign your name exactly as it appears on this Proxy. Joint
accounts require only one signature. If you are signing this Proxy as an
attorney, administrator, agent, corporation, officer, executor, trustee or
guardian, etc., please add your full title to your signature.
___________________________________
Signature
Dated: _____________________, 1998
IMPORTANT: IF YOU RECEIVE MORE THAN ONE CARD, PLEASE SIGN AND RETURN ALL CARDS
IN THE ACCOMPANYING ENVELOPE.
<PAGE> 1
EXHIBIT 99.4
[Blue Sky Letter - Charles Webb & Company Letterhead]
To Members and Friends of Columbia Federal Savings Bank:
Charles Webb & Company, a member of the National Association of Securities
Dealers ("NASD"), is assisting Columbia Federal Savings Bank (the
"Association") in its conversion from a mutual savings and loan association to
a permanent capital stock savings and loan association and the concurrent
offering of shares of common stock by its holding company, Columbia Financial
of Kentucky, Inc. ("CFKY").
At the request of CFKY, we are enclosing materials explaining this process and
your options, including an opportunity to invest in shares of CFKY's common
stock being offered to customers and the community through ____________ 199__.
Please read the enclosed offering materials carefully. CFKY has asked us to
forward these documents to you in view of certain requirements of the
securities laws of your state.
If you have any questions, please stop by the Conversion Information Center at
________________ in ________________ between x:00 a.m. and x:00 p.m., Monday
through Friday, or call the Conversion Information Center at (xxx) xxx-xxxx.
Very truly yours,
Charles Webb & Company
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 GOVERNMENT AGENCY.
THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES. THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE> 2
(RECEIPT OF ORDER LETTER - COLUMBIA FINANCIAL OF KENTUCKY, INC. LETTERHEAD)
DATE
NAME
ADDRESS TAX I.D. NUMBER XXX-XX-XXX
CITY, STATE, ZIP
RECEIPT OF ORDER
This letter is to acknowledge receipt of your order to purchase stock offered
by Columbia Financial of Kentucky, Inc. ("CFKY"). Please check the following
information carefully to ensure that we have entered your order correctly.
Each order is assigned a prioritized category described below. Acceptance of
your order will be subject to the allocation provisions of the Plan of
Conversion, as well as other conditions and limitations described in the
Prospectus.
Our records indicate the following:
Number of Shares Ordered: _________
Purchase Price Per Share: $10.00
Total Order Amount: $_______
Date Order Received: / /
Category Assigned:
Category Description
1. ELIGIBLE ACCOUNT HOLDERS AS OF SEPTEMBER 30, 1996
2. COLUMBIA FINANCIAL OF KENTUCKY, INC. EMPLOYEE STOCK OWNERSHIP PLAN
(ESOP)
3. SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS AS OF DECEMBER 31, 1997
4. OTHER MEMBERS AS OF _________, 199__ ("VOTING RECORD DATE")
5. RESIDENT OF EITHER BOONE COUNTY OR KENTON COUNTY, KENTUCKY
6. GENERAL PUBLIC
If this information does not agree with your records or if you have any
questions, please call our Conversion Information Center at (xxx) xxx-xxxx.
Thank you for your order.
Sincerely,
Robert V. Lynch
President
<PAGE> 3
[Dear Friend Letter -Columbia Federal Letterhead]
Dear Friend:
We are pleased to announce that Columbia Federal Savings Bank (the
"Association") is converting from a mutual savings and loan association to a
stock savings and loan association (the "Conversion"). In connection with the
Conversion, Columbia Financial of Kentucky, Inc. ("CFKY"), the newly-formed
holding company for the Association, is offering common shares in a
subscription offering and community offering. The sale of common shares in
connection with the Conversion will enable the Association 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 CFKY's common shares as an investment, we are sending you the following
materials which describe the offering.
PROSPECTUS: This document provides detailed information about the
Association's operations and the proposed offering of CFKY common shares.
QUESTIONS AND ANSWERS: Key questions and answers about the stock offering
are found in this pamphlet.
STOCK ORDER 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 _____ p.m., XXXX xx, 199__.
CERTIFICATION FORM: This form must be completed and returned with the
stock order form in the enclosed business reply envelope if you wish to
purchase stock.
As a friend of the Association, you will have a right to buy common shares
directly from CFKY without paying a commission or fee. If you have additional
questions regarding the Conversion and offering, please call us at (606)
xxx-xxxx, or stop by the Conversion Information Center at ________________ in
_____________, ____________, Monday through Friday from x:00 a.m. to x:00 p.m.
We are pleased to offer you this opportunity to become a charter
shareholder of CFKY.
Sincerely,
Robert V. Lynch
President
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 GOVERNMENT AGENCY.
THIS LETTER IS NOT AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES. THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE> 4
[Dear Member Letter, Columbia Federal Letterhead]
_____________, 199__
Dear Member:
We are pleased to announce that Columbia Federal Savings Bank (the
"Association") is converting from a mutual savings and loan association to a
stock savings and loan association (the "Conversion"). In connection with the
Conversion, Columbia Financial of Kentucky, Inc. ("CFKY"), the newly-formed
holding company for the Association, is offering common shares in a
subscription offering and community offering to our Employee Stock Ownership
Plan, certain depositors, and members of the general public pursuant to a Plan
of Conversion.
The Board of Directors of the Association believes that the Conversion
offers a number of advantages, including an opportunity for the Association's
depositors and customers to become shareholders of CFKY. In connection with
the Conversion, please remember:
. Your accounts at the Association will continue to be insured
up to the maximum legal limit by the Federal Deposit Insurance
Corporation ("FDIC").
. There will be no change in the balance, interest rate, or
maturity of any deposit accounts at the Association because of the
Conversion.
. Members have a right, but not an obligation, to buy CFKY
common shares before they are offered to the public.
. Like all stock, the common shares issued in this offering
will not be insured by the FDIC.
Enclosed are materials describing the offering of CFKY common shares. We
urge you to read these materials carefully. If you are interested in
purchasing common shares of CFKY, you must submit your Stock Order Form,
Certification Form, and payment prior to _____ p.m. on XXXX xx, 1998.
If you have additional questions regarding the stock offering, please call
us at (xxx) xxx-xxxx, or stop by the Conversion Information Center located at
_________________________, __________________ Monday through Friday from x:00
a.m. to x:00 p.m.
Sincerely,
Robert V. Lynch
President
THE COMMON SHARES BEING OFFERED IN THIS OFFERING ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE AGENCY, THE BANK
INSURANCE FUND OR THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY. THIS LETTER IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES. THE OFFER WILL BE MADE ONLY BY THE PROSPECTUS.
<PAGE> 5
[Dear Member "Dark Blue Sky" & Foreign Accounts - On Columbia Federal
Letterhead]
_______________, 199__
Dear Member:
We are pleased to announce that Columbia Federal Savings Bank (the
"Association") is converting from a mutual savings and loan association to a
stock savings and loan association (the "Conversion"). In connection with the
Conversion, Columbia Financial of Kentucky, Inc. ("CFKY"), the newly-formed
holding company for the Association, is offering common shares in a
subscription offering and community offering.
Unfortunately, CFKY 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 CFKY.
However, as a member of the Association, you have the right to vote on the
Plan of Conversion at the Special Meeting of Members to be held on XXXXX xx,
199__. Therefore, enclosed is a proxy card, a Proxy Statement (which includes
the Notice of the Special Meeting), a Subscription and Community Offering
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 XXXXX xx, 199__ However, if
you are unable to attend, please complete the enclosed proxy card and return it
in the enclosed envelope.
Sincerely,
Robert V. Lynch
President
<PAGE> 6
(Prospective Investor Letter - Columbia Federal letterhead)
________________, 199__
Dear Prospective Investor:
We are pleased to announce that Columbia Federal Savings Bank (the
"Association") is converting from a mutual savings and loan association to a
stock savings and loan association (the "Conversion"). In connection with the
Conversion, Columbia Financial of Kentucky, Inc. ("CFKY"), the newly-formed
holding company for the Association, is offering common shares in a
subscription offering and community offering. The sale of common shares in
connection with the Conversion will enable the Association 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 CFKY's common shares as an investment. Please read and
review the materials carefully.
PROSPECTUS: This document provides detailed information about the
Association's operations and the proposed stock offering.
QUESTIONS AND ANSWERS: Key questions and answers about the stock offering
are found in this pamphlet.
STOCK ORDER 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 _____ p.m., ____, 199__.
CERTIFICATION FORM: This form must be completed and returned with the
stock order form in the enclosed business reply envelope if you wish to
purchase CFKY common shares.
We invite our depositors and local community members to become
shareholders of CFKY. Through this offering you have the opportunity to buy
common shares directly from CFKY, without paying a commission or fee. The
board of directors and senior management of the Association fully support the
offering.
If you have additional questions regarding the Conversion and stock
offering, please call us at (xxx) xxx-xxxx or stop-by the Conversion
Information Center located at ______________________________, Monday through
Friday from x:00 a.m. to x:00 p.m.
Sincerely,
Robert V. Lynch
President
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 GOVERNMENT AGENCY.
THIS LETTER IS NOT AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES. THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE> 7
[Oversubscription Letter- check, Columbia Financial of Kentucky, Inc.,
Letterhead]
________________, 199__
Dear Subscriber:
I want to thank you for your interest in the common shares of Columbia
Financial of Kentucky, Inc. ("CFKY"). We are extremely proud of the
overwhelming support we received from our members and the community as we
successfully completed the sale of common shares of CFKY.
Due to the oversubscription of CFKY's common shares during the Subscription
Offering, however, we regret we were unable to fill a portion of your order.
Enclosed is a refund check for the unfilled portion of your order. The stock
certificates representing the balance of your order will be sent to you
directly from our transfer agent, <Name of Transfer Agent>.
If you continue to be interested in acquiring common shares of CFKY, the
following brokerage firms have indicated their intent to make a market in our
stock. You may contact any of them for assistance.
[List of Market Makers]
Again, thank you for your interest. If you have any questions, please do not
hesitate to contact me.
Sincerely,
Robert V. Lynch
President
<PAGE> 8
[Closing Letter Columbia Financial of Kentucky, Inc., Letterhead]
_________________, 199__
Dear Subscriber,
I want to thank you for your interest in the common shares of Columbia
Financial of Kentucky, Inc. ("CFKY"). We are extremely proud of the
overwhelming support we received from our members and the community as we
successfully completed the sale of XXXXXX common shares of CFKY.
Enclosed please find a check for payment of the interest on the funds you used
to purchase the CFKY common shares. The stock certificate(s) representation
your shares of CFKY common stock are being mailed directly to you from our
Transfer Agent, <Name of Transfer Agent>.
Again, thank you for your interest. If you have any questions, please do not
hesitate to contact me.
Sincerely,
Robert V. Lynch
President
<PAGE> 9
PROXY GRAM
We recently forwarded to you a proxy statement and letter informing you that
the Board of Directors of Columbia Federal Savings Bank had received
conditional regulatory approval to convert to a stock association.
Your vote on our plan to convert to a stock savings bank has not been received.
Failure to vote has the same effect as voting against the Conversion.
Your vote is important to us and we are, therefore, 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 stock or affect the
terms or insurance on your accounts.
The Board of Directors unanimously recommends that you vote "FOR" the
Conversion.
COLUMBIA FEDERAL SAVINGS BANK
Robert V. Lynch
President
________________________________________________________________________________
If you mailed the proxy, please accept our thanks and disregard this request.
For further information, call (606) xxx-xxxx.
This notice is neither an offer to sell nor a solicitation of an offer to buy
the common shares of
Columbia Financial of Kentucky, Inc.. The offer is made only by the
Prospectus, dated __________, 199__.
The securities offered in the Conversion are not deposits or accounts and
are not federally insured or guaranteed.
<PAGE> 10
STOCK GRAM
We are pleased to announce that Columbia Financial of Kentucky, Inc. ("CFKY"),
the holding company of Columbia Federal Savings Bank (the "Bank"), is offering
common shares in a subscription and community offering. The sale of common
shares in connection with the conversion of the Bank from mutual to stock form
will enable the Bank to raise additional capital to support and enhance its
current operations.
We previously mailed you a PROSPECTUS providing you detailed information about
the Bank's operations and the proposed offering of CFKY common shares. We urge
you to read these materials carefully.
We invite our loyal depositors and community members to become shareholders of
CFKY. If you are interested in purchasing CFKY common shares, you must submit
your completed Order Form and Form of Certification, and payment prior to X:30
P.M., XXXX XX, 199__.
If you have additional questions regarding the stock offering or need
additional materials, please call the Conversion Information Center at (xxx)
xxx-xxxx or stop by our office at _______________________ from _______ a.m. to
______ p.m., Monday through Friday.
The common shares of CFKY are not deposits or accounts and are not federally
insured or guaranteed.
This stockgram is neither an offer to sell nor a solicitation of an offer to
buy the common shares of CFKY.
The offer is made only by the Prospectus, dated __________, 199__.
<PAGE> 11
STOCK
OFFERING
QUESTIONS
AND
ANSWERS
COLUMBIA
FINANCIAL OF
KENTUCKY, INC.
<PAGE> 12
STOCK OFFERING
QUESTIONS & ANSWERS
FACTS ABOUT THE PLAN OF CONVERSION
THE BOARD OF DIRECTORS OF COLUMBIA FEDERAL SAVINGS BANK (THE "BANK")
UNANIMOUSLY ADOPTED A PLAN OF CONVERSION TO CONVERT FROM A FEDERALLY CHARTERED
MUTUAL SAVINGS BANK TO A FEDERALLY CHARTERED PERMANENT CAPITAL STOCK SAVINGS
BANK (THE "CONVERSION") AND SIMULTANEOUSLY BECOME A WHOLLY-OWNED SUBSIDIARY OF
COLUMBIA FINANCIAL OF KENTUCKY, INC., AN OHIO CORPORATION FORMED BY THE
ASSOCIATION TO OWN ALL OF THE OUTSTANDING STOCK OF CFKY.
THIS BROCHURE IS PROVIDED TO ANSWER SOME OF THE MOST FREQUENTLY ASKED QUESTIONS
REGARDING THE CONVERSION. FOLLOWING THE CONVERSION, THE BANK WILL CONTINUE TO
PROVIDE FINANCIAL SERVICES TO ITS DEPOSITORS, BORROWERS AND OTHER CUSTOMERS AND
OPERATE WITH ITS EXISTING MANAGEMENT AND EMPLOYEES. THE CONVERSION WILL NOT
AFFECT THE TERMS, BALANCES, INTEREST RATES OR EXISTING FEDERAL DEPOSIT
INSURANCE COVERAGE OR THE TERMS OR CONDITIONS OF ANY LOANS TO EXISTING
BORROWERS UNDER THEIR INDIVIDUAL CONTRACT ARRANGEMENTS WITH THE BANK.
FOR COMPLETE INFORMATION REGARDING THE CONVERSION, SEE THE PROSPECTUS OF
COLUMBIA FINANCIAL OF KENTUCKY, INC., DATED _______, 199__. COPIES OF THE
PROSPECTUS MAY BE OBTAINED BY CALLING THE STOCK INFORMATION CENTER AT (XXX) XXX
- - XXXX.
WHY IS THE BANK 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 the stock, the
Bank will raise additional capital enabling it to:
. support and expand its current financial and other services.
. allow customers and friends to purchase stock and share in CFKY's and the
Bank's 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. The
Conversion also will not affect the terms or conditions of any loans to
existing borrowers or the rights and obligations of these borrowers under their
individual contractual arrangements with the Bank.
WHO IS ELIGIBLE TO SUBSCRIBE FOR COMMON SHARES IN THE SUBSCRIPTION AND
COMMUNITY OFFERINGS?
The shares of CFKY to be issued in the Conversion are being offered in the
Subscription Offering in the following order of priority to: (1) Eligible
Account Holders (account holders with a balance of $50.00 or more in an account
as of September 30, 1996); (2) CFKY's Employee Stock Ownership Plan; (3)
Supplemental Eligible Account Holders (account holders with a balance of $50.00
or more in an account as of December 31, 1997); and (4) Other
<PAGE> 13
Eligible Members (depositors and certain borrowers as of _____________. Shares
not subscribed for in the Subscription Offering may be offered to certain
members of the general public with preference given to natural persons who are
residents of either Boone County or Kenton County, Kentucky.
HOW MANY COMMON SHARES ARE BEING OFFERED AND AT WHAT PRICE?
It is currently expected that between 1,717,000 and 2,323,000 common shares
will be sold at a price of $10.00 per share. The appraised midpoint of the
offering is 2,020,000 shares at $10.00 per share, or $20.2 million. All
subscribers will subscribe for shares at the subscription price of $10.00 per
share.
HOW MANY COMMON SHARES MAY I SUBSCRIBE FOR IN THE CONVERSION?
The minimum number of shares is 25. No person may purchase more than 15,000 of
the common shares, and no person, together with associates or persons acting in
concert, may purchase more than 30,000 of the common shares.
HOW DO I SUBSCRIBE FOR SHARES?
To subscribe for shares in the Subscription Offering, you must complete and
mail or hand deliver the enclosed Stock Order Form along with your payment for
the common shares. Your order must be received by the Bank by _____ p.m., Ft.
Mitchell, Kentucky, time, on _________, 1998.
HOW MAY I PAY FOR MY SHARES OF STOCK?
You may pay for shares by check, cash or money order. Interest will be paid by
the Bank on these funds at the passbook rate, which is currently 3.0% per
annum, from the day the funds are received until the completion or termination
of the Conversion. You may also authorize us to withdraw funds from your
savings account or certificate of deposit at the Association for the amount of
funds you specify for stock payment. You will not have access to these funds
from the day we receive your order until the completion or termination of the
Conversion.
CAN I PURCHASE SHARES USING FUNDS IN MY BANK IRA ACCOUNT?
No. Federal regulations do not permit the purchase of conversion stock from
your IRA account existing with the Bank. To accommodate our depositors,
however, we have made arrangements with an outside trustee to allow such
purchases through a trustee to trustee transfer. Please call our Stock
Information Center for additional information.
WILL THE FDIC INSURE THE SHARES OF CFKY?
No. The shares of CFKY being offered are not savings accounts or savings
deposits and are not insured by the FDIC or any other governmental agency.
Like any other common stock, CFKY's common shares will not be insured.
WILL DIVIDENDS BE PAID ON THE STOCK?
The declaration and payment of dividends will be subject to the discretion of
the Board of Directors of CFKY.
<PAGE> 14
HOW WILL THE STOCK BE TRADED?
CFKY has applied to have the common shares trade on the Nasdaq National Market
System under the symbol "CFKY" However, no assurances can be given that an
active and liquid market will develop following the Conversion.
ARE OFFICERS AND DIRECTORS OF THE BANK PLANNING TO SUBSCRIBE FOR COMMON SHARES
OF CFKY?
Yes! The Bank's executive officers and directors currently intend to subscribe
for approximately 200,500 common shares, or approximately 9.9% 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!
WHY DID I GET SEVERAL PROXY CARDS?
If you have more than one account with the Bank, you may receive more than one
proxy card, depending on the ownership structure of your accounts. PLEASE
VOTE, SIGN AND RETURN ALL PROXY CARDS!
HOW MANY VOTES DO I HAVE?
Your proxy card(s) show the number of votes you have. Every depositor entitled
to vote may cast one vote for each $100, and a proportionate fractional vote of
the withdrawal value of the account thereof, on deposit as of the record date.
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
then attend the Special Meeting in person and vote, your proxy will be revoked
by your vote at the meeting.
FOR ADDITIONAL INFORMATION YOU MAY CALL OUR STOCK INFORMATION CENTER (606)
XXX-XXXX, BETWEEN X:00 A.M. AND X:30 P.M. MONDAY THROUGH FRIDAY.
The shares of common stock offered in the Conversion 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
government agency.
This is not an offer to sell or a solicitation of an offer to buy stock. the
offer will be made only by the Prospectus.
<PAGE> 15
[Closing Letter, Columbia Financial of Kentucky, Inc., Letterhead]
XXXX xx, 199__
Dear Shareholder:
It is my pleasure to welcome you as a shareholder of Columbia Financial of
Kentucky, Inc. ("CFKY"), the newly-formed holding company for Columbia Federal
Savings Bank (the "Bank"). We are extremely proud of the overwhelming support
we received from our members and the community as we successfully completed the
sale of ______ common shares of CFKY.
Your new stock certificate is enclosed and should be kept in a safe place.
Please take a moment to be sure that the name(s), number of shares, and mailing
address are correct.
We have selected <Name of Transfer Agent> to serve as our Transfer Agent and
Registrar. If there is an error on your stock certificate, if your address
changes, or if at any time you want to change the registration of your
certificate, you should contact <Name of Transfer Agent> at the address listed
below:
[Transfer Agent]
If the original stock certificate must be forwarded to the Transfer Agent to be
reissued, the certificate should be sent registered mail. Lost or destroyed
certificates can be replaced, but an indemnity bond will be required to replace
the certificate.
Please be advised that CFKY will trade on the Nasdaq National Market System
under the symbol "XXXX". Should you be interested in purchasing additional
shares or selling your shares of CFKY, the following brokerage firms have
indicated their intent to make a market in our stock. You may contact any of
them for assistance.
[List of Market Makers]
If you purchased your shares with a check or cash, you will receive a check for
payment of the interest earned on those funds in a separate mailing.
On behalf of CFKY and the Board of Directors and employees of the Bank, we look
forward to the opportunities now ahead of us and pledge our best efforts to
make your investment a profitable one.
Sincerely,
Robert V. Lynch
President
<PAGE> 1
EXHIBIT 99.5
KELLER & COMPANY, INC.
555 METRO PLACE NORTH
SUITE 524
DUBLIN, OHIO 43017
(614) 766-1426
(614) 766-1459 FAX
July 16, 1997
The Board of Directors
Columbia Federal Savings Bank
2497 Dixie Highway
Fort Mitchell, KY 41017-3085
Re: Conversion Valuation Agreement
Attn: Robert V. Lynch, President
Keller & Company, Inc. (hereinafter referred to as KELLER) hereby proposes
to prepare an independent conversion appraisal of Columbia Federal Savings
Bank, Fort Mitchell, Kentucky (hereinafter referred to as COLUMBIA), relating
to the conversion of COLUMBIA 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 COLUMBIA.
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 thrift stock
valuations.
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. KELLER will provide any additional information as
requested and will complete appraisal updates in accordance with regulatory
requirements. KELLER will also be available to meet with any regulatory agency
to review the appraisal.
<PAGE> 2
The appraisal report will provide a detailed description of COLUMBIA,
including its financial condition, operating performance, asset quality, rate
sensitivity position, liquidity level and management qualifications. The
appraisal will include a description of COLUMBIA'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 COLUMBIA 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 COLUMBIA; the economic and demographic conditions in COLUMBIA's existing
marketing area; pertinent historical financial and other information relating
to COLUMBIA; a comparative evaluation of the operating and financial statistics
of COLUMBIA 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 COLUMBIA's capital position and earnings potential; COLUMBIA'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
COLUMBIA, and will not independently value the assets or liabilities of
COLUMBIA in order to prepare the appraisal.
Upon completion of the conversion appraisal, KELLER will provide a written
presentation to the Board of Directors of COLUMBIA to review the content of the
appraisal, the format and the assumptions. A written presentation will be
provided to each board member.
For its services in making this appraisal, KELLER's fee will be $17,000.
The appraisal fee will include the preparation of one valuation update. 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.
COLUMBIA 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 COLUMBIA or by an intentional
omission by COLUMBIA to state a material fact in the information so provided,
except where KELLER has been negligent or at fault.
<PAGE> 3
This proposal will be considered accepted upon the execution of the two
enclosed copies of this agreement and the return of one executed copy and the
retainer fee to KELLER.
KELLER & COMPANY, INC.
By: /s/ Michael R. Keller
_______________________________________
Michael R. Keller
President
Columbia Federal Savings Bank
By: /s/ Robert V. Lynch
_______________________________________
Robert V. Lynch
President
Date: August 18, 1997
<PAGE> 1
CONVERSION VALUATION APPRAISAL REPORT
Prepared for:
COLUMBIA FEDERAL SAVINGS BANK
and
COLUMBIA FINANCIAL OF KENTUCKY, INC.
Fort Mitchell, Kentucky
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:
COLUMBIA FEDERAL SAVINGS BANK
and
COLUMBIA FINANCIAL OF KENTUCKY, INC.
Fort Mitchell, Kentucky
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
Columbia Federal Savings Bank
2497 Dixie Highway
Fort Mitchell, KY 41017
Gentlemen:
We hereby submit an independent appraisal of the pro forma market value of the
to-be-issued stock of Columbia Financial of Kentucky, Inc. ("Corporation"),
which is the newly formed holding company of Columbia Federal Savings Bank, Fort
Mitchell, Kentucky ("Columbia Federal" 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
Columbia Federal and the material provided by the independent auditor, Von
Lehman & Company, Inc., Fort Mitchell, Kentucky, 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
Columbia Federal Savings Bank
December 8, 1997
Page 2
In the preparation of this appraisal, we held discussions with the management of
Columbia Federal, with the law firm of Vorys, Sater, Seymour & Pease,
Cincinnati, Ohio, the Bank's conversion counsel, and with Von Lehman & Company,
Inc. Further, we viewed the Bank's local economy and primary market area.
This 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 appraised 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 $20,200,000. Further, a range for this
valuation is from a minimum of $17,170,000 to a maximum of $23,230,00, with a
super-maximum of $26,714,500.
Very truly yours,
KELLER & COMPANY, INC.
/s/ Michael R. Keller
Michael R. Keller
President
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
INTRODUCTION 1
<S> <C>
I. DESCRIPTION OF COLUMBIA FEDERAL SAVINGS BANK
General 4
Performance Overview 7
Income and Expense 9
Yields and Costs 14
Interest Rate Sensitivity 15
Lending Activities 17
Non-Performing Assets 21
Investments 23
Deposit Activities 24
Borrowings 25
Subsidiaries 25
Office Properties 25
Management 25
II. DESCRIPTION OF PRIMARY MARKET AREA 26
III. COMPARABLE GROUP SELECTION
Introduction 32
General Parameters
Merger/Acquisition 33
Mutual Holding Companies 34
Trading Exchange 34
IPO Date 35
Geographic Location 35
Asset Size 36
Balance Sheet Parameters
Introduction 37
Cash and Investments to Assets 37
Mortgage-Backed Securities to Assets 38
One- to Four-Family Loans to Assets 38
Total Net Loans to Assets 39
Total Net Loans and Mortgage-Backed Securities to Assets 39
Borrowed Funds to Assets 40
Equity to Assets 40
Performance Parameters
Introduction 41
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
TABLE OF CONTENTS (CONT.)
PAGE
<S> <C>
III. COMPARABLE GROUP SELECTION (CONT.)
Performance Parameters (cont.)
Return on Average Assets 41
Return on Average Equity 42
Net Interest Margin 42
Operating Expenses to Assets 43
Noninterest Income to Assets 43
Asset Quality Parameters
Introduction 44
Nonperforming Assets to Asset Ratio 44
Repossessed Assets to Assets 44
Allowance for Loan Losses to Assets 45
The Comparable Group 45
Summary of Comparable Group Institutions 47
IV. ANALYSIS OF FINANCIAL PERFORMANCE 57
V. MARKET VALUE ADJUSTMENTS
Earnings Performance 60
Market Area 64
Financial Condition 65
Asset and Deposit Growth 67
Dividend Payments 68
Subscription Interest 68
Liquidity of Stock 69
Management 69
Marketing of the Issue 70
VI. VALUATION METHODS 71
Price to Book Value Ratio Method 72
Price to Earnings Method 73
Price to Net Assets Method 74
Valuation Conclusion 76
</TABLE>
<PAGE> 7
LIST OF EXHIBITS
<TABLE>
<CAPTION>
NUMERICAL PAGE
EXHIBITS
<S> <C>
1 Balance Sheet - At September 30, 1997 77
2 Balance Sheets - At September 30, 1993
through 1996 78
3 Statement of Income - Year ended
September 30, 1997 79
4 Consolidated Statements of Income -
Years ended September 30, 1993 through 1996 80
5 Selected Consolidated Financial Condition Data 81
6 Income and Expense Trends 82
7 Normalized Earnings Trend 83
8 Performance Indicators 84
9 Volume/Rate Analysis 85
10 Yield and Cost Trends 86
11 Net Portfolio Value 87
12 Loan Portfolio Composition 88
13 Loan Maturity Schedule 89
14 Loan Originations 90
15 Delinquent Loans 91
16 Classified Assets 92
17 Nonperforming Assets 93
18 Allowance for Loan Losses 94
19 Investment Portfolio Composition 95
20 Mix of Deposits 96
21 Deposit Activity 97
22 Borrowed Funds Activity 98
23 Offices of Columbia Federal Savings Bank 99
24 List of Key Officers and Directors 100
25 Key Demographic Data and Trends 101
26 Key Housing Data 102
27 Major Sources of Employment 103
28 Unemployment Rates 104
29 Market Share of Deposits 105
30 National Interest Rates by Quarter 106
31 Thrift Stock Prices and Pricing Ratios 107
32 Key Financial Data and Ratios 119
33 Recently Converted Thrift Institutions 132
34 Acquisitions and Pending Acquisitions 133
</TABLE>
<PAGE> 8
LIST OF EXHIBITS (CONT.)
<TABLE>
<CAPTION>
NUMERICAL PAGE
EXHIBITS
<S> <C>
35 Thrift Stock Prices and Pricing Ratios -
Mutual Holding Companies 134
36 Key Financial Data and Ratios -
Mutual Holding Companies 135
37 Balance Sheets Parameters -
Comparable Group Selection 136
38 Operating Performance and Asset Quality Parameters -
Comparable Group Selection 140
39 Balance Sheet Ratios -
Final Comparable Group 145
40 Operating Performance and Asset Quality Ratios
Final Comparable Group 146
41 Balance Sheet Totals - Final Comparable Group 147
42 Balance Sheet - Asset Composition
Most Recent Quarter 148
43 Balance Sheet - Liability and Equity
Most Recent Quarter 149
44 Income and Expense Comparison
Trailing Four Quarters 150
45 Income and Expense Comparison as a Percent of
Average Assets - Trailing Four Quarters 151
46 Yields, Costs & Earnings Ratios
Trailing Four Quarters 152
47 Dividends, Reserves and Supplemental Data 153
48 Valuation Analysis and Conclusions 154
49 Market Pricings and Financial Ratios - Stock Prices
Comparable Group 155
50 Pro Forma Minimum Valuation 156
51 Pro Forma Mid-Point Valuation 157
52 Pro Forma Maximum Valuation 158
53 Pro Forma Superrange Valuation 159
54 Summary of Valuation Premium or Discount 160
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
ALPHABETICAL EXHIBITS
PAGE
<S> <C>
A Background and Qualifications 161
B RB 20 Certification 165
C Affidavit of Independence 166
</TABLE>
<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 Columbia
Financial of Kentucky Inc. (the "Corporation"), an Ohio corporation, formed as a
holding company to own all of the to-be-issued shares of common stock of
Columbia Federal Savings Bank, Fort Mitchell, Kentucky ("Columbia Federal" or
the "Bank"). The stock is to be issued in connection with the Bank's Application
for Approval of Conversion from a federally chartered mutual savings bank to a
federally chartered stock savings bank. 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 ss.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 September 30, 1993 through 1997, and
discussed them with Columbia Federal's management and with Columbia Federal's
independent auditors, Von Lehman & Company, Ft. Mitchell, Kentucky. 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 Columbia Federal's home office 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 Kentucky and the United States. We have also examined the competitive market
within which Columbia Federal operates, giving consideration to the area's
numerous financial institution offices, mortgage banking offices, and credit
union offices 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 Columbia Federal 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 COLUMBIA FEDERAL SAVINGS BANK
GENERAL
Columbia Federal Savings Bank, Fort Mitchell, Kentucky, was organized
in 1884 as a Kentucky-chartered mutual savings and loan association with the
name of Columbia Building Association. The Bank became a federally-chartered
savings and loan association in 1934, changing its name to Columbia Federal
Savings and Loan Association of Covington. In 1970, Star Federal Savings and
Loan Association merged into Columbia Federal and in 1981, American Federal
Savings and Loan Association merged into Columbia Federal. Then in 1995, the
Bank converted its charter to a federal savings bank and adopted its current
name, Columbia Federal Savings Bank.
Columbia Federal conducts its business from its main office in Fort
Mitchell, Kentucky, and its four branch offices located in Crescent Springs,
Covington, Erlanger and Florence. The Bank's market area is comprised of Boone
and Kenton Counties, Kentucky.
Columbia Federal'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").
Columbia Federal 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, Columbia Federal had assets of $104,006,000, deposits of $90,195,000,
retained earnings of $13,090,000.
Columbia Federal 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. Columbia Federal has
been actively and consistently
4
<PAGE> 14
GENERAL (CONT.)
involved in the origination of residential mortgage loans of one- to four-family
dwellings, which represented 91.0 percent of its loan originations and loan
purchases during the year ended September 30, 1997, and a lesser 87.5 percent of
its loan originations and purchases during the fiscal year ended September 30,
1996. At September 30, 1997, 83.8 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 smaller 78.1 percent at September
30, 1993, with the primary sources of funds being retail deposits from residents
in its local communities. The Bank is also an originator of multi-family loans,
commercial real estate loans, construction and land loans, and consumer loans
including loans on deposits and home improvement loans.
The Bank had $22.2 million, or 20.1 percent of its assets in cash and
investments including FHLB stock. The Bank had an additional $17.9 million, or
17.2 percent of its assets in mortgage-backed securities, with the combined
total of investment securities, mortgage-backed securities, FHLB stock and cash
and cash equivalents being $40.1 million or 38.6 percent of assets. Deposits and
retained earnings have been the primary sources of funds for the Bank's lending
and investment activities.
The Bank's gross amount of stock to be sold in the subscription and
community offering will be $20,200,000 or 2,020,000 shares at $10 per share
based on the midpoint of the appraised value of with net conversion proceeds of
$19,542,000 reflecting conversion expenses of approximately $658,000. The actual
cash proceeds to the Bank of $9.8 million will represent fifty percent of the
net conversion proceeds. The ESOP will represent 8.0 percent of the gross shares
issued or 161,600 shares at $10 per share, representing $1,616,000. The Bank's
net proceeds will be invested in adjustable-rate and fixed-rate mortgage loans,
construction loans, multi-family loans and mortgage-backed securities and
initially invested in short term investments. The Bank may also use
5
<PAGE> 15
GENERAL (CONT.)
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 and federal agency
securities and to possibly purchase mortgage-backed and related securities.
Columbia Federal has seen a moderate overall deposit decrease over the
past four fiscal years with deposits decreasing 7.3 percent from September 30,
1993, to September 30, 1997, or an average of 1.8 percent per year. From
September 30, 1996, to September 30, 1997, deposits decreased by 4.7 percent
compared to a lesser 1.2 percent decline rate in fiscal 1996. The Bank has also
witnessed a decrease in its residential real estate loan portfolio during the
past five years. The Bank has focused on monitoring its earnings and maintaining
its equity to assets ratio. Equity to assets increased from 9.34 percent of
assets at September 30, 1993, to 12.59 percent at September 30, 1997.
Columbia Federal's primary lending strategy has been to focus on the
origination of fixed-rate loans, followed by the origination of adjustable-rate
residential mortgage loans, the origination of multi-family loans, commercial
real estate loans and construction loans of all types, and the origination of
consumer loans to a lesser extent.
Columbia Federal's share of one- to four-family mortgage loans has
increased modestly, rising from 78.1 percent of gross loans at September 30,
1993 to 83.8 percent as of September 30, 1997. Construction and land loans
increased from 4.1 percent of gross loans at September 30, 1993, to 4.9 percent
at September 30, 1997. Multi-family loans decreased from 9.8 percent to 8.6
percent and commercial real estate loans decreased from 7.9 percent to 2.7
percent from September 30, 1993, to September 30, 1997. All types of mortgage
loans as a group increased minimally from 99.88 percent of gross loans
6
<PAGE> 16
GENERAL (CONT.)
in 1993 to 99.92 percent at September 30, 1997. The slight increase in mortgage
loans was offset by the Bank's minimal decrease in consumer loans. The Bank's
share of consumer loans witnessed a decrease in its share of loans from 0.13
percent at September 30, 1993, to 0.08 percent at September 30, 1997, and the
level of consumer loans decreased from $85,000 to $49,000.
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. At September 30, 1993, Columbia Federal had $189,000 in
its loan loss allowance or 0.28 percent of gross loans, which increased to
$300,000 and represented a higher 0.49 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
Columbia Federal's financial position over the past five fiscal years
of September 30, 1993, through September 30, 1997, is highlighted through the
use of selected financial data in Exhibit 5. Columbia Federal has focused on
maintaining its equity position, controlling its overhead ratio, increasing its
investments, and maintaining its net interest margin. Columbia Federal has
experienced a moderate decrease in assets from 1993 to 1997 with a similar
decrease in deposits, and an increase in retained earnings over the past five
fiscal years. Such decreases were the result of a major decrease in assets and
deposits in 1997 with each of these having increased from September 30, 1993, to
September 30, 1995.
7
<PAGE> 17
PERFORMANCE OVERVIEW (CONT.)
Such decreases in loans in 1997 was the result of a higher level of loan
payoffs. Due to the Bank's moderate increase in equity, the resultant impact has
been a moderate increase in the Bank's equity to assets ratio from 1993 to 1997.
Columbia Federal witnessed a total decrease in assets of $3.7 million
or 3.5 percent for the period of September 30, 1993, to September 30, 1997,
representing an average annual decrease in assets of 0.9 percent. Assets
decreased $4.1 million in 1997 or a moderate 3.8 percent. Over the past four
fiscal periods, the Bank experienced its only dollar rise in assets of $2.3
million in fiscal year 1995, which represented a 2.1 percent increase in assets
funded by a rise in deposits. This increase was preceded by a $1.6 million or
1.5 percent decrease in assets in fiscal year 1994.
The Bank's net loan portfolio, including mortgage loans and
non-mortgage loans, decreased from $67.0 million at September 30, 1993, to $61.6
million at September 30, 1997, and represented a total decrease of $5.4 million,
or 8.1 percent. The average annual decrease during that period was 2.03 percent.
That decrease was primarily the result of higher levels of loan payoffs of one-
to four-family loans and multi-family loans. For the year ended September 30,
1997, loans decreased $6.2 million or 9.1 percent.
Columbia Federal has pursued obtaining funds through deposits in
accordance with the demand for loans and has also made occasional use of FHLB
advances for cash management purposes during the past five years. The Bank's
competitive rates for savings in its local market in conjunction with its focus
on services and office network have been the sources for attracting retail
deposits. Deposits decreased 3.6 percent from 1993 to 1994, followed by a 2.1
percent increase in fiscal year 1995 and then a minimal decrease of 1.2 percent
in 1996 and a moderate decrease of 4.7 percent in 1997, with an average annual
rate of decrease of 1.8 percent from September 30, 1993, to September 30, 1997.
The Bank's only fiscal year deposit growth was in 1995, when deposits increased
$2.0 million or 2.1 percent. The Bank had no FHLB advances at the end of any
fiscal year.
8
<PAGE> 18
PERFORMANCE OVERVIEW (CONT.)
Columbia Federal has been able to increase its retained earnings each
fiscal year from 1993 through 1997. At September 30, 1993, the Bank had retained
earnings of $10.1 million representing a 9.34 percent retained earnings to
assets ratio increasing to $13.1 million at September 30, 1997, and representing
a 12.59 percent retained earnings to assets ratio. The modest rise in the equity
to assets ratio from 1993 to 1997 is the result of the Bank's moderate earnings
performance in 1993 through 1997 combined with a modest decrease in assets.
Retained earnings increased 30.0 percent from September 30, 1993, to September
30, 1997, representing an average annual increase of 7.5 percent and increased
4.4 percent for the year ended September 30, 1997.
INCOME AND EXPENSE
Exhibit 6 presents selected operating data for Columbia Federal,
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.
Columbia Federal has witnessed an overall decrease in its dollar level
of interest income from September 30, 1993, through September 30, 1997, due to
the Bank's shrinkage in assets, primarily loans. Interest income ranged from a
high of $8.4 million in 1993 to a low of $7.94 million in 1994, and then
increasing to $8.2 million in 1996 before decreasing to $8.0 million in 1997.
This overall trend was a combination of a decrease of 5.0 percent from 1993 to
1994 followed by modest increases from 1994 to 1996. In fiscal year 1997,
interest income decreased $202,000 or 2.5 percent to $8.0 million. The overall
decrease in interest income was due primarily to the Bank's decrease in its loan
portfolio.
9
<PAGE> 19
INCOME AND EXPENSE (CONT.)
The Bank's interest expense experienced a similar trend with a decrease
in 1994 followed by an increase from fiscal year 1994 to 1996, followed by a
modest decrease in 1997. Interest expense decreased $517,000 or 11.8 percent,
from 1993 to 1994, compared to a smaller decrease in interest income of $416,000
or 5.0 percent, for the same time period. Interest expense then increased
$725,000 or 18.8 percent from 1994 to 1996, compared to an increase in interest
income of $259,000 or 3.3 percent. From 1996 to 1997, interest expense decreased
$127,000 or 2.8 percent compared to a decrease in interest income of $202,000 or
2.5 percent. Such decrease in interest income, notwithstanding the decrease in
interest expense, resulted in a modest dollar decrease in annual net interest
income of $75,000 or 2.1 percent for the fiscal year ended September 30, 1997,
but an increase in net interest margin. Net interest income increased from
$3,985,000 in 1993 to its highest level of $4,086,000 in 1994 and then decreased
to $3,545,000 in 1997.
The Bank has made provisions for loan losses in each of the past five
fiscal years of 1993 through 1997. The amounts of those provisions were
determined in recognition of the Bank's levels of nonperforming assets,
classified assets, charge-offs, repossessed assets, the Bank's level of lending
activity, and industry norms. The loan loss provisions were $47,000 in 1993,
$34,000 in 1994, $13,000 in 1995, $8,000 in 1996 and $113,000 in 1997. The
impact of these loan loss provisions has been to provide Columbia Federal with a
general valuation allowance of $300,000 at September 30, 1997, or 0.49 percent
of gross loans and 49.9 percent of nonperforming assets.
Total other income or noninterest income indicated overall stable
levels in fiscal years 1994 to 1997, with a significantly higher level in 1993
due to higher loan fee income. The highest level of noninterest income was in
fiscal year 1993 at $174,000 or 0.17 percent of assets and the lowest level at
$88,000 was in 1997, representing 0.08 percent of assets. The average
noninterest income level for the past five fiscal years was $111,600 or a modest
0.11 percent of average assets and a lower $96,000 when one excludes 1993 or
0.09 percent of average assets. Noninterest income consists primarily of service
charges, fees and other income.
10
<PAGE> 20
INCOME AND EXPENSE (CONT.)
The Bank's general and administrative expenses or noninterest expenses
increased from $2,190,000 for the fiscal year of 1993 to $2,667,000 for the
fiscal year ended September 30, 1997. In fiscal 1996, noninterest expenses were
a higher $3,120,000 due to the one time SAIF assessment of $592,000. The dollar
increase in noninterest expenses was $477,000 from 1993 to 1997, representing an
average annual increase of $119,250 or 5.1 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, operating expenses increased
from 2.07 percent of average assets for the fiscal year ended September 30,
1993, to 2.53 percent for the fiscal year ended September 30, 1997, which was
higher than current industry average of approximately 2.35 percent.
The net earnings position of Columbia Federal has indicated profitable
performance in each of the past five fiscal years ended September 30, 1993
through 1997. The annual net income figures for the past five fiscal years of
1993, 1994, 1995, 1996 and 1997 have been $1,329,000, $1,265,000, $816,000,
$388,000, and $553,000, representing returns on average assets of 1.23 percent,
1.17 percent, 0.77 percent, 0.36 percent, and 0.53 percent, respectively.
Exhibit 7 provides the Bank's normalized earnings or core earnings for
fiscal years 1995, 1996, and 1997. The Bank's normalized earnings eliminate any
nonrecurring income and expense items. There were no adjustments for fiscal year
1995. In fiscal 1996, there was an expense adjustment of $592,000 to eliminate
the one time SAIF assessment and in 1997, there was an expense adjustment to
reduce the higher provision for loan losses.
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 1.23 percent
in fiscal year 1993 to 1.17 percent in 1994, then decreasing to 0.77 percent in
fiscal year 1995, decreasing to 0.36 percent in fiscal year 1996, and then
increasing to 0.53 percent in 1997.
11
<PAGE> 21
INCOME AND EXPENSE (CONT.)
The Bank's average net interest rate spread increased from 3.45 percent
in fiscal year 1993 to 3.53 percent in fiscal year 1994, then decreased during
the next three fiscal years to 2.97 percent in 1997. The Bank's net interest
margin increased from 3.76 percent in fiscal year 1993 to 3.87 percent in fiscal
year 1994, then decreasing to 3.38 percent in fiscal 1995, and then increasing
to 3.46 percent in fiscal 1997. Columbia Federal's net interest rate spread
increased 8 basis points in 1994 to 3.53 percent from 3.45 percent in 1993 and
then decreased 60 basis points in 1995 to 2.93 percent. Net interest rate spread
then increased 1 basis points to 2.94 percent in fiscal year 1996 and increased
another 3 basis points to 2.97 percent for the fiscal year ended September 30,
1997. The Bank's net interest margin followed a similar trend, increasing 11
basis points to 3.87 percent in 1994 and then decreasing 49 basis points to 3.38
percent in 1995. Net interest margin increased 3 basis points to 3.41 percent in
1996 and continued to increase to 3.46 percent in 1997.
The Bank's return on average retained earnings decreased from 1993 to
1996, and then increased in 1997. The return on average retained income
decreased from 14.12 percent in 1993 to 11.78 percent in fiscal year 1994, and
then decreased to 6.92 percent in fiscal year 1995. The return on average
retained earnings then decreased to 3.10 percent in fiscal year 1996, and then
increased to 4.30 percent for the fiscal year ended September 30, 1997.
The Bank's ratio of non-interest expenses to average assets increased
from 2.07 percent in fiscal year 1993 to a higher 2.53 percent in fiscal year
1997, due primarily to a rise in normal overhead. 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 decreasing
level of efficiency reflected in its rise in its efficiency ratio, which
increased from 52.66 percent in 1993 to 73.41 percent in 1997.
12
<PAGE> 22
INCOME AND EXPENSE (CONT.)
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. Columbia Federal witnessed a decrease in its nonperforming
asset ratio from 1993 to 1997. Nonperforming assets consist of loans delinquent
90 days or more, nonaccruing loans and repossessed assets. The ratio of
nonperforming assets to total assets was 0.46 percent at September 30, 1993, and
increased to 0.56 percent at September 30, 1994. The ratio then decreased to
0.03 percent in 1995, increased to 0.16 percent in 1996 and to 0.58 percent in
1997. The Bank's allowance for loan losses was 0.28 percent of loans at
September 30, 1993, and decreased to 0.27 percent at September 30, 1994, and
then increased to 0.49 percent at September 30, 1997. As a percentage of
nonperforming loans, Columbia Federal's allowance for loan losses increased to
72.97 percent in 1993, then decreased to 38.03 percent in 1994, increased to
106.78 percent in 1996 and then decreased to 49.92 percent in 1997.
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. In fiscal year
1996, net interest income increased $123,000, due to an increase in interest
income of $255,000 reduced by a $132,000 increase in interest expense. The
increase in interest income was due to an increase due to rate of $152,000
accented by an increase due to volume of $103,000. The increase in interest
expense was due to an increase due to volume of $159,000 reduced by a decrease
due to a change in rate of $27,000.
In fiscal year 1997, net interest income decreased $75,000, due to a
$202,000 decrease in interest income reduced by a $127,000 decrease in interest
expense. The decrease in interest income was due to a $248,000 decrease due to
volume reduced by a $46,000 increase due to rate. The decrease in interest
expense was due to a $149,000 decrease due to volume reduced by $22,000 increase
due to rate.
13
<PAGE> 23
YIELDS AND COSTS
The overview of yield and cost trends for the years ended September 30,
1995 to 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.
Columbia Federal's weighted average yield on its loan portfolio
increased 7 basis points from fiscal year 1995 to 1997, from 8.54 percent to
8.61 percent, and then decreased 38 basis points to 8.23 percent at September
30, 1997. The yield on mortgage-backed securities increased 32 basis points from
fiscal year 1995 to 1997 from 6.51 percent to 6.83 percent and then decreased 2
basis points to 6.81 percent at September 30, 1997. The yield on investment
securities increased 55 basis points from 5.34 percent in 1995 to 5.89 percent
in 1997 and then decreased 16 basis points to 5.73 percent at September 30,
1997. The yield on interest-bearing deposits increased 26 basis points from
fiscal year 1995 to 1997, from 4.99 percent to 5.25 percent and then increased
11 basis points to 5.36 percent at September 30, 1997. The combined weighted
average yield on all interest-earning assets increased 13 basis points to 7.81
percent from 1995 to 1997. The yield on interest-earning assets at September 30,
1997, was a lower 7.44 percent.
Columbia Federal's weighted average cost of interest-bearing
liabilities increased 3 basis points to 4.78 percent from fiscal year 1995 to
1996, which was less than the Bank's 4 basis point increase in yield, resulting
in an increase in the Bank's interest rate spread of 1 basis points from 2.93
percent to 2.94 percent from 1995 to 1996. The Bank's average cost of
interest-bearing liabilities then increased from 1996 to 1997 by 6 basis points
to 4.84 percent compared to a 9 basis point increase in yield on
interest-earning assets. The result was a continued increase in the Bank's
interest rate spread of 3 basis points to 2.97 percent for fiscal year 1997. At
September 30, 1997, the Bank's cost of funds increased 10 basis points to 4.94
percent, compared to a 37 basis point decrease in yield on interest-earning
assets, resulting in a lower net interest rate spread by 47 basis points to 2.50
percent
14
<PAGE> 24
YIELDS AND COSTS (CONT.)
compared to 2.97 percent for the fiscal year ended September 30, 1997. The
Bank's net interest margin increased from 3.38 percent in fiscal year 1995 to
3.41 percent in fiscal year 1996, increasing further to 3.46 percent for the
year ended September 30, 1997.
INTEREST RATE SENSITIVITY
Columbia Federal has always monitored its interest rate sensitivity
position and focused on maintaining a higher level of rate sensitive short term
investments to offset its higher level of fixed-rate mortgage loans. Columbia
Federal 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. Columbia Federal has responded to the interest
rate sensitivity issue by maintaining a higher level of short term investments
and a moderate level of adjustable-rate mortgage-backed securities.
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.
15
<PAGE> 25
INTEREST RATE SENSITIVITY (CONT.)
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 September 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 September 30, 1997, based on a rise in
interest rates of 200 basis points was a 20.0 percent decrease, representing a
dollar decrease in equity value of $3,322,000. In contrast, based on a decline
in interest rates of 200 basis points, the Bank's NPV was estimated to increase
8.0 percent or $1,333,000 at September 30, 1997. The Bank's exposure increases
to a 43.0 percent decrease under a 400 basis point rise in rates, and the NPV is
estimated to increase 20.0 percent based on a 400 basis point decrease in rates.
The Bank is aware of its moderate interest rate risk exposure under
rapidly rising rates and more modest exposure under falling rates. Due to
Columbia Federal's recognition of the need to control its interest rate
exposure, the Bank has focused on maintaining a higher level of liquid
investments, mortgage-backed securities and originating adjustable-rate
multi-family, commercial real estate loans and one- to four-family ARMs.
16
<PAGE> 26
LENDING ACTIVITIES
Columbia Federal has focused its lending activity on the origination of
conventional mortgage loans secured by one- to four-family dwellings. Exhibit 12
provides a summary of Columbia Federal's loan portfolio, by loan type, at
September 30, 1993 through 1997.
Residential loans secured by one- to four-family dwellings but
excluding residential construction loans was the primary loan type representing
83.8 percent of the Bank's gross loans as of September 30, 1997. This share has
seen a moderate increase from 78.1 percent at September 30, 1993. The second
largest real estate loan type as of September 30, 1997, was multi-family loans
which comprised a moderate 8.6 percent of gross loans compared to a larger 9.8
percent as of September 30, 1993. The multi-family loan category was also the
second largest real estate loan type in 1993. The third key real estate loan
type was construction loans, which represented 4.9 percent of gross loans as of
September 30, 1997, compared to a slightly smaller 4.1 percent at September 30,
1993. Construction loans was the fourth largest real estate loan type at
September 30, 1993. Nonresidential loans was the fourth largest real estate loan
type representing 2.7 percent of gross loans at September 30, 1997, and a larger
7.9 percent at September 30, 1993, making it the third largest real estate loan
type in 1993. These four largest real estate loan categories represented 99.92
percent of gross loans at September 30, 1997, compared to a similar 99.88
percent of gross loans at September 30, 1993.
The consumer loan category was the remaining loan type at September 30,
1997, and represented a minimal 0.08 percent of gross loans compared to 0.12
percent at September 30, 1993. Consumer loans were the fifth largest overall
loan type, at September 30, 1997, and at September 30, 1993. The Bank originates
home improvement loans and savings account loans. The overall mix of loans has
witnessed almost no change from fiscal year-end 1993 to 1997.
17
<PAGE> 27
LENDING ACTIVITIES (CONT.)
The emphasis of Columbia Federal's lending activity is the origination
and purchase of conventional mortgage loans secured by one- to four-family
residences. Such residences are located in Columbia Federal's market area, which
includes Boone and Kenton Counties, Kentucky. The Bank also originates interim
construction loans on one- to four-family residences primarily to individual
owners and to developers. At September 30, 1997, 83.8 percent of Columbia
Federal's gross loans consisted of loans secured by one- to four-family
residential properties, excluding construction loans. Construction loans
represented another 4.9 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 one-year or three-year U. S. Treasury Constant Maturity
Treasury (CMT) Index. ARMs have a maximum rate adjustment of 2.0 percent at each
adjustment period and 6.0 percent for the life of the loan with payments based
on up to a 25 year loan term.
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 retains its fixed rate loans. The
majority of Columbia Federal's mortgage loan portfolio has been fixed-rate
mortgage loans, which represented 80.7 percent of mortgage loans due after
September 30, 1997. All of Columbia Federal's construction loans are fixed-rate,
but 39.5 percent of multifamily loans are adjustable-rate, the largest loan
category of adjustable-rate loans based on share of loans. Overall, 19.3 percent
of Columbia Federal loans due after September 30, 1997, are adjustable-rate.
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 Columbia Federal, even though the Bank will grant loans with up to a
95 percent loan to value ratio, but private mortgage insurance is required for
loans in excess of 85 percent. Mortgage
18
<PAGE> 28
LENDING ACTIVITIES (CONT.)
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.
Columbia Federal has also been an originator of commercial real estate
loans and has been somewhat active in multi-family loans in the past. The Bank
will continue to make multi-family and commercial real estate loans. The Bank
had a total of $1.7 million in commercial real estate loans at September 30,
1997, or 2.7 percent of gross loans, compared to $5.5 million or 7.9 percent of
gross loans at September 30, 1993. Multifamily loans have decreased from $6.8
million or 9.8 percent of gross loans at September 30, 1993, to $5.5 million and
a lesser 8.9 percent of gross loans at September 30, 1997. The major portion of
commercial real estate loans are secured by office buildings, retail stores and
other commercial properties and are located in the Bank's primary market area.
Columbia Federal has not been active in consumer lending. Consumer
loans originated consist of home improvement loans and savings account loans,
which represented a combined total of only $49,000 or 0.08 percent of gross
loans at September 30, 1997, down from $85,000 or 0.12 percent of loans in 1993.
Exhibit 13 provides a loan maturity schedule and breakdown and summary
of Columbia Federal's fixed- and adjustable-rate loans, indicating a majority of
fixed-rate loans. At September 30, 1997, 80.7 percent of the Bank's total loans
due after September 30, 1997, were fixed-rate and 19.3 percent were
adjustable-rate. The Bank also has 15.6 percent of its loans at September 30,
1997, due in 10 years or less and an additional 50.0 percent due in 10 to 20
years.
19
<PAGE> 29
LENDING ACTIVITIES (CONT.)
As indicated in Exhibit 14, Columbia Federal experienced an increase in
its one-to four-family loan originations and total loan originations from fiscal
years 1995 to 1997. Total loan originations in fiscal year 1997 were $11.7
million compared to $6.8 million in fiscal year 1995, with fiscal year 1996
originations of $10.3 million, reflective of higher levels of one- to
four-family, construction, multi-family and nonresidential loan originations.
The increase in one- to four-family residential loan originations from 1995 to
1997 constituted 75.7 percent of the $4.9 million aggregate increase in total
loan originations from 1995 to 1997, construction loans were responsible for
12.8 percent of the increase, nonresidential loans were responsible for 3.8
percent and multi-family loans responsible for 6.7 percent of the increase. Loan
originations on one- to four-family residences, excluding construction loans,
represented 56.0 percent of total loan originations in fiscal year 1995,
compared to a higher 67.5 percent in fiscal year 1996 and 64.3 percent in fiscal
year 1997. Construction loans represented a strong 27.2 percent of total loans
originated in fiscal 1997, compared to a larger 37.5 percent in fiscal 1995.
Overall, loan originations fell short of principal payments and
repayments in fiscal 1995 by $4.4 million, were less than reductions in fiscal
year 1996 by $2.4 million, and fell short of reductions in fiscal 1997 by a
higher $7.3 million.
20
<PAGE> 30
NONPERFORMING ASSETS
Columbia Federal 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. Columbia Federal 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 Columbia Federal's delinquent loans at
September 30, 1995 through 1997, indicating a rising level of delinquent loans.
The Bank had $601,000 or 0.94 percent of loans in loans delinquent 90 days or
more at September 30, 1997, compared to no loans at September 30, 1995. Loans
delinquent 30 to 89 days totaled $668,000 at September 30, 1995, or 0.95 percent
of loans, and were $1,140,000 or a higher 1.78 percent of gross loans at
September 30, 1997. Total delinquent loans were $1.7 million or 2.72 percent at
September 30, 1997, up from 0.95 percent at September 30, 1995.
Columbia Federal'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,
the Bank sends the borrower a late payment notice within 15 days after the
payment is due. 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
21
<PAGE> 31
NONPERFORMING ASSETS (CONT.)
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.
Exhibit 16 provides a summary of Columbia Federal's nonperforming
assets at September 30, 1993 through 1997. Nonperforming assets consist of
non-accrual loans, loans delinquent 90 days or more and real estate owned. The
Bank historically carried a lower level of nonperforming assets. Columbia
Federal's level of nonperforming assets ranged from a high dollar amount of
$601,000 or 0.58 percent of total assets at September 30, 1997, to a low dollar
amount of $32,000 or 0.03 percent of assets at September 30, 1995. At September
30, 1997, Columbia Federal's nonperforming assets consisted of $601,000 in
delinquent loans 90 days or more past due representing 0.98 percent of loans,
its highest ratio over the past five years with no repossessed assets or
nonaccruing loans.
Columbia Federal's level of nonperforming assets was below its level of
classified assets. The Bank's level of classified assets was $972,000 or 0.93
percent of assets at September 30, 1997 (reference Exhibit 17). The Bank's
classified assets consisted of $972,000 in substandard assets, with none
classified as doubtful or loss.
Exhibit 18 shows Columbia Federal's allowance for loan losses for
fiscal years 1993 through 1997, indicating the activity and the resultant
balances. Columbia Federal has witnessed an increase in its balance of allowance
for loan losses from $189,000 in 1993 to $300,000 in 1997. The balance in
allowance for loan losses was maintained each year from 1993 to 1996 and then
increased in 1997, with provisions of $47,000 in 1993, $34,000 in 1994, $13,000
in 1995, $8,000 in 1996 and $113,000 in fiscal 1997. The Bank had net
charge-offs of $47,000 in 1993, $34,000 in 1994, $13,000 in 1995, $8,000 in
1996, and $2,000 in 1997. The Bank's ratio of allowance for loan losses to gross
loans increased from a modest 0.28 percent at September 30, 1993, to 0.49
percent at September 30, 1997,
22
<PAGE> 32
NONPERFORMING ASSETS (CONT.)
due to the higher provision in 1997. Allowance for loan losses to nonperforming
loans was 72.97 percent at September 30, 1993, and a lower 49.92 percent at
September 30, 1997, reflecting the significant increase in nonperforming loans
and the moderate increase in allowance for loan losses.
INVESTMENTS
The investment and securities portfolio of Columbia Federal has been
comprised of U.S. government and federal agency securities, mortgage-backed
securities and FHLB stock. Exhibit 19 provides a summary of Columbia Federal's
investment portfolio at September 30, 1995 through 1997, including FHLB stock.
Investment securities totaled $15.3 million at September 30, 1997, compared to
$16.2 million at September 30, 1996, and $14.6 million at September 30, 1995,
including FHLB stock of $1.3 million at September 30, 1997. The primary
component of investment securities at September 30, 1997, was U.S. government
and federal agency securities, representing 91.8 percent of investments. The
securities portfolio had a weighted average yield of 5.73. percent, and the
mortgage-backed securities had a weighted average yield of 6.81 percent at
September 30, 1997. The Bank also had cash and cash equivalents of $6.8 million
or 6.6 percent of assets at September 30, 1997, and liquid assets represented
23.5 percent of assets at September 30, 1997.
The Bank had mortgage-backed securities with a book value of $17.9
million at September 30, 1997, which decreased from $18.8 million at September
30, 1996, and increased from $16.8 million at September 30, 1995.
Mortgage-backed securities are included with total investments and shown in
Exhibit 19. Total investment and mortgage-backed securities were $33.2 million
or 31.9 percent of assets excluding cash and cash equivalents but including FHLB
stock.
23
<PAGE> 33
DEPOSIT ACTIVITIES
The change in the mix of deposits from September 30, 1995, 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 65.1
percent of total deposits at September 30, 1995, to a stronger 67.7 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 51.5 percent of
certificates at September 30, 1997. At September 30, 1995, the major component
of certificates was the 6.01 percent to 8.00 percent category with 51.3 percent
of certificates. Passbook savings accounts decreased slightly in dollar amount
from $13.5 million to $13.2 million, but their share of total deposits increased
from 14.1 percent to 14.6 percent from September 30, 1995, to September 30,
1997, respectively, with a change in rates from 3.44 percent to 3.02 percent
during that period. NOW accounts indicated a modest dollar decrease declining
from $4.3 million at September 30, 1995, to $4.0 million at September 30, 1997,
and their share of total deposits decreased from 4.5 percent to 4.4 percent.
MMDA accounts witnessed a more significant decrease in deposits from $15.6
million at September 30, 1995, to $11.9 million at September 30, 1997, with
their share decreasing from 16.3 percent to 13.2 percent over that time period.
Club accounts had a decrease in their share of deposits declining from 0.08
percent to 0.07 percent during the same time period.
Exhibit 21 shows the Bank's deposit activity for the three years ended
September 30, 1995 to 1997. Excluding interest credited, Columbia Federal
experienced net decreases in deposits in fiscal years 1995, 1996, and 1997. In
fiscal year 1995, there was a net decrease in deposits of $1.7 million or 1.9
percent, followed by a $5.0 million net decrease or 5.2 percent in 1996. In
fiscal year 1997, a net decrease in deposits of $8.2 million resulted in a 8.6
percent decrease in deposits excluding interest credited.
24
<PAGE> 34
BORROWINGS
Columbia Federal has relied on retail deposits as its primary source of
funds but has made occasional use of FHLB advances for cash management purposes.
Exhibit 22 shows the Bank's FHLB advances activity for the past three fiscal
years. The Bank had average FHLB advances totaling $1.1 million in 1995, with no
advances in 1996 and average advances of $417,000 in 1997. The Bank had no
advances outstanding at the end of 1995, 1996, or 1997. The cost of FHLB
advances has increased from 5.82 percent in 1995, to 6.00 percent in 1997.
SUBSIDIARIES
Columbia Federal has no subsidiaries.
OFFICE PROPERTIES
Columbia Federal has 5 full service offices located in Boone and Kenton
Counties. (reference Exhibit 23). Columbia Federal owns all of its offices. The
Bank's investment in its office premises, including furniture, fixtures and
equipment, totaled $1.6 million or 1.54 percent of assets at September 30, 1997.
MANAGEMENT
The President, Chief Executive Officer, and Managing Officer of
Columbia Federal is Robert V. Lynch, who is also a Director. Mr. Lynch joined
the Bank in 1971 serving the Bank as Treasurer from 1974 to 1977. In 1977 Mr.
Lynch became President and Chief Executive Officer. Mr. Lynch has been a
director since 1978. The Bank's senior management also includes four vice
presidents, the secretary/treasurer and the controller.
25
<PAGE> 35
II. DESCRIPTION OF PRIMARY MARKET AREA
Columbia Federal's primary market area for retail deposits encompasses
all of Kentucky and Boone and Kenton Counties, (the market area"). The Bank has
five offices, one each in Fort Mitchell, Covington, Crescent Springs, Erlanger
and Florence.
The primary market area is characterized by a modestly higher than
average level of median household income but a lower housing value when compared
to the United States. Unemployment rates in the market area, Kenton County and
Boone County have been lower than national unemployment rates and have declined
over the past few years. Kenton and Boone Counties' unemployment rates have been
below Kentucky's unemployment rates, while Kentucky's unemployment rate has been
higher than the United States. The market area's strongest employment categories
are the services industry, wholesale/retail trade industry and the manufacturing
industry, with a noticeably higher level of residents employed in the
transportation/utilities industry category than in the United States.
Exhibit 25 provides a summary of key demographic data and trends for
the market area, Fort Mitchell, Kentucky and the United States. Overall, from
1990 to 1996, population increased in the market area as well as in Fort
Mitchell, Kentucky and the United States. The population increased by 9.5
percent and 4.8 percent for the market area and Fort Mitchell, respectively,
from 1990 to 1996. In the same time period, population increased a similar 5.7
percent in Kentucky, 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 7.0 percent in the market area and increase by 3.2 percent in Fort
Mitchell, 4.3 percent in Kentucky and 5.1 percent in the United States.
In conformance with its modestly rising trend in population, the two
market area counties witnessed an increase in households (families) of 9.3
percent from 1990 to 1996. During that same time period, the number of
households increased in Kentucky by 6.0 percent and increased by 6.8 percent in
the United States. By the year 2001, the market
26
<PAGE> 36
DESCRIPTION OF PRIMARY MARKET AREA (CONT.)
area's households are projected to continue to increase by 6.8 percent, while
the number of households are expected to increase by 4.4 percent in Kentucky and
increase in the United States by 5.1 percent.
In 1990, per capita income in the market area was higher than the per
capita income in Kentucky and the United States. The market area had a 1990 per
capita income of $13,582 compared to Kentucky at a lower $11,153 and the United
States at $12,313. From 1990 to 1996, per capita income increased in the market
area, Kentucky 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 13.1 percent to $15,361, while Kentucky's per capita income increased
by a larger 14.3 percent to a lower $12,744. 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
higher than the median household income in Kentucky and the United States. The
market area had a 1990 median household income of $32,501, which was higher than
Kentucky's median household income of $22,534 and also higher than the United
States' median household income of $28,255. From 1990 to 1996, median household
income in the primary market area, Kentucky 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 10.9 percent to $36,000
in the market area compared to a lower 14.1 percent increase to $25,703 in
Kentucky and a higher 21.1 percent increase to $34,530 in the United States.
From 1996 to 2001, median household income is projected to decrease by 2.7
percent in the market area while decreasing by 5.0 percent in Kentucky 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 $35,076 in the market
area, $24,407 in Kentucky, while decreasing in the United States to $33,189.
Exhibit 26 provides a summary of key housing data for the market area,
Fort Mitchell, Kentucky and the United States. The market area had a slightly
lower than
27
<PAGE> 37
DESCRIPTION OF PRIMARY MARKET AREA (CONT.)
average rate of owner-occupancy at 68.9 percent, less than the 69.6 percent
owner- occupancy rate for Kentucky. The United 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 31.1 percent compared to 30.4 percent for
Kentucky and 35.8 percent for the United States.
The market area's median housing value of $69,450 is higher than
Kentucky's but lower than the United States' median housing value. The market
area's median housing value of $69,450 is 38.6 percent higher than Kentucky's
median housing value of $50,100 but 12.2 percent lower than the United States'
$79,098 median housing value. The average median rent of the market area
surpasses the median rent of Kentucky and the United States. The market area had
a median rent of $396, which was higher than the United States' median rent of
$374 and higher than Kentucky's median rent value of $319.
In 1990, the major business source of employment by industry group,
based on number of employees, for the market area was the services industry,
responsible for 30.3 percent of jobs, which was lower than Kentucky and the
United States with 31.3 percent and 34.0 percent, respectively (reference,
Exhibit 27). The wholesale/retail trade industry was the second major employer
in the market area at 24.4 percent. In Kentucky and the United States, the
wholesale/retail trade group was also the second major employer with 22.3
percent and 27.5 percent, respectively. The manufacturing group was the third
major employer in the market area at 18.0 percent. In Kentucky and the United
States the manufacturing group was also third with 20.3 percent and 19.2
percent, respectively. The construction group, finance, insurance and real
estate group, transportation/utilities group, and the agriculture/mining groups
combined to provide 27.3 percent of employment in the market area, 26.1 percent
of employment in Kentucky and 19.3 percent in the United States.
The strong presence of the services group in the market area is due to
the strong presence of the Internal Revenue Service office and also of the St.
Elizabeth Medical Center, which together, employ approximately 6,000 people. The
public school systems within Kenton County are also major employers for the
area, providing over 2,000 jobs.
28
<PAGE> 38
DESCRIPTION OF PRIMARY MARKET AREA (CONT.)
The following list provides some of the leading employers in the market area:
<TABLE>
<CAPTION>
Employer Product/Service Number of Employees
- -------- --------------- -------------------
<S> <C> <C>
U.S. Government Internal Revenue Service 3,500
St. Elizabeth Medical Center Hospital 2,494
Fidelity Investments Stock brokerage 2,000
Kenton County Board of Ed. Public school system 1,250
Covington Board of Ed. Public school system 787
Mazak Corporation Machine tools & machinery 553
R.A. Jones & Company Packaging machinery 510
</TABLE>
Boone County to the west and Campbell County to the east, just outside
the market area, also contribute major sources of employment to Columbia
Federal's market area as well. Major employers in these counties are Delta Air
Lines with 3,130 jobs, The Gap/Banana Republic with 1,650 jobs, COMAIR Holdings
providing 1,613 jobs, The St. Luke Hospitals contributing 1,289 jobs, the Kroger
Company with 1,279 positions, the Boone County Board of Education with 1,200
positions, and Northern Kentucky University with 1,004 jobs.
The unemployment rate is another key economic indicator. Exhibit 28
shows the unemployment rates in the two market area counties, Kentucky and the
United States in 1994, 1995, 1996 and September 1997. The two market area
counties combined have been characterized by a lower unemployment rate than
Kentucky and also lower than the United States. In 1994, Kenton County had an
unemployment rate of 4.5 percent and Boone County had an unemployment rate of
4.6 percent, compared to an unemployment rate of 5.4 percent in Kentucky and a
higher 6.1 percent in the United States. Kenton County's unemployment rate
decreased to 4.2 percent in 1995 and Boone County's unemployment rate decreased
to 4.1 percent, compared to no change in Kentucky and a decrease to 5.6 percent
in the United States. In 1996, the two market area counties had an unemployment
rate of 4.2 percent in Kenton County and 4.1 percent in Boone County, with
Kentucky at
29
<PAGE> 39
DESCRIPTION OF PRIMARY MARKET AREA (CONT.)
5.6 percent and the United States at 5.0 percent. By September 1997, the
unemployment rate in the two market area counties was again lower at 3.7 percent
in Kenton County and 3.5 percent in Boone County and had also decreased to 5.0
percent in Kentucky and to 4.7 percent in the United States.
Exhibit 29 provides deposit data for banks, thrifts and credit unions
in the two market area counties. Columbia Federal's deposit base in the market
area was $97.5 million or 53.0 percent of the $184.1 million total thrift
deposits and a much smaller 4.4 percent share of total deposits which were $2.2
billion as of June 30, 1996. The market area is dominated by the banking
industry. Total bank deposits in the market area was $2.0 billion representing
90.9 percent of total deposits, compared to a lower $184.1 million or 8.3
percent of deposits for thrifts, and $16.9 million or 0.8 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 counties have a 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 30 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.
30
<PAGE> 40
SUMMARY
To summarize, the market area represents an area with an increasing
population trend and household trend during the mid 1990s. The market area
displayed a lower per capita income but higher median household income than the
United States in 1996 and had a lower median housing value but higher median
rent level than the United States. Finally, the market area has a lower
unemployment rate when compared to 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 $2.2 billion in deposits.
31
<PAGE> 41
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 Kentucky.
Exhibits 31 and 32 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 31
and 32 also subclassify all thrifts by region, including the 146 publicly-traded
Midwest thrifts ("Midwest thrifts") and the 10 publicly-traded thrifts in
Kentucky ("Kentucky thrifts"), and by trading exchange. Exhibit 33 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 Columbia Federal 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
32
<PAGE> 42
INTRODUCTION (COnt.)
defined are considered to be both reasonable and reflective of Columbia
Federal'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:
<TABLE>
<CAPTION>
Institution State
----------- -----
<S> <C>
HomeCorp, Inc. Illinois
Gateway Bancorp, Inc. Kentucky
Sho-Me Financial Corp. Missouri
</TABLE>
No thrift institution in Columbia Federal's city, county or market area
is currently involved in merger/acquisition activity or has recently been so
involved, as indicated in Exhibit 34.
33
<PAGE> 43
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
35 presents pricing ratios and Exhibit 36 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:
<TABLE>
<CAPTION>
Institution State
----------- -----
<S> <C>
Jacksonville Savings Bank, MHC Illinois
Pulaski Bank, Savings Bank, MHC Missouri
Guaranty Federal Savings Bank, MHC Missouri
Wayne Savings Community Bank, MHC Ohio
</TABLE>
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.
34
<PAGE> 44
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 Columbia Federal,
including the western, southwestern and New England states.
The geographic location parameter consists of Kentucky and its
surrounding states of Missouri, Illinois, Indiana, Ohio, West Virginia, Virginia
and Tennessee, for a total of eight 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.
35
<PAGE> 45
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 $350 million or less, due to the greater similarity of asset mix
and operating strategies of institutions in this asset range compared to
Columbia Federal, with assets of approximately $104 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 37 and 38 show the 65 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.
36
<PAGE> 46
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 37. 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 Columbia
Federal with regard to asset mix. The balance sheet parameters also distinguish
institutions with a significantly different capital position from Columbia
Federal. 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
Columbia Federal's level of cash and investments to assets was 20.1
percent at September 30, 1997, and reflects the Bank's slightly higher share of
investments compared to national and regional averages. The Bank's investments
consist primarily of U. S. government and federal agency securities, FHLB
deposits and certificates of deposit in other institutions. During its last five
fiscal years, Columbia Federal's ratio of cash and investments to assets has
remained generally constant and has averaged 17.8 percent, from a high of 20.1
percent at September 30, 1997, to a low of 15.3 percent in fiscal year 1994.
37
<PAGE> 47
CASH AND INVESTMENTS TO ASSETS (CONT.)
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 and to prevent the elimination of otherwise good
potential comparable group candidates. The range has been defined as 4.0 percent
of assets to 35.0 of assets, with a midpoint of 19.5 percent, similar to
Columbia Federal's current ratio and five year average.
MORTGAGE-BACKED SECURITIES TO ASSETS
At September 30, 1997, Columbia Federal's ratio of mortgage-backed
securities to assets was 17.2 percent, moderately higher than both the regional
average of 8.2 percent and the national average of 11.2 percent for
publicly-traded thrift institutions and 18.5 percent for all FDIC-insured thrift
institutions. 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
Columbia Federal'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 51.5 percent of
the Bank's assets at September 30, 1997, which is similar to the industry
average of approximately 49.0 percent. The parameter for this characteristic
requires any comparable group institution to have from
38
<PAGE> 48
ONE- TO FOUR-FAMILY LOANS TO ASSETS (CONT.)
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, Columbia Federal had a ratio of total net loans
to assets of 59.2 percent and a higher five fiscal year average of 63.1 percent,
both of which are lower than the national and regional averages of 67.2 percent
and 71.8 percent, respectively. The parameter for the selection of the
comparable group is from 45.0 percent to 85.0 percent with a midpoint of 65.0
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 Columbia
Federal.
TOTAL NET LOANS AND MORTGAGE-BACKED SECURITIES TO ASSETS
As discussed previously, Columbia Federal's shares of mortgage-backed
securities to assets and total net loans to assets were 17.2 percent and 59.2
percent, respectively, for a combined share of 76.4 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 65.0 percent to 95.0 percent,
with a midpoint of 80.0 percent, similar to the Bank's ratio.
39
<PAGE> 49
BORROWED FUNDS TO ASSETS
Columbia Federal had no borrowed funds at September 30, 1997, had no
balance of borrowed funds at the end of its three most recent fiscal years, and
indicated very modest borrowing activity during fiscal years 1995 and 1997. 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 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
Columbia Federal's equity to assets ratio as of September 30, 1997, was
12.59 percent. After conversion, based on the midpoint value of $20.2 million,
with 50.0 percent of the net proceeds of the public offering going to the Bank,
Columbia Federal's equity is projected to stabilize in the area of 21.0 percent.
The consolidated pro forma equity to assets ratio for the Corporation is
projected to be 24.4 percent following conversion. Based on those equity ratios,
we have defined the equity ratio parameter to be 8.0 percent to 16.0 percent
with a midpoint ratio of 12.0 percent.
40
<PAGE> 50
PERFORMANCE PARAMETERS
INTRODUCTION
Exhibit 38 presents five parameters identified as key indicators of
Columbia Federal'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, Columbia Federal's ROAA was 0.53 percent based on net
earnings after taxes, and a higher 0.58 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 four fiscal years, based on net
earnings, has ranged from a low of 0.36 percent in fiscal year 1997 to a high of
1.23 percent in fiscal year 1995 with an average ROAA of 0.81 percent. For the
four quarters following conversion in early 1998, the Bank's ROAA based on both
net and core income is projected to range between 0.60 percent and 0.70 percent.
Considering the historical, current and projected earnings performance
of Columbia Federal, the range for the ROAA parameter based on net income has
been defined as 0.45 percent to a high of 0.90 percent with a midpoint of 0.68
percent.
41
<PAGE> 51
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 2.92 percent based on the midpoint
valuation. Prior to conversion, the Bank's ROAE was 4.30 percent for the twelve
months ended September 30, 1997, based on net income, and a higher 4.74 percent
based on core income, with a five fiscal year average net ROAE of 8.04 percent.
The parameter range for the comparable group, based on net income, is from 3.0
percent to 10.0 percent with a midpoint of 6.5 percent.
NET INTEREST MARGIN
Columbia Federal had a net interest margin of 3.46 percent for the
twelve month period ended September 30, 1997. The Bank's range of net interest
margin for the past five fiscal years has been from a low of 3.38 percent in
1995 to a high of 3.87 percent in 1994 with an average of 3.57 percent.
The parameter range for the selection of the comparable group is from a
low of 2.90 percent to a high of 4.00 percent with a midpoint of 3.45 percent,
similar to the Bank's current and five year average net interest margin.
42
<PAGE> 52
OPERATING EXPENSES TO ASSETS
Columbia Federal had a higher than average 2.53 percent ratio of
operating expense to average assets for the twelve months ended September 30,
1997. The Bank's operating expenses increased significantly from 2.07 percent in
fiscal year 1993 to 2.87 percent in fiscal year 1996 before moderating to 2.53
in fiscal year 1997 and averaging 2.37 percent. During this five year period,
Columbia Federal's operating expenses rose from below to 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 3.10 percent with a
midpoint of 2.50 percent.
NONINTEREST INCOME TO ASSETS
Columbia Federal has experienced a lower than average dependence on
noninterest income as a source of additional income. The Bank's noninterest
income to average assets was 0.08 percent for the twelve months ended September
30, 1997, which is well below the industry average of 0.44 percent for
publicly-traded thrifts for that period. Columbia Federal's noninterest income
for the past five fiscal years indicates a significant decrease in fiscal years
1995 through 1997 compared to fiscal years 1993 and 1994. The Bank's ratio of
noninterest income to average assets was 1.62 percent, 1.01 percent, 0.09
percent, 0.09 percent and 0.08 percent in fiscal years 1993, 1994, 1995, 1996
and 1997, respectively, averaging 0.58 percent for the five years.
The range for this parameter for the selection of the comparable group
is 0.50 percent of average assets or less, with a midpoint of 0.25 percent.
43
<PAGE> 53
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 38. 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
Columbia Federal. 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.
NONPERFORMING ASSETS TO ASSETS RATIO
Columbia Federal's ratio of nonperforming assets to total assets was
0.58 percent at September 30, 1997, which is lower than the national average of
0.82 percent and slightly lower than the Midwest regional average of 0.63
percent, but higher than its ratios of 0.16 percent at September 30, 1996, and
0.03 percent at September 30, 1995. For the five fiscal years ended September
30, 1993 to 1997, the Bank's ratio of nonperforming assets to total assets
averaged 0.36 percent.
The parameter range for nonperforming assets to assets has been defined
as 1.10 percent of assets or less with a midpoint of 0.55 percent.
REPOSSESSED ASSETS TO ASSETS
Columbia Federal was absent repossessed assets at September 30, 1996
and 1997. At the close of fiscal years 1993, 1994 and 1995, the Bank's ratio of
repossessed assets to total assets was 0.22 percent, 0.10 percent and 0.03
percent, indicating a steady decline and a five fiscal year average of 0.07
percent. At September 30, 1997, national and
44
<PAGE> 54
REPOSSESSED ASSETS TO ASSETS (CONT.)
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 0.50
percent of assets or less with a midpoint of 0.25 percent.
ALLOWANCE FOR LOANS LOSSES TO ASSETS
Columbia Federal had an allowance for loan losses of $300,000,
representing a ratio to total assets of 0.29 percent at September 30, 1997,
which is higher than its ratio of 0.17 percent at September 30, 1997. For its
last five fiscal years, the Bank's allowance for loan losses averaged 0.20
percent of assets, which represents a virtually constant ratio of 0.18 percent
in 1993 and 1994, and 0.17 percent in 1995 and 1996, followed by 0.29 percent in
1997.
The allowance for loan losses to assets parameter range used for the
selection of the comparable group focused on a minimum required ratio of 0.10
percent of assets.
THE COMPARABLE GROUP
With the application of the parameters previously identified and
applied, the final comparable group represents ten institutions identified in
Exhibits 39, 40 and 41. The comparable group institutions range in size from
$41.7 million to $339.9 million with an average asset size of $183.5 million and
have an average of 4.2 offices per institution, compared to Columbia Federal
with assets of $104.0 million and 5 offices. One of the comparable group
institutions was converted in 1990, two in 1993, two in 1994, four in 1995 and
one in 1996. Nine of the comparable group institutions are traded on NASDAQ
45
<PAGE> 55
THE COMPARABLE GROUP (CONT.)
and one is 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 1.0 percent lower than all publicly-traded thrift institutions
in the United States but 12.1 percent higher than publicly-traded thrift
institutions in Kentucky, and for the most recent four quarters indicated a core
return on average assets of 0.76 percent, lower than all publicly-traded thrifts
at 0.84 percent, and also lower than publicly-traded thrifts in Kentucky at 1.09
percent.
46
<PAGE> 56
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 a core ROAA of 0.73
percent and a core ROAE of 4.46 percent for its most recent four quarters.
CLASSIC BANCSHARES, INC., Ashland, Kentucky, is the holding company for
Classic Bank, with 1 office, and The First National Bank of Paintsville, with 2
offices, serving the market area of Boyd and Johnson Counties.
The Company's total assets increased $631,000, or 0.5 percent from
$131.6 million at March 31, 1997 to $132.2 million at September 30, 1997. The
increase was due primarily to an increase in loans of $6.4 million offset by a
decrease in cash and cash equivalents of $4.8 million and a decrease in
investment securities of $2.2 million. Net deposits decreased $1.2 million from
$100.5 million at March 31, 1997, to $99.3 million
47
<PAGE> 57
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
at September 30, 1997. The decrease in deposits was due to a more conservative
pricing structure in an effort to reduce interest costs. Federal Home Loan Bank
advances increased $2.8 million from $4.7 million at March 31, 1997 to $7.5
million at September 30, 1997. Net proceeds from advances were used to fund loan
demand and the outflow of deposits and repurchase agreements.
The Company reported net income of $511,000 for the six months ended
September 30, 1997 compared to net income of $34,000 for the six months ended
September 30, 1996. The increase in income of $477,000 between the two periods
was primarily the result of an increase in net interest income of $1.3 million,
and increase in non-interest income of $504,000, partially offset by an increase
in the provision for loss on loans of $73,000, an increase in non-interest
expenses of $959,000 and an increase in income tax expense of $248,000. Total
interest income increased $2.4 million for the six months ended September 30,
1997, as compared to the six months ended September 30, 1996. The average
balance of interest-earning assets increased from $65.1 million at September 30,
1996 to $120.7 million at September 30, 1997. The increase in the average
balance of interest-earning assets was due primarily to the increase in the
average balance of loans, mortgage-backed and investment securities and other
interest-earning assets as a result of the acquisition of First National.
Interest expense increased $564,000 and $1.1 million for the three and six
months ended September 30, 1997 as compared to the same period in 1996 primarily
as a result of the inclusion of First National'sinterest expense for the period.
At the end of its most recent quarter, the Bank had total assets of
$132.2 million and equity of $19.7 million, and reported a core ROAA of 0.62
percent and a core ROAE of 4.25 percent for its most recent four quarters.
48
<PAGE> 58
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
GLENWAY FINANCIAL CORP., Cincinnati, Ohio, is the holding company for
Centennial Savings Bank, a savings bank serving the west side of Cincinnati from
5 full service offices.
For the three months ended September 30, 1997, interest income rose 7
percent to $5.5 million and interest income after loan loss provisions rose 5
percent to $2.1 million. Net income totalled $613,000 compared to a loss of
$439,000 for the same period in 1996 and reflects an increase of $344,000 in net
interest income, an increase of $10,000 in other income, and a decline in
general, administrative and other expense, including reduced insurance premiums.
These increases were partially offset by the increase in the provision for loan
losses of $82,000. Interest income reflects loan growth, partially offset by
higher delinquent loan reserves.
The Corporation's total assets increased by $6.2 million, or 2.1%, over
the $287.1 million total at June 30, 1997. The increase was funded primarily
through growth in deposits of $3.2 million, and an increase in borrowings of
$3.4 million. Deposits increased by $3.2 million or 1.4 percent for the current
three month period. FHLB advances increased by $1.9 million or 6.7% from June
30, 1997, and federal funds purchased increased by $1.5 million. The
Corporation's stockholders' equity increased by $512,000 during the current
three month period. At the end of its most recent quarter, the Bank had total
assets of $293.2 million and equity of $27.8 million, and reported a core ROAA
of 0.77 percent and a core ROAE of 8.14 percent for its most recent four
quarters.
HARDIN BANCORP, INC., Hardin, Missouri, is the holding company for
Hardin Federal Savings Bank. The Bank conducts its business through its main
office in Hardin, Ray County, and two full service branch offices in Ray and
Clay Counties, Missouri. The Bank is principally engaged in the business of
attracting retail savings deposits from the general public and investing those
funds in first mortgage loans on owner occupied,
49
<PAGE> 59
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
single-family residential loans, commercial real estate loans, mortgage-backed
securities, U.S. Government and agency securities, and insured interest bearing
deposits. The Bank also originates consumer loans for the purchase of
automobiles, home improvement, and home equity lines of credit.
For the six months ended September 30, 1997, total interest income rose
26 percent to $4 million and net interest income after loan loss provision was
$1,447,718 compared to $1,341,090 for the six month period ended September 30,
1996, an increase of $106,628. The increase was due to an increase in interest
earning assets partially offset by greater interest on FHLB advances and a
higher loan loss provision. Net earnings for the six months ended September 30,
1997, were $408,417 compared to $64,075 for the six months ended September 30,
1996, an increase of $344,342. The increase is related to a decrease in
non-interest expense, including the absence of a $441,000 SAIF special
assessment, and an increase in non-interest income and net interest income after
provision for loan losses.
Consolidated assets as of September 30, 1997, indicated an increase of
$14,010,131 compared to March 31, 1997. On September 30, 1997, total
stockholders' equity increased $325,928 compared to stockholders' equity on
March 31, 1997. The increase in assets was due to growth in investment
securities and the loan portfolio which was funded by a $7,500,000 increase in
Federal Home Loan Bank advances and an increase in deposits in the amount of
$5,626,288. The increase in stockholders' equity was a result of a decrease in
unrealized loss on available-for-sale securities, amortization of deferred
recognition and retention plan, and net earnings during the period, offset by
the declaration of cash dividends on the Company's common stock in June and
September. Deposits totaled $75,827,145 on September 30, 1997, an increase from
$70,200,857 on March 31, 1997. The increase of $5,626,288 is due to a special
certificate of deposit program and the introduction of a new checking account
marketing program. Federal Home Loan Bank advances were $26,500,000 on September
30, 1997, compared to $19,000,000 on March
50
<PAGE> 60
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
31, 1997, an increase of $7,500,000. The funds were acquired to meet the
Company's growth objective, and to fund the purchase of U.S. government agency
securities. At the end of its most recent quarter, the Bank had total assets of
$117.4 million and equity of $13.5 million, and reported a core ROAA of 0.75
percent and a core ROAE of 5.55 percent for its most recent four quarters.
HOME BUILDING BANCORP INC., Washington, Indiana, is the holding company
for Home Building Savings Bank, FSB. Established in 1908, the Bank is a
community oriented financial institution offering a variety of financial
services to meet the needs of the communities it serves from its 2 full service
offices. The Bank's primary market area covers Daviess and Pike counties in
southwestern Indiana. The Bank attracts deposits from the general public and
uses such deposits, together with borrowings and other funds, to originate one-
to four-family residential mortgages, automobile and consumer loans, and to a
lesser extent commercial and multifamily loans.
For the nine months ended June 30, 1997, total interest income
increased 4 percent to $2.5 million and net interest income after loan loss
provision rose 51 percent to $1.1 million. Net income increased from $23,000 to
$250,000. Net interest income reflects interest earned on a large deposit of
public funds. Earnings benefitted from a decrease in the loan loss provision and
lower deposit insurance premiums. For the nine months ended June 30, 1997, total
assets increased approximately $2.5 million to $45.1 million from $42.6 million
at September 30, 1996. Liabilities increased by approximately $2.2 million as
deposits increased by $2.6 compared to September 30, 1996. The Bank's advances
from the FHLB remained unchanged. At the end of its most recent quarter, the
Bank had total assets of $41.7 million and equity of $5.9 million, and reported
a core ROAA of 0.73 percent and a core ROAE of 5.65 percent for its most recent
four quarters.
51
<PAGE> 61
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
KANKAKEE BANCORP, INC., Kankakee, Illinois, is the bank holding company
for Kankakee Federal Savings Bank, which operates 10 full service banking
offices in Illinois. The Bank was originally chartered in 1885 as an Illinois
savings and loan association and was converted to a federally chartered thrift
institution in 1937. The Bank serves the financial needs of families and local
businesses in its primary market areas through its main office in Kankakee,
Illinois, and nine branch offices located in the communities of Ashkum,
Bourbonnais, Champaign, Dwight, Herscher, Hoopeston, Manteno and Momence,
Illinois. The Bank's business involves attracting deposits from the general
public and using those deposits to originate residential mortgage loans and, to
a lesser extent, commercial real estate, consumer, commercial business,
multi-family and construction loans in its primary market areas. The Bank also
invests in investment securities, mortgage-backed securities and various types
of short term liquid assets.
Net income for the nine-month period ended September 30, 1997 was $2.3
million compared to $974,000 for the same period in 1996, reflecting the absence
of $1.7 million FDIC assessment, as well as lower balances of earning assets,
offset by lower costs of interest-bearing liabilities. The difference in net
income of$1.3 million represents a 132.5 percent increase in net income for the
1997 period. The increase in net income resulted from a $159,000 increase in net
interest income, a $41,000 decrease in provision for losses on loans, and a $2.2
million decrease in other expenses, which were partially offset by a decrease of
$562,000 in other income and a $583,000 increase in federal income tax expense.
At the end of its most recent quarter, the Bank had total assets of $339.9
million and equity of $38.9 million, and reported a core ROAA of 0.87 percent
and a core ROAE of 8.11 percent for its most recent four quarters.
MFB CORPORATION, Mishawaka, Indiana, is the holding company for
Mishawaka Federal Savings with 4 full service offices in St. Joseph County,
Indiana. The principal business of MFB Financial (the "Bank") consists of
providing a variety of lending, deposit and selected financial services to
retail and commercial banking customers.
52
<PAGE> 62
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
For the nine months ended September 30, 1997, interest income rose 26
percent to $12.9 million and net interest income after loan loss provision rose
24 percent to $5.5 million. Net income rose 28 percent to $1.5 million. Interest
income reflects mortgage loan growth and the inclusion of interest from
financing leases, partially offset by interest on FHLB advances. Earnings
reflect reduced SAIF insurance premiums paid.
Total assets increased by $22.4 million June 30, 1997, compared to
September 30, 1996. Net loans increased by $34.6 million from $152.0 million at
September 30, 1996, to $l86.6 million at June 30, 1997, due to loan originations
exceeding principal payments by approximately $34.2 million, along with the
purchase of $505,000 in mortgage loans. Total liabilities increased from $188.2
million at September 30, 1996 to $214.3 million at June 30, 1997. Significant
changes included a net increase of $8.5 million in customer deposits primarily
due to the addition of $1.8 million in savings, NOW and MMDA deposits and $7.3
million in time deposits. FHLB advances also increased by $19.2 million during
the nine months ended June 30, 1997, and were used primarily to fund security
investments during the period. At the end of its most recent quarter, the Bank
had total assets of $255.9 million and equity of $33.5 million, and reported a
core ROAA of 0.83 percent and a core ROAE of 5.62 percent for its most recent
four quarters.
MILTON FEDERAL FINANCIAL CORP., West Milton, Ohio, is the holding
company for Milton Federal Savings Bank, serving Miami and Montgomery Counties
from 2 full service offices.
For the nine months ended June 30, 1997, interest income rose 8 percent
to $10 million and net interest income after loan loss provisions fell 4 percent
to $4.1 million. Net income fell 18 percent to $1 million. Interest income
benefitted from increased interest-earning assets. Earnings suffered from
increased interest on borrowed funds, data processing services and salaries and
employee benefits.
53
<PAGE> 63
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
The Corporation's assets totaled $200.2 million at June 30, 1997, an
increase of $19.4 million, or 10.7%, from $180.8 million at September 30, 1996.
The growth in assets was primarily in mortgage-backed and related securities and
loans receivable. Such growth was funded by increased deposits and borrowed
funds. Total deposits increased $10.1 million, or 7.9%, from $128.6 million at
September 30, 1996, to $138.7 million at June 30, 1997. The Corporation
experienced little change in passbook savings accounts, negotiable order of
withdrawal ("NOW") accounts and money market accounts. Certificates of deposit
increased $10.2 million, or 10.7%, and were the primary reason for the overall
deposit growth. Certificates of deposit growth has been due to normal operating
procedures as the Corporation has not used special promotions to attract
increased volume. Borrowed funds increased $16.1 million from $17.5 million at
September 30, 1996, to $33.6 million at June 30, 1997. At the end of its most
recent quarter, the Bank had total assets of $210.0 million and equity of $26.4
million, and reported a core ROAA of 0.65 percent and a core ROAE of 4.52
percent for its most recent four quarters.
OHSL FINANCIAL CORP., Cincinnati, Ohio, is the holding company for Oak
Hills Savings and Loan Company, F.A., operating 5 full service offices in
Hamilton County, Ohio.
For the nine months ended September 30, 1997, total interest income
rose 9 percent to $13.2 million and net interest income after loan loss
provision rose 5 percent to $5.4 million. Net income rose from $731,000 to $1.5
million. Net interest income reflects increased loan balances, partially offset
by higher deposit costs. Earnings include higher commission income. Net income
for the six months ended June 30, 1997 was $1,041,000, an increase of $108,000
or 11.6% over the net income for the six months ended June 30, 1996. Total
interest income for the six months ended June 30, 1997 was $8,659,000, compared
to $7,915,000 for the same period in 1996. That increase of $744,000 or 9.4
54
<PAGE> 64
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
percent is generally the result of larger loan and investment balances carried
during the first six months of 1997.
Total assets increased $14.3 million or 6.6 percent from December 31,
1996, to June 30, 1997. During the first six months of 1997, loans receivable
increased by $7.9 million and held-to-maturity securities increased by $9.6
million. These changes were funded primarily by a $5.0 million increase in
deposit accounts, by a $9.7 million increase in advances from the Federal Home
Loan Bank, by a reduction in cash and cash equivalents of $1.4 million and by a
reduction in available-for-sale securities of $2.5 million. The stockholders'
equity of OHSL increased by $171,000 during the first six months of 1997. At the
end of its most recent quarter, the Bank had total assets of $234.6 million and
equity of $25.6 million, and reported a core ROAA of 0.88 percent and a core
ROAE of 7.86 percent for its most recent four quarters.
TWIN CITY BANCORP, INC., Bristol, Tennessee, is the holding company for
Twin City Federal Savings Bank, serving Sullivan County from 3 full service
offices.
The Bank posted net income of $802,000 for the nine months ended
September 30, 1997. Net interest income for the nine months ended September 30,
1997, decreased $16,000 from the nine months ended September 30, 1996, and for
the three months ended September 30, 1997, increased $35,000 as compared to the
three months ended September 30, 1996. The decrease was primarily attributable
to a decrease in the interest rate spread. For the six months ended June 30,
1997, interest income rose 1 percent to $4 million and net interest income after
loan loss provisions fell 3 percent to $1.9 million. Net income fell 14 percent
to $512,000. Net interest income reflects increase in average balance of
interest-earning assets, offset by higher cost of deposits and loan loss
provision. Net income suffered from increased compensation and employee benefits
expense.
55
<PAGE> 65
SUMMARY OF COMPARABLE GROUP INSTITUTIONS (CONT.)
The Bank's total consolidated assets increased $1.9 million or 1.8
percent from December 31, 1996, to September 30, 1997. Interest-earning deposits
and federal funds increased $1.2 million as the Bank experienced an increase in
net cash flows. Net loans receivable decreased $2.7 million or 3.5 percent from
$78.2 million at December 31, 1996, to $75.4 million at September 30, 1997.
Total real estate loans amounted to $49.8 million at September 30, 1997,
compared to $53.6 million at December 31, 1996. Consumer/commercial loans
increased 3.4 percent from $26.1 million at December 31, 1996, to $27.0 million
at September 30, 1997. Deposits increased $3.9 million or 4.6 percent from $85.7
million at December 31, 1996, to $89.6 million at September 30, 1997. During the
nine months ended September 30, 1997, the Bank secured governmental deposits of
approximately $4.4 million. Federal Home Loan Bank advances decreased $4.1
million at September 30, 1997 from December 31, 1996. Total stockholders' equity
has increased $456,000 or 3.4 percent from December 31, 1996, to September 30,
1997. At the end of its most recent quarter, the Bank had total assets of $106.9
million and equity of $13.8 million, and reported a core ROAA of 0.72 percent
and a core ROAE of 5.59 percent for its most recent four quarters.
56
<PAGE> 66
IV. ANALYSIS OF FINANCIAL PERFORMANCE
This section reviews and compares the financial performance of Columbia
Federal to all thrifts, regional thrifts, Kentucky thrifts and the ten
institutions constituting Columbia Federal'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 43
through 48.
As presented in Exhibits 42 and 43, at September 30, 1997, Columbia
Federal's total equity of 12.59 percent of assets was similar to the 12.49
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 19.61 percent ratio for
Kentucky thrifts. The Bank had a 59.21 percent share of net loans in its asset
mix, lower than the comparable group at 69.34 percent, and also lower than all
thrifts at 67.23 percent, Midwest thrifts at 71.83 percent and Kentucky thrifts
at 75.21 percent. Columbia Federal's share of net loans, lower than industry
averages, is primarily the result of its higher 20.09 percent share of cash and
investments and its higher 17.17 percent share of mortgage-backed securities.
The comparable group had a lower 9.46 percent share of mortgage-backed
securities and a lower 18.07 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. Columbia Federal's share of deposits of 86.72 percent was
moderately higher than the comparable group, but more noticeably higher than the
three geographic categories, reflecting the Bank's absence of FHLB advances. The
comparable group had deposits of 74.26 percent and borrowings of 12.14 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. Kentucky thrifts averaged a 67.79
percent share of deposits and a 11.36 percent share of borrowed funds. Columbia
Federal was absent goodwill and other intangibles, compared to 0.30 percent for
the comparable group, 0.25 percent for all thrifts, 0.19 percent for Midwest
thrifts and 0.34 percent for Kentucky thrifts.
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ANALYSIS OF FINANCIAL PERFORMANCE (CONT.)
Operating performance indicators are summarized in Exhibits 44 and 45
and provide a synopsis of key sources of income and key expense items for
Columbia Federal in comparison to the comparable group, all thrifts, and
regional thrifts for the trailing four quarters.
As shown in Exhibit 46, for the twelve months ended September 30, 1997,
Columbia Federal had a yield on average interest-earning assets modestly higher
than the comparable group and slightly higher than the three geographical
categories. The Bank's yield on interest-earning assets was 7.81 percent
compared to the comparable group at 7.69 percent, all thrifts at 7.77, Midwest
thrifts at 7.76 percent and Kentucky thrifts also at 7.76 percent.
The Bank's cost of funds for the twelve months ended September 30,
1997, was very similar to the comparable group and to all thrifts and modestly
lower than the regional and state averages. Columbia Federal had an average cost
of interest-bearing liabilities of 4.84 percent compared to 4.86 percent for the
comparable group, 4.86 percent for all thrifts, 4.98 percent for Midwest thrifts
and 5.00 for Kentucky thrifts. The Bank's interest income and interest expense
ratios resulted in an interest rate spread of 2.97 percent, which was higher
than the comparable group at 2.83 percent, all thrifts at 2.91 percent, Midwest
thrifts at 2.78 percent and Kentucky thrifts at 2.77 percent. Columbia Federal
achieved a net interest margin of 3.46 percent based on average interest-earning
assets for the twelve months ended September 30, 1997, which was slightly higher
than the comparable group ratio of 3.39 percent. All thrifts averaged a slightly
higher 3.48 percent net interest margin for the trailing four quarters, while
Midwest thrifts and Kentucky thrifts averaged net interest margins of 3.43
percent and 3.78 percent, respectively.
Columbia Federal's major source of income is interest earnings, as is
evidenced by the operations ratios presented in Exhibit 45. The Bank made a
$113,000 provision for
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ANALYSIS OF FINANCIAL PERFORMANCE (CONT.)
loan losses during the twelve months ended September 30, 1997, representing 0.11
percent of average assets and reflecting the Bank's objective to strengthen its
allowance for loan losses as it increases its share of nonresidential and
multi-family loans. The comparable group indicated a provision representing a
nominally lower 0.09 percent of assets, with all thrifts at 0.14 percent,
Midwest thrifts at 0.11 percent and Kentucky thrifts at 0.06 percent.
The Bank's non-interest income was $88,000 or 0.08 percent of average
assets for the twelve months ended September 30, 1997. Such non-interest income
was significantly lower than the comparable group at 0.29 percent, all thrifts
at 0.44 percent, Midwest thrifts at 0.41 percent and Kentucky thrifts at 0.25
percent. For the twelve months ended September 30, 1997, Columbia Federal's
operating expense ratio was 2.53 percent, higher than the comparable group and
the three geographical averages. The comparable group's operating expense ratio
was 2.30 percent, while all thrifts averaged 2.34 percent, Midwest thrifts
averaged 2.17 percent and Kentucky thrifts averaged 2.15 percent.
The overall impact of Columbia Federal's income and expense ratios is
reflected in the Bank's net income and return on average assets. The Bank had an
ROAA of 0.53 percent based on net income and a higher ROAA of 0.58 percent based
on core income for the twelve months ended September 30, 1997. For its most
recent four quarters, the comparable group had a higher ROAA of 0.83 percent
based on net income and also a higher core ROAA of 0.76 percent compared to the
Bank. All thrifts also averaged a higher net ROAA of 0.86 percent, while Midwest
thrifts averaged 0.94 percent and Kentucky thrifts averaged a higher 1.10
percent. All thrifts indicated a core ROAA of 0.84 percent, while Midwest
thrifts and Kentucky thrifts averaged core ROAAs of 0.93 percent and 1.09
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 Columbia Federal 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 increasing its net interest income and net earnings, reducing its
historical ratio of nonperforming assets, strengthening its level of interest
sensitive assets relative to interest sensitive liabilities, maintaining its
sensitivity measure and its overall interest rate risk, maintaining an adequate
level of general valuation allowances to reduce the impact of any unforeseen
losses, and closely monitoring and reducing its overhead expenses. The Bank's
current philosophy will continue to focus on maintaining a stable net interest
spread and net interest margin while increasing its net income and return on
assets, increasing its level of interest sensitive assets relative to interest
sensitive liabilities and reducing its overhead expenses.
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EARNINGS PERFORMANCE AND GROWTH POTENTIAL (CONT.)
Earnings are often related to an institution's ability to generate
loans. The Bank was a moderate originator of mortgage loans in fiscal years 1993
to 1997. During the twelve months ended September 30, 1997, originations of
$11.7 million exceeded fiscal year 1996 originations of $10.3 million by $1.4
million or 13.7 percent. Such 1996 originations exceeded fiscal year 1995
originations of $6.8 million by a greater $3.5 million or 51.2 percent. In each
of the three most recent fiscal years, however, principal repayments exceeded
originations, resulting in a decrease in Columbia Federal's net loan portfolio
since September 30, 1995. The significant increase in principal repayments of
$18.9 million in fiscal year 1997 compared to $12.8 million in fiscal year 1996
included the payoff of four nonresidential and multi-family loans totaling
approximately $7.1 million. 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 net decrease in loans receivable,
however, was a much lower $529,000 in fiscal 1996 and, along with the net
decrease of $2.0 million in loans receivable in fiscal year 1995, relate to
moderating interest rates in late 1995, also exceeded originations during those
periods. In fiscal year 1994, loan originations exceeded repayment by $3.3
million. Most of the increase in loan originations in fiscal years 1996 and 1997
constituted one- to four-family mortgage loans, with multi-family originations
increasing in 1996 and then decreasing in 1997. Originations of construction
loans and consumer loans both increased from fiscal year 1995 to fiscal year
1996, although those dollar increases were not substantial, and then remained
generally constant in fiscal year 1997.
The Bank's net loans receivable decreased by $5.4 million or 8.1
percent from September 30, 1993 to September 30, 1997, with an increase in
fiscal year 1994 followed by decreases in the next three fiscal years. The
Bank's strong emphasis has been on the origination of one- to four-family
mortgage loans, with that loan category constituting 90.4 percent, 87.5 percent,
91.0 percent of total originations in fiscal years 1995, 1996 and 1997,
respectively. In each of those fiscal years, the second largest category of
originations
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EARNINGS PERFORMANCE AND GROWTH POTENTIAL (CONT.)
was multi-family loans, followed by nonresidential loans and consumer loans. The
impact of these primary lending efforts has been to generate a yield on average
interest-earning assets of 7.81 percent for Columbia Federal for the twelve
months ended September 30, 1997, compared to 7.69 percent for the comparable
group and 7.77 percent for all thrifts and 7.76 percent for Midwest thrifts. The
Bank's ratio of interest income to average assets was 7.58 percent for the
twelve months ended September 30, 1997, which was higher than the comparable
group at 7.45 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 3.46 percent, based on average
interest-earning assets for the twelve months ended September 30, 1997, was
higher than the comparable group at 3.39 percent, while being very similar to
all thrifts at 3.48 percent and Midwest thrifts at 3.43 percent. Columbia
Federal's cost of interest-bearing liabilities of 4.84 percent for the twelve
months ended September 30, 1997, was very similar to both the comparable group
and all thrifts at 4.86 percent, but modestly lower than Midwest thrifts at 4.98
percent. Columbia Federal's net interest spread of 2.97 percent for the twelve
months ended September 30, 1997, was higher than the comparable group at 2.83
percent, all thrifts at 2.91 percent and Midwest thrifts at 2.78 percent.
The Bank's ratio of noninterest income to assets was 0.08 percent for
the twelve months ended September 30, 1997, considerably lower than the
comparable group at 0.29 percent, all thrifts at 0.44 percent and Midwest
thrifts at 0.41 percent. The Bank has indicated noninterest income lower than
the comparable group and its operating expenses were higher than the comparable
group, as well as all thrifts and Midwest thrifts. For the twelve months ended
September 30, 1997, Columbia Federal had an operating expense to assets ratio of
2.53 percent compared to a lower 2.30 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, Columbia Federal
generated lower levels of noninterest income, higher levels of noninterest
expenses, only partially offset by a modestly higher net interest margin
relative to its comparable group. As a result, the Bank's net income level was
lower 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 1.23 percent
in fiscal year 1993, 1.17 percent in fiscal year 1994, 0.77 percent in fiscal
year 1995, 0.36 percent in fiscal year 1996 and 0.53 percent in fiscal year
1997. For its most recent four quarters, the comparable group had a higher ROAA
of 0.83 percent, while all thrifts also indicated an even higher 0.86 percent.
The Bank's core or normalized earnings, however, as shown in Exhibit 7, were
slightly higher than its net earnings, indicating a 0.58 percent core return on
assets for the most recent twelve months ended September 30, 1997. That core
ROAA was also lower than the comparable group's core ROAA at 0.76 percent, all
thrifts at 0.84 percent and Midwest thrifts at 0.93 percent.
Columbia Federal'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 non-interest income, the latter indicating a considerable
annual decline since fiscal year 1993. 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 that in addition to Columbia
Federal's current ROAA being lower than that of its comparable group for the
most recent four quarters, the Bank has also experienced a decline in both its
net and core ROAA, as well as its net interest margin and net interest spread
for the twelve months ended September 30, 1997, since fiscal year 1993. Further,
Columbia Federal's efficiency ratio has become steadily less favorable during
the last five year, changing from 48.2 percent in fiscal year 1993 to 73.40
percent in fiscal year 1997, significantly less favorable than the current
industry average of approximately 64.0 percent.
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EARNINGS PERFORMANCE AND GROWTH POTENTIAL (CONT.)
In recognition of the foregoing earnings related factors, a moderate
downward adjustment has been made to Columbia Federal's pro forma market value
for earnings performance.
MARKET AREA
Columbia Federal's primary market area for retail deposits consists of
Boone and Kenton Counties, Kentucky, the latter county including the city of
Fort Mitchell, the location of the Bank's home office. As discussed in Section
II, this market area has evidenced higher population and household growth and
reported a somewhat lower unemployment rate compared to the comparable group
markets, Kentucky and the United States. The unemployment rates in Boone County
and Kenton County were 3.5 percent and 3.7 percent, respectively, in September,
1997, 5.0 percent for Kentucky and 4.7 percent for the United States. In
Columbia Federal's market area in 1996, per capita income was above the state
average but below the national average, and median household income was higher
than both the state and national average. The market area is also characterized
by median housing values higher than Kentucky and the United States.
The market area is principally suburban to Greater Cincinnati, with the
major employment sector being services, followed by the wholesale/retail sector,
with the manufacturing sector third.
Due to its proximity to Cincinnati, 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. Many residents of the Bank's
market area work in the Cincinnati area and do their banking there, further
intensifying competition for both loan and deposit customers. Consequently,
Columbia Federal, had net decreases in both deposits and net
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MARKET AREA (CONT.)
loans from fiscal year 1993 to fiscal year 1997, as deposits, including
interest, exceeded withdrawals and principal repayments on loans exceeded
originations. The Bank's share of total market area deposits is, therefore,
lower than the average of the comparable group institutions.
In recognition of all these factors, we believe that no adjustment is
warranted for the Bank's market area.
FINANCIAL CONDITION
The financial condition of Columbia Federal 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 41, 43 and 44. The Bank's total equity ratio before conversion
was 12.59 percent at September 30, 1997, which was slightly higher than the
comparable group at 12.49 percent, similar to all thrifts at 12.67 percent and
lower than 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 24.5 percent, and the Bank's pro forma equity to assets ratio will
increase to approximately 21.0 percent.
The Bank's mix of assets indicates some areas of significant variation
from its comparable group. Columbia Federal had a lower share of net loans at
59.21 percent of total assets at September 30, 1997, compared to the comparable
group at 69.24 percent and all thrifts at 67.23 percent. The Bank's share of
cash and investments was a modestly higher 20.09 percent compared to 18.07
percent for the comparable group and 17.85 percent for all thrifts. Columbia
Federal's ratio of mortgage-backed securities to total assets was 17.17 percent,
higher than the comparable group at 9.46 percent and all thrifts at 11.19
percent. The Bank's 86.72 percent share of deposits and absence of FHLB advances
differed from the comparable group's 74.26 percent of deposits and 12.14 percent
of borrowed funds.
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FINANCIAL CONDITION (CONT.)
At September 30, 1997, the Bank was absent both intangible assets and
repossessed real estate compared to 0.30 percent and 0.08 percent in intangible
assets and repossessed real estate, respectively, for the comparable group. The
financial condition of Columbia Federal is further affected by its level of
nonperforming assets at 0.58 percent of assets at September 30, 1997, compared
to a lower 0.36 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 its most recent five fiscal years, increasing considerably
from 0.03 percent and 0.16 percent of total assets in fiscal years 1995 and
1996, respectively. At September 30, 1993, Columbia Federal's ratio of
nonperforming assets to total assets was 0.46 percent.
The Bank had a lower 6.78 percent share of high risk real estate loans
compared to 8.92 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.
Columbia Federal had $300,000 in allowance for loan losses or 49.92 percent of
nonperforming assets at September 30, 1997, compared to the comparable group's
higher 107.92 percent, with all thrifts and Midwest thrifts at 102.28 percent
and 131.66 percent, respectively. The Bank's ratio is reflective of its
historically higher levels of non-performing assets and classified loans. The
Bank's allowance for loan losses represented 0.47 percent of gross loans at
September 30, 1997, compared to the comparable group at a similar 0.45 percent,
all thrifts at a higher 0.77 percent and Midwest thrifts also at a higher 0.65
percent.
Overall, we believe that no adjustment is warranted for Columbia
Federal's current financial condition.
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ASSET AND DEPOSIT GROWTH
During the past three years, Columbia Federal has been characterized by
a much lower than average growth in assets compared to the comparable group,
publicly-traded Kentucky thrifts and all publicly-traded thrifts. The Bank's
assets decreased at an average annual rate of 1.03 percent from 1993 to 1997,
compared to annual growth of 9.72 percent for the comparable group, 11.22
percent for all thrifts and 8.85 percent for Kentucky thrifts. Columbia
Federal's negative asset growth rate is reflective of its average annual deposit
decrease of 2.09 percent for the same five year period, compared to a positive
annual growth rate of 3.47 percent for the comparable group. Deposits for all
thrifts grew at a five year average rate of 6.38 percent, while Kentucky thrifts
experienced average annual deposit growth of 2.41 percent. Finally, Columbia
Federal also indicates a negative loan growth rate of 1.94 percent for 1993
through 1997, compared to positive annual growth for the comparable group at
9.52 percent, all thrifts at 12.52 percent and Kentucky thrifts at 9.87 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
Columbia Federal's banking offices in a two county market area, suburban to
Greater Cincinnati, results in additional competition with Cincinnati financial
institutions for market share. Other financial institutions, even those smaller
in size than Columbia Federal, may be more visible and convenient to the
Cincinnati workplaces of Kenton and Boone County residents and have the ability
to be more competitive in areas contiguous to the Bank's market area. With no
immediate plans to expand beyond Kenton and Boone Counties, 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 recent and
potential asset, deposit and loan growth.
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DIVIDEND PAYMENTS
Columbia Federal 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 2.25 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 Columbia Federal's offering.
Columbia Federal will direct its offering primarily to depositors and
residents in its market area. The board of directors and officers anticipate
purchasing approximately $2.0 million or 9.9 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 of either the subscription offering or the direct community offering. The
Bank has secured
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SUBSCRIPTION INTEREST (CONT.)
the services of Charles Webb & Company, a division of Keefe, Bruyette & 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
Columbia Federal 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. Columbia Federal will pursue at least two market makers
for the stock. The Bank's public offering is approximately 26.7 percent smaller
than the current market value of the comparable group and approximately 78.4
percent smaller than the average market value of Kentucky 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 Columbia Federal is Robert
V. Lynch. Mr. Lynch joined the Bank in 1971, served as treasurer from 1974 to
1977, has served as president and chief executive officer since 1977 and as
director since 1978. The Bank also has four vice presidents, a controller and a
secretary/treasurer as senior management.
The management of Columbia Federal has been able to strengthen the
Bank's equity and increase its equity ratio over the past several years and to
increase the Bank's net
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MANAGEMENT (CONT.)
interest spread and net interest margin since 1995. Net interest spread and net
interest margin are higher than the comparable group and similar to all thrifts,
although net and core earnings are currently lower than comparable group and
industry averages, reflecting the Bank's higher operating expenses and lower
noninterest income.
Overall, we believe the Bank to be professionally, knowledgeably and
efficiently managed, as are the comparable group institutions. 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
Kentucky thrifts at a lower 136.67 percent, 15.2 percent below the national
average.
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.
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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
Columbia Financial of Kentucky, Inc., 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
moderate downward adjustment was made for Columbia Federal's earnings
performance and growth potential. Minimum downward adjustments were made for the
Bank's asset and deposit growth and for the marketing of the issue. No
adjustments were made for the Bank's financial condition, market area, dividend
payments, subscription interest, liquidity of the stock and management.
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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 49 shows the average and median price to book value ratios for
the comparable group which were 120.70 percent and 118.17 percent, respectively.
The total comparable group indicated a moderately wide range, from a low of
104.01 percent (Home Building Bancorp) to a high of 156.12 percent (Glenway
Financial Corp.). The comparable group had a modestly higher average price to
tangible book value ratio of 123.66 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 107.02 percent to a high of 129.55 percent, and the range of price
to tangible book value ratio narrowed from a low of 104.01 percent to a high of
133.27 percent.
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 66.90 percent and a price to tangible book
value ratio of 66.87 percent at the midpoint. The price to book value ratio
increases from 62.26 percent at the minimum to 74.49 percent at the super
maximum, while the price to tangible book value ratio increases from 62.26
percent at the minimum to 74.49 percent at the super maximum.
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PRICE TO BOOK VALUE METHOD (CONT.)
The Corporation's pro forma price to book value and price to tangible
book value ratios of 66.90 percent and 66.87 percent, respectively, are strongly
influenced by the Bank's financial condition, growth trend, local market and
subscription interest in thrift stocks. Further, the Corporation's ratio of
equity to assets after conversion at the midpoint of the valuation range will be
approximately 24.45 percent compared to 12.49 percent for the comparable group.
Based on the price to book value ratio and the Bank's total equity of
$13,090,000 at September 30, 1997, the indicated pro forma market value for the
Bank using this approach is $20,232,104 at the midpoint (reference Exhibit 48).
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 Columbia Federal is displayed
in Exhibit 3, indicating after tax net earnings for the twelve months ended
September 30, 1997, of $553,000, and in Exhibit 7 indicating the derivation of
the Bank's higher core or normalized earnings of $609,000 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 core earnings base of $609,000.
In determining the price to earnings multiple, we reviewed the range of
price to core earnings and price to net earnings multiples for the comparable
group and all publicly-traded thrifts. The average price to core earnings
multiple for the comparable group was 21.01, while the median was 20.09. The
average price to net earnings multiple was 18.82 and the median multiple was
18.70. The comparable group's price to core earnings multiple was lower than the
average for all publicly-traded, FDIC-insured thrifts of 22.14 and also lower
than their median of 19.71. The range in the price to core earnings multiple for
the comparable group was from a low of 16.85 (Kankakee Bancorp, Inc.) to a high
of 26.79 (Milton Federal Financial Corp.). The primary range in the price
73
<PAGE> 83
PRICE TO EARNINGS METHOD (CONT.)
to core earnings multiple for the comparable group, excluding the high and low
ranges, was from a low price to earnings multiple of 17.45 to a high of 25.18
times earnings for eight of the ten institutions in the group.
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 21.56 at the midpoint,
based on Columbia Federal's core earnings of $609,000 for the twelve months
ended September 30, 1997. The price to core earnings multiple increases from
19.39 percent at the minimum to 25.50 percent at the super maximum, which is
moderately higher than the 21.01 price to net earnings multiple of the
comparable group.
Based on the Bank's core earnings base of $609,000 (reference Exhibits
7 and 47), the pro forma market value of the Corporation using the price to
earnings method is $22,232,104 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 49 indicates that the
average price to net assets ratio for the comparable group was 15.17 percent and
the median was 14.96 percent. The range in the price to net assets ratios for
the comparable group varied from a low of 12.81 percent (Hardin Bancorp, Inc.)
to a high of
74
<PAGE> 84
PRICE TO NET ASSETS METHOD (CONT.)
16.84 percent (Classic Bancshares, Inc.). It narrows only slightly with the
elimination of the two extremes in the group to a low of 14.21 percent and a
high of 16.47 percent.
Based on the adjustments made previously for Columbia Federal, it is
our opinion that an appropriate price to net assets ratio for the Corporation is
16.36 percent at the midpoint, which is modestly higher than the comparable
group at 15.17 percent and ranges from a low of 14.24 percent at the minimum to
20.55 percent at the super maximum.
Based on the Bank's September 30, 1997, asset base of $104,006,000, the
indicated pro forma market value of the Corporation using the price to net
assets method is $20,208,305 at the midpoint (reference Exhibit 48).
75
<PAGE> 85
VALUATION CONCLUSION
Exhibit 54 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 66.90 percent for the Corporation represents a discount of 44.57
percent relative to the comparable group and decreases to 36.96 percent at the
super maximum. The price to core earnings multiple of 21.56 for the Corporation
at the midpoint value indicates a premium of 2.63 percent, changing to a premium
of 26.94 percent at the super maximum. The price to assets ratio at the midpoint
represents a premium of 7.82 percent, changing to a premium of 37.38 percent at
the super maximum.
It is our opinion that as of November 28, 1997, the pro forma market
value of the Corporation, is $20,200,000 at the midpoint, representing 2,020,000
shares at $10.00 per share. The pro forma valuation range of the Corporation is
from a minimum of $17,170,000 or 1,717,000 shares at $10.00 per share to a
maximum of $23,230,000 or 2,323,000 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 $26,714,500 or 2,671,450 shares at $10.00
per share (reference Exhibits 50 to 53).
The appraised value of Columbia Financial of Kentucky, Inc. as of
November 28, 1997, is $20,200,000 at the midpoint.
76
<PAGE> 86
EXHIBITS
<PAGE> 87
NUMERICAL
EXHIBITS
<PAGE> 88
EXHIBIT 1
COLUMBIA FEDERAL SAVINGS BANK
FORT MITCHELL, KENTUCKY
BALANCE SHEET
AT SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
September 30,
1997
-------------------
ASSETS (In thousands)
<S> <C>
Cash and cash equivalents due from banks $ 612
Interest-bearing deposits in other banks 6,215
---------
Total cash and cash equivalents 6,827
Investment securities held to maturity, at cost
(Market Value of $13,068 for 1997) 13,069
Available for sale, at market value 1,003
Mortgate-backed securities, at cost
(Market value of $17,893 for 1997) 17,862
Loans receivable, net 61,578
Interest receivable 712
Premises and equipment, net 1,595
Federal Home Loan Bank stock, at cost 1,260
Deferred Federal Income Tax Asset --
Federal Income Tax-Refund Receivable 13
Other assets 87
---------
Total assets $104,006
========
LIABILITIES
Deposits $ 90,195
Advances from Borrowers for taxes and insurance 460
Accrued Federal Income Tax Liability --
Deferred Federal Income Tax Asset 162
Other liabilities 98
---------
Total liabilities 90,915
EQUITY
Retained earnings, substantially restricted 13,090
Unrealized gain on available for sale securities
net of related taxes 1
Total equity 13,091
---------
Total liabilities and equity $104,006
========
</TABLE>
Source: Columbia Federal Savings Bank's audited financial statement.
<PAGE> 89
EXHIBIT 2
COLUMBIA FEDERAL SAVINGS BANK
FORT MITCHELL, KENTUCKY
BALANCE SHEETS
AT SEPTEMBER 30, 1993 THROUGH 1996
<TABLE>
<CAPTION>
1996 1995 1994 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents (including interest bearing accounts
of $2,497,559, $6,303,752, $2,202,192 and $6,621,277
in 1996, 1995, 1994, and 1993, respectively) $ 3,046,629 $ 6,846,372 $ 2,770,512 $ 7,232,914
Investment securities, at cost (Market value of
$13,949,438, $12,100,781, $12,771,670, and $14,180,740
for 1996, 1995, 1994, and 1993, respectively) 13,994,580 12,493,163 13,494,794 12,427,967
Available for sale, at market value 1,002,188 987,928 -- --
Mortgage-backed securities, at cost (market value of
$18,584,680, $16,699,118, $16,122,445, and $18,507,849
in 1996, 1995, 1994, and 1993, respectively) 18,750,516 16,800,481 16,743,791 18,264,096
Loans receivable, net 67,741,258 68,269,714 70,288,296 67,026,479
Interest receivable 819,037 708,187 760,302 787,518
Real estate owned -- 31,609 101,322 239,311
Property and equipment, net 1,329,232 857,705 627,442 621,515
Federal Home Loan Bank Stock, at cost 1,174,100 1,095,400 1,025,700 973,800
Federal income tax receivable -- 92,479 172,899 17,120
Deferred Federal income tax asset 65,684 -- -- 120,280
Other assets 174,643 193,851 113,224 111,812
------------- ------------- ------------- -------------
Total assets $ 108,097,867 $ 108,376,889 $ 106,098,282 $ 107,822,812
============= ============= ============= =============
LIABILITIES
Deposits $ 94,657,461 $ 95,806,222 $ 93,806,712 $ 97,242,294
Advances from Borrowers for taxes and insurance 263,285 300,157 377,096 372,255
FHLB Advances -- -- 500,000 --
Other borrowings -- -- -- 52,421
Accrued federal income tax 6,970 -- -- --
Deferred Federal income tax liability -- 72,865 6,735 --
Other liabilities 633,627 48,652 75,014 87,466
------------- ------------- ------------- -------------
Total liabilities 95,561,343 96,227,896 94,765,557 97,754,436
------------- ------------- ------------- -------------
EQUITY
Retained earnings - substantially restricted 12,536,603 12,149,060 11,332,725 10,068,376
Unrealized loss on available-for-sale securities,
net of related taxes (79) (67) -- --
------------- ------------- ------------- -------------
Total equity 12,536,524 12,148,993 11,332,725 10,068,376
------------- ------------- ------------- -------------
Total liabilities and equity $ 108,097,867 $ 108,376,889 $ 106,098,282 $ 107,822,812
============= ============= ============= =============
</TABLE>
Source: Columbia Federal Savings Bank's audited financial statements
<PAGE> 90
EXHIBIT 3
COLUMBIA FEDERAL SAVINGS BANK
FORT MITCHELL, KENTUCKY
STATEMENT OF INCOME
YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Year ended
September 30,
1997
-----------------
(In thousands)
<S> <C>
Interest income:
Interest and fees on loans $5,802
Mortgage-backed securities 1,143
Interest and dividends on investments 854
Interest-bearing deposits 197
------
Total interest income 7,996
Interest expense:
Deposits 4,426
FHLB Advances 25
------
Total interest expense 4,451
Net interest income 3,545
Provision for losses on Loans and REO 113
------
Net interest income after provision for loan losses 3,432
Non-interest income 88
------
General, Administrative and Other Expenses
Compensation and employee benefits 1,680
Net occupancy expense of premises 242
Federal deposit insurance premiums 88
Data Processing services 112
Advertising 106
Other 439
------
Total General, Administrative and Other Expenses 2,667
Income before Federal income tax expense 853
Federal income tax expense 300
------
Net income $ 553
======
</TABLE>
Source: Columbia Federal Savings Bank's audited financial statements
<PAGE> 91
EXHIBIT 4
COLUMBIA FEDERAL SAVINGS BANK
FORT MITCHELL, KENTUCKY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 1993 THROUGH 1996
<TABLE>
<CAPTION>
Year ended September 30,
------------------------------
1996 1995 1994 1993
------ ------ ------ ------
(In thousands)
<S> <C> <C> <C> <C>
Interest income:
Loans $5,869 $6,014 $6,070 $6,166
Mortgage-backed securities 1,214 981 995 1,304
Investment securities 876 777 708 697
Interest-bearing deposits 239 171 114 145
------ ------ ------ ------
Total interest income 8,198 7,943 7,887 8,312
------ ------ ------ ------
Interest expense:
Deposits 4,578 4,383 3,835 4,365
FHLB Advances 63 15 --
Other borrowings 3 6
------ ------ ------ ------
Total interest expense 4,578 4,446 3,853 4,370
Net interest income 3,620 3,497 4,034 3,942
Provision for losses on Loans and REO 8 13 34 47
------ ------ ------ ------
Net interest income after provision
for loan losses 3,612 3,484 4,000 3,895
------ ------ ------ ------
Non-Interest Income 96 92 160 217
------ ------ ------ ------
Other expenses
Compensation and employee benefits 1,458 1,372 1,232 1,165
Occupancy of premises 228 206 216 232
Federal deposit insurance premiums 809 213 223 184
Data processing 109 103 101 99
Other 516 477 500 511
------ ------ ------ ------
Total other expenses 3,120 2,371 2,272 2,190
------ ------ ------ ------
Income before Federal income tax expense 588 1,205 1,888 1,922
Federal income tax expense 200 389 623 593
------ ------ ------ ------
Net income 388 816 1,265 1,329
====== ====== ====== ======
</TABLE>
Source: Columbia Federal Savings Bank's audited financial statements
<PAGE> 92
EXHIBIT 5
SELECTED CONSOLIDATED FINANCIAL CONDITION DATA
AT SEPTEMBER 30, 1993 THROUGH 1997
<TABLE>
<CAPTION>
September 30,
--------------------------------------------------
1997 1996 1995 1994 1993
--------------------------------------------------
(In thousands)
SELECTED FINANCIAL CONSITION AND OTHER DATA:
<S> <C> <C> <C> <C> <C>
Total assets $104,006 $108,098 $108,376 $106,099 $107,739
Cash and amounts due from banks (1) 612 549 543 568 612
Interest-bearing deposits in banks 6,215 2,498 6,304 2,202 6,621
Investment securities available-for-sale 1,003 1,002 988 -- --
Investment securities held-to-maturity 13,069 13,995 12,493 13,495 12,428
Mortgage-backed securities available-for-sale -- -- -- -- --
Mortgage-backed securities held-to-maturity 17,862 18,751 16,800 16,744 18,264
Loans receivable, net 61,578 67,741 68,270 70,288 67,026
FHLB stock - at cost 1,260 1,174 1,095 1,026 974
Deposits 90,195 94,657 95,806 93,807 97,278
Retained Earnings 13,090 12,537 12,149 11,333 10,068
</TABLE>
(1) Includes cash and amounts due from depository institutions and
interest-bearing deposits in other financial institutions.
Source: Columbia Financial of Kentucky Inc's Prospectus
<PAGE> 93
EXHIBIT 6
INCOME AND EXPENSE TRENDS
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 1993 THROUGH 1997
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
SUMMARY OF EARNINGS: (In thousands)
<S> <C> <C> <C> <C> <C>
Interest and dividend income $7,996 $8,198 $7,943 $7,939 $8,355
Interest expense 4,451 4,578 4,446 3,853 4,370
------ ------ ------ ------ ------
Net interest income 3,545 3,620 3,497 4,086 3,985
Provisions for loan losses 113 8 13 34 47
------ ------ ------ ------ ------
Net interest income after provision
for losses on loans 3,432 3,612 3,484 4,052 3,938
Non-interest income 88 96 92 108 174
Non-interest expense 2,667 3,120 2,371 2,272 2,190
------ ------ ------ ------ ------
Income before income taxes 853 588 1,205 1,888 1,922
Income tax expense 300 200 389 623 593
------ ------ ------ ------ ------
Net income $ 553 $ 388 $ 816 $1,265 $1,329
====== ====== ====== ====== ======
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 94
EXHIBIT 7
NORMALIZED EARNINGS TREND
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
Fiscal years ended
September 30,
------------------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Net income after taxes $ 553 $ 388 $ 816
Net income before taxes and effect
of accounting adjustments 853 588 1,205
Expense adjustments
Provision for loan losses (70) --- ---
SAIF assessment --- (592) ---
Normalized earnings before taxes 923 1,180 1,205
Taxes 314(1) 401(1) 389(1)
------- ------- -------
Normalized earnings after taxes $ 609 $ 779 $ 816
======= ======= =======
</TABLE>
(1) Based on tax rate of 34.00 percent
Source: Columbia Federal Savings Bank's audited financial statements
<PAGE> 95
EXHIBIT 8
PERFORMANCE INDICATORS
FOR THE YEARS ENDED SEPTEMBER 30, 1993 THROUGH 1997
<TABLE>
<CAPTION>
Years ended September 30,
-------------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS:
Return on average assets 0.53% 0.36% 0.77% 1.17% 1.23%
Return on average equity 4.30% 3.10% 6.92% 11.78% 14.12%
Interest rate spread 2.97% 2.94% 2.93% 3.53% 3.45%
Net interest margin 3.46% 3.41% 3.38% 3.87% 3.76%
Non-interest expense to average total assets 2.53% 2.87% 2.24% 2.15% 2.07%
Capital ratios:
Average equity to average assets 12.22% 11.50% 11.15% 9.96% 8.70%
Equity to assets at the end of period 12.59% 11.60% 11.21% 10.68% 9.34%
Asset quality ratios and other data:
Non-performing loans to total net loans at end of period 0.98% 0.26% 0.00% 0.71% 0.39%
Non-performing assets to total assets at end of period 0.58% 0.16% 0.03% 0.56% 0.46%
Allowance for losses on loans to total net loans
at end of period 0.49% 0.28% 0.28% 0.27% 0.28%
Allowance for losses on loans to non-performing loans
at end of period 49.92% 106.78% 0.00% 38.03% 72.97%
Net charge-offs to average loans 0.00% 0.01% 0.02% 0.05% 0.07%
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 96
EXHIBIT 9
VOLUME/RATE ANALYSIS
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 1996 AND 1997
<TABLE>
<CAPTION>
Year ended September 30,
--------------------------------------------------------------------------
1997 vs. 1996 1996 vs. 1995
------------------------------------- ----------------------------------
Increase Increase
(Decrease) (Decrease)
Due to Total Due to Total
----------------------- ----------------------
Increase Increase
Volume Rate (Decrease) Volume Rate (Decrease)
--------- --------- ------------------------ -------- -----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME ATTRIBUTABLE TO:
Interest bearing deposits $ (39) $ (3) $ (42) $ 53 $ 15 $ 68
Investment securities (56) 34 (22) 51 48 99
Mortgage backed securities (79) 8 (71) 184 49 233
Loans receivable (74) 7 (67) (185) 40 (145)
--------- --------- --------- --------- -------- ---------
Total interest income $ (248) $ 46 $ (202) $ 103 $ 152 $ 255
========= ========= ========= ========= ======== =========
INTEREST EXPENSE ATTRIBUTABLE TO:
NOW accounts $ (8) $ (1) $ (9) $ 10 $ (18) $ (8)
Money market accounts (60) (10) (70) (94) (53) (147)
Passbook savings accounts (2) (7) (9) (5) (50) (55)
Certificates of deposit (104) 40 (64) 311 94 405
FHLB advances 25 -- 25 (63) -- (63)
--------- --------- --------- --------- -------- ---------
Total interest expense $ (149) $ 22 $ (127) $ 159 $ (27) $ 132
========= ========= ========= ========= ======== =========
Increase (decrease) in net interest income $ (99) $ 24 $ (75) $ (56) $ 179 $ 123
========= ========= ========= ========= ======== =========
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 97
EXHIBIT 10
Yield and Cost Trends
For the Years Ended September 30, 1995 through 1997
<TABLE>
<CAPTION>
Years Ended September 30,
--------------------------------------
1997 1996 1995
Yield/ Yield/ Yield/
Rate Rate Rate
----------- ----------- ---------
<S> <C> <C> <C>
Interest Earning Assets
Interest bearing deposits 5.25% 5.32% 4.99%
Investment securities 5.89% 5.65% 5.34%
Mortgage backed and related securities 6.83% 6.79% 6.51%
Loans receivable, net 8.61% 8.60% 8.54%
----------- ----------- ---------
Total interest earning assets 7.81% 7.72% 7.68%
Interest bearing liabilities
NOW accounts 2.46% 2.49% 2.90%
Money market accounts 3.06% 3.14% 3.50%
Passbook savings accounts 3.02% 3.07% 3.44%
Certificates of deposit 5.74% 5.68% 5.53%
FHLB borrowings 6.00% -- 5.82%
----------- ----------- ---------
Total interest bearing liabilities 4.84% 4.78% 4.75%
Net interest income: interest rate spread 2.97% 2.94% 2.93%
----------- ----------- ---------
Net interest margin (net interest income as a
percent of average interest-earning assets) 3.46% 3.41% 3.38%
----------- ----------- ---------
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s prospectus
<PAGE> 98
EXHIBIT 11
Interest Rate Sensitivity of Net Portfolio Value (NPV)
At September 30, 1997
<TABLE>
<CAPTION>
At September 30, 1997
----------------------------
Assumed
Change in
Interest Rates $ Change % Change
(Basis Points) in NPV in NPV
----------------- ------------ ------------
(In Thousands)
<S> <C> <C> <C>
+400 $(7,137) (43)%
+300 (5,232) (32)%
+200 (3,322) (20)%
+100 (1,498) (9)%
0 0 0%
-100 838 5%
-200 1,333 8%
-300 2,109 13%
-400 3,260 20%
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 99
EXHIBIT 12
Loan Portfolio Composition
At March 31, 1997, and at June 30, 1993 through 1996
<TABLE>
<CAPTION>
September 30,
------------------------ -------------------------- -------------------------
1997 1996 1995
------------------------ -------------------------- -------------------------
Amount Percent Amount Percent Amount Percent
---------- ------ ---------- ------ ---------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Type of Loan:
- ------------
Residential real estate loans:
One-to-four family residential $ 53,584 83.80% $ 52,691 75.92% $ 53,552 75.92%
Multi-family residential 5,487 8.58% 8,769 12.64% 8,918 12.64%
Land and construction:
Nonresidential real estate loans 1,711 2.68% 6,011 8.66% 5,630 7.98%
Construction loans 3,117 4.87% 1,878 2.71% 2,405 3.41%
---------- ------ ---------- ------ ---------- -----
Total real estate loans 63,899 99.92% 69,349 99.93% 70,505 99.95%
Consumer loans:
Loans on deposits 42 0.07% 42 0.06% 22 0.03%
Home improvement loans 7 0.01% 8 0.01% 14 0.02%
---------- ------ ---------- ------ ---------- -----
Total consumer loans 49 0.08% 50 0.07% 36 0.05%
---------- ------ ---------- ------ ---------- -----
Total loans $ 63,948 100.00% $ 69,399 100.00% $ 70,541 100.00%
---------- ====== ---------- ====== ---------- ======
Less:
Loans in process $ 1,202 $ 552 $ 1,196
Unearned discounts
Deferred loan fees 868 864 886
Allowance for loan losses 300 189 189
---------- ---------- ----------
Loans receivable, net $ 61,578 $ 67,794 $ 68,270
========== ========== ==========
<CAPTION>
September 30,
--------------------- -------------------------
1994 1993
--------------------- -------------------------
Amount Percent Amount Percent
------- ------ ---------- ------
<S> <C> <C> <C> <C>
Type of Loan:
Residential real estate loans:
One-to-four family residential $ 54,29 74.39% $ 54,123 78.12%
Multi-family residential 8,973 12.29% 6,793 9.80%
Land and construction:
Nonresidential real estate loans 6,434 8.82% 5,467 7.89%
Construction loans 3,235 4.43% 2,818 4.07%
------- ------ ---------- ------
Total real estate loans 72,939 99.93% 69,201 99.88%
Consumer loans:
Loans on deposits 35 0.05% 61 0.09%
Home improvement loans 13 0.02% 24 0.03%
------- ------ ---------- ------
Total consumer loans 48 0.07% 85 0.13%
------- ------ ---------- ------
Total loans $ 72,987 100.00% $ 69,286 100.00%
------- ====== ---------- ======
Less:
Loans in process $ 1,589 $ 1,296
Unearned discounts
Deferred loan fees 921 775
Allowance for loan losses 189 189
------- ----------
Loans receivable, net $ 70,288 $ 67,026
========== ==========
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 100
EXHIBIT 13
Loan Maturity Schedule
<TABLE>
<CAPTION>
Due
Due during the year ending Due 4-5 Due 6-10 Due 11-20 More Than
September 30, Years Years Years 20 Years
-------------------------------- After After After After
1998 1999 2000 9/30/97 9/30/97 9/30/97 9/30/97 Total
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate Loans (In Thousands)
Residential real estate loans:
One-to-four family (first mortgage) $ 16 $ 29 $ 111 $ 830 $ 6,438 $22,766 $13,690 $43,880
Home equity (second mortgage) - - 2 11 5 31 - 49
Multi-family - - 13 78 297 2,775 154 3,317
Nonresidential real estate loans - - - 39 134 965 79 1,217
Construction loans 3,117 - - - - - - 3,117
------- ------- ------- ------- ------- ------- ------- -------
Total real estate loans $ 3,133 $ 29 $ 126 $ 958 $ 6,874 $26,537 $13,923 $51,580
Consumer loans:
Loans on deposits 42 - - - - - - 42
Other consumer loans - - 2 - 5 - - 7
------- ------- ------- ------- ------- ------- ------- -------
Total consumer loans 42 - 2 - 5 - - 49
------- ------- ------- ------- ------- ------- ------- -------
Total fixed rate loans $ 3,175 $ 29 $ 128 $ 958 $ 6,879 $26,537 $13,923 $51,629
======= ======= ======= ======= ======= ======= ======= =======
Adjustable Rate Loans
Residential real estate loans:
One- to four-family (first mortgage) - $ 19 $ 56 $ 126 $ 853 $ 4,505 $ 3,967 $ 9,526
Home equity (second mortgage) - 9 3 8 109 - - 129
Multifamily - - 18 - 909 694 549 2,170
Nonresidential real estate loans - - 13 33 131 229 88 494
Construction loans - - - - - - - -
------- ------- ------- ------- ------- ------- ------- -------
Total real estate loans - $ 28 $ 90 $ 167 $ 2,002 $ 5,428 $ 4,604 $12,319
Consumer loans:
Loans on deposits - - - - - - - -
Other consumer loans - - - - - - - -
------- ------- ------- ------- ------- ------- ------- -------
Total consumer loans - - - - - - - -
Total adjustable rate loans - $ 28 $ 90 $ 167 $ 2,002 $ 5,428 $ 4,604 $12,319
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 101
EXHIBIT 14
LOAN ORIGINATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995, 1996, AND 1997
<TABLE>
<CAPTION>
Year Ended September 30,
-----------------------------------------
1997 1996 1995
------------- ------------- ----------
<S> <C> <C> <C>
LOAN ORIGINATIONS:
One-to-four family residential $ 7,493 $ 6,925 $ 3,802
Multi-family residential 684 553 358
Nonresidential 232 125 49
Construction 3,170 2,584 2,544
Consumer 80 70 32
------- ------- -------
Total loans originated 11,659 10,257 6,785
Loan purchases -- 160 --
------- ------- -------
Total loans originated and purchased 11,659 10,417 6,785
------- ------- -------
SALES AND LOAN PRINCIPAL REPAYMENTS:
LOANS SOLD:
PRINCIPAL REPAYMENTS 18,904 12,818 11,213
------- ------- -------
Loan originations, net (7,245) (2,401) (4,428)
Increase (decrease) due to
other items, net $ 1,082 $ 1,872 $ 2,410
------- ------- -------
Net increase in net
loan portfolio $ (6,163) $ (529) $ (2,018)
======== ====== ========
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 102
EXHIBIT 15
DELINQUENT LOANS
AT SEPTEMBER 30, 1995 THROUGH 1997
<TABLE>
<CAPTION>
September 30,
-------------------------------------------------------------------------------------------------------
1997 1996 1995
------------------------------------- ---------------------------------------- -------------------
Percent Percent Percent
of Total of Total of Total
Number Amount Loans Number Amount Loans Number Amount Loans
------ ---- ------ ---- ------ -------- --------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Loans delinquent for:
30 - 59 days $ 549 0.86% $ 792 1.14% $ 668 0.95%
60 - 89 days 591 0.92% 132 0.19% -- --
90 days and over 601 0.94% 177 0.26% -- --
------ ---- ------ ---- ------ ----
Total delinquent loans $1,741 2.72% $1,101 1.59% $ 668 0.95%
====== ==== ====== ==== ====== ====
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 103
EXHIBIT 16
CLASSIFIED ASSETS
AT SEPTEMBER 30, 1996 AND 1997
<TABLE>
<CAPTION>
At September 30,
---------------------------
1997 1996
----------- ------------
(In thousands)
<S> <C> <C>
Loss assets $ 0 $ 0
Doubtful assets 0 0
Substandard assets 972 178
------------- -----------
Total classified assets $ 972 $ 178
============= ============
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 104
EXHIBIT 17
NONPERFORMING ASSETS
<TABLE>
<CAPTION>
September 30,
----------------------------------------------------------
1997 1996 1995 1994 1993
----------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Accruing loans greater than 90 days delinquent Real estate:
Residential $ 601 $ 177 $ -- $286 $259
Nonresidential -- -- -- 211 --
Consumer -- -- -- -- --
------- ------- ------- ---- ----
Total nonperforming loans 601 177 -- 497 259
Real estate owned -- -- 32 101 239
------- ------- ------- ---- ----
Total nonperforming assets $ 601 $ 177 $ 32 $598 $498
Total nonperforming loans as a
percentage of total net loans 0.98% 0.26% 0.05% 0.71% 0.39%
Total nonperforming assets as a
percentage of total assets 0.58% 0.16% 0.03% 0.56% 0.46%
Allowance for losses on loans as a
percentage of nonperforming
loans 49.92% 106.78% N/M 38.03% 72.97%
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 105
EXHIBIT 18
ALLOWANCE FOR LOAN LOSSES
FOR THE YEARS ENDED SEPTEMBER 30, 1993 THROUGH 1997
<TABLE>
<CAPTION>
At or for The Year Ended September 30,
------------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ------------- ------------ ------------ ------------
(Dollars in thousands)
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total net loans outstanding $61,578 $67,741 $68,270 $70,288 $67,026
Average loans outstanding 67,405 68,269 70,433 69,611 68,740
Allowance for loan losses
Balance at beginning of period 189 189 189 189 189
Charge-offs
Real estate:
Residential 2 8 13 34 47
Nonresidential -- -- -- -- --
Consumer -- -- -- -- --
Recoveries
Real estate:
Residential -- -- -- -- --
Nonresidential -- -- -- -- --
Consumer -- -- -- -- --
-------
Net charge-offs
Provision for losses on loans
(charged to operations) 113 8 13 34 47
------- ------- ------- ------- -------
Balance at end of period $ 300 $ 189 $ 189 $ 189 $ 189
======= ======= ======= ======= =======
Ratio of allowance for losses on loans as a
percent of total loans outstanding 0.49% 0.28% 0.28% 0.27% 0.28%
======= ======= ======= ======= =======
Ratio of net charge-offs (recoveries) to
average net loans outstanding during the period -- 0.01% 0.02% 0.05% 0.07%
======= ======= ======= ======= =======
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 106
EXHIBIT 19
INVESTMENT PORTFOLIO COMPOSITION
AT SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
At September 30,
--------------------------------------------------------------------
1997 1996 1995
--------------------- --------------------- -----------------------
Carrying % of Carrying % of Carrying % of
Value Total Value Total Value Total
------- ------ ------- ------ ------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Investment securities:
U.S. government and federal agency securities $14,027 92.00% $14,997 93.00 $13,481 92.00%
FHLB stock 1,260 8.00% 1,174 7.00% 1,095 8.00%
------- ------ ------- ------ ------- ------
Total investment securities $15,287 100.00% $16,171 100.00 $14,576 100.00%
Mortgage-backed securities:
FNMA certificates $ 9,297 52.00% $ 9,229 49.22% $ 9,290 55.30%
GNMA certificates 5,048 28.26% 4,536 24.19% 3,858 22.96%
FHLMC certificates 3,517 19.74% 4,986 26.59% 3,652 21.74%
------- ------ ------- ------ ------- ------
Total mortgage-backed and related securities $17,862 100.00% $18,751 100.00 $16,800 100.00%
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 107
EXHIBIT 20
MIX OF DEPOSITS
AT SEPTEMBER 30, 1995 THROUGH 1997
<TABLE>
<CAPTION>
September 30,
-----------------------------------------------------------------------------
1997 1996 1995
---------------------- ------------------------- -----------------------
Percent Percent Percent
Amount of Total Amount of Total Amount of Total
--------------------- ------------------------- -----------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Transaction accounts:
- --------------------
NOW accounts $ 3,952 4.38% $ 4,339 4.58% $ 4,267 4.45%
Money market accounts 11,919 13.21% 13,641 14.41% 15,624 16.31%
Club accounts 66 0.07% 73 0.08% 77 0.08%
Passbook savings accounts 13,167 14.60% 13,519 14.28% 13,478 14.07%
------- ---- ------- ---- ------- ----
Total transaction accounts $29,104 32.26% $31,572 33.35% $33,446 34.91%
Certificates of deposit:
- -----------------------
2.01 - 4.00% 42 0.05% 42 0.04% 50 0.05%
4.01 - 6.00% 31,457 34.88% 54,925 58.03% 30,274 31.60%
6.01 - 8.005 29,592 32.81% 8,118 8.58% 32,036 33.44%
------- ---- ------- ---- ------- ----
Total Certificates $61,091 67.74% $63,085 66.65% $62,360 65.09%
------- ---- ------- ---- ------- ----
Total Deposits $90,195 100.0% $94,657 100.00% $95,806 100.00%
======= ===== ======= ====== ======= ======
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 108
EXHIBIT 21
DEPOSIT ACTIVITY
FOR THE YEARS ENDED SEPTEMBER 30, 1995 THROUGH 1997
<TABLE>
<CAPTION>
Year ended September 30,
----------------------------------------
1996 1995 1994
------------ ------------- -------------
(Dollars in thousands)
<S> <C> <C> <C>
Beginning balance $ 94,657 $ 95,806 $ 93,807
Deposits 59,497 60,704 66,213
Withdrawals (67,647) (65,719) (67,956)
Net increases (decreases) before
interest credited (8,150) (5,015) (1,743)
------------ ------------- -------------
Interest credited 3,688 3,866 3,742
Ending balance $ 90,195 $ 94,657 $ 95,806
============ ============= =============
Net increase (decrease) $ (4,462) $ (1,149) $ 1,999
============ ============= =============
Percent increase (decrease) (4.71)% (1.20)% 2.13%
============ ============= =============
</TABLE>
Source:Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 109
EXHIBIT 22
BORROWED FUNDS ACTIVITY
FOR THE YEARS ENDED SEPTEMBER 30, 1995 THROUGH 1997
<TABLE>
<CAPTION>
Year ended September 30,
--------------------------------------
1997 1996 1995
------------ ------------- -------------
(Dollars in thousands)
<S> <C> <C> <C>
FHBL ADVANCES
Average balance outstanding $ 417 $ -- $1,083
Maximum amount outstanding at any
month end during the period 1,000 -- 2,750
Balance outstanding at end of period -- -- --
Weighted average interest rate
during the period 6.00% -- 5.82%
Weighted average interest rate at
end of period -- -- --
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 110
EXHIBIT 23
OFFICES OF COLUMBIA FEDERAL SAVINGS BANK
FORT MITCHELL, KENTUCKY
AT SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Net Book
Owned Value at
Date or September 30,
LOCATION Acquired Leased 1997
- -------------------------------------- ------------- ------------ ------------
(000)
Main Office:
<S> <C> <C> <C>
2497 Dixie Highway 1957 Owned $ 231
Ft. Mitchell, KY 41017-3085
Branch Offices:
Pike Street and Lee Street 1937 Owned $ 141
Covington, KY 41011
612 Buttermilk Pike 1981 Owned $134
Crescent Springs, KY 41017
3522 Dixie Highway 1981 Owned $52
Erlanger, KY 41018
7550 Dixie Highway 1996 Owned $748
Florence, KY 41042
</TABLE>
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 111
EXHIBIT 24
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> <C>
J. Robert Bluemlein Director 79 1970 2000
Kenneth R. Kelly Director, Chairman of the Board 76 1965 2000
John C. Layne Director 48 1995 2000
Daniel T. Mistler Director 55 1997 1999
Fred A. Tobergte, Sr. Director 79 1981 1999
Geraldine Zembrodt Director 53 1993 1999
Robert V. Lynch Director, President, CEO 52 1978 2000
Mary Jane Lucas Vice President 61 1971 --
George Raybourne Vice President 44 1972 --
Edward Schwartz Vice President 48 1973 --
Harold E. Taylor Vice President 56 1996 --
Abijah Adams Controller 52 1978 --
Carol S. Margrave Secretary, Treasurer 42 1979 --
</TABLE>
(1) At September 30, 1997
Source: Columbia Financial of Kentucky Inc.'s Prospectus
<PAGE> 112
EXHIBIT 25
KEY DEMOGRAPHIC DATA AND TRENDS
MARKET AREA, FORT MITCHELL, KENTUCKY AND THE UNITED STATES
1990, 1996 AND 2001
<TABLE>
<CAPTION>
1990 1996 % Change 2001 % Change
--------------- ---------------- ------------ --------------- ----------
<S> <C> <C> <C> <C> <C>
Population
- ----------
Market Area 199,620 218,682 9.5% 233,929 7.0%
Fort Mitchell 7,438 7,798 4.8% 8,046 3.2%
Kentucky 3,685,296 3,895,554 5.7% 4,063,325 4.3%
United States 248,709,873 265,294,885 6.7% 278,802,003 5.1%
Households
- ----------
Market Area 72,837 79,625 9.3% 85,028 6.8%
Fort Mitchell 3,149 3,309 5.1% 3,417 3.3%
Kentucky 1,379,610 1,462,541 6.0% 1,527,071 4.4%
United States 91,947,410 98,239,161 6.8% 103,293,062 5.1%
Per Capita Income
- -----------------
Market Area $ 13,582 $ 15,364 13.1% -- --
Fort Mitchell 20,919 23,504 12.4% -- --
Kentucky 11,153 12,744 14.3% -- --
United States 12,313 16,738 35.9% -- --
Median Household Income
- -----------------------
Market Area $ 32,501 $ 36,031 10.9% $ 35,076 (2.7)%
Fort Mitchell 36,250 46,848 29.2% 45,365 (3.2)%
Kentucky 22,534 25,703 14.1% 24,407 (5.0)%
United States 28,525 34,530 21.1% 33,189 (3.9)%
</TABLE>
Source: Data Users Center and CACI
<PAGE> 113
EXHIBIT 26
KEY HOUSING DATA
MARKET AREA, FORT MITCHELL, KENTUCKY AND THE UNITED STATES
1990
<TABLE>
<CAPTION>
Occupied Housing Units
- ----------------------
<S> <C>
Market Area 72,817
Fort Mitchell 3,149
Kentucky 1,379,610
United States 91,947,410
Occupancy Rate
- ---------------
Market Area
Owner-Occupied 68.9%
Renter-Occupied 31.1%
Fort Mitchell
Owner-Occupied 51.0%
Renter-Occupied 49.0%
Kentucky
Owner-Occupied 69.6%
Renter-Occupied 30.4%
United States
Owner-Occupied 64.2%
Renter-Occupied 35.8%
Median Housing Values
- ----------------------
Market Area $ 69,450
Fort Mitchell 94,200
Kentucky 50,100
United States 79,098
Median Rent
- -----------
Market Area $ 396
Fort Mitchell 431
Kentucky 319
United States 374
</TABLE>
Source: U.S. Department of Commerce and CACI Sourcebook
<PAGE> 114
EXHIBIT 27
MAJOR SOURCES OF EMPLOYMENT BY INDUSTRY GROUP
MARKET AREA, FORT MITCHELL, KENTUCKY AND THE UNITED STATES
1990
<TABLE>
<CAPTION>
Market Fort United
Industry Group Area Mitchell Kentucky States
- --------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Agriculture/Mining 1.3% 0.5% 6.5% 1.3%
Construction 7.1% 5.8% 6.6% 4.8%
Manufacturing 18.0% 14.5% 20.3% 19.2%
Transportation/Utilities 12.0% 11.1% 7.6% 5.9%
Wholesale/Retail 24.4% 22.7% 22.3% 27.5%
Finance, Insurance, & Real Estate 6.9% 8.0% 5.4% 7.3%
Services 30.3% 37.4% 31.3% 34.0%
</TABLE>
Source: Bureau of the Census County Business Patterns
<PAGE> 115
EXHIBIT 28
UNEMPLOYMENT RATES
KENTON COUNTY, BOONE COUNTY,
KENTUCKY AND THE UNITED STATES
1994, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
Location 1994 1995 1996 1997
- ------------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Kenton County 4.5% 4.2% 4.2% 3.7%
Boone County 4.6% 4.1% 4.1% 3.5%
Kentucky 5.4% 5.4% 5.6% 5.0%
United States 6.1% 5.6% 5.0% 4.7%
</TABLE>
* September 1997
Source: Kentucky Commission for Employment Services
<PAGE> 116
EXHIBIT 29
MARKET SHARE OF DEPOSITS
BOONE AND KENTON COUNTY
JUNE 30, 1996
<TABLE>
<CAPTION>
Market Area Columbia's Columbia's
Deposits Share Share
($000) ($000) (%)
----------- -------- --------
<S> <C> <C> <C>
Banks $ 2,005,807 --- ---
Thrifts 184,074 $ 97,510 53.0%
Credit Unions 16,890 --- ---
----------- --------- ---------
TOTAL $ 2,206,771 $ 97,510 4.4%
</TABLE>
Source: Sheshunoff
<PAGE> 117
EXHIBIT 30
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> 118
KELLER & COMPANY Page 1
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
Price High Low
State Exchange ($) ($) ($)
----- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
FFDB FirstFed Bancorp Inc. AL NASDAQ 22.000 22.750 8.500
SRN Southern Banc Co. AL AMSE 16.875 17.375 11.375
SCBS Southern Community Bancshares AL NASDAQ 18.188 18.500 13.000
SZB SouthFirst Bancshares Inc. AL AMSE 19.000 20.875 10.625
FFBH First Federal Bancshares of AR AR NASDAQ 21.375 21.750 10.000
HCBB HCB Bancshares Inc. AR NASDAQ 13.625 14.250 12.625
FTF Texarkana First Financial Corp AR AMSE 24.750 27.000 10.000
AFFFZ America First Financial Fund CA NASDAQ 47.125 50.563 14.500
BPLS Bank Plus Corp. CA NASDAQ 11.125 14.000 5.000
BVCC Bay View Capital Corp. CA NASDAQ 33.750 35.813 5.625
BYFC Broadway Financial Corp. CA NASDAQ 13.000 13.000 9.000
CENF CENFED Financial Corp. CA NASDAQ 40.750 42.250 4.545
CSA Coast Savings Financial CA NYSE 60.000 61.438 1.625
DSL Downey Financial Corp. CA NYSE 27.500 27.563 1.321
FSSB First FS&LA of San Bernardino CA NASDAQ 9.625 14.500 6.875
FED FirstFed Financial Corp. CA NYSE 36.500 39.438 1.125
GSB Golden State Bancorp Inc. CA NYSE 33.313 589.500 5.250
GDW Golden West Financial CA NYSE 89.625 93.813 3.875
AHM H.F. Ahmanson & Co. CA NYSE 59.500 62.063 2.688
HTHR Hawthorne Financial Corp. CA NASDAQ 21.000 35.500 2.250
HEMT HF Bancorp Inc. CA NASDAQ 16.750 17.125 8.188
HBNK Highland Federal Bank FSB CA NASDAQ 32.000 32.750 11.000
ITLA ITLA Capital Corp. CA NASDAQ 18.000 21.250 11.375
LFCO Life Financial Corp. CA NASDAQ 15.500 21.875 13.375
MBBC Monterey Bay Bancorp Inc. CA NASDAQ 19.000 20.500 8.750
PFFB PFF Bancorp Inc. CA NASDAQ 18.375 21.500 10.375
PROV Provident Financial Holdings CA NASDAQ 20.000 21.125 10.125
QCBC Quaker City Bancorp Inc. CA NASDAQ 20.500 24.563 6.000
REDF RedFed Bancorp Inc. CA NASDAQ 20.000 21.125 7.750
SGVB SGV Bancorp Inc. CA NASDAQ 17.125 19.375 7.750
WES Westcorp CA NYSE 17.000 23.875 3.703
FFBA First Colorado Bancorp Inc. CO NASDAQ 22.750 23.500 3.189
ANE Alliance Bncorp of New England CT AMSE 17.500 18.000 2.063
BKC American Bank of Connecticut CT AMSE 47.125 47.875 2.875
<CAPTION>
PER SHARE
*****************************************************************
Monthly Quarterly Book 12 Month
Change Change Value Assets Div.
(%) (%) ($) ($) ($)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
FFDB FirstFed Bancorp Inc. -3.30 33.08 14.77 153.31 0.55
SRN Southern Banc Co. -2.17 8.87 14.74 86.29 0.35
SCBS Southern Community Bancshares 1.04 14.57 13.19 61.87 NA
SZB SouthFirst Bancshares Inc. -1.94 16.92 16.06 114.77 0.50
FFBH First Federal Bancshares of AR 4.27 1.79 16.64 111.75 0.16
HCBB HCB Bancshares Inc. 2.83 1.87 14.43 75.59 NA
FTF Texarkana First Financial Corp -0.50 10.30 15.03 95.71 3.48
AFFFZ America First Financial Fund 9.59 19.68 29.41 374.43 1.60
BPLS Bank Plus Corp. -10.10 3.19 9.16 202.69 0.00
BVCC Bay View Capital Corp. 12.97 29.49 14.81 254.58 0.32
BYFC Broadway Financial Corp. 2.97 18.18 14.77 150.14 0.20
CENF CENFED Financial Corp. 0.93 21.64 21.51 386.73 0.34
CSA Coast Savings Financial 0.52 30.97 25.21 484.89 0.00
DSL Downey Financial Corp. 12.53 26.80 15.61 218.81 0.31
FSSB First FS&LA of San Bernardino 1.32 16.67 13.68 315.79 0.00
FED FirstFed Financial Corp. 2.28 9.16 20.01 387.78 0.00
GSB Golden State Bancorp Inc. -0.93 16.38 16.16 325.68 0.00
GDW Golden West Financial 4.44 9.63 45.36 691.00 0.44
AHM H.F. Ahmanson & Co. -2.36 16.67 20.17 495.69 0.88
HTHR Hawthorne Financial Corp. 20.00 22.63 14.01 288.58 0.00
HEMT HF Bancorp Inc. 5.93 12.61 13.26 167.21 0.00
HBNK Highland Federal Bank FSB 0.00 18.52 17.20 224.33 0.00
ITLA ITLA Capital Corp. -10.00 0.70 12.32 114.89 0.00
LFCO Life Financial Corp. -11.43 -8.82 7.56 44.96 NA
MBBC Monterey Bay Bancorp Inc. 4.11 14.29 15.60 126.84 0.11
PFFB PFF Bancorp Inc. -3.92 1.73 14.69 146.09 0.00
PROV Provident Financial Holdings -0.62 1.27 17.66 132.47 0.00
QCBC Quaker City Bancorp Inc. 2.50 0.00 15.33 181.26 0.00
REDF RedFed Bancorp Inc. 6.67 15.94 11.21 134.75 0.00
SGVB SGV Bancorp Inc. -4.86 14.17 12.98 174.61 0.00
WES Westcorp -9.64 -20.24 13.00 143.11 0.40
FFBA First Colorado Bancorp Inc. 14.47 22.97 12.00 91.76 0.42
ANE Alliance Bncorp of New England 5.26 2.19 10.95 148.70 0.15
BKC American Bank of Connecticut 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> 119
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>
*****************************
Latest All Time
Price High
State Exchange ($) ($)
----- -------- -------- --------
<S> <C> <C> <C> <C>
BKCT Bancorp Connecticut Inc. CT NASDAQ 40.000 40.000
BSBC Branford Savings Bank CT NASDAQ 6.000 178.750
DIBK Dime Financial Corp. CT NASDAQ 31.500 32.000
EGFC Eagle Financial Corp. CT NASDAQ 51.750 52.500
FFES First Federal of East Hartford CT NASDAQ 37.000 37.500
MECH Mechanics Savings Bank CT NASDAQ 25.625 27.250
NMSB NewMil Bancorp Inc. CT NASDAQ 14.250 15.500
NSSB Norwich Financial Corp. CT NASDAQ 29.750 31.625
NSSY NSS Bancorp Inc. CT NASDAQ 38.500 38.500
NTMG Nutmeg Federal S&LA CT NASDAQ 13.000 13.000
WBST Webster Financial Corp. CT NASDAQ 62.656 66.000
IFSB Independence Federal Svgs Bank DC NASDAQ 13.781 15.125
WSFS WSFS Financial Corp. DE NASDAQ 19.625 20.000
BANC BankAtlantic Bancorp Inc. FL NASDAQ 14.375 17.125
BKUNA BankUnited Financial Corp. FL NASDAQ 12.938 13.750
FFLC FFLC Bancorp Inc. FL NASDAQ 22.500 23.500
FFPB First Palm Beach Bancorp Inc. FL NASDAQ 38.750 40.563
OCN Ocwen Financial Corp. FL NYSE 24.250 28.282
CCFH CCF Holding Company GA NASDAQ 20.000 21.000
CFBC Community First Banking Co. GA NASDAQ 38.375 40.000
EBSI Eagle Bancshares GA NASDAQ 19.250 20.938
FSTC First Citizens Corp. GA NASDAQ 24.000 27.167
FGHC First Georgia Holding Inc. GA NASDAQ 8.375 9.500
FLFC First Liberty Financial Corp. GA NASDAQ 27.875 28.375
FLAG FLAG Financial Corp. GA NASDAQ 18.500 19.875
SFNB Security First Network Bank GA NASDAQ 8.000 41.500
CASH First Midwest Financial Inc. IA NASDAQ 20.500 20.750
GFSB GFS Bancorp Inc. IA NASDAQ 16.875 17.625
HZFS Horizon Financial Svcs Corp. IA NASDAQ 11.000 13.000
MFCX Marshalltown Financial Corp. IA NASDAQ 17.250 17.250
MIFC Mid-Iowa Financial Corp. IA NASDAQ 10.625 11.000
MWBI Midwest Bancshares Inc. IA NASDAQ 18.500 19.500
FFFD North Central Bancshares Inc. IA NASDAQ 18.875 19.250
PMFI Perpetual Midwest Financial IA NASDAQ 27.000 27.500
<CAPTION>
PER SHARE
******************************************************************************
All Time Monthly Quarterly Book 12 Month
Low Change Change Value Assets Div.
($) (%) (%) ($) ($) ($)
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BKCT Bancorp Connecticut Inc. 2.026 8.84 33.33 17.92 166.65 0.88
BSBC Branford Savings Bank 1.625 14.29 21.51 2.69 27.88 0.08
DIBK Dime Financial Corp. 2.125 1.61 14.03 14.54 178.52 0.37
EGFC Eagle Financial Corp. 6.198 6.98 54.48 22.91 332.04 0.94
FFES First Federal of East Hartford 4.000 5.71 14.73 24.40 368.12 0.60
MECH Mechanics Savings Bank 11.000 3.02 13.26 16.33 156.94 0.00
NMSB NewMil Bancorp Inc. 1.250 16.33 9.62 8.42 82.76 0.24
NSSB Norwich Financial Corp. 2.000 2.59 17.82 15.05 129.02 0.62
NSSY NSS Bancorp Inc. 9.875 6.21 16.23 21.54 275.37 0.25
NTMG Nutmeg Federal S&LA 4.645 13.04 20.93 7.72 138.72 0.08
WBST Webster Financial Corp. 3.864 4.53 21.07 26.83 502.50 0.76
IFSB Independence Federal Svgs Bank 0.250 -0.23 6.01 14.23 196.37 0.22
WSFS WSFS Financial Corp. 1.250 12.14 30.83 6.66 120.20 0.00
BANC BankAtlantic Bancorp Inc. 0.278 6.48 13.86 7.03 127.72 8.23
BKUNA BankUnited Financial Corp. 2.320 0.49 12.50 7.94 225.06 0.00
FFLC FFLC Bancorp Inc. 7.650 7.14 19.05 13.73 99.98 0.28
FFPB First Palm Beach Bancorp Inc. 14.000 1.31 19.00 22.39 358.26 0.60
OCN Ocwen Financial Corp. 10.125 -14.26 14.45 6.91 48.86 0.00
CCFH CCF Holding Company 10.750 0.63 17.65 14.21 133.32 0.78
CFBC Community First Banking Co. 31.875 6.60 13.70 31.49 163.48 NA
EBSI Eagle Bancshares 1.875 6.57 16.67 12.59 154.03 0.60
FSTC First Citizens Corp. 1.970 -5.26 14.29 12.44 122.97 0.29
FGHC First Georgia Holding Inc. 0.815 3.08 11.67 4.21 51.23 0.05
FLFC First Liberty Financial Corp. 2.667 19.89 27.43 12.30 166.86 0.39
FLAG FLAG Financial Corp. 3.200 10.45 25.42 10.66 117.07 0.34
SFNB Security First Network Bank 5.500 1.59 -38.76 3.02 9.12 0.00
CASH First Midwest Financial Inc. 8.833 4.46 12.33 16.11 149.91 0.36
GFSB GFS Bancorp Inc. 5.500 -1.46 16.38 11.01 95.62 0.23
HZFS Horizon Financial Svcs Corp. 5.188 -2.22 16.55 10.27 103.14 0.16
MFCX Marshalltown Financial Corp. 8.500 1.10 2.99 14.37 88.91 0.00
MIFC Mid-Iowa Financial Corp. 2.474 -1.16 14.86 7.19 76.29 0.08
MWBI Midwest Bancshares Inc. 3.917 8.82 63.83 10.18 147.21 0.20
FFFD North Central Bancshares Inc. 8.071 7.09 13.53 15.13 66.03 0.25
PMFI Perpetual Midwest Financial 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)
-------- -------- -------- --------
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> 120
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
Price High Low
State Exchange ($) ($) ($)
----- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SFFC StateFed Financial Corp. IA NASDAQ 13.500 14.125 5.250
FBNW FirstBank Corp. ID NASDAQ 17.625 19.000 15.500
ABCL Alliance Bancorp Inc. IL NASDAQ 26.250 28.375 6.000
AVND Avondale Financial Corp. IL NASDAQ 16.000 18.875 11.500
BFFC Big Foot Financial Corp. IL NASDAQ 18.500 19.625 12.313
CBCI Calumet Bancorp Inc. IL NASDAQ 31.875 34.000 6.889
CBSB Charter Financial Inc. IL NASDAQ 22.000 22.000 6.361
CBK Citizens First Financial Corp. IL AMSE 18.250 19.500 9.500
CSBF CSB Financial Group Inc. IL NASDAQ 12.500 12.750 8.810
EGLB Eagle BancGroup Inc. IL NASDAQ 19.750 19.750 10.500
FBCI Fidelity Bancorp Inc. IL NASDAQ 23.250 25.750 9.500
FFBI First Financial Bancorp Inc. IL NASDAQ 19.000 20.000 9.000
FMBD First Mutual Bancorp Inc. IL NASDAQ 20.250 21.500 11.125
FSFF First SecurityFed Financial IL NASDAQ 16.063 16.063 15.000
GTPS Great American Bancorp IL NASDAQ 19.000 19.500 11.875
HMLK Hemlock Federal Financial Corp IL NASDAQ 17.250 17.500 12.500
HBEI Home Bancorp of Elgin Inc. IL NASDAQ 18.000 19.313 11.813
HMCI HomeCorp Inc. IL NASDAQ 25.000 25.000 3.333
KNK Kankakee Bancorp Inc. IL AMSE 33.875 34.625 13.625
MAFB MAF Bancorp Inc. IL NASDAQ 32.500 34.750 1.818
NBSI North Bancshares Inc. IL NASDAQ 26.500 27.125 11.000
PFED Park Bancorp Inc. IL NASDAQ 17.875 18.125 10.188
PSFI PS Financial Inc. IL NASDAQ 17.250 18.000 11.625
SWBI Southwest Bancshares IL NASDAQ 25.500 26.000 7.833
SPBC St. Paul Bancorp Inc. IL NASDAQ 24.500 28.500 2.044
SFSB SuburbFed Financial Corp. IL NASDAQ 34.875 34.875 6.667
WCBI Westco Bancorp IL NASDAQ 27.500 29.250 7.667
FBCV 1ST Bancorp IN NASDAQ 40.000 41.000 3.990
AMFC AMB Financial Corp. IN NASDAQ 16.000 17.750 9.750
ASBI Ameriana Bancorp IN NASDAQ 19.500 22.000 2.750
ATSB AmTrust Capital Corp. IN NASDAQ 14.000 14.500 7.750
FFWC FFW Corp. IN NASDAQ 37.750 37.750 12.500
FFED Fidelity Federal Bancorp IN NASDAQ 10.000 14.773 1.534
FISB First Indiana Corporation IN NASDAQ 26.250 26.500 1.642
<CAPTION>
PER SHARE
****************************************************************
Monthly Quarterly Book 12 Month
Change Change Value Assets Div.
(%) (%) ($) ($) ($)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SFFC StateFed Financial Corp. 0.00 22.73 9.86 56.21 0.20
FBNW FirstBank Corp. 7.63 0.71 15.99 89.66 NA
ABCL Alliance Bancorp Inc. 5.53 24.51 16.10 170.96 0.29
AVND Avondale Financial Corp. -6.57 8.47 13.18 170.81 0.00
BFFC Big Foot Financial Corp. 4.23 9.63 14.97 85.63 NA
CBCI Calumet Bancorp Inc. -5.32 17.33 25.01 154.24 0.00
CBSB Charter Financial Inc. 4.76 7.32 13.71 94.77 0.28
CBK Citizens First Financial Corp. -2.67 14.06 16.30 107.58 0.00
CSBF CSB Financial Group Inc. 1.01 6.38 12.99 51.86 0.00
EGLB Eagle BancGroup Inc. 6.76 19.70 17.03 143.72 0.00
FBCI Fidelity Bancorp Inc. -1.06 9.41 18.66 178.13 0.30
FFBI First Financial Bancorp Inc. -1.30 0.66 18.10 202.92 0.00
FMBD First Mutual Bancorp Inc. 6.58 35.00 16.77 114.75 0.32
FSFF First SecurityFed Financial NA NA NA NA NA
GTPS Great American Bancorp 0.00 6.29 18.44 82.25 0.40
HMLK Hemlock Federal Financial Corp 1.47 12.20 15.06 77.98 NA
HBEI Home Bancorp of Elgin Inc. 7.46 5.88 13.77 49.96 0.20
HMCI HomeCorp Inc. 23.46 63.93 13.07 191.43 0.00
KNK Kankakee Bancorp Inc. 7.54 16.31 27.25 238.46 0.46
MAFB MAF Bancorp Inc. 6.56 4.84 17.22 221.04 0.26
NBSI North Bancshares Inc. 1.92 17.13 17.04 126.92 0.46
PFED Park Bancorp Inc. 0.70 7.52 16.61 71.77 0.00
PSFI PS Financial Inc. 0.73 16.95 14.76 39.55 NA
SWBI Southwest Bancshares -0.97 25.93 16.01 141.13 0.76
SPBC St. Paul Bancorp Inc. 1.29 7.69 11.98 133.25 0.32
SFSB SuburbFed Financial Corp. 3.33 26.82 22.73 342.62 0.32
WCBI Westco Bancorp 3.77 5.26 19.42 124.93 0.60
FBCV 1ST Bancorp 3.90 11.89 32.63 377.22 0.40
AMFC AMB Financial Corp. -4.48 10.34 14.95 107.27 0.24
ASBI Ameriana Bancorp 4.00 -3.70 13.63 121.63 0.61
ATSB AmTrust Capital Corp. 1.82 7.69 14.46 132.36 0.15
FFWC FFW Corp. 20.80 29.06 24.64 253.86 0.66
FFED Fidelity Federal Bancorp 8.11 17.65 5.15 84.32 0.50
FISB First Indiana Corporation 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> 121
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
Price High Low
State Exchange ($) ($) ($)
----- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
HFGI Harrington Financial Group IN NASDAQ 12.375 13.750 9.750
HBFW Home Bancorp IN NASDAQ 27.375 27.375 12.500
HBBI Home Building Bancorp IN NASDAQ 21.250 23.750 10.000
HOMF Home Federal Bancorp IN NASDAQ 27.500 27.500 1.432
HWEN Home Financial Bancorp IN NASDAQ 16.438 17.250 9.875
INCB Indiana Community Bank SB IN NASDAQ 20.500 20.500 11.000
LOGN Logansport Financial Corp. IN NASDAQ 15.250 16.000 11.125
LSBI LSB Financial Corp. IN NASDAQ 26.000 27.375 10.714
MARN Marion Capital Holdings IN NASDAQ 26.500 28.125 14.250
MFBC MFB Corp. IN NASDAQ 23.250 23.750 10.500
MONT Montgomery Financial Corp. IN NASDAQ 12.313 14.000 10.000
NEIB Northeast Indiana Bancorp IN NASDAQ 20.000 21.125 11.250
PFDC Peoples Bancorp IN NASDAQ 22.000 24.500 3.583
PERM Permanent Bancorp Inc. IN NASDAQ 25.625 27.375 9.750
RIVR River Valley Bancorp IN NASDAQ 18.750 18.875 13.250
SOBI Sobieski Bancorp Inc. IN NASDAQ 19.625 19.625 10.000
FFSL First Independence Corp. KS NASDAQ 15.000 15.000 5.438
LARK Landmark Bancshares Inc. KS NASDAQ 24.000 27.250 9.750
MCBS Mid Continent Bancshares Inc. KS NASDAQ 41.250 43.250 9.750
CKFB CKF Bancorp Inc. KY NASDAQ 18.500 20.750 11.375
CLAS Classic Bancshares Inc. KY NASDAQ 17.125 17.250 10.375
FFKY First Federal Financial Corp. KY NASDAQ 22.000 23.500 3.063
FLKY First Lancaster Bancshares KY NASDAQ 15.750 16.375 13.125
FTSB Fort Thomas Financial Corp. KY NASDAQ 14.750 17.750 9.250
FKKY Frankfort First Bancorp Inc. KY NASDAQ 9.250 15.875 8.000
GWBC Gateway Bancorp Inc. KY NASDAQ 19.625 19.625 11.000
GTFN Great Financial Corp. KY NASDAQ 48.000 48.125 13.875
HFFB Harrodsburg First Fin Bancorp KY NASDAQ 17.125 19.000 12.375
KYF Kentucky First Bancorp Inc. KY AMSE 14.500 15.250 10.563
ANA Acadiana Bancshares Inc. LA AMSE 23.750 24.750 11.690
GSLA GS Financial Corp. LA NASDAQ 17.750 18.750 13.375
ISBF ISB Financial Corp. LA NASDAQ 26.250 28.000 12.938
MERI Meritrust Federal SB LA NASDAQ 51.219 51.219 13.500
TSH Teche Holding Co. LA AMSE 21.875 23.500 11.375
<CAPTION>
PER SHARE
****************************************************************
Monthly Quarterly Book 12 Month
Change Change Value Assets Div.
(%) (%) ($) ($) ($)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
HFGI Harrington Financial Group -1.98 1.02 7.74 159.99 0.06
HBFW Home Bancorp 12.59 24.43 17.62 132.63 0.20
HBBI Home Building Bancorp -1.73 3.66 20.43 133.95 0.30
HOMF Home Federal Bancorp 17.86 37.50 11.77 136.05 0.30
HWEN Home Financial Bancorp 0.38 4.37 15.61 88.93 0.20
INCB Indiana Community Bank SB 36.67 30.16 12.38 104.21 0.36
LOGN Logansport Financial Corp. 1.67 5.17 12.86 68.06 0.40
LSBI LSB Financial Corp. 1.96 23.81 20.24 218.55 0.32
MARN Marion Capital Holdings -1.85 15.22 22.22 101.26 0.84
MFBC MFB Corp. 2.20 -1.06 20.31 155.05 0.32
MONT Montgomery Financial Corp. 0.51 3.14 11.81 61.70 NA
NEIB Northeast Indiana Bancorp 8.84 19.40 15.51 107.97 0.32
PFDC Peoples Bancorp 4.76 38.95 12.82 84.30 0.40
PERM Permanent Bancorp Inc. 2.50 7.89 20.25 206.19 0.43
RIVR River Valley Bancorp 15.38 13.64 14.80 116.33 NA
SOBI Sobieski Bancorp Inc. 7.53 20.77 17.26 108.12 0.22
FFSL First Independence Corp. 2.56 12.94 11.78 115.02 0.24
LARK Landmark Bancshares Inc. 0.00 0.00 18.99 134.86 0.40
MCBS Mid Continent Bancshares Inc. 8.55 34.15 19.93 208.65 0.40
CKFB CKF Bancorp Inc. -2.63 -2.63 16.91 66.29 1.47
CLAS Classic Bancshares Inc. 10.48 21.24 15.13 101.69 0.21
FFKY First Federal Financial Corp. 0.00 -2.22 12.60 91.99 0.52
FLKY First Lancaster Bancshares 0.00 -1.56 14.62 49.60 0.25
FTSB Fort Thomas Financial Corp. 10.28 22.92 10.56 65.44 0.30
FKKY Frankfort First Bancorp Inc. -3.90 -10.84 6.84 40.63 4.36
GWBC Gateway Bancorp Inc. 3.97 11.35 16.15 58.20 0.40
GTFN Great Financial Corp. 10.34 41.43 21.08 209.32 0.54
HFFB Harrodsburg First Fin Bancorp 7.03 15.13 15.68 53.81 0.55
KYF Kentucky First Bancorp Inc. 7.41 16.00 11.29 67.62 3.50
ANA Acadiana Bancshares Inc. 6.74 10.47 17.21 101.59 0.36
GSLA GS Financial Corp. 2.90 12.25 16.44 38.12 NA
ISBF ISB Financial Corp. 8.25 9.38 17.75 138.54 0.41
MERI Meritrust Federal SB 7.26 24.83 24.89 301.37 0.70
TSH Teche Holding Co. 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> 122
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 e
Price High
State Exchange ($) ($)
----- -------- -------- --------
<S> <C> <C> <C> <C>
ABBK Abington Bancorp Inc. MA NASDAQ 36.000 36.750
AFCB Affiliated Community Bancorp MA NASDAQ 28.500 32.125
ANDB Andover Bancorp Inc. MA NASDAQ 37.750 40.500
BFD BostonFed Bancorp Inc. MA AMSE 20.375 22.313
CEBK Central Co-operative Bank MA NASDAQ 26.500 26.500
EIRE Emerald Isle Bancorp Inc. MA NASDAQ 32.250 32.250
FCB Falmouth Bancorp Inc. MA AMSE 20.250 22.000
FESX First Essex Bancorp Inc. MA NASDAQ 19.875 20.500
FAB FirstFed America Bancorp Inc. MA AMSE 20.625 22.125
HIFS Hingham Instit. for Savings MA NASDAQ 27.125 29.000
HPBC Home Port Bancorp Inc. MA NASDAQ 24.000 25.000
IPSW Ipswich Savings Bank MA NASDAQ 12.875 14.125
LSBX Lawrence Savings Bank MA NASDAQ 13.875 18.125
MASB MASSBANK Corp. MA NASDAQ 45.000 47.750
MFLR Mayflower Co-operative Bank MA NASDAQ 24.438 26.250
MDBK Medford Savings Bank MA NASDAQ 37.000 38.500
MWBX MetroWest Bank MA NASDAQ 8.250 18.125
PBKB People's Bancshares Inc. MA NASDAQ 20.000 20.250
SWCB Sandwich Bancorp Inc. MA NASDAQ 41.750 42.000
SISB SIS Bancorp Inc. MA NASDAQ 33.625 37.000
SOSA Somerset Savings Bank MA NASDAQ 4.875 36.563
WRNB Warren Bancorp Inc. MA NASDAQ 20.625 21.375
EQSB Equitable Federal Savings Bank MD NASDAQ 45.000 45.750
HRBF Harbor Federal Bancorp Inc. MD NASDAQ 21.750 23.500
MFSL Maryland Federal Bancorp MD NASDAQ 26.625 26.625
WSB Washington Savings Bank, FSB MD AMSE 7.375 8.250
WHGB WHG Bancshares Corp. MD NASDAQ 16.250 16.500
FCME First Coastal Corp. ME NASDAQ 13.875 15.750
KSBK KSB Bancorp Inc. ME NASDAQ 15.250 16.000
MCBN Mid-Coast Bancorp Inc. ME NASDAQ 28.750 29.000
NBN Northeast Bancorp ME AMSE 27.750 27.875
PHBK Peoples Heritage Finl Group ME NASDAQ 42.625 43.250
BWFC Bank West Financial Corp. MI NASDAQ 22.000 22.500
CFSB CFSB Bancorp Inc. MI NASDAQ 35.500 35.750
<CAPTION>
PER SHARE
****************************************************************************
All Time Monthly Quarterly Book 12 Month
Low Change Change Value Assets Div.
($) (%) (%) ($) ($) ($)
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
ABBK Abington Bancorp Inc. 1.250 10.77 18.03 19.43 272.65 0.40
AFCB Affiliated Community Bancorp 12.848 0.00 8.57 17.28 173.83 0.48
ANDB Andover Bancorp Inc. 1.563 6.34 23.27 20.20 248.73 0.64
BFD BostonFed Bancorp Inc. 10.000 -1.21 6.88 15.43 170.04 0.24
CEBK Central Co-operative Bank 2.000 17.78 36.77 18.05 182.40 0.32
EIRE Emerald Isle Bancorp Inc. 0.666 2.38 51.76 13.78 197.13 0.28
FCB Falmouth Bancorp Inc. 10.250 -1.22 19.12 15.40 64.56 0.15
FESX First Essex Bancorp Inc. 1.000 1.92 18.66 11.90 160.72 0.48
FAB FirstFed America Bancorp Inc. 13.625 5.10 3.77 15.63 118.99 NA
HIFS Hingham Instit. for Savings 1.625 -4.82 13.02 16.10 165.89 0.53
HPBC Home Port Bancorp Inc. 3.000 3.23 14.29 11.65 109.13 0.80
IPSW Ipswich Savings Bank 1.100 -0.96 7.29 4.78 85.17 0.11
LSBX Lawrence Savings Bank 0.500 3.74 21.98 7.84 82.39 0.00
MASB MASSBANK Corp. 6.375 3.45 18.81 28.25 261.97 0.83
MFLR Mayflower Co-operative Bank 2.000 3.99 39.65 13.67 141.14 0.54
MDBK Medford Savings Bank 3.250 5.71 19.35 21.96 243.63 0.86
MWBX MetroWest Bank 0.750 0.00 32.00 3.13 41.97 0.17
PBKB People's Bancshares Inc. 0.750 7.38 19.40 8.96 218.53 0.39
SWCB Sandwich Bancorp Inc. 1.875 15.97 27.48 21.16 266.68 1.20
SISB SIS Bancorp Inc. 9.625 -0.74 14.47 18.94 260.36 0.38
SOSA Somerset Savings Bank 0.313 -4.88 36.82 2.06 31.25 0.00
WRNB Warren Bancorp Inc. 0.500 1.85 16.20 10.20 95.86 0.85
EQSB Equitable Federal Savings Bank 11.250 2.56 15.94 25.80 511.79 0.00
HRBF Harbor Federal Bancorp Inc. 9.750 4.82 14.47 16.74 128.26 0.42
MFSL Maryland Federal Bancorp 2.165 17.03 20.34 15.42 181.68 0.39
WSB Washington Savings Bank, FSB 0.281 -3.28 9.26 5.16 61.61 0.10
WHGB WHG Bancshares Corp. 10.875 7.44 3.17 14.16 68.56 0.15
FCME First Coastal Corp. 1.500 0.91 29.07 10.66 109.31 0.00
KSBK KSB Bancorp Inc. 3.712 8.93 8.93 8.90 120.87 0.07
MCBN Mid-Coast Bancorp Inc. 8.095 2.57 11.65 22.65 263.84 0.52
NBN Northeast Bancorp 4.625 18.09 91.38 14.27 205.19 0.32
PHBK Peoples Heritage Finl Group 1.875 8.60 17.18 16.42 220.43 0.72
BWFC Bank West Financial Corp. 8.500 7.32 31.34 13.30 94.02 0.28
CFSB CFSB Bancorp Inc. 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> 123
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
Price High Low Change
State Exchange ($) ($) ($) (%)
----- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
DNFC D & N Financial Corp. MI NASDAQ 24.125 25.375 2.500 1.05
FLGS Flagstar Bancorp Inc. MI NASDAQ 18.250 21.750 13.000 -6.41
MSBF MSB Financial Inc. MI NASDAQ 19.500 19.500 5.375 10.64
MSBK Mutual Savings Bank FSB MI NASDAQ 13.000 25.500 3.000 6.12
OFCP Ottawa Financial Corp. MI NASDAQ 27.500 28.250 9.318 3.29
THR Three Rivers Financial Corp. MI AMSE 19.750 20.500 11.375 9.72
BDJI First Federal Bancorporation MN NASDAQ 28.000 28.000 10.625 13.71
FFHH FSF Financial Corp. MN NASDAQ 20.000 21.000 7.750 4.58
HMNF HMN Financial Inc. MN NASDAQ 25.875 26.500 9.313 6.70
MIVI Mississippi View Holding Co. MN NASDAQ 18.250 19.750 8.500 1.39
QCFB QCF Bancorp Inc. MN NASDAQ 28.500 28.500 11.000 0.00
WEFC Wells Financial Corp. MN NASDAQ 17.750 19.000 9.000 4.41
CMRN Cameron Financial Corp MO NASDAQ 19.625 19.875 10.688 8.28
CAPS Capital Savings Bancorp Inc. MO NASDAQ 22.375 22.500 6.125 29.71
CBES CBES Bancorp Inc. MO NASDAQ 20.375 22.375 12.625 6.54
CNSB CNS Bancorp Inc. MO NASDAQ 20.000 20.000 11.000 15.94
FBSI First Bancshares Inc. MO NASDAQ 26.250 28.000 10.250 6.60
FTNB Fulton Bancorp Inc. MO NASDAQ 20.250 26.500 12.500 5.19
GSBC Great Southern Bancorp Inc. MO NASDAQ 21.875 22.125 1.146 8.70
HFSA Hardin Bancorp Inc. MO NASDAQ 17.500 18.625 11.000 -0.71
JSBA Jefferson Savings Bancorp MO NASDAQ 43.250 44.000 13.250 8.13
JOAC Joachim Bancorp Inc. MO NASDAQ 14.750 15.625 11.500 -0.84
LXMO Lexington B&L Financial Corp. MO NASDAQ 16.750 17.250 9.500 2.29
MBLF MBLA Financial Corp. MO NASDAQ 27.000 27.000 12.750 4.85
NASB North American Savings Bank MO NASDAQ 49.938 55.625 2.500 0.38
NSLB NS&L Bancorp Inc. MO NASDAQ 18.750 19.500 11.750 2.74
PCBC Perry County Financial Corp. MO NASDAQ 23.250 25.000 12.375 13.41
SMFC Sho-Me Financial Corp. MO NASDAQ 47.000 48.000 9.375 3.87
SMBC Southern Missouri Bancorp Inc. MO NASDAQ 19.000 19.500 8.875 7.04
CFTP Community Federal Bancorp MS NASDAQ 17.125 20.000 12.250 4.58
FFBS FFBS BanCorp Inc. MS NASDAQ 22.500 26.000 12.000 1.98
EFBC Empire Federal Bancorp Inc. MT NASDAQ 16.500 18.250 12.500 3.94
GBCI Glacier Bancorp Inc. MT NASDAQ 20.750 22.500 0.997 3.75
UBMT United Financial Corp. MT NASDAQ 27.000 27.000 5.625 12.50
<CAPTION>
PER SHARE
***************************************************
Quarterly Book 12 Month
Change Value Assets Div.
(%) ($) ($) ($)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
DNFC D & N Financial Corp. 26.97 11.18 212.76 0.05
FLGS Flagstar Bancorp Inc. -5.81 8.89 148.74 NA
MSBF MSB Financial Inc. 22.83 10.33 62.43 0.27
MSBK Mutual Savings Bank FSB 20.93 9.73 152.86 0.00
OFCP Ottawa Financial Corp. 18.05 14.15 161.95 0.35
THR Three Rivers Financial Corp. 25.40 15.75 114.40 0.37
BDJI First Federal Bancorporation 33.33 17.75 165.77 0.00
FFHH FSF Financial Corp. 12.68 16.24 128.96 0.50
HMNF HMN Financial Inc. 4.02 20.09 135.06 0.00
MIVI Mississippi View Holding Co. 17.74 16.30 92.60 0.16
QCFB QCF Bancorp Inc. 11.76 18.83 114.49 0.00
WEFC Wells Financial Corp. 7.58 14.86 104.50 0.12
CMRN Cameron Financial Corp 11.35 17.18 79.23 0.28
CAPS Capital Savings Bancorp Inc. 42.06 11.70 128.06 0.24
CBES CBES Bancorp Inc. 13.99 17.60 104.04 0.30
CNSB CNS Bancorp Inc. 19.40 14.34 58.93 0.21
FBSI First Bancshares Inc. 8.25 20.74 148.97 0.20
FTNB Fulton Bancorp Inc. -2.41 14.88 60.32 NA
GSBC Great Southern Bancorp Inc. 25.00 7.79 90.04 0.40
HFSA Hardin Bancorp Inc. 6.06 15.75 136.57 0.44
JSBA Jefferson Savings Bancorp 32.06 24.57 251.23 0.38
JOAC Joachim Bancorp Inc. 1.72 13.66 48.55 0.50
LXMO Lexington B&L Financial Corp. 5.51 14.73 52.03 0.15
MBLF MBLA Financial Corp. 13.68 22.35 176.63 0.40
NASB North American Savings Bank -3.50 25.37 330.46 0.71
NSLB NS&L Bancorp Inc. 1.52 16.51 84.40 0.50
PCBC Perry County Financial Corp. 8.77 18.81 97.97 0.40
SMFC Sho-Me Financial Corp. 26.17 22.63 230.05 0.00
SMBC Southern Missouri Bancorp Inc. 11.76 16.36 101.29 0.50
CFTP Community Federal Bancorp -4.86 13.40 46.65 2.80
FFBS FFBS BanCorp Inc. -2.17 15.07 85.83 2.50
EFBC Empire Federal Bancorp Inc. 4.76 15.51 42.64 NA
GBCI Glacier Bancorp Inc. 16.90 8.41 84.21 0.45
UBMT United Financial Corp. 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> 124
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
Price High Low
State Exchange ($) ($) ($)
----- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
WSTR WesterFed Financial Corp. MT NASDAQ 23.563 27.000 11.375
CFNC Carolina Fincorp Inc. NC NASDAQ 17.375 17.875 13.000
CENB Century Bancorp Inc. NC NASDAQ 80.000 84.000 62.000
COOP Cooperative Bankshares Inc. NC NASDAQ 17.375 17.750 1.734
SOPN First Savings Bancorp Inc. NC NASDAQ 24.375 25.000 13.500
GSFC Green Street Financial Corp. NC NASDAQ 18.500 20.750 12.125
HBS Haywood Bancshares Inc. NC AMSE 21.000 22.625 9.500
HFNC HFNC Financial Corp. NC NASDAQ 14.875 22.063 13.125
KSAV KS Bancorp Inc. NC NASDAQ 22.500 25.500 8.719
MBSP Mitchell Bancorp Inc. NC NASDAQ 17.500 18.000 10.190
PDB Piedmont Bancorp Inc. NC AMSE 10.375 19.125 9.250
SSB Scotland Bancorp Inc. NC AMSE 10.250 19.250 10.188
SSFC South Street Financial Corp. NC NASDAQ 17.500 20.000 12.125
SSM Stone Street Bancorp Inc. NC AMSE 20.250 27.250 16.250
UFRM United Federal Savings Bank NC NASDAQ 11.500 12.750 1.750
CFB Commercial Federal Corp. NE NYSE 48.063 51.188 1.083
CFX CFX Corp. NH AMSE 27.750 27.750 3.290
NHTB New Hampshire Thrift Bncshrs NH NASDAQ 21.000 22.750 1.750
FBER 1st Bergen Bancorp NJ NASDAQ 18.625 19.500 9.000
FSNJ Bayonne Bancshares Inc. NJ NASDAQ 12.000 13.063 3.665
FSPG First Home Bancorp Inc. NJ NASDAQ 23.750 23.750 1.898
FMCO FMS Financial Corp. NJ NASDAQ 29.375 31.500 1.500
IBSF IBS Financial Corp. NJ NASDAQ 17.438 18.750 7.312
LVSB Lakeview Financial NJ NASDAQ 24.125 26.000 3.668
LFBI Little Falls Bancorp Inc. NJ NASDAQ 20.000 20.000 9.500
OCFC Ocean Financial Corp. NJ NASDAQ 37.125 38.375 19.625
PBCI Pamrapo Bancorp Inc. NJ NASDAQ 23.875 26.750 2.563
PFSB PennFed Financial Services Inc NJ NASDAQ 33.188 33.500 9.063
PULS Pulse Bancorp NJ NASDAQ 24.500 29.750 4.000
RARB Raritan Bancorp Inc. NJ NASDAQ 27.250 28.625 3.445
SFIN Statewide Financial Corp. NJ NASDAQ 21.500 22.625 11.250
WYNE Wayne Bancorp Inc. NJ NASDAQ 22.750 24.875 10.750
WWFC Westwood Financial Corp. NJ NASDAQ 27.625 28.000 10.250
AABC Access Anytime Bancorp Inc. NM NASDAQ 10.125 10.625 1.716
<CAPTION>
PER SHARE
***************************************************************** *
Monthly Quarterly Book 12 Month
Change Change Value Assets Div.
(%) (%) ($) ($) ($)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
WSTR WesterFed Financial Corp. -4.80 8.65 19.03 179.16 0.46
CFNC Carolina Fincorp Inc. 2.21 0.00 13.92 61.61 NA
CENB Century Bancorp Inc. -4.76 3.23 75.05 247.80 NA
COOP Cooperative Bankshares Inc. 8.59 32.38 9.27 120.51 0.00
SOPN First Savings Bancorp Inc. 3.72 16.07 18.43 80.11 0.79
GSFC Green Street Financial Corp. 2.78 -2.63 14.64 41.40 0.57
HBS Haywood Bancshares Inc. -0.59 10.53 17.33 122.20 0.56
HFNC HFNC Financial Corp. 0.00 -6.30 9.48 50.42 5.28
KSAV KS Bancorp Inc. 4.65 21.62 16.44 124.17 0.94
MBSP Mitchell Bancorp Inc. 2.94 5.26 15.36 37.16 0.40
PDB Piedmont Bancorp Inc. -5.68 -1.19 7.56 46.00 7.40
SSB Scotland Bancorp Inc. -3.53 -43.45 7.61 33.65 6.30
SSFC South Street Financial Corp. -1.41 -3.45 14.84 53.49 NA
SSM Stone Street Bancorp Inc. 0.00 -4.71 16.32 55.20 4.56
UFRM United Federal Savings Bank 1.10 -2.13 6.82 92.95 0.22
CFB Commercial Federal Corp. 0.00 19.04 20.59 333.95 0.28
CFX CFX Corp. 11.56 45.10 10.25 117.66 0.88
NHTB New Hampshire Thrift Bncshrs -4.55 21.74 12.04 153.92 0.50
FBER 1st Bergen Bancorp 2.05 4.93 13.57 99.40 0.14
FSNJ Bayonne Bancshares Inc. 3.23 0.00 10.58 67.73 NA
FSPG First Home Bancorp Inc. 5.56 18.01 13.31 193.87 0.40
FMCO FMS Financial Corp. 3.07 16.34 15.80 243.60 0.22
IBSF IBS Financial Corp. 8.99 1.09 11.69 67.10 0.54
LVSB Lakeview Financial 0.26 49.61 13.71 112.19 0.12
LFBI Little Falls Bancorp Inc. 14.29 15.11 14.53 124.40 0.13
OCFC Ocean Financial Corp. 0.34 10.00 27.63 182.15 0.40
PBCI Pamrapo Bancorp Inc. 5.52 13.02 16.89 130.84 0.98
PFSB PennFed Financial Services Inc 11.32 14.94 22.43 282.83 0.28
PULS Pulse Bancorp -6.22 18.07 14.03 170.75 0.70
RARB Raritan Bancorp Inc. -1.80 22.47 12.64 171.68 0.45
SFIN Statewide Financial Corp. 10.26 14.28 14.34 153.15 0.41
WYNE Wayne Bancorp Inc. 1.11 -7.14 16.49 132.73 0.15
WWFC Westwood Financial Corp. 0.45 13.92 15.95 171.14 0.25
AABC Access Anytime Bancorp Inc. 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> 125
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
Price High Low
State Exchange ($) ($) ($)
----- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
GUPB GFSB Bancorp Inc. NM NASDAQ 20.250 22.250 12.875
AFED AFSALA Bancorp Inc. NY NASDAQ 19.125 19.500 11.313
ALBK ALBANK Financial Corp. NY NASDAQ 46.250 47.750 9.167
ALBC Albion Banc Corp. NY NASDAQ 29.000 30.500 10.500
AHCI Ambanc Holding Co. NY NASDAQ 17.000 17.375 9.375
ASFC Astoria Financial Corp. NY NASDAQ 55.125 56.625 12.688
CNY Carver Bancorp Inc. NY AMSE 17.063 17.063 6.250
CATB Catskill Financial Corp. NY NASDAQ 17.625 19.125 9.875
DME Dime Bancorp Inc. NY NYSE 24.250 26.375 1.625
DIME Dime Community Bancorp Inc. NY NASDAQ 23.250 23.625 11.687
ESBK Elmira Savings Bank (The) NY NASDAQ 30.000 31.000 9.091
FIBC Financial Bancorp Inc. NY NASDAQ 24.813 25.750 8.500
FFIC Flushing Financial Corp. NY NASDAQ 22.250 24.000 14.125
GPT GreenPoint Financial Corp. NY NYSE 66.625 69.375 17.625
GOSB GSB Financial Corp. NY NASDAQ 15.625 16.750 14.250
HAVN Haven Bancorp Inc. NY NASDAQ 43.000 45.375 10.000
JSB JSB Financial Inc. NY NYSE 46.625 49.563 10.750
LISB Long Island Bancorp Inc. NY NASDAQ 47.125 47.500 12.090
MBB MSB Bancorp Inc. NY AMSE 29.000 29.500 10.750
NYB New York Bancorp Inc. NY NYSE 35.375 36.313 1.213
PEEK Peekskill Financial Corp. NY NASDAQ 17.500 18.250 11.125
PKPS Poughkeepsie Financial Corp. NY NASDAQ 9.938 26.750 0.875
PSBK Progressive Bank Inc. NY NASDAQ 33.750 38.000 1.667
QCSB Queens County Bancorp Inc. NY NASDAQ 35.000 37.750 7.111
RELY Reliance Bancorp Inc. NY NASDAQ 33.125 33.500 8.875
RSLN Roslyn Bancorp Inc. NY NASDAQ 21.750 24.313 15.000
SFED SFS Bancorp Inc. NY NASDAQ 22.125 24.500 11.000
SKAN Skaneateles Bancorp Inc. NY NASDAQ 27.000 32.000 4.250
TPNZ Tappan Zee Financial Inc. NY NASDAQ 19.750 22.625 11.250
ROSE TR Financial Corp. NY NASDAQ 32.875 33.500 4.938
YFCB Yonkers Financial Corporation NY NASDAQ 18.500 22.000 9.310
ASBP ASB Financial Corp. OH NASDAQ 13.125 18.250 11.375
CAFI Camco Financial Corp. OH NASDAQ 24.000 24.000 4.310
COFI Charter One Financial OH NASDAQ 59.250 61.905 3.125
<CAPTION>
PER SHARE
*****************************************************************
Monthly Quarterly Book 12 Month
Change Change Value Assets Div.
(%) (%) ($) ($) ($)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
GUPB GFSB Bancorp Inc. -4.71 8.00 17.60 137.33 0.40
AFED AFSALA Bancorp Inc. 2.00 21.43 15.92 109.42 NA
ALBK ALBANK Financial Corp. 1.65 20.92 26.69 288.76 0.63
ALBC Albion Banc Corp. 0.00 24.73 24.25 283.18 0.47
AHCI Ambanc Holding Co. 3.42 7.94 13.98 122.91 0.05
ASFC Astoria Financial Corp. 8.49 17.91 29.51 382.48 0.52
CNY Carver Bancorp Inc. 36.50 36.50 15.08 179.56 0.05
CATB Catskill Financial Corp. 0.71 6.82 15.41 62.19 0.21
DME Dime Bancorp Inc. 0.78 27.21 10.38 191.28 0.08
DIME Dime Community Bancorp Inc. 12.05 25.25 14.81 109.73 0.05
ESBK Elmira Savings Bank (The) 6.67 30.43 21.07 323.16 0.64
FIBC Financial Bancorp Inc. 10.28 25.64 15.71 173.69 0.38
FFIC Flushing Financial Corp. 5.33 10.56 17.08 120.27 0.20
GPT GreenPoint Financial Corp. 7.03 8.44 33.65 305.75 0.95
GOSB GSB Financial Corp. 4.17 6.84 NA NA NA
HAVN Haven Bancorp Inc. 2.08 16.22 25.07 417.98 0.60
JSB JSB Financial Inc. -0.80 3.04 35.91 154.68 1.35
LISB Long Island Bancorp Inc. 7.71 19.30 22.74 246.88 0.60
MBB MSB Bancorp Inc. 5.94 25.41 22.40 272.13 0.60
NYB New York Bancorp Inc. 7.20 15.51 7.93 152.18 0.53
PEEK Peekskill Financial Corp. 4.48 7.69 14.81 56.76 0.36
PKPS Poughkeepsie Financial Corp. 0.00 37.08 5.91 70.18 0.10
PSBK Progressive Bank Inc. -0.74 2.66 20.18 231.09 0.64
QCSB Queens County Bancorp Inc. -2.10 -2.55 13.26 102.00 0.52
RELY Reliance Bancorp Inc. 8.61 10.42 19.29 233.55 0.62
RSLN Roslyn Bancorp Inc. 0.00 -1.97 14.04 79.60 NA
SFED SFS Bancorp Inc. 2.91 13.46 17.64 141.42 0.26
SKAN Skaneateles Bancorp Inc. -10.74 21.35 18.15 259.29 0.40
TPNZ Tappan Zee Financial Inc. -3.66 16.18 14.36 83.74 0.22
ROSE TR Financial Corp. 8.23 19.55 13.94 209.84 0.49
YFCB Yonkers Financial Corporation -1.33 6.47 14.53 103.60 0.21
ASBP ASB Financial Corp. -1.87 0.00 10.30 66.15 5.40
CAFI Camco Financial Corp. 6.67 34.98 14.98 156.23 0.49
COFI Charter One Financial 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> 126
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
Price High Low
State Exchange ($) ($) ($)
----- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CTZN CitFed Bancorp Inc. OH NASDAQ 50.625 55.500 6.167
CIBI Community Investors Bancorp OH NASDAQ 15.750 17.000 7.167
DCBI Delphos Citizens Bancorp Inc. OH NASDAQ 17.500 18.250 11.750
EMLD Emerald Financial Corp. OH NASDAQ 19.250 19.250 7.750
EFBI Enterprise Federal Bancorp OH NASDAQ 27.750 27.750 11.250
FFDF FFD Financial Corp. OH NASDAQ 18.375 19.500 10.000
FFYF FFY Financial Corp. OH NASDAQ 29.750 30.125 12.250
FFOH Fidelity Financial of Ohio OH NASDAQ 15.000 16.375 3.112
FDEF First Defiance Financial OH NASDAQ 15.250 16.000 5.790
FFBZ First Federal Bancorp Inc. OH NASDAQ 19.250 20.500 3.125
FFHS First Franklin Corp. OH NASDAQ 26.000 26.000 3.500
GFCO Glenway Financial Corp. OH NASDAQ 19.000 19.000 7.710
HHFC Harvest Home Financial Corp. OH NASDAQ 14.750 14.750 8.750
HCFC Home City Financial Corp. OH NASDAQ 18.000 18.000 12.000
INBI Industrial Bancorp Inc. OH NASDAQ 18.000 18.250 9.875
LONF London Financial Corporation OH NASDAQ 14.750 21.000 9.750
MRKF Market Financial Corp. OH NASDAQ 15.250 15.750 12.250
METF Metropolitan Financial Corp. OH NASDAQ 28.500 30.625 10.500
MFFC Milton Federal Financial Corp. OH NASDAQ 15.000 17.125 10.000
OSFS Ohio State Financial Services OH NASDAQ 14.750 15.500 14.750
OHSL OHSL Financial Corp. OH NASDAQ 27.750 28.250 11.500
PFFC Peoples Financial Corp. OH NASDAQ 14.000 19.000 10.875
PSFC Peoples-Sidney Financial Corp. OH NASDAQ 17.250 18.500 12.563
PTRS Potters Financial Corp. OH NASDAQ 34.000 34.000 9.000
PVFC PVF Capital Corp. OH NASDAQ 20.500 21.750 3.924
SFSL Security First Corp. OH NASDAQ 19.500 19.500 1.083
WOFC Western Ohio Financial Corp. OH NASDAQ 25.750 29.250 14.750
WEHO Westwood Homestead Fin. Corp. OH NASDAQ 17.500 18.000 10.375
WFI Winton Financial Corp. OH AMSE 20.000 20.500 3.750
FFWD Wood Bancorp Inc. OH NASDAQ 18.500 18.750 5.333
KFBI Klamath First Bancorp OR NASDAQ 21.875 24.250 12.500
OTFC Oregon Trail Financial Corp. OR NASDAQ 16.000 16.750 15.625
WFSG Wilshire Financial Services OR NASDAQ 27.625 33.500 13.500
CVAL Chester Valley Bancorp Inc. PA NASDAQ 26.250 27.500 2.955
<CAPTION>
PER SHARE
*****************************************************************
Monthly Quarterly Book 12 Month
Change Change Value Assets Div.
(%) (%) ($) ($) ($)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CTZN CitFed Bancorp Inc. 2.27 16.71 23.88 380.60 0.33
CIBI Community Investors Bancorp 5.00 5.00 12.09 102.94 0.28
DCBI Delphos Citizens Bancorp Inc. 0.00 8.53 14.65 55.01 NA
EMLD Emerald Financial Corp. 8.45 37.50 9.28 118.99 0.24
EFBI Enterprise Federal Bancorp 5.71 38.75 15.82 138.42 1.75
FFDF FFD Financial Corp. -0.68 24.58 14.86 61.06 0.25
FFYF FFY Financial Corp. 4.39 8.18 20.30 148.22 0.70
FFOH Fidelity Financial of Ohio -3.23 -4.76 12.34 94.75 0.26
FDEF First Defiance Financial -3.17 1.67 12.61 64.13 0.32
FFBZ First Federal Bancorp Inc. -1.91 4.05 9.06 129.33 0.24
FFHS First Franklin Corp. 13.04 31.65 17.49 193.95 0.34
GFCO Glenway Financial Corp. 24.08 55.10 12.17 128.62 0.36
HHFC Harvest Home Financial Corp. 0.00 25.53 11.31 95.75 3.40
HCFC Home City Financial Corp. 16.13 16.13 15.20 77.50 NA
INBI Industrial Bancorp Inc. 4.35 19.01 11.76 68.46 0.34
LONF London Financial Corporation -27.61 -1.67 14.60 74.23 0.24
MRKF Market Financial Corp. 1.67 7.49 14.89 42.02 NA
METF Metropolitan Financial Corp. 40.74 57.24 9.90 245.51 0.00
MFFC Milton Federal Financial Corp. -1.64 7.14 12.31 91.09 3.09
OSFS Ohio State Financial Services -1.40 NA 16.47 60.80 NA
OHSL OHSL Financial Corp. 4.72 19.35 21.42 190.02 0.85
PFFC Peoples Financial Corp. 3.70 -17.65 15.78 58.00 NA
PSFC Peoples-Sidney Financial Corp. -1.43 7.81 15.72 57.60 NA
PTRS Potters Financial Corp. 26.51 41.21 22.42 254.43 0.32
PVFC PVF Capital Corp. 2.50 -4.09 10.63 147.96 0.00
SFSL Security First Corp. 9.09 2.63 8.31 89.69 0.31
WOFC Western Ohio Financial Corp. 5.10 8.42 23.40 168.69 1.00
WEHO Westwood Homestead Fin. Corp. 10.24 14.75 14.20 51.35 0.21
WFI Winton Financial Corp. 2.56 24.03 11.72 163.40 0.45
FFWD Wood Bancorp Inc. 5.71 11.28 9.77 78.60 0.29
KFBI Klamath First Bancorp -3.31 14.38 15.64 97.83 0.30
OTFC Oregon Trail Financial Corp. -1.54 NA NA NA NA
WFSG Wilshire Financial Services -3.91 57.86 9.55 180.95 NA
CVAL Chester Valley Bancorp Inc. 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> 127
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
Price High Low
State Exchange ($) ($) ($)
----- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CMSB Commonwealth Bancorp Inc. PA NASDAQ 20.375 20.375 5.790
FSBI Fidelity Bancorp Inc. PA NASDAQ 26.625 26.625 3.415
FBBC First Bell Bancorp Inc. PA NASDAQ 17.250 18.375 11.875
FKFS First Keystone Financial PA NASDAQ 32.000 33.250 10.250
SHEN First Shenango Bancorp Inc. PA NASDAQ 33.750 35.000 12.750
GAF GA Financial Inc. PA AMSE 19.250 19.688 10.250
HARL Harleysville Savings Bank PA NASDAQ 29.375 30.250 2.828
LARL Laurel Capital Group Inc. PA NASDAQ 27.750 28.000 3.627
MLBC ML Bancorp Inc. PA NASDAQ 28.750 29.063 6.219
PVSA Parkvale Financial Corporation PA NASDAQ 29.750 29.750 1.720
PWBC PennFirst Bancorp Inc. PA NASDAQ 18.250 19.500 3.654
PWBK Pennwood Bancorp Inc. PA NASDAQ 18.938 19.000 9.000
PHFC Pittsburgh Home Financial Corp PA NASDAQ 20.688 20.813 9.500
PRBC Prestige Bancorp Inc. PA NASDAQ 18.406 19.375 9.750
PFNC Progress Financial Corp. PA NASDAQ 15.500 17.277 0.714
SHSB SHS Bancorp Inc. PA NASDAQ 16.000 16.370 14.750
SVRN Sovereign Bancorp Inc. PA NASDAQ 18.938 19.250 0.837
THRD TF Financial Corp. PA NASDAQ 28.000 28.000 9.750
USAB USABancshares, Inc. PA NASDAQ 9.000 9.750 6.000
WVFC WVS Financial Corp. PA NASDAQ 31.500 34.000 13.000
YFED York Financial Corp. PA NASDAQ 26.500 27.250 3.441
CFCP Coastal Financial Corp. SC NASDAQ 23.000 27.750 1.439
FFCH First Financial Holdings Inc. SC NASDAQ 43.125 44.000 4.000
FSFC First Southeast Financial Corp SC NASDAQ 15.125 20.250 9.125
FSPT FirstSpartan Financial Corp. SC NASDAQ 37.500 39.000 35.000
PALM Palfed Inc. SC NASDAQ 27.000 27.000 3.500
SCCB S. Carolina Community Bancshrs SC NASDAQ 23.000 25.250 12.625
HFFC HF Financial Corp. SD NASDAQ 26.000 27.000 5.500
TWIN Twin City Bancorp TN NASDAQ 13.625 14.500 7.000
BNKU Bank United Corp. TX NASDAQ 42.000 45.375 22.500
CBSA Coastal Bancorp Inc. TX NASDAQ 28.875 33.250 9.875
ETFS East Texas Financial Services TX NASDAQ 20.000 21.500 11.000
FBHC Fort Bend Holding Corp. TX NASDAQ 19.625 24.000 5.188
GLMR Gilmer Financial Svcs, Inc. TX NASDAQ NA 12.000 9.000
<CAPTION>
PER SHARE
****************************************************************
Monthly Quarterly Book 12 Month
Change Change Value Assets Div.
(%) (%) ($) ($) ($)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CMSB Commonwealth Bancorp Inc. 17.27 18.98 13.02 140.25 0.27
FSBI Fidelity Bancorp Inc. 10.94 25.29 16.65 245.02 0.33
FBBC First Bell Bancorp Inc. 0.73 9.52 11.02 104.63 3.40
FKFS First Keystone Financial 9.40 15.32 20.15 303.99 0.20
SHEN First Shenango Bancorp Inc. -1.46 22.73 22.55 194.02 0.54
GAF GA Financial Inc. 3.36 1.99 14.72 100.63 0.38
HARL Harleysville Savings Bank 0.43 12.98 13.76 207.77 0.39
LARL Laurel Capital Group Inc. 7.77 23.33 15.20 145.22 0.46
MLBC ML Bancorp Inc. 4.07 41.98 14.41 195.17 0.39
PVSA Parkvale Financial Corporation 3.48 26.06 15.20 196.92 0.44
PWBC PennFirst Bancorp Inc. 2.10 16.80 12.96 154.86 0.34
PWBK Pennwood Bancorp Inc. -0.33 13.06 15.34 83.64 0.30
PHFC Pittsburgh Home Financial Corp 10.34 6.09 14.63 138.78 0.29
PRBC Prestige Bancorp Inc. 0.85 7.48 16.88 150.66 0.09
PFNC Progress Financial Corp. 11.71 6.90 5.85 108.91 0.09
SHSB SHS Bancorp Inc. 1.59 NA NA NA NA
SVRN Sovereign Bancorp Inc. 7.83 24.69 7.33 163.55 0.08
THRD TF Financial Corp. 16.67 45.45 19.21 152.95 0.38
USAB USABancshares, Inc. 1.41 10.77 6.73 87.75 0.00
WVFC WVS Financial Corp. 1.61 17.21 19.38 161.47 3.10
YFED York Financial Corp. 26.79 38.74 11.62 131.24 0.48
CFCP Coastal Financial Corp. -6.12 -7.07 6.97 106.32 0.35
FFCH First Financial Holdings Inc. 20.63 34.24 16.45 268.98 0.72
FSFC First Southeast Financial Corp -4.72 0.00 8.20 79.77 0.22
FSPT FirstSpartan Financial Corp. 7.14 5.63 29.17 108.87 NA
PALM Palfed Inc. 7.46 65.51 10.74 126.15 0.11
SCCB S. Carolina Community Bancshrs 6.98 6.98 17.35 65.29 0.60
HFFC HF Financial Corp. 1.96 18.18 18.22 205.07 0.38
TWIN Twin City Bancorp -0.91 2.19 10.87 84.04 0.43
BNKU Bank United Corp. 0.00 16.67 18.94 378.76 0.56
CBSA Coastal Bancorp Inc. -1.70 -5.33 20.13 586.83 0.44
ETFS East Texas Financial Services 4.58 6.67 20.34 112.97 0.20
FBHC Fort Bend Holding Corp. 1.95 18.05 11.88 192.91 0.16
GLMR Gilmer Financial Svcs, Inc. 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> 128
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
Price High Low
State Exchange ($) ($) ($)
----- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
JXVL Jacksonville Bancorp Inc. TX NASDAQ 18.750 19.500 7.141
BFSB Bedford Bancshares Inc. VA NASDAQ 28.250 28.750 10.250
CNIT CENIT Bancorp Inc. VA NASDAQ 68.000 71.000 10.875
CFFC Community Financial Corp. VA NASDAQ 24.750 24.750 4.250
ESX Essex Bancorp Inc. VA AMSE 5.000 19.250 0.750
FFFC FFVA Financial Corp. VA NASDAQ 33.375 35.125 8.250
LIFB Life Bancorp Inc. VA NASDAQ 31.125 31.125 8.313
VABF Virginia Beach Fed. Financial VA NASDAQ 16.625 17.625 1.625
VFFC Virginia First Financial Corp. VA NASDAQ 25.250 25.250 1.250
CASB Cascade Financial Corp. WA NASDAQ 12.750 16.800 2.130
FMSB First Mutual Savings Bank WA NASDAQ 18.250 20.167 1.628
FWWB First SB of Washington Bancorp WA NASDAQ 25.250 26.375 12.375
HRZB Horizon Financial Corp. WA NASDAQ 16.563 18.000 1.970
IWBK InterWest Bancorp Inc. WA NASDAQ 39.500 43.250 8.478
RVSB Riverview Bancorp Inc. WA NASDAQ 15.000 15.000 3.481
STSA Sterling Financial Corp. WA NASDAQ 21.125 22.500 1.878
WFSL Washington Federal Inc. WA NASDAQ 32.188 33.313 1.566
WAMU Washington Mutual Inc. WA NASDAQ 69.125 72.375 1.629
AADV Advantage Bancorp Inc. WI NASDAQ 62.250 62.250 10.600
ABCW Anchor BanCorp Wisconsin WI NASDAQ 31.500 32.250 4.900
FCBF FCB Financial Corp. WI NASDAQ 27.250 28.125 10.000
FTFC First Federal Capital Corp. WI NASDAQ 27.875 29.000 0.966
FNGB First Northern Capital Corp. WI NASDAQ 13.500 14.000 1.730
HALL Hallmark Capital Corp. WI NASDAQ 15.250 15.375 4.938
MWFD Midwest Federal Financial WI NASDAQ 26.500 27.500 4.167
NWEQ Northwest Equity Corp. WI NASDAQ 19.000 19.000 6.875
RELI Reliance Bancshares Inc. WI NASDAQ 8.875 10.125 6.500
STFR St. Francis Capital Corp. WI NASDAQ 38.250 41.250 12.625
AFBC Advance Financial Bancorp WV NASDAQ 17.750 17.875 12.750
FOBC Fed One Bancorp WV NASDAQ 24.875 27.000 5.358
CRZY Crazy Woman Creek Bancorp WY NASDAQ 15.375 15.500 10.000
TRIC Tri-County Bancorp Inc. WY NASDAQ 27.500 29.000 11.375
<CAPTION>
PER SHARE
***************************************************************
Monthly Quarterly Book 12 Month
Change Change Value Assets Div.
(%) (%) ($) ($) ($)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
JXVL Jacksonville Bancorp Inc. 1.35 11.94 13.55 90.83 0.50
BFSB Bedford Bancshares Inc. 22.83 16.05 18.04 121.83 0.53
CNIT CENIT Bancorp Inc. 11.02 28.91 31.01 424.15 1.00
CFFC Community Financial Corp. 13.79 13.79 18.99 143.71 0.55
ESX Essex Bancorp Inc. -4.76 185.71 0.03 181.42 0.00
FFFC FFVA Financial Corp. 5.53 13.86 17.84 125.46 0.46
LIFB Life Bancorp Inc. 31.75 31.75 16.17 150.94 0.46
VABF Virginia Beach Fed. Financial 9.92 22.02 8.70 121.61 0.19
VFFC Virginia First Financial Corp. 4.12 5.76 11.89 146.82 0.10
CASB Cascade Financial Corp. 2.00 -3.77 8.36 125.97 0.00
FMSB First Mutual Savings Bank -0.45 32.73 7.53 110.92 0.13
FWWB First SB of Washington Bancorp 4.66 3.06 15.83 107.22 0.26
HRZB Horizon Financial Corp. 1.53 10.42 11.17 71.44 0.69
IWBK InterWest Bancorp Inc. 5.69 0.32 16.13 254.24 0.59
RVSB Riverview Bancorp Inc. 12.15 51.39 9.56 46.06 NA
STSA Sterling Financial Corp. 0.60 14.19 12.98 247.19 0.00
WFSL Washington Federal Inc. 3.42 19.21 15.11 120.39 0.90
WAMU Washington Mutual Inc. 1.47 14.61 20.28 371.76 1.02
AADV Advantage Bancorp Inc. 13.18 47.34 30.60 320.62 0.38
ABCW Anchor BanCorp Wisconsin 11.50 16.67 13.82 215.91 0.28
FCBF FCB Financial Corp. 0.93 1.87 18.72 134.81 0.74
FTFC First Federal Capital Corp. 2.29 17.37 11.46 170.18 0.45
FNGB First Northern Capital Corp. 0.00 3.85 8.24 74.29 0.32
HALL Hallmark Capital Corp. 7.08 37.08 10.59 145.00 0.00
MWFD Midwest Federal Financial 10.42 24.71 11.70 130.06 0.33
NWEQ Northwest Equity Corp. 8.57 15.15 14.53 115.59 0.46
RELI Reliance Bancshares Inc. 1.43 2.90 9.18 19.01 3.00
STFR St. Francis Capital Corp. -0.65 10.87 24.78 317.28 0.48
AFBC Advance Financial Bancorp 1.43 9.23 15.01 97.48 NA
FOBC Fed One Bancorp 3.65 24.38 17.45 150.73 0.59
CRZY Crazy Woman Creek Bancorp 4.24 6.03 14.88 62.79 0.40
TRIC Tri-County Bancorp Inc. -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)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
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> 129
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
Price High Low Change
State Exchange ($) ($) ($) (%)
----- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
ALL THRIFTS
AVERAGE 24.414 28.144 7.934 4.44
MEDIAN 21.000 23.500 8.875 3.31
HIGH 89.625 589.500 62.000 40.74
LOW 4.875 8.250 0.250 -27.61
AVERAGE FOR STATE
KY 19.663 21.350 10.300 4.30
AVERAGE BY REGION
MIDWEST 22.647 23.926 8.505 4.96
NEW ENGLAND 27.315 33.571 3.887 5.15
MID ATLANTIC 25.768 27.237 7.725 4.91
SOUTHEAST 22.894 25.802 9.872 3.61
SOUTHWEST 24.863 25.587 10.383 5.54
WEST 26.991 42.443 7.121 1.90
AVERAGE BY EXCHANGE
NYSE 43.740 89.137 4.770 0.52
AMEX 20.522 22.839 8.618 4.14
OTC/NASDAQ 23.962 26.177 8.004 4.62
<CAPTION>
************************************************** **
Quarterly Book 12 Month e
Change Value Assets Div.
(%) ($) ($) ($)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ALL THRIFTS
AVERAGE 16.21 15.58 153.65 0.55
MEDIAN 14.73 14.98 131.80 0.35
HIGH 185.71 75.05 691.00 8.23
LOW -43.45 0.03 9.12 0.00
AVERAGE FOR STATE
KY 11.08 14.09 80.46 1.21
AVERAGE BY REGION
MIDWEST 15.91 15.53 132.15 0.49
NEW ENGLAND 22.78 14.85 179.88 0.47
MID ATLANTIC 16.24 16.18 171.58 0.44
SOUTHEAST 13.80 14.91 118.49 1.23
SOUTHWEST 15.91 16.69 185.46 0.36
WEST 13.77 15.95 204.64 0.30
AVERAGE BY EXCHANGE
NYSE 13.62 20.84 302.59 0.40
AMEX 22.17 14.32 128.82 1.33
OTC/NASDAQ 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
KY 22.144 136.670 25.564 24.728
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> 130
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 ue
Assets Equity Tang. Equity es
State ($000) ($000) ($000)
----- --------------- --------------- --------------- ----
<S> <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
<CAPTION>
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
<CAPTION>
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> 131
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>
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
<CAPTION>
PROFITABILITY
***************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
-------- ---------- -------- --------
<S> <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
<CAPTION>
CAPITAL ISSUES
**********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
---------- ------------- ---------------- ------------
<S> <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> 132
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>
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
<CAPTION>
PROFITABILITY
*************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
-------- ---------- -------- --------
<S> <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
<CAPTION>
CAPITAL ISSUES
**********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
---------- ------------- ---------------- ------------
<S> <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> 133
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>
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
<CAPTION>
PROFITABILITY
**************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
-------- ---------- -------- --------
<S> <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
<CAPTION>
CAPITAL ISSUES
*********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
---------- ------------- ---------------- ------------
<S> <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> 134
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>
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
<CAPTION>
PROFITABILITY
**************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
-------- ---------- -------- --------
<S> <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
<CAPTION>
CAPITAL ISSUES
*********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
---------- ------------- ---------------- ------------
<S> <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> 135
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>
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
<CAPTION>
ASSETS AND EQUITY
***************************************************
Core Core
ROAA ROAA ROAE ROAE
(%) (%) (%) (%)
-------- ---------- -------- --------
<S> <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 Bank 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
<CAPTION>
CAPITAL ISSUES
**********************************************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
---------- ------------- ---------------- ------------
<S> <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 Bank 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> 136
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 PROFITABILITY
************************************ *****************************
Total Total Total Core Core ue
Assets Equity Tang. Equity ROAA ROAA ROAE ROAE s
State ($000) ($000) ($000) (%) (%) (%) (%)
----- ----------- --------- ----------- ----- ------ ------- ----- -
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FBSI First Bancshares Inc. MO 162,755 22,657 22,657 1.20 1.08 8.49 7.68
FTNB Fulton Bancorp Inc. MO 103,713 25,585 25,585 1.25 1.08 5.41 4.69
GSBC Great Southern Bancorp Inc. MO 727,533 62,940 62,940 1.85 1.74 21.01 19.81
HFSA Hardin Bancorp Inc. MO 117,364 13,536 13,536 0.80 0.75 5.88 5.55
JSBA Jefferson Savings Bancorp MO 1,257,753 113,516 89,043 0.79 0.76 9.60 9.32
JOAC Joachim Bancorp Inc. MO 35,073 9,870 9,870 0.79 0.79 2.72 2.72
LXMO Lexington B&L Financial Corp. MO 59,236 16,775 16,775 1.02 1.32 3.45 4.46
MBLF MBLA Financial Corp. MO 224,013 28,347 28,347 0.83 0.85 6.50 6.63
NASB North American Savings Bank MO 736,585 56,547 54,645 1.27 1.20 17.21 16.21
NSLB NS&L Bancorp Inc. MO 59,711 11,679 11,679 0.49 0.77 2.39 3.72
PCBC Perry County Financial Corp. MO 81,105 15,570 15,570 0.93 1.07 4.97 5.72
SMFC Sho-Me Financial Corp. MO 344,849 31,138 31,138 1.30 1.24 13.64 12.97
SMBC Southern Missouri Bancorp Inc. MO 163,297 26,376 26,376 0.93 0.90 5.81 5.61
CFTP Community Federal Bancorp MS 215,953 57,701 57,701 1.46 1.45 4.73 4.71
FFBS FFBS BanCorp Inc. MS 134,952 22,544 22,544 1.41 1.41 7.42 7.42
EFBC Empire Federal Bancorp Inc. MT 110,540 40,200 40,200 NA NA NA NA
GBCI Glacier Bancorp Inc. MT 573,968 57,332 55,929 1.50 1.54 15.68 16.10
UBMT United Financial Corp. MT 103,082 24,757 24,757 1.41 1.40 6.06 6.01
WSTR WesterFed Financial Corp. MT 999,203 106,148 85,632 0.80 0.76 6.90 6.60
CFNC Carolina Fincorp Inc. NC 114,069 25,764 25,764 1.20 1.16 5.52 5.32
CENB Century Bancorp Inc. NC 100,937 30,572 30,572 1.58 1.59 6.21 6.25
COOP Cooperative Bankshares Inc. NC 359,535 27,652 27,652 0.63 0.63 8.26 8.21
SOPN First Savings Bancorp Inc. NC 295,315 67,949 67,949 1.76 1.76 7.28 7.28
GSFC Green Street Financial Corp. NC 177,962 62,946 62,946 1.58 1.58 4.47 4.47
HBS Haywood Bancshares Inc. NC 152,796 21,672 20,931 1.37 1.37 9.41 9.41
HFNC HFNC Financial Corp. NC 866,859 163,027 163,027 1.21 1.05 5.28 4.55
KSAV KS Bancorp Inc. NC 109,937 14,554 14,549 1.21 1.20 8.84 8.77
MBSP Mitchell Bancorp Inc. NC 34,591 14,303 14,303 1.62 1.62 3.79 3.79
PDB Piedmont Bancorp Inc. NC 126,544 20,791 20,791 -0.25 0.57 -1.39 3.19
SSB Scotland Bancorp Inc. NC 64,399 14,561 14,561 1.89 1.88 6.39 6.36
SSFC South Street Financial Corp. NC 240,524 61,718 61,718 1.23 1.19 6.85 6.62
<CAPTION>
CAPITAL ISSUES
*********************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
--------- ---------- ---------- ---------
<S> <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> 137
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 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>
SSM Stone Street Bancorp Inc. NC 104,773 30,979 30,979 1.56 1.56 4.57 4.57
UFRM United Federal Savings Bank NC 285,744 20,954 20,954 0.72 0.57 9.56 7.55
CFB Commercial Federal Corp. NE 7,207,143 444,273 397,642 0.94 0.94 15.97 15.97
CFX CFX Corp. NH 2,821,182 245,691 236,835 0.72 0.95 8.45 11.09
NHTB New Hampshire Thrift Bncshrs NH 319,338 24,976 21,454 0.74 0.60 9.98 8.11
FBER 1st Bergen Bancorp NJ 284,739 38,881 38,881 0.77 0.77 4.94 4.94
FSNJ Bayonne Bancshares Inc. NJ 609,053 95,161 95,161 0.37 0.53 4.05 5.77
FSPG First Home Bancorp Inc. NJ 525,092 36,039 35,494 0.93 0.91 14.03 13.69
FMCO FMS Financial Corp. NJ 581,660 37,729 37,180 1.03 1.02 15.86 15.74
IBSF IBS Financial Corp. NJ 734,751 128,019 128,019 0.78 0.78 4.44 4.44
LVSB Lakeview Financial NJ 505,882 61,809 52,953 1.28 0.93 13.09 9.48
LFBI Little Falls Bancorp Inc. NJ 324,425 37,903 34,957 0.57 0.51 4.37 3.93
OCFC Ocean Financial Corp. NJ 1,489,220 225,884 225,884 1.00 1.00 5.71 5.71
PBCI Pamrapo Bancorp Inc. NJ 371,958 48,008 47,674 1.35 1.33 9.76 9.61
PFSB PennFed Financial Services Inc NJ 1,363,950 99,917 84,615 0.82 0.82 10.96 10.96
PULS Pulse Bancorp NJ 526,016 43,207 43,207 1.10 1.10 14.06 14.06
RARB Raritan Bancorp Inc. NJ 407,262 29,996 29,536 1.04 1.02 13.27 13.07
SFIN Statewide Financial Corp. NJ 703,112 65,812 65,700 0.81 0.81 8.46 8.46
WYNE Wayne Bancorp Inc. NJ 267,285 33,213 33,213 0.86 0.86 6.01 6.01
WWFC Westwood Financial Corp. NJ 110,425 10,290 9,205 0.73 0.78 2.34 2.50
AABC Access Anytime Bancorp Inc. NM 105,639 9,134 9,134 1.44 1.34 22.55 20.89
GUPB GFSB Bancorp Inc. NM 109,964 14,095 14,095 0.87 0.87 5.47 5.45
AFED AFSALA Bancorp Inc. NY 159,181 21,444 21,444 NA NA NA NA
ALBK ALBANK Financial Corp. NY 3,716,954 343,512 302,611 1.05 1.05 11.40 11.35
ALBC Albion Banc Corp. NY 70,810 6,064 6,064 0.50 0.49 5.54 5.46
AHCI Ambanc Holding Co. NY 529,309 60,204 60,204 -0.54 -0.61 -4.22 -4.74
ASFC Astoria Financial Corp. NY 7,904,363 609,784 515,847 0.81 0.77 10.35 9.80
CNY Carver Bancorp Inc. NY 415,561 34,910 33,561 -0.15 0.18 -1.76 2.08
CATB Catskill Financial Corp. NY 289,619 71,777 71,777 1.40 1.37 5.22 5.11
DME Dime Bancorp Inc. NY 19,413,597 1,053,004 1,002,707 0.67 0.66 12.63 12.47
DIME Dime Community Bancorp Inc. NY 1,385,356 186,951 161,119 1.10 1.04 6.94 6.55
<CAPTION>
CAPITAL ISSUES
*********************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
--------- --------- ---------- ---------
<S> <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> 138
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 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>
ESBK Elmira Savings Bank (The) NY 228,268 14,503 14,123 0.42 0.34 6.67 5.40
FIBC Financial Bancorp Inc. NY 296,956 26,856 26,729 0.92 0.98 9.57 10.16
FFIC Flushing Financial Corp. NY 960,130 136,389 130,931 0.96 0.96 6.01 6.05
GPT GreenPoint Financial Corp. NY 13,093,985 1,268,776 680,049 1.09 1.05 10.41 10.01
GOSB GSB Financial Corp. NY 154,649 12,545 12,545 NA NA NA NA
HAVN Haven Bancorp Inc. NY 1,833,284 109,945 109,594 0.68 0.69 11.37 11.45
JSB JSB Financial Inc. NY 1,531,068 355,419 355,419 1.93 1.72 8.62 7.67
LISB Long Island Bancorp Inc. NY 5,930,784 546,375 541,306 0.86 0.73 9.33 7.93
MBB MSB Bancorp Inc. NY 773,991 76,137 46,403 0.53 0.54 6.05 6.06
NYB New York Bancorp Inc. NY 3,244,200 169,063 169,063 1.64 1.49 31.49 28.61
PEEK Peekskill Financial Corp. NY 181,242 47,297 47,297 1.15 1.15 4.33 4.33
PKPS Poughkeepsie Financial Corp. NY 883,981 74,436 74,436 0.53 0.54 6.36 6.44
PSBK Progressive Bank Inc. NY 884,617 77,243 69,571 0.95 0.94 11.39 11.17
QCSB Queens County Bancorp Inc. NY 1,541,049 172,847 172,847 1.57 1.55 11.69 11.55
RELY Reliance Bancorp Inc. NY 2,034,753 168,030 123,413 0.89 0.84 10.86 10.22
RSLN Roslyn Bancorp Inc. NY 3,474,150 612,813 609,850 0.97 1.17 5.64 6.80
SFED SFS Bancorp Inc. NY 174,093 21,716 21,716 0.69 0.69 5.48 5.48
SKAN Skaneateles Bancorp Inc. NY 247,643 17,337 16,838 0.70 0.68 10.32 9.99
TPNZ Tappan Zee Financial Inc. NY 124,603 21,369 21,369 0.85 0.84 4.87 4.77
ROSE TR Financial Corp. NY 3,691,564 230,213 230,213 0.97 0.87 15.66 14.14
YFCB Yonkers Financial Corporation NY 312,956 43,878 43,878 1.05 1.07 6.72 6.79
ASBP ASB Financial Corp. OH 112,449 17,512 17,512 0.97 0.91 5.89 5.53
CAFI Camco Financial Corp. OH 502,186 48,157 44,568 1.16 0.99 12.08 10.23
COFI Charter One Financial OH 15,196,993 1,071,930 984,464 1.27 1.24 18.76 18.34
CTZN CitFed Bancorp Inc. OH 3,294,554 206,713 187,844 0.87 0.87 13.46 13.46
CIBI Community Investors Bancorp OH 94,328 11,085 11,085 0.97 0.97 8.37 8.37
DCBI Delphos Citizens Bancorp Inc. OH 107,796 28,716 28,716 1.61 1.61 8.03 8.03
EMLD Emerald Financial Corp. OH 603,493 47,081 46,387 1.04 0.97 13.69 12.70
EFBI Enterprise Federal Bancorp OH 274,888 31,424 31,404 0.93 0.78 7.35 6.14
FFDF FFD Financial Corp. OH 88,220 21,473 21,473 1.93 0.97 7.83 3.92
FFYF FFY Financial Corp. OH 610,974 83,662 83,662 1.29 1.26 8.78 8.58
<CAPTION>
CAPITAL ISSUES
*********************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
--------- --------- ---------- ---------
<S> <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> 139
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 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>
FFOH Fidelity Financial of Ohio OH 528,704 68,875 61,076 0.83 0.94 6.28 7.07
FDEF First Defiance Financial OH 574,364 112,906 112,906 1.02 1.00 4.79 4.67
FFBZ First Federal Bancorp Inc. OH 203,703 15,626 15,609 1.02 0.97 13.37 12.73
FFHS First Franklin Corp. OH 231,189 20,847 20,730 0.55 0.65 6.18 7.31
GFCO Glenway Financial Corp. OH 293,245 27,750 27,418 0.80 0.77 8.37 8.14
HHFC Harvest Home Financial Corp. OH 87,596 10,349 10,349 0.30 0.57 2.31 4.44
HCFC Home City Financial Corp. OH 70,110 13,750 13,750 1.23 1.25 6.40 6.49
INBI Industrial Bancorp Inc. OH 354,116 60,848 60,848 1.51 1.44 8.32 7.92
LONF London Financial Corporation OH 38,240 7,519 7,519 0.66 0.99 3.17 4.77
MRKF Market Financial Corp. OH 56,121 19,895 19,895 0.99 0.99 3.66 3.66
METF Metropolitan Financial Corp. OH 865,572 34,911 31,859 0.64 0.60 16.23 15.21
MFFC Milton Federal Financial Corp. OH 209,958 26,385 26,385 0.73 0.65 5.08 4.52
OSFS Ohio State Financial Services OH 38,559 10,442 10,442 0.98 0.98 6.13 6.13
OHSL OHSL Financial Corp. OH 234,600 25,619 25,619 0.90 0.88 8.06 7.86
PFFC Peoples Financial Corp. OH 86,486 23,534 23,534 0.59 0.90 2.31 3.54
PSFC Peoples-Sidney Financial Corp. OH 102,835 26,014 26,014 1.04 1.04 6.37 6.37
PTRS Potters Financial Corp. OH 122,716 10,812 10,812 0.98 0.96 10.93 10.72
PVFC PVF Capital Corp. OH 383,278 27,537 27,537 1.37 1.31 19.66 18.82
SFSL Security First Corp. OH 680,827 63,059 62,084 1.36 1.37 14.62 14.73
WOFC Western Ohio Financial Corp. OH 397,425 55,105 51,442 0.37 0.43 2.74 3.16
WEHO Westwood Homestead Fin. Corp. OH 142,878 39,513 39,513 1.01 1.09 3.23 3.50
WFI Winton Financial Corp. OH 324,532 23,277 22,814 1.05 0.86 14.63 12.06
FFWD Wood Bancorp Inc. OH 166,520 20,707 20,707 1.40 1.29 11.07 10.20
KFBI Klamath First Bancorp OR 980,078 144,462 NA 1.04 1.04 5.75 5.75
OTFC Oregon Trail Financial Corp. OR 341,988 65,168 65,168 NA NA NA NA
WFSG Wilshire Financial Services OR 1,369,761 99,769 99,769 1.83 1.62 28.33 25.01
CVAL Chester Valley Bancorp Inc. PA 322,321 27,917 27,917 0.98 0.93 11.31 10.83
CMSB Commonwealth Bancorp Inc. PA 2,278,099 211,483 164,822 0.75 0.58 7.49 5.76
FSBI Fidelity Bancorp Inc. PA 380,951 25,881 NA 0.78 0.76 11.41 11.19
FBBC First Bell Bancorp Inc. PA 681,215 71,762 71,762 1.12 1.09 9.47 9.27
FKFS First Keystone Financial PA 373,430 24,752 24,752 0.84 0.77 11.46 10.53
<CAPTION>
CAPITAL ISSUES
*********************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
--------- --------- ---------- ---------
<S> <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> 140
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 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>
SHEN First Shenango Bancorp Inc. PA 401,437 46,654 46,654 1.17 1.17 10.51 10.46
GAF GA Financial Inc. PA 802,304 117,377 116,235 1.09 1.07 6.26 6.10
HARL Harleysville Savings Bank PA 345,239 22,872 22,872 1.04 1.04 16.14 16.17
LARL Laurel Capital Group Inc. PA 209,980 21,982 21,982 1.46 1.41 14.07 13.60
MLBC ML Bancorp Inc. PA 2,315,784 160,337 149,595 0.72 0.51 9.90 7.09
PVSA Parkvale Financial Corporation PA 1,005,440 77,610 77,108 1.08 1.08 14.93 14.93
PWBC PennFirst Bancorp Inc. PA 822,350 68,826 61,205 0.66 0.66 8.60 8.61
PWBK Pennwood Bancorp Inc. PA 47,645 8,736 8,736 0.99 1.08 5.20 5.66
PHFC Pittsburgh Home Financial Corp PA 273,304 28,814 28,511 0.85 0.76 6.70 6.02
PRBC Prestige Bancorp Inc. PA 137,834 15,445 15,445 0.62 0.62 5.10 5.11
PFNC Progress Financial Corp. PA 436,746 23,291 20,773 0.89 0.71 17.19 13.62
SHSB SHS Bancorp Inc. PA 88,460 11,797 11,797 NA NA NA NA
SVRN Sovereign Bancorp Inc. PA 14,601,008 742,122 624,005 0.53 0.65 10.12 12.46
THRD TF Financial Corp. PA 625,338 72,713 64,214 0.78 0.67 6.96 6.02
USAB USABancshares, Inc. PA 64,269 5,420 5,338 0.53 0.47 4.57 4.08
WVFC WVS Financial Corp. PA 282,235 33,877 33,877 1.29 1.28 10.68 10.65
YFED York Financial Corp. PA 1,155,725 102,335 102,335 0.95 0.80 11.47 9.70
CFCP Coastal Financial Corp. SC 494,003 32,391 32,391 1.21 1.05 19.36 16.81
FFCH First Financial Holdings Inc. SC 1,712,931 104,785 104,785 0.87 0.85 14.22 13.85
FSFC First Southeast Financial Corp SC 350,038 35,978 35,978 1.05 1.05 10.32 10.32
FSPT FirstSpartan Financial Corp. SC 482,314 129,234 129,234 1.08 1.07 7.51 7.47
PALM Palfed Inc. SC 668,504 56,928 56,928 0.39 0.67 4.87 8.22
SCCB S. Carolina Community Bancshrs SC 45,619 12,126 12,126 1.15 1.15 4.37 4.37
HFFC HF Financial Corp. SD 574,889 54,185 54,182 1.02 0.94 11.03 10.13
TWIN Twin City Bancorp TN 106,931 13,840 13,840 0.85 0.72 6.65 5.59
BNKU Bank United Corp. TX 11,967,072 598,479 584,874 0.69 0.54 13.50 10.48
CBSA Coastal Bancorp Inc. TX 2,929,560 101,656 85,465 0.42 0.40 12.44 11.94
ETFS East Texas Financial Services TX 115,949 20,879 20,879 0.67 0.62 3.67 3.44
FBHC Fort Bend Holding Corp. TX 319,414 19,671 18,368 0.66 0.51 10.61 8.12
GLMR Gilmer Financial Svcs, Inc. TX 42,171 3,803 3,803 0.06 0.32 0.59 3.36
JXVL Jacksonville Bancorp Inc. TX 226,182 33,745 33,745 1.02 1.33 6.42 8.42
<CAPTION>
CAPITAL ISSUES
*********************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
--------- --------- ---------- ---------
<S> <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> 141
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 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>
BFSB Bedford Bancshares Inc. VA 139,179 19,621 19,621 1.20 1.19 8.39 8.34
CNIT CENIT Bancorp Inc. VA 701,708 48,739 44,638 0.80 0.78 11.24 10.96
CFFC Community Financial Corp. VA 183,278 24,213 24,213 1.12 1.13 8.18 8.22
ESX Essex Bancorp Inc. VA 191,886 15,028 14,853 0.12 0.02 1.41 0.30
FFFC FFVA Financial Corp. VA 567,266 75,499 73,981 1.40 1.35 10.37 9.97
LIFB Life Bancorp Inc. VA 1,486,357 159,280 154,881 0.92 0.86 8.70 8.10
VABF Virginia Beach Fed. Financial VA 605,486 43,320 43,320 0.62 0.49 9.13 7.24
VFFC Virginia First Financial Corp. VA 853,557 69,136 66,918 0.94 0.50 11.68 6.22
CASB Cascade Financial Corp. WA 426,451 28,311 28,311 0.61 0.61 9.61 9.55
FMSB First Mutual Savings Bank WA 451,120 30,637 30,637 1.03 1.00 15.32 15.00
FWWB First SB of Washington Bancorp WA 1,098,615 150,295 138,838 1.25 1.17 8.47 7.97
HRZB Horizon Financial Corp. WA 531,028 83,044 83,044 1.58 1.55 10.18 9.95
IWBK InterWest Bancorp Inc. WA 2,046,705 129,824 127,516 1.12 0.98 16.98 14.90
RVSB Riverview Bancorp Inc. WA 282,247 58,556 56,390 1.26 1.23 11.33 11.07
STSA Sterling Financial Corp. WA 1,870,513 98,250 89,924 0.59 0.54 10.33 9.50
WFSL Washington Federal Inc. WA 5,719,589 717,745 658,971 1.86 1.85 15.71 15.62
WAMU Washington Mutual Inc. WA 95,607,369 5,337,105 4,964,585 0.18 0.68 3.15 11.92
AADV Advantage Bancorp Inc. WI 1,037,462 99,004 92,102 1.05 0.94 11.67 10.49
ABCW Anchor BanCorp Wisconsin WI 1,954,749 125,150 122,971 1.00 0.93 15.57 14.53
FCBF FCB Financial Corp. WI 522,991 72,633 72,633 1.05 1.09 6.67 6.92
FTFC First Federal Capital Corp. WI 1,559,672 105,029 98,984 1.08 0.90 16.79 13.94
FNGB First Northern Capital Corp. WI 656,745 72,801 72,801 0.93 0.89 8.20 7.88
HALL Hallmark Capital Corp. WI 418,467 30,555 30,555 0.65 0.63 9.10 8.94
MWFD Midwest Federal Financial WI 211,689 19,047 18,415 1.45 1.11 16.71 12.82
NWEQ Northwest Equity Corp. WI 96,954 11,333 11,333 1.03 0.99 8.75 8.42
RELI Reliance Bancshares Inc. WI 46,987 22,698 22,698 1.32 1.29 2.58 2.52
STFR St. Francis Capital Corp. WI 1,661,916 129,797 114,976 0.89 0.74 10.76 8.94
AFBC Advance Financial Bancorp WV 105,717 16,279 16,279 0.88 0.86 6.11 5.92
FOBC Fed One Bancorp WV 357,721 39,980 38,210 0.94 0.94 8.31 8.26
CRZY Crazy Woman Creek Bancorp WY 59,952 14,210 14,210 1.28 1.30 4.74 4.79
TRIC Tri-County Bancorp Inc. WY 88,173 13,503 13,503 1.05 1.07 7.13 7.26
<CAPTION>
CAPITAL ISSUES
*********************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
--------- --------- ---------- ---------
<S> <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> 142
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 PROFITABILITY
************************************ *****************************
Total Total Total Core Core
Assets Equity Tang. Equity ROAA ROAA ROAE ROAE
State ($000) ($000) ($000) (%) (%) (%) (%)
----- ----------- --------- ----------- ----- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
ALL THRIFTS
AVERAGE 1,465,609 110,687 103,408 0.86 0.84 8.74 8.36
MEDIAN 343,684 37,816 36,707 0.94 0.90 8.34 7.91
HIGH 95,607,369 5,337,105 4,964,585 4.13 3.97 46.76 44.97
LOW 34,591 3,803 3,803 -28.08 -28.75 -68.24 -69.85
AVERAGE FOR STATE
KY 400,607 49,114 47,352 1.10 1.09 6.11 5.85
AVERAGE BY REGION
MIDWEST 618,558 58,457 55,722 0.91 0.90 8.55 8.37
NEW ENGLAND 855,812 85,574 84,703 0.89 0.79 8.41 6.90
MID ATLANTIC 1,205,089 117,505 104,100 1.10 1.08 8.47 8.22
SOUTHEAST 868,922 68,412 64,135 0.52 0.47 8.63 8.00
SOUTHWEST 390,902 47,951 47,211 1.06 0.99 7.46 7.06
WEST 4,229,833 268,514 262,841 0.81 0.78 9.65 9.19
AVERAGE BY EXCHANGE
NYSE 13,281,731 858,050 773,884 1.12 0.91 15.31 12.98
AMEX 427,272 46,490 44,473 0.77 0.84 5.95 6.41
OTC/NASDAQ 1,085,390 86,522 81,704 0.86 0.83 8.70 8.34
CAPITAL ISSUES
*********************************************
Number of Mkt. Value
IPO Shares of Shares
Date Exchange Outstg. ($M)
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
ALL THRIFTS
AVERAGE 6,801,232 226.65
MEDIAN 2,669,683 55.36
HIGH 257,176,039 17,938.03
LOW 191,258 2.10
AVERAGE FOR STATE
KY 3,031,526 85.38
AVERAGE BY REGION
MIDWEST 3,911,510 94.63
NEW ENGLAND 6,774,072 141.97
MID ATLANTIC 7,457,563 219.01
SOUTHEAST 5,286,350 141.77
SOUTHWEST 3,515,419 65.81
WEST 12,794,278 531.32
AVERAGE BY EXCHANGE
NYSE 41,653,708 1,755.68
AMEX 3,442,219 67.63
OTC/NASDAQ 5,689,536 178.80
</TABLE>
<PAGE> 143
KELLER & COMPANY
Dublin, Ohio
614-766-1426
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> <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 17.30 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 10.00 12.88 28.75 12.94 29.38 14.00 40.00
RSLN Roslyn Bancorp Inc. 10.00 15.00 50.00 15.94 59.38 16.00 60.00
FAB FirstFed America Bancorp Inc. 10.00 13.63 36.25 14.13 41.25 14.88 48.75
EFBC Empire Federal Bancorp Inc. 10.00 13.25 32.50 13.50 35.00 13.75 37.50
MRKF Market Financial Corp. 10.00 12.94 29.38 12.25 22.50 12.63 26.25
GSLA GS Financial Corp. 10.00 13.38 33.75 13.75 37.50 14.00 40.00
HMLK Hemlock Federal Financial Corp 10.00 12.88 28.75 12.88 28.75 13.00 30.00
PLSK Pulaski Savings Bank (MHC) 10.00 11.50 15.00 12.00 20.00 11.86 18.59
SKBO First Carnegie Deposit (MHC) 10.00 11.63 16.25 13.00 30.00 12.88 28.75
PSFC Peoples-Sidney Financial Corp. 10.00 12.56 25.63 12.88 28.75 13.25 32.50
HCBB HCB Bancshares Inc. 10.00 12.63 26.25 12.75 27.50 12.88 28.75
* MONT Montgomery Financial Corp. 10.00 11.13 11.25 11.25 12.50 12.06 20.63
CFBC Community First Banking Co. 20.00 31.88 59.38 33.00 65.00 34.00 70.00
FBNW FirstBank Corp. 10.00 15.81 58.13 15.56 55.63 17.75 77.50
FSPT FirstSpartan Financial Corp. 20.00 36.69 83.44 37.00 85.00 35.63 78.13
GOSB GSB Financial Corp. 10.00 14.63 46.25 14.88 48.75 14.38 43.75
PHSB Peoples Home Savings Bk (MHC) 10.00 14.00 40.00 13.75 37.50 14.00 40.00
* FSNJ Bayonne Bancshares Inc. 10.00 11.75 17.50 11.88 18.75 12.69 26.88
OSFS Ohio State Financial Services 10.00 15.50 55.00 15.37 53.70 14.96 49.60
SHSB SHS Bancorp Inc. 10.00 14.75 47.50 16.25 62.50 16.00 60.00
OTFC Oregon Trail Financial Corp. 10.00 16.75 67.50 16.38 63.75 16.13 61.25
FSFF First SecurityFed Financial 10.00 15.06 50.63 15.13 51.25 16.06 60.63
<FN>
* Second stage conversion.
</TABLE>
<PAGE> 144
EXHIBIT 34
KELLER & COMPANY
Dublin, Ohio
614-766-1426
ACQUISITIONS AND PENDING ACQUISITIONS
COUNTY, CITY OR MARKET AREA OF COLUMBIA FEDERAL SAVINGS BANK
NONE
<PAGE> 145
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>
EXHIBIT 35
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
State Exchange (X) (%) (%) (X)
----- -------- -------- --------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
PFSL Pocahontas FS&LA (MHC) AR NASDAQ 23.29 228.96 14.48 23.45
PBCT People's Bank (MHC) CT NASDAQ 23.56 295.25 26.64 36.22
CMSV Community Savings Bnkshrs(MHC FL NASDAQ 32.41 215.78 25.14 35.35
FFFL Fidelity Bankshares Inc. (MHC FL NASDAQ 55.75 225.53 18.89 34.84
HARB Harbor Florida Bancorp (MHC) FL NASDAQ 24.44 334.02 28.58 24.62
FFSX First Fed SB of Siouxland(MHC IA NASDAQ 26.79 226.38 19.77 27.48
WCFB Webster City Federal SB (MHC) IA NASDAQ 31.15 192.49 45.01 31.15
JXSB Jacksonville Savings Bk (MHC) IL NASDAQ 33.86 196.40 20.72 40.53
LFED Leeds Federal Savings Bk (MHC MD NASDAQ 33.08 233.95 39.03 33.08
GFED Guaranty Federal SB (MHC) MO NASDAQ 38.31 271.12 35.32 39.58
PULB Pulaski Bank, Svgs Bank (MHC) MO NASDAQ 52.59 271.59 35.44 39.10
FSLA First Savings Bank (MHC) NJ NASDAQ 36.05 325.87 30.95 34.51
PLSK Pulaski Savings Bank (MHC) NJ NASDAQ NA 180.98 21.68 NA
TSBS Trenton SB (MHC) NJ NASDAQ 39.94 290.31 49.20 56.97
PBHC Oswego City Savings Bk (MHC) NY NASDAQ 26.64 237.10 28.30 29.69
SBFL SB of the Finger Lakes (MHC) NY NASDAQ 66.48 245.39 22.90 100.86
WAYN Wayne Svgs Community Bank(MHC OH NASDAQ 38.27 293.01 27.94 40.79
SKBO First Carnegie Deposit (MHC) PA NASDAQ NA 175.54 29.12 NA
GDVS Greater Delaware Valley (MHC) PA NASDAQ 45.59 350.28 40.77 45.59
HARS Harris Financial Inc. (MHC) PA NASDAQ 36.54 371.09 30.41 44.19
NWSB Northwest Savings Bank (MHC) PA NASDAQ 32.56 323.33 31.16 33.33
PHSB Peoples Home Savings Bk (MHC) PA NASDAQ NA 182.24 24.90 NA
PERT Perpetual Bank (MHC) SC NASDAQ 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> 146
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>
EXHIBIT 36
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> <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) PA 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> <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> 147
KELLER & COMPANY
Dublin, Ohio
614-766-1426
<TABLE>
<CAPTION>
Exhibit 37
Page 1
COMPARABLE GROUP SELECTION
BALANCE SHEET PARAMETERS
General Parameters:
States: IL IN KY MO OH TN VA WV
IPO Date: <= 09/30/96
Asset size: <= $350,000,000 Total
Cash & 1-4 Fam. Total Net Net Loans Borrowed
Total Invest./ MBS/ Loans/ Loans/ & MBS/ Funds/ Equity/
Assets Assets Assets Assets Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%) (%) (%) (%) (%)
----------------------------------------------------------------------------------------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 20.09 17.17 51.52 59.21 76.38 0.00 12.59
-----------------------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to 4.00 - 35.00 - 45.00 - 65.00 - 8.00 -
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 35.00 <25.00 70.00 85.00 95.00 <25.00 16.00
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
JOAC Joachim Bancorp Inc. MO 12/28/95 35,073 27.43 0.23 59.49 70.21 70.44 0.00 28.14
LONF London Financial Corporation OH 04/01/96 38,240 11.73 9.62 57.06 77.07 86.69 2.09 19.66
HWEN Home Financial Bancorp IN 07/02/96 41,309 9.69 1.80 55.90 84.94 86.74 19.37 17.55
HBBI Home Building Bancorp IN 02/08/95 41,746 16.94 11.76 51.70 68.46 80.22 9.58 14.12
FLKY First Lancaster Bancshares KY 07/01/96 47,184 6.92 1.09 61.76 90.37 91.46 21.02 29.47
CSBF CSB Financial Group Inc. IL 10/09/95 48,844 38.20 2.73 38.19 55.41 58.14 0.00 25.04
LXMO Lexington B&L Financial Corp. MO 06/06/96 59,236 18.55 2.97 68.43 76.31 79.28 0.00 28.32
NSLB NS&L Bancorp Inc. MO 06/08/95 59,711 33.56 7.95 47.43 55.66 63.62 5.02 19.56
CKFB CKF Bancorp Inc. KY 01/04/95 59,868 5.45 0.68 69.58 92.12 92.80 3.71 23.67
ATSB AmTrust Capital Corp. IN 03/28/95 69,685 18.14 5.78 39.17 70.79 76.56 18.78 10.93
PCBC Perry County Financial Corp. MO 02/13/95 81,105 47.61 34.47 12.90 16.41 50.88 5.55 19.20
FFBI First Financial Bancorp Inc. IL 10/04/93 84,242 27.49 2.31 69.98 66.62 68.93 9.73 8.92
SOBI Sobieski Bancorp Inc. IN 03/31/95 84,279 4.70 15.59 54.72 76.57 92.17 15.44 14.78
LOGN Logansport Financial Corp. IN 06/14/95 85,801 13.67 10.75 46.72 71.09 81.83 6.41 18.89
PFFC Peoples Financial Corp. OH 09/13/96 86,486 14.05 23.47 41.46 60.22 83.69 0.00 27.21
HHFC Harvest Home Financial Corp. OH 10/10/94 87,596 NA NA 42.99 51.44 NA 22.43 11.81
KYF Kentucky First Bancorp Inc. KY 08/29/95 88,089 18.33 23.01 28.36 55.99 79.00 20.17 16.70
FFDF FFD Financial Corp. OH 04/03/96 88,220 14.95 16.62 52.31 66.66 83.28 9.39 24.34
CIBI Community Investors Bancorp OH 02/07/95 94,328 13.14 1.71 62.89 83.92 85.63 9.05 11.75
</TABLE>
<PAGE> 148
<TABLE>
<CAPTION>
KELLER & COMPANY Page 2
Dublin, Ohio
614-766-1426
COMPARABLE GROUP SELECTION
BALANCE SHEET PARAMETERS
General Parameters:
States: IL IN KY MO OH TN VA WV
IPO Date: <= 09/30/96
Asset size: <= $350,000,000 Total
Cash & 1-4 Fam. Total Net Net Loans Borrowed
Total Invest./ MBS/ Loans/ Loans/ & MBS/ Funds/ Equity/
Assets Assets Assets Assets Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%) (%) (%) (%) (%)
----------------------------------------------------------------------------------------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 20.09 17.17 51.52 59.21 76.38 0.00 12.59
-----------------------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to 4.00 - 35.00 - 45.00 - 65.00 - 8.00 -
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 35.00 <25.00 70.00 85.00 95.00 <25.00 16.00
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCB Indiana Community Bank SB IN 12/15/94 96,089 18.08 2.69 39.56 75.95 78.64 0.00 11.88
CNSB CNS Bancorp Inc. MO 06/12/96 97,411 15.38 11.14 46.88 69.28 80.42 0.00 24.33
FTSB Fort Thomas Financial Corp. KY 06/28/95 97,843 6.11 0.82 63.99 90.89 91.71 9.04 16.13
AMFC AMB Financial Corp. IN 04/01/96 103,388 21.44 3.53 44.33 72.69 76.22 13.06 13.94
CBES CBES Bancorp Inc. MO 09/30/96 106,635 6.07 0.10 50.38 90.11 90.21 9.14 16.92
TWIN Twin City Bancorp TN 01/04/95 106,931 12.98 12.41 44.40 70.88 83.29 0.94 12.94
HFFB Harrodsburg First Fin Bancorp KY 10/04/95 108,949 25.06 0.06 61.15 73.63 73.69 0.00 26.92
ASBP ASB Financial Corp. OH 05/11/95 112,449 22.98 7.28 43.10 67.65 74.93 3.00 15.57
HFSA Hardin Bancorp Inc. MO 09/29/95 117,364 31.52 17.60 37.49 49.25 66.85 22.58 11.53
NBSI North Bancshares Inc. IL 12/21/93 122,081 30.34 5.28 54.08 62.56 67.84 23.84 13.43
PTRS Potters Financial Corp. OH 12/31/93 122,716 16.71 17.42 37.30 63.13 80.55 8.03 8.81
CLAS Classic Bancshares Inc. KY 12/29/95 132,186 7.02 20.00 44.36 66.69 86.69 8.95 14.88
FKKY Frankfort First Bancorp Inc. KY 07/10/95 133,255 5.80 0.00 79.69 92.64 92.64 17.89 16.83
BFSB Bedford Bancshares Inc. VA 08/22/94 139,179 14.53 0.01 58.63 83.41 83.43 10.78 14.10
GTPS Great American Bancorp IL 06/30/95 139,568 14.99 0.00 35.98 78.62 78.62 0.00 20.43
WEHO Westwood Homestead Fin. Corp. OH 09/30/96 142,878 18.98 1.56 43.85 78.08 79.64 11.74 27.66
FBSI First Bancshares Inc. MO 12/22/93 162,755 12.55 0.49 59.45 84.09 84.57 11.89 13.92
SMBC Southern Missouri Bancorp Inc. MO 04/13/94 163,297 17.66 11.86 43.82 68.55 80.41 10.74 16.15
FFWD Wood Bancorp Inc. OH 08/31/93 166,520 13.95 2.48 57.88 81.70 84.18 12.63 12.44
</TABLE>
<PAGE> 149
<TABLE>
<CAPTION>
KELLER & COMPANY Page 3
Dublin, Ohio
614-766-1426
COMPARABLE GROUP SELECTION
BALANCE SHEET PARAMETERS
General Parameters:
States: IL IN KY MO OH TN VA WV
IPO Date: <= 09/30/96
Asset size: <= $350,000,000 Total
Cash & 1-4 Fam. Total Net Net Loans Borrowed
Total Invest./ MBS/ Loans/ Loans/ & MBS/ Funds/ Equity/
Assets Assets Assets Assets Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%) (%) (%) (%) (%)
----------------------------------------------------------------------------------------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 20.09 17.17 51.52 59.21 76.38 0.00 12.59
-----------------------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to 4.00 - 35.00 - 45.00 - 65.00 - 8.00 -
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 35.00 <25.00 70.00 85.00 95.00 <25.00 16.00
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EGLB Eagle BancGroup Inc. IL 07/01/96 172,160 18.00 6.97 37.95 72.12 79.08 10.89 11.85
PFED Park Bancorp Inc. IL 08/12/96 174,515 45.39 11.29 30.52 39.44 50.73 1.72 23.14
MARN Marion Capital Holdings IN 03/18/93 179,822 6.68 0.00 49.95 84.43 84.43 8.06 21.95
FFWC FFW Corp. IN 04/05/93 181,468 20.58 10.32 36.84 66.00 76.32 25.79 9.70
CFFC Community Financial Corp. VA 03/30/88 183,278 NA NA 49.89 87.76 NA 15.82 13.21
NEIB Northeast Indiana Bancorp IN 06/28/95 190,319 9.27 0.00 52.94 88.78 88.78 34.15 14.37
ESX Essex Bancorp Inc. VA 07/18/90 191,886 9.46 0.99 57.98 84.56 85.55 12.39 7.83
LSBI LSB Financial Corp. IN 02/03/95 200,266 7.23 1.69 48.09 87.77 89.45 23.32 8.63
FFBZ First Federal Bancorp Inc. OH 07/13/92 203,703 9.51 0.71 50.69 85.43 86.14 29.36 7.67
CMRN Cameron Financial Corp MO 04/03/95 208,105 11.40 0.00 53.25 83.97 83.97 16.94 21.69
MFFC Milton Federal Financial Corp. OH 10/07/94 209,958 27.89 8.50 49.76 60.68 69.17 18.85 12.57
MBLF MBLA Financial Corp. MO 06/24/93 224,013 34.54 6.98 46.06 57.69 64.67 40.09 12.65
FFHS First Franklin Corp. OH 01/26/88 231,189 15.99 16.43 51.68 65.88 82.31 2.64 9.02
OHSL OHSL Financial Corp. OH 02/10/93 234,600 20.41 4.73 43.41 72.07 76.80 10.98 10.92
FFED Fidelity Federal Bancorp IN 08/31/87 235,336 6.26 3.57 48.01 83.56 87.13 16.04 6.11
CAPS Capital Savings Bancorp Inc. MO 12/29/93 242,259 9.40 9.08 63.67 79.75 88.84 18.58 9.14
MFBC MFB Corp. IN 03/25/94 255,921 18.76 1.37 57.56 78.51 79.89 18.71 13.10
FBCV 1ST Bancorp IN 04/07/87 260,935 26.61 0.96 59.43 68.47 69.43 38.42 8.65
EFBI Enterprise Federal Bancorp OH 10/17/94 274,888 10.93 17.74 38.77 69.52 87.25 34.56 11.43
CBK Citizens First Financial Corp. IL 05/01/96 277,962 5.24 6.92 59.47 83.53 90.45 15.16 13.75
</TABLE>
<PAGE> 150
<TABLE>
<CAPTION>
KELLER & COMPANY Page 4
Dublin, Ohio
614-766-1426
COMPARABLE GROUP SELECTION
BALANCE SHEET PARAMETERS
General Parameters:
States: IL IN KY MO OH TN VA WV
IPO Date: <= 09/30/96
Asset size: <= $350,000,000 Total
Cash & 1-4 Fam. Total Net Net Loans Borrowed
Total Invest./ MBS/ Loans/ Loans/ & MBS/ Funds/ Equity/
Assets Assets Assets Assets Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%) (%) (%) (%) (%)
----------------------------------------------------------------------------------------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 20.09 17.17 51.52 59.21 76.38 0.00 12.59
-----------------------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to 4.00 - 35.00 - 45.00 - 65.00 - 8.00 -
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 35.00 <25.00 70.00 85.00 95.00 <25.00 16.00
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PFDC Peoples Bancorp IN 07/07/87 287,564 18.87 0.18 70.62 79.61 79.80 0.99 15.20
GFCO Glenway Financial Corp. OH 11/30/90 293,245 6.16 5.44 63.71 84.71 90.15 10.76 9.46
WCBI Westco Bancorp IL 06/26/92 309,070 22.10 0.00 57.29 76.55 76.55 0.00 15.54
WFI Winton Financial Corp. OH 08/04/88 324,532 NA NA 43.42 86.45 NA 17.69 7.17
HBFW Home Bancorp IN 03/30/95 334,862 17.06 0.00 71.10 81.37 81.37 0.00 13.29
KNK Kankakee Bancorp Inc. IL 01/06/93 339,937 17.59 9.26 44.99 69.48 78.74 6.98 11.43
HBEI Home Bancorp of Elgin Inc. IL 09/27/96 342,518 12.15 0.03 76.38 84.97 85.00 0.00 27.56
</TABLE>
<PAGE> 151
<TABLE>
<CAPTION>
EXHIBIT 38
KELLER & COMPANY Page 1
Dublin, Ohio
614-766-1426
COMPARABLE GROUP SELECTION
OPERATING PERFORMANCE AND ASSET QUALITY PARAMETERS
MOST RECENT FOUR QUARTERS
General Parameters:
States: IL IN KY MO OH TN VA WV
IPO Date: <= 09/30/96
Asset size: <= $350,000,000
OPERATING PERFORMANCE
*******************************************************
Net Operating Noninterest
Total Core Core Interest Expenses/ Income/
Assets ROAA ROAE Margin (2) Assets Assets
IPO Date ($000) (%) (%) (%) (%) (%)
--------- ---------- -------- -------- ----------- ----------- --------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 0.58 4.74 3.46 2.53 0.08
---------------------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to 0.45 - 3.00 - 2.90 - 1.75 -
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 0.90 10.00 4.00 3.10 <0.50
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
JOAC Joachim Bancorp Inc. MO 12/28/95 35,073 0.79 2.72 4.22 2.91 0.14
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
FLKY First Lancaster Bancshares KY 07/01/96 47,184 1.24 3.64 4.86 2.73 0.00
CSBF CSB Financial Group Inc. IL 10/09/95 48,844 0.31 1.21 3.50 2.55 0.17
LXMO Lexington B&L Financial Corp. MO 06/06/96 59,236 1.02 3.45 3.72 1.75 0.15
NSLB NS&L Bancorp Inc. MO 06/08/95 59,711 0.49 2.39 3.15 2.27 0.33
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
PCBC Perry County Financial Corp. MO 02/13/95 81,105 0.93 4.97 2.89 1.13 0.04
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
<CAPTION>
ASSET QUALITY (1)
***************************************
Total NPA/ REO/ Reserves/
Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%)
--------- ---------- ----------- ----------- -----------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 0.58 0.00 0.29
--------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 <1.10 <0.50 >0.10
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
JOAC Joachim Bancorp Inc. MO 12/28/95 35,073 0.24 0.00 0.23
LONF London Financial Corporation OH 04/01/96 38,240 0.80 0.00 0.49
HWEN Home Financial Bancorp IN 07/02/96 41,309 1.70 0.08 0.62
HBBI Home Building Bancorp IN 02/08/95 41,746 0.44 0.00 0.19
FLKY First Lancaster Bancshares KY 07/01/96 47,184 2.28 0.00 0.32
CSBF CSB Financial Group Inc. IL 10/09/95 48,844 0.56 0.00 0.32
LXMO Lexington B&L Financial Corp. MO 06/06/96 59,236 0.48 0.00 0.37
NSLB NS&L Bancorp Inc. MO 06/08/95 59,711 0.03 0.00 0.07
CKFB CKF Bancorp Inc. KY 01/04/95 59,868 1.20 0.00 0.20
ATSB AmTrust Capital Corp. IN 03/28/95 69,685 2.20 0.27 0.74
PCBC Perry County Financial Corp. MO 02/13/95 81,105 0.03 0.00 0.03
FFBI First Financial Bancorp Inc. IL 10/04/93 84,242 0.33 0.00 0.58
SOBI Sobieski Bancorp Inc. IN 03/31/95 84,279 0.13 0.00 0.24
LOGN Logansport Financial Corp. IN 06/14/95 85,801 0.49 0.12 0.28
PFFC Peoples Financial Corp. OH 09/13/96 86,486 0.00 0.00 0.23
</TABLE>
<PAGE> 152
<TABLE>
<CAPTION>
KELLER & COMPANY Page 2
Dublin, Ohio
614-766-1426
COMPARABLE GROUP SELECTION
OPERATING PERFORMANCE AND ASSET QUALITY PARAMETERS
MOST RECENT FOUR QUARTERS
General Parameters:
States: IL IN KY MO OH TN VA WV
IPO Date: <= 09/30/96
Asset size: <= $350,000,000
OPERATING PERFORMANCE
*******************************************************
Net Operating Noninterest
Total Core Core Interest Expenses/ Income/
Assets ROAA ROAE Margin (2) Assets Assets
IPO Date ($000) (%) (%) (%) (%) (%)
--------- ---------- -------- -------- ----------- ----------- --------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 0.58 4.74 3.46 2.53 0.08
---------------------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to 0.45 - 3.00 - 2.90 - 1.75 -
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 0.90 10.00 4.00 3.10 <0.50
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HHFC Harvest Home Financial Corp. OH 10/10/94 87,596 0.30 2.31 2.89 2.05 0.07
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 1.81 0.06
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
CNSB CNS Bancorp Inc. MO 06/12/96 97,411 0.79 3.20 3.57 2.22 0.17
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 0.90 6.30 3.72 2.90 0.45
CBES CBES Bancorp Inc. MO 09/30/96 106,635 1.24 6.89 4.48 2.88 0.42
TWIN Twin City Bancorp TN 01/04/95 106,931 0.85 6.65 3.92 2.59 0.40
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
HFSA Hardin Bancorp Inc. MO 09/29/95 117,364 0.80 5.88 2.91 1.83 0.20
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
<CAPTION>
ASSET QUALITY (1)
***************************************
Total NPA/ REO/ Reserves/
Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%)
--------- ---------- ----------- ----------- -----------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 0.58 0.00 0.29
------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 <1.10 <0.50 >0.10
============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
HHFC Harvest Home Financial Corp. OH 10/10/94 87,596 0.11 0.00 0.13
KYF Kentucky First Bancorp Inc. KY 08/29/95 88,089 0.09 0.00 0.43
FFDF FFD Financial Corp. OH 04/03/96 88,220 NA NA 0.31
CIBI Community Investors Bancorp OH 02/07/95 94,328 0.53 0.04 0.50
INCB Indiana Community Bank SB IN 12/15/94 96,089 NA NA 0.72
CNSB CNS Bancorp Inc. MO 06/12/96 97,411 0.50 0.00 0.40
FTSB Fort Thomas Financial Corp. KY 06/28/95 97,843 1.98 0.00 0.49
AMFC AMB Financial Corp. IN 04/01/96 103,388 0.32 0.12 0.38
CBES CBES Bancorp Inc. MO 09/30/96 106,635 0.59 0.25 0.48
TWIN Twin City Bancorp TN 01/04/95 106,931 0.16 0.08 0.14
HFFB Harrodsburg First Fin Bancorp KY 10/04/95 108,949 0.47 0.00 0.28
ASBP ASB Financial Corp. OH 05/11/95 112,449 0.96 0.00 0.73
HFSA Hardin Bancorp Inc. MO 09/29/95 117,364 0.09 0.01 0.18
NBSI North Bancshares Inc. IL 12/21/93 122,081 0.00 0.00 0.17
PTRS Potters Financial Corp. OH 12/31/93 122,716 0.44 0.00 1.72
</TABLE>
<PAGE> 153
<TABLE>
<CAPTION>
KELLER & COMPANY Page 3
Dublin, Ohio
614-766-1426
COMPARABLE GROUP SELECTION
OPERATING PERFORMANCE AND ASSET QUALITY PARAMETERS
MOST RECENT FOUR QUARTERS
General Parameters:
States: IL IN KY MO OH TN VA WV
IPO Date: <= 09/30/96
Asset size: <= $350,000,000
OPERATING PERFORMANCE
*******************************************************
Net Operating Noninterest
Total Core Core Interest Expenses/ Income/
Assets ROAA ROAE Margin (2) Assets Assets
IPO Date ($000) (%) (%) (%) (%) (%)
--------- ---------- -------- -------- ----------- ----------- --------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 0.58 4.74 3.46 2.53 0.08
---------------------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to 0.45 - 3.00 - 2.90 - 1.75 -
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 0.90 10.00 4.00 3.10 <0.50
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
BFSB Bedford Bancshares Inc. VA 08/22/94 139,179 1.20 8.39 4.01 2.31 0.44
GTPS Great American Bancorp IL 06/30/95 139,568 0.53 2.38 4.36 3.44 0.49
WEHO Westwood Homestead Fin. Corp. OH 09/30/96 142,878 1.01 3.23 3.56 1.90 0.09
FBSI First Bancshares Inc. MO 12/22/93 162,755 1.20 8.49 3.52 1.87 0.30
SMBC Southern Missouri Bancorp Inc. MO 04/13/94 163,297 0.93 5.81 3.18 2.00 0.36
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
CFFC Community Financial Corp. VA 03/30/88 183,278 1.12 8.18 3.94 2.07 0.34
NEIB Northeast Indiana Bancorp IN 06/28/95 190,319 1.20 7.78 3.58 1.73 0.27
ESX Essex Bancorp Inc. VA 07/18/90 191,886 0.12 1.41 2.99 4.12 1.27
<CAPTION>
ASSET QUALITY (1)
***************************************
Total NPA/ REO/ Reserves/
Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%)
--------- ---------- ----------- ----------- -----------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 0.58 0.00 0.29
------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 <1.10 <0.50 >0.10
============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
CLAS Classic Bancshares Inc. KY 12/29/95 132,186 0.67 0.21 0.63
FKKY Frankfort First Bancorp Inc. KY 07/10/95 133,255 0.09 0.00 0.08
BFSB Bedford Bancshares Inc. VA 08/22/94 139,179 0.52 0.15 0.49
GTPS Great American Bancorp IL 06/30/95 139,568 0.26 0.00 0.34
WEHO Westwood Homestead Fin. Corp. OH 09/30/96 142,878 0.22 0.00 0.17
FBSI First Bancshares Inc. MO 12/22/93 162,755 0.67 0.10 0.31
SMBC Southern Missouri Bancorp Inc. MO 04/13/94 163,297 0.88 0.05 0.45
FFWD Wood Bancorp Inc. OH 08/31/93 166,520 0.35 0.02 0.36
EGLB Eagle BancGroup Inc. IL 07/01/96 172,160 1.48 0.38 0.53
PFED Park Bancorp Inc. IL 08/12/96 174,515 0.24 0.03 0.29
MARN Marion Capital Holdings IN 03/18/93 179,822 1.08 0.04 1.13
FFWC FFW Corp. IN 04/05/93 181,468 0.18 0.02 0.40
CFFC Community Financial Corp. VA 03/30/88 183,278 0.56 0.10 0.59
NEIB Northeast Indiana Bancorp IN 06/28/95 190,319 0.17 0.00 0.60
ESX Essex Bancorp Inc. VA 07/18/90 191,886 2.11 1.01 1.09
</TABLE>
<PAGE> 154
<TABLE>
<CAPTION>
KELLER & COMPANY Page 4
Dublin, Ohio
614-766-1426
COMPARABLE GROUP SELECTION
OPERATING PERFORMANCE AND ASSET QUALITY PARAMETERS
MOST RECENT FOUR QUARTERS
General Parameters:
States: IL IN KY MO OH TN VA WV
IPO Date: <= 09/30/96
Asset size: <= $350,000,000
OPERATING PERFORMANCE
*******************************************************
Net Operating Noninterest
Total Core Core Interest Expenses/ Income/
Assets ROAA ROAE Margin (2) Assets Assets
IPO Date ($000) (%) (%) (%) (%) (%)
--------- ---------- -------- -------- ----------- ----------- --------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 0.58 4.74 3.46 2.53 0.08
---------------------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to 0.45 - 3.00 - 2.90 - 1.75 -
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 0.90 10.00 4.00 3.10 <0.50
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LSBI LSB Financial Corp. IN 02/03/95 200,266 0.78 8.67 3.54 2.45 0.30
FFBZ First Federal Bancorp Inc. OH 07/13/92 203,703 1.02 13.37 3.88 2.41 0.43
CMRN Cameron Financial Corp MO 04/03/95 208,105 1.06 4.41 4.17 1.77 0.09
MFFC Milton Federal Financial Corp. OH 10/07/94 209,958 0.73 5.08 3.09 2.10 0.22
MBLF MBLA Financial Corp. MO 06/24/93 224,013 0.83 6.50 2.15 0.65 0.01
FFHS First Franklin Corp. OH 01/26/88 231,189 0.55 6.18 2.76 1.83 0.17
OHSL OHSL Financial Corp. OH 02/10/93 234,600 0.90 8.06 3.25 1.98 0.14
FFED Fidelity Federal Bancorp IN 08/31/87 235,336 0.75 14.15 2.79 3.03 1.56
CAPS Capital Savings Bancorp Inc. MO 12/29/93 242,259 0.95 10.99 3.28 2.15 0.55
MFBC MFB Corp. IN 03/25/94 255,921 0.83 5.63 3.19 1.91 0.16
FBCV 1ST Bancorp IN 04/07/87 260,935 0.72 8.73 2.57 2.43 0.43
EFBI Enterprise Federal Bancorp OH 10/17/94 274,888 0.93 7.35 2.84 1.59 0.05
CBK Citizens First Financial Corp. IL 05/01/96 277,962 0.61 4.15 3.27 2.65 0.47
PFDC Peoples Bancorp IN 07/07/87 287,564 1.12 7.29 3.70 1.52 0.21
GFCO Glenway Financial Corp. OH 11/30/90 293,245 0.80 8.37 3.25 2.07 0.26
<CAPTION>
ASSET QUALITY (1)
***************************************
Total NPA/ REO/ Reserves/
Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%)
--------- ---------- ----------- ----------- -----------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 0.58 0.00 0.29
------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 <1.10 <0.50 >0.10
============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
LSBI LSB Financial Corp. IN 02/03/95 200,266 1.05 0.00 0.73
FFBZ First Federal Bancorp Inc. OH 07/13/92 203,703 0.52 0.00 0.89
CMRN Cameron Financial Corp MO 04/03/95 208,105 0.73 0.00 0.82
MFFC Milton Federal Financial Corp. OH 10/07/94 209,958 0.29 0.00 0.27
MBLF MBLA Financial Corp. MO 06/24/93 224,013 0.57 0.00 0.29
FFHS First Franklin Corp. OH 01/26/88 231,189 0.47 0.00 0.43
OHSL OHSL Financial Corp. OH 02/10/93 234,600 0.18 0.00 0.23
FFED Fidelity Federal Bancorp IN 08/31/87 235,336 0.13 0.04 0.81
CAPS Capital Savings Bancorp Inc. MO 12/29/93 242,259 0.37 0.01 0.31
MFBC MFB Corp. IN 03/25/94 255,921 0.10 0.00 0.14
FBCV 1ST Bancorp IN 04/07/87 260,935 1.30 0.16 0.45
EFBI Enterprise Federal Bancorp OH 10/17/94 274,888 0.07 0.00 0.21
CBK Citizens First Financial Corp. IL 05/01/96 277,962 0.61 0.22 0.24
PFDC Peoples Bancorp IN 07/07/87 287,564 0.36 0.09 0.31
GFCO Glenway Financial Corp. OH 11/30/90 293,245 0.25 0.02 0.31
</TABLE>
<PAGE> 155
<TABLE>
<CAPTION>
KELLER & COMPANY Page 5
Dublin, Ohio
614-766-1426
COMPARABLE GROUP SELECTION
OPERATING PERFORMANCE AND ASSET QUALITY PARAMETERS
MOST RECENT FOUR QUARTERS
General Parameters:
States: IL IN KY MO OH TN VA WV
IPO Date: <= 09/30/96
Asset size: <= $350,000,000
OPERATING PERFORMANCE
*******************************************************
Net Operating Noninterest
Total Core Core Interest Expenses/ Income/
Assets ROAA ROAE Margin (2) Assets Assets
IPO Date ($000) (%) (%) (%) (%) (%)
--------- ---------- -------- -------- ----------- ----------- --------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 0.58 4.74 3.46 2.53 0.08
---------------------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to 0.45 - 3.00 - 2.90 - 1.75 -
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 0.90 10.00 4.00 3.10 <0.50
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WCBI Westco Bancorp IL 06/26/92 309,070 1.50 9.74 3.65 1.61 0.27
WFI Winton Financial Corp. OH 08/04/88 324,532 1.05 14.63 3.14 1.91 0.12
HBFW Home Bancorp IN 03/30/95 334,862 0.56 3.96 2.95 1.46 0.07
KNK Kankakee Bancorp Inc. IL 01/06/93 339,937 0.89 8.28 3.24 2.31 0.44
HBEI Home Bancorp of Elgin Inc. IL 09/27/96 342,518 0.83 3.02 4.23 3.01 0.31
<CAPTION>
ASSET QUALITY (1)
***************************************
Total NPA/ REO/ Reserves/
Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%)
--------- ---------- ----------- ----------- -----------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 0.58 0.00 0.29
------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 <1.10 <0.50 >0.10
============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
WCBI Westco Bancorp IL 06/26/92 309,070 0.21 0.00 0.29
WFI Winton Financial Corp. OH 08/04/88 324,532 0.30 0.16 0.26
HBFW Home Bancorp IN 03/30/95 334,862 0.05 0.00 0.41
KNK Kankakee Bancorp Inc. IL 01/06/93 339,937 1.05 0.41 0.63
HBEI Home Bancorp of Elgin Inc. IL 09/27/96 342,518 0.35 0.08 0.30
<FN>
(1) Asset quality ratios reflect balance sheet totals at the end of the most recent quarter.
(2) Based on average
interest-earning assets.
</TABLE>
<PAGE> 156
<TABLE>
<CAPTION>
KELLER & COMPANY
Dublin, Ohio
614-766-1426
EXHIBIT 39
FINAL COMPARABLE GROUP
BALANCE SHEET RATIOS
Cash & 1-4 Fam. Total Net
Total Invest./ MBS/ Loans/ Loans/
Assets Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%) (%)
----------- ---------- --------- -------- -------- --------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 20.09 17.17 51.52 59.21
----------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to 4.00 - 35.00 - 45.00 -
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 35.00 <25.00 70.00 85.00
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HBBI Home Building Bancorp IN 02/08/95 41,746 16.94 11.76 51.70 68.46
AMFC AMB Financial Corp. IN 04/01/96 103,388 21.44 3.53 44.33 72.69
TWIN Twin City Bancorp TN 01/04/95 106,931 12.98 12.41 44.40 70.88
HFSA Hardin Bancorp Inc. MO 09/29/95 117,364 31.52 17.60 37.49 49.25
CLAS Classic Bancshares Inc. KY 12/29/95 132,186 7.02 20.00 44.36 66.69
MFFC Milton Federal Financial Corp. OH 10/07/94 209,958 27.89 8.50 49.76 60.68
OHSL OHSL Financial Corp. OH 02/10/93 234,600 20.41 4.73 43.41 72.07
MFBC MFB Corp. IN 03/25/94 255,921 18.76 1.37 57.56 78.51
GFCO Glenway Financial Corp. OH 11/30/90 293,245 6.16 5.44 63.71 84.71
KNK Kankakee Bancorp Inc. IL 01/06/93 339,937 17.59 9.26 44.99 69.48
AVERAGE 183,528 18.07 9.46 48.17 69.34
MEDIAN 171,072 18.17 8.88 44.70 70.18
HIGH 339,937 31.52 20.00 63.71 84.71
LOW 41,746 6.16 1.37 37.49 49.25
<CAPTION>
Total
Net Loans Borrowed
Total & MBS/ Funds/ Equity/
Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%)
----------- ------------ ---------- ---------- ----------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 76.38 0.00 12.59
--------------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to 65.00 - 8.00 -
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 95.00 <25.00 16.00
====================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
HBBI Home Building Bancorp IN 02/08/95 41,746 80.22 9.58 14.12
AMFC AMB Financial Corp. IN 04/01/96 103,388 76.22 13.06 13.94
TWIN Twin City Bancorp TN 01/04/95 106,931 83.29 0.94 12.94
HFSA Hardin Bancorp Inc. MO 09/29/95 117,364 66.85 22.58 11.53
CLAS Classic Bancshares Inc. KY 12/29/95 132,186 86.69 8.95 14.88
MFFC Milton Federal Financial Corp. OH 10/07/94 209,958 69.17 18.85 12.57
OHSL OHSL Financial Corp. OH 02/10/93 234,600 76.80 10.98 10.92
MFBC MFB Corp. IN 03/25/94 255,921 79.89 18.71 13.10
GFCO Glenway Financial Corp. OH 11/30/90 293,245 90.15 10.76 9.46
KNK Kankakee Bancorp Inc. IL 01/06/93 339,937 78.74 6.98 11.43
AVERAGE 183,528 78.80 12.14 12.49
MEDIAN 171,072 79.31 10.87 12.75
HIGH 339,937 90.15 22.58 14.88
LOW 41,746 66.85 0.94 9.46
</TABLE>
<PAGE> 157
<TABLE>
<CAPTION>
KELLER & COMPANY
Dublin, Ohio
614-766-1426
EXHIBIT 40
FINAL COMPARABLE GROUP
OPERATING PERFORMANCE AND ASSET QUALITY RATIOS
MOST RECENT FOUR QUARTERS
OPERATING PERFORMANCE
*****************************************************
Net Operating Noninterest
Total Core Core Interest Expenses/ Income/
Assets ROAA ROAE Margin (2) Assets Assets
IPO Date ($000) (%) (%) (%) (%) (%)
---------- --------- -------- ------- --------- --------- -----------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 0.58 4.74 3.46 2.53 0.08
---------------------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to 0.45 - 3.00 - 2.90 - 1.75 -
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 0.90 10.00 4.00 3.10 <0.50
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HBBI Home Building Bancorp IN 02/08/95 41,746 0.75 5.76 3.50 2.40 0.28
AMFC AMB Financial Corp. IN 04/01/96 103,388 0.90 6.30 3.72 2.90 0.45
TWIN Twin City Bancorp TN 01/04/95 106,931 0.85 6.65 3.92 2.59 0.40
HFSA Hardin Bancorp Inc. MO 09/29/95 117,364 0.80 5.88 2.91 1.83 0.20
CLAS Classic Bancshares Inc. KY 12/29/95 132,186 0.81 5.53 3.83 2.91 0.31
MFFC Milton Federal Financial Corp. OH 10/07/94 209,958 0.73 5.08 3.09 2.10 0.22
OHSL OHSL Financial Corp. OH 02/10/93 234,600 0.90 8.06 3.25 1.98 0.14
MFBC MFB Corp. IN 03/25/94 255,921 0.83 5.63 3.19 1.91 0.16
GFCO Glenway Financial Corp. OH 11/30/90 293,245 0.80 8.37 3.25 2.07 0.26
KNK Kankakee Bancorp Inc. IL 01/06/93 339,937 0.89 8.28 3.24 2.31 0.44
AVERAGE 183,528 0.83 6.55 3.39 2.30 0.29
MEDIAN 171,072 0.82 6.09 3.25 2.21 0.27
HIGH 339,937 0.90 8.37 3.92 2.91 0.45
LOW 41,746 0.73 5.08 2.91 1.83 0.14
<CAPTION>
ASSET QUALITY (1)
****************************************
Total NPA/ REO/ Reserves/
Assets Assets Assets Assets
IPO Date ($000) (%) (%) (%)
---------- --------- ----------- ----------- -----------
COLUMBIA FEDERAL
SAVINGS BANK -- 104,006 0.58 0.00 0.29
----------------------------------------------------------------------------------------------------------------------
DEFINED PARAMETERS FOR Prior to
INCLUSION IN COMPARABLE GROUP 09/30/96 <$350,000 <1.10 <0.50 >0.10
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
HBBI Home Building Bancorp IN 02/08/95 41,746 0.44 0.00 0.19
AMFC AMB Financial Corp. IN 04/01/96 103,388 0.32 0.12 0.38
TWIN Twin City Bancorp TN 01/04/95 106,931 0.16 0.08 0.14
HFSA Hardin Bancorp Inc. MO 09/29/95 117,364 0.09 0.01 0.18
CLAS Classic Bancshares Inc. KY 12/29/95 132,186 0.67 0.21 0.63
MFFC Milton Federal Financial Corp. OH 10/07/94 209,958 0.29 0.00 0.27
OHSL OHSL Financial Corp. OH 02/10/93 234,600 0.18 0.00 0.23
MFBC MFB Corp. IN 03/25/94 255,921 0.10 0.00 0.14
GFCO Glenway Financial Corp. OH 11/30/90 293,245 0.25 0.02 0.31
KNK Kankakee Bancorp Inc. IL 01/06/93 339,937 1.05 0.41 0.63
AVERAGE 183,528 0.36 0.08 0.31
MEDIAN 171,072 0.27 0.01 0.25
HIGH 339,937 1.05 0.41 0.63
LOW 41,746 0.09 0.00 0.14
<FN>
(1) Asset quality ratios reflect balance sheet totals at the end of the most recent quarter.
(2) Based on average interest-earning assets.
</TABLE>
<PAGE> 158
KELLER & COMPANY
Dublin, Ohio
614-766-1426
EXHIBIT 41
COLUMBIA FEDERAL SAVINGS BANK
COMPARABLE GROUP CHARACTERISTICS AND BALANCE SHEET TOTALS
<TABLE>
<CAPTION>
Number Conversion
of (IPO)
Offices Exchange Date
----------------------------
<S> <C> <C> <C> <C> <C> <C>
SUBJECT
COLUMBIA FEDERAL
SAVINGS BANK Ft. Mitchell KY 5 NA NA
COMPARABLE GROUP
AMFC AMB Financial Corp. Munster IN 4 NASDAQ 04/01/96
CLAS Classic Bancshares, Inc. Ashland KY 3 NASDAQ 12/29/95
GFCO Glenway Financial Corp. Cincinnati OH 5 NASDAQ 11/30/90
HFSA Hardin Bancorp, Inc. Hardin MO 3 NASDAQ 09/29/95
HBBI Home Building Bancorp, Inc. Washington IN 2 NASDAQ 02/08/95
KNK Kankakee Bancorp, Inc. Kankakee IL 9 AMSE 01/06/93
MFBC MFB Corp. Mishawaka IN 5 NASDAQ 03/25/94
MFFC Milton Federal Financial
Corporation West Milton OH 3 NASDAQ 10/07/94
OHSL OHSL Financial Corp. Cincinnati OH 5 NASDAQ 02/10/93
TWIN Twin City Bancorp, Inc. Bristol TN 3 NASDAQ 01/04/95
Average 4.2
Median 3.5
High 9.0
Low 2.0
</TABLE>
<TABLE>
<CAPTION>
Most Recent Quarter
------------------------------------------------------------
Total Goodwill
Total Int. Earning Net and Total Total
Assets Assets Loans Intang. Deposits Equity
($000) ($000) ($000) ($000) ($000) ($000)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUBJECT
COLUMBIA FEDERAL
SAVINGS BANK 104,006 102,391 61,578 0 90,195 13,090
COMPARABLE GROUP
AMFC AMB Financial Corp. 103,388 96,781 75,150 0 73,745 14,411
CLAS Classic Bancshares, Inc. 132,186 123,431 88,157 2,965 99,329 19,666
GFCO Glenway Financial Corp. 293,245 279,292 248,414 332 230,008 27,750
HFSA Hardin Bancorp, Inc. 117,364 108,942 57,799 0 75,827 13,536
HBBI Home Building Bancorp, Inc. 41,746 41,416 28,579 0 31,518 5,893
KNK Kankakee Bancorp, Inc. 339,937 326,460 236,193 2,220 276,215 38,852
MFBC MFB Corp. 255,921 245,290 200,935 0 171,887 33,521
MFFC Milton Federal Financial
Corporation 209,958 197,170 127,396 0 142,832 26,385
OHSL OHSL Financial Corp. 234,600 227,741 169,080 0 181,319 25,619
TWIN Twin City Bancorp, Inc. 106,931 103,314 75,794 0 89,624 13,840
Average 183,528 174,984 130,750 552 137,230 21,947
Median 171,072 160,301 107,777 0 121,081 22,643
High 339,937 326,460 248,414 2,965 276,215 38,852
Low 41,746 41,416 28,579 0 31,518 5,893
</TABLE>
<PAGE> 159
KELLER & COMPANY
Columbus, Ohio
614-766-1426
EXHIBIT 42
BALANCE SHEET
ASSET COMPOSITION - MOST RECENT QUARTER
<TABLE>
<CAPTION>
As a Percent of Total Assets
----------------------------------------------------------
Total Cash & Net Loan Loss Estate Goodwill
Assets Invest. MBS Loans Reserves Owned & Intang.
($000) (%) (%) (%) (%) (%) (%)
------------ ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUBJECT
COLUMBIA FEDERAL
SAVINGS BANK 104,006 20.09 17.17 59.21 0.29 0.00 0.00
COMPARABLE GROUP
AMFC AMB Financial Corp. 103,388 21.44 3.53 72.69 0.38 0.12 0.00
CLAS Classic Bancshares Inc. 132,186 7.02 20.00 66.69 0.63 0.21 2.24
GFCO Glenway Financial Corp. 293,245 6.16 5.44 84.71 0.31 0.02 0.11
HFSA Hardin Bancorp Inc. 117,364 31.52 17.60 49.25 0.18 0.01 0.00
HBBI Home Building Bancorp 41,746 16.94 11.76 68.46 0.19 0.00 0.00
KNK Kankakee Bancorp Inc. 339,937 17.59 9.26 69.48 0.63 0.41 0.65
MFBC MFB Corp. 255,921 18.76 1.37 78.51 0.14 0.00 0.00
MFFC Milton Federal Financial Corp. 209,958 27.89 8.50 60.68 0.27 0.00 0.00
OHSL OHSL Financial Corp. 234,600 20.41 4.73 72.07 0.23 0.00 0.00
TWIN Twin City Bancorp 106,931 12.98 12.41 70.88 0.14 0.08 0.00
Average 183,528 18.07 9.46 69.34 0.31 0.08 0.30
Median 171,072 18.17 8.88 70.18 0.25 0.01 0.00
High 339,937 31.52 20.00 84.71 0.63 0.41 2.24
Low 41,746 6.16 1.37 49.25 0.14 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
KENTUCKY THRIFTS (10)
Average 400,607 13.00 8.52 75.21 0.35 0.04 0.34
</TABLE>
<TABLE>
<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
COLUMBIA FEDERAL
SAVINGS BANK 3.53 6.78 0.58 95.89 86.72 0.00
COMPARABLE GROUP
AMFC AMB Financial Corp. 2.22 13.85 0.32 93.61 80.39 0.00
CLAS Classic Bancshares Inc. 4.22 6.82 0.67 93.38 83.69 0.00
GFCO Glenway Financial Corp. 3.56 13.47 0.25 95.24 88.08 0.00
HFSA Hardin Bancorp Inc. 1.63 1.90 0.09 92.82 81.96 0.00
HBBI Home Building Bancorp 2.84 1.42 0.44 99.21 90.18 0.00
KNK Kankakee Bancorp Inc. 2.59 13.23 1.05 96.04 88.80 0.02
MFBC MFB Corp. 1.36 2.48 0.10 95.85 83.65 0.00
MFFC Milton Federal Financial Corp. 2.89 7.93 0.29 93.91 83.81 0.05
OHSL OHSL Financial Corp. 2.77 21.37 0.18 97.08 86.51 0.01
TWIN Twin City Bancorp 3.09 6.71 0.16 96.62 84.92 0.56
Average 2.72 8.92 0.36 95.37 85.20 0.06
Median 2.81 7.37 0.27 95.54 84.37 0.00
High 4.22 21.37 1.05 99.21 90.18 0.56
Low 1.36 1.42 0.09 92.82 80.39 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
KENTUCKY THRIFTS (10)
Average 2.21 10.34 1.13 96.20 77.87 0.13
</TABLE>
<PAGE> 160
KELLER & COMPANY
Columbus, Ohio
614-766-1426
EXHIBIT 43
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
COLUMBIA FEDERAL
SAVINGS BANK 90,915 13,091 86.72 0.00 0.69 0.00 0.00 0.00
COMPARABLE GROUP
AMFC AMB Financial Corp. 88,977 14,411 71.33 13.06 1.68 0.00 13.94 0.05
CLAS Classic Bancshares Inc. 112,520 19,666 75.14 8.95 1.03 0.00 14.88 0.09
GFCO Glenway Financial Corp. 265,495 27,750 78.44 10.76 1.34 0.00 9.46 0.04
HFSA Hardin Bancorp Inc. 103,828 13,536 64.61 22.58 1.28 0.00 11.53 (0.14)
HBBI Home Building Bancorp 35,853 5,893 75.50 9.58 0.80 0.00 14.12 0.03
KNK Kankakee Bancorp Inc. 301,085 38,852 81.25 6.98 0.34 0.00 11.43 (0.00)
MFBC MFB Corp. 222,400 33,521 67.16 18.71 1.03 0.00 13.10 0.03
MFFC Milton Federal Financial
Corp. 183,573 26,385 68.03 18.85 0.56 0.00 12.57 (0.04)
OHSL OHSL Financial Corp. 208,981 25,619 77.29 10.98 0.82 0.00 10.92 (0.01)
TWIN Twin City Bancorp 93,091 13,840 83.81 0.94 2.31 0.00 12.94 0.06
Average 161,580 21,947 74.26 12.14 1.12 0.00 12.49 0.01
Median 148,047 22,643 75.32 10.87 1.03 0.00 12.75 0.03
High 301,085 38,852 83.81 22.58 2.31 0.00 14.88 0.09
Low 35,853 5,893 64.61 0.94 0.34 0.00 9.46 (0.14)
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
KENTUCKY THRIFTS (10)
Average 351,493 49,114 67.79 11.36 1.24 0.00 19.61 0.39
</TABLE>
<TABLE>
<CAPTION>
As a Percent of Assets
--------------------------------------------------------
Reg. Reg. Reg.
Retained Total Tangible Core Tangible Risk-Based
Earnings Equity Equity Capital Capital Capital
(%) (%) (%) (%) (%) (%)
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUBJECT
COLUMBIA FEDERAL
SAVINGS BANK 12.59 12.59 12.59 12.59 12.59 30.37
COMPARABLE GROUP
AMFC AMB Financial Corp. 6.25 13.94 13.94 9.15 9.15 26.61
CLAS Classic Bancshares Inc. 1.49 14.88 12.92 11.60 11.60 NA
GFCO Glenway Financial Corp. 4.21 9.46 9.36 8.50 NA NA
HFSA Hardin Bancorp Inc. 5.71 11.53 11.53 10.00 10.00 31.22
HBBI Home Building Bancorp 7.29 14.12 14.12 10.69 10.69 20.95
KNK Kankakee Bancorp Inc. 6.79 11.43 10.85 9.02 9.02 15.09
MFBC MFB Corp. 8.12 13.10 13.10 12.43 12.43 32.65
MFFC Milton Federal Financial Corp 4.93 12.57 12.57 10.34 10.34 24.25
OHSL OHSL Financial Corp. 5.92 10.92 10.92 9.17 9.17 19.51
TWIN Twin City Bancorp 6.96 12.94 12.94 12.14 12.14 21.11
Average 5.77 12.49 12.23 10.30 10.50 23.92
Median 6.09 12.76 12.75 10.17 10.34 22.68
High 8.12 14.88 14.12 12.43 12.43 32.65
Low 1.49 9.46 9.36 8.50 9.02 15.09
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
KENTUCKY THRIFTS (10)
Average 9.55 19.61 19.31 17.51 17.51 41.38
</TABLE>
<PAGE> 161
KELLER & COMPANY
Columbus, Ohio
614-766-1426
EXHIBIT 44
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
COLUMBIA FEDERAL
SAVINGS BANK 7,996 4,451 3,545 113 0 88 0 0 2,667
COMPARABLE GROUP
AMFC AMB Financial Corp. 6,888 3,544 3,344 46 424 467 0 (28) 2,667
CLAS Classic Bancshares Inc. 9,458 4,727 4,731 178 51 407 124 57 3,815
GFCO Glenway Financial Corp. 21,204 12,348 8,856 326 95 750 191 6 5,880
HFSA Hardin Bancorp Inc. 7,512 4,599 2,913 73 72 233 0 (8) 1,861
HBBI Home Building Bancorp 3,306 1,831 1,475 5 9 117 0 0 1,058
KNK Kankakee Bancorp Inc. 25,189 14,422 10,767 1 95 1,489 232 7 7,986
MFBC MFB Corp. 17,685 10,157 7,528 29 6 418 0 0 4,599
MFFC Milton Federal Financial Corp. 13,773 8,149 5,624 75 233 252 0 (13) 3,947
OHSL OHSL Financial Corp. 17,348 10,154 7,194 39 79 326 0 4 4,471
TWIN Twin City Bancorp 8,201 4,196 4,005 423 221 427 0 (34) 2,744
Average 13,056 7,413 5,644 120 129 489 55 (1) 3,903
Median 11,616 6,438 5,178 60 87 413 0 0 3,881
High 25,189 14,422 10,767 423 424 1,489 232 57 7,986
Low 3,306 1,831 1,475 1 6 117 0 (34) 1,058
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
KENTUCKY THRIFTS (10)
Average 29,839 17,629 12,210 347 1,286 2,922 136 34 9,273
</TABLE>
<TABLE>
<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
COLUMBIA FEDERAL
SAVINGS BANK 0 853 300 553 0 553 609
COMPARABLE GROUP
AMFC AMB Financial Corp. 0 1,522 580 942 0 942 667
CLAS Classic Bancshares Inc. 0 1,526 460 1,066 0 1,066 819
GFCO Glenway Financial Corp. 0 3,495 1,237 2,258 0 2,258 2,196
HFSA Hardin Bancorp Inc. 0 1,284 475 809 0 809 763
HBBI Home Building Bancorp 0 538 210 328 0 328 322
KNK Kankakee Bancorp Inc. 0 4,364 1,296 3,068 0 3,068 3,006
MFBC MFB Corp. 0 3,324 1,322 2,002 0 2,002 1,998
MFFC Milton Federal Financial Corp. 0 2,087 709 1,378 0 1,378 1,227
OHSL OHSL Financial Corp. 0 3,089 1,052 2,037 0 2,037 1,986
TWIN Twin City Bancorp 0 1,486 583 903 0 903 759
Average 0 2,272 792 1,479 0 1,479 1,374
Median 0 1,807 646 1,222 0 1,222 1,023
High 0 4,364 1,322 3,068 0 3,068 3,006
Low 0 538 210 328 0 328 322
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
KENTUCKY THRIFTS (10)
Average 164 6,667 2,349 4,318 0 4,318 3,568
</TABLE>
<PAGE> 162
KELLER & COMPANY
Columbus, Ohio
614-766-1426
EXHIBIT 45
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
COLUMBIA FEDERAL
SAVINGS BANK 7.58 4.22 3.36 0.11 0.00 0.08 0.00 0.00 2.53
COMPARABLE GROUP
AMFC AMB Financial Corp. 7.50 3.86 3.64 0.05 0.46 0.51 0.00 (0.03) 2.90
CLAS Classic Bancshares Inc. 7.21 3.60 3.61 0.14 0.04 0.31 0.09 0.04 2.91
GFCO Glenway Financial Corp. 7.47 4.35 3.12 0.11 0.03 0.26 0.07 0.00 2.07
HFSA Hardin Bancorp Inc. 7.41 4.53 2.87 0.07 0.07 0.23 0.00 (0.01) 1.83
HBBI Home Building Bancorp 7.52 4.16 3.35 0.01 0.02 0.27 0.00 0.00 2.40
KNK Kankakee Bancorp Inc. 7.28 4.17 3.11 0.00 0.03 0.43 0.07 0.00 2.31
MFBC MFB Corp. 7.34 4.22 3.13 0.01 0.00 0.17 0.00 0.00 1.91
MFFC Milton Federal Financial
Corp. 7.33 4.34 2.99 0.04 0.12 0.13 0.00 (0.01) 2.10
OHSL OHSL Financial Corp. 7.68 4.49 3.18 0.02 0.03 0.14 0.00 0.00 1.98
TWIN Twin City Bancorp 7.75 3.96 3.78 0.40 0.21 0.40 0.00 (0.03) 2.59
Average 7.45 4.17 3.28 0.09 0.10 0.29 0.02 (0.00) 2.30
Median 7.44 4.19 3.15 0.05 0.04 0.27 0.00 0.00 2.20
High 7.75 4.53 3.78 0.40 0.46 0.51 0.09 0.04 2.91
Low 7.21 3.60 2.87 0.00 0.00 0.13 0.00 (0.03) 1.83
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
KENTUCKY THRIFTS (10)
Average 7.53 3.86 3.66 0.06 0.12 0.25 0.02 0.01 2.15
</TABLE>
<TABLE>
<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
COLUMBIA FEDERAL
SAVINGS BANK 0.00 0.81 0.28 0.53 0.00 0.53 0.58
COMPARABLE GROUP
AMFC AMB Financial Corp. 0.00 1.53 0.63 0.90 0.00 0.90 0.73
CLAS Classic Bancshares Inc. 0.00 1.16 0.35 0.81 0.00 0.81 0.62
GFCO Glenway Financial Corp. 0.00 1.23 0.44 0.80 0.00 0.80 0.77
HFSA Hardin Bancorp Inc. 0.00 1.27 0.47 0.80 0.00 0.80 0.75
HBBI Home Building Bancorp 0.00 1.22 0.48 0.75 0.00 0.75 0.73
KNK Kankakee Bancorp Inc. 0.00 1.26 0.37 0.89 0.00 0.89 0.87
MFBC MFB Corp. 0.00 1.38 0.55 0.83 0.00 0.83 0.83
MFFC Milton Federal Financial Corp. 0.00 1.11 0.38 0.73 0.00 0.73 0.65
OHSL OHSL Financial Corp. 0.00 1.37 0.47 0.90 0.00 0.90 0.88
TWIN Twin City Bancorp 0.00 1.40 0.55 0.85 0.00 0.85 0.72
Average 0.00 1.29 0.47 0.83 0.00 0.83 0.76
Median 0.00 1.26 0.47 0.82 0.00 0.82 0.74
High 0.00 1.53 0.63 0.90 0.00 0.90 0.88
Low 0.00 1.11 0.35 0.73 0.00 0.73 0.62
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
KENTUCKY THRIFTS (10)
Average 0.13 1.71 0.62 1.10 0.00 1.10 1.09
</TABLE>
<PAGE> 163
KELLER & COMPANY
Columbus, Ohio
614-766-1426
EXHIBIT 46
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
COLUMBIA FEDERAL
SAVINGS BANK 7.81 4.84 2.97 3.46 0.53 0.58 4.30 4.74
AMFC AMB Financial Corp. 7.66 4.69 2.97 3.72 0.90 0.73 6.30 4.46
CLAS Classic Bancshares Inc. 7.65 4.28 3.37 3.83 0.81 0.62 5.53 4.25
GFCO Glenway Financial Corp. 7.78 4.89 2.89 3.25 0.80 0.77 8.37 8.14
HFSA Hardin Bancorp Inc. 7.51 5.29 2.22 2.91 0.80 0.75 5.88 5.55
HBBI Home Building Bancorp 7.83 4.69 3.14 3.50 0.75 0.73 5.76 5.65
KNK Kankakee Bancorp Inc. 7.59 4.71 2.88 3.24 0.89 0.87 8.28 8.11
MFBC MFB Corp. 7.48 5.08 2.40 3.19 0.83 0.83 5.63 5.62
MFFC Milton Federal Financial Corp. 7.56 5.12 2.44 3.09 0.73 0.65 5.08 4.52
OHSL OHSL Financial Corp. 7.84 5.23 2.61 3.25 0.90 0.88 8.06 7.86
TWIN Twin City Bancorp 8.02 4.65 3.37 3.92 0.85 0.72 6.65 5.59
Average 7.69 4.86 2.83 3.39 0.83 0.76 6.55 5.98
Median 7.66 4.80 2.89 3.25 0.82 0.74 6.09 5.61
High 8.02 5.29 3.37 3.92 0.90 0.88 8.37 8.14
Low 7.48 4.28 2.22 2.91 0.73 0.62 5.08 4.25
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
KENTUCKY THRIFTS (10)
Average 7.76 5.00 2.77 3.78 1.10 1.09 6.11 5.85
</TABLE>
<PAGE> 164
KELLER & COMPANY
Columbus, Ohio
614-766-1426
EXHIBIT 47
<TABLE>
<CAPTION>
DIVIDENDS, RESERVES AND SUPPLEMENTAL DATA
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
COLUMBIA FEDERAL
SAVINGS BANK - - - -
COMPARABLE GROUP
AMFC AMB Financial Corp. 0 0.25 1.75 24.00
CLAS Classic Bancshares Inc. 0 0.28 1.64 24.14
GFCO Glenway Financial Corp. 0 0.37 2.11 35.86
HFSA Hardin Bancorp Inc. 0 0.44 2.74 45.83
HBBI Home Building Bancorp 0 0.30 1.41 26.09
KNK Kankakee Bancorp Inc. 0 0.48 1.42 22.55
MFBC MFB Corp. 0 0.32 1.38 28.07
MFFC Milton Federal Financial Corp. 0 0.60 4.00 490.48
OHSL OHSL Financial Corp. 0 0.88 3.17 51.83
TWIN Twin City Bancorp 0 0.42 2.94 59.28
Average 0 0.43 2.25 80.81
Median 0 0.40 1.93 31.97
High 0 0.88 4.00 490.48
Low 0 0.25 1.38 22.55
ALL THRIFTS (373)
Average 202 0.45 1.27 39.49
MIDWEST THRIFTS (146)
Average 0 0.51 1.59 44.11
KENTUCKY THRIFTS (10)
Average 0 1.23 2.47 98.23
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
(%) (%) (%) (%) (%) (%) ($000)
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUBJECT
COLUMBIA FEDERAL
SAVINGS BANK 0.47 49.92 0.00 NM NA 35.17 2,737
COMPARABLE GROUP
AMFC AMB Financial Corp. 0.51 118.29 0.04 214.29 NA 38.95 NA
CLAS Classic Bancshares Inc. 0.94 93.71 0.00 NM NA 29.20 NA
GFCO Glenway Financial Corp. 0.37 123.32 0.00 NM NA 34.72 4,312
HFSA Hardin Bancorp Inc. 0.36 195.33 0.08 145.45 5.04 36.88 6,177
HBBI Home Building Bancorp 0.28 44.51 0.03 0.00 NA 42.22 2,783
KNK Kankakee Bancorp Inc. 0.90 60.22 0.08 46.67 7.47 27.98 2,982
MFBC MFB Corp. 0.18 141.76 0.00 NM (36.75) 39.88 3,709
MFFC Milton Federal Financial Corp. 0.44 91.98 0.00 NM NA 34.03 3,620
OHSL OHSL Financial Corp. 0.31 121.89 0.00 NM NA 33.64 3,846
TWIN Twin City Bancorp 0.20 88.17 0.60 38.26 NA 39.33 2,018
Average 0.45 107.92 0.08 88.93 (8.08) 35.68 3,681
Median 0.37 106.00 0.02 46.67 5.04 35.80 3,664
High 0.94 195.33 0.60 214.29 7.47 42.22 6,177
Low 0.18 44.51 0.00 0.00 (36.75) 27.98 2,018
ALL THRIFTS (373)
Average 0.77 102.28 0.13 149.81 (4.11) 29.71 4,341
MIDWEST THRIFTS (146)
Average 0.65 131.66 0.21 213.13 (6.99) 35.53 4,078
KENTUCKY THRIFTS (10)
Average 0.49 87.15 0.00 358.65 3.47 33.70 5,354
</TABLE>
153
<PAGE> 165
EXHIBIT 48
KELLER & COMPANY
Dublin, Ohio
614-766-1426
VALUATION ANALYSIS AND CONCLUSIONS
Columbia Federal Savings Bank/Columbia Financial of Kentucky, Inc.
Stock Prices as of November 28, 1997
<TABLE>
<CAPTION>
VALUATION ASSUMPTIONS: Comparable Group All Thrifts
Symbol Value Average Median Average Median
--------- ------------ -------------- -------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Post conv. price to earnings P/E 22.93 18.82 18.70 21.77 18.71
Post conv. price to book value P/B 66.90% 120.70% 118.17% 161.12% 149.24%
Post conv. price to assets P/A 16.36% 15.17% 14.96% 18.72% 16.99%
Post conv. price to core earnings P/E 21.56 21.01 20.09 22.14 19.71
Pre conversion earnings ($) Y $ 553,000 For the twelve months ended September 30, 1997.
Pre conversion book value ($) B $ 13,090,000 At September 30, 1997.
Pre conversion assets ($) A $ 104,006,000 At September 30, 1997.
Pre conversion core earnings ($) $ 609,000 For the twelve months ended September 30, 1997.
Conversion expense ($) X $ 658,000
Proceeds not reinvested ($) Z $ 1,616,000 ESOP
ESOP borrowings ($) E $ 1,616,000
ESOP cost of borrowings, net (%) S 6.27%
ESOP term of borrowings (yrs.) T 11
RRP amount ($) M $ 808,000
RRP expense ($) N $ 161,600
Tax rate (%) TAX 34.00%
Investment rate of return, net (%) R 3.53%
Investment rate of return, pretax (%) 5.35%
FORMULAE TO INDICATE VALUE AFTER CONVERSION:
1. P/E method: Value = P/E(Y-R(X+Z)-ES-(1-TAX)E/T-(1-TAX)N)) = $ 20,197,826
------------------------------------
1-(P/E)R
2. P/B method: Value = P/B(B-X-E-M) = $ 20,232,104
------------
1-P/B
3. P/A method: Value = P/A(A-X) = $ 20,208,305
--------
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 2,020,000 $10.00 $ 20,200,000
Minimum - 85% of midrange 1,717,000 $10.00 $ 17,170,000
Maximum - 115% of midrange 2,323,000 $10.00 $ 23,230,000
Superrange - 115% of maximum 2,671,450 $10.00 $ 26,714,500
</TABLE>
154
<PAGE> 166
KELLER & COMPANY
Dublin, Ohio
614-766-1426
EXHIBIT 49
<TABLE>
<CAPTION>
COMPARABLE GROUP MARKET, PRICING AND FINANCIAL RATIOS
Stock Prices as of November 28, 1997
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>
COLUMBIA FEDERAL SAVINGS BANK
APPRAISED VALUE - MIDPOINT 20.20 10.00 0.44 14.95 22.93 66.90 16.36 66.87 21.56
Minimum of range 17.17 10.00 0.48 16.06 20.69 62.26 14.24 62.26 19.39
Maximum of range 23.23 10.00 0.40 14.14 24.91 70.74 18.36 70.74 22.92
Superrange maximum 26.71 10.00 0.37 13.42 26.94 74.49 20.55 74.49 25.50
ALL THRIFTS (373)
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
KENTUCKY THRIFTS (10)
Average 93.58 19.66 0.91 14.09 22.14 136.67 25.56 140.68 24.73
Median 22.16 17.13 0.80 14.88 19.68 124.98 23.43 130.85 24.01
COMPARABLE GROUP (10)
Average 27.55 20.44 1.11 17.06 18.82 120.70 15.17 123.66 21.01
Median 28.26 18.25 1.00 15.44 18.70 118.17 14.96 123.60 20.09
COMPARABLE GROUP
AMFC AMB Financial Corp. 15.42 16.00 1.00 14.95 16.00 107.02 14.92 107.02 22.86
CLAS Classic Bancshares Inc. 22.26 17.13 0.87 15.13 19.68 113.19 16.84 133.27 25.18
GFCO Glenway Financial Corp. 43.35 19.00 0.99 12.17 19.19 156.12 14.77 158.07 19.79
HFSA Hardin Bancorp Inc. 15.04 17.50 0.96 15.75 18.23 111.11 12.81 111.11 19.23
HBBI Home Building Bancorp 6.62 21.25 1.15 20.43 18.48 104.01 15.86 104.01 18.81
KNK Kankakee Bancorp Inc. 48.29 33.88 2.04 27.25 16.61 124.31 14.21 131.86 16.85
MFBC MFB Corp. 38.38 23.25 1.14 20.31 20.39 114.48 15.00 114.48 20.39
MFFC Milton Federal Financial Corp. 34.57 15.00 0.63 12.31 23.81 121.85 16.47 121.85 26.79
OHSL OHSL Financial Corp. 34.26 27.75 1.64 21.42 16.92 129.55 14.60 129.55 17.45
TWIN Twin City Bancorp 17.34 13.63 0.72 10.87 18.92 125.34 16.21 125.34 22.71
Dividends Financial Ratios
---------------------------------------------------
Div./ Dividend Payout Equity/ Core Core
Share Yield Ratio Assets ROAA ROAE
($) (%) (%) (%) (%) (%)
----- ----- ----- ------ ---- ----
<S> <C> <C> <C> <C> <C> <C>
COLUMBIA FEDERAL SAVINGS BANK
APPRAISED VALUE - MIDPOINT 0.00 0.00 0.00 24.45 0.71 2.92
Minimum of range 0.00 0.00 0.00 22.88 0.69 3.01
Maximum of range 0.00 0.00 0.00 25.95 0.74 2.84
Superrange maximum 0.00 0.00 0.00 27.59 0.76 2.76
ALL THRIFTS (373)
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
KENTUCKY THRIFTS (10)
Average 1.23 2.47 98.23 19.61 1.10 6.11
Median 0.56 2.44 45.45 16.77 1.10 6.09
COMPARABLE GROUP (10)
Average 0.43 2.25 80.81 12.49 0.83 6.55
Median 0.40 1.93 31.97 12.76 0.82 6.09
COMPARABLE GROUP
AMFC AMB Financial Corp. 0.25 1.75 24.00 13.94 0.90 6.30
CLAS Classic Bancshares Inc. 0.28 1.64 24.14 14.88 0.81 5.53
GFCO Glenway Financial Corp. 0.37 2.11 35.86 9.46 0.80 8.37
HFSA Hardin Bancorp Inc. 0.44 2.74 45.83 11.53 0.80 5.88
HBBI Home Building Bancorp 0.30 1.41 26.09 14.12 0.75 5.76
KNK Kankakee Bancorp Inc. 0.48 1.42 22.55 11.43 0.89 8.28
MFBC MFB Corp. 0.32 1.38 28.07 13.10 0.83 5.63
MFFC Milton Federal Financial Corp. 0.60 4.00 490.48 12.57 0.73 5.08
OHSL OHSL Financial Corp. 0.88 3.17 51.83 10.92 0.90 8.06
TWIN Twin City Bancorp 0.42 2.94 59.28 12.94 0.85 6.65
</TABLE>
155
<PAGE> 167
EXHIBIT 50
KELLER & COMPANY
Dublin, Ohio
614-766-1426
<TABLE>
<CAPTION>
PROJECTED EFFECT OF CONVERSION PROCEEDS
Columbia Federal Savings Bank/Columbia Financial of Kentucky, Inc.
At the MINIMUM of the Range
<S> <C> <C> <C>
1. GROSS CONVERSION PROCEEDS
Minimum market value $ 17,170,000
Less: Estimated conversion expenses 620,000
Net conversion proceeds $ 16,550,000
2. GENERATION OF ADDITIONAL INCOME
Net conversion proceeds $ 16,550,000
Less: Proceeds not invested (1) 1,373,600
Total conversion proceeds invested $ 15,176,400
Investment rate 3.53%
Earnings increase - return on proceeds invested $ 535,879
Less: Estimated cost of ESOP borrowings 86,125
Less: Amortization of ESOP borrowings, net of taxes 82,416
Less: RRP expense, net of taxes 90,658
Net earnings increase $ 276,680
3. COMPARATIVE EARNINGS
Regular Core
--------------------- --------------------
Before conversion - 12 months ended 09/30/97 $ 553,000 609,000
Net earnings increase 276,680 276,680
After conversion $ 829,680 885,680
4. COMPARATIVE NET WORTH (2)
Before conversion - 09/30/97 $ 13,090,000
Conversion proceeds 14,489,600
After conversion $ 27,579,600
5. COMPARATIVE NET ASSETS
Before conversion - 09/30/97 $ 104,006,000
Conversion proceeds 16,550,000
After conversion $ 120,556,000
</TABLE>
(1) Represents ESOP borrowings and fixed assets.
(2) ESOP borrowings and RRP are omitted from net worth.
156
<PAGE> 168
EXHIBIT 51
KELLER & COMPANY
Dublin, Ohio
614-766-1426
<TABLE>
<CAPTION>
PROJECTED EFFECT OF CONVERSION PROCEEDS
Columbia Federal Savings Bank/Columbia Financial of Kentucky, Inc.
At the MIDPOINT of the Range
<S> <C> <C> <C>
1. GROSS CONVERSION PROCEEDS
Midpoint market value $ 20,200,000
Less: Estimated conversion expenses 658,000
Net conversion proceeds $ 19,542,000
2. GENERATION OF ADDITIONAL INCOME
Net conversion proceeds $ 19,542,000
Less: Proceeds not invested (1) 1,616,000
Total conversion proceeds invested $ 17,926,000
Investment rate of return 3.53%
Earnings increase - return on proceeds invested $ 632,967
Less: Estimated cost of ESOP borrowings 101,323
Less: Amortization of ESOP borrowings, net of taxes 96,960
Less: RRP expense, net of taxes 106,656
Net earnings increase $ 328,028
3. COMPARATIVE EARNINGS
Regular Core
--------------------- --------------------
Before conversion - 12 months ended 09/30/97 $ 553,000 609,000
Net earnings increase 328,028 328,028
After conversion $ 881,028 937,028
4. COMPARATIVE NET WORTH (2)
Before conversion - 09/30/97 $ 13,090,000
Conversion proceeds 17,118,000
After conversion $ 30,208,000
5. COMPARATIVE NET ASSETS
Before conversion - 09/30/97 $ 104,006,000
Conversion proceeds 19,542,000
After conversion $ 123,548,000
</TABLE>
(1) Represents ESOP borrowings and fixed assets.
(2) ESOP borrowings and RRP are omitted from net worth.
157
<PAGE> 169
EXHIBIT 52
KELLER & COMPANY
Dublin, Ohio
614-766-1426
<TABLE>
<CAPTION>
PROJECTED EFFECT OF CONVERSION PROCEEDS
Columbia Federal Savings Bank/Columbia Financial of Kentucky, Inc.
At the MAXIMUM of the Range
<S> <C> <C> <C>
1. GROSS CONVERSION PROCEEDS
Maximum market value $ 23,230,000
Less: Estimated conversion expenses 695,000
Net conversion proceeds $ 22,535,000
2. GENERATION OF ADDITIONAL INCOME
Net conversion proceeds $ 22,535,000
Less: Proceeds not invested (1) 1,858,400
Total conversion proceeds invested $ 20,676,600
Investment rate 3.53%
Earnings increase - return on proceeds invested $ 730,091
Less: Estimated cost of ESOP borrowings 116,522
Less: Amortization of ESOP borrowings, net of taxes 111,504
Less: RRP expense, net of taxes 122,654
Net earnings increase $ 379,411
3. COMPARATIVE EARNINGS
Regular Core
--------------------- --------------------
Before conversion - 12 months ended 09/30/97 $ 553,000 609,000
Net earnings increase 379,411 379,411
After conversion $ 932,411 988,411
4. COMPARATIVE NET WORTH (2)
Before conversion - 09/30/97 $ 13,090,000
Conversion proceeds 19,747,400
After conversion $ 32,837,400
5. COMPARATIVE NET ASSETS
Before conversion - 09/30/97 $ 104,006,000
Conversion proceeds 22,535,000
After conversion $ 126,541,000
</TABLE>
(1) Represents ESOP borrowings and fixed assets.
(2) ESOP borrowings and RRP are omitted from net worth.
158
<PAGE> 170
EXHIBIT 53
KELLER & COMPANY
Dublin, Ohio
614-766-1426
<TABLE>
<CAPTION>
PROJECTED EFFECT OF CONVERSION PROCEEDS
Columbia Federal Savings Bank/Columbia Financial of Kentucky, Inc.
At the SUPERRANGE Maximum
<S> <C> <C> <C>
1. GROSS CONVERSION PROCEEDS
Superrange market value $ 26,714,500
Less: Estimated conversion expenses 737,000
Net conversion proceeds $ 25,977,500
2. GENERATION OF ADDITIONAL INCOME
Net conversion proceeds $ 25,977,500
Less: Proceeds not invested (1) 2,137,160
Total conversion proceeds invested $ 23,840,340
Investment rate 3.53%
Earnings increase - return on proceeds invested $ 841,802
Less: Estimated cost of ESOP borrowings 134,000
Less: Amortization of ESOP borrowings, net of taxes 128,230
Less: RRP expense, net of taxes 141,053
Net earnings increase $ 438,520
3. COMPARATIVE EARNINGS
Regular Core
--------------------- ---------------------
Before conversion - 12 months ended 09/30/97 $ 553,000 609,000
Net earnings increase 438,520 438,520
After conversion $ 991,520 1,047,520
4. COMPARATIVE NET WORTH (2)
Before conversion - 09/30/97 $ 13,090,000
Conversion proceeds 22,771,760
After conversion $ 35,861,760
5. COMPARATIVE NET ASSETS
Before conversion - 09/30/97 $ 104,006,000
Conversion proceeds 25,977,500
After conversion $ 129,983,500
</TABLE>
(1) Represents ESOP borrowings and fixed assets.
(2) ESOP borrowings and RRP are omitted from net worth.
159
<PAGE> 171
EXHIBIT 54
KELLER & COMPANY
Dublin, Ohio
614-766-1426
<TABLE>
<CAPTION>
SUMMARY OF VALUATION PREMIUM OR DISCOUNT
Premium or (discount)
from comparable group.
-----------------------------
Columbia Federal Average Median
---------------- ------- ------
<S> <C> <C> <C>
MIDPOINT:
Price/earnings 22.93x 21.80% 22.61%
Price/book value 66.90% (44.57)% (43.38)%
Price/assets 16.36% 7.82% 9.33%
Price/tangible book value 66.87% (45.92)% (45.90)%
Price/core earnings 21.56x 2.63% 7.30%
MINIMUM OF RANGE:
Price/earnings 20.69x 9.94% 10.67%
Price/book value 62.26% (48.42)% (47.31)%
Price/assets 14.24% (6.11)% (4.80)%
Price/tangible book value 62.26% (49.65)% (49.63)%
Price/core earnings 19.39x (7.71)% (3.50)%
MAXIMUM OF RANGE:
Price/earnings 24.91x 32.36% 33.23%
Price/book value 70.74% (41.39)% (40.13)%
Price/assets 18.36% 21.02% 22.71%
Price/tangible book value 70.74% (42.79)% (42.76)%
Price/core earnings 22.92x 9.13% 14.11%
SUPER MAXIMUM OF RANGE:
Price/earnings 26.94x 43.14% 44.08%
Price/book value 74.49% (38.28)% (36.96)%
Price/assets 20.55% 35.49% 37.38%
Price/tangible book value 74.49% (39.76)% (39.73)%
Price/core earnings 25.50x 21.41 % 26.94%
</TABLE>
160
<PAGE> 172
ALPHABETICAL
EXHIBITS
<PAGE> 173
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> 174
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> 175
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> 176
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> 177
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 10, 1997 /s/ Michael R. Keller
- ----------------------------- -------------------------------------
DATE Michael R. Keller
<PAGE> 178
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, Columbia Federal
Savings Bank, Fort Mitchell, Kentucky 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.
/s/ Michael R. Keller
-----------------------
MICHAEL R. KELLER
Sworn to before me and subscribed in my presence this 11th day of
December 1997.
/s/ Julie A. Wij???
---------------------------
NOTARY PUBLIC
COMMISSION 10-16-99
