As filed with the Securities and Exchange Commission on September 15, 1998
Registration No. 333-52889
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Amendment No. 2 to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SEACOAST FINANCIAL SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Massachusetts 6712 04-1659040
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. employer identification number)
incorporation or organization) Classification Code Number)
</TABLE>
791 Purchase Street
New Bedford, Massachusetts 02740
(508) 984-6000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------
KEVIN G. CHAMPAGNE
President and Chief Executive Officer
SEACOAST FINANCIAL SERVICES CORPORATION
791 Purchase Street, New Bedford, Massachusetts 02740 (508) 984-6000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
Peter W. Coogan, Esq.
Carol Hempfling Pratt, Esq.
Foley, Hoag & Eliot LLP
One Post Office Square
Boston, Massachusetts 02109
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Approximate date of commencement of proposed sale 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 under the Securities Act
of 1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [X]
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.
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<PAGE>
PROSPECTUS SUPPLEMENT
SEACOAST FINANCIAL SERVICES CORPORATION
SAVINGS BANKS EMPLOYEES RETIREMENT ASSOCIATION
401(k) PLAN
as adopted by Compass Bank for Savings
(Participation Interests in up to 580,000 shares of Common Stock)
This Prospectus Supplement is being provided to participants (the
"Participants") in the Savings Banks Employees Retirement Association ("SBERA")
401(k) Plan as adopted by Compass Bank for Savings (the "Plan"). Seacoast
Financial Services Corporation ("Seacoast Financial"), the parent company of
Compass Bank for Savings (the "Bank"), is converting from a mutual bank holding
company to a stock bank holding company (the "Conversion"), and is offering for
sale shares of common stock of Seacoast Financial, par value $.01 per share
(the "Common Stock"), to certain depositors and the public (the "Offering").
Participants are being given the opportunity to direct the trustee of the Plan
(the "Trustee") to purchase Common Stock in the Offering with amounts in the
Plan allocated to their accounts. The Plan would invest in Common Stock through
the Seacoast Financial Stock Fund ("Employer Stock Fund").
Because the Plan actually purchases the Common Stock, Participants would
acquire a "participation interest" in the shares and would not own the shares
directly. This Prospectus Supplement relates to Participants' initial election
to direct that all or a portion of their Plan accounts be invested in the
Employer Stock Fund in the Offering and to their election to invest future
contributions in the Employer Stock Fund following the Offering.
The Prospectus of Seacoast Financial dated , 1998 (the
"Prospectus"), which is attached to this Prospectus Supplement, includes
detailed information with respect to the Conversion and Offering and the
financial condition, results of operations and business of Seacoast Financial.
This Prospectus Supplement, which provides information with respect to the
Plan, should be read only in conjunction with the Prospectus. For a discussion
of certain factors that should be considered by each Participant as to an
investment in the Common Stock, see "Risk Factors" beginning on page of the
Prospectus.
THE INTERESTS IN THE PLAN AND THE OFFERING OF THE COMMON STOCK HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, THE
MASSACHUSETTS DIVISION OF BANKS, THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR BY ANY OTHER FEDERAL AGENCY, OR BY ANY STATE SECURITIES COMMISSION OR
OTHER STATE AGENCY, NOR HAS SUCH COMMISSION, DIVISION, CORPORATION, OTHER
AGENCY OR ANY STATE SECURITIES COMMISSION OR OTHER STATE AGENCY PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE INTERESTS OFFERED HEREBY ARE NOT DEPOSIT ACCOUNTS AND ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND, THE
SAVINGS ASSOCIATION INSURANCE FUND, THE DEPOSITORS INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY, AND ARE NOT GUARANTEED BY SEACOAST FINANCIAL OR THE BANK.
THE SEACOAST FINANCIAL COMMON STOCK IS SUBJECT TO INVESTMENT RISK, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL INVESTED.
The date of this Prospectus Supplement is , 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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THE OFFERING ........................................................... 3
Securities Offered .................................................... 3
Election to Purchase Common Stock in the Offering; Priorities ......... 3
Value of Participation Interests ...................................... 3
How to Use Plan Funds to Invest in Offering ........................... 3
Deadline for Participating in Offering ................................ 3
Irrevocability of Election to Participate in Offering ................. 4
Direction to Purchase Common Stock After the Offering ................. 4
Purchase Price of Common Stock ........................................ 4
Nature of a Participant's Interest in Common Stock .................... 4
Voting Rights of Common Stock ......................................... 4
DESCRIPTION OF THE PLAN ................................................ 5
Introduction .......................................................... 5
Eligibility and Participation ......................................... 5
Contributions Under the Plan .......................................... 5
Limitations on Contributions .......................................... 5
Investment of Contributions and Account Balances ...................... 6
Benefits Under the Plan ............................................... 8
Withdrawals and Distributions from the Plan ........................... 8
Trustee ............................................................... 9
Plan Administrator .................................................... 9
Reports to Plan Participants .......................................... 9
Amendment and Termination ............................................. 9
Merger, Consolidation or Transfer ..................................... 10
Federal Income Tax Consequences ....................................... 10
ERISA and Other Qualifications ........................................ 12
SEC Reporting and Short-Swing Profit Liability ........................ 12
Financial Information Regarding Plan Assets ........................... 12
LEGAL OPINION .......................................................... 12
</TABLE>
2
<PAGE>
THE OFFERING
Securities Offered
The securities offered hereby are participation interests in the Plan. Up
to 580,000 shares (at a purchase price of $10.00 per share) of Common Stock may
be acquired in the Offering by the Plan to be held in the Employer Stock Fund.
Seacoast Financial is the issuer of the Common Stock. Only employees of the
Bank may become Participants in the Plan. The Common Stock to be issued hereby
is conditioned on the consummation of the Conversion. A Participant's
investment in the Employer Stock Fund in the Conversion is subject to the
priority applicable to the Participant, as set forth in the Plan of Conversion,
and as described below. Information with regard to the Plan is contained in
this Prospectus Supplement and information with regard to the Conversion and
the financial condition, results of operation and business of Seacoast
Financial is contained in the attached Prospectus. The address of the principal
executive office of Seacoast Financial and the Bank is 791 Purchase Street, New
Bedford, Massachusetts 02740. The telephone number of the Bank is (508)
984-6000.
Election to Purchase Common Stock in the Offering; Priorities
The Plan has recently been amended to permit each Participant to direct
the transfer of all or part of the funds which represent his or her beneficial
interest in the assets of the Plan to the Employer Stock Fund. The Trustee of
the Plan will subscribe for Common Stock offered for sale in connection with
the Offering in accordance with each Participant's directions. In the event the
Offering is oversubscribed and the Trustee is unable to use the full amount
allocated by a Participant to purchase Common Stock in the Offering, the amount
that is not invested in the Employer Stock Fund will be reallocated on a pro
rata basis among the other investment options that the Participant has
selected. If a Participant chooses not to direct the investment of his or her
account balance, the Participant's account balance will remain in the other
investment options of the Plan previously directed by the Participant.
The shares of Common Stock to be sold in the Offering are being offered in
the following order of priority: (i) holders of deposit accounts at the Bank
with an aggregate balance of $50 or more on December 31, 1996; (ii) holders of
deposit accounts at the Bank with an aggregate balance of $50 or more on June
30, 1997; (iii) the Bank's Employee Stock Ownership Plan; and (iv) employees,
officers, directors and trustees of the Bank and Seacoast Financial (the
"Subscription Offering"). (Subject to the prior rights of holders of
subscription rights, Seacoast Financial may also offer Conversion Shares in a
community offering and/or a syndicated community offering.) To the extent that
Participants fall into one of the Subscription Offering categories, they have
subscription rights to purchase shares of Common Stock in the Subscription
Offering and are being permitted to use funds in their Plan account to pay for
the Common Stock that they may subscribe for. Common Stock so purchased will be
placed in the Participant's Employer Stock Fund within his Plan account.
The limitations on the amount of Common Stock that a person may purchase
in the Offering, which are described in the Prospectus, apply to the aggregate
of the amount directly purchased by a person in the Offering and the amount
purchased by the Trustee with funds allocated to a Participant's Plan account.
Value of Participation Interests
The assets of the Plan were valued at approximately $5.8 million as of
June 30, 1998, representing the aggregate market value of all Participants'
accounts and earnings thereon, less previous withdrawals.
How to Use Plan Funds to Invest in Offering
Accompanying this Prospectus Supplement is a form (the "Investment
Election Form") which will enable a Participant to direct that all or a portion
of his or her beneficial interest in the Plan, representing Plan contributions
through June 30, 1998, be transferred to the Employer Stock Fund. If a
Participant wishes to invest all or part of his or her beneficial interest in
the assets of the Plan in the Common Stock issued in connection with the
Offering, he or she should complete the Investment Election Form.
Deadline for Participating in Offering
Directions to transfer amounts to the Employer Stock Fund in order to
purchase Common Stock issued in connection with the Offering must be returned
to Linda Perron no later than :00 p.m. on , 1998.
3
<PAGE>
Irrevocability of Election to Participate in Offering
A Participant's direction to transfer amounts credited to his or her
account in the Plan to the Employer Stock Fund in order to purchase shares of
Common Stock in connection with the Offering is irrevocable.
Direction to Purchase Common Stock After the Offering
After the Offering, a Participant will continue to be able to direct the
investment of past balances and current contributions in the investment options
available under the Plan, including the Employer Stock Fund (the percentage
invested in any option must be a whole percent). The allocation of a
Participant's interest in the various investment options offered under the Plan
may be changed each calendar quarter. Special restrictions may apply to
transfers directed to and from the Employer Stock Fund by those Participants
who are executive officers, directors and principal shareholders of Seacoast
Financial who are subject to the provisions of Section 16(b) of the Securities
and Exchange Act of 1934 (the "Exchange Act"), as amended. In addition,
Participants who are officers, directors, trustees or Corporators of Seacoast
Financial or the Bank will not be able to transfer their initial investment out
of the Employer Stock Fund for a period of one year following consummation of
the Conversion.
Purchase Price of Common Stock
The funds transferred to the Employer Stock Fund for the purchase of
Common Stock in connection with the Offering will be used in full by the
Trustee to purchase shares of Common Stock, except in the event of an
oversubscription, as discussed above. The price paid for such shares of Common
Stock will be $10.00 per share, the same price as is paid by all other persons
who purchase shares of Common Stock in the Offering.
Subsequent to the Offering, Common Stock purchased by the Trustee will be
acquired in open market transactions or from the Seacoast Financial's treasury
stock account. The prices paid by the Trustee for shares of Common Stock will
not exceed "adequate consideration" as defined in Section 3(18) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
Nature of a Participant's Interest in Common Stock
The Common Stock will be held in the name of the Plan, as Trustee. Shares
of Common Stock acquired at the direction of a Participant will be allocated to
the Participant's account under the Plan. Therefore, earnings with respect to a
Participant's account should not be affected by the investment designations
(including investments in Common Stock) of other Participants. The Plan
Administrator will vote such allocated shares, if any, as described in the
following paragraph.
Voting Rights of Common Stock
The Plan Administrator generally will exercise voting rights attributable
to all Common Stock held by the Employer Stock Fund. For matters involving a
tender offer for Seacoast Financial, the Plan Administrator will vote such
allocated shares, if any, as directed by Participants with interests in the
Employer Stock Fund. Each Participant will be allocated voting instruction
rights reflecting such Participant's proportionate interest in the Employer
Stock Fund. The number of shares of Common Stock held in the Employer Stock
Fund that are voted in the affirmative and negative on each matter shall be
proportionate to the number of voting instruction rights exercised by
Participants in the affirmative and negative respectively. For matters not
involving a tender offer, the Plan Administrator will vote such allocated
shares in his own discretion and Participants will not have an opportunity to
direct the voting of shares.
4
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DESCRIPTION OF THE PLAN
Introduction
The Bank adopted the Plan and related Adoption Agreement effective July 1,
1992. The Board of Directors of the Bank has voted to include the Employer
Stock Fund as an investment option. The Plan is a profit sharing plan with a
cash or deferred compensation feature established in accordance with the
requirements under Section 401(a) and Section 401(k) of the Internal Revenue
Code of 1986, as amended (the "Code"). The Bank has obtained a ruling from the
Internal Revenue Service that the Plan is qualified under Section 401(a) of the
Code, and its related trust is tax exempt under Section 501(a) of the Code.
Employee Retirement Income Security Act. The Plan is an "individual
account plan" other than a "money purchase pension plan" within the meaning of
ERISA. As such, the Plan is subject to all of the provisions of Title I
(Protection of Employee Benefit Rights) and Title II (Amendments to the
Internal Revenue Code Relating to Retirement Plans) of ERISA, except the
funding requirements contained in Part 3 of Title I of ERISA which by their
terms do not apply to an individual account plan (other than a money purchase
plan). The Plan is not subject to Title IV (Plan Termination Insurance) of
ERISA. The funding requirements contained in Title IV of ERISA are not
applicable to Participants (as defined below) or beneficiaries under the Plan.
Reference to Full Text of Plan. The following statements are summaries of
certain provisions of the Plan. They are not complete and are qualified in
their entirety by the full text of the Plan. Words capitalized but not defined
in the following discussion have the same meaning as set forth in the Plan.
Copies of the Plan are available to all employees by filing a request with the
Bank, 791 Purchase Street, New Bedford, Massachusetts 02740, Attention: Linda
M. Perron. Each employee is urged to read carefully the full text of the Plan.
Eligibility and Participation
Any employee of the Employer is eligible to become a Participant in the
Plan on the first day of the month following completion of one (1) Year of
Service, as defined, with the Bank, provided he or she has reached age 21 at
such time. A Year of Service is defined as the 12 month period during which an
employee completes at least 1,000 hours of service with the Bank. The plan year
is November 1 to October 31 (the "Plan Year").
As of June 30, 1998, there were approximately 307 employees eligible to
participate in the Plan, and 286 employees participating by making elective
deferral contributions.
Contributions Under the Plan
401(k) Plan Contributions. Each Participant of the Plan is permitted to
elect to defer such Participant's Pay (as defined below) on a pre-tax basis up
to the lesser of 15% of annual Pay (expressed in terms of whole percentages) or
the applicable limit under the Code (for 1998, the applicable limit is $10,000)
and subject to certain other restrictions imposed by the Code, and to have that
amount contributed to the Plan on such Participant's behalf. For purposes of
the Plan, "Pay" means, generally, a Participant's total pay received from the
Bank as reported on IRS Form W-2 for purposes of income-tax withholding. In
1998, the annual Pay of each Participant taken into account under the Plan was
and is limited to $160,000. (Limits established by the IRS are subject to
increase pursuant to an annual cost of living adjustment, as permitted by the
Code). A Participant may elect to modify the amount contributed to the Plan,
effective on the first day of the month, by filing a new deferral agreement at
least 15 days prior to the effective date of the modification.
Employer Contributions. The Bank currently makes matching contributions to
the Plan equal to 50% of the elective deferral contributions, up to a maximum
of 6% of the Participant's Pay for the Plan Year. The Plan does not require
that the Bank make a matching contribution.
Limitations on Contributions
Limitation on Employee Salary Deferrals. The annual amount of deferred Pay
of a Participant (when aggregated with any elective deferrals of the
Participant under a simplified employee pension plan or a tax-deferred annuity)
may not exceed the limitation contained in Section 402(g) of the Code, adjusted
for increases in the cost of living as permitted by the Code (the limitation
for 1998 is $10,000). Contributions in excess of this limitation ("excess
deferrals") will be included in the Participant's gross income for federal
income tax purposes in the year they are made. In addition, any such excess
deferral will again be subject to federal income tax when distributed
5
<PAGE>
by the Plan to the Participant, unless the excess deferral (together with any
income allocable thereto) is distributed to the Participant not later than the
first April 15th following the close of the taxable year in which the excess
deferral is made. Any income on the excess deferral that is distributed not
later than such date shall be treated, for federal income tax purposes, as
earned and received by the Participant in the taxable year in which the
distribution is made.
Limitations on Annual Additions and Benefits. Pursuant to the requirements
of the Code, the Plan provides that the amount of contributions and forfeitures
allocated to each Participant's account during any Plan Year may not exceed the
lesser of $30,000 or 25% of the Participant's Compensation (as defined) for the
Plan Year. In addition, annual additions are limited to the extent necessary to
prevent contributions on behalf of any employee from exceeding the employee's
combined plan limit, i.e., a limit that takes into account the contributions
and benefits made on behalf of an employee to all plans of the Bank.
Limitation on Plan Contributions for Highly Compensated Employees.
Sections 401(k) and 401(m) of the Code limit the amount of elective deferral
contributions and matching contributions that may be made to the Plan in any
Plan Year on behalf of Highly Compensated Employees (defined below) in relation
to the amount of elective deferral contributions made by or on behalf of all
other employees eligible to participate in the Plan. Specifically, the "actual
deferral percentage" ("ADP") (i.e., the average of the actual deferral ratios,
expressed as a percentage, of each eligible employee's elective deferral
contribution if any, for the Plan Year over the employee's Pay), of the Highly
Compensated Employees must meet either of the following tests: (i) the ADP of
the eligible Highly Compensated Employees is not more than 125% of the ADP of
all other eligible employees, or (ii) the ADP of the eligible Highly
Compensated Employees is not more than 200% of the ADP of all other eligible
employees, and the excess of the ADP for the eligible Highly Compensated
Employees over the ADP of all other eligible employees is not more than two
percentage points. Similarly, the actual contribution percentage ("ACP") (i.e.,
the average of the actual contribution ratios, expressed as a percentage, of
each eligible employee's matching contributions, if any, for the Plan Year over
the employees Pay) of the Highly Compensated Employees must meet either of the
following tests: (i) the ACP of the eligible Highly Compensated Employees is
not more than 125% of the ACP of all other eligible employees, or (ii) the ACP
of the eligible Highly Compensated Employees is not more than 200% of the ACP
of all other eligible employees, and the excess of the ACP for the eligible
Highly Compensated Employees over the ACP of all other employees is not more
than two percentage points.
In general, for Plan Years beginning in 1998, a Highly Compensated
Employee includes any employee, who, (1) during the Plan Year or the preceding
Plan Year, was at any time a 5% owner (i.e., owns directly or indirectly more
than 5% of the stock of an employer, or stock possessing more than 5% of the
total combined voting power of all stock of an employer), or (2) for the
preceding Plan Year, received Pay from an employer in excess of $80,000 (in
1998), and (if the employer elects for a Plan Year) was in the group consisting
of the top 20% of employees when ranked on the basis of Pay paid during the
Plan Year. The dollar amounts set forth above are adjusted annually to reflect
increases in the cost of living.
In order to prevent the disqualification of the Plan, any amount
contributed by Highly Compensated Employees that exceed the ADP limitation in
any Plan Year ("excess contributions"), together with any income allocable
thereto, must be distributed first to Highly Compensated Employees with the
greatest dollar amount deferrals, and so on, until the Plan satisfies the ADP
test, before the close of the following Plan Year. Moreover, the Bank will be
subject to a 10% excise tax on any excess contributions unless such excess
contributions, together with any income allocable thereto, either are
re-characterized or are distributed before the close of the first 2-1/2 months
following the Plan Year to which such excess contributions relate. In addition,
in order to avoid disqualification of the Plan, any contributions by Highly
Compensated Employees that exceed the average contribution limitation in any
Plan Year ("excess aggregate contributions") together with any income allocable
thereto, must be distributed to such Highly Compensated Employees before the
close of the following Plan Year. However, the 10% excise tax will be imposed on
the Bank with respect to any excess aggregate contributions, unless such
amounts, plus any income allocable thereto, are distributed within 2-1/2 months
following the close of the Plan Year in which they arose.
Investment of Contributions and Account Balances
All amounts credited to Participants' accounts under the Plan are held in
the Plan trust (the "Trust"), which is administered by SBERA, as trustee.
6
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Prior to the effective date of the Offering, Participants have been
provided the opportunity to direct the investment of their accounts into one of
the following options (the "Funds"):
Money Market Account Index 500 Account
Equity Account Enhanced Index Account
Bond Account Small Cap Equity Account
Asset Allocation Account International Equity Account
The Plan now provides that in addition to the Funds specified above, a
Participant may direct the Trustee to invest all or a portion of his account in
the Employer Stock Fund.
The Plan provides that a Participant may elect to change the investment
mix of past contributions (as adjusted to reflect then current market value of
the Participant's investment options) by directing the Trustee to transfer all
or a portion of the Participant's account balance from one investment option to
another. A Participant may also elect to change the investment mix of future
contributions. Neither election will affect the other. Such elections may be
made by completing a Change in Investment form (available from Linda Perron).
These elections will be effective as of the last day of the calendar quarter
for which the election is made, provided that notice to the Plan Administrator
is received by the close of business on the first business day following the
second day of the month following the last month of the quarter for which the
election is made.
A. Previous Funds
Prior to the effective date of the Offering, contributions under the Plan
have been invested in the eight Funds specified above. The average compounded
rates of return as of June 30, 1998 are as follows:
<TABLE>
<CAPTION>
One Year Three Year Five Year
Average Average Average
Year to Date Annualized Annualized Annualized
Quarter Ended (January 1- Compounded Compounded Compounded
June 30, 1998 June 30, 1998) Return Return Return
--------------- ---------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Money Market Account ................. 1.31% 2.65% 5.44% 5.57% 5.02%
Asset Allocation Account ............. 1.03% 9.99% 14.73% 17.61% 14.43%
Equity Account ....................... -.22% 12.58% 19.69% 24.05% 19.04%
Bond Account ......................... 1.23% 3.24% 8.49% 6.71% 6.21%
Enhanced Index Account ............... 3.22% 18.80% 29.05% 29.44% 22.86%
Index 500 Account .................... 3.33% 17.74% 30.23% 30.17% 22.94%
International Equity Account ......... 2.48% 16.62% 14.91% 17.90% 13.08%
Small Cap Equity Account ............. -3.65% 8.25% 14.91% 25.84% 24.57%
</TABLE>
The following is a description of each of the Plan's eight investment
Funds:
The Money Market Account seeks the maximum current income that is
consistent with preservation of capital and liquidity. The account intends to
maintain a consistent net cash value of $1.00 per share. The objective of the
account is to consistently out-perform the Donoghue Money Fund Average. The
account is managed by SBERA.
The Asset Allocation Account seeks to offer a competitive long-term total
return and below-average volatility through a balanced and diversified
investment approach. The account invests in a carefully selected portfolio of
mutual funds that emphasizes either equity, fixed income, or money market
securities, both foreign and domestic. The Asset Allocation Account is managed
by Putnam Investments.
The Equity Account seeks long-term growth of capital and income by
investing in common stocks of domestic and foreign companies. This account is
managed by five investment advisors selected by the Board of Trustees of SBERA.
The Bond Account's objective is to produce a positive real rate of return
after inflation with a high degree of stability and limited volatility. The
entire portfolio will be invested in United States Treasury obligations,
Government National Mortgage Association mortgage-backed certificates, other
United States Agency obligations and cash equivalents. The goal of the account
is to exceed the returns of the Lehman Brothers Mortgage Backed Securities
Index. The account is managed by Putnam Investment Management.
7
<PAGE>
The Enhanced Index Account is a domestic common stock portfolio. The goal
of the account is to consistently provide excess returns over the Standard &
Poor's 500 Index. The account seeks to control risk by maintaining portfolio
characteristics and industry weights similar to those of the S&P 500 Index.
This account is managed by the Fidelity Management Trust Company.
The Index 500 Account attempts to provide investment results that parallel
the performance of the Standard & Poor's 500 Composite Stock Price Index. The
portfolio holds all of the 500 underlying securities in proportion to their
weighting in the Index. Given this objective, the account is expected to
provide investors with long-term growth of capital and income. This account is
administered by The Vanguard Group.
The International Equity Account's objective is to obtain long-term growth
through a diversified portfolio of marketable equity securities of foreign
companies. The performance objective is to outperform the Morgan Stanley
Capital International EAFE (Europe, Australia, Far East) Index in U.S. dollars
over a market cycle. This account is managed by Putnam International Equity
Management.
The Small Cap Equity Account's investment objective is capital
appreciation. The account is designed for participants willing to assume
above-average risk in exchange for above-average capital potential. The account
invests primarily in common stocks of small to medium-sized companies that the
account's investment advisor believes have potential for capital appreciation
significantly greater than the market average. The account is administered by
Putnam Investment Management.
B. The Employer Stock Fund
The Employer Stock Fund will consist of investments in Common Stock made
on and after the effective date of the Offering. After the Offering, the
Trustee will, to the extent practicable, use all amounts held by it in the
Employer Stock Fund, including cash dividends paid on Common Stock held in the
Employer Stock Fund, to purchase shares of Common Stock of Seacoast Financial.
It is expected that all purchases will be made at prevailing market prices.
Under certain circumstances, the Trustee may be required to limit the daily
volume of shares purchased. Pending investment in Common Stock, assets held in
the Employer Stock Fund will be placed in money market accounts.
As of the date of this Prospectus Supplement, none of the shares of Common
Stock have been issued or are outstanding and there is no established market
for the Common Stock. Accordingly, there is no record of the historical
performance of the Employer Stock Fund. Performance will be dependent upon a
number of factors, including the financial condition and profitability of
Seacoast Financial and the Bank and market conditions for the Common Stock
generally.
INVESTMENT IN THE EMPLOYER STOCK FUND MAY INVOLVE CERTAIN RISKS IN
INVESTMENT IN COMMON STOCK OF SEACOAST FINANCIAL. FOR A DISCUSSION OF THESE
RISK FACTORS, SEE THE PROSPECTUS.
Benefits Under the Plan
Vesting. A Participant, at all times, has a fully vested, nonforfeitable
interest in his or her account under the Plan.
Withdrawals and Distributions from the Plan
APPLICABLE FEDERAL LAW REQUIRES THE PLAN TO IMPOSE SUBSTANTIAL
RESTRICTIONS ON THE RIGHT OF A PLAN PARTICIPANT TO WITHDRAW AMOUNTS HELD FOR
HIS OR HER BENEFIT UNDER THE PLAN PRIOR TO THE PARTICIPANT'S TERMINATION OF
EMPLOYMENT WITH THE BANK. A SUBSTANTIAL FEDERAL TAX PENALTY MAY ALSO BE IMPOSED
ON WITHDRAWALS MADE PRIOR TO THE PARTICIPANT'S ATTAINMENT OF AGE 59-1/2,
REGARDLESS OF WHETHER SUCH A WITHDRAWAL OCCURS DURING HIS OR HER EMPLOYMENT
WITH THE BANK OR AFTER TERMINATION OF EMPLOYMENT.
Withdrawals Prior to Termination of Employment. A Participant may make a
withdrawal from his or her elective deferral contributions (and earnings
thereon) prior to termination of employment only in the event of financial
hardship, subject to the hardship distribution rules under the Plan. These
requirements insure that Participants have a true financial need before a
withdrawal may be made.
8
<PAGE>
Loans. A Participant may apply for a loan through the Bank's personnel
department.
Distribution Upon Retirement or Disability. Unless an optional form of
benefit has been elected, the automatic form of benefit payable to a
Participant who retires, incurs a disability, or otherwise terminates
employment shall be a life annuity (for married participants, a qualified joint
and survivor annuity). A Participant may elect to receive a lump sum payment;
however, if the Participant is married, spousal consent is required.
Distribution Upon Death. A Participant who dies prior to the benefit
commencement date for retirement, disability or termination of employment shall
have his or her benefits paid to the surviving spouse or beneficiary under one
or more of the forms available under the Plan.
Distribution Upon Termination for Any Other Reason. Distribution of
benefits to a Participant who terminates employment for any reason other than
retirement, disability or death whose account balance exceeds $5,000 will be
made on the Participant's normal retirement date unless the Participant
requests otherwise. Distribution of benefits to Participants whose account
balances do not exceed $5,000 will be made as soon as administratively
practicable following termination of employment but shall be made on the
occurrence of an event which would result in a distribution had the Participant
remained in the employ of the Bank (i.e., upon the Participant's death,
disability, or attainment of early or normal retirement age). Alternatively, at
the Participant's election, a Participant may receive a distribution of his
account after he ceases to be an employee.
Nonalienation of Benefits. Except with respect to federal income tax
withholding and as provided with respect to a qualified domestic relations
order (as defined in the Code), benefits payable under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution, or levy of any kind,
either voluntary or involuntary, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or otherwise dispose of any rights
to benefits payable under the Plan shall be void.
Trustee
SBERA has been appointed as trustee of the Plan. SBERA is governed by a
Board of Trustees whose members are elected by the savings banks (including the
Bank) that have adopted the SBERA 401(k) Plan.
The Trustee receives, holds and invests the contributions to the Employer
Stock Fund of the Plan in trust and distributes them to Participants and
beneficiaries in accordance with the terms of the Plan and the directions of
the Plan Administrator. The Trustee is responsible for investment of the assets
of the Trust.
Plan Administrator
Pursuant to the terms of the Plan, the Plan is administered by the plan
administrator (the "Plan Administrator"). The name, address and telephone
number of the Plan Administrator, are as follows: Thomas Forese, Jr., c/o
SBERA, One Linscott Road, Box 4046, Woburn, Massachusetts 01801, (781)
938-3500. The Plan Administrator is responsible for the administration of the
Plan, interpretation of the provisions of the Plan, prescribing procedures for
filing applications for benefits, preparation and distribution of information
explaining the Plan, maintenance of plan records, books of account and all
other data necessary for the proper administration of the Plan, and preparation
and filing of all returns and reports relating to the Plan which are required
to be filed with the U.S. Department of Labor and the IRS, and for all
disclosures required to be made to Participants, beneficiaries, and others
under Sections 104 and 105 of ERISA.
Reports to Plan Participants
The Plan Administrator will furnish to each Participant a statement
quarterly showing (i) the balance in the Participant's account as of the end of
that period, (ii) the amount of contributions allocated to such Participant's
account for that period, and (iii) the adjustments to such Participant's
account to reflect earnings or losses (if any).
Amendment and Termination
It is the intention of the Bank to continue the Plan indefinitely.
Nevertheless, the Bank may terminate the Plan at any time. If the Plan is
terminated in whole or in part, then regardless of other provisions in the
Plan, each employee affected by such termination shall have a fully vested
interest in his or her accounts. The Bank reserves the right to make, from time
to time, any amendment or amendments to the Plan which do not cause any part of
9
<PAGE>
the Trust to be used for, or diverted to, any purpose other than the exclusive
benefit of Participants or their beneficiaries; provided, however, that the
Bank may make any amendment it determines necessary or desirable, with or
without retroactive effect, to comply with ERISA.
Merger, Consolidation or Transfer
In the event of the merger or consolidation of the Plan with another plan,
or the transfer of the Trust assets to another plan, the Plan requires that
each Participant would (if either the Plan or the other plan then terminated)
receive a benefit immediately after the merger, consolidation or transfer which
is equal to or greater than the benefit he or she would have been entitled to
receive immediately before the merger, consolidation or transfer (if the Plan
had then terminated).
Federal Income Tax Consequences
The following is only a brief summary of certain federal income tax
aspects of the Plan which are of general application under the Code and is not
intended to be a complete or definitive description of the federal income tax
consequences of participating in or receiving distributions from the Plan. The
summary is necessarily general in nature and does not purport to be complete.
Moreover, statutory provisions are subject to change, as are their
interpretations, and their application may vary in individual circumstances.
Finally, the consequences under applicable state and local income tax laws may
not be the same as under the federal income tax laws. Participants are urged to
consult their tax advisors with respect to any distribution from the Plan and
transactions involving the Plan.
The Plan is qualified under Section 401(a) and 401(k) of the Code and the
related Trust is exempt from tax under Section 501(a) of the Code. A plan that
is qualified under these sections of the Code is afforded special tax treatment
which include the following: (1) the Bank is allowed an immediate tax deduction
for the amount contributed to the Plan each year; (2) Participants pay no
current income tax on amounts contributed by the Bank on their behalf; and (3)
Earnings of the Plan are tax-exempt thereby permitting the tax-free
accumulation of income and gains on investments. The Plan will be administered
to comply in operation with the requirements of the Code as of the applicable
effective date of any change in the law. The Bank expects to timely adopt any
amendments to the Plan that may be necessary to maintain the qualified status
of the Plan under the Code.
Assuming that the Plan is administered in accordance with the requirements
of the Code, participation in the Plan under existing federal income tax laws
will have the following effects:
(a) Amounts contributed to a Participant's account and the investment
earnings on the account are not includable in a Participant's federal taxable
income until such contributions or earnings are actually distributed or
withdrawn from the Plan. Special tax treatment may apply to the taxable portion
of any distribution that includes Common Stock or qualifies as a Lump Sum
Distribution (as described below).
(b) Income earned on assets held by the Trust will not be taxable to the
Trust.
Lump Sum Distribution. A distribution from the Plan to a Participant or
the beneficiary of a Participant will qualify as a lump sum distribution ("Lump
Sum Distribution") if it is made: (i) within one taxable year of the
Participant or beneficiary; (ii) on account of the Participant's death,
disability or separation from service, or after the Participant attains age
59-1/2; and (iii) consists of the balance to the credit of the Participant under
this Plan and all other profit sharing plans, if any, maintained by the Bank.
The portion of any Lump Sum Distribution that is required to be included in the
Participant's or beneficiary's taxable income for federal income tax purposes
(the "total taxable amount") consists of the entire amount of such Lump Sum
Distribution less the amount of after-tax contributions, if any, made by the
Participant to any other profit sharing plan maintained by the Bank which is
included in such distribution.
Averaging Rules. The portion of the total taxable amount of a Lump Sum
Distribution that is attributable to participation after 1973 in the Plan or in
any other profit-sharing plan maintained by the Bank (the "ordinary income
portion") will be taxable generally as ordinary income for federal income tax
purposes. However, a Participant who has completed at least five years of
participation in the Plan before the taxable year in which the distribution is
made, or a beneficiary who receives a Lump Sum Distribution on account of the
Participant's death (regardless of the period of the Participant's
participation in the Plan or any other profit-sharing plan maintained by the
Bank), may elect to have the ordinary income portion of such Lump Sum
Distribution taxed according to
10
<PAGE>
a special averaging rule ("five-year averaging"). The election of the special
averaging rules may apply only to one Lump Sum Distribution received by the
Participant or beneficiary, provided such amount is received on or after the
Participant turns 59-1/2 and the recipient elects to have any other Lump Sum
Distribution from a qualified plan received in the same taxable year taxed
under the special averaging rule. Under a special grandfather rule, individuals
who turned 50 by 1985 may elect to have their Lump Sum Distribution taxed under
either the five- year averaging rule or under the prior law ten-year averaging
rule. Such individuals also may elect to have that portion of the Lump Sum
Distribution attributable to the Participant's pre-1974 participation in the
Plan taxed at a flat 20% rate as gain from the sale of a capital asset.
Contribution to Another Qualified Plan or to an IRA. A Participant may
defer federal income taxation of all or any portion of the total taxable amount
of a Lump Sum Distribution (including the proceeds from the sale of any Common
Stock included in the Lump Sum Distribution) to the extent that such amount, or
a portion thereof, is contributed, within 60 days after the date of its receipt
by the Participant, to another qualified plan or to an individual retirement
account ("IRA"). If less than the total taxable amount of a Lump Sum
Distribution is contributed to another qualified plan or to an IRA within the
applicable 60-day period, the amount not so contributed must be included in the
Participant's income for federal income tax purposes and will not be eligible
for the special averaging rules or for capital gains treatment. Additionally, a
Participant may defer the federal income taxation of any portion of an amount
distributed from the Plan on account of the Participant's disability or
separation from service, generally, if the amount is distributed within one
taxable year of the Participant, and such amount is contributed, within 60 days
after the date of its receipt by the Participant, to an IRA. Prior to 1993,
following the partial distribution of a Participant's account, any remaining
balance under the Plan (and the balance to the credit of the Participant under
any other profit sharing plan sponsored by the Bank) would not be eligible for
the special averaging rules or for capital gains treatment. For these purposes,
a "partial distribution" is a distribution within one taxable year of the
Participant equal to at least 50% of the balance of a Participant's account
("Partial Distribution").
Pursuant to a change in the law, effective January 1, 1993, virtually all
distributions from the Plan may be rolled over to another qualified Plan or to
an IRA without regard to whether the distribution is a Lump Sum Distribution or
a Partial Distribution. Effective January 1, 1993, Participants have the right
to elect to have the Trustee transfer all or any portion of an "eligible
rollover distribution" directly to another plan qualified under Section 401(a)
of the Code or to an IRA. If the Participant does not elect to have an
"eligible rollover distribution" transferred directly to another qualified plan
or to an IRA, the distribution will be subject to a mandatory federal
withholding tax equal to 20% of the taxable distribution. An "eligible rollover
distribution" means any amount distributed from the Plan except: (1) a
distribution that is (a) one of a series of substantially equal periodic
payments made (not less frequently than annually) over the Participant's life
or the joint life of the Participant and the Participant's designated
beneficiary, or (b) for a specified period of ten years or more; (2) any amount
that is required to be distributed under the minimum distribution rules; and
(3) any other distributions excepted under applicable federal law.
The beneficiary of a Participant who is the Participant's surviving spouse
also may defer federal income taxation of all or any portion of a distribution
from the Plan to the extent that such amount, or a portion thereof, is
contributed within 60 days after the date of its receipt by the surviving
spouse, to an IRA. If all or any portion of the total taxable amount of a Lump
Sum Distribution is contributed by the surviving spouse of a Participant to an
IRA within the applicable 60-day period, any subsequent distribution from the
IRA will not be eligible for the special averaging rules or for capital gains
treatment. Any amount received by the Participant's surviving spouse that is
not contributed to another qualified plan or to an IRA within the applicable
60-day period, and any amount received by a nonspouse beneficiary will be
included in such beneficiary's income for federal tax purposes in the year in
which it is received.
Additional Tax on Early Distributions. A Participant who receives a
distribution from the Plan prior to attaining age 59-1/2 will be subject to an
additional income tax equal to 10% of the taxable amount of the distribution.
The 10% additional income tax will not apply, however, to the extent the
distribution is rolled over into an IRA or another qualified plan or the
distribution is (i) made to a beneficiary (or to the estate or a Participant)
on or after the death of the Participant, (ii) attributable to the
Participant's being disabled within the meaning of Section 72(m)(7) of the
Code, (iii) part of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
Participant or the joint lives (or joint life expectancies) of the Participant
11
<PAGE>
and his beneficiary, (iv) made to the Participant after separation from service
after attainment of age 55, (v) made to pay medical expenses to the extent
deductible for federal income tax purposes, (vi) payments made to an alternate
payee pursuant to a qualified domestic relations order, or (vii) made to effect
the distribution of excess contributions or excess deferrals.
ERISA and Other Qualifications
The foregoing is only a brief summary of certain federal income tax
aspects of the Plan which are of general application under the Code and is not
intended to be a complete or definitive description of the federal income tax
consequences of participating in or receiving distributions from the Plan.
Accordingly, each Participant is urged to consult a tax advisor concerning the
federal, state and local tax consequences of participating in and receiving
distributions from the Plan.
SEC Reporting and Short-Swing Profit Liability
Section 16 of the Exchange Act imposes reporting and liability
requirements on executive officers, directors, and persons beneficially owning
more than 10% of public companies such as Seacoast Financial. Section 16(a) of
the Exchange Act requires the filing of reports of beneficial ownership. Within
10 days of becoming a person subject to the reporting requirements of Section
16(a), a Form 3 reporting initial beneficial ownership must be filed with the
Securities and Exchange Commission ("SEC"). Certain changes in beneficial
ownership, such as purchases, sales and gifts must be reported periodically,
either on a Form 4 within 10 days after the end of the month in which a change
occurs, or annually on a Form 5 within 45 days after the close of the Company's
fiscal year. Certain discretionary transactions in and beneficial ownership of
the Common Stock through the Employer Stock Fund of the Plan by executive
officers, directors and persons beneficially owning more than 10% of the Common
Stock of the Company must be reported to the SEC by such individuals.
In addition to the reporting requirements described above, Section 16(b)
of the Exchange Act provides for the recovery by Seacoast Financial of profits
realized by an executive officer, director or any person beneficially owning
more than 10% of Seacoast Financial's Common Stock ("Section 16(b) Persons")
resulting from non-exempt purchases and sales of Seacoast Financial's Common
Stock within any six-month period.
The SEC has adopted rules that provide exemption from the profit recovery
provisions of Section 16(b) for all transactions in employer securities within
an employee benefit plan, such as the Plan, provided certain requirements are
met. These requirements generally involve restrictions upon the timing of
elections to acquire or dispose of employer securities for the accounts of
Section 16(b) Persons.
Except for distributions of Common Stock due to death, disability,
retirement, termination of employment or under a qualified domestic relations
order, Section 16(b) Persons are required to hold shares of Common Stock
distributed from the Plan for six months following such distribution and are
prohibited from directing additional purchases of units within the Employer
Stock Fund for six months after receiving such a distribution.
Financial Information Regarding Plan Assets
Financial statements for the Plan for the year ended October 31, 1997 are
attached to this Prospectus Supplement.
LEGAL OPINION
The validity of the issuance of the Common Stock will be passed upon by
Foley, Hoag & Eliot LLP, which firm is acting as special counsel to Seacoast
Financial in connection with Seacoast Financial's conversion from a mutual bank
holding company to a stock bank holding company and the Offering.
12
<PAGE>
SAVINGS BANKS EMPLOYEES RETIREMENT ASSOCIATION 401(k) PLAN
AS ADOPTED BY COMPASS BANK FOR SAVINGS
FINANCIAL STATEMENT TO ACCOMPANY THE 1996 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974
FOR THE YEARS ENDED OCTOBER 31, 1997 AND OCTOBER 31, 1996
<PAGE>
SAVINGS BANKS EMPLOYEES RETIREMENT ASSOCIATION 401(k) PLAN
AS ADOPTED BY COMPASS BANK FOR SAVINGS
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
For the Years Ended October 31, 1997 and October 31, 1996
<TABLE>
<CAPTION>
Page(s)
--------
<S> <C>
Independent Auditor's Report .............................................. 1
Statements of Net Assets Available for Pension Benefits ................... 2
Statements of Changes in Net Assets Available for Pension Benefits ........ 3
Notes to Financial Statements ............................................. 4-7
Supplemental Schedules:
Item 27a--Schedule of Assets Held for Investment Purposes ................ 8
Item 27d--Schedule of Reportable Transactions ............................ 8
</TABLE>
<PAGE>
T.C. EDWARDS & CO., P.C.
CERTIFIED PUBLIC ACCOUNTANTS
Since 1902
The Board of Directors
Savings Banks Employees Retirement Association:
We have audited the accompanying Statement of Net Assets Attributable to 401(k)
Plan Participant Balances of the Savings Banks Employees Retirement Association
("SBERA") 401(k) Plan as adopted by Compass Bank For Savings (the "Plan") as of
October 31, 1997 and the related Statement of Changes in Net Assets Attributed
to 401(k) Plan Participant Balances for the year then ended. These financial
statements are the responsibility of the Plan's trustees. Our responsibility is
to express an opinion on these financial statements based on our audit. The
financial statements of the plan as of October 31, 1996 were audited by other
auditors whose report dated May 28, 1997, expressed an unqualified opinion on
those statements.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the Plan's net assets attributable to 401(k) plan
participant balances as of October 31, 1997, and the changes therein for the
year then ended in conformity with generally accepted accounting principles.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
have been subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
Woburn, Massachusetts
May 19, 1998
1
<PAGE>
SBERA 401(k) PLAN
AS ADOPTED BY COMPASS BANK FOR SAVINGS
Statements of Net Assets Attributable to 401(k) Plan Participant Balances
October 31, 1997 and October 31, 1996
<TABLE>
<CAPTION>
October 31, October 31,
1997 1996
------------- ------------
<S> <C> <C>
Loans to participants ................................................ $ 134,230 $ 94,462
Investments, at fair value:
Interest in SBERA common/collective trust ........................... 4,442,911 3,197,626
---------- ----------
Net assets attributable to 401(k) plan participant balances ......... $4,577,141 $3,292,088
========== ==========
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
2
<PAGE>
SBERA 401(k) PLAN
AS ADOPTED BY COMPASS BANK FOR SAVINGS
Statements of Changes in Net Assets Attributable to 401(k) Plan Participant
Balances
For the Years Ended October 31, 1997 and October 31, 1996
<TABLE>
<CAPTION>
October 31, October 31,
1997 1996
------------- --------------
<S> <C> <C>
Contributions:
Employee ................................................. $ 510,747 $ 460,719
Employer ................................................. 216,344 191,713
Employee Rollovers ....................................... 65,241 62,701
Loan Repayments .......................................... 85,354 29,536
---------- ----------
Total Contributions ................................... 877,686 744,669
---------- ----------
Investment Income:
Net investment gain from investment in SBERA common/
collective trust ......................................... 683,488 487,477
---------- ----------
401(k) Disbursements:
Participant balances paid ................................ (276,121) (134,899)
---------- ----------
Net assets attributable to 401(k) plan participant balances
Beginning of period ...................................... 3,292,088 2,194,841
---------- ----------
End of period ............................................ $4,577,141 $3,292,088
========== ==========
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
3
<PAGE>
SBERA 401(k) PLAN
AS ADOPTED BY COMPASS BANK FOR SAVINGS
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF PLAN
The following brief description of the Savings Banks Employees Retirement
Association ("SBERA") 401(k) Plan as adopted by Compass Bank For Savings (the
"Bank") is provided for general information purposes only. Participants should
refer to the Summary Plan Description for more complete information.
General
The Plan is part of the SBERA 401(k) Savings Plan common/collective trust
(the "Trust"). Under the trust agreement, the Plan owns a portion of the net
assets of the Trust. Within the Trust, each plan's assets are jointly invested
and the return on the assets is allocated monthly to each plan based on the
percentage of ownership each plan had in the Trust's net assets at the end of
the prior month. Contributions made to and benefits paid from the Trust for the
Plan result in increases or decreases in the Plan's ownership percentage in the
net assets of the Trust.
The Plan is a defined contribution plan covering substantially all
employees of the Bank. It is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
Participation
To become eligible for participation, an employee must be at least age 21
and must have completed 1 year of service. Upon reaching retirement age, a
participant can direct distribution of balances under several options described
by the 401(k) plan document.
Participants may contribute 1% to 15% of their annual earnings on a pretax
basis, subject to maximum annual limits. Participants may change their
investment options quarterly. The bank may also match a portion of the
employee's contribution as outlined in the Plan's adoption agreement.
Withdrawals
Participants may withdraw contributions only after termination of service
or, subject to the consent of the Plan Administrator, in the case of financial
hardship. Upon termination of employment, retirement or death, all salary
deferrals and the vested portion of employer contributions are payable to the
participant or their beneficiary.
Vesting
Participants are at all times 100% vested in their own contributions to
the Plan. Employer contributions, if any, will be 100% vested or vested
according to a schedule elected by the employer in the Plan's adoption
agreement.
Plan Termination
Although it has not expressed any intent to do so, the Bank has the right
to terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100% vested in their accounts.
Participant Loans
Loans may be made to participants when directed by the Plan Administrator
upon request by the participant. Each loan shall bear interest at the prime
rate as published in the Wall Street Journal on the last day of the previous
month prior to the origination of the loan, plus one percentage point. The rate
is fixed for the duration of the loan. Interest and principal are repaid and
credited to the participant's accounts based on the participant's current
investment choices.
The maximum loan amount is one-half of the participant's vested 401(k)
account balance, not to exceed fifty thousand dollars. The minimum loan amount
is one thousand dollars. Loans are repayable over a period of up to five years.
Benefit Payments
Benefits are recorded when paid.
4
<PAGE>
SBERA 401(k) PLAN
AS ADOPTED BY COMPASS BANK FOR SAVINGS (Continued)
NOTES TO FINANCIAL STATEMENTS--(Continued)
(1) DESCRIPTION OF PLAN (Continued)
Investment Options
Participants may direct the investment of their elective deferrals and any
employer matching contributions to any of eight investment accounts in
accordance with the participant's election. Earnings in these funds and/or
market gains or losses are reflected in their changing unit values or returns.
Money Market Account
A portfolio of U.S. Treasury or agency obligations with maturities of six
months or less.
Equity Account
A diversified portfolio of domestic and international stocks.
Bond Account
A portfolio of U.S. Treasury obligations and other obligations guaranteed
by the U.S. Government or its agencies.
Asset Allocation Account
A portfolio of domestic and international common stocks, bonds and money
market investments.
Index 500 Account
A portfolio of domestic stocks based upon the Standard & Poor's 500
Composite Price Index.
Enhanced Index Account
A portfolio of domestic stocks based upon Standard & Poor's 500 Composite
Price Index invested only in stocks held by Fidelity Investment's mutual funds.
Small Cap Equity Account
A portfolio of common stocks of small to medium sized companies.
International Equity Account
A portfolio of international equity securities.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The financial statements of the Plan have been prepared in conformity with
generally accepted accounting principles.
(b) Valuation of Investments
Investments consist of assets held in the Trust and are valued at their
fair market value as of October 31, 1997 and October 31, 1996. Participant
loans are valued at cost which approximates market value.
The Trust reports bond and other obligations, short-term investments and
equity securities at fair values based on published quotations. Interest earned
is recorded on the accrual basis; dividends are recorded when received.
Purchases and sales of investments are recorded on a trade date basis. Gains or
losses on investments sold are calculated using the average cost identification
method.
(c) Use of Estimates
In addition, the preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
significant estimates and assumptions that affect the reported amounts of
assets at
5
<PAGE>
SBERA 401(k) PLAN
AS ADOPTED BY COMPASS BANK FOR SAVINGS (Continued)
NOTES TO FINANCIAL STATEMENTS--(Continued)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
the date of the financial statements and the reported amounts of changes in net
assets available for Plan benefits during the reporting period. These
significant estimates include the accumulated plan benefits and market values
of investments. Actual results could differ from those estimates.
(3) INVESTMENTS
The plan owned approximately .96% of the fair market value of the Trust
net assets at October 31, 1997. The total net assets of the Trust at October
31, 1997 were:
<TABLE>
<S> <C>
Cash ................................................. $ 20,078,891
------------
Investments:
Bonds and other obligations:
U.S. Government and agency obligations ............. 67,848,952
Other bonds and obligations ........................ 11,376,695
------------
Total bonds and other obligations ................ 79,225,647
Short-term investments ............................. 23,284,001
Equity securities, primarily common stocks ......... 299,228,128
Guaranteed investment contract ..................... 54,200,000
Loans to participants .............................. 1,823,178
------------
Total Investments ................................ 457,760,954
Other assets (liabilities), net ..................... 1,092,881
------------
Total trust net assets ............................... $478,932,726
============
</TABLE>
(4) TRUST INCOME
Trust income for the year ended October 31, 1997 was comprised of:
<TABLE>
<S> <C>
Investment income:
Net realized gains on investments .................. $ 47,883,345
Interest and dividends ............................. 17,968,343
Net unrealized appreciation of investments ......... 9,345,771
------------
Total investment income .......................... 75,197,459
Administrative expenses .............................. (1,015,441)
------------
Total trust income ............................... $ 74,182,018
============
Portion allocated to the Plan ........................ $ 683,488
============
</TABLE>
(5) ADMINISTRATION OF THE PLAN
Investment expenses of the Trust and Plans, such as custodial and advisory
fees, are borne by the Trust. Investment transaction fees are borne by the
Trust and are recorded as part of the cost of investments acquired.
Miscellaneous fees, including audit fees, are allocated to the Plan's sponsor.
6
<PAGE>
SBERA 401(k) PLAN
AS ADOPTED BY COMPASS BANK FOR SAVINGS (Continued)
NOTES TO FINANCIAL STATEMENTS--(Continued)
(6) FEDERAL INCOME TAXES
The SBERA 401(k) Plan is a Volume Submitter Plan which has been approved
by the Internal Revenue Service (IRS). SBERA is presently in the process of
requesting individual determination letters from the IRS for each adopting
employer. The Plan administrator and the Plan's tax counsel believe that the
Plan is designed and is currently being operated in compliance with the
applicable requirements of the Internal Revenue Code.
(7) 401(k) PLAN FUND INFORMATION 1997
<TABLE>
<CAPTION>
Money Asset Index
Market Equity Bond Allocation 500
Account Account Account Account Account
--------- --------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Balance,
October 31, 1996 ......... 575,309 609,016 236,446 232,459 482,234
Contributions ............. 150,003 134,340 45,397 69,079 127,833
Withdrawals ............... -38,254 -9,390 -4,016 -8,061 -11,612
Transfers ................. 111,141 -41,336 -43,256 -6,711 -55,544
Interest Income ........... 37,872 0 0 0 0
Appreciation .............. 0 145,174 19,875 39,344 145,566
Balance,
October 31, 1997 ......... 836,071 837,804 254,446 326,110 688,477
<CAPTION>
Enhanced Small Cap Internat'l Employer
Index Equity Equity Stock Participant
Account Account Account Account Loans TOTAL
---------- ----------- ------------ --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance,
October 31, 1996 ......... 367,182 577,245 117,735 0 94,462 3,292,088
Contributions ............. 100,673 138,823 26,184 0 0 792,332
Withdrawals ............... -7,912 -41,914 -40,461 0 0 -161,620
Transfers ................. -2,487 -26,537 35,584 0 29,146 0
Interest Income ........... 0 0 0 0 10,622 48,494
Appreciation .............. 118,579 111,323 25,986 0 0 605,847
Balance,
October 31, 1997 ......... 576,035 758,940 165,028 0 134,230 4,577,141
</TABLE>
7
<PAGE>
SBERA 401(k) PLAN
AS ADOPTED BY COMPASS BANK FOR SAVINGS
SUPPLEMENTAL SCHEDULES
October 31, 1997 and for the period November 1, 1996 through October 31, 1997
Item 27a--Schedule of Assets Held for Investment Purposes
<TABLE>
<CAPTION>
Issue Description Cost Current Value
- ----------------------- -------------------------- ------------- --------------
<S> <C> <C> <C>
* The Savings Bank Savings Bank Employees $3,683,481 $4,442,911
Employees Retirement Retirement Association
Association Common/Collective Trust
* Participant Loans Interest of prime at $ 134,230 $ 134,230
loan origination plus 1%
</TABLE>
Item 27d--Schedule of Reportable Transactions
Investments that represent 5% or more of total net assets available for
the Plan under the Trust's 401(k) benefits are as follows:
<TABLE>
<CAPTION>
Cost Current Value
-------------- --------------
<S> <C> <C>
Savings Bank Employees
Retirement Association
Common/Collective Trust ......... $ 3,683,481 $ 4,442,911
</TABLE>
- ------------
* Party in interest to the Plan
8
<PAGE>
PROSPECTUS SUPPLEMENT
SEACOAST FINANCIAL SERVICES CORPORATION
COMPASS BANK FOR SAVINGS
EXECUTIVE DEFERRED COMPENSATION PLAN
(Plan Investment in up to 35,000 shares of Common Stock)
This Prospectus Supplement is being provided to participants (the
"Participants") in the Compass Bank for Savings Executive Deferred Compensation
Plan (the "Plan"). Seacoast Financial Services Corporation ("Seacoast
Financial"), the parent company of Compass Bank for Savings (the "Bank"), is
converting from a mutual bank holding company to a stock bank holding company
(the "Conversion"), and is offering for sale shares of common stock of Seacoast
Financial, par value $.01 per share (the "Common Stock"), to certain depositors
and the public (the "Offering"). Participants are being given the opportunity
to request that the trustee of the "Rabbi" Trust that holds the assets of the
Plan (the "Trustee") purchase Common Stock in the Offering with amounts in the
Plan allocated to their accounts. The Plan would invest in Common Stock through
the Seacoast Financial Stock Fund ("Employer Stock Fund").
This Prospectus Supplement relates to Participants' initial election to
direct that all or a portion of their Plan accounts be invested in the Employer
Stock Fund in the stock offering and also to their election to have future
contributions invested in the Employer Stock Fund following the Offering.
The Prospectus of Seacoast Financial dated , 1998 (the
"Prospectus"), which is attached to this Prospectus Supplement, includes
detailed information with respect to the Conversion and Offering and the
financial condition, results of operations and business of Seacoast Financial.
This Prospectus Supplement, which provides information with respect to the
Plan, should be read only in conjunction with the Prospectus. For a discussion
of certain factors that should be considered by each Participant as to an
investment in the Common Stock, see "Risk Factors" beginning on page of the
Prospectus.
THE INTERESTS IN THE PLAN AND THE OFFERING OF THE COMMON STOCK HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, THE
MASSACHUSETTS DIVISION OF BANKS, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
BY ANY OTHER FEDERAL AGENCY, OR BY ANY STATE SECURITIES COMMISSION OR OTHER
STATE AGENCY, NOR HAS SUCH COMMISSION, DIVISION, CORPORATION, OTHER AGENCY OR
ANY STATE SECURITIES COMMISSION OR OTHER STATE AGENCY PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INTERESTS OFFERED HEREBY ARE NOT DEPOSIT ACCOUNTS AND ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND, THE
SAVINGS ASSOCIATION INSURANCE FUND, THE DEPOSITORS INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY, AND ARE NOT GUARANTEED BY SEACOAST FINANCIAL OR THE BANK.
THE SEACOAST FINANCIAL COMMON STOCK IS SUBJECT TO INVESTMENT RISK, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL INVESTED.
The date of this Prospectus Supplement is , 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE OFFERING ....................................................... 3
Securities Offered ................................................ 3
Election to Purchase Common Stock in Offering; Priorities ......... 3
Value of Participation Interests .................................. 3
How to Request Trustee to Invest in Offering ...................... 3
Deadline for Participating in Offering ............................ 3
Irrevocability of Election to Participate in Offering ............. 3
Request to Purchase Common Stock After Offering ................... 4
Purchase Price of Common Stock .................................... 4
Nature of a Participant's Interest in Common Stock ................ 4
Voting Rights of Common Stock ..................................... 4
DESCRIPTION OF THE PLAN ............................................ 5
Introduction ...................................................... 5
Eligibility and Participation ..................................... 5
Deferrals Under Plan .............................................. 5
Investment of Deferred Compensation ............................... 5
Withdrawals and Distributions from the Plan ....................... 7
Administration of Plan ............................................ 7
Reports to Plan Participants ...................................... 7
Amendment and Termination ......................................... 7
Change in Control ................................................. 7
Federal Income Tax Consequences ................................... 7
SEC Reporting and Short-Swing Profit Liability .................... 7
LEGAL OPINION ...................................................... 8
</TABLE>
2
<PAGE>
THE OFFERING
Securities Offered
Up to 35,000 shares (assuming a purchase price of $10.00 per share) of
Common Stock may be acquired by the Plan to be held in the Employer Stock Fund.
Seacoast Financial is the issuer of the Common Stock. Only senior management
employees of the Bank may become Participants in the Plan. The Common Stock to
be acquired by the Plan is conditioned on the consummation of the Conversion. A
Participant's investment in the Employer Stock Fund in the Conversion is
subject to the priority applicable to the Participant, as set forth in the Plan
of Conversion, and as described below. Information with regard to the Plan is
contained in this Prospectus Supplement and information with regard to the
Conversion and the financial condition, results of operation and business of
Seacoast Financial is contained in the attached Prospectus. The address of the
principal executive office of the Bank is 791 Purchase Street, New Bedford,
Massachusetts 02740. The telephone number of the Bank is (508) 984-6000.
Election to Purchase Common Stock in Offering; Priorities
The Trustee will subscribe for Common Stock offered for sale in connection
with the Offering in accordance with each Participant's preferences. In the
event the Offering is oversubscribed and the Trustee is unable to use the full
amount allocated by a Participant to purchase Common Stock in the Offering, the
amount that is not invested in the Employer Stock Fund will be reallocated on a
pro rata basis among the other investment options that the Participant has
selected. If a Participant fails to request the Trustee to invest all or a
portion of his or her account balance in the Employer Stock Fund, the
Participant's account balance will remain in the other investment options of
the Plan previously requested by the Participant.
The shares of Common Stock to be sold in the Offering are being offered in
the following order of priority: (i) holders of deposit accounts at the Bank
with an aggregate balance of $50 or more on December 31, 1996; (ii) holders of
deposit accounts at the Bank with an aggregate balance of $50 or more on June
30, 1997; (iii) the Bank's Employee Stock Ownership Plan; and (iv) employees,
officers, directors and trustees of the Bank and Seacoast Financial (the
"Subscription Offering"). (Subject to the prior rights of holders of
subscription rights, Seacoast Financial may also offer Conversion Shares in a
community offering and/or a syndicated community offering.) To the extent that
Participants fall into one of the Subscription Offering categories, they have
subscription rights to purchase shares of Common Stock in the Subscription
Offering and are being permitted to request the Trustee to use funds in their
Plan account to pay for the Common Stock that they may subscribe for. Common
Stock so purchased will be placed in the Participant's Employer Stock Fund
within his Plan account.
The limitations on the amount of Common Stock that a person may purchase
in the Offering, which are described in the Prospectus, apply to the aggregate
of the amount directly purchased by a person in the Offering and the amount
purchased by the Trustee with funds allocated to a Participant's plan account.
Value of Participation Interests
The assets of the Plan were valued at approximately $345,827 as of June
30, 1998, representing the aggregate market value of all Participants' accounts
and earnings thereon, less previous withdrawals.
How to Request Trustee to Invest in Offering
Each Participant will receive a form which will enable a Participant to
request that all or a portion of his or her account balance be transferred to
the Employer Stock Fund (the "Investment Election Form"). If a Participant
wishes that all or part of his or her account balance be invested in the Common
Stock issued in connection with the Offering, he or she should complete the
Investment Election Form.
Deadline for Participating in Offering
Requests to transfer amounts to the Employer Stock Fund in order to
purchase Common Stock issued in connection with the Offering must be returned
to Linda Perron no later than :00 p.m. on , 1998.
Irrevocability of Election to Participate in Offering
A Participant's direction to transfer amounts credited to his or her
account in the Plan to the Employer Stock Fund in order to purchase shares of
Common Stock in connection with the Offering is irrevocable.
3
<PAGE>
Request to Purchase Common Stock After Offering
After the Offering, a Participant will continue to be able to request the
investment of past balances and current deferrals in the investment options
available under the Plan, including the Employer Stock Fund (the percentage
invested in any option must be a whole percent). The allocation of a
Participant's account balance among the various investment options offered
under the Plan may be changed each month. Special restrictions may apply to
transfers directed to and from the Employer Stock Fund by those Participants
who are executive officers, directors and principal shareholders of Seacoast
Financial who are subject to the provisions of Section 16(b) of the Securities
and Exchange Act of 1934 (the "Exchange Act"), as amended. In addition,
Participants (all of whom are officers of Seacoast Financial or the Bank) will
not be able to request the Trustee to transfer the initial investment of their
account balance out of the Employer Stock Fund for a period of one year
following consummation of the Conversion.
Purchase Price of Common Stock
The funds transferred to the Employer Stock Fund for the purchase of
Common Stock in connection with the Offering will be used by the Trustee to
purchase shares of Common Stock, except in the event of an oversubscription, as
discussed above. The price paid for such shares of Common Stock will be $10.00
per share, the same price as is paid by all other persons who purchase shares
of Common Stock in the Offering. Subsequent to the Offering, Common Stock
purchased by the Trustee will be acquired in open market transactions or from
Seacoast Financial's treasury stock account.
Nature of a Participant's Interest in Common Stock
Participants in the Plan do not have any beneficial interest in or
contractual right to the assets in the Trust, including the Common Stock
purchased by the Trustee in accordance with Participants' preferences. The
assets that the Bank has contributed to the Trust consist of an amount equal to
the compensation that Participants have elected to defer. As beneficiary of the
Trust, the Bank has authorized the Trustee to invest the Bank's contribution to
the Trust in various investment options in accordance with Participants'
preferences, and to establish an account for each Participant. Upon retirement
from the Bank, a Participant has a contractual right to receive from the Bank
an amount equal to the amount of his or her deferred compensation, as adjusted
to reflect the then current market value of the assets in which the Trustee has
invested that Participant's account balance.
The Common Stock will be held in the name of the Trustee. Shares of Common
Stock acquired in accordance with the preferences of a Participant will be
allocated to the Participant's account under the Plan. Therefore, earnings with
respect to a Participant's account should not be affected by the investment
designations (including investments in Common Stock) of other Participants.
Voting Rights of Common Stock
The Trustee generally will exercise voting rights attributable to all
Common Stock held by the Employer Stock Fund. The Trustee will vote such
allocated shares, if any, in his discretion.
4
<PAGE>
DESCRIPTION OF THE PLAN
Introduction
The Bank adopted the Plan effective October 1, 1995. The Board of
Directors of the Bank has voted to include the Employer Stock Fund as an
investment option. The following statements are summaries of certain provisions
of the Plan. They are not complete and are qualified in their entirety by the
full text of the Plan. Words capitalized but not defined in the following
discussion have the same meaning as set forth in the Plan. Copies of the Plan
are available to all participants by filing a request with the Bank, 791
Purchase Street, New Bedford, Massachusetts 02740, Attention: Linda M. Perron.
Each Participant is urged to read carefully the full text of the Plan.
The Plan is intended to qualify as an unfunded plan, maintained by the
Bank primarily for the purpose of providing deferred compensation for a select
group of management or highly-compensated employees. As such, the Plan is
exempt from having to comply with Part 2 (Participation and Vesting), Part 3
(Funding) and Part 4 (Fiduciary Responsibility) of Title I of ERISA, but is
subject to Part 1 (Reporting and Disclosure) and Part 5 (Administration and
Enforcement) of Title I of ERISA.
Eligibility and Participation
The President of the Bank and other senior management employees of the
Bank from time to time designated by the President are eligible to participate
in the Plan. As of June 30, 1998, there were approximately 17 employees
eligible to participate in the Plan, and nine employees participating by making
elective deferral contributions.
Deferrals Under Plan
Each Participant in the Plan is permitted to elect to defer from 1% to 15%,
in whole percentages, of his or her gross salary and from 1% to 100%, in whole
percentages, of his or her annual bonus otherwise payable in cash. Deferral
elections must be made in writing on or before the December 31 preceding the
year during which the compensation is to be earned, except that elections for
the first year of eligibility must be made within 30 days of the date of initial
eligibility.
Investment of Deferred Compensation
All amounts credited to Participants' accounts under the Plan are held in
a "Rabbi" Trust, which is administered by Northeast Retirement Services, Inc.
as Trustee.
Prior to the effective date of the Offering, the Trustee has invested
Participants' accounts in one of the following mutual funds (the "Funds") in
accordance with Participants' preferences:
[bullet] Barron Asset Fund
[bullet] Dodge and Cox Stock Fund
[bullet] T. Rowe Price International Stock Fund
[bullet] T. Rowe Price Mid-Cap Growth Fund
[bullet] Strong Advantage Fund
[bullet] Government Obligations Tax-Managed Fund
The Plan now provides that in addition to the Funds specified above, the
Trustee may invest all or a portion of a Participant's account in the Employer
Stock Fund in accordance with the Participant's preferences.
A Participant may elect to change the investment mix of past deferrals (as
adjusted to reflect then current market value of the Participant's account
balance) by requesting that the Trustee transfer all or a portion of the
Participant's account balance from one investment option to another. A
Participant may also elect to change the investment mix of future deferrals.
Neither election will affect the other.
5
<PAGE>
A. Previous Funds
Prior to the effective date of the Offering, amounts deferred under the
Plan have been invested in the six Funds specified above. The cumulative
returns for each of the Funds (rounded to the nearest whole percent) as of June
30, 1998 are as follows:
<TABLE>
<CAPTION>
Three-Month One Year Three Years Five Years
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Barron Asset Fund ................................ -3% 25% 103% 184%
Dodge and Cox Stock Fund ......................... -1% 18% 91% 150%
T. Rowe Price Int'l Stock Fund ................... 0% 4% 46% 86%
T. Rowe Price Mid Cap Growth Fund ................ 0% 30% 106% 180%
Strong Advantage Fund ............................ 2% 6% 21% 35%
Government Obligations Tax-Managed Fund .......... 1% 5% 17% *
</TABLE>
- ------------
*Fund was established June 1, 1995.
The following is a description of each of the Plan's six investment funds:
Barron Asset Fund. This fund seeks capital appreciation through
investments in companies with market capitalizations between $100 million and
$2 billion that the investment advisor believes have under-valued assets or
favorable growth prospects.
Dodge & Cox Stock Fund. This fund's primary objective is to provide
investors with an opportunity for long-term growth of principal and income,
with a secondary objective of achieving a reasonable current income. The fund
seeks to achieve these objectives by investing primarily in a broadly
diversified and carefully selected portfolio of common stocks.
T. Rowe Price International Stock Fund. This fund seeks to provide
long-term growth of capital by investing primarily in established foreign
companies that have strong performance records as well as attractive long-term
prospects. Due to its international focus, the fund involves specific risks not
found in domestic funds, including political uncertainty, unfavorable currency
exchange rates, and, to a lesser degree, market illiquidity. These factors will
cause the value of this fund to fluctuate more than that of a domestic one.
T. Rowe Price Mid-Cap Growth Fund. This fund seeks long-term capital
appreciation by investing primarily in common stocks of medium-sized companies
with attractive growth prospects. The Fund is subject to the inherent
instability of the stock market and can be expected to be more volatile than a
fund focusing on large, established companies.
The Strong Advantage Fund. This fund seeks to provide current income with
a very low degree of share-price fluctuation. The fund invests primarily in
ultra short-term investment-grade debt obligations. The fund is designed for
investors who seek higher yields than money market funds generally offer and
who are willing to accept some modest principal fluctuation in order to achieve
that objective. The fund's investment advisor is Strong Capital Management,
Inc.
Government Obligations Tax-Managed Fund. This fund invests in short-term
U.S. government securities to provide current income consistent with stability
of principal and liquidity. The Fund's investment strategy is intended to
enable the Fund to provide shareholders with dividends that are exempt from
state and local income taxation to the extent permissible by federal and state
law. The fund's investment advisor is Federated Administrative Services.
B. The Employer Stock Fund
The Employer Stock Fund will consist of investments in Common Stock made
on and after the effective date of the Offering. After the Offering, the
Trustee will, to the extent practicable, use all amounts held by it in the
Employer Stock Fund, including cash dividends paid on Common Stock held in the
Employer Stock Fund, to purchase shares of Common Stock of Seacoast Financial.
It is expected that all purchases will be made at prevailing market prices.
Under certain circumstances, the Trustee may be required to limit the daily
volume of shares purchased. Pending investment in Common Stock, assets held in
the Employer Stock Fund will be placed in money market accounts.
As of the date of this Prospectus Supplement, none of the shares of Common
Stock have been issued or are outstanding and there is no established market
for the Common Stock. Accordingly, there is no record of the historical
performance of the Employer Stock Fund. Performance will be dependent upon a
number of factors,
6
<PAGE>
including the financial condition and profitability of Seacoast Financial and
the Bank and market conditions for the Common Stock generally.
INVESTMENT IN THE EMPLOYER STOCK FUND MAY INVOLVE CERTAIN RISKS IN
INVESTMENT IN COMMON STOCK OF SEACOAST FINANCIAL. FOR A DISCUSSION OF THESE
RISK FACTORS, SEE THE PROSPECTUS.
Withdrawals and Distributions from the Plan
Withdrawals Prior to Termination of Employment. A Participant may make a
withdrawal from his or her account prior to termination of employment only in
the event of financial hardship caused by an unforeseeable emergency. An
unforeseeable emergency is defined in the Plan as an unanticipated emergency
that is caused by an event beyond the control of the Participant or beneficiary
and that would result in severe financial hardship if early withdrawal were not
permitted. The Salary Committee of the Board of Directors of the Bank (the
"Committee") may approve a withdrawal only to the extent needed to meet the
emergency.
Distribution Upon Retirement, Death or Other Termination of
Employment. Distributions shall be made upon the earliest of a Participant's
retirement, death or other termination of employment in accordance with the
form of benefit requested by the Participant in his voluntary salary reduction
deferral election, subject to the discretion of the Committee to use any form
of payment it determines. If no form of distribution is elected, the Committee
may distribute benefits at a time and in a form that most closely approximates
the form and time of distributions to the Participant under the Bank's 401(k)
Plan. A Participant may elect to receive a distribution as a single-sum cash
payment or in annual cash installments for a period not to exceed five years.
Administration of Plan
The Plan is administered by a committee consisting of three members of
management of the Bank. The committee is responsible for interpretation of the
Plan.
Reports to Plan Participants
The Trustee will furnish to each Participant a monthly statement showing
(i) the balance in the Participant's account as of the end of that period, (ii)
the amount of deferrals allocated to such Participant's account for that
period, and (iii) the adjustments to such Participant's account to reflect
earnings or losses (if any).
Amendment and Termination
The Bank may amend the Plan without the consent of any Participant,
beneficiary or other person, provided that no amendment may reduce the amount
then credited to the accounts of any Participant at the time of the amendment.
The Bank may terminate the Plan at any time.
Change in Control
In the event of a change in control, as defined in the Plan, the method of
determining a Participant's earnings with respect to amounts credited to the
Plan for any year up to and including the year of the change in control may not
result in an earnings rate that is less favorable than the rate that would
apply under the method as in effect immediately prior to the change in control.
Federal Income Tax Consequences
Amounts contributed to a Participant's account and the investment earnings
on the account are not includable in a Participant's federal taxable income
until such contributions or earnings are actually distributed or withdrawn from
the Plan.
SEC Reporting and Short-Swing Profit Liability
Section 16 of the Exchange Act imposes reporting and liability
requirements on executive officers, directors, and persons beneficially owning
more than 10% of public companies such as Seacoast Financial. Section 16(a) of
the Exchange Act requires the filing of reports of beneficial ownership. Within
10 days of becoming a person subject to the reporting requirements of Section
16(a), a Form 3 reporting initial beneficial ownership must be filed with the
Securities and Exchange Commission ("SEC"). Certain changes in beneficial
ownership, such as purchases,
7
<PAGE>
sales and gifts must be reported periodically, either on a Form 4 within 10 days
after the end of the month in which a change occurs, or annually on a Form 5
within 45 days after the close of Seacoast Financial's fiscal year. Certain
discretionary transactions in and beneficial ownership of the Common Stock
through the Employer Stock Fund of the Plan by executive officers, directors and
persons beneficially owning more than 10% of the Common Stock of Seacoast
Financial must be reported to the SEC by such individuals.
In addition to the reporting requirements described above, Section 16(b) of
the Exchange Act provides for the recovery by Seacoast Financial of profits
realized by an executive officer, director or any person beneficially owning
more than 10% of Seacoast Financial's Common Stock ("Section 16(b) Persons")
resulting from non-exempt purchases and sales of Seacoast Financial's Common
Stock within any six-month period.
The SEC has adopted rules that provide exemption from the profit recovery
provisions of Section 16(b) for all transactions in employer securities within
an employee benefit plan, such as the Plan, provided certain requirements are
met. These requirements generally involve restrictions upon the timing of
elections to acquire or dispose of employer securities for the accounts of
Section 16(b) Persons.
Except for distributions of Common Stock due to death, disability,
retirement, termination of employment or under a qualified domestic relations
order, Section 16(b) Persons are required to hold shares of Common Stock
distributed from the Plan for six months following such distribution and are
prohibited from requesting additional purchases in the Employer Stock Fund for
six months after receiving such a distribution.
LEGAL OPINION
The validity of the issuance of the Common Stock will be passed upon by
Foley, Hoag & Eliot LLP, which firm is acting as special counsel to Seacoast
Financial in connection with Seacoast Financial's conversion from a mutual bank
holding company to a stock bank holding company and the Offering.
8
<PAGE>
PROSPECTUS
[LOGO] SEACOAST
Financial Services Corporation
(Holding Company for Compass Bank for Savings)
13,600,000 (Anticipated Minimum) Shares of Common Stock
18,400,000 (Anticipated Maximum) Shares of Common Stock
21,160,000 (Anticipated Maximum, as Adjusted) Shares of Common Stock
At $10.00 Per Share
Seacoast Financial Services Corporation ("Seacoast Financial"), a
Massachusetts mutual holding company and the sole stockholder of Compass Bank
for Savings ("Compass"), New Bedford, Massachusetts, is offering up to
18,400,000 shares (the "Conversion Shares") of its common stock, par value $.01
per share ("Seacoast Financial Common Stock"), in connection with its
conversion from a Massachusetts-chartered mutual holding company to a
Massachusetts-chartered business corporation and stock holding company (the
"Conversion"). In certain circumstances described herein, the maximum number of
Conversion Shares sold may be increased to up to 21,160,000 shares without a
resolicitation of subscribers. The Conversion Shares are being offered for a
purchase price of $10.00 per share (the "Purchase Price"). Seacoast Financial
was formerly known as "The 1855 Bancorp," and recently changed its name in
connection with the Conversion.
(Continued on next page)
--------------
For a discussion of certain factors that should be considered by prospective
investors, see "Risk Factors" beginning on page of this Prospectus.
THE CONVERSION IS CONTINGENT UPON THE SALE OF THE MINIMUM NUMBER OF CONVERSION
SHARES OFFERED, UPON RECEIPT OF ALL REGULATORY APPROVALS RELATING TO THE
CONVERSION AND UPON RECEIPT OF ALL REGULATORY AND SANDWICH BANCORP
STOCKHOLDER APPROVALS RELATING TO THE MERGER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE MASSACHUSETTS DIVISION OF BANKS, THE BOARD OF
GOVERNORS OF THE FEDERAL RESERVE SYSTEM, THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR BY ANY OTHER FEDERAL AGENCY, OR BY ANY STATE SECURITIES
COMMISSION OR OTHER STATE AGENCY, NOR HAS SUCH COMMISSION, DIVISION,
CORPORATION, OTHER AGENCY OR ANY STATE SECURITIES COMMISSION OR OTHER
STATE AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF SEACOAST FINANCIAL COMMON STOCK OFFERED HEREBY ARE NOT DEPOSIT
ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
BANK INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND, THE DEPOSITORS
INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY, AND ARE NOT GUARANTEED BY
SEACOAST FINANCIAL OR COMPASS. THE SEACOAST FINANCIAL COMMON STOCK IS SUBJECT
TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL INVESTED.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Estimated Commissions
Subscription and Other Fees Estimated
Price (2) and Expenses (3) Net Proceeds (4)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share(1) ................. $10.00 $0.20 $9.80
- --------------------------------------------------------------------------------------
Minimum Total ................ $136,000,000 $2,956,000 $133,044,000
- --------------------------------------------------------------------------------------
Midpoint Total ............... 160,000,000 3,178,000 156,822,000
- --------------------------------------------------------------------------------------
Maximum Total ................ 184,000,000 3,398,000 180,602,000
- --------------------------------------------------------------------------------------
Adjusted Maximum Total (5) ... 211,600,000 3,652,000 207,948,000
- --------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Estimated fees and expenses per share and estimated net conversion proceeds
per share are based on the midpoint of the Estimated Valuation Range.
(2) Determined in accordance with the Independent Valuation, prepared by RP
Financial and dated as of September 4, 1998, which states that the
Estimated Valuation Range is from $136.0 million to $184.0 million with a
midpoint of $160.0 million. The Independent Valuation is based upon
estimates and projections that are subject to change, and the valuation
must not be construed as a recommendation as to the advisability of
purchasing the Conversion Shares nor an assurance that a purchaser of
Conversion Shares will thereafter be able to sell such shares at prices
within the Estimated Valuation Range. See "The Conversion and the
Merger--Description of the Conversion--Stock Pricing and Number of
Conversion Shares to be Issued."
(3) Consists of the estimated costs to Compass and Seacoast Financial arising
from the Conversion, including estimated fixed expenses of approximately
$1.8 million and marketing fees to be paid to Ryan Beck and McConnell Budd
in connection with the Subscription and Community Offerings, which fees
are estimated to be $1,188,000 and $1,630,000 at the minimum and maximum
of the Estimated Valuation Range, respectively. See "The Offerings--Plan
of Distribution and Selling Commissions." The actual fees and expenses may
vary from the estimates. See "Pro Forma Data" for the assumptions used to
arrive at these estimates.
(4) Actual net proceeds may vary substantially from estimated amounts depending
upon the number of shares sold and other factors. The figures in this
column include proceeds from the purchase of Conversion Shares by the ESOP
which is intended to be funded by a loan to the ESOP from Seacoast
Financial, which will be deducted from Seacoast Financial's stockholders'
equity. See "Capitalization," "Use of Proceeds of Conversion" and "Pro
Forma Data--Pro Forma Conversion Data."
(5) As adjusted to reflect the sale of additional Conversion Shares due to a
possible increase of up to 15% in the Estimated Valuation Range, without
resolicitation of subscribers or any right of cancellation, due to
regulatory considerations or changes in market and financial conditions,
as supported by the Independent Valuation. See "Pro Forma Data" and "The
Conversion and the Merger--Description of the Conversion--Stock Pricing
and Number of Conversion Shares to be Issued." For a discussion of the
distribution and allocation of the additional shares, if any, see "The
Offerings--Subscription Offering," "--Community Offering" and "--Limitations
upon Purchases of Conversion Shares."
Ryan, Beck & Co. [MCCONNELL BUDD LOGO]
The Date of this Prospectus is , 1998.
<PAGE>
The Offering
The Conversion Shares are being offered under the terms of a Plan of
Conversion (the "Conversion Plan") in a subscription offering, in order of
priority, (i) to eligible depositors of Compass at December 31, 1996, (ii) to
supplemental eligible depositors of Compass at June 30, 1997, (iii) to an
employee stock ownership plan of Compass (the "ESOP") and (iv) to employees,
officers, trustees and directors of Seacoast Financial and Compass (together,
the "Subscription Offering"). Concurrently with or at any time during or after
the Subscription Offering, Seacoast Financial may offer Conversion Shares not
subscribed for in the Subscription Offering for sale to certain members of the
general public (the "Community Offering"). Conversion Shares not subscribed for
in the Subscription or Community Offerings may be offered for sale to certain
members of the general public in a Syndicated Community Offering (the
"Syndicated Community Offering"), which would be conducted as soon as
practicable after the expiration of the Community Offering (the Subscription,
Community and Syndicated Community Offerings are referred to herein
collectively as the "Offering" or "Offerings"). Subscription rights of
depositors to purchase Conversion Shares in the Subscription Offering are
non-transferable. There is no obligation to subscribe for Conversion Shares.
Seacoast Financial reserves the absolute right to reject, in whole or in part,
in its sole discretion, any order received in the Community and Syndicated
Community Offerings. Except for the ESOP, generally no person may purchase more
than $750,000 of Conversion Shares in the Offering, and no person together with
his or her associates and groups acting in concert may purchase in the
aggregate more than $1.5 million of Conversion Shares in the Offering. See "The
Offerings--Limitations upon Purchases of Conversion Shares." The minimum
purchase is 25 shares of Seacoast Financial Common Stock.
The Conversion Shares will be issued at an aggregate Purchase Price equal
to the estimated pro forma market value of such shares based on an independent
appraisal of the Conversion Shares (the "Independent Valuation") prepared by RP
Financial, LC., an independent appraisal firm ("RP Financial"). RP Financial
has estimated that the pro forma market value of the Conversion Shares is
between $136.0 million and $184.0 million (the "Estimated Valuation Range"),
giving effect to a merger with Sandwich Bancorp, Inc. ("Sandwich Bancorp"),
which merger is described below. Based on this estimate, Seacoast Financial
will issue a total of between 13,600,000 and 18,400,000 Conversion Shares at
the $10.00 Purchase Price per share. RP Financial will update its appraisal
immediately prior to consummation of the sale of the Conversion Shares. As long
as the estimated pro forma market value is not increased by more than 15% above
the maximum, or decreased below the minimum, of the Estimated Valuation Range,
no resolicitation of subscribers will be made and subscribers will not be
permitted to modify or cancel their subscriptions. See "The Offerings." The
actual number of Conversion Shares issued will have a corresponding effect on
the estimated net proceeds of the Conversion and the pro forma capitalization
and per share data of Seacoast Financial. See "Use of Proceeds of Conversion,"
"Capitalization" and "Pro Forma Data."
The Subscription Offering will expire at 10:00 a.m., Boston time on
, 1998, unless extended by Seacoast Financial, with regulatory
approval, if necessary. The Community Offering, if held, may commence during or
promptly after the Subscription Offering. The Community and Syndicated
Community Offerings must be completed by , 1998, unless extended, with
regulatory approval if necessary. If the Offerings are not completed by that
date and are not so extended, subscribers will have their funds refunded
promptly, with interest. Stock orders submitted are irrevocable until
consummation or termination of the Conversion. However, if the Offering is not
consummated by 1998, the Offering will be terminated and
subscribers will receive refunds, with interest.
Seacoast Financial has engaged Ryan, Beck & Co., Inc. ("Ryan Beck") and
McConnell, Budd & Downes ("McConnell Budd"), registered broker-dealers, to
consult with and advise Seacoast Financial in connection with the sale of the
Conversion Shares in the Conversion. Ryan Beck and McConnell Budd have agreed
to use their best efforts to assist Seacoast Financial and Compass in the
solicitation of subscriptions for the Conversion Shares. Neither Ryan Beck nor
McConnell Budd is obligated to take or purchase any Conversion Shares offered
in the Conversion. See "The Offerings--Plan of Distribution and Selling
Commissions."
Seacoast Financial has received conditional approval to have the Seacoast
Financial Common Stock listed on the Nasdaq National Market System under the
symbol "SCFS," subject to the completion of the Conversion and compliance with
certain initial listing conditions. Seacoast Financial has never issued stock
to the public or to any person and there can be no assurance that an active and
liquid trading market for the Seacoast Financial Common Stock will develop or
that purchasers of Conversion Shares in connection with the Conversion will be
able to sell their shares at or above the Purchase Price. Ryan Beck and
McConnell Budd have advised Seacoast Financial that
2
<PAGE>
they intend to act as market makers for the Seacoast Financial Common Stock
following consummation of the Conversion. See "Market for Seacoast Financial
Common Stock" beginning on Page 47 of this Prospectus.
The Merger
The primary reason that Seacoast Financial's Board of Trustees determined
to undertake the Conversion at this time is to facilitate the consummation of
Seacoast Financial's proposed acquisition of Sandwich Bancorp in a
stock-for-stock exchange. As a mutual holding company, Seacoast Financial would
not have shares to issue in such exchange without first undertaking the
Conversion. On March 23, 1998, Seacoast Financial and Compass entered into an
Amended and Restated Affiliation and Merger Agreement (the "Merger Agreement")
with Sandwich Bancorp and its wholly-owned subsidiary, Sandwich Co-operative
Bank ("Sandwich Bank"), pursuant to which Sandwich Bancorp will merge with a
corporate subsidiary of Seacoast Financial (the "Merger"). Pursuant to the
terms of the Merger Agreement, upon consummation of the Merger, each share of
common stock, par value $1.00 per share, of Sandwich Bancorp ("Sandwich Bancorp
Common Stock") and each outstanding option to purchase Sandwich Bancorp Common
Stock will automatically convert into and become exchangeable for a number of
shares of Seacoast Financial Common Stock (the "Exchange Shares") determined by
application of an exchange ratio (the "Exchange Ratio"). The Exchange Ratio
will be determined based upon the trading price of Seacoast Financial Common
Stock for a number of days immediately following the consummation of the
Conversion. See "The Conversion and the Merger--Description of the Merger and
the Exchange Ratio." The Exchange Shares to be issued to the Sandwich Bancorp
stockholders will be in addition to the Conversion Shares to be issued in the
Offering. The Merger is expected to close on the tenth trading day after
consummation of the Conversion. Although the Conversion and the Merger will not
close simultaneously, they are interdependent transactions, and the Conversion
will not be consummated unless or until all conditions to the consummation of
both the Conversion and the Merger (other than the delivery of the Exchange
Shares to the Sandwich Bancorp stockholders and optionholders) have been
satisfied or waived. Unless otherwise indicated, all pro forma data presented
herein which reflect consummation of the Conversion also reflect consummation
of the Merger. See "The Conversion and the Merger" and "Pro Forma Data."
3
<PAGE>
SEACOAST FINANCIAL
SERVICES CORPORATION
[Map of Bank Locations]
[star] Headquarters of
Compass Bank for Savings
and Seacoast Financial Services Corporation
791 Purchase Street
New Bedford, Massachusetts
[bullet] Compass Bank for Savings Branches
[triangle] Sandwich Co-Operative Bank Branches
4
<PAGE>
SUMMARY OF PROSPECTUS
Generally, this summary highlights selected information from this document
and does not contain all the information that an investor needs to know before
making an informed investment decision. To understand the Conversion and the
Merger fully, persons considering the purchase of Conversion Shares should
carefully read this entire Prospectus, including the consolidated financial
statements and the notes to the consolidated financial statements of Seacoast
Financial and Sandwich Bancorp included herein. References in this document to
"Compass" refer to Compass Bank for Savings. References in this document to the
"Company" or "Seacoast Financial" refer to Seacoast Financial Services
Corporation. References to "Sandwich Bancorp" refer to Sandwich Bancorp, Inc.
and references to "Sandwich Bank" refer to The Sandwich Co-operative Bank.
Seacoast Financial Services Corporation
Seacoast Financial is a mutual holding company that was organized in 1994
under the name "The 1855 Bancorp" in connection with Compass's reorganization
from a mutual savings bank to the mutual holding company form of organization.
Seacoast Financial's operations have been limited to the ownership of Compass.
Seacoast Financial has never issued, or been authorized to issue, any capital
stock. It is now undertaking a mutual to stock conversion into a stock holding
company (the "Conversion") and issuing shares (the "Conversion Shares") of its
common stock, par value $.01 per share ("Seacoast Financial Common Stock"), in
connection with such conversion. Seacoast Financial is registered with the
Board of Governors of the Federal Reserve System (the "FRB") as a bank holding
company under the Bank Holding Company Act of 1956, as amended (the "BHCA").
Since its formation, Seacoast Financial has owned 100% of Compass's outstanding
capital stock, and will continue to do so after consummation of the Conversion.
Upon completion of the Conversion, Seacoast Financial will have no significant
liabilities and no assets other than 100% of the shares of Compass's
outstanding common stock, the ESOP loan, a portfolio of investment securities
(Seacoast Financial held $5.3 million of such securities as of May 31, 1998)
and any net proceeds of the Conversion not contributed by Seacoast Financial to
Compass. Following the Conversion, Seacoast Financial will not initially engage
in any significant business activity other than to conduct the Merger, hold the
outstanding common stock of Compass, hold the loan to the ESOP and invest any
funds it holds. See "Business of Seacoast Financial" and "Use of Proceeds of
Conversion." At the present time, Seacoast Financial does not employ any
persons other than certain officers who are also officers of Compass, but uses
the support staff of Compass from time to time.
At May 31, 1998, Seacoast Financial, on a consolidated basis, had total
assets of $1,176.6 million, total loans (net) of $873.9 million, total deposits
of $982.4 million and total surplus of $106.5 million. Seacoast Financial also
had, as of the same date, a Tier 1 leverage capital ratio of 8.89% and a Tier 1
risk-based capital ratio of 12.44%.
Compass Bank for Savings
Compass was organized in 1855 as a Massachusetts-chartered mutual savings
bank, and reorganized into mutual holding company form (without a minority
stock issuance) in 1994. Compass's principal business has been, and continues
to be, gathering deposits from customers within its market area and investing
those funds in residential and commercial real estate loans, indirect
automobile loans, commercial loans, construction loans, home equity loans and
other consumer loans. Compass conducts business from its corporate headquarters
and 23 full-service banking offices, six of which are located in New Bedford,
Massachusetts and the remaining 17 of which are located in the Massachusetts
communities of Fall River (two offices), Plymouth (three offices), Fairhaven,
North Dartmouth, Somerset, Swansea, Westport, Assonet and Carver and the island
of Martha's Vineyard (five offices). Compass also has two limited service high
school branches and four remote service ATMs. In addition, Compass's indirect
auto lending business extends into the State of Rhode Island through its
subsidiary, Compass Credit Corporation.
Compass's deposits are insured by the Bank Insurance Fund (the "BIF"), as
administered by the Federal Deposit Insurance Corporation (the "FDIC"), up to
the maximum amount permitted by law, except that certain deposits that Compass
acquired from a savings association are insured by the Savings Association
Insurance Fund (the "SAIF"), also administered by the FDIC. Deposit amounts in
excess of FDIC insurance limits are insured by the Depositors Insurance Fund
(the "DIF"), a deposit insuring entity for Massachusetts savings banks. Compass
is subject to comprehensive regulation and examination by the Massachusetts
Commissioner of Banks (the "Commissioner") and the FDIC.
5
<PAGE>
Compass's business strategy includes (i) taking advantage of its position
as a locally based bank to foster a community orientation, (ii) developing a
niche through its expertise in indirect automobile lending, (iii) diversifying
its loan portfolio composition in an effort to broaden its business
opportunities and help manage credit and interest rate risk, (iv) emphasizing
transaction accounts in order to build customer relationships, achieve a low
cost of funds and generate service fee income and (v) expanding its products
and market area, with the goals of achieving a higher profile and increased
opportunities for growth. Compass seeks to pursue its business strategy in a
manner that allows it to maintain asset quality and control operating expenses.
Compass's business strategy has produced the following results:
o Community Orientation. As a result of mergers over the last several
years, Compass is one of the few remaining savings banks (and the largest
financial institution) headquartered in New Bedford. Throughout its market
area, Compass seeks to provide a high level of personalized service to
individuals and small businesses. Examples of such service include
experienced branch personnel (due to low turnover), prompt local
decisionmaking and a "call center" to address customer questions. After
the Merger with Sandwich Bancorp (as defined in the next section), Compass
will seek to increase its reputation as a small business lender by
promoting commercial loans to the many retail and tourism-related
businesses on Cape Cod.
o Loan Portfolio Diversity. Compass differs from a typical savings bank.
The latter normally concentrates primarily on residential lending while
Compass has historically diversified its lending focus. As a result, at
May 31, 1998, one-to four-family residential loans represented 41.6% of
Compass's loan portfolio, indirect auto loans (net of unearned discount)
represented 28.0% of the portfolio and commercial real estate loans
represented 14.1% of the loan portfolio. The remainder of the portfolio
consists of commercial loans, construction loans and other consumer loans.
For a discussion of the added risks of Compass's diversification strategy,
see "Risk Factors--Construction, Commercial Real Estate, Commercial and
Indirect Auto Lending Risks." The addition of Sandwich Bank's loan
portfolio following the Merger will increase the relative percentage of
real estate loans in Compass's portfolio, particularly of those real
estate loans secured by one-to four-family owner-occupied residences.
After the Merger with Sandwich Bancorp, Compass intends to maintain its
presence as a residential mortgage lender, while emphasizing its indirect
auto lending and commercial lending in the new market provided by Sandwich
Bank.
o Geographic and Product Expansion. Beginning in 1994, Compass has pursued
geographic expansion of its branch network, on a selected basis, through
building and acquiring new branches and acquiring small financial
institutions. The expanded branch network has allowed Compass to move
beyond its Greater New Bedford/Fall River market areas, so that its
primary market area now also includes the island of Martha's Vineyard and
the Greater Plymouth area (geographically, Plymouth is the largest town in
Massachusetts). Compass's business activities on Cape Cod are currently
limited. The addition of Sandwich Bank's nine Cape Cod branches will
provide Compass an immediate presence in a contiguous market. Compass
intends to continue its growth strategy on a basis that management
considers prudent, targeting promising market areas and, in the case of
acquisitions, identifying favorable opportunities. Concurrent with
geographic expansion, Compass has in recent years initiated customer
convenience products, such as a debit card and a "sweep" account for
commercial customers. Compass has installed a telephone voice response
system and a telephone "call center," with extended hours, manned with
Compass staff. These services accommodate customers who have account
inquiries, want information about loan programs or want to conduct banking
business by telephone. Later in 1998, Compass expects to expand its
telephone voice response system to include bill payment services, and to
offer customers the ability to conduct certain banking business, also
including bill payment services, over the Internet.
o Emphasizing Core Deposits. Compass attracts a substantial amount of money
market, NOW (checking), passbook and savings accounts, and
non-interest-bearing demand checking accounts. These accounts, which carry
a lower cost and generally represent a more stable source of funds than
certificate of deposit accounts, represented 48.4% of Compass's deposits
at May 31, 1998. Additionally, unlike certificate accounts, they provide
service fee income. Sandwich Bank's transaction accounts at June 30, 1998
represented 52.0% of Sandwich Bank's total deposits. Through its own and
Sandwich Bank's branch network, Compass will continue to emphasize
transaction accounts after the Merger. The weighted average
6
<PAGE>
rate paid on Compass's deposits was 4.02% for the seven months ended May
31, 1998. For Sandwich Bank, this rate was 3.78% for the six months ended
June 30, 1998.
o Managing Overhead Expense. One of management's goals is to maintain a
reasonable efficiency ratio, which is the ratio of its non-interest
expense to the sum of net interest income and non-interest income. The
efficiency ratio has consistently improved since 1995, when it was 67.95%,
compared with 54.21% for the seven months ended May 31, 1998. Sandwich
Bancorp's efficiency ratio was 60.13% for the six months ended June 30,
1998.
o Maintenance of Asset Quality. Compass maintains a loan portfolio that is
diversified between residential mortgage, commercial, commercial real
estate and indirect auto loans and other consumer loans. Residential
mortgage loans historically pose less credit risk than the other loan
types but the latter offer the advantages of relatively short terms and
generally higher interest rates. For a discussion of the added risks
involved with non-residential lending, see "Risk Factors--Construction,
Commercial Real Estate, Commercial and Indirect Auto Lending Risks."
Compass pursues a diversified portfolio, while seeking to maintain asset
quality and moderate credit risk. At May 31, 1998, its ratio of
non-performing assets to total assets was 0.93%. The comparable ratio for
Sandwich Bank at June 30, 1998 was 0.56%.
The executive offices of Compass and Seacoast Financial are located at 791
Purchase Street, New Bedford, Massachusetts 02740. Their telephone number is
(508) 984-6000.
The Merger with Sandwich Bancorp
The Merger. Seacoast Financial determined to undertake the Conversion in
connection with its decision to enter into an Amended and Restated Affiliation
and Merger Agreement (the "Merger Agreement") with Sandwich Bancorp and its
subsidiary, Sandwich Bank. The Merger will enable Compass to expand its branch
network geographically into the Cape Cod market, which is contiguous to
Compass's existing market areas. Compass currently operates primarily in the
southeastern Massachusetts region (the "South Coast") just west of Cape Cod,
including the New Bedford, Fall River and Plymouth markets, and also operates
on the island of Martha's Vineyard, off the coast of Cape Cod. Sandwich Bancorp
operates primarily on Cape Cod itself. As a result of the Conversion and the
Merger, Compass will operate 34 full-service banking offices, and, based on pro
forma total assets at May 31, 1998, would be the third largest savings bank in
Massachusetts and the largest financial institution headquartered in
southeastern Massachusetts. For further information about Seacoast Financial's
reasons for undertaking the Merger, see "Certain Effects of the Merger on
Seacoast Financial," and "The Conversion and the Merger--Seacoast Financial's
Background and Reasons for the Conversion and the Merger."
The Merger Agreement provides for a stock-for-stock exchange. Seacoast
Financial would not have shares to issue in such exchange without first
undertaking the Conversion. Pursuant to the Merger Agreement, Sandwich Bancorp
will merge with a corporate subsidiary of Seacoast Financial (the "Merger") on
the tenth trading day following consummation of the Conversion, and it is
expected that thereafter Sandwich Bank will merge with Compass. Upon completion
of the Merger, each outstanding share of common stock, par value $1.00 per
share, of Sandwich Bancorp ("Sandwich Bancorp Common Stock") (other than shares
held by stockholders exercising dissenters rights or by Seacoast Financial or
Compass) and each outstanding option to purchase Sandwich Bancorp Common Stock
(each such option, a "Sandwich Option" and, the options collectively, the
"Sandwich Options") will automatically convert into and become exchangeable for
shares of Seacoast Financial Common Stock (the "Exchange Shares") and cash in
lieu of any fractional share of Seacoast Financial Common Stock which Sandwich
Bancorp's stockholders and optionholders otherwise would be entitled to
receive. Seacoast Financial will issue in the Merger up to a maximum of
12,686,225 Exchange Shares, assuming that 1,953,475 shares of Sandwich Bancorp
Common Stock (representing the aggregate number of such shares outstanding at
June 30, 1998 less the 90,000 shares owned by Seacoast Financial and Compass)
and 45,203 Sandwich Bancorp Options (representing the number of such options
outstanding at June 30, 1998) are outstanding as of consummation of the Merger.
In addition, Seacoast Financial will issue in the Conversion up to 18,400,000
Conversion Shares (which may be increased to up to 21,160,000 under certain
circumstances described herein). In the event all Sandwich Bancorp Options were
exercised for cash prior to the consummation of the Merger, the maximum number
of Exchange Shares that could be issued would increase by 105,314. See "Pro
Forma Data--Pro Forma Outstanding Seacoast Financial Common
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<PAGE>
Stock." The Merger is expected to be accounted for under the
pooling-of-interests method of accounting. See "The Conversion and the
Merger--Accounting Treatment of the Conversion and the Merger."
The number of Exchange Shares issuable in exchange for each outstanding
share of Sandwich Bancorp Common Stock will be determined by application of an
exchange ratio (the "Exchange Ratio"). The Exchange Ratio will be based upon
the average trading price of Seacoast Financial Common Stock during a period
between the consummation of the Conversion and consummation of the Merger. This
average trading price (the "Seacoast Financial Trading Price") will be
determined by averaging the closing bid and asked prices of Seacoast Financial
Common Stock for each of the second through the ninth trading days, inclusive,
following consummation of the Conversion (the average of the closing bid and
asked price for each such day is referred to as the "Daily Closing Price"),
discarding the two highest and two lowest Daily Closing Prices and averaging
the remaining Daily Closing Prices. The closing bid and asked prices will be as
quoted at the close of business on the Nasdaq National Market System (the
"Nasdaq National Market"). If the Seacoast Financial Trading Price is between
$10.01 and $13.50, the Exchange Ratio will be between 6.3936 and 4.7407
(determined by dividing $64.00 by the Seacoast Financial Trading Price). If the
Seacoast Financial Trading Price is between $13.51 and $15.00, the Exchange
Ratio will be fixed at 4.7407. If the Seacoast Financial Trading Price exceeds
$15.00, the Exchange Ratio will be less than 4.7407 (determined by dividing
$71.11 by the Seacoast Financial Trading Price). If the Seacoast Financial
Trading Price is equal to or less than $10.00 per share, the Exchange Ratio
will be 6.4000. For a depiction of the calculation of the Exchange Ratio
calculation in tabular form, see "The Conversion and the Merger--Description of
the Merger and the Exchange Ratio."
The number of Exchange Shares issuable in exchange for each outstanding
Sandwich Option will be determined by subtracting the per share exercise price
of an option from the product of the Seacoast Financial Trading Price and the
Exchange Ratio and dividing the result by the Seacoast Financial Trading Price.
The reason for the delay between the dates of consummation of the
Conversion and consummation of the Merger is that the calculation of the
Exchange Ratio is based upon the Seacoast Financial Trading Price during a
period following the consummation of the Conversion. Notwithstanding this
delay, the Conversion and the Merger are interdependent transactions, and
neither one will occur unless both of them do. Any person who subscribes for
Conversion Shares will be deemed to have consented to the consummation of the
Merger. Although the Conversion and the Merger will not close simultaneously,
it is a condition to consummation of the Conversion that all conditions to
consummation of the Merger (other than the delivery of the Exchange Shares to
Sandwich Bancorp stockholders and optionholders) shall have been satisfied or
waived as of the date of consummation of the Conversion. Similarly, it is a
condition to consummation of the Merger that the Conversion shall have been
consummated. Completion of the Conversion and the Merger are subject to a
number of conditions, including the final regulatory approval of the
Commissioner, the Massachusetts Board of Bank Incorporation ("BBI"), the FDIC
and the FRB and the approval of the Sandwich Bancorp stockholders. For more
information about the Merger and the terms of the Merger Agreement, see "The
Conversion and the Merger--Description of the Merger and the Exchange Ratio"
and "--Description of the Merger Agreement."
Sandwich Bancorp and Sandwich Bank. Sandwich Bancorp is a stock bank
holding company registered with the FRB and was organized in 1997 for the
purpose of serving as the holding company of Sandwich Bank. Sandwich Bancorp's
business consists primarily of the business of Sandwich Bank, and Sandwich
Bancorp has no significant assets other than the issued and outstanding capital
stock of Sandwich Bank. At June 30, 1998, Sandwich Bancorp, on a consolidated
basis, had total assets of $531.0 million, total deposits of $444.8 million and
stockholders' equity of $44.6 million. At that date, Sandwich Bancorp and
Sandwich Bank employed approximately 128 full-time and 31 part-time employees.
Sandwich Bank was organized as a Massachusetts-chartered co-operative bank
in 1885 and merged with Wareham Co-operative Bank in May 1982. In July 1986,
Sandwich Bank converted from mutual to stock form. The business of Sandwich
Bank consists primarily of attracting deposits from the general public and
originating construction and residential mortgage loans secured by one-to
four-family homes, consumer loans, home equity loans and commercial and
commercial real estate loans. Sandwich Bank's deposit and lending operations
are conducted through eleven full-service office facilities located in the Cape
Cod communities of Sandwich, South Sandwich, Buzzards Bay, Pocasset, Falmouth,
Hyannis, Chatham, Orleans and South Yarmouth and in the
8
<PAGE>
southeastern Massachusetts communities of Wareham and Cedarville. In addition,
Sandwich Bank maintains a loan production office in Plymouth, Massachusetts.
Sandwich Bank's business also includes investing in money market instruments,
federal government and agency obligations and various types of corporate
securities and other authorized investments, such as collateralized mortgage
obligations and mortgage-backed securities.
For further information about Sandwich Bancorp and Sandwich Bank, see
"Excerpts from Annual Report on Form 10-K for the Year Ended December 31, 1997"
and "Excerpts from Sandwich Bancorp's Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 1998," attached to this Prospectus.
The Plan of Conversion
The Plan of Conversion, which Seacoast Financial's Board of Trustees
adopted on April 23, 1998 and its Board of Corporators approved on August 24,
1998 (the "Conversion Plan"), provides for the amendment of Seacoast
Financial's charter to authorize the issuance of capital stock (among other
amendments) so that Seacoast Financial will become a stock holding company
rather than a mutual holding company. The Conversion Plan further provides that
Seacoast Financial will offer the Conversion Shares for sale in a subscription
offering (the "Subscription Offering") to Compass's depositors, the ESOP and
directors, trustees, officers and employees of Seacoast Financial and Compass
and may offer Conversion Shares in a community offering (the "Community
Offering") and in a syndicated community offering (the "Syndicated Community
Offering;" the Subscription, Community and Syndicated Community Offerings are
referred to collectively as the "Offering" or "Offerings.") Seacoast Financial
expects to contribute at least 50% of the proceeds of the Offering to Compass.
See "The Conversion and the Merger--Overview," "The Offerings" and "Use of
Proceeds of Conversion."
The Offerings
Seacoast Financial is offering the Conversion Shares for sale in the
Subscription Offering pursuant to subscription rights in the following order of
priority to: (i) holders of deposit accounts in Compass with an aggregate
balance of $50 or more on December 31, 1996 ("Eligible Account Holders" and the
"Eligibility Record Date"); (ii) holders of aggregate deposit accounts in
Compass with a balance of $50 or more on June 30, 1997 ("Supplemental Eligible
Account Holders" and the "Supplemental Eligibility Record Date"); (iii) the
ESOP; and (iv) employees, officers, trustees and directors of Seacoast
Financial and Compass. Subject to the prior rights of holders of subscription
rights, Seacoast Financial may offer Conversion Shares in the Community
Offering to certain members of the general public with a preference given to
residents of Compass's community (as such community is defined in "The
Offerings--Community Offering"). The Community Offering, if any, will commence
concurrently with, during or promptly after the Subscription Offering. Shares
not purchased in the Subscription and Community Offerings, if any, may be
offered for sale to the general public in the Syndicated Community Offering
through a syndicate of registered broker-dealers (which may include Ryan, Beck
& Co., Inc. ("Ryan Beck") and McConnell, Budd & Downes ("McConnell Budd"),
registered broker dealers), to be formed and managed by Ryan Beck and McConnell
Budd acting as agents of Seacoast Financial to assist Seacoast Financial in the
sale of the Conversion Shares. The Syndicated Community Offering, if any, would
occur as soon as practicable following the close of the Community Offering.
Seacoast Financial reserves the absolute right to reject, in whole or part and
in its sole discretion, any order received in the Community and Syndicated
Community Offerings. See "The Offerings--Subscription Offering" and
"--Community Offering."
Offering Expiration Date
The Subscription Offering will terminate at 10:00 a.m., Boston Time, on
, 1998 (the "Expiration Date"), unless extended by Seacoast
Financial with the approval of the Commissioner and the FRB, if necessary. The
Community and Syndicated Community Offerings must be completed by , 1998,
unless extended, with regulatory approval if necessary. If the Offerings are
not completed by that date and are not so extended, subscribers will have their
funds refunded, with interest. Orders submitted are irrevocable until
completion of the Offering. However, if the Offering is not consummated by
1999, (or by the date the Merger Agreement expires or is
terminated, if earlier) the Offering will be terminated and subscribers will
receive refunds, with interest. See "The Offerings--Procedure for Purchasing
Shares."
9
<PAGE>
Purchase Price and Independent Valuation
Seacoast Financial has established a fixed price of $10.00 per share for
each Conversion Share sold in the Offering (the "Purchase Price"). Federal and
state regulations require that the aggregate Purchase Price of the Conversion
Shares offered in the Offering be based on the appraised pro forma market value
of the Conversion Shares (the "Independent Valuation"), as determined by an
independent appraiser. Seacoast Financial has engaged RP Financial, LC., an
independent appraisal firm ("RP Financial"), to conduct such valuation. The
Independent Valuation is not a recommendation for the purchase of Conversion
Shares. RP Financial has estimated that the pro forma market value of the
Conversion Shares is between $136.0 million and $184.0 million (the "Estimated
Valuation Range"). Based on this estimate, Seacoast Financial will issue a
total of between 13,600,000 and 18,400,000 Conversion Shares at the Purchase
Price. RP Financial will update its appraisal immediately prior to completion
of the sale of the Conversion Shares. As long as the estimated pro forma market
value is not increased by more than 15% above the maximum, or decreased below
the minimum, of the Estimated Valuation Range, no resolicitation of subscribers
will be made and subscribers will not be permitted to modify or cancel their
subscriptions. See "The Conversion and the Merger--Description of the
Conversion--Stock Pricing and Number of Conversion Shares to be Issued." The
actual number of Conversion Shares issued will have a corresponding effect on
the estimated net proceeds of the Conversion and the pro forma capitalization
and per share data of Seacoast Financial. See "Use of Proceeds of Conversion,"
"Capitalization" and "Pro Forma Data."
Nontransferability of Subscription Rights
No person may transfer or enter into any agreement or understanding to
transfer the legal or beneficial ownership of the subscription rights issued
under the Conversion Plan or the Conversion Shares to be issued upon the
exercise of such rights. Each person exercising subscription rights will be
required to certify on the Order Form that the purchase of Conversion Shares by
such person is solely for the purchaser's own account and that there is no
agreement or understanding regarding the sale or transfer of such shares.
Seacoast Financial and Compass will pursue any and all legal and equitable
remedies in the event they become aware of the transfer of subscription rights
and will not honor orders that they believe involve the transfer of
subscription rights. See "The Offerings--Restrictions on Agreements or
Understandings Regarding Transfer of Conversion Shares to be Purchased in the
Offering." Following the Offering, there generally will be no restrictions on
the transfer or sale of Conversion Shares by purchasers unless such purchasers
are "affiliates" of Seacoast Financial or Compass (as such term is defined in
Rule 144 ("Rule 144"), promulgated under the Securities Act of 1933, as
amended, (the "Securities Act")). In addition, Massachusetts law prohibits
(subject to certain exceptions) for one year after the Offering sales by
directors, trustees, officers and Corporators of Seacoast Financial or Compass
of Conversion Shares. See "The Conversion and the Merger--Resale Restrictions."
Marketing Agents
Seacoast Financial and Compass have engaged Ryan Beck and McConnell Budd,
registered broker-dealers, to consult with and advise them in connection with
the sale of Conversion Shares in the Offering. Ryan Beck and McConnell Budd
have agreed to use their best efforts to assist Seacoast Financial in
soliciting subscriptions in the Offering. See "The Offerings--Plan of
Distribution and Selling Commissions." Neither Ryan Beck, McConnell Budd nor
any registered broker-dealer shall have any obligation to take or purchase any
Conversion Shares.
Prospectus Delivery and Procedure for Delivering Shares
To ensure that each purchaser receives this Prospectus at least 48 hours
prior to the Expiration Date in accordance with Rule 15c2-8 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), Seacoast Financial will
not mail the Prospectus any later than five days prior to the Expiration Date
or hand-deliver the Prospectus any later than two days prior to such date.
Order forms to purchase Conversion Shares ("Order Forms") will be distributed
only with the Prospectus. Seacoast Financial is not obligated to accept for
processing orders not submitted on an original Order Form. Payment by check,
money order or debit authorization to an existing non-transaction account at
Compass must accompany an Order Form. No wire transfers will be accepted. See
"The Offerings--Procedure for Purchasing Shares."
10
<PAGE>
Purchase Limitations
Generally, no person may purchase, in the aggregate, more than $750,000 of
Conversion Shares in the Offerings and no person together with associates or
persons acting in concert with such person may purchase in the aggregate more
than $1.5 million of Conversion Shares in the Offerings. However, Seacoast
Financial may, in its sole discretion, and without notice to or solicitation of
subscribers or other prospective purchasers, increase or decrease such maximum
purchase limitations. The minimum purchase is 25 Conversion Shares. The ESOP,
however, may purchase in the Subscription Offering up to 8% of the Conversion
Shares issued in the Offering. Prior to completion of the Offering, if the
maximum purchase limitation is increased, subscribers for the maximum amount
will be, and certain other large subscribers in the sole discretion of Seacoast
Financial and Compass may be, given the opportunity to increase their
subscriptions up to the then applicable limits. See "The Offerings."
Conditions to Consummation of Conversion and Merger
The Merger is expected to be completed on the tenth trading day following
completion of the Conversion. Although the Conversion and the Merger will not
close simultaneously, it is a condition to completion of the Conversion that
all conditions to consummation of the Merger (other than the delivery of the
Exchange Shares to the Sandwich Bancorp stockholders and optionholders) shall
have been satisfied or waived and it is a condition to consummation of the
Merger that the Conversion shall have been consummated. Consummation of the
Conversion and the Merger are subject to a number of other conditions,
including final regulatory approval of the Commissioner, the BBI, the FDIC and
the FRB and approval of the Sandwich Bancorp stockholders. See "The Conversion
and the Merger--Required Approvals" and "--Description of the Merger
Agreement--Conditions to the Merger."
Use of Proceeds of Conversion
Net proceeds from the sale of the Conversion Shares are estimated to be
between $133.0 million and $180.6 million, depending on the number of
Conversion Shares sold and the expenses of the Offering ($207.9 million if the
Estimated Valuation Range is increased by 15%). Up to 50% of the net proceeds
of the Offering will be retained by Seacoast Financial and used for general
business purposes, including a loan by Seacoast Financial to the ESOP to enable
the ESOP to purchase up to 8% of the Conversion Shares issued in the Offerings.
The net proceeds retained by Seacoast Financial will be invested in short- and
medium-term debt securities, including U.S. Government and Agency securities,
corporate bonds and mortgage-backed securities. Seacoast Financial will
contribute at least 50% of the net proceeds from the Offering to Compass, to be
used for general corporate purposes, including origination of loans and
purchase of investments in the ordinary course of business. Initially, Compass
plans to invest the net proceeds primarily in short- and medium-term debt
securities of the same types as Seacoast Financial's investments. Compass also
intends to use approximately $20.0 million of the proceeds to build a new main
office. Compass or Seacoast Financial may use proceeds to support the
acquisition of other financial institutions, branches thereof or other
financial services businesses. Compass has no arrangements or understandings
regarding acquisitions at this time, other than the Merger with Sandwich
Bancorp. See "Use of Proceeds of Conversion."
Dividend Policy
Upon completion of the Conversion, the Board of Directors of Seacoast
Financial will have the authority to declare dividends on the Seacoast
Financial Common Stock, subject to statutory and regulatory requirements.
Although no decision has been made whether to pay dividends, Seacoast Financial
will consider a policy of paying quarterly cash dividends on the Seacoast
Financial Common Stock, with the first such dividend to be declared and paid no
sooner than the first full quarter following consummation of the Conversion and
Merger. There can be no assurance that dividends will be paid or, if paid, what
the amounts of dividends will be, or whether such dividends, once paid, will
continue to be paid. Declaration of dividends by the Board will be dependent
upon a number of factors, including capital requirements, regulatory
limitations, Seacoast Financial's operating results and financial condition and
general economic conditions. See "Seacoast Financial's Dividend Policy."
Purchases by Management
Officers and directors of Seacoast Financial and Compass have indicated to
Seacoast Financial that they intend to purchase up to $4,050,000 of Conversion
Shares, equal to 3.0%, 2.5%, 2.2% and 1.9% of the number of shares to be issued
in the Conversion, at the minimum, midpoint, maximum and 15% above the maximum
of the Estimated
11
<PAGE>
Valuation Range, respectively. There is no assurance, however, that such
persons will not purchase more or less than such number of shares or that there
will be sufficient shares available to fill such subscriptions. Such persons
will pay $10.00 per share for such shares. See "Purchases by Management of
Seacoast Financial and Compass."
Benefits of Conversion to Management and Directors
Compass has adopted the ESOP, a tax-qualified benefit plan for officers
and employees of Compass, which intends to purchase 8% of the Conversion
Shares, or 1,088,000 shares ($10.9 million) and 1,472,000 shares ($14.7
million) at the minimum and maximum, respectively, of the Estimated Valuation
Range. See "Management of Seacoast Financial and Compass--Compensation of
Officers and Directors through Benefit Plans--Employee Stock Ownership Plan and
Trust."
Following completion of the Conversion, the Board of Directors may consider
the adoption of a stock option plan for, and a stock plan for the recognition
and retention of, officers and directors of Compass and Seacoast Financial.
Applicable banking regulations would permit the Company to adopt such plans for
presentation to Seacoast Financial's stockholders at a meeting to be held no
earlier than six months after the completion of the Conversion. If the Board
adopts such plans, no options or stock awards would be granted under either plan
until the date on which stockholder approval of the respective plan is received.
See "Management of Seacoast Financial and Compass--Compensation of Officers and
Directors through Benefit Plans--Stock Option Plan" and "--Stock Plan."
In connection with the Conversion, Seacoast Financial and Compass have
entered into employment agreements and change in control agreements with its
President and four other senior officers that provide for, among other things,
payment in the event of termination of employment. See "Management of Seacoast
Financial and Compass--Employment and Change in Control Agreements."
Market for Seacoast Financial Common Stock
As a mutual holding company, Seacoast Financial has never issued capital
stock, and consequently, there is no existing market for the Seacoast Financial
Common Stock. Seacoast Financial has received conditional approval to have the
Seacoast Financial Common Stock quoted on the Nasdaq National Market under the
symbol "SCFS," subject to the completion of the Conversion and compliance with
certain initial listing conditions. See "Market for Seacoast Financial Common
Stock."
No Board Recommendation
Neither the Board of Trustees of Seacoast Financial nor the Board of
Directors of Compass has made any recommendations to depositors or other
potential investors regarding whether such persons should purchase any
Conversion Shares. An investment in the Conversion Shares must be made pursuant
to each investor's evaluation of his or her best interests.
Risk Factors
A purchase of Conversion Shares involves a substantial degree of risk.
Prospective investors should carefully consider the matters set forth under
"Risk Factors," including a discussion of certain risks of construction,
commercial real estate, commercial and indirect auto lending; risks arising
from Compass's geographic concentration of loans in Southeastern Massachusetts
and Rhode Island; risks of changing interest rates and their potential impact
on earnings; risks related to the acquisition of Sandwich Bancorp; the expected
low return on equity after the Conversion; the risk of dilution resulting from
the issuances of additional shares and the possible adoption of stock benefit
plans; the risk that after-market stock performance may not compare favorably
with that of other recent mutual-to-stock conversions; and other risks of the
Offering.
Stock Information Center
If you have any questions regarding the Conversion, call Seacoast
Financial's Stock Information Center at (888) 7-COMPASS [(888) 726-6727].
12
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF SEACOAST FINANCIAL
Set forth below are the selected consolidated financial and other data of
Seacoast Financial. The financial data are derived in part from, and should be
read in conjunction with, the Consolidated Financial Statements of Seacoast
Financial and Subsidiary and notes thereto presented elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
At October 31,
---------------------------------------------------------------
At May 31,
1998 (1) 1997 1996 1995 1994 1993
------------- ------------- ------------- ----------- ----------- -----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Selected Financial Condition Data:
Total assets .................................. $1,176,559 $1,106,590 $1,027,764 $983,975 $791,989 $705,734
Loans (2) ..................................... 884,422 820,197 748,113 676,007 509,868 451,114
Allowance for loan losses ..................... 10,508 10,642 10,334 9,850 7,002 6,000
Debt securities (3):
Available/held for sale ...................... 173,820 205,620 198,783 77,562 68,472 50,328
Held to maturity/held for investment ......... 13,649 12,633 11,752 153,805 160,856 143,923
Marketable equity securities (3) .............. 9,520 3,696 1,523 1,064 2,631 2,030
Deposits ...................................... 982,351 937,948 882,608 859,723 687,291 622,729
Borrowed funds ................................ 77,074 60,703 49,948 41,178 33,469 16,098
Surplus ....................................... 106,510 98,141 84,917 74,604 65,192 61,746
Net unrealized gain (loss) on securities
available for sale, net of taxes, included
in surplus ................................... 2,317 1,614 174 16 (1,910) --
Non-performing loans .......................... 9,493 10,925 10,326 8,506 15,171 9,906
Non-performing assets ......................... 10,888 12,632 12,924 12,424 20,969 16,867
</TABLE>
<TABLE>
<CAPTION>
Seven months
ended May 31, Year ended October 31,
------------------------ ------------------------------------------------------
1998 (1) 1997 (1) 1997 1996 1995 1994 1993
------------- ---------- ---------- ---------- ---------- ---------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Operating Data:
Interest income ................................ $49,990 $45,643 $80,032 $74,126 $66,472 $50,682 $51,215
Interest expense ............................... 25,032 22,652 39,831 37,245 34,539 23,280 23,314
------- ------- ------- ------- ------- ------- -------
Net interest income ........................... 24,958 22,991 40,201 36,881 31,933 27,402 27,901
Provision (credit) for loan losses ............. 536 890 1,865 1,166 (351) 2,524 3,838
------- ------- ------- ------- ------- ------- -------
Net interest income after provision
(credit) for loan losses .................... 24,422 22,101 38,336 35,715 32,284 24,878 24,063
Gains (losses) on sales of securities, net ..... (3) 23 37 60 (84) 663 1,847
Other non-interest income ...................... 3,776 3,085 5,906 5,086 4,487 3,475 2,669
Other real estate owned expense, net ........... 138 293 519 644 1,072 1,026 1,560
Other non-interest expense ..................... 15,437 14,378 24,291 23,514 23,618 19,342 16,757
-------- ------- ------- ------- ------- ------- -------
Income before income taxes and
cumulative effect of change in
accounting principle .......................... 12,620 10,538 19,469 16,703 11,997 8,648 10,262
Provision for income taxes ..................... 4,954 4,254 7,685 6,548 4,511 3,292 4,451
Cumulative effect of change in
accounting principle (4) ...................... -- -- -- -- -- -- 2,000
-------- ------- ------- ------- ------- ------- -------
Net income ..................................... $7,666 $ 6,284 $11,784 $10,155 $ 7,486 $ 5,356 $ 7,811
======== ======= ======= ======= ======= ======= =======
</TABLE>
(footnotes begin on following page)
13
<PAGE>
<TABLE>
<CAPTION>
Seven months
ended May 31, Year ended October 31,
------------------- -----------------------------------------------------
1998 (1) 1997 (1) 1997 1996 1995 1994 1993
--------- --------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Financial Ratios and Other Data (5):
Performance Ratios:
Return on average assets ........................ 1.15% 1.03% 1.11% 1.02% 0.82% .71% 1.12%
Return on average surplus ....................... 12.63 12.03 12.73 12.63 10.57 8.42 13.74
Surplus to total assets at end of period ........ 9.05 8.52 8.87 8.26 7.58 8.23 8.75
Net interest rate spread (6) .................... 3.42 3.52 3.48 3.47 3.33 3.50 3.97
Net interest margin (7) ......................... 3.91 3.96 3.95 3.90 3.69 3.81 4.23
Average interest-earning assets to average
interest-bearing liabilities .................. 112.62 111.43 112.01 110.71 108.94 109.25 107.35
Total non-interest expense to average assets..... 2.34 2.41 2.33 2.42 2.70 2.66 2.69
Efficiency ratio (8) ............................ 54.21 56.21 53.77 57.48 67.95 64.58 56.50
Regulatory Capital Ratios (9):
Tier 1 leverage capital ......................... 8.89 8.44 8.60 8.13 7.35 8.14 8.72
Tier 1 risk-based capital ....................... 12.44 12.64 12.67 12.47 11.07 12.35 12.84
Total risk-based capital ........................ 13.69 13.89 13.92 13.73 12.31 13.69 14.09
Asset Quality Ratios:
Non-performing loans as a percent of
loans (10) .................................... 1.07 1.74 1.33 1.38 1.26 2.98 2.20
Non-performing assets as a percent of
total assets .................................. .93 1.47 1.14 1.26 1.26 2.65 2.39
Allowance for loan losses as a percent
of loans ...................................... 1.19 1.36 1.30 1.38 1.46 1.37 1.33
Allowance for loan losses as a percent of
total non-performing loans .................... 110.69 78.49 97.41 100.08 115.80 46.15 60.57
Number of Full Service Customer Facilities ....... 23 22 22 22 22 17 15
</TABLE>
- ------------
(1) The data presented at and for the seven months ended May 31, 1998 and 1997
were derived from unaudited consolidated financial statements and reflect,
in the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to present fairly the results
for such interim periods. Interim results at and for the seven months
ended May 31, 1998 are not necessarily indicative of the results that may
be expected for the year ending October 31, 1998.
(2) Loans are comprised of gross loan balances, less loans held for sale, net
unadvanced funds on loans, net deferred loan origination fees and unearned
discounts.
(3) Compass adopted Statement of Financial Accounting Standards ("SFAS") No.
115, "Accounting for Certain Investments in Debt and Equity Securities,"
effective November 1, 1993. In November 1995, Compass reclassified
securities having a market value of $138.7 million from its
held-to-maturity portfolio to its available-for-sale portfolio pursuant to
a Financial Accounting Standards Board (the "FASB") interpretation of SFAS
No. 115. Prior to the adoption of SFAS No. 115, debt securities were
classified as either held for sale, in which case they were accounted for
at the lower of amortized cost or market value, or held to maturity, in
which case they were accounted for at amortized cost and marketable equity
securities were stated at the lower of cost or market.
(4) In 1993, the "cumulative effect of change in accounting principle"
resulted from the adoption of SFAS No. 109, "Accounting for Income Taxes."
(5) Asset Quality Ratios and Regulatory Capital Ratios are end-of-period
ratios. With the exception of end-of-period ratios, all ratios are based
on average daily balances during the periods indicated and are annualized
where appropriate.
14
<PAGE>
(6) The net interest rate spread represents the difference between the
weighted average yield on average interest-earning assets and the weighted
average cost of average interest-bearing liabilities.
(7) The net interest margin represents net interest income as a percentage of
average interest-earning assets.
(8) The efficiency ratio represents the ratio of non-interest expenses to the
sum of net interest income and non-interest income.
(9) For definitions and further information relating to Seacoast Financial's
and Compass's regulatory capital requirements and for Seacoast Financial's
pro forma capital levels as a result of the Offering, see "Regulatory
Capital Compliance" and "Regulation of Seacoast Financial and
Compass--Regulatory Capital Requirements" and "--Prompt Corrective
Action."
(10) Non-performing loans consist of all loans 90 days or more past due and
other loans which have been identified by Compass as presenting
uncertainty with respect to the collectibility of interest or principal.
It is Compass's policy to cease accruing interest on all such loans,
except indirect auto loans and other consumer loans.
15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF SANDWICH BANCORP
Set forth below are the selected consolidated financial and other data of
Sandwich Bancorp. The financial data are derived in part from, and should be
read in conjunction with, the Consolidated Financial Statements of Sandwich
Bancorp and Subsidiaries and notes thereto presented elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
At December 31,
--------------------------------------------------------------
At June 30,
1998(1) 1997 1996 1995 1994 1993
------------ -------- -------- -------- -------- --------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Selected Financial Condition Data:
Total assets .............................. $531,013 $518,697 $464,555 $426,515 $408,282 $328,746
Loans ..................................... 360,617 370,742 320,844 274,095 253,985 210,618
Allowance for loan losses ................. 4,167 4,100 3,741 3,674 3,255 2,983
Investment securities:
Available for sale ....................... 58,180 10,995 13,312 25,770 31,318 --
Held to maturity/held for investment ..... 64,792 99,577 99,648 89,468 90,107 89,793
Deposits .................................. 444,750 423,014 388,249 377,973 358,009 279,965
Borrowed funds ............................ 33,601 45,601 32,073 8,148 12,865 14,300
Stockholders' equity ...................... 44,556 42,014 38,633 35,744 32,819 31,197
Net unrealized gain (loss) on securities,
available for sale, net of taxes, included
in stockholders' equity .................. 162 85 27 39 (537) --
Book value per share ...................... $ 21.80 $ 21.63 $ 20.31 $ 19.43 $ 17.95 $ 17.11
Non-performing loans ...................... 2,691 3,581 4,086 4,671 2,063 2,331
Non-performing assets ..................... 2,962 4,177 4,551 5,038 3,032 5,198
</TABLE>
<TABLE>
<CAPTION>
Six months
ended June 30, Year ended December 31,
-------------------- --------------------------------------------------------
1998(1) 1997(1) 1997 1996 1995 1994 1993
-------- --------- -------- ------- ------- ------- -------
(In thousands except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Operating Data: $18,293 $17,283 $35,917 $32,309 $30,673 $24,077 $20,128
Interest and dividend income ............ 9,572 8,707 18,322 15,792 14,833 10,572 9,245
Interest expense ........................ ------- ------- ------- ------- ------- ------- -------
Net interest income .................... 8,721 8,576 17,595 16,517 15,840 13,505 10,883
Provision for loan losses ............... 57 241 750 265 597 340 478
------- ------- ------- ------- ------- ------- -------
Net interest income after
provision for loan losses ............ 8,664 8,335 16,845 16,252 15,243 13,165 10,405
Gains on sales of securities, net ....... -- -- 55 -- -- 6 107
Other non-interest income ............... 1,374 1,237 2,666 2,839 2,718 2,225 2,364
Non-interest expense .................... 6,292 6,051 12,225 12,333 12,356 11,416 10,984
------- ------- ------- ------- ------- ------- -------
Income before income taxes .............. 3,746 3,521 7,340 6,758 5,605 3,980 1,892
Provision for income taxes .............. 1,404 1,327 2,480 2,621 2,169 1,396 241
------- ------- ------- ------- ------- ------- -------
Net income .............................. $ 2,342 $ 2,194 $ 4,860 $ 4,137 $ 3,436 $ 2,584 $ 1,651
======= ======= ======= ======= ======= ======= =======
Basic earnings per share ................ $ 1.19 $ 1.15 $ 2.54 $ 2.20 $ 1.87 $ 1.41 $ 0.91
------- ------- ------- ------- ------- ------- -------
Diluted earnings per share .............. $ 1.14 $ 1.10 $ 2.45 $ 2.13 $ 1.82 $ 1.38 $ 0.90
------- ------- ------- ------- ------- ------- -------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Six months
ended June 30, Year ended December 31,
------------------- ------------------------------------------------------
1998(1) 1997(1) 1997 1996 1995 1994 1993
--------- --------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Financial Ratios and Other Data (2):
Performance Ratios:
Return on average assets ........................ 0.90% 0.91% 0.98% 0.94% 0.81% 0.69% 0.52%
Return on average equity ........................ 11.23 11.48 12.49 11.47 10.21 7.92 5.40
Average equity to average assets ................ 7.98 7.97 7.84 8.17 7.98 8.72 9.56
Equity to total assets at end of period ......... 8.39 7.95 8.10 8.32 8.38 8.04 9.49
Net interest rate spread (3) .................... 2.96 3.20 3.12 3.38 3.51 3.42 3.54
Net interest margin (4) ......................... 3.51 3.74 3.71 3.94 3.98 3.83 3.66
Average interest-earning assets to average
interest-bearing liabilities .................. 114.23 114.17 115.27 114.71 112.68 113.56 112.77
Total non-interest expense to average assets..... 2.41 2.52 2.46 2.80 2.93 3.05 3.60
Efficiency ratio (5) ............................ 60.13 59.00 57.68 60.53 61.61 69.19 78.88
Regulatory Capital Ratios (6):
Tier 1 leverage capital ......................... 8.29 7.77 7.86 8.35 7.92 7.30 8.73
Tier 1 risk-based capital ....................... 15.21 13.23 13.61 13.43 13.13 12.34 14.14
Total risk-based capital ........................ 16.46 14.48 14.86 14.14 14.40 13.59 15.39
Asset Quality Ratios
Non-performing loans as a percent of
loans (7) ..................................... 0.75 1.05 0.97 1.27 1.70 0.81 1.09
Non-performing assets as a percent of
total assets .................................. 0.56 0.79 0.81 0.98 1.18 0.74 1.58
Allowance for loan losses as a percent
of loans ...................................... 1.16 1.09 1.11 1.17 1.34 1.28 1.42
Allowance for loan losses as a percent of
total non-performing loans .................... 154.85 104.06 114.49 91.56 78.66 157.78 127.97
Number of Full Service Customer Facilities ....... 11 11 11 11 11 11 10
</TABLE>
- ------------
(1) The data presented at and for the six months ended June 30, 1998 and 1997
were derived from unaudited consolidated financial statements and reflect,
in the opinion of Sandwich Bancorp's management, all adjustments
(consisting only of normal recurring adjustments) which are necessary to
present fairly the results for such interim periods. Interim results at and
for the six months ended June 30, 1998 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1998.
(2) Asset Quality Ratios and Regulatory Capital Ratios are end-of-period
ratios. With the exception of end-of-period ratios, all ratios are based on
average daily balances during the periods indicated and are annualized
where appropriate.
(3) The net interest rate spread represents the difference between the weighted
average yield on average interest-earning assets and the weighted average
cost of average interest-bearing liabilities.
(4) The net interest margin represents net interest income as a percentage of
average interest-earning assets.
(5) The efficiency ratio represents the ratio of non-interest expenses
(excluding amortization of core deposit intangible asset) to the sum of net
interest income and non-interest income.
(6) For definitions and further information relating to Sandwich Bancorp's and
Sandwich Bank's regulatory capital requirements, see "Regulation of
Seacoast Financial and Compass--Regulatory Capital Requirements" and
"--Prompt Corrective Action."
(7) Non-performing loans consist of all loans 90 days or more past due and
other loans which have been identified by Sandwich Bank as presenting
uncertainty with respect to the collectibility of interest or principal. It
is Sandwich Bank's policy to cease accruing interest on all such loans.
17
<PAGE>
SELECTED UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
OF SEACOAST FINANCIAL
The following tables present certain unaudited pro forma consolidated
financial data with respect to Seacoast Financial and its subsidiary. For each
period presented below, the "Pro Forma for Merger" information gives effect to
the Merger but not the Conversion. The "Pro Forma for Merger and Conversion"
information gives effect to the consummation of both the Conversion and the
Merger, including the sale of Conversion Shares in the Offering and the
issuance of Exchange Shares in the Merger, and includes interest income on the
investment of the net proceeds on the sale of Conversion Shares and the
anticipated expenses associated with the ESOP and one-time Merger costs
(reflected as a reduction to stockholders' equity but not to net income). This
financial data assumes that these transactions occurred on each of the dates
and at the beginning of each of the periods presented, that 12,686,225 Exchange
Shares are issued and that 18,400,000 Conversion Shares are sold in the
Offerings at the $10.00 Purchase Price per share, resulting in gross proceeds
of $184.0 million (the maximum of the Estimated Valuation Range). For
information on net income, net income per share, stockholders' equity and
stockholders' equity per share at the minimum, midpoint and 15% above the
maximum of the Estimated Valuation Range, see "Pro Forma Data--Pro Forma
Conversion Data." For additional assumptions used in calculating the pro forma
data, see "Pro Forma Data--Unaudited Pro Forma Condensed Consolidated Financial
Information."
In accordance with generally accepted accounting principles ("GAAP"), the
Merger will be accounted for using the pooling-of-interests method. Under the
pooling-of-interests method of accounting, the recorded assets and liabilities
of the parties to the Merger Agreement will be carried forward at their
recorded amounts, and the results of operations of the combined parties will
include the results of operations of Seacoast Financial and Sandwich Bancorp
for the entire year in which the Conversion and the Merger occur and, as
restated, for prior periods. Such accounting treatment requires satisfaction of
certain conditions, including that "affiliates" of the parties to the Merger
Agreement may not dispose of shares of Seacoast Financial Common Stock prior to
the publication of financial results covering at least 30 days of post-closing
combined operations of such parties.
The following selected unaudited pro forma financial data should be read
in conjunction with the consolidated financial statements and related notes
presented elsewhere in this Prospectus.
<TABLE>
<CAPTION>
At May 31, 1998(1) At October 31, 1997(1)
--------------------------- -----------------------------
Pro Forma Pro Forma
Pro Forma for Merger Pro Forma for Merger
for Merger and Conversion for Merger and Conversion
----------- -------------- ------------ --------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Financial Condition:
Total assets ....................................... $1,698,414 $1,864,296 $1,621,295 $1,787,177
Loans, net ......................................... 1,230,364 1,230,364 1,176,197 1,176,197
Investment securities held to maturity ............. 13,649 13,649 12,633 12,633
Investment securities available for sale ........... 300,597 300,597 319,896 319,896
Deposits ........................................... 1,427,101 1,427,101 1,360,962 1,360,962
Borrowed funds ..................................... 112,396 112,396 108,042 108,042
Total stockholders' equity ......................... 141,908 307,790 136,132 302,014
Non-performing loans ............................... 12,184 12,184 14,506 14,506
Non-performing assets .............................. 13,850 13,850 16,809 16,809
Asset quality ratios (period end):
Allowance for loan losses to total loans ......... 1.18% 1.18% 1.24% 1.24%
Non-performing assets as a percent of
total assets .................................... 0.82% 0.74% 1.04% 0.94%
Allowance for loan losses to non-
performing loans ................................ 120.44% 120.44% 101.63% 101.63%
</TABLE>
(footnotes begin on following page)
18
<PAGE>
<TABLE>
<CAPTION>
Seven months ended May 31, (1)
---------------------------------------------------
1998 1997
------------------------- -------------------------
Pro Pro
Forma Forma
Pro for Pro for
Forma Merger Forma Merger
for and for and
Merger Conversion Merger Conversion
------------ ------------ ------------ ------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Results of Operations (2):
Net interest income ................. $35,214 $39,627 $33,194 $37,623
Provision for loan losses ........... 830 830 1,241 1,241
------- ------- ------- -------
Net interest income after
provision for loan losses .......... 34,384 38,797 31,953 36,382
Noninterest income .................. 5,449 5,449 4,566 4,566
Noninterest expense ................. 22,969 23,398 21,706 22,135
------- ------- ------- -------
Income before income taxes .......... 16,864 20,848 14,813 18,813
Income taxes ........................ 6,265 7,859 5,884 7,484
------- ------- ------- -------
Net income .......................... $10,599 $12,989 $8,929 $11,329
======= ======= ======= =======
Diluted earnings per share (5) ...... $ 0.34 $ 0.44 $ 0.29 $ 0.39
======= ======= ======= =======
Selected Ratios:
Performance ratios:
Return on average assets (3)(4)...... 1.09% 1.22% 1.00% 1.15%
Return on average equity (3) (4)..... 12.46% 7.36% 11.98% 6.70%
<CAPTION>
For the year ended October 31, (1)
--------------------------------------------------------------------------
1997 1996 1995
----------------------- ------------------------ ----------------------
Pro Pro Pro
Forma Forma Forma
Pro for Pro for Pro for
Forma Merger Forma Merger Forma Merger
for and for and for and
Merger Conversion Merger Conversion Merger Conversion
-------- ------------ ---------- ------------ -------- ------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Results of Operations (2):
Net interest income ................. $57,796 $65,390 $53,398 $61,203 $47,773 $56,437
Provision for loan losses ........... 2,615 2,615 1,431 1,431 246 246
------- ------- ------- ------- ------- -------
Net interest income after
provision for loan losses .......... 55,181 62,775 51,967 59,772 47,527 56,191
Noninterest income .................. 8,664 8,664 7,985 7,985 7,121 7,121
Noninterest expense ................. 37,036 37,772 36,491 37,227 37,046 37,782
------- ------- ------- ------- ------- -------
Income before income taxes .......... 26,809 33,667 23,461 30,530 17,602 25,530
Income taxes ........................ 10,165 12,909 9,169 11,997 6,680 9,851
------- ------- ------- ------- ------- -------
Net income .......................... $16,644 $20,758 $14,292 $18,533 $10,922 $15,679
======= ======= ======= ======= ======= =======
Diluted earnings per share (5) ...... $ 0.54 $ 0.71 $ 0.47 $ 0.63 $ 0.36 $ 0.54
======= ======= ======= ======= ======= =======
Selected Ratios:
Performance ratios:
Return on average assets (3)(4)...... 1.07% 1.20% 0.99% 1.15% 0.82% 1.04%
Return on average equity (3) (4)..... 12.66% 7.08% 12.27% 6.66% 10.45% 5.89%
</TABLE>
- ------------
(1) Sandwich Bancorp financial data is included at June 30, 1998 and December
31, 1997 and for the seven-month periods ended June 30, 1998 and 1997 and
the fiscal years ended December 31, 1997, 1996 and 1995.
(2) Does not reflect any cost savings or other benefits of the Merger.
(3) These ratios are based on average daily balances.
(4) Annualized.
(5) Diluted earnings per share have been computed as follows: for "Pro Forma
for Merger" purposes, no ESOP shares are assumed to have been issued; for
"Pro Forma for Merger and Conversion" purposes, ESOP shares are assumed to
have been issued but are not treated as outstanding until committed to be
released.
19
<PAGE>
RECENT DEVELOPMENTS
The following table sets forth certain consolidated financial and other
data of Seacoast Financial at and for the periods indicated. Consolidated
financial and operating data and financial ratios and other data at and for the
year ended October 31, 1997 have been derived from and should be read in
conjunction with the audited Consolidated Financial Statements of Seacoast
Financial and Notes thereto presented elsewhere in this Prospectus.
Consolidated financial and operating data and financial ratios and other data
at and for the nine months ended July 31, 1998 and 1997 were derived from
unaudited Consolidated Financial Statements. The results of operations and
ratios and other data presented for the nine months ended July 31, 1998 are not
necessarily indicative of the results that may be expected for the year ending
October 31, 1998.
<TABLE>
<CAPTION>
At July 31, At October 31,
1998 (1) 1997
------------ -------------
(In thousands)
<S> <C> <C>
Selected Financial Condition Data:
Total assets ...................................................... $1,201,704 $1,106,590
Loans (2) ......................................................... 907,404 820,197
Allowance for loan losses ......................................... 10,534 10,642
Debt securities:
Available for sale ............................................... 178,668 205,620
Held to maturity ................................................. 13,695 12,633
Marketable equity securities ...................................... 10,828 3,696
Deposits .......................................................... 1,008,417 937,948
Borrowed funds .................................................... 74,368 60,703
Surplus ........................................................... 108,721 98,141
Net unrealized gain on securities available for sale, net of taxes,
included in surplus .............................................. 2,174 1,614
Non-performing loans .............................................. 4,592 10,925
Non-performing assets ............................................. 5,866 12,632
Nine months ended July 31,
1998 (1) 1997 (1)
------------ -----------
(In thousands)
Selected Operating Data:
Interest income ................................................... $ 64,776 $ 59,191
Interest expense .................................................. 32,395 29,431
---------- ----------
Net interest income .............................................. 32,381 29,760
Provision for loan losses ......................................... 837 1,337
---------- ----------
Net interest income after provision for loan losses .............. 31,544 28,423
Gains (losses) on sales of securities, net ........................ (3) 20
Other non-interest income ......................................... 5,050 4,154
Other real estate owned expense, net .............................. 121 382
Other non-interest expense ........................................ 20,027 17,908
---------- ----------
Income before income taxes ........................................ 16,443 14,307
Provision for income taxes ........................................ 6,423 5,588
---------- ----------
Net income ........................................................ $ 10,020 $ 8,719
========== ==========
</TABLE>
(footnotes begin on following page)
20
<PAGE>
<TABLE>
<CAPTION>
Nine months ended July 31,
1998 (1) 1997 (1)
------------ -----------
<S> <C> <C>
Selected Financial Ratios and Other Data (3):
Performance Ratios:
Return on average assets ............................................. 1.16% 1.10%
Return on average surplus ............................................ 12.69 12.82
Surplus to total assets at end of period ............................. 9.05 8.63
Net interest rate spread (4) ......................................... 3.43 3.50
Net interest margin (5) .............................................. 3.92 3.95
Average interest-earning assets to average interest-bearing
liabilities ......................................................... 112.54 111.62
Total non-interest expense to average assets ......................... 2.33 2.32
Efficiency ratio (6) ................................................. 53.83 53.90
Regulatory Capital Ratios (7):
Tier 1 leverage capital .............................................. 8.91 8.53
Tier 1 risk-based capital ............................................ 12.32 12.55
Total risk-based capital ............................................. 13.55 13.80
Asset Quality Ratios:
Non-performing loans as a percent of loans (8) ....................... 0.51 1.44
Non-performing assets as a percent of total assets ................... 0.49 1.24
Allowance for loan losses as a percent of loans ...................... 1.16 1.34
Allowance for loan losses as a percent of total
nonperforming loans ................................................ 229.40 93.09
Number of Full Service Customer Facilities ............................ 23 22
</TABLE>
- ------------
(1) The data presented at and for the nine months ended July 31, 1998 and 1997
was derived from unaudited consolidated financial statements and reflect,
in the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to present fairly the results
for such interim periods. Interim results at and for the nine months ended
July 31, 1998 are not necessarily indicative of the results that may be
expected for the year ending October 31, 1998.
(2) Loans are comprised of gross loan balances less loans held for sale,
unadvanced funds on loans, deferred loan origination fees and unearned
discounts.
(3) Asset Quality Ratios and Regulatory Capital Ratios are end of period ratios.
With the exception of period ratios, all ratios are based on average daily
balances during the indicated periods and are annualized where appropriate.
(4) The net interest spread represents the difference between the weighted
average yield on average interest-earning assets and the weighted average
cost of average interest-bearing liabilities.
(5) The net interest margin represents net interest income as a percent of
average interest-earning assets.
(6) The efficiency ratio represents the ratio of non-interest expenses divided
by the sum of net interest income and non-interest income.
(7) For definitions and further information relating to Seacoast Financial's and
Compass's regulatory capital requirements, and for Seacoast Financial's pro
forma capital levels as a result of the Offering, see "Regulatory Capital
Compliance" and "Regulation of Seacoast Financial and Compass--Regulatory
Capital Requirements" and "--Prompt Corrective Action."
(8) Non-performing loans consist of all loans 90 days or more past due and other
loans which have been identified by Compass as presenting uncertainty with
respect to the collectibility of interest or principal. It is Compass's
policy to cease accruing interest on all such loans, except indirect auto
loans and other consumer loans.
21
<PAGE>
Comparison of Financial Condition at July 31, 1998 and October 31, 1997
Total assets increased by $95.1 million, or 8.6%, from $1,106.6 million at
October 31, 1997 to $1,201.7 million at July 31, 1998. This growth was due
primarily to a $14.8 million, or 45.0%, increase in cash and cash equivalents
and a $87.2 million, or 10.6% increase in loans. Asset growth was funded
primarily by a $70.5 million, or 7.5%, increase in deposits and a $10.3
million, or 20.1%, increase in FHLB advances.
The increase in cash and cash equivalents at July 31, 1998 was temporary
in nature and attributable to a reduction in the difference in rates paid on
short- to medium-term investments and funds invested overnight as well as
to normal fluctuations in activity.
The increase in loans occurred primarily in Seacoast Financial's
construction and indirect auto loan portfolios. From October 31, 1997 to July
31, 1998, construction loans increased by $9.7 million, or 28.6% and indirect
auto loans (net of unearned discounts) increased by $63.6 million, or 30.6%.
The growth during the nine months ended July 31, 1998 is primarily attributable
to the favorable interest rate environment and economic conditions which
prevailed during this period. In addition, Seacoast Financial has continued to
emphasize the origination of indirect auto loans through its network of
automobile dealers.
Total deposits at July 31, 1998, were $1,008.4 million, an increase of
$70.5 million, or 7.5% compared to $937.9 million at October 31, 1997. The
increase in deposits continues to be impacted by favorable economic conditions
partially offset by a continuing low interest rate environment wherein Seacoast
Financial competes against other instruments available to the public such as
mutual funds and annuities. In addition, deposit growth reflects increased
seasonal activity on Martha's Vineyard and the continuing effect of industry
consolidation. Total borrowed funds were $74.4 million at July 31, 1998
compared to $60.7 million at October 31, 1997, an increase of $13.7 million, or
22.6%. During the nine months ended July 31, 1998, Seacoast Financial's net
borrowing from the FHLB increased by $10.3 million.
The increase in surplus of $10.6 million to $108.7 million at July 31,
1998 resulted from net earnings of $10.0 million for the nine months ended July
31, 1998 and a $560,000 increase in unrealized gains (net of taxes) on
securities available for sale, most of which pertained to Seacoast Financial's
marketable equity securities portfolio.
Comparison of Operating Results for the Nine Months Ended July 31, 1998 and
July 31, 1997
General. Net income increased by $1.3 million or 14.9%, from $8.7 million
for the nine months ended July 31, 1997 to $10.0 million for the nine months
ended July 31, 1998. The improvement was attributable to higher net interest
income of $2.6 million, a $500,000 decrease in the provision for loan losses
due to a continuation of the favorable trends in the various factors considered
by management in evaluating the adequacy of the allowance for loan losses and
an increase in net gains on sales of loans of $556,000. The improvement was
partially offset by an increase of $1.9 million in non-interest expense due to
higher salaries, occupancy and equipment expenses, data processing expenses and
marketing costs. Of the $1.9 million increase in non-interest expense, $412,000
was due to a recovery, in 1997, of life insurance premiums recognized when an
insurance company emerged from receivership. The increase in net interest
income was due to growth in average interest-earning assets.
Interest Income. Interest income for the nine months ended July 31, 1998
was $64.8 million, compared to $59.2 million for the nine months ended July 31,
1997, an increase of $5.6 million, or 9.5%. All of the increase in interest
income resulted from growth in average interest-earning assets of $98.7
million, or 9.8%, as the overall yield on interest-earning assets declined by 2
basis points in the 1998 period. The principal areas of growth related to real
estate loans (up $36.9 million, or 7.1%) and indirect auto loans (up $56.7
million, or 32.5%). Most of the real estate loan growth resulted from increased
originations of one-to-four family real estate loans and construction loans.
The increase in indirect auto loans resulted from an improved economic
environment within Compass's local markets, the expansion of such lending into
Rhode Island and the continued emphasis of this area of lending.
Interest Expense. Interest expense for the nine months ended July 31, 1998
was $32.4 million, compared to $29.4 million for the nine months ended July 31,
1997, an increase of $3.0 million, or 10.1%. This increase resulted from a
higher average balance of interest-bearing liabilities (up $80.3 million, or
8.9%). Average interest-bearing deposit balances increased $62.9 million, or
7.5%, primarily as a result of the factors noted in the prior discussion on
deposit growth.
Compass increased its borrowings from the FHLB during the nine months
ended July 31, 1998. Interest expense on borrowed funds increased $752,000, or
27.5%, in the nine months ended July 31, 1998 due to a $17.5 million,
22
<PAGE>
or 31.0%, increase in the average balance of such funds to $73.9 million, which
was partially offset by an 18 basis point reduction in the average rate paid on
borrowed funds to 6.29% in the 1998 period compared to the 1997 period.
Provision for Loan Losses. Compass establishes provisions for loan losses,
which are charged to operations, in order to maintain the allowance for loan
losses at a level that management estimates is appropriate to absorb future
charge-offs of loans deemed uncollectible. In determining the appropriate level
of the allowance for loan losses, management considers past and anticipated loss
experience, evaluations of real estate collateral, current and anticipated
economic conditions, volume and type of lending and the levels of nonperforming
and other classified loans. The amount of the allowance is based on estimates
and the ultimate losses may vary from such estimates. Management assesses the
allowance for loan losses on a quarterly basis and makes provisions for loan
losses monthly in order to maintain the adequacy of the allowance.
Compass provided $837,000 for loan losses in the nine month period ended
July 31, 1998 compared to $1.3 million in the nine month period ended July 31,
1997, a decrease of $500,000, or 37.4%. This decrease was primarily influenced
by a reduction in the balance of adversely classified loans and fewer
delinquencies.
Non-Interest Income. Total non-interest income was $5.0 million for the
nine months ended July 31, 1998 compared to $4.2 million for the nine months
ended July 31, 1997, an increase of $873,000, or 20.9%. The increase resulted
primarily from an increase of $556,000 in the gain on sale of mortgage loans
from $297,000 in the nine months ended July 31, 1997 to $853,000 in the nine
months ended July 31, 1998. Compass generally sells in the secondary mortgage
market fixed rate residential mortgage loans with terms of 15 years or longer.
With the reduction in interest rates on 15- and 30-year fixed rate mortgages
which occurred in 1997 and into 1998, the volume of fixed-rate mortgage loan
originations increased which caused this increase. Also, Compass earned
$188,000 of fees in 1998 under a new relationship with an outside vendor which
processes its official checks. This fee is determined based on the average
length of time such checks, which are drawn on the account of the outside
vendor, remain outstanding.
Non-Interest Expense. Non-interest expense increased by $1.9 million, or
10.4%, from $18.3 million for the nine months ended July 31, 1997 to $20.2
million for the nine months ended July 31, 1998. Of this increase, $868,000
related to compensation and employee benefits, which rose 8.5% to $11.0 million
for the nine months ended July 31, 1998. The higher level of compensation and
employee benefits was caused by overall salary increases averaging 4%,
increased commissions of $155,000 related to higher mortgage loan originations,
staffing increases in the lending area and higher health insurance costs of
$65,000.
Occupancy and equipment expenses increased $127,000, or 5.1%, to $2.6
million for the nine months ended July 31, 1998. This increase was due to an
increase in ATM maintenance costs, and a one-time reduction in rent expense in
1997 of $36,000 attributable to a leased facility which Compass no longer
utilized.
Marketing expenses increased $280,000, or 32.6%, to $1.1 million for the
nine months ended July 31, 1998. This increase was primarily attributable to
advertising campaigns related to the new ROTH IRA accounts allowed by changes
in the tax law, Compass's commercial loan programs and the advertising of
Compass's Preferred Checking account program.
Data processing expenses increased $285,000, or 17.9%, to $1.9 million for
the nine months ended July 31, 1998. This increase was due to new services,
including laser printing and Internet services, and volume-related increases in
loans and deposits.
Other real estate owned (OREO) expenses decreased $261,000, or 68.3%, to
$121,000 for the nine months ended July 31, 1998 due to the continuation of the
decline in the number of properties held as OREO and stable real estate market
values.
Other non-interest expenses for the nine months ended July 31, 1998 were
$2.5 million compared to $1.9 million for the comparable period in 1997, an
increase of $527,000 or 27.1%. Included in the results for 1997 was a recovery
of life insurance premiums of $412,000 from an insurance company which emerged
from receivership. Exclusive of this item, other non-interest expenses
increased in 1998 by $115,000 or 4.9%.
Income Taxes. Income tax expense was $6.4 million of the nine months ended
July 31, 1998, an increase of $835,000, or 14.9%, compared to the 1997 period.
The effective tax rate was 39.1% in 1998 and 1997.
23
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus and in the documents incorporated by
reference herein that are not statements of historical fact may be deemed to be
"forward-looking statements". Without limiting the foregoing, the words
"expect," "anticipate," "plan," "believe," "seek," "estimate," "internal" and
similar words are intended to identify expressions that may be forward-looking
statements. Forward-looking statements involve certain risks and uncertainties,
and actual results may differ materially from those contemplated by such
statements. For example, actual results may be adversely affected by the
following possibilities: (i) competitive pressure among depository institutions
may increase; (ii) changes in interest rates may reduce banking interest
margins; (iii) general economic conditions and real estate values may be less
favorable than contemplated; (iv) adverse legislation or regulatory
requirements may be adopted; (v) contemplated cost savings, revenue
enhancements, etc., from the Merger may not be timely or fully realized; and
(vi) the impact of the Year 2000 issue may be more significant than currently
anticipated. Many of such factors are beyond Seacoast Financial's or Sandwich
Bancorp's ability to control or predict. Readers of this Prospectus are
accordingly cautioned not to place undue reliance on forward-looking
statements. Seacoast Financial and Sandwich Bancorp disclaim any intent or
obligation to update publicly any of the forward-looking statements herein,
whether in response to new information, future events or otherwise. Important
factors that may cause Seacoast Financial's or Sandwich Bancorp's actual
results to differ from such forward-looking statements include, but are not
limited to, the risk factors discussed below.
RISK FACTORS
The following risk factors, in addition to those discussed elsewhere in
this Prospectus, should be considered by investors in deciding whether to
purchase the Conversion Shares offered hereby.
Construction, Commercial Real Estate, Commercial and Indirect Auto Lending Risks
Residential real estate loans represent a smaller proportion of Compass's
loan portfolio than that of most savings institutions. In general, construction
loans, commercial real estate loans, commercial loans and indirect auto loans
generate higher returns, but also pose greater credit risks, than do
owner-occupied residential mortgage loans.
The repayment of construction and commercial real estate loans depends on
the business and financial condition of borrowers and, in the case of
construction loans, on the economic viability of projects financed. A number of
Compass's borrowers have more than one construction or commercial real estate
loan outstanding with Compass. Moreover, these loans are concentrated primarily
in southeastern Massachusetts. Economic events and changes in government
regulations, which Compass and its borrowers cannot control, could have an
adverse impact on the cash flows generated by properties securing Compass's
construction and commercial real estate loans and on the values of such
properties. Commercial properties tend to decline in value more rapidly than
residential owner-occupied properties during economic recessions. Compass held
$167.0 million in construction and commercial real estate loans in its loan
portfolio as of May 31, 1998 and on a pro forma basis at that date, assuming
consummation of the Merger, it would have had $258.3 million of such loans in
its portfolio.
Compass makes both secured and some short-term unsecured commercial loans,
holding $58.2 million of such loans in its loan portfolio as of May 31, 1998.
On a pro forma basis at that date, assuming consummation of the Merger, it
would have had $66.4 million of commercial loans in its portfolio. Repayment of
both secured and unsecured commercial loans depends substantially on borrowers'
underlying business, financial condition and cash flows. Unsecured loans
generally involve a higher degree of risk of loss than do secured loans
because, without collateral, repayment is wholly dependent upon the success of
the borrowers' businesses. Secured commercial loans are generally
collateralized by equipment, leases, inventory and accounts receivable.
Compared to real estate, such collateral is more difficult to monitor, its
value is harder to ascertain, it may depreciate more rapidly and it may not be
as readily saleable if repossessed.
In 1985, Compass began to make indirect auto loans and its portfolio of
such loans has grown significantly since then. Compass's portfolio of indirect
auto loans, net of unearned discounts, totaled $247.6 million as of May 31,
1998. Although Compass has not experienced significant delinquencies in this
portfolio to date, borrowers may be more likely to become delinquent on an
automobile loan than on a residential mortgage loan secured by their primary
residence. Moreover, automobiles depreciate rapidly and, in the event of
default, principal loss as a percent of the loan balance depends upon the
mileage and condition of the vehicle at the time of repossession, over which
Compass has no control.
24
<PAGE>
The interest rate charged to an indirect auto loan borrower is generally
one to two percentage points higher than the rate earned by Compass. The
difference between the two rates is referred to as the "spread." At loan
inception, the dollar value of the spread over the contractual term of the loan
is prepaid by Compass to an auto dealer. Such prepaid amounts are generally
subject to rebate to Compass in the event the underlying loan is prepaid or
becomes delinquent. The risk of loss of amounts previously advanced to a dealer
is primarily dependent upon loan performance and general economic conditions
but is also dependent upon the financial condition of the dealer. To mitigate
this risk, Compass withholds a portion of the spread at loan origination as a
dealer reserve. The amount withheld, in the aggregate, generally approximates
1% of the outstanding balance of loans originated by each dealer. However,
there is no assurance that Compass can successfully recover amounts advanced
for spreads.
Geographic Concentration of Loans in and Deposits from Southeastern
Massachusetts and Rhode Island
Compass operates primarily in southeastern Massachusetts and, to a much
lesser degree, Rhode Island. Over the past several decades, portions of
Compass's market area, including the cities of New Bedford and Fall River, have
experienced relatively flat economic activity and higher unemployment rates
than most of New England and the country, primarily as a result of a reduction
in manufacturing and marine-related jobs there. The economies of New Bedford
and Fall River did not experience the same growth and increase in real estate
values that characterized much of Massachusetts and New England during the
1980's. Similarly, during the latter half of the 1990's, the economies,
employment rates and real estate markets of New Bedford and Fall River have
remained relatively flat, continuing to lag behind many other New England
regions that have enjoyed significant economic improvement in recent years.
Compass's current primary market area also includes Martha's Vineyard.
Following consummation of the Merger, Compass's operations will also include
Sandwich Bank's extensive market area on Cape Cod. See "Business of Compass--
Market Area and Competition" and "Certain Effects of the Merger on Seacoast
Financial." The economies of Cape Cod and Martha's Vineyard depend heavily on
tourists who visit primarily during summer months. As a result, many businesses
on Cape Cod and Martha's Vineyard have positive cash flows only during those
months. Tourism-based businesses are customers--commercial loan borrowers and
depositors--of both Compass and Sandwich Bank, and seasonal fluctuations affect
these customers' deposit balances as well as their ability to repay their
loans. Compass and Sandwich Bank often structure loans to such customers with
uneven payment schedules, so that the bulk of the annual debt service comes due
in the summer months. Nevertheless, a tourist season may be delayed or cut
short due to conditions beyond Compass's control (such as the weather) and,
thus, Compass's loans to tourism-based businesses may be subject to a greater
risk of non-repayment than its other commercial loans.
Potential Impact of Changes in Interest Rates on Seacoast Financial's Earnings
Seacoast Financial's profitability, like that of most financial
institutions, depends to a large extent upon its net interest income, which is
the difference, or spread, between its gross interest income on
interest-earning assets, such as loans and securities, and its interest expense
on interest-bearing liabilities, such as deposits and borrowed funds.
Accordingly, Seacoast Financial's results of operations and financial condition
depend largely on movements in market interest rates and its ability to manage
its interest-rate-sensitive assets and liabilities in response to such
movements. Changes in interest rates could have a material adverse effect on
Seacoast Financial's business, financial condition, results of operations and
cash flows. Because, as a general matter, Seacoast Financial's interest-bearing
liabilities reprice or mature more quickly than its interest-earning assets, an
increase in interest rates generally would result in a decrease in its interest
rate spread and net interest income. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations of Seacoast
Financial--Management of Market and Interest Rate Risk."
Changes in interest rates also affect the value of Seacoast Financial's
interest-earning assets, including, in particular, the value of its investment
securities portfolio. Generally, the value of investment securities fluctuates
inversely with changes in interest rates. At May 31, 1998, Seacoast Financial's
securities portfolio totaled $202.3 million, including $183.3 million of
securities available for sale. Unrealized gains and losses on securities
available for sale are reported as a separate component of surplus, net of
related taxes. Decreases in the fair value of securities available for sale
therefore would have an adverse affect on Seacoast Financial's stockholders'
equity. See "Business of Compass--Investment Activities."
Seacoast Financial is also subject to reinvestment risk relating to
interest rate movements. Decreases in interest rates can result in increased
prepayments of loans and mortgage-related securities, as borrowers refinance to
reduce their borrowing costs. Under these circumstances, Seacoast Financial is
subject to reinvestment risk to the extent
25
<PAGE>
that it is not able to reinvest funds from such prepayments at rates that are
comparable to the rates on the prepaid loans or securities. On the other hand,
increases in interest rates on adjustable rate mortgage loans result in larger
mortgage payments from borrowers, which could potentially increase Seacoast
Financial's level of loan delinquencies and defaults.
Risks Related to the Acquisition of Sandwich Bancorp
Compass's future operating performance will depend, in part, on the
success of the Merger. The success of the Merger will, in turn, depend on a
number of factors, including Compass's ability to (i) integrate into Compass
Sandwich Bank's operations and branches, (ii) retain Sandwich Bank's deposits
and customers, (iii) control future non-interest expenses in a manner that
enables Compass to improve its overall operating efficiencies and (iv) retain
and integrate certain personnel of Sandwich Bank into Compass's operations.
Integration of Sandwich Bank into Compass following the Merger will require the
dedication of the time and resources of Compass's and Seacoast Financial's
managements, and may temporarily distract managements' attention from the
day-to-day business of Compass. No assurance can be given that Compass will
successfully integrate Sandwich Bank's operations into its own, or that Compass
will achieve anticipated benefits of the Merger or achieve earnings results in
the future similar to those it, or Sandwich Bancorp, has achieved in the past.
Further, no assurance can be given that Compass will effectively manage any
growth resulting from the Merger.
Low Return on Equity following the Conversion
Seacoast Financial's ratio of surplus to assets was 9.05% as of May 31,
1998. The consummation of the Conversion will increase this ratio significantly
because the proceeds from the sale of the Conversion Shares will be added to
Seacoast Financial's equity. Seacoast Financial's consolidated ratio of equity
to assets would be 15.5% and 16.5%, respectively, on a pro forma basis as of
May 31, 1998 assuming the sale of Conversion Shares at the midpoint and the
maximum, respectively, of the Estimated Valuation Range and assuming
consummation of the Merger. Seacoast Financial's ability to leverage this
additional capital will be significantly affected by competition for loans and
deposits and economic conditions. Seacoast Financial currently anticipates that
it will take considerable time to prudently deploy such capital. Management
expects that Seacoast Financial will earn a return on its equity that is below
the industry average (and below its own historical levels) for a period of time
after the Conversion and the Merger.
Since Seacoast Financial expects to account for the Merger as a
pooling-of-interests under generally accepted accounting principles ("GAAP"),
Seacoast Financial's ability to repurchase shares of Seacoast Financial Common
Stock may be restricted during the two-year period that will follow completion
of the Merger. See "Use of Proceeds of Conversion."
Dilution Resulting From Issuances of Additional Shares
The exact number of Conversion Shares to be issued in the Offerings will
not be determined until RP Financial updates its appraisal immediately prior to
the consummation of the sale of the Conversion Shares. The higher the number of
Conversion Shares issued, the lower Seacoast Financial's pro forma net income
per share and pro forma stockholders' equity per share, and the higher the
Purchase Price as a percentage of pro forma stockholders' equity per share and
as a multiple of net income per share. See "Pro Forma Data--Pro Forma
Conversion Data."
The issuance of the Exchange Shares in connection with the Merger will
dilute the ownership interest of purchasers of Conversion Shares in the
Conversion. The trading price of Seacoast Financial Common Stock during the
time period between the consummation of the Conversion and the consummation of
the Merger will determine the number of shares of Seacoast Financial Common
Stock issued by Seacoast Financial to effect the Merger. Generally, the lower
the trading price during that period, the greater the number of Exchange Shares
issuable in the Merger, and the greater such dilution. See "The Conversion and
the Merger--Description of the Merger and the Exchange Ratio."
In preparing the Independent Valuation, RP Financial considered various
Seacoast Financial Trading Prices and Exchange Ratios for purposes of estimating
the number of Exchange Shares to be issued in the Merger. The actual Seacoast
Financial Trading Price and Exchange Ratio, and therefore the total number of
shares of Seacoast Financial Common Stock that will be outstanding after
consummation of the Merger, will not be determined until after consummation of
the Conversion. As a result, the actual per share data reported by Seacoast
Financial after completion of the Conversion and the Merger will, in all
probability, be different from the pro forma per share data considered by RP
Financial in preparing the Independent Valuation and disclosed herein.
26
<PAGE>
Relatively High Pro Forma Pricing Multiples May Negatively Affect After-Market
Stock Performance Compared with Other Converted Institutions
The Purchase Price as a percentage of pro forma stockholders' equity per
share of the Conversion Shares ranges from 99.5% at the minimum of the Estimated
Valuation Range to 101.6% at 15% above the Estimated Valuation Range, assuming a
6.4 Exchange Ratio in the Merger. The Purchase Price to pro forma stockholders'
equity at which the Conversion Shares are being sold in the Offering
substantially exceeds the price to pro forma stockholders' equity of common
stock sold in most mutual-to-stock conversions that do not also involve mutual
holding companies or acquisitions of other financial institutions. Prospective
investors should be aware that as a result of the relatively high pro forma
pricing multiples, the after-market performance of the Seacoast Financial Common
Stock may be less favorable during the period immediately following the
Conversion than the price performance of common stock sold in recent
mutual-to-stock conversions that do not involve a mutual holding company or an
acquisition of another institution.
Recent Stock Market Volatility
Publicly traded stocks, including stocks of financial institutions, have
recently experienced substantial market price volatility. These market
fluctuations may be unrelated to the operating performance of particular
companies whose shares are traded. In several cases, common stock issued by
recently converted financial institutions has traded at a price that is below
the price at which such shares were sold in the stock offering. The Purchase
Price of the Seacoast Financial Common Stock in the Offering is based on the
Independent Valuation. In the after-market, the trading price of the Seacoast
Financial Common Stock will be determined by the marketplace, and may be
influenced by many factors, including prevailing interest rates, investor
perceptions of Seacoast Financial and general industry and economic conditions.
Due to possible continued market volatility and to other factors, including
certain Risk Factors discussed herein, there can be no assurance that, following
the Conversion, the trading price of the Seacoast Financial Common Stock will be
at or above the Purchase Price. See "--Relatively High Pro Forma Pricing
Multiples May Negatively Affect After-Market Stock Performance Compared with
Other Converted Institutions" and "--Absence of Market for Shares of Seacoast
Financial Common Stock."
Possible Dilution Resulting From Stock Plans
Seacoast Financial may adopt certain stock plans following the Conversion,
subject to stockholder approval, and such plans could dilute the voting rights
of Seacoast Financial's stockholders. Federal and state banking regulations
allow the Board of Directors of Seacoast Financial, and the Board may decide,
to adopt one or more stock plans for the benefit of employees, officers and
directors of Seacoast Financial and Compass, including stock award plans and
stock option plans. See "Management of Seacoast Financial and
Compass--Compensation of Officers and Directors Through Benefit Plans--Stock
Option Plan" and "--Stock Plan." Such plans could purchase and could grant
options to purchase Seacoast Financial Common Stock, and such stock purchases
and option grants could dilute the voting rights of purchasers of Conversion
Shares in the Conversion.
Competition
Compass faces significant competition both in attracting deposits and in
the origination of loans. See "Business of Compass--Market Area and
Competition." Savings banks, credit unions, savings and loan associations and
commercial banks operating in Compass's primary market area have historically
provided most of Compass's competition for deposits. In addition, and
particularly in times of high interest rates, Compass faces additional and
significant competition for funds from money-market mutual funds and issuers of
corporate and government securities. Competition for the origination of real
estate and other loans comes from other thrift institutions, commercial banks,
insurance companies, finance companies, other institutional lenders and
mortgage companies. Many of Compass's competitors have substantially greater
financial and other resources than those of Compass. Moreover, Compass may face
increased competition in the origination of loans if competing thrift
institutions convert to stock form, because such converting thrifts would
likely seek to invest their new capital into loans. Finally, credit unions do
not pay federal or state income taxes and are subject to fewer regulatory
constraints than savings banks. Numerous credit unions are located in Fall
River and Rhode Island and, because of their tax and regulatory status, they
enjoy a competitive advantage over Compass. This advantage places significant
competitive pressure on the prices of Compass's loan and deposits.
Regulatory Oversight and Legislation
Seacoast Financial and Compass are subject to extensive regulation,
supervision and examination. See "Regulation of Seacoast Financial and
Compass." Any change in the laws or regulations applicable to Seacoast
Financial and Compass, or in banking regulators' supervisory policies or
examination procedures, whether by the
27
<PAGE>
Commissioner, the FDIC, the FRB, other state or federal regulators, the United
States Congress or the Massachusetts legislature could have a material adverse
effect on Seacoast Financial's and Compass's business, financial condition,
results of operations and cash flows.
Compass is subject to regulations promulgated by the Massachusetts
Division of Banks, as its chartering authority, and by the FDIC and the
Depositors Insurance Fund (the "DIF") as insurers of its deposits up to certain
limits. Compass also belongs to the Federal Home Loan Bank System and, as a
member of such system, is subject to certain limited regulations promulgated by
the Federal Home Loan Bank. In addition, the FRB regulates and oversees Seacoast
Financial in Seacoast Financial's capacity as Compass's holding company.
Such regulation and supervision limit the activities in which Seacoast
Financial and Compass may engage. The regulation and supervision is intended
primarily to protect Compass's depositors and borrowers and, in the case of
FDIC regulation, the FDIC's insurance funds. Regulatory authorities have
extensive discretion in the exercise of their supervisory and enforcement
powers. They may, among other things, impose restrictions on the operation of a
banking institution, the classification of assets by such institution and such
institution's allowance for loan losses. Regulatory and law enforcement
authorities also have wide discretion and extensive enforcement powers under
various consumer protection and civil rights laws, including the
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Housing Act,
the Real Estate Settlement Procedures Act and Massachusetts's deceptive acts
and practices law. These laws also permit private individual and class action
law suits and provide for the recovery of attorneys fees in certain instances.
No assurance can be given that the foregoing regulations and supervision will
not change.
Absence of Market for Seacoast Financial Common Stock
Seacoast Financial has never issued capital stock and, consequently, there
is currently no existing market for the Seacoast Financial Common Stock.
Seacoast Financial has received conditional approval to have the Seacoast
Financial Common Stock quoted on the Nasdaq National Market under the symbol
"SCFS," subject to the completion of the Conversion and compliance with certain
initial listing conditions, including the presence of at least three market
makers.
A public trading market having the desirable characteristics of depth,
liquidity and orderliness depends upon the existence of willing buyers and
sellers at any given time, the presence of which is dependent upon the
individual decisions of buyers and sellers over which neither Seacoast
Financial nor any market maker has control. Accordingly, there can be no
assurance that an active and liquid trading market for the Seacoast Financial
Common Stock will develop or that, if developed, it will continue. The failure
of an active and liquid trading market to develop would likely have a material
adverse effect on the value of the Seacoast Financial Common Stock. In
addition, common stock is subject to investment risk, including loss of
principal invested. No assurance can be given that a purchaser in the
Conversion will be able to resell the Conversion Shares at or above the
Purchase Price, nor can any assurance be given that a Sandwich Bancorp
stockholder receiving Exchange Shares in the Merger will be able to sell such
Exchange Shares at or above the Seacoast Financial Trading Price used in the
calculation of the Exchange Ratio. See "Market for Seacoast Financial Common
Stock."
Certain Anti-Takeover Effects of the Articles of Organization and By-Laws of
Seacoast Financial, the ESOP and Federal and State Regulations and Laws.
Seacoast Financial has adopted Articles of Organization and By-Laws that
will go into effect upon consummation of the Conversion and those Articles and
By-Laws contain provisions (known as "anti-takeover" provisions) which may
impede efforts to acquire Seacoast Financial, or stock purchases in furtherance
of such an acquisition, even though such acquisition efforts or stock purchases
might otherwise have a favorable effect on the price of the Seacoast Financial
Common Stock. The Articles and By-Laws provide for, among other things,
staggered Directors' terms, restrictions on the acquisition of more than 10% of
Seacoast Financial's outstanding voting stock for a period of five years after
consummation of the Conversion and approval of certain actions, including
certain business combinations, by specified percentages of its Disinterested
Directors (as such term is defined in the Articles) or by specified percentages
of the shares outstanding and entitled to vote thereon. The Articles also
authorize the Board of Directors to issue up to 10,000,000 shares of serial
preferred stock, the rights and preferences of which may be designated by the
Board, without the approval of Seacoast Financial's stockholders.
The ESOP, which expects to purchase in the Subscription Offering 8% of the
Conversion Shares sold in the Offering, contains provisions that permit
participating employees to direct the voting of shares held in the ESOP, and
such provisions may have anti-takeover effects.
28
<PAGE>
Federal and state regulations and laws may also have anti-takeover
effects. The Change in Bank Control Act and the BHCA, together with FRB
regulations promulgated under those acts, require that a person obtain the
consent of the FRB before attempting to acquire control of a bank holding
company. In addition, Massachusetts laws place certain limitations on
acquisitions of the stock of banking institutions.
For additional information regarding the anti-takeover effects of Seacoast
Financial's Articles and By-Laws, the ESOP and certain federal and state
regulations and laws, see "Restrictions on Acquisition of Seacoast Financial
and Compass."
Year 2000 Issue
The Year 2000 issue (commonly referred to as "Y2K") is the result of
computer programs being written using two digits, rather than four digits, to
define the applicable year. The Y2K issue, which is common to most corporations
including banks, concerns the inability of information and other systems,
primarily (but not exclusively) computer software programs, to properly
recognize and process date-sensitive information as the year 2000 approaches.
This problem could produce miscalculations, generate erroneous data or even
cause a computer system to fail.
A bank such as Compass relies heavily upon computer systems for its daily
operations, including particularly the accurate processing of its customers'
financial records. Compass currently estimates that the cost of its efforts to
achieve Y2K readiness will not exceed $1.0 million. However, no assurance can
be given that Compass or the third-party vendors to whom Compass outsources its
information systems functions will solve such issues in a successful and timely
fashion or that the costs of such effort will not exceed current estimates. If
Compass does not solve such issues, or does not do so in a timely manner, the
Y2K issue could have a material adverse impact on Compass's business, financial
condition, results of operations and cash flows.
Bank regulatory agencies have recently issued additional guidance under
which they are assessing Y2K readiness. The failure of a financial institution,
such as Compass, to take appropriate action to address Y2K issues may result in
enforcement actions which could have a material adverse effect on such
institution, result in the imposition of civil money penalties, or result in
the delay (or receipt of an unfavorable or critical evaluation of management of
a financial institution in connection with a regulatory review) of applications
seeking to acquire other entities or otherwise expand the institution's
activities.
Compass's credit risk associated with its borrowers may increase as a
result of problems such borrowers may have resolving their own Y2K issues.
Although it is not possible to evaluate the magnitude of any potential
increased credit risk at this time, the impact of the Y2K issue on borrowers
could result in increases in Compass's problem loans and credit losses in
future years.
For additional information regarding the Y2K issue and the steps Compass
is taking in response, see "Business of Compass--Year 2000 Issue."
Possible Delays in Completion of the Offering and the Merger; Irrevocability of
Stock Orders
Seacoast Financial will hold funds submitted to purchase Conversion Shares
in connection with the Offering until it completes or terminates the Offering,
and it may not complete or terminate the Offering for an extended period of
time. The Offering may be delayed one or more times because its completion will
be subject to various conditions, including the receipt of regulatory approvals
of both the Conversion and the Merger. Moreover, unless Seacoast Financial
terminates the Conversion, orders to purchase Conversion Shares made in
connection with the Offering will be irrevocable. No assurance can be given
that Seacoast Financial will complete or terminate the Offering on or before
any particular date, except that the Conversion Plan provides that if the
Offering is not completed within 180 days after the date that this Prospectus
was declared effective by the Commissioner (i.e., by , 1998), the
Offering will be terminated and all subscribers will have applicable
subscription funds returned promptly with interest (or have applicable
withdrawal authorizations canceled). Moreover, in the event that the Merger is
not consummated by February 20, 1999, the Merger Agreement may be terminated by
either Seacoast Financial or Sandwich Bancorp (subject to a possible one-month
extension in certain circumstances). If the Merger Agreement is terminated, the
Offering will also be terminated and all subscribers will have applicable
subscription funds returned promptly with interest (or have applicable
withdrawal authorizations canceled).
29
<PAGE>
PRO FORMA DATA
Unaudited Pro Forma Condensed Consolidated Financial Information
The following Unaudited Pro Forma Condensed Consolidated Balance Sheets at
May 31, 1998 and October 31, 1997 and Unaudited Pro Forma Condensed
Consolidated Statements of Income for the seven months ended May 31, 1998 and
1997 and for each of the years ended October 31, 1997, 1996 and 1995 give
effect to the Conversion and the Merger based on the assumptions set forth
below. The unaudited pro forma consolidated financial statements are based on
the unaudited consolidated financial statements of Seacoast Financial for the
seven-month periods ended May 31, 1998 and 1997 and of Sandwich Bancorp for the
seven-month periods ended June 30, 1998 and 1997 and on the audited
consolidated financial statements of Seacoast Financial for the years ended
October 31, 1997, 1996 and 1995 and of Sandwich Bancorp for the years ended
December 31, 1997, 1996 and 1995. The unaudited pro forma consolidated
financial statements give effect to the Merger using the pooling-of-interests
method of accounting under GAAP.
The pro forma adjustments in the tables assume the sale of 18,400,000
Conversion Shares in the Offerings at the $10.00 Purchase Price per share, which
is the maximum of the Estimated Valuation Range. In addition, the pro forma
adjustments in the tables assume the issuance of 6.4 shares of Seacoast
Financial Common Stock for each share of Sandwich Bancorp Common Stock
(including the effect of outstanding Sandwich Bancorp Stock Options) in
connection with the Merger. The net proceeds in the tables are based upon the
following assumptions: (i) all Conversion Shares will be sold in the
Subscription and Community Offerings; (ii) no fees will be paid to Ryan Beck or
McConnell Budd on shares purchased by the ESOP or the 625,000 shares assumed
purchased by officers, trustees, directors, employees and members of their
immediate families; (iii) Ryan Beck and McConnell Budd will receive an aggregate
fee equal to 1.00% of the aggregate Purchase Price for sales in the Subscription
and Community Offerings (excluding the sale of shares to the ESOP and to
officers, trustees, directors, employees and their immediate families); and (iv)
total expenses of the Conversion, including the marketing fees of $1.6 million
paid to Ryan Beck and McConnell Budd, will be $3.4 million. Actual expenses may
vary from those estimated. The actual amount of Conversion Shares sold may be
more or less than the maximum of the Estimated Valuation Range. For the effects
of such possible changes, see "--Pro Forma Conversion Data." In addition, the
expenses of the Conversion and of the Merger may vary from those estimated. The
fees paid to Ryan Beck and McConnell Budd will vary from the amounts estimated
if more or less shares are sold, or if a Syndicated Community Offering is
conducted. Additionally, certain one-time charges to operating results
(estimated to be $4.0 million, net of income tax effect) are expected to occur
following the Conversion and the Merger. These items are shown as a reduction in
stockholders' equity in the following tables but are not shown as a reduction in
net income for the periods shown in the following tables. No cost savings or
other benefits of the Merger are reflected in the tables. The Unaudited Pro
Forma Condensed Consolidated Statements of Income do not reflect investment
income from investment of Conversion proceeds or anticipated ESOP expense. For
the effects of such items, see "--Pro Forma Conversion Data."
The unaudited pro forma information is provided for informational purposes
only. The pro forma financial information presented is not necessarily
indicative of the actual results that would have been achieved had the
Conversion and the Merger been consummated on the dates or at the beginning of
the periods presented, and is not necessarily indicative of future results. The
unaudited pro forma financial information should be read in conjunction with
the consolidated financial statements and the notes thereto of Seacoast
Financial and Sandwich Bancorp contained elsewhere in this Prospectus.
The pro forma stockholders' equity is based upon the combined book value
of the common stockholders' ownership of Seacoast Financial and Sandwich
Bancorp computed in accordance with GAAP. This amount is not intended to
represent fair market value and does not represent amounts, if any, that would
be available for distribution to stockholders in the event of liquidation.
THE UNAUDITED PRO FORMA COMMON STOCKHOLDERS' EQUITY AND NET INCOME DERIVED
FROM THE ABOVE ASSUMPTIONS ARE QUALIFIED BY THE STATEMENTS SET FORTH UNDER THIS
CAPTION AND SHOULD NOT BE CONSIDERED INDICATIVE OF THE MARKET VALUE OF SEACOAST
FINANCIAL COMMON STOCK OR THE ACTUAL OR FUTURE RESULTS OF OPERATIONS OF
SEACOAST FINANCIAL AND SANDWICH BANCORP FOR ANY PERIOD. SUCH PRO FORMA DATA MAY
BE MATERIALLY AFFECTED BY THE ACTUAL GROSS AND NET PROCEEDS FROM THE SALE OF
CONVERSION SHARES IN THE CONVERSION, THE ACTUAL EXCHANGE RATIO IN THE MERGER
AND OTHER FACTORS. SEE "USE OF PROCEEDS OF CONVERSION."
30
<PAGE>
Unaudited Pro Forma Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
At May 31, 1998 (1)
---------------------------------------------------------------------------------------------
Pro Forma Seacoast Pro Forma
Seacoast Conversion Financial Sandwich Merger Pro Forma
Financial Adjustments as Converted Bancorp Adjustments Consolidated
----------- ----------- ------------ --------- ------------- -------------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Cash and cash equivalents ........... $ 45,001 $145,882 (2) $ 190,883 $ 25,921 $ (5,000)(5) $ 211,804
Securities available for sale ....... 183,340 183,340 58,180 59,077 (4) 300,597
Securities held to maturity ......... 13,649 13,649 64,792 (64,792)(3) 13,649
Loans held for sale ................. 19,810 19,810 -- 19,810
Loans, net .......................... 873,914 873,914 356,450 1,230,364
Bank premises and equipment ......... 13,932 20,000 (2) 33,932 6,231 40,163
OREO ................................ 1,395 1,395 271 1,666
Net deferred tax asset .............. 5,877 5,877 2,929 557 (3) 9,363
Other assets ........................ 19,641 19,641 16,239 1,000 (5) 36,880
---------- ---------- --------- ---------- ----------
Total assets ..................... $1,176,559 $165,882 $1,342,441 $ 531,013 $ (9,158) $1,864,296
========== ======== ========== ========= ========== ==========
Liabilities and
Stockholders' Equity:
Deposits ............................ $ 982,351 $ 982,351 $ 444,750 $1,427,101
Borrowed funds ...................... 77,074 77,074 35,322 112,396
Other liabilities ................... 10,624 10,624 6,385 17,009
---------- ---------- --------- ----------
Total liabilities ................ 1,070,049 1,070,049 486,457 1,556,506
---------- ---------- --------- ----------
Stockholders' equity:
Common stock ....................... -- $ 1,840 (2) 1,840 2,043 $ (774)(6) 3,109
Additional paid-in capital ......... -- 178,762 (2) 178,762 21,540 (3,549)(6) 196,753
Retained earnings .................. 104,193 104,193 20,811 (4,000)(5) 121,004
Unearned compensation--
ESOP ............................. -- (14,720)(2) (14,720) -- (14,720)
Unrealized gain on securities
available for sale, net
of taxes ......................... 2,317 2,317 162 (835)(4) 1,644
---------- -------- ---------- --------- ---------- ----------
Total stockholders' equity ......... 106,510 165,882 272,392 44,556 (9,158) 307,790
---------- -------- ---------- --------- ---------- ----------
Total liabilities and
stockholders' equity ............. $1,176,559 $165,882 $1,342,441 $ 531,013 $ (9,158) $1,864,296
========== ======== ========== ========= ========== ==========
Book value per share ................ $ 21.80 $ 9.90(7)
Book value per equivalent share-- ========= ===========
Sandwich Bancorp ...................
$ 63.36(8)
===========
</TABLE>
(footnotes begin on following page)
31
<PAGE>
Unaudited Pro Forma Condensed Consolidated Balance Sheets, continued
<TABLE>
<CAPTION>
At October 31, 1997 (1) At October 31, 1997 (1)
--------------------------------------------- ---------------------------------------
Pro Forma Seacoast Pro Forma
Seacoast Conversion Financial as Sandwich Merger Pro forma
Financial Adjustments Converted Bancorp Adjustments Consolidated
------------- ----------------- ------------ --------- ----------- ------------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Cash and cash equivalents ............. $ 32,761 $145,882 (2) $ 178,643 $ 16,068 $ (5,000)(5) $ 189,711
Securities available for sale ......... 209,316 209,316 10,995 99,585 (4) 319,896
Securities held to maturity ........... 12,633 12,633 99,577 (99,577)(3) 12,633
Loans held for sale ................... 4,277 4,277 -- 4,277
Loans, net ............................ 809,555 809,555 366,642 1,176,197
Bank premises and equipment ........... 12,254 20,000 (2) 32,254 6,379 38,633
OREO .................................. 1,707 1,707 596 2,303
Net deferred tax asset ................ 6,988 6,988 2,948 9,936
Other assets .......................... 17,099 17,099 15,492 1,000 (5) 33,591
---------- ---------- -------- -------- ----------
Total assets .......................... $1,106,590 $165,882 $1,272,472 $518,697 $ (3,992) $1,787,177
========== ======== ========== ======== ======== ==========
Liabilities and
Stockholders' Equity:
Deposits .............................. $ 937,948 $ 937,948 $423,014 $1,360,962
Borrowed funds ........................ 60,703 60,703 47,339 108,042
Other liabilities ..................... 9,798 9,798 6,330 $ 31 (3) 16,159
---------- ---------- -------- -------- ----------
Total liabilities ..................... 1,008,449 1,008,449 476,683 31 (3) 1,485,163
---------- ---------- -------- -------- ----------
Stockholders' equity:
Common stock ......................... -- $ 1,840 (2) 1,840 1,942 (688)(6) 3,094
Additional paid-in capital ........... -- 178,762 (2) 178,762 20,139 619 (6) 199,520
Retained earnings .................... 96,527 96,527 19,848 (4,000)(5) 112,375
Unearned compensation--
ESOP ............................... -- (14,720)(2) (14,720) -- (14,720)
Unrealized gain on securities
available for sale, net of
taxes .............................. 1,614 1,614 85 46 (4) 1,745
---------- ---------- -------- -------- ----------
Total stockholders' equity ......... 98,141 165,882 264,023 42,014 (4,023) 302,014
---------- -------- ---------- -------- -------- ----------
Total liabilities and
stockholders' equity .............. $1,106,590 $165,882 $1,272,472 $518,697 $ (3,992) $1,787,177
========== ======== ========== ======== ======== ==========
Book value per share .................. $ 21.63 $ 9.76(7)
Book value per equivalent share-- ======== ==========
Sandwich Bancorp .....................
$ 62.46(8)
==========
</TABLE>
- ------------
(1) Reflects Sandwich Bancorp's balance sheets as of June 30, 1998 and
December 31, 1997.
(2) Reflects gross proceeds of $184.0 million from the sale of Conversion
Shares, assuming the maximum of the Estimated Valuation Range less (i)
estimated expenses of the Conversion equal to $3.4 million, (ii) the
purchase of $14.7 million of Conversion Shares by the ESOP funded
internally by a loan from Seacoast Financial and (iii) $20 million for the
estimated construction costs of a new main office building.
(3) Reflects transfer of Sandwich investments from held to maturity to available
for sale consistent with Seacoast Financial's classification and as
permitted by SFAS No. 115.
(4) Reflects the adjustment set forth in Note 3 above and the retirement of
shares of Sandwich Bancorp Common Stock held by Seacoast Financial having a
carrying value of $5,715,000 at May 31, 1998 (90,000 shares) and $190,000 at
October 31, 1997 (5,000 shares) and a net SFAS No. 115 adjustment of
$835,000 at May 31, 1998 and $73,000 at October 31, 1997.
32
<PAGE>
(5) Adjustment to record the effects of estimated one-time expenses of
approximately $5.0 million, which, net of a $1.0 million income tax benefit,
will be charged to earnings as incurred following the Merger. Since these
expenses are non-recurring, they have not been reflected in the pro forma
condensed statements of income and related per share amounts. These expenses
are expected to be incurred prior to or shortly after the Merger. The
estimated non-recurring expenses consist of the following (in thousands):
<TABLE>
<S> <C>
Merger related professional fees ...................... $ 2,400
Employee severance costs .............................. 2,500
Data processing and other costs ....................... 100
--------
Total estimated merger expenses .................... 5,000
Tax benefit ........................................... (1,000)
--------
Total estimated merger expenses, net of tax benefit $ 4,000
========
</TABLE>
(6) Reflects the reclassification to retire Sandwich Bancorp Common Stock
previously held by Seacoast Financial (assuming no additional purchases or
exercises of options to acquire Sandwich Bancorp Common Stock) and the
effects of the assumed Exchange Ratio of 6.4 shares of Seacoast Financial
Common Stock for each share of Sandwich Bancorp Common Stock, net of
effect of differences in par values.
(7) The pro forma consolidated book value per share was calculated assuming the
exchange of 6.4 shares of Seacoast Financial Common Stock for each share
of Sandwich Bancorp Common Stock, the maximum number of shares of Seacoast
Financial Common Stock to be exchanged for each share of Sandwich Bancorp
Common Stock. This Exchange Ratio assumes that the Seacoast Financial
Trading Price is $10 or less. In the event that the Seacoast Financial
Trading Price is greater than $10, the Exchange Ratio will be lower. The
following reflects the impact of selected higher Seacoast Financial
Trading Prices on the Exchange Ratio, on the pro forma book value per
share of Seacoast Financial Common Stock and the pro forma book value per
equivalent share of Sandwich Bancorp (assuming the issuance of the maximum
number of Conversion Shares as set forth in Note 2 above):
<TABLE>
<CAPTION>
Pro Forma Book Value
Pro Forma Book Value Per Per Equivalent
Share Share--Sandwich Bancorp
--------------------------- --------------------------
Seacoast
Financial Exchange May 31, October 31, May 31, October 31,
Trading Price Ratio 1998 1997 1998 1997
- ------------------ ---------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
$11............. 5.8182 $10.28 $10.14 $59.81 $59.00
12 ............ 5.3333 10.62 10.47 56.64 55.84
13 ............ 4.9231 10.93 10.77 53.81 53.02
14 ............ 4.7407 11.07 10.91 52.48 51.72
15 ............ 4.7407 11.07 10.90 52.48 51.67
16 ............ 4.4444 11.31 11.13 50.27 49.47
</TABLE>
(8) As each Sandwich Bancorp shareholder is assumed in this table to receive 6.4
Exchange Shares in exchange for each share of Sandwich Bancorp Common Stock,
the pro forma consolidated book value per share has been multiplied by 6.4
to present the pro forma impact on Sandwich Bancorp shareholders of the
Merger. If the Exchange Ratio is less than 6.4, the pro forma book value per
equivalent share of Sandwich Bancorp would be lower, as set forth in Note 7
above.
33
<PAGE>
Unaudited Pro Forma Condensed Consolidated Statements of Income
<TABLE>
<CAPTION>
Seven months ended May 31, 1998 (1) Seven months ended May 31, 1997 (1)
------------------------------------- -------------------------------------------
Seacoast Sandwich Pro forma Seacoast Sandwich Pro forma
Financial Bancorp Consolidated Financial Bancorp Consolidated
--------- -------- ------------- ----------- ---------- ------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Interest income ...................... $ 49,990 $21,466 $ 71,456 $45,643 $20,294 $ 65,937
Interest expense ..................... 25,032 11,210 36,242 22,652 10,091 32,743
-------- ------- -------- ------- ------- --------
Net interest income ................. 24,958 10,256 35,214 22,991 10,203 33,194
Provision for loan losses ............ 536 294 830 890 351 1,241
-------- ------- -------- ------- ------- --------
Net interest income after
provision for loan losses .......... 24,422 9,962 34,384 22,101 9,852 31,953
Non-interest income .................. 3,773 1,676 5,449 3,108 1,458 4,566
Non-interest expense ................. 15,575 7,394 22,969 14,671 7,035 21,706
-------- ------- -------- ------- ------- --------
Income before income taxes .......... 12,620 4,244 16,864 10,538 4,275 14,813
Provision for income taxes ........... 4,954 1,311 6,265 4,254 1,630 5,884
-------- ------- -------- ------- ------- --------
Net income .......................... $ 7,666 $ 2,933 $ 10,599 $ 6,284 $ 2,645 $ 8,929
======== ======= ======== ======= ======= ========
Basic earnings per share ............. $ 1.49 $ 0.34(2) $ 1.39 $ 0.29(2)
======= ======== ======= ========
Diluted earnings per share ........... $ 1.43 $ 0.34(2) $ 1.33 $ 0.29(2)
======= ======== ======= ========
Basic earnings per equivalent
share--Sandwich Bancorp ............. $ 2.18(3) $ 1.86(3)
========== ========
</TABLE>
<TABLE>
<CAPTION>
Year ended October 31, 1997(1) Year ended October 31, 1996(1)
----------------------------------------- ----------------------------------------
Seacoast Sandwich Pro forma Seacoast Sandwich Pro forma
Financial Bancorp Consolidated Financial Bancorp Consolidated
----------- ---------- ------------ ---------- ---------- ------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Interest income ...................... $80,032 $35,917 $115,949 $74,126 $32,309 $106,435
Interest expense ..................... 39,831 18,322 58,153 37,245 15,792 53,037
-------- ------- -------- ------- ------- --------
Net interest income ................. 40,201 17,595 57,796 36,881 16,517 53,398
Provision for loan losses ............ 1,865 750 2,615 1,166 265 1,431
-------- ------- -------- ------- ------- --------
Net interest income after
provision for loan losses ......... 38,336 16,845 55,181 35,715 16,252 51,967
Non-interest income .................. 5,943 2,721 8,664 5,146 2,839 7,985
Non-interest expense ................. 24,810 12,226 37,036 24,158 12,333 36,491
-------- ------- -------- ------- ------- --------
Income before income taxes .......... 19,469 7,340 26,809 16,703 6,758 23,461
Provision for income taxes ........... 7,685 2,480 10,165 6,548 2,621 9,169
-------- ------- -------- ------- ------- --------
Net income .......................... $11,784 $ 4,860 $ 16,644 $10,155 $ 4,137 $ 14,292
======== ======= ======== ======= ======= ========
Basic earnings per share ............. $ 2.54 $ 0.54(2) $ 2.20 $ 0.47(2)
======= ======== ======= ========
Diluted earnings per share ........... $ 2.45 $ 0.54(2) $ 2.13 $ 0.47(2)
======= ======== ======= ========
Basic earnings per equivalent
share--Sandwich Bancorp ............. $ 3.46(3) $ 3.01(3)
======== ========
</TABLE>
(footnotes begin on next page)
34
<PAGE>
Unaudited Pro Forma Condensed Consolidated Statements of Income, continued
<TABLE>
<CAPTION>
Year ended October 31, 1995 (1)
------------------------------------------
Seacoast Sandwich Pro forma
Financial Bancorp Consolidated
----------- ------------ -------------
(In thousands, except per share data)
<S> <C> <C> <C>
Interest income ............................................... $66,472 $30,673 $97,145
Interest expense .............................................. 34,539 14,833 49,372
------- ------- -------
Net interest income .......................................... 31,933 15,840 47,773
Provision (credit) for loan losses ............................ (351) 597 246
------- ------- -------
Net interest income after
provision (credit) for loan losses ......................... 32,284 15,243 47,527
Non-interest income ........................................... 4,403 2,718 7,121
Non-interest expense .......................................... 24,690 12,356 37,046
------- ------- -------
Income before income taxes ................................... 11,997 5,605 17,602
Provision for income taxes .................................... 4,511 2,169 6,680
------- ------- -------
Net income ................................................... $ 7,486 $ 3,436 $10,922
======= ======= =======
Basic earnings per share ...................................... $ 1.87 $ 0.36(2)
======= =======
Diluted earnings per share .................................... $ 1.82 $ 0.36(2)
======= =======
Basic earnings per equivalent share--Sandwich Bancorp ......... $ 2.30(3)
=======
</TABLE>
- ------------
(1) Sandwich Bancorp's statements of income included in the pro forma
statements of income are for the seven months ended June 30, 1998 and 1997
and the years ended December 31, 1997, 1996 and 1995.
(2) Earnings per share have been computed assuming the issuance of 18,400,000
Conversion Shares (none of which are assumed to be issued to the ESOP) and
an Exchange Ratio of 6.4:1 in connection with the Merger. As discussed in
Note 7 to the Pro Forma Condensed Consolidated Balance Sheets, this ratio
will vary based on the Seacoast Financial Trading Price. The following
tables indicate the impact on pro forma earnings per share and earnings
per equivalent share--Sandwich Bancorp for the seven months ended May 31,
1998 and 1997 and for the years ended October 31, 1997, 1996 and 1995
(basic and diluted) at selected Seacoast Financial Trading Prices. In no
event can the Exchange Ratio exceed 6.4:1.
<TABLE>
<CAPTION>
Pro Forma Earnings Per Share
------------------------------------------------------------------------------------------------
Seacoast Seven Months Seven Months
Financial Exchange Ended Ended Year Ended Year Ended Year Ended
Trading Price Ratio May 31, 1998 May 31, 1997 October 31, 1997 October 31, 1996 October 31, 1995
- ---------------- ---------- -------------- -------------- ------------------ ------------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
$11........... 5.8182 $0.36 $0.30 $0.56 $0.48 $0.37
12 .......... 5.3333 0.37 0.31 0.58 0.50 0.38
13 .......... 4.9231 0.38 0.32 0.60 0.51 0.39
14 .......... 4.7407 0.38 0.32 0.60 0.52 0.40
15 .......... 4.7407 0.38 0.32 0.60 0.52 0.40
16 .......... 4.4444 0.39 0.33 0.62 0.53 0.41
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Basic Earnings Per Equivalent Share--Sandwich Bancorp
-------------------------------------------------------------------------------------
Seacoast Seven Months Seven Months
Financial Exchange Ended Ended Year Ended Year Ended Year Ended
Trading Price Ratio May 31, 1998 May 31, 1997 October 31, 1997 October 31, 1996 October 31, 1995
- ---------------- ---------- -------------- -------------- ------------------ ------------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
$11........... 5.8182 $2.09 $1.75 $3.26 $2.79 $2.15
12 .......... 5.3333 1.97 1.65 3.09 2.67 2.03
13 .......... 4.9231 1.87 1.58 2.95 2.51 1.92
14 .......... 4.7407 1.80 1.52 2.84 2.47 1.90
15 .......... 4.7407 1.80 1.52 2.84 2.47 1.90
16 .......... 4.4444 1.73 1.47 2.76 2.36 1.82
</TABLE>
35
<PAGE>
(3) As each Sandwich Bancorp stockholder is assumed in this table to receive
6.4 Exchange Shares in exchange for each share of Sandwich Bancorp Common
Stock, the pro forma consolidated basic earnings per share has been
multiplied by 6.4 to present the pro forma equivalent earnings for
Sandwich Bancorp stockholders. If the Exchange Ratio is less than 6.4, the
pro forma consolidated basic earnings per equivalent share of Sandwich
Bancorp would be lower, as set forth in Note 2 above.
Pro Forma Conversion Data
The tables on the following pages provide unaudited pro forma data with
respect to Seacoast Financial's stockholders' equity, net income and related per
share amounts based upon the minimum, midpoint, maximum and 15% above the
maximum of the Estimated Valuation Range at May 31, 1998 and for the seven
months then ended and at October 31, 1997 and for the year then ended. The
actual net proceeds from the sale of the Conversion Shares cannot be determined
until the Conversion is completed. However, net proceeds are currently estimated
to be between $133.0 million and $180.6 million ($207.9 million in the event the
Estimated Valuation Range is increased by 15%) based upon the following
assumptions: (i) all Conversion Shares will be sold in the Subscription and
Community Offerings; (ii) Ryan Beck and McConnell Budd will receive an aggregate
fee equal to 1% of the aggregate Purchase Price for sales in the Subscription
Offering (excluding the sale of shares to the ESOP and the 625,000 shares
assumed purchased by officers, directors, trustees, employees and their
immediate families); (iii) total expenses of the Conversion, including the
marketing fees paid to Ryan Beck and McConnell Budd, will range from $3.0
million to $3.7 million; and (iv) construction costs for the planned new main
office will be $20.0 million. Actual amounts may vary from those estimated.
Pro forma net income has been calculated for the seven months ended May
31, 1998 and the year ended October 31, 1997 as if the Conversion Shares had
been sold on the dates indicated and the net proceeds had been invested at the
yield on the one year U.S. Treasury Note in effect at the beginning of the
period for each of the periods presented (rates ranged from 5.37% to 5.39%).
This yield is believed to reflect the interest rate at which the Conversion
proceeds will be initially invested. The effect of withdrawals from deposit
accounts at Compass for the purchase of Conversion Shares in the Offerings has
not been reflected. A combined effective federal and state income tax rate of
40% has been assumed for pro forma adjustments in all periods. Pro forma
earnings per share amounts have been calculated by dividing pro forma amounts
by the number of outstanding shares of Seacoast Financial Common Stock less
ESOP shares which have not been committed to be released.
Pro forma unaudited consolidated stockholders' equity of Seacoast
Financial have been calculated in the same manner and based upon the same
assumptions as set forth with respect to the preceding pro forma unaudited
presentations. Pro forma stockholders' equity per share has been calculated by
dividing pro forma amounts by the number of outstanding shares of Seacoast
Financial Common Stock.
The following pro forma unaudited information is based, in part, on
historical information related to Seacoast Financial and Sandwich Bancorp and
on assumptions as to future events. For these and other reasons, the pro forma
unaudited financial data may not be representative of the financial effects of
the Conversion and the Merger at the dates on which such transactions actually
occur and should not be taken as indicative of future results of operations.
Pro forma stockholders' equity represents the difference between the stated
amount of assets and liabilities of Seacoast Financial computed in accordance
with GAAP.
The following table gives effect to the issuance of the Exchange Shares in
the Merger and certain non-recurring expenses expected to be incurred as a
result of the Merger. For information related to the seven-month period ended
May 31, 1998 and for the year ended October 31, 1997, the table assumes the
issuance of 12,537,392 and 12,393,048 Exchange Shares, based upon the number of
shares of Sandwich Bancorp Common Stock and Sandwich Options outstanding at the
beginning of each period, respectively. For information related to May 31, 1998
and October 31, 1997, the table assumes the issuance of 12,686,225 and
12,537,392 Exchange Shares, based upon the number of shares of Sandwich Bancorp
Common Stock and Sandwich Options outstanding on such dates, respectively. The
pro forma stockholders' equity is not intended to represent the fair market
value of the Seacoast Financial Common Stock and may be different than amounts
that would be available for distribution to stockholders in the event of
liquidation of Seacoast Financial.
36
<PAGE>
<TABLE>
<CAPTION>
At or for the seven months ended May 31, 1998
-------------------------------------------------------------
21,160,000
13,600,000 16,000,000 18,400,000 shares sold
shares sold shares sold shares sold at $10.00
at $10.00 at $10.00 at $10.00 per share
per share per share per share (15% above
(minimum of (midpoint of (maximum of maximum of
Estimated Estimated Estimated Estimated
Valuation Valuation Valuation Valuation
Range) Range) Range) Range)
------------- -------------- ------------- ------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Gross proceeds ...................................... $ 136,000 $ 160,000 $ 184,000 $ 211,600
Less: estimated Offering expenses ................... (2,957) (3,178) (3,398) (3,652)
--------- --------- --------- ---------
Estimated net proceeds ............................. 133,043 156,822 180,602 207,948
Less: Non-recurring Merger expenses ................. (5,000) (5,000) (5,000) (5,000)
Less: Shares purchased by the ESOP (1) .............. (10,880) (12,800) (14,720) (16,928)
Less: Construction of new main office ............... (20,000) (20,000) (20,000) (20,000)
--------- --------- --------- ---------
Estimated net investable proceeds .................. $ 97,163 $ 119,022 $ 140,882 $ 166,020
========= ========= ========= =========
Net income:
Historical combined ................................ $ 10,599 $ 10,599 $ 10,599 $ 10,599
Pro forma income on estimated net
investable proceeds .............................. 1,826 2,237 2,648 3,120
Pro forma ESOP adjustment (1) ...................... (190) (224) (258) (296)
--------- --------- --------- ---------
Pro forma net income ............................. $ 12,235 $ 12,612 $ 12,989 $ 13,423
========= ========= ========= =========
Net income per share (4):
Historical combined ................................ $ 0.43 $ 0.39 $ 0.36 $ 0.33
Pro forma income on estimated net
investable proceeds .............................. 0.07 0.08 0.09 0.10
Pro forma ESOP adjustment (1) ...................... (0.01) (0.01) (0.01) (0.01)
--------- --------- --------- ---------
Pro forma net income per share ................... $ 0.49 $ 0.46 $ 0.44 $ 0.42
========= ========= ========= =========
Stockholders' equity (2):
Historical combined ................................ $ 151,066 $ 151,066 $ 151,066 $ 151,066
Estimated net proceeds ............................. 133,043 156,822 180,602 207,948
Less: Seacoast Financial Common Stock
acquired by the ESOP ............................. (10,880) (12,800) (14,720) (16,928)
Less: Non-recurring Merger expenses,
net of taxes ..................................... (4,000) (4,000) (4,000) (4,000)
Less: Shares of Sandwich Bancorp Common
Stock owned by Seacoast Financial ................ (5,158) (5,158) (5,158) (5,158)
--------- --------- --------- ---------
Pro forma stockholders' equity. .................. $ 264,071 $ 285,930 $ 307,790 $ 332,928
========= ========= ========= =========
Stockholders' equity per share (3 and 4):
Historical combined ................................ $ 5.75 $ 5.27 $ 4.86 $ 4.46
Net proceeds ....................................... 5.06 5.47 5.81 6.15
Less: Seacoast Financial Common Stock
acquired by the ESOP ............................. (0.41) (0.45) (0.47) (0.50)
Less: Non-recurring Merger expenses,
net of taxes ..................................... (0.15) (0.14) (0.13) (0.12)
Less: Shares of Sandwich Bancorp Common
Stock owned by Seacoast Financial ................ (0.20) (0.18) (0.17) (0.15)
--------- --------- --------- ---------
Pro forma stockholders' equity per share ......... $ 10.05 $ 9.97 $ 9.90 $ 9.84
========= ========= ========= =========
Purchase price as a percentage of pro forma
stockholders' equity per share ..................... 99.50% 100.30% 101.01% 101.63%
========= ========= ========= =========
Purchase price as a multiple of pro forma net
income per share--annualized ....................... 11.90x 12.66x 13.33x 13.89x
========= ========= ========= =========
</TABLE>
(footnotes begin on following page)
37
<PAGE>
Pro Forma Conversion Data, Continued
- ------------
(1) It is assumed that 8% of the Conversion Shares issued in the Conversion
will be purchased by the ESOP. The funds used to acquire such shares are
assumed to have been borrowed by the ESOP from Seacoast Financial. The
amount to be borrowed is reflected as a reduction of stockholders' equity.
Pro forma net income assumes that the ESOP shares are released over a
twenty-year period at an average fair value of $10.00 per share. Only ESOP
shares committed to be released (7/12 of 1/20 for the seven month period)
were considered outstanding for purposes of the net income per share
calculation.
(2) The retained earnings of Seacoast Financial will continue to be restricted
after the Conversion. See "Seacoast Financial's Dividend Policy,"
"Description of Capital Stock of Seacoast Financial--Seacoast Financial
Common Stock--Liquidation or Dissolution," "Regulation of Seacoast Financial
and Compass--Massachusetts Bank Regulation" and "The Conversion and the
Merger--Effects of the Conversion and the Merger--Liquidation Rights."
(3) Stockholders' equity per share data is based on a total of 26,286,225,
28,686,225, 31,086,225 and 33,846,225 shares outstanding representing
shares sold in the Conversion and Exchange Shares issued in the Merger.
(4) All per share data has been computed assuming an exchange ratio in
connection with the Merger of 6.4:1. This ratio assumes that the Seacoast
Financial Trading Price used for calculating the Exchange Ratio is $10 or
less. In no event can the Exchange Ratio exceed 6.4:1. In the event that
the Seacoast Trading Price is greater than $10, the Exchange Ratio will be
reduced. The following tables reflect pro forma per share data based on
selected higher trading prices of Seacoast Financial Common Stock:
<TABLE>
<CAPTION>
Net Income Per Share
---------------------------------------------------------
15% Above
Seacoast Exchange Minimum of Midpoint of Maximum of Maximum of
Financial Exchange Shares Valuation Valuation Valuation Valuation
Trading Price Ratio Issued Range Range Range Range
- ------------------ ---------- ----------- ------------ ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
$10 ............. 6.4000 12,537,392 $0.49 $0.46 $0.44 $0.42
11 ............. 5.8182 11,397,630 0.51 0.48 0.46 0.43
12 ............. 5.3333 10,447,827 0.53 0.50 0.47 0.45
13 ............. 4.9231 9,644,148 0.55 0.52 0.49 0.46
14 ............. 4.7407 9,293,660 0.56 0.52 0.49 0.47
15 ............. 4.7407 9,305,872 0.56 0.52 0.49 0.47
16 ............. 4.4444 8,724,193 0.58 0.54 0.51 0.48
</TABLE>
<TABLE>
<CAPTION>
Stockholders' Equity Per Share
----------------------------------------------------------
15% Above
Seacoast Exchange Minimum of Midpoint Maximum of Maximum of
Financial Exchange Shares Valuation of Valuation Valuation Valuation
Trading Price Ratio Issued Range Range Range Range
- ------------------ ---------- ------------ ------------ -------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
$10 ............. 6.4000 12,686,225 $10.05 $ 9.97 $ 9.90 $ 9.84
11 ............. 5.8182 11,532,932 10.51 10.39 10.28 10.18
12 ............. 5.3333 10,571,854 10.92 10.76 10.62 10.49
13 ............. 4.9231 9,758,635 11.31 11.10 10.93 10.77
14 ............. 4.7407 9,399,909 11.48 11.26 11.07 10.89
15 ............. 4.7407 9,404,923 11.48 11.25 11.07 10.89
16 ............. 4.4444 8,817,053 11.78 11.52 11.31 11.11
</TABLE>
38
<PAGE>
Pro Forma Conversion Data, Continued
<TABLE>
<CAPTION>
Purchase Price as a Percentage of
Pro Forma Stockholders' Equity Per Share
---------------------------------------------------------
15% Above
Seacoast Exchange Minimum of Midpoint of Maximum of Maximum of
Financial Exchange Shares Valuation Valuation Valuation Valuation
Trading Price Ratio Issued Range Range Range Range
- --------------- ---------- ------------ ------------ ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
$10 .......... 6.4000 12,686,225 99.50% 100.30% 101.01% 101.63%
11 .......... 5.8182 11,532,932 95.15 96.25 97.28 98.23
12 .......... 5.3333 10,571,854 91.58 92.94 94.16 95.33
13 .......... 4.9231 9,758,635 88.42 90.09 91.49 92.85
14 .......... 4.7407 9,399,909 87.11 88.81 90.33 91.83
15 .......... 4.7407 9,404,923 87.11 88.89 90.33 91.83
16 .......... 4.4444 8,817,053 84.89 86.81 88.42 90.01
</TABLE>
<TABLE>
<CAPTION>
Purchase Price as a Multiple of
Pro Forma Net Income Per Share--Annualized
---------------------------------------------------------
15% Above
Seacoast Exchange Minimum of Midpoint of Maximum of Maximum of
Financial Exchange Shares Valuation Valuation Valuation Valuation
Trading Price Ratio Issued Range Range Range Range
- --------------- ---------- ------------ ------------ ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
$10 .......... 6.4000 12,537,392 11.90x 12.66x 13.33x 13.89x
11 .......... 5.8182 11,397,630 11.44 12.05 12.82 13.51
12 .......... 5.3333 10,447,827 11.01 11.63 12.35 12.99
13 .......... 4.9231 9,644,148 10.61 11.24 11.90 12.66
14 .......... 4.7407 9,293,660 10.42 11.11 11.76 12.50
15 .......... 4.7407 9,305,872 10.42 11.11 11.76 12.50
16 .......... 4.4444 8,724,193 10.06 10.87 11.49 12.35
</TABLE>
39
<PAGE>
Pro Forma Conversion Data, Continued
<TABLE>
<CAPTION>
At or for the year ended October 31, 1997
-------------------------------------------------------
21,160,000
13,600,000 16,000,000 18,400,000 shares sold
shares sold shares sold shares sold at $10.00
at $10.00 at $10.00 at $10.00 per share
per share per share per share (15% above
(minimum of (midpoint of (maximum of maximum of
Estimated Estimated Estimated Estimated
Valuation Valuation Valuation Valuation
Range) Range) Range) Range)
------------- -------------- ------------- ------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Gross proceeds ......................................... $136,000 $160,000 $184,000 $211,600
Less: estimated Offering expenses ...................... (2,957) (3,178) (3,398) (3,652)
-------- -------- --------- ---------
Estimated net proceeds ................................ 133,043 156,822 180,602 207,948
Less: Non-recurring Merger expenses .................... (5,000) (5,000) (5,000) (5,000)
Less: Shares purchased by the ESOP (1) ................. (10,880) (12,800) (14,720) (16,928)
Less: Construction of new main office .................. (20,000) (20,000) (20,000) (20,000)
-------- -------- --------- ---------
Estimated net investable proceeds ..................... $ 97,163 $119,022 $140,882 $166,020
======== ======== ========= =========
Net income:
Historical combined ................................... $ 16,644 $ 16,644 $ 16,644 $ 16,644
Pro forma income on estimated net investable
proceeds ............................................ 3,142 3,849 4,556 5,369
Pro forma ESOP adjustment (1) ......................... (326) (384) (442) (508)
-------- -------- --------- ---------
Pro forma net income ................................ $ 19,460 $ 20,109 $ 20,758 $ 21,505
======== ======== ========= =========
Net income per share (4):
Historical combined ................................... $ 0.67 $ 0.61 $ 0.57 $ 0.52
Pro forma income on estimated net investable
proceeds ............................................ 0.12 0.14 0.16 0.17
Pro forma ESOP adjustment (1) ......................... (0.01) (0.01) (0.02) (0.02)
-------- -------- --------- ---------
Pro forma net income per share ...................... $ 0.78 $ 0.74 $ 0.71 $ 0.67
======== ======== ========= =========
Stockholders' equity (2):
Historical combined ................................... $140,155 $140,155 $140,155 $140,155
Estimated net proceeds ................................ 133,043 156,822 180,602 207,948
Less: Seacoast Financial Common Stock acquired
by the ESOP ......................................... (10,880) (12,800) (14,720) (16,928)
Less: Non-recurring Merger expenses, net of taxes ..... (4,000) (4,000) (4,000) (4,000)
Add: Change in unrealized gain on securities
available for sale, net of taxes .................... 119 119 119 119
Less: Shares of Sandwich Bancorp Common Stock
owned by Seacoast Financial ......................... (142) (142) (142) (142)
-------- -------- --------- ---------
Pro forma stockholders' equity ........................ $258,295 $280,154 $302,014 $327,152
======== ======== ========= =========
Stockholders' equity per share (3 and 4):
Historical combined ................................... $ 5.36 $ 4.91 $ 4.53 $ 4.16
Net proceeds .......................................... 5.09 5.50 5.84 6.17
Less: Seacoast Financial Common Stock acquired
by the ESOP ......................................... (0.42) (0.45) (0.48) (0.50)
Less: Non-recurring Merger expenses, net of taxes ..... (0.15) (0.14) (0.13) (0.12)
Add: Change in unrealized gain on securities
available for sale net of taxes ..................... -- -- -- --
Less: Shares of Sandwich Bancorp Common Stock
owned by Seacoast Financial ......................... -- -- -- --
-------- -------- --------- ---------
Pro forma stockholders' equity per share .............. $ 9.88 $ 9.82 $ 9.76 $ 9.71
======== ======== ========= =========
Purchase price as a percentage of pro forma
stockholders' equity per share ........................ 101.21% 101.83% 102.46% 102.99%
======== ======== ========= =========
Purchase price as a multiple of pro forma
net income per share ............................ ...... 12.82x 13.51x 14.08x 14.93x
======== ======== ========= =========
</TABLE>
(footnotes begin on following page)
40
<PAGE>
Pro Forma Conversion Data, Continued
- ------------
(1) It is assumed that 8% of the Conversion Shares issued in the Conversion
will be purchased by the ESOP. The funds used to acquire such shares are
assumed to have been borrowed by the ESOP from Seacoast Financial. The
amount to be borrowed is reflected as a borrowing and as a reduction of
stockholders' equity. Pro forma net income assumes that the ESOP shares
are released over a twenty-year period at an average fair value of $10.00
per share. Only ESOP shares committed to be released (1/20 for the annual
period) were considered outstanding for purposes of the net income per
share calculation.
(2) The retained earnings of Seacoast Financial will continue to be restricted
after the Conversion. See "Seacoast Financial's Dividend Policy,"
"Description of Capital Stock of Seacoast Financial--Seacoast Financial
Common Stock-- Liquidation or Dissolution, "Regulation of Seacoast Financial
and Compass--Massachusetts Bank Regulation" and "The Conversion and the
Merger--Effects of the Conversion and the Merger--Liquidation Rights."
(3) Stockholders' equity per share data is based on a total of 26,137,392,
28,537,392, 30,937,392 and 33,697,392 shares outstanding representing
shares sold in the Conversion and issued in the Merger.
(4) All per share data has been computed assuming an exchange ratio in
connection with the Merger of 6.4:1, the maximum ratio which could occur.
This exchange ratio assumes that the Seacoast Financial Trading Price is
$10 or less. In the event the Seacoast Financial Common Stock in such
period trades at prices greater than $10, the Exchange Ratio will be
reduced. The following table reflects pro forma per share data based on
selected higher trading prices of Seacoast Financial Common Stock:
<TABLE>
<CAPTION>
Net Income Per Share
----------------------------------------------------------------------
Seacoast Exchange 15% Above
Financial Exchange Shares Minimum of Midpoint of Maximum of Maximum of
Trading Price Ratio Issued Valuation Range Valuation Range Valuation Range Valuation Range
- --------------- ---------- ------------ ----------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
$10 .......... 6.4000 12,393,048 $0.78 $0.74 $0.71 $0.67
11 .......... 5.8182 11,266,408 0.82 0.77 0.73 0.70
12 .......... 5.3333 10,327,540 0.85 0.80 0.76 0.72
13 .......... 4.9231 9,533,114 0.88 0.83 0.78 0.74
14 .......... 4.7407 9,185,344 0.89 0.84 0.79 0.75
15 .......... 4.7407 9,195,043 0.89 0.84 0.79 0.75
16 .......... 4.4444 8,620,291 0.92 0.86 0.81 0.76
</TABLE>
<TABLE>
<CAPTION>
Stockholders' Equity Per Share
----------------------------------------------------------------------
Seacoast Exchange 15% Above
Financial Exchange Shares Minimum of Midpoint of Maximum of Maximum of
Trading Price Ratio Issued Valuation Range Valuation Range Valuation Range Valuation Range
- --------------- ---------- ------------ ----------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
$10 .......... 6.4000 12,537,392 $ 9.88 $ 9.82 $ 9.76 $ 9.71
11 .......... 5.8182 11,397,630 10.33 10.23 10.14 10.05
12 .......... 5.3333 10,447,827 10.74 10.59 10.47 10.35
13 .......... 4.9231 9,644,148 11.11 10.92 10.77 10.62
14 .......... 4.7407 9,293,660 11.28 11.08 10.91 10.74
15 .......... 4.7407 9,305,872 11.28 11.07 10.90 10.74
16 .......... 4.4444 8,724,193 11.57 11.33 11.13 10.95
</TABLE>
41
<PAGE>
Pro Forma Conversion Data, Continued
<TABLE>
<CAPTION>
Purchase Price as a Percentage of
Pro Forma Stockholders' Equity Per Share
----------------------------------------------------------------------
Seacoast Exchange 15% Above
Financial Exchange Shares Minimum of Midpoint of Maximum of Maximum of
Trading Price Ratio Issued Valuation Range Valuation Range Valuation Range Valuation Range
- --------------- ---------- ------------ ----------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
$10 .......... 6.4000 12,537,392 101.21% 101.83% 102.46% 102.99%
11 .......... 5.8182 11,397,630 96.81 97.75 98.62 99.50
12 .......... 5.3333 10,447,827 93.11 94.43 95.51 96.62
13 .......... 4.9231 9,644,148 90.01 91.58 92.85 94.16
14 .......... 4.7407 9,293,660 88.65 90.25 91.66 93.11
15 .......... 4.7407 9,305,872 88.65 90.33 91.74 93.11
16 .......... 4.4444 8,724,193 86.43 88.26 89.85 91.32
</TABLE>
<TABLE>
<CAPTION>
Purchase Price as a Multiple of
Pro Forma Net Income Per Share
----------------------------------------------------------------------
Seacoast Exchange 15% Above
Financial Exchange Shares Minimum of Midpoint of Maximum of Maximum of
Trading Price Ratio Issued Valuation Range Valuation Range Valuation Range Valuation Range
- --------------- ---------- ------------ ----------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
$10.......... 6.4000 12,393,048 12.8x 13.5x 14.1x 14.9x
11 .......... 5.8182 11,266,408 12.2 13.0 13.7 14.3
12 .......... 5.3333 10,327,540 11.8 12.5 13.2 13.9
13 .......... 4.9231 9,533,114 11.4 12.1 12.8 13.5
14 .......... 4.7407 9,185,344 11.2 11.9 12.7 13.3
15 .......... 4.7407 9,195,043 11.2 11.9 12.7 13.3
16 .......... 4.4444 8,620,291 10.9 11.6 12.4 13.2
</TABLE>
Pro Forma Outstanding Seacoast Financial Common Stock
The following table sets forth, for the minimum, midpoint, maximum and 15%
above the maximum of the Estimated Valuation Range, the total number of
Conversion Shares to be issued, and, for various possible Exchange Ratios, (i)
the total number of Exchange Shares to be issued (taking into consideration
both the outstanding Sandwich Bancorp Common Stock and the outstanding Sandwich
Bancorp Options as of June 30, 1998) and (ii) the total Seacoast Common Stock
outstanding following consummation of both the Conversion and the Merger.
<TABLE>
<CAPTION>
Total Outstanding Seacoast Financial Common Stock
following Conversion and Merger based on
--------------------------------------------------------------------------
21,160,000
13,600,000 16,000,000 18,400,000 Conversion
Conversion Conversion Conversion Shares Issued
Shares Issued Shares Issued Shares Issued (15% above
Seacoast Exchange (Minimum of (Minimum of (Maximum of Maximum of
Financial Exchange Shares Estimated Estimated Estimated Estimated
Trading Price Ratio Issued Valuation Range) Valuation Range) Valuation Range) Valuation Range)
- --------------- ---------- ------------ ------------------ ------------------ ------------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
$10 .......... 6.4000 12,686,225 26,286,225 28,686,225 31,086,225 33,846,225
11 .......... 5.8182 11,532,932 25,132,932 27,532,932 29,932,932 32,692,932
12 .......... 5.3333 10,571,854 24,171,854 26,571,854 28,971,854 31,731,854
13 .......... 4.9231 9,758,635 23,358,635 25,758,635 28,158,635 30,918,635
14 .......... 4.7407 9,399,909 22,999,909 25,399,909 27,799,909 30,559,909
15 .......... 4.7407 9,404,923 23,004,923 25,404,923 27,804,923 30,564,923
16 .......... 4.4444 8,817,053 22,417,053 24,817,053 27,217,053 29,977,053
</TABLE>
42
<PAGE>
REGULATORY CAPITAL COMPLIANCE
At May 31, 1998, Compass and Sandwich Bank each exceeded all of their
regulatory capital requirements. The following table sets forth the approximate
pro forma regulatory capital of Seacoast Financial and Compass after giving
effect to the Conversion, the Merger and the Bank Merger, based upon the banks'
respective regulatory capital at that date and the sale of the number of shares
shown in the table. The pro forma regulatory capital amounts reflect the
receipt by Compass of 50% of the estimated net Conversion proceeds. The pro
forma risk-based capital amounts assume the investment of the estimated net
proceeds received, exclusive of $20.0 million to be used by Compass in the
construction of a new main office building, in U.S. Treasury Notes which have a
risk-weight of 0% under applicable regulations as if such net proceeds had been
received and so applied at May 31, 1998. The FRB has adopted capital adequacy
guidelines for bank holding companies (on a consolidated basis) substantially
similar to the FDIC's capital requirements for Compass. On a pro forma basis
after the Conversion and the consummation of the Merger, Seacoast Financial's
and Compass's pro forma regulatory capital will exceed these requirements. See
"Regulation of Seacoast Financial and Compass--Holding Company Regulation."
<TABLE>
<CAPTION>
Pro Forma Combined for Seacoast Financial and Compass at May 31, 1998 based on
--------------------------------------------------------------------------------------------------
13,600,000 16,000,000 18,400,000 21,160,000
Conversion Shares Conversion Shares Conversion Shares Conversion Shares
sold at $10.00 sold at $10.00 sold at $10.00 sold at $10.00
per share per share per share per share
------------------------ ------------------------ ------------------------ -----------------------
Percent of Percent of Percent of Percent of
Amount assets (1) Amount assets (1) Amount assets (1) Amount assets (1)
----------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seacoast Financial
Tier 1 leverage:
Actual .................. $259,750 13.82% $281,609 14.65% $303,469 15.44% $328,607 16.31%
Requirement ............. 70,367 4.00 71,241 4.00 72,115 4.00 73,121 4.00
Excess .................. 189,383 9.82 210,368 10.65 231,354 11.44 255,486 12.31
Tier 1 risk-based capital:
Actual .................. 259,750 23.04 281,609 24.97 303,469 26.91 328,607 29.14
Requirement ............. 45,105 4.00 45,105 4.00 45,105 4.00 45,105 4.00
Excess .................. 214,645 19.04 236,504 20.97 258,364 22.91 283,502 25.14
Total risk-based capital:
Actual .................. 273,853 24.29 295,712 26.22 317,572 28.16 342,710 30.39
Requirement ............. 90,209 8.00 90,209 8.00 90,209 8.00 90,209 8.00
Excess .................. 183,644 16.29 205,503 18.22 227,363 20.16 252,501 22.39
Compass
Tier 1 leverage:
Actual .................. 199,597 11.49 211,487 12.10 223,376 12.69 237,049 13.36
Requirement ............. 69,462 4.00 69,938 4.00 70,413 4.00 70,960 4.00
Excess .................. 130,135 7.49 141,549 8.10 152,963 8.69 166,089 9.36
Tier 1 risk-based capital:
Actual .................. 199,597 17.76 211,487 18.82 223,376 19.87 237,049 21.09
Requirement ............. 44,957 4.00 44,957 4.00 44,957 4.00 44,957 4.00
Excess .................. 154,640 13.76 166,530 14.82 178,419 15.87 192,092 17.09
Total risk-based capital:
Actual .................. 213,653 19.01 225,543 20.07 237,433 21.13 251,106 22.34
Requirement ............. 89,914 8.00 89,914 8.00 89,914 8.00 89,914 8.00
Excess .................. 123,739 11.01 135,629 12.07 147,519 13.13 161,192 14.34
</TABLE>
- ------------
(1) Adjusted total or adjusted risk-weighted assets, as appropriate.
43
<PAGE>
CAPITALIZATION
The following table presents the actual capitalization of Seacoast
Financial and Sandwich Bancorp at May 31, 1998 and June 30, 1998, respectively,
and the approximate pro forma consolidated capitalization of Seacoast Financial
after giving effect to the Conversion and the Merger, based upon the companies'
respective capitalization at those dates, the sale of the number of shares
indicated in the table and the other assumptions set forth under "Pro Forma
Data--Pro Forma Conversion Data."
<TABLE>
<CAPTION>
Seacoast Financial pro forma based upon
the sale of Conversion Shares at $10.00 per share
------------------------------------------------------
21,160,000
13,600,000 16,000,000 18,400,000 shares
shares shares shares (15% above
(minimum (midpoint (maximum maximum
Seacoast of the of the of the of the
Seacoast Sandwich Financial estimated estimated estimated estimated
Financial Bancorp combined valuation valuation valuation valuation
Historical Historical Historical range) range) range) range) (1)
----------- ----------- ------------ ----------- ----------- ---------- -----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Deposits (2) ..................... $ 982,351 $444,750 $1,427,101 $1,427,101 $1,427,101 $1,427,101 $1,427,101
Borrowed funds and capital lease
obligation ..................... 77,074 35,322 112,396 112,396 112,396 112,396 112,396
---------- -------- ---------- ---------- ---------- ---------- ----------
Total deposits and
borrowed funds .............. $1,059,425 $480,072 $1,539,497 $1,539,497 $1,539,497 $1,539,497 $1,539,497
========== ======== ========== ========== ========== ========== ==========
Stockholders' equity:
Preferred Stock,
$.01 par value,
10,000,000 shares
authorized; none to be
issued ........................ $ -- $ -- $ -- $ -- $ -- $ -- $ --
---------- -------- ---------- ---------- ---------- ---------- ----------
Common Stock,
$.01 par value,
100,000,000 shares
authorized (3) ................ -- 2,043 2,043 2,629 2,869 3,109 3,385
Additional paid-in capital (3) .. -- 21,540 21,540 149,674 173,213 196,753 223,823
Retained earnings (4)(5) ........ 104,193 20,811 125,004 121,004 121,004 121,004 121,004
Less:
Unearned compensation--
ESOP (6) ....................... -- -- -- (10,880) (12,800) (14,720) (16,928)
Net unrealized gain on
securities available for
sale, net of taxes ............. 2,317 162 2,479 1,644 1,644 1,644 1,644
---------- -------- ---------- ---------- ---------- ---------- ----------
Total stockholders' equity ...... $ 106,510 $44,556 $ 151,066 $ 264,071 $ 285,930 $ 307,790 $ 332,928
========== ======== ========== ========== ========== ========== ==========
Total stockholders' equity
as a % of total assets .......... 9.05% 8.39% 8.85% 14.5% 15.5% 16.5% 17.6%
========== ======== ========== ========== ========== ========== ==========
</TABLE>
- ------------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Valuation Range of up to
15% as a result of regulatory considerations or changes in market or
general financial and economic conditions following the commencement of
the Subscription Offerings in Compass.
(2) Does not reflect withdrawals from deposit accounts in Compass for the
purchase of Seacoast Financial Common Stock in the Conversion. Such
withdrawals would reduce pro forma deposits by the amount of such
withdrawals.
(3) Reflects the issuance of 12,686,225 Exchange Shares in the Merger and the
sale of a number of Conversion Shares as noted in the headings above. See
"The Conversion and the Merger--Description of the Conversion--Stock
Pricing and Number of Conversion Shares to be Issued" and "--Description of
the Merger and the Exchange Ratio."
(4) The retained earnings of Compass will be restricted at the time of the
Conversion. See "Description of Capital Stock of Seacoast
Financial--Seacoast Financial Common Stock--Liquidation or Dissolution."
44
<PAGE>
(5) Pro forma stockholders' equity includes the effects of estimated
non-recurring expenses of approximately $4.0 million net of tax benefit.
Since the expenses are non-recurring, they have not been reflected in the
pro forma condensed consolidated statements of income and related per
share amounts. See Note 5 to the Notes to Unaudited Pro Forma Condensed
Consolidated Balance Sheets.
(6) It is assumed that 8% of the Conversion Shares issued in the Conversion
will be purchased by the ESOP. The funds used to acquire such shares are
assumed to have been borrowed by the ESOP from Seacoast Financial. The
amount to be borrowed is reflected as a reduction of stockholders' equity.
45
<PAGE>
USE OF PROCEEDS OF CONVERSION
Although the actual net proceeds from the sale of the Conversion Shares
cannot be determined until the Conversion is completed, it is presently
anticipated that such proceeds will be between $133.0 million and $180.6
million ($207.9 million if the Estimated Valuation Range is increased by 15%).
See "Pro Forma Data" and "The Conversion and the Merger--Stock Pricing and the
Number of Shares to be Offered in the Conversion" for a description and
discussion of the assumptions used to arrive at such amounts. Seacoast
Financial will be unable to utilize any of the net proceeds of the Conversion
until the consummation of the Conversion.
Seacoast Financial will contribute at least 50% of the net proceeds of the
Conversion to Compass, or $66.5 million to $90.3 million at the minimum and
maximum, respectively, of the Estimated Valuation Range. Compass intends to add
such funds to its general funds, to be used for general corporate purposes,
including investments in short- and medium-term, investment-grade debt
securities, including U.S. Government and Agency securities, corporate bonds
and mortgage-backed securities. Depending on market conditions, Compass also
intends to use the funds to increase its loan originations and may use funds to
open new branches. Compass also intends to use approximately $20.0 million of
the funds for the construction of a new main office.
Net proceeds retained by Seacoast Financial will be used to fund the loan
to Compass's ESOP to acquire up to 8% of the Conversion Shares issued in the
Offerings. Seacoast Financial intends to invest any remaining net proceeds
retained by it in short- and medium-term, investment-grade debt securities,
including U.S. Government and Agency securities, corporate bonds and
mortgage-backed securities. Seacoast Financial may also use a portion of the
net proceeds it retains to pay dividends on its issued and outstanding capital
stock. See "Seacoast Financial's Dividend Policy."
Seacoast Financial and Compass may also use the funds to expand operations
through acquisitions of other banks or branch offices of other banks or
acquisitions of other financial services companies, such as insurance agencies.
However, neither Seacoast Financial nor Compass has any current arrangements,
understandings or agreements regarding any such transactions, other than the
Merger (for which neither will use any of the Conversion proceeds because the
Merger is structured as a stock-for-stock exchange).
To the extent that the stock-based benefit programs which Seacoast
Financial or Compass may adopt subsequent to the Conversion are not funded with
authorized but unissued Seacoast Financial Common Stock, Seacoast Financial or
Compass may use net proceeds from the Conversion to fund the purchase of
Seacoast Financial Common Stock to be awarded under such stock benefit programs,
if any. See "Management of Seacoast Financial and Compass--Compensation of
Officers and Directors through Benefit Plans--Stock Option Plan" and "--Stock
Plan."
Finally, although it has no current intention to do so, Seacoast Financial
may in the future decide to repurchase shares of its issued and outstanding
capital stock, to the extent that such repurchases are consistent with the
preservation of pooling-of-interests accounting treatment under GAAP of the
Merger and of possible future acquisitions, if any. Any such stock repurchase
program would be based upon facts and circumstances at the time of adoption of
such a program, including but not limited to: (i) market and economic factors
such as the price at which the stock is trading in the market, the volume of
trading, the attractiveness of other investment alternatives in terms of the
rate of return and risk involved in such alternatives, the ability to increase
the book value and/or earnings per share of the remaining outstanding shares
and the opportunity to improve Seacoast Financial's return on equity; (ii) the
avoidance of dilution to stockholders by not having to issue additional shares
to cover the exercise of stock options or to fund stock plans; and (iii) any
other circumstances in which repurchases would be in the best interests of
Seacoast Financial and its stockholders.
In order to preserve pooling-of-interests accounting treatment under GAAP
of the Merger, Seacoast Financial's ability to repurchase shares of its common
stock may be limited during the two-year period following consummation of the
Merger. Moreover, in the event Seacoast Financial determines to repurchase
stock, such repurchases will be made at market prices which may be in excess of
the Purchase Price in the Offering. Any stock repurchases will be subject to
the determination of the Board of Directors that both Seacoast Financial and
Compass will be capitalized in excess of all applicable regulatory requirements
after any such repurchases and that such capital will be adequate, taking into
account, among other things, the level of non-performing and other risk assets,
Seacoast Financial's and Compass's current and projected results of operations
and asset/liability structure, the economic environment, tax and other
considerations. The repurchase of stock or payment of dividends, however, would
be
46
<PAGE>
prohibited if Compass's net worth would be reduced below the amount required
for the liquidation account to be established for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders. See "The Conversion
and the Merger--Effects of the Conversion and the Merger--Liquidation Rights."
SEACOAST FINANCIAL'S DIVIDEND POLICY
Upon completion of the Conversion, the Board of Directors of Seacoast
Financial will have the authority to declare dividends on the Seacoast
Financial Common Stock, subject to statutory and regulatory requirements.
Although no decision has been made whether to pay dividends, Seacoast Financial
will consider a policy of paying quarterly cash dividends on the Seacoast
Financial Common Stock, with the first such dividend to be declared and paid no
sooner than the first full quarter following consummation of the Conversion and
the Merger. There can be no assurance that dividends will be paid or, if paid,
what the amounts of dividends will be, or whether such dividends, once paid,
will continue to be paid. Declaration of dividends by the Board of Directors
will be dependent upon a number of factors, including capital requirements,
regulatory limitations, Seacoast Financial's operating results and financial
condition and general economic conditions.
The source of funds for the payment of any dividends by Seacoast Financial
will depend, in part, upon dividends paid from Compass to Seacoast Financial,
in addition to the net Conversion proceeds retained by Seacoast Financial and
earnings thereon. Compass's ability to pay cash dividends is subject to various
federal and state restrictions. Under FDIC regulations, Compass would be
prohibited from paying dividends if, among other things, Compass was not in
compliance with applicable regulatory capital requirements. Under Massachusetts
law, a stock-form savings bank may pay dividends only out of its net profits
and only to the extent such payments do not impair its capital and surplus
accounts. Provided that Compass can meet these requirements, Massachusetts law
permits net profits of a bank to be distributed as a dividend so long as, after
such a distribution, either (i) the capital and surplus accounts of the bank
equal at least 10% of its deposit liabilities or (ii) the surplus account of
the bank equals 100% of its capital account, subject to certain statutory
exceptions.
MARKET FOR SEACOAST FINANCIAL COMMON STOCK
Seacoast Financial has received conditional approval to have the Seacoast
Financial Common Stock quoted on the Nasdaq National Market under the symbol
"SCFS," subject to the completion of the Conversion and compliance with certain
initial listing conditions, including the presence of at least three registered
market makers. Seacoast Financial will seek to encourage and assist at least
three market makers to make a market in its common stock. Although under no
obligation to do so, each of Ryan Beck and McConnell Budd has indicated its
intention to act as a market maker for the Seacoast Financial Common Stock
following consummation of the Conversion. Making a market involves maintaining
bid and ask quotations and being able, as principal, to effect transactions in
reasonable quantities at those quoted prices, subject to various securities
laws and other regulatory requirements. There can be no assurance that the
Seacoast Financial Common Stock will be able to meet the applicable criteria to
maintain its quotation on the Nasdaq National Market or that an active and
liquid trading market in such stock will develop or, if developed, will be
maintained. A public market having the desirable characteristics of depth,
liquidity and orderliness depends upon the presence in the marketplace of both
willing buyers and sellers at any given time, which is not within the control
of Seacoast Financial.
No assurance can be given that a purchaser in the Conversion will be able
to resell the Conversion Shares at or above the Purchase Price, nor can any
assurance be given that a Sandwich Bancorp stockholder receiving Exchange
Shares in the Merger will be able to sell such Exchange Shares at or above the
Seacoast Financial Trading Price used in the calculation of the Exchange Ratio.
See "Risk Factors--Absence of Market for Common Stock" and "The Conversion and
the Merger--Descriptions of the Merger and the Exchange Ratio."
47
<PAGE>
SEACOAST FINANCIAL AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
The following Consolidated Statements of Income of Seacoast Financial and
Subsidiary for each of the years in the three year period ended October 31,
1997 have been audited by Arthur Andersen LLP, independent public accountants,
whose report thereon appears elsewhere in this Prospectus. With respect to
information for the seven months ended May 31, 1998 and 1997, which is
unaudited, in the opinion of management, all adjustments necessary for a fair
presentation of such periods have been included and are of a normal recurring
nature. Results for the seven months ended May 31, 1998 are not necessarily
indicative of the results that may be expected for the year ending October 31,
1998. These statements should be read in conjunction with the "Seacoast
Financial's Consolidated Financial Statements and Notes Thereto" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of Seacoast Financial" included elsewhere herein.
<TABLE>
<CAPTION>
Seven Months Years Ended
Ended May 31, October 31,
-------------------------- ------------------------------------
1998 1997 1997 1996 1995
------------- ---------- ---------- ---------- ----------
(unaudited)
(In thousands)
<S> <C> <C> <C> <C> <C>
Interest and Dividend Income:
Interest on loans ....................................... $41,580 $37,375 $65,499 $60,423 $52,459
Interest and dividends on investment securities ......... 7,523 7,560 13,298 12,756 12,756
Interest on federal funds sold and short-term
investments ........................................... 887 708 1,235 947 1,257
------- ------- ------- ------- -------
Total interest and dividend income ..................... 49,990 45,643 80,032 74,126 66,472
------- ------- ------- ------- -------
Interest Expense:
Interest on deposits .................................... 22,360 20,546 36,109 34,621 31,852
Interest on borrowed funds .............................. 2,672 2,106 3,722 2,624 2,687
------- ------- ------- ------- -------
Total interest expense ................................. 25,032 22,652 39,831 37,245 34,539
------- ------- ------- ------- -------
Net interest income .................................... 24,958 22,991 40,201 36,881 31,933
Provision (credit) for possible loan losses .............. 536 890 1,865 1,166 (351)
------- ------- ------- ------- -------
Net interest income after provision (credit)
for loan losses ....................................... 24,422 22,101 38,336 35,715 32,284
------- ------- ------- ------- -------
Noninterest Income:
Deposit and other banking fees .......................... 1,841 1,760 3,213 2,733 2,271
Loan servicing fees ..................................... 305 342 571 607 584
Card fee income, net .................................... 195 138 398 354 402
Other loan fees ......................................... 277 250 449 412 386
Gain (loss) on sales of investment
securities, net ....................................... (3) 23 37 60 (84)
Gain on sales of loans, net ............................. 568 190 542 181 94
Other income ............................................ 590 405 733 799 750
------- ------- ------- ------- -------
Total noninterest income ............................... 3,773 3,108 5,943 5,146 4,403
------- ------- ------- ------- -------
Noninterest Expense:
Salaries and employee benefits .......................... 8,534 8,041 13,633 12,890 12,747
Occupancy and equipment expenses ........................ 2,023 1,911 3,344 3,276 2,970
Data processing expenses ................................ 1,417 1,230 2,192 2,049 1,896
Marketing expenses ...................................... 792 542 1,225 743 901
Professional services expenses .......................... 645 647 1,044 975 950
Deposit insurance premiums .............................. 90 58 121 392 1,198
Other real estate owned expenses, net ................... 138 293 519 644 1,072
Other operating expenses ................................ 1,936 1,949 2,732 3,189 2,956
------- ------- ------- ------- -------
Total noninterest expense .............................. 15,575 14,671 24,810 24,158 24,690
------- ------- ------- ------- -------
Income before provision for income taxes ............... 12,620 10,538 19,469 16,703 11,997
Provision for income taxes ............................... 4,954 4,254 7,685 6,548 4,511
------- ------- ------- ------- -------
Net income .............................................. $7,666 $ 6,284 $11,784 $10,155 $ 7,486
======= ======= ======= ======= =======
</TABLE>
48
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF SEACOAST FINANCIAL
General
Seacoast Financial's results of operations depend primarily on its net
interest income, which is the difference between the income earned on its loan
and securities portfolios and its cost of funds, consisting of the interest
paid on deposits and borrowings. Results of operations are also affected by
Seacoast Financial's provision for loan losses, as well as noninterest income
and expenses. Seacoast Financial's noninterest income consists principally of
gains and losses from sales of loans and securities, deposit and other banking
fees. Seacoast Financial's non-interest expenses consist principally of
compensation and employee benefits, occupancy, data processing, marketing and
professional services costs and other operating expenses. Results of operations
are also significantly affected by general economic and competitive conditions
and changes in interest rates as well as government policies and actions of
regulatory authorities. Future changes in applicable law, regulations or
government policies may materially affect Seacoast Financial and Compass. See
"Risk Factors--Regulatory Oversight and Legislation."
Seacoast Financial's and Compass's fiscal years end on October 31.
References to a year in this Management's Discussion and Analysis and in
"Business of Compass" refer to a fiscal year ended on October 31.
Management Strategy
Historically, Seacoast Financial (through its banking subsidiary, Compass)
has focused on offering deposit products in New Bedford, Fall River and
Plymouth and their surrounding communities as well as on the island of Martha's
Vineyard. Compass's lending activities are concentrated primarily in
Southeastern Massachusetts (including Cape Cod, primarily for indirect auto
lending) and, to a much lesser degree, Rhode Island, primarily for indirect
auto lending. After the Merger, Cape Cod will become a targeted market area for
both Compass's deposit and its loan products. Seacoast Financial generates its
earnings primarily by originating loans, investing in debt and equity
securities, attracting and retaining deposits by paying competitive interest
rates, borrowing from the Federal Home Loan Bank of Boston ("FHLB") and
controlling its operating expenses.
Compass's business strategy includes (i) taking advantage of its position
as a locally based bank to foster a community orientation, (ii) developing a
niche through its expertise in indirect automobile lending, (iii) diversifying
its loan portfolio composition in an effort to broaden its business
opportunities and help manage credit and interest rate risk, (iv) emphasizing
transaction accounts in order to build customer relationships, achieve a low
cost of funds and generate service fee income and (v) expanding its products
and market area, with the goals of achieving a higher profile and increased
opportunities for growth. Seacoast Financial seeks to pursue its business
strategy in a manner that allows it to maintain asset quality and control
operating expenses.
Management of Credit Risk
Management considers credit risk to be the most important risk factor
affecting the financial condition and operating results of Compass. The
potential for loss associated with this risk factor is managed through a
combination of policies established by Compass's Board of Directors, the
monitoring of compliance with these policies and the periodic reporting and
evaluation of loans with problem characteristics. Policies relate to the
maximum amount that can be granted to a single borrower and his or her related
interests, the aggregate amount of loans outstanding by type in relation to
total assets and capital, loan concentrations, loan to collateral value ratios,
approval limits and other underwriting criteria. Policies also exist with
respect to performing periodic credit reviews, the rating of loans, when loans
should be placed in a non-performing status and the factors that should be
considered in establishing Compass's allowance for loan losses. See "Business
of Compass--Lending Activities."
Management of Market and Interest Rate Risk
General. The chief market risk factor affecting the financial condition
and operating results of Seacoast Financial is interest rate risk. This risk is
managed by periodic evaluation of the interest rate risk inherent in certain
balance sheet accounts, determination of the level of risk considered
appropriate given Compass's capital and liquidity requirements, business
strategy, performance objectives and operating environment and maintenance of
such risks within guidelines approved by the Board. Through such management,
Compass seeks to reduce the vulnerability of its net earnings to changes in
interest rates. Compass's Asset/Liability Committee, comprised of senior
management, is responsible for managing interest rate risk and reviewing with
the Board of Directors on
49
<PAGE>
a quarterly basis its activities and strategies, the effect of those strategies
on Compass's and Seacoast Financial's operating results, Compass's interest
rate risk position and the effect changes in interest rates would have on
Compass's net interest income. The extent of movement of interest rates is an
uncertainty that could have a negative impact on the earnings of Seacoast
Financial. See "Risk Factors--Potential Impact of Changes in Interest Rates on
Seacoast Financial's Earnings."
The principal strategies Seacoast Financial and Compass use to manage
interest rate risk include (i) emphasizing the origination and retention of
adjustable-rate loans, origination of indirect auto loans which have relatively
short maturities and origination of loans with maturities at least partly
matched with those of the deposits and borrowings funding the loans, (ii)
investing in debt securities with relatively short maturities and (iii)
classifying a significant portion of its investment portfolio as available for
sale so as to provide sufficient flexibility in liquidity management.
Gap Analysis. The matching of assets and liabilities may be analyzed by
examining the extent to which such assets and liabilities are "interest rate
sensitive" and by monitoring a bank's interest rate sensitivity "gap." An asset
or liability is deemed to be interest rate sensitive within a specific time
period if it will mature or reprice within that time period. The "interest rate
sensitivity gap" is defined as the difference between the amount of interest-
earning assets maturing or repricing within a specific time period and the
amount of interest-bearing liabilities maturing or repricing within that same
time period. At May 31, 1998, Seacoast Financial's cumulative one-year gap
position, the difference between the amount of interest-earning assets maturing
or repricing within one year and interest-bearing liabilities maturing or
repricing within one year, was negative $59.1 million, or negative 5.0% of
total assets. A gap is positive when the amount of interest rate sensitive
assets exceeds the amount of interest rate sensitive liabilities. A gap is
negative when the amount of interest rate sensitive liabilities exceeds the
amount of interest rate sensitive assets. Accordingly, during a period of
rising interest rates, a bank with a negative gap position generally would not
be in as favorable a position, compared to an institution with a positive gap,
to invest in higher yielding assets. The resulting yield on a bank's assets
generally would increase at a slower rate than the increase in its cost of
interest-bearing liabilities. Conversely, during a period of falling interest
rates, a bank with a negative gap would tend to experience a repricing of its
assets at a slower rate than its interest-bearing liabilities which,
consequently, would generally result in its net interest income growing at a
faster rate than the net interest income of a bank with a positive gap
position.
The following table (the "GAP Table") sets forth the amounts of
interest-earning assets and interest-bearing liabilities outstanding at May 31,
1998 which Seacoast Financial expects, based upon certain assumptions, to
reprice or mature in each of the future time periods shown. Except as stated
below, the amount of assets and liabilities shown which reprice or mature
during a particular period were determined in accordance with the contractual
maturity or, if earlier, the term to repricing of the asset or liability. The
table sets forth an approximation of the projected repricing of assets and
liabilities at May 31, 1998, on the basis of contractual maturities,
anticipated prepayments and scheduled rate adjustments within a three month
period and subsequent selected time intervals. The loan amounts in the table
reflect principal balances expected to be redeployed and/or repriced as a
result of contractual amortization and anticipated prepayments of
adjustable-rate and fixed-rate loans and as a result of contractual rate
adjustments on adjustable-rate loans. Loans and mortgage-backed securities with
prepayment options (fixed and adjustable) have been modeled utilizing an
industry standard financial modeling system to project cash flows based upon
current interest rates. Deposits that do not possess contractual maturity dates
or are not directly linked to an interest rate index are modeled utilizing
deposit decay rates (the estimated period over which a depositor relationship
will last) based on information provided by Compass's excess deposit insurer,
the Depositors Insurance Fund. These deposits include deposits in savings
accounts, NOW accounts and money market accounts. See "Business of
Compass--Lending Activities," "--Investment Activities" and "--Sources of
Funds."
50
<PAGE>
<TABLE>
<CAPTION>
Up to More than More than More than More than More than
Three three months six months one year to three years five years More than
Months to six months to one year three years to five years to ten years ten years Total
------ ------------- ----------- ----------- ------------- ------------ --------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets (1): $ 10,440 $ -- $ -- $ -- $ -- $ -- $ -- $ 10,440
Debt securities (4) .............. 37,116 11,552 24,291 77,499 28,467 7,027 667 186,619
Loans held for sale .............. 19,810 -- -- -- -- -- -- 19,810
Mortgage loans (2) ............... 48,778 60,566 105,590 207,880 74,276 40,961 13,040 551,091
Commercial loans ................. 29,887 3,241 11,711 9,735 2,114 1,428 84 58,200
Indirect auto loans .............. 25,695 24,079 43,670 113,846 39,292 996 -- 247,578
Other consumer loans ............. 5,351 1,883 3,425 9,435 4,489 2,773 197 27,553
-------- -------- -------- -------- -------- -------- -------- ----------
Total interest-earning assets ... 177,077 101,321 188,687 418,395 148,638 53,185 13,988 1,101,291
-------- -------- -------- -------- -------- -------- -------- ----------
Interest-bearing liabilities:
NOW and money market
savings accounts ................ 3,716 2,064 41,956 67,477 25,933 47,737 49,801 238,684
Savings accounts ................. 15,922 8,846 10,615 35,383 26,537 35,383 44,229 176,915
Certificate of deposit accounts .. 171,687 122,943 126,734 77,661 8,349 -- -- 507,374
Borrowed funds ................... 16,233 1,914 3,574 22,287 15,630 9,626 7,810 77,074
-------- -------- -------- -------- -------- -------- -------- ----------
Total interest-bearing
liabilities ................... 207,558 135,767 182,879 202,808 76,449 92,746 101,840 1,000,047
-------- -------- -------- -------- -------- -------- -------- ----------
Interest sensitivity gap (3) ..... $(30,481) $(34,446) $ 5,808 $215,587 $ 72,189 $(39,561) $(87,852) $ 101,244
======== ======== ======== ======== ======== ======== ======== ==========
Cumulative interest sensitivity
gap ............................ $(30,481) $(64,927) $(59,119) $156,468 $228,657 $189,096 $101,244
======== ======== ======== ======== ======== ======== ========
Cumulative interest sensitivity
gap as percentage of total
assets .......................... (2.59%) (5.52%) (5.02%) 13.30% 19.43% 16.07% 8.61%
Cumulative interest sensitivity
gap as a percentage of total
interest-earning assets ......... (2.77%) (5.90%) (5.37%) 14.21% 20.76% 17.17% 9.19%
Cumulative interest-earning assets
as a percentage of cumulative
interest-bearing liabilities .... 85.31% 81.09% 88.77% 121.46% 128.39% 121.05% 110.12%
</TABLE>
- ------------
(1) Interest-earning assets are included in the period in which the balances
are expected to be redeployed and/or repriced as a result of anticipated
prepayments, scheduled rate adjustments and contractual maturities.
(2) For purposes of the gap analysis, allowances for loan losses, deferred loan
fees, unearned discounts and non-performing loans have been excluded.
(3) The interest sensitivity gaps represent the differences between
interest-earning assets and interest-bearing liabilities, expressed as a
dollar amount.
(4) Debt securities are presented at amortized cost.
Certain shortcomings are inherent in the method of analysis presented in
the GAP Table. For example, although certain assets and liabilities may have
similar maturities or periods to repricing, they may react in different degrees
to changes in market interest rates. Also, the interest rates on certain types
of assets and liabilities may fluctuate in advance of changes in market
interest rates, while interest rates on other types may lag behind changes in
market rates. Additionally, certain assets, such as adjustable-rate loans, have
features which restrict changes in interest rates both on a short-term basis
and over the life of the asset. Further, in the event of changes in interest
rates, prepayment and early withdrawal levels would likely deviate
significantly from those assumed in presenting the GAP table. Finally, the
ability of certain borrowers to service their adjustable-rate loans may
decrease in the event of an interest rate increase.
Interest rate gap analysis provides a static view of the maturity and
repricing characteristics of balance sheet positions. Seacoast Financial
quantifies its interest-rate risk exposures using a sophisticated simulation
model as well as the simpler gap analysis. Simulation analysis is used to
measure the exposure of net interest income to changes in interest rates over a
specified time horizon. Simulation analysis involves projecting future interest
income and expense under various rate scenarios. Compass's internal guidelines
on interest rate risk specify that for every 100 basis points immediate shift
in interest rates, its estimated net interest income over the next 12 months
should decline by less than 5%. As of May 31, 1998, Seacoast Financial's
estimated exposure as a percentage of estimated net interest income for the
next twelve and twenty-four month periods is as follows:
<TABLE>
<CAPTION>
Percentage Change in
Estimated
Net Interest Income Over:
--------------------------
12 months 24 months
----------- ------------
<S> <C> <C>
200 basis point increase in rates ......... (7.98%) (4.57%)
200 basis point decrease in rates ......... (0.27%) (5.07%)
</TABLE>
51
<PAGE>
Based on the scenarios above, net income would be adversely affected
(within Compass's internal guidelines) in both the twelve and twenty-four month
periods. For each one percentage point change in net interest income, the
adverse effect on net income would be $277,000, assuming a 40% tax rate.
Analysis of Net Interest Income
Net interest income represents the difference between income on
interest-earning assets and expense on interest-bearing liabilities. Net
interest income also depends on the relative amounts of interest-earning assets
and interest-bearing liabilities and the interest rates earned or paid on them.
Average Balance Sheet. The following tables set forth certain information
relating to Seacoast Financial for the seven months ended May 31, 1998 and 1997
and the years ended October 31, 1997, 1996 and 1995. The average yields and
costs are derived by dividing income or expenses by the average balances of
interest-earning assets or interest-bearing liabilities, respectively, for the
periods shown and reflect annualized yields and costs. Average balances are
derived from average daily balances. The yields and costs include fees which
are considered adjustments to yields.
<TABLE>
<CAPTION>
Seven months ended May 31,
--------------------------------------------------------------------------
1998 1997
----------------------------------- -----------------------------------
Average Average Average Average
balance Interest yield/cost balance Interest yield/cost
------------ ---------- ----------- ------------ ---------- -----------
(Dollars in thousands) (Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Short-term investments ................................ $ 24,886 $ 887 6.11% $ 20,036 $ 708 6.06%
Debt securities (1) ................................... 201,545 7,242 6.16 207,997 7,357 6.06
Equity securities (1) ................................. 11,674 281 4.13 6,801 203 5.12
Mortgage loans (2) .................................... 552,078 26,761 8.31 516,622 25,364 8.42
Commercial loans (2) .................................. 54,069 3,111 9.86 49,005 2,830 9.90
Indirect auto loans (2) ............................... 223,809 10,385 7.95 171,135 8,019 8.03
Other consumer loans (2) .............................. 25,428 1,323 8.92 22,486 1,162 8.86
---------- ------- ---------- -------
Total interest-earning assets ........................ 1,093,489 49,990 7.84 994,082 45,643 7.87
------- ------ ------- ------
Allowance for loan losses ............................. (10,597) (10,422)
Non-interest earning assets ........................... 58,146 60,142
---------- ----------
Total assets ......................................... $1,141,038 $1,043,802
========== ==========
Liabilities and Surplus:
Interest-bearing liabilities:
NOW accounts .......................................... $ 80,170 $ 679 1.45% $ 70,289 $ 595 1.45%
Savings accounts ...................................... 170,023 2,567 2.59 170,407 2,563 2,58
Money market savings accounts ......................... 146,465 2,352 2.75 137,744 2,276 2.83
Certificate of deposit accounts ....................... 501,324 16,762 5.73 458,149 15,112 5.65
---------- ------- ---------- -------
Total deposits ....................................... 897,982 22,360 4.27 836,589 20,546 4.21
Borrowed funds:
Short-term borrowings (3) ............................ 10,993 316 4.93 4,221 129 5.24
FHLB advances ........................................ 61,986 2,356 6.52 51,293 1,977 6.61
---------- ------- ---------- -------
Total borrowings .................................... 72,979 2,672 6.28 55,514 2,106 6.50
---------- ------- ---------- -------
Total interest-bearing liabilities ................. 970,961 25,032 4.42 892,103 22,652 4.35
---------- ------- ------ ---------- ------- ------
Non-interest bearing demand checking accounts ......... 56,213 53,562
Other liabilities ..................................... 9,778 8,559
---------- ----------
Total liabilities ................................... 1,036,952 954,224
Surplus ............................................... 104,086 89,578
---------- ----------
Total liabilities and surplus ....................... $1,141,038 $1,043,802
========== ==========
Net interest income/interest rate spread (4) .......... $24,958 3.42% $22,991 3.52%
======= ====== ======= ======
Net interest margin (5) ............................... 3.91% 3.96%
====== ======
Ratio of interest-earning assets to
interest-bearing liabilities ......................... 112.62% 111.43%
====== ======
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
Year ended October 31,
----------------------------------------------------------------------------------------------
1997 1996 1995
------------------------------- ----------------------------- -------------------------------
Average Average Average Average Average Average
balance Interest yield/cost balance Interest yield/cost balance Interest yield/cost
---------- -------- ---------- --------- -------- ---------- -------- -------- ----------
(Dollars in thousands
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Short-term investments ............ $ 21,516 $ 1,235 5.74% $ 15,969 $ 947 5.93% $ 17,263 1,257 7.28%
Debt securities (1) ............... 211,304 12,910 6.11 208,665 12,370 5.93 210,680 12,280 5.83
Equity securities (1) ............. 7,290 388 5.32 7,296 386 5.29 8,484 476 5.61
Mortgage loans (2) ................ 523,376 43,977 8.40 498,185 42,162 8.46 451,497 37,813 8.37
Commercial loans (2) .............. 50,361 4,972 9.87 45,283 4,456 9.84 35,610 3,522 9.89
Indirect auto loans (2) ........... 180,600 14,497 8.03 150,070 11,927 7.95 124,850 9,502 7.61
Other consumer loans (2) .......... 23,195 2,053 8.85 20,795 1,878 9.03 17,204 1,622 9.43
---------- ------- -------- ------- -------- ------
Total interest-earning assets .... 1,017,642 80,032 7.86 946,263 74,126 7.83 865,588 66,472 7.68
------- ------ ------- ------ ------ ------
Allowance for loan losses ......... (10,570) (10,109) (9,811)
Non-interest earning assets ....... 59,094 61,480 58,298
---------- -------- --------
Total assets ..................... $1,066,166 $997,634 $914,075
========== ======== ========
Liabilities and Surplus:
Interest-bearing liabilities:
Deposits:
NOW accounts ..................... $ 72,837 $ 1,065 1.46% $ 68,156 $ 1,008 1.48% $ 61,366 $ 1,078 1.76%
Savings accounts ................. 171,157 4,434 2.59 176,311 4,660 2.64 173,700 5,107 2.94
Money market savings accounts .... 140,413 3,959 2.82 136,322 3,888 2.85 129,920 3,916 3.01
Certificate of deposit accounts .. 466,942 26,651 5.71 434,930 25,065 5.76 388,708 21,751 5.60
---------- ------- -------- ------- -------- -------
Total deposits .................. 851,349 36,109 4.24 815,719 34,621 4.24 753,694 31,852 4.23
Borrowed funds:
Short-term borrowings (3) ........ 5,666 283 4.99 1,727 100 5.79 1,326 84 6.33
FHLB advances .................... 51,490 3,439 6.68 37,288 2,524 6.77 39,552 2,603 6.58
---------- ------- -------- ------- -------- -------
Total borrowings ................ 57,156 3,722 6.51 39,015 2,624 6.73 40,878 2,687 6.57
---------- ------- -------- ------- -------- -------
Total interest-bearing 794,572 34,539 4.35
liabilities ................... 908,505 39,831 4.38 854,734 37,245 4.36
------ ------ ------
Non-interest bearing demand
checking accounts ............... 56,284 53,684 41,824
Other liabilities ................. 8,807 8,807 6,845
---------- -------- --------
Total liabilities ................ 973,596 917,225 843,241
Surplus ........................... 92,570 80,409 70,834
---------- -------- --------
Total liabilities and surplus .... $1,066,166 $997,634 $914,075
========== ======== ========
Net interest income/interest
rate spread (4) ................. $40,201 3.48% $36,881 3.47% $31,933 3.33%
======= ====== ======= ====== ======= ======
Net interest margin (5) ........... 3.95% 3.90% 3.69%
====== ====== ======
Ratio of interest-earning assets
to interest-bearing liabilities.. 112.01% 110.71% 108.94%
====== ====== ======
</TABLE>
- --------------
(1) Average balances include unrealized gains on securities available for sale.
Equity securities include marketable equity securities and restricted
equity securities.
(2) Loans on non-accrual status are included in the average balances.
(3) Short-term borrowings include immaterial balances of other borrowings.
(4) Interest rate spread represents the difference between the yield on
interest-earning assets and the cost of interest-bearing liabilities.
(5) Net interest margin represents annualized net interest income divided by
average interest-earning assets.
53
<PAGE>
Rate/Volume Analysis. The following table presents the extent to which
changes in interest rates and changes in volume of interest-earning assets and
interest-bearing liabilities have affected Seacoast Financial's interest income
and interest expense during the periods indicated. Information is provided in
each category with respect to: (i) changes attributable to changes in volume
(changes in volume multiplied by prior rate); (ii) changes attributable to
changes in rate (changes in rate multiplied by prior volume); and (iii) the net
change. The changes attributable to the combined impact of volume and rate have
been allocated proportionately to the changes due to volume and the changes due
to rate.
<TABLE>
<CAPTION>
Seven months ended Year ended Year ended
May 31, 1998 October 31, 1997 October 31, 1996
compared to compared to compared to
seven months ended year ended year ended
May 31, 1997 October 31, 1996 October 31, 1995
----------------------------- -------------------------- -----------------------------
Increase (decrease) due to Increase (decrease) due to Increase (decrease) due to
----------------------------- -------------------------- -----------------------------
Volume Rate Net Volume Rate Net Volume Rate Net
--------- -------- --------- -------- ------ -------- --------- ------ ------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Short-term investments .......... $ 173 $ 6 $ 179 $ 319 $ (31) $ 288 $ (89) $(221) $ (310)
Debt securities ................. (231) 116 (115) 158 382 540 (118) 208 90
Equity securities ............... 123 (45) 78 -- 2 2 (64) (25) (89)
Mortgage loans .................. 1,722 (325) 1,397 2,119 (304) 1,815 3,947 402 4,349
Commercial loans ................ 291 (10) 281 501 15 516 952 (18) 934
Indirect auto loans ............. 2,445 (79) 2,366 2,450 120 2,570 1,989 436 2,425
Other consumer loans ............ 153 8 161 213 (38) 175 327 (72) 255
------ ----- ------ ------ ----- ------ ------ ----- ------
Total interest-earning assets .. $4,676 $(329) $4,347 $5,760 $ 146 $5,906 $6,944 $ 710 $7,654
----- ----- ------ ------ ----- ------ ------ ----- ------
Interest-bearing liabilities:
Deposits:
NOW accounts ................... $ 84 $ -- $ 84 $ 69 $ (12) $ 57 $ 112 $(182) $ (70)
Savings accounts ............... (6) 10 4 (135) (91) (226) 76 (523) (447)
Money market savings
accounts ...................... 141 (65) 76 116 (45) 71 188 (216) (28)
Certificate of deposit
accounts ..................... 1,441 209 1,650 1,829 (243) 1,586 2,648 666 3,314
----- ----- ------ ------ ----- ------ ------ ----- ------
Total deposits ................ 1,660 154 1,814 1,879 (391) 1,488 3,024 (255) 2,769
----- ----- ------ ------ ----- ------ ------ ----- ------
Borrowed funds:
Short-term borrowings ......... 195 (8) 187 199 (16) 183 24 (8) 16
FHLB borrowings ............... 407 (28) 379 950 (35) 915 (152) 73 (79)
----- ------ ------ ------ ----- ------ ------ ----- ------
Total borrowings .............. 602 (36) 566 1,149 (51) 1,098 (128) 65 (63)
----- ------ ------ ------ ----- ------ ------ ------ ------
Total interest-bearing
liabilities .................. 2,262 118 2,380 3,028 (442) 2,586 2,896 (190) 2,706
----- ------ ------ ------ ----- ------ ------ ----- ------
Net change in net interest
income ........................ $2,414 $ (447) $1,967 $2,732 $ 588 $3,320 $4,048 $ 900 $4,948
===== ====== ====== ====== ===== ====== ====== ====== ======
</TABLE>
Comparison of Financial Condition at May 31, 1998 and October 31, 1997
Total assets increased by $70.0 million, or 6.3%, from $1,106.6 million at
October 31, 1997 to $1,176.6 million at May 31, 1998. This growth was due
primarily to a $12.2 million, or 37.2%, increase in cash and cash equivalents
and a $64.2 million, or 7.8% increase in loans. Asset growth was funded
primarily by a $44.4 million, or 4.7%, increase in deposits and a $13.6
million, or 26.7%, increase in FHLB advances.
The increase in cash and cash equivalents at May 31, 1998 was temporary in
nature and attributable to a reduction in the difference in rates paid on
short- to medium-term investments and funds invested overnight as well as
normal fluctuations in activity.
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<PAGE>
The increase in loans occurred primarily in Seacoast Financial's
construction and indirect auto loan portfolios. From October 31, 1997 to May
31, 1998, construction loans increased by $8.0 million, or 23.6%, and indirect
auto loans (net of unearned discounts) increased by $39.5 million, or 19.0%.
The growth during the seven months ended May 31, 1998 is primarily attributable
to the favorable interest rate environment and economic conditions which
prevailed during this period.
Total deposits at May 31, 1998 were $982.4 million, an increase of $44.4
million, or 4.7%, compared to $937.9 million at October 31, 1997. The increase
in deposits was primarily due to favorable economic conditions partially offset
by a continuing low interest rate environment wherein Seacoast Financial
competes against other instruments available to the public such as mutual funds
and annuities. Total borrowed funds were $77.1 million at May 31, 1998 compared
to $60.7 million at October 31, 1997, an increase of $16.4 million, or 27.0%.
During the seven months ended May 31, 1998, Seacoast Financial's net borrowings
from the FHLB increased by $13.6 million at a weighted average rate of 5.98%.
The increase in surplus of $8.4 million to $106.5 million at May 31, 1998
resulted from net earnings of $7.7 million for the seven months ended May 31,
1998 and a $703,000 increase in unrealized gains (net of taxes) on securities
available for sale, most of which pertained to Seacoast Financial's marketable
equity securities portfolio.
Comparison of Financial Condition at October 31, 1997 and October 31, 1996
Total assets were $1,106.6 million at October 31, 1997 compared to
$1,027.8 million at October 31, 1996, an increase of $78.8 million, or 7.7%.
Substantially all of the growth was due to a $71.8 million, or 9.7%, increase
in net loans. Asset growth was funded primarily from increased deposits ($55.3
million), increased borrowings from the FHLB ($5.6 million), increased
borrowings through repurchase agreements ($7.6 million) and increased surplus
($13.2 million). Total net loans increased from $737.8 million at October 31,
1996 to $809.6 million at October 31, 1997. Between those dates, total real
estate loans increased by $21.9 million, or 4.3%, to $536.1 million, and total
commercial loans increased by $5.2 million, or 11.2%, to $51.4 million. The
most significant area of real estate loan growth was in residential real estate
loans which increased by $19.8 million, or 5.8%, to $363.0 million. While the
residential real estate loan market was strong throughout the year due to a
favorable interest rate environment, so too was the competition for such
business. Many borrowers took advantage of the increased competition to
refinance their loans. This factor, along with an increase in the sales of
fixed-rate mortgage loans, caused Seacoast Financial's net growth in real
estate loans in 1997 ($21.9 million) to be less than that achieved in 1996
($39.9 million) despite approximately the same level of loan originations in
each year.
The most significant area of overall loan growth in 1997 and 1996 was in
the area of indirect auto loans. During 1997, such loans increased, before
unearned discount, $48.2 million, or 25.4%, to $238.1 million at October 31,
1997. During 1996 such loans increased $30.4 million, or 19.1%, to $189.9
million at October 31, 1996. This growth is primarily attributable to the
expansion of the network of auto dealerships offering Compass's auto financing
program. This expansion resulted in an increase in the number of new loan
originations from 8,181 in 1996 to 9,817 in 1997, an increase of 20%.
Total investments increased modestly from $216.7 million at October 31,
1996 to $227.1 million at October 31, 1997. Among debt securities, Seacoast
Financial increased its holdings of U.S. Government and Agency obligations by
$2.8 million and corporate bonds by $22.4 million while decreasing its holdings
of mortgage-backed securities by $18.5 million. These shifts were caused by a
change in tax regulations and an opportunity to increase portfolio yield
without extending portfolio duration.
Total deposits increased 6.3% from $882.6 million at October 31, 1996 to
$937.9 million at October 31, 1997. The overall growth in deposits in 1997 was
favorably affected by Compass's introduction and promotion of
relationship-based retail checking account products offering a package of
benefits, including enhanced pricing on certificates of deposits. The
acquisition of competing local financial institutions by larger regional banks
also contributed to Compass's deposit growth in 1997 as customers who prefer to
bank with a locally-based community institution shifted their deposits to
Compass.
Of the $55.3 million increase in deposits in 1997, $37.4 million occurred
in certificates of deposit, continuing a gradual shift of deposits to
higher-yielding accounts. The remaining deposit growth of $17.9 million, or
4.1%, resulted from an increase in retail and business checking accounts.
Compass also offers customers with checking
55
<PAGE>
accounts the opportunity to "sweep" funds into a higher-yielding, non-insured,
investments under a repurchase agreement. The balance in these accounts
increased by $7.6 million from October 31, 1996 to October 31, 1997. Funds
invested under repurchase agreements are classified as short-term borrowings
rather than as deposits.
Customers also moderated inflows of deposits by opting to invest their
funds in alternative investments, such as mutual funds and annuities, that
Compass does not offer directly (other than through its affiliation with INVEST
Financial Corporation), rather than in deposit products perceived to have less
attractive returns.
Compass increased its borrowings from the FHLB from $45.4 million at
October 31, 1996 to $51.0 million at October 31, 1997 as part of its Affordable
Home Loan Program. Under that program, Compass borrows funds under a special
fixed-rate, amortizing program to provide low cost financing for first time
home buyers in the low-to-moderate income categories.
The increase in surplus of $13.2 million to $98.1 million at October 31,
1997 resulted from net earnings of $11.8 million and a $1.4 million increase in
unrealized gains (net of taxes) on securities available for sale.
Comparison of Operating Results for the Seven Months Ended May 31, 1998 and
May 31, 1997
General. Net income increased by $1.4 million or 22.2%, from $6.3 million
for the seven months ended May 31, 1997 to $7.7 million for the seven months
ended May 31, 1998. The improvement was attributable to higher net interest
income of $2.0 million, a $354,000 decrease in the provision for loan losses
due to a continuation of the favorable trends in the various factors considered
by management in evaluating the adequacy of the allowance for loan losses and
an increase in net gains on sales of loans of $378,000. The improvement was
partially offset by an increase of $904,000 in non-interest expense due to
higher salaries, occupancy and equipment expenses, data processing expenses and
marketing costs. The increase in net interest income was due to growth in
average interest-earning assets.
Interest Income. Interest income for the seven months ended May 31, 1998
was $50.0 million, compared to $45.6 million for the seven months ended May 31,
1997, an increase of $4.4 million, or 9.6%. Substantially all of the increase
in interest income resulted from growth in average interest-earning assets of
$99.4 million, or 10.0%. The principal areas of growth related to real estate
loans (up $35.5 million, or 6.9%) and indirect auto loans (up $52.7 million, or
30.8%). Most of the real estate loan growth resulted from increased
originations of one- to four-family real estate loans. The increase in indirect
auto loans resulted from an improved economic environment within Compass's
local markets plus the expansion of such lending into Rhode Island.
Interest Expense. Interest expense for the seven months ended May 31, 1998
was $25.0 million, compared to $22.7 million for the seven months ended May 31,
1997, an increase of $2.3 million, or 10.1%. This increase resulted from a
higher average balance of interest-bearing liabilities ($78.9 million, or
8.8%). Average interest-bearing deposit balances increased $61.4 million, or
7.3%, as a result of the introduction and promotion of relationship-based
retail checking account products in 1996 and 1997.
Compass increased its borrowings from the FHLB during the seven months
ended May 31, 1998. Interest expense on borrowed funds increased $566,000, or
26.9%, in the seven months ended May 31, 1998 due to a $17.5 million, or 31.5%,
increase in the average balance of such funds to $73.0 million, which was
partially offset by a 22 basis point reduction in the average rate paid on
borrowed funds to 6.28% in the 1998 period compared to the 1997 period.
Provision for Loan Losses. Compass establishes provisions for loan losses,
which are charged to operations, in order to maintain the allowance for loan
losses at a level that management estimates is appropriate to absorb future
charge-offs of loans deemed uncollectible. In determining the appropriate level
of the allowance for loan losses, management considers past and anticipated
loss experience, evaluations of real estate collateral, current and anticipated
economic conditions, volume and type of lending and the levels of nonperforming
and other classified loans. The amount of the allowance is based on estimates
and the ultimate losses may vary from such estimates. Management assesses the
allowance for loan losses on a quarterly basis and makes provisions for loan
losses monthly in order to maintain the adequacy of the allowance.
Compass provided $536,000 for loan losses in the seven month period ended
May 31, 1998 compared to $890,000 in the seven month period ended May 31, 1997,
a decrease of $354,000, or 39.8%. This decrease was primarily influenced by a
reduction in the balance of adversely classified loans and fewer delinquencies.
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<PAGE>
Non-Interest Income. Non-interest income is comprised of fees and charges
for bank services, net interchange fees on the processing of merchant credit
card receipts, gains or losses from sales of assets, loan servicing fees and
other income resulting from miscellaneous transactions. Total non-interest
income was $3.8 million for the seven months ended May 31, 1998 compared to
$3.1 million for the seven months ended May 31, 1997, an increase of $665,000,
or 21.4%. The increase resulted primarily from an increase of $378,000 in the
gain on sale of mortgage loans, from $190,000 in the seven months ended May 31,
1997 to $568,000 in the seven months ended May 31, 1998. Compass generally
sells in the secondary mortgage market fixed rate residential mortgage loans
with terms of 15 years or longer. With the reduction in interest rates on 15-
and 30-year fixed rate mortgages which occurred in 1997 and into 1998, the
volume of fixed-rate mortgage loan originations increased which contributed to
this increase.
Non-Interest Expense. Non-interest expense increased by $904,000, or 6.1%,
from $14.7 million for the seven months ended May 31, 1997 to $15.6 million for
the seven months ended May 31, 1998. Of this increase, $493,000 related to
compensation and employee benefits, which rose 6.1% to $8.5 million for the
seven months ended May 31, 1998. The higher level of compensation and employee
benefits was caused by overall salary increases averaging 4% and staffing
increases in the lending area.
Seacoast Financial expects compensation and employee benefits expenses to
increase after the Offering, primarily as a result of the adoption of the ESOP
in connection with the Offering. In this regard, the proposed ESOP, which
intends to purchase 8% of the Conversion Shares issued in connection with the
Offering, would result in increased compensation and employee benefits expenses
as the ESOP shares are allocated. See "Management of Seacoast Financial and
Compass--Compensation of Officers and Trustees through Benefit Plans--Employee
Stock Ownership Plan and Trust." Following the Conversion, Seacoast Financial
may also adopt a stock plan for the recognition and retention of management. If
such a stock plan were adopted, compensation and employee benefit expense would
increase as stock plan awards were granted.
Occupancy and equipment expenses increased $112,000, or 5.9%, to $2.0
million for the seven months ended May 31, 1998. This increase was due to an
increase in ATM maintenance costs, and a one-time reduction in rent expense in
1997 of $36,000 attributable to a leased facility which Compass no longer
utilized.
Marketing expenses increased $250,000, or 46.1%, to $792,000 for the seven
months ended May 31, 1998. This increase was primarily attributable to
advertising campaigns related to the new ROTH IRA accounts allowed by changes
in the tax law, Compass's commercial loan programs and the advertising of
Compass's Preferred Checking account program.
Data processing expenses increased $187,000, or 15.2%, to $1.4 million for
the seven months ended May 31, 1998. This increase was due to new services,
including laser printing and Internet services, and volume-related increases in
loans and deposits.
Other real estate owned (OREO) expenses decreased $155,000, or 52.9%, to
$138,000 for the seven months ended May 31, 1998 due to the continuation of the
decline in the number of properties held as OREO and stable real estate market
values.
Income Taxes. Income tax expense was $5.0 million for the seven months
ended May 31, 1998, an increase of $700,000, or 16.5%, compared to the 1997
period. The effective tax rate was 39.3% in 1998 compared to 40.4% in 1997
which decrease was caused by Compass's greater utilization of non-bank
subsidiaries that were taxed at a lower rate for state tax purposes.
Comparison of Operating Results for the Years Ended October 31, 1997 and
October 31, 1996
General. Net income was $11.8 million in 1997 compared to $10.2 million in
1996, an increase of $1.6 million or 15.7%. Due primarily to an increase in
average interest-earning assets of $71.4 million, or 7.5%, net interest income
increased by $3.3 million, or 9.0%, from $36.9 million in 1996 to $40.2 million
in 1997. The other significant factors affecting the change in net income was
an increase of $797,000 in non-interest income offset by an increase of
$699,000 in the provision for loan losses and an increase of $652,000 in
non-interest expense.
Interest Income. Interest income was $80.0 million in 1997, compared to
$74.1 million in 1996, an increase of $5.9 million, or 8.0%. This increase in
interest income resulted almost exclusively from interest-earning asset growth.
The yield on interest-earning assets increased three basis points in 1997 from
7.83% in 1996 to 7.86% in
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<PAGE>
1997. A significant portion of the increase in interest-earning assets was
attributable to the indirect auto loan portfolio, which increased from $165.6
million at October 31, 1996 to $208.0 million at October 31, 1997, and the real
estate loan portfolios, which increased from $514.2 million to $536.1 million,
at those dates, respectively.
Interest Expense. Interest expense increased by $2.6 million, or 6.9%,
from $37.2 million in 1996 to $39.8 million in 1997. The increase resulted from
a $53.8 million, or 6.3%, increase in average interest-bearing liabilities and
a two basis point increase in the average rate paid on such liabilities. Total
average interest-bearing deposits increased by $35.6 million, or 4.4%, with
most of the increase occurring in certificates of deposit because of the higher
rates offered on such deposits in comparison to those offered on other types of
deposits. Because of the level of loan growth, Compass increased its borrowings
from the FHLB with the average amount of such borrowings outstanding increasing
by $14.2 million, or 38.1%, from $37.3 million in 1996 to $51.5 million in
1997.
Provision for Loan Losses. Seacoast Financial's provision for loan losses
increased by $699,000, or 60.0%, from $1.2 million in 1996 to $1.9 million in
1997. With net loan charge-offs of $1.6 million in 1997 (as compared to
$682,000 in 1996), Seacoast Financial's allowance for loan losses increased by
$308,000 in 1997. The total allowance of $10.6 million at October 31, 1997
represented 1.30% of total loans, a slight decrease from 1.38% at October 31,
1996.
The increase of $875,000 in net charge-offs in 1997 resulted from the
resolution of certain commercial and commercial real estate loans as well as
the impact of the increasing indirect auto loan portfolio.
Non-Interest Income. Total non-interest income was $5.9 million in 1997,
an increase of $797,000, or 15.5%, from $5.1 million in 1996. The increase in
deposit and other banking fees from $2.7 million in 1996 to $3.2 million in
1997 was primarily attributable to a $141,000 increase in monthly checking
account fees and $182,000 in additional returned check fees. An increase in the
monthly maintenance fee on basic checking accounts instituted in 1996 caused
higher monthly checking account fees in 1997. Returned check fees increased in
1997 because of price increases on check returns put into effect in July 1996.
The remaining growth in non-interest income resulted from gains on sales
of loans, which increased by $361,000, or 200%, from $181,000 in 1996 to
$542,000 in 1997. Of this increase, $255,000 was attributable to the initial
application of SFAS No.125. As more fully disclosed in Note 1 to the
accompanying consolidated financial statements of Seacoast Financial, SFAS No.
125 required that Seacoast Financial capitalize, for the first time, the value
of servicing rights on loans originated and sold to others with servicing
retained by Seacoast Financial. The remaining increase of $106,000 in gains on
sales of loans was attributable to an increase in the volume of loan sales from
$15.5 million in 1996 to $30.1 million in 1997.
Non-Interest Expense. Total non-interest expense was $24.8 million in
1997, compared to $24.2 million in 1996, an increase of $652,000, or 2.7%. This
increase was primarily attributable to an increase of $743,000, or 5.8%, in
salaries and employee benefits and an increase of $482,000, or 64.9%, in
marketing expenses, which increases were partially offset by a decrease of
$271,000 in deposit insurance premiums, $125,000 in other real estate owned
expenses, and a $416,000 recovery of life insurance premiums recognized when an
insurance company emerged from receivership in 1997.
The increase in salaries and employee benefits in 1997 was caused by an
increase of $415,000, or 3.4%, in salaries and employee benefits and a
$328,000, or 47.1%, increase in bonuses paid in accordance with Compass's bonus
plan. These increases were primarily driven both by individual and
institutional performance in 1997 as the average number of full-time equivalent
employees in 1997 remained almost flat at 336 compared to 334 in 1996.
The increase in marketing expense in 1997 was due to significant
promotional activities associated with the introduction of the Preferred
Checking and Prime for Life equity loan programs. In addition, Compass
introduced its website on the Internet.
FDIC insurance expense decreased by $271,000 in 1997 because of a
reduction in the annual premiums charged by the FDIC on insurable deposits.
Other real estate owned ("OREO") expenses declined by $125,000 in 1997
primarily due to a reduction in the number of properties held as OREO and
stable real estate market values.
Income Taxes. Total income tax expense was $7.7 million in 1997 compared
to $6.5 million in 1996. The effective tax rate was slightly higher in 1997
(39.5%) than in 1996 (39.2%) primarily because Compass's effective Federal
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<PAGE>
statutory tax rate increased by 1% with the growth in taxable income partially
offset by a reduction in the effective state tax rate caused by Compass's
greater utilization of non-bank subsidiaries that were taxed at a lower rate.
Comparison of Operating Results for the Years Ended October 31, 1996 and
October 31, 1995
General. Net income increased by $2.7 million, or 35.7%, from $7.5 million
in 1995 to $10.2 million in 1996. Contributing to the increase in net income
was a $4.9 million, or 15.5%, improvement in net interest income, $462,000 more
in deposit and other banking fees, $428,000 less in expenses relating to other
real estate owned and an $806,000 reduction in premiums paid to the FDIC for
deposit insurance. Partially offsetting these additions to income was a $2.0
million increase in the provision for income taxes and a $1.5 million increase
in the provision for loan losses.
Interest Income. Interest income was $74.1 million in 1996, compared to
$66.5 million in 1995, an increase of $7.6 million, or 11.5%. Of this increase,
$710,000 resulted from higher asset yields and $6.9 million from a higher
volume of interest-earning assets. The 15 basis point increase in the average
yield on interest-earning assets was caused by the upward movement in the prime
rate throughout 1994 and most of 1995. This movement was beneficial to Seacoast
Financial since the interest rates on much of its commercial loan portfolio are
based on the prime rate. In addition, Seacoast Financial's growth in
interest-earning assets was entirely within the higher yielding loan portfolio
while the investment portfolio was reduced slightly in 1996. Total average
interest-earning assets increased by $80.7 million, or 9.3%, to $946.3 million
in 1996. Most of the loan growth was in real estate loans (up $46.7 million, or
10.3%) and in indirect auto loans (up $25.2 million, or 20.2%).
Interest Expense. Interest expense was $37.2 million in 1996, compared to
$34.5 million in 1995, an increase of $2.7 million, or 7.8%. This increase was
due to higher levels of deposits as the average rate paid on interest-bearing
liabilities was virtually unchanged. Average interest-bearing deposits
increased by $62.0 million, or 8.2%. Of this increase, $46.2 million, or 74.5%,
was attributable to certificates of deposit. With the gradual decline in money
market and other savings deposit account rates which began in 1995 and remained
flat in 1996, depositors continued to shift more of their funds to higher
paying certificate of deposit accounts. Consequently, NOW, savings and money
market accounts increased, in the aggregate, only $15.8 million, or 4.3%, in
1996. Despite the shift in deposit mix toward term certificates having higher
rates, the cost of funds for all deposits was only one basis point higher in
1996 at 4.24%. The average balance of borrowed funds decreased $1.9 million
from $40.9 million in 1995 to $39.0 million in 1996 while the average cost of
such borrowings increased from 6.57% in 1995 to 6.73% in 1996.
Provision for Loan Losses. In 1996, Seacoast Financial provided $1.2
million for loan losses. Because a credit of $351,000 was recognized in 1995,
the provision increased by $1.5 million in 1996. During 1995, Compass acquired
Martha's Vineyard National Bank which had an allowance for loan losses of $3.5
million at the date of acquisition. In assessing its overall reserve
requirements, management of Seacoast Financial determined that such reserves
could be reduced in 1995 and recorded a credit of $351,000. While the 1996
provision reflects a significant increase from 1995, such provision is
comparable to amounts recorded in recent years.
Non-Interest Income. Non-interest income increased to $5.1 million in 1996
from $4.4 million in 1995 primarily as a result of a $462,000 increase in basic
monthly fees and returned check charges on checking accounts. These increased
fees resulted from the introduction of a standard monthly fee assessed on
certain checking accounts and an increase in the fee charged on returned
checks, both of which changes were implemented during 1996. In addition, ATM
service fees contributed to the increase in non-interest income in 1996.
To a lesser extent, gains from the sale of both investment securities and
residential real estate loans contributed to the 1996 increase as Seacoast
Financial realized a net gain on security transactions as compared to a net
loss in 1995 and favorable rates on real estate loans made it possible to
increase sales of fixed rate loans in the secondary market.
Non-Interest Expense. Total non-interest expense was $24.2 million in
1996, compared to $24.7 million in 1995, a decrease of $532,000, or 2.2%. The
decrease was attributable to a $806,000 reduction in premiums paid to the FDIC
for deposit insurance, from $1.2 million in 1995 to $392,000 in 1996, and a
$428,000 decrease in net expenses related to other real estate owned, a
reduction consistent with the decline in foreclosed properties held. Other
categories of non-interest expense increased by an aggregate of $702,000, or
2.9%, in 1996, principally due to the impact of Seacoast Financial's
acquisition of Martha's Vineyard National Bank on December 28, 1994.
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<PAGE>
Accordingly, the activities of the acquired bank are fully reflected in 1996
while 1995 includes only 10 months of combined operations.
Income Taxes. Income tax expense was $6.5 million in 1996 and $4.5 million
in 1995, an increase of $2.0 million, or 44.4%. The effective tax rate
increased from 37.6% in 1995 to 39.2% in 1996 primarily as a result of an
increase in state income taxes resulting from a relative decline in the portion
of income taxed at lower rates applicable to non-bank subsidiaries.
Liquidity and Capital Resources
Seacoast Financial's primary sources of funds are deposits, principal and
interest payments on loans and debt securities and borrowings from the FHLB.
While maturities and scheduled amortization of loans are predictable sources of
funds, deposit flows and mortgage prepayments are greatly influenced by
interest rate trends, economic conditions and competition.
Total assets increased by $70.0 million, $78.8 million, $43.8 million, and
$192.0 million (including $128.7 million resulting from the acquisition of
Martha's Vineyard National Bank) for the seven months ended May 31, 1998 and
the years ended October 31, 1997, 1996 and 1995. These increases included $64.2
million, $72.1 million, $72.1 million and $166.1 million (including $104.4
million resulting from the acquisition of Martha's Vineyard National Bank),
respectively, of growth in Seacoast Financial's gross loan portfolio.
During the past few years, the combination of generally low interest rates
on deposit products, and the attraction of alternative investments, such as
mutual funds and annuities, has significantly affected deposit mix and flows.
Seacoast Financial experienced a $44.4 million net deposit inflow for the seven
months ended May 31, 1998 and net deposit inflows of $55.3 million, $22.9
million and $172.4 million (including $116.1 million of deposits acquired in
the acquisition of Martha's Vineyard National Bank) for the years ended October
31, 1997, 1996 and 1995, respectively. During the period from November 1, 1994
to May 31, 1998, time deposits increased from 43.1% to 51.6% of total deposits.
Compass has expanded its use of borrowings from the FHLB as part of its
management of interest rate risk. Such borrowings increased by $13.6 million,
$5.6 million, $6.0 million and $7.9 million during the seven months ended May
31, 1998 and the years ended October 31, 1997, 1996 and 1995, respectively. At
May 31, 1998, total borrowings from the FHLB amounted to $64.6 million and
Compass had the capacity to increase that total to $358.6 million. Depending on
market conditions and Compass's liquidity and GAP position, Compass may
continue to borrow from the FHLB.
Seacoast Financial's most liquid assets are cash and due from banks,
short-term investments and debt securities. The levels of these assets are
dependent on Seacoast Financial's operating, financing, lending and investment
activities during any given period. At May 31, 1998, cash and due from banks,
short-term investments and debt securities maturing within one year amounted to
$77.8 million, or 6.6% of total assets.
At May 31, 1998, Compass had commitments to originate loans, unused
outstanding lines of credit, standby letters of credit and undisbursed proceeds
of loans totaling $105.9 million. Compass anticipates that it will have
sufficient funds available to meet its current loan commitments. Certificates
of deposit maturing within one year from May 31, 1998 amounted to $421.4
million. Compass expects that substantially all maturing certificate accounts
will be retained by Compass at maturity. At May 31, 1998, Compass exceeded all
of its regulatory requirements with a leverage capital of $102.6 million, or
8.89% of average assets, which is above the required level of $46.2 million or
4.00%, and total risk-based capital of $112.9 million, or 13.69% of adjusted
assets, which is above the required level of $66.0 million, or 8.00%. Seacoast
Financial also exceeded all regulatory capital requirements applicable to bank
holding companies. See "Regulation of Seacoast Financial and
Compass--Regulatory Capital Requirements" and "--Insurance of Accounts and
Regulation by the FDIC."
Impact of Inflation and Changing Prices
The Consolidated Financial Statements and Notes thereto presented herein
have been prepared in accordance with GAAP, which requires the measurement of
financial position and operating results in terms of historical dollar amounts
without considering changes in the relative purchasing power of money over time
due to inflation. The impact of inflation is reflected in the increased cost of
Seacoast Financial's operations. Unlike industrial companies,
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<PAGE>
nearly all of the assets and liabilities of Seacoast Financial are monetary in
nature. As a result, interest rates have a greater impact on Seacoast
Financial's performance than do the effects of general levels of inflation.
Interest rates do not necessarily move in the same direction or to the same
extent as the prices of goods and services.
Impact of New Accounting Standards
Accounting for Stock-Based Compensation. In November 1995, the FASB issued
SFAS No. 123, "Accounting for Stock Based Compensation." The statement
established financial accounting standards for stock-based employee
compensation plans. SFAS No. 123 permits Seacoast Financial to choose either a
new fair value based method or the Accounting Principles Board (the "APB")
Opinion 25 intrinsic value based method of accounting for its stock-based
compensation arrangements. SFAS No. 123 requires pro forma disclosures of net
earnings and earnings per share computed as if the fair value based method had
been applied in financial statements of companies that continue to follow
current practice in accounting for such arrangements under APB Opinion 25. SFAS
No. 123 applies to all stock-based employee compensation plans in which an
employer grants shares of its stock or other equity instruments to employees
except for employee stock ownership plans. SFAS No. 123 also applies to plans
in which the employer incurs liabilities to employees in amounts based on the
price of the employer's stock (e.g., stock option plans, stock purchase plans,
restricted stock plans and stock appreciation rights). The statement also
specifies the accounting for transactions in which a company issues stock
options or other equity instruments for services provided by nonemployees or to
acquire goods or services from outside suppliers or vendors. The recognition
provisions of SFAS No. 123 for companies choosing to adopt the new fair value
based method of accounting for stock-based compensation arrangements is
applicable to all transactions entered into in fiscal years that begin after
December 15, 1995. Any effect that this statement will have on Seacoast
Financial will be applicable upon consummation of the Offering.
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. In June 1996, the FASB issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities." This statement provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of liabilities
based on consistent application of a financial-components approach that focuses
on control. It distinguishes transfers of financial assets that are sales from
transfers that are secured borrowings. Under the financial-components approach,
after a transfer of financial assets, an entity recognizes all financial and
servicing assets it controls and liabilities it has incurred and derecognizes
financial assets it no longer controls and liabilities that have been
extinguished. The financial-components approach focuses on the assets and
liabilities that exist after the transfer. Many of these assets and liabilities
are components of financial assets that existed prior to the transfer. If a
transfer does not meet the criteria for a sale, the transfer is accounted for
as a secured borrowing with pledge of collateral. The Statement is effective
for transfers and servicing of financial assets and extinguishments of
liabilities occurring after December 31, 1996, and is to be applied
prospectively. Earlier or retroactive application of the Statement is not
permitted. In December 1996, the FASB issued SFAS No. 127, "Deferral of the
Effective Date of Certain Provisions of SFAS No. 125." That statement requires
the deferral of implementation as it relates to repurchase agreements,
dollar-rolls, securities lending and similar transactions until years beginning
after December 31, 1997. Earlier or retroactive application of SFAS No. 125 is
not permitted. Adoption of SFAS No. 125 and SFAS No. 127 has not had a material
impact on the financial position or operating results of Seacoast Financial.
Earnings Per Share. In February 1997, the FASB issued SFAS No. 128,
"Earnings Per Share." This statement, which supersedes APB Opinion 15,
simplifies the reporting of earnings per share by eliminating the presentation
of primary earnings per share and requiring the presentation of basic earnings
per share. The calculation of basic earnings per share excludes the effect of
potential common shares to be issued, thus resulting in no dilution. The
statement requires entities with complex capital structures to present basic
and diluted earnings per share on the face of the income statement and
eliminates the modified treasury stock method of computing potential common
shares. The statement is effective for financial statements issued for fiscal
years ending after December 15, 1997. Seacoast Financial will follow the
guidance of SFAS No. 128 when it is required to report earnings per share.
Reporting Comprehensive Income. In June 1997, the FASB issued SFAS No.
130, "Reporting Comprehensive Income." The statement requires entities
presenting a complete set of financial statements to include details of
comprehensive income that arise in the reporting period. Comprehensive income
consists of net income or loss for the current period and other comprehensive
income consisting of revenue, expenses, gains and losses that bypass the income
statement and are reported directly in a separate component of equity. Other
comprehensive income
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<PAGE>
includes, for example, unrealized gains and losses on certain investment
securities, minimum pension liability adjustments and foreign currency items.
SFAS No. 130 requires that components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. At May 31, 1998, Seacoast Financial's other comprehensive
income consisted of unrealized gains on securities classified as available for
sale, net of taxes. The statement is effective for fiscal years beginning after
December 15, 1997 and requires restatement of prior period financial statements
presented for comparative purposes.
Disclosures about Segments of an Enterprise and Related Information. In
June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The statement changes the current practice
for reporting segment information under SFAS No. 14, "Financial Reporting for
Segments of an Enterprise." Public entities are required to report financial
and descriptive information about their reportable operating segments. An
operating segment is a component of an entity for which financial information
is developed and evaluated by the entity's chief operating decision maker to
assess performance and to make decisions about resource allocation. Disclosures
about operating segments should generally be based on the information used
internally. The statement is effective for financial statements for periods
beginning after December 15, 1997. On adoption, comparative information for
earlier years is to be restated.
Employers' Disclosures About Pensions and Other Postretirement Benefits.
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits," which is to become effective for
fiscal years beginning after December 15, 1997. This statement revises
employers' disclosures about pension and other postretirement benefit plans. It
does not change the measurement or recognition of those plans. Restatement of
disclosures for earlier periods provided for comparative purposes is required
unless the information is not readily available.
Accounting for Derivative Instruments and Hedging Activities. In June
1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" which is effective for fiscal years beginning after June
15, 1999. The Statement establishes accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value. The statement requires
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting. Management does not anticipate that the adoption
of this statement will have a material impact on the financial position or
operating results of Seacoast Financial.
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<PAGE>
BUSINESS OF SEACOAST FINANCIAL
Seacoast Financial is a mutual holding company that was formed in 1994 in
connection with Compass's reorganization into the mutual holding company form
of organization. Seacoast Financial is registered with the FRB as a bank
holding company under the BHCA. Since the formation of Seacoast Financial, it
has owned 100% of Compass's outstanding capital stock, and will continue to do
so after consummation of the Conversion.
In addition to the capital stock of Compass, Seacoast Financial's assets
consist primarily of approximately $5.4 million in investment securities and
cash as of May 31, 1998. Seacoast Financial is subject to regulation and
supervision by the FRB and the Commissioner. See "Regulation of Seacoast
Financial and Compass--Holding Company Regulation."
Upon completion of the Conversion and the Merger, Seacoast Financial will
have no significant liabilities and no assets other than 100% of the shares of
Compass's outstanding common stock, its investment securities and any net
proceeds of the Conversion not contributed to Compass.
On a consolidated basis, Seacoast Financial's total assets and deposits
have grown from $1,027.8 million and $882.6 million, respectively, as of
October 31, 1996 to $1,106.6 million and $937.9 million, respectively, as of
October 31, 1997. At May 31, 1998, total assets and deposits were $1,176.6
million and $982.4 million, respectively. Seacoast Financial's gross loan
portfolio has increased from $748.1 million as of October 31, 1996 to $884.4
million on May 31, 1998. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations of Seacoast Financial--Comparison of
Financial Condition at October 31, 1997 and October 31, 1996" and "--Comparison
of Financial Condition at May 31, 1998 and October 31, 1997."
The management of Seacoast Financial is set forth under "Management of
Seacoast Financial and Compass." At the present time, Seacoast Financial does
not employ any persons other than certain officers who are also officers of
Compass but uses the support staff of Compass from time to time. Additional
employees may be hired as appropriate to the extent Seacoast Financial expands
its business in the future.
The fiscal years of both Seacoast Financial and Compass end on October 31.
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<PAGE>
BUSINESS OF COMPASS
General
Based on total assets, Compass was the sixth largest savings bank in
Massachusetts as of October 31, 1997. Compass is principally engaged in the
business of attracting deposits from the general public and investing those
deposits in loans and investment securities. Individual and business customers
of Compass have a variety of deposit accounts with Compass, including NOW
(checking) and other demand deposit accounts, passbook savings accounts, money
market deposit accounts, Individual Retirement Accounts ("IRAs") and various
certificates of deposit. Compass's loan portfolio includes residential and
commercial real estate loans, indirect auto loans, construction loans and
consumer and commercial loans. With its emphasis on commercial and commercial
real estate lending as well as its indirect auto loan program, management
believes that Compass differs from the typical savings bank. Savings banks
normally concentrate to a greater degree on residential mortgage lending.
Compass's investment portfolio consists primarily of U.S. Government and Agency
securities, corporate debt obligations, mortgage-backed securities and, to a
lesser extent, marketable equity securities.
Compass's results of operations depend to a large degree on its net
interest income, which is the difference between interest income from loans and
investments and interest expense for deposits and borrowings. See "Risk
Factors--Potential Impact of Changes in Interest Rates on Seacoast Financial's
Earnings."
For a description of certain effects of the Merger on Seacoast Financial's
and Compass's business, see "Certain Effects of the Merger on Seacoast
Financial."
Market Area and Competition
Compass is a community-oriented savings bank offering a variety of
financial products and services to meet the needs of the communities it serves.
Compass's deposit gathering is concentrated in the communities surrounding its
23 full service branch offices located in the southeastern Massachusetts areas
of Greater New Bedford, Greater Fall River, Greater Plymouth and the island of
Martha's Vineyard. Compass also maintains four free-standing ATM machines and
two limited-service high school branches. Compass primarily originates loans
secured by one- to four-family residential properties and commercial real
estate, indirect auto loans, commercial loans and consumer loans within
southeastern Massachusetts and, to a much lesser degree, Rhode Island.
Compass's main office is located in New Bedford, Massachusetts. New
Bedford had an estimated population of 99,088 in 1995 and is located in the
southeastern, or "South Coast," region of Massachusetts, approximately 60 miles
south of Boston and 30 miles east of Providence, Rhode Island. The City of New
Bedford was historically a major center of the New England fishery and textile
industries. Compass also operates in the City of Fall River, another city with
a history of textile manufacturing. Fall River had an estimated population of
92,560 in 1995 and is located to the west of New Bedford and just north of the
southern Massachusetts coastline. Over the past several decades, the cities of
New Bedford and Fall River have experienced relatively flat economic activity
and higher unemployment rates than most of New England and the country,
primarily as a result of a reduction in manufacturing and marine-related jobs
there. Although the economy in New Bedford and Fall River has not generally
been as strong as that of the rest of Massachusetts and New England, neither
has it been as volatile. For example, these areas did not experience the rapid
economic growth and increase in real estate values that characterized much of
Massachusetts and New England during the 1980's, and therefore were not hit as
hard by the economic recession suffered by New England in the late 1980's and
early 1990's. Similarly, while the economies and real estate markets of parts
of New England have improved significantly since the end of the recession in
the early 1990's, the economies of and real estate markets in New Bedford and
Fall River, although relatively stable, lag behind the rest of the region.
However, many well-known manufacturers, such as Titleist Footjoy Worldwide,
American Flexible Conduit, Acushnet Rubber, Globe Manufacturing and Quaker
Fabrics, are still located in the New Bedford and Fall River areas. In
addition, the recent designation of the New Bedford Waterfront and adjoining
Historic District as a National Park dedicated to New Bedford's history as the
"Whaling Capital of the World" could have a positive impact on the local
economy.
Compass also operates in the towns surrounding New Bedford and Fall River,
which have experienced significant growth over the last decade. The University
of Massachusetts at Dartmouth has been a regional source for educational
opportunities and a catalyst for economic development. Single family home
construction has accelerated in the suburban towns of Dartmouth, Acushnet,
Westport, Somerset and Swansea during the past five years.
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<PAGE>
Compass's market area also includes the resort island of Martha's
Vineyard. Compass opened a loan production office on Martha's Vineyard in 1986,
and acquired the Martha's Vineyard National Bank in December 1994. A well-known
and affluent vacation destination, the island's economy is cyclical, driven
primarily by the tourist industry, which includes second homes, restaurants,
inns, hotels, small service businesses and tradespeople.
In 1994, Compass entered Plymouth County through its acquisition of a
significant portion of the deposits of the Plymouth Federal Savings Bank
("Plymouth Federal") from the Resolution Trust Corporation. Plymouth is, by
area, the largest town in Massachusetts. Its size and direct highway and rail
access to Boston have created recent increased demand for mortgage and
residential construction loans there. Compass continues to operate one of the
former Plymouth Federal branch offices, and has opened three additional
branches in the area in order to increase deposit and lending opportunities,
one in the town of Carver, one in Manomet (a section of the town of Plymouth)
and the third in the town of Plymouth. Compass has also become an active real
estate lender in the communities north of Plymouth which are generally
desirable suburban towns populated by Boston commuters.
Compass's current business activity in the Cape Cod market is primarily
restricted to its indirect auto lending program. Following the Merger,
Compass's market area will expand to include Sandwich's substantial Cape Cod
market. Like Martha's Vineyard, Cape Cod is a tourist destination, with a
cyclical economy based primarily on second homes, restaurants, inns, hotels and
small service businesses. See "Certain Effects of the Merger on Seacoast
Financial."
Compass faces significant competition both in generating loans and in
attracting deposits. Compass's primary market area is highly competitive and
Compass faces direct competition from a significant number of financial
institutions, many with a state-wide, a regional and, in some cases, a national
presence. Many of these financial institutions are significantly larger and
have greater financial resources than Compass. Compass's competition for loans
comes principally from commercial banks, savings banks, credit unions, mortgage
brokers, mortgage banking companies and insurance companies. Its most direct
competition for deposits has historically come from savings, cooperative and
commercial banks and credit unions, particularly in Fall River and New Bedford.
In addition, Compass faces increasing competition for deposits from non-bank
institutions, such as brokerage firms and insurance companies which offer
instruments like short-term money-market funds, corporate and government
securities funds, mutual funds and annuities. Competition may also increase as
a result of the lifting of restrictions on the interstate operations of
financial institutions. Finally, credit unions do not pay federal or state
income taxes and are subject to fewer regulatory constraints than savings
banks. Numerous credit unions are located in Fall River and Rhode Island and,
because of their tax and regulatory status, they enjoy a competitive advantage
over Compass. This advantage places significant competitive pressure on the
prices of Compass's loan and deposits. See "Risk Factors--Competition."
Lending Activities
General. Compass's gross loan portfolio totaled $884.4 million as of May
31, 1998, representing 75.2% of Compass's total assets on that date. Compass
primarily makes residential real estate loans secured by one- to four-family
residences, indirect auto loans and commercial real estate loans. Such loans
represented 41.6%, 28.0% (net of unearned discounts) and 14.1%, respectively,
of Compass's gross loan portfolio as of May 31, 1998. Compass started making
indirect auto loans in 1985 and, between October 31, 1995 and May 31, 1998,
that portion of Compass's loan portfolio grew by 77.4%. Compass also makes home
equity line of credit loans, residential and commercial construction loans,
commercial loans, fixed rate home equity loans, personal installment loans,
education loans and passbook loans. Real estate secures a majority of Compass's
loans as of May 31, 1998, including some loans classified as commercial loans.
Compass makes loans throughout its market area and originated $363.7
million in loans during 1997 and $303.5 million in loans during the seven
months ended May 31, 1998. It sold, on a servicing retained basis, $33.7
million and $45.4 million in residential loans in the secondary market during
those same periods, respectively.
The types of loans that Compass may originate are subject to federal and
state law and regulations. Interest rates charged by Compass on loans are
affected primarily by the demand for such loans, the supply of money available
for lending purposes and the rates offered by competitors. These factors are,
in turn, affected by national, regional and local economic conditions, the
levels of federal government spending and revenue, monetary policies of the FRB
and tax policies.
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<PAGE>
The following table summarizes the composition of Compass's gross loan
portfolio as of certain dates:
<TABLE>
<CAPTION>
At October 31,
At May 31, -----------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------------- ------------------------------------ ----------------- ----------------- ----------------
Percent Percent Percent Percent Percent Percent
Amount of total Amount of total Amount of total Amount of total Amount of total Amount of total
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------- ------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate loans:
Residential
(one- to four-family)...$368,136 41.63% $363,030 44.26% $343,204 45.88% $336,489 49.78% $268,010 52.56% $251,623 55.78%
Commercial (1) .......... 125,089 14.14 124,059 15.13 128,707 17.20 103,096 15.25 67,784 13.30 61,938 13.73
Home equity lines
of credit .............. 15,941 1.80 15,133 1.85 17,288 2.31 18,857 2.79 11,448 2.25 13,016 2.89
Construction, net ....... 41,925 4.74 33,894 4.13 25,007 3.34 15,877 2.35 14,844 2.91 13,719 3.04
-------- ------ -------- ------ -------- ------ -------- ------ -------- ------ -------- ------
Total real estate
loans ................ 551,091 62.31 536,116 65.37 514,206 68.73 474,319 70.17 362,086 71.02 340,296 75.44
-------- ------ -------- ------ -------- ------ -------- ------ -------- ------ -------- ------
Commercial loans ........ 58,200 6.58 51,371 6.26 46,211 6.18 43,402 6.42 20,763 4.07 17,061 3.78
-------- ------ -------- ------ -------- ------ -------- ------ -------- ------ -------- ------
Consumer loans:
Indirect auto loans ..... 280,215 31.68 238,114 29.03 189,865 25.38 159,433 23.58 125,667 24.65 90,159 19.99
Other ................... 27,553 3.12 24,662 3.01 22,063 2.95 18,764 2.78 15,433 3.03 14,120 3.13
-------- -------- -------- -------- -------- --------
Consumer loans ......... 307,768 262,776 211,928 178,197 141,100 104,279
Less:
unearned discount ...... 32,637 30,066 24,232 19,911 14,081 10,522
-------- -------- -------- -------- -------- --------
Total consumer loans ... 275,131 31.11 232,710 28.37 187,696 25.09 158,286 23.41 127,019 24.91 93,757 20.78
-------- ------ -------- ------ -------- ------ -------- ------ -------- ------ -------- ------
Total loans ............$884,422 100.00% $820,197 100.00% $748,113 100.00% $676,007 100.00% $509,868 100.00% $451,114 100.00%
======== ====== ======== ====== ======== ====== ======== ====== ======== ====== ======== ======
</TABLE>
- --------
(1) In September 1996, Compass reclassified approximately $28.0 in multifamily
loans from residential real estate to commercial real estate. Corresponding
prior-period reclassifications have not been made.
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<PAGE>
Loan Origination and Underwriting. Loan officers based in each of
Compass's four regions--Plymouth, Fall River, New Bedford and Martha's
Vineyard--originate and underwrite Compass's mortgage and commercial loans.
Compass underwrites consumer loans at its main office, although it originates
such loans at its branches and, in the case of indirect auto loans, through a
network of car dealers. Compass also employs nine traveling loan originators,
based in the four regions, who originate residential mortgage loans. Compass
has recently entered into agreements for the origination of, and has begun
purchasing, adjustable rate residential mortgage loans by Boston area mortgage
correspondents.
Compass relies on print, radio, television and cable advertising, on
referrals from existing customers, attorneys and real estate professionals and
on relationships with existing borrowers to originate loans. In addition,
Compass solicits consumer loans, including home equity loans, by direct mail to
existing deposit and residential mortgage loan customers. Compass tries to
develop relationships with its customers in which customers see Compass as a
source of support in the management of their personal finances or in the
conduct of their businesses. Based on those relationships, many customers have
more than one account with and/or loan from Compass. Finally, Compass relies on
relationships with automobile dealers operating throughout its current market
area, Rhode Island and on Cape Cod to generate new indirect auto loans. The
dealers originate the loans, send loan applications to Compass and Compass
underwrites them. Compass maintains frequent contact with its dealers through
its Senior Vice President, Consumer Lending, and through a sales officer who
devotes all of his time to servicing this business.
Compass's underwriting of loans varies depending on the types of loan
underwritten. It generally includes the use of credit applications, property
appraisals and verification of an applicant's credit history, employment and
banking relationships to the extent management deems appropriate in each case.
Additional information concerning the underwriting of specific types of loans
is set forth in sections that discuss those loans and in the discussion of
environmental factors that affect lending. See "--Lending Activities,"
"--Residential Real Estate Loans," "--Indirect Auto and Other Consumer Loans,"
"--Commercial Real Estate Loans," "--Commercial Loans,"
"--Construction Loans" and "--Environmental Issues."
Four senior loan officers oversee loan origination and underwriting.
Individual loan officers may originate loans within certain approved lending
limits. A credit committee, consisting of senior loan officers, must approve
all commercial loans that exceed $300,000 and Compass's Board of Directors or
the executive committee thereof must approve all loans over $750,000. Pursuant
to its loan policy, Compass generally will not make loans aggregating more than
$5.0 million to any one borrower. Exceptions to this "house" lending limit are
approved by the Board. At May 31, 1998, two customers had aggregate borrowing
capacity with Compass which exceeded this limit, with outstanding loans (all of
which were performing in accordance with their terms), commitments and amounts
available under lines of credit totaling $8.2 million and $5.1 million at that
date. Compass's internal lending limit is significantly lower than the
Massachusetts legal lending limit, which is 20% of a bank's surplus and capital
stock accounts, or $20.1 million for Compass as of May 31, 1998.
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The following table sets forth certain information concerning Compass's
origination of loans:
<TABLE>
<CAPTION>
Seven months
ended May 31, Year ended October 31,
------------------------- ---------------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(In thousands)
<S> <C> <C> <C> <C> <C>
Loans outstanding at beginning of period ......... $820,197 $748,113 $748,113 $676,007 $509,868
Loans originated:
Mortgage loans:
Residential (1) ................................ 106,569 50,547 94,743 104,856 56,184
Commercial real estate (1) ..................... 6,842 10,392 12,292 21,761 15,502
Construction ................................... 35,196 23,421 46,659 26,784 19,645
Home Equity .................................... 8,168 2,450 7,644 5,934 3,542
-------- -------- -------- -------- --------
Total mortgage loans .......................... 156,775 86,810 161,338 159,335 94,873
Commercial loans ................................ 39,419 37,265 61,333 53,462 48,370
Indirect auto loans ............................. 97,143 62,073 128,117 100,305 85,558
Other consumer loans ............................ 10,122 7,523 12,877 13,518 10,486
-------- -------- -------- -------- --------
Total loans originated ........................ 303,459 193,671 363,665 326,620 239,287
-------- -------- -------- -------- --------
Purchases of mortgage loans ..................... 6,736 500 4,461 8,859 8,313
-------- -------- -------- -------- --------
Acquisition of Martha's Vineyard
National Bank ................................. -- -- -- -- 104,393
-------- -------- -------- -------- --------
Less:
Principal repayments ........................... 198,612 145,866 257,049 224,612 160,012
Loans sold or securitized ...................... 45,360 16,084 33,726 35,260 18,827
Transfers to other real estate owned ........... 1,098 2,023 3,333 2,430 5,783
Principal charged-off .......................... 900 839 1,934 1,071 1,232
-------- -------- -------- -------- --------
Loans outstanding at end of period .............. $884,422 $777,472 $820,197 $748,113 $676,007
======== ======== ======== ======== ========
</TABLE>
- ------------
(1) In September 1996, Compass reclassified as commercial real estate loans
approximately $28.0 million in multi-family loans that previously had been
classified as residential real estate. Corresponding reclassifications were
not made for prior periods.
Compass charges origination fees, or points, and collects fees to cover
the costs of appraisals and credit reports on most new residential mortgage
loans. Compass also collects late charges on real estate loans and prepayment
premiums on commercial mortgage loans. Compass generally charges availability
fees on lines of credit. For information regarding Compass's recognition of
loan fees and costs, see Note 1 of the notes to the Consolidated Financial
Statements of Seacoast Financial and Subsidiary presented elsewhere herein.
Loan Purchases. Compass occasionally purchases participation interests in
commercial and residential real estate loans originated by other banks in its
market area. Compass underwrites such loans as if it had originated them
itself. Compass's interest in participation loans as of May 31, 1998 totaled
$16.1 million, of which $11.2 million was acquired from a bank located on the
island of Nantucket, Massachusetts.
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<PAGE>
Loan Maturity and Repricing. The following table shows the contractual
maturity and repricing dates of Compass's loan portfolio at May 31, 1998. The
table does not reflect prepayments or scheduled principal amortization.
<TABLE>
<CAPTION>
At May 31, 1998
-------------------------------------------------------------------------------------------
Real estate mortgage loans
----------------------------------------------- Indirect Other
Home auto consumer Total
Residential Commercial Construction equity Commercial loans loans loans
----------- ---------- ------------- -------- ---------- -------- -------- -------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Amounts due (1):
Within one year ................... $ 65,040 $ 44,940 $ 9,449 $13,267 $41,536 $ 4,215 $ 3,792 $182,239
-------- -------- ------- ------- ------- -------- ------- --------
After one year:
More than one year to
three years ...................... 96,326 54,941 13,528 173 8,137 59,562 5,001 237,668
More than three years to
five years ....................... 59,642 13,937 4,980 527 3,441 167,581 6,417 256,525
More than five years to
ten years ........................ 41,817 8,009 4,409 1,058 4,817 16,220 10,812 87,142
More than ten years ............... 105,311 3,262 9,559 916 269 -- 1,531 120,848
-------- -------- ------- ------- ------- -------- ------- --------
Total due after
May 31, 1999 .................... 303,096 80,149 32,476 2,674 16,664 243,363 23,761 702,183
-------- -------- ------- ------- ------- -------- ------- --------
Total amount due ................. $368,136 $125,089 $41,925 $15,941 $58,200 $247,578 $27,553 884,422
======== ======== ======= ======= ======= ======== =======
Less:
Allowance for loan losses ......... (10,508)
Net loans ........................ --------
$873,914
========
</TABLE>
- ------------
(1) Amounts due are net of unadvanced funds on loans.
The following table sets forth, at May 31, 1998, the dollar amount of
gross loans, net of unadvanced funds on loans, contractually due or scheduled
to reprice after May 31, 1999 and whether such loans have fixed interest rates
or adjustable interest rates:
<TABLE>
<CAPTION>
Due after May 31, 1999
----------------------------------------
Fixed Adjustable Total
----------- ------------ -----------
(In thousands)
<S> <C> <C> <C>
Real estate mortgage loans:
Residential ............................... $147,522 $155,574 $303,096
Commercial ................................ 13,666 66,483 80,149
Construction .............................. 14,276 18,200 32,476
Home equity ............................... 2,674 -- 2,674
-------- -------- --------
Total real estate mortgage loans ......... 178,138 240,257 418,395
Commercial loans ........................... 12,168 4,496 16,664
Indirect auto loans ....................... 243,363 -- 243,363
Other consumer loans ...................... 23,761 -- 23,761
-------- -------- --------
Total loans .............................. $457,430 $244,753 $702,183
======== ======== ========
</TABLE>
Residential Real Estate Loans. As of May 31, 1998, adjustable rate
mortgage loans represented approximately 60% and fixed-rate mortgage loans
represented approximately 40% of Compass's portfolio of residential mortgage
loans secured by one- to four-family owner-occupied properties. Compass
originated $104.9 million, $94.7 million and $106.6 million of such loans in
1996, 1997 and in the first seven months of 1998, respectively. Compass's
portfolio of residential loans totaled $368.1 million, which represented 41.6%
of Compass's total loan portfolio at May 31, 1998. Over 90% of this portfolio
is secured by single-family owner-occupied homes and the remainder is secured
primarily by two-, three- or four-family owner-occupied homes.
Compass currently sells most of the fixed-rate residential mortgage loans
it originates with terms of 15 years or longer to the Federal Home Loan
Mortgage Corporation ("FHLMC"). Compass is also authorized to sell loans to the
Federal National Mortgage Association ("FNMA") and to service those loans but
has not done so to date.
69
<PAGE>
Compass continues to service loans that it sells to FHLMC and receives a
monthly fee for servicing such loans equal to 0.25% per annum of the amounts
outstanding on them. Compass serviced for others loans aggregating $238.2
million as of May 31, 1998 and it earned $571,000 and $305,000 in servicing
fees, representing 9.61% and 8.08%, respectively, of its non-interest income,
in 1997 and during the first seven months of 1998, respectively.
Compass generally retains for its own portfolio fixed-rate residential
mortgage loans with terms of less than 15 years and fixed-rate residential
mortgage loans that are amortized on a bi-weekly basis and have terms between
10 and 30 years. Compass had $56.0 million of such loans in its portfolio as of
May 31, 1998. Compass also retains in its portfolio fixed-rate mortgage loans
that exceed the size limits of FHLMC's underwriting criteria, and loans made
under its program for low-to-moderate income borrowers, as described below.
Compass originates adjustable-rate residential mortgage loans mostly for
its own portfolio. Compass originated $45.1 million and $26.4 million in such
loans during 1997 and during the first seven months of 1998, respectively, and
had $220.5 million of such loans in its residential loan portfolio,
representing approximately 60% of such portfolio, as of May 31, 1998. Compass
offers adjustable-rate mortgage loans that reprice annually, every three years
or after five years and annually thereafter. The interest rate adjustments on
these loans are indexed to the applicable one-year or three-year U.S. Treasury
CMT Index with corresponding add-on margins of varying amounts. Such loans are
subject to certain requirements and limitations set forth in guidelines issued
by the Commissioner, including limitations on the amount and frequency of
interest rate changes. Rates adjust by no more than one or two percentage
points in each adjustment period and by no more than five or six points over
the life of a loan. Adjustable rate loans are generally originated at a
discount, generally ranging from 1.25% to 2.75%, from the fully margined index
rate.
Compass's residential mortgage loans are written in amounts up to 95% of
the appraised value or selling price, whichever is less, of the property
securing the loan, although the majority of such loans are written with ratios
of 80% or less. Compass generally requires borrowers to obtain private mortgage
insurance with respect to loans with a greater than 80% loan-to-value ratio.
In 1994, Compass initiated a program to originate residential mortgage
loans to low-to-moderate income borrowers. The loans have fixed or adjustable
interest rates that are typically lower than prevailing market rates, are
closed without points, have substantially lower closing costs than Compass's
other residential loans and have terms of up to 30 years. The loans may have up
to a 95% loan-to-value ratio, although borrowers must obtain private mortgage
insurance if the loan-to-value ratio exceeds 80%. Compass does not sell these
loans in the secondary market. Compass makes the loans with funds borrowed
under the Community Investment Program ("CIP") and the New England Fund ("NEF")
housing programs of the Federal Home Loan Bank of Boston (the "FHLB"). These
programs permit Compass to borrow from the FHLB at below market rates to
finance the loans. Compass had $21.3 million of CIP-funded loans and $19.5
million of NEF-funded loans in its residential loan portfolio, representing
11.1% of such portfolio, as of May 31, 1998.
Compass originates, sells and services residential mortgage loans to low-
and moderate-income first-time home buyers with funds provided by the
Massachusetts Housing Finance Agency. As of May 31, 1998, Compass serviced $3.9
million of such loans.
Commercial Real Estate Loans. Compass makes commercial real estate loans
throughout its market area. Compass originated $12.3 million and $6.8 million
in commercial real estate loans in 1997 and during the first seven months of
1998, respectively, and had $125.1 million in commercial real estate loans in
its loan portfolio, representing 14.1% of such portfolio, as of May 31, 1998.
Properties that are used for borrowers' businesses, such as small office
buildings, warehouses, restaurants, inns, retail facilities, industrial
properties and multi-family income properties, normally collateralize Compass's
commercial real estate loans. The loans typically have terms of up to 20 years
and interest rates which adjust over periods of one to five years based on one
of various rate indices. Commercial real estate loans with fixed interest rates
have terms ranging from one to ten years, with the most frequent term lasting
from three to five years.
Compass primarily considers the quality of the borrower's management and
the borrower's cash flows when it underwrites commercial real estate loans.
Compass generally makes commercial real estate loans in an amount equal to no
more than 80% of the appraised value of the property securing the loan. Compass
generally requires the owners of businesses seeking commercial real estate
loans to personally guarantee those loans.
70
<PAGE>
At May 31, 1998, $24.3 million of the commercial real estate loans in
Compass's portfolio were secured by multi-family income properties. A majority
of these properties are located in Fall River and New Bedford and contain
between five and twelve units.
Commercial real estate lending entails greater credit risks than
residential mortgage lending to owner occupants. The repayment of commercial
real estate loans depends on the business and financial condition of the
borrower. Economic events and changes in government regulations, which Compass
and its borrowers cannot control, could have an adverse impact on the cash
flows generated by properties securing Compass's commercial real estate loans
and on the value of such properties. Commercial properties tend to decline in
value more rapidly than residential owner-occupied properties during economic
recessions. See "Risk Factors--Construction, Commercial Real Estate, Commercial
and Indirect Auto Lending Risks."
Construction Loans. Compass makes both residential and commercial
construction loans, primarily in Plymouth County, in and around New Bedford and
on Martha's Vineyard. Compass typically makes the loans to owner-borrowers who
will occupy the properties (residential construction) and to licensed and
experienced developers for the construction of single-family home developments
(commercial construction). Developers build homes in Plymouth County to
accommodate a growing population that commutes to work in Boston. There are few
developments on Martha's Vineyard but individuals regularly build secondary
residences there.
Compass makes construction loans only to developers who have successful
track records. Compass generally increases the loan-to-value ratios on such
loans as construction progresses. Before any work has commenced, and while a
construction loan's only collateral is a plot of land, Compass will finance
only up to 70% of the value of that land. Once construction has begun, Compass
will generally make residential construction loans in amounts up to 90% (for
primary homes) and 80% (for secondary homes) of the lesser of the appraised
value of the property, as completed, or the property's cost of construction.
Compass generally makes commercial construction loans in amounts up to 75% of
the lesser of the property's appraised value, as completed, or construction
cost and generally requires developers seeking commercial construction loans to
personally guarantee them. Compass typically makes commercial construction
loans only to finance construction on developments that have no more than 20
housing lots.
Compass disburses the proceeds of construction loans in stages and
requires developers to pre-sell a certain percentage of the properties they
plan to build before Compass will advance any construction financing. Compass
officials inspect each project's progress before Compass disburses additional
funds to verify that borrowers have completed project phases.
Residential construction loans to owner-borrowers generally convert to a
fully amortizing long-term mortgage loan upon completion of construction.
Commercial construction loans generally have terms of six months to a maximum
of two years. Some construction loans have fixed interest rates but Compass
originates mostly adjustable-rate construction loans.
Compass originated $46.7 million and $35.2 million in construction loans
during 1997 and during the first seven months of 1998, respectively, and had
$41.9 million in construction loans in its loan portfolio, representing 4.7% of
such portfolio, as of May 31, 1998.
Construction lending, particularly commercial construction lending,
entails greater credit risk than residential mortgage lending to owner
occupants. The repayment of construction loans depends on the business and
financial condition of the borrower and on the economic viability of the
project financed. A number of Compass's borrowers have more than one
construction loan outstanding with the bank. Economic events and changes in
government regulations, which Compass and its borrowers cannot control, could
have an adverse impact on the value of properties securing construction loans
and on the borrowers' ability to complete projects financed and, if not the
borrower's residence, sell them for expected amounts at the time the projects
were commenced. See "Risk Factors--Construction, Commercial Real Estate,
Commercial and Indirect Auto Lending Risks."
Home Equity Loans. Compass has a portfolio of home equity lines of credit
secured by one- to four-family owner-occupied properties. These loans are
revolving lines of credit and are typically secured by second mortgages.
Interest rates on home equity loans normally adjust based on Compass's prime
rate of interest. The lines of credit are available for up to ten years, at the
end of which they become term loans which are amortized for the same amount of
time as the original loan. Compass originates home equity line of credit loans
in amounts from $10,000 to $150,000 but not, in any event, more than the
difference between 80% (for primary homes) or 70% (for secondary
71
<PAGE>
homes) of the appraised value of the property securing the loan, or 70% (for
primary homes) or 60% (for secondary homes) of the value of such property as
assessed for tax purposes, and the outstanding balance of the first mortgage on
such property. Compass had $15.9 million in home equity lines of credit in its
loan portfolio, representing 1.8% of the portfolio, as of May 31, 1998. The
undrawn portion of home equity lines of credit totaled $18.0 million at May 31,
1998.
Commercial Loans. Compass primarily makes commercial loans to businesses
that operate in and around New Bedford and on Martha's Vineyard. In recent
months, Compass has increased its efforts to originate more such loans in
Plymouth and Fall River by adding a commercial loan officer dedicated to those
markets.
Compass reviews the financial resources, debt-to-equity ratios, cash flows
and Compass's own experience with businesses when underwriting commercial
loans. Compass generally requires business owners to personally guarantee
commercial loans.
Compass's commercial loans are generally collateralized by equipment,
leases, inventory and accounts receivable. Many of Compass's commercial loans
are also collateralized by real estate, but are not classified as commercial
real estate loans because such loans are not made for the purpose of acquiring,
refinancing or constructing the real estate securing the loan. Commercial loans
provide, among other things, working capital, equipment financing, financing
for leasehold improvements and financing for acquisitions. Compass offers both
term and revolving commercial loans. The former have either fixed or adjustable
rates of interest and, generally, terms of between four and seven years. Term
loans generally amortize during their life, although some loans require a lump
sum payment at maturity. Revolving commercial lines of credit typically have
one-year terms, renewable annually, and rates of interest which adjust on a
daily basis. Such rates are normally indexed to Compass's prime rate of
interest.
Compass's commercial borrowers are not concentrated in any one particular
industry. As of May 31, 1998, Compass's outstanding commercial loans included
floor plan loans to auto dealerships, loans to hotels, inns and other
tourism-related businesses on Martha's Vineyard, loans to building trade
companies and loans to liquor stores.
Compass originated $61.3 million and $39.4 million in commercial loans
during 1997 and during the first seven months of 1998, respectively, and had
$58.2 million in commercial loans in its loan portfolio, representing 6.6% of
such portfolio, as of May 31, 1998.
Commercial lending entails greater credit risks than residential mortgage
lending to owner occupants. Repayment of both secured and unsecured commercial
loans depends substantially on the borrower's underlying business, financial
condition and cash flows. Unsecured loans generally involve a higher degree of
risk of loss than do secured loans because, without collateral, repayment is
wholly dependent upon the success of the borrower's business. Secured
commercial loans are generally collateralized by equipment, leases, inventory
and accounts receivable. Compared to real estate, such collateral is more
difficult to monitor, its value is harder to ascertain, it may depreciate more
rapidly and it may not be as readily saleable if repossessed. See "Risk
Factors--Construction, Commercial Real Estate, Commercial and Indirect Auto
Lending Risks."
Indirect Auto and Other Consumer Loans. Compass emphasizes indirect auto
lending through a network of automobile dealers, and was actively doing
business with approximately 90 dealers at May 31, 1998. Compass has been in the
indirect auto lending business since 1985 and has increased its portfolio of
indirect auto loans from $79.6 million at October 31, 1993 to $247.6 million at
May 31, 1998, or 28.0% (net of unearned discount) of the loan portfolio on the
latter date. No one dealership originated more than $11.6 million of the loan
balances outstanding in Compass's loan portfolio at May 31, 1998. In developing
its network, Compass has continued to focus on dealers in its primary market
areas as well as on Cape Cod and in Rhode Island. Since November 1996, a
consumer lending sales officer has been dedicated full time to serving existing
dealers in order to expand on those relationships and to develop potential new
dealer relationships. The growth of the dealer network has been achieved
through an emphasis on quality service and the development of long-term
relationships with the owners and managers of the dealerships. Since the
program began, no dealer has voluntarily ceased doing business with Compass.
Compass does not currently engage in auto lease financing.
Management believes that indirect auto lending has several advantages,
including the following: (i) the dealer network creates numerous "loan centers"
throughout Compass's market area; (ii) Compass can increase the network without
increasing its operating expenses significantly; and (iii) the network develops
a pool of customers to whom Compass can cross-sell other products and services.
72
<PAGE>
Compass makes indirect auto loans to purchase both new and used cars. The
loans have terms of up to six years for those secured by new vehicles and five
and a half years for those secured by used vehicles. As of May 31, 1998,
approximately half of Compass's indirect auto loans were secured by new cars
and the other half by used cars. Compass originated $128.1 million and $97.1
million in indirect auto loans during 1997 and during the first seven months of
1998, respectively.
To underwrite its indirect auto loans, Compass reviews the credit history
of applicants and determines appropriate debt-to-equity and loan-to-value
ratios. Compass also believes that the quality of its indirect auto portfolio
is positively affected by its efforts to build and maintain relationships with
auto dealers who attract creditworthy customers. Compass tries to identify such
dealers based on Compass's knowledge of car dealers in its market area.
In connection with the origination of indirect auto loans, the interest
rate charged to the borrower on the underlying loan is generally one to two
percentage points higher than the "buy rate" or rate earned by Compass. The
difference between the two rates is referred to as the "spread". At loan
inception, the dollar value of the spread over the contractual term of the loan
is prepaid by Compass to the auto dealer. Such prepaid amounts are generally
subject to rebate to Compass in the event the underlying loan is prepaid or
becomes delinquent. The risk of loss of amounts previously advanced to the
dealer is primarily dependent upon loan performance but is also dependent upon
the financial condition of the dealer. Consequently, the dealer's ability to
refund any portion of the prepaid interest which is unearned is subject to
economic conditions, generally, and the financial condition of the dealer. To
mitigate this risk, Compass withholds a portion of the spread at loan
origination as a dealer reserve. The amount withheld, in the aggregate,
generally approximates 1% of the outstanding balance of loans originated by
each dealer. At May 31, 1998, the balance of the dealer reserve was $3.4
million, or 1.2% of the balance of indirect auto loans. Since its inception of
indirect auto lending in 1985, Compass has written-off interest spread prepaid
to auto dealers on only one occasion and the loss was less than $50,000.
Indirect auto lending entails greater risks than residential mortgage
lending to owner occupants. Although Compass has not experienced significant
delinquencies in this portfolio to date, borrowers may be more likely to become
delinquent on an automobile loan than on a residential mortgage loan secured by
their primary residence. Moreover, automobiles depreciate rapidly and, in the
event of default, principal loss as a percent of the loan balance depends upon
the mileage and condition of the vehicle at the time of repossession, over
which Compass has no control See "Risk Factors--Construction, Commercial Real
Estate, Commercial and Indirect Auto Lending Risks."
Compass makes a variety of other consumer loans, including personal
installment loans, education loans, fixed-rate home equity loans, auto loans
directly to customers and passbook loans. Compass does not have any credit card
loans. Other consumer loans represented 3.1% of Compass's gross loan portfolio
as of May 31, 1998. Compass's fixed-rate home equity loans are collateralized
generally by second mortgages on residential properties. The loans have terms
of up to 15 years and are available in amounts up to $50,000. Compass generally
makes fixed-rate home equity loans that, together with any first mortgage loans
on the properties collateralizing such loans, have a loan-to-value ratio of 80%
or less (if the first mortgage is with another bank) or up to 90% (if the first
mortgage is with Compass).
Environmental Issues
Compass encounters certain environmental risks in its lending. Under
federal and state environmental laws, lenders may become liable for the costs
of cleaning up hazardous materials found on properties securing their loans. In
addition, the presence of hazardous materials on such properties may make it
unattractive for Compass to foreclose on them. Also, the presence of
environmentally hazardous materials near but not on properties in which Compass
has a security interest may have a negative effect on the values of those
properties. Commercial real estate loans typically involve such risks but
multi-family and other residential real estate loans are also subject to them.
Compass has procedures for the assessment of environmental risks and it
believes that those procedures are adequate. Before originating commercial real
estate loans in excess of $250,000, Compass requires prospective borrowers to
make a preliminary assessment of whether environmentally hazardous materials
are located on the properties that would collateralize such loans. If a
preliminary assessment raises concerns, Compass requires borrowers to conduct
further environmental analyses of the properties. Before originating a
commercial real estate loan below $250,000, a loan officer must review the
appraisal of the property that will collateralize the loan to make sure that
the borrower does not need to undertake a preliminary assessment of its
environmental condition.
73
<PAGE>
Compass does not know of any environmental problems that might expose it
to any material liabilities. No assurance can be given, however, that the
values of properties securing loans in Compass's portfolio will not be
adversely affected by environmental risks.
Delinquent Loans, Other Real Estate Owned, Classification of Assets and
Loan Review
Delinquent Loans. Management performs a monthly review of all delinquent
loans with a principal balance in excess of $150,000. Compass's Collection
Department Manager discusses the status of each account with Lending Department
Managers, the Senior Lending Officer and Account Officers. In addition,
Compass's Board of Directors reviews delinquency statistics by loan class on a
monthly basis.
The actions taken with respect to delinquencies vary depending upon the
nature of the delinquent loans and the period of delinquency. Compass's
collection philosophy is predicated upon early detection and response to
delinquent and default situations. Compass seeks to make arrangements to cure
the entire default over the shortest time frame. Generally, Compass requires
that a delinquency notice be mailed no later than the 10th day of delinquency.
A second notice is mailed on the 15th day of delinquency. A late charge is
usually assessed on loans where the scheduled payment is unpaid after 15 days.
After mailing the delinquency notices, Compass's loan collection personnel call
the borrower to ascertain the reasons for delinquency and the prospects for
payment. On loans secured by one- to four-family owner occupied properties,
Compass attempts to work out a payment schedule with the borrower in order to
avoid foreclosure. If these efforts do not achieve a satisfactory arrangement,
Compass refers the loan to legal counsel and counsel initiates foreclosure
proceedings. At any time prior to a sale of the property at foreclosure,
Compass will terminate foreclosure proceedings if the borrower and Compass are
able to work out a satisfactory payment plan. On loans secured by commercial
real estate properties, Compass also seeks to reach a satisfactory payment plan
so as to avoid foreclosure. Prior to foreclosure, Compass will generally obtain
an updated appraisal of the property.
74
<PAGE>
The following table sets forth delinquencies in Compass's loan portfolio as
of the dates indicated:
<TABLE>
<CAPTION>
At May 31, 1998 At October 31, 1997
--------------------------------------------- --------------------------------------------
60-89 days 90 days or more 60-89 days 90 days or more
---------------------- ---------------------- ---------------------- ---------------------
Principal Principal Principal Principal
Number balance Number balance Number balance Number balance
of loans of loans of loans of loans of loans of loans of loans of loans
---------- ----------- ---------- ----------- ---------- ----------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Residential ......................... 5 $ 350 20 $ 1,626 6 $ 306 18 $ 1,463
Commercial real estate .............. 2 111 6 989 1 116 8 1,205
Construction ........................ -- -- -- -- -- -- 1 148
Home equity ......................... 1 41 2 53 -- -- 2 34
Commercial loans .................... 2 23 3 125 1 75 2 344
Indirect auto loans ................. 35 258 47 430 33 223 40 435
Other consumer loans ................ 7 12 18 30 13 19 14 20
-- ------- -- ------- -- ------- -- -------
Total .............................. 52 $ 795 96 $ 3,253 54 $ 739 85 $ 3,649
== ======= == ======= == ======= == =======
Delinquent loans to total loans ..... 0.09% 0.37% 0.09% 0.44%
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
At October 31, 1996 At October 31, 1995
--------------------------------------------- --------------------------------------------
60-89 days 90 days or more 60-89 days 90 days or more
---------------------- ---------------------- ---------------------- ---------------------
Principal Principal Principal Principal
Number balance Number balance Number balance Number balance
of loans of loans of loans of loans of loans of loans of loans of loans
---------- ----------- ---------- ----------- ---------- ----------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Residential ......................... 17 $ 885 31 $ 2,100 12 $ 769 23 $ 1,390
Commercial real estate .............. 3 613 11 1,453 -- -- 2 499
Construction ........................ -- -- 1 147 1 156 3 343
Home equity ......................... 2 72 1 16 -- -- 5 209
Commercial loans .................... 1 102 8 620 4 470 6 584
Indirect auto loans ................. 24 180 43 339 13 96 14 101
Other consumer loans ................ 10 14 5 9 3 5 3 5
-- ------- -- ------- -- ------- -- -------
Total .............................. 57 $ 1,866 100 $ 4,684 33 $ 1,496 56 $ 3,131
== ======= === ======= == ======= == =======
Delinquent loans to total loans ..... 0.25% 0.63% 0.22% 0.46%
======= ======= ======= =======
</TABLE>
Other Real Estate Owned. Compass classifies property acquired through
foreclosure or acceptance of a deed in lieu of foreclosure as OREO in its
financial statements. When a property is placed in OREO, the excess of the loan
balance over the estimated fair market value of the collateral is charged to
the allowance for loan losses. Estimated fair value usually represents the
sales price a buyer would be willing to pay on the basis of current market
conditions, including normal loan terms from other financial institutions, less
estimated costs to sell the property. Management inspects all OREO properties
periodically. Subsequent writedowns in the carrying value of OREO are charged
to expense if the carrying value exceeds the OREO's fair value less estimated
selling costs.
At May 31, 1998, OREO totaled $1.4 million, the majority of which
consisted of properties sold by Compass from its OREO portfolio to buyers,
financed by Compass, whose cash downpayments were insufficient under GAAP to
permit such transactions to be accounted for as a sale. There were eleven loans
in this category all of which were substantially current at May 31, 1998.
Classification of Assets and Loan Review. Compass uses an internal rating
system to monitor and evaluate the credit risk inherent in its loan portfolio.
At the time of loan approval, all commercial, commercial real estate and
commercial construction loans are assigned a rating based on all of the factors
considered in originating the loan. The initial loan rating is recommended by
the loan officer who originated the loan and approved by the individuals or
committee responsible for approving it.
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<PAGE>
Loan quality ratings are utilized as major criteria in the compilation of
Compass's asset Watch List. All loans with loan ratings of 4 (Special Mention),
5 (Substandard) or 6 (Doubtful) are included in a monthly asset Watch List.
Watch List ratings are an integral part of the evaluation of the adequacy of
Compass's loan loss reserve. Loan officers are expected to submit appropriate
rating changes to the Lending Administration Officer when facts come to their
attention that warrant an upgrade or downgrade in a loan rating. In addition,
loan ratings are generally reviewed on an annual basis.
Loans that are rated Substandard or Doubtful coincide with the
classifications used by federal regulators in their examination of financial
institutions. Generally, an asset is considered Substandard if it is
inadequately protected by the current net worth and paying capacity of the
obligers and/or the collateral pledged. Substandard assets include those
characterized by the distinct possibility that Compass will sustain some loss
if the deficiencies are not corrected. Assets classified as Doubtful have all
the weaknesses inherent in those classified Substandard with the added
characteristic that the weaknesses present make collection or liquidation in
full, on the basis of currently existing facts, highly questionable and
improbable. Assets classified as Loss are those considered uncollectible and of
such little value that their continuance as assets without establishment of a
specific loss reserve and/or charge-off is not warranted. Assets which do not
currently expose Compass to sufficient risk to warrant classification in one of
the aforementioned categories but possess weaknesses are designated "Special
Mention."
Compass has established a policy that an independent third party conduct a
semi-annual analysis of its commercial and commercial real estate loans. The
level of Classified Assets as determined by Compass is reconciled to the level
of Classified Assets as determined by the independent loan review. The
independent loan review also analyzes trends in loan delinquency and
non-performing loans.
On a quarterly basis, a management group comprised of the Senior Vice
President and Treasurer, the Senior Lending Officer and other key officers
reviews the status and classification of each loan assigned a rating of
Substandard, Doubtful or Loss. Loans, or portions of loans, classified Loss are
charged off against the reserve for loan losses. This group also assesses the
overall adequacy of the allowance for loan losses, including the general
valuation allowance established to recognize the inherent risk associated with
each specific category of lending.
Compass's classification of its loans and the amount of the valuation
allowances it sets aside for estimated losses is subject to review by the FDIC
and the Commissioner. Based on their reviews, these agencies can order the
establishment of additional general or specific loss allowances. The FDIC, in
conjunction with the other federal banking agencies, has adopted an interagency
policy statement on allowances for loan and lease losses. The policy statement
provides guidance for banks on both the responsibilities of management for the
assessment and establishment of adequate allowances and guidance for banking
agency examiners to use in determining the adequacy of a bank's valuation
methodology. Generally, the policy statement recommends that banks have
effective systems and controls to identify, monitor and address asset quality
problems; that management analyze all significant factors that affect the
collectibility of loans in a reasonable manner; and that management establish
acceptable valuation processes that meet the objectives set forth in the policy
statement. While Compass believes that it has established adequate specific and
general allowances for losses on loans, there can be no assurance that the
regulators, in reviewing Compass's loan portfolio, will not request Compass to
materially increase its allowances for losses, thereby negatively affecting
Compass's financial condition and earnings. Moreover, actual losses are
dependent upon future events and, as such, further additions to the allowance
for loan losses may become necessary. See "--Allowance for Loan Losses."
At May 31, 1998, loans designated as Substandard and Special Mention
totaled $10.3 million and $7.2 million, respectively. No loans were designated
Doubtful or Loss. The Substandard loans include 11 commercial loans with
individual borrower balances ranging from $4,000 to $600,000 and a total
outstanding principal balance of $1.2 million and 24 commercial real estate
loans with individual borrower balances ranging from $53,300 to $2,074,000 and
a total outstanding principal balance of $9.1 million. All of the 11 commercial
loans classified as Substandard at May 31, 1998 were substantially current. The
delinquency status of the 24 commercial real estate loans classified as
Substandard was as follows: current--$7,272,000; 30-60 days past due--$716,000;
60-90 days past due--$80,000; and greater than 90 days past due--$989,000.
Included in Special Mention loans at May 31, 1998 were 12 commercial loans
with individual borrower balances ranging from $18,750 to $3.3 million and a
total outstanding principal balance of $4.2 million. The largest borrower was
an auto dealership whose floor plan loans were current. There were 16
commercial real estate loans
76
<PAGE>
with individual borrower balances ranging from $36,000 to $572,000 and a total
outstanding principal balance of $2.9 million classified as Special Mention at
May 31, 1998. Of these, all but $413,000 were either current or less than 30
days past due.
Non-Accrual Loans, Non-Performing Assets and Restructured Loans
The following table sets forth information regarding non-accrual loans,
other real estate owned and restructured loans:
<TABLE>
<CAPTION>
At May 31, At October 31,
------------ ----------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------ ------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Non-accrual loans (1):
Mortgage loans:
Residential .............................. $ 1,707 $ 1,531 $ 2,330 $ 3,123 $ 6,827 $ 7,106
Commercial real estate ................... 7,198 8,501 6,835 4,115 6,997 2,573
Construction ............................. 93 148 147 107 269 --
Home equity .............................. -- -- -- 63 -- --
Commercial loan ........................... 495 745 1,014 1,098 1,078 227
Indirect auto loans (4) ................... -- -- -- -- -- --
Other consumer loans (4) .................. -- -- -- -- -- --
--------- -------- --------- --------- -------- --------
Total non-accrual loans .................. 9,493 10,925 10,326 8,506 15,171 9,906
Other real estate owned .................... 1,395 1,707 2,598 3,918 5,798 6,961
--------- -------- --------- --------- -------- --------
Total non-performing assets ............... $ 10,888 $ 12,632 $ 12,924 $ 12,424 $ 20,969 $ 16,867
========= ======== ========= ========= ======== ========
Restructured loans (2) ..................... $ -- $ 130 $ 4,267 $ 3,119 -- $ 10,953
========= ======== ========= ========= ======== ========
Allowance for loan losses as a percent
of total loans ............................ 1.19% 1.30% 1.38% 1.46% 1.37% 1.33%
Allowance for loan losses as a percent
of total non-performing loans (3) ......... 110.69% 97.41% 100.08% 115.80 46.15% 60.57%
Non-performing loans as a percent of total
loans ..................................... 1.07% 1.33% 1.38% 1.26% 2.98% 2.20%
Non-performing assets as a percent of total
assets .................................... 0.93% 1.14% 1.26% 1.26% 2.65% 2.39%
</TABLE>
- ------------
(1) Non-accrual loans include all loans 90 days or more past due and other
loans which have been identified by Compass as presenting uncertainty with
respect to the collectibility of interest or principal. See Note 4 for
exception to this policy.
(2) Restructured loans represent performing loans for which concessions (such
as reductions of interest rates to below market terms and/or extension of
repayment terms) have been granted due to a borrower's financial
condition.
(3) Non-performing loans are comprised of non-accrual loans.
(4) Consumer loans, including indirect auto loans, are not placed on
non-accrual status due to the expedited manner in which these loans are
resolved and the immaterial balance of individual loans.
77
<PAGE>
Allowance for Loan Losses
The allowance for loan losses is established through provisions for loan
losses based on management's on-going evaluation of the risks inherent in
Compass's loan portfolio. Factors considered in the evaluation process include
growth of the loan portfolio, the risk characteristics of the types of loans in
the portfolio, geographic and large borrower concentrations, current regional
economic and real estate market conditions that could affect the ability of
borrowers to pay, the value of underlying collateral and trends in loan
delinquencies and charge-offs. The allowance for loan losses is maintained at
an amount management considers adequate to cover estimated losses in its loan
portfolio which are deemed probable and estimable based on information
currently known to management. See "--Delinquent Loans, Other Real Estate
Owned, Classification of Assets and Loan Review--Classification of Assets and
Loan Review."
The following table sets forth activity in Compass's allowance for loan
losses for the periods indicated:
<TABLE>
<CAPTION>
Seven months
ended
May 31, Year ended October 31,
------------- ----------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------------- ---------- ----------- --------- ----------- -----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period ............. $10,642 $ 10,334 $ 9,850 $7,002 $ 6,000 $ 5,395
Provision (credit) for loan losses ......... 536 1,865 1,166 (351) 2,524 3,838
Acquired allowance ......................... -- -- -- 3,541 -- --
Charge-offs:
Mortgage loans:
Residential .............................. 115 137 130 721 1,033 725
Commercial ............................... 295 761 250 150 661 1,988
Home equity lines of credit .............. -- -- 121 -- -- --
Construction ............................. -- -- -- -- -- --
Commercial loans .......................... 137 442 134 51 33 317
Indirect auto loans ....................... 310 546 373 227 191 279
Other consumer loans ...................... 43 48 63 83 93 134
------- -------- ------- ------ -------- --------
Total charge-offs . ...................... 900 1,934 1,071 1,232 2,011 3,443
------- -------- ------- ------ -------- --------
Recoveries:
Mortgage loans:
Residential .............................. 24 30 17 271 335 80
Commercial ............................... 20 117 174 485 34 23
Home equity lines of credit .............. -- -- -- -- -- --
Construction ............................. -- -- -- -- -- --
Commercial loans .......................... 83 57 96 2 28 30
Indirect auto loans ....................... 66 144 70 93 69 57
Other consumer loans ...................... 37 29 32 39 23 20
------- -------- ------- ------ -------- --------
Total recoveries ......................... 230 377 389 890 489 210
------- -------- ------- ------ -------- --------
Net charge-offs ............................ (670) (1,557) (682) (342) (1,522) (3,233)
------- -------- ------- ------ -------- --------
Balance at end of period ................... $10,508 $ 10,642 $10,334 $9,850 $ 7,002 $ 6,000
======= ======== ======= ====== ======== ========
</TABLE>
78
<PAGE>
The following tables set forth Compass's percent of allowance by loan
category and the percent of loans to total loans in each of the categories
listed at the dates indicated:
<TABLE>
<CAPTION>
At October 31,
----------------------------------------------------------------
At May 31, 1998 1997 1996
-------------------------------- ----------------------------- -------------------------------
Percent Percent
Percent Percent Percent of loans Percent of loans
of of loans of in each of in each
allowance in each allowance category allowance category
to total category to to total to gross to total to gross
Amount allowance gross loans Amount allowance loans Amount allowance loans
-------- ---------- ------------ -------- ----------- --------- -------- ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Residential .............. $ 1,945 18.51% 41.63% $ 1,929 18.13% 44.26% $ 2,171 21.01% 45.88%
Commercial real estate 3,932 37.42 14.14 4,313 40.53 15.13 4,036 39.06 17.20
Construction ............. 368 3.50 4.74 338 3.18 4.13 251 2.43 3.34
Home equity .............. 148 1.41 1.80 136 1.28 1.85 149 1.44 2.31
Commercial loans .......... 1,670 15.89 6.58 1,785 16.77 6.26 1,972 19.08 6.18
Indirect auto loans ....... 2,116 20.14 27.99 1,837 17.26 25.36 1,498 14.50 22.14
Other consumer loans ...... 329 3.13 3.12 304 2.85 3.01 257 2.48 2.95
------- ------ ------ ------- ------ ------ ------- ------ ------
Total allowance for
loan losses .............. $10,508 100.00% 100.00% $10,642 100.00% 100.00% $10,334 100.00% 100.00%
======= ====== ====== ======= ====== ====== ======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
At October 31,
-------------------------------------------------------------------------------------------------
1995 1994 1993
------------------------------- ------------------------------- --------------------------------
Percent Percent Percent
Percent of loans Percent of loans Percent of loans
of in each of in each of in each
allowance category allowance category allowance category
to total to gross to total to gross to total to gross
Amount allowance loans Amount allowance loans Amount allowance loans
-------- ----------- ---------- -------- ----------- ---------- -------- ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Residential ............... $2,764 28.06% 49.78% $2,384 34.05% 52.56% $1,978 32.97% 55.78%
Commercial real estate 2,808 28.51 15.25 1,827 26.09 13.30 1,682 28.03 13.73
Construction .............. 318 3.23 2.35 315 4.50 2.91 284 4.73 3.04
Home equity ............... 418 4.25 2.79 170 2.43 2.25 194 3.24 2.89
Commercial loans ........... 1,883 19.11 6.42 975 13.92 4.07 749 12.49 3.78
Indirect auto loans ........ 1,403 14.25 20.63 1,123 16.04 21.88 894 14.89 17.65
Other consumer loans ....... 255 2.59 2.78 208 2.97 3.03 219 3.65 3.13
------ ------ ------ ------ ------ ------ ------ ------ ------
Total allowance for
loan losses ............... $9,850 100.00% 100.00% $7,002 100.00% 100.00% $6,000 100.00% 100.00%
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
Investment Activities
The investment policy of Compass is reviewed and updated by senior
management and submitted to the Board of Directors for their approval on an
annual basis. The primary objective of the investment portfolio is to achieve a
competitive rate of return on the investments over a reasonable period of time
based on prudent management practices and sensible risk taking. In view of
Compass's lending capacity and generally higher rates of return on loans,
management prefers lending activities as its primary source of revenue with the
securities portfolio serving a secondary role. The investment portfolio,
however, is expected to continue to represent a significant portion of
Compass's assets, with such portfolio consisting of U.S. Government and Agency
securities, mortgage-backed securities, high quality corporate debt obligations
and a limited amount of corporate equities. The portfolio will continue to
serve Compass's liquidity needs as projected by management and as required by
regulatory authorities.
Compass's current investment strategy has emphasized the purchase of U.S.
Government and Agency obligations and corporate debt obligations generally
maturing within two to three years. Compass's investment policy permits
investments in mortgage-backed securities which are traditionally long-term
assets. However, the
79
<PAGE>
policy limits Compass's investment in these types of securities to 25% of total
assets. A substantial portion of the mortgage-backed securities held at May 31,
1998 were backed by loans originated by and securitized by Compass and placed
in the securities portfolio for the purpose of providing liquidity.
The investment policy prohibits the use of hedging with such instruments
as financial futures, interest rate options and swaps without specific approval
from Compass's Board of Directors. The President and Chief Executive Officer,
the Executive Vice President and Chief Operating Officer and the Senior Vice
President and Treasurer are authorized to execute portfolio transactions but
are limited in the amount they can purchase without Board approval. Portfolio
sales require the approval of any two of these three officers regardless of the
amount. It is the responsibility of Compass's Board of Directors to ensure
compliance with the investment policy and report such activity to Seacoast
Financial's Board. The status of Compass's investment portfolio is reviewed by
Compass's Board of Directors on a monthly basis and by Seacoast Financial's
Board of Trustees on a quarterly basis.
At May 31, 1998, Compass had $202.3 million, or 17.19% of total assets, in
securities consisting primarily of U.S. Government and Agency obligations
($94.1 million), corporate obligations ($46.0 million), mortgage-backed
securities ($41.4 million), other bonds and obligations ($6.0 million) and
marketable common and preferred equity securities ($9.5 million). Also included
in investments is $5.3 million in restricted equity securities, $4.9 million of
which is in the stock of the FHLB. To avail itself of services offered by that
organization, in particular the ability to borrow funds, Compass is required to
invest in the stock of the FHLB in an amount determined on the basis of
Compass's residential mortgage loans and borrowings from the FHLB. The stock is
redeemable at par and earns dividends at the discretion of the FHLB.
SFAS No. 115 requires Compass to designate its securities as held to
maturity, available for sale or trading depending on Compass's intent regarding
its investments at the time of purchase. Compass does not currently maintain a
trading portfolio of securities. Concurrent with the adoption of an
implementation guide on SFAS No. 115 in November 1995, Compass transferred debt
securities having a carrying value of $138.7 million from its held to maturity
portfolio to its available for sale portfolio. As of May 31, 1998, $183.3
million, or 90.64% of the portfolio, was classified as available for sale,
$13.6 million, or 6.75% of the portfolio, was classified as held for investment
and $5.3 million, or 2.61% of the portfolio, was invested in restricted equity
securities. The net unrealized gain on securities classified as available for
sale was $3.8 million, with $2.9 million of that amount attributable to
marketable equity securities as of May 31, 1998.
U.S. Government and Agency Obligations. At May 31, 1998, Compass's U.S.
Government and Agency securities portfolio totaled $94.1 million, $80.4 million
of which was classified as available for sale and $13.7 million of which was
classified as held to maturity. There were no structured notes in the
portfolio.
Corporate Obligations. At May 31, 1998, Compass's portfolio of corporate
obligations totaled $46.0 million, all of which was classified as available for
sale. Compass policy requires that investments in corporate obligations be
restricted only to those obligations rated "A" or better by a nationally
recognized rating agency at the time of purchase and are confined only to those
obligations that are readily marketable. As of May 31, 1998, $33.8 million of
Compass's investments in corporate obligations were invested in finance bonds,
$7.2 million in industrial bonds, $3.0 million in public utility bonds and $2.0
million in bank and trust company bonds. As of May 31, 1998, all corporate
obligations were rated "A" or better.
Mortgage-Backed Securities. At May 31, 1998, Compass's portfolio of
mortgage-backed securities totaled $41.4 million. Such securities are
guaranteed by the Government National Mortgage Association, FNMA and FHLMC. All
mortgage-backed securities were classified as available for sale.
Mortgage-backed securities generally yield less than the loans that underlie
such securities because of the cost of payment guarantees or credit
enhancements that reduce credit risk. Mortgage-backed securities are more
liquid than individual mortgage loans and may be used to collateralize
borrowings.
Other Bonds and Obligations. At May 31, 1998, Compass's portfolio of other
bonds and obligations totaled $6.0 million, $5.0 million of which was invested
in a liquidity fund managed by the Bank Investment Fund of Massachusetts and
$1.0 million of which was invested in a U.S. dollar denominated bond of a
Canadian issuer having a quality rating of "A." The liquidity fund is a
no-load, diversified, open-end money market fund whose objective is to achieve
a high level of current income but to do so in a manner that is consistent with
preservation of capital and liquidity by investing in short-term money market
instruments.
80
<PAGE>
Marketable Equity Securities. At May 31, 1998, Compass's marketable equity
securities portfolio totaled $9.5 million, $8.5 million of which was in common
stock and $1.0 million in preferred stock. Compass's policy requires that
investments in common stock be confined to quality issuers that have a past
record of profitability and growth with the prospect of continued performance.
The policy requires that Compass make investments in common stocks that are
liquid and traded on major exchanges, and that a reasonable and prudent
industry distribution of common stocks be maintained in the portfolio and held
for the long-term. Compass does not view short-term trading, short sales,
margin transactions and option speculation as prudent investment policy
objectives and does not permit them. Investments in preferred stocks, including
money market preferred, auction preferred and adjustable-rate preferred, are
subject to similar quality ratings and activities as common stocks. As of May
31, 1998, Compass held 90,000 shares of Sandwich Bancorp Common Stock in its
portfolio having a market value of $5.7 million and representing 4.4% of the
issued and outstanding shares of such stock. The majority of these shares were
purchased in February 1998, after Seacoast Financial and Sandwich Bancorp had
announced their original cash merger transaction but before the Merger was
restructured as a stock-for-stock exchange. See "The Conversion and the
Merger--Background of the Merger."
81
<PAGE>
The following table sets forth certain information regarding the amortized
cost and market value of Seacoast Financial's investment portfolio at the dates
indicated:
<TABLE>
<CAPTION>
At May 31, 1998 At October 31,
---------------------- ----------------------------------------------------------------------
1997 1996 1995
----------------------- ----------------------- ----------------------
Amortized Market Amortized Market Amortized Market Amortized Market
cost value cost value cost value cost value
----------- ---------- ----------- ----------- ----------- ----------- ----------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities available for sale:
Debt securities:
U.S. Government and
Agency obligations ............ $ 80,172 $ 80,424 $113,231 $113,496 $111,861 $111,613 $ 65,336 $ 65,015
Corporate obligations .......... 45,799 46,033 44,773 44,966 22,632 22,520 6,085 6,051
Mortgage-backed securities ..... 40,998 41,362 45,652 46,157 64,760 64,650 6,470 6,496
Other bonds and obligations..... 6,001 6,001 1,001 1,001 -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Total debt securities ......... 172,970 173,820 204,657 205,620 199,253 198,783 77,891 77,562
-------- -------- -------- -------- -------- -------- -------- --------
Marketable equity securities:
Common stocks .................. 5,605 8,520 1,164 2,696 835 1,523 474 788
Preferred stocks ............... 1,000 1,000 1,000 1,000 -- -- 276 276
-------- -------- -------- -------- -------- -------- -------- --------
Total marketable equity
securities ................... 6,605 9,520 2,164 3,696 835 1,523 750 1,064
-------- -------- -------- -------- -------- -------- -------- --------
Total securities available
for sale .................... $179,575 $183,340 $206,821 $209,316 $200,088 $200,306 $ 78,641 $ 78,626
======== ======== ======== ======== ======== ======== ======== ========
Securities held to maturity:
U.S. Government and
Agency obligations ............ $ 13,649 $ 13,702 $ 12,633 $ 12,694 $ 11,752 $ 11,744 $ 85,936 $ 85,678
Corporate obligations .......... -- -- -- -- -- -- 36,540 36,284
Mortgage-backed securities ..... -- -- -- -- -- -- 29,329 29,299
Other bonds and obligations..... -- -- -- -- -- -- 2,000 1,997
-------- -------- -------- -------- -------- -------- -------- --------
Total securities held to
maturity ..................... $ 13,649 $ 13,702 $ 12,633 $ 12,694 $ 11,752 $ 11,744 $153,805 $153,258
======== ======== ======== ======== ======== ======== ======== ========
Restricted equity securities:
Federal Home Loan Bank of
Boston stock .................. $ 4,856 $ 4,856 $ 4,726 $ 4,726 $ 4,215 $ 4,215 $ 3,829 $ 3,829
Massachusetts Savings Bank
Life Insurance Company
stock ......................... 251 251 251 251 251 251 251 251
Depositors Insurance Fund ...... 179 179 179 179 179 179 179 179
-------- -------- -------- -------- -------- -------- -------- --------
Total restricted equity
securities .................. $ 5,286 $ 5,286 $ 5,156 $ 5,156 $ 4,645 $ 4,645 $ 4,259 $ 4,259
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
82
<PAGE>
The following table sets forth the composition of Seacoast Financial's
investment portfolio at the dates indicated:
<TABLE>
<CAPTION>
At October 31,
--------------------------------------------------------------------
At May 31, 1998 1997 1996 1995
----------------------- --------------------- --------------------- ----------------------
Carrying Percent Carrying Percent Carrying Percent Carrying Percent
value of total value of total value of total value of total
---------- ------------ ---------- ---------- ---------- ---------- ---------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Debt securities:
U.S. Government and
agency obligations ............ $ 94,073 46.51% $126,129 55.54% $123,365 56.93% $150,951 63.78%
Corporate obligations ........... 46,033 22.76 44,966 19.80 22,520 10.39 42,591 17.99
Mortgage-backed securities....... 41,362 20.45 46,157 20.32 64,650 29.83 35,825 15.14
Other bonds and obligations...... 6,001 2.96 1,001 0.44 -- -- 2,000 0.84
-------- ------ -------- ------ -------- ------ -------- ------
Total debt securities .......... 187,469 92,68 218,253 96.10 210,535 97.15 231,367 97.75
Marketable equity securities ..... 9,520 4.71 3,696 1.63 1,523 0.71 1,064 0.45
Restricted equity securities ..... 5,286 2.61 5,156 2.27 4,645 2.14 4,259 1.80
-------- ------ -------- ------ -------- ------ -------- ------
Total securities ............... $202,275 100.00% $227,105 100.00% $216,703 100.00% $236,690 100.00%
======== ====== ======== ====== ======== ====== ======== ======
Debt and equity securities
available for sale .............. $183,340 90.64% $209,316 92.17% $200,306 92.43% $ 78,626 33.22%
Debt securities held to
maturity ........................ 13,649 6.75 12,633 5.56 11,752 5.43 153,805 64.98
Restricted equity securities ..... 5,286 2.61 5,156 2.27 4,645 2.14 4,259 1.80
-------- ------ -------- ------ -------- ------ -------- ------
Total securities ............... $202,275 100.00% $227,105 100.00% $216,703 100.00% $236,690 100.00%
======== ====== ======== ====== ======== ====== ======== ======
</TABLE>
The following table sets forth certain information regarding the carrying
value, weighted average yield and contractual maturities of Seacoast
Financial's investment portfolio as of May 31, 1998:
<TABLE>
<CAPTION>
After one year After five years
One year or less through five years through ten years After ten years Total
------------------ ------------------ ------------------- ------------------- --------------------
Weighted Weighted Weighted Weighted Weighted
Carrying average Carrying average Carrying average Carrying average Carrying average
value yield value yield value yield value yield value yield
-------- --------- --------- -------- -------- --------- -------- -------- ---------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities available for sale:
Debt securities:
U.S. Government and
Agency obligations .......... $11,497 5.48% $ 62,950 5.64% $5,978 6.51% $ -- --% $ 80,425 5.68%
Corporate obligations ........ 11,049 6.09 32,961 6.22 2,023 6.20 -- -- 46,033 6.13
Mortgage-backed securities ... 1,218 6.42 12,488 6.71 585 6.65 27,070 6.21 41,361 6.37
Other bonds and obligations... 5,000 5.45 1,001 6.39 -- -- -- -- 6,001 5.61
------- -------- ------ ------- --------
Total debt securities ....... 28,764 5.66 109,400 5.94 8,586 6.45 27,070 6.21 173,820 5.96
------- -------- ------ ------- --------
Marketable equity securities
Common stocks ................ 8,520 2.38
Preferred stocks ............. 1,000 4.05
Total marketable --------
equity securities .......... 9,520 2.56
Total securities available --------
for sale ..................
Securities held to maturity: 183,340 5.79
U.S. Government and ========
Agency obligations .......... 3,999 5.92 9,650 5.87 -- -- -- -- 13,649 5.88
------- -------- ------ ------- --------
Total securities held to
maturity .................... 3,999 5.92 9,650 5.87 -- -- -- -- 13,649 5.88
------- -------- ------ ------- --------
Restricted equity securities:
Federal Home Loan Bank of
Boston stock ................ 4,856 6.30
Massachusetts Savings Bank
Life Insurance Company
stock ....................... 251 2.90
Depositors Insurance Fund .... 179 5.60
Total restricted equity --------
securities ................. 5,286 5.97
--------
Total securities ............ $32,763 5.69% $119,050 5.93% $8,586 6.45% $27,070 6.21% $202,275 5.80%
======= ======== ====== ======= ========
</TABLE>
83
<PAGE>
Sources of Funds
General. Compass uses deposits, repayments and prepayments of loans,
proceeds from sales of loans and securities and proceeds from maturing
securities, borrowings and cash flows generated by operations to fund its
lending, investing and general operations. Deposits represent Compass's primary
source of funds.
Deposits. Compass offers a variety of deposit accounts with a range of
interest rates and other terms. The accounts include passbook savings accounts,
NOW accounts (checking), demand deposit accounts, money market deposit
accounts, club accounts and certificates of deposit. Compass also offers IRA,
Roth/IRA, Education IRA and Simple IRA accounts and SEP accounts. Both
individuals and commercial enterprises maintain accounts with Compass. The FDIC
insures deposits up to certain limits (generally, $100,000 per depositor). The
DIF fully insures amounts in excess of such limits.
At May 31, 1998, Compass's deposits of $982.4 million were comprised of
$59.4 million of non-interest-bearing checking accounts and $923.0 million of
interest-bearing deposit accounts, of which $507.4 million, or 55.0% were
certificates of deposit. Of this total of certificates of deposit at May 31,
1998, $421.4 million, or 83.1%, were scheduled to mature within one year.
However, based on Compass's monitoring of historical trends, its current
pricing strategy for deposits and its avoidance of brokered deposits,
management believes that Compass will retain a significant portion of its
certificate of deposit accounts upon maturity.
Deposit flows are influenced greatly by economic conditions, the general
level of interest rates and the relative attractiveness of competing deposit
and investment alternatives. During the past few years, the strength of the
stock market has affected deposit flows within the banking industry as some
customers have opted to place their funds in instruments--such as mutual funds
- --not directly offered by Compass (other than through its affiliation with
INVEST Financial Corporation), rather than in deposit accounts which they
perceive to have less attractive returns. See "Risk Factors--Competition."
Compass competes for deposits in four distinct market areas--New Bedford,
Fall River, Plymouth and Martha's Vineyard. Compass has experienced steady
deposit inflows during the last three years, primarily influenced by regional
bank consolidations and its strong community bank image. Compass's strategy has
been to grow deposit levels through targeted promotions, branch expansion and
bank acquisition. Compass has expanded its presence in Plymouth with one new
branch opened in 1995 and another in May 1998.
Compass places emphasis on sales of its products and quality of its
service to attract and retain customers. Management measures the sales
performance of customer service personnel based on the cross-sales of
additional products and services above the initial product that the customer
requests. Branch managers in all four markets actively participate in a
business development call program to develop new banking relationships.
In the interest of customer convenience and product alternatives, in 1995
Compass introduced a "call center" with extended hours, staffed with
individuals who are trained to answer telephone inquiries about customer
accounts and about Compass's various products and services. Compass also
introduced in 1995 a 24-hour automated touch-tone telephone voice response
system, which allows customers to obtain information about their accounts, to
make account transfers and to receive information about Compass's products and
services. In 1996 and 1997, Compass introduced relationship-based checking
account products, entitled Flagship Checking and Preferred Checking,
respectively, which offer a package of select benefits. The increase in
certificates of deposit is partially attributable to attractive pricing and
bonus CD programs offered to select customers participating in these and other
packaged checking account programs. Services to commercial customers have also
been enhanced through the introduction of a Sweep Account, Simple IRA accounts
and electronic tax filing service.
Compass uses direct mail and customer service personnel at each of its
branches and at its main office to solicit deposits and advertises its deposits
through the print media, on billboards and through radio and television.
Compass expects to offer on-line banking, including bill payment capability,
over the Internet by the end of 1998.
Compass has a contract with INVEST Financial Corporation ("Invest")
pursuant to which Invest offers Compass's customers investments in mutual funds
and securities. Invest representatives work out of Compass's main office and
branches and Compass's customer service personnel refer to Invest customers who
are looking for such investments. Compass receives a portion of commissions
earned by Invest from Invest's operations on Compass's premises.
84
<PAGE>
National, regional and local economic conditions, changes in money market
rates, prevailing interest rates and competing deposit and investment
alternatives all have a significant impact on the level of Compass's deposits.
See "Risk Factors--Potential Impact of Changes in Interest Rates on Seacoast
Financial's Earnings," "--Geographic Concentration of Loans in and Deposits
from Southeastern Massachusetts and Rhode Island" and "--Competition."
85
<PAGE>
The following table sets forth certain information regarding the
distribution of Compass's average deposit accounts and the weighted average
interest rate on each category of deposits:
<TABLE>
<CAPTION>
Year ended October 31,
---------------------------------
Seven months ended May 31, 1998 1997
--------------------------------- ---------------------------------
Percent Percent
of total Weighted of total Weighted
Average average average Average average average
balance deposits rate balance deposits rate
----------- ---------- ---------- ----------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
NOW accounts ....................... $ 80,170 8.40% 1.45% $ 72,837 8.02% 1.46%
Savings accounts ................... 170,023 17.82 2.59 171,157 18.86 2.59
Money market savings accounts ...... 146,465 15.35 2.75 140,413 15.47 2.82
Non-interest-bearing demand
checking accounts ................. 56,213 5.89 -- 56,284 6.20 --
-------- ------ -------- ------
Total transaction deposit
accounts ......................... 452,871 47.46 2.12 440,691 48.55 2.15
-------- ------ -------- ------
Certificate of deposit accounts:
Six months or less ................ 143,740 15.06 5.44 122,934 13.54 5.39
Over six months through
12 months ........................ 219,617 23.02 5.75 209,668 23.10 5.70
Over 12 months through
24 months ........................ 56,497 5.92 5.78 52,157 5.75 5.83
Over 24 months .................... 81,470 8.54 6.15 82,183 9.06 6.12
-------- ------ -------- ------
Total certificates
of deposit accounts ............. 501,324 52.54 5.73 466,942 51.45 5.71
-------- ------ -------- ------
Total average deposits ........... $954,195 100.00% 4.02% $907,633 100.00% 3.98%
======== ====== ======== ======
<CAPTION>
Year ended October 31,
------------------------------------------------------------------
1996 1995
--------------------------------- --------------------------------
Percent Percent
of total Weighted of total Weighted
Average average average Average average average
balance deposits rate balance deposits rate
----------- ---------- ---------- ----------- ---------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
NOW accounts ....................... $ 68,156 7.84% 1.48% $ 61,366 7.71% 1.76%
Savings accounts ................... 176,311 20.28 2.64 173,700 21.84 2.94
Money market savings accounts ...... 136,322 15.68 2.85 129,920 16.33 3.01
Non-interest-bearing demand
checking accounts ................. 53,684 6.17 -- 41,824 5.26 --
-------- ------ -------- ------
Total transaction deposit
accounts ......................... 434,473 49.97 2.20 406,810 51.14 2.48
-------- ------ -------- ------
Certificate of deposit accounts:
Six months or less ................ 113,341 13.04 5.24 92,578 11.64 5.36
Over six months through
12 months ........................ 167,178 19.23 5.81 151,403 19.03 5.63
Over 12 months through
24 months ........................ 63,617 7.32 6.21 55,963 7.03 5.50
Over 24 months .................... 90,794 10.44 6.01 88,764 11.16 5.85
-------- ------ -------- ------
Total certificates
of deposit accounts ............. 434,930 50.03 5.76 388,708 48.86 5.60
-------- ------ -------- ------
Total average deposits ........... $869,403 100.00% 3.98% $795,518 100.00% 4.00%
======== ====== ======== ======
</TABLE>
86
<PAGE>
Compass had $88.4 million in certificates of deposit of $100,000 or more
outstanding as of May 31, 1998, maturing as follows:
<TABLE>
<CAPTION>
Weighted
Maturity Period Amount average rate
- ----------------------------------------------- ---------- -------------
(Dollars in thousands)
<S> <C> <C>
Three months or less .......................... $25,450 5.60%
Over three months through six months .......... 25,782 5.59
Over six months through twelve months ......... 22,763 5.88
Over twelve months ............................ 14,433 5.99
-------
$88,428 5.73%
=======
</TABLE>
Borrowings. Compass borrows funds from the FHLB. FHLB loans finance
Compass's loans to low- and moderate-income borrowers and other funding needs.
FHLB loans are collateralized primarily by certain of Compass's mortgage loans
and mortgage-backed securities and by Compass's holdings of FHLB stock. See "--
Investments." The maximum amount that the FHLB will loan fluctuates from time
to time based on the FHLB's policies. See "Regulation--Federal Home Loan Bank
System."
Compass had $64.6 million in outstanding loans from the FHLB as of May 31,
1998. The FHLB charges a fixed rate of interest on its loans. Compass may
borrow up to $358.6 million from the FHLB, including under a preapproved line
of credit of $20,000,000.
The following table sets forth certain information regarding borrowed
funds during the periods indicated:
<TABLE>
<CAPTION>
Seven months
ended May 31, Year ended October 31,
------------------------- ---------------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Short term borrowings:
Securities sold under agreements to repurchase:
Average balance outstanding ........................... $ 9,605 $ 2,343 $ 3,923 $ 120 --
Maximum amount outstanding at any month
end during the period ............................... 11,616 3,147 9,533 1,925 --
Balance outstanding at end of period .................. 11,616 3,147 9,533 1,925 --
Weighted average interest rate during the period ...... 4.73% 4.57% 4.70% 4.09% --
Weighted average interest rate at end of period ....... 4.75% 4.75% 4.75% 4.75% --
Treasury Tax and Loan Notes:
Average balance outstanding ........................... $ 1,178 $ 1,152 $ 1,163 $ 1,078 $ 1,205
Maximum amount outstanding at any month
end during the period ............................... 2,071 2,117 2,117 2,175 2,190
Balance outstanding at end of period .................. 597 2,117 164 2,000 1,501
Weighted average interest rate during the period ...... 5.45% 4.64% 5.00% 4.90% 5.30%
Weighted average interest rate at end of period ....... 5.46% 5.36% 5.41% 5.10% 5.56%
Total short term borrowings:
Average balance outstanding ........................... $10,783 $ 3,495 $ 5,086 $ 1,198 $ 1,205
Maximum amount outstanding at any month
end during the period ............................... 12,213 5,264 9,742 3,925 2,190
Balance outstanding at end of period .................. 12,213 5,264 9,697 3,925 1,501
Weighted average interest rate during the period ...... 4.80% 4.59% 4.77% 4.82% 5.30%
Weighted average interest rate at end of period ....... 4.78% 5.00% 4.76% 4.93% 5.56%
Federal Home Loan Bank of Boston advances:
Average balance outstanding ........................... $61,986 $51,293 $51,490 $37,288 $39,552
Maximum amount outstanding at any month
end during the period ............................... 67,456 54,942 54,942 45,375 43,178
Balance outstanding at end of period .................. 64,572 54,017 51,006 45,375 39,364
Weighted average interest rate during the period ...... 6.52% 6.61% 6.68% 6.77% 6.58%
Weighted average interest rate at end of period ....... 6.43% 6.56% 6.63% 6.50% 6.64%
</TABLE>
87
<PAGE>
Subsidiary Activities
Compass Bank Securities Corporation. Compass Bank Securities Corporation
("CBS Corporation") is a wholly-owned subsidiary of Compass established in 1990
as a Massachusetts security corporation. CBS Corporation engages exclusively in
buying, selling and holding investment securities on its own behalf and not as
a broker. The income earned on CBS Corporation's investment securities is
subject to a significantly lower rate of state tax than that assessed on income
earned on investment securities maintained at Compass. At May 31, 1998, CBS
Corporation had total assets of $135.3 million, consisting primarily of cash
and investment securities.
Compass Credit Corporation. Compass Credit Corporation ("CC Corporation")
is a wholly-owned subsidiary of Compass established in 1997 as a Massachusetts
corporation. CC Corporation buys, sells, and originates auto loans in Rhode
Island. CC Corporation is a licensed lender in Rhode Island. At May 31, 1998,
CC Corporation had total assets of $15.9 million, consisting primarily of cash
and auto loans.
Buffinton Brook Realty Corporation. Buffinton Brook Realty Corporation
("BBR Corporation") is a wholly-owned subsidiary of Compass established in 1977
as a Massachusetts corporation. BBR Corporation purchases and holds real estate
and is the 99.9% owner of Compass Preferred Capital Corporation ("Compass
Preferred"). At May 31, 1998, BBR Corporation had total assets of $158.5
million, consisting primarily of its investment in Compass Preferred.
Compass Preferred Capital Corporation. Compass Preferred is a 99.9% owned
subsidiary of BBR Corporation. It was established in March, 1998 to engage in
real estate business activities (including the acquisition and holding of
securities and real estate loans) that enable it to be taxed as a "real estate
investment trust" under federal and Massachusetts tax laws. Compass Preferred
had total assets of $159.2 million at May 31, 1998, $145.9 million of which
were mortgage loans originated by and acquired from Compass.
The 1855 Corporation. The 1855 Corporation ("1855 Corporation") is a
wholly-owned subsidiary of Compass established in 1971 as a Massachusetts
corporation. 1855 Corporation is principally engaged in the acquisition and
holding of real estate which is used for banking purposes. At May 31, 1998,
1855 Corporation had total assets of $7.4 million of which $2.5 million
consisted of real estate used for banking purposes and $3.5 million consisted
of investments in subsidiaries.
Purchase Corporation. Purchase Corporation is a wholly-owned subsidiary of
1855 Corporation established in 1981 as a Massachusetts corporation. Purchase
Corporation acquires, manages and develops real estate, purchases equipment and
makes investments. At May 31, 1998, Purchase Corporation had total assets of
$2.4 million of which $2.3 million consisted of cash and $90,000 consisted of
real estate holdings.
North Front Street, Inc. North Front Street, Inc. ("NFS Inc.") is a
wholly-owned subsidiary of 1855 Corporation established in 1991 as a
Massachusetts corporation. NFS, Inc. acquires, manages, develops,
rehabilitates, leases, finances, holds and makes real estate investments. At
May 31, 1998, NFS Inc. had total assets of $1.1 million which consisted solely
of cash.
Year 2000 Issue
The Year 2000 Issue (commonly referred to as "Y2K") is the result of
computer programs being written using two digits, rather than four digits, to
define the applicable year. The Y2K issue, which is common to most
corporations, including banks, concerns the inability of information systems,
primarily (but not exclusively) computer software programs, to properly
recognize and process date-sensitive information as the Year 2000 approaches.
Since Compass's information systems functions are either outsourced to
service bureaus or processed in-house using programs developed by third-party
vendors, the direct effort to correct Y2K issues will be undertaken largely by
third parties and will therefore not be within Compass's direct control.
Compass expects to bring its mission critical operating systems into compliance
with Y2K requirements through the installation of updated or replacement
programs developed by third parties.
Bank regulatory agencies have recently issued additional guidance under
which they are assessing Y2K readiness. The failure of a financial institution,
such as Compass, to take appropriate action to address deficiencies in the Y2K
project management process may result in enforcement actions which could have a
material adverse effect on such institution, result in the imposition of civil
money penalties or result in the delay (or receipt of an
88
<PAGE>
unfavorable or critical evaluation of management of a financial institution in
connection with regulatory review) of applications seeking to acquire other
entities or otherwise expand the institution's activities.
Compass began addressing the Y2K issue in the Fall of 1996 when it formed
a Y2K Project Team comprised of financial, operations, information systems,
internal audit, compliance, lending, corporate services, loan servicing and
retail personnel. A formal Y2K Action Plan was developed by the Y2K Project
Team and approved by the Board of Directors in 1997. The Y2K Project Team meets
at least once every quarter and provides quarterly updates to the Board of
Directors. The Team has completed an assessment, identifying mission critical
systems, and has initiated formal communications with all third-party vendors
to determine the compliance status of all systems utilized by Compass. Mission
critical systems include hardware, software, program interfaces, operating
systems as well as other mechanical or computer-generated requirements that are
beyond Compass's main central processing system and network. Based upon the
results of the assessment, Compass has determined that there will be a need to
replace portions of its existing hardware and upgrade a portion of its software
systems.
Compass's plan to resolve the Y2K issue was developed along the five phase
((i) awareness; (ii) assessment; (iii) renovation; (iv) validation; and (v)
implementation) project management process outlined in the Federal Financial
Institutions Examination Council (FFIEC) Year 2000 statement of May 5, 1997.
The awareness phase has been completed, a Y2K assessment was completed and
monitoring of service bureau and vendor progress is ongoing. Renovation of
third party systems that were identified as non-compliant is being undertaken
by those third parties and is scheduled to be completed by December 31, 1998.
The Y2K Project Team is in the process of creating formal test plans. Testing
has begun and testing of mission critical systems is expected to be completed
by June 30, 1999. Compass has not yet developed contingency plans to ensure
that critical operations continue in the event its service bureau or other
vendors are unable to achieve millenium requirements. Contingency plans will be
initiated if a vendor misses its target date or is not considered Y2K compliant
by December 31, 1998.
The chief components of Compass's expense related to the Y2K issue are
currently believed to be the replacement of personal computer equipment and the
purchase or upgrade of third-party software. External maintenance and internal
modification costs will be expensed as incurred. Costs of new hardware and
software will be capitalized and depreciated in accordance with Compass
policies. Although final costs have yet to be determined, management currently
expects to incur costs in the range of $750,000 to $1.0 million on its Year
2000 readiness efforts. Costs of the Y2K project are based on current estimates
and actual results could vary significantly from such estimates once detailed
testing is completed. If the resolution plan were unsuccessful, it would have a
material adverse effect on Compass's future operating results and financial
condition.
Ultimately, the success of Compass's efforts to address the Y2K issue
depends to a large extent not only on the corrective measures that Compass
undertakes, but also on the efforts undertaken by businesses and other
independent entities who provide data to, or receive data from, Compass such as
borrowers, vendors or customers. In particular, Compass's credit risk
associated with its borrowers may increase as a result of problems such
borrowers may have resolving their own Y2K issues. Although it is not possible
to evaluate the magnitude of any potential increased credit risk at this time,
the impact of the Y2K issue on borrowers could result in increases in problem
loans and credit losses in future years. Over the course of the next twelve
months, Compass will endeavor to monitor the Y2K efforts of its borrowers and
will implement a course of action and procedures designed to reduce any
increased potential risk as a result of Y2K issues.
Properties
Compass conducts its business through 23 full-service branches, two
seasonal high school offices, four remote ATMs and five non-branch properties,
including its corporate headquarters, an operations center, a mortgage office
and two other back-office facilities as of the date of this Prospectus.
In the Greater New Bedford market, Compass operates eight full service
branches, including six branches in the City of New Bedford (five of which are
owned by Compass or a subsidiary and one of which is operated under a land
lease), one owned branch in the town of Fairhaven and one leased branch in the
town of North Dartmouth. Compass's corporate headquarters and operations center
are also located in the city of New Bedford, as are two other back-office
facilities. All of these buildings are owned by Compass or a subsidiary. Two of
Compass's remote ATMs are located in the City of New Bedford. One of Compass's
limited service high school branches is located in the City of New Bedford.
89
<PAGE>
In the Greater Fall River market, Compass operates six full service
branches, including one owned and one leased branch in the city of Fall River,
one leased branch in Assonet and owned branches in each of Somerset, Swansea
and Westport. One of Compass's remote ATMs is also located in the City of Fall
River, as is one of Compass's limited service high school branches.
In the Greater Plymouth market, Compass operates four full service
branches, including one owned and one leased branch in the town of Plymouth and
leased branches in each of Carver and Manomet. Compass also leases a non-branch
mortgage office in the town of Lakeville, located in the Greater Plymouth
market.
In the Martha's Vineyard market, Compass operates five full service
branches, including one owned and one leased branch in the town of Edgartown,
and three owned branches in the towns of Chilmark, Vineyard Haven and Oak
Bluffs. One of Compass's remote ATMs is located in the Martha's Vineyard town
of West Tisbury.
Compass recognizes that its existing executive office facilities are not
sufficient--in either size or physical design--to house the personnel Compass
needs to support its recent and planned growth. Compass intends to use an
estimated $20 million of the Offering proceeds to fund the construction of a
new corporate headquarters.
Legal Proceedings
Compass is not involved in any pending legal proceedings other than
routine legal proceedings occurring in the ordinary course of business.
Management believes that those routine proceeds involve, in the aggregate,
amounts which are immaterial to the financial condition and results of
operations of Compass.
Personnel
As of May 31, 1998, Compass had 321 full-time and 51 part-time employees.
The employees are not represented by a collective bargaining unit and Compass
considers its relationship with its employees to be good. See "Management of
Seacoast Financial and Compass--Compensation of Officers and Directors through
Benefit Plans" for a description of certain compensation and benefit programs
offered to Compass's employees.
90
<PAGE>
CERTAIN EFFECTS OF THE MERGER ON SEACOAST FINANCIAL
Assuming that the Conversion and the Merger had been consummated as of May
31, 1998, Seacoast Financial would have had, on a pro forma basis assuming
issuance of 18,400,000 Conversion Shares at the maximum of the Estimated
Valuation Range, total assets of $1.9 billion, total deposits of $1.4 billion,
net loans of $1.2 billion and total stockholders equity of $307.8 million. For
pro forma income statements and balance sheets, see "Pro Forma Data." For
historical financial information about Sandwich Bancorp, see "Excerpts from
Annual Report on Form 10-K for the Year Ended December 31, 1997 " and "Excerpts
from Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1998"
attached to this Prospectus.
Management of Seacoast Financial and Compass believe that the Merger
furthers Compass's expansion strategies regarding geographic market area,
customer base and asset size, while maintaining Compass's loan portfolio
diversification and its relatively low-cost sources of funds. In addition,
Compass's and Sandwich's product offerings and corporate cultures are
relatively similar, which management believes will facilitate a smooth
integration of the two banks.
Geographic Expansion and Marketing Opportunities
Geographic Expansion. Compass and Sandwich Bank currently operate in
markets that are, for the most part, contiguous and complementary to each other
in the "South Coast" and Cape Cod regions of southeastern Massachusetts along
the Atlantic shoreline. As of August 1998, Compass has eight full service
branches and one limited service branch in the Greater New Bedford market, six
full service branches and one limited service branch in the Greater Fall River
market, four full-service branches in Plymouth County and five full-service
branches on Martha's Vineyard. Sandwich has nine branches on Cape Cod and two
in Plymouth County. Compass believes that the combination of its market area
with that of Sandwich Bank will enable it to both better serve its existing
customers and attract new customers. Management believes that the acquisition
of Sandwich Bancorp is a more cost-effective, efficient means of expansion to
Cape Cod than establishing new branches would be.
Sandwich Bank operates primarily on Cape Cod. Although Compass generates
indirect auto loans through auto dealers on Cape Cod, to date it has not
concentrated its marketing efforts on other lending or deposit products because
Compass has no branches in that market area. After the Merger, Compass will
have nine branches on Cape Cod from which to market products and services. In
particular, Compass believes that there is opportunity to expand its commercial
loan portfolio by lending to businesses (primarily retail and tourism-related)
located on Cape Cod. Cape Cod's economy is substantially dependent on the
tourist industry, and is more cyclical than other regions in Compass's market
other than Martha's Vineyard. See "Risk Factors--Geographic Concentration of
Loans in and Deposits from Southeastern Massachusetts and Rhode Island." The
population of Cape Cod is also generally more affluent than that of Compass's
New Bedford and Fall River market areas.
Compass and Sandwich Bank both operate in Plymouth County. The four
branches of Compass and the two branches of Sandwich Bank in Plymouth County
are all expected to remain open after the Merger, thereby providing greater
convenience for Compass's existing and future Plymouth County customers. In
addition, management believes that the expansion of Compass's Plymouth County
market presence, together with its entrance into the Cape Cod market, will help
to connect its Cape Cod, Plymouth and New Bedford market areas. Many people
commute from Cape Cod to New Bedford or Plymouth, and others commute between
New Bedford and Plymouth. The Merger may enable Compass to attract new
customers who prefer a bank with branches near both home and work.
Marketing Opportunities. Seacoast Financial's management expects that the
contiguous nature of Compass's and Sandwich Bank's markets will create
efficiencies in advertising and marketing and enable Compass to reach a broader
audience without proportional increases in marketing expense or changes in
marketing strategies. For example, Compass currently advertises in local
newspapers and on radio stations that cover Sandwich Bank's market area as well
as Compass's. In addition, since Compass and Sandwich Bank use the same data
processor and marketing software, management expects to be able to merge the
two banks' databases, which will facilitate cross-marketing opportunities
through a better understanding of customer relationships and product use.
91
<PAGE>
Impact on Deposits
Compass and Sandwich Bank have relatively similar deposit mixes and
weighted average rates paid on deposits, as set forth in the following table.
<TABLE>
<CAPTION>
Seacoast Financial Historical Sandwich Bancorp Historical
Seven months ended May 31, 1998 Six months ended June 30, 1998
--------------------------------- --------------------------------
Percent Percent
of total Weighted of total Weighted
Average average average Average average average
balance deposits rate balance deposits rate
----------- ---------- ---------- ----------- ---------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
NOW accounts ................................. $ 80,170 8.40% 1.45% $ 41,327 9.65% 1.09%
Savings accounts ............................. 170,023 17.82 2.59 26,362 6.16 1.93
Money market savings accounts ................ 146,465 15.35 2.75 107,650 25.15 3.28
Non-interest-bearing demand checking
accounts .................................... 56,213 5.89 -- 40,156 9.38 --
-------- ------ -------- ------
Total transaction deposit accounts ......... 452,871 47.46 2.12 215,495 50.34 2.08
-------- ------ -------- ------
Certificate of deposit accounts: .............
6 months or less ............................ 143,740 15.06 5.44 91,778 21.44 5.37
Over 6 months through 12 months ............. 219,617 23.02 5.75 45,072 10.53 5.45
Over 12 months through 24 months ............ 56,497 5.92 5.78 34,806 8.13 5.68
Over 24 months .............................. 81,470 8.54 6.15 40,960 9.56 5.71
-------- ------ -------- ------
Total certificates of deposit accounts ..... 501,324 52.54 5.73 212,616 49.66 5.50
-------- ------ -------- ------
Total average deposits ..................... $954,195 100.00% 4.02% $428,111 100.00% 3.78%
======== ====== ======== ======
</TABLE>
In addition to having a similar deposit mix, Compass and Sandwich Bank
offer similar--although not identical--deposit products. Seacoast Financial
believes that its more extensive branch network and wider range of products
will not only preserve relationships with Sandwich Bank's existing customers
but will enhance those relationships and provide opportunities to cross sell
additional services not currently provided by Sandwich Bank, such as Sweep
Accounts and electronic tax payment services. In addition, it is expected that
certain popular deposit products currently offered by Sandwich Bank will be
retained and promoted by Compass.
Customer retention is expected to be facilitated because all of Sandwich
Bank's 11 branches will remain open following the Merger. Because the two
companies have relatively similar deposit pricing strategies, management does
not expect significant Sandwich Bank deposit runoff following the Merger.
92
<PAGE>
Impact on Loan Portfolio
Compass's and Sandwich Bank's loan products and lending operations are
relatively similar. The mix of the two banks' loan portfolios differs primarily
in that a larger proportion of Sandwich Bank's loan portfolio is comprised of
real estate loans (particularly residential mortgage loans, but also including
commercial real estate loans and construction and land loans) while Compass has
a significantly higher proportion of commercial and consumer loans in its
portfolio. Compass's ratio of non-performing assets to total assets is also
relatively similar to that of Sandwich Bank. The following table presents the
two companies' loan portfolios by category and asset quality ratios at the
dates indicated:
<TABLE>
<CAPTION>
Seacoast Financial Historical Sandwich Bancorp Historical At
At May 31, 1998 June 30, 1998
---------------------------------- -----------------------------------
Percent Average Percent Average
Amount of total yield Amount of total yield
------------- ---------- --------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Real estate loans:
Residential (one-to four-family) ................ $ 368,136 41.63% $ 242,709 67.30%
Commercial ...................................... 125,089 14.14 61,609 17.09
Home equity lines of credit ..................... 15,941 1.80 11,227 3.11
Construction, net ............................... 41,925 4.74 29,669 8.23
--------- ------ --------- ------
Total real estate loans ........................ 551,091 62.31 8.31% 345,214 95.73 7.92%
--------- ------ ---- --------- ------ -----
Commercial loans ................................. 58,200 6.58 9.86 8,161 2.26 10.06
--------- ------ ---- --------- ------ -----
Consumer loans:
Indirect auto loans, net ........................ 280,215 31.68 7.95 -- --
Other ........................................... 27,553 3.12 8.92 7,242 2.01 9.83
--------- ---- --------- -----
Consumer loans ................................. 307,768 7,242
Less: unearned discount ......................... 32,637 --
--------- ---------
Total consumer loans ........................... 275,131 31.11 8.05 7,242 2.01 9.83
--------- ------ ---- --------- ------ -----
Total loans .................................... $ 884,422 100.00% 8.33% $ 360,617 100.00% 8.01%
========= ====== ==== ========= ====== =====
Non-performing loans as a percent of total loans 1.07% 0.75%
Non-performing assets as a percent of total assets 0.93% 0.56%
</TABLE>
Seacoast Financial's average yield on average interest bearing assets for
its last fiscal year (ended October 31, 1997) was 7.86%, compared to Sandwich
Bancorp's average yield of 7.57% for its last fiscal year (ended December 31,
1997). Seacoast Financial expects that its average yield on interest-bearing
assets will initially decline upon consummation of the Conversion and Merger,
due both to Sandwich Bancorp's comparatively lower-yielding loan portfolio and,
more importantly, to the impact of the initial investment of the Offering
proceeds in investment securities (which generally have lower yields than
loans). This initial investment will result in a substantial increase in the
investment portfolio as a percent of total assets.
Seacoast Financial's management believes that, over time, the Merger will
provide additional lending opportunities. An integral part of Compass's
business strategy after the Merger will include expanding its indirect auto
lending program, adding quality auto dealers operating in Sandwich Bank's
market area and expanding commercial lending by combining Sandwich Bank's
strong customer base with Compass's greater lending capacity. Compass expects
to continue its current practice of having most loan underwriting decisions
(other than consumer ones) made locally in its various regions. Cape Cod will
become a separate market region for Compass, and local loan officers are
expected to retain the authority to make most credit decisions in that region.
93
<PAGE>
THE CONVERSION AND THE MERGER
THE BOARDS OF TRUSTEES AND CORPORATORS OF SEACOAST FINANCIAL AND THE BOARD
OF DIRECTORS OF COMPASS HAVE APPROVED THE CONVERSION PLAN AND THE MERGER
AGREEMENT. THE COMMISSIONER HAS ALSO APPROVED THE CONVERSION PLAN, SUBJECT TO
THE SATISFACTION OF CERTAIN OTHER CONDITIONS. HOWEVER, SUCH COMMISSIONER
APPROVAL DOES NOT CONSTITUTE A RECOMMENDATION OR ENDORSEMENT OF THE PLAN. IN
ADDITION, THE BOARDS OF DIRECTORS OF SANDWICH BANCORP AND SANDWICH BANK HAVE
APPROVED THE MERGER AGREEMENT.
Overview
The Conversion Plan, which Seacoast Financial's Board of Trustees adopted
on April 23, 1998, provides for the amendment of Seacoast Financial's charter
to authorize the issuance of capital stock (among other amendments) so that
Seacoast Financial will become a stock holding company rather than a mutual
holding company. The Conversion Plan further provides that Seacoast Financial
will offer the Conversion Shares for sale in the Subscription Offering to
depositors, the ESOP and directors, trustees, officers and employees. Subject
to the prior rights of holders of subscription rights, Seacoast Financial may
also offer Conversion Shares in a Community Offering to certain members of the
general public, with a preference given to residents of Compass's Community.
The Community Offering may commence concurrently with, during or after the
Subscription Offering. If any Conversion Shares remain unsold after the
Subscription and Community Offerings, Seacoast Financial expects to offer such
shares for sale to the general public in the Syndicated Community Offering. The
Purchase Price per share of all Conversion Shares sold in the Offerings will be
$10.00, and the aggregate price (and the aggregate number) of Conversion Shares
sold in the Offerings will be determined based upon an Independent Appraisal of
the estimated pro forma market value of the Conversion Shares, currently
estimated to be between $136.0 million and $184.0 million.
Seacoast Financial determined to undertake the Conversion in connection
with its decision to enter into the Merger Agreement with Sandwich Bancorp and
Sandwich Bank. The Merger Agreement provides for a stock-for-stock exchange.
The Conversion will result in Seacoast Financial becoming a stock company,
thereby having shares available to effect the exchange. The Exchange Shares to
be issued in the Merger are in addition to the Conversion Shares to be issued
in the Offerings.
The Boards of Trustees and Directors of Seacoast Financial and Compass
approved the Merger Agreement on March 22, 1998 and the Boards of Directors of
Sandwich Bancorp and Sandwich Bank approved it on March 23, 1998. The Merger
Agreement provides that, on the tenth trading day following consummation of the
Conversion, Sandwich Bancorp will merge with a corporate subsidiary of Seacoast
Financial. Upon consummation of the Merger, the outstanding shares of Sandwich
Bancorp Common Stock and outstanding Sandwich Bancorp Options will
automatically convert into and become exchangeable for the Exchange Shares
determined by application of the Exchange Ratio. Following the Merger, Seacoast
Financial expects to cause Sandwich Bancorp to merge into Seacoast Financial
and to cause Sandwich Bank to merge with Compass (the "Bank Merger") and cease
to be a separate bank.
The reason for the delay between the dates of consummation of the
Conversion and consummation of the Merger is that the calculation of the
Exchange Ratio for determining the number of Exchange Shares issuable to the
Sandwich Bancorp stockholders is based upon the average trading prices of the
Seacoast Financial Common Stock for a number of days following the consummation
of the Conversion. Notwithstanding this delay, the Conversion and the Merger
are interdependent transactions, and neither one will occur unless both of them
do. Although the Conversion and the Merger will not close simultaneously, it is
a condition to consummation of the Conversion that all conditions to
consummation of the Merger (other than the delivery of the Exchange Shares to
the Sandwich Bancorp stockholders and optionholders) shall have been satisfied
or waived and it is a condition to consummation of the Merger that the
Conversion shall have been consummated. Consummation of the Conversion and the
Merger are subject to a number of conditions, including final regulatory
approval of the Commissioner, the BBI, the FDIC and the FRB and the approval of
the Sandwich Bancorp stockholders. A special meeting of the Sandwich Bancorp
stockholders for purposes of voting on the Merger has been scheduled for
October , 1998.
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The following is a brief summary of pertinent aspects of the Conversion
and the Merger as well as the Merger Agreement. The summary is qualified in its
entirety by reference to the provisions of the Conversion Plan and the Merger
Agreement. Copies of the Conversion Plan and the Merger Agreement are available
for inspection at the offices of Seacoast Financial and Compass and at the
offices of the FRB and the Commissioner, and the Conversion Plan and Merger
Agreement are filed as exhibits to the Registration Statement of which this
Prospectus is a part, copies of which may be obtained from the SEC. See
"Additional Information."
Seacoast Financial's Background of and Reasons for the Conversion and the
Merger
Over the past several years, the Board of Trustees of Seacoast Financial
and the Board of Directors of Compass have reviewed the various corporate forms
available to Compass, including remaining in mutual holding company form
without stock issuance, issuing shares of stock through the existing mutual
holding company structure and undertaking a full conversion to stock form of
organization. The Boards have consistently determined that a full
mutual-to-stock conversion might be appropriate but only if undertaken for a
valid business purpose.
In addition to considering the appropriate corporate form for Seacoast
Financial and Compass, the Board of Directors of Compass has considered various
growth alternatives from time to time, including the possible acquisition of
smaller banks as a means of expanding Compass's geographic market and asset
base. Particularly since 1994, when Compass successfully acquired Martha's
Vineyard National Bank, the Compass Board has sought acquisition opportunities
on Cape Cod, a market that Compass views as an attractive natural extension of
its New Bedford, Plymouth, Fall River and Martha's Vineyard markets.
In September 1997, Kevin G. Champagne, Compass's president, began
discussions with Frederic D. Legate, Sandwich Bank's president, regarding a
possible combination between the two banks and their respective parent
companies. The discussions, which continued through the fall, focused on the
benefits of such a combination to the two banks' respective constituencies and
on the type of consideration that Compass could pay to acquire Sandwich Bancorp
(in light of Seacoast Financial's mutual form). On January 8, 1998, in response
to a solicitation of bids to acquire Sandwich Bancorp by Sandwich Bancorp's
financial advisor, Compass formally offered $53.00, in cash, per outstanding
share of Sandwich Bancorp Common Stock. After considering Compass's offer along
with three other competing offers, Sandwich Bancorp informed Compass that it
was prepared to begin due diligence and begin negotiating an agreement. During
the week of January 26, 1998, the two companies performed due diligence reviews
of each others' businesses and, with the assistance of their respective counsel
and financial advisors, negotiated a definitive merger agreement.
At a meeting on February 1, 1998, the Board of Directors of Compass and
the Board of Trustees of Seacoast Financial voted to approve an Acquisition and
Merger Agreement with Sandwich Bancorp and Sandwich Bank, and that agreement
was executed by both parties on February 2, 1998 (the "February 2 Agreement").
Pursuant to the February 2 Agreement, Sandwich Bancorp was to have merged into
a corporate subsidiary of Compass, in exchange for cash consideration of $53.00
per share of Sandwich Bancorp Common Stock. In order to raise the capital
needed for such cash acquisition, Seacoast Financial and Compass planned to
undertake a so-called "minority stock issuance" through the existing mutual
holding company structure. In order to do so, Seacoast Financial planned to
form a "mid-tier" holding company that would own 100% of the common stock of
Compass. The mid-tier holding company would have issued at least 51% of its
common stock to Seacoast Financial, and would have issued the remaining
minority interest to Compass's depositors and others in a subscription and
public offering.
After the February 2 Agreement was announced, Sandwich Bancorp received
unsolicited expressions of interest from three other financial institutions who
had originally submitted bids in January, 1998, in each case proposing
stock-for-stock merger transactions at nominal values higher than Seacoast
Financial's cash transaction. As permitted by the February 2 Agreement,
Sandwich Bancorp's Board of Directors determined that its fiduciary duties
required it to consider the alternative proposals. The Sandwich Bancorp Board
provided the three interested parties with the opportunity to perform "due
diligence" in order to be in a position to make their best and final offers,
and also gave Seacoast Financial the opportunity to propose a revised
transaction.
Based upon its knowledge of the terms of the competing proposals, Seacoast
Financial's management, with the advice of its legal and financial advisors,
concluded that the only way Seacoast Financial could make a financially sound,
competitive proposal would be by undertaking a mutual-to-stock conversion
followed by a stock-for-stock exchange with Sandwich Bancorp's stockholders.
Since Seacoast Financial is currently a mutual corporation with no authority to
issue capital stock, the only way that Seacoast Financial could enter into a
transaction providing
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for a stock-for-stock exchange would be by undertaking a full conversion to
stock form. (A stock-for-stock merger would not have been possible under
Seacoast Financial's existing mutual holding company structure.) Seacoast
Financial and Compass held a series of meetings with their respective Boards to
consider such a proposal.
At a joint meeting held on March 22, 1998, the Board of Directors of
Compass and the Board of Trustees of Seacoast Financial confirmed their earlier
judgment that the acquisition of Sandwich Bancorp, a well-established banking
institution in an attractive contiguous market, represented the kind of
business opportunity that Seacoast Financial and Compass had been seeking. The
Boards were advised by management and by their investment advisors that, given
the levels to which the price of the Sandwich Bancorp Common Stock had been
bid, an acquisition of Sandwich Bancorp would only make sense, from a financial
point of view, if the transaction were structured as a stock-for-stock
exchange. The Boards determined that the ability to effect such an acquisition
was exactly the kind of valid business purpose that warranted a decision to
convert to stock form. At that meeting, the Boards approved the Merger
Agreement (which superseded the February 2 Agreement) and directed the officers
to prepare a plan of conversion for subsequent Board approval. At a meeting
held on April 23, 1998, the Board of Trustees of Seacoast Financial approved
the Conversion Plan. The Conversion Plan was subsequently approved by the
Corporators of Seacoast Financial and by the Commissioner, subject to certain
conditions.
The Boards of Compass and Seacoast Financial believe that the combination
with Sandwich Bancorp will enhance the competitive position of the combined
entities and will enable the resulting institution to compete more effectively
than either institution could on its own. The combined entity will have greater
financial resources and, as a result of the Offerings, increased capital
levels. At May 31, 1998, assuming the prior sale of the Conversion Shares at
the maximum of the Estimated Valuation Range and consummation of the Merger,
Seacoast Financial's pro forma stockholders' equity would amount to 16.5% of
pro forma total assets. The combination will result in increased funds being
available for lending purposes, greater resources for expansion of services and
better opportunities (through stock benefit plans) for attracting and retaining
qualified personnel.
The terms of the Merger Agreement were the result of arm's length
negotiations between representatives of Seacoast Financial and Sandwich
Bancorp. Among the factors considered by the Board of Trustees of Seacoast
Financial in considering the Merger were (i) the ability to expand Compass's
presence onto Cape Cod (upon consummation of the Merger, Compass will have nine
branches on Cape Cod); (ii) information concerning the financial condition,
results of operations, capital levels, asset quality and prospects of Compass
and Sandwich Bancorp; (iii) the short-term and long-term impact the Conversion
and the Merger will have on Seacoast Financial's consolidated results of
operations; (iv) the general structure of the transaction and the compatibility
of the respective managements and business philosophies; (v) the enhancement of
the franchise value of Seacoast Financial and Compass; (vi) the ability of the
combined enterprise to compete in relevant banking and non-banking markets;
(vii) industry and economic conditions; and (viii) the impact of the Conversion
and the Merger on the depositors, employees, customers and communities served
by Compass and Sandwich Bancorp through the contemplated expansion of Compass's
lending and retail banking services as a result of the Merger.
Compass and Sandwich Bank currently serve contiguous market areas. Compass
operates in the southeastern Massachusetts region just west of Cape Cod,
including New Bedford, Fall River and Plymouth, and also operates on the island
of Martha's Vineyard, off the coast of Cape Cod. Sandwich Bank, which has 11
full service offices, operates primarily on Cape Cod. As a result of the
Conversion and the Merger, Compass will operate 34 full-service banking
offices, and, based on pro forma total assets at May 31, 1998, would be the
third largest savings bank in Massachusetts and the largest financial
institution headquartered in southeastern Massachusetts.
In addition to enabling Seacoast Financial to effect the Merger, the
Conversion will structure Seacoast Financial in stock form, the organizational
structure used by most business entities, including commercial bank holding
companies. The Conversion will permit Compass's depositors and members of the
local community and of the general public to become equity owners and to share
in the future of Seacoast Financial and Compass. The Conversion will also
provide additional funds for lending and investment activities, facilitate
future access to the capital markets, enhance the ability of Seacoast Financial
to diversify and expand into other markets and enable Compass to compete more
effectively with other financial institutions.
After completion of the Conversion, the unissued common and preferred
stock authorized by Seacoast Financial's Articles of Organization will permit
Seacoast Financial, subject to market conditions and applicable regulatory
approvals, to raise additional equity capital through further sales of
securities, and to issue securities
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in connection with possible acquisitions. At the present time, Seacoast
Financial has no plans with respect to additional offerings of securities
(other than the issuance of the Exchange Shares in connection with the Merger),
although Seacoast Financial may consider the adoption of a stock option plan
and/or a recognition and retention plan that would provide for the granting of
shares of stock or stock options to management and the Board. The ability to
use stock-related incentive programs to attract and retain executive and other
personnel for itself and its subsidiaries is another benefit of operating in
stock form. See "Management of Seacoast Financial and Compass--Compensation of
Officers and Directors through Benefit Plans."
In light of the foregoing, the Board of Trustees of Seacoast Financial and
the Board of Directors of Compass believe that the Conversion and the Merger
are in the best interests of Seacoast Financial, Compass and their depositors
and other customers and employees.
Description of the Conversion
The Offering and Sale of Conversion Shares. Seacoast Financial is offering
between 13,600,000 and 18,400,000 Conversion Shares (subject to adjustment to
up to 21,160,000 shares in the event the estimated pro forma market value of
the Conversion Shares increases immediately prior to the conclusion of the
Offering) in connection with the Conversion. Pursuant to applicable state and
federal regulations, Seacoast Financial is offering the Conversion Shares for
sale in the Subscription Offering pursuant to subscription rights in the
following order of priority to: (i) holders of deposit accounts at Compass with
an aggregate balance of $50 or more on December 31, 1996 ("Eligible Account
Holders"); (ii) holders of deposit accounts at Compass with an aggregate
balance of $50 or more on June 30, 1997 ("Supplemental Eligible Account
Holders"); (iii) Compass's ESOP; and (iv) employees, officers, directors and
trustees of Compass and Seacoast Financial. Concurrently with, during or
promptly after the Subscription Offering, and subject to the prior rights of
holders of subscription rights, Seacoast Financial may offer Conversion Shares
in the Community Offering to certain members of the general public with a
preference given to residents of Compass's Community (as defined below in "The
Offerings--Community Offering"). Seacoast Financial may offer Conversion Shares
not subscribed for in the Subscription and Community Offerings, if any, for
sale to the general public in the Syndicated Community Offering. For detailed
information about subscription priorities, purchase limitations and procedures
for placing an order for Conversion Shares, see "The Offerings."
Stock Pricing and Number of Conversion Shares to be Issued. Seacoast
Financial has established the Purchase Price per share of all Conversion Shares
sold in the Offerings at $10.00. The Conversion Plan requires that the
aggregate purchase price of the Conversion Shares must be based on the
appraised pro forma market value of the Conversion Shares as determined on the
basis of an independent appraisal. Seacoast Financial has retained RP Financial
to make such valuation. For its services in making such appraisal and for
preparation of a business plan, RP Financial will receive a fee of $45,000 for
the initial appraisal, $5,000 for any update and $12,500 for the business plan
plus out-of-pocket expenses not to exceed $10,000. Seacoast Financial has
agreed to indemnify RP Financial and any employees of RP Financial who act for
or on behalf of RP Financial in connection with the appraisal against any and
all loss, cost, damage, claim, liability or expense of any kind (including
claims under federal and state securities laws) arising out of any misstatement
or untrue statement of a material fact or an omission to state a material fact
in the information supplied by Compass to RP Financial, unless RP Financial is
determined to be negligent or otherwise at fault.
An appraisal has been made by RP Financial in reliance upon the
information contained herein, including the financial statements of Seacoast
Financial and Sandwich Bancorp. RP Financial also considered the following
factors, among others, in preparing its appraisal: the present and projected
operating results and financial condition of Seacoast Financial and Sandwich
Bancorp and the economic and demographic conditions in Compass's and Sandwich
Bank's existing marketing area; certain historical, financial and other
information relating to Seacoast Financial and Sandwich Bancorp; a comparative
evaluation of the operating and financial statistics of Seacoast Financial and
Sandwich Bancorp with those of other similarly situated publicly traded savings
and co-operative banks and other savings institutions located in Massachusetts
and other New England states; the aggregate size of the offering of the
Conversion Shares; the impact of the Conversion and the Merger on Seacoast
Financial's net worth and earnings potential; estimates of the number of
Exchange Shares to be issued in the Merger; and the trading market for
securities of comparable institutions and general conditions in the market for
such securities. In its review of the appraisal provided by RP Financial, the
Board of Trustees of Seacoast Financial reviewed the methodologies and the
appropriateness of the assumptions that RP Financial used, in addition to the
factors enumerated above, and the Board of Trustees believes that such
assumptions were reasonable.
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On the basis of the foregoing, RP Financial has advised Seacoast Financial
and Compass that in its opinion, dated September 4, 1998, the estimated pro
forma market value of the Conversion Shares ranged from a minimum of $136.0
million to a maximum of $184.0 million with a midpoint of $160.0 million (the
"Estimated Valuation Range"), giving effect to the Merger. The Board of
Directors of Compass and the Board of Trustees of Seacoast Financial determined
that the Conversion Shares should be sold at $10.00 per share, resulting in a
range of 13,600,000 to 18,400,000 Conversion Shares being offered. Upon
consummation of both the Conversion (assuming consummation occurs at the
maximum of the Estimated Valuation Range) and the Merger (assuming an Exchange
Ratio of 6.4), the Conversion Shares and the Exchange Shares will represent
approximately 59.2% and 40.8%, respectively, of the total shares of Seacoast
Financial Common Stock outstanding, assuming no fractional Exchange Shares, no
exercise of dissenters' rights and a Purchase Price of $10.00 per share.
Assuming an Exchange Ratio of 4.7407, the Conversion Shares and Exchange Shares
would represent 66.2% and 33.8%, respectively, of the total shares of Seacoast
Financial Common Stock outstanding. See "--Description of the Merger and the
Exchange Ratio." The Estimated Valuation Range may be amended with the approval
of the Commissioner, if required, or if necessitated by subsequent developments
in the financial condition of Seacoast Financial and Compass or market
conditions generally.
RP Financial's valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing the Conversion
Shares. RP Financial did not independently verify the consolidated financial
statements and other information provided by Seacoast Financial and Sandwich
Bancorp, nor did RP Financial value independently the assets or liabilities of
the parties. The valuation considers Seacoast Financial and Compass as a going
concern and should not be considered as an indication of the liquidation value
of Seacoast Financial. 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
Conversion Shares in the Conversion or receiving Exchange Shares in the Merger
will thereafter be able to sell such shares at prices at or above the Purchase
Price (or the Seacoast Financial Trading Price used to determine the Exchange
Ratio) or in the range of the foregoing valuation of the pro forma market value
thereof.
No sale of Conversion Shares may be consummated unless prior to such
consummation RP Financial confirms that nothing of a material nature has
occurred which, taking into account all relevant factors, would cause it to
conclude that the aggregate Purchase Price is materially incompatible with its
September 4, 1998 estimate of the pro forma market value of the Conversion
Shares upon consummation of the Conversion. If such is not the case, the
Offering can be terminated; a new Estimated Valuation Range may be set and
investors resolicited and new Subscription, Community Offerings and a new
Syndicated Community Offering may be held; or such other action may be taken as
Seacoast Financial and Compass shall determine and the Commissioner may permit
or require.
Depending upon market or financial conditions prior to conclusion of the
Offering, the total number of Conversion Shares to be sold will be established.
In the event market or financial conditions change so as to cause the aggregate
Purchase Price, supported by the updated appraisal, to be below the minimum of
the Estimated Valuation Range or more than 15% above the maximum of such range,
Seacoast Financial will resolicit subscribers (i.e., permit them to modify or
rescind their subscriptions, or permit them to continue their orders, in which
case they will need to affirmatively reconfirm their subscriptions prior to the
expiration of the resolicitation period or their subscription funds will be
promptly refunded, with interest at Compass's passbook rate of interest
(currently 2.25%), and their withdrawal authorizations will be cancelled). Any
change in the Estimated Valuation Range must be approved by the Commissioner.
If the number of Conversion Shares issued in the Conversion is increased due to
an increase of up to 15% in the Estimated Valuation Range to reflect changes in
market or financial conditions, no resolicitation of subscribers will be made.
See "The Offering--Limitations on Purchases of Conversion Shares" as to
purchase priorities with respect to additional shares that may be issued in the
event of an increase in the Estimated Valuation Range.
The higher the number of Conversion Shares issued, the lower a
stockholder's ownership interest and per share pro forma net income and
stockholders' equity, and the higher Seacoast Financial's pro forma net income
and stockholders' equity on an aggregate basis. The lower the number of
Conversion Shares issued, the higher a stockholder's ownership interest and per
share pro forma net income and stockholders' equity and the lower Seacoast
Financial's pro forma net income and stockholders' equity on an aggregate
basis. See "Risk Factors--Dilution Resulting from Possible Issuances of
Additional Shares" and "Pro Forma Data--Pro Forma Conversion Data."
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Copies of the appraisal report of RP Financial, including any amendments
thereto, and the detailed report of the appraiser setting forth the method and
assumptions for such appraisal are available for inspection at the main office
of Seacoast Financial and at the other locations specified under "Additional
Information."
Description of the Merger and the Exchange Ratio
Pursuant to the Merger Agreement, Sandwich Bancorp will merge with a
corporate subsidiary of Seacoast Financial. It is anticipated that, following
the merger of Sandwich Bancorp with a subsidiary of Seacoast Financial,
Sandwich Bancorp, as the surviving corporation, will merge with Seacoast
Financial and that Sandwich Bank will be merged with Compass and cease to be a
separate bank. Each outstanding share of Sandwich Bancorp Common Stock (other
than shares held by any dissenting stockholders and shares held by Seacoast
Financial or any subsidiary) and each outstanding Sandwich Bancorp Option will
automatically convert into and become exchangeable for a number of shares of
Seacoast Financial Common Stock determined by the application of the Exchange
Ratio (as described below), and cash in lieu of any fractional share of
Seacoast Financial Common Stock which such stockholders or optionholders
otherwise would be entitled to receive. The Exchange Ratio depends upon a
calculation of the average trading price of Seacoast Financial Common Stock on
certain specified days between the consummation of the Conversion and
consummation of the Merger, determined in the manner described below.
At the Merger Effective Time (as such term is defined in "--Description of
the Merger Agreement"), each share of Sandwich Bancorp Common Stock issued and
outstanding immediately prior thereto (other than those held by Seacoast
Financial, by Compass and by Sandwich Bancorp stockholders exercising
dissenters' rights) will convert into a number of Exchange Shares equal to one
share multiplied by the appropriate Exchange Ratio and cash in lieu of any
fractional share. The Exchange Ratio will be based on the Seacoast Financial
Trading Price and will be calculated as set forth below. The parties have
agreed to a range of possible Exchange Ratios so that, as the Seacoast
Financial Trading Price increases, the Exchange Ratio may decrease, as follows:
<TABLE>
<CAPTION>
Seacoast Financial
Trading Price Exchange Ratio Per Sandwich Bancorp Share Value
- ----------------------- -------------------------------------------- ---------------------------------
<S> <C> <C>
More than $15.00 Less than 4.7407 $71.11
($71.11 [divided by] Seacoast Financial
Trading Price)
$13.51-$15.00 4.7407 $64.05-$71.11
(4.7407 x Seacoast Financial
Trading Price)
$10.01-$13.50 6.3936-4.7407 $64.00
($64.00 [divided by] Seacoast Financial
Trading Price)
$10.00 or less 6.4000 $64.00 or less
(6.4000 x Seacoast Financial
Trading Price)
</TABLE>
The Seacoast Financial Trading Price (and therefore the Exchange Ratio)
will be determined in the period between the consummation of the Conversion and
the consummation of the Merger by averaging the closing bid and asked price of
the Seacoast Financial Common Stock for each of the second through the ninth
trading days (inclusive) following consummation of the Conversion (the average
of the closing bid and asked price for each such day is referred to as the
"Daily Closing Price"), discarding the two highest and two lowest Daily Closing
Prices and averaging the remaining Daily Closing Prices. The closing bid and
asked prices will be as quoted at the close of business on the Nasdaq National
Market. The market price of Seacoast Financial Common Stock at the Merger
Effective Time could be more or less than the Seacoast Financial Trading Price
used to determine the Exchange Ratio, and the actual value of the shares issued
in the Merger therefore could be more or less than the Per Sandwich Bancorp
Share Value indicated in the foregoing table.
In addition, each option to purchase a share of Sandwich Bancorp Common
Stock outstanding under the Sandwich Stock Option Plans will, as of the Merger
Effective Time, be automatically converted into and
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exchangeable for a number of Exchange Shares calculated by subtracting the per
share exercise price of such option from the Per Sandwich Share Value and
dividing the result by the Seacoast Financial Trading Price.
At any time prior to the Merger Effective Time, Seacoast Financial may
revise the structure of the Merger and the other transactions contemplated by
the Merger Agreement, provided that (i) there are no material adverse federal
or state income tax consequences to Sandwich Bancorp and its stockholders as a
result of a modification; (ii) the consideration to be paid to the holders of
the Sandwich Bancorp Common Stock under the Merger Agreement is not thereby
changed in kind or reduced in amount; (iii) there are no material adverse
changes to the benefits and other arrangements provided to or on behalf of
Sandwich Bancorp's directors, officers and other employees; and (iv) such
modification will not delay materially or jeopardize receipt of any required
regulatory approvals or other consents and approvals relating to the
consummation of the Merger. Seacoast Financial, Compass, Sandwich Bancorp and
Sandwich Bank have agreed to appropriately amend the Merger Agreement and any
related documents in order to reflect any such revised structure.
For additional information about the Merger Agreement and the terms of the
Merger, see "--Description of the Merger Agreement."
Effects of the Conversion and the Merger
Continuity. While the Conversion and Merger are pending, the normal
business of Compass and Sandwich Bank of accepting deposits and making loans
will continue without interruption. Compass and Sandwich Bank will continue to
be subject to regulation by the Commissioner and the FDIC. After the Conversion
and Bank Merger, Compass will continue to provide services for both Compass's
and Sandwich Bank's depositors and borrowers under Compass's current policies
by its present management and staff, as supplemented by Sandwich Bank
personnel.
The directors and officers of Compass at the time of the Conversion will
continue to serve as directors and officers of Compass after the Conversion.
The directors of Seacoast Financial following the Conversion will consist of
individuals currently serving as directors of Compass and the officers of
Seacoast Financial will consist of the persons currently serving as officers of
Seacoast Financial. Upon consummation of the Merger, certain of the officers
and directors of Sandwich Bancorp and Sandwich Bank will become officers and
directors of Seacoast Financial and/or Compass. See "Management of Seacoast
Financial and Compass--Directors of Seacoast Financial."
Effect on Deposit Accounts. The Conversion will have no effect on
Compass's deposit accounts, except to the extent that funds in the account are
withdrawn to purchase Conversion Shares and except with respect to liquidation
rights. Moreover, each depositor in Sandwich Bank at the time of the Bank
Merger will automatically become a depositor of Compass after the Bank Merger,
and each such deposit account will remain the same with respect to deposit
balance, interest rate and other terms, subject to Compass's right to conform
such account terms to comparable accounts offered by Compass. Subject to
certain limitations, each such account will be insured by the FDIC to the same
extent as before the Conversion and the Merger, and each such account will
continue to be insured in full for amounts in excess of FDIC limits by the
excess insurer of savings bank deposits, the DIF (as a co-operative bank,
Sandwich Bank currently offers its depositors similar excess deposit insurance
through the Share Insurance Fund of the Co-operative Central Bank). Depositors
will continue to hold their existing certificates, passbooks and other
evidences of their accounts.
Effect on Loans. No loan outstanding from either Compass or Sandwich Bank
will be affected by the Conversion or the Merger, and the amount, interest
rate, maturity and security for each loan will remain as they were
contractually fixed prior to the Conversion and the Merger.
Tax Effects. Seacoast Financial has received a favorable opinion regarding
the federal income tax consequences of the Conversion. See "--Tax Aspects of
the Conversion and Merger." Consummation of the Merger is conditioned on prior
receipt by Seacoast Financial and Sandwich Bancorp of an opinion with regard to
federal income taxation which indicates, among other things, that each of the
Merger and the merger of Sandwich Bank and Compass (the "Bank Merger") will
constitute or will be part of a tax-free reorganization and that Seacoast
Financial, Compass, Sandwich Bancorp, Sandwich Bank and the shareholders of
Sandwich Bancorp, by reason of the Merger or the Bank Merger, will recognize no
gain or loss for federal income tax purposes.
Liquidation Rights. At the completion of the Conversion, Seacoast
Financial will establish a liquidation account for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders who continue to
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maintain deposit accounts with Compass following the Conversion. The amount of
the liquidation account will be equal to the net worth of Seacoast Financial as
set forth in the most recent consolidated statement of financial condition
contained herein. In the unlikely event of a complete liquidation of Seacoast
Financial, and only in such event, each such account holder will be entitled to
receive a liquidating distribution from the liquidation account in the amount
of the then-adjusted account balances for such person's deposit accounts then
held following all liquidation payments to creditors.
The initial account balance for each Eligible Account Holder and
Supplemental Eligible Account Holder will be determined by multiplying the
opening balance in the liquidation account by a fraction, the numerator of
which is the amount of Qualifying Deposits or Supplemental Qualifying Deposits
held by such Eligible Account Holder or Supplemental Eligible Account Holder on
the Eligibility Record Date or the Supplemental Eligibility Record Date,
respectively, and the denominator of which is the aggregate amount of all
Qualifying Deposits or Supplemental Qualifying Deposits on such dates. For
deposit accounts in existence on both dates, separate account balances shall be
determined on the basis of the Qualifying Deposits and Supplemental Qualifying
Deposits in such deposit accounts on such dates.
If, however, on the last day of any fiscal year of Seacoast Financial
commencing after the Eligibility Record Date or Supplemental Eligibility Record
Date, as the case may be, the deposit balance in any deposit account of an
Eligible Account Holder or Supplemental Eligible Account Holder is less than
either (i) the amount of Qualifying Deposits of such Eligible Account Holder or
Supplemental Eligible Account Holder on the Eligibility Record Date or
Supplemental Eligibility Record Date, as the case may be, or (ii) the deposit
balance in such deposit account at the close of business on the last day of any
previous fiscal year of Seacoast Financial commencing after the Eligibility
Record Date or the Supplemental Eligibility Record Date, then such Eligible
Account Holder's or Supplemental Eligible Account Holder's account balance
would be reduced in an amount equal to the reduction in such deposit balance,
and such account balance will cease to exist if such deposit account is closed.
In addition, no interest in the liquidation account would ever be increased
despite any subsequent increase in the deposit balances of any Eligible Account
Holder or Supplemental Eligible Account Holder. Any assets remaining after the
above liquidation rights of Eligible Account Holders and Subsequent Eligible
Account Holders are satisfied would be distributed to the stockholders of
Seacoast Financial.
Neither Compass nor Seacoast Financial will be required to set aside funds
for the purpose of establishing the liquidation account, and the creation and
maintenance of the account will not operate to restrict the use or application
of any of the net worth accounts of Compass or Seacoast Financial, except that
neither Compass nor Seacoast Financial, as the case may be, shall declare or
pay a cash dividend on, or repurchase any of, its capital stock if the effect
of such a transaction would be to cause its net worth to be reduced below the
amount required for the liquidation account.
Required Approvals
Various regulatory approvals are required in order to consummate the
Conversion and the Merger. The Commissioner has approved the Conversion Plan,
subject to the satisfaction of certain conditions. The FRB has approved the
Merger (including the Conversion as a precondition to the Merger) and the FDIC
has approved the Bank Merger under the Bank Merger Act, and in each case the
required 15-day waiting period has passed. In addition, the Conversion and the
Merger cannot be consummated unless the BBI and the Commissioner approve the
Merger and the Bank Merger. There can be no assurances that the required
approvals will be obtained. Approvals, nonobjections and authorizations by the
FDIC, the FRB, the Commissioner or the BBI do not constitute recommendations or
endorsements of the Conversion or the Merger by such entities. There can be no
assurances that the requisite regulatory approvals will be received in a timely
manner. In the event the Merger is not consummated on or before February 20,
1999, the Merger Agreement may be terminated by either Seacoast Financial or
Sandwich Bancorp (subject to a possible one-month extension under certain
circumstances).
Pursuant to Massachusetts law, the Conversion Plan must be approved by at
least a majority of Seacoast Financial's Corporators, including a majority of
the "Independent Corporators," as such term is defined in Massachusetts banking
regulations. In addition, the Merger must be approved by at least two thirds
(2/3) of Seacoast Financial's Corporators. Such approvals were obtained at a
special meeting of Corporators held on August 24, 1998. In addition,
consummation of the Merger requires the approval of the Merger Agreement by the
stockholders of Sandwich Bancorp. Sandwich Bancorp has called a special meeting
of stockholders for the purpose of voting on
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the Merger on October , 1998. Under Massachusetts law, the Merger Agreement
must be approved by a two-thirds vote of the outstanding Sandwich Bancorp
Common Stock entitled to vote at such special meeting.
Seacoast Financial is required to make certain filings with state
securities regulatory authorities in connection with the issuance of Seacoast
Financial Common Stock in the Conversion and the Merger.
Description of the Merger Agreement
Representations and Warranties. The Merger Agreement contains
representations and warranties by Sandwich Bancorp and Seacoast Financial
regarding various legal, regulatory, financial and business matters which
generally include, but are not limited to, the following: (i) capital
structure, (ii) securities documents and regulatory reports, (iii) financial
statements, (iv) material adverse change, (v) environmental matters, (vi) tax
matters; (vii) legal proceedings, (viii) employee benefit plans; (ix)
properties, (x) loan portfolio and (xi) material interests of certain persons.
Except as otherwise provided in the Merger Agreement, these representations and
warranties will not survive the Merger Effective Time.
Conduct of Business Prior to the Closing Date. Under the terms of the
Merger Agreement, each of Seacoast Financial and Sandwich Bancorp and their
respective subsidiaries generally is prohibited from: (i) taking any action
that materially adversely affects the ability of either party to obtain any
necessary regulatory approvals or materially increases the period of time
necessary to obtain such approvals; (ii) taking any action that materially
adversely affects its ability to perform its covenants and agreements under the
Merger Agreement; (iii) knowingly taking any action that would result in its
representations and warranties not being true and correct on the date of the
Merger Agreement or at any future date on or prior to the closing date; or (iv)
taking or causing any act which disqualifies the Merger as a
pooling-of-interests for accounting purposes or as a tax free reorganization
under Section 368 of the Code.
Sandwich Bancorp, including its subsidiaries, is required to use
reasonable efforts to preserve intact its business organization and assets and
maintain its rights and franchises and operate its business in the usual,
regular and ordinary course. In addition, Sandwich Bancorp has agreed, except
as otherwise specifically permitted or required by the Merger Agreement or
consented to in writing, that Sandwich Bancorp may not: (i) declare or pay any
dividends or other distributions on capital stock (except for (a) a quarterly
cash dividend not in excess of $0.35 per share that is declared and paid in
accordance with applicable law, regulation, contractual and regulatory
commitments, and (b) dividends paid by any Sandwich Bancorp subsidiary to
Sandwich Bancorp); (ii) increase compensation or fringe benefits of, or pay
bonuses to, directors, officers or employees beyond certain stated limits;
(iii) change or waive any provision of its articles or by-laws; (iv) change the
number of shares authorized or issued capital stock (except for an issuance
pursuant to the Stock Option Agreement or upon exercise of outstanding Sandwich
Options); (v) issue or grant any option, warrant, call commitment,
subscription, right to purchase or agreement relating to the authorized and
issued capital stock of Sandwich Bancorp, or any subsidiary thereunder, or any
convertible securities, except for those shares issued to satisfy presently
outstanding options under and in accordance with the Stock Option Agreement and
the Sandwich Bancorp stock option plans; (vi) enter into or amend in any
material respect or terminate any contract, except in the ordinary course of
business consistent with past practice and as specified in the Merger
Agreement; (vii) amend, terminate, waive or provide consent under any
standstill agreement; (viii) incur any material liabilities or material
obligations, whether directly or by way of guaranty, or acquire any equity,
debt or other investment securities, except in the ordinary course of business
consistent with past practices; (ix) make capital expenditures beyond stated
limits, excluding binding commitments already existing as of the date of the
Merger Agreement; (x) make equity investments in real estate, other than in
foreclosed properties, settlements in lieu of foreclosure or troubled loan or
debt restructurings in the ordinary course of business consistent with
customary banking practices; (xi) make commercial or commercial real estate
loans or loans to one borrower above a certain stated size; (xii) open or close
any branch offices or automated banking facilities; (xiii) engage in certain
off-balance-sheet transactions; (xiv) change accounting method or practices,
except as required by GAAP or by regulatory policy; (xv) merge or consolidate
with, or be acquired by, another entity, except as the fiduciary duties of the
Board of Directors otherwise requires; or (xvi) agree to do any of the
foregoing.
Acquisition Proposals. Sandwich Bancorp has also agreed in the Merger
Agreement, subject to certain exceptions relating to the fiduciary duty of the
Sandwich Bancorp Board of Directors, that it will not (and will use all
commercially reasonable efforts to cause its representatives not to) directly
or indirectly encourage, solicit,
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initiate or participate in any discussions or negotiations with, or provide any
information to, any other person (other than Seacoast Financial and its
affiliates or representatives) concerning any merger, tender offer, sale of
substantial assets, sale of shares of capital stock or debt securities or
similar acquisition transaction involving Sandwich Bancorp or Sandwich Bank.
Sandwich Bancorp has agreed to notify Seacoast Financial immediately of any
such inquiry or proposal (including the terms thereof and the identity of the
other person making the inquiry or proposal) and has further agreed to consult
with Seacoast Financial after receipt of such proposal or commencement of such
discussion or negotiation relating to an acquisition transaction and not to
take any action with respect to such proposed acquisition transaction except
after reasonable consultation with Seacoast Financial.
Closing Date of the Merger. The Merger Agreement provides that the closing
of the Merger will occur on the tenth trading day following consummation of the
Conversion or such other time as Seacoast Financial and Sandwich Bancorp may
agree upon (the "Closing Date"). The reason for the delay between the dates of
consummation of the Conversion and consummation of the Merger is that the
calculation of the Exchange Ratio for determining the number of Exchange Shares
issuable to the Sandwich Bancorp stockholders is based upon the Seacoast
Financial Trading Price, which cannot be calculated until after the
consummation of the Conversion. Notwithstanding this delay, the Conversion and
the Merger are interdependent transactions, and neither one will occur unless
both of them do. As a result, the conditions to the Merger set forth in the
Merger Agreement (other than the delivery of the Exchange Shares), which would
typically need to have been met as of the closing date of the Merger, must
instead be met as of the date of consummation of the Conversion (the
"Pre-Closing Date"), which will be the date of the pre-closing (the
"Pre-Closing") for the Merger. Following completion of the Pre-Closing, which
completion will be acknowledged in writing by the parties at such time, neither
party will have the right to terminate the Merger Agreement. The Merger
Agreement provides that if, after the Pre-Closing Date, any party to the Merger
Agreement attempts to terminate such agreement or fails to take any action
necessary to consummate the Merger, the other party may seek injunctive relief
to enforce the Merger Agreement and the breaching party may not oppose or
contest such effort. Assuming that all conditions to the Merger have been
satisfied or waived as of the Pre-Closing Date, the Merger Effective Time shall
be the time on the Closing Date that the Merger becomes effective pursuant to
applicable provisions of Massachusetts law.
Seacoast Financial and Sandwich Bancorp each anticipates that the Merger
will be consummated in the fourth quarter of 1998. However, consummation could
be delayed as a result of delays in obtaining the necessary governmental and
regulatory approvals of the Conversion or the Merger or if any other condition
to consummation of the Merger is not satisfied or waived. There can be no
assurances as to if or when such approvals will be obtained or that the Merger
will be consummated. See "--Regulatory and Other Approvals."
Conditions to the Merger. The respective obligations of each party under
the Merger Agreement are subject to the fulfillment of the following conditions
at or prior to the Pre-Closing Date, none of which may be waived: (i) the
approval of the Merger Agreement by the Sandwich Bancorp stockholders; (ii) the
absence of orders, decrees or injunctions which enjoin or prohibit the Merger;
(iii) the receipt of all necessary regulatory approvals, authorizations and
consents and the expiration of all applicable waiting periods, without any
condition or requirement that materially and adversely affects the combined
enterprise or the value of Sandwich Bancorp or Sandwich Bank; (iv) the
effectiveness under the Securities Act of the Registration Statement
registering the Exchange Shares without having a stop order issued by either
the SEC or state securities regulators suspending the effectiveness or any
proceeding initiated or threatened by the SEC to suspend such effectiveness;
(v) the approval for listing on the Nasdaq National Market, subject to official
notice of issuance, of the Exchange Shares; (vi) the receipt of a tax opinion,
dated as of the Pre-Closing Date for federal income tax purposes, relating to
the Merger as described under "--Tax Aspects of the Conversion and the Merger";
and (vii) the consummation by Seacoast Financial of the Conversion, resulting
in net proceeds sufficient to enable Compass to remain "well-capitalized" under
applicable federal banking law and otherwise to meet regulatory capital
requirements, in each case after giving effect to the Merger.
The obligations of Seacoast Financial and Sandwich Bancorp under the
Merger Agreement are further subject to the satisfaction (or waiver), at or
prior to the Pre-Closing Date, of the following conditions: (i) the
representations and warranties of the other party shall continue to be true and
correct in all material respects as of the Pre-Closing Date; (ii) the other
party shall have performed in all material respects all obligations and
complied in all material respects with all of its agreements or covenants under
the Merger Agreement, except to the extent that failure to perform does not
have a material adverse effect; (iii) the other party shall have obtained any
and all material permits,
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authorizations, consents, waivers, clearances or approvals required for the
lawful consummation of the Merger by it; (iv) each party shall have received
the agreed legal opinion from counsel to the other party; (v) each party shall
have received the agreed "comfort" letter from the independent accountant to
the other party; and (vi) each party shall have furnished the other party with
such certificates of its officers or others and such other documents to
evidence fulfillment of the aforementioned conditions as shall be reasonably
requested.
The obligations of Seacoast Financial are further subject to the condition
that, as of the Pre-Closing Date, Seacoast Financial shall have received a
letter from its independent accountant to the effect that the Merger will
qualify for "pooling of interests" accounting treatment. Seacoast Financial
will be deemed to have waived this condition if it purchases any shares of
Sandwich Bancorp Common Stock between the date of the Merger Agreement and the
Pre-Closing Date. The obligations of Sandwich Bancorp are further subject to
the condition that Seacoast Financial shall have delivered to the exchange
agent, on or before the Closing Date of the Merger, certificates representing
the Exchange Shares and the cash in lieu of fractional shares to be delivered
to the Sandwich Bancorp stockholders and optionholders pursuant to the Merger
Agreement.
Termination and Termination Fees. The Agreement may be terminated at any
time prior to the Pre-Closing Date, whether before or after approval of the
Merger by the stockholders of Sandwich Bancorp: (i) at any time by the mutual
written agreement of Seacoast Financial and Sandwich Bancorp; (ii) by either
Sandwich Bancorp or Seacoast Financial in the event of a material breach by the
other party of any covenant, agreement, representation or warranty in the
Merger Agreement which breach by its nature cannot be cured prior to the
Pre-Closing Date or shall not have been cured within 30 business days after
written notice by Seacoast Financial to Sandwich Bancorp (or by Sandwich
Bancorp to Seacoast Financial) of such breach (provided that the terminating
party is not itself in material breach); (iii) at the election of either
Seacoast Financial or Sandwich Bancorp in the event that the Closing Date does
not occur on or before February 20, 1999, or such later date as Seacoast
Financial and Sandwich Bancorp have agreed to in writing, subject to a
one-month extension in certain circumstances specified in the Merger Agreement;
(iv) by either Sandwich Bancorp or Seacoast Financial if the stockholders of
Sandwich Bancorp shall not have approved the Merger Agreement; (v) by either
Sandwich Bancorp or Seacoast Financial if (a) either the Merger or the
Conversion is disapproved by a regulatory authority and such disapproval has
become unappealable or (b) if any court of competent jurisdiction or other
governmental authority issues an order, decree, ruling or takes any other
action restraining, enjoining or otherwise prohibiting the consummation of
Merger, the Bank Merger or the Conversion and such order or injunction has
become final and nonappealable; (vi) by either party if an event occurs that
would result in Sandwich Bancorp's obligation to pay to Seacoast Financial the
$6.0 million termination fee as described below; or (vii) by the Board of
Directors of either party in the event that any of the conditions precedent to
the obligations of such party to consummate the Merger cannot be satisfied or
fulfilled, provided that the terminating party is not then in material breach
of any representation, warranty, covenant or other agreement.
Termination due to mutual agreement shall be without liability, cost or
expense on the part of any party to the other, unless an event occurs requiring
the payment of a $6.0 million termination fee to Sandwich Bancorp or Seacoast
Financial, as described below. In the event termination upon the occurrence of
either party's material failure to comply with representations, warranties,
covenants or other agreements contained in the Merger Agreement as a result of
willful misconduct or gross negligence of a party, such party shall be
obligated to reimburse the other party for up to $1,000,000 of out-of-pocket
costs and expenses, including reasonable legal, accounting and investment
banking fees and expenses, in addition to any other rights or remedies
available at law or equity, unless under the Merger Agreement either Sandwich
Bancorp or Seacoast Financial is entitled to a $6.0 million dollar termination
fee, as described below.
As a condition of Sandwich Bancorp's willingness to enter into the Merger
Agreement, and to reimburse Sandwich Bancorp for incurring the damages, costs
and expenses related to entering into the Merger Agreement and consummating the
transactions contemplated thereby, Seacoast Financial has agreed to pay
Sandwich Bancorp, as liquidated damages, and in lieu of any other rights or
remedies under the Merger Agreement, a payment in the amount of $6.0 million if
the Merger does not occur because (i) either the Conversion does not occur or
it does occur but it does not result in net proceeds sufficient to enable
Compass to remain "well-capitalized" under applicable federal banking law and
otherwise to meet regulatory capital requirements, in each case after giving
effect to the Merger, or (ii) the Conversion has not been approved by
regulators, has been enjoined or is otherwise not completed by Seacoast
Financial by February 20, 1999 (subject to a one-month extension under certain
circumstances specified in the Merger Agreement), or if Sandwich Bancorp has
terminated the Merger Agreement
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as a result of Seacoast Financial's willful or intentional breach of its
representations and warranties, covenants or agreements. Seacoast Financial
will not be required to pay the termination fee if the triggering event is
primarily due to a breach by Sandwich Bancorp of its representations,
warranties, covenants or agreements that directly or adversely affects Seacoast
Financial's ability to consummate the Merger or to satisfy the conditions to
its obligation to consummate the Merger.
As a condition of Seacoast Financial's willingness to enter into the
Merger Agreement, and to reimburse Seacoast Financial for incurring the
damages, costs and expenses related to entering into the Merger Agreement and
consummating the transactions contemplated thereby, Sandwich Bancorp has agreed
to pay to Seacoast Financial, as liquidated damages, and in lieu of any other
rights or remedies under the Merger Agreement, a payment in the amount of $6.0
million, but if and only if a "payment event" (as such term is defined below)
has occurred before the "expense fee termination date" (as such term is defined
below).
A "payment event" would be any of the following events: (i) without
Seacoast Financial's prior written consent, Sandwich Bancorp shall have
authorized, proposed or entered into, or publicly announced an intention to
authorize, propose or enter into, an agreement with any person (other than
Seacoast Financial or any subsidiary thereof) to effect (a) a merger,
consolidation or similar transaction involving Sandwich Bancorp or any
subsidiary thereof, (b) the disposition, by sale, lease, exchange or otherwise,
of assets of Sandwich Bancorp or any subsidiary thereof representing in either
case 15% or more of the consolidated assets of Sandwich Bancorp or any
subsidiary or (c) the issuance, sale or other disposition (including by way of
merger, consolidation, share exchange or any similar transaction) of securities
representing 15% or more of the voting power of Sandwich Bancorp or any
subsidiary thereof or (ii) a person (other than Seacoast Financial or any
subsidiary thereof) shall have acquired beneficial ownership of, or the right
to acquire beneficial ownership of, or a group shall have been formed which
beneficially owns, or has the right to acquire beneficial ownership of, 25% or
more of the then outstanding shares of Sandwich Bancorp Common Stock.
The "expense fee termination date" would be the earliest to occur of (i)
the Merger Effective Time, (ii) the date that is 12 months after termination of
the Merger Agreement following the occurrence of a "time extension event" (as
such term is defined below) or (iii) the date on which the Merger Agreement is
terminated in accordance with its terms, but only if such termination takes
place prior to the occurrence of a payment event or a "time extension event." A
"time extension event" would be any of the following events: (i) a person
(other than Seacoast Financial or any subsidiary thereof) shall have commenced,
or shall have filed a registration statement under the Securities Act with
respect to, a tender offer or exchange offer to purchase any shares of Sandwich
Bancorp Common Stock such that, upon consummation of such offer, such person
would own or control 10% or more of the then outstanding shares of such stock;
(ii) following the public announcement of an "acquisition proposal" (which is
defined in the Merger Agreement, and which the parties acknowledge has already
taken place), the holders of the Sandwich Bancorp Common Stock shall not have
approved the Merger Agreement; (iii) following the occurrence of an
"acquisition proposal" (a) a meeting of Sandwich Bancorp's stockholders held
for the purpose of voting on the Merger Agreement shall not have been held or
shall have been canceled prior to termination of the Merger Agreement; (b)
Sandwich Bancorp's Board of Directors shall have withdrawn or modified in a
manner adverse to Seacoast Financial the recommendation of the Board of
Directors with respect to the Merger Agreement and the Merger; (c) Sandwich
Bancorp shall have willfully or intentionally breached any representation,
warranty, covenant or obligation contained in the Merger Agreement and such
breach would entitle Seacoast Financial to terminate the Merger Agreement
(without regard to the cure period otherwise provided for unless such cure is
promptly effected without jeopardizing consummation of the Merger pursuant to
the terms of the Merger Agreement); or (d) the Merger shall not have been
consummated by reason of failure of the pooling-of-interests condition, and
such failure is the result of the actions of a party not affiliated with either
Seacoast Financial or Sandwich Bancorp.
Amendment and Waiver. Subject to applicable law, at any time prior to the
Merger Effective Time, the parties to the Merger Agreement may amend the Merger
Agreement, extend the time for the performance of any of the obligations or
other acts of any other party, waive any inaccuracies in the representations
and warranties or any document delivered pursuant to the Merger Agreement or
waive compliance with any of the Merger Agreement's agreements or conditions,
except that after the Sandwich Bancorp stockholder meeting at which the Merger
is to be considered there may not be, without further approval by Sandwich
Bancorp's stockholders, any amendment of the Merger Agreement which reduces the
amount or changes the form of consideration to be delivered to Sandwich
Bancorp's stockholders.
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The Stock Option Agreement
Under the Stock Option Agreement, Sandwich Bancorp has granted an option
(the "Option") to Seacoast Financial to purchase up to 387,107 authorized but
unissued shares of Sandwich Bancorp Common Stock (constituting up to 19.9% of
the outstanding Sandwich Bancorp Common Stock on the date of grant of the
Option and 16.7% of the shares of Sandwich Bancorp Common Stock that would be
outstanding following the exercise of the Option) at a price of $57 per share.
In the event of any change in Sandwich Bancorp Common Stock by reason of stock
dividends, split-ups, recapitalizations, combinations, exchanges of shares or
the like, the type and number of shares subject to the Option and the purchase
price therefor will be adjusted appropriately. If any additional shares of
Sandwich Bancorp Common Stock are issued or otherwise become outstanding after
the date of the Stock Option Agreement (other than as contemplated in the Stock
Option Agreement), the number of shares of Sandwich Bancorp Common Stock
subject to the Option shall be adjusted so that, after such issuance, it does
not exceed 19.9% of the number of shares of Sandwich Bancorp Common Stock then
issued and outstanding without giving effect to any shares subject to or issued
pursuant to the Option. The $57 exercise price was based upon trading price
information for Sandwich Bancorp Common Stock on March 20, 1998, the trading
day immediately preceding the announcement of the Merger Agreement on March 23,
1998.
The Option is exercisable in whole or in part upon the occurrence of a
"Purchase Event" (as such term is defined below) and prior to an "Exercise
Termination Event" (as such term is defined below). A "Purchase Event" would be
any of the following events:
(i) without Seacoast Financial's prior written consent, Sandwich Bancorp
shall have authorized, recommend or publicly proposed or publicly
announced an intention to authorize, recommend or propose or enter
into, an agreement with any person (other than Seacoast Financial or
any subsidiary thereof) to effect (a) a merger, consolidation or
similar transaction involving Sandwich Bancorp or any subsidiary
thereof, (b) the disposition, by sale, lease, exchange or otherwise,
of assets of Sandwich Bancorp or any subsidiary thereof representing
in either case 15% or more of the consolidated assets of Sandwich
Bancorp or (c) the issuance, sale or other disposition (including by
way of merger, consolidation, share exchange or any similar
transaction) of securities representing 15% or more of the voting
power of Sandwich Bancorp or any subsidiary thereof (each, an
"Acquisition Transaction"), or
(ii) a person (other than Seacoast Financial or any subsidiary thereof)
shall have acquired beneficial ownership of, or the right to acquire
beneficial ownership of, or a group shall have been formed which
beneficially owns, or has the right to acquire beneficial ownership
of, 25% or more of the then outstanding shares of Sandwich Bancorp
Common Stock.
An "Exercise Termination Event" would be any of the following events: (i)
the Merger Effective Time, (ii) the date that is 12 months after termination of
the Merger Agreement following the occurrence of a "Purchase Event" or
"Preliminary Purchase Event" (as such terms are defined below), (iii) the date
on which the Merger Agreement is terminated in accordance with its terms, but
only if such termination takes place prior to the occurrence of a Purchase
Event or a Preliminary Purchase Event, or (iv) the passage of twelve months
after the Merger Agreement is terminated by Seacoast Financial as a result of a
material breach of any representation, covenant, warranty or agreement set
forth in the Merger Agreement, which breach by its nature cannot be cured prior
to the pre-closing date or shall not have been cured within 30 business days
after written notice by Sandwich Bancorp to Seacoast Financial of such breach.
A "Preliminary Purchase Event" would be any of the following events:
(i) a person (other than Seacoast Financial or any subsidiary thereof)
shall have commenced, or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Sandwich Bancorp Common Stock such
that, upon consummation of such offer, such person would own or
control 10% or more of the then outstanding shares of the Sandwich
Bancorp Common Stock;
(ii) following the public announcement or occurrence of an "acquisition
proposal" (which is defined in the Stock Option Agreement, and which
the parties acknowledge has already taken place): (a) the holders of
the Sandwich Bancorp Common Stock shall not have approved the Merger
Agreement; (b) a meeting of Sandwich Bancorp's stockholders held for
the purpose of voting on the Merger Agreement shall not have been held
or shall have been canceled prior to termination of the Merger
Agreement; (c) Sandwich Bancorp's
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Board of Directors shall have withdrawn or modified, or publicly
announced its intention to withdraw or modify, in a manner adverse to
Seacoast Financial the recommendation of the Board of Directors with
respect to the Merger Agreement and the Merger; (d) Sandwich Bancorp
shall have breached any representation, warranty, covenant or
obligation contained in the Merger Agreement and such breach would
entitle Seacoast Financial to terminate the Merger Agreement (without
regard to the cure period otherwise provided for unless such cure is
promptly effected without jeopardizing consummation of the Merger
pursuant to the terms of the Merger Agreement); (e) or the Merger
shall not have been consummated by reason of failure of the
pooling-of-interests condition, and such failure is the result of the
actions of a party not affiliated with either Seacoast Financial or
Sandwich Bancorp; or
(iii) any person, other than Seacoast Financial, or any subsidiary
thereunder, other than in connection with a transaction to which
Seacoast Financial has given prior written consent, shall have (a)
acquired beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of Sandwich Bancorp
Common Stock or (b) filed an application or notice with the FRB, or
other federal or state bank regulatory authority, which application or
notice has been accepted for processing, for approval to acquire
beneficial ownership of 10% or more of the outstanding shares of
Sandwich Bancorp Common Stock or otherwise to engage in an Acquisition
Transaction.
The Stock Option Agreement also provides that Sandwich Bancorp is required
to repurchase the Option from Seacoast Financial, together with any shares of
Sandwich Bancorp Common Stock purchased by Seacoast Financial pursuant thereto,
at the election of Seacoast Financial during the twelve months immediately
following (i) the acquisition by one or more third parties of 50% or more of
the outstanding shares of Sandwich Bancorp Common Stock (or the right to
acquire 50% or more of such outstanding shares) or (ii) the execution by
Sandwich Bancorp of an agreement to merge into or consolidate with a third
party following which transaction Sandwich Bancorp will not be the continuing
or surviving corporation or to sell 50% or more of the voting power of Sandwich
Bancorp to a third party or to sell or otherwise transfer all or substantially
all of the Sandwich Bancorp assets to a third party. The price of such
repurchase is specified in the Stock Option Agreement. The obligation for
Sandwich Bancorp to repurchase the Option terminates upon an Exercise
Termination Event, unless a Purchase Event occurs prior to an Exercise
Termination Event.
Although the shares issuable upon exercise of the Option represent
approximately 16.7% of the Sandwich Bancorp Common Stock that would be
outstanding after such exercise, Seacoast Financial may not acquire more than
5% of the Sandwich Bancorp Common Stock, pursuant to the exercise of the Option
or otherwise, without prior approval of the FRB. Seacoast Financial has
received approval from the FRB to exercise the Option following any applicable
event triggering the Option.
Interests of Certain Persons in the Conversion
General. In connection with the Conversion, the trustees, directors and
executive officers of Seacoast Financial and Compass, as a group (19 persons),
have proposed to purchase 405,000 Conversion Shares, or 3.0% and 2.2% of the
Conversion Shares at the minimum and maximum of the Estimated Valuation Range,
respectively. See "Purchases by Management of Seacoast Financial and Compass."
The ESOP. Compass has adopted the ESOP, a tax-qualified benefit plan for
officers and employees of Compass, which intends to purchase 8% of the
Conversion Shares, or 1,088,000 shares ($10.9 million) and 1,472,000 shares
($14.7 million) at the minimum and maximum of the Estimated Valuation Range,
respectively. See "Management of Seacoast Financial and Compass--Compensation
of Officers and Directors through Benefit Plans--Employee Stock Ownership Plan
and Trust."
Seacoast Financial Stock Compensation Plans. Following consummation of the
Conversion, the Board of Directors may consider the adoption of a stock option
plan for, and a stock plan for the recognition and retention of, officers and
directors of Compass and Seacoast Financial. Applicable banking regulations
would permit the Company to adopt such plans for presentation to Seacoast
Financial's stockholders at a meeting to be held no earlier than six months
after the completion of the Conversion. If such plans are adopted, no options
or stock awards would be granted under either plan until the date on which
stockholder approval of the respective plan is received. See "Management of
Seacoast Financial and Compass--Compensation of Officers and Directors through
Benefit Plans--Stock Option Plan" and "--Stock Plan."
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Seacoast Financial Employment Agreements. In connection with the
Conversion, Seacoast Financial and Compass have entered into employment and
change of control agreements with the following officers of Seacoast Financial
and Compass: Kevin G. Champagne; Arthur W. Short; John D. Kelleher; Francis S.
Mascianica, Jr.; and Carolyn A. Belanger. The employment agreements have
three-year (in the case of Mr. Champagne) and two-year (in the case of the
other officers) terms that are extended automatically unless one of the parties
thereto gives a notice of non-renewal. Such agreements also guarantee the
officers payments and benefits in the event the officers are terminated under
certain circumstances or in the event of their retirement, death or disability.
The change in control agreements guarantee the officers severance payments and
continuing benefits in case they are terminated for certain reasons following a
"change in control" (as such term is defined in such agreements) of Seacoast
Financial or Compass. See "Management of Seacoast Financial and
Compass--Employment and Change of Control Agreements."
Interests of Certain Persons in the Merger
Boards of Directors. Upon consummation of the Merger, Seacoast Financial
will take all necessary action to appoint Frederic D. Legate, currently the
President and Chief Executive Officer of Sandwich Bancorp, and two other
members of Sandwich Bancorp's Board of Directors (to be designated by Seacoast
Financial after consultation with Sandwich Bancorp) to Seacoast Financial's
Board of Directors. Mr. Legate will also be appointed to Compass's Board and
the executive committee thereof.
Sandwich Bancorp Employees. At the Merger Effective Time, all employees of
Sandwich Bancorp and its subsidiaries shall be employed by Compass, with
employee benefits which in the aggregate are no less favorable than those
generally afforded to other employees of Compass holding similar positions,
subject to the terms and conditions under which those employee benefits are
made available to such employees and to certain other provisions of the Merger
Agreement. For purposes of determining eligibility for and vesting of such
employee benefits only (and not for pension benefit accrual purposes), service
with Sandwich Bancorp prior to the Merger Effective Time will be treated as
service with an "employer" as if such persons had been employees of Seacoast
Financial, to the extent permissible under the terms of Seacoast Financial's
employee benefit plans. Seacoast Financial has also agreed to continue to
provide post-retirement medical benefits to former employees of Sandwich
Bancorp who at the time of the Merger are receiving post-retirement medical
benefits in accordance with Sandwich Bancorp's retiree health care plans, and
Seacoast Financial will honor any and all vacation leave (but not sick leave)
accrued by employees of Sandwich Bancorp, except to the extent of any
duplication of benefits. No pre-existing condition exclusion that is currently
inapplicable to an employee of Sandwich Bancorp or a subsidiary thereof and/or
the employee's covered dependents shall affect their rights to health benefits
or coverage under Seacoast Financial's plans, to the extent permissible under
such plans.
The parties are working to identify operational efficiencies that may be
obtained through the consolidation of the entities in the Merger. It is
anticipated that some positions will be eliminated following the Merger
Effective Time, and Seacoast Financial and Compass are not under any continuing
obligation with respect to the employment of any specific employee of Sandwich
Bancorp or Sandwich Bank other than the officers whose employment contracts are
being assumed. See "--Sandwich Bancorp Employment Agreements." Seacoast
Financial and Compass have agreed that any employee of Sandwich Bancorp or
Sandwich Bank whose employment with Seacoast Financial or Compass is terminated
by Seacoast Financial within one year after the Merger Effective Time will
receive a lump-sum severance benefit in an amount equal to two weeks' pay for
each year of employment (with partial years of service included in the
calculation on a pro-rated basis), up to a maximum of 26 weeks' pay, and
continuation of health benefits, on the same terms and conditions applicable to
Seacoast Financial's active employees, for the same number of weeks factored
into the calculation of severance payments, and thereafter COBRA benefits for
an additional period of time.
Sandwich Bancorp Employment Agreements. Under the terms of the Merger
Agreement, Seacoast Financial and Compass have agreed to assume employment and
change of control agreements that Sandwich Bancorp and Sandwich Bank currently
have with Frederic D. Legate, President and Chief Executive Officer, and Dana
S. Briggs, George L. Larson and David A. Parsons, each a Senior Vice President,
of Sandwich Bancorp and Sandwich Bank, as well as comparable agreements with
certain other officers of Sandwich Bank. Pursuant to the employment and change
of control agreements, the officers are entitled to receive severance benefits
if, within a period of time following a "change in control" (as defined in the
agreements), such officers' employment is terminated involuntarily or
voluntarily following certain specified events such as a material change in
responsibilities. The
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Merger constitutes a change in control of Sandwich Bancorp and Sandwich Bank
and a material change of such officers' responsibilities and supervision under
the agreements. The severance benefits payable to the officers may be an amount
equal to up to 2.99 times the officer's average annual compensation received
from Sandwich Bank during the five year period immediately prior to the date of
the change of control. Assuming that the Seacoast Financial Trading Price is
between $10.01 and $13.50, and the Exchange Ratio therefore results in the
exchange of approximately $64 worth of Seacoast Financial Common Stock for each
share of Sandwich Bancorp Common Stock, management of Sandwich Bancorp
estimates that such payments could amount to up to $1,021,942, $394,496,
$420,870 and $320,202 for Messrs. Legate, Briggs, Larson and Parsons,
respectively, if made during the year ending December 31, 1998. Seacoast
Financial has also agreed to assume certain deferred compensation plans,
grantor trust agreements, supplemental retirement plans and split dollar
insurance agreements currently in effect for certain officers and directors of
Sandwich Bancorp.
Indemnification and Insurance. Pursuant to the Merger Agreement, Seacoast
Financial has agreed to indemnify the directors and officers of Sandwich
Bancorp and its subsidiaries with respect to claims arising in whole or in part
out of the fact that such person is or was a director, officer or employee of
Sandwich Bancorp or any of its subsidiaries if such claim pertains to any
matter of fact arising, existing or occurring before the Merger Effective Time.
In addition, Seacoast Financial has agreed for a period of not less than
six years following the Merger Effective Time to provide to those persons who
served as directors or officers of Sandwich Bancorp on or before the Merger
Effective Time Sandwich Bancorp's existing insurance against liabilities and
claims (and related expenses) made against them resulting from their service as
such prior to the Merger Effective Time, or comparable substitute coverage,
provided that Seacoast Financial is not required to expend more than $60,000 in
the aggregate for such insurance coverage.
Sandwich Bancorp Stock Option Plans. At the Merger Effective Time, each
outstanding option under the Sandwich Stock Option Plans will be automatically
converted into, and exchangeable for, a number of shares of Seacoast Financial
Common Stock determined by subtracting the per share exercise price of such
option from the value of the shares of Seacoast Financial Common Stock
receivable by Sandwich Bancorp stockholders in exchange for each outstanding
share of Sandwich Bancorp Common Stock and dividing the result by the Seacoast
Financial Trading Price. As of June 30, 1998, there were outstanding under the
Sandwich Stock Option Plans options to acquire an aggregate of 45,203 shares of
Sandwich Bancorp Common Stock at exercise prices ranging from $9.00 per share
to $30.6875 per share. Assuming that the Seacoast Financial Trading Price is
between $10.01 and $13.50, and the Exchange Ratio therefore results in the
exchange of approximately $64 worth of Seacoast Financial Common Stock for each
share of Sandwich Bancorp Common Stock, management of Sandwich Bancorp
estimates that the aggregate value of the Sandwich Stock Options held by each
executive officer of Sandwich Bancorp at the time the Merger Agreement was
executed was approximately as follows: Frederic D. Legate, President and Chief
Executive Officer, $2,241,299; Dana S. Briggs, Senior Vice President and
Corporate Secretary, $970,605; George L. Larson, Senior Vice President, Chief
Financial Officer and Treasurer, $1,199,040; David A. Parsons, Senior Vice
President, Senior Loan Officer, $904,756.
Delivery of Certificates
Conversion Shares. Certificates representing the Conversion Shares issued
in the Conversion will be mailed by Seacoast Financial's transfer agent to the
subscribers at the addresses provided by such persons appearing on the Order
Form as soon as practicable following consummation of the Conversion. Any
certificates returned as undeliverable will be held by Seacoast Financial until
claimed by persons legally entitled thereto or otherwise disposed of in
accordance with applicable law. Until certificates for the Conversion Shares
are available and delivered to subscribers, such subscribers may not be able to
sell the Conversion Shares for which they have subscribed, even though trading
of the Seacoast Financial Common Stock may have commenced.
Exchange Shares. After consummation of the Merger, each Sandwich Bancorp
stockholder, upon surrender of his or her stock certificate(s) to an agent,
duly appointed by Seacoast Financial (the "Exchange Agent"), will be entitled
to receive in exchange therefor a certificate or certificates representing the
number of full Exchange Shares for which the shares of Sandwich Bancorp Common
Stock surrendered shall have been converted based on the Exchange Ratio, and
cash in lieu of fractional shares. The Exchange Agent will promptly mail to
each Sandwich Bancorp stockholder a form of letter of transmittal (which shall
specify that delivery shall be effected,
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and risk of loss and title to the stockholder's stock certificate(s) shall
pass, only upon delivery of such certificate(s) to the Exchange Agent) advising
such holder of the terms of the exchange effected by the Merger and of the
procedure for surrendering to the Exchange Agent such certificate(s) in
exchange for a certificate or certificates evidencing the Exchange Shares. The
stockholders of Sandwich Bancorp should not forward Sandwich Bancorp Common
Stock certificates to Seacoast Financial or the Exchange Agent until they have
received the transmittal letter.
No holder of a certificate representing shares of Sandwich Bancorp Common
Stock will be entitled to receive any dividends in respect of Seacoast
Financial Common Stock into which such shares shall have been converted by
virtue of the Merger until the certificate representing such shares of Sandwich
Bancorp Common Stock is surrendered in exchange for certificates representing
shares of Seacoast Financial Common Stock. In the event that dividends are
declared and paid by Seacoast Financial in respect of Seacoast Financial Common
Stock after the consummation of the Merger but prior to surrender of
certificates representing shares of Sandwich Bancorp Common Stock, dividends
payable in respect of shares of Seacoast Financial Common Stock not then issued
shall accrue (without interest). Any such dividends will be paid (without
interest) upon surrender of the certificates representing such shares of
Sandwich Bancorp Common Stock. Seacoast Financial will be entitled, after the
consummation of the Merger, to treat certificates representing shares of
Sandwich Bancorp Common Stock as evidencing ownership of the number of full
shares of Seacoast Financial Common Stock into which the shares of Sandwich
Bancorp Common Stock represented by such certificates shall have been
converted, notwithstanding the failure on the part of the holder thereof to
surrender such certificates.
Seacoast Financial will not be obligated to deliver a certificate or
certificates representing Exchange Shares to which a holder of Sandwich Bancorp
Common Stock would otherwise be entitled as a result of the Merger until such
holder surrenders the certificate or certificates representing the shares of
Sandwich Bancorp Common Stock for exchange as provided above, or, in default
thereof, an appropriate affidavit of loss and indemnity agreement and/or a bond
as may be required in each case by Seacoast Financial.
If any certificate evidencing Exchange Shares is to be issued in a name
other than that in which the certificate evidencing Sandwich Bancorp Common
Stock surrendered in exchange therefor is registered, it shall be a condition
of the issuance thereof that the certificate so surrendered is properly
endorsed or is accompanied by appropriate stock powers, in either case signed
exactly as the name of the record holder appears on such certificate, and is
otherwise in proper form for transfer, or is accompanied by appropriate
evidence of the authority of the person surrendering such certificate and
signing the letter of transmittal to do so on behalf of the record holder. The
person requesting any such exchange shall pay to the Exchange Agent in advance
any transfer or other taxes required by reason of the payment to a person other
than the registered holder of the certificate surrendered, or required for any
other reason, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
Resale Restrictions
Resale of Exchange Shares. The Exchange Shares that will be issued in the
Merger will be registered under the Exchange Act and approved for listing on
the Nasdaq National Market and will be freely transferable, except for Exchange
Shares received in the Merger by persons, including directors and executive
officers of any of the parties to the Merger, who may be deemed to be
"affiliates" of any of the parties under Rule 145 under the Securities Act. The
term "affiliate" generally means any person who controls, is controlled by or
is under common control with, or is a member of a group that controls, is
controlled by or is under common control with, a party, and for purposes hereof
could be deemed to include all executive officers, directors and 10% or greater
stockholders of a party.
Rule 145 will restrict the sale of Exchange Shares received in the Merger
and beneficially owned by those stockholders who are deemed to be affiliates of
Sandwich Bancorp or Seacoast Financial and certain of their family members and
related interests. Such affiliates, provided they are not affiliates of
Seacoast Financial at or following the Merger Effective Time, may publicly
resell Exchange Shares received by them in the Merger subject to certain
limitations of Rule 144 under the Securities Act, which restrict, among other
things, the number of shares sold in any quarter and the manner of sale, during
the one year following the Merger Effective Time. After such one-year period,
such affiliates may resell their shares without restriction so long as there is
adequate current public information with respect to Seacoast Financial as
required by Rule 144. Persons who become affiliates of Seacoast
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Financial prior to, at or after the Merger Effective Time may publicly resell
the Exchange Shares received by them in the Merger subject to similar
limitations and subject to certain filing requirements specified in Rule 144.
Affiliates also would be permitted to resell the Exchange Shares received in
the Merger pursuant to an effective registration statement under the Securities
Act or another available exemption from the Securities Act's registration
requirements. This Prospectus does not cover any resales of Exchange Shares
received in the Merger by persons who may be deemed to be affiliates of
Seacoast Financial or Sandwich Bancorp.
Resale by Seacoast Financial and Sandwich Bancorp Affiliates During
"Pooling" Period. Affiliates of both Seacoast Financial and Sandwich Bancorp
will not be able to transfer shares of Seacoast Financial Common Stock
(including both Conversion Shares and Exchange Shares) or Sandwich Bancorp
Common Stock during the period beginning 30 days prior to the Merger Effective
Time and ending when financial results covering at least 30 days of post-Merger
combined operations of Seacoast Financial and Sandwich Bancorp have been
published, in order to satisfy certain requirements of the SEC in transactions
to be accounted for using pooling-of-interests accounting treatment under GAAP.
Under the Merger Agreement, Seacoast Financial has agreed to use its best
efforts to publish no later than 30 days after the end of the first month in
which there are at least 30 days of post-Merger combined operations (which may
be the month in which the Merger Effective Time occurs) combined revenues and
net income figures as contemplated by and in accordance with the SEC's
Accounting Series Release No. 135. The Merger Agreement provides that Seacoast
Financial and Sandwich Bancorp shall use all reasonable efforts to cause those
persons who may be deemed to be affiliates of Sandwich Bancorp to deliver to
Seacoast Financial, as soon as practicable after the date of the Merger
Agreement, and prior to the Sandwich Bancorp Special Meeting, a written
agreement providing that such persons will not sell, pledge, transfer or
otherwise dispose of any shares of Seacoast Financial Common Stock or Sandwich
Bancorp Common Stock for the period beginning 30 days prior to the Merger and
ending on the publication of financial results covering at least 30 days of
combined operations of Seacoast Financial and Sandwich Bancorp and in
compliance with the Securities Act and the rules and regulations promulgated
thereunder. Each director and executive officer of Sandwich Bancorp has
executed such an agreement. Certificates of Sandwich Bancorp Common Stock
surrendered for exchange pursuant to the Merger by any person deemed to be an
affiliate shall not be exchanged for certificates representing Exchange Shares
until Seacoast Financial has received from that person the written agreement
described in this paragraph.
One-Year Restriction on Sale of Conversion Shares by Seacoast Financial
Insiders. Pursuant to Massachusetts law, directors, trustees, officers and
Corporators of Seacoast Financial or Compass will not be able to sell any
Conversion Shares that they purchase in the Conversion for a period of one year
following the Conversion, except in the case of death or substantial
disability, as determined by the Commissioner, or upon the written approval of
the Commissioner. Each certificate for restricted shares will bear a legend
giving notice of this restriction on transfer, and instructions will be issued
to the effect that any transfer within such time period of any certificate or
record ownership of such shares other than as provided above is a violation of
the restriction. Any shares of Seacoast Financial Common Stock issued at a
later date within this one year period as a stock dividend, stock split or
otherwise with respect to such restricted Conversion Shares will be subject to
the same restrictions.
Certain Restrictions on Purchase of Shares After the Conversion
Three-Year Restriction on Certain Purchases of Seacoast Financial Common
Stock. Purchases of Seacoast Financial Common Stock by directors, officers and
their associates during the three-year period following completion of the
Conversion (i) may not be made directly from Seacoast Financial and (ii) may be
made only through a broker or dealer registered with the SEC, except with the
prior written approval of the Commissioner. The second restriction does not
apply, however, to negotiated transactions involving more than 1% of
outstanding Seacoast Financial Common Stock or to certain purchases of such
stock pursuant to an employee stock benefit plan.
Repurchases of Seacoast Financial Common Stock by Seacoast Financial. In
order to preserve pooling-of-interests accounting treatment for the Merger
under GAAP, Seacoast Financial's ability to repurchase shares of its common
stock may be limited during the two-year period following consummation of the
Merger.
Tax Aspects of the Conversion and Merger
General. As described below, Foley, Hoag & Eliot LLP ("FHE"), counsel to
Seacoast Financial, has opined on federal income tax consequences of the
Conversion and the Merger. Although these opinions are not complete
descriptions of all federal income tax consequences of the Conversion and the
Merger, they address all material federal income tax consequences of the
Conversion and the Merger. Seacoast Financial, Compass, Sandwich
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Bancorp, and Sandwich Bank have provided FHE with facts, representations and
assumptions on which FHE has relied in rendering its opinions. These opinions
are also based on laws, regulations, rulings and judicial decisions as they
existed as of the date of the opinions. These authorities are all subject to
change, and such change may be made with retroactive effect. FHE cannot give
any assurance that, after any such change, its opinions would not be different,
and FHE does not undertake any responsibility to update or supplement its
opinions. Unlike private rulings, the opinions of FHE are not binding on the
IRS, and the IRS could disagree with conclusions reached therein. In the event
of such disagreement, there can be no assurance that the IRS would not prevail
in a judicial or administrative proceeding.
The Conversion. Subject to the foregoing, FHE has opined that, for federal
income tax purposes: (i) the Conversion will constitute a reorganization under
Section 368(a)(1)(F) of the Code (see Rev. Rul. 80-105, 1980-1 C.B. 78; Rev.
Rul. 96-29, 1996-24 I.R.B.); (ii) neither Compass nor Seacoast Financial will
recognize any gain or loss as a result of the Conversion; and (iii) eligible
subscribers will recognize no gain or loss upon the receipt of the subscription
rights.
The Merger. In addition, subject to the foregoing, FHE has opined that,
for federal income tax purposes, (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code or will be
treated as part of a reorganization within the meaning of Section 368(a) of the
Code; (ii) no gain or loss will be recognized by Seacoast Financial, Compass,
Sandwich or Sandwich Bank as a result of the Merger; (iii) no gain or loss will
be recognized by a shareholder of Sandwich Bancorp who exchanges all of such
shareholders Sandwich Bancorp Common Stock solely for Exchange Shares; (iv) the
basis of Exchange Shares to be received (including any fractional shares deemed
received for tax purposes) by a stockholder of Sandwich Bancorp will be the
same as the basis of the Sandwich Bancorp Common Stock surrendered in exchange
therefor; and (v) the holding period of the Exchange Shares to be received by a
shareholder of Sandwich Bancorp will include the period during which the
shareholder held the shares of Sandwich Bancorp Common Stock surrendered in
exchange therefor, provided that such Sandwich Bancorp Common Stock is held as
a capital asset by such stockholder at the Merger Effective Time.
Accounting Treatment of the Conversion and Merger
Seacoast Financial and Sandwich Bancorp expect to account for the Merger
under the pooling-of-interests method of accounting under GAAP, and the
availability of this accounting method is a condition to Seacoast Financial's
obligation to consummate the Merger. Since the Conversion will not be
consummated until the conditions to consummation of the Merger have been met,
such accounting treatment is also effectively a condition to consummation of
the Conversion. Seacoast Financial will be deemed to have automatically waived
this condition if it acquires any shares of Sandwich Bancorp Common Stock
between the date of the Merger Agreement and the Pre-Closing Date of the
Merger.
As a result of pooling-of-interests accounting treatment, the historical
basis of the assets and liabilities of Sandwich Bancorp and Seacoast Financial
will be combined at the Merger Effective Time and carried forward at their
previously recorded amounts, and the stockholders' equity accounts of Sandwich
Bancorp and Seacoast Financial will also be combined. The consolidated income
and other financial statements of Seacoast Financial issued after consummation
of the Merger will be restated retroactively to reflect the consolidated
operations of Seacoast Financial and Sandwich Bancorp as if the Merger had
taken place prior to the periods covered by such financial statements. See
"Selected Unaudited Pro Forma Financial Data of Seacoast Financial."
Expenses of the Conversion and the Merger
The Merger Agreement provides, in general, that Seacoast Financial and
Sandwich Bancorp shall each bear and pay all their respective costs and
expenses incurred by them in connection with the transactions contemplated by
the Merger Agreement, including fees and expenses of their respective financial
consultants, investment bankers, accountants and counsel.
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FEDERAL AND STATE TAXATION OF SEACOAST FINANCIAL AND COMPASS
Federal Taxation
General. Seacoast Financial and Compass will be subject to federal income
taxation in the same general manner as other corporations, with some exceptions
discussed below. The following discussion of federal taxation is intended only
to summarize certain pertinent federal income tax matters and is not a
comprehensive description of the tax rules applicable to Compass.
Method of Accounting. For federal income tax purposes, Compass currently
reports it income and expenses on the accrual method of accounting and uses a
fiscal year ending October 31 for filing its consolidated federal income tax
returns. The Small Business Protection Act of 1996 (the "1996 Act") eliminated
the use of the reserve method of accounting for bad debt reserves by savings
institutions, effective for taxable years beginning after 1995 (after October
31, 1996 in the case of Compass).
Bad Debt Reserves. Prior to the 1996 Act, Compass was permitted to
establish a reserve for bad debts and to make annual additions to the reserve.
These additions could, within specified formula limits, be deducted in
connection with the calculation of Compass's taxable income. As a result of the
1996 Act, Compass must use the specific charge-off method in computing its bad
debt deduction beginning with its 1996 federal tax return. In addition, the
federal legislation requires the recapture (over a six year period) of the
excess of tax bad debt reserves accumulated after October 31, 1988. The amount
of such reserve subject to recapture by Compass as of November 1, 1997 was
$987,000.
Taxable Distributions and Recapture. Prior to the 1996 Act, bad debt
reserves created prior to November 1, 1988 were subject to recapture into
taxable income should Compass fail to meet certain thrift asset and
definitional tests. New federal legislation eliminated these thrift related
recapture rules. However, under current law, pre-1988 reserves remain subject
to recapture should Compass make certain non-dividend distributions or cease to
maintain a bank charter. At October 31, 1997, Compass's total federal pre-1988
reserve was $9.1 million. This reserve reflects the cumulative effects of
federal tax deductions by Compass for which no federal income tax provision has
been made.
Minimum Tax. The Code imposes an alternative minimum tax ("AMT") at a rate
of 20% on a base of regular taxable income plus certain tax preferences
("alternative minimum taxable income" or "AMTI"). The AMT is payable to the
extent such AMTI is in excess of an exemption amount. Net operating losses can
offset no more than 90% of AMTI. Certain payments of alternative minimum tax
may be used as credits against regular tax liabilities in future years. Compass
has not been subject to the alternative minimum tax and has no such amounts
available as credits for carryover.
Net Operating Loss Carryovers. For federal income tax purposes, a
financial institution may carry back net operating losses to the preceding two
taxable years and forward to the succeeding 20 taxable years. This provision
applies to losses incurred in taxable years beginning after 1996. At May 31,
1998, Compass had no net operating loss carryforwards for federal income tax
purposes, other than net operating losses attributable to its acquisition of
Martha's Vineyard National Bank in December 1994. Under Section 382 of the
Code, the utilization of such carryforwards is spread over seven tax years of
Compass. At October 31, 1997, the remaining balance of the foregoing
carryforwards was $2,702,317, to be utilized at an annual rate of approximately
$667,000 over the succeeding four tax years.
Corporate Dividends-Received Deduction. Seacoast Financial may exclude
from its income 100% of dividends received from Compass since they are both
members of the same affiliated group of corporations.
State Taxation
For Massachusetts income tax purposes, a consolidated tax return cannot be
filed. Instead, Seacoast Financial, Compass and each of its subsidiaries file
an annual income tax return. Compass is subject to an annual Massachusetts
excise tax at a rate of 11.72% of its net income as of the date of this
Prospectus and declining in increments to 10.50% for the fiscal year ending
October 31, 2000. In addition, five of Compass's wholly-owned subsidiaries are
subject to an excise tax at the rate of 9.50% of their net income plus a tax on
their net worth. CBS Corporation, a wholly-owned subsidiary of Compass, is a
securities corporation and, accordingly, is subject to an excise tax at the
rate of 1.32% of its gross income. For these purposes, Massachusetts net income
is currently defined as gross income from all sources without any exclusions,
less the following deductions: all deductions (but not credits) which
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are allowable under the Code except for those deductions under the Code
relating to (i) dividends received, (ii) losses sustained in other taxable
years and (iii) taxes on or measured by income, franchise taxes for the
privilege of doing business and capital stock taxes imposed by any state of the
United States, the District of Columbia, the Commonwealth of Puerto Rico, any
territory or possession of the United States or any foreign country or a
political subdivision of any of the foregoing. Compass is not permitted to
carry its losses forward or back for Massachusetts tax purposes. For Compass's
tax year beginning November 1, 1999 and thereafter, it will be allowed a
deduction equal to 95% of dividends received, as is permitted under the
corporate excise rules. Seacoast Financial may also qualify to be classified as
a Massachusetts security corporation. Bank holding companies that are so
classified are subject to a state tax rate of 0.33% of their gross income.
Compass's wholly-owned subsidiary Compass Preferred is taxed as a real
estate investment trust ("REIT"). Shareholders of a REIT that are subject to
the Massachusetts corporate excise tax are entitled to a 95% dividends-received
deduction. A REIT corporation shareholder (such as Compass) subject to
Massachusetts corporate taxation will, therefore, pay income tax on only 5% of
the dividends received from the REIT.
Finally, one of Compass's wholly-owned subsidiaries is subject to Rhode
Island taxation on a portion of its net income at a rate of 9.0%.
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REGULATION OF SEACOAST FINANCIAL AND COMPASS
General
Compass is a Massachusetts-chartered stock savings bank and a wholly-owned
subsidiary of Seacoast Financial. Compass's deposits are insured up to
applicable limits by the FDIC through the BIF, except that certain deposits
that Compass acquired from savings associations are insured through the SAIF.
Compass's deposits are also insured by the DIF for amounts in excess of FDIC
insurance limits. Compass is subject to extensive regulation by the
Massachusetts Division of Banks (the "Division"), as its chartering agency, and
by the FDIC, as its deposit insurer. Compass is required to file reports with,
and is periodically examined by, the FDIC and the Division concerning its
activities and financial condition and must obtain regulatory approvals prior
to entering into certain transactions, including, but not limited to, mergers
with or acquisitions of other financial institutions. Compass is a member of
the FHLB and is subject to certain limited regulation by the FRB. Seacoast
Financial, as a bank holding company, is subject to regulation by the FRB and
is required to file reports with the FRB. Any change in such regulations,
whether by the Division, the FDIC or the FRB, could have a material adverse
impact on Compass or Seacoast Financial. See "Risk Factors--Regulatory
Oversight and Legislation." Certain of the regulatory requirements applicable
to Compass and Seacoast Financial are referred to below or elsewhere herein.
Massachusetts Bank Regulation
General. As a Massachusetts-chartered savings bank, Compass is subject to
supervision, regulation and examination by the Division and to various
Massachusetts statutes and regulations which govern, among other things,
investment powers, lending and deposit-taking activities, borrowings,
maintenance of surplus and reserve accounts, distribution of earnings and
payment of dividends. In addition, Compass is subject to Massachusetts consumer
protection and civil rights laws and regulations. The Commissioner's approval
is required for a Massachusetts bank to establish or close branches, merge with
other banks, organize a holding company, issue stock and undertake certain
other activities.
In response to a Massachusetts law enacted in 1996, the Commissioner
adopted rules that generally give Massachusetts banks powers equivalent to
those of national banks. The Commissioner also has adopted procedures reducing
regulatory burdens and expense and expediting branching by well-capitalized and
well-managed banks.
Investment Activities. As a Massachusetts-chartered savings bank, Compass
may invest in preferred and common stock of any corporation provided such
investments do not involve control of any corporation and do not, in the
aggregate, exceed 4% of Compass's deposits. Subject to certain limits, a
Massachusetts-chartered savings bank may invest up to 7% of its deposits in
investments not otherwise legally permitted, provided that any such amounts
which exceed 3% of deposits must be invested in companies organized for the
purpose of acquiring, constructing, rehabilitating, leasing, financing and
disposing of housing, in micro-lending to small businesses (including fishing
and farm loans) and in providing certain technical assistance. No investment in
the equity or debt securities of any one issuer made pursuant to such authority
may exceed 2% of the bank's deposits.
Regulatory Enforcement Authority. Any Massachusetts bank that does not
operate in accordance with the regulations, policies and directives of the
Commissioner may be subject to sanctions for non-compliance, including seizure
of the property and business of the bank and suspension or revocation of its
charter. The Commissioner may under certain circumstances suspend or remove
officers or directors who have violated the law, conducted Compass's business
in a manner which is unsafe, unsound or contrary to the depositors' interests
or been negligent in the performance of their duties. In addition, upon finding
that a bank has engaged in an unfair or deceptive act or practice, the
Commissioner may issue an order to cease and desist and impose a fine on the
bank concerned. Finally, Massachusetts consumer protection and civil rights
statutes applicable to Compass permit private individual and class action law
suits and provide for the rescission of consumer transactions, including loans,
and the recovery of statutory and punitive damages and attorneys' fees in the
case of certain violations or those statutes.
DIF. All Massachusetts-chartered savings banks are required to be members
of the DIF, a corporation that insures savings bank deposits not covered by
federal deposit insurance. The DIF is authorized to charge savings banks an
annual assessment of up to 1/16th of 1% of a savings bank's deposits.
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Insurance of Accounts and Regulation by the FDIC
Compass and Sandwich Bank are members of the BIF, which is administered by
the FDIC. Certain of Compass's and Sandwich Bank's deposits, acquired from
federal savings institutions, are insured by the SAIF. Deposits are insured up
to applicable limits by the FDIC and such insurance is backed by the full faith
and credit of the U.S. Government. As an insurer, the FDIC charges deposit
insurance premiums and is authorized to conduct examinations of and to require
reporting by FDIC-insured institutions. It also may prohibit any FDIC-insured
institution from engaging in any activity that the FDIC determines by
regulation or order to pose a risk to the insurance fund. The FDIC also has the
authority to initiate enforcement actions against savings banks, after giving
the Commissioner an opportunity to take such action, and may terminate deposit
insurance if it determines that the institution has engaged or is engaging in
unsafe or unsound practices or is in an unsafe or unsound condition.
In late 1995, the FDIC issued a final rule regarding deposit insurance
premiums which, effective with respect to the semi-annual premium assessment
beginning January 1, 1996, reduced deposit insurance premiums for BIF member
institutions to zero basis points (subject to an annual minimum of $2,000) for
institutions in the lowest risk category.
As a result of legislation passed in 1996 relating to the recapitalization
of the SAIF, FDIC-insured institutions will pay an insurance premium of
approximately 1.3 basis points of their BIF-assessable deposits and 6.4 basis
points of their SAIF-assessable deposits from 1997 through 1999. Based upon
assessable deposits at December 31, 1997, Compass and Sandwich Bank are paying
$34,000 and $38,000, respectively, in FDIC insurance premiums per quarter
during 1998.
Regulatory Capital Requirements
FDIC-insured savings banks are subject to risk-based capital guidelines
that establish a framework for making regulatory capital requirements more
sensitive to the risk profiles of each institution. Compass is required to
maintain certain levels of regulatory capital in relation to risk-weighted
assets. The ratio of such regulatory capital to risk-weighted assets is
referred to as Compass's "risk-based capital ratio." Risk-based capital ratios
are determined by allocating assets and specified off-balance sheet items to
four risk-weighted categories ranging from 0% to 100%, with higher levels of
capital being required for the categories perceived as representing greater
risk.
These guidelines divide a savings bank's capital into two tiers. The first
tier ("Tier 1") includes common equity, retained earnings, certain
non-cumulative perpetual preferred stock (excluding auction rate issues) and
minority interests in equity accounts of consolidated subsidiaries, less
goodwill and other intangible assets (except mortgage servicing rights and
purchased credit card relationships subject to certain limitations).
Supplementary ("Tier 2") capital includes, among other items, cumulative
perpetual and long-term limited-life preferred stock, mandatory convertible
securities, certain hybrid capital instruments, term subordinated debt and the
allowance for loan and lease losses, subject to certain limitations, less
required deductions. Savings banks are required to maintain a total risk-based
capital ratio equal to at least 8% of risk-weighted assets, and at least half
of such a bank's capital must be Tier 1 capital.
In addition, the FDIC has established regulations prescribing a minimum
Tier 1 leverage capital ratio (Tier 1 capital to adjusted total assets as
specified in the regulations). These regulations provide for a minimum Tier 1
leverage ratio of 3% for banks that meet certain specified criteria, including
that they have the highest examination rating and are not experiencing or
anticipating significant growth. All other banks are required to maintain a
Tier 1 leverage ratio of 3% plus an additional cushion of at least 100 to 200
basis points. The FDIC may, however, set higher leverage and risk-based capital
requirements on individual institutions when particular circumstances warrant.
Savings banks experiencing or anticipating significant growth are expected to
maintain capital ratios, including tangible capital positions, well above the
minimum levels.
The FDIC has also proposed that a bank's interest rate risk exposure
should be quantified using either the measurement system set forth in the
proposal or the institution's internal model for measuring such exposure.
Management of Compass has not determined what effect, if any, the proposed
interest rate risk component would have on Compass's capital if adopted as
proposed.
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Standards for Safety and Soundness
The federal banking agencies have adopted a final regulation and
Interagency Guidelines Prescribing Standards for Safety and Soundness (the
"Guidelines") to implement safety and soundness standards required under
federal law. The Guidelines set forth the safety and soundness standards that
the federal banking agencies use to identify and address problems at insured
depository institutions before capital becomes impaired. The standards set
forth in the Guidelines address (i) internal controls and information systems;
(ii) internal audit program; (iii) credit underwriting; (iv) loan
documentation; (v) interest rate risk exposure; (vi) asset growth; and (vii)
compensation, fees and benefits. The agencies also adopted additions to the
Guidelines which require institutions to examine asset quality and earnings
standards. If the appropriate federal banking agency determines that an
institution fails to meet any standard prescribed by the Guidelines, the agency
may require the institution to submit to the agency an acceptable plan to
achieve compliance with the standard, as required by federal law. The final
regulations establish deadlines for the submission and review of such safety
and soundness compliance plans.
Limitations on Dividends and Other Capital Distributions
The FDIC has the authority to use its enforcement powers to prohibit a
savings bank from paying dividends if, in its opinion, the payment of dividends
would constitute an unsafe or unsound practice. Federal law also prohibits the
payment of dividends by a bank that will result in the bank failing to meet its
applicable capital requirements on a pro forma basis. Massachusetts law also
restricts Compass from declaring a dividend which would reduce its capital
below (i) the amount required to be maintained by state and federal law and
regulations or (ii) the amount of Compass's liquidation account established in
connection with the Conversion.
Prompt Corrective Action
The federal banking agencies have promulgated regulations to implement a
system of prompt corrective action required by federal law. Under the
regulations, a bank is deemed to be: (i) "well capitalized" if it has total
risk-based capital of 10.0% or more, has a Tier 1 risk-based capital ratio of
6.0% or more, has a Tier 1 leverage capital ratio of 5.0% or more and is not
subject to any written capital order or directive; (ii) "adequately
capitalized" if it has a total risk-based capital ratio of 8.0% or more, a Tier
1 risk-based capital ratio of 4.0% or more and a Tier 1 leverage capital ratio
of 4.0% or more (3.0% under certain circumstances) and does not meet the
definition of "well capitalized"; (iii) "undercapitalized" if it has a total
risk-based capital ratio that is less than 8.0%, a Tier 1 risk-based capital
ratio that is less than 4.0% or a Tier 1 leverage capital ratio that is less
than 4.0% (3.0% under certain circumstances); (iv) "significantly
undercapitalized" if it has a total risk-based capital ratio that is less than
6.0%, a Tier 1 risk-based capital ratio that is less than 3.0% or a Tier 1
leverage capital ratio that is less than 3.0%; and (v) "critically
undercapitalized" if it has a ratio of tangible equity to total assets that is
equal to or less than 2.0%. Federal law and regulations also specify
circumstances under which a federal banking agency may reclassify a well
capitalized institution as adequately capitalized and may require an adequately
capitalized institution to comply with supervisory actions as if it were in the
next lower capitalization category (except that the FDIC may not reclassify a
significantly undercapitalized institution as critically undercapitalized).
"Undercapitalized" banks are subject to growth, capital distribution
(including dividend) and other limitations and are required to submit a capital
restoration plan. A bank's compliance with such plan is required to be
guaranteed by any company that controls the undercapitalized institution. If an
"undercapitalized" bank fails to submit an acceptable plan, it is treated as if
it is "significantly undercapitalized." "Significantly undercapitalized" banks
are subject to one or more of a number of additional restrictions, including an
order by the FDIC to sell sufficient voting stock to become adequately
capitalized, requirements to reduce total assets and cease receipt of deposits
from correspondent banks or to dismiss directors or officers and restrictions
on interest rates paid on deposits, compensation of executive officers and
capital distributions by a parent holding company.
Based on the foregoing, both Compass and Sandwich Bank are currently
classified as "well capitalized" banks.
Activities and Investments of Insured State-Chartered Banks
Federal law generally limits the activities and equity investments of
FDIC-insured, state-chartered banks to those that are permissible for national
banks, notwithstanding state laws. Under regulations dealing with equity
investments, an insured state bank generally may not, directly or indirectly,
acquire or retain any equity investment of a type, or in an amount, that is not
permissible for a national bank. An insured state bank is not prohibited from,
among other things: (i) acquiring or retaining a majority interest in a
subsidiary; (ii) investing as a limited partner
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in a partnership, the sole purpose of which is direct or indirect investment in
the acquisition, rehabilitation or new construction of a qualified housing
project, provided that such limited partnership investments may not exceed 2%
of the bank's total assets; (iii) acquiring up to 10% of the voting stock of a
company that solely provides or reinsures directors', trustees' and officers'
liability insurance coverage or bankers' blanket bond group insurance coverage
for insured depository institutions; and (iv) acquiring or retaining, through a
subsidiary, up to 10% of the voting shares of a depository institution if
certain requirements are met.
Federal law and FDIC regulations permit certain exceptions to the
foregoing limitations. For example, certain state-chartered banks, such as
Compass and Sandwich Bank, may continue to invest, up to certain limits, in
common or preferred stock listed on a National Securities Exchange or the
National Market System of Nasdaq, and in the shares of an investment company
registered under the Investment Company Act of 1940, as amended. Such banks may
also continue to sell savings bank life insurance. As of May 31, 1998 and June
30, 1998, respectively, Compass and Sandwich Bank, respectively, held
marketable equity securities with a carrying value of $5.8 million and $6,000,
respectively, pursuant to this exception.
Transactions with Affiliates
Under current federal law, transactions between depository institutions
and their affiliates are governed by Sections 23A and 23B of the Federal
Reserve Act. An affiliate of a savings bank is any company or entity that
controls, is controlled by or is under common control with the savings bank,
other than a subsidiary. In a holding company context, at a minimum, the parent
holding company of a savings bank and any companies which are controlled by
such parent holding company are affiliates of the savings bank. Generally,
Section 23A limits the extent to which the savings bank or its subsidiaries may
engage in "covered transactions" with any one affiliate to an amount equal to
10% of such savings bank's capital stock and surplus, and contains an aggregate
limit on all such transactions with all affiliates to an amount equal to 20% of
such capital stock and surplus. The term "covered transaction" includes (i) the
making of loans or other extensions of credit to an affiliate; (ii) the
purchase of assets from an affiliate; (iii) the purchase of, or an investment
in, the securities of an affiliate; (iv) the acceptance of securities of an
affiliate as collateral for a loan or extension of credit to any person; or (v)
issuance of a guarantee, acceptance or letter of credit on behalf of an
affiliate. Section 23A also establishes specific collateral requirements for
loans or extensions of credit to, or guarantees, acceptances or letters of
credit issued on behalf of, an affiliate. Section 23B requires that covered
transactions and a broad list of other specified transactions be on terms
substantially the same, or no less favorable, to the savings bank or its
subsidiary as similar transactions with nonaffiliates.
Further, Section 22(h) of the Federal Reserve Act restricts the making of
loans by a savings bank to its directors, executive officers and principal
stockholders. Under Section 22(h), loans to directors, executive officers and
stockholders who control, directly or indirectly, 10% or more of voting
securities of a savings bank, and certain related interests of any of the
foregoing, may not exceed, together with all other outstanding loans to such
persons and affiliated entities, the savings bank's total capital and surplus.
Section 22(h) also prohibits loans above amounts prescribed by the appropriate
federal banking agency to directors, executive officers and stockholders who
control 10% or more of voting securities of a stock savings bank, and their
respective related interests, unless such loan is approved in advance by a
majority of the board of directors of the savings bank. Any "interested"
director may not participate in the voting. The loan amount (which includes all
other outstanding loans to such person) as to which such prior board of
director approval is required is the greater of $25,000 or 5% of capital and
surplus or any loans over $500,000. Further, pursuant to Section 22(h), loans
to directors, executive officers and principal stockholders must generally be
made on terms substantially the same as offered in comparable transactions to
other persons. Section 22(g) of the Federal Reserve Act places additional
limitations on loans to executive officers.
Holding Company Regulation
General. Seacoast Financial, as a bank holding company, is subject to
comprehensive regulation and regular examinations by the FRB. The FRB also has
extensive enforcement authority over bank holding companies, including, among
other things, the ability to assess civil money penalties, to issue cease and
desist or removal orders and to require that a holding company divest
subsidiaries (including its bank subsidiaries). In general, enforcement actions
may be initiated for violations of law and regulations and unsafe or unsound
practices. Seacoast Financial would also be regulated as a bank holding company
under Massachusetts law if it were to control two or more
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banking institutions. As a savings bank, Compass may elect to have Seacoast
Financial regulated as a savings and loan holding company by the Office of
Thrift Supervision ("OTS"). Regulation as a savings and loan holding company
would require application to, and prior approval of, the OTS.
Seacoast Financial is subject to capital adequacy guidelines for bank
holding companies (on a consolidated basis) which are substantially similar to
those of the FDIC for Compass. See "--Regulatory Capital Requirements." On a
pro forma consolidated basis after the Offering, Seacoast Financial's pro forma
stockholders' equity will exceed these requirements.
Under FRB policy, a bank holding company must serve as a source of
strength for its subsidiary bank. Under this policy, the FRB may require, and
has required in the past, a holding company to contribute additional capital to
an undercapitalized subsidiary bank.
Seacoast Financial must obtain Massachusetts Board of Bank Incorporation
and FRB approval before: (i) acquiring, directly or indirectly, ownership or
control of any voting shares of another bank or bank holding company if, after
such acquisition, it would own or control more than 5% of such shares (unless
it already owns or controls the majority of such shares); (ii) acquiring all or
substantially all of the assets of another bank or bank holding company; or
(iii) merging or consolidating with another bank holding company.
The BHCA also prohibits a bank holding company, with certain exceptions,
from acquiring direct or indirect ownership or control of more than 5% of the
voting shares of any company which is not a bank or bank holding company, or
from engaging directly or indirectly in activities other than those of banking,
managing or controlling banks, or providing services for its subsidiaries. The
principal exceptions to these prohibitions involve certain non-bank activities
which, by statute or by FRB regulation or order, have been identified as
activities closely related to the business of banking or managing or
controlling banks. The list of activities permitted by the FRB includes, among
other things: (i) operating a savings institution, mortgage company, finance
company, credit card company or factoring company; (ii) performing certain data
processing operations; (iii) providing certain investment and financial advice;
(iv) underwriting and acting as an insurance agent for certain types of
credit-related insurance; (v) leasing property on a full-payout, non-operating
basis; (vi) selling money orders, travelers' checks and United States Savings
Bonds; (vii) real estate and personal property appraising; (viii) providing tax
planning and preparation services; and (ix) subject to certain limitations,
providing securities brokerage services for customers. Seacoast Financial has
no present plans to engage in any of these activities.
Interstate Banking and Branching. Federal law allows the FRB to approve an
application of an adequately capitalized and adequately managed bank holding
company to acquire control of, or acquire all or substantially all of the
assets of, a bank located in a state other than such holding company's home
state, without regard to whether the transaction is prohibited by the laws of
any state. The FRB may not approve the acquisition of a bank that has not been
in existence for the minimum time period (not exceeding five years) specified
by the statutory law of the host state. The FRB is prohibited from approving an
application if the applicant (and its depository institution affiliates)
controls or would control more than 10% of the insured deposits in the United
States or 30% or more of the deposits in the target bank's home state or in any
state in which the target bank maintains a branch. Individual states continue
to have authority to limit the percentage of total insured deposits in the
state which may be held or controlled by a bank or bank holding company to the
extent such limitation does not discriminate against out-of-state banks or bank
holding companies. Individual states may also waive the 30% state-wide
concentration limit referred to above.
Additionally, beginning on June 1, 1997, the federal banking agencies were
authorized to approve interstate merger transactions without regard to whether
such transactions are prohibited by the law of any state, unless the home state
of one of the banks "opted out" by adopting a law which applies equally to all
out-of-state banks and expressly prohibits merger transactions involving
out-of-state banks. Interstate acquisitions of branches are permitted only if
the law of the state in which the branch is located permits such acquisitions.
In 1996, the Massachusetts legislature enacted a new interstate banking
statute pursuant to which an out-of-state bank may (subject to various
regulatory approvals and to reciprocity in its home state) establish and
maintain bank branches in Massachusetts by (i) merging with a Massachusetts
bank that has been in existence for at least three years, (ii) acquiring a
branch or branches of a Massachusetts bank without acquiring the entire bank or
(iii) opening such branches de novo. Massachusetts banks' ability to exercise
similar interstate banking powers in other states depend upon the laws of those
other states. For example, according to the law of the bordering state
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of New Hampshire, out-of-state banks may acquire New Hampshire banks by merger
but may not acquire individual branches or establish de novo bank branches in
New Hampshire.
Federal law authorizes the FDIC to approve interstate branching de novo by
national and state banks, respectively, only in states which specifically allow
for such branching. The appropriate federal banking agencies are required to
prescribe regulations which prohibit any out-of-state bank from using the
interstate branching authority primarily for the purpose of deposit production.
The FDIC and FRB have adopted such regulations. These regulations include
guidelines to ensure that interstate branches operated by an out-of-state bank
in a host state are reasonably helping to meet the credit needs of the
communities which they serve. Should the FDIC determine that a bank's
interstate branch is not reasonably helping to meet the credit needs of the
communities serviced by the interstate branch, the FDIC is authorized to close
the interstate branch or not permit the bank to open a new branch in the state
in which the bank previously opened an interstate branch.
Dividends. The FRB has issued a policy statement on the payment of cash
dividends by bank holding companies, which expresses the FRB's view that a bank
holding company should pay cash dividends only to the extent that the holding
company's net income for the past year is sufficient to cover both the cash
dividends and a rate of earnings retention that is consistent with the holding
company's capital needs, asset quality and overall financial condition. The FRB
also indicated that it would be inappropriate for a company experiencing
serious financial problems to borrow funds to pay dividends. Furthermore, under
the prompt corrective action regulations adopted by the FRB, the FRB may
prohibit a bank holding company from paying any dividends if the holding
company's bank subsidiary is classified as "undercapitalized." See
"--Regulatory Capital Requirements."
Bank holding companies are required to give the FRB prior written notice
of any purchase or redemption of its outstanding equity securities if the gross
consideration for the purchase or redemption, when combined with the net
consideration paid for all such purchases or redemptions during the preceding
12 months, is equal to 10% or more of the consolidated net worth of the bank
holding company. The FRB may disapprove such a purchase or redemption if it
determines that the proposal would constitute an unsafe or unsound practice or
would violate any law, regulation, FRB order or any condition imposed by, or
written agreement with, the FRB.
This notification requirement does not apply to any company that meets the
well-capitalized standard for commercial banks, is "well managed" within the
meaning of the FRB regulations and is not subject to any unresolved supervisory
issues.
Federal Securities Law
The Conversion Shares and Exchange Shares will be registered with the SEC
under the Securities Act. Seacoast Financial will be subject to the
information, proxy solicitation, insider trading restrictions and other
requirements of SEC regulations promulgated under the Exchange Act.
Seacoast Financial Common Stock held by persons who are affiliates
(generally officers, directors and 10% or more stockholders) of Seacoast
Financial may not be resold without registration, unless such stock is sold in
accordance with certain resale restrictions. If Seacoast Financial meets
specified current public information requirements, each affiliate of Seacoast
Financial is able to sell in the public market, without registration, a limited
number of shares in any three-month period.
In addition, "affiliates" of either Seacoast Financial or Sandwich Bancorp
may not sell their Exchange Shares, except pursuant to an effective
registration statement under the Securities Act covering such shares or in
compliance with Rule 145 or another applicable exemption from the registration
requirements of the Securities Act. See "The Conversion and the Merger--Resale
Restrictions--Resale of Exchange Shares."
Federal Reserve System
The FRB requires all depository institutions to maintain
noninterest-bearing reserves at specified levels against their transaction
accounts (primarily checking, NOW and Super NOW checking accounts). At May 31,
1998, Compass was in compliance with these reserve requirements. Savings banks
are authorized to borrow from the Federal Reserve Bank's "discount window," but
FRB regulations require savings banks to exhaust other reasonable alternative
sources of funds, including FHLB borrowings, before borrowing from the Federal
Reserve Bank.
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Community Reinvestment Act
Under the Community Reinvestment Act, as amended (the "CRA"), as
implemented by FDIC regulations, a bank has a continuing and affirmative
obligation, consistent with its safe and sound operation, to help meet the
credit needs of its entire community, including low and moderate income
neighborhoods. The CRA does not establish specific lending requirements or
programs for financial institutions nor does it limit an institution's
discretion to develop the types of products and services that it believes are
best suited to its particular community, consistent with the CRA. The CRA does
require the FDIC, in connection with its examination of a bank, to assess the
institution's record of meeting the credit needs of its community and to take
such record into account in its evaluation of certain applications by such
institution, including applications to acquire branches and other financial
institutions. The CRA requires the FDIC to provide a written evaluation of an
institution's CRA performance utilizing a four-tiered descriptive rating
system. Compass's latest FDIC CRA rating was "satisfactory" and Sandwich Bank's
was "outstanding."
Massachusetts has its own statutory counterpart to the CRA which is also
applicable to Compass and Sandwich Bank. The Massachusetts version is generally
similar to the CRA but utilizes a five-tiered descriptive rating system.
Massachusetts law requires the Commissioner to consider, but not be limited to,
a bank's record of performance under Massachusetts law in considering any
application by the bank to establish a branch or other deposit-taking facility,
to relocate an office or to merge or consolidate with or acquire the assets and
assume the liabilities of any other banking institution. Both Compass's and
Sandwich Bank's most recent rating under Massachusetts law was "outstanding."
Consumer Protection and Fair Lending Regulations
Compass and Sandwich Bank are subject to a variety of federal and
Massachusetts statutes and regulations that are intended to protect consumers
and prohibit discrimination in the granting of credit. These statutes and
regulations provide for a range of sanctions for non-compliance with their
terms, including imposition of administrative fines and remedial orders, and
referral to the Attorney General for prosecution of a civil action for actual
and punitive damages and injunctive relief. Certain of these statutes authorize
private individual and class action lawsuits and the award of actual, statutory
and punitive damages and attorneys' fees for certain types of violations.
Federal Home Loan Bank System
Compass is a member of the FHLB, which is one of 12 regional Federal Home
Loan Banks, that administer the home financing credit function of savings
institutions. Each Federal Home Loan Bank serves as a reserve or central bank
for its members within its assigned region. It is funded primarily from
proceeds derived from the sale of consolidated obligations of the Federal Home
Loan Bank system. It makes loans to members (i.e., advances) in accordance with
policies and procedures established by the board of directors of each Federal
Home Loan Bank. These policies and procedures are subject to the regulation and
oversight of the Federal Housing Finance Board. All advances to Compass from
the FHLB are required to be fully secured by sufficient collateral as
determined by the FHLB.
As a member, Compass is required to purchase and maintain stock in the
FHLB. At May 31, 1998, Compass owned $4.9 million of FHLB stock. In past years,
Compass has received dividends on its FHLB stock. The dividend yield from FHLB
stock was 6.50% for the year ended October 31, 1997. No assurance can be given
that such dividends will continue in the future at such levels.
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MANAGEMENT OF SEACOAST FINANCIAL AND COMPASS
Directors of Seacoast Financial
Upon consummation of the Conversion, the Board of Directors of Seacoast
Financial will consist of 11 members (all of whom are currently trustees of
Seacoast Financial and directors of Compass). The following table sets forth
certain information about each such person as of June 30, 1998. Directors of
Seacoast Financial serve three-year staggered terms so that approximately
one-third of the Directors will be elected at each annual meeting of
stockholders.
<TABLE>
<CAPTION>
Term
Name (1) Age Expires Date Elected (2)
- --------------------------------- --- --------- -----------------
<S> <C> <C> <C>
Manuel G. Camacho ............... 72 1999 1979
David P. Cameron ................ 72 2000 1976
Kevin G. Champagne .............. 48 1999 1993
Howard C. Dyer, Jr. ............. 69 2000 1963
Glen F. Johnson ................. 73 2001 1972
Thornton P. Klaren, Jr. ......... 62 2000 1968
J. Louis LeBlanc ................ 58 2001 1982
A. William Munro ................ 66 2001 1986
Carl Ribeiro .................... 51 1999 1991
Joseph H. Silverstein ........... 71 2000 1980
Gerald H. Silvia ................ 63 1999 1990
</TABLE>
- ------------
(1) In addition to the Directors set forth in this table, three members of
Sandwich Bancorp's Board of Directors will be appointed to Seacoast
Financial's Board of Directors upon consummation of the Merger, one of
whom will be Frederic D. Legate, the President and Chief Executive Officer
of Sandwich Bancorp, and the other two of whom will be selected by
Seacoast Financial after consultation with Sandwich Bancorp.
(2) "Date Elected" indicates the date the Director first joined the Board of
Trustees of Compass. All of such dates are prior to Seacoast Financial's
formation in 1994.
The principal occupation and business experience during at least the last
five years for each person who will be a Director of Seacoast Financial upon
consummation of the Conversion is set forth below. Seacoast Financial's Board
does not currently have a Chairman due to the death of Richard Marchisio on
September 10, 1998. Mr. Marchisio served as Chairman of the Boards of both
Seacoast Financial and Compass from 1994 until his death. He was President of
Compass from 1984 until his retirement in 1990. Mr. Marchisio first joined
Compass in 1946.
Manuel G. Camacho is a dentist in private practice in New Bedford,
Massachusetts. He is semi-retired.
David P. Cameron was President of Morse Cutting Tools in New Bedford,
Massachusetts until his retirement in 1982.
Kevin G. Champagne. See "Executive Officers," below.
Howard C. Dyer, Jr. was General Manager, New Bedford Storage Warehouse,
New Bedford, Massachusetts, until his retirement in 1996.
Glen F. Johnson was a General Manager, Goodyear Tire and Rubber, New
Bedford, Massachusetts, until his retirement in 1985.
Thornton P. Klaren, Jr. is retired.
J. Louis LeBlanc is an attorney in private practice in New Bedford,
Massachusetts.
A. William Munro is President of Munro Distributing, Inc., Fall River,
Massachusetts.
Carl Ribeiro is President, Luzo Foodservice Corp., New Bedford,
Massachusetts.
Joseph H. Silverstein was the President of Silverstein's Family Store, a
retail clothing store located in New Bedford, Massachusetts, until his
retirement in 1992.
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Gerald H. Silvia is the owner of Americana Travel, a travel agency located
in Fall River, Massachusetts.
Upon consummation of the Merger, Mr. Legate and two other directors of
Sandwich Bancorp to be selected by Seacoast Financial will be appointed as
directors of Seacoast Financial. Mr. Legate will also be appointed as a
director and a member of the Executive Committee of Compass. Set forth below is
certain biographical information with respect to Mr. Legate.
Frederic D. Legate has served Sandwich Bank in various capacities since
1977 and was appointed its President and Chief Executive Officer in 1981. Mr.
Legate became President and Chief Executive Officer of Sandwich Bancorp upon
its formation in 1997. Mr. Legate plans to retire as an executive officer
following consummation of the Merger.
Executive Officers
The names and ages of each of the executive officers of Seacoast Financial
and Compass and the principal occupation and business experience during at
least the last five years for each is set forth below. Each of Messrs.
Kelleher, Lambert, Rigby, Taber, Mascianica and Camara and Ms. Belanger serve
as a Vice President of Seacoast Financial, a position each has held since the
formation of Seacoast Financial in 1994.
Kevin G. Champagne has served as President and Chief Executive Officer of
Seacoast Financial since its formation in 1994 and as President and Chief
Executive Officer of Compass since 1994. Prior to 1994, Mr. Champagne was
Executive Vice President/Retail Banking of Compass. He joined Compass's
Management Training Program in 1971. Mr. Champagne is 48 years old.
Arthur W. Short served as Treasurer of Seacoast Financial since its
formation in 1994 until 1997. He currently serves as Vice President of Seacoast
Financial, as Executive Vice President of Compass, a position he has held since
1993, and as Chief Operating Officer of Compass, a position he has held since
1997. Prior to 1993, Mr. Short served as Senior Vice President/Treasurer and
Chief Financial Officer of Compass. He joined Compass in 1981. Mr. Short is 57
years old.
John D. Kelleher has served as Executive Vice President of Compass since
1993 and has headed Compass's Lending Division since 1984. Mr. Kelleher joined
Compass's Management Training Program in 1971. Mr. Kelleher is 53 years old.
James E. Lambert has served as Executive Vice President of Compass since
1994. Prior to joining Compass in 1990, Mr. Lambert served as President of
Martha's Vineyard National Bank, which merged with Compass in 1994. Mr. Lambert
is 53 years old.
Francis S. Mascianica, Jr. has served as Senior Vice President/Treasurer
and Chief Financial Officer of Compass since 1997 and as Treasurer of Seacoast
Financial since 1997. Mr. Mascianica has held various positions with Compass
since he joined the bank in 1981. He is 50 years old.
Carolyn A. Belanger has served as Senior Vice President and head of the
Retail Banking Division of Compass since 1994. Ms. Belanger has held various
positions with Compass since she joined the bank in 1966. She is 50 years old.
William D. Rigby has served as Senior Vice President since 1994 and
Manager of the Consumer Lending Department of Compass since 1985, when he
joined Compass. He is 50 years old.
Carl W. Taber has served as Senior Vice President since 1993 and head of
Mortgage Lending of Compass since 1984. Mr. Taber joined Compass's Management
Training Program in 1975. He is 45 years old.
Robert J. Camara has served as Senior Vice President and Loan Servicing
Manager of Compass since 1997. He joined Compass in 1987 as Assistant Vice
President and Auditor and became Vice President and Loan Servicing Manager in
1990. Mr. Camara is 41 years old.
The executive officers of Seacoast Financial and Compass are elected
annually and hold office until their successors are chosen and qualified.
Since the formation of Seacoast Financial in 1994, none of the executive
officers have received remuneration from Seacoast Financial. It is not
anticipated that the executive officers of Seacoast Financial will initially
receive
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<PAGE>
any remuneration in their capacities as executive officers. For information
concerning compensation of executive officers of Compass, see "Executive
Compensation."
Indemnification and Limitation of Liability
The Articles of Organization of Seacoast Financial provide that each
Director of Seacoast Financial and each officer appointed or elected by the
Board of Directors of Seacoast Financial shall be indemnified by Seacoast
Financial to the extent permitted by law against any expenses incurred by such
person in connection with any proceeding in which he or she is involved as a
result of (i) his or her serving or having served as a Director, officer or
employee of Seacoast Financial, (ii) his or her serving or having served as a
Director, officer or employee of any of Seacoast Financial's wholly owned
subsidiaries or (iii) his or her serving or having served in any capacity with
respect to any other corporation, organization, partnership, joint venture,
trust, employee benefit plan or other entity at the request or direction of
Seacoast Financial. The Board of Directors may, in its discretion, indemnify
non-officer employees of Seacoast Financial.
In accordance with Massachusetts law, the Articles of Organization provide
that no indemnification shall be provided with respect to a matter as to which
the indemnitee shall have been determined by final judicial decision from which
there is no further right to appeal that the indemnitee is not entitled to be
indemnified for such expenses.
If Seacoast Financial does not assume the defense or unless and until
Seacoast Financial assumes the defense of any proceeding of which Seacoast
Financial receives notice, Seacoast Financial has agreed to pay, in the case of
a Director or officer at the level of Vice President or above, and may agree to
pay, in the case of any other indemnitee, the expenses incurred by an
indemnitee in defending a proceeding or any appeal therefrom in advance of the
final disposition of such proceeding.
The Articles of Organization also provide that no Director of Seacoast
Financial shall be personally liable to Seacoast Financial or its stockholders
for monetary damages for breach of fiduciary duty as a Director notwithstanding
any provision of law imposing such liability. However, a Director shall be
liable (i) for any breach of the Director's duty of loyalty to Seacoast
Financial or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Sections 61 or 62 of Chapter 156B of the MGL, or (iv) with respect to any
transaction from which the Director derived an improper personal benefit.
Committees of the Boards of Seacoast Financial and Compass
The Boards of Seacoast Financial and Compass have two committees, an
Executive Committee and an Audit Committee. The current members of the Executive
Committee are Messrs. Champagne, Dyer, Johnson, LeBlanc, Munro and Silverstein,
and following the consummation of the Merger, Frederic D. Legate, currently the
President of Sandwich Bancorp, will join the Executive Committee. The Executive
Committee is vested with the authority of the Board in most matters, except
those powers which by law may not be delegated. The Executive Committee also
serves as the Compensation Committee, in which capacity it reviews and
establishes salaries and other compensation and benefit programs of all officers
and employees of Seacoast Financial and Compass, and as the Nominating
Committee, which recommends to the Boards of Seacoast Financial and Compass
nominees for election to the Boards of Seacoast Financial and Compass.
The Audit Committee, of which Messrs. Camacho, Cameron, Klaren, Ribeiro
and Silvia are members, reviews the results and scope of the audit and other
services provided by Seacoast Financial's and Compass's independent auditors.
Compensation Committee Interlocks and Insider Participation
The Executive Committee serves as the Compensation Committee. Its members
are Messrs. Champagne, Dyer, Johnson, LeBlanc, Munro and Silverstein. Mr.
Champagne, the President and Chief Executive Officer of Seacoast Financial and
Compass, does not participate in deliberations involving his own compensation.
No executive officer of Seacoast Financial or Compass served (i) as a
member of the compensation committee of another entity, one of whose executive
officers served on the Executive Committee of Seacoast Financial and Compass,
(ii) as a director of another entity, one of whose executive officers served on
the Executive Committee of Seacoast Financial and Compass, or (iii) as a member
of the compensation committee of another entity, one of whose executive
officers served as a trustee or director of Seacoast Financial or Compass.
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<PAGE>
Compensation of Directors
Members of the Seacoast Financial and Compass Boards receive $500 for each
Board meeting that they attend. The Chairman of the Board of Seacoast Financial
(who also serves as Chairman of the Board of Compass) receives an annual
retainer of $50,000 for service as Chairman of both Boards. Members of Seacoast
Financial's and Compass's Executive Committee receive an annual retainer of
$13,000 and members of Compass's Audit Committee receive an annual retainer of
$5,000. In addition, members of the Audit Committee (other than the Chairman)
are paid $500 for each Seacoast Financial Audit Committee meeting that they
attend and the Chairman of the Audit Committee is paid $600 for each Seacoast
Financial Audit Committee meeting that he attends. The most senior member of
the Board of Directors of Compass receives an annual retainer of $7,000 for
duties performed in connection with his appointment as a non-operating Vice
President of Compass. Mr. Champagne does not receive any fees for service on
the Board of Directors of Seacoast Financial or Compass or for service on any
committees of either Board.
Executive Compensation
Summary Compensation Table. The following table sets forth the cash
compensation paid by Compass as well as certain other compensation paid or
accrued for services rendered in all capacities during the year ended December
31, 1997 to the Chief Executive Officer of Seacoast Financial and Compass and
the four other executive officers of Seacoast Financial or Compass who received
total annual compensation in excess of $100,000 (such other executive officers,
"Named Executive Officers").
<TABLE>
<CAPTION>
All Other
Annual Compensation Compensation(4)
------------------------------------------ ----------------
Name and Principal
Position with Seacoast Financial and Compass Year(1) Salary Bonus(2) Other(3)
- ----------------------------------------------------- --------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Kevin G. Champagne .................................. 1997 $230,002 $59,801 $5,794
President and Chief Executive
Officer of Seacoast Financial and Compass
A. William Short .................................... 1997 148,506 34,750 7,450
Vice President of Seacoast Financial;
Executive Vice President and Chief Operating Officer
of Compass
John D. Kelleher .................................... 1997 134,905 31,568 6,478
Vice President of Seacoast Financial;
Executive Vice President/Lending of Compass
James E. Lambert .................................... 1997 120,001 23,400 6,030
Vice President of Seacoast Financial;
Executive Vice President/Commercial Lending of
Compass
Carolyn A. Belanger ................................. 1997 105,346 24,651 4,829
Vice President of Seacoast Financial;
Senior Vice President/Retail Banking of Compass
</TABLE>
- ------------
(1) Because Seacoast Financial will not be a public company until the
Conversion, Summary Compensation information is not provided for 1996 and
1995 in accordance with the rules of the SEC.
(2) Represents bonuses paid in December 1997 for the fiscal year ended
October 31, 1997.
(3) Perquisites and other personal benefits paid to each officer included in
the Summary Compensation Table in each instance aggregated less than 10% of
the total annual salary and bonus set forth in the columns entitled
"Salary" and "Bonus" for each officer, and accordingly, are omitted from
the table in accordance with the rules of the SEC.
(4) Includes Compass's matching contributions under its 401(k) plan of $4,750
for each of Messrs. Champagne, Short and Kelleher and of $4,302 and $3,900
for Mr. Lambert and Ms. Belanger, respectively. Also includes premiums paid
by Compass for group term life insurance of $1,044, $2,700, $1,728, $1,728
and $929 for Messrs. Champagne, Short, Kelleher and Lambert and Ms.
Belanger, respectively.
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<PAGE>
Employment and Change in Control Agreements
In connection with the Conversion, Seacoast Financial and Compass will
enter into certain employment agreements (each such agreement, an "Employment
Agreement" and, such agreements collectively, the "Employment Agreements") and
certain change in control agreements (the "Change in Control Agreements") with
Messrs. Champagne, Short, Kelleher and Mascianica and Ms. Belanger
(collectively, the "Officers"). The Employment Agreements provide that the
Officers will receive certain benefits and a base salary equal to $270,003,
$156,505, $141,654, $103,382 and $110,346, respectively, subject to increases
in accordance with the usual practices of Seacoast Financial and Compass with
respect to review of compensation of their senior executives.
Mr. Champagne's Employment Agreement has a three-year term and the
Employment Agreements of the other Officers have two-year terms. The terms all
commence on the date of consummation of the Conversion, and each term extends
by one day for each day that an Officer remains employed by Compass or (in the
case of Mr. Champagne) by Compass or Seacoast Financial until either of the
Officer or Compass or (in the case of Mr. Champagne) Compass or Seacoast
Financial give a notice of non-renewal. Under each of the Employment
Agreements, Seacoast Financial (in the case of Mr. Champagne) and Compass (in
the case of the other Officers) may terminate an Officer's employment at any
time for "cause," as such term is defined in such agreements, without incurring
any continuing obligations to the Officer. If Seacoast Financial or Compass
terminates an Officer's employment for any reason other than for cause or if
the Officer terminates the Officer's employment for "good reason," as such term
is defined in the Employment Agreements, Seacoast Financial and Compass will
become obligated to provide the Officer: (i) an amount equal to the sum of (a)
the Officer's base salary or other compensation earned through the date of
termination, (b) the Officer's pro rata share of the Officer's highest annual
bonus paid during the three fiscal years preceding such termination and (c) all
accrued vacation and deferred compensation; (ii) a lump sum severance benefit
equal to three times (in the case of Mr. Champagne) or two times (in the case
of the other Officers) the sum of (a) the Officer's annual base salary and (b)
the highest annual bonus paid to the Officer in the three fiscal years
preceding the termination; (iii) disability and medical benefits specified in
the Officer's Employment Agreement for the duration of what otherwise would
have been the remaining term of the Employment Agreement (which, as a result of
the daily extension of the term of the Agreements, will always be three years
for Mr. Champagne and two years for the other Officers); and (iv) a pension
adjustment as specified in the Employment Agreement. The Employment Agreements
also provide certain retirement, death and disability benefits. Mr. Champagne's
Employment Agreement includes a provision reimbursing him, on an after-tax
basis, for any "golden parachute" excise taxes.
The Change in Control Agreements provide that an Officer may receive
certain benefits if the Officer is terminated within three years (in the case
of Mr. Champagne) or two years (in the case of the other Officers) of a "Change
in Control" (as such term is defined in the Change in Control Agreements) of
either Seacoast Financial or Compass. An Officer would receive such termination
benefits if Seacoast Financial or Compass terminated the Officer for any reason
other than death or "cause," as such term is defined in the Employment
Agreements, or if the Officer terminated the Officer's employment following:
(i) a significant change in the nature or scope of the Officer's
responsibilities, authorities, powers, functions or duties; (ii) a
determination by the Officer that, as a result of a Change in Control, the
Officer is unable to exercise the responsibilities, authorities, powers,
functions or duties exercised by the Officer immediately prior to such Change
in Control; (iii) a reduction in the Officer's annual base salary; (iv) a
significant relocation of the offices of Seacoast Financial or Compass; (v) a
failure of either Seacoast Financial or Compass to pay any portion of
compensation due to the Officer; (vi) the termination of or a material
reduction in the Officer's benefits; or (vii) a failure of Seacoast Financial
or Compass to obtain a satisfactory agreement from any successor to assume and
agree to perform the Officer's Change in Control Agreement. The benefits in the
case of both Mr. Champagne and the other Officers are: (i) a lump sum severance
payment equal to three times the "base amount," as such term is defined in
Section 280G(b)(3) of the Code, applicable to the Officer minus $1.00 and (ii)
for a period of three years, continuation of the Officer's disability and
medical benefits existing on the date of the termination. Alternatively, an
Officer could elect to receive such termination benefits as the Officer would
be entitled to under the Officer's Employment Agreement, but may not receive
payments under both agreements.
Cash and benefits paid to each Officer under the Change in Control
Agreements together with payments under other benefit plans following a change
in control of Seacoast Financial or Compass may constitute an "excess
parachute" payment under Section 280G of the Code, resulting in the imposition
of a 20% excise tax on the recipient and the denial of the deduction for such
excess amounts to Seacoast Financial or Compass. The Change in Control
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<PAGE>
Agreements place limitations on the salary and benefits the Officers can
receive so that such payments do not exceed the Section 280G limits. However,
such limitations would not apply if an Officer elects to receive payments under
his or her Employment Agreement instead of his or her Change in Control
Agreement.
Compass also has a severance agreement with James E. Lambert, its
Executive Vice President/Commercial Lending. Mr. Lambert was formerly President
of Martha's Vineyard National Bank, which Compass acquired in December 1994.
Pursuant to this agreement, which Compass assumed from Martha's Vineyard
National Bank, Compass has agreed to pay Mr. Lambert one year's severance for
any termination of his employment by Compass, other than termination for
"cause", and for any termination by Mr. Lambert for "good reason," as such
terms are defined in the agreement.
Compensation of Officers and Directors Through Benefit Plans
Compass's current tax-qualified employee pension benefit plans consist of
a defined benefit pension plan and a 401(k) plan. As a result of the
Conversion, Seacoast Financial and Compass will be able to compensate employees
with stock-based compensation pursuant to the ESOP and pursuant to stock option
plans and other stock-based management recognition and retention plans
described below.
Defined Benefit Pension Plan. Compass maintains the Savings Banks
Employees Retirement Association Pension Plan, which is a qualified, tax-exempt
defined benefit plan (the "Retirement Plan"). All employees age 21 or older who
have worked at Compass for a period of two years and have been credited with
1,000 or more hours of service with Compass during the year are eligible to
accrue benefits under the Retirement Plan. Compass contributes annually an
amount to the Retirement Plan necessary to satisfy the actuarially determined
minimum funding requirements in accordance with ERISA.
The retirement benefit provided is an amount equal to 1.25% of a
participant's average compensation based on the average of the three
consecutive years providing the highest average compensation multiplied by the
participant's years of service (up to a maximum of 25 years) plus 0.6% of such
average compensation in excess of covered compensation multiplied by the
participant's total number of years of service (up to a maximum of 25 years).
Normal retirement age is 65. Retirement benefits are also payable upon
disability or death. A reduced benefit is payable upon early retirement at age
62, at age 55 and the completion of ten years of service with Compass or at age
50 and the completion of 15 years of such service. Benefits under the
Retirement Plan are payable in various annuity forms as well as in the form of
a single lump sum payment. As of October 31, 1997, the most recent date for
which information is available, the market value of the Retirement Plan's
assets was $8.4 million.
The following table indicates the annual retirement benefit that would be
payable under the Retirement Plan upon retirement by existing employees at age
65 between November 1, 1997 and October 31, 1998, expressed in the form of a
single life annuity for the final average salary and benefit service
classifications specified below:
Projected Annual Pension Benefit
Based on Years of Service
<TABLE>
<CAPTION>
Average 25 Years
Compensation 10 Years 15 Years 20 Years and After
- ---------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
$ 20,000 $ 2,500 $ 3,750 $ 5,000 $6,250
40,000 5,642 8,463 11,284 14,104
60,000 9,342 14,013 18,684 23,354
80,000 13,042 19,563 26,084 32,604
100,000 16,742 25,113 33,484 41,854
120,000 20,442 30,663 40,884 51,104
125,000 21,367 32,050 42,734 53,417
140,000 24,142 36,213 48,284 60,354
150,000 25,992 38,988 51,984 64,979
160,000(1) 27,842 41,763 55,684 69,604
</TABLE>
- ------------
(1) Beginning November 1, 1997, Federal law does not permit defined benefit
pension plans to recognize compensation in excess of $160,000 for plan
years (for SBERA plans).
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<PAGE>
At October 31, 1997, the approximate years of credited service for the
named executive officers were as follows:
<TABLE>
<CAPTION>
Years of Credited Service
Name at Age 65
---- --------------------------
<S> <C>
Kevin G. Champagne ............................ 25
Arthur W. Short ............................... 25
John D. Kelleher .............................. 25
James E. Lambert .............................. 14
Carolyn A. Belanger ........................... 25
</TABLE>
Executive Salary Continuation Agreements. Compass has entered into a
salary continuation agreement with four of its executive officers: Messrs.
Champagne, Short, Kelleher and Mascianica. The agreements provide each officer
with a supplemental retirement benefit in an amount equal to 25% of the average
of the three highest years of compensation paid to the officer in the ten years
of employment immediately preceding the officer's retirement. The benefit is
payable monthly, for a period of 15 years, commencing on the first day of the
month next following the officer's retirement. A reduced benefit is payable if
the officer retires prior to the age of 65, but after age 55. If the officer
dies while employed by Compass, a monthly benefit will be paid to the officer's
beneficiary for a period of 15 years in an amount equal to 25% of the officer's
salary on the date of his death. If the officer's employment with Compass is
terminated prior to the age of 55 other than for cause, the officer is entitled
to a benefit equal to 5% of the benefit he would have received upon retirement
at age 65, multiplied by the number of years of service between the age of 35
and termination of employment. The agreements provide that Compass may not
merge or consolidate into another corporation or sell substantially all of its
assets to another corporation unless such corporation agrees to assume and
discharge the obligations of Compass under the agreements. The agreements are
funded by life insurance policies, of which Compass is the owner and
beneficiary, held in a "rabbi" trust.
Executive Deferred Compensation Plan. Compass has a deferred compensation
plan for the benefit of certain of its senior management employees, as
designated from time to time by the President of Compass. At the current time,
17 employees are eligible to participate in the plan. Participants may defer 1%
to 15% of their base salary and 1% to 100% of any bonus to which they are
entitled. Deferred amounts are credited to each participant's account and are
held in a "rabbi" trust. The deferred compensation plan permits employees to
direct the investment of their own accounts into various investment options.
Compass has amended the plan to enable the participants to direct the
investment of their accounts into subscriptions for Conversion Shares in the
Offering, subject to participants' eligibility to so subscribe based on their
qualifying deposits with Compass. Distributions to a participant are made upon
the earliest of the participant's retirement, death or other termination of
employment, in the form requested by the participant in his or her salary
reduction deferral election. The plan permits, at the Committee's discretion,
withdrawals in the event of a financial hardship caused by an unforeseeable
emergency.
401(k) Plan. Compass maintains a Savings Banks Employees Retirement
Association 401(k) Plan, which is a qualified, tax-exempt plan. All employees
who have attained age 21 and have completed one year of employment during which
they worked at least 1,000 hours are eligible to participate.
Under the 401(k) Plan, participants are permitted to make salary reduction
contributions equal to the lesser of 15% of compensation or $10,000 (as indexed
annually). All employee contributions and earnings thereon are fully and
immediately vested. A participant may withdraw salary reduction contributions
in the event the participant suffers a financial hardship. The 401(k) Plan
permits employees to direct the investment of their own accounts into various
investment options. Compass matches 50% of the first 6% of compensation that a
participant contributes to the 401(k) Plan. Compass has amended the plan to
enable the participants to direct the investment of their accounts into
subscriptions for Conversion Shares in the Offering, subject to such
participants' eligibility to so subscribe under the subscription priorities set
forth in the Plan of Conversion.
Plan benefits will be paid to each participant in the form of a life
annuity (or joint and survivor annuity if married) upon retirement or death
unless an alternate form of distribution (lump sum or equal payments over a
fixed period) is selected. If a participant terminates employment prior to
retirement, his vested benefit will be held by the 401(k) Plan until the
participant elects to receive his benefit from the plan. If a participant (and
the participant's spouse, if married) elects to receive benefits after
termination of employment prior to normal or early retirement age, benefits
will be paid in a lump sum. Normal retirement age under the plan is age 65.
Early retirement age is age 59-1/2.
ESOP. Compass intends to implement the ESOP in connection with the
Conversion. Employees with at least one year of employment with Compass and who
have attained age 21 are eligible to participate. As part of the
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Conversion, the ESOP intends to borrow funds from Seacoast Financial and use
those funds to purchase a number of shares equal to up to 8% of the Conversion
Shares. Collateral for the loan will be the unallocated shares of Seacoast
Financial Common Stock purchased by the ESOP. The loan will be repaid
principally from Compass's discretionary contributions to the ESOP, over a
period of not less than 20 years. Shares purchased by the ESOP will be held in
a suspense account for allocation among participants as the loan is repaid.
Contributions to the ESOP and shares released from the suspense account in
an amount proportional to the repayment of the ESOP loan will be allocated
among ESOP participants on the basis of compensation in the year of allocation.
Participants in the ESOP will receive credit for years of service prior to the
effective date of the ESOP. Benefits generally vest over a six-year period.
Benefits generally vest at the rate of 20% per year beginning in the second
year of service until a participant is 100% vested after six years or upon
normal retirement (as such term is defined in the ESOP), disability or death of
the participant or a change in control (as such term is defined in the ESOP). A
participant who terminates employment for reasons other than death, retirement
or disability prior to seven years of credited service will forfeit the
nonvested portion of his benefits under the ESOP. Benefits will be payable in
the form of Seacoast Financial Common Stock and cash upon death, retirement,
early retirement, disability or separation from service. Compass's
contributions to the ESOP are discretionary, subject to the loan terms and tax
law limits, and, therefore, benefits payable under the ESOP cannot be
estimated. Compass is required to record compensation expense in an amount
equal to the fair market value of the shares released from the suspense
account.
Compass has established a committee of three officers of Compass to
administer the ESOP, and has appointed its President and Chief Executive
Officer to serve as trustee of the ESOP. The ESOP committee may instruct the
trustee regarding investment of funds contributed to the ESOP. The ESOP
trustee, subject to his fiduciary duty, must vote all allocated shares held in
the ESOP in accordance with the instructions of participating employees. Under
the ESOP, nondirected shares and shares held in the suspense account will be
voted in a manner calculated to most accurately reflect the instructions it has
received from participants regarding the allocated stock so long as such vote
is in accordance with the provisions of ERISA.
Stock Option Plan. Following consummation of the Conversion, the Board of
Directors may consider the adoption of a stock option plan for directors and
officers of Compass and Seacoast Financial. Applicable banking regulations
would permit Seacoast Financial to adopt such a plan for presentation to
Seacoast Financial's stockholders at a meeting to be held no earlier than six
months after the completion of the Conversion. If such plan were adopted, it
would provide for the granting of options to purchase Seacoast Financial Common
Stock in an aggregate amount no greater than 10% of the Conversion Shares. Ten
percent of such shares would amount to 1,360,000 shares, 1,600,000 shares,
1,840,000 shares or 2,116,000 shares at the minimum, midpoint, maximum and 15%
above the maximum of the Estimated Valuation Range, respectively. No options
would be granted under a stock option plan until the date on which stockholder
approval is received.
Stock Plan. Following consummation of the Conversion, the Board of
Directors may also consider the adoption of a stock plan for the recognition
and retention of officers and directors of Seacoast Financial and Compass.
Applicable banking regulations would permit Seacoast Financial to adopt such a
plan for presentation to Seacoast Financial's stockholders at a meeting to be
held no earlier than six months after the completion of the Conversion. If such
plan were adopted, it would provide for the award of shares of Seacoast
Financial Common Stock to executive officers and directors without their having
to pay cash for the shares, in a manner designed to encourage them to continue
their service with Compass. If the plan were adopted, Compass or Seacoast
Financial would contribute funds to the plan from time to time to enable it to
acquire shares of Seacoast Financial Common Stock for award under the plan
(either in open market purchases or directly from Seacoast Financial) in an
aggregate amount no greater than 4% of the Conversion Shares. Four percent of
the Conversion Shares would amount to 544,000 shares, 640,000 shares, 736,000
or 846,400 shares at the minimum, midpoint, maximum and 15% above the maximum
of the Estimated Valuation Range, respectively. In the event that additional
authorized but unissued shares were acquired by the plan, the interests of
existing stockholders would be diluted. No awards under the plan would be made
until the date of approval of the plan by Seacoast Financial's stockholders.
Indebtedness of Management
Compass makes loans to non-officer directors of Compass and Trustees of
Seacoast Financial. Such loans are made on the same terms and conditions as
those of comparable transactions with the general public and do not present
more than the normal risk of collectibility.
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PURCHASES BY MANAGEMENT OF SEACOAST FINANCIAL AND COMPASS
The following table sets forth information regarding intended Conversion
Share purchases by each person who will serve as a director of Seacoast
Financial upon consummation of the Conversion, by the non-director executive
officers of Seacoast Financial and Compass as a group and by all directors and
executive officers as a group, in each case including such person's associates.
This table excludes shares to be purchased by the ESOP. The directors and
executive officers of Compass and Seacoast Financial have indicated their
intention to purchase in the Conversion an aggregate of $4,050,000 of
Conversion Shares, equal to 3.0%, 2.5%, 2.2%, and 1.9% of the number of shares
to be issued in the Conversion at the minimum, midpoint, maximum and 15% above
the maximum of the Estimated Valuation Range, respectively.
<TABLE>
<CAPTION>
Aggregate Number Percent
Name Purchase Price of Shares at Midpoint
------ ---------------- ----------- ------------
<S> <C> <C> <C>
Manuel G. Camacho, D.D.S. ................. $ 100,000 10,000 *
David P. Cameron .......................... 50,000 5,000 *
Kevin G. Champagne ........................ 250,000 25,000 *
Howard C. Dyer, Jr. ....................... 40,000 4,000 *
Glen F. Johnson ........................... 150,000 15,000 *
Thornton P. Klaren, Jr. ................... 55,000 5,500 *
J. Louis LeBlanc .......................... 650,000 65,000 *
A. William Munro .......................... 1,500,000 150,000 *
Carl Ribeiro .............................. 300,000 30,000 *
Joseph Silverstein ........................ 300,000 30,000 *
Gerald H. Silvia .......................... 160,000 16,000 *
All non-director executive officers
(8 persons) as a group ................... 495,000 49,500 *
---------- -------
Total shares to be purchased by
directors and executive officers ......... $4,050,000 405,000 2.5%
========== =======
</TABLE>
- ------------
* Less than 1%.
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THE OFFERINGS
Pursuant to applicable state and federal regulation, the Conversion Shares
are being offered for sale in the Subscription Offering pursuant to
subscription rights in the following order of descending priority to: (i) the
Eligible Account Holders (holders of deposit accounts at Compass with an
aggregate balance of $50 or more on December 31, 1996) ("Qualifying Deposits");
(ii) the Supplemental Eligible Account Holders (holders of deposit accounts at
Compass with an aggregate balance of $50 or more on June 30, 1997)
("Supplemental Qualifying Deposits"); (iii) the ESOP; and (iv) employees,
officers, directors and trustees of Compass and Seacoast Financial. Subject to
the prior rights of holders of subscription rights, Seacoast Financial may
offer Conversion Shares in the Community Offering to certain members of the
general public with a preference given to residents of "Compass's Community"
(as such community is defined herein under "--Community Offering"). The
Community Offering may commence concurrently with, during or promptly after the
Subscription Offering. It is anticipated that shares not subscribed for in the
Subscription and Community Offerings, if any, will be offered for sale by
Seacoast Financial to the general public in the Syndicated Community Offering.
Subscription Offering
In accordance with the Conversion Plan, the following persons have the
right to subscribe for the purchase of Conversion Shares in the Subscription
Offering in the order of priority set forth below. All subscriptions received
will be subject to the availability of Conversion Shares after satisfaction of
all subscriptions of all persons having prior rights in the Subscription
Offering, to the maximum and minimum purchase limitations set forth in the
Conversion Plan and as described below under "--Limitations Upon Purchases of
Conversion Shares."
<TABLE>
<S> <C>
Priority 1: Each Eligible Account Holder will have an opportunity to
Eligible subscribe for a number of Conversion Shares equal to the
Account Individual Purchase Limit, defined as the greatest of (x)
Holders $750,000 of Conversion Shares, (y) one-tenth of one percent
(.10%) of the Conversion Shares or (z) 15 times the product
(rounded down to the nearest whole number) obtained by
multiplying (1) the total number of Conversion Shares to be
issued in the Conversion by (2) a fraction, of which the
numerator is the Qualifying Deposit of the Eligible Account
Holder and the denominator is the total amount of Qualifying
Deposits of all Eligible Account Holders. If there are
insufficient shares available to satisfy all subscriptions
of Eligible Account Holders, shares will be allocated to
Eligible Account Holders so as to permit each such
subscribing Eligible Account Holder to purchase a number of
shares sufficient to make his or her total allocation equal
to the lesser of 100 shares or the number of shares
subscribed for. Thereafter, unallocated shares will be
allocated pro rata to remaining subscribing Eligible Account
Holders whose subscriptions remain unfilled in the same
proportion that each such subscriber's Qualifying Deposits
bears to the total amount of Qualifying Deposits of all
subscribing Eligible Account Holders whose subscriptions
remain unfilled. Subscription rights to purchase Conversion
Shares received by executive officers, trustees,
Corporators, and directors of Seacoast Financial and
Compass, including associates of executive officers,
trustees, Corporators and directors, based on their
increased deposits in Compass in the one-year period
preceding the Eligibility Record Date, shall be subordinated
to the subscription rights of other Eligible Account
Holders. To ensure proper allocation of stock, each Eligible
Account Holder must list on his Order Form all deposit
accounts in which he had an ownership interest as of the
Eligibility Record Date.
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Priority 2: Each Supplemental Eligible Account Holder will have the
Supplemental opportunity to purchase, to the extent there are sufficient
Eligible shares remaining after satisfaction of subscriptions by
Account Account Holders, the greatest of (x) $750,000 of Conversion
Holders Shares, (y) one-tenth of one percent (.10%) of the
Conversion Shares, or (z) 15 times the product (rounded down
to the nearest whole number) obtained by multiplying (1) the
total number of Conversion Shares to be issued in the
Conversion by (2) a fraction, of which the numerator is the
Supplemental Qualifying Deposit of the Supplemental Eligible
Account Holder and the denominator is the total amount of
Supplemental Qualifying Deposits of all Supplemental
Eligible Account Holders. In the event Eligible Account
Holders subscribe for all available shares, subscriptions of
Supplemental Eligible Account Holders will not be filled. In
the event Supplemental Eligible Account Holders subscribe
for more than the available number of shares, the Conversion
Shares available for purchase will be allocated among
subscribing Supplemental Eligible Account Holders so as to
permit each subscribing Supplemental Eligible Account Holder
to purchase a number of shares sufficient to make his total
allocation equal to the lesser of 100 shares or the number
of shares subscribed for. Thereafter, unallocated shares
will be allocated to each subscribing Supplemental Eligible
Account Holder whose subscription remains unfilled in the
same proportion that such subscriber's Supplemental
Qualifying Deposits bear to the total amount of Supplemental
Qualifying Deposits of all subscribing Supplemental Eligible
Account Holders whose subscriptions remain unfilled.
Priority 3: On a third priority basis, the ESOP intends to subscribe for
Employee Stock 8% of the Conversion Shares issued in the Offering, or
Ownership Plan 1,088,000 shares and 1,472,000 shares based on the minimum
and maximum of the Estimated Valuation Range, respectively.
Subscriptions by the ESOP will not be aggregated with
Conversion Shares purchased directly, pursuant to
subscription rights, by any person eligible to receive
allocations of shares under the ESOP. In the event that the
total number of shares offered in the Conversion is
increased to a number of shares exceeding the maximum of the
Estimated Valuation Range, the ESOP will have a first
priority right to purchase any such shares up to an
aggregate of 8% of the Conversion Shares issued.
Priority 4: To the extent there are sufficient shares remaining after
Employees, satisfaction of subscriptions by Eligible Account Holders,
Officers, Trustees Supplemental Eligible Account Holders and the ESOP, each
employee, officer, trustee and director of Seacoast
Financial and Compass will have the opportunity to subscribe
for up to $750,000 of Conversion Shares. Shares purchased
under this order of priority will be aggregated with shares,
if any, purchased under the preceding priority categories
when calculating the $750,000 individual purchase limit for
such person. In the event that employees, officers, trustees
and directors subscribe under this order of priority for
more Conversion Shares than are available for purchase by
them, the Conversion Shares available for purchase will be
allocated by Seacoast Financial among such subscribing
persons on a equitable basis, such as by giving weight to
the period of service, compensation and position of the
individual subscriber, provided that no fractional shares
will be allocated or issued.
</TABLE>
Community Offering
Any Conversion Shares not subscribed for in the Subscription Offering may
be offered for sale in the Community Offering. This will involve an offering of
unsubscribed Conversion Shares directly to the general public. The Community
Offering, if any, shall be for a period of not more than 45 days unless
extended by Seacoast Financial and Compass, and shall commence concurrently
with, during or promptly after the Subscription Offering. The Conversion Shares
will be offered and sold in the Community Offering, in accordance with the
Division regulations, so as to achieve the widest distribution of the
Conversion Shares. No person may subscribe for or purchase more than $750,000
of Conversion Shares in the Community Offering.
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In the event of an oversubscription for Conversion Shares in the Community
Offering, available shares will be allocated first to natural persons residing
in Compass's Community so that each such person receives 100 shares, and
thereafter on a pro rata basis to such persons based on their respective
subscriptions or on such other reasonable basis as Seacoast Financial may
determine. If there are sufficient shares to fill orders of such Community
residents, but not to fill the orders of others subscribing in the Community
Offering, available shares will be allocated to such other persons in the
manner described for Community residents. Compass's Community consists of the
Massachusetts cities and towns of: Acushnet, Aquinnah, Barnstable, Bourne,
Brewster, Buzzard's Bay, Carver, Chatham, Chilmark, Dartmouth, Dennis, Eastham,
Edgartown, Fairhaven, Fall River, Falmouth, Freetown (Assonet), Gosnold,
Harwich, Hyannis, Kingston, Lakeville, Marion, Mashpee, Mattapoisett, New
Bedford, Oak Bluffs, Orleans, Plymouth (including Cedarville and Manomet),
Plympton, Pocasset, Rochester, Sandwich, South Sandwich, Somerset, Swansea,
Tisbury, W. Tisbury, Wareham, Westport, Yarmouth and South Yarmouth ("Compass's
Community").
The terms "residence," "reside" or "residing" as used herein with respect
to any person shall mean any person who occupies a dwelling within Compass's
Community, has an intent to remain in Compass's Community for a period of time
and manifests the genuineness of that intent by establishing an ongoing
physical presence within Compass's Community together with an indication that
such presence in Compass's Community is something other than merely transitory
in nature. To the extent the person is a corporation or other business entity,
the principal place of business or headquarters shall be in Compass's
Community. Seacoast Financial may utilize deposit or loan records or such other
evidence provided to it to make a determination as to whether a person is a
resident. In all cases, however, such a determination shall be in the sole
discretion of Seacoast Financial.
Seacoast Financial, in its sole discretion, may reject subscriptions, in
whole or in part, received from any person in the Community Offering.
Syndicated Community Offering
Any Conversion Shares not sold in the Subscription Offering or in the
Community Offering, if any, may be offered for sale to the general public by a
selling group of broker-dealers to be managed by Ryan Beck and McConnell Budd
in a Syndicated Community Offering, subject to terms, conditions and procedures
as may be determined by Seacoast Financial and Compass in a manner that is
intended to achieve the widest distribution of the Conversion Shares subject to
the rights of Seacoast Financial, in its sole discretion, to accept or reject
in whole or in part all orders in the Syndicated Community Offering. It is
expected that the Syndicated Community Offering, if any, would commence as soon
as practicable after termination of the Community Offering. The Syndicated
Community Offering shall be completed within 45 days after the termination of
the Subscription Offering, unless such period is extended as provided herein.
No person may purchase more than $750,000 of Conversion Shares in the
Syndicated Community Offering.
If for any reason the Syndicated Community Offering cannot be effected or
is not advisable and any shares remain unsold after the Subscription and
Community Offerings, if any, Seacoast Financial and Compass will seek to make
other arrangements for the sale of the remaining Conversion Shares. Such other
arrangements will be subject to the approval of the Division and the FDIC and
to compliance with applicable state and federal securities laws.
Restrictions on Agreements or Understandings Regarding Transfer of Conversion
Shares to Be Purchased in the Offering
Prior to the completion of the Offering, no depositor may transfer or
enter into an agreement or understanding to transfer the legal or beneficial
ownership of the Conversion Shares to be purchased by such person in the
Offering. Each depositor who submits an Order Form will be required to certify
that the purchase of Conversion Shares by such person is solely for the
purchaser's own account and that there is no agreement or understanding
regarding the sale or transfer of such shares. Seacoast Financial intends to
pursue any and all legal and equitable remedies in the event it becomes aware
of any such agreement or understanding, and will not honor orders that it
reasonably believes to involve such an agreement or understanding.
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Purchasers' Consent to the Merger
The Conversion and the Merger are interdependent transactions, and neither
will be completed unless both of them are. By subscribing for or purchasing
Conversion Shares in the Offering, subscribers and other purchasers will be
approving and consenting to the consummation of the Merger, which is expected
to occur on the tenth trading day after completion of the Conversion. The Order
Form, which each subscriber will be required to sign, contains an
acknowledgment of such approval and consent.
Procedure for Purchasing Shares
To ensure that each purchaser receives this Prospectus at least 48 hours
before the Expiration Date, Prospectuses may not be mailed any later than five
days prior to such date or be hand delivered any later than two days prior to
such date. Order Forms may be distributed only with the Prospectus.
Expiration Date. The Subscription Offering will expire at 10:00 a.m.,
Boston time on , 1998, unless extended by Seacoast Financial, with
regulatory approval, if necessary. The Community Offering, if held, may
commence during or promptly after the Subscription Offering. The Community and
Syndicated Community Offerings must be completed by , 1998, unless
extended, with regulatory approval if necessary. If the Offerings are not
completed by that date and are not so extended, subscribers will have their
funds refunded promptly, with interest. Stock orders submitted are irrevocable
until consummation or termination of the Conversion. However, if the Offering
is not consummated by , 1998 (or by the date the Merger Agreement
expires or is terminated, if earlier), the Offering will be terminated and
investors will have applicable subscription funds returned promptly with
interest (or have applicable withdrawal authorizations canceled).
Use of Order Forms. In order to purchase Conversion Shares, each purchaser
must complete an Order Form except for certain persons purchasing in the
Syndicated Community Offering as more fully described below. Any person
receiving an Order Form who desires to purchase Conversion Shares may do so by
delivering by mail to Seacoast Financial or by hand to any Compass office a
properly executed and completed Order Form, together with full payment for the
Conversion Shares purchased. The Order Form must be received prior to 10:00
a.m. Boston Time on , 1998. Once tendered, a subscriber cannot modify
or revoke an Order Form without the consent of Seacoast Financial. Each person
ordering shares must represent that he is purchasing such shares for his own
account. Seacoast Financial's interpretation of the terms and conditions of the
Conversion Plan and of the acceptability of the Order Forms will be final.
Seacoast Financial is not required to accept copies or faxes of Order Forms.
Payment for Shares. Payment for all Conversion Shares must accompany all
completed Order Forms for the purchase to be valid. Subscribers may make
payment by (i) check or money order or (ii) authorization of withdrawal from
non-transaction deposit accounts maintained with Compass. Payments made by wire
transfer will not be allowed in the Subscription and Community Offerings.
Appropriate means by which withdrawals may be authorized are provided on the
Order Forms. Once such a withdrawal amount has been authorized, Compass will
place a hold on such funds, making them unavailable to the depositor. In the
case of payments authorized to be made through withdrawal from deposit
accounts, all funds authorized for withdrawal will continue to earn interest at
the contract rate until the Offering is completed or terminated. Interest
penalties for early withdrawal applicable to certificate accounts will not
apply to withdrawals authorized for the purchase of shares; however, if a
withdrawal results in a certificate account with a balance less than the
applicable minimum balance requirement, the certificate shall be canceled at
the time of withdrawal without penalty, and the remaining balance will earn
interest at Compass's passbook rate subsequent to the withdrawal. In the case
of payments made by check or money order, Seacoast Financial will place such
funds in a segregated savings account at Compass and such funds will earn
interest at Compass's passbook rate from the date payment is received until the
Offering is completed or terminated. Such interest will be paid by check
promptly upon completion or termination of the Offering. An executed Order
Form, once received by Seacoast Financial, may not be modified, amended or
rescinded without the consent of Seacoast Financial, unless the Offering is not
completed by , 1998, in which event the Offering will be terminated and
Seacoast will return subscription funds promptly with interest (or cancel
applicable withdrawal authorizations).
Depending on market conditions, the Seacoast Financial Common Stock may be
offered for sale to the general public on a best efforts basis in the
Syndicated Community Offering by a selling group (the "Selling Group") of
broker-dealers ("Selected Dealers") to be managed by Ryan Beck and McConnell
Budd. Ryan Beck and McConnell Budd, in their discretion, will instruct Selected
Dealers as to the number of shares to be allocated to each Selected
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Dealer. Only upon allocation of shares to Selected Dealers may Selected Dealers
take orders from their customers. Investors who desire to purchase shares in
the Syndicated Community Offering directly through a Selected Dealer, which may
include Ryan Beck and McConnell Budd, are advised that the members of the
Selling Group are required either (i) upon receipt of an executed Order Form or
direction to execute an Order Form on behalf of an investor, to forward the
appropriate purchase price to Seacoast Financial for deposit in a segregated
account on or before twelve noon, Boston time, of the business day next
following such receipt or execution or (ii) upon receipt of confirmation by
such member of the Selling Group of an investor's interest in purchasing
shares, and following a mailing of an acknowledgment by such member to such
investor on the business day next following receipt of confirmation, to debit
the account of such investor on the third business day next following receipt
of confirmation and to forward the appropriate purchase price to Seacoast
Financial for deposit in the segregated account on or before 12:00 noon, Boston
time, of the business day next following such debiting. Payment for any shares
purchased pursuant to alternative (i) above must be made by check made out to
Seacoast Financial in full payment therefor. Payment for shares purchased
pursuant to alternative (ii) above may be made by wire transfer.
Owners of self-directed IRAs may use the assets of such IRAs to purchase
Conversion Shares in the Offering. Individuals who are participants in
self-directed tax-qualified plans maintained by self-employed individuals
("Keogh Plans") may use the assets in their self-directed Keogh Plan accounts
to purchase Conversion Shares in the Offering. The provisions of ERISA and IRS
regulations require that executive officers, trustees and 10% stockholders who
use self-directed IRA funds and/or Keogh Plan accounts to purchase Conversion
Shares in the Offering make such purchase for the exclusive benefit of the IRA
and/or Keogh Plan participant.
The ESOP will not be required to pay for Conversion Shares that it orders
until consummation of the Offering, provided that there is in force, from the
time the order is received, a loan commitment to lend to the ESOP the amount of
funds necessary to purchase the number of shares ordered.
Delivery of Stock Certificates. Seacoast Financial will mail certificates
representing Conversion Shares issued in the Offering to the persons entitled
thereto at the registration address noted by them on the Order Form as soon as
practicable following consummation of the Offering. Seacoast Financial will
hold any certificates returned as undeliverable until claimed by persons
legally entitled thereto or otherwise disposed of in accordance with applicable
law. Until certificates for the Conversion Shares are available and delivered
to purchasers, purchasers may not be able to sell the shares of such stock
which they ordered.
Plan of Distribution and Selling Commissions
Seacoast Financial has initially distributed Offering materials for the
Offering to certain persons by mail, with additional copies made available at
Compass's offices and by Ryan Beck and McConnell Budd. All prospective
purchasers must send payments directly to Seacoast Financial. Such funds will
be held in a segregated special escrow account at Compass and not released
until the Offering is completed or terminated.
To assist in the marketing of the Conversion Shares, Seacoast Financial
has retained Ryan Beck and McConnell Budd, broker-dealers registered with the
National Association of Securities Dealers (the "NASD"). Ryan Beck and
McConnell Budd will assist Seacoast Financial and Compass in the Offering as
follows: (i) in training and educating Compass's employees regarding the
Conversion and their roles; (ii) assisting in design and implementation of a
marketing strategy; and (iii) managing a Stock Information Center and
coordinating selling efforts. Ryan Beck and McConnell Budd have agreed to use
their best efforts to assist Seacoast Financial and Compass in the solicitation
of subscriptions for Conversion Shares in the Offering. For these services,
Ryan Beck and McConnell Budd will receive an advisory and management fee of
$50,000 in the aggregate and an aggregate marketing fee of 1.0% of the dollar
amount of the Conversion Shares sold in the Subscription and Community
Offerings (other than shares purchased by officers, directors, trustees,
employees and the ESOP). In the event that a selected dealers agreement is
entered into in connection with a Syndicated Community Offering, Seacoast
Financial will pay a fee to such selected dealers of 6.0%, including a
management fee to Ryan Beck and McConnell Budd of no more than 1.0% for shares
sold by NASD member firms, other than Ryan Beck and McConnell Budd. Seacoast
Financial will also pay to McConnell Budd a $200,000 fee, plus out-of pocket
expenses, for its ongoing investment advisory services in connection with the
Merger. McConnell Budd has previously performed financial advisory services for
Compass and been compensated for such services. Ryan Beck has not provided (and
will not provide) investment advisory services in connection with the Merger.
Seacoast Financial will also reimburse Ryan Beck and McConnell Budd for
their reasonable out-of-pocket expenses (including legal fees, up to a maximum
of $55,000 and up to $15,000 for other expenses) associated with
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<PAGE>
their marketing efforts. Seacoast Financial has made an advance payment to Ryan
Beck and McConnell Budd in the amount of $50,000 upon commencement of the
Offering. If the Conversion Plan is terminated by Seacoast Financial, the
Offering is not consummated by December 31, 1998, or if Ryan Beck and McConnell
Budd terminates the agreement with Seacoast Financial in accordance with the
provisions of such agreement, they will be entitled to receive a fee of $50,000
for their advisory and administrative services, plus reimbursement of their
reasonable out-of-pocket expenses. Seacoast Financial will indemnify Ryan Beck
and McConnell Budd against liabilities and expenses (including legal fees)
incurred in connection with certain claims or litigation arising out of or
based upon untrue statements or omissions contained in the offering material
for the Conversion Shares, including liabilities under the Securities Act.
Trustees, directors and executive officers of Seacoast Financial and
Compass may participate in the solicitation of offers to purchase Conversion
Shares. Other trained employees of Compass may participate in the Offering in
ministerial capacities, providing clerical assistance or answering questions of
a ministerial nature. Other questions of prospective purchasers will be
directed to executive officers or Ryan Beck or McConnell Budd registered
representatives. Seacoast Financial will rely on Rule 3a4-1 of the Exchange Act
so as to permit officers, trustees, directors and employees to participate in
the sale of the Conversion Shares. No officer, trustee, director or employee of
Seacoast Financial or Compass will be compensated for his participation by the
payment of commissions or other remuneration based either directly or
indirectly on transactions in the Conversion Shares.
A Stock Information Center will be established at Compass's main office,
in an area separated from Compass's banking operations. Employees will inform
prospective purchasers to direct their questions to the Stock Information
Center and will provide such persons with the telephone number of the Stock
Information Center.
Other Restrictions. Notwithstanding any other provision of the Conversion
Plan, no person is entitled to purchase any Conversion Shares to the extent
such purchase would be illegal under any federal or state law or regulation
(including state "blue-sky" laws and regulations) or would violate regulations
or policies of the NASD, particularly those regarding free riding and
withholding. Seacoast Financial and/or its agents may ask for an acceptable
legal opinion from any purchaser as to the legality of such purchase and may
refuse to honor any such purchase order if such opinion is not timely
furnished. The Conversion Plan prohibits Compass from lending funds or
extending credit to any persons to purchase Conversion Shares in the Offering.
Stock Pricing and Number of Shares to be Issued
Seacoast Financial has established a fixed Purchase Price of $10.00 per
share for each Conversion Share sold in the Offering. Federal and state
regulations require that the aggregate Purchase Price of the Conversion Shares
offered in the Offering be based on the appraised pro forma market value of the
Conversion Shares, as determined by an independent appraiser. Seacoast
Financial has engaged RP Financial, an independent appraisal firm, to conduct
such valuation. The Independent Valuation is not a recommendation for the
purchase of Conversion Shares. RP Financial has estimated that the pro forma
market value of the Conversion Shares is between $136.0 million and $184.0
million. Based on this estimate, Seacoast Financial will issue a total of
between 13,600,000 and 18,400,000 Conversion Shares at the Purchase Price. RP
Financial will update its appraisal immediately prior to completion of the sale
of the Conversion Shares. As long as the estimated pro forma market value is
not increased by more than 15% above the maximum, or decreased below the
minimum, of the Estimated Valuation Range, no resolicitation of subscribers
will be made and subscribers will not be permitted to modify or cancel their
subscriptions. For more information about RP Financial's appraisal, see "The
Conversion and the Merger--Description of the Conversion--Stock Pricing and
Number of Conversion Shares to be Issued."
Limitations upon Purchases of Conversion Shares
Individual Purchase Limitation. No person may purchase more than the
Individual Purchase Limit, generally $750,000 of Conversion Shares, in all
phases of the Offering combined, except that (i) Seacoast Financial may, in its
sole discretion and without further notice to or solicitation of subscribers or
other prospective purchasers, (x) increase such individual purchase limitation
to up to 5% of the number of Conversion Shares offered in the Offering or (z)
decrease such individual purchase limitation to no less than one-tenth of one
percent (.10%) of the number of Conversion Shares offered in the Offering; (ii)
the ESOP may purchase up to 8% of Conversion Shares issued in the Offering; and
(iii) shares to be held by the ESOP and attributable to an employee or officer
of Compass shall not be aggregated with other shares purchased directly by or
otherwise attributable to such employee or officer.
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Prior to completion of the Offering, if the maximum purchase limitation is
increased, subscribers for the maximum amount will be, and certain other large
subscribers in the sole discretion of Seacoast Financial and Compass may be,
given the opportunity to increase their subscriptions up to the then applicable
limits.
Persons and Associates and Groups Acting in Concert. No person together
with his or her associates or group of persons acting in concert with one
another may purchase more than an aggregate of $1.5 million of Conversion
Shares in all phases of the Offering combined, except that: (i) Seacoast
Financial may, in its sole discretion and without further notice to or
solicitation of subscribers or other prospective purchasers, (x) increase or
decrease such overall maximum purchase limitation to up to 5% of the number of
Conversion Shares offered in the Offering or (z) decrease such overall maximum
purchase limitation to no less than one-tenth of one percent (.10%) of the
number of Conversion Shares offered in the Offering; (ii) the ESOP may purchase
up to 8% of Conversion Shares issued in the Offering; and (iii) shares to be
held by the ESOP and attributable to an employee or officer of Compass shall
not be aggregated with other shares purchased directly by or otherwise
attributable to such employee or officer. For purposes of this paragraph,
trustees and directors of Seacoast Financial and Compass shall not be deemed to
be associates or a group acting in concert solely as a result of their
membership on the boards of those companies.
Increase in the Total Number of Shares Offered. In the event of an
increase in the total number of Conversion Shares offered due to an increase in
the Estimated Valuation Range of up to 15%, the ESOP shall have a first
priority right to purchase any such additional shares necessary to fill its
order for Conversion Shares (up to 8% of the Conversion Shares issued in the
Conversion). Any remaining shares will be allocated to subscribers according to
their respective categories in the Offering.
Rejection of Orders. Seacoast Financial has the right in its sole
discretion to reject any order submitted by a person whose representations
Seacoast Financial believes to be false or who it otherwise believes, either
alone or acting in concert with others, is violating or circumventing, or
intends to violate, evade or circumvent, the terms and conditions of the
Conversion Plan.
Subscribers in Non-Qualified States or in Foreign Countries. Seacoast
Financial may make reasonable efforts to comply with the securities laws of any
state in the United States in which its depositors reside, and will only offer
and sell the Conversion Shares in states in which such offers and sales comply
with such states' securities laws. However, no person will be offered or
allowed to purchase any Conversion Shares if he or she resides in a foreign
country or in a state of the United States with respect to which any of the
following apply: (i) a small number of persons otherwise eligible to purchase
shares under the Conversion Plan reside in such state or foreign country; (ii)
the offer or sale of Conversion Shares to such persons would require Seacoast
Financial or its employees to register, under the securities laws of such state
or foreign country, as a broker or dealer or to register or otherwise qualify
its securities for sale in such state or foreign country; or (iii) such
registration or qualification would be impracticable for reasons of cost or
otherwise.
Directors, Trustees, Officers and Corporators. The aggregate number of
Conversion Shares purchased by officers, trustees, corporators, and directors
of Seacoast Financial and Compass and their associates may not exceed 30% of
the Conversion Shares issued in the Offering.
Interpretation of the Conversion Plan
Seacoast Financial shall have the right, in its sole discretion, to
determine whether prospective purchasers are "residents," "associates" or
"acting in concert" as defined by the Conversion Plan and in interpreting any
and all other provisions of the Conversion Plan. All such determinations are in
the sole discretion of Seacoast Financial and may be based on whatever evidence
Seacoast Financial chooses to use in making any such determination.
Termination of the Offering
The Board of Trustees of Seacoast Financial may terminate the Conversion
Plan in its sole discretion, by reason of the termination of the Merger
Agreement or otherwise, at any time with the concurrence of the Commissioner.
If the minimum number of Conversion Shares offered in the Offering (13,600,000
shares) is not sold by the Expiration Date, Seacoast Financial may terminate
the Offering and promptly refund all orders for Conversion Shares.
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DESCRIPTION OF CAPITAL STOCK OF SEACOAST FINANCIAL
General
Upon consummation of the Conversion, Seacoast Financial will be authorized
to issue up to 110 million shares of capital stock, consisting of 100 million
shares of Seacoast Financial Common Stock and 10 million shares of preferred
stock, par value $.01 per share ("Seacoast Financial Preferred Stock"). As of
the date of this Prospectus, Seacoast Financial has not issued any shares of
Seacoast Financial Common Stock or Seacoast Financial Preferred Stock. Seacoast
Financial currently expects to issue between 13,600,000 and 18,400,000
Conversion Shares, with an adjusted maximum of 21,160,000 shares, in the
Offerings, and between 12,686,225 and 8,817,053 Exchange Shares in the Merger
(based on 1,953,475 shares of Sandwich Common Stock, which is exclusive of
90,000 shares owned by Seacoast Financial, and 45,203 Sandwich Options
outstanding as of June 30, 1998 and assuming Exchange Ratios of 6.4 and 4.4444,
respectively). See "The Conversion and the Merger--Description of the Merger
and Exchange Ratio" and "Pro Forma Data--Pro Forma Outstanding Seacoast
Financial Common Stock." Seacoast Financial does not currently plan to issue
any shares of Seacoast Financial Preferred Stock, either pursuant to the
Conversion or the Merger or in the foreseeable future thereafter.
Seacoast Financial Common Stock
General. Each issued and outstanding share of Seacoast Financial Common
Stock will have the same rights as, and will be identical in all respects with,
each other share of such stock. Upon payment of the Purchase Price for the
Conversion Shares, in accordance with the Conversion Plan, and upon issuance of
the Exchange Shares, in accordance with the provisions of the Merger Agreement,
all such shares will be duly authorized, fully paid, validly issued and
non-assessable.
The Seacoast Financial Common Stock will represent nonwithdrawable
capital, will not be an account that is insurable and will not be insured by
the FDIC or by the DIF.
Voting Rights. Each holder of Seacoast Financial Common Stock will be
entitled to one vote for each share of such stock held by such holder.
Holders of Seacoast Financial Common Stock will not have cumulative voting
rights in connection with the election of directors. Such holders will be able
to elect directors by a plurality of votes cast.
Dividends. Holders of Seacoast Financial Common Stock will be entitled to
receive and share equally in such dividends as the Board of Directors of
Seacoast Financial may declare out of funds legally available therefor. If
Seacoast Financial issues Seacoast Financial Preferred Stock, holders of such
stock may have a priority over holders of Seacoast Financial Common Stock with
respect to the payment of dividends. See "--Seacoast Financial Preferred
Stock." State and federal laws and regulations place limitations on the payment
of dividends. See "Seacoast Financial's Dividend Policy."
Liquidation or Dissolution. Holders of Seacoast Financial Common Stock
will receive pro rata all assets of Seacoast Financial available for
distribution after payment or provision for payment of all debts and
liabilities of Seacoast Financial (including all deposits in Compass and
accrued interest thereon) and after distribution of the liquidation account
established upon the completion of the Conversion for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders who continue their
deposit accounts at Compass. If Seacoast Financial issues Seacoast Financial
Preferred Stock, holders of such stock may have a senior interest over holders
of Seacoast Financial Common Stock in such a distribution. See "--Seacoast
Financial Preferred Stock."
No Preemptive or Redemption Rights. Holders of Seacoast Financial Common
Stock will not have preemptive rights with respect to issuances of any shares
of the capital stock of Seacoast Financial and shares of Seacoast Financial
Common Stock shall not be redeemable.
Seacoast Financial Preferred Stock
Seacoast Financial's Board of Directors may, without stockholder approval
but subject to certain regulatory approvals, create and issue one or more
series of Seacoast Financial Preferred Stock. In connection with the creation
and issuance of such stock, the Board may establish or change the number of
shares in each such series, fix and state the voting powers, designations,
preferences and the relative or special rights or privileges of the shares of
any series so established and the qualifications thereon without further vote
or action by the stockholders.
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Any issuance of Seacoast Financial Preferred Stock may have an adverse
effect on the voting and other rights of holders of Seacoast Financial Common
Stock. Each series of Seacoast Financial Preferred Stock issued after the
Conversion may rank senior to shares of Seacoast Financial Common Stock as to
dividend rights, liquidation preferences or both, may have full, limited or no
voting rights and may be convertible into shares of Seacoast Financial Common
Stock.
RESTRICTIONS ON ACQUISITION OF SEACOAST FINANCIAL AND COMPASS
Certain provisions of Seacoast Financial's Articles of Organization and
By-Laws which will become effective upon the consummation of the Conversion, as
well as provisions of the ESOP and certain state and federal laws, may have
certain "anti-takeover" effects. The provisions and laws deal with matters of
corporate governance and certain rights of stockholders, including stock
ownership and transfer, Seacoast Financial's Board of Directors and business
combinations. The provisions and laws may impede efforts to acquire Seacoast
Financial, or stock purchases in furtherance of such an acquisition, which
might otherwise have a favorable effect on the price of shares of Seacoast
Financial Common Stock. Persons considering whether to purchase Seacoast
Financial Common Stock in connection with the Conversion should give careful
attention to these provisions and laws because they will affect the rights of
Seacoast Financial's stockholders.
Although the Board of Directors of Compass and Board of Trustees of
Seacoast Financial are not aware of any effort that might be made to obtain
control of Seacoast Financial following the Conversion, the Boards believe, as
discussed below, that it is appropriate to include certain provisions in the
Articles and By-Laws to protect the interests of Seacoast Financial and its
stockholders from takeovers which the Board might conclude are not in the best
interest of Compass, Seacoast Financial or Seacoast Financial's stockholders.
In addition, these provisions will increase protections available to Seacoast
Financial against transactions that, although not resulting in an acquisition
of a majority of Seacoast Financial's capital stock, nevertheless may harm
Seacoast Financial and its stockholders by disrupting Compass's operations and
management and by causing Seacoast Financial to incur substantial expenses.
The following discussion is a general summary of the material provisions
of the Articles and By-Laws that will become effective upon consummation of the
Conversion, and of certain provisions of the ESOP and certain laws, which may
be deemed to have an "anti-takeover" effect. The following description of
certain of these provisions is necessarily general and, with respect to
provisions contained in the Articles and By-Laws, reference should be made in
each case to the document in question, each of which is part of Seacoast
Financial's application to the Commissioner and Registration Statement on Form
S-1 filed with the SEC on May 15, 1998. See "Additional Information."
Certain Provisions of the Articles and By-Laws
Definition of "Interested Stockholder" and "Disinterested Director." As
used herein, the terms "Interested Stockholder" and "Disinterested Directors"
have the same meanings ascribed to them by the Articles and By-Laws. An
"Interested Stockholder" is any person (other than Seacoast Financial, any
direct or indirect subsidiary of Seacoast Financial or any employee stock
ownership plan formed by Seacoast Financial) who or which: (i) is the
beneficial owner, directly or indirectly, of 10% or more of the voting power of
the outstanding "voting stock" (as such term is defined in the Articles) of
Seacoast Financial; (ii) is an "affiliate" (as such term is defined in the
Articles) of Seacoast Financial and at any time within the two-year period
immediately prior to the date in question was the beneficial owner, directly or
indirectly, of 10% or more of the voting power of the then outstanding voting
stock of Seacoast Financial; or (iii) is an assignee of or has otherwise
succeeded to any shares of voting stock of Seacoast Financial which were at any
time within the two-year period immediately prior to the date in question
beneficially owned by any Interested Stockholder, if such assignment or
succession shall have occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning of the
Securities Act and was not approved by two-thirds (2/3) of the Disinterested
Directors. A "Disinterested Director" is any member of the Board of Directors
of Seacoast Financial at any time when there is no Interested Stockholder or,
when there is an Interested Stockholder, any Director who (i) is not, and was
not at any time during the two-year period immediately prior to the date in
question, an Affiliate or Associate (as such terms are defined in Rule 12b-2
promulgated under the Exchange Act) of an Interested Stockholder and (ii)
either (A) was a member of the Board prior to the time that the Interested
Stockholder became an Interested Stockholder or (B) thereafter received
favorable votes for his or her nomination or election as a Director by a
majority of the Disinterested Directors then
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serving on the Board. Throughout Seacoast Financial's Articles and By-Laws, a
vote of the Disinterested Directors may be required (in addition to the vote of
the full Board of Directors) when there is an Interested Stockholder. The
required percentage vote of Disinterested Directors varies from section to
section.
Directors. The Articles and By-Laws contain certain provisions which may
make it difficult to change majority control of Seacoast Financial's Board of
Directors. The Articles provide for three classes of Directors elected for
three-year staggered terms, so that ordinarily no more than approximately
one-third of Seacoast Financial's Directors will stand for election in any one
year. Thus, it would take two annual elections to replace a majority of
Seacoast Financial's Board. The Articles also provide that stockholders shall
not have cumulative voting rights in the election of Directors. The By-Laws
provide that, subject to the foregoing requirements and applicable law, the
Board of Directors may from time to time fix the number of Directors and their
respective classifications (unless there is an Interested Stockholder, in which
case an affirmative vote of Disinterested Directors shall also be required).
The By-Laws also provide that any vacancy occurring in the Board of Directors,
including vacancies resulting from an increase in the number of Directors, may
be filled only by a vote of a majority of the Directors (even if such Directors
do not constitute a quorum), unless at the time there is an Interested
Stockholder, in which case such vacancy may be filled only by vote of a
majority of the Disinterested Directors then in office. In addition, the
By-Laws impose certain advance notice and informational requirements on the
nomination by stockholders of candidates for election to the Board of
Directors. Finally, the Articles provide that Directors may be removed only for
cause and only by an affirmative vote of two-thirds (2/3) of the outstanding
shares of Seacoast Financial entitled to vote on such removal.
Meetings of Stockholders. The Articles and By-Laws provide that a special
meeting of stockholders may be called at any time only by a majority of the
Directors then in office (provided, however, that, if there is an Interested
Stockholder, any such call by the Board of Directors shall also require an
affirmative vote of Disinterested Directors) or upon application by one or more
stockholders who hold at least two-thirds (2/3) of the capital stock entitled
to vote at such meeting. Only those matters set forth in the call of the
special meeting may be considered or acted upon at such meeting, unless
otherwise provided by law. With respect to annual meetings of stockholders, the
By-Laws impose certain advance notice and informational requirements for any
business which a stockholder may wish to propose for consideration at such a
meeting.
Authorized Stock. The Articles authorize the Board of Directors to issue
any of the 100,000,000 shares of Seacoast Financial Common Stock not issued in
the Conversion and the Merger and any of the 10,000,000 shares of Seacoast
Financial Preferred Stock which are authorized but unissued. See "Description
of Capital Stock of Seacoast Financial--General." The Board of Directors may,
without approval of Seacoast Financial's stockholders, designate and issue
shares of one or more series of Seacoast Financial Preferred Stock, establish
or change from time to time the number of shares to be included in each such
series, fix and state the voting powers, designations, preferences and the
relative or special rights of the shares of any series so established and the
qualifications thereon. See "Description of Capital Stock of Seacoast Financial
- --General." In the event of a proposed merger, tender offer or other attempt to
gain control of Seacoast Financial that the Board of Directors does not
approve, it might be possible for the Board of Directors to authorize the
issuance of a series of Seacoast Financial Preferred Stock with rights and
preferences that might impede the completion of such a transaction. Seacoast
Financial has no present plans or understandings for the issuance of any shares
of Seacoast Financial Preferred Stock.
Vote Required to Approve Business Combinations Involving Interested
Stockholders. The Articles contain a so-called "fair price" provision pursuant
to which certain acquisitions, stock issuances, liquidations or
recapitalizations (such transactions being referred to as "Business
Combinations" in the Articles) involving an Interested Stockholder and Seacoast
Financial or any subsidiary thereof would require stockholder approval by the
affirmative vote of holders of at least 80% of the outstanding shares of
Seacoast Financial entitled to vote in elections of directors. The provision
does not require an 80% stockholder vote for approval of a Business Combination
if at least one Disinterested Director is then in office and such transaction
is approved by two-thirds (2/3) of Disinterested Directors or if certain
procedures and price requirements are met. An affirmative vote of the holders
of at least 80% of the outstanding voting stock shall be required to amend or
repeal, or adopt any provisions inconsistent with, the fair price provision.
Vote Required for Certain Transactions. The Articles further provide that
any (i) sale, lease or exchange of all or substantially all of Seacoast
Financial's property or assets, including goodwill or (ii) Seacoast Financial's
merger, share exchange or consolidation with or into any other entity, must be
approved by an affirmative vote of
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at least 75% of the total votes that may be cast by Seacoast Financial's
stockholders on such a transaction. However, only a majority vote of Seacoast
Financial's stockholders is necessary to approve a merger, share exchange or
consolidation if the voting stock of Seacoast Financial outstanding immediately
before such transaction will represent immediately after the transaction more
than 70% of the outstanding voting stock of the company that will survive the
transaction.
Restrictions on Acquisitions of Securities. The Articles provide that, for
a period of five years following the date of completion of Seacoast Financial's
initial issuance of Seacoast Financial Common Stock, no person shall directly
or indirectly offer to acquire or acquire the beneficial ownership of more than
10% of the issued and outstanding voting stock of Seacoast Financial. Shares
acquired in excess of this limitation will not be entitled to vote or to take
other stockholder action or to be counted in determining the total number of
outstanding shares for purposes of any matter involving stockholder action, and
such shares may be required to be sold through an independent trustee. The
foregoing limitation does not apply to: (i) any acquisition of shares of voting
stock which has been approved in advance by an affirmative vote of not less
than two-thirds (2/3) of the Directors then in office (plus an affirmative vote
of Disinterested Directors if there is an Interested Stockholder); (ii) any
offer with a view toward public resale made exclusively to Seacoast Financial
or to any underwriter acting on behalf of Seacoast Financial or to the selling
group acting on the underwriter's behalf in connection with a public offering
of Seacoast Financial's capital stock; or (iii) a corporate reorganization
without a change in the respective beneficial ownership interests of Seacoast
Financial's stockholders other than pursuant to the exercise of any dissenters'
appraisal rights.
Provisions for Amendment of Articles and By-Laws. The Articles provide
that, in general, they may be amended only by a vote of at least 75% of the
votes eligible to be cast by Seacoast Financial's stockholders or by a majority
of such votes if the Board of Directors recommends an amendment by an
affirmative vote of two-thirds (2/3) of the Disinterested Directors. In
addition, any provision of the Articles which requires a greater than majority
vote of stockholders will not be able to be amended except by such greater
vote. The Articles also provide that the By-Laws may be amended by a vote of
75% of the votes eligible to be cast by Seacoast Financial's stockholders or by
a majority of such votes if the Board of Directors recommends an amendment by
an affirmative vote of two-thirds (2/3) of the Directors (plus an affirmative
vote of Disinterested Directors if there is an Interested Stockholder). In
addition, the Directors may amend the By-Laws themselves by a majority vote
(plus an affirmative vote of Disinterested Directors if there is an Interested
Stockholder).
Matters to be Considered at Annual Meeting of Stockholders. The By-Laws
provide only two methods of placing proposals on the agenda of an annual
meeting of stockholders: (i) the Board of Directors, the Chairman of the Board
or the President of Seacoast Financial may present a proposal for consideration
or (ii) any stockholder may submit a proposal. However, stockholders can submit
a proposal only by delivering a notice thereof to the Clerk at least 60 days
(but not more than 150 days) in advance of such meeting. Such notice must state
the stockholder's name, the name of other stockholders who support the proposal
and the class and number of shares owned by them, must describe the matter
proposed and the reason for considering it at the annual meeting and must set
forth any financial interest that the proposing stockholder has in the
proposal. The Board of Directors may reject a stockholder's proposal if such
stockholder does not fully and timely comply with the foregoing notice
requirement.
Purpose and Takeover Defensive Effects of Articles and By-Laws. The Boards
of Seacoast Financial and Compass believe that the provisions described above
are prudent and will reduce Seacoast Financial's vulnerability to takeover
attempts and to certain other transactions which have not been negotiated with
and approved by Seacoast Financial's Board of Directors. These provisions will
also assist Seacoast Financial and Compass in the orderly deployment of the
Offering proceeds into productive assets during the initial period after the
Offering. The Boards believe these provisions are in the best interests of
Compass, Seacoast Financial and its stockholders. Attempts to acquire control
of financial institutions and their holding companies have become increasingly
common. Takeover attempts which have not been negotiated with and approved by
boards of directors present to stockholders the risk of a takeover on terms
which may be less favorable than might otherwise be available. A transaction
which is negotiated and approved by the Board of Directors of Seacoast
Financial, on the other hand, can be carefully planned and undertaken at an
opportune time in order to obtain maximum value for Seacoast Financial and its
stockholders, with due consideration given to matters such as the management
and business of the acquiring corporation and maximum strategic development of
Seacoast Financial's assets.
An unsolicited takeover proposal can seriously disrupt the business and
management of a corporation and cause it great expense. Although a tender offer
or other takeover attempt may be made at a price substantially above then-
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current market prices, such offers are sometimes made for less than all of the
outstanding shares of a target company. As a result, stockholders may be
presented with the alternative of partially liquidating their investment at a
time that may be disadvantageous or retaining their investment in an enterprise
which is under different management and the objectives of which may not be
similar to those of the remaining stockholders.
Potential Anti-Takeover Effects. Despite the belief of Compass and
Seacoast Financial as to the benefits to stockholders of the provisions
described above, these provisions will have the effect of discouraging any
takeover attempt which would not be approved either by regulatory policy or by
Seacoast Financial's Board of Directors but pursuant to which stockholders may
receive a substantial premium for their shares over then-current market prices.
As a result, stockholders who might desire to participate in such a transaction
may not have any opportunity to do so. Such provisions will also make it more
difficult to remove the Board and Seacoast Financial's management. The Boards
of Compass and Seacoast Financial, however, have concluded that the potential
benefits outweigh the possible disadvantages.
Pursuant to applicable law, at any annual or special meeting of its
stockholders after the Offering, Seacoast Financial may amend the Seacoast
Financial Articles of Organization to add provisions regarding the acquisition
of its equity securities that would be permitted to a Massachusetts
corporation. Seacoast Financial and Compass do not presently intend to propose
the adoption of further restrictions on the acquisition of Seacoast Financial's
equity securities.
Employee Stock Ownership Plan
The ESOP, which expects to subscribe to purchase 8% of the Conversion
Shares sold in the Offering, contains certain provisions permitting
participating employees to direct the voting of shares held in the ESOP. Such
provisions may be considered to have anti-takeover effects. See "Management of
Seacoast Financial and Compass--Compensation of Officers and Directors Through
Benefit Plans--Employee Stock Ownership Plan and Trust."
FRB Regulations
The Change in Bank Control Act and the BHCA, together with FRB regulations
promulgated under those acts, require that the consent of the FRB be obtained
prior to any person or company acquiring "control" of a bank holding company.
Control is conclusively presumed to exist if an individual or company acquires
more than 25% of any class of voting stock of the bank holding company. Control
is rebuttably presumed to exist if the person acquires more than 10% of any
class of voting stock of a bank holding company and if either (i) the company
has registered securities under Section 12 of the Exchange Act or (ii) no other
person will own a greater percentage of that class of voting securities
immediately after the transaction. The regulations provide a procedure to rebut
the foregoing presumption. Since Seacoast Financial Common Stock will be
registered under Section 12 of the Exchange Act, any acquisition of 10% or more
of the outstanding Seacoast Financial Common Stock will give rise to a
rebuttable presumption that the acquiror of such stock controls Seacoast
Financial, requiring the acquiror, prior to acquiring such stock, to rebut the
presumption of control to the satisfaction of the FRB or obtain FRB approval
for the acquisition of control.
Restrictions applicable to the operations of bank holding companies may
also deter companies from seeking to obtain control of Seacoast Financial. See
"Regulation of Seacoast Financial and Compass."
Massachusetts Banking Law
Massachusetts banking law also prohibits any "company," defined to include
banking institutions as well as corporations, from directly or indirectly
controlling the voting power of 25% or more of the voting stock of two or more
banking institutions without the prior approval of the BBI. Additionally, an
out-of-state company which already directly or indirectly controls voting power
of 25% or more of the voting stock of two or more banking institutions may not
also acquire direct or indirect ownership or control of more than 5% of the
voting stock of a Massachusetts banking institution without the prior approval
of the BBI. Finally, for a period of three years following completion of a
conversion to stock form, no person may directly or indirectly offer to acquire
or acquire beneficial ownership of more than 10% of any class of equity
security of a converting mutual holding company without prior written approval
of the Commissioner.
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Massachusetts Anti-Takeover Laws
The Massachusetts General Laws contain two anti-takeover statutes that are
applicable to certain public corporations in Massachusetts--Chapter 110F, the
"business combinations" law and Chapter 110D, the "control share acquisition"
law. Seacoast Financial's Articles contain a provision opting out of the
applicability of Chapters 110F and 110D, in light of the provisions contained
in Seacoast Financial's Articles that provide similar anti-takeover
protections.
TRANSFER AGENT AND REGISTRAR FOR SEACOAST FINANCIAL COMMON STOCK
Registrar and Transfer Company will act as the transfer agent and
registrar for issued and outstanding shares of Seacoast Financial Common Stock.
LEGAL OPINIONS
The legality of the Conversion Shares and the Exchange Shares, and certain
tax matters, will be passed upon for Seacoast Financial by Foley, Hoag & Eliot
LLP, Boston, Massachusetts. Foley, Hoag & Eliot LLP has consented to the
references herein to its opinions. Certain legal matters will be passed upon
for Ryan Beck and McConnell Budd by Luse Lehman Gorman Pomerenk & Schick, P.C.,
Washington, D.C.
EXPERTS
The consolidated financial statements of Seacoast Financial as of October
31, 1997 and 1996 and for each of the years in the three-year period ended
October 31, 1997 appearing herein have been audited by Arthur Andersen LLP,
independent public accountants, as stated in its reports appearing elsewhere
herein, and have been so included in reliance upon the reports of such firm
given upon its authority as an expert in accounting and auditing.
The consolidated financial statements of Sandwich Bancorp and subsidiaries
as of December 31, 1997 and 1996 and for each of the years in the three-year
period ended December 31, 1997 have been included herein and in the
Registration Statement on Form S-1 of which this Prospectus represents a part
in reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, appearing elsewhere herein, and upon the authority of said
firm as experts in accounting and auditing.
RP Financial has consented to the publication herein of the summary of its
report to Seacoast Financial setting forth its opinion as to the estimated pro
forma market value of the Conversion Shares upon their conversion and its
valuation with respect to subscription rights issued under the Conversion Plan.
ADDITIONAL INFORMATION
Seacoast Financial has filed with the SEC a Registration Statement on Form
S-1 (the "Registration Statement") under the Securities Act with respect to the
Conversion Shares offered hereby. As permitted by the rules and regulations of
the SEC, this Prospectus does not contain all of the information set forth in
the Registration Statement and the exhibits and schedules thereto. Also, since
the effective date of the Registration Statement, Seacoast Financial has been
subject to the annual and periodic reporting requirements of the Exchange Act
pursuant to Section 15(d) of such act. In addition, Sandwich Bancorp is subject
to the informational requirements of the Exchange Act, and, in accordance
therewith, files reports, proxy statements and other information with the SEC.
The Registration Statement, and the reports and other information of
Seacoast Financial and Sandwich Bancorp, can be examined, without charge, and
copied, at prescribed rates, at the public reference facilities of the SEC
located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549 and at the Regional Offices of the SEC located at Suite 1400, 500 West
Madison Street, Chicago, Illinois 60661 and 7 World Trade Center, Thirteenth
Floor, New York, N.Y. 10048. In addition, the SEC maintains a web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. The address of
this web site is http://www.sec.gov. Sandwich Bancorp's materials are also
available for inspection at the office of the Nasdaq Stock Market, Reports
Section, 1735 K Street, N.W., Washington, D.C. 20006.
The statements contained herein as to the contents of any contract or
other document are, of necessity, brief descriptions thereof and are not
necessarily complete but do contain all material information regarding such
documents. In each instance of such a statement, if such contract or document
is filed as an exhibit to the Registration
143
<PAGE>
Statement or to reports, proxy statements and other information filed by
Seacoast Financial and Sandwich Bancorp with the SEC, reference is made to the
copy of the contract or document filed as such exhibit, each of such statements
being qualified in all respects by such reference.
Seacoast Financial has filed the Conversion Application with the
Commissioner. Pursuant to the rules and regulations of the Commissioner, this
Prospectus omits certain information contained in the Conversion Application,
including the Conversion Plan and the Independent Valuation. The Conversion
Application may be examined at the office of the Commissioner, at 100 Cambridge
Street, Boston, Massachusetts, and at the main office of Seacoast Financial, at
791 Purchase Street, New Bedford, Massachusetts, without charge.
In connection with the Conversion, Seacoast Financial will register the
Seacoast Financial Common Stock with the SEC under Section 12(g) of the
Exchange Act. Upon such registration, Seacoast Financial and the holders of
Seacoast Financial Common Stock will become subject to the proxy solicitation
rules, reporting requirements and restrictions on stock purchases and sales by
directors, officers and greater than 10% stockholders and the annual and
periodic reporting and certain other requirements of the Exchange Act. Under
the Conversion Plan, Seacoast Financial has undertaken that it will not
terminate such registration for a period of at least three years following the
Offering.
A copy of the Articles of Organization and By-Laws of Seacoast Financial
are available without charge from Seacoast Financial by contacting Francis S.
Mascianica, Jr., Treasurer, at 791 Purchase Street, New Bedford, Massachusetts
02740 or at (508) 984-6000.
144
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Report of Independent Public Accountants ................................................. F-2
Consolidated Balance Sheets as of May 31, 1998 (Unaudited) and October 31, 1997 and 1996 . F-3
Consolidated Statements of Income for the Seven Months ended May 31, 1998 and 1997
(Unaudited) and the Years Ended October 31, 1997, 1996 and 1995 ......................... F-4
Consolidated Statements of Changes in Surplus for the Seven Months Ended May 31, 1998
(Unaudited) and the Years Ended October 31, 1997, 1996 and 1995 ......................... F-5
Consolidated Statements of Cash Flows for the Seven Months Ended May 31, 1998 and 1997
(Unaudited) and the Years Ended October 31, 1997, 1996 and 1995 ......................... F-6
Notes to Consolidated Financial Statements ............................................... F-8
</TABLE>
All schedules are omitted because they are not required or applicable, or
the required information is shown in the financial statements or notes thereto.
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Audit Committee of
Seacoast Financial Services Corporation:
We have audited the accompanying consolidated balance sheets of Seacoast
Financial Services Corporation (formerly The 1855 Bancorp) and subsidiary (the
Bank) as of October 31, 1997 and 1996, and the related consolidated statements
of income, changes in surplus and cash flows for each of the three years in the
period ended October 31, 1997. These consolidated financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Seacoast Financial Services Corporation and subsidiary as of October 31,
1997 and 1996, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended October 31, 1997, in
conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 25, 1997 (except with respect to
the matters discussed in Note 16, as to
which the date is March 31, 1998)
F-2
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
October 31,
-----------------------------
May 31,
1998 1997 1996
------------ ------------- -------------
(Unaudited)
<S> <C> <C> <C>
ASSETS:
Cash and due from banks .................................. $ 34,561 $ 25,611 $ 34,511
Federal funds sold ....................................... 10,440 7,150 53
---------- ---------- ----------
Total cash and cash equivalents ...................... 45,001 32,761 34,564
Investment securities (Note 2)--
Available-for-sale, at fair value ....................... 183,340 209,316 200,306
Held-to-maturity, at amortized cost ..................... 13,649 12,633 11,752
Restricted equity securities ............................ 5,286 5,156 4,645
Loans held-for-sale (Note 1) ............................. 19,810 4,277 4,394
Loans, net (Notes 3 and 13) .............................. 873,914 809,555 737,779
Accrued interest receivable .............................. 6,782 5,805 5,422
Banking premises and equipment, net (Note 5) ............. 13,932 12,254 12,588
Other real estate owned (Note 4) ......................... 1,395 1,707 2,598
Net deferred tax asset (Note 9) .......................... 5,877 6,988 8,276
Other assets (Notes 1 and 12) ............................ 7,573 6,138 5,440
---------- ---------- ----------
Total assets ......................................... $1,176,559 $1,106,590 $1,027,764
========== ========== ==========
LIABILITIES AND SURPLUS:
Deposits (Note 6) ........................................ $ 982,351 $ 937,948 $ 882,608
Short-term borrowings (Notes 2 and 7) .................... 12,213 9,697 3,925
Federal Home Loan Bank advances (Note 8) ................. 64,572 51,006 45,375
Other borrowings (Note 12) ............................... 289 -- 648
Mortgagors' escrow payments .............................. 1,059 1,002 890
Accrued expenses and other liabilities (Note 12) ......... 9,565 8,796 9,401
---------- ---------- ----------
Total liabilities .................................... 1,070,049 1,008,449 942,847
---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES
(Notes 9, 10 and 13)
SURPLUS (Note 11) ........................................... 104,193 96,527 84,743
NET UNREALIZED GAIN ON INVESTMENT
SECURITIES AVAILABLE-FOR-SALE, NET OF
INCOME TAXES ............................................... 2,317 1,614 174
---------- ---------- ----------
Total surplus ........................................ 106,510 98,141 84,917
---------- ---------- ----------
Total liabilities and surplus ........................ $1,176,559 $1,106,590 $1,027,764
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands)
<TABLE>
<CAPTION>
Seven Months Ended
May 31, Years Ended October 31,
-------------------------- ------------------------------------
1998 1997 1997 1996 1995
------------- ---------- ---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME:
Interest on loans (Note 3) .............................. $41,580 $37,375 $65,499 $60,423 $52,459
Interest and dividends on investment securities ......... 7,523 7,560 13,298 12,756 12,756
Interest on federal funds sold .......................... 887 708 1,235 947 1,257
------- ------- ------- ------- -------
Total interest and dividend income .................. 49,990 45,643 80,032 74,126 66,472
------- ------- ------- ------- -------
INTEREST EXPENSE:
Interest on deposits .................................... 22,360 20,546 36,109 34,621 31,852
Interest on borrowed funds .............................. 2,672 2,106 3,722 2,624 2,687
------- ------- ------- ------- -------
Total interest expense .............................. 25,032 22,652 39,831 37,245 34,539
------- ------- ------- ------- -------
Net interest income ................................. 24,958 22,991 40,201 36,881 31,933
PROVISION (CREDIT) FOR POSSIBLE LOAN
LOSSES (Note 3) ........................................... 536 890 1,865 1,166 (351)
------- ------- ------- ------- -------
Net interest income after provision
(credit) for possible loan losses ................ 24,422 22,101 38,336 35,715 32,284
------- ------- ------- ------- -------
NONINTEREST INCOME:
Deposit and other banking fees .......................... 1,841 1,760 3,213 2,733 2,271
Loan servicing fees (Note 3) ............................ 305 342 571 607 584
Card fee income, net .................................... 195 138 398 354 402
Other loan fees ......................................... 277 250 449 412 386
Gain (loss) on sales of investment
securities, net ........................................ (3) 23 37 60 (84)
Gain on sales of loans, net ............................. 568 190 542 181 94
Other income ............................................ 590 405 733 799 750
-------- ------- ------- ------- -------
Total noninterest income ............................ 3,773 3,108 5,943 5,146 4,403
-------- ------- ------- ------- -------
NONINTEREST EXPENSE:
Salaries and employee benefits (Note 12) ................ 8,534 8,041 13,633 12,890 12,747
Occupancy and equipment expenses (Notes 5
and 10) ................................................ 2,023 1,911 3,344 3,276 2,970
Data processing expenses ................................ 1,417 1,230 2,192 2,049 1,896
Marketing expenses ...................................... 792 542 1,225 743 901
Professional services expenses .......................... 645 647 1,044 975 950
Deposit insurance premiums .............................. 90 58 121 392 1,198
Other real estate owned expenses, net (Note 1) .......... 138 293 519 644 1,072
Other operating expenses ................................ 1,936 1,949 2,732 3,189 2,956
-------- ------- ------- ------- -------
Total noninterest expense ........................... 15,575 14,671 24,810 24,158 24,690
-------- ------- ------- ------- -------
Income before provision for
income taxes .................................... 12,620 10,538 19,469 16,703 11,997
PROVISION FOR INCOME TAXES (Note 9) ........................ 4,954 4,254 7,685 6,548 4,511
-------- ------- ------- ------- -------
Net income .......................................... $7,666 $ 6,284 $11,784 $10,155 $ 7,486
======== ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SURPLUS
FOR THE SEVEN MONTHS ENDED MAY 31, 1998 (UNAUDITED)
AND FOR THE YEARS ENDED OCTOBER 31, 1997, 1996 AND 1995
(In Thousands)
<TABLE>
<CAPTION>
Net Unrealized Gain
(Loss) on Securities
Classified as
Available-for-Sale,
Surplus Net of Income Taxes Total Surplus
----------- --------------------- --------------
<S> <C> <C> <C>
BALANCE, OCTOBER 31, 1994 ............................... $ 67,102 $ (1,910) $ 65,192
Net income ........................................... 7,486 -- 7,486
Change in unrealized loss on securities
available-for-sale .................................. -- 1,926 1,926
-------- -------- --------
BALANCE, OCTOBER 31, 1995 ............................... 74,588 16 74,604
Net income ........................................... 10,155 -- 10,155
Change in unrealized gain on securities
available-for-sale .................................. -- 158 158
-------- -------- --------
BALANCE, OCTOBER 31, 1996 ............................... 84,743 174 84,917
Net income ........................................... 11,784 -- 11,784
Change in unrealized gain on securities
available-for-sale .................................. -- 1,440 1,440
-------- -------- --------
BALANCE, OCTOBER 31, 1997 ............................... 96,527 1,614 98,141
Net income (unaudited) ............................... 7,666 -- 7,666
Change in unrealized gain on securities available-for-
sale (unaudited) .................................... -- 703 703
-------- -------- --------
BALANCE, MAY 31, 1998 (UNAUDITED) ....................... $104,193 $ 2,317 $106,510
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Seven Months Ended
May 31, Years Ended October 31,
------------------------- --------------------------------------
1998 1997 1997 1996 1995
------------ ------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................... $ 7,666 $ 6,284 $ 11,784 $ 10,155 $ 7,486
Adjustments to reconcile net income to net cash
provided by (used in) operating activities--
Depreciation and amortization of premises
and equipment ..................................... 847 818 1,420 1,301 1,066
Amortization and accretion, net ..................... 386 569 906 337 349
Provision (credit) for possible loan losses ......... 536 890 1,865 1,166 (351)
(Gain) loss on sale of investment securities ........ 3 (23) (37) (60) 84
Write-down of other real estate owned ............... 43 149 198 385 749
Provision for deferred (prepaid) taxes .............. 547 318 453 (757) 648
Originations of loans held-for-sale ................. (60,893) (15,650) (30,014) (19,006) (16,917)
Proceeds from sales of loans originated
for resale ........................................ 45,928 16,273 34,268 35,441 18,921
Gain on sales of loans .............................. (568) (190) (542) (181) (94)
Loss on sale of premises and equipment .............. -- -- -- 5 --
Changes in assets and liabilities, net of effects
from acquisition of Martha's Vineyard
National Bank
Net increase in accrued interest receivable ....... (977) (1,289) (383) -- (283)
Net (increase) decrease in other assets ........... 1,584 457 (714) 3,770 170
Net increase (decrease) in accrued expenses
and other liabilities ........................... 769 (1,447) (605) 1,932 1,154
--------- --------- ---------- ---------- ---------
Net cash (used in) provided by
operating activities ........................... (7,297) 7,159 18,599 34,488 12,982
--------- --------- ---------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Martha's Vineyard National Bank,
net of cash acquired ................................ -- -- -- -- (7,301)
Purchase of securities classified as
available-for-sale .................................. (37,720) (47,190) (104,748) (77,055) (33,303)
Purchase of securities classified as
held-to-maturity .................................... (5,433) (3,489) (5,971) (6,924) (39,364)
Proceeds from sales, calls and maturities of
securities classified as available-for-sale ......... 54,194 32,262 87,831 105,166 46,969
Proceeds from maturities and calls of securities
classified as held-to-maturity ...................... 4,300 3,069 5,069 9,600 40,661
Purchase of premises and equipment ................... (2,525) (530) (1,123) (1,670) (2,019)
Purchase of loans .................................... (6,736) (500) (4,461) (8,859) (8,313)
Net increase in loans ................................ (58,637) (30,913) (78,620) (106,726) (64,016)
Recoveries of loans previously charged off ........... 230 227 377 389 890
Proceeds from sales of other real estate owned ....... 517 1,409 2,315 2,722 4,033
Principal receipts from mortgage-backed
investments classified as available-for-sale ........ 10,516 7,766 12,722 9,654 1,180
Principal receipts from mortgage-backed -- -- -- 676 5,491
investments classified as held-to-maturity ........... -- -- -- 4 --
Proceeds from sales of premises and equipment ........ -- -- -- 4 --
--------- --------- ---------- ---------- ---------
Net cash (used in) investing activities .......... (41,294) (37,889) (86,609) (73,023) (55,092)
--------- --------- ---------- ---------- ---------
</TABLE>
F-6
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)
(In Thousands)
<TABLE>
<CAPTION>
Seven Months Ended
May 31, Years Ended October 31,
----------------------- ---------------------------------------
1998 1997 1997 1996 1995
----------- ----------- ------------- ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in NOW accounts and
demand deposits .................................... $ 8,362 $ 2,094 $ (11,072) $ 15,441 $ 19,949
Increase (decrease) in passbook and other
savings accounts ................................... 13,123 (630) 29,014 (7,743) (21,969)
Increase in term certificates ....................... 22,918 26,143 37,398 15,187 58,350
Advances from Federal Home Loan Bank ................ 21,586 15,192 17,007 16,992 55,719
Repayments of Federal Home Loan Bank
advances ........................................... (8,020) (6,550) (11,376) (10,981) (47,821)
Increase (decrease) in short-term and
other borrowings ................................... 2,805 1,361 5,124 2,759 (1,289)
Increase (decrease) in mortgagors'
escrow payments .................................... 57 22 112 (111) 119
-------- -------- --------- --------- ---------
Net cash provided by
financing activities ......................... 60,831 37,632 66,207 31,544 63,058
-------- -------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS .................................. 12,240 6,902 (1,803) (6,991) 20,948
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR ..................................... 32,761 34,564 34,564 41,555 20,607
-------- -------- --------- --------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD ......................................... $ 45,001 $ 41,466 $ 32,761 $ 34,564 $ 41,555
======== ======== ========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid on deposits and borrowed funds ........ $ 24,982 $ 22,556 $ 39,734 $ 37,244 $ 34,492
Income taxes paid ................................... 3,868 4,076 8,434 6,264 3,342
SUPPLEMENTAL DISCLOSURE OF NONCASH
TRANSACTIONS:
Transfers from loans to other real estate owned ..... 1,098 2,023 3,333 2,430 5,783
Financed other real estate owned sales .............. 850 809 1,460 638 2,881
Loans securitized into mortgage-backed
investments classified as available-for-sale ....... -- -- 3,595 20,837 2,532
Transfer of investments from held-to-maturity
to available-for-sale .............................. -- -- -- 138,701 --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Compass Bank for Savings was reorganized into a mutual bank holding
company operating under the name of Seacoast Financial Services Corporation,
formerly The 1855 Bancorp, (The Bancorp) on October 1, 1994 under the
provisions of Massachusetts general law. A new Massachusetts savings bank in
stock form, known as Compass Bank for Savings, was chartered as a wholly owned
subsidiary of the Bancorp. All deposits of the Bank, as defined below, are
insured by the Federal Deposit Insurance Corporation (FDIC) and the Depositors
Insurance Fund.
The accompanying consolidated financial statements include the accounts of
the Bancorp and its wholly owned subsidiary, Compass Bank for Savings,
(collectively referred to as the Bank). Compass Bank for Savings has four
wholly owned subsidiaries--Compass Credit Corporation which engages in buying,
selling and originating automobile loans and other extensions of credit; the
1855 Corporation which engages in leasing of property primarily for Bank use;
CB Securities Corporation which engages in the investment of securities; and
Buffinton-Brook Realty Corporation which is currently inactive. The 1855
Corporation has two wholly owned subsidiaries--Purchase Corporation and North
Front Street, Inc., which engage in the management of real estate acquired from
the Bank through foreclosure. All significant intercompany balances and
transactions have been eliminated in consolidation.
The accompanying consolidated 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 and disclosure of
contingent assets and liabilities as of the date of the balance sheets and
income and expenses during the reporting periods. Actual results could differ
from those estimates. Material estimates that are particularly susceptible to
change relate to the determination of the allowance for possible loan losses
and the valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans.
In the opinion of management, the unaudited consolidated financial
statements presented herein reflect all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation. Interim results are
not necessarily indicative of the results to be expected for the entire year.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include
cash, amounts due from banks and federal funds sold. Federal funds are sold
with maturities of one day.
Investment Securities
Debt securities that the Bank has the positive intent and ability to hold
to maturity are classified as held-to-maturity and reported at cost, adjusted
for amortization of premiums and accretion of discounts, both computed by a
method that approximates the effective yield method; debt and equity securities
that are bought and held principally for the purpose of selling them in the
near term are classified as trading and reported at fair value, with unrealized
gains and losses included in earnings. The Bank has no securities held for
trading. Debt and equity securities not classified as either held-to-maturity
or trading are classified as available-for-sale and reported at fair value,
with unrealized gains and losses excluded from earnings and reported as a
separate component of surplus, net of taxes. The Bank classifies its securities
based on the Bank's intention at the time of purchase.
Restricted equity securities are reported at cost.
Unrealized losses deemed to be other than temporary declines in value are
charged to operations. When securities are sold, the adjusted cost of the
specific security sold is used to compute gains or losses on the sale.
F-8
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loans, Deferred Fees and Allowance for Possible Loan Losses
Loans are stated at the amount of unpaid principal, reduced by amounts due
to borrowers on unadvanced loans, net deferred loan fees, unearned discount and
the allowance for possible loan losses.
Unearned discount is recognized on the level-yield method for discounted
installment loans. All other interest on loans is recognized on a simple
interest basis.
Deferred loan origination fees and certain deferred loan origination costs
are amortized over the contractual life of the related loan using the
level-yield method. At May 31, 1998 and October 31, 1997 and 1996, the Bank had
net deferred loan fees of approximately $756,000, $805,000 and $740,000,
respectively.
It is the policy of the Bank to discontinue the accrual of interest on
loans delinquent in excess of 90 days or sooner if in the judgment of
management the ultimate collectibility of principal or interest becomes
doubtful and to reverse all interest previously accrued. Interest income is
subsequently recognized only to the extent cash payments are received.
Loans are considered impaired when it is probable that the Bank will not
be able to collect principal, interest and fees according to the contractual
terms of the loan agreement. Management considers the paying status, net worth
and earnings potential of a borrower, and the value and cash flow of the
collateral as factors to determine whether a loan will be paid in accordance
with its contractual terms. The amount judged to be impaired is the difference
between the present value of the expected cash flows using as a discount rate
the original contractual effective interest rate and the recorded investment of
the loan. If foreclosure on a collateralized loan is probable, impairment is
measured based on the fair value of the collateral compared to the recorded
investment. If appropriate, a valuation reserve is established to recognize the
difference between the recorded investment and the present value. Impaired
loans are charged off when management believes that the collectibility of the
loan is remote. The Bank generally considers nonaccrual loans, except for
smaller balance homogeneous residential and consumer loans, and troubled debt
restructures to be impaired. All impaired loans are classified as nonaccrual.
The allowance for possible loan losses is maintained at a level considered
adequate to provide for potential loan losses. The allowance is increased by
provisions charged to operations, and realized losses, net of recoveries, are
charged directly to the allowance. The provision and the level of the allowance
are based on management's periodic review of the loan portfolio in light of
historical experience and prevailing economic conditions. The allowance is an
estimate, and ultimate losses may vary from current estimates. As adjustments
become necessary, they are reported in the results of operations of the period
in which they become known.
Loan Sales
Loans held for sale are valued at the lower of the recorded loan balance
or market value. The Bank enters into forward commitments to sell loans for the
purpose of reducing interest rate risk associated with the origination of loans
for sale. Unrealized losses on contracts used to hedge the Bank's closed loans
and pipeline of loans expected to close are considered in adjusting the
carrying value of loans held for sale. No adjustments for unrealized losses
were required at May 31, 1998 and October 31, 1997 and 1996.
Prior to November 1, 1996, gains and losses on sales of loans were
recognized based on the difference between the selling price and the carrying
value of the related loans sold. When the servicing of such loans was retained
by the Bank, gains and losses were adjusted by the present value of the
difference, if any, between the weighted average interest rate on the loans
sold, adjusted for a normal servicing fee, and the agreed yield to the buyer.
At October 31, 1996 and 1995, the deferred loan sale premium resulting from
such sales amounted to approximately $64,000 and $144,000, respectively, and is
included in other assets in the accompanying consolidated balance sheets.
Effective November 1, 1996, the Bank adopted Statement of Financial
Accounting Standards (SFAS No.) 122, Accounting for Mortgage Servicing Rights.
SFAS No. 122, requires entities that engage in mortgage banking
F-9
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
activities to recognize, as separate assets, rights to service mortgage loans
for others acquired through either the purchase or origination of mortgage
loans and sale or securitization of those loans with servicing retained. The
amount capitalized is based on an allocation of the total cost of the mortgage
loans to the mortgage servicing rights and the loans without the mortgage
servicing rights based on their relative fair values. In addition, capitalized
mortgage servicing rights are required to be assessed for impairment based on
the fair value of those rights. Effective January 1, 1997, SFAS No. 125,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities, superseded SFAS No. 122. For servicing contracts in existence
before January 1, 1997, previously recognized servicing rights and excess
servicing receivables that do not exceed contractually specified servicing fees
were combined. Each time the Bank undertakes an obligation to service financial
assets it shall recognize either a servicing asset or a servicing liability for
that contract, unless it securitizes the assets, retains the resulting
securities and classifies them as debt securities held-to-maturity. For the
year ended October 31, 1997, the Bank capitalized approximately $255,000 in
mortgage servicing rights. The mortgage servicing rights are amortized in
proportion to, and over the period of, estimated net servicing income on loans
and are assessed for impairment based on the fair values of the underlying
servicing contracts. For purposes of measuring impairment, the rights are
stratified based on the following predominant risk characteristics of the
underlying loans; interest rates, type of interest and loan maturity dates.
Amortization of the mortgage servicing rights for the year ended October
31, 1997 was approximately $33,000. No impairment loss was recognized in 1997.
Banking Premises and Equipment
Land is stated at cost. Buildings, leasehold improvements and equipment
are stated at cost, less accumulated depreciation and amortization, which are
computed on the straight-line method over the estimated useful lives of the
assets or the terms of the leases, if shorter. Maintenance and repairs are
expensed when incurred; major expenditures for betterments are capitalized and
depreciated.
Other Real Estate Owned
Other real estate owned (OREO) is composed of properties acquired through
foreclosure or deed in lieu of foreclosure. After foreclosure, foreclosed
assets are presumed to be held-for-sale and are recorded at the lower of the
carrying value of the related loan or the fair value of property, less
estimated costs to sell. The excess, if any, of the loan balance over the fair
value of the property at the time of transfer from loans to OREO is charged to
the allowance for loan losses. Subsequent write-downs of the carrying value of
the foreclosed assets are charged to expense. Costs relating to the development
and improvement of the property are capitalized. Costs relating to holding the
property are charged to expense. Included in other real estate owned expenses
are losses on sale and write-downs of carrying value amounting to approximately
$198,000, $385,000 and $749,000 and net operating expenses of approximately
$321,000, $259,000 and $323,000 in 1997, 1996 and 1995, respectively. For the
seven months ended May 31, 1998 and 1997, OREO losses on sale and write-downs
were $43,000 and $149,000, respectively, and net operating expenses were
$95,000 and $144,000, respectively.
Income Taxes
The Bank utilizes the asset and liability method of accounting for income
taxes. Under this method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
F-10
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Core Deposit Intangible Asset
The core deposit intangible asset, resulting from prior acquisitions, is
being amortized over periods ranging from six to ten years using the
straight-line method. Amortization expense was approximately $303,000, $337,000
and $349,000 in fiscal 1997, 1996 and 1995, respectively, and was approximately
$163,000 for each of the seven months ended May 31, 1998 and 1997. The core
deposit intangible asset is reported net of accumulated amortization and
amounted to approximately $1,523,000, $1,726,000 and $2,029,000 at May 31, 1998
and October 31, 1997 and 1996, respectively.
Recent Accounting Pronouncements
Effective November 1, 1996, the Bank adopted SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long- Lived Assets To Be Disposed
Of. SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. SFAS No. 121 also requires that certain
long-lived assets and identifiable intangibles to be disposed of be reported at
the lower of the carrying amount or fair value less cost to sell. The adoption
of this standard did not have an impact on the results of operations or
financial condition for the year ended October 31, 1997.
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 130, Reporting Comprehensive Income. SFAS No. 130 establishes standards for
reporting and displaying comprehensive income and its components. Comprehensive
income is the total of net income and all other nonowner changes in equity.
SFAS No. 130 is effective for fiscal years beginning after December 15, 1997
and requires restatement of prior period financial statements presented for
comparative purposes.
Reclassifications
Certain reclassifications have been made to the 1995 and 1996 financial
statements to conform to the 1997 presentation. Such reclassifications have no
effect on previously reported net income.
(2) INVESTMENT SECURITIES
The amortized cost and estimated fair value of securities
available-for-sale at May 31, 1998 and October 31, 1997 and 1996 are as
follows:
<TABLE>
<CAPTION>
May 31, 1998
------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ------------ ------------ ----------
(In Thousands)
<S> <C> <C> <C> <C>
U.S. government and agency
obligations ......................... $ 80,172 $ 335 $ 83 $ 80,424
Other bonds and obligations .......... 51,800 283 49 52,034
Mortgage-backed investments .......... 40,998 391 27 41,362
-------- ------ ---- --------
Total debt securities ............. 172,970 1,009 159 173,820
Marketable equity securities ......... 6,605 2,916 1 9,520
-------- ------ ---- --------
Total securities available for sale $179,575 $3,925 $160 $183,340
======== ====== ==== ========
</TABLE>
F-11
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(2) INVESTMENT SECURITIES (Continued)
<TABLE>
<CAPTION>
October 31, 1997
------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ------------ ------------ ----------
(In Thousands)
<S> <C> <C> <C> <C>
U.S. government and agency
obligations ......................... $113,231 $ 392 $127 $113,496
Other bonds and obligations .......... 45,774 239 46 45,967
Mortgage-backed investments .......... 45,652 555 50 46,157
-------- ------ ---- --------
Total debt securities ............. 204,657 1,186 223 205,620
Marketable equity securities ......... 2,164 1,532 -- 3,696
-------- ------ ---- --------
Total securities available for sale $206,821 $2,718 $223 $209,316
======== ====== ==== ========
</TABLE>
<TABLE>
<CAPTION>
October 31, 1996
------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ------------ ------------ ----------
(In Thousands)
<S> <C> <C> <C> <C>
U.S. government and agency
obligations ......................... $111,861 $ 188 $436 $111,613
Other bonds and obligations .......... 22,632 14 126 22,520
Mortgage-backed investments .......... 64,760 324 434 64,650
-------- ------ ---- --------
Total debt securities ............. 199,253 526 996 198,783
Marketable equity securities ......... 835 689 1 1,523
-------- ------ ---- --------
Total securities available for sale $200,088 $1,215 $997 $200,306
======== ====== ==== ========
</TABLE>
A schedule of the maturity distribution of debt securities
available-for-sale at October 31, 1997 is as follows:
<TABLE>
<CAPTION>
Amortized Percent of Estimated
Cost Total Fair Value
----------- ------------ -----------
(Dollars in Thousands)
<S> <C> <C> <C>
One year or less ................. $ 27,828 14% $ 27,836
Over 1 year to 5 years ........... 140,220 68 140,757
Over 5 years to 10 years ......... 5,722 3 5,719
Over 10 years .................... 30,887 15 31,308
-------- -- --------
$204,657 100% $205,620
======== === ========
</TABLE>
Mortgage-backed investments are shown at their contractual maturity dates,
but actual maturities may differ as borrowers have the right to prepay
obligations without incurring prepayment penalties.
F-12
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(2) INVESTMENT SECURITIES (Continued)
The amortized cost and estimated fair value of securities held-to-maturity
at May 31, 1998 and October 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
May 31, 1998
------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ------------ ------------ ----------
(In Thousands)
<S> <C> <C> <C> <C>
U.S. government and agency obligations ......... $13,649 $55 $2 $13,702
------- --- -- -------
Total debt securities ....................... $13,649 $55 $2 $13,702
======= === == =======
</TABLE>
<TABLE>
<CAPTION>
October 31, 1997
------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ------------ ------------ ----------
(In Thousands)
<S> <C> <C> <C> <C>
U.S. government and agency obligations ......... $12,633 $68 $7 $12,694
------- --- -- -------
Total debt securities ....................... $12,633 $68 $7 $12,694
======= === == =======
</TABLE>
<TABLE>
<CAPTION>
October 31, 1996
------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ------------ ------------ ----------
(In Thousands)
<S> <C> <C> <C> <C>
U.S. government and agency obligations ......... $11,752 $40 $48 $11,744
------- --- --- -------
Total debt securities ....................... $11,752 $40 $48 $11,744
======= === === =======
</TABLE>
A schedule of the maturity distribution of debt securities
held-to-maturity at October 31, 1997 is as follows:
<TABLE>
<CAPTION>
Amortized Percent of Estimated
Cost Total Fair Value
----------- ------------ -----------
(Dollars in Thousands)
<S> <C> <C> <C>
One year or less ............... $ 5,298 42% $ 5,301
Over 1 year to 5 years ......... 7,335 58 7,393
------- -- -------
$12,633 100% $12,694
======= === =======
</TABLE>
Included in restricted equity securities at May 31, 1998, and October 31,
1997 and 1996 are Federal Home Loan Bank (FHLB) stock, Savings Bank Life
Insurance Company of Massachusetts stock and the Depositors Insurance Fund.
F-13
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(2) INVESTMENT SECURITIES (Continued)
Proceeds from the sales of investment securities and related gains and
losses for the seven months ended May 31, 1998 and 1997 and for the years ended
October 31, 1997, 1996 and 1995 (all classified as available-for-sale) were as
follows:
<TABLE>
<CAPTION>
Seven Months Ended
May 31, Years Ended October 31,
--------------------- ------------------------------------
1998 1997 1997 1996 1995
--------- --------- ---------- ---------- ----------
In Thousands)
<S> <C> <C> <C> <C> <C>
Proceeds from sales ......... $6,010 $9,223 $22,017 $26,051 $46,884
Gross gains ................. 14 31 58 101 330
Gross losses ................ 17 8 21 41 414
</TABLE>
At October 31, 1997, investment securities carried at approximately
$3,000,000 were pledged to secure public deposits under the Treasury, Tax and
Loan program, as required by law, securities carried at $5,865,000 were pledged
to secure deposits held by various municipalities and securities carried at
$9,980,000 were pledged against various repurchase agreements.
In November 1995, concurrent with the adoption of its implementation guide
on SFAS No. 115, the FASB allowed a one-time reassessment of SFAS No. 115
classifications of all investment securities held. Any reclassifications are
accounted for at fair value in accordance with SFAS No. 115, and any
reclassifications from the held-to-maturity portfolio that resulted from this
one-time reassessment did not call into question the intent of the Bank to hold
other debt securities to maturity in the future. The Bank used the opportunity
under this one-time reassessment to reclassify securities with an amortized
cost of approximately $138,701,000 from held-to-maturity to the
available-for-sale portfolio. In connection with this reclassification, a new
unrealized gain of $117,000 was recorded in available-for-sale securities and
in surplus (on a net-of-tax basis).
(3) LOANS
The Bank's loan portfolio consisted of the following:
<TABLE>
<CAPTION>
October 31,
May 31, -------------------------
1998 1997 1996
----------- ----------- -----------
(In Thousands)
<S> <C> <C> <C>
Real estate loans:
Residential (one-to-four family) ................ $368,136 $363,030 $343,204
Commercial ...................................... 125,089 124,059 128,707
Home equity lines of credit ..................... 15,941 15,133 17,288
Construction .................................... 41,925 33,894 25,007
-------- -------- --------
Total real estate loans ..................... 551,091 536,116 514,206
-------- -------- --------
Commercial loans ................................. 58,200 51,371 46,211
-------- -------- --------
Consumer loans:
Indirect auto loans ............................. 280,215 238,114 189,865
-------- -------- --------
Other ........................................... 27,553 24,662 22,063
-------- -------- --------
Total consumer loans ........................ 307,768 262,776 211,928
-------- -------- --------
Less--Unearned discount .......................... 32,637 30,066 24,232
-------- -------- --------
Total consumer loans, net ................... 275,131 232,710 187,696
-------- -------- --------
Total loans ................................. 884,422 820,197 748,113
Less--Allowance for possible loan losses ......... 10,508 10,642 10,334
-------- -------- --------
Total loans, net ............................ $873,914 $809,555 $737,779
======== ======== ========
</TABLE>
F-14
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(3) LOANS (Continued)
Nonaccrual loans consisted of the following:
<TABLE>
<CAPTION>
October 31,
May 31, ----------------------
1998 1997 1996
--------- ---------- ---------
(In Thousands)
<S> <C> <C> <C>
Real estate ......... $8,998 $10,180 $ 9,312
Commercial .......... 495 745 1,014
------ ------- -------
$9,493 $10,925 $10,326
====== ======= =======
</TABLE>
As a result of nonaccrual loans, interest income was reduced by
approximately $203,000, $200,000 and $331,000 in 1997, 1996 and 1995,
respectively. At October 31, 1997 and 1996, restructured loans totaled
approximately $4,619,000 and $10,178,000, respectively, of which $4,489,000 and
$5,911,000, respectively, were included in nonaccrual loans. If these loans had
been paying in accordance with their original contractual terms, approximately
$36,000, $37,000 and $28,000 of additional interest income would have been
recorded in 1997, 1996 and 1995, respectively. There are no commitments to
extend additional credit on these loans.
During fiscal 1997, the average recorded investment in impaired loans was
approximately $10,844,000 and the income recognized related to impaired loans
while impaired was $778,000. At October 31, 1997, the Bank classified
approximately $10,560,000 of its loans as impaired. A portion of these impaired
loans, approximately $7,912,000, had a related valuation reserve of
approximately $1,114,000 included in the allowance for possible loan losses. In
addition, approximately $2,648,000 of impaired loans did not, in the opinion of
the Bank's management, require a related valuation reserve.
During fiscal 1996, the average recorded investment in impaired loans was
approximately $9,174,000, and the income recognized related to impaired loans
while impaired was $671,000. At October 31, 1996, the Bank classified
approximately $11,203,000 of its loans as impaired. A portion of these impaired
loans, approximately $7,341,000, had a related valuation reserve of
approximately $752,000 included in the allowance for possible loan losses. In
addition, approximately $3,862,000 of impaired loans did not, in the opinion of
the Bank's management, require a related valuation reserve.
In the ordinary course of business, the Bank makes loans to its trustees,
executive officers, directors and related parties at substantially the same
terms as loans made to nonrelated borrowers. Generally, the Bank rarely extends
credit to officers of the Bank. An analysis of related party loans for the
years ended October 31, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
Years Ended October 31,
-------------------------
1997 1996
----------- -----------
(In Thousands)
<S> <C> <C>
Balance, beginning of year ......... $ 5,807 $ 1,961
New loans ......................... 442 5,123
Payments .......................... (1,133) (1,277)
-------- --------
Balance, end of year ............... $ 5,116 $ 5,807
======== ========
</TABLE>
Loans serviced for others at October 31, 1997 and 1996 amounted to
approximately $204,162,000 and $192,114,000, respectively. At October 31, 1997
and 1996, there were no loans outstanding subject to formal recourse
provisions.
F-15
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(3) LOANS (Continued)
An analysis of the allowance for possible loan losses follows:
<TABLE>
<CAPTION>
Seven Months Ended
May 31, Years Ended October 31,
----------------------- --------------------------------------
1998 1997 1997 1996 1995
---------- ---------- ---------- ----------- -----------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Balance, beginning of year .......................... $10,642 $10,334 $ 10,334 $ 9,850 $ 7,002
Acquired allowance for possible loan losses ......... -- -- -- -- 3,541
Provision for possible loan losses .................. 536 890 1,865 1,166 (351)
Charge-offs--
Real estate ........................................ (410) (475) (898) (501) (871)
Commercial ......................................... (137) (113) (442) (134) (51)
Consumer ........................................... (353) (251) (594) (436) (310)
------- ------- -------- -------- --------
(900) (839) (1,934) (1,071) (1,232)
------- ------- -------- -------- --------
Recoveries--
Real estate ........................................ 44 104 147 191 756
Commercial ......................................... 83 36 57 96 2
Consumer ........................................... 103 87 173 102 132
------- ------- -------- -------- --------
230 227 377 389 890
------- ------- -------- -------- --------
Net charge-offs ................................ (670) (612) (1,557) (682) (342)
------- ------- -------- -------- --------
Balance, end of year ................................ $10,508 $10,612 $ 10,642 $ 10,334 $ 9,850
======= ======= ======== ======== ========
</TABLE>
On December 28, 1994, the Bank acquired all the outstanding voting stock
of Martha's Vineyard National Bank (MVNB). At the date of purchase, the Bank's
allowance for possible loan losses was increased by the MVNB allowance for
possible loan losses of $3,541,000.
(4) OTHER REAL ESTATE OWNED
Other real estate owned acquired through foreclosure consisted of the
following:
<TABLE>
<CAPTION>
October 31,
May 31, -------------------
1998 1997 1996
--------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Land and construction ........... $ -- $ -- $ 43
Residential real estate ......... 794 1,227 1,769
Commercial real estate .......... 601 480 786
------ ------ ------
$1,395 $1,707 $2,598
====== ====== ======
</TABLE>
F-16
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(5) BANKING PREMISES AND EQUIPMENT
A summary of the cost and accumulated depreciation and amortization of
banking premises and equipment and their estimated useful lives is as follows:
<TABLE>
<CAPTION>
October 31,
May 31, ---------------------
Estimated
1998 1997 1996 Useful Lives
--------- --------- --------- ---------------
(In Thousands)
<S> <C> <C> <C> <C>
Land ............................. $ 2,503 $ 2,503 $ 2,503 --
Buildings ........................ 10,147 9,378 9,139 30 to 50 years
Leasehold improvements ........... 2,075 2,143 1,774 8 to 10 years
Furniture and equipment .......... 8,039 7,026 6,572 3 to 20 years
Construction-in-progress ......... 967 156 194
------- ------- -------
23,731 21,206 20,182
Less--Accumulated depreciation and
amortization .................... 9,799 8,952 7,594
------- ------- -------
$13,932 $12,254 $12,588
======= ======= =======
</TABLE>
Total depreciation and amortization expense of banking premises and
equipment for the seven months ended May 31, 1998 and 1997 amounted to
approximately $847,000 and $818,000, respectively, and for the years ended
October 31, 1997, 1996 and 1995 amounted to approximately $1,420,000,
$1,301,000 and $1,066,000, respectively, and is included in occupancy and
equipment expenses.
(6) DEPOSITS
A summary of deposit balances is as follows:
<TABLE>
<CAPTION>
October 31,
May 31, -----------------------
1998 1997 1996
----------- ---------- ----------
(In Thousands)
<S> <C> <C> <C>
Demand deposit accounts ......................... $ 59,378 $ 58,840 $ 48,466
NOW and money market deposit accounts ........... 238,684 223,580 211,215
Passbook and other savings accounts ............. 176,915 171,072 175,869
-------- -------- --------
Total noncertificate accounts ................ 474,977 453,492 435,550
Term certificates--
Term certificates of $100,000 and over ......... 88,428 82,647 71,729
Term certificates less than $100,000 ........... 418,946 401,809 375,329
-------- -------- --------
Total term certificate accounts .............. 507,374 484,456 447,058
-------- -------- --------
Total deposits .................................. $982,351 $937,948 $882,608
======== ======== ========
</TABLE>
F-17
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(6) DEPOSITS (Continued)
A schedule of the maturity distribution of term certificates with weighted
average interest rates is as follows:
<TABLE>
<CAPTION>
October 31,
--------------------------------------------
May 31,
1998 1997 1996
---------------------- ---------------------- ---------------------
Weighted Weighted Weighted
Average Average Average
Interest Interest Interest
Amount Rate Amount Rate Amount Rate
----------- ---------- ----------- ---------- ----------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Within 1 year ............. $421,364 5.62% $408,291 5.69% $354,969 5.50%
Over 1 to 2 years ......... 46,830 5.86 46,405 6.17 58,012 5.94
Over 2 to 3 years ......... 30,831 5.98 18,129 5.90 22,994 6.45
Over 3 to 5 years ......... 8,349 5.97 11,631 6.05 11,083 5.82
-------- -------- --------
$507,374 5.67% $484,456 5.75% $447,058 5.62%
======== ======== ========
</TABLE>
(7) SHORT-TERM BORROWINGS
Short-term borrowings consisted of the following:
<TABLE>
<CAPTION>
October 31,
---------------------
May 31,
1998 1997 1996
---------- --------- ---------
(In Thousands)
<S> <C> <C> <C>
Securities sold under agreements to repurchase ......... $11,616 $9,533 $1,925
Treasury tax and loan note account ..................... 597 164 2,000
------- ------ ------
$12,213 $9,697 $3,925
======= ====== ======
</TABLE>
The average daily outstanding short-term borrowings were approximately
$5,086,000 in 1997 and $1,198,000 in 1996. The maximum amount of short-term
borrowings outstanding at any month-end was approximately $9,742,000 in 1997
and $3,925,000 in 1996. The weighted average interest rates during 1997 and
1996 were 4.77% and 4.82%, respectively. For the seven months ended May 31,
1998, the average daily outstanding short-term borrowings were approximately
$10,783,000 with the maximum amount outstanding at any month end of
approximately $12,213,000. The weighted average interest rate during the seven
months ended May 31, 1998 was 4.80%.
(8) FEDERAL HOME LOAN BANK ADVANCES
Federal Home Loan Bank (FHLB) advances are collateralized by a
blanket-type pledge agreement on the Bank's FHLB stock, certain qualified
investment securities, deposits at the FHLB, and first mortgages on residential
property. As a member of the FHLB, the Bank is required to invest in stock of
the FHLB at an amount equal to the greater of 1% of its outstanding first
mortgage residential loans, .3% of total assets, or 5% of its outstanding
advances from the FHLB divided by a leverage factor of 20. When such stock is
redeemed, the Bank will receive from the FHLB an amount equal to the par value
of the stock. The Bank also has access to a preapproved line of credit of
$20,000,000. No funds were advanced under this line of credit at May 31, 1998
and October 31, 1997 and 1996.
F-18
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(8) FEDERAL HOME LOAN BANK ADVANCES (Continued)
A schedule of the maturity distribution of FHLB advances with weighted
average interest rates is as follows:
<TABLE>
<CAPTION>
October 31,
------------------------------------------------
May 31,
1998 1997 1996
----------------------- ----------------------- ----------------------
(Dollars in Thousands)
Weighted Weighted Weighted
Average Average Average
Amount Rate Amount Rate Amount Rate
---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Within 1 year .............. $ 2,719 5.54% $ 6,087 6.40% $ 4,291 5.46%
Over 1 to 5 years .......... 32,979 6.02 16,528 6.02 15,030 5.84
Over 5 to 10 years ......... 9,775 6.64 10,741 6.61 11,317 6.52
10 years and over .......... 19,099 7.16 17,650 7.29 14,737 7.47
------- ------- -------
$64,572 6.43% $51,006 6.63% $45,375 6.50%
======= ======= =======
</TABLE>
The Bank may be subject to a substantial penalty upon prepayment of FHLB
advances.
(9) INCOME TAXES
The components of the provision for income taxes for the years ended
October 31 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
(In Thousands)
<S> <C> <C> <C>
Current--
Federal ............................ $5,762 $5,448 $3,122
State .............................. 1,470 1,857 741
------ ------ ------
Total current .................... 7,232 7,305 3,863
Deferred (prepaid)--
Federal ............................ 231 (560) 532
State .............................. 222 (197) 116
------ ------ ------
Total deferred (prepaid) ......... 453 (757) 648
------ ------ ------
Total ............................ $7,685 $6,548 $4,511
====== ====== ======
</TABLE>
The difference between the income tax rate computed by applying the
statutory federal income tax rate to income before income taxes and the actual
effective income tax rate is summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Statutory rate ............................... 35.00% 34.00% 34.00%
State taxes, net of federal benefit .......... 5.68 6.56 4.72
Other, net ................................... (1.21) (1.36) (1.12)
----- ----- -----
Effective tax rate ........................ 39.47% 39.20% 37.60%
===== ===== =====
</TABLE>
The Bank does not separately determine its current and deferred tax
provision on an interim basis. The change in net deferred tax assets between
year ends is attributable to the change in unrealized gain on securities
available-for-sale and changes in estimated temporary differences from those
included in filed tax returns. The Bank's provision for income taxes for the
seven months ended May 31, 1998 and 1997 and the related effective tax rate
were $4,954,000 (39.3%) and $4,254,000 (40.4%), respectively.
F-19
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(9) INCOME TAXES (Continued)
At October 31, the Bank's net deferred tax asset, as presented in the
accompanying consolidated balance sheets, consisted of the following
components:
<TABLE>
<CAPTION>
October 31,
---------------------
1997 1996
--------- ---------
(In Thousands)
<S> <C> <C>
Allowance for loan losses ................................ $4,114 $4,009
Deferred compensation .................................... 2,239 2,180
Net operating loss carryforward .......................... 946 1,179
Accrued liabilities ...................................... 547 780
Unrealized gain on available-for-sale securities ......... (898) (49)
Other .................................................... 40 177
------ ------
$6,988 $8,276
====== ======
</TABLE>
In August 1996, Congress passed the Small Business Job Protection Act of
1996. Included in this bill was the repeal of IRC Section 593, which allowed
thrift institutions special provisions in calculating bad debt deductions for
income tax purposes. Thrift institutions now will be viewed as commercial banks
for income tax purposes. The repeal is effective for tax years beginning after
December 31, 1995.
One effect of this legislative change is to suspend the Bank's bad debt
reserve for income tax purposes as of its base year (October 31, 1988). Any bad
debt reserve in excess of the base year amount is subject to recapture over a
six-year time period. The suspended (i.e., base year) amount is subject to
recapture upon the occurrence of certain events, such as complete or partial
redemption of the Bank's stock or if the Bank ceases to qualify as a bank for
income tax purposes.
At October 31, 1997, the Bank's surplus includes approximately $9,085,000
of bad debt reserves, representing the base year amount, for which income taxes
have not been provided. Since the Bank does not intend to use the suspended bad
debt reserve for purposes other than to absorb the losses for which it was
established, deferred taxes in the amount of $3,800,000 have not been recorded
with respect to such reserve.
(10) COMMITMENTS AND CONTINGENCIES
In the normal course of business, there are outstanding commitments and
contingencies that are not reflected in the accompanying consolidated financial
statements. On March 21, 1996, the Bank entered into a Master Commitment to
deliver or sell $40,000,000 in residential mortgage loans to a federal agency
on or before March 31, 1998. At October 31, 1997, the unfulfilled portion that
remained to be delivered under this commitment was approximately $17,076,000.
Pursuant to the terms of noncancelable lease and sublease agreements
pertaining to banking premises and equipment, future minimum lease payments and
sublease income commitments are as follows:
<TABLE>
<CAPTION>
Years Ending Future Minimum Future Lease
October 31, Lease Payments Income
- ------------------------ ---------------- -------------
(In Thousands)
<S> <C> <C>
1998 ............... $388 $165
1999 ............... 432 88
2000 ............... 431 59
2001 ............... 285 54
2002 ............... 285 --
Thereafter ......... 840 --
</TABLE>
F-20
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(10) COMMITMENTS AND CONTINGENCIES (Continued)
The leases contain renewal options for periods ranging from 8 to 85 years,
the cost of which is not included above. Rent expense for the years ended
October 31, 1997, 1996 and 1995 amounted to approximately $370,000, $403,000
and $387,000 respectively, and is included in occupancy and equipment expenses
in the accompanying consolidated statements of income.
Aggregate reserves (in the form of deposits with the Federal Reserve Bank
and vault cash) of $6,754,000 and $12,537,000 were maintained to satisfy
regulatory requirements at October 31, 1997 and 1996, respectively.
In the ordinary course of business, the Bank is involved in litigation.
Based on its review of current litigation and discussion with legal counsel,
management does not expect any material adverse impact on the consolidated
financial position or results of operations resulting from the resolution of
pending litigation.
(11) REGULATORY CAPITAL REQUIREMENTS
The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory--and possibly additional
discretionary--actions by regulators that, if undertaken, could have a direct
material effect on the Bank's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities and certain off-balance-sheet items as calculated
under regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgments by the regulators
about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to
average assets (as defined). Management believes, as of October 31, 1997, that
the Bancorp and the Bank met all capital adequacy requirements to which they
are subject.
As of October 31, 1997, the most recent notification from the Federal
Reserve Bank of Boston relating to the Bancorp classified the Bancorp's capital
as satisfactory, and the most recent notification from the FDIC relating to the
Bank categorized the Bank as well capitalized under the regulatory framework
for prompt corrective action. To be categorized as well capitalized, an insured
depository institution must maintain minimum total risk-based, Tier I
risk-based and Tier I leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have
changed the Bancorp's and the Bank's category.
F-21
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(11) REGULATORY CAPITAL REQUIREMENTS (Continued)
The Bancorp's and the Bank's actual capital amounts and ratios are also
presented in the table.
<TABLE>
<CAPTION>
To Be Well
Capitalized
Under Prompt
Corrective
For Capital Action
Actual Adequacy Purposes Provisions
-------------------- -------------------------------- ---------------
Amount Ratio Amount Ratio Amount Ratio
----------- -------- --------------- ------------ -------- ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
As of October 31, 1997:
Bancorp (consolidated)--
Total capital (to risk weighted assets) .... $104,158 13.92% greater greater
than or than or
equal to $59,867 equal to 8.0% N/A N/A
Tier I capital (to risk weighted assets) ... $ 94,788 12.67% greater greater
than or than or
equal to $29,933 equal to 4.0% N/A N/A
Tier I capital (to average assets) ......... $ 94,788 8.60% greater greater
Bank-- than or than or
equal to $44,092 equal to 4.0% N/A N/A
greater greater greater
than or than or than or
Total capital (to risk weighted assets) .... $100,637 13.47% equal to $59,766 equal to 8.0% equal to $74,796 10.0%
greater greater greater
than or than or than or
Tier I capital (to risk weighted assets) ... $ 91,283 12.22% equal to $29,883 equal to 4.0% equal to $44,877 6.0%
greater greater greater
than or than or than or
Tier I capital (to average assets) ......... $ 91,283 8.29% equal to $44,045 equal to 4.0% equal to $55,056 5.0%
As of October 31, 1996:
Bancorp (consolidated)--
greater greater
than or than or
Total capital (to risk weighted assets) .... $91,005 13.73% equal to $52,948 equal to 8.0% N/A N/A
greater greater
than or than or
Tier I capital (to risk weighted assets) ... $ 82,693 12.47% equal to $26,525 equal to 4.0% N/A N/A
greater greater
than or than or
Tier I capital (to average assets) ......... $ 82,693 8.13% equal to $40,685 equal to 4.0% N/A N/A
Bank--
greater greater greater
than or than or than or
Total capital (to risk weighted assets) .... $ 87,252 13.19% equal to $52,920 equal to 8.0% equal to $66,150 10.0%
greater greater greater
than or than or than or
Tier I capital (to risk weighted assets) ... $ 78,959 11.94% equal to $26,452 equal to 4.0% equal to $39,678 6.0%
greater greater greater
than or than or than or
Tier I capital (to average assets) ........ $ 78,959 7.79% equal to $40,544 equal to 4.0% equal to $50,680 5.0%
</TABLE>
(12) EMPLOYEE BENEFITS
The Bank provides basic and supplemental pension benefits for eligible
employees through the Savings Bank's Employees Retirement Association Pension
Plan (the Plan). Each employee having reached the age of 21 and having
completed at least 1,000 hours of service in two consecutive 12-month periods
beginning with such employee's date of employment automatically becomes a
participant in the Plan. Benefits are based on employees' years of service and
annual compensation, as defined in the Plan. The Bank's funding policy is to
contribute annually the maximum amount that can be deducted for federal income
tax purposes. Contributions made under the Plan totaled approximately $609,000,
$425,000 and $112,000 for 1997, 1996 and 1995, respectively.
F-22
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(12) EMPLOYEE BENEFITS (Continued)
Net pension cost under the Plan for the years ended October 31 included
the following components:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
(In Thousands)
<S> <C> <C> <C>
Service cost during year .............................. $ 517 $ 500 $ 603
Interest cost on projected benefit obligation ......... 656 618 677
Return on plan assets ................................. (544) (439) (367)
Net amortization and deferral ......................... (57) (28) 59
------ ------ ------
Net pension cost .................................. $ 534 $ 651 $ 972
====== ====== ======
</TABLE>
According to the Plan's actuary, the funded status of the Plan was as
follows at October 31 (latest available data):
<TABLE>
<CAPTION>
1997 1996
----------- -----------
(In Thousands)
<S> <C> <C>
Plan assets at fair value ................................... $ 8,369 $ 6,806
Actuarial present value of projected benefit obligation
(substantially all vested) ................................. 9,884 8,748
Excess of projected benefit obligation over assets .......... (1,515) (1,942)
Unrecognized net asset existing at transition ............... (398) (425)
Unrecognized net gain ....................................... (1,172) (763)
-------- --------
Accrued pension liability included on balance sheet ......... $ (3,085) $ (3,130)
======== ========
</TABLE>
The accumulated benefit obligation (all vested) at October 31, 1997 and
1996 amounted to $5,258,499 and $4,651,406, respectively. Plan assets consist
primarily of common stock, U.S. government and agency obligations and a
guaranteed investment contract.
Actuarial assumptions used in determining plan obligations and net pension
expense are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Discount rate used to calculate projected benefit obligation .......... 7.5% 7.5% 7.5%
Expected long-term rate of return on plan assets ...................... 8.0 7.5 7.0
Annual salary increases ............................................... 5.0 5.0 6.0
</TABLE>
F-23
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(12) EMPLOYEE BENEFITS (Continued)
In addition to the Bank's defined benefit pension plan, the Bank sponsors
a noncontributory defined benefit postretirement life insurance plan (the Life
Insurance Plan) that covers all pre-1996 retirees and active employees
designated by the Bank for coverage. The Life Insurance Plan generally provides
lifetime coverage to retired employees equal to retiring employees' final rate
of pay, but not more than $50,000, and to active employees equal to three times
the employees' annual salary, but not more than $350,000. The Bank funds the
Life Insurance Plan in combination with its active employee coverage. The
status of this Life Insurance Plan is as follows:
<TABLE>
<CAPTION>
October 31,
-----------------------
1997 1996
---------- ----------
(In Thousands)
<S> <C> <C>
Accumulated postretirement benefit obligation--
Retirees ............................................................. $ (288) $ (269)
Eligible plan participants ........................................... (26) (24)
------ ------
Total .......................................................... $ (314) $ (293)
====== ======
Plan assets .......................................................... $ -- $ --
------ ------
Accumulated postretirement benefit obligation in excess of plan assets (314) (293)
Unrecognized transition obligation ................................... 25 27
Unrecognized prior service cost ...................................... 62 64
Unrecognized net gain ................................................ (31) (30)
------ ------
Accrued postretirement benefit cost .................................. $ (258) $ (232)
====== ======
</TABLE>
Net periodic postretirement benefit cost included the following
components:
<TABLE>
<CAPTION>
Years Ended October 31,
-----------------------
1997 1996 1995
------ ------ -----
(In Thousands)
<S> <C> <C> <C>
Service cost--benefits attributed to service during the period ........ $-- $-- $--
Interest cost on accumulated postretirement benefit obligation ........ 22 21 16
Amortization of transition obligation over 20 years ................... 2 2 2
Amortization of unrecognized prior service cost ....................... 2 2 --
--- --- ---
Net periodic postretirement benefit cost .............................. $26 $25 $18
=== === ===
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation was 7%, and the assumed rate of compensation increase was
4.5% in all years presented.
The Bank has entered into agreements with certain officers to provide
supplemental retirement benefits based on 25% of average compensation computed
over a three-year period. The present value of these future payments is
presently being accrued over the estimated remaining terms of employment. The
accrued supplemental retirement expense is approximately $1,332,000 and
$1,281,000 at October 31, 1997 and 1996, respectively. The agreements are being
funded through a life insurance program with policy benefits accruing to the
Bank. The cash surrender value of the policies is approximately $1,567,000 and
$1,245,000 at October 31, 1997 and 1996, respectively, and is included in other
assets in the accompanying consolidated balance sheets. Borrowings made against
the life insurance policies are approximately $0 and $648,000 at October 31,
1997 and 1996, respectively, and are included in other borrowings in the
accompanying consolidated balance sheets. Net expense for these supplemental
retirement benefits for the years ended October 31, 1997, 1996 and 1995 was
approximately $70,000, $222,000 and $157,000, respectively, and is included in
salaries and employee benefits in the accompanying consolidated statements of
income.
F-24
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(12) EMPLOYEE BENEFITS (Continued)
The Bank has an Employee Bonus and Management Incentive Compensation Plan
(the Bonus Plan) in which employees are eligible to participate. The Bonus Plan
provides for awards based on a combination of Bank and individual performance
objectives being met, subject to the approval of the Board of Directors.
Amounts charged to operations under the Bonus Plan amounted to approximately
$1,024,000, $696,000 and $581,000 for the years ended October 31, 1997, 1996
and 1995, respectively.
The Bank offers a 401(k) Retirement Savings Plan (the Savings Plan) for
employees. Participating employees are able to contribute up to 15% of their
salary, and the Bank matches 50% of a participant's deferral contribution on
the first 6% of the deferral amount subject to the maximum allowable under
federal regulations. The Bank's matching contribution expense was approximately
$218,000, $193,000 and $103,000 for the years ended October 31, 1997, 1996 and
1995, respectively, and is included in salaries and employee benefits in the
accompanying consolidated statements of income.
(13) FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATION OF
CREDIT RISK
The Bank is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its customers
and to reduce its own exposure to fluctuations in interest rates. These
financial instruments include commitments to extend credit and standby letters
of credit. Those instruments involve, to varying degrees, elements of credit
and interest rate risk in excess of the amounts recognized in the accompanying
consolidated balance sheets.
The contract amounts of those instruments reflect the extent of
involvement the Bank has in particular classes of financial instruments.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual amount of those
instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments.
Off-balance-sheet financial instruments whose contract amounts present
credit risk included the following:
<TABLE>
<CAPTION>
October 31,
-----------------------
May 31,
1998 1997 1996
---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C>
Unused portion of existing lines of credit ......... $38,551 $37,744 $32,839
Standby letters of credit .......................... 1,428 1,110 1,265
Unadvanced construction loans ...................... 19,486 16,327 10,542
Firm commitments to extend credit:
Residential mortgage loans--
Fixed rate ...................................... 20,267 12,245 3,980
Adjustable rate ................................. 5,937 5,447 5,099
Commercial loans ................................... 20,273 11,207 16,047
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since some of the commitments may expire
without being drawn upon, the total commitment amounts do not necessarily
require future cash requirements. The Bank evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained
upon extension of the credit
F-25
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(13) FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATION OF
CREDIT RISK (Continued)
is based on management's credit evaluation of the customer. Collateral held
varies but may include accounts receivable, inventory, property, plant and
equipment and income-producing commercial real estate.
Standby letters of credit are conditional commitments issued by the Bank
to guarantee performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements. Most
guarantees extend for one year. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities to
customers.
The collateral supporting those commitments varies and may include real
property, accounts receivable or inventory. The Bank originates primarily
residential and commercial real estate loans and, to a lesser extent,
installment loans to customers primarily located in southeastern Massachusetts.
In order to diversify its geographic risk, the Bank buys and sells loans
to/from other financial institutions operating in other states. The Bank
estimates that 95% of its loan portfolio is based in the state of
Massachusetts, of which the majority is located in southeastern Massachusetts.
(14) FAIR VALUE OF FINANCIAL INSTRUMENTS
The reported fair values of financial instruments are based on a variety
of valuation techniques. In some cases, fair values represent quoted market
prices for identical or comparable instruments. In other cases, fair values
have been estimated based on assumptions concerning the amount and timing of
estimated future cash flows, assumed discount rates reflecting varying degrees
of risk and future expected loss assumptions. These estimates involve a high
degree of judgment. The estimates do not reflect any premium or discount that
could result from offering significant holdings of financial instruments at
bulk sale. Tax implications of unrealized gains and losses can also have a
significant effect on fair value of the financial instruments that could have
been realized as of October 31, 1997 and 1996 or that will be realized in the
future. Changes in economic conditions may dramatically affect the fair value
of financial instruments.
The following methods and assumptions were used to estimate the fair value
of the Bank's instruments:
For cash and due from banks and federal funds sold, the carrying amount
approximates fair value due to the short maturity of those instruments.
The fair values of investment securities are based on published market
prices or quotations received from securities dealers.
The fair values of loans are estimated for loan portfolios with similar
financial characteristics. Loans are segregated by type, fixed- and
adjustable-rate interest terms and by performing and nonperforming status.
The fair values of performing residential real estate loans are estimated
by discounting the anticipated future cash flows at rates currently required by
the secondary mortgage market for the purchase of similar loans. For performing
commercial real estate loans and performing business loans, fair values are
estimated by discounting the anticipated future cash flows using estimated
market discount rates that reflect the credit and interest rate risk inherent
in the loan as determined by the loan's terms and credit rating. For home
equity loans and certain consumer loans, the recorded book values approximate
fair value because the majority of these loans reprice with changes in market
rates.
For collateral dependent nonperforming loans, the fair values are
estimated based on the fair values of the underlying collateral as determined
generally by recent appraisals. For other nonperforming loans, the fair values
are estimated by discounting the expected future cash flows using a discount
rate commensurate with the higher credit risk associated with these loans.
The fair value of noncertificate deposits does not include the value of
the Bank's long-term relationships with its depositors and does not reflect the
value associated with possessing this relatively inexpensive source of funds
F-26
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(14) FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
that may be available for a considerable length of time. The fair value of
noncertificate deposits is equal to the amount payable on demand at the
reporting date. The fair values of fixed-maturity certificate deposits are
estimated by discounting the contractual future cash flows at rates currently
offered for certificate deposits with similar remaining maturities.
The fair values of FHLB advances are determined by discounting the
anticipated future cash payments by using the rates currently available to the
Bank for advances with similar terms and remaining maturities. For other
borrowings, the carrying amount approximates fair value due to the short
maturity of those instruments.
The fair value of commitments to extend credit is estimated using the fees
currently charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the present creditworthiness of the
counterparties. For fixed rate loan commitments, fair value also considers the
difference between current levels of interest rates and the committed rates.
The fair value of financial standby letters of credit is based on fees
currently charged for similar agreements or on the estimated cost to terminate
them or otherwise settle the obligations with the counterparties. While these
commitment fees have value, the Bank has not estimated their value due to the
short-term nature of the underlying commitments and their immateriality.
Certain assets are excluded from disclosure requirements, including
banking premises and equipment, the intangible value of the Bank's portfolio of
loans serviced for others and the intangible value inherent in the Bank's
deposit relationships (i.e., core deposits) among others. Accordingly, the
aggregate fair value amounts presented below do not represent the underlying
value of the Bank.
The estimated fair values of the Bank's financial instruments at October
31 are as follows (the amounts in the book value column represent the amounts
at which such instruments are carried in the accompanying consolidated balance
sheets):
<TABLE>
<CAPTION>
1997 1996
--------------------------- --------------------------
Estimated Estimated
Book Value Fair Value Book Value Fair Value
------------ ------------ ------------ -----------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
Financial instrument assets:
Cash and due from banks ..................... $ 25,611 $ 25,611 $ 34,511 $ 34,511
Federal funds sold .......................... 7,150 7,150 53 53
Investment securities ....................... 227,105 227,166 216,703 216,695
Loans held-for-sale ......................... 4,277 4,305 4,394 4,414
Loans--
Residential ................................ 377,362 383,772 355,517 353,316
Commercial real estate ..................... 143,621 143,503 141,401 139,524
Commercial ................................. 51,371 51,682 46,211 46,184
Home equity lines of credit ................ 15,133 15,655 17,288 17,550
Consumer ................................... 232,710 233,629 187,696 189,513
Allowance for possible loan losses ......... (10,642) -- (10,334) --
--------- -------- --------- --------
Total loans, net ........................ $ 809,555 $828,241 $ 737,779 $746,087
========= ======== ========= ========
Financial liabilities:
Noncertificate deposits ..................... 453,492 453,492 435,550 435,550
Certificate deposits ........................ 484,456 485,202 447,058 447,726
Borrowings .................................. 9,697 9,697 4,573 4,573
FHLB advances ............................... 51,006 51,941 45,375 47,171
</TABLE>
F-27
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(15) CONDENSED PARENT COMPANY FINANCIAL STATEMENTS
The balance sheets of the Bancorp are as follows:
<TABLE>
<CAPTION>
October 31,
May 31, ----------------------
1998 1997 1996
----------- ---------- ---------
(In Thousands)
<S> <C> <C> <C>
ASSETS:
Cash and due from banks ......................................... $ 87 $ 142 $ 111
Investment securities available-for-sale, at fair value ......... 5,313 4,856 3,904
Accrued interest receivable ..................................... 55 62 62
Investment in Subsidiary ........................................ 101,738 93,603 81,046
Other assets .................................................... 42 41 61
-------- ------- -------
Total assets ............................................... $107,235 $98,704 $85,184
======== ======= =======
LIABILITIES AND SURPLUS:
Accrued expenses and other liabilities .......................... $ 725 $ 563 $ 267
Surplus ......................................................... 106,510 98,141 84,917
-------- ------- -------
Total liabilities and surplus .............................. $107,235 $98,704 $85,184
======== ======= =======
</TABLE>
The income statements of the Bancorp are as follows:
<TABLE>
<CAPTION>
Seven Months Ended
May 31, Years Ended October 31,
------------------- ---------------------------------
1998 1997 1997 1996 1995
-------- -------- --------- --------- ---------
(In Thousands)
<S> <C> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME:
Interest and dividends on investment securities ......... $ 115 $ 121 $ 217 $ 195 $ 179
NONINTEREST INCOME:
Gain on sales of investment securities .................. -- -- -- -- 11
NONINTEREST EXPENSE:
Salaries and employee benefits .......................... 71 34 58 62 59
Amortization of organization costs ...................... 8 12 21 43 --
Other operating expenses ................................ 22 1 14 23 12
------ ------ ------- ------- ------
Total noninterest expense .......................... 101 47 93 128 71
------ ------ ------- ------- ------
Income before income taxes and equity in
undistributed net income of subsidiary ................. 14 74 124 67 119
PROVISION FOR INCOME TAXES ................................. 5 26 18 23 41
------ ------ ------- ------- ------
Income before equity in undistributed net
income of subsidiary ................................... 9 48 106 44 78
EQUITY IN UNDISTRIBUTED NET INCOME
OF SUBSIDIARY ............................................. 7,657 6,236 11,678 10,111 7,408
------ ------ ------- ------- ------
Net income .............................................. $7,666 $6,284 $11,784 $10,155 $7,486
====== ====== ======= ======= ======
</TABLE>
F-28
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(15) CONDENSED PARENT COMPANY FINANCIAL STATEMENTS (Continued)
The cash flow statements of the Bancorp are as follows:
<TABLE>
<CAPTION>
Seven Months Ended
May 31, Years Ended October 31,
------------------------ --------------------------------------
1998 1997 1997 1996 1995
----------- ------------ ------------- ------------ -----------
(In Thousands)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ......................................... $ 7,666 $ 6,284 $ 11,784 $ 10,155 $ 7,486
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sales of investments ....................... -- -- -- -- (11)
Net (accretion) amortization of
investment securities ............................. 3 (2) (2) (17) 17
Equity in undistributed earnings of subsidiary ..... (7,657) (6,236) (11,678) (10,111) (7,408)
Net increase in other liabilities .................. 17 19 3 (12) 44
Net decrease in other assets ....................... 6 17 20 4 (61)
-------- --------- ---------- --------- --------
Net cash provided by operating
activities .................................. 35 82 127 19 67
-------- --------- ---------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of
held-to-maturity and available-for-sale
securities ........................................ 496 -- -- 2,017 551
Purchase of securities classified as
held-to-maturity .................................. -- -- (96) -- (497)
Purchase of securities classified as
available-for-sale ................................ (586) -- -- (2,071) --
-------- --------- ---------- --------- --------
Net cash provided by (used in)
investing activities ........................ (90) -- (96) (54) 54
-------- --------- ---------- --------- --------
Net increase (decrease) in cash and
cash equivalents .................................. (55) 82 31 (35) 121
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR .................................... 142 111 111 146 25
-------- --------- ---------- --------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD ........................................ $ 87 $ 193 $ 142 $ 111 $ 146
======== ========= ========== ========= ========
SUPPLEMENTAL CASH DISCLOSURE:
Income taxes paid .................................. $ 1 $ 10 $ 27 $ 43 $ 62
======== ========= ========== ========= ========
Transfer of investments from held-to-
maturity to available-for-sale .................... $ -- $ -- $ -- $ 496 $ --
======== ========= ========== ========= ========
</TABLE>
F-29
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(16) EVENTS SUBSEQUENT TO THE DATE OF THE REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS
Stock Conversion
On April 23, 1998, the Board of Trustees of the Bancorp adopted a Plan of
Conversion (the Conversion) pursuant to which the Bancorp will convert to a
stock form of ownership and offer for sale 100% of its common stock in a
subscription offering initially to Bank depositors, employee benefit plans of
the Bank and certain other eligible subscribers. Any shares of stock not sold
in the subscription offering are expected to be sold to the public by
underwriters.
One of the primary purposes of the Conversion is to enable the Bancorp to
acquire Sandwich Bancorp, Inc. (Sandwich) as more fully described below. The
Bancorp will not proceed with the Conversion unless all preconditions to the
closing of the acquisition of Sandwich have been satisfied or waived. As part
of the Conversion, the Bank will establish a liquidation account in an amount
equal to the net worth of the Bank as of the date of the latest consolidated
balance sheet appearing in the final prospectus. The liquidation account will
be maintained for the benefit of eligible account holders and supplemental
eligible account holders who maintain their accounts at the Bank after the
Conversion. The liquidation account will be reduced annually to the extent that
such account holders have reduced their qualifying deposits as of each
anniversary date. Subsequent increases will not restore an account holder's
interest in the liquidation account. In the event of a complete liquidation,
each eligible account holder will be entitled to receive balances for accounts
then held.
Subsequent to the Conversion, the Bancorp may not declare or pay dividends
on and may not repurchase any of its common stock if the effect thereof would
cause its capital to be reduced below applicable regulatory capital maintenance
requirements or if such declaration, payment or repurchase would otherwise
violate regulatory requirements.
Pending Acquisition
On February 2, 1998, the Bancorp and the Bank entered into a definitive
agreement under which the Bank would acquire Sandwich, a one-bank holding
company with approximately $519,000,000 in total assets at December 31, 1997.
On February 24, 1998, Sandwich announced that its Board of Directors determined
that it was appropriate to request additional information and a clarification
of the renewed expressions of interest that it had received from the three
other parties subsequent to February 2, 1998.
Following a review of the other expressions of interests for Sandwich, the
Bancorp and Sandwich jointly announced on March 23, 1998 that they had signed
an amendment to their previously announced agreement of February 2, 1998 (the
Amended Agreement) by which the Bancorp would acquire Sandwich. Under the terms
of the Amended Agreement, the Bancorp will convert to a 100% publicly owned
stock holding company and, thereafter, issue stock having a value of $64.00 per
share to Sandwich shareholders in a tax-free exchange of common stock. The
value to be received by Sandwich shareholders is subject to adjustment pursuant
to a formula based on the value of the stock of the Bancorp near the
transaction date. Based on the Bancorp's assumed initial public offering price
of $10.00 per share, each Sandwich share will be exchanged for Bancorp stock
having a value of $64.00 per share so long as Bancorp stock trades at an
average price of between $10.00 and $13.50 per share during a designated
trading period following the initial public offering date. If this average
price exceeds $13.50 per share, the value to be received by Sandwich
shareholders will increase proportionately up to a maximum value of $71.11
until Bancorp's average price reaches or exceeds $15.00 per share. If this
average price is equal to or less than $10.00 per share, Sandwich shares will
be exchanged for 6.4 shares of Bancorp stock.
Sandwich and the Bancorp also entered into a Stock Option Agreement,
granting to the Bancorp an option to acquire up to 19.9% of Sandwich common
stock under certain circumstances. The transaction is conditioned upon its
being eligible to be accounted for as a pooling of interests and is subject to
all necessary regulatory and shareholder approvals. It is expected to close in
the fourth quarter of 1998.
F-30
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MAY 31, 1998 AND 1997 (UNAUDITED) AND
OCTOBER 31, 1997, 1996 AND 1995
(16) EVENTS SUBSEQUENT TO THE DATE OF THE REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS (Continued)
Formation of New Subsidiary
Compass Preferred Capital Corporation (CPCC) was established in March 1998
to engage in real estate business activities (including the acquisition and
holding of securities and mortgage loans) that enable it to be taxed as a real
estate investment trust (REIT) for federal and Massachusetts tax purposes. At
March 31, 1998, CPCC had total assets of $157.1 million of which $157 million
were residential mortgage loans originated by and acquired from the Bank. CPCC
is currently a 100% owned subsidiary of Buffinton Brook Realty Corporation. It
is anticipated that its ownership interest will be reduced to 99.9% through the
issuance of shares to certain Bank employees, as required by tax regulation.
F-31
<PAGE>
SANDWICH BANCORP, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION
<TABLE>
<S> <C> <C>
I. Excerpts from Sandwich Bancorp's Annual Report on Form 10-K for the Year Ended
December 31, 1997
Part II, Item 8. Audited Consolidated Financial Statements of Sandwich
Bancorp, Inc. and Subsidiaries and Independent Auditors' Report Thereon:
Independent Auditors' Report .................................................. G-2
Consolidated Balance Sheets as of December 31, 1997 and 1996 .................. G-3
Consolidated Statements of Operations for the years ended December 31, 1997,
1996 and 1995. ................................................................ G-4
Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 1997, 1996 and 1995. ............................................. G-5
Consolidated Statements of Cash Flows for the years ended December 31, 1997,
1996 and 1995. ................................................................ G-6
Notes to Consolidated Financial Statements .................................... G-8
Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations. ................................................................... G-28
Part I, Item 1. Business ...................................................................... G-38
II. Excerpts from Sandwich Bancorp's Quarterly Report on Form 10-Q for the Quarter Ended
June 30, 1998
Part I, Item 1. Unaudited Consolidated Financial Statements of Sandwich Bancorp, Inc. and
Subsidiaries:
Consolidated Balance Sheets as of June 30, 1998 and December 31, 1997 ........ G-54
Consolidated Statements of Operations for the three and six months ended
June 30, 1998 and 1997 ....................................................... G-55
Consolidated Statements of Changes in Stockholders' Equity for the six months
ended June 30, 1998 and 1997. ................................................ G-56
Consolidated Statements of Cash Flows for the six months ended June 30,
1998 and 1997 ................................................................. G-57
Notes to Consolidated Financial Statements .................................... G-59
Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations. ................................................................... G-61
</TABLE>
G-1
<PAGE>
KPMG PEAT MARWICK LLP
The Board of Directors and Stockholders
Sandwich Bancorp, Inc.
We have audited the accompanying consolidated balance sheets of Sandwich
Bancorp, Inc. and subsidiaries as of December 31, 1997 and 1996 and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1997.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepting 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Sandwich
Bancorp, Inc. and subsidiaries as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
January 26, 1998, except as to note 17,
which is as of March 23, 1998
G-2
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
-------------- -------------
(In thousands)
<S> <C> <C>
ASSETS
Cash and due from banks (note 14) ......................................... $ 9,949 $ 11,543
Federal funds sold ........................................................ 6,018 175
-------- --------
Total cash and cash equivalents ....................................... 15,967 11,718
-------- --------
Other short-term investments (note 2) ..................................... 101 636
Investment securities (notes 3 and 9):
Available for sale (amortized cost of $10,863 and $13,262,
at December 31, 1997 and 1996, respectively) ........................... 10,995 13,312
Held to maturity (fair value of $99,775 and $99,128, at
December 31, 1997 and 1996, respectively) .............................. 99,577 99,648
-------- --------
Total investment securities ............................................ 110,572 112,960
-------- --------
Loans, less allowance for loan losses of $4,100 in 1997 and
$3,741 in 1996 (notes 4, 5, 9 and 14) .................................... 366,642 317,103
Stock in Federal Home Loan Bank of Boston, at cost (notes 7 and 9) ....... 3,749 2,670
Accrued interest receivable .............................................. 2,836 2,680
The Co-operative Central Bank Reserve Fund ............................... 965 965
Real estate held for sale ................................................ 457 --
Real estate held for investment .......................................... -- 571
Real estate acquired by foreclosure ...................................... 596 465
Office properties and equipment (note 6) ................................. 4,641 6,015
Leased property under capital lease (note 6) ............................. 1,738 --
Core deposit intangible .................................................. 1,459 1,966
Income taxes receivable, net (note 10) ................................... 103 --
Deferred income tax asset, net (note 10) ................................. 2,948 2,469
Prepaid expenses and other assets ........................................ 5,923 4,337
-------- --------
Total assets .......................................................... $518,697 $464,555
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits (note 8) ......................................................... $423,014 $388,249
Borrowed funds (note 9) ................................................... 45,601 32,073
Capital lease obligation (note 6) ......................................... 1,738 --
Escrow deposits of borrowers .............................................. 1,604 915
Income taxes payable, net (note 10) ....................................... -- 282
Accrued expenses and other liabilities .................................... 4,726 4,403
-------- --------
Total liabilities ..................................................... 476,683 425,922
-------- --------
Commitments and contingencies (note 14)
STOCKHOLDERS' EQUITY (NOTE 11)
Preferred stock, par value $1.00 per share;
authorized 5,000,000 shares; none issued or outstanding--
Common stock, par value $1.00 per share; authorized 15,000,000
shares; 1,942,159 and 1,901,565 issued and outstanding, respectively ..... 1,942 1,902
Additional paid-in capital ................................................ 20,139 19,323
Retained earnings ......................................................... 19,848 17,381
Net unrealized gain on investment securities available for sale ........... 85 27
-------- --------
Total stockholders' equity ............................................ 42,014 38,633
-------- --------
Total liabilities and stockholders' equity ............................ $518,697 $464,555
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
G-3
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------------------
1997 1996 1995
------------ ------------ ------------
(In thousands, except per share data)
<S> <C> <C> <C>
INTEREST AND DIVIDEND INCOME
Interest on loans ............................................ $ 28,205 $ 24,680 $ 22,218
Interest and dividends on investment securities
available for sale .......................................... 772 1,562 1,719
Interest on investment securities held to maturity ........... 6,575 5,833 6,027
Interest on short-term investments ........................... 304 166 640
The Co-operative Central Bank Reserve Fund ................... 61 68 69
-------- -------- --------
Total interest and dividend income ....................... 35,917 32,309 30,673
-------- -------- --------
INTEREST EXPENSE
Deposits:
Savings accounts ............................................ 3,588 3,660 4,338
Certificates of deposit ..................................... 11,754 10,973 9,940
-------- -------- --------
Total deposits ........................................... 15,342 14,633 14,278
Borrowed funds ............................................... 2,980 1,159 555
-------- -------- --------
Total interest expense ................................... 18,322 15,792 14,833
-------- -------- --------
Net interest and dividend income ......................... 17,595 16,517 15,840
Provision for loan losses (note 5) .............................. 750 265 597
-------- -------- --------
Net interest and dividend income after
provision for loan losses .............................. 16,845 16,252 15,243
-------- -------- --------
NON-INTEREST INCOME
Service charges .............................................. 1,687 1,781 1,740
Mortgage loan servicing fees ................................. 250 252 248
Gain on sale of branch deposits .............................. -- -- 214
Gain on sale of loans ........................................ 175 250 40
Gain on sales of investment securities, net .................. 55 -- --
Other ........................................................ 554 556 476
-------- -------- --------
Total non-interest income ................................ 2,721 2,839 2,718
-------- -------- --------
NON-INTEREST EXPENSE
Salaries and employee benefits ............................... 6,243 5,999 5,757
Occupancy and equipment ...................................... 1,503 1,587 1,325
FDIC deposit insurance ....................................... 73 112 469
SAIF special assessment ...................................... -- 280 --
Advertising .................................................. 385 357 358
Data processing service fees ................................. 633 702 665
Foreclosed property expense .................................. 1 46 152
Loss on writedown of real estate held for investment ......... -- -- 305
Amortization of core deposit intangible ...................... 507 584 660
Other ........................................................ 2,881 2,666 2,665
-------- -------- --------
Total non-interest expense ............................... 12,226 12,333 12,356
-------- -------- --------
Income before income tax expense ......................... 7,340 6,758 5,605
Income tax expense (note 10) .................................... 2,480 2,621 2,169
-------- -------- --------
Net income ............................................... $ 4,860 $ 4,137 $ 3,436
======== ======== ========
Basic earnings per share ........................................ $ 2.54 $ 2.20 $ 1.87
======== ======== ========
Diluted earnings per share ...................................... $ 2.45 $ 2.13 $ 1.82
======== ======== ========
Average basic shares outstanding ................................ 1,913 1,881 1,840
Dilutive effect of outstanding stock options .................... 73 59 51
-------- -------- --------
Average diluted shares outstanding .............................. 1,986 1,940 1,891
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
G-4
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Net unrealized
gain (loss) on
investment
Additional securities
Common paid-in Retained available
stock capital earnings for sale, net Total
-------- ------------ ---------- --------------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 .................... $1,833 $18,448 $ 13,075 $ (537) $ 32,819
Net income ................................... -- -- 3,436 -- 3,436
Dividends declared ($0.70 per share) ......... -- -- (1,288) -- (1,288)
Stock options exercised ...................... 17 184 -- -- 201
Decrease in net unrealized loss on
investment securities available for sale -- -- -- 576 576
------ ------- -------- ------ --------
Balance at December 31, 1995 .................... 1,850 18,632 15,223 39 35,744
Net income ................................... -- -- 4,137 -- 4,137
Dividends declared ($1.05 per share) ......... -- -- (1,979) -- (1,979)
Stock options exercised ...................... 52 691 -- -- 743
Decrease in net unrealized gain on
investment securities available for sale -- -- -- (12) (12)
------ ------- -------- ------ --------
Balance at December 31, 1996 .................... 1,902 19,323 17,381 27 38,633
Net income ................................... -- -- 4,860 -- 4,860
Dividends declared ($1.25 per share) ......... -- -- (2,393) -- (2,393)
Stock options exercised ...................... 40 816 -- -- 856
Increase in net unrealized gain on
investment securities available for sale -- -- -- 58 58
------ ------- -------- ------ --------
Balance at December 31, 1997 .................... $1,942 $20,139 $ 19,848 $ 85 $ 42,014
====== ======= ======== ====== ========
</TABLE>
See accompanying notes to consolidated financial statements.
G-5
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31,
----------------------------------------
1997 1996 1995
----------- ------------ -----------
(In thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .............................................................. $ 4,860 $ 4,137 $ 3,436
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses ............................................. 750 265 597
Provision for loss and writedowns of real estate acquired
by foreclosure ....................................................... 31 48 96
Depreciation and amortization ......................................... 684 1,422 1,592
(Increase) decrease in:
Accrued interest receivable .......................................... (156) 61 (47)
Deferred income tax asset, net ....................................... (503) 9 (528)
Other assets ......................................................... (1,586) 1,029 (3,626)
Income taxes receivable .............................................. (103) -- --
Core deposit intangible .............................................. 507 -- --
Increase (decrease) in:
Escrow deposits of borrowers ......................................... 689 (664) 914
Income tax payable ................................................... (282) 32 (455)
Accrued expenses and other liabilities ............................... 323 1,582 (398)
Gain on sales of loans, net ........................................... (175) (250) (40)
Principal balance of loans originated for sale ........................ (18,197) (20,827) (14,752)
Principal balance of loans sold ....................................... 18,238 20,999 14,363
Gain on sales of investment securities, net ........................... (55) -- --
Gain on sales of real estate acquired by foreclosure .................. (92) (65) (16)
--------- --------- ---------
Total adjustments ................................................... 73 3,641 (2,300)
--------- --------- ---------
Net cash provided by operating activities ......................... 4,933 7,778 1,136
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale ................. (4,086) (145) (8,718)
Purchases of investment securities held to maturity ................... (38,915) (29,948) (6,054)
Proceeds from sales of investment securities available for sale ....... 2,910 -- --
Proceeds from maturities and paydowns of investment securities
available for sale ................................................... 3,584 12,495 6,457
Proceeds from maturities and paydowns of investment securities
held to maturity ..................................................... 39,031 19,675 15,120
(Increase) decrease in:
Short-term investments ............................................... 535 274 773
Loans ................................................................ (51,400) (48,276) (20,405)
Real estate acquired by foreclosure .................................. -- -- (52)
Real estate held for sale ............................................ (457) -- --
Stock in Federal Home Loan Bank of Boston ............................ (1,079) -- --
Investments in real estate ........................................... 571 14 229
Proceeds from sale of real estate acquired by foreclosure ............. 1,195 1,326 983
Disposal of office properties and equipment, net ...................... 1,055 -- --
Capitalized expenses on real estate acquired by foreclosure ........... (20) -- --
Purchase of office properties and equipment ........................... (364) (512) (1,009)
--------- --------- ---------
Net cash used by investing activities ............................. (47,440) (45,097) (12,676)
--------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
G-6
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------
1997 1996 1995
------------- ------------ ------------
(In thousands)
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits ................................... $ 34,765 $ 10,276 $ 11,830
Advances from the Federal Home Loan Bank of Boston ......... 200,054 69,884 11,047
Repayment of Federal Home Loan Bank advances ............... (186,526) (45,959) (15,764)
Cash dividends paid ........................................ (2,393) (1,979) (1,288)
Net cash paid for deposits sold ............................ -- -- 8,134
Stock options exercised .................................... 856 743 201
---------- --------- ---------
Net cash provided by financing activities .............. 46,756 32,965 14,160
---------- --------- ---------
Net increase (decrease) in cash and federal funds sold ..... 4,249 (4,354) 2,620
Cash and federal funds sold, beginning of year ............. 11,718 16,072 13,452
---------- --------- ---------
Cash and federal funds sold, end of year ................... $ 15,967 $ 11,718 $ 16,072
========== ========= =========
CASH PAID FOR
Interest on deposits ....................................... $ 15,329 $ 14,635 $ 14,606
========== ========= =========
Interest on borrowed funds ................................. $ 2,870 $ 615 $ 582
========== ========= =========
Income taxes, net .......................................... $ 2,983 $ 2,481 $ 3,152
========== ========= =========
OTHER NON-CASH ACTIVITIES
Deferred taxes on change in unrealized (gain) loss on
securities available for sale ............................. $ (24) $ 15 $ (296)
========== ========= =========
Additions to real estate acquired by foreclosure ........... $ 1,245 $ 1,407 $ 409
========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
G-7
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Sandwich Bancorp, Inc. (the "Company") is a Massachusetts corporation and
the holding company of Sandwich Co-operative Bank (the "Bank"). The Sandwich
Co-operative Bank was organized as a Massachusetts chartered co-operative bank
in 1885. The Bank merged with Wareham Co-operative Bank in May 1982. In July
1986, the Bank converted from mutual to stock form through the sale and
issuance of 1,820,833 shares of common stock, par value $1.00 per share (the
"Common Stock"). The Bank's deposits are insured by the Federal Deposit
Insurance Corporation ("FDIC"), an agency of the federal government, up to
$100,000 per insured depositor, with additional insurance to the total amount
of the deposit provided by the Share Insurance Fund of The Co-operative Central
Bank (the "Central Bank"), a deposit insuring entity chartered by the
Commonwealth of Massachusetts. The Bank is subject to regulation by the
Massachusetts Commissioner of Banks ("Commissioner") and the FDIC.
On January 28, 1997, Sandwich Co-operative Bank announced that its Board
of Directors had approved a plan providing for the formation of a holding
company with the Bank as the principal subsidiary. Under the plan, each
existing share of the Bank's Common Stock was converted into one share of
Common Stock in the new holding company. As a result of this reorganization,
the Bank's stockholders became the owners of the newly formed holding company,
which in turn owns all of the outstanding stock of the Bank. The holding
company formation resulted in no change to the Bank's business, management,
office locations or customer service, and the holding company's corporate
documents did not include any additional anti-takeover provisions. The holding
company reorganization was consummated on September 30, 1997.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Sandwich Bancorp, Inc. (the "Company") and its wholly owned subsidiaries, The
Sandwich Co-operative Bank, The Sextant Corporation, Sandwich Securities
Corporation and Sextant Securities Corporation. All significant intercompany
accounts and transactions have been eliminated in consolidation.
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles and general practices
within the banking industry. 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 balance sheet and income and
expenses for the period. Actual results could differ from those estimates.
Material estimates that are particularly susceptible to change relate to
the determination of the allowance for loan losses. This estimate is dependent
on future economic and overall business conditions.
Certain reclassifications have been made to previously reported balances
to conform with the current period's presentation.
Investment Securities
Debt securities that the Bank has the positive intent and ability to hold
to maturity are classified as held-to-maturity and reported at amortized cost;
debt and equity securities that are bought and held principally for the purpose
of selling in the near term are classified as trading and reported at fair
value, with unrealized gains and losses included in earnings; and debt and
equity securities not classified as either held-to-maturity or trading are
classified as available-for-sale and reported at fair value, with unrealized
gains and losses excluded from earnings and reported as a separate component of
stockholders' equity, net of applicable taxes.
Securities held to maturity, including bonds, mortgage-backed securities &
CMOs are stated at cost, adjusted for amortization of premiums or accretion of
discounts, calculated using a method which approximates the interest method.
The basis for valuation reflects management's intention and ability to hold
these securities to maturity.
G-8
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Securities available for sale consisting of government bonds, adjustable
rate mortgage-backed securities and marketable equity securities are stated at
fair value, with unrealized gains and losses, net of tax, excluded from
earnings and reported as a separate component of stockholders' equity until
realized. Fair value is based upon quoted market prices or dealer quotes as of
the reporting date.
Gains and losses on the sale of investment securities are recognized at
the time of sale on a specific identification basis. Unrealized losses deemed
to be other than temporary declines in value are charged to operations.
Premiums and discounts on investment and mortgage-backed securities are
amortized or accreted into income by a method that estimates the interest
method adjusted for prepayments. If a decline in fair value below the amortized
cost basis of an investment or mortgage-backed security is judged to be other
than temporary, the cost basis of the investment is written down to fair value
as a new cost basis and the amount of the write-down is included as a charge
against income.
Loans
Loans are reported at their principal amount outstanding, net of any
unearned discount and deferred loan fees. Interest income on loans is credited
to income based on loan principal amounts outstanding at appropriate interest
rates.
Unearned discount and premium on loans is credited or charged to income on
a basis which approximates the interest method.
Accrual of interest income on loans is discontinued and unpaid accrued
interest is reversed when management determines that borrowers will be unable
to meet contractual obligations and/or when loans are ninety days or more in
arrears, except in certain instances where management believes that collateral
held by the Bank is clearly sufficient for full satisfaction of both principal
and interest. Loans will be removed from non-accrual when the principal and
interest become current and the loan is considered fully collectable.
Loan origination fees and certain direct origination costs are offset and
the resulting net amount is deferred and amortized as an adjustment of the
yield on the related loans.
Loans held for sale are carried at the lower of cost or estimated fair
value. Fair value is determined based on outstanding investor commitments or,
in the absence of such commitments, current investor yield requirements.
Allowance for Loan Losses
The allowance for loan losses is available for probable credit losses
inherent in the loan portfolio. The allowance is increased by provisions
charged to operations on the basis of many factors including the risk
characteristics of the portfolio, current economic conditions and trends in
loan delinquencies and charge-offs. Realized losses, net of recoveries, are
charged directly to the allowance.
The Bank accounts for impaired loans, except loans accounted for at fair
value or at the lower of cost or fair value, at the present value of the
expected future cash flows discounted at the loan's effective interest rate or
the fair value of the collateral if the loan is collateral dependent. Impaired
loans include commercial, commercial real estate and individually significant
mortgage or consumer loans for which it is probable the Bank will not collect
all amounts due according to the terms of the loan agreement. Impairment on
troubled debt restructurings is measured using the premodification rate of
interest.
G-9
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
While management uses the information available in establishing the
allowance for loan losses, future adjustments to the allowance may be necessary
if economic conditions differ substantially from the assumptions used in making
the evaluation. In addition, various regulatory agencies, as an integral part
of their examination process, periodically review the Bank's allowance for loan
losses. Such agencies may require the Bank to recognize additions to the
allowance based on judgments different from those of management.
Real Estate Acquired by Foreclosure
Real estate acquired by foreclosure is comprised of properties acquired
through foreclosure proceedings or acceptance of a deed in lieu of foreclosure.
Real estate acquired by foreclosure is initially recorded at the lower of the
carrying value of the loan or the fair value of the property minus costs to
sell. Fair value is based upon a market appraisal prepared by a State certified
appraiser not more than 30 days prior to the date of the foreclosure. Losses
arising from the acquisition of such properties are charged against the
allowance for loan losses.
Operating expenses and any subsequent provisions to reduce the carrying
value to fair value minus cost to sell are charged to current period earnings.
Gains upon disposition are reflected in earnings as realized. Realized losses
are charged to the valuation allowance.
Office Properties and Equipment
Office properties and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are computed on
the straight-line method over the estimated useful lives of the related assets
or terms of leases.
Pension Costs and Employee Benefits
The Bank accounts for pension and postretirement benefits on the net
periodic cost method for financial reporting purposes. This method recognizes
the compensation cost of an employee's benefit over that employee's approximate
service period.
The Company continues to follow APB Opinion No. 25 "Accounting for Stock
Issued to Employees" as permitted by Statement of Financial Accounting
Standards No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123"). For
companies that elect to continue using APB 25, SFAS 123 requires disclosure of
the pro forma effect of using the fair value method of accounting for
stock-based compensation that is encouraged by SFAS 123. See note 12 of notes
to consolidated financial statements for the expanded disclosures required by
SFAS 123 regarding pro forma net income and earnings per share.
Core Deposit Intangible
Core deposit and other intangibles are amortized to expense over a period
of ten years using an accelerated method. The unamortized balance of these
intangibles are evaluated periodically for their recoverability.
Income Taxes
The Bank recognizes income taxes under the asset and liability method.
Under this method, deferred tax assets and liabilities are established for the
temporary differences between the accounting basis and the tax basis of the
Bank's assets and liabilities at enacted tax rates expected to be in effect
when the amounts related to such temporary differences are realized or settled.
A valuation allowance related to deferred tax assets is established when, in
management's judgment, it is more likely than not that all or a portion of such
deferred tax assets will not be realized. Changes in the valuation allowance
are reflected as deferred income tax expense or benefit. The deferred tax asset
is adjusted for changes in the federal and state tax rates.
G-10
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Earnings Per Share
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"). SFAS 128
replaces the existing accounting rules for computing earnings per share and
makes the new rules comparable to international standards. Basic earnings per
share excludes common stock equivalents and is computed by dividing net income
by the weighted average number of common shares outstanding for the period.
Diluted earnings per share gives effect to all potential dilutive common shares
using the average market price of the Company's common stock for the period
plus the weighted average number of common shares outstanding for the
equivalent period of time. All prior period earnings per share have been
restated to comply with SFAS 128.
The numerator in the earnings per share calculation is net income, as
reported, for both the basic and dilutive calculations.
(2) OTHER SHORT-TERM INVESTMENTS
A comparative summary of other short-term investments follows:
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
-------------- -------------
(In thousands)
<S> <C> <C>
Tax anticipation notes ......... $ -- $570
Money market funds ............. 101 66
---- ----
$101 $636
==== ====
</TABLE>
(3) INVESTMENT SECURITIES
A comparative summary of investment securities follows (mortgage-backed
securities and CMOs are shown at their final maturity, but are expected to have
shorter average lives); the Bank does not own callable securities.
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
--------------------------------------------- --------------------------------------------
Held to Maturity Available for Sale Held to Maturity Available for Sale
---------------------- ---------------------- ---------------------- ---------------------
Amortized Fair Amortized Fair Amortized Fair Amortized Fair
Cost Value Cost Value Cost Value Cost Value
----------- ---------- ------------ --------- ----------- ---------- ----------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government obligations:
Maturing within 1 year .......... $ 9,992 $10,004 $-- $-- $12,015 $12,035 $2,000 $1,994
Maturing after 1 year
but within 5 years ............ 5,488 5,506 -- -- 10,462 10,492 -- --
------- ------- --- --- ------- ------- ------ ------
15,480 15,510 -- -- 22,477 22,527 2,000 1,994
------- ------- --- --- ------- ------- ------ ------
Collateralized mortgage
obligations (CMOs):
Maturing within 1 year .......... 413 413 -- -- 1,436 1,436 -- --
Maturing after 1 year
but within 5 years ............ 4,598 4,591 -- -- 6,384 6,312 -- --
Maturing after 5 years but
within 10 years ............... 5,036 5,021 -- -- 740 753 -- --
Maturing after 10 years ......... 40,162 40,230 -- -- 56,220 55,708 -- --
------- ------- --- --- ------- ------- ------ ------
50,209 50,255 -- -- 64,780 64,209 -- --
------- ------- --- --- ------- ------- ------ ------
</TABLE>
G-11
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(3) INVESTMENT SECURITIES (Continued)
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
-------------------------------------------- --------------------------------------------
Held to Maturity Available for Sale Held to Maturity Available for Sale
--------------------- ---------------------- --------------------- ----------------------
Amortized Fair Amortized Fair Amortized Fair Amortized Fair
Cost Value Cost Value Cost Value Cost Value
----------- --------- ------------ --------- ----------- --------- ----------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage-backed securities:
Maturing within 1 year .......... -- -- 98 98 -- -- -- --
Maturing after 1 year but
within 5 years ................ -- -- -- -- -- -- 147 147
Maturing after 5 years but
within 10 years ............... 217 228 -- -- -- -- -- --
Maturing after 10 years ......... 33,671 33,782 10,763 10,891 12,391 12,392 8,271 8,343
------ ------ ------ ------ ------ ------ ----- -----
33,888 34,010 10,861 10,989 12,391 12,392 8,418 8,490
------ ------ ------ ------ ------ ------ ----- -----
Marketable equity securities:
Mortgage-backed mutual
fund .......................... -- -- -- -- -- -- 2,520 2,510
Common and preferred
stocks ........................ -- -- 2 6 -- -- 324 318
------ ------ ------ ------ ------ ------ ----- -----
-- -- 2 6 -- -- 2,844 2,828
------ ------ ------ ------ ------ ------ ----- -----
$99,577 $99,775 $10,863 $10,995 $99,648 $99,128 $13,262 $13,312
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
A comparative summary of mortgage-backed securities and CMO's follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
------------------------ ------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
----------- ---------- ----------- ----------
(In thousands)
<S> <C> <C> <C> <C>
FHLMC .............. $18,086 $18,210 $18,820 $18,720
FNMA ............... 41,643 41,687 24,586 24,408
GNMA ............... 4,398 4,492 3,982 4,068
Non-agency ......... 30,831 30,865 38,201 38,201
------- ------- ------- -------
$94,958 $95,254 $85,589 $85,091
======= ======= ======= =======
</TABLE>
G-12
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(3) INVESTMENT SECURITIES (Continued)
A comparative summary of gross unrealized gains and losses pertaining to
investment securities are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1997
-----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ------------ ------------ ---------
(In thousands)
<S> <C> <C> <C> <C>
Held to Maturity
- --------------------------------------
U.S. Government obligations .......... $15,480 $ 36 $ (6) $15,510
Collateralized mortgage
obligations ......................... 50,209 269 (223) 50,255
Mortgage-backed securities ........... 33,888 331 (209) 34,010
------- ---- ----- -------
$99,577 $636 $(438) $99,775
======= ==== ===== =======
Available for Sale
- ---------------------------------------
U.S. Government obligations .......... $ -- $ -- $ -- $ --
Mortgage-backed securities ........... 10,861 137 (9) 10,989
Marketable equity securities ......... 2 4 -- 6
------- ---- ------- -------
$10,863 $141 $ (9) $10,995
======= ==== ======= =======
<CAPTION>
December 31, 1996
------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ------------ ------------ ----------
(In thousands)
<S> <C> <C> <C> <C>
Held to Maturity
- ---------------------------------------
U.S. Government obligations .......... $22,477 $ 50 $ -- $22,527
Collateralized mortgage
obligations ......................... 64,780 209 (780) 64,209
Mortgage-backed securities ........... 12,391 88 (87) 12,392
------- ---- ------ -------
$99,648 $347 $ (867) $99,128
======= ==== ====== =======
Available for Sale
- ---------------------------------------
U.S. Government obligations .......... $ 2,000 $ -- $ (6) $ 1,994
Mortgage-backed securities ........... 8,418 112 (40) 8,490
Marketable equity securities ......... 2,844 20 (36) 2,828
------- ---- ------ -------
$13,262 $132 $ (82) $13,312
======= ==== ====== =======
</TABLE>
The Bank had approximately $2,910,000 in proceeds from sales of securities
available for sale for the year ended December 31, 1997. The Bank realized
gross gains on sales of $66,000 and gross losses of $11,000 during 1997. There
were no sales of securities for the year ended December 31, 1996.
(4) LOANS
The Bank's lending activities are conducted principally in the
Southeastern and Cape Cod areas of Massachusetts. The Bank grants single-family
and multi-family residential loans, commercial real estate loans and a variety
of consumer loans. In addition, the Bank grants loans for the construction of
residential homes, multi-family properties, commercial real estate properties
and for land development. Most loans granted by the Bank are either
collateralized by real estate or guaranteed by Federal and local governmental
authorities. The loans are expected to be repaid from borrower's earnings and
cash flow or proceeds from the sale of the related assets.
State banking regulations generally limit the amount of loans that may be
outstanding to one borrower to 20% of stockholders' equity. At December 31,
1997, the Bank had no loans outstanding to one borrower in an aggregate amount
exceeding this limitation.
G-13
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(4) LOANS (Continued)
A comparative summary of loans follows:
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
-------------- -------------
(In thousands)
<S> <C> <C>
Residential mortgage:
Fixed rate ....................................... $ 14,956 $ 16,020
Adjustable rate .................................. 232,925 186,012
Commercial real estate ............................ 62,579 61,088
Construction ...................................... 32,472 34,332
Land .............................................. 6,351 4,526
Other loans:
Home equity ...................................... 12,438 12,278
Consumer ......................................... 4,847 5,393
Secured by deposits .............................. 1,182 1,160
Commercial ....................................... 8,060 7,933
Education ........................................ 826 1,123
-------- --------
376,636 329,865
Less:
Allowance for loan losses (note 5) ............... (4,100) (3,741)
Unadvanced portion of construction loans ......... (7,188) (9,763)
Deferred loan origination costs .................. 1,294 742
-------- --------
$366,642 $317,103
======== ========
</TABLE>
Non-accrual loans totaled approximately $3,581,000, $4,086,000, and
$4,671,000 at December 31, 1997, 1996, and 1995, respectively. Restructured
loans totaled approximately $105,000, $258,000, and $1,062,000 at December 31,
1997, 1996, and 1995, respectively.
The reduction in interest income associated with non-accrual and
restructured loans at the end of the periods was as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------
1997 1996 1995
------ ------ -------
(In thousands)
<S> <C> <C> <C>
Income in accordance with original terms ......... $321 $403 $551
Income recognized ................................ 144 203 312
---- ---- ----
Reduction in interest income .................... $177 $200 $239
==== ==== ====
</TABLE>
Included in non-accrual loans are impaired loans totaling $630,000,
$1,429,000 and $1,309,000 at December 31, 1997, 1996 and 1995, respectively.
The reduction in interest income associated with impaired loans at the end of
the periods was as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------
1997 1996 1995
------ ------ -------
(In thousands)
<S> <C> <C> <C>
Income in accordance with original terms ......... $67 $148 $141
Income recognized ................................ 23 84 72
--- ---- ----
Reduction in interest income .................... $44 $ 64 $ 69
=== ==== ====
</TABLE>
G-14
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(4) LOANS (Continued)
The Bank granted mortgage loans to executive officers and to Directors and
their related interests in the normal course of business. The outstanding
amount of such loans at December 31, 1997, 1996 and 1995 was approximately
$700,000, $714,000, and $820,000, respectively. No such loans were on
non-accrual. Currently, the Bank grants only loans secured by deposits to
executive officers and Directors.
Mortgage loans serviced by the Bank for others amounted to approximately
$115,478,000, $108,756,000, and $100,902,000, at December 31, 1997, 1996 and
1995, respectively. The Bank had no loans held for sale at December 31, 1997
and $221,000, and $389,000 at December 31, 1996, 1995, respectively. At
December 31, 1997, the Bank had commitments to sell loans totaling
approximately $6,149,000.
(5) ALLOWANCE FOR LOAN LOSSES
An analysis of the allowance for loan losses follows:
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Balance at beginning of period ......................... $3,741 $3,674 $3,255
Provision charged to operations ....................... 750 265 597
Recoveries on accounts previously charged off ......... 89 67 183
Loans charged off ..................................... (480) (265) (361)
------ ------ ------
Balance at end of period ............................... $4,100 $3,741 $3,674
====== ====== ======
</TABLE>
(6) OFFICE PROPERTIES AND EQUIPMENT
A summary of office properties and equipment follows:
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
-------------- -------------
(In thousands)
<S> <C> <C>
Land ................................................... $ 712 $ 870
Buildings .............................................. 2,627 4,395
Furniture, fixtures and equipment ...................... 4,282 3,923
Leasehold improvements ................................. 400 392
-------- --------
8,021 9,580
Less accumulated depreciation and amortization ......... (3,380) (3,565)
-------- --------
$ 4,641 $ 6,015
======== ========
</TABLE>
In 1997, the Bank entered into a sale/leaseback agreement for three of its
offices and deferred the gain on sale of $599,000. The initial lease term is
twenty years followed by four five-year renewal options. Furthermore, the Bank
will have the right to re-purchase the properties at the end of years eight,
fifteen and twenty. The commitment for minimum annual lease payments is as
follows:
<TABLE>
<CAPTION>
Years ending December 31,
---------------------------------------------------------------------
1997 1998 1999 2000 2001 Thereafter Total
------ ------ ------ ------ ------ ------------ ---------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Capital Lease Payments ......... $15 182 182 182 182 995 $1,738
</TABLE>
G-15
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(7) STOCK IN FEDERAL HOME LOAN BANK OF BOSTON
As a member of the Federal Home Loan Bank of Boston ("FHLB of Boston"),
the Bank is required to invest in $100 par value stock of the FHLB of Boston in
an amount equal to 1% of its outstanding home loans or 5% of its outstanding
advances from the FHLB of Boston, or 1% of 30% of total assets, whichever is
highest. If such stock is redeemed, the Bank will receive from the FHLB of
Boston an amount equal to the par value of the stock. As of December 31, 1997,
the Bank was required to have an investment of at least $2,603,000.
(8) DEPOSITS
A summary of deposits follows:
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
-------------- -------------
(In thousands)
<S> <C> <C>
Non-interest bearing accounts:
Demand ......................................... $ 39,127 $ 38,459
Official checks ................................ 865 1,336
-------- --------
Total non-interest bearing accounts ......... 39,992 39,795
-------- --------
Savings accounts:
Regular ........................................ 24,345 23,321
NOW, Super NOW and Special Notice .............. 44,075 40,488
Money market ................................... 100,825 92,441
-------- --------
Total savings accounts ...................... 169,245 156,250
-------- --------
Certificates of deposit:
Term ........................................... 168,523 147,265
IRA ............................................ 45,254 44,939
-------- --------
Total certificates of deposit ............... 213,777 192,204
-------- --------
$423,014 $388,249
======== ========
</TABLE>
A summary of certificates of deposit, by periods of maturity follows:
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
-------------- -------------
(In thousands)
<S> <C> <C>
Within one year .................. $134,958 $122,255
From one to two years ............ 55,552 42,250
From two to three years .......... 16,678 15,798
From three to five years ......... 6,572 11,844
Over five years .................. 17 57
-------- --------
$213,777 $192,204
======== ========
</TABLE>
Individual certificates of deposit of $100,000 or more, by periods of
maturity, are summarized below:
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
-------------- -------------
(In thousands)
<S> <C> <C>
Within three months ............... $15,133 $ 8,945
From three to six months .......... 6,976 3,675
From six to twelve months ......... 7,897 4,823
Thereafter ........................ 15,146 18,391
------- -------
$45,152 $35,834
======= =======
</TABLE>
G-16
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(9) BORROWED FUNDS
Advances from the Federal Home Loan Bank of Boston are summarized as
follows:
<TABLE>
<CAPTION>
Maturing in December 31, December 31,
Interest rate year ending 1997 1996
- ---------------------------------- ------------- -------------- -------------
(In thousands)
<S> <C> <C> <C>
4.53-5.78% .................... 1997 $ -- $ 26,026
5.60-6.47% .................... 1998 34,000 5,000
5.71-6.83% .................... 1999 11,000 1,000
8.32% ......................... 2015 47 47
6.67% ......................... 2017 54 --
5.66% ......................... 2018 500 --
-------- --------
$ 45,601 $ 32,073
======== ========
Weighted average rate ......... 5.82% 5.70%
======== ========
</TABLE>
The advances are secured by the Bank's stock in the FHLB of Boston and
certain qualifying assets of the Bank, which include mortgage loans on
residential property and investments with a market value in excess of 125% of
outstanding advances. The Bank has a line of credit with the FHLB of Boston
aggregating $8,146,000 of which all is available at December 31, 1997.
(10) INCOME TAXES
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------
1997 1996 1995
--------- ------------ ---------
(In thousands)
<S> <C> <C> <C>
Current tax expense:
Federal ............................. $2,383 $2,070 $1,928
State ............................... 606 539 674
------ ------ ------
2,989 2,609 2,602
------ ------ ------
Deferred tax benefit:
Federal ............................. (426) (2) (423)
State ............................... (83) 14 (10)
------ ------- ------
(509) 12 (433)
------ ------- ------
Total income tax expense ......... $2,480 $2,621 $2,169
====== ======= ======
</TABLE>
G-17
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(10) INCOME TAXES (Continued)
The difference between income tax expense computed by applying the
statutory Federal income tax rate of 34% to income before income taxes and the
reported income tax expense (benefit) is explained as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------
1997 1996 1995
---------- ------------ ---------
(Dollars in thousands)
<S> <C> <C> <C>
Expected income tax expense at statutory rate ............. $2,496 $2,298 $1,906
Increase (decrease) resulting from:
Dividend received deduction and municipal income ......... (17) (7) (16)
State income taxes, net of Federal benefit ............... 345 365 436
Change in valuation allowance ............................ (576) (142) (100)
Expiration of capital loss carryforward .................. 30 98 --
Other, net ............................................... 202 9 (57)
------ ------- ------
Total income tax expense .............................. $2,480 $2,621 $2,169
====== ======= ======
Effective income tax rate ................................. 33.8% 38.8% 38.7%
====== ======= ======
</TABLE>
The Bank had gross deferred tax assets and gross deferred tax liabilities
as follows:
<TABLE>
<CAPTION>
December 31, At December 31,
1997 1996
-------------- ----------------
(In thousands)
<S> <C> <C>
Gross deferred tax assets:
Allowance for loan losses ................................. $1,470 $1,269
Capital loss carryforward ................................. 9 490
Deferred compensation ..................................... 1,113 966
Non-accrual loan interest ................................. 21 21
Losses on foreclosed real estate .......................... 56 148
Subsidiary state net operating loss carryforward .......... -- 34
Deferred gain on the sale of office properties ............ 269 --
Purchase accounting ....................................... 589 498
------ ------
Gross deferred tax assets .................................. 3,527 3,426
Valuation allowance ........................................ (56) (632)
------ ------
Gross deferred tax assets, net ............................ 3,471 2,794
------ ------
Gross deferred tax liabilities:
Mortgage servicing rights ................................. (143) (80)
Unrealized gains on securities available for sale ......... (47) (17)
Depreciation .............................................. (178) (112)
Loan origination costs .................................... (100) (71)
Miscellaneous ............................................. (55) (45)
------ ------
Gross deferred tax liabilities ............................ (523) (325)
------ ------
Net deferred tax asset ..................................... $2,948 $2,469
====== ======
</TABLE>
A valuation allowance is provided when it is more likely than not that
some portion of the gross deferred tax asset will not be realized. Management
has established a valuation allowance principally for the tax effect of the
capital loss carry forward and the state income tax benefit derived from the
gross deductible temporary differences. The primary sources of recovery of the
deferred tax asset are taxes paid that are available for carryback of $6.1
G-18
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(10) INCOME TAXES (Continued)
million in 1997, 1996 and 1995, and the expectation that the deductible
temporary differences will reverse during periods in which the Bank generates
taxable income. As of December 31, 1997, the capital loss carryforward
approximates $25,000 and expires in 1998.
The balance of the pre-1988 bad debt reserves continue to be subject to
provision of present law that require recapture in the case of certain excess
distributions to shareholders. The tax effect of pre-1988 bad debt reserves
subject to recapture in the case of certain excess distributions is
approximately $2,300,000.
(11) RETAINED EARNINGS
The Bank is subject to various regulatory capital requirements
administered by federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional,
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Bank's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance sheet items as calculated
under regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of Total and Tier I capital (as defined in the regulations) to risk
weighted assets (as defined), and of Tier 1 capital (as defined) to average
assets (as defined). Management believes that as of December 31, 1997, the Bank
meets all capital adequacy requirements to which they are subject.
As of December 31, 1997, the most recent notification from the FDIC
categorized the Bank as well capitalized under the prompt corrective action
provisions. To be categorized as well capitalized, the Bank must maintain Total
capital risk-based, Tier 1 capital risk-based and Tier 1 capital leverage
ratios as set forth in the table. There are no conditions or events since that
notification that management believes would cause a change in the Bank's
categorization.
The Company's and Bank's actual capital amounts and ratios in addition to
the minimum capital requirements and well capitalized capital requirements at
December 31 follow:
<TABLE>
<CAPTION>
To Be Well
Minimums Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Action Provisions
----------------------- ---------------------- -----------------------
Amount Ratio Amount Ratio Amount Ratio
---------- ---------- ---------- --------- ---------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Risk-based capital ratio:
Total capital
Sandwich Bancorp, Inc. $44,371 14.9% $23,868 8.0% $29,835 10.0%
Sandwich Co-operative Bank ......... 44,050 14.8 23,851 8.0 29,814 10.0
Tier I capital
Sandwich Bancorp, Inc. ............. 40,640 13.6 11,934 4.0 17,901 6.0
Sandwich Co-operative Bank .......... 40,321 13.5 11,926 4.0 17,889 6.0
Leverage capital ratio:
Tier I capital
Sandwich Bancorp, Inc. ............. 40,640 7.9 20,690 4.0 25,863 5.0
Sandwich Co-operative Bank ......... 40,321 7.8 20,686 4.0 25,858 5.0
</TABLE>
G-19
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(11) RETAINED EARNINGS (Continued)
<TABLE>
<CAPTION>
To Be Well
Minimums Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Action Provisions
-------------------- ------------------ --------------------
Amount Ratio Amount Ratio Amount Ratio
-------- --------- -------- ------- -------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Risk-based capital ratio:
Total capital:
Sandwich Co-operative Bank ......... 40,112 14.7 21,851 8.0 27,314 10.0
Tier 1 capital
Sandwich Co-operative Bank ......... 36,694 13.4 10,925 4.0 15,147 6.0
Leverage capital ratio:
Tier 1 capital
Sandwich Co-operative Bank ......... 36,694 8.4 17,572 4.0 20,927 5.0
</TABLE>
The Company may not declare or pay cash dividends on its common stock if
the effect thereof would cause its net worth to be reduced below regulatory net
worth requirements or if such declaration and payment would otherwise violate
regulatory requirements.
(12) EMPLOYEE BENEFITS
Postretirement Benefits
The Bank provides postretirement medical benefits for employees that were
hired before July 1, 1993. The Bank accrued postretirement benefits other than
pensions (medical benefits) over the periods during which employees render
service. The Bank amortizes the transition obligation from January 31, 1993
into operations over a 20 year period. Expense for the years ended December 31,
1997, 1996 and 1995 was approximately $54,000, $53,000 and $51,000,
respectively.
Pension Plan
The Bank provides pension benefits for its employees through membership in
the Co-operative Banks Employee's Retirement Association. The Plan is a
multi-employer, noncontributory, defined benefit plan. Bank employees become
eligible after attaining age 21 and one year of service. The Plan is funded by
the Bank and benefits become fully vested after six years of eligible service.
Pension expense was approximately $317,000, $309,000 and $224,000 for the
years ended December 31, 1997, 1996 and 1995, respectively.
Stock Option Plan
During 1986, the Board of Directors adopted a Stock Option Plan for the
benefit of officer and non-officer employees and reserved 182,083 shares of
authorized but unissued common stock. Similarly, in 1994, the Board of
Directors instituted the 1994 Stock Option and Incentive Plan and reserved
90,000 shares of common stock. Under terms of the Plans, the exercise price of
any option granted will not be less than the fair market value of the common
stock on the date of grant of the option and options may not have a maximum
term of more than ten years.
G-20
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(12) EMPLOYEE BENEFITS (Continued)
A summary of the activity under the Plan follows:
<TABLE>
<CAPTION>
Number of Average
shares exercise price
----------- ---------------
<S> <C> <C>
Balance outstanding at December 31, 1994 ......... 169,005 $ 10.67
Options granted ($16.75) ........................ 28,500 16.75
Options exercised ($7.00-$12.00) ................ (17,716) 11.37
------- --------
Balance outstanding at December 31, 1995 ......... 179,789 11.56
Options granted ($21.1875) ...................... 28,600 21.19
Options exercised ($7.00-$16.75) ................ (51,266) 12.49
Options canceled ($11.55-$16.75) ................ (450) 16.17
------- --------
Balance outstanding at December 31, 1996 ......... 156,673 13.00
Options granted ($30.6875) ...................... 31,850 30.69
Options exercised ($7.00-$21.1875)............... (40,594) 10.47
Options canceled ($16.75-$30.6875)............... (1,050) 24.41
------- --------
Balance outstanding at December 31, 1997 ......... 146,879 $ 17.46
======= ========
</TABLE>
Stock options outstanding and exercisable:
<TABLE>
<CAPTION>
At December 31, 1997
---------------------------------------------------------------------------
Options outstanding Options exercisable
---------------------------------- --------------------------------------
Weighted Weighted Weighted
average average average
Number remaining exercise Number exercise
outstanding contractual life price outstanding price
------------- ------------------ ---------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Range of exercise prices
$7.00-$14.875 ........... 63,475 4.2 years $ 9.60 63,475 $ 9.60
$16.75-$21.1875 ......... 52,004 7.8 years 19.07 24,064 18.29
$30.6875 ................ 31,400 9.2 years 30.69 -- --
</TABLE>
There are 3,828 options available for future grant at December 31, 1997.
At December 31, 1997, the per share weighted average fair value of stock
options granted during 1997, 1996 and 1995 was $18.05, $7.39 and $5.20,
respectively, on the date of grant using the Black Scholes option-pricing model
with the following weighted average assumptions for 1997, 1996 and 1995:
expected dividend yield of 2.42% for 1997 and 3.69% for 1996 and 1995,
risk-free interest rate of 5.92% for 1997 and 6.56% for 1996 and 1995,
volatility of the Company's common stock of 35% for 1997 and 45% for 1996 and
1995 and an expected life of ten years.
The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock options in
the financial statements. Had the Company determined compensation cost based on
the fair value at the grant date for its stock options under SFAS No. 123, the
Company's net income would have been reduced to the pro forma amounts indicated
below:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
(Dollars in thousands except per share
data)
<S> <C> <C> <C> <C>
Net income ................. As reported $ 4,860 $ 4,137 $ 3,436
Pro forma 4,654 4,102 3,406
Earnings per share ......... As reported $ 2.45 $ 2.13 $ 1.82
Pro forma 2.34 2.11 1.80
</TABLE>
G-21
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(12) EMPLOYEE BENEFITS (Continued)
Pro forma net income reflects only options granted in 1997, 1996 and 1995.
Therefore, the full impact of calculating compensation cost for stock options
under SFAS No. 123 is not reflected in the pro forma net income amounts
presented above because compensation cost is reflected over the options'
vesting period of three years and compensation cost for options granted prior
to January 1, 1995 is not considered.
Employee Bonus Plan
The Bank has an employee bonus and management incentive compensation plan
in which employees are eligible to participate. The Plan provides for awards
based upon a combination of Bank and individual performance measured against
predetermined annual goals, based on specific performance objectives. The Plan
is administered by the Bank's president under the direction of the Board of
Directors.
Incentive compensation expense of $248,000, $188,000 and $235,000 was
charged to expense for the years ended December 31, 1997, 1996 and 1995,
respectively.
Employee Stock Ownership Plan
Effective May 1, 1989, the Bank established an Employee Stock Ownership
Plan ("ESOP") for the exclusive benefit of participating employees, defined as
age 21 or older who have completed one year of service. Under the plan, the
Bank reviews its profitability and determines what contribution, if any, will
be made to the ESOP. ESOP expense of $197,000, $171,000 and $134,000 was
charged to expense for the years ended December 31, 1997, 1996 and 1995,
respectively.
Executive Supplemental Retirement Agreements
The Bank entered into executive supplemental retirement agreements with
certain executive officers. These agreements provide retirement benefits
designed to supplement benefits available through the Bank's retirement plan
for employees. Total expense for benefits payable under the agreements amounted
to $101,000, $78,000 and $73,000 for the years ended December 31, 1997, 1996
and 1995, respectively. At December 31, 1997, the Bank's liability for these
arrangements, included in accrued expenses and other liabilities, was
approximately $387,000.
Director Deferred Compensation Arrangements
Starting in 1983, the Bank entered into deferred compensation arrangements
with certain directors whereby in consideration for the deferral of directors'
fees, those directors will receive in the future a fixed amount of cash
compensation. Expensed under these arrangements for the years ended December
31, 1997, 1996 and 1995 was approximately $220,000, $238,000 and $148,000,
respectively. At December 31, 1997, the Bank's liability for these
arrangements, included in accrued expenses and other liabilities, was
approximately $1,768,000.
(13) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments have been determined by using available quoted market information
or other appropriate valuation methodologies at year-end, and are not
indicative of the fair value of those instruments at the date this report is
published. These estimates do not reflect any premium or discount that could
result from offering for sale at one time the Bank's entire holdings of a
particular financial instrument. Because no market exists for a portion of the
Bank's financial instruments, fair value estimates are based on judgments
regarding future expected loss experience, current economic conditions, risk
characteristics of various financial instruments, and other factors. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance sheet
financial instruments without attempting to estimate the value of anticipated
future business and the value of assets and liabilities that are not considered
G-22
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(13) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
financial instruments. Significant assets and liabilities that are not
considered financial instruments include real estate acquired by foreclosure,
the deferred income tax asset, office properties and equipment, and core
deposit and other intangibles. In addition, the tax ramifications related to
the realization of the unrealized gains and losses can have a significant
effect on fair value estimates and have not been considered.
The estimation methodologies used, book values and estimated fair values
for the Bank's financial instruments follows.
Financial instruments actively traded in a secondary market have been
valued using quoted available market prices as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
------------------------- ------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
---------- ------------ ---------- -----------
(In thousands)
<S> <C> <C> <C> <C>
Loans held for sale ................ $ -- $ -- $ 221 $ 216
Investment securities:
Available for sale ................ 6 6 4,822 4,822
Held to maturity .................. 15,480 15,510 22,477 22,527
Mortgage-backed securities and CMOs:
Available for Sale ................ 10,989 10,989 8,490 8,490
Held to maturity .................. 84,097 84,265 77,171 76,601
</TABLE>
The fair value of financial instruments with stated maturities have been
estimated by discounting cash flows with a discount rate approximately equal to
the current market rate for similar instruments as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
------------------------- ------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
---------- ------------ ---------- -----------
(In thousands)
<S> <C> <C> <C> <C>
Loans, net .............................. 366,642 372,455 $317,103 $321,473
Certificates of deposit ................. 213,777 214,369 192,204 193,236
Federal Home Loan Bank advances ......... 45,601 45,613 32,073 32,169
</TABLE>
The fair value of financial instruments with no maturity or short-term
maturities approximates its carrying value as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
------------------------- ------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
---------- ------------ ---------- -----------
(In thousands)
<S> <C> <C> <C> <C>
Cash and cash equivalents ...................... $ 15,967 $ 15,967 $11,718 $11,718
Other short-term investments ................... 101 101 636 636
Accrued interest receivable .................... 2,836 2,836 2,680 2,680
Stock in FHLB of Boston ........................ 3,749 3,749 2,670 2,670
Co-operative Central Bank Reserve Fund ......... 965 965 965 965
Demand deposit accounts ........................ 39,992 39,992 39,795 39,795
NOW, Super NOW and Special Notice
accounts ..................................... 44,075 44,075 40,488 40,488
Regular savings accounts ....................... 24,345 24,345 23,321 23,321
Money market deposit accounts .................. 100,825 100,825 92,441 92,441
Escrow deposits of borrowers accounts .......... 1,604 1,604 915 915
</TABLE>
G-23
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(13) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
The fair value of commitments to extend credit have been estimated using
fees charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the present creditworthiness of the
counterparties. The fair value of commitments to sell loans are estimated as
the cost to cancel such agreements. The fair value of financial instruments
with off-balance sheet risk have been estimated as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
-------------------------------- -------------------------------
Contract or Estimated Contract or Estimated
Notional Amount Fair Value Notional Amount Fair Value
----------------- ------------ ----------------- -----------
(In thousands)
<S> <C> <C> <C> <C>
Commitments to extend credit ......... $46,190 $490 $51,976 $539
Commitments to sell loans ............ 6,149 20 1,232 0
</TABLE>
(14) COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Bank has been named a defendant in various legal proceedings arising
in the normal course of business. In the opinion of management, based on the
advice of legal counsel, the ultimate resolution of these proceedings will not
have a material effect on the Company's or the Bank's consolidated financial
statements.
Off-balance Sheet Risk
The Bank is party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers and
to reduce its own exposure to fluctuations in interest rates. These financial
instruments include commitments to originate or purchase loans, unadvanced
portions of construction loans, unused lines of credit, standby letters of
credit and forward commitments to sell loans. These instruments involve, to
varying degrees, elements of credit and interest rate risk in excess of the
amount recognized in the consolidated balance sheets. The contract or notional
amounts of those instruments reflect the extent of involvement the Bank has in
particular classes of financial instruments.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for loan commitments and standby
letters of credit is represented by the contractual amount of those
instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance sheet instruments. For
forward commitments, the contract or notional amounts do not represent exposure
to credit loss. The Bank controls the credit risk of forward commitments
through credit approvals, limits and monitoring procedures.
Financial instruments with off-balance sheet risk are as follows:
<TABLE>
<CAPTION>
Contract or
Notional Amount
------------------------------
December 31, December 31,
1997 1996
-------------- -------------
(In thousands)
<S> <C> <C>
Financial instruments whose contract amounts represent credit risk:
Unused lines of credit and commitments to originate loans ......... $38,784 $41,926
Unadvanced portions of construction loans ......................... 7,188 9,764
Standby letters of credit ......................................... 218 286
Financial instruments whose notional or contract amounts exceed the
amount of credit risk:
Commitments to sell loans ......................................... 6,149 1,232
</TABLE>
G-24
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(14) COMMITMENTS AND CONTINGENCIES (Continued)
Unused lines of credit, commitments to originate or purchase loans and
unadvanced portions of construction loans are agreements to lend to a customer
provided there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. For all lines of credit and
loans, the Bank evaluates each customer's creditworthiness on a case-by-case
basis. The amount of collateral obtained, if deemed necessary by the Bank upon
extension of credit, is based on management's credit evaluation of the
borrower.
Commitments to sell loans are contracts which the Bank enters into for the
purpose of reducing the market risk associated with originating and selling
residential mortgage loans. In order to fulfill the commitment, the Bank must
deliver loans under contract or must pay a cash penalty as determined by the
investor. The Bank does not sell loans with recourse.
Standby letters of credit are conditional commitments issued by the Bank
to guarantee the performance by a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers.
The Bank is required to maintain certain reserves of vault cash and/or
deposits with the Federal Reserve Bank of Boston. The amount of this reserve
requirement included in cash and due from banks was $1,927,000 at December 31,
1997.
(15) CONDENSED PARENT COMPANY FINANCIAL STATEMENTS
Sandwich Bancorp, Inc. was formed on September 30, 1997, therefore the
Statement of Operations and Statement of Cash Flows is for the three months
ended December 31, 1997 only. The following are the condensed financial
statements for Sandwich Bancorp, Inc., referred to as the "Parent Company" for
purposes of this note only, as of December 31:
<TABLE>
<CAPTION>
1997
BALANCE SHEET ---------------
(In thousands)
<S> <C>
Assets
Cash and interest-bearing deposits in subsidiaries ......... $ 258
Investments in subsidiaries, at equity ..................... 41,695
Other assets ............................................... 73
-------
Total assets ............................................. $42,026
=======
Liabilities and Stockholders' Equity
Total liabilities ......................................... $ 12
Total stockholders' equity ................................ 42,014
-------
Total liabilities and stockholders' equity ............... $42,026
=======
</TABLE>
G-25
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(15) CONDENSED PARENT COMPANY FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
Three Months
Ended
December 31, 1997
STATEMENT OF OPERATIONS ------------------
(in thousands)
<S> <C>
Dividends from Company subsidiaries ................................................ $ 768
Interest income from deposits in Company subsidiaries .............................. --
Total operating income ............................................................ --
Non-interest expenses .............................................................. 27
------
Income before income tax expense (benefit) and equity in net income of subsidiaries 741
Income tax expense (benefit) ....................................................... --
------
Income before equity in net income of subsidiaries ................................. 741
Equity in net income of subsidiaries ............................................... 687
------
Net income ......................................................................... $1,428
======
</TABLE>
The Parent Company's statements of changes in stockholders' equity are
identical to the consolidated statements of changes in stockholders' equity and
therefore are not presented here.
<TABLE>
<CAPTION>
Three Months
Ended
December 31, 1997
STATEMENT OF CASH FLOWS ------------------
(in thousands)
<S> <C>
Cash flows from operating activities:
Net income ........................................................................ $1,428
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net income of subsidiaries ................................ (687)
Increase in other assets .......................................................... (73)
Increase in other liabilities ..................................................... 12
------
Net cash provided by operating activities ........................................ 680
------
Cash flows from financing activities:
Stock options exercised ........................................................... 250
Dividends paid to stockholders .................................................... (672)
------
Net cash used by financing activities ............................................ (422)
------
Net cash received by subsidiary .................................................. 258
------
Net increase in cash and interest-bearing deposit in subsidiaries ................... 258
Cash and interest-bearing deposit in subsidiaries at beginning of year .............. --
------
Cash and interest-bearing deposit in subsidiaries at end of year .................... $ 258
======
</TABLE>
G-26
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
SANDWICH BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995--(Continued)
(16) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
1997 Quarters 1996 Quarters
Three Months Ended Three months ended
-------------------------------------------- ---------------------------------------------
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
Periods ended ---------- ----------- ---------- ---------- ---------- ----------- ---------- -----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest and dividend income $ 9,400 $ 9,234 $ 8,958 $ 8,325 $ 8,616 $ 8,233 $ 7,754 $ 7,706
Interest expense ................ 4,896 4,720 4,584 4,122 4,155 4,042 3,805 3,790
-------- -------- -------- -------- -------- -------- -------- --------
Net interest and dividend
income ...................... 4,504 4,514 4,374 4,203 4,461 4,191 3,949 3,916
Provision for loan losses ....... (328) (181) (132) (109) (180) (50) (35) --
Non-interest income ............. 823 662 620 616 712 719 702 706
Non-interest expense ............ (3,186) (2,989) (3,046) (3,005) (2,915) (3,158) (3,116) (3,144)
-------- -------- -------- -------- -------- -------- -------- --------
Income before income taxes ...... 1,813 2,006 1,816 1,705 2,078 1,702 1,500 1,478
Income tax expense .............. 385 768 669 658 831 658 563 569
-------- -------- -------- -------- -------- -------- -------- --------
Net income ...................... $ 1,428 $ 1,238 $ 1,147 $ 1,047 $ 1,247 $ 1,044 $ 937 $ 909
======== ======== ======== ======== ======== ======== ======== ========
Basic earnings per share ........ $ 0.74 $ 0.65 $ 0.60 $ 0.55 $ 0.66 $ 0.55 $ 0.50 $ 0.49
======== ======== ======== ======== ======== ======== ======== ========
Diluted earnings per share ...... $ 0.71 $ 0.62 $ 0.58 $ 0.53 $ 0.63 $ 0.54 $ 0.48 $ 0.47
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
(17) SUBSEQUENT EVENTS
On February 2, 1998, the Company and the Bank entered into a definitive
agreement under which Compass Bank of New Bedford, Massachusetts will acquire
Sandwich Bancorp, Inc. Prior to the Company's consideration and approval of its
definitive agreement with Compass Bank, the Company had contacted and received
expressions of interest from three other parties who had expressed an interest
in an acquisition of the Company.
On February 24, 1998, the Company announced that its Board of Directors,
consistent with the exercise of its fiduciary duties, determined that it was
appropriate to request additional information and clarification of the renewed
expressions of interest that it had received from three other parties
subsequent to February 2.
Following a comprehensive review of the other expressions of interests for
the Company, the Company and Compass Bank jointly announced on March 23, 1998,
that they have signed an amendment to their previously announced agreement of
February 2, 1998 (the "Amended Agreement") by which Compass Bank would acquire
Sandwich Bancorp, Inc. Under the terms of the Amended Agreement, Compass Bank's
parent company, The 1855 Bancorp will convert to a 100% publicly owned stock
holding company and thereafter issue stock having a value of $64.00 per share
to Sandwich Bancorp shareholders in a tax-free exchange of common stock. The
value to be received by Sandwich Bancorp shareholders is subject to adjustment
pursuant to a formula based on the value of the stock of The 1855 Bancorp near
the transaction date. Based on 1855 Bancorp's assumed initial public offering
price of $10.00 per share, each Sandwich Bancorp share will be exchanged for
1855 Bancorp stock having a value of $64.00 per share so long as 1855 Bancorp
stock trades at an average price of between $10.00 and $13.50 per share during
a designated trading period following the initial public offering date. If this
average price exceeds $13.50 per share, the value to be received by Sandwich
Bancorp shareholders will increase proportionately up to a maximum value of
$71.11 until 1855 Bancorp's average price reaches or exceeds $15.00 per share.
If this average price is equal to or less than $10.00 per share, Sandwich
Bancorp shares will be exchanged for 6.4 shares of 1855 Bancorp stock.
Sandwich Bancorp and The 1855 Bancorp also entered into a Stock Option
Agreement, granting to The 1855 Bancorp an option to acquire up to 19.9% of
Sandwich common stock under certain circumstances. The transaction, which is
subject to all necessary regulatory and shareholder approvals, is expected to
close in the fourth quarter of 1998.
G-27
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
PART II, ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
At December 31, 1996, the Bank's total assets were $464,555,000 as
compared to $426,515,000 at December 31, 1995. The increase was largely
attributable to an increase in loan production throughout 1996 offset by a
decrease in the Bank's investment portfolio. At December 31, 1997, the
Company's total assets were $518,697,000 as compared to $464,555,000 at
December 31, 1996, an increase of $54,142,000 or 11.7%. The increase is largely
attributable to an increase in loan production throughout 1997 offset by a
decrease in the Company's investment portfolio, including investment securities
held to maturity and available for sale. Total cash and cash equivalents at
December 31, 1997 totaled $15,967,000 compared to $11,718,000 at December 31,
1996, an increase of $4,249,000. The Company's investment portfolio, including
other short-term investments, investment securities available for sale and
investment securities held to maturity, decreased approximately $2,923,000 to
$110,673,000. Maturities on investment securities and cash flow from
collateralized mortgage obligations (CMOs) were reinvested into loans. The
continuing improvement in the New England and local real estate markets has had
a positive impact on the Company's loan portfolio. As evidence of this, the
Company's loan portfolio, net of allowance for loan losses, increased
approximately $49,539,000 or 15.6% to $366,642,000, through loan originations
and purchases offset by principal amortization and early payoffs.
Deposits totaled $423,014,000 at December 31, 1997 compared to
$388,249,000 at December 31, 1996, an increase of $34,765,000 or 9.0%.
Borrowings totaled $45,601,000 at December 31, 1997 compared to $32,073,000 at
December 31, 1996, an increase of $13,528,000 due to an increase in advances
from the Federal Home Loan Bank of Boston used to finance loan originations,
loan purchases and the purchase of investment securities.
Non-performing assets, which include non-accrual loans and real estate
acquired by foreclosure (OREO) decreased $374,000, from $4,551,000 at December
31, 1996, to $4,177,000 at December 31, 1997. At December 31, 1995,
non-performing assets totaled $5,038,000. Non-accrual loans decreased by
$505,000, from $4,086,000 at December 31, 1996, to $3,581,000 at December 31,
1997. Other real estate owned, however, increased by $131,000, from $465,000 at
December 31, 1996, to $596,000 at December 31, 1997.
The Company's results of operations are affected by interest rate levels,
the amount of non-performing assets, the health of the real estate sector of
the economy, investment securities transactions and seasonal trends. At
December 31, 1997, non-performing assets totaled $4,177,000 or 0.81% of total
assets, of which $3,319,000 are residential properties, $560,000 are investment
properties, and the balance reflects other land loans and properties.
Management anticipates continued stability in the economy in 1998.
However, the local real estate market continues to represent a risk to the
Company's loan portfolio and could result in an increase in, and reduced values
of, properties acquired by foreclosure. Accordingly, higher provisions for loan
losses and foreclosed property expense may be required should economic
conditions worsen or the levels of the Company's non-performing assets
increase. Management continues to engage experienced outside consultants to
assist in loan reviews in an effort to minimize risk and control exposure.
Results of Operations
Comparison of years ended December 31, 1997 and December 31, 1996
General
Net income for the year ended December 31, 1997 amounted to $4,860,000
compared with net income of $4,137,000 for the year ended December 31, 1996.
The principal reason for the increase was improvement in net interest and
dividend income, resulting from growth in the residential loan portfolio.
Additionally, non-interest expense decreased as no provision for the special,
one-time deposit insurance assessment from the Savings Association Insurance
Fund ("SAIF") was incurred in the 1997 period. Decreases in net gains realized
on the sale of loans in the secondary market and decreases in service charges
also occurred for the year ended December 31, 1997. The Company's operating
results depend largely upon its net interest margin which is the difference
between the income earned on loans and investments, and the interest expense
paid on deposits and borrowings, divided by total interest earning average
assets. The net interest margin is affected by the economic and market factors
which influence interest rates, loan demand and deposit flows. The interest
rate margin decreased to 3.71% for the year ended December 31, 1997, from 3.94%
for the year ended December 31, 1996.
G-28
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
Trends in the real estate market locally and in New England impact the
Company because of its real estate loan portfolio. If the local and New England
real estate markets show signs of weakness, additional provisions for loan
losses may be necessary in the future. In addition, various regulatory
agencies, as an integral part of their examination process, periodically review
the Company's allowance for loan losses. Such agencies may require the Company
to recognize additions to the allowance based on information available at the
time of their review.
Average Balance Sheets and Net Interest and Dividend Income
The following table sets forth certain information relating to the
Company's average balance sheets, including interest-earning assets,
interest-bearing liabilities and net interest income:
<TABLE>
<CAPTION>
Years ended December 31,
-------------------------------------------------------------------
1997 1996
--------------------------------- ---------------------------------
Interest Interest
Average earned/ Yield/ Average earned/ Yield/
balance paid Rate balance paid Rate
----------- ---------- ---------- ----------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earnings assets:
Short-term investments .................. $ 6,467 $ 304 4.70% $ 5,160 $ 234 4.53%
Investment securities
available for sale ..................... 12,995 758 5.83 24,236 1,512 6.24
Investment securities held
to maturity ............................ 104,211 6,575 6.31 93,398 5,833 6.25
-------- ------- -------- -------
Total investment securities (1) ......... 117,206 7,333 6.26 117,634 7,345 6.24
Total loans (2) ....................... 349,028 28,205 8.08 295,228 24,680 8.36
Other earning assets .................... 1,988 75 3.77 1,657 50 3.02
-------- ------- -------- -------
Total interest-earnings
assets .............................. 474,689 35,917 7.57 419,679 32,309 7.70
------- -------
Allowance for loan losses ............... (3,839) (3,635)
-------- --------
Total interest-earning assets less
allowance for loan losses .............. 470,850 416,044
Other assets ............................ 25,683 25,214
-------- --------
Total assets .......................... $496,533 $441,258
======== ========
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Savings accounts ....................... $154,856 3,588 2.32 $158,071 3,660 2.32
Certificates of deposit ................ 205,710 11,754 5.71 186,776 10,973 5.87
-------- ------- -------- -------
Total interest-bearing
deposits ............................ 360,566 15,342 4.25 344,847 14,633 4.24
Borrowed funds ......................... 51,241 2,980 5.82 20,999 1,159 5.52
-------- ------- -------- -------
Total interest-bearing
liabilities ......................... 411,807 18,322 4.45 365,846 15,792 4.32
------- -------
Non-interest bearing deposits .......... 40,852 36,415
Other liabilities ...................... 4,971 2,929
-------- --------
Total liabilities ..................... 457,630 405,190
-------- --------
Stockholders' equity .................... 38,923 36,068
-------- --------
Total liabilities and
stockholders' equity ................. $496,553 $441,258
======== ========
Net interest income ..................... $17,595 $16,517
======= =======
Interest rate spread .................... 3.12% 3.38%
==== ====
Net interest margin (3) ................. 3.71% 3.94%
==== ====
<CAPTION>
Years ended December 31,
--------------------------------
1995
--------------------------------
Interest
Average earned/ Yield/
balance paid Rate
----------- --------- ----------
(Dollars in thousands)
<S> <C> <C> <C>
Assets
Interest-earnings assets:
Short-term investments .................. $ 12,933 $ 709 5.48%
Investment securities
available for sale ..................... 29,246 1,719 5.88
Investment securities held
to maturity ............................ 92,676 6,027 6.50
-------- -------
Total investment securities (1) ......... 121,922 7,746 6.35
Total loans (2) ....................... 262,952 22,218 8.45
Other earning assets .................... 0 0 0.00
-------- -------
Total interest-earnings
assets .............................. 397,807 30,673 7.71
-------
Allowance for loan losses ............... (3,412)
--------
Total interest-earning assets less
allowance for loan losses .............. 394,395
Other assets ............................ 27,369
--------
Total assets .......................... $421,764
========
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Savings accounts ....................... $171,197 4,338 2.53
Certificates of deposit ................ 171,431 9,940 5.80
-------- -------
Total interest-bearing
deposits ............................ 342,628 14,278 4.17
Borrowed funds ......................... 10,423 555 5.32
-------- -------
Total interest-bearing
liabilities ......................... 353,051 14,833 4.20
-------
Non-interest bearing deposits .......... 32,450
Other liabilities ...................... 2,622
--------
Total liabilities ..................... 388,123
--------
Stockholders' equity .................... 33,641
--------
Total liabilities and
stockholders' equity ................. $421,764
========
Net interest income ..................... $15,840
=======
Interest rate spread .................... 3.51%
====
Net interest margin (3) ................. 3.98%
====
</TABLE>
- ------------
(1) Investment securities are shown at average amortized cost.
(2) Loans on non-accrual status are included in the average balance.
(3) Net interest income before provision for loan losses divided by total
interest-earning average assets.
G-29
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
Interest and Dividend Income
Interest and dividend income increased by $3,608,000 or 11.2% to
$35,917,000 for the year ended December 31, 1997 when compared to the year
ended December 31, 1996. Interest on loans increased $3,525,000 or 14.3% as a
result of an increase in the average balance outstanding of $53,800,000, and a
decrease in non-accrual loans, partially offset by a decrease in the average
rate earned on the portfolio from 8.36% in 1996 to 8.08% in 1997. Interest and
dividends on investment securities and other short-term investments increased
by $58,000 or 0.8%.
Non-accrual loans decreased $505,000 to $3,581,000 when compared to the
year ended December 31, 1996 balance of $4,086,000. Restructured loans at
December 31, 1997 amounted to approximately $105,000 compared to the December
31, 1996 balance of $258,000. Typically, restructured loans are restructured to
provide either a reduction of the interest on the loan principal or an
extension of the loan maturity.
The following table presents changes in interest and dividend income,
interest expense and net interest and dividend income which are attributable to
changes in the average amounts of interest-earning assets and interest-bearing
liabilities outstanding and/or to changes in the rates earned or paid thereon.
<TABLE>
<CAPTION>
Years ended December 31, Years ended December 31,
1997 vs. 1996 1996 vs. 1995
------------------------------------------ -----------------------------------------
Changes due to increase/(decrease) Changes due to increase/(decrease)
------------------------------------------ -----------------------------------------
Rate/ Rate/
Total Volume Rate Volume Total Volume Rate Volume
--------- -------- ---------- ------------ --------- ---------- ---------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest and dividend income:
Total loans ................................ $3,525 $4,498 $ (827) $(146) $2,462 $2,727 $ (237) $ (28)
Investments ................................ 58 54 12 (8) (876) (756) (135) 15
Other earning assets ....................... 25 10 13 2 50 0 0 50
------ ------ ------ ------- ------ ------ ------ -----
Total interest and dividend income ......... 3,608 4,562 (802) (152) 1,636 1,971 (372) 37
------ ------ ------ ------- ------ ------ ------ -----
Interest expense:
Deposits ................................... 709 666 34 9 355 93 240 22
Borrowed funds ............................. 1,821 1,669 63 89 604 555 21 28
------ ------ ------ ------- ------ ------ ------ -----
Total interest expense ..................... 2,530 2,335 97 98 959 648 261 50
------ ------ ------ ------- ------ ------ ------ -----
Net interest and dividend income ........... $1,078 $2,227 $ (899) $(250) $ 677 $1,323 $ (633) $ (13)
====== ====== ====== ======= ====== ====== ====== =====
</TABLE>
Interest Expense
Total interest expense increased $2,530,000 to $18,322,000 for the year
ended December 31, 1997, from $15,792,000 for the year ended December 31, 1996.
Interest expense from deposits increased by $709,000 or 4.8%. The rise reflects
the increase in average interest-bearing deposits balance outstanding of
$15,719,000. Interest expense from borrowed funds increased $1,821,000
primarily due to an increase in the average balance outstanding of $30,242,000.
Interest rates on interest-bearing deposits and borrowed funds for the year
ended December 31, 1997 increased to 4.45% from 4.32% when compared to 1996.
Provision for Loan Losses
The provision for loan losses charged to earnings amounted to $750,000 and
$265,000 for the years ended December 31, 1997 and 1996, respectively. The
Company increased its provision for loan losses for the year ended December 31,
1997 as compared to the year ended December 31, 1996 as a result of the overall
increase in the loan portfolio and an increase in specific loan charge-offs.
Non-accrual loans as a percentage of total loans outstanding were 0.97% at
December 31, 1997 and 1.27% at December 31, 1996. As of December 31, 1997 and
1996, the Company had identified $200,000 and $584,000, respectively, of
potential problem loans. Management's analysis of the loan portfolio considers
risk elements by loan category, and also the prevailing economic climate and
anticipated future uncertainties. Future adjustments to the allowance for loan
losses may be necessary if economic conditions differ substantially from
assumptions used in performing the analysis, or the levels of the Company's
non-performing assets increase significantly.
G-30
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1997 1996 1995
-------------- -------------- --------------
(Dollars in thousands)
<S> <C> <C> <C>
Non-accrual loans:
Mortgage loans ........................ $ 3,283 $ 3,521 $ 4,238
Other loans ........................... 298 565 433
------- ------- -------
Total non-accrual loans ............. 3,581 4,086 4,671
OREO .................................. 596 465 367
------- ------- -------
Total non-performing assets ......... $ 4,177 $ 4,551 $ 5,038
======= ======= =======
Non-accrual loans as a percentage of:
Total loans receivable .............. 0.97% 1.27% 1.70%
======= ======= =======
Total assets ........................ 0.69% 0.88% 1.10%
======= ======= =======
Non-performing assets as a percentage of:
Total assets ........................ 0.81% 0.98% 1.18%
======= ======= =======
</TABLE>
For further information on non-accrual loans and the provision for loan
losses, see notes 4 and 5 of notes to consolidated financial statements.
Non-Interest Income
Non-interest income decreased $118,000 for the year ended December 31,
1997 compared to the 1996 period. The decrease was mainly the result of a
decline of $94,000 in service charges along with a decrease in gain on sale of
loans of $75,000, partially offset by a $55,000 increase in gains on sales of
investment securities, net. The decrease in gain on sale of fixed rate loans in
the secondary market was due to less favorable market interest rates during the
year 1997. The decrease in service charges resulted from an overall decrease in
fees received for checking account services the Company provides to its
customers.
Non-Interest Expense
Total non-interest expense consists of salaries and employee benefits,
occupancy and equipment, FDIC deposit insurance, advertising, data processing
service fees, foreclosed property expense, amortization of core deposit and
other intangibles, and other expenses. Also included are the costs of carrying
and administering non-performing loans.
Non-interest expense decreased as no provision for the special, one-time
deposit insurance assessment from SAIF was incurred in 1997, while a $280,000
provision was incurred in 1996.
Income Taxes
The Company recognized income tax expense of $2,480,000 for the year ended
December 31, 1997 and $2,621,000 in the comparable period of 1996. Both these
amounts differ from the expected tax expense of 34% of income before income
taxes. The major reasons for these variances relate to state income tax expense
(net of the federal tax benefit), tax exempt income, dividend received
deduction and changes in the valuation allowance for deferred income taxes.
Factors such as the Company's earnings and equity securities gains or losses
will affect income taxes recorded in the financial statements. At December 31,
1997, the Company had a net deferred income tax asset of $2,948,000, which is
net of the valuation allowance of $56,000. Management establishes a valuation
allowance when it is more likely than not that some portion of the gross
deferred income tax assets will not be realized. The valuation allowance at
year end applies principally to the tax effect of the state income tax benefit
attributable to the gross deductible temporary differences. The primary sources
of recovery of the deferred tax assets are taxes paid that are available for
carry back of $6,100,000 in 1997, 1996 and 1995, and the expectation that the
deductible temporary differences will reverse during periods in which the
Company generates taxable income.
During the fourth quarter of 1997, the Company implemented two tax
strategies in order to recognize the benefit of net, unused capital loss
carryforwards that were due to expire on December 31, 1997. The Company entered
into a sale/leaseback agreement with a third party for three of its offices. In
addition, the Company sold equity
G-31
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
securities that were maintained in a Grantors Trust in order to generate
capital gains. The combination of these two transactions allowed the Company to
recognize a $576,000 benefit through a reduction in the deferred tax asset
valuation allowance.
Comparison of years ended December 31, 1996 and December 31, 1995
General
Net income for the year ended December 31, 1996 amounted to $4,137,000
compared with net income of $3,436,000 for the year ended December 31, 1995.
The principal reasons for the increase were increased net interest and dividend
income, increased gains realized on the sale of loans and a decrease in
provisions for loan losses and FDIC deposit insurance expense, partially offset
by increases in other non-interest expenses and a special one-time deposit
insurance assessment from the Savings Association Insurance Fund ("SAIF"). The
Bank's operating results depend largely upon its net interest margin which is
the difference between the income earned on loans and investments, and the
interest expense paid on deposits and borrowings, divided by total interest
earning average assets. The net interest margin is affected by the economic and
market factors which influence interest rates, loan demand and deposit flows.
The interest rate margin decreased to 3.94% for the year ended December 31,
1996, from 3.98% for the year ended December 31, 1995.
Interest and Dividend Income
Interest and dividend income increased by $1,636,000 or 5.3% to
$32,309,000 for the year ended December 31, 1996 when compared to the year
ended December 31, 1995. Interest on loans increased $2,462,000 or 11.1% as a
result of an increase in the average balance outstanding of $32,276,000, and a
decrease in non-accrual loans, partially offset by a decrease in the average
rate earned on the portfolio from 8.45% in 1995 to 8.36% in 1996. Interest and
dividends on investment securities and other short-term investments decreased
by $826,000 or 9.8% as a result of the decrease in the average balance
outstanding to $122,794,000 and a decrease in the yield on investment
securities to 6.17% for the year ended December 31, 1996, as compared to 6.27%
for the year ended December 31, 1995.
Interest Expense
Total interest expense increased $959,000 to $15,792,000 for the year
ended December 31, 1996, from $14,833,000 for the year ended December 31, 1995.
Interest expense from deposits increased by $355,000 or 2.5%. The rise reflects
the increase in average deposits balance outstanding of $2,219,000, along with
an increase in market interest rates over the period. Interest expense from
borrowed funds increased $604,000 primarily due to an increase in the average
balance outstanding of $10,576,000, and an increase in the interest rates over
the period. Interest rates on deposits and borrowed funds for the year ended
December 31, 1996 increased to 4.32% from 4.20% when compared to 1995.
Provision for Loan Losses
The provision for loan losses charged to earnings amounted to $265,000 and
$597,000 for the years ended December 31, 1996 and 1995, respectively. The Bank
decreased its provision for loan losses for the year ended December 31, 1996 as
compared to the year ended December 31, 1995 due to a decline in specific loan
charge-offs. Non-accrual loans as a percentage of total loans outstanding were
1.27% at December 31, 1996 and 1.70% at December 31, 1995. As of December 31,
1996 and 1995, the Bank had identified $584,000 and $349,000, respectively, of
potential problem loans. Management's analysis of the loan portfolio considers
risk elements by loan category, and also the prevailing economic climate and
anticipated future uncertainties. Future adjustments to the allowance for loan
losses may be necessary if economic conditions differ substantially from
assumptions used in performing the analysis, or the levels of the Bank's
non-performing assets increase significantly.
Non-Interest Income
Non-interest income increased $121,000 for the year ended December 31,
1996 compared to the 1995 period. The increase was mainly the result of the
increase in gain on sale of loans of $210,000, along with an increase of
$41,000 in service charges, partially offset by a decrease of $214,000 in gain
on sale of branch deposits. The
G-32
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
increase in gain on sale of loans was due to favorable market interest rates
during the year 1996 and the recording of the value of the mortgage loan
servicing rights. The increase in service charges resulted from the overall
increases in fees for services the Bank provides to its customers.
Non-Interest Expense
Total non-interest expense consists of salaries and employee benefits,
occupancy and equipment, FDIC deposit insurance, advertising, data processing
service fees, foreclosed property expense, amortization of core deposit and
other intangibles and other expenses. Also included are the costs of carrying
and administering non-performing assets.
The slight decrease in non-interest expense for the year when compared to
the prior period is attributed primarily to decreases in FDIC deposit
insurance, foreclosed property expense and amortization of core deposit
intangible, offset partially by increases in salaries and employee benefits and
occupancy and equipment, and the one-time special assessment of $280,000 on
SAIF-assessable deposits.
Income Taxes
The Bank recognized income tax expense of $2,621,000 for the year ended
December 31, 1996 and $2,169,000 in the comparable period of 1995. Both these
amounts differ from the expected tax expense of 34% of income before income
taxes. The major reasons for these variances relate to state income tax expense
(net of the federal tax benefit), tax exempt income, dividend received
deduction and changes in the valuation allowance for deferred income taxes.
Factors such as the Bank's earnings and equity securities gains or losses will
affect income taxes recorded in the financial statements. At December 31, 1996,
the Bank had a net deferred income tax asset of $2,469,000, which is net of the
valuation reserve of $632,000. Management establishes a valuation reserve when
it is more likely than not that some portion of the gross deferred income tax
asset will not be realized. The valuation reserve at year end applies
principally to the tax effect of the capital loss carryforward and the state
income tax benefit attributable to the gross deductible temporary differences.
The primary sources of recovery of the deferred tax asset are taxes paid
that are available for carry back of $5,400,000 in 1996, 1995 and 1994, and the
expectation that the deductible temporary differences will reverse during
periods in which the Bank generates taxable income.
Asset and Liability Management and Market Risk
The Company's pre-tax earnings depend primarily on its net interest
income, the difference between the income it receives on its loan portfolio and
other investments and its cost of money, consisting primarily of interest paid
on savings deposits, FHLB advances and other borrowings. Net interest income is
affected by (i) the difference ("interest rate spread") between rates of
interest earned on its interest-earning assets and rates paid on its interest-
bearing liabilities and (ii) the relative amounts of its interest-earning
assets and interest-bearing liabilities. When interest-earning assets
approximate or exceed interest-bearing liabilities, any positive interest rates
spread will generate net interest income. Thrift institutions have
traditionally used interest rate spreads as a measure of net interest income.
Another indicator of an institution's net interest income is its "net yield on
interest-earning assets" which is net interest income divided by average
interest-earning assets.
Market risk is the risk of loss from adverse changes in market prices and
rates. The Company's market risk arises primarily from interest rate risk
inherent in its lending, security investments, and deposit taking activities.
To that end, management actively monitors and manages its interest rate risk
exposure.
The Company's primary objective in managing interest rate risk is to
minimize the adverse impact of changes on the Company's net interest income and
capital, while adjusting the Company's rate-sensitive asset and liability
structure to obtain the maximum net yield on that structure. The Company relies
primarily on this structure to control interest rate risk. However, a sudden
and substantial shift in interest rates may adversely impact the Company's
earnings to the extent that the interest rate earned on interest-earning assets
and interest paid on interest-bearing liabilities do not change at the same
frequency, to the same extent or on the same basis.
G-33
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
A method used by the Company to measure the interest rate risk exposure is
the interest rate sensitivity "GAP", which is the difference between assets and
liabilities subject to rate change over specific time periods. There are
limitations to GAP analysis. However, as rates on different assets and
liabilities may not move to the same extent in any given time period,
competition may affect the ability of the Company to change rates on particular
loan or deposit products. The following table discloses the Company's
interest-sensitive financial instruments, categorized by expected maturity and
their fair values at December 31, 1997. Market risk sensitive instruments are
generally defined as on- and off-balance sheet and other financial instruments.
The following table presents the Company's interest sensitivity gap
between interest-earning assets and interest-bearing liabilities at December
31, 1997. In addition the table indicates the Company's sensitivity gap at
various periods and the ratio of the Company's interest-earning assets to
interest-bearing liabilities at various periods. Term certificates are based
upon contractual maturities.
<TABLE>
<CAPTION>
Over One Over Three Over Five Over
One Year Through Through Through Ten
or less Three Years Five Years Ten Years Years Total
------------- ------------- ------------ ------------- ------------- -------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Short-term investments, investment
securities held to maturity and
investment securities available for
sale .................................... $ 71,379 $ 34,973 $ 32 $ 10,307 $ -- $ 116,691
Residential .............................. 101,623 66,312 68,511 7,193 5,272 248,911
Commercial real estate ................... 44,975 17,286 153 111 54 62,579
Construction and land loans .............. 13,384 6,378 11,850 23 -- 31,635
Other loans .............................. 20,230 3,029 2,602 709 1,047 27,617
-------- --------- --------- --------- -------- ---------
Total ................................... $251,591 $ 127,978 $ 83,148 $ 18,343 $ 6,373 $ 487,433
======== ========= ========= ========= ======== =========
Interest-bearing liabilities:
Money market accounts .................... $100,825 $ -- $ -- $ -- $ -- $ 100,285
NOW and Super NOW (1) .................... -- -- -- -- 44,075 44,075
Regular savings accounts (1) ............. -- -- -- -- 24,345 24,345
Certificates of deposit .................. 134,958 77,230 6,572 17 -- 213,777
Borrowed funds ........................... 34,000 11,000 -- -- 601 45,601
-------- --------- --------- --------- -------- ---------
Total ................................... $269,783 $ 83,230 $ 6,572 $ 17 $ 69,021 $ 428,623
======== ========= ========= ========= ======== =========
Interest sensitivity gap .................... $(18,192) $ 44,748 $ 76,576 $ 18,326 $(62,648) $ 58,810
======== ========= ========= ========= ======== =========
Cumulative interest sensitivity gap ......... $(18,192) $ 26,556 $ 103,132 $ 121,458 $ 58,810 $ 58,810
======== ========= ========= ========= ======== =========
Interest sensitivity gap/total assets ....... (3.51)% 8.63% 14.76% 3.53% (12.08)% 11.34%
======== ========= ========= ========= ======== =========
Cumulative interest sensitivity gap/total
assets ..................................... (3.51)% 5.12% 19.88% 23.42% 11.34%
======== ========= ========= ========= ========
</TABLE>
- ------------
(1) Interest rates on these accounts have remained constant or decreased from
March of 1994 through December 31, 1997, although market interest rates
have increased over the same period. It is the current intention of the
Company's management not to increase rates on these accounts in a rising
rate environment.
G-34
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
The following table shows the company's financial instruments that are
sensitive in interest rates, categorized by expected maturity, and the
instruments' fair values as of December 31, 1997.
Expected Maturity Date at December 31, 1997 (1)
<TABLE>
<CAPTION>
1998 1999 2000 2001
---------- ---------- ---------- ----------
(Dollars in millions)
INTEREST SENSITIVE ASSETS:
Loans:
<S> <C> <C> <C> <C>
Fixed interest rate
Residential mortgages .................. $ 3 $ 2 $ 2 $ 2
Average interest rate ................. 6.99% 7.05% 7.03% 6.96%
Variable interest rate
Residential mortgages .................. 49 37 30 23
Average interest rate ................. 7.47% 7.49% 7.49% 7.49%
Fixed interest rate
Consumer loans ......................... 4 1 1 --
Average interest rate ................. 10.34% 10.30% 9.89% 0.00%
Variable interest rate
Consumer loans ......................... 8 4 2 --
Average interest rate ................. 9.80% 9.84% 9.87% 0.00%
Fixed interest rate
Commercial loans ....................... 1 1 -- --
Average interest rate ................. 9.73% 9.71% 0.00% 0.00%
Variable interest rate
Commercial loans ....................... 22 10 8 6
Average interest rate ................. 9.87% 9.64% 9.63% 9.63%
Fixed interest rate
Investment securities .................. 21 12 5 4
Average interest rate ................. 6.18% 6.22% 6.41% 6.40%
Variable interest rate
Investment securities .................. 10 8 6 5
Average interest rate ................. 6.36% 6.36% 6.37% 6.38%
-------- -------- -------- --------
Total interest sensitive assets ..... $ 118 $ 75 $ 54 $ 40
======== ======== ======== ========
INTEREST SENSITIVE LIABILITIES:
Deposits:
Checking ............................... $ 2 $ 2 $ 2 $ 2
Average interest rate ................. 0.58% 0.58% 0.58% 0.58%
Savings ................................ 4 3 2 2
Average interest rate ................. 1.98% 1.98% 1.98% 1.98%
Money market ........................... 10 10 7 6
Average interest rate ................. 2.88% 2.99% 2.68% 2.68%
Time deposits .......................... 144 51 14 2
Average interest rate ................. 5.41% 5.71% 5.92% 5.77%
Borrowings: .............................
FHLB ................................... 34 11 -- --
Average interest rate ................. 5.82% 5.71% 0.00% 0.00%
Other .................................. -- -- -- --
Average interest rate ................. 0.00% 0.00% 0.00% 0.00%
-------- -------- -------- --------
Total interest sensitive
liabilities: ...................... $ 194 $ 77 $ 25 $ 12
======== ======== ======== ========
<CAPTION>
2002 Thereafter Total Fair Value
---------- ------------ ---------- -----------
(Dollars in millions)
INTEREST SENSITIVE ASSETS:
Loans:
<S> <C> <C> <C> <C>
Fixed interest rate
Residential mortgages .................. $ 2 $ 4 $ 15 $ 15
Average interest rate ................. 6.96% 7.33% 7.10%
Variable interest rate
Residential mortgages .................. 23 96 258 260
Average interest rate ................. 7.49% 7.51% 7.50%
Fixed interest rate
Consumer loans ......................... -- -- 6 6
Average interest rate ................. 0.00% 0.00% 10.17%
Variable interest rate
Consumer loans ......................... -- -- 14 14
Average interest rate ................. 0.00% 0.00% 9.85%
Fixed interest rate
Commercial loans ....................... -- -- 2 2
Average interest rate ................. 0.00% 0.00% 9.72%
Variable interest rate
Commercial loans ....................... 5 25 76 75
Average interest rate ................. 9.63% 9.68% 9.72%
Fixed interest rate
Investment securities .................. 4 13 59 59
Average interest rate ................. 6.40% 6.42% 6.29%
Variable interest rate
Investment securities .................. 5 18 52 52
Average interest rate ................. 6.38% 6.42% 6.39%
-------- -------- --------
Total interest sensitive assets ..... $ 39 $ 156 $ 482 $483
======== ======== ======== ====
INTEREST SENSITIVE LIABILITIES:
Deposits:
Checking ............................... $ 2 $ 74 $ 84 $ 84
Average interest rate ................. 0.58% 0.51% 0.52%
Savings ................................ 2 11 24 24
Average interest rate ................. 1.98% 1.98% 1.98%
Money market ........................... 5 63 101 101
Average interest rate ................. 2.68% 3.47% 3.22%
Time deposits .......................... 2 1 214 214
Average interest rate ................. 5.77% 2.90% 5.51%
Borrowings: .............................
FHLB ................................... -- 1 46 46
Average interest rate ................. 0.00% 5.96% 5.82%
Other .................................. -- -- -- --
Average interest rate ................. 0.00% 0.00% 0.00%
-------- -------- --------
Total interest sensitive
liabilities: ...................... $ 11 $ 150 $ 469 $469
======== ======== ======== ====
</TABLE>
(footnotes on the following page)
G-35
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
(1) Expected maturities are contractual maturities adjusted for projected
prepayments of principal. The Company uses certain assumptions to estimate fair
values and expected maturities. For assets, expected maturities are based upon
contractual maturities, projected repayments and prepayments of principal. The
prepayment experience reflected herein is based on the Company's historical
experience. The Company's average Constant Prepayment Rate ("CPR") is 13.9% and
18.9% per year of its fixed-rate and adjustable-rate portfolios, respectively,
for interest-earning assets. For deposits, "decay rates" have been applied to
estimate deposit runoff of 14.3% per year based on the Company's own historical
experience. The actual maturities of these instruments could vary substantially
if future prepayments differ from the Company's historical experience.
Off-balance sheet risk includes commitments to extend credit and sell loans. At
December 31, 1997, the contract or notional amount of these commitments is
$46,200,000 and $6,100,000, respectively. Their fair values have been estimated
as $500,000.
Liquidity and Capital Resources
The Company's primary source of liquidity is dividends from its bank
subsidiary. Dividends from the Bank to the Company totaled $768,000 in 1997.The
Company made payments of dividends to stockholders in the amount of $672,000
during the fourth quarter ended December 31, 1997.
The Bank's primary sources of liquidity are deposits, loan payments and
payoffs, investment income and maturities and principal payments on
investments, mortgage-backed securities and CMOs, advances from the Federal
Home Loan Bank of Boston, and other borrowings. Management believes it is
prudent to maintain an investment portfolio that not only provides a source of
income, but additionally provides a source of liquidity, through its principal
paydowns and maturities, to meet lending demands and fluctuations in deposit
flows. These various sources of funds are utilized to fund withdrawals, new
loans and other investments, as well as to pay on-going expenses of operation.
At December 31, 1997, the Bank had total unused lines of credit and commitments
to originate loans of $38,784,000, unadvanced portions of construction loans of
$7,188,000 and commercial standby letters of credit of $218,000. In addition,
the Bank had commitments to sell loans totaling $6,149,000. Management believes
that the Bank's various sources of funds are sufficient to meet its commitments
in the ordinary course of business. For further information, see notes to
consolidated financial statements.
The Bank is required to maintain certain levels of capital (stockholders'
equity) pursuant to FDIC regulations. At December 31, 1997, the Bank's capital
level was significantly in excess of required minimums. For additional
information on capital ratios of the Company and the Bank, see note 11 of notes
to consolidated financial statements.
Impact of the Year 2000 Issue
The Year 2000 (Y2K) Issue is the result of computer programs being written
using two digits, rather than four to define the applicable year. Any of the
Company's computer programs that have date-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
The Company began addressing the Year 2000 Issue in the Fall of 1996. The
Company formed a Y2K Review Team which is composed of the Company's internal
Management Information Systems Steering Committee and all members of our Senior
Management Group. A Plan was developed by the Y2K Review Team and approved by
the Board of Directors. The Team has completed an assessment, identifying
mission critical systems and has initiated formal communications with all third
party vendors to determine the compliance status of any systems utilized by the
Company. Based upon the results of the assessment, the Company has determined
that there will be a need to replace portions of its existing hardware and
require upgrades to a portion of its software systems. The Company does not
utilize internally written and supported proprietary code. All software is
purchased or licensed through widely recognized providers.
The Company Plan calls for replacement and upgrading to take place with
allowances for extensive testing within time frames established by the Federal
Financial Institutions Examination Council (FFIEC). The Y2K Review Team meets
no less than quarterly and provides quarterly reports to the Board of
Directors. The Company has notified its customers of the Year 2000 Issue in the
Fall 1997 issue of the Company newsletter, "Currents".
G-36
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
The newsletter outlines the issue and the Company's Plan to address it. Also,
letters have been sent to all commercial loan customers informing them of the
Year 2000 Issue and how it can impact businesses.
The Company had included approximately $150,000 for the replacement and
upgrade of specific hardware in its 1998 capital budget. An additional IS
Technician position has been planned and included in the budget for the IS
Department in the second quarter of 1998. The new employee will assist in the
deployment of Y2K compliant hardware, upgrade software and facilitate the Y2K
testing of all systems.
The Company will utilize internal and, if necessary, external resources to
upgrade, replace, and test the software and systems for Year 2000 Issue
modifications. The Company plans to complete the Year 2000 Issue project no
later than March 31, 1999.
Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board (FASB) issued
SFAS No. 129, "Disclosure of Information about Capital Structure", which is
effective for 1997 financial statements. The Company's disclosures currently
comply with the provisions of this statement.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income". SFAS No. 130 establishes standards for reporting and displaying
comprehensive income, which is defined as all changes to equity except
investments by and distributions to shareholders. Net income is a component of
comprehensive income, with all other components referred to in the aggregate as
other comprehensive income. This statement is effective for 1998 financial
statements and is not expected to have a material effect on the financial
statements.
Also in June 1997 the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", which establishes standards
for reporting information about operating segments. An operating segment is
defined as a component of a business for which separate financial information
is available that is evaluated regularly by the chief operating decision maker
in deciding how to allocate resources and evaluate performance. This statement
requires a company to disclose certain income statement and balance sheet
information by operating segment, as well as provide a reconciliation of
operating segment information to the company's consolidated balances. This
statement is also effective for 1998 financial statements and is not expected
to have a material effect on the financial statements.
G-37
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
PART I, ITEM 1. BUSINESS
General
The Company. Sandwich Bancorp, Inc. (the "Company"), a Massachusetts
corporation, was organized by The Sandwich Co-operative Bank (the "Bank") to be
a bank holding company. The Company was organized at the direction of the Bank
in June 1997 to acquire all of the capital stock of the Bank upon the
consummation of the reorganization of the Bank into the holding company form of
ownership (the "Reorganization"), which was completed on September 30, 1997.
The Company's common stock, par value $1.00 per share (the "Common Stock")
became registered under the Securities Exchange Act of 1934 on September 30,
1997. The Company has no significant assets other than the corporate stock of
the Bank. For that reason, substantially all of the discussion in this Form
10-K relates to the operations of the Bank and its subsidiaries.
The executive offices of the Company are located at 100 Old Kings Highway,
Sandwich, Massachusetts 02563. The telephone number is (508) 888-0026.
The Bank. The Sandwich Co-operative Bank was organized as a Massachusetts
chartered co-operative bank in 1885. The Bank merged with Wareham Co-operative
Bank in May 1982. In July 1986, the Bank converted from mutual to stock form
through the sale and issuance of 1,820,833 shares of common stock, par value
$1.00 per share (the "Common Stock"). Since 1986, the Bank's deposits have been
insured by the Federal Deposit Insurance Corporation ("FDIC"), an agency of the
federal government, up to $100,000 per insured depositor, with additional
insurance to the total amount of the deposit provided by the Share Insurance
Fund of The Co-operative Central Bank (the "Central Bank"), a deposit insuring
entity chartered by the Commonwealth of Massachusetts. The Bank is subject to
regulation by the Massachusetts Commissioner of Banks ("Commissioner") and the
FDIC.
The business of the Bank consists primarily of attracting deposits from
the general public and originating both construction and permanent loans on
one-to-four family homes. The Bank also makes consumer loans, home equity loans
and commercial loans and mortgages. The Bank invests a portion of its funds in
money market instruments, federal government and agency obligations, and
various types of corporate securities and other authorized investments.
The principal sources of funds for the Bank's lending and investment
activities are deposits, loan payments and payoffs, investment income and
maturities, and principal payments on investments, mortgage-backed securities
and collateralized mortgage obligations. As additional sources of funds, the
Bank has access to advances from the Federal Home Loan Bank of Boston and other
borrowings. The Bank's principal sources of income are interest on loans and
loan origination fees, interest and dividends on investment securities,
mortgage-backed securities and collateralized mortgage obligations and
short-term investments, customer service charges and gains on the sale of loans
in the secondary market, as well as income from servicing loans sold. Its
principal expenses are interest paid on deposits and general and administrative
expenses.
The Bank's deposit and lending operations are conducted through eleven
full service office facilities located in Sandwich, South Sandwich, Buzzards
Bay, Pocasset, Wareham, Cedarville, Falmouth, Hyannis, Chatham, Orleans and
South Yarmouth, Massachusetts. In addition, the Bank maintains a loan
production office in Plymouth, Massachusetts. Significant events contributing
to the structure of the current branch network are described below.
In February 1996 and May 1996 the Bank opened free standing ATMs in
Cedarville and South Sandwich, Massachusetts, respectively, in order to provide
greater convenience and access to accounts for its customers. In addition to
its existing ATM network offerings of X-Press 24, NYCE, CIRRUS/MasterCard, the
Bank recently added the Plus/VISA networks for users of Bank ATMs.
In June 1996, the Bank entered into an agreement with FISCO, a national
financial services group that provides a variety of investment services through
community banks to offer expanded retirement investments and financial
planning. FISCO will provide Bank customers with access to alternative
investments, including mutual funds and annuities from a number of highly rated
companies.
The Bank also established a referral arrangement with State Street Global
Advisors which enables customers to avail themselves of the estate planning and
trust services of a nationally respected trust institution.
G-38
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
The Bank's main office is located at 100 Old Kings Highway, Sandwich,
Massachusetts 02563 and its telephone number is (508) 888-0026.
Recent Events
On February 2, 1998, the Company and the Bank entered into a definitive
agreement under which Compass Bank of New Bedford, Massachusetts will acquire
Sandwich Bancorp, Inc. Prior to the Company's consideration and approval of its
definitive agreement with Compass Bank, the Company had contacted and received
expressions of interest from three other parties who had expressed an interest
in an acquisition of the Company.
On February 24, 1998, the Company announced that its Board of Directors,
consistent with the exercise of its fiduciary duties, determined that it was
appropriate to request additional information and clarification of the renewed
expressions of interest that it had received from three other parties
subsequent to February 2.
Following a comprehensive review of the other expressions of interests for
the Company, the Company and Compass Bank jointly announced on March 23, 1998,
that they have signed an amendment to their previously announced agreement of
February 2, 1998 (the "Amended Agreement") by which Compass Bank would acquire
Sandwich Bancorp, Inc. Under the terms of the Amended Agreement, Compass Bank's
parent company, The 1855 Bancorp will convert to a 100% publicly owned stock
holding company and thereafter issue stock having a value of $64.00 per share
to Sandwich Bancorp shareholders in a tax-free exchange of common stock. The
value to be received by Sandwich Bancorp shareholders is subject to adjustment
pursuant to a formula based on the value of the stock of The 1855 Bancorp near
the transaction date. Based on 1855 Bancorp's assumed initial public offering
price of $10.00 per share, each Sandwich Bancorp share will be exchanged for
1855 Bancorp stock having a value of $64.00 per share so long as 1855 Bancorp
stock trades at an average price of between $10.00 and $13.50 per share during
a designated trading period following the initial public offering date. If this
average price exceeds $13.50 per share, the value to be received by Sandwich
Bancorp shareholders will increase proportionately up to a maximum value of
$71.11 until 1855 Bancorp's average price reaches or exceeds $15.00 per share.
If this average price is equal to or less than $10.00 per share, Sandwich
Bancorp shares will be exchanged for 6.4 shares of 1855 Bancorp stock.
Sandwich Bancorp and The 1855 Bancorp also entered into a Stock Option
Agreement, granting to The 1855 Bancorp an option to acquire up to 19.9% of
Sandwich common stock under certain circumstances. The transaction, which is
subject to all necessary regulatory and shareholder approvals, is expected to
close in the fourth quarter of 1998.
For additional information, reference is made to the Amended and Restated
Affiliation and Merger Agreement, dated as of March 23, 1998, attached hereto
as Exhibit 2.1, and the Stock Option Agreement dated as of March 23, 1998,
attached hereto as Exhibit 2.2.
Lending Activities
General. The Bank's net loan portfolio totaled $366.6 million as of
December 31, 1997, which represented 70.7% of total assets. The Bank offers
residential and home equity mortgage loans, commercial real estate loans,
commercial business loans, construction loans, and personal, automobile, boat,
education and other types of consumer loans. During the year ended December 31,
1997, the Bank originated mortgage loans totaling $123.2 million and purchased
loans totaling $18.3 million for total mortgage loan originations and purchases
of $141.5 million, compared to $117.4 million in mortgage loans originated, and
$23.7 million in mortgage loans purchased for total mortgage loan originations
and purchases of $141.1 million during the year ended December 31, 1996.
Included in the Bank's mortgage loan originations for the year ended December
31, 1997 were $20.8 million of fixed rate residential loans of which $17.4
million were sold in the secondary mortgage market and the difference of $3.4
million was placed into the loan portfolio under the direction of senior
management, as "fixed construction" and "fixed upon completion" mortgage loans.
The increase in mortgage loan originations during fiscal 1997 as compared to
fiscal 1996 was a direct result of a strong residential real estate market.
Residential construction mortgages decreased from 175 loans totaling $27.9
million in 1996 to 156 loans totaling $19.8 million in 1997. In addition, the
purchase of new homes and re-sales of existing homes increased over 1997. In
early 1996, the Bank
G-39
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
began a correspondent relationship with Anchor Mortgage Co., Conway Financial
Services and National City Mortgage (formerly known as Commonwealth United
Mortgage), which generated an additional $25.2 million (164 loans) in loan
volume during 1997.
The following table shows the composition of the Bank's loan portfolio by
type of loan and the percentage each type represents of the total loan
portfolio at the dates indicated.
<TABLE>
<CAPTION>
At December 31,
--------------------------------------------------------------------
1997 1996 1995
---------------------- ---------------------- ----------------------
Amount % Amount % Amount %
----------- ---------- ----------- ---------- ----------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Residential .................. $247,881 67.6% $202,032 63.7% $162,974 60.3%
Commercial real estate ....... 62,579 17.0 61,088 19.3 59,597 22.0
Commercial and land .......... 38,823 10.6 38,858 12.2 26,486 9.8
-------- ------ -------- ------ -------- -----
349,283 95.2 301,978 95.2 249,057 92.1
Unadvanced portion of loans
in process ................... (7,188) ( 2.0) (9,763) ( 3.1) (6,573) ( 2.4)
Deferred loan origination
(fees) costs ................. 1,030 0.3 542 0.2 56 --
Unearned discount ............. -- -- -- -- (171) ( 0.1)
-------- ------ -------- ------ -------- -----
Total mortgage loans,
net ........................ 343,125 93.5 292,757 92.3 242,369 89.6
-------- ------ -------- ------ -------- -----
Other loans:
Home equity .................. 12,438 3.4 12,278 3.9 13,188 4.9
Consumer ..................... 4,847 1.3 5,393 1.7 6,032 2.2
Commercial ................... 8,060 2.2 7,933 2.5 9,671 3.6
Secured by deposits .......... 1,182 0.3 1,160 0.4 992 0.3
Education .................... 826 0.2 1,123 0.3 1,660 0.6
-------- ------ -------- ------ -------- -----
27,353 7.6 27,887 8.8 31,543 11.6
Deferred loan origination
costs ........................ 264 0.1 200 0.1 183 0.1
-------- ------ -------- ------ -------- -----
Total other loans, net ...... 27,617 7.6 28,087 8.9 31,726 11.7
-------- ------ -------- ------ -------- -----
Premium paid on loans, net
of accumulated
amortization ................. -- -- -- -- -- --
Allowance for loan losses ..... (4,100) ( 1.1) (3,741) ( 1.2) (3,674) ( 1.3)
-------- ------ -------- ------ -------- -----
Loans, net .................... $366,642 100.00% $317,103 100.00% $270,421 100.0%
======== ====== ======== ====== ======== =====
<CAPTION>
At December 31,
-----------------------------------------------
1994 1993
---------------------- ------------------------
Amount % Amount %
----------- ---------- ------------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Mortgage loans:
Residential .................. $150,788 60.1% $ 124,420 59.9%
Commercial real estate ....... 49,919 19.9 40.501 19.5
Commercial and land .......... 26,920 10.8 23,367 11.3
-------- ------ ---------- ------
227,627 90.8 188,288 90.7
Unadvanced portion of loans
in process ................... (5,810) ( 2.3) (5,520) ( 2.7)
Deferred loan origination
(fees) costs ................. (42) -- (159) ( 0.1)
Unearned discount ............. (239) ( 0.1) -- --
-------- ------ ---------- ------
Total mortgage loans,
net ........................ 221,536 88.4 182,609 87.9
-------- ------ ---------- ------
Other loans:
Home equity .................. 14,961 6.0 15,746 7.6
Consumer ..................... 4,903 1.9 2,306 1.1
Commercial ................... 8,114 3.2 6,385 3.1
Secured by deposits .......... 972 0.4 760 0.4
Education .................... 3,193 1.3 2,397 1.1
-------- ------ ---------- ------
32,143 12.8 27,594 13.3
Deferred loan origination
costs ........................ 169 0.1 128 0.1
-------- ------ ---------- ------
Total other loans, net ...... 32,312 12.9 27,722 13.4
-------- ------ ---------- ------
Premium paid on loans, net
of accumulated
amortization ................. 137 -- 287 0.1
Allowance for loan losses ..... (3,255) ( 1.3) (2,983) ( 1.4)
-------- ------ ---------- ------
Loans, net .................... $250,730 100.00% $ 207,635 100.00%
======== ====== ========== ======
</TABLE>
Loan Maturity or Repricing Analysis. The following table sets forth
certain information at December 31, 1997 regarding the dollar amount of loans
maturing or repricing in the Bank's portfolio. Demand loans, loans having no
schedule of repayments or no stated maturity are reported as due in one year or
less.
G-40
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
<TABLE>
<CAPTION>
Due after 3 Due after 5
Due in Year Ended December 31, through 5 through 10 Due after 10
--------------------------------- years after years after years after
1998 1999 2000 12/31/97 12/31/97 12/31/97 Total
----------- ---------- ---------- ------------- ------------- ------------- -----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Residential .................. $101,623 $40,255 $26,057 $68,511 $7,193 $5,272 $248,911
Commercial real estate ....... 44,975 8,589 8,697 153 111 54 62,579
Construction and land ........ 13,384 3,497 2,881 11,850 23 -- 31,635
-------- ------- ------- ------- ------ ------ --------
Total ....................... 159,982 52,341 37,635 80,514 7,327 5,326 343,125
Other:
Home equity .................. 12,358 57 287 -- -- -- 12,702
Consumer ..................... 626 846 1,167 1,278 709 221 4,847
Commercial ................... 6,074 246 416 1,324 -- -- 8,060
Secured by deposits .......... 1,172 10 -- -- -- -- 1,182
Education .................... -- -- -- -- -- 826 826
-------- ------- ------- ------- ------ ------ --------
Total ....................... 20,230 1,159 1,870 2,602 709 1,047 27,617
-------- ------- ------- ------- ------ ------ --------
Total loans ................. $180,212 $53,500 $39,505 $83,116 $8,036 $6,373 $370,742
======== ======= ======= ======= ====== ====== ========
</TABLE>
Residential Lending. The Bank's residential mortgage loan program
currently includes the origination of a variety of adjustable rate loans which
are retained in the Bank's loan portfolio. At December 31, 1997, the Bank's
adjustable rate residential mortgages totaled $232.9 million, or 63.5%, of the
residential mortgage loan portfolio. Fixed-rate loans accounted for $15.0
million, or 4.1%, of the residential mortgage loan portfolio at that date. The
Bank stresses the origination of adjustable rate mortgages for retention in its
portfolio. The Bank continued to actively originate fixed rate loans for sale
in the secondary mortgage market. By retaining the servicing on loans sold, the
Bank generates loan servicing fee income.
The Bank's adjustable rate residential mortgage loans have a maximum term
of 35 years, and allow for periodic interest rate adjustments. The initial
offering rates on these loans may be discounted to remain competitive prior to
their first interest rate adjustment. The payment amount and the interest rate
on the one year adjustable rate loan adjusts annually to 2.75% above the weekly
average yield of the one year U.S. Treasury Securities (at time of adjustment)
with a maximum interest rate adjustment of 2% per year and 6% over the term of
the loan. Interest rates on the three year adjustable rate loans are fixed for
the first three years by reference to various market indices and competitive
rates, and rates are adjusted every three years thereafter to 2.875% above the
weekly average yield of three year U.S. Treasury Securities (at time of
adjustment) with a maximum interest rate adjustment of 2% every three years,
and 6% over the term of the loan. In 1997, the Bank began offering a 4/3
adjustable rate mortgage loan. The interest rate is fixed for the first four
years and then becomes a three year adjustable rate mortgage which adjusts
every three years at 2.875% above the weekly average yield of the three year
U.S. Treasury Securities, with a maximum interest rate adjustment of 2% per
year and 3% over the remaining term of the loan. The Bank also offers a 5/1
year adjustable rate mortgage. The interest rate is fixed for the first five
years and then becomes a one year adjustable rate mortgage which adjusts
annually at 2.75% above the weekly average yield of the one year U.S. Treasury
Securities, with a maximum interest rate adjustment of 2% per year and 5% over
the remaining term of the loan.
Residential loans may be made as construction loans or as permanent loans
on one-to-four family residential properties and are typically written in
amounts up to 95% of appraised value. The Bank makes fixed and adjustable rate
mortgage loans of up to 95% of appraised value, if the property is owner
occupied. All loans in excess of 80% of appraised value require private
mortgage insurance, with the exception of the Bank's adjustable rate First-Time
Home Buyer products, which does not require private mortgage insurance.
As noted above, adjustable rate residential mortgage loans originated for
retention in the Bank's loan portfolio provide for periodic interest rate
adjustments. Despite the benefits of adjustable rate mortgages to the Bank's
asset and liability management program, such mortgages pose risks, because as
interest rates rise, the underlying payments by the borrowers rise, increasing
the potential for default. At the same time, the marketability of the
underlying property may be adversely affected by higher interest rates. One of
the ways the Bank seeks to protect itself on these loans is by generally
requiring private mortgage insurance as stated above.
G-41
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
Construction Lending. The Bank's construction loans totaled $32.5 million,
or 8.9%, of the Bank's total loan portfolio at December 31, 1997. Construction
loans originated during the years ended December 31, 1997 and 1996 totaled
$34.4 million and $36.0 million, respectively.
The Bank lends to individuals for the construction of residential
properties which they intend to occupy as a primary or secondary residence.
Borrowers are required to have a firm contract with a qualified builder. Such a
construction loan is generally made with the first twelve months designated as
the construction period (six months for fixed construction) after which time
the loan converts to a 30-35 year permanent residential real estate loan. A
maximum loan to value ratio of 95% of the value of the completed property, or
95% of the total cost to construct, whichever is less, is permitted as
determined by appraisers. The majority of the Bank's construction loans are
made for the construction of pre-sold, pre-approved residential homes.
Inspections of the construction sites are primarily performed by independent
inspectors.
Due to the active real estate market in 1997, the Bank provided financing
to established, credit worthy builders for the purpose of funding construction
of residential homes which had either been pre-sold or constructed on
speculation. Sound underwriting standards were adhered to, minimizing the
inherent risks associated with construction lending. The total loan exposure to
any one builder was well within the prudent levels established by management.
All builder construction loans are performing as anticipated.
Commercial Real Estate Lending. The Bank also originates loans secured by
real estate other than one-to-four family residential properties. These
commercial real estate loans generally bear interest at variable rates based
upon a margin of one to two percent above the prime interest rate as quoted in
The Wall Street Journal, and such rates adjust when The Wall Street Journal
prime rate changes. In June 1996, the Bank started offering three year
adjustable rate commercial real estate loans where the interest rate is fixed
for the first three years, generally at 9-1/4%. After the initial three year
period, the interest rate adjusts every three years thereafter to a margin of
one and one half percent above the prime interest rate as quoted in The Wall
Street Journal. This product has enabled the Bank to be more competitive with
its product offerings. There were $62.6 million in commercial real estate loans
outstanding, which comprised 17.1% of the Bank's total loan portfolio at
December 31, 1997. In some cases, commercial real estate loans are made through
participations with other banks. Commercial real estate loans are generally
written in amounts of up to 75% of the appraised value of the property and all
commercial real estate loans over $100,000 are appraised by independent
appraisers. In addition, the Bank's underwriting procedures require
verification of the borrower's credit history and income, banking
relationships, references and income projections for the property. In certain
cases, borrowers may be required to provide additional collateral for loans
made. All property securing commercial loans is revalued or inspected
periodically as required under Massachusetts law. It is the Bank's policy to
use the same underwriting procedures for loan participations as for loans
originated by the Bank. The Bank grants loans guaranteed by the Small Business
Administration as well as by the Massachusetts Business Development
Corporation's Capital Access Program. Although the Bank is permitted to grant
commercial real estate loans in substantially greater amounts, the Bank's
current policy generally limits new commercial real estate loan originations to
$2,000,000 to any individual or entity.
Consumer and Other Loans. The Bank's consumer and other loans totaled
$27.4 million on December 31, 1997, representing 7.5% of the total loan
portfolio on that date. In addition to consumer loans, including personal and
automobile loans, the Bank makes education loans under the American Student
Assistance Corporation ("A.S.A.") program, which are serviced by Sallie Mae,
Inc. The interest on education loans is partially subsidized by the Federal
Government and the principal is fully guaranteed by A.S.A. The Bank sells its
student loans to Sallie Mae once the loan has begun repayment.
The Bank offers a home equity line of credit whereby the Bank makes
monthly adjustable rate loans, secured by the borrower's equity in their
residence, whether or not the loans are to be used for home improvements. As of
December 31, 1997, the Bank had $12.4 million in home equity loans outstanding
or 3.4% of the Bank's total loan portfolio, as compared with $12.3 million in
such loans outstanding at December 31, 1996 or 3.9% of the Bank's total loan
portfolio at that date. Home equity loans are currently written in amounts up
to 80% of the appraised value of the property less the outstanding balance of
the existing first mortgage.
The Bank offers a three year adjustable home equity loan. The interest
rate for each three year period is based upon a margin of 3.0% above the prime
interest rate as quoted in The Wall Street Journal. The home equity loan
G-42
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
has a maximum interest rate adjustment of 3.0% per adjustment, and a ceiling
interest rate of 18.0%. The home equity loan amount is fully drawn down at
closing.
The Bank offers a commercial line of credit program for its established
business customers with seasonal cash flow needs. The Bank's home equity line
of credit loans and commercial lines of credit accounts generally bear interest
at variable rates based upon a margin 1-3% above the prime interest rate as
quoted in The Wall Street Journal, while other loans are generally priced based
on market conditions.
The Bank believes its consumer lending programs create diversity and
interest rate sensitivity within its asset mix and offer attractive yields. The
Bank is currently promoting its construction, consumer and home equity lending
programs through the activities of its loan officers, branch managers and
customer service personnel, and is utilizing careful underwriting and
monitoring procedures in these programs.
Risks of Commercial Construction and Consumer Lending. Commercial real
estate, construction and consumer lending may entail additional risks compared
to residential mortgage lending. Commercial real estate and construction loans
may involve large loan balances to single borrowers or groups of related
borrowers. In addition, the payment experience on loans secured by income
producing properties is typically dependent on the successful operation of the
properties and thus may be subject to a greater extent to adverse conditions in
the local real estate market or in the economy generally. Construction loans
may involve additional risks, because the uncertainties inherent in estimating
construction costs, delays arising from labor problems, material shortages, and
other unpredictable contingencies, which make it relatively difficult to
evaluate accurately the total loan funds required to complete a project, and
related loan-to-value ratios. Because of these factors, the analysis of
prospective construction loan projects requires an expertise that is different
in significant respects from the expertise required for residential mortgage
lending. Consumer loans and particularly unsecured personal loans may involve
additional risks, and it may be expensive and time consuming to recover the
money lent in the event of a default. While the Bank has attempted to limit the
risk of loss on its commercial real estate, construction and consumer loans,
and has established provisions for loan losses, a reversal in the current
positive trend in the New England real estate market could negatively affect
the Bank's commercial real estate, construction and consumer loan portfolios,
which would further negatively affect the Bank's results of operations. In
addition, the status of the Bank's problem assets could be impacted by a
reversal in the continuing improvement in the New England real estate market
and the Bank's market area.
The following table indicates the amounts of construction and commercial
loans which are due after one year from December 31, 1997 that earn interest at
fixed rates and adjustable rates.
<TABLE>
<CAPTION>
Total Due After One Year
------------------------------------
Fixed Adjustable
Rate Rate Total
--------- ----------- ----------
(in thousands)
<S> <C> <C> <C>
Construction ......... $ -- $18,251 $18,251
Commercial ........... 1,986 -- 1,986
------ ------- -------
Total .............. $1,986 $18,251 $20,237
====== ======= =======
</TABLE>
G-43
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
Loans by Interest Rate and Maturity. The following table shows as of
December 31, 1997 information concerning the Bank's fixed and adjustable rate
permanent mortgage loans by interest rate range and by maturity date for fixed
rate mortgages and interest rate adjustment date for variable rate mortgages.
<TABLE>
<CAPTION>
Fixed Rate Mortgages Mortgages Subject to Interest Rate Adjustment
-------------------------------------------------- -------------------------------------------------------
4.01- 8.01- 10.01- 12.01% 4.01- 8.01- 10.01- 12.01%
8.00% 10.00% 12.00% and over Total 8.00% 10.00% 12.00% and over Total
---------- -------- -------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0-1 ................ $ 205 $ 147 $ -- $-- $ 352 $ 54,773 $ 82,206 $22,575 $ 76 $159,630
1-2 ................ 37 80 20 5 142 36,410 15,190 534 65 52,199
2-5 ................ 1,712 442 66 11 2,231 100,363 14,811 744 -- 115,918
5-10 ............... 6,732 315 182 75 7,304 -- 23 -- -- 23
10 or more ......... 4,336 990 -- -- 5,326 -- -- -- -- --
------- ------ ---- --- ------- -------- -------- ------- ---- --------
Total ............. $13,022 $1,974 $268 $91 $15,355 $191,546 $112,230 $23,853 $141 $327,770
======= ====== ==== === ======= ======== ======== ======= ==== ========
</TABLE>
Origination Fees and Other Fees. The Bank offers real estate loans with
and without origination fees. During 1997, customer preference tended towards
the "no point," higher rate loans, both adjustable and fixed. The Bank does
charge the customer for expenses incurred during the loan application process
to cover such items as real estate appraisal, credit report, etc. The Bank
retains late charges on all real estate loans that are more than fifteen days
late. For information regarding the manner in which fees are taken into income,
see Note 1 of Notes to Consolidated Financial Statements contained in the
Company's 1997 Annual Report to Stockholders (the "Annual Report"), which is
Exhibit 13 to this report.
Loan Solicitation and Approval Procedures. Loan originations are developed
by the Bank's officers, managers, assistant branch managers, customer service
representatives, and loan originators from a number of sources, including
referrals from realtors, builders, attorneys and customers. Consumer loans are
solicited from existing depositors and loan customers. Various advertising
forums are also used to promote the Bank's lending programs.
Applications for all types of loans are taken at all of the Bank's offices
and mortgage loan applications are forwarded to the Bank's loan department for
processing. The Bank's loan underwriting procedures include the use of detailed
credit applications, property appraisals and verifications of an applicant's
credit history, employment situations and banking relationships. Loans up to
and including $500,000 may be approved by the Bank's senior loan officer, while
those over $500,000 must be approved by the Bank's Security Committee before
they close. All mortgage loans are approved or ratified by the Security
Committee and/or the full Board of Directors. All residential loans and
commercial mortgages over $100,000 are appraised by independent state certified
appraisers selected by the Bank. Title insurance and fire and casualty
insurance are required on all security properties.
Mortgage applicants are promptly notified of the decision concerning their
application by a commitment letter setting forth the terms and conditions of
the decision. If approved, these commitments include the amount of the loan,
interest rate, amortization term, brief description of the real estate
mortgaged to the Bank, the required amount of fire and casualty insurance to be
maintained to protect the Bank's interest and other special conditions as
warranted.
Loan Originations, Purchases and Sales. The Bank uses the underwriting
standards and standard documents of the Federal Home Loan Mortgage Corporation
and Federal National Mortgage Association. The Bank continues to sell fixed
rate residential loans in the secondary market. The Bank has also become more
active in the Massachusetts Housing Finance Agency ("MHFA") program, and
generated five loans totaling $326,175 under their below market fixed rate
residential loan programs. Also, in 1997, the Bank began offering the low
interest rate MHFA Septic loans and closed two loans totaling $10,000 as of
December 31, 1997.
G-44
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
Set forth below is a table showing the Bank's mortgage loan origination,
purchase and sales activity for the periods indicated, together with
information on repayment of principal on mortgage loans in the Bank's
portfolio. Mortgage loans purchased were whole loans originated by other New
England-based financial institutions.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
(In thousands)
<S> <C> <C> <C> <C> <C>
Beginning balance (a) ....................... $ 292,757 $ 242,369 $ 221,536 $ 182,609 $ 151,892
Loan originations and purchases:
Fixed rate ................................. 20,845 19,127 12,682 21,244 60,921
Adjustable rate ............................ 67,895 62,258 36,416 35,026 36,087
Construction ............................... 34,431 35,982 27,028 23,491 11,683
--------- --------- --------- --------- ---------
Total mortgage loan originations .......... 123,171 117,367 76,126 79,761 108,691
Loans purchased ............................ 18,342 23,758 8,612 14,590 12,674
--------- --------- --------- --------- ---------
Total loan originations and purchases ..... 141,513 141,125 84,738 94,351 121,365
--------- --------- --------- --------- ---------
Loan principal reduction .................... (74,023) (70,396) (49,708) (35,160) (46,739)
Loans sold .................................. (17,610) (20,999) (14,363) (20,142) (43,913)
Change in deferred net loan origination
fees ........................................ 488 487 98 117 4
Change in unearned discount ................. -- 171 68 (239) --
--------- --------- --------- --------- ---------
Ending balance (a) .......................... $ 343,125 $ 292,757 $ 242,369 $ 221,536 $ 182,609
========= ========= ========= ========= =========
</TABLE>
(a) Beginning balance and ending balance are net of undisbursed proceeds
of loans in process, deferred net loan origination fees and unearned discounts.
The following table sets forth at December 31, 1997 all mortgage loans by
categories of weighted average annual yield.
<TABLE>
<CAPTION>
Percent Weighted Average
Amount of Total Annual Yield
---------- ---------- -----------------
(In thousands)
<S> <C> <C> <C>
12.01% and over ................ $ 232 0.07% 12.71%
11.01% to 12% .................. 917 0.27 11.51
10.01% to 11% .................. 23,352 6.81 10.50
9.01% to 10% ................... 46,267 13.48 9.59
8.01% to 9% .................... 67,957 19.81 8.54
4.01% to 8% .................... 204,400 59.56 7.02
-------- ------ -----
Total mortgage loans ......... $343,125 100.00% 7.92%
======== ====== =====
</TABLE>
Non-performing Assets and Asset Classification. Once a loan payment is 15
days past due, the Bank notifies the borrower of the delinquency. Repeated
contacts are made if the loan remains in a delinquent status for 30 days or
more. While generally the Bank is able to work out satisfactory repayment with
a delinquent borrower, the Bank will undertake foreclosure proceedings if the
delinquency is not otherwise resolved when payments are 90 days past due.
Property acquired by the Bank as a result of foreclosure or by deed in lieu of
foreclosure is classified as "other real estate owned" until such time as it is
sold or otherwise disposed. When such property is acquired it is recorded at
the lower of unpaid principal balance of the related loan or its fair value,
less costs to dispose. Beginning for the year ended December 31, 1993, the Bank
has classified its non-performing assets in accordance with FDIC classification
regulations, so that all loans secured by residential real estate are
considered residential loans, regardless of whether they are owner-occupied or
are investment properties. During the year ended December 31, 1997, the Bank
foreclosed on eleven loans totaling $1,245,000 of which nine were residential
mortgage loans totaling $728,000 and two were commercial real estate loans
totaling $517,000. The Bank charged off $397,000 on various other loans during
fiscal 1997.
G-45
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
The following table sets forth information with respect to the Bank's
non-performing assets at the dates indicated. At December 31, 1997, the Bank
had one restructured loan within the meaning of the Financial Accounting
Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS")
No. 15 which are described below.
<TABLE>
<CAPTION>
At December 31,
-----------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Loans accounted for on a non-accrual basis which
are contractually past due 90 days or more:
Mortgage loans:
Residential ........................................... $ 2,755 $ 2,320 $ 2,948 $ 966 $ 1,614
Commercial real estate ................................ 456 1,118 1,225 401 228
Construction and land ................................. 72 83 65 227 264
------- ------- ------- ------- -------
Total ................................................ 3,283 3,521 4,238 1,594 2,106
------- ------- ------- ------- -------
Other:
Home equity ........................................... 82 195 133 250 219
Consumer .............................................. 42 90 138 20 6
Commercial ............................................ 174 280 162 199 --
------- ------- ------- ------- -------
Total ................................................ 298 565 433 469 225
------- ------- ------- ------- -------
Total non-accrual loans ............................... $ 3,581 $ 4,086 $ 4,671 $ 2,063 $ 2,331
======= ======= ======= ======= =======
Restructured loans:
Mortgage loans:
Residential ........................................... $ -- $ 151 $ 504 $ 1,078 $ 551
Commercial real estate ................................ 105 107 558 423 1,174
Construction and land ................................. -- -- -- 30 --
------- ------- ------- ------- -------
Total ................................................ 105 258 1,062 1,531 1,725
------- ------- ------- ------- -------
Other:
Home equity ........................................... -- -- -- -- 37
Commercial ............................................ -- -- -- -- 303
------- ------- ------- ------- -------
Total ................................................ -- -- -- -- 340
------- ------- ------- ------- -------
Total restructured loans .............................. $ 105 $ 258 $ 1,062 $ 1,531 $ 2,065
======= ======= ======= ======= =======
Total of non-accrual loans and restructured loans ......... $ 3,686 $ 4,344 $ 5,733 $ 3,594 $ 4,396
======= ======= ======= ======= =======
Percentage of total loans ................................. 1.01% 1.37% 2.12% 1.43% 2.12%
======= ======= ======= ======= =======
Real estate acquired by foreclosure or substantively
repossessed .............................................. $ 596 $ 465 $ 367 $ 969 $ 2,867
======= ======= ======= ======= =======
</TABLE>
At December 31, 1997, the Bank had 46 loans, totaling $3.6 million which
were non-accruing. Non-accruing loans at December 31, 1997 included in the
above total were: (i) 27 loans on residential properties, including two land
loans, totaling $2.8 million with balances outstanding ranging from $2,000 to
$712,000; (ii) eight loans on commercial real estate properties, totaling
$600,000, with balances outstanding ranging from $30,000 to $111,000; (iii)
three home equity loans with combined balances outstanding of $82,000 and (iv)
$121,000 in various other loans. Reserves of $4.1 million have been established
by the Bank at December 31, 1997 to cover any losses that may be incurred on
loans.
Restructured loans at December 31, 1997 amounted to $105,000. Additional
interest income of approximately $2,000 would have been recorded on these
restructured loans during the year ended December 31, 1997 if they had been
performing in accordance with their original terms. Interest income actually
recorded on these loans for the year amounted to approximately $9,000.
Typically, restructured loans are restructured to provide either a reduction of
the interest on the loan principal or an extension of the loan maturity.
G-46
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
Real estate acquired by foreclosure at December 31, 1997 totaled $596,000,
representing the lower of the carrying value of the loan or the fair value less
costs to dispose of properties. These properties had secured six loans which
were foreclosed upon by the Bank. The largest of these foreclosed properties,
carried at $167,000 at December 31, 1997, is comprised of one residential loan.
For further information regarding the Bank's non-performing assets, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 4 of Notes to Consolidated Financial Statements contained
in the Annual Report.
Allowance for Loan Losses
The Bank maintains an allowance for losses on loans. The annual provision
for loan losses is determined by management on the basis of many factors
including the risk characteristics of the portfolio, current economic
conditions and trends in loan delinquencies and charge-offs. The provision for
loan losses charged to earnings totaled $750,000 and $265,000 for the years
ended December 31, 1997 and 1996, respectively. The Bank increased its
provision for loan losses for the year ended December 31, 1997, as compared to
the year ended December 31, 1996 as a result of the overall increase in the
loan portfolio and an increase in specific loan charge-offs. The allowance for
loan losses was $4.1 million at December 31, 1997. The allowance for loan
losses is reviewed by management on a continual basis and although management
currently believes this allowance to be adequate, there can be no assurance
that this allowance will be sufficient to cover future losses.
The following table presents activity in the allowance for loan losses
during the periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ------------ ------------ ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance at the beginning of year ......... $3,741 $3,674 $3,255 $2,983 $2,979
------ ------ ------ ------ ------
Provision for loan losses ................ 750 265 597 340 478
------ ------ ------ ------ ------
Loans charged-off:
Mortgage loans:
Residential .............................. (59) (50) (223) (2) (250)
Commercial real estate ................... (24) (92) (36) (89) (121)
Construction and land .................... -- -- -- (51) (100)
Other loans:
Home equity .............................. -- -- (21) (23) --
Consumer ................................. (151) (101) (73) (19) (16)
Commercial ............................... (246) (22) (8) -- (60)
------ ------ -------- ------- ------
Total charge-offs ....................... (480) (265) (361) (184) (547)
------ ------ ------- ------- ------
Recoveries on previously charged-
off loans:
Mortgage loans ........................... 60 46 152 106 49
Other loans .............................. 29 21 31 10 24
------ ------ ------- ------- ------
Total recoveries ........................ 89 67 183 116 73
------ ------ ------- ------- ------
Net charge-offs .......................... (391) (198) (178) (68) (474)
------ ------ ------- ------- ------
Balance at the end of year ............... $4,100 $3,741 $3,674 $3,255 $2,983
====== ====== ======= ======= ======
Ratio of net charge-offs to average
loans outstanding ........................ 0.11% 0.07% 0.07% 0.03% 0.25%
====== ====== ======= ======= ======
</TABLE>
G-47
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
The following table sets forth the breakdown of the allowance for loan
losses by loan category for the periods indicated. The allocation of the
allowance to each category is not necessarily indicative of future losses and
does not restrict the use of the allowances to absorb losses in any category.
<TABLE>
<CAPTION>
At December 31,
---------------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C>
Residential ................................ $1,613 $1,313 $1,396 $1,279 $1,302
Commercial real estate ..................... 1,655 1,683 1,513 1,148 985
Construction and land ...................... 378 284 267 320 311
Other:
Home equity ............................... 81 90 90 130 188
Consumer .................................. 137 146 178 273 128
Commercial ................................ 236 225 230 105 69
------ ------ ------ ------ ------
Total allowance for loan losses ......... $4,100 $3,741 $3,674 $3,255 $2,983
====== ====== ====== ====== ======
</TABLE>
Investment Activities
The Bank's management believes it prudent to maintain an investment
portfolio that provides not only a source of income but also a source of
liquidity to meet lending demands and fluctuations in deposit flows. The
relative mix of investment securities and loans in the Bank's portfolio is
dependent upon the comparative attractiveness of yields available to the Bank
on adjustable rate loans that it makes as compared to yields on short-term
investment securities. At December 31, 1997, the Bank's portfolio of short-term
investments, equity securities, mortgage-backed securities and collateralized
mortgage obligations totaled $110.7 million, which represented 21.3% of total
assets. Sales of equity securities during the year ended December 31, 1997
resulted in a net gain of $55,000. There were no sales of equity securities for
the year ended December 31, 1996. The fair value of the Bank's equity
securities portfolio as of December 31, 1997 totaled $6,000. For more
information, see Note 3 of Notes to Consolidated Financial Statements in the
Annual Report.
The Bank's portfolio of investment securities consists of securities
offering reasonably short maturities or adjustable interest rates, primarily
United States Treasury notes and Government agency obligations, mortgage-backed
securities, collateralized mortgage obligations, investment grade corporate
bonds, money market instruments and municipal tax anticipation notes. The
average life of the Bank's fixed-income investment portfolio was less than
three years at December 31, 1997, with final maturities greater than ten years.
The Bank's investment portfolio is presently managed by the Bank's Chief
Financial Officer.
G-48
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
The following table sets forth a summary of the held to maturity and
available for sale, amortized cost and fair value of the Bank's investment
securities at the dates specified.
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
-------------------------------------------- ----------------------
Held to Maturity Available for Sale Held to Maturity
---------------------- --------------------- ----------------------
Amortized Fair Amortized Fair Amortized Fair
Cost Value Cost Value Cost Value
----------- ---------- ----------- --------- ----------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
U.S. Government obligations:
Maturing within 1 year .......... $ 9,992 $10,004 $ -- $ -- $12,015 $12,035
Maturing after 1 year but within
5 years ........................ 5,488 5,506 -- -- 10,462 10,492
------- ------- ------- ------- ------- -------
15,480 15,510 -- -- 22,477 22,527
------- ------- ------- ------- ------- -------
Collaterized mortgage obligations
(CMOs):
Maturing within 1 year .......... 413 413 -- -- 1,436 1,436
Maturing after 1 year but within
5 years ........................ 4,598 4,591 -- -- 6,384 6,312
Maturing after 5 years but within
10 years ....................... 5,036 5,021 -- -- 740 753
Maturing after 10 years ......... 40,162 40,230 -- -- 56,220 55,708
------- ------- ------- ------- ------- -------
50,209 50,255 -- -- 64,780 64,209
------- ------- ------- ------- ------- -------
Mortgage-backed securities:
Maturing within one year ........ -- -- 98 98 -- --
Maturing after 1 year but within
5 years ........................ -- -- -- -- -- --
Maturing after 5 years but within
10 years ....................... 217 228 -- -- -- --
Maturing after 10 years ......... 33,671 33,782 10,763 10,891 12,391 12,392
------- ------- ------- ------- ------- -------
33,888 34,010 10,861 10,989 12,391 12,392
------- ------- ------- ------- ------- -------
Other bonds and obligations:
Maturing within one year ........ -- -- -- -- -- --
Maturing after 1 year but within
5 years ........................ -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Marketable equity securities
Mortgage-backed mutual funds .... -- -- -- -- -- --
Common and preferred stocks ..... -- -- 2 6 -- --
------- ------- ------- ------- ------- -------
Totals ........................ $99,577 $99,775 $10,863 $10,995 $99,648 $99,128
======= ======= ======= ======= ======= =======
<CAPTION>
December 31, 1996 December 31, 1995
--------------------- -------------------------------------------
Available for Sale Held to Maturity Available for Sale
--------------------- --------------------- ---------------------
Amortized Fair Amortized Fair Amortized Fair
Cost Value Cost Value Cost Value
----------- --------- ----------- --------- ----------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
U.S. Government obligations:
Maturing within 1 year .......... $ 2,000 $ 1,994 $ 2,522 $ 2,534 $ 8,758 $ 8,828
Maturing after 1 year but within
5 years ........................ -- -- 12,072 12,172 4,007 4,005
------- ------- ------- ------- ------- -------
2,000 1,994 14,594 14,706 12,765 12,833
------- ------- ------- ------- ------- -------
Collaterized mortgage obligations
(CMOs):
Maturing within 1 year .......... -- -- -- -- -- --
Maturing after 1 year but within
5 years ........................ -- -- 7,547 7,609 -- --
Maturing after 5 years but within
10 years ....................... -- -- 6,022 6,001 -- --
Maturing after 10 years ......... -- -- 57,385 57,077 -- --
------- ------- ------- ------- ------- -------
-- -- 70,954 70,687 -- --
------- ------- ------- ------- ------- -------
Mortgage-backed securities:
Maturing within one year ........ -- -- -- -- -- --
Maturing after 1 year but within
5 years ........................ 147 147 -- -- 152 152
Maturing after 5 years but within
10 years ....................... -- -- -- -- -- --
Maturing after 10 years ......... 8,271 8,343 1,358 1,390 10,031 10,062
------- ------- ------- ------- ------- -------
8,418 8,490 1,358 1,390 10,183 10,214
------- ------- ------- ------- ------- -------
Other bonds and obligations:
Maturing within one year ........ -- -- 709 707 -- --
------- ------- ------- -------
Maturing after 1 year but within
5 years ........................ -- -- 1,853 1,898 -- --
------- ------- ------- ------- ------- -------
2,562 2,605 -- --
------- ------- ------- -------
Marketable equity securities
Mortgage-backed mutual funds .... 2,520 2,510 -- -- 2,375 2,369
Common and preferred stocks ..... 324 318 -- -- 370 354
------- ------- ------- ------- ------- -------
Totals ........................ $13,262 $13,312 $89,468 $89,388 $25,693 $25,770
======= ======= ======= ======= ======= =======
</TABLE>
G-49
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
DEPOSIT ACTIVITIES AND OTHER SOURCES OF FUNDS
General. Checking, savings and investment deposits have traditionally been
an important source of the Bank's funds for use in lending and for other
general business purposes. In addition to deposits, the Bank derives funds from
loan repayments, selling loans, and from other operations. The availability of
funds is influenced by general interest rates and other market conditions.
Scheduled loan repayments are a relatively stable source of funds while deposit
inflows and outflows vary widely and are influenced by prevailing interest
rates and money market conditions. Borrowings may be used on a short-term basis
to compensate for reductions in deposits or deposit inflows at less than
projected levels and may be used on a longer term basis to support expanded
lending activities, or to take advantage of favorable investment opportunities.
Deposits. Consumer deposits are attracted principally from within the
Bank's market area through the offering of a broad selection of deposit
instruments including demand deposit accounts, NOW accounts, money market
deposit accounts, regular savings accounts, term deposit accounts and
retirement savings plans. The Bank does not actively solicit or advertise for
deposits outside of its market area. The Bank accepts deposits primarily
through its branch office network and through the "X-Press 24" automated teller
machine network, of which it is a member. The Bank also actively solicits
deposits from area businesses as part of its Business Services offerings and
seeks to attract deposits from local municipalities.
The Bank has adopted a policy of controlled deposit growth, by pricing its
savings products based on the Bank's need for additional funds and rates being
paid by other area financial institutions.
The Bank offers its customers a variety of pricing options which enable
them to select the combination of banking services which best meets their
needs, in the most cost effective manner.
In August 1994, the Bank introduced a new relationship banking product
called "Advantage CD." With this deposit offering, customers have the
opportunity to earn bonus interest each month, based upon their total deposit
and loan account balances with the Bank. As of December 31, 1997, over $78.1
million had been deposited into the 18 and 30 month Advantage CD's. In January
1996, the Bank reintroduced its club program, as the Presidents Club, producing
a package of benefits for customers with combined balances of $10,000 or more.
During 1997, Presidents Club household deposits with the Bank grew by $31.3
million to $179.3 million at December 31, 1997. In August 1997, a high rate,
high minimum balance money market account was introduced, resulting in deposits
of $19.8 million by year end 1997.
For further information regarding the Bank's deposits see Note 8 of Notes
to Consolidated Financial Statements in the Annual Report.
Borrowings. Savings deposits and loan repayments, as well as principal
payments and maturing investments, are the primary source of funds of the
Bank's lending and investment activities and for its general business purposes.
Advances from the Federal Home Loan Bank ("FHLB") of Boston and other
borrowings in the form of securities sold under agreements to repurchase, are
alternative sources of funds. The Bank increased its advances from the FHLB of
Boston to finance loan originations, loan purchases and purchases of investment
securities. Advances from the FHLB of Boston were $45.6 million at December 31,
1997 compared to $32.1 million at December 31, 1996. Additional sources of
available funds include the Co-operative Central Bank Reserve Fund and the
Federal Reserve System.
G-50
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
Advances from the Federal Home Loan Bank of Boston are summarized as
follows:
<TABLE>
<CAPTION>
At December 31,
-----------------------------------------
Maturing in
Interest Rate Year Ending 1997 1996 1995
- ----------------------------------------------------- ------------- ------------ ------------ -----------
(Dollars in thousands)
<S> <C> <C> <C> <C>
4.19%-5.61% ......................................... 1996 $ -- $ -- $ 6,407
4.53%-5.78% ......................................... 1997 -- 26,026 694
5.60%-6.47% ......................................... 1998 34,000 5,000 --
5.71%-6.83% ......................................... 1999 11,000 1,000 1,000
8.32% ............................................... 2015 47 47 47
6.67% ............................................... 2017 54 -- --
5.66% ............................................... 2018 500 -- --
-------- -------- -------
$ 45,601 $ 32,073 $ 8,148
======== ======== =======
Weighted average rate (cost of borrowings) .......... 5.82% 5.70% 5.21%
======== ======== =======
Maximum amount outstanding at any month end ......... $ 71,515 $ 32,073 $15,354
======== ======== =======
</TABLE>
For further information regarding the Bank's borrowings see Note 9 of
Notes to Consolidated Financial Statements included in the Company's Annual
Report to Stockholders.
Subsidiary Activities
The Sextant Corporation (the "Corporation") is a wholly-owned subsidiary
of the Bank, originally formed to purchase equipment and lease the equipment to
the Bank to take advantage of favorable tax treatment previously but no longer
allowed to such transactions. In fiscal 1989, the Corporation constructed four
office condominium buildings which contain a total of sixteen thousand square
feet of office space (16 units). At December 31, 1997, eight units had been
sold, and two units have been leased. The Bank occupies the remaining units.
The Corporation also owns seven condominium units in Cedarville, Massachusetts.
These units have been written down to their appraised value and are actively
being marketed. The sales price for the units has been reduced as of March 1,
1997 to help facilitate a sale. No further losses are anticipated; the current
book value as of December 31, 1997 is $233,000.
The Company in its application to the Federal Reserve Bank of Boston
("FRB") to become a bank holding company committed to divest or convert to bank
premises the properties that are currently held by the Sextant Corporation
including the properties discussed above, pursuant to [sec]225.22(f) of
Regulation Y. Section 225.22(f) of Regulation Y, which stipulates that a
company that becomes a bank holding company may, for a period of two years,
engage in nonbanking activities and control voting securities or assets of a
nonbank subsidiary, if the bank holding company engaged in such activities or
controlled such voting securities or assets on the date it became a bank
holding company. The FRB may grant requests for up to three one-year extensions
of the two-year period.
The Corporation is also a 49% partner in the Glasstown Group Partnership.
In July 1996, the Partnership sold approximately 12 acres of land on Old Kings
Highway adjacent to a major retail complex in Sandwich, Massachusetts. The
Corporation received $113,000 in cash and a note receivable for $174,000.
Principal and interest is payable in quarterly payments over a five year
period. The Corporation sustained no loss as a result of the transaction. At
December 31, 1997, the Corporation's portion of the note receivable was
$135,000.
In March 1992, the Bank established Redeil Corporation ("Redeil"), a
Massachusetts Corporation which was established in order to allow the Bank to
transfer certain real estate owned by foreclosure to Redeil. The Bank
transferred $903,000 in real estate owned by foreclosure to Redeil in March
1992, and made an additional investment in Redeil of $20,000 in June 1992. At
July 31, 1995, the Bank dissolved Redeil and transferred its investment of
$791,000, including a real estate owned by foreclosure balance of $135,000,
back to the Bank.
In February 1993, the Bank established Sandwich Securities Corporation
("SSC"), a Massachusetts corporation for the purpose of engaging exclusively in
buying, selling and holding, on its own behalf, securities that may be held
directly by the Bank. SSC qualifies under Massachusetts General Laws, Chapter
63 Section 38B, as a Massachusetts security corporation. At December 31, 1997,
SSC held $39.6 million in U.S. Treasury notes and Government agency obligations
and mortgage-backed securities. In March 1995, the Bank established Sextant
G-51
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
Securities Corporation ("SEXT"), a second Massachusetts security corporation,
for the purpose of engaging exclusively in buying, selling and holding, on its
own behalf, securities that may be held directly by the Bank. At December 31,
1997, SEXT held $30.3 million in securities.
In February 1997, the Bank filed for and received permission from the
Massachusetts Commissioner of Banks to increase the amount of securities to be
held by SSC from the original amount of $15 million to an amount not to exceed
$45 million.
Yields Earned and Rates Paid
The Bank's pre-tax earnings depend primarily on its net interest income,
the difference between the income it receives on its loan portfolio and other
investments and its cost of money, consisting primarily of interest paid on
savings deposits, FHLB advances and other borrowings. Net interest income is
affected by (i) the difference ("interest rate spread") between rates of
interest earned on its interest-earning assets and rates paid on its interest-
bearing liabilities and (ii) the relative amounts of its interest-earning
assets and interest-bearing liabilities. When interest-earning assets
approximate or exceed interest-bearing liabilities, any positive interest rate
spread will generate net interest income. Thrift institutions have
traditionally used interest rate spreads as a measure of net interest income.
Another indicator of an institution's net interest income is its "net yield on
interest earning assets" which is net interest income divided by average
interest earning assets.
At December 31, 1997, approximately 6.4% of the Bank's total loans
outstanding consisted of fixed-rate loans with maturities of up to 30 years.
Although actions taken by management have largely reduced the Bank's reliance
on long-term fixed-rate assets in favor of short-term repriceable assets, when
interest rates rise, the Bank's yield on its loan portfolio still increases at
a slower pace as the Bank's deposit base has a shorter term than its loan
portfolio and is more sensitive to rapidly increasing or decreasing rates.
Competition
The Bank's competition for deposits has historically come from other
co-operative banks, savings banks, savings and loan associations, trust
companies, commercial banks and credit unions located in Massachusetts
generally, and on Cape Cod specifically, some of which have greater financial
resources than the Bank. Based upon FDIC data for branch deposits as of June
30, 1997, the Bank ranked fourth in total deposits in its principle market of
Barnstable County (Cape Cod), when compared to other deposit gathering
institutions. The Bank has also experienced significant additional competition
for investors' funds from short term money market funds, mutual funds,
annuities and other corporate and government securities yielding interest rates
which have been higher than those being paid by the Bank on savings deposits or
containing other favorable features. The Bank anticipates that it will face
continuing competition from other financial intermediaries for deposits.
The Bank competes for deposits principally by offering depositors a wide
variety of checking, savings and investment programs, convenient branch
locations, 24-hour automated teller machine access, preauthorized payment and
withdrawal systems, tax-deferred retirement programs, and other miscellaneous
services. The Bank does not rely upon any individual, group or entity for a
material portion of its deposits.
The Bank's competition for real estate loans comes principally from
mortgage banking companies, co-operative banks and savings banks, savings and
loan associations, commercial banks, insurance companies and other
institutional lenders. The Bank competes for loan originations primarily
through the interest rates and loan fees it charges and the efficiency and
quality of services it provides borrowers, real estate brokers and builders.
For 1997, Banker and Tradesman listed the Bank as being the third largest
originator of residential mortgages on Cape Cod (Barnstable County),
Massachusetts, by dollar amount. The competition for loans encountered by the
Bank, as well as the types of institutions with which the Bank competes, varies
from time to time depending upon certain factors including the general
availability of lendable funds and credit, general and local economic
conditions, current interest rate levels, volatility in the mortgage markets
and other factors which are not readily predictable.
In addition to competing with other banks and financial services
organizations based in Massachusetts, the Bank has and is expected to face
competition from major commercial banks headquartered outside of Massachusetts
as a result of regional interstate banking laws which currently permit banks
located in New England to enter the Bank's market area and compete with it for
deposits and loan originations. The Bank also faces increased
G-52
<PAGE>
Sandwich Bancorp -- Excerpts from Annual Report on Form 10-K for the Year Ended
December 31, 1997
competition as a result of the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 which, as of September 29, 1995, allowed the Federal
Reserve Board to approve a bank holding company's application to acquire
control of, or substantially all of the assets of, a Massachusetts bank without
regard to Massachusetts law.
Bank regulation is undergoing significant change with an increased number
of bank mergers and acquisitions, changes in the products and services banks
can offer, and involvement in non-banking activities by bank holding companies.
There are a number of pending legislative and regulatory proposals that may
further alter the structure, regulation, and competitive relationships of
financial institutions.
The Bank is headquartered in Sandwich, Massachusetts and operates a
network of eleven full service offices and one loan production office. The
Bank's eleven full service office facilities are located in Sandwich, South
Sandwich, Buzzards Bay (Bourne), Pocasset (Bourne), Wareham, Cedarville
(Plymouth), Falmouth, Hyannis, Chatham, Orleans and South Yarmouth,
Massachusetts. The Bank's main office is located at 100 Old Kings Highway,
Sandwich, Massachusetts. In addition, the Bank maintains a loan production
office located in Plymouth, Massachusetts. Nine of the offices are located on
Cape Cod in Barnstable County, while the Wareham and Cedarville offices are
located in Plymouth County. The Bank's primary market area within which the
majority of the properties securing loans originated by the Bank are located,
encompasses the southern portion of Plymouth County and all of Cape Cod
(Barnstable County), Massachusetts.
Employees
As of December 31, 1997, the Company and subsidiaries had 128 full-time
and 39 part-time employees. The employees are not represented by any collective
bargaining agreement. Management considers its relations with its employees to
be good.
Executive Officers Who Are Not Directors
The executive officers of the Bank are as follows:
<TABLE>
<CAPTION>
Age at
December 31,
Name 1997 Principal Position
- -------------------------- ------------- -------------------------------------------------------------
<S> <C> <C>
Dana S. Briggs ........... 46 Senior Vice President
George L. Larson ......... 54 Senior Vice President, Chief Financial Officer and Treasurer
David A. Parsons ......... 54 Senior Vice President
</TABLE>
The following is a description of the principal occupation and employment
of the executive officers of the Company during at least the past five years:
Dana S. Briggs joined the Bank in 1983 as Assistant Vice President and
Main Office Manager and in 1984 became the Bank's Vice President of
Administration. Presently as Senior Vice President and Senior Retail/
Operations Officer, he is in charge of the Bank's branches, operations and
marketing. From 1973 to 1983, Mr. Briggs was employed by Bass River Savings
Bank and Barnstable County National Bank.
George L. Larson started with the Bank in November 1986 as Senior Vice
President and Chief Financial Officer and is responsible for the Financial
Division of the Bank. Mr. Larson came to the Bank with 15 years of bank
accounting and finance experience. From 1978 to 1986, Mr. Larson was employed
by Jefferson Federal Savings and Loan Association in Meriden, CT, as Senior
Vice President and Treasurer, in which capacities he was in charge of the
Jefferson Federal's accounting and data processing operations and managed the
Association's investment portfolio.
David A. Parsons joined the Bank in December, 1990 as Senior Vice
President, Senior Loan Officer and is responsible for the Bank's Lending
Division. He was employed from 1969-1989 by Shawmut Bank. His career has
covered consumer lending and collection, commercial loan collection and
workouts and equipment financing & leasing. In 1989, Mr. Parsons was employed
as an Executive Vice President/Senior Credit Officer at Home National Bank in
Milford, Massachusetts. Upon Home National's closing, Mr. Parsons was employed
by the FDIC until August 1990. From August 1990 until being hired full-time by
the Bank in December 1990, Mr. Parsons was employed as a consultant to the
Bank.
G-53
<PAGE>
Sandwich Bancorp -- Excerpts from Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1998
SANDWICH BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------- -------------
(Unaudited)
(In thousands)
<S> <C> <C>
ASSETS
Cash and due from banks .......................................... $ 15,771 $ 9,949
Federal funds sold ............................................... 8,001 6,018
-------- --------
Total cash and cash equivalents .............................. 23,772 15,967
-------- --------
Other short-term investments ..................................... 2,149 101
Investment securities:
Available for sale .............................................. 58,180 10,995
Held to maturity ................................................ 64,792 99,577
-------- --------
Total investment securities .................................. 122,972 110,572
-------- --------
Loans:
Mortgage loans .................................................. 336,646 346,062
Other loans ..................................................... 23,971 24,680
-------- --------
Total loans .................................................. 360,617 370,742
Less allowance for loan losses .................................. 4,167 4,100
-------- --------
Net loans .................................................... 356,450 366,642
-------- --------
Stock in Federal Home Loan Bank of Boston, at cost ............... 3,749 3,749
Accrued interest receivable ...................................... 2,748 2,836
The Co-operative Central Bank Reserve Fund ....................... 965 965
Real estate held for sale ........................................ 442 457
Real estate acquired by foreclosure .............................. 271 596
Office properties and equipment .................................. 4,510 4,641
Leased property under capital lease .............................. 1,721 1,738
Core deposit and other intangibles ............................... 1,237 1,459
Income taxes receivable, net ..................................... 350 103
Deferred income tax asset, net ................................... 2,929 2,948
Prepaid expenses and other assets ................................ 6,748 5,923
-------- --------
Total assets ................................................. $531,013 $518,697
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits ......................................................... $444,750 $423,014
Borrowed funds ................................................... 33,601 45,601
Capital lease obligation ......................................... 1,721 1,738
Escrow deposits of borrowers ..................................... 1,382 1,604
Accrued expenses and other liabilities ........................... 5,003 4,726
-------- --------
Total liabilities ............................................ 486,457 476,683
-------- --------
STOCKHOLDERS' EQUITY ................................................
Preferred stock, par value $1.00 per share;
authorized 5,000,000 shares; none issued or outstanding ......... -- --
Common stock, par value $1.00 per share;
authorized 15,000,000 shares; 2,043,475 and 1,942,159 issued
and outstanding, respectively ................................... 2,043 1,942
Additional paid-in capital ....................................... 21,540 20,139
Retained earnings ................................................ 20,811 19,848
Accumulated other comprehensive income ........................... 162 85
-------- --------
Total stockholders' equity ................................... 44,556 42,014
-------- --------
Total liabilities and stockholders' equity ................... $531,013 $518,697
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
G-54
<PAGE>
Sandwich Bancorp -- Excerpts from Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1998
SANDWICH BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------- ---------------------------
1998 1997 1998 1997
----------- ----------- ------------ ------------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME
Interest on loans .......................................... $ 7,168 $ 6,986 $ 14,512 $ 13,493
Interest on dividends on investment securities
available for sale ........................................ 440 134 649 301
Interest on investment securities held to maturity ......... 1,230 1,758 2,744 3,377
Interest on short-term investments ......................... 271 80 388 112
------- ------- -------- --------
Total interest and dividend income ..................... 9,109 8,958 18,293 17,283
------- ------- -------- --------
INTEREST EXPENSE
Deposits ................................................... 4,185 3,714 8,215 7,295
Borrowed funds ............................................. 624 870 1,357 1,412
------- ------- -------- --------
Total interest expense ................................. 4,809 4,584 9,572 8,707
------- ------- -------- --------
Net interest and dividend income ....................... 4,300 4,374 8,721 8,576
Provision for loan losses ..................................... -- 132 57 241
------- ------- -------- --------
Net interest and dividend income after
provision for loan losses ............................ 4,300 4,242 8,664 8,335
------- ------- -------- --------
NON-INTEREST INCOME
Service charges ............................................ 411 432 813 838
Mortgage loan servicing fees ............................... 71 58 138 122
Gain on sale of loans, net ................................. 146 27 304 67
Other ...................................................... 139 103 119 210
------- ------- -------- --------
Total non-interest income .............................. 767 620 1,374 1,237
------- ------- -------- --------
Income before non-interest expense and
income taxes ......................................... 5,067 4,862 10,038 9,572
------- ------- -------- --------
NON-INTEREST EXPENSE
Salaries and employee benefits ............................. 1,646 1,552 3,243 3,080
Occupancy and equipment .................................... 359 378 721 750
FDIC deposit insurance ..................................... 27 18 46 36
Advertising ................................................ 103 101 221 202
Data processing service fees ............................... 184 160 345 316
Foreclosed property expense ................................ 12 19 28 35
Amortization of core deposit intangible .................... 110 130 223 261
Other ...................................................... 818 688 1,465 1,371
------- ------- -------- --------
Total non-interest expense ............................. 3,259 3,046 6,292 6,051
------- ------- -------- --------
Income before income tax expense ....................... 1,808 1,816 3,746 3,521
Income tax expense ............................................ 646 669 1,404 1,327
------- ------- -------- --------
Net income ............................................. $ 1,162 $ 1,147 $ 2,342 $ 2,194
======= ======= ======== ========
Basic earnings per share ...................................... $ 0.59 $ 0.60 $ 1.19 $ 1.15
======= ======= ======== ========
Diluted earnings per share .................................... $ 0.56 $ 0.58 $ 1.14 $ 1.10
======= ======= ======== ========
Average basic shares outstanding .............................. 1,979 1,912 1,962 1,908
Dilutive effect of outstanding stock options .................. 79 78 89 81
------- ------- -------- --------
Average diluted shares outstanding ............................ 2,058 1,990 2,051 1,989
======= ======= ======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
G-55
<PAGE>
Sandwich Bancorp -- Excerpts from Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1998
SANDWICH BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Additional Accumulated other
Common paid-in Retained comprehensive
Stock capital earnings income Total
-------- ------------ ----------- ------------------ ----------
(In thousands)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 ............................. $1,902 $19,323 $ 17,381 $ 27 $ 38,633
Net income for six months ............................. -- -- 2,194 -- 2,194
Other comprehensive income, net of tax
Unrealized gains on securities, net of
reclassification adjustment ........................ 76 76
--------
Comprehensive income .................................. 2,270
Dividends declared ($0.60 per share) .................. -- -- (1,145) -- (1,145)
Stock options exercised ............................... 13 123 -- -- 136
------ ------- -------- ----- --------
Balance at June 30, 1997 ................................. $1,915 $19,446 $ 18,430 $ 103 $ 39,894
====== ======= ======== ===== ========
Balance at December 31, 1997 ............................. $1,942 $20,139 $ 19,848 $ 85 $ 42,014
Comprehensive income:
Net income for six months ............................. -- -- 2,342 -- 2,342
Other comprehensive income, net of tax
Unrealized gains on securities, net of
reclassification adjustment ........................ 77 77
--------
Comprehensive income .................................. 2,419
Dividends declared ($0.70 per share) .................. -- -- (1,379) -- (1,379)
Stock options exercised ............................... 101 1,401 -- -- 1,502
------ ------- -------- ----- --------
Balance at June 30, 1998 ................................. $2,043 $21,540 $ 20,811 $ 162 $ 44,556
====== ======= ======== ===== ========
DISCLOSURE OF RECLASSIFICATION
AMOUNT:
Unrealized holding gains arising during period ........... $ 77
Less: reclassification adjustment for gains included in
net income .............................................. --
-----
Net unrealized gains on securities ....................... $ 77
=====
</TABLE>
See accompanying notes to consolidated financial statements.
G-56
<PAGE>
Sandwich Bancorp -- Excerpts from Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1998
SANDWICH BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
1998 1997
------------ -----------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .............................................................. $ 2,342 $ 2,194
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses ............................................. 57 241
Provision for loss and writedowns of real estate acquired by
foreclosure .......................................................... 13 20
Depreciation and amortization ......................................... 498 322
(Increase) decrease in:
Accrued interest receivable .......................................... 88 (345)
Deferred income tax asset, net ....................................... (27) (39)
Other assets ......................................................... (825) 408
Income taxes receivable .............................................. (247) (146)
Core deposit intangible .............................................. 222 260
Increase (decrease) in:
Escrow deposits of borrowers ......................................... (222) 63
Income tax payable ................................................... -- (282)
Accrued expenses and other liabilities ............................... 277 (709)
Gain on sales of loans, net ........................................... (304) (67)
Principal balance of loans originated for sale ........................ (39,028) (8,209)
Principal balance of loans sold ....................................... 39,232 8,430
Loss on sales of investment securities, net ........................... -- 6
Gain on sales of real estate acquired by foreclosure .................. (25) (20)
--------- ---------
Total adjustments ................................................. (291) (67)
--------- ---------
Net cash provided by operating activities ........................ 2,051 2,127
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale ................. (49,475) (13)
Purchases of investment securities held to maturity ................... -- (28,733)
Proceeds from sales of investment securities available for sale ....... -- 2,527
Proceeds from maturities and paydowns of investment securities
available for sale ................................................... 2,382 2,686
Proceeds from maturities and paydowns of investment securities
held to maturity ..................................................... 34,620 19,918
(Increase) decrease in:
Short-term investments ............................................... (2,048) (989)
Loans ................................................................ 10,105 (31,405)
Real estate acquired by foreclosure .................................. -- (20)
Real estate held for sale ............................................ 15 --
Stock in Federal Home Loan Bank of Boston ............................ -- (1,079)
Investments in real estate ........................................... -- 7
Proceeds from sale of real estate acquired by foreclosure ............. 467 742
Purchase of office properties and equipment ........................... (171) (209)
--------- ---------
Net cash used by investing activities ............................... (4,105) (36,568)
--------- ---------
</TABLE>
G-57
<PAGE>
Sandwich Bancorp -- Excerpts from Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1998
SANDWICH BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------
1998 1997
------------ -------------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits ....................................... $ 21,736 $ 13,532
Advances from the Federal Home Loan Bank of Boston ............. 16,000 126,500
Repayment of Federal Home Loan Bank advances ................... (28,000) (103,026)
Cash dividends paid ............................................ (1,379) (1,145)
Stock options exercised ........................................ 1,502 136
--------- ----------
Net cash provided by financing activities ..................... 9,859 35,997
--------- ----------
Net increase in cash and federal funds sold .................... 7,805 1,556
Cash and federal funds sold, beginning of period ............... 15,967 11,718
--------- ----------
Cash and federal funds sold, end of period ..................... $ 23,772 $ 13,274
========= ==========
CASH PAID FOR
Interest on deposits ........................................... $ 8,221 $ 7,296
========= ==========
Interest on borrowed funds ..................................... $ 1,432 $ 1,338
========= ==========
Income taxes, net .............................................. $ 1,689 $ 1,791
========= ==========
OTHER NON-CASH ACTIVITIES
Deferred taxes on change in unrealized (gain) loss on securities
available for sale ............................................ $ (46) $ (18)
========= ==========
Additions to real estate acquired by foreclosure ............... $ 130 $ 524
========= ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
G-58
<PAGE>
Sandwich Bancorp -- Excerpts from Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1998
SANDWICH BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998 and 1997
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited consolidated financial statements of Sandwich Bancorp, Inc.
(the "Company") and its wholly owned subsidiary, the Sandwich Co-operative Bank
(the "Bank") presented herein should be read in conjunction with the
consolidated financial statements of the Company as of and for the year ended
December 31, 1997. In the opinion of management, the interim financial
statements reflect all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation of the three months and the six months ended
June 30, 1998 and 1997. Interim results are not necessarily indicative of
results to be expected for the entire year. Certain reclassifications have been
made to the December 31, 1997 and the June 30, 1997 balances to conform with
June 30, 1998 presentation. Management is required to make estimates and
assumptions that effect amounts reported in the financial statements. Actual
results could differ significantly from those estimates.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued
Financial Accounting Standard No. 133, "Accounting for Derivative Instruments
and Hedging Activities". This statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, (collectively referred to as derivatives) and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair market value. Under this statement, an entity that elects to apply
hedge accounting is required to establish at the inception of the hedge the
method it will use for assessing the effectiveness of the hedging derivative
and the measurement approach for determining the ineffective aspect of the
hedge. This Statement is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. This statement should not have an immaterial
effect on the Company's consolidated financial statements.
Recent Events
On February 2, 1998, the Company and the Bank entered into a definitive
agreement under which The 1855 Bancorp, the parent company of Compass Bank for
Savings of New Bedford, Massachusetts will acquire Sandwich Bancorp, Inc. Prior
to the Company's consideration and approval of its definitive agreement with
The 1855 Bancorp, the Company had contacted and received expressions of
interest from three other parties who had an interest in an acquisition of the
Company.
On February 24, 1998, the Company announced that its Board of Directors,
consistent with the exercise of its fiduciary duties, determined that it was
appropriate to request additional information and a clarification of the
renewed expressions of interest that it had recently received subsequent to
February 2 from the three other parties.
Following a comprehensive review of the other expressions of interests for
the Company, the Company and Compass Bank jointly announced on March 23, 1998,
that they had signed an amendment to their previously announced agreement of
February 2, 1998 by which Compass Bank would acquire Sandwich Bancorp, Inc.
Under the terms of the amended agreement, Compass Bank's parent company, The
1855 Bancorp will convert to a 100% publicly owned stock holding company and
thereafter issue stock having a value of $64.00 per share to Sandwich Bancorp
shareholders in a tax-free exchange of common stock. The value to be received
by Sandwich Bancorp shareholders is subject to adjustment pursuant to a formula
based on the value of the stock of The 1855 Bancorp near the transaction date.
Based on 1855 Bancorp's assumed initial public offering price of $10.00 per
share, each Sandwich Bancorp share will be exchanged for 1855 Bancorp stock
having a value of $64.00 per share so long as 1855 Bancorp stock trades at an
average price of between $10.00 and $13.50 per share during a designated
trading period following the initial public offering date. If this average
price exceeds $13.50 per share, the value to be received by Sandwich Bancorp
shareholders will increase proportionately up to a maximum value of $71.11
until 1855 Bancorp's average price reaches or exceeds $15.00 per share. If this
average price is equal to or less than $10.00 per share, Sandwich Bancorp
shares will be exchanged for 6.4 shares of 1855 Bancorp stock.
G-59
<PAGE>
Sandwich Bancorp -- Excerpts from Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1998
SANDWICH BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
June 30, 1998 and 1997
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Sandwich Bancorp and The 1855 Bancorp also entered into a Stock Option
Agreement, granting to The 1855 Bancorp an option to acquire up to 19.9% of
Sandwich's common stock under certain circumstances. The transaction, which is
subject to all necessary regulatory and shareholder approvals, is expected to
close in the fourth quarter of 1998.
G-60
<PAGE>
Sandwich Bancorp -- Excerpts from Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1998
PART I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Condition
The following is a discussion of the major changes and trends in financial
condition as of June 30, 1998 as compared to December 31, 1997.
At June 30, 1998, the Company's total assets were $531,013,000 as compared
to $518,697,000 at December 31, 1997, an increase of $12,316,000 or 2.4%. The
increase is largely attributable to increases in cash and cash equivalents,
other short-term investments and investment securities available for sale,
partially offset by a decrease in investment securities held to maturity and in
loans. Total cash and cash equivalents at June 30, 1998 totaled $23,772,000
compared to $15,967,000 at December 31, 1997, an increase of $7,805,000. The
increase was the direct result of cash flow from loan repayments. The Company's
investment portfolio, including other short-term investments, investment
securities available for sale and investment securities held to maturity
increased $14,448,000 or 11.5% to $125,121,000 at June 30, 1998 compared to
$110,673,000 at December 31, 1997. Maturities on investment securities and cash
flow from mortgage-backed securities were reinvested into investment securities
available for sale.
The major components of investment securities at June 30, 1998 and
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---------- -------------
(In thousands)
<S> <C> <C>
Available-for-sale:
US Government obligations ................... $ 4,993 $ --
Mortgage-backed securities .................. 53,181 10,989
Common and preferred stocks ................. 6 6
-------- --------
58,180 10,995
-------- --------
Held-to-maturity:
US Government obligations ................... 9,989 15,480
Collateralized mortgage obligations ......... 37,235 50,209
Mortgage-backed securities .................. 17,568 33,888
-------- --------
64,792 99,577
-------- --------
Total ....................................... $122,972 $110,572
======== ========
</TABLE>
The New England and local real estate markets have been positively
impacted by a decline in market interest rates, occurring late in the fourth
quarter of 1997 and continuing through the first six months of 1998. The
decline has created a significant increase in loan refinances and thirty-year
fixed rate loan originations, which the Company sells in the secondary market.
As evidence of this, the Company's loan portfolio, net of allowance for loan
losses, decreased to $356,450,000 at June 30, 1998 compared to $366,642,000 at
December 31, 1997. In addition, property acquired by the Company as the result
of foreclosure or repossession decreased to $271,000 at June 30, 1998 from
$596,000 at December 31, 1997. Foreclosed properties are classified as "real
estate acquired by foreclosure," representing the lower of the carrying value
of the loan or the fair value of the property less costs to sell until such
time as they are sold or otherwise disposed. During the six months ended June
30, 1998, the Company acquired two properties through foreclosure or
repossession, of which one was a land loan totaling $30,000 and one, a
commercial mortgage loan totaling $100,000. During the same period, the Company
sold four foreclosed residential properties totaling $457,000, thereby
incurring a net gain of $25,000 and have accepted deposits totaling $10,000 on
pending sales of three additional properties.
Management anticipates continued stability in the economy in 1998.
However, the local real estate market continues to represent a risk to the
Company's loan portfolio and could result in an increase in, and reduced values
of, properties acquired by foreclosure. Accordingly, higher provisions for loan
losses and foreclosed property expense may be required should economic
conditions worsen or the levels of the Company's non-performing assets
increase.
G-61
<PAGE>
Sandwich Bancorp -- Excerpts from Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1998
Deposits increased by $21,736,000 or 5.1% to $444,750,000 at June 30, 1998
compared to $423,014,000 at December 31, 1997. Substantially all of the
increase was realized in money market deposit accounts, passbook savings and
checking accounts. Borrowed funds decreased by $12,000,000 to $33,601,000 at
June 30, 1998 compared to $45,601,000 at December 31, 1997. Cash flow from loan
repayments and mortgage-backed securities were used to pay down maturing
advances from the Federal Home Loan Bank of Boston.
Total stockholders' equity increased $2,542,000 or 6.1% since December 31,
1997. Increases in stockholders' equity resulted from net income of $2,342,000,
stock options exercised of $1,502,000 and an increase in net unrealized gains
on investment securities available for sale of $77,000, partially offset by
cash dividends paid of $0.70 per share or $1,379,000. The Company is required
to maintain certain levels of capital (stockholders' equity) pursuant to FDIC
regulations. At June 30, 1998, the Company had a qualifying total capital to
risk-weighted assets ratio of 16.46%, of which 8.29% constituted Tier 1
leverage capital, substantially exceeding the FDIC qualifying total capital to
risk-weighted assets requirement of at least 8.00%, of which at least 4.00%
must be Tier 1 leverage capital.
As a result of the amendment to the Merger Agreement of February 2, 1998,
which was signed on March 23, 1998, the new terms, being a stock-for-stock
transaction, will allow the Company to record the transaction under the
pooling-of-interest method. Under the pooling-of-interest method, the Company
is allowed to defer all merger-related expenses (versus expensing as incurred).
During the first six months of 1998, the Company incurred approximately
$1,003,000 of merger-related expenses, which have been deferred and will be
recognized by the merged entity during the quarter when the merger is complete.
Results of Operations
Comparison of Three Months Ended June 30, 1998 and 1997
General
Operations for the three months ended June 30, 1998 resulted in net income
of $1,162,000 compared with $1,147,000 for the three months ended June 30,
1997. Non-interest income increased $147,000 or 23.7% to $767,000 for the three
months ended June 30, 1998 as compared to $620,000 for the three months ended
June 30, 1997. The principal reason for the increase was an increase in gains
on sale of fixed rate loans in the secondary market. No provision for loan
losses was recorded as a result of a decline in non-performing assets and total
loans. Non-interest expenses increased by $213,000 or 7.0% to $3,259,000 for
the three months ended June 30, 1998 as compared to $3,046,000 for the three
months ended June 30, 1997. The major areas of increase in non- interest
expense were in salaries and employee benefits, data processing service fees
and other non-interest expenses. Market interest rates have remained low over
the three month period, a continuance from the initial decline experienced late
in the fourth quarter of 1997. The Company's results of operations largely
depend upon its net interest margin which is the difference between the income
earned on loans and investments, and the interest expense paid on deposits and
borrowings divided by total interest earning average assets. The net interest
margin is affected by economic and market factors which influence interest rate
levels, loan demand and deposit flows. The net interest margin decreased to
3.46% for the three months ended June 30, 1998 from 3.70% for the three months
ended June 30, 1997. As a result of this decrease, net interest and dividend
income decreased $74,000 from $4,374,000 for the three months ended June 30,
1997 to $4,300,000 for the three months ended June 30, 1998.
Trends in the real estate market locally and in New England impact the
Company because of its real estate loan portfolio. If the local and New England
real estate markets should show signs of weakness, additional provisions for
loan losses and further write downs of properties acquired by foreclosure or
repossession may be necessary in the future. In addition, various regulatory
agencies, as an integral part of their examination process, periodically review
the Company's allowance for loan losses. Such agencies may require the Company
to recognize additions to the allowance based on information available at the
time of their review.
Interest and Dividend Income
Interest and dividend income increased by $151,000 to $9,109,000 for the
three months ended June 30, 1998 when compared to three months ended June 30,
1997. Interest on loans increased $182,000 or 2.6% as a result of an increase
in the average balance outstanding of $19,419,000, partially offset by a
decrease in the average rate
G-62
<PAGE>
Sandwich Bancorp -- Excerpts from Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1998
earned on the portfolio from 8.12% in the second quarter of 1997 to 7.88% for
the same period in 1998. Interest and dividends on total investments decreased
by $31,000 as a result of the decrease in the yield on the Company's investment
portfolio from 6.19% for the June 30, 1997 period, to 5.88% for June 30, 1998,
partially offset by an increase in the average balance outstanding of
$4,272,000.
Interest Expense
Total interest expense increased $225,000 to $4,809,000 for the three
months ended June 30, 1998, from $4,584,000 for the three months ended June 30,
1997. Interest expense on interest bearing deposits increased by $471,000 or
12.7%. The increase reflects an increase in the average balance outstanding of
$36,553,000 and an increase in interest rates over the three month period, from
4.19% in 1997 to 4.28% in 1998. Interest expense on borrowed funds decreased
$246,000 primarily due to a decrease in the average balance outstanding of
$17,039,000, along with a slight decrease in interest rates over the three
month period from 5.64% in 1997 to 5.61% in 1998. Cash flow from loan
repayments and mortgage-backed securities were used to pay down maturing
advances from the Federal Home Loan Bank of Boston. Interest rates on interest
bearing deposits and borrowed funds for the three months ended June 30, 1998
increased slightly to 4.41% from 4.40% when compared to the same period in
1997.
Provision for Loan Losses
No provision for loan losses was recorded for the three months ended June
30, 1998 as a result of a decline in non-performing assets, specific loan
charge-offs and total loans, compared to $132,000 charged to earnings for the
1997 period. At June 30, 1998, total non-performing assets were $2,962,000
representing 0.56% of total assets, compared to $3,958,000 or 0.79% of total
assets at June 30, 1997. Management's analysis of the loan portfolio considers
risk elements by loan category, and also the prevailing economic climate and
anticipated future uncertainties. Future adjustments to the allowance for loan
losses may be necessary if economic conditions differ substantially from
assumptions used in performing the analysis, or the levels of the Company's
non-performing assets increase significantly.
Non-accrual loans as of June 30, 1998 decreased $1,000,000 to $2,691,000
when compared to the June 30, 1997 balance of $3,691,000. Substantially all of
the decrease was attributed to a reduction in non-accrual residential mortgage
loans. There were no restructured loans at June 30, 1998 compared to $106,000
at June 30, 1997. Typically, restructured loans are modified to provide either
a reduction of the interest on the loan principal or an extension of the loan
maturity.
Non-performing assets and the percentage of such assets to total loans and
total assets are as follows:
<TABLE>
<CAPTION>
June 30, December 31, June 30,
(Dollars in thousands) 1998 1997 1997
- ------------------------------------------------ ---------- -------------- -----------
<S> <C> <C> <C>
Non-performing assets:
Non-accrual loans:
Mortgage loans .............................. $ 2,309 $ 3,283 $ 3,159
Other loans ................................. 382 298 532
------- ------- -------
Total non-accrual loans ................. 2,691 3,581 3,691
Real estate acquired by foreclosure ......... 271 596 267
------- ------- -------
Total non-performing assets ............. $ 2,962 $ 4,177 $ 3,958
======= ======= =======
Non-accrual loans as a percentage of:
Total loans receivable .................. 0.75% 0.97% 1.05%
======= ======= =======
Total assets ............................ 0.51% 0.69% 0.74%
======= ======= =======
Non-performing assets as a percentage of:
Total assets ............................ 0.56% 0.81% 0.79%
======= ======= =======
</TABLE>
Non-interest Income
Non-interest income increased $147,000 for the three months ended June 30,
1998 when compared to the same period in 1997. Substantially all of the
increase was due to an increase in gain on sale of fixed rate loans in the
secondary market. Gain on sale of loans, net as of three months ended June 30,
1998 totaled $146,000 compared to $27,000 as of three months ended June 30,
1997, an increase of $119,000. Other non-interest income as of three months
ended June 30, 1998 increased $36,000 to $139,000 when compared to $103,000 as
of three months ended June 30, 1997.
G-63
<PAGE>
Sandwich Bancorp -- Excerpts from Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1998
Non-interest Expense
Non-interest expense increased by $213,000 or 7.0% for the three months
ended June 30, 1998 compared to the three months ended June 30, 1997. Increases
in salaries and employee benefits, data processing service fees and other
non-interest expenses were incurred.
Income Tax Expense
The Company incurred income tax expense of $646,000 for the three months
ended June 30, 1998 and $669,000 in the comparable period of 1997. Both these
amounts differ from the expected tax expense of 34% of income before income
taxes. The major reasons for these variances relate to state income tax expense
(net of the federal tax benefit), tax exempt income and dividend received
deduction.
Comparison of Six Months Ended June 30, 1998 and 1997
General
Operations for the six months ended June 30, 1998 resulted in net income
of $2,342,000 compared with $2,194,000 for the six months ended June 30, 1997.
The principal reason for the increase was improvement in the net interest
income, resulting from growth in the residential loan portfolio. Substantial
increases in net gains realized on the sale of loans in the secondary market
were also realized for the six months ended June 30, 1998. The provision for
loan losses charged to earnings for the six months ended June 30, 1998 was
$57,000, compared to $241,000 charged to earnings for the 1997 period. Total
non- interest expense increased by $241,000 or 4.0% to $6,292,000 for the six
months ended June 30, 1998 when compared to six months ended June 30, 1997. The
Company's results of operations largely depend upon its net interest margin
which is the difference between the income earned on loans and investments, and
the interest expense paid on deposits and borrowings divided by total interest
earning average assets. The net interest margin is affected by economic and
market factors which influence interest rate levels, loan demand and deposit
flows. The net interest margin decreased to 3.51% for the six months ended June
30, 1998 from 3.74% for the six months ended June 30, 1997.
Interest and Dividend Income
Interest and dividend income increased by $1,010,000 or 5.8% to
$18,293,000 for the six months ended June 30, 1998 when compared to six months
ended June 30, 1997. Interest on loans increased $1,019,000 or 7.6% as a result
of an increase in the average balance outstanding of $32,209,000, partially
offset by a decrease in the average rate earned on the portfolio from 8.04% in
1997 to 7.89% in 1998. Interest and dividends on total investments decreased
slightly by $9,000 to $3,781,000 for the six months ended June 30, 1998 when
compared to six months ended June 30, 1997. The decrease was the result of a
decrease in the average rate earned on the portfolio from 6.19% in 1997 to
5.93% in 1998, partially offset by an increase in the average balance
outstanding of $5,121,000.
Interest Expense
Total interest expense increased $865,000 to $9,572,000 for the six months
ended June 30, 1998, from $8,707,000 for the six months ended June 30, 1997.
Interest expense on interest bearing deposits increased by $920,000 or 12.6%.
The rise reflects the increase in the average balance outstanding of
$35,468,000, that resulted substantially from an increase in deposit account
balances, along with market interest rates increasing over the same six month
period, from 4.17% in 1997 to 4.27% in 1998. Interest expense on borrowed funds
decreased $55,000 due to a decrease in the average balance outstanding of
$2,170,000, partially offset by a slight increase in the interest rate paid for
the six months ended June 30, 1998 of 5.70% compared to 5.68% for the same
period in 1997.
Provision for Loan Losses
The provision for loan losses charged to earnings for the six months ended
June 30, 1998 was $57,000 compared to $241,000 for the same period in 1997. The
Company decreased its provision for loan losses for the six months ended June
30, 1998 as a result of a decline in non-performing assets, specific loan
charge-offs and total loans.
G-64
<PAGE>
Sandwich Bancorp -- Excerpts from Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1998
Non-interest Income
Non-interest income was $1,374,000 for the six months ended June 30, 1998
compared to $1,237,000 for the same period in 1997. Gain on sale of fixed rate
loans in the secondary market was $304,000 for the six months ended June 30,
1998 compared to $67,000 for the same period in 1997, an increase of $237,000
due to the more favorable market interest rates in 1998. Other non-interest
income decreased $91,000 to $119,000 for the six months ended June 30, 1998,
from $210,000 for the six months ended June 30, 1997.
Non-interest Expense
Non-interest expense increased by $241,000 or 4.0% for the six months
ended June 30, 1998 compared to the six months ended June 30, 1997. Increases
in salaries and employee benefits, data processing service fees and other
non-interest expenses were incurred.
Income Tax Expense
The Company incurred income tax expense of $1,404,000 for the six months
ended June 30, 1998 compared with $1,327,000 in the 1997 period. Both these
amounts differ from the expected tax expense of 34% of income before income
taxes. The major reasons for these variances relate to state income tax expense
(net of the federal tax benefit), tax exempt income and dividend received
deduction.
Liquidity and Capital Resources
Substantially all of the Company's funds are generated through its
Company's subsidiary, the Sandwich Co-operative Bank. The Bank's primary
sources of liquidity are deposits, loan payments and payoffs, investment income
and maturities and principal payments of investments, mortgage-backed
securities and CMOs, advances from the Federal Home Loan Bank of Boston, and
other borrowings. As a member of the Co-operative Central Bank's Share
Insurance Fund, the Company also has a right to borrow from the Share Insurance
Fund for short-term cash needs by pledging certain assets, although it has
never exercised this right. The Company's liquidity management program is
designed to assure that sufficient funds are available to meet its daily needs.
The Company believes its capital resources, including deposits, scheduled
loan repayments, revenue generated from the sales of loans and investment
securities, unused borrowing capacity at the Federal Home Loan Bank of Boston,
and revenue from other sources will be adequate to meet its funding
commitments. At June 30, 1998 and December 31, 1997 the Company's and the
Bank's capital ratios were in excess of regulatory requirements.
Impact of the Year 2000 Issue
The Company remains on track with plans for Year 2000 compliance. In March
of 1998, the FDIC reviewed the Company's Year 2000 readiness plans and found
nothing unusual. They will continue to monitor the Company's process. The
Company continues to provide reports to the Board of Directors on a quarterly
basis. Recognizing the importance of customer awareness, additional
informational mailings are planned for the third quarter of 1998 for all
customers receiving monthly statements. A special follow-up mailing is also
planned for commercial loan customers during the third quarter of this year.
The Company relies on a third-party data processing vendor for critical
data warehousing and on-line transaction processing. Other, less critical,
systems are supported by purchased applications software. The Company is
continually evaluating mission-critical vendor plans and monitoring project
milestones. The Company plans to begin testing its key transaction processing
system in the third quarter of 1998 and to complete testing on most other
applications not later than December 31, 1998. There can be no guarantee that
the systems of other companies, or third party vendors on which the Company's
systems rely, will be remedied on a timely basis. Therefore, the Company may
possibly be negatively impacted to the extent other entities not affiliated
with the Company are unsuccessful in properly addressing their respective Year
2000 compliance responsibilities. Specific factors that may cause such material
differences include, but are not limited to, the availability and cost of
personnel trained in this area, the ability to locate and correct all relevant
computer codes, and similar uncertainties.
During the first and second quarters of 1998, the Company replaced
specific hardware and software that had been identified as non-compliant in the
organization assessment. All replacements have been on schedule and within
G-65
<PAGE>
Sandwich Bancorp -- Excerpts from Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1998
budget. The remaining replacements are scheduled for the third quarter of 1998.
In addition, the Company added to the Information Systems Department staff in
the second quarter of 1998, according to plan. The Company will utilize
internal and, if necessary, external resources to upgrade, replace, and test
the software and systems for Year 2000 modifications.
Current projected timeframes call for completion of the proposed merger
with the 1855 Bancorp in the fourth quarter of 1998 and the subsequent data
system conversion in the first quarter of 1999. Y2K Team Leaders at both
Companies have agreed to pursue independent plans for Y2K compliance through
the date of the data system conversion. The Company foresees no significant
complications from the proposed merger and plans to complete the Year 2000
Project no later than March 31, 1999. Y2K Team Leaders from each Company are
working in concert to ensure smooth integration of plans after the conversion.
For further response, refer to the discussion under the sub-caption
"Impact of the Year 2000 Issue" of the caption "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" in the Annual
Report, included as Part II, Item 7 of the Form 10-K, which is incorporated
herein by reference.
Quantitative and Qualitative Disclosures About Market Risk
The response is incorporated herein by reference from the discussion under
the sub-caption "Asset and Liability Management and Market Risk" of the caption
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" in the Annual Report, included as Part II, Item 7 of the Form 10-K,
which is incorporated herein by reference. In addition, there has been no
significant change in interest rates over the six month period ending June 30,
1998.
G-66
<PAGE>
================================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representation other than as contained in this
Prospectus in connection with the Offering made hereby and, if given or made,
such other information or representation must not be relied upon as having been
authorized by Seacoast Financial Services Corporation, Compass Bank for
Savings, Ryan Beck & Co., Inc., McConnell, Budd & Downes, Sandwich Bancorp,
Inc. or The Sandwich Co-operative Bank. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities
offered hereby to any person in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation in such jurisdiction. Neither the delivery
of this Prospectus nor any sale hereunder shall under any circumstances create
any implication that there has been no change in the affairs of Seacoast
Financial Services Corporation, Compass Bank for Savings, Sandwich Bancorp,
Inc. or The Sandwich Co-operative Bank since any of the dates as of which
information is furnished herein or since the date hereof.
----------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----------
<S> <C>
Summary of Prospectus ....................................... 5
Selected Consolidated Financial And Other Data of
Seacoast Financial ....................................... 13
Selected Consolidated Financial And Other Data of
Sandwich Bancorp ......................................... 16
Selected Unaudited Pro Forma Consolidated Financial
Data of Seacoast Financial ............................... 18
Recent Developments ......................................... 20
Forward-looking Statements .................................. 24
Risk Factors ................................................ 24
Pro Forma Data .............................................. 30
Regulatory Capital Compliance ............................... 43
Capitalization .............................................. 44
Use of Proceeds of Conversion ............................... 46
Seacoast Financial's Dividend Policy ........................ 47
Market for Seacoast Financial Common Stock .................. 47
Seacoast Financial and Subsidiary Consolidated
Statements of Income ..................................... 48
Management's Discussion and Analysis of Financial
Condition and Results of Operations of Seacoast
Financial ................................................ 49
Business of Seacoast Financial .............................. 63
Business of Compass ......................................... 64
Certain Effects of the Merger on Seacoast Financial ......... 91
The Conversion and the Merger ............................... 94
Federal and State Taxation of Seacoast Financial and
Compass .................................................. 113
Regulation of Seacoast Financial and Compass ................ 115
Management of Seacoast Financial and Compass ................ 122
Purchases by Management of Seacoast Financial and
Compass .................................................. 130
The Offerings ............................................... 131
Description of Capital Stock of Seacoast Financial .......... 138
Restrictions on Acquisition of Seacoast Financial and
Compass .................................................. 139
Transfer Agent and Registrar for Seacoast Financial
Common Stock ............................................. 143
Legal Opinions .............................................. 143
Experts ..................................................... 143
Additional Information ...................................... 143
Seacoast Financial Services Corporation and Subsidiary
Index to Consolidated Financial Statements ............... F-1
Sandwich Bancorp, Inc. and Subsidiaries Index to
Consolidated Financial Statements and
Other Information ........................................ G-1
</TABLE>
Until the later of , 1998 and 25 days after commencement
of a broker assisted public offering, if any, all dealers effecting
transactions in the registered securities, whether or not participating in this
distribution, may be required to deliver this Prospectus when acting as
underwriters and with respect to their unsold allotments of subscriptions.
18,400,000 Shares
(Anticipated Maximum)
[Seacoast Financial Logo]
COMMON STOCK
par value $0.01 per share
-------------------------------------
P R O S P E C T U S
-------------------------------------
[Ryan, Beck & Co. Logo]
[McConnell Budd Logo]
, 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses to be paid by Seacoast
Financial in connection with the issuance and distribution of the securities
being registered, other than underwriting discounts and commissions.
All amounts shown are estimates except for amounts of filing and listing fees.
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee................ $113,100
National Association of Securities Dealers, Inc.
filing fee................................................. 30,500
Nasdaq National Market System listing fee.................... 95,000
Secretary of State of The Commonwealth of Massachusetts...... 100,000
Accounting fees and expenses................................. 218,000
Legal fees and expenses...................................... 537,000
Blue Sky fees and expenses (including related legal fees) ... 12,500
Printing, engraving, postage and EDGAR expenses.............. 350,000
Consulting fees and expenses................................. 75,000
Appraisal and Business Plan fees and expenses................ 80,000
Data processing fees and expenses............................ 65,000
Miscellaneous................................................ 91,900
----------
Total................................................. $1,768,000
==========
</TABLE>
Item 14. Indemnification of Directors and Officers.
Section 67 of Chapter 156B of the Massachusetts General Laws (the "MGL")
authorizes a corporation to indemnify its directors, officers, employees and
other agents unless such person shall have been adjudicated in any proceeding
not to have acted in good faith in the reasonable belief that such action was in
the best interests of the corporation or, to the extent such matter related to
service with respect to an employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan. The Articles of
Organization of Seacoast Financial provide that each Director of Seacoast
Financial and each officer appointed or elected by the Board of Directors of
Seacoast Financial shall be indemnified by Seacoast Financial to the extent
permitted by law against any expenses incurred by such person in connection with
any proceeding in which he or she is involved as a result of (i) his or her
serving or having served as a Director, officer or employee of Seacoast
Financial, (ii) his or her serving or having served as a Director, officer or
employee of any of Seacoast Financial's wholly owned subsidiaries or (iii) his
or her serving or having served in any capacity with respect to any other
corporation, organization, partnership, joint venture, trust, employee benefit
plan or other entity at the request or direction of Seacoast Financial. The
Board of Directors may, in its discretion, indemnify non-officer employees of
Seacoast Financial. In accordance with Massachusetts law, the Articles also
provide that no indemnification shall be provided with respect to a matter as to
which the indemnitee shall have been determined by final judicial decision from
which there is no further right to appeal that the indemnitee is not entitled to
be indemnified for such expenses.
The Articles of Organization also provide that no Director of Seacoast
Financial shall be personally liable to Seacoast Financial or its stockholders
for monetary damages for breach of fiduciary duty as a Director notwithstanding
any provision of law imposing such liability. However, in conformity with
Section 13(b) (1 1/2) of Chapter 156B of the MGL, a Director shall be liable (i)
for any breach of the Director's duty of loyalty to Seacoast Financial or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Sections 61 or
62 of Chapter 156B of the MGL or (iv) with respect to any transaction from which
the Director derived an improper personal benefit.
The effect of these provisions would be to permit indemnification by
Seacoast Financial for liabilities arising out of the Securities Act.
Section 67 of Chapter 156B of the MGL also affords a Massachusetts
corporation the power to obtain insurance on behalf of its directors and
officers against liabilities incurred by them in those capacities. Seacoast
Financial has procured a directors and officers liability and company
reimbursement liability insurance policy that (i) insures
II-1
<PAGE>
directors and officers of Seacoast Financial against losses (above a deductible
amount) arising from certain claims made against them by reason of certain acts
or omissions of such directors or officers in their capacity as directors or
officers and (ii) insures Seacoast Financial against losses (above a deductible
amount) arising from any such claims, but only if Seacoast Financial is required
or permitted to indemnify such directors or officers for such losses under
statutory or common law or under provisions of Seacoast Financial's Articles of
Organization or By-Laws.
Reference is also made to Section 7 of the Agency Agreement between Ryan
Beck and Compass, filed as Exhibit 1.2 to this Registration Statement, for a
description of indemnification arrangements between Ryan Beck and Compass.
Item 15. Recent Sales of Unregistered Securities.
None.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<S> <C>
1.1 Engagement Letter between Seacoast Financial Services Corporation,
Compass Bank for Savings and Ryan, Beck & Co., Inc.*
1.2 Form of Agency Agreement between Compass Bank for Savings and Ryan, Beck
& Co., Inc.
2 Seacoast Financial Services Corporation Plan of Conversion (the two
documents that are attached as Exhibit A to such plan are attached to
this Registration Statement as Exhibits 3.1 and 3.2, respectively)*
3.1 Articles of Organization of Seacoast Financial Services Corporation*
3.2 By-Laws of Seacoast Financial Services Corporation*
4 Specimen certificate for the common stock of Seacoast Financial Services
Corporation**
5 Opinion of Foley, Hoag & Eliot LLP regarding legality of securities
being registered**
8 Opinion of Foley, Hoag & Eliot LLP regarding certain tax matters
10.1 Employment Agreement by and among Seacoast Financial Services
Corporation, Compass Bank for Savings and Kevin G. Champagne*
10.2 Form of Employment Agreement by and among Compass Bank for Savings,
Seacoast Financial Services Corporation and certain Officers of Compass
Bank for Savings*
10.3 Form of Change in Control Agreements by and among Seacoast Financial
Services Corporation, Compass Bank for Savings, Kevin G. Champagne and
certain other Officers of Compass Bank for Savings*
10.4 Form of Change in Control Agreement by and among Seacoast Financial
Services Corporation, Compass Bank for Savings and certain Officers of
Compass Bank for Savings.*
10.5 Form of Executive Salary Continuation Agreements made and entered into
by and between Compass Bank for Savings and Kevin G. Champagne, Arthur
W. Short, John D. Kelleher and Francis S. Mascianica and forms of
amendments thereto*
10.6 Trust Agreement, made as of December 18, 1992, by and between Compass
Bank for Savings and Shawmut Bank, N.A.*
10.7 Compass Bank for Savings January 1998 Incentive Compensation Plan**
10.8 Amended and Restated Affiliation and Merger Agreement dated as of March
23, 1998 by and among Seacoast Financial Services Corporation, Compass
Bank for Savings, Sandwich Bancorp, Inc. and the Sandwich Co-operative
Bank*
10.9 Stock Option Agreement dated as of March 23, 1998 by and between
Sandwich Bancorp, Inc. and Seacoast Financial Services Corporation*
10.10 Form of Voting Agreements between Seacoast Financial Services
Corporation and the Directors of Sandwich Bancorp, Inc.*
10.11 Form of Affiliates Agreements between Seacoast Financial Services
Corporation and certain affiliates of Sandwich Bancorp, Inc.*
10.12 Compass Bank for Savings Executive Deferred Compensation Plan*
10.13 Rabbi Trust for Compass Bank for Savings Executive Deferred Compensation
Plan*
II-2
<PAGE>
<S> <C>
10.14(a)Employment Agreements dated July 18, 1994 by and between Sandwich
Co-operative Bank and Frederic D. Legate, Dana S. Briggs and George L.
Larson**
10.14(b)1998 Amendment to Employment Agreements dated July 18, 1994 by and
between Sandwich Co-operative Bank and Frederic D. Legate, Dana S.
Briggs and George L. Larson**
10.15(a)Employment Agreement dated December 17, 1991 by and between Sandwich
Co-operative Bank and David A. Parsons**
10.15(b)1998 Amendment to Employment Agreement dated December 17, 1991 by and
between Sandwich Co-operative Bank and David A. Parsons**
10.16 Sandwich Co-operative Bank 1983 Directors Deferred Income Agreement**
10.17 Sandwich Co-operative Bank 1992 Directors Deferred Compensation Plan**
10.18 Supplemental Executive Retirement Agreements dated May 5, 1995 by and
between Sandwich Co-operative Bank and Frederic D. Legate, Dana S.
Briggs, George L. Larson and David A. Parsons and amendments thereto**
10.19 Employment Agreement by and among Seacoast Financial Services
Corporation, Compass Bank for Savings and James E. Lambert**
21 Subsidiaries of Seacoast Financial Services Corporation*
23.1 Consent of Arthur Andersen LLP
23.2 Consent of RP Financial, LC.
23.3 Consent of Foley, Hoag & Eliot LLP (included in Exhibits 5 and 8 to this
Registration Statement)
23.4 Consent of KPMG Peat Marwick LLP
23.5 Consent of T.C. Edwards & Co., P.C.
27 EDGAR Financial Data Schedule**
99.1 Appraisal Agreement between Compass Bank for Savings and RP Financial,
LC.*
99.2 Appraisal Report of RP Financial, LC. dated as of May 8, 1998, together
with Conversion Appraisal Update Reports dated as of August 7, 1998
and September 4, 1998.
99.3 Marketing Materials**
99.4 Stock Order Form*
99.5 Letter from RP Financial, LC. with respect to value of subscription
rights issued under the Seacoast Financial Services Corporation Plan of
Conversion**
99.6 Consent of Frederic D. Legate**
</TABLE>
- -------------------------
* Filed on May 15, 1998.
** Filed on August 14, 1998.
(b) Financial Statement Schedules
Financial statement schedules have been omitted because they are
inapplicable or the required information is shown in the Financial Statements
and the Notes thereto.
Item 17. Undertakings.
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation
II-3
<PAGE>
from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, Seacoast Financial
Services Corporation has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
Bedford, The Commonwealth of Massachusetts, on September 1, 1998.
SEACOAST FINANCIAL SERVICES CORPORATION
By: /s/ Kevin G. Champagne
------------------------------------
Kevin G. Champagne
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities
indicated on September 1, 1998.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Kevin G. Champagne
- ------------------------------------------ President, Chief Executive Officer
Kevin G. Champagne and Trustee (Principal Executive
Officer)
* Vice President and Treasurer (Principal
- ------------------------------------------ Financial and Accounting Officer)
Francis S. Mascianica, Jr.
*
- ------------------------------------------ Trustee
Manuel G. Camacho
*
- ------------------------------------------ Trustee
David P. Cameron
*
- ------------------------------------------ Trustee
Howard C. Dyer, Jr.
*
- ------------------------------------------ Trustee
Glen F. Johnson
*
- ------------------------------------------ Trustee
John D. Kelleher
*
- ------------------------------------------ Trustee
Thornton P. Klaren, Jr.
II-5
<PAGE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
*
- ------------------------------------------ Trustee
J. Louis LeBlanc
*
- ------------------------------------------ Trustee
Terence G. Lewis
*
- ------------------------------------------ Trustee
Richard S. Marchisio
- ------------------------------------------ Trustee
A. William Munro
- ------------------------------------------ Trustee
Carl Ribeiro
*
- ------------------------------------------ Trustee
Arthur W. Short
*
- ------------------------------------------ Trustee
Joseph H. Silverstein
- ------------------------------------------ Trustee
Gerald H. Silvia
- ------------------------------------------ Trustee
William N. Whalen
* By: /s/ Kevin G. Champagne
-------------------------------------
Kevin G. Champagne
Attorney-in-fact
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
1.1 Engagement Letter between Seacoast Financial Services Corporation,
Compass Bank for Savings and Ryan, Beck & Co., Inc.*
1.2 Form of Agency Agreement between Compass Bank for Savings and Ryan, Beck
& Co., Inc.
2 Seacoast Financial Services Corporation Plan of Conversion (the two
documents that are attached as Exhibit A to such plan are attached to
this Registration Statement as Exhibits 3.1 and 3.2, respectively)*
3.1 Articles of Organization of Seacoast Financial Services Corporation*
3.2 By-Laws of Seacoast Financial Services Corporation*
4 Specimen certificate for the common stock of Seacoast Financial Services
Corporation**
5 Opinion of Foley, Hoag & Eliot LLP regarding legality of securities
being registered**
8 Opinion of Foley, Hoag & Eliot LLP regarding certain tax matters
10.1 Employment Agreement by and among Seacoast Financial Services
Corporation, Compass Bank for Savings and Kevin G. Champagne*
10.2 Form of Employment Agreement by and among Compass Bank for Savings,
Seacoast Financial Services Corporation and certain Officers of Compass
Bank for Savings*
10.3 Form of Change in Control Agreements by and among Seacoast Financial
Services Corporation, Compass Bank for Savings, Kevin G. Champagne and
certain other Officers of Compass Bank for Savings*
10.4 Form of Change in Control Agreement by and among Seacoast Financial
Services Corporation, Compass Bank for Savings and certain Officers of
Compass Bank for Savings.*
10.5 Form of Executive Salary Continuation Agreements made and entered into
by and between Compass Bank for Savings and Kevin G. Champagne, Arthur
W. Short, John D. Kelleher and Francis S. Mascianica and forms of
amendments thereto*
10.6 Trust Agreement, made as of December 18, 1992, by and between Compass
Bank for Savings and Shawmut Bank, N.A.*
10.7 Compass Bank for Savings January 1998 Incentive Compensation Plan**
10.8 Amended and Restated Affiliation and Merger Agreement dated as of March
23, 1998 by and among Seacoast Financial Services Corporation, Compass
Bank for Savings, Sandwich Bancorp, Inc. and the Sandwich Co-operative
Bank*
10.9 Stock Option Agreement dated as of March 23, 1998 by and between
Sandwich Bancorp, Inc. and Seacoast Financial Services Corporation*
10.10 Form of Voting Agreements between Seacoast Financial Services
Corporation and the Directors of Sandwich Bancorp, Inc.*
10.11 Form of Affiliates Agreements between Seacoast Financial Services
Corporation and certain affiliates of Sandwich Bancorp, Inc.*
10.12 Compass Bank for Savings Executive Deferred Compensation Plan*
<PAGE>
10.13 Rabbi Trust for Compass Bank for Savings Executive Deferred Compensation
Plan*
10.14(a)Employment Agreements dated July 18, 1994 by and between Sandwich
Co-operative Bank and Frederic D. Legate, Dana S. Briggs and George L.
Larson**
10.14(b)1998 Amendment to Employment Agreements dated July 18, 1994 by and
between Sandwich Co-operative Bank and Frederic D. Legate, Dana S.
Briggs and George L. Larson**
10.15(a)Employment Agreement dated December 17, 1991 by and between Sandwich
Co-operative Bank and David A. Parsons**
10.15(b)1998 Amendment to Employment Agreement dated December 17, 1991 by and
between Sandwich Co-operative Bank and David A. Parsons**
10.16 Sandwich Co-operative Bank 1983 Directors Deferred Income Agreement**
10.17 Sandwich Co-operative Bank 1992 Directors Deferred Compensation Plan**
10.18 Supplemental Executive Retirement Agreements dated May 5, 1995 by and
between Sandwich Co-operative Bank and Frederic D. Legate, Dana S.
Briggs, George L. Larson and David A. Parsons and amendments thereto**
10.19 Employment Agreement by and among Seacoast Financial Services
Corporation, Compass Bank for Savings and James E. Lambert**
21 Subsidiaries of Seacoast Financial Services Corporation*
23.1 Consent of Arthur Andersen LLP
23.2 Consent of RP Financial, LC.
23.3 Consent of Foley, Hoag & Eliot LLP (included in Exhibits 5 and 8 to this
Registration Statement)
23.4 Consent of KPMG Peat Marwick LLP
23.5 Consent of T.C. Edwards & Co., P.C.
27 EDGAR Financial Data Schedule**
99.1 Appraisal Agreement between Compass Bank for Savings and RP Financial,
LC.*
99.2 Appraisal Report of RP Financial, LC.
99.3 Marketing Materials**
99.4 Stock Order Form*
99.5 Letter from RP Financial, LC. with respect to value of subscription
rights issued under the Seacoast Financial Services Corporation Plan of
Conversion**
99.6 Consent of Frederic D. Legate**
</TABLE>
- -------------------------
* Filed on May 15, 1998.
** Filed on August 14, 1998.
SEACOAST FINANCIAL SERVICES CORPORATION
21,160,000 (Anticipated Maximum) Shares
of Common Stock
(par value $.01 per share)
AGENCY AGREEMENT
----------------
September __, 1998
Ryan, Beck & Co., Inc.
220 South Orange Avenue
Livingston, New Jersey 07039-5817
McConnell, Budd & Downes, Inc.
365 South Street
Morristown, New Jersey 07960
Ladies and Gentlemen:
Seacoast Financial Services Corporation, a Massachusetts mutual holding
company (the "Company"), and Compass Bank for Savings, a Massachusetts-chartered
stock savings bank (the "Bank"), hereby confirm their agreement with Ryan, Beck
& Co., Inc. ("Ryan, Beck") and McConnell, Budd and Downes ("McConnell Budd" and,
together with Ryan Beck, the "Selling Agents") to serve as agents of the Company
to assist the Company in the sale of Common Stock (as defined below) of the
Company (the "Shares" or "Conversion Stock") in the Offering, as defined below,
as follows:
Introductory. The Company is converting (the "Conversion") from a
-------------
Massachusetts-chartered mutual holding company to a Massachusetts corporation in
accordance with the laws of the Commonwealth of Massachusetts and the United
States and applicable regulations of the Massachusetts Division of Banks (the
"Division"), (such laws and the regulations of the Division are referred to
herein as the "Conversion Regulations"). The Conversion is to be conducted in
accordance with a Plan of Conversion (the "Plan") adopted by the Company's Board
of Trustees on April 23, 1998. Upon consummation of the Conversion, the Company
will acquire Sandwich Bancorp, Inc. ("Sandwich Bancorp"), in a stock-for-stock
exchange (the "Merger") pursuant to the Amended and Restated Affiliation and
Merger Agreement dated as of March 23, 1998 (the "Merger Agreement"). Sandwich
Bancorp is the holding company of Sandwich Co-operative Bank ("Sandwich Bank").
The Merger will be accomplished in accordance with the laws of the Commonwealth
of Massachusetts and the United States and applicable regulations of the
Division, the Massachusetts Board of Bank Incorporation (the "Bank Board"), the
Federal Deposit Insurance Corporation (the "FDIC") and the Board of Governors of
the Federal Reserve System (the "FRB") (such laws and the regulations of the
Division, the Bank Board, the FDIC, and the FRB collectively, the "Merger
Regulations", and together with the Conversion Regulations, the "Reorganization
Regulations"). McConnell Budd has and will serve as financial advisor to the
Company in connection with the Merger under agreement dated _________, 1998.
<PAGE>
Pursuant to the terms of the Merger Agreement, upon consummation of the Merger
each outstanding share of common stock, par value $1.00 per share, of Sandwich
Bancorp ("Sandwich Bancorp Common Stock") and each outstanding option to
purchase Sandwich Bancorp Common Stock will automatically convert into and
become exchangeable for a number of shares of Seacoast Financial's common stock
determined according to a ratio (the "Exchange Ratio") set forth in the Merger
Agreement. The Merger is expected to close on the tenth trading day following
the consummation of the Conversion. The Conversion and the Merger are separate,
distinct transactions, but one will not occur without the other. The Conversion
will not be consummated until all conditions to the consummation of both the
Conversion and the Merger have been satisfied or waived. The Conversion and the
Merger are sometimes collectively referred to herein as the "Reorganization."
The Company, the Bank, Sandwich Bancorp and Sandwich Bank are sometimes
hereinafter collectively referred to as the "Constituent Institutions."
The following applications have been filed in connection with the
Conversion and the Merger: (i) an Application for Conversion (the "Conversion
Application") and an Application for Merger (the "Merger Application") have been
filed with the Division; (ii) a Bank Holding Company Application (the "Bank
Board Application") has been filed with the Bank Board; (iii) a Bank Merger Act
Application (the "BMA Application") has been filed with the FDIC; (iv) a Bank
Holding Company Application on Form FR Y-3 (the "Holding Company Application")
and a Notice of Conversion have been filed with the FRB; and (v) Requests for
Notification to the Commissioner that satisfactory arrangements have been made,
have been filed with the Depositors Insurance Fund of Massachusetts (the "DIFM
Application") and with the Cooperative Central Bank of Massachusetts (the "CCB
Application") and all amendments to the foregoing applications required to the
date hereof have also been filed. The Conversion Application, the Merger
Application, the Bank Board Application, the BMA Application, the Holding
Company Application, the DIFM Application and the CCB Application are referred
to herein collectively as, the "Reorganization Applications." The Conversion
Application includes, among other things, the Company's Plan of Conversion From
a Mutual Holding Company to a stock holding company (the "Plan").
Upon consummation of the Conversion, the Company will be authorized to
issue 110,000,000 shares of capital stock, of which 100,000,000 shares shall be
common stock having a par value of $.01 per share (the "Common Stock"), and
10,000,000 shares shall be preferred stock having a par value of $.01 per share.
Seacoast Financial, in accordance with the Plan, is offering, in a subscription
offering by way of nontransferable subscription rights, Common Stock (the
"Shares") for a purchase price of $10.00 per share (the "Purchase Price") in
descending order of priority to (i) the Bank's Eligible Account Holders (defined
as holders of deposit accounts totaling $50 or more as of December 31, 1996);
(ii) the Bank's Supplemental Eligible Account Holders (defined as holders of
deposit accounts totaling $50 or more as of ______, 1998); (iii) the Bank's
Employee Stock Ownership Plan and Trust (the "ESOP") (for a total of up to__% of
the shares issued in the Offering, as defined below); and (iv) the employees,
officers , trustees and directors of Seacoast Financial and the Bank (the
"Subscription Offering"). Concurrently with or at any time during or after the
subscription offering, the Company may offer the shares of Common Stock not
subscribed for in the Subscription Offering for sale in a direct community
offering to certain members of the general public (the "Community Offering").
Shares not subscribed for in the Subscription and Community Offerings may be
offered for sale to certain members of the general public in a syndicated
community offering (the "Syndicated Community Offering"). It is acknowledged
that the Company reserves the right, in its absolute discretion, to accept or
reject, in whole or in part, any or all orders in the Community Offering and
Syndicated Community Offering. The Subscription Offering, the Community Offering
and the Syndicated Community Offering are referred to collectively herein as the
"Offering." Except for the ESOP, generally no person may purchase in the
Offering more than $750,000 of Conversion Stock; no person, together with
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associates and persons acting in concert with such person, may purchase in the
aggregate more than $1.5 million of Conversion Stock in the Offering; provided
that the Company may, in its sole discretion and without further notice to or
solicitation of subscribers or other prospective purchasers, increase or
decrease such maximum purchase limitation.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-52889) (the
"Registration Statement") containing a prospectus relating to the Offering for
the registration of the Shares under the Securities Act of 1933, as amended (the
"1933 Act"), and has filed such amendments thereto and such amended prospectuses
as may have been required to the date hereof. The prospectus, as amended, on
file with the Commission at the time the Registration Statement becomes
effective is hereinafter called the "Prospectus," except that if the Prospectus
filed by the Company pursuant to Rule 424(b) of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") differs from the
prospectus on file at the time the Registration Statement becomes effective, the
term "Prospectus" shall refer to the prospectus filed pursuant to Rule 424(b)
from and after the time such prospectus is filed with or mailed to the
Commission for filing.
SECTION 1. Appointment of the Selling Agents; Compensation to the Selling
--------------------------------------------------------------
Agents. Subject to the terms and conditions set forth below, the Company hereby
- -------
appoints Ryan, Beck and McConnell Budd as its agents to consult with and advise
the Company and the Bank, and to solicit subscriptions and purchase orders for
Shares on behalf of the Company, in connection with the Company's offering of
Common Stock in the Conversion. On the basis of the representations, warranties
and agreements herein contained, and subject to the terms and conditions herein
set forth, Ryan, Beck and McConnell Budd accept such appointment and agree to
consult with and advise the Company and the Bank as to the matters set forth in
Section 3 of the Engagement Letter between the Selling Agents, the Company and
the Bank dated February 9, 1998, included as Exhibit A attached hereto, and to
use their best efforts to solicit subscriptions and purchase orders for Shares
in accordance with this Agreement; provided, however, that the Selling Agents
shall not be responsible for obtaining subscriptions or purchase orders for any
specific number of Shares, shall not be required to purchase any Shares and
shall not be obligated to take any action which is inconsistent with any
applicable law, regulation, decision or order.
Subject to the prior approval of the Company and the Bank, the Selling
Agents may also assemble and manage a selling group of broker dealers ("Selling
Group") that are members of the National Association of Securities Dealers, Inc.
("NASD"), to participate in the solicitation of purchase orders for the Shares
under a selected dealers' agreement (the "Selected Dealers' Agreement"), the
form of which is set forth as Exhibit B to this Agreement.
In addition to the reimbursement of the expenses specified in Sections 6, 7
and 8 hereof, the Selling Agents shall receive and the Company and the Bank
shall pay (i) an advisory and management fee of $50,000 (the "Management Fee")
and (ii) a fee of one percent (1.0%) of the dollar amount of the Shares sold in
the Subscription Offering and Community Offering (the "Marketing Fee"),
excluding shares purchased by officers, trustees, directors, employees (and
immediate family thereof) and employee benefit plans of the Company and the
Bank. Should a Selling Group (which may include the Selling Agents) under a
Selected Dealers' Agreement be implemented, the Bank shall pay a fee to selected
dealers ("Selected Dealers' Fee") of 5.0% of the dollar amount of the Shares
sold by such dealers, no more than 1% of which shall be attributable to selling
group management services. The Management Fee, Marketing Fee and Selected
Dealers' Fee are hereinafter collectively referred to as the "Sales
Compensation." It is acknowledged that
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the Bank paid the Selling Agents $50,000 of the Sales Compensation upon
execution of the Engagement Letter.
If (i) the Plan is abandoned or terminated by the Company; (ii) the
Offering is not consummated by February 28, 1999; (iii) the Selling Agents
terminate this Agreement because there has been a material adverse change in the
financial condition or operations of the Bank since September 30, 1997; or (iv)
immediately prior to the commencement of the Offering, the Selling Agents
terminate this Agreement because, in their reasonable judgment, the Company and
the Bank have failed to satisfactorily disclose all relevant information in the
Registration Statement, the Prospectus and the Reorganization Applications or
the Selling Agents determine that market conditions exist which might render the
sale of the Shares by the Company inadvisable, the Selling Agents shall receive
a fee of $50,000 for their advisory and administrative services as set forth in
Exhibit A hereto in lieu of the Sales Compensation (offset by the $50,000 fee
previously paid by the Company), in addition to reimbursement of their
reasonable out-of-pocket expenses as set forth in Section 6 hereof. If there is
a resolicitation of subscriptions for any reason, and the Selling Agents are
required to provide significant additional services or expend significant
additional time, the parties agree to negotiate in good faith an agreement to
cover the Selling Agents's additional fees and expenses in connection therewith,
including attorneys' fees and expenses.
The compensation specified above shall be payable (to the extent not
already paid) to the Selling Agents in next day clearinghouse funds on the
earlier of the Closing Date (as hereinafter defined), a determination by the
Company and the Bank to terminate or abandon the Plan or the termination of this
Agreement by the Selling Agents or the Company and the Bank in accordance with
the preceding paragraph. The Bank and the Company agree to reimburse the Selling
Agents from time to time for the costs and expenses specified in Sections 6, 7
and 8 hereof, to the extent such costs and expenses are reasonably incurred by
the Selling Agents, promptly upon receiving a reasonable accounting of such
costs and expenses.
SECTION 2. Closing Date; Release of Funds and Delivery of Certificates. If
------------------------------------------------------------
all conditions precedent to the consummation of the Conversion and the Offering,
including, without limitation, the sale of all the Shares required by the Plan
to be sold and the satisfaction or waiver of all conditions of the Merger are
satisfied, the Company agrees to issue or have issued the Shares sold in the
Offering and to release for delivery certificates evidencing such Shares on the
Closing Date against payment therefor by release of funds from the special,
interest-bearing account referred to in Section 5(p) hereof and by the
authorized withdrawal of funds from deposit accounts at the Bank in accordance
with the Plan; provided, however, that no such funds shall be released to the
Company or withdrawn until the conditions specified in Section 9 hereof shall
have been complied with to the reasonable satisfaction of the Selling Agents and
their counsel. Such release, withdrawal and payment shall be made on the Closing
Date, on a business day and at a time and place selected by the Selling Agents,
which date and place shall be acceptable to the Bank and the Company, on at
least two business days prior notice to the Bank and the Company (it being
understood that such business day shall not be more than fifteen business days
after the final approval of the stock issuance by the Division), or such other
time or place as shall be agreed upon by the Selling Agents, the Bank and the
Company. Certificates evidencing the Shares sold in the Offering shall be
delivered directly to the purchasers thereof or in accordance with their
directions. The hour and date upon which the Company shall release or deliver
the Shares sold in the Offering in accordance with the terms hereof are called
the "Closing Date."
SECTION 3. Prospectus; Offering. The Shares are to be offered in the
---------------------
Offering at $10.00 per share, as set forth on the cover page of the Prospectus.
There will be a maximum and minimum number of Shares
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offered. The number of Shares offered may be changed by the Company after
consultation with the Selling Agents, subject to the provisions of the Plan,
depending on market and financial conditions.
SECTION 4. Representations and Warranties; Certain Covenants.
--------------------------------------------------
A. The Company and the Bank jointly and severally represent and warrant to
and covenant with the Selling Agents as follows:
(a) The Registration Statement was declared effective by the
Commission on __________, 1998. At the time the Registration Statement,
including the Prospectus contained therein, became effective, the
Registration Statement complied in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and the
Registration Statement, any preliminary or final Prospectus, any Blue Sky
Application (as defined in Section 7 hereof) or any Sales Information (as
defined in Section 7 hereof) authorized by the Company or the Bank for use
in connection with the Offering did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and at the time
any Rule 424(b) Prospectus is filed with or mailed to the Commission for
filing and at the Closing Date referred to in Section 2, the Registration
Statement, any preliminary or final Prospectus, any Blue Sky Application or
any Sales Information authorized by the Company or the Bank for use in
connection with the Offering will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the representations and
warranties in this Section 4(a) shall not apply to statements in or
omissions from the Registration Statement, any preliminary or final
Prospectus, any Blue Sky Application or any Sales Information made in
reliance upon and in conformity with information furnished in writing to
the Company or the Bank by the Selling Agents expressly regarding the
Selling Agents for use under the captions "Summary of Prospectus-Marketing
Agent" and "The Offerings-Plan of Distribution and Selling Commissions" in
the Prospectus.
(b) The Company has filed with the Division the Conversion
Application, including the Plan, the Registration Statement, the Prospectus
and exhibits and supplemental material, and the Merger Application, and an
amendment or amendments thereto, as required, and has published notice of
such filings, as required, which Applications have been or prior to the
Closing Date will be approved by the Division; and the Plan has been
adopted by the Board of Trustees and the corporators of the Company (by a
vote of at least two-thirds of the corporators, including a majority of the
Company's "independent corporators" constituting at least 60% of all
corporators, at a meeting specially called to consider the Plan).
(c) The Bank has filed with the Bank Board the Bank Board Application,
including exhibits and supplemental material, and an amendment or
amendments thereto, as required, and has published notice of such filing,
as required, which Application has been or prior to the Closing Date will
be approved by the Bank Board.
(d) The Bank and the Company have filed with the FDIC the BMA
Application, including exhibits and supplemental material, and an amendment
or amendments thereto, as
5
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required, and have published notice of the filing of the BMA Application,
as required, and the FDIC has approved the BMA Application.
(e) The Company has filed with the FRB the Holding Company
Application, including exhibits and supplemental material, and an amendment
or amendments thereto, as required, and have published notice of such
filing, as required, which Application has been approved by the FRB.
(f) The Bank has filed with the Depositors Insurance Fund of
Massachusetts (the "DIFM") the DIFM Application, including exhibits and
supplemental material, and an amendment or amendments thereto, as required,
which Application has been approved by the DIFM. The Bank has filed with
the Cooperative Central Bank of Massachusetts (the "CCB") the CCB
Application, including exhibits and supplemental material, and an amendment
or amendments thereto, as required, which Application has been approved by
the CCB.
(g) At the Closing Date, the Conversion and the Offering will have
been effected in the manner described in the Prospectus and in accordance
with the Plan, the Conversion Regulations and all other applicable material
laws, regulations, decisions and orders, including in compliance with all
terms, conditions, requirements and provisions precedent to the Conversion
and the Offering imposed upon the Company or the Bank by the Commission,
the Division, the Bank Board, the FDIC, the FRB, any state regulatory or
Blue Sky authority or any other regulatory authority. At the Closing Date,
the Company, the Bank, Sandwich Bancorp and Sandwich Bank will have
completed the conditions precedent to the Merger in accordance with the
Merger Agreement (other than the delivery of the Exchange Shares), and all
applicable laws, regulations, decisions and orders, including all material
terms, conditions, requirements and provisions precedent to the Merger
imposed upon the Company, the Bank, Sandwich Bancorp or Sandwich Bank, by
the BBI, the Division, the FDIC or any other regulatory authority, other
than those which the regulatory authority permits to be completed after the
effective time of the Merger ("Effective Time").
(h) No order has been issued by the Commission, the Division, the Bank
Board, the FDIC, the FRB or any state regulatory or Blue Sky authority
preventing or suspending the use of the Prospectus, and no action by or
before any such governmental entity to revoke any approval, authorization
or order of effectiveness related to the Conversion or the Offering is
pending or threatened.
(i) At the time of the approval of the Reorganization Applications by
the applicable regulatory authorities (including any amendment or
supplement thereto) and at all times subsequent thereto until the Closing
Date, the Reorganization Applications complied and will comply in all
material respects with the Reorganization Regulations. The prospectus
contained in the Reorganization Applications (including any amendment or
supplement thereto), at the time of the approval of the Reorganization
Applications by the applicable regulatory authorities and at all times
subsequent thereto until the Closing Date and the Effective Time, complied
and will comply in all material respects with the Reorganization
Regulations.
(j) RP Financial, LC. ("RP Financial"), which prepared the Independent
Valuation dated as of August 7, 1998, described in the Prospectus, is
independent with respect to the Company and the Bank within the meaning of
the Plan and the Conversion Regulations and is believed by the Company and
the Bank to be experienced and expert in the valuation and the appraisal of
business
6
<PAGE>
entities, including savings institutions, and the Company and the Bank
believe that RP Financial has prepared the pricing information set forth in
the Prospectus in accordance with the requirements of the Conversion
Regulations.
(k) Arthur Anderson LLP("Arthur Anderson"), the firm which certified
the financial statements of the Company filed as part of the Registration
Statement, is, with respect to the Company and the Bank, an independent
certified public accountant as required by the 1933 Act and the 1933 Act
Regulations. KPMG Peat Marwick LLP("Peat Marwick"), the firm which
certified the financial statements of Sandwich Bancorp filed as part of the
Registration Statement, is, with respect to Sandwich Bancorp and Sandwich
Bank, an independent certified public accountant as required by the 1933
Act and the 1933 Act Regulations.
(l) The consolidated financial statements, together with the related
schedules and notes thereto, included in the Registration Statement and
which are part of the Prospectus present fairly the financial condition,
results of operations, changes in retained earnings and cash flows of each
of (i) the Company and its consolidated subsidiaries and (ii) Sandwich
Bancorp and its consolidated subsidiaries, at and for the dates indicated
and the periods specified and comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act Regulations.
Such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis during the
periods involved, present fairly in all material respects the information
required to be stated therein and are consistent with financial statements
and other reports filed by the Company and/or Sandwich Bancorp with the
Division, the FDIC and the SEC except to the extent that accounting
principles employed in such filings conform to the requirements of such
authorities and not necessarily to generally accepted accounting
principles. The other financial, statistical and pro forma information and
related notes thereto included in the Prospectus present fairly the
information shown therein on a basis consistent with the audited financial
statements of the Company and/or Sandwich Bancorp included in the
Registration Statement and which are part of the Prospectus, and as to the
pro forma adjustments, such adjustments have been properly applied on the
basis described therein.
(m) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, except as may otherwise be stated
therein: (i) there has not been any material adverse change in the
financial condition, net income, capital, properties, affairs or prospects
of the Company, the Bank, Sandwich Bancorp, Sandwich Bank, or their
respective subsidiaries, taken as a whole, whether or not arising in the
ordinary course of business, (ii) there has not been any material increase
in the long-term debt of the Company, the Bank, Sandwich Bancorp, Sandwich
Bank or their respective subsidiaries, nor has the Company, the Bank,
Sandwich Bancorp, Sandwich Bank or their respective subsidiaries issued any
securities or incurred any liability or obligations for borrowing other
than in the ordinary course of business, (iii) there have not been any
material transactions entered into by the Company, the Bank, Sandwich
Bancorp, Sandwich Bank or their respective subsidiaries, except those
transactions entered into in the ordinary course of business and those
specifically described in or contemplated by the Prospectus, including the
execution of loan documents pertaining to the ESOP, and (iv) the
capitalization, liabilities, assets, properties and business of the
Company, the Bank, Sandwich Bancorp, Sandwich Bank and their respective
subsidiaries conform in all material respects to the descriptions thereof
contained in the Prospectus. The Company, the Bank, Sandwich Bancorp,
Sandwich Bank and their subsidiaries have no material liability of any
kind, contingent or otherwise, except as reflected in
7
<PAGE>
the financial statements filed as part of the Registration Statement or
otherwise set forth in the Prospectus.
(n) The Bank is now a Massachusetts-chartered stock savings bank and
upon consummation of the Conversion will continue as such, and is duly
authorized to conduct its business and own its property as described in the
Registration Statement and Prospectus. The Company is now a Massachusetts
chartered mutual holding company and upon consummation of the Conversion
will become a Massachusetts-chartered business corporation and stock
holding company, in both instances duly organized and validly existing and
in good standing under the laws of the Commonwealth of Massachusetts with
the corporate power and authority to conduct its business and own its
property as described in the Registration Statement and Prospectus.
Sandwich Bancorp has been duly organized as a Massachusetts corporation and
is validly existing and in good standing under the laws of the Commonwealth
of Massachusetts with the corporate power and authority to conduct its
business and own its property as described in the Registration Statement
and Prospectus. Sandwich Bank has been duly organized as a Massachusetts
chartered cooperative bank and is validly existing under the laws of the
Commonwealth of Massachusetts with the corporate power and authority to
conduct its business and own its property as described in the Registration
Statement and Prospectus. The Company, the Bank, Sandwich Bancorp, Sandwich
Bank and their subsidiaries have obtained all material licenses, permits
and other governmental authorizations currently required for the conduct of
their respective businesses; all such licenses, permits and governmental
authorizations are in full force and effect; the Company, the Bank,
Sandwich Bancorp, Sandwich Bank and their subsidiaries are in all material
respects complying with all laws, rules, regulations and orders applicable
to the operation of their respective businesses; and none of the Company,
the Bank, Sandwich Bancorp, Sandwich Bank or their subsidiaries has
received notice of any proceeding or action relating to the revocation or
modification of any such license, permit or governmental authorization
which, singly or in the aggregate, if subject to an unfavorable decision,
ruling or finding, might materially and adversely affect the conduct of the
business, the financial condition or the net income, affairs or prospects
of the combined institution taken as a whole. The articles of organization,
certificate of incorporation, charter or similar instruments of the
Company, the Bank, Sandwich Bancorp and Sandwich Bank are in full force and
effect; no conservator or receiver has been appointed for any of the
Company, the Bank, Sandwich Bancorp and Sandwich Bank; and the Bank and
Sandwich Bank are each operating as an insured depository institution. Each
of the Company, the Bank, Sandwich Bancorp and Sandwich Bank is duly
qualified to transact business and is in good standing in each jurisdiction
in which its ownership or leasing of property or the conduct of its
business requires such qualification, unless the failure to be so qualified
in one or more of such jurisdictions would not have a material adverse
effect on the financial condition or the business, operations, net income
or prospects of the combined institution, taken as a whole. Upon
consummation of the Conversion and the Reorganization, all of the
outstanding capital stock of the Bank will be duly authorized and validly
issued and fully paid and nonassessable; and all such stock will be owned
directly by the Company, free and clear of all liens, encumbrances, claims
or other restrictions. Each of the Company, the Bank, Sandwich Bancorp and
Sandwich Bank does not own equity securities or any equity interest in any
other business enterprise except as described in the Prospectus; each of
the subsidiaries has been duly organized and is validly existing and in
good standing under the laws of its jurisdiction of organization with the
authority to conduct its business and own its property as described in the
Registration Statement and the Prospectus; all of the outstanding stock of
each subsidiary has been duly authorized and validly issued and is fully
paid and nonassessable; all such stock is owned directly by the Bank or
Sandwich Bank, as the case may
8
<PAGE>
be, free and clear of all liens, encumbrances, claims or other
restrictions; and each of the subsidiaries is duly qualified to transact
business and is in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires
such qualification, unless the failure to be so qualified would not have a
material adverse effect on the operations of the combined institution,
taken as a whole. The activities of the subsidiaries are permitted to
subsidiaries of a Massachusetts-chartered savings bank or co-operative
bank, as the case may be, by the rules, regulations, policies and practices
of the Division, the FDIC and any other state or federal authority having
jurisdiction over such matters.
(o) The deposit accounts of the Bank are, and following the Closing
Date of the Conversion the deposit accounts of the Bank will be, insured by
the Bank Insurance Fund (the "BIF"), or the Savings Association Insurance
Fund (the "SAIF"), each as administered by the FDIC, and the DIFM, as
administered by the Mutual Savings Central Fund, Inc., up to the maximum
amounts allowed by law. The deposit accounts of Sandwich Bank are, and
following the Closing Date of the Conversion the deposit accounts of
Sandwich Bank will be, insured by the BIF or the SAIF, as administered by
the FDIC, and the Share Insurance Fund, as administered by the CCB, up to
the maximum amounts allowed by law. Upon consummation of the Conversion,
the liquidation account for the benefit of Eligible Account Holders and
Supplemental Eligible Account Holders ("Liquidation Account") will be duly
established in accordance with the requirements of the Conversion
Regulations.
(p) Upon consummation of the Conversion and the Merger, the
authorized, issued and outstanding equity capital of the Company will be as
set forth in the Prospectus under the caption "Capitalization"; no shares
of Common Stock, or securities exercisable into or exchangeable for Common
Stock, will have been issued prior to the Closing Date; the Shares will
have been duly and validly authorized for issuance and, when issued and
delivered by the Company pursuant to the Plan, will be duly and validly
issued and fully paid and nonassessable, the issuance of the Shares is not
subject to any preemptive rights; and the terms and provisions of the
Common Stock will conform in all material respects to the description
thereof contained in the Prospectus. Upon the issuance of the Shares, good
title to the Shares will be transferred from the Company to the purchasers
thereof against payment therefor, subject to such claims as may be asserted
against the purchasers thereof by third-party claimants.
(q) As of the date hereof and as of the Closing Date, none of the
Company, the Bank, Sandwich Bancorp, Sandwich Bank, or any subsidiary is or
will be in violation of its charter or By-Laws or in default in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any material contract, lease, loan agreement,
indenture or other instrument to which it is a party or by which it or any
of its property may be bound; the consummation of the Conversion and the
Merger, the execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated have been duly and
validly authorized by all necessary corporate action on the part of the
Company and the Bank, and this Agreement has been validly executed and
delivered by the Company and the Bank and is the valid, legal and binding
obligation of the Company and the Bank enforceable in accordance with its
terms, except to the extent that rights to indemnity hereunder may be
limited under applicable law and subject to bankruptcy, insolvency,
reorganization or other laws related to or affecting the enforcement of
creditors' rights generally and equitable principles limiting the right to
obtain specific enforcement or similar equitable relief. The execution and
delivery of this Agreement, the fulfillment of the
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terms herein set forth and the consummation of the transactions herein
contemplated will not (i) conflict with or constitute a breach of, or
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, the charter or By-Laws of the Company (in
either mutual or stock form), the Bank, Sandwich Bancorp, Sandwich Bank, or
any subsidiary, or any material contract, lease or other instrument to
which the Company, the Bank, Sandwich Bancorp, Sandwich Bank, or any
subsidiary is a party or in which the Company, the Bank, Sandwich Bancorp,
Sandwich Bank, or any subsidiary has a beneficial interest, or any
applicable law, rule, regulation or order; (ii) violate any authorization,
approval, judgment, decree, order, statute, rule or regulation applicable
to the Company, the Bank, Sandwich Bancorp, Sandwich Bank, or any
subsidiary; or (iii) result in the creation of any lien, charge or
encumbrance upon any property of the Company, the Bank, Sandwich Bancorp,
Sandwich Bank, or any subsidiary.
(r) The Company and the Bank have all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement and to carry out the provisions and conditions hereof, and the
Company has all such power, authority, authorizations and orders as may be
required to issue and sell the Shares as provided in the Plan and described
in the Prospectus, subject to the approval of the applicable regulatory
authorities and the satisfaction of any conditions of such approval.
(s) The Company, the Bank, Sandwich Bancorp, Sandwich Bank and their
respective subsidiaries have good and marketable title to all properties
and assets which are material to the business of the combined entity taken
as a whole, including those properties and assets described in the
Prospectus as owned by them, free and clear of all liens, except such liens
as are described in the Prospectus or are not materially significant or
important in relation to the business of the combined entity and its
subsidiaries on a consolidated basis; and all leases and subleases which
are material to the business of the combined entity taken as a whole under
which the Company, the Bank, Sandwich Bancorp, Sandwich Bank or any
subsidiary holds properties, including those leases and subleases described
in the Prospectus, are in full force and effect.
(t) As of the date hereof and as of the Closing Date and the Effective
Date, the Company, the Bank, Sandwich Bancorp and Sandwich Bank are not and
will not be in violation of any directive from the Commission, the
Division, the Bank Board, the FDIC, the FRB or any other agency to make any
material change in the method of conducting their respective businesses so
as to comply in all material respects with all applicable statutes and
regulations (including, without limitation, regulations, decisions,
directives and orders of the Commission, the Division, the Bank Board, the
FDIC and the FRB), and no suit or proceeding, charge, investigation or
action before or by any court, regulatory authority or governmental agency
or body is or will be pending or, to the knowledge of the Company or the
Bank, threatened, which might materially and adversely affect the
Conversion or the Merger, the performance of this Agreement or the
consummation of the transactions contemplated in the Plan and as described
in the Prospectus, or which might result in any material adverse change in
the financial condition, net income, capital, properties, affairs or
prospects of the Company and the Bank taken as a whole, or Sandwich Bancorp
and Sandwich Bank taken as a whole, as applicable, or which would
materially affect their respective properties and assets.
(u) The Company and the Bank have received an opinion of their
counsel, Foley, Hoag and Eliot LLP, Boston, Massachusetts with respect to
the federal income tax consequences of the
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Conversion and the Merger, and an opinion of Foley, Hoag & Eliot, LLP,
Boston, Massachusetts, with respect to the Massachusetts state income tax
consequences of the Conversion and the Merger; the federal tax opinion of
Foley, Hoag and Eliot LLP, Boston, Massachusetts, is accurately summarized
in the Conversion Application and the Prospectus. The facts and
representations upon which such opinions are based are truthful, accurate
and complete, and neither the Bank nor the Company will take any action
inconsistent therewith.
(v) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default, on the part of the
Company, the Bank or any subsidiary in the due performance and observance
of any term, covenant or condition of any indenture, mortgage, deed of
trust, note, bank loan or credit agreement or any other instrument or
agreement to which the Company, the Bank and their subsidiaries taken as a
whole is a party or by which any of them or any of their respective
property is bound or affected which, in any such case, is material to the
Company and the Bank and its subsidiaries taken as a whole; such agreements
are in full force and effect and no other party to any such agreement has
instituted or, to the knowledge of the Company or the Bank, threatened any
action or proceeding wherein the Company, the Bank or any subsidiary would
or might be alleged to be in default thereunder. No default exists, and no
event has occurred which with notice or lapse of time, or both, would
constitute a default, on the part of Sandwich Bancorp, Sandwich Bank or any
subsidiary in the due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, note, bank loan or
credit agreement or any other instrument or agreement to which Sandwich
Bancorp, Sandwich Bank and their subsidiaries taken as a whole is a party
or by which any of them or any of their respective property is bound or
affected which, in any such case, is material to Sandwich Bancorp, Sandwich
Bank and its subsidiaries, taken as a whole; such agreements are in full
force and effect and no other party to any such agreement has instituted
or, to the knowledge of Sandwich Bancorp or Sandwich Bank, threatened any
action or proceeding wherein Sandwich Bancorp, Sandwich Bank or any
subsidiary would or might be alleged to be in default thereunder.
(w) Subsequent to the date the Registration Statement is declared
effective by the Commission and prior to the Closing Date, except as
otherwise may be indicated or contemplated therein, none of the Company,
the Bank or any subsidiary has or will have: (i) issued any securities or
incurred any liability or obligation, direct or contingent, for borrowed
money, except borrowings from the same or similar sources indicated in the
Prospectus in the ordinary course of its business, or (ii) entered into any
transaction which is material in light of the business and properties of
the Company and the Bank taken as a whole. Subsequent to the date the
Registration Statement is declared effective by the Commission and prior to
the Closing Date, except as otherwise may be indicated or contemplated
therein, none of Sandwich Bancorp, Sandwich Bank or any subsidiary has or
will have: (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except borrowings
from the same or similar sources indicated in the Prospectus in the
ordinary course of its business, or (ii) entered into any transaction which
is material in light of the business and properties of Sandwich Bancorp and
Sandwich Bank taken as a whole. For purposes of this Section 4(w),
obligations for borrowed money do not include deposits.
(x) The Company, the Bank, Sandwich Bancorp, Sandwich Bank and their
subsidiaries have filed all federal, state and local tax returns required
to be filed and have made timely payment of all taxes due and payable in
respect of such returns and no deficiency has been asserted with respect
thereto by any taxing authority.
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(y) Except as disclosed in the Prospectus with respect to the ESOP,
none of the Company, the Bank, Sandwich Bancorp, Sandwich Bank or any
subsidiary has made any payment of funds of the Company, the Bank, Sandwich
Bancorp, Sandwich Bank or any subsidiary as a loan for the purchase of the
Shares or made any other payment of funds prohibited by law, and no funds
have been set aside to be used for any payment prohibited by law.
(z) Prior to the Conversion, the Bank had _______ shares of authorized
capital stock, of which ___ shares were issued and outstanding, and the
Company was not authorized to issue shares. Neither the Bank nor the
Company has: (i) other than described in the Prospectus issued any
securities within the last 18 months (except for notes to evidence other
bank loans and reverse repurchase agreements); (ii) had any material
dealings within the 12 months prior to the date hereof with any member of
the NASD, or any person related to or associated with such member, other
than discussions and meetings relating to the Offering and the Merger and
routine purchases and sales of securities for or from its portfolio; (iii)
entered into a financial or management consulting agreement relating to the
sale of stock, except as contemplated hereunder and in connection with the
Merger; or (iv) engaged any intermediary between the Selling Agents and the
Company or the Bank in connection with any offering of shares of its
capital stock, and no person is being compensated in any manner for such
service.
(aa) Neither the Company, the Bank, Sandwich Bancorp, Sandwich Bank is
required to be registered under the Investment Company Act of 1940, as
amended.
(bb) To the knowledge of the Company and the Bank, the Company has
taken all necessary action to make such filings and/or to qualify or
register the Shares for offer and sale in the Conversion and the Merger
under the securities or Blue Sky laws of all jurisdictions wherein such
Shares will be offered which require such filings and/or qualification or
registration.
(cc) All Sales Information used by the Company in connection with the
Offering that is required by the Conversion Regulations to be filed has
been filed with and approved by the applicable regulatory authority.
(dd) Except for information provided in writing to the Company or the
Bank by the Selling Agents for use in the Prospectus, the Company and the
Bank have not relied upon the Selling Agents or its legal or other advisors
for any legal, tax or accounting advice in connection with the Conversion.
(ee) To the knowledge of the Company and the Bank on the one hand and
to the knowledge of Sandwich Bancorp and Sandwich Bank on the other hand,
each of the Company, the Bank, Sandwich Bancorp and Sandwich Bank and their
respective subsidiaries is in compliance with all laws, rules and
regulations relating to environmental
12
<PAGE>
protection, except where such failure would not have a material adverse
effect on the financial condition of the combined entity taken as a whole,
and none of the Company, the Bank, Sandwich Bancorp, Sandwich Bank or any
subsidiary has been notified or is otherwise aware that any of them is
potentially liable, or is considered potentially liable, under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or any similar state law. No actions, suits, regulatory
investigations or other proceedings are pending, or, to the knowledge of
the Company and the Bank, threatened against the Company, the Bank,
Sandwich Bancorp, Sandwich Bank or any subsidiary relating to environmental
protection, nor does the Company or the Bank have any reason to believe any
such proceedings may be brought against any of such entities. To the
knowledge of the Company and the Bank on the one hand and to the knowledge
of Sandwich Bancorp and Sandwich Bank, on the other hand, no disposal,
release or discharge of hazardous or toxic substances, pollutants or
contaminants, including petroleum and gas products, as any of such terms
may be defined under federal, state or local law, has occurred on, in, at
or about any of the facilities or properties owned, operated or leased by,
or pledged to, the Company, the Bank, Sandwich Bancorp, Sandwich Bank or
any subsidiary, except such disposal, release or discharge which would not
have a material adverse effect on the combined entity taken as a whole.
(ff) No labor dispute with the employees of the Company, the Bank,
Sandwich Bancorp, Sandwich Bank or any subsidiary exists or, to the
knowledge of the Company or the Bank, is imminent.
(gg) All of the loans represented as assets on the most recent
financial statements or selected financial information of the Company and
Sandwich Bancorp included in the Prospectus meet or are exempt from all
requirements of federal, state and local law pertaining to lending,
including, without limitation, truth in lending (including the requirements
of Regulation Z and 12 C.F.R. Part 226), real estate settlement procedures,
consumer credit protection, equal credit opportunity and all disclosure
laws applicable to such loans, except for violations which, if asserted,
would not result in a material adverse effect on the financial condition,
results of operations or business of the combined entity taken as a whole.
Any certificate signed by an officer of the Bank or of the Company and
delivered to the Selling Agents or their counsel that refers to this Agreement
shall be deemed to be a representation and warranty by the Bank or the Company
to the Selling Agents as to the matters covered thereby with the same effect as
if such representation and warranty were set forth herein.
B. The Selling Agents represent and warrant to the Company and the
Bank as follows:
(a) The Selling Agents are registered as broker-dealers with the
Commission and the NASD.
(b) The Selling Agents are validly existing and in good standing
as corporations under the laws of the State of New Jersey with the
corporate power and authority to provide the services to be furnished
to the Company and the Bank hereunder.
(c) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated have been duly
and validly authorized by all necessary corporate action on the part
of the Selling Agents, and this Agreement is a legal, valid and
binding obligation of the Selling Agents, enforceable in accordance
with its terms, except to the extent that rights to indemnity
hereunder may be limited under applicable law and subject to
bankruptcy, insolvency, reorganization or other laws related to or
affecting the enforcement of creditors' rights generally and equitable
principles limiting the right to obtain specific enforcement or
similar equitable relief.
(d) The Selling Agents and, to the Selling Agents' knowledge,
their employees, agents and representatives who shall perform any of
the services required hereunder to be performed by the
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<PAGE>
Selling Agents shall be duly authorized and shall have all licenses,
approvals and permits necessary to perform such services, and Ryan
Beck and/or McConnell Budd are registered selling agents in the
jurisdictions listed in Exhibit C hereto and will remain registered in
such jurisdictions in which the Company is relying on such
registration for the sale of the Shares, until the Conversion is
consummated or terminated.
(e) The execution and delivery of this Agreement by the Selling
Agents, the fulfillment of the terms set forth herein and the
consummation of the transactions herein contemplated shall not violate
or conflict with the corporate charter or By-Laws of the Selling
Agents or violate, conflict with or constitute a breach of, or default
(or an event which, with notice or lapse of time, or both, would
constitute a default) under, any material agreement, indenture or
other instrument by which the Selling Agents are bound or under any
governmental license or permit or any law, administrative regulation,
authorization, approval or order or court decree, injunction or order
applicable to it.
(f) Any funds received by the Selling Agents to purchase Shares
will be handled in accordance with Rule 15c2-4 under the Securities
Exchange Act of 1934 (the "1934 Act"), if applicable.
(g) There is not now pending or, to the Selling Agents'
knowledge, threatened against the Selling Agents any material action
or proceeding before the Commission, the NASD, any state securities
commission or any state or federal court concerning the Selling
Agents' activities as a broker-dealer.
SECTION 5. Additional Covenants of the Company and the Bank. The Company
-------------------------------------------------
and the Bank hereby jointly and severally covenant with the Selling Agents as
follows:
(a) Neither the Company or the Bank will file any amendment or
supplement to the Registration Statement or any Reorganization
Application without notifying the Selling Agents of its intention to
do so and providing the Selling Agents and their counsel an
opportunity to review such amendment or supplement, nor will the
Company or the Bank file any such amendment or supplement to which the
Selling Agents or their counsel shall reasonably object.
(b) The Company and the Bank will use their best efforts to cause
each Reorganization Application not heretofore approved to be approved
by the applicable regulatory authority and will promptly upon receipt
of any information concerning the events listed below notify the
Selling Agents: (i) of the approval of any Reorganization Application
not heretofore approved; (ii) of the receipt of any comments from the
Commission, the Division, the Bank Board, the FDIC, the FRB or any
other governmental entity with respect to the Conversion, the Merger
or the transactions contemplated by this Agreement; (iii) of the
request by the Commission, the Division, the Bank Board, the FDIC, the
FRB or any other governmental entity for any amendment or supplement
to the Registration Statement, the Prospectus or any Reorganization
Application or for additional information; (iv) of the issuance by the
Commission, the Division, the Bank Board, the FDIC, the FRB or any
other governmental entity of any order or other action suspending the
Conversion or the Merger or the use of the Registration Statement or
the Prospectus or any other filing of the Company and the Bank under
the Conversion Regulations, the 1933 Act, 1933 Act Regulations or
other applicable law, or the threat of any such action; (v) of the
issuance by the Commission, the Division, the Bank Board, the FDIC,
the FRB or any other state governmental authority of any stop order
14
<PAGE>
suspending the effectiveness of the Registration Statement or any
Reorganization Application or of the initiation or threat of any
proceedings for such purpose; or (vi) of the occurrence of any event
mentioned in paragraph (f) below. The Company and the Bank will make
every reasonable effort to prevent the issuance by the Commission, the
Division, the Bank Board, the FDIC, the FRB or any other governmental
authority of any such order and, if any such order shall at any time
be issued, to obtain the lifting thereof at the earliest possible
time. The Company and the Bank will provide copies of the foregoing
comments, requests and orders to the Selling Agents upon receipt of
such items.
(c) The Company and the Bank will deliver to the Selling Agents
and to their counsel two conformed copies of each of the following
documents, with all exhibits: each Reorganization Application as
originally filed and each amendment or supplement thereto and the
Registration Statement as originally filed and each amendment thereto.
In addition, the Company and the Bank will also deliver to the Selling
Agents such number of copies of the closing documents with respect to
the Conversion and the Offering as the Selling Agents may reasonably
request.
(d) The Company will furnish to the Selling Agents, from time to
time during the period when the Prospectus is required to be delivered
under federal or state securities laws or regulations or the
applicable rules and regulations of any other governmental entity,
such number of copies of the Prospectus (as amended or supplemented)
as the Selling Agents may reasonably request for the purposes
contemplated by such federal or state securities laws or regulations
or the applicable rules and regulations of any other governmental
entity. The Company authorizes the Selling Agents to use the
Prospectus (as amended or supplemented) for any lawful manner in
connection with the sale of the Shares.
(e) The Company and the Bank will comply with any and all terms,
conditions, requirements and provisions with respect to the
Reorganization and the transactions contemplated thereby imposed by
the Commission, the Division, the Bank Board, the FDIC, the FRB, any
state regulatory or Blue Sky authority or any other governmental
entity, including the terms, conditions, requirements and provisions
contained in the Reorganization Regulations, the 1933 Act, the 1933
Act Regulations, the 1934 Act and the rules and regulations of the
Commission promulgated under the 1934 Act (the "1934 Act
Regulations").
(f) If, at any time during the period when the Prospectus is
required to be delivered, any event relating to or affecting the
Company or the Bank shall occur, as a result of which it is necessary
or appropriate, in the opinion of counsel for the Company and the
Bank, to amend or supplement the Registration Statement or the
Prospectus in order to make the Registration Statement or Prospectus
not misleading in light of the circumstances existing at the time it
is delivered to a purchaser, the Company and the Bank will, at their
expense, forthwith prepare, file with the Commission and furnish to
the Selling Agents a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to, the Registration
Statement or Prospectus (in form and substance reasonably satisfactory
to the Selling Agents and their counsel after a reasonable time for
review) which will amend or supplement the Registration Statement or
Prospectus so that as amended or supplemented it will not contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading.
15
<PAGE>
(g) The Company and the Bank will take all necessary actions, in
cooperation with the Selling Agents, and furnish to whomever the
Selling Agents may direct such information as may be required to
qualify or register the Shares for the Offering and sale by the
Company under the applicable securities or Blue Sky laws of such
jurisdictions as the Selling Agents may reasonably designate;
provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify to do business in
any jurisdiction in which it is not otherwise required to be so
qualified. In each jurisdiction where any of the Shares shall have
been so qualified or registered, the Company will make and file such
statements and reports as are or may be required by the laws of such
jurisdiction.
(h) The Company will not sell or issue, contract to sell or
otherwise dispose of, for a period of 90 days after the Closing Date,
without the prior written consent of the Selling Agents, any shares
of, or any securities convertible into or exercisable for shares of,
Common Stock other than in connection with the Merger or any other
plan or arrangement described in the Prospectus.
(i) During the period in which the Company's Common Stock is
registered under the 1934 Act, the Company will furnish to its
stockholders as soon as practicable after the end of each fiscal year
an annual report (including a consolidated balance sheet and
consolidated statements of income, stockholders' equity and cash flows
of the Company and the Bank as at the end of and for such year,
certified by independent public accountants in accordance with
Regulation S-X under the 1934 Act) and make available as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the first fiscal quarter ending after the
Closing Date) financial information of the Company and the Bank for
such quarter in reasonable detail.
(j) During the period of three years from the date hereof, the
Company will furnish to the Selling Agents: (i) promptly after it
becomes available, a copy of each report of the Company furnished
generally to stockholders of the Company or furnished to or filed with
the Commission under the 1934 Act or any national securities exchange
or system on which any class of securities of the Company is listed or
quoted (including, but not limited to, reports of Forms 10-K, 10-Q and
8-K and all proxy statements and annual reports to stockholders), a
copy of each other report of the Company mailed to its stockholders or
filed with the Commission or any other supervisory or regulatory
authority or any national securities exchange or system on which any
class of securities of the Company is listed or quoted and each press
release and material news item and article released by the Company or
the Bank, and (ii) from time to time, such other public information
concerning the Company and the Bank as the Selling Agents may
reasonably request.
(k) The Company and the Bank will use the net proceeds from the
sale of the Shares substantially in the manner set forth in the
Prospectus under the caption "Use of Proceeds."
(l) Other than as permitted by the Reorganization Regulations,
the laws of the Commonwealth of Massachusetts, the 1933 Act, the 1933
Act Regulations and the laws of any jurisdiction in which the Shares
are qualified for sale, neither the Company nor the Bank will
distribute any Prospectus or other Sales Information in connection
with the offer and sale of the Shares.
(m) The Company will make generally available to its security
holders as soon as practicable, but not later than 60 days after the
close of the period covered thereby, an earnings
16
<PAGE>
statement (in form complying with the provisions of Rule 158 of the
1933 Act Regulations) covering a twelve-month period beginning not
later than the first day of the Company's fiscal quarter next
following the effective date (as defined in such Rule 158) of the
Registration Statement.
(n) The Company will register the Common Stock under Section
12(g) of the 1934 Act effective on or prior to the Closing Date.
(o) The Company will use its best efforts to obtain approval for,
effective on or prior to the Closing Date, and maintain quotation of
the Common Stock on the Nasdaq National Market System.
(p) The Company will maintain appropriate arrangements for
depositing all funds received from persons delivering orders to
purchase Shares in the Subscription and Community Offerings on an
interest-bearing basis at the rate described in the Prospectus until
the Closing Date or until the Offering is terminated in accordance
with the Plan and as described in the Prospectus. The Company will
maintain such records of all funds received to permit the funds of
each subscriber to be separately insured by the BIF and the DIFM (to
the maximum extent allowable) and to enable the Company to make
appropriate refunds of such funds in the event that such refunds are
required to be made in accordance with the Plan and as described in
the Prospectus.
(q) The Company will take such actions and furnish such
information as are reasonably requested by the Selling Agents in order
for the Selling Agents to ensure compliance with Article III, Section
1, of the NASD's Rules of Fair Practice and the NASD's "Interpretation
to Free Riding and Withholding."
(r) The Company and the Bank will conduct their respective
businesses in compliance in all material respects with all applicable
federal and state laws, rules, regulations, decisions, directives and
orders including, all decisions, directives and orders of the
Division, the FDIC and the FRB.
(s) The Bank will not amend the Plan without the Selling Agents'
prior written consent in any manner that, in the opinion of the
Selling Agents, would affect the sale of the Shares or the terms of
this Agreement, which approval shall not be unreasonably withheld.
(t) The Company and the Bank will use all reasonable efforts to
comply with, or cause to be complied with, the conditions precedent to
the several obligations of the Selling Agents specified in Section 9
hereof.
(u) Prior to the Closing Date, the Company shall have received
approval of each Reorganization Application required to consummate the
Merger, and all applicable waiting periods shall have expired.
SECTION 6. Payment of Expenses. The Company and the Bank jointly and
--------------------
severally agree to pay all expenses incident to the performance of the
obligations of the Company and the Bank under this Agreement, including the
following: (i) the preparation, printing, issuance and delivery of the
certificates evidencing the Shares sold to the purchasers in the Offering and
the printing and delivery of all other documents applicable to the Conversion
and the Merger; (ii) the fees and disbursements of the Company's
17
<PAGE>
and the Bank's counsel, accountants and other advisors; (iii) the qualification
of the Shares under all applicable securities or Blue Sky laws, including filing
fees and the reasonable fees and disbursements of counsel in connection
therewith and in connection with the preparation of a Blue Sky Survey concerning
such jurisdictions as the Selling Agents may reasonably designate; (iv) the
printing and delivery to the Selling Agents in such quantities as the Selling
Agents shall reasonably request of copies of the Registration Statement, the
Prospectus and the Reorganization Applications as originally filed and as
amended or supplemented and all other documents in connection with the
Conversion and this Agreement; (v) the filing fees incurred in connection with
the review of the Registration Statement, the Reorganization Applications and
any other application, form or filing by the Commission, the Division, the Bank
Board, the FDIC and the FRB; (vi) the filing fees and the fees and disbursements
of counsel incurred in connection with the review of the Offering by the NASD;
(vii) the fees for listing the Shares on the Nasdaq National Market System;
(viii) the fees and expenses relating to the Independent Valuation; (ix) the
fees and expenses relating to advertising expenses, temporary personnel
expenses, expenses related to the Stock Information Center to be established,
investor meeting expenses and other miscellaneous expenses relating to the
marketing by the Selling Agents of the Shares; and (x) the fees and charges of
any transfer agent, registrar or other agent. In the event that the Selling
Agents incur any such expenses on behalf of the Company or the Bank, the Company
or the Bank will pay or reimburse the Selling Agents for such expenses
regardless of whether the Conversion is successfully completed, and such
reimbursements will not be included in the expense limitations set forth in the
following paragraph. the Selling Agents will not incur any single expense of
more than $1,000 pursuant to this paragraph without the prior approval of the
Company or the Bank.
In addition, the Company and the Bank will reimburse the Selling Agents for
all reasonable out-of-pocket expenses, including legal fees and expenses,
incurred by the Selling Agents in connection with the services provided by the
Selling Agents to the Company and the Bank pursuant to this Agreement. Such
legal fees shall not exceed $55,000 and such other out-of-pocket expenses
incurred by Ryan Beck shall not exceed $15,000. The Selling Agents will provide
the Company and the Bank with a detailed accounting of the out-of-pocket
expenses referred to in this paragraph, which will be paid by the Company and
the Bank on the Closing Date. The parties hereto acknowledge that the expense
limitations set forth in this paragraph may be exceeded in the event of a
material delay in the Offering that requires an update of financial information
contained in the Registration Statement.
SECTION 7. Indemnification.
----------------
(a) The Bank and the Company jointly and severally agree to
indemnify and hold harmless the Selling Agents, their officers,
directors, agents and employees and each person, if any, who controls
the Selling Agents within the meaning of Section 15 of the 1933 Act or
Section 20(a) of the 1934 Act against any and all loss, liability,
claim, damage or expense whatsoever (including but not limited to
settlement expenses, subject to the limitation in the last sentence of
paragraph (c) below), joint or several, that the Selling Agents or any
of such persons may suffer or to which the Selling Agents or any such
persons may become subject under all applicable federal and state laws
or otherwise, and to promptly reimburse the Selling Agents and any of
such persons upon written demand for any expenses (including
reasonable fees and disbursements of counsel) reasonably incurred by
the Selling Agents or any of such persons in connection with
investigating, preparing or defending any actions, proceedings or
claims (whether commenced or threatened) to the extent such losses,
claims, damages, liabilities or actions: (i) arise out of or are based
upon any untrue statement, or alleged untrue statement, of any
material fact contained in any Reorganization
18
<PAGE>
Application (or any amendment or supplement thereto), the Registration
Statement (or any amendment or supplement thereto), the Prospectus (or
any amendment or supplement thereto), any Blue Sky application or
other instrument or document prepared, made or executed by or on
behalf of the Company or the Bank or based upon written information or
statements furnished or made by the Company or the Bank or their
respective representatives (including counsel) which is filed in any
jurisdiction to register or qualify any or all of the Shares under the
securities laws thereof (or any amendment or supplement thereto)
(collectively, the "Blue Sky Application") or any application or other
document, advertisement or communication prepared, made or executed by
or on behalf of the Company or the Bank or based upon written
information or statements furnished or made by the Bank or the Company
or their respective representatives (including counsel) whether or not
filed in any jurisdiction in order to register or qualify any or all
of the Shares under the securities law thereof (the "Sales
Information"); (ii) arise out of or are based upon the omission or
alleged omission to state in any of the foregoing documents or
information a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading; or (iii) arise from any theory
of liability whatsoever relating to or arising from or based upon any
Reorganization Application (or any amendment or supplement thereto),
the Registration Statement (or any amendment or supplement thereto),
the Prospectus (or any amendment or supplement thereto), the Blue Sky
Application, the Sales Information or other documentation prepared by
the Bank or the Company and distributed in connection with the
Offering; except to the extent such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact in, or
omission or alleged omission of a material fact from, any
Reorganization Application (or any amendment or supplement thereto),
the Registration Statement (or any amendment or supplement thereto),
the Prospectus (or any amendment or supplement thereto), the Blue Sky
Application, the Sales Information or other documentation prepared by
the Company or the Bank and distributed in connection with the
Offering made in reliance upon and in conformity with information
furnished in writing to the Company or the Bank by the Selling Agents
or their representatives (including counsel) regarding the Selling
Agents expressly for use in the Prospectus, which the Bank and the
Company acknowledge includes only the information contained in the
Prospectus under the captions "Summary of Prospectus-Marketing Agent"
and "The Offerings-Plan of Distribution and Selling Commissions"; nor
shall indemnification be required for material oral misstatements to a
purchaser of Shares made by the Selling Agents which are not based
upon information provided by the Company or the Bank in writing or
based upon information contained in any Reorganization Application (or
any amendment or supplement thereto), the Registration Statement (or
any amendment or supplement thereto), the Prospectus (or any amendment
or supplement thereto), the Blue Sky Application or the Sales
Information or other documentation prepared by the Company or the Bank
and distributed in connection with the Reorganization. In addition,
neither the Company nor the Bank will be liable under the foregoing
indemnification provisions to the extent that any loss, claim, damage,
liability or action is found in a final judgment by a court to have
resulted from the Selling Agents' bad faith or negligence in
performing the services to be performed by the Selling Agents under
this Agreement. Notwithstanding the foregoing, the indemnification
provided for in this paragraph (a) shall not apply to the Bank to the
extent that such indemnification by the Bank would constitute a
covered transaction under Section 23A of the Federal Reserve Act. For
purposes of this Section 7, the term "expense" shall include, but not
be limited to, counsel fees and costs, court costs and out-of-pocket
costs. The foregoing agreement to indemnify shall be in addition to
any liability the Company or the Bank may otherwise have to the
Selling Agents or the persons entitled to the benefit of these
indemnification provisions.
19
<PAGE>
(b) The Selling Agents agree to indemnify and hold harmless the
Company and the Bank, their respective officers, directors, agents and
employees and each person, if any, who controls the Bank or the
Company within the meaning of Section 15 of the 1933 Act or Section
20(a) of the 1934 Act against any and all loss liability, claim,
damage or expense whatsoever (including but not limited to settlement
expenses, subject to the limitation in the last sentence of paragraph
(c) below), joint or several, that they or any of such persons may
suffer or to which they or any such persons may become subject under
all applicable federal and state laws or otherwise, and to promptly
reimburse the Bank and the Company and any of such persons upon
written demand for any expenses (including reasonable fees and
disbursements of counsel) reasonably incurred by them or any of such
persons in connection with investigating, preparing or defending any
actions, proceedings or claims (whether commenced or threatened) to
the extent such losses, claims, damages, liabilities or actions: (i)
arise out of or are based upon any untrue statement, or alleged untrue
statement, of a material fact contained in any Reorganization
Application (or any amendment or supplement thereto), the Registration
Statement (or any amendment or supplement thereto), the Prospectus (or
any amendment or supplement thereto), the Blue Sky Application, the
Sales Information or other documentation prepared by the Company or
the Bank and distributed in connection with the Offering; or (ii)
arise out of or which are based upon the omission or alleged omission
to state in any of the foregoing documents or information a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that obligations of the Selling Agents
under this paragraph shall exist only if and to the extent that such
untrue statement or alleged untrue statement was made in, or such
omission or alleged omission was from, any Reorganization Application
(or any amendment or supplement thereto), the Registration Statement
(or any amendment or supplement thereto), the Prospectus (or any
amendment or supplement thereto), the Blue Sky Application, the Sales
Information or other documentation prepared by the Bank or the Company
and distributed in connection with the Offering in reliance upon and
in conformity with information furnished in writing to the Company or
the Bank by the Selling Agents or their representatives (including
counsel) regarding the Selling Agents expressly for use in the
Prospectus, which the Bank and the Company acknowledge includes only
the information contained in the Prospectus under the captions
"Summary of Prospectus-Marketing Agent" and "The Offerings-Plan of
Distribution and Selling Commissions." In addition, the Selling Agents
will not be liable under the foregoing indemnification provisions to
the extent that any loss, claim, damage, liability or action is found
in a final judgment by a court to have resulted from the Bank's or the
Company's bad faith or negligence. The foregoing agreement to
indemnify shall be in addition to any liability the Selling Agents may
otherwise have to the Company and the Bank or the persons entitled to
the benefit of these indemnification provisions.
(c) Each indemnified party shall give prompt written notice to
each indemnifying party of any action, proceeding, claim (whether
commenced or threatened) or suit instituted against it in respect of
which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve it from any liability which it
may have on account of this Section 7 and Section 8 herein. An
indemnifying party may participate at its own expense in the defense
of such action. In addition, if it so elects within a reasonable time
after receipt of such notice, an indemnifying party, jointly with any
other indemnifying parties receiving such notice, may assume the
defense of such action with counsel chosen by it and reasonably
acceptable to the indemnified parties that are defendants in such
action, unless such indemnified parties reasonably object to such
assumption on the ground that there may be legal defenses available to
them that are different from or in addition
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to those available to such indemnifying party. If an indemnifying
party assumes the defense of such action, the indemnifying parties
shall not be liable for any fees and expenses of counsel for the
indemnified parties incurred thereafter in connection with such
action, proceeding or claim, other than reasonable costs of
investigation. In no event shall the indemnifying parties be liable
for the fees and expenses of more than one firm of attorneys for the
indemnified parties (unless an indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or
them which are different from or additional to those of the other
indemnified parties) in connection with any one action, proceeding or
claim or separate but similar or related actions, proceedings or
claims in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall be liable
for any settlement of any action, proceeding or suit effected without
its prior written consent.
(d) The agreement contained in this Section 7 and in Section 8
hereof and the representations and warranties of the Bank and the
Company set forth in this Agreement shall remain operative and in full
force and effect regardless of: (i) any investigation made by or on
behalf of the Selling Agents or their directors, officers, agents,
employees or controlling persons or by or on behalf of the Bank or the
Company or their respective directors, officers, agents, employees or
controlling persons; (ii) delivery of and payment hereunder for the
Shares; or (iii) any termination of this Agreement.
SECTION 8. Contribution. If the indemnification of an indemnified party
-------------
provided for in Section 7 of this Agreement is for any reason held
unenforceable, the Bank and the Company, on the one hand, and the Selling
Agents, on the other, agree to contribute to the losses, liabilities, claims,
damages and expenses for which such indemnification is held unenforceable: (i)
in such proportion as is appropriate to reflect the relative benefits to the
Bank and the Company, on the one hand, and the Selling Agents, on the other, of
the Reorganization as contemplated (whether or not the Reorganization is
consummated), or (ii) if the application provided for in clause (i) is for any
reason held unenforceable, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) but also the relative fault
of the Bank and the Company, on the one hand, and the Selling Agents, on the
other, as well as other equitable considerations. The Bank and the Company agree
that for the purposes of this Section 8, the relative benefits to the Bank and
the Company and the Selling Agents of the Conversion as contemplated shall be
deemed to be in the same proportion that the total net proceeds from the
Conversion and the Offering received by the Bank and the Company in connection
with the Conversion bear to the total fees paid or to be paid to the Selling
Agents under this Agreement. No person found guilty of any fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not found guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each of the
Selling Agents' officers and directors and each person, if any, who controls the
Selling Agents within the meaning of the 1933 Act and the 1934 Act shall have
the same rights to contribution as the Selling Agents, and each of the Company's
and the Bank's officers and directors and each person, if any, who controls the
Bank or the Company within the meaning of the 1933 Act and the 1934 Act shall
have the same rights to contribution as the Bank and the Company. Any party
entitled to contribution shall, promptly after receipt of notice of commencement
of any action, suit, claim or proceeding against such party in respect to which
a claim for contribution may be made against another party, notify such other
party, but the omission to so notify such party shall not relieve the party from
whom contribution may be sought from any other obligation it may have hereunder
or otherwise than under this Section 8. The Bank, the Company and the Selling
Agents agree that it would not be just and equitable if contribution pursuant to
this Section 8 were determined by pro rata
--- ----
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allocation or by other method of allocation that does not take into account the
equitable considerations referred to in this Section 8.
SECTION 9. Conditions of the Selling Agents' Obligations. The obligations
----------------------------------------------
of the Selling Agents hereunder as to the Shares to be delivered at the Closing
Date are subject, in the discretion of the Selling Agents, to the condition that
all representations and warranties and other statements of the Bank and the
Company herein are, at and as of the commencement of the Offering and at and as
of the Closing Date, true and correct in all material respects, the condition
that the Bank and the Company shall have performed in all material respects all
of their respective obligations hereunder to be performed on or before such
dates and to the following conditions:
(a) The Registration Statement shall have been declared effective by
the Commission not later than 5:30 p.m. on the date of this Agreement, or
with the consent of the Selling Agents at a later time and date; and at the
Closing Date no stop order suspending the effectiveness of the Registration
Statement or the consummation of the Conversion shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by the
Commission or any state securities or Blue Sky authority, and no order or
other action suspending the effectiveness of the Prospectus or the
consummation of the Conversion shall have been issued or proceedings
therefore initiated or threatened by the Division, the Bank Board, the FDIC
or the FRB.
(b) At the Closing Date, the Selling Agents shall have received:
(1) The favorable opinion, dated as of the Closing Date addressed
to the Selling Agents and for their and their counsel's benefit, of
Foley, Hoag & Eliot, LLP ("Foley Hoag"), as to issues of federal and
Massachusetts law set forth below. The opinion of Foley Hoag shall be
in form and substance to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a mutual holding company under the laws of the
Commonwealth of Massachusetts and upon the Conversion will become
a duly organized and validly existing corporation in good
standing under the laws of Massachusetts. The Bank has been duly
organized and is validly existing under the laws of the
Commonwealth of Massachusetts. Each of the subsidiaries has been
duly organized and is validly existing and in good standing under
the laws of its jurisdiction of organization.
(ii) Each of the Company, the Bank and their subsidiaries
has the corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the
Registration Statement and Prospectus; and each of the Company,
the Bank and their subsidiaries is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, unless the
failure to be so qualified in one or more of such jurisdictions
would not have a material adverse effect on the financial
condition or the business, operations, net income or prospects of
the Company and the Bank taken as a whole.
22
<PAGE>
(iii) The Company is a Massachusetts-chartered mutual
holding company, and, at the Closing Date, will become a
Massachusetts-chartered business corporation, with corporate
power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus. The Bank
is a Massachusetts-chartered stock savings bank, with corporate
power and authority to own, lease and operate its property and to
conduct its business as described in the Prospectus. All of the
outstanding capital stock of the Bank is duly authorized and
validly issued, fully paid and non-assessable and owned by the
Company, free and clear of any liens, encumbrances, claims or
other restrictions.
(iv) The activities of each subsidiary of the Company and
the Bank as described in the Registration Statement and
Prospectus are permitted to subsidiaries of a
Massachusetts-chartered savings bank and of a bank holding
company, by the rules, regulations, policies and practices of the
Division, the FDIC, the FRB and any other federal or state
authority having jurisdiction over such matters. All of the
outstanding stock of each subsidiary of the Company and the Bank
has been duly authorized and validly issued and is fully paid and
nonassessable; and all such stock is owned of record and
beneficially by the Bank, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(v) Upon consummation of the Conversion and the Merger, the
authorized, issued and outstanding equity capital of the Company
will be as set forth in the Registration Statement and the
Prospectus under the caption "Capitalization" and, other than in
the Conversion, no shares of Common Stock, or securities
exercisable into or exchangeable for Common Stock, will have been
issued prior to the Closing Date and the Effective Date; at the
time of the Conversion the Shares will have been duly and validly
authorized for issuance, and when issued and delivered by the
Company pursuant to the Plan, will be duly authorized and validly
issued and fully paid and nonassessable; the issuance of the
Shares is not subject to any preemptive rights. To such counsel's
knowledge, upon the issuance of the Shares, good title to the
Shares will be transferred from the Company to the purchasers
thereof against payment therefor, subject to such claims as may
be asserted against the purchasers thereof by third-party
claimants.
(vi) Each Conversion Application has been approved by the
applicable regulatory authority pursuant to the Conversion
Regulations, and, to such counsel's knowledge, no action has been
taken or is pending or threatened to revoke any such approval.
(vii) Each Conversion Application, as amended or
supplemented, if amended or supplemented, as filed with the
applicable regulatory authority complied as to form in all
material respects with the requirements of the Conversion
Regulations.
(viii) The Division's approval of the Plan remains in full
force and effect; the Company has duly adopted a Massachusetts
stock charter and By-Laws effective upon consummation of the
Conversion; the Company and the Bank have
23
<PAGE>
conducted the Conversion in all material respects in accordance
with the requirements of the Conversion Regulations, federal law,
all other applicable regulations, decisions and orders and the
Plan, including all material applicable terms, conditions,
requirements and conditions precedent to the Conversion imposed
upon the Company and the Bank by the Division, the Bank Board,
the FDIC and the FRB; no order has been issued by the Division,
the Bank Board, the FDIC or the FRB to suspend the Conversion or
the Merger and no action for such purpose has been instituted or,
to such counsel's knowledge, threatened by the Division, the Bank
Board, the FDIC or the FRB; and, to such counsel's knowledge, no
person has sought to obtain review of the final action of the
Division in approving the Conversion Application or the Plan.
(ix) This Agreement has been duly authorized, executed and
delivered by the Company and the Bank and is the legal, valid and
binding agreement of the Company and the Bank, subject, as to
enforceability, to bankruptcy, insolvency, reorganization,
moratorium, conservatorship, receivership and other laws of
general applicability relating to or affecting creditors' rights
or the rights of creditors of depository institutions the
deposits of which are insured by the BIF or the DIFM, to general
principles of equity (whether considered in an action at law or
in equity) and to the extent that rights to indemnity and
contribution thereunder may be limited under applicable laws or
under considerations of public policy.
(x) The Registration Statement is effective under the 1933
Act and no stop order suspending effectiveness has been issued
under the 1933 Act and, to such counsel's knowledge, no
proceedings therefor have been initiated or threatened by the
Commission or any state securities or Blue Sky authority.
(xi) All conditions imposed by regulatory authorities in
connection with their respective approvals of the Conversion
Applications have been satisfied, and no further approval,
authorization, consent or other order of any federal or state
board or body is required in connection with the execution and
delivery of this Agreement, the issuance of the Shares and the
consummation of the Conversion, except as may be required under
the securities or Blue Sky laws of various jurisdictions.
(xii) At the time the Registration Statement became
effective, (i) the Registration Statement (as amended or
supplemented, if so amended or supplemented) (other than the
financial statements, stock valuation information and other
financial and statistical data included therein, as to which no
opinion need be rendered), complied as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations and (ii) the Prospectus (other than the financial
statements, stock valuation information and other financial and
statistical data included therein, as to which no opinion need be
rendered) complied as to form in all material respects with the
requirements of the Conversion Regulations.
(xiii) The information in the Registration Statement and
Prospectus under the captions "Risk Factors-Regulatory Oversight
and Legislation" and "-Certain
24
<PAGE>
Anti-Takeover Provisions," "Regulation of Seacoast Financial and
Subsidiaries," "Restrictions on Acquisition of Seacoast Financial
and Subsidiaries" and "Description of Capital Stock of Seacoast
Financial" to the extent that it constitutes matters of law,
summaries of legal matters, documents or proceedings or legal
conclusions, has been reviewed by such counsel and is correct in
all material respects.
(xiv) The terms and provisions of the Common Stock conform
in all material respects to the description thereof contained in
the Prospectus, and the form of certificate used to evidence the
Shares is in due and proper form.
(xv) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against the
Company, the Bank or any subsidiary which are required to be
disclosed in the Registration Statement and Prospectus other than
those disclosed therein, and all pending legal and governmental
proceedings to which the Company, the Bank or any subsidiary is
the subject which are not disclosed in the Registration
Statement, including ordinary routine litigation, are, considered
in the aggregate, not material.
(xvi) To such counsel's knowledge, there are no material
contracts, indentures, mortgages, loan agreements, notes, leases
or other instruments required to be described or referred to in
the Registration Statement and Prospectus or to be filed as
exhibits thereto other than those described or referred to
therein or filed as exhibits thereto, and the description thereof
or references thereto are correct in all material respects.
(xvii) To such counsel's knowledge, the Company, the Bank
and the subsidiaries have obtained all material licenses, permits
and other governmental authorizations currently required for the
conduct of their respective businesses taken as a whole, as
described in the Registration Statement and Prospectus, all such
licenses, permits and other governmental authorizations are in
full force and effect, and the Company, the Bank and the
subsidiaries are in all material respects complying therewith.
(xviii) The Plan has been duly adopted by the required votes
of the Board of Trustees and the corporators, including the
"independent corporators," of the Company.
(xix) The Company is not in violation of its mutual Articles
of Organization or By-Laws (and the Company will not be in
violation of its Massachusetts stock Articles of Organization
upon consummation of the Conversion); the execution and delivery
of this Agreement, the incurrence of the obligations herein set
forth and the consummation of the transactions contemplated
herein will not result in any violation of the provisions of the
Articles of Organization or By-Laws of the Company.
25
<PAGE>
(xx) The Bank is not in violation of its Massachusetts stock
charter or By-Laws; the execution and delivery of this Agreement,
the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein will not
result in any violation of the provisions of the charter or
By-Laws of the Bank.
(xxi) To such counsel's knowledge, none of the subsidiaries
is in violation of its charter or By-Laws; to such counsel's
knowledge, the execution and delivery of this Agreement, the
incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein will not
result in any violation of the provisions of the charter or
By-Laws of such subsidiary.
(xxii) To such counsel's knowledge, neither the Company nor
the Bank is in violation of any directive from the Division, the
Bank Board, the FDIC or the FRB to make any material change in
the method of conducting its business, and the Company and the
Bank have conducted and are conducting their respective
businesses so as to comply in all material respect with all
applicable statutes and regulations (including, without
limitation, regulations, decisions, directives and orders of the
Division, the Bank Board, the FDIC and the FRB).
(xxiii) Neither the Company nor the Bank is required to be
registered as an investment company under the Investment Company
Act of 1940.
(xxiv) The Company and the Bank have the power and authority
to consummate the transactions contemplated by the Merger
Agreement.
(xxv) The Merger Agreement has been duly authorized,
executed and delivered by the Company and the Bank and
constitutes the valid and binding obligation of the Company and
the Bank enforceable in accordance with its terms subject to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, whether applied
in a court of law or a court of equity.
(xxvi) To such counsel's knowledge, all corporate acts and
other proceedings required to be taken by or on the part of the
Company and the Bank to consummate the transactions contemplated
by the Merger Agreement have been properly taken; neither the
execution and delivery of the Merger Agreement, nor the
consummation of the transactions contemplated thereby, with and
without the giving of notice or the lapse of time, or both, will
violate any provision of the Articles, Charter or Bylaws of the
Company and the Bank.
(xxvii) Except as disclosed in such opinion, to such
counsel's knowledge, there are no actions, suits, proceedings or
investigations (public
26
<PAGE>
or private) of any nature pending or threatened that challenge
the validity or propriety of the transactions contemplated by the
Merger Agreement or which seek or threaten to restrain, enjoin or
prohibit or to obtain substantial damages in connection with the
consummation of such transactions.
(xxviii) All regulatory and governmental approvals and
consents which are necessary to be obtained by the Company and
the Bank and its subsidiaries to permit the execution, delivery
and performance of the Merger Agreement have been obtained.
(xxix) All conditions precedent to consummation of the
Merger have been satisfied or waived, including but not limited
to those referenced in the Merger Agreement other than the
delivery of the Exchange Shares, all statutory waiting periods
with respect to all regulatory and governmental approvals of the
Acquisition have expired and there are no facts or circumstances
which would preclude the consummation of the Merger immediately
after determination of the Exchange Ratio.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
Commonwealth of Massachusetts or the United States, to the extent such counsel
deems proper and specifies in such opinion, upon the opinion of other counsel of
good standing (providing that such counsel states that the Selling Agents and
its counsel are justified in relying upon such specified opinion or opinions),
and (B) as to matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and the Bank and public
officials; provided copies of any such opinion(s) or certificates are delivered
to the Selling Agents together with the opinion to be rendered hereunder by such
counsel.
(2) The favorable opinion, dated as of the Closing Time, of Housley,
Kantarian & Bronstein, counsel to Sandwich Bancorp and Sandwich Bank, concerning
the following matters:
(i) Sandwich Bancorp is a corporation duly organized, validly
existing and in good standing under the laws of the State of ______,
and Sandwich Bank is a Massachusetts chartered cooperative bank duly
organized, validly existing and in good standing under the laws of the
Massachusetts.
(ii) Sandwich Bancorp and Sandwich Bank have the power and
authority to carry on their business as described in the Prospectus
and to consummate the transactions contemplated by the Merger
Agreement.
(iii) The Merger Agreement has been duly authorized and approved
by Sandwich Bancorp and the Merger Agreement and the transactions
contemplated thereby have been approved by the requisite vote of
Sandwich Bancorp's shareholders and duly authorized, executed and
delivered by Sandwich Bancorp and the Merger Agreement constitutes the
valid and binding obligation of Sandwich Bancorp enforceable in
accordance with its terms subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights and remedies generally
and
27
<PAGE>
subject, as to enforceability, to general principles of equity,
whether applied in a court of law or a court of equity.
(iv) To such counsel's knowledge, all acts and other proceedings
required to be taken by or on the part of Sandwich Bancorp, including
the adoption of the Merger Agreement by the shareholders of Sandwich
Bancorp, and the necessary approvals, consents, authorizations or
notifications required to be taken to consummate the transactions
contemplated by the Merger Agreement, have been properly taken or
obtained; neither the execution and delivery of the Merger Agreement
nor the consummation of the transactions contemplated hereby and
thereby, with or without the giving of notice or the lapse of time, or
both, will (i) violate any provision of the Articles of Incorporation,
Charter or Bylaws; or (ii) to the knowledge of such counsel, violate,
conflict with, result in the material breach or termination of,
constitute a material default under, accelerate the performance
required by, or result in the creation of any material lien, charge or
encumbrance upon any of the properties or assets of Sandwich Bancorp
and Sandwich Bank pursuant to any indenture, mortgage, deed of trust,
or other agreement or instrument to which Sandwich Bancorp and
Sandwich Bank are a party or by which it or any of their properties or
assets may be bound, or violate any statute, rule or regulation
applicable to Sandwich Bancorp and Sandwich Bank, which would have a
material adverse effect on the financial condition, assets,
liabilities, or business of Sandwich Bancorp and Sandwich Bank; to the
knowledge of such counsel, no consent, approval, authorization, order,
registration or qualification of or with any court, regulatory
authority or other governmental body other than as specifically
contemplated by the Merger Agreement is required for the consummation
by Sandwich Bancorp and Sandwich Bank of the transactions contemplated
by the Merger Agreement.
(v) To such counsel's knowledge, there are no actions, suits,
proceedings, or investigations of any nature pending or threatened
that challenge the validity or legality of the transactions
contemplated by the Merger Agreement which seek or threaten to
restrain, enjoin or prohibit (or obtain substantial damages in
connection with) the consummation of such transactions.
(vi) To such counsel's knowledge, there is no litigation,
appraisal or other proceeding or governmental investigation pending or
threatened against or relating to the business or property of Sandwich
Bancorp or Sandwich Bank which would have a materially adverse effect
on the consolidated financial condition of Sandwich Bancorp, or any
legal impediment to the continued operation of the properties and
business of Sandwich Bancorp and Sandwich Bank in the ordinary course
after the consummation of the transactions contemplated by the Merger
Agreement.
(vii) All conditions precedent to consummation of the Merger have
been satisfied, including but not limited to those referenced in
Article ___ of the Merger Agreement, all statutory waiting periods
with respect to all regulatory and governmental approvals of the
Merger have expired and there are no facts or
28
<PAGE>
circumstances which would preclude the immediate consummation of the
Merger.
(3) The letter of Foley Hoag addressed to the Selling Agents, dated the
Closing Date, in form and substance to the effect that:
During the preparation of the Conversion Applications, the Registration
Statement and the Prospectus, such counsel participated in conferences with
management of and the independent certified public accountants for the Company
and the Bank. Based upon such conferences and such review of corporate records
of the Company and the Bank as such counsel conducted in connection with the
preparation of the Registration Statement and Conversion Applications, nothing
has come to their attention that would lead them to believe that any Conversion
Application, the Registration Statement, the Prospectus or any amendment or
supplement thereto (other than financial statements, stock valuation information
and other financial and statistical data included therein, as to which such
counsel need express no view), contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(4) The favorable opinion, dated as of the Closing Date, of Luse Lehman
Gorman Pomerenk & Schick, P.C, counsel for the Selling Agents, with respect to
such matters as the Selling Agents may reasonably require. Such opinion may rely
upon certificates of officers and directors of the Company and the Bank
delivered pursuant hereto or as such counsel shall reasonably request.
(c) At the Closing Date, the Selling Agents shall receive a
certificate of the Chief Executive Officer and the Chief Financial Officer
of the Company and of the Chief Executive Officer and Chief Financial
Officer of the Bank, dated the Closing Date, to the effect that: (i) since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has been no material adverse change in
the financial condition or in the net income, capital, properties, affairs
or prospects of the Company and the Bank taken as a whole, whether or not
arising in the ordinary course of business; (ii) the representations and
warranties in Section 4 of this Agreement are true and correct with the
same force and effect as though expressly made at and as of the Closing
Date; (iii) the Company and the Bank have complied with all agreements and
satisfied all conditions on their part to be performed or satisfied at or
prior to the Closing Date and will comply with all obligations to be
satisfied by them after the Conversion; (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been initiated or threatened by the
Commission or any state securities or Blue Sky authority; and (v) no order
suspending the Offering, the Conversion or the effectiveness of the
Prospectus has been issued and no proceedings for that purpose have been
issued and no proceedings for that purpose have been initiated or
threatened by the Division, the Bank Board, the FDIC or the FRB.
(d) Prior to and at the Closing Date: (i) there shall have been no
material adverse change in the financial condition or in the net income,
affairs or prospects of the Company or the Bank taken as a whole since the
respective dates as of which information is given in the Prospectus, except
as referred to therein; (ii) there shall have been no material transaction
entered into by the Company or the Bank taken as a whole since the latest
dates as of which the financial condition of
29
<PAGE>
the Company and the Bank is set forth in the Prospectus, other than
transactions referred to or contemplated therein; (iii) neither the Company
nor the Bank shall have received from the Division, the Bank Board, the
FDIC or the FRB any direction (oral or written) to make any material change
in the method of conducting its business with which it has not complied
(which direction, if any, shall have been disclosed to the Selling Agents)
or which would materially and adversely affect its business, operations,
financial condition or net income; (iv) neither the Company nor the Bank
shall have been in default (nor shall an event have occurred which, with
notice or lapse of time or both, would constitute a default) under any
provision of any agreement or instrument relating to any outstanding
indebtedness; (v) no action, suit or proceeding, at law or in equity or
before or by any federal or state commission, board or other administrative
agency, shall be pending or, to the knowledge of the Company or the Bank,
threatened against the Company or the Bank or affecting any of their
respective properties wherein an unfavorable decision, ruling or finding
would materially and adversely affect the business, operations, financial
condition or net income of the Company and the Bank taken as a whole; and
(vi) the Shares shall have been qualified or registered for offering and
sale under the securities or Blue Sky laws of the jurisdictions set forth
in the Blue Sky Survey of __________.
(e) (1)Concurrently with the execution of this Agreement, the Selling
Agents, the Company and the Bank shall receive a letter from Arthur
Anderson dated the date hereof and addressed to the Selling Agents: (i)
confirming that Arthur Anderson is a firm of independent certified public
accountants with respect to the Company and the Bank within the meaning of
the 1933 Act and the 1933 Act Regulations and the Code of Ethics of the
American Institute of Certified Public Accountants and no information
concerning its relationship with or interests in the Bank or the Company is
required to be disclosed in the Prospectus, and stating in effect that in
its opinion the consolidated financial statements of the Company included
in the Prospectus and covered by its opinion included therein comply as to
form in all material respects with the applicable accounting requirements
of the 1933 Act, the 1934 Act, the 1933 Act Regulations, the 1934 Act
Regulations and generally accepted accounting principles; (ii) stating in
effect that, on the basis of certain agreed upon procedures (but not an
examination in accordance with generally accepted auditing standards)
consisting of a reading of the latest available unaudited interim
consolidated financial statements of the Company prepared by the Company, a
reading of the minutes of the meetings of the Board of Trustees and
corporators of the Company and Board of Directors of the Bank and
consultations with officers of the Company responsible for financial and
accounting matters, nothing has come to its attention which causes it to
believe that: (A) the unaudited consolidated financial statements of the
Company included in the Prospectus do not comply as to form in all material
respects with applicable accounting requirements; (B) such unaudited
consolidated financial statements are not in conformity with generally
accepted accounting principles applied on a basis substantially consistent
with that of the audited consolidated financial statements included in the
Prospectus; (C) during the period from the date of the latest audited
consolidated financial statements included in the Prospectus to a specified
date not more than five business days prior to the date hereof, there was
any material increase in borrowings by the Company or the Bank; or (D)
there was any material decrease in retained earnings of the Company at the
date of such letter as compared with amounts shown in the latest audited
consolidated balance sheet included in the Prospectus or any material
decrease in net income or net interest income of the Company for the number
of full months commencing immediately after the period covered by the
latest audited consolidated income statement included in the Prospectus and
ended on the latest month end prior to the date of the Prospectus as
compared to the corresponding period in the preceding year; and (iii)
stating that, in
30
<PAGE>
addition to the examination referred to in its opinion included in the
Prospectus and the performance of the procedures referred to in clause (ii)
of this paragraph (e), it has compared with the general accounting records
of the Company's and/or the Bank's, as applicable, accounting system and
other data prepared by the Company and/or the Bank, as applicable, directly
from such accounting records, to the extent specified in such letter, such
amounts and/or percentages set forth in the Prospectus as the Selling
Agents may reasonably request; and they have found such amounts and
percentages to be in agreement therewith (subject to rounding).
(2)Concurrently with the execution of this Agreement, the Selling
Agents, the Company and the Bank shall receive a letter from Peat Marwick
dated the date hereof and addressed to the Selling Agents: (i) confirming
that Peat Marwick is a firm of independent certified public accountants
with respect to Sandwich Bancorp and Sandwich Bank within the meaning of
the 1933 Act and the 1933 Act Regulations and the Code of Ethics of the
American Institute of Certified Public Accountants and no information
concerning its relationship with or interests in Sandwich Bank or Sandwich
Bancorp is required to be disclosed in the Prospectus, and stating in
effect that in its opinion the consolidated financial statements of
Sandwich Bancorp included in the Prospectus and covered by its opinion
included therein comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act, the 1934 Act, the 1933
Act Regulations, the 1934 Act Regulations and generally accepted accounting
principles; (ii) stating in effect that, on the basis of certain agreed
upon procedures (but not an examination in accordance with generally
accepted auditing standards) consisting of a reading of the latest
available unaudited interim consolidated financial statements of Sandwich
Bancorp prepared by Sandwich Bancorp, a reading of the minutes of the
meetings of the Board of Directors and stockholders of Sandwich Bancorp and
consultations with officers of Sandwich Bancorp responsible for financial
and accounting matters, nothing has come to its attention which causes it
to believe that: (A) the unaudited consolidated financial statements of
Sandwich Bancorp included in the Prospectus do not comply as to form in all
material respects with applicable accounting requirements; (B) such
unaudited consolidated financial statements are not in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited consolidated financial statements
included in the Prospectus; (C) during the period from the date of the
latest audited consolidated financial statements included in the Prospectus
to a specified date not more than five business days prior to the date
hereof, there was any material increase in borrowings by Sandwich Bancorp
or Sandwich Bank; or (D) there was any material decrease in retained
earnings of Sandwich Bancorp at the date of such letter as compared with
amounts shown in the latest audited consolidated balance sheet included in
the Prospectus or any material decrease in net income or net interest
income of Sandwich Bancorp for the number of full months commencing
immediately after the period covered by the latest audited consolidated
income statement included in the Prospectus and ended on the latest month
end prior to the date of the Prospectus as compared to the corresponding
period in the preceding year; and (iii) stating that, in addition to the
examination referred to in its opinion included in the Prospectus and the
performance of the procedures referred to in clause (ii) of this paragraph
(e), it has compared with the general accounting records of Sandwich
Bancorp and/or Sandwich Bank, as applicable, accounting system and other
data prepared by Sandwich Bancorp and/or Sandwich Bank, as applicable,
directly from such accounting records, to the extent specified in such
letter, such amounts and/or percentages set forth in the Prospectus as the
Selling Agents may reasonably request; and they have found such amounts and
percentages to be in agreement therewith (subject to rounding).
31
<PAGE>
(f) At the Closing Date, the Selling Agents shall receive a letter
from Arthur Anderson and Peat Marwick, dated the Closing Date, addressed to
the Selling Agents, confirming the statements made by them in the letter
delivered by it pursuant to paragraph (e) of this Section 9, the "specified
date" referred to in clause (ii) (C) thereof to be a date specified in such
letter, which shall not be more than five business days prior to the
Closing Date.
(g) At the Closing Date, the Selling Agents shall have received a
letter from RP Financial, dated as of the Closing Date, confirming the
Independent Valuation.
(h) At the Closing Date, counsel to the Selling Agents shall have been
furnished with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the sale of the Shares as
herein contemplated and related proceedings or in order to evidence the
accuracy or completeness of any of the representations and warranties, or
the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company or the Bank in connection with the
Conversion and the sale of the Shares as herein contemplated shall be
satisfactory in form and substance to the Selling Agents and counsel to the
Selling Agents.
(i) The Company and the Bank shall not have sustained since the date
of the latest audited consolidated financial statements included in the
Registration Statement and Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, other than as set forth or contemplated in the
Registration Statement, which is in the judgment of the Selling Agents
sufficiently material and adverse as to make it impracticable or
inadvisable to proceed with the Offering or the delivery of the Shares on
the terms and in the manner contemplated in the Prospectus.
(j) Subsequent to the date hereof, there shall not have occurred any
of the following: (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange or American Stock Exchange or in
the over-the-counter market, or quotations halted generally on the Nasdaq
Stock Market, or minimum or maximum prices for trading fixed, or maximum
ranges for prices for securities required by either of such exchanges or
the NASD or by order of the Commission or any other governmental authority;
(ii) a general moratorium on the operation of commercial banks, federal or
state savings and loan associations or savings banks in Massachusetts or a
general moratorium on the withdrawal of deposits from commercial banks,
federal or state savings and loan associations or savings banks in
Massachusetts declared by either federal or Massachusetts authorities;
(iii) the engagement by the United States in hostilities which have
resulted in the declaration, on or after the date hereof, a national
emergency or war; or (iv) a material decline in the price of equity or debt
securities, if the effect of such a decline, in the judgment or the Selling
Agents, makes it impracticable or inadvisable to proceed with the Offering
or the delivery of the Shares on the terms and in the manner contemplated
in the Prospectus.
If any of the conditions specified in this Section 9 shall not have been
fulfilled when and as required by this Agreement, or by ________, 1998, this
Agreement and all of the Selling Agents' obligations hereunder may be canceled
by the Selling Agents by notifying the Bank of such cancellation in writing or
by telegram at any time at or prior to the Closing Date, and any such
cancellation shall be without liability of any party to any other party except
as otherwise provided in Sections 1, 6, 7 and 8 hereof.
32
<PAGE>
Notwithstanding the above, if this Agreement is canceled pursuant to this
paragraph, the Bank and the Company jointly and severally agree to reimburse the
Selling Agents for all of the Selling Agents' out-of-pocket expenses reasonably
incurred by the Selling Agents, including any legal fees (and out-of-pocket
expenses) to be paid to the Selling Agents' counsel, subject to the limits
expressed in Section 6 hereof, and an advisory and administrative services fee
of $______ in connection with the preparation of the Registration Statement and
the Prospectus and in contemplation of the proposed Offering.
SECTION 10. Termination.
------------
(a) In the event the Company fails to sell the minimum number of
Shares in the Offering as set forth in the Prospectus and does not modify
the Offering within the period specified in, and in accordance with the
provisions of, the Plan or as required by the Conversion Regulations, this
Agreement shall terminate upon refund by the Company to each person who has
subscribed for or ordered any of the Shares the full amount which it may
have received from such person, together with interest, as provided in the
Prospectus, and no party to this Agreement shall have any obligation to the
other hereunder, except for payment by the Bank and/or the Company as set
forth in Sections 1, 6, 7 and 8 hereof.
(b) This Agreement may be terminated by the Selling Agents, with
respect to the Selling Agents' obligations hereunder, by notifying the
Company at any time or prior to the Closing Date, if any of the conditions
specified in Section 9 hereof shall not have been fulfilled when and as
required by this Agreement or if the Conversion has not been completed by
______, 1998.
SECTION 11. Survival. The respective indemnities, agreements,
---------
representations, warranties and other statements of the Bank, the Company and
the Selling Agents, as set forth in this Agreement, shall remain in full force
and effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of the Selling Agents or any of the Selling
Agents' officers or directors or any person controlling the Selling Agents, or
the Bank or the Company, or any of their respective officers or directors or any
person controlling the Bank or the Company, and shall survive termination of
this Agreement and receipt or delivery of any payment for the Shares.
SECTION 12. Miscellaneous. Notices hereunder, except as otherwise provided
--------------
herein, shall be given in writing or by telegraph, addressed (a) to Ryan, Beck
at 220 South Orange Avenue, Livingston, New Jersey 07039-5817 (Attention: Ben A.
Plotkin, President), and to McConnell Budd at 365 South Street, Morristown, New
Jersey 07960 (attention: William J. Downes, Managing Director), with a copy to
Luse Lehman Gorman Pomerenk & Schick, P.C., 5335 Wisconsin Avenue, N.W., Suite
400, Washington, D.C. 20015 (Attention: Robert Lipsher, Esq.). and (b) to the
Bank and the Company at the Bank's principal office (Attention: Kevin G.
Champagne, President and Chief Executive Officer), with a copy to Foley, Hoag
and Eliot, LLP, One Post Office Square, Boston, Massachusetts 02109 (Attention:
Carol Hempfling Pratt, Esq.).
This Agreement is made solely for the benefit of and will be binding upon
the parties hereto and their respective successors and the directors, officers
and controlling persons referred to in Section 7 hereof, and no other person
will have any right or obligation hereunder. The term "successors" shall not
include any purchaser of any of the Shares.
33
<PAGE>
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
Time shall be of the essence of this Agreement.
This Agreement may be signed in various counterparts which together will
constitute one agreement.
If the foregoing correctly sets forth the arrangement among the Company,
the Bank and the Selling Agents, please indicate acceptance thereof in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement.
SEACOAST FINANCIAL SERVICES CORPORATION COMPASS BANK FOR SAVINGS
By: By:
---------------------------------------- -----------------------------
Kevin G. Champagne, President Kevin G. Champagne, President
and Chief Executive Officer and Chief Executive Officer
Accepted as of the date first above written.
RYAN, BECK & CO., INC. MCCONNELL, BUDD & DOWNES, INC.
By: By:
---------------------------------------- -----------------------------
Ben A. Plotkin, President William J. Downes,
Managing Director
34
<PAGE>
EXHIBIT B
SEACOAST FINANCIAL SERVICES CORPORATION
21,160,000 (Anticipated Maximum) Shares of Common Stock
(par value $.01 per share)
Selected Dealers' Agreement
---------------------------
_________________, 1998
We have agreed to assist Seacoast Financial Services Corporation (the
"Company"), and Compass Savings Bank (the "Bank") in connection with the offer
and sale of up to___________ shares of the Company's common stock, $.01 par
value per share (the "Common Stock"), in connection with the mutual holding
company reorganization (the "Reorganization") of the Company. The total number
of shares of Common Stock to be offered may be increased to allow for the sale
of up to an additional 15% of the shares (or a total of 21,160,000 shares). The
price per share will be fixed at $10.00. The Common Stock, the number of shares
to be issued and certain of the terms on which they are being offered are more
fully described in the enclosed prospectus dated _____________, 1998 (the
"Prospectus").
In connection with the Reorganization, the Company has offered the Common
Stock in a Subscription Offering (to the Bank's Eligible Account Holders, the
Bank's Supplemental Eligible Account Holders , the Bank's Employee Stock
Ownership Plan, and the Bank's employees, officers and trustees) and in a
concurrent Community Offering to certain members of the general public
(capitalized terms not otherwise defined herein are as defined in the
Prospectus). The Common Stock is also being offered in accordance with the
Company's Plan of Reorganization From a Mutual Holding Company to a Stock
Holding Company (the "Plan") by a selling group of broker dealers in a
Syndicated Community Offering.
We are offering the selected dealers (of which you are one) the opportunity
to participate in the solicitation of offers to buy the Common Stock and we will
use our best efforts to cause the Company to pay you directly a fee in the
amount of 6.0% of the dollar amount of the Common Stock sold on behalf of the
Company by you. The dollar amount of shares sold on behalf of the Company by you
shall be evidenced (1) on the Stock Subscription Agreements supplied by the
Company executed by subscribers or executed by your firm on behalf of
subscribers, pursuant to authority previously given, or (2) on a summary record
as may be prepared by your firm (the "Purchase Record"). Subscribers who elect
to use Subscription Agreements must make checks payable to "The 1855 Bancorp".
It is understood that (i) Stock Subscription Agreements or the Purchase
Record must bear the authorized designation of your firm; (ii) Stock
Subscription Agreements or the Purchase Record executed by you shall indicate
the true and correct beneficial subscribers for the indicated shares; and
B-1
<PAGE>
(iii) payment of your fee for the shares sold on behalf of the Company by you
will be made directly by the Company.
Each Stock Subscription Agreement or Purchase Record must precisely set
forth the Taxpayer Identification Number, number of shares, county, and state of
residence of the beneficial subscriber for each order and the name in which each
certificate for Common Stock should be issued and delivered.
Each order form for the purchase of Common Stock must set forth the
----
identity and address of each person to whom the certificates for such Common
- -------- -------
Stock should be issued and delivered. Such order form should clearly identify
your firm. You shall instruct any subscriber who elects to send his or her order
form to you to make any accompanying check payable to "The 1855 Bancorp".
This offer is made subject to the terms and conditions herein set forth and
is made only to selected dealers who are (i) members in good standing of the
National Association of Securities Dealers, Inc. ("NASD"), who are to comply
with all applicable rules of the NASD, including, without limitation, the NASD's
Interpretation With Respect to Free-Riding and Withholding and Section 24 of
Article III of the NASD's Rules of Fair Practice, or (ii) foreign dealers not
eligible for membership in the NASD who agree (A) not to sell any Common Stock
within the United States, its territories or possessions or to persons who are
citizens thereof or residents therein and (B) in making other sales to comply
with the NASD Interpretation referred to above, Sections 8, 24 and 36 of the
above-referenced Article III and Section 25 of such Article III as if they were
NASD members, and Section 25 of such Article III as it applies to non-member
brokers or dealers in a foreign country.
Orders for Common Stock will be strictly subject to confirmation and we,
acting on behalf of the Company, reserve the right in our unfettered discretion
to reject any order in whole or in part, to accept or reject orders in the order
of their receipt or otherwise and to allot. Neither you nor any other person is
authorized by the Company or by us to give any information or make any
representations other than those contained in the Prospectus in connection with
the sale of any of the Common Stock. No selected dealer is authorized to act as
agent for us when soliciting offers to buy the Common Stock from the public or
otherwise. No selected dealer shall engage in any stabilizing (as defined in
Rule 10b-7 promulgated under the Securities Exchange Act of 1934) (the "1934
Act") with respect to the Common Stock during the Reorganization.
We and each selected dealer assisting in selling the Common Stock pursuant
hereto agree to comply with the applicable requirements of the 1934 Act and
applicable state rules and regulations. In addition, we and each selected dealer
confirm that the Securities and Exchange Commission interprets Rule 15c2-8
promulgated under the 1934 Act as requiring that a Prospectus be supplied to
each person who is expected to receive a confirmation of sale 48 hours prior to
delivery of such person's order form.
We and each selected dealer further agree to the extent that our customers'
desire to pay for shares with funds held by or to be deposited with us, in
accordance with the interpretation of the Securities and Exchange Commission of
Rule 15c2-4 promulgated under the 1934 Act, either (a) upon receipt of an
executed Subscription Agreement or direction to execute a Subscription Agreement
on behalf of a customer to forward the offering price of the Common Stock
ordered on or before 12 noon, Eastern time, of the next business day following
receipt or execution of a Subscription Agreement by us to the Company for
deposit in a segregated account or (b) to solicit indications of interest, in
which event (i) we will subsequently contact any customer indicating interest to
confirm the interest and give
B-2
<PAGE>
instructions to execute and return a Subscription Agreement or to receive
authorization to execute the Subscription Agreement on the customer's behalf,
(ii) we will mail acknowledgments of receipt of orders to each customer
confirming interest on the business day following such confirmation, (iii) we
will debit accounts of such customers on the third business day (the "Debit
Date") following receipt of the confirmation referred to in (i) and (iv) we will
forward completed Subscription Agreements together with such funds to the
Company on or before 12 noon, Eastern time, on the next business day following
the Debit Date for deposit in a segregated account. We and each selected dealer
acknowledge that if the procedure in (b) is adopted, our customers' funds are
not required to be in their accounts until the Debit Date.
Unless earlier terminated by us, this Agreement shall terminate upon the
Closing Date of the Reorganization. We may terminate this Agreement or any
provision hereof at any time by written or telegraphic notice to you. Of course,
our obligations hereunder are subject to the successful completion of the
Reorganization.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of shares of
Common Stock sold on behalf of the Company by you under this Agreement.
We shall have full authority to take such actions as we may deem advisable
in respect of all matters pertaining to the offering. We shall be under no
liability to you except for lack of good faith and for obligations expressly
assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we
believe the Common Stock has been qualified for sale under, or is exempt from
the requirements of, the respective blue sky laws of such states, but we assume
no responsibility or obligation as to your rights to sell Common Stock in any
state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned, or telegraphed to you at the address to which this Agreement
is mailed.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.
Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at Ryan, Beck & Co., Inc.,
220 South Orange Avenue, Livingston, New Jersey 07039-5817. The enclosed
duplicate copy will evidence the agreement between us.
RYAN, BECK & CO., INC.
By:___________________________________
Ben A. Plotkin, President
CONFIRMED AS OF:
_______________________________, 1998
_________________________________________
(Name of Dealer)
By:______________________________________
Its:_____________________________________
B-3
3
<PAGE>
EXHIBIT C
Ryan, Beck is registered in all U.S. jurisdictions except Arkansas.
C-1
Exhibit 8
[FOLEY, HOAG & ELIOT LLP LETTERHEAD]
September 14, 1998
SEACOAST FINANCIAL SERVICES CORPORATION
791 Purchase Street
New Bedford, Massachusetts 02740-2101
Ladies and Gentlemen:
We have acted as counsel to Seacoast Financial Services Corporation
("MHC"), a Massachusetts mutual holding company, in connection with the proposed
conversion (the "Conversion") of MHC from mutual to stock form of ownership, in
accordance with The 1855 Bancorp Plan of Conversion adopted by MHC's Board of
Trustees on April 23, 1998 (the "Plan").
We have examined the law and such papers, including the Plan, as deemed
necessary to render these opinions. As to questions of fact material to our
opinions we have relied upon representations set forth in the Plan (including
the Exhibits), and such other documents pertaining to the transactions
contemplated by the Plan as we have deemed appropriate and necessary. As to
questions of fact material to our opinions, we have relied upon representations
of MHC contained in a letter of even date addressed to us and attached to this
letter (the "Letter of Representation"), without undertaking to verify the same
by independent investigation.
In our examination we have assumed that (i) the transactions
contemplated by the Plan will be consummated in accordance with the terms of the
Plan; (ii) each entity that is a party to any of the documents (the "Documents")
described in the preceding paragraphs has been duly organized under the laws of
its state or country of organization, is validly existing and in good standing
under such laws, and is duly qualified and in good standing in each jurisdiction
in which it is required to be qualified to engage in the transactions
contemplated by the Documents; (iii) each such entity has full power, authority,
capacity and legal right to enter into and perform the terms of the Documents
and the transactions contemplated thereby; (iv) the copies or originals of the
Documents furnished to us are authentic (if originals) or accurate (if copies),
those that are contracts or instruments are enforceable and effective in
accordance with their terms against all parties thereto, and all signatures are
genuine; (v) any representations made in the Documents are, and will continue to
be, true and complete, and no default exists under any of the Documents; (vi)
the business and affairs of each of the entities that is a party to any of the
Documents will be conducted in accordance with the Documents and all relevant
laws; (vii) no actions will be taken, no change in any of the Documents will
occur, and no other events will occur, after the date hereof, that would have
the effect of altering the facts, Documents or assumptions upon which this
opinion is based; and (viii) the business reasons for the Conversion will
constitute a valid
<PAGE>
business purpose, within the meaning of Treasury Regulation section 1.368-1(b)
and (c).
The opinions rendered herein are based upon the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Department
proposed, temporary and final regulations, judicial decisions, and rulings and
administrative interpretations of the Internal Revenue Service (the "IRS"), as
each of the foregoing exists on the date hereof. The opinions rendered herein
are not binding on the IRS or a court of law, and no assurance can be given that
legislative or administrative action or judicial decisions that differ from the
opinion rendered below will not be forthcoming. Any such differences could be
retroactive to transactions or business operations prior to such action or
decisions.
We express no opinion as to the federal income tax consequences of the
Conversion other than those described below, if any; as to the federal income
tax consequences of any transaction other than the Conversion; or as to any
state, local or foreign income or other tax consequences with respect to the
Conversion.
Based on the foregoing, we are of opinion, as of the date hereof and
under existing law, that the Conversion will constitute a reorganization under
Section 368(a) of the Code.
We undertake no responsibility to update or supplement our opinion.
This letter is not to be used, circulated, quoted or otherwise referred to for
any other purpose without our prior written consent. We hereby consent, however,
to the filing with the Securities and Exchange Commission of this opinion as an
exhibit to the registration statement on Form S-1 filed by Seacoast Financial
Services Corporation with the Securities and Exchange Commission. In giving such
consent, we do not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933. Very truly
yours,
FOLEY, HOAG & ELIOT LLP
By: /s/ Richard Schaul-Yoder
----------------------
A Partner
Exhibit 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use in this
registration statement of our report dated November 25, 1997, (except with
respect to the matters discussed in Note 16, as to which the date is March 31,
1998), included herein and to all references to our Firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
September 10, 1998
Exhibit 23.2
[LETTERHEAD OF RP FINANCIAL, LC.]
September 11, 1998
Board of Directors
The 1855 Bancorp
791 Purchase Street
New Bedford, Massachusetts 02740-2101
Gentlemen:
We hereby consent to the use of our firm's name incorporated by reference
in the Registration Statement on Form S-1 for Seacoast Financial Services
Corporation with the Securities and Exchange Commission in order to effect
Seacoast Financial's conversion from a mutual holding company form to a stock
holding company form and related offering for sale of shares of its common
stock. We also hereby consent to the inclusion of, summary of and references to
our Appraisal Report and our statement concerning subscription rights prepared
by us and incorporated by reference in such filing.
Respectfully submitted,
RP FINANCIAL, LC.
/s/ James P. Hennessey
James P. Hennessey
Senior Vice President
Exhibit 23.4
Consent of Independent Accountants
We consent to the incorporation by reference in the Registration Statement to be
filed on Form S-1 of Seacoast Financial Services Corporation of our report dated
January 26, 1998, except as to Note 17, which is as of March 23, 1998, relating
to the consolidated balance sheets of Sandwich Bancorp, Inc. and subsidiaries as
of December 31, 1997 and 1996 and the related consolidated statements of
operations, changes in stockholders equity and cash flows for each of the years
in the three-year period ended December 31, 1997, which report appears in the
December 31, 1997 annual report on Form 10-K of Sandwich Bancorp, Inc. We also
consent to the reference to our firm under the heading "Experts" in the
Registration Statement.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
August 13, 1998
Exhibit 23.5
[LETTERHEAD OF T.C. EDWARDS & CO., P.C.]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the use in this registration statement of our independent
auditor's report dated May 19, 1998 on the Statement of Net Assets Attributable
to 401(k) Plan Participant Balance of the Savings Banks Employees Retirement
Association 401(k) Plan as adopted by Compass Bank for Savings as of October 31,
1997 and the related Statement of Changes in Net Assets Attributed to 401(k)
Plan Participant Balances for the year then ended.
/s/ T.C. EDWARDS & CO., P.C.
Woburn, Massachusetts
September 11, 1998
- -------------------------------------------------------------------------------
CONVERSION VALUATION APPRAISAL REPORT
SEACOAST FINANCIAL SERVICES CORPORATION
PROPOSED HOLDING COMPANY FOR
COMPASS BANK FOR SAVINGS
New Bedford, Massachusetts
Dated As Of:
May 8, 1998
- -------------------------------------------------------------------------------
Prepared By:
RP Financial, LC.
1700 North Moore Street
Suite 2210
Arlington, Virginia 22209
<PAGE>
RP FINANCIAL, LC.
- ----------------------------------------
Financial Services Industry Consultants
May 8, 1998
Board of Trustees
The 1855 Bancorp and
Board of Directors
Compass Bank for Savings
791 Purchase Street
New Bedford, Massachusetts 02740-6300
Gentlemen:
At your request, we have completed and hereby provide an independent
appraisal ("Appraisal") of the estimated pro forma market value of the common
stock which is to be issued in connection with the mutual-to-stock conversion
transaction and subsequent acquisition, as described below.
This Appraisal has been prepared in accordance with the "Guidelines for
Appraisal Reports for the Valuation of Savings and Loan Associations Converting
from Mutual to Stock Form of Organization" of the Office of Thrift Supervision
("OTS"), including the most recent revisions as of October 21, 1994, and
applicable interpretations thereof. Such Valuation Guidelines are relied upon by
the Massachusetts Division of Banks (the "Division"), the Federal Deposit
Insurance Corporation (FDIC) and the Federal Reserve Board ("FRB") in evaluating
conversion appraisals in the absence of such specific written valuation
guidelines separately issued by the respective agencies.
Description of Reorganization
- -----------------------------
We understand that the Board of Trustees of The 1855 Bancorp, a
Massachusetts-chartered mutual holding company (the "MHC"), and the Board of
Directors of Compass Bank for Savings ("Compass" or the "Bank"), a wholly-owned
state-chartered state savings bank subsidiary of the MHC, have adopted a Plan of
Conversion, incorporated herein by reference, in which the MHC will be combined
with the Bank simultaneously with the MHC's conversion to stock form and
reorganization as a subsidiary of a newly-formed stock corporation, to be known
as "Seacoast Financial Services Corporation" ("Seacoast" or the "Company").
Seacoast will offer shares of Common Stock ("Conversion Shares") for sale in the
Subscription Offering, the concurrent Community Offering and, if necessary, in a
Syndicated Community Offering, based on the appraised value. The Conversion
Shares are first being offered in the Subscription Offering with nontransferable
subscription rights being granted to Eligible Account Holders, Supplemental
Eligible Account Holders, the ESOP, Employees, Officers, Trustees and Directors.
<PAGE>
Board of Directors
May 8, 1998
Page 2
Acquisition of Sandwich Bancorp, Inc.
- -------------------------------------
Pursuant to the Amended and Restated Affiliation and Merger Agreement
(the "Agreement"), dated March 22, 1998, The 1855 Bancorp agreed to acquire
Sandwich Bancorp, Inc., Sandwich, Massachusetts ("Sandwich Bancorp"), the bank
holding company for Sandwich Co-operative Bank, a Massachusetts-chartered
co-operative bank ("Sandwich"). Sandwich Bancorp is a Massachusetts corporation
that was organized in June 1997 to acquire all the capital stock of Sandwich
upon consummation of the reorganization of Sandwich into holding company form.
Sandwich Bancorp is a publicly-traded company whose stock is listed on the
NASDAQ National Market System under the ticker symbol "SWCB". Pursuant to the
Agreement, at the effective time of the merger, each share of common stock of
Sandwich Bancorp issued and outstanding, shall by virtue of the merger be
converted into the right to receive Seacoast common stock. The number of shares
of Seacoast common stock a Sandwich Bancorp stockholder will receive will be
determined by the application of an exchange ratio (the "Exchange Ratio" based
upon the trading price of Seacoast's common stock (the "Seacoast Trading Price")
10 days following the closing of the conversion. If the Seacoast Trading Price
is between $10.00 and $13.50, the Exchange Ratio will be between 6.4000 and
4.7407 (determined by dividing $64.00 by the Seacoast Trading Price). If the
Seacoast Trading Price is between $13.51 and $15.00, the Exchange Ratio will be
fixed at 4.7407. If the Seacoast Trading Price exceeds $15.00, the Exchange
Ratio will be less than 4.7407, (determined by dividing $71.11 by the Seacoast
Trading Price). If the Seacoast Trading Price is equal to or less than $10.00
per share, the Exchange Ratio will be 6.4000. The number of Exchange Shares
issuable in exchange for each outstanding Sandwich Bancorp stock option will be
determined by subtracting the per share exercise price of such option from the
value of the Exchange Shares receivable by Sandwich Bancorp stockholders in
exchange for each outstanding share of Sandwich Bancorp common stock, and
dividing the result by the Seacoast Trading Price. As of March 31, 1998,
Sandwich Bancorp had 1,945,756 shares of common stock issued and outstanding and
143,282 stock options outstanding, of which 103,574 shares subject to option
were exercisable (all options become fully vested upon a change of control).
Cash will be paid in lieu of fractional shares.
It is anticipated that the merger will be accounted for as a pooling of
interests and that certain financial adjustments will be made concurrent with
the merger. The transaction is expected to constitute a tax-free reorganization
under the Internal Revenue Code, so that Sandwich Bancorp shareholders who
receive Seacoast's common stock will not recognize gain or loss in connection
with the exchange.
RP Financial, LC.
- -----------------
RP Financial, LC. ("RP Financial") is a financial consulting firm
serving the financial services industry nationwide that, among other things,
specializes in financial valuations and analyses of business enterprises and
securities, including the pro forma valuation for savings institutions
converting from mutual-to-stock form. The background and experience of RP
Financial is detailed in Exhibit V-1. We believe that, except for the fee we
will receive for our appraisal and assisting in the preparation of the
post-conversion business plan, we are independent of Compass, Seacoast and
Sandwich Bancorp and the other parties engaged by Compass, Seacoast or Sandwich
Bancorp to assist in the transaction.
<PAGE>
Board of Directors
May 8, 1998
Page 3
Valuation Methodology
- ---------------------
In preparing our appraisal, we have reviewed the Application for
Approval of Conversion, including the Proxy Statement, as filed with the FDIC,
the Division and the FRB and the Form S-1 registration statement as filed with
the Securities Exchange Commission ("SEC"). We have conducted a financial
analysis of Compass that has included a review of its audited financial
information for the last five fiscal years and more recent unaudited information
and internal financial reports and due diligence related discussions with
Compass' management; Arthur Andersen LLP, Compass' independent auditor; Foley,
Hoag & Eliot LLP, Compass' conversion counsel; and Ryan Beck & Co., Inc., the
financial and marketing advisor in connection with Seacoast's stock offering.
Additionally, we have conducted an analysis of Sandwich Bancorp, including a
review of financial documents and discussions with Sandwich Bancorp's
management. All conclusions set forth in the appraisal were reached
independently from such discussions. In addition, where appropriate, we have
considered information based on other available published sources that we
believe are reliable. While we believe the information and data gathered from
all these sources are reliable, we cannot guarantee the accuracy and
completeness of such information.
We have investigated the competitive environment within which Compass
operates and have assessed Compass' relative strengths and weaknesses,
incorporating the merger with Sandwich Bancorp. We have kept abreast of the
changing regulatory and legislative environment for financial institutions and
analyzed the potential impact on Seacoast and the industry as a whole. We have
analyzed the potential effects of the stock conversion and simultaneous merger
on Seacoast's operating characteristics and financial performance as they relate
to the pro forma market value. We have reviewed the overall conditions in the
primary market area as set forth in demographic, economic and competitive
information prepared by CACI, SNL Securities and other third party private and
governmental sources. We have compared Compass' and Seacoast's financial
performance and condition, incorporating the merger with Sandwich Bancorp, with
selected publicly-traded thrifts and thrift holding companies in accordance with
the Valuation Guidelines, as well as all publicly-traded thrifts and thrift
holding companies. We have reviewed the current conditions in the securities
markets in general and in the market for thrift stocks in particular, including
the market for existing thrift issues and the market for initial public
offerings by thrifts and thrift holding companies. We have excluded from such
analyses publicly-traded mutual holding companies and thrifts subject to
announced or rumored acquisition and/or other unusual characteristics due to
pricing distortions.
Our Appraisal is based on Compass' representation that the information
contained in the regulatory applications and additional information furnished to
us by Compass and its other advisors are truthful, accurate and complete. We did
not independently verify the financial statements and other information provided
by Compass or Sandwich Bancorp, or their respective independent auditors, legal
counsel and other authorized agents, nor did we independently value the assets
or liabilities of the MHC, Compass or Sandwich Bancorp. Our valuation was also
predicated on the merger with Sandwich Bancorp being completed in a manner
consistent with the Agreement. The pro forma valuation considers Seacoast only
as a going concern and should not be considered as an indication of the
liquidation value.
<PAGE>
Board of Directors
May 8, 1998
Page 4
Our appraised value is predicated on a continuation of the current
operating environment for Seacoast and for all thrifts and their holding
companies. Changes in the local, state and national economy, the legislative and
regulatory environment for financial institutions, the stock market, interest
rates, and other external forces (such as natural disasters or significant world
events) may occur from time to time, often with great unpredictability and may
materially impact the value of thrift stocks as a whole or Seacoast's values
alone. It is our understanding that there are no current plans for selling
control of the Seacoast following Conversion. To the extent that such factors
can be foreseen, they have been factored into our analysis.
The estimated pro forma market value is defined as the price at which
the Seacoast's Common Stock, immediately upon completion of the conversion
offering, would change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or sell and both having reasonable
knowledge of relevant facts.
Valuation Conclusion
- --------------------
It is our opinion that, as of May 8, 1998, the pro forma offering value
of Seacoast's conversion is $290 million, taking into account the potential
range of exchange ratios in the subsequent acquisition of Sandwich Bancorp as
set forth in the Merger Agreement. Accordingly, the conversion offering range of
value, based on a $10.00 per share value, is as follows:
<TABLE>
<CAPTION>
Price/
Dollar Amount Shares Share
------------- ------ -----
(000) ($)
<S> <C> <C> <C>
Minimum $246,500,000 24,650,000 $10.00
Midpoint 290,000,000 29,000,000 10.00
Maximum 333,500,000 33,500,000 10.00
Supermaximum 383,525,000 38,352,500 10.00
</TABLE>
The total market of all shares issued, including both offering shares
and shares issued in the merger, is dependent upon the trading price of Seacoast
10 days following completion of the conversion offering. The following table
reflects the pro forma market value of all shares, both conversion and merger
shares, reflecting an exchange ratio of 6.4000, reflecting a Seacoast trading
price of $10.00 per share, and 4.7407, reflecting a Seacoast trading price of
$15.00 per share, both representing collars in the exchange ratio set forth in
the Merger Agreement, based on the conversion offering valuation range.
<PAGE>
Board of Directors
May 8, 1998
Page 5
<TABLE>
<CAPTION>
6.4000 Exchange Ratio(1) 4.7407 Exchange Ratio(2)
------------------------ ------------------------
Total Total Total Total
Market Value Shares Issued Market Value Shares Issued
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Minimum $371,936,730 37,193,673 $339,600,590 33,960,059
Midpoint 415,436,730 41,543,673 383,100,590 38,310,059
Maximum 458,937,730 45,893,673 426,600,590 42,660,059
Supermaximum 508,961,730 50,896,173 476,625,590 47,662,559
</TABLE>
(1) Reflects 12,543,673 Seacoast shares issued to Sandwich Bancorp shareholders
at $10.00 per share.
(2) Reflects 9,310,059 Seacoast shares issued to Sandwich Bancorp shareholders
at $15.00 per share.
Limiting Factors and Considerations
- -----------------------------------
Our valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing shares of the
Common Stock. Moreover, because such valuation is necessarily based upon
estimates and projections of a number of matters, all of which are subject to
change from time to time, no assurance can be given that persons who purchase
shares of common stock in the Conversion will thereafter be able to buy or sell
such shares at prices related to the foregoing valuation of the estimated pro
forma market value thereof.
RP Financial's valuation was determined based on the financial
condition and operations of Compass and Sandwich Bancorp as of February 28,
1998, and March 31, 1998, respectively, the date of the financial data included
in Seacoast's prospectus, and structure of the merger as set forth in the
Agreement.
RP Financial is not a seller of securities within the meaning of any
federal and state securities laws and any report prepared by RP Financial shall
not be used as an offer or solicitation with respect to the purchase or sale of
any securities. RP Financial maintains a policy which prohibits RP Financial,
its principals or employees from purchasing stock of its client institutions.
This valuation will be updated as provided for in the conversion
regulations and guidelines. These updates will consider, among other things, any
developments or changes in Compass' and/or Sandwich Bancorp's financial
performance and condition, management policies, current conditions in the equity
markets for thrift shares and structure and pro forma impact of the merger.
These updates may also consider changes in other external factors which impact
value including, but not limited to: various changes in the legislative and
regulatory environment for financial institutions, the stock market and the
market for thrift stocks, and
<PAGE>
Board of Directors
May 8, 1998
Page 6
interest rates. Should any such new developments or changes be material, in our
opinion, to the valuation of the shares, appropriate adjustments to the
estimated pro forma market value will be made. The reasons for any such
adjustments will be explained in the update at the date of the release of the
update.
Respectfully submitted,
RP FINANCIAL, LC.
/s/ Ronald S. Riggins
Ronald S. Riggins
President
/s/ James P. Hennessey
James P. Hennessey
Senior Vice President
<PAGE>
RP Financial, LC.
TABLE OF CONTENTS
SEACOAST FINANCIAL SERVICES CORPORATION
COMPASS BANK FOR SAVINGS
<TABLE>
<CAPTION>
PAGE
DESCRIPTION NUMBER
----------- ------
<S> <C>
CHAPTER ONE OVERVIEW AND FINANCIAL ANALYSIS
- -----------
Introduction 1.1
Plan of Conversion and Holding Company Reorganization 1.2
Acquisition of Sandwich Bancorp, Inc. 1.2
Strategic Discussion 1.4
Balance Sheet Trends 1.8
Income and Expense Trends 1.14
Interest Rate Risk Management 1.18
Lending Activities and Strategy 1.19
Asset Quality 1.23
Funding Strategy 1.24
Subsidiary Activities 1.25
Year 2000 Plan 1.26
Environmental Issues 1.26
Legal Proceedings 1.26
CHAPTER TWO MARKET AREA
- -----------
Market Area Demographics 2.2
Economy 2.4
Market Area Deposit Characteristics and Competition 2.6
CHAPTER THREE PEER GROUP ANALYSIS
- -------------
Selection of Peer Group 3.1
Financial Condition 3.6
Income and Expense Trends 3.9
Loan Portfolio Composition 3.12
Credit Risk 3.12
Interest Rate Risk 3.15
Market Area and Competitive Characteristics 3.15
</TABLE>
<PAGE>
RP Financial, LC.
TABLE OF CONTENTS
SEACOAST FINANCIAL SERVICES CORPORATION
COMPASS BANK FOR SAVINGS
(continued)
<TABLE>
<CAPTION>
PAGE
DESCRIPTION NUMBER
----------- ------
<S> <C>
CHAPTER FOUR VALUATION ANALYSIS
- ------------
Introduction 4.1
Appraisal Guidelines 4.1
RP Financial Approach to the Valuation 4.1
Valuation Analysis 4.2
1. Financial Condition 4.3
2. Profitability, Growth and Viability of Earnings 4.4
3. Asset Growth 4.5
4. Primary Market Area 4.5
5. Dividends 4.6
6. Liquidity of the Shares 4.7
7. Marketing of the Issue 4.7
A. The Public Market 4.7
B. The New Issue Market 4.14
C. The Acquisition Market 4.17
8. Management 4.17
9. Effect of Government Regulation and Regulatory Reform 4.18
Summary of Adjustments 4.18
Valuation Approaches 4.18
1. Price-to-Book ("P/B") 4.21
2. Price-to-Earnings ("P/E") 4.22
3. Price-to-Assets ("P/A") 4.23
Comparison to Recent Conversions 4.23
Valuation Conclusion 4.23
</TABLE>
<PAGE>
RP Financial, LC.
LIST OF TABLES
SEACOAST FINANCIAL SERVICES CORPORATION
COMPASS BANK FOR SAVINGS
<TABLE>
<CAPTION>
TABLE
NUMBER DESCRIPTION PAGE
------ ----------- ----
<S> <C>
1.1 Historical Balance Sheets 1.9
1.2 Historical Income Statements 1.15
2.1 Summary Demographic Data 2.3
2.2 Market Area Unemployment Trends 2.6
2.3 Deposit Summary 2.7
3.1 Peer Group of Publicly-Traded Thrifts 3.3
3.2 Balance Sheet Composition and Growth Rates 3.7
3.3 Income as a Percent of Average Assets and Yields, Costs, Spreads 3.10
3.4 Loan Portfolio Composition and Related Information 3.13
3.5 Credit Risk Measures and Related Information 3.14
3.6 Interest Rate Risk Measures and Net Interest Income Volatility 3.16
4.1 Pricing Characteristics and After-Market Trends (Recent Conversions) 4.15
4.2 Market Pricing Comparatives 4.16
4.3 Public Market Pricing (6.4000 exchange ratio) 4.25
4.4 Public Market Pricing (4.7407 exchange ratio) 4.27
</TABLE>
<PAGE>
RP Financial, LC.
Page 1.1
I. OVERVIEW AND FINANCIAL ANALYSIS
Introduction
- ------------
Compass Bank for Savings ("Compass" or the "Bank") is a state-chartered
stock savings bank headquartered in New Bedford, Massachusetts (Bristol County).
Compass conducts operations out of its main office in New Bedford,
Massachusetts, and a total of 23 branch offices, including 14 in Bristol County,
5 in Dukes County (Martha's Vineyard Island) and 4 in Plymouth County, all of
which are situated in southeastern Massachusetts. Additionally, the Bank
operates two limited service offices in area high schools, and a network of 25
branches and remote automated teller machines ("ATMs"). Compass was organized in
1855 and has operated in southeastern Massachusetts since that time. The Bank is
a member of the Federal Home Loan Bank ("FHLB") system. The Bank's deposits are
insured up to the regulatory maximums by the Bank Insurance Fund ("BIF") and, as
a result of a prior acquisition, the Savings Association Insurance Fund
("SAIF"), both administered by the Federal Deposit Insurance Corporation
("FDIC").
In 1994, the Bank completed a reorganization from a mutual savings bank
to a stock savings bank concurrent with a reorganization as a
Massachusetts-chartered mutual holding company. Pursuant to the reorganization,
Compass transferred substantially all of its assets and liabilities to a
newly-formed stock savings bank in exchange for 100 percent of the stock savings
bank's common stock issued to The 1855 Bancorp ("The 1855 Bancorp" or the
"MHC"). No shares were issued publicly at the time of the reorganization. The
purpose of the reorganization into the mutual holding company form was to
facilitate the acquisition of Martha's Vineyard National Bank ("MVNB") at the
end of calendar 1994 as well as possible other future acquisitions.
Subsequently, the MHC has engaged in a very limited level of activity other than
ownership of the Bank. The MHC's principal assets consist of fixed assets,
investment in subsidiaries (primarily the Bank), and a small balance of cash.
The analysis set forth herein relates to the MHC on a consolidated basis with
Compass.
As of February 28, 1998, the MHC on a consolidated basis had $1.1
billion in assets, $951.4 million in deposits and a surplus (i.e., equity) of
$103.1 million, or 9.02 percent of total
<PAGE>
RP Financial, LC.
Page 1.2
assets. Tangible equity was $101.5 million, or 8.88 percent of total assets,
after excluding intangible assets of $1.6 million. For the twelve months ended
February 28, 1998, the MHC reported net income of $12.5 million, equal to
approximately 1.14 percent of average assets.
As described more fully herein, the MHC is converting to stock form and
shortly following the completion of the stock offering will acquire Sandwich
Bancorp, Inc. ("Sandwich Bancorp") by means of a share exchange. This conversion
valuation appraisal takes into account the pro forma impact of the Sandwich
Bancorp merger. Seacoast Financial Services Corporation ("Seacoast" or "the
Company") will be the resulting bank holding company for the merged
state-chartered stock savings bank.
Plan of Conversion and Holding Company Reorganization
- -----------------------------------------------------
Seacoast was organized in April 1998 in conjunction with the proposed
mutual-to-stock conversion of the MHC. In the course of the conversion, Seacoast
will acquire all of the capital stock that the MHC will issue upon conversion
from mutual-to-stock form. Going forward, Seacoast will own 100 percent of the
Bank's stock, and the Bank will be Seacoast's sole subsidiary. At this time, no
other major activities are contemplated for Seacoast other than the ownership of
the Bank. Seacoast plans to retain up to 50 percent of the net proceeds from the
sale of common stock and to use the remaining proceeds to purchase all of the
then to be issued and outstanding capital stock of the Bank. Prior to the
completion of the conversion, The 1855 Bancorp will change its name on an
interim basis to Seacoast, Inc., and after the conversion will change its name
to Seacoast Financial Services Corporation.
Acquisition of Sandwich Bancorp, Inc.
- -------------------------------------
Pursuant to the Amended and Restated Affiliation and Merger Agreement
(the "Agreement"), dated March 22, 1998, The 1855 Bancorp agreed to acquire
Sandwich Bancorp, Inc., Sandwich, Massachusetts ("Sandwich Bancorp"), the bank
holding company for Sandwich Co-operative Bank ("Sandwich"), a
Massachusetts-chartered co-operative bank. Sandwich Bancorp is a Massachusetts
corporation that was organized in June 1997 to acquire all the capital stock of
Sandwich pursuant to the bank holding company reorganization. Sandwich Bancorp
is a publicly-traded company whose stock is listed on the NASDAQ National Market
System under
<PAGE>
RP Financial, LC.
Page 1.3
the ticker symbol "SWCB". As of March 31, 1998, Sandwich Bancorp reported
consolidated assets of $526.5 million, deposits of $426.7 million, and
stockholders' equity of $42.6 million, or 8.08 percent of total assets.
Sandwich is a state-chartered co-operative bank operating through an
administrative office in Sandwich, Massachusetts, and a total of 11 retail
branch offices in Barnstable County (i.e., Cape Cod) and southern Plymouth
County. The deposits of Sandwich are insured to regulatory maximums by BIF and
the SAIF, and Sandwich is a member of the FHLB system.
Upon completion of the merger, Seacoast will continue to be
headquartered in New Bedford, Massachusetts, with 36 banking offices in
southeastern Massachusetts. As described more fully herein, both institutions
share many characteristics, i.e., a community bank strategy emphasizing a local
orientation, and utilizing primarily retail deposits to fund local lending.
Compass has a more diversified lending operation and loan portfolio than
Sandwich Bancorp, particularly in the areas of consumer lending (primarily
indirect auto loans) as well as commercial and industrial ("C&I") lending.
Sandwich Bancorp currently has a more leveraged capital position than Seacoast
will have on a pro forma basis. The merger is expected to enhance Compass'
ability to offer full service banking services on Cape Cod and southern Plymouth
County and facilitate asset growth by offering loans and other products in an
expanded area.
Pursuant to the Agreement, at the effective time of the merger, each
share of common stock of Sandwich Bancorp issued and outstanding, shall by
virtue of the merger be converted into the right to receive Seacoast common
stock by means of an exchange ratio (the "Exchange Ratio") based upon the
trading price of Seacoast's common stock following the completion of the
offering (the "Seacoast Trading Price"). If the Seacoast Trading Price is
between $10.00 and $13.50, the Exchange Ratio will be between 6.4000 and 4.7407
(determined by dividing $64.00 by the Seacoast Trading Price). If the Seacoast
Trading Price is between $13.51 and $15.00, the Exchange Ratio will be fixed at
4.7407. If the Seacoast Trading Price exceeds $15.00, the Exchange Ratio will be
less than 4.7407 (determined by dividing $71.11 by the Seacoast Trading Price).
If the Seacoast Trading Price is equal to or less than $10.00 per share, the
Exchange Ratio will be 6.4000. The number of Exchange Shares issuable in
exchange for each outstanding Sandwich Bancorp stock option will be determined
by subtracting the per share exercise price of such option from the value of the
Exchange Shares receivable by Sandwich Bancorp
<PAGE>
RP Financial, LC.
Page 1.4
stockholders in exchange for each outstanding share of Sandwich Bancorp common
stock, and dividing the result by the Seacoast Trading Price. As of March 31,
1998, Sandwich Bancorp had 1,945,756 shares of common stock issued and
outstanding and 143,282 stock options outstanding, of which 103,574 shares
subject to option were exercisable (all become fully vested upon acquisition).
Cash will be paid in lieu of fractional shares.
As described more fully herein, the merger is anticipated to be
accounted for as a pooling of interests. At the time of the merger, certain
merger expenses will be recognized, approximating $4.0 million on an after-tax
basis, to reflect the following: (1) certain financial advisory, legal and other
expenses in connection with the merger; (2) expenses related to payouts on
Sandwich Bancorp management contracts; and (3) expenses related to converting
data processing to a single system. Merger synergies are expected to primarily
consist of the elimination of duplicative personnel, primarily in management,
and the related pre-tax cost savings, estimated to approximate $1.5 million in
the first year following the merger and $1.8 million and $2.0 million in the
second and third years, respectively.
There will be a 15 member Board of Directors of Seacoast, comprised of
12 directors from Compass and 3 directors from Sandwich Bancorp. The senior
management team of the merged institution is expected to consist of 9
individuals, all of whom are currently employed by Compass.
Strategic Discussion
- --------------------
Seacoast, Inc.
--------------
Seacoast, Inc. (reflects the interim name change of The 1855 Bancorp),
is the mutual holding company for Compass, a well-capitalized community-oriented
savings institution operating in southeastern Massachusetts. Since substantially
all of the consolidated operations consist of the activities of Compass, the
balance of the analysis will describe the operations of Compass, although the
financial data reflects the consolidated financial data of the MHC and Compass.
The Bank's current operations and strategic direction have been
significantly influenced by certain events over the last two decades. In
particular, during the early 1980s,
<PAGE>
RP Financial, LC.
Page 1.5
the Bank experienced diminished profitability as interest rates and the cost of
funds increased rapidly while interest income on long-term fixed rate loans and
investments increased relatively slowly. Additionally, during this same time
frame, the local economy in southeastern Massachusetts was under pressure as the
traditional manufacturing employers continued to decline and the benefit from
the increase in national defense spending and the growth of hi-tech industries
in the Boston area was not felt.
As a result of the foregoing, management sought to emphasize
shorter term and adjustable rate loans with the objective of minimizing the
Bank's interest rate risk exposure. Additionally, the Bank has been cognizant of
maintaining credit quality, particularly as it has began to focus on higher
risk-weight lending.
In recent periods, the Bank has sought to emphasize a community
bank operating strategy, emphasizing service, its local orientation and a
relatively broad array of products and services. Compass has implemented a
three-prong lending strategy which has focused on: (1) residential mortgage
lending; (2) commercial lending, including commercial and multi-family mortgage
loans as well as commercial and industrial loans; and (3) consumer loans,
including primarily auto loans originated indirectly through a network of
approximately 80 dealers located in Massachusetts and Rhode Island. As a result,
as of February 28, 1998, 1-4 family residential mortgage loans comprised
approximately 43.0 percent of total loans, while commercial mortgage and C&I
loans totaled approximately 20.7 percent of total loans, and consumer loans
comprised approximately 30.0 percent of total loans. The Bank has pursued loan
diversification with the objective of enhancing yields and overall earnings
levels while also improving the interest sensitivity of assets.
The majority of the balance of interest-earning assets ("IEA") are
invested in U.S. Treasury and agency obligations, corporate securities and
mortgage-backed securities ("MBS"). The majority of the Bank's investment
portfolio is classified as available for sale ("AFS") and the maturity of most
of the securities in the portfolio averages five years or less.
In conjunction with the community bank operating strategy, Compass
has sought to actively grow and expand its franchise, both through internal and
external means. Compass has grown internally by offering competitive rates and a
wide array of products and services.
<PAGE>
RP Financial, LC.
Page 1.6
However, a significant portion of the Bank's growth has been generated through
two acquisitions. The first acquisition involved the purchase of approximately
$57 million of deposits and two office facilities from the failed Plymouth
Federal Savings Bank ("Plymouth Federal") from the Resolution Trust Corporation
("RTC") in March 1994. Additionally, the Bank acquired MVNB, a commercial bank
with 5 locations on the Island of Martha's Vineyard, with total assets of
approximately $129 million in December 1994.
Sandwich Bancorp
----------------
Sandwich, a wholly-owned subsidiary of Sandwich Bancorp, was organized
as a Massachusetts co-operative bank in 1885 and has operated on Cape Cod and
Plymouth County since that time. Sandwich serves Barnstable County (Cape Cod)
and southern Plymouth County through a network of 11 branch offices. Sandwich's
market is contiguous to the Compass market and there is little overlap in the
respective branch office networks. Sandwich is also a community-oriented banking
institution, with a focus on mortgage lending, particularly residential mortgage
loans. The deposit and customer base composition of Sandwich is highly
comparable to those of Compass.
Merged Bank
-----------
The business plan of Seacoast, inclusive of the acquired operations of
Sandwich Bancorp, are expected to continue to focus on products and services
which have facilitated growth to date. Specifically, the largest business
segment will continue to consist of traditional deposit products and retail
banking services, with funds deployed primarily in residential mortgage loans,
and, to a lesser extent, commercial and consumer loans. The acquisition of
Sandwich Bancorp is expected to enhance Seacoast's ability to compete and grow.
The merger will result in the immediate leverage of the post-conversion capital,
owing to the relatively leveraged capital position of Sandwich Bancorp. While
Seacoast and Compass will continue to maintain a strong capital level following
the conversion and acquisition, management efforts over the near term following
the conversion will largely be focused on enhancing efficiency, including the
integration of Sandwich Bancorp into Seacoast's operations, continuing to manage
interest rate risk, maintaining good asset quality and pursuing retail growth in
southeastern Massachusetts.
<PAGE>
RP Financial, LC.
Page 1.7
Stock Conversion
----------------
The stock conversion is intended to accomplish several objectives:
provide the opportunity for stock ownership to employees, depositors and
management; provide a mechanism to attract and retain competent staff; and
provide the funds, form of consideration and the capital necessary to complete
stock acquisitions. The capital from the stock conversion will be used to
support the growth through existing branches as well as through other
acquisitions, revenue diversification activities, reduction of interest rate
risk and provide a capital cushion to safeguard against contingencies such as
credit losses or an adverse interest rate environment. As disclosed in
Seacoast's prospectus, the proceeds from the stock conversion are anticipated to
be invested as follows.
o Seacoast Bancorp. Seacoast will retain up to 50 percent of the
net conversion proceeds. Seacoast funds are expected to be
invested initially into short- and intermediate-term investment
securities with laddered maturities extending up to five to seven
years. Over time, Seacoast funds may be utilized for various
corporate purposes, possibly including the payment of
regular/special cash dividends, acquisitions, infusing additional
equity into the Bank and/or repurchases of common stock, however
no specific plans currently exist.
o Compass. At least 50 percent of the net conversion proceeds will
be infused into the Bank in exchange for all of the Bank's
newly-issued stock. The increase in capital will be less, as the
amount to be borrowed by the ESOP from a third party to fund an 8
percent stock purchase will be deducted from capital. Cash
proceeds (i.e., net proceeds less deposits withdrawn to fund
stock purchases) infused into the Bank are anticipated to become
part of general operating funds, and are expected to initially be
invested in short-term investments and/or used to repay borrowed
funds as they mature. Over the longer term, the proceeds are
expected to be partially redeployed into loans.
Seacoast's business plan initially calls for consolidating the
operations of Sandwich Bancorp into those of Seacoast, partially deploying the
conversion proceeds into loans, and pursuing moderate growth through the
expanded branch network. Over the longer term, management will continue to
review growth opportunities including internal growth, branching and
acquisitions of branches or other institutions. In this regard, current plans
call for the Bank to establish one to two new branch offices per year during
each of the next three years.
<PAGE>
RP Financial, LC.
Page 1.8
Balance Sheet Trends
- --------------------
Growth Trends
-------------
Table 1.1 shows the Bank's historical balance sheets from October 31,
1993 to February 28, 1998, and the Bank's pro forma balance sheet at February
28, 1998 giving effect to the Sandwich Bancorp merger (but before incorporating
the capital to be raised in conversion and merger expenses). The following
paragraphs describe the historical balance sheet changes for Compass on a
pre-acquisition basis. The pro forma balance sheet impact of the acquisition of
Sandwich Bancorp will be discussed at the end of this section. Additionally, the
foregoing analysis describes the consolidated operations of the MHC but is
referenced to as Compass since the substantial majority of assets and
liabilities are attributable to the Bank.
Over the last 5 years, Compass' asset base increased at a compounded
annual rate of approximately 10.9 percent. The Bank's growth has been fostered
through the 1994 acquisition of Plymouth Federal branches, and the 1995
acquisition of MVNB. Excluding growth through acquisition, the Bank's internal
growth has been relatively limited as a result of the competition and the
limited population growth in the Bank's markets. Over this period, asset growth
was largely attributable to loan portfolio growth, which increased from $451.1
million, or 63.92 percent of assets, as of October 31, 1993, to $846.4 million,
or 74.01 percent, as of February 28, 1998. The 14.8 percent annual growth rate
of loans was partially funded internally through a reduction in the proportion
of investment securities.
The Bank's loan portfolio has undergone significant change over the
last five fiscal years, as the proportion of residential mortgage loans
diminished in conjunction with the increased emphasis on commercial and consumer
(primarily indirect auto loans) lending. In particular, the proportion of
commercial loans was bolstered with the 1995 acquisition of MVNB. Most of the
lending and branch-related staff of MVNB were retained following the
acquisition, including the managing officer, who became a Compass Executive Vice
President in charge of the commercial loan department. The consumer loan
portfolio has also increased substantially, from $93.8 million in 1993 to $250.5
million currently, largely as a result of growth in the indirect auto loan
portfolio. In this regard, management has intensified efforts to recruit new
dealer relationships and to expand the volume of loan referrals from existing
dealer relationships.
<PAGE>
RP Financial, LC.
Page 1.9
The Bank's assets are funded through a combination of deposits,
borrowings and retained earnings. Although deposits realized the most
significant growth in dollar terms, largely due to acquisitions, borrowings
increased most rapidly on a percentage basis due to the relatively favorable
cost and to lengthen liabilities duration. Additionally, Compass has utilized
FHLB advances in connection with originating affordable housing loans.
Equity has increased steadily since the end of fiscal 1993, reflecting
the Bank's strengthening earnings. Equity has generally been maintained in the
7.5 to 9.0 percent range the last 5 years, and, as of February 28, 1998, the
equity/assets ratio approximated 9.0 percent.
Loans Receivable
----------------
The increased ratio of loans to assets in recent years reflects
management's preference for lending to enhance asset yields and to capitalize on
certain market niches. Currently, 1-4 family mortgage loans comprise the largest
segment of the loan portfolio, equal to 43.0 percent, a much lower ratio than 5
years earlier. The residential mortgage loan portfolio consists primarily of
adjustable rate mortgage loans ("ARMs") and shorter term fixed rate mortgage
loans (i.e., maturities of less than 15 years). It is the Bank's current
practice to sell long term fixed rate loans into the secondary market on a
servicing retained basis for interest rate risk management and fee income
purposes.
The Bank also maintains a large portfolio of consumer loans, comprised
primarily of indirect auto loans. Overall, consumer loans totaled $250.5
million, or 29.6 percent of total loans, as of February 28, 1998. The Bank
intends to continue to expand the indirect auto loan portfolio through new
dealer relationships and increased volume with existing dealers. Compass has
recently established a finance company operating subsidiary, which is licensed
to conduct business in Rhode Island, as a means of expanding its indirect
lending business into other nearby areas.
The last major segment of the loan portfolio consists of commercial
mortgages and C&I loans, which together comprised approximately 20.7 percent of
total loans. The increase in the commercial mortgage portfolio has been
facilitated by loans and staff from the MVNB acquisition.
<PAGE>
RP Financial, LC.
Page 1.10
Investment and Mortgage-Backed Securities
-----------------------------------------
The intent of the Bank's investment policy is to provide adequate
liquidity, to generate a favorable return on excess investable funds and to
support the overall credit and interest rate risk objectives of the Bank. In
recent periods, the Bank has sought to minimize the level of investment
securities in favor of higher yielding loans. The Bank anticipates initially
reinvesting the net conversion proceeds into investments with short-term
maturities, pending longer-term deployment into other investments and loans.
Compass anticipates that the future composition of the liquidity portfolio will
consist of similar types of investment securities as are currently held.
As of February 28, 1998, the Bank's portfolio of cash and cash
equivalents totaled $43.3 million, equal to 3.78 percent of assets. Investment
securities available for sale ("AFS") totaled $195.6 million, equal to 17.1
percent of assets, while the balance of securities held to maturity ("HTM") was
much lower, equal to $12.3 million, or 1.1 percent of assets, as of February 28,
1998 (see Exhibit I-4). Overall, HTM and AFS investment securities equaled 18.2
percent of total assets as of February 28, 1998, which reflects a significant
decline since the end of fiscal 1993 given the lending emphasis. The majority of
the Bank's investments are classified as AFS although there is a small portfolio
of U.S. agency securities classified as HTM. Management's current investment
strategy is to purchase securities with maturities no longer than ten years and
generally possessing maturities of five years or less.
The largest component of the investment portfolio consisted of U.S.
Government and agency obligations with a balance of $110.5 million, $12.3
million of which was classified as HTM. Corporate debt obligations totaled $46.6
million, and consisted of finance bonds, industrial revenue bonds, utility bonds
and bank and trust company bonds. Compass' investment policy restricts
investment in bonds to securities rated "A" or better by a nationally recognized
rating agency. Mortgage-backed securities totaled $44.6 million, as of February
28, 1998, and consisted of securities guaranteed by GNMA, FHLMC or FNMA. The
Bank also has invested in a mutual fund which invests in various investment
grade securities.
Marketable equity securities consist of $8.5 million of common stocks
and $1.0 million of preferred stocks. Stocks are generally acquired for
long-term investment purposes. As of February 28, 1998, Compass' portfolio of
common stocks included 90,000 shares
<PAGE>
RP Financial, LC.
Page 1.11
of Sandwich Bancorp common stock with a market value of approximately $5.2
million, which represented 4.6 percent of the Sandwich Bancorp shares
outstanding.
Funding Structure
-----------------
Deposits are comprised of a large base of savings and transaction
accounts (or "core" deposits) with the balance of funds consisting of CDs.
Growth of the Bank's deposit base has been significantly enhanced by the $57
million Plymouth Federal acquisition in 1994 and the $100 million MVNB
acquisition in 1995. Since the end of fiscal 1995, deposit balances have
increased at a 4.4 percent compounded annual growth rate, underscoring the
moderate growth nature of the local market. As future prospects for in-market
deposit growth are expected to remain moderate, the Bank has been intensifying
cross-selling strategy to stimulate deposit growth from existing customers.
Additionally, the Bank expects to continue to evaluate other acquisition
opportunities.
Borrowings have been increasingly utilized since the end of fiscal
1993, primarily FHLB advances and short-term repurchase agreements, as Compass
has sought to avail itself to favorably priced long term funds, including
special borrowing programs to assist low-to-moderate income home buyers. Compass
may use additional borrowings for interest rate risk or leveraging purposes
provided the spreads justify such funding.
Capital
-------
Earnings since the end of fiscal 1993 have led to annual equity growth
of 11.3 percent. As a result of the Plymouth Federal acquisition in 1994, a $2.6
million core deposit intangible was created, which is being amortized over 10
years on a straight-line basis. The balance of the core deposit intangible
equaled $1.591 million as of February 28, 1998. The Bank maintained capital
surpluses relative to all of its regulatory capital requirements at February 28,
1998, as summarized in the table below. The addition of conversion proceeds will
serve to further strengthen Compass' capital position.
<PAGE>
RP Financial, LC.
Page 1.12
<TABLE>
<CAPTION>
Required Actual
Capital Capital Excess
------- ------- ------
($000) ($000) ($000)
<S> <C> <C> <C>
Tier I Leverage Capital Ratio $45,007 $95,742 $50,735
Risk-Based Capital: Tier I 30,970 95,742 64,772
Risk-Based Capital: Total 61,939 105,543 43,604
</TABLE>
Source: Prospectus.
Acquisition of Sandwich Bancorp
-------------------------------
Since year end 1993, Sandwich Bancorp's total assets have grown at a
12.1 percent compounded annual rate, facilitated through four branch deposit
acquisitions since 1992 and rapid growth in borrowings. Asset growth has been
dominated by loan growth and, to a lesser extent, investment and mortgage-backed
securities. As a result, the loans/deposit ratio has increased from 74.3 percent
at December 31, 1993, to 86.6 percent at March 31, 1998. Sandwich Bancorp's
equity/assets ratio has declined modestly over the last five years as asset
growth exceeded equity growth, reflecting moderate profitability and a
relatively high dividend payout ratio.
Sandwich Bancorp has been predominantly a permanent 1-4 family lender,
with such loans representing 60 to 70 percent of loans over the last 5 years.
Moreover, the proportion of residential loans has been increasing while
commercial and consumer loans have been declining. Sandwich Bancorp also
maintains a relatively large balance of construction and land development loans.
Sandwich Bancorp's loan growth has been facilitated with affiliations with
correspondent loan brokers.
Since the acquisition will be accounted for as a "pooling of
interests," Sandwich Bancorp's balance sheet and income statement will simply be
added to Compass' balance sheet, before reflecting previously referenced merger
expenses. The pro forma pre-conversion impact of the Sandwich Bancorp
acquisition (based on Sandwich Bancorp financial data as of March 31, 1998)
would have increased Compass' total assets to $1.7 billion, total deposits to
$1.4 billion and equity to $145.7 million, or 8.72 percent of assets. The
post-merger balance sheet composition does not change significantly as the
proportion of loans, investments, deposits
<PAGE>
RP Financial, LC.
Page 1.13
borrowed funds for Sandwich Bancorp compares relatively closely to Compass' on a
pre-conversion basis.
Income and Expense Trends
- -------------------------
Table 1.2 shows the Bank's historical income statements for the fiscal
years from 1993 through 1997 and for the twelve months ended February 28, 1998,
as well as the Bank's pro forma income statement for the twelve months ended
February 28, 1998 reflecting the merger (incorporates the Sandwich Bancorp
results through March 31, 1998). The following paragraphs describe the
historical income statements of Compass on a pre-merger basis. The pro forma
income statement impact of the merger with Sandwich Bancorp is discussed at the
end of this section.
Overall, Compass' net income before extraordinary items ranged from a
low of $5.4 million, equal to 0.71 percent of average assets, in fiscal 1994, to
a high of $12.5 million, equal to 1.14 percent of average assets, for the most
recent twelve months ended February 28, 1998. Factors leading to consistent
earnings and profitability growth include a stable net interest margin, a
moderating level of loan loss provisions, stronger levels of non-interest
operating income and a moderating operating expense ratio, notwithstanding the
growth in the aggregate level of operating costs.
Net Interest Income
-------------------
Compass' ratio of net interest income to average assets declined
between fiscal 1993 and 1994, from 3.99 percent to 3.62 percent, respectively,
partially as a result of an unfavorable interest rate environment and the cash
received in the Plymouth Federal acquisition. Subsequently, net interest income
increased in dollar terms, commensurate with the growth of the Bank,
representing 3.50 to 3.80 percent of average assets. The recent stability of the
net interest income ratio is reflective of the relatively stable interest rate
environment coupled with the Bank's strategy of limiting interest rate risk
exposure.
Compass' spreads and margins have increased modestly since fiscal 1995,
reflecting the increasing proportion of higher yielding loans (see Exhibit I-5).
Specifically, Compass' fiscal 1995 interest rate spread of 3.33 percent
increased to 3.47 percent and 3.48 percent in
<PAGE>
RP Financial, LC.
Page 1.14
fiscal 1996 and fiscal 1997, respectively. For the four months ended February
28, 1998, Compass' spread equaled 3.47 percent.
Non-Interest Income
-------------------
Other income has shown a gradual upward trend since fiscal 1993, from
$2.6 million, or 0.37 percent of average assets, to $5.7 million, or 0.52
percent of average assets, for the twelve months ended February 28, 1998. The
increase in non-interest income over the last five fiscal years is attributable
to several factors: increased fee generating commercial lending and depository
activities; growth of ATM fees as the ATM network expanded; and increased
service fee structure.
Operating Expenses
------------------
Operating expenses have increased in dollar terms since fiscal 1994,
although the operating expense ratio has diminished due to faster asset growth.
For the twelve months ended February 28, 1998, operating expenses totaled $25.0
million, equal to 2.29 percent of average assets.
Operating expenses increased significantly between fiscal 1993 and
fiscal 1995 as a result of the Plymouth Federal and MVNB acquisitions.
Subsequently, operating expenses have increased more slowly as the Bank has
focused on limiting operating expense growth. Operating expenses are expected to
increase following the conversion as a result of the leveraged ESOP amortization
expense; public company legal, accounting and printing/mailing costs; and
expansion of fixed assets. The Bank has preliminary plans to build a new
executive office facility in downtown New Bedford at a cost estimated to range
up to $15 million, which will result in significant new depreciation and
property tax expenses. Management is hopeful that the new facility can be
constructed and occupied within 24 to 30 months. Also, Compass is targeting to
open one to two additional branch offices per year into the foreseeable future.
Other Real Estate Owned Expense
-------------------------------
Other real estate owned ("OREO") expense reflects a decline over the
last five years as a result of improving asset quality, including a diminishing
OREO level. Specifically, OREO expense has declined from $1.5 million, 0.22
percent of average assets, in fiscal 1993, to $519,000, 0.05 percent of average
assets, for the twelve months ended February 28, 1998.
<PAGE>
RP Financial, LC.
Page 1.15
Loan Loss Provisions
--------------------
As a result of improving economic conditions locally and a reduction in
non-performing assets, the level of loan loss provisions declined to $1.6
million, or 0.15 percent of average assets, for the twelve months ended February
28, 1998. Going forward, the Bank intends to continue to evaluate the adequacy
of general valuation allowances ("GVAs"), establishing additional loan loss
provisions in accordance with the Bank's asset classification and loss reserve
policies. Currently, the Bank is accruing $375,000 of loan loss provisions
quarterly.
Non-Operating Items
-------------------
Non-operating income and expenses have typically had a limited impact
on Compass' net income, and such items totaled $575,000, equal to 5 basis points
on average assets, for the twelve months ended February 28, 1998. The majority
of Compass' non-operating items consisted of gains on the sale of loans, which
has increased in recent periods as loan origination volumes (and sales) have
increased.
Taxes
-----
The Bank's tax rate has ranged from approximately 37.6 to 43.4 percent
over the last 5 years. Currently, the Bank is engaged in a tax planning strategy
to reduce state income taxes, utilizing a real estate investment trust ("REIT")
subsidiary. Specifically, Compass formed Compass Preferred Capital Corporation
to hold approximately $150 million of the Bank's real estate loans. Under
current state tax laws, REIT income is subject to a 60 percent dividend
exclusion, which is estimated to marginally reduce the Bank's effective state
and federal tax rate. While additional loans may be transferred to the REIT in
the future, the amount is limited by certain limitations in the Massachusetts
tax code. The Bank recognizes that a change in tax laws may eliminate such tax
benefits, although no change in the relevant tax laws is known to be underway at
this time.
Pro Forma Earnings Impact of Sandwich Bancorp Merger
----------------------------------------------------
Sandwich Bancorp's earnings reflects steady growth over the last five
fiscal years, both in terms of reported earnings and earnings as a percent of
average assets. The earnings growth is principally attributable to improvements
in all areas of core operations, including increases in the net interest margin
and non-interest income as well as a diminishing operating
<PAGE>
RP Financial, LC.
Page 1.16
expense ratio. Overall, Sandwich Bancorp's profitability ratios have increased
from 0.52 percent of average assets in fiscal 1993 to 0.98 percent of average
assets in fiscal 1997. Sandwich Bancorp's profitability in every year has been
partially dependent on the gains on sale of loans. The relatively low levels of
non-performing assets in recent periods has kept provisions for loan losses to
moderate levels. Sandwich Bancorp's return on equity has increased from
approximately 5 percent in fiscal 1993 to 12.5 percent in fiscal 1997.
On a pro forma basis, the Sandwich Bancorp merger is projected to
impact Compass' income statement in several ways. There are certain
non-recurring merger expenses anticipated concurrent with the merger, including
financial advisory fees, data processing costs and the expense of change of
control provisions in Sandwich Bancorp management contracts. Overall, total
acquisition-related expenses are projected to equal $5.0 million on a pre-tax
basis ($4.0 million after-tax), most of which will be incurred at the time of,
or shortly following, the merger. The impact of the conversion and the one-time
merger costs are captured in the pro forma adjustments set forth in the
valuation analysis in Chapter IV. On a pro forma basis, net interest income as a
percent of average assets is expected to be similar (3.79 percent of average
assets on a stand-alone basis and 3.70 percent for the merged Bank);
non-interest operating income is subject to a slight decrease (from 0.52 percent
of average assets to 0.51 percent for the merged Bank); and the operating
expense ratio is inflated from 2.29 to 2.33 percent of average assets. On a pro
forma basis (before the impact of the conversion offering), core profitability
declines from 1.14 to 1.09 percent of average assets. Compass estimates pre-tax
cost savings in the range of $1.5 million in the first year following the
acquisition increasing to $1.8 million and $2.0 million in the second and third
years following the acquisition, respectively.
Interest Rate Risk Management
- -----------------------------
Compass' February 28, 1998 Net Interest Income ("NII") analysis shows
that NII would decline by approximately 8.22 percent over a 12 month period,
pursuant to a 200 basis point instantaneous and permanent increase in interest
rates, relative to base case levels (i.e., no change in market interest rates),
and by 4.73 percent over a 24 month period. Further, the NII would remain
substantially unchanged over a 12 month period assuming a 200 basis point
decrease in rates (see Exhibit I-7 for details).
<PAGE>
RP Financial, LC.
Page 1.17
The foregoing NII analysis indicates a modestly liability sensitive
position, although Compass has been relatively successful in minimizing interest
rate risk exposure. Furthermore, the Bank's one year cumulative gap ratio
equaled negative 8.40 percent of assets, which reflects a modest level of
interest rate risk exposure (see Exhibit I-8 for details). Compass manages
interest rate risk primarily from the asset side of the balance sheet, by
focusing asset investments on shorter term or adjustable rate loans as well as
short to intermediate term investment securities. Additionally, the Bank sells
the substantial majority of the longer term fixed rate residential mortgage
loans originated which eliminates the risk related to holding such assets while
also providing a source of non-interest fee and loan servicing income.
Strategies undertaken with respect to liabilities include attempting to market
longer term CDs and locking in long-term borrowings when such funds are
attractively priced and can be reinvested at a favorable spread. Additionally,
Compass seeks to maintain a strong capital ratio which provides for a favorable
level of interest-earning assets relative to interest-bearing liabilities while
also seeking to maintain strong credit quality.
Based on interest rate risk analyses prepared by Sandwich Bancorp,
Sandwich Bancorp's interest rate risk exposure appears to be relatively
comparable to the Bank's exposure levels. Specifically, Sandwich Bancorp's
analysis shows that as of the end of fiscal 1997, Sandwich Bancorp's negative
gap equaled 3.51 percent of assets in the one year or less period.
The completion of the Bank's conversion should further facilitate
management efforts to further control interest rate risk, as the conversion
proceeds can be reinvested to enhance core earnings and as the Bank's ratio of
interest-earning assets to interest-bearing liabilities is improved.
Lending Activities and Strategy
- -------------------------------
Throughout most of its history, Compass' lending strategy focused on
permanent residential mortgage lending. Most recently, however, Compass has
implemented a three-prong lending strategy which focused on: (1) residential
mortgage lending; (2) commercial lending, including commercial and multi-family
mortgage loans as well as commercial and industrial loans; and (3) consumer
loans, including primarily auto loans originated indirectly through a network of
approximately 80 dealers located in Massachusetts and Rhode Island.
<PAGE>
RP Financial, LC.
Page 1.18
The Bank has pursued loan diversification with the objective of enhancing yields
and overall earnings levels while also improving the interest sensitivity of
assets. The Bank's lending strategy is evidenced in financial data reflecting
the loan portfolio composition and lending activity set forth in Exhibits I-10
and I-11.
The Bank's lending strategy and the loan portfolio composition are not
expected to change substantially as a result of the conversion or the
acquisition. Accordingly, it is expected that future loans originated by the
Bank will continue to consist of a mixture of residential, commercial and
consumer loans secured by properties and/or to borrowers in southeastern
Massachusetts and Rhode Island.
Consistent with its community bank strategy, Compass offers a broad
array of 1-4 family mortgage loan programs including fixed and adjustable rate
loans with varying terms and maturities as well as bi-weekly payment loans. As
of February 28, 1998, residential mortgage loans equaled $364.2 million, or 43.0
percent of total loans. Compass originates both fixed rate and adjustable rate
1-4 family loans; the Bank's general philosophy is to seek to originate
adjustable rate loans and/or shorter-term fixed rate loans for portfolio (10
year maturities or less) and sell longer-term fixed rate loans through various
secondary market conduits (primarily FHLMC) on a servicing-retained basis.
The Bank originates one-to-four family loans up to a loan-to-value
("LTV") ratio of 95.0 percent, with private mortgage insurance ("PMI") being
required for loans in excess of a 80.0 percent LTV ratio. The substantial
portion of 1-4 family mortgage loans originated by Compass are secured by
residences proximate to the markets served by the retail branches.
As a complement to the 1-4 family permanent mortgage lending
activities, the Bank also offers home equity loans, including fixed rate
amortizing term loans as well as variable rate lines of credit. The majority of
the home equity loans extended by the Bank are to first mortgage borrowers of
Compass.
Commercial lending has become an increasingly important part of
Compass' lending activities over the last decade, both internally and through
the 1994 MVNB acquisition. As a result, the balance of commercial and
multi-family mortgage loans has increased to $120.7 million, or 14.26 percent of
total loans, and C&I loans equaled $54.0 million, equal to 6.38
<PAGE>
RP Financial, LC.
Page 1.19
percent of loans. The addition of Sandwich will not change the portfolio
composition dramatically with respect to commercial loans but the retail
presence on the Cape is expected to facilitate the Bank's efforts to originate
commercial loans in Barnstable County.
Commercial loans are almost always made to local borrowers and/or
secured by local properties. Commercial real estate/multi-family loans are
generally extended up to a 75 percent LTV ratio and require a debt-coverage
ratio of at least 1.2 times. C&I loans are carefully underwritten with a
thorough financial analysis of the borrowers business and cash flow performed to
ensure that credit risk is limited. Additionally, personal guarantees are
required on most of the commercial loans originated by Compass.
The consumer loan portfolio consists primarily of automobile loans,
supplemented by student loans, unsecured personal loans (made primarily to
customers of the Bank), and passbook loans. Auto loans originated indirectly
constitute approximately 90 percent of the consumer loan portfolio. As of
February 28, 1998, consumer loans totaled $250.5 million, equal to 29.59 percent
of total loans.
Automobile loans are originated through relationships with
approximately 80 automobile dealerships in southeastern Massachusetts and Rhode
Island. The Bank is continuing to build the base of dealer relationships as part
of its long term efforts to expand the portfolio. Auto loans are secured by both
new and late model used cars and are originated in a procedure whereby Bank
personnel process and underwrite the loans to Bank standards using information
provided by the dealers. All borrower information is confirmed by the Bank
before an automobile loan is approved. The Bank originates similar levels of
loans secured by used and new automobiles. Compass intends to continue to expand
the automobile loan portfolio over the next several years.
The balance of the loan portfolio is secured by construction and land
loans, which totaled $41.2 million, equal to 4.87 percent of loans.
Construction/permanent loans are made to owners and are converted to permanent
loans at the end of the construction phase. Loans to builders are also made by
the Bank and comprise a lesser proportion of the construction loan origination
volume. Construction loans typically require payment of interest only during the
construction period and are extended for up to one year. The Bank originates
construction loans up to a LTV ratio of 90 percent, with the rate offered on
builder loans typically exceeding the Bank's 1-4
<PAGE>
RP Financial, LC.
Page 1.20
family loan rate. The number of loans extended to builders at one time is
dependent upon the financial strength and credit history of the builder. The
origination of construction loans is expected to remain an active lending area
for the Bank given the prior success and profitability of the program. The Bank
also originates commercial construction loans, typically for the purpose of
constructing an owner-occupied structure.
On a more limited basis, the Bank originates land loans. Land loans
extended by Compass are both to individuals as well as developers of small
residential subdivisions.
Exhibit I-10B shows loan portfolio information for Sandwich Bancorp as
of March 31, 1998, as well as the loan portfolio composition for Compass as of
February 28, 1998, and the two institutions on a pro forma merged basis. The
data reflects that Sandwich Bancorp has more heavily emphasized 1-4 family
residential mortgage lending as well as construction and land development
lending. Sandwich Bancorp maintains approximately the same proportion of
commercial/multi-family mortgage loans as Compass, while Sandwich Bancorp has
not heavily emphasized non-mortgage lending. In this regard, non-mortgage loans
extended by Sandwich Bancorp have primarily been made to existing customers
whereas Compass has been actively soliciting new customers and seeking to
increase the balance of indirect loans.
Exhibit I-11 reflects loan origination activity for Compass for the
last three fiscal years and the four months ended February 28, 1998. The data
reflects that non-mortgage loans have recently comprised over half of total
volume, reflecting the emphasis on higher yields and shorter duration. Overall,
loan volumes have been subject to increase since fiscal 1995, and totaled $441.2
million for the 12 months ended February 28, 1998. Most loans are originated
internally, although Compass will occasionally purchase participation interests
in loans originated by other local lenders (primarily commercial real estate or
C&I loans). Loan sales totaled $33.2 million in fiscal 1997 and $21.3 million
during the first four months of fiscal 1998, and primarily consist of the sale
of long-term fixed rate loans to the secondary market.
The Sandwich Bancorp merger is expected to enhance loan origination
capacity, as a result of the expanded retail presence in Barnstable and southern
Plymouth Counties. Compass currently originates loans on a decentralized basis
through four regional offices (New Bedford, Fall River, Plymouth and Martha's
Vineyard) in order to compete more effectively with other
<PAGE>
RP Financial, LC.
Page 1.21
community banks and mortgage brokers and bankers. Compass anticipates opening a
fifth office in Barnstable County on a post-acquisition basis to complement
expanded retail branch network. Additionally, Sandwich originates loans through
loan correspondents and Compass may retain these correspondent relationships on
a post-acquisition basis.
Asset Quality
- -------------
As shown in Exhibit I-12, Compass' level of non-performing assets
("NPAs") has generally been improved over the last five fiscal years,
notwithstanding the increase in higher risk-weight loans, including indirect
auto loans and commercial mortgage and non-mortgage loans. As of February 28,
1998, non-performing assets consisted of $9.9 million of non-accruing loans and
$1.2 million of OREO. Overall, NPAs equaled $11.1 million, equal to 0.97 percent
of assets, as of February 28, 1998. Valuation allowances were equal to 1.27
percent and 96.55 percent of total loans and NPAs, respectively.
Exhibit I-12B shows past due loans and real estate owned for Sandwich
Bancorp as of March 31, 1998, as well as the past due loans and real estate
owned for Compass on a pro forma basis incorporating the Sandwich Bancorp
merger. Sandwich Bancorp maintains comparatively stronger asset quality ratios,
with NPAs equal to 0.60 percent of assets. On a merged basis, Compass will
report pro forma non performing loans equal to $12.7 million, total pro forma
NPAs equal to $14.3 million, and an NPA to assets ratio of 0.85 percent.
Valuation allowances will equal 1.22 percent and 104.22 percent of total loans
and NPAs, respectively.
The Bank's emphasis on high risk-weight lending facilitated earnings
growth since fiscal 1993, but it has also increased credit risk exposure as
well. The moderate level of NPAs may reflect the relatively favorable economic
conditions currently. Several other credit related risk factors of note include:
(1) the Bank's reserve coverage ratio is low relative to industry averages both
in relation to NPAs and to total loans, particularly given the risk profile of
the loan portfolio; (2) the limited seasoning of the Bank's newer loans,
particularly given the types of lending dominating recent growth; and (3) the
Bank maintains some large credit concentrations which may increase the Bank's
exposure, particularly in the commercial arena. These factors are mitigated
somewhat by Compass' favorable loan loss experience.
<PAGE>
RP Financial, LC.
Page 1.22
Funding Strategy
- ----------------
Deposits have consistently been the Bank's primary source of funds and,
at February 28, 1998, deposits accounted for more than 90 percent of
interest-bearing liabilities. Exhibits I-13 and I-13B provide data pertaining to
the deposit composition for Compass as of February 28, 1998, Sandwich as of
March 31, 1998 as well as both institutions on a pro forma merged basis. The
Bank's deposit composition has consistently reflected a relatively large
concentration in transaction and savings accounts, averaging $446.1 million, or
47.3 percent of average deposits for the four months ended February 28, 1998.
The ratio of transaction and savings accounts reflects a modest reduction from
the average ratio of 51.1 percent reported for fiscal 1995, although the
absolute balance of these accounts increased modestly.
The remainder of the Bank's deposit base consists of CDs, primarily
short-term CDs (maturities of less than one year). For the four months ended
February 28, 1998, the CD portfolio averaged $497.3 million, or 52.7 percent of
average deposits. Jumbo CDs (balances of $100,000 or more) amounted to $86.4
million, or 17.10 percent of CDs and 9.08 percent of total deposits.
Sandwich Bancorp has a similar retail deposit structure with the one
significant difference being the higher proportion of NOW accounts. Sandwich
Bancorp's money market accounts comprised the largest segment of non-CD
balances, equaling $104.5 million, or 24.74 percent of total deposits. Overall,
Sandwich Bancorp's deposits will marginally reduce Compass' deposit costs.
Borrowings have been utilized by Compass on a limited basis in recent
periods, primarily as a means of extending the duration of liabilities in view
of customer resistance to locking up long term funds in CDs. Overall, FHLB
advances totaled $66.9 million while other short term borrowings equaled $11.4
million. Likewise, Sandwich had approximately $47.6 million with most maturing
within two years although there was a limited amount of long-term borrowings.
Anticipated deposit growth, the offering proceeds and internal cash flows should
adequately address most of the Bank's funding needs in the foreseeable future.
Compass may use additional borrowings for interest rate risk or leveraging
purposes provided the spreads justify such funding.
<PAGE>
RP Financial, LC.
Page 1.23
Subsidiary Activities
- ---------------------
Compass Bank Securities Corporation. Compass Bank Securities
Corporation ("CBS Corporation"), is a wholly-owned subsidiary of Compass
established in 1990 as a Massachusetts security corporation, engages exclusively
in buying, selling and holding investment securities on its own behalf and not
as a broker. The income earned on CBS Corporation's investment securities is
subject to a significantly lower rate of state tax than that assessed on income
earned on investment securities maintained at Compass. At February 28, 1998, CBS
Corporation had total assets of $134.2 million, primarily cash and investment
securities.
Compass Credit Corporation. Compass Credit Corporation ("CC
Corporation") is a wholly-owned subsidiary of Compass established in 1997 as a
Massachusetts corporation for the purpose of buying, selling and origination
auto loans. CC Corporation is a licensed lender in Rhode Island. At February 28,
1998, CC Corporation had total assets of $15.7 million, which was primarily in
cash and auto loans.
Buffinton Brook Realty Corporation. Buffinton Brook Realty Corporation
("BBR Corporation") is a wholly-owned subsidiary of Compass established in 1977
as a Massachusetts corporation for the purpose of purchasing and holding real
estate. At February 28, 1998, BBR Corporation had total assets of $142,596 which
consisted solely of cash.
Compass Preferred Capital Corporation. Compass Preferred Capital
Corporation ("Compass Preferred") is a wholly-owned subsidiary of Compass. It
was established to engage in real estate business activities (including the
acquisition and holding of securities and mortgage loans) that enable it to be
taxed as a "real estate investment trust" under federal and Massachusetts tax
laws. Upon formation of Compass Preferred, Compass transferred to Compass
Preferred approximately $157 million of originated mortgage loans.
The 1855 Corporation. The 1855 Corporation ("1855 Corporation") is a
wholly-owned subsidiary of Compass established in 1971 as a Massachusetts
corporation principally engaged in the acquisition and holding of real estate
which is used for banking purposes. At February 28, 1998, 1855 Corporation had
total assets of $7.3 million, of which $2.5 million consisted of real estate
used for banking purposes and $4.0 million consisted of investment in
subsidiaries.
<PAGE>
RP Financial, LC.
Page 1.24
Purchase Corporation. Purchase Corporation is a wholly-owned subsidiary
of The 1855 Corporation established in 1981 as a Massachusetts corporation used
for the purpose of acquiring, managing and developing real estate as well as
purchasing equipment and making investments. At February 28, 1998, Purchase
Corporation had total assets of $2.4 million, of which $2.3 million consisted of
cash and $90,000 consisted of real estate holdings.
North Front Street, Inc. North Front Street, Inc. ("NFS Inc.") is a
wholly-owned subsidiary of The 1855 Corporation established in 1991 as a
Massachusetts corporation principally engaged to acquire, manage, develop,
rehabilitate, lease, finance hold and make real estate investments. At February
28, 1998, NFS Inc. had total assets of $1.1 million which consisted solely of
cash.
Year 2000 Plan
- --------------
Compass began addressing the Year 2000 ("Y2K") issue in the fall of
1996 when it formed the Y2K project team which subsequently developed the Y2K
action plan approved by the Board December 1997. Compass believes the Y2K action
plan is in conformity with the Federal Financial Institutions Examination
Council ("FFIEC") Year 2000 Statement of May 5, 1997. The final cost to ensure
Y2K readiness is estimated to be in the range of $0.5 to $1.0 million.
Environmental Issues
- --------------------
There are no known outstanding environmental issues with respect to
Compass' office properties or properties in which the Bank maintains a lien
interest which, in management's judgment, would have a material adverse impact
on financial condition or operations.
Legal Proceedings
- -----------------
Compass and Sandwich Bancorp are not currently involved in any legal
proceedings other than routine legal proceedings that occur in the ordinary
course of business, which, in aggregate, involve amounts that are believed to be
material to the financial condition of the Bank.
<PAGE>
RP Financial, LC.
Page 2.1
II. MARKET AREA
Compass conducts operations out of its main office in New Bedford,
Massachusetts, and a total of 23 branch offices including 14 in Bristol County,
5 in Dukes County (Martha's Vineyard Island) and two in Bristol County, all of
which are situated in southeastern Massachusetts. Additionally, the Bank
operates two limited service offices in area high schools, and a network of 25
branch and remote automated teller machines ("ATMs"). Sandwich operates through
its main office in Sandwich, Massachusetts and ten branch offices, which
includes 9 offices in Barnstable County and two offices in Plymouth County.
Sandwich's offices are located generally in markets contiguous and complimentary
to those served by Compass. Following the acquisition, Sandwich will be merged
with and into Compass and Sandwich's branches will operate as branches of
Compass (Exhibit II-1 provides information regarding the branch offices).
Sandwich's administrative operations will be merged with those of the Bank.
The Bank's markets in southeast Massachusetts has a long history of
economic prominence in the state and nation. The region made its early fortunes
in whaling and fishing. As the whaling trade died out in the 1840s,
manufacturing became the dominant industry with textile and shoe manufacturing
being the preeminent industries. The area went through a long period of general
decline from the 1920's into the early 1980s as manufacturing and the textile
industries moved to other areas while the region was largely bypassed by the
defense and high technology industries which became increasingly important in
the Boston area. In the 1980s, strong economic growth returned to southeast
Massachusetts fostered by improved highways and inexpensive housing costs. The
region's unemployment rate fell from 9.2 percent in 1983 to 4.3 percent in 1988,
reflecting strong growth in the retail/wholesale trade sectors, services, and
the construction industry. Subsequently, the recession of the early 1990s wiped
out all the economic gains of the previous decade and the region's unemployment
rose to 12 percent in 1990.
Southeast Massachusetts economic base is still dominated by
manufacturing with concentrations remaining in the historic textile and shoe
industries and significant electronics and jewelry production. Despite steep
losses before and throughout the 1983-1991 period, manufacturing still accounts
for 23 percent of all employment in the region, compared with the
<PAGE>
RP Financial, LC.
Page 2.2
statewide average of 17.2 percent. Manufacturing ranges from over 50 percent of
total private employment in Attleboro, 35 percent in Fall River, 33 percent in
New Bedford and 23 percent in Taunton. Manufacturing employment is supplemented
by the tourism, agriculture and fishing industries and New Bedford remains a
large seaport.
The following sections analyze the market area's historical and
forecasted demographic growth trends, economy, and the competitive environment
to help determine the growth potential that exists for the Bank. The ability of
the market area to provide growth opportunities for Compass is an important
consideration that is reflected in the Bank's pro forma market value analysis.
Market Area Demographics
- ------------------------
Demographic trends in the Bank's market are an important indicator of
future growth potential. The following sections evaluate several key demographic
factors impacting Compass, including trends in population, number of households
and household income distribution data for the primary market areas (see Table
2.1). Examined are figures for the U.S. overall, the State of Massachusetts and
the Bank's primary markets (i.e., the four county market in southeastern
Massachusetts where Compass and Sandwich maintain a retail presence). Compass'
markets have experienced uneven growth as demographic growth in Bristol County
has been comparatively modest while relatively strong in Barnstable and Dukes
Counties (i.e., Cape Cod and Martha's Vineyard). Specifically, the data shows
that between 1990 and 1997, the population of Bristol County, where Compass
maintains 14 offices and nearly 60 percent of the Bank's total deposits
(inclusive of the Sandwich acquisition), increased at a slow 0.2 percent annual
rate. Conversely, the population of outlying areas, where the Bank maintains a
relatively smaller proportionate market share, has realized more favorable
growth trends. For example, in Plymouth County, the population growth rate
equaled 0.8 percent on an annual basis while the population of Barnstable
County, where the majority of Sandwich's operations are located, have increased
at rates in excess of the state and national average. Population growth trends
observed above are projected to continue over the next five year period, with
areas such as Cape Cod, Martha's Vineyard and Nantucket (the "Cape and Islands")
as well as portions of Plymouth County projected to experience the most
favorable growth trends.
<PAGE>
RP Financial, LC.
Page 2.3
Table 2.1
Compass Bank for Savings
Summary Demographic Data
<TABLE>
<CAPTION>
Growth Rate Growth Rate
Population (000) 1990 1997 2002 1990-97 1997-2002
- ---------------- ---- ---- ---- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
United States 248,710 267,805 281,209 1.1% 1.0%
Massachusetts 6,016 6,113 6,181 0.2% 0.2%
Barnstable County 187 205 218 1.4% 1.2%
Bristol County 506 515 521 0.2% 0.2%
Dukes County 12 14 15 2.3% 2.0%
Plymouth County 435 461 479 0.8% 0.8%
Households (000)
- ----------------
United States 91,947 99,020 104,001 1.1% 1.0%
Massachusetts 2,247 2,316 2,368 0.4% 0.4%
Barnstable County 78 86 93 1.6% 1.4%
Bristol County 188 193 198 0.4% 0.4%
Dukes County 5 6 7 2.5% 2.1%
Plymouth County 150 161 169 1.1% 1.0%
Median Household Income ($)
- ---------------------------
United States $29,199 $36,961 $42,042 3.4% 2.6%
Massachusetts 36,286 42,084 45,253 2.1% 1.5%
Barnstable County 31,702 34,745 36,749 1.3% 1.1%
Bristol County 31,500 37,028 41,897 2.3% 2.5%
Dukes County 28,781 35,843 37,917 3.2% 1.1%
Plymouth County 42,428 45,884 51,011 1.1% 2.1%
Per Capita Income ($)
- ---------------------
United States $13,179 $18,100 - 4.6% N/A
Massachusetts 16,241 20,310 - 3.2% N/A
Barnstable County 16,249 18,311 - 1.7% N/A
Bristol County 13,557 16,729 - 3.0% N/A
Dukes County 15,598 20,123 - 3.7% N/A
Plymouth County 16,555 19,340 - 2.2% N/A
1997 Age Distribution (%) 0-14 Years 15-24 Years 25-44 Years 45-64 Years 65+ Years Median Age
- ------------------------- ---------- ----------- ----------- ----------- --------- ----------
United States 21.7 13.6 31.4 20.5 12.7 34.8
Massachusetts 20.2 12.8 33.2 20.4 13.4 35.4
Barnstable County 19.1 9.9 27.7 22.2 21.0 40.7
Bristol County 20.9 13.3 31.3 20.4 14.1 35.3
Dukes County 20.3 9.9 29.4 25.0 15.3 40.2
Plymouth County 22.5 12.7 31.8 21.6 11.5 34.7
Less Than $15,000 to $25,000 to $50,000 to $100,000 to
1997 HH Income Dist. (%) $15,000 $25,000 $50,000 $100,000 $150,000 $150,000+
- ------------------------ ----------- ---------- ---------- ---------- --------- ---------
United States 17.7 14.4 33.5 26.5 5.4 2.6
Massachusetts 16.4 11.3 31.2 31.4 6.7 3.0
Barnstable County 18.6 15.9 35.2 24.9 3.9 1.5
Bristol County 20.2 12.2 33.9 28.1 4.2 1.4
Dukes County 16.9 13.7 38.4 21.9 5.6 3.5
Plymouth County 13.8 10.0 30.7 35.8 7.2 2.6
</TABLE>
Source: CACI.
<PAGE>
RP Financial, LC.
Page 2.4
Median household and per capita income levels in the primary market
area reflect the distinct socioeconomic markets served by the Bank. Post-Merger
Compass will serve a broad market spectrum of the population ranging from
relatively affluent white collar professionals, particularly in Plymouth County,
to a lower income blue collar customer base in the New Bedford and Fall River
areas. For example, in 1997, Bristol County reported a median household income
of $37,028, which was below the state average and approximately equivalent to
the national average. In contrast, the median household income in Plymouth
County equaled $45,884, which exceeded both the state and national averages.
Economy
- -------
As discussed earlier, the regional economy of southeastern
Massachusetts is still dominated by manufacturing. Large employers in the New
Bedford/Fall River areas include Titleist and Footjoy Worldwide in Fairhaven
employing 1500 workers and Polaroid in New Bedford employing in excess of 800
workers. The economy of Barnstable County (Cape Cod), where Sandwich conducts
the majority of its operations, remains highly dependent upon the tourism
industry but such dependence has lessened over the last decade as the number of
permanent residents has increased.
Textile and Apparel Industry
----------------------------
Southeastern Massachusetts (the "Southeast Region") is home to the
largest concentration of textile and apparel manufacturers in the state. In
1991, there were 4,921 people employed in the production of textiles in the
Southeast, representing an 11.4 percent decrease from the 1988 level of 5,557.
Textile manufacturers in the Southeast Region tend to specialize in narrow niche
markets. Examples include: Globe Manufacturing Company of Fall River, which
produces rubber thread and spandex fiber; Bacon Felt of Taunton, which produces
felt to be used in a variety of medical and industrial applications; and Albany
International in Mansfield, which produces fabrics with many military and
industrial applications. Quaker Fabrics of Fall River, employing nearly 1,400
workers, makes textile fabrics used in furniture upholstery, car interiors and
military camouflage uniforms.
<PAGE>
RP Financial, LC.
Page 2.5
Marine Science and Electronics
------------------------------
The Southeast Region and adjacent Cape Cod are home to one of the
largest concentrations of marine science firms in the world. While the marine
science industry currently accounts for modest levels of employment, future
growth will be fueled by the existence of the region's network of research
institutions such as the Woods Hole Oceanographic Institute, the marine science
program at the University of Massachusetts at Dartmouth, the marine engineering
program at the Massachusetts Maritime Academy, the Newport Naval Underwater
Systems Center and the marine science program at the University of Rhode Island.
Fishing
-------
The Southeast Region continues to be one of the nation's premier
fishing centers. While total employment in the fisheries industry has declined
over the last decade, southeastern Massachusetts is still home to major fishing
fleets and the Port of New Bedford.
Jewelry and Silver Plating
--------------------------
Approximately 4,500 people are employed in the jewelry and silver
plating industry in the region. Swank, Inc., with facilities in Attleboro and
Taunton, employ over 1,000 people in the production of men's and women's
jewelry.
Food Processing and Distribution
--------------------------------
The largest employer in the food processing industry is Ocean Spray
Cranberries with approximately 2,500 workers. The Brockton area contains a
substantial concentration of supermarket headquarters, food distribution and
packaging firms.
Table 2.2 displays unemployment trends for the markets served by the
Bank. Overall, unemployment rates in the Bank's markets, with the exception of
Plymouth County, are in excess of the state and national averages. Importantly,
the February unemployment data reflects the high off-season unemployment on Cape
Code and Martha's Vineyard.
<PAGE>
RP Financial, LC.
Page 2.6
Table 2.2
Compass Bank for Savings
Market Area Unemployment Trends
<TABLE>
<CAPTION>
February 1997 February 1998
Region Unemployment Unemployment
------ ------------ ------------
<S> <C> <C>
United States 5.7% 5.0%
Massachusetts 4.6 3.8
Barnstable County 9.1 8.0
Bristol County 7.9 6.6
Dukes County 9.9 8.7
Plymouth County 5.0 4.3
</TABLE>
Source: U.S. Bureau of Labor Statistics.
Market Area Deposit Characteristics and Competition
- ---------------------------------------------------
Table 2.3 displays deposit market trends in the market area from June
30, 1995 to June 30, 1997, the latest date for which complete branch deposit
data is publicly available. The large volume of economic activity in the market
area, coupled with the relative proximity to the Boston metropolitan area,
results in a significant level of competition, particularly from several
superregional banks including Fleet and Bank Boston. Thus, from a competitive
standpoint, Compass is seeking to emphasize its local orientation in
southeastern Massachusetts including the Cape and Islands. At the same time, the
acquisition will enhance Compass' ability to compete with the many larger
companies in its markets through an expanded retail network, particularly in
Barnstable County.
Deposit growth in the market area was generally moderate over the
period from 1995 to 1997, equaling 1.4 percent in Bristol County and 3.8 percent
in Barnstable County. Importantly, the deposit growth rates of both Compass and
Sandwich in their largest markets exceeded the market average, resulting in a
modest increase to their respective market shares. Overall, Compass maintains an
approximate 13 percent share of the deposit market in Bristol County and 29
percent of the market in Dukes County. Sandwich maintains a 10 percent share of
the market in Barnstable County and in Plymouth County, the only area where the
Compass/Sandwich branch network overlap, Compass will maintain a relatively
small 3 percent share of the market on a pro forma basis following the Merger.
Also notable is the significant competition posed by credit unions which hold a
23 percent and 22 percent market share in Bristol and Plymouth Counties,
respectively.
<PAGE>
RP Financial, LC.
Page 2.7
Table 2.3
Compass Bank for Savings
Deposit Summary
<TABLE>
<CAPTION>
As of June 30,
-------------------------------------------------------------------
1995 1997
------------------------------- ---------------------------------- Deposit
Market # of Market # of Growth Rate
Deposits Share Branches Deposits Share Branches 1995-1997
-------- ------- -------- -------- ----- -------- ---------
(Dollars in Thousands) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
State of Massachusetts $111,284,908 100.0% 1,925 $124,563,749 100.0% 2,218 5.8%
Commercial Banks 60,145,213 54.0% 1,011 69,913,023 56.1% 942 7.8%
Savings Institutions 41,641,360 37.4% 914 44,136,419 35.4% 957 3.0%
Credit Unions 9,498,335 8.5% NA 10,514,307 8.4% 319 5.2%
Barnstable County $ 3,137,611 100.0% 102 $ 3,378,910 100.0% 104 3.8%
Commercial Banks 1,490,596 47.5% 59 1,523,553 45.1% 58 1.1%
Savings Institutions 1,645,229 52.4% 43 1,853,585 54.9% 45 6.1%
Credit Unions 1,786 0.1% NA 1,772 0.1% 1 -0.4%
Compass Bank (1) - 0.0% - - 0.0% -
Compass Bank (2) 0.0% 0.0%
Sandwich Co-op (1) 305,101 18.5% 9 337,539 18.2% 9 5.2%
Sandwich Co-op (2) 9.7% 10.0%
Pro Forma (1) 305,101 18.5% 9 337,539 18.2% 9 5.2%
Pro Forma (2) 9.7% 10.0%
Bristol County $ 6,098,661 100.0% 151 $ 6,265,181 100.0% 191 1.4%
Commercial Banks 2,472,638 40.5% 79 1,881,374 30.0% 68 -12.8%
Savings Institutions 2,697,947 44.2% 72 3,335,960 53.2% 84 11.2%
Credit Unions 928,076 15.2% NA 1,047,847 16.7% 39 6.3%
Compass Bank (1) 685,284 25.4% 14 780,831 23.4% 14 6.7%
Compass Bank (2) 11.2% 12.5%
Sandwich Co-op (1) - 0.0% - - 0.0% -
Sandwich Co-op (2) 0.0% 0.0%
Pro Forma (1) 685,284 25.4% 13 780,831 23.4% 14 6.7%
Pro Forma (2) 11.2% 12.5%
Dukes County $ 277,783 100.0% 13 $ 296,698 100.0% 3 3.3%
Commercial Banks 43,585 15.7% 3 45,645 15.4% 3 2.3%
Savings Institutions 234,198 84.3% 10 251,053 84.6% 10 3.5%
Credit Unions - 0.0% NA - 0.0% NA
Compass Bank (1) 85,288 36.4% 5 84,717 33.7% 5 -0.3%
Compass Bank (2) 30.7% 28.6%
Sandwich Co-op (1) - 0.0% - - 0.0% -
Sandwich Co-op (2) 0.0% 0.0%
Pro Forma (1) 85,288 36.4% 5 84,717 33.7% 5 -0.3%
Pro Forma (2) 30.7% 28.6%
Plymouth County $ 4,450,296 100.0% 137 $ 4,791,549 100.0% 148 3.8%
Commercial Banks 1,300,198 29.2% 59 1,404,710 29.3% 57 3.9%
Savings Institutions 2,180,787 49.0% 78 2,340,833 48.9% 79 3.6%
Credit Unions 969,311 21.8% NA 1,046,006 21.8% 12 3.9%
Compass Bank (1) 50,401 2.3% 2 59,969 2.6% 3 9.1%
Compass Bank (2) 1.1% 1.3%
Sandwich Co-op (1) 75,407 3.5% 3 65,697 2.8% 2 -6.7%
Sandwich Co-op (2) 1.7% 1.4%
Pro Forma (1) 125,808 5.8% 5 125,666 5.4% 5 -0.1%
Pro Forma (2) 2.8% 2.6%
</TABLE>
(1) Percent of thrift deposits.
(2) Percent of total deposits.
Source: FDIC, OTS, SNL Securities.
<PAGE>
RP Financial, LC.
Page 3.1
III. PEER GROUP ANALYSIS
This chapter presents an analysis of Compass' operations versus a group
of comparable savings institutions (the "Peer Group") selected from the universe
of all publicly-traded savings institutions in a manner consistent with the
regulatory valuation guidelines. The basis of the pro forma market valuation of
Compass is derived from the pricing ratios of the Peer Group institutions,
incorporating valuation adjustments to account for key differences relative to
the Peer Group. Since no Peer Group can be exactly comparable to Compass, key
areas examined for differences are: financial condition; profitability, growth
and viability of earnings; assets growth; primary market area; dividends;
liquidity of the shares; marketing of the issue; management; and effect of
government regulations and regulatory reform. The following Peer Group selection
criteria and comparative analysis relative to Compass considered the pro forma
impact of the Sandwich Bancorp merger as set forth in the merger agreement.
Selection of Peer Group
- -----------------------
The Peer Group selection process is governed by the general parameters
set forth in the regulatory valuation guidelines. Accordingly, the Peer Group is
comprised of only those publicly-traded savings institutions whose common stock
is either listed on a national exchange (NYSE or AMEX) or NASDAQ, since the
stock trading activity is regularly reported and generally more frequent than
non-publicly traded and closely-held institutions. Non-listed institutions are
inappropriate since the trading activity for thinly-traded or closely-held
stocks is typically highly irregular in terms of frequency and price and thus
may not be a reliable indicator of market value. We have also excluded from the
Peer Group those companies under acquisition or subject to rumored acquisition,
mutual holding companies and recent conversions, since their pricing ratios are
subject to unusual distortion and/or have limited trading history. A recent
listing of the universe of all publicly-traded savings institutions is included
as Exhibit III-1.
Ideally, the Peer Group, which must have at least 10 members to comply
with the regulatory valuation guidelines, should be comprised of locally or
regionally-based institutions with comparable resources, strategies and
financial characteristics. Since there are approximately 400 publicly-traded
institutions nationally, it is typically the case that the Peer
<PAGE>
RP Financial, LC.
Page 3.2
Group will be comprised of institutions with relatively comparable rather than
identical characteristics. To the extent that differences exist between the
converting institution and the Peer Group, valuation adjustments are applied to
account for the differences.
In deriving Compass' Peer Group, the following selection criteria
resulted in a reasonably comparable group of New England savings institutions
not subject to acquisition or in MHC form: total assets ranging from $500
million to $5 billion, equity/assets over 6 percent and generally strong core
profitability. A total of 13 institutions met the foregoing criteria but only 11
were included in the Peer Group. SIS Bancorp was excluded since the full impact
of the recent completed, relatively large acquisition of Glastonbury Bank &
Trust was not reflected in trailing 12 month financial results. NSS Bancorp was
excluded due to the perceived impact of the current proxy fight on current
pricing ratios. Table 3.1 shows the general characteristics of each of the 11
Peer Group companies and Exhibit III-3 provides summary demographic and deposit
market share data for the primary market areas served by each of the Peer Group
companies.
While there are expectedly some differences relative to Compass (merged
basis), we believe that the Peer Group companies, on average, provide a good
basis for valuation subject to valuation adjustments. The following sections
present a comparison of Compass' financial condition, income and expense trends,
loan composition, interest rate and credit risk (on a merged basis) versus the
Peer Group as of the most recent publicly available date. A brief introduction
to each Peer Group member appears below, in descending asset size corresponding
with Table 3.1, along with a brief comparison to Compass.
Andover Bancorp of MA. Andover Bancorp, with a total of $1.3 billion of
assets, operates through 12 offices in Massachusetts and New Hampshire.
Andover Bancorp maintains a similar ratio of loans/assets but a smaller
proportion of non-mortgage loans, as operations are focused on mortgage
banking. Net earnings levels are similar although Andover Bancorp's more
traditional asset composition is reflected in lower asset yields and
operating expenses.
First Essex Bancorp of MA. First Essex, with $1.2 billion of assets,
operates 15 branch offices in Massachusetts and New Hampshire. Although
First Essex maintains a lower proportion of assets in loans, First Essex's
loan portfolio also reflects significant diversification into non-mortgage
commercial and consumer loans. First Essex has also facilitated recent
growth through acquisition.
<PAGE>
RP Financial, LC.
Page 3.3
Table 3.1
Peer Group of Publicly-Traded Thrifts
May 8, 1998 (1)
<TABLE>
<CAPTION>
Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Primary Market Strategy(2) Assets Offices Year Date Price Value
- ------ ------------------------------- ------ -------------- ----------- ------ ------- ---- ---- ----- -----
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANDB Andover Bancorp, Inc. of MA (3) OTC MA, NH M.B. $1,323 12 31-Dec May-86 $42.75 $221
FESX First Essex Bancorp of MA (3) OTC MA, NH Div. 1,197 15 31-Dec Aug-87 22.88 172
FAB FirstFed America Bancorp of MA AMEX MA, RI M.B. 1,160 13 31-Mar Jan-97 22.63 197
MDBK Medford Bancorp, Inc. of MA (3) OTC Eastern MA Thrift 1,136 16 31-Dec Mar-86 44.00 200
FFES First Fed of E. Hartford CT OTC Central CT Thrift 983 12 31-Dec Jun-87 40.00 109
BFD BostonFed Bancorp of MA AMEX Boston MA M.B. 975 10 31-Dec Oct-95 24.06 130
MASB MassBank Corp. of Reading MA (3) OTC Eastern MA Thrift 925 15 31-Dec May-86 49.75 178
MECH MECH Financial Inc. of CT (3) OTC Hartford CT Thrift 892 14 31-Dec Jun-96 30.00 159
BKC American Bank of Waterbury CT (3) AMEX Western CT Thrift 639 14 31-Dec Dec-81 30.00 140
MWBX MetroWest Bank of MA (3) OTC Eastern MA Thrift 609 12 31-Dec Oct-86 7.94 113
ABBK Abington Bancorp of MA (3) OTC Southeastern MA M.B. 532 8 31-Dec Jun-86 19.75 70
</TABLE>
NOTES: (1) Or most recent date available (M=March, S=September, D=December,
J=June, E=Estimated, and P=Pro Forma).
(2) Operating strategies are: Thrift=Traditional Thrift,
M.B.=Mortgage Banker, R.E.=Real Estate Developer,
Div.=Diversified and Ret.=Retail Banking.
(3) FDIC savings bank institution.
(4) Screening criteria: All New England publicly-traded savings
institutions with assets $500 million to $5 billion. Excludes SIS
Bancorp of MA due to large recently completed bank acquisition
and NSS Bancorp of CT due to current proxy battle.
Source: Corporate offering circulars, data derived from information
published in SNL Securities Quarterly Thrift Report, and
financial reports of publicly-traded thrifts.
<PAGE>
RP Financial, LC.
Page 3.4
FirstFed America Bancorp, Inc. of MA. FirstFed America, with assets in
excess of $1.0 billion, is a direct competitor of Compass in several
Massachusetts markets, but also operates branches in Rhode Island. FirstFed
America is primarily a residential lender but also competes with Compass for
commercial and consumer loans in Bristol County to a limited extent. While
FirstFed America reported lower profitability, core profitability was
relatively comparable.
Medford Bancorp, Inc. of MA. Medford Bancorp, with $1.1 billion of assets,
operates through 16 branch offices within the greater Boston metropolitan
area. Medford Bancorp generates a comparable profitability and has pursued
moderate loan portfolio diversification. Medford Bancorp has utilized
borrowed funds to a modestly greater extent.
First FS&LA of East Hartford. First Federal of East Hartford, with slightly
less than $1 billion of total assets, operates 12 offices in the Hartford
metropolitan area. First Federal maintains a greater wholesale orientation
as reflected in a higher level of investments, MBS and borrowed funds. First
Federal's lower profitability is commensurate with the lower credit risk
profile.
BostonFed Bancorp of MA. BostonFed Bancorp, with $975 million of assets,
operates through 10 branches in the greater Boston metropolitan area.
BostonFed Bancorp is primarily a residential mortgage lender and engages in
greater secondary market activities. BostonFed Bancorp's lower profitability
is largely attributable to a higher cost of funding.
MassBank Corp. of MA. MassBank Corp., with a total of $925 million of
assets, operates through 15 offices in eastern Massachusetts. MassBank Corp.
is primarily a residential lender with a comparatively high ratio of
investments and MBS. Earnings are strong, notwithstanding a moderate net
interest margin, as a result of a low operating expense ratio.
MECH Financial, Inc. of CT. MECH Financial, with $892 million in assets,
operates 14 offices in the greater Hartford area. MECH Financial's loan
portfolio diversification primarily reflects an emphasis in income property
lending. MECH Financial's higher profitability, notwithstanding higher loan
loss provisions, reflects greater non-interest operating income.
American Bank of Waterbury. American Bank, with $639 million in assets,
operates 10 branches in western Connecticut. American Bank's loan portfolio
diversification primarily reflects an emphasis in income property lending.
American Bank's stronger profitability reflects a relatively low operating
expense ratio.
<PAGE>
RP Financial, LC.
Page 3.5
MetroWest Bank of MA. MetroWest Bank, with $609 million in assets, operates
12 branches in eastern Massachusetts. MetroWest Bank's loan portfolio
diversification primarily reflects an emphasis in income property lending.
MetroWest Bank's strong profitability is attributable, in part, to its low
effective tax rate.
Abington Bancorp of MA. Abington Bancorp, with $532 million in assets,
operates 8 branches in markets south of Boston. Abington Bancorp is
primarily a residential mortgage lender, with an emphasis on mortgage
banking. Abington Bancorp's lower profitability largely reflects a lower net
interest income ratio.
In the aggregate, the Peer Group companies are less highly capitalized
than the two industry groups shown below, with generally comparable core
profitability, resulting in a higher core return on equity ratio. Overall, the
Peer Group's pricing ratios are relatively consistent with Massachusetts thrifts
(since most were included in the Peer Group) but are very distinct relative to
all publicly-traded thrifts, with a book multiple premium and an earnings
multiple discount, largely reflecting the lower capitalization and higher ROE of
the Peer Group.
<TABLE>
<CAPTION>
As of May 8, 1998
-------------------------------------------
Peer Massachusetts All Public
Group Thrifts(1) Thrifts(1)
----- ---------- ----------
<S> <C> <C> <C>
Key Financial Ratios
--------------------
Equity/Assets 8.67% 10.87% 13.59%
Core Return on Assets ("ROA")(2) 0.95 1.02 0.91
Core Return on Equity ("ROE")(2) 11.30 10.82 7.91
Key Pricing Ratios (Averages as of 5/31/98)
-------------------------------------------
Price/Book Ratio ("P/B") 191.46% 193.55% 172.79%
Price/Tangible Book Ratio ("P/TB") 198.23 198.42 176.65
Price/Core Earnings Multiple ("P/E")(2) 17.82x 18.81x 21.38x
Price/Assets Ratio ("P/A") 16.44% 20.03% 21.67%
</TABLE>
(1) Excludes institutions in MHC form and subject to acquisition.
(2) Excludes non-operating items on an after-tax basis and extraordinary
items.
The following comparative analyses are based on the latest
publicly-available financial information for both Compass and the Peer Group.
For Compass, such information is as of February 28, 1998 and gives effect for
the merger with Sandwich Bancorp with financial data as of March 31, 1998.
Comparative financial data for the Peer Group is generally as of December 31,
1997.
<PAGE>
RP Financial, LC.
Page 3.6
Financial Condition
- -------------------
After giving effect to the merger, Compass should maintain an asset
size advantage relative to the Peer Group (approximately $1.7 billion versus the
Peer Group average of $943 million). Compass (incorporating the pooling merger
of Sandwich) experienced modestly lower asset growth the last 12 months relative
to the Peer Group average, 8.7 and 12.3 percent, respectively. The source of
growth was different, as the Peer Group experienced relatively greater growth in
the cash and investments portfolio than loans and MBS while Compass' growth was
primarily in loans and MBS. The loan and MBS portfolios of Compass (merged
basis) increased by nearly 13 percent, largely the result of growth in loans,
closely tracking the Peer Group growth. In contrast, the cash and investments
portfolio increased strongly for the Peer Group, with the Peer Group's 25
percent growth standing in contrast to portfolio shrinkage realized by Compass.
Following conversion, Compass' portfolio of cash and investments will surge
pending longer-term deployment of the offering proceeds into loans.
The Peer Group's deposit growth the last 12 months is roughly 1.5 times
faster than Compass' 8 percent growth rate. Compass relied more heavily on
borrowed funds to support asset growth than the Peer Group over the past 12
months. On a post-conversion basis, Compass' borrowings utilization may diminish
somewhat given the expected infusion of liquid funds. Growth of the Peer Group's
funding liabilities on average was more balanced among deposits and borrowings.
Compass' deposit growth over the next year may be adversely impacted by deposit
withdrawals to fund conversion stock purchases and potential deposit runoff at
Sandwich following acquisition (which has been a characteristic in other
acquisitions).
The Peer Group is comparably capitalized relative to Compass (merged
basis) on both a reported and tangible capital basis, before the conversion
transaction impact, and both Compass and the Peer Group meet the FDICIA
"well-capitalized" standard. Specifically, Compass' current reported and
tangible capital levels of 8.7 and 8.5 percent of assets, respectively, are
comparable to the Peer Group's reported and tangible capital levels of 8.7 and
8.4 percent, respectively. Compass' pro forma capital following conversion is
anticipated to exceed the Peer Group average, providing greater leverage
potential but reducing the pro forma ROE below the Peer Group average. Compass'
tangible equity the past year grew more quickly than the average
<PAGE>
RP Financial, LC.
Page 3.7
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.2
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of December 31, 1997
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
----------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref.Stock
----------- ------ ------ -------- -------- ------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank for Savings
- ------------------------
February 28, 1998 17.5 71.9 6.6 82.5 7.6 0.0 8.7 0.2 8.5 0.0
SAIF-Insured Thrifts 17.9 67.8 10.6 69.8 15.3 0.2 13.1 0.2 12.9 0.0
All Public Companies 18.4 67.0 10.9 70.2 15.2 0.1 12.8 0.3 12.5 0.0
State of MA 19.5 63.8 12.5 72.0 16.9 0.0 9.8 0.2 9.6 0.0
Comparable Group Average 23.4 58.9 14.7 69.7 20.6 0.0 8.7 0.3 8.4 0.0
New England Companies 23.4 58.9 14.7 69.7 20.6 0.0 8.7 0.3 8.4 0.0
Comparable Group
- ----------------
New England Companies
- ---------------------
ABBK Abington Bancorp of MA 11.4 62.2 23.7 61.1 31.2 0.0 6.8 0.6 6.2 0.0
BKC American Bank of Waterbury CT 30.1 56.7 10.7 71.9 18.2 0.0 9.0 0.3 8.7 0.0
ANDB Andover Bancorp, Inc. of MA 11.3 73.5 12.9 71.6 19.6 0.0 8.1 0.0 8.1 0.0
BFD BostonFed Bancorp of MA 11.0 82.2 4.5 63.6 27.0 0.0 8.4 0.3 8.1 0.0
FESX First Essex Bancorp of MA 16.9 59.1 19.3 62.2 28.7 0.0 7.6 0.9 6.7 0.0
FFES First Fed of E. Hartford CT 62.0 19.5 16.8 58.6 34.1 0.0 6.8 0.0 6.8 0.0
FAB FirstFed America Bancorp of MA 5.9 76.5 14.4 60.9 25.7 0.0 11.2 0.0 11.2 0.0
MECH MECH Financial Inc of CT 17.4 64.2 12.5 74.8 14.5 0.0 9.9 0.0 9.9 0.0
MASB MassBank Corp. of Reading MA 33.7 29.2 35.7 87.5 0.1 0.0 11.2 0.2 11.1 0.0
MDBK Medford Bancorp, Inc. of MA 35.9 50.3 10.7 72.4 18.1 0.0 8.9 0.5 8.4 0.0
MWBX MetroWest Bank of MA 22.3 74.2 0.7 82.5 9.1 0.0 7.4 0.0 7.4 0.0
<CAPTION>
Balance Sheet Annual Growth Rates Regulatory Capital
------------------------------------------------------------ -------------------------
Cash and Loans Borrows. Net Tng Net
Assets Investments & MBS Deposits &Subdebt Worth Worth Tangible Core Reg.Cap.
------ ----------- ------ -------- -------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank for Savings
- ------------------------
February 28, 1998 8.74 -5.39 12.86 6.93 23.49 13.55 14.56 8.54 8.54 14.43
SAIF-Insured Thrifts 12.57 6.45 13.04 8.47 14.26 4.02 3.13 11.40 11.43 23.04
All Public Companies 12.96 8.03 13.32 8.41 14.48 4.87 3.98 11.29 11.11 22.33
State of MA 17.70 9.71 17.00 13.55 20.31 11.60 11.57 8.23 8.51 16.37
Comparable Group Average 12.35 21.47 11.76 10.69 11.44 11.24 11.58 7.59 7.90 17.29
New England Companies 12.35 21.47 11.76 10.69 11.44 11.24 11.58 7.59 7.90 17.29
Comparable Group
- ----------------
New England Companies
- ---------------------
ABBK Abington Bancorp of MA 9.25 45.62 6.99 8.15 12.46 8.27 10.34 NM 5.46 11.87
BKC American Bank of Waterbury CT 14.43 43.04 5.53 14.47 7.38 22.13 23.68 NM 7.66 13.65
ANDB Andover Bancorp, Inc. of MA 9.79 15.46 9.70 14.88 -5.72 11.72 11.72 NM 8.10 15.00
BFD BostonFed Bancorp of MA 18.78 56.59 15.86 44.54 -12.12 -5.49 -8.95 NM NM NM
FESX First Essex Bancorp of MA 12.21 52.39 6.06 7.72 24.95 9.53 12.20 6.17 6.17 12.21
FFES First Fed of E. Hartford CT 2.52 6.40 -2.79 2.95 -0.29 11.33 11.33 7.01 7.01 22.18
FAB FirstFed America Bancorp of MA 19.35 -53.90 35.05 2.49 NM NM NM 8.54 8.54 18.35
MECH MECH Financial Inc of CT 19.51 60.38 10.00 1.91 NM 18.32 18.32 NM 9.57 16.96
MASB MassBank Corp. of Reading MA 4.18 -3.38 8.43 2.73 -16.65 12.50 10.89 NM 10.39 35.67
MDBK Medford Bancorp, Inc. of MA 9.28 -1.37 17.63 3.73 38.61 9.72 11.95 8.65 8.65 15.83
MWBX MetroWest Bank of MA 16.53 14.89 16.91 13.96 54.38 14.36 14.36 NM 7.48 11.17
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.8
Peer Group member, given the various capital strategies employed by the Peer
Group, particularly dividends and stock repurchases.
Compass' interest-earning assets ("IEA") position (including cash and
equivalents) of 96.0 percent of assets compares less favorably to the Peer Group
average of 97.0 percent, before factoring in the conversion proceeds. Compass
maintains a higher proportion of assets in loans, as the Peer Group has engaged
in more extensive wholesale leveraging. As a result, the loans/assets ratio of
71.9 percent for Compass exceeded the Peer Group average of 58.9 percent.
Accordingly, while the asset mix provides the Bank an asset yield advantage,
Compass' credit risk profile and operating expense ratio are comparatively
greater.
Compass' interest-bearing liabilities ("IBL") ratio of 90.1 percent of
assets is relatively comparable to the Peer Group's ratio of 90.3 percent,
reflecting Compass' comparable pre-conversion capitalization. On a
post-conversion basis, Compass can be expected to gain an advantage with the
infusion of new capital and the extent to which deposits are withdrawn to fund
stock purchases. Currently, Compass' funding liabilities are primarily comprised
of deposits, with more limited borrowings utilization than the Peer Group. On a
merged basis, Compass has approximately 52 percent of total deposits in the form
of time deposits, nearly identical to the Peer Group average. Compass maintained
roughly 16 percent of deposits in transaction accounts whereas the Peer Group
average fell just short of 15 percent. Compass' borrowings/assets ratio
approximated 7.6 percent, compared to 20.6 percent for the Peer Group. Compass'
borrowings are expected to remain more limited on a post-conversion basis given
the infusion of a significant amount of cash from the conversion which will
diminish the need for funds initially.
The relationship of interest-earning assets and interest-bearing
liabilities reveals a key element of earnings power. In this regard, Compass'
IEA/IBL ratio of 106.6 percent compares slightly unfavorably to the Peer Group
ratio of 107.4 percent. On a post-conversion basis, Compass can be expected to
gain a distinct advantage in this regard.
The strengthened capital position from conversion, the potential
withdrawal of deposits to purchase conversion stock and the reinvestment of
proceeds should enhance Compass' financial position and earnings power.
<PAGE>
RP Financial, LC.
Page 3.9
Income and Expense Trends
- -------------------------
Reported profitability for the past 12 months approximated 1.09 and
0.97 percent of average assets for Compass and the Peer Group, respectively (see
Table 3.3). While profitability was relatively comparable, the components of
core earnings are illustrative of the differences between the Bank and the Peer
Group.
Net Interest Income
-------------------
Compass maintains a higher proportion of loans/assets and greater loan
portfolio diversification, which generate a higher level of net interest income
and non-interest fee income but also result in a higher level of operating costs
and higher credit risk profile. Compass' interest income ratio of 7.47 percent
of average assets was above the Peer Group average of 7.16 percent. The Bank
also maintains a lower cost of funds, 3.76 percent versus 4.02 percent for the
Peer Group, primarily reflecting the Bank's lower borrowings utilization. As a
result, Compass maintains a net interest income ratio advantage over the Peer
Group by approximately 55 basis points. Following reinvestment of the conversion
proceeds, Compass' net interest income ratio can be expected to increase,
although asset yields may be diluted as such funds are initially expected to be
invested into short- to intermediate-term securities.
Provisions for Loan Losses
--------------------------
During the last 12 months, provision for loan losses for Compass and
the Peer Group represented 0.14 percent and 0.25 percent of average assets,
respectively, although the Peer Group median equaled only 0.18 percent of
average assets (the difference between the mean and median was primarily
attributable to one Peer Group member with very high provisions during the last
12 months). Compass' higher credit risk profile suggests that loan loss
provisions may exceed the Peer Group average - this will be discussed in a later
section.
Non-Interest Income
-------------------
Compass generates higher non-interest operating income than the Peer
Group, based on levels of 0.48 percent and 0.43 percent of average assets,
respectively. The majority of Compass' non-interest operating income is
generated from fees on the core deposit base, loan fees, and ATM card fees.
Compass' higher fee income is partially attributable to the Bank's efforts to
generate less traditional sources of revenue and that retail operations comprise
a greater
<PAGE>
RP Financial, LC.
Page 3.10
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.3
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended December 31, 1997
<TABLE>
<CAPTION>
Net Interest Income Other Income G&A/Other Exp.
--------------------------- ------------------- ----------------
Loss NII Total
Net Provis. After Loan R.E. Other Other G&A Goodwill
Income Income Expense NII on IEA Provis. Fees Oper. Income Income Expense Amort.
----- ------ ------- ----- ------- ------- ---- ----- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank for Savings
------------------------
February 28, 1998 1.09 7.47 3.76 3.70 0.14 3.56 0.00 -0.03 0.51 0.48 2.28 0.05
SAIF-Insured Thrifts 0.92 7.40 4.12 3.27 0.13 3.14 0.10 0.01 0.29 0.41 2.18 0.02
All Public Companies 0.94 7.38 4.07 3.32 0.13 3.18 0.10 0.01 0.31 0.42 2.20 0.03
State of MA 1.07 7.09 3.69 3.40 0.09 3.32 0.07 -0.01 0.31 0.37 2.20 0.02
Comparable Group Average 0.97 7.16 4.02 3.15 0.25 2.90 0.07 -0.01 0.37 0.43 2.01 0.03
New England Companies 0.97 7.16 4.02 3.15 0.25 2.90 0.07 -0.01 0.37 0.43 2.01 0.03
Comparable Group
----------------
New England Companies
---------------------
ABBK Abington Bancorp of MA 0.87 7.22 4.00 3.22 0.13 3.10 0.11 0.00 0.70 0.82 2.58 0.09
BKC American Bank of Waterbury CT 1.32 7.21 4.02 3.19 0.30 2.89 0.00 -0.08 0.57 0.50 1.69 0.04
ANDB Andover Bancorp, Inc. of MA 1.05 7.23 4.15 3.08 0.08 3.00 0.17 -0.08 0.26 0.35 1.75 0.00
BFD BostonFed Bancorp of MA 0.75 7.28 3.97 3.31 0.18 3.13 0.13 0.13 0.26 0.53 2.41 0.02
FESX First Essex Bancorp of MA 0.83 7.68 4.46 3.21 0.17 3.04 0.05 -0.05 0.21 0.21 1.91 0.07
FFES First Fed of E. Hartford CT 0.57 6.75 4.46 2.29 0.08 2.21 0.00 0.00 0.16 0.16 1.39 0.00
FAB FirstFed America Bancorp of MA 0.17 7.06 4.22 2.84 0.27 2.56 0.26 0.00 0.20 0.45 2.05 0.00
MECH MECH Financial Inc of CT 1.60 7.02 3.44 3.58 1.11 2.47 0.10 0.00 0.82 0.92 2.77 0.00
MASB MassBank Corp. of Reading MA 1.12 6.67 3.81 2.86 0.03 2.83 0.00 0.00 0.20 0.20 1.36 0.03
MDBK Medford Bancorp, Inc. of MA 1.05 6.97 3.82 3.14 0.01 3.13 0.00 0.00 0.25 0.25 1.61 0.11
MWBX MetroWest Bank of MA 1.33 7.73 3.81 3.92 0.42 3.50 0.00 -0.06 0.39 0.33 2.58 0.00
<CAPTION>
Non-Op. Items Yields, Costs, and Spreads
-------------- -------------------------
MEMO: MEMO:
Net Extrao. Yield Cost Yld-Cost Assets/ Effective
Gains Items On Assets Of Funds Spread FTE Emp. Tax Rate
------ ------- --------- -------- ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Compass Bank for Savings
------------------------
February 28, 1998 0.05 0.00 7.84 4.48 3.36 3,360 38.05
SAIF-Insured Thrifts 0.07 0.00 7.61 4.80 2.81 4,306 36.92
All Public Companies 0.07 0.00 7.61 4.72 2.89 4,254 36.98
State of MA 0.08 0.00 7.34 4.09 3.25 3,920 39.55
Comparable Group Average 0.03 0.00 7.39 4.45 2.94 4,298 40.12
New England Companies 0.03 0.00 7.39 4.45 2.94 4,298 40.12
Comparable Group
----------------
New England Companies
---------------------
ABBK Abington Bancorp of MA 0.15 0.00 7.44 4.34 3.10 3,093 37.96
BKC American Bank of Waterbury CT 0.27 0.00 7.40 4.42 2.98 4,664 31.30
ANDB Andover Bancorp, Inc. of MA 0.03 0.00 7.43 4.55 2.88 4,641 35.56
BFD BostonFed Bancorp of MA 0.12 0.00 7.46 4.40 3.06 3,868 43.83
FESX First Essex Bancorp of MA 0.13 0.00 8.03 4.91 3.12 4,696 40.72
FFES First Fed of E. Hartford CT -0.09 0.00 6.87 4.80 2.08 5,430 35.77
FAB FirstFed America Bancorp of MA -0.56 0.00 7.31 4.94 2.37 4,026 59.89
MECH MECH Financial Inc of CT 0.03 0.00 7.40 3.86 3.55 3,880 NM
MASB MassBank Corp. of Reading MA 0.13 0.00 6.76 4.32 2.45 5,141 37.10
MDBK Medford Bancorp, Inc. of MA 0.06 0.00 7.21 4.22 2.99 4,506 38.91
MWBX MetroWest Bank of MA 0.01 0.00 7.95 4.16 3.79 3,328 NM
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.11
proportion of total assets in comparison to the Peer Group who is more dependent
on wholesale leveraging on average.
Operating Expenses
------------------
Compass maintains a higher operating expense ratio than the Peer Group,
2.28 and 2.01 percent of average assets, respectively (excluding goodwill
amortization and non-operating items). Compass' higher operating expense ratio
is the result of several factors, including: (1) the Peer Group's greater
wholesale leveraging (which requires little marginal overhead expense); (2)
Compass' greater revenue diversification efforts; and (3) Compass' greater
diversification into higher risk weight loans as well as higher asset mix in
loans, which require greater administration. Following the conversion and
acquisition transactions, there are expected to be opposing forces on Compass'
operating expense ratio. First, merger synergies are expected to lead to a
reduction in operating expenses, primarily in terms of compensation and
benefits. Such cost savings are expected to be partially offset by some
consolidating expenditures and related marketing. The Bank's operating expenses
can also be expected to increase with the incorporation of the Employee Stock
Ownership Plan and public company operations and the construction of a new
headquarters facility.
Net Non-Operating Items
-----------------------
Compass reported similar net non-operating income relative to the Peer
Group, 5 and 3 basis points, respectively. Compass' non-operating revenues were
attributable primarily to gains on the sale of loans and investments, comparable
to the Peer Group's sources.
Efficiency Ratio
----------------
Compass operates with a comparable pre-conversion efficiency ratio
(operating expenses, excluding goodwill amortization, as a percent of the sum of
net interest income before loan loss provisions and other operating income)
relative to the Peer Group, equal to 55 and 56 percent, respectively. The
efficiency ratio is another indicator of core earnings strength and the Bank and
the Peer Group have a comparable level of core earnings. Compass' efficiency
ratio is expected to improve on a post-conversion basis with the investment of
the net conversion proceeds and the net impact of potential merger synergies and
public company/stock plan expense.
<PAGE>
RP Financial, LC.
Page 3.12
Income Taxes
------------
Compass' effective tax rate of 38.05 percent was slightly below the
Peer Group's average effective tax rate of 40.12 percent. The Bank's effective
tax rate may decline slightly as a result of certain tax planning strategies
which are also available to the Peer Group members.
Loan Portfolio Composition
- --------------------------
Perhaps one of the greatest differences between Compass and the Peer
Group is loan portfolio composition, with Compass having a more diversified loan
portfolio than the Peer Group (see Table 3.4). As noted earlier, Compass
maintains a higher proportion of assets in loans. Compass' loan portfolio also
reflects greater diversification into high risk-weight loans, particularly C&I
loans and consumer loans, 4.60 and 19.44 percent of loans and MBS, respectively,
exceeding the Peer Group averages of 3.77 percent and 2.73 percent,
respectively. The Bank's portfolio of construction and commercial mortgage loans
more closely approximated the Peer Group average, and the proportion of
residential mortgage loans, inclusive of MBS, was below the Peer Group average.
As a result of the foregoing, Compass' risk weighted assets to total assets
ratio of 64.9 percent well exceeded the Peer Group average 54.8 percent.
Overall, the Compass loan portfolio appears to provide the Bank with an
avenue for growth and stronger yield potential than the Peer Group. At the same
time, the level of NPAs coupled with loan portfolio composition leads to
comparatively greater credit risk than for the Peer Group on average.
Although the Peer Group on average is smaller than Compass, the Peer
Group services more loans for others than Compass, largely due to three Peer
Group members. The Peer Group's capitalized mortgage servicing rights represent
44 basis points of the balance serviced for others; in contrast, the Bank's
capitalized portion was de minimus.
Credit Risk
- -----------
Overall, Compass' credit risk exposure appears to be significantly
greater than the Peer Group's, as indicated by the Bank's higher proportion of
assets in loans, greater diversification into higher risk lending, the larger
size of C&I loans, the nature of indirect lending and higher level of
non-performing assets. As shown in Table 3.5, Compass' ratio of non-performing
assets
<PAGE>
RP Financial, LC.
Page 3.13
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.4
Loan Portfolio Composition and Related Information
Comparable Institution Analysis
As of December 31, 1997
<TABLE>
<CAPTION>
Portfolio Composition as a Percent of MBS and Loans
--------------------------------------------------------
1-4 Constr. 5+Unit Commerc. RWA/ Serviced Servicing
Institution MBS Family & Land Comm RE Business Consumer Assets For Others Assets
- ----------- ----- ------ ------ ------ ------ -------- ------ ---------- ------
(%) (%) (%) (%) (%) (%) (%) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank for Savings 8.34 46.55 5.07 13.94 4.60 19.44 64.92 319,640 0
SAIF-Insured Thrifts 14.67 63.10 5.52 11.23 5.97 1.70 53.51 362,432 3,333
All Public Companies 14.92 61.44 4.99 12.89 5.68 1.96 54.12 484,034 4,718
State of MA 18.04 58.50 2.14 16.04 2.48 3.02 59.48 196,039 781
Comparable Group Average 21.11 57.36 2.14 13.22 3.77 2.73 54.80 287,860 1,288
Comparable Group
- ----------------
ABBK Abington Bancorp of MA 26.04 64.12 0.89 4.14 4.14 0.66 51.48 193,534 0
BKC American Bank of Waterbury CT 9.17 59.19 4.95 22.54 0.40 3.73 62.75 1,983 0
ANDB Andover Bancorp, Inc. of MA 17.93 63.68 3.04 12.54 0.89 1.93 59.87 915,878 8,953
BFD BostonFed Bancorp of MA 4.40 84.30 0.98 7.64 2.83 0.10 NA 565,985 1,821
FESX First Essex Bancorp of MA 23.65 37.82 4.96 11.02 13.39 11.18 60.40 36,711 97
FFES First Fed of E. Hartford CT 54.99 33.87 0.61 4.05 5.86 0.88 32.99 12,422 0
FAB FirstFed America Bancorp of MA 15.80 72.61 1.79 3.91 4.46 2.31 54.52 1,264,000 3,230
MECH MECH Financial Inc of CT 19.22 54.82 0.81 18.23 2.70 4.28 61.81 56,957 72
MASB MassBank Corp. of Reading MA 55.24 41.70 0.30 0.58 2.36 0.01 29.42 3,598 0
MDBK Medford Bancorp, Inc. of MA 4.96 68.14 1.30 20.74 3.24 1.62 57.53 547 0
MWBX MetroWest Bank of MA 0.84 50.68 3.94 40.03 1.25 3.27 77.28 114,842 0
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.14
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.5
Credit Risk Measures and Related Information
Comparable Institution Analysis
As of December 31, 1997 or Most Recent Date Available
<TABLE>
<CAPTION>
NPAs & Rsrves/
REO/ 90+Del/ NPLs/ Rsrves/ Rsrves/ NPAs & Net Loan NLCs/
Institution Assets Assets Loans Loans NPLs 90+Del Chargoffs Loans
- ----------- ------ ------ ------ ------ ------ -------- --------- --------
(%) (%) (%) (%) (%) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank for Savings 0.09 0.85 1.05 1.22 116.75 104.27 1,948 0.16
SAIF-Insured Thrifts 0.26 0.69 0.72 0.78 192.46 141.98 305 0.10
All Public Companies 0.25 0.69 0.76 0.87 192.48 147.78 302 0.10
State of MA 0.18 0.49 0.62 1.33 267.23 214.81 77 -0.02
Comparable Group Average 0.20 0.56 0.86 1.33 270.16 214.80 160 0.01
Comparable Group
- ----------------
ABBK Abington Bancorp of MA 0.05 0.14 0.14 0.72 520.00 310.69 0 0.00
BKC American Bank of Waterbury CT 0.25 2.28 3.39 1.54 45.46 40.39 98 0.10
ANDB Andover Bancorp, Inc. of MA 0.02 0.49 0.64 1.24 194.10 184.92 312 -0.01
BFD BostonFed Bancorp of MA 0.02 NA NA 0.84 NA NA 145 0.00
FESX First Essex Bancorp of MA 0.09 0.54 0.78 1.49 192.08 150.53 412 0.23
FFES First Fed of E. Hartford CT 0.01 0.31 1.18 1.32 111.50 85.02 40 0.08
FAB FirstFed America Bancorp of MA 0.05 0.31 0.36 1.16 324.35 275.70 7 0.00
MECH MECH Financial Inc of CT 1.61 0.56 0.69 2.28 329.02 258.21 690 0.47
MASB MassBank Corp. of Reading MA 0.00 0.17 0.56 0.86 152.27 152.27 2 0.00
MDBK Medford Bancorp, Inc. of MA 0.00 0.13 0.24 1.17 498.97 481.96 22 0.02
MWBX MetroWest Bank of MA 0.08 0.70 0.60 2.01 333.84 208.27 33 -0.74
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.15
and accruing loans more than 90 days past due equaled 0.85 percent of assets,
versus a comparative ratio of 0.56 percent for the Peer Group. Similarly,
Compass' non-performing loans to loans ratio was higher than the Peer Group's
ratio (1.05 percent versus 0.86 percent for the Peer Group). Loss reserve ratios
as a percent of problem assets also indicated a potentially higher degree of
credit risk exposure for the Bank, with the Bank and the Peer Group maintaining
loss reserves as a percent of non-performing assets and accruing loans that are
more than 90 days past due of 116.75 percent and 270.16 percent, respectively.
Net loan charge-offs were not a material factor for either the Bank or the Peer
Group during the period covered in Table 3.5.
Interest Rate Risk
- ------------------
Public companies are not required to report interest rate risk in a
standard fashion and many do not specifically quantify their interest rate risk
on a regular basis. Furthermore, the computation of interest rate risk is
predicated on numerous assumptions, many of which are unique among institutions.
As a result, we have sought to measure interest rate risk by evaluating balance
sheet composition and recent quarterly changes in net interest income ratio.
Currently, Compass' asset composition suggests greater interest rate
risk given its higher non-earning assets, resulting in a lower IEA/IBL ratio. As
a result, Compass has greater dependence on the yield-cost spread to sustain the
net interest income ratio. Compass' advantage in terms of post-conversion
capital ratio should diminish the current comparative disadvantage in this
regard.
Compass has maintained a comparable fluctuation in net interest income
ratio during the last 5 quarters, as compared to the Peer Group average,
suggesting comparable interest rate risk exposure. It is expected that the
infusion of stock proceeds will serve to further enhance the stability of
Compass' net interest income ratio.
Market Area and Competitive Characteristics
- -------------------------------------------
As indicated previously, all 11 Peer Group companies are regionally
based, and thus share similar market area and competitive characteristics with
Compass (refer to Exhibit III-3). A few of the Peer Group companies are direct
regional competitors of Compass and seven of the
<PAGE>
RP Financial, LC.
Page 3.16
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.6
Interest Rate Risk Measures and Net Interest Income Volatility
Comparable Institution Analysis
As of December 31, 1997 or Most Recent Date Available
<TABLE>
<CAPTION>
Balance Sheet Measures
--------------------------
Non-Earn. Quarterly Change in Net Interest Income
Equity/ IEA/ Assets/ ----------------------------------------------------------
Institution Assets IBL Assets 12/31/97 09/30/97 06/30/97 03/31/97 12/31/96 09/30/96
- ----------- ------ ------ ------ -------- -------- -------- -------- -------- --------
(%) (%) (%) (change in net interest income is annualized in basis points)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank for Savings 8.5 106.5 4.0 0 2 -3 -8 3 22
SAIF-Insured Thrifts 12.8 113.4 3.6 -3 -4 2 0 1 3
All Public Companies 12.4 112.7 3.6 -3 -4 1 0 1 3
State of MA 9.2 102.7 4.0 3 -6 -5 6 5 5
Comparable Group Average 8.4 107.5 3.0 -2 -6 -3 9 -1 8
Comparable Group
- ----------------
ABBK Abington Bancorp of MA 6.2 105.4 2.7 -10 1 -7 8 12 11
BKC American Bank of Waterbury CT 8.7 108.2 2.5 -4 -7 -8 -10 9 4
ANDB Andover Bancorp, Inc. of MA 8.1 107.1 2.3 5 -3 -3 9 3 -1
BFD BostonFed Bancorp of MA 8.1 107.8 2.3 0 -1 5 15 -3 10
FESX First Essex Bancorp of MA 6.7 105.0 4.6 14 -16 -10 37 -11 -2
FFES First Fed of E. Hartford CT 6.8 106.0 1.7 1 -11 -6 2 -7 5
FAB FirstFed America Bancorp of MA 11.2 111.6 3.3 -16 -4 17 27 -19 -2
MECH MECH Financial Inc of CT 9.9 105.3 5.9 -16 -13 -13 -9 12 37
MASB MassBank Corp. of Reading MA 11.1 112.6 1.4 3 -2 -0 -1 0 4
MDBK Medford Bancorp, Inc. of MA 8.4 107.1 3.1 -7 -5 -4 3 -3 -1
MWBX MetroWest Bank of MA 7.4 106.1 2.8 10 -0 -4 12 -2 26
</TABLE>
NA=Change is greater than 100 basis points during the quarter.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.17
Peer Group members primarily operate within the greater Boston metropolitan
area. In general, the Peer Group members serve urban or suburban markets within
the New England market.
While the Bank's pro forma assets exceed the Peer Group average and
each company individually, the resources of each are generally comparable in a
broad sense, i.e., more than a one or two office institution but substantially
less than the major regional and superregional competition. Both operate
substantial branch office networks and compete in urban/suburban markets with
significantly larger commercial banks. In general, Compass and the Peer Group
are primarily mortgage lenders, although Compass has diversified its lending
operations to a greater degree. Compass maintains a greater primary market area
deposit market share than the Peer Group, although the Bank operates in a
relatively smaller market and is increasingly subject to greater competition
from credit unions.
<PAGE>
RP Financial, LC.
Page 4.1
IV. VALUATION ANALYSIS
Introduction
- ------------
This chapter presents the valuation analysis, prepared pursuant to the
regulatory valuation guidelines, and valuation adjustments and assumptions used
to determine the estimated pro forma market value of the common stock to be
issued in conjunction with Compass' conversion transaction.
Appraisal Guidelines
- --------------------
The OTS appraisal guidelines, most recently amended in written form in
October 1994, and applicable interpretations thereof, specify the methodology
for estimating the pro forma market value of an institution pursuant to a
mutual-to-stock conversion. Such valuation guidelines are relied upon by the
Massachusetts Division of Banks and the FDIC in evaluating conversion appraisals
in the absence of such specific guidelines separately issued by the respective
agencies. The valuation methodology provides for: (1) the selection of a peer
group of comparable publicly-traded institutions, excluding those converted for
less than a year, subject to acquisition or in MHC form; (2) a financial and
operational comparison of the subject company to the selected peer group,
identifying key differences and similarities; and (3) a valuation analysis in
which the pro forma market value of the subject company is determined based on
the market pricing of the peer group as of the date of valuation, incorporating
valuation adjustments for key differences. In addition, the pricing
characteristics of recent conversions, both at conversion and in the
aftermarket, must be considered.
RP Financial Approach to the Valuation
- --------------------------------------
RP Financial's valuation analysis complies with the above-referenced
appraisal guidelines. Accordingly, the valuation incorporates a detailed
analysis based on the Peer Group discussed in Chapter III, incorporating
"fundamental analysis" techniques. Additionally, the valuation incorporates a
"technical analysis" of recently completed stock conversions, including closing
pricing and aftermarket trading. It should be noted that such analyses cannot
possibly
<PAGE>
RP Financial, LC.
Page 4.2
fully account for all the market forces which impact trading activity and
pricing characteristics of a particular stock on a given day.
The pro forma market value determined herein is a preliminary value for
the to-be-issued stock. Throughout the conversion process, RP Financial will:
(1) review changes in Compass' operations and financial condition (inclusive of
the operations and financial condition of Sandwich Bancorp); (2) monitor
Compass' operations and financial condition relative to the Peer Group to
identify any fundamental changes; (3) monitor the external factors affecting
value including, but not limited to, local and national economic conditions,
interest rates, and the stock market environment, including the market for
thrift stocks; and (4) monitor pending conversion offerings (including those in
the offering phase) both regionally and nationally. If material changes should
occur during the conversion process, RP Financial will prepare updated valuation
reports reflecting such changes and their related impact on value, if any, over
the course of the conversion process. RP Financial will also prepare a final
valuation update at the closing of the conversion offering to determine if the
preliminary range of value continues to be appropriate.
The appraised value determined herein is based on the current market
and operating environment for Compass and for all thrifts. Subsequent changes in
the local and national economy, the legislative and regulatory environment, the
stock market, interest rates, and other external forces (such as natural
disasters or major world events), which may occur from time to time (often with
great unpredictability) may materially impact the market value of all thrift
stocks, including Compass, or Compass' value alone. To the extent a change in
factors impacting Compass' value can be reasonably anticipated and/or
quantified, RP Financial has incorporated the estimated impact into our
analysis.
Valuation Analysis
- ------------------
A fundamental analysis discussing similarities and differences relative
to the Peer Group was presented in Chapter III. The following sections summarize
the key differences between Compass and the Peer Group and how those differences
affect the pro forma valuation. Emphasis is placed on the specific strengths and
weaknesses of Compass relative to the Peer Group in such key areas as financial
condition, profitability, growth and viability of earnings, asset growth,
primary market area, dividends, liquidity of the issue, marketing of the issue,
<PAGE>
RP Financial, LC.
Page 4.3
management, and the effect of government regulations and/or regulatory reform.
We have also considered the market for thrift stocks, and in particular new
issues, to assess the impact on value of Compass coming to market at this time.
1. Financial Condition
-------------------
The financial condition of an institution is an important determinant
in pro forma market value, because investors typically look to such factors as
liquidity, capital, asset composition and quality, and funding sources in
assessing investment attractiveness. The similarities and differences in the
financial condition of Compass and the Peer Group are recapped below.
o Overall A/L Composition. Compass currently maintains a similar
reported and tangible capital position, but on a pro forma basis, is
expected to exceed the Peer Group averages, thereby enhancing Compass'
comparative earnings power based on the ratio of IEA/IBL. Compass'
comparatively higher loans/assets indicates higher origination
capacity and asset yields. Immediately following conversion, however,
Compass' proportion of investments is expected to increase, which is
expected to dilute asset yields. The Peer Group has supplemented
deposits with higher borrowings utilization, leveraging their equity,
fixed assets and operating expenses; in contrast, the Bank relies more
heavily on deposits and may seek to reduce the level of existing
borrowings given the increase to post-conversion liquidity.
o Credit Quality. The Bank has a greater level of credit risk exposure
in comparison to the Peer Group, based on the Bank's higher level of
loans/assets and NPAs, greater diversification into higher risk-weight
loans, particularly commercial and consumer loans, and lower reserve
coverage ratio. Furthermore, the Bank's emphasis on commercial loans
has increased the Bank's exposure to large borrowers.
o Balance Sheet Liquidity. While Compass currently maintains a lower
level of cash, investments and mortgage-backed securities than the
Peer Group, such difference is expected to diminish on a
post-conversion basis. The Bank appears to have greater current
borrowings capacity than the Peer Group, as the Bank has a much
smaller balance of borrowed funds.
o Capital. Compass' comparable pre-conversion capital ratio will be
substantially enhanced with the consummation of the conversion,
incorporating the dilutive impact of the merger transaction. The
increase in capital will depress Compass' pro forma return on equity
until the proceeds can be effectively reinvested and leveraged over
time.
On balance, we concluded that no valuation adjustment was warranted for
Compass' financial strength.
<PAGE>
RP Financial, LC.
Page 4.4
2. Profitability, Growth and Viability of Earnings
-----------------------------------------------
Earnings are a key factor in determining pro forma market value, as the
level and risk characteristics of an institution's earnings stream and the
prospects and ability to generate future earnings heavily influence the multiple
the investment community will pay for earnings. The major earnings factors
considered in the valuation are described below.
o Reported and Core Earnings. Compass reported comparable profitability
relative to the Peer Group, reflecting the Bank's stronger net
interest income and other operating income ratios, offset by a higher
operating expense ratio. Non-operating income and expenses were
limited for both the Bank and the Peer Group.
o Interest Rate Risk. Compass appears to maintain a relatively
comparable level of interest rate risk exposure. The anticipated
redeployment of stock proceeds into interest-earning assets with
short- to intermediate-term maturities should further moderate
interest rate risk exposure.
o Credit Risk. Loss provisions had a slightly lesser impact on Compass'
earnings in comparison to the Peer Group. In terms of future exposure
to credit quality related losses, however, Compass' higher credit risk
profile and lower reserve coverage ratio may lead to greater earnings
risk in the event of increased delinquencies and adverse economic
cycles.
o Earnings Growth Potential. Compass' post-conversion earnings growth
potential appears to be more limited than the Peer Group since: (1)
the deposits of the merged entity have recently grown more slowly than
the Peer Group; and (2) the potential for the typical deposit runoff
immediately following the merger. The net cash proceeds from
conversion are expected to be gradually deployed into loans; however,
it is anticipated that the yield-cost spread immediately following
conversion will be diminished through the initial reinvestment into
short- to intermediate-term securities. The proceeds reinvestment
benefit will also be impacted by the annual expense of the stock
plans, operations as a public company and leveraged ESOP.
Merger-related synergies are anticipated, estimated to approximate
$1.5 million pre-tax in the first year following the acquisition, $1.8
million in year 2 and $2.0 million in year 3. The estimated synergies
are expected to be largely derived from reductions in compensation and
benefits costs. At the same time, in the short-run, such savings may
initially be offset by expenses related to merging and marketing the
combined Bank. Additionally, Compass is anticipating significant new
investment in fixed assets including up to a $15 million investment in
a new main office facility and one to two new branch offices annually.
o Return on Equity. The higher pro forma capital position will place
Compass at a disadvantage relative to the Peer Group in terms of
return on equity, despite higher pro forma core profitability.
<PAGE>
RP Financial, LC.
Page 4.5
Overall, a slight downward valuation adjustment was warranted for
profitability, growth and viability of earnings.
3. Asset Growth
------------
On a merged basis, Compass' asset growth over the past 12 months
compared unfavorably to the Peer Group. In view of the Bank's comparatively
slower deposit growth and potential post-merger deposit runoff, Compass' asset
growth potential appears to remain at a disadvantage. At the same time, Compass'
higher pro forma capitalization implies a greater ability to undertake asset
growth than the Peer Group. While the merger with Sandwich Bancorp will result
in an expanded market and retail operations, there is some risk that current
Sandwich Bancorp customers and/or affiliate relationships may not be retained on
a post-acquisition basis.
On balance, we concluded that no adjustment was appropriate for this
factor.
4. Primary Market Area
--------------------
The general condition of an institution's market area has an impact on
value, as future success is in part dependent upon opportunities for profitable
activities in the local market served. All 11 of the Peer Group companies are
based in southern New England while 7 are based in the Boston metropolitan area
and 2 Peer Group companies operate in many of the same markets as Compass on a
merged basis (FirstFed America Bancorp and Abington Bancorp). Accordingly, the
Peer Group companies are viewed as sharing similar market area and competitive
characteristics with Compass, and, on balance, are subject to similar market
area demographic and economic forces and trends.
Summary demographic and deposit market share data for Compass and Peer
Group is provided in Exhibit III-3. The Peer Group's average asset size
approximates $943 million, which is lower than Compass' pro forma asset base of
approximately $1.7 billion. Both, however, operate substantial branch office
networks, compete with both large superregional banks and smaller
community-oriented financial institutions.
On balance, we concluded that no adjustment was appropriate for
Compass' market area.
<PAGE>
RP Financial, LC.
Page 4.6
5. Dividends
---------
While Seacoast has not indicated its intention to commence a cash
dividend at this time, the pro forma capitalization and profitability clearly
position Seacoast to have the capacity to pay cash dividends comparable to the
Peer Group. Historically, thrifts typically have not established dividend
policies at the time of their conversion to stock ownership. Newly converted
institutions, in general, have preferred to gain market seasoning, establish an
earnings track record and fully invest the conversion proceeds before
establishing a dividend policy. However, during the late 1980s and early 1990s,
with negative publicity surrounding the thrift industry, there was a tendency
for more thrifts to initiate moderate dividend policies concurrent with their
conversion as a means of increasing the attractiveness of the stock offering.
Today, fewer institutions are compelled to initially establish dividend policies
at the time of their conversion offering as (1) industry profitability has
improved, (2) the number of problem thrift institutions has declined, and (3)
the stock market cycle for thrift stocks is generally more favorable than in the
early-1990s. At the same time, with ROE ratios under pressure, due to high
equity levels, well-capitalized institutions are subject to increased
competitive pressures to offer dividends. In fact, the dividend payout ratios
are typically higher for the more highly-capitalized thrifts.
As publicly-traded thrifts' capital levels and profitability have
improved and as weakened institutions have been resolved, the proportion of
institutions with cash dividend policies has increased. Ten of the eleven
institutions in the Peer Group presently pay regular cash dividends, with
implied dividend yields ranging from 1.01 percent to 2.53 percent. The average
dividend yield on the stocks of the Peer Group institutions was approximately
1.71 percent as of May 8, 1998, representing an average payout ratio of
approximately 30.65 percent of core earnings. As of May 8, 1998, approximately
84 percent of all publicly-traded full stock thrifts had adopted cash dividend
policies (see Exhibit IV-1), exhibiting an average yield of 1.90 percent and an
average payout ratio of 36.32 percent. The dividend paying thrifts generally
maintain higher than average profitability ratios, facilitating their ability to
pay cash dividends, which supports a market pricing premium on average relative
to non-dividend paying thrifts.
Given Seacoast's capacity to pay a dividend comparable to the Peer
Group based on pro forma capitalization and profitability, and since no
regulatory hurdle exists, we have not made an adjustment for this factor despite
no initial dividend policy. One consideration taken into
<PAGE>
RP Financial, LC.
Page 4.7
account, however, was the history of quarterly dividends paid by Sandwich
Bancorp given that no dividend policy has yet been established by Seacoast.
6. Liquidity of the Shares
------------------------
The Peer Group is by definition composed of companies that are traded
in the public markets, all of which trade on the NASDAQ system. Typically, the
number of shares outstanding and market capitalization provides an indication of
how much liquidity there will be in a particular stock. The market
capitalization of the Peer Group companies ranged from $70.4 million to $221.4
million as of May 8, 1998, with an average market value of $153.6 million. The
shares outstanding of the Peer Group members ranged from 2.7 million to 14.2
million, with an average of approximately 5.9 million. The pro forma market
value and number of shares outstanding based on the value herein are expected to
exceed the Peer Group average and each of the Peer Group companies on an
individual basis. Since the liquidity of Seacoast's stock may exceed the Peer
Group for these reasons, although there can be no certainty of such at this
time, we applied a slight upward adjustment for this factor.
7. Marketing of the Issue
----------------------
Three separate markets exist for thrift stocks: (1) the after-market
for public companies, in which trading activity is regular and investment
decisions are made based upon financial condition, earnings, capital, ROE and
dividends; (2) the new issue market in which converting thrifts are evaluated on
the basis of the same factors but on a pro forma basis without the benefit of a
stock trading history and reporting quarterly operating results as a
publicly-held company; and (3) the thrift acquisition market. All three of these
markets were considered in the valuation of Compass' to-be-issued stock.
A. The Public Market
-----------------
The value of publicly-traded thrift stocks is easily measurable, and is
tracked by most investment houses and related organizations. Exhibit IV-1
provides pricing and financial data on all publicly-traded thrifts. In general,
thrift stock values react to market stimuli such as interest rates, inflation,
perceived industry health, projected rates of economic growth, regulatory issues
and stock market conditions in general. Exhibit IV-2 displays historical stock
market
<PAGE>
RP Financial, LC.
Page 4.8
trends for various indices and includes historical stock price index values for
thrifts and commercial banks. Exhibit IV-3 displays historical stock price
indices for thrifts only.
In terms of assessing general stock market conditions, the stock market
has generally trended higher over the past year. Profit taking, growing
expectations of a correction and comments by the Federal Reserve Chairman pulled
the market lower in late-February 1997. Following the downturn in late-February,
the market recovered in early-March. Despite increasing expectations of an
interest rate hike by the Federal Reserve, the DJIA closed to a new record high
of 7085.16 on March 11, 1997. However, an upward revision to the January retail
sales figure triggered a one day sell-off in stocks and bonds on March 13, 1997,
as the stronger than expected growth heightened expectations of an interest rate
increase by the Federal Reserve. Unease over higher interest rates,
profitability concerns in the technology sector and litigation concerns for
tobacco stocks pulled the stock market lower in mid-March. As expected, the
Federal Reserve increased the rate on short-term funds by 0.25 percent at its
late-March meeting. Following the rate increase, the sell-off in the stock
market became more severe amid further signs of an accelerating economy. Stocks
bottomed-out on news of a stronger than expected rise in core producer prices
for March, with the DJIA closing at 6391.69 on April 11, 1997, or 9.8 percent
below the all-time high recorded a month ago.
Some favorable first quarter earnings reports and news of a possible
settlement by tobacco companies to resolve the threat of liability lawsuits
provided for a modest recovery in the stock market in mid-April 1997. In
late-April, the release of economic data which indicated mild inflationary
pressures furthered the rally in bond and stock prices. News of a budget
agreement and a favorable ruling for tobacco companies sent the stock market
soaring to record highs in early-May. Mixed economic data and the Federal
Reserve's decision to leave its target for the federal funds rate unchanged at
its May meeting sustained a positive trend in the stock market through the end
of May. Profit worries caused a sell-off in technology stocks in early-June,
while declining interest rates served to stabilize the broader market.
Technology stocks rallied the stock market to new highs in mid-July, as a number
of technology companies posted favorable second quarter earnings. Favorable
inflation data, including second quarter GDP growth slowing to an annual rate of
2.2 percent, versus 4.9 percent in the first quarter, and
<PAGE>
RP Financial, LC.
Page 4.9
comments by the Federal Reserve Chairman which indicated that an increase in
interest rates was not imminent, spurred bond and stock prices strongly higher
during the second half of July.
A decline in the July 1997 unemployment rate reversed the positive bond
and stock market trends in early-August, as inflation concerns became more
prominent. A declining dollar against the yen and mark sharpened the decline in
bond prices, with the 30-year U.S. Treasury bond yield increasing from 6.32
percent at the end of July to 6.66 percent as of August 8, 1997. The sell-off in
bonds pulled stock prices lower as well. While bond prices firmed in mid-August,
notable volatility was evident in the stock market. The DJIA moved at least 100
points for five consecutive days from August 18, 1997 through August 21, 1997,
which set a record for volatility. Profit worries among some of the large blue
chip companies and mixed inflation readings were factors contributing to the
roller-coaster performance of the stock market. Despite strengthening bond
prices, stocks traded lower through the end of August. Bond prices moved higher
on inflation data which showed that prices stayed low during the second quarter,
even though second quarter GDP growth was revised upward to an annual rate of
3.6 percent compared to an original estimate of 2.2 percent.
Volatility returned to the stock market in early-September, with the
DJIA posting a record breaking point increase of 257.36 on September 2, 1997.
The rally was sparked by economic data that indicated manufacturing growth
slowed in August, thereby easing investors' inflation worries. However, the
rally was not sustained, as the DJIA pulled back following the one day rally.
The pull back was largely attributed to profit worries, which more than offset
favorable inflation news indicated by a slight increase in the national
unemployment rate for August (4.9 percent in August versus 4.8 percent in July).
Stocks fluctuated in a narrow trading range in mid-September, in anticipation of
third quarter earnings and August economic data. The low inflation reading
indicated by the August consumer price index sent stock and bond prices sharply
higher on September 16, 1997, with the DJIA posting a 175 point increase and the
yield on the 30-year U.S. Treasury bond posting its second largest decline in
the 1990s. Uncertainty over third quarter earnings provided for a mixed stock
market performance towards the end of September, while generally favorable
inflation readings pushed interest rates to their lowest level in two years. The
release of September employment data on October 3, 1997 caused bond and stock
prices to soar in early trading activity, as the September unemployment rate was
<PAGE>
RP Financial, LC.
Page 4.10
unchanged at 4.9 percent and fewer jobs than expected were added to the economy
during September. However, most of the initial gains were erased by news of
rising tensions between Iraq and Iran.
Congressional testimony by the Federal Reserve Chairman, in which he
indicated that it would be difficult to maintain the current balance between
tight labor markets and low inflation, caused stock and bond prices to skid in
mid-October 1997. Disappointing third quarter earnings in the technology sector
sharpened the sell-off in the stock market, with the Dow Jones Industrial
Average ("DJIA") posting consecutive losses of more than 1.0 percent on October
16 and 17. Stocks bounced back in early-week trading the following week,
reflecting positive third quarter earnings surprises posted by some of the blue
chip stocks. However, the recovery was abbreviated by global selling pressure,
which was led by the decline in the Hong Kong stock market, as the DJIA posted a
two-day loss approximating 320 points on October 23 and 24, 1997. The sell-off
in the world financial markets turned into a rout on the following Monday, with
a 5.8 percent decline in the Hong Kong stock market fueling the largest ever
point decline in the DJIA. On October 24, the DJIA declined 554 points or 7.2
percent. While the selling was broad based, technology stocks sensitive to Asian
demand experienced some of the sharpest declines. The turmoil in the stock
market provided for a sharp rally in U.S. Treasury bonds, reflecting a flight to
quality by skittish investors. The stock market recovered strongly the day after
the record breaking point decline, as the DJIA surged a record breaking 337
points on October 28. Comparatively, bond prices declined sharply on October 28,
as investors pulled out of the Treasury market to reinvest into the stock
market.
Market conditions remained uneven through the week ended October 31,
1997, which was followed by a soaring stock market on November 3, 1997. The DJIA
posted a 232 point increase on November 3, which was supported by a resurgence
in the Hong Kong market. Following the one day rally, volatility returned to the
stock market through mid-November. The market's uneven performance was largely
attributable to the ongoing influence of the international markets, particularly
the Asian and Latin American markets. In mid-November, the yield on the 30-year
bellwether Treasury issue approached 6.0 percent, its lowest level since
February 1996. Advances in the bond market provided for a generally positive
stock market environment in the second half of November, with bank and
technology issues being among the
<PAGE>
RP Financial, LC.
Page 4.11
strongest performers. Renewed confidence that the Asian governments would
control the region's financial problems furthered the stock market rally in
early-December. Despite a sell-off in the bond market caused by the November
unemployment rate dropping to its lowest level since October 1973, the DJIA
showed surprising strength and closed almost 99 points higher on December 5,
1997. Stocks declined the following week, as earnings concerns, particularly in
the technology sector, overshadowed a rally in the bond market. Positive
inflation news and world market turmoil caused investors to dump stocks in favor
of bonds, which served to push the yield on the bellwether 30-year Treasury bond
below 6.0 percent in mid-December. Bond prices were also boosted by the Federal
Reserve's decision to leave interest rates unchanged at its mid-December
meeting, which also provided for a modest recovery in the stock market. In
late-December, investors dumped stocks on earnings concerns, while a flight to
quality pushed bond prices higher. The stock market surged higher at year end,
as worries about South Korea's financial crisis eased.
Led by a rally in the bond market, stocks continued to move higher at
the beginning of 1998. However, turmoil in the Asian markets and the uncertain
outlook for fourth quarter earnings provided for an uneven stock market through
most of January and into early-February. For example, the Dow Jones Industrial
Average ("DJIA") plunged 222 points on January 9, 1998, due to fourth quarter
profit worries and economic turmoil in Southeast Asia. Comparatively, a rally in
the Asian markets propelled the DJIA 201 points higher on February 2, 1998. In
general, a rebound in the Asian markets and favorable fourth quarter earnings
served to the push the stock market higher during the second half of January and
into early-February. In contrast, bond prices edged lower over the same time
period, as the labor market remained tight as indicated by a sharp increase in
labor costs during the fourth quarter of 1997 and a larger than expected
increase in the number of jobs added during December 1997.
Strength primarily in technology stocks pushed the DJIA to a new record
for the first time in six months on February 10, 1998. The rally was sustained
through mid-February, as the DJIA established six consecutive new highs through
February 18, 1998. Strong earnings and expectations that profitability was not
as badly hurt by the Asian crisis as feared served as the basis for the rally in
technology stocks. Stable interest rates and few signs of inflation preserved
the positive market environment through the middle of March. Strong first
quarter earnings
<PAGE>
RP Financial, LC.
Page 4.12
results propelled the market to record highs during April, followed by some
profit taking in early May. On May 8, 1998, the DJIA closed at 9055.15, an
increase of 26.3 percent from one year ago.
Similar to the overall stock market, the market for thrift
stocks has generally been favorable during the past twelve months. Stable
interest rates and acquisition activity supported higher thrift prices in
early-March 1997; however, like the stock market in general, the peak in thrift
prices was followed by a sharp sell-off in mid-March. In fact, interest rate
sensitive issues were among the sectors hardest hit by the revised January
retail sales report, as the 30-year bond approached 7.0 percent. Interest rate
sensitive issues continued to experience selling pressure in late-March and
early-April, as signs of a strengthening economy pushed interest rates higher.
The sell-off in thrift stocks culminated on April 11, 1997, as interest rates
increased sharply on news of the higher than expected rise in core producer
prices for March. Thrift prices edged modestly higher in mid-April, reflecting
generally favorable first quarter earnings and a slight decline in interest
rates following the release of economic data which showed that inflation was
low. Favorable inflation data and the budget agreement provided for a more
substantial rally in thrift stocks in late-April and early-May, as interest rate
sensitive issues were bolstered by declining interest rates.
Thrift stocks continued to trend higher through June and early-July
1997, based on the improved interest rate outlook and an overall positive
outlook for the economy. Generally favorable second quarter earnings and the
30-year U.S. Treasury bond yield declining below 6.50 percent served to further
boost thrift prices in mid-July, with the declining interest rate environment
serving to sustain the rally in thrift prices through the end of July. Thrift
prices generally declined during the first half of August, due to higher
interest rates and profit taking. From July 31, 1997 to August 15, 1997, the SNL
Index declined by 3.7 percent. Thrift prices recovered modestly during the
second half of August, as the Federal Reserve left short-term interest rates
unchanged at its August meeting. Thrift stocks participated in the one day stock
market rally on September 2, 1997, as evidenced by a 1.95 percent increase in
the SNL Index. News of NationsBank's proposed acquisition of Barnett Banks for
more than four times its book value appears to have further contributed to the
one day run-up in thrift prices. In contrast to the overall stock market, thrift
prices continued to move higher following the one day rally in the
<PAGE>
RP Financial, LC.
Page 4.13
DJIA. Stable interest rates and acquisition news sustained the positive market
for thrift issues. The decline in interest rates following the release of the
August consumer price index in mid-September served to further the rally in
thrift prices. During late-September and early-October, interest rate sensitive
issues in general benefited from the declining interest rate environment and
expectations of strong third quarter earnings.
The upward trend in thrift prices stalled in mid-October 1997, as
interest rates moved higher following warnings by the Federal Reserve Chairman
of inflation creeping back into the economy due to the tight labor markets.
Thrift stocks gyrated in conjunction with the overall market in late-October,
with the SNL index declining by 5.2 percent on October 27 and increasing by 2.4
percent on October 28. Aided by the favorable interest rate climate, thrift
stocks posted further gains in early-November and then retreated modestly in
mid-November. Thrift and bank issues declined on concerns that a slowing U.S.
economy could lead to weaker loan demand and higher delinquency rates. However,
led by the strengthening bond market, thrift and bank issues moved higher during
late-November and early-December. Acquisition news also contributed to the
upturn in bank and thrift prices, as two major bank acquisitions were announced
for relatively high price-to-book multiples. First Union Corp.'s proposed
acquisition of CoreStates Financial ($47 billion in assets) was for 539 percent
of book value, while First American Corporation's proposed acquisition for
Deposit Guaranty Corporation ($6.8 billion in assets) was for 419 percent of
book value. Those deals, along with speculation of possible other major thrift
and bank acquisitions, filtered into the prices of bank and thrift issues in
general. Concern of relatively high valuations somewhat offset the declining
interest rate environment, as thrift issues traded in a narrow range in
mid-December. Thrift prices moved higher at the close of 1997, as interest rates
continued to decline.
The positive trend in thrift prices was not sustained at the beginning
of 1998, as thrift prices moved sharply lower during early-January trading. From
January 2, 1998 to January 9, 1998, the SNL index for all publicly-traded
thrifts declined from 810.5 to 720.2, or 11.1 percent. The sell-off in thrift
stocks was prompted by concerns that the flattening yield curve would put
pressure on earnings, particularly among institutions which maintained high
concentrations of mortgage loans. Thrift prices recovered somewhat during the
second half of January, with the upward trend becoming more pronounced in
early-February.
<PAGE>
RP Financial, LC.
Page 4.14
Fourth quarter earnings, which generally met expectations, and acquisition news
led the recovery in thrift prices. The ongoing trend of consolidation was
highlighted by the proposed merger between First Nationwide Holdings, San
Francisco, California ($30.9 billion in assets) and Golden State Bancorp,
Glendale, California ($16.0 billion in assets), which was announced in
early-February. Stable interest rates and acquisitions provided for a
continuation of the rally through the end of the first quarter while two
blockbuster bank mergers including the NationsBank merger with Bank of America
and the NBD Bancorp merger with First Chicago. On May 8, 1998, the SNL Index for
all publicly-traded thrifts closed at 875.0, an increase of 57.6 percent from
one year ago.
B. The New Issue Market
--------------------
In addition to thrift stock market conditions in general, the new issue
market for converting thrifts is also an important consideration in determining
pro forma market value. In general, the market environment for converting thrift
issues was highly receptive throughout 1997, with most converting issues being
oversubscribed and trading higher in initial trading. To date, the positive
market environment for converting thrift issues has been sustained during 1998.
Since early February 1998, standard conversion offerings completed and began
trading have exhibited an average price increase of 47.3 percent on the first
day of trading. As shown in Table 4.1, the average one week change in price for
standard conversion offerings completed during the latest three month period
ending May 8, 1998 equaled positive 58.2 percent. The average pro forma
price/tangible book and core price/earnings ratios of the recent conversions,
excluding second step conversions, was 77.6 percent and 19.8 times,
respectively. The standard conversions that have began trading since the
beginning of February 1998 have all closed at the top of the superrange.
In examining the current pricing characteristics of institutions
completing their conversions during the last three months (see Table 4.2), we
note there exists a considerable difference in pricing ratios compared to the
universe of all publicly-traded thrifts. Specifically, the current median P/B
ratio of the conversions completed in the most recent three month period of
125.4 percent reflects a discount of 27.43 percent from the average P/B ratio of
all publicly-traded thrifts (equal to 172.79 percent), and the average core P/E
ratio of 25.23 times reflects a premium of 18.01 percent from the all public
average core P/E ratio of 21.38 times. The pricing
<PAGE>
RP Financial, LC.
Page 4.15
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.2
Market Pricing Comparatives
Prices As of May 8, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------- Pricing Ratios(3)
--------------- Core Book ---------------------------------------
Price/ Market 12-Mth Value/
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
------- ------- ------- ------- ------- ------- ------- ------- --------
Financial Institution
- --------------------- ($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 23.01 176.52 0.98 13.92 20.51 167.50 21.58 172.96 21.66
All Public Companies 23.63 253.21 1.02 13.87 20.32 172.79 21.67 176.65 21.38
Special Selection Grouping(8) 17.11 257.29 0.52 12.28 25.12 152.88 34.50 154.63 25.23
State of MA 26.99 116.75 1.34 14.33 17.33 193.55 20.03 198.42 18.81
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
BYS Bay State Bancorp of MA 28.88 73.21 1.05 23.66 27.50 122.06 25.28 122.06 27.50
CAVB Cavalry Bancorp of TN 23.50 177.14 0.61 12.53 NM 187.55 51.06 187.55 NM
CFKY Columbia Financial of KY 16.13 43.08 0.08 13.42 NM 120.19 33.99 327.85 NM
EFC EFC Bancorp Inc of IL 14.19 0.00 0.56 12.42 25.34 114.25 27.16 114.25 25.34
FSLA First Source Bancorp of NJ 10.50 333.27 0.41 7.72 25.61 136.01 27.95 136.01 25.61
HARB Harbor Florida Bancshrs of FL 12.31 377.90 0.56 8.01 21.22 153.68 29.66 155.63 21.98
HBSC Heritage Bancorp, Inc of SC 22.06 102.12 0.78 19.41 28.28 113.65 32.72 113.65 28.28
HLFC Home Loan Financial Corp of OH 15.88 35.70 0.60 13.35 26.47 118.95 44.32 118.95 26.47
HFBC HopFed Bancorp of KY 21.88 88.26 0.58 13.26 NM 165.01 37.27 165.01 NM
ICBC Independence Comm Bnk Cp of NY 18.44 1298.38 0.49 12.55 NM 146.93 31.89 156.94 NM
NEP Northeast PA Fin. Corp of PA 15.38 98.85 0.42 12.43 NM 123.73 22.60 123.73 NM
TSBSD Peoples Bancorp Inc of NJ 10.63 385.20 0.15 3.04 NM 349.67 60.16 NM NM
PFSL Pocahontas Bancorp of AR 10.06 67.09 0.47 8.31 21.40 121.06 15.97 121.06 21.40
RCBK Richmond County Fin Corp of NY 19.75 521.87 0.56 11.79 NM 167.51 42.96 167.51 NM
SBAN SouthBanc Shares Inc. of SC(7) 21.63 15.25 0.73 17.01 29.63 127.16 27.78 127.16 29.63
<CAPTION>
Financial Characteristics(6)
Dividends(4) -------------------------------------------------------
----------------------- Reported Core
Amount/ Payout Total Equity/ NPAs/ ---------------- ---------------
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
------- ------ ------- ------ ------- ------- ------- ------- ------- -------
Financial Institution
- --------------------- ($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.36 1.62 31.23 1,008 13.96 0.69 0.94 7.92 0.89 7.46
All Public Companies 0.37 1.60 31.32 1,387 13.59 0.69 0.96 8.35 0.91 7.91
Special Selection Grouping(8) 0.19 1.67 11.97 760 23.18 0.39 1.07 4.74 1.00 4.46
State of MA 0.42 1.46 30.19 679 10.87 0.49 1.07 11.57 1.02 10.82
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
BYS Bay State Bancorp of MA 0.00 0.00 0.00 290 20.71 0.77 0.92 4.44 0.92 4.44
CAVB Cavalry Bancorp of TN 0.00 0.00 0.00 347 27.23 0.01 1.33 4.87 1.33 4.87
CFKY Columbia Financial of KY 0.00 0.00 0.00 127 28.28 0.05 0.91 3.20 0.17 0.60
EFC EFC Bancorp Inc of IL 0.00 0.00 NM 0 23.77 0.18 1.07 4.51 1.07 4.51
FSLA First Source Bancorp of NJ 0.12 1.14 29.27 1,192 20.55 0.59 1.09 5.31 1.09 5.31
HARB Harbor Florida Bancshrs of FL 1.40 11.37 NM 1,274 19.30 0.47 1.40 7.24 1.35 6.99
HBSC Heritage Bancorp, Inc of SC 0.00 0.00 0.00 312 28.79 0.84 1.16 4.02 1.16 4.02
HLFC Home Loan Financial Corp of OH 0.00 0.00 0.00 81 37.26 0.06 1.67 4.49 1.67 4.49
HFBC HopFed Bancorp of KY 0.00 0.00 0.00 237 22.59 0.06 0.99 4.37 0.99 4.37
ICBC Independence Comm Bnk Cp of NY 0.00 0.00 0.00 4,072 21.70 0.70 0.64 2.95 0.85 3.90
NEP Northeast PA Fin. Corp of PA 0.00 0.00 0.00 437 18.26 0.29 0.62 3.38 0.62 3.38
TSBSD Peoples Bancorp Inc of NJ 0.10 0.94 66.67 640 17.20 0.64 1.21 7.14 0.87 5.10
PFSL Pocahontas Bancorp of AR 0.90 8.95 NM 420 13.19 NA 0.75 5.66 0.75 5.66
RCBK Richmond County Fin Corp of NY 0.20 1.01 35.71 1,215 25.65 NA 1.22 4.75 1.22 4.75
SBAN SouthBanc Shares Inc. of SC(7) 1.40 6.47 NM 117 21.85 0.53 0.94 4.29 0.94 4.29
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month data,
adjusted to omit non-operating items (including the SAIF assessment) on a
tax effected basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/CORE = Price to estimated core
earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month estimated core
earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month earnings and average equity and assets
balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
(8) Includes Converted Last 3 Mths (no MHC);
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 4.16
ratios of the better capitalized but lower earning recently converted thrifts
(with resulting lower return on equity measures) suggest that the investment
community has determined to discount their stocks on a book basis until the
earnings improve through redeployment and leveraging of the proceeds over the
longer term.
C. The Acquisition Market
----------------------
Also considered in the valuation was the potential impact on Seacoast's
stock price of recently completed and pending acquisitions of other regional
thrifts. As shown in Exhibit IV-4, there were nine thrifts acquired since 1997
in the Massachusetts market and three acquisitions are currently pending of
Massachusetts thrifts. Seacoast's larger size and relatively high pro forma
capital position may tend to lessen such acquisition speculation, based on
expectations that an acquiror would be reluctant to pay an acquisition premium
for the "excess" capital. At the same time, the fairly active acquisition market
for Massachusetts market may imply a certain degree of acquisition speculation
for Seacoast's stock. To the extent that acquisition speculation may impact the
conversion offering, we have largely taken this into account in selecting
companies which operate in the same market.
Taking these factors and trends into account, primarily recent trends in
the new issue market, market conditions overall and recent trends in the
acquisition market, no adjustment was made for marketing of the issue.
8. Management
----------
Seacoast/Compass executive management appears to have experience and
expertise in the key areas of operations to operate the merged bank as a public
company and there are no apparent vacancies in this regard. At the same time,
the ability to effectively integrate such a large merger and manage the acquired
operations and markets of Sandwich Bancorp can only be proven over time. (See
Exhibit IV-5 for summary resumes of the Board of Directors and executive
management.) The location in New England and the compensation and benefits
available through the stock structure should facilitate Seacoast's/Compass'
ability to attract qualified candidates if such a need should arise. The
financial characteristics and growth of Seacoast/Compass suggest that Compass is
being effectively managed and there appears to be a well-defined organizational
structure.
<PAGE>
RP Financial, LC.
Page 4.17
The returns, capital positions, and other operating measures of the
Peer Group companies are indicative of well-managed financial institutions,
which also have generally seasoned Boards and management teams.
On balance, we concluded that no valuation adjustment relative to the
Peer Group was appropriate for this factor.
9. Effect of Government Regulation and Regulatory Reform
-----------------------------------------------------
Currently, there are no significant differences between
Seacoast/Compass and the Peer Group from a regulatory perspective. The majority
of the Peer Group members essentially operate under a similar regulatory scheme
as Compass (i.e., insured financial institution operating under a holding
company structure). On balance, no adjustment to Compass' value was warranted
for this factor.
Summary of Adjustments
- ----------------------
Overall, we believe Seacoast's pro forma market value should be
discounted relative to the Peer Group as follows.
<TABLE>
<CAPTION>
Key Valuation Parameters Valuation Adjustment
------------------------ --------------------
<S> <C>
Financial Condition No Adjustment
Profitability, Growth and Viability of Earnings Slight Downward
Asset Growth No Adjustment
Primary Market Area No Adjustment
Dividends No Adjustment
Liquidity of the Shares Slight Upward
Marketing of the Issue No Adjustment
Management No Adjustment
Effect of Government Regulations and Regulatory Reform No Adjustment
</TABLE>
Valuation Approaches
- --------------------
In applying the accepted valuation methodology promulgated by the
regulatory agencies, i.e., the pro forma market value approach, we considered
the three key pricing ratios in valuing Seacoast's to-be-issued stock
- --price/earnings ("P/E"), price/book ("P/B"), and price/assets ("P/A") -- all
performed on a pro forma basis including the effects of the conversion proceeds
<PAGE>
RP Financial, LC.
Page 4.18
and the acquisition of Sandwich Bancorp. In computing the pro forma impact of
the conversion and merger and the related pricing ratios, we have incorporated
the valuation parameters disclosed in Seacoast's prospectus for offering
expenses, pro forma impact of the merger based on the potential range of
exchange ratios, merger-related costs, reinvestment rate, the effective tax rate
and the leveraged ESOP (see Exhibits IV-6 and IV-7). Each of these parameters
are described more fully below.
o Conversion Expenses. Management has estimated fixed and variable
conversion expenses over the range of value incorporating the
appraised value determined herein, based on the financial arrangements
with the various third parties engaged to assist in completing the
conversion transaction.
o Exchange Shares. The Sandwich merger will occur within 10 days
following the conversion, i.e., once Seacoast's stock has begun to
trade. The Merger Agreement sets forth certain changes in the merger
exchange ratio depending upon the trading price of Seacoast's stock,
as set forth below:
<TABLE>
<CAPTION>
Per Sandwich Bancorp
Seacoast Trading Price Exchange Ratio Share Value
---------------------- -------------- -----------
<S> <C> <C>
$15.01 or more Less than 4.7407 $71.11
($71.11/Seacoast Trading Price)
$13.51 - $15.00 4.7407 $64.05 - $71.11
(4.7407 x Seacoast Trading Price)
$10.01 - $13.50 6.3936 - 4.7407 $64.00
($64.00/Seacoast Trading Price)
$10.00 or less 6.4000 $64.00 or less
(6.4000 x Seacoast Trading Price)
</TABLE>
We have considered the exchange ratio formula and related collars in
estimating pro forma market value, as the trading price of Seacoast at
the time the exchange ratio will be determined will not be known at
the time the conversion will be consummated. In preparing the pro
forma valuation analyses incorporated herein, we have reflected two
key points of the exchange ratio formula, as established in the Merger
Agreement, which encompasses a range of potential exchange ratios. In
this regard, RP Financial has evaluated the pro forma impact of the
transaction assuming an Exchange Ratio of 6.4000 Seacoast shares
(exchange ratio if the Seacoast Trading Price is $10.00 or lower) for
each Sandwich Bancorp share and 4.7407 Seacoast shares (exchange ratio
if the Seacoast Trading Price is between $13.50 to $15.00 per share).
The number of Exchange Shares issuable in exchange for each
outstanding Sandwich Bancorp stock option will be determined by
subtracting the per share exercise price of such option from the value
of Exchange Shares receivable by Sandwich Bancorp stockholders in
<PAGE>
RP Financial, LC.
Page 4.19
exchange for each outstanding share of Sandwich Bancorp common stock,
and dividing the result by the Seacoast Trading Price.
o Merger-Related Costs. Management has estimated the merger-related for
both itself and Sandwich Bancorp in such areas as merger advisory and
legal fees and expenses related to the change of control provisions in
Sandwich Bancorp's management contracts. Certain of these costs will
be expensed just prior to closing the merger and thus will be
reflected on an after-tax basis. Consistent with the prospectus, the
after-tax merger costs have been estimated to total $4.0 million.
o Effective Tax Rate. Compass, in consultation with its outside
auditors, has determined the marginal effective tax rate on the net
reinvestment benefit of the conversion proceeds to be 40 percent based
on the statutory Federal, and state income tax rates.
o Reinvestment Rate. The pro forma section in the prospectus
incorporates a 5.37 percent reinvestment rate, equivalent to yield on
the one-year Treasury bill as of November 1, 1997, the rate utilized
herein. As of February 28, 1998, the one-year Treasury bill yield was
roughly the same at 5.40 percent. The one-year U.S. Treasury rate more
closely approximates the estimated reinvestment yield based on the
anticipated use of proceeds than the 6.12 percent arithmetic average
of the yield on interest-earning assets and cost of deposits over the
most recent fiscal year.
o Stock Benefit Plans. The Employee Stock Ownership Plan ("ESOP")
structure and funding reflects the decisions made by the Board, as set
forth in the prospectus. Specifically, the ESOP is assumed to purchase
8 percent of the stock in conversion at the initial public offering
price, funded by a third party loan bearing an interest rate equal to
the Prime Rate with a term of up to 20 years. While a stock grant
program may be implemented in the future, no decisions have been made
to date regarding amount and timing, and any such plan would require
shareholder approval. Accordingly, the pro forma impact of such a
stock grant program was not incorporated into the valuation.
o Sandwich Bancorp Stock Currently Owned by Compass. The value of the
approximately 90,000 shares of Sandwich Bancorp common stock ($5.175
million as of February 28, 1998) held by Seacoast is eliminated as a
result of the merger transaction pursuant to GAAP accounting. A
$74,000 positive after-tax adjustment to pro forma equity is also
incorporated into the pro forma calculations as a result of the
expected reclassification of a portion of Sandwich Bancorp's
investment portfolio from "held to maturity" to "available for sale".
RP Financial's valuation considered each of the valuation approaches
promulgated in the regulatory valuation guidelines, as described more fully
below.
o P/E Approach. The P/E approach is generally regarded as the best
indicator of long-term value for a stock. Given the earnings
composition and level of core profitability of Compass and the Peer
Group, the P/E approach was carefully considered in this
<PAGE>
RP Financial, LC.
Page 4.20
valuation. We considered both reported and estimated core earnings for
the most recent 12 months and the resulting price/earnings ratios.
o P/B Approach. P/B ratios have generally served as a useful benchmark
in the valuation of thrift stocks. Recognizing that the pro forma P/B
ratio will result in a below market ratio due to the pro forma nature
of the P/B computation, RP Financial considered the P/B approach to be
a reliable indicator in the context of pro forma value taking into
account the pricing ratios under the P/E and P/A approaches. We have
also examined the P/B approach to exclude the impact of intangible
assets (i.e., price/tangible book value or "P/TB"), in that the
investment community frequently makes this adjustment in its
evaluation of the stock price level.
o P/A Approach. Investors typically do not place significant weight on
simply the size of total assets as a determinant of market value
without making risk adjustments. Investors generally place greater
weight on book value and earnings for established publicly-traded
institutions. At the same time, the P/A ratio is an indicator of
franchise value, and, in the case of highly capitalized institutions,
high P/A ratios may limit the investment community's willingness to
pay market multiples for earnings or book value when ROE is expected
to be low. This approach, as set forth in the regulatory valuation
guidelines, does not take into account the amount of stock purchases
funded by deposit withdrawals, thus understating the pro forma P/A
ratio.
Based on the application of the three valuation approaches, taking into
consideration the valuation adjustments discussed above, and placing the
greatest weight on the earnings and book approaches, RP Financial concluded that
the pro forma offering value of Seacoast's conversion stock is $290 million at
the midpoint at this time, taking into account the potential range of exchange
ratios in the subsequent acquisition of Sandwich Bancorp. The conversion
offering shares will be issued at a $10.00 per share price. Assuming a 6.4000
times exchange ratio for the Sandwich Bancorp stock, the total pro forma market
value of all shares is equal to $415.4 million based on a $10.00 per share
Seacoast trading price. Assuming a 4.7407 exchange ratio, the pro forma market
value of all Seacoast shares is equal to $383.1 million, reflecting a Seacoast
trading price of $15.00.
1. Price-to-Book ("P/B"). The application of the P/B valuation method
requires calculating Seacoast's pro forma market value by applying a valuation
P/B ratio, derived from the Peer Group's P/B ratio, to Seacoast's pro forma book
value taking into account the acquisition of Sandwich Bancorp in a pooling
merger. In applying the P/B approach, we focused on tangible book value. Based
on the $290 million offering amount and assuming a 6.4000 times
<PAGE>
RP Financial, LC.
Page 4.21
exchange ratio, Seacoast's pro forma P/TB ratio was 104.89 percent. In
comparison to the median P/TB ratio for the Peer Group of 206.72 percent,
Seacoast's P/TB ratio was discounted by 49.3 percent. Based on the midpoint
offering amount and a 4.7407 exchange ratio, the P/TB ratio equaled 96.73
percent. RP Financial considered such discounts to be reasonable in light of the
previously referenced valuation adjustments, the nature of the calculation of
the pro forma P/TB ratio which mathematically results in a ratio discounted to
book value, comparatively lower pro forma core ROE and the resulting pricing
ratios under the earnings and assets approaches.
2. Price-to-Earnings ("P/E"). The application of the P/E valuation
method requires calculating Seacoast's pro forma market value by applying a
valuation P/E multiple, derived from the Peer Group's P/E multiple, times the
pro forma earnings base. In applying this technique, we considered both reported
earnings and a recurring earnings base, that is, earnings adjusted to exclude
any one-time non-operating and extraordinary items, plus the estimated after-tax
earnings benefit from reinvestment of net conversion proceeds. Compass' reported
earnings (incorporating Sandwich Bancorp) were $17.467 million for the twelve
months ended February 28, 1998. In deriving core earnings, the adjustments made
to reported pre-tax earnings were the gains on the sale of investments and
loans, which, on a tax effected basis, indicated adjusted earnings of
approximately $16.975 million. Similar types of adjustments were applied to the
Peer Group in the calculation of their core earnings (Note: see Exhibit IV-8).
Based on Compass' reported and estimated core earnings, and
incorporating the impact of the pro forma assumptions discussed previously,
Seacoast's pro forma reported and core P/E multiples incorporating a $290
million offering amount and a 6.4000 times exchange ratio were 16.85 and 17.19
times, respectively. Relative to the Peer Group average, the P/E was comparable
and the P/Core was discounted by 3.5 percent. Incorporating a 4.7407 exchange
ratio for Sandwich, Seacoast's pro forma P/E and P/Core multiples are discounted
by 7.9 percent and 11.2 percent, respectively. Such adjustments reflect the
valuation adjustments outlined previously and the other pricing ratios. We also
considered the potential long-term benefits of the merger with Sandwich Bancorp.
RP Financial also considered the impact of SOP 93-6 in examining the P/E ratios.
<PAGE>
RP Financial, LC.
Page 4.22
3. Price-to-Assets ("P/A"). The P/A valuation methodology determines
market value by applying a valuation P/A ratio to Compass' pro forma asset base,
conservatively assuming no deposit withdrawals are made to fund stock purchases.
In all likelihood there will be deposit withdrawals, which results in
understating the pro forma P/A ratio which is computed herein. At the midpoint
of the offering range and assuming a 6.4000 exchange ratio, Seacoast's value
equaled 21.60 percent of pro forma assets, compared to the Peer Group average
P/A ratio of 16.44 percent, which implies a 31.4 percent premium being applied
to Seacoast's pro forma P/A ratio. While generally emphasized less than the P/E
and P/B approaches, the P/A ratio is an indicator of franchise value and, thus,
was considered in the valuation conclusion.
Comparison to Recent Conversions
- --------------------------------
As indicated at the beginning of this chapter, RP Financial's analysis
of recent conversion pricing characteristics at conversion (excluding second
step conversions) and in the aftermarket has been limited to a "technical"
analysis and, thus, the pricing characteristics of recent conversions is not the
primary determinate of value herein. Particular focus was placed on the P/B
approach in this analysis since the P/E multiples do not reflect the actual
impact of reinvestment and the source of the conversion funds (i.e., external
funds vs. deposit withdrawals). The recent conversions (excluding second step
conversions) on average closed their offerings at their supermaximum levels
given the oversubscribed nature of their offerings and prevailing market
conditions at closing, indicating a median price/tangible book ratio of 79.0
percent. On average, the prices of recent conversions appreciated by 58.2
percent during the first week of trading. In comparison, Seacoast's P/TB ratio
at the appraised midpoint reflects a premium relative to the closing ratios
(generally at their supermaximums), but a discount to the aftermarket ratios.
The closing and aftermarket P/TB ratios are not directly comparable in that the
closing ratio reflects the pro forma impact of conversion on equity whereas the
aftermarket ratio reflects only price (with no further impact on equity
capital).
Valuation Conclusion
- --------------------
It is our opinion that, as of May 8, 1998, the pro forma offering value
of Seacoast's conversion is $290 million, taking into account the potential
range of exchange ratios in the
<PAGE>
RP Financial, LC.
Page 4.23
subsequent acquisition of Sandwich Bancorp as set forth in the Merger Agreement.
Accordingly, the conversion offering range of value, based on a $10.00 per share
value, is as follows:
<TABLE>
<CAPTION>
Price/
Dollar Amount Shares Share
------------- ------ -----
(000) ($)
<S> <C> <C> <C>
Minimum $246,500,000 24,650,000 $10.00
Midpoint 290,000,000 29,000,000 10.00
Maximum 333,500,000 33,500,000 10.00
Supermaximum 383,525,000 38,352,500 10.00
</TABLE>
The total market of all shares issued, including both offering shares
and shares issued in the merger, is dependent upon the trading price of Seacoast
10 days following completion of the conversion offering. The following table
reflects the pro forma market value of all shares, both conversion and merger
shares, reflecting an exchange ratio of 6.4000, reflecting a Seacoast trading
price of $10.00 per share, and 4.7407, reflecting a Seacoast trading price of
$15.00 per share, both representing collars in the exchange ratio set forth in
the Merger Agreement, based on the conversion offering valuation range.
<TABLE>
<CAPTION>
6.4000 Exchange Ratio(1) 4.7407 Exchange Ratio(2)
------------------------ ------------------------
Total Total Total Total
Market Value Shares Issued Market Value Shares Issued
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Minimum $371,936,730 37,193,673 $339,600,590 33,960,059
Midpoint 415,436,730 41,543,673 383,100,590 38,310,059
Maximum 458,937,730 45,893,673 426,600,590 42,660,059
Supermaximum 508,961,730 50,896,173 476,625,590 47,662,559
</TABLE>
(1) Reflects 12,543,673 Seacoast shares issued to Sandwich Bancorp shareholders
at $10.00 per share.
(2) Reflects 9,310,059 Seacoast shares issued to Sandwich Bancorp shareholders
at $15.00 per share.
The comparative pro forma valuation ratios relative to the Peer Group
are shown in Table 4.3 incorporating a 6.4000 exchange ratio and Table 4.4
incorporating a 4.7407 exchange ratio, and the key valuation assumptions are
detailed in Exhibit IV-6. The pro forma calculations for the range are detailed
in Exhibit IV-7, and pro forma regulatory capital levels are presented in
Exhibit IV-9.
<PAGE>
RP Financial, LC.
Page 4.24
RP FINANCIAL, LC.
- -------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.3
Public Market Pricing
Compass Bank for Savings and the Comparables
As of May 8, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization ---------------
----------------- Core Book Pricing Ratios(3)
Price/ Market 12-Mth Value/ ----------------------------------------
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
-------- ------ ------ ------ ----- ----- ----- ------ ------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank for Savings
- ------------------------
Superrange 10.00 508.96 0.53 9.51 18.82 105.12 25.34 105.76 19.17
Range Maximum 10.00 458.94 0.56 9.56 17.81 104.63 23.38 105.34 18.16
Range Midpoint 10.00 415.44 0.59 9.60 16.85 104.12 21.60 104.89 17.19
Range Minimum 10.00 371.94 0.63 9.66 15.79 103.49 19.74 104.35 16.13
BIF-Insured Thrifts(7)
- ----------------------
Averages 26.77 636.46 1.25 13.72 19.47 199.25 21.76 196.33 20.07
Medians -- -- -- -- 17.56 195.30 18.57 210.97 19.08
All Non-MHC State of MA(7)
- --------------------------
Averages 27.48 110.84 1.38 14.61 17.33 193.16 19.31 198.30 18.81
Medians -- -- -- -- 17.32 195.30 18.07 207.92 18.23
Comparable Group Averages
- -------------------------
Averages 30.34 153.61 1.66 16.47 16.84 191.46 16.44 198.23 17.82
Medians -- -- -- -- 17.54 189.25 16.99 206.72 18.23
State of MA
- -----------
ABBK Abington Bancorp of MA 19.75 70.39 1.08 10.19 16.06 193.82 13.23 212.82 18.29
AFCB Affiliated Comm BC, Inc of MA(7) 38.50 253.37 1.74 17.18 21.39 244.10 21.94 225.28 22.13
ANDB Andover Bancorp, Inc. of MA 42.75 221.40 2.50 20.68 16.76 206.72 16.74 206.72 17.10
BYS Bay State Bancorp of MA 28.88 73.21 1.05 23.66 27.50 122.06 25.28 122.06 27.50
BFD BostonFed Bancorp of MA 24.06 130.48 1.17 15.05 18.51 159.87 13.39 165.93 20.56
CEBK Central Co-Op. Bank of MA 29.75 58.46 1.30 18.35 20.95 162.13 15.92 179.32 22.88
FCB Falmouth Bancorp, Inc. of MA 20.25 29.46 0.53 16.05 NM 126.17 30.20 126.17 NM
FESX First Essex Bancorp of MA 22.88 172.40 1.15 12.09 17.74 189.25 14.40 215.44 19.90
FAB FirstFed America Bancorp of MA 22.63 197.04 0.63 14.87 NM 152.19 16.99 152.19 NM
HIFS Hingham Inst. for Sav. of MA 35.50 46.29 2.04 16.39 17.40 216.60 20.80 216.60 17.40
HPBC Home Port Bancorp, Inc. of MA 25.88 47.67 1.75 11.92 14.46 217.11 22.83 217.11 14.79
IPSW Ipswich SB of Ipswich MA 19.00 45.41 0.76 4.95 20.43 NM 19.98 NM 25.00
LSBX Lawrence Savings Bank of MA 17.88 77.17 1.86 8.71 9.51 205.28 21.44 205.28 9.61
MASB MassBank Corp. of Reading MA 49.75 178.45 2.62 28.93 17.58 171.97 19.28 174.44 18.99
MFLR Mayflower Co-Op. Bank of MA 25.00 22.48 1.48 14.31 16.03 174.70 17.04 177.30 16.89
MDBK Medford Bancorp, Inc. of MA 44.00 199.76 2.42 22.36 17.53 196.78 17.59 209.13 18.18
MWBX MetroWest Bank of MA 7.94 112.91 0.53 3.15 14.98 252.06 18.54 252.06 14.98
MYST Mystic Financial of MA 16.88 45.76 0.52 13.00 NM 129.85 25.28 129.85 NM
PBKB People's Bancshares of MA 26.88 88.41 0.73 9.16 17.23 293.45 11.59 305.11 NM
SISB SIS Bancorp, Inc. of MA 42.00 292.74 1.87 18.00 NM 233.33 16.89 233.33 22.46
SWCB Sandwich Bancorp of MA(7) 64.00 124.29 2.44 21.63 25.60 295.89 23.96 306.51 26.23
SOSA Somerset Savings Bank of MA(7) 5.13 85.81 0.35 2.14 14.25 239.72 15.90 239.72 14.66
WRNB Warren Bancorp of Peabody MA 27.88 106.84 1.69 10.45 14.67 266.79 28.80 266.79 16.50
Comparable Group
- ----------------
ABBK Abington Bancorp of MA 19.75 70.39 1.08 10.19 16.06 193.82 13.23 212.82 18.29
BKC American Bank of Waterbury CT 30.00 139.56 1.48 12.39 17.54 242.13 21.84 250.42 20.27
ANDB Andover Bancorp, Inc. of MA 42.75 221.40 2.50 20.68 16.76 206.72 16.74 206.72 17.10
BFD BostonFed Bancorp of MA 24.06 130.48 1.17 15.05 18.51 159.87 13.39 165.93 20.56
FESX First Essex Bancorp of MA 22.88 172.40 1.15 12.09 17.74 189.25 14.40 215.44 19.90
FFES First Fed of E. Hartford Ct 40.00 108.52 2.27 24.69 19.51 162.01 11.04 162.01 17.62
FAB FirstFed America Bancorp of MA 22.63 197.04 0.63 14.87 NM 152.19 16.99 152.19 NM
MECH MECH Financial Inc of CT 30.00 158.82 2.44 16.73 12.15 179.32 17.80 179.32 12.30
MASB MassBank Corp. of Reading MA 49.75 178.45 2.62 28.93 17.58 171.97 19.28 174.44 18.99
MDBK Medford Bancorp, Inc. of MA 44.00 199.76 2.42 22.36 17.53 196.78 17.59 209.13 18.18
MWBX MetroWest Bank of MA 7.94 112.91 0.53 3.15 14.98 252.06 18.54 252.06 14.98
<CAPTION>
Dividends(4) Financial Characteristics(6)
--------------------- -------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ ----------- --------- SWCB
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE Memo Exchange Total
------ ----- -------- ------ ------- ------ --- --- --- --- Offering Shares Value
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%) ($Mil) ($Mil) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank for Savings
- ------------------------ 0.00 0.00 0.00 2,009 24.11 0.71 1.35 5.58 1.32 5.48 383.53 125.44 508.96
Superrange 0.00 0.00 0.00 1,963 22.34 0.73 1.31 5.87 1.29 5.76 333.50 125.44 458.94
Range Maximum 0.00 0.00 0.00 1,923 20.74 0.74 1.28 6.18 1.26 6.06 290.00 125.44 415.44
Range Midpoint 0.00 0.00 0.00 1,884 19.08 0.76 1.25 6.55 1.22 6.42 246.50 125.44 371.94
Range Minimum
BIF-Insured Thrifts(7)
- ----------------------
Averages 0.43 1.49 31.82 3,289 11.63 0.69 1.04 10.52 1.01 10.13
Medians -- -- -- -- -- -- -- -- -- --
All Non-MHC State of MA(7)
- --------------------------
Averages 0.45 1.53 31.70 640 10.55 0.47 1.08 11.92 1.03 11.14
Medians -- -- -- -- -- -- -- -- -- --
Comparable Group Averages
- -------------------------
Averages 0.55 1.71 30.65 943 8.67 0.56 0.97 11.57 0.95 11.30
Medians -- -- -- -- -- -- -- -- -- --
State of MA
- -----------
ABBK Abington Bancorp of MA 0.20 1.01 18.52 532 6.83 0.14 0.87 12.59 0.77 11.05
AFCB Affiliated Comm BC, Inc of MA(7) 0.60 1.56 34.48 1,155 9.79 0.41 1.08 11.08 1.05 10.71
ANDB Andover Bancorp, Inc. of MA 0.90 2.11 36.00 1,323 8.10 0.49 1.05 13.07 1.03 12.81
BYS Bay State Bancorp of MA 0.00 0.00 0.00 290 20.71 0.77 0.92 4.44 0.92 4.44
BFD BostonFed Bancorp of MA 0.40 1.66 34.19 975 8.37 NA 0.75 8.41 0.68 7.57
CEBK Central Co-Op. Bank of MA 0.32 1.08 24.62 367 9.82 0.42 0.81 8.09 0.74 7.40
FCB Falmouth Bancorp, Inc. of MA 0.24 1.19 45.28 98 23.94 NA 0.98 4.06 0.83 3.42
FESX First Essex Bancorp of MA 0.56 2.45 48.70 1,197 7.61 0.54 0.83 11.19 0.74 9.97
FAB FirstFed America Bancorp of MA 0.00 0.00 0.00 1,160 11.17 0.31 0.17 1.58 0.53 4.99
HIFS Hingham Inst. for Sav. of MA 0.52 1.46 25.49 223 9.60 0.42 1.25 13.09 1.25 13.09
HPBC Home Port Bancorp, Inc. of MA 0.80 3.09 45.71 209 10.52 0.29 1.67 15.70 1.63 15.35
IPSW Ipswich SB of Ipswich MA 0.16 0.84 21.05 227 5.21 0.79 1.18 20.53 0.96 16.78
LSBX Lawrence Savings Bank of MA 0.00 0.00 0.00 360 10.45 0.40 2.31 25.03 2.28 24.77
MASB MassBank Corp. of Reading MA 1.00 2.01 38.17 925 11.21 0.17 1.11 10.51 1.03 9.73
MFLR Mayflower Co-Op. Bank of MA 0.80 3.20 54.05 132 9.75 0.69 1.11 11.52 1.05 10.93
MDBK Medford Bancorp, Inc. of MA 0.80 1.82 33.06 1,136 8.94 0.13 1.05 11.80 1.02 11.37
MWBX MetroWest Bank of MA 0.12 1.51 22.64 609 7.36 0.70 1.33 17.91 1.33 17.91
MYST Mystic Financial of MA 0.20 1.18 38.46 181 19.47 0.25 0.78 4.00 0.78 4.00
PBKB People's Bancshares of MA 0.52 1.93 71.23 763 3.95 0.57 0.82 16.56 0.39 7.75
SISB SIS Bancorp, Inc. of MA 0.64 1.52 34.22 1,734 7.24 0.43 0.65 8.86 0.88 12.10
SWCB Sandwich Bancorp of MA(7) 1.40 2.19 57.38 519 8.10 0.83 0.98 12.12 0.96 11.83
SOSA Somerset Savings Bank of MA(7) 0.00 0.00 0.00 540 6.63 4.58 1.15 18.46 1.12 17.95
WRNB Warren Bancorp of Peabody MA 0.72 2.58 42.60 371 10.79 1.01 2.01 19.49 1.79 17.33
Comparable Group
- ----------------
ABBK Abington Bancorp of MA 0.20 1.01 18.52 532 6.83 0.14 0.87 12.59 0.77 11.05
BKC American Bank of Waterbury CT 0.76 2.53 51.35 639 9.02 2.28 1.33 15.56 1.15 13.47
ANDB Andover Bancorp, Inc. of MA 0.90 2.11 36.00 1,323 8.10 0.49 1.05 13.07 1.03 12.81
BFD BostonFed Bancorp of MA 0.40 1.66 34.19 975 8.37 NA 0.75 8.41 0.68 7.57
FESX First Essex Bancorp of MA 0.56 2.45 48.70 1,197 7.61 0.54 0.83 11.19 0.74 9.97
FFES First Fed of E. Hartford Ct 0.68 1.70 29.96 983 6.82 0.31 0.57 8.78 0.63 9.72
FAB FirstFed America Bancorp of MA 0.00 0.00 0.00 1,160 11.17 0.31 0.17 1.58 0.53 4.99
MECH MECH Financial Inc of CT 0.60 2.00 24.59 892 9.93 0.56 1.60 15.91 1.58 15.72
MASB MassBank Corp. of Reading MA 1.00 2.01 38.17 925 11.21 0.17 1.11 10.51 1.03 9.73
MDBK Medford Bancorp, Inc. of MA 0.80 1.82 33.06 1,136 8.94 0.13 1.05 11.80 1.02 11.37
MWBX MetroWest Bank of MA 0.12 1.51 22.64 609 7.36 0.70 1.33 17.91 1.33 17.91
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) EPS (core basis) is based on actual trailing twelve month data, adjusted to
omit the impact of non-operating items (including the SAIF assessment) on
a tax effected basis, and is shown on a pro forma basis where appropriate.
(3) P/E = Price to Earnings; P/B = Price to Book; P/A = Price to Assets;
P/TB = Price to Tangible Book; and P/CORE = Price to Core Earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated twelve month dividend as a percent of trailing twelve month
estimated core earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common and
total assets balances.
(7) Excludes from averages and medians those companies the subject of actual or
rumored acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 4.25
RP FINANCIAL, LC
- -------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.4
Public Market Pricing
Compass Bank for Savings and the Comparables
As of May 8, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization ---------------
----------------- Core Book Pricing Ratios(3)
Price/ Market 12-Mth Value/ ----------------------------------------
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
-------- ------ ------ ----- --- --- --- ---- ------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank for Savings
- ------------------------
Superrange 10.00 476.63 0.57 10.16 17.63 98.44 23.73 99.94 17.95
Range Maximum 10.00 426.60 0.60 10.28 16.56 97.26 21.73 97.91 16.88
Range Midpoint 10.00 383.10 0.64 10.42 15.53 96.01 19.92 96.73 15.85
Range Minimum 10.00 339.60 0.69 10.58 14.42 94.49 18.03 95.27 14.72
BIF-Insured Thrifts(7)
- ----------------------
Averages 26.77 636.46 1.25 13.72 19.47 199.25 21.76 196.33 20.07
Medians -- -- -- -- 17.56 195.30 18.57 210.97 19.08
All Non-MHC State of MA(7)
- --------------------------
Averages 27.48 110.84 1.38 14.61 17.33 193.16 19.31 198.30 18.81
Medians -- -- -- -- 17.32 195.30 18.07 207.92 18.23
Comparable Group Averages
- -------------------------
Averages 30.34 153.61 1.66 16.47 16.84 191.46 16.44 198.23 17.82
Medians -- -- -- -- 17.54 189.25 16.99 206.72 18.23
State of MA
- -----------
ABBK Abington Bancorp of MA 19.75 70.39 1.08 10.19 16.06 193.82 13.23 212.82 18.29
AFCB Affiliated Comm BC, Inc of MA(7) 38.50 253.37 1.74 17.18 21.39 244.10 21.94 225.28 22.13
ANDB Andover Bancorp, Inc. of MA 42.75 221.40 2.50 20.68 16.76 206.72 16.74 206.72 17.10
BYS Bay State Bancorp of MA 28.88 73.21 1.05 23.66 27.50 122.06 25.28 122.06 27.50
BFD BostonFed Bancorp of MA 24.06 130.48 1.17 15.05 18.51 159.87 13.39 165.93 20.56
CEBK Central Co-Op. Bank of MA 29.75 58.46 1.30 18.35 20.95 162.13 15.92 179.32 22.88
FCB Falmouth Bancorp, Inc. of MA 20.25 29.46 0.53 16.05 NM 126.17 30.20 126.17 NM
FESX First Essex Bancorp of MA 22.88 172.40 1.15 12.09 17.74 189.25 14.40 215.44 19.90
FAB FirstFed America Bancorp of MA 22.63 197.04 0.63 14.87 NM 152.19 16.99 152.19 NM
HIFS Hingham Inst. for Sav. of MA 35.50 46.29 2.04 16.39 17.40 216.60 20.80 216.60 17.40
HPBC Home Port Bancorp, Inc. of MA 25.88 47.67 1.75 11.92 14.46 217.11 22.83 217.11 14.79
IPSW Ipswich SB of Ipswich MA 19.00 45.41 0.76 4.95 20.43 NM 19.98 NM 25.00
LSBX Lawrence Savings Bank of MA 17.88 77.17 1.86 8.71 9.51 205.28 21.44 205.28 9.61
MASB MassBank Corp. of Reading MA 49.75 178.45 2.62 28.93 17.58 171.97 19.28 174.44 18.99
MFLR Mayflower Co-Op. Bank of MA 25.00 22.48 1.48 14.31 16.03 174.70 17.04 177.30 16.89
MDBK Medford Bancorp, Inc. of MA 44.00 199.76 2.42 22.36 17.53 196.78 17.59 209.13 18.18
MWBX MetroWest Bank of MA 7.94 112.91 0.53 3.15 14.98 252.06 18.54 252.06 14.98
MYST Mystic Financial of MA 16.88 45.76 0.52 13.00 NM 129.85 25.28 129.85 NM
PBKB People's Bancshares of MA 26.88 88.41 0.73 9.16 17.23 293.45 11.59 305.11 NM
SISB SIS Bancorp, Inc. of MA 42.00 292.74 1.87 18.00 NM 233.33 16.89 233.33 22.46
SWCB Sandwich Bancorp of MA(7) 64.00 124.29 2.44 21.63 25.60 295.89 23.96 306.51 26.23
SOSA Somerset Savings Bank of MA(7) 5.13 85.81 0.35 2.14 14.25 239.72 15.90 239.72 14.66
WRNB Warren Bancorp of Peabody MA 27.88 106.84 1.69 10.45 14.67 266.79 28.80 266.79 16.50
Comparable Group
- ----------------
ABBK Abington Bancorp of MA 19.75 70.39 1.08 10.19 16.06 193.82 13.23 212.82 18.29
BKC American Bank of Waterbury CT 30.00 139.56 1.48 12.39 17.54 242.13 21.84 250.42 20.27
ANDB Andover Bancorp, Inc. of MA 42.75 221.40 2.50 20.68 16.76 206.72 16.74 206.72 17.10
BFD BostonFed Bancorp of MA 24.06 130.48 1.17 15.05 18.51 159.87 13.39 165.93 20.56
FESX First Essex Bancorp of MA 22.88 172.40 1.15 12.09 17.74 189.25 14.40 215.44 19.90
FFES First Fed of E. Hartford Ct 40.00 108.52 2.27 24.69 19.51 162.01 11.04 162.01 17.62
FAB FirstFed America Bancorp of MA 22.63 197.04 0.63 14.87 NM 152.19 16.99 152.19 NM
MECH MECH Financial Inc of CT 30.00 158.82 2.44 16.73 12.15 179.32 17.80 179.32 12.30
MASB MassBank Corp. of Reading MA 49.75 178.45 2.62 28.93 17.58 171.97 19.28 174.44 18.99
MDBK Medford Bancorp, Inc. of MA 44.00 199.76 2.42 22.36 17.53 196.78 17.59 209.13 18.18
MWBX MetroWest Bank of MA 7.94 112.91 0.53 3.15 14.98 252.06 18.54 252.06 14.98
<CAPTION>
Dividends(4) Financial Characteristics(6)
--------------------- -------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ ----------- --------- SWCB
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE Memo Exchange Total
----- ----- -------- ------ ------ ------ --- --- --- --- Offering Shares Value
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%) ($Mil) ($Mil) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank for Savings
- ------------------------
Superrange 0.00 0.00 0.00 2,009 24.11 0.71 1.35 5.58 1.32 5.48 383.53 93.10 476.63
Range Maximum 0.00 0.00 0.00 1,963 22.34 0.73 1.31 5.87 1.29 5.76 333.50 93.10 426.60
Range Midpoint 0.00 0.00 0.00 1,923 20.74 0.74 1.28 6.18 1.26 6.06 290.00 93.10 383.10
Range Minimum 0.00 0.00 0.00 1,884 19.08 0.76 1.25 6.55 1.22 6.42 246.50 93.10 339.60
BIF-Insured Thrifts(7)
- ----------------------
Averages 0.43 1.49 31.82 3,289 11.63 0.69 1.04 10.52 1.01 10.13
Medians -- -- -- -- -- -- -- -- -- --
All Non-MHC State of MA(7)
- --------------------------
Averages 0.45 1.53 31.70 640 10.55 0.47 1.08 11.92 1.03 11.14
Medians -- -- -- -- -- -- -- -- -- --
Comparable Group Averages
- -------------------------
Averages 0.55 1.71 30.65 943 8.67 0.56 0.97 11.57 0.95 11.30
Medians -- -- -- -- -- -- -- -- -- --
State of MA
- -----------
ABBK Abington Bancorp of MA 0.20 1.01 18.52 532 6.83 0.14 0.87 12.59 0.77 11.05
AFCB Affiliated Comm BC, Inc of MA(7) 0.60 1.56 34.48 1,155 9.79 0.41 1.08 11.08 1.05 10.71
ANDB Andover Bancorp, Inc. of MA 0.90 2.11 36.00 1,323 8.10 0.49 1.05 13.07 1.03 12.81
BYS Bay State Bancorp of MA 0.00 0.00 0.00 290 20.71 0.77 0.92 4.44 0.92 4.44
BFD BostonFed Bancorp of MA 0.40 1.66 34.19 975 8.37 NA 0.75 8.41 0.68 7.57
CEBK Central Co-Op. Bank of MA 0.32 1.08 24.62 367 9.82 0.42 0.81 8.09 0.74 7.40
FCB Falmouth Bancorp, Inc. of MA 0.24 1.19 45.28 98 23.94 NA 0.98 4.06 0.83 3.42
FESX First Essex Bancorp of MA 0.56 2.45 48.70 1,197 7.61 0.54 0.83 11.19 0.74 9.97
FAB FirstFed America Bancorp of MA 0.00 0.00 0.00 1,160 11.17 0.31 0.17 1.58 0.53 4.99
HIFS Hingham Inst. for Sav. of MA 0.52 1.46 25.49 223 9.60 0.42 1.25 13.09 1.25 13.09
HPBC Home Port Bancorp, Inc. of MA 0.80 3.09 45.71 209 10.52 0.29 1.67 15.70 1.63 15.35
IPSW Ipswich SB of Ipswich MA 0.16 0.84 21.05 227 5.21 0.79 1.18 20.53 0.96 16.78
LSBX Lawrence Savings Bank of MA 0.00 0.00 0.00 360 10.45 0.40 2.31 25.03 2.28 24.77
MASB MassBank Corp. of Reading MA 1.00 2.01 38.17 925 11.21 0.17 1.11 10.51 1.03 9.73
MFLR Mayflower Co-Op. Bank of MA 0.80 3.20 54.05 132 9.75 0.69 1.11 11.52 1.05 10.93
MDBK Medford Bancorp, Inc. of MA 0.80 1.82 33.06 1,136 8.94 0.13 1.05 11.80 1.02 11.37
MWBX MetroWest Bank of MA 0.12 1.51 22.64 609 7.36 0.70 1.33 17.91 1.33 17.91
MYST Mystic Financial of MA 0.20 1.18 38.46 181 19.47 0.25 0.78 4.00 0.78 4.00
PBKB People's Bancshares of MA 0.52 1.93 71.23 763 3.95 0.57 0.82 16.56 0.39 7.75
SISB SIS Bancorp, Inc. of MA 0.64 1.52 34.22 1,734 7.24 0.43 0.65 8.86 0.88 12.10
SWCB Sandwich Bancorp of MA(7) 1.40 2.19 57.38 519 8.10 0.83 0.98 12.12 0.96 11.83
SOSA Somerset Savings Bank of MA(7) 0.00 0.00 0.00 540 6.63 4.58 1.15 18.46 1.12 17.95
WRNB Warren Bancorp of Peabody MA 0.72 2.58 42.60 371 10.79 1.01 2.01 19.49 1.79 17.33
Comparable Group
- ----------------
ABBK Abington Bancorp of MA 0.20 1.01 18.52 532 6.83 0.14 0.87 12.59 0.77 11.05
BKC American Bank of Waterbury CT 0.76 2.53 51.35 639 9.02 2.28 1.33 15.56 1.15 13.47
ANDB Andover Bancorp, Inc. of MA 0.90 2.11 36.00 1,323 8.10 0.49 1.05 13.07 1.03 12.81
BFD BostonFed Bancorp of MA 0.40 1.66 34.19 975 8.37 NA 0.75 8.41 0.68 7.57
FESX First Essex Bancorp of MA 0.56 2.45 48.70 1,197 7.61 0.54 0.83 11.19 0.74 9.97
FFES First Fed of E. Hartford Ct 0.68 1.70 29.96 983 6.82 0.31 0.57 8.78 0.63 9.72
FAB FirstFed America Bancorp of MA 0.00 0.00 0.00 1,160 11.17 0.31 0.17 1.58 0.53 4.99
MECH MECH Financial Inc of CT 0.60 2.00 24.59 892 9.93 0.56 1.60 15.91 1.58 15.72
MASB MassBank Corp. of Reading MA 1.00 2.01 38.17 925 11.21 0.17 1.11 10.51 1.03 9.73
MDBK Medford Bancorp, Inc. of MA 0.80 1.82 33.06 1,136 8.94 0.13 1.05 11.80 1.02 11.37
MWBX MetroWest Bank of MA 0.12 1.51 22.64 609 7.36 0.70 1.33 17.91 1.33 17.91
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) EPS (core basis) is based on actual trailing twelve month data, adjusted to
omit the impact of non-operating items (including the SAIF assessment) on
a tax effected basis, and is shown on a pro forma basis where appropriate.
(3) P/E = Price to Earnings; P/B = Price to Book; P/A = Price to Assets;
P/TB = Price to Tangible Book; and P/CORE = Price to Core Earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated twelve month dividend as a percent of trailing twelve month
estimated core earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common and
total assets balances.
(7) Excludes from averages and medians those companies the subject of actual or
rumored acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
EXHIBITS
<PAGE>
RP Financial, LC.
LIST OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
I-1 Map of Office Locations
I-2 Compass Bank for Savings Audited Financial Statements
I-3 Key Operating Ratios
I-4 Investment Portfolio Composition
I-5 Yields and Costs
I-6 Allowance for Loan Losses Activity
I-7 Net Interest Income Analysis
I-8 Gap Analysis
I-9 Loan Maturity Schedule
I-10 Loan Portfolio Composition
I-10B Pro Forma Loan Portfolio Composition
I-11 Loan Originations, Purchases, and Sales
I-12 Non-Performing Assets
I-12B Pro Forma Non-Performing Assets
I-13 Deposit Portfolio Composition
I-13B Pro Forma Deposit Portfolio Composition
I-14 Borrowings Portfolio Data
II-1 List of Branch Offices
II-2 Historical Interest Rates
</TABLE>
<PAGE>
LIST OF EXHIBITS
(continued)
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
III-1 General Characteristics of Publicly-Traded Institutions
III-2 Financial Analysis of Comparable New England Institutions
III-3 Peer Group Market Area Comparative Analysis
IV-1 Stock Prices: May 8, 1998
IV-2 Historical Stock Price Indices
IV-3 Historical Thrift Stock Indices
IV-4 Market Area Acquisition Activity
IV-5 Directors and Senior Management Summary Resumes
IV-6 Pro Forma Analysis Sheet
IV-7 Pro Forma Effect of Conversion Proceeds
IV-8 Peer Group Core Earnings Analysis
IV-9 Pro Forma Regulatory Capital Ratios
V-1 Firm Qualifications Statement
</TABLE>
<PAGE>
EXHIBIT I-1
Compass Bank for Savings
Map of Office Locations
<PAGE>
[GRAPHIC] Map of Office Locations
<PAGE>
EXHIBIT I-2
Compass Bank for Savings
Audited Financial Statements
[Incorporated by Reference]
<PAGE>
EXHIBIT I-3
Compass Bank for Savings
Key Operating Ratios
<PAGE>
Exhibit I-3
Compass Bank for Savings
Key Operating Ratios
<TABLE>
<CAPTION>
Three months ended
March 31, Year ended December 31,
-------------------- -------------------------------------------------
1998(1) 1997(1) 1997 1996 1995 1994 1993
------- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Financial Ratios and Other
Data (2):
Performance Ratios:
Return on average assets ........ 0.91% 0.90% 0.98% 0.94% 0.81% 0.69% 0.52%
Return on average equity ........ 11.50 11.06 12.49 11.47 10.21 7.92 5.40
Average equity to
average assets ................ 7.90 8.16 7.84 8.17 7.98 9.06 10.01
Equity to total assets
at end of period .............. 8.08 8.24 8.10 8.32 8.38 8.04 9.49
Net interest rate spread (3) .... 2.75 3.23 3.12 3.38 3.51 3.42 3.54
Net interest margin (4) ......... 3.56 3.78 3.71 3.94 3.98 3.83 3.66
Average interest-earning
assets to average
interest-bearing liabilities .. 121.33 114.86 104.65 104.07 97.36 101.42 102.64
Total non-interest
expense to average assets ..... 2.34 2.59 2.46 2.80 2.93 3.05 3.60
Efficiency ratio (5) ............ 58.10 59.64 57.68 60.53 61.61 69.19 78.88
Regulatory Capital Ratios (6):
Tier 1 leverage capital ........ 7.98 8.08 7.86 8.35 7.94 7.30 8.73
Tier 1 risk-based capital ....... 14.01 13.56 13.61 13.43 13.16 12.34 14.14
Total risk-based capital ........ 15.27 14.81 14.86 14.14 14.16 13.59 15.39
Asset Quality Ratios:
Non-performing loans as
a percent of loans (7) ........ 0.77 1.32 0.97 1.27 1.70 0.81 1.09
Non-performing assets as a percent
of total assets ............... 0.60 1.08 0.81 0.98 1.18 0.74 1.58
Allowance for loan losses as a
percent of loans .............. 1.12 1.13 1.11 1.17 1.34 1.28 1.42
Allowance for loan losses as a
percent of total non-performing
loans ......................... 144.49 87.03 114.51 91.56 78.66 157.78 127.97
Number of Full Service Customer
Facilities ...................... 11 11 11 11 11 11 10
</TABLE>
- ------------------------
(1) The data presented at and for the three months ended March 31, 1998 and
1997 were derived from unaudited consolidated financial statements and
reflect, in the opinion of management, all adjustments (consisting only of
normal recurring adjustments) which are necessary to present fairly the
results for such interim periods. Interim results at and for the three
months ended March 31, 1998 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1998.
(2) Asset Quality Ratios and Regulatory Capital Ratios are end-of-period
ratios. With the exception of end-of-period ratios, all ratios are based on
average daily balances during the periods indicated and are annualized
where appropriate.
(3) The net interest rate spread represents the difference between the weighted
average yield on average interest-earning assets and the weighted average
cost of average interest-bearing liabilities.
(4) The net interest margin represents net interest income as a percentage of
average interest-earning assets.
(5) The efficiency ratio represents the ratio of non-interest expenses to the
sum of net interest income and non-interest income.
(6) For definitions and further information relating to Sandwich Bancorp's and
Sandwich Bank's regulatory capital requirements, see "Regulation of
Seacoast Financial and Subsidiary -- Regulatory Capital Requirements" and
"-- Prompt Corrective Action."
(7) Non-performing loans consist of all loans 90 days or more past due and
other loans which have been identified by Sandwich Bank as presenting
uncertainty with respect to the collectibility of interest or principal.
It is Sandwich Bank's policy to cease accruing interest on all such loans.
<PAGE>
EXHIBIT I-4
Compass Bank for Savings
Investment Portfolio Composition
<PAGE>
Exhibit I-4
Compass Bank for Savings
Investment Portfolio Composition
<TABLE>
<CAPTION>
At October 31,
-----------------------------------------------------------------
At February 28, 1998 1997 1996 1995
----------------------- -------------------- -------------------- --------------------
Amortized Market Amortized Market Amortized Market Amortized Market
cost value cost value cost value cost value
--------- ------ --------- ------ --------- ------ --------- ------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities available for sale:
Debt securities:
U.S. Government and
Agency obligations ............ $ 98,203 $ 98,453 $113,231 $113,496 $111,861 $111,613 $65,336 $65,015
Corporate obligations ............ 46,327 46,550 44,773 44,966 22,632 22,520 6,085 6,051
Mortgage-backed
securities ................... 44,214 44,597 45,652 46,157 64,760 64,650 6,470 6,496
Other bonds and
obligations ................... 6,001 6,001 1,001 1,001 -- -- -- --
--------- --------- -------- -------- -------- -------- ------- -------
Total debt securities ... 194,745 195,601 204,657 205,620 199,253 198,783 77,891 77,562
--------- --------- -------- -------- -------- -------- ------- -------
Marketable equity securities:
Common stocks .................... 5,817 8,450 1,164 2,696 835 1,523 474 788
Preferred stocks ................. 1,000 1,000 1,000 1,000 -- -- 276 276
--------- --------- -------- -------- -------- -------- ------- -------
Total marketable
equity securities .... 6,817 9,450 2,164 3,696 835 1,523 750 1,064
--------- --------- -------- -------- -------- -------- ------- -------
Total securities
available for sale ... $201,562 $205,051 $206,821 $209,316 $200,088 $200,306 $78,641 $78,626
========= ========= ======== ======== ======== ======== ======= =======
Securities held to maturity:
U.S. Government and
Agency obligations ............ $12,322 $12,387 $12,633 $12,694 $11,752 $11,744 $ 85,936 $ 85,678
Corporate obligations ............ -- -- -- -- -- -- 36,540 36,284
Mortgage-backed
securities .................... -- -- -- -- -- -- 29,329 29,299
Other bonds and
obligations ................... -- -- -- -- -- -- 2,000 1,997
--------- --------- -------- -------- -------- -------- ------- -------
Total securities held
to maturity .......... $12,322 $12,387 $12,633 $12,694 $11,752 $11,744 $153,805 $153,258
========= ========= ======== ======== ======== ======== ======= =======
Restricted equity securities:
Federal Home Loan Bank
of Boston stock ............... $4,726 $4,726 $4,726 $4,726 $4,215 $4,215 $3,829 $3,829
Massachusetts Savings Bank
Life Insurance Company stock .. 251 251 251 251 251 251 251 251
Depositors Insurance Fund ........ 179 179 179 179 179 179 179 179
--------- --------- -------- -------- -------- -------- ------- -------
Total restricted equity
securities ........... $5,156 $5,156 $5,156 $5,156 $4,645 $4,645 $4,259 $4,259
========= ========= ======== ======== ======== ======== ======= =======
</TABLE>
<PAGE>
EXHIBIT I-5
Compass Bank for Savings
Yields and Costs
<PAGE>
Exhibit I-5
Compass Bank for Savings
Yields and Costs
<TABLE>
<CAPTION>
Four months ended February 28,
------------------------------------------------------------------------------
1998 1997
---------------------------------------- ------------------------------------
Average Average Average Average
balance Interest yield/cost balance Interest yield/cost
------- -------- ---------- ------- -------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Short-term investments ........................ $ 21,555 $ 491 6.83% $ 19,869 $ 441 6.66%
Debt securities (1) ........................... 212,419 4,371 6.17 204,820 4,103 6.01
Equity securities (1) ......................... 9,402 141 4.50 6,908 116 5.04
Mortgage loans (2) ............................ 543,974 15,089 8.32 515,182 14,407 8.39
Commercial loans (2) .......................... 52,676 1,722 9.81 47,792 1,544 9.69
Indirect auto loans (2) ....................... 215,280 5,765 8.03 167,566 4,356 7.80
Other consumer loans (2) ...................... 24,958 744 8.94 22,070 642 8.73
---------- ------- ---------- -------
Total interest-earning assets .............. 1,080,264 28,323 7.87 984,207 25,609 7.81
------- ------- ------- -------
Allowance for loan losses ........................ (10,653) (10,396)
Non-interest earning assets ...................... 57,000 58,856
---------- ----------
Total assets ............................... $1,126,611 $1,032,667
========== ==========
Liabilities and Surplus:
Interest-bearing liabilities:
NOW accounts .................................. $ 78,896 $ 379 1.44% $ 70,345 $ 337 1.44%
Savings accounts .............................. 167,480 1,430 2.56 170,645 1,453 2.55
Money market savings accounts ................. 144,731 1,318 2.73 136,233 1,273 2.80
Certificate of deposit accounts ............... 497,269 9,444 5.70 451,794 8,392 5.57
---------- ------- ---------- -------
Total deposits ............................. 888,376 12,571 4.25 829,017 11,455 4.15
Borrowed funds:
Short-term borrowings (3) .................. 10,988 180 4.91 3,909 78 5.99
FHLB advances .............................. 60,417 1,313 6.52 49,139 1,080 6.59
---------- ------- ---------- -------
Total borrowings ........................ 71,405 1,493 6.27 53,048 1,158 6.55
---------- ------- ---------- -------
Total interest-bearing liabilities ... 959,781 14,064 4.40 882,065 12,613 4.29
------- ------- ------- -------
Non-interest bearing demand
checking accounts ............................. 55,037 53,542
Other liabilities ................................ 9,697 8,695
---------- ----------
Total liabilities ....................... 1,024,515 944,302
Surplus .......................................... 102,096 88,365
---------- ----------
Total liabilities and surplus ........... $1,126,611 $1,032,667
========== ==========
Net interest income/
interest rate spread (4) ...................... $14,259 3.47% $12,996 3.52%
======= ======= ======= =======
Net interest margin (5) .......................... 3.96% 3.96%
======= =======
Ratio of interest-earning assets
to interest-bearing liabilities ............... 112.55% 111.58%
======= =======
</TABLE>
- ----------------------
(footnotes begin on following page)
<PAGE>
EXHIBIT I-6
Compass Bank for Savings
Allowance for Loan Losses Activity
<PAGE>
Exhibit I-6
Compass Bank for Savings
Allowance for Loan Losses Activity
<TABLE>
<CAPTION>
Four months
ended Year ended October 31,
February 28, ------------------------------------------------------
1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period ............................. $10,642 $10,334 $ 9,850 $ 7,002 $ 6,000 $ 5,395
Provision (credit) for loan losses ......................... 183 1,865 1,166 (351) 2,524 3,838
Acquired allowance ......................................... -- -- -- 3,541 -- --
Charge-offs:
Mortgage loans:
Residential .......................................... 44 137 130 721 1,033 725
Commercial ........................................... -- 761 250 150 661 1,988
Home equity lines of credit .......................... -- -- 121 -- -- --
Construction ......................................... -- -- -- -- -- --
Commercial loans ........................................ -- 442 134 51 33 317
Indirect auto loans ..................................... 150 546 373 227 191 279
Other consumer loans .................................... 21 48 63 83 93 134
------- ------- ------- ------- ------- -------
Total charge-offs ...................... 215 1,934 1,071 1,232 2,011 3,443
------- ------- ------- ------- ------- -------
Recoveries:
Mortgage loans:
Residential .......................................... 24 30 17 271 335 80
Commercial ........................................... 10 117 174 485 34 23
Home equity lines of credit .......................... -- -- -- -- -- --
Construction ......................................... -- -- -- -- -- --
Commercial loans ........................................ 38 57 96 2 28 30
Indirect auto loans ..................................... 36 144 70 93 69 57
Other consumer loans .................................... 29 29 32 39 23 20
------- ------- ------- ------- ------- -------
Total recoveries ....................... 137 377 389 890 489 210
------- ------- ------- ------- ------- -------
Net charge-offs ............................................ (78) (1,557) (682) (342) (1,522) (3,233)
------- ------- ------- ------- ------- -------
Balance at end of period ................................... $10,747 $10,642 $10,334 $ 9,850 $ 7,002 $ 6,000
======= ======= ======= ======= ======= =======
</TABLE>
<PAGE>
EXHIBIT I-7
Compass Bank for Savings
Net Interest Income Analysis
<PAGE>
Exhibit I-7
Compass Bank for Savings
Net Interest Income Analysis
<TABLE>
<CAPTION>
Percentage Change in Estimated
Net Interest Income Over:
-----------------------------------
12 months 24 months
--------------- ----------------
<S> <C> <C>
200 basis point increase in rates (8.22)% (4.73)%
200 basis point decrease in rates (0.03)% (4.45)%
</TABLE>
<PAGE>
EXHIBIT I-8
Compass Bank for Savings
Gap Analysis
<PAGE>
Exhibit I-8
Compass Bank for Savings
Gap Analysis
<TABLE>
<CAPTION>
More More More More More
than than than than than
three six one three five More
Up to months months year to years years than
Three to six to one three to five to ten ten
months months year years years years years Total
---------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets (1):
Short-term investments $ 15,973 $ -- $ -- $ -- $ -- $ -- $ -- $ 15,973
Debt securities (4) 34,744 20,632 29,036 83,102 32,776 6,346 207,066
Loans held for sale 8,519 -- -- -- -- -- -- 8,519
Mortgage loans (2) 36,472 47,083 106,017 194,043 83,767 43,205 31,345 541,932
Commercial loans 22,583 4,663 11,162 10,880 2,494 1,991 201 53,974
Indirect auto loans 24,878 23,432 41,826 106,081 28,130 672 0 225,019
Other consumer loans 2,782 1,838 2,602 7,519 4,041 6,073 605 25,460
--------- ---------- --------- -------- -------- -------- -------- ---------
Total interest-earning assets 145,951 97,648 190,643 401,625 151,208 58,287 1,077,943
--------- ---------- --------- -------- -------- -------- -------- ---------
Interest-bearing liabilities:
NOW and money market savings accounts 7,068 3,927 33,755 59,271 26,301 44,749 48,676 223,747
Savings accounts 15,195 8,442 10,130 33,767 25,325 33,767 42,208 168,834
Certificate of deposit accounts 170,496 137,058 120,791 68,508 8,526 -- -- 505,379
Borrowed funds 15,666 4,492 3,304 16,038 22,785 8,955 7,313 78,553
--------- ---------- --------- ------- -------- -------- -------- ---------
Total interest-bearing liabilities 208,425 153,919 167,980 177,584 82,937 87,471 98,197 976,513
--------- ---------- --------- -------- -------- -------- -------- ---------
Interest sensitivity gap (3) $(62,474) $ (56,271) $ 22,663 $224,041 $ 68,271 $(65,615) $ 101,431
========= ========== ========= ======== ========= ======== ======== =========
Cumulative interest sensitivity gap $(62,474) $(118,745) $(96,082) $127,959 $196,230 $101,431
========= ========== ========= ======== ========= ======== ========
Cumulative interest sensitivity gap
as percentage of total assets (5.46%) (10.38%) (8.40%) 11.19% 17.16% 14.61% 8.87%
Cumulative interest sensitivity gap
as a percentage of total interest-earning
assets (5.80%) (11.02%) (8.91%) 11.87% 18.20% 15.50% 9.41%
Cumulative interest-earning assets as a
percentage of cumulative interest-bearing
liabilities 70.03% 67.23% 81.88% 118.08% 124.81% 119.02% 110.39%
</TABLE>
- -------------------
(1) Interest-earning assets are included in the period in which the balances
are expected to be redeployed and/or repriced as a result of anticipated
prepayments, scheduled rate adjustments and contractual maturities.
(2) For purposes of the gap analysis, allowances for loan losses, deferred loan
fees, unearned discounts and non-performing loans have been excluded.
(3) The interest sensitivity gaps represent the differences between
interest-earning assets and interest-bearing liabilities, expressed as a
dollar amount.
(4) Debt securities are presented at amortized cost.
<PAGE>
EXHIBIT I-9
Compass Bank for Savings
Loan Maturity Schedule
<PAGE>
Exhibit I-9
Compass Bank for Savings
Loan Maturity Schedule
<TABLE>
<CAPTION>
At February 28, 1998
------------------------------------------------------------------------------------------
Real estate mortgage loans
----------------------------------------------
Other
Home Indirect consumer Total
Residential Commercial Construction equity Commercial auto loans loans loans
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Amounts due (1):
Within one year .................... $ 107,096 $ 43,197 $ 9,454 $14,059 $35,882 $ 27,812 $ 3,117 $240,617
--------- -------- ------- ------- ------- -------- ------- --------
After one year:
More than one year to three years .. 113,382 58,254 13,085 803 9,198 87,637 4,479 286,838
More than three years to five years. 55,175 15,549 6,819 145 3,962 103,763 5,760 191,173
More than five years to ten years .. 46,839 2,335 9,038 335 4,425 5,807 10,822 79,601
More than ten years ................ 41,681 1,405 2,833 448 507 -- 1,282 48,156
--------- -------- ------- ------- ------- -------- ------- --------
Total due after February 28, 1999 257,077 77,543 31,775 1,731 18,092 197,207 22,343 605,768
--------- -------- ------- ------- ------- -------- ------- --------
Total amount due ................ $ 364,173 $120,740 $41,229 $15,790 $53,974 $225,019 $25,460 $846,385
========= ======== ======= ======= ======= ======== ======= --------
Less:
Allowance for loan losses .......... (10,747)
--------
Net loans ....................... $ 835,638
=========
</TABLE>
- ----------
(1) Amounts due are net of unadvanced funds on loans.
<PAGE>
EXHIBIT I-10
Compass Bank for Savings
Loan Portfolio Composition
<PAGE>
Exhibit I-10
Compass Bank for Savings
Loan Portfolio Composition
<TABLE>
<CAPTION>
At February 28, At October 31,
------------------ ------------------------------------------------------------
1998 1997 1996 1995
------------------ ------------------ ------------------ -----------------
Percent Percent Percent Percent
Amount of total Amount of total Amount of total Amount of total
------ -------- ------ -------- ------ -------- ------ --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate loans:
Residential (one- to four-family) .......... $364,173 43.03% $363,030 44.26% $343,204 45.88% $336,489 49.78%
Commercial (1) ............................. 120,740 14.26 124,059 15.13 128,707 17.20 103,096 15.25
Home equity lines of credit ................ 15,790 1.87 15,133 1.85 17,288 2.31 18,857 2.79
Construction, net .......................... 41,229 4.87 33,894 4.13 25,007 3.34 15,877 2.35
-------- -------- -------- -------- -------- -------- -------- --------
Total real estate loans ............. 541,932 64.03 536,116 65.37 514,206 68.73 474,319 70.17
-------- -------- -------- -------- -------- -------- -------- --------
Commercial loans .............................. 53,974 6.38 51,371 6.26 46,211 6.18 43,402 6.42
-------- -------- -------- -------- -------- -------- -------- --------
Consumer loans:
Indirect auto loans ........................ 256,093 30.26 238,114 29.03 189,865 25.38 159,433 23.58
Other ...................................... 25,460 3.01 24,662 3.01 22,063 2.95 18,764 2.78
-------- -------- -------- -------- -------- -------- -------- --------
Consumer loans ...................... 281,553 262,776 211,928 178,197
Less: unearned discount .................... 31,074 30,066 24,232 19,911
-------- -------- -------- --------
Total consumer loans ................ 250,479 29.59 232,710 28.37 187,696 25.09 158,286 23.41
-------- -------- -------- -------- -------- -------- -------- --------
Total loans ......................... $846,385 100.00% $820,197 100.00% $748,113 100.00% $676,007 100.00%
======== ====== ======== ====== ======== ====== ======== ======
</TABLE>
<TABLE>
<CAPTION>
At October 31,
---------------------------------------
1994 1993
------------------ ------------------
Percent Percent
Amount of total Amount of total
------ -------- ------ --------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Real estate loans:
Residential (one- to four-family) .......... $268,010 52.56% $251,623 55.78%
Commercial (1) ............................. 67,784 13.30 61,938 13.73
Home equity lines of credit ................ 11,448 2.25 13,016 2.89
Construction, net .......................... 14,844 2.91 13,719 3.04
-------- -------- -------- --------
Total real estate loans ............. 362,086 71.02 340,296 75.44
-------- -------- -------- --------
Commercial loans .............................. 20,763 4.07 17,061 3.78
-------- -------- -------- --------
Consumer loans:
Indirect auto loans ........................ 125,667 24.65 90,159 19.99
Other ...................................... 15,433 3.03 14,120 3.13
-------- -------- -------- --------
Consumer loans ...................... 141,100 104,279
Less: unearned discount .................... 14,081 10,522
-------- --------
Total consumer loans ................ 127,019 24.91 93,757 20.78
-------- -------- -------- --------
Total loans ......................... $509,868 100.00% $451,114 100.00%
======== ====== ======== ======
</TABLE>
- ----------------------
(1) In September 1996, Compass reclassified approximately $28.0 in multifamily
loans from residential real estate to commercial real estate. Corresponding
prior-period reclassifications have not been made.
<PAGE>
EXHIBIT I-10B
Compass Bank for Savings
Pro Forma Loan Portfolio Composition
<PAGE>
Exhibit I-10B
Loan Portfolio Composition
As of February 28, 1998
<TABLE>
<CAPTION>
Compass Sandwich (1) Pro Forma
----------------------- ---------------------- --------------------------
% of % of % of
Amount Portfolio Amount Portfolio Amount Portfolio
($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C>
Mortgage Loans
One-to-Four Family $ 364,173 43.03% $ 253,398 68.54% $ 617,571 50.78%
Multi-Family and Commercial 120,740 14.27% 64,165 17.36% 184,905 15.20%
Construction and Land 41,229 4.87% 26,077 7.05% 67,306 5.53%
Home Equity 15,790 1.87% 11,583 3.13% 27,373 2.25%
------- ----- ------- ----- ------- -----
Total Mortgage Loans $ 541,932 64.03% $ 355,223 96.08% $ 897,155 73.77%
Non-Mortgage Loans
Consumer Loans (net) $ 250,479 29.59% $ 7,417 2.01% $ 257,896 21.21%
Commercial Loans 53,974 6.38% 7,065 1.91% 61,039 5.02%
------- ----- ------ ----- ------- -----
Total Consumer and Other Loans $ 304,453 35.97% $ 14,482 3.92% $ 318,935 26.23%
Total Loans, Net $ 846,385 100.00% $ 369,705 100.00% $1,216,090 100.00%
</TABLE>
(1) Reflects data as of March 31, 1998.
Source: Prospectus for Compass and internal reports for Sandwich.
<PAGE>
EXHIBIT I-11
Compass Bank for Savings
Loan Originations, Purchases, and Sales
<PAGE>
Exhibit I-11
Compass Bank for Savings
Loan Originations, Purchases, and Sales
<TABLE>
<CAPTION>
Four months
ended February 28, Year ended October 31,
-------------------- ----------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C>
Loans outstanding at beginning of period ....... $820,197 $748,113 $748,113 $676,007 $509,868
Loans originated:
Mortgage loans:
Residential .................................. 43,230 24,528 94,391 104,562 56,184
Commercial real estate ....................... 785 5,118 12,292 21,761 15,502
Construction ................................. 23,233 13,971 52,402 29,966 21,074
Home Equity .................................. 4,377 977 7,996 6,228 3,542
-------- -------- -------- -------- --------
Total mortgage loans ....................... 71,625 44,594 167,081 162,517 96,302
Commercial loans .............................. 20,183 19,150 61,333 53,462 48,370
Indirect auto loans ........................... 56,627 38,308 152,349 120,000 103,093
Other consumer loans .......................... 4,891 3,669 12,877 13,518 10,486
-------- -------- -------- -------- --------
Total loans originated ..................... 153,326 105,721 393,640 349,497 258,251
-------- -------- -------- -------- --------
Purchases of mortgage loans .................... 2,086 500 888 9,209 6,290
-------- -------- -------- -------- --------
Acquisition of Martha's Vineyard
National Bank ................................. -- -- -- -- 104,393
-------- -------- -------- -------- --------
Less:
Principal repayments .......................... 107,145 94,001 283,993 246,962 177,046
Loans sold .................................... 21,299 6,873 33,184 36,137 18,734
Transfers to other real estate owned .......... 565 1,109 3,333 2,430 5,783
Principal charged-off ......................... 215 374 1,934 1,071 1,232
-------- -------- -------- -------- --------
Loans outstanding at end of period ............. $846,385 $751,977 $820,197 $748,113 $676,007
======== ======== ======== ======== ========
</TABLE>
<PAGE>
EXHIBIT I-12
Compass Bank for Savings
Non-Performing Assets
<PAGE>
Exhibit I-12
Compass Bank for Savings
Non-Performing Assets
<TABLE>
<CAPTION>
At February 28, At October 31,
--------------- ------------------------------------------------------
1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Non-accrual loans (1):
Mortgage loans:
Residential .......................................... $ 1,192 $ 1,531 $ 2,330 $ 3,123 $ 6,827 $ 7,106
Commercial real estate ............................... 8,040 8,501 6,835 4,115 6,997 2,573
Construction ......................................... -- 148 147 107 269 --
Home equity .......................................... -- -- -- 63 -- --
Commercial loan ......................................... 653 745 1,014 1,098 1,078 227
Indirect auto loans ..................................... -- -- -- -- -- --
Other consumer loans .................................... -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total non-accrual loans .............................. 9,885 10,925 10,326 8,506 15,171 9,906
Other real estate owned .................................... 1,246 1,707 2,598 3,918 5,798 6,961
------- ------- ------- ------- ------- -------
Total non-performing assets .......................... $11,131 $12,632 $12,924 $12,424 $20,969 $16,867
------- ------- ------- ------- ------- -------
Restructured loans (2) ..................................... $ 559 $ 130 $ 4,267 $ 3,119 -- $10,953
------- ------- ------- ------- ------- -------
Allowance for loan losses as a percent of total loans ...... 1.27% 1.30% 1.38% 1.46% 1.37% 1.33%
Allowance for loan losses as a percent of total
non-performing loans (3) ................................ 108.72% 97.41% 100.08% 115.80 46.15% 60.57%
Non-performing loans as a percent of total loans ........... 1.17% 1.33% 1.38% 1.26% 2.98% 2.20%
Non-performing assets as a percent of total assets ......... .97% 1.14% 1.26% 1.26% 2.65% 2.39%
</TABLE>
- ----------
(1) Non-accrual loans include all loans 90 days or more past due and other loans
which have been identified by Compass as presenting uncertainty with respect to
the collectibility of interest or principal.
(2) Restructured loans represent performing loans for which concessions (such as
reductions of interest rates to below market terms and/or extension of repayment
terms) have been granted due to a borrower's financial condition.
(3) Non-performing loans are comprised of non-accrual loans.
<PAGE>
EXHIBIT I-12B
Compass Bank for Savings
Pro Forma Non-Performing Assets
<PAGE>
Exhibit I-12B
Pro Forma Non-Performing Assets
As of February 28, 1998
<TABLE>
<CAPTION>
Compass Sandwich
Bank Bancorp Pro Forma
---- ------- ---------
<S> <C> <C> <C>
Non-Accrual Loans
Mortgage Loans $ 9,232 $ 2,631 $11,863
Other Loans 653 230 883
-------- ------- -------
Total Non-Accrual Loans $ 9,885 $ 2,861 $12,746
Other Real Estate Owned 1,246 280 1,526
-------- ------- -------
Total Non-Performing Assets $ 11,131 $ 3,141 $14,272
ALLs as a Percent of Total Loans 1.27% 1.12% 1.22%
ALLs as a Percent of Total Non-Performing Loans 108.72% 144.49% 116.75%
ALLs as a Percent of Total NPAs 96.55% 131.61% 104.27%
Non-Performing Loans as a Percent of Total Loans 1.17% 0.77% 1.05%
Non-Performing Assets as a Percent of Total Assets 0.97% 0.60% 0.85%
Source: Prospectus for Compass and March 31, 1998 10Q for Sandwich.
</TABLE>
<PAGE>
EXHIBIT I-13
Compass Bank for Savings
Deposit Portfolio Composition
<PAGE>
Exhibit I-13
Compass Bank for Savings
Deposit Portfolio Composition
<TABLE>
<CAPTION>
Four months ended February 28, 1998 Year ended October 31, 1997
------------------------------------- --------------------------------
Percent Percent
of total Weighted of total Weighted
Average average average Average average average
balance deposits rate balance deposits rate
------- -------- -------- ------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
NOW accounts $ 78,896 8.36% 1.44% $ 72,837 8.02% 1.46%
Savings accounts 167,480 17.75 2.56 171,157 18.86 2.59
Money market savings accounts 144,731 15.34 2.73 140,413 15.47 2.82
Non-interest-bearing demand checking accounts 55,037 5.83 -- 56,284 6.20 --
-------- ------ -------- ------
Total transaction deposit accounts 446,144 47.29 2.10 440,691 48.55 2.15
-------- ------ -------- ------
Certificate of deposit accounts:
Six months or less 143,876 15.25 5.43 122,934 13.54 5.39
Over six months through 12 months 215,817 22.88 5.71 209,668 23.10 5.70
Over 12 months through 24 months 56,006 5.94 5.70 52,157 5.75 5.83
Over 24 months 81,570 8.65 6.13 82,183 9.05 6.12
-------- ------ ---- -------- ------ ----
Total certificates of deposit accounts 497,269 52.71 5.70 466,942 51.45 5.71
-------- ------ -------- ------
Total average deposits $943,413 100.00% 4.00% $907,633 100.00% 3.98%
======== ====== ======== ======
</TABLE>
<TABLE>
<CAPTION>
Year ended October 31, 1996 Year ended October 31, 1995
---------------------------------------- --------------------------------
Percent Percent
of total Weighted of total Weighted
Average average average Average average average
balance deposits rate balance deposits rate
------- ------- ------- ------- ------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
NOW accounts $ 68,156 7.84% 1.48% $ 61,366 7.71% 1.76%
Savings accounts 176,311 20.28 2.64 173,700 21.83 2.94
Money market savings accounts 136,322 15.68 2.85 129,920 16.33 3.01
Non-interest-bearing demand checking accounts 53,684 6.17 -- 41,824 5.26 --
-------- ------ -------- ------
Total transaction deposit accounts 434,473 49.97 2.20 406,810 51.14 2.48
-------- ------ -------- ------
Certificate of deposit accounts:
Six months or less 113,341 13.04 5.24 92,578 11.64 5.36
Over six months through 12 months 167,178 19.23 5.81 151,403 19.03 5.63
Over 12 months through 24 months 63,617 7.32 6.21 55,963 7.03 5.50
Over 24 months 90,794 10.44 6.01 88,764 11.16 5.85
-------- ------ -------- ------
Total certificates of deposit accounts 434,930 50.03 5.76 388,708 48.86 5.60
-------- ------ -------- ------
Total average deposits $869,403 100.00% 3.98% $795,518 100.00% 4.00%
======== ====== ======== ======
</TABLE>
<PAGE>
EXHIBIT I-13B
Compass Bank for Savings
Pro Forma Deposit Portfolio Composition
<PAGE>
Exhibit I-13B
Savings Account Information
As of February 28, 1998
<TABLE>
<CAPTION>
Compass (1) Sandwich (2) Pro Forma
----------------------- --------------------- ---------------------
% of % of % of
Amount Portfolio Amount Portfolio Amount Portfolio
($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C>
Transaction and Savings Accounts:
Non-Interest $ 55,037 5.83% $ 38,506 9.12% $ 93,543 6.85%
Passbook 167,480 17.75% 27,087 6.42% 194,567 14.25%
Money Market 144,731 15.34% 104,481 24.74% 249,212 18.25%
NOW Accounts 78,896 8.36% 40,513 9.59% 119,409 8.74%
--------- ------- -------- ----- ---------- ------
Total Transaction Accounts $ 446,144 47.29% $210,587 49.87% $ 656,731 48.09%
Certificates of Deposit $ 497,269 52.71% $211,645 50.13% $ 708,914 51.91%
--------- ------- -------- ------ ---------- ------
TOTAL $ 943,413 100.00% $422,232 100.00% $1,365,645 100.00%
</TABLE>
(1) Reflects average balances for the four months ended February 28, 1998.
(2) Data reflects average balances for the three months ended March 31, 1998.
Source: Prospectus for Compass and internal management reports for Sandwich.
<PAGE>
EXHIBIT I-14
Compass Bank for Savings
Borrowings Portfolio Data
<PAGE>
Exhibit I-14
Compass Bank for Savings
Borrowings Portfolio Data
<TABLE>
<CAPTION>
Four months ended
February 28, Year ended October 31,
-------------------- ------------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Short term borrowings:
Securities sold under agreements to repurchase:
Average balance outstanding $ 9,601 $ 1,910 $ 3,923 $ 120 -
Maximum amount outstanding at any month end
during the period 10,884 2,165 9,533 1,925 -
Balance outstanding at end of period 9,335 2,136 9,533 1,925 -
Weighted average interest rate during the period 4.68% 4.44% 4.70% 4.09% -
Weighted average interest rate at end of period 4.75% 4.75% 4.75% 4.75% -
Treasury Tax and Loan Notes:
Average balance outstanding $ 1,237 $ 1,247 $ 1,163 $ 1,078 $ 1,205
Maximum amount outstanding at any month end
during the period 2,071 2,104 2,117 2,175 2,190
Balance outstanding at end of period 2,047 82 164 2,000 1,501
Weighted average interest rate during the period 5.42% 5.12% 5.00% 4.90% 5.30%
Weighted average interest rate at end of period 5.30% 5.10% 5.41% 5.10% 5.56%
Total short term borrowings:
Average balance outstanding $10,838 $ 3,157 $ 5,086 $ 1,198 $ 1,205
Maximum amount outstanding at any month end
during the period 11,712 4,022 9,742 3,925 2,190
Balance outstanding at end of period 11,382 2,218 9,697 3,925 1,501
Weighted average interest rate during the period 4.76% 4.71% 4.77% 4.82% 5.30%
Weighted average interest rate at end of period 5.30% 5.10% 5.41% 5.10% 5.56%
</TABLE>
<PAGE>
EXHIBIT II-1
Compass Bank for Savings
List of Branch Offices
<PAGE>
Exhibit II-1
List of Branch Offices
<TABLE>
<CAPTION>
Net Book Value
of Property &
Lease Leasehold Deposits
Owned/ Expiration Improvements at
Location Leased Date at 2/28/98 2/28/98
-------- ------ ---- ---------- -------
(In Thousands)
<S> <C> <C> <C> <C>
Compass
- -------
Executive Office:
791 Purchase Street Owned -- $1,252 $189,470
New Bedford, MA 02740
Main Office:
572 Pleasant Street Owned -- 476
New Bedford, MA 02740
Branch Offices:
1238 Kempton Street Owned -- 570 32,538
New Bedford, MA 02740
2136 Acushnet Avenue Owned -- 353 108,559
New Bedford, MA 02745
440 Mt. Pleasant Street Land Leased 2002 142 43,482
New Bedford, MA 02746
585 Allen Street Owned -- 235 98,817
New Bedford, MA 02740
58 County Street Owned -- 371 26,458
New Bedford, MA 02744
125 Huttleston Avenue Owned -- 815 65,112
Fairhaven, MA 02719
88 North Dartmouth Mall Leased 2001 74 44,944
Dartmouth, MA 02747
141 North Main Street Owned -- 438 38,547
Fall River, MA 02720
63 South Main Street Leased 2001 21 20,134
Assonet, MA 02702
430 Wm. S. Canning Blvd. Leased 2003 173 40,178
Fall River, MA 02721
54 County Street Owned -- 428 25,963
Somerset, MA 02726
</TABLE>
<PAGE>
Exhibit II-1 (continued)
List of Branch Offices
<TABLE>
<CAPTION>
Net Book Value
of Property &
Lease Leasehold Deposits
Owned/ Expiration Improvements at
Location Leased Date at 2/28/98 2/28/98
-------- ------ ---- ---------- -------
(In Thousands)
<S> <C> <C> <C> <C>
Compass
- -------
Branch Office (continued):
620 G.A.R. Highway Owned -- $878 $25,367
Swansea, MA 02777
782 Main Road Leased 2001 5 37,473
Westport, MA 02790
32 Court Street Owned -- 784 46,786
Plymouth, MA 02360
160 North Main Street Leased 2005 277 9,745
Carver, MA 02330
715 State Road Leased 2000 101 5,837
Manomet, MA 02360
75 Main Street Owned -- 882 44,663
Vineyard Haven, MA 02568
517 South Road Owned -- 137 5,874
Chilmark, MA 02535
19 Main Street Leased 2003 467 8,840
Edgartown, MA 02539
260 Edgartown Road Owned -- 111 8,991
Edgartown, MA 02539
Oak Bluffs Avenue Owned -- 133 14,150
Oak Bluffs, MA 02557
Under Construction:
Pilgrim Hill Road 54 --
Plymouth, MA
786 Main Road Owned -- 512 --
Westport, MA
</TABLE>
<PAGE>
Exhibit II-1 (continued)
List of Branch Offices
<TABLE>
<CAPTION>
Net Book Value
of Property &
Lease Leasehold Deposits
Owned/ Expiration Improvements at
Location Leased Date at 2/28/98 2/28/98
-------- ------ ---- ---------- -------
(In Thousands)
<S> <C> <C> <C> <C>
Compass
- -------
Limited Service Banking Offices & Training Facilities:
New Bedford High School Agreement w/respective -- N/A
230 Hathaway Boulevard school departments
New Bedford, MA
BMC Durfee High School No Lease - no rental payments -- N/A
360 Elsbree Street
Fall River, MA
</TABLE>
<PAGE>
Exhibit II-1 (continued)
List of Branch Offices
<TABLE>
<CAPTION>
Net Book Value
of Property &
Lease Leasehold Deposits
Owned/ Expiration Improvements at
Location Leased Date at 12/31/97 12/31/97
-------- ------ ---- ----------- --------
(In Thousands)
<S> <C> <C> <C> <C>
Sandwich
- --------
Main Office:
100 Old Kings Hwy. Leased 2017 $490 $95,809
Sandwich, MA
Branch Offices:
50 Cohasset Avenue Leased 2017 60 33,678
Buzzards Bay, MA
30 Barlows Landing Road Owned -- 260 41,199
Pocasset, MA
261 Main Street Leased 2017 59 37,785
Wareham, MA
331 Cotuit Road Leased 2001 192 29,913
South Sandwich, MA
2277 Route 3A Owned -- 487 30,299
Cedarville, MA
895 Main Street Owned -- 455 22,963
Chatham, MA
310 Gifford Street Owned -- 448 31,757
Falmouth, MA
North Street & Bassett Lane Owned -- 415 34,867
Hyannis, MA
51 Main Street Owned -- 686 27,871
Orleans, MA
90 Route 6A (Servicing Office) Owned -- 1,007 N/A
Sandwich, MA
1029 Route 28 Leased 1999 82 45,024
South Yarmouth, MA
</TABLE>
<PAGE>
EXHIBIT II-2
Historical Interest Rates
<PAGE>
Exhibit II-2
Historical Interest Rates(1)
<TABLE>
<CAPTION>
Prime 90 Day One Year 30 Year
Year/Qtr. Ended Rate T-Bill T-Bill T-Bond
- --------------- ---- ------ ------ ------
<S> <C> <C> <C> <C>
1991: Quarter 1 8.75% 5.92% 6.24% 8.26%
Quarter 2 8.50% 5.72% 6.35% 8.43%
Quarter 3 8.00% 5.22% 5.38% 7.80%
Quarter 4 6.50% 3.95% 4.10% 7.47%
1992: Quarter 1 6.50% 4.15% 4.53% 7.97%
Quarter 2 6.50% 3.65% 4.06% 7.79%
Quarter 3 6.00% 2.75% 3.06% 7.38%
Quarter 4 6.00% 3.15% 3.59% 7.40%
1993: Quarter 1 6.00% 2.95% 3.18% 6.93%
Quarter 2 6.00% 3.09% 3.45% 6.67%
Quarter 3 6.00% 2.97% 3.36% 6.03%
Quarter 4 6.00% 3.06% 3.59% 6.34%
1994: Quarter 1 6.25% 3.56% 4.44% 7.09%
Quarter 2 7.25% 4.22% 5.49% 7.61%
Quarter 3 7.75% 4.79% 5.94% 7.82%
Quarter 4 8.50% 5.71% 7.21% 7.88%
1995: Quarter 1 9.00% 5.86% 6.47% 7.43%
Quarter 2 9.00% 5.57% 5.63% 6.63%
Quarter 3 8.75% 5.42% 5.68% 6.51%
Quarter 4 8.50% 5.09% 5.14% 5.96%
1996: Quarter 1 8.25% 5.14% 5.38% 6.67%
Quarter 2 8.25% 5.16% 5.68% 6.87%
Quarter 3 8.25% 5.03% 5.69% 6.92%
Quarter 4 8.25% 5.18% 5.49% 6.64%
1997: Quarter 1 8.50% 5.32% 6.00% 7.10%
Quarter 2 8.50% 5.17% 5.66% 6.78%
Quarter 3 8.50% 5.10% 5.44% 6.40%
Quarter 4 8.50% 5.34% 5.48% 5.92%
1998: Quarter 1 8.50% 5.12% 5.39% 5.93%
May 8, 1998 8.50% 5.17% 5.34% 5.88%
</TABLE>
(1) End of period data.
Source: SNL Securities.
<PAGE>
EXHIBIT III-1
General Characteristics of Publicly-Traded Institutions
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Characteristics of Publicly-Traded Thrifts
May 13, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
California Companies
--------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AHM Ahmanson and Co. H.F. of CA NYSE Nationwide M.B. 46,679 371 12-31 10/72 75.69 8,306
GDW Golden West Fin. Corp. of CA NYSE Nationwide M.B. 39,590 249 12-31 05/59 104.00 5,948
GSB Golden State Bancorp of CA NYSE California Div. 16,029 178 06-30 10/83 38.88 1,996
DSL Downey Financial Corp. of CA NYSE Southern CA Thrift 5,836 85 12-31 01/71 32.69 918
BPLS Bank Plus Corp. of CA OTC Los Angeles CA R.E. 4,168 37 12-31 / 13.13 254
FED FirstFed Fin. Corp. of CA NYSE Los Angeles CA R.E. 4,160 24 12-31 12/83 49.81 528
WES Westcorp Inc. of Orange CA NYSE California Div. 3,729 26 12-31 05/86 14.81 390
BVCC Bay View Capital Corp. of CA OTC San Francisco CA M.B. 3,246 37 12-31 05/86 31.63 642
PFFB PFF Bancorp of Pomona CA OTC Southern CA Thrift 2,766 23 03-31 03/96 20.75 354
HEMT HF Bancorp of Hemet CA OTC Southern CA Thrift 1,063 19 06-30 06/95 15.50 98
ITLA ITLA Capital Corp of CA (3) OTC Los Angeles CA R.E. 1,016 6 12-31 10/95 23.00 181
REDF RedFed Bancorp of Redlands CA OTC Southern CA Thrift 1,010 14 12-31 04/94 20.13 149
HTHR Hawthorne Fin. Corp. of CA OTC Southern CA Thrift 928 6 12-31 / 20.50 65
QCBC Quaker City Bancorp of CA OTC Los Angeles CA R.E. 852 8 06-30 12/93 24.63 115
PROV Provident Fin. Holdings of CA OTC Southern CA M.B. 724 10 06-30 06/96 24.00 112
HBNK Highland Bancorp of CA OTC Los Angeles CA R.E. 550 7 12-31 / 42.50 99
LFCO Life Financial Corp of CA OTC Southern CA Thrift 412 5 12-31 / 22.25 146
MBBC Monterey Bay Bancorp of CA OTC West Central CA Thrift 408 7 12-31 02/95 22.50 73
SGVB SGV Bancorp of W. Covina CA OTC Los Angeles CA Thrift 408 8 06-30 06/95 18.75 44
BYFC Broadway Fin. Corp. of CA OTC Los Angeles CA Thrift 125 3 12-31 01/96 12.50 11
Florida Companies
-----------------
OCN Ocwen Financial Corp. of FL NYSE Southeast FL Div. 3,069 1 12-31 / 23.00 1,396
BANC BankAtlantic Bancorp of FL OTC Southeastern FL M.B. 3,064 60 12-31 11/83 13.88 458
BKUNA BankUnited Fin. Corp. of FL OTC Miami FL Thrift 3,029 16 09-30 12/85 17.00 242
FFPB First Palm Beach Bancorp of FL OTC Southeast FL Thrift 1,821 47 09-30 09/93 36.25 183
HARB Harbor Florida Bancshrs of FL OTC Eastern FL Thrift 1,274 P 23 09-30 03/98 12.31 378
FFFL Fidelity Bcsh MHC of FL (47.7) OTC Southeast FL Thrift 1,220 20 12-31 01/94 30.50 207
CMSV Commty. Svgs, MHC of FL (48.5) OTC Southeast FL Thrift 720 21 12-31 10/94 38.00 194
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Characteristics of Publicly-Traded Thrifts
May 13, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Florida Companies (continued)
-----------------------------
FFLC FFLC Bancorp of Leesburg FL OTC Central FL Thrift 400 9 12-31 01/94 20.38 76
Mid-Atlantic Companies
----------------------
DME Dime Bancorp, Inc. of NY (3) NYSE NY,NJ,FL M.B. 21,848 91 12-31 08/86 29.63 3,385
SVRN Sovereign Bancorp, Inc. of PA OTC PA,NJ,DE M.B. 14,336 150 12-31 08/86 18.81 2,500
GPT GreenPoint Fin. Corp. of NY (3) NYSE New York City NY Thrift 13,083 74 12-31 01/94 41.50 3,513
ASFC Astoria Financial Corp. of NY OTC New York City NY Thrift 10,528 61 12-31 11/93 57.63 1,519
LISB Long Island Bancorp, Inc of NY OTC Long Island NY M.B. 6,073 35 09-30 04/94 65.00 1,556
ALBK ALBANK Fin. Corp. of Albany NY OTC Upstate NY,MA,VT Thrift 4,083 108 12-31 04/92 51.50 662
ICBC Independence Comm Bnk Cp of NY OTC New York City Thrift 4,072 P 34 March 03/98 18.44 1,298
ROSE T R Financial Corp. of NY (3) OTC New York City NY Thrift 3,843 15 12-31 06/93 35.00 614
RSLN Roslyn Bancorp, Inc. of NY (3) OTC Long Island NY M.B. 3,601 8 12-31 01/97 30.00 1,285
NBCP Niagara Bancorp of NY MHC(45.4 (3) OTC Northern NY Thrift 3,145 P 15 12/31 04/98 16.69 497
SIB Staten Island Bancorp of NY (3) NYSE New York City NY Thrift 2,651 16 12-31 12/97 23.13 1,044
CMSB Commonwealth Bancorp Inc of PA OTC Philadelphia PA M.B. 2,269 56 12-31 06/96 23.56 383
NWSB Northwest Bcrp MHC of PA (30.7 OTC Northwest PA Thrift 2,249 67 06-30 11/94 17.63 826
RELY Reliance Bancorp, Inc. of NY OTC New York City NY Thrift 2,243 30 06-30 03/94 38.50 371
HARS Harris Fin. MHC of PA (24.3) OTC Harrisburg PA M.B. 2,201 33 12-31 01/94 26.88 912
HAVN Haven Bancorp of Woodhaven NY OTC New York City NY Thrift 1,975 33 12-31 09/93 25.75 228
QCSB Queens County Bancorp of NY (3) OTC New York City NY Thrift 1,603 11 12-31 11/93 43.25 645
JSB JSB Financial, Inc. of NY (3) NYSE New York City NY Thrift 1,531 S 13 12-31 06/90 54.19 536
WSFS WSFS Financial Corp. of DE (3) OTC Wilmington Div. 1,515 16 12-31 11/86 21.81 272
OCFC Ocean Fin. Corp. of NJ OTC Eastern NJ Thrift 1,511 10 12-31 07/96 37.75 296
DIME Dime Community Bancorp of NY (3) OTC New York City NY Thrift 1,488 15 06-30 06/96 27.75 345
PFSB PennFed Fin. Services of NJ OTC Northern NJ Thrift 1,476 18 06-30 07/94 17.81 172
RCBK Richmond County Fin Corp of NY OTC New York City Thrift 1,215 P 13 June 02/98 19.75 522
FSLA First Source Bancorp of NJ OTC Eastern NJ Thrift 1,192 P 17 12-31 04/98 10.50 333
YFED York Financial Corp. of PA OTC PA,MD Thrift 1,182 22 06-30 02/84 24.00 214
MFSL Maryland Fed. Bancorp of MD OTC Southern MD Thrift 1,175 S 27 02-28 06/87 39.50 257
FFIC Flushing Fin. Corp. of NY (3) OTC New York City NY Thrift 1,088 7 12-31 11/95 26.25 205
PVSA Parkvale Financial Corp of PA OTC Southwestern PA Thrift 1,019 29 06-30 07/87 32.00 165
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Characteristics of Publicly-Traded Thrifts
May 13, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Companies (continued)
----------------------------------
ESBF ESB Financial Corp of PA OTC Western PA Thrift 911 11 12-31 06/90 20.50 108
PSBK Progressive Bank, Inc. of NY (3) OTC Southeast NY Thrift 883 17 12-31 08/84 42.50 164
GAF GA Financial Corp. of PA AMEX Pittsburgh PA Thrift 784 13 12-31 03/96 20.00 152
MBB MSB Bancorp of Middletown NY (3) AMEX Southeastern NY Thrift 765 16 12-31 09/92 33.50 95
IBSF IBS Financial Corp. of NJ OTC Southwest NJ Thrift 728 10 09-30 10/94 17.63 193
FBBC First Bell Bancorp of PA OTC Pittsburgh PA Thrift 676 7 12-31 06/95 20.50 134
SFIN Statewide Fin. Corp. of NJ OTC Northern NJ Thrift 675 16 12-31 10/95 23.50 106
TSBSD Peoples Bancorp Inc of NJ (3) OTC Central NJ Thrift 640 14 12-31 04/98 10.63 385
FMCO FMS Financial Corp. of NJ OTC Southern NJ Thrift 628 20 12-31 12/88 46.00 110
FSNJ Bayonne Banchsares of NJ OTC Northern NJ Thrift 611 4 03-31 08/97 16.31 148
THRD TF Financial Corp. of PA OTC PA, NJ Thrift 597 14 12-31 07/94 27.25 87
PULS Pulse Bancorp of S. River NJ OTC Central NJ Thrift 539 4 09-30 09/86 27.50 86
FSPG First Home Bancorp of NJ OTC NJ,DE Thrift 538 10 12-31 04/87 32.50 88
AHCI Ambanc Holding Co., Inc. of NY (3) OTC East-Central NY Thrift 510 12 12-31 12/95 18.94 82
PFNC Progress Financial Corp. of PA OTC Southeastern PA Thrift 493 10 12-31 07/83 19.25 81
LVSB Lakeview Financial of NJ OTC Northern NJ Thrift 473 8 07-31 12/93 24.00 93
NEP Northeast PA Fin. Corp of PA AMEX Northeast PA Thrift 437 P 10 DEC 04/98 15.38 99
CNY Carver Bancorp, Inc. of NY AMEX New York, NY Thrift 416 7 03-31 10/94 15.38 36
RARB Raritan Bancorp of Raritan NJ (3) OTC Central NJ Thrift 408 6 12-31 03/87 28.75 68
FSBI Fidelity Bancorp, Inc. of PA OTC Southwestern PA Thrift 393 8 09-30 06/88 25.63 50
FKFS First Keystone Fin. Corp of PA OTC Philadelphia PA Thrift 379 5 09-30 01/95 20.75 50
PBCI Pamrapo Bancorp, Inc. of NJ OTC Northern NJ Thrift 377 10 12-31 11/89 29.00 82
SHEN First Shenango Bancorp of PA OTC Western PA Thrift 375 4 12-31 04/93 44.75 93
FOBC Fed One Bancorp of Wheeling WV OTC Northern WV,OH Thrift 367 11 12-31 01/95 36.75 88
WSBI Warwick Community Bncrp of NY (3) OTC Southeast NY Thrift 350 P 4 05-31 12/97 17.25 114
HARL Harleysville SB of PA OTC Southeastern PA Thrift 348 4 09-30 08/87 33.00 55
YFCB Yonkers Fin. Corp. of NY OTC Yonkers NY Thrift 332 4 09-30 04/96 19.25 58
LFBI Little Falls Bancorp of NJ OTC New Jersey Thrift 329 6 12-31 01/96 20.25 50
CVAL Chester Valley Bancorp of PA OTC Southeastern PA Thrift 326 7 06-30 03/87 33.00 72
EQSB Equitable FSB of Wheaton MD OTC Central MD Thrift 322 4 09-30 09/93 33.25 40
FIBC Financial Bancorp, Inc. of NY OTC New York City NY Thrift 308 5 09-30 08/94 26.00 44
PHFC Pittsburgh Home Fin Corp of PA OTC Pittsburgh PA Thrift 300 9 09-30 04/96 18.50 36
CATB Catskill Fin. Corp. of NY (3) OTC Albany NY Thrift 295 4 09-30 04/96 18.00 80
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Characteristics of Publicly-Traded Thrifts
May 13, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Companies (continued)
----------------------------------
WVFC WVS Financial Corp. of PA OTC Pittsburgh PA Thrift 292 5 06-30 11/93 39.13 71
LFED Leeds Fed Bksr MHC of MD (36.3 OTC Baltimore MD Thrift 291 1 06-30 05/94 20.75 108
FBER 1st Bergen Bancorp of NJ OTC Northern NJ Thrift 290 4 12-31 04/96 19.38 53
WYNE Wayne Bancorp, Inc. of NJ OTC Northern NJ Thrift 270 5 12-31 06/96 32.00 64
WSB Washington SB, FSB of MD AMEX Southeastern MD Thrift 266 5 12-31 / 7.88 35
ALLB Alliance Bank MHC of PA (19.9) OTC Southeast PA Thrift 260 7 12-31 03/95 33.50 110
SKAN Skaneateles Bancorp Inc of NY (3) OTC Northwest NY Thrift 256 9 12-31 06/86 18.88 27
IFSB Independence FSB of DC OTC Washington DC Ret. 252 S 2 12-31 06/85 20.50 26
SBFL SB Fngr Lakes MHC of NY (33.1) OTC Western NY Thrift 248 5 12-31 11/94 20.00 71
HRBF Harbor Federal Bancorp of MD OTC Baltimore MD Thrift 234 9 03-31 08/94 24.75 42
ESBK Elmira Svgs Bank (The) of NY (3) OTC NY,PA Thrift 231 6 12-31 03/85 30.00 22
PHSB Ppls Home SB, MHC of PA (45.0) OTC Western PA Thrift 218 9 12-31 07/97 20.88 58
LARL Laurel Capital Group of PA OTC Southwestern PA Thrift 213 6 06-30 02/87 21.25 46
PBHC Pathfinder BC MHC of NY (46.1) (3) OTC Upstate NY Thrift 197 5 12-31 11/95 24.00 68
PEEK Peekskill Fin. Corp. of NY OTC Southeast NY Thrift 184 3 06-30 12/95 17.25 52
PLSK Pulaski SB, MHC of NJ (46.0) OTC New Jersey Thrift 182 6 12-31 04/97 19.00 40
SFED SFS Bancorp of Schenectady NY OTC Eastern NY Thrift 174 4 12-31 06/95 25.00 30
AFED AFSALA Bancorp, Inc. of NY OTC Central NY Thrift 160 5 09-30 10/96 19.00 26
SKBO First Carnegie MHC of PA(45.0) OTC Western PA Thrift 144 3 03-31 04/97 20.25 47
PRBC Prestige Bancorp of PA OTC Southwestern PA Thrift 143 4 12-31 06/96 24.25 22
CFKY Columbia Financial of KY *** NorthCentral KY Thrift 127 P 5 12-31 04/98 16.13 43
TPNZ Tappan Zee Fin., Inc. of NY OTC Southeast NY Thrift 125 S 1 03-31 10/95 20.38 30
GOSB GSB Financial Corp. of NY (3) OTC Southeast NY Thrift 116 2 09-30 07/97 17.56 39
AFBC Advance Fin. Bancorp of WV OTC Northern Neck WV Thrift 108 2 06-30 01/97 18.13 20
WHGB WHG Bancshares of MD OTC Baltimore MD Thrift 101 5 09-30 04/96 17.75 25
USAB USABancshares, Inc of PA (3) OTC Philadelphia PA Thrift 89 1 12-31 / 13.50 10
SHSB SHS Bancorp, Inc. of PA OTC Pittsburgh, PA Thrift 89 3 12-31 10/97 17.75 15
ALBC Albion Banc Corp. of Albion NY OTC Western NY Thrift 72 2 09-30 07/93 11.00 8
PWBK Pennwood Bancorp, Inc. of PA OTC Pittsburgh PA Thrift 47 3 06-30 07/96 19.50 11
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Characteristics of Publicly-Traded Thrifts
May 13, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies
------------------
COFI Charter One Financial of OH OTC OH,MI,NY Div. 19,760 221 12-31 01/88 68.13 4,365
CFB Commercial Federal Corp. of NE NYSE NE,CO,KS,OK,IA M.B. 7,189 108 06-30 12/84 35.13 1,416
SPBC St. Paul Bancorp, Inc. of IL OTC Chicago IL Div. 4,557 52 12-31 05/87 24.88 854
CTZN CitFed Bancorp of Dayton OH OTC Dayton OH M.B. 3,460 35 03-31 01/92 50.50 657
MAFB MAF Bancorp, Inc. of IL OTC Chicago IL Thrift 3,458 21 12-31 01/90 38.75 582
ABCW Anchor Bancorp Wisconsin of WI OTC Wisconsin M.B. 1,941 35 03-31 07/92 43.38 389
FLGS Flagstar Bancorp, Inc of MI OTC MI Thrift 1,901 19 12/31 / 27.00 369
DNFC D&N Financial Corp. of MI OTC Northern MI Ret. 1,815 37 12-31 02/85 27.75 253
FISB First Indiana Corp. of IN OTC Central IN M.B. 1,613 26 12-31 08/83 24.38 311
STFR St. Francis Cap. Corp. of WI OTC Milwaukee WI Thrift 1,598 23 09-30 06/93 43.25 226
FTFC First Fed. Capital Corp. of WI OTC Southern WI M.B. 1,544 49 12-31 11/89 35.00 324
ABCL Alliance Bancorp, Inc. of IL OTC Chicago IL M.B. 1,364 14 12-31 07/92 28.00 225
JSBA Jefferson Svgs Bancorp of MO OTC St. Louis MO,TX Thrift 1,238 32 12-31 04/93 30.75 308
METF Metropolitan Fin. Corp. of OH OTC Northeast OH Thrift 925 15 12-31 / 16.25 115
OFCP Ottawa Financial Corp. of MI OTC Western MI Thrift 886 26 12-31 08/94 29.06 154
CFSB CFSB Bancorp of Lansing MI OTC Central MI Thrift 853 17 12-31 06/90 27.75 207
GSBC Great Southern Bancorp of MO OTC Southwest MO Thrift 750 25 06-30 12/89 25.88 209
NASB North American SB, FSB of MO OTC KS,MO M.B. 734 7 09-30 09/85 64.00 143
HOMF Home Fed Bancorp of Seymour IN OTC Southern IN Thrift 709 16 06-30 01/88 32.00 164
HMNF HMN Financial, Inc. of MN OTC Southeast MN Thrift 691 7 12-31 06/94 27.38 113
SFSL Security First Corp. of OH OTC Northeastern OH R.E. 678 14 03-31 01/88 24.75 187
FNGB First Northern Cap. Corp of WI OTC Northeast WI Thrift 668 19 12-31 12/83 13.75 123
MSBK Mutual SB, FSB of Bay City MI OTC Michigan M.B. 645 22 12-31 07/92 12.13 52
FFYF FFY Financial Corp. of OH OTC Youngstown OH Thrift 615 10 06-30 06/93 34.38 139
EMLD Emerald Financial Corp. of OH OTC Cleveland OH Thrift 604 14 12-31 / 28.75 148
HFFC HF Financial Corp. of SD OTC South Dakota Thrift 581 19 06-30 04/92 35.00 103
FDEF First Defiance Fin.Corp. of OH OTC Northwest OH Thrift 580 10 12-31 10/95 15.25 124
HFGI Harrington Fin. Group of IN OTC Eastern IN Thrift 545 4 06-30 / 11.50 38
AVND Avondale Fin. Corp. of IL OTC Chicago IL Ret. 542 5 12-31 04/95 17.00 57
FFOH Fidelity Financial of OH OTC Cincinnati OH Thrift 535 12 12-31 03/96 17.88 100
CAFI Camco Fin. Corp. of OH OTC Eastern OH M.B. 521 11 12-31 / 29.88 96
FCBF FCB Fin. Corp. of Neenah WI OTC Eastern WI Thrift 520 13 03-31 09/93 32.50 126
FBCI Fidelity Bancorp of Chicago IL OTC Chicago IL Thrift 490 5 09-30 12/93 24.75 70
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Characteristics of Publicly-Traded Thrifts
May 13, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
------------------------------
CBCI Calumet Bancorp of Chicago IL OTC Chicago IL Thrift 487 5 12-31 02/92 37.50 118
FFSX First FSB MHC Sxld of IA(46.1) OTC Western IA Thrift 459 13 06-30 07/92 38.00 108
SFSB SuburbFed Fin. Corp. of IL OTC IL,IN Thrift 438 12 12-31 03/92 47.50 60
PERM Permanent Bancorp, Inc. of IN OTC Southwest IN Thrift 420 11 03-31 04/94 16.63 70
HALL Hallmark Capital Corp. of WI OTC Milwaukee WI Thrift 414 3 06-30 01/94 15.50 45
CASH First Midwest Fin., Inc. of OH OTC IA,SD R.E. 408 12 09-30 09/93 23.75 64
FFHH FSF Financial Corp. of MN OTC Southern MN Thrift 403 11 09-30 10/94 20.38 60
PVFC PVF Capital Corp. of OH OTC Cleveland OH R.E. 396 9 06-30 12/92 27.63 73
PMFI Perpetual Midwest Fin. of IA OTC EastCentral IA Thrift 392 5 06-30 03/94 30.31 59
FMBD First Mutual Bancorp Inc of IL OTC Central IL Thrift 391 14 12-31 07/95 18.38 65
ASBI Ameriana Bancorp of IN OTC Eastern IN,OH Thrift 391 8 12-31 03/87 20.75 67
FFKY First Fed. Fin. Corp. of KY OTC Central KY Thrift 388 8 06-30 07/87 26.31 109
CBSB Charter Financial Inc. of IL OTC Southern IL Thrift 382 8 09-30 12/95 34.75 145
WOFC Western Ohio Fin. Corp. of OH OTC Western OH Thrift 372 10 12-31 07/94 26.63 63
SWBI Southwest Bancshares of IL OTC Chicago IL Thrift 368 6 12-31 06/92 32.75 91
INBI Industrial Bancorp of OH OTC Northern OH Thrift 364 10 12-31 08/95 22.25 113
HBEI Home Bancorp of Elgin IL OTC Northern IL Thrift 353 4 12-31 09/96 17.63 121
HBFW Home Bancorp of Fort Wayne IN OTC Northeast IN Thrift 350 9 09-30 03/95 34.25 81
KNK Kankakee Bancorp, Inc. of IL AMEX Illinois Thrift 343 9 12-31 01/93 35.88 49
WFI Winton Financial Corp. of OH AMEX Cincinnati OH R.E. 324 S 5 09-30 08/88 19.06 77
WCBI WestCo Bancorp, Inc. of IL OTC Chicago IL Thrift 316 1 12-31 06/92 29.25 72
FSFF First SecurityFed Fin of IL OTC Chicago, IL Thrift 316 5 12-31 10/97 16.75 107
GFCO Glenway Financial Corp. of OH OTC Cincinnati OH Thrift 305 5 06-30 11/90 20.25 46
EFBI Enterprise Fed. Bancorp of OH OTC Cincinnati OH Thrift 301 5 09-30 10/94 29.00 58
PFDC Peoples Bancorp of Auburn IN OTC Northeastern IN Thrift 294 7 09-30 07/87 22.00 74
CBK Citizens First Fin.Corp. of IL AMEX Central IL Thrift 274 7 12-31 05/96 20.25 51
MFBC MFB Corp. of Mishawaka IN OTC Northern IN Thrift 264 5 09-30 03/94 26.63 44
FBCV 1st Bancorp of Vincennes IN OTC Southwestern IN M.B. 256 2 06-30 04/87 31.00 34
WAYN Wayne Svgs Bks MHC of OH (47.8 OTC Central OH Thrift 255 6 03-31 06/93 30.00 68
CAPS Capital Savings Bancorp of MO OTC Central MO Thrift 242 8 06-30 12/93 22.25 42
OHSL OHSL Financial Corp. of OH OTC Cincinnati, OH Thrift 239 5 12-31 02/93 16.75 42
HFBC HopFed Bancorp of KY OTC Southwest KY Thrift 237 P 5 09-30 02/98 21.88 88
LARK Landmark Bancshares, Inc of KS OTC Central KS Thrift 234 5 09-30 03/94 26.88 45
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Characteristics of Publicly-Traded Thrifts
May 13, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
------------------------------
GFED Guaranty Fed Bancshares of MO OTC Southwest MO Thrift 231 4 06-30 12/97 13.13 82
FFHS First Franklin Corp. of OH OTC Cincinnati OH Thrift 231 7 12-31 01/88 28.75 34
EBI Equality Bancorp, Inc. of MO AMEX St Louis Thrift 229 3 03-31 12/97 15.06 37
MBLF MBLA Financial Corp. of MO OTC Northeast MO Thrift 224 2 06-30 06/93 25.00 32
MFFC Milton Fed. Fin. Corp. of OH OTC Southwest OH Thrift 219 3 09-30 10/94 15.75 35
BFFC Big Foot Fin. Corp. of IL OTC Chicago IL Thrift 216 3 06-30 12/96 21.44 54
FFED Fidelity Fed. Bancorp of IN OTC Southwestern IN Thrift 216 4 06-30 08/87 7.88 25
FFFD North Central Bancshares of IA OTC Central IA Thrift 215 S 4 12-31 03/96 24.75 81
CMRN Cameron Fin. Corp. of MO OTC Northwest MO Thrift 211 3 09-30 04/95 21.50 55
FFBZ First Federal Bancorp of OH OTC Eastern OH Thrift 209 6 09-30 07/92 24.00 38
LSBI LSB Fin. Corp. of Lafayette IN OTC Central IN Thrift 207 4 12-31 02/95 32.50 30
WEFC Wells Fin. Corp. of Wells MN OTC Southcentral MN Thrift 201 8 12-31 04/95 21.50 42
NEIB Northeast Indiana Bncrp of IN OTC Northeast IN Thrift 199 3 12-31 06/95 21.50 37
MARN Marion Capital Holdings of IN OTC Central IN Thrift 192 2 06-30 03/93 28.50 51
FFWC FFW Corporation of Wabash IN OTC Central IN Thrift 191 4 06-30 04/93 18.50 27
PULB Pulaski Bk,SB MHC of MO (29.8) OTC St. Louis MO Thrift 179 S 5 09-30 05/94 46.75 98
PFED Park Bancorp of Chicago IL OTC Chicago IL Thrift 177 3 12-31 08/96 19.13 45
HMLK Hemlock Fed. Fin. Corp. of IL OTC Chicago IL Thrift 177 3 12-31 04/97 18.88 38
EGLB Eagle BancGroup of IL OTC Central IL Thrift 171 3 12-31 07/96 20.38 24
BWFC Bank West Fin. Corp. of MI OTC Southeast MI Thrift 170 3 06-30 03/95 14.13 37
JXSB Jcksnville SB,MHC of IL (45.6) OTC Central IL Thrift 168 4 12-31 04/95 23.25 44
FFWD Wood Bancorp of OH OTC Northern OH Thrift 167 7 06-30 08/93 18.50 49
FBSI First Bancshares, Inc. of MO OTC Southcentral MO Thrift 162 6 06-30 12/93 13.50 30
SMBC Southern Missouri Bncrp of MO OTC Southeast MO Thrift 160 8 06-30 04/94 20.50 33
QCFB QCF Bancorp of Virginia MN OTC Northeast MN Thrift 153 2 06-30 04/95 30.25 42
MWBI Midwest Bancshares, Inc. of IA OTC Southeast IA Thrift 148 4 12-31 11/92 17.00 17
GTPS Great American Bancorp of IL OTC East Central IL Thrift 142 3 12-31 06/95 20.75 33
RIVR River Valley Bancorp of IN OTC Southeast IN Thrift 137 6 12-31 12/96 20.25 24
MIFC Mid Iowa Financial Corp. of IA OTC Central IA Thrift 135 7 09-30 10/92 12.13 21
WEHO Westwood Hmstd Fin Corp of OH OTC Cincinnati OH Thrift 134 2 12-31 09/96 14.69 42
FKKY Frankfort First Bancorp of KY OTC Frankfort KY Thrift 133 3 06-30 07/95 17.00 28
CLAS Classic Bancshares, Inc. of KY OTC Eastern KY Thrift 132 S 3 03-31 12/95 18.50 24
UCBC Union Community Bancorp of IN OTC W.Central IN Thrift 132 1 12-31 12/97 15.50 47
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Characteristics of Publicly-Traded Thrifts
May 13, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
------------------------------
NBSI North Bancshares of Chicago IL OTC Chicago IL Thrift 123 2 12-31 12/93 17.38 22
PTRS Potters Financial Corp of OH OTC Northeast OH Thrift 123 4 12-31 12/93 19.50 19
BDJI First Fed. Bancorp. of MN OTC Northern MN Thrift 119 5 09-30 04/95 20.25 20
HFSA Hardin Bancorp of Hardin MO OTC Western MO Thrift 115 3 03-31 09/95 19.00 16
FFSL First Independence Corp. of KS OTC Southeast KS Thrift 114 2 09-30 10/93 14.00 13
ASBP ASB Financial Corp. of OH OTC Southern OH Thrift 113 1 06-30 05/95 14.25 23
CBES CBES Bancorp, Inc. of MO OTC Western MO Thrift 111 2 06-30 09/96 22.80 21
HFFB Harrodsburg 1st Fin Bcrp of KY OTC Central KY Thrift 109 2 09-30 10/95 17.69 35
FTNB Fulton Bancorp, Inc. of MO OTC Central MO Thrift 108 2 06-30 10/96 22.50 39
DCBI Delphos Citizens Bancorp of OH OTC Northwest OH Thrift 108 1 09-30 11/96 22.00 42
PSFC Peoples Sidney Fin. Corp of OH OTC WestCentral OH Thrift 106 1 06-30 04/97 18.94 34
MONT Montgomery Fin. Corp. of IN OTC Westcentral IN Thrift 106 4 06-30 07/97 13.00 21
FTSB Fort Thomas Fin. Corp. of KY OTC Northern KY Thrift 100 2 09-30 06/95 15.25 22
AMFC AMB Financial Corp. of IN OTC Northwest IN Thrift 100 4 12-31 04/96 18.88 18
NWEQ Northwest Equity Corp. of WI OTC Northwest WI Thrift 100 3 03-31 10/94 20.63 17
CNSB CNS Bancorp, Inc. of MO OTC Central MO Thrift 98 5 12-31 06/96 17.88 30
THR Three Rivers Fin. Corp. of MI AMEX Southwest MI Thrift 97 4 06-30 08/95 19.38 16
CIBI Community Inv. Bancorp of OH OTC NorthCentral OH Thrift 96 3 06-30 02/95 20.75 18
WCFB Wbstr Cty FSB MHC of IA (45.2) OTC Central IA Thrift 95 1 12-31 08/94 20.88 44
HHFC Harvest Home Fin. Corp. of OH OTC Southwest OH Thrift 93 3 09-30 10/94 16.50 15
LXMO Lexington B&L Fin. Corp. of MO OTC West Central MO Thrift 92 1 09-30 06/96 16.50 18
FFDF FFD Financial Corp. of OH OTC Northeast OH Thrift 92 1 06-30 04/96 22.88 33
HZFS Horizon Fin'l. Services of IA OTC Central IA Thrift 89 3 06-30 06/94 15.75 14
SFFC StateFed Financial Corp. of IA OTC Des Moines IA Thrift 89 2 06-30 01/94 14.50 23
PSFI PS Financial of Chicago IL OTC Chicago IL Thrift 88 1 12-31 11/96 14.50 30
SOBI Sobieski Bancorp of S. Bend IN OTC Northern IN Thrift 88 3 06-30 03/95 19.13 15
KYF Kentucky First Bancorp of KY AMEX Central KY Thrift 86 2 06-30 08/95 15.00 19
LOGN Logansport Fin. Corp. of IN OTC Northern IN Thrift 86 1 12-31 06/95 17.50 22
PCBC Perry Co. Fin. Corp. of MO OTC EastCentral MO Thrift 85 1 09-30 02/95 23.50 19
PFFC Peoples Fin. Corp. of OH OTC Northeast OH Thrift 82 2 09-30 09/96 15.63 22
HLFC Home Loan Financial Corp of OH OTC Central Ohio Thrift 81 P 0 03/98 15.88 36
MSBF MSB Financial, Inc of MI OTC Southcentral MI Thrift 77 2 06-30 02/95 18.00 22
HCFC Home City Fin. Corp. of OH OTC Southwest OH Thrift 72 1 06-30 12/96 21.00 19
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Characteristics of Publicly-Traded Thrifts
May 13, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
------------------------------
CKFB CKF Bancorp of Danville KY OTC Central KY Thrift 63 1 12-31 01/95 19.13 16
NSLB NS&L Bancorp, Inc of Neosho MO OTC Southwest MO Thrift 58 2 09-30 06/95 17.81 12
MRKF Market Fin. Corp. of OH OTC Cincinnati OH Thrift 57 2 09-30 03/97 15.00 20
FLKY First Lancaster Bncshrs of KY OTC Central KY Thrift 50 1 06-30 07/96 15.75 15
CSBF CSB Financial Group Inc of IL OTC Centralia IL Thrift 49 S 2 09-30 10/95 13.63 11
RELI Reliance Bancshares Inc of WI OTC Milwaukee WI Thrift 45 1 06-30 04/96 8.75 21
HWEN Home Financial Bancorp of IN OTC Central IN Thrift 44 1 06-30 07/96 9.25 9
JOAC Joachim Bancorp, Inc. of MO OTC Eastern MO Thrift 34 1 03-31 12/95 16.75 12
EFC EFC Bancorp Inc of IL AMEX Southeast IL Thrift 0 P 6 DEC 04/98 14.19 0
New England Companies
---------------------
PBCT Peoples Bank, MHC of CT (40.1) (3) OTC Southwestern CT Div. 8,184 111 12-31 07/88 38.00 2,435
WBST Webster Financial Corp. of CT OTC Central CT Thrift 7,020 84 12-31 12/86 32.69 896
PHBK Peoples Heritage Fin Grp of ME (3) OTC ME,NH,MA Div. 6,795 141 12-31 12/86 48.25 1,343
SISB SIS Bancorp, Inc. of MA (3) OTC Central MA Div. 1,734 25 12-31 02/95 42.00 293
BRKL Brookline Bncp MHC of MA(47.0) OTC Brookline Thrift 1,451 P 5 08-31 03/98 17.19 500
ANDB Andover Bancorp, Inc. of MA (3) OTC MA,NH M.B. 1,323 12 12-31 05/86 42.75 221
FESX First Essex Bancorp of MA (3) OTC MA,NH Div. 1,197 15 12-31 08/87 22.88 172
FAB FirstFed America Bancorp of MA AMEX MA,RI M.B. 1,160 13 03-31 01/97 22.63 197
AFCB Affiliated Comm BC, Inc of MA OTC MA Thrift 1,155 12 12-31 10/95 38.50 253
MDBK Medford Bancorp, Inc. of MA (3) OTC Eastern MA Thrift 1,136 16 12-31 03/86 44.00 200
FFES First Fed of E. Hartford CT OTC Central CT Thrift 983 12 12-31 06/87 40.00 109
BFD BostonFed Bancorp of MA AMEX Boston MA M.B. 975 10 12-31 10/95 24.06 130
DIBK Dime Financial Corp. of CT (3) OTC Central CT Thrift 958 11 12-31 07/86 34.00 176
MASB MassBank Corp. of Reading MA (3) OTC Eastern MA Thrift 925 15 12-31 05/86 49.75 178
MECH MECH Financial Inc of CT (3) OTC Hartford CT Thrift 892 14 12-31 06/96 30.00 159
PBKB People's Bancshares of MA (3) OTC Southeastern MA Thrift 763 14 12-31 10/86 26.88 88
NSSY NSS Bancorp of CT (3) OTC Southwest CT Thrift 671 S 8 12-31 06/94 43.00 105
BKC American Bank of Waterbury CT (3) AMEX Western CT Thrift 639 14 12-31 12/81 30.00 140
MWBX MetroWest Bank of MA (3) OTC Eastern MA Thrift 609 12 12-31 10/86 7.94 113
SOSA Somerset Savings Bank of MA (3) OTC Eastern MA R.E. 540 5 12-31 07/86 5.13 86
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Characteristics of Publicly-Traded Thrifts
May 13, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
New England Companies (continued)
---------------------------------
ABBK Abington Bancorp of MA (3) OTC Southeastern MA M.B. 532 8 12-31 06/86 19.75 70
SWCB Sandwich Bancorp of MA (3) OTC Southeastern MA Thrift 519 11 12-31 07/86 64.00 124
BKCT Bancorp Connecticut of CT (3) OTC Central CT Thrift 443 3 12-31 07/86 20.13 103
WRNB Warren Bancorp of Peabody MA (3) OTC Eastern MA R.E. 371 6 12-31 07/86 27.88 107
CEBK Central Co-Op. Bank of MA (3) OTC Eastern MA Thrift 367 8 03-31 10/86 29.75 58
LSBX Lawrence Savings Bank of MA (3) OTC Northeastern MA Thrift 360 5 12-31 05/86 17.88 77
NMSB Newmil Bancorp, Inc. of CT (3) OTC Western CT Thrift 356 15 06-30 02/86 13.81 53
NHTB NH Thrift Bancshares of NH OTC Central NH Thrift 318 10 12-31 05/86 20.00 42
BYS Bay State Bancorp of MA (3) NYSE Brookline Thrift 290 P 0 DEC 03/98 28.88 73
NBN Northeast Bancorp of ME (3) AMEX Eastern ME Thrift 279 11 06-30 08/87 17.75 39
ANE Alliance Bancorp of NE, of CT (3) AMEX Northern CT Thrift 247 7 12-31 12/86 24.00 39
IPSW Ipswich SB of Ipswich MA (3) OTC Northwest MA Thrift 227 6 12-31 05/93 19.00 45
HIFS Hingham Inst. for Sav. of MA (3) OTC Eastern MA Thrift 223 5 12-31 12/88 35.50 46
HPBC Home Port Bancorp, Inc. of MA (3) OTC Southeastern MA Thrift 209 2 12-31 08/88 25.88 48
MYST Mystic Financial of MA (3) OTC Medford Thrift 181 P 3 06-30 01/98 16.88 46
KSBK KSB Bancorp of Kingfield ME (3) OTC Western ME M.B. 150 S 8 12-31 06/93 18.25 23
FCME First Coastal Corp. of ME (3) OTC Southern ME Thrift 146 7 12-31 / 13.63 19
MFLR Mayflower Co-Op. Bank of MA (3) OTC Southeastern MA Thrift 132 4 04-30 12/87 25.00 22
NTMG Nutmeg FS&LA of CT OTC Eastern CT M.B. 105 S 3 12-31 / 11.00 11
FCB Falmouth Bancorp, Inc. of MA (3) AMEX Southeast MA Thrift 98 2 09-30 03/96 20.25 29
MCBN Mid-Coast Bancorp of ME OTC Eastern ME Thrift 63 2 03-31 11/89 12.13 9
North-West Companies
--------------------
WAMU Washington Mutual, Inc. of WA (3) OTC CA,WA,FL,OR,UT Div. 96,981 914 12-31 03/83 69.88 18,021
WFSL Washington Federal, Inc. of WA OTC Western US Thrift 5,713 104 09-30 11/82 27.75 1,454
IWBK Interwest Bancorp of WA OTC Western WA Div. 1,982 39 09-30 / 44.38 374
STSA Sterling Financial Corp. of WA OTC WA,OR M.B. 1,876 41 12-31 / 27.13 206
FWWB First Savings Bancorp of WA OTC Central WA Thrift 1,099 S 20 03-31 11/95 24.88 253
KFBI Klamath First Bancorp of OR OTC Southern OR Thrift 975 33 09-30 10/95 21.38 214
HRZB Horizon Financial Corp. of WA (3) OTC Northwest WA Thrift 533 12 03-31 08/86 18.00 135
FMSB First Mutual SB of Bellevue WA (3) OTC Western WA M.B. 451 S 8 12-31 12/85 17.75 74
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Characteristics of Publicly-Traded Thrifts
May 13, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
North-West Companies (continued)
--------------------------------
CASB Cascade Financial Corp. of WA OTC Seattle WA Thrift 423 11 06-30 09/92 17.75 60
OTFC Oregon Trail Fin. Corp. of OR OTC Baker City Thrift 369 S 7 03-31 10/97 17.38 75
HFWA Heritage Financial Corp of WA OTC NW Washington Thrift 311 P 10 06-30 01/98 15.88 155
TSBK Timberland Bancorp of WA OTC Grays Harbor Thrift 269 P 5 06-30 01/98 18.25 121
RVSB Riverview Bancorp of WA OTC Southwest WA Thrift 263 9 03-31 10/97 18.31 113
FBNW FirstBank Corp of Clarkston WA OTC West. WA/East ID Thrift 183 5 03-31 07/97 23.00 46
EFBC Empire Federal Bancorp of MT OTC Southern MT Thrift 110 3 12-31 01/97 17.00 44
South-East Companies
--------------------
BNKU Bank United Corp. of TX OTC TX,AZ Thrift 12,523 71 09-30 08/96 50.50 1,596
FFCH First Fin. Holdings Inc. of SC OTC Charleston SC Div. 1,793 34 09-30 11/83 24.00 325
FLFC First Liberty Fin. Corp. of GA OTC Georgia M.B. 1,275 31 09-30 12/83 24.50 285
EBSI Eagle Bancshares of Tucker GA OTC Atlanta GA Thrift 934 14 03-31 04/86 22.75 130
HFNC HFNC Financial Corp. of NC OTC Charlotte NC Thrift 911 10 06-30 12/95 13.31 229
CNIT Cenit Bancorp of Norfolk VA OTC Southeastern VA Thrift 718 19 12-31 08/92 26.50 132
VABF Va. Beach Fed. Fin. Corp of VA OTC Southeast VA M.B. 616 14 12-31 11/80 18.63 93
CFCP Coastal Fin. Corp. of SC OTC South Carolina Thrift 564 9 09-30 09/90 22.00 103
FFBH First Fed. Bancshares of AR OTC Northern AR Thrift 550 13 12-31 05/96 27.75 136
FSPT FirstSpartan Fin. Corp. of SC OTC Northwestern SC Thrift 495 7 06-30 07/97 45.50 202
PFSL Pocahontas Bancorp of AR OTC Northeast AR Thrift 420 P 6 09-30 04/98 10.06 67
TSH Teche Holding Company of LA AMEX Southern LA Thrift 409 9 09-30 04/95 20.25 70
COOP Cooperative Bancshares of NC OTC Eastern NC Thrift 369 16 12-31 08/91 18.00 54
CAVB Cavalry Bancorp of TN OTC Murfreesburg Thrift 347 P 0 Sept 03/98 23.50 177
FSTC First Citizens Corp of GA OTC Western GA M.B. 337 S 9 03-31 03/86 31.75 88
HBSC Heritage Bancorp, Inc of SC OTC Laurens Thrift 312 P 4 Sept 04/98 22.06 102
UFRM United FSB of Rocky Mount NC OTC Eastern NC M.B. 304 13 12-31 07/80 18.25 60
SOPN First Svgs Bancorp of NC OTC Central NC Thrift 301 5 06-30 01/94 24.00 89
ANA Acadiana Bancshares, Inc of LA AMEX Southern LA Thrift 277 5 12-31 07/96 23.75 61
FLAG Flag Financial Corp of GA OTC Western GA M.B. 248 4 12-31 12/86 19.00 39
SSFC South Street Fin. Corp. of NC (3) OTC South Central NC Thrift 229 2 09-30 10/96 10.13 47
CFTP Community Fed. Bancorp of MS OTC Northeast MS Thrift 229 2 09-30 03/96 17.75 80
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Characteristics of Publicly-Traded Thrifts
May 13, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
South-East Companies (continued)
--------------------------------
HCBB HCB Bancshares of Camden AR OTC Southern AR Thrift 205 7 06-30 05/97 15.63 41
ESX Essex Bancorp of Norfolk VA AMEX VA,NC M.B. 195 4 12-31 07/90 4.06 4
CFFC Community Fin. Corp. of VA OTC Central VA Thrift 183 4 03-31 03/88 16.25 42
FTF Texarkana Fst. Fin. Corp of AR AMEX Southwest AR Thrift 180 5 09-30 07/95 28.31 50
GSFC Green Street Fin. Corp. of NC OTC Southern NC Thrift 180 3 09-30 04/96 16.75 72
FFDB FirstFed Bancorp, Inc. of AL OTC Central AL Thrift 179 8 03-31 11/91 25.00 29
FGHC First Georgia Hold. Corp of GA OTC Southeastern GA Thrift 166 7 09-30 02/87 13.50 41
SZB SouthFirst Bancshares of AL AMEX Central AL Thrift 165 2 09-30 02/95 19.88 19
HBS Haywood Bancshares, Inc. of NC (3) AMEX Northwest NC Thrift 153 4 12-31 12/87 22.88 29
BFSB Bedford Bancshares, Inc. of VA OTC Southern VA Thrift 137 3 09-30 08/94 28.75 33
GSLA GS Financial Corp. of LA OTC New Orleans LA Thrift 131 3 12-31 04/97 20.00 69
PDB Piedmont Bancorp, Inc. of NC AMEX Central NC Thrift 130 1 06-30 12/95 10.31 28
CCFH CCF Holding Company of GA OTC Atlanta GA Thrift 125 5 12-31 07/95 23.25 21
SBAN SouthBanc Shares Inc. of SC OTC Northwest SC Thrift 117 P 6 09-30 04/98 21.63 33
CFNC Carolina Fincorp of NC (3) OTC Southcentral NC Thrift 115 4 06-30 11/96 18.13 34
TWIN Twin City Bancorp, Inc. of TN OTC Northeast TN Thrift 109 3 12-31 01/95 14.50 18
SSM Stone Street Bancorp of NC AMEX Central NC Thrift 108 2 12-31 04/96 19.88 38
SRN Southern Banc Company of AL AMEX Northeast AL Thrift 106 S 4 06-30 10/95 16.50 20
CENB Century Bancorp, Inc. of NC OTC Charlotte NC Thrift 102 1 06-30 12/96 19.75 24
PEDE Great Pee Dee Bancorp of SC OTC Northeast SC Thrift 79 P 1 06-30 12/97 16.00 35
UTBI United Tenn. Bancshares of TN OTC Eastern TN Thrift 77 P 2 12-31 01/98 15.38 22
SCBS Southern Commun. Bncshrs of AL OTC NorthCentral AL Thrift 71 S 1 09-30 12/96 16.75 19
SSB Scotland Bancorp, Inc. of NC AMEX S. Central NC Thrift 61 2 09-30 04/96 8.88 17
SCCB S. Carolina Comm. Bnshrs of SC OTC Central SC Thrift 45 3 06-30 07/94 21.25 12
MBSP Mitchell Bancorp, Inc. of NC OTC Western NC Thrift 36 1 06-30 07/96 16.88 16
South-West Companies
--------------------
CBSA Coastal Bancorp of Houston TX OTC Houston TX M.B. 2,911 37 12-31 / 38.38 193
FBHC Fort Bend Holding Corp. of TX OTC Eastcentral TX M.B. 303 6 03-31 06/93 28.00 47
JXVL Jacksonville Bancorp of TX OTC East Central TX Thrift 235 6 09-30 04/96 21.00 51
ETFS East Texas Fin. Serv. of TX OTC Northeast TX Thrift 120 2 09-30 01/95 16.13 25
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Characteristics of Publicly-Traded Thrifts
May 13, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
South-West Companies (continued)
--------------------------------
GUPB GFSB Bancorp, Inc of Gallup NM OTC Northwest NM Thrift 115 1 06-30 06/95 17.00 20
AABC Access Anytime Bancorp of NM OTC Eastern NM Thrift 107 3 12-31 08/86 12.00 15
Western Companies (Excl CA)
---------------------------
FFBA First Colorado Bancorp of CO OTC Colorado Thrift 1,555 27 12-31 01/96 29.19 491
WSTR WesterFed Fin. Corp. of MT OTC Montana Thrift 1,035 36 06-30 01/94 25.69 143
UBMT United Fin. Corp. of MT OTC Central MT Thrift 96 4 12-31 09/86 28.75 35
TRIC Tri-County Bancorp of WY OTC Southeastern WY Thrift 90 2 12-31 09/93 15.25 18
HCBC High Country Bancorp of CO OTC Salida Thrift 87 2 12-31 12/97 15.00 20
CRZY Crazy Woman Creek Bncorp of WY OTC Northeast WY Thrift 61 1 09-30 03/96 19.00 18
Other Areas
-----------
</TABLE>
NOTES: (1) Or most recent date available (M=March, S=September, D=December,
J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift,
M.B.=Mortgage Banker, R.E.=Real Estate Developer,
Div.=Diversified, and Ret.=Retail Banking.
(3) FDIC savings bank.
Source: Corporate offering circulars, SNL Securities Quarterly Thrift
Report, and financial reports of publicly Traded Thrifts.
Date of Last Update: 05/13/98
<PAGE>
EXHIBIT III-2
Financial Analysis of Comparable New England Thrifts
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Market Pricing Comparatives
Prices As of May 8, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------- Pricing Ratios(3) Dividends(4)
--------------- Core Book -------------------------------------- ----------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
-------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------ -------
Financial Institution ($) ($Mil) ($) ($) (X) (%) (%) (%) (x) ($) (%) (%)
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 23.01 176.52 0.98 13.92 20.51 167.50 21.58 172.96 21.66 0.36 1.62 31.23
All Public Companies 23.63 253.21 1.02 13.87 20.32 172.79 21.67 176.65 21.38 0.37 1.60 31.32
State of MA 26.99 116.75 1.34 14.33 17.33 193.55 20.03 198.42 18.81 0.42 1.46 30.19
Comparable Group Average 32.21 160.55 1.79 17.04 16.73 194.70 16.41 200.87 17.87 0.55 1.66 29.85
New England Companies 32.21 160.55 1.79 17.04 16.73 194.70 16.41 200.87 17.87 0.55 1.66 29.85
Comparable Group
- ----------------
New England Companies
- ---------------------
ABBK Abington Bancorp of MA 19.75 70.39 1.08 10.19 16.06 193.82 13.23 212.82 18.29 0.20 1.01 18.52
BKC American Bank of Waterbury CT 30.00 139.56 1.48 12.39 17.54 242.13 21.84 250.42 20.27 0.76 2.53 51.35
ANDB Andover Bancorp, Inc. of MA 42.75 221.40 2.50 20.68 16.76 206.72 16.74 206.72 17.10 0.90 2.11 36.00
BFD BostonFed Bancorp of MA 24.06 130.48 1.17 15.05 18.51 159.87 13.39 165.93 20.56 0.40 1.66 34.19
FESX First Essex Bancorp of MA 22.88 172.40 1.15 12.09 17.74 189.25 14.40 215.44 19.90 0.56 2.45 48.70
FFES First Fed of E. Hartford CT 40.00 108.52 2.27 24.69 19.51 162.01 11.04 162.01 17.62 0.68 1.70 29.96
FAB FirstFed America Bancorp of MA 22.63 197.04 0.63 14.87 NM 152.19 16.99 152.19 NM 0.00 0.00 0.00
MECH MECH Financial Inc of CT 30.00 158.82 2.44 16.73 12.15 179.32 17.80 179.32 12.30 0.60 2.00 24.59
MASB MassBank Corp. of Reading MA 49.75 178.45 2.62 28.93 17.58 171.97 19.28 174.44 18.99 1.00 2.01 38.17
MDBK Medford Bancorp, Inc. of MA 44.00 199.76 2.42 22.36 17.53 196.78 17.59 209.13 18.18 0.80 1.82 33.06
MWBX MetroWest Bank of MA 7.94 112.91 0.53 3.15 14.98 252.06 18.54 252.06 14.98 0.12 1.51 22.64
NSSY NSS Bancorp of CT 43.00 104.66 3.12 22.43 15.64 191.71 15.60 197.52 13.78 0.52 1.21 16.67
SISB SIS Bancorp, Inc. of MA 42.00 292.74 1.87 18.00 NM 233.33 16.89 233.33 22.46 0.64 1.52 34.22
<CAPTION>
Financial Characteristics(6)
-----------------------------------------------------
Reported Core
Total Equity/ NPAs/ -------------- ----------------
Assets Assets Assets ROA ROE ROA ROE
------ ------- ------ ------ ------- ------- -------
Financial Institution ($Mil) (%) (%) (%) (%) (%) (%)
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 1,008 13.96 0.69 0.94 7.92 0.89 7.46
All Public Companies 1,387 13.59 0.69 0.96 8.35 0.91 7.91
State of MA 679 10.87 0.49 1.07 11.57 1.02 10.82
Comparable Group Average 983 8.52 0.55 0.95 11.50 0.97 11.66
New England Companies 983 8.52 0.55 0.95 11.50 0.97 11.66
Comparable Group
- ----------------
New England Companies
- ---------------------
ABBK Abington Bancorp of MA 532 6.83 0.14 0.87 12.59 0.77 11.05
BKC American Bank of Waterbury CT 639 9.02 2.28 1.33 15.56 1.15 13.47
ANDB Andover Bancorp, Inc. of MA 1,323 8.10 0.49 1.05 13.07 1.03 12.81
BFD BostonFed Bancorp of MA 975 8.37 NA 0.75 8.41 0.68 7.57
FESX First Essex Bancorp of MA 1,197 7.61 0.54 0.83 11.19 0.74 9.97
FFES First Fed of E. Hartford CT 983 6.82 0.31 0.57 8.78 0.63 9.72
FAB FirstFed America Bancorp of MA 1,160 11.17 0.31 0.17 1.58 0.53 4.99
MECH MECH Financial Inc of CT 892 9.93 0.56 1.60 15.91 1.58 15.72
MASB MassBank Corp. of Reading MA 925 11.21 0.17 1.11 10.51 1.03 9.73
MDBK Medford Bancorp, Inc. of MA 1,136 8.94 0.13 1.05 11.80 1.02 11.37
MWBX MetroWest Bank of MA 609 7.36 0.70 1.33 17.91 1.33 17.91
NSSY NSS Bancorp of CT 671 8.14 NA 1.05 13.40 1.19 15.20
SISB SIS Bancorp, Inc. of MA 1,734 7.24 0.43 0.65 8.86 0.88 12.10
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month data,
adjusted to omit non-operating items (including the SAIF assessment) on a
tax effected basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/CORE = Price to estimated core
earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month estimated core
earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month earnings and average equity and assets
balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
EXHIBIT III-3
Peer Group Market Area Comparative Analysis
<PAGE>
Exhibit III-3
Peer Group Market Area Comparative Analysis
<TABLE>
<CAPTION>
Per Capita Income
Population Proj. ----------------------- Deposit
------------- Pop. 1990-97 1997-2002 Median % State Market
Institution County 1990 1997 2002 % Change % Change Age Amount Average Share(1)
- ----------- ------ ---- ---- ---- -------- --------- ------ ------ ------- --------
(000) (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Andover Bancorp Inc of MA Essex 670 691 706 3.2% 2.1% 36.0 21,025 103.5% 7.2%
First Essex Bancorp of MA Essex 670 691 706 3.2% 2.1% 36.0 21,025 103.5% 5.0%
FirstFed America Bancorp of MA Bristol 506 515 521 1.7% 1.2% 35.3 16,729 82.4% 9.8%
Medford Bancorp Inc of MA Middlesex 1,398 1,418 1,431 1.4% 0.9% 35.6 23,587 116.1% 3.8%
First Fed of East Hartford of CT Hartford 852 828 812 -2.8% -1.9% 36.9 19,111 119.1% 2.5%
BostonFed Bancorp of MA Middlesex 1,398 1,418 1,431 1.4% 0.9% 35.6 23,587 116.1% 1.5%
MassBank Corp of MA Middlesex 1,398 1,418 1,431 1.4% 0.9% 35.6 23,587 116.1% 3.8%
MECH Financial Inc of CT Hartford 852 828 812 -2.8% -1.9% 36.9 19,111 119.1% 3.5%
American Bank of Waterbury CT New Haven 804 793 786 -1.4% -1.0% 36.5 18,751 116.9% 2.5%
Abington Bancorp of MA Plymouth 435 461 479 5.9% 3.8% 34.7 19,340 95.2% 3.2%
Metrowest Bank of MA Middlesex 1,398 1,418 1,431 1.4% 0.9% 35.6 23,587 116.1% 1.8%
----- ----- ----- ---- ---- ----- ------- ------ ----
Averages: 944 953 959 1.1% 0.7% 35.9 20,858 109.5% 4.1%
Medians: 852 828 812 1.4% 0.9% 35.6 21,025 116.1% 3.5%
Compass Bank for Savings Bristol 506 515 521 1.7% 1.2% 35.3 16,729 82.4% 12.5%
Sandwich Barnstable 187 205 218 9.9% 6.2% 40.7 18,311 90.2% 9.9%
</TABLE>
(1) Total institution deposits in headquarters county as percent of total
county deposits.
Sources: CACI, Inc, SNL Securities
<PAGE>
EXHIBIT IV-1
Stock Prices:
As of May 8, 1998
<PAGE>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A
Weekly Thrift Market Line - Part One
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- % Change From
Shares Market 52 Week (1) -----------------------
Price/ Outst- Capital- --------------- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts no MHC)
---------------------------------------------
SAIF-Insured Thrifts(295) 22.90 6,415 182.1 25.07 15.54 23.04 -0.42 51.65 7.01
NYSE Traded Companies(8) 43.24 37,199 1,765.9 47.88 26.60 44.00 -2.39 57.52 5.42
AMEX Traded Companies(22) 18.66 3,045 57.2 21.06 13.93 18.73 -0.48 39.42 6.19
NASDAQ Listed OTC Companies(264) 22.79 5,956 154.0 24.89 15.40 22.92 -0.37 52.54 6.90
California Companies(19) 29.85 13,767 643.3 32.59 18.89 29.77 0.11 51.35 6.67
Florida Companies(6) 20.47 24,570 455.6 24.29 14.23 21.23 -2.87 54.43 -4.49
Mid-Atlantic Companies(59) 24.35 9,323 215.8 26.27 15.81 24.69 -1.00 61.53 10.30
Mid-West Companies(136) 22.26 4,071 123.2 24.42 15.13 22.35 -0.29 48.64 5.84
New England Companies(8) 23.22 6,863 199.0 24.97 13.96 23.65 -1.30 67.81 6.10
North-West Companies(11) 23.16 10,658 272.8 24.39 17.31 23.05 0.76 53.41 20.51
South-East Companies(44) 21.23 4,544 117.5 23.95 15.51 21.44 -0.78 44.26 4.87
South-West Companies(6) 20.90 2,287 60.9 21.70 13.43 19.90 5.04 63.57 6.42
Western Companies (Excl CA)(6) 20.74 2,050 46.9 21.93 15.19 20.83 -0.52 46.38 7.72
Thrift Strategy(247) 21.65 4,597 110.8 23.77 15.06 21.79 -0.40 49.13 6.70
Mortgage Banker Strategy(30) 30.66 16,818 594.8 33.18 18.78 30.91 -0.72 63.71 5.20
Real Estate Strategy(8) 28.64 6,618 172.8 29.69 15.32 27.81 1.95 85.06 29.66
Diversified Strategy(7) 33.20 34,555 1,283.8 37.88 22.41 33.98 -2.49 45.03 -1.87
Retail Banking Strategy(3) 21.75 4,580 112.1 23.29 12.35 22.27 -1.30 82.65 9.97
Companies Issuing Dividends(248) 23.42 6,237 187.7 25.73 15.83 23.61 -0.58 49.59 4.94
Companies Without Dividends(47) 20.16 7,343 152.3 21.64 13.98 20.04 0.40 62.44 17.89
Equity/Assets less than 6%(21) 25.18 16,627 423.3 27.78 14.81 25.32 -0.71 74.25 6.29
Equity/Assets 6-12%(129) 25.97 6,685 244.7 28.19 16.25 26.18 -0.45 59.90 6.58
Equity/Assets greater than 12%(145) 19.98 4,750 95.2 22.06 15.04 20.07 -0.35 41.51 7.48
Converted Last 3 Mths (no MHC)(13) 16.67 16,124 262.0 17.62 13.93 16.78 -0.68 84.89 56.38
Actively Traded Companies(34) 31.64 20,632 775.9 34.47 19.79 31.97 -0.81 62.87 3.56
Market Value Below $20 Million(40) 16.52 934 15.1 18.44 12.30 16.53 0.05 40.71 2.79
Holding Company Structure(268) 22.97 6,396 185.9 25.20 15.70 23.12 -0.43 49.80 7.14
Assets Over $1 Billion(57) 31.22 22,627 734.6 34.11 20.33 31.80 -1.85 57.81 7.55
Assets $500 Million-$1 Billion(42) 25.64 5,364 123.2 28.02 15.96 25.74 -0.23 60.28 6.69
Assets $250-$500 Million(69) 23.40 3,348 73.1 25.34 15.63 23.42 -0.02 61.52 11.56
Assets less than $250 Million(127) 18.36 1,670 30.0 20.29 13.40 18.39 -0.10 41.40 4.63
Goodwill Companies(118) 26.19 11,634 323.7 28.66 16.98 26.47 -0.91 57.73 7.03
Non-Goodwill Companies(175) 20.88 3,167 94.2 22.89 14.60 20.93 -0.10 47.90 6.54
Acquirors of FSLIC Cases(8) 40.14 30,418 1,638.3 42.86 25.28 41.01 -1.98 67.79 7.98
<CAPTION>
Current Per Share Financials
---------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
--------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts (no MHC)
---------------------------------------------
SAIF-Insured Thrifts(295) 1.05 1.00 14.15 13.71 127.43
NYSE Traded Companies(8) 2.40 1.92 19.18 18.89 277.24
AMEX Traded Companies(22) 0.80 0.77 13.72 13.55 105.35
NASDAQ Listed OTC Companies(264) 1.04 1.00 14.06 13.64 125.95
California Companies(19) 1.52 1.38 16.77 16.36 230.17
Florida Companies(6) 0.99 0.67 11.17 10.72 144.16
Mid-Atlantic Companies(59) 1.17 1.12 14.37 13.43 145.05
Mid-West Companies(136) 0.99 0.96 14.20 13.92 114.24
New England Companies(8) 1.05 1.15 13.48 12.92 182.61
North-West Companies(11) 1.04 0.97 13.14 12.71 110.38
South-East Companies(44) 0.91 0.85 13.37 13.19 97.84
South-West Companies(6) 1.24 1.21 13.60 12.97 187.24
Western Companies (Excl CA)(6) 0.88 0.88 15.96 15.24 94.14
Thrift Strategy(247) 0.99 0.96 14.17 13.77 115.70
Mortgage Banker Strategy(30) 1.50 1.38 14.45 13.68 200.09
Real Estate Strategy(8) 1.54 1.41 13.87 13.45 201.19
Diversified Strategy(7) 1.60 1.26 13.04 12.71 166.95
Retail Banking Strategy(3) -0.37 -0.45 12.93 12.38 186.07
Companies Issuing Dividends(248) 1.12 1.06 14.29 13.85 127.35
Companies Without Dividends(47) 0.67 0.70 13.40 13.00 127.83
Equity/Assets less than 6%(21) 1.08 1.16 11.11 10.47 228.25
Equity/Assets 6-12%(129) 1.29 1.19 14.08 13.41 163.53
Equity/Assets greater than 12%(145) 0.84 0.81 14.63 14.43 82.75
Converted Last 3 Mths (no MHC)(13) 0.53 0.51 12.10 11.32 51.80
Actively Traded Companies(34) 1.55 1.63 14.83 14.39 181.98
Market Value Below $20 Million(40) 0.79 0.74 13.11 13.05 91.69
Holding Company Structure(268) 1.04 0.99 14.32 13.88 126.62
Assets Over $1 Billion(57) 1.51 1.43 15.17 13.93 202.53
Assets $500 Million-$1 Billion(42) 1.20 1.15 13.79 13.39 155.53
Assets $250-$500 Million(69) 1.08 1.03 14.58 14.21 127.67
Assets less than $250 Million(127) 0.79 0.76 13.63 13.49 87.50
Goodwill Companies(118) 1.27 1.19 14.34 13.30 162.63
Non-Goodwill Companies(175) 0.91 0.88 14.00 13.95 106.01
Acquirors of FSLIC Cases(8) 2.29 2.13 19.32 18.66 250.78
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1996 or 1997.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by
public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
BIF-Insured Thrifts(59) 26.80 15,444 650.1 29.04 17.16 27.10 -0.90 63.84 7.05
NYSE Traded Companies(5) 37.11 63,480 2,119.5 38.99 26.45 37.70 -1.28 61.54 7.76
AMEX Traded Companies(6) 22.98 2,243 55.3 24.79 13.36 22.85 0.83 73.30 12.48
NASDAQ Listed OTC Companies(48) 26.26 12,871 597.2 28.54 16.49 26.55 -1.00 63.42 5.51
California Companies(1) 23.00 7,852 180.6 23.00 14.00 22.50 2.22 64.29 19.48
Mid-Atlantic Companies(21) 26.63 22,162 666.9 28.37 17.60 27.09 -1.50 64.70 5.98
New England Companies(31) 27.20 4,563 139.7 29.61 16.44 27.45 -0.68 71.51 10.27
North-West Companies(3) 35.21 89,844 6,076.6 38.12 25.92 35.23 0.67 39.30 2.29
South-East Companies(3) 17.05 2,593 36.5 20.96 13.34 17.17 -1.73 11.30 -15.67
Thrift Strategy(45) 25.21 8,253 235.5 27.36 16.25 25.52 -1.01 63.99 7.54
Mortgage Banker Strategy(6) 26.36 28,541 843.1 28.79 15.32 26.71 -0.99 69.89 0.72
Real Estate Strategy(3) 25.44 5,842 143.7 25.63 14.75 24.75 2.74 70.65 20.35
Diversified Strategy(5) 40.96 62,538 4,020.2 44.49 27.75 41.44 -1.30 52.68 5.27
Companies Issuing Dividends(51) 27.99 17,199 736.0 30.32 17.65 28.27 -0.69 63.04 6.05
Companies Without Dividends(8) 18.81 3,664 73.3 20.45 13.83 19.22 -2.32 69.25 13.73
Equity/Assets less than 6%(4) 34.39 69,008 4,606.7 36.83 21.11 34.49 0.27 90.74 12.97
Equity/Assets 6-12%(39) 27.94 10,834 360.3 30.20 16.71 28.23 -0.85 67.42 6.06
Equity/Assets greater than 12%(16) 22.49 11,851 276.6 24.65 17.13 22.83 -1.30 49.52 7.66
Converted Last 3 Mths (no MHC)(2) 19.76 19,386 229.2 22.23 16.72 20.38 -2.42 81.34 17.13
Actively Traded Companies(17) 36.94 32,349 1,754.9 39.54 23.38 37.50 -1.24 64.50 8.54
Market Value Below $20 Million(2) 13.57 1,046 14.2 15.63 7.72 14.50 -6.32 67.32 13.30
Holding Company Structure(47) 26.58 14,046 647.9 28.90 17.42 26.91 -0.97 60.69 7.15
Assets Over $1 Billion(17) 36.78 39,984 1,898.5 39.00 24.13 37.35 -1.35 60.31 9.59
Assets $500 Million-$1 Billion(15) 25.49 8,506 145.5 27.66 14.96 25.96 -1.47 72.01 4.92
Assets $250-$500 Million(12) 21.39 3,571 72.9 23.47 14.22 21.34 0.43 64.32 4.43
Assets less than $250 Million(15) 20.71 1,757 33.3 23.14 13.08 20.84 -1.06 62.02 7.66
Goodwill Companies(31) 29.14 25,658 1,157.4 31.26 17.86 29.40 -0.88 70.67 8.07
Non-Goodwill Companies(27) 24.30 5,334 145.4 26.60 15.99 24.59 -0.81 57.50 4.54
<CAPTION>
Current Per Share Financials
---------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
BIF-Insured Thrifts(59) 1.31 1.29 13.89 13.36 140.82
NYSE Traded Companies(5) 1.53 1.53 19.42 17.09 139.86
AMEX Traded Companies(6) 1.15 1.01 13.43 12.98 120.73
NASDAQ Listed OTC Companies(48) 1.32 1.30 13.21 12.83 143.79
California Companies(1) 1.59 1.59 12.65 12.61 129.38
Mid-Atlantic Companies(21) 1.05 1.05 14.20 13.51 128.47
New England Companies(31) 1.54 1.46 13.91 13.43 151.59
North-West Companies(3) 1.14 1.49 12.94 12.48 185.20
South-East Companies(3) 0.89 0.88 13.04 12.85 77.88
Thrift Strategy(45) 1.26 1.19 14.13 13.69 129.79
Mortgage Banker Strategy(6) 1.31 1.31 12.19 11.61 151.19
Real Estate Strategy(3) 1.75 1.64 11.55 11.53 113.10
Diversified Strategy(5) 1.58 1.86 14.85 13.42 229.89
Companies Issuing Dividends(51) 1.38 1.35 14.03 13.42 147.72
Companies Without Dividends(8) 0.86 0.85 12.93 12.91 94.48
Equity/Assets less than 6%(4) 1.27 1.29 10.30 9.86 206.17
Equity/Assets 6-12%(39) 1.52 1.48 13.55 12.89 161.23
Equity/Assets greater than 12%(16) 0.88 0.87 15.49 15.23 81.10
Converted Last 3 Mths (no MHC)(2) 0.63 0.60 13.35 13.20 65.97
Actively Traded Companies(17) 1.93 1.86 17.37 16.44 194.98
Market Value Below $20 Million(2) 0.31 0.31 9.12 9.06 114.88
Holding Company Structure(47) 1.30 1.27 14.19 13.78 135.25
Assets Over $1 Billion(17) 1.59 1.66 16.46 15.25 177.25
Assets $500 Million-$1 Billion(15) 1.50 1.37 13.16 12.85 147.10
Assets $250-$500 Million(12) 1.17 1.13 12.48 12.21 113.63
Assets less than $250 Million(15) 0.98 0.93 12.57 12.46 117.08
Goodwill Companies(31) 1.37 1.36 14.03 12.98 163.74
Non-Goodwill Companies(27) 1.26 1.22 13.36 13.36 118.03
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1996 or 1997.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by
public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(16) 25.11 10,004 77.6 27.45 13.51 25.33 -0.94 104.39 14.85
BIF-Insured Thrifts(3) 26.23 32,223 391.9 28.09 15.63 26.75 -1.68 105.27 28.97
NASDAQ Listed OTC Companies(19) 25.30 13,707 130.0 27.56 13.86 25.57 -1.07 104.54 17.20
Florida Companies(2) 34.25 5,940 96.1 38.07 20.25 34.00 0.67 70.75 0.63
Mid-Atlantic Companies(10) 21.96 13,256 86.9 24.13 10.83 22.22 -1.17 129.89 19.26
Mid-West Companies(5) 28.03 2,278 28.8 29.88 15.58 28.50 -1.51 74.32 10.95
New England Companies(2) 27.60 46,589 582.1 29.56 19.21 28.02 -1.40 72.00 35.95
Thrift Strategy(17) 24.41 9,294 74.5 26.69 13.78 24.68 -1.12 94.75 17.15
Mortgage Banker Strategy(1) 26.88 33,942 219.6 27.88 6.58 26.75 0.49 293.56 35.21
Diversified Strategy(1) 38.00 64,083 929.2 41.13 22.42 38.66 -1.71 72.10 0.00
Companies Issuing Dividends(17) 26.35 11,742 117.5 28.81 13.58 26.64 -1.17 108.93 10.67
Companies Without Dividends(2) 16.94 29,426 230.2 17.49 16.16 16.98 -0.21 69.40 69.40
Equity/Assets 6-12%(12) 28.23 14,627 147.8 31.03 13.76 28.48 -0.88 122.95 12.70
Equity/Assets >12%(7) 19.44 11,868 94.4 20.60 14.07 19.75 -1.44 67.72 26.20
Holding Company Structure(3) 23.56 11,615 92.9 25.38 13.83 24.19 -2.19 105.05 30.12
Assets Over $1 Billion(6) 24.48 35,083 326.8 26.23 14.53 24.60 -0.37 118.38 32.10
Assets $500 Million-$1 Billion(1) 38.00 5,095 93.9 40.75 21.75 37.50 1.33 78.82 7.41
Assets $250-$500 Million(4) 30.56 3,387 35.7 32.97 15.52 31.00 -1.37 91.35 6.65
Assets less than $250 Million(8) 21.18 2,513 20.4 23.72 11.22 21.59 -1.83 103.88 11.85
Goodwill Companies(6) 29.17 26,219 261.8 31.25 13.97 29.55 -1.24 135.59 15.59
Non-Goodwill Companies(13) 23.37 7,451 64.1 25.71 13.81 23.58 -0.98 89.01 18.01
MHC Institutions(19) 25.30 13,707 130.0 27.56 13.86 25.57 -1.07 104.54 17.20
MHC Converted Last 3 Months(2) 16.94 29,426 230.2 17.49 16.16 16.98 -0.21 69.40 69.40
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(16) 0.64 0.61 9.84 9.76 88.32
BIF-Insured Thrifts(3) 0.89 0.67 10.71 10.26 100.97
NASDAQ Listed OTC Companies(19) 0.68 0.62 9.99 9.84 90.42
Florida Companies(2) 1.00 0.92 14.42 14.38 160.60
Mid-Atlantic Companies(10) 0.52 0.51 8.65 8.41 72.08
Mid-West Companies(5) 0.80 0.75 11.20 11.17 102.01
New England Companies(2) 0.92 0.61 9.82 9.79 88.80
Thrift Strategy(17) 0.64 0.62 10.21 10.09 89.69
Mortgage Banker Strategy(1) 0.52 0.45 5.27 4.70 64.85
Diversified Strategy(1) 1.44 0.83 11.08 11.02 127.71
Companies Issuing Dividends(17) 0.70 0.63 9.91 9.74 92.00
Companies Without Dividends(2) 0.49 0.49 10.64 10.64 77.79
Equity/Assets 6-12%(12) 0.75 0.65 9.79 9.57 102.45
Equity/Assets >12%(7) 0.55 0.55 10.39 10.39 66.36
Holding Company Structure(3) 0.69 0.65 10.58 10.16 96.06
Assets Over $1 Billion(6) 0.72 0.59 9.16 8.96 96.00
Assets $500 Million-$1 Billion(1) 1.05 0.97 15.95 15.95 141.34
Assets $250-$500 Million(4) 0.83 0.80 10.83 10.80 102.69
Assets less than $250 Million(8) 0.51 0.49 9.36 9.18 71.37
Goodwill Companies(6) 0.86 0.72 9.39 8.96 108.65
Non-Goodwill Companies(13) 0.59 0.57 10.28 10.28 81.31
MHC Institutions(19) 0.68 0.62 9.99 9.84 90.42
MHC Converted Last 3 Months(2) 0.49 0.49 10.64 10.64 77.79
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1996 or 1997.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by
public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA(8) 75.69 109,737 8,306.0 81.25 39.38 76.75 -1.38 90.42 13.07
CFB Commercial Federal Corp. of NE 35.13 40,306 1,415.9 38.19 21.42 36.56 -3.91 59.10 -1.21
DME Dime Bancorp, Inc. of NY* 29.63 114,258 3,385.5 32.06 16.63 31.06 -4.60 78.17 -2.05
DSL Downey Financial Corp. of CA 32.69 28,094 918.4 34.47 18.21 34.75 -5.93 85.53 20.72
FED FirstFed Fin. Corp. of CA 49.81 10,592 527.6 49.81 24.88 46.81 6.41 100.20 28.54
GSB Golden State Bancorp of CA(8) 38.88 51,328 1,995.6 41.81 23.75 39.00 -0.31 58.69 3.85
GDW Golden West Fin. Corp. of CA 104.00 57,190 5,947.8 110.94 65.88 105.56 -1.48 55.81 6.33
GPT GreenPoint Fin. Corp. of NY* 41.50 84,649 3,512.9 41.69 29.34 40.19 3.26 44.65 14.39
JSB JSB Financial, Inc. of NY* 54.19 9,883 535.6 58.56 41.00 56.50 -4.09 30.58 8.25
OCN Ocwen Financial Corp. of FL 23.00 60,709 1,396.3 30.38 14.50 25.63 -10.26 58.62 -9.59
SIB Staten Island Bancorp of NY* 23.13 45,130 1,043.9 23.63 18.81 23.06 0.30 92.75 10.46
WES Westcorp Inc. of Orange CA 14.81 26,301 389.5 23.50 14.69 14.69 0.82 -14.14 -12.26
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 23.75 2,575 61.2 25.63 18.25 23.00 3.26 31.00 1.58
ANE Alliance Bancorp of NE, of CT* 24.00 1,636 39.3 24.00 11.44 22.50 6.67 109.79 45.45
BKC American Bank of Waterbury CT* 30.00 4,652 139.6 32.56 16.06 31.00 -3.23 86.80 23.05
BFD BostonFed Bancorp of MA 24.06 5,423 130.5 24.88 15.00 24.38 -1.31 59.02 9.96
CNY Carver Bancorp, Inc. of NY 15.38 2,314 35.6 17.13 9.13 15.00 2.53 61.89 -5.35
CBK Citizens First Fin.Corp. of IL 20.25 2,536 51.4 22.38 14.88 20.50 -1.22 36.09 0.00
EFC EFC Bancorp Inc of IL 14.19 0 0.0 14.94 14.13 14.69 -3.40 41.90 41.90
EBI Equality Bancorp, Inc. of MO 15.06 2,486 37.4 16.00 12.50 14.75 2.10 50.60 3.86
ESX Essex Bancorp of Norfolk VA(8) 4.06 1,059 4.3 7.94 1.00 4.25 -4.47 194.20 3.05
FCB Falmouth Bancorp, Inc. of MA* 20.25 1,455 29.5 23.88 14.50 20.75 -2.41 39.66 -1.22
FAB FirstFed America Bancorp of MA 22.63 8,707 197.0 23.25 14.19 23.00 -1.61 56.07 3.43
GAF GA Financial Corp. of PA 20.00 7,595 151.9 22.25 15.75 20.00 0.00 25.94 5.93
HBS Haywood Bancshares, Inc. of NC* 22.88 1,250 28.6 24.00 15.63 22.50 1.69 41.85 1.69
KNK Kankakee Bancorp, Inc. of IL 35.88 1,378 49.4 37.75 27.00 35.63 0.70 32.25 -4.95
KYF Kentucky First Bancorp of KY 15.00 1,298 19.5 15.50 10.56 15.00 0.00 36.36 0.40
MBB MSB Bancorp of Middletown NY(8)* 33.50 2,844 95.3 37.63 17.50 35.00 -4.29 87.36 -10.98
NBN Northeast Bancorp of ME* 17.75 2,223 39.5 19.50 9.17 17.50 1.43 88.43 -6.58
NEP Northeast PA Fin. Corp of PA 15.38 6,427 98.8 16.00 15.25 15.44 -0.39 53.80 53.80
PDB Piedmont Bancorp, Inc. of NC 10.31 2,751 28.4 11.63 10.00 10.50 -1.81 -4.09 -5.24
SSB Scotland Bancorp, Inc. of NC 8.88 1,914 17.0 19.25 8.81 9.00 -1.33 -42.71 -10.66
SZB SouthFirst Bancshares of AL 19.88 976 19.4 22.75 14.38 19.75 0.66 38.25 -12.62
SRN Southern Banc Company of AL 16.50 1,230 20.3 19.13 14.38 16.50 0.00 14.74 -7.04
SSM Stone Street Bancorp of NC 19.88 1,898 37.7 27.25 19.25 20.00 -0.60 -22.43 -10.41
TSH Teche Holding Company of LA 20.25 3,438 69.6 23.50 16.75 20.88 -3.02 20.90 -10.99
FTF Texarkana Fst. Fin. Corp of AR 28.31 1,759 49.8 29.50 17.13 27.88 1.54 66.53 13.24
THR Three Rivers Fin. Corp. of MI 19.38 825 16.0 23.50 14.13 19.50 -0.62 37.15 -10.90
WSB Washington SB, FSB of MD 7.88 4,406 34.7 9.50 4.88 8.00 -1.50 57.60 -13.02
WFI Winton Financial Corp. of OH 19.06 4,014 76.5 20.63 6.25 19.88 -4.12 177.03 87.05
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN 31.00 1,090 33.8 34.50 18.41 30.00 3.33 60.04 5.84
FBER 1st Bergen Bancorp of NJ 19.38 2,729 52.9 20.75 13.50 19.13 1.31 37.15 1.31
AFED AFSALA Bancorp, Inc. of NY(8) 19.00 1,383 26.3 20.75 13.50 19.16 -0.84 40.74 -1.30
ALBK ALBANK Fin. Corp. of Albany NY 51.50 12,853 661.9 54.50 36.75 52.75 -2.37 32.90 0.12
AMFC AMB Financial Corp. of IN 18.88 964 18.2 19.38 14.00 19.38 -2.58 32.49 18.89
ASBP ASB Financial Corp. of OH 14.25 1,635 23.3 14.75 11.75 14.75 -3.39 21.28 7.55
ABBK Abington Bancorp of MA* 19.75 3,564 70.4 22.25 10.75 20.00 -1.25 83.72 -5.95
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA(8) 3.46 3.04 17.46 14.91 425.37
CFB Commercial Federal Corp. of NE 1.69 1.66 11.37 10.26 178.37
DME Dime Bancorp, Inc. of NY* 1.07 1.07 11.51 9.44 191.22
DSL Downey Financial Corp. of CA 1.61 1.55 15.32 15.13 207.72
FED FirstFed Fin. Corp. of CA 2.18 2.14 21.03 20.86 392.76
GSB Golden State Bancorp of CA(8) 1.84 2.21 18.85 17.01 312.29
GDW Golden West Fin. Corp. of CA 6.19 6.10 47.18 47.18 692.26
GPT GreenPoint Fin. Corp. of NY* 1.74 1.69 15.00 8.18 154.56
JSB JSB Financial, Inc. of NY* 2.97 2.64 35.96 35.96 154.92
OCN Ocwen Financial Corp. of FL 1.30 0.37 6.91 6.66 50.56
SIB Staten Island Bancorp of NY* 0.32 0.70 15.20 14.79 58.75
WES Westcorp Inc. of Orange CA 1.40 -0.28 13.26 13.23 141.78
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 1.14 1.11 17.31 17.31 107.60
ANE Alliance Bancorp of NE, of CT* 1.23 0.86 11.49 11.17 151.06
BKC American Bank of Waterbury CT* 1.71 1.48 12.39 11.98 137.36
BFD BostonFed Bancorp of MA 1.30 1.17 15.05 14.50 179.73
CNY Carver Bancorp, Inc. of NY -0.20 0.03 15.24 14.66 179.67
CBK Citizens First Fin.Corp. of IL 0.74 0.50 14.97 14.97 107.89
EFC EFC Bancorp Inc of IL 0.56 0.56 12.42 12.42 52.24
EBI Equality Bancorp, Inc. of MO 0.46 0.10 10.31 10.31 92.23
ESX Essex Bancorp of Norfolk VA(8) -0.28 -0.27 0.03 -0.15 184.22
FCB Falmouth Bancorp, Inc. of MA* 0.63 0.53 16.05 16.05 67.05
FAB FirstFed America Bancorp of MA 0.20 0.63 14.87 14.87 133.17
GAF GA Financial Corp. of PA 1.10 1.03 15.29 15.15 103.22
HBS Haywood Bancshares, Inc. of NC* 1.50 1.50 17.74 17.16 122.78
KNK Kankakee Bancorp, Inc. of IL 2.19 2.14 27.45 25.88 249.21
KYF Kentucky First Bancorp of KY 0.77 0.76 11.32 11.32 66.49
MBB MSB Bancorp of Middletown NY(8)* 0.40 1.11 21.92 11.66 269.12
NBN Northeast Bancorp of ME* 0.70 0.68 9.46 8.53 125.39
NEP Northeast PA Fin. Corp of PA 0.42 0.42 12.43 12.43 68.06
PDB Piedmont Bancorp, Inc. of NC 0.54 0.54 7.66 7.66 47.32
SSB Scotland Bancorp, Inc. of NC 0.58 0.58 7.73 7.73 32.12
SZB SouthFirst Bancshares of AL 0.63 0.64 16.39 15.98 169.45
SRN Southern Banc Company of AL 0.41 0.41 14.74 14.61 86.31
SSM Stone Street Bancorp of NC 0.81 0.81 16.37 16.37 56.95
TSH Teche Holding Company of LA 1.13 1.08 16.09 16.09 118.85
FTF Texarkana Fst. Fin. Corp of AR 1.72 1.68 15.53 15.53 102.48
THR Three Rivers Fin. Corp. of MI 1.00 0.95 15.91 15.86 118.17
WSB Washington SB, FSB of MD 0.46 0.33 5.23 5.23 60.31
WFI Winton Financial Corp. of OH 0.80 0.66 5.80 5.68 80.84
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN 1.81 1.18 21.08 20.71 234.80
FBER 1st Bergen Bancorp of NJ 0.78 0.78 14.39 14.39 106.43
AFED AFSALA Bancorp, Inc. of NY(8) 0.89 0.89 14.52 14.52 115.99
ALBK ALBANK Fin. Corp. of Albany NY 3.38 3.35 27.98 21.73 317.68
AMFC AMB Financial Corp. of IN 1.06 0.67 15.32 15.32 103.52
ASBP ASB Financial Corp. of OH 0.63 0.63 10.70 10.70 69.22
ABBK Abington Bancorp. of MA* 1.23 1.08 10.19 9.28 149.27
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ABBK Abington Bancorp of MA* 19.75 3,564 70.4 22.25 10.75 20.00 -1.25 83.72 -5.95
AABC Access Anytime Bancorp of NM 12.00 1,217 14.6 13.00 5.39 11.75 2.13 122.63 9.09
AFBC Advance Fin. Bancorp of WV 18.13 1,084 19.7 20.88 13.50 17.75 2.14 34.30 4.32
AFCB Affiliated Comm BC, Inc of MA(8) 38.50 6,581 253.4 41.88 21.00 38.50 0.00 85.99 1.99
ALBC Albion Banc Corp. of Albion NY 11.00 750 8.3 14.17 6.17 10.50 4.76 76.00 -17.48
ABCL Alliance Bancorp, Inc. of IL 28.00 8,024 224.7 29.25 18.52 28.25 -0.88 51.35 5.66
ALLB Alliance Bank MHC of PA (19.9) 33.50 3,273 21.8 36.38 12.50 33.50 0.00 162.75 8.06
AHCI Ambanc Holding Co., Inc. of NY* 18.94 4,306 81.6 20.00 13.56 18.69 1.34 37.75 1.01
ASBI Ameriana Bancorp of IN 20.75 3,233 67.1 22.00 15.50 20.13 3.08 33.87 4.38
ABCW Anchor Bancorp Wisconsin of WI 43.38 8,963 388.8 46.50 21.25 43.75 -0.85 104.14 19.24
ANDB Andover Bancorp, Inc. of MA* 42.75 5,179 221.4 45.25 27.50 43.50 -1.72 55.45 6.21
ASFC Astoria Financial Corp. of NY 57.63 26,366 1,519.5 62.50 39.75 59.63 -3.35 43.61 3.37
AVND Avondale Fin. Corp. of IL 17.00 3,324 56.5 18.88 13.13 16.19 5.00 22.48 4.62
BKCT Bancorp Connecticut of CT* 20.13 5,096 102.6 25.00 11.25 20.00 0.65 80.86 -4.14
BPLS Bank Plus Corp. of CA 13.13 19,383 254.5 16.13 9.75 13.75 -4.51 31.30 3.96
BNKU Bank United Corp. of TX 50.50 31,596 1,595.6 56.00 31.38 52.50 -3.81 62.90 3.19
BWFC Bank West Fin. Corp. of MI 14.13 2,623 37.1 17.50 8.25 14.13 0.00 72.95 -12.40
BANC BankAtlantic Bancorp of FL 13.88 32,996 458.0 17.00 12.50 14.50 -4.28 11.04 -17.13
BKUNA BankUnited Fin. Corp. of FL 17.00 14,209 241.6 17.13 8.63 16.25 4.62 100.00 10.32
BVCC Bay View Capital Corp. of CA 31.63 20,309 642.4 38.00 22.63 32.25 -1.92 23.75 -12.74
FSNJ Bayonne Banchsares of NJ 16.31 9,050 147.6 17.38 8.01 16.63 -1.92 103.62 21.90
BFSB Bedford Bancshares, Inc. of VA 28.75 1,149 33.0 34.75 19.75 29.00 -0.86 51.32 -15.44
BFFC Big Foot Fin. Corp. of IL 21.44 2,513 53.9 23.94 15.00 20.75 3.33 46.55 2.10
BYFC Broadway Fin. Corp. of CA 12.50 863 10.8 13.75 10.50 12.50 0.00 16.28 -5.66
BRKL Brookline Bncp MHC of MA(47.0) 17.19 29,095 235.1 17.98 16.00 17.38 -1.09 71.90 71.90
CBES CBES Bancorp, Inc. of MO 22.80 940 21.4 26.00 16.00 22.50 1.33 38.18 2.47
CCFH CCF Holding Company of GA 23.25 900 20.9 23.25 14.32 23.00 1.09 57.95 15.50
CFSB CFSB Bancorp of Lansing MI 27.75 7,473 207.4 31.13 13.49 27.50 0.91 105.71 5.71
CKFB CKF Bancorp of Danville KY 19.13 855 16.4 21.25 17.75 19.88 -3.77 -4.35 3.41
CNSB CNS Bancorp, Inc. of MO 17.88 1,653 29.6 21.50 15.50 17.88 0.00 11.75 -12.78
CSBF CSB Financial Group Inc of IL 13.63 840 11.4 14.00 11.75 13.75 -0.87 14.73 0.96
CBCI Calumet Bancorp of Chicago IL 37.50 3,141 117.8 39.00 24.67 36.50 2.74 58.43 12.78
CAFI Camco Fin. Corp. of OH 29.88 3,217 96.1 31.00 16.67 29.38 1.70 79.24 17.18
CMRN Cameron Fin. Corp. of MO 21.50 2,564 55.1 22.19 16.00 22.00 -2.27 28.36 4.88
CAPS Capital Savings Bancorp of MO(8) 22.25 1,891 42.1 25.25 13.13 23.13 -3.80 66.29 -11.88
CFNC Carolina Fincorp of NC* 18.13 1,852 33.6 18.88 14.25 18.13 0.00 27.23 -2.00
CASB Cascade Financial Corp. of WA 17.75 3,395 60.3 17.75 11.60 16.25 9.23 34.47 33.96
CATB Catskill Fin. Corp. of NY* 18.00 4,461 80.3 19.13 15.25 18.25 -1.37 14.29 -4.66
CAVB Cavalry Bancorp of TN 23.50 7,538 177.1 25.25 20.56 24.00 -2.08 135.00 135.00
CNIT Cenit Bancorp of Norfolk VA 26.50 4,977 131.9 28.58 13.58 27.00 -1.85 90.37 0.00
CEBK Central Co-Op. Bank of MA* 29.75 1,965 58.5 33.50 16.50 30.25 -1.65 77.61 4.39
CENB Century Bancorp, Inc. of NC(8) 19.75 1,222 24.1 39.00 19.75 21.00 -5.95 -13.19 -30.09
CBSB Charter Financial Inc. of IL(8) 34.75 4,174 145.0 34.75 17.00 34.75 0.00 97.11 38.28
COFI Charter One Financial of OH 68.13 64,068 4,365.0 72.75 43.93 69.56 -2.06 55.51 7.92
CVAL Chester Valley Bancorp of PA 33.00 2,185 72.1 37.00 16.67 34.00 -2.94 82.32 12.82
CTZN CitFed Bancorp of Dayton OH(8) 50.50 13,003 656.7 58.00 22.50 53.13 -4.95 122.76 29.49
CLAS Classic Bancshares, Inc. of KY 18.50 1,300 24.1 21.50 13.50 19.63 -5.76 37.04 10.45
CBSA Coastal Bancorp of Houston TX 38.38 5,035 193.2 39.00 24.75 36.25 5.88 56.65 10.03
CFCP Coastal Fin. Corp. of SC 22.00 4,674 102.8 27.75 17.81 22.00 0.00 24.79 -10.20
CMSB Commonwealth Bancorp Inc of PA 23.56 16,264 383.2 23.75 14.63 23.50 0.26 59.08 18.51
CMSV Commty. Svgs, MHC of FL (48.5) 38.00 5,095 93.9 40.75 21.75 37.50 1.33 78.82 7.41
CFTP Community Fed. Bancorp of MS 17.75 4,527 80.4 21.00 16.38 18.25 -2.74 -10.13 -12.35
CFFC Community Fin. Corp. of VA 16.25 2,554 41.5 16.25 10.75 16.13 0.74 41.30 17.67
CIBI Community Inv. Bancorp of OH 20.75 890 18.5 22.88 11.54 20.50 1.22 80.43 28.40
COOP Cooperative Bancshares of NC 18.00 2,984 53.7 25.00 10.50 18.31 -1.69 71.43 -26.53
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ABBK Abington Bancorp of MA* 1.23 1.08 10.19 9.28 149.27
AABC Access Anytime Bancorp of NM 1.31 1.22 7.51 7.51 88.10
AFBC Advance Fin. Bancorp of WV 0.84 0.81 15.17 15.17 99.66
AFCB Affiliated Comm BC, Inc of MA(8) 1.80 1.74 17.18 17.09 175.51
ALBC Albion Banc Corp. of Albion NY 0.47 0.45 8.21 8.21 95.63
ABCL Alliance Bancorp, Inc. of IL 1.28 1.42 16.32 16.13 169.97
ALLB Alliance Bank MHC of PA (19.9) 0.62 0.62 8.91 8.91 79.58
AHCI Ambanc Holding Co., Inc. of NY* 0.64 0.52 14.21 14.21 118.54
ASBI Ameriana Bancorp of IN 1.12 0.98 13.74 13.74 120.90
ABCW Anchor Bancorp Wisconsin of WI 2.22 2.05 14.39 14.16 216.58
ANDB Andover Bancorp, Inc. of MA* 2.55 2.50 20.68 20.68 255.41
ASFC Astoria Financial Corp. of NY 2.54 2.36 32.22 22.42 399.32
AVND Avondale Fin. Corp. of IL -3.76 -3.19 13.83 13.83 163.12
BKCT Bancorp Connecticut of CT* 1.16 1.03 9.21 9.21 86.94
BPLS Bank Plus Corp. of CA 0.65 0.73 9.36 8.52 215.02
BNKU Bank United Corp. of TX 2.52 2.21 19.39 18.89 396.36
BWFC Bank West Fin. Corp. of MI 0.43 0.32 8.83 8.83 64.65
BANC BankAtlantic Bancorp of FL 0.84 0.43 6.28 5.48 92.87
BKUNA BankUnited Fin. Corp. of FL 0.38 0.29 9.13 8.10 213.16
BVCC Bay View Capital Corp. of CA 0.69 0.94 8.55 7.10 159.85
FSNJ Bayonne Banchsares of NJ 0.30 0.43 10.63 10.63 67.47
BFSB Bedford Bancshares, Inc. of VA 1.41 1.40 17.30 17.30 119.15
BFFC Big Foot Fin. Corp. of IL 0.51 0.45 15.09 15.09 86.06
BYFC Broadway Fin. Corp. of CA 0.61 0.42 14.93 14.93 144.98
BRKL Brookline Bncp MHC of MA(47.0) 0.39 0.39 8.56 8.56 49.88
CBES CBES Bancorp, Inc. of MO 1.19 1.04 18.66 18.66 118.22
CCFH CCF Holding Company of GA 0.15 -0.25 13.05 13.05 138.92
CFSB CFSB Bancorp of Lansing MI 1.43 1.33 9.04 9.04 114.13
CKFB CKF Bancorp of Danville KY 1.31 0.98 16.10 16.10 73.53
CNSB CNS Bancorp, Inc. of MO 0.52 0.52 14.47 14.47 59.22
CSBF CSB Financial Group Inc of IL 0.29 0.25 13.87 13.09 57.78
CBCI Calumet Bancorp of Chicago IL 2.54 2.56 25.98 25.98 154.93
CAFI Camco Fin. Corp. of OH 1.75 1.42 15.22 14.12 161.83
CMRN Cameron Fin. Corp. of MO 0.94 0.93 17.66 17.66 82.39
CAPS Capital Savings Bancorp of MO(8) 1.25 1.20 12.08 12.08 128.08
CFNC Carolina Fincorp of NC* 0.73 0.70 14.06 14.06 61.91
CASB Cascade Financial Corp. of WA 0.74 0.72 8.63 8.63 124.46
CATB Catskill Fin. Corp. of NY* 0.85 0.85 16.06 16.06 66.05
CAVB Cavalry Bancorp of TN 0.61 0.61 12.53 12.53 46.02
CNIT Cenit Bancorp of Norfolk VA 1.21 1.12 10.03 9.23 144.28
CEBK Central Co-Op. Bank of MA* 1.42 1.30 18.35 16.59 186.82
CENB Century Bancorp, Inc. of NC(8) 1.33 1.34 25.23 25.23 83.70
CBSB Charter Financial Inc. of IL(8) 1.26 1.39 14.24 12.75 91.61
COFI Charter One Financial of OH 1.96 2.87 21.49 20.08 308.43
CVAL Chester Valley Bancorp of PA 1.44 1.37 13.14 13.14 149.04
CTZN CitFed Bancorp of Dayton OH(8) 2.10 2.10 16.14 14.74 266.12
CLAS Classic Bancshares, Inc. of KY 0.82 0.96 15.13 12.85 101.68
CBSA Coastal Bancorp of Houston TX 2.30 2.28 20.82 17.70 578.23
CFCP Coastal Fin. Corp. of SC 1.31 1.13 7.21 7.21 120.64
CMSB Commonwealth Bancorp Inc of PA 1.01 0.77 13.21 10.43 139.49
CMSV Commty. Svgs, MHC of FL (48.5) 1.05 0.97 15.95 15.95 141.34
CFTP Community Fed. Bancorp of MS 0.62 0.62 13.37 13.37 50.51
CFFC Community Fin. Corp. of VA 0.73 0.74 9.76 9.72 71.60
CIBI Community Inv. Bancorp of OH 1.04 1.04 12.48 12.48 107.73
COOP Cooperative Bancshares of NC 0.75 0.74 9.48 9.48 123.70
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
CRZY Crazy Woman Creek Bncorp of WY 19.00 955 18.1 19.13 13.13 18.13 4.80 40.74 26.67
DNFC D&N Financial Corp. of MI 27.75 9,135 253.5 29.75 15.68 29.50 -5.93 76.98 4.72
DCBI Delphos Citizens Bancorp of OH 22.00 1,904 41.9 24.25 13.50 21.00 4.76 66.04 6.02
DIME Dime Community Bancorp of NY* 27.75 12,440 345.2 28.56 16.88 27.88 -0.47 60.31 16.84
DIBK Dime Financial Corp. of CT(8)* 34.00 5,164 175.6 37.00 19.75 35.25 -3.55 65.85 11.48
ESBF ESB Financial Corp of PA 20.50 5,271 108.1 21.50 12.27 20.50 0.00 67.07 6.49
EGLB Eagle BancGroup of IL 20.38 1,177 24.0 21.13 15.00 20.70 -1.55 31.48 7.94
EBSI Eagle Bancshares of Tucker GA 22.75 5,719 130.1 27.25 15.50 24.63 -7.63 47.92 3.41
ETFS East Texas Fin. Serv. of TX 16.13 1,539 24.8 16.25 11.25 15.00 7.53 43.38 1.90
ESBK Elmira Svgs Bank (The) of NY* 30.00 741 22.2 32.25 18.33 30.00 0.00 61.55 0.00
EMLD Emerald Financial Corp. of OH 28.75 5,131 147.5 32.00 13.00 28.88 -0.45 107.13 29.91
EFBC Empire Federal Bancorp of MT 17.00 2,592 44.1 18.25 13.00 17.00 0.00 30.77 -0.76
EFBI Enterprise Fed. Bancorp of OH 29.00 1,986 57.6 35.00 15.50 29.25 -0.85 87.10 -7.94
EQSB Equitable FSB of Wheaton MD 33.25 1,218 40.5 34.00 16.88 33.63 -1.13 90.33 25.47
FCBF FCB Fin. Corp. of Neenah WI 32.50 3,863 125.5 34.00 20.75 32.25 0.78 51.16 10.17
FFDF FFD Financial Corp. of OH 22.88 1,445 33.1 23.75 13.25 22.88 0.00 66.40 27.11
FFLC FFLC Bancorp of Leesburg FL 20.38 3,747 76.4 23.50 15.90 20.75 -1.78 24.65 -6.30
FFWC FFW Corporation of Wabash IN 18.50 1,450 26.8 21.50 13.00 17.63 4.93 42.31 -2.63
FFYF FFY Financial Corp. of OH 34.38 4,055 139.4 35.38 25.50 35.00 -1.77 32.84 3.77
FMCO FMS Financial Corp. of NJ 46.00 2,395 110.2 50.00 19.00 47.50 -3.16 142.11 29.58
FFHH FSF Financial Corp. of MN 20.38 2,949 60.1 21.25 16.63 21.00 -2.95 22.55 -2.67
FOBC Fed One Bancorp of Wheeling WV(8) 36.75 2,394 88.0 40.63 18.63 37.75 -2.65 96.00 33.64
FBCI Fidelity Bancorp of Chicago IL 24.75 2,822 69.8 26.00 18.50 24.75 0.00 26.92 -3.43
FSBI Fidelity Bancorp, Inc. of PA 25.63 1,952 50.0 27.50 16.00 27.50 -6.80 62.94 10.47
FFFL Fidelity Bcsh MHC of FL (47.7) 30.50 6,785 98.3 35.38 18.75 30.50 0.00 62.67 -6.15
FFED Fidelity Fed. Bancorp of IN 7.88 3,128 24.6 10.50 7.50 7.88 0.00 -7.29 -23.57
FFOH Fidelity Financial of OH 17.88 5,595 100.0 19.88 13.25 18.00 -0.67 30.04 15.35
FIBC Financial Bancorp, Inc. of NY 26.00 1,707 44.4 27.25 16.25 26.13 -0.50 60.00 7.75
FBSI First Bancshares, Inc. of MO 13.50 2,211 29.8 17.50 9.50 13.63 -0.95 37.61 -13.63
FBBC First Bell Bancorp of PA 20.50 6,524 133.7 21.63 14.50 20.75 -1.20 36.67 7.89
SKBO First Carnegie MHC of PA(45.0) 20.25 2,300 21.0 21.00 12.88 20.75 -2.41 50.00 8.00
FSTC First Citizens Corp of GA 31.75 2,765 87.8 35.50 15.50 33.25 -4.51 104.84 -6.62
FCME First Coastal Corp. of ME* 13.63 1,359 18.5 15.75 8.88 14.00 -2.64 45.31 -8.40
FFBA First Colorado Bancorp of CO(8) 29.19 16,827 491.2 30.13 16.25 29.25 -0.21 70.40 22.91
FDEF First Defiance Fin.Corp. of OH 15.25 8,123 123.9 16.25 12.38 15.00 1.67 23.18 -4.69
FESX First Essex Bancorp of MA* 22.88 7,535 172.4 26.13 15.63 23.50 -2.64 43.00 -1.59
FFSX First FSB MHC Sxld of IA(46.1) 38.00 2,834 49.5 39.00 20.75 38.63 -1.63 65.22 19.69
FFES First Fed of E. Hartford CT 40.00 2,713 108.5 42.25 23.50 40.00 0.00 70.21 7.38
BDJI First Fed. Bancorp. of MN 20.25 998 20.2 22.00 12.00 20.25 0.00 64.23 -7.95
FFBH First Fed. Bancshares of AR 27.75 4,896 135.9 30.25 18.88 28.50 -2.63 38.75 16.84
FTFC First Fed. Capital Corp. of WI 35.00 9,258 324.0 35.75 19.50 35.75 -2.10 84.21 3.31
FFKY First Fed. Fin. Corp. of KY 26.31 4,133 108.7 27.50 18.25 25.50 3.18 31.55 15.65
FFBZ First Federal Bancorp of OH 24.00 1,575 37.8 25.75 17.00 24.00 0.00 37.14 13.58
FFCH First Fin. Holdings Inc. of SC 24.00 13,521 324.5 27.00 12.50 24.50 -2.04 86.34 -9.64
FFHS First Franklin Corp. of OH 28.75 1,192 34.3 31.25 17.25 29.13 -1.30 66.67 -8.00
FGHC First Georgia Hold. Corp of GA 13.50 3,052 41.2 13.75 7.00 13.00 3.85 68.75 42.11
FSPG First Home Bancorp of NJ(8) 32.50 2,708 88.0 37.50 18.13 32.56 -0.18 75.68 7.87
FFSL First Independence Corp. of KS 14.00 954 13.4 15.63 10.88 14.38 -2.64 28.68 0.00
FISB First Indiana Corp. of IN 24.38 12,737 310.5 30.00 15.42 24.88 -2.01 57.09 -3.29
FKFS First Keystone Fin. Corp of PA 20.75 2,413 50.1 21.75 11.00 21.00 -1.19 86.43 16.05
FLKY First Lancaster Bncshrs of KY 15.75 953 15.0 16.38 15.00 15.75 0.00 3.28 -1.19
FLFC First Liberty Fin. Corp. of GA 24.50 11,623 284.8 25.25 14.00 25.00 -2.00 68.97 14.86
CASH First Midwest Fin., Inc. of OH 23.75 2,692 63.9 24.88 15.00 23.25 2.15 55.13 5.56
FMBD First Mutual Bancorp Inc of IL 18.38 3,531 64.9 25.00 13.75 18.75 -1.97 31.29 -26.48
FMSB First Mutual SB of Bellevue WA* 17.75 4,166 73.9 20.17 11.06 17.38 2.13 58.34 -4.05
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
CRZY Crazy Woman Creek Bncorp of WY 0.75 0.76 15.04 15.04 63.64
DNFC D&N Financial Corp. of MI 1.57 1.40 10.74 10.64 198.72
DCBI Delphos Citizens Bancorp of OH 0.95 0.95 15.16 15.16 56.59
DIME Dime Community Bancorp of NY* 0.95 0.91 14.97 12.94 119.62
DIBK Dime Financial Corp. of CT(8)* 3.24 3.22 15.35 14.95 185.61
ESBF ESB Financial Corp of PA 1.03 1.03 13.00 11.58 172.79
EGLB Eagle BancGroup of IL 0.43 0.31 17.25 17.25 145.40
EBSI Eagle Bancshares of Tucker GA 0.96 0.97 12.80 12.80 163.40
ETFS East Texas Fin. Serv. of TX 0.47 0.44 13.63 13.63 78.03
ESBK Elmira Svgs Bank (The) of NY* 1.18 1.27 19.71 19.71 311.72
EMLD Emerald Financial Corp. of OH 1.20 1.14 9.46 9.33 117.71
EFBC Empire Federal Bancorp of MT 0.61 0.61 15.66 15.66 42.36
EFBI Enterprise Fed. Bancorp of OH 1.11 1.00 16.31 16.30 151.69
EQSB Equitable FSB of Wheaton MD 1.89 1.87 13.73 13.73 264.11
FCBF FCB Fin. Corp. of Neenah WI 1.25 0.92 18.97 18.97 134.59
FFDF FFD Financial Corp. of OH 1.11 0.53 15.38 15.38 63.92
FFLC FFLC Bancorp of Leesburg FL 1.00 0.95 13.73 13.73 106.82
FFWC FFW Corporation of Wabash IN 1.23 1.21 12.54 11.43 131.93
FFYF FFY Financial Corp. of OH 1.91 1.89 20.61 20.61 151.60
FMCO FMS Financial Corp. of NJ 2.29 2.29 16.25 16.05 262.38
FFHH FSF Financial Corp. of MN 1.07 1.05 14.90 14.90 136.61
FOBC Fed One Bancorp of Wheeling WV(8) 1.35 1.34 16.95 16.24 153.21
FBCI Fidelity Bancorp of Chicago IL 0.38 1.09 18.17 18.13 173.52
FSBI Fidelity Bancorp, Inc. of PA 1.42 1.38 13.77 13.77 201.37
FFFL Fidelity Bcsh MHC of FL (47.7) 0.95 0.86 12.88 12.81 179.85
FFED Fidelity Fed. Bancorp of IN 0.56 0.52 5.02 5.02 69.00
FFOH Fidelity Financial of OH 0.87 0.84 11.49 10.12 95.64
FIBC Financial Bancorp, Inc. of NY 1.53 1.63 16.13 16.06 180.58
FBSI First Bancshares, Inc. of MO 0.85 0.81 10.52 10.52 73.06
FBBC First Bell Bancorp of PA 1.16 1.14 11.19 11.19 103.57
SKBO First Carnegie MHC of PA(45.0) 0.41 0.46 10.74 10.74 62.46
FSTC First Citizens Corp of GA 2.15 1.92 12.34 9.73 121.95
FCME First Coastal Corp. of ME* 0.93 0.75 10.90 10.90 107.73
FFBA First Colorado Bancorp of CO(8) 1.18 1.12 12.44 12.19 92.43
FDEF First Defiance Fin.Corp. of OH 0.67 0.65 13.16 13.16 71.37
FESX First Essex Bancorp of MA* 1.29 1.15 12.09 10.62 158.92
FFSX First FSB MHC Sxld of IA(46.1) 1.19 1.15 14.34 14.23 161.94
FFES First Fed of E. Hartford CT 2.05 2.27 24.69 24.69 362.24
BDJI First Fed. Bancorp. of MN 0.73 0.73 12.12 12.12 119.08
FFBH First Fed. Bancshares of AR 1.12 1.07 16.93 16.93 112.26
FTFC First Fed. Capital Corp. of WI 1.88 1.48 11.81 11.17 166.81
FFKY First Fed. Fin. Corp. of KY 1.49 1.47 12.85 12.15 93.96
FFBZ First Federal Bancorp of OH 1.22 1.22 10.09 10.08 132.60
FFCH First Fin. Holdings Inc. of SC 1.08 1.06 8.54 8.54 132.63
FFHS First Franklin Corp. of OH 1.42 1.30 17.81 17.72 193.38
FGHC First Georgia Hold. Corp of GA 0.58 0.48 4.53 4.20 54.52
FSPG First Home Bancorp of NJ(8) 1.75 1.71 13.81 13.61 198.60
FFSL First Independence Corp. of KS 0.76 0.76 11.91 11.91 119.15
FISB First Indiana Corp. of IN 1.39 1.13 12.02 11.88 126.67
FKFS First Keystone Fin. Corp of PA 1.12 1.01 10.38 10.38 156.87
FLKY First Lancaster Bncshrs of KY 0.53 0.53 14.92 14.92 52.34
FLFC First Liberty Fin. Corp. of GA 0.82 0.85 8.33 7.57 109.73
CASH First Midwest Fin., Inc. of OH 1.37 1.28 16.39 14.62 151.41
FMBD First Mutual Bancorp Inc of IL 0.28 0.23 15.35 11.77 110.86
FMSB First Mutual SB of Bellevue WA* 1.05 1.03 7.35 7.35 108.29
</TABLE>
<PAGE>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
---------------------------------------
FNGB First Northern Cap. Corp of WI 13.75 8,917 122.6 14.00 9.25 13.63 0.88 48.65 -1.79
FFPB First Palm Beach Bancorp of FL 36.25 5,058 183.4 44.94 27.88 37.75 -3.97 29.46 -15.95
FWWB First Savings Bancorp of WA 24.88 10,156 252.7 28.56 20.75 26.63 -6.57 15.72 -9.53
FSFF First SecurityFed Fin of IL 16.75 6,408 107.3 16.88 14.50 16.25 3.08 67.50 6.35
SHEN First Shenango Bancorp of PA(8) 44.75 2,069 92.6 46.25 24.00 46.00 -2.72 84.54 20.95
FSLA First Source Bancorp of NJ 10.50 31,740 333.3 13.93 5.23 10.56 -0.57 89.19 -24.62
SOPN First Svgs Bancorp of NC 24.00 3,710 89.0 26.00 19.38 23.25 3.23 23.84 -5.88
FBNW FirstBank Corp of Clarkston WA 23.00 1,984 45.6 23.50 15.50 22.13 3.93 130.00 21.82
FFDB FirstFed Bancorp, Inc. of AL 25.00 1,155 28.9 25.50 16.00 24.25 3.09 56.25 15.58
FSPT FirstSpartan Fin. Corp. of SC 45.50 4,430 201.6 47.25 35.00 45.75 -0.55 127.50 13.04
FLAG Flag Financial Corp of GA 19.00 2,037 38.7 21.50 11.88 19.75 -3.80 58.33 -11.63
FLGS Flagstar Bancorp, Inc of MI 27.00 13,670 369.1 28.38 13.50 27.88 -3.16 94.52 36.36
FFIC Flushing Fin. Corp. of NY* 26.25 7,828 205.5 28.00 18.75 26.75 -1.87 37.22 9.92
FBHC Fort Bend Holding Corp. of TX(8) 28.00 1,668 46.7 28.00 13.25 28.00 0.00 111.32 28.74
FTSB Fort Thomas Fin. Corp. of KY 15.25 1,474 22.5 15.63 9.25 15.25 0.00 45.24 -0.85
FKKY Frankfort First Bancorp of KY 17.00 1,619 27.5 24.50 15.75 16.88 0.71 -16.05 -3.57
FTNB Fulton Bancorp, Inc. of MO 22.50 1,719 38.7 26.50 18.25 23.00 -2.17 20.00 1.67
GUPB GFSB Bancorp, Inc of Gallup NM 17.00 1,201 20.4 17.00 11.50 15.50 9.68 47.83 20.74
GSLA GS Financial Corp. of LA 20.00 3,439 68.8 21.00 13.88 19.75 1.27 42.86 -4.76
GOSB GSB Financial Corp. of NY* 17.56 2,248 39.5 18.94 14.25 17.50 0.34 75.60 -2.77
GFCO Glenway Financial Corp. of OH 20.25 2,281 46.2 21.25 10.50 19.50 3.85 84.09 8.00
GTPS Great American Bancorp of IL 20.75 1,588 33.0 23.00 15.50 22.00 -5.68 30.18 9.21
PEDE Great Pee Dee Bancorp of SC 16.00 2,202 35.2 16.25 14.75 16.25 -1.54 60.00 -0.81
GSBC Great Southern Bancorp of MO 25.88 8,066 208.7 26.38 16.00 26.00 -0.46 53.32 5.63
GSFC Green Street Fin. Corp. of NC 16.75 4,298 72.0 20.75 16.69 16.75 0.00 -4.29 -8.22
GFED Guaranty Fed Bancshares of MO 13.13 6,226 81.7 14.44 8.03 13.25 -0.91 67.69 1.94
HCBB HCB Bancshares of Camden AR 15.63 2,645 41.3 16.13 12.63 16.00 -2.31 22.59 7.79
HEMT HF Bancorp of Hemet CA 15.50 6,312 97.8 18.25 13.31 17.00 -8.82 6.90 -11.43
HFFC HF Financial Corp. of SD 35.00 2,935 102.7 35.63 19.25 35.63 -1.77 79.49 32.08
HFNC HFNC Financial Corp. of NC 13.31 17,193 228.8 18.13 12.94 13.25 0.45 -21.71 -8.21
HMNF HMN Financial, Inc. of MN 27.38 4,144 113.5 32.50 20.50 27.69 -1.12 38.63 -15.75
HALL Hallmark Capital Corp. of WI 15.50 2,934 45.5 18.00 8.88 15.13 2.45 74.55 -8.82
HRBF Harbor Federal Bancorp of MD 24.75 1,693 41.9 25.75 17.00 25.75 -3.88 42.41 -1.98
HARB Harbor Florida Bancshrs of FL 12.31 30,699 377.9 12.81 5.95 12.50 -1.52 102.80 11.71
HFSA Hardin Bancorp of Hardin MO 19.00 824 15.7 19.50 13.50 18.88 0.64 38.18 4.11
HARL Harleysville SB of PA 33.00 1,672 55.2 33.00 21.50 32.25 2.33 53.49 20.00
HFGI Harrington Fin. Group of IN 11.50 3,311 38.1 13.75 10.75 11.50 0.00 3.32 -11.54
HARS Harris Fin. MHC of PA (24.3) 26.88 33,942 219.6 27.88 6.58 26.75 0.49 293.56 35.21
HFFB Harrodsburg 1st Fin Bcrp of KY 17.69 1,986 35.1 18.00 14.75 17.00 4.06 18.88 5.61
HHFC Harvest Home Fin. Corp. of OH 16.50 891 14.7 16.75 10.50 16.75 -1.49 43.48 4.76
HAVN Haven Bancorp of Woodhaven NY 25.75 8,836 227.5 28.75 16.69 26.00 -0.96 52.55 14.44
HTHR Hawthorne Fin. Corp. of CA 20.50 3,164 64.9 24.00 9.25 20.50 0.00 121.62 1.84
HMLK Hemlock Fed. Fin. Corp. of IL 18.88 2,000 37.8 19.00 12.88 19.00 -0.63 45.90 10.22
HBSC Heritage Bancorp, Inc of SC 22.06 4,629 102.1 22.38 21.75 21.88 0.82 47.07 47.07
HFWA Heritage Financial Corp of WA 15.88 9,749 154.8 15.94 13.00 15.63 1.60 58.80 58.80
HCBC High Country Bancorp of CO 15.00 1,323 19.8 15.50 14.44 14.88 0.81 50.00 -3.23
HBNK Highland Bancorp of CA 42.50 2,323 98.7 43.50 20.50 41.00 3.66 97.67 29.77
HIFS Hingham Inst. for Sav. of MA* 35.50 1,304 46.3 37.00 18.00 35.25 0.71 97.22 23.48
HBEI Home Bancorp of Elgin IL 17.63 6,856 120.9 19.31 15.38 17.50 0.74 13.74 -1.40
HBFW Home Bancorp of Fort Wayne IN 34.25 2,358 80.8 37.63 20.13 34.63 -1.10 70.14 16.10
HCFC Home City Fin. Corp. of OH 21.00 905 19.0 22.75 13.13 21.00 0.00 59.21 13.51
HOMF Home Fed Bancorp of Seymour IN 32.00 5,113 163.6 33.75 16.83 31.50 1.59 90.14 23.08
HWEN Home Financial Bancorp of IN 9.25 929 8.6 9.75 7.38 9.00 2.78 19.35 0.00
HLFC Home Loan Financial Corp of OH 15.88 2,248 35.7 16.75 15.25 16.56 -4.11 58.80 58.80
HPBC Home Port Bancorp, Inc. of MA* 25.88 1,842 47.7 27.63 17.50 26.00 -0.46 38.03 11.89
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
--------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
---------------------------------------
FNGB First Northern Cap. Corp of WI 0.68 0.64 8.28 8.28 74.88
FFPB First Palm Beach Bancorp of FL 1.86 1.43 22.94 22.43 360.04
FWWB First Savings Bancorp of WA 1.25 1.17 14.80 13.67 108.17
FSFF First SecurityFed Fin of IL 0.28 0.55 14.34 14.29 49.29
SHEN First Shenango Bancorp of PA(8) 2.22 2.21 23.13 23.13 181.23
FSLA First Source Bancorp of NJ 0.41 0.41 7.72 7.72 37.57
SOPN First Svgs Bancorp of NC 1.35 1.35 18.46 18.46 81.08
FBNW FirstBank Corp of Clarkston WA 0.48 0.24 14.95 14.95 92.39
FFDB FirstFed Bancorp, Inc. of AL 1.48 1.48 15.00 13.77 154.80
FSPT FirstSpartan Fin. Corp. of SC 1.33 1.33 29.52 29.52 111.81
FLAG Flag Financial Corp of GA 1.00 0.69 10.83 10.83 121.74
FLGS Flagstar Bancorp, Inc of MI 1.68 1.26 9.26 8.93 139.07
FFIC Flushing Fin. Corp. of NY* 1.09 1.10 17.43 16.74 139.05
FBHC Fort Bend Holding Corp. of TX(8) 1.41 1.04 12.29 11.52 181.49
FTSB Fort Thomas Fin. Corp. of KY 0.80 0.80 10.72 10.72 67.76
FKKY Frankfort First Bancorp of KY 0.14 0.59 13.92 13.92 82.03
FTNB Fulton Bancorp, Inc. of MO 0.75 0.60 15.06 15.06 62.82
GUPB GFSB Bancorp, Inc of Gallup NM 0.72 0.72 11.94 11.94 95.54
GSLA GS Financial Corp. of LA 0.49 0.48 16.30 16.30 38.21
GOSB GSB Financial Corp. of NY* 0.34 0.31 14.66 14.66 51.55
GFCO Glenway Financial Corp. of OH 1.05 1.05 12.41 12.28 133.55
GTPS Great American Bancorp of IL 0.55 0.55 17.82 17.82 89.41
PEDE Great Pee Dee Bancorp of SC 0.56 0.56 13.51 13.51 35.68
GSBC Great Southern Bancorp of MO 1.66 1.53 8.13 8.07 93.04
GSFC Green Street Fin. Corp. of NC 0.66 0.66 14.73 14.73 41.81
GFED Guaranty Fed Bancshares of MO 0.33 0.32 11.17 11.17 37.04
HCBB HCB Bancshares of Camden AR 0.22 0.22 14.45 13.94 77.48
HEMT HF Bancorp of Hemet CA 0.06 0.35 13.25 11.14 168.45
HFFC HF Financial Corp. of SD 2.08 1.93 18.95 18.95 197.84
HFNC HFNC Financial Corp. of NC 0.63 0.48 9.66 9.66 52.97
HMNF HMN Financial, Inc. of MN 1.35 1.07 20.38 18.92 166.80
HALL Hallmark Capital Corp. of WI 0.94 0.92 10.74 10.74 140.94
HRBF Harbor Federal Bancorp of MD 0.96 0.92 17.23 17.23 137.96
HARB Harbor Florida Bancshrs of FL 0.58 0.56 8.01 7.91 41.50
HFSA Hardin Bancorp of Hardin MO 0.99 0.90 15.89 15.89 140.09
HARL Harleysville SB of PA 2.05 2.06 14.18 14.18 208.06
HFGI Harrington Fin. Group of IN 0.30 0.31 7.36 7.36 164.51
HARS Harris Fin. MHC of PA (24.3) 0.52 0.45 5.27 4.70 64.85
HFFB Harrodsburg 1st Fin Bcrp of KY 0.74 0.74 14.66 14.66 54.84
HHFC Harvest Home Fin. Corp. of OH 0.67 0.66 11.62 11.62 104.54
HAVN Haven Bancorp of Woodhaven NY 1.25 1.27 12.77 12.74 223.50
HTHR Hawthorne Fin. Corp. of CA 2.46 2.95 13.38 13.38 293.36
HMLK Hemlock Fed. Fin. Corp. of IL 0.47 0.80 15.21 15.21 88.34
HBSC Heritage Bancorp, Inc of SC 0.78 0.78 19.41 19.41 67.43
HFWA Heritage Financial Corp of WA 0.49 0.49 9.34 9.34 31.95
HCBC High Country Bancorp of CO 0.47 0.47 13.48 13.48 65.86
HBNK Highland Bancorp of CA 2.64 2.03 17.87 17.87 236.61
HIFS Hingham Inst. for Sav. of MA* 2.04 2.04 16.39 16.39 170.69
HBEI Home Bancorp of Elgin IL 0.41 0.41 13.89 13.89 51.43
HBFW Home Bancorp of Fort Wayne IN 1.23 1.22 18.04 18.04 148.45
HCFC Home City Fin. Corp. of OH 0.98 0.99 15.47 15.47 79.40
HOMF Home Fed Bancorp of Seymour IN 1.84 1.62 12.21 11.87 138.75
HWEN Home Financial Bancorp of IN 0.36 0.26 7.95 7.95 46.83
HLFC Home Loan Financial Corp of OH 0.60 0.60 13.35 13.35 35.83
HPBC Home Port Bancorp, Inc. of MA* 1.79 1.75 11.92 11.92 113.36
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HFBC HopFed Bancorp of KY 21.88 4,034 88.3 21.88 16.00 21.50 1.77 118.80 118.80
HZFS Horizon Fin'l. Services of IA 15.75 880 13.9 16.75 8.50 15.88 -0.82 85.29 31.25
HRZB Horizon Financial Corp. of WA* 18.00 7,478 134.6 19.25 14.50 17.88 0.67 26.32 1.41
IBSF IBS Financial Corp. of NJ(8) 17.63 10,944 192.9 21.19 14.25 18.75 -5.97 21.59 -0.34
ITLA ITLA Capital Corp of CA* 23.00 7,852 180.6 23.00 14.00 22.50 2.22 64.29 19.48
ICBC Independence Comm Bnk Cp of NY 18.44 70,411 1,298.4 19.13 17.25 18.75 -1.65 84.40 84.40
IFSB Independence FSB of DC 20.50 1,281 26.3 21.25 8.25 21.13 -2.98 148.48 20.59
INBI Industrial Bancorp of OH 22.25 5,078 113.0 25.00 12.00 21.75 2.30 78.00 25.35
IWBK Interwest Bancorp of WA 44.38 8,419 373.6 45.13 29.75 44.13 0.57 51.73 17.56
IPSW Ipswich SB of Ipswich MA* 19.00 2,390 45.4 20.75 7.38 18.25 4.11 149.02 15.15
JXVL Jacksonville Bancorp of TX 21.00 2,444 51.3 23.25 14.25 21.00 0.00 47.37 -9.68
JXSB Jcksnville SB,MHC of IL (45.6) 23.25 1,908 13.5 25.50 10.83 23.25 0.00 117.90 16.25
JSBA Jefferson Svgs Bancorp of MO 30.75 10,015 308.0 31.00 14.00 30.00 2.50 121.54 50.00
JOAC Joachim Bancorp, Inc. of MO(8) 16.75 722 12.1 16.75 14.25 16.63 0.72 14.49 4.69
KSBK KSB Bancorp of Kingfield ME* 18.25 1,259 23.0 22.50 9.17 18.38 -0.71 65.91 -18.89
KFBI Klamath First Bancorp of OR 21.38 9,994 213.7 24.25 18.06 21.75 -1.70 18.78 -0.56
LSBI LSB Fin. Corp. of Lafayette IN 32.50 916 29.8 33.00 19.29 32.50 0.00 68.48 14.04
LVSB Lakeview Financial of NJ 24.00 3,882 93.2 26.56 14.31 24.25 -1.03 66.20 -5.88
LARK Landmark Bancshares, Inc of KS 26.88 1,665 44.8 29.25 19.25 27.00 -0.44 39.64 8.04
LARL Laurel Capital Group of PA 21.25 2,187 46.5 23.50 13.42 21.50 -1.16 48.29 -1.94
LSBX Lawrence Savings Bank of MA* 17.88 4,316 77.2 19.31 9.13 18.06 -1.00 93.30 9.16
LFED Leeds Fed Bksr MHC of MD (36.3 20.75 5,182 39.1 23.50 11.83 20.88 -0.62 66.00 -4.60
LXMO Lexington B&L Fin. Corp. of MO 16.50 1,121 18.5 17.88 14.13 16.75 -1.49 16.77 -7.04
LFCO Life Financial Corp of CA(8) 22.25 6,547 145.7 25.38 10.75 24.25 -8.25 N.A. 76.17
LFBI Little Falls Bancorp of NJ 20.25 2,478 50.2 22.25 13.00 21.25 -4.71 55.77 -1.22
LOGN Logansport Fin. Corp. of IN 17.50 1,261 22.1 19.63 13.25 18.00 -2.78 32.08 -2.78
LISB Long Island Bancorp, Inc of NY(8) 65.00 23,934 1,555.7 67.63 34.13 67.63 -3.89 91.85 30.97
MAFB MAF Bancorp, Inc. of IL 38.75 15,030 582.4 43.25 26.58 39.88 -2.83 41.79 9.53
MBLF MBLA Financial Corp. of MO 25.00 1,270 31.8 30.63 20.50 26.38 -5.23 19.73 -18.03
MECH MECH Financial Inc of CT* 30.00 5,294 158.8 31.50 17.25 30.00 0.00 64.38 15.12
MFBC MFB Corp. of Mishawaka IN 26.63 1,652 44.0 30.38 19.00 26.38 0.95 40.16 -12.34
MSBF MSB Financial, Inc of MI 18.00 1,231 22.2 19.50 10.50 18.00 0.00 71.43 -5.26
MARN Marion Capital Holdings of IN 28.50 1,782 50.8 29.50 21.75 28.13 1.32 31.03 5.05
MRKF Market Fin. Corp. of OH 15.00 1,336 20.0 20.25 12.38 16.00 -6.25 18.76 -4.03
MFSL Maryland Fed. Bancorp of MD(8) 39.50 6,501 256.8 39.88 18.38 39.25 0.64 116.44 12.86
MASB MassBank Corp. of Reading MA* 49.75 3,587 178.5 54.25 30.56 52.00 -4.33 62.79 4.45
MFLR Mayflower Co-Op. Bank of MA* 25.00 899 22.5 27.50 15.75 26.50 -5.66 56.25 -6.54
MDBK Medford Bancorp, Inc. of MA* 44.00 4,540 199.8 44.25 25.50 43.50 1.15 77.78 12.10
MWBX MetroWest Bank of MA* 7.94 14,220 112.9 9.50 4.69 8.25 -3.76 67.16 -11.78
METF Metropolitan Fin. Corp. of OH 16.25 7,051 114.6 18.88 6.25 16.75 -2.99 150.00 4.84
MIFC Mid Iowa Financial Corp. of IA 12.13 1,724 20.9 12.75 7.50 12.00 1.08 64.36 5.48
MCBN Mid-Coast Bancorp of ME 12.13 711 8.6 14.00 6.50 11.75 3.23 96.60 21.30
MWBI Midwest Bancshares, Inc. of IA 17.00 1,028 17.5 19.50 9.83 16.00 6.25 68.65 -6.85
MFFC Milton Fed. Fin. Corp. of OH 15.75 2,237 35.2 17.00 13.25 16.00 -1.56 17.71 2.41
MBSP Mitchell Bancorp, Inc. of NC 16.88 931 15.7 18.00 16.25 16.88 0.00 3.88 -0.71
MBBC Monterey Bay Bancorp of CA 22.50 3,230 72.7 26.75 15.75 22.63 -0.57 40.10 15.38
MONT Montgomery Fin. Corp. of IN 13.00 1,653 21.5 13.63 11.00 13.13 -0.99 30.00 0.93
MSBK Mutual SB, FSB of Bay City MI 12.13 4,290 52.0 14.63 7.38 12.38 -2.02 67.31 -6.69
MYST Mystic Financial of MA* 16.88 2,711 45.8 18.56 14.44 17.00 -0.71 68.80 68.80
NHTB NH Thrift Bancshares of NH 20.00 2,088 41.8 22.75 14.13 20.75 -3.61 37.93 -2.44
NSLB NS&L Bancorp, Inc of Neosho MO 17.81 686 12.2 19.50 16.50 17.50 1.77 7.94 -5.67
NSSY NSS Bancorp of CT* 43.00 2,434 104.7 47.75 24.63 43.75 -1.71 72.00 13.91
NMSB Newmil Bancorp, Inc. of CT* 13.81 3,839 53.0 14.63 8.88 13.25 4.23 49.30 6.23
NBCP Niagara Bancorp of NY MHC(45.4* 16.69 29,756 225.3 17.00 16.31 16.58 0.66 66.90 66.90
NASB North American SB, FSB of MO 64.00 2,240 143.4 71.00 42.50 65.50 -2.29 50.59 20.46
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HFBC HopFed Bancorp of KY 0.58 0.58 13.26 13.26 58.70
HZFS Horizon Fin'l. Services of IA 0.81 0.64 10.25 10.25 100.87
HRZB Horizon Financial Corp. of WA* 1.09 1.07 11.35 11.35 71.24
IBSF IBS Financial Corp. of NJ(8) 0.53 0.53 11.80 11.80 66.54
ITLA ITLA Capital Corp of CA* 1.59 1.59 12.65 12.61 129.38
ICBC Independence Comm Bnk Cp of NY 0.37 0.49 12.55 11.75 57.83
IFSB Independence FSB of DC 1.09 0.45 14.23 12.67 196.38
INBI Industrial Bancorp of OH 1.01 1.01 11.99 11.99 71.69
IWBK Interwest Bancorp of WA 2.44 2.12 15.84 15.58 235.46
IPSW Ipswich SB of Ipswich MA* 0.93 0.76 4.95 4.95 95.08
JXVL Jacksonville Bancorp of TX 1.38 1.38 14.09 14.09 96.32
JXSB Jcksnville SB,MHC of IL (45.6) 0.51 0.41 9.17 9.17 88.07
JSBA Jefferson Svgs Bancorp of MO 1.02 0.95 11.61 9.23 123.62
JOAC Joachim Bancorp, Inc. of MO(8) 0.37 0.37 13.71 13.71 47.41
KSBK KSB Bancorp of Kingfield ME* 1.20 1.20 8.75 8.32 118.87
KFBI Klamath First Bancorp of OR 0.88 0.88 14.71 13.44 97.58
LSBI LSB Fin. Corp. of Lafayette IN 1.71 1.54 19.36 19.36 225.53
LVSB Lakeview Financial of NJ 1.82 1.14 11.75 9.64 121.76
LARK Landmark Bancshares, Inc of KS 1.48 1.34 19.77 19.77 140.32
LARL Laurel Capital Group of PA 1.34 1.34 10.31 10.31 97.57
LSBX Lawrence Savings Bank of MA* 1.88 1.86 8.71 8.71 83.38
LFED Leeds Fed Bksr MHC of MD (36.3 0.66 0.66 9.35 9.35 56.23
LXMO Lexington B&L Fin. Corp. of MO 0.65 0.65 15.12 14.18 82.47
LFCO Life Financial Corp of CA(8) 1.94 2.03 8.37 8.37 62.90
LFBI Little Falls Bancorp of NJ 0.75 0.72 15.45 14.30 132.58
LOGN Logansport Fin. Corp. of IN 0.98 1.01 13.12 13.12 68.29
LISB Long Island Bancorp, Inc of NY(8) 2.12 1.74 23.28 23.08 253.72
MAFB MAF Bancorp, Inc. of IL 2.52 2.49 17.53 15.44 230.05
MBLF MBLA Financial Corp. of MO 1.41 1.43 22.32 22.32 176.03
MECH MECH Financial Inc of CT* 2.47 2.44 16.73 16.73 168.56
MFBC MFB Corp. of Mishawaka IN 1.23 1.22 20.30 20.30 159.87
MSBF MSB Financial, Inc of MI 0.91 0.84 10.61 10.61 62.91
MARN Marion Capital Holdings of IN 1.58 1.58 22.37 21.89 107.66
MRKF Market Fin. Corp. of OH 0.43 0.43 15.13 15.13 42.54
MFSL Maryland Fed. Bancorp of MD(8) 1.14 1.60 15.34 15.16 180.74
MASB MassBank Corp. of Reading MA* 2.83 2.62 28.93 28.52 257.99
MFLR Mayflower Co-Op. Bank of MA* 1.56 1.48 14.31 14.10 146.73
MDBK Medford Bancorp, Inc. of MA* 2.51 2.42 22.36 21.04 250.13
MWBX MetroWest Bank of MA* 0.53 0.53 3.15 3.15 42.82
METF Metropolitan Fin. Corp. of OH 0.82 0.77 5.20 4.78 131.18
MIFC Mid Iowa Financial Corp. of IA 0.89 0.97 7.35 7.34 78.51
MCBN Mid-Coast Bancorp of ME 0.64 0.60 7.34 7.34 88.09
MWBI Midwest Bancshares, Inc. of IA 1.23 1.09 10.38 10.38 143.70
MFFC Milton Fed. Fin. Corp. of OH 0.57 0.55 11.59 11.59 97.88
MBSP Mitchell Bancorp, Inc. of NC 0.56 0.56 15.56 15.56 38.78
MBBC Monterey Bay Bancorp of CA 0.55 0.50 14.84 13.84 126.35
MONT Montgomery Fin. Corp. of IN 0.44 0.44 11.89 11.89 63.93
MSBK Mutual SB, FSB of Bay City MI -2.13 -0.75 7.64 7.64 150.29
MYST Mystic Financial of MA* 0.52 0.52 13.00 13.00 66.76
NHTB NH Thrift Bancshares of NH 1.33 1.21 12.24 10.59 152.29
NSLB NS&L Bancorp, Inc of Neosho MO 0.62 0.61 16.64 16.51 84.29
NSSY NSS Bancorp of CT* 2.75 3.12 22.43 21.77 275.57
NMSB Newmil Bancorp, Inc. of CT* 0.72 0.72 8.63 8.63 92.61
NBCP Niagara Bancorp of NY MHC(45.4* 0.58 0.58 12.71 12.71 105.69
NASB North American SB, FSB of MO 5.40 4.39 27.83 27.01 327.72
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
NBSI North Bancshares of Chicago IL 17.38 1,280 22.2 18.83 12.83 17.63 -1.42 33.28 -2.80
FFFD North Central Bancshares of IA 24.75 3,266 80.8 24.88 15.13 24.50 1.02 58.35 24.50
NEIB Northeast Indiana Bncrp of IN 21.50 1,732 37.2 22.75 13.50 21.75 -1.15 59.26 -2.85
NWSB Northwest Bcrp MHC of PA (30.7 17.63 46,838 253.0 18.00 7.13 17.73 -0.56 143.17 24.77
NWEQ Northwest Equity Corp. of WI 20.63 839 17.3 22.25 14.25 21.13 -2.37 47.36 -0.58
NTMG Nutmeg FS&LA of CT 11.00 986 10.8 11.38 5.53 11.00 0.00 86.13 4.76
OHSL OHSL Financial Corp. of OH 16.75 2,490 41.7 18.38 11.63 17.00 -1.47 42.55 24.07
OCFC Ocean Fin. Corp. of NJ 37.75 7,853 296.5 40.00 30.88 39.50 -4.43 22.25 1.34
OTFC Oregon Trail Fin. Corp. of OR 17.38 4,333 75.3 18.50 15.63 17.63 -1.42 73.80 0.00
OFCP Ottawa Financial Corp. of MI 29.06 5,313 154.4 34.00 18.86 28.75 1.08 49.10 -14.53
PFFB PFF Bancorp of Pomona CA 20.75 17,067 354.1 21.50 14.75 20.63 0.58 40.68 4.38
PSFI PS Financial of Chicago IL 14.50 2,074 30.1 22.38 13.44 14.63 -0.89 6.38 -35.21
PVFC PVF Capital Corp. of OH 27.63 2,659 73.5 28.25 15.68 27.63 0.00 76.21 36.85
PBCI Pamrapo Bancorp, Inc. of NJ 29.00 2,843 82.4 29.00 19.25 28.75 0.87 50.65 6.42
PFED Park Bancorp of Chicago IL 19.13 2,333 44.6 19.75 14.50 19.50 -1.90 29.69 2.68
PVSA Parkvale Financial Corp of PA 32.00 5,150 164.8 34.25 21.40 33.25 -3.76 52.38 -6.57
PBHC Pathfinder BC MHC of NY (46.1)* 24.00 2,831 21.2 26.13 8.17 25.00 -4.00 176.82 20.00
PEEK Peekskill Fin. Corp. of NY 17.25 3,017 52.0 18.25 13.50 17.25 0.00 27.78 2.99
PFSB PennFed Fin. Services of NJ 17.81 9,647 171.8 19.00 12.06 18.13 -1.77 44.68 3.97
PWBK Pennwood Bancorp, Inc. of PA 19.50 551 10.7 23.25 14.25 19.50 0.00 30.00 -1.27
PBKB People's Bancshares of MA* 26.88 3,289 88.4 27.75 12.81 27.25 -1.36 100.90 18.15
TSBSD Peoples Bancorp Inc of NJ* 10.63 36,237 385.2 11.83 4.81 10.75 -1.12 118.28 -10.14
PFDC Peoples Bancorp of Auburn IN 22.00 3,378 74.3 25.00 14.50 21.38 2.90 49.97 0.00
PBCT Peoples Bank, MHC of CT (40.1)* 38.00 64,083 929.2 41.13 22.42 38.66 -1.71 72.10 0.00
PFFC Peoples Fin. Corp. of OH 15.63 1,417 22.1 19.00 12.75 15.00 4.20 4.20 3.30
PHBK Peoples Heritage Fin Grp of ME* 48.25 27,831 1,342.8 53.00 31.88 48.75 -1.03 49.61 4.89
PSFC Peoples Sidney Fin. Corp of OH 18.94 1,785 33.8 19.75 12.88 19.00 -0.32 40.30 5.93
PERM Permanent Bancorp, Inc. of IN 16.63 4,206 69.9 18.25 11.25 17.25 -3.59 42.99 6.88
PMFI Perpetual Midwest Fin. of IA(8) 30.31 1,950 59.1 32.38 18.75 32.00 -5.28 57.45 3.62
PCBC Perry Co. Fin. Corp. of MO 23.50 828 19.5 25.00 19.00 23.25 1.08 23.68 -2.61
PHFC Pittsburgh Home Fin Corp of PA 18.50 1,969 36.4 20.81 14.38 18.00 2.78 22.27 2.78
PFSL Pocahontas Bancorp of AR 10.06 6,669 67.1 11.43 4.41 9.94 1.21 128.12 -9.04
PTRS Potters Financial Corp of OH 19.50 973 19.0 22.25 10.00 19.50 0.00 92.50 -2.50
PHSB Ppls Home SB, MHC of PA (45.0) 20.88 2,760 25.9 22.13 13.63 21.75 -4.00 108.80 10.59
PRBC Prestige Bancorp of PA 24.25 915 22.2 25.38 15.50 23.88 1.55 50.34 21.25
PFNC Progress Financial Corp. of PA 19.25 4,201 80.9 22.75 7.68 20.00 -3.75 146.79 16.67
PSBK Progressive Bank, Inc. of NY(8)* 42.50 3,856 163.9 44.50 24.25 41.50 2.41 77.08 11.11
PROV Provident Fin. Holdings of CA 24.00 4,674 112.2 24.25 15.63 23.50 2.13 53.55 9.69
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 46.75 2,097 29.2 51.00 17.38 46.00 1.63 156.16 48.98
PLSK Pulaski SB, MHC of NJ (46.0) 19.00 2,108 18.1 24.50 11.88 19.00 0.00 59.93 -1.30
PULS Pulse Bancorp of S. River NJ 27.50 3,111 85.6 29.75 18.13 27.25 0.92 51.68 5.24
QCFB QCF Bancorp of Virginia MN 30.25 1,382 41.8 31.75 19.50 30.25 0.00 55.13 1.68
QCBC Quaker City Bancorp of CA 24.63 4,665 114.9 24.63 15.20 22.38 10.05 57.88 15.91
QCSB Queens County Bancorp of NY* 43.25 14,922 645.4 47.13 27.17 46.00 -5.98 61.68 6.79
RARB Raritan Bancorp of Raritan NJ* 28.75 2,372 68.2 29.25 17.50 28.00 2.68 62.71 2.68
REDF RedFed Bancorp of Redlands CA(8) 20.13 7,388 148.7 21.13 13.88 20.13 0.00 46.40 1.26
RELY Reliance Bancorp, Inc. of NY 38.50 9,628 370.7 42.25 24.13 39.19 -1.76 58.76 5.11
RELI Reliance Bancshares Inc of WI 8.75 2,371 20.7 10.13 7.13 8.75 0.00 14.68 -7.89
RCBK Richmond County Fin Corp of NY 19.75 26,424 521.9 19.75 15.69 19.56 0.97 97.50 97.50
RIVR River Valley Bancorp of IN 20.25 1,190 24.1 20.25 14.25 20.00 1.25 42.11 8.00
RVSB Riverview Bancorp of WA 18.31 6,154 112.7 19.13 7.49 17.38 5.35 101.87 3.15
RSLN Roslyn Bancorp, Inc. of NY* 30.00 42,822 1,284.7 30.50 16.81 29.94 0.20 77.73 29.03
SCCB S. Carolina Comm. Bnshrs of SC 21.25 583 12.4 25.25 17.50 21.88 -2.88 21.43 -5.56
SBFL SB Fngr Lakes MHC of NY (33.1) 20.00 3,570 23.6 24.75 7.38 20.25 -1.23 171.00 25.00
SFED SFS Bancorp of Schenectady NY 25.00 1,208 30.2 27.25 16.50 25.50 -1.96 50.97 -6.99
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
NBSI North Bancshares of Chicago IL 0.50 0.47 12.96 12.96 96.08
FFFD North Central Bancshares of IA 1.16 1.16 15.10 15.10 65.87
NEIB Northeast Indiana Bncrp of IN 1.27 1.27 15.76 15.76 115.11
NWSB Northwest Bcrp MHC of PA (30.7 0.41 0.42 4.44 3.94 48.01
NWEQ Northwest Equity Corp. of WI 1.22 1.17 13.77 13.77 118.66
NTMG Nutmeg FS&LA of CT 0.67 0.40 6.26 6.26 106.64
OHSL OHSL Financial Corp. of OH 0.81 0.77 10.45 10.45 95.95
OCFC Ocean Fin. Corp. of NJ 1.78 1.77 27.45 27.45 192.40
OTFC Oregon Trail Fin. Corp. of OR 0.63 0.64 10.64 10.64 85.17
OFCP Ottawa Financial Corp. of MI 1.42 1.35 14.37 11.69 166.73
PFFB PFF Bancorp of Pomona CA 0.83 0.79 15.72 15.57 162.06
PSFI PS Financial of Chicago IL 0.44 0.76 11.14 11.14 42.39
PVFC PVF Capital Corp. of OH 1.90 1.79 10.85 10.85 149.01
PBCI Pamrapo Bancorp, Inc. of NJ 1.78 1.70 17.07 16.96 132.51
PFED Park Bancorp of Chicago IL 0.66 0.71 16.55 16.55 75.85
PVSA Parkvale Financial Corp of PA 2.06 2.06 15.66 15.57 197.89
PBHC Pathfinder BC MHC of NY (46.1)* 0.65 0.59 8.33 7.06 69.51
PEEK Peekskill Fin. Corp. of NY 0.66 0.66 15.41 15.41 61.06
PFSB PennFed Fin. Services of NJ 1.11 1.10 10.64 9.12 152.95
PWBK Pennwood Bancorp, Inc. of PA 0.83 0.96 15.41 15.41 85.68
PBKB People's Bancshares of MA* 1.56 0.73 9.16 8.81 231.96
TSBSD Peoples Bancorp Inc of NJ* 0.21 0.15 3.04 2.74 17.67
PFDC Peoples Bancorp of Auburn IN 1.27 1.27 13.30 13.30 87.12
PBCT Peoples Bank, MHC of CT (40.1)* 1.44 0.83 11.08 11.02 127.71
PFFC Peoples Fin. Corp. of OH 0.56 0.55 10.97 10.97 58.20
PHBK Peoples Heritage Fin Grp of ME* 2.64 2.62 17.07 12.83 244.16
PSFC Peoples Sidney Fin. Corp of OH 0.64 0.64 14.72 14.72 59.52
PERM Permanent Bancorp, Inc. of IN 0.63 0.62 9.98 9.86 99.81
PMFI Perpetual Midwest Fin. of IA(8) 0.99 0.88 17.94 17.94 201.07
PCBC Perry Co. Fin. Corp. of MO 1.07 1.07 19.75 19.75 102.69
PHFC Pittsburgh Home Fin Corp of PA 1.07 0.92 12.52 12.37 152.19
PFSL Pocahontas Bancorp of AR 0.47 0.47 8.31 8.31 62.99
PTRS Potters Financial Corp of OH 1.23 1.21 11.31 11.31 126.04
PHSB Ppls Home SB, MHC of PA (45.0) 0.59 0.56 10.37 10.37 78.89
PRBC Prestige Bancorp of PA 0.86 0.84 17.08 17.08 156.57
PFNC Progress Financial Corp. of PA 0.92 0.70 5.98 5.02 117.45
PSBK Progressive Bank, Inc. of NY(8)* 2.24 2.19 20.35 18.45 229.12
PROV Provident Fin. Holdings of CA 1.05 0.55 17.92 17.92 154.83
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 1.03 0.90 11.38 11.38 85.56
PLSK Pulaski SB, MHC of NJ (46.0) 0.53 0.53 10.29 10.29 86.21
PULS Pulse Bancorp of S. River NJ 1.83 1.86 14.21 14.21 173.36
QCFB QCF Bancorp of Virginia MN 1.80 1.80 19.41 19.41 110.47
QCBC Quaker City Bancorp of CA 1.27 1.22 15.76 15.76 182.67
QCSB Queens County Bancorp of NY* 1.56 1.54 11.43 11.43 107.44
RARB Raritan Bancorp of Raritan NJ* 1.65 1.62 13.02 12.83 172.14
REDF RedFed Bancorp of Redlands CA(8) 1.41 1.45 11.40 11.36 136.67
RELY Reliance Bancorp, Inc. of NY 1.88 1.98 19.93 13.57 232.98
RELI Reliance Bancshares Inc of WI 0.21 0.22 9.41 9.41 18.79
RCBK Richmond County Fin Corp of NY 0.56 0.56 11.79 11.79 45.97
RIVR River Valley Bancorp of IN 1.10 0.92 15.12 14.91 115.17
RVSB Riverview Bancorp of WA 0.54 0.52 9.71 9.37 42.74
RSLN Roslyn Bancorp, Inc. of NY* 0.78 0.96 14.67 14.61 84.09
SCCB S. Carolina Comm. Bnshrs of SC 0.79 0.79 16.00 16.00 77.34
SBFL SB Fngr Lakes MHC of NY (33.1) 0.24 0.21 6.07 6.07 69.39
SFED SFS Bancorp of Schenectady NY 0.88 0.85 17.74 17.74 144.39
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SGVB SGV Bancorp of W. Covina CA 18.75 2,345 44.0 19.38 12.38 18.53 1.19 53.06 5.63
SHSB SHS Bancorp, Inc. of PA 17.75 820 14.6 18.00 14.75 17.00 4.41 77.50 5.97
SISB SIS Bancorp, Inc. of MA* 42.00 6,970 292.7 44.50 27.00 42.50 -1.18 57.72 4.50
SWCB Sandwich Bancorp of MA(8)* 64.00 1,942 124.3 64.50 30.25 64.00 0.00 106.45 45.45
SFSL Security First Corp. of OH(8) 24.75 7,571 187.4 27.88 12.33 25.88 -4.37 100.73 18.53
SKAN Skaneateles Bancorp Inc of NY* 18.88 1,440 27.2 22.25 12.33 18.88 0.00 53.12 -14.69
SOBI Sobieski Bancorp of S. Bend IN 19.13 764 14.6 24.25 14.50 19.50 -1.90 31.93 -6.13
SOSA Somerset Savings Bank of MA(8)* 5.13 16,727 85.8 5.94 2.50 5.25 -2.29 88.60 2.60
SSFC South Street Fin. Corp. of NC* 10.13 4,676 47.4 20.00 10.13 10.88 -6.89 -35.19 -46.68
SBAN SouthBanc Shares Inc. of SC(8) 21.63 1,509 15.2 23.76 9.21 21.75 -0.55 122.30 1.74
SCBS Southern Commun. Bncshrs of AL 16.75 1,137 19.0 20.75 13.75 16.75 0.00 19.64 -8.22
SMBC Southern Missouri Bncrp of MO 20.50 1,612 33.0 23.25 15.50 21.00 -2.38 30.16 0.00
SWBI Southwest Bancshares of IL(8) 32.75 2,788 91.3 34.25 18.88 32.50 0.77 70.13 10.08
SVRN Sovereign Bancorp, Inc. of PA 18.81 132,914 2,500.1 22.19 10.42 19.00 -1.00 80.52 8.79
STFR St. Francis Cap. Corp. of WI 43.25 5,223 225.9 50.75 29.25 43.75 -1.14 47.86 -14.36
SPBC St. Paul Bancorp, Inc. of IL 24.88 34,311 853.7 28.50 19.08 25.38 -1.97 32.13 -5.22
SFFC StateFed Financial Corp. of IA 14.50 1,563 22.7 15.00 9.00 14.50 0.00 61.11 -1.69
SFIN Statewide Fin. Corp. of NJ 23.50 4,509 106.0 26.69 15.63 24.63 -4.59 46.88 -2.08
STSA Sterling Financial Corp. of WA 27.13 7,596 206.1 27.63 16.25 26.25 3.35 66.95 24.74
SFSB SuburbFed Fin. Corp. of IL(8) 47.50 1,270 60.3 50.00 23.25 47.25 0.53 104.30 -5.00
ROSE T R Financial Corp. of NY* 35.00 17,530 613.6 37.88 19.00 36.81 -4.92 81.25 5.26
THRD TF Financial Corp. of PA 27.25 3,189 86.9 30.00 17.00 27.88 -2.26 60.29 -9.17
TPNZ Tappan Zee Fin., Inc. of NY(8) 20.38 1,478 30.1 22.63 15.44 20.38 0.00 31.99 8.69
TSBK Timberland Bancorp of WA 18.25 6,613 120.7 18.50 14.50 18.25 0.00 82.50 82.50
TRIC Tri-County Bancorp of WY 15.25 1,167 17.8 16.50 9.63 16.50 -7.58 58.36 1.67
TWIN Twin City Bancorp, Inc. of TN 14.50 1,269 18.4 15.50 12.00 14.63 -0.89 13.02 -6.45
USAB USABancshares, Inc of PA* 13.50 732 9.9 15.50 6.56 15.00 -10.00 89.34 35.00
UCBC Union Community Bancorp of IN 15.50 3,042 47.2 15.81 13.94 15.38 0.78 55.00 5.95
UFRM United FSB of Rocky Mount NC(8) 18.25 3,263 59.5 21.00 9.75 18.25 0.00 62.22 -7.03
UBMT United Fin. Corp. of MT 28.75 1,223 35.2 31.50 19.00 29.00 -0.86 49.35 12.75
UTBI United Tenn. Bancshares of TN 15.38 1,455 22.4 16.00 13.63 16.00 -3.87 53.80 53.80
VABF Va. Beach Fed. Fin. Corp of VA 18.63 4,981 92.8 20.88 10.75 18.25 2.08 75.26 1.36
WHGB WHG Bancshares of MD 17.75 1,389 24.7 19.00 13.75 18.50 -4.05 24.56 -5.33
WSFS WSFS Financial Corp. of DE* 21.81 12,464 271.8 23.88 12.06 22.00 -0.86 79.80 9.05
WVFC WVS Financial Corp. of PA 39.13 1,808 70.7 40.25 23.50 39.50 -0.94 44.23 11.01
WRNB Warren Bancorp of Peabody MA* 27.88 3,832 106.8 28.25 15.50 27.00 3.26 77.02 21.22
WSBI Warwick Community Bncrp of NY* 17.25 6,607 114.0 18.00 15.38 17.50 -1.43 72.50 -0.75
WFSL Washington Federal, Inc. of WA 27.75 52,405 1,454.2 30.29 22.39 27.94 -0.68 23.94 -2.90
WAMU Washington Mutual, Inc. of WA* 69.88 257,88818,021.2 74.94 52.19 70.44 -0.80 33.26 9.51
WYNE Wayne Bancorp, Inc. of NJ 32.00 2,013 64.4 32.00 16.25 32.00 0.00 89.57 19.63
WAYN Wayne Svgs Bks MHC of OH (47.8 30.00 2,258 32.3 33.00 17.00 31.00 -3.23 71.43 3.45
WCFB Wbstr Cty FSB MHC of IA (45.2) 20.88 2,112 19.8 22.00 13.75 21.13 -1.18 42.72 4.40
WBST Webster Financial Corp. of CT 32.69 27,411 896.1 36.25 18.88 34.69 -5.77 68.68 -1.68
WEFC Wells Fin. Corp. of Wells MN 21.50 1,959 42.1 21.75 14.00 21.00 2.38 53.57 20.25
WCBI WestCo Bancorp, Inc. of IL 29.25 2,462 72.0 29.75 23.25 29.75 -1.68 25.81 7.34
WSTR WesterFed Fin. Corp. of MT 25.69 5,584 143.5 27.00 19.75 25.63 0.23 33.45 0.75
WOFC Western Ohio Fin. Corp. of OH 26.63 2,352 62.6 29.25 21.00 26.25 1.45 23.86 -0.93
WEHO Westwood Hmstd Fin Corp of OH 14.69 2,843 41.8 18.13 12.75 14.63 0.41 15.22 -13.59
FFWD Wood Bancorp of OH 18.50 2,662 49.2 27.00 8.47 18.50 0.00 118.42 -1.60
YFCB Yonkers Fin. Corp. of NY 19.25 3,016 58.1 22.00 14.63 19.19 0.31 27.23 0.00
YFED York Financial Corp. of PA 24.00 8,924 214.2 27.25 14.90 24.75 -3.03 65.52 -6.80
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SGVB SGV Bancorp of W. Covina CA 0.57 0.66 13.13 12.94 173.91
SHSB SHS Bancorp, Inc. of PA 0.81 0.81 14.65 14.65 108.01
SISB SIS Bancorp, Inc. of MA* 1.37 1.87 18.00 18.00 248.73
SWCB Sandwich Bancorp of MA(8)* 2.50 2.44 21.63 20.88 267.09
SFSL Security First Corp. of OH(8) 1.19 1.19 8.38 8.26 89.54
SKAN Skaneateles Bancorp Inc of NY* 1.15 1.12 12.27 11.94 177.85
SOBI Sobieski Bancorp of S. Bend IN 0.65 0.65 16.49 16.49 114.60
SOSA Somerset Savings Bank of MA(8)* 0.36 0.35 2.14 2.14 32.26
SSFC South Street Fin. Corp. of NC* 0.43 0.44 7.32 7.32 48.94
SBAN SouthBanc Shares Inc. of SC(8) 0.73 0.73 17.01 17.01 77.85
SCBS Southern Commun. Bncshrs of AL 0.70 0.70 12.73 12.73 62.34
SMBC Southern Missouri Bncrp of MO 0.85 0.81 16.47 16.47 99.21
SWBI Southwest Bancshares of IL(8) 1.47 1.48 15.79 15.79 132.10
SVRN Sovereign Bancorp, Inc. of PA 0.43 0.59 5.13 4.26 107.86
STFR St. Francis Cap. Corp. of WI 2.37 2.27 25.30 22.56 305.89
SPBC St. Paul Bancorp, Inc. of IL 1.43 1.43 12.18 12.15 132.82
SFFC StateFed Financial Corp. of IA 0.70 0.70 10.01 10.01 56.69
SFIN Statewide Fin. Corp. of NJ 1.24 1.23 14.39 14.37 149.77
STSA Sterling Financial Corp. of WA 1.14 1.04 13.54 12.52 247.01
SFSB SuburbFed Fin. Corp. of IL(8) 2.20 1.77 23.23 23.17 345.25
ROSE T R Financial Corp. of NY* 1.98 1.77 13.75 13.75 219.23
THRD TF Financial Corp. of PA 1.53 1.30 15.71 13.11 187.22
TPNZ Tappan Zee Fin., Inc. of NY(8) 0.70 0.69 14.46 14.46 84.29
TSBK Timberland Bancorp of WA 0.75 0.75 12.38 12.38 40.65
TRIC Tri-County Bancorp of WY 0.77 0.79 11.85 11.85 77.12
TWIN Twin City Bancorp, Inc. of TN 0.85 0.70 11.04 11.04 85.65
USAB USABancshares, Inc of PA* -0.31 -0.14 7.33 7.22 122.03
UCBC Union Community Bancorp of IN 0.39 0.39 14.10 14.10 43.41
UFRM United FSB of Rocky Mount NC(8) 0.55 0.36 6.74 6.74 93.21
UBMT United Fin. Corp. of MT 1.11 1.11 20.16 20.16 78.71
UTBI United Tenn. Bancshares of TN 0.66 0.66 12.95 12.95 52.89
VABF Va. Beach Fed. Fin. Corp of VA 0.82 0.66 8.86 8.86 123.71
WHGB WHG Bancshares of MD 0.54 0.55 14.34 14.34 72.95
WSFS WSFS Financial Corp. of DE* 1.31 1.30 6.96 6.92 121.57
WVFC WVS Financial Corp. of PA 2.06 2.08 17.22 17.22 161.52
WRNB Warren Bancorp of Peabody MA* 1.90 1.69 10.45 10.45 96.81
WSBI Warwick Community Bncrp of NY* 0.55 0.55 12.60 12.60 53.02
WFSL Washington Federal, Inc. of WA 2.06 2.04 14.06 12.97 109.02
WAMU Washington Mutual, Inc. of WA* 1.28 2.38 20.13 18.75 376.06
WYNE Wayne Bancorp, Inc. of NJ 0.97 0.97 16.86 16.86 134.15
WAYN Wayne Svgs Bks MHC of OH (47.8 0.84 0.78 10.71 10.71 112.99
WCFB Wbstr Cty FSB MHC of IA (45.2) 0.65 0.65 10.58 10.58 45.04
WBST Webster Financial Corp. of CT 1.15 1.75 13.94 12.16 256.09
WEFC Wells Fin. Corp. of Wells MN 1.13 1.10 15.13 15.13 102.83
WCBI WestCo Bancorp, Inc. of IL 1.91 1.78 19.73 19.73 128.33
WSTR WesterFed Fin. Corp. of MT 1.30 1.26 19.28 15.67 185.37
WOFC Western Ohio Fin. Corp. of OH 0.06 0.14 23.21 21.69 158.16
WEHO Westwood Hmstd Fin Corp of OH 0.31 0.49 10.60 10.60 47.22
FFWD Wood Bancorp of OH 0.89 0.80 8.01 8.01 62.56
YFCB Yonkers Fin. Corp. of NY 1.03 1.01 14.90 14.90 110.01
YFED York Financial Corp. of PA 1.25 1.04 11.74 11.74 132.48
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B
Weekly Thrift Market Line - Part Two
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings ------------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
SAIF-Insured Thrifts(295) 14.05 13.74 0.95 7.97 4.38 0.90 7.50 0.70 141.48 0.78
NYSE Traded Companies(8) 8.16 7.94 1.18 14.93 5.86 0.63 9.42 0.90 109.72 1.35
AMEX Traded Companies(22) 14.66 14.56 0.89 6.19 4.20 0.85 5.71 0.58 137.02 0.70
NASDAQ Listed OTC Companies(264) 14.08 13.83 0.94 7.97 4.36 0.91 7.64 0.71 140.00 0.77
California Companies(19) 7.87 7.62 0.63 8.66 4.96 0.53 7.83 1.25 80.86 1.25
Florida Companies(6) 10.54 10.17 1.18 12.16 4.78 0.71 6.96 0.58 113.51 0.79
Mid-Atlantic Companies(59) 11.59 10.85 0.86 8.48 4.61 0.82 8.09 0.78 114.82 0.90
Mid-West Companies(136) 14.84 14.64 0.96 7.49 4.17 0.93 7.22 0.59 147.85 0.66
New England Companies(8) 7.72 7.42 0.62 8.84 4.71 0.66 9.18 0.76 116.96 1.01
North-West Companies(11) 16.92 16.57 1.16 8.70 4.27 1.11 8.12 0.62 309.83 0.77
South-East Companies(44) 17.52 17.37 1.08 7.58 4.27 1.03 7.04 0.92 109.15 0.79
South-West Companies(6) 11.34 11.24 0.98 10.36 6.13 0.95 10.01 0.37 146.44 0.61
Western Companies (Excl CA)(6) 19.10 18.71 1.04 5.92 4.21 1.04 5.93 0.35 224.77 0.88
Thrift Strategy(247) 15.16 14.86 0.97 7.51 4.46 0.94 7.20 0.64 146.76 0.73
Mortgage Banker Strategy(30) 7.67 7.21 0.77 10.29 3.98 0.70 9.59 1.13 103.49 0.95
Real Estate Strategy(8) 7.31 7.06 0.89 12.21 5.36 0.80 11.12 1.26 105.82 1.49
Diversified Strategy(7) 8.72 8.54 1.29 15.32 5.62 0.78 10.50 0.65 158.58 1.07
Retail Banking Strategy(3) 7.04 6.76 -0.23 -0.07 -3.71 -0.26 -1.00 1.12 66.31 1.16
Companies Issuing Dividends(248) 13.90 13.64 0.99 8.35 4.67 0.94 7.79 0.71 136.02 0.75
Companies Without Dividends(47) 14.85 14.28 0.70 5.95 2.86 0.68 6.00 0.68 172.74 0.92
Equity/Assets less than 6%(21) 4.99 4.70 0.51 10.43 3.68 0.55 11.13 0.72 130.31 0.96
Equity/Assets 6-12%(129) 8.86 8.51 0.84 9.94 4.83 0.77 9.06 0.84 125.36 0.88
Equity/Assets greater than 12%(145) 19.70 19.43 1.09 5.96 4.10 1.06 5.68 0.58 156.15 0.66
Converted Last 3 Mths (no MHC)(13) 23.88 22.25 1.07 4.56 3.34 1.02 4.40 0.33 215.59 0.76
Actively Traded Companies(34) 9.43 9.18 0.96 10.93 4.42 0.99 11.70 0.72 152.44 0.99
Market Value Below $20 Million(40) 16.04 15.96 0.96 6.58 4.85 0.90 6.06 0.84 116.10 0.69
Holding Company Structure(268) 14.31 13.99 0.95 7.80 4.38 0.90 7.36 0.69 142.18 0.77
Assets Over $1 Billion(57) 8.96 8.35 0.88 10.99 4.70 0.80 10.09 0.83 114.63 0.98
Assets $500 Million-$1 Billion(42) 9.70 9.43 0.84 8.98 3.95 0.79 8.74 0.65 172.69 0.93
Assets $250-$500 Million(69) 13.09 12.82 0.94 8.16 4.51 0.90 7.72 0.72 143.64 0.77
Assets less than $250 Million(127) 18.02 17.80 1.01 6.31 4.32 0.97 5.94 0.67 139.32 0.65
Goodwill Companies(118) 10.26 9.62 0.89 9.85 4.69 0.82 9.05 0.84 116.43 0.88
Non-Goodwill Companies(175) 16.30 16.19 0.98 6.82 4.19 0.94 6.56 0.62 157.32 0.72
Acquirors of FSLIC Cases(8) 8.68 8.26 1.00 12.16 5.64 0.92 11.02 0.93 54.99 0.59
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts (no MHCs)
- --------------------------------------------
SAIF-Insured Thrifts(295) 20.51 164.54 21.04 170.22 21.66 0.36 1.62 30.65
NYSE Traded Companies(8) 18.17 237.36 19.85 245.83 20.64 0.21 0.57 9.21
AMEX Traded Companies(22) 19.98 141.76 19.77 143.22 20.78 0.31 1.69 33.25
NASDAQ Listed OTC Companies(264) 20.62 164.90 21.13 170.03 21.74 0.36 1.65 31.18
California Companies(19) 18.45 159.36 12.86 163.30 21.19 0.18 0.58 13.09
Florida Companies(6) 19.06 200.03 21.20 212.36 22.93 0.43 2.63 17.11
Mid-Atlantic Companies(59) 20.14 169.54 18.49 179.81 21.08 0.36 1.39 29.75
Mid-West Companies(136) 20.49 161.26 21.63 165.24 21.54 0.35 1.63 31.32
New England Companies(8) 19.48 173.28 13.06 182.68 20.19 0.36 1.56 29.10
North-West Companies(11) 22.60 176.38 26.77 182.31 23.36 0.32 1.32 32.07
South-East Companies(44) 21.85 166.69 25.44 171.07 23.11 0.42 2.20 39.54
South-West Companies(6) 16.17 150.78 16.11 157.28 16.37 0.29 1.29 27.43
Western Companies (Excl CA)(6) 22.70 128.43 24.56 134.57 22.65 0.46 2.03 35.94
Thrift Strategy(247) 20.81 156.31 21.80 161.06 21.66 0.36 1.73 32.32
Mortgage Banker Strategy(30) 19.28 208.03 16.36 222.48 22.25 0.32 1.05 22.46
Real Estate Strategy(8) 19.18 214.20 15.43 219.95 20.75 0.25 0.81 14.88
Diversified Strategy(7) 17.22 254.51 22.28 261.21 21.18 0.48 1.34 28.24
Retail Banking Strategy(3) 18.24 175.12 11.61 181.84 19.82 0.15 0.65 17.84
Companies Issuing Dividends(248) 20.43 166.14 21.08 171.36 21.70 0.42 1.93 36.76
Companies Without Dividends(47) 21.09 156.19 20.83 164.31 21.36 0.00 0.00 0.00
Equity/Assets less than 6%(21) 19.30 219.33 11.82 222.91 20.44 0.18 0.66 17.12
Equity/Assets 6-12%(129) 19.14 188.03 16.21 197.59 20.92 0.38 1.48 27.64
Equity/Assets greater than 12%(145) 22.07 137.80 26.42 140.86 22.59 0.36 1.87 35.54
Converted Last 3 Mths (no MHC)(13) 24.72 139.04 33.13 157.34 24.85 0.22 1.87 6.50
Actively Traded Companies(34) 19.11 214.26 19.38 221.40 19.84 0.45 1.48 30.02
Market Value Below $20 Million(40) 20.91 128.82 19.83 129.28 22.30 0.30 1.78 33.34
Holding Company Structure(268) 20.76 163.21 21.28 168.80 21.85 0.36 1.63 31.17
Assets Over $1 Billion(57) 19.65 206.78 17.95 224.34 20.83 0.39 1.33 23.49
Assets $500 Million-$1 Billion(42) 19.37 192.59 17.61 198.82 20.62 0.39 1.49 32.05
Assets $250-$500 Million(69) 19.97 167.04 20.66 169.23 21.36 0.35 1.51 25.54
Assets less than $250 Million(127) 21.58 137.62 23.61 140.21 22.51 0.33 1.84 36.12
Goodwill Companies(118) 19.52 188.31 18.00 201.52 21.11 0.38 1.50 26.28
Non-Goodwill Companies(175) 21.05 150.43 22.85 151.70 21.93 0.34 1.72 33.86
Acquirors of FSLIC Cases(8) 18.12 205.87 17.25 217.61 18.82 0.47 1.59 27.29
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
BIF-Insured Thrifts(59) 11.68 11.33 1.05 10.61 4.89 1.03 10.33 0.68 177.59 1.31
NYSE Traded Companies(5) 17.10 15.86 1.05 8.02 3.66 1.17 8.98 1.51 62.92 1.00
AMEX Traded Companies(6) 12.51 12.17 1.01 9.73 4.89 0.88 8.43 1.42 71.37 1.23
NASDAQ Listed OTC Companies(48) 10.96 10.72 1.06 11.00 5.03 1.03 10.70 0.55 196.81 1.36
California Companies(1) 9.78 9.75 1.42 13.26 6.91 1.42 13.26 1.31 102.95 1.63
Mid-Atlantic Companies(21) 13.81 13.26 0.91 7.96 3.62 0.93 8.12 0.80 129.87 1.22
New England Companies(31) 9.93 9.68 1.13 12.70 5.71 1.06 11.78 0.67 192.98 1.48
North-West Companies(3) 9.36 9.24 1.03 11.65 4.60 1.16 14.23 0.31 399.42 1.01
South-East Companies(3) 17.37 17.21 1.12 5.90 4.94 1.11 5.85 0.29 180.87 0.51
Thrift Strategy(45) 12.79 12.47 1.06 9.79 4.82 1.02 9.25 0.67 167.43 1.23
Mortgage Banker Strategy(6) 8.76 8.40 0.94 12.07 5.15 0.96 11.93 0.41 304.65 1.20
Real Estate Strategy(3) 10.29 10.27 1.72 16.37 6.86 1.60 15.30 1.16 105.13 1.63
Diversified Strategy(5) 6.58 5.97 0.87 13.28 4.44 0.98 15.27 0.81 150.64 1.95
Companies Issuing Dividends(51) 11.09 10.70 1.06 11.02 4.97 1.04 10.69 0.68 180.20 1.29
Companies Without Dividends(8) 15.61 15.59 0.97 7.87 4.39 0.96 7.89 0.68 159.77 1.46
Equity/Assets less than 6%(4) 5.06 4.92 0.90 16.76 4.63 0.84 15.63 0.88 97.83 1.55
Equity/Assets 6-12%(39) 8.61 8.24 1.05 12.18 5.48 1.02 11.78 0.78 189.59 1.42
Equity/Assets greater than 12%(16) 19.84 19.52 1.08 5.74 3.72 1.09 5.92 0.37 171.69 1.00
Converted Last 3 Mths (no MHC)(2) 18.96 18.11 1.07 5.79 2.81 0.89 4.77 0.71 86.68 0.98
Actively Traded Companies(17) 9.86 9.43 1.22 13.18 5.65 1.16 12.63 0.53 164.89 1.11
Market Value Below $20 Million(2) 8.06 8.02 0.22 2.31 2.26 0.25 2.64 0.54 225.73 1.74
Holding Company Structure(47) 12.71 12.44 1.06 10.02 4.82 1.04 9.75 0.59 178.34 1.30
Assets Over $1 Billion(17) 10.82 10.11 1.04 10.95 4.41 1.11 11.73 0.79 159.81 1.39
Assets $500 Million-$1 Billion(15) 10.16 9.84 1.15 12.41 5.61 1.03 10.95 0.64 155.46 1.28
Assets $250-$500 Million(12) 12.38 12.21 1.16 11.26 5.53 1.12 10.79 0.70 206.46 1.47
Assets less than $250 Million(15) 13.10 13.01 0.91 8.50 4.46 0.86 7.95 0.56 185.71 1.10
Goodwill Companies(31) 9.70 9.01 0.92 10.57 4.65 0.92 10.44 0.87 145.23 1.30
Non-Goodwill Companies(27) 13.38 13.38 1.19 10.89 5.20 1.14 10.44 0.48 215.95 1.34
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- ------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts (no MHCs)
- ---------------------------------------------
BIF-Insured Thrifts(59) 19.10 196.08 21.48 191.60 19.86 0.43 1.52 30.09
NYSE Traded Companies(5) 24.32 191.80 28.39 185.76 25.07 0.54 1.28 27.34
AMEX Traded Companies(6) 19.42 178.76 20.14 186.57 22.38 0.40 1.67 33.76
NASDAQ Listed OTC Companies(48) 18.48 198.65 20.85 192.84 18.98 0.43 1.53 29.91
California Companies(1) 14.47 181.82 17.78 182.39 14.47 0.00 0.00 0.00
Mid-Atlantic Companies(21) 22.71 194.90 25.61 186.92 21.88 0.41 1.29 33.23
New England Companies(31) 17.35 198.61 18.82 200.87 18.85 0.45 1.58 28.82
North-West Companies(3) 16.71 249.08 20.08 200.04 21.14 0.61 1.76 29.71
South-East Companies(3) 21.22 132.10 22.87 133.56 21.39 0.41 2.63 36.44
Thrift Strategy(45) 19.59 181.26 22.27 177.94 20.02 0.42 1.58 31.45
Mortgage Banker Strategy(6) 18.53 218.76 18.81 233.27 19.10 0.32 1.09 23.11
Real Estate Strategy(3) 14.57 224.31 23.29 224.59 15.48 0.36 1.29 18.95
Diversified Strategy(5) 17.55 273.15 17.51 254.65 21.38 0.68 1.61 33.15
Companies Issuing Dividends(51) 19.36 202.69 21.39 198.00 20.11 0.50 1.74 34.19
Companies Without Dividends(8) 16.53 153.58 22.12 154.06 17.44 0.00 0.00 0.00
Equity/Assets less than 6%(4) 18.10 317.99 17.02 310.14 23.71 0.50 1.26 19.90
Equity/Assets 6-12%(39) 18.30 204.47 17.98 206.02 19.03 0.47 1.58 30.53
Equity/Assets greater than 12%(16) 22.26 155.92 30.05 145.99 21.76 0.34 1.45 31.23
Converted Last 3 Mths (no MHC)(2) 27.50 235.87 42.72 122.06 27.50 0.05 0.47 23.81
Actively Traded Companies(17) 17.70 221.82 20.05 216.83 19.49 0.69 1.79 31.65
Market Value Below $20 Million(2) 14.66 154.61 11.86 156.01 18.17 0.00 0.00 0.00
Holding Company Structure(47) 18.93 190.38 22.45 184.15 19.57 0.44 1.53 30.14
Assets Over $1 Billion(17) 20.76 223.94 22.96 216.48 21.51 0.62 1.55 34.53
Assets $500 Million-$1 Billion(15) 17.48 216.60 21.93 207.06 16.49 0.45 1.69 32.07
Assets $250-$500 Million(12) 18.77 182.30 20.60 186.07 19.49 0.29 1.36 24.90
Assets less than $250 Million(15) 18.80 161.39 20.23 163.28 20.29 0.33 1.49 28.23
Goodwill Companies(31) 19.08 215.19 20.10 209.16 20.16 0.44 1.41 29.44
Non-Goodwill Companies(27) 18.72 177.66 22.78 177.66 19.20 0.44 1.69 31.91
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(16) 12.27 12.14 0.80 6.98 2.50 0.77 6.66 0.55 149.57 0.89
BIF-Insured Thrifts(3) 10.90 10.27 0.90 8.89 3.32 0.70 6.68 0.82 110.30 1.18
NASDAQ Listed OTC Companies(19) 12.04 11.83 0.82 7.30 2.64 0.76 6.67 0.59 142.64 0.94
Florida Companies(2) 9.22 9.20 0.70 7.24 2.94 0.64 6.61 0.39 83.08 0.49
Mid-Atlantic Companies(10) 12.02 11.65 0.78 6.98 2.43 0.76 6.76 0.67 126.05 0.90
Mid-West Companies(5) 13.06 13.04 0.89 7.16 2.81 0.84 6.67 0.39 201.03 0.60
New England Companies(2) 12.92 12.90 0.98 9.21 3.03 0.73 6.28 0.72 197.54 2.14
Thrift Strategy(17) 12.50 12.31 0.79 6.67 2.61 0.76 6.42 0.58 146.47 0.88
Mortgage Banker Strategy(1) 8.13 7.25 0.88 10.74 1.93 0.76 9.30 0.66 60.87 0.99
Diversified Strategy(1) 8.68 8.63 1.18 13.87 3.79 0.68 8.00 0.66 166.94 1.76
Companies Issuing Dividends(17) 11.72 11.48 0.83 7.64 2.61 0.77 6.93 0.59 137.79 0.83
Companies Without Dividends(2) 14.59 14.59 0.67 4.56 2.87 0.67 4.56 0.62 179.00 1.80
Equity/Assets 6-12%(12) 9.76 9.43 0.77 8.08 2.55 0.69 7.11 0.69 95.25 0.84
Equity/Assets >12%(7) 16.61 16.61 0.90 5.74 2.81 0.91 5.77 0.42 229.52 1.13
Holding Company Structure(3) 11.16 10.55 0.75 6.96 2.99 0.71 6.51 0.90 81.97 0.89
Assets Over $1 Billion(6) 10.40 10.07 0.83 8.51 2.82 0.72 7.21 0.60 125.54 1.26
Assets $500 Million-$1 Billion(1) 11.28 11.28 0.77 6.80 2.76 0.71 6.29 0.42 88.29 0.59
Assets $250-$500 Million(4) 11.54 11.52 0.88 7.81 2.74 0.86 7.59 0.54 230.39 0.60
Assets less than $250 Million(8) 13.84 13.58 0.78 6.04 2.41 0.75 5.73 0.64 127.45 0.86
Goodwill Companies(6) 9.01 8.36 0.89 9.81 2.83 0.76 8.33 0.65 104.19 0.86
Non-Goodwill Companies(13) 13.56 13.56 0.78 6.04 2.54 0.76 5.83 0.56 163.61 0.99
MHC Institutions(19) 12.04 11.83 0.82 7.30 2.64 0.76 6.67 0.59 142.64 0.94
MHC Converted Last 3 Months(2) 14.59 14.59 0.67 4.56 2.87 0.67 4.56 0.62 179.00 1.80
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(16) 0.00 233.15 31.20 233.43 0.00 0.43 1.65 48.28
BIF-Insured Thrifts(3) 27.58 254.13 26.69 272.03 28.78 0.35 1.01 29.70
NASDAQ Listed OTC Companies(19) 27.58 237.35 30.45 241.15 28.78 0.41 1.54 43.99
Florida Companies(2) 0.00 237.52 21.92 238.17 0.00 0.90 2.66 0.00
Mid-Atlantic Companies(10) 28.78 220.77 31.72 228.17 28.78 0.26 1.17 42.58
Mid-West Companies(5) 0.00 249.00 30.69 249.51 0.00 0.55 2.11 57.66
New England Companies(2) 26.39 271.89 32.11 272.82 0.00 0.42 1.11 29.17
Thrift Strategy(17) 28.78 229.80 29.80 233.74 28.78 0.40 1.54 42.84
Mortgage Banker Strategy(1) 0.00 0.00 41.45 0.00 0.00 0.22 0.82 42.31
Diversified Strategy(1) 26.39 342.96 29.75 344.83 0.00 0.84 2.21 58.33
Companies Issuing Dividends(17) 26.39 248.31 31.11 252.70 0.00 0.46 1.73 51.99
Companies Without Dividends(2) 28.78 166.07 25.13 166.07 28.78 0.00 0.00 0.00
Equity/Assets 6-12%(12) 26.39 268.77 29.64 275.10 0.00 0.46 1.55 50.90
Equity/Assets >12%(7) 28.78 190.22 32.07 190.22 28.78 0.32 1.53 28.46
Holding Company Structure(3) 28.78 233.18 25.62 250.46 28.78 0.27 0.97 34.86
Assets Over $1 Billion(6) 27.58 227.97 29.19 228.76 28.78 0.35 1.15 27.93
Assets $500 Million-$1 Billion(1) 0.00 238.24 26.89 238.24 0.00 0.90 2.37 0.00
Assets $250-$500 Million(4) 0.00 255.68 32.25 256.36 0.00 0.51 1.78 57.40
Assets less than $250 Million(8) 0.00 234.72 31.01 242.12 0.00 0.34 1.62 52.01
Goodwill Companies(6) 26.39 283.22 30.48 297.48 0.00 0.47 1.50 42.15
Non-Goodwill Companies(13) 28.78 220.67 30.43 220.67 28.78 0.39 1.56 45.14
MHC Institutions(19) 27.58 237.35 30.45 241.15 28.78 0.41 1.54 43.99
MHC Converted Last 3 Months(2) 28.78 166.07 25.13 166.07 28.78 0.00 0.00 0.00
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA(8) 4.10 3.51 0.79 19.64 4.57 0.70 17.25 NA NA 1.32
BYS Bay State Bancorp of MA* 20.71 20.71 0.92 4.44 3.64 0.92 4.44 0.77 110.27 1.10
CFB Commercial Federal Corp. of NE 6.37 5.75 0.97 15.97 4.81 0.95 15.69 0.83 79.52 0.88
DME Dime Bancorp, Inc. of NY* 6.02 4.94 0.62 11.11 3.61 0.62 11.11 1.03 48.09 0.66
DSL Downey Financial Corp. of CA 7.38 7.28 0.80 11.04 4.93 0.77 10.63 0.85 63.98 0.59
FED FirstFed Fin. Corp. of CA 5.35 5.31 0.56 11.24 4.38 0.55 11.04 0.89 236.92 2.68
GSB Golden State Bancorp of CA(8) 6.04 5.45 0.60 10.47 4.73 0.72 12.58 0.99 92.79 1.22
GDW Golden West Fin. Corp. of CA 6.82 6.82 0.91 14.13 5.95 0.90 13.92 1.02 58.45 0.72
GPT GreenPoint Fin. Corp. of NY* 9.70 5.29 1.11 10.83 4.19 1.08 10.52 2.73 30.41 1.22
JSB JSB Financial, Inc. of NY* 23.21 23.21 1.92 8.59 5.48 1.71 7.64 NA NA 0.56
OCN Ocwen Financial Corp. of FL 13.67 13.17 2.83 26.10 5.65 0.81 7.43 NA NA NA
SIB Staten Island Bancorp of NY* 25.87 25.17 0.70 5.11 1.38 1.53 11.18 NA NA 1.44
WES Westcorp Inc. of Orange CA 9.35 9.33 1.03 11.08 9.45 -0.21 -2.22 NA NA 1.88
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 16.09 16.09 1.09 6.38 4.80 1.06 6.21 NA NA NA
ANE Alliance Bancorp of NE, of CT* 7.61 7.39 0.84 11.87 5.13 0.59 8.30 1.60 75.91 1.91
BKC American Bank of Waterbury CT* 9.02 8.72 1.33 15.56 5.70 1.15 13.47 2.28 40.39 1.54
BFD BostonFed Bancorp of MA 8.37 8.07 0.75 8.41 5.40 0.68 7.57 NA NA 0.84
CNY Carver Bancorp, Inc. of NY 8.48 8.16 -0.11 -1.33 -1.30 0.02 0.20 1.67 41.11 1.15
CBK Citizens First Fin.Corp. of IL 13.88 13.88 0.69 4.82 3.65 0.47 3.26 0.69 44.35 0.36
EFC EFC Bancorp Inc of IL 23.77 23.77 1.07 4.51 3.95 1.07 4.51 0.18 138.59 0.34
EBI Equality Bancorp, Inc. of MO 11.18 11.18 0.53 7.30 3.05 0.12 1.59 0.39 31.69 0.25
ESX Essex Bancorp of Norfolk VA(8) 0.02 -0.08 -0.16 NM -6.90 -0.15 NM 1.69 71.25 1.33
FCB Falmouth Bancorp, Inc. of MA* 23.94 23.94 0.98 4.06 3.11 0.83 3.42 NA NA 0.83
FAB FirstFed America Bancorp of MA 11.17 11.17 0.17 1.58 0.88 0.53 4.99 0.31 275.70 1.16
GAF GA Financial Corp. of PA 14.81 14.68 1.15 7.13 5.50 1.07 6.68 0.21 81.02 0.42
HBS Haywood Bancshares, Inc. of NC* 14.45 13.98 1.28 8.84 6.56 1.28 8.84 0.54 89.14 0.64
KNK Kankakee Bancorp, Inc. of IL 11.01 10.38 0.88 8.04 6.10 0.86 7.86 1.12 55.72 0.98
KYF Kentucky First Bancorp of KY 17.03 17.03 1.14 6.80 5.13 1.12 6.71 0.13 348.65 0.77
MBB MSB Bancorp of Middletown NY(8)* 8.15 4.33 0.14 1.82 1.19 0.40 5.04 1.61 22.76 0.71
NBN Northeast Bancorp of ME* 7.54 6.80 0.60 8.33 3.94 0.58 8.10 1.24 80.05 1.21
NEP Northeast PA Fin. Corp of PA 18.26 18.26 0.62 3.38 2.73 0.62 3.38 0.29 135.14 0.56
PDB Piedmont Bancorp, Inc. of NC 16.19 16.19 1.19 7.28 5.24 1.19 7.28 0.48 142.37 0.82
SSB Scotland Bancorp, Inc. of NC 24.07 24.07 1.67 5.26 6.53 1.67 5.26 NA NA 0.57
SZB SouthFirst Bancshares of AL 9.67 9.43 0.56 4.44 3.17 0.57 4.51 1.28 37.22 0.78
SRN Southern Banc Company of AL 17.08 16.93 0.48 2.77 2.48 0.48 2.77 NA NA 0.19
SSM Stone Street Bancorp of NC 28.74 28.74 1.45 4.58 4.07 1.45 4.58 0.27 193.22 0.61
TSH Teche Holding Company of LA 13.54 13.54 0.97 7.28 5.58 0.93 6.95 0.38 215.27 0.97
FTF Texarkana Fst. Fin. Corp of AR 15.15 15.15 1.75 11.22 6.08 1.71 10.96 0.23 267.38 0.76
THR Three Rivers Fin. Corp. of MI 13.46 13.42 0.88 6.42 5.16 0.84 6.10 1.08 47.87 0.80
WSB Washington SB, FSB of MD 8.67 8.67 0.77 9.15 5.84 0.55 6.56 NA NA 0.99
WFI Winton Financial Corp. of OH 7.17 7.03 1.05 14.60 4.20 0.86 12.04 NA NA NA
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN 8.98 8.82 0.75 8.89 5.84 0.49 5.79 1.71 26.55 0.62
FBER 1st Bergen Bancorp of NJ 13.52 13.52 0.78 5.29 4.02 0.78 5.29 NA NA NA
AFED AFSALA Bancorp, Inc. of NY(8) 12.52 12.52 0.79 5.91 4.68 0.79 5.91 0.30 234.30 1.46
ALBK ALBANK Fin. Corp. of Albany NY 8.81 6.84 1.18 12.97 6.56 1.17 12.85 0.92 78.98 1.05
AMFC AMB Financial Corp. of IN 14.80 14.80 1.07 6.93 5.61 0.68 4.38 0.33 122.66 0.52
ASBP ASB Financial Corp. of OH 15.46 15.46 0.92 5.89 4.42 0.92 5.89 0.14 513.38 1.03
ABBK Abington Bancorp of MA* 6.83 6.22 0.87 12.59 6.23 0.77 11.05 0.14 310.69 0.72
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA(8) 21.88 NM 17.79 NM 24.90 0.88 1.16 25.43
BYS Bay State Bancorp of MA* 27.50 122.06 25.28 122.06 27.50 0.00 0.00 0.00
CFB Commercial Federal Corp. of NE 20.79 308.97 19.70 342.40 21.16 0.22 0.63 13.02
DME Dime Bancorp, Inc. of NY* 27.69 257.43 15.50 313.88 27.69 0.20 0.67 18.69
DSL Downey Financial Corp. of CA 20.30 213.38 15.74 216.06 21.09 0.32 0.98 19.88
FED FirstFed Fin. Corp. of CA 22.85 236.85 12.68 238.78 23.28 0.00 0.00 0.00
GSB Golden State Bancorp of CA(8) 21.13 206.26 12.45 228.57 17.59 0.00 0.00 0.00
GDW Golden West Fin. Corp. of CA 16.80 220.43 15.02 220.43 17.05 0.50 0.48 8.08
GPT GreenPoint Fin. Corp. of NY* 23.85 276.67 26.85 NM 24.56 0.64 1.54 36.78
JSB JSB Financial, Inc. of NY* 18.25 150.70 34.98 150.70 20.53 1.60 2.95 53.87
OCN Ocwen Financial Corp. of FL 17.69 332.85 45.49 345.35 NM 0.00 0.00 0.00
SIB Staten Island Bancorp of NY* NM 152.17 39.37 156.39 NM 0.28 1.21 NM
WES Westcorp Inc. of Orange CA 10.58 111.69 10.45 111.94 NM 0.20 1.35 14.29
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 20.83 137.20 22.07 137.20 21.40 0.44 1.85 38.60
ANE Alliance Bancorp of NE, of CT* 19.51 208.88 15.89 214.86 27.91 0.20 0.83 16.26
BKC American Bank of Waterbury CT* 17.54 242.13 21.84 250.42 20.27 0.76 2.53 44.44
BFD BostonFed Bancorp of MA 18.51 159.87 13.39 165.93 20.56 0.40 1.66 30.77
CNY Carver Bancorp, Inc. of NY NM 100.92 8.56 104.91 NM 0.00 0.00 NM
CBK Citizens First Fin.Corp. of IL 27.36 135.27 18.77 135.27 NM 0.00 0.00 0.00
EFC EFC Bancorp Inc of IL 25.34 114.25 27.16 114.25 25.34 0.00 0.00 0.00
EBI Equality Bancorp, Inc. of MO NM 146.07 16.33 146.07 NM 0.24 1.59 52.17
ESX Essex Bancorp of Norfolk VA(8) NM NM 2.20 NM NM 0.00 0.00 NM
FCB Falmouth Bancorp, Inc. of MA* NM 126.17 30.20 126.17 NM 0.24 1.19 38.10
FAB FirstFed America Bancorp of MA NM 152.19 16.99 152.19 NM 0.00 0.00 0.00
GAF GA Financial Corp. of PA 18.18 130.80 19.38 132.01 19.42 0.56 2.80 50.91
HBS Haywood Bancshares, Inc. of NC* 15.25 128.97 18.63 133.33 15.25 0.60 2.62 40.00
KNK Kankakee Bancorp, Inc. of IL 16.38 130.71 14.40 138.64 16.77 0.48 1.34 21.92
KYF Kentucky First Bancorp of KY 19.48 132.51 22.56 132.51 19.74 0.50 3.33 64.94
MBB MSB Bancorp of Middletown NY(8)* NM 152.83 12.45 287.31 NM 0.56 1.67 NM
NBN Northeast Bancorp of ME* 25.36 187.63 14.16 208.09 26.10 0.21 1.18 30.00
NEP Northeast PA Fin. Corp of PA NM 123.73 22.60 123.73 NM 0.00 0.00 0.00
PDB Piedmont Bancorp, Inc. of NC 19.09 134.60 21.79 134.60 19.09 0.40 3.88 74.07
SSB Scotland Bancorp, Inc. of NC 15.31 114.88 27.65 114.88 15.31 0.20 2.25 34.48
SZB SouthFirst Bancshares of AL NM 121.29 11.73 124.41 NM 0.60 3.02 NM
SRN Southern Banc Company of AL NM 111.94 19.12 112.94 NM 0.35 2.12 NM
SSM Stone Street Bancorp of NC 24.54 121.44 34.91 121.44 24.54 0.46 2.31 56.79
TSH Teche Holding Company of LA 17.92 125.85 17.04 125.85 18.75 0.50 2.47 44.25
FTF Texarkana Fst. Fin. Corp of AR 16.46 182.29 27.62 182.29 16.85 0.56 1.98 32.56
THR Three Rivers Fin. Corp. of MI 19.38 121.81 16.40 122.19 20.40 0.44 2.27 44.00
WSB Washington SB, FSB of MD 17.13 150.67 13.07 150.67 23.88 0.10 1.27 21.74
WFI Winton Financial Corp. of OH 23.83 328.62 23.58 335.56 28.88 0.25 1.31 31.25
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN 17.13 147.06 13.20 149.69 26.27 0.27 0.87 14.92
FBER 1st Bergen Bancorp of NJ 24.85 134.68 18.21 134.68 24.85 0.20 1.03 25.64
AFED AFSALA Bancorp, Inc. of NY(8) 21.35 130.85 16.38 130.85 21.35 0.28 1.47 31.46
ALBK ALBANK Fin. Corp. of Albany NY 15.24 184.06 16.21 237.00 15.37 0.72 1.40 21.30
AMFC AMB Financial Corp. of IN 17.81 123.24 18.24 123.24 28.18 0.28 1.48 26.42
ASBP ASB Financial Corp. of OH 22.62 133.18 20.59 133.18 22.62 0.40 2.81 63.49
ABBK Abington Bancorp of MA* 16.06 193.82 13.23 212.82 18.29 0.20 1.01 16.26
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
AABC Access Anytime Bancorp of NM 8.52 8.52 1.50 20.76 10.92 1.40 19.33 0.14 335.63 0.77
AFBC Advance Fin. Bancorp of WV 15.22 15.22 0.87 5.65 4.63 0.84 5.45 1.10 27.69 0.35
AFCB Affiliated Comm BC, Inc of MA(8) 9.79 9.74 1.08 11.08 4.68 1.05 10.71 0.41 186.48 1.24
ALBC Albion Banc Corp. of Albion NY 8.59 8.59 0.52 5.88 4.27 0.49 5.63 0.38 100.00 0.52
ABCL Alliance Bancorp, Inc. of IL 9.60 9.49 0.84 9.10 4.57 0.93 10.10 0.22 156.51 0.56
ALLB Alliance Bank MHC of PA (19.9) 11.20 11.20 0.83 7.17 1.85 0.83 7.17 1.38 41.98 1.02
AHCI Ambanc Holding Co., Inc. of NY* 11.99 11.99 0.56 4.49 3.38 0.45 3.65 0.67 111.94 1.34
ASBI Ameriana Bancorp of IN 11.36 11.36 0.91 8.24 5.40 0.80 7.21 0.50 59.58 0.39
ABCW Anchor Bancorp Wisconsin of WI 6.64 6.54 1.04 16.38 5.12 0.96 15.13 NA NA 1.34
ANDB Andover Bancorp, Inc. of MA* 8.10 8.10 1.05 13.07 5.96 1.03 12.81 0.49 184.92 1.24
ASFC Astoria Financial Corp. of NY 8.07 5.61 0.82 10.36 4.41 0.76 9.62 0.54 67.50 0.85
AVND Avondale Fin. Corp. of IL 8.48 8.48 -2.10 -23.98 -22.12 -1.78 -20.34 1.14 84.08 2.31
BKCT Bancorp Connecticut of CT* 10.59 10.59 1.39 13.30 5.76 1.23 11.81 0.74 151.22 2.06
BPLS Bank Plus Corp. of CA 4.35 3.96 0.35 7.31 4.95 0.39 8.21 1.64 NA NA
BNKU Bank United Corp. of TX 4.89 4.77 0.69 13.68 4.99 0.60 12.00 NA NA 0.44
BWFC Bank West Fin. Corp. of MI 13.66 13.66 0.72 4.94 3.04 0.54 3.67 0.48 32.03 0.22
BANC BankAtlantic Bancorp of FL 6.76 5.90 0.99 16.94 6.05 0.51 8.67 1.17 72.73 1.12
BKUNA BankUnited Fin. Corp. of FL 4.28 3.80 0.28 6.95 2.24 0.21 5.30 0.40 35.26 0.16
BVCC Bay View Capital Corp. of CA 5.35 4.44 0.44 7.40 2.18 0.60 10.09 NA NA 1.22
FSNJ Bayonne Banchsares of NJ 15.76 15.76 0.46 3.99 1.84 0.65 5.73 1.01 48.09 1.27
BFSB Bedford Bancshares, Inc. of VA 14.52 14.52 1.20 8.44 4.90 1.20 8.38 0.43 112.25 0.60
BFFC Big Foot Fin. Corp. of IL 17.53 17.53 0.60 3.46 2.38 0.53 3.05 NA NA 0.28
BYFC Broadway Fin. Corp. of CA 10.30 10.30 0.43 4.13 4.88 0.30 2.84 1.65 51.04 1.00
BRKL Brookline Bncp MHC of MA(47.0) 17.16 17.16 0.78 4.56 2.27 0.78 4.56 0.78 228.13 2.51
CBES CBES Bancorp, Inc. of MO 15.78 15.78 1.11 6.34 5.22 0.97 5.54 NA NA NA
CCFH CCF Holding Company of GA 9.39 9.39 0.13 1.11 0.65 -0.22 -1.85 0.50 106.86 0.68
CFSB CFSB Bancorp of Lansing MI 7.92 7.92 1.27 16.47 5.15 1.18 15.32 0.08 724.89 0.65
CKFB CKF Bancorp of Danville KY 21.90 21.90 1.84 7.79 6.85 1.38 5.83 0.43 48.87 0.23
CNSB CNS Bancorp, Inc. of MO 24.43 24.43 0.88 3.56 2.91 0.88 3.56 0.22 178.34 0.57
CSBF CSB Financial Group Inc of IL 24.00 22.65 0.50 2.01 2.13 0.43 1.73 0.95 39.74 0.66
CBCI Calumet Bancorp of Chicago IL 16.77 16.77 1.61 10.01 6.77 1.62 10.09 1.45 82.15 1.53
CAFI Camco Fin. Corp. of OH 9.40 8.73 1.15 11.99 5.86 0.93 9.73 0.48 53.21 0.30
CMRN Cameron Fin. Corp. of MO 21.43 21.43 1.18 5.29 4.37 1.17 5.23 0.98 82.65 0.94
CAPS Capital Savings Bancorp of MO(8) 9.43 9.43 0.98 11.06 5.62 0.95 10.62 0.41 78.85 0.40
CFNC Carolina Fincorp of NC* 22.71 22.71 1.22 5.24 4.03 1.17 5.02 0.10 365.18 0.50
CASB Cascade Financial Corp. of WA 6.93 6.93 0.66 10.21 4.17 0.64 9.93 0.35 274.48 1.13
CATB Catskill Fin. Corp. of NY* 24.31 24.31 1.34 5.19 4.72 1.34 5.19 0.29 219.08 1.49
CAVB Cavalry Bancorp of TN 27.23 27.23 1.33 4.87 2.60 1.33 4.87 0.01 NA 1.23
CNIT Cenit Bancorp of Norfolk VA 6.95 6.40 0.85 12.05 4.57 0.79 11.16 0.36 145.18 0.72
CEBK Central Co-Op. Bank of MA* 9.82 8.88 0.81 8.09 4.77 0.74 7.40 0.42 185.68 1.08
CENB Century Bancorp, Inc. of NC(8) 30.14 30.14 1.61 5.35 6.73 1.62 5.39 0.58 93.95 0.84
CBSB Charter Financial Inc. of IL(8) 15.54 13.92 1.36 9.12 3.63 1.50 10.06 0.62 90.95 0.76
COFI Charter One Financial of OH 6.97 6.51 0.81 11.84 2.88 1.19 17.33 0.38 151.36 0.87
CVAL Chester Valley Bancorp of PA 8.82 8.82 1.00 11.61 4.36 0.96 11.05 0.24 390.28 1.21
CTZN CitFed Bancorp of Dayton OH(8) 6.06 5.54 0.87 13.86 4.16 0.87 13.86 0.39 136.09 1.01
CLAS Classic Bancshares, Inc. of KY 14.88 12.64 0.81 5.53 4.43 0.95 6.47 0.42 148.74 0.92
CBSA Coastal Bancorp of Houston TX 3.60 3.06 0.40 11.65 5.99 0.39 11.55 NA NA 0.64
CFCP Coastal Fin. Corp. of SC 5.98 5.98 1.22 19.67 5.95 1.06 16.97 0.59 151.67 1.20
CMSB Commonwealth Bancorp Inc of PA 9.47 7.48 0.73 7.51 4.29 0.56 5.73 0.42 90.64 0.64
CMSV Commty. Svgs, MHC of FL (48.5) 11.28 11.28 0.77 6.80 2.76 0.71 6.29 0.42 88.29 0.59
CFTP Community Fed. Bancorp of MS 26.47 26.47 1.32 4.46 3.49 1.32 4.46 0.49 48.59 0.44
CFFC Community Fin. Corp. of VA 13.63 13.58 1.06 7.80 4.49 1.08 7.91 0.44 129.75 0.65
CIBI Community Inv. Bancorp of OH 11.58 11.58 0.97 8.35 5.01 0.97 8.35 0.58 NA NA
COOP Cooperative Bancshares of NC 7.66 7.66 0.63 8.32 4.17 0.62 8.21 0.16 167.34 0.35
CRZY Crazy Woman Creek Bncorp of WY 23.63 23.63 1.28 4.92 3.95 1.30 4.99 0.09 511.11 0.94
DNFC D&N Financial Corp. of MI 5.40 5.35 0.88 15.72 5.66 0.78 14.01 0.56 101.76 0.77
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
AABC Access Anytime Bancorp of NM 9.16 159.79 13.62 159.79 9.84 0.00 0.00 0.00
AFBC Advance Fin. Bancorp of WV 21.58 119.51 18.19 119.51 22.38 0.32 1.77 38.10
AFCB Affiliated Comm BC, Inc of MA(8) 21.39 224.10 21.94 225.28 22.13 0.60 1.56 33.33
ALBC Albion Banc Corp. of Albion NY 23.40 133.98 11.50 133.98 24.44 0.12 1.09 25.53
ABCL Alliance Bancorp, Inc. of IL 21.88 171.57 16.47 173.59 19.72 0.44 1.57 34.38
ALLB Alliance Bank MHC of PA (19.9) NM NM 42.10 NM NM 0.36 1.07 58.06
AHCI Ambanc Holding Co., Inc. of NY* 29.59 133.29 15.98 133.29 NM 0.24 1.27 37.50
ASBI Ameriana Bancorp of IN 18.53 151.02 17.16 151.02 21.17 0.64 3.08 57.14
ABCW Anchor Bancorp Wisconsin of WI 19.54 301.46 20.03 306.36 21.16 0.36 0.83 16.22
ANDB Andover Bancorp, Inc. of MA* 16.76 206.72 16.74 206.72 17.10 0.90 2.11 35.29
ASFC Astoria Financial Corp. of NY 22.69 178.86 14.43 257.05 24.42 0.80 1.39 31.50
AVND Avondale Fin. Corp. of IL NM 122.92 10.42 122.92 NM 0.00 0.00 NM
BKCT Bancorp Connecticut of CT* 17.35 218.57 23.15 218.57 19.54 0.54 2.68 46.55
BPLS Bank Plus Corp. of CA 20.20 140.28 6.11 154.11 17.99 0.00 0.00 0.00
BNKU Bank United Corp. of TX 20.04 260.44 12.74 267.34 22.85 0.64 1.27 25.40
BWFC Bank West Fin. Corp. of MI NM 160.02 21.86 160.02 NM 0.24 1.70 55.81
BANC BankAtlantic Bancorp of FL 16.52 221.02 14.95 253.28 NM 0.10 0.72 11.90
BKUNA BankUnited Fin. Corp. of FL NM 186.20 7.98 209.88 NM 0.00 0.00 0.00
BVCC Bay View Capital Corp. of CA NM NM 19.79 NM NM 0.40 1.26 57.97
FSNJ Bayonne Banchsares of NJ NM 153.43 24.17 153.43 NM 0.17 1.04 56.67
BFSB Bedford Bancshares, Inc. of VA 20.39 166.18 24.13 166.18 20.54 0.56 1.95 39.72
BFFC Big Foot Fin. Corp. of IL NM 142.08 24.91 142.08 NM 0.00 0.00 0.00
BYFC Broadway Fin. Corp. of CA 20.49 83.72 8.62 83.72 29.76 0.20 1.60 32.79
BRKL Brookline Bncp MHC of MA(47.0) NM 200.82 34.46 200.82 NM 0.00 0.00 0.00
CBES CBES Bancorp, Inc. of MO 19.16 122.19 19.29 122.19 21.92 0.40 1.75 33.61
CCFH CCF Holding Company of GA NM 178.16 16.74 178.16 NM 0.64 2.75 NM
CFSB CFSB Bancorp of Lansing MI 19.41 306.97 24.31 306.97 20.86 0.52 1.87 36.36
CKFB CKF Bancorp of Danville KY 14.60 118.82 26.02 118.82 19.52 0.50 2.61 38.17
CNSB CNS Bancorp, Inc. of MO NM 123.57 30.19 123.57 NM 0.24 1.34 46.15
CSBF CSB Financial Group Inc of IL NM 98.27 23.59 104.13 NM 0.00 0.00 0.00
CBCI Calumet Bancorp of Chicago IL 14.76 144.34 24.20 144.34 14.65 0.00 0.00 0.00
CAFI Camco Fin. Corp. of OH 17.07 196.32 18.46 211.61 21.04 0.56 1.87 32.00
CMRN Cameron Fin. Corp. of MO 22.87 121.74 26.10 121.74 23.12 0.28 1.30 29.79
CAPS Capital Savings Bancorp of MO(8) 17.80 184.19 17.37 184.19 18.54 0.24 1.08 19.20
CFNC Carolina Fincorp of NC* 24.84 128.95 29.28 128.95 25.90 0.24 1.32 32.88
CASB Cascade Financial Corp. of WA 23.99 205.68 14.26 205.68 24.65 0.00 0.00 0.00
CATB Catskill Fin. Corp. of NY* 21.18 112.08 27.25 112.08 21.18 0.32 1.78 37.65
CAVB Cavalry Bancorp of TN NM 187.55 51.06 187.55 NM 0.00 0.00 0.00
CNIT Cenit Bancorp of Norfolk VA 21.90 264.21 18.37 287.11 23.66 0.40 1.51 33.06
CEBK Central Co-Op. Bank of MA* 20.95 162.13 15.92 179.32 22.88 0.32 1.08 22.54
CENB Century Bancorp, Inc. of NC(8) 14.85 78.28 23.60 78.28 14.74 0.68 3.44 51.13
CBSB Charter Financial Inc. of IL(8) 27.58 244.03 37.93 272.55 25.00 0.32 0.92 25.40
COFI Charter One Financial of OH NM 317.03 22.09 339.29 23.74 1.12 1.64 57.14
CVAL Chester Valley Bancorp of PA 22.92 251.14 22.14 251.14 24.09 0.44 1.33 30.56
CTZN CitFed Bancorp of Dayton OH(8) 24.05 312.89 18.98 342.61 24.05 0.36 0.71 17.14
CLAS Classic Bancshares, Inc. of KY 22.56 122.27 18.19 143.97 19.27 0.28 1.51 34.15
CBSA Coastal Bancorp of Houston TX 16.69 184.34 6.64 216.84 16.83 0.48 1.25 20.87
CFCP Coastal Fin. Corp. of SC 16.79 305.13 18.24 305.13 19.47 0.36 1.64 27.48
CMSB Commonwealth Bancorp Inc of PA 23.33 178.35 16.89 225.89 NM 0.32 1.36 31.68
CMSV Commty. Svgs, MHC of FL (48.5) NM 238.24 26.89 238.24 NM 0.90 2.37 NM
CFTP Community Fed. Bancorp of MS 28.63 132.76 35.14 132.76 28.63 0.32 1.80 51.61
CFFC Community Fin. Corp. of VA 22.26 166.50 22.70 167.18 21.96 0.28 1.72 38.36
CIBI Community Inv. Bancorp of OH 19.95 166.27 19.26 166.27 19.95 0.32 1.54 30.77
COOP Cooperative Bancshares of NC 24.00 189.87 14.55 189.87 24.32 0.00 0.00 0.00
CRZY Crazy Woman Creek Bncorp of WY 25.33 126.33 29.86 126.33 25.00 0.40 2.11 53.33
DNFC D&N Financial Corp. of MI 17.68 258.38 13.96 260.81 19.82 0.20 0.72 12.74
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
DCBI Delphos Citizens Bancorp of OH 26.79 26.79 1.69 6.10 4.32 1.69 6.10 NA NA 0.12
DIME Dime Community Bancorp of NY* 12.51 10.82 0.89 6.05 3.42 0.85 5.80 0.48 159.03 1.36
DIBK Dime Financial Corp. of CT(8)* 8.27 8.05 1.94 23.88 9.53 1.92 23.73 0.30 433.25 3.30
ESBF ESB Financial Corp of PA 7.52 6.70 0.69 8.90 5.02 0.69 8.90 0.45 117.30 1.41
EGLB Eagle BancGroup of IL 11.86 11.86 0.29 2.43 2.11 0.21 1.75 1.27 41.32 0.77
EBSI Eagle Bancshares of Tucker GA 7.83 7.83 0.66 8.05 4.22 0.67 8.14 1.18 56.90 0.92
ETFS East Texas Fin. Serv. of TX 17.47 17.47 0.63 3.46 2.91 0.59 3.24 0.41 47.58 0.38
ESBK Elmira Svgs Bank (The) of NY* 6.32 6.32 0.39 6.11 3.93 0.42 6.57 0.70 90.95 0.82
EMLD Emerald Financial Corp. of OH 8.04 7.93 1.04 13.47 4.17 0.99 12.79 NA NA NA
EFBC Empire Federal Bancorp of MT 36.97 36.97 1.45 3.93 3.59 1.45 3.93 0.03 645.16 0.44
EFBI Enterprise Fed. Bancorp of OH 10.75 10.75 0.82 6.96 3.83 0.74 6.27 0.01 NA 0.32
EQSB Equitable FSB of Wheaton MD 5.20 5.20 0.75 14.81 5.68 0.75 14.66 NA NA NA
FCBF FCB Fin. Corp. of Neenah WI 14.09 14.09 1.15 7.62 3.85 0.84 5.61 0.26 269.82 0.89
FFDF FFD Financial Corp. of OH 24.06 24.06 1.82 7.45 4.85 0.87 3.56 0.05 642.86 0.42
FFLC FFLC Bancorp of Leesburg FL 12.85 12.85 1.00 7.16 4.91 0.95 6.80 0.31 147.07 0.56
FFWC FFW Corporation of Wabash IN 9.51 8.66 1.03 10.50 6.65 1.01 10.33 0.33 113.70 0.57
FFYF FFY Financial Corp. of OH 13.59 13.59 1.29 9.29 5.56 1.27 9.19 0.53 81.15 0.60
FMCO FMS Financial Corp. of NJ 6.19 6.12 0.96 15.10 4.98 0.96 15.10 0.70 68.15 1.05
FFHH FSF Financial Corp. of MN 10.91 10.91 0.83 7.22 5.25 0.82 7.09 0.18 131.50 0.34
FOBC Fed One Bancorp of Wheeling WV(8) 11.06 10.60 0.91 8.07 3.67 0.91 8.01 0.29 141.57 0.90
FBCI Fidelity Bancorp of Chicago IL 10.47 10.45 0.22 2.12 1.54 0.63 6.08 0.29 33.82 0.12
FSBI Fidelity Bancorp, Inc. of PA 6.84 6.84 0.78 11.24 5.54 0.75 10.93 0.15 349.48 1.04
FFFL Fidelity Bcsh MHC of FL (47.7) 7.16 7.12 0.64 7.67 3.11 0.58 6.94 0.35 77.87 0.38
FFED Fidelity Fed. Bancorp of IN 7.28 7.28 0.73 12.79 7.11 0.68 11.87 0.35 240.48 1.01
FFOH Fidelity Financial of OH 12.01 10.58 0.94 7.26 4.87 0.90 7.01 0.18 174.24 0.39
FIBC Financial Bancorp, Inc. of NY 8.93 8.89 0.92 9.83 5.88 0.98 10.48 2.19 23.74 0.93
FBSI First Bancshares, Inc. of MO 14.40 14.40 1.17 8.22 6.30 1.11 7.83 0.87 33.59 0.36
FBBC First Bell Bancorp of PA 10.80 10.80 1.10 10.13 5.66 1.08 9.96 0.07 156.05 0.13
SKBO First Carnegie MHC of PA(45.0) 17.20 17.20 0.64 4.58 2.02 0.71 5.13 0.78 47.72 0.85
FSTC First Citizens Corp of GA 10.12 7.98 1.96 20.63 6.77 1.75 18.43 1.12 99.21 1.46
FCME First Coastal Corp. of ME* 10.12 10.12 0.85 9.00 6.82 0.68 7.26 0.56 325.79 2.47
FFBA First Colorado Bancorp of CO(8) 13.46 13.19 1.31 9.83 4.04 1.24 9.33 0.18 176.16 0.41
FDEF First Defiance Fin.Corp. of OH 18.44 18.44 0.97 4.77 4.39 0.94 4.62 0.31 158.28 0.62
FESX First Essex Bancorp of MA* 7.61 6.68 0.83 11.19 5.64 0.74 9.97 0.54 150.53 1.49
FFSX First FSB MHC Sxld of IA(46.1) 8.86 8.79 0.73 8.67 3.13 0.71 8.38 0.19 195.85 0.49
FFES First Fed of E. Hartford CT 6.82 6.82 0.57 8.78 5.12 0.63 9.72 0.31 85.02 1.32
BDJI First Fed. Bancorp. of MN 10.18 10.18 0.65 6.01 3.60 0.65 6.01 0.19 198.64 0.79
FFBH First Fed. Bancshares of AR 15.08 15.08 1.03 6.73 4.04 0.99 6.43 NA NA NA
FTFC First Fed. Capital Corp. of WI 7.08 6.70 1.13 17.12 5.37 0.89 13.48 NA NA NA
FFKY First Fed. Fin. Corp. of KY 13.68 12.93 1.63 11.94 5.66 1.61 11.78 0.47 94.14 0.52
FFBZ First Federal Bancorp of OH 7.61 7.60 0.97 12.68 5.08 0.97 12.68 0.46 219.63 1.18
FFCH First Fin. Holdings Inc. of SC 6.44 6.44 0.87 14.12 4.50 0.86 13.86 1.35 48.83 0.82
FFHS First Franklin Corp. of OH 9.21 9.16 0.74 8.28 4.94 0.68 7.58 0.49 92.09 0.68
FGHC First Georgia Hold. Corp of GA 8.31 7.70 1.13 13.71 4.30 0.94 11.35 4.97 12.42 0.71
FSPG First Home Bancorp of NJ(8) 6.95 6.85 0.91 13.59 5.38 0.89 13.28 0.78 85.83 1.29
FFSL First Independence Corp. of KS 10.00 10.00 0.65 6.26 5.43 0.65 6.26 1.44 40.91 0.81
FISB First Indiana Corp. of IN 9.49 9.38 1.16 12.15 5.70 0.94 9.88 1.38 103.15 1.70
FKFS First Keystone Fin. Corp of PA 6.62 6.62 0.80 11.37 5.40 0.72 10.25 1.15 38.88 0.86
FLKY First Lancaster Bncshrs of KY 28.51 28.51 1.16 3.62 3.37 1.16 3.62 3.49 8.62 0.34
FLFC First Liberty Fin. Corp. of GA 7.59 6.90 0.76 10.21 3.35 0.78 10.59 1.00 96.64 1.37
CASH First Midwest Fin., Inc. of OH 10.82 9.66 0.96 8.50 5.77 0.89 7.95 0.74 67.97 0.80
FMBD First Mutual Bancorp Inc of IL 13.85 10.62 0.25 1.76 1.52 0.21 1.45 0.43 85.81 0.47
FMSB First Mutual SB of Bellevue WA* 6.79 6.79 1.03 15.35 5.92 1.01 15.06 0.15 714.97 1.23
FNGB First Northern Cap. Corp of WI 11.06 11.06 0.95 8.43 4.95 0.89 7.93 0.12 405.46 0.54
FFPB First Palm Beach Bancorp of FL 6.37 6.23 0.56 8.55 5.13 0.43 6.57 0.57 NA NA
FWWB First Savings Bancorp of WA 13.68 12.64 1.24 8.47 5.02 1.16 7.93 0.25 263.53 0.97
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
DCBI Delphos Citizens Bancorp of OH 23.16 145.12 38.88 145.12 23.16 0.24 1.09 25.26
DIME Dime Community Bancorp of NY* 29.21 185.37 23.20 214.45 NM 0.36 1.30 37.89
DIBK Dime Financial Corp. of CT(8)* 10.49 221.50 18.32 227.42 10.56 0.48 1.41 14.81
ESBF ESB Financial Corp of PA 19.90 157.69 11.86 177.03 19.90 0.36 1.76 34.95
EGLB Eagle BancGroup of IL NM 118.14 14.02 118.14 NM 0.00 0.00 0.00
EBSI Eagle Bancshares of Tucker GA 23.70 177.73 13.92 177.73 23.45 0.60 2.64 62.50
ETFS East Texas Fin. Serv. of TX NM 118.34 20.67 118.34 NM 0.20 1.24 42.55
ESBK Elmira Svgs Bank (The) of NY* 25.42 152.21 9.62 152.21 23.62 0.64 2.13 54.24
EMLD Emerald Financial Corp. of OH 23.96 303.91 24.42 308.15 25.22 0.28 0.97 23.33
EFBC Empire Federal Bancorp of MT 27.87 108.56 40.13 108.56 27.87 0.32 1.88 52.46
EFBI Enterprise Fed. Bancorp of OH 26.13 177.81 19.12 177.91 29.00 1.00 3.45 NM
EQSB Equitable FSB of Wheaton MD 17.59 242.17 12.59 242.17 17.78 0.00 0.00 0.00
FCBF FCB Fin. Corp. of Neenah WI 26.00 171.32 24.15 171.32 NM 0.80 2.46 64.00
FFDF FFD Financial Corp. of OH 20.61 148.76 35.79 148.76 NM 0.30 1.31 27.03
FFLC FFLC Bancorp of Leesburg FL 20.38 148.43 19.08 148.43 21.45 0.36 1.77 36.00
FFWC FFW Corporation of Wabash IN 15.04 147.53 14.02 161.85 15.29 0.36 1.95 29.27
FFYF FFY Financial Corp. of OH 18.00 166.81 22.68 166.81 18.19 0.80 2.33 41.88
FMCO FMS Financial Corp. of NJ 20.09 283.08 17.53 286.60 20.09 0.36 0.78 15.72
FFHH FSF Financial Corp. of MN 19.05 136.78 14.92 136.78 19.41 0.50 2.45 46.73
FOBC Fed One Bancorp of Wheeling WV(8) 27.22 216.81 23.99 226.29 27.43 0.62 1.69 45.93
FBCI Fidelity Bancorp of Chicago IL NM 136.21 14.26 136.51 22.71 0.40 1.62 NM
FSBI Fidelity Bancorp, Inc. of PA 18.05 186.13 12.73 186.13 18.57 0.36 1.40 25.35
FFFL Fidelity Bcsh MHC of FL (47.7) NM 236.80 16.96 238.10 NM 0.90 2.95 NM
FFED Fidelity Fed. Bancorp of IN 14.07 156.97 11.42 156.97 15.15 0.40 5.08 71.43
FFOH Fidelity Financial of OH 20.55 155.61 18.70 176.68 21.29 0.32 1.79 36.78
FIBC Financial Bancorp, Inc. of NY 16.99 161.19 14.40 161.89 15.95 0.50 1.92 32.68
FBSI First Bancshares, Inc. of MO 15.88 128.33 18.48 128.33 16.67 0.12 0.89 14.12
FBBC First Bell Bancorp of PA 17.67 183.20 19.79 183.20 17.98 0.40 1.95 34.48
SKBO First Carnegie MHC of PA(45.0) NM 188.55 32.42 188.55 NM 0.30 1.48 73.17
FSTC First Citizens Corp of GA 14.77 257.29 26.04 326.31 16.54 0.32 1.01 14.88
FCME First Coastal Corp. of ME* 14.66 125.05 12.65 125.05 18.17 0.00 0.00 0.00
FFBA First Colorado Bancorp of CO(8) 24.74 234.65 31.58 239.46 26.06 0.52 1.78 44.07
FDEF First Defiance Fin.Corp. of OH 22.76 115.88 21.37 115.88 23.46 0.36 2.36 53.73
FESX First Essex Bancorp of MA* 17.74 189.25 14.40 215.44 19.90 0.56 2.45 43.41
FFSX First FSB MHC Sxld of IA(46.1) NM 264.99 23.47 267.04 NM 0.48 1.26 40.34
FFES First Fed of E. Hartford CT 19.51 162.01 11.04 162.01 17.62 0.68 1.70 33.17
BDJI First Fed. Bancorp. of MN 27.74 167.08 17.01 167.08 27.74 0.00 0.00 0.00
FFBH First Fed. Bancshares of AR 24.78 163.91 24.72 163.91 25.93 0.28 1.01 25.00
FTFC First Fed. Capital Corp. of WI 18.62 296.36 20.98 313.34 23.65 0.56 1.60 29.79
FFKY First Fed. Fin. Corp. of KY 17.66 204.75 28.00 216.54 17.90 0.56 2.13 37.58
FFBZ First Federal Bancorp of OH 19.67 237.86 18.10 238.10 19.67 0.28 1.17 22.95
FFCH First Fin. Holdings Inc. of SC 22.22 281.03 18.10 281.03 22.64 0.42 1.75 38.89
FFHS First Franklin Corp. of OH 20.25 161.43 14.87 162.25 22.12 0.40 1.39 28.17
FGHC First Georgia Hold. Corp of GA 23.28 298.01 24.76 321.43 28.13 0.40 2.96 68.97
FSPG First Home Bancorp of NJ(8) 18.57 235.34 16.36 238.80 19.01 0.40 1.23 22.86
FFSL First Independence Corp. of KS 18.42 117.55 11.75 117.55 18.42 0.30 2.14 39.47
FISB First Indiana Corp. of IN 17.54 202.83 19.25 205.22 21.58 0.48 1.97 34.53
FKFS First Keystone Fin. Corp of PA 18.53 199.90 13.23 199.90 20.54 0.20 0.96 17.86
FLKY First Lancaster Bncshrs of KY 29.72 105.56 30.09 105.56 29.72 0.50 3.17 NM
FLFC First Liberty Fin. Corp. of GA 29.88 294.12 22.33 323.65 28.82 0.29 1.18 35.37
CASH First Midwest Fin., Inc. of OH 17.34 144.91 15.69 162.45 18.55 0.48 2.02 35.04
FMBD First Mutual Bancorp Inc of IL NM 119.74 16.58 156.16 NM 0.32 1.74 NM
FMSB First Mutual SB of Bellevue WA* 16.90 241.50 16.39 241.50 17.23 0.20 1.13 19.05
FNGB First Northern Cap. Corp of WI 20.22 166.06 18.36 166.06 21.48 0.36 2.62 52.94
FFPB First Palm Beach Bancorp of FL 19.49 158.02 10.07 161.61 25.35 0.70 1.93 37.63
FWWB First Savings Bancorp of WA 19.90 168.11 23.00 182.00 21.26 0.36 1.45 28.80
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FSFF First SecurityFed Fin of IL 29.09 28.99 0.66 4.22 1.67 1.29 8.28 0.45 128.50 0.96
SHEN First Shenango Bancorp of PA(8) 12.76 12.76 1.15 10.18 4.96 1.15 10.14 0.97 83.39 1.27
FSLA First Source Bancorp of NJ 20.55 20.55 1.09 5.31 3.90 1.09 5.31 0.59 98.01 1.03
SOPN First Svgs Bancorp of NC 22.77 22.77 1.75 7.43 5.63 1.75 7.43 NA NA 0.30
FBNW FirstBank Corp of Clarkston WA 16.18 16.18 0.59 4.73 2.09 0.30 2.37 0.73 83.64 0.76
FFDB FirstFed Bancorp, Inc. of AL 9.69 8.90 0.96 9.89 5.92 0.96 9.89 1.42 45.57 0.95
FSPT FirstSpartan Fin. Corp. of SC 26.40 26.40 1.16 6.68 2.92 1.16 6.68 0.35 115.67 0.49
FLAG Flag Financial Corp of GA 8.90 8.90 0.88 9.57 5.26 0.61 6.60 2.98 30.55 1.31
FLGS Flagstar Bancorp, Inc of MI 6.66 6.42 1.38 21.88 6.22 1.03 16.41 3.29 8.79 0.33
FFIC Flushing Fin. Corp. of NY* 12.54 12.04 0.95 6.37 4.15 0.96 6.43 0.31 199.94 1.04
FBHC Fort Bend Holding Corp. of TX(8) 6.77 6.35 0.78 12.28 5.04 0.57 9.06 0.47 114.18 1.02
FTSB Fort Thomas Fin. Corp. of KY 15.82 15.82 1.23 7.55 5.25 1.23 7.55 2.04 23.24 0.52
FKKY Frankfort First Bancorp of KY 16.97 16.97 0.17 0.84 0.82 0.73 3.55 0.10 71.94 0.08
FTNB Fulton Bancorp, Inc. of MO 23.97 23.97 1.26 5.11 3.33 1.01 4.08 1.05 86.26 1.10
GUPB GFSB Bancorp, Inc of Gallup NM 12.50 12.50 0.89 6.08 4.24 0.89 6.08 0.24 132.26 0.58
GSLA GS Financial Corp. of LA 42.66 42.66 1.38 3.88 2.45 1.36 3.80 0.13 246.99 0.76
GOSB GSB Financial Corp. of NY* 28.44 28.44 0.63 3.39 1.94 0.58 3.09 NA NA NA
GFCO Glenway Financial Corp. of OH 9.29 9.20 0.83 8.74 5.19 0.83 8.74 0.09 344.01 0.38
GTPS Great American Bancorp of IL 19.93 19.93 0.63 3.00 2.65 0.63 3.00 0.11 346.45 0.48
PEDE Great Pee Dee Bancorp of SC 37.86 37.86 1.57 4.15 3.50 1.57 4.15 0.45 97.55 0.57
GSBC Great Southern Bancorp of MO 8.74 8.67 1.89 21.59 6.41 1.75 19.90 1.84 114.98 2.48
GSFC Green Street Fin. Corp. of NC 35.23 35.23 1.61 4.50 3.94 1.61 4.50 0.18 78.95 0.19
GFED Guaranty Fed Bancshares of MO 30.16 30.16 1.00 5.77 2.51 0.97 5.59 0.59 152.53 1.14
HCBB HCB Bancshares of Camden AR 18.65 17.99 0.30 2.05 1.41 0.30 2.05 0.23 316.88 1.42
HEMT HF Bancorp of Hemet CA 7.87 6.61 0.04 0.46 0.39 0.22 2.69 NA NA NA
HFFC HF Financial Corp. of SD 9.58 9.58 1.08 11.49 5.94 1.00 10.66 0.49 196.91 1.26
HFNC HFNC Financial Corp. of NC 18.24 18.24 1.23 6.02 4.73 0.93 4.58 0.73 98.43 0.89
HMNF HMN Financial, Inc. of MN 12.22 11.34 0.95 6.79 4.93 0.76 5.39 0.12 327.35 0.61
HALL Hallmark Capital Corp. of WI 7.62 7.62 0.67 9.29 6.06 0.66 9.09 0.11 471.85 0.71
HRBF Harbor Federal Bancorp of MD 12.49 12.49 0.74 5.73 3.88 0.70 5.49 0.53 37.43 0.31
HARB Harbor Florida Bancshrs of FL 19.30 19.06 1.40 7.24 4.71 1.35 6.99 0.47 198.97 1.33
HFSA Hardin Bancorp of Hardin MO 11.34 11.34 0.75 6.03 5.21 0.69 5.48 0.19 110.22 0.40
HARL Harleysville SB of PA 6.82 6.82 1.02 15.57 6.21 1.02 15.64 NA NA 0.79
HFGI Harrington Fin. Group of IN 4.47 4.47 0.19 4.04 2.61 0.20 4.17 0.16 23.48 0.16
HARS Harris Fin. MHC of PA (24.3) 8.13 7.25 0.88 10.74 1.93 0.76 9.30 0.66 60.87 0.99
HFFB Harrodsburg 1st Fin Bcrp of KY 26.73 26.73 1.35 5.05 4.18 1.35 5.05 0.45 70.72 0.41
HHFC Harvest Home Fin. Corp. of OH 11.12 11.12 0.68 5.76 4.06 0.67 5.67 0.03 393.33 0.27
HAVN Haven Bancorp of Woodhaven NY 5.71 5.70 0.62 10.45 4.85 0.63 10.62 0.57 112.56 1.08
HTHR Hawthorne Fin. Corp. of CA 4.56 4.56 0.89 19.29 12.00 1.07 23.14 NA NA 1.46
HMLK Hemlock Fed. Fin. Corp. of IL 17.22 17.22 0.58 3.49 2.49 0.98 5.93 0.23 175.34 0.94
HBSC Heritage Bancorp, Inc of SC 28.79 28.79 1.16 4.02 3.54 1.16 4.02 0.84 42.10 0.45
HFWA Heritage Financial Corp of WA 29.23 29.23 1.53 5.25 3.09 1.53 5.25 0.10 817.44 1.30
HCBC High Country Bancorp of CO 20.47 20.47 0.76 5.23 3.13 0.76 5.23 0.42 177.96 0.93
HBNK Highland Bancorp of CA 7.55 7.55 1.21 16.19 6.21 0.93 12.45 1.95 84.08 2.06
HIFS Hingham Inst. for Sav. of MA* 9.60 9.60 1.25 13.09 5.75 1.25 13.09 0.42 166.84 0.89
HBEI Home Bancorp of Elgin IL 27.01 27.01 0.80 2.90 2.33 0.80 2.90 0.32 93.09 0.36
HBFW Home Bancorp of Fort Wayne IN 12.15 12.15 0.86 6.53 3.59 0.85 6.47 0.08 463.00 0.45
HCFC Home City Fin. Corp. of OH 19.48 19.48 1.27 6.33 4.67 1.29 6.39 0.65 90.76 0.66
HOMF Home Fed Bancorp of Seymour IN 8.80 8.55 1.38 16.20 5.75 1.22 14.26 0.55 101.25 0.67
HWEN Home Financial Bancorp of IN 16.98 16.98 0.81 4.51 3.89 0.59 3.26 NA NA 0.86
HLFC Home Loan Financial Corp of OH 37.26 37.26 1.67 4.49 3.78 1.67 4.49 0.06 460.53 0.33
HPBC Home Port Bancorp, Inc. of MA* 10.52 10.52 1.67 15.70 6.92 1.63 15.35 0.29 430.57 1.49
HFBC HopFed Bancorp of KY 22.59 22.59 0.99 4.37 2.65 0.99 4.37 0.06 115.61 0.23
HZFS Horizon Fin'l. Services of IA 10.16 10.16 0.86 8.39 5.14 0.68 6.63 NA NA NA
HRZB Horizon Financial Corp. of WA* 15.93 15.93 1.57 10.06 6.06 1.54 9.87 0.01 NA 0.83
IBSF IBS Financial Corp. of NJ(8) 17.73 17.73 0.79 4.51 3.01 0.79 4.51 0.11 130.18 0.49
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FSFF First SecurityFed Fin of IL NM 116.81 33.98 117.21 NM 0.00 0.00 0.00
SHEN First Shenango Bancorp of PA(8) 20.16 193.47 24.69 193.47 20.25 0.60 1.34 27.03
FSLA First Source Bancorp of NJ 25.61 136.01 27.95 136.01 25.61 0.12 1.14 29.27
SOPN First Svgs Bancorp of NC 17.78 130.01 29.60 130.01 17.78 1.00 4.17 74.07
FBNW FirstBank Corp of Clarkston WA NM 153.85 24.89 153.85 NM 0.32 1.39 66.67
FFDB FirstFed Bancorp, Inc. of AL 16.89 166.67 16.15 181.55 16.89 0.50 2.00 33.78
FSPT FirstSpartan Fin. Corp. of SC NM 154.13 40.69 154.13 NM 0.60 1.32 45.11
FLAG Flag Financial Corp of GA 19.00 175.44 15.61 175.44 27.54 0.34 1.79 34.00
FLGS Flagstar Bancorp, Inc of MI 16.07 291.58 19.41 302.35 21.43 0.28 1.04 16.67
FFIC Flushing Fin. Corp. of NY* 24.08 150.60 18.88 156.81 23.86 0.32 1.22 29.36
FBHC Fort Bend Holding Corp. of TX(8) 19.86 227.83 15.43 243.06 26.92 0.40 1.43 28.37
FTSB Fort Thomas Fin. Corp. of KY 19.06 142.26 22.51 142.26 19.06 0.25 1.64 31.25
FKKY Frankfort First Bancorp of KY NM 122.13 20.72 122.13 28.81 0.80 4.71 NM
FTNB Fulton Bancorp, Inc. of MO 30.00 149.40 35.82 149.40 NM 0.24 1.07 32.00
GUPB GFSB Bancorp, Inc of Gallup NM 23.61 142.38 17.79 142.38 23.61 0.27 1.59 37.50
GSLA GS Financial Corp. of LA NM 122.70 52.34 122.70 NM 0.28 1.40 57.14
GOSB GSB Financial Corp. of NY* NM 119.78 34.06 119.78 NM 0.00 0.00 0.00
GFCO Glenway Financial Corp. of OH 19.29 163.17 15.16 164.90 19.29 0.44 2.17 41.90
GTPS Great American Bancorp of IL NM 116.44 23.21 116.44 NM 0.40 1.93 72.73
PEDE Great Pee Dee Bancorp of SC 28.57 118.43 44.84 118.43 28.57 0.30 1.88 53.57
GSBC Great Southern Bancorp of MO 15.59 318.33 27.82 320.69 16.92 0.44 1.70 26.51
GSFC Green Street Fin. Corp. of NC 25.38 113.71 40.06 113.71 25.38 0.44 2.63 66.67
GFED Guaranty Fed Bancshares of MO NM 117.55 35.45 117.55 NM 0.30 2.28 NM
HCBB HCB Bancshares of Camden AR NM 108.17 20.17 112.12 NM 0.20 1.28 NM
HEMT HF Bancorp of Hemet CA NM 116.98 9.20 139.14 NM 0.00 0.00 0.00
HFFC HF Financial Corp. of SD 16.83 184.70 17.69 184.70 18.13 0.42 1.20 20.19
HFNC HFNC Financial Corp. of NC 21.13 137.78 25.13 137.78 27.73 0.32 2.40 50.79
HMNF HMN Financial, Inc. of MN 20.28 134.35 16.41 144.71 25.59 0.24 0.88 17.78
HALL Hallmark Capital Corp. of WI 16.49 144.32 11.00 144.32 16.85 0.00 0.00 0.00
HRBF Harbor Federal Bancorp of MD 25.78 143.64 17.94 143.64 26.90 0.52 2.10 54.17
HARB Harbor Florida Bancshrs of FL 21.22 153.68 29.66 155.63 21.98 1.40 11.37 NM
HFSA Hardin Bancorp of Hardin MO 19.19 119.57 13.56 119.57 21.11 0.52 2.74 52.53
HARL Harleysville SB of PA 16.10 232.72 15.86 232.72 16.02 0.44 1.33 21.46
HFGI Harrington Fin. Group of IN NM 156.25 6.99 156.25 NM 0.12 1.04 40.00
HARS Harris Fin. MHC of PA (24.3) NM NM 41.45 NM NM 0.22 0.82 42.31
HFFB Harrodsburg 1st Fin Bcrp of KY 23.91 120.67 32.26 120.67 23.91 0.40 2.26 54.05
HHFC Harvest Home Fin. Corp. of OH 24.63 142.00 15.78 142.00 25.00 0.44 2.67 65.67
HAVN Haven Bancorp of Woodhaven NY 20.60 201.64 11.52 202.12 20.28 0.30 1.17 24.00
HTHR Hawthorne Fin. Corp. of CA 8.33 153.21 6.99 153.21 6.95 0.00 0.00 0.00
HMLK Hemlock Fed. Fin. Corp. of IL NM 124.13 21.37 124.13 23.60 0.28 1.48 59.57
HBSC Heritage Bancorp, Inc of SC 28.28 113.65 32.72 113.65 28.28 0.00 0.00 0.00
HFWA Heritage Financial Corp of WA NM 170.02 49.70 170.02 NM 0.14 0.88 28.57
HCBC High Country Bancorp of CO NM 111.28 22.78 111.28 NM 0.00 0.00 0.00
HBNK Highland Bancorp of CA 16.10 237.83 17.96 237.83 20.94 1.00 2.35 37.88
HIFS Hingham Inst. for Sav. of MA* 17.40 216.60 20.80 216.60 17.40 0.52 1.46 25.49
HBEI Home Bancorp of Elgin IL NM 126.93 34.28 126.93 NM 0.40 2.27 NM
HBFW Home Bancorp of Fort Wayne IN 27.85 189.86 23.07 189.86 28.07 0.20 0.58 16.26
HCFC Home City Fin. Corp. of OH 21.43 135.75 26.45 135.75 21.21 0.36 1.71 36.73
HOMF Home Fed Bancorp of Seymour IN 17.39 262.08 23.06 269.59 19.75 0.40 1.25 21.74
HWEN Home Financial Bancorp of IN 25.69 116.35 19.75 116.35 NM 0.10 1.08 27.78
HLFC Home Loan Financial Corp of OH 26.47 118.95 44.32 118.95 26.47 0.00 0.00 0.00
HPBC Home Port Bancorp, Inc. of MA* 14.46 217.11 22.83 217.11 14.79 0.80 3.09 44.69
HFBC HopFed Bancorp of KY NM 165.01 37.27 165.01 NM 0.00 0.00 0.00
HZFS Horizon Fin'l. Services of IA 19.44 153.66 15.61 153.66 24.61 0.18 1.14 22.22
HRZB Horizon Financial Corp. of WA* 16.51 158.59 25.27 158.59 16.82 0.44 2.44 40.37
IBSF IBS Financial Corp. of NJ(8) NM 149.41 26.50 149.41 NM 0.40 2.27 NM
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ITLA ITLA Capital Corp of CA* 9.78 9.75 1.42 13.26 6.91 1.42 13.26 1.31 102.95 1.63
ICBC Independence Comm Bnk Cp of NY 21.70 20.32 0.64 2.95 2.01 0.85 3.90 0.70 126.32 1.24
IFSB Independence FSB of DC 7.25 6.45 0.54 8.04 5.32 0.22 3.32 1.66 13.10 0.39
INBI Industrial Bancorp of OH 16.72 16.72 1.49 8.35 4.54 1.49 8.35 0.25 188.24 0.54
IWBK Interwest Bancorp of WA 6.73 6.62 1.10 16.51 5.50 0.96 14.34 0.66 66.76 0.76
IPSW Ipswich SB of Ipswich MA* 5.21 5.21 1.18 20.53 4.89 0.96 16.78 0.79 90.70 0.89
JXVL Jacksonville Bancorp of TX 14.63 14.63 1.49 9.87 6.57 1.49 9.87 0.70 70.27 0.66
JXSB Jcksnville SB,MHC of IL (45.6) 10.41 10.41 0.61 5.69 2.19 0.49 4.57 0.86 54.02 0.61
JSBA Jefferson Svgs Bancorp of MO 9.39 7.47 0.82 9.52 3.32 0.76 8.87 0.80 82.88 0.88
JOAC Joachim Bancorp, Inc. of MO(8) 28.92 28.92 0.76 2.64 2.21 0.76 2.64 0.25 89.29 0.30
KSBK KSB Bancorp of Kingfield ME* 7.36 7.00 1.07 14.93 6.58 1.07 14.93 NA NA 1.10
KFBI Klamath First Bancorp of OR 15.07 13.77 1.09 6.06 4.12 1.09 6.06 0.02 932.65 0.24
LSBI LSB Fin. Corp. of Lafayette IN 8.58 8.58 0.80 9.10 5.26 0.72 8.20 NA NA NA
LVSB Lakeview Financial of NJ 9.65 7.92 1.44 13.78 7.58 0.90 8.63 1.27 57.56 1.42
LARK Landmark Bancshares, Inc of KS 14.09 14.09 1.09 7.60 5.51 0.98 6.88 0.21 217.31 0.63
LARL Laurel Capital Group of PA 10.57 10.57 1.40 13.41 6.31 1.40 13.41 0.37 226.91 1.24
LSBX Lawrence Savings Bank of MA* 10.45 10.45 2.31 25.03 10.51 2.28 24.77 0.40 218.48 1.79
LFED Leeds Fed Bksr MHC of MD (36.3 16.63 16.63 1.20 7.33 3.18 1.20 7.33 0.04 453.33 0.30
LXMO Lexington B&L Fin. Corp. of MO 18.33 17.19 1.10 4.29 3.94 1.10 4.29 0.54 119.11 0.94
LFCO Life Financial Corp of CA(8) 13.31 13.31 5.46 38.04 8.72 5.72 39.80 2.43 43.86 1.76
LFBI Little Falls Bancorp of NJ 11.65 10.79 0.60 4.75 3.70 0.57 4.56 NA NA NA
LOGN Logansport Fin. Corp. of IN 19.21 19.21 1.50 7.75 5.60 1.55 7.99 0.57 46.97 0.37
LISB Long Island Bancorp, Inc of NY(8) 9.18 9.10 0.86 9.45 3.26 0.71 7.76 0.86 62.70 0.91
MAFB MAF Bancorp, Inc. of IL 7.62 6.71 1.14 14.68 6.50 1.13 14.50 0.55 80.77 0.56
MBLF MBLA Financial Corp. of MO 12.68 12.68 0.81 6.31 5.64 0.82 6.40 0.48 62.09 0.51
MECH MECH Financial Inc of CT* 9.93 9.93 1.60 15.91 8.23 1.58 15.72 0.56 258.21 2.28
MFBC MFB Corp. of Mishawaka IN 12.70 12.70 0.83 6.00 4.62 0.82 5.95 NA NA 0.18
MSBF MSB Financial, Inc of MI 16.87 16.87 1.51 8.78 5.06 1.39 8.11 0.74 60.27 0.49
MARN Marion Capital Holdings of IN 20.78 20.33 1.57 7.09 5.54 1.57 7.09 1.43 74.17 1.30
MRKF Market Fin. Corp. of OH 35.57 35.57 1.06 3.30 2.87 1.06 3.30 0.33 27.08 0.17
MFSL Maryland Fed. Bancorp of MD(8) 8.49 8.39 0.65 7.80 2.89 0.91 10.94 0.66 60.90 0.48
MASB MassBank Corp. of Reading MA* 11.21 11.05 1.11 10.51 5.69 1.03 9.73 0.17 152.27 0.86
MFLR Mayflower Co-Op. Bank of MA* 9.75 9.61 1.11 11.52 6.24 1.05 10.93 0.69 124.95 1.49
MDBK Medford Bancorp, Inc. of MA* 8.94 8.41 1.05 11.80 5.70 1.02 11.37 0.13 481.96 1.17
MWBX MetroWest Bank of MA* 7.36 7.36 1.33 17.91 6.68 1.33 17.91 0.70 208.27 2.01
METF Metropolitan Fin. Corp. of OH 3.96 3.64 0.69 17.52 5.05 0.65 16.45 0.91 NA NA
MIFC Mid Iowa Financial Corp. of IA 9.36 9.35 1.22 13.09 7.34 1.33 14.26 0.07 275.00 0.41
MCBN Mid-Coast Bancorp of ME 8.33 8.33 0.76 8.85 5.28 0.71 8.30 1.09 48.53 0.66
MWBI Midwest Bancshares, Inc. of IA 7.22 7.22 0.88 12.54 7.24 0.78 11.11 0.66 43.60 0.50
MFFC Milton Fed. Fin. Corp. of OH 11.84 11.84 0.65 4.83 3.62 0.63 4.66 0.28 85.06 0.36
MBSP Mitchell Bancorp, Inc. of NC 40.12 40.12 1.52 3.59 3.32 1.52 3.59 1.77 29.42 0.64
MBBC Monterey Bay Bancorp of CA 11.75 10.95 0.43 3.81 2.44 0.39 3.47 0.65 62.58 0.63
MONT Montgomery Fin. Corp. of IN 18.60 18.60 0.72 4.29 3.38 0.72 4.29 0.78 22.34 0.19
MSBK Mutual SB, FSB of Bay City MI 5.08 5.08 -1.38 -23.36 -17.56 -0.49 -8.22 0.07 427.08 0.63
MYST Mystic Financial of MA* 19.47 19.47 0.78 4.00 3.08 0.78 4.00 0.25 254.55 0.92
NHTB NH Thrift Bancshares of NH 8.04 6.95 0.91 11.84 6.65 0.83 10.77 0.66 146.88 1.18
NSLB NS&L Bancorp, Inc of Neosho MO 19.74 19.59 0.72 3.62 3.48 0.71 3.56 0.22 38.89 0.14
NSSY NSS Bancorp of CT* 8.14 7.90 1.05 13.40 6.40 1.19 15.20 NA NA 1.33
NMSB Newmil Bancorp, Inc. of CT* 9.32 9.32 0.85 8.56 5.21 0.85 8.56 0.63 215.34 2.87
NBCP Niagara Bancorp of NY MHC(45.4* 12.03 12.03 0.55 4.56 3.48 0.55 4.56 0.46 129.87 1.08
NASB North American SB, FSB of MO 8.49 8.24 1.67 21.16 8.44 1.35 17.20 3.07 27.86 0.99
NBSI North Bancshares of Chicago IL 13.49 13.49 0.53 3.76 2.88 0.50 3.53 NA NA 0.27
FFFD North Central Bancshares of IA 22.92 22.92 1.83 7.49 4.69 1.83 7.49 NA NA 1.04
NEIB Northeast Indiana Bncrp of IN 13.69 13.69 1.21 8.20 5.91 1.21 8.20 0.59 101.79 0.68
NWSB Northwest Bcrp MHC of PA (30.7 9.25 8.21 0.93 9.67 2.33 0.95 9.91 0.69 89.55 0.83
NWEQ Northwest Equity Corp. of WI 11.60 11.60 1.06 9.03 5.91 1.01 8.66 1.35 35.37 0.58
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ITLA ITLA Capital Corp of CA* 14.47 181.82 17.78 182.39 14.47 0.00 0.00 0.00
ICBC Independence Comm Bnk Cp of NY NM 146.93 31.89 156.94 NM 0.00 0.00 0.00
IFSB Independence FSB of DC 18.81 144.06 10.44 161.80 NM 0.25 1.22 22.94
INBI Industrial Bancorp of OH 22.03 185.57 31.04 185.57 22.03 0.60 2.70 59.41
IWBK Interwest Bancorp of WA 18.19 280.18 18.85 284.85 20.93 0.76 1.71 31.15
IPSW Ipswich SB of Ipswich MA* 20.43 NM 19.98 NM 25.00 0.16 0.84 17.20
JXVL Jacksonville Bancorp of TX 15.22 149.04 21.80 149.04 15.22 0.50 2.38 36.23
JXSB Jcksnville SB,MHC of IL (45.6) NM 253.54 26.40 253.54 NM 0.30 1.29 58.82
JSBA Jefferson Svgs Bancorp of MO NM 264.86 24.87 333.15 NM 0.28 0.91 27.45
JOAC Joachim Bancorp, Inc. of MO(8) NM 122.17 35.33 122.17 NM 0.50 2.99 NM
KSBK KSB Bancorp of Kingfield ME* 15.21 208.57 15.35 219.35 15.21 0.10 0.55 8.33
KFBI Klamath First Bancorp of OR 24.30 145.34 21.91 159.08 24.30 0.34 1.59 38.64
LSBI LSB Fin. Corp. of Lafayette IN 19.01 167.87 14.41 167.87 21.10 0.40 1.23 23.39
LVSB Lakeview Financial of NJ 13.19 204.26 19.71 248.96 21.05 0.25 1.04 13.74
LARK Landmark Bancshares, Inc of KS 18.16 135.96 19.16 135.96 20.06 0.60 2.23 40.54
LARL Laurel Capital Group of PA 15.86 206.11 21.78 206.11 15.86 0.52 2.45 38.81
LSBX Lawrence Savings Bank of MA* 9.51 205.28 21.44 205.28 9.61 0.00 0.00 0.00
LFED Leeds Fed Bksr MHC of MD (36.3 NM 221.93 36.90 221.93 NM 0.56 2.70 NM
LXMO Lexington B&L Fin. Corp. of MO 25.38 109.13 20.01 116.36 25.38 0.30 1.82 46.15
LFCO Life Financial Corp of CA(8) 11.47 265.83 35.37 265.83 10.96 0.00 0.00 0.00
LFBI Little Falls Bancorp of NJ 27.00 131.07 15.27 141.61 28.13 0.20 0.99 26.67
LOGN Logansport Fin. Corp. of IN 17.86 133.38 25.63 133.38 17.33 0.40 2.29 40.82
LISB Long Island Bancorp, Inc of NY(8) NM 279.21 25.62 281.63 NM 0.60 0.92 28.30
MAFB MAF Bancorp, Inc. of IL 15.38 221.05 16.84 250.97 15.56 0.42 1.08 16.67
MBLF MBLA Financial Corp. of MO 17.73 112.01 14.20 112.01 17.48 0.40 1.60 28.37
MECH MECH Financial Inc of CT* 12.15 179.32 17.80 179.32 12.30 0.60 2.00 24.29
MFBC MFB Corp. of Mishawaka IN 21.65 131.18 16.66 131.18 21.83 0.34 1.28 27.64
MSBF MSB Financial, Inc of MI 19.78 169.65 28.61 169.65 21.43 0.30 1.67 32.97
MARN Marion Capital Holdings of IN 18.04 127.40 26.47 130.20 18.04 0.88 3.09 55.70
MRKF Market Fin. Corp. of OH NM 99.14 35.26 99.14 NM 0.28 1.87 65.12
MFSL Maryland Fed. Bancorp of MD(8) NM 257.50 21.85 260.55 24.69 0.45 1.14 39.47
MASB MassBank Corp. of Reading MA* 17.58 171.97 19.28 174.44 18.99 1.00 2.01 35.34
MFLR Mayflower Co-Op. Bank of MA* 16.03 174.70 17.04 177.30 16.89 0.80 3.20 51.28
MDBK Medford Bancorp, Inc. of MA* 17.53 196.78 17.59 209.13 18.18 0.80 1.82 31.87
MWBX MetroWest Bank of MA* 14.98 252.06 18.54 252.06 14.98 0.12 1.51 22.64
METF Metropolitan Fin. Corp. of OH 19.82 312.50 12.39 339.96 21.10 0.00 0.00 0.00
MIFC Mid Iowa Financial Corp. of IA 13.63 165.03 15.45 165.26 12.51 0.08 0.66 8.99
MCBN Mid-Coast Bancorp of ME 18.95 165.26 13.77 165.26 20.22 0.17 1.40 26.56
MWBI Midwest Bancshares, Inc. of IA 13.82 163.78 11.83 163.78 15.60 0.24 1.41 19.51
MFFC Milton Fed. Fin. Corp. of OH 27.63 135.89 16.09 135.89 28.64 0.60 3.81 NM
MBSP Mitchell Bancorp, Inc. of NC NM 108.48 43.53 108.48 NM 0.40 2.37 71.43
MBBC Monterey Bay Bancorp of CA NM 151.62 17.81 162.57 NM 0.14 0.62 25.45
MONT Montgomery Fin. Corp. of IN 29.55 109.34 20.33 109.34 29.55 0.22 1.69 50.00
MSBK Mutual SB, FSB of Bay City MI NM 158.77 8.07 158.77 NM 0.00 0.00 NM
MYST Mystic Financial of MA* NM 129.85 25.28 129.85 NM 0.20 1.18 38.46
NHTB NH Thrift Bancshares of NH 15.04 163.40 13.13 188.86 16.53 0.60 3.00 45.11
NSLB NS&L Bancorp, Inc of Neosho MO 28.73 107.03 21.13 107.87 29.20 0.50 2.81 NM
NSSY NSS Bancorp of CT* 15.64 191.71 15.60 197.52 13.78 0.52 1.21 18.91
NMSB Newmil Bancorp, Inc. of CT* 19.18 160.02 14.91 160.02 19.18 0.32 2.32 44.44
NBCP Niagara Bancorp of NY MHC(45.4* 28.78 131.31 15.79 131.31 28.78 0.00 0.00 0.00
NASB North American SB, FSB of MO 11.85 229.97 19.53 236.95 14.58 1.00 1.56 18.52
NBSI North Bancshares of Chicago IL NM 134.10 18.09 134.10 NM 0.40 2.30 NM
FFFD North Central Bancshares of IA 21.34 163.91 37.57 163.91 21.34 0.32 1.29 27.59
NEIB Northeast Indiana Bncrp of IN 16.93 136.42 18.68 136.42 16.93 0.34 1.58 26.77
NWSB Northwest Bcrp MHC of PA (30.7 NM NM 36.72 NM NM 0.16 0.91 39.02
NWEQ Northwest Equity Corp. of WI 16.91 149.82 17.39 149.82 17.63 0.60 2.91 49.18
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
NTMG Nutmeg FS&LA of CT 5.87 5.87 0.68 12.05 6.09 0.40 7.19 1.57 30.83 0.55
OHSL OHSL Financial Corp. of OH 10.89 10.89 0.88 7.90 4.84 0.83 7.51 0.17 126.00 0.32
OCFC Ocean Fin. Corp. of NJ 14.27 14.27 0.98 5.94 4.72 0.97 5.91 0.45 97.91 0.84
OTFC Oregon Trail Fin. Corp. of OR 12.49 12.49 0.93 8.04 3.62 0.94 8.16 0.18 180.70 0.55
OFCP Ottawa Financial Corp. of MI 8.62 7.01 0.87 9.92 4.89 0.83 9.43 0.36 103.46 0.44
PFFB PFF Bancorp of Pomona CA 9.70 9.61 0.54 5.25 4.00 0.52 5.00 1.33 69.73 1.40
PSFI PS Financial of Chicago IL 26.28 26.28 1.12 3.01 3.03 1.94 5.19 0.97 21.91 0.50
PVFC PVF Capital Corp. of OH 7.28 7.28 1.36 19.21 6.88 1.28 18.10 1.06 65.77 0.75
PBCI Pamrapo Bancorp, Inc. of NJ 12.88 12.80 1.37 10.35 6.14 1.31 9.89 1.94 32.66 1.11
PFED Park Bancorp of Chicago IL 21.82 21.82 0.87 3.86 3.45 0.94 4.15 0.10 253.81 0.69
PVSA Parkvale Financial Corp of PA 7.91 7.87 1.08 14.06 6.44 1.08 14.06 0.52 262.03 1.79
PBHC Pathfinder BC MHC of NY (46.1)* 11.98 10.16 0.96 8.24 2.71 0.87 7.48 1.33 34.08 0.70
PEEK Peekskill Fin. Corp. of NY 25.24 25.24 1.08 4.21 3.83 1.08 4.21 0.89 38.25 1.39
PFSB PennFed Fin. Services of NJ 6.96 5.96 0.81 11.02 6.23 0.80 10.92 NA NA 0.26
PWBK Pennwood Bancorp, Inc. of PA 17.99 17.99 0.95 5.12 4.26 1.10 5.92 1.49 34.66 0.80
PBKB People's Bancshares of MA* 3.95 3.80 0.82 16.56 5.80 0.39 7.75 0.57 98.78 1.04
TSBSD Peoples Bancorp Inc of NJ* 17.20 15.51 1.21 7.14 1.98 0.87 5.10 0.64 63.09 0.86
PFDC Peoples Bancorp of Auburn IN 15.27 15.27 1.49 9.80 5.77 1.49 9.80 0.21 144.43 0.36
PBCT Peoples Bank, MHC of CT (40.1)* 8.68 8.63 1.18 13.87 3.79 0.68 8.00 0.66 166.94 1.76
PFFC Peoples Fin. Corp. of OH 18.85 18.85 0.96 5.10 3.58 0.95 5.01 NA NA 0.30
PHBK Peoples Heritage Fin Grp of ME* 6.99 5.25 1.25 16.38 5.47 1.24 16.25 0.91 99.98 1.26
PSFC Peoples Sidney Fin. Corp of OH 24.73 24.73 1.15 5.90 3.38 1.15 5.90 1.13 34.69 0.45
PERM Permanent Bancorp, Inc. of IN 10.00 9.88 0.62 6.56 3.79 0.61 6.46 0.70 70.95 0.97
PMFI Perpetual Midwest Fin. of IA(8) 8.92 8.92 0.49 5.66 3.27 0.43 5.03 0.30 255.13 0.86
PCBC Perry Co. Fin. Corp. of MO 19.23 19.23 1.08 5.70 4.55 1.08 5.70 0.01 277.78 0.17
PHFC Pittsburgh Home Fin Corp of PA 8.23 8.13 0.82 7.69 5.78 0.70 6.61 1.37 34.44 0.79
PFSL Pocahontas Bancorp of AR 13.19 13.19 0.75 5.66 4.67 0.75 5.66 NA NA NA
PTRS Potters Financial Corp of OH 8.97 8.97 1.00 11.18 6.31 0.99 11.00 0.17 NA 2.54
PHSB Ppls Home SB, MHC of PA (45.0) 13.14 13.14 0.77 7.20 2.83 0.73 6.83 0.36 164.84 1.32
PRBC Prestige Bancorp of PA 10.91 10.91 0.60 5.15 3.55 0.58 5.03 0.40 65.18 0.40
PFNC Progress Financial Corp. of PA 5.09 4.27 0.91 17.36 4.78 0.69 13.21 NA NA 1.19
PSBK Progressive Bank, Inc. of NY(8)* 8.88 8.05 0.98 11.46 5.27 0.96 11.21 0.76 142.41 1.70
PROV Provident Fin. Holdings of CA 11.57 11.57 0.77 5.74 4.38 0.40 3.01 NA NA 0.96
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 13.30 13.30 1.21 9.32 2.20 1.06 8.14 0.68 54.63 0.46
PLSK Pulaski SB, MHC of NJ (46.0) 11.94 11.94 0.63 6.25 2.79 0.63 6.25 0.73 67.79 0.93
PULS Pulse Bancorp of S. River NJ 8.20 8.20 1.09 13.62 6.65 1.11 13.84 0.60 61.50 1.41
QCFB QCF Bancorp of Virginia MN 17.57 17.57 1.63 9.27 5.95 1.63 9.27 0.39 214.67 1.95
QCBC Quaker City Bancorp of CA 8.63 8.63 0.73 8.40 5.16 0.70 8.07 1.25 74.34 1.17
QCSB Queens County Bancorp of NY* 10.64 10.64 1.59 12.46 3.61 1.56 12.30 0.55 106.38 0.67
RARB Raritan Bancorp of Raritan NJ* 7.56 7.45 1.01 13.22 5.74 0.99 12.98 0.23 349.74 1.23
REDF RedFed Bancorp of Redlands CA(8) 8.34 8.31 1.11 13.42 7.00 1.14 13.80 1.81 NA NA
RELY Reliance Bancorp, Inc. of NY 8.55 5.82 0.90 10.87 4.88 0.95 11.45 NA NA 0.90
RELI Reliance Bancshares Inc of WI 50.08 50.08 1.08 2.21 2.40 1.13 2.31 NA NA 0.60
RCBK Richmond County Fin Corp of NY 25.65 25.65 1.22 4.75 2.84 1.22 4.75 NA NA 1.17
RIVR River Valley Bancorp of IN 13.13 12.95 0.94 7.53 5.43 0.78 6.30 0.58 145.00 1.03
RVSB Riverview Bancorp of WA 22.72 21.92 1.36 8.59 2.95 1.31 8.27 0.19 186.36 0.60
RSLN Roslyn Bancorp, Inc. of NY* 17.45 17.37 1.02 5.36 2.60 1.26 6.60 0.25 264.59 2.23
SCCB S. Carolina Comm. Bnshrs of SC 20.69 20.69 1.00 4.02 3.72 1.00 4.02 1.53 42.40 0.81
SBFL SB Fngr Lakes MHC of NY (33.1) 8.75 8.75 0.39 4.11 1.20 0.34 3.60 0.27 170.49 0.94
SFED SFS Bancorp of Schenectady NY 12.29 12.29 0.62 4.91 3.52 0.60 4.74 NA NA NA
SGVB SGV Bancorp of W. Covina CA 7.55 7.44 0.33 4.42 3.04 0.39 5.12 1.23 26.58 0.42
SHSB SHS Bancorp, Inc. of PA 13.56 13.56 0.75 5.58 4.56 0.75 5.58 NA NA 0.78
SISB SIS Bancorp, Inc. of MA* 7.24 7.24 0.65 8.86 3.26 0.88 12.10 0.43 300.83 2.70
SWCB Sandwich Bancorp of MA(8)* 8.10 7.82 0.98 12.12 3.91 0.96 11.83 0.83 95.55 1.11
SFSL Security First Corp. of OH(8) 9.36 9.22 1.38 14.76 4.81 1.38 14.76 0.43 176.70 0.84
SKAN Skaneateles Bancorp Inc of NY* 6.90 6.71 0.67 9.76 6.09 0.65 9.51 2.01 49.89 1.21
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- --------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
NTMG Nutmeg FS&LA of CT 16.42 175.72 10.32 175.72 27.50 0.20 1.82 29.85
OHSL OHSL Financial Corp. of OH 20.68 160.29 17.46 160.29 21.75 0.44 2.63 54.32
OCFC Ocean Fin. Corp. of NJ 21.21 137.52 19.62 137.52 21.33 0.96 2.54 53.93
OTFC Oregon Trail Fin. Corp. of OR 27.59 163.35 20.41 163.35 27.16 0.20 1.15 31.75
OFCP Ottawa Financial Corp. of MI 20.46 202.23 17.43 248.59 21.53 0.40 1.38 28.17
PFFB PFF Bancorp of Pomona CA 25.00 132.00 12.80 133.27 26.27 0.00 0.00 0.00
PSFI PS Financial of Chicago IL NM 130.16 34.21 130.16 19.08 0.48 3.31 NM
PVFC PVF Capital Corp. of OH 14.54 254.65 18.54 254.65 15.44 0.00 0.00 0.00
PBCI Pamrapo Bancorp, Inc. of NJ 16.29 169.89 21.89 170.99 17.06 1.12 3.86 62.92
PFED Park Bancorp of Chicago IL 28.98 115.59 25.22 115.59 26.94 0.00 0.00 0.00
PVSA Parkvale Financial Corp of PA 15.53 204.34 16.17 205.52 15.53 0.60 1.88 29.13
PBHC Pathfinder BC MHC of NY (46.1)* NM 288.12 34.53 339.94 NM 0.20 0.83 30.77
PEEK Peekskill Fin. Corp. of NY 26.14 111.94 28.25 111.94 26.14 0.36 2.09 54.55
PFSB PennFed Fin. Services of NJ 16.05 167.39 11.64 195.29 16.19 0.14 0.79 12.61
PWBK Pennwood Bancorp, Inc. of PA 23.49 126.54 22.76 126.54 20.31 0.36 1.85 43.37
PBKB People's Bancshares of MA* 17.23 293.45 11.59 305.11 NM 0.52 1.93 33.33
TSBSD Peoples Bancorp Inc of NJ* NM 349.67 60.16 NM NM 0.10 0.94 47.62
PFDC Peoples Bancorp of Auburn IN 17.32 165.41 25.25 165.41 17.32 0.44 2.00 34.65
PBCT Peoples Bank, MHC of CT (40.1)* 26.39 342.96 29.75 344.83 NM 0.84 2.21 58.33
PFFC Peoples Fin. Corp. of OH 27.91 142.48 26.86 142.48 28.42 0.60 3.84 NM
PHBK Peoples Heritage Fin Grp of ME* 18.28 282.66 19.76 NM 18.42 0.88 1.82 33.33
PSFC Peoples Sidney Fin. Corp of OH 29.59 128.67 31.82 128.67 29.59 0.28 1.48 43.75
PERM Permanent Bancorp, Inc. of IN 26.40 166.63 16.66 168.66 26.82 0.22 1.32 34.92
PMFI Perpetual Midwest Fin. of IA(8) NM 168.95 15.07 168.95 NM 0.30 0.99 30.30
PCBC Perry Co. Fin. Corp. of MO 21.96 118.99 22.88 118.99 21.96 0.50 2.13 46.73
PHFC Pittsburgh Home Fin Corp of PA 17.29 147.76 12.16 149.56 20.11 0.24 1.30 22.43
PFSL Pocahontas Bancorp of AR 21.40 121.06 15.97 121.06 21.40 0.90 8.95 NM
PTRS Potters Financial Corp of OH 15.85 172.41 15.47 172.41 16.12 0.24 1.23 19.51
PHSB Ppls Home SB, MHC of PA (45.0) NM 201.35 26.47 201.35 NM 0.24 1.15 40.68
PRBC Prestige Bancorp of PA 28.20 141.98 15.49 141.98 28.87 0.20 0.82 23.26
PFNC Progress Financial Corp. of PA 20.92 321.91 16.39 NM 27.50 0.12 0.62 13.04
PSBK Progressive Bank, Inc. of NY(8)* 18.97 208.85 18.55 230.35 19.41 0.80 1.88 35.71
PROV Provident Fin. Holdings of CA 22.86 133.93 15.50 133.93 NM 0.00 0.00 0.00
PULB Pulaski Bk,SB MHC of MO (29.8)(8) NM NM 54.64 NM NM 1.10 2.35 NM
PLSK Pulaski SB, MHC of NJ (46.0) NM 184.65 22.04 184.65 NM 0.30 1.58 56.60
PULS Pulse Bancorp of S. River NJ 15.03 193.53 15.86 193.53 14.78 0.80 2.91 43.72
QCFB QCF Bancorp of Virginia MN 16.81 155.85 27.38 155.85 16.81 0.00 0.00 0.00
QCBC Quaker City Bancorp of CA 19.39 156.28 13.48 156.28 20.19 0.00 0.00 0.00
QCSB Queens County Bancorp of NY* 27.72 NM 40.26 NM 28.08 1.00 2.31 64.10
RARB Raritan Bancorp of Raritan NJ* 17.42 220.81 16.70 224.08 17.75 0.60 2.09 36.36
REDF RedFed Bancorp of Redlands CA(8) 14.28 176.58 14.73 177.20 13.88 0.00 0.00 0.00
RELY Reliance Bancorp, Inc. of NY 20.48 193.18 16.53 283.71 19.44 0.72 1.87 38.30
RELI Reliance Bancshares Inc of WI NM 92.99 46.57 92.99 NM 0.00 0.00 0.00
RCBK Richmond County Fin Corp of NY NM 167.51 42.96 167.51 NM 0.20 1.01 35.71
RIVR River Valley Bancorp of IN 18.41 133.93 17.58 135.81 22.01 0.20 0.99 18.18
RVSB Riverview Bancorp of WA NM 188.57 42.84 195.41 NM 0.14 0.76 25.93
RSLN Roslyn Bancorp, Inc. of NY* NM 204.50 35.68 205.34 NM 0.32 1.07 41.03
SCCB S. Carolina Comm. Bnshrs of SC 26.90 132.81 27.48 132.81 26.90 0.64 3.01 NM
SBFL SB Fngr Lakes MHC of NY (33.1) NM 329.49 28.82 329.49 NM 0.24 1.20 NM
SFED SFS Bancorp of Schenectady NY 28.41 140.92 17.31 140.92 29.41 0.32 1.28 36.36
SGVB SGV Bancorp of W. Covina CA NM 142.80 10.78 144.90 28.41 0.00 0.00 0.00
SHSB SHS Bancorp, Inc. of PA 21.91 121.16 16.43 121.16 21.91 0.00 0.00 0.00
SISB SIS Bancorp, Inc. of MA* NM 233.33 16.89 233.33 22.46 0.64 1.52 46.72
SWCB Sandwich Bancorp of MA(8)* 25.60 295.89 23.96 306.51 26.23 1.40 2.19 56.00
SFSL Security First Corp. of OH(8) 20.80 295.35 27.64 299.64 20.80 0.32 1.29 26.89
SKAN Skaneateles Bancorp Inc of NY* 16.42 153.87 10.62 158.12 16.86 0.28 1.48 24.35
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of May 8, 1998
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SOBI Sobieski Bancorp of S. Bend IN 14.39 14.39 0.60 3.91 3.40 0.60 3.91 0.26 87.34 0.29
SOSA Somerset Savings Bank of MA(8)* 6.63 6.63 1.15 18.46 7.02 1.12 17.95 4.58 32.38 1.90
SSFC South Street Fin. Corp. of NC* 14.96 14.96 0.85 3.61 4.24 0.87 3.69 0.22 88.30 0.39
SBAN SouthBanc Shares Inc. of SC(8) 21.85 21.85 0.94 4.29 3.37 0.94 4.29 0.53 126.88 1.02
SCBS Southern Commun. Bncshrs of AL 20.42 20.42 1.15 5.98 4.18 1.15 5.98 2.34 48.64 1.73
SMBC Southern Missouri Bncrp of MO 16.60 16.60 0.85 5.22 4.15 0.81 4.98 0.83 58.44 0.66
SWBI Southwest Bancshares of IL(8) 11.95 11.95 1.09 9.85 4.49 1.10 9.91 0.16 122.22 0.28
SVRN Sovereign Bancorp, Inc. of PA 4.76 3.95 0.48 11.17 2.29 0.66 15.32 NA NA 1.05
STFR St. Francis Cap. Corp. of WI 8.27 7.38 0.78 9.61 5.48 0.75 9.21 NA NA 0.95
SPBC St. Paul Bancorp, Inc. of IL 9.17 9.15 1.09 12.24 5.75 1.09 12.24 0.20 367.36 1.02
SFFC StateFed Financial Corp. of IA 17.66 17.66 1.27 7.20 4.83 1.27 7.20 NA NA NA
SFIN Statewide Fin. Corp. of NJ 9.61 9.59 0.83 8.57 5.28 0.82 8.50 0.44 96.26 0.84
STSA Sterling Financial Corp. of WA 5.48 5.07 0.51 10.91 4.20 0.46 9.95 0.72 68.74 0.83
SFSB SuburbFed Fin. Corp. of IL(8) 6.73 6.71 0.66 10.06 4.63 0.53 8.09 1.00 19.60 0.30
ROSE T R Financial Corp. of NY* 6.27 6.27 0.98 15.70 5.66 0.87 14.04 0.57 65.67 0.69
THRD TF Financial Corp. of PA 8.39 7.00 0.77 7.25 5.61 0.66 6.16 0.30 106.83 0.84
TPNZ Tappan Zee Fin., Inc. of NY(8) 17.16 17.16 0.85 4.86 3.43 0.84 4.79 1.39 39.34 1.18
TSBK Timberland Bancorp of WA 30.46 30.46 1.85 6.06 4.11 1.85 6.06 3.07 19.72 0.94
TRIC Tri-County Bancorp of WY 15.37 15.37 1.02 6.67 5.05 1.05 6.85 NA NA 0.98
TWIN Twin City Bancorp, Inc. of TN 12.89 12.89 1.01 7.87 5.86 0.83 6.48 0.09 131.58 0.16
USAB USABancshares, Inc of PA* 6.01 5.92 -0.41 -4.39 -2.30 -0.18 -1.98 0.51 125.66 1.00
UCBC Union Community Bancorp of IN 32.48 32.48 1.26 5.92 2.52 1.26 5.92 0.07 257.14 0.32
UFRM United FSB of Rocky Mount NC(8) 7.23 7.23 0.64 8.61 3.01 0.42 5.63 0.64 137.38 1.02
UBMT United Fin. Corp. of MT 25.61 25.61 1.31 5.53 3.86 1.31 5.53 0.23 133.33 0.80
UTBI United Tenn. Bancshares of TN 24.48 24.48 1.25 5.10 4.29 1.25 5.10 0.93 74.91 1.29
VABF Va. Beach Fed. Fin. Corp of VA 7.16 7.16 0.67 9.65 4.40 0.54 7.76 1.13 61.96 0.92
WHGB WHG Bancshares of MD 19.66 19.66 0.76 3.59 3.04 0.77 3.65 0.95 19.59 0.24
WSFS WSFS Financial Corp. of DE* 5.73 5.69 1.11 20.40 6.01 1.10 20.25 1.38 117.99 3.31
WVFC WVS Financial Corp. of PA 10.66 10.66 1.31 11.05 5.26 1.32 11.15 0.20 310.17 1.14
WRNB Warren Bancorp of Peabody MA* 10.79 10.79 2.01 19.49 6.81 1.79 17.33 1.01 107.31 1.63
WSBI Warwick Community Bncrp of NY* 23.76 23.76 1.04 4.37 3.19 1.04 4.37 0.52 75.47 0.79
WFSL Washington Federal, Inc. of WA 12.90 11.90 1.87 15.50 7.42 1.85 15.35 0.75 55.29 0.56
WAMU Washington Mutual, Inc. of WA* 5.35 4.99 0.50 9.55 1.83 0.92 17.76 0.78 83.87 0.97
WYNE Wayne Bancorp, Inc. of NJ 12.57 12.57 0.76 5.59 3.03 0.76 5.59 0.90 91.95 1.18
WAYN Wayne Svgs Bks MHC of OH (47.8 9.48 9.48 0.75 8.07 2.80 0.70 7.49 NA NA NA
WCFB Wbstr Cty FSB MHC of IA (45.2) 23.49 23.49 1.46 6.23 3.11 1.46 6.23 0.12 353.21 0.70
WBST Webster Financial Corp. of CT 5.44 4.75 0.54 10.34 3.52 0.82 15.74 0.59 114.77 1.33
WEFC Wells Fin. Corp. of Wells MN 14.71 14.71 1.09 7.67 5.26 1.07 7.46 NA NA NA
WCBI WestCo Bancorp, Inc. of IL 15.37 15.37 1.51 9.79 6.53 1.41 9.12 0.45 62.71 0.37
WSTR WesterFed Fin. Corp. of MT 10.40 8.45 0.81 7.26 5.06 0.78 7.04 0.64 76.69 0.75
WOFC Western Ohio Fin. Corp. of OH 14.68 13.71 0.04 0.26 0.23 0.08 0.61 0.91 115.97 1.44
WEHO Westwood Hmstd Fin Corp of OH 22.45 22.45 0.67 2.33 2.11 1.05 3.68 0.12 178.06 0.23
FFWD Wood Bancorp of OH 12.80 12.80 1.44 11.45 4.81 1.30 10.30 0.35 110.31 0.46
YFCB Yonkers Fin. Corp. of NY 13.54 13.54 1.05 7.10 5.35 1.03 6.96 0.41 87.23 0.77
YFED York Financial Corp. of PA 8.86 8.86 0.96 11.17 5.21 0.80 9.29 2.37 28.49 0.81
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SOBI Sobieski Bancorp of S. Bend IN 29.43 116.01 16.69 116.01 29.43 0.32 1.67 49.23
SOSA Somerset Savings Bank of MA(8)* 14.25 239.72 15.90 239.72 14.66 0.00 0.00 0.00
SSFC South Street Fin. Corp. of NC* 23.56 138.39 20.70 138.39 23.02 0.40 3.95 NM
SBAN SouthBanc Shares Inc. of SC(8) 29.63 127.16 27.78 127.16 29.63 1.40 6.47 NM
SCBS Southern Commun. Bncshrs of AL 23.93 131.58 26.87 131.58 23.93 0.00 0.00 0.00
SMBC Southern Missouri Bncrp of MO 24.12 124.47 20.66 124.47 25.31 0.50 2.44 58.82
SWBI Southwest Bancshares of IL(8) 22.28 207.41 24.79 207.41 22.13 0.80 2.44 54.42
SVRN Sovereign Bancorp, Inc. of PA NM NM 17.44 NM NM 0.08 0.43 18.60
STFR St. Francis Cap. Corp. of WI 18.25 170.95 14.14 191.71 19.05 0.56 1.29 23.63
SPBC St. Paul Bancorp, Inc. of IL 17.40 204.27 18.73 204.77 17.40 0.40 1.61 27.97
SFFC StateFed Financial Corp. of IA 20.71 144.86 25.58 144.86 20.71 0.20 1.38 28.57
SFIN Statewide Fin. Corp. of NJ 18.95 163.31 15.69 163.54 19.11 0.44 1.87 35.48
STSA Sterling Financial Corp. of WA 23.80 200.37 10.98 216.69 26.09 0.00 0.00 0.00
SFSB SuburbFed Fin. Corp. of IL(8) 21.59 204.48 13.76 205.01 26.84 0.32 0.67 14.55
ROSE T R Financial Corp. of NY* 17.68 254.55 15.96 254.55 19.77 0.72 2.06 36.36
THRD TF Financial Corp. of PA 17.81 173.46 14.56 207.86 20.96 0.48 1.76 31.37
TPNZ Tappan Zee Fin., Inc. of NY(8) 29.11 140.94 24.18 140.94 29.54 0.28 1.37 40.00
TSBK Timberland Bancorp of WA 24.33 147.42 44.90 147.42 24.33 0.24 1.32 32.00
TRIC Tri-County Bancorp of WY 19.81 128.69 19.77 128.69 19.30 0.40 2.62 51.95
TWIN Twin City Bancorp, Inc. of TN 17.06 131.34 16.93 131.34 20.71 0.40 2.76 47.06
USAB USABancshares, Inc of PA* NM 184.17 11.06 186.98 NM 0.00 0.00 NM
UCBC Union Community Bancorp of IN NM 109.93 35.71 109.93 NM 0.30 1.94 NM
UFRM United FSB of Rocky Mount NC(8) NM 270.77 19.58 270.77 NM 0.24 1.32 43.64
UBMT United Fin. Corp. of MT 25.90 142.61 36.53 142.61 25.90 1.00 3.48 NM
UTBI United Tenn. Bancshares of TN 23.30 118.76 29.08 118.76 23.30 1.20 7.80 NM
VABF Va. Beach Fed. Fin. Corp of VA 22.72 210.27 15.06 210.27 28.23 0.24 1.29 29.27
WHGB WHG Bancshares of MD NM 123.78 24.33 123.78 NM 0.32 1.80 59.26
WSFS WSFS Financial Corp. of DE* 16.65 313.36 17.94 315.17 16.78 0.12 0.55 9.16
WVFC WVS Financial Corp. of PA 19.00 227.24 24.23 227.24 18.81 1.20 3.07 58.25
WRNB Warren Bancorp of Peabody MA* 14.67 266.79 28.80 266.79 16.50 0.72 2.58 37.89
WSBI Warwick Community Bncrp of NY* NM 136.90 32.53 136.90 NM 0.00 0.00 0.00
WFSL Washington Federal, Inc. of WA 13.47 197.37 25.45 213.96 13.60 0.88 3.17 42.72
WAMU Washington Mutual, Inc. of WA* NM 347.14 18.58 NM 29.36 1.20 1.72 NM
WYNE Wayne Bancorp, Inc. of NJ NM 189.80 23.85 189.80 NM 0.20 0.63 20.62
WAYN Wayne Svgs Bks MHC of OH (47.8 NM 280.11 26.55 280.11 NM 0.62 2.07 73.81
WCFB Wbstr Cty FSB MHC of IA (45.2) NM 197.35 46.36 197.35 NM 0.80 3.83 NM
WBST Webster Financial Corp. of CT 28.43 234.51 12.77 268.83 18.68 0.44 1.35 38.26
WEFC Wells Fin. Corp. of Wells MN 19.03 142.10 20.91 142.10 19.55 0.60 2.79 53.10
WCBI WestCo Bancorp, Inc. of IL 15.31 148.25 22.79 148.25 16.43 0.68 2.32 35.60
WSTR WesterFed Fin. Corp. of MT 19.76 133.25 13.86 163.94 20.39 0.50 1.95 38.46
WOFC Western Ohio Fin. Corp. of OH NM 114.74 16.84 122.78 NM 1.00 3.76 NM
WEHO Westwood Hmstd Fin Corp of OH NM 138.58 31.11 138.58 29.98 0.36 2.45 NM
FFWD Wood Bancorp of OH 20.79 230.96 29.57 230.96 23.13 0.34 1.84 38.20
YFCB Yonkers Fin. Corp. of NY 18.69 129.19 17.50 129.19 19.06 0.28 1.45 27.18
YFED York Financial Corp. of PA 19.20 204.43 18.12 204.43 23.08 0.52 2.17 41.60
</TABLE>
<PAGE>
EXHIBIT IV-2
Historical Stock Price Indices
<PAGE>
Exhibit IV-2
Historical Stock Price Indices(1)
<TABLE>
<CAPTION>
SNL SNL
NASDAQ Thrift Bank
Year/Qtr. Ended DJIA S&P 500 Composite Index Index
--------------- ---- ------- --------- ----- -----
<S> <C> <C> <C> <C> <C>
1991: Quarter 1 2881.1 375.2 482.3 125.5 66.0
Quarter 2 2957.7 371.2 475.9 130.5 82.0
Quarter 3 3018.2 387.9 526.9 141.8 90.7
Quarter 4 3168.0 417.1 586.3 144.7 103.1
1992: Quarter 1 3235.5 403.7 603.8 157.0 113.3
Quarter 2 3318.5 408.1 563.6 173.3 119.7
Quarter 3 3271.7 417.8 583.3 167.0 117.1
Quarter 4 3301.1 435.7 677.0 201.1 136.7
1993: Quarter 1 3435.1 451.7 690.1 228.2 151.4
Quarter 2 3516.1 450.5 704.0 219.8 147.0
Quarter 3 3555.1 458.9 762.8 258.4 154.3
Quarter 4 3754.1 466.5 776.8 252.5 146.2
1994: Quarter 1 3625.1 445.8 743.5 241.6 143.1
Quarter 2 3625.0 444.3 706.0 269.6 152.6
Quarter 3 3843.2 462.6 764.3 279.7 149.2
Quarter 4 3834.4 459.3 752.0 244.7 137.6
1995: Quarter 1 4157.7 500.7 817.2 278.4 152.1
Quarter 2 4556.1 544.8 933.5 313.5 171.7
Quarter 3 4789.1 584.4 1,043.5 362.3 195.3
Quarter 4 5117.1 615.9 1,052.1 376.5 207.6
1996: Quarter 1 5587.1 645.5 1,101.4 382.1 225.1
Quarter 2 5654.6 670.6 1,185.0 387.2 224.7
Quarter 3 5882.2 687.3 1,226.9 429.3 249.2
Quarter 4 6442.5 737.0 1,280.7 483.6 280.1
1997: Quarter 1 6583.5 757.1 1,221.7 527.7 292.5
Quarter 2 7672.8 885.1 1,442.1 624.5 333.3
Quarter 3 7945.3 947.3 1,685.7 737.5 381.7
Quarter 4 7908.3 970.4 1,570.4 814.1 414.9
1998: Quarter 1 8799.8 1101.8 1,835.7 869.3 456.1
May 8, 1998 8906.4 1099.2 1,789.2 872.7 460.9
</TABLE>
(1) End of period data.
Sources: SNL Securities; Wall Street Journal.
<PAGE>
EXHIBIT IV-3
Historical Thrift Stock Indices
<PAGE>
ThriftINVESTOR
Index Values
<TABLE>
<CAPTION>
Index Values Percent Change Since
------------------------------------- --------------------------
04/30/98 1 Month YTD LTM 1 Month YTD LTM
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
All Pub. Traded Thrifts 882.1 869.3 814.1 537.2 1.46 8.35 64.19
MHC Index 1,263.7 1,252.7 1,179.9 587.7 0.88 7.10 115.04
Insurance Indices
- ---------------------------------------------------------------------------------------------------
SAIF Thrifts 827.9 815.9 764,4 484.2 1.48 8.30 70.99
BIF Thrifts 1,067,4 1,052.3 984.4 689.7 1.44 8.44 54.77
Stock Exchange Indices
- ---------------------------------------------------------------------------------------------------
AMEX Thrifts 272.9 264.6 255.4 166.7 3.14 6.86 63.71
NYSE Thrifts 566.1 549.2 521.3 314.7 3.09 8.59 79.86
OTC Thrifts 987.3 979.4 911.5 622.5 0.81 8.31 58.61
Geographic Indices
- ---------------------------------------------------------------------------------------------------
Mid-Atlantic Thrifts 1,911.2 1,833.2 1,735.2 1,077.4 4.25 10.15 77.40
Midwestern Thrifts 1,971.0 1,948.7 1,832.9 1,234.5 1.14 7.53 59.65
New England Thrifts 821.0 809.8 778.3 458.4 1.37 5.48 79.10
Southeastern 786.9 799.9 776.0 499.4 -1.63 1.40 57.57
Southwestern Thrifts 573.4 558.6 533.5 347.5 2.65 7.47 64.98
Western Thrifts 850.3 848.8 778.8 539.7 0.18 9.17 57.55
Asset Size Indices
- ---------------------------------------------------------------------------------------------------
Less than $250M 915.8 907.7 869.9 639.4 0.89 5.27 43.21
$250M to $500M 1,393.0 1,371.7 1,312.3 865.2 1.56 6.15 61.00
$500M to $1B 902.6 892.2 846.8 558.9 1.16 6.58 61.49
$1B to $5B 1,051.7 1,022.5 956.8 593.8 2.86 9.92 77.12
Over $5B 555.5 550.0 512.3 344.1 1.00 8.44 61.45
Comparative Indices
- ---------------------------------------------------------------------------------------------------
Dow Jones Industrials 9,063.4 8,799.6 7,908.3 7,009.0 3.00 14.61 29.31
S&P 1,111.8 1,101.8 970.4 801.3 0.91 14.56 38.74
</TABLE>
All SNL indices are market-value weighted; i.e., an institution's effect on an
index is proportionate to that institution's market capitalization. All SNL
thrift indices, except for the SNL MHC Index, began at 100 on March 30, 1984.
The SNL MHC Index began at 201.082 on Dec. 31, 1992, the level of the SNL Thrift
Index on that date. On March 30, 1984, the S&P 500 closed at 159.2 and the Dow
Jones Industrials stood at 1164.9.
Mid-Atlantic: DE, DC, MD, NJ, NY, PA, PR; Midwest: IA, IL, IN, KS, KY, MI, MN,
MO, ND, NE, OH, SD, WI; New England: CT, MA, ME, NH, RI, VT; Southeast: AL, AR,
FL, GA, MS, NC, SC, TN, VA, WV; Southwest: CO, LA, NM, OK, TX, UT; West: AZ, AK,
CA, HI, ID, MT, NV, OR, WA, WY
<PAGE>
EXHIBIT IV-4
Market Area Acquisition Activity
<PAGE>
Exhibit IV-4
Massachusetts Thrift Merger and Acquisition Activity
1997 to Present
<TABLE>
<CAPTION>
Seller Financials at Announcement
------------------------------------------------------
Total Total YTD YTD NPAs Rsrvs/
Annd Comp Assets Equity ROAA ROAE Assets NPLs
Date Date Buyer ST Seller ST ($000) (%) (%) (%) (%) (%)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/10/97 Pending UST Corp MA Somerset Svgs Bk MA 520,339 6.60 1.15 18.72 5.91 31.60
12/15/97 Pending UST Corp MA Affiliated Cmty Bncp MA 1,128,579 9.71 1.10 11.22 0.34 218.71
02/02/98 Pending 1855 Bancorp MA Sandwich Bancorp MA 518,697 7.84 0.98 12.38 0.56 176.50
09/10/96 05/01/97 Berkshire Cnty SB MA Great Barrington SB MA 274,165 13.93 1.49 10.26 0.63 122.04
11/01/96 02/21/97 Bay State FSB MA Union FS&LA MA 38,797 7.45 -0.16 -2.23 0.59 73.01
05/28/97 10/31/97 South Weymouth SB MA Weymouth SB MA 173,557 8.24 0.62 7.73 0.45 190.73
08/30/96 01/03/97 UST Corp MA Walden Bancorp, Inc. MA 1,051,743 8.07 1.14 12.18 0.91 150.25
11/04/96 03/04/97 Citizens Fin'l Group RI Grove Bank MA 598,507 6.49 0.91 14.35 0.58 128.33
12/15/97 01/01/98 Country Bank for Sav MA Leicester Savings Bk MA 31,249 3.65 -3.44 -74.83 5.75 51.12
10/23/97 02/27/98 Eastern Bank Corp MA Emerald Isle Bncp MA 443,503 6.99 0.88 12.59 0.17 416.26
02/26/97 07/22/97 MASSBANK Corp MA Glendale Co-Op Bank MA 36,947 16.23 0.75 4.73 0.00 NA
08/27/96 01/02/97 Grove Bank MA Greater Boston Bk MA 150,167 7.76 0.37 4.72 1.49 259.68
Average 413,854 8.58 0.48 2.65 1.45 165.29
Median 358,834 7.80 0.90 10.74 0.59 150.25
<CAPTION>
Deal Terms and Pricing at Announcement
-------------------------------------------------------------
Deal Deal Deal Deal Pr/ Deal Pr/ Deal Pr/ TgBkPr/
Annd Comp Value Pr/Shr Consid. Pr/Bk Tg Bk 4-Qtr Assets CoreDp
Date Date Buyer ST Seller ST ($M) ($) Type (%) (%) EPS (x) (%) (%)
- -------------------------------------------------------------------- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/10/97 Pending UST Corp MA Somerset Svgs Bk MA 95.9 5.63 Stock 273.25 273.25 18.16 18.43 15.19
12/15/97 Pending UST Corp MA Affiliated Cmty Bncp MA 277.0 39.92 Stock 231.02 232.23 22.94 24.54 26.57
02/02/98 Pending 1855 Bancorp MA Sandwich Bancorp MA 132.5 64.00 Cash 295.89 306.51 26.12 25.54 24.38
09/10/96 05/01/97 Berkshire Cnty SB MA Great Barrington SB MA NA NA NA NA NA NA NA NA
11/01/96 02/21/97 Bay State FSB MA Union FS&LA MA NA NA NA NA NA NA NA NA
05/28/97 10/31/97 South Weymouth SB MA Weymouth SB MA NA NA NA NA NA NA NA NA
08/30/96 01/03/97 UST Corp MA Walden Bancorp, Inc. MA 165.9 30.88 Stock 168.90 196.16 16.16 15.77 11.38
11/04/96 03/04/97 Citizens Fin'l Group RI Grove Bank MA 91.8 51.00 Cash NA NA NA NA NA
12/15/97 01/01/98 Country Bank for Sav MA Leicester Savings Bk MA NA NA NA NA NA NA NA NA
10/23/97 02/27/98 Eastern Bank Corp MA Emerald Isle Bncp MA 76.7 33.00 Cash 239.48 239.48 21.02 17.29 14.66
02/26/97 07/22/97 MASSBANK Corp MA Glendale Co-Op Bank MA 7.2 28.00 Cash 115.46 115.46 24.56 19.49 4.22
08/27/96 01/02/97 Grove Bank MA Greater Boston Bk MA 18.0 27.56 Mix 138.62 138.62 9.33 10.77 5.17
Average 108.1 35.00 208.95 214.53 19.76 18.83 14.51
Median 93.8 31.94 231.02 232.23 21.02 18.43 14.66
</TABLE>
Source: SNL Securities, LC.
<PAGE>
EXHIBIT IV-5
Directors and Senior Management Summary Resumes
<PAGE>
SUMMARY DESCRIPTIONS OF DIRECTORS
Manuel G. Camacho is a dentist in private practice in New Bedford,
Massachusetts. He is semi-retired.
David P. Cameron was President of Morse Cutting Tools in New Bedford,
Massachusetts until his retirement.
Kevin G. Champagne has served as President and Chief Executive Officer of
1855 Bancorp since its formation in 1994 and as President and Chief Executive
Officer of Compass since 1994. Prior to 1994, Mr. Champagne was Executive Vice
President/Retail Banking of Compass. He joined Compass' Management Training
Program in 1971.
Howard C. Dyer, Jr. was General Manager, New Bedford Storage Warehouse,
Bedford, Massachusetts, until his retirement.
Glen F. Johnson was a General Manager, Goodyear Tire and Rubber, New
Bedford, Massachusetts, until his retirement.
Thornton P. Klaren, Jr. has previously worked in sales. He is semi-retired.
Louis J. LeBlanc is an attorney in private practice in New Bedford,
Massachusetts.
Richard S. Marchisio is Chairman of the Board of 1855 Bancorp and Compass,
positions he has held since 1994. He was President of Compass from 1984 until
his retirement in 1990. Mr. Marchisio first joined Compass in 1946.
A. William Munro is President of Munro Distributing, Inc., Fall River,
Massachusetts.
Carl Ribeiro is President, Luzo Foodservice Corp., New Bedford,
Massachusetts.
Joseph H. Silverstein was the President of Silverstein's Family Store, a
retail clothing store located in New Bedford, Massachusetts, until his
retirement.
Gerald H. Silvia is the owner of Americana Travel, a travel agency located
in Fall River, Massachusetts.
Upon consummation of the Merger, Mr. Legate (the President and Chief
Executive Officer of Sandwich Bancorp) and two other directors of Sandwich
Bancorp selected by 1855 Bancorp will be appointed as directors of 1855 Bancorp.
Mr. Legate will also be appointed as a director and a member of the Executive
Committee of Compass. Set forth below is certain biographical information with
respect to Mr. Legate.
Frederic D. Legate has served Sandwich Bank in various capacities since
1977 and was appointed its President and Chief Executive Officer in 1981. Mr.
Legate became President and Chief Executive Officer of Sandwich Bancorp, Inc.
upon its formation in 1997. Mr. Legate plans to retire as an executive officer
following consummation of the Merger.
<PAGE>
SUMMARY DESCRIPTIONS OF SENIOR MANAGEMENT
Kevin G. Champagne has served as President and Chief Executive Officer of
1855 Bancorp since its formation in 1994 and as President and Chief Executive
Officer of Compass since 1994. Prior to 1994, Mr. Champagne was Executive Vice
President/Retail Banking of Compass. He joined Compass' Management Training
Program in 1971. Mr. Champagne is 48 years old.
Arthur W. Short served as Treasurer of 1855 Bancorp since its formation in
1994 until 1997. He currently serves as Executive Vice President of Compass, a
position he has held since 1993, and as Chief Operating Officer of Compass, a
position he has held since 1997. Prior to 1993, Mr. Short served as Senior Vice
President/Treasurer and Chief Financial Officer of Compass. He joined Compass in
1981. Mr. Short is 57 years old.
John D. Kelleher has served as Executive Vice President of Compass since
1993 and has headed the Lending Division since 1984. Mr. Kelleher joined
Compass' Management Training Program in 1971. Mr. Kelleher is 52 years old.
James E. Lambert has served as Executive Vice President of Compass since
1994. Prior to joining Compass in 1990, Mr. Lambert served as President of
Martha's Vineyard National Bank, which merged with Compass in 1994. Mr. Lambert
is 53 years old.
Francis S. Mascianica, Jr. has served as Senior Vice President/Treasurer
and Chief Financial Officer of Compass since 1997. Mr. Mascianica has held
various positions with Compass since he joined the Bank in 1981. He is 50 years
old.
Carolyn A. Belanger has served as Senior Vice President and head of the
Retail Banking Division of Compass since 1994. Ms. Belanger has held various
positions with Compass since she joined the Bank in 1966. She is 49 years old.
William D. Rigby has served as Senior Vice President since 1994 and Manager
of the Consumer Lending Department of Compass since 1985, when he joined
Compass. He is 50 years old.
Carl W. Taber has served as Senior Vice President since 1993 and head of
Mortgage Lending of Compass since 1984. Mr. Taber joined Compass' Management
Training Program in 1975. He is 44 years old.
Robert J. Camara has served as Senior Vice President and Loan Servicing
Manager of Compass since 1997. He joined Compass in 1987 as Assistant Vice
President and Auditor and became Vice President and Loan Servicing Manager in
1990. Mr. Camara is 41 years old.
<PAGE>
EXHIBIT IV-6
Pro Forma Analysis Sheet
<PAGE>
PRO FORMA ANALYSIS SHEET
Compass Bank for Savings
Prices as of May 8, 1998
Assumes a 4.7407 Exchange Ratio for SWCB Shares
<TABLE>
<CAPTION>
All Savings
Peer Group Massachusetts Companies Institutions
Subject ------------------- ----------------------- ------------
Price Multiple Symbol @ Midpoint(1) Mean Median Mean Median Mean
- -------------- ------ ------------- ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio = P/E 15.53x 16.84x 17.54x 17.33x 17.32x 20.32x
Price-core earnings ratio = P/CE 15.85x 17.82x 18.23x 18.81x 18.23x 21.38x
Price-book ratio = P/B 96.01% 191.46% 189.25% 193.10% 195.30% 172.79%
Price-tangible book ratio = P/TB 96.73% 198.23% 206.72% 198.30% 207.92% 176.65%
Price-assets ratio = P/A 19.92% 16.44% 16.99% 19.31% 18.07% 21.67%
<CAPTION>
Valuation Parameters
- --------------------
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $17,467,000 ESOP Stock Purchases (E) 8.00%(5)
Pre-Conversion Book Value (B) $145,680,000 Cost of ESOP Borrowings (S) 8.50%
Pre-Conv. Tang. Book Value (B) $142,742,000 ESOP Amortization (T) 20.00 years
Pre-Conversion Assets (A) $1,670,088,000 RRP Amount (M) 0.00%
Reinvestment Rate (2)(R) 3.22% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 2.89% SWCB Shares and Acct. Adj. (F) 1.76%
Tax rate (TAX) 40.00% Exchange Shares (SH) 32.10%
Tax Benefit (Z) 0
Percentage Sold (PCT) 100.00%
</TABLE>
Calculation of Pro Forma Value After Conversion
1. V = P/E * (Y) V = $383,100,592
----------------------------------------------------
1 - P/E * PCT * ((1-X-M-SH)*R -(1-TAX)*E*S - (1-TAX)*E/T - (1-TAX)*M/N)
2. V = P/B * (B+Z) V= $383,100,592
----------------------------------------------------
1 - P/B * PCT * (1-X-E-M-F-SH)
3. V= P/A * (A+Z) V= $383,100,592
----------------------------------------------------
1 - P/A * PCT * (1-X-E-M-F-SH)
<TABLE>
<CAPTION>
Shares Aggregate
Shares Sold to Price Per Gross Offering Exchange Shares Issued To Total Shares Market Value
Conclusion Public Share Proceeds Issued to SCWB Foundation Issued of Stock Issued
----------- ------ ----- -------------- -------------- ---------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum 24,650,000 10.00 $246,500,000 9,310,059 0 33,960,059 339,600,592
Midpoint 29,000,000 10.00 290,000,000 9,310,059 0 38,310,059 383,100,592
Maximum 33,350,000 10.00 333,500,000 9,310,059 0 42,660,059 426,600,592
Supermaximum 38,352,500 10.00 383,525,000 9,310,059 0 47,662,559 476,625,592
</TABLE>
- -----------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 5.37 percent, and a tax rate of
40.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) ESOP loan will be funded by a third party loan.
(5) ESOP amortizes over 20 years; amortization expenses tax effected at 40.00
percent.
<PAGE>
PRO FORMA ANALYSIS SHEET
Compass Bank for Savings
Prices as of May 8, 1998
Assumes a 6.400 Exchange Ratio for SWCB Shares
<TABLE>
<CAPTION>
All Savings
Peer Group Massachusetts Companies Institutions
Subject -------------------- ----------------------- ------------
Price Multiple Symbol @ Midpoint(1) Mean Median Mean Median Mean
-------------- ------ ------------- ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio = P/E 16.85x 16.84x 17.54x 17.33x 17.32x 20.32x
Price-core earnings ratio = P/CE 15.85x 17.82x 18.23x 18.81x 18.23x 21.38x
Price-book ratio = P/B 104.12% 191.46% 189.25% 193.10% 195.30% 172.79%
Price-tangible book ratio = P/TB 104.89% 198.23% 206.72% 198.30% 207.92% 176.65%
Price-assets ratio = P/A 21.60% 16.44% 16.99% 19.31% 18.07% 21.67%
<CAPTION>
Valuation Parameters
--------------------
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $17,467,000 ESOP Stock Purchases (E) 8.00%(5)
Pre-Conversion Book Value (B) $145,680,000 Cost of ESOP Borrowings (S) 8.50%
Pre-Conv. Tang. Book Value (B) $142,742,000 ESOP Amortization (T) 20.00 years
Pre-Conversion Assets (A) $1,670,088,000 RRP Amount (M) 0.00%
Reinvestment Rate (2)(R) 3.22% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 2.89% SWCB Shares and Acct. Adj. (F) 1.76%
Tax rate (TAX) 40.00% Exchange Shares (SH) 43.25%
Tax Benefit (Z) 0
Percentage Sold (PCT) 100.00%
</TABLE>
Calculation of Pro Forma Value After Conversion
<TABLE>
<S> <C> <C> <C>
1. V= P/E * (Y) V= $415,436,728
--------------------------------------------------------------------------
1 - P/E * PCT * ((1-X-M-SH)*R - (1-TAX)*E*S - (1-TAX)*E/T - (1-TAX)*M/N)
2. V= P/B * (B+Z) V= $415,436,728
----------------------------------------------------
1 - P/B * PCT * (1-X-E-M-F-SH)
3. V= P/A * (A+Z) V= $415,436,728
----------------------------------------------------
1 - P/A * PCT * (1-X-E-M-F-SH)
</TABLE>
<TABLE>
<CAPTION>
Shares Aggregate
Shares Sold to Price Per Gross Offering Exchange Shares Issued To Total Shares Market Value
Conclusion Public Share Proceeds Issued to SCWB Foundation Issued of Stock Issued
----------- ------ ----- -------- -------------- ---------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum 24,650,000 10.00 $246,500,000 12,543,673 0 37,193,673 391,936,728
Midpoint 29,000,000 10.00 290,000,000 12,543,673 0 41,543,673 415,436,728
Maximum 33,350,000 10.00 333,500,000 12,543,673 0 45,893,673 458,936,728
Supermaximum 38,352,500 10.00 383,525,000 12,543,673 0 50,896,173 508,961,728
</TABLE>
- ------------------------------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 5.37 percent, and a tax rate of
40.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) ESOP loan will be funded by a third party loan.
(5) ESOP amortizes over 20 years; amortization expenses tax effected at 40.00
percent.
<PAGE>
EXHIBIT IV-7
Pro Forma Effect of Conversion Proceeds
<PAGE>
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Compass Bank for Savings
At the Maximum
<TABLE>
<S> <C> <C>
1. Offering Proceeds $333,500,000
Less: Estimated Offering Expenses 8,773,700
------------
Net Conversion Proceeds $324,726,300
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $324,726,300
Less: Proceeds Invested in Non-Earning Fixed Assets 0
Less: Non-Cash Stock Purchases (1) 0
------------
Net Proceeds Reinvested $324,726,300
Estimated net incremental rate of return 3.22%
-----
Earnings Increase $10,462,681
Less: Estimated cost of ESOP borrowings (2) 1,360,680
Less: Amortization of ESOP borrowings (3) 800,400
Less: Recognition Plan Vesting 0
------------
Net Earnings Increase $8,301,601
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C> <C>
12 Months ended February 28, 1998 (reported) $17,467,000 $8,301,601 $25,768,601
12 Months ended February 28, 1998 (core) $16,975,000 $8,301,601 $25,276,601
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
February 28, 1998 $145,680,000 $298,046,300 ($5,101,000) $438,625,300
February 28, 1998 (Tangible) $142,742,000 $298,046,300 ($5,101,000) $435,687,300
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
February 28, 1998 $1,670,088,000 $298,046,300 ($5,101,000) $1,963,033,300
</TABLE>
(1) Includes ESOP stock purchases equal to 8.0 percent of the offering.
(2) ESOP stock purchases are externally financed by a loan from a third party.
(3) ESOP borrowings are amortized over 20 years, amortization expense is
tax-effected at a 40.00 percent rate.
(4) Reflects impact of elimination of SWCB shares owned by Compass ($5.175
million) and other accounting adjustments.
<PAGE>
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Compass Bank for Savings
At the Midpoint
<TABLE>
<S> <C> <C>
1. Offering Proceeds $290,000,000
Less: Estimated Offering Expenses 8,373,500
------------
Net Conversion Proceeds $281,626,500
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $281,626,500
Less: Proceeds Invested in Non-Earning Fixed Assets 0
Less: Non-Cash Stock Purchases (1) 0
------------
Net Proceeds Reinvested $281,626,500
Estimated net incremental rate of return 3.22%
-----
Earnings Increase $9,074,006
Less: Estimated cost of ESOP borrowings (2) 1,183,200
Less: Amortization of ESOP borrowings (3) 696,000
Less: Recognition Plan Vesting 0
------------
Net Earnings Increase $7,194,806
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C> <C>
12 Months ended February 28, 1998 (reported) $17,467,000 $7,194,806 $24,661,806
12 Months ended February 28, 1998 (core) $16,975,000 $7,194,806 $24,169,806
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
February 28, 1998 $145,680,000 $258,426,500 ($5,101,000) $399,005,500
February 28, 1998 (Tangible) $142,742,000 $258,426,500 ($5,101,000) $396,067,500
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
February 28, 1998 $1,670,088,000 $258,426,500 ($5,101,000) $1,923,413,500
</TABLE>
(1) Includes ESOP stock purchases equal to 8.0 percent of the offering.
(2) ESOP stock purchases are externally financed by a loan from a third party.
(3) ESOP borrowings are amortized over 20 years, amortization expense is
tax-effected at a 40.00 percent rate.
(4) Reflects impact of elimination of SWCB shares owned by Compass ($5.175
million) and other accounting adjustments.
<PAGE>
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Compass Bank for Savings
At the Minimum
<TABLE>
<S> <C> <C>
1. Offering Proceeds $246,500,000
Less: Estimated Offering Expenses 7,973,300
------------
Net Conversion Proceeds $238,526,700
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $238,526,700
Less: Proceeds Invested in Non-Earning Fixed Assets 0
Less: Non-Cash Stock Purchases (1) 0
------------
Net Proceeds Reinvested $238,526,700
Estimated net incremental rate of return 3.22%
-----
Earnings Increase $7,685,330
Less: Estimated cost of ESOP borrowings (2) 1,005,720
Less: Amortization of ESOP borrowings (3) 591,600
Less: Recognition Plan Vesting 0
------------
Net Earnings Increase $6,088,010
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C> <C>
12 Months ended February 28, 1998 (reported) $17,467,000 $6,088,010 $23,555,010
12 Months ended February 28, 1998 (core) $16,975,000 $6,088,010 $23,063,010
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
February 28, 1998 $145,680,000 $218,806,700 ($5,101,000) $359,385,700
February 28, 1998 (Tangible) $142,742,000 $218,806,700 ($5,101,000) $356,447,700
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
February 28, 1998 $1,670,088,000 $218,806,700 ($5,101,000) $1,883,793,700
</TABLE>
(1) Includes ESOP stock purchases equal to 8.0 percent of the offering.
(2) ESOP stock purchases are externally financed by a loan from a third party.
(3) ESOP borrowings are amortized over 20 years, amortization expense is
tax-effected at a 40.00 percent rate.
(4) Reflects impact of elimination of SWCB shares owned by Compass ($5.175
million) and other accounting adjustments.
<PAGE>
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Compass Bank for Savings
At the Supermaximum Value
<TABLE>
<S> <C> <C>
1. Offering Proceeds $383,525,000
Less: Estimated Offering Expenses 9,233,930
------------
Net Conversion Proceeds $374,291,070
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $374,291,070
Less: Proceeds Invested in Non-Earning Fixed Assets 0
Less: Non-Cash Stock Purchases (1) 0
------------
Net Proceeds Reinvested $374,291,070
Estimated net incremental rate of return 3.22%
-----
Earnings Increase $12,059,658
Less: Estimated cost of ESOP borrowings (2) 1,564,782
Less: Amortization of ESOP borrowings (3) 920,460
Less: Recognition Plan Vesting 0
------------
Net Earnings Increase $9,574,416
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C> <C>
12 Months ended February 28, 1998 (reported) $17,467,000 $9,574,416 $27,041,416
12 Months ended February 28, 1998 (core) $16,975,000 $9,574,416 $26,549,416
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
February 28, 1998 $145,680,000 $343,609,070 ($5,101,000) $484,188,070
February 28, 1998 (Tangible) $142,742,000 $343,609,070 ($5,101,000) $481,250,070
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
February 28, 1998 $1,670,088,000 $343,609,070 ($5,101,000) $2,008,596,070
</TABLE>
(1) Includes ESOP stock purchases equal to 8.0 percent of the offering.
(2) ESOP stock purchases are externally financed by a loan from a third party.
(3) ESOP borrowings are amortized over 20 years, amortization expense is
tax-effected at a 40.00 percent rate.
(4) Reflects impact of elimination of SWCB shares owned by Compass ($5.175
million) and other accounting adjustments.
<PAGE>
EXHIBIT IV-8
Peer Group Core Earnings Analysis
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Core Earnings Analysis
Comparable Institution Analysis
For the Twelve Months Ended December 31, 1997
<TABLE>
<CAPTION>
Estimated
Net Income Less: Net Tax Effect Less: Extd Core Income Estimated
to Common Gains(Loss) @ 34% Items to Common Shares Core EPS
---------- ----------- ---------- ---------- ----------- ---------- ---------
($000) ($000) $000) ($000) ($000) ($000) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Comparable Group
- ----------------
ABBK Abington Bancorp of MA 4,378 -776 264 0 3,866 3,564 1.08
BKC American Bank of Waterbury CT 7,940 -1,628 554 0 6,866 4,652 1.48
ANDB Andover Bancorp, Inc. of MA 13,206 -422 143 0 12,927 5,179 2.50
BFD BostonFed Bancorp of MA 7,055 -1,114 379 0 6,320 5,423 1.17
FESX First Essex Bancorp of MA 9,713 -1,537 523 0 8,699 7,535 1.15
FFES First Fed of E. Hartford CT 5,575 893 -304 0 6,164 2,713 2.27
FAB FirstFed America Bancorp of MA 1,718 5,742 -1,952 0 5,508 8,707 0.63
MECH MECH Financial Inc of CT 13,077 -261 89 0 12,905 5,294 2.44
MASB MassBank Corp. of Reading MA 10,167 -1,161 395 0 9,401 3,587 2.62
MDBK Medford Bancorp, Inc. of MA 11,390 -628 214 0 10,976 4,540 2.42
MWBX MetroWest Bank of MA 7,555 -71 24 0 7,508 14,220 0.53
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
EXHIBIT IV-9
Pro Forma Regulatory Capital Ratios
<PAGE>
EXHIBIT IV-9
Pro Forma Regulatory Capital Ratios
<TABLE>
<CAPTION>
Pro Forma Combined for Seacoast Financial and Compass at February 28, 1998 based on
------------------------------------------------------------------------------------------------------
24,650,000 29,000,000 33,350,000 38,352,500
Conversion Shares Conversion Shares Conversion Shares Conversion Shares
sold at $10.00 per share sold at $10.00 per share sold at $10.00 per share sold at $10.00 per share
------------------------ ------------------------ ------------------------ ------------------------
Percent Percent Percent Percent
of of of of
Amount assets (1) Amount assets (1) Amount assets (1) Amount assets (1)
-------- ---------- -------- ---------- -------- ---------- -------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seacoast Financial -
Tier 1 leverage:
Actual.................... $354,126 18.85% $393,745 20.49% $433,365 22.05% $478,928 23.77%
Requirement............... 75,158 4.00 76,882 4.00 78,606 4.00 80,589 4.00
Excess.................... 278,968 14.85 316,863 16.49 354,759 18.05 398,339 19.77
Tier 1 risk-based capital:
Actual.................... 354,126 32.93 393,745 36.62 433,365 40.30 478,928 44.48
Requirement............... 43,011 4.00 43,011 4.00 43,011 4.00 43,011 4.00
Excess.................... 311,115 28.93 350,734 32.62 390,354 36.30 435,917 40.48
Total risk-based capital:
Actual.................... 367,585 34.18 407,204 37.87 446,824 41.55 492,387 45.73
Requirement............... 86,021 8.00 86,021 8.00 86,021 8.00 86,021 8.00
Excess.................... 281,564 26.18 321,183 29.87 360,803 33.55 406,366 37.73
Compass -
Tier 1 leverage:
Actual.................... 254,074 14.55 275,624 15.59 297,173 16.61 321,956 17.75
Requirement............... 69,843 4.00 70,705 4.00 71,567 4.00 72,559 4.00
Excess.................... 184,230 10.55 204,919 11.59 225,606 12.61 249,397 13.75
Tier 1 risk-based capital:
Actual.................... 254,074 24.16 275,624 26.21 297,173 28.26 321,956 30.61
Requirement............... 42,066 4.00 42,066 4.00 42,066 4.00 42,066 4.00
Excess.................... 212,008 20.16 233,558 22.21 255,107 24.26 279,890 26.61
Total risk-based capital:
Actual.................... 267,241 25.41 288,791 27.46 310,341 29.51 335,123 31.87
Requirement............... 84,133 8.00 84,133 8.00 84,133 8.00 84,133 8.00
Excess.................... 183,108 17.41 204,658 19.46 226,208 21.51 250,990 23.87
</TABLE>
- ----------------------
(1) Adjusted total or adjusted risk-weighted assets, as appropriate.
<PAGE>
EXHIBIT V-1
RP Financial, LC.
Firm Qualifications Statement
<PAGE>
RP Financial, LC.
- ---------------------------------------
Financial Services Industry Consultants FIRM QUALIFICATION STATEMENT
RP Financial provides financial and management consulting and valuation services
to the financial services industry nationwide, particularly federally-insured
financial institutions. RP Financial establishes long-term client relationships
through its wide array of services, emphasis on quality and timeliness, hands-on
involvement by our principals and senior consulting staff, and careful
structuring of strategic plans and transactions. RP Financial's staff draws from
backgrounds in consulting, regulatory agencies and investment banking, thereby
providing our clients with considerable resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's strategic and capital planning services are designed to provide
effective workable plans with quantifiable results. Through a program known as
SAFE (Strategic Alternatives Financial Evaluations), RP Financial analyzes
strategic options to enhance shareholder value or other established objectives.
Our planning services involve conducting situation analyses; establishing
mission statements, strategic goals and objectives; and identifying strategies
for enhancement of franchise value, capital management and planning, earnings
improvement and operational issues. Strategy development typically includes the
following areas: capital formation and management, asset/liability targets,
profitability, return on equity and market value of stock. Our proprietary
financial simulation model provides the basis for evaluating the financial
impact of alternative strategies and assessing the feasibility/compatibility of
such strategies with regulations and/or other guidelines.
MERGER AND ACQUISITION SERVICES
RP Financial's merger and acquisition (M&A) services include targeting
candidates and potential acquirors, assessing acquisition merit, conducting
detailed due diligence, negotiating and structuring transactions, preparing
merger business plans and financial simulations, rendering fairness opinions and
assisting in implementing post-acquisition strategies. Through our financial
simulations, comprehensive in-house data bases, valuation expertise and
regulatory knowledge, RP Financial's M&A consulting focuses on structuring
transactions to enhance shareholder returns.
VALUATION SERVICES
RP Financial's extensive valuation practice includes valuations for a variety of
purposes including mergers and acquisitions, mutual-to-stock conversions, ESOPs,
subsidiary companies, mark-to-market transactions, loan and servicing
portfolios, non-traded securities, core deposits, FAS 107 (fair market value
disclosure), FAS 122 (loan servicing rights) and FAS 123 (stock options). Our
principals and staff are highly experienced in performing valuation appraisals
which conform with regulatory guidelines and appraisal industry standards. RP
Financial is the nation's leading valuation firm for mutual-to-stock conversions
of thrift institutions.
OTHER CONSULTING SERVICES AND DATA BASES
RP Financial offers a variety of other services including branching strategies,
feasibility studies and special research studies, which are complemented by our
quantitative and computer skills. RP Financial's consulting services are aided
by its in-house data base resources for commercial banks and savings
institutions and proprietary valuation and financial simulation models.
YEAR 2000 SERVICES
RP Financial, through a relationship with a computer research and development
company with a proprietary methodology, offers Year 2000 advisory and conversion
services to financial institutions which are more cost effective and less
disruptive than most other providers of such service.
RP Financial's Key Personnel (Years of Relevant Experience)
Ronald S. Riggins, Managing Director (18)
William E. Pommerening, Managing Director (14)
Gregory E. Dunn, Senior Vice President (16)
James P. Hennessey, Senior Vice President (13)
James J. Oren, Senior Vice President (11)
<PAGE>
Exhibit 1-5
Compass Bank for Savings
Yields and Cost
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------------------------------------------------------------------------
1997 1996 1995
-------------------------------- ------------------------------ -----------------------------
Average Average Average
Average yield/ Average yield/ Average yield/
balance Interest cost balance Interest cost balance Interest cost
------- -------- ------- ------- -------- ------- ------- -------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Short-term investments ...... $ 21,516 $ 1,235 5.74% $ 15,969 $ 947 5.93% $ 17,263 $ 1,257 7.28%
Debt securities (1) ......... 211,304 12,910 6.11 208,665 12,370 5.93 210,680 12,280 5.83
Equity securities (1) ....... 7,290 388 5.32 7,296 386 5.29 8,484 475 5.60
Mortgage loans (2) .......... 523,376 43,977 8.40 498,185 42,162 8.46 451,497 37,813 8.37
Commercial loans (2) ........ 50,361 4,972 9.87 45,283 4,456 9.84 35,610 3,522 9.89
Indirect auto loans (2) ..... 180,600 14,497 8.03 150,070 11,927 7.95 124,850 9,502 7.61
Other consumer loans (2) .... 23,195 2,053 8.85 20,795 1,878 9.03 17,204 1,623 9.43
---------- ------- -------- ------- -------- -------
Total interest-earning
assets ................. 1,017,642 80,032 7.86 946,263 74,126 7.83 865,588 66,472 7.68
------- ------ ------- ------ ------- -----
Allowance for loan losses ..... (10,570) (10,109) (9,811)
Non-interest earning assets ... 59,094 61,480 58,298
--------- -------- --------
Total liabilities
and surplus ............ $1,066,166 $997,634 $914,075
========== ======== ========
Liabilities and Surplus:
Interest-bearing liabilities:
Deposits:
NOW accounts .............. $ 72,837 $ 1,065 1.46% $ 68,156 $ 1,008 1.46% $ 61,366 $ 1,078 1.76%
Savings accounts .......... 171,157 4,434 2.59 176,311 4,660 2.64 173,700 5,107 2.94
Money market savings
accounts ................. 140,413 3,959 2.82 136,322 3,888 2.85 3,916 3.01
Certificate of deposit
accounts ................ 466,942 26,651 5.71 434,930 25,065 5.76 388,708 21,751 5.60
--------- ------- -------- ------- -------- -------
Total deposits .......... 851,349 36,109 4.24 815,719 34,621 4.24 753,694 31,852 4.23
Borrowed funds:
Short-term borrowings (3).. 5,666 283 4.99 1,727 100 5.79 1,326 84 6.33
FHLB advances ............. 51,490 3,439 6.68 37,288 2,524 6.77 39,552 2,603 6.58
--------- ------- --------- ------- -------- -------
Total borrowings ........ 57,156 3,722 6.51 39,015 2,624 6.73 40,878 2,687 6.57
--------- ------- --------- ------- -------- -------
Total interest-bearing
liabilities ............ 908,505 39,831 4.38 854,734 37,245 4.36 794,572 34,539 4.35
------- ------ ------- ------ ------- -----
Non-interest bearing demand
checking accounts ............ 56,284 53,684 41,824
Other liabilities ............. 8,807 8,807 6,845
--------- -------- --------
Total liabilities ....... 973,596 917,225 843,241
Surplus ....................... 92,570 80,409 70,834
--------- -------- --------
Total liabilities and
surplus ................ $1,066,166 $997,634 $914,075
========= ======== ========
Net interest income/interest
rate spread (4) .............. $40,201 3.48% $36,881 3.47% $31,933 3.33%
======== ====== ======= ====== ======= ======
Net interest margin (5) ....... 3.95% 3.90% 3.69%
====== ====== ======
Ratio of interest-earning
assets to interest-bearing
liabilities .................. 112.01% 110.71% 108.94%
====== ====== ======
</TABLE>
- -------------------
1) Average balances include unrealized gains on securities available for sale.
Equity securities include marketable equity securities and restricted equity
securities.
2) Loans on non-accrual status are included in the average balances.
<PAGE>
--------------------------------------------------------------
CONVERSION APPRAISAL UPDATE REPORT
SEACOAST FINANCIAL SERVICES CORPORATION
PROPOSED HOLDING COMPANY FOR
COMPASS BANK FOR SAVINGS
New Bedford, Massachusetts
Dated As Of:
August 7, 1998
--------------------------------------------------------------
Prepared By:
RP Financial, LC.
1700 North Moore Street
Suite 2210
Arlington, Virginia 22209
<PAGE>
RP FINANCIAL, LC.
- --------------------------------------------------
Financial Services Industry Consultants
August 7, 1998
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
791 Purchase Street
New Bedford, Massachusetts 02740-6300
Members of the Boards:
We have completed and hereby provide an updated independent appraisal of
the estimated pro forma market value of the Common Stock in connection with the
mutual-to-stock conversion transaction described below.
This Appraisal has been prepared in accordance with the "Guidelines for
Appraisal Reports for the Valuation of Savings and Loan Associations Converting
from Mutual to Stock Form of Organization" of the Office of Thrift Supervision
("OTS"), including the most recent revisions as of October 21, 1994, and
applicable interpretations thereof. Such Valuation Guidelines are relied upon by
the Massachusetts Division of Banks (the "Division"), the Federal Deposit
Insurance Corporation ("FDIC") and the Federal Reserve Board ("FRB") in
evaluating conversion appraisals in the absence of such specific written
valuation guidelines separately issued by the respective agencies.
Our original appraisal report, dated May 8, 1998 (the "Original
Appraisal"), is incorporated herein by reference. As in the preparation of our
Original Appraisal, we believe the data and information used herein is reliable;
however, we cannot guarantee the accuracy and completeness of such information.
Description of Reorganization
- -----------------------------
We understand that the Board of Trustees of The 1855 Bancorp, a
Massachusetts-chartered mutual holding company (the "MHC"), and the Board of
Directors of Compass Bank for Savings ("Compass" or the "Bank"), a wholly-owned
state-chartered stock savings bank subsidiary of the MHC, have adopted a Plan of
Conversion, incorporated herein by reference, in which the MHC will be combined
with the Bank simultaneously with the MHC's conversion to stock form and
reorganization as a subsidiary of a newly-formed stock corporation, to be known
as "Seacoast Financial Services Corporation" ("Seacoast" or the "Company").
Seacoast will offer shares of Common Stock ("Conversion Shares") for sale in the
Subscription Offering, the concurrent Community Offering and, if necessary, in a
Syndicated Community Offering, based on the appraised value. The Conversion
Shares are first being offered in the Subscription Offering with nontransferable
subscription rights being granted to Eligible Account Holders, Supplemental
Eligible Account Holders, the ESOP, Employees, Officers, Trustees and Directors.
- -------------------------------------------------------------------------------
Washington Headquarters
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
August 7, 1998
Page 2
Acquisition of Sandwich Bancorp, Inc.
Pursuant to the Amended and Restated Affiliation and Merger Agreement (the
"Agreement"), dated March 22, 1998, The 1855 Bancorp agreed to acquire Sandwich
Bancorp, Inc., Sandwich, Massachusetts ("Sandwich Bancorp"), the bank holding
company for Sandwich Co-operative Bank, a Massachusetts-chartered co-operative
bank ("Sandwich"). Sandwich Bancorp is a Massachusetts corporation that was
organized in June 1997 to acquire all the capital stock of Sandwich upon
consummation of the reorganization of Sandwich into holding company form.
Sandwich Bancorp is a publicly-traded company whose stock is listed on the
NASDAQ National Market System under the ticker symbol "SWCB". Pursuant to the
Agreement, at the effective time of the merger, each share of common stock of
Sandwich Bancorp issued and outstanding, shall by virtue of the merger be
converted into the right to receive Seacoast common stock. The number of shares
of Seacoast common stock a Sandwich Bancorp stockholder will receive will be
determined by the application of an exchange ratio (the "Exchange Ratio") based
upon the trading price of Seacoast's common stock (the "Seacoast Trading Price")
10 days following the closing of the conversion. If the Seacoast Trading Price
is between $10.00 and $13.50, the Exchange Ratio will be between 6.4000 and
4.7407 (determined by dividing $64.00 by the Seacoast Trading Price). If the
Seacoast Trading Price is between $13.51 and $15.00, the Exchange Ratio will be
fixed at 4.7407. If the Seacoast Trading Price exceeds $15.00, the Exchange
Ratio will be less than 4.7407 (determined by dividing $71.11 by the Seacoast
Trading Price). If the Seacoast Trading Price is equal to or less than $10.00
per share, the Exchange Ratio will be 6.4000. The number of Exchange Shares
issuable in exchange for each outstanding Sandwich Bancorp stock option will be
determined by subtracting the per share exercise price of such option from the
value of the Exchange Shares receivable by Sandwich Bancorp stockholders in
exchange for each outstanding share of Sandwich Bancorp common stock, and
dividing the result by the Seacoast Trading Price. As of June 30, 1998, Sandwich
Bancorp had 2,043,475 shares of common stock issued and outstanding and 45,203
granted stock options outstanding, all of which become fully vested upon a
change of control. Cash will be paid in lieu of fractional shares.
It is anticipated that the merger will be accounted for as a pooling of
interests and that certain financial adjustments will be made concurrent with
the merger. The transaction is expected to constitute a tax-free reorganization
under the Internal Revenue Code, so that Sandwich Bancorp shareholders who
receive Seacoast's common stock will not recognize gain or loss in connection
with the exchange.
Limiting Factors and Considerations
- -----------------------------------
Our valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing shares of the
Common Stock. Moreover, because such valuation is necessarily based upon
estimates and projections of a number of matters, all of which are subject to
change time to time, no assurance can be given that persons who purchase shares
of common stock in the Conversion will thereafter be able to buy or sell such
shares at prices related to the foregoing valuation of the estimated pro forma
market value thereof.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
August 7, 1998
Page 3
RP Financial's updated valuation was determined based on the financial
condition and operations of the Bank and Sandwich as of May 31, 1998 and June
30, 1998, respectively, the date of the most recent financial data included in
the Company's Prospectus.
RP Financial is not a seller of securities within the meaning of any
federal and state securities laws and any report prepared by RP Financial shall
not be used as an offer or solicitation with respect to the purchase or sale of
any securities. RP Financial maintains a policy which prohibits RP Financial,
its principals or employees from purchasing stock of its client financial
institutions.
This valuation will be updated as provided for in the conversion
regulations and guidelines. These updates will consider, among other things, any
developments or changes in the Bank's financial performance and condition,
management policies, and current conditions in the equity markets for thrift
shares. These updates may also consider changes in other external factors which
impact value including, but not limited to: various changes in the legislative
and regulatory environment for financial institutions, the stock market and the
market for thrift stocks, and interest rates. Should any such new developments
or changes be material, in our opinion, to the valuation of the shares,
appropriate adjustments to the estimated pro forma market value will be made.
The reasons for any such adjustments will be explained in the update at the date
of the release of the update.
Discussion of Relevant Considerations
- -------------------------------------
1. Financial Results
-----------------
The Original Appraisal was based on financial data as of February 28,
1998 for Compass and March 31, 1998 for Sandwich. This updated appraisal is
based on financial information as of May 31, 1998 for Compass and June 30, 1998
for Sandwich reflecting the updated financial results for each company as set
forth in the amended prospectus. Corresponding to the analysis set forth in the
Original Appraisal, the following paragraphs describe the historical balance
sheet changes for Compass on a pre-acquisition basis. The pro forma balance
sheet impact of the acquisition of Sandwich (but before incorporating the
capital to be raised in the conversion and merger expenses) will be discussed at
the end of this section.
Growth Trends
-------------
Compass's total assets increased by $33 million over the three months
ended May 31, 1998, largely attributable to continued expansion of the loan
portfolio which was funded by an increase in deposits. Capital increased as a
result of interim earnings, although the equity/assets ratio increased only
modestly as the rate of increase in capital was nearly matched by the growth of
total assets.
<PAGE>
RP Financial, LC.
Page 4
Table 1
Compass Bank for Savings
Historical Balance Sheets
(Amount and Percent of Assets)
<TABLE>
<CAPTION>
Pro Forma Combined Pro Forma Combined
As of February 28, As of May 31, As of As of
1998 1998 February 28, 1998(1)(3) May 31, 1998(1)(4)
-------------------- ------------------ ----------------------- ---------------------
Amount Pct Amount Pct Amount Pct Amount Pct
------ --- ------ --- ------ --- ------ ---
($000) (%) ($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Amount of:
Assets $1,143,559 100.00% $1,176,559 100.00% $1,670,088 100.00% $1,707,572 100.00%
Loans 846,385 74.01% 884,822 75.20% 1,216,090 72.82% 1,245,439 72.94%
Allowances for Loan Losses 10,747 0.94% 10,508 0.89% 14,881 0.89% 14,675 0.86%
Debt Securities
Available for Sale 195,601 17.10% 173,820 14.77% 216,230 12.95% 232,000 13.59%
Held to Maturity/Held for Invest. 12,322 1.08% 13,649 1.16% 96,479 5.78% 78,441 4.59%
Marketable Equity Securities 9,450 0.83% 9,520 0.81% 9,450 0.57% 9,520 0.56%
Deposits 951,449 83.20% 982,351 83.49% 1,378,178 82.52% 1,427,101 83.57%
Borrowed Funds 78,553 6.87% 77,074 6.55% 126,154 7.55% 110,675 6.48%
Surplus 103,118 9.02% 106,510 9.05% 145,680 8.72% 151,066 8.85%
Memo:
Loans/Deposits 88.96% 90.07% 88.24% 87.27%
IEA/IBL (Average) 112.55% 112.62% N/A N/A
Non-Performing Assets/Assets 0.97% 0.93% 0.85% 0.81%
Allow. for Loan Losses as a % of:
Loans Receivable, net 1.27% 1.19% 1.22% 1.18%
Non-Performing Loans 109.72% 110.69% 116.75% 120.44%
Full Service Offices 22 (2) 23 33 34
(1) Pre-conversion basis and before merger transaction expenses; reflects pooling accounting.
(2) A new office not included in the total was opened in May 1998.
(3) Data is as of March 31, 1998 for Sandwich.
(4) Data is as of June 30, 1998 for Sandwich.
</TABLE>
Sources: Prospectus.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
August 7, 1998
Page 5
Loan Receivable
---------------
The balance of loans receivable increased from $846.4 million, as of
February 28, 1998, to $884.8 million, as of May 31, 1998, equal to 75.20 percent
of total assets. Expansion of the loan portfolio over the three months ended May
31, 1998 has been supported by growth of the indirect auto loan portfolio, which
increased by $24.1 million attributable to ongoing efforts to develop new dealer
relationships and generate additional business through existing relationships.
Other major segments of the loan portfolio also reflect growth over the quarter
ended May 31, 1998, albeit to a lesser extent than the growth realized in the
indirect loan portfolio.
Investments and Mortgage-Backed Securities
------------------------------------------
A portion of the Bank's loan growth was funded through a reduction in
the level of investments and MBS. Specifically, investments classified as
available for sale ("AFS") declined $21.8 million to equal 14.77 percent of
assets. The largest component of the investment portfolio consisted of U.S.
Government and agency obligations with a balance of $94.0 million. Corporate
debt obligations totaled $46.0 million and consisted of finance bonds,
industrial revenue bonds, utility bonds and bank and trust company bonds.
Mortgage-backed securities totaled $41.4 million as of May 31, 1998, and
consisted primarily of agency securities.
Funding Structure
-----------------
Deposit balances increased by $31.1 million over the three months ended
May 31, 1998. Management attributes the increase to the relatively favorable
economic conditions prevailing in Compass' markets, the benefits of which were
partially offset by strong competition including competition from
non-traditional products such as annuities and mutual funds.
Equity
------
After-tax earnings of $3.3 million during the three months ended May
31, 1998, coupled with the impact of a $136,000 upward after-tax adjustment on
"available for sale" securities, resulted in equity growth to $106.5 million. As
a result of interim asset growth, the Bank's equity/assets ratio increased
nominally to 9.05 percent as of May 31, 1998. The Bank maintained capital
surpluses relative to all of its regulatory capital requirements and was a "well
capitalized" institution.
Acquisition of Sandwich
-----------------------
The updated merged balance sheet reflects relatively limited change
from the prior quarter. The pro forma pre-conversion impact of the Sandwich
acquisition increases Compass' total assets to $1.708 billion, with the majority
of the quarterly increase attributable to Compass' asset growth. Compass'
balance sheet composition does not change significantly as the proportion of
loans, investments, deposits, and borrowed funds for Sandwich compares
relatively closely to Compass.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
August 7, 1998
Page 6
Income and Expense Trends
-------------------------
Table 2 shows the Bank's historical income statements for twelve months
ended February 28, 1998 as well as updated information for the twelve months
ended May 31, 1998. The Bank's pro forma income statement for the twelve months
ended February 28, 1998 and May 31, 1998 giving effect to the merger has also
been provided. The following paragraphs describe the historical income
statements of Compass on a pre-merger basis. The pro forma income statement
impact of the Sandwich merger through May 31, 1998 is discussed at the end of
this section.
Compass' earnings improved modestly based on updated financial data,
primarily as a result of growth in the net interest margin and increased loan
originations and sales which increased the gains on the sale of loans. Overall,
net income increased from $12.5 million for the twelve months ended February 28,
1998 to $13.2 million for the twelve months ended May 31, 1998. The Bank's
return on average assets ("ROA") increased slightly to 1.13 percent.
Compass's net interest income increased modestly for the most recent
trailing 12 month period, while the ratio as a percent of average assets
decreased slightly to 3.77 percent for the twelve months ended May 31, 1998. The
increase in net interest income is primarily attributable to expansion of
interest-earning assets.
Non-interest income decreased modestly based on updated financial data
through May 31, 1998. Specifically, non-interest income decreased by
approximately $60,000 to equal $5.7 million, or 0.51 percent of average assets.
Compass' operating expenses increased to $25.4 million, equal to 2.27
percent of average assets, versus $25.0 million for the twelve months ended
February 28, 1998. As discussed in the Original Appraisal, operating expenses
are expected to realize further increases following the conversion as a result
of the leveraged ESOP amortization expense and the expense associated with
operating as a public company. Additionally, Compass has plans to build a new
executive office facility in downtown New Bedford at a cost of up to $18
million, which will result in significant new depreciation and property tax
expenses.
Compass' efficiency ratio (operating expenses as a percent of the sum
of net interest income and other operating income) of approximately 54.71
percent for the most recent 12 months reflected a slight decrease from the 54.89
percent ratio reported for the twelve months ended February 28, 1998.
Provisions for loan losses decreased marginally to $1.5 million for the
12 months ended May 31, 1998 versus $1.6 million for the twelve months ended
February 28, 1998.
Non-operating income increased for the trailing twelve months ended May
31, 1998, as lower interest rates fueled increased loan originations, increasing
gains on the sale of loans.
Pro Forma Impact of Sandwich Merger
-----------------------------------
On a pro forma basis, the acquisition of Sandwich is projected to
impact Compass's income statement in several ways. First, there are certain
non-recurring merger expenses anticipated concurrent with the merger;
specifically, such expenses are expected to include
<PAGE>
RP Financial, LC.
Page 7
Table 2
Compass Bank for Savings
Historical Income Statements
(Amount and Percent of Assets)(1)
<TABLE>
<CAPTION>
Pro Forma Combined Pro Forma Combined
For the 12 Months For the 12 Months For the Most Recent For the Most Recent
Ended Feb. 28, 1998 Ended May 31, 1998 12 Months Ended(4) 12 Months Ended(5)
-------------------- ------------------ -------------------- -------------------
Amount Pct Amount Pct Amount Pct Amount Pct
------ --- ------ --- ------ --- ------ ---
($000) (%) ($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Income $ 82,746 7.56% $ 84,379 7.55% $119,522 7.47% $121,306 7.43%
Interest Expense (41,282) -3.77% (42,211) -3.78% (60,244) -3.76% (61,398) -3.76%
-------- ------ -------- ------ -------- ------ -------- ------
Net Interest Income $ 41,464 3.79% $ 42,168 3.77% $ 59,278 3.70% $ 59,908 3.67%
Provision for Loan Losses (1,605) -0.15% (1,511) -0.14% (2,303) -0.14% (2,077) -0.13%
-------- ------ -------- ------ -------- ------ -------- ------
Net Interest Income after Provisions $ 39,859 3.64% $ 40,657 3.64% $ 56,975 3.56% $ 57,831 3.54%
Other Income 5,737 0.52% 5,677 0.51% 8,228 0.51% 8,068 0.49%
Other Real Estate Owned Expense (519) -0.05% (364) -0.03% (519) -0.03% (364) -0.02%
Operating Expense (25,029) -2.29% (25,350) -2.27% (37,283) -2.33% (37,817) -2.32%
-------- ------ -------- ------ -------- ------ -------- ------
Net Operating Income $ 20,048 1.83% $ 20,620 1.84% $ 27,401 1.71% $ 27,718 1.70%
Gain on Sale of Loans $ 542 0.05% $ 920 0.05% $ 715 0.04% $ 1,212 0.07%
Gain on Securities 33 0.00% 11 0.00% 80 0.00% 186 0.01%
-------- ------ -------- ------ -------- ------ -------- ------
Total Non-Operating Income/(Expense) $ 575 0.05% $ 931 0.05% $ 795 0.05% $ 1,398 0.09%
Net Income Before Tax $ 20,623 1.88% $ 21,551 1.93% $ 28,196 1.76% $ 29,116 1.78%
Income Taxes (8,149) -0.74% (8,385) -0.75% (10,729) -0.67% (10,942) -0.67%
-------- ------ -------- ------ -------- ------ -------- ------
Net Income (Loss) Before Extraord. Items $ 12,474 1.14% $ 13,166 1.18% $ 17,467 1.09% $ 18,174 1.11%
Cumulative Effect of Change in
Accounting for Income Taxes - 0.00% - 0.00% - 0.00% - 0.00%
-------- ------ -------- ------ -------- ------ -------- ------
Net Income (Loss) $ 12,474 1.14% $ 13,166 1.18% $ 17,467 1.09% $ 18,174 1.11%
Estimated Core Earnings
Net Income $ 12,474 1.14% $ 13,166 1.18% $ 17,467 1.09% $ 18,174 1.11%
Addback(Deduct): Non-Recurring (Inc)/Exp (575) -0.05% (931) -0.08% (795) -0.05% (1,398) -0.09%
Tax Effect 227 0.02% 362 0.03% 303 0.02% 525 0.03%
-------- ------ -------- ------ -------- ------ -------- ------
Estimated Core Income $ 12,126 1.11% $ 12,597 1.13% $ 16,975 1.06% $ 17,301 1.06%
Memo:
Coverage Ratio (2) 165.66% 166.34% 158.99% 158.42%
Efficiency Ratio (3) 53.03% 52.98% 55.23% 55.63%
Effective Tax Rate 39.51% 38.91% 38.05% 37.58%
(1) Ratios are as a percent of average assets.
(2) Net interest income divided by operating expenses.
(3) Operating expenses as a percent of the sum of net interest income and other income (excluding gains on sale).
(4) Reflects the twelve months ended February 28, 1998 for Compass and March 31, 1998 for Sandwich.
(5) Reflects the twelve months ended May 31, 1998 for Compass and June 30, 1998 for Sandwich.
</TABLE>
Source: Prospectus.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
August 7, 1998
Page 8
financial advisory fees, costs related to data processing, and the expense of
the change of control provisions in the Sandwich management contracts. Overall,
total acquisition-related expenses are projected to equal $5.0 million on a
pre-tax basis ($4.0 million after-tax), most of which will be incurred at the
time of, or shortly following, the merger.
The pro forma income statement impact of the merger is shown in Table
2. The impact of the conversion and the one-time merger costs are captured in
the pro forma adjustments set forth in the valuation analysis. On a pro forma
basis, net interest income as a percent of average assets remains similar (3.77
percent of average assets on a stand-alone basis and 3.67 percent for the merged
bank); non-interest operating income is subject to a slight decrease (from 0.51
percent of average assets to 0.49 percent for the merged Bank); and the
operating expense ratio is inflated from 2.27 percent to 2.32 percent of average
assets. On a pro forma basis (before the impact of the conversion offering), net
income, adjusted for net non-operating items, is subject to a slight decrease
from 1.13 percent to 1.06 percent of average assets. Compass estimates pre-tax
cost savings in the range of $1.5 million in the first year following the
acquisition, increasing to $1.8 million and $2.0 million in the second and third
year following the acquisition, respectively.
2. Peer Group Financial Comparisons
--------------------------------
Consistent with the Peer Group financial comparison set forth in the
Original Appraisal, the comparative analysis reflects Compass incorporating the
impact of the Sandwich merger. Such data were derived from the prospectus and
the analyses set forth in the discussion of recent financial results for
Compass.
Financial Condition
-------------------
In general, the comparative balance sheet ratios for the Bank and the
Peer Group did not vary significantly from the ratios exhibited in the Original
Appraisal. Relative to the Peer Group, the Bank's interest-earning asset
composition continued to reflect a higher level of loans and a lower level of
MBS and cash and investments.
The Peer Group continues to be comparably capitalized relative to
Compass (merged basis) on both a reported and tangible capital basis, before the
conversion transaction impact. Specifically, the Bank's reported and tangible
capital ratios on a merged basis as of May 31, 1998, equaled 8.9 percent and 8.7
percent, respectively. On a post-conversion basis, the Bank's pro forma capital
is anticipated to exceed the Peer Group's average. As discussed in the Original
Appraisal, the Bank's higher pro forma capital will provide greater leverage
potential than the Peer Group, although in the intermediate term the higher
capital will lead to a pronounced disadvantage in terms of return on equity
("ROE").
The Bank's interest-earning assets ("IEA") position (including cash and
equivalents) has reduced to 95.4 percent, which continues to fall short of the
Peer Group average of 97.1 percent. The Bank also continues to maintain a
comparable ratio of interest-bearing liabilities ("IBL"), equal to 90.1 percent
of assets as of May 31, 1998, relative to the Peer Group's ratio of 90.3
percent, reflecting the Bank's comparable capitalization. The strengthened
capital position
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
August 7, 1998
Page 9
from conversion, the potential withdrawal of deposits to purchase conversion
stock and the reinvestment of proceeds should enhance Compass' financial
position and earnings power.
Updated growth rates for the Bank and the Peer Group suggest little
change relative to the trends noted in the Original Appraisal (the Bank's growth
rates are annual rates for the seven months ended May 31, 1998 while the Peer
Group's growth rates are for the most recent trailing twelve month period for
which data is publicly available). In this regard, growth of assets continued to
fall short of the Peer Group asset growth, although loans and MBS increased more
rapidly with the redeployment of funds from cash and investments. Expansion of
deposits was relatively comparable for Compass in comparison to the Peer Group
average, as the Peer Group's faster growth was attributable to the greater
increase in borrowed funds.
Income and Expense Trends
-------------------------
Compass' profitability (merged basis) remained above the Peer Group
average, equal to 1.11 percent of average assets for the twelve months ended May
31, 1998, while the Peer Group's earnings equaled 1.01 percent of average
assets. As described in the Original Appraisal, Compass on a merged basis
maintains a comparative advantage in terms of net interest income and other
operating income, which was only partially offset by its higher operating
expenses.
Neither Compass nor the Peer Group's net interest margin changed
significantly incorporating updated financial data (the net interest margin
equaled 3.67 percent and 3.10 percent of assets for the Bank and Peer Group,
respectively). Compass' advantage, on a merged basis, is the result of both
higher asset yields and a more favorable cost of funds.
The level of loan loss provisions remained relatively stable, with the
Bank reporting loan loss provisions equal to 0.13 percent of average assets,
below the Peer Group average of 0.22 percent of average assets.
Compass continues to generate modestly higher levels of non-interest
income relative to the Peer Group, equal to 0.47 percent and 0.41 percent of
average assets, respectively. Compass continued to maintain a higher operating
expense ratio, equal to 2.27 percent of average assets versus an average of 1.98
percent for the Peer Group. As discussed in the Original Appraisal, Compass'
higher operating expense ratio is the result of several factors including: (1)
the Peer Group's greater wholesale leveraging; (2) Compass' greater revenue
diversification efforts; and (3) Compass' greater diversification into higher
risk weight loans as well as the higher asset mix in loans, which require
greater administration. Following the conversion and acquisition transactions,
there are expected to be opposing forces on Compass' operating expense ratio.
First, merger synergies are expected to lead to a reduction in operating
expenses (primarily compensation and benefits). Such cost savings are expected
to be partially offset by some consolidation expenses and increased marketing,
the cost of the Employee Stock Ownership Plan, the cost of operating as a public
company and the costs related to the construction of a new headquarters
facility.
Taking together the components of core net income through a review of
the efficiency ratio (operating expenses divided by net interest income and
non-interest operating income) indicates a slight advantage for Compass, with an
efficiency ratio of 55.63 percent versus 57.26
<PAGE>
RP FINANCIAL, LC.
- --------------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, VA 22209
(703) 528-1700
Table 3
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of March 31, 1998
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
----------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref.Stock
----------- ------ ------ -------- -------- ------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
- ------------
May 31, 1998 14.5 72.1 8.8 83.6 6.5 0.0 8.9 0.2 8.7 0.0
SAIF-Insured Thrifts 19.2 66.7 10.5 69.3 15.0 0.2 13.5 0.2 13.2 0.0
All Public Companies 19.7 66.0 10.7 69.7 14.9 0.2 13.2 0.3 13.0 0.0
State of MA 21.3 65.8 10.2 69.7 17.5 0.0 11.4 0.2 11.3 0.0
Comparable Group Average 24.8 57.8 14.5 68.6 21.7 0.0 8.4 0.2 8.2 0.0
New England Companies 24.8 57.8 14.5 68.6 21.7 0.0 8.4 0.2 8.2 0.0
Comparable Group
- ----------------
New England Companies
- ---------------------
ABBK Abington Bancorp of MA 11.1 62.1 23.6 60.6 32.1 0.0 6.3 0.6 5.7 0.0
BKC American Bank of Waterbury CT 29.3 58.9 9.5 72.3 17.5 0.0 9.0 0.3 8.7 0.0
ANDB Andover Bancorp, Inc. of MA 12.3 72.3 13.2 70.4 20.8 0.0 7.9 0.0 7.9 0.0
BFD BostonFed Bancorp of MA 12.0 82.0 3.9 63.1 27.9 0.0 7.9 0.3 7.6 0.0
FESX First Essex Bancorp of MA 23.8 54.1 17.8 58.8 32.4 0.0 7.0 0.8 6.2 0.0
FFES First Fed of E. Hartford CT 61.6 19.9 16.9 58.7 33.8 0.0 6.9 0.0 6.9 0.0
FAB FirstFed America Bancorp of MA 6.3 72.8 17.8 55.3 31.5 0.0 9.9 0.0 9.9 0.0
MECH MECH Financial Inc of CT 23.5 61.7 9.3 72.5 17.1 0.0 9.6 0.0 9.6 0.0
MASB MassBank Corp. of Reading MA 35.0 29.5 34.1 87.1 0.1 0.0 11.5 0.2 11.4 0.0
MDBK Medford Bancorp, Inc. of MA 32.7 51.0 13.0 73.4 16.8 0.0 9.2 0.5 8.7 0.0
MWBX MetroWest Bank of MA 25.2 71.3 0.6 82.9 8.9 0.0 7.2 0.0 7.2 0.0
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Annual Growth Rates
------------------------------------------------------------
Cash and Loans Borrows. Net Tng Net
Assets Investments & MBS Deposits &Subdebt Worth Worth
------ ----------- ------ -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
- ------------
May 31, 1998 8.68 -25.68 14.64 8.33 7.05 13.47 14.31
SAIF-Insured Thrifts 14.70 9.40 12.91 8.56 16.51 4.90 5.06
All Public Companies 15.00 9.95 13.46 8.47 16.51 5.72 5.66
State of MA 18.47 18.64 17.21 9.89 18.70 11.80 12.25
Comparable Group Average 12.52 18.93 10.04 7.72 9.84 11.42 12.01
New England Companies 12.52 18.93 10.04 7.72 9.84 11.42 12.01
Comparable Group
- ----------------
New England Companies
- ---------------------
ABBK Abington Bancorp of MA 11.74 34.53 8.95 9.01 19.23 2.21 3.70
BKC American Bank of Waterbury CT 10.64 19.33 8.24 7.27 14.36 25.07 26.73
ANDB Andover Bancorp, Inc. of MA 14.54 25.83 13.96 13.28 19.77 12.61 12.61
BFD BostonFed Bancorp of MA 9.63 12.46 9.83 19.49 -5.38 -3.00 -3.17
FESX First Essex Bancorp of MA 12.77 67.50 0.72 7.72 23.44 8.72 11.24
FFES First Fed of E. Hartford CT 1.67 0.22 4.64 1.26 -0.07 12.47 12.47
FAB FirstFed America Bancorp of MA 30.83 -4.50 33.78 -2.14 NM 3.96 3.96
MECH MECH Financial Inc of CT 19.97 NM 0.12 7.32 NM 18.31 18.31
MASB MassBank Corp. of Reading MA 3.14 3.93 2.76 1.86 -16.65 19.03 17.40
MDBK Medford Bancorp, Inc. of MA 6.29 -9.90 17.67 2.88 20.41 11.59 14.16
MWBX MetroWest Bank of MA 16.52 39.92 9.80 17.02 13.41 14.66 14.66
Source: Audited and unaudited financial statements, corporate reports and offering circulars, and RP Financial, LC.
calculations. The information provided in this table has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
</TABLE>
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
August 7, 1998
Page 11
percent for the Peer Group. Compass' efficiency ratio is expected to improve on
a post-conversion basis with the investment of the net conversion proceeds and
the net impact of potential merger synergies and public company/stock plan
expense.
Non-operating income equaled 0.09 percent of average assets for the
Bank and 0.11 percent of average assets for the Peer Group.
Compass' effective tax rate of 37.58 percent continues to compare
closely to the Peer Group's effective tax rate of 38.09 percent, reflecting the
fully taxable status of both the Bank and the Peer Group.
Other aspects of Compass' operations in comparison to the Peer Group
remained relatively stable. Compass continues to maintain a more diversified
loan portfolio including a greater proportion of high risk-weight loans such as
C&I and consumer loans. Primarily by virtue of the higher ratio of high
risk-weight loans and greater NPAs, Compass continues to maintain greater credit
risk exposure relative to the Peer Group.
The Bank's interest rate risk exposure in relation to the Peer Group
will be moderated with the infusion of the net conversion proceeds.
3. Stock Market Conditions
-----------------------
Since the date of the Original Appraisal, the performance of the
overall stock market has been mixed, and has recently been trending downward.
Stocks traded in a narrow range in early-June 1998, while bond prices moved
higher following remarks by the Federal Reserve Chairman that indicated an
increase in interest rates was not imminent. Anxiety over Asia's financial woes
caused a 207 point one-day sell-off in the Dow Jones Industrial Average ("DJIA")
on June 15, 1998, while bond prices moved higher as investors moved funds out of
stocks and into dollar-denominated U.S. bonds. The rally in the bond market
pushed the 30-year Treasury bond yield down to 5.58 percent on June 15, 1998,
which was the lowest yield recorded since the Treasury Department began issuing
30-year fixed maturity securities in 1977. Stocks rebounded on news that the
U.S. intervened in the currency market to support the yen; however, the upturn
was cut-short by ongoing concerns about Asia's financial problems. In late-June,
money flowing into mutual funds and a rebound in technology stocks provided for
a generally positive stock market environment.
Second quarter earnings dominated stock market activity through most of
July. In general, stocks moved higher during the first half of July on the
strength of some favorable second quarter earnings, particularly among the
financial and technology stocks. Reflecting the positive outlook for earnings
during the balance of 1998, both the DJIA and NASDAQ established new highs in
mid-July. However, the stock market rally was not sustained during the latter
part of July, as stocks declined sharply following warnings by the Federal
Reserve Chairman of relatively high trading levels for stocks in general and
disappointing second quarter earnings posted by some of the blue chip stocks.
Additionally, second quarter economic data released in the last week of July
heightened concerns regarding the future strength of corporate earnings. The
negative psychology carried forward into the first week of August as the DJIA
lost nearly 300 points on August 4 and only posted a modest advance during the
balance of the
<PAGE>
RP FINANCIAL, LC.
- --------------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, VA 22209
(703) 528-1700
Table 4
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended March 31, 1998
<TABLE>
<CAPTION>
Net Interest Income Other Income G&A/Other Exp.
---------------------------- ------------------- ----------------
Loss NII Total
Net Provis. After Loan R.E. Other Other G&A Goodwill
Income Income Expense NII on IEA Provis. Fees Oper. Income Income Expense Amort.
------ ------ ------- ------ ------- ------- ---- ----- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
- ------------
May 31, 1998 1.11 7.43 3.76 3.67 0.13 3.54 0.00 -0.02 0.49 0.47 2.27 0.05
SAIF-Insured Thrifts 0.91 7.48 4.17 3.31 0.13 3.18 0.10 0.01 0.30 0.42 2.22 0.02
All Public Companies 0.91 7.45 4.10 3.35 0.13 3.22 0.10 0.01 0.31 0.42 2.24 0.03
State of MA 0.93 7.27 3.79 3.48 0.10 3.38 0.05 -0.01 0.28 0.32 2.23 0.02
Comparable Group Average 1.01 7.12 4.02 3.10 0.22 2.88 0.06 -0.01 0.36 0.41 1.98 0.03
New England Companies 1.01 7.12 4.02 3.10 0.22 2.88 0.06 -0.01 0.36 0.41 1.98 0.03
Comparable Group
- ----------------
New England Companies
- ---------------------
ABBK Abington Bancorp of MA 0.87 7.15 4.01 3.14 0.13 3.01 0.10 0.01 0.72 0.83 2.59 0.08
BKC American Bank of Waterbury CT 1.33 7.16 4.03 3.14 0.30 2.84 0.00 -0.04 0.53 0.49 1.68 0.04
ANDB Andover Bancorp, Inc. of MA 1.06 7.21 4.14 3.07 0.05 3.01 0.11 -0.05 0.27 0.33 1.74 0.00
BFD BostonFed Bancorp of MA 0.72 7.19 3.92 3.27 0.17 3.10 0.11 0.04 0.25 0.40 2.37 0.02
FESX First Essex Bancorp of MA 0.84 7.58 4.44 3.14 0.16 2.98 0.04 -0.04 0.20 0.20 1.82 0.06
FFES First Fed of E. Hartford CT 0.58 6.72 4.46 2.26 0.06 2.20 0.00 0.00 0.16 0.17 1.37 0.00
FAB FirstFed America Bancorp of MA 0.62 7.02 4.25 2.77 0.21 2.56 0.21 -0.01 0.21 0.41 2.02 0.00
MECH MECH Financial Inc of CT 1.54 6.95 3.49 3.45 0.90 2.55 0.10 0.01 0.77 0.88 2.66 0.00
MASB MassBank Corp. of Reading MA 1.15 6.65 3.79 2.85 0.03 2.83 0.00 0.00 0.20 0.20 1.36 0.03
MDBK Medford Bancorp, Inc. of MA 1.08 6.97 3.84 3.13 0.01 3.12 0.00 0.00 0.25 0.25 1.59 0.11
MWBX MetroWest Bank of MA 1.29 7.70 3.82 3.89 0.39 3.49 0.00 -0.06 0.37 0.31 2.54 0.00
</TABLE>
<TABLE>
<CAPTION>
Non-Op. Items Yields, Costs, and Spreads
-------------- --------------------------
MEMO: MEMO:
Net Extrao. Yield Cost Yld-Cost Assets/ Effective
Gains Items On Assets Of Funds Spread FTE Emp. Tax Rate
------ ------- --------- -------- ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
- ------------
May 31, 1998 0.09 0.00 7.66 4.17 3.49 3,457 37.58
SAIF-Insured Thrifts 0.05 0.00 7.61 4.74 2.87 4,300 37.12
All Public Companies 0.03 0.00 7.52 4.63 2.89 4,266 37.28
State of MA -0.12 0.00 7.11 4.07 3.03 4,118 38.66
Comparable Group Average 0.11 0.00 7.34 4.45 2.89 4,417 38.09
New England Companies 0.11 0.00 7.34 4.45 2.89 4,417 38.09
Comparable Group
- ----------------
New England Companies
- ---------------------
ABBK Abington Bancorp of MA 0.20 0.00 7.37 4.35 3.02 3,197 36.70
BKC American Bank of Waterbury CT 0.32 0.00 7.35 4.44 2.90 4,971 31.36
ANDB Andover Bancorp, Inc. of MA 0.04 0.00 7.39 4.54 2.85 4,861 35.22
BFD BostonFed Bancorp of MA 0.17 0.00 7.36 4.32 3.04 3,922 43.94
FESX First Essex Bancorp of MA 0.12 0.00 7.92 4.87 3.05 4,808 40.38
FFES First Fed of E. Hartford CT -0.10 0.00 6.84 4.80 2.04 5,271 35.97
FAB FirstFed America Bancorp of MA 0.15 0.00 7.25 4.93 2.32 4,301 43.66
MECH MECH Financial Inc of CT 0.00 0.00 7.35 3.92 3.43 4,113 NM
MASB MassBank Corp. of Reading MA 0.17 0.00 6.74 4.32 2.42 5,164 36.73
MDBK Medford Bancorp, Inc. of MA 0.09 0.00 7.21 4.25 2.96 4,428 38.80
MWBX MetroWest Bank of MA 0.02 0.00 7.92 4.16 3.76 3,553 NM
Source: Audited and unaudited financial statements, corporate reports and offering circulars, and RP Financial, LC.
calculations. The information provided in this table has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
</TABLE>
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
August 7, 1998
Page 13
week. On August 7, 1998, the DJIA closed at 8598.02, a decrease of 5.1 percent
since the date of Original Appraisal.
Since the Original Appraisal date, thrift issues have in general
underperformed the overall stock market. Thrift prices drifted lower during the
first half of June, despite lower interest rates and the ongoing trend of
consolidation occurring among banks and thrifts. In late-June, the positive
trend in the overall stock market lifted thrift prices higher as well. Thrift
stocks continued to move higher during the first half of July, reflecting
generally favorable second quarter earnings and the strength of the overall
stock market. Thrift stocks followed the general stock market lower in
late-July, with the sell-off in thrift issues becoming more pronounced following
congressional testimony by the Federal Reserve Chairman that indicated inflation
was more of a concern than a recession. The sell-off continued in the first week
of August as the thrift market followed the major declines posted in the major
indexes. On August 7, 1998, the SNL Index for all publicly-traded thrifts closed
at 740.8, a decline of 15.3 percent since the date of the Original Appraisal,
and 11.4 percent over the prior ten days.
Consistent with the SNL index, the pricing measures for all
publicly-traded thrifts and the Peer Group declined since the date of the
Original Appraisal, and all 11 Peer Group companies were trading at lower prices
as of August 7, 1998. A comparative pricing analysis of all publicly-traded
thrifts, the Peer Group and recent conversions is shown in the table below,
based on market prices as of May 8, 1998 and August 7, 1998.
Average Pricing Characteristics
<TABLE>
<CAPTION>
At May 8, At August 7, %
1998 1998 Change
---- ---- ------
<S> <C> <C> <C>
Peer Group
- ----------
Price/Earnings (x) 16.84x 15.63x (7.2)%
Price/Core Earnings (x) 17.82 17.07 (4.2)
Price/Book (%) 191.46% 171.58% (10.4)
Price/Assets (%) 16.44 14.29 (13.1)
Publicly-Traded Thrifts
- -----------------------
Price/Earnings (x) 20.32x 18.92x (6.9)%
Price/Core Earnings (x) 21.38 19.73 (7.7)
Price/Book (%) 172.79% 148.35% (14.1)
Price/Assets (%) 21.67 18.85 (13.0)
Recent Conversions(1)
- ---------------------
Price/Core Earnings (x)(2) 25.23x 23.58x (6.5)%
Price/Book (%) 125.40% 97.17% (22.5)
</TABLE>
(1) Ratios based on conversions completed for prior three months.
(2) Companies with P/E multiples of greater than 30x have been excluded from
the average.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
August 7, 1998
Page 14
The "new issue" market is separate and distinct from the market for
seasoned issues like the Peer Group companies. Accordingly, as discussed in the
Original Appraisal, RP Financial has considered the pro forma pricing and
trading level of recently converted companies in this updated appraisal. Since
the date of the Original Appraisal, market interest for converting thrifts has
diminished. While most of the recent full stock conversions have been
oversubscribed, aftermarket interest for converting issues has been less notable
as implied by the generally lower price increases recorded by the recent
conversions in near term trading activity. The pullback in the new issue market
for converting thrifts has been particularly evident with respect to the
"second-step" conversions, which have tended to trade below their initial
offering prices. As shown in Table 5, the average one week change in price for
conversion offerings completed during the latest three months equaled positive
24.3 percent while the average one week change in price for the three
"second-step" conversions completed during the past three months equaled
negative 6.1 percent. The average pro forma price/tangible book and core
price/earnings ratios of the recent conversions equaled 97.2 percent and 23.58
times, respectively. Importantly, the Bank's conversion pricing characteristics
share some similarities with the second step offerings as a result of the
Exchange Shares issued to Sandwich Bancorp shareholders.
One recent conversion involved a concurrent stock acquisition of a
publicly-traded thrift, similar to Compass' transaction. Specifically, CFS
Bancorp converted July 24, 1998, contemporaneously acquiring SuburbFed Bancorp,
Inc., utilizing its newly-issued stock as the transaction consideration. As of
August 7, 1998, CFS Bancorp was trading at $10.81 per share, 8.1 percent above
its $10.00 issue price per share, which equates to 99.36 percent of pro forma
book value and 27.03 times core earnings.
Shown in Table 6 is a pricing summary of recently completed conversions
which closed in the last three months, based on their closing stock prices as of
August 7, 1998. Relative to the Original Appraisal date, which reflected pricing
ratios as of May 8, 1998, the newly converted companies are trading 22.5 percent
lower on a price-to-book basis, from an average 125.4 percent pro forma P/B
ratio at May 8, 1998 to an average 97.2 percent pro forma P/B ratio at August 7,
1998.
As noted in the Original Appraisal, the pricing ratios of the better
capitalized but lower earning recently converted thrifts suggest that the
investment community has determined to discount their stock price on a book
basis, until the earnings improve through redeployment and leveraging of the
proceeds over the longer term.
Summary of Adjustments
- ----------------------
Based on the foregoing, we have changed one key valuation parameter since
the Original Appraisal, as described more fully below.
<PAGE>
RP FINANCIAL, LC.
- --------------------------------------------------
Table 5
Pricing Characteristics and After-Market Trends
Recent Conversions Completed (Last Three Months)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Institutional Information Pre-Conversion Data Offering Information
Financial Info. Asset Quality
- -----------------------------------------------------------------------------------------------------------------------------------
Conversion Equity/ NPAs/ Res. Gross % of Exp./
Institution State Date Ticker Assets Assets Assets Cov. Proc. Mid. Proc.
- ----------- ----- ---- ------ ------ ------ ------ ---- ------ ----- ------
($Mil) (%) (%)(2) (%) ($Mil.) (%) (%)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
CFS Bancorp, Inc. IN* 07/24/98 CITZ $1,267 7.68% 0.97% 43% $178.5 132% 1.8%
Carnegie Financial Corp. PA 07/13/98 Pink 17 7.05% 3.12% 233% 2.4 132% 10.9%
United Community Financial OH 07/09/98 UCFC 1,049 13.73% 0.98% 59% 334.7 132% 1.3%
PCB Holding Company IN 07/02/98 Pink 22 9.51% 0.00% N.M. 4.0 132% 7.9%
Hudson River Bancorp NY* 07/01/98 HRBT 665 10.13% 2.66% 46% 173.4 132% 1.7%
First Kansas Financial Corp. KS 06/29/98 FKAN 94 7.36% 0.05% 398% 15.5 132% 3.2%
Anson Bancorp, Inc. NC 06/26/98 Pink 21 18.46% 1.25% 37% 5.9 89% 8.3%
Averages - Standard Conversions: $ 448 10.56% 1.29% 136% $102.0 126% 5.0%
Medians - Standard Conversions: $ 94 9.51% 0.98% 53% $ 15.5 132% 3.2%
Second-Step Conversions
Homestead Financial, Inc. LA* 07/20/98 HSTD $ 62 9.72% 0.97% 43% $ 11.2 132% 4.1%
PSB Bancorp PA* 07/17/98 PSBI 134 11.58% 1.97% 9% 16.1 115% 3.0%
Thistle Group Holdings PA 07/14/98 THTL 281 10.41% 0.27% 133% 78.6 100% 1.7%
Averages - 2nd Step Conversions: $ 159 10.57% 1.07% 62% $ 35.3 116% 2.9%
Medians - 2nd Step Conversions: $ 134 10.41% 0.97% 43% $ 16.1 115% 3.0%
Averages - All Conversions: $ 361 10.56% 1.22% 111% $ 82.0 123% 4.4%
Medians - All Conversions: $ 114 9.93% 0.98% 46% $ 15.8 132% 3.1%
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Institutional Information Contribution to Insider Purchases
Charitable Found
- ------------------------------------------------------------------------------------------------------------------------
Benefit Plans Initial
Conversion % of Recog. Mgmt.& Dividend
Institution State Date Ticker Form Offering ESOP Plans Dirs. Yield
- ----------- ----- ---- ------ ---- -------- ---- ----- ----- -----
(%) (%) (%) (%)(3) (%)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
CFS Bancorp, Inc. IN* 07/24/98 CITZ Stock 1.70% 8.0% 4.0% 3.3% 0.00%
Carnegie Financial Corp. PA 07/13/98 Pink N.A. N.A. 8.0% 4.0% 12.8% 0.00%
United Community Financial OH 07/09/98 UCFC Stock 5.00% 8.0% 4.0% 0.1% 0.00%
PCB Holding Company IN 07/02/98 Pink N.A. N.A. 0.0% 4.0% 6.7% 0.00%
Hudson River Bancorp NY* 07/01/98 HRBT N.A. N.A. 8.0% 4.0% 1.6% 0.00%
First Kansas Financial Corp. KS 06/29/98 FKAN N.A. N.A. 8.0% 4.0% 5.7% 0.00%
Anson Bancorp, Inc. NC 06/26/98 Pink N.A. N.A. 0.0% 4.0% 9.2% 0.00%
Averages - Standard Conversions: N.A. N.A. 5.7% 4.0% 5.6% 0.00%
Medians - Standard Conversions: N.A. N.A. 8.0% 4.0% 5.7% 0.00%
Second-Step Conversions
Homestead Financial, Inc. LA* 07/20/98 HSTD N.A. N.A. 8.0% 4.0% 2.9% 2.00%
PSB Bancorp PA* 07/17/98 PSBI N.A. N.A. 8.0% 4.0% 3.3% 0.00%
Thistle Group Holdings PA 07/14/98 THTL N.A. N.A. 8.0% 4.0% 5.6% 0.00%
Averages - 2nd Step Conversions: N.A. N.A. 8.0% 4.0% 3.9% 0.67%
Medians - 2nd Step Conversions: N.A. N.A. 8.0% 4.0% 3.3% 0.00%
Averages - All Conversions: N.A. N.A. 6.4% 4.0% 5.1% 0.20%
Medians - All Conversions: N.A. N.A. 8.0% 4.0% 4.4% 0.00%
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Pro Forma Data
Institutional Information --------------------------------------------------------
Pricing Ratios(4) Financial Charac.
- ---------------------------------------------------------- --------------------------------------------------------
Conversion Core
Institution State Date Ticker P/TB P/E(5) P/A ROA TE/A ROE
- ----------- ----- ---- ------ ---- ------ --- --- ---- ---
(%) (x) (%) (%) (%) (%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
CFS Bancorp, Inc. IN* 07/24/98 CITZ 91.9% 28.0x 16.0% 0.6% 16.3% 3.6%
Carnegie Financial Corp. PA 07/13/98 Pink 79.2% N.M. 12.9% N.M. 16.3% N.M.
United Community Financial OH 07/09/98 UCFC 80.2% 17.4 25.9% 1.5% 32.3% 4.6%
PCB Holding Company IN 07/02/98 Pink 71.0% 22.2 15.6% 0.7% 21.9% 3.2%
Hudson River Bancorp NY* 07/01/98 HRBT 82.0% 21.4 21.9% 0.9% 26.7% 3.3%
First Kansas Financial Corp. KS 06/29/98 FKAN 77.2% 16.3 14.4% 0.9% 18.7% 4.7%
Anson Bancorp, Inc. NC 06/26/98 Pink 64.7% 19.9 22.2% 1.1% 34.3% 3.3%
Averages - Standard Conversions: 78.0% 20.9x 18.4% 1.0% 23.8% 3.8%
Medians - Standard Conversions: 79.2% 20.7x 16.0% 0.9% 21.9% 3.5%
Second-Step Conversions
Homestead Financial, Inc. LA* 07/20/98 HSTD 96.1% 28.2x 20.8% 0.7% 21.7% 3.4%
PSB Bancorp PA* 07/17/98 PSBI 106.3% 27.1 21.1% 0.8% 19.8% 3.9%
Thistle Group Holdings PA 07/14/98 THTL 92.7% 19.0 25.8% 1.4% 27.8% 4.9%
Averages - 2nd Step Conversions: 98.4% 24.8x 22.6% 1.0% 23.1% 4.1%
Medians - 2nd Step Conversions: 96.1% 27.1x 21.1% 0.8% 21.7% 3.9%
Averages - All Conversions: 84.1% 22.2x 19.7% 1.0% 23.6% 3.9%
Medians - All Conversions: 81.1% 21.4x 20.9% 0.9% 21.8% 3.6%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Post-IPO Pricing Trends
Institutional Information ------------------------------------------------------------
Closing Price:
- ---------------------------------------------------------------------------------------------------------------------------------
Conversion First After After
Institution State Date Ticker IPO Trading % First % First %
- ----------- ----- ---- ------ Price Day Change Week(6) Change Month(7) Change
----- --- ------ ------- ------ -------- ------
- ---------------------------------------------------------- ($) ($) (%) ($) (%) ($) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
CFS Bancorp, Inc. IN* 07/24/98 CITZ $10.00 $11.44 14.4% $10.81 8.1% $10.81 8.1%
Carnegie Financial Corp. PA 07/13/98 Pink 10.00 11.81 18.1% 10.25 2.5% 10.94 9.4%
United Community Financial OH 07/09/98 UCFC 10.00 15.00 50.0% 16.00 60.0% 15.75 57.5%
PCB Holding Company IN 07/02/98 Pink 10.00 11.50 15.0% 12.12 21.2% 10.88 8.7%
Hudson River Bancorp NY* 07/01/98 HRBT 10.00 12.56 25.6% 13.50 35.0% 13.38 33.8%
First Kansas Financial Corp. KS 06/29/98 FKAN 10.00 12.31 23.1% 12.25 22.5% 11.63 16.3%
Anson Bancorp, Inc. NC 06/26/98 Pink 10.00 12.00 20.0% 12.06 20.6% 12.37 23.7%
Averages - Standard Conversions: $10.00 $12.37 23.7% $12.43 24.3% $12.25 22.5%
Medians - Standard Conversions: $10.00 $12.00 20.0% $12.12 21.2% $11.63 16.3%
Second-Step Conversions
Homestead Financial, Inc. LA* 07/20/98 HSTD $10.00 $ 9.31 -6.9% $ 9.25 -7.5% $ 8.56 -14.4%
PSB Bancorp PA* 07/17/98 PSBI 10.00 9.19 -8.1% 9.13 -8.8% 8.38 -16.3%
Thistle Group Holdings PA 07/14/98 THTL 10.00 9.94 -0.6% 9.81 -1.9% 9.56 -4.4%
Averages - 2nd Step Conversions: $10.00 $ 9.48 -5.2% $ 9.40 -6.1% $ 8.83 -11.7%
Medians - 2nd Step Conversions: $10.00 $ 9.31 -6.9% $ 9.25 -7.5% $ 8.56 -14.4%
Averages - All Conversions: $10.00 $11.51 15.1% $11.52 15.2% $11.22 12.2%
Medians - All Conversions: $10.00 $11.66 16.6% $11.44 14.4% $10.91 -11.7%
Note: * - Appraisal performed by RP Financial; "NT" - Not Traded; "NA" - Not Applicable, Not Available.
(1) Non-OTS regulated thrift. (5) Excludes impact of special SAIF assessment on earnings.
(2) As reported in summary pages of prospectus. (6) Latest price if offering less than one week old.
(3) As reported in prospectus. (7) Latest price if offering more than one week but less than one month old.
(4) Does not take into account the adoption of SOP 93-6.(8) Simultaneously converted to commercial bank charter. August 7, 1998
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- --------------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, VA 22209
(703) 528-1700
Table 6
Market Pricing Comparatives
Prices As of August 7, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------- Pricing Ratios(3) Dividends(4)
--------------- Core Book --------------------------------------- -----------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------- ------- ------ -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 18.86 158.13 0.91 13.39 19.11 145.56 18.85 150.11 19.95 0.33 1.78 31.55
All Public Companies 19.23 181.03 0.94 13.34 18.92 148.35 18.85 152.81 19.73 0.34 1.77 31.33
Special Selection Grouping(8) 11.06 163.49 0.47 11.30 21.97 97.17 23.33 97.17 23.58 0.11 1.34 0.00
State of MA 21.99 94.70 1.26 13.94 17.16 169.06 17.89 173.22 18.17 0.41 1.80 30.41
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CITZ CFS Bancorp, Inc. of IN 10.81 245.68 0.40 10.88 NM 99.36 17.29 99.36 27.03 0.00 0.00 0.00
FKAN First Kansas Financial of KS 11.13 17.30 0.61 12.95 18.25 85.95 16.06 85.95 18.25 0.00 0.00 0.00
HSTD Homestead Bancorp, Inc. of LA 8.56 12.65 0.36 10.40 23.78 82.31 17.83 82.31 23.78 0.80 9.35 NM
HRBT Hudson River Bancorp Inc of NY 13.25 229.73 0.47 12.20 NM 108.61 29.04 108.61 28.19 0.00 0.00 0.00
PSBI PSB Bancorp Inc. of PA 8.38 25.99 0.37 9.41 22.65 89.05 17.65 89.05 22.65 0.00 0.00 0.00
THTL Thistle Group Holdings of PA 9.56 86.04 0.53 10.79 18.04 88.60 24.63 88.60 18.04 0.00 0.00 0.00
UCFC United Community Fin. of OH 15.75 527.07 0.58 12.47 27.16 126.30 40.81 126.30 27.16 0.00 0.00 0.00
</TABLE>
<TABLE>
<CAPTION>
Financial Characteristics(6)
-------------------------------------------------------
Reported Core
Total Equity/ NPAs/ ---------------- ---------------
Financial Institution Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------ ------- ------- ------- ------- ------- -------
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 1,060 14.12 0.61 0.93 7.82 0.88 7.36
All Public Companies 1,152 13.85 0.61 0.95 8.26 0.90 7.74
Special Selection Grouping(8) 600 23.49 1.02 0.96 4.05 0.99 4.17
State of MA 622 11.61 0.41 1.16 12.18 1.07 10.92
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CITZ CFS Bancorp, Inc. of IN 1,421 17.41 0.97 0.58 3.31 0.64 3.68
FKAN First Kansas Financial of KS 108 18.69 0.17 0.88 4.71 0.88 4.71
HSTD Homestead Bancorp, Inc. of LA 71 21.66 0.27 0.75 3.46 0.75 3.46
HRBT Hudson River Bancorp Inc of NY 815 26.74 2.57 0.90 3.36 1.03 3.85
PSBI PSB Bancorp Inc. of PA 147 19.81 1.85 0.78 3.93 0.78 3.93
THTL Thistle Group Holdings of PA 349 27.80 0.30 1.37 4.91 1.37 4.91
UCFC United Community Fin. of OH 1,291 32.31 0.98 1.50 4.65 1.50 4.65
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month data, adjusted to omit non-operating items (including
the SAIF assessment) on a tax effected basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; and P/CORE =
Price to estimated core earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month estimated core earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing twelve month earnings and average
equity and assets balances.
(7) Excludes from averages those companies the subject of actual or rumored acquisition activities or unusual operating
characteristics.
(8) Includes Converted Last 3 Mths (no MHC);
Source: Corporate reports, offering circulars, and RP Financial, LC. calculations. The information provided in this report has
been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such
information.
</TABLE>
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
August 7, 1998
Page 17
<TABLE>
<CAPTION>
Previous Current Change in
Key Valuation Parameters Valuation Adjustment Valuation Adjustment
- ------------------------ -------------------- --------------------
<S> <C> <C>
Financial Condition No Adjustment No Change
Profitability, Growth and Viability of Earnings Slight Downward No Change
Asset Growth No Adjustment No Change
Primary Market Area No Adjustment No Change
Dividends No Adjustment No Change
Liquidity of the Shares Slight Upward No Change
Marketing of the Issue No Adjustment Slight Downward
Management No Adjustment No Change
Effect of Government Regul. & Reg. Reform No Adjustment No Change
</TABLE>
We determined no change in the previous valuation adjustments for
financial condition and profitability were appropriate based on updated
financial information. Likewise, the valuation parameters of asset growth,
primary market area, dividends, liquidity of the shares, management and effect
of government regulation and regulatory reform were unchanged from the previous
valuation.
The general market for thrift stocks moved lower since the date of the
Original Appraisal, as indicated by the decline in the SNL Thrift Index, and the
pricing measures for the Peer Group and for all publicly-traded thrifts. The new
issue market for thrift stocks has also weakened, as reflected by diminished
aftermarket price performance and subscription levels of new issues.
Accordingly, we believe the valuation adjustment for marketing of the issue
should be changed from no adjustment as set forth in the Original Appraisal to a
slight downward adjustment.
Overall, taking into account the foregoing factors, particularly the
reduction in the pricing ratios of thrifts in general and the Peer Group
specifically, as well as the fallback in the pricing ratios of new issues, we
believe that a reduction in the Bank's valuation ratios are appropriate.
Valuation Approaches
- --------------------
In applying the accepted valuation methodology promulgated by the OTS,
i.e., the pro forma market value approach, we considered the three key pricing
ratios in valuing Compass to-be-issued stock -- price/earnings ("P/E"),
price/book ("P/B"), and price/assets ("P/A") approaches -- all performed on a
pro forma basis including the effects of the conversion proceeds. In computing
the pro forma impact of the conversion and the related pricing ratios, updated
information consistent with the prospectus for the effective tax rate, offering
expenses, reinvestment rate, merger related costs, stock benefit plans, exchange
shares issued to Sandwich Bancorp shareholders, based on a range of Seacoast
trading prices, the impact of Sandwich Bancorp stock held by Compass and the
pooling of interests accounting for the merger was incorporated into the
valuation. Updated information with regard to the use of $20 million of proceeds
for a new main office facility have also been incorporated into the valuation
update. The pro assumptions are summarized in Exhibits 3 and 4.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
August 7, 1998
Page 18
Consistent with the Original Appraisal, this updated appraisal continues
to be based primarily on fundamental analysis techniques applied to the Peer
Group, including the P/E approach, the P/B approach and the P/A approach. The
updated appraisal also incorporates a technical analysis of recently completed
stock conversions, including principally the P/B approach which (as discussed in
the Original Appraisal) is the most meaningful pricing ratio as the pro forma
P/E ratios reflect an assumed reinvestment rate and do not yet reflect the
actual use of proceeds.
Based on the foregoing, we have concluded that the pro forma market value
range of Seacoast's stock is subject to a decrease. Therefore, as of August 7,
1998, RP Financial concluded that the pro forma offering value of Seacoast's
stock is $240 million at the midpoint at this time, taking into account the
potential range of exchange ratios in the subsequent acquisition of Sandwich
Bancorp. Assuming a 6.4000 times exchange ratio for the Sandwich Bancorp stock,
the total pro forma market value of all shares is equal to $366.9 million based
on a $10.00 per share Seacoast trading price. Assuming a 4.7407 exchange ratio,
the pro forma market value of all Seacoast shares is equal to $334.1 million,
reflecting a Seacoast trading price of $15.00.
1. P/B Approach. The application of the P/B valuation method requires
calculating Seacoast's pro forma market value by applying a valuation P/B ratio,
derived from the Peer Group's P/B ratio, to Seacoast's pro forma book value
taking into account the acquisition of Sandwich Bancorp in a pooling merger. In
applying the P/B approach, we focused on tangible book value. Based on the $240
million offering amount and assuming a 6.4000 times exchange ratio, Seacoast's
pro forma P/TB ratio was 103.09 percent, which reflects a 1.7 percent reduction
from the 104.89 percent ratio set forth in the Original Appraisal. Based on the
midpoint offering amount and a 4.7407 exchange ratio, the P/TB ratio equaled
93.87 percent, which reflects a 3.0 percent reduction from the 96.73 ratio set
forth in the Original Appraisal. The P/B valuation discount has narrowed as the
Peer Group's average book pricing multiple fell to a greater extent than for
Seacoast, which we believe is appropriate in view of the relatively greater
reduction in the P/E ratio, as described below.
In addition to the fundamental analysis applied to the Peer Group,
RP Financial utilized a technical analysis of recently completed conversions as
a proxy for anticipated aftermarket trading in Compass conversion stock. The
recent conversions currently trade at an average P/TB ratio approximating book
value, including CFS Bancorp. While Seacoast's pro forma P/TB ratio appears to
be consistent with the recent conversions trading level, Seacoast is expected to
be more leveraged on a pro forma basis.
2. P/E Approach. The application of the P/E valuation method requires
calculating Seacoast's pro forma market value by applying a valuation P/E
multiple, derived from the Peer Group's P/E multiple, times the pro forma
earnings base. In applying this technique, we considered both reported earnings
and a recurring earnings base, that is, earnings adjusted to exclude any
one-time non-operating and extraordinary items, plus the estimated after-tax
earnings benefit from reinvestment of net conversion proceeds. Compass' reported
earnings (incorporating Sandwich Bancorp) were $18.2 million for the twelve
months ended May 31, 1998. In deriving core earnings, the adjustments made to
reported pre-tax earnings were the
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
August 7, 1998
Page 19
gains on the sale of investments and loans, which, on a tax effected basis,
indicated adjusted earnings of approximately $17.3 million. Similar types of
adjustments were applied to the Peer Group in the calculation of their core
earnings (Note: see Exhibit 5).
Based on Compass' reported and estimated core earnings, and
incorporating the impact of the pro forma assumptions discussed previously,
Seacoast's pro forma reported and core P/E multiples incorporating a $240
million offering amount and a 6.4000 times exchange ratio were 15.41 and 15.99
times, respectively, which reflects a reduction in the range of 7 to 9 percent
from the midpoint ratios in the Original Appraisal. Incorporating a 4.7407
exchange ratio for Sandwich Bancorp, Seacoast's pro forma P/E and P/Core
multiples are equal to 14.03 times and 14.56 times, respectively, which reflects
a reduction in a range of 8 to 10 percent relative to the ratios set forth in
the Original Appraisal. In deriving the earnings based pricing multiples, we
also considered the potential long-term benefits of the merger with Sandwich
Bancorp. RP Financial also considered the impact of SOP 93-6 in examining the
P/E ratios.
3. P/A Approach. P/A ratios are generally not as reliable an indicator
of market value, as investors appear to place less weight on total assets as a
determinant of market value. Investors place significantly greater weight on
book value and earnings -- which have received greater weight in our valuation
analysis. At the midpoint of the offering range and assuming a 6.4000 exchange
ratio, Seacoast's value equaled 19.15 percent of pro forma assets, compared to
the Peer Group average P/A ratio of 14.29 percent, which implies a 34 percent
premium being applied to Seacoast's pro forma P/A ratio which is slightly higher
than the 31 percent premium in the Original Appraisal. While generally
emphasized less than the P/E and P/B approaches, the P/A ratio is an indicator
of franchise value and, thus, was considered in the valuation conclusion. The
pro forma P/A ratio has been calculated assuming no deposit withdrawals are made
to fund stock purchases. In all likelihood there will be deposit withdrawals,
which results in understating the pro forma P/A ratio which is computed herein.
Summary
- -------
Based on the foregoing, we have concluded that Seacoast's estimated pro
forma market value should be reduced from the Original Appraisal. Accordingly,
it is our opinion, as of August 7, 1998, the pro forma offering value of
Seacoast's conversion is $240 million, taking into account the potential range
of exchange ratios in the subsequent acquisition of Sandwich Bancorp as set
forth in the Merger Agreement. Accordingly, the conversion offering range of
value, based on an offering price of $10.00 per share value, is as follows:
<TABLE>
<CAPTION>
Offering
Dollar Amount Shares Price/Share
------------- ------ -----------
(000) ($)
<S> <C> <C> <C>
Minimum $204,000,000 20,400,000 $10.00
Midpoint 240,000,000 24,000,000 10.00
Maximum 276,000,000 27,600,000 10.00
Supermaximum 317,400,000 31,740,000 10.00
</TABLE>
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
August 7, 1998
Page 20
The total market value of all shares issued, including both offering
shares and shares issued in the merger, is dependent upon the trading price of
Seacoast 10 days following completion of the conversion offering. The following
table reflects the pro forma market value of all shares, both conversion and
merger shares, reflecting an exchange ratio of 6.4000, reflecting a Seacoast 10
day trading price of $10.00 per share, and 4.7407, reflecting a Seacoast 10 day
trading price of $15.00 per share, both representing collars in the exchange
ratio set forth in the Merger Agreement, based on the conversion offering
valuation range.
<TABLE>
<CAPTION>
6.4000 Exchange Ratio(1) 4.7407 Exchange Ratio(2)
------------------------ ------------------------
Total Total Total Total
Market Value Shares Issued Market Value Shares Issued
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Minimum $330,862,320 33,086,232 $298,049,282 29,804,928
Midpoint 366,862,320 36,686,232 334,049,282 33,404,928
Maximum 402,862,320 40,286,232 370,049,282 37,004,928
Supermaximum 444,262,320 44,426,232 411,449,282 41,144,928
</TABLE>
(1) Reflects 12,686,232 Seacoast shares issued to Sandwich Bancorp
shareholders at a 10 day trading price of $10.00 per share.
(2) Reflects 9,404,928 Seacoast shares issued to Sandwich Bancorp
shareholders at a 10 day trading price of $15.00 per share.
The comparative pro forma valuation ratios relative to the Peer Group are
shown in Table 7 incorporating a 6.4000 exchange ratio and Table 8 incorporating
a 4.7407 exchange ratio, and the key valuation assumptions are detailed in
Exhibit 3. The pro forma calculations for the range are detailed in Exhibit 4.
Respectfully submitted,
RP FINANCIAL, LC.
/s/ Ronald S. Riggins
---------------------
Ronald S. Riggins
President
/s/ James P. Hennessey
----------------------
James P. Hennessey
Senior Vice President
<PAGE>
RP FINANCIAL, L.C.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 7
Public Market Pricing
Compass Bank and the Comparables
As of August 7, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization Core Book Pricing Ratios(3)
Price/ Market 12-Mth Value/
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
-------- ----- ------ ----- --- --- --- ---- ------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
Superrange 10.00 444.26 0.58 9.66 17.15 103.49 22.37 104.20 17.75
Range Maximum 10.00 402.86 0.62 9.72 16.26 102.88 20.68 103.66 16.85
Range Midpoint 10.00 366.86 0.65 9.78 15.41 102.25 19.15 103.09 15.99
Range Minimum 10.00 330.86 0.69 9.85 14.48 101.49 17.58 102.41 15.06
BIF-Insured Thrifts(7)
Averages 21.17 298.77 1.13 13.13 17.96 162.72 18.60 166.93 18.58
Medians -- -- -- -- 16.67 160.23 17.45 162.47 17.79
All Non-MHC State of MA(7)
Averages 22.43 89.87 1.31 14.19 16.54 170.27 16.28 174.65 17.53
Medians -- -- -- -- 15.19 160.33 15.72 162.47 17.45
Comparable Group Averages
Averages 26.97 139.64 1.64 16.37 15.63 171.58 14.29 177.67 17.07
Medians -- -- -- -- 15.87 173.27 15.72 182.95 17.45
State of MA
ABBK Abington Bancorp of MA 18.50 65.34 1.06 9.70 14.80 190.72 11.99 209.75 17.45
AFCB Affiliated Comm BC, Inc. of MA(7) 33.56 223.68 1.73 17.40 18.44 192.87 19.61 193.76 19.40
ANDB Andover Bancorp, Inc. of MA 35.94 232.93 2.06 16.95 17.03 212.04 16.81 212.04 17.45
BYS Bay State Bancorp of MA 25.19 63.86 1.05 23.66 23.99 106.47 22.05 106.47 23.99
BFD BostonFed Bancorp of MA 20.63 111.26 1.10 15.06 15.87 136.99 10.79 142.08 18.75
CEBK Central Co-Op. Bank of MA 23.75 46.67 1.20 18.72 15.32 126.87 12.41 139.71 19.79
FCB Falmouth Bancorp, Inc. of MA 18.50 26.92 0.54 16.19 27.21 114.27 25.60 114.27 NM
FESX First Essex Bancorp of MA 22.00 166.36 1.23 12.05 16.18 182.57 12.86 207.16 17.89
FAB FirstFed America Bancorp of MA 17.88 147.90 0.69 15.35 21.80 116.48 11.54 116.48 25.91
HIFS Hingham Inst. For Sav. of MA 27.00 35.21 2.10 16.84 12.86 160.33 15.20 160.33 12.86
HPBC Home Port Bancorp, Inc. of MA 24.50 45.13 1.81 11.98 15.03 204.51 20.00 204.51 13.54
IPSW Ipswich SB of Ipswich MA 15.00 35.85 0.80 5.25 14.15 285.71 15.09 285.71 18.75
LSBX Lawrence Savings Bank of MA 14.38 62.22 1.99 9.14 7.12 157.33 17.52 157.33 7.23
MASB MassBank Corp. of Reading MA 47.75 171.57 2.65 29.80 16.30 160.23 18.46 162.47 18.02
MFLR Mayflower Co-Op. Bank of MA 21.50 19.35 1.49 14.40 12.95 149.31 14.28 151.52 14.43
MDBK Medford Bancorp, Inc. of MA 40.25 179.31 2.50 23.23 15.19 173.27 16.01 182.95 16.10
MWBX MetroWest Bank of MA 7.13 101.62 0.53 3.27 13.20 218.04 15.72 218.04 13.45
MYST Mystic Financial of MA 14.75 39.99 0.48 13.20 28.37 111.74 21.29 111.74 NM
PBKB People's Bancshares of MA 20.25 67.15 0.70 9.56 12.74 211.82 7.77 219.39 28.93
SISB SIS Bancorp, Inc. of MA(7) 46.81 325.89 2.00 18.41 NM 254.26 18.17 254.26 23.41
SWCB Sandwich Bancorp of MA(7) 60.75 124.11 2.35 20.83 24.90 291.65 23.57 301.19 25.85
WRNB Warrent Bancorp of Peabody MA 11.25 88.93 0.83 5.20 14.06 216.35 23.87 216.35 13.55
Comparable Group
ABBK Abington Bancorp of MA 18.50 65.34 1.06 9.70 14.80 190.72 11.99 209.75 17.45
BKC American Bank of Waterbury CT 24.25 113.66 1.47 12.53 13.86 193.54 17.45 199.92 16.50
ANDB Andover Bancorp, Inc. of MA 35.94 232.93 2.06 16.95 17.03 212.04 16.81 212.04 17.45
BFD BostonFed Bancorp of MA 20.63 111.26 1.10 15.06 15.87 136.99 10.79 142.08 18.75
FESX First Essex Bancorp of MA 22.00 166.36 1.23 12.05 16.18 182.57 12.86 207.16 17.89
FFES First Fed of E. Hartford CT 33.00 90.52 2.29 24.99 15.94 132.05 9.13 132.05 14.41
FAB FirstFed America Bancorp of MA 17.88 147.90 0.69 15.35 21.80 116.48 11.54 116.48 25.91
MECH MECH Financial Inc of CT 29.38 155.57 2.49 17.14 11.80 171.41 16.45 171.41 11.80
MASB MassBank Corp. of Reading MA 47.75 171.57 2.65 29.80 16.30 160.23 18.46 162.47 18.02
MDBK Medford Bancorp, Inc of MA 40.25 179.31 2.50 23.23 15.19 173.27 16.01 182.95 16.10
MWBX MetroWest Bank of MA 7.13 101.62 0.53 3.27 13.20 218.04 15.72 218.04 13.45
</TABLE>
<TABLE>
<CAPTION>
Dividends(4) Financial Characteristics(6)
------------ ----------------------------
Amount/ Payout Total Equity/ NPAs/ Reported Core
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
----- ----- -------- ------ ------ ------ --- --- --- ---
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
Superrange 0.00 0.00 0.00 1,986 21.62 0.70 1.30 6.03 1.26 5.83
Range Maximum 0.00 0.00 0.00 1,948 20.10 0.71 1.27 6.33 1.23 6.11
Range Midpoint 0.00 0.00 0.00 1,915 18.73 0.72 1.24 6.64 1.20 6.39
Range Minimum 0.00 0.00 0.00 1,883 17.32 0.74 1.21 7.01 1.17 6.74
BIF-Insured Thrifts(7)
Averages 0.39 1.72 30.14 1,633 12.31 0.59 1.06 10.48 1.00 9.70
Medians -- -- -- -- -- -- -- -- -- --
All Non-MHC State of MA(7)
Averages 0.42 1.82 30.99 611 10.47 0.40 1.12 12.36 1.02 11.03
Medians -- -- -- -- -- -- -- -- -- --
Comparable Group Averages
Averages 0.55 1.97 32.96 984 8.41 0.52 1.01 11.91 0.93 11.09
Medians -- -- -- -- -- -- -- -- -- --
State of MA
ABBK Abington Bancorp of MA 0.20 1.08 18.87 545 6.29 0.14 0.86 12.72 0.73 10.78
AFCB Affiliated Comm BC, Inc. of MA(7) 0.60 1.79 34.68 1,141 10.17 0.36 1.09 11.05 1.04 10.50
ANDB Andover Bancorp, Inc. of MA 0.72 2.00 34.95 1,386 7.93 0.38 1.06 13.16 1.04 12.85
BYS Bay State Bancorp of MA 0.00 0.00 0.00 290 20.71 0.71 0.92 4.44 0.92 4.44
BFD BostonFed Bancorp of MA 0.40 1.94 36.36 1,032 7.87 NA 0.72 8.46 0.61 7.16
CEBK Central Co-Op. Bank of MA 0.32 1.35 26.67 376 9.78 0.44 0.86 8.65 0.67 6.70
FCB Falmouth Bancorp, Inc. of MA 0.24 1.30 44.44 105 22.41 0.05 1.02 4.33 0.81 3.44
FESX First Essex Bancorp of MA 0.56 2.55 45.53 1,293 7.05 0.45 0.84 11.62 0.76 10.51
FAB FirstFed America Bancorp of MA 0.20 1.12 28.99 1,282 9.91 0.29 0.62 5.39 0.52 4.54
HIFS Hingham Inst. For Sav. of MA 0.56 2.07 26.67 232 9.48 0.17 1.25 13.13 1.25 13.13
HPBC Home Port Bancorp, Inc. of MA 0.80 3.27 44.20 226 9.78 0.26 1.47 14.04 1.63 15.59
IPSW Ipswich SB of Ipswich MA 0.16 1.07 20.00 238 5.28 0.80 1.24 22.32 0.94 16.84
LSBX Lawrence Savings Bank of MA 0.00 0.00 0.00 355 11.14 0.24 2.46 25.31 2.42 24.94
MASB MassBank Corp. of Reading MA 1.00 2.09 37.74 929 11.52 0.20 1.15 10.58 1.04 9.57
MFLR Mayflower Co-Op. Bank of MA 0.80 3.72 53.69 136 9.56 0.59 1.15 12.01 1.04 10.78
MDBK Medford Bancorp, Inc. of MA 0.80 1.99 32.00 1,120 9.24 0.18 1.08 11.95 1.01 11.28
MWBX MetroWest Bank of MA 0.12 1.68 22.64 647 7.21 0.64 1.30 17.65 1.27 17.32
MYST Mystic Financial of MA 0.20 1.36 41.67 188 19.06 0.08 0.73 5.82 0.67 5.38
PBKB People's Bancshares of MA 0.56 2.77 NM 864 3.67 0.35 0.76 16.93 0.33 7.45
SISB SIS Bancorp, Inc. of MA(7) 0.64 1.37 32.00 1,794 7.14 0.27 0.69 9.61 0.89 12.32
SWCB Sandwich Bancorp of MA(7) 1.40 2.30 59.57 527 8.08 0.36 0.98 12.21 0.95 11.76
WRNB Warrent Bancorp of Peabody MA 0.36 3.20 43.37 373 11.03 1.27 1.73 16.33 1.80 16.94
Comparable Group
ABBK Abington Bancorp of MA 0.20 1.08 18.87 545 6.29 0.14 0.86 12.72 0.73 10.78
BKC American Bank of Waterbury CT 0.76 3.13 51.70 651 9.02 2.10 1.33 15.35 1.11 12.89
ANDB Andover Bancorp, Inc. of MA 0.72 2.00 34.95 1,386 7.93 0.38 1.06 13.16 1.04 12.85
BFD BostonFed Bancorp of MA 0.40 1.94 36.36 1,032 7.87 NA 0.72 8.46 0.61 7.16
FESX First Essex Bancorp of MA 0.56 2.55 45.53 1,293 7.05 0.45 0.84 11.62 0.76 10.51
FFES First Fed of E. Hartford CT 0.68 2.06 29.69 991 6.92 0.33 0.58 8.73 0.64 9.66
FAB FirstFed America Bancorp of MA 0.20 1.12 28.99 1,282 9.91 0.29 0.62 5.39 0.52 4.54
MECH MECH Financial Inc of CT 0.60 2.04 24.10 946 9.59 0.46 1.54 15.45 1.54 15.45
MASB MassBank Corp. of Reading MA 1.00 2.09 37.74 929 11.52 0.20 1.15 10.58 1.04 9.57
MDBK Medford Bancorp, Inc of MA 0.80 1.99 32.00 1,120 9.24 0.18 1.08 11.95 1.01 11.28
MWBX MetroWest Bank of MA 0.12 1.68 22.64 647 7.21 0.64 1.30 17.65 1.27 17.32
</TABLE>
<TABLE>
<CAPTION>
SWCB
----
Memo Exchange Total
Offering Shares Value
-------- ------ -----
($Mil) ($Mil) ($Mil)
<S> <C> <C> <C>
Compass Bank 317.40 126.86 444.26
Superrange 276.00 126.86 402.86
Range Maximum 240.00 126.86 366.86
Range Midpoint 204.00 126.86 330.86
(1) Average of high/low or bid/ask price per share.
(2) EPS (core basis) is based on actual trailing twelve month data, adjusted to omit the impact of non-operating items
(including the SAIF assessment) on a tax effected basis, and is shown on a pro forma basis where appropriate.
(3) P/E = Price to Earnings; P/B = Price to Book; P/A = Price to Assets; P/TB = Price to Tangible Book; and P/CORE = Price to
Core Earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated twelve month dividend as a percent of trailing twelve month estimated core earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing twelve month common earnings and
average common equity and total assets balances.
(7) Excludes from averages and medians those companies the subject of actual or rumored acquisition activities or unusual
operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc. calculations. The information in this report has been
obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.
</TABLE>
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, L.C.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 7
Public Market Pricing
Compass Bank and the Comparables
As of August 7, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization Core Book Pricing Ratios(3)
Price/ Market 12-Mth Value/
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
-------- ----- ------ ----- --- --- --- ---- ------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
Superrange 10.00 411.45 0.63 10.43 15.89 95.84 20.72 96.50 16.44
Range Maximum 10.00 370.05 0.67 10.58 14.93 94.50 19.00 95.22 15.48
Range Midpoint 10.00 334.05 0.71 10.74 14.03 93.10 17.44 93.87 14.56
Range Minimum 10.00 298.05 0.77 10.94 13.05 91.42 15.83 92.26 13.57
BIF-Insured Thrifts(7)
Averages 21.17 298.77 1.13 13.13 17.96 162.72 18.60 166.93 18.58
Medians -- -- -- -- 16.67 160.23 17.45 162.47 17.79
All Non-MHC State of MA(7)
Averages 22.43 89.87 1.31 14.19 16.54 170.27 16.28 174.65 17.53
Medians -- -- -- -- 15.19 160.33 15.72 162.47 17.45
Comparable Group Averages
Averages 26.97 139.64 1.64 16.37 15.63 171.58 14.29 177.67 17.07
Medians -- -- -- -- 15.87 173.27 15.72 182.95 17.45
State of MA
ABBK Abington Bancorp of MA 18.50 65.34 1.06 9.70 14.80 190.72 11.99 209.75 17.45
AFCB Affiliated Comm BC, Inc. of MA(7) 33.56 223.68 1.73 17.40 18.44 192.87 19.61 193.76 19.40
ANDB Andover Bancorp, Inc. of MA 35.94 232.93 2.06 16.95 17.03 212.04 16.81 212.04 17.45
BYS Bay State Bancorp of MA 25.19 63.86 1.05 23.66 23.99 106.47 22.05 106.47 23.99
BFD BostonFed Bancorp of MA 20.63 111.26 1.10 15.06 15.87 136.99 10.79 142.08 18.75
CEBK Central Co-Op. Bank of MA 23.75 46.67 1.20 18.72 15.32 126.87 12.41 139.71 19.79
FCB Falmouth Bancorp, Inc. of MA 18.50 26.92 0.54 16.19 27.21 114.27 25.60 114.27 NM
FESX First Essex Bancorp of MA 22.00 166.36 1.23 12.05 16.18 182.57 12.86 207.16 17.89
FAB FirstFed America Bancorp of MA 17.88 147.90 0.69 15.35 21.80 116.48 11.54 116.48 25.91
HIFS Hingham Inst. For Sav. of MA 27.00 35.21 2.10 16.84 12.86 160.33 15.20 160.33 12.86
HPBC Home Port Bancorp, Inc. of MA 24.50 45.13 1.81 11.98 15.03 204.51 20.00 204.51 13.54
IPSW Ipswich SB of Ipswich MA 15.00 35.85 0.80 5.25 14.15 285.71 15.09 285.71 18.75
LSBX Lawrence Savings Bank of MA 14.38 62.22 1.99 9.14 7.12 157.33 17.52 157.33 7.23
MASB MassBank Corp. of Reading MA 47.75 171.57 2.65 29.80 16.30 160.23 18.46 162.47 18.02
MFLR Mayflower Co-Op. Bank of MA 21.50 19.35 1.49 14.40 12.95 149.31 14.28 151.52 14.43
MDBK Medford Bancorp, Inc. of MA 40.25 179.31 2.50 23.23 15.19 173.27 16.01 182.95 16.10
MWBX MetroWest Bank of MA 7.13 101.62 0.53 3.27 13.20 218.04 15.72 218.04 13.45
MYST Mystic Financial of MA 14.75 39.99 0.48 13.20 28.37 111.74 21.29 111.74 NM
PBKB People's Bancshares of MA 20.25 67.15 0.70 9.56 12.74 211.82 7.77 219.39 28.93
SISB SIS Bancorp, Inc. of MA(7) 46.81 325.89 2.00 18.41 NM 254.26 18.17 254.26 23.41
SWCB Sandwich Bancorp of MA(7) 60.75 124.11 2.35 20.83 24.90 291.65 23.57 301.19 25.85
WRNB Warrent Bancorp of Peabody MA 11.25 88.93 0.83 5.20 14.06 216.35 23.87 216.35 13.55
Comparable Group
ABBK Abington Bancorp of MA 18.50 65.34 1.06 9.70 14.80 190.72 11.99 209.75 17.45
BKC American Bank of Waterbury CT 24.25 113.66 1.47 12.53 13.86 193.54 17.45 199.92 16.50
ANDB Andover Bancorp, Inc. of MA 35.94 232.93 2.06 16.95 17.03 212.04 16.81 212.04 17.45
BFD BostonFed Bancorp of MA 20.63 111.26 1.10 15.06 15.87 136.99 10.79 142.08 18.75
FESX First Essex Bancorp of MA 22.00 166.36 1.23 12.05 16.18 182.57 12.86 207.16 17.89
FFES First Fed of E. Hartford CT 33.00 90.52 2.29 24.99 15.94 132.05 9.13 132.05 14.41
FAB FirstFed America Bancorp of MA 17.88 147.90 0.69 15.35 21.80 116.48 11.54 116.48 25.91
MECH MECH Financial Inc of CT 29.38 155.57 2.49 17.14 11.80 171.41 16.45 171.41 11.80
MASB MassBank Corp. of Reading MA 47.75 171.57 2.65 29.80 16.30 160.23 18.46 162.47 18.02
MDBK Medford Bancorp, Inc of MA 40.25 179.31 2.50 23.23 15.19 173.27 16.01 182.95 16.10
MWBX MetroWest Bank of MA 7.13 101.62 0.53 3.27 13.20 218.04 15.72 218.04 13.45
</TABLE>
<TABLE>
<CAPTION>
Dividends(4) Financial Characteristics(6)
------------ ----------------------------
Amount/ Payout Total Equity/ NPAs/ Reported Core
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
----- ----- -------- ------ ------ ------ --- --- --- ---
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
Superrange 0.00 0.00 0.00 1,986 21.62 0.70 1.30 6.03 1.26 5.83
Range Maximum 0.00 0.00 0.00 1,948 20.10 0.71 1.27 6.33 1.23 6.11
Range Midpoint 0.00 0.00 0.00 1,915 18.73 0.72 1.24 6.64 1.20 6.39
Range Minimum 0.00 0.00 0.00 1,883 17.32 0.74 1.21 7.01 1.17 6.74
BIF-Insured Thrifts(7)
Averages 0.39 1.72 30.14 1,633 12.31 0.59 1.06 10.48 1.00 9.70
Medians -- -- -- -- -- -- -- -- -- --
All Non-MHC State of MA(7)
Averages 0.42 1.82 30.99 611 10.47 0.40 1.12 12.36 1.02 11.03
Medians -- -- -- -- -- -- -- -- -- --
Comparable Group Averages
Averages 0.55 1.97 32.96 984 8.41 0.52 1.01 11.91 0.93 11.09
Medians -- -- -- -- -- -- -- -- -- --
State of MA
ABBK Abington Bancorp of MA 0.20 1.08 18.87 545 6.29 0.14 0.86 12.72 0.73 10.78
AFCB Affiliated Comm BC, Inc. of MA(7) 0.60 1.79 34.68 1,141 10.17 0.36 1.09 11.05 1.04 10.50
ANDB Andover Bancorp, Inc. of MA 0.72 2.00 34.95 1,386 7.93 0.38 1.06 13.16 1.04 12.85
BYS Bay State Bancorp of MA 0.00 0.00 0.00 290 20.71 0.71 0.92 4.44 0.92 4.44
BFD BostonFed Bancorp of MA 0.40 1.94 36.36 1,032 7.87 NA 0.72 8.46 0.61 7.16
CEBK Central C o-Op. Bank of MA 0.32 1.35 26.67 376 9.78 0.44 0.86 8.65 0.67 6.70
FCB Falmouth Bancorp, Inc. of MA 0.24 1.30 44.44 105 22.41 0.05 1.02 4.33 0.81 3.44
FESX First Essex Bancorp of MA 0.56 2.55 45.53 1,293 7.05 0.45 0.84 11.62 0.76 10.51
FAB FirstFed America Bancorp of MA 0.20 1.12 28.99 1,282 9.91 0.29 0.62 5.39 0.52 4.54
HIFS Hingham Inst. For Sav. of MA 0.56 2.07 26.67 232 9.48 0.17 1.25 13.13 1.25 13.13
HPBC Home Port Bancorp, Inc. of MA 0.80 3.27 44.20 226 9.78 0.26 1.47 14.04 1.63 15.59
IPSW Ipswich SB of Ipswich MA 0.16 1.07 20.00 238 5.28 0.80 1.24 22.32 0.94 16.84
LSBX Lawrence Savings Bank of MA 0.00 0.00 0.00 355 11.14 0.24 2.46 25.31 2.42 24.94
MASB MassBank Corp. of Reading MA 1.00 2.09 37.74 929 11.52 0.20 1.15 10.58 1.04 9.57
MFLR Mayflower Co-Op. Bank of MA 0.80 3.72 53.69 136 9.56 0.59 1.15 12.01 1.04 10.78
MDBK Medford Bancorp, Inc. of MA 0.80 1.99 32.00 1,120 9.24 0.18 1.08 11.95 1.01 11.28
MWBX MetroWest Bank of MA 0.12 1.68 22.64 647 7.21 0.64 1.30 17.65 1.27 17.32
MYST Mystic Financial of MA 0.20 1.36 41.67 188 19.06 0.08 0.73 5.82 0.67 5.38
PBKB People's Bancshares of MA 0.56 2.77 NM 864 3.67 0.35 0.76 16.93 0.33 7.45
SISB SIS Bancorp, Inc. of MA(7) 0.64 1.37 32.00 1,794 7.14 0.27 0.69 9.61 0.89 12.32
SWCB Sandwich Bancorp of MA(7) 1.40 2.30 59.57 527 8.08 0.36 0.98 12.21 0.95 11.76
WRNB Warrent Bancorp of Peabody MA 0.36 3.20 43.37 373 11.03 1.27 1.73 16.33 1.80 16.94
Comparable Group
ABBK Abington Bancorp of MA 0.20 1.08 18.87 545 6.29 0.14 0.86 12.72 0.73 10.78
BKC American Bank of Waterbury CT 0.76 3.13 51.70 651 9.02 2.10 1.33 15.35 1.11 12.89
ANDB Andover Bancorp, Inc. of MA 0.72 2.00 34.95 1,386 7.93 0.38 1.06 13.16 1.04 12.85
BFD BostonFed Bancorp of MA 0.40 1.94 36.36 1,032 7.87 NA 0.72 8.46 0.61 7.16
FESX First Essex Bancorp of MA 0.56 2.55 45.53 1,293 7.05 0.45 0.84 11.62 0.76 10.51
FFES First Fed of E. Hartford CT 0.68 2.06 29.69 991 6.92 0.33 0.58 8.73 0.64 9.66
FAB FirstFed America Bancorp of MA 0.20 1.12 28.99 1,282 9.91 0.29 0.62 5.39 0.52 4.54
MECH MECH Financial Inc of CT 0.60 2.04 24.10 946 9.59 0.46 1.54 15.45 1.54 15.45
MASB MassBank Corp. of Reading MA 1.00 2.09 37.74 929 11.52 0.20 1.15 10.58 1.04 9.57
MDBK Medford Bancorp, Inc of MA 0.80 1.99 32.00 1,120 9.24 0.18 1.08 11.95 1.01 11.28
MWBX MetroWest Bank of MA 0.12 1.68 22.64 647 7.21 0.64 1.30 17.65 1.27 17.32
</TABLE>
<TABLE>
<CAPTION>
SWCB
----
Memo Exchange Total
Offering Shares Value
-------- ------ -----
($Mil) ($Mil) ($Mil)
<S> <C> <C> <C>
Compass Bank 317.40 94.05 411.45
Superrange 276.00 94.05 370.05
Range Maximum 240.00 94.05 334.05
Range Midpoint 204.00 94.05 298.05
(1) Average of high/low or bid/ask price per share.
(2) EPS (core basis) is based on actual trailing twelve month data, adjusted to omit the impact of non-operating items
(including the SAIF assessment) on a tax effected basis, and is shown on a pro forma basis where appropriate.
(3) P/E = Price to Earnings; P/B = Price to Book; P/A = Price to Assets; P/TB = Price to Tangible Book; and P/CORE = Price to
Core Earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated twelve month dividend as a percent of trailing twelve month estimated core earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing twelve month common earnings and
average common equity and total assets balances.
(7) Excludes from averages and medians those companies the subject of actual or rumored acquisition activities or unusual
operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc. calculations. The information in this report has been
obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
</TABLE>
<PAGE>
EXHIBITS
<PAGE>
LIST OF EXHIBITS
Exhibit
Number Description
- ------ -----------
1 Stock Prices: As of August 7, 1998
2 Peer Group Core Earnings Analysis
3 Pro Forma Analysis Sheet
4 Pro Forma Effect of Conversion Proceeds
5 Firm Qualifications Statement
<PAGE>
EXHIBIT 1
Stock Prices
As of August 7, 1998
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1
Weekly Thrift Market Line - Part One
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- --------------------------------------------------
52 Week (1) % Change From
Shares Market --------------- ------------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHC)
- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(287) 18.95 7,356 165.0 23.52 16.01 19.57 -3.14 16.57 -3.95
NYSE Traded Companies(8) 33.20 39,352 1,507.1 44.71 28.43 34.42 -2.35 5.08 -10.15
AMEX Traded Companies(22) 16.23 3,326 51.5 20.91 15.00 16.76 -2.95 5.36 -7.94
NASDAQ Listed OTC Companies(257) 18.82 6,900 140.8 23.22 15.79 19.45 -3.18 17.87 -3.43
California Companies(18) 24.03 14,596 551.6 30.67 20.36 25.26 -4.97 9.22 -6.53
Florida Companies(6) 18.80 25,422 402.6 24.64 15.95 19.67 -3.73 8.41 -15.52
Mid-Atlantic Companies(57) 19.05 11,083 198.9 23.76 15.88 19.62 -2.76 18.38 -3.62
Mid-West Companies(131) 18.34 5,251 114.4 22.71 15.47 18.89 -3.02 15.88 -4.78
New England Companies(8) 20.20 8,361 220.2 25.13 17.82 21.03 -3.80 16.76 -5.44
North-West Companies(11) 20.15 11,024 254.7 24.19 18.02 20.69 -2.40 16.36 5.94
South-East Companies(44) 18.74 4,225 98.5 23.22 15.59 19.35 -3.03 20.02 -0.56
South-West Companies(6) 15.96 2,788 54.0 19.23 13.24 16.59 -3.26 22.28 -7.49
Western Companies (Excl CA)(6) 18.31 2,142 43.1 22.10 17.13 19.30 -5.06 15.44 -8.40
Thrift Strategy(242) 18.25 5,081 101.0 22.60 15.57 18.83 -3.12 16.17 -3.87
Mortgage Banker Strategy(27) 23.89 20,929 585.9 30.14 19.45 24.94 -3.80 20.34 -7.41
Real Estate Strategy(8) 21.76 8,292 147.1 25.94 15.84 22.37 -3.06 30.87 12.40
Diversified Strategy(7) 24.76 45,528 1,145.8 32.13 21.26 25.51 -1.76 -0.46 -12.74
Retail Banking Strategy(3) 18.63 4,499 96.9 23.42 14.69 19.21 -2.56 20.63 -6.33
Companies Issuing Dividends(238) 19.48 6,939 168.4 24.20 16.40 20.13 -3.10 15.30 -5.80
Companies Without Dividends(49) 16.36 9,368 148.4 20.28 14.15 16.90 -3.34 22.66 4.96
Equity/Assets [less than] 6%(21) 19.57 18,825 385.9 24.91 15.19 20.12 -2.96 23.12 -3.31
Equity/Assets 6-12%(123) 20.92 7,766 216.1 25.83 16.92 21.69 -3.45 20.49 -5.29
Equity/Assets [greater than] 12%(143) 17.20 5,361 90.2 21.38 15.36 17.71 -2.90 12.30 -2.90
Converted Last 3 Mths (no MHC)(6) 11.51 14,346 186.4 12.49 10.30 11.97 -3.67 15.10 25.64
Actively Traded Companies(31) 25.83 26,248 741.0 32.88 22.09 26.99 -3.92 14.85 -10.41
Market Value Below $20 Million(54) 14.31 1,106 15.1 18.15 12.66 14.65 -2.33 8.71 -8.35
Holding Company Structure(258) 19.26 7,236 168.4 23.94 16.32 19.92 -3.28 15.89 -4.02
Assets Over $1 Billion(60) 24.21 24,813 615.3 30.32 20.26 25.07 -3.07 16.46 -4.20
Assets $500 Million-$1 Billion(38) 20.45 6,020 112.5 24.82 16.68 21.12 -3.27 19.39 -3.37
Assets $250-$500 Million(68) 19.51 3,539 63.2 23.91 16.24 20.06 -2.80 22.37 0.30
Assets less than $250 Million(121) 15.78 1,698 26.1 19.81 13.74 16.33 -3.31 12.73 -6.23
Goodwill Companies(114) 20.77 13,370 291.3 25.86 17.10 21.48 -3.20 19.50 -4.41
Non-Goodwill Companies(172) 17.86 3,526 86.0 22.15 15.37 18.44 -3.11 14.79 -3.73
Acquirors of FSLIC Cases(8) 34.44 30,789 1,417.0 43.56 30.07 35.67 -2.35 11.41 -6.65
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
Market Averages. SAIF-Insured Thrifts(no MHC)
- --------------------------------------------
<S> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(287) 0.98 0.93 13.66 13.26 121.22
NYSE Traded Companies(8) 2.17 1.79 18.39 17.97 250.32
AMEX Traded Companies(22) 0.82 0.78 14.00 13.68 111.25
NASDAQ Listed OTC Companies(257) 0.96 0.92 13.51 13.10 118.81
California Companies(18) 1.47 1.38 16.83 16.08 225.16
Florida Companies(6) 0.97 0.57 11.28 10.75 144.55
Mid-Atlantic Companies(57) 1.00 0.96 13.20 12.48 134.95
Mid-West Companies(131) 0.93 0.89 13.72 13.45 109.03
New England Companies(8) 1.16 1.10 13.19 12.70 179.91
North-West Companies(11) 1.03 0.92 13.32 12.90 103.48
South-East Companies(44) 0.89 0.84 13.32 13.11 95.60
South-West Companies(6) 1.16 1.14 12.46 12.06 151.98
Western Companies (Excl CA)(6) 0.84 0.85 15.03 14.26 90.36
Thrift Strategy(242) 0.94 0.90 13.80 13.46 112.03
Mortgage Banker Strategy(27) 1.24 1.20 13.34 12.31 186.80
Real Estate Strategy(8) 1.38 1.28 12.23 11.83 169.89
Diversified Strategy(7) 1.28 0.86 10.98 10.76 137.28
Retail Banking Strategy(3) 0.40 0.26 13.88 13.36 205.51
Companies Issuing Dividends(238) 1.03 0.96 13.81 13.37 120.10
Companies Without Dividends(49) 0.75 0.77 12.94 12.71 126.62
Equity/Assets [less than] 6%(21) 1.09 1.15 10.29 9.73 209.74
Equity/Assets 6-12%(123) 1.15 1.05 13.32 12.61 154.96
Equity/Assets [greater than] 12%(143) 0.82 0.79 14.43 14.31 80.10
Converted Last 3 Mths (no MHC)(6) 0.47 0.49 11.62 11.62 50.48
Actively Traded Companies(31) 1.52 1.58 14.74 14.11 178.51
Market Value Below $20 Million(54) 0.73 0.66 12.71 12.63 94.31
Holding Company Structure(258) 0.99 0.94 13.87 13.46 121.77
Assets Over $1 Billion(60) 1.37 1.30 14.04 12.93 186.20
Assets $500 Million-$1 Billion(38) 1.01 0.94 13.23 12.75 134.70
Assets $250-$500 Million(68) 1.02 0.98 14.14 13.78 123.39
Assets less than $250 Million(121) 0.77 0.73 13.36 13.29 86.16
Goodwill Companies(114) 1.12 1.04 13.44 12.39 149.56
Non-Goodwill Companies(172) 0.90 0.86 13.81 13.81 103.98
Acquirors of FSLIC Cases(8) 2.35 2.27 20.53 19.72 258.42
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1996 or 1997. Percent change figures are actual year-to-date and
are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing twelve month common earnings and
average common equity and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk. Parentheses following market averages indicate the
number of institutions included in the respective averages. All figures have been adjusted for stock splits, stock
dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies, and RP Financial, Inc. calculations. The
information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- --------------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ---- ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(56) 21.28 12,172 298.4 26.45 17.24 22.16 -4.11 19.34 -6.57
NYSE Traded Companies(5) 32.30 50,883 1,554.9 38.25 27.01 34.11 -5.13 31.51 3.51
AMEX Traded Companies(5) 17.95 2,424 45.7 23.20 14.59 19.34 -6.82 20.27 -6.37
NASDAQ Listed OTC Companies(46) 20.36 8,724 178.9 25.43 16.40 21.07 -3.66 17.78 -7.79
California Companies(1) 19.50 7,697 150.1 24.00 17.38 20.00 -2.50 7.56 1.30
Mid-Atlantic Companies(20) 23.51 21,067 564.2 28.29 18.98 24.46 -3.89 25.26 -4.63
New England Companies(30) 20.99 7,091 146.6 26.29 16.71 21.93 -4.72 21.76 -4.48
North-West Companies(2) 15.25 5,866 89.9 19.71 14.15 15.75 -3.17 3.57 -15.80
South-East Companies(3) 13.50 2,611 30.1 20.96 12.25 13.81 -1.36 -26.70 -34.05
Thrift Strategy(44) 21.44 8,274 209.2 26.65 17.58 22.40 -4.38 19.12 -6.28
Mortgage Banker Strategy(6) 22.31 28,408 737.2 28.00 16.85 23.11 -4.02 19.00 -11.34
Real Estate Strategy(2) 15.38 7,801 119.5 19.19 13.07 15.94 -3.90 17.12 -0.44
Diversified Strategy(4) 20.96 35,891 759.3 25.50 16.25 21.13 -0.62 24.50 -4.97
Companies Issuing Dividends(49) 22.12 13,463 335.0 27.49 17.86 23.05 -4.23 17.51 -8.07
Companies Without Dividends(7) 15.85 3,876 63.1 19.82 13.25 16.41 -3.33 31.11 3.08
Equity/Assets [less than] 6%(4) 20.83 32,946 896.0 26.27 14.91 21.53 -3.36 30.83 -7.02
Equity/Assets 6-12%(34) 23.05 10,285 278.4 28.11 18.16 24.10 -4.86 19.16 -6.91
Equity/Assets [greater than] 12%(18) 18.43 10,702 198.8 23.73 16.24 19.07 -3.01 17.08 -5.89
Converted Last 3 Mths (no MHC)(1) 8.38 3,101 26.0 11.27 6.80 8.63 -2.90 23.24 -25.64
Actively Traded Companies(15) 27.63 19,948 521.0 33.43 21.57 28.45 -2.89 23.23 -4.80
Market Value Below $20 Million(2) 11.29 1,634 18.2 17.32 10.13 11.57 -2.14 -16.05 -31.02
Holding Company Structure(43) 21.31 9,870 214.3 26.29 17.37 22.08 -3.75 19.47 -5.30
Assets Over $1 Billion(18) 28.18 31,772 840.3 33.54 22.11 29.03 -2.59 26.69 -1.90
Assets $500 Million-$1 Billion(10) 22.33 5,803 107.3 27.17 17.78 23.24 -4.45 16.99 -7.40
Assets $250-$500 Million(12) 17.35 3,923 62.5 22.40 14.89 18.23 -5.22 19.41 -11.16
Assets less than $250 Million(16) 16.80 1,945 28.9 22.05 13.87 17.70 -4.61 13.12 -7.37
Goodwill Companies(29) 22.06 18,971 467.6 27.18 17.32 22.91 -3.83 25.58 -5.88
Non-Goodwill Companies(27) 20.49 5,374 129.2 25.73 17.16 21.41 -4.38 13.10 -7.26
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
--------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
<S> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(56) 1.24 1.16 13.32 12.87 126.78
NYSE Traded Companies(5) 1.49 1.46 20.77 18.92 137.03
AMEX Traded Companies(5) 1.18 1.02 12.88 12.47 114.17
NASDAQ Listed OTC Companies(46) 1.22 1.15 12.48 12.20 127.06
California Companies(1) 1.70 1.70 13.37 13.33 131.35
Mid-Atlantic Companies(20) 1.08 1.05 14.53 13.91 125.36
New England Companies(30) 1.40 1.27 12.72 12.32 136.33
North-West Companies(2) 1.07 1.05 9.21 9.21 89.69
South-East Companies(3) 0.88 0.91 13.11 12.92 76.72
Thrift Strategy(44) 1.23 1.15 14.12 13.73 125.77
Mortgage Banker Strategy(6) 1.33 1.23 11.65 10.94 146.79
Real Estate Strategy(2) 1.25 1.27 9.29 9.27 89.24
Diversified Strategy(4) 1.19 1.13 8.30 7.37 125.61
Companies Issuing Dividends(49) 1.29 1.20 13.43 12.91 132.94
Companies Without Dividends(7) 0.93 0.91 12.59 12.58 87.14
Equity/Assets [less than] 6%(4) 1.32 0.96 8.38 7.77 169.05
Equity/Assets 6-12%(34) 1.48 1.40 12.80 12.22 148.50
Equity/Assets [greater than] 12%(18) 0.83 0.82 15.28 15.09 81.18
Converted Last 3 Mths (no MHC)(1) 0.37 0.37 9.41 9.41 47.49
Actively Traded Companies(15) 1.80 1.61 15.97 15.31 166.41
Market Value Below $20 Million(2) 0.75 0.73 12.50 12.50 86.28
Holding Company Structure(43) 1.21 1.14 13.62 13.32 120.88
Assets Over $1 Billion(18) 1.47 1.42 15.06 14.07 142.17
Assets $500 Million-$1 Billion(10) 1.53 1.31 13.43 13.18 153.95
Assets $250-$500 Million(12) 1.10 1.05 12.15 11.89 112.27
Assets less than $250 Million(16) 0.97 0.93 12.39 12.25 108.68
Goodwill Companies(29) 1.29 1.18 13.24 12.35 141.23
Non-Goodwill Companies(27) 1.19 1.15 13.39 13.39 112.33
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1996 or 1997. Percent change figures are actual year-to-date and
are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing twelve month common earnings and
average common equity and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk. Parentheses following market averages indicate the
number of institutions included in the respective averages. All figures have been adjusted for stock splits, stock
dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies, and RP Financial, Inc. calculations. The
information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 17.47 9,397 52.8 24.29 13.77 18.57 -5.73 34.63 -5.23
BIF-Insured Thrifts(3) 19.33 32,239 305.4 28.09 16.19 20.90 -7.43 29.70 -5.83
NASDAQ Listed OTC Companies(22) 17.74 12,824 90.7 24.86 14.13 18.92 -5.98 33.89 -5.32
Florida Companies(2) 26.75 6,802 86.2 35.38 22.25 29.00 -7.76 15.05 -17.69
Mid-Atlantic Companies(12) 15.37 11,884 57.6 22.35 11.61 16.65 -6.92 40.10 -7.25
Mid-West Companies(5) 21.69 2,336 22.5 29.13 16.99 22.50 -3.68 27.05 -12.61
New England Companies(2) 21.77 46,613 458.9 29.56 19.94 22.66 -4.03 19.72 7.51
South-East Companies(1) 13.38 4,497 28.3 18.06 13.25 14.25 -6.11 33.80 33.80
Thrift Strategy(20) 17.00 8,799 51.5 23.79 13.79 18.28 -6.65 29.97 -4.48
Mortgage Banker Strategy(1) 19.00 33,965 155.2 27.88 7.88 18.31 3.77 135.15 -4.43
Diversified Strategy(1) 29.91 64,130 731.4 41.13 26.56 31.06 -3.70 3.14 -21.29
Companies Issuing Dividends(20) 18.42 12,379 90.2 26.03 14.43 19.70 -6.37 35.81 -7.75
Companies Without Dividends(2) 11.66 16,829 95.4 14.35 11.41 11.94 -2.52 16.60 16.60
Equity/Assets 6-12%(12) 20.63 15,523 117.7 30.12 14.95 22.09 -6.72 46.24 -14.39
Equity/Assets [greater than] 12%(10) 14.22 9,524 57.6 18.44 13.13 15.04 -5.08 18.78 5.77
Holding Company Structure(4) 15.43 9,743 57.3 21.21 12.20 16.47 -6.02 32.72 -0.66
Assets Over $1 Billion(5) 20.27 36,299 266.2 27.88 15.51 21.10 -3.51 45.56 -4.90
Assets $500 Million-$1 Billion(3) 22.07 15,968 113.1 28.49 18.78 23.13 -4.52 31.04 16.18
Assets $250-$500 Million(5) 18.28 4,125 24.1 25.98 13.14 19.20 -3.85 42.41 -7.39
Assets less than $250 Million(9) 14.75 2,802 17.0 21.38 12.73 16.33 -9.23 21.98 -9.66
Goodwill Companies(7) 20.88 23,361 177.2 28.59 15.83 22.21 -5.97 43.15 -8.88
Non-Goodwill Companies(15) 16.06 7,150 44.1 22.85 13.21 17.15 -5.99 28.90 -3.40
MHC Institutions(22) 17.74 12,824 90.7 24.86 14.13 18.92 -5.98 33.89 -5.32
MHC Converted Last 3 Months(2) 11.13 5,009 23.5 12.16 11.01 11.44 -2.76 11.30 11.30
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 0.60 0.57 9.23 8.97 80.65
BIF-Insured Thrifts(3) 0.86 0.59 9.88 8.83 85.18
NASDAQ Listed OTC Companies(22) 0.64 0.57 9.33 8.95 81.33
Florida Companies(2) 1.07 0.92 13.01 12.62 194.16
Mid-Atlantic Companies(12) 0.52 0.50 8.18 7.99 65.37
Mid-West Companies(5) 0.76 0.71 11.06 10.31 109.81
New England Companies(2) 0.98 0.64 11.25 10.31 85.38
South-East Companies(1) 0.43 0.43 8.56 8.56 38.07
Thrift Strategy(20) 0.60 0.57 9.33 9.04 78.75
Mortgage Banker Strategy(1) 0.55 0.45 5.41 4.86 66.55
Diversified Strategy(1) 1.49 0.80 13.17 11.28 142.67
Companies Issuing Dividends(20) 0.65 0.57 9.44 9.02 84.52
Companies Without Dividends(2) 0.59 0.58 8.31 8.31 52.63
Equity/Assets 6-12%(12) 0.73 0.61 9.39 8.70 105.72
Equity/Assets [greater than] 12%(10) 0.53 0.53 9.24 9.24 51.52
Holding Company Structure(4) 0.63 0.58 8.65 8.34 69.78
Assets Over $1 Billion(5) 0.81 0.61 8.89 8.23 99.68
Assets $500 Million-$1 Billion(3) 0.81 0.82 11.92 10.41 114.68
Assets $250-$500 Million(5) 0.53 0.51 8.33 8.33 72.12
Assets less than $250 Million(9) 0.56 0.53 9.57 9.41 67.29
Goodwill Companies(7) 0.81 0.66 9.44 8.36 110.02
Non-Goodwill Companies(15) 0.55 0.52 9.26 9.26 65.89
MHC Institutions(22) 0.64 0.57 9.33 8.95 81.33
MHC Converted Last 3 Months(2) 0.52 0.52 7.79 7.79 53.22
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1996 or 1997. Percent change figures are actual year-to-date and
are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing twelve month common earnings and
average common equity and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk. Parentheses following market averages indicate the
number of institutions included in the respective averages. All figures have been adjusted for stock splits, stock
dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies, and RP Financial, Inc. calculations. The
information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AHM Ahmanson and Co. H.F. of CA(8) 62.25 112,748 7,018.6 82.81 49.63 66.06 -5.77 21.46 -7.01
BYS Bay State Bancorp of MA* 25.19 2,535 63.9 32.63 24.75 26.50 -4.94 25.95 25.95
CFB Commercial Federal Corp. of NE 26.81 42,056 1,127.5 38.19 26.29 28.13 -4.69 -0.85 -24.61
DME Dime Bancorp, Inc. of NY* 28.50 113,533 3,235.7 32.69 18.63 29.75 -4.20 42.07 -5.79
DSL Downey Financial Corp. of CA 32.00 28,105 899.4 35.00 20.48 32.50 -1.54 50.16 18.17
FED FirstFed Fin. Corp. of CA 20.81 21,215 441.5 26.94 15.94 21.75 -4.32 27.05 7.38
GSB Golden State Bancorp of CA(8) 24.13 55,485 1,338.9 41.81 24.00 28.00 -13.82 -19.57 -35.55
GDW Golden West Fin. Corp. of CA 87.94 57,591 5,064.6 114.25 78.94 92.38 -4.81 6.35 -10.09
GPT GreenPoint Fin. Corp. of NY* 37.13 83,383 3,096.0 42.63 29.34 39.88 -6.90 12.72 2.34
JSB JSB Financial, Inc. of NY* 51.31 9,833 504.5 59.69 43.50 54.19 -5.31 15.30 2.50
OCN Ocwen Financial Corp. of FL 19.63 60,772 1,193.0 30.38 18.00 20.25 -3.06 -10.77 -22.84
SIB Staten Island Bancorp of NY* 19.38 45,130 874.6 23.63 18.81 20.25 -4.30 61.50 -7.45
WES Westcorp Inc. of Orange CA 12.00 26,374 316.5 23.50 10.94 11.50 4.35 -41.46 -28.91
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 22.00 2,505 55.1 25.63 21.38 22.00 0.00 0.55 -5.90
ANE Alliance Bncp of New Eng of CT* 12.50 2,493 31.2 16.08 10.00 13.06 -4.29 13.64 13.64
BKC American Bank of Waterbury CT* 24.25 4,687 113.7 32.56 17.88 27.00 -10.19 28.04 -0.53
BFD BostonFed Bancorp of MA 20.63 5,393 111.3 24.88 18.75 22.13 -6.78 3.46 -5.71
CNY Carver Bancorp, Inc. of NY 12.13 2,314 28.1 17.13 11.88 12.13 0.00 -2.96 -25.35
CBK Citizens First Fin.Corp. of IL 17.63 2,536 44.7 22.38 16.00 17.50 0.74 4.44 -12.94
EFC EFC Bancorp Inc of IL 12.00 6,937 83.2 14.94 11.75 12.75 -5.88 20.00 20.00
EBI Equality Bancorp, Inc. of MO 13.06 2,486 32.5 16.00 12.50 13.38 -2.39 30.60 -9.93
ESX Essex Bancorp of Norfolk VA(8) 2.81 1,059 3.0 7.94 1.56 3.13 -10.22 80.13 -28.68
FCB Falmouth Bancorp, Inc. of MA* 18.50 1,455 26.9 23.88 16.88 20.00 -7.50 6.44 -9.76
FAB FirstFed America Bancorp of MA 17.88 8,272 147.9 23.25 17.75 18.75 -4.64 -4.03 -18.28
GAF GA Financial Corp. of PA 15.50 7,220 111.9 22.25 15.19 17.31 -10.46 -10.82 -17.90
HBS Haywood Bancshares, Inc. of NC* 20.50 1,250 25.6 24.00 18.50 21.50 -4.65 10.81 -8.89
KNK Kankakee Bancorp, Inc. of IL 31.13 1,380 43.0 37.75 29.00 32.50 -4.22 5.53 -17.54
KYF Kentucky First Bancorp of KY 14.38 1,240 17.8 15.88 12.19 13.88 3.60 16.82 -3.75
NBN Northeast Bancorp of ME* 14.00 2,237 31.3 19.50 9.67 15.13 -7.47 42.42 -26.32
NEP Northeast PA Fin. Corp of PA 13.38 6,427 86.0 16.00 13.25 13.88 -3.60 33.80 33.80
PDB Piedmont Bancorp, Inc. of NC 10.00 2,751 27.5 11.63 9.50 9.63 3.84 -9.58 -8.09
SSB Scotland Bancorp, Inc. of NC 9.00 1,914 17.2 19.25 8.13 9.75 -7.69 -47.06 -9.46
SZB SouthFirst Bancshares of AL 17.38 967 16.8 22.75 15.88 17.88 -2.80 2.24 -23.60
SRN Southern Banc Company of AL 15.38 1,230 18.9 19.13 15.38 15.50 -0.77 -2.35 -13.35
SSM Stone Street Bancorp of NC 17.63 1,843 32.5 22.50 17.63 18.38 -4.08 -18.94 -20.55
TSH Teche Holding Company of LA 17.13 3,439 58.9 23.50 17.13 18.25 -6.14 -6.80 -24.70
FTF Texarkana Fst. Fin. Corp of AR 27.50 1,738 47.8 30.63 22.25 27.63 -0.47 19.57 10.00
THR Three Rivers Fin. Corp. of MI 16.25 825 13.4 23.50 15.63 17.13 -5.14 2.33 -25.29
WSB Washington SB, FSB of MD 6.19 4,421 27.4 9.50 5.88 6.25 -0.96 -5.64 -31.68
WFI Winton Financial Corp. of OH 14.63 4,014 58.7 20.63 7.88 15.25 -4.07 81.51 43.57
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 45.00 1,090 49.1 45.00 21.59 43.50 3.45 102.52 53.64
FBER 1st Bergen Bancorp of NJ 17.88 2,729 48.8 20.75 15.94 19.00 -5.89 -8.31 -6.53
AFED AFSALA Bancorp, Inc. of NY(8) 16.88 1,378 23.3 20.75 15.63 18.38 -8.16 6.30 -12.31
ALBK ALBANK Fin. Corp. of Albany NY(8) 64.75 13,222 856.1 74.63 37.13 69.13 -6.34 68.18 25.87
AMFC AMB Financial Corp. of IN 16.63 916 15.2 19.38 14.50 16.63 0.00 10.87 4.72
ASBP ASB Financial Corp. of OH 12.31 1,635 20.1 16.75 12.25 13.38 -8.00 0.49 -7.09
ABBK Abington Bancorp of MA* 18.50 3,532 65.3 22.25 13.88 19.25 -3.90 24.33 -11.90
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA(8) 3.50 3.30 26.34 19.38 483.55
BYS Bay State Bancorp of MA* 1.05 1.05 23.66 23.66 114.26
CFB Commercial Federal Corp. of NE 1.49 1.76 14.63 12.79 211.60
DME Dime Bancorp, Inc. of NY* 1.29 1.04 11.45 9.37 193.99
DSL Downey Financial Corp. of CA 1.80 1.84 15.87 15.69 208.93
FED FirstFed Fin. Corp. of CA 1.23 1.19 10.96 10.88 191.72
GSB Golden State Bancorp of CA(8) 1.89 2.04 17.44 15.73 288.89
GDW Golden West Fin. Corp. of CA 6.48 6.50 48.88 48.88 688.81
GPT GreenPoint Fin. Corp. of NY* 1.70 1.76 15.34 8.56 158.64
JSB JSB Financial, Inc. of NY* 2.99 2.66 37.88 37.88 159.05
OCN Ocwen Financial Corp. of FL 1.39 0.27 7.36 6.98 56.29
SIB Staten Island Bancorp of NY* 0.43 0.79 15.51 15.11 59.19
WES Westcorp Inc. of Orange CA 0.63 -0.84 12.62 12.59 144.57
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 1.17 1.10 17.97 17.97 117.17
ANE Alliance Bncp of New Eng of CT* 0.87 0.51 7.91 7.72 99.21
BKC American Bank of Waterbury CT* 1.75 1.47 12.53 12.13 138.94
BFD BostonFed Bancorp of MA 1.30 1.10 15.06 14.52 191.28
CNY Carver Bancorp, Inc. of NY 0.45 0.40 15.36 14.82 189.05
CBK Citizens First Fin.Corp. of IL 0.78 0.49 15.27 15.27 110.35
EFC EFC Bancorp Inc of IL 0.56 0.56 12.42 12.42 52.24
EBI Equality Bancorp, Inc. of MO 0.50 0.03 10.39 10.39 102.80
ESX Essex Bancorp of Norfolk VA(8) -0.20 -0.19 0.03 -0.14 182.29
FCB Falmouth Bancorp, Inc. of MA* 0.68 0.54 16.19 16.19 72.26
FAB FirstFed America Bancorp of MA 0.82 0.69 15.35 15.35 154.96
GAF GA Financial Corp. of PA 1.16 1.09 15.87 15.73 113.31
HBS Haywood Bancshares, Inc. of NC* 1.76 1.76 18.06 17.49 121.60
KNK Kankakee Bancorp, Inc. of IL 2.20 2.14 27.92 23.23 289.48
KYF Kentucky First Bancorp of KY 0.79 0.78 11.24 11.24 65.97
NBN Northeast Bancorp of ME* 0.82 0.81 9.72 8.83 138.86
NEP Northeast PA Fin. Corp of PA -0.60 0.37 13.07 13.07 68.99
PDB Piedmont Bancorp, Inc. of NC 0.57 0.57 7.77 7.77 48.28
SSB Scotland Bancorp, Inc. of NC 0.50 0.50 7.91 7.91 32.02
SZB SouthFirst Bancshares of AL 0.70 0.65 16.91 16.49 167.82
SRN Southern Banc Company of AL 0.42 0.42 14.95 14.84 85.95
SSM Stone Street Bancorp of NC 0.80 0.80 16.85 16.85 60.21
TSH Teche Holding Company of LA 1.09 1.08 16.38 16.38 118.43
FTF Texarkana Fst. Fin. Corp of AR 1.79 1.76 16.19 16.19 106.32
THR Three Rivers Fin. Corp. of MI 1.01 0.94 16.08 16.02 118.86
WSB Washington SB, FSB of MD 0.44 0.30 5.21 5.21 61.87
WFI Winton Financial Corp. of OH 0.80 0.66 5.80 5.68 80.84
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 1.82 1.24 21.48 21.13 238.13
FBER 1st Bergen Bancorp of NJ 0.78 0.78 13.54 13.54 115.82
AFED AFSALA Bancorp, Inc. of NY(8) 0.87 0.89 14.61 14.61 120.41
ALBK ALBANK Fin. Corp. of Albany NY(8) 3.32 3.29 27.74 21.70 309.29
AMFC AMB Financial Corp. of IN 1.05 0.60 15.54 15.54 110.17
ASBP ASB Financial Corp. of OH 0.66 0.65 10.68 10.68 70.28
ABBK Abington Bancorp of MA* 1.25 1.06 9.70 8.82 154.28
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,/
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- - ------ ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AABC Access Anytime Bancorp of NM 10.50 1,217 12.8 13.00 6.37 10.75 -2.33 61.54 -4.55
AFBC Advance Fin. Bancorp of WV 16.38 1,074 17.6 20.88 15.25 16.75 -2.21 7.41 -5.75
AFCB Affiliated Comm BC, Inc of MA(8) 33.56 6,665 223.7 41.88 24.63 35.25 -4.79 32.91 -11.10
ALBC Albion Banc Corp. of Albion NY 8.75 752 6.6 14.17 7.75 8.75 0.00 11.04 -34.36
ABCL Alliance Bancorp, Inc. of IL 23.88 11,435 273.1 29.25 20.58 23.25 2.71 15.08 -9.89
ALLB Alliance Bank MHC of PA (19.9) 21.50 3,273 14.0 39.00 15.13 25.50 -15.69 42.10 -30.65
AHCI Ambanc Holding Co., Inc. of NY* 15.88 4,258 67.6 20.00 14.13 17.50 -9.26 -1.55 -15.31
ASBI Ameriana Bancorp of IN 17.75 3,252 57.7 22.00 17.75 19.63 -9.58 -6.58 -10.71
ABCW Anchor Bancorp Wisconsin of WI 45.00 8,920 401.4 46.50 25.25 46.25 -2.70 73.08 23.69
ANDB Andover Bancorp, Inc. of MA* 35.94 6,481 232.9 39.88 23.70 35.75 0.53 44.92 11.61
ASFC Astoria Financial Corp. of NY 49.63 26,531 1,316.7 62.50 45.38 50.13 -1.00 3.40 -10.98
AVND Avondale Fin. Corp. of IL 14.63 3,060 44.8 18.88 14.13 16.75 -12.66 -0.81 -9.97
BCSB BCSB Bankcorp MHC of MD (38.6) 11.63 6,117 27.5 12.63 11.38 11.63 0.00 16.30 16.30
BKCT Bancorp Connecticut of CT* 16.75 5,113 85.6 25.00 13.63 18.00 -6.94 17.54 -20.24
BPLS Bank Plus Corp. of CA 10.63 19,387 206.1 16.13 9.50 10.81 -1.67 -9.53 -15.84
BNKU Bank United Corp. of TX 43.38 31,596 1,370.6 56.00 35.88 44.63 -2.80 11.57 -11.36
BWFC Bank West Fin. Corp. of MI 11.63 2,624 30.5 17.50 9.92 14.00 -16.93 15.38 -27.90
BANC BankAtlantic Bancorp of FL 10.75 36,676 394.3 17.00 10.69 11.25 -4.44 -35.36 -35.82
BKUNA BankUnited Fin. Corp. of FL 12.19 15,468 188.6 18.50 10.88 12.75 -4.39 10.82 -20.90
BVCC Bay View Capital Corp. of CA 24.25 20,276 491.7 38.00 24.25 27.69 -12.42 -6.73 -33.10
FSNJ Bayonne Banchsares of NJ 16.25 9,094 147.8 17.38 10.91 16.75 -2.99 48.95 21.45
BFSB Bedford Bancshares, Inc. of VA 14.31 2,298 32.9 17.38 11.50 15.00 -4.60 15.59 -15.82
BFFC Big Foot Fin. Corp. of IL 16.00 2,513 40.2 23.94 16.00 16.50 -3.03 -8.57 -23.81
BYFC Broadway Fin. Corp. of CA 9.72 933 9.1 12.73 9.72 11.00 -11.64 0.00 -20.78
BRKL Brookline Bncp MHC of MA(47.0) 13.63 29,095 186.4 17.98 13.31 14.25 -4.35 36.30 36.30
CBES CBES Bancorp, Inc. of MO 19.00 940 17.9 26.00 17.25 19.84 -4.23 8.57 -14.61
CCFH CCF Holding Company of GA 20.50 897 18.4 24.00 15.00 21.00 -2.38 31.66 1.84
CITZ CFS Bancorp, Inc. of IN 10.81 22,727 245.7 11.44 10.38 10.94 -1.19 8.10 8.10
CFSB CFSB Bancorp of Lansing MI 24.00 8,167 196.0 28.75 15.76 25.13 -4.50 46.70 0.59
CKFB CKF Bancorp of Danville KY 18.13 843 15.3 21.25 17.75 19.00 -4.58 -9.35 -2.00
CNSB CNS Bancorp, Inc. of MO 15.75 1,645 25.9 21.50 15.75 16.50 -4.55 -7.35 -23.17
CSBF CSB Financial Group Inc of IL 10.63 840 8.9 14.00 10.63 11.63 -8.60 -11.42 -21.26
CBCI Calumet Bancorp of Chicago IL 30.25 3,145 95.1 39.00 27.00 31.50 -3.97 9.68 -9.02
CAFI Camco Fin. Corp. of OH 16.75 5,468 91.6 20.67 11.83 18.00 -6.94 33.15 -1.47
CMRN Cameron Fin. Corp. of MO 16.75 2,563 42.9 22.19 16.75 18.50 -9.46 -2.90 -18.29
CFNC Carolina Fincorp of NC* 10.44 1,906 19.9 18.88 9.63 10.38 0.58 -39.93 -43.57
CASB Cascade Financial Corp. of WA 15.13 4,266 64.5 16.00 9.60 15.25 -0.79 36.31 42.74
CATB Catskill Fin. Corp. of NY* 16.38 4,486 73.5 19.13 16.00 16.75 -2.21 0.80 -13.24
CAVB Cavalry Bancorp of TN 20.50 7,538 154.5 25.25 19.88 20.50 0.00 105.00 105.00
CNIT Cenit Bancorp of Norfolk VA 22.00 4,977 109.5 28.58 16.42 24.00 -8.33 28.13 -16.98
CEBK Central Co-Op. Bank of MA* 23.75 1,965 46.7 33.50 18.88 23.50 1.06 21.79 -16.67
CENB Century Bancorp, Inc. of NC(8) 13.75 1,271 17.5 39.00 13.75 15.25 -9.84 -47.78 -51.33
COFI Charter One Financial of OH 30.13 127,635 3,845.6 36.38 24.76 32.56 -7.46 15.04 -4.53
CVAL Chester Valley Bancorp of PA 29.00 2,185 63.4 37.00 20.71 31.50 -7.94 26.86 -0.85
CLAS Classic Bancshares, Inc. of KY 16.25 1,300 21.1 21.50 13.88 17.13 -5.14 10.17 -2.99
CBSA Coastal Bancorp of Houston TX 23.25 7,563 175.8 26.67 18.75 24.81 -6.29 13.86 0.00
CFCP Coastal Fin. Corp. of SC 19.00 6,248 118.7 20.50 14.72 20.50 -7.32 -0.68 3.37
CFKY Columbia Financial of KY 14.00 2,671 37.4 17.13 13.69 14.50 -3.45 40.00 40.00
CMSB Commonwealth Bancorp Inc of PA 18.63 15,474 288.3 24.25 16.75 18.75 -0.64 10.83 -6.29
CMSV Commty. Svgs, MHC of FL (48.5)(8) 32.38 5,100 80.0 40.75 25.50 36.00 -10.06 25.75 -8.48
CFTP Community Fed. Bancorp of MS 16.75 4,398 73.7 21.00 16.38 16.75 0.00 -5.63 -17.28
CFFC Community Fin. Corp. of VA 13.75 2,559 35.2 16.38 10.75 14.00 -1.79 20.83 -0.43
CIBI Community Inv. Bancorp of OH 14.50 1,335 19.4 15.25 9.83 14.50 0.00 43.56 34.63
COOP Cooperative Bancshares of NC 15.50 3,027 46.9 25.00 12.25 16.88 -8.18 26.53 -36.73
CRZY Crazy Woman Creek Bncorp of WY 16.38 939 15.4 20.00 13.75 17.38 -5.75 18.01 9.20
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AABC Access Anytime Bancorp of NM 1.28 1.19 7.58 7.58 93.71
AFBC Advance Fin. Bancorp of WV 0.89 0.84 14.52 14.52 103.04
AFCB Affiliated Comm BC, Inc of MA(8) 1.82 1.73 17.40 17.32 171.16
ALBC Albion Banc Corp. of Albion NY 0.45 0.42 8.28 8.28 96.94
ABCL Alliance Bancorp, Inc. of IL 1.09 1.11 11.55 11.42 134.42
ALLB Alliance Bank MHC of PA (19.9) 0.62 0.62 8.93 8.93 83.33
AHCI Ambanc Holding Co., Inc. of NY* 0.60 0.48 14.27 14.27 122.08
ASBI Ameriana Bancorp of IN 1.16 0.99 13.90 13.64 119.46
ABCW Anchor Bancorp Wisconsin of WI 2.30 2.05 14.34 14.12 224.14
ANDB Andover Bancorp, Inc. of MA* 2.11 2.06 16.95 16.95 213.78
ASFC Astoria Financial Corp. of NY 2.73 2.51 32.67 23.12 410.67
AVND Avondale Fin. Corp. of IL -1.53 -1.10 15.07 15.07 198.25
BCSB BCSB Bankcorp MHC of MD (38.6) 0.36 0.36 7.28 7.28 44.74
BKCT Bancorp Connecticut of CT* 1.22 1.05 9.42 9.42 93.83
BPLS Bank Plus Corp. of CA 0.62 0.72 9.57 8.76 217.68
BNKU Bank United Corp. of TX 3.29 3.13 20.67 18.68 414.91
BWFC Bank West Fin. Corp. of MI 0.41 0.33 8.93 8.93 68.73
BANC BankAtlantic Bancorp of FL 0.73 0.31 5.92 4.96 96.15
BKUNA BankUnited Fin. Corp. of FL 0.42 0.32 9.43 8.18 215.09
BVCC Bay View Capital Corp. of CA 0.68 1.06 19.17 12.27 263.44
FSNJ Bayonne Banchsares of NJ 0.48 0.48 10.85 10.85 71.04
BFSB Bedford Bancshares, Inc. of VA 0.72 0.72 8.86 8.86 66.64
BFFC Big Foot Fin. Corp. of IL 0.44 0.38 15.24 15.24 83.36
BYFC Broadway Fin. Corp. of CA 0.69 0.48 15.08 15.08 148.83
BRKL Brookline Bncp MHC of MA(47.0) 0.47 0.47 9.33 9.33 28.09
CBES CBES Bancorp, Inc. of MO 1.17 0.97 17.63 17.63 123.86
CCFH CCF Holding Company of GA 0.18 -0.16 12.91 12.91 159.49
CITZ CFS Bancorp, Inc. of IN 0.36 0.40 10.88 10.88 62.51
CFSB CFSB Bancorp of Lansing MI 1.37 1.25 8.00 8.00 103.60
CKFB CKF Bancorp of Danville KY 1.36 1.03 15.84 15.84 74.22
CNSB CNS Bancorp, Inc. of MO 0.54 0.50 14.63 14.63 59.28
CSBF CSB Financial Group Inc of IL 0.29 0.25 13.22 12.47 57.12
CBCI Calumet Bancorp of Chicago IL 3.25 3.26 27.27 27.27 155.89
CAFI Camco Fin. Corp. of OH 1.18 0.89 10.42 9.77 105.26
CMRN Cameron Fin. Corp. of MO 0.95 0.93 17.91 17.91 86.18
CFNC Carolina Fincorp of NC* 0.55 0.63 13.89 13.89 62.16
CASB Cascade Financial Corp. of WA 0.73 0.69 7.14 7.14 102.31
CATB Catskill Fin. Corp. of NY* 0.85 0.84 15.45 15.45 65.97
CAVB Cavalry Bancorp of TN 0.62 0.43 13.23 13.23 46.54
CNIT Cenit Bancorp of Norfolk VA 1.29 1.20 10.15 9.36 147.56
CEBK Central Co-Op. Bank of MA* 1.55 1.20 18.72 17.00 191.38
CENB Century Bancorp, Inc. of NC(8) 1.06 1.06 14.58 14.58 82.12
COFI Charter One Financial of OH 1.14 1.57 11.23 10.54 152.44
CVAL Chester Valley Bancorp of PA 1.52 1.38 13.64 13.64 157.38
CLAS Classic Bancshares, Inc. of KY 0.78 0.98 15.70 13.46 100.86
CBSA Coastal Bancorp of Houston TX 1.89 1.94 14.61 12.60 392.20
CFCP Coastal Fin. Corp. of SC 1.03 0.85 5.63 5.63 93.35
CFKY Columbia Financial of KY 0.44 0.43 13.42 13.42 47.46
CMSB Commonwealth Bancorp Inc of PA 1.00 0.75 14.10 11.27 154.48
CMSV Commty. Svgs, MHC of FL (48.5)(8) 1.03 0.95 16.11 16.11 149.14
CFTP Community Fed. Bancorp of MS 0.59 0.56 13.28 13.28 56.12
CFFC Community Fin. Corp. of VA 0.71 0.71 9.97 9.93 71.86
CIBI Community Inv. Bancorp of OH 0.68 0.68 8.37 8.37 76.21
COOP Cooperative Bancshares of NC 0.75 0.68 9.62 9.62 126.01
CRZY Crazy Woman Creek Bncorp of WY 0.79 0.79 15.49 15.49 65.69
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DNFC D&N Financial Corp. of MI 24.50 9,157 224.3 29.75 16.93 25.50 -3.92 40.89 -7.55
DCBI Delphos Citizens Bancorp of OH 16.00 1,848 29.6 24.25 15.75 17.00 -5.88 0.00 -22.89
DCOM Dime Community Bancorp of NY* 24.13 12,177 293.8 29.31 18.56 23.38 3.21 26.60 1.60
DIBK Dime Financial Corp. of CT(8)* 32.63 5,294 172.7 37.00 25.75 33.63 -2.97 23.13 6.98
ESBF ESB Financial Corp of PA 18.38 5,751 105.7 20.00 14.21 18.50 -0.65 23.44 5.03
EGLB Eagle BancGroup of IL 18.75 1,177 22.1 21.13 16.50 19.00 -1.32 12.14 -0.69
EBSI Eagle Bancshares of Tucker GA 24.06 5,735 138.0 27.25 16.13 25.75 -6.56 39.48 9.36
ETFS East Texas Fin. Serv. of TX 14.06 1,539 21.6 16.25 12.35 13.75 2.25 13.85 -11.18
ESBK Elmira Svgs Bank (The) of NY* 27.00 727 19.6 32.25 21.67 27.63 -2.28 19.36 -10.00
EMLD Emerald Financial Corp. of OH 12.50 10,274 128.4 16.00 6.75 12.63 -1.03 86.85 13.02
EFBC Empire Federal Bancorp of MT 14.31 2,592 37.1 18.25 14.13 15.00 -4.60 -7.68 -16.46
EFBI Enterprise Fed. Bancorp of OH 28.13 2,211 62.2 35.00 19.50 28.25 -0.42 38.91 -10.70
EQSB Equitable FSB of Wheaton MD 29.25 1,223 35.8 34.00 18.75 28.75 1.74 50.93 10.38
FCBF FCB Fin. Corp. of Neenah WI 30.00 3,867 116.0 34.00 26.50 29.75 0.84 11.03 1.69
FFDF FFD Financial Corp. of OH 18.50 1,445 26.7 24.00 14.75 19.38 -4.54 23.33 2.78
FFLC FFLC Bancorp of Leesburg FL 18.88 3,742 70.6 23.50 16.65 19.50 -3.18 7.09 -13.20
FFWC FFW Corporation of Wabash IN 18.00 1,458 26.2 21.50 14.00 19.50 -7.69 25.17 -5.26
FFYF FFY Financial Corp. of OH 35.00 4,011 140.4 35.38 26.88 33.88 3.31 27.27 5.64
FMCO FMS Financial Corp. of NJ 13.63 7,203 98.2 16.67 8.33 14.75 -7.59 57.21 15.22
FFHH FSF Financial Corp. of MN 17.63 2,933 51.7 21.25 17.00 17.75 -0.68 -0.68 -15.81
FOBC Fed One Bancorp of Wheeling WV(8) 39.75 2,402 95.5 45.50 20.00 41.50 -4.22 80.68 44.55
FBCI Fidelity Bancorp of Chicago IL 23.50 2,833 66.6 26.00 20.75 22.31 5.33 9.30 -8.31
FSBI Fidelity Bancorp, Inc. of PA 20.75 1,966 40.8 28.00 16.80 22.00 -5.68 23.51 -10.56
FFFL Fidelity Bcsh MHC of FL (47.7) 26.75 6,802 86.2 35.38 22.25 29.00 -7.76 15.05 -17.69
FFED Fidelity Fed. Bancorp of IN 5.88 3,127 18.4 10.50 5.88 6.00 -2.00 -33.78 -42.97
FFOH Fidelity Financial of OH 14.75 5,598 82.6 19.88 12.50 14.63 0.82 -9.23 -4.84
FIBC Financial Bancorp, Inc. of NY(8) 36.25 1,707 61.9 37.63 19.50 37.63 -3.67 79.01 50.23
FBSI First Bancshares, Inc. of MO 13.06 2,211 28.9 17.50 11.00 13.13 -0.53 7.67 -16.44
FBBC First Bell Bancorp of PA 17.38 6,525 113.4 21.63 15.63 18.00 -3.44 6.11 -8.53
SKBO First Carnegie MHC of PA(45.0) 14.38 2,300 14.9 21.00 13.38 16.38 -12.21 6.52 -23.31
FSTC First Citizens Corp of GA 28.00 2,765 77.4 35.50 19.67 29.00 -3.45 37.73 -17.65
FCME First Coastal Corp. of ME* 12.13 1,361 16.5 15.75 10.63 12.75 -4.86 7.82 -18.48
FFBA First Colorado Bancorp of CO(8) 25.50 16,895 430.8 30.13 17.38 26.56 -3.99 38.74 7.37
FDEF First Defiance Fin.Corp. of OH 13.63 8,123 110.7 16.25 13.50 13.88 -1.80 -9.50 -14.81
FESX First Essex Bancorp of MA* 22.00 7,562 166.4 26.13 16.50 21.63 1.71 29.41 -5.38
FFSX First FSB MHC Sxld of IA(46.1) 30.50 2,840 39.7 39.00 24.25 32.00 -4.69 25.77 -3.94
FFES First Fed of E. Hartford CT 33.00 2,743 90.5 42.25 31.00 34.75 -5.04 5.60 -11.41
BDJI First Fed. Bancorp. of MN 17.50 998 17.5 22.00 14.00 18.50 -5.41 26.54 -20.45
FFBH First Fed. Bancshares of AR 22.75 4,871 110.8 30.25 20.50 23.63 -3.72 6.41 -4.21
FTFC First Fed. Capital Corp. of WI 16.00 18,519 296.3 18.38 11.88 16.00 0.00 31.90 -5.55
FFKY First Fed. Fin. Corp. of KY 27.63 4,130 114.1 28.75 20.50 27.63 0.00 27.03 21.45
FFBZ First Federal Bancorp of OH 11.00 3,151 34.7 14.50 9.00 12.00 -8.33 22.22 4.17
FFCH First Fin. Holdings Inc. of SC 20.88 13,587 283.7 27.00 15.50 21.25 -1.74 28.97 -21.39
FFHS First Franklin Corp. of OH 12.50 1,783 22.3 20.83 12.50 15.50 -19.35 -6.23 -39.99
FGHC First Georgia Hold. Corp of GA 12.50 4,799 60.0 15.75 4.71 12.13 3.05 165.39 97.47
FFSL First Independence Corp. of KS 12.25 957 11.7 15.63 12.25 12.63 -3.01 -5.77 -12.50
FISB First Indiana Corp. of IN 23.44 12,781 299.6 30.00 17.08 26.25 -10.70 29.29 -7.02
FKAN First Kansas Financial of KS 11.13 1,554 17.3 12.50 11.06 11.50 -3.22 11.30 11.30
FKFS First Keystone Fin. Corp of PA 16.00 2,413 38.6 21.75 13.13 16.50 -3.03 24.22 -10.51
FLKY First Lancaster Bncshrs of KY 13.75 947 13.0 16.38 13.19 13.50 1.85 -9.84 -13.74
FLFC First Liberty Fin. Corp. of GA 21.25 11,622 247.0 25.50 14.50 23.00 -7.61 38.62 -0.38
CASH First Midwest Fin., Inc. of OH 21.38 2,614 55.9 24.88 17.25 22.50 -4.98 23.94 -4.98
FMBD First Mutual Bancorp Inc of IL(8) 17.63 3,531 62.3 25.00 15.00 17.25 2.20 10.19 -29.48
FMSB First Mutual SB of Bellevue WA* 15.00 4,244 63.7 20.17 13.42 15.75 -4.76 7.14 -18.92
FNGB First Northern Cap. Corp of WI 13.25 8,859 117.4 14.00 12.38 13.25 0.00 6.00 -5.36
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DNFC D&N Financial Corp. of MI 1.63 1.44 11.10 11.01 203.95
DCBI Delphos Citizens Bancorp of OH 0.93 0.93 15.21 15.21 60.94
DCOM Dime Community Bancorp of NY* 0.96 0.90 15.55 13.52 129.52
DIBK Dime Financial Corp. of CT(8)* 2.94 2.92 15.57 15.20 191.99
ESBF ESB Financial Corp of PA 1.02 1.01 11.83 10.56 164.41
EGLB Eagle BancGroup of IL 0.50 0.25 17.56 17.56 153.11
EBSI Eagle Bancshares of Tucker GA 1.26 1.26 13.03 13.03 200.43
ETFS East Texas Fin. Serv. of TX 0.45 0.41 13.70 13.70 78.59
ESBK Elmira Svgs Bank (The) of NY* 1.39 1.47 19.63 19.63 315.97
EMLD Emerald Financial Corp. of OH 0.64 0.59 4.95 4.89 59.94
EFBC Empire Federal Bancorp of MT 0.62 0.62 15.68 15.68 42.67
EFBI Enterprise Fed. Bancorp of OH 1.03 0.88 16.47 16.06 165.37
EQSB Equitable FSB of Wheaton MD 1.85 1.79 14.20 14.20 273.97
FCBF FCB Fin. Corp. of Neenah WI 1.51 1.12 19.37 19.37 133.90
FFDF FFD Financial Corp. of OH 1.09 0.49 15.43 15.43 69.28
FFLC FFLC Bancorp of Leesburg FL 1.01 0.95 13.88 13.88 109.21
FFWC FFW Corporation of Wabash IN 1.26 1.22 13.06 11.98 136.29
FFYF FFY Financial Corp. of OH 1.93 1.90 20.82 20.82 158.98
FMCO FMS Financial Corp. of NJ 0.75 0.75 5.52 5.47 92.83
FFHH FSF Financial Corp. of MN 1.10 1.07 14.57 14.57 140.15
FOBC Fed One Bancorp of Wheeling WV(8) 1.29 1.28 17.21 16.52 153.07
FBCI Fidelity Bancorp of Chicago IL 0.36 1.07 18.44 18.41 170.96
FSBI Fidelity Bancorp, Inc. of PA 1.42 1.40 14.01 14.01 204.94
FFFL Fidelity Bcsh MHC of FL (47.7) 1.07 0.92 13.01 12.62 194.16
FFED Fidelity Fed. Bancorp of IN -0.25 -0.19 4.28 4.28 63.14
FFOH Fidelity Financial of OH 0.87 0.84 11.64 10.31 96.54
FIBC Financial Bancorp, Inc. of NY(8) 1.62 1.58 16.43 16.36 181.66
FBSI First Bancshares, Inc. of MO 0.83 0.81 10.80 10.35 80.48
FBBC First Bell Bancorp of PA 1.15 1.11 11.43 11.43 101.86
SKBO First Carnegie MHC of PA(45.0) 0.42 0.50 10.86 10.86 64.41
FSTC First Citizens Corp of GA 2.22 2.01 12.85 10.28 127.39
FCME First Coastal Corp. of ME* 0.94 0.82 11.10 11.10 110.39
FFBA First Colorado Bancorp of CO(8) 1.18 1.12 12.39 12.14 92.06
FDEF First Defiance Fin.Corp. of OH 0.66 0.63 12.54 12.54 71.09
FESX First Essex Bancorp of MA* 1.36 1.23 12.05 10.62 171.03
FFSX First FSB MHC Sxld of IA(46.1) 1.16 1.17 14.51 11.48 201.27
FFES First Fed of E. Hartford CT 2.07 2.29 24.99 24.99 361.28
BDJI First Fed. Bancorp. of MN 0.77 0.77 12.35 12.35 113.39
FFBH First Fed. Bancshares of AR 1.11 1.05 17.29 17.29 117.10
FTFC First Fed. Capital Corp. of WI 1.00 0.76 6.12 5.81 85.35
FFKY First Fed. Fin. Corp. of KY 1.52 1.48 13.02 12.33 98.56
FFBZ First Federal Bancorp of OH 0.58 0.58 5.12 5.11 67.19
FFCH First Fin. Holdings Inc. of SC 1.12 1.08 8.70 8.70 136.76
FFHS First Franklin Corp. of OH 1.05 0.91 12.04 11.99 130.31
FGHC First Georgia Hold. Corp of GA 0.38 0.38 2.96 2.76 36.57
FFSL First Independence Corp. of KS 0.79 0.79 12.07 12.07 130.09
FISB First Indiana Corp. of IN 1.41 1.07 12.23 12.09 132.07
FKAN First Kansas Financial of KS 0.61 0.61 12.95 12.95 69.29
FKFS First Keystone Fin. Corp of PA 1.13 1.00 10.64 10.64 159.62
FLKY First Lancaster Bncshrs of KY 0.51 0.51 14.91 14.91 55.97
FLFC First Liberty Fin. Corp. of GA 0.85 0.89 8.57 7.84 116.59
CASH First Midwest Fin., Inc. of OH 1.10 0.99 16.33 14.54 155.31
FMBD First Mutual Bancorp Inc of IL(8) 0.37 0.29 15.64 12.11 110.52
FMSB First Mutual SB of Bellevue WA* 1.03 1.01 7.22 7.22 106.30
FNGB First Northern Cap. Corp of WI 0.71 0.66 8.48 8.48 76.42
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFPB First Palm Beach Bancorp of FL 39.38 5,136 202.3 44.94 32.25 42.25 -6.79 16.47 -8.69
FWWB First Savings Bancorp of WA 22.88 10,948 250.5 25.97 21.14 23.63 -3.17 4.33 -8.48
FSFF First SecurityFed Fin of IL 15.50 6,408 99.3 17.25 14.50 16.00 -3.13 55.00 -1.59
FSLA First Source Bancorp of NJ 9.44 31,740 299.6 13.93 6.39 9.38 0.64 40.06 -32.23
SOPN First Svgs Bancorp of NC 23.50 3,710 87.2 26.00 20.00 23.25 1.08 8.05 -7.84
FBNW FirstBank Corp of Clarkston WA 19.25 1,984 38.2 23.75 16.00 20.25 -4.94 2.67 1.96
FFDB FirstFed Bancorp, Inc. of AL 28.94 1,201 34.8 29.00 16.53 29.00 -0.21 75.08 33.80
FSPT FirstSpartan Fin. Corp. of SC 37.75 4,253 160.6 47.25 35.00 41.00 -7.93 5.59 -6.21
FLAG Flag Financial Corp of GA 17.13 4,574 78.4 19.38 9.50 18.25 -6.14 77.15 19.54
FLGS Flagstar Bancorp, Inc of MI 27.25 13,670 372.5 28.38 17.75 24.88 9.53 42.45 37.63
FFIC Flushing Fin. Corp. of NY* 24.00 7,810 187.4 29.88 20.00 25.00 -4.00 16.34 0.50
FBHC Fort Bend Holding Corp. of TX(8) 20.00 1,817 36.3 28.00 15.38 20.50 -2.44 25.00 -8.05
FTSB Fort Thomas Fin. Corp. of KY 13.13 1,474 19.4 15.75 10.50 14.75 -10.98 19.36 -14.63
FKKY Frankfort First Bancorp of KY 13.88 1,619 22.5 22.94 13.75 14.50 -4.28 -24.97 -21.27
FTNB Fulton Bancorp, Inc. of MO 17.38 1,701 29.6 26.50 16.75 20.00 -13.10 -14.17 -21.46
GUPB GFSB Bancorp, Inc of Gallup NM 14.50 1,201 17.4 17.00 12.33 15.50 -6.45 14.44 2.98
GSLA GS Financial Corp. of LA 14.25 3,350 47.7 21.00 13.38 14.63 -2.60 -8.83 -32.14
GOSB GSB Financial Corp. of NY* 14.00 2,248 31.5 18.94 13.75 15.63 -10.43 -3.45 -22.48
GBNK Gaston Fed Bncp MHC of NC(47.0 13.38 4,497 28.3 18.06 13.25 14.25 -6.11 33.80 33.80
GFCO Glenway Financial Corp. of OH 22.00 2,282 50.2 24.25 12.25 22.63 -2.78 62.96 17.33
GTPS Great American Bancorp of IL 21.75 1,588 34.5 23.00 16.88 21.75 0.00 24.29 14.47
PEDE Great Pee Dee Bancorp of SC 13.75 2,202 30.3 17.38 13.25 13.50 1.85 37.50 -14.76
GSFC Green Street Fin. Corp. of NC 14.38 4,083 58.7 20.75 13.75 14.50 -0.83 -17.26 -21.21
GFED Guaranty Fed Bancshares of MO 12.94 6,228 80.6 14.44 9.45 13.00 -0.46 36.93 0.47
HCBB HCB Bancshares of Camden AR 13.25 2,645 35.0 16.13 12.81 14.13 -6.23 -4.54 -8.62
HEMT HF Bancorp of Hemet CA 16.50 6,369 105.1 18.25 14.75 17.25 -4.35 6.45 -5.71
HFFC HF Financial Corp. of SD 21.88 4,395 96.2 24.17 14.58 21.25 2.96 47.54 23.83
HFNC HFNC Financial Corp. of NC(8) 12.13 17,193 208.6 16.81 11.25 12.75 -4.86 -26.48 -16.34
HMNF HMN Financial, Inc. of MN 15.00 5,430 81.5 21.67 14.75 15.25 -1.64 -9.09 -30.78
HALL Hallmark Capital Corp. of WI 14.13 2,934 41.5 18.00 10.63 14.75 -4.20 21.50 -16.88
HRBF Harbor Federal Bancorp of MD 18.63 1,863 34.7 23.41 17.27 20.00 -6.85 2.48 -18.86
HARB Harbor Florida Bancshrs of FL 11.94 30,740 367.0 13.50 7.24 12.00 -0.50 62.23 8.35
HFSA Hardin Bancorp of Hardin MO 17.00 816 13.9 20.00 16.50 17.75 -4.23 1.49 -6.85
HARL Harleysville SB of PA 31.00 1,675 51.9 35.00 25.00 31.50 -1.59 24.00 12.73
HFGI Harrington Fin. Group of IN 10.50 3,276 34.4 13.75 10.13 10.50 0.00 -8.70 -19.23
HARS Harris Fin. MHC of PA (24.3) 19.00 33,965 155.2 27.88 7.88 18.31 3.77 135.15 -4.43
HFFB Harrodsburg 1st Fin Bcrp of KY 15.38 1,947 29.9 18.00 14.88 15.94 -3.51 0.00 -8.18
HHFC Harvest Home Fin. Corp. of OH 14.50 891 12.9 16.75 11.75 15.25 -4.92 13.73 -7.94
HAVN Haven Bancorp of Woodhaven NY 19.00 8,849 168.1 28.75 18.13 21.31 -10.84 3.37 -15.56
HTHR Hawthorne Fin. Corp. of CA 17.00 3,164 53.8 24.00 15.00 18.25 -6.85 9.68 -15.55
HMLK Hemlock Fed. Fin. Corp. of IL 17.50 2,000 35.0 19.00 15.06 17.00 2.94 14.75 2.16
HBSC Heritage Bancorp, Inc of SC 19.25 4,629 89.1 22.38 18.75 19.50 -1.28 28.33 28.33
HFWA Heritage Financial Corp of WA 12.88 9,755 125.6 15.94 12.63 13.44 -4.17 28.80 28.80
HCBC High Country Bancorp of CO 14.00 1,323 18.5 15.50 13.50 14.38 -2.64 40.00 -9.68
HBNK Highland Bancorp of CA 42.13 2,329 98.1 43.50 25.50 42.56 -1.01 62.04 28.64
HIFS Hingham Inst. for Sav. of MA* 27.00 1,304 35.2 37.00 23.06 29.50 -8.47 16.13 -6.09
HBEI Home Bancorp of Elgin IL(8) 14.50 6,856 99.4 19.13 14.13 15.50 -6.45 -20.55 -18.90
HBFW Home Bancorp of Fort Wayne IN 27.88 2,351 65.5 37.63 21.25 28.00 -0.43 28.90 -5.49
HCFC Home City Fin. Corp. of OH 15.00 905 13.6 22.75 14.31 15.00 0.00 0.00 -18.92
HOMF Home Fed Bancorp of Seymour IN 27.50 5,139 141.3 33.75 19.83 28.50 -3.51 35.27 5.77
HWEN Home Financial Bancorp of IN 8.75 929 8.1 9.75 7.44 8.50 2.94 12.04 -5.41
HLFC Home Loan Financial Corp of OH 14.88 2,248 33.5 16.75 14.00 15.00 -0.80 48.80 48.80
HPBC Home Port Bancorp, Inc. of MA* 24.50 1,842 45.1 27.63 19.50 25.00 -2.00 18.07 5.92
HSTD Homestead Bancorp, Inc. of LA 8.56 1,478 12.7 9.31 3.41 9.00 -4.89 -14.40 48.87
HFBC HopFed Bancorp of KY 16.63 4,034 67.1 21.88 16.00 17.63 -5.67 66.30 66.30
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FFPB First Palm Beach Bancorp of FL 1.79 1.14 22.79 22.30 348.79
FWWB First Savings Bancorp of WA 1.32 1.23 15.09 13.98 115.95
FSFF First SecurityFed Fin of IL 0.46 0.72 14.59 14.55 50.45
FSLA First Source Bancorp of NJ 0.41 0.41 7.72 7.72 37.57
SOPN First Svgs Bancorp of NC 1.40 1.40 18.61 18.61 80.81
FBNW FirstBank Corp of Clarkston WA 0.86 0.52 15.13 15.13 92.50
FFDB FirstFed Bancorp, Inc. of AL 1.38 1.38 14.68 13.53 151.10
FSPT FirstSpartan Fin. Corp. of SC 1.52 1.51 29.87 29.87 113.62
FLAG Flag Financial Corp of GA 0.44 0.31 4.82 4.82 54.22
FLGS Flagstar Bancorp, Inc of MI 1.83 1.83 9.77 9.46 187.56
FFIC Flushing Fin. Corp. of NY* 1.14 1.14 17.56 16.89 138.09
FBHC Fort Bend Holding Corp. of TX(8) 1.11 0.79 11.78 11.09 174.25
FTSB Fort Thomas Fin. Corp. of KY 0.82 0.82 10.87 10.87 68.93
FKKY Frankfort First Bancorp of KY 0.20 0.65 13.96 13.96 82.34
FTNB Fulton Bancorp, Inc. of MO 0.75 0.58 15.06 15.06 64.45
GUPB GFSB Bancorp, Inc of Gallup NM 0.79 0.79 12.14 12.14 98.40
GSLA GS Financial Corp. of LA 0.56 0.50 16.08 16.08 38.63
GOSB GSB Financial Corp. of NY* 0.39 0.37 14.88 14.88 52.87
GBNK Gaston Fed Bncp MHC of NC(47.0 0.43 0.43 8.56 8.56 38.07
GFCO Glenway Financial Corp. of OH 1.11 1.12 12.60 12.49 131.66
GTPS Great American Bancorp of IL 0.58 0.58 16.88 16.88 92.09
PEDE Great Pee Dee Bancorp of SC 0.33 0.33 14.19 14.19 31.45
GSFC Green Street Fin. Corp. of NC 0.66 0.66 14.81 14.81 41.39
GFED Guaranty Fed Bancshares of MO 0.39 0.38 11.21 11.21 39.56
HCBB HCB Bancshares of Camden AR 0.25 0.25 14.45 14.28 83.79
HEMT HF Bancorp of Hemet CA -0.07 0.21 13.15 11.16 167.33
HFFC HF Financial Corp. of SD 1.41 1.31 12.60 12.60 129.58
HFNC HFNC Financial Corp. of NC(8) 0.70 0.48 9.82 9.82 56.97
HMNF HMN Financial, Inc. of MN 1.06 0.75 15.65 14.55 134.83
HALL Hallmark Capital Corp. of WI 0.95 0.90 11.02 11.02 143.47
HRBF Harbor Federal Bancorp of MD 0.90 0.86 15.74 15.74 124.07
HARB Harbor Florida Bancshrs of FL 0.47 0.45 8.28 8.19 41.78
HFSA Hardin Bancorp of Hardin MO 1.07 0.92 16.52 16.52 148.47
HARL Harleysville SB of PA 2.08 2.08 14.63 14.63 219.46
HFGI Harrington Fin. Group of IN -0.03 0.08 7.47 7.47 168.84
HARS Harris Fin. MHC of PA (24.3) 0.55 0.45 5.41 4.86 66.55
HFFB Harrodsburg 1st Fin Bcrp of KY 0.76 0.76 14.79 14.79 55.89
HHFC Harvest Home Fin. Corp. of OH 0.63 0.62 11.57 11.57 102.00
HAVN Haven Bancorp of Woodhaven NY 1.12 1.11 12.89 12.86 228.02
HTHR Hawthorne Fin. Corp. of CA 2.81 3.29 14.07 14.07 330.88
HMLK Hemlock Fed. Fin. Corp. of IL 0.85 0.85 15.47 15.47 95.51
HBSC Heritage Bancorp, Inc of SC 0.78 0.78 19.41 19.41 67.43
HFWA Heritage Financial Corp of WA 0.37 0.19 9.53 9.53 33.09
HCBC High Country Bancorp of CO 0.53 0.53 13.64 13.64 69.73
HBNK Highland Bancorp of CA 2.90 2.53 18.71 18.71 238.59
HIFS Hingham Inst. for Sav. of MA* 2.10 2.10 16.84 16.84 177.69
HBEI Home Bancorp of Elgin IL(8) 0.36 0.36 13.95 13.95 53.82
HBFW Home Bancorp of Fort Wayne IN 1.25 1.22 18.03 18.03 149.86
HCFC Home City Fin. Corp. of OH 1.02 1.02 15.68 15.68 84.39
HOMF Home Fed Bancorp of Seymour IN 1.95 1.58 12.65 12.31 137.54
HWEN Home Financial Bancorp of IN 0.42 0.33 8.03 8.03 44.64
HLFC Home Loan Financial Corp of OH 0.37 0.37 13.82 13.82 35.49
HPBC Home Port Bancorp, Inc. of MA* 1.63 1.81 11.98 11.98 122.53
HSTD Homestead Bancorp, Inc. of LA 0.36 0.36 10.40 10.40 48.02
HFBC HopFed Bancorp of KY 0.65 0.65 14.26 14.26 54.89
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HZFS Horizon Fin'l. Services of IA 15.38 880 13.5 16.88 9.44 15.38 0.00 62.92 28.17
HRZB Horizon Financial Corp. of WA* 15.50 7,488 116.1 19.25 14.88 15.75 -1.59 0.00 -12.68
HRBT Hudson River Bancorp Inc of NY 13.25 17,854 229.7 13.69 12.56 13.38 -0.97 32.50 32.50
IBSF IBS Financial Corp. of NJ(8) 16.38 10,962 179.6 21.19 15.13 16.69 -1.86 4.80 -7.41
ITLA ITLA Capital Corp of CA* 19.50 7,697 150.1 24.00 17.38 20.00 -2.50 7.56 1.30
ICBC Independence Comm Bnk Cp of NY 14.63 76,044 1,112.5 19.13 14.50 14.50 0.90 46.30 46.30
IFSB Independence FSB of DC 16.75 1,281 21.5 21.63 13.00 15.38 8.91 21.82 -1.47
INBI Industrial Bancorp of OH 19.00 5,015 95.3 25.00 14.38 19.75 -3.80 29.34 7.04
IWBK Interwest Bancorp of WA 43.06 10,445 449.8 47.00 37.00 45.00 -4.31 7.30 14.07
IPSW Ipswich SB of Ipswich MA* 15.00 2,390 35.9 20.75 11.13 16.50 -9.09 23.66 -9.09
JXVL Jacksonville Bancorp of TX 17.50 2,422 42.4 23.25 16.38 18.13 -3.47 7.69 -24.73
JXSB Jcksnville SB,MHC of IL (45.6) 16.25 1,908 9.4 25.50 11.08 17.25 -5.80 46.66 -18.75
JSBA Jefferson Svgs Bancorp of MO 25.00 10,020 250.5 31.88 15.38 24.75 1.01 57.43 21.95
KSBK KSB Bancorp of Kingfield ME* 16.50 1,259 20.8 22.50 12.50 18.38 -10.23 14.74 -26.67
KFBI Klamath First Bancorp of OR 17.38 9,917 172.4 24.25 17.38 17.75 -2.08 -7.31 -19.16
LSBI LSB Fin. Corp. of Lafayette IN 31.00 954 29.6 32.00 19.52 31.00 0.00 55.00 14.22
LVSB Lakeview Financial of NJ 24.00 4,978 119.5 28.75 16.13 25.00 -4.00 44.93 -5.88
LARK Landmark Bancshares, Inc of KS 22.38 1,549 34.7 29.25 21.25 24.88 -10.05 1.13 -10.05
LARL Laurel Capital Group of PA 20.00 2,187 43.7 23.50 14.25 20.00 0.00 39.57 -7.71
LSBX Lawrence Savings Bank of MA* 14.38 4,327 62.2 19.31 10.94 15.00 -4.13 21.04 -12.21
LFED Leeds Fed Bksr MHC of MD (36.3 18.25 5,182 34.4 23.50 13.92 18.25 0.00 28.79 -16.09
LXMO Lexington B&L Fin. Corp. of MO 15.50 1,009 15.6 17.88 15.16 15.25 1.64 -3.91 -12.68
LIBB Liberty Bancorp MHC of NJ (47) 10.63 3,901 19.5 11.69 10.63 11.25 -5.51 6.30 6.30
LFCO Life Financial Corp of CA(8) 12.00 6,556 78.7 25.38 10.75 14.38 -16.55 -29.95 -4.99
LFBI Little Falls Bancorp of NJ 20.00 2,478 49.6 22.25 16.75 20.13 -0.65 14.29 -2.44
LOGN Logansport Fin. Corp. of IN 15.00 1,262 18.9 19.63 13.63 15.00 0.00 9.09 -16.67
LISB Long Island Bancorp, Inc of NY(8) 56.50 24,183 1,366.3 67.63 38.38 57.31 -1.41 43.04 13.84
MAFB MAF Bancorp, Inc. of IL 22.75 22,577 513.6 28.83 20.33 23.06 -1.34 5.81 -3.52
MBLF MBLA Financial Corp. of MO 20.50 1,251 25.6 30.63 20.25 21.00 -2.38 -12.77 -32.79
MECH MECH Financial Inc of CT* 29.38 5,295 155.6 31.81 21.63 30.38 -3.29 35.83 12.74
MFBC MFB Corp. of Mishawaka IN 24.00 1,590 38.2 30.38 20.00 25.00 -4.00 17.07 -21.00
MSBF MSB Financial, Inc of MI 14.00 1,338 18.7 17.73 11.82 16.63 -15.81 8.02 -18.93
MARN Marion Capital Holdings of IN 24.63 1,704 42.0 29.50 22.00 25.50 -3.41 7.09 -9.21
MRKF Market Fin. Corp. of OH 13.00 1,336 17.4 20.25 12.75 13.38 -2.84 -9.60 -16.83
MFSL Maryland Fed. Bancorp of MD(8) 40.88 6,572 268.7 42.25 21.50 41.50 -1.49 69.91 16.80
MASB MassBank Corp. of Reading MA* 47.75 3,593 171.6 54.25 37.88 47.75 0.00 22.72 0.25
MFLR Mayflower Co-Op. Bank of MA* 21.50 900 19.4 27.50 17.50 23.50 -8.51 19.44 -19.63
MDBK Medford Bancorp, Inc. of MA* 40.25 4,455 179.3 44.25 29.75 41.75 -3.59 33.59 2.55
MWBX MetroWest Bank of MA* 7.13 14,252 101.6 9.50 6.19 7.50 -4.93 5.63 -20.78
METF Metropolitan Fin. Corp. of OH 13.63 7,051 96.1 18.88 9.00 15.00 -9.13 41.54 -12.06
MIFC Mid Iowa Financial Corp. of IA 10.75 1,735 18.7 12.75 9.00 11.13 -3.41 11.63 -6.52
MCBN Mid-Coast Bancorp of ME 10.50 712 7.5 14.00 8.33 11.75 -10.64 26.05 5.00
MWBI Midwest Bancshares, Inc. of IA 14.00 1,051 14.7 19.50 11.29 14.00 0.00 19.97 -23.29
MFFC Milton Fed. Fin. Corp. of OH 13.50 2,237 30.2 17.00 13.50 14.25 -5.26 -0.95 -12.22
MBSP Mitchell Bancorp, Inc. of NC 16.50 931 15.4 18.00 16.50 16.75 -1.49 -1.49 -2.94
MBBC Monterey Bay Bancorp of CA 16.38 3,958 64.8 21.40 13.00 20.00 -18.10 26.00 5.00
MONT Montgomery Fin. Corp. of IN 11.25 1,653 18.6 13.63 11.25 12.00 -6.25 -9.13 -12.66
MSBK Mutual SB, FSB of Bay City MI 9.50 4,290 40.8 14.63 9.50 10.06 -5.57 -12.68 -26.92
MYST Mystic Financial of MA* 14.75 2,711 40.0 18.56 14.00 14.63 0.82 47.50 47.50
NHTB NH Thrift Bancshares of NH 17.25 2,091 36.1 22.75 16.31 17.50 -1.43 5.31 -15.85
NSLB NS&L Bancorp, Inc of Neosho MO 18.13 686 12.4 19.50 16.63 18.25 -0.66 9.02 -3.97
NSSY NSS Bancorp of CT(8)* 51.00 2,395 122.1 58.75 33.13 53.25 -4.23 51.11 35.10
NMSB Newmil Bancorp, Inc. of CT* 11.38 3,834 43.6 14.63 11.38 12.50 -8.96 -9.90 -12.46
NBCP Niagara Bancorp of NY MHC(45.4* 12.69 29,756 171.3 17.00 12.19 12.63 0.48 26.90 26.90
NBSI North Bancshares of Chicago IL 12.88 1,265 16.3 18.83 12.88 13.25 -2.79 -13.15 -27.96
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HZFS Horizon Fin'l. Services of IA 0.90 0.69 9.60 9.60 105.35
HRZB Horizon Financial Corp. of WA* 1.10 1.09 11.20 11.20 73.07
HRBT Hudson River Bancorp Inc of NY 0.41 0.47 12.20 12.20 45.63
IBSF IBS Financial Corp. of NJ(8) 0.55 0.55 11.91 11.91 68.61
ITLA ITLA Capital Corp of CA* 1.70 1.70 13.37 13.33 131.35
ICBC Independence Comm Bnk Cp of NY 0.29 0.32 12.48 11.75 68.68
IFSB Independence FSB of DC 1.09 0.45 15.46 13.99 214.32
INBI Industrial Bancorp of OH 1.05 1.05 12.29 12.29 74.58
IWBK Interwest Bancorp of WA 1.93 1.64 13.53 13.32 200.19
IPSW Ipswich SB of Ipswich MA* 1.06 0.80 5.25 5.25 99.40
JXVL Jacksonville Bancorp of TX 1.37 1.37 14.29 14.29 97.01
JXSB Jcksnville SB,MHC of IL (45.6) 0.51 0.33 9.23 9.23 88.91
JSBA Jefferson Svgs Bancorp of MO 0.98 0.87 11.85 9.51 123.94
KSBK KSB Bancorp of Kingfield ME* 1.20 1.20 9.56 8.31 122.83
KFBI Klamath First Bancorp of OR 0.86 0.86 15.05 13.81 100.25
LSBI LSB Fin. Corp. of Lafayette IN 1.73 1.55 19.06 19.06 226.48
LVSB Lakeview Financial of NJ 1.76 0.88 12.11 8.26 124.48
LARK Landmark Bancshares, Inc of KS 1.49 1.31 19.61 19.61 138.90
LARL Laurel Capital Group of PA 1.39 1.36 10.54 10.54 99.12
LSBX Lawrence Savings Bank of MA* 2.02 1.99 9.14 9.14 82.06
LFED Leeds Fed Bksr MHC of MD (36.3 0.66 0.66 9.52 9.52 57.70
LXMO Lexington B&L Fin. Corp. of MO 0.62 0.62 15.19 14.25 84.31
LIBB Liberty Bancorp MHC of NJ (47) 0.69 0.69 8.30 8.30 61.70
LFCO Life Financial Corp of CA(8) 2.16 2.25 8.93 8.93 59.06
LFBI Little Falls Bancorp of NJ 0.75 0.72 14.63 13.51 143.44
LOGN Logansport Fin. Corp. of IN 1.00 1.02 13.30 13.30 70.52
LISB Long Island Bancorp, Inc of NY(8) 2.17 1.75 23.31 23.11 260.34
MAFB MAF Bancorp, Inc. of IL 1.68 1.63 12.04 10.68 155.52
MBLF MBLA Financial Corp. of MO 1.54 1.53 22.38 22.38 165.83
MECH MECH Financial Inc of CT* 2.49 2.49 17.14 17.14 178.65
MFBC MFB Corp. of Mishawaka IN 1.37 1.34 21.52 21.52 182.79
MSBF MSB Financial, Inc of MI 0.97 0.86 10.77 10.77 64.51
MARN Marion Capital Holdings of IN 1.37 1.37 22.30 21.83 108.53
MRKF Market Fin. Corp. of OH 0.48 0.48 15.25 15.25 43.23
MFSL Maryland Fed. Bancorp of MD(8) 1.13 1.59 15.89 15.74 181.38
MASB MassBank Corp. of Reading MA* 2.93 2.65 29.80 29.39 258.68
MFLR Mayflower Co-Op. Bank of MA* 1.66 1.49 14.40 14.19 150.58
MDBK Medford Bancorp, Inc. of MA* 2.65 2.50 23.23 22.00 251.48
MWBX MetroWest Bank of MA* 0.54 0.53 3.27 3.27 45.37
METF Metropolitan Fin. Corp. of OH 0.93 0.82 5.42 5.01 140.36
MIFC Mid Iowa Financial Corp. of IA 0.88 0.96 7.50 7.49 84.75
MCBN Mid-Coast Bancorp of ME 0.67 0.62 7.50 7.50 88.50
MWBI Midwest Bancshares, Inc. of IA 1.26 1.10 10.40 10.40 150.96
MFFC Milton Fed. Fin. Corp. of OH 0.63 0.56 11.50 11.50 101.35
MBSP Mitchell Bancorp, Inc. of NC 0.54 0.54 15.60 15.60 39.67
MBBC Monterey Bay Bancorp of CA 0.55 0.51 14.87 13.91 127.33
MONT Montgomery Fin. Corp. of IN 0.50 0.50 12.05 12.05 66.02
MSBK Mutual SB, FSB of Bay City MI -2.01 -0.71 7.76 7.76 153.06
MYST Mystic Financial of MA* 0.52 0.48 13.20 13.20 69.27
NHTB NH Thrift Bancshares of NH 1.36 1.26 12.41 10.78 153.32
NSLB NS&L Bancorp, Inc of Neosho MO 0.59 0.59 16.74 16.62 89.13
NSSY NSS Bancorp of CT(8)* 2.83 3.20 22.87 22.26 281.78
NMSB Newmil Bancorp, Inc. of CT* 0.74 0.74 8.60 8.60 96.58
NBCP Niagara Bancorp of NY MHC(45.4* 0.48 0.46 8.31 8.31 43.56
NBSI North Bancshares of Chicago IL 0.44 0.42 10.73 10.73 93.66
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- - ------ ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFFD North Central Bancshares of IA 19.00 3,126 59.4 24.88 16.50 19.88 -4.43 13.03 -4.43
NEIB Northeast Indiana Bncrp of IN 21.75 1,650 35.9 22.75 16.75 22.00 -1.14 20.83 -1.72
NWSB Northwest Bcrp MHC of PA (30.7 13.00 46,841 186.6 18.00 8.69 14.50 -10.34 47.56 -8.00
NWEQ Northwest Equity Corp. of WI 18.13 825 15.0 22.25 15.25 20.00 -9.35 18.89 -12.63
NTMG Nutmeg FS&LA of CT 12.50 989 12.4 12.50 7.69 12.00 4.17 66.67 19.05
OHSL OHSL Financial Corp. of OH 16.50 2,490 41.1 18.38 11.63 15.75 4.76 34.69 22.22
OCFC Ocean Fin. Corp. of NJ 18.50 15,534 287.4 20.00 16.53 18.56 -0.32 7.25 -0.70
OTFC Oregon Trail Fin. Corp. of OR 14.88 4,695 69.9 18.50 14.50 15.00 -0.80 48.80 -14.38
OFCP Ottawa Financial Corp. of MI 27.75 5,317 147.5 34.00 22.96 27.50 0.91 20.86 -18.38
PFFB PFF Bancorp of Pomona CA 17.63 16,214 285.9 21.50 17.63 18.13 -2.76 -9.59 -11.32
PSFI PS Financial of Chicago IL 12.00 2,074 24.9 22.38 11.25 12.38 -3.07 -17.98 -46.38
PSBI PSB Bancorp Inc. of PA* 8.38 3,101 26.0 11.27 6.80 8.63 -2.90 23.24 -25.64
PVFC PVF Capital Corp. of OH 25.25 2,660 67.2 28.25 19.00 25.25 0.00 21.69 25.06
PBCI Pamrapo Bancorp, Inc. of NJ 27.88 2,843 79.3 32.38 20.50 28.56 -2.38 34.36 2.31
PFED Park Bancorp of Chicago IL 18.00 2,333 42.0 19.75 16.38 18.06 -0.33 9.09 -3.38
PVSA Parkvale Financial Corp of PA 33.00 5,173 170.7 35.00 22.40 34.25 -3.65 47.32 -3.65
PBHC Pathfinder BC MHC of NY (46.1)* 15.38 2,831 13.6 26.13 9.83 19.00 -19.05 59.05 -23.10
PEEK Peekskill Fin. Corp. of NY 16.38 2,896 47.4 18.25 16.00 17.25 -5.04 0.80 -2.21
PFSB PennFed Fin. Services of NJ 15.50 9,386 145.5 19.00 14.38 15.00 3.33 3.75 -9.52
PWBK Pennwood Bancorp, Inc. of PA 11.50 734 8.4 17.44 11.50 11.50 0.00 -1.12 -22.35
PBKB People's Bancshares of MA* 20.25 3,316 67.1 27.75 15.75 20.75 -2.41 20.90 -10.99
TSBS Peoples Bancorp Inc of NJ* 8.88 36,325 322.6 11.83 6.41 9.38 -5.33 54.43 -24.94
PFDC Peoples Bancorp of Auburn IN 21.25 3,357 71.3 25.00 15.67 21.75 -2.30 23.76 -3.41
PBCT Peoples Bank, MHC of CT (40.1)* 29.91 64,130 731.4 41.13 26.56 31.06 -3.70 3.14 -21.29
PFFC Peoples Fin. Corp. of OH 12.00 1,417 17.0 19.00 11.38 12.13 -1.07 -28.36 -20.69
PHBK Peoples Heritage Fin Grp of ME* 21.31 87,565 1,866.0 26.50 18.13 22.63 -5.83 7.41 -7.35
PSFC Peoples Sidney Fin. Corp of OH 20.50 1,785 36.6 24.38 15.50 20.75 -1.20 24.24 14.65
PERM Permanent Bancorp, Inc. of IN 14.00 4,102 57.4 18.25 11.38 14.94 -6.29 10.85 -10.03
PCBC Perry Co. Fin. Corp. of MO 22.00 828 18.2 25.00 20.50 22.63 -2.78 7.32 -8.83
PHFC Pittsburgh Home Fin Corp of PA 16.00 1,969 31.5 20.81 15.63 16.25 -1.54 -5.88 -11.11
PFSL Pocahontas Bancorp of AR 8.75 6,685 58.5 11.43 5.53 9.38 -6.72 58.23 -20.89
PTRS Potters Financial Corp of OH 15.50 951 14.7 22.25 12.00 15.50 0.00 28.52 -22.50
PHSB Ppls Home SB, MHC of PA (45.0) 16.38 2,760 20.3 22.13 13.63 19.00 -13.79 17.00 -13.24
PRBC Prestige Bancorp of PA 16.13 1,052 17.0 22.07 13.91 17.00 -5.12 15.96 -7.25
PFNC Progress Financial Corp. of PA 17.50 5,246 91.8 21.67 11.57 18.63 -6.07 37.80 11.39
PROV Provident Fin. Holdings of CA 20.38 4,854 98.9 24.25 19.00 20.13 1.24 7.60 -6.86
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 31.38 2,106 19.6 51.00 20.50 34.00 -7.71 53.07 0.00
PLSK Pulaski SB, MHC of NJ (46.0) 14.63 2,108 13.9 24.50 13.50 15.75 -7.11 9.34 -24.00
PULS Pulse Bancorp of S. River NJ(8) 29.88 3,120 93.2 30.50 20.50 30.38 -1.65 42.29 14.35
QCFB QCF Bancorp of Virginia MN 30.50 1,365 41.6 31.75 23.50 30.50 0.00 28.42 2.52
QCBC Quaker City Bancorp of CA 17.50 5,827 102.0 21.25 15.80 18.50 -5.41 9.38 2.94
QCSB Queens County Bancorp of NY* 42.13 14,922 628.7 47.13 34.00 44.25 -4.79 21.83 4.02
RARB Raritan Bancorp of Raritan NJ* 29.00 2,373 68.8 30.25 22.25 29.75 -2.52 20.83 3.57
RELY Reliance Bancorp, Inc. of NY 32.00 9,565 306.1 42.25 28.75 33.75 -5.19 9.40 -12.64
RELI Reliance Bancshares Inc of WI(8) 9.50 2,371 22.5 10.13 8.06 9.50 0.00 13.37 0.00
RCBK Richmond County Fin Corp of NY 15.97 26,424 422.0 19.75 14.88 16.25 -1.72 59.70 59.70
RIVR River Valley Bancorp of IN 18.00 1,190 21.4 20.75 15.50 18.25 -1.37 16.13 -4.00
RVSB Riverview Bancorp of WA 15.38 6,186 95.1 19.13 9.76 16.00 -3.87 52.88 -13.35
RSLN Roslyn Bancorp, Inc. of NY* 19.44 41,400 804.8 30.50 18.94 19.75 -1.57 -19.20 -16.39
SCCB S. Carolina Comm. Bnshrs of SC 21.50 580 12.5 24.50 21.06 21.38 0.56 2.38 -4.44
SBFL SB Fngr Lakes MHC of NY (33.1) 17.00 3,570 20.1 24.75 9.13 17.63 -3.57 86.20 6.25
SFED SFS Bancorp of Schenectady NY(8) 27.38 1,208 33.1 27.50 18.88 20.00 36.90 43.88 1.86
SGVB SGV Bancorp of W. Covina CA 15.63 2,348 36.7 19.38 15.00 16.50 -5.27 0.84 -11.94
SISB SIS Bancorp, Inc. of MA(8)* 46.81 6,962 325.9 52.63 29.25 49.25 -4.95 56.03 16.47
SWCB Sandwich Bancorp of MA(8)* 60.75 2,043 124.1 64.50 32.00 62.63 -3.00 77.37 38.07
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FFFD North Central Bancshares of IA 1.21 1.21 16.42 14.29 106.47
NEIB Northeast Indiana Bncrp of IN 1.36 1.36 16.20 16.20 121.40
NWSB Northwest Bcrp MHC of PA (30.7 0.44 0.44 4.55 4.07 51.44
NWEQ Northwest Equity Corp. of WI 1.36 1.27 13.96 13.96 119.68
NTMG Nutmeg FS&LA of CT 0.57 0.40 6.58 6.58 112.78
OHSL OHSL Financial Corp. of OH 0.82 0.77 10.64 10.64 100.87
OCFC Ocean Fin. Corp. of NJ 0.90 0.90 13.90 13.90 97.75
OTFC Oregon Trail Fin. Corp. of OR 0.67 0.67 14.33 14.33 56.06
OFCP Ottawa Financial Corp. of MI 1.44 1.33 14.55 11.92 172.18
PFFB PFF Bancorp of Pomona CA 0.99 0.93 15.68 15.52 173.45
PSFI PS Financial of Chicago IL 0.44 0.74 11.24 11.24 40.42
PSBI PSB Bancorp Inc. of PA* 0.37 0.37 9.41 9.41 47.49
PVFC PVF Capital Corp. of OH 1.94 1.83 11.34 11.34 157.49
PBCI Pamrapo Bancorp, Inc. of NJ 1.73 1.67 17.20 17.11 134.17
PFED Park Bancorp of Chicago IL 0.69 0.74 16.84 16.84 84.59
PVSA Parkvale Financial Corp of PA 2.10 2.10 15.95 15.87 204.04
PBHC Pathfinder BC MHC of NY (46.1)* 0.62 0.50 8.15 6.91 69.30
PEEK Peekskill Fin. Corp. of NY 0.66 0.67 15.54 15.54 67.63
PFSB PennFed Fin. Services of NJ 1.18 1.15 11.26 9.76 156.52
PWBK Pennwood Bancorp, Inc. of PA 0.50 0.60 11.59 11.59 63.21
PBKB People's Bancshares of MA* 1.59 0.70 9.56 9.23 260.50
TSBS Peoples Bancorp Inc of NJ* 0.37 0.37 8.73 9.03 36.02
PFDC Peoples Bancorp of Auburn IN 1.30 1.30 13.51 13.51 89.56
PBCT Peoples Bank, MHC of CT (40.1)* 1.49 0.80 13.17 11.28 142.67
PFFC Peoples Fin. Corp. of OH 0.75 0.29 11.11 11.11 58.02
PHBK Peoples Heritage Fin Grp of ME* 0.87 0.87 5.60 4.26 83.48
PSFC Peoples Sidney Fin. Corp of OH 0.71 0.71 14.87 14.87 59.12
PERM Permanent Bancorp, Inc. of IN 0.64 0.62 10.41 10.29 107.05
PCBC Perry Co. Fin. Corp. of MO 1.04 1.03 19.69 19.69 103.96
PHFC Pittsburgh Home Fin Corp of PA 1.12 0.95 12.77 12.62 171.82
PFSL Pocahontas Bancorp of AR 0.36 0.35 8.70 8.70 59.94
PTRS Potters Financial Corp of OH 1.01 0.98 11.40 11.40 130.90
PHSB Ppls Home SB, MHC of PA (45.0) 0.63 0.56 10.33 10.33 80.94
PRBC Prestige Bancorp of PA 0.70 0.68 15.00 15.00 152.64
PFNC Progress Financial Corp. of PA 0.75 0.67 5.35 4.75 97.04
PROV Provident Fin. Holdings of CA 1.02 0.50 17.47 17.47 157.51
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 0.95 0.78 11.70 11.70 87.19
PLSK Pulaski SB, MHC of NJ (46.0) 0.55 0.55 10.44 10.44 90.50
PULS Pulse Bancorp of S. River NJ(8) 1.81 1.83 14.43 14.43 173.08
QCFB QCF Bancorp of Virginia MN 1.90 1.88 19.98 19.98 112.89
QCBC Quaker City Bancorp of CA 1.08 1.05 12.92 12.92 147.59
QCSB Queens County Bancorp of NY* 1.50 1.48 11.36 11.36 108.73
RARB Raritan Bancorp of Raritan NJ* 1.66 1.63 13.31 13.14 176.49
RELY Reliance Bancorp, Inc. of NY 1.95 2.05 20.26 13.98 227.89
RELI Reliance Bancshares Inc of WI(8) 0.20 0.20 9.31 9.31 18.63
RCBK Richmond County Fin Corp of NY 0.09 0.74 12.21 12.16 55.40
RIVR River Valley Bancorp of IN 1.08 0.96 15.35 15.14 112.48
RVSB Riverview Bancorp of WA 0.63 0.61 9.87 9.55 44.16
RSLN Roslyn Bancorp, Inc. of NY* 1.07 1.02 15.01 14.94 89.53
SCCB S. Carolina Comm. Bnshrs of SC 0.80 0.80 16.27 16.27 79.84
SBFL SB Fngr Lakes MHC of NY (33.1) 0.26 0.22 6.10 6.10 70.26
SFED SFS Bancorp of Schenectady NY(8) 0.92 0.89 17.95 17.95 145.22
SGVB SGV Bancorp of W. Covina CA 0.66 0.75 13.47 13.30 170.81
SISB SIS Bancorp, Inc. of MA(8)* 1.56 2.00 18.41 18.41 257.68
SWCB Sandwich Bancorp of MA(8)* 2.44 2.35 20.83 20.17 257.72
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- - -------- --------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SFSL Security First Corp. of OH(8) 24.69 7,555 186.5 27.88 16.00 25.75 -4.12 59.29 18.25
SKAN Skaneateles Bancorp Inc of NY* 16.19 1,445 23.4 22.25 14.50 18.50 -12.49 9.76 -26.84
SOBI Sobieski Bancorp of S. Bend IN 17.00 764 13.0 24.25 16.25 17.38 -2.19 3.79 -16.58
SSFC South Street Fin. Corp. of NC* 9.56 4,676 44.7 20.00 8.63 9.56 0.00 -50.97 -49.68
SBAN SouthBanc Shares Inc. of SC 18.88 1,509 13.3 23.76 13.68 20.13 -6.21 37.21 -11.19
SCBS Southern Commun. Bncshrs of AL 16.00 1,137 18.2 20.75 14.00 15.50 3.23 3.23 -12.33
SMBC Southern Missouri Bncrp of MO 21.00 1,484 31.2 23.25 17.00 21.00 0.00 21.74 2.44
SVRN Sovereign Bancorp, Inc. of PA 15.88 152,393 2,420.0 22.19 12.24 16.03 -0.94 20.49 -8.16
STFR St. Francis Cap. Corp. of WI 39.88 5,111 203.8 50.75 33.88 40.25 -0.92 10.78 -21.03
SPBC St. Paul Bancorp, Inc. of IL 22.88 34,357 786.1 28.50 21.38 22.50 1.69 -1.84 -12.84
SFFC StateFed Financial Corp. of IA 13.13 1,566 20.6 15.00 10.75 13.00 1.00 19.36 -10.98
SFIN Statewide Fin. Corp. of NJ 21.13 4,519 95.5 26.69 18.63 21.13 0.00 11.56 -11.96
STSA Sterling Financial Corp. of WA 21.75 7,606 165.4 27.63 17.63 21.56 0.88 21.64 0.00
ROSE T R Financial Corp. of NY* 37.44 17,529 656.3 44.75 26.00 37.75 -0.82 35.85 12.60
THRD TF Financial Corp. of PA 23.63 3,189 75.4 30.00 19.13 24.50 -3.55 22.37 -21.23
TPNZ Tappan Zee Fin., Inc. of NY(8) 18.75 1,478 27.7 22.63 16.63 19.50 -3.85 6.35 0.00
THTL Thistle Group Holdings of PA 9.56 9,000 86.0 10.06 9.56 10.00 -4.40 -4.40 -4.40
TSBK Timberland Bancorp of WA 14.75 6,613 97.5 18.50 14.25 14.75 0.00 47.50 47.50
TRIC Tri-County Bancorp of WY 12.31 1,167 14.4 16.50 11.38 13.00 -5.31 8.17 -17.93
TWIN Twin City Bancorp, Inc. of TN 13.63 1,260 17.2 15.50 13.00 13.50 0.96 4.85 -12.06
USAB USABancshares, Inc of PA* 16.50 1,502 24.8 17.75 7.75 16.50 0.00 83.33 65.00
UCBC Union Community Bancorp of IN 14.50 3,042 44.1 15.81 13.88 13.88 4.47 45.00 -0.89
UCFC United Community Fin. of OH 15.75 33,465 527.1 17.94 14.81 17.00 -7.35 57.50 57.50
UFRM United FSB of Rocky Mount NC(8) 18.19 3,283 59.7 21.00 10.50 18.25 -0.33 48.49 -7.34
UBMT United Fin. Corp. of MT 27.25 1,698 46.3 31.50 25.63 28.00 -2.68 N.A. N.A.
UTBI United Tenn. Bancshares of TN 12.25 1,455 17.8 16.00 12.25 13.75 -10.91 22.50 22.50
WHGB WHG Bancshares of MD 13.75 1,389 19.1 19.00 13.50 14.75 -6.78 -9.12 -26.67
WSFS WSFS Financial Corp. of DE* 19.56 12,545 245.4 23.88 14.13 19.13 2.25 36.69 -2.20
WVFC WVS Financial Corp. of PA 15.13 3,617 54.7 20.13 13.19 15.75 -3.94 10.52 -14.18
WRNB Warren Bancorp of Peabody MA* 11.25 7,905 88.9 14.38 8.75 11.88 -5.30 26.69 -2.17
WSBI Warwick Community Bncrp of NY* 14.88 6,607 98.3 18.00 14.50 15.50 -4.00 48.80 -14.38
WFSL Washington Federal, Inc. of WA 25.38 52,447 1,331.1 30.29 23.98 26.00 -2.38 -2.46 -11.20
WYNE Wayne Bancorp, Inc. of NJ 35.00 2,013 70.5 37.06 21.00 35.00 0.00 53.85 30.84
WAYN Wayne Svgs Bks MHC of OH (47.8 23.00 2,484 24.7 30.00 16.14 23.00 0.00 38.64 -12.75
WCFB Wbstr Cty FSB MHC of IA (45.2) 17.00 2,112 16.2 22.00 16.50 17.75 -4.23 -2.86 -15.00
WBST Webster Financial Corp. of CT 29.63 38,327 1,135.6 36.25 24.92 30.31 -2.24 14.23 -10.89
WEFC Wells Fin. Corp. of Wells MN 18.88 1,879 35.5 22.00 15.75 20.88 -9.58 16.18 5.59
WCBI WestCo Bancorp, Inc. of IL 27.38 2,486 68.1 30.50 25.50 29.50 -7.19 5.31 0.48
WSTR WesterFed Fin. Corp. of MT 21.63 5,585 120.8 27.00 21.38 23.75 -8.93 -4.42 -15.18
WOFC Western Ohio Fin. Corp. of OH 23.00 2,352 54.1 29.25 23.00 23.75 -3.16 0.52 -14.43
WEHO Westwood Hmstd Fin Corp of OH 12.38 2,559 31.7 18.13 11.88 12.50 -0.96 -19.51 -27.18
FFWD Wood Bancorp of OH 17.00 2,664 45.3 27.00 12.20 17.00 0.00 33.86 -9.57
YFCB Yonkers Fin. Corp. of NY 16.31 2,772 45.2 22.00 16.31 17.25 -5.45 -7.49 -15.27
YFED York Financial Corp. of PA 18.75 8,924 167.3 27.25 16.81 20.38 -8.00 -12.38 -27.18
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SFSL Security First Corp. of OH(8) 1.23 1.23 8.56 8.44 90.73
SKAN Skaneateles Bancorp Inc of NY* 1.11 1.09 12.44 12.12 178.27
SOBI Sobieski Bancorp of S. Bend IN 0.64 0.64 16.58 16.58 117.60
SSFC South Street Fin. Corp. of NC* 0.32 0.33 7.37 7.37 46.40
SBAN SouthBanc Shares Inc. of SC 0.73 0.73 17.01 17.01 77.85
SCBS Southern Commun. Bncshrs of AL 0.70 0.70 10.10 10.10 63.72
SMBC Southern Missouri Bncrp of MO 0.70 0.66 16.45 16.45 98.09
SVRN Sovereign Bancorp, Inc. of PA 0.40 0.61 5.85 5.02 118.75
STFR St. Francis Cap. Corp. of WI 2.54 2.44 25.80 23.05 322.42
SPBC St. Paul Bancorp, Inc. of IL 1.44 1.41 12.46 12.41 133.40
SFFC StateFed Financial Corp. of IA 0.70 0.70 10.16 10.16 57.31
SFIN Statewide Fin. Corp. of NJ 1.22 1.21 14.59 14.56 148.39
STSA Sterling Financial Corp. of WA 1.26 1.10 13.91 12.96 248.25
ROSE T R Financial Corp. of NY* 2.09 1.85 14.05 14.05 228.52
THRD TF Financial Corp. of PA 1.47 1.24 15.99 13.46 200.52
TPNZ Tappan Zee Fin., Inc. of NY(8) 0.75 0.70 14.75 14.75 87.51
THTL Thistle Group Holdings of PA 0.53 0.53 10.79 10.79 38.81
TSBK Timberland Bancorp of WA 0.58 0.55 12.70 12.70 39.54
TRIC Tri-County Bancorp of WY 0.77 0.80 12.03 12.03 76.49
TWIN Twin City Bancorp, Inc. of TN 0.88 0.73 11.17 11.17 87.59
USAB USABancshares, Inc of PA* 0.09 0.16 8.53 8.48 68.27
UCBC Union Community Bancorp of IN 0.47 0.47 14.22 14.22 35.53
UCFC United Community Fin. of OH 0.58 0.58 12.47 12.47 38.59
UFRM United FSB of Rocky Mount NC(8) 0.53 0.35 6.98 6.98 93.10
UBMT United Fin. Corp. of MT 0.80 0.80 14.52 14.52 56.69
UTBI United Tenn. Bancshares of TN 0.57 0.57 13.92 13.92 51.58
WHGB WHG Bancshares of MD 0.48 0.49 14.37 14.37 85.29
WSFS WSFS Financial Corp. of DE* 1.34 1.30 7.26 7.22 122.32
WVFC WVS Financial Corp. of PA 1.02 1.03 9.05 9.05 82.34
WRNB Warren Bancorp of Peabody MA* 0.80 0.83 5.20 5.20 47.13
WSBI Warwick Community Bncrp of NY* 0.31 0.30 12.94 12.94 56.13
WFSL Washington Federal, Inc. of WA 2.09 2.05 14.41 13.33 107.42
WYNE Wayne Bancorp, Inc. of NJ 0.92 0.92 17.15 17.15 135.13
WAYN Wayne Svgs Bks MHC of OH (47.8 0.74 0.68 9.83 9.83 104.57
WCFB Wbstr Cty FSB MHC of IA (45.2) 0.64 0.64 10.68 10.68 44.47
WBST Webster Financial Corp. of CT 1.36 1.37 10.43 9.20 197.22
WEFC Wells Fin. Corp. of Wells MN 1.23 1.17 16.10 16.10 111.46
WCBI WestCo Bancorp, Inc. of IL 1.93 1.77 19.82 19.82 128.37
WSTR WesterFed Fin. Corp. of MT 1.33 1.33 19.46 15.60 183.20
WOFC Western Ohio Fin. Corp. of OH 0.11 0.15 22.78 21.31 155.37
WEHO Westwood Hmstd Fin Corp of OH 0.32 0.51 11.67 11.67 50.75
FFWD Wood Bancorp of OH 0.89 0.76 8.18 8.18 61.94
YFCB Yonkers Fin. Corp. of NY 1.09 1.06 16.36 16.36 124.05
YFED York Financial Corp. of PA 1.16 0.94 11.97 11.97 136.46
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1
Weekly Thrift Market Line - Part Two
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(287) 14.13 13.89 0.93 7.86 4.95 0.88 7.40 0.62 143.95 0.79
NYSE Traded Companies(8) 8.19 7.91 1.09 13.43 6.13 0.56 8.64 0.80 95.86 1.14
AMEX Traded Companies(22) 14.43 14.29 0.84 6.07 4.89 0.83 5.73 0.47 168.60 0.73
NASDAQ Listed OTC Companies(257) 14.26 14.00 0.93 7.88 4.93 0.89 7.51 0.63 143.40 0.79
California Companies(18) 7.96 7.60 0.61 8.60 5.82 0.54 8.07 1.51 85.38 1.15
Florida Companies(6) 10.45 10.01 1.13 12.14 5.19 0.60 6.54 0.49 118.73 0.73
Mid-Atlantic Companies(57) 11.62 11.25 0.79 7.98 5.08 0.81 7.90 0.70 115.03 0.91
Mid-West Companies(131) 14.71 14.51 0.95 7.34 4.80 0.91 7.03 0.56 141.21 0.69
New England Companies(8) 7.48 7.20 0.70 9.56 5.80 0.64 8.82 0.62 130.49 0.99
North-West Companies(11) 18.22 17.88 1.17 9.40 4.92 1.04 8.34 0.34 252.22 0.81
South-East Companies(44) 17.91 17.77 1.06 7.63 4.53 1.01 7.16 0.59 169.02 0.78
South-West Companies(6) 11.26 11.16 0.98 10.40 7.36 0.95 10.16 0.29 222.78 0.55
Western Companies (Excl CA)(6) 19.02 18.60 1.04 6.03 4.79 1.05 6.09 0.42 180.38 0.94
Thrift Strategy(242) 15.20 14.99 0.95 7.44 5.04 0.92 7.11 0.59 147.31 0.74
Mortgage Banker Strategy(27) 7.54 6.96 0.74 9.73 4.15 0.67 9.27 0.70 129.07 0.96
Real Estate Strategy(8) 7.37 7.13 0.87 12.11 6.16 0.80 11.26 1.25 88.18 1.31
Diversified Strategy(7) 8.61 8.39 1.19 13.89 5.38 0.66 9.00 0.64 137.78 1.15
Retail Banking Strategy(3) 6.75 6.51 0.20 4.45 0.90 0.14 3.35 1.05 71.52 1.35
Companies Issuing Dividends(238) 14.04 13.78 0.97 8.07 5.15 0.91 7.49 0.57 147.40 0.77
Companies Without Dividends(49) 14.57 14.41 0.76 6.87 4.00 0.76 6.94 0.85 126.57 0.89
Equity/Assets [less than] 6%(21) 5.02 4.76 0.55 11.05 4.51 0.59 11.77 1.22 90.79 0.75
Equity/Assets 6-12%(123) 8.83 8.45 0.81 9.41 5.38 0.73 8.49 0.62 141.14 0.89
Equity/Assets [greater than] 12%(143) 19.90 19.77 1.08 6.10 4.66 1.05 5.85 0.55 152.48 0.70
Converted Last 3 Mths (no MHC)(6) 24.10 24.10 1.00 4.07 4.22 1.03 4.21 0.88 85.45 0.93
Actively Traded Companies(31) 9.68 9.35 0.98 10.88 5.15 0.99 11.55 0.84 131.18 0.93
Market Value Below $20 Million(54) 15.30 15.23 0.88 6.03 5.11 0.81 5.46 0.63 132.19 0.67
Holding Company Structure(258) 14.18 13.94 0.94 7.84 4.99 0.89 7.39 0.63 138.60 0.78
Assets Over $1 Billion(60) 9.23 8.67 0.85 10.77 5.46 0.79 10.05 0.83 114.20 0.93
Assets $500 Million-$1 Billion(38) 10.75 10.40 0.87 8.49 4.27 0.79 7.95 0.60 144.78 0.89
Assets $250-$500 Million(68) 13.52 13.29 0.93 8.07 5.11 0.90 7.67 0.48 160.82 0.77
Assets less than $250 Million(121) 17.71 17.63 0.99 6.22 4.84 0.94 5.86 0.61 148.12 0.70
Goodwill Companies(114) 10.30 9.65 0.86 9.58 5.29 0.80 8.85 0.64 112.92 0.83
Non-Goodwill Companies(172) 16.49 16.49 0.97 6.83 4.76 0.93 6.52 0.61 162.01 0.76
Acquirors of FSLIC Cases(8) 8.98 8.50 1.00 11.70 6.64 0.95 11.20 0.86 59.31 0.62
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- - ------ ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. SAIF-Insured Thrifts (no MHCs)
- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(287) 18.83 142.97 18.43 147.42 19.62 0.33 1.77 30.93
NYSE Traded Companies(8) 16.57 186.08 15.80 193.55 15.91 0.21 0.68 12.00
AMEX Traded Companies(22) 19.01 120.54 16.82 122.47 19.32 0.32 1.99 32.14
NASDAQ Listed OTC Companies(257) 18.89 143.88 18.64 148.49 19.73 0.33 1.78 31.37
California Companies(18) 17.43 135.38 10.50 143.25 16.78 0.15 0.58 13.05
Florida Companies(6) 20.66 171.76 18.15 184.23 23.20 0.24 1.13 23.96
Mid-Atlantic Companies(57) 18.23 148.54 15.82 153.62 19.76 0.31 1.61 30.34
Mid-West Companies(131) 18.69 139.49 18.68 142.85 19.45 0.33 1.85 30.85
New England Companies(8) 17.96 162.65 11.53 171.81 18.56 0.39 1.94 32.77
North-West Companies(11) 20.31 154.85 23.90 159.69 21.25 0.33 1.56 32.33
South-East Companies(44) 20.63 143.68 23.36 147.36 21.33 0.39 2.23 38.97
South-West Companies(6) 12.91 128.44 13.56 133.52 12.98 0.20 1.27 23.78
Western Companies (Excl CA)(6) 19.85 121.91 24.20 127.41 19.70 0.53 2.83 50.49
Thrift Strategy(242) 19.05 135.86 19.07 138.99 19.66 0.34 1.88 32.24
Mortgage Banker Strategy(27) 17.65 183.66 14.31 201.87 20.12 0.25 1.13 24.72
Real Estate Strategy(8) 16.50 181.06 13.31 185.79 17.59 0.18 0.73 13.16
Diversified Strategy(7) 19.41 228.66 19.48 235.01 20.25 0.43 1.67 33.58
Retail Banking Strategy(3) 15.20 142.05 9.07 146.44 17.01 0.15 0.77 17.60
Companies Issuing Dividends(238) 18.86 145.54 18.58 150.25 19.74 0.40 2.14 37.50
Companies Without Dividends(49) 18.67 130.36 17.72 133.62 18.88 0.00 0.00 0.00
Equity/Assets [less than] 6%(21) 17.15 198.07 10.08 202.44 17.13 0.13 0.60 11.60
Equity/Assets 6-12%(123) 17.95 161.08 14.19 170.01 18.92 0.34 1.65 27.77
Equity/Assets [greater than] 12%(143) 19.97 120.08 23.21 121.27 20.63 0.35 2.04 36.59
Converted Last 3 Mths (no MHC)(6) 21.80 98.52 24.28 98.52 23.74 0.13 1.56 0.00
Actively Traded Companies(31) 16.47 187.41 17.24 198.03 17.68 0.43 1.73 31.01
Market Value Below $20 Million(54) 19.20 115.91 16.94 116.44 20.22 0.34 2.37 36.90
Holding Company Structure(258) 18.86 143.19 18.58 147.57 19.67 0.34 1.78 31.51
Assets Over $1 Billion(60) 18.12 177.44 15.33 192.22 19.22 0.32 1.28 24.52
Assets $500 Million-$1 Billion(38) 17.33 166.33 16.48 174.48 19.61 0.33 1.52 29.10
Assets $250-$500 Million(68) 18.93 143.64 18.10 143.97 19.22 0.32 1.57 28.05
Assets less than $250 Million(121) 19.61 119.42 20.62 120.08 20.06 0.34 2.18 36.61
Goodwill Companies(114) 18.16 162.77 15.58 174.74 19.03 0.34 1.55 26.19
Non-Goodwill Companies(172) 19.27 130.99 20.21 130.99 19.95 0.33 1.92 34.19
Acquirors of FSLIC Cases(8) 15.36 162.83 14.51 172.29 15.29 0.47 1.85 27.06
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995. Percent change figures are actual year-to-date and
are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing twelve month common earnings and
average common equity and assets balances; ROI (return on investment) is current EPS divided by current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk. Parentheses following market averages indicate the
number of institutions included in the respective averages. All figures have been adjusted for stock splits, stock
dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies, and RP Financial, Inc. calculations. The
information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. BIF-Insured Thrifts (no MHCs)
- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(56) 12.25 11.95 1.06 10.57 5.86 1.02 9.90 0.58 221.50 1.26
NYSE Traded Companies(5) 17.26 16.06 1.09 8.14 4.26 1.17 8.39 1.22 73.58 0.96
AMEX Traded Companies(5) 12.25 11.93 1.07 10.32 6.46 0.91 8.61 0.83 123.38 1.17
NASDAQ Listed OTC Companies(46) 11.65 11.47 1.05 10.89 5.98 1.01 10.23 0.48 248.84 1.30
California Companies(1) 10.18 10.15 1.43 13.50 8.72 1.43 13.50 0.00 0.00 1.75
Mid-Atlantic Companies(20) 14.66 14.27 0.92 7.99 4.40 0.92 7.91 0.77 131.94 1.15
New England Companies(30) 9.93 9.66 1.14 12.85 6.79 1.05 11.55 0.52 263.63 1.41
North-West Companies(2) 11.06 11.06 1.28 12.54 6.98 1.27 12.35 0.07 989.94 1.07
South-East Companies(3) 17.69 17.54 1.01 5.73 5.73 1.06 5.96 0.25 149.91 0.51
Thrift Strategy(44) 13.28 13.04 1.04 9.71 5.73 1.00 9.01 0.57 207.55 1.19
Mortgage Banker Strategy(6) 8.58 8.12 0.99 12.21 6.13 0.93 11.33 0.38 374.33 1.15
Real Estate Strategy(2) 10.61 10.59 1.58 14.91 7.91 1.61 15.22 1.27 83.50 1.69
Diversified Strategy(4) 6.56 5.74 1.06 16.15 5.71 1.02 15.57 0.88 159.54 2.05
Companies Issuing Dividends(49) 11.76 11.43 1.06 10.87 5.84 1.01 10.09 0.57 216.60 1.24
Companies Without Dividends(7) 15.35 15.33 1.03 8.64 5.96 1.03 8.63 0.63 252.52 1.33
Equity/Assets [less than[ 6%(4) 5.20 4.89 0.96 18.04 6.57 0.73 13.54 0.87 105.20 1.48
Equity/Assets 6-12%(34) 8.76 8.38 1.12 12.71 6.71 1.06 12.04 0.65 242.20 1.41
Equity/Assets [greater than] 12%(18) 19.62 19.49 0.98 5.34 4.29 1.00 5.51 0.38 214.30 0.93
Converted Last 3 Mths (no MHC)(1) 19.81 19.81 0.78 3.93 4.42 0.78 3.93 1.85 11.66 0.41
Actively Traded Companies(15) 10.20 9.80 1.27 13.45 6.89 1.18 12.08 0.43 210.06 1.08
Market Value Below $20 Million(2) 16.20 16.20 0.89 6.47 6.51 0.90 6.19 0.20 438.49 1.52
Holding Company Structure(43) 13.20 12.99 1.06 9.94 5.66 1.03 9.40 0.45 226.56 1.28
Assets Over $1 Billion(18) 12.18 11.54 1.12 11.00 5.19 1.11 10.74 0.71 155.72 1.27
Assets $500 Million-$1 Billion(10) 9.29 9.15 1.12 12.86 6.86 1.00 10.84 0.57 190.31 1.32
Assets $250-$500 Million(12) 12.20 12.05 1.12 10.98 6.52 1.08 10.60 0.65 244.13 1.46
Assets less than $250 Million(16) 13.82 13.70 0.92 8.69 5.53 0.88 8.05 0.42 278.13 1.04
Goodwill Companies(29) 10.80 10.22 0.97 10.59 5.79 0.93 9.70 0.78 157.45 1.25
Non-Goodwill Companies(27) 13.69 13.69 1.15 10.55 5.92 1.11 10.09 0.40 285.55 1.26
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- -------- ------- -------- -------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. BIF-Insured Thrifts (no MHCs)
- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(56) 17.59 161.12 18.28 164.08 18.39 0.39 1.74 30.01
NYSE Traded Companies(5) 21.27 171.57 25.03 168.59 23.26 0.55 1.44 36.22
AMEX Traded Companies(5) 16.83 144.67 16.52 150.37 17.48 0.40 2.09 32.28
NASDAQ Listed OTC Companies(46) 17.31 161.86 17.69 165.35 17.82 0.37 1.74 28.98
California Companies(1) 11.47 145.85 14.85 146.29 11.47 0.00 0.00 0.00
Mid-Atlantic Companies(20) 20.62 158.15 21.16 158.67 21.26 0.40 1.43 31.97
New England Companies(30) 15.92 169.62 16.27 174.78 16.99 0.41 1.86 29.00
North-West Companies(2) 14.33 173.07 17.66 173.07 14.54 0.32 2.09 29.71
South-East Companies(3) 20.17 106.13 18.09 107.36 19.06 0.41 3.14 38.86
Thrift Strategy(44) 17.92 152.00 18.66 152.23 18.67 0.42 1.83 31.49
Mortgage Banker Strategy(6) 16.73 193.59 15.46 210.40 18.33 0.29 1.25 20.86
Real Estate Strategy(2) 12.77 181.10 19.36 181.32 12.51 0.18 1.60 22.50
Diversified Strategy(4) 18.42 226.00 18.13 239.04 19.14 0.37 1.74 33.57
Companies Issuing Dividends(49) 17.82 166.03 18.16 169.58 18.67 0.46 2.02 34.78
Companies Without Dividends(7) 15.63 130.92 19.10 131.14 16.03 0.00 0.00 0.00
Equity/Assets [less than] 6%(4) 15.89 253.97 13.39 270.05 22.53 0.26 1.29 18.69
Equity/Assets 6-12%(34) 15.97 173.91 16.19 176.13 16.67 0.46 1.91 31.31
Equity/Assets [greater than] 12%(18) 21.54 120.57 22.86 122.47 20.95 0.31 1.57 30.37
Converted Last 3 Mths (no MHC)(1) 22.65 89.05 17.65 89.05 22.65 0.00 0.00 0.00
Actively Traded Companies(15) 15.74 176.96 18.05 186.31 18.25 0.58 2.06 32.83
Market Value Below $20 Million(2) 15.94 92.22 13.89 92.22 15.68 0.12 1.15 21.82
Holding Company Structure(43) 18.06 153.97 19.19 157.90 18.65 0.40 1.79 31.68
Assets Over $1 Billion(18) 19.63 180.29 21.42 184.83 20.90 0.52 1.67 36.22
Assets $500 Million-$1 Billion(10) 15.41 174.43 15.26 178.83 17.20 0.49 2.14 31.89
Assets $250-$500 Million(12) 15.69 153.16 17.21 155.97 16.38 0.26 1.60 24.77
Assets less than $250 Million(16) 18.15 143.64 17.47 145.95 17.57 0.32 1.73 26.58
Goodwill Companies(29) 17.16 166.45 16.97 172.74 19.46 0.38 1.60 28.35
Non-Goodwill Companies(27) 18.03 155.78 19.60 155.78 17.11 0.41 1.88 31.74
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995. Percent change figures are actual year-to-date and
are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing twelve month common earnings and
average common equity and assets balances; ROI (return on investment) is current EPS divided by current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk. Parentheses following market averages indicate the
number of institutions included in the respective averages. All figures have been adjusted for stock splits, stock
dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies, and RP Financial, Inc. calculations. The
information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 13.95 13.75 0.90 7.09 3.47 0.87 6.72 0.50 144.11 0.82
BIF-Insured Thrifts(3) 13.36 12.32 1.06 8.99 4.27 0.81 6.33 0.75 135.34 1.15
NASDAQ Listed OTC Companies(22) 13.86 13.53 0.93 7.38 3.59 0.86 6.66 0.53 142.79 0.87
Florida Companies(2) 6.70 6.50 0.66 8.52 4.00 0.57 7.32 0.32 75.42 0.36
Mid-Atlantic Companies(12) 12.88 12.59 0.85 7.00 3.52 0.82 6.63 0.56 136.46 0.81
Mid-West Companies(5) 12.75 12.38 0.86 6.93 3.48 0.79 6.30 0.45 150.76 0.58
New England Companies(2) 21.22 20.56 1.55 11.15 4.21 1.28 8.04 0.65 203.93 2.05
South-East Companies(1) 22.48 22.48 1.13 5.02 3.21 1.13 5.02 0.50 132.06 0.96
Thrift Strategy(20) 14.44 14.19 0.92 6.84 3.55 0.88 6.50 0.52 146.59 0.82
Mortgage Banker Strategy(1) 8.13 7.30 0.88 10.96 2.89 0.72 8.96 0.66 60.54 0.97
Diversified Strategy(1) 9.23 7.91 1.18 13.45 4.98 0.63 7.22 0.70 156.79 1.72
Companies Issuing Dividends(20) 13.59 13.23 0.91 7.41 3.42 0.84 6.63 0.55 142.74 0.88
Companies Without Dividends(2) 16.26 16.26 1.11 7.04 5.14 1.09 6.92 0.37 143.28 0.79
Equity/Assets 6-12%(12) 9.33 8.73 0.76 8.16 3.42 0.65 6.88 0.65 87.97 0.80
Equity/Assets >12%(10) 19.40 19.40 1.13 6.42 3.80 1.13 6.39 0.39 209.81 0.95
Holding Company Structure(4) 13.42 12.98 0.96 7.39 4.38 0.89 6.80 0.63 94.03 0.64
Assets Over $1 Billion(5) 10.40 9.74 0.96 9.77 3.81 0.79 7.84 0.49 126.63 0.99
Assets $500 Million-$1 Billion(3) 20.21 19.46 1.30 8.58 3.63 1.30 8.61 0.47 194.69 1.51
Assets $250-$500 Million(5) 12.31 12.31 0.78 6.27 2.87 0.76 6.01 0.46 177.65 0.59
Assets less than $250 Million(9) 15.41 15.18 0.91 6.28 3.90 0.86 5.84 0.62 118.14 0.81
Goodwill Companies(7) 9.74 8.80 0.87 9.15 3.74 0.73 7.60 0.61 95.59 0.81
Non-Goodwill Companies(15) 16.08 16.08 0.96 6.42 3.51 0.93 6.15 0.49 168.21 0.90
MHC Institutions(22) 13.86 13.53 0.93 7.38 3.59 0.86 6.66 0.53 142.79 0.87
MHC Converted Last 3 Months(2) 14.86 14.86 0.96 6.63 4.79 0.96 6.63 0.46 76.09 0.52
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 25.78 187.70 25.21 193.67 26.79 0.35 1.86 41.18
BIF-Insured Thrifts(3) 23.77 189.51 24.10 213.48 27.59 0.35 1.37 29.54
NASDAQ Listed OTC Companies(22) 25.28 187.99 25.04 196.80 26.86 0.35 1.78 38.85
Florida Companies(2) 25.00 205.61 13.78 211.97 29.08 0.90 3.36 0.00
Mid-Atlantic Companies(12) 25.21 187.02 24.06 193.16 26.40 0.22 1.31 33.71
Mid-West Companies(5) 26.43 194.85 23.41 208.72 26.32 0.55 2.71 50.10
New England Companies(2) 24.54 186.60 34.74 205.62 29.00 0.52 2.14 49.46
South-East Companies(1) 0.00 156.31 35.15 156.31 0.00 0.20 1.49 46.51
Thrift Strategy(20) 25.75 185.81 25.07 193.00 26.86 0.33 1.76 37.41
Mortgage Banker Strategy(1) 0.00 0.00 28.55 0.00 0.00 0.22 1.16 40.00
Diversified Strategy(1) 20.07 227.11 20.96 265.16 0.00 0.84 2.81 56.38
Companies Issuing Dividends(20) 26.15 193.59 25.25 203.44 28.06 0.39 1.98 44.83
Companies Without Dividends(2) 20.92 140.39 23.18 140.39 21.50 0.00 0.00 0.00
Equity/Assets 6-12%(12) 25.39 218.70 21.12 235.44 27.82 0.42 1.92 47.23
Equity/Assets [greater than] 12%(10) 25.18 153.87 29.83 153.87 26.32 0.26 1.61 29.28
Holding Company Structure(4) 22.22 175.87 22.64 184.33 21.50 0.21 1.00 10.75
Assets Over $1 Billion(5) 25.26 217.78 23.54 237.31 28.74 0.42 1.71 33.18
Assets $500 Million-$1 Billion(3) 27.65 178.14 31.84 205.88 27.53 0.34 1.52 41.97
Assets $250-$500 Million(5) 27.65 220.98 25.92 220.98 27.65 0.36 1.77 29.03
Assets less than $250 Million(9) 23.87 154.93 23.73 159.16 25.32 0.30 1.90 44.00
Goodwill Companies(7) 25.14 212.85 21.70 240.76 28.23 0.40 1.63 34.40
Non-Goodwill Companies(15) 25.38 176.51 26.84 176.51 26.35 0.32 1.86 41.82
MHC Institutions(22) 25.28 187.99 25.04 196.80 26.86 0.35 1.78 38.85
MHC Converted Last 3 Months(2) 15.41 143.91 21.61 143.91 15.41 0.00 0.00 0.00
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995. Percent change figures are actual year-to-date and
are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing twelve month common earnings and
average common equity and assets balances; ROI (return on investment) is current EPS divided by current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk. Parentheses following market averages indicate the
number of institutions included in the respective averages. All figures have been adjusted for stock splits, stock
dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies, and RP Financial, Inc. calculations.
The information provided in this report has been obtained from sources we believe are reliable, but we cannot
guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AHM Ahmanson and Co. H.F. of CA(8) 5.45 4.01 0.81 18.46 5.62 0.76 17.41 1.72 52.05 1.33
BYS Bay State Bancorp of MA* 20.71 20.71 0.92 4.44 4.17 0.92 4.44 0.71 122.32 1.06
CFB Commercial Federal Corp. of NE 6.91 6.04 0.81 12.90 5.56 0.96 15.24 0.78 86.50 0.88
DME Dime Bancorp, Inc. of NY* 5.90 4.83 0.72 12.67 4.53 0.58 10.22 1.03 50.85 0.69
DSL Downey Financial Corp. of CA 7.60 7.51 0.87 12.03 5.63 0.89 12.30 0.84 65.10 0.60
FED FirstFed Fin. Corp. of CA 5.72 5.67 0.63 12.25 5.91 0.61 11.85 0.84 NA NA
GSB Golden State Bancorp of CA(8) 6.04 5.44 0.66 11.63 7.83 0.71 12.55 0.86 100.48 1.12
GDW Golden West Fin. Corp. of CA 7.10 7.10 0.95 14.36 7.37 0.95 14.41 0.97 63.20 0.86
GPT GreenPoint Fin. Corp. of NY* 9.67 5.40 1.07 10.71 4.58 1.11 11.08 2.54 33.98 1.22
JSB JSB Financial, Inc. of NY* 23.82 23.82 1.88 7.89 5.83 1.67 7.02 NA NA 0.55
OCN Ocwen Financial Corp. of FL 13.08 12.40 2.84 24.09 7.08 0.55 4.68 NA NA NA
SIB Staten Island Bancorp of NY* 26.20 25.53 0.86 5.00 2.22 1.59 9.19 0.61 87.17 1.27
WES Westcorp Inc. of Orange CA 8.73 8.71 0.45 4.96 5.25 -0.60 -6.61 0.58 168.62 2.22
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 15.34 15.34 1.07 6.43 5.32 1.00 6.04 NA NA NA
ANE Alliance Bncp of New Eng of CT* 7.97 7.78 0.89 12.20 6.96 0.52 7.15 0.53 229.26 1.84
BKC American Bank of Waterbury CT* 9.02 8.73 1.33 15.35 7.22 1.11 12.89 2.10 42.28 1.50
BFD BostonFed Bancorp of MA 7.87 7.59 0.72 8.46 6.30 0.61 7.16 NA NA 0.84
CNY Carver Bancorp, Inc. of NY 8.12 7.84 0.25 2.99 3.71 0.22 2.65 NA NA 1.28
CBK Citizens First Fin.Corp. of IL 13.84 13.84 0.72 5.13 4.42 0.45 3.22 0.71 47.08 0.41
EFC EFC Bancorp Inc of IL 23.77 23.77 1.07 4.51 4.67 1.07 4.51 0.46 57.60 0.45
EBI Equality Bancorp, Inc. of MO 10.11 10.11 0.55 6.80 3.83 0.03 0.41 0.34 43.44 0.34
ESX Essex Bancorp of Norfolk VA(8) 0.02 -0.08 -0.11 NM -7.12 -0.11 NM 1.26 76.64 1.11
FCB Falmouth Bancorp, Inc. of MA* 22.41 22.41 1.02 4.33 3.68 0.81 3.44 0.05 NA 0.74
FAB FirstFed America Bancorp of MA 9.91 9.91 0.62 5.39 4.59 0.52 4.54 0.29 293.25 1.24
GAF GA Financial Corp. of PA 14.01 13.88 1.09 7.25 7.48 1.03 6.81 0.24 75.96 0.46
HBS Haywood Bancshares, Inc. of NC* 14.85 14.38 1.46 10.18 8.59 1.46 10.18 0.37 131.68 0.65
KNK Kankakee Bancorp, Inc. of IL 9.64 8.02 0.86 8.00 7.07 0.84 7.78 1.12 53.91 0.97
KYF Kentucky First Bancorp of KY 17.04 17.04 1.13 6.76 5.49 1.11 6.68 0.18 263.19 0.76
NBN Northeast Bancorp of ME* 7.00 6.36 0.67 9.52 5.86 0.66 9.41 1.08 90.28 1.12
NEP Northeast PA Fin. Corp of PA 18.94 18.94 -0.93 -6.80 -4.48 0.57 4.19 0.22 178.76 0.64
PDB Piedmont Bancorp, Inc. of NC 16.09 16.09 1.24 7.56 5.70 1.24 7.56 0.71 102.48 0.89
SSB Scotland Bancorp, Inc. of NC 24.70 24.70 1.47 5.01 5.56 1.47 5.01 NA NA 0.57
SZB SouthFirst Bancshares of AL 10.08 9.83 0.55 4.66 4.03 0.51 4.33 NA NA 0.74
SRN Southern Banc Company of AL 17.39 17.27 0.49 2.86 2.73 0.49 2.86 NA NA 0.19
SSM Stone Street Bancorp of NC 27.99 27.99 1.38 4.56 4.54 1.38 4.56 NA NA 0.64
TSH Teche Holding Company of LA 13.83 13.83 0.93 6.90 6.36 0.92 6.84 0.20 413.82 0.98
FTF Texarkana Fst. Fin. Corp of AR 15.23 15.23 1.76 11.38 6.51 1.73 11.19 0.12 445.58 0.67
THR Three Rivers Fin. Corp. of MI 13.53 13.48 0.88 6.44 6.22 0.81 5.99 1.00 48.12 0.74
WSB Washington SB, FSB of MD 8.42 8.42 0.73 8.64 7.11 0.50 5.89 NA NA 1.02
WFI Winton Financial Corp. of OH 7.17 7.03 1.05 14.60 5.47 0.86 12.04 NA NA NA
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 9.02 8.87 0.75 8.78 4.04 0.51 5.98 1.66 27.44 0.62
FBER 1st Bergen Bancorp of NJ 11.69 11.69 0.75 5.40 4.36 0.75 5.40 0.95 104.08 2.38
AFED AFSALA Bancorp, Inc. of NY(8) 12.13 12.13 0.75 5.80 5.15 0.77 5.93 0.37 185.39 1.46
ALBK ALBANK Fin. Corp. of Albany NY(8) 8.97 7.02 1.16 12.73 5.13 1.15 12.62 0.85 84.14 1.04
AMFC AMB Financial Corp. of IN 14.11 14.11 1.02 6.89 6.31 0.58 3.93 0.19 214.55 0.52
ASBP ASB Financial Corp. of OH 15.20 15.20 0.96 6.17 5.36 0.94 6.08 0.14 513.38 1.03
ABBK Abington Bancorp of MA* 6.29 5.72 0.86 12.72 6.76 0.73 10.78 0.14 353.60 0.77
AABC Access Anytime Bancorp of NM 8.09 8.09 1.45 18.31 12.19 1.35 17.02 0.08 535.05 0.67
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
--------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AHM Ahmanson and Co. H.F. of CA(8) 17.79 236.33 12.87 321.21 18.86 0.88 1.41 25.14
BYS Bay State Bancorp of MA* 23.99 106.47 22.05 106.47 23.99 0.00 0.00 0.00
CFB Commercial Federal Corp. of NE 17.99 183.25 12.67 209.62 15.23 0.22 0.82 14.77
DME Dime Bancorp, Inc. of NY* 22.09 248.91 14.69 304.16 27.40 0.20 0.70 15.50
DSL Downey Financial Corp. of CA 17.78 201.64 15.32 203.95 17.39 0.32 1.00 17.78
FED FirstFed Fin. Corp. of CA 16.92 189.87 10.85 191.27 17.49 0.00 0.00 0.00
GSB Golden State Bancorp of CA(8) 12.77 138.36 8.35 153.40 11.83 0.00 0.00 0.00
GDW Golden West Fin. Corp. of CA 13.57 179.91 12.77 179.91 13.53 0.50 0.57 7.72
GPT GreenPoint Fin. Corp. of NY* 21.84 242.05 23.41 NM 21.10 0.64 1.72 37.65
JSB JSB Financial, Inc. of NY* 17.16 135.45 32.26 135.45 19.29 1.60 3.12 53.51
OCN Ocwen Financial Corp. of FL 14.12 266.71 34.87 281.23 NM 0.00 0.00 0.00
SIB Staten Island Bancorp of NY* NM 124.95 32.74 128.26 24.53 0.32 1.65 74.42
WES Westcorp Inc. of Orange CA 19.05 95.09 8.30 95.31 NM 0.20 1.67 31.75
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 18.80 122.43 18.78 122.43 20.00 0.44 2.00 37.61
ANE Alliance Bncp of New Eng of CT* 14.37 158.03 12.60 161.92 24.51 0.20 1.60 22.99
BKC American Bank of Waterbury CT* 13.86 193.54 17.45 199.92 16.50 0.76 3.13 43.43
BFD BostonFed Bancorp of MA 15.87 136.99 10.79 142.08 18.75 0.40 1.94 30.77
CNY Carver Bancorp, Inc. of NY 26.96 78.97 6.42 81.85 NM 0.00 0.00 0.00
CBK Citizens First Fin.Corp. of IL 22.60 115.46 15.98 115.46 NM 0.00 0.00 0.00
EFC EFC Bancorp Inc of IL 21.43 96.62 22.97 96.62 21.43 0.00 0.00 0.00
EBI Equality Bancorp, Inc. of MO 26.12 125.70 12.70 125.70 NM 0.24 1.84 48.00
ESX Essex Bancorp of Norfolk VA(8) NM NM 1.54 NM NM 0.00 0.00 NM
FCB Falmouth Bancorp, Inc. of MA* 27.21 114.27 25.60 114.27 NM 0.24 1.30 35.29
FAB FirstFed America Bancorp of MA 21.80 116.48 11.54 116.48 25.91 0.20 1.12 24.39
GAF GA Financial Corp. of PA 13.36 97.67 13.68 98.54 14.22 0.56 3.61 48.28
HBS Haywood Bancshares, Inc. of NC* 11.65 113.51 16.86 117.21 11.65 0.60 2.93 34.09
KNK Kankakee Bancorp, Inc. of IL 14.15 111.50 10.75 134.01 14.55 0.48 1.54 21.82
KYF Kentucky First Bancorp of KY 18.20 127.94 21.80 127.94 18.44 0.50 3.48 63.29
NBN Northeast Bancorp of ME* 17.07 144.03 10.08 158.55 17.28 0.21 1.50 25.61
NEP Northeast PA Fin. Corp of PA NM 102.37 19.39 102.37 NM 0.00 0.00 NM
PDB Piedmont Bancorp, Inc. of NC 17.54 128.70 20.71 128.70 17.54 0.48 4.80 NM
SSB Scotland Bancorp, Inc. of NC 18.00 113.78 28.11 113.78 18.00 0.20 2.22 40.00
SZB SouthFirst Bancshares of AL 24.83 102.78 10.36 105.40 26.74 0.60 3.45 NM
SRN Southern Banc Company of AL NM 102.88 17.89 103.64 NM 0.35 2.28 NM
SSM Stone Street Bancorp of NC 22.04 104.63 29.28 104.63 22.04 0.46 2.61 57.50
TSH Teche Holding Company of LA 15.72 104.58 14.46 104.58 15.86 0.50 2.92 45.87
FTF Texarkana Fst. Fin. Corp of AR 15.36 169.86 25.87 169.86 15.63 0.56 2.04 31.28
THR Three Rivers Fin. Corp. of MI 16.09 101.06 13.67 101.44 17.29 0.44 2.71 43.56
WSB Washington SB, FSB of MD 14.07 118.81 10.00 118.81 20.63 0.10 1.62 22.73
WFI Winton Financial Corp. of OH 18.29 252.24 18.10 257.57 22.17 0.25 1.71 31.25
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 24.73 209.50 18.90 212.97 NM 0.27 0.60 14.84
FBER 1st Bergen Bancorp of NJ 22.92 132.05 15.44 132.05 22.92 0.20 1.12 25.64
AFED AFSALA Bancorp, Inc. of NY(8) 19.40 115.54 14.02 115.54 18.97 0.28 1.66 32.18
ALBK ALBANK Fin. Corp. of Albany NY(8) 19.50 233.42 20.94 298.39 19.68 0.84 1.30 25.30
AMFC AMB Financial Corp. of IN 15.84 107.01 15.09 107.01 27.72 0.28 1.68 26.67
ASBP ASB Financial Corp. of OH 18.65 115.26 17.52 115.26 18.94 0.40 3.25 60.61
ABBK Abington Bancorp of MA* 14.80 190.72 11.99 209.75 17.45 0.20 1.08 16.00
AABC Access Anytime Bancorp of NM 8.20 138.52 11.20 138.52 8.82 0.00 0.00 0.00
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AFBC Advance Fin. Bancorp of WV 14.09 14.09 0.90 5.94 5.43 0.85 5.61 0.60 51.29 0.35
AFCB Affiliated Comm BC, Inc of MA(8) 10.17 10.12 1.09 11.05 5.42 1.04 10.50 0.36 220.69 1.28
ALBC Albion Banc Corp. of Albion NY 8.54 8.54 0.48 5.58 5.14 0.45 5.20 0.47 72.86 0.45
ABCL Alliance Bancorp, Inc. of IL 8.59 8.50 0.89 9.74 4.56 0.91 9.92 NA NA 0.47
ALLB Alliance Bank MHC of PA (19.9) 10.72 10.72 0.80 7.09 2.88 0.80 7.09 1.06 45.21 0.88
AHCI Ambanc Holding Co., Inc. of NY* 11.69 11.69 0.51 4.18 3.78 0.41 3.34 0.62 122.28 1.37
ASBI Ameriana Bancorp of IN 11.64 11.42 0.96 8.54 6.54 0.82 7.28 0.47 64.16 0.41
ABCW Anchor Bancorp Wisconsin of WI 6.40 6.30 1.06 16.55 5.11 0.94 14.75 NA NA 1.29
ANDB Andover Bancorp, Inc. of MA* 7.93 7.93 1.06 13.16 5.87 1.04 12.85 0.38 195.38 1.00
ASFC Astoria Financial Corp. of NY 7.96 5.63 0.81 10.32 5.50 0.75 9.49 0.45 72.22 0.77
AVND Avondale Fin. Corp. of IL 7.60 7.60 -0.78 -9.51 -10.46 -0.56 -6.84 1.25 84.71 2.83
BCSB BCSB Bankcorp MHC of MD (38.6) 16.27 16.27 0.80 4.95 3.10 0.80 4.95 0.43 82.78 0.56
BKCT Bancorp Connecticut of CT* 10.04 10.04 1.43 13.71 7.28 1.23 11.80 0.61 181.32 2.10
BPLS Bank Plus Corp. of CA 4.40 4.02 0.31 6.79 5.83 0.36 7.89 1.75 NA NA
BNKU Bank United Corp. of TX 4.98 4.50 0.87 17.22 7.58 0.82 16.38 NA NA 0.46
BWFC Bank West Fin. Corp. of MI 12.99 12.99 0.66 4.68 3.53 0.53 3.76 0.44 35.64 0.23
BANC BankAtlantic Bancorp of FL 6.16 5.16 0.90 15.08 6.79 0.38 6.40 0.81 100.62 1.12
BKUNA BankUnited Fin. Corp. of FL 4.38 3.80 0.28 6.84 3.45 0.21 5.21 0.44 32.93 0.19
BVCC Bay View Capital Corp. of CA 7.28 4.66 0.39 6.08 2.80 0.60 9.47 NA NA 1.05
FSNJ Bayonne Banchsares of NJ 15.27 15.27 0.72 5.61 2.95 0.72 5.61 0.56 75.74 0.92
BFSB Bedford Bancshares, Inc. of VA 13.30 13.30 1.19 8.45 5.03 1.19 8.45 0.21 232.62 0.60
BFFC Big Foot Fin. Corp. of IL 18.28 18.28 0.52 2.95 2.75 0.45 2.55 0.09 150.75 0.28
BYFC Broadway Fin. Corp. of CA 10.13 10.13 0.48 4.65 7.10 0.33 3.23 1.22 69.07 1.01
BRKL Brookline Bncp MHC of MA(47.0) 33.21 33.21 1.92 8.85 3.45 1.92 8.85 0.60 251.07 2.37
CBES CBES Bancorp, Inc. of MO 14.23 14.23 1.04 6.29 6.16 0.86 5.22 NA NA 0.58
CCFH CCF Holding Company of GA 8.09 8.09 0.14 1.36 0.88 -0.13 -1.21 0.41 123.98 0.67
CITZ CFS Bancorp, Inc. of IN 17.41 17.41 0.58 3.31 3.33 0.64 3.68 0.97 42.69 1.01
CFSB CFSB Bancorp of Lansing MI 7.72 7.72 1.32 17.10 5.71 1.20 15.61 0.21 275.17 0.64
CKFB CKF Bancorp of Danville KY 21.34 21.34 1.87 8.18 7.50 1.42 6.19 0.45 NA NA
CNSB CNS Bancorp, Inc. of MO 24.68 24.68 0.91 3.68 3.43 0.84 3.41 0.07 569.23 0.57
CSBF CSB Financial Group Inc of IL 23.14 21.83 0.51 2.19 2.73 0.44 1.89 0.99 38.40 0.66
CBCI Calumet Bancorp of Chicago IL 17.49 17.49 2.08 12.70 10.74 2.09 12.74 1.21 99.71 1.56
CAFI Camco Fin. Corp. of OH 9.90 9.28 1.26 13.08 7.04 0.95 9.87 0.68 43.07 0.35
CMRN Cameron Fin. Corp. of MO 20.78 20.78 1.16 5.38 5.67 1.13 5.26 0.81 95.78 0.94
CFNC Carolina Fincorp of NC* 22.35 22.35 0.92 4.05 5.27 1.06 4.64 0.15 226.37 0.49
CASB Cascade Financial Corp. of WA 6.98 6.98 0.77 11.72 4.82 0.73 11.08 0.54 171.37 1.07
CATB Catskill Fin. Corp. of NY* 23.42 23.42 1.33 5.33 5.19 1.31 5.27 0.22 282.65 1.43
CAVB Cavalry Bancorp of TN 28.43 28.43 1.48 7.18 3.02 1.02 4.98 0.05 NA 1.26
CNIT Cenit Bancorp of Norfolk VA 6.88 6.34 0.90 12.81 5.86 0.84 11.92 0.36 145.18 0.72
CEBK Central Co-Op. Bank of MA* 9.78 8.88 0.86 8.65 6.53 0.67 6.70 0.44 173.54 1.02
CENB Century Bancorp, Inc. of NC(8) 17.75 17.75 1.33 4.81 7.71 1.33 4.81 0.37 144.73 0.82
COFI Charter One Financial of OH 7.37 6.91 0.88 12.53 3.78 1.21 17.25 0.38 148.17 0.84
CVAL Chester Valley Bancorp of PA 8.67 8.67 1.02 11.89 5.24 0.93 10.80 0.24 390.28 1.21
CLAS Classic Bancshares, Inc. of KY 15.57 13.35 0.77 5.13 4.80 0.97 6.44 0.43 147.86 0.91
CBSA Coastal Bancorp of Houston TX 3.73 3.21 0.49 13.93 8.13 0.50 14.30 NA NA 0.62
CFCP Coastal Fin. Corp. of SC 6.03 6.03 1.22 19.88 5.42 1.01 16.41 0.91 98.94 1.22
CFKY Columbia Financial of KY 28.28 28.28 0.93 3.28 3.14 0.91 3.20 NA NA 0.49
CMSB Commonwealth Bancorp Inc of PA 9.13 7.30 0.67 7.17 5.37 0.51 5.38 0.41 97.65 0.66
CMSV Commty. Svgs, MHC of FL (48.5)(8) 10.80 10.80 0.74 6.58 3.18 0.68 6.07 0.26 134.87 0.55
CFTP Community Fed. Bancorp of MS 23.66 23.66 1.20 4.37 3.52 1.14 4.15 0.28 78.26 0.41
CFFC Community Fin. Corp. of VA 13.87 13.82 1.02 7.44 5.16 1.02 7.44 0.51 119.08 0.68
CIBI Community Inv. Bancorp of OH 10.98 10.98 0.94 8.14 4.69 0.94 8.14 0.56 98.23 0.66
COOP Cooperative Bancshares of NC 7.63 7.63 0.63 8.22 4.84 0.57 7.46 0.08 330.28 0.34
CRZY Crazy Woman Creek Bncorp of WY 23.58 23.58 1.28 5.18 4.82 1.28 5.18 0.13 355.84 0.92
DNFC D&N Financial Corp. of MI 5.44 5.40 0.87 15.81 6.65 0.77 13.97 0.50 113.36 0.83
DCBI Delphos Citizens Bancorp of OH 24.96 24.96 1.58 5.87 5.81 1.58 5.87 NA NA NA
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
--------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AFBC Advance Fin. Bancorp of WV 18.40 112.81 15.90 112.81 19.50 0.32 1.95 35.96
AFCB Affiliated Comm BC, Inc of MA(8) 18.44 192.87 19.61 193.76 19.40 0.60 1.79 32.97
ALBC Albion Banc Corp. of Albion NY 19.44 105.68 9.03 105.68 20.83 0.12 1.37 26.67
ABCL Alliance Bancorp, Inc. of IL 21.91 206.75 17.77 209.11 21.51 0.44 1.84 40.37
ALLB Alliance Bank MHC of PA (19.9) NM 240.76 25.80 240.76 NM 0.36 1.67 58.06
AHCI Ambanc Holding Co., Inc. of NY* 26.47 111.28 13.01 111.28 NM 0.24 1.51 40.00
ASBI Ameriana Bancorp of IN 15.30 127.70 14.86 130.13 17.93 0.64 3.61 55.17
ABCW Anchor Bancorp Wisconsin of WI 19.57 313.81 20.08 318.70 21.95 0.40 0.89 17.39
ANDB Andover Bancorp, Inc. of MA* 17.03 212.04 16.81 212.04 17.45 0.72 2.00 34.12
ASFC Astoria Financial Corp. of NY 18.18 151.91 12.09 214.66 19.77 0.80 1.61 29.30
AVND Avondale Fin. Corp. of IL NM 97.08 7.38 97.08 NM 0.00 0.00 NM
BCSB BCSB Bankcorp MHC of MD (38.6) NM 159.75 25.99 159.75 NM 0.00 0.00 0.00
BKCT Bancorp Connecticut of CT* 13.73 177.81 17.85 177.81 15.95 0.54 3.22 44.26
BPLS Bank Plus Corp. of CA 17.15 111.08 4.88 121.35 14.76 0.00 0.00 0.00
BNKU Bank United Corp. of TX 13.19 209.87 10.46 232.23 13.86 0.64 1.48 19.45
BWFC Bank West Fin. Corp. of MI 28.37 130.24 16.92 130.24 NM 0.24 2.06 58.54
BANC BankAtlantic Bancorp of FL 14.73 181.59 11.18 216.73 NM 0.10 0.93 13.70
BKUNA BankUnited Fin. Corp. of FL 29.02 129.27 5.67 149.02 NM 0.00 0.00 0.00
BVCC Bay View Capital Corp. of CA NM 126.50 9.21 197.64 22.88 0.40 1.65 58.82
FSNJ Bayonne Banchsares of NJ NM 149.77 22.87 149.77 NM 0.25 1.54 52.08
BFSB Bedford Bancshares, Inc. of VA 19.88 161.51 21.47 161.51 19.88 0.32 2.24 44.44
BFFC Big Foot Fin. Corp. of IL NM 104.99 19.19 104.99 NM 0.00 0.00 0.00
BYFC Broadway Fin. Corp. of CA 14.09 64.46 6.53 64.46 20.25 0.19 1.95 27.54
BRKL Brookline Bncp MHC of MA(47.0) 29.00 146.09 48.52 146.09 29.00 0.20 1.47 42.55
CBES CBES Bancorp, Inc. of MO 16.24 107.77 15.34 107.77 19.59 0.48 2.53 41.03
CCFH CCF Holding Company of GA NM 158.79 12.85 158.79 NM 0.64 3.12 NM
CITZ CFS Bancorp, Inc. of IN NM 99.36 17.29 99.36 27.03 0.00 0.00 0.00
CFSB CFSB Bancorp of Lansing MI 17.52 300.00 23.17 300.00 19.20 0.52 2.17 37.96
CKFB CKF Bancorp of Danville KY 13.33 114.46 24.43 114.46 17.60 0.54 2.98 39.71
CNSB CNS Bancorp, Inc. of MO 29.17 107.66 26.57 107.66 NM 0.24 1.52 44.44
CSBF CSB Financial Group Inc of IL NM 80.41 18.61 85.24 NM 0.00 0.00 0.00
CBCI Calumet Bancorp of Chicago IL 9.31 110.93 19.40 110.93 9.28 0.00 0.00 0.00
CAFI Camco Fin. Corp. of OH 14.19 160.75 15.91 171.44 18.82 0.39 2.33 33.05
CMRN Cameron Fin. Corp. of MO 17.63 93.52 19.44 93.52 18.01 0.28 1.67 29.47
CFNC Carolina Fincorp of NC* 18.98 75.16 16.80 75.16 16.57 0.24 2.30 43.64
CASB Cascade Financial Corp. of WA 20.73 211.90 14.79 211.90 21.93 0.00 0.00 0.00
CATB Catskill Fin. Corp. of NY* 19.27 106.02 24.83 106.02 19.50 0.32 1.95 37.65
CAVB Cavalry Bancorp of TN NM 154.95 44.05 154.95 NM 0.20 0.98 32.26
CNIT Cenit Bancorp of Norfolk VA 17.05 216.75 14.91 235.04 18.33 0.40 1.82 31.01
CEBK Central Co-Op. Bank of MA* 15.32 126.87 12.41 139.71 19.79 0.32 1.35 20.65
CENB Century Bancorp, Inc. of NC(8) 12.97 94.31 16.74 94.31 12.97 0.68 4.95 64.15
COFI Charter One Financial of OH 26.43 268.30 19.77 285.86 19.19 0.56 1.86 49.12
CVAL Chester Valley Bancorp of PA 19.08 212.61 18.43 212.61 21.01 0.44 1.52 28.95
CLAS Classic Bancshares, Inc. of KY 20.83 103.50 16.11 120.73 16.58 0.32 1.97 41.03
CBSA Coastal Bancorp of Houston TX 12.30 159.14 5.93 184.52 11.98 0.00 0.00 0.00
CFCP Coastal Fin. Corp. of SC 18.45 337.48 20.35 337.48 22.35 0.28 1.47 27.18
CFKY Columbia Financial of KY NM 104.32 29.50 104.32 NM 0.28 2.00 63.64
CMSB Commonwealth Bancorp Inc of PA 18.63 132.13 12.06 165.31 24.84 0.32 1.72 32.00
CMSV Commty. Svgs, MHC of FL (48.5)(8) NM 200.99 21.71 200.99 NM 0.90 2.78 NM
CFTP Community Fed. Bancorp of MS 28.39 126.13 29.85 126.13 29.91 0.32 1.91 54.24
CFFC Community Fin. Corp. of VA 19.37 137.91 19.13 138.47 19.37 0.28 2.04 39.44
CIBI Community Inv. Bancorp of OH 21.32 173.24 19.03 173.24 21.32 0.24 1.66 35.29
COOP Cooperative Bancshares of NC 20.67 161.12 12.30 161.12 22.79 0.00 0.00 0.00
CRZY Crazy Woman Creek Bncorp of WY 20.73 105.75 24.94 105.75 20.73 0.40 2.44 50.63
DNFC D&N Financial Corp. of MI 15.03 220.72 12.01 222.52 17.01 0.20 0.82 12.27
DCBI Delphos Citizens Bancorp of OH 17.20 105.19 26.26 105.19 17.20 0.24 1.50 25.81
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DCOM Dime Community Bancorp of NY* 12.01 10.44 0.83 6.19 3.98 0.78 5.80 0.39 189.26 1.27
DIBK Dime Financial Corp. of CT(8)* 8.11 7.92 1.70 21.03 9.01 1.69 20.89 NA NA 3.15
ESBF ESB Financial Corp of PA 7.20 6.42 0.70 9.13 5.55 0.69 9.04 0.44 116.49 1.37
EGLB Eagle BancGroup of IL 11.47 11.47 0.34 2.87 2.67 0.17 1.43 0.73 75.47 0.82
EBSI Eagle Bancshares of Tucker GA 6.50 6.50 0.78 10.10 5.24 0.78 10.10 0.95 59.71 0.74
ETFS East Texas Fin. Serv. of TX 17.43 17.43 0.60 3.31 3.20 0.54 3.01 0.41 46.61 0.38
ESBK Elmira Svgs Bank (The) of NY* 6.21 6.21 0.44 7.04 5.15 0.47 7.45 0.68 97.63 0.85
EMLD Emerald Financial Corp. of OH 8.26 8.16 1.09 13.91 5.12 1.01 12.83 0.30 86.50 0.32
EFBC Empire Federal Bancorp of MT 36.75 36.75 1.47 3.98 4.33 1.47 3.98 0.01 NA 0.43
EFBI Enterprise Fed. Bancorp of OH 9.96 9.71 0.78 6.96 3.66 0.67 5.95 0.01 NA 0.29
EQSB Equitable FSB of Wheaton MD 5.18 5.18 0.72 14.02 6.32 0.69 13.56 NA NA NA
FCBF FCB Fin. Corp. of Neenah WI 14.47 14.47 1.24 8.47 5.03 0.92 6.28 0.26 266.59 0.91
FFDF FFD Financial Corp. of OH 22.27 22.27 1.73 7.25 5.89 0.78 3.26 0.08 329.27 0.40
FFLC FFLC Bancorp of Leesburg FL 12.71 12.71 0.98 7.27 5.35 0.92 6.83 0.26 192.43 0.59
FFWC FFW Corporation of Wabash IN 9.58 8.79 1.01 10.46 7.00 0.98 10.12 NA NA NA
FFYF FFY Financial Corp. of OH 13.10 13.10 1.28 9.36 5.51 1.26 9.21 0.51 82.43 0.56
FMCO FMS Financial Corp. of NJ 5.95 5.89 0.90 14.40 5.50 0.90 14.40 0.70 68.77 1.07
FFHH FSF Financial Corp. of MN 10.40 10.40 0.83 7.46 6.24 0.81 7.26 0.20 123.88 0.37
FOBC Fed One Bancorp of Wheeling WV(8) 11.24 10.79 0.86 7.69 3.25 0.86 7.63 0.36 111.72 0.90
FBCI Fidelity Bancorp of Chicago IL 10.79 10.77 0.21 1.99 1.53 0.62 5.92 0.24 45.86 0.14
FSBI Fidelity Bancorp, Inc. of PA 6.84 6.84 0.75 10.93 6.84 0.74 10.78 0.08 658.57 1.05
FFFL Fidelity Bcsh MHC of FL (47.7) 6.70 6.50 0.66 8.52 4.00 0.57 7.32 0.32 75.42 0.36
FFED Fidelity Fed. Bancorp of IN 6.78 6.78 -0.34 -5.64 -4.25 -0.26 -4.29 0.38 613.16 2.77
FFOH Fidelity Financial of OH 12.06 10.68 0.92 7.30 5.90 0.89 7.05 NA NA NA
FIBC Financial Bancorp, Inc. of NY(8) 9.04 9.01 0.94 10.24 4.47 0.92 9.99 NA NA NA
FBSI First Bancshares, Inc. of MO 13.42 12.86 1.11 7.98 6.36 1.08 7.79 0.87 33.59 0.36
FBBC First Bell Bancorp of PA 11.22 11.22 1.09 10.37 6.62 1.05 10.01 0.05 191.03 0.13
SKBO First Carnegie MHC of PA(45.0) 16.86 16.86 0.65 4.26 2.92 0.77 5.08 0.77 47.99 0.80
FSTC First Citizens Corp of GA 10.09 8.07 1.90 19.61 7.93 1.72 17.76 1.12 99.21 1.46
FCME First Coastal Corp. of ME* 10.06 10.06 0.85 8.88 7.75 0.74 7.75 0.24 650.60 2.55
FFBA First Colorado Bancorp of CO(8) 13.46 13.19 1.31 9.87 4.63 1.24 9.36 0.20 158.86 0.42
FDEF First Defiance Fin.Corp. of OH 17.64 17.64 0.95 4.82 4.84 0.90 4.60 0.31 156.70 0.61
FESX First Essex Bancorp of MA* 7.05 6.21 0.84 11.62 6.18 0.76 10.51 0.45 191.23 1.48
FFSX First FSB MHC Sxld of IA(46.1) 7.21 5.70 0.68 8.30 3.80 0.69 8.38 0.34 138.30 0.64
FFES First Fed of E. Hartford CT 6.92 6.92 0.58 8.73 6.27 0.64 9.66 0.33 84.42 1.30
BDJI First Fed. Bancorp. of MN 10.89 10.89 0.68 6.36 4.40 0.68 6.36 0.18 202.30 0.78
FFBH First Fed. Bancshares of AR 14.77 14.77 0.99 6.58 4.88 0.94 6.22 0.86 NA NA
FTFC First Fed. Capital Corp. of WI 7.17 6.81 1.19 17.61 6.25 0.90 13.38 0.23 212.49 0.75
FFKY First Fed. Fin. Corp. of KY 13.21 12.51 1.63 12.01 5.50 1.59 11.69 0.53 84.57 0.52
FFBZ First Federal Bancorp of OH 7.62 7.61 0.90 11.79 5.27 0.90 11.79 0.54 190.00 1.19
FFCH First Fin. Holdings Inc. of SC 6.36 6.36 0.88 14.12 5.36 0.85 13.62 1.26 51.68 0.80
FFHS First Franklin Corp. of OH 9.24 9.20 0.82 9.01 8.40 0.71 7.80 0.90 49.39 0.69
FGHC First Georgia Hold. Corp of GA 8.09 7.55 1.13 13.67 3.04 1.13 13.67 1.65 37.32 0.71
FFSL First Independence Corp. of KS 9.28 9.28 0.66 6.58 6.45 0.66 6.58 0.56 95.21 0.72
FISB First Indiana Corp. of IN 9.26 9.15 1.15 12.08 6.02 0.87 9.17 NA NA 1.65
FKAN First Kansas Financial of KS 18.69 18.69 0.88 4.71 5.48 0.88 4.71 0.17 111.18 0.38
FKFS First Keystone Fin. Corp of PA 6.67 6.67 0.77 11.25 7.06 0.68 9.96 1.34 34.27 0.89
FLKY First Lancaster Bncshrs of KY 26.64 26.64 1.03 3.44 3.71 1.03 3.44 1.70 18.91 0.36
FLFC First Liberty Fin. Corp. of GA 7.35 6.72 0.77 10.35 4.00 0.80 10.84 0.82 114.75 1.38
CASH First Midwest Fin., Inc. of OH 10.51 9.36 0.73 6.66 5.14 0.66 5.99 NA NA NA
FMBD First Mutual Bancorp Inc of IL(8) 14.15 10.96 0.32 2.39 2.10 0.25 1.87 0.33 115.88 0.48
FMSB First Mutual SB of Bellevue WA* 6.79 6.79 1.01 15.06 6.87 0.99 14.77 0.11 989.94 1.26
FNGB First Northern Cap. Corp of WI 11.10 11.10 0.97 8.62 5.36 0.90 8.01 0.12 400.84 0.54
FFPB First Palm Beach Bancorp of FL 6.53 6.39 0.53 8.19 4.55 0.34 5.22 0.51 59.41 0.50
FWWB First Savings Bancorp of WA 13.01 12.06 1.20 8.71 5.77 1.12 8.12 0.23 301.38 1.03
FSFF First SecurityFed Fin of IL 28.92 28.84 1.03 5.32 2.97 1.61 8.33 0.37 158.47 0.96
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
--------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DCOM Dime Community Bancorp of NY* 25.14 155.18 18.63 178.48 26.81 0.40 1.66 41.67
DIBK Dime Financial Corp. of CT(8)* 11.10 209.57 17.00 214.67 11.17 0.48 1.47 16.33
ESBF ESB Financial Corp of PA 18.02 155.37 11.18 174.05 18.20 0.36 1.96 35.29
EGLB Eagle BancGroup of IL NM 106.78 12.25 106.78 NM 0.00 0.00 0.00
EBSI Eagle Bancshares of Tucker GA 19.10 184.65 12.00 184.65 19.10 0.64 2.66 50.79
ETFS East Texas Fin. Serv. of TX NM 102.63 17.89 102.63 NM 0.20 1.42 44.44
ESBK Elmira Svgs Bank (The) of NY* 19.42 137.54 8.55 137.54 18.37 0.64 2.37 46.04
EMLD Emerald Financial Corp. of OH 19.53 252.53 20.85 255.62 21.19 0.14 1.12 21.88
EFBC Empire Federal Bancorp of MT 23.08 91.26 33.54 91.26 23.08 0.32 2.24 51.61
EFBI Enterprise Fed. Bancorp of OH 27.31 170.80 17.01 175.16 NM 1.00 3.55 NM
EQSB Equitable FSB of Wheaton MD 15.81 205.99 10.68 205.99 16.34 0.00 0.00 0.00
FCBF FCB Fin. Corp. of Neenah WI 19.87 154.88 22.40 154.88 26.79 0.88 2.93 58.28
FFDF FFD Financial Corp. of OH 16.97 119.90 26.70 119.90 NM 0.30 1.62 27.52
FFLC FFLC Bancorp of Leesburg FL 18.69 136.02 17.29 136.02 19.87 0.36 1.91 35.64
FFWC FFW Corporation of Wabash IN 14.29 137.83 13.21 150.25 14.75 0.42 2.33 33.33
FFYF FFY Financial Corp. of OH 18.13 168.11 22.02 168.11 18.42 0.80 2.29 41.45
FMCO FMS Financial Corp. of NJ 18.17 246.92 14.68 249.18 18.17 0.12 0.88 16.00
FFHH FSF Financial Corp. of MN 16.03 121.00 12.58 121.00 16.48 0.50 2.84 45.45
FOBC Fed One Bancorp of Wheeling WV(8) NM 230.97 25.97 240.62 NM 0.62 1.56 48.06
FBCI Fidelity Bancorp of Chicago IL NM 127.44 13.75 127.65 21.96 0.40 1.70 NM
FSBI Fidelity Bancorp, Inc. of PA 14.61 148.11 10.12 148.11 14.82 0.36 1.73 25.35
FFFL Fidelity Bcsh MHC of FL (47.7) 25.00 205.61 13.78 211.97 29.08 0.90 3.36 NM
FFED Fidelity Fed. Bancorp of IN NM 137.38 9.31 137.38 NM 0.20 3.40 NM
FFOH Fidelity Financial of OH 16.95 126.72 15.28 143.06 17.56 0.32 2.17 36.78
FIBC Financial Bancorp, Inc. of NY(8) 22.38 220.63 19.95 221.58 22.94 0.50 1.38 30.86
FBSI First Bancshares, Inc. of MO 15.73 120.93 16.23 126.18 16.12 0.12 0.92 14.46
FBBC First Bell Bancorp of PA 15.11 152.06 17.06 152.06 15.66 0.40 2.30 34.78
SKBO First Carnegie MHC of PA(45.0) NM 132.41 22.33 132.41 28.76 0.30 2.09 71.43
FSTC First Citizens Corp of GA 12.61 217.90 21.98 272.37 13.93 0.32 1.14 14.41
FCME First Coastal Corp. of ME* 12.90 109.28 10.99 109.28 14.79 0.00 0.00 0.00
FFBA First Colorado Bancorp of CO(8) 21.61 205.81 27.70 210.05 22.77 0.52 2.04 44.07
FDEF First Defiance Fin.Corp. of OH 20.65 108.69 19.17 108.69 21.63 0.36 2.64 54.55
FESX First Essex Bancorp of MA* 16.18 182.57 12.86 207.16 17.89 0.56 2.55 41.18
FFSX First FSB MHC Sxld of IA(46.1) 26.29 210.20 15.15 265.68 26.07 0.48 1.57 41.38
FFES First Fed of E. Hartford CT 15.94 132.05 9.13 132.05 14.41 0.68 2.06 32.85
BDJI First Fed. Bancorp. of MN 22.73 141.70 15.43 141.70 22.73 0.00 0.00 0.00
FFBH First Fed. Bancshares of AR 20.50 131.58 19.43 131.58 21.67 0.28 1.23 25.23
FTFC First Fed. Capital Corp. of WI 16.00 261.44 18.75 275.39 21.05 0.28 1.75 28.00
FFKY First Fed. Fin. Corp. of KY 18.18 212.21 28.03 224.09 18.67 0.56 2.03 36.84
FFBZ First Federal Bancorp of OH 18.97 214.84 16.37 215.26 18.97 0.14 1.27 24.14
FFCH First Fin. Holdings Inc. of SC 18.64 240.00 15.27 240.00 19.33 0.42 2.01 37.50
FFHS First Franklin Corp. of OH 11.90 103.82 9.59 104.25 13.74 0.30 2.40 28.57
FGHC First Georgia Hold. Corp of GA NM NM 34.18 NM NM 0.00 0.00 0.00
FFSL First Independence Corp. of KS 15.51 101.49 9.42 101.49 15.51 0.30 2.45 37.97
FISB First Indiana Corp. of IN 16.62 191.66 17.75 193.88 21.91 0.48 2.05 34.04
FKAN First Kansas Financial of KS 18.25 85.95 16.06 85.95 18.25 0.00 0.00 0.00
FKFS First Keystone Fin. Corp of PA 14.16 150.38 10.02 150.38 16.00 0.20 1.25 17.70
FLKY First Lancaster Bncshrs of KY 26.96 92.22 24.57 92.22 26.96 0.60 4.36 NM
FLFC First Liberty Fin. Corp. of GA 25.00 247.96 18.23 271.05 23.88 0.30 1.41 35.29
CASH First Midwest Fin., Inc. of OH 19.44 130.92 13.77 147.04 21.60 0.48 2.25 43.64
FMBD First Mutual Bancorp Inc of IL(8) NM 112.72 15.95 145.58 NM 0.32 1.82 NM
FMSB First Mutual SB of Bellevue WA* 14.56 207.76 14.11 207.76 14.85 0.20 1.33 19.42
FNGB First Northern Cap. Corp of WI 18.66 156.25 17.34 156.25 20.08 0.36 2.72 50.70
FFPB First Palm Beach Bancorp of FL 22.00 172.80 11.29 176.59 NM 0.70 1.78 39.11
FWWB First Savings Bancorp of WA 17.33 151.62 19.73 163.66 18.60 0.33 1.44 25.00
FSFF First SecurityFed Fin of IL NM 106.24 30.72 106.53 21.53 0.00 0.00 0.00
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FSLA First Source Bancorp of NJ 20.55 20.55 1.09 5.31 4.34 1.09 5.31 0.47 115.69 1.04
SOPN First Svgs Bancorp of NC 23.03 23.03 1.78 7.65 5.96 1.78 7.65 0.16 125.31 0.30
FBNW FirstBank Corp of Clarkston WA 16.36 16.36 1.03 7.72 4.47 0.62 4.67 0.39 160.81 0.78
FFDB FirstFed Bancorp, Inc. of AL 9.72 8.95 0.93 9.58 4.77 0.93 9.58 1.32 46.08 0.93
FSPT FirstSpartan Fin. Corp. of SC 26.29 26.29 1.33 6.94 4.03 1.32 6.89 0.38 111.34 0.51
FLAG Flag Financial Corp of GA 8.89 8.89 0.87 9.46 2.57 0.62 6.67 0.99 91.47 1.30
FLGS Flagstar Bancorp, Inc of MI 5.21 5.04 1.30 21.55 6.72 1.30 21.55 2.32 11.78 0.31
FFIC Flushing Fin. Corp. of NY* 12.72 12.23 0.93 6.62 4.75 0.93 6.62 0.31 196.12 1.00
FBHC Fort Bend Holding Corp. of TX(8) 6.76 6.36 0.65 10.16 5.55 0.46 7.23 NA NA NA
FTSB Fort Thomas Fin. Corp. of KY 15.77 15.77 1.23 7.71 6.25 1.23 7.71 2.22 19.86 0.49
FKKY Frankfort First Bancorp of KY 16.95 16.95 0.25 1.31 1.44 0.80 4.26 NA NA 0.08
FTNB Fulton Bancorp, Inc. of MO 23.37 23.37 1.22 5.01 4.32 0.95 3.88 0.70 126.01 1.06
GUPB GFSB Bancorp, Inc of Gallup NM 12.34 12.34 0.91 6.67 5.45 0.91 6.67 0.37 86.67 0.54
GSLA GS Financial Corp. of LA 41.63 41.63 1.44 3.79 3.93 1.29 3.39 0.13 264.81 0.77
GOSB GSB Financial Corp. of NY* 28.14 28.14 0.73 3.54 2.79 0.69 3.36 0.09 NA NA
GBNK Gaston Fed Bncp MHC of NC(47.0) 22.48 22.48 1.13 5.02 3.21 1.13 5.02 0.50 132.06 0.96
GFCO Glenway Financial Corp. of OH 9.57 9.49 0.86 9.12 5.05 0.87 9.20 0.19 184.71 0.41
GTPS Great American Bancorp of IL 18.33 18.33 0.66 3.24 2.67 0.66 3.24 0.08 484.87 0.47
PEDE Great Pee Dee Bancorp of SC 45.12 45.12 1.05 2.33 2.40 1.05 2.33 0.73 65.48 0.59
GSFC Green Street Fin. Corp. of NC 35.78 35.78 1.60 4.49 4.59 1.60 4.49 0.07 216.10 0.19
GFED Guaranty Fed Bancshares of MO 28.34 28.34 1.12 5.49 3.01 1.09 5.34 0.35 241.97 1.05
HCBB HCB Bancshares of Camden AR 17.25 17.04 0.33 1.99 1.89 0.33 1.99 NA NA 1.38
HEMT HF Bancorp of Hemet CA 7.86 6.67 -0.04 -0.54 -0.42 0.13 1.62 NA NA NA
HFFC HF Financial Corp. of SD 9.72 9.72 1.09 11.50 6.44 1.01 10.69 0.53 239.17 1.62
HFNC HFNC Financial Corp. of NC(8) 17.24 17.24 1.34 7.36 5.77 0.92 5.05 0.53 131.75 0.86
HMNF HMN Financial, Inc. of MN 11.61 10.79 0.92 6.94 7.07 0.65 4.91 0.09 449.77 0.61
HALL Hallmark Capital Corp. of WI 7.68 7.68 0.67 9.13 6.72 0.64 8.65 0.33 163.10 0.82
HRBF Harbor Federal Bancorp of MD 12.69 12.69 0.75 5.86 4.83 0.72 5.60 0.42 50.26 0.33
HARB Harbor Florida Bancshrs of FL 19.82 19.60 1.25 11.35 3.94 1.20 10.87 0.43 208.24 1.27
HFSA Hardin Bancorp of Hardin MO 11.13 11.13 0.77 6.54 6.29 0.66 5.62 NA NA NA
HARL Harleysville SB of PA 6.67 6.67 1.01 15.25 6.71 1.01 15.25 NA NA 0.79
HFGI Harrington Fin. Group of IN 4.42 4.42 -0.02 -0.40 -0.29 0.05 1.06 0.18 40.45 0.22
HARS Harris Fin. MHC of PA (24.3) 8.13 7.30 0.88 10.96 2.89 0.72 8.96 0.66 60.54 0.97
HFFB Harrodsburg 1st Fin Bcrp of KY 26.46 26.46 1.36 5.08 4.94 1.36 5.08 0.44 79.96 0.45
HHFC Harvest Home Fin. Corp. of OH 11.34 11.34 0.63 5.42 4.34 0.62 5.34 0.23 56.81 0.27
HAVN Haven Bancorp of Woodhaven NY 5.65 5.64 0.53 9.13 5.89 0.53 9.05 0.45 132.08 0.97
HTHR Hawthorne Fin. Corp. of CA 4.25 4.25 0.97 21.97 16.53 1.14 25.72 6.04 22.28 1.46
HMLK Hemlock Fed. Fin. Corp. of IL 16.20 16.20 0.99 5.53 4.86 0.99 5.53 0.16 248.40 0.94
HBSC Heritage Bancorp, Inc of SC 28.79 28.79 1.16 4.02 4.05 1.16 4.02 0.49 46.93 0.38
HFWA Heritage Financial Corp of WA 28.80 28.80 1.11 5.92 2.87 0.57 3.04 0.12 761.93 1.28
HCBC High Country Bancorp of CO 19.56 19.56 0.84 5.87 3.79 0.84 5.87 0.45 167.06 0.94
HBNK Highland Bancorp of CA 7.84 7.84 1.30 17.04 6.88 1.13 14.86 1.84 88.38 2.06
HIFS Hingham Inst. for Sav. of MA* 9.48 9.48 1.25 13.13 7.78 1.25 13.13 0.17 396.87 0.90
HBEI Home Bancorp of Elgin IL(8) 25.92 25.92 0.70 2.57 2.48 0.70 2.57 0.28 107.27 0.35
HBFW Home Bancorp of Fort Wayne IN 12.03 12.03 0.86 6.72 4.48 0.84 6.56 0.10 402.90 0.43
HCFC Home City Fin. Corp. of OH 18.58 18.58 1.29 6.57 6.80 1.29 6.57 NA NA 0.63
HOMF Home Fed Bancorp of Seymour IN 9.20 8.95 1.45 16.58 7.09 1.17 13.44 0.59 100.21 0.71
HWEN Home Financial Bancorp of IN 17.99 17.99 0.94 5.32 4.80 0.74 4.18 1.32 53.55 0.86
HLFC Home Loan Financial Corp of OH 38.94 38.94 1.30 5.70 2.49 1.30 5.70 NA NA NA
HPBC Home Port Bancorp, Inc. of MA* 9.78 9.78 1.47 14.04 6.65 1.63 15.59 0.26 453.64 1.38
HSTD Homestead Bancorp, Inc. of LA 21.66 21.66 0.75 3.46 4.21 0.75 3.46 0.27 158.33 0.83
HFBC HopFed Bancorp of KY 25.98 25.98 1.12 10.32 3.91 1.12 10.32 0.15 70.97 0.23
HZFS Horizon Fin'l. Services of IA 9.11 9.11 0.91 9.24 5.85 0.70 7.08 0.92 45.20 0.69
HRZB Horizon Financial Corp. of WA* 15.33 15.33 1.56 10.02 7.10 1.54 9.93 0.02 NA 0.88
HRBT Hudson River Bancorp Inc of NY 26.74 26.74 0.90 3.36 3.09 1.03 3.85 2.57 47.68 1.62
IBSF IBS Financial Corp. of NJ(8) 17.36 17.36 0.82 4.70 3.36 0.82 4.70 NA NA 0.45
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
--------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FSLA First Source Bancorp of NJ 23.02 122.28 25.13 122.28 23.02 0.18 1.91 43.90
SOPN First Svgs Bancorp of NC 16.79 126.28 29.08 126.28 16.79 1.00 4.26 71.43
FBNW FirstBank Corp of Clarkston WA 22.38 127.23 20.81 127.23 NM 0.32 1.66 37.21
FFDB FirstFed Bancorp, Inc. of AL 20.97 197.14 19.15 213.90 20.97 0.56 1.94 40.58
FSPT FirstSpartan Fin. Corp. of SC 24.84 126.38 33.22 126.38 25.00 0.60 1.59 39.47
FLAG Flag Financial Corp of GA NM NM 31.59 NM NM 0.24 1.40 54.55
FLGS Flagstar Bancorp, Inc of MI 14.89 278.92 14.53 288.05 14.89 0.28 1.03 15.30
FFIC Flushing Fin. Corp. of NY* 21.05 136.67 17.38 142.10 21.05 0.32 1.33 28.07
FBHC Fort Bend Holding Corp. of TX(8) 18.02 169.78 11.48 180.34 25.32 0.40 2.00 36.04
FTSB Fort Thomas Fin. Corp. of KY 16.01 120.79 19.05 120.79 16.01 0.25 1.90 30.49
FKKY Frankfort First Bancorp of KY NM 99.43 16.86 99.43 21.35 0.80 5.76 NM
FTNB Fulton Bancorp, Inc. of MO 23.17 115.41 26.97 115.41 29.97 0.24 1.38 32.00
GUPB GFSB Bancorp, Inc of Gallup NM 18.35 119.44 14.74 119.44 18.35 0.30 2.07 37.97
GSLA GS Financial Corp. of LA 25.45 88.62 36.89 88.62 28.50 0.28 1.96 50.00
GOSB GSB Financial Corp. of NY* NM 94.09 26.48 94.09 NM 0.12 0.86 30.77
GBNK Gaston Fed Bncp MHC of NC(47.0 NM 156.31 35.15 156.31 NM 0.20 1.49 46.51
GFCO Glenway Financial Corp. of OH 19.82 174.60 16.71 176.14 19.64 0.44 2.00 39.64
GTPS Great American Bancorp of IL NM 128.85 23.62 128.85 NM 0.44 2.02 NM
PEDE Great Pee Dee Bancorp of SC NM 96.90 43.72 96.90 NM 0.36 2.62 NM
GSFC Green Street Fin. Corp. of NC 21.79 97.10 34.74 97.10 21.79 0.48 3.34 72.73
GFED Guaranty Fed Bancshares of MO NM 115.43 32.71 115.43 NM 0.00 0.00 0.00
HCBB HCB Bancshares of Camden AR NM 91.70 15.81 92.79 NM 0.20 1.51 NM
HEMT HF Bancorp of Hemet CA NM 125.48 9.86 147.85 NM 0.00 0.00 NM
HFFC HF Financial Corp. of SD 15.52 173.65 16.89 173.65 16.70 0.28 1.28 19.86
HFNC HFNC Financial Corp. of NC(8) 17.33 123.52 21.29 123.52 25.27 0.32 2.64 45.71
HMNF HMN Financial, Inc. of MN 14.15 95.85 11.13 103.09 20.00 0.16 1.07 15.09
HALL Hallmark Capital Corp. of WI 14.87 128.22 9.85 128.22 15.70 0.00 0.00 0.00
HRBF Harbor Federal Bancorp of MD 20.70 118.36 15.02 118.36 21.66 0.47 2.52 52.22
HARB Harbor Florida Bancshrs of FL 25.40 144.20 28.58 145.79 26.53 0.26 2.18 55.32
HFSA Hardin Bancorp of Hardin MO 15.89 102.91 11.45 102.91 18.48 0.56 3.29 52.34
HARL Harleysville SB of PA 14.90 211.89 14.13 211.89 14.90 0.44 1.42 21.15
HFGI Harrington Fin. Group of IN NM 140.56 6.22 140.56 NM 0.12 1.14 NM
HARS Harris Fin. MHC of PA (24.3) NM NM 28.55 NM NM 0.22 1.16 40.00
HFFB Harrodsburg 1st Fin Bcrp of KY 20.24 103.99 27.52 103.99 20.24 0.40 2.60 52.63
HHFC Harvest Home Fin. Corp. of OH 23.02 125.32 14.22 125.32 23.39 0.44 3.03 69.84
HAVN Haven Bancorp of Woodhaven NY 16.96 147.40 8.33 147.74 17.12 0.30 1.58 26.79
HTHR Hawthorne Fin. Corp. of CA 6.05 120.82 5.14 120.82 5.17 0.00 0.00 0.00
HMLK Hemlock Fed. Fin. Corp. of IL 20.59 113.12 18.32 113.12 20.59 0.32 1.83 37.65
HBSC Heritage Bancorp, Inc of SC 24.68 99.18 28.55 99.18 24.68 0.00 0.00 0.00
HFWA Heritage Financial Corp of WA NM 135.15 38.92 135.15 NM 0.16 1.24 43.24
HCBC High Country Bancorp of CO 26.42 102.64 20.08 102.64 26.42 0.30 2.14 56.60
HBNK Highland Bancorp of CA 14.53 225.17 17.66 225.17 16.65 0.50 1.19 17.24
HIFS Hingham Inst. for Sav. of MA* 12.86 160.33 15.20 160.33 12.86 0.56 2.07 26.67
HBEI Home Bancorp of Elgin IL(8) NM 103.94 26.94 103.94 NM 0.40 2.76 NM
HBFW Home Bancorp of Fort Wayne IN 22.30 154.63 18.60 154.63 22.85 0.32 1.15 25.60
HCFC Home City Fin. Corp. of OH 14.71 95.66 17.77 95.66 14.71 0.36 2.40 35.29
HOMF Home Fed Bancorp of Seymour IN 14.10 217.39 19.99 223.40 17.41 0.40 1.45 20.51
HWEN Home Financial Bancorp of IN 20.83 108.97 19.60 108.97 26.52 0.10 1.14 23.81
HLFC Home Loan Financial Corp of OH NM 107.67 41.93 107.67 NM 0.00 0.00 0.00
HPBC Home Port Bancorp, Inc. of MA* 15.03 204.51 20.00 204.51 13.54 0.80 3.27 49.08
HSTD Homestead Bancorp, Inc. of LA 23.78 82.31 17.83 82.31 23.78 0.80 9.35 NM
HFBC HopFed Bancorp of KY 25.58 116.62 30.30 116.62 25.58 0.00 0.00 0.00
HZFS Horizon Fin'l. Services of IA 17.09 160.21 14.60 160.21 22.29 0.18 1.17 20.00
HRZB Horizon Financial Corp. of WA* 14.09 138.39 21.21 138.39 14.22 0.44 2.84 40.00
HRBT Hudson River Bancorp Inc of NY NM 108.61 29.04 108.61 28.19 0.00 0.00 0.00
IBSF IBS Financial Corp. of NJ(8) 29.78 137.53 23.87 137.53 29.78 0.40 2.44 72.73
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ITLA ITLA Capital Corp of CA* 10.18 10.15 1.43 13.50 8.72 1.43 13.50 NA NA 1.75
ICBC Independence Comm Bnk Cp of NY 18.17 17.11 0.42 2.32 1.98 0.47 2.56 0.60 NA NA
IFSB Independence FSB of DC 7.21 6.53 0.51 7.05 6.51 0.21 2.91 1.41 16.50 0.40
INBI Industrial Bancorp of OH 16.48 16.48 1.49 8.59 5.53 1.49 8.59 0.30 159.91 0.54
IWBK Interwest Bancorp of WA 6.76 6.65 1.04 15.56 4.48 0.88 13.23 0.67 80.89 0.88
IPSW Ipswich SB of Ipswich MA* 5.28 5.28 1.24 22.32 7.07 0.94 16.84 0.80 92.60 0.94
JXVL Jacksonville Bancorp of TX 14.73 14.73 1.45 9.79 7.83 1.45 9.79 NA NA NA
JXSB Jcksnville SB,MHC of IL (45.6) 10.38 10.38 0.59 5.64 3.14 0.38 3.65 0.86 54.02 0.61
JSBA Jefferson Svgs Bancorp of MO 9.56 7.67 0.78 8.69 3.92 0.69 7.71 0.66 96.80 0.88
KSBK KSB Bancorp of Kingfield ME* 7.78 6.77 0.98 12.55 7.27 0.98 12.55 NA NA 1.14
KFBI Klamath First Bancorp of OR 15.01 13.78 0.98 5.90 4.95 0.98 5.90 0.05 356.52 0.26
LSBI LSB Fin. Corp. of Lafayette IN 8.42 8.42 0.82 9.44 5.58 0.74 8.46 NA NA NA
LVSB Lakeview Financial of NJ 9.73 6.64 1.69 16.30 7.33 0.84 8.15 0.96 70.27 1.47
LARK Landmark Bancshares, Inc of KS 14.12 14.12 1.08 7.66 6.66 0.95 6.73 0.25 196.35 0.66
LARL Laurel Capital Group of PA 10.63 10.63 1.43 13.75 6.95 1.40 13.45 0.37 226.91 1.24
LSBX Lawrence Savings Bank of MA* 11.14 11.14 2.46 25.31 14.05 2.42 24.94 0.24 389.46 1.74
LFED Leeds Fed Bksr MHC of MD (36.3 16.50 16.50 1.18 7.20 3.62 1.18 7.20 0.03 560.82 0.29
LXMO Lexington B&L Fin. Corp. of MO 18.02 16.90 0.95 4.19 4.00 0.95 4.19 0.48 130.50 0.95
LIBB Liberty Bancorp MHC of NJ (47) 13.45 13.45 1.12 8.31 6.49 1.12 8.31 0.48 69.39 0.47
LFCO Life Financial Corp of CA(8) 15.12 15.12 4.90 32.78 18.00 5.10 34.14 2.09 17.41 0.47
LFBI Little Falls Bancorp of NJ 10.20 9.42 0.58 4.85 3.75 0.55 4.66 0.43 78.51 0.81
LOGN Logansport Fin. Corp. of IN 18.86 18.86 1.49 7.78 6.67 1.52 7.94 0.26 103.45 0.36
LISB Long Island Bancorp, Inc of NY(8) 8.95 8.88 0.87 9.64 3.84 0.70 7.77 NA NA 0.91
MAFB MAF Bancorp, Inc. of IL 7.74 6.87 1.12 14.46 7.38 1.09 14.03 0.54 81.33 0.55
MBLF MBLA Financial Corp. of MO 13.50 13.50 0.88 6.81 7.51 0.87 6.76 0.55 59.37 0.50
MECH MECH Financial Inc of CT* 9.59 9.59 1.54 15.45 8.48 1.54 15.45 0.46 296.39 2.14
MFBC MFB Corp. of Mishawaka IN 11.77 11.77 0.84 6.44 5.71 0.82 6.30 0.11 131.25 0.18
MSBF MSB Financial, Inc of MI 16.70 16.70 1.55 9.28 6.93 1.38 8.23 0.79 62.16 0.53
MARN Marion Capital Holdings of IN 20.55 20.11 1.33 6.13 5.56 1.33 6.13 1.02 105.99 1.25
MRKF Market Fin. Corp. of OH 35.28 35.28 1.13 3.21 3.69 1.13 3.21 0.39 24.64 0.16
MFSL Maryland Fed. Bancorp of MD(8) 8.76 8.68 0.62 7.11 2.76 0.88 10.01 0.65 61.91 0.49
MASB MassBank Corp. of Reading MA* 11.52 11.36 1.15 10.58 6.14 1.04 9.57 0.20 131.93 0.84
MFLR Mayflower Co-Op. Bank of MA* 9.56 9.42 1.15 12.01 7.72 1.04 10.78 0.59 144.01 1.49
MDBK Medford Bancorp, Inc. of MA* 9.24 8.75 1.08 11.95 6.58 1.01 11.28 0.18 338.34 1.19
MWBX MetroWest Bank of MA* 7.21 7.21 1.30 17.65 7.57 1.27 17.32 0.64 236.24 2.16
METF Metropolitan Fin. Corp. of OH 3.86 3.57 0.74 18.94 6.82 0.66 16.70 1.45 42.45 0.77
MIFC Mid Iowa Financial Corp. of IA 8.85 8.84 1.16 12.57 8.19 1.26 13.71 NA NA NA
MCBN Mid-Coast Bancorp of ME 8.47 8.47 0.78 9.15 6.38 0.72 8.47 0.58 95.07 0.68
MWBI Midwest Bancshares, Inc. of IA 6.89 6.89 0.89 12.79 9.00 0.78 11.17 0.66 43.79 0.48
MFFC Milton Fed. Fin. Corp. of OH 11.35 11.35 0.68 5.39 4.67 0.61 4.79 0.41 67.74 0.40
MBSP Mitchell Bancorp, Inc. of NC 39.32 39.32 1.44 3.47 3.27 1.44 3.47 1.54 34.72 0.72
MBBC Monterey Bay Bancorp of CA 11.68 10.92 0.42 3.72 3.36 0.39 3.45 0.35 131.09 0.67
MONT Montgomery Fin. Corp. of IN 18.25 18.25 0.80 4.71 4.44 0.80 4.71 1.06 15.75 0.19
MSBK Mutual SB, FSB of Bay City MI 5.07 5.07 -1.31 -22.89 -21.16 -0.46 -8.09 0.09 312.66 0.54
MYST Mystic Financial of MA* 19.06 19.06 0.73 5.82 3.53 0.67 5.38 0.08 824.00 0.90
NHTB NH Thrift Bancshares of NH 8.09 7.03 0.90 11.47 7.88 0.83 10.62 0.76 126.05 1.20
NSLB NS&L Bancorp, Inc of Neosho MO 18.78 18.65 0.68 3.49 3.25 0.68 3.49 0.11 73.53 0.14
NSSY NSS Bancorp of CT(8)* 8.12 7.90 1.00 12.37 5.55 1.14 13.99 0.83 100.49 1.31
NMSB Newmil Bancorp, Inc. of CT* 8.90 8.90 0.84 8.77 6.50 0.84 8.77 0.46 297.15 2.98
NBCP Niagara Bancorp of NY MHC(45.4* 19.08 19.08 1.10 5.78 3.78 1.06 5.54 0.25 217.16 1.10
NBSI North Bancshares of Chicago IL 11.46 11.46 0.46 3.43 3.42 0.44 3.28 NA NA 0.27
FFFD North Central Bancshares of IA 15.42 13.42 1.14 7.37 6.37 1.14 7.37 NA NA 1.03
NEIB Northeast Indiana Bncrp of IN 13.34 13.34 1.19 8.35 6.25 1.19 8.35 NA NA 0.73
NWSB Northwest Bcrp MHC of PA (30.7 8.85 7.91 0.95 10.14 3.38 0.95 10.14 0.50 123.26 0.82
NWEQ Northwest Equity Corp. of WI 11.66 11.66 1.15 9.96 7.50 1.08 9.30 1.57 31.29 0.61
NTMG Nutmeg FS&LA of CT 5.83 5.83 0.51 8.66 4.56 0.35 6.08 1.36 34.45 0.55
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ITLA ITLA Capital Corp of CA* 11.47 145.85 14.85 146.29 11.47 0.00 0.00 0.00
ICBC Independence Comm Bnk Cp of NY NM 117.23 21.30 124.51 NM 0.00 0.00 0.00
IFSB Independence FSB of DC 15.37 108.34 7.82 119.73 NM 0.25 1.49 22.94
INBI Industrial Bancorp of OH 18.10 154.60 25.48 154.60 18.10 0.60 3.16 57.14
IWBK Interwest Bancorp of WA 22.31 318.26 21.51 323.27 26.26 0.80 1.86 41.45
IPSW Ipswich SB of Ipswich MA* 14.15 285.71 15.09 285.71 18.75 0.16 1.07 15.09
JXVL Jacksonville Bancorp of TX 12.77 122.46 18.04 122.46 12.77 0.50 2.86 36.50
JXSB Jcksnville SB,MHC of IL (45.6) NM 176.06 18.28 176.06 NM 0.30 1.85 58.82
JSBA Jefferson Svgs Bancorp of MO 25.51 210.97 20.17 262.88 28.74 0.28 1.12 28.57
KSBK KSB Bancorp of Kingfield ME* 13.75 172.59 13.43 198.56 13.75 0.10 0.61 8.33
KFBI Klamath First Bancorp of OR 20.21 115.48 17.34 125.85 20.21 0.36 2.07 41.86
LSBI LSB Fin. Corp. of Lafayette IN 17.92 162.64 13.69 162.64 20.00 0.40 1.29 23.12
LVSB Lakeview Financial of NJ 13.64 198.18 19.28 290.56 27.27 0.25 1.04 14.20
LARK Landmark Bancshares, Inc of KS 15.02 114.13 16.11 114.13 17.08 0.60 2.68 40.27
LARL Laurel Capital Group of PA 14.39 189.75 20.18 189.75 14.71 0.60 3.00 43.17
LSBX Lawrence Savings Bank of MA* 7.12 157.33 17.52 157.33 7.23 0.00 0.00 0.00
LFED Leeds Fed Bksr MHC of MD (36.3 27.65 191.70 31.63 191.70 27.65 0.56 3.07 NM
LXMO Lexington B&L Fin. Corp. of MO 25.00 102.04 18.38 108.77 25.00 0.30 1.94 48.39
LIBB Liberty Bancorp MHC of NJ (47) 15.41 128.07 17.23 128.07 15.41 0.00 0.00 0.00
LFCO Life Financial Corp of CA(8) 5.56 134.38 20.32 134.38 5.33 0.00 0.00 0.00
LFBI Little Falls Bancorp of NJ 26.67 136.71 13.94 148.04 27.78 0.24 1.20 32.00
LOGN Logansport Fin. Corp. of IN 15.00 112.78 21.27 112.78 14.71 0.44 2.93 44.00
LISB Long Island Bancorp, Inc of NY(8) 26.04 242.39 21.70 244.48 NM 0.80 1.42 36.87
MAFB MAF Bancorp, Inc. of IL 13.54 188.95 14.63 213.01 13.96 0.28 1.23 16.67
MBLF MBLA Financial Corp. of MO 13.31 91.60 12.36 91.60 13.40 0.60 2.93 38.96
MECH MECH Financial Inc of CT* 11.80 171.41 16.45 171.41 11.80 0.60 2.04 24.10
MFBC MFB Corp. of Mishawaka IN 17.52 111.52 13.13 111.52 17.91 0.34 1.42 24.82
MSBF MSB Financial, Inc of MI 14.43 129.99 21.70 129.99 16.28 0.27 1.93 27.84
MARN Marion Capital Holdings of IN 17.98 110.45 22.69 112.83 17.98 0.88 3.57 64.23
MRKF Market Fin. Corp. of OH 27.08 85.25 30.07 85.25 27.08 0.28 2.15 58.33
MFSL Maryland Fed. Bancorp of MD(8) NM 257.27 22.54 259.72 25.71 0.45 1.10 39.82
MASB MassBank Corp. of Reading MA* 16.30 160.23 18.46 162.47 18.02 1.00 2.09 34.13
MFLR Mayflower Co-Op. Bank of MA* 12.95 149.31 14.28 151.52 14.43 0.80 3.72 48.19
MDBK Medford Bancorp, Inc. of MA* 15.19 173.27 16.01 182.95 16.10 0.80 1.99 30.19
MWBX MetroWest Bank of MA* 13.20 218.04 15.72 218.04 13.45 0.12 1.68 22.22
METF Metropolitan Fin. Corp. of OH 14.66 251.48 9.71 272.06 16.62 0.00 0.00 0.00
MIFC Mid Iowa Financial Corp. of IA 12.22 143.33 12.68 143.52 11.20 0.08 0.74 9.09
MCBN Mid-Coast Bancorp of ME 15.67 140.00 11.86 140.00 16.94 0.20 1.90 29.85
MWBI Midwest Bancshares, Inc. of IA 11.11 134.62 9.27 134.62 12.73 0.32 2.29 25.40
MFFC Milton Fed. Fin. Corp. of OH 21.43 117.39 13.32 117.39 24.11 0.60 4.44 NM
MBSP Mitchell Bancorp, Inc. of NC NM 105.77 41.59 105.77 NM 0.40 2.42 74.07
MBBC Monterey Bay Bancorp of CA 29.78 110.15 12.86 117.76 NM 0.12 0.73 21.82
MONT Montgomery Fin. Corp. of IN 22.50 93.36 17.04 93.36 22.50 0.22 1.96 44.00
MSBK Mutual SB, FSB of Bay City MI NM 122.42 6.21 122.42 NM 0.00 0.00 NM
MYST Mystic Financial of MA* 28.37 111.74 21.29 111.74 NM 0.20 1.36 38.46
NHTB NH Thrift Bancshares of NH 12.68 139.00 11.25 160.02 13.69 0.60 3.48 44.12
NSLB NS&L Bancorp, Inc of Neosho MO NM 108.30 20.34 109.09 NM 0.50 2.76 NM
NSSY NSS Bancorp of CT(8)* 18.02 223.00 18.10 229.11 15.94 0.52 1.02 18.37
NMSB Newmil Bancorp, Inc. of CT* 15.38 132.33 11.78 132.33 15.38 0.32 2.81 43.24
NBCP Niagara Bancorp of NY MHC(45.4* 26.44 152.71 29.13 152.71 27.59 0.00 0.00 0.00
NBSI North Bancshares of Chicago IL 29.27 120.04 13.75 120.04 NM 0.40 3.11 NM
FFFD North Central Bancshares of IA 15.70 115.71 17.85 132.96 15.70 0.32 1.68 26.45
NEIB Northeast Indiana Bncrp of IN 15.99 134.26 17.92 134.26 15.99 0.34 1.56 25.00
NWSB Northwest Bcrp MHC of PA (30.7 29.55 285.71 25.27 319.41 29.55 0.16 1.23 36.36
NWEQ Northwest Equity Corp. of WI 13.33 129.87 15.15 129.87 14.28 0.64 3.53 47.06
NTMG Nutmeg FS&LA of CT 21.93 189.97 11.08 189.97 NM 0.20 1.60 35.09
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OHSL OHSL Financial Corp. of OH 10.55 10.55 0.86 7.92 4.97 0.81 7.44 0.17 126.00 0.32
OCFC Ocean Fin. Corp. of NJ 14.22 14.22 0.95 6.13 4.86 0.95 6.13 0.40 114.22 0.80
OTFC Oregon Trail Fin. Corp. of OR 25.56 25.56 1.20 7.06 4.50 1.20 7.06 0.15 248.13 0.57
OFCP Ottawa Financial Corp. of MI 8.45 6.92 0.87 10.06 5.19 0.81 9.29 0.36 104.99 0.44
PFFB PFF Bancorp of Pomona CA 9.04 8.95 0.60 6.07 5.62 0.56 5.70 1.06 79.87 1.36
PSFI PS Financial of Chicago IL 27.81 27.81 1.10 3.19 3.67 1.85 5.37 2.36 8.79 0.42
PSBI PSB Bancorp Inc. of PA* 19.81 19.81 0.78 3.93 4.42 0.78 3.93 1.85 11.66 0.41
PVFC PVF Capital Corp. of OH 7.20 7.20 1.34 18.73 7.68 1.26 17.66 0.69 95.38 0.74
PBCI Pamrapo Bancorp, Inc. of NJ 12.82 12.75 1.32 10.26 6.21 1.27 9.91 1.67 34.85 1.02
PFED Park Bancorp of Chicago IL 19.91 19.91 0.89 4.10 3.83 0.96 4.39 0.10 253.81 0.69
PVSA Parkvale Financial Corp of PA 7.82 7.78 1.08 13.97 6.36 1.08 13.97 0.43 279.67 1.56
PBHC Pathfinder BC MHC of NY (46.1)* 11.76 9.97 0.91 7.74 4.03 0.73 6.24 1.30 32.06 0.63
PEEK Peekskill Fin. Corp. of NY 22.98 22.98 1.03 4.11 4.03 1.05 4.17 0.79 43.03 1.41
PFSB PennFed Fin. Services of NJ 7.19 6.24 0.80 11.08 7.61 0.78 10.80 0.44 40.82 0.25
PWBK Pennwood Bancorp, Inc. of PA 18.34 18.34 0.77 4.19 4.35 0.92 5.03 1.60 44.68 1.09
PBKB People's Bancshares of MA* 3.67 3.54 0.76 16.93 7.85 0.33 7.45 0.35 149.48 0.88
TSBS Peoples Bancorp Inc of NJ* 24.24 25.07 1.03 4.24 4.17 1.03 4.24 NA NA 0.90
PFDC Peoples Bancorp of Auburn IN 15.08 15.08 1.50 9.86 6.12 1.50 9.86 0.18 172.98 0.36
PBCT Peoples Bank, MHC of CT (40.1)* 9.23 7.91 1.18 13.45 4.98 0.63 7.22 0.70 156.79 1.72
PFFC Peoples Fin. Corp. of OH 19.15 19.15 1.29 6.79 6.25 0.50 2.63 0.01 NA 0.30
PHBK Peoples Heritage Fin Grp of ME* 6.71 5.10 1.22 16.57 4.08 1.22 16.57 NA NA 1.25
PSFC Peoples Sidney Fin. Corp of OH 25.15 25.15 1.24 5.56 3.46 1.24 5.56 1.10 35.55 0.44
PERM Permanent Bancorp, Inc. of IN 9.72 9.61 0.61 6.42 4.57 0.59 6.22 0.25 180.51 0.87
PCBC Perry Co. Fin. Corp. of MO 18.94 18.94 1.03 5.46 4.73 1.02 5.41 NA NA 0.16
PHFC Pittsburgh Home Fin Corp of PA 7.43 7.34 0.79 8.24 7.00 0.67 6.99 1.24 33.90 0.75
PFSL Pocahontas Bancorp of AR 14.51 14.51 0.62 7.76 4.11 0.61 7.54 NA NA NA
PTRS Potters Financial Corp of OH 8.71 8.71 0.80 9.05 6.52 0.78 8.78 0.32 541.52 2.35
PHSB Ppls Home SB, MHC of PA (45.0) 12.76 12.76 0.81 7.30 3.85 0.72 6.49 0.32 173.78 1.31
PRBC Prestige Bancorp of PA 9.83 9.83 0.52 4.79 4.34 0.51 4.66 0.35 79.16 0.41
PFNC Progress Financial Corp. of PA 5.51 4.89 0.84 15.86 4.29 0.75 14.16 NA NA NA
PROV Provident Fin. Holdings of CA 11.09 11.09 0.74 5.81 5.00 0.36 2.85 NA NA 0.89
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 13.42 13.42 1.11 8.38 3.03 0.91 6.88 NA NA NA
PLSK Pulaski SB, MHC of NJ (46.0) 11.54 11.54 0.63 5.86 3.76 0.63 5.86 0.63 82.57 0.97
PULS Pulse Bancorp of S. River NJ(8) 8.34 8.34 1.07 13.16 6.06 1.08 13.31 0.46 78.83 1.33
QCFB QCF Bancorp of Virginia MN 17.70 17.70 1.68 9.63 6.23 1.66 9.53 1.22 67.47 1.92
QCBC Quaker City Bancorp of CA 8.75 8.75 0.76 8.74 6.17 0.74 8.50 1.11 80.77 1.13
QCSB Queens County Bancorp of NY* 10.45 10.45 1.47 12.54 3.56 1.45 12.37 0.55 106.38 0.67
RARB Raritan Bancorp of Raritan NJ* 7.54 7.45 0.99 13.02 5.72 0.97 12.78 0.43 186.77 1.14
RELY Reliance Bancorp, Inc. of NY 8.89 6.13 0.90 10.70 6.09 0.95 11.25 NA NA 0.91
RELI Reliance Bancshares Inc of WI(8) 49.97 49.97 1.03 2.11 2.11 1.03 2.11 NA NA 0.60
RCBK Richmond County Fin Corp of NY 22.04 21.95 0.19 1.11 0.56 1.53 9.09 0.37 124.25 1.12
RIVR River Valley Bancorp of IN 13.65 13.46 0.93 7.27 6.00 0.83 6.46 0.62 133.21 1.00
RVSB Riverview Bancorp of WA 22.35 21.63 1.53 8.47 4.10 1.48 8.20 0.28 136.88 0.63
RSLN Roslyn Bancorp, Inc. of NY* 16.77 16.69 1.32 7.11 5.50 1.26 6.78 0.23 281.89 2.01
SCCB S. Carolina Comm. Bnshrs of SC 20.38 20.38 1.01 4.23 3.72 1.01 4.23 1.26 50.34 0.82
SBFL SB Fngr Lakes MHC of NY (33.1) 8.68 8.68 0.40 4.39 1.53 0.34 3.72 0.32 141.95 0.89
SFED SFS Bancorp of Schenectady NY(8) 12.36 12.36 0.64 5.13 3.36 0.62 4.96 NA NA NA
SGVB SGV Bancorp of W. Covina CA 7.89 7.79 0.38 5.10 4.22 0.43 5.80 NA NA 0.48
SISB SIS Bancorp, Inc. of MA(8)* 7.14 7.14 0.69 9.61 3.33 0.89 12.32 0.27 471.43 2.63
SWCB Sandwich Bancorp of MA(8)* 8.08 7.83 0.98 12.21 4.02 0.95 11.76 0.36 220.94 1.16
SFSL Security First Corp. of OH(8) 9.43 9.30 1.39 14.89 4.98 1.39 14.89 0.42 178.44 0.82
SKAN Skaneateles Bancorp Inc of NY* 6.98 6.80 0.64 9.27 6.86 0.63 9.10 1.74 57.15 1.23
SOBI Sobieski Bancorp of S. Bend IN 14.10 14.10 0.58 3.93 3.76 0.58 3.93 0.29 77.82 0.28
SSFC South Street Fin. Corp. of NC* 15.88 15.88 0.64 2.97 3.35 0.66 3.06 0.23 91.68 0.40
SBAN SouthBanc Shares Inc. of SC 21.85 21.85 0.94 4.29 3.87 0.94 4.29 0.06 853.16 1.02
SCBS Southern Commun. Bncshrs of AL 15.85 15.85 1.10 6.93 4.38 1.10 6.93 0.36 308.46 1.70
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- --------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OHSL OHSL Financial Corp. of OH 20.12 155.08 16.36 155.08 21.43 0.50 3.03 60.98
OCFC Ocean Fin. Corp. of NJ 20.56 133.09 18.93 133.09 20.56 0.48 2.59 53.33
OTFC Oregon Trail Fin. Corp. of OR 22.21 103.84 26.54 103.84 22.21 0.20 1.34 29.85
OFCP Ottawa Financial Corp. of MI 19.27 190.72 16.12 232.80 20.86 0.40 1.44 27.78
PFFB PFF Bancorp of Pomona CA 17.81 112.44 10.16 113.60 18.96 0.00 0.00 0.00
PSFI PS Financial of Chicago IL 27.27 106.76 29.69 106.76 16.22 0.48 4.00 NM
PSBI PSB Bancorp Inc. of PA* 22.65 89.05 17.65 89.05 22.65 0.00 0.00 0.00
PVFC PVF Capital Corp. of OH 13.02 222.66 16.03 222.66 13.80 0.00 0.00 0.00
PBCI Pamrapo Bancorp, Inc. of NJ 16.12 162.09 20.78 162.95 16.69 1.12 4.02 64.74
PFED Park Bancorp of Chicago IL 26.09 106.89 21.28 106.89 24.32 0.00 0.00 0.00
PVSA Parkvale Financial Corp of PA 15.71 206.90 16.17 207.94 15.71 0.60 1.82 28.57
PBHC Pathfinder BC MHC of NY (46.1)* 24.81 188.71 22.19 222.58 NM 0.20 1.30 32.26
PEEK Peekskill Fin. Corp. of NY 24.82 105.41 24.22 105.41 24.45 0.36 2.20 54.55
PFSB PennFed Fin. Services of NJ 13.14 137.66 9.90 158.81 13.48 0.14 0.90 11.86
PWBK Pennwood Bancorp, Inc. of PA 23.00 99.22 18.19 99.22 19.17 0.28 2.43 56.00
PBKB People's Bancshares of MA* 12.74 211.82 7.77 219.39 28.93 0.56 2.77 35.22
TSBS Peoples Bancorp Inc of NJ* 24.00 101.72 24.65 98.34 24.00 0.10 1.13 27.03
PFDC Peoples Bancorp of Auburn IN 16.35 157.29 23.73 157.29 16.35 0.44 2.07 33.85
PBCT Peoples Bank, MHC of CT (40.1)* 20.07 227.11 20.96 265.16 NM 0.84 2.81 56.38
PFFC Peoples Fin. Corp. of OH 16.00 108.01 20.68 108.01 NM 0.60 5.00 NM
PHBK Peoples Heritage Fin Grp of ME* 24.49 NM 25.53 NM 24.49 0.44 2.06 50.57
PSFC Peoples Sidney Fin. Corp of OH 28.87 137.86 34.68 137.86 28.87 0.28 1.37 39.44
PERM Permanent Bancorp, Inc. of IN 21.88 134.49 13.08 136.05 22.58 0.24 1.71 37.50
PCBC Perry Co. Fin. Corp. of MO 21.15 111.73 21.16 111.73 21.36 0.50 2.27 48.08
PHFC Pittsburgh Home Fin Corp of PA 14.29 125.29 9.31 126.78 16.84 0.24 1.50 21.43
PFSL Pocahontas Bancorp of AR 24.31 100.57 14.60 100.57 25.00 0.24 2.74 66.67
PTRS Potters Financial Corp of OH 15.35 135.96 11.84 135.96 15.82 0.24 1.55 23.76
PHSB Ppls Home SB, MHC of PA (45.0) 26.00 158.57 20.24 158.57 29.25 0.28 1.71 44.44
PRBC Prestige Bancorp of PA 23.04 107.53 10.57 107.53 23.72 0.17 1.05 24.29
PFNC Progress Financial Corp. of PA 23.33 327.10 18.03 NM 26.12 0.15 0.86 20.00
PROV Provident Fin. Holdings of CA 19.98 116.66 12.94 116.66 NM 0.00 0.00 0.00
PULB Pulaski Bk,SB MHC of MO (29.8)(8) NM 268.21 35.99 268.21 NM 1.10 3.51 NM
PLSK Pulaski SB, MHC of NJ (46.0) 26.60 140.13 16.17 140.13 26.60 0.30 2.05 54.55
PULS Pulse Bancorp of S. River NJ(8) 16.51 207.07 17.26 207.07 16.33 0.80 2.68 44.20
QCFB QCF Bancorp of Virginia MN 16.05 152.65 27.02 152.65 16.22 0.00 0.00 0.00
QCBC Quaker City Bancorp of CA 16.20 135.45 11.86 135.45 16.67 0.00 0.00 0.00
QCSB Queens County Bancorp of NY* 28.09 NM 38.75 NM 28.47 1.00 2.37 66.67
RARB Raritan Bancorp of Raritan NJ* 17.47 217.88 16.43 220.70 17.79 0.60 2.07 36.14
RELY Reliance Bancorp, Inc. of NY 16.41 157.95 14.04 228.90 15.61 0.72 2.25 36.92
RELI Reliance Bancshares Inc of WI(8) NM 102.04 50.99 102.04 NM 0.00 0.00 0.00
RCBK Richmond County Fin Corp of NY NM 130.79 28.83 131.33 21.58 0.24 1.50 NM
RIVR River Valley Bancorp of IN 16.67 117.26 16.00 118.89 18.75 0.22 1.22 20.37
RVSB Riverview Bancorp of WA 24.41 155.83 34.83 161.05 25.21 0.24 1.56 38.10
RSLN Roslyn Bancorp, Inc. of NY* 18.17 129.51 21.71 130.12 19.06 0.34 1.75 31.78
SCCB S. Carolina Comm. Bnshrs of SC 26.88 132.15 26.93 132.15 26.88 0.64 2.98 NM
SBFL SB Fngr Lakes MHC of NY (33.1) NM 278.69 24.20 278.69 NM 0.24 1.41 NM
SFED SFS Bancorp of Schenectady NY(8) 29.76 152.53 18.85 152.53 NM 0.32 1.17 34.78
SGVB SGV Bancorp of W. Covina CA 23.68 116.04 9.15 117.52 20.84 0.00 0.00 0.00
SISB SIS Bancorp, Inc. of MA(8)* NM 254.26 18.17 254.26 23.41 0.64 1.37 41.03
SWCB Sandwich Bancorp of MA(8)* 24.90 291.65 23.57 301.19 25.85 1.40 2.30 57.38
SFSL Security First Corp. of OH(8) 20.07 288.43 27.21 292.54 20.07 0.36 1.46 29.27
SKAN Skaneateles Bancorp Inc of NY* 14.59 130.14 9.08 133.58 14.85 0.28 1.73 25.23
SOBI Sobieski Bancorp of S. Bend IN 26.56 102.53 14.46 102.53 26.56 0.32 1.88 50.00
SSFC South Street Fin. Corp. of NC* 29.88 129.72 20.60 129.72 28.97 0.40 4.18 NM
SBAN SouthBanc Shares Inc. of SC 25.86 110.99 24.25 110.99 25.86 0.48 2.54 65.75
SCBS Southern Commun. Bncshrs of AL 22.86 158.42 25.11 158.42 22.86 0.30 1.88 42.86
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 7, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- -------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SMBC Southern Missouri Bncrp of MO 16.77 16.77 0.70 4.27 3.33 0.66 4.02 1.49 55.77 1.08
SVRN Sovereign Bancorp, Inc. of PA 4.93 4.23 0.45 9.93 2.52 0.68 15.14 NA NA 1.07
STFR St. Francis Cap. Corp. of WI 8.00 7.15 0.80 9.98 6.37 0.77 9.59 0.19 219.19 0.88
SPBC St. Paul Bancorp, Inc. of IL 9.34 9.30 1.09 12.10 6.29 1.06 11.85 0.31 239.56 1.03
SFFC StateFed Financial Corp. of IA 17.73 17.73 1.25 7.09 5.33 1.25 7.09 NA NA NA
SFIN Statewide Fin. Corp. of NJ 9.83 9.81 0.81 8.48 5.77 0.80 8.41 0.51 84.18 0.87
STSA Sterling Financial Corp. of WA 5.60 5.22 0.54 10.94 5.79 0.47 9.55 0.52 128.59 1.09
ROSE T R Financial Corp. of NY* 6.15 6.15 0.99 15.97 5.58 0.88 14.13 0.53 70.17 0.68
THRD TF Financial Corp. of PA 7.97 6.71 0.74 7.44 6.22 0.63 6.28 0.30 106.83 0.84
TPNZ Tappan Zee Fin., Inc. of NY(8) 16.86 16.86 0.88 5.18 4.00 0.83 4.83 NA NA 1.23
THTL Thistle Group Holdings of PA 27.80 27.80 1.37 4.91 5.54 1.37 4.91 0.30 94.11 0.80
TSBK Timberland Bancorp of WA 32.12 32.12 1.63 10.60 3.93 1.55 10.05 NA NA 0.91
TRIC Tri-County Bancorp of WY 15.73 15.73 1.01 6.58 6.26 1.05 6.84 NA NA 1.01
TWIN Twin City Bancorp, Inc. of TN 12.75 12.75 1.03 8.01 6.46 0.86 6.64 0.10 102.83 0.14
USAB USABancshares, Inc of PA* 12.49 12.42 0.20 2.00 0.55 0.35 3.56 0.22 265.63 0.99
UCBC Union Community Bancorp of IN 40.02 40.02 1.44 5.52 3.24 1.44 5.52 0.45 51.96 0.30
UCFC United Community Fin. of OH 32.31 32.31 1.50 4.65 3.68 1.50 4.65 0.98 58.70 0.94
UFRM United FSB of Rocky Mount NC(8) 7.50 7.50 0.60 8.13 2.91 0.40 5.37 1.16 83.92 1.15
UBMT United Fin. Corp. of MT 25.61 25.61 1.31 5.53 2.94 1.31 5.53 0.60 101.19 1.07
UTBI United Tenn. Bancshares of TN 26.99 26.99 1.01 6.08 4.65 1.01 6.08 0.59 142.44 1.31
WHGB WHG Bancshares of MD 16.85 16.85 0.64 3.27 3.49 0.66 3.34 1.06 24.18 0.39
WSFS WSFS Financial Corp. of DE* 5.94 5.90 1.12 20.24 6.85 1.08 19.64 1.30 127.85 3.41
WVFC WVS Financial Corp. of PA 10.99 10.99 1.28 11.10 6.74 1.29 11.21 NA NA NA
WRNB Warren Bancorp of Peabody MA* 11.03 11.03 1.73 16.33 7.11 1.80 16.94 1.27 83.50 1.62
WSBI Warwick Community Bncrp of NY* 23.05 23.05 0.55 2.40 2.08 0.53 2.32 0.52 75.47 0.79
WFSL Washington Federal, Inc. of WA 13.41 12.41 1.92 15.33 8.23 1.88 15.04 0.70 60.38 0.57
WYNE Wayne Bancorp, Inc. of NJ 12.69 12.69 0.70 5.37 2.63 0.70 5.37 0.80 103.99 1.18
WAYN Wayne Svgs Bks MHC of OH (47.8 9.40 9.40 0.72 7.72 3.22 0.66 7.09 0.48 57.50 0.35
WCFB Wbstr Cty FSB MHC of IA (45.2) 24.02 24.02 1.43 6.08 3.76 1.43 6.08 0.12 353.21 0.70
WBST Webster Financial Corp. of CT 5.29 4.66 0.79 15.08 4.59 0.80 15.19 0.41 149.68 1.14
WEFC Wells Fin. Corp. of Wells MN 14.44 14.44 1.13 7.89 6.51 1.08 7.51 NA NA NA
WCBI WestCo Bancorp, Inc. of IL 15.44 15.44 1.53 9.93 7.05 1.41 9.10 0.44 63.73 0.37
WSTR WesterFed Fin. Corp. of MT 10.62 8.52 0.75 7.02 6.15 0.75 7.02 0.49 97.44 0.74
WOFC Western Ohio Fin. Corp. of OH 14.66 13.72 0.07 0.48 0.48 0.09 0.65 0.91 115.97 1.44
WEHO Westwood Hmstd Fin Corp of OH 23.00 23.00 0.61 2.28 2.58 0.97 3.64 0.19 119.15 0.25
FFWD Wood Bancorp of OH 13.21 13.21 1.44 11.32 5.24 1.23 9.67 0.35 110.31 0.46
YFCB Yonkers Fin. Corp. of NY 13.19 13.19 0.97 6.85 6.68 0.94 6.66 0.15 208.94 0.61
YFED York Financial Corp. of PA 8.77 8.77 0.88 10.11 6.19 0.71 8.20 2.37 28.49 0.81
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- --------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SMBC Southern Missouri Bncrp of MO NM 127.66 21.41 127.66 NM 0.50 2.38 71.43
SVRN Sovereign Bancorp, Inc. of PA NM 271.45 13.37 316.33 26.03 0.08 0.50 20.00
STFR St. Francis Cap. Corp. of WI 15.70 154.57 12.37 173.02 16.34 0.56 1.40 22.05
SPBC St. Paul Bancorp, Inc. of IL 15.89 183.63 17.15 184.37 16.23 0.60 2.62 41.67
SFFC StateFed Financial Corp. of IA 18.76 129.23 22.91 129.23 18.76 0.20 1.52 28.57
SFIN Statewide Fin. Corp. of NJ 17.32 144.83 14.24 145.12 17.46 0.44 2.08 36.07
STSA Sterling Financial Corp. of WA 17.26 156.36 8.76 167.82 19.77 0.00 0.00 0.00
ROSE T R Financial Corp. of NY* 17.91 266.48 16.38 266.48 20.24 0.80 2.14 38.28
THRD TF Financial Corp. of PA 16.07 147.78 11.78 175.56 19.06 0.48 2.03 32.65
TPNZ Tappan Zee Fin., Inc. of NY(8) 25.00 127.12 21.43 127.12 26.79 0.28 1.49 37.33
THTL Thistle Group Holdings of PA 18.04 88.60 24.63 88.60 18.04 0.00 0.00 0.00
TSBK Timberland Bancorp of WA 25.43 116.14 37.30 116.14 26.82 0.24 1.63 41.38
TRIC Tri-County Bancorp of WY 15.99 102.33 16.09 102.33 15.39 0.44 3.57 57.14
TWIN Twin City Bancorp, Inc. of TN 15.49 122.02 15.56 122.02 18.67 0.40 2.93 45.45
USAB USABancshares, Inc of PA* NM 193.43 24.17 194.58 NM 0.00 0.00 0.00
UCBC Union Community Bancorp of IN NM 101.97 40.81 101.97 NM 0.34 2.34 72.34
UCFC United Community Fin. of OH 27.16 126.30 40.81 126.30 27.16 0.00 0.00 0.00
UFRM United FSB of Rocky Mount NC(8) NM 260.60 19.54 260.60 NM 0.24 1.32 45.28
UBMT United Fin. Corp. of MT NM 187.67 48.07 187.67 NM 1.00 3.67 NM
UTBI United Tenn. Bancshares of TN 21.49 88.00 23.75 88.00 21.49 0.00 0.00 0.00
WHGB WHG Bancshares of MD 28.65 95.69 16.12 95.69 28.06 0.32 2.33 66.67
WSFS WSFS Financial Corp. of DE* 14.60 269.42 15.99 270.91 15.05 0.12 0.61 8.96
WVFC WVS Financial Corp. of PA 14.83 167.18 18.38 167.18 14.69 0.60 3.97 58.82
WRNB Warren Bancorp of Peabody MA* 14.06 216.35 23.87 216.35 13.55 0.36 3.20 45.00
WSBI Warwick Community Bncrp of NY* NM 114.99 26.51 114.99 NM 0.00 0.00 0.00
WFSL Washington Federal, Inc. of WA 12.14 176.13 23.63 190.40 12.38 0.92 3.62 44.02
WYNE Wayne Bancorp, Inc. of NJ NM 204.08 25.90 204.08 NM 0.20 0.57 21.74
WAYN Wayne Svgs Bks MHC of OH (47.8 NM 233.98 21.99 233.98 NM 0.62 2.70 NM
WCFB Wbstr Cty FSB MHC of IA (45.2) 26.56 159.18 38.23 159.18 26.56 0.80 4.71 NM
WBST Webster Financial Corp. of CT 21.79 284.08 15.02 322.07 21.63 0.44 1.48 32.35
WEFC Wells Fin. Corp. of Wells MN 15.35 117.27 16.94 117.27 16.14 0.60 3.18 48.78
WCBI WestCo Bancorp, Inc. of IL 14.19 138.14 21.33 138.14 15.47 0.68 2.48 35.23
WSTR WesterFed Fin. Corp. of MT 16.26 111.15 11.81 138.65 16.26 0.50 2.31 37.59
WOFC Western Ohio Fin. Corp. of OH NM 100.97 14.80 107.93 NM 1.00 4.35 NM
WEHO Westwood Hmstd Fin Corp of OH NM 106.08 24.39 106.08 24.27 0.40 3.23 NM
FFWD Wood Bancorp of OH 19.10 207.82 27.45 207.82 22.37 0.36 2.12 40.45
YFCB Yonkers Fin. Corp. of NY 14.96 99.69 13.15 99.69 15.39 0.28 1.72 25.69
YFED York Financial Corp. of PA 16.16 156.64 13.74 156.64 19.95 0.52 2.77 44.83
</TABLE>
<PAGE>
EXHIBIT 2
Peer Group Core Earnings Analysis
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Core Earnings Analysis
Comparable Institution Analysis
For the Twelve Months Ended March 31, 1998
<TABLE>
<CAPTION>
Estimated
Net Income Less: Net Tax Effect Less: Extd Core Income Estimated
to Common Gains(Loss) @ 34% Items to Common Shares Core EPS
---------- ----------- ---------- ---------- ---------- ---------- -------
($000) ($000) ($000) ($000) ($000) ($000) ($)
Comparable Group
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ABBK Abington Bancorp of MA 4,462 -1,018 346 0 3,790 3,564 1.06
BKC American Bank of Waterbury CT 8,212 -1,977 672 0 6,907 4,687 1.47
ANDB Andover Bancorp, Inc. of MA 13,700 -543 185 0 13,342 6,481 2.06
BFD BostonFed Bancorp of MA 7,030 -1,639 557 0 5,948 5,393 1.10
FESX First Essex Bancorp of MA 10,264 -1,422 483 0 9,325 7,562 1.23
FFES First Fed of E. Hartford CT 5,675 937 -319 0 6,293 2,743 2.29
FAB FirstFed America Bancorp of MA 6,820 -1,657 563 0 5,726 8,272 0.69
MECH MECH Financial Inc of CT 13,201 -4 1 0 13,198 5,295 2.49
MASB MassBank Corp. of Reading MA 10,528 -1,545 525 0 9,508 3,593 2.65
MDBK Medford Bancorp, Inc. of MA 11,807 -1,034 352 0 11,125 4,455 2.50
MWBX MetroWest Bank of MA 7,673 -137 47 0 7,583 14,252 0.53
Source: Audited and unaudited financial statements, corporate reports and offering circulars, and RP Financial, LC.
calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot
guarantee the accuracy or completeness of such information.
</TABLE>
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
EXHIBIT 3
Pro Forma Analysis Sheet
<PAGE>
PRO FORMA ANALYSIS SHEET
Compass Bank for Savings
Prices as of August 7, 1998
Assumes a 6.4000 Exchange Ratio for SWCB Shares
<TABLE>
<CAPTION>
All Savings
Peer Group Massachusetts Companies Institutions
Subject ------------------ ----------------------- ----------------
Price Multiple Symbol @ Midpoint(1) Mean Median Mean Median Mean
- -------------- ------ ------------- ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio = P/E 15.41x 15.63x 15.87x 16.54x 15.19x 18.92x
Price-core earnings ratio = P/CE 15.99x 17.07x 17.45x 17.53x 17.45x 19.73x
Price-book ratio = P/B 102.25% 171.58% 173.27% 170.27% 160.33% 148.35%
Price-tangible book ratio = P/TB 103.09% 177.67% 182.95% 174.65% 162.47% 152.81%
Price-assets ratio = P/A 19.15% 14.29% 16.28% 16.28% 15.72% 18.85%
Valuation Parameters
- --------------------
Pre-Conversion Earnings (Y) $18,174,000 ESOP Stock Purchases (E) 8.00% (5)
Pre-Conversion Book Value (B) $151,066,000 Cost of ESOP Borrowings (S) 0.00%
Pre-Conv. Tang. Book Value (B) $148,128,000 ESOP Amortization (T) 20.00 years
Pre-Conversion Assets (A) $1,707,572,000 RRP Amount (M) 0.00%
Reinvestment Rate (2)(R) 3.22% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 3.30% SWCB Shares and Acct. Adj. (F) 2.15%
Tax rate (TAX) 40.00% Exchange Shares (SH) 52.86%
Funds Invested into Fixed Assets (FA) 8.33%
Tax Benefit (Z) 0
Percentage Sold (PCT) 100.00%
Calculation of Pro Forma Value After Conversion
1. V= P/E * (Y) V= $366,862,317
-----------------------------------------------------------
1 - P/E * PCT * ((1-X-M-SH)*R - (1-TAX)*E/T)
`
2. V= P/B * (B+Z) V= $366,862,317
---------------------------------
1 - P/B * PCT * (1-X-E-M-F-SH)
3. V= P/A * (A+Z) V= $366,862,317
---------------------------------
1 - P/A * PCT * (1-X-E-M-F-SH)
Shares Aggregate
Shares Sold to Price Per Gross Offering Exchange Shares Issued To Total Shares Market Value
Conclusion Public Share Proceeds Issued to SCWB Foundation Issued of Stock Issued
- ----------- ------ ----- -------- -------------- ---------- ------ ---------------
Minimum 20,400,000 10.00 $204,000,000 12,686,232 0 33,086,232 330,862,317
Midpoint 24,000,000 10.00 240,000,000 12,686,232 0 36,686,232 366,862,317
Maximum 27,600,000 10.00 276,000,000 12,686,232 0 40,286,232 402,862,317
Supermaximum 31,740,000 10.00 317,400,000 12,686,232 0 44,426,232 444,262,317
- ----------------------------------------------------------------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 5.37 percent, and a tax rate of 40.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) ESOP loan will be funded internally by Seacoast.
(5) ESOP amortizes over 20 years; amortization expenses tax effected at 40.00 percent.
</TABLE>
<PAGE>
PRO FORMA ANALYSIS SHEET
Compass Bank for Savings
Prices as of August 7, 1998
Assumes a 4.7407 Exchange Ratio for SWCB Shares
<TABLE>
<CAPTION>
All Savings
Peer Group Massachusetts Companies Institutions
Subject --------------------- ------------------------ ------------
Price Multiple Symbol @ Midpoint(1) Mean Median Mean Median Mean
- -------------- ------ ------------- ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio = P/E 14.03 x 15.63x 15.87x 16.54x 15.19x 18.92x
Price-core earnings ratio = P/CE 14.56 x 17.07x 17.45x 17.53x 17.45x 19.73x
Price-book ratio = P/B 93.10% 171.58% 173.27% 170.27% 160.33% 148.35%
Price-tangible book ratio = P/TB 93.87% 177.67% 182.95% 174.65% 162.47% 152.81%
Price-assets ratio = P/A 17.44% 14.29% 16.28% 16.28% 15.72% 18.85%
Valuation Parameters
- --------------------
Pre-Conversion Earnings (Y) $18,174,000 ESOP Stock Purchases (E) 8.00% (5)
Pre-Conversion Book Value (B) $151,066,000 Cost of ESOP Borrowings (S) 0.00%
Pre-Conv. Tang. Book Value (B) $148,128,000 ESOP Amortization (T) 20.00 years
Pre-Conversion Assets (A) $1,707,572,000 RRP Amount (M) 0.00%
Reinvestment Rate (2)(R) 3.22% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 3.30% SWCB Shares and Acct. Adj. (F) 2.15%
Tax rate (TAX) 40.00% Exchange Shares (SH) 39.19%
Funds Invested into Fixed Assets (FA) 8.33%
Tax Benefit (Z) 0
Percentage Sold (PCT) 100.00%
Calculation of Pro Forma Value After Conversion
1. V= P/E * (Y) V= $334,049,282
------------------------------------------------
1 - P/E * PCT * ((1-X-M-SH)*R - (1-TAX)*E/T) `
2. V= P/B * (B+Z) V= $334,049,282
------------------------------
1 - P/B * PCT * (1-X-E-M-F-SH)
3. V= P/A * (A+Z) V= $334,049,282
------------------------------
1 - P/A * PCT * (1-X-E-M-F-SH)
Shares Aggregate
Shares Sold Price Per Gross Offering Exchange Shares Issued To Total Shares Market Value
Conclusion to Public Share Proceeds Issued to SCWB Foundation Issued of Stock Issued
- ----------- ------ ----- -------- -------------- ---------- ------ ---------------
Minimum 20,400,000 10.00 $204,000,000 9,404,928 0 29,804,928 298,049,282
Midpoint 24,000,000 10.00 240,000,000 9,404,928 0 33,404,928 334,049,282
Maximum 27,600,000 10.00 276,000,000 9,404,928 0 37,004,928 370,049,282
Supermaximum 31,740,000 10.00 317,400,000 9,404,928 0 41,144,928 411,449,282
- ------------------------------------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 5.37 percent, and a tax rate of 40.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) ESOP loan will be funded internally by Seacoast.
(5) ESOP amortizes over 20 years; amortization expenses tax effected at 40.00 percent.
</TABLE>
<PAGE>
EXHIBIT 4
Pro Forma Effect of Conversion Proceeds
<PAGE>
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Compass Bank for Savings
At the Maximum
<TABLE>
<CAPTION>
<S> <C>
1. Offering Proceeds $276,000,000
Less: Estimated Offering Expenses 8,244,700
------------
Net Conversion Proceeds $267,755,300
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $267,755,300
Less: Proceeds Invested in Non-Earning Fixed Assets 20,000,000
Less: Non-Cash Stock Purchases (1) 22,080,000
------------
Net Proceeds Reinvested $225,675,300
Estimated net incremental rate of return 3.22%
------------
Earnings Increase $7,271,258
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 662,400
Less: Recognition Plan Vesting 0
-
Net Earnings Increase $6,608,858
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- -----------
12 Months ended May 31, 1998 (reported) $18,174,000 $6,608,858 $24,782,858
12 Months ended May 31, 1998 (core) $17,301,000 $6,608,858 $23,909,858
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- -----------
May 31, 1998 $151,066,000 $245,675,300 ($5,158,000) $391,583,300
May 31, 1998 (Tangible) $148,128,000 $245,675,300 ($5,158,000) $388,645,300
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- -----------
May 31, 1998 $1,707,572,000 $245,675,300 ($5,158,000) $1,948,089,300
(1) Includes ESOP stock purchases equal to 8.0 percent of the offering.
(2) ESOP loan will be funded internally by Seacoast.
(3) ESOP borrowings are amortized over 20 years, amortization expense is tax-effected at a 40.00 percent rate.
(4) Reflects impact of elimination of SWCB shares owned by Compass.
</TABLE>
<PAGE>
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Compass Bank for Savings
At the Midpoint
<TABLE>
<CAPTION>
<S> <C>
1. Offering Proceeds $240,000,000
Less: Estimated Offering Expenses 7,913,500
------------
Net Conversion Proceeds $232,086,500
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $232,086,500
Less: Proceeds Invested in Non-Earning Fixed Assets 20,000,000
Less: Non-Cash Stock Purchases (1) 19,200,000
------------
Net Proceeds Reinvested $192,886,500
Estimated net incremental rate of return 3.22%
------------
Earnings Increase $6,214,803
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 576,000
Less: Recognition Plan Vesting 0
-
Net Earnings Increase $5,638,803
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- -----------
12 Months ended May 31, 1998 (reported) $18,174,000 $5,638,803 $23,812,803
12 Months ended May 31, 1998 (core) $17,301,000 $5,638,803 $22,939,803
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- -----------
May 31, 1998 $151,066,000 $212,886,500 ($5,158,000) $358,794,500
May 31, 1998 (Tangible) $148,128,000 $212,886,500 ($5,158,000) $355,856,500
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- -----------
May 31, 1998 $1,707,572,000 $212,886,500 ($5,158,000) $1,915,300,500
(1) Includes ESOP stock purchases equal to 8.0 percent of the offering.
(2) ESOP loan will be funded internally by Seacoast.
(3) ESOP borrowings are amortized over 20 years, amortization expense is tax-effected at a 40.00 percent rate.
(4) Reflects impact of elimination of SWCB shares owned by Compass.
</TABLE>
<PAGE>
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Compass Bank for Savings
At the Minimum
<TABLE>
<CAPTION>
<S> <C>
1. Offering Proceeds $204,000,000
Less: Estimated Offering Expenses 7,582,300
------------
Net Conversion Proceeds $196,417,700
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $196,417,700
Less: Proceeds Invested in Non-Earning Fixed Assets 20,000,000
Less: Non-Cash Stock Purchases (1) 16,320,000
-----------
Net Proceeds Reinvested $160,097,700
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $5,158,348
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 489,600
Less: Recognition Plan Vesting 0
-
Net Earnings Increase $4,668,748
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
12 Months ended May 31, 1998 (reported) $18,174,000 $4,668,748 $22,842,748
12 Months ended May 31, 1998 (core) $17,301,000 $4,668,748 $21,969,748
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
May 31, 1998 $151,066,000 $180,097,700 ($5,158,000) $326,005,700
May 31, 1998 (Tangible) $148,128,000 $180,097,700 ($5,158,000) $323,067,700
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
May 31, 1998 $1,707,572,000 $180,097,700 ($5,158,000) $1,882,511,700
(1) Includes ESOP stock purchases equal to 8.0 percent of the offering.
(2) ESOP loan will be funded internally by Seacoast.
(3) ESOP borrowings are amortized over 20 years, amortization expense is tax-effected at a 40.00 percent rate.
(4) Reflects impact of elimination of SWCB shares owned by Compass.
</TABLE>
<PAGE>
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Compass Bank for Savings
At the Supermaximum Value
<TABLE>
<CAPTION>
<S> <C>
1. Offering Proceeds $317,400,000
Less: Estimated Offering Expenses 8,625,580
------------
Net Conversion Proceeds $308,774,420
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $308,774,420
Less: Proceeds Invested in Non-Earning Fixed Assets 20,000,000
Less: Non-Cash Stock Purchases (1) 25,392,000
------------
Net Proceeds Reinvested $263,382,420
Estimated net incremental rate of return 3.22%
------------
Earnings Increase $8,486,182
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 761,760
Less: Recognition Plan Vesting 0
-
Net Earnings Increase $7,724,422
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- -----------
12 Months ended May 31, 1998 (reported) $18,174,000 $7,724,422 $25,898,422
12 Months ended May 31, 1998 (core) $17,301,000 $7,724,422 $25,025,422
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- -----------
May 31, 1998 $151,066,000 $283,382,420 ($5,158,000) $429,290,420
May 31, 1998 (Tangible) $148,128,000 $283,382,420 ($5,158,000) $426,352,420
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- -----------
May 31, 1998 $1,707,572,000 $283,382,420 ($5,158,000) $1,985,796,420
(1) Includes ESOP stock purchases equal to 8.0 percent of the offering.
(2) ESOP loan will be funded internally by Seacoast.
(3) ESOP borrowings are amortized over 20 years, amortization expense is tax-effected at a 40.00 percent rate.
(4) Reflects impact of elimination of SWCB shares owned by Compass.
</TABLE>
<PAGE>
EXHIBIT 5
Firm Qualifications Statement
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants FIRM QUALIFICATION STATEMENT
RP Financial provides financial and management consulting and valuation services
to the financial services industry nationwide, particularly federally-insured
financial institutions. RP Financial establishes long-term client relationships
through its wide array of services, emphasis on quality and timeliness, hands-on
involvement by our principals and senior consulting staff, and careful
structuring of strategic plans and transactions. RP Financial's staff draws from
backgrounds in consulting, regulatory agencies and investment banking, thereby
providing our clients with considerable resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's strategic and capital planning services are designed to provide
effective workable plans with quantifiable results. Through a program known as
SAFE (Strategic Alternatives Financial Evaluations), RP Financial analyzes
strategic options to enhance shareholder value or other established objectives.
Our planning services involve conducting situation analyses; establishing
mission statements, strategic goals and objectives; and identifying strategies
for enhancement of franchise value, capital management and planning, earnings
improvement and operational issues. Strategy development typically includes the
following areas: capital formation and management, asset/liability targets,
profitability, return on equity and market value of stock. Our proprietary
financial simulation model provides the basis for evaluating the financial
impact of alternative strategies and assessing the feasibility/compatibility of
such strategies with regulations and/or other guidelines.
MERGER AND ACQUISITION SERVICES
RP Financial's merger and acquisition (M&A) services include targeting
candidates and potential acquirors, assessing acquisition merit, conducting
detailed due diligence, negotiating and structuring transactions, preparing
merger business plans and financial simulations, rendering fairness opinions and
assisting in implementing post-acquisition strategies. Through our financial
simulations, comprehensive in-house data bases, valuation expertise and
regulatory knowledge, RP Financial's M&A consulting focuses on structuring
transactions to enhance shareholder returns.
VALUATION SERVICES
RP Financial's extensive valuation practice includes valuations for a variety of
purposes including mergers and acquisitions, mutual-to-stock conversions, ESOPs,
subsidiary companies, mark-to-market transactions, loan and servicing
portfolios, non-traded securities, core deposits, FAS 107 (fair market value
disclosure), FAS 122 (loan servicing rights) and FAS 123 (stock options). Our
principals and staff are highly experienced in performing valuation appraisals
which conform with regulatory guidelines and appraisal industry standards. RP
Financial is the nation's leading valuation firm for mutual-to-stock conversions
of thrift institutions.
OTHER CONSULTING SERVICES AND DATA BASES
RP Financial offers a variety of other services including branching strategies,
feasibility studies and special research studies, which are complemented by our
quantitative and computer skills. RP Financial's consulting services are aided
by its in-house data base resources for commercial banks and savings
institutions and proprietary valuation and financial simulation models.
YEAR 2000 SERVICES
RP Financial, through a relationship with a computer research and development
company with a proprietary methodology, offers Year 2000 advisory and conversion
services to financial institutions which are more cost effective and less
disruptive than most other providers of such service.
RP Financial's Key Personnel (Years of Relevant Experience)
Ronald S. Riggins, Managing Director (18)
William E. Pommerening, Managing Director (14)
Gregory E. Dunn, Senior Vice President (16)
James P. Hennessey, Senior Vice President (13)
James J. Oren, Senior Vice President (11)
- -------------------------------------------------------------------------------
Washington Headquarters
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
<PAGE>
RP FINANCIAL, LC.
---------------------------
Financial Services Industry
<PAGE>
- --------------------------------------------------------------------------------
CONVERSION APPRAISAL UPDATE REPORT
SEACOAST FINANCIAL SERVICES CORPORATION
PROPOSED HOLDING COMPANY FOR
COMPASS BANK FOR SAVINGS
New Bedford, Massachusetts
Dated As Of:
September 4, 1998
- --------------------------------------------------------------------------------
Prepared By:
RP Financial, LC.
1700 North Moore Street
Suite 2210
Arlington, Virginia 22209
<PAGE>
RP FINANCIAL, LC.
- ---------------------------
Financial Services Industry
September 4, 1998
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
791 Purchase Street
New Bedford, Massachusetts 02740-6300
Members of the Boards:
We have completed and hereby provide an updated independent appraisal
of the estimated pro forma market value of the Common Stock in connection with
the mutual-to-stock conversion transaction described below.
This Appraisal has been prepared in accordance with the "Guidelines for
Appraisal Reports for the Valuation of Savings and Loan Associations Converting
from Mutual to Stock Form of Organization" of the Office of Thrift Supervision
("OTS"), including the most recent revisions as of October 21, 1994, and
applicable interpretations thereof. Such Valuation Guidelines are relied upon by
the Massachusetts Division of Banks (the "Division"), the Federal Deposit
Insurance Corporation ("FDIC") and the Federal Reserve Board ("FRB") in
evaluating conversion appraisals in the absence of such specific written
valuation guidelines separately issued by the respective agencies.
Our original appraisal report, dated May 8, 1998 (the "Original
Appraisal") and updated as of August 7, 1998 (the "First Update"), is
incorporated herein by reference. As in the preparation of our Original
Appraisal and First Update, we believe the data and information used herein is
reliable; however, we cannot guarantee the accuracy and completeness of such
information.
Description of Reorganization
- -----------------------------
We understand that the Board of Trustees of The 1855 Bancorp, a
Massachusetts-chartered mutual holding company (the "MHC"), and the Board of
Directors of Compass Bank for Savings ("Compass" or the "Bank"), a wholly-owned
state-chartered stock savings bank subsidiary of the MHC, have adopted a Plan of
Conversion, incorporated herein by reference, in which the MHC will be combined
with the Bank simultaneously with the MHC's conversion to stock form and
reorganization as a subsidiary of a newly-formed stock corporation, to be known
as "Seacoast Financial Services Corporation" ("Seacoast" or the "Company").
Seacoast will offer shares of Common Stock ("Conversion Shares") for sale in the
Subscription Offering, the concurrent Community Offering and, if necessary, in a
Syndicated Community Offering, based
- --------------------------------------------------------------------------------
Washington Headquarters
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
September 4, 1998
Page 2
on the appraised value. The Conversion Shares are first being offered in the
Subscription Offering with nontransferable subscription rights being granted to
Eligible Account Holders, Supplemental Eligible Account Holders, the ESOP,
Employees, Officers, Trustees and Directors.
Acquisition of Sandwich Bancorp, Inc.
- -------------------------------------
Pursuant to the Amended and Restated Affiliation and Merger Agreement
(the "Agreement"), dated March 22, 1998, The 1855 Bancorp agreed to acquire
Sandwich Bancorp, Inc., Sandwich, Massachusetts ("Sandwich Bancorp"), the bank
holding company for Sandwich Co-operative Bank, a Massachusetts-chartered
co-operative bank ("Sandwich"). Sandwich Bancorp is a Massachusetts corporation
that was organized in June 1997 to acquire all the capital stock of Sandwich
upon consummation of the reorganization of Sandwich into holding company form.
Sandwich Bancorp is a publicly-traded company whose stock is listed on the
NASDAQ National Market System under the ticker symbol "SWCB". Pursuant to the
Agreement, at the effective time of the merger, each share of common stock of
Sandwich Bancorp issued and outstanding, shall by virtue of the merger be
converted into the right to receive Seacoast common stock. The number of shares
of Seacoast common stock a Sandwich Bancorp stockholder will receive will be
determined by the application of an exchange ratio (the "Exchange Ratio") based
upon the trading price of Seacoast's common stock (the "Seacoast Trading Price")
10 days following the closing of the conversion. If the Seacoast Trading Price
is between $10.00 and $13.50, the Exchange Ratio will be between 6.4000 and
4.7407 (determined by dividing $64.00 by the Seacoast Trading Price). If the
Seacoast Trading Price is between $13.51 and $15.00, the Exchange Ratio will be
fixed at 4.7407. If the Seacoast Trading Price exceeds $15.00, the Exchange
Ratio will be less than 4.7407 (determined by dividing $71.11 by the Seacoast
Trading Price). If the Seacoast Trading Price is equal to or less than $10.00
per share, the Exchange Ratio will be 6.4000. The number of Exchange Shares
issuable in exchange for each outstanding Sandwich Bancorp stock option will be
determined by subtracting the per share exercise price of such option from the
value of the Exchange Shares receivable by Sandwich Bancorp stockholders in
exchange for each outstanding share of Sandwich Bancorp common stock, and
dividing the result by the Seacoast Trading Price. As of June 30, 1998, Sandwich
Bancorp had 2,043,475 shares of common stock issued and outstanding and 45,203
granted stock options outstanding, all of which become fully vested upon a
change of control. Cash will be paid in lieu of fractional shares.
It is anticipated that the merger will be accounted for as a pooling of
interests and that certain financial adjustments will be made concurrent with
the merger. The transaction is expected to constitute a tax-free reorganization
under the Internal Revenue Code, so that Sandwich Bancorp shareholders who
receive Seacoast's common stock will not recognize gain or loss in connection
with the exchange.
Limiting Factors and Considerations
- -----------------------------------
Our valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing shares of the
Common Stock. Moreover, because such
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
September 4, 1998
Page 3
valuation is necessarily based upon estimates and projections of a number of
matters, all of which are subject to change time to time, no assurance can be
given that persons who purchase shares of common stock in the Conversion will
thereafter be able to buy or sell such shares at prices related to the foregoing
valuation of the estimated pro forma market value thereof.
RP Financial's updated valuation was determined based on the financial
condition and operations of the Bank and Sandwich as of July 31, 1998 and June
30, 1998, respectively, the date of the most recent financial data included in
the Company's Prospectus.
RP Financial is not a seller of securities within the meaning of any
federal and state securities laws and any report prepared by RP Financial shall
not be used as an offer or solicitation with respect to the purchase or sale of
any securities. RP Financial maintains a policy which prohibits RP Financial,
its principals or employees from purchasing stock of its client financial
institutions.
This valuation will be updated as provided for in the conversion
regulations and guidelines. These updates will consider, among other things, any
developments or changes in the Bank's financial performance and condition,
management policies, and current conditions in the equity markets for thrift
shares. These updates may also consider changes in other external factors which
impact value including, but not limited to: various changes in the legislative
and regulatory environment for financial institutions, the stock market and the
market for thrift stocks, and interest rates. Should any such new developments
or changes be material, in our opinion, to the valuation of the shares,
appropriate adjustments to the estimated pro forma market value will be made.
The reasons for any such adjustments will be explained in the update at the date
of the release of the update.
Discussion of Relevant Considerations
- -------------------------------------
1. Financial Results
-----------------
The First Update was based on financial data as of May 31, 1998 for
Compass and June 30, 1998 for Sandwich. This updated appraisal is based on
financial information as of July 31, 1998 for Compass and June 30, 1998 for
Sandwich reflecting the updated financial results for each company as set forth
in the amended prospectus. Corresponding to the analysis set forth in the
Original Appraisal and First Update, the following paragraphs describe the
historical balance sheet changes for Compass on a pre-acquisition basis. The pro
forma balance sheet impact of the acquisition of Sandwich (but before
incorporating the capital to be raised in the conversion and merger expenses)
will be discussed at the end of this section.
Growth Trends
-------------
Compass' total assets increased by $25 million over the two months
ended July 31, 1998, largely attributable to continued expansion of the loan
portfolio which was funded by an increase in deposits. Capital increased as a
result of interim earnings, although the equity/assets ratio remained stable as
the rate of increase in capital was matched by the growth of total assets.
<PAGE>
RP Financial, LC.
Page 4
Table 1
Compass Bank for Savings
Historical Balance Sheets
(Amount and Percent of Assets)
<TABLE>
<CAPTION>
As of May 31, As of July 31,
1998 1998
------------------------ ------------------------
Amount Pct Amount Pct
------ --- ------ ---
($000) (%) ($000) (%)
<S> <C> <C> <C> <C>
Total Amount of:
Assets $1,176,559 100.00% $1,201,704 100.00%
Loans 884,822 75.20% 907,404 75.51%
Allowances for Loan Losses 10,508 0.89% 10,534 0.88%
Debt Securities
Available for Sale 173,820 14.77% 178,668 14.87%
Held to Maturity/Held for Invest. 13,649 1.16% 13,695 1.14%
Marketable Equity Securities 9,520 0.81% 10,828 0.90%
Deposits 982,351 83.49% 1,008,417 83.92%
Borrowed Funds 77,074 6.55% 74,368 6.19%
Surplus 106,510 9.05% 108,721 9.05%
Memo:
Loans/Deposits 90.07% 89.98%
IEA/IBL (Average) 112.62% 112.54%
Non-Performing Assets/Assets 0.93% 0.49%
Allow. for Loan Losses as a % of:
Loans Receivable, net 1.19% 1.16%
Non-Performing Loans 110.69% 229.40%
Full Service Offices 23 23
<CAPTION>
Pro Forma Combined Pro Forma Combined
As of As of
May 31, 1998(1)(2) July 31, 1998(1)(2)
------------------------- ------------------------
Amount Pct Amount Pct
------ --- ------ ---
($000) (%) ($000) (%)
<S> <C> <C> <C> <C>
Total Amount of:
Assets $1,707,572 100.00% $1,732,717 100.00%
Loans 1,245,439 72.94% 1,268,021 73.18%
Allowances for Loan Losses 14,675 0.86% 14,701 0.85%
Debt Securities
Available for Sale 232,000 13.59% 236,848 13.67%
Held to Maturity/Held for Invest. 78,441 4.59% 78,487 4.53%
Marketable Equity Securities 9,520 0.56% 10,828 0.62%
Deposits 1,427,101 83.57% 1,453,167 83.87%
Borrowed Funds 110,675 6.48% 107,969 6.23%
Surplus 151,066 8.85% 153,377 8.85%
Memo:
Loans/Deposits 87.27% 87.26%
IEA/IBL (Average) N/A N/A
Non-Performing Assets/Assets 0.81% 0.51%
Allow. for Loan Losses as a % of:
Loans Receivable, net 1.18% 1.16%
Non-Performing Loans 120.44% 166.55%
Full Service Offices 34 34
</TABLE>
(1) Pre-conversion basis and before merger transaction expenses; reflects
pooling accounting.
(2) Data is as of June 30, 1998 for Sandwich.
Sources: Prospectus.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
September 4, 1998
Page 5
Loan Receivable
---------------
The balance of loans receivable increased from $884.8 million, as
of May 31, 1998, to $907.4 million, as of July 31, 1998, equal to 75.51 percent
of total assets. Expansion of the loan portfolio over the two months ended July
31, 1998 continues to be supported by expansion of the construction and indirect
auto loan portfolios.
Investments and Mortgage-Backed Securities
------------------------------------------
Investments remained relatively stable over the two months ended
July 31, 1998 and totaled $203.2 million, equal to 16.9 percent of assets. The
composition of the investment portfolio remains substantially unchanged
comprised of U.S. Government and agency obligations, corporate debt obligations
and mortgage-backed securities.
Funding Structure
-----------------
Deposit balances increased by $26 million over the two months ended
July 31, 1998. Management attributes the increase to the relatively favorable
economic conditions prevailing in Compass' markets, the benefits of which were
partially offset by strong competition including competition from
non-traditional products such as annuities and mutual funds.
Equity
------
After-tax earnings of $2.4 million during the two months ended July
31, 1998, coupled with the impact of a small downward equity adjustment on the
available for sale portfolio resulted in equity growth to $108.7 million. As a
result of interim asset growth, the Bank's equity/assets ratio remained stable,
equal to 9.05 percent as of July 31, 1998. The Bank maintained capital surpluses
relative to all of its regulatory capital requirements and was a "well
capitalized" institution.
Acquisition of Sandwich
-----------------------
The updated merged balance sheet reflects relatively limited change
from the prior quarter. The pro forma pre-conversion impact of the Sandwich
acquisition increases Compass' total assets to $1.733 billion, with the increase
solely due to the incorporation of updated financial data for Compass. Compass'
balance sheet composition does not change significantly as the proportion of
loans, investments, deposits, and borrowed funds for Sandwich compares
relatively closely to Compass.
Income and Expense Trends
-------------------------
Table 2 shows the Bank's historical income statements for twelve
months ended May 31, 1998 as well as updated information for the twelve months
ended July 31, 1998. The Bank's pro forma income statement for the twelve months
ended May 31, 1998 and July 31, 1998 giving effect to the merger has also been
provided. The following paragraphs describe the historical income statements of
Compass on a pre-merger basis. The pro forma income statement impact of the
Sandwich merger through July 31, 1998 is discussed at the end of this section.
<PAGE>
RP Financial, LC.
Page 6
Table 2
Compass Bank for Savings
Historical Income Statements
(Amount and Percent of Assets)(1)
<TABLE>
<CAPTION>
For the 12 Months For the 12 Months
Ended May 31, 1998 Ended July 31, 1998
-------------------------- --------------------------
Amount Pct Amount Pct
------ --- ------ ---
($000) (%) ($000) (%)
<S> <C> <C> <C> <C>
Interest Income $84,379 7.55% $85,617 7.56%
Interest Expense (42,211) -3.78% (42,795) -3.78%
-------- ------ -------- ------
Net Interest Income $42,168 3.77% $42,822 3.78%
Provision for Loan Losses (1,511) -0.14% (1,365) -0.12%
------- ------ ------- ------
Net Interest Income after Provisions $40,657 3.64% $41,457 3.66%
Other Income 5,677 0.51% 5,704 0.50%
Other Real Estate Owned Expense (364) -0.03% (258) -0.02
Operating Expense (25,350) -2.27% (26,410) -2.33%
-------- ------ -------- ------
Net Operating Income $20,620 1.84% $20,493 1.81%
Gain on Sale of Loans $ 920 0.08% $ 1,098 0.10%
Gain on Securities 11 0.00% 14 0.00%
-------- ------ -------- ------
Total Non-Operating Income/(Expense) $ 931 0.08% $ 1,112 0.10%
Net Income Before Tax $21,551 1.93% $ 21,605 1.91%
Income Taxes (8,385) -0.75% (8,520) -0.75%
-------- ------ -------- ------
Net Income (Loss) Before Extraord. Items $13,166 1.18% $13,085 1.16%
Cumulative Effect of Change in
Accounting for Income Taxes -- 0.00% -- 0.00%
-------- ------ -------- ------
Net Income (Loss) $13,166 1.18% $13,085 1.16%
Estimated Core Earnings
- -----------------------
Net Income $13,166 1.18% $13,085 1.16%
Addback(Deduct): Non-Recurring (Inc)/Exp (931) -0.08% (1,112) -0.10%
Tax Effect 362 0.03% 439 0.04%
-------- ------ -------- ------
Estimated Core Income $12,597 1.13% $12,412 1.10%
Memo:
Coverage Ratio (2) 166.34% 162.14%
Efficiency Ratio (3) 52.98% 56.00%
Effective Tax Rate 38.91% 39.44%
<CAPTION>
Pro Forma Combined Pro Forma Combined
For the Most Recent For the Most Recent
12 Months Ended(4) 12 Months Ended(5)
-------------------------- ---------------------------
Amount Pct Amount Pct
------ --- ------ ---
($000) (%) ($000) (%)
<S> <C> <C> <C> <C>
Interest Income $121,306 7.43% $122,544 7.44%
Interest Expense (61,398) -3.76% (61,982) -3.76%
-------- ------ -------- ------
Net Interest Income $59,908 3.67% $60,562 3.68%
Provision for Loan Losses (2,077) -0.13% (1,931) -0.12%
------- ------ ------- ------
Net Interest Income after Provisions $57,831 3.54% $58,631 3.56%
Other Income 8,068 0.49% 8,095 0.49%
Other Real Estate Owned Expense (364) -0.02% (258) -0.02%
Operating Expense (37,817) -2.32% (38,877) -2.36%
-------- ------ -------- ------
Net Operating Income $27,718 1.70% $27,591 1.67%
Gain on Sale of Loans $ 1,212 0.07% $ 1,390 0.08%
Gain on Securities 186 0.01% 189 0.01%
-------- ------ -------- ------
Total Non-Operating Income/(Expense) $ 1,398 0.09% $ 1,579 0.10%
Net Income Before Tax $29,116 1.78% $29,170 1.77%
Income Taxes (10,942) -0.67% (11,077) -0.67%
-------- ------ -------- ------
Net Income (Loss) Before Extraord. Items $18,174 1.11% $18,093 1.10%
Cumulative Effect of Change in
Accounting for Income Taxes -- 0.00% -- 0.00%
-------- ------ -------- ------
Net Income (Loss) $18,174 1.11% $18,093 1.10%
Estimated Core Earnings
- -----------------------
Net Income $18,174 1.11% $18,093 1.10%
Addback(Deduct): Non-Recurring (Inc)/Exp (1,398) -0.09% (1,579) -0.10%
Tax Effect 525 0.03% 600 0.04%
-------- ------ -------- ------
Estimated Core Income $17,301 1.06% $17,114 1.04%
Memo:
Coverage Ratio (2) 158.42% 155.78%
Efficiency Ratio (3) 55.63% 58.26%
Effective Tax Rate 37.58% 37.97%
</TABLE>
(1) Ratios are as a percent of average assets.
(2) Net interest income divided by operating expenses.
(3) Operating expenses as a percent of the sum of net interest income and other
income (excluding gains on sale).
(4) Reflects the twelve months ended May 31, 1998 for Compass and June 30, 1998
for Sandwich.
(5) Reflects the twelve months ended July 31, 1998 for Compass and June 30, 1998
for Sandwich.
Source: Prospectus.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
September 4, 1998
Page 7
Compass' earnings diminished nominally based on updated financial
data, primarily as operating expenses and the effective tax rate increased,
which were offset by improved results in other key areas of operations. Overall,
net income decreased from $13.2 million for the twelve months ended May 31, 1998
to $13.1 million for the twelve months ended July 31, 1998. The Bank's return on
average assets ("ROA") decreased slightly to 1.16 percent.
Compass' net interest income increased modestly for the most recent
trailing 12 month period, while the ratio as a percent of average assets
increased by only 1 basis point to equal 3.78 percent of average assets for the
twelve months ended July 31, 1998. The increase in net interest income is
primarily attributable to expansion of interest-earning assets.
Non-interest income increased modestly based on updated financial
data through July 31, 1998. Specifically, non-interest income increased by
approximately $27,000 to equal $5.7 million, but the ratio declined slightly to
0.50 percent of average assets.
Compass' operating expenses increased to $26.4 million, equal to
2.33 percent of average assets, versus $25.4 million for the twelve months ended
May 31, 1998. As discussed in the Original Appraisal, operating expenses are
expected to realize further increases following the conversion as a result of
the leveraged ESOP amortization expense and the expense associated with
operating as a public company. Additionally, Compass has plans to build a new
executive office facility in downtown New Bedford at a cost of up to $18
million, which will result in significant new depreciation and property tax
expenses.
Compass' efficiency ratio (operating expenses as a percent of the
sum of net interest income and other operating income) of approximately 56.00
percent for the most recent 12 months reflected an increase from the 52.98
percent ratio reported for the twelve months ended May 31, 1998, with the
deterioration largely reflecting growth in operating expenses.
Provisions for loan losses decreased marginally to $1.4 million for
the 12 months ended July 31, 1998, versus $1.5 million for the twelve months
ended May 31, 1998.
Non-operating income increased marginally for the most recent
twelve months, as lower interest rates fueled increased loan originations,
increasing gains on the sale of loans.
Pro Forma Impact of Sandwich Merger
-----------------------------------
On a pro forma basis, the acquisition of Sandwich is projected to
impact Compass's income statement in several ways. First, there are certain
non-recurring merger expenses anticipated concurrent with the merger;
specifically, such expenses are expected to include financial advisory fees,
costs related to data processing, and the expense of the change of control
provisions in the Sandwich management contracts. Overall, total
acquisition-related expenses are projected to equal $5.0 million on a pre-tax
basis ($4.0 million after-tax), most of which will be incurred at the time of,
or shortly following, the merger.
The pro forma income statement impact of the merger is shown in
Table 2. The impact of the conversion and the one-time merger costs are captured
in the pro forma adjustments set forth in the valuation analysis. On a pro forma
basis, net interest income as a percent of average assets declines marginally
(3.78 percent of average assets on a stand-alone basis and 3.68 percent for the
merged bank); non-interest operating income is subject to a slight
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
September 4, 1998
Page 8
decrease (from 0.50 percent of average assets to 0.49 percent for the merged
Bank); and the operating expense ratio is inflated from 2.33 percent to 2.36
percent of average assets. On a pro forma basis (before the impact of the
conversion offering), net income, adjusted for net non-operating items, is
subject to a slight decrease from 1.10 percent to 1.04 percent of average
assets. Compass estimates pre-tax cost savings in the range of $1.5 million in
the first year following the acquisition, increasing to $1.8 million and $2.0
million in the second and third year following the acquisition, respectively.
2. Peer Group Financial Comparisons
--------------------------------
Consistent with the Peer Group financial comparison set forth in
the Original Appraisal and First Update, the comparative analysis reflects
Compass incorporating the impact of the Sandwich merger. Such data were derived
from the prospectus and the analyses set forth in the discussion of recent
financial results for Compass.
Financial Condition
-------------------
In general, the comparative balance sheet ratios for the Bank and
the Peer Group did not vary significantly from the ratios examined in the
earlier appraisal analyses. Relative to the Peer Group, the Bank's
interest-earning asset composition continued to reflect a higher level of loans
and a lower level of MBS and cash and investments.
The Peer Group continues to be comparably capitalized relative to
Compass (merged basis) on both a reported and tangible capital basis, before the
conversion transaction impact. Specifically, the Bank's reported and tangible
capital ratios on a merged basis as of July 31, 1998, equaled 8.9 percent and
8.7 percent, respectively. On a post-conversion basis, the Bank's pro forma
capital is anticipated to exceed the Peer Group's average. As discussed in the
Original Appraisal and First Update, the Bank's higher pro forma capital will
provide greater leverage potential than the Peer Group, although in the
intermediate term the higher capital will lead to a pronounced disadvantage in
terms of return on equity ("ROE").
The Bank's interest-earning assets ("IEA") position (including cash
and equivalents) has reduced to 94.0 percent, which continues to fall short of
the Peer Group average of 96.8 percent. The Bank also continues to maintain a
comparable ratio of interest-bearing liabilities ("IBL"), equal to 90.1 percent
of assets as of July 31, 1998, relative to the Peer Group's ratio of 90.2
percent, reflecting the Bank's comparable capitalization. The strengthened
capital position from conversion, the potential withdrawal of deposits to
purchase conversion stock and the reinvestment of proceeds should enhance
Compass' financial position and earnings power.
Updated growth rates for the Bank and the Peer Group suggest little
change relative to the trends noted in the First Update (the Bank's growth rates
are annual rates for the nine months ended July 31, 1998 while the Peer Group's
growth rates are for the most recent trailing twelve month period for which data
is publicly available). In this regard, growth of assets continues to fall
slightly short of the Peer Group asset growth, although loans and MBS increased
more rapidly. The Bank's asset growth was funded with relatively strong deposit
growth, as borrowings diminished in comparison to growth of borrowings
experienced by the Peer Group.
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of June 30, 1998
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
----------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref.Stock
----------- ------ ------ -------- -------- ------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
------------
July 31, 1998 12.9 72.3 8.8 83.9 6.2 0.0 8.9 0.2 8.7 0.0
SAIF-Insured Thrifts 18.9 67.5 10.3 68.6 15.9 0.1 13.5 0.3 13.2 0.0
All Public Companies 19.5 66.7 10.4 69.1 15.7 0.1 13.3 0.3 13.0 0.0
State of MA 21.4 66.0 9.8 70.3 16.8 0.0 11.5 0.2 11.3 0.0
Comparable Group Average 25.1 57.8 13.9 69.4 20.8 0.0 8.4 0.3 8.0 0.0
New England Companies 25.1 57.8 13.9 69.4 20.8 0.0 8.4 0.3 8.0 0.0
Comparable Group
----------------
New England Companies
---------------------
ABBK Abington Bancorp of MA 12.4 62.7 21.5 63.3 27.2 0.0 6.4 0.6 5.8 0.0
BKC American Bank of Waterbury CT 28.7 58.1 9.6 69.5 20.9 0.0 8.7 0.3 8.4 0.0
ANDB Andover Bancorp, Inc. of MA 12.5 73.6 11.7 69.8 21.1 0.0 8.2 0.0 8.2 0.0
BFD BostonFed Bancorp of MA 10.8 83.6 3.5 61.6 29.7 0.0 7.8 0.3 7.5 0.0
FESX First Essex Bancorp of MA 23.2 57.9 13.6 70.7 20.0 0.0 7.1 2.0 5.2 0.0
FFES First Fed of E. Hartford CT 60.9 21.0 16.5 60.0 32.2 0.0 7.2 0.0 7.2 0.0
FAB FirstFed America Bancorp of MA 7.8 67.8 21.1 52.8 36.0 0.0 8.9 0.0 8.9 0.0
MECH MECH Financial Inc of CT 25.8 62.0 6.9 71.7 17.4 0.0 9.7 0.0 9.7 0.0
MASB MassBank Corp. of Reading MA 36.5 30.7 31.4 87.0 0.1 0.0 11.8 0.2 11.6 0.0
MDBK Medford Bancorp, Inc. of MA 30.3 50.4 16.2 73.4 16.7 0.0 8.9 0.5 8.5 0.0
MWBX MetroWest Bank of MA 27.5 68.4 1.1 83.7 7.9 0.0 7.3 0.0 7.3 0.0
<CAPTION>
Balance Sheet Annual Growth Rates Regulatory Capital
------------------------------------------------------------- -------------------------
Cash and Loans Borrows. Net Tng Net
Assets Investments & MBS Deposits &Subdebt Worth Worth Tangible Core Reg.Cap.
------ ----------- ------ -------- -------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
------------
July 31, 1998 9.42 46.63 14.83 10.06 -5.65 14.06 14.41 0.00 0.00 0.00
SAIF-Insured Thrifts 14.64 10.22 12.12 9.57 13.19 3.45 3.23 11.35 11.39 22.97
All Public Companies 14.64 9.93 12.67 9.40 12.86 4.08 3.67 11.40 11.25 22.51
State of MA 14.51 10.88 14.81 9.17 8.50 8.11 7.56 8.95 10.29 18.11
Comparable Group Average 10.61 23.23 8.29 7.64 5.29 7.71 6.34 7.07 7.93 17.36
New England Companies 10.61 23.23 8.29 7.64 5.29 7.71 6.34 7.07 7.93 17.36
Comparable Group
----------------
New England Companies
---------------------
ABBK Abington Bancorp of MA 8.97 46.60 4.39 11.34 -1.75 0.29 1.50 NM 7.44 16.05
BKC American Bank of Waterbury CT 13.15 19.67 9.14 6.48 36.35 18.14 19.37 NM 7.55 13.22
ANDB Andover Bancorp, Inc. of MA 11.30 17.07 11.09 5.63 33.12 13.21 13.21 NM 8.21 15.13
BFD BostonFed Bancorp of MA 8.43 -12.79 12.14 12.13 4.21 -3.72 -3.90 NM NM NM
FESX First Essex Bancorp of MA 5.57 19.11 1.02 27.59 -35.74 8.03 -9.74 5.03 5.03 10.01
FFES First Fed of E. Hartford CT -0.32 -4.87 8.63 1.56 -5.89 11.59 11.59 7.25 7.25 24.50
FAB FirstFed America Bancorp of MA 28.88 96.33 24.80 -4.34 NM -6.10 -6.10 7.46 7.46 16.22
MECH MECH Financial Inc of CT 15.92 NM -3.99 3.83 NM 9.99 9.99 NM 9.61 16.65
MASB MassBank Corp. of Reading MA 2.68 5.08 1.09 1.28 -16.65 13.56 12.07 NM 10.63 34.75
MDBK Medford Bancorp, Inc. of MA 5.85 -12.83 17.89 1.07 29.27 5.23 7.15 8.54 8.54 15.62
MWBX MetroWest Bank of MA 16.23 58.92 4.92 17.44 4.73 14.57 14.57 NM 7.59 11.48
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The
information provided in this table has been obtained from sources
we believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
September 4, 1998
Page 10
Income and Expense Trends
-------------------------
Compass' profitability (merged basis) remained above the Peer Group
average, equal to 1.10 percent of average assets for the twelve months ended
July 31, 1998, while the Peer Group's earnings equaled 0.97 percent of average
assets. As described in the Original Appraisal and First Update, Compass on a
merged basis maintains a comparative advantage in terms of net interest income
and other operating income, which was only partially offset by its higher
operating expenses.
Neither Compass nor the Peer Group's net interest margin changed
significantly incorporating updated financial data (the net interest margin
equaled 3.68 percent and 3.06 percent of assets for the Bank and Peer Group,
respectively). Compass' advantage, on a merged basis, is the result of both
higher asset yields and a more favorable cost of funds.
Loan loss provisions diminished for the Peer Group and, thus,
approximated the level reported by Compass equal to 0.12 percent of average
assets.
Compass continues to generate modestly higher levels of
non-interest income relative to the Peer Group, equal to 0.47 percent and 0.41
percent of average assets, respectively. Compass continued to maintain a higher
operating expense ratio, equal to 2.31 percent of average assets versus an
average of 1.98 percent for the Peer Group. As discussed in the Original
Appraisal, Compass' higher operating expense ratio is the result of several
factors including: (1) the Peer Group's greater wholesale leveraging; (2)
Compass' greater revenue diversification efforts; and (3) Compass' greater
diversification into higher risk weight loans as well as the higher asset mix in
loans, which require greater administration. Following the conversion and
acquisition transactions, there are expected to be opposing forces on Compass'
operating expense ratio. First, merger synergies are expected to lead to a
reduction in operating expenses (primarily compensation and benefits). Such cost
savings are expected to be partially offset by some consolidation expenses and
increased marketing, the cost of the Employee Stock Ownership Plan, the cost of
operating as a public company and the costs related to the construction of a new
headquarters facility.
Taking together the components of core net income through a review
of the efficiency ratio (operating expenses divided by net interest income and
non-interest operating income) indicates a slight advantage for the Peer Group,
with an efficiency ratio of 57.06 percent versus 58.26 percent for Compass
(merged basis). Compass' efficiency ratio is expected to improve on a
post-conversion basis with the investment of the net conversion proceeds and the
net impact of potential merger synergies and public company/stock plan expense.
Non-operating income equaled 0.10 percent of average assets for the
Bank and 0.14 percent of average assets for the Peer Group.
Compass' effective tax rate of 37.97 percent continues to compare
closely to the Peer Group's effective tax rate of 34.69 percent, reflecting the
fully taxable status of both the Bank and the Peer Group.
<PAGE>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended June 30, 1998
<TABLE>
<CAPTION>
Net Interest Income Other Income G&A/Other Exp.
---------------------------- ------------------- ----------------
Loss NII Total
Net Provis. After Loan R.E. Other Other G&A Goodwill
Income Income Expense NII on IEA Provis. Fees Oper. Income Income Expense Amort.
------ ------ ------- ------ ------- ------- ---- ----- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
- ------------
July 31, 1998 1.10 7.44 3.76 3.68 0.12 3.56 0.00 -0.02 0.49 0.47 2.31 0.05
SAIF-Insured Thrifts 0.91 7.40 4.14 3.26 0.13 3.13 0.10 0.01 0.31 0.43 2.20 0.02
All Public Companies 0.93 7.39 4.08 3.32 0.13 3.19 0.10 0.01 0.32 0.44 2.23 0.03
State of MA 1.17 7.27 3.78 3.48 0.06 3.42 0.05 0.00 0.28 0.33 2.19 0.02
Comparable Group Average 0.97 7.09 4.02 3.06 0.12 2.94 0.06 -0.01 0.36 0.41 1.98 0.03
New England Companies 0.97 7.09 4.02 3.06 0.12 2.94 0.06 -0.01 0.36 0.41 1.98 0.03
Comparable Group
- ----------------
New England Companies
- ---------------------
ABBK Abington Bancorp of MA 0.86 7.09 4.02 3.07 0.13 2.94 0.10 0.00 0.73 0.83 2.68 0.07
BKC American Bank of Waterbury CT 1.34 7.10 4.01 3.08 0.28 2.80 0.00 -0.02 0.53 0.51 1.65 0.04
ANDB Andover Bancorp, Inc. of MA 1.19 7.17 4.13 3.05 -0.13 3.18 0.08 -0.03 0.27 0.33 1.71 0.00
BFD BostonFed Bancorp of MA 0.71 7.14 3.95 3.20 0.16 3.04 0.10 0.02 0.25 0.36 2.35 0.02
FESX First Essex Bancorp of MA 0.84 7.42 4.38 3.04 0.15 2.89 0.05 -0.03 0.21 0.22 1.84 0.06
FFES First Fed of E. Hartford CT 0.59 6.71 4.45 2.26 0.06 2.20 0.00 0.00 0.17 0.17 1.36 0.00
FAB FirstFed America Bancorp of MA 0.59 6.89 4.24 2.65 0.14 2.50 0.19 0.00 0.21 0.40 2.06 0.00
MECH MECH Financial Inc of CT 1.00 7.21 3.70 3.51 0.18 3.33 0.10 0.02 0.77 0.89 2.62 0.00
MASB MassBank Corp. of Reading MA 1.17 6.61 3.77 2.84 0.02 2.81 0.00 0.00 0.20 0.20 1.34 0.03
MDBK Medford Bancorp, Inc. of MA 1.07 6.92 3.82 3.10 0.01 3.10 0.00 0.00 0.25 0.25 1.57 0.11
MWBX MetroWest Bank of MA 1.26 7.69 3.81 3.89 0.35 3.54 0.00 -0.02 0.35 0.32 2.59 0.00
<CAPTION>
Non-Op. Items Yields, Costs, and Spreads
-------------- -------------------------
MEMO: MEMO:
Net Extrao. Yield Cost Yld-Cost Assets/ Effective
Gains Items On Assets Of Funds Spread FTE Emp. Tax Rate
------- ------- --------- -------- ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
- ------------
July 31, 1998 0.10 0.00 7.66 4.17 3.49 3,508 37.97
SAIF-Insured Thrifts 0.07 0.00 7.51 4.75 2.76 4,316 36.77
All Public Companies 0.07 0.00 7.49 4.67 2.82 4,288 36.81
State of MA 0.15 0.00 7.46 4.31 3.15 4,168 36.87
Comparable Group Average 0.14 0.00 7.28 4.44 2.84 4,432 34.69
New England Companies 0.14 0.00 7.28 4.44 2.84 4,432 34.69
Comparable Group
- ----------------
New England Companies
- ---------------------
ABBK Abington Bancorp of MA 0.32 0.00 7.31 4.37 2.94 2,952 36.10
BKC American Bank of Waterbury CT 0.32 0.00 7.29 4.44 2.85 5,233 31.28
ANDB Andover Bancorp, Inc. of MA 0.04 0.00 7.35 4.53 2.82 4,937 35.60
BFD BostonFed Bancorp of MA 0.22 0.00 7.31 4.35 2.96 3,848 42.81
FESX First Essex Bancorp of MA 0.18 0.00 7.79 4.81 2.97 4,888 39.88
FFES First Fed of E. Hartford CT -0.07 0.00 6.82 4.80 2.02 5,215 36.38
FAB FirstFed America Bancorp of MA 0.17 0.00 7.12 4.88 2.24 4,415 42.12
MECH MECH Financial Inc of CT 0.01 0.00 7.37 4.00 3.37 4,045 38.07
MASB MassBank Corp. of Reading MA 0.25 0.00 6.70 4.30 2.40 5,108 38.08
MDBK Medford Bancorp, Inc. of MA 0.08 0.00 7.15 4.23 2.92 4,487 38.49
MWBX MetroWest Bank of MA 0.03 0.00 7.92 4.15 3.76 3,618 2.71
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The
information provided in this table has been obtained from sources
we believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
September 4, 1998
Page 12
3. Stock Market Conditions
-----------------------
Since the date of the First Update, the stock market has continued
to be highly volatile with significant changes from day-to-day and even within a
given trading day. Prices continue to be affected by concerns on the Asian and
Russian markets in particular and all emerging markets generally. Additionally,
many market participants remain concerned over the future direction of corporate
earnings with all the foregoing factors fueling the market sell-off into early
September. On September 4, 1998, the DJIA closed at 7640.25, a decrease of 958
points or 11.1 percent since the date of the First Update.
Thrift issues have continued to underperform the broader stock
market over the period since the First Update. On September 4, 1998, the SNL
Index for all publicly-traded thrifts closed at 622.5, a decline of 16.0 percent
since the date of the First Update and a reduction of nearly 29 percent since
the date of the Original Appraisal. The decline in the prices of financial
institutions has been broad based given the concerns about earnings,
particularly with respect to larger banks which may have exposure to Asia, Latin
America and eastern Europe. Additionally, the flat yield curve has given many
cause for concern about the future direction of earnings for savings
institutions.
Consistent with the SNL index, the pricing measures for all
publicly-traded thrifts and the Peer Group declined since the date of the First
Update, and all 11 Peer Group companies were trading at lower prices as of
September 4, 1998. A comparative pricing analysis of all publicly-traded
thrifts, the Peer Group and recent conversions is shown in the table below,
based on market prices as of August 7, 1998 and September 4, 1998.
Average Pricing Characteristics
<TABLE>
<CAPTION>
At August 7, At September 4, %
1998 1998 Change
----------- ------------------ ------
<S> <C> <C> <C>
Peer Group
- ----------
Price/Earnings (x) 15.63x 12.31x (21.2)%
Price/Core Earnings (x) 17.07 13.89 (18.6)
Price/Book (%) 171.58% 138.42% (19.3)
Price/Assets (%) 14.29 11.52 (19.4)
Publicly-Traded Thrifts
- -----------------------
Price/Earnings (x) 18.92x 17.02x (10.0)%
Price/Core Earnings (x) 19.73 17.83 (9.6)
Price/Book (%) 148.35% 128.54% (13.4)
Price/Assets (%) 18.85 16.05 (14.9)
Recent Conversions(1)
- ---------------------
Price/Core Earnings (x)(2) 23.58x 20.32x (13.8)%
Price/Book (%) 97.17% 84.01 (13.5)
</TABLE>
(1) Ratios based on conversions completed for prior three months.
(2) Companies with P/E multiples of greater than 30x have been excluded from
the average.
<PAGE>
RP Financial, LC.
Table 5
Pricing Characteristics and After-Market Trends
Recent Conversions Completed (Last Three Months)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Institutional Information Pre-Conversion Data Offering Information Contribution to
--------------------------- Charitable Found.
Financial Info. Asset Quality
- ------------------------------------------------------------------------------------------------------------------------------
Conversion Equity/ NPAs/ Res. Gross % of Exp./ % of
Institution State Date Ticker Assets Assets Assets Cov. Proc. Mid. Proc. Form Offering
- ----------- ----- ---- ------ ------ ------ ------ ---- ----- ---- ----- ---- --------
($Mil) (%) (%)(2) (%) ($Mil.) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
- --------------------
CFS Bancorp, Inc. IN* 07/24/98 CITZ $1,267 7.68% 0.97% 43% $178.5 132% 1.8% Stock 1.70%
Carnegie Financial Corp. PA 07/13/98 Pink 17 7.05% 3.12% 233% 2.4 132% 10.9% N.A. N.A.
United Community Financial OH 07/09/98 UCFC 1,049 13.73% 0.98% 59% 334.7 132% 1.3% Stock 5.00%
PCB Holding Company IN 07/02/98 Pink 22 9.51% 0.00% N.M. 4.0 132% 7.9% N.A. N.A.
Hudson River Bancorp NY* 07/01/98 HRBT 665 10.13% 2.66% 46% 173.4 132% 1.7% N.A. N.A.
First Kansas Financial Corp. KS 06/29/98 FKAN 94 7.36% 0.05% 398% 15.5 132% 3.2% N.A. N.A.
Anson Bancorp, Inc. NC 06/26/98 Pink 21 18.46% 1.25% 37% 5.9 89% 8.3% N.A. N.A.
Averages - Standard Conversions: $ 448 10.56% 1.29% 136% $102.0 126% 5.0% N.A. N.A.
Medians - Standard Conversions: $ 94 9.51% 0.98% 53% $ 15.5 132% 3.2% N.A. N.A.
Second-Step Conversions
- -----------------------
Homestead Financial, Inc. LA* 07/20/98 HSTD $ 62 9.72% 0.97% 43% $ 11.2 132% 4.1% N.A. N.A.
PSB Bancorp PA* 07/17/98 PSBI 134 11.58% 1.97% 9% 16.1 115% 3.0% N.A. N.A.
Thistle Group Holdings PA 07/14/98 THTL 281 10.41% 0.27% 133% 78.6 100% 1.7% N.A. N.A.
Averages - 2nd Step Conversions: $ 159 10.57% 1.07% 62% $ 35.3 116% 2.9% N.A. N.A.
Medians - 2nd Step Conversions: $ 134 10.41% 0.97% 43% $ 16.1 115% 3.0% N.A. N.A.
Averages - All Conversions: $ 361 10.56% 1.22% 111% $ 82.0 123% 4.4% N.A. N.A.
Medians - All Conversions: $ 114 9.93% 0.98% 46% $ 15.8 132% 3.1% N.A. N.A.
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional Information Insider Purchases Pro Forma Data
--------------------------------------
Pricing Ratios(4) Financial Charac.
- ------------------------------------------------------------------------------------------------------------------------------------
Benefit Plans
------------- Initial
Conversion Recog. Mgmt.& Dividend Core
Institution State Date Ticker ESOP Plans Dirs. Yield P/TB P/E(5) P/A ROA TE/A ROE
- ----------- ----- ---- ------ ---- ----- ----- ----- ---- ------ --- --- ---- ---
(%) (%) (%)(3) (%) (%) (x) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
- --------------------
CFS Bancorp, Inc. IN* 07/24/98 CITZ 8.0% 4.0% 3.3% 0.00% 91.9% 28.0x 16.0% 0.6% 16.3% 3.6%
Carnegie Financial Corp. PA 07/13/98 Pink 8.0% 4.0% 12.8% 0.00% 79.2% N.M. 12.9% N.M. 16.3% N.M.
United Community Financial OH 07/09/98 UCFC 8.0% 4.0% 0.1% 0.00% 80.2% 17.4 25.9% 1.5% 32.3% 4.6%
PCB Holding Company IN 07/02/98 Pink 0.0% 4.0% 6.7% 0.00% 71.0% 22.2 15.6% 0.7% 21.9% 3.2%
Hudson River Bancorp NY* 07/01/98 HRBT 8.0% 4.0% 1.6% 0.00% 82.0% 21.4 21.9% 0.9% 26.7% 3.3%
First Kansas Financial Corp. KS 06/29/98 FKAN 8.0% 4.0% 5.7% 0.00% 77.2% 16.3 14.4% 0.9% 18.7% 4.7%
Anson Bancorp, Inc. NC 06/26/98 Pink 0.0% 4.0% 9.2% 0.00% 64.7% 19.9 22.2% 1.1% 34.3% 3.3%
Averages - Standard Conversions: 5.7% 4.0% 5.6% 0.00% 78.0% 20.9x 18.4% 1.0% 23.8% 3.8%
Medians - Standard Conversions: 8.0% 4.0% 5.7% 0.00% 79.2% 20.7x 16.0% 0.9% 21.9% 3.5%
Second-Step Conversions
- -----------------------
Homestead Financial, Inc. LA* 07/20/98 HSTD 8.0% 4.0% 2.9% 2.00% 96.1% 28.2x 20.8% 0.7% 21.7% 3.4%
PSB Bancorp PA* 07/17/98 PSBI 8.0% 4.0% 3.3% 0.00% 106.3% 27.1 21.1% 0.8% 19.8% 3.9%
Thistle Group Holdings PA 07/14/98 THTL 8.0% 4.0% 5.6% 0.00% 92.7% 19.0 25.8% 1.4% 27.8% 4.9%
Averages - 2nd Step Conversions: 8.0% 4.0% 3.9% 0.67% 98.4% 24.8x 22.6% 1.0% 23.1% 4.1%
Medians - 2nd Step Conversions: 8.0% 4.0% 3.3% 0.00% 96.1% 27.1x 21.1% 0.8% 21.7% 3.9%
Averages - All Conversions: 6.4% 4.0% 5.1% 0.20% 84.1% 22.2x 19.7% 1.0% 23.6% 3.9%
Medians - All Conversions: 8.0% 4.0% 4.4% 0.00% 81.1% 21.4x 20.9% 0.9% 21.8% 3.6%
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Institutional Information Post-IPO Pricing Trends
-----------------------
Closing Price:
- --------------------------------------------------------------------------------------------------------------------
First After After
Conversion IPO Trading % First % First %
Institution State Date Ticker Price Day Change Week(6) Change Month(7) Change
- ----------- ----- ---- ------ ----- --- ------ ------- ------ -------- ------
($) ($) (%) ($) (%) ($) (%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
- --------------------
CFS Bancorp, Inc. IN* 07/24/98 CITZ $10.00 $11.44 14.4% $10.81 8.1% $10.00 0.0%
Carnegie Financial Corp. PA 07/13/98 Pink 10.00 11.81 18.1% 10.25 2.5% 10.94 9.4%
United Community Financial OH 07/09/98 UCFC 10.00 15.00 50.0% 16.00 60.0% 15.75 57.5%
PCB Holding Company IN 07/02/98 Pink 10.00 11.50 15.0% 12.12 21.2% 10.88 8.7%
Hudson River Bancorp NY* 07/01/98 HRBT 10.00 12.56 25.6% 13.50 35.0% 13.38 33.8%
First Kansas Financial Corp. KS 06/29/98 FKAN 10.00 12.31 23.1% 12.25 22.5% 11.63 16.3%
Anson Bancorp, Inc. NC 06/26/98 Pink 10.00 12.00 20.0% 12.06 20.6% 12.37 23.7%
Averages - Standard Conversions: $10.00 $12.37 23.7% $12.43 24.3% $12.13 21.3%
Medians - Standard Conversions: $10.00 $12.00 20.0% $12.12 21.2% $11.63 16.3%
Second-Step Conversions
- -----------------------
Homestead Financial, Inc. LA* 07/20/98 HSTD $10.00 $ 9.31 -6.9% $ 9.25 -7.5% $ 8.44 -15.6%
PSB Bancorp PA* 07/17/98 PSBI 10.00 9.19 -8.1% 9.13 -8.8% 7.81 -21.9%
Thistle Group Holdings PA 07/14/98 THTL 10.00 9.94 -0.6% 9.81 -1.9% 9.00 -10.0%
Averages - 2nd Step Conversions: $10.00 $ 9.48 -5.2% $ 9.40 -6.1% $ 8.42 -15.8%
Medians - 2nd Step Conversions: $10.00 $ 9.31 -6.9% $ 9.25 -7.5% $ 8.44 -15.6%
Averages - All Conversions: $10.00 $11.51 15.1% $11.52 15.2% $11.02 10.2%
Medians - All Conversions: $10.00 $11.66 16.6% $11.44 14.4% $10.91 -15.6%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: * - Appraisal performed by RP Financial; "NT" - Not Traded; "NA" - Not
Applicable, Not Available.
(1) Non-OTS regulated thrift.
(2) As reported in summary pages of prospectus.
(3) As reported in prospectus.
(4) Does not take into account the adoption of SOP 93-6.
(5) Excludes impact of special SAIF assessment on earnings.
(6) Latest price if offering less than one week old.
(7) Latest price if offering more than one week but less than one month old.
(8) Simultaneously converted to commercial bank charter.
September 4, 1998
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Market Pricing Comparatives
Prices As of September 4, 1998
<TABLE>
<CAPTION>
Per Share Data
Market ----------------
Capitalization Pricing Ratios(3)
--------------- Core Book ---------------------------------------
Price/ Market 12-Mth Value/
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 16.07 135.28 0.89 13.33 17.49 126.88 16.12 131.22 18.13
All Public Companies 16.34 153.38 0.94 13.30 17.02 128.54 16.05 133.58 17.83
Special Selection Grouping(8) 9.57 141.26 0.47 11.30 21.15 84.01 20.20 84.01 20.32
State of MA 18.03 77.11 1.29 14.05 13.57 137.50 14.47 142.38 15.95
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CITZ CFS Bancorp, Inc. of IN 9.13 207.50 0.40 10.88 25.36 83.92 14.61 83.92 22.83
FKAN First Kansas Financial of KS 10.13 15.74 0.61 12.95 16.61 78.22 14.62 78.22 16.61
HSTD Homestead Bancorp, Inc. of LA 7.44 11.00 0.36 10.40 20.67 71.54 15.49 71.54 20.67
HRBT Hudson River Bancorp Inc of NY 10.56 183.09 0.47 12.20 25.76 86.56 23.14 86.56 22.47
PSBI PSB Bancorp Inc. of PA 7.13 22.11 0.37 9.41 19.27 75.77 15.01 75.77 19.27
THTL Thistle Group Holdings of PA 8.50 76.50 0.53 10.79 16.04 78.78 21.90 78.78 16.04
UCFC United Community Fin. of OH 14.13 472.86 0.58 12.47 24.36 113.31 36.62 113.31 24.36
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Amount/ Payout Total Equity/ NPAs/ Reported Core
Financial Institution Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
- --------------------- --------- ------ ------- ------ ------- ------- ------- ------- ------- -------
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.30 1.86 29.39 1,095 13.81 0.63 0.90 7.73 0.86 7.24
All Public Companies 0.31 1.87 29.26 1,186 13.56 0.63 0.93 8.21 0.89 7.67
Special Selection Grouping(8) 0.11 1.54 0.00 600 23.49 0.56 0.96 4.05 0.99 4.17
State of MA 0.36 2.12 28.63 630 11.46 0.42 1.17 12.18 1.07 10.76
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CITZ CFS Bancorp, Inc. of IN 0.00 0.00 0.00 1,421 17.41 0.67 0.58 3.31 0.64 3.68
FKAN First Kansas Financial of KS 0.00 0.00 0.00 108 18.69 0.05 0.88 4.71 0.88 4.71
HSTD Homestead Bancorp, Inc. of LA 0.80 10.75 NM 71 21.66 0.27 0.75 3.46 0.75 3.46
HRBT Hudson River Bancorp Inc of NY 0.00 0.00 0.00 815 26.74 1.66 0.90 3.36 1.03 3.85
PSBI PSB Bancorp Inc. of PA 0.00 0.00 0.00 147 19.81 NA 0.78 3.93 0.78 3.93
THTL Thistle Group Holdings of PA 0.00 0.00 0.00 349 27.80 0.22 1.37 4.91 1.37 4.91
UCFC United Community Fin. of OH 0.00 0.00 0.00 1,291 32.31 0.51 1.50 4.65 1.50 4.65
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month data,
adjusted to omit non-operating items (including the SAIF assessment) on a
tax effected basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/CORE = Price to estimated core earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month estimated core
earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month earnings and average equity and assets balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
(8) Includes Converted Last 3 Mths (no MHC);
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been
obtained from sources we believe are reliable, but we cannot guarantee
the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
September 4, 1998
Page 15
The "new issue" market is separate and distinct from the market for
seasoned issues like the Peer Group companies. Accordingly, as discussed in the
Original Appraisal and First Update, RP Financial has considered the pro forma
pricing and trading level of recently converted companies in this updated
appraisal. Since the date of the First Update, the market for new issues has
weakened in concert with the decline in the market overall. Importantly, while
no new issues have come to market since the date of the First Update, the
average pricing of the recently converted Peer Group (i.e., companies which have
converted in the last three months) has declined by 13.5 percent since the date
of the First Update. The average pro forma price/tangible book and core
price/earnings ratios of the recent conversions equaled 84.01 percent and 20.32
times, respectively, as of September 4, 1998. Importantly, the Bank's conversion
pricing characteristics share some similarities with the second step offerings
as a result of the Exchange Shares issued to Sandwich Bancorp shareholders.
One recent conversion involved a concurrent stock acquisition of a
publicly-traded thrift, similar to Compass' transaction. Specifically, CFS
Bancorp converted July 24, 1998, contemporaneously acquiring SuburbFed Bancorp,
Inc., utilizing its newly-issued stock as the transaction consideration. As of
September 4, 1998, CFS Bancorp was trading at $9.13 per share, or 8.7 percent
below its issue price, which equates to 84.01 percent of pro forma book value
and 22.83 times core earnings.
As noted in the Original Appraisal and First Update, the pricing
ratios of the better capitalized but lower earning recently converted thrifts
suggest that the investment community has determined to discount their stock
price on a book basis, until the earnings improve through redeployment and
leveraging of the proceeds over the longer term.
Summary of Adjustments
- ----------------------
Based on the foregoing, we have changed one key valuation parameter
since the First Update, as described more fully below.
<TABLE>
<CAPTION>
Previous Current Change in
Key Valuation Parameters Valuation Adjustment Valuation Adjustment
- ------------------------ -------------------- ---------------------
<S> <C> <C>
Financial Condition No Adjustment No Change
Profitability, Growth and Viability of Earnings Slight Downward No Change
Asset Growth No Adjustment No Change
Primary Market Area No Adjustment No Change
Dividends No Adjustment No Change
Liquidity of the Shares Slight Upward No Change
Marketing of the Issue Slight Downward Moderate
Downward
Management No Adjustment No Change
Effect of Government Regul. & Reg. Reform No Adjustment No Change
</TABLE>
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
September 4, 1998
Page 16
No change in the previous valuation adjustments for financial condition
and profitability were appropriate since Sandwich has not released new
information and the data for Compass and Sandwich on a merged basis has not
changed significantly in comparison to the Peer Group. Likewise, the valuation
parameters of asset growth, primary market area, dividends, liquidity of the
shares, management and effect of government regulation and regulatory reform
were unchanged from the previous valuation.
The general market for thrift stocks moved sharply lower since the date
of the First Update, as indicated by the decline in the SNL Thrift Index, and
the pricing measures for the Peer Group and for all publicly-traded thrifts. The
pricing of recently converted issues has also weakened substantially.
Accordingly, we believe the valuation adjustment for marketing of the issue
should be changed from the slight downward adjustment as set forth in the First
Update to a moderate downward adjustment.
Overall, taking into account the foregoing factors, particularly the
reduction in the pricing ratios of thrifts in general and the Peer Group
specifically, as well as the fallback in the pricing ratios of new issues, we
believe that a reduction in the Bank's valuation ratios are appropriate.
Valuation Approaches
- --------------------
In applying the accepted valuation methodology promulgated by the OTS,
i.e., the pro forma market value approach, we considered the three key pricing
ratios in valuing Compass to-be-issued stock -- price/earnings ("P/E"),
price/book ("P/B"), and price/assets ("P/A") approaches -- all performed on a
pro forma basis including the effects of the conversion proceeds. In computing
the pro forma impact of the conversion and the related pricing ratios, updated
information consistent with the prospectus for the effective tax rate, offering
expenses, reinvestment rate, merger related costs, stock benefit plans, exchange
shares issued to Sandwich Bancorp shareholders, based on a range of Seacoast
trading prices, the impact of Sandwich Bancorp stock held by Compass and the
pooling of interests accounting for the merger was incorporated into the
valuation. The pro assumptions are summarized in Exhibits 3 and 4.
Consistent with the Original Appraisal and First Update, this updated
appraisal continues to be based primarily on fundamental analysis techniques
applied to the Peer Group, including the P/E approach, the P/B approach and the
P/A approach. The updated appraisal also incorporates a technical analysis of
recently completed stock conversions, including principally the P/B approach
which (as discussed in the Original Appraisal) is the most meaningful pricing
ratio as the pro forma P/E ratios reflect an assumed reinvestment rate and do
not yet reflect the actual use of proceeds.
Based on the foregoing, we have concluded that the pro forma market
value range of Seacoast's stock is subject to a decrease. Therefore, as of
September 4, 1998, RP Financial concluded that the pro forma offering value of
Seacoast's stock is $160 million at the midpoint at this time, taking into
account the potential range of exchange ratios in the subsequent acquisition of
Sandwich Bancorp. Assuming a 6.4000 times exchange ratio for the Sandwich
Bancorp stock, the total pro forma market value of all shares is equal to $286.9
million based on a $10.00
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
September 4, 1998
Page 17
per share Seacoast trading price. Assuming a 4.7407 exchange ratio, the pro
forma market value of all Seacoast shares is equal to $254.1 million, reflecting
a Seacoast trading price of $15.00.
1. P/B Approach. The application of the P/B valuation method
requires calculating Seacoast's pro forma market value by applying a valuation
P/B ratio, derived from the Peer Group's P/B ratio, to Seacoast's pro forma book
value taking into account the acquisition of Sandwich Bancorp in a pooling
merger. In applying the P/B approach, we focused on tangible book value. Based
on the $160 million offering amount and assuming a 6.4000 times exchange ratio,
Seacoast's pro forma P/TB ratio was 100.53 percent, which reflects a 2.5 percent
reduction from the 103.09 percent ratio set forth in the First Update. Based on
the midpoint offering amount and a 4.7407 exchange ratio, the P/TB ratio equaled
89.03 percent, which reflects a 5.2 percent reduction from the 93.87 ratio set
forth in the First Update. The P/B valuation discount has narrowed as the Peer
Group's average book pricing multiple fell to a greater extent than for
Seacoast, which we believe is appropriate in view of the relatively greater
reduction in the P/E ratio, as described below.
In addition to the fundamental analysis applied to the Peer
Group, RP Financial utilized a technical analysis of recently completed
conversions as a proxy for anticipated aftermarket trading in Compass conversion
stock. The recent conversions currently trade at an average P/TB ratio
approximating 84 percent of book value. We believe the current pro forma pricing
of Compass relative to recently converted companies is appropriate in view of
its more leveraged equity and higher pro forma ROE and ROA which translates into
a comparatively lower pro forma P/E multiple.
2. P/E Approach. The application of the P/E valuation method
requires calculating Seacoast's pro forma market value by applying a valuation
P/E multiple, derived from the Peer Group's P/E multiple, times the pro forma
earnings base. In applying this technique, we considered both reported earnings
and a recurring earnings base, that is, earnings adjusted to exclude any
one-time non-operating and extraordinary items, plus the estimated after-tax
earnings benefit from reinvestment of net conversion proceeds. Compass' reported
earnings (incorporating Sandwich Bancorp) were $18.1 million for the twelve
months ended June 30, 1998. In deriving core earnings, the adjustments made to
reported pre-tax earnings were the gains on the sale of investments and loans,
which, on a tax effected basis, indicated adjusted earnings of approximately
$17.1 million. Similar types of adjustments were applied to the Peer Group in
the calculation of their core earnings (Note: see Exhibit 5).
Based on Compass' reported and estimated core earnings, and
incorporating the impact of the pro forma assumptions discussed previously,
Seacoast's pro forma reported and core P/E multiples incorporating a $160
million offering amount and a 6.4000 times exchange ratio were 13.30 and 13.93
times, respectively, which reflects an approximate reduction of 13 percent from
the midpoint ratios in the First Update. Incorporating a 4.7407 exchange ratio
for Sandwich Bancorp, Seacoast's pro forma P/E and P/Core multiples are equal to
11.77 times and 12.33 times, respectively, which reflects a reduction of
approximately 16 percent. In deriving the earnings based pricing multiples, we
also considered the potential long-term benefits of the
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
September 4, 1998
Page 18
merger with Sandwich Bancorp. RP Financial also considered the impact of SOP
93-6 in examining the P/E ratios.
3. P/A Approach. P/A ratios are generally not as reliable an
indicator of market value, as investors appear to place less weight on total
assets as a determinant of market value. Investors place significantly greater
weight on book value and earnings -- which have received greater weight in our
valuation analysis. At the midpoint of the offering range and assuming a 6.4000
exchange ratio, Seacoast's value equaled 15.36 percent of pro forma assets,
compared to the Peer Group average P/A ratio of 11.52 percent, which implies a
33 percent premium being applied to Seacoast's pro forma P/A ratio, which
approximates the 34 percent premium in the First Update. While generally
emphasized less than the P/E and P/B approaches, the P/A ratio is an indicator
of franchise value and, thus, was considered in the valuation conclusion. The
pro forma P/A ratio has been calculated assuming no deposit withdrawals are made
to fund stock purchases. In all likelihood there will be deposit withdrawals,
which results in understating the pro forma P/A ratio which is computed herein.
Summary
- -------
Based on the foregoing, we have concluded that Seacoast's estimated pro
forma market value should be reduced from the First Update. Accordingly, it is
our opinion, as of September 4, 1998, the pro forma offering value of Seacoast's
conversion is $160 million, taking into account the potential range of exchange
ratios in the subsequent acquisition of Sandwich Bancorp as set forth in the
Merger Agreement. Accordingly, the conversion offering range of value, based on
an offering price of $10.00 per share value, is as follows:
<TABLE>
<CAPTION>
Offering
Dollar Amount Shares Price/Share
------------- ------ -----------
(000) ($)
<S> <C> <C> <C>
Minimum $136,000,000 13,600,000 $10.00
Midpoint 160,000,000 16,000,000 10.00
Maximum 184,000,000 18,400,000 10.00
Supermaximum 211,600,000 21,160,000 10.00
</TABLE>
The total market value of all shares issued, including both offering
shares and shares issued in the merger, is dependent upon the trading price of
Seacoast 10 days following completion of the conversion offering. The following
table reflects the pro forma market value of all shares, both conversion and
merger shares, reflecting an exchange ratio of 6.4000, reflecting a Seacoast 10
day trading price of $10.00 per share, and 4.7407, reflecting a Seacoast 10 day
trading price of $15.00 per share, both representing collars in the exchange
ratio set forth in the Merger Agreement, based on the conversion offering
valuation range.
<PAGE>
Board of Trustees, The 1855 Bancorp
Board of Directors, Compass Bank for Savings
September 4, 1998
Page 19
<TABLE>
<CAPTION>
6.4000 Exchange Ratio(1) 4.7407 Exchange Ratio(2)
------------------------ ------------------------
Total Total Total Total
Market Value Shares Issued Market Value Shares Issued
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Minimum $262,862,320 26,286,232 $230,049,280 23,004,928
Midpoint 286,862,320 28,686,232 254,049,280 25,404,928
Maximum 310,862,320 31,086,232 278,049,280 27,804,928
Supermaximum 338,462,320 33,846,232 305,649,280 30,564,928
</TABLE>
(1) Reflects 12,686,232 Seacoast shares issued to Sandwich Bancorp
shareholders at a 10 day trading price of $10.00 per share.
(2) Reflects 9,404,928 Seacoast shares issued to Sandwich Bancorp
shareholders at a 10 day trading price of $15.00 per share.
The comparative pro forma valuation ratios relative to the Peer Group
are shown in Table 7 incorporating a 6.4000 exchange ratio and Table 8
incorporating a 4.7407 exchange ratio, and the key valuation assumptions are
detailed in Exhibit 3. The pro forma calculations for the range are detailed in
Exhibit 4.
Respectfully submitted,
RP FINANCIAL, LC.
/s/ Ronald S. Riggins
Ronald S. Riggins
President
/s/ James P. Hennessey
James P. Hennessey
Senior Vice President
<PAGE>
RP FINANCIAL, LC.
---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Public Market Pricing
Compass Bank and the Comparables
As of September 4, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------- Pricing Ratios(3) Dividends (4)
--------------- Core Book ---------------------------------- -------------
Price/ Market 12-Mth Value/ Amount/
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share
-------- ------ ------ ------ --- --- --- ---- ------ -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
- ------------
Superrange 10.00 338.46 0.68 9.90 14.74 100.96 17.68 101.84 15.39 0.00
Range Maximum 10.00 310.86 0.71 9.98 13.99 100.25 16.45 101.19 14.63 0.00
Range Midpoint 10.00 286.86 0.75 10.05 13.30 99.52 15.35 100.53 13.93 0.00
Range Minimum 10.00 262.86 0.80 10.13 12.56 98.68 14.24 99.76 13.18 0.00
BIF-Insured Thrifts(7)
- ----------------------
Averages 17.77 245.32 1.20 13.16 14.71 137.15 15.51 145.73 16.45 0.36
Medians --- --- --- --- 13.06 130.18 14.09 133.31 15.33 ---
All Non-MHC State of MA(7)
- --------------------------
Averages 18.41 73.34 1.33 14.30 13.06 138.60 13.20 143.73 15.57 0.37
Medians --- --- --- --- 11.82 130.58 12.80 131.58 13.79 ---
Comparable Group Averages
- -------------------------
Averages 21.87 113.04 1.66 16.49 12.31 138.42 11.52 145.94 13.89 0.41
Medians --- --- --- --- 11.81 139.32 12.80 156.16 13.52 ---
State of MA
- -----------
ABBK Abington Bancorp of MA 15.13 53.44 0.97 9.85 11.82 153.60 9.78 168.49 15.60 0.20
ANDB Andover Bancorp, Inc. of MA 27.50 178.23 2.37 17.61 11.32 156.16 12.80 156.16 11.60 0.72
BYS Bay State Bancorp of MA 19.75 50.07 1.05 23.66 18.81 83.47 17.29 83.47 18.81 0.00
BFD BostonFed Bancorp of MA 16.75 90.33 1.06 15.31 12.69 109.41 8.54 113.41 15.80 0.40
CEBK Central Co-Op. Bank of MA 19.50 38.32 1.20 18.72 12.58 104.17 10.19 114.71 16.25 0.32
FCB Falmouth Bancorp, Inc. of MA 16.75 24.37 0.57 16.24 22.33 103.14 22.05 103.14 29.39 0.24
FESX First Essex Bancorp of MA 16.00 120.99 1.19 12.41 11.51 128.93 9.20 177.78 13.45 0.56
FAB FirstFed America Bancorp of MA 14.31 118.37 0.67 14.10 17.24 101.49 9.00 101.49 21.36 0.20
HIFS Hingham Inst. for Sav. of MA 22.75 29.67 2.14 17.29 10.53 131.58 12.40 131.58 10.63 0.56
HPBC Home Port Bancorp, Inc. of MA 19.75 36.38 1.93 12.32 11.48 160.31 13.97 160.31 10.23 0.80
IPSW Ipswich SB of Ipswich MA 12.00 28.68 0.87 5.46 11.01 219.78 12.27 219.78 13.79 0.16
LSBX Lawrence Savings Bank of MA 12.00 51.92 2.09 9.62 5.66 124.74 15.06 124.74 5.74 0.00
MASB MassBank Corp. of Reading MA 39.75 142.82 2.58 30.44 13.25 130.58 15.36 132.32 15.41 0.00
MFLR Mayflower Co-Op. Bank of MA 18.00 16.20 1.49 14.40 10.84 125.00 11.95 126.85 12.08 0.80
MDBK Medford Bancorp, Inc. of MA 35.00 155.93 2.55 22.78 13.06 153.64 13.73 161.89 13.73 0.80
MWBX MetroWest Bank of MA 6.38 90.93 0.54 3.39 11.81 188.20 13.81 188.20 11.81 0.20
MYST Mystic Financial of MA 11.50 31.18 0.55 13.33 19.49 86.27 15.66 86.27 20.91 0.20
PBKB People's Bancshares of MA 16.75 55.54 0.63 9.79 10.09 171.09 6.47 178.57 26.59 0.56
SISB SIS Bancorp, Inc. of MA(7) 35.06 244.09 2.16 18.89 20.27 185.60 13.25 185.60 16.23 0.00
SWCB Sandwich Bancorp of MA(7) 58.00 118.49 2.32 21.81 23.67 265.93 22.31 273.58 25.00 1.40
WRNB Warren Bancorp of Peabody MA 10.13 80.08 0.80 5.02 12.66 201.79 21.17 201.79 12.66 0.36
Comparable Group
- ----------------
<CAPTION>
Dividends(4) Financial Characteristics(6)
------------- -------------------------------------------------------
Reported Core
Payout Total Equity/ NPAs/ ------------- ----------
Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE SWCB
----- -------- ------ ------ ------ ------ --- --- --- Memo Exchange Total
(%) (%) ($Mil) (%) (%) (%) (%) (%) (%) Offering Shares Value
($Mil) ($Mil) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
- ------------
Superrange 0.00 0.00 1,915 17.51 0.72 1.20 6.85 1.15 6.56 211.60 126.86 338.46
Range Maximum 0.00 0.00 1,889 16.41 0.73 1.18 7.17 1.12 6.85 184.00 126.86 310.86
Range Midpoint 0.00 0.00 1,868 15.43 0.74 1.16 7.49 1.10 7.15 160.00 126.86 286.86
Range Minimum 0.00 0.00 1,846 14.43 0.75 1.13 7.86 1.08 7.49 136.00 126.86 262.86
BIF-Insured Thrifts(7)
- ----------------------
Averages 1.94 28.54 1,662 12.17 0.63 1.07 10.59 1.04 9.82
Medians --- --- --- --- --- --- --- --- ---
All Non-MHC State of MA(7)
- --------------------------
Averages 2.14 29.10 620 10.32 0.41 1.13 12.36 1.02 10.86
Medians --- --- --- --- --- --- --- --- ---
Comparable Group Averages
- -------------------------
Averages 2.11 28.72 997 8.35 0.49 1.01 12.00 0.92 10.94
Medians --- --- --- --- --- --- --- --- ---
State of MA
- -----------
ABBK Abington Bancorp of MA 1.32 20.62 546 6.37 0.14 0.86 12.84 0.65 9.73
ANDB Andover Bancorp, Inc. of MA 2.62 30.38 1,392 8.20 0.38 1.19 14.69 1.16 14.33
BYS Bay State Bancorp of MA 0.00 0.00 290 20.71 0.71 0.92 4.44 0.92 4.44
BFD BostonFed Bancorp of MA 2.39 37.74 1,058 7.80 0.17 0.71 8.62 0.57 6.92
CEBK Central Co-Op. Bank of MA 1.64 26.67 376 9.78 0.40 0.86 8.65 0.67 6.70
FCB Falmouth Bancorp, Inc. of MA 1.43 42.11 111 21.38 NA 1.08 4.71 0.82 3.58
FESX First Essex Bancorp of MA 3.50 47.06 1,315 7.14 0.45 0.84 11.61 0.72 9.94
FAB FirstFed America Bancorp of MA 1.40 29.85 1,316 8.86 0.29 0.59 5.50 0.48 4.44
HIFS Hingham Inst. for Sav. of MA 2.46 26.17 239 9.43 0.17 1.25 13.14 1.24 13.02
HPBC Home Port Bancorp, Inc. of MA 4.05 41.45 260 8.71 0.26 1.45 14.51 1.62 16.29
IPSW Ipswich SB of Ipswich MA 1.33 18.39 234 5.58 0.80 1.19 21.84 0.95 17.43
LSBX Lawrence Savings Bank of MA 0.00 0.00 345 12.07 0.24 2.58 24.91 2.54 24.56
MASB MassBank Corp. of Reading MA 0.00 0.00 930 11.76 0.20 1.17 10.42 1.00 8.96
MFLR Mayflower Co-Op. Bank of MA 4.44 53.69 136 9.56 0.61 1.15 12.01 1.04 10.78
MDBK Medford Bancorp, Inc. of MA 2.29 31.37 1,135 8.94 0.18 1.07 11.87 1.02 11.30
MWBX MetroWest Bank of MA 3.13 37.04 658 7.34 0.64 1.25 17.03 1.25 17.03
MYST Mystic Financial of MA 1.74 36.36 199 18.16 0.08 0.83 4.45 0.77 4.14
PBKB People's Bancshares of MA 3.34 NM 858 3.78 0.35 0.73 17.51 0.28 6.65
SISB SIS Bancorp, Inc. of MA(7) 0.00 0.00 1,842 7.14 0.27 0.73 10.12 0.91 12.63
SWCB Sandwich Bancorp of MA(7) 2.41 60.34 531 8.39 0.36 0.97 11.94 0.92 11.31
WRNB Warren Bancorp of Peabody MA 3.55 45.00 378 10.49 1.27 1.71 16.06 1.71 16.06
Comparable Group
- ----------------
</TABLE>
<PAGE>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Public Market Pricing
Compass Bank and the Comparables
As of September 4, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------- Pricing Ratios(3)
--------------- Core Book --------------------------------------
Price/ Market 12-Mth Value/
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
------- ------- ------- ------- ------- ------- ------- ------- -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ABBK Abington Bancorp of MA 15.13 53.44 0.97 9.85 11.82 153.60 9.78 168.49 15.60
BKC American Bank of Waterbury CT 20.69 96.97 1.53 12.65 11.37 163.56 14.15 168.62 13.52
ANDB Andover Bancorp, Inc. of MA 27.50 178.23 2.37 17.61 11.32 156.16 12.80 156.16 11.60
BFD BostonFed Bancorp of MA 16.75 90.33 1.06 15.31 12.69 109.41 8.54 113.41 15.80
FESX First Essex Bancorp of MA 16.00 120.99 1.19 12.41 11.51 128.93 9.20 177.78 13.45
FFES First Fed of E. Hartford CT 25.13 68.93 2.30 25.73 11.80 97.67 7.03 97.67 10.93
FAB FirstFed America Bancorp of MA 14.31 118.37 0.67 14.10 17.24 101.49 9.00 101.49 21.36
MECH MECH Financial Inc of CT 23.88 126.44 2.49 17.14 9.59 139.32 13.37 139.32 9.59
MASB MassBank Corp. of Reading MA 39.75 142.82 2.58 30.44 13.25 130.58 15.36 132.32 15.41
MDBK Medford Bancorp, Inc. of MA 35.00 155.93 2.55 22.78 13.06 153.64 13.73 161.89 13.73
MWBX MetroWest Bank of MA 6.38 90.93 0.54 3.39 11.81 188.20 13.81 188.20 11.81
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ --------------- ---------------
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ABBK Abington Bancorp of MA 0.20 1.32 20.62 546 6.37 0.14 0.86 12.84 0.65 9.73
BKC American Bank of Waterbury CT 0.80 3.87 52.29 686 8.65 2.10 1.34 15.26 1.12 12.82
ANDB Andover Bancorp, Inc. of MA 0.72 2.62 30.38 1,392 8.20 0.38 1.19 14.69 1.16 14.33
BFD BostonFed Bancorp of MA 0.40 2.39 37.74 1,058 7.80 0.17 0.71 8.62 0.57 6.92
FESX First Essex Bancorp of MA 0.56 3.50 47.06 1,315 7.14 0.45 0.84 11.61 0.72 9.94
FFES First Fed of E. Hartford CT 0.68 2.71 29.57 980 7.20 0.33 0.59 8.73 0.64 9.42
FAB FirstFed America Bancorp of MA 0.20 1.40 29.85 1,316 8.86 0.29 0.59 5.50 0.48 4.44
MECH MECH Financial Inc of CT 0.00 0.00 0.00 946 9.59 0.46 1.54 15.45 1.54 15.45
MASB MassBank Corp. of Reading MA 0.00 0.00 0.00 930 11.76 0.20 1.17 10.42 1.00 8.96
MDBK Medford Bancorp, Inc. of MA 0.80 2.29 31.37 1,135 8.94 0.18 1.07 11.87 1.02 11.30
MWBX MetroWest Bank of MA 0.20 3.13 37.04 658 7.34 0.64 1.25 17.03 1.25 17.03
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) EPS (core basis) is based on actual trailing twelve month data,
adjusted to omit the impact of non-operating items (including the SAIF
assessment) on a tax effected basis, and is shown on a pro forma basis
where appropriate.
(3) P/E = Price to Earnings; P/B = Price to Book; P/A = Price to Assets;
P/TB = Price to Tangible Book; and P/CORE = Price to Core Earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend
declared.
(5) Indicated twelve month dividend as a percent of trailing twelve month
estimated core earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common
equity and total assets balances.
(7) Excludes from averages and medians those companies the subject of
actual or rumored acquisition activities or unusual operating
characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Public Market Pricing
Compass Bank and the Comparables
As of September 4, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization -------------- Pricing Ratios(3) Dividends(4)
--------------- Core Book ------------------------------------- ------------
Price/ Market 12-Mth Value/ Amount/
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share
-------- ------ ------ ------ --- --- --- ---- ------ -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
- ------------
Superrange 10.00 305.65 0.75 10.97 13.31 91.17 15.96 91.97 13.90 0.00
Range Maximum 10.00 278.05 0.80 11.15 12.51 89.66 14.72 90.51 13.09 0.00
Range Midpoint 10.00 254.05 0.85 11.35 11.77 88.14 13.60 89.03 12.33 0.00
Range Minimum 10.00 230.05 0.91 11.58 10.99 86.36 12.46 87.31 11.53 0.00
BIF-Insured Thrifts(7)
- ----------------------
Averages 17.77 245.32 1.20 13.16 14.71 137.15 15.51 145.73 16.45 0.36
Medians --- --- --- --- 13.06 130.18 14.09 133.31 15.33 ---
All Non-MHC State of MA(7)
- --------------------------
Averages 18.41 73.34 1.33 14.30 13.06 138.60 13.20 143.73 15.57 0.37
Medians --- --- --- --- 11.82 130.58 12.80 131.58 13.79 ---
Comparable Group Averages
- -------------------------
Averages 21.87 113.04 1.66 16.49 12.31 138.42 11.52 145.94 13.89 0.41
Medians --- --- --- --- 11.81 139.32 12.80 156.16 13.52 ---
State of MA
- -----------
ABBK Abington Bancorp of MA 15.13 53.44 0.97 9.85 11.82 153.60 9.78 168.49 15.60 0.20
ANDB Andover Bancorp, Inc. of MA 27.50 178.23 2.37 17.61 11.32 156.16 12.80 156.16 11.60 0.72
BYS Bay State Bancorp of MA 19.75 50.07 1.05 23.66 18.81 83.47 17.29 83.47 18.81 0.00
BFD BostonFed Bancorp of MA 16.75 90.33 1.06 15.31 12.69 109.41 8.54 113.41 15.80 0.40
CEBK Central Co-Op. Bank of MA 19.50 38.32 1.20 18.72 12.58 104.17 10.19 114.71 16.25 0.32
FCB Falmouth Bancorp, Inc. of MA 16.75 24.37 0.57 16.24 22.33 103.14 22.05 103.14 29.39 0.24
FESX First Essex Bancorp of MA 16.00 120.99 1.19 12.41 11.51 128.93 9.20 177.78 13.45 0.56
FAB FirstFed America Bancorp of MA 14.31 118.37 0.67 14.10 17.24 101.49 9.00 101.49 21.36 0.20
HIFS Hingham Inst. for Sav. of MA 22.75 29.67 2.14 17.29 10.53 131.58 12.40 131.58 10.63 0.56
HPBC Home Port Bancorp, Inc. of MA 19.75 36.38 1.93 12.32 11.48 160.31 13.97 160.31 10.23 0.80
IPSW Ipswich SB of Ipswich MA 12.00 28.68 0.87 5.46 11.01 219.78 12.27 219.78 13.79 0.16
LSBX Lawrence Savings Bank of MA 12.00 51.92 2.09 9.62 5.66 124.74 15.06 124.74 5.74 0.00
MASB MassBank Corp. of Reading MA 39.75 142.82 2.58 30.44 13.25 130.58 15.36 132.32 15.41 0.00
MFLR Mayflower Co-Op. Bank of MA 18.00 16.20 1.49 14.40 10.84 125.00 11.95 126.85 12.08 0.80
MDBK Medford Bancorp, Inc. of MA 35.00 155.93 2.55 22.78 13.06 153.64 13.73 161.89 13.73 0.80
MWBX MetroWest Bank of MA 6.38 90.93 0.54 3.39 11.81 188.20 13.81 188.20 11.81 0.20
MYST Mystic Financial of MA 11.50 31.18 0.55 13.33 19.49 86.27 15.66 86.27 20.91 0.20
PBKB People's Bancshares of MA 16.75 55.54 0.63 9.79 10.09 171.09 6.47 178.57 26.59 0.56
SISB SIS Bancorp, Inc. of MA(7) 35.06 244.09 2.16 18.89 20.27 185.60 13.25 185.60 16.23 0.00
SWCB Sandwich Bancorp of MA(7) 58.00 118.49 2.32 21.81 23.67 265.93 22.31 273.58 25.00 1.40
WRNB Warren Bancorp of Peabody MA 10.13 80.08 0.80 5.02 12.66 201.79 21.17 201.79 12.66 0.36
Comparable Group
- ----------------
<CAPTION>
Dividends(4) Financial Characteristics(6)
-------------- -------------------------------------------------------
Reported Core
Payout Total Equity/ NPAs/ --------------- ---------------
Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE SWCB
----- -------- ------ ------ ------ ------- ------ ------ ------- Memo Exchange Total
(%) (%) ($Mil) (%) (%) (%) (%) (%) (%) Offering Shares Value
($Mil) ($Mil) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compass Bank
- ------------
Superrange 0.00 0.00 1,915 17.51 0.72 1.20 6.85 1.15 6.56 211.60 94.05 305.65
Range Maximum 0.00 0.00 1,889 16.41 0.73 1.18 7.17 1.12 6.85 184.00 94.05 278.05
Range Midpoint 0.00 0.00 1,868 15.43 0.74 1.16 7.49 1.10 7.15 160.00 94.05 254.05
Range Minimum 0.00 0.00 1,846 14.43 0.75 1.13 7.86 1.08 7.49 136.00 94.05 230.05
BIF-Insured Thrifts(7)
- ----------------------
Averages 1.94 28.54 1,662 12.17 0.63 1.07 10.59 1.04 9.82
Medians --- --- --- --- --- --- --- --- ---
All Non-MHC State of MA(7)
- --------------------------
Averages 2.14 29.10 620 10.32 0.41 1.13 12.36 1.02 10.86
Medians --- --- --- --- --- --- --- --- ---
Comparable Group Averages
- -------------------------
Averages 2.11 28.72 997 8.35 0.49 1.01 12.00 0.92 10.94
Medians --- --- --- --- --- --- --- --- ---
State of MA
- -----------
ABBK Abington Bancorp of MA 1.32 20.62 546 6.37 0.14 0.86 12.84 0.65 9.73
ANDB Andover Bancorp, Inc. of MA 2.62 30.38 1,392 8.20 0.38 1.19 14.69 1.16 14.33
BYS Bay State Bancorp of MA 0.00 0.00 290 20.71 0.71 0.92 4.44 0.92 4.44
BFD BostonFed Bancorp of MA 2.39 37.74 1,058 7.80 0.17 0.71 8.62 0.57 6.92
CEBK Central Co-Op. Bank of MA 1.64 26.67 376 9.78 0.40 0.86 8.65 0.67 6.70
FCB Falmouth Bancorp, Inc. of MA 1.43 42.11 111 21.38 NA 1.08 4.71 0.82 3.58
FESX First Essex Bancorp of MA 3.50 47.06 1,315 7.14 0.45 0.84 11.61 0.72 9.94
FAB FirstFed America Bancorp of MA 1.40 29.85 1,316 8.86 0.29 0.59 5.50 0.48 4.44
HIFS Hingham Inst. for Sav. of MA 2.46 26.17 239 9.43 0.17 1.25 13.14 1.24 13.02
HPBC Home Port Bancorp, Inc. of MA 4.05 41.45 260 8.71 0.26 1.45 14.51 1.62 16.29
IPSW Ipswich SB of Ipswich MA 1.33 18.39 234 5.58 0.80 1.19 21.84 0.95 17.43
LSBX Lawrence Savings Bank of MA 0.00 0.00 345 12.07 0.24 2.58 24.91 2.54 24.56
MASB MassBank Corp. of Reading MA 0.00 0.00 930 11.76 0.20 1.17 10.42 1.00 8.96
MFLR Mayflower Co-Op. Bank of MA 4.44 53.69 136 9.56 0.61 1.15 12.01 1.04 10.78
MDBK Medford Bancorp, Inc. of MA 2.29 31.37 1,135 8.94 0.18 1.07 11.87 1.02 11.30
MWBX MetroWest Bank of MA 3.13 37.04 658 7.34 0.64 1.25 17.03 1.25 17.03
MYST Mystic Financial of MA 1.74 36.36 199 18.16 0.08 0.83 4.45 0.77 4.14
PBKB People's Bancshares of MA 3.34 NM 858 3.78 0.35 0.73 17.51 0.28 6.65
SISB SIS Bancorp, Inc. of MA(7) 0.00 0.00 1,842 7.14 0.27 0.73 10.12 0.91 12.63
SWCB Sandwich Bancorp of MA(7) 2.41 60.34 531 8.39 0.36 0.97 11.94 0.92 11.31
WRNB Warren Bancorp of Peabody MA 3.55 45.00 378 10.49 1.27 1.71 16.06 1.71 16.06
Comparable Group
- ----------------
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Public Market Pricing
Compass Bank and the Comparables
As of September 4, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------- Pricing Ratios(3) Dividends(4)
--------------- Core Book --------------------------------------- ----------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ABBK Abington Bancorp of MA 15.13 53.44 0.97 9.85 11.82 153.60 9.78 168.49 15.60 0.20 1.32 20.62
BKC American Bank of Waterbury CT 20.69 96.97 1.53 12.65 11.37 163.56 14.15 168.62 13.52 0.80 3.87 52.29
ANDB Andover Bancorp, Inc. of MA 27.50 178.23 2.37 17.61 11.32 156.16 12.80 156.16 11.60 0.72 2.62 30.38
BFD BostonFed Bancorp of MA 16.75 90.33 1.06 15.31 12.69 109.41 8.54 113.41 15.80 0.40 2.39 37.74
FESX First Essex Bancorp of MA 16.00 120.99 1.19 12.41 11.51 128.93 9.20 177.78 13.45 0.56 3.50 47.06
FFES First Fed of E. Hartford CT 25.13 68.93 2.30 25.73 11.80 97.67 7.03 97.67 10.93 0.68 2.71 29.57
FAB FirstFed America Bancorp of MA 14.31 118.37 0.67 14.10 17.24 101.49 9.00 101.49 21.36 0.20 1.40 29.85
MECH MECH Financial Inc of CT 23.88 126.44 2.49 17.14 9.59 139.32 13.37 139.32 9.59 0.00 0.00 0.00
MASB MassBank Corp. of Reading MA 39.75 142.82 2.58 30.44 13.25 130.58 15.36 132.32 15.41 0.00 0.00 0.00
MDBK Medford Bancorp, Inc. of MA 35.00 155.93 2.55 22.78 13.06 153.64 13.73 161.89 13.73 0.80 2.29 31.37
MWBX MetroWest Bank of MA 6.38 90.93 0.54 3.39 11.81 188.20 13.81 188.20 11.81 0.20 3.13 37.04
<CAPTION>
Financial Characteristics(6)
-------------------------------------------------------
Reported Core
Total Equity/ NPAs/ --------------- ---------------
Assets Assets Assets ROA ROE ROA ROE
------- ------- ------- ------- ------- ------- -------
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
ABBK Abington Bancorp of MA 546 6.37 0.14 0.86 12.84 0.65 9.73
BKC American Bank of Waterbury CT 686 8.65 2.10 1.34 15.26 1.12 12.82
ANDB Andover Bancorp, Inc. of MA 1,392 8.20 0.38 1.19 14.69 1.16 14.33
BFD BostonFed Bancorp of MA 1,058 7.80 0.17 0.71 8.62 0.57 6.92
FESX First Essex Bancorp of MA 1,315 7.14 0.45 0.84 11.61 0.72 9.94
FFES First Fed of E. Hartford CT 980 7.20 0.33 0.59 8.73 0.64 9.42
FAB FirstFed America Bancorp of MA 1,316 8.86 0.29 0.59 5.50 0.48 4.44
MECH MECH Financial Inc of CT 946 9.59 0.46 1.54 15.45 1.54 15.45
MASB MassBank Corp. of Reading MA 930 11.76 0.20 1.17 10.42 1.00 8.96
MDBK Medford Bancorp, Inc. of MA 1,135 8.94 0.18 1.07 11.87 1.02 11.30
MWBX MetroWest Bank of MA 658 7.34 0.64 1.25 17.03 1.25 17.03
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) EPS (core basis) is based on actual trailing twelve month data, adjusted to
omit the impact of non-operating items (including the SAIF assessment) on a
tax effected basis, and is shown on a pro forma basis where appropriate.
(3) P/E = Price to Earnings; P/B = Price to Book; P/A = Price to Assets; P/TB =
Price to Tangible Book; and P/CORE = Price to Core Earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated twelve month dividend as a percent of trailing twelve month
estimated core earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and total
assets balances.
(7) Excludes from averages and medians those companies the subject of actual or
rumored acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
EXHIBITS
<PAGE>
LIST OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
1 Stock Prices: As of September 4, 1998
2 Peer Group Core Earnings Analysis
3 Pro Forma Analysis Sheet
4 Pro Forma Effect of Conversion Proceeds
5 Firm Qualifications Statement
</TABLE>
<PAGE>
EXHIBIT 1
Stock Prices
As of September 4, 1998
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-A
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHC)
- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(284) 16.19 7,501 140.9 23.31 14.79 16.73 -3.32 -0.94 -16.78
NYSE Traded Companies(8) 26.96 39,352 1,248.9 44.71 26.31 27.97 -4.99 -22.40 -30.57
AMEX Traded Companies(22) 13.95 3,354 43.4 20.91 13.41 14.82 -5.34 -9.51 -19.86
NASDAQ Listed OTC Companies(254) 16.11 7,053 121.0 22.98 14.62 16.61 -3.09 0.41 -16.14
California Companies(18) 19.65 14,594 456.3 30.67 18.54 20.60 -6.13 -15.17 -24.71
Florida Companies(6) 15.38 25,809 322.6 24.64 14.52 15.82 -2.15 -14.52 -29.73
Mid-Atlantic Companies(56) 16.12 10,969 163.7 23.74 14.61 16.55 -2.23 -2.02 -18.61
Mid-West Companies(131) 16.04 5,391 101.2 22.45 14.54 16.62 -3.48 1.39 -15.63
New England Companies(7) 16.08 8,374 171.7 25.13 15.07 16.89 -5.67 -11.35 -23.46
North-West Companies(11) 15.84 11,557 220.4 22.76 14.83 16.15 -1.90 -2.73 -10.97
South-East Companies(44) 16.11 4,475 88.4 23.02 14.61 16.51 -2.84 2.85 -12.32
South-West Companies(6) 13.08 2,788 40.7 19.23 12.17 14.08 -7.17 -0.23 -23.87
Western Companies (Excl CA)(5) 15.75 2,142 37.0 22.10 15.33 16.10 -2.23 -1.63 -21.26
Thrift Strategy(239) 15.87 5,138 86.3 22.56 14.54 16.38 -3.11 -0.37 -15.89
Mortgage Banker Strategy(27) 19.01 21,472 499.8 29.03 17.01 19.80 -4.30 -0.70 -22.87
Real Estate Strategy(8) 16.36 8,482 109.2 24.59 14.66 17.63 -9.37 -3.03 -13.61
Diversified Strategy(7) 18.97 46,406 974.4 29.52 17.22 18.76 -0.01 -16.70 -26.55
Retail Banking Strategy(3) 14.25 4,499 71.5 23.42 13.40 14.92 -4.15 -7.30 -27.37
Companies Issuing Dividends(220) 16.74 7,389 151.6 23.96 15.24 17.29 -3.26 -0.73 -16.96
Companies Without Dividends(64) 14.27 7,889 103.8 21.05 13.25 14.77 -3.50 -1.66 -16.16
Equity/Assets (less than)6%(18) 16.01 20,754 339.7 26.06 14.47 17.04 -6.64 -10.82 -26.26
Equity/Assets 6-12%(125) 17.43 7,956 184.3 25.28 15.51 18.06 -3.95 2.78 -18.56
Equity/Assets (greater than)12%(141) 15.14 5,376 77.4 21.26 14.22 15.55 -2.34 -2.83 -14.01
Converted Last 3 Mths (no MHC)(6) 9.98 14,346 161.1 12.49 8.82 9.88 1.16 -0.18 8.98
Actively Traded Companies(30) 21.93 27,211 659.2 32.90 20.19 22.65 -2.98 -5.50 -24.07
Market Value Below $20 Million(60) 13.05 1,118 13.9 18.28 12.00 13.36 -3.02 -3.60 -17.62
Holding Company Structure(256) 16.51 7,377 143.4 23.75 15.11 17.05 -3.25 -1.06 -16.58
Assets Over $1 Billion(61) 19.17 24,567 501.6 29.29 17.62 19.65 -2.28 -5.71 -21.38
Assets $500 Million-$1 Billion(36) 17.88 5,695 93.3 25.27 16.20 18.49 -3.48 0.48 -16.99
Assets $250-$500 Million(67) 16.36 3,638 54.5 23.45 14.77 17.13 -4.38 2.25 -14.99
Assets less than $250 Million(120) 14.16 1,705 23.5 19.76 13.02 14.59 -3.23 -0.66 -15.38
Goodwill Companies(116) 17.08 13,566 240.8 25.16 15.47 17.58 -2.90 -0.76 -19.16
Non-Goodwill Companies(166) 15.67 3,368 74.2 22.17 14.42 16.24 -3.60 -1.28 -15.47
Acquirors of FSLIC Cases(8) 29.45 30,789 1,217.5 43.56 28.63 30.30 -2.67 -10.21 -20.90
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
EPS(3) EPS(3) Share Share(4) Share
-------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(284) 0.98 0.92 13.60 13.15 122.89
NYSE Traded Companies(8) 2.10 1.80 18.89 18.45 247.00
AMEX Traded Companies(22) 0.79 0.76 13.95 13.67 112.83
NASDAQ Listed OTC Companies(254) 0.96 0.91 13.43 12.97 120.59
California Companies(18) 1.51 1.40 16.88 16.14 229.01
Florida Companies(6) 0.78 0.48 11.72 10.98 143.03
Mid-Atlantic Companies(56) 1.02 0.97 13.21 12.47 140.23
Mid-West Companies(131) 0.91 0.87 13.62 13.34 109.37
New England Companies(7) 1.20 1.11 13.67 13.06 186.14
North-West Companies(11) 0.95 0.87 12.79 11.72 98.82
South-East Companies(44) 0.91 0.85 13.10 12.90 95.16
South-West Companies(6) 1.15 1.13 12.64 12.24 153.68
Western Companies (Excl CA)(5) 0.84 0.84 15.73 14.88 102.66
Thrift Strategy(239) 0.94 0.90 13.76 13.40 114.45
Mortgage Banker Strategy(27) 1.22 1.17 13.33 11.94 185.20
Real Estate Strategy(8) 1.32 1.23 11.90 11.51 165.09
Diversified Strategy(7) 0.99 0.68 10.32 10.07 125.94
Retail Banking Strategy(3) 0.87 0.25 14.03 13.50 206.61
Companies Issuing Dividends(220) 1.03 0.95 13.69 13.23 121.34
Companies Without Dividends(64) 0.78 0.82 13.29 12.88 128.25
Equity/Assets (less than)6%(18) 1.15 1.26 11.40 10.27 230.21
Equity/Assets 6-12%(125) 1.14 1.02 13.11 12.41 154.37
Equity/Assets (greater than)12%(141) 0.81 0.79 14.31 14.18 81.74
Converted Last 3 Mths (no MHC)(6) 0.47 0.49 11.62 11.62 50.48
Actively Traded Companies(30) 1.52 1.60 15.37 14.36 190.23
Market Value Below $20 Million(60) 0.75 0.65 12.86 12.75 97.62
Holding Company Structure(256) 0.98 0.93 13.81 13.36 123.77
Assets Over $1 Billion(61) 1.31 1.26 13.99 12.72 185.79
Assets $500 Million-$1 Billion(36) 1.05 0.98 13.67 13.15 138.03
Assets $250-$500 Million(67) 0.99 0.93 14.09 13.75 122.65
Assets less than $250 Million(120) 0.78 0.72 13.14 13.06 87.98
Goodwill Companies(116) 1.08 1.00 13.46 12.34 147.92
Non-Goodwill Companies(166) 0.91 0.87 13.76 13.76 106.81
Acquirors of FSLIC Cases(8) 2.71 2.36 21.10 20.32 255.34
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1996 or 1997.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public
(non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of
institutions included in the respective averages. All figures have been
adjusted for stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(55) 17.88 12,179 243.9 26.37 16.38 18.37 -1.91 -1.33 -21.42
NYSE Traded Companies(5) 27.01 50,883 1,253.0 38.25 24.80 26.60 1.14 8.68 -14.50
AMEX Traded Companies(5) 15.68 2,424 39.4 23.20 14.85 16.20 -3.35 0.94 -18.33
NASDAQ Listed OTC Companies(45) 17.06 8,733 148.1 25.33 15.56 17.65 -2.10 -2.79 -22.61
California Companies(1) 15.75 7,697 121.2 24.00 15.75 17.75 -11.27 -11.91 -18.18
Mid-Atlantic Companies(20) 19.64 21,084 461.7 28.07 17.34 19.65 -0.28 1.92 -20.83
New England Companies(29) 17.61 7,091 118.8 26.29 16.45 18.45 -2.58 0.87 -19.40
North-West Companies(2) 13.38 5,866 79.5 19.71 12.54 13.75 -2.61 -7.10 -26.10
South-East Companies(3) 12.17 2,611 26.9 20.96 12.09 12.48 -3.40 -34.65 -40.73
Thrift Strategy(43) 18.13 8,283 173.5 26.54 16.75 18.55 -1.73 -1.97 -20.85
Mortgage Banker Strategy(6) 18.67 28,408 596.5 28.00 15.80 19.45 -2.07 5.06 -25.04
Real Estate Strategy(2) 12.94 7,801 100.7 19.19 12.38 13.63 -2.32 -0.05 -15.05
Diversified Strategy(4) 16.25 35,884 596.0 25.50 15.15 16.90 -3.83 -6.19 -26.12
Companies Issuing Dividends(44) 18.31 14,118 286.1 27.05 16.67 18.67 -1.37 -2.48 -22.56
Companies Without Dividends(11) 16.09 4,035 66.6 23.50 15.14 17.13 -4.20 3.50 -16.59
Equity/Assets (less than)6%(2) 14.38 2,853 42.1 24.25 13.25 14.00 2.34 -3.11 -26.82
Equity/Assets 6-12%(36) 19.29 13,464 293.7 27.98 17.54 20.10 -3.19 1.20 -19.87
Equity/Assets (greater than)12%(17) 15.55 10,782 171.0 23.49 14.49 15.54 0.07 -6.02 -23.77
Converted Last 3 Mths (no MHC)(1) 7.13 3,101 22.1 11.27 6.50 7.13 0.00 -3.52 -36.73
Actively Traded Companies(14) 23.05 19,948 420.6 33.43 21.62 24.26 -3.42 0.43 -20.79
Market Value Below $20 Million(5) 14.24 1,379 16.7 21.54 13.21 14.95 -3.80 -0.69 -22.42
Holding Company Structure(42) 17.98 9,878 179.3 26.18 16.36 18.36 -1.18 -1.13 -20.15
Assets Over $1 Billion(16) 24.45 31,468 708.2 34.99 21.69 24.80 -1.58 1.07 -18.09
Assets $500 Million-$1 Billion(11) 17.54 9,177 114.0 25.47 16.25 18.22 -0.61 -1.47 -22.78
Assets $250-$500 Million(14) 14.81 3,672 50.2 22.32 14.11 15.54 -3.87 -2.28 -22.01
Assets less than $250 Million(14) 14.13 1,949 23.7 21.76 13.03 14.42 -1.15 -2.86 -23.50
Goodwill Companies(28) 18.34 18,989 377.8 27.01 16.62 18.89 -2.07 2.61 -21.56
Non-Goodwill Companies(26) 17.61 5,414 112.3 25.95 16.30 18.01 -1.46 -5.21 -20.88
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
EPS(3) EPS(3) Share Share(4) Share
-------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(55) 1.30 1.24 13.34 12.85 129.29
NYSE Traded Companies(5) 1.91 1.98 21.02 19.19 135.70
AMEX Traded Companies(5) 1.23 1.02 12.91 12.51 116.78
NASDAQ Listed OTC Companies(45) 1.24 1.18 12.48 12.14 130.02
California Companies(1) 1.79 1.79 13.85 13.81 132.69
Mid-Atlantic Companies(20) 1.18 1.22 14.53 13.90 127.48
New England Companies(29) 1.45 1.29 12.97 12.50 139.84
North-West Companies(2) 1.08 1.05 9.31 9.31 90.08
South-East Companies(3) 0.85 0.87 11.17 10.98 74.97
Thrift Strategy(43) 1.29 1.24 14.06 13.66 128.23
Mortgage Banker Strategy(6) 1.46 1.28 11.72 11.01 145.98
Real Estate Strategy(2) 1.30 1.30 9.43 9.41 90.27
Diversified Strategy(4) 1.17 1.17 9.43 7.81 136.43
Companies Issuing Dividends(44) 1.32 1.24 13.10 12.50 132.53
Companies Without Dividends(11) 1.24 1.25 14.36 14.31 115.70
Equity/Assets (less than)6%(2) 1.38 0.75 7.63 7.42 178.32
Equity/Assets 6-12%(36) 1.45 1.34 12.81 12.11 151.87
Equity/Assets (greater than)12%(17) 1.01 1.09 15.04 14.92 79.71
Converted Last 3 Mths (no MHC)(1) 0.37 0.37 9.41 9.41 47.49
Actively Traded Companies(14) 1.99 1.83 16.44 15.63 168.62
Market Value Below $20 Million(5) 0.97 0.96 12.06 12.01 144.51
Holding Company Structure(42) 1.27 1.23 13.61 13.25 124.10
Assets Over $1 Billion(16) 1.74 1.73 15.83 14.64 152.78
Assets $500 Million-$1 Billion(11) 1.41 1.17 13.14 12.88 142.11
Assets $250-$500 Million(14) 1.10 1.07 11.91 11.68 114.75
Assets less than $250 Million(14) 0.97 0.93 12.24 12.09 110.43
Goodwill Companies(28) 1.34 1.20 13.38 12.40 143.07
Non-Goodwill Companies(26) 1.28 1.29 13.55 13.55 115.88
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1996 or 1997.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public
(non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 14.22 9,807 45.1 23.38 13.46 15.05 -5.05 -9.24 -18.88
BIF-Insured Thrifts(3) 15.90 32,239 269.9 28.09 13.92 15.31 5.31 -3.30 -20.07
NASDAQ Listed OTC Companies(22) 14.48 13,349 80.6 24.12 13.53 15.09 -3.41 -8.31 -19.07
Florida Companies(2) 24.00 6,802 78.2 35.38 22.25 23.00 4.35 -14.68 -26.15
Mid-Atlantic Companies(12) 12.85 11,884 48.8 22.35 11.89 13.67 -4.12 -10.79 -20.96
Mid-West Companies(5) 17.25 2,169 17.8 25.83 16.57 17.92 -3.91 -5.22 -22.30
New England Companies(2) 17.04 46,613 394.8 29.56 15.60 16.72 1.00 -5.27 -15.09
South-East Companies(1) 11.25 4,497 23.8 18.06 11.25 12.50 -10.00 12.50 12.50
Thrift Strategy(20) 14.01 9,149 45.5 22.90 13.18 14.64 -3.41 -7.72 -17.24
Mortgage Banker Strategy(1) 13.88 33,965 117.2 27.88 12.00 15.50 -10.45 -7.22 -30.18
Diversified Strategy(1) 23.19 64,130 640.8 41.13 21.00 22.38 3.62 -19.34 -38.97
Companies Issuing Dividends(16) 15.26 15,762 99.5 25.48 14.32 15.63 -3.01 -10.56 -22.86
Companies Without Dividends(6) 12.81 8,122 39.5 21.18 11.81 13.93 -4.28 -3.43 -10.86
Equity/Assets 6-12%(12) 16.45 16,791 108.9 29.23 15.12 17.26 -4.77 -11.28 -28.78
Equity/Assets (greater than)12%(10) 12.31 9,525 49.1 18.44 11.76 12.68 -1.91 -5.01 -8.27
Holding Company Structure(4) 13.99 9,744 53.2 21.21 12.68 13.67 4.24 2.18 -9.68
Assets Over $1 Billion(5) 16.64 36,299 229.0 27.88 14.80 16.28 2.93 -9.18 -21.16
Assets $500 Million-$1 Billion(3) 10.88 29,095 148.8 17.98 10.19 11.06 -1.63 8.80 8.80
Assets $250-$500 Million(6) 14.56 4,088 20.9 23.60 13.85 15.84 -6.44 -7.86 -16.81
Assets less than $250 Million(8) 13.39 2,645 15.9 22.76 12.82 14.18 -5.60 -10.52 -23.49
Goodwill Companies(7) 15.94 26,781 172.5 26.86 14.56 16.08 -1.70 -9.51 -24.61
Non-Goodwill Companies(15) 13.81 7,150 38.1 22.85 13.05 14.63 -4.21 -7.75 -16.51
MHC Institutions(22) 14.48 13,349 80.6 24.12 13.53 15.09 -3.41 -8.31 -19.07
MHC Converted Last 3 Months(2) 10.32 5,009 21.7 12.16 9.82 10.13 2.01 3.15 3.15
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
EPS(3) EPS(3) Share Share(4) Share
-------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 0.54 0.50 9.01 8.92 75.67
BIF-Insured Thrifts(3) 0.87 0.57 10.00 8.98 85.17
NASDAQ Listed OTC Companies(22) 0.59 0.51 9.17 8.93 77.17
Florida Companies(2) 1.15 0.92 13.28 12.90 215.87
Mid-Atlantic Companies(12) 0.48 0.46 8.25 8.06 66.33
Mid-West Companies(5) 0.63 0.54 10.02 10.02 79.75
New England Companies(2) 1.04 0.65 11.35 10.43 85.04
South-East Companies(1) 0.33 0.30 9.14 9.14 45.06
Thrift Strategy(20) 0.53 0.49 9.13 9.01 73.87
Mortgage Banker Strategy(1) 0.54 0.44 5.56 5.02 68.47
Diversified Strategy(1) 1.60 0.83 13.37 11.52 141.98
Companies Issuing Dividends(16) 0.65 0.54 9.54 9.20 85.34
Companies Without Dividends(6) 0.46 0.44 8.35 8.35 59.48
Equity/Assets 6-12%(12) 0.69 0.54 9.02 8.57 99.02
Equity/Assets (greater than)12%(10) 0.48 0.47 9.33 9.33 52.89
Holding Company Structure(4) 0.53 0.48 8.79 8.48 70.83
Assets Over $1 Billion(5) 0.85 0.62 9.03 8.39 104.85
Assets $500 Million-$1 Billion(3) 0.47 0.47 9.33 9.33 28.09
Assets $250-$500 Million(6) 0.51 0.48 8.42 8.42 71.57
Assets less than $250 Million(8) 0.49 0.46 9.88 9.71 69.21
Goodwill Companies(7) 0.77 0.57 8.74 8.00 99.24
Non-Goodwill Companies(15) 0.51 0.48 9.36 9.36 66.98
MHC Institutions(22) 0.59 0.51 9.17 8.93 77.17
MHC Converted Last 3 Months(2) 0.38 0.37 7.94 7.94 55.10
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1996 or 1997.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public
(non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA(8) 51.75 112,748 5,834.7 82.81 51.38 52.25 -0.96 -3.83 -22.69
BYS Bay State Bancorp of MA* 19.75 2,535 50.1 32.63 19.25 20.38 -3.09 -1.25 -1.25
CFB Commercial Federal Corp. of NE 23.06 42,056 969.8 38.19 22.00 22.50 2.49 -23.87 -35.15
DME Dime Bancorp, Inc. of NY* 22.75 113,533 2,582.9 32.69 19.00 22.81 -0.26 12.68 -24.79
DSL Downey Financial Corp. of CA 23.31 28,105 655.1 35.00 21.67 23.81 -2.10 5.28 -13.92
FED FirstFed Fin. Corp. of CA 14.88 21,215 315.7 26.94 14.75 16.50 -9.82 -13.13 -23.22
GSB Golden State Bancorp of CA(8) 17.75 55,485 984.9 41.81 15.88 17.25 2.90 -41.09 -52.59
GDW Golden West Fin. Corp. of CA 77.06 57,591 4,438.0 114.25 76.13 79.06 -2.53 -10.07 -21.21
GPT GreenPoint Fin. Corp. of NY* 28.94 83,383 2,413.1 42.63 25.19 27.06 6.95 -8.13 -20.23
JSB JSB Financial, Inc. of NY* 46.81 9,833 460.3 59.69 45.00 46.00 1.76 0.00 -6.49
OCN Ocwen Financial Corp. of FL 14.44 60,772 877.5 30.38 14.44 16.31 -11.47 -34.00 -43.24
SIB Staten Island Bancorp of NY* 16.81 45,130 758.6 23.63 15.56 16.75 0.36 40.08 -19.72
WES Westcorp Inc. of Orange CA 9.00 26,374 237.4 23.50 8.88 9.63 -6.54 -58.62 -46.68
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 15.50 2,505 38.8 25.63 15.50 19.13 -18.98 -27.91 -33.70
ANE Alliance Bncp of New Eng of CT* 10.94 2,493 27.3 16.08 10.25 11.00 -0.55 -7.52 -0.55
BKC American Bank of Waterbury CT* 20.69 4,687 97.0 32.56 17.88 21.88 -5.44 10.35 -15.14
BFD BostonFed Bancorp of MA 16.75 5,393 90.3 24.88 16.75 18.50 -9.46 -10.67 -23.45
CNY Carver Bancorp, Inc. of NY 9.50 2,314 22.0 17.13 9.50 11.13 -14.65 -23.63 -41.54
CBK Citizens First Fin.Corp. of IL 14.38 2,526 36.3 22.38 14.38 16.00 -10.12 -14.15 -28.99
EFC EFC Bancorp Inc of IL 10.25 7,491 76.8 14.94 10.00 10.38 -1.25 2.50 2.50
EBI Equality Bancorp, Inc. of MO 13.06 2,518 32.9 16.00 12.50 13.81 -5.43 30.60 -9.93
ESX Essex Bancorp of Norfolk VA(8) 2.19 1,059 2.3 7.94 1.88 2.50 -12.40 12.89 -44.42
FCB Falmouth Bancorp, Inc. of MA* 16.75 1,455 24.4 23.88 16.50 17.00 -1.47 -2.90 -18.29
FAB FirstFed America Bancorp of MA 14.31 8,272 118.4 23.25 14.19 15.38 -6.96 -29.33 -34.60
GAF GA Financial Corp. of PA 13.38 7,220 96.6 22.25 13.38 15.25 -12.26 -27.44 -29.13
HBS Haywood Bancshares, Inc. of NC* 19.00 1,250 23.8 24.00 19.00 19.00 0.00 0.00 -15.56
KNK Kankakee Bancorp, Inc. of IL 24.50 1,380 33.8 37.75 24.50 26.00 -5.77 -17.31 -35.10
KYF Kentucky First Bancorp of KY 13.63 1,241 16.9 15.88 12.63 13.88 -1.80 10.10 -8.77
NBN Northeast Bancorp of ME* 11.00 2,237 24.6 19.50 10.63 12.13 -9.32 4.76 -42.11
NEP Northeast PA Fin. Corp of PA 10.63 6,427 68.3 16.00 9.88 10.19 4.32 6.30 6.30
PDB Piedmont Bancorp, Inc. of NC 9.56 2,751 26.3 11.63 9.50 10.00 -4.40 -8.95 -12.13
SSB Scotland Bancorp, Inc. of NC 11.06 1,914 21.2 19.25 8.13 11.00 0.55 -38.76 11.27
SZB SouthFirst Bancshares of AL 16.63 967 16.1 22.75 15.63 16.88 -1.48 3.94 -26.90
SRN Southern Banc Company of AL 14.00 1,230 17.2 19.13 14.00 14.00 0.00 -12.50 -21.13
SSM Stone Street Bancorp of NC 15.75 1,843 29.0 22.50 15.75 16.75 -5.97 -26.09 -29.02
TSH Teche Holding Company of LA 14.50 3,439 49.9 23.50 14.50 14.75 -1.69 -21.11 -36.26
FTF Texarkana Fst. Fin. Corp of AR 23.00 1,738 40.0 30.63 23.00 24.38 -5.66 -7.56 -8.00
THR Three Rivers Fin. Corp. of MI 16.25 825 13.4 23.50 15.13 16.50 -1.52 1.18 -25.29
WSB Washington SB, FSB of MD 4.88 4,421 21.6 9.50 4.88 5.06 -3.56 -30.29 -46.14
WFI Winton Financial Corp. of OH 11.50 4,014 46.2 20.63 7.88 12.25 -6.12 41.45 12.86
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 42.25 1,092 46.1 45.50 22.06 42.00 0.60 90.14 44.25
FBER 1st Bergen Bancorp of NJ 16.25 2,585 42.0 20.75 14.75 17.25 -5.80 -8.45 -15.05
AFED AFSALA Bancorp, Inc. of NY(8) 13.50 1,319 17.8 20.75 12.25 15.00 -10.00 -15.63 -29.87
ALBK ALBANK Fin. Corp. of Albany NY(8) 55.63 13,222 735.5 74.63 39.75 57.25 -2.83 39.49 8.15
AMFC AMB Financial Corp. of IN 14.50 916 13.3 19.38 14.50 14.75 -1.69 0.00 -8.69
ASBP ASB Financial Corp. of OH 11.50 1,655 19.0 16.75 10.88 10.88 5.70 -12.41 -13.21
ABBK Abington Bancorp of MA* 15.13 3,532 53.4 22.25 13.00 14.88 1.68 -1.63 -27.95
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA(8) 3.74 3.70 28.65 21.85 468.53
BYS Bay State Bancorp of MA* 1.05 1.05 23.66 23.66 114.26
CFB Commercial Federal Corp. of NE 1.46 1.76 15.29 13.55 210.50
DME Dime Bancorp, Inc. of NY* 1.55 0.95 11.72 9.64 184.21
DSL Downey Financial Corp. of CA 2.03 2.10 16.33 16.16 207.51
FED FirstFed Fin. Corp. of CA 1.38 1.31 11.33 11.25 189.04
GSB Golden State Bancorp of CA(8) 1.70 2.04 20.24 16.99 326.52
GDW Golden West Fin. Corp. of CA 6.99 6.84 50.76 50.76 678.36
GPT GreenPoint Fin. Corp. of NY* 1.75 1.79 15.30 8.65 154.15
JSB JSB Financial, Inc. of NY* 4.65 5.22 38.65 38.65 159.00
OCN Ocwen Financial Corp. of FL 0.45 0.04 7.03 6.43 57.68
SIB Staten Island Bancorp of NY* 0.56 0.91 15.75 15.35 66.89
WES Westcorp Inc. of Orange CA 0.28 -1.26 12.60 12.57 138.92
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 1.18 1.10 17.52 17.52 119.02
ANE Alliance Bncp of New Eng of CT* 0.93 0.45 7.90 7.73 101.20
BKC American Bank of Waterbury CT* 1.82 1.53 12.65 12.27 146.27
BFD BostonFed Bancorp of MA 1.32 1.06 15.31 14.77 196.22
CNY Carver Bancorp, Inc. of NY 0.45 0.40 15.36 14.82 189.05
CBK Citizens First Fin.Corp. of IL 0.78 0.44 15.52 15.52 111.27
EFC EFC Bancorp Inc of IL -0.44 0.53 12.56 12.56 53.08
EBI Equality Bancorp, Inc. of MO 0.56 0.01 10.40 10.40 108.56
ESX Essex Bancorp of Norfolk VA(8) -0.44 -0.44 0.04 -0.08 202.45
FCB Falmouth Bancorp, Inc. of MA* 0.75 0.57 16.24 16.24 75.96
FAB FirstFed America Bancorp of MA 0.83 0.67 14.10 14.10 159.06
GAF GA Financial Corp. of PA 1.13 1.05 14.95 14.81 116.10
HBS Haywood Bancshares, Inc. of NC* 1.76 1.76 18.06 17.49 121.60
KNK Kankakee Bancorp, Inc. of IL 2.09 2.00 28.43 24.29 291.26
KYF Kentucky First Bancorp of KY 0.74 0.73 11.61 11.61 66.11
NBN Northeast Bancorp of ME* 0.89 0.81 9.72 8.83 138.86
NEP Northeast PA Fin. Corp of PA -0.20 0.45 13.22 13.22 74.34
PDB Piedmont Bancorp, Inc. of NC 0.60 0.58 7.85 7.85 47.45
SSB Scotland Bancorp, Inc. of NC 0.44 0.44 7.96 7.96 31.91
SZB SouthFirst Bancshares of AL 0.66 0.59 16.75 16.34 168.54
SRN Southern Banc Company of AL 0.42 0.42 14.95 14.84 85.95
SSM Stone Street Bancorp of NC 0.82 0.82 16.64 16.64 60.91
TSH Teche Holding Company of LA 1.12 1.10 16.60 16.60 119.93
FTF Texarkana Fst. Fin. Corp of AR 1.82 1.77 16.23 16.23 109.07
THR Three Rivers Fin. Corp. of MI 1.01 0.94 16.08 16.02 118.86
WSB Washington SB, FSB of MD 0.44 0.30 5.21 5.21 61.87
WFI Winton Financial Corp. of OH 0.80 0.66 5.80 5.68 80.84
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 1.75 1.23 21.85 21.43 238.23
FBER 1st Bergen Bancorp of NJ 0.82 0.82 13.50 13.50 116.35
AFED AFSALA Bancorp, Inc. of NY(8) 0.91 0.93 15.26 15.26 125.80
ALBK ALBANK Fin. Corp. of Albany NY(8) 3.38 3.37 28.70 22.72 312.42
AMFC AMB Financial Corp. of IN 0.94 0.61 15.41 15.41 121.55
ASBP ASB Financial Corp. of OH 0.65 0.65 8.76 8.76 70.35
ABBK Abington Bancorp of MA* 1.28 0.97 9.85 8.98 154.65
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
AABC Access Anytime Bancorp of NM 7.00 1,217 8.5 13.00 6.37 8.25 -15.15 9.89 -36.36
AFBC Advance Fin. Bancorp of WV 14.38 1,074 15.4 20.88 13.88 14.38 0.00 -8.00 -17.26
ALBC Albion Banc Corp. of Albion NY 8.63 752 6.5 14.17 7.75 9.75 -11.49 11.35 -35.26
ABCL Alliance Bancorp, Inc. of IL 17.25 11,435 197.3 29.25 16.75 18.44 -6.45 -22.47 -34.91
ALLB Alliance Bank MHC of PA (19.9) 15.25 3,273 9.9 39.00 15.25 20.00 -23.75 -38.38 -50.81
AHCI Ambanc Holding Co., Inc. of NY* 13.00 4,105 53.4 20.00 12.88 13.75 -5.45 -16.13 -30.67
ASBI Ameriana Bancorp of IN 18.00 3,253 58.6 22.00 17.75 18.75 -4.00 -17.73 -9.46
ABCW Anchor Bancorp Wisconsin of WI 22.19 17,840 395.9 23.25 13.69 22.00 0.86 62.80 21.99
ANDB Andover Bancorp, Inc. of MA* 27.50 6,481 178.2 39.88 24.60 33.00 -16.67 10.44 -14.60
ASFC Astoria Financial Corp. of NY 37.88 26,531 1,005.0 62.50 35.94 38.81 -2.40 -23.29 -32.05
AVND Avondale Fin. Corp. of IL 12.25 3,060 37.5 18.88 12.25 13.00 -5.77 -16.27 -24.62
BCSB BCSB Bankcorp MHC of MD (38.6) 10.44 6,117 24.6 12.63 10.13 10.63 -1.79 4.40 4.40
BKCT Bancorp Connecticut of CT* 16.25 5,114 83.1 25.00 14.94 14.94 8.77 1.56 -22.62
BPLS Bank Plus Corp. of CA 7.25 19,387 140.6 16.13 7.25 8.75 -17.14 -34.86 -42.60
BNKU Bank United Corp. of TX 35.44 31,596 1,119.8 56.00 32.50 32.50 9.05 -11.40 -27.58
BWFC Bank West Fin. Corp. of MI 11.13 2,624 29.2 17.50 11.13 11.75 -5.28 -7.25 -31.00
BANC BankAtlantic Bancorp of FL 9.31 36,676 341.5 17.00 8.63 9.75 -4.51 -26.29 -44.42
BKUNA BankUnited Fin. Corp. of FL 9.50 17,786 169.0 18.50 8.25 9.30 2.15 -23.63 -38.35
BVCC Bay View Capital Corp. of CA 17.00 20,276 344.7 38.00 17.00 17.75 -4.23 -34.62 -53.10
FSNJ Bayonne Banchsares of NJ(8) 13.16 9,094 119.7 17.38 10.00 12.75 3.22 9.12 -1.64
BFSB Bedford Bancshares, Inc. of VA 11.50 2,298 26.4 17.38 10.88 12.38 -7.11 -4.17 -32.35
BFFC Big Foot Fin. Corp. of IL 14.00 2,513 35.2 23.94 12.75 14.75 -5.08 -17.65 -33.33
BYFC Broadway Fin. Corp. of CA 8.25 933 7.7 12.73 8.25 9.75 -15.38 -19.04 -32.76
BRKL Brookline Bncp MHC of MA(47.0) 10.88 29,095 148.8 17.98 10.19 11.06 -1.63 8.80 8.80
CBES CBES Bancorp, Inc. of MO 19.00 940 17.9 26.00 17.38 19.00 0.00 7.04 -14.61
CCFH CCF Holding Company of GA 21.00 895 18.8 24.00 15.00 19.25 9.09 35.83 4.32
CITZ CFS Bancorp, Inc. of IN 9.13 22,727 207.5 11.44 8.38 9.13 0.00 -8.70 -8.70
CFSB CFSB Bancorp of Lansing MI 21.75 8,167 177.6 28.75 15.76 21.75 0.00 35.43 -8.84
CKFB CKF Bancorp of Danville KY 16.50 843 13.9 21.25 15.00 17.38 -5.06 -13.16 -10.81
CNSB CNS Bancorp, Inc. of MO 15.13 1,645 24.9 21.50 14.75 15.50 -2.39 -9.67 -26.20
CSBF CSB Financial Group Inc of IL 10.13 821 8.3 14.00 10.00 10.63 -4.70 -14.73 -24.96
CBCI Calumet Bancorp of Chicago IL 26.50 3,145 83.3 39.00 26.00 26.75 -0.93 -7.28 -20.30
CAFI Camco Fin. Corp. of OH 16.00 5,481 87.7 20.67 11.83 16.63 -3.79 35.25 -5.88
CMRN Cameron Fin. Corp. of MO 16.00 2,434 38.9 22.19 16.00 16.63 -3.79 -9.86 -21.95
CFNC Carolina Fincorp of NC* 8.94 1,906 17.0 18.88 8.88 9.38 -4.69 -49.29 -51.68
CASB Cascade Financial Corp. of WA 12.75 4,266 54.4 16.00 9.60 13.25 -3.77 20.28 20.28
CATB Catskill Fin. Corp. of NY* 12.75 4,486 57.2 19.13 12.75 13.75 -7.27 -21.54 -32.47
CAVB Cavalry Bancorp of TN 18.88 7,538 142.3 25.25 18.50 18.63 1.34 88.80 88.80
CNIT Cenit Bancorp of Norfolk VA 17.75 4,997 88.7 28.58 16.42 18.25 -2.74 4.66 -33.02
CEBK Central Co-Op. Bank of MA* 19.50 1,965 38.3 33.50 19.50 22.00 -11.36 -2.50 -31.58
CENB Century Bancorp, Inc. of NC(8) 13.00 1,271 16.5 39.00 12.88 14.00 -7.14 -50.94 -53.98
COFI Charter One Financial of OH 26.63 127,635 3,398.9 36.38 23.00 26.63 0.00 0.08 -15.62
CVAL Chester Valley Bancorp of PA 26.00 2,444 63.5 35.24 20.00 29.50 -11.86 21.33 -6.68
CLAS Classic Bancshares, Inc. of KY 14.13 1,300 18.4 21.50 12.00 15.25 -7.34 -0.84 -15.64
CBSA Coastal Bancorp of Houston TX 16.00 7,563 121.0 26.67 15.00 18.75 -14.67 -18.66 -31.18
CFCP Coastal Fin. Corp. of SC 19.00 6,256 118.9 20.50 14.72 19.00 0.00 8.39 3.37
CFKY Columbia Financial of KY 12.00 2,671 32.1 17.13 11.75 12.38 -3.07 20.00 20.00
CMSB Commonwealth Bancorp Inc of PA 15.00 15,474 232.1 24.25 13.38 14.00 7.14 -12.43 -24.55
CMSV Commty. Svgs, MHC of FL (48.5)(8) 22.00 5,100 54.3 40.75 22.00 24.00 -8.33 -31.25 -37.82
CFTP Community Fed. Bancorp of MS 15.00 4,398 66.0 21.00 14.50 16.00 -6.25 -17.26 -25.93
CFFC Community Fin. Corp. of VA 12.50 2,569 32.1 16.38 10.75 12.50 0.00 14.89 -9.49
CIBI Community Inv. Bancorp of OH 12.94 1,335 17.3 15.25 9.83 12.50 3.52 25.27 20.15
COOP Cooperative Bancshares of NC 13.38 3,027 40.5 25.00 12.50 14.50 -7.72 -4.43 -45.39
CRZY Crazy Woman Creek Bncorp of WY 13.25 939 12.4 20.00 12.75 13.88 -4.54 -9.43 -11.67
CRSB Crusader Holding Corp of PA 12.75 3,833 48.9 17.86 12.75 13.50 -5.56 N.A. N.A.
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- --------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
AABC Access Anytime Bancorp of NM 1.23 1.12 7.62 7.62 96.07
AFBC Advance Fin. Bancorp of WV 0.89 0.84 14.52 14.52 103.04
ALBC Albion Banc Corp. of Albion NY 0.51 0.48 8.37 8.37 98.56
ABCL Alliance Bancorp, Inc. of IL 1.01 1.24 15.80 15.67 180.87
ALLB Alliance Bank MHC of PA (19.9) 0.61 0.61 9.05 9.05 84.78
AHCI Ambanc Holding Co., Inc. of NY* 0.51 0.52 14.22 14.22 137.73
ASBI Ameriana Bancorp of IN 1.17 0.98 14.03 13.78 115.37
ABCW Anchor Bancorp Wisconsin of WI 1.23 1.07 7.33 7.22 115.34
ANDB Andover Bancorp, Inc. of MA* 2.43 2.37 17.61 17.61 214.83
ASFC Astoria Financial Corp. of NY 2.99 2.71 33.64 24.10 436.30
AVND Avondale Fin. Corp. of IL -1.53 -1.10 15.07 15.07 198.25
BCSB BCSB Bankcorp MHC of MD (38.6) 0.36 0.36 7.28 7.28 44.74
BKCT Bancorp Connecticut of CT* 1.27 1.07 9.58 9.58 96.83
BPLS Bank Plus Corp. of CA 0.39 0.59 9.55 8.77 221.09
BNKU Bank United Corp. of TX 3.50 3.28 21.19 19.25 414.48
BWFC Bank West Fin. Corp. of MI 0.38 0.33 8.88 8.88 69.17
BANC BankAtlantic Bancorp of FL 0.72 0.32 6.96 5.38 102.43
BKUNA BankUnited Fin. Corp. of FL 0.36 0.21 10.29 8.60 201.51
BVCC Bay View Capital Corp. of CA 0.72 1.22 19.43 12.60 282.11
FSNJ Bayonne Banchsares of NJ(8) 0.51 0.51 10.55 10.55 77.01
BFSB Bedford Bancshares, Inc. of VA 0.77 0.76 9.02 9.02 68.11
BFFC Big Foot Fin. Corp. of IL 0.47 0.35 15.16 15.16 87.79
BYFC Broadway Fin. Corp. of CA 0.69 0.44 13.94 13.94 137.67
BRKL Brookline Bncp MHC of MA(47.0) 0.47 0.47 9.33 9.33 28.09
CBES CBES Bancorp, Inc. of MO 1.12 0.80 17.93 17.93 131.61
CCFH CCF Holding Company of GA 0.21 -0.02 12.89 12.89 177.14
CITZ CFS Bancorp, Inc. of IN 0.36 0.40 10.88 10.88 62.51
CFSB CFSB Bancorp of Lansing MI 1.42 1.27 8.08 8.08 103.80
CKFB CKF Bancorp of Danville KY 0.98 0.98 16.06 16.06 74.45
CNSB CNS Bancorp, Inc. of MO 0.53 0.45 14.76 14.76 59.57
CSBF CSB Financial Group Inc of IL 0.41 0.42 13.52 12.76 58.44
CBCI Calumet Bancorp of Chicago IL 3.04 3.06 27.74 27.74 156.43
CAFI Camco Fin. Corp. of OH 1.23 0.89 10.62 9.98 107.32
CMRN Cameron Fin. Corp. of MO 1.01 0.99 18.02 18.02 90.71
CFNC Carolina Fincorp of NC* 0.56 0.63 8.07 8.07 59.76
CASB Cascade Financial Corp. of WA 0.83 0.74 7.36 7.36 104.12
CATB Catskill Fin. Corp. of NY* 0.86 0.85 15.21 15.21 69.01
CAVB Cavalry Bancorp of TN 0.68 0.50 13.37 13.37 45.08
CNIT Cenit Bancorp of Norfolk VA 1.27 1.17 10.32 9.56 130.45
CEBK Central Co-Op. Bank of MA* 1.55 1.20 18.72 17.00 191.38
CENB Century Bancorp, Inc. of NC(8) 0.95 0.94 14.74 14.74 76.21
COFI Charter One Financial of OH 1.31 1.73 11.59 10.91 155.23
CVAL Chester Valley Bancorp of PA 1.39 1.31 13.69 13.69 162.02
CLAS Classic Bancshares, Inc. of KY 0.78 0.98 15.70 13.46 100.86
CBSA Coastal Bancorp of Houston TX 2.04 2.09 15.17 13.21 394.09
CFCP Coastal Fin. Corp. of SC 1.07 0.86 5.81 5.81 98.61
CFKY Columbia Financial of KY 0.22 0.22 14.03 14.03 44.54
CMSB Commonwealth Bancorp Inc of PA 0.86 0.61 12.91 10.17 153.05
CMSV Commty. Svgs, MHC of FL (48.5)(8) 1.01 0.93 16.29 16.29 150.10
CFTP Community Fed. Bancorp of MS 0.66 0.57 13.33 13.33 59.86
CFFC Community Fin. Corp. of VA 0.71 0.68 10.05 10.01 71.32
CIBI Community Inv. Bancorp of OH 0.68 0.68 8.37 8.37 76.21
COOP Cooperative Bancshares of NC 0.79 0.72 10.00 10.00 125.89
CRZY Crazy Woman Creek Bncorp of WY 0.79 0.79 15.34 15.34 65.47
CRSB Crusader Holding Corp of PA 0.97 0.89 6.06 5.74 52.71
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
DNFC D&N Financial Corp. of MI 17.50 9,157 160.2 29.75 15.94 18.75 -6.67 -3.74 -33.96
DCBI Delphos Citizens Bancorp of OH 18.53 1,848 34.2 24.25 15.38 16.13 14.88 12.30 -10.70
DCOM Dime Community Bancorp of NY* 18.00 12,177 219.2 29.31 15.31 18.00 0.00 -7.98 -24.21
ESBF ESB Financial Corp of PA 15.75 5,665 89.2 20.00 14.21 16.25 -3.08 10.84 -10.00
EGLB Eagle BancGroup of IL 15.75 1,177 18.5 21.13 14.00 14.13 11.46 -7.35 -16.58
EBSI Eagle Bancshares of Tucker GA 17.00 5,806 98.7 27.25 16.75 18.25 -6.85 3.03 -22.73
ETFS East Texas Fin. Serv. of TX 13.25 1,539 20.4 16.25 12.67 13.25 0.00 3.92 -16.30
ESBK Elmira Svgs Bank (The) of NY* 24.00 727 17.4 32.25 23.10 25.75 -6.80 3.90 -20.00
EMLD Emerald Financial Corp. of OH 12.00 10,274 123.3 16.00 6.88 11.50 4.35 74.42 8.50
EFBC Empire Federal Bancorp of MT 13.13 2,480 32.6 18.25 12.50 12.50 5.04 -16.63 -23.35
EFBI Enterprise Fed. Bancorp of OH 27.38 2,211 60.5 35.00 19.50 28.00 -2.21 35.21 -13.08
EQSB Equitable FSB of Wheaton MD 23.00 1,223 28.1 34.00 18.75 25.75 -10.68 22.67 -13.21
FCBF FCB Fin. Corp. of Neenah WI 27.25 3,857 105.1 34.00 26.50 28.63 -4.82 1.87 -7.63
FFDF FFD Financial Corp. of OH 17.00 1,445 24.6 24.00 14.75 16.00 6.25 15.25 -5.56
FFLC FFLC Bancorp of Leesburg FL 17.50 3,742 65.5 23.50 16.50 17.00 2.94 -7.06 -19.54
FFWC FFW Corporation of Wabash IN 15.00 1,458 21.9 21.50 14.31 17.13 -12.43 2.53 -21.05
FFYF FFY Financial Corp. of OH 29.50 4,011 118.3 36.88 26.88 32.13 -8.19 6.77 -10.96
FMCO FMS Financial Corp. of NJ 11.25 7,203 81.0 16.67 9.08 11.50 -2.17 33.61 -4.90
FFHH FSF Financial Corp. of MN 14.38 2,933 42.2 21.25 13.38 15.63 -8.00 -18.99 -31.33
FOBC Fed One Bancorp of Wheeling WV(8) 37.38 2,402 89.8 45.50 20.00 36.13 3.46 86.90 35.93
FBCI Fidelity Bancorp of Chicago IL 21.13 2,833 59.9 26.00 19.38 20.25 4.35 -6.09 -17.56
FSBI Fidelity Bancorp, Inc. of PA 18.50 1,974 36.5 28.00 17.00 19.50 -5.13 10.12 -20.26
FFFL Fidelity Bcsh MHC of FL (47.9) 24.00 6,802 78.2 35.38 22.25 23.00 4.35 -14.68 -26.15
FFED Fidelity Fed. Bancorp of IN 3.63 3,127 11.4 10.50 3.63 5.00 -27.40 -57.29 -64.79
FFOH Fidelity Financial of OH 13.00 5,598 72.8 19.88 12.50 13.50 -3.70 -18.75 -16.13
FIBC Financial Bancorp, Inc. of NY(8) 31.00 1,707 52.9 37.63 22.00 34.00 -8.82 41.68 28.47
FBSI First Bancshares, Inc. of MO 12.75 2,214 28.2 17.50 11.00 13.00 -1.92 7.32 -18.43
FBBC First Bell Bancorp of PA 16.00 6,525 104.4 21.63 15.63 16.63 -3.79 -0.81 -15.79
SKBO First Carnegie MHC of PA(45.0) 11.00 2,300 11.4 21.00 11.00 13.25 -16.98 -34.33 -41.33
FSTC First Citizens Corp of GA 25.50 2,795 71.3 35.50 21.33 27.25 -6.42 15.91 -25.00
FCME First Coastal Corp. of ME* 11.75 1,361 16.0 15.75 10.25 10.50 11.90 8.00 -21.03
FDEF First Defiance Fin.Corp. of OH 11.88 8,158 96.9 16.25 11.88 12.50 -4.96 -23.35 -25.75
FESX First Essex Bancorp of MA* 16.00 7,562 121.0 26.13 15.13 16.69 -4.13 -10.51 -31.18
FFSX First FSB MHC Sxld of IA(46.3)(8) 28.00 2,840 36.8 39.00 28.00 30.25 -7.44 -6.67 -11.81
FFES First Fed of E. Hartford CT 25.13 2,743 68.9 42.25 24.75 26.00 -3.35 -28.20 -32.54
BDJI First Fed. Bancorp. of MN 14.75 998 14.7 22.00 14.00 14.50 1.72 5.36 -32.95
FFBH First Fed. Bancshares of AR 19.00 4,871 92.5 30.25 18.50 20.25 -6.17 -10.08 -20.00
FTFC First Fed. Capital Corp. of WI 14.25 18,519 263.9 18.38 11.88 14.75 -3.39 16.90 -15.88
FFKY First Fed. Fin. Corp. of KY 23.63 4,130 97.6 28.75 20.50 25.00 -5.48 8.64 3.87
FFBZ First Federal Bancorp of OH 10.00 3,151 31.5 14.50 9.13 11.13 -10.15 8.11 -5.30
FFCH First Fin. Holdings Inc. of SC 18.50 13,632 252.2 27.00 16.75 18.38 0.65 11.24 -30.35
FFHS First Franklin Corp. of OH 14.50 1,783 25.9 20.83 12.50 15.13 -4.16 10.10 -30.39
FGHC First Georgia Hold. Corp of GA 10.25 4,799 49.2 15.75 5.17 11.13 -7.91 98.26 61.93
FFSL First Independence Corp. of KS 11.50 957 11.0 15.63 11.00 11.25 2.22 -20.69 -17.86
FISB First Indiana Corp. of IN 19.75 12,781 252.4 30.00 18.54 22.13 -10.75 10.21 -21.66
FKAN First Kansas Financial of KS 10.13 1,554 15.7 12.50 10.00 10.25 -1.17 1.30 1.30
FKFS First Keystone Fin. Corp of PA 12.00 2,413 29.0 21.75 11.75 12.75 -5.88 -13.54 -32.89
FLKY First Lancaster Bncshrs of KY 13.69 947 13.0 16.38 13.19 13.25 3.32 -12.75 -14.12
FLFC First Liberty Fin. Corp. of GA 20.00 13,369 267.4 25.50 14.75 19.00 5.26 37.17 -6.24
CASH First Midwest Fin., Inc. of OH 18.13 2,614 47.4 24.88 17.75 19.00 -4.58 0.72 -19.42
FMBD First Mutual Bancorp Inc of IL(8) 16.63 3,531 58.7 25.00 15.25 17.00 -2.18 5.59 -33.48
FMSB First Mutual SB of Bellevue WA* 12.75 4,244 54.1 20.17 11.94 14.00 -8.93 -6.73 -31.08
FNGB First Northern Cap. Corp of WI 10.75 8,859 95.2 14.00 10.50 11.50 -6.52 -23.21 -23.21
FFPB First Palm Beach Bancorp of FL 31.00 5,136 159.2 44.94 30.00 32.25 -3.88 -8.82 -28.12
FWWB First Savings Bancorp of WA 20.13 11,699 235.5 25.97 19.38 19.94 0.95 -10.29 -19.48
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
DNFC D&N Financial Corp. of MI 1.67 1.46 11.55 11.45 207.27
DCBI Delphos Citizens Bancorp of OH 0.91 0.91 14.84 14.84 61.46
DCOM Dime Community Bancorp of NY* 1.08 1.05 15.30 13.33 133.36
ESBF ESB Financial Corp of PA 1.03 1.03 12.01 10.72 166.91
EGLB Eagle BancGroup of IL 0.52 0.18 17.82 17.82 147.91
EBSI Eagle Bancshares of Tucker GA 1.49 1.45 13.36 13.36 192.94
ETFS East Texas Fin. Serv. of TX 0.41 0.35 13.77 13.77 79.66
ESBK Elmira Svgs Bank (The) of NY* 1.48 1.56 19.97 19.97 318.74
EMLD Emerald Financial Corp. of OH 0.67 0.61 5.11 5.05 60.09
EFBC Empire Federal Bancorp of MT 0.65 0.65 16.39 16.39 44.59
EFBI Enterprise Fed. Bancorp of OH 1.03 0.88 16.47 16.06 165.37
EQSB Equitable FSB of Wheaton MD 1.86 1.76 14.67 14.67 286.64
FCBF FCB Fin. Corp. of Neenah WI 1.51 1.12 19.42 19.42 134.24
FFDF FFD Financial Corp. of OH 1.09 0.49 15.43 15.43 69.28
FFLC FFLC Bancorp of Leesburg FL 1.06 1.00 14.11 14.11 110.22
FFWC FFW Corporation of Wabash IN 1.30 1.14 13.12 12.07 139.45
FFYF FFY Financial Corp. of OH 1.93 1.89 21.00 21.00 162.49
FMCO FMS Financial Corp. of NJ 0.73 0.73 5.69 5.64 93.53
FFHH FSF Financial Corp. of MN 1.08 1.02 14.73 14.73 141.18
FOBC Fed One Bancorp of Wheeling WV(8) 1.25 1.21 17.43 16.77 155.64
FBCI Fidelity Bancorp of Chicago IL 0.33 1.04 18.77 18.74 177.09
FSBI Fidelity Bancorp, Inc. of PA 1.45 1.42 14.23 14.23 200.70
FFFL Fidelity Bcsh MHC of FL (47.9) 1.15 0.92 13.28 12.90 215.87
FFED Fidelity Fed. Bancorp of IN -0.25 -0.19 4.28 4.28 63.14
FFOH Fidelity Financial of OH 0.85 0.82 11.79 10.49 95.02
FIBC Financial Bancorp, Inc. of NY(8) 1.69 1.64 16.83 16.76 199.77
FBSI First Bancshares, Inc. of MO 0.83 0.83 11.00 10.55 77.77
FBBC First Bell Bancorp of PA 1.16 1.15 11.78 11.78 115.96
SKBO First Carnegie MHC of PA(45.0) 0.36 0.43 10.63 10.63 63.30
FSTC First Citizens Corp of GA 2.20 1.99 12.72 10.17 126.02
FCME First Coastal Corp. of ME* 0.90 0.81 11.29 11.29 126.17
FDEF First Defiance Fin.Corp. of OH 0.66 0.63 12.66 12.66 71.36
FESX First Essex Bancorp of MA* 1.39 1.19 12.41 9.00 173.86
FFSX First FSB MHC Sxld of IA(46.3)(8) 1.20 1.17 14.80 11.92 194.22
FFES First Fed of E. Hartford CT 2.13 2.30 25.73 25.73 357.42
BDJI First Fed. Bancorp. of MN 0.81 0.82 12.71 12.71 121.56
FFBH First Fed. Bancshares of AR 1.14 1.13 17.46 17.46 118.69
FTFC First Fed. Capital Corp. of WI 1.02 0.70 6.42 6.11 85.56
FFKY First Fed. Fin. Corp. of KY 1.53 1.47 13.24 12.57 99.19
FFBZ First Federal Bancorp of OH 0.54 0.51 5.23 5.23 65.81
FFCH First Fin. Holdings Inc. of SC 1.16 1.11 8.92 8.92 137.49
FFHS First Franklin Corp. of OH 1.05 0.91 12.16 12.11 133.30
FGHC First Georgia Hold. Corp of GA 0.41 0.41 3.07 2.87 37.68
FFSL First Independence Corp. of KS 0.88 0.88 12.35 12.35 128.91
FISB First Indiana Corp. of IN 1.47 1.04 12.54 12.40 136.99
FKAN First Kansas Financial of KS 0.61 0.61 12.95 12.95 69.29
FKFS First Keystone Fin. Corp of PA 1.14 1.01 10.53 10.53 162.03
FLKY First Lancaster Bncshrs of KY 0.51 0.51 14.91 14.91 55.97
FLFC First Liberty Fin. Corp. of GA 0.74 0.77 7.45 6.81 101.35
CASH First Midwest Fin., Inc. of OH 1.09 0.98 16.41 14.65 161.15
FMBD First Mutual Bancorp Inc of IL(8) 0.39 0.30 15.72 12.23 107.49
FMSB First Mutual SB of Bellevue WA* 1.03 1.01 7.22 7.22 106.30
FNGB First Northern Cap. Corp of WI 0.74 0.68 8.49 8.49 77.93
FFPB First Palm Beach Bancorp of FL 1.56 0.83 23.53 23.04 343.46
FWWB First Savings Bancorp of WA 1.12 1.04 12.84 11.90 98.65
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FSFF First SecurityFed Fin of IL 12.25 6,408 78.5 17.25 10.69 11.44 7.08 22.50 -22.22
FSLA First Source Bancorp of NJ 8.00 31,740 253.9 13.93 7.00 7.22 10.80 7.67 -42.57
SOPN First Svgs Bancorp of NC 21.25 3,711 78.9 26.00 20.25 22.00 -3.41 1.19 -16.67
FBNW FirstBank Corp of Clarkston WA 15.13 1,984 30.0 23.75 15.00 15.88 -4.72 -12.95 -19.86
FFDB FirstFed Bancorp, Inc. of AL 12.50 2,434 30.4 15.94 8.88 12.75 -1.96 40.77 15.63
FSPT FirstSpartan Fin. Corp. of SC 32.50 4,253 138.2 47.25 32.00 33.00 -1.52 -8.45 -19.25
FLAG Flag Financial Corp of GA 13.25 5,175 68.6 19.38 9.67 13.75 -3.64 37.02 -7.54
FLGS Flagstar Bancorp, Inc of MI 21.00 13,670 287.1 28.38 17.75 25.50 -17.65 6.98 6.06
FFIC Flushing Fin. Corp. of NY* 22.00 7,810 171.8 29.88 18.88 21.75 1.15 -0.59 -7.87
FBHC Fort Bend Holding Corp. of TX(8) 16.63 1,817 30.2 28.00 16.63 18.00 -7.61 -4.32 -23.54
FTSB Fort Thomas Fin. Corp. of KY 13.25 1,474 19.5 15.75 11.75 15.75 -15.87 12.77 -13.85
FKKY Frankfort First Bancorp of KY 14.25 1,619 23.1 22.94 13.75 14.50 -1.72 -35.23 -19.17
FTNB Fulton Bancorp, Inc. of MO 16.88 1,701 28.7 26.50 15.75 17.75 -4.90 -20.56 -23.72
GUPB GFSB Bancorp, Inc of Gallup NM 14.00 1,201 16.8 17.00 12.33 13.88 0.86 12.00 -0.57
GSLA GS Financial Corp. of LA 12.00 3,267 39.2 21.00 12.00 12.25 -2.04 -23.81 -42.86
GOSB GSB Financial Corp. of NY* 11.75 2,248 26.4 18.94 8.31 10.50 11.90 -18.29 -34.94
GBNK Gaston Fed Bncp MHC of NC(47.0 11.25 4,497 23.8 18.06 11.25 12.50 -10.00 12.50 12.50
GFCO Glenway Financial Corp. of OH 19.00 2,282 43.4 24.25 12.50 20.00 -5.00 52.00 1.33
GTPS Great American Bancorp of IL 16.75 1,588 26.6 23.00 16.25 17.13 -2.22 -5.63 -11.84
PEDE Great Pee Dee Bancorp of SC 12.00 2,202 26.4 17.38 10.75 11.00 9.09 20.00 -25.60
GSFC Green Street Fin. Corp. of NC 12.50 4,083 51.0 20.75 11.94 12.88 -2.95 -32.90 -31.51
GFED Guaranty Fed Bancshares of MO 10.50 6,228 65.4 14.44 9.90 11.50 -8.70 2.04 -18.48
HCBB HCB Bancshares of Camden AR 11.00 2,645 29.1 16.13 11.00 12.50 -12.00 -19.30 -24.14
HEMT HF Bancorp of Hemet CA 14.13 6,369 90.0 18.25 12.25 13.25 6.64 -4.20 -19.26
HFFC HF Financial Corp. of SD 15.50 4,395 68.1 24.17 15.50 18.13 -14.51 0.00 -12.28
HFNC HFNC Financial Corp. of NC(8) 10.50 17,193 180.5 16.81 10.38 11.50 -8.70 -35.90 -27.59
HMNF HMN Financial, Inc. of MN 13.75 5,430 74.7 21.67 13.75 14.38 -4.38 -15.80 -36.55
HALL Hallmark Capital Corp. of WI 11.75 2,934 34.5 18.00 11.00 12.00 -2.08 8.00 -30.88
HRBF Harbor Federal Bancorp of MD 18.00 1,863 33.5 23.41 17.50 18.13 -0.72 4.23 -21.60
HARB Harbor Florida Bancshrs of FL 10.50 30,740 322.8 13.50 9.30 10.31 1.84 12.66 -4.72
HFSA Hardin Bancorp of Hardin MO 16.75 816 13.7 20.00 16.50 18.25 -8.22 -1.47 -8.22
HARL Harleysville SB of PA 29.63 1,675 49.6 35.00 25.75 29.63 0.00 15.07 7.75
HFGI Harrington Fin. Group of IN 9.63 3,276 31.5 13.75 9.63 9.88 -2.53 -20.61 -25.92
HARS Harris Fin. MHC of PA (24.9) 13.88 33,965 117.2 27.88 12.00 15.50 -10.45 -7.22 -30.18
HFFB Harrodsburg 1st Fin Bcrp of KY 15.25 1,930 29.4 18.00 14.00 15.00 1.67 0.00 -8.96
HHFC Harvest Home Fin. Corp. of OH 12.50 879 11.0 16.75 12.00 12.50 0.00 4.17 -20.63
HAVN Haven Bancorp of Woodhaven NY 14.38 8,849 127.2 28.75 14.38 17.19 -16.35 -28.10 -36.09
HTHR Hawthorne Fin. Corp. of CA 14.25 3,170 45.2 24.00 13.75 14.50 -1.72 -18.01 -29.21
HMLK Hemlock Fed. Fin. Corp. of IL 14.50 1,965 28.5 19.00 14.25 15.06 -3.72 -4.16 -15.35
HBSC Heritage Bancorp, Inc of SC 16.13 4,629 74.7 22.38 16.13 16.75 -3.70 7.53 7.53
HFWA Heritage Financial Corp of WA 11.13 9,755 108.6 15.94 9.88 10.75 3.53 11.30 11.30
HCBC High Country Bancorp of CO 12.00 1,323 15.9 15.50 12.00 12.00 0.00 20.00 -22.58
HBNK Highland Bancorp of CA 38.00 2,329 88.5 43.50 30.25 38.50 -1.30 24.59 16.03
HIFS Hingham Inst. for Sav. of MA* 22.75 1,304 29.7 37.00 22.75 24.63 -7.63 -6.19 -20.87
HBEI Home Bancorp of Elgin IL(8) 12.50 6,856 85.7 19.13 11.69 13.63 -8.29 -28.57 -30.09
HBFW Home Bancorp of Fort Wayne IN 27.00 2,351 63.5 37.63 22.38 28.00 -3.57 22.01 -8.47
HCFC Home City Fin. Corp. of OH 12.00 905 10.9 22.75 11.00 11.50 4.35 -22.58 -35.14
HOMF Home Fed Bancorp of Seymour IN 24.50 5,139 125.9 33.75 20.00 25.00 -2.00 19.51 -5.77
HWEN Home Financial Bancorp of IN 7.75 929 7.2 9.75 7.63 8.00 -3.13 -5.72 -16.22
HLFC Home Loan Financial Corp of OH 13.38 2,248 30.1 16.75 13.38 14.50 -7.72 33.80 33.80
HPBC Home Port Bancorp, Inc. of MA* 19.75 1,842 36.4 27.63 19.75 22.25 -11.24 -14.13 -14.61
HSTD Homestead Bancorp, Inc. of LA 7.44 1,478 11.0 9.31 3.41 7.50 -0.80 -25.60 29.39
HFBC HopFed Bancorp of KY 16.63 4,034 67.1 21.88 16.00 16.88 -1.48 66.30 66.30
HZFS Horizon Fin'l. Services of IA 15.50 880 13.6 16.88 9.44 15.75 -1.59 64.19 29.17
HRZB Horizon Financial Corp. of WA* 14.00 7,488 104.8 19.25 13.13 13.50 3.70 -7.47 -21.13
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FSFF First SecurityFed Fin of IL 0.46 0.72 14.59 14.55 50.45
FSLA First Source Bancorp of NJ 0.36 0.35 8.17 7.91 38.47
SOPN First Svgs Bancorp of NC 1.42 1.42 18.73 18.73 81.94
FBNW FirstBank Corp of Clarkston WA 0.97 0.55 15.32 15.32 98.00
FFDB FirstFed Bancorp, Inc. of AL 0.68 0.68 7.24 6.67 74.56
FSPT FirstSpartan Fin. Corp. of SC 1.77 1.72 29.57 29.57 121.66
FLAG Flag Financial Corp of GA 0.39 0.27 4.26 4.26 47.92
FLGS Flagstar Bancorp, Inc of MI 2.20 2.20 10.44 10.16 188.24
FFIC Flushing Fin. Corp. of NY* 1.21 1.22 17.90 17.24 139.81
FBHC Fort Bend Holding Corp. of TX(8) 1.14 0.75 12.52 11.84 175.21
FTSB Fort Thomas Fin. Corp. of KY 0.80 0.80 11.05 11.05 68.76
FKKY Frankfort First Bancorp of KY 0.98 0.98 14.02 14.02 83.07
FTNB Fulton Bancorp, Inc. of MO 0.75 0.58 15.06 15.06 64.45
GUPB GFSB Bancorp, Inc of Gallup NM 0.79 0.79 12.14 12.14 98.40
GSLA GS Financial Corp. of LA 0.46 0.40 16.01 16.01 44.43
GOSB GSB Financial Corp. of NY* 0.41 0.39 14.30 14.30 57.42
GBNK Gaston Fed Bncp MHC of NC(47.0 0.33 0.30 9.14 9.14 45.06
GFCO Glenway Financial Corp. of OH 1.11 1.12 12.60 12.49 131.66
GTPS Great American Bancorp of IL 0.63 0.63 17.07 17.07 93.41
PEDE Great Pee Dee Bancorp of SC 0.62 0.62 14.19 14.19 31.45
GSFC Green Street Fin. Corp. of NC 0.69 0.69 14.81 14.81 42.44
GFED Guaranty Fed Bancshares of MO 0.45 0.45 11.35 11.35 41.75
HCBB HCB Bancshares of Camden AR 0.25 0.25 14.45 14.28 83.79
HEMT HF Bancorp of Hemet CA 0.02 0.10 13.15 11.25 164.21
HFFC HF Financial Corp. of SD 1.47 1.28 12.88 12.88 129.71
HFNC HFNC Financial Corp. of NC(8) 0.78 0.53 9.94 9.94 58.62
HMNF HMN Financial, Inc. of MN 1.06 0.75 15.65 14.55 134.83
HALL Hallmark Capital Corp. of WI 0.95 0.89 11.40 11.40 149.41
HRBF Harbor Federal Bancorp of MD 0.94 0.91 15.94 15.94 126.53
HARB Harbor Florida Bancshrs of FL 0.53 0.50 8.41 8.32 42.90
HFSA Hardin Bancorp of Hardin MO 1.01 0.88 16.51 16.51 163.39
HARL Harleysville SB of PA 2.08 2.08 15.14 15.14 236.05
HFGI Harrington Fin. Group of IN -0.57 -0.20 6.92 6.92 147.86
HARS Harris Fin. MHC of PA (24.9) 0.54 0.44 5.56 5.02 68.47
HFFB Harrodsburg 1st Fin Bcrp of KY 0.77 0.77 14.92 14.92 56.38
HHFC Harvest Home Fin. Corp. of OH 0.73 0.63 11.73 11.73 103.39
HAVN Haven Bancorp of Woodhaven NY 1.00 1.06 13.33 12.74 255.99
HTHR Hawthorne Fin. Corp. of CA 2.91 3.40 15.06 15.06 378.97
HMLK Hemlock Fed. Fin. Corp. of IL 0.84 0.82 14.81 14.81 97.85
HBSC Heritage Bancorp, Inc of SC 0.76 0.76 20.46 20.46 65.00
HFWA Heritage Financial Corp of WA 0.37 0.19 9.53 9.53 33.09
HCBC High Country Bancorp of CO 0.53 0.53 13.64 13.64 69.73
HBNK Highland Bancorp of CA 3.15 2.77 19.37 19.37 246.21
HIFS Hingham Inst. for Sav. of MA* 2.16 2.14 17.29 17.29 183.40
HBEI Home Bancorp of Elgin IL(8) 0.36 0.36 14.00 14.00 53.63
HBFW Home Bancorp of Fort Wayne IN 1.26 1.23 18.27 18.27 153.25
HCFC Home City Fin. Corp. of OH 1.05 1.04 11.96 11.96 86.23
HOMF Home Fed Bancorp of Seymour IN 2.02 1.58 13.03 12.70 140.02
HWEN Home Financial Bancorp of IN 0.42 0.32 8.08 8.08 45.81
HLFC Home Loan Financial Corp of OH 0.41 0.41 14.04 14.04 36.44
HPBC Home Port Bancorp, Inc. of MA* 1.72 1.93 12.32 12.32 141.40
HSTD Homestead Bancorp, Inc. of LA 0.36 0.36 10.40 10.40 48.02
HFBC HopFed Bancorp of KY 0.72 0.72 14.46 14.46 54.00
HZFS Horizon Fin'l. Services of IA 0.90 0.69 9.60 9.60 105.35
HRZB Horizon Financial Corp. of WA* 1.12 1.09 11.40 11.40 73.86
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HRBT Hudson River Bancorp Inc of NY 10.56 17,854 183.1 13.69 9.81 10.38 1.73 5.60 5.60
ITLA ITLA Capital Corp of CA* 15.75 7,697 121.2 24.00 15.75 17.75 -11.27 -11.91 -18.18
ICBC Independence Comm Bnk Cp of NY 12.81 76,044 974.1 19.13 11.00 11.88 7.83 28.10 28.10
IFSB Independence FSB of DC 13.00 1,281 16.7 21.63 12.00 13.00 0.00 -1.89 -23.53
INBI Industrial Bancorp of OH 16.75 5,015 84.0 25.00 14.88 18.50 -9.46 9.84 -5.63
IWBK Interwest Bancorp of WA 25.38 15,668 397.7 31.33 23.00 23.00 10.35 -1.74 0.83
IPSW Ipswich SB of Ipswich MA* 12.00 2,390 28.7 20.75 11.50 12.00 0.00 -4.00 -27.27
JXVL Jacksonville Bancorp of TX 15.13 2,422 36.6 23.25 14.50 16.25 -6.89 -8.30 -34.92
JXSB Jcksnville SB,MHC of IL (45.6) 15.25 1,908 13.3 25.50 14.00 15.50 -1.61 1.67 -23.75
JSBA Jefferson Svgs Bancorp of MO 17.00 10,030 170.5 31.88 16.75 19.00 -10.53 2.22 -17.07
KSBK KSB Bancorp of Kingfield ME* 17.25 1,259 21.7 22.50 12.50 16.00 7.81 38.00 -23.33
KFBI Klamath First Bancorp of OR 14.00 9,917 138.8 24.25 14.00 15.50 -9.68 -30.00 -34.88
LSBI LSB Fin. Corp. of Lafayette IN 30.50 954 29.1 32.00 20.48 31.00 -1.61 48.93 12.38
LVSB Lakeview Financial of NJ 21.50 4,978 107.0 28.75 17.63 19.00 13.16 13.88 -15.69
LARK Landmark Bancshares, Inc of KS 22.00 1,549 34.1 29.25 20.25 21.63 1.71 -16.98 -11.58
LARL Laurel Capital Group of PA 16.50 2,191 36.2 23.50 15.67 19.00 -13.16 5.91 -23.86
LSBX Lawrence Savings Bank of MA* 12.00 4,327 51.9 19.31 11.00 12.38 -3.07 3.18 -26.74
LFED Leeds Fed Bksr MHC of MD (36.3 15.75 5,182 29.7 23.50 15.75 16.25 -3.08 -26.16 -27.59
LXMO Lexington B&L Fin. Corp. of MO 14.00 1,009 14.1 17.88 14.00 14.00 0.00 -12.50 -21.13
LIBB Liberty Bancorp MHC of NJ (47) 10.19 3,901 18.7 11.69 9.50 9.63 5.82 1.90 1.90
LFCO Life Financial Corp of CA(8) 5.00 6,556 32.8 25.38 5.00 6.63 -24.59 -72.60 -60.41
LFBI Little Falls Bancorp of NJ 14.63 2,478 36.3 22.25 14.00 14.50 0.90 -15.19 -28.63
LOGN Logansport Fin. Corp. of IN 14.75 1,262 18.6 19.63 13.50 15.00 -1.67 -6.35 -18.06
LISB Long Island Bancorp, Inc of NY(8) 42.88 24,183 1,037.0 67.63 37.50 43.88 -2.28 1.78 -13.60
MAFB MAF Bancorp, Inc. of IL 22.13 22,577 499.6 28.83 19.38 23.75 -6.82 4.53 -6.15
MBLF MBLA Financial Corp. of MO 19.75 1,251 24.7 30.63 19.25 19.88 -0.65 -15.05 -35.25
MECH MECH Financial Inc of CT* 23.88 5,295 126.4 31.81 21.88 25.00 -4.48 0.55 -8.37
MFBC MFB Corp. of Mishawaka IN 18.00 1,590 28.6 30.38 18.00 22.20 -18.92 -20.88 -40.75
MSBF MSB Financial, Inc of MI 14.25 1,338 19.1 17.73 12.05 16.88 -15.58 18.26 -17.49
MARN Marion Capital Holdings of IN 23.00 1,704 39.2 29.50 22.25 22.75 1.10 -2.13 -15.22
MRKF Market Fin. Corp. of OH 11.00 1,336 14.7 20.25 10.75 10.75 2.33 -22.48 -29.62
MFSL Maryland Fed. Bancorp of MD(8) 32.88 6,572 216.1 42.25 22.50 34.75 -5.38 49.86 -6.06
MASB MassBank Corp. of Reading MA* 39.75 3,593 142.8 54.25 39.28 45.13 -11.92 2.90 -16.54
MFLR Mayflower Co-Op. Bank of MA* 18.00 900 16.2 27.50 18.00 19.50 -7.69 -3.38 -32.71
MDBK Medford Bancorp, Inc. of MA* 35.00 4,455 155.9 44.25 32.00 36.75 -4.76 6.45 -10.83
MWBX MetroWest Bank of MA* 6.38 14,252 90.9 9.50 6.25 6.38 0.00 -4.63 -29.11
METF Metropolitan Fin. Corp. of OH 11.75 7,051 82.8 18.88 9.00 12.50 -6.00 29.69 -24.19
MIFC Mid Iowa Financial Corp. of IA(8) 13.00 1,735 22.6 14.00 9.25 13.00 0.00 44.44 13.04
MCBN Mid-Coast Bancorp of ME 7.50 713 5.3 14.00 7.50 9.00 -16.67 -11.76 -25.00
MWBI Midwest Bancshares, Inc. of IA 11.00 1,051 11.6 19.50 11.00 12.25 -10.20 -8.33 -39.73
MFFC Milton Fed. Fin. Corp. of OH 12.75 2,237 28.5 17.00 12.31 12.50 2.00 -7.27 -17.10
MBSP Mitchell Bancorp, Inc. of NC(8) 16.00 931 14.9 18.50 16.00 17.00 -5.88 -6.60 -5.88
MBBC Monterey Bay Bancorp of CA 16.00 3,923 62.8 21.40 13.30 16.00 0.00 20.30 2.56
MONT Montgomery Fin. Corp. of IN 10.38 1,653 17.2 13.63 9.75 10.19 1.86 -13.50 -19.41
MSBK Mutual SB, FSB of Bay City MI 6.75 4,290 29.0 14.63 6.75 7.75 -12.90 -43.18 -48.08
MYST Mystic Financial of MA* 11.50 2,711 31.2 18.56 11.00 11.75 -2.13 15.00 15.00
NHTB NH Thrift Bancshares of NH 14.00 2,095 29.3 22.75 14.00 14.75 -5.08 -29.11 -31.71
NSLB NS&L Bancorp, Inc of Neosho MO 16.00 686 11.0 19.50 16.00 16.25 -1.54 -15.79 -15.25
NSSY NSS Bancorp of CT(8)* 41.63 2,378 99.0 58.75 33.75 44.00 -5.39 12.51 10.28
NMSB Newmil Bancorp, Inc. of CT* 10.75 3,834 41.2 14.63 10.13 11.00 -2.27 -16.54 -17.31
NBCP Niagara Bancorp of NY MHC(45.4* 11.25 29,756 151.9 17.00 8.75 9.56 17.68 12.50 12.50
NBSI North Bancshares of Chicago IL 11.88 1,265 15.0 18.83 11.88 12.50 -4.96 -19.02 -33.56
FFFD North Central Bancshares of IA 16.19 3,126 50.6 24.88 15.00 15.06 7.50 -2.65 -18.56
NEIB Northeast Indiana Bncrp of IN 18.25 1,650 30.1 22.75 16.88 19.63 -7.03 4.29 -17.53
NWSB Northwest Bcrp MHC of PA (30.8 10.88 46,841 157.1 18.00 10.00 10.94 -0.55 -17.14 -23.00
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HRBT Hudson River Bancorp Inc of NY 0.41 0.47 12.20 12.20 45.63
ITLA ITLA Capital Corp of CA* 1.79 1.79 13.85 13.81 132.69
ICBC Independence Comm Bnk Cp of NY -0.53 0.45 12.63 11.93 62.94
IFSB Independence FSB of DC 2.46 0.39 15.46 13.99 214.32
INBI Industrial Bancorp of OH 1.07 1.07 12.19 12.19 76.34
IWBK Interwest Bancorp of WA 1.29 1.09 9.02 8.88 133.46
IPSW Ipswich SB of Ipswich MA* 1.09 0.87 5.46 5.46 97.77
JXVL Jacksonville Bancorp of TX 1.30 1.30 14.48 14.48 100.20
JXSB Jcksnville SB,MHC of IL (45.6) 0.52 0.33 9.38 9.38 88.96
JSBA Jefferson Svgs Bancorp of MO 0.98 0.87 11.84 9.50 123.81
KSBK KSB Bancorp of Kingfield ME* 1.33 1.33 9.56 8.31 122.83
KFBI Klamath First Bancorp of OR 0.90 0.89 14.22 13.03 101.71
LSBI LSB Fin. Corp. of Lafayette IN 1.85 1.59 19.26 19.26 229.18
LVSB Lakeview Financial of NJ 1.76 0.88 12.11 8.26 124.48
LARK Landmark Bancshares, Inc of KS 1.58 1.33 19.35 19.35 148.05
LARL Laurel Capital Group of PA 1.39 1.43 10.73 10.73 100.86
LSBX Lawrence Savings Bank of MA* 2.12 2.09 9.62 9.62 79.70
LFED Leeds Fed Bksr MHC of MD (36.3 0.66 0.66 9.52 9.52 57.70
LXMO Lexington B&L Fin. Corp. of MO 0.62 0.62 15.17 14.15 94.45
LIBB Liberty Bancorp MHC of NJ (47) 0.40 0.38 8.59 8.59 65.46
LFCO Life Financial Corp of CA(8) 2.11 2.19 9.11 9.11 72.06
LFBI Little Falls Bancorp of NJ 0.76 0.76 14.90 13.82 141.79
LOGN Logansport Fin. Corp. of IN 1.02 1.03 13.46 13.46 71.52
LISB Long Island Bancorp, Inc of NY(8) 2.31 1.88 23.88 23.68 268.12
MAFB MAF Bancorp, Inc. of IL 1.66 1.59 12.40 11.07 158.11
MBLF MBLA Financial Corp. of MO 1.54 1.53 22.38 22.38 165.83
MECH MECH Financial Inc of CT* 2.49 2.49 17.14 17.14 178.65
MFBC MFB Corp. of Mishawaka IN 1.35 1.32 20.82 20.82 182.98
MSBF MSB Financial, Inc of MI 0.91 0.79 9.95 9.95 59.77
MARN Marion Capital Holdings of IN 1.36 1.36 22.10 21.63 113.83
MRKF Market Fin. Corp. of OH 0.46 0.46 11.78 11.78 40.16
MFSL Maryland Fed. Bancorp of MD(8) 0.90 1.09 15.89 15.74 181.38
MASB MassBank Corp. of Reading MA* 3.00 2.58 30.44 30.04 258.75
MFLR Mayflower Co-Op. Bank of MA* 1.66 1.49 14.40 14.19 150.58
MDBK Medford Bancorp, Inc. of MA* 2.68 2.55 22.78 21.62 254.84
MWBX MetroWest Bank of MA* 0.54 0.54 3.39 3.39 46.20
METF Metropolitan Fin. Corp. of OH 0.93 0.80 5.61 5.20 150.18
MIFC Mid Iowa Financial Corp. of IA(8) 0.79 0.78 7.73 7.72 77.83
MCBN Mid-Coast Bancorp of ME 0.61 0.53 7.35 7.35 91.60
MWBI Midwest Bancshares, Inc. of IA 1.38 1.10 10.85 10.85 151.72
MFFC Milton Fed. Fin. Corp. of OH 0.67 0.54 11.64 11.64 105.10
MBSP Mitchell Bancorp, Inc. of NC(8) 0.54 0.54 15.60 15.60 39.67
MBBC Monterey Bay Bancorp of CA 0.33 0.33 11.97 10.95 111.19
MONT Montgomery Fin. Corp. of IN 0.50 0.50 12.05 12.05 66.02
MSBK Mutual SB, FSB of Bay City MI -1.91 -0.65 7.94 7.94 143.08
MYST Mystic Financial of MA* 0.59 0.55 13.33 13.33 73.42
NHTB NH Thrift Bancshares of NH 1.38 1.28 12.60 11.01 154.81
NSLB NS&L Bancorp, Inc of Neosho MO 0.60 0.59 16.87 16.76 91.32
NSSY NSS Bancorp of CT(8)* 2.18 1.92 23.19 22.62 274.11
NMSB Newmil Bancorp, Inc. of CT* 0.78 0.61 8.71 8.71 95.87
NBCP Niagara Bancorp of NY MHC(45.4* 0.48 0.46 8.31 8.31 43.56
NBSI North Bancshares of Chicago IL 0.36 0.32 10.55 10.55 97.48
FFFD North Central Bancshares of IA 1.41 1.37 16.42 14.29 106.47
NEIB Northeast Indiana Bncrp of IN 1.40 1.40 16.07 16.07 123.19
NWSB Northwest Bcrp MHC of PA (30.8 0.46 0.44 4.65 4.18 54.38
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
NWEQ Northwest Equity Corp. of WI 17.50 825 14.4 22.25 16.00 17.50 0.00 8.49 -15.66
NTMG Nutmeg FS&LA of CT 12.00 1,077 12.9 12.50 7.69 11.88 1.01 45.45 14.29
OHSL OHSL Financial Corp. of OH 14.63 2,496 36.5 18.38 11.75 15.50 -5.61 25.80 8.37
OCFC Ocean Fin. Corp. of NJ 14.63 15,534 227.3 20.00 13.88 15.00 -2.47 -12.97 -21.47
OTFC Oregon Trail Fin. Corp. of OR 12.13 4,695 57.0 18.50 11.00 12.75 -4.86 21.30 -30.21
OFCP Ottawa Financial Corp. of MI 23.75 5,717 135.8 30.91 21.28 23.88 -0.54 11.61 -23.16
PFFB PFF Bancorp of Pomona CA 14.38 16,214 233.2 21.50 13.94 14.06 2.28 -26.74 -27.67
PSFI PS Financial of Chicago IL 11.13 2,019 22.5 22.38 10.75 11.63 -4.30 -27.63 -50.27
PSBI PSB Bancorp Inc. of PA* 7.13 3,101 22.1 11.27 6.50 7.13 0.00 -3.52 -36.73
PVFC PVF Capital Corp. of OH 10.00 3,990 39.9 18.83 10.00 12.00 -16.67 -27.27 -25.71
PBCI Pamrapo Bancorp, Inc. of NJ 24.13 2,843 68.6 32.38 21.00 25.00 -3.48 12.86 -11.45
PFED Park Bancorp of Chicago IL 14.00 2,418 33.9 19.75 13.50 13.50 3.70 -15.81 -24.85
PVSA Parkvale Financial Corp of PA 30.00 5,173 155.2 35.00 24.10 30.88 -2.85 21.95 -12.41
PBHC Pathfinder BC MHC of NY (45.2)* 13.25 2,831 16.9 26.13 12.00 14.00 -5.36 -3.07 -33.75
PEEK Peekskill Fin. Corp. of NY 14.75 2,896 42.7 18.25 14.75 15.00 -1.67 -12.62 -11.94
PFSB PennFed Fin. Services of NJ 13.00 9,386 122.0 19.00 10.88 11.13 16.80 -12.99 -24.11
PWBK Pennwood Bancorp, Inc. of PA 11.00 697 7.7 17.44 11.00 12.31 -10.64 -12.42 -25.73
PBKB People's Bancshares of MA* 16.75 3,316 55.5 27.75 15.00 16.00 4.69 -2.22 -26.37
TSBS Peoples Bancorp Inc of NJ* 8.31 36,326 301.9 11.83 6.97 7.44 11.69 5.06 -29.75
PFDC Peoples Bancorp of Auburn IN 20.50 3,357 68.8 25.00 16.67 20.63 -0.63 19.39 -6.82
PBCT Peoples Bank, MHC of CT (41.2)* 23.19 64,130 640.8 41.13 21.00 22.38 3.62 -19.34 -38.97
PFFC Peoples Fin. Corp. of OH 10.63 1,352 14.4 19.00 10.63 13.50 -21.26 -38.38 -29.74
PHBK Peoples Heritage Fin Grp of ME* 16.75 87,565 1,466.7 26.50 15.69 17.00 -1.47 -12.99 -27.17
PSFC Peoples Sidney Fin. Corp of OH 18.50 1,785 33.0 24.38 15.50 19.13 -3.29 13.85 3.47
PERM Permanent Bancorp, Inc. of IN 12.75 4,249 54.2 18.25 11.50 12.50 2.00 10.87 -18.06
PCBC Perry Co. Fin. Corp. of MO 21.50 828 17.8 25.00 18.00 20.00 7.50 1.18 -10.90
PHFC Pittsburgh Home Fin Corp of PA 13.50 1,969 26.6 20.81 13.00 15.25 -11.48 -28.95 -25.00
PFSL Pocahontas Bancorp of AR 6.75 6,685 45.1 11.43 6.75 7.94 -14.99 -4.66 -38.97
PTRS Potters Financial Corp of OH 14.00 951 13.3 22.25 12.28 14.75 -5.08 13.09 -30.00
PHSB Ppls Home SB, MHC of PA (45.0) 14.75 2,760 18.3 22.13 14.00 14.50 1.72 -9.95 -21.88
PRBC Prestige Bancorp of PA 13.13 1,052 13.8 22.07 13.00 14.38 -8.69 -11.16 -24.50
PFNC Progress Financial Corp. of PA 13.75 5,246 72.1 21.67 13.10 15.38 -10.60 0.44 -12.48
PROV Provident Fin. Holdings of CA 14.75 4,854 71.6 24.25 14.25 16.13 -8.56 -23.38 -32.59
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 23.88 2,106 14.9 51.00 22.13 25.00 -4.48 -12.78 -23.90
PLSK Pulaski SB, MHC of NJ (47.0) 13.00 2,108 12.9 24.50 12.25 12.75 1.96 -25.71 -32.47
PULS Pulse Bancorp of S. River NJ(8) 25.00 3,120 78.0 30.50 20.50 27.00 -7.41 19.05 -4.32
QCFB QCF Bancorp of Virginia MN 28.00 1,365 38.2 31.75 25.00 29.50 -5.08 6.67 -5.88
QCBC Quaker City Bancorp of CA 14.75 5,827 85.9 21.25 14.75 16.38 -9.95 -12.72 -13.24
QCSB Queens County Bancorp of NY* 39.75 14,941 593.9 47.13 34.17 37.94 4.77 10.94 -1.85
RARB Raritan Bancorp of Raritan NJ* 25.50 2,373 60.5 30.25 22.25 27.25 -6.42 6.25 -8.93
RELY Reliance Bancorp, Inc. of NY 26.00 9,565 248.7 42.25 23.88 25.00 4.00 -18.44 -29.02
RELI Reliance Bancshares Inc of WI(8) 9.13 2,371 21.6 10.13 8.06 9.13 0.00 5.79 -3.89
RCBK Richmond County Fin Corp of NY 13.56 26,424 358.3 19.75 11.88 13.00 4.31 35.60 35.60
RIVR River Valley Bancorp of IN 15.00 1,190 17.9 20.75 13.75 15.38 -2.47 -9.09 -20.00
RVSB Riverview Bancorp of WA 12.00 6,186 74.2 19.13 10.84 12.25 -2.04 11.63 -32.39
RSLN Roslyn Bancorp, Inc. of NY* 16.63 41,400 688.5 30.50 13.75 16.00 3.94 -22.43 -28.47
SCCB S. Carolina Comm. Bnshrs of SC 20.50 580 11.9 24.50 18.50 20.25 1.23 -10.87 -8.89
SBFL SB Fngr Lakes MHC of NY (33.1) 14.50 3,570 17.1 24.75 12.00 17.00 -14.71 13.73 -9.38
SFED SFS Bancorp of Schenectady NY(8) 26.50 1,208 32.0 27.88 19.25 27.00 -1.85 39.47 -1.41
SGVB SGV Bancorp of W. Covina CA 11.75 2,348 27.6 19.38 11.75 15.00 -21.67 -22.34 -33.80
SISB SIS Bancorp, Inc. of MA(8)* 35.06 6,962 244.1 52.63 29.25 37.38 -6.21 18.33 -12.76
SWCB Sandwich Bancorp of MA(8)* 58.00 2,043 118.5 64.50 33.63 56.50 2.65 78.46 31.82
SFSL Security First Corp. of OH(8) 19.19 7,864 150.9 27.88 17.38 20.00 -4.05 9.66 -8.09
SKAN Skaneateles Bancorp Inc of NY* 14.63 1,445 21.1 22.25 14.63 14.63 0.00 -5.61 -33.89
SOBI Sobieski Bancorp of S. Bend IN 15.00 764 11.5 24.25 14.00 14.50 3.45 -8.76 -26.40
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
NWEQ Northwest Equity Corp. of WI 1.44 1.34 14.25 14.25 116.91
NTMG Nutmeg FS&LA of CT 0.87 0.46 6.31 6.31 104.10
OHSL OHSL Financial Corp. of OH 0.83 0.77 10.76 10.76 99.30
OCFC Ocean Fin. Corp. of NJ 0.88 0.88 13.57 13.51 99.03
OTFC Oregon Trail Fin. Corp. of OR 0.69 0.69 14.47 14.47 54.62
OFCP Ottawa Financial Corp. of MI 1.38 1.23 13.23 10.85 160.90
PFFB PFF Bancorp of Pomona CA 1.03 0.95 14.92 14.77 185.51
PSFI PS Financial of Chicago IL 0.42 0.73 11.27 11.27 42.10
PSBI PSB Bancorp Inc. of PA* 0.37 0.37 9.41 9.41 47.49
PVFC PVF Capital Corp. of OH 1.29 1.22 7.56 7.56 104.99
PBCI Pamrapo Bancorp, Inc. of NJ 1.65 1.59 17.30 17.21 138.68
PFED Park Bancorp of Chicago IL 0.70 0.71 16.55 16.55 81.39
PVSA Parkvale Financial Corp of PA 2.15 2.15 16.25 16.17 211.75
PBHC Pathfinder BC MHC of NY (45.2)* 0.52 0.43 8.32 7.10 69.97
PEEK Peekskill Fin. Corp. of NY 0.64 0.65 14.92 14.92 69.18
PFSB PennFed Fin. Services of NJ 1.19 1.16 11.05 9.61 165.35
PWBK Pennwood Bancorp, Inc. of PA 0.40 0.44 11.42 11.42 66.11
PBKB People's Bancshares of MA* 1.66 0.63 9.79 9.38 258.86
TSBS Peoples Bancorp Inc of NJ* 0.23 0.20 9.40 9.12 24.05
PFDC Peoples Bancorp of Auburn IN 1.28 1.28 13.57 13.57 90.65
PBCT Peoples Bank, MHC of CT (41.2)* 1.60 0.83 13.37 11.52 141.98
PFFC Peoples Fin. Corp. of OH 0.71 0.33 10.89 10.89 62.80
PHBK Peoples Heritage Fin Grp of ME* 0.76 1.02 8.26 6.86 111.55
PSFC Peoples Sidney Fin. Corp of OH 0.69 0.69 10.99 10.99 59.33
PERM Permanent Bancorp, Inc. of IN 0.64 0.60 10.52 8.59 122.69
PCBC Perry Co. Fin. Corp. of MO 1.01 1.00 20.02 20.02 108.41
PHFC Pittsburgh Home Fin Corp of PA 1.09 0.97 13.12 12.98 189.20
PFSL Pocahontas Bancorp of AR 0.40 0.40 8.74 8.47 60.52
PTRS Potters Financial Corp of OH 0.99 0.89 11.50 11.50 134.75
PHSB Ppls Home SB, MHC of PA (45.0) 0.63 0.58 10.41 10.41 82.15
PRBC Prestige Bancorp of PA 0.67 0.65 15.14 15.14 156.52
PFNC Progress Financial Corp. of PA 0.76 0.67 7.95 7.09 114.82
PROV Provident Fin. Holdings of CA 1.03 0.42 17.85 17.85 168.10
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 0.95 0.78 11.70 11.70 87.19
PLSK Pulaski SB, MHC of NJ (47.0) 0.47 0.51 10.53 10.53 89.08
PULS Pulse Bancorp of S. River NJ(8) 1.78 1.78 14.71 14.71 174.39
QCFB QCF Bancorp of Virginia MN 1.90 1.88 19.98 19.98 112.89
QCBC Quaker City Bancorp of CA 1.13 1.11 13.26 13.26 152.30
QCSB Queens County Bancorp of NY* 1.58 1.56 11.35 11.35 114.80
RARB Raritan Bancorp of Raritan NJ* 1.68 1.67 13.42 13.26 183.15
RELY Reliance Bancorp, Inc. of NY 1.96 2.06 20.37 14.21 259.88
RELI Reliance Bancshares Inc of WI(8) 0.20 0.20 9.31 9.31 18.63
RCBK Richmond County Fin Corp of NY 0.27 0.76 12.44 12.39 60.39
RIVR River Valley Bancorp of IN 1.08 0.96 15.35 15.14 112.48
RVSB Riverview Bancorp of WA 0.72 0.68 10.02 9.71 43.42
RSLN Roslyn Bancorp, Inc. of NY* 1.11 1.06 14.36 14.29 93.07
SCCB S. Carolina Comm. Bnshrs of SC 0.80 0.80 16.27 16.27 79.84
SBFL SB Fngr Lakes MHC of NY (33.1) 0.28 0.22 6.12 6.12 72.38
SFED SFS Bancorp of Schenectady NY(8) 0.95 0.92 18.14 18.14 147.43
SGVB SGV Bancorp of W. Covina CA 0.63 0.62 13.73 13.56 173.91
SISB SIS Bancorp, Inc. of MA(8)* 1.73 2.16 18.89 18.89 264.53
SWCB Sandwich Bancorp of MA(8)* 2.45 2.32 21.81 21.20 259.92
SFSL Security First Corp. of OH(8) 1.24 1.24 8.77 8.65 88.56
SKAN Skaneateles Bancorp Inc of NY* 1.09 1.06 12.69 12.39 184.59
SOBI Sobieski Bancorp of S. Bend IN 0.64 0.64 16.58 16.58 117.60
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SSFC South Street Fin. Corp. of NC* 8.56 4,676 40.0 20.00 8.38 9.06 -5.52 -54.66 -54.95
SBAN SouthBanc Shares Inc. of SC 16.25 4,306 70.0 23.76 15.00 16.00 1.56 -7.78 -23.57
SCBS Southern Commun. Bncshrs of AL 14.75 1,137 16.8 20.75 14.00 16.00 -7.81 -7.12 -19.18
SMBC Southern Missouri Bncrp of MO 16.00 1,484 23.7 23.25 16.00 17.25 -7.25 -6.60 -21.95
SVRN Sovereign Bancorp, Inc. of PA 13.13 152,393 2,000.9 22.19 12.19 13.94 -5.81 1.63 -24.06
STFR St. Francis Cap. Corp. of WI 38.88 5,111 198.7 50.75 35.75 39.00 -0.31 6.87 -23.01
SPBC St. Paul Bancorp, Inc. of IL 19.88 34,357 683.0 28.50 17.25 18.59 6.94 -17.17 -24.27
SFFC StateFed Financial Corp. of IA 10.00 1,566 15.7 15.00 9.00 12.00 -16.67 -9.09 -32.20
SFIN Statewide Fin. Corp. of NJ 16.75 4,397 73.6 26.69 15.25 15.88 5.48 -12.99 -30.21
STSA Sterling Financial Corp. of WA 15.88 7,606 120.8 27.63 14.75 16.38 -3.05 -22.08 -26.99
ROSE T R Financial Corp. of NY* 28.00 17,529 490.8 44.75 20.69 27.50 1.82 5.14 -15.79
THRD TF Financial Corp. of PA 17.75 3,192 56.7 30.00 17.75 19.38 -8.41 -11.25 -40.83
THTL Thistle Group Holdings of PA 8.50 9,000 76.5 10.06 7.63 8.00 6.25 -15.00 -15.00
TSBK Timberland Bancorp of WA 12.38 6,613 81.9 18.50 11.75 13.00 -4.77 23.80 23.80
TRIC Tri-County Bancorp of WY 11.50 1,167 13.4 16.50 11.38 12.00 -4.17 -2.13 -23.33
TWIN Twin City Bancorp, Inc. of TN 13.00 1,241 16.1 15.50 12.75 13.00 0.00 -3.70 -16.13
USAB USABancshares, Inc of PA* 8.50 2,002 17.0 13.31 5.81 9.63 -11.73 37.32 13.33
UCBC Union Community Bancorp of IN 11.00 3,042 33.5 15.81 11.00 12.00 -8.33 10.00 -24.81
UCFC United Community Fin. of OH 14.13 33,465 472.9 17.94 13.69 14.00 0.93 41.30 41.30
UFRM United FSB of Rocky Mount NC(8) 16.50 3,283 54.2 21.00 10.50 14.75 11.86 40.43 -15.94
UBMT United Fin. Corp. of MT 23.50 1,698 39.9 31.50 23.50 24.25 -3.09 N.A. N.A.
UTBI United Tenn. Bancshares of TN 11.69 1,455 17.0 16.00 11.69 12.25 -4.57 16.90 16.90
WHGB WHG Bancshares of MD 11.00 1,389 15.3 19.00 11.00 11.00 0.00 -30.16 -41.33
WSFS WSFS Financial Corp. of DE* 16.00 12,525 200.4 23.88 14.63 17.00 -5.88 4.92 -20.00
WVFC WVS Financial Corp. of PA 15.31 3,617 55.4 20.13 13.75 15.56 -1.61 10.30 -13.16
WRNB Warren Bancorp of Peabody MA* 10.13 7,905 80.1 14.38 9.00 9.50 6.63 11.81 -11.91
WSBI Warwick Community Bncrp of NY* 11.63 6,607 76.8 18.00 11.50 12.38 -6.06 16.30 -33.08
WFSL Washington Federal, Inc. of WA 22.25 52,447 1,166.9 30.29 22.25 24.69 -9.88 -12.98 -22.15
WYNE Wayne Bancorp, Inc. of NJ 29.00 2,013 58.4 37.06 21.00 27.06 7.17 22.11 8.41
WAYN Wayne Svgs Bks MHC of OH (48.2 21.25 2,486 25.4 30.00 20.46 21.50 -1.16 -2.61 -19.39
WCFB Wbstr Cty FSB MHC of IA (45.6) 15.25 2,114 14.7 22.00 15.25 16.75 -8.96 -14.71 -23.75
WBST Webster Financial Corp. of CT 22.88 38,327 876.9 36.25 20.63 22.69 0.84 -15.85 -31.19
WEFC Wells Fin. Corp. of Wells MN 16.75 1,879 31.5 22.00 16.00 17.50 -4.29 6.35 -6.32
WCBI WestCo Bancorp, Inc. of IL(8) 28.75 2,486 71.5 30.50 25.75 28.25 1.77 8.49 5.50
WSTR WesterFed Fin. Corp. of MT 18.50 5,585 103.3 27.00 17.00 18.38 0.65 -14.94 -27.45
WOFC Western Ohio Fin. Corp. of OH 20.75 2,298 47.7 29.25 20.75 21.75 -4.60 -12.63 -22.81
WEHO Westwood Hmstd Fin Corp of OH 10.63 2,559 27.2 18.13 10.63 11.00 -3.36 -30.30 -37.47
FFWD Wood Bancorp of OH 15.00 2,669 40.0 27.00 12.20 15.00 0.00 22.95 -20.21
YFCB Yonkers Fin. Corp. of NY 15.50 2,772 43.0 22.00 13.75 14.50 6.90 -17.33 -19.48
YFED York Financial Corp. of PA 18.25 8,968 163.7 27.25 16.81 19.25 -5.19 -4.95 -29.13
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SSFC South Street Fin. Corp. of NC* 0.22 0.22 7.37 7.37 43.56
SBAN SouthBanc Shares Inc. of SC 0.73 0.73 17.01 17.01 77.85
SCBS Southern Commun. Bncshrs of AL 0.54 0.54 10.10 10.10 63.72
SMBC Southern Missouri Bncrp of MO 0.72 0.75 16.25 16.25 105.07
SVRN Sovereign Bancorp, Inc. of PA 0.54 0.71 6.81 6.00 123.68
STFR St. Francis Cap. Corp. of WI 2.51 2.43 25.62 22.93 343.34
SPBC St. Paul Bancorp, Inc. of IL 1.44 1.39 12.75 12.70 132.87
SFFC StateFed Financial Corp. of IA 0.65 0.65 10.27 10.27 57.34
SFIN Statewide Fin. Corp. of NJ 1.21 1.16 14.51 14.49 149.34
STSA Sterling Financial Corp. of WA 0.89 1.07 13.90 5.47 273.04
ROSE T R Financial Corp. of NY* 2.23 1.90 14.62 14.62 234.80
THRD TF Financial Corp. of PA 1.39 1.12 16.18 13.73 215.94
THTL Thistle Group Holdings of PA 0.53 0.53 10.79 10.79 38.81
TSBK Timberland Bancorp of WA 0.67 0.63 12.87 12.87 39.79
TRIC Tri-County Bancorp of WY 0.76 0.78 12.20 12.20 74.16
TWIN Twin City Bancorp, Inc. of TN 0.89 0.72 11.29 11.29 89.13
USAB USABancshares, Inc of PA* 0.26 0.32 6.55 6.51 67.28
UCBC Union Community Bancorp of IN 0.47 0.47 14.22 14.22 35.53
UCFC United Community Fin. of OH 0.58 0.58 12.47 12.47 38.59
UFRM United FSB of Rocky Mount NC(8) 0.56 0.47 7.13 7.13 91.97
UBMT United Fin. Corp. of MT 0.80 0.80 17.83 17.23 120.93
UTBI United Tenn. Bancshares of TN 0.71 0.71 13.83 13.83 51.16
WHGB WHG Bancshares of MD 0.46 0.46 14.52 14.52 95.01
WSFS WSFS Financial Corp. of DE* 1.36 1.31 7.62 7.58 123.88
WVFC WVS Financial Corp. of PA 0.97 1.05 9.12 9.12 82.13
WRNB Warren Bancorp of Peabody MA* 0.80 0.80 5.02 5.02 47.84
WSBI Warwick Community Bncrp of NY* -0.36 0.39 12.94 12.94 56.13
WFSL Washington Federal, Inc. of WA 2.12 2.06 14.73 13.68 105.99
WYNE Wayne Bancorp, Inc. of NJ 0.93 0.90 17.47 17.47 136.78
WAYN Wayne Svgs Bks MHC of OH (48.2 0.73 0.66 9.94 9.94 104.35
WCFB Wbstr Cty FSB MHC of IA (45.6) 0.63 0.63 10.75 10.75 45.93
WBST Webster Financial Corp. of CT 1.29 1.45 14.31 12.13 239.76
WEFC Wells Fin. Corp. of Wells MN 1.27 1.18 15.43 15.43 100.41
WCBI WestCo Bancorp, Inc. of IL(8) 1.90 1.78 20.18 20.18 128.84
WSTR WesterFed Fin. Corp. of MT 1.30 1.30 19.64 16.01 183.01
WOFC Western Ohio Fin. Corp. of OH 0.12 0.10 22.57 21.11 155.48
WEHO Westwood Hmstd Fin Corp of OH 0.36 0.58 10.16 10.16 49.37
FFWD Wood Bancorp of OH 0.89 0.72 8.45 8.45 62.25
YFCB Yonkers Fin. Corp. of NY 1.07 0.97 14.91 14.91 144.86
YFED York Financial Corp. of PA 1.12 0.88 12.18 12.18 137.07
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-B
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(284) 13.79 13.52 0.91 7.80 5.73 0.86 7.31 0.64 147.07 0.80
NYSE Traded Companies(8) 8.31 7.98 0.76 10.41 6.60 0.47 7.67 1.82 107.55 1.45
AMEX Traded Companies(22) 14.22 14.10 0.76 5.84 5.34 0.79 5.66 0.58 180.30 0.76
NASDAQ Listed OTC Companies(254) 13.89 13.61 0.92 7.91 5.75 0.88 7.45 0.61 145.68 0.79
California Companies(18) 7.84 7.50 0.60 8.40 7.08 0.51 7.69 1.45 104.33 1.33
Florida Companies(6) 10.56 9.93 0.79 8.40 5.13 0.51 5.02 1.56 101.49 0.83
Mid-Atlantic Companies(56) 11.28 10.89 0.81 8.65 6.20 0.82 8.28 0.66 111.69 0.93
Mid-West Companies(131) 14.49 14.28 0.92 7.13 5.27 0.89 6.83 0.54 154.34 0.68
New England Companies(7) 7.44 7.12 0.72 9.86 7.58 0.62 8.56 0.48 185.95 0.99
North-West Companies(11) 18.17 17.59 1.18 8.86 5.86 1.05 7.94 0.61 211.29 0.80
South-East Companies(44) 17.21 17.05 1.07 7.83 5.40 1.01 7.32 0.59 156.12 0.78
South-West Companies(6) 11.17 11.07 0.93 10.04 9.53 0.90 9.72 0.34 182.35 0.55
Western Companies (Excl CA)(5) 16.98 16.49 0.89 6.03 5.48 0.90 6.07 0.37 194.20 0.93
Thrift Strategy(239) 14.82 14.59 0.93 7.41 5.76 0.90 7.07 0.59 149.25 0.75
Mortgage Banker Strategy(27) 7.53 6.82 0.74 9.71 4.96 0.66 9.07 0.63 151.84 0.95
Real Estate Strategy(8) 7.35 7.12 0.87 11.98 8.07 0.81 11.26 1.36 104.70 1.62
Diversified Strategy(7) 8.59 8.32 0.84 10.65 4.96 0.53 7.71 1.67 116.55 1.18
Retail Banking Strategy(3) 6.80 6.55 0.41 7.34 5.33 0.12 3.12 0.88 99.04 1.36
Companies Issuing Dividends(220) 13.91 13.63 0.96 8.10 5.97 0.89 7.37 0.56 150.52 0.76
Companies Without Dividends(64) 13.37 13.13 0.72 6.76 4.91 0.77 7.11 0.91 135.22 0.93
Equity/Assets (less than)6%(18) 5.07 4.63 0.51 10.31 5.37 0.57 11.46 1.11 107.84 0.98
Equity/Assets 6-12%(125) 8.70 8.30 0.82 9.64 6.44 0.72 8.47 0.63 147.77 0.89
Equity/Assets (greater than)12%(141) 19.32 19.17 1.04 5.88 5.17 1.02 5.77 0.59 151.86 0.70
Converted Last 3 Mths (no MHC)(6) 24.10 24.10 1.00 4.07 4.84 1.03 4.21 0.56 119.72 0.92
Actively Traded Companies(30) 9.18 8.68 0.91 10.59 5.77 0.93 11.33 0.82 139.36 0.94
Market Value Below $20 Million(60) 14.58 14.47 0.84 6.08 5.84 0.76 5.26 0.56 150.37 0.69
Holding Company Structure(256) 13.80 13.52 0.90 7.71 5.67 0.86 7.30 0.65 143.06 0.80
Assets Over $1 Billion(61) 9.22 8.58 0.79 10.22 6.46 0.77 9.79 0.88 124.54 0.98
Assets $500 Million-$1 Billion(36) 10.61 10.23 0.87 8.55 5.00 0.79 7.95 0.55 146.45 0.89
Assets $250-$500 Million(67) 13.95 13.73 0.90 7.62 5.97 0.88 7.18 0.58 169.23 0.82
Assets less than $250 Million(120) 16.86 16.77 0.98 6.49 5.48 0.92 5.98 0.57 148.17 0.67
Goodwill Companies(116) 10.59 9.91 0.83 9.25 6.14 0.79 8.57 0.74 126.00 0.89
Non-Goodwill Companies(166) 15.95 15.95 0.96 6.81 5.47 0.91 6.46 0.57 163.29 0.74
Acquirors of FSLIC Cases(8) 9.31 8.85 1.15 13.28 9.84 0.98 11.18 0.77 66.05 0.63
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Earning Book Assets Book Earnings Share Yield Ratio(7)
------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(284) 17.05 124.58 15.80 128.96 17.77 0.30 1.87 28.67
NYSE Traded Companies(8) 12.27 142.26 12.16 149.11 11.71 0.21 0.87 18.24
AMEX Traded Companies(22) 16.70 105.00 14.78 106.40 18.21 0.26 1.82 28.04
NASDAQ Listed OTC Companies(254) 17.17 125.90 15.99 130.49 17.85 0.31 1.91 29.02
California Companies(18) 13.70 108.51 8.49 114.47 13.09 0.15 0.73 15.31
Florida Companies(6) 19.10 135.35 14.70 148.81 22.53 0.24 1.31 23.63
Mid-Atlantic Companies(56) 16.07 124.74 13.20 132.50 17.62 0.27 1.59 26.30
Mid-West Companies(131) 17.51 122.84 16.48 125.84 17.91 0.30 1.94 29.21
New England Companies(7) 13.67 124.54 8.98 131.51 16.43 0.39 2.43 31.38
North-West Companies(11) 16.88 131.89 20.37 151.30 18.62 0.31 1.83 31.54
South-East Companies(44) 18.68 138.53 20.18 136.75 19.20 0.37 2.46 37.26
South-West Companies(6) 10.72 102.67 11.46 105.80 10.82 0.22 1.49 18.42
Western Companies (Excl CA)(5) 19.63 98.92 16.50 104.11 19.55 0.37 2.22 27.13
Thrift Strategy(239) 17.36 119.37 16.45 122.03 17.92 0.31 1.96 29.44
Mortgage Banker Strategy(27) 15.95 159.20 12.03 181.24 18.17 0.26 1.43 25.25
Real Estate Strategy(8) 13.32 136.53 10.18 140.12 13.54 0.18 0.88 13.02
Diversified Strategy(7) 17.44 191.88 16.02 198.33 17.41 0.39 1.95 38.86
Retail Banking Strategy(3) 7.88 105.63 6.90 109.02 11.99 0.15 1.02 11.07
Companies Issuing Dividends(220) 16.99 127.84 16.29 132.90 17.97 0.38 2.40 36.72
Companies Without Dividends(64) 17.24 113.29 14.10 115.09 17.01 0.01 0.05 1.34
Equity/Assets (less than)6%(18) 14.38 147.75 7.63 166.43 12.88 0.16 0.80 10.92
Equity/Assets 6-12%(125) 15.29 141.60 12.12 147.66 16.86 0.29 1.74 25.27
Equity/Assets (greater than)12%(141) 18.95 106.90 20.05 108.10 19.18 0.32 2.13 34.19
Converted Last 3 Mths (no MHC)(6) 21.47 85.39 21.06 85.39 20.49 0.13 1.79 0.00
Actively Traded Companies(30) 15.91 151.43 13.43 166.44 15.57 0.42 1.97 30.54
Market Value Below $20 Million(60) 17.76 103.34 14.61 104.06 19.35 0.29 2.32 31.28
Holding Company Structure(256) 17.23 125.43 15.94 129.75 17.81 0.31 1.89 29.55
Assets Over $1 Billion(61) 15.84 143.21 12.54 158.18 16.36 0.29 1.50 24.19
Assets $500 Million-$1 Billion(36) 15.24 141.33 13.97 149.21 17.27 0.31 1.60 25.81
Assets $250-$500 Million(67) 16.17 119.19 15.66 122.19 16.57 0.29 1.72 28.01
Assets less than $250 Million(120) 18.59 113.40 18.00 112.16 19.24 0.31 2.22 32.43
Goodwill Companies(116) 16.43 135.82 13.44 146.97 17.22 0.31 1.69 24.90
Non-Goodwill Companies(166) 17.42 116.85 17.40 116.85 18.12 0.30 2.01 31.49
Acquirors of FSLIC Cases(8) 11.58 134.80 12.70 142.07 12.93 0.47 2.10 24.37
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
BIF-Insured Thrifts(55) 12.10 11.76 1.07 10.70 7.07 1.05 10.05 0.62 212.65 1.24
NYSE Traded Companies(5) 16.97 15.76 1.36 9.50 6.29 1.50 9.36 1.01 106.47 0.96
AMEX Traded Companies(5) 11.94 11.63 1.11 10.60 7.83 0.91 8.41 1.08 111.06 1.15
NASDAQ Listed OTC Companies(45) 11.54 11.29 1.03 10.86 7.08 1.02 10.32 0.52 236.69 1.28
California Companies(1) 10.44 10.41 1.44 13.81 11.37 1.44 13.81 1.07 139.44 1.75
Mid-Atlantic Companies(20) 14.78 14.30 0.95 8.42 5.35 1.03 8.51 0.74 132.40 1.10
New England Companies(29) 9.83 9.53 1.15 12.79 8.28 1.04 11.40 0.60 249.48 1.41
North-West Companies(2) 11.11 11.11 1.29 12.54 8.04 1.26 12.26 0.07 989.94 1.07
South-East Companies(3) 15.09 14.94 0.95 5.65 6.03 0.99 5.83 0.32 152.62 0.52
Thrift Strategy(43) 13.09 12.80 1.06 9.86 6.84 1.05 9.21 0.57 206.26 1.17
Mortgage Banker Strategy(6) 8.49 8.02 1.05 13.08 7.76 0.94 11.46 0.61 320.76 1.15
Real Estate Strategy(2) 10.47 10.45 1.58 14.94 9.63 1.58 14.94 1.17 111.47 1.69
Diversified Strategy(4) 6.90 5.82 0.97 14.72 7.24 1.02 15.40 0.85 142.72 2.00
Companies Issuing Dividends(44) 11.76 11.34 1.09 11.02 7.04 1.04 10.14 0.63 203.27 1.16
Companies Without Dividends(11) 13.52 13.50 1.00 9.38 7.24 1.10 9.64 0.56 259.58 1.60
Equity/Assets (less than)6%(2) 4.68 4.60 0.96 19.68 9.50 0.61 12.04 0.58 121.04 0.91
Equity/Assets 6-12%(36) 8.54 8.09 1.04 12.27 7.57 0.98 11.46 0.75 207.89 1.41
Equity/Assets (greater than)12%(17) 19.88 19.72 1.13 6.60 5.84 1.24 7.06 0.31 238.85 0.92
Converted Last 3 Mths (no MHC)(1) 19.81 19.81 0.78 3.93 5.19 0.78 3.93 0.00 0.00 0.46
Actively Traded Companies(14) 10.39 9.93 1.36 13.73 8.84 1.30 12.40 0.43 205.71 1.08
Market Value Below $20 Million(5) 9.60 9.56 0.79 7.69 6.47 0.80 7.76 0.58 239.95 1.27
Holding Company Structure(42) 12.98 12.70 1.07 10.07 6.78 1.08 9.60 0.53 211.36 1.25
Assets Over $1 Billion(16) 11.22 10.43 1.21 11.94 7.05 1.24 11.76 0.70 157.45 1.28
Assets $500 Million-$1 Billion(11) 12.48 12.23 1.11 11.93 7.59 0.97 9.84 0.58 174.60 1.26
Assets $250-$500 Million(14) 11.55 11.41 1.05 11.01 7.50 1.07 10.51 0.62 273.24 1.53
Assets less than $250 Million(14) 13.35 13.23 0.91 8.29 6.34 0.88 7.88 0.55 241.39 0.90
Goodwill Companies(28) 11.15 10.46 1.00 10.89 7.14 0.94 9.76 0.82 142.52 1.24
Non-Goodwill Companies(26) 13.30 13.30 1.15 10.34 6.97 1.17 10.15 0.42 257.02 1.23
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
BIF-Insured Thrifts(55) 14.30 136.04 15.23 144.04 16.05 0.36 1.96 27.95
NYSE Traded Companies(5) 15.02 138.92 20.60 176.93 17.27 0.55 1.68 28.21
AMEX Traded Companies(5) 13.72 124.71 14.11 129.30 18.32 0.41 2.44 31.03
NASDAQ Listed OTC Companies(45) 14.30 137.08 14.72 141.83 15.61 0.34 1.93 27.53
California Companies(1) 8.80 113.72 11.87 114.05 8.80 0.00 0.00 0.00
Mid-Atlantic Companies(20) 17.10 128.19 17.65 139.90 18.39 0.42 1.80 32.60
New England Companies(29) 13.00 144.51 13.30 151.50 15.25 0.33 1.94 24.71
North-West Companies(2) 12.44 149.70 15.47 149.70 12.73 0.32 2.36 29.35
South-East Companies(3) 13.38 110.71 16.75 111.85 12.49 0.41 3.51 38.47
Thrift Strategy(43) 14.64 127.61 15.68 133.40 16.60 0.38 2.01 29.02
Mortgage Banker Strategy(6) 13.02 162.79 13.14 176.87 15.41 0.29 1.47 18.94
Real Estate Strategy(2) 10.73 157.76 16.52 157.92 10.73 0.18 1.78 22.50
Diversified Strategy(4) 15.10 180.56 12.38 211.01 14.03 0.37 2.29 35.67
Companies Issuing Dividends(44) 14.61 142.04 15.48 151.91 15.91 0.45 2.39 34.08
Companies Without Dividends(11) 12.78 111.48 14.18 111.76 16.61 0.02 0.14 0.00
Equity/Assets (less than)6%(2) 10.55 195.44 9.37 199.18 20.19 0.36 2.34 24.21
Equity/Assets 6-12%(36) 13.73 150.26 13.22 162.32 15.40 0.38 1.95 27.08
Equity/Assets (greater than)12%(17) 16.27 102.30 19.80 103.14 16.99 0.33 1.92 30.35
Converted Last 3 Mths (no MHC)(1) 19.27 75.77 15.01 75.77 19.27 0.00 0.00 0.00
Actively Traded Companies(14) 12.30 149.50 14.78 161.82 14.48 0.50 2.27 28.43
Market Value Below $20 Million(5) 14.02 117.96 11.28 118.49 16.54 0.34 1.96 26.86
Holding Company Structure(42) 14.74 131.70 15.99 136.90 16.55 0.36 1.94 28.81
Assets Over $1 Billion(16) 14.81 151.73 16.99 174.06 15.66 0.56 2.12 33.97
Assets $500 Million-$1 Billion(11) 13.24 138.78 15.10 142.32 16.30 0.28 1.98 28.91
Assets $250-$500 Million(14) 12.90 133.91 14.10 136.06 15.78 0.29 1.89 24.89
Assets less than $250 Million(14) 15.93 120.74 14.54 123.11 16.71 0.28 1.83 23.40
Goodwill Companies(28) 13.65 140.00 14.09 155.68 16.40 0.34 1.82 26.64
Non-Goodwill Companies(26) 15.03 130.07 16.53 130.07 15.82 0.39 2.11 29.80
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(19) 14.13 14.02 0.84 6.65 3.74 0.80 6.14 0.47 163.66 0.83
BIF-Insured Thrifts(3) 13.46 12.45 1.03 8.58 5.03 0.77 5.95 0.76 125.67 1.14
NASDAQ Listed OTC Companies(22) 14.03 13.77 0.87 6.96 3.94 0.79 6.11 0.52 157.33 0.88
Florida Companies(2) 6.15 5.98 0.65 8.98 4.79 0.52 7.18 0.27 78.51 0.34
Mid-Atlantic Companies(12) 12.83 12.55 0.78 6.31 3.75 0.74 5.94 0.55 141.41 0.80
Mid-West Companies(5) 14.49 14.49 0.90 6.38 3.66 0.81 5.45 0.41 219.34 0.55
New England Companies(2) 21.32 20.66 1.57 11.22 5.61 1.28 7.95 0.65 203.93 2.05
South-East Companies(1) 20.28 20.28 0.73 5.92 2.93 0.66 5.39 0.50 132.06 0.96
Thrift Strategy(20) 14.64 14.48 0.85 6.37 3.77 0.81 5.92 0.50 163.42 0.82
Mortgage Banker Strategy(1) 8.12 7.33 0.84 10.33 3.89 0.68 8.41 0.66 60.54 0.97
Diversified Strategy(1) 9.42 8.11 1.22 13.58 6.90 0.63 7.05 0.70 156.79 1.72
Companies Issuing Dividends(16) 13.50 13.12 0.88 7.64 4.09 0.78 6.52 0.56 141.46 0.93
Companies Without Dividends(6) 15.17 15.17 0.85 5.48 3.62 0.82 5.23 0.42 198.61 0.76
Equity/Assets 6-12%(12) 9.52 9.03 0.74 7.89 4.01 0.61 6.37 0.66 84.42 0.82
Equity/Assets (greater than)12%(10) 19.04 19.04 1.01 5.92 3.86 1.00 5.82 0.34 248.47 0.94
Holding Company Structure(4) 13.40 12.97 0.79 6.08 3.89 0.73 5.51 0.61 90.35 0.63
Assets Over $1 Billion(5) 10.26 9.64 0.95 9.80 4.82 0.76 7.62 0.48 121.45 0.98
Assets $500 Million-$1 Billion(3) 33.21 33.21 1.92 8.85 4.32 1.92 8.85 0.60 251.07 2.37
Assets $250-$500 Million(6) 12.42 12.42 0.75 5.97 3.49 0.72 5.65 0.45 177.83 0.57
Assets less than $250 Million(8) 15.34 15.10 0.77 5.50 3.65 0.72 5.04 0.58 154.93 0.85
Goodwill Companies(7) 10.07 9.25 0.87 9.09 4.53 0.69 7.13 0.69 90.23 0.84
Non-Goodwill Companies(15) 15.85 15.85 0.87 5.97 3.67 0.84 5.64 0.46 183.14 0.89
MHC Institutions(22) 14.03 13.77 0.87 6.96 3.94 0.79 6.11 0.52 157.33 0.88
MHC Converted Last 3 Months(2) 14.70 14.70 0.71 4.80 3.69 0.69 4.68 0.35 82.98 0.51
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(19) 25.42 163.99 21.25 167.64 25.40 0.26 1.64 28.72
BIF-Insured Thrifts(3) 21.14 156.03 20.37 174.43 26.20 0.35 1.71 30.32
NASDAQ Listed OTC Companies(22) 24.62 162.73 21.11 168.72 25.52 0.27 1.65 29.04
Florida Companies(2) 20.87 180.72 11.12 186.05 26.09 1.00 4.17 0.00
Mid-Atlantic Companies(12) 25.27 164.98 19.93 171.69 25.60 0.17 1.25 22.23
Mid-West Companies(5) 27.55 172.74 23.57 172.74 24.21 0.31 1.63 28.85
New England Companies(2) 18.82 145.03 27.53 158.96 25.54 0.52 2.73 47.53
South-East Companies(1) 0.00 123.09 24.97 123.09 0.00 0.20 1.78 60.61
Thrift Strategy(20) 25.26 156.99 21.44 160.46 25.32 0.24 1.54 26.34
Mortgage Banker Strategy(1) 25.70 249.64 20.27 276.49 0.00 0.22 1.59 40.74
Diversified Strategy(1) 14.49 173.45 16.33 201.30 27.94 0.84 3.62 52.50
Companies Issuing Dividends(16) 24.25 165.17 20.39 173.91 25.28 0.40 2.41 48.40
Companies Without Dividends(6) 25.42 157.45 22.66 157.45 25.90 0.00 0.00 0.00
Equity/Assets 6-12%(12) 24.59 190.23 17.68 201.60 25.85 0.36 1.95 36.00
Equity/Assets (greater than)12%(10) 24.65 132.18 24.92 132.18 25.31 0.17 1.31 21.09
Holding Company Structure(4) 25.88 156.76 20.17 163.60 25.64 0.21 1.11 12.82
Assets Over $1 Billion(5) 21.63 194.63 18.71 211.90 25.80 0.44 2.17 32.01
Assets $500 Million-$1 Billion(3) 23.15 116.61 38.73 116.61 23.15 0.20 1.84 42.55
Assets $250-$500 Million(6) 26.49 174.45 20.76 174.45 26.17 0.20 1.08 0.00
Assets less than $250 Million(8) 26.02 136.49 20.60 140.40 25.18 0.23 1.74 44.17
Goodwill Companies(7) 23.20 190.08 18.33 209.03 26.94 0.40 2.06 33.30
Non-Goodwill Companies(15) 25.46 150.11 22.39 150.11 24.89 0.21 1.46 26.91
MHC Institutions(22) 24.62 162.73 21.11 168.72 25.52 0.27 1.65 29.04
MHC Converted Last 3 Months(2) 27.24 131.02 19.45 131.02 27.91 0.00 0.00 0.00
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA(8) 6.11 4.66 0.85 17.57 7.23 0.84 17.38 1.72 52.05 1.33
BYS Bay State Bancorp of MA* 20.71 20.71 0.92 4.44 5.32 0.92 4.44 0.71 122.32 1.06
CFB Commercial Federal Corp. of NE 7.26 6.44 0.79 11.99 6.33 0.95 14.45 0.78 86.50 0.88
DME Dime Bancorp, Inc. of NY* 6.36 5.23 0.84 14.53 6.81 0.52 8.90 1.03 50.85 0.69
DSL Downey Financial Corp. of CA 7.87 7.79 0.97 13.20 8.71 1.01 13.65 0.84 65.10 0.60
FED FirstFed Fin. Corp. of CA 5.99 5.95 0.71 13.19 9.27 0.68 12.52 0.84 256.41 2.80
GSB Golden State Bancorp of CA(8) 6.20 5.20 0.52 8.40 9.58 0.62 10.08 0.86 100.48 1.12
GDW Golden West Fin. Corp. of CA 7.48 7.48 1.02 14.91 9.07 1.00 14.59 0.97 63.28 0.86
GPT GreenPoint Fin. Corp. of NY* 9.93 5.61 1.11 11.28 6.05 1.14 11.54 2.54 33.98 1.22
JSB JSB Financial, Inc. of NY* 24.31 24.31 2.92 12.15 9.93 3.28 13.64 0.16 238.05 0.54
OCN Ocwen Financial Corp. of FL 12.19 11.15 0.87 6.99 3.12 0.08 0.62 6.87 11.20 1.31
SIB Staten Island Bancorp of NY* 23.55 22.95 1.02 5.10 3.33 1.65 8.29 0.61 87.17 1.27
WES Westcorp Inc. of Orange CA 9.07 9.05 0.20 2.19 3.11 -0.89 -9.84 0.60 162.80 2.22
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 14.72 14.72 1.05 6.53 7.61 0.98 6.09 0.29 320.59 1.26
ANE Alliance Bncp of New Eng of CT* 7.81 7.64 0.94 12.52 8.50 0.46 6.06 0.53 229.26 1.84
BKC American Bank of Waterbury CT* 8.65 8.39 1.34 15.26 8.80 1.12 12.82 2.10 42.28 1.50
BFD BostonFed Bancorp of MA 7.80 7.53 0.71 8.62 7.88 0.57 6.92 0.17 413.47 0.84
CNY Carver Bancorp, Inc. of NY 8.12 7.84 0.25 2.99 4.74 0.22 2.65 2.21 36.35 1.28
CBK Citizens First Fin.Corp. of IL 13.95 13.95 0.71 5.12 5.42 0.40 2.89 0.67 54.73 0.45
EFC EFC Bancorp Inc of IL 23.66 23.66 -0.78 -5.19 -4.29 0.94 6.26 0.53 57.48 0.42
EBI Equality Bancorp, Inc. of MO 9.58 9.58 0.59 6.72 4.29 0.01 0.12 0.36 37.97 0.37
ESX Essex Bancorp of Norfolk VA(8) 0.02 -0.04 -0.24 NM -20.09 -0.24 NM 1.26 76.64 1.11
FCB Falmouth Bancorp, Inc. of MA* 21.38 21.38 1.08 4.71 4.48 0.82 3.58 NA NA 0.65
FAB FirstFed America Bancorp of MA 8.86 8.86 0.59 5.50 5.80 0.48 4.44 0.29 293.25 1.24
GAF GA Financial Corp. of PA 12.88 12.76 1.02 7.16 8.45 0.95 6.65 0.24 75.96 0.46
HBS Haywood Bancshares, Inc. of NC* 14.85 14.38 1.46 10.18 9.26 1.46 10.18 0.60 82.40 0.66
KNK Kankakee Bancorp, Inc. of IL 9.76 8.34 0.79 7.50 8.53 0.76 7.18 1.12 53.91 0.97
KYF Kentucky First Bancorp of KY 17.56 17.56 1.08 6.34 5.43 1.06 6.25 0.17 272.34 0.78
NBN Northeast Bancorp of ME* 7.00 6.36 0.73 10.34 8.09 0.66 9.41 1.08 90.28 1.12
NEP Northeast PA Fin. Corp of PA 17.78 17.78 -0.28 -1.52 -1.88 0.63 3.42 0.23 182.16 0.72
PDB Piedmont Bancorp, Inc. of NC 16.54 16.54 1.28 7.84 6.28 1.24 7.58 0.71 102.48 0.89
SSB Scotland Bancorp, Inc. of NC 24.95 24.95 1.33 4.93 3.98 1.33 4.93 NA NA 0.57
SZB SouthFirst Bancshares of AL 9.94 9.70 0.47 4.21 3.97 0.42 3.76 1.56 29.54 0.74
SRN Southern Banc Company of AL 17.39 17.27 0.49 2.86 3.00 0.49 2.86 NA NA 0.19
SSM Stone Street Bancorp of NC 27.32 27.32 1.39 4.89 5.21 1.39 4.89 0.03 NA 0.64
TSH Teche Holding Company of LA 13.84 13.84 0.94 6.97 7.72 0.93 6.84 0.18 460.90 0.98
FTF Texarkana Fst. Fin. Corp of AR 14.88 14.88 1.75 11.47 7.91 1.70 11.15 0.12 445.58 0.67
THR Three Rivers Fin. Corp. of MI 13.53 13.48 0.88 6.44 6.22 0.81 5.99 1.00 48.12 0.74
WSB Washington SB, FSB of MD 8.42 8.42 0.73 8.64 9.02 0.50 5.89 NA NA 1.02
WFI Winton Financial Corp. of OH 7.17 7.03 1.05 14.60 6.96 0.86 12.04 NA NA NA
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 9.17 9.00 0.73 8.30 4.14 0.51 5.83 1.84 30.69 0.77
FBER 1st Bergen Bancorp of NJ 11.60 11.60 0.72 5.57 5.05 0.72 5.57 0.96 111.28 2.41
AFED AFSALA Bancorp, Inc. of NY(8) 12.13 12.13 0.75 5.81 6.74 0.77 5.93 0.33 205.73 1.42
ALBK ALBANK Fin. Corp. of Albany NY(8) 9.19 7.27 1.14 12.55 6.08 1.14 12.51 0.85 84.14 1.04
AMFC AMB Financial Corp. of IN 12.68 12.68 0.84 5.95 6.48 0.54 3.86 0.19 214.55 0.52
ASBP ASB Financial Corp. of OH 12.45 12.45 0.94 6.35 5.65 0.94 6.35 0.34 191.18 0.98
ABBK Abington Bancorp of MA* 6.37 5.81 0.86 12.84 8.46 0.65 9.73 0.14 353.60 0.77
AABC Access Anytime Bancorp of NM 7.93 7.93 1.36 16.80 17.57 1.24 15.30 0.08 535.05 0.67
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA(8) 13.84 180.63 11.05 236.84 13.99 0.88 1.70 23.53
BYS Bay State Bancorp of MA* 18.81 83.47 17.29 83.47 18.81 0.00 0.00 0.00
CFB Commercial Federal Corp. of NE 15.79 150.82 10.95 170.18 13.10 0.22 0.95 15.07
DME Dime Bancorp, Inc. of NY* 14.68 194.11 12.35 236.00 23.95 0.20 0.88 12.90
DSL Downey Financial Corp. of CA 11.48 142.74 11.23 144.25 11.10 0.32 1.37 15.76
FED FirstFed Fin. Corp. of CA 10.78 131.33 7.87 132.27 11.36 0.00 0.00 0.00
GSB Golden State Bancorp of CA(8) 10.44 87.70 5.44 104.47 8.70 0.00 0.00 0.00
GDW Golden West Fin. Corp. of CA 11.02 151.81 11.36 151.81 11.27 0.50 0.65 7.15
GPT GreenPoint Fin. Corp. of NY* 16.54 189.15 18.77 334.57 16.17 0.64 2.21 36.57
JSB JSB Financial, Inc. of NY* 10.07 121.11 29.44 121.11 8.97 1.60 3.42 34.41
OCN Ocwen Financial Corp. of FL NM 205.41 25.03 224.57 NM 0.00 0.00 0.00
SIB Staten Island Bancorp of NY* NM 106.73 25.13 109.51 18.47 0.32 1.90 57.14
WES Westcorp Inc. of Orange CA NM 71.43 6.48 71.60 NM 0.20 2.22 71.43
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 13.14 88.47 13.02 88.47 14.09 0.44 2.84 37.29
ANE Alliance Bncp of New Eng of CT* 11.76 138.48 10.81 141.53 24.31 0.20 1.83 21.51
BKC American Bank of Waterbury CT* 11.37 163.56 14.15 168.62 13.52 0.80 3.87 43.96
BFD BostonFed Bancorp of MA 12.69 109.41 8.54 113.41 15.80 0.40 2.39 30.30
CNY Carver Bancorp, Inc. of NY 21.11 61.85 5.03 64.10 23.75 0.00 0.00 0.00
CBK Citizens First Fin.Corp. of IL 18.44 92.65 12.92 92.65 NM 0.00 0.00 0.00
EFC EFC Bancorp Inc of IL NM 81.61 19.31 81.61 19.34 0.00 0.00 NM
EBI Equality Bancorp, Inc. of MO 23.32 125.58 12.03 125.58 NM 0.24 1.84 42.86
ESX Essex Bancorp of Norfolk VA(8) NM NM 1.08 NM NM 0.00 0.00 NM
FCB Falmouth Bancorp, Inc. of MA* 22.33 103.14 22.05 103.14 29.39 0.24 1.43 32.00
FAB FirstFed America Bancorp of MA 17.24 101.49 9.00 101.49 21.36 0.20 1.40 24.10
GAF GA Financial Corp. of PA 11.84 89.50 11.52 90.34 12.74 0.00 0.00 0.00
HBS Haywood Bancshares, Inc. of NC* 10.80 105.20 15.63 108.63 10.80 0.60 3.16 34.09
KNK Kankakee Bancorp, Inc. of IL 11.72 86.18 8.41 100.86 12.25 0.00 0.00 0.00
KYF Kentucky First Bancorp of KY 18.42 117.40 20.62 117.40 18.67 0.50 3.67 67.57
NBN Northeast Bancorp of ME* 12.36 113.17 7.92 124.58 13.58 0.21 1.91 23.60
NEP Northeast PA Fin. Corp of PA NM 80.41 14.30 80.41 23.62 0.00 0.00 NM
PDB Piedmont Bancorp, Inc. of NC 15.93 121.78 20.15 121.78 16.48 0.48 5.02 NM
SSB Scotland Bancorp, Inc. of NC 25.14 138.94 34.66 138.94 25.14 0.20 1.81 45.45
SZB SouthFirst Bancshares of AL 25.20 99.28 9.87 101.77 28.19 0.60 3.61 NM
SRN Southern Banc Company of AL NM 93.65 16.29 94.34 NM 0.00 0.00 0.00
SSM Stone Street Bancorp of NC 19.21 94.65 25.86 94.65 19.21 0.46 2.92 56.10
TSH Teche Holding Company of LA 12.95 87.35 12.09 87.35 13.18 0.50 3.45 44.64
FTF Texarkana Fst. Fin. Corp of AR 12.64 141.71 21.09 141.71 12.99 0.56 2.43 30.77
THR Three Rivers Fin. Corp. of MI 16.09 101.06 13.67 101.44 17.29 0.44 2.71 43.56
WSB Washington SB, FSB of MD 11.09 93.67 7.89 93.67 16.27 0.10 2.05 22.73
WFI Winton Financial Corp. of OH 14.38 198.28 14.23 202.46 17.42 0.25 2.17 31.25
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 24.14 193.36 17.73 197.15 NM 0.27 0.64 15.43
FBER 1st Bergen Bancorp of NJ 19.82 120.37 13.97 120.37 19.82 0.28 1.72 34.15
AFED AFSALA Bancorp, Inc. of NY(8) 14.84 88.47 10.73 88.47 14.52 0.28 2.07 30.77
ALBK ALBANK Fin. Corp. of Albany NY(8) 16.46 193.83 17.81 244.85 16.51 0.84 1.51 24.85
AMFC AMB Financial Corp. of IN 15.43 94.09 11.93 94.09 23.77 0.28 1.93 29.79
ASBP ASB Financial Corp. of OH 17.69 131.28 16.35 131.28 17.69 0.40 3.48 61.54
ABBK Abington Bancorp of MA* 11.82 153.60 9.78 168.49 15.60 0.20 1.32 15.63
AABC Access Anytime Bancorp of NM 5.69 91.86 7.29 91.86 6.25 0.00 0.00 0.00
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
AFBC Advance Fin. Bancorp of WV 14.09 14.09 0.90 5.94 6.19 0.85 5.61 0.60 51.29 0.35
ALBC Albion Banc Corp. of Albion NY 8.49 8.49 0.54 6.24 5.91 0.50 5.88 0.47 72.86 0.44
ABCL Alliance Bancorp, Inc. of IL 8.74 8.66 0.75 8.27 5.86 0.92 10.16 0.13 240.27 0.47
ALLB Alliance Bank MHC of PA (19.9) 10.67 10.67 0.77 6.87 4.00 0.77 6.87 1.06 45.21 0.88
AHCI Ambanc Holding Co., Inc. of NY* 10.32 10.32 0.40 3.45 3.92 0.41 3.52 0.60 120.40 1.26
ASBI Ameriana Bancorp of IN 12.16 11.94 0.98 8.54 6.50 0.82 7.15 0.56 54.99 0.43
ABCW Anchor Bancorp Wisconsin of WI 6.36 6.26 1.11 17.35 5.54 0.97 15.09 0.58 180.99 1.29
ANDB Andover Bancorp, Inc. of MA* 8.20 8.20 1.19 14.69 8.84 1.16 14.33 0.38 195.38 1.00
ASFC Astoria Financial Corp. of NY 7.71 5.52 0.82 10.39 7.89 0.74 9.42 0.45 72.22 0.77
AVND Avondale Fin. Corp. of IL 7.60 7.60 -0.78 -9.51 -12.49 -0.56 -6.84 1.25 84.71 2.83
BCSB BCSB Bankcorp MHC of MD (38.6) 16.27 16.27 0.80 4.95 3.45 0.80 4.95 NA NA 0.56
BKCT Bancorp Connecticut of CT* 9.89 9.89 1.43 13.91 7.82 1.21 11.72 0.61 181.32 2.10
BPLS Bank Plus Corp. of CA 4.32 3.97 0.19 4.16 5.38 0.28 6.30 1.75 69.27 1.79
BNKU Bank United Corp. of TX 5.11 4.64 0.89 17.73 9.88 0.83 16.62 0.68 50.76 0.46
BWFC Bank West Fin. Corp. of MI 12.84 12.84 0.59 4.30 3.41 0.51 3.74 0.58 28.97 0.24
BANC BankAtlantic Bancorp of FL 6.79 5.25 0.83 13.33 7.73 0.37 5.93 0.81 100.62 1.12
BKUNA BankUnited Fin. Corp. of FL 5.11 4.27 0.23 5.40 3.79 0.13 3.15 0.46 37.03 0.21
BVCC Bay View Capital Corp. of CA 6.89 4.47 0.35 5.46 4.24 0.60 9.26 0.38 218.38 1.06
FSNJ Bayonne Banchsares of NJ(8) 13.70 13.70 0.73 5.31 3.88 0.73 5.31 0.44 96.50 0.92
BFSB Bedford Bancshares, Inc. of VA 13.24 13.24 1.23 8.87 6.70 1.21 8.76 0.21 232.62 0.60
BFFC Big Foot Fin. Corp. of IL 17.27 17.27 0.55 3.12 3.36 0.41 2.32 NA NA 0.26
BYFC Broadway Fin. Corp. of CA 10.13 10.13 0.52 5.03 8.36 0.33 3.20 1.15 68.56 0.97
BRKL Brookline Bncp MHC of MA(47.0) 33.21 33.21 1.92 8.85 4.32 1.92 8.85 0.60 251.07 2.37
CBES CBES Bancorp, Inc. of MO 13.62 13.62 0.94 6.07 5.89 0.67 4.33 NA NA 0.58
CCFH CCF Holding Company of GA 7.28 7.28 0.15 1.61 1.00 -0.01 -0.15 0.36 137.94 0.68
CITZ CFS Bancorp, Inc. of IN 17.41 17.41 0.58 3.31 3.94 0.64 3.68 0.67 42.30 0.81
CFSB CFSB Bancorp of Lansing MI 7.78 7.78 1.36 17.60 6.53 1.22 15.74 0.21 272.22 0.64
CKFB CKF Bancorp of Danville KY 21.57 21.57 1.34 5.95 5.94 1.34 5.95 0.54 40.24 0.24
CNSB CNS Bancorp, Inc. of MO 24.78 24.78 0.89 3.62 3.50 0.76 3.07 0.07 569.23 0.57
CSBF CSB Financial Group Inc of IL 23.13 21.83 0.70 3.03 4.05 0.72 3.11 1.13 34.83 0.69
CBCI Calumet Bancorp of Chicago IL 17.73 17.73 1.95 11.64 11.47 1.96 11.72 1.21 99.71 1.56
CAFI Camco Fin. Corp. of OH 9.90 9.30 1.26 13.00 7.69 0.91 9.41 0.72 39.75 0.34
CMRN Cameron Fin. Corp. of MO 19.87 19.87 1.14 5.47 6.31 1.12 5.36 1.06 67.46 0.87
CFNC Carolina Fincorp of NC* 13.50 13.50 0.93 4.48 6.26 1.05 5.04 0.14 283.77 0.51
CASB Cascade Financial Corp. of WA 7.07 7.07 0.84 12.48 6.51 0.75 11.13 0.54 171.37 1.07
CATB Catskill Fin. Corp. of NY* 22.04 22.04 1.31 5.48 6.75 1.29 5.41 0.22 282.65 1.43
CAVB Cavalry Bancorp of TN 29.66 29.66 1.48 5.11 3.60 1.09 3.76 0.05 NA 1.26
CNIT Cenit Bancorp of Norfolk VA 7.91 7.33 0.90 12.59 7.15 0.83 11.60 0.19 316.10 0.75
CEBK Central Co-Op. Bank of MA* 9.78 8.88 0.86 8.65 7.95 0.67 6.70 0.40 188.70 1.00
CENB Century Bancorp, Inc. of NC(8) 19.34 19.34 1.20 4.68 7.31 1.18 4.63 0.47 120.87 0.79
COFI Charter One Financial of OH 7.47 7.03 0.94 13.19 4.92 1.24 17.42 0.38 148.17 0.84
CVAL Chester Valley Bancorp of PA 8.45 8.45 0.96 11.13 5.35 0.90 10.49 0.33 274.00 1.23
CLAS Classic Bancshares, Inc. of KY 15.57 13.35 0.77 5.13 5.52 0.97 6.44 0.29 216.16 0.92
CBSA Coastal Bancorp of Houston TX 3.85 3.35 0.52 14.54 12.75 0.54 14.90 0.49 61.08 0.62
CFCP Coastal Fin. Corp. of SC 5.89 5.89 1.21 19.85 5.63 0.97 15.96 0.48 188.30 1.31
CFKY Columbia Financial of KY 31.50 31.50 0.48 2.32 1.83 0.48 2.32 0.40 63.42 0.48
CMSB Commonwealth Bancorp Inc of PA 8.44 6.64 0.57 6.25 5.73 0.41 4.43 0.41 97.65 0.66
CMSV Commty. Svgs, MHC of FL (48.5)(8) 10.85 10.85 0.70 6.35 4.59 0.65 5.85 0.27 133.22 0.52
CFTP Community Fed. Bancorp of MS 22.27 22.27 1.24 4.91 4.40 1.07 4.24 0.28 78.26 0.41
CFFC Community Fin. Corp. of VA 14.09 14.04 1.00 7.33 5.68 0.96 7.02 1.30 48.66 0.71
CIBI Community Inv. Bancorp of OH 10.98 10.98 0.94 8.14 5.26 0.94 8.14 0.56 98.23 0.66
COOP Cooperative Bancshares of NC 7.94 7.94 0.65 8.40 5.90 0.59 7.66 0.08 330.28 0.34
CRZY Crazy Woman Creek Bncorp of WY 23.43 23.43 1.24 5.18 5.96 1.24 5.18 0.13 355.84 0.92
CRSB Crusader Holding Corp of PA 11.50 10.89 2.27 32.12 7.61 2.09 29.47 0.96 44.19 0.50
DNFC D&N Financial Corp. of MI 5.57 5.52 0.85 15.64 9.54 0.75 13.67 0.50 113.36 0.83
DCBI Delphos Citizens Bancorp of OH 24.15 24.15 1.53 5.86 4.91 1.53 5.86 0.64 15.93 0.12
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
AFBC Advance Fin. Bancorp of WV 16.16 99.04 13.96 99.04 17.12 0.32 2.23 35.96
ALBC Albion Banc Corp. of Albion NY 16.92 103.11 8.76 103.11 17.98 0.12 1.39 23.53
ABCL Alliance Bancorp, Inc. of IL 17.08 109.18 9.54 110.08 13.91 0.44 2.55 43.56
ALLB Alliance Bank MHC of PA (19.9) 25.00 168.51 17.99 168.51 25.00 0.00 0.00 0.00
AHCI Ambanc Holding Co., Inc. of NY* 25.49 91.42 9.44 91.42 25.00 0.24 1.85 47.06
ASBI Ameriana Bancorp of IN 15.38 128.30 15.60 130.62 18.37 0.64 3.56 54.70
ABCW Anchor Bancorp Wisconsin of WI 18.04 302.73 19.24 307.34 20.74 0.20 0.90 16.26
ANDB Andover Bancorp, Inc. of MA* 11.32 156.16 12.80 156.16 11.60 0.72 2.62 29.63
ASFC Astoria Financial Corp. of NY 12.67 112.60 8.68 157.18 13.98 0.80 2.11 26.76
AVND Avondale Fin. Corp. of IL NM 81.29 6.18 81.29 NM 0.00 0.00 NM
BCSB BCSB Bankcorp MHC of MD (38.6) 29.00 143.41 23.33 143.41 29.00 0.00 0.00 0.00
BKCT Bancorp Connecticut of CT* 12.80 169.62 16.78 169.62 15.19 0.54 3.32 42.52
BPLS Bank Plus Corp. of CA 18.59 75.92 3.28 82.67 12.29 0.00 0.00 0.00
BNKU Bank United Corp. of TX 10.13 167.25 8.55 184.10 10.80 0.64 1.81 18.29
BWFC Bank West Fin. Corp. of MI 29.29 125.34 16.09 125.34 NM 0.00 0.00 0.00
BANC BankAtlantic Bancorp of FL 12.93 133.76 9.09 173.05 29.09 0.10 1.07 13.89
BKUNA BankUnited Fin. Corp. of FL 26.39 92.32 4.71 110.47 NM 0.00 0.00 0.00
BVCC Bay View Capital Corp. of CA 23.61 87.49 6.03 134.92 13.93 0.40 2.35 55.56
FSNJ Bayonne Banchsares of NJ(8) 25.80 124.74 17.09 124.74 25.80 0.25 1.90 49.02
BFSB Bedford Bancshares, Inc. of VA 14.94 127.49 16.88 127.49 15.13 0.32 2.78 41.56
BFFC Big Foot Fin. Corp. of IL 29.79 92.35 15.95 92.35 NM 0.00 0.00 0.00
BYFC Broadway Fin. Corp. of CA 11.96 59.18 5.99 59.18 18.75 0.19 2.30 27.54
BRKL Brookline Bncp MHC of MA(47.0) 23.15 116.61 38.73 116.61 23.15 0.20 1.84 42.55
CBES CBES Bancorp, Inc. of MO 16.96 105.97 14.44 105.97 23.75 0.48 2.53 42.86
CCFH CCF Holding Company of GA NM 162.92 11.86 162.92 NM 0.64 3.05 NM
CITZ CFS Bancorp, Inc. of IN 25.36 83.92 14.61 83.92 22.83 0.00 0.00 0.00
CFSB CFSB Bancorp of Lansing MI 15.32 269.18 20.95 269.18 17.13 0.52 2.39 36.62
CKFB CKF Bancorp of Danville KY 16.84 102.74 22.16 102.74 16.84 0.54 3.27 55.10
CNSB CNS Bancorp, Inc. of MO 28.55 102.51 25.40 102.51 NM 0.30 1.98 56.60
CSBF CSB Financial Group Inc of IL 24.71 74.93 17.33 79.39 24.12 0.00 0.00 0.00
CBCI Calumet Bancorp of Chicago IL 8.72 95.53 16.94 95.53 8.66 0.00 0.00 0.00
CAFI Camco Fin. Corp. of OH 13.01 150.66 14.91 160.32 17.98 0.39 2.44 31.71
CMRN Cameron Fin. Corp. of MO 15.84 88.79 17.64 88.79 16.16 0.28 1.75 27.72
CFNC Carolina Fincorp of NC* 15.96 110.78 14.96 110.78 14.19 0.24 2.68 42.86
CASB Cascade Financial Corp. of WA 15.36 173.23 12.25 173.23 17.23 0.00 0.00 0.00
CATB Catskill Fin. Corp. of NY* 14.83 83.83 18.48 83.83 15.00 0.37 2.90 43.02
CAVB Cavalry Bancorp of TN 27.76 141.21 41.88 141.21 NM 0.20 1.06 29.41
CNIT Cenit Bancorp of Norfolk VA 13.98 172.00 13.61 185.67 15.17 0.40 2.25 31.50
CEBK Central Co-Op. Bank of MA* 12.58 104.17 10.19 114.71 16.25 0.32 1.64 20.65
CENB Century Bancorp, Inc. of NC(8) 13.68 88.20 17.06 88.20 13.83 0.68 5.23 71.58
COFI Charter One Financial of OH 20.33 229.77 17.16 244.09 15.39 0.56 2.10 42.75
CVAL Chester Valley Bancorp of PA 18.71 189.92 16.05 189.92 19.85 0.42 1.62 30.22
CLAS Classic Bancshares, Inc. of KY 18.12 90.00 14.01 104.98 14.42 0.32 2.26 41.03
CBSA Coastal Bancorp of Houston TX 7.84 105.47 4.06 121.12 7.66 0.32 2.00 15.69
CFCP Coastal Fin. Corp. of SC 17.76 327.02 19.27 327.02 22.09 0.28 1.47 26.17
CFKY Columbia Financial of KY NM 85.53 26.94 85.53 NM 0.28 2.33 NM
CMSB Commonwealth Bancorp Inc of PA 17.44 116.19 9.80 147.49 24.59 0.32 2.13 37.21
CMSV Commty. Svgs, MHC of FL (48.5)(8) 21.78 135.05 14.66 135.05 23.66 0.90 4.09 NM
CFTP Community Fed. Bancorp of MS 22.73 112.53 25.06 112.53 26.32 0.32 2.13 48.48
CFFC Community Fin. Corp. of VA 17.61 124.38 17.53 124.88 18.38 0.00 0.00 0.00
CIBI Community Inv. Bancorp of OH 19.03 154.60 16.98 154.60 19.03 0.24 1.85 35.29
COOP Cooperative Bancshares of NC 16.94 133.80 10.63 133.80 18.58 0.00 0.00 0.00
CRZY Crazy Woman Creek Bncorp of WY 16.77 86.38 20.24 86.38 16.77 0.40 3.02 50.63
CRSB Crusader Holding Corp of PA 13.14 210.40 24.19 222.13 14.33 0.00 0.00 0.00
DNFC D&N Financial Corp. of MI 10.48 151.52 8.44 152.84 11.99 0.20 1.14 11.98
DCBI Delphos Citizens Bancorp of OH 20.36 124.87 30.15 124.87 20.36 0.24 1.30 26.37
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
DCOM Dime Community Bancorp of NY* 11.47 10.00 0.89 7.00 6.00 0.87 6.80 0.39 189.26 1.27
ESBF ESB Financial Corp of PA 7.20 6.42 0.69 9.08 6.54 0.69 9.08 0.60 83.44 1.34
EGLB Eagle BancGroup of IL 12.05 12.05 0.35 2.97 3.30 0.12 1.03 0.73 75.47 0.82
EBSI Eagle Bancshares of Tucker GA 6.92 6.92 0.88 11.78 8.76 0.85 11.46 1.20 49.97 0.78
ETFS East Texas Fin. Serv. of TX 17.29 17.29 0.53 3.02 3.09 0.45 2.58 0.41 46.61 0.38
ESBK Elmira Svgs Bank (The) of NY* 6.27 6.27 0.47 7.45 6.17 0.49 7.85 0.82 81.26 0.85
EMLD Emerald Financial Corp. of OH 8.50 8.40 1.13 14.08 5.58 1.03 12.82 0.30 86.50 0.32
EFBC Empire Federal Bancorp of MT 36.76 36.76 1.47 4.00 4.95 1.47 4.00 0.01 NA 0.41
EFBI Enterprise Fed. Bancorp of OH 9.96 9.71 0.78 6.96 3.76 0.67 5.95 0.06 333.77 0.30
EQSB Equitable FSB of Wheaton MD 5.12 5.12 0.70 13.60 8.09 0.66 12.87 NA NA NA
FCBF FCB Fin. Corp. of Neenah WI 14.47 14.47 1.24 8.45 5.54 0.92 6.26 0.22 327.68 0.98
FFDF FFD Financial Corp. of OH 22.27 22.27 1.73 7.25 6.41 0.78 3.26 0.08 329.27 0.40
FFLC FFLC Bancorp of Leesburg FL 12.80 12.80 1.00 7.60 6.06 0.94 7.17 0.26 192.43 0.59
FFWC FFW Corporation of Wabash IN 9.41 8.66 0.99 10.40 8.67 0.87 9.12 0.43 112.49 0.70
FFYF FFY Financial Corp. of OH 12.92 12.92 1.24 9.26 6.54 1.21 9.06 0.51 82.43 0.56
FMCO FMS Financial Corp. of NJ 6.08 6.03 0.85 13.57 6.49 0.85 13.57 0.70 68.77 1.07
FFHH FSF Financial Corp. of MN 10.43 10.43 0.79 7.33 7.51 0.75 6.92 0.20 123.88 0.37
FOBC Fed One Bancorp of Wheeling WV(8) 11.20 10.77 0.82 7.39 3.34 0.80 7.15 0.36 111.72 0.90
FBCI Fidelity Bancorp of Chicago IL 10.60 10.58 0.19 1.80 1.56 0.60 5.67 0.24 45.86 0.14
FSBI Fidelity Bancorp, Inc. of PA 7.09 7.09 0.74 10.76 7.84 0.72 10.54 0.17 330.68 1.05
FFFL Fidelity Bcsh MHC of FL (47.9) 6.15 5.98 0.65 8.98 4.79 0.52 7.18 0.27 78.51 0.34
FFED Fidelity Fed. Bancorp of IN 6.78 6.78 -0.34 -5.64 -6.89 -0.26 -4.29 0.38 613.16 2.77
FFOH Fidelity Financial of OH 12.41 11.04 0.89 7.16 6.54 0.86 6.91 0.26 121.33 0.40
FIBC Financial Bancorp, Inc. of NY(8) 8.42 8.39 0.94 10.48 5.45 0.91 10.17 1.92 25.63 0.87
FBSI First Bancshares, Inc. of MO 14.14 13.57 1.10 7.90 6.51 1.10 7.90 1.31 23.38 0.36
FBBC First Bell Bancorp of PA 10.16 10.16 1.08 10.33 7.25 1.07 10.24 0.05 191.03 0.13
SKBO First Carnegie MHC of PA(45.0) 16.79 16.79 0.57 3.37 3.27 0.68 4.03 0.59 64.19 0.80
FSTC First Citizens Corp of GA 10.09 8.07 1.91 19.64 8.63 1.73 17.77 1.17 86.37 1.39
FCME First Coastal Corp. of ME* 8.95 8.95 0.80 8.29 7.66 0.72 7.47 0.24 650.60 2.55
FDEF First Defiance Fin.Corp. of OH 17.74 17.74 0.94 4.96 5.56 0.90 4.74 0.29 171.18 0.62
FESX First Essex Bancorp of MA* 7.14 5.18 0.84 11.61 8.69 0.72 9.94 0.45 191.23 1.48
FFSX First FSB MHC Sxld of IA(46.3)(8) 7.62 6.14 0.68 8.41 4.29 0.66 8.20 0.46 102.36 0.64
FFES First Fed of E. Hartford CT 7.20 7.20 0.59 8.73 8.48 0.64 9.42 0.33 84.42 1.30
BDJI First Fed. Bancorp. of MN 10.46 10.46 0.70 6.62 5.49 0.71 6.70 0.18 202.30 0.78
FFBH First Fed. Bancshares of AR 14.71 14.71 1.00 6.71 6.00 0.99 6.65 0.85 20.75 0.23
FTFC First Fed. Capital Corp. of WI 7.50 7.14 1.20 17.23 7.16 0.83 11.82 0.23 212.49 0.75
FFKY First Fed. Fin. Corp. of KY 13.35 12.67 1.61 11.89 6.47 1.54 11.42 0.53 84.57 0.52
FFBZ First Federal Bancorp of OH 7.95 7.95 0.82 10.74 5.40 0.78 10.14 0.54 190.00 1.19
FFCH First Fin. Holdings Inc. of SC 6.49 6.49 0.89 14.08 6.27 0.85 13.47 1.16 56.67 0.80
FFHS First Franklin Corp. of OH 9.12 9.08 0.81 8.85 7.24 0.70 7.67 0.90 49.39 0.69
FGHC First Georgia Hold. Corp of GA 8.15 7.62 1.17 14.29 4.00 1.17 14.29 1.65 37.32 0.71
FFSL First Independence Corp. of KS 9.58 9.58 0.72 7.28 7.65 0.72 7.28 0.56 95.21 0.72
FISB First Indiana Corp. of IN 9.15 9.05 1.16 12.29 7.44 0.82 8.70 1.11 125.92 1.65
FKAN First Kansas Financial of KS 18.69 18.69 0.88 4.71 6.02 0.88 4.71 0.05 327.59 0.43
FKFS First Keystone Fin. Corp of PA 6.50 6.50 0.74 11.06 9.50 0.66 9.80 1.22 36.94 0.87
FLKY First Lancaster Bncshrs of KY 26.64 26.64 1.03 3.44 3.73 1.03 3.44 1.70 18.91 0.36
FLFC First Liberty Fin. Corp. of GA 7.35 6.72 0.77 10.36 3.70 0.80 10.78 0.77 132.28 1.51
CASH First Midwest Fin., Inc. of OH 10.18 9.09 0.71 6.60 6.01 0.64 5.93 1.94 37.96 1.19
FMBD First Mutual Bancorp Inc of IL(8) 14.62 11.38 0.35 2.53 2.35 0.27 1.94 0.33 115.88 0.48
FMSB First Mutual SB of Bellevue WA* 6.79 6.79 1.01 15.06 8.08 0.99 14.77 0.11 989.94 1.26
FNGB First Northern Cap. Corp of WI 10.89 10.89 0.98 8.88 6.88 0.90 8.16 0.12 400.84 0.54
FFPB First Palm Beach Bancorp of FL 6.85 6.71 0.45 6.95 5.03 0.24 3.70 0.51 59.41 0.50
FWWB First Savings Bancorp of WA 13.02 12.06 1.20 8.69 5.56 1.11 8.07 0.43 164.95 1.03
FSFF First SecurityFed Fin of IL 28.92 28.84 1.03 5.32 3.76 1.61 8.33 0.34 170.99 0.94
FSLA First Source Bancorp of NJ 21.24 20.56 1.04 8.63 4.50 1.01 8.39 0.35 159.84 1.04
SOPN First Svgs Bancorp of NC 22.86 22.86 1.76 7.70 6.68 1.76 7.70 0.18 109.36 0.29
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
DCOM Dime Community Bancorp of NY* 16.67 117.65 13.50 135.03 17.14 0.40 2.22 37.04
ESBF ESB Financial Corp of PA 15.29 131.14 9.44 146.92 15.29 0.36 2.29 34.95
EGLB Eagle BancGroup of IL NM 88.38 10.65 88.38 NM 0.00 0.00 0.00
EBSI Eagle Bancshares of Tucker GA 11.41 127.25 8.81 127.25 11.72 0.64 3.76 42.95
ETFS East Texas Fin. Serv. of TX NM 96.22 16.63 96.22 NM 0.00 0.00 0.00
ESBK Elmira Svgs Bank (The) of NY* 16.22 120.18 7.53 120.18 15.38 0.64 2.67 43.24
EMLD Emerald Financial Corp. of OH 17.91 234.83 19.97 237.62 19.67 0.14 1.17 20.90
EFBC Empire Federal Bancorp of MT 20.20 80.11 29.45 80.11 20.20 0.32 2.44 49.23
EFBI Enterprise Fed. Bancorp of OH 26.58 166.24 16.56 170.49 NM 1.00 3.65 NM
EQSB Equitable FSB of Wheaton MD 12.37 156.78 8.02 156.78 13.07 0.00 0.00 0.00
FCBF FCB Fin. Corp. of Neenah WI 18.05 140.32 20.30 140.32 24.33 0.88 3.23 58.28
FFDF FFD Financial Corp. of OH 15.60 110.17 24.54 110.17 NM 0.30 1.76 27.52
FFLC FFLC Bancorp of Leesburg FL 16.51 124.03 15.88 124.03 17.50 0.36 2.06 33.96
FFWC FFW Corporation of Wabash IN 11.54 114.33 10.76 124.28 13.16 0.42 2.80 32.31
FFYF FFY Financial Corp. of OH 15.28 140.48 18.15 140.48 15.61 0.80 2.71 41.45
FMCO FMS Financial Corp. of NJ 15.41 197.72 12.03 199.47 15.41 0.12 1.07 16.44
FFHH FSF Financial Corp. of MN 13.31 97.62 10.19 97.62 14.10 0.50 3.48 46.30
FOBC Fed One Bancorp of Wheeling WV(8) 29.90 214.46 24.02 222.90 NM 0.62 1.66 49.60
FBCI Fidelity Bancorp of Chicago IL NM 112.57 11.93 112.75 20.32 0.00 0.00 0.00
FSBI Fidelity Bancorp, Inc. of PA 12.76 130.01 9.22 130.01 13.03 0.00 0.00 0.00
FFFL Fidelity Bcsh MHC of FL (47.9) 20.87 180.72 11.12 186.05 26.09 1.00 4.17 NM
FFED Fidelity Fed. Bancorp of IN NM 84.81 5.75 84.81 NM 0.20 5.51 NM
FFOH Fidelity Financial of OH 15.29 110.26 13.68 123.93 15.85 0.32 2.46 37.65
FIBC Financial Bancorp, Inc. of NY(8) 18.34 184.19 15.52 184.96 18.90 0.00 0.00 0.00
FBSI First Bancshares, Inc. of MO 15.36 115.91 16.39 120.85 15.36 0.12 0.94 14.46
FBBC First Bell Bancorp of PA 13.79 135.82 13.80 135.82 13.91 0.40 2.50 34.48
SKBO First Carnegie MHC of PA(45.0) NM 103.48 17.38 103.48 25.58 0.30 2.73 NM
FSTC First Citizens Corp of GA 11.59 200.47 20.23 250.74 12.81 0.32 1.25 14.55
FCME First Coastal Corp. of ME* 13.06 104.07 9.31 104.07 14.51 0.00 0.00 0.00
FDEF First Defiance Fin.Corp. of OH 18.00 93.84 16.65 93.84 18.86 0.36 3.03 54.55
FESX First Essex Bancorp of MA* 11.51 128.93 9.20 177.78 13.45 0.56 3.50 40.29
FFSX First FSB MHC Sxld of IA(46.3)(8) 23.33 189.19 14.42 234.90 23.93 0.00 0.00 0.00
FFES First Fed of E. Hartford CT 11.80 97.67 7.03 97.67 10.93 0.68 2.71 31.92
BDJI First Fed. Bancorp. of MN 18.21 116.05 12.13 116.05 17.99 0.00 0.00 0.00
FFBH First Fed. Bancshares of AR 16.67 108.82 16.01 108.82 16.81 0.28 1.47 24.56
FTFC First Fed. Capital Corp. of WI 13.97 221.96 16.65 233.22 20.36 0.28 1.96 27.45
FFKY First Fed. Fin. Corp. of KY 15.44 178.47 23.82 187.99 16.07 0.60 2.54 39.22
FFBZ First Federal Bancorp of OH 18.52 191.20 15.20 191.20 19.61 0.14 1.40 25.93
FFCH First Fin. Holdings Inc. of SC 15.95 207.40 13.46 207.40 16.67 0.42 2.27 36.21
FFHS First Franklin Corp. of OH 13.81 119.24 10.88 119.74 15.93 0.30 2.07 28.57
FGHC First Georgia Hold. Corp of GA 25.00 333.88 27.20 NM 25.00 0.00 0.00 0.00
FFSL First Independence Corp. of KS 13.07 93.12 8.92 93.12 13.07 0.30 2.61 34.09
FISB First Indiana Corp. of IN 13.44 157.50 14.42 159.27 18.99 0.48 2.43 32.65
FKAN First Kansas Financial of KS 16.61 78.22 14.62 78.22 16.61 0.00 0.00 0.00
FKFS First Keystone Fin. Corp of PA 10.53 113.96 7.41 113.96 11.88 0.20 1.67 17.54
FLKY First Lancaster Bncshrs of KY 26.84 91.82 24.46 91.82 26.84 0.60 4.38 NM
FLFC First Liberty Fin. Corp. of GA 27.03 268.46 19.73 293.69 25.97 0.30 1.50 40.54
CASH First Midwest Fin., Inc. of OH 16.63 110.48 11.25 123.75 18.50 0.48 2.65 44.04
FMBD First Mutual Bancorp Inc of IL(8) NM 105.79 15.47 135.98 NM 0.32 1.92 NM
FMSB First Mutual SB of Bellevue WA* 12.38 176.59 11.99 176.59 12.62 0.20 1.57 19.42
FNGB First Northern Cap. Corp of WI 14.53 126.62 13.79 126.62 15.81 0.36 3.35 48.65
FFPB First Palm Beach Bancorp of FL 19.87 131.75 9.03 134.55 NM 0.70 2.26 44.87
FWWB First Savings Bancorp of WA 17.97 156.78 20.41 169.16 19.36 0.36 1.79 32.14
FSFF First SecurityFed Fin of IL 26.63 83.96 24.28 84.19 17.01 0.00 0.00 0.00
FSLA First Source Bancorp of NJ 22.22 97.92 20.80 101.14 22.86 0.18 2.25 50.00
SOPN First Svgs Bancorp of NC 14.96 113.45 25.93 113.45 14.96 1.00 4.71 70.42
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FBNW FirstBank Corp of Clarkston WA 15.63 15.63 1.08 7.37 6.41 0.61 4.18 0.39 160.81 0.78
FFDB FirstFed Bancorp, Inc. of AL 9.71 8.95 0.93 9.56 5.44 0.93 9.56 1.41 41.95 0.90
FSPT FirstSpartan Fin. Corp. of SC 24.31 24.31 1.41 6.66 5.45 1.37 6.47 0.38 111.34 0.51
FLAG Flag Financial Corp of GA 8.89 8.89 0.88 9.49 2.94 0.61 6.57 1.33 65.46 1.22
FLGS Flagstar Bancorp, Inc of MI 5.55 5.40 1.41 23.50 10.48 1.41 23.50 2.26 20.60 0.53
FFIC Flushing Fin. Corp. of NY* 12.80 12.33 0.93 6.92 5.50 0.94 6.98 0.31 198.69 1.00
FBHC Fort Bend Holding Corp. of TX(8) 7.15 6.76 0.66 10.00 6.86 0.43 6.58 0.41 123.80 0.90
FTSB Fort Thomas Fin. Corp. of KY 16.07 16.07 1.18 7.42 6.04 1.18 7.42 1.93 30.61 0.65
FKKY Frankfort First Bancorp of KY 16.88 16.88 1.19 7.05 6.88 1.19 7.05 NA NA 0.08
FTNB Fulton Bancorp, Inc. of MO 23.37 23.37 1.22 5.01 4.44 0.95 3.88 0.70 126.01 1.06
GUPB GFSB Bancorp, Inc of Gallup NM 12.34 12.34 0.91 6.67 5.64 0.91 6.67 0.37 86.67 0.54
GSLA GS Financial Corp. of LA 36.03 36.03 1.14 2.73 3.83 0.99 2.38 0.12 260.11 0.74
GOSB GSB Financial Corp. of NY* 24.90 24.90 0.73 3.21 3.49 0.69 3.05 0.09 156.52 0.24
GBNK Gaston Fed Bncp MHC of NC(47.0 20.28 20.28 0.73 5.92 2.93 0.66 5.39 0.50 132.06 0.96
GFCO Glenway Financial Corp. of OH 9.57 9.49 0.86 9.12 5.84 0.87 9.20 0.19 184.71 0.41
GTPS Great American Bancorp of IL 18.27 18.27 0.70 3.57 3.76 0.70 3.57 0.08 484.87 0.47
PEDE Great Pee Dee Bancorp of SC 45.12 45.12 1.97 4.37 5.17 1.97 4.37 0.73 65.48 0.59
GSFC Green Street Fin. Corp. of NC 34.90 34.90 1.59 4.49 5.52 1.59 4.49 0.07 216.10 0.19
GFED Guaranty Fed Bancshares of MO 27.19 27.19 1.22 5.29 4.29 1.22 5.29 0.35 241.97 1.05
HCBB HCB Bancshares of Camden AR 17.25 17.04 0.33 1.99 2.27 0.33 1.99 0.44 150.91 1.38
HEMT HF Bancorp of Hemet CA 8.01 6.85 0.01 0.15 0.14 0.06 0.77 NA NA NA
HFFC HF Financial Corp. of SD 9.93 9.93 1.13 11.75 9.48 0.98 10.23 0.53 239.17 1.62
HFNC HFNC Financial Corp. of NC(8) 16.96 16.96 1.44 8.07 7.43 0.98 5.49 0.53 131.75 0.86
HMNF HMN Financial, Inc. of MN 11.61 10.79 0.92 6.94 7.71 0.65 4.91 0.09 449.77 0.61
HALL Hallmark Capital Corp. of WI 7.63 7.63 0.66 8.85 8.09 0.62 8.29 0.32 168.40 0.82
HRBF Harbor Federal Bancorp of MD 12.60 12.60 0.77 6.06 5.22 0.75 5.87 0.32 65.53 0.33
HARB Harbor Florida Bancshrs of FL 19.60 19.39 1.36 10.13 5.05 1.29 9.56 0.43 208.24 1.27
HFSA Hardin Bancorp of Hardin MO 10.10 10.10 0.69 6.14 6.03 0.60 5.35 0.14 145.30 0.40
HARL Harleysville SB of PA 6.41 6.41 0.97 14.71 7.02 0.97 14.71 NA NA 0.79
HFGI Harrington Fin. Group of IN 4.68 4.68 -0.37 -7.67 -5.92 -0.13 -2.69 0.18 40.45 0.22
HARS Harris Fin. MHC of PA (24.9) 8.12 7.33 0.84 10.33 3.89 0.68 8.41 0.66 60.54 0.97
HFFB Harrodsburg 1st Fin Bcrp of KY 26.46 26.46 1.36 5.11 5.05 1.36 5.11 0.55 66.83 0.48
HHFC Harvest Home Fin. Corp. of OH 11.35 11.35 0.72 6.20 5.84 0.62 5.35 0.09 144.19 0.25
HAVN Haven Bancorp of Woodhaven NY 5.21 4.98 0.45 7.89 6.95 0.48 8.36 0.45 132.08 0.97
HTHR Hawthorne Fin. Corp. of CA 3.97 3.97 0.94 21.21 20.42 1.09 24.78 6.67 18.16 1.31
HMLK Hemlock Fed. Fin. Corp. of IL 15.14 15.14 0.93 5.41 5.79 0.91 5.28 0.06 625.00 0.84
HBSC Heritage Bancorp, Inc of SC 31.48 31.48 1.12 5.60 4.71 1.12 5.60 0.44 57.25 0.38
HFWA Heritage Financial Corp of WA 28.80 28.80 1.11 5.92 3.32 0.57 3.04 0.12 761.93 1.28
HCBC High Country Bancorp of CO 19.56 19.56 0.84 7.33 4.42 0.84 7.33 0.45 167.06 0.94
HBNK Highland Bancorp of CA 7.87 7.87 1.36 17.69 8.29 1.20 15.55 1.84 88.38 2.06
HIFS Hingham Inst. for Sav. of MA* 9.43 9.43 1.25 13.14 9.49 1.24 13.02 0.17 396.87 0.90
HBEI Home Bancorp of Elgin IL(8) 26.10 26.10 0.69 2.60 2.88 0.69 2.60 0.28 107.27 0.35
HBFW Home Bancorp of Fort Wayne IN 11.92 11.92 0.85 6.84 4.67 0.83 6.68 0.10 402.90 0.43
HCFC Home City Fin. Corp. of OH 13.87 13.87 1.30 7.09 8.75 1.28 7.02 0.59 97.81 0.63
HOMF Home Fed Bancorp of Seymour IN 9.31 9.07 1.48 16.63 8.24 1.16 13.00 0.59 100.21 0.71
HWEN Home Financial Bancorp of IN 17.64 17.64 0.92 5.30 5.42 0.70 4.04 1.10 68.52 0.93
HLFC Home Loan Financial Corp of OH 38.53 38.53 1.34 4.88 3.06 1.34 4.88 0.29 92.92 0.39
HPBC Home Port Bancorp, Inc. of MA* 8.71 8.71 1.45 14.51 8.71 1.62 16.29 0.26 453.64 1.38
HSTD Homestead Bancorp, Inc. of LA 21.66 21.66 0.75 3.46 4.84 0.75 3.46 0.27 119.47 0.69
HFBC HopFed Bancorp of KY 26.78 26.78 1.22 8.52 4.33 1.22 8.52 0.11 107.86 0.23
HZFS Horizon Fin'l. Services of IA 9.11 9.11 0.91 9.24 5.81 0.70 7.08 NA NA NA
HRZB Horizon Financial Corp. of WA* 15.43 15.43 1.56 10.03 8.00 1.52 9.76 0.02 NA 0.88
HRBT Hudson River Bancorp Inc of NY 26.74 26.74 0.90 3.36 3.88 1.03 3.85 1.66 58.37 1.87
ITLA ITLA Capital Corp of CA* 10.44 10.41 1.44 13.81 11.37 1.44 13.81 1.07 139.44 1.75
ICBC Independence Comm Bnk Cp of NY 20.07 18.95 -0.81 -4.22 -4.14 0.68 3.58 0.60 135.71 1.34
IFSB Independence FSB of DC 7.21 6.53 1.15 15.91 18.92 0.18 2.52 NA NA 0.42
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FBNW FirstBank Corp of Clarkston WA 15.60 98.76 15.44 98.76 27.51 0.32 2.12 32.99
FFDB FirstFed Bancorp, Inc. of AL 18.38 172.65 16.77 187.41 18.38 0.28 2.24 41.18
FSPT FirstSpartan Fin. Corp. of SC 18.36 109.91 26.71 109.91 18.90 0.60 1.85 33.90
FLAG Flag Financial Corp of GA NM 311.03 27.65 311.03 NM 0.24 1.81 61.54
FLGS Flagstar Bancorp, Inc of MI 9.55 201.15 11.16 206.69 9.55 0.28 1.33 12.73
FFIC Flushing Fin. Corp. of NY* 18.18 122.91 15.74 127.61 18.03 0.36 1.64 29.75
FBHC Fort Bend Holding Corp. of TX(8) 14.59 132.83 9.49 140.46 22.17 0.00 0.00 0.00
FTSB Fort Thomas Fin. Corp. of KY 16.56 119.91 19.27 119.91 16.56 0.25 1.89 31.25
FKKY Frankfort First Bancorp of KY 14.54 101.64 17.15 101.64 14.54 0.80 5.61 NM
FTNB Fulton Bancorp, Inc. of MO 22.51 112.08 26.19 112.08 29.10 0.24 1.42 32.00
GUPB GFSB Bancorp, Inc of Gallup NM 17.72 115.32 14.23 115.32 17.72 0.30 2.14 37.97
GSLA GS Financial Corp. of LA 26.09 74.95 27.01 74.95 30.00 0.28 2.33 60.87
GOSB GSB Financial Corp. of NY* 28.66 82.17 20.46 82.17 NM 0.12 1.02 29.27
GBNK Gaston Fed Bncp MHC of NC(47.0 NM 123.09 24.97 123.09 NM 0.20 1.78 60.61
GFCO Glenway Financial Corp. of OH 17.12 150.79 14.43 152.12 16.96 0.44 2.32 39.64
GTPS Great American Bancorp of IL 26.59 98.13 17.93 98.13 26.59 0.44 2.63 69.84
PEDE Great Pee Dee Bancorp of SC 19.35 84.57 38.16 84.57 19.35 0.36 3.00 58.06
GSFC Green Street Fin. Corp. of NC 18.12 84.40 29.45 84.40 18.12 0.48 3.84 69.57
GFED Guaranty Fed Bancshares of MO 23.33 92.51 25.15 92.51 23.33 0.32 3.05 71.11
HCBB HCB Bancshares of Camden AR NM 76.12 13.13 77.03 NM 0.20 1.82 NM
HEMT HF Bancorp of Hemet CA NM 107.45 8.60 125.60 NM 0.00 0.00 0.00
HFFC HF Financial Corp. of SD 10.54 120.34 11.95 120.34 12.11 0.00 0.00 0.00
HFNC HFNC Financial Corp. of NC(8) 13.46 105.63 17.91 105.63 19.81 0.32 3.05 41.03
HMNF HMN Financial, Inc. of MN 12.97 87.86 10.20 94.50 18.33 0.24 1.75 22.64
HALL Hallmark Capital Corp. of WI 12.37 103.07 7.86 103.07 13.20 0.00 0.00 0.00
HRBF Harbor Federal Bancorp of MD 19.15 112.92 14.23 112.92 19.78 0.47 2.61 50.00
HARB Harbor Florida Bancshrs of FL 19.81 124.85 24.48 126.20 21.00 0.26 2.48 49.06
HFSA Hardin Bancorp of Hardin MO 16.58 101.45 10.25 101.45 19.03 0.56 3.34 55.45
HARL Harleysville SB of PA 14.25 195.71 12.55 195.71 14.25 0.00 0.00 0.00
HFGI Harrington Fin. Group of IN NM 139.16 6.51 139.16 NM 0.12 1.25 NM
HARS Harris Fin. MHC of PA (24.9) 25.70 249.64 20.27 276.49 NM 0.22 1.59 40.74
HFFB Harrodsburg 1st Fin Bcrp of KY 19.81 102.21 27.05 102.21 19.81 0.40 2.62 51.95
HHFC Harvest Home Fin. Corp. of OH 17.12 106.56 12.09 106.56 19.84 0.44 3.52 60.27
HAVN Haven Bancorp of Woodhaven NY 14.38 107.88 5.62 112.87 13.57 0.30 2.09 30.00
HTHR Hawthorne Fin. Corp. of CA 4.90 94.62 3.76 94.62 4.19 0.00 0.00 0.00
HMLK Hemlock Fed. Fin. Corp. of IL 17.26 97.91 14.82 97.91 17.68 0.32 2.21 38.10
HBSC Heritage Bancorp, Inc of SC 21.22 78.84 24.82 78.84 21.22 0.30 1.86 39.47
HFWA Heritage Financial Corp of WA NM 116.79 33.64 116.79 NM 0.16 1.44 43.24
HCBC High Country Bancorp of CO 22.64 87.98 17.21 87.98 22.64 0.00 0.00 0.00
HBNK Highland Bancorp of CA 12.06 196.18 15.43 196.18 13.72 0.50 1.32 15.87
HIFS Hingham Inst. for Sav. of MA* 10.53 131.58 12.40 131.58 10.63 0.56 2.46 25.93
HBEI Home Bancorp of Elgin IL(8) NM 89.29 23.31 89.29 NM 0.40 3.20 NM
HBFW Home Bancorp of Fort Wayne IN 21.43 147.78 17.62 147.78 21.95 0.32 1.19 25.40
HCFC Home City Fin. Corp. of OH 11.43 100.33 13.92 100.33 11.54 0.36 3.00 34.29
HOMF Home Fed Bancorp of Seymour IN 12.13 188.03 17.50 192.91 15.51 0.40 1.63 19.80
HWEN Home Financial Bancorp of IN 18.45 95.92 16.92 95.92 24.22 0.10 1.29 23.81
HLFC Home Loan Financial Corp of OH NM 95.30 36.72 95.30 NM 0.05 0.37 12.20
HPBC Home Port Bancorp, Inc. of MA* 11.48 160.31 13.97 160.31 10.23 0.80 4.05 46.51
HSTD Homestead Bancorp, Inc. of LA 20.67 71.54 15.49 71.54 20.67 0.80 10.75 NM
HFBC HopFed Bancorp of KY 23.10 115.01 30.80 115.01 23.10 0.00 0.00 0.00
HZFS Horizon Fin'l. Services of IA 17.22 161.46 14.71 161.46 22.46 0.18 1.16 20.00
HRZB Horizon Financial Corp. of WA* 12.50 122.81 18.95 122.81 12.84 0.44 3.14 39.29
HRBT Hudson River Bancorp Inc of NY 25.76 86.56 23.14 86.56 22.47 0.00 0.00 0.00
ITLA ITLA Capital Corp of CA* 8.80 113.72 11.87 114.05 8.80 0.00 0.00 0.00
ICBC Independence Comm Bnk Cp of NY NM 101.43 20.35 107.38 28.47 0.00 0.00 NM
IFSB Independence FSB of DC 5.28 84.09 6.07 92.92 NM 0.25 1.92 10.16
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
INBI Industrial Bancorp of OH 15.97 15.97 1.47 8.77 6.39 1.47 8.77 0.30 159.91 0.54
IWBK Interwest Bancorp of WA 6.76 6.65 1.04 15.60 5.08 0.88 13.18 0.67 80.89 0.88
IPSW Ipswich SB of Ipswich MA* 5.58 5.58 1.19 21.84 9.08 0.95 17.43 0.80 92.60 0.94
JXVL Jacksonville Bancorp of TX 14.45 14.45 1.34 9.15 8.59 1.34 9.15 NA NA NA
JXSB Jcksnville SB,MHC of IL (45.6) 10.54 10.54 0.59 5.68 3.41 0.38 3.60 0.68 65.11 0.59
JSBA Jefferson Svgs Bancorp of MO 9.56 7.67 0.78 8.70 5.76 0.69 7.72 0.74 72.40 0.73
KSBK KSB Bancorp of Kingfield ME* 7.78 6.77 1.08 13.91 7.71 1.08 13.91 1.74 52.91 1.14
KFBI Klamath First Bancorp of OR 13.98 12.81 0.95 6.16 6.43 0.94 6.10 0.05 356.52 0.26
LSBI LSB Fin. Corp. of Lafayette IN 8.40 8.40 0.85 9.94 6.07 0.73 8.54 1.20 58.59 0.80
LVSB Lakeview Financial of NJ 9.73 6.64 1.69 16.30 8.19 0.84 8.15 0.96 70.27 1.47
LARK Landmark Bancshares, Inc of KS 13.07 13.07 1.06 7.68 7.18 0.90 6.47 0.25 196.35 0.66
LARL Laurel Capital Group of PA 10.64 10.64 1.42 13.56 8.42 1.46 13.95 0.32 263.07 1.20
LSBX Lawrence Savings Bank of MA* 12.07 12.07 2.58 24.91 17.67 2.54 24.56 0.24 389.46 1.74
LFED Leeds Fed Bksr MHC of MD (36.3 16.50 16.50 1.18 7.20 4.19 1.18 7.20 0.03 560.82 0.29
LXMO Lexington B&L Fin. Corp. of MO 16.06 14.98 0.78 3.83 4.43 0.78 3.83 0.48 130.50 0.95
LIBB Liberty Bancorp MHC of NJ (47) 13.12 13.12 0.61 4.66 3.93 0.58 4.42 0.35 82.98 0.45
LFCO Life Financial Corp of CA(8) 12.64 12.64 3.93 26.18 42.20 4.08 27.17 2.02 18.00 0.47
LFBI Little Falls Bancorp of NJ 10.51 9.75 0.57 4.98 5.19 0.57 4.98 0.33 108.65 0.82
LOGN Logansport Fin. Corp. of IN 18.82 18.82 1.48 7.80 6.92 1.50 7.88 0.26 103.45 0.36
LISB Long Island Bancorp, Inc of NY(8) 8.91 8.83 0.91 10.06 5.39 0.74 8.19 0.86 61.26 0.91
MAFB MAF Bancorp, Inc. of IL 7.84 7.00 1.09 14.02 7.50 1.04 13.43 0.54 81.33 0.55
MBLF MBLA Financial Corp. of MO 13.50 13.50 0.88 6.81 7.80 0.87 6.76 0.55 59.37 0.50
MECH MECH Financial Inc of CT* 9.59 9.59 1.54 15.45 10.43 1.54 15.45 0.46 296.39 2.14
MFBC MFB Corp. of Mishawaka IN 11.38 11.38 0.80 6.38 7.50 0.78 6.24 0.11 131.25 0.18
MSBF MSB Financial, Inc of MI 16.65 16.65 1.57 9.35 6.39 1.36 8.12 0.79 62.16 0.53
MARN Marion Capital Holdings of IN 19.41 19.00 1.24 5.92 5.91 1.24 5.92 1.02 105.99 1.25
MRKF Market Fin. Corp. of OH 29.33 29.33 1.09 3.20 4.18 1.09 3.20 0.39 24.64 0.16
MFSL Maryland Fed. Bancorp of MD(8) 8.76 8.68 0.50 5.66 2.74 0.60 6.86 0.65 61.91 0.49
MASB MassBank Corp. of Reading MA* 11.76 11.61 1.17 10.42 7.55 1.00 8.96 0.20 131.93 0.84
MFLR Mayflower Co-Op. Bank of MA* 9.56 9.42 1.15 12.01 9.22 1.04 10.78 0.61 134.79 1.54
MDBK Medford Bancorp, Inc. of MA* 8.94 8.48 1.07 11.87 7.66 1.02 11.30 0.18 338.34 1.19
MWBX MetroWest Bank of MA* 7.34 7.34 1.25 17.03 8.46 1.25 17.03 0.64 236.24 2.16
METF Metropolitan Fin. Corp. of OH 3.74 3.46 0.70 18.02 7.91 0.61 15.50 1.45 42.45 0.77
MIFC Mid Iowa Financial Corp. of IA(8) 9.93 9.92 1.02 10.90 6.08 1.01 10.76 0.14 161.66 0.44
MCBN Mid-Coast Bancorp of ME 8.02 8.02 0.70 8.30 8.13 0.61 7.21 0.69 79.42 0.70
MWBI Midwest Bancshares, Inc. of IA 7.15 7.15 0.95 13.56 12.55 0.76 10.81 0.66 43.79 0.48
MFFC Milton Fed. Fin. Corp. of OH 11.08 11.08 0.69 5.75 5.25 0.55 4.64 0.41 67.74 0.40
MBSP Mitchell Bancorp, Inc. of NC(8) 39.32 39.32 1.44 3.47 3.38 1.44 3.47 1.54 34.72 0.72
MBBC Monterey Bay Bancorp of CA 10.77 9.85 0.31 2.74 2.06 0.31 2.74 0.55 112.07 1.08
MONT Montgomery Fin. Corp. of IN 18.25 18.25 0.80 4.71 4.82 0.80 4.71 NA NA 0.19
MSBK Mutual SB, FSB of Bay City MI 5.55 5.55 -1.26 -22.42 -28.30 -0.43 -7.63 0.09 312.66 0.54
MYST Mystic Financial of MA* 18.16 18.16 0.83 4.45 5.13 0.77 4.14 0.08 824.00 0.90
NHTB NH Thrift Bancshares of NH 8.14 7.11 0.90 11.39 9.86 0.84 10.56 1.00 95.48 1.21
NSLB NS&L Bancorp, Inc of Neosho MO 18.47 18.35 0.68 3.55 3.75 0.67 3.49 0.19 41.67 0.14
NSSY NSS Bancorp of CT(8)* 8.46 8.25 0.79 9.48 5.24 0.69 8.35 NA NA 1.27
NMSB Newmil Bancorp, Inc. of CT* 9.09 9.09 0.86 9.14 7.26 0.67 7.15 0.46 297.15 2.98
NBCP Niagara Bancorp of NY MHC(45.4* 19.08 19.08 1.10 5.78 4.27 1.06 5.54 0.29 188.17 1.07
NBSI North Bancshares of Chicago IL 10.82 10.82 0.38 2.97 3.03 0.33 2.64 NA NA 0.27
FFFD North Central Bancshares of IA 15.42 13.42 1.32 8.59 8.71 1.29 8.34 0.12 662.09 1.03
NEIB Northeast Indiana Bncrp of IN 13.04 13.04 1.19 8.58 7.67 1.19 8.58 0.41 159.71 0.73
NWSB Northwest Bcrp MHC of PA (30.8 8.55 7.69 0.95 10.36 4.23 0.90 9.91 0.50 123.26 0.82
NWEQ Northwest Equity Corp. of WI 12.19 12.19 1.22 10.37 8.23 1.13 9.65 1.73 28.33 0.60
NTMG Nutmeg FS&LA of CT 6.06 6.06 0.84 14.08 7.25 0.44 7.44 NA NA 0.53
OHSL OHSL Financial Corp. of OH 10.84 10.84 0.86 7.94 5.67 0.80 7.37 0.16 134.65 0.32
OCFC Ocean Fin. Corp. of NJ 13.70 13.64 0.91 6.19 6.02 0.91 6.19 0.40 114.22 0.80
OTFC Oregon Trail Fin. Corp. of OR 26.49 26.49 1.19 6.01 5.69 1.19 6.01 0.18 206.22 0.57
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
INBI Industrial Bancorp of OH 15.65 137.41 21.94 137.41 15.65 0.60 3.58 56.07
IWBK Interwest Bancorp of WA 19.67 281.37 19.02 285.81 23.28 0.53 2.09 41.09
IPSW Ipswich SB of Ipswich MA* 11.01 219.78 12.27 219.78 13.79 0.16 1.33 14.68
JXVL Jacksonville Bancorp of TX 11.64 104.49 15.10 104.49 11.64 0.50 3.30 38.46
JXSB Jcksnville SB,MHC of IL (45.6) 29.33 162.58 17.14 162.58 NM 0.30 1.97 57.69
JSBA Jefferson Svgs Bancorp of MO 17.35 143.58 13.73 178.95 19.54 0.28 1.65 28.57
KSBK KSB Bancorp of Kingfield ME* 12.97 180.44 14.04 207.58 12.97 0.00 0.00 0.00
KFBI Klamath First Bancorp of OR 15.56 98.45 13.76 107.44 15.73 0.36 2.57 40.00
LSBI LSB Fin. Corp. of Lafayette IN 16.49 158.36 13.31 158.36 19.18 0.40 1.31 21.62
LVSB Lakeview Financial of NJ 12.22 177.54 17.27 260.29 24.43 0.25 1.16 14.20
LARK Landmark Bancshares, Inc of KS 13.92 113.70 14.86 113.70 16.54 0.00 0.00 0.00
LARL Laurel Capital Group of PA 11.87 153.77 16.36 153.77 11.54 0.60 3.64 43.17
LSBX Lawrence Savings Bank of MA* 5.66 124.74 15.06 124.74 5.74 0.00 0.00 0.00
LFED Leeds Fed Bksr MHC of MD (36.3 23.86 165.44 27.30 165.44 23.86 0.56 3.56 NM
LXMO Lexington B&L Fin. Corp. of MO 22.58 92.29 14.82 98.94 22.58 0.30 2.14 48.39
LIBB Liberty Bancorp MHC of NJ (47) 25.48 118.63 15.57 118.63 26.82 0.00 0.00 0.00
LFCO Life Financial Corp of CA(8) 2.37 54.88 6.94 54.88 2.28 0.00 0.00 0.00
LFBI Little Falls Bancorp of NJ 19.25 98.19 10.32 105.86 19.25 0.24 1.64 31.58
LOGN Logansport Fin. Corp. of IN 14.46 109.58 20.62 109.58 14.32 0.44 2.98 43.14
LISB Long Island Bancorp, Inc of NY(8) 18.56 179.56 15.99 181.08 22.81 0.80 1.87 34.63
MAFB MAF Bancorp, Inc. of IL 13.33 178.47 14.00 199.91 13.92 0.28 1.27 16.87
MBLF MBLA Financial Corp. of MO 12.82 88.25 11.91 88.25 12.91 0.60 3.04 38.96
MECH MECH Financial Inc of CT* 9.59 139.32 13.37 139.32 9.59 0.00 0.00 0.00
MFBC MFB Corp. of Mishawaka IN 13.33 86.46 9.84 86.46 13.64 0.34 1.89 25.19
MSBF MSB Financial, Inc of MI 15.66 143.22 23.84 143.22 18.04 0.30 2.11 32.97
MARN Marion Capital Holdings of IN 16.91 104.07 20.21 106.33 16.91 0.88 3.83 64.71
MRKF Market Fin. Corp. of OH 23.91 93.38 27.39 93.38 23.91 0.28 2.55 60.87
MFSL Maryland Fed. Bancorp of MD(8) NM 206.92 18.13 208.89 NM 0.45 1.37 50.00
MASB MassBank Corp. of Reading MA* 13.25 130.58 15.36 132.32 15.41 0.00 0.00 0.00
MFLR Mayflower Co-Op. Bank of MA* 10.84 125.00 11.95 126.85 12.08 0.80 4.44 48.19
MDBK Medford Bancorp, Inc. of MA* 13.06 153.64 13.73 161.89 13.73 0.80 2.29 29.85
MWBX MetroWest Bank of MA* 11.81 188.20 13.81 188.20 11.81 0.20 3.13 37.04
METF Metropolitan Fin. Corp. of OH 12.63 209.45 7.82 225.96 14.69 0.00 0.00 0.00
MIFC Mid Iowa Financial Corp. of IA(8) 16.46 168.18 16.70 168.39 16.67 0.08 0.62 10.13
MCBN Mid-Coast Bancorp of ME 12.30 102.04 8.19 102.04 14.15 0.20 2.67 32.79
MWBI Midwest Bancshares, Inc. of IA 7.97 101.38 7.25 101.38 10.00 0.32 2.91 23.19
MFFC Milton Fed. Fin. Corp. of OH 19.03 109.54 12.13 109.54 23.61 0.60 4.71 NM
MBSP Mitchell Bancorp, Inc. of NC(8) 29.63 102.56 40.33 102.56 29.63 0.00 0.00 0.00
MBBC Monterey Bay Bancorp of CA NM 133.67 14.39 146.12 NM 0.12 0.75 36.36
MONT Montgomery Fin. Corp. of IN 20.76 86.14 15.72 86.14 20.76 0.22 2.12 44.00
MSBK Mutual SB, FSB of Bay City MI NM 85.01 4.72 85.01 NM 0.00 0.00 NM
MYST Mystic Financial of MA* 19.49 86.27 15.66 86.27 20.91 0.20 1.74 33.90
NHTB NH Thrift Bancshares of NH 10.14 111.11 9.04 127.16 10.94 0.60 4.29 43.48
NSLB NS&L Bancorp, Inc of Neosho MO 26.67 94.84 17.52 95.47 27.12 0.50 3.13 NM
NSSY NSS Bancorp of CT(8)* 19.10 179.52 15.19 184.04 21.68 0.52 1.25 23.85
NMSB Newmil Bancorp, Inc. of CT* 13.78 123.42 11.21 123.42 17.62 0.00 0.00 0.00
NBCP Niagara Bancorp of NY MHC(45.4* 23.44 135.38 25.83 135.38 24.46 0.00 0.00 0.00
NBSI North Bancshares of Chicago IL NM 112.61 12.19 112.61 NM 0.40 3.37 NM
FFFD North Central Bancshares of IA 11.48 98.60 15.21 113.30 11.82 0.32 1.98 22.70
NEIB Northeast Indiana Bncrp of IN 13.04 113.57 14.81 113.57 13.04 0.34 1.86 24.29
NWSB Northwest Bcrp MHC of PA (30.8 23.65 233.98 20.01 260.29 24.73 0.16 1.47 34.78
NWEQ Northwest Equity Corp. of WI 12.15 122.81 14.97 122.81 13.06 0.00 0.00 0.00
NTMG Nutmeg FS&LA of CT 13.79 190.17 11.53 190.17 26.09 0.20 1.67 22.99
OHSL OHSL Financial Corp. of OH 17.63 135.97 14.73 135.97 19.00 0.50 3.42 60.24
OCFC Ocean Fin. Corp. of NJ 16.63 107.81 14.77 108.29 16.63 0.48 3.28 54.55
OTFC Oregon Trail Fin. Corp. of OR 17.58 83.83 22.21 83.83 17.58 0.20 1.65 28.99
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
OFCP Ottawa Financial Corp. of MI 8.22 6.74 0.89 10.38 5.81 0.79 9.25 0.50 79.48 0.46
PFFB PFF Bancorp of Pomona CA 8.04 7.96 0.60 6.43 7.16 0.56 5.93 1.06 79.87 1.36
PSFI PS Financial of Chicago IL 26.77 26.77 1.00 3.18 3.77 1.73 5.53 0.41 50.85 0.37
PSBI PSB Bancorp Inc. of PA* 19.81 19.81 0.78 3.93 5.19 0.78 3.93 NA NA 0.46
PVFC PVF Capital Corp. of OH 7.20 7.20 1.33 18.67 12.90 1.26 17.66 0.69 95.38 0.74
PBCI Pamrapo Bancorp, Inc. of NJ 12.47 12.41 1.24 9.69 6.84 1.19 9.34 1.66 35.55 1.03
PFED Park Bancorp of Chicago IL 20.33 20.33 0.92 4.28 5.00 0.93 4.34 0.07 390.63 0.67
PVSA Parkvale Financial Corp of PA 7.67 7.64 1.08 13.90 7.17 1.08 13.90 0.43 279.67 1.56
PBHC Pathfinder BC MHC of NY (45.2)* 11.89 10.15 0.75 6.37 3.92 0.62 5.27 1.30 32.06 0.63
PEEK Peekskill Fin. Corp. of NY 21.57 21.57 0.98 4.05 4.34 1.00 4.11 0.79 43.03 1.41
PFSB PennFed Fin. Services of NJ 6.68 5.81 0.78 10.97 9.15 0.76 10.69 0.44 40.82 0.25
PWBK Pennwood Bancorp, Inc. of PA 17.27 17.27 0.59 3.29 3.64 0.65 3.62 1.44 58.95 1.15
PBKB People's Bancshares of MA* 3.78 3.62 0.73 17.51 9.91 0.28 6.65 0.35 149.48 0.88
TSBS Peoples Bancorp Inc of NJ* 39.09 37.92 1.14 5.37 2.77 0.99 4.67 0.68 66.45 0.90
PFDC Peoples Bancorp of Auburn IN 14.97 14.97 1.45 9.60 6.24 1.45 9.60 0.18 172.98 0.36
PBCT Peoples Bank, MHC of CT (41.2)* 9.42 8.11 1.22 13.58 6.90 0.63 7.05 0.70 156.79 1.72
PFFC Peoples Fin. Corp. of OH 17.34 17.34 1.15 6.30 6.68 0.53 2.93 0.15 151.61 0.30
PHBK Peoples Heritage Fin Grp of ME* 7.40 6.15 0.94 12.95 4.54 1.26 17.38 0.79 114.76 1.25
PSFC Peoples Sidney Fin. Corp of OH 18.52 18.52 1.18 4.96 3.73 1.18 4.96 NA NA NA
PERM Permanent Bancorp, Inc. of IN 8.57 7.00 0.59 6.33 5.02 0.55 5.93 0.18 223.89 0.75
PCBC Perry Co. Fin. Corp. of MO 18.47 18.47 0.98 5.17 4.70 0.97 5.12 NA NA 0.16
PHFC Pittsburgh Home Fin Corp of PA 6.93 6.86 0.70 8.10 8.07 0.62 7.21 1.24 33.90 0.75
PFSL Pocahontas Bancorp of AR 14.44 14.00 0.68 7.04 5.93 0.68 7.04 0.26 159.98 0.88
PTRS Potters Financial Corp of OH 8.53 8.53 0.76 8.64 7.07 0.68 7.77 0.32 541.52 2.35
PHSB Ppls Home SB, MHC of PA (45.0) 12.67 12.67 0.80 6.62 4.27 0.73 6.09 0.32 173.78 1.31
PRBC Prestige Bancorp of PA 9.67 9.67 0.47 4.52 5.10 0.46 4.39 0.35 79.16 0.41
PFNC Progress Financial Corp. of PA 6.92 6.17 0.82 14.34 5.53 0.72 12.64 0.79 90.50 1.16
PROV Provident Fin. Holdings of CA 10.62 10.62 0.70 5.87 6.98 0.29 2.39 1.04 73.18 0.89
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 13.42 13.42 1.11 8.38 3.98 0.91 6.88 NA NA 0.51
PLSK Pulaski SB, MHC of NJ (47.0) 11.82 11.82 0.54 4.57 3.62 0.59 4.96 0.63 82.57 0.97
PULS Pulse Bancorp of S. River NJ(8) 8.44 8.44 1.04 12.61 7.12 1.04 12.61 0.46 78.83 1.33
QCFB QCF Bancorp of Virginia MN 17.70 17.70 1.68 9.63 6.79 1.66 9.53 1.22 67.47 1.92
QCBC Quaker City Bancorp of CA 8.71 8.71 0.77 8.95 7.66 0.76 8.79 1.11 80.77 1.13
QCSB Queens County Bancorp of NY* 9.89 9.89 1.48 13.79 3.97 1.47 13.61 0.50 110.42 0.64
RARB Raritan Bancorp of Raritan NJ* 7.33 7.24 0.97 12.91 6.59 0.97 12.84 0.43 186.77 1.14
RELY Reliance Bancorp, Inc. of NY 7.84 5.47 0.86 10.29 7.54 0.90 10.81 0.40 88.82 0.91
RELI Reliance Bancshares Inc of WI(8) 49.97 49.97 1.03 2.11 2.19 1.03 2.11 NA NA 0.60
RCBK Richmond County Fin Corp of NY 20.60 20.52 0.55 3.31 1.99 1.55 9.31 0.37 124.25 1.12
RIVR River Valley Bancorp of IN 13.65 13.46 0.93 7.27 7.20 0.83 6.46 0.55 158.30 1.03
RVSB Riverview Bancorp of WA 23.08 22.36 1.69 8.33 6.00 1.60 7.87 0.28 137.60 0.63
RSLN Roslyn Bancorp, Inc. of NY* 15.43 15.35 1.29 7.43 6.67 1.23 7.10 0.23 281.89 2.01
SCCB S. Carolina Comm. Bnshrs of SC 20.38 20.38 1.01 4.23 3.90 1.01 4.23 1.26 50.34 0.82
SBFL SB Fngr Lakes MHC of NY (33.1) 8.46 8.46 0.42 4.65 1.93 0.33 3.65 0.32 141.95 0.89
SFED SFS Bancorp of Schenectady NY(8) 12.30 12.30 0.66 5.30 3.58 0.64 5.13 0.84 56.89 0.60
SGVB SGV Bancorp of W. Covina CA 7.89 7.80 0.36 4.77 5.36 0.36 4.70 NA NA 0.48
SISB SIS Bancorp, Inc. of MA(8)* 7.14 7.14 0.73 10.12 4.93 0.91 12.63 0.27 471.43 2.63
SWCB Sandwich Bancorp of MA(8)* 8.39 8.16 0.97 11.94 4.22 0.92 11.31 0.36 220.94 1.16
SFSL Security First Corp. of OH(8) 9.90 9.77 1.44 15.16 6.46 1.44 15.16 0.62 122.36 0.83
SKAN Skaneateles Bancorp Inc of NY* 6.87 6.71 0.62 8.92 7.45 0.60 8.67 1.74 57.15 1.23
SOBI Sobieski Bancorp of S. Bend IN 14.10 14.10 0.58 3.93 4.27 0.58 3.93 0.29 77.82 0.28
SSFC South Street Fin. Corp. of NC* 16.92 16.92 0.45 2.28 2.57 0.45 2.28 0.23 91.68 0.40
SBAN SouthBanc Shares Inc. of SC 21.85 21.85 0.94 4.29 4.49 0.94 4.29 0.37 153.09 0.99
SCBS Southern Commun. Bncshrs of AL 15.85 15.85 0.85 5.35 3.66 0.85 5.35 0.19 602.29 1.69
SMBC Southern Missouri Bncrp of MO 15.47 15.47 0.67 4.11 4.50 0.70 4.29 1.49 55.77 1.08
SVRN Sovereign Bancorp, Inc. of PA 5.51 4.85 0.54 11.13 4.11 0.70 14.64 0.57 104.60 1.07
STFR St. Francis Cap. Corp. of WI 7.46 6.68 0.77 9.82 6.46 0.75 9.51 0.19 219.19 0.88
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
OFCP Ottawa Financial Corp. of MI 17.21 179.52 14.76 218.89 19.31 0.40 1.68 28.99
PFFB PFF Bancorp of Pomona CA 13.96 96.38 7.75 97.36 15.14 0.00 0.00 0.00
PSFI PS Financial of Chicago IL 26.50 98.76 26.44 98.76 15.25 0.48 4.31 NM
PSBI PSB Bancorp Inc. of PA* 19.27 75.77 15.01 75.77 19.27 0.00 0.00 0.00
PVFC PVF Capital Corp. of OH 7.75 132.28 9.52 132.28 8.20 0.00 0.00 0.00
PBCI Pamrapo Bancorp, Inc. of NJ 14.62 139.48 17.40 140.21 15.18 1.12 4.64 67.88
PFED Park Bancorp of Chicago IL 20.00 84.59 17.20 84.59 19.72 0.00 0.00 0.00
PVSA Parkvale Financial Corp of PA 13.95 184.62 14.17 185.53 13.95 0.60 2.00 27.91
PBHC Pathfinder BC MHC of NY (45.2)* 25.48 159.25 18.94 186.62 NM 0.20 1.51 38.46
PEEK Peekskill Fin. Corp. of NY 23.05 98.86 21.32 98.86 22.69 0.36 2.44 56.25
PFSB PennFed Fin. Services of NJ 10.92 117.65 7.86 135.28 11.21 0.14 1.08 11.76
PWBK Pennwood Bancorp, Inc. of PA 27.50 96.32 16.64 96.32 25.00 0.28 2.55 70.00
PBKB People's Bancshares of MA* 10.09 171.09 6.47 178.57 26.59 0.56 3.34 33.73
TSBS Peoples Bancorp Inc of NJ* NM 88.40 34.55 91.12 NM 0.10 1.20 43.48
PFDC Peoples Bancorp of Auburn IN 16.02 151.07 22.61 151.07 16.02 0.44 2.15 34.38
PBCT Peoples Bank, MHC of CT (41.2)* 14.49 173.45 16.33 201.30 27.94 0.84 3.62 52.50
PFFC Peoples Fin. Corp. of OH 14.97 97.61 16.93 97.61 NM 0.60 5.64 NM
PHBK Peoples Heritage Fin Grp of ME* 22.04 202.78 15.02 244.17 16.42 0.44 2.63 57.89
PSFC Peoples Sidney Fin. Corp of OH 26.81 168.33 31.18 168.33 26.81 0.28 1.51 40.58
PERM Permanent Bancorp, Inc. of IN 19.92 121.20 10.39 148.43 21.25 0.24 1.88 37.50
PCBC Perry Co. Fin. Corp. of MO 21.29 107.39 19.83 107.39 21.50 0.50 2.33 49.50
PHFC Pittsburgh Home Fin Corp of PA 12.39 102.90 7.14 104.01 13.92 0.24 1.78 22.02
PFSL Pocahontas Bancorp of AR 16.88 77.23 11.15 79.69 16.88 0.24 3.56 60.00
PTRS Potters Financial Corp of OH 14.14 121.74 10.39 121.74 15.73 0.00 0.00 0.00
PHSB Ppls Home SB, MHC of PA (45.0) 23.41 141.69 17.95 141.69 25.43 0.28 1.90 44.44
PRBC Prestige Bancorp of PA 19.60 86.72 8.39 86.72 20.20 0.17 1.29 25.37
PFNC Progress Financial Corp. of PA 18.09 172.96 11.98 193.94 20.52 0.15 1.09 19.74
PROV Provident Fin. Holdings of CA 14.32 82.63 8.77 82.63 NM 0.00 0.00 0.00
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 25.14 204.10 27.39 204.10 NM 1.10 4.61 NM
PLSK Pulaski SB, MHC of NJ (47.0) 27.66 123.46 14.59 123.46 25.49 0.30 2.31 63.83
PULS Pulse Bancorp of S. River NJ(8) 14.04 169.95 14.34 169.95 14.04 0.80 3.20 44.94
QCFB QCF Bancorp of Virginia MN 14.74 140.14 24.80 140.14 14.89 0.00 0.00 0.00
QCBC Quaker City Bancorp of CA 13.05 111.24 9.68 111.24 13.29 0.00 0.00 0.00
QCSB Queens County Bancorp of NY* 25.16 NM 34.63 NM 25.48 1.00 2.52 63.29
RARB Raritan Bancorp of Raritan NJ* 15.18 190.01 13.92 192.31 15.27 0.60 2.35 35.71
RELY Reliance Bancorp, Inc. of NY 13.27 127.64 10.00 182.97 12.62 0.72 2.77 36.73
RELI Reliance Bancshares Inc of WI(8) NM 98.07 49.01 98.07 NM 0.00 0.00 0.00
RCBK Richmond County Fin Corp of NY NM 109.00 22.45 109.44 17.84 0.24 1.77 NM
RIVR River Valley Bancorp of IN 13.89 97.72 13.34 99.08 15.63 0.22 1.47 20.37
RVSB Riverview Bancorp of WA 16.67 119.76 27.64 123.58 17.65 0.24 2.00 33.33
RSLN Roslyn Bancorp, Inc. of NY* 14.98 115.81 17.87 116.38 15.69 0.40 2.41 36.04
SCCB S. Carolina Comm. Bnshrs of SC 25.63 126.00 25.68 126.00 25.63 0.64 3.12 NM
SBFL SB Fngr Lakes MHC of NY (33.1) NM 236.93 20.03 236.93 NM 0.00 0.00 0.00
SFED SFS Bancorp of Schenectady NY(8) 27.89 146.09 17.97 146.09 28.80 0.32 1.21 33.68
SGVB SGV Bancorp of W. Covina CA 18.65 85.58 6.76 86.65 18.95 0.00 0.00 0.00
SISB SIS Bancorp, Inc. of MA(8)* 20.27 185.60 13.25 185.60 16.23 0.00 0.00 0.00
SWCB Sandwich Bancorp of MA(8)* 23.67 265.93 22.31 273.58 25.00 1.40 2.41 57.14
SFSL Security First Corp. of OH(8) 15.48 218.81 21.67 221.85 15.48 0.36 1.88 29.03
SKAN Skaneateles Bancorp Inc of NY* 13.42 115.29 7.93 118.08 13.80 0.28 1.91 25.69
SOBI Sobieski Bancorp of S. Bend IN 23.44 90.47 12.76 90.47 23.44 0.32 2.13 50.00
SSFC South Street Fin. Corp. of NC* NM 116.15 19.65 116.15 NM 0.40 4.67 NM
SBAN SouthBanc Shares Inc. of SC 22.26 95.53 20.87 95.53 22.26 0.48 2.95 65.75
SCBS Southern Commun. Bncshrs of AL 27.31 146.04 23.15 146.04 27.31 0.30 2.03 55.56
SMBC Southern Missouri Bncrp of MO 22.22 98.46 15.23 98.46 21.33 0.00 0.00 0.00
SVRN Sovereign Bancorp, Inc. of PA 24.31 192.80 10.62 218.83 18.49 0.08 0.61 14.81
STFR St. Francis Cap. Corp. of WI 15.49 151.76 11.32 169.56 16.00 0.00 0.00 0.00
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SPBC St. Paul Bancorp, Inc. of IL 9.60 9.56 1.08 11.83 7.24 1.04 11.42 0.31 239.56 1.03
SFFC StateFed Financial Corp. of IA 17.91 17.91 1.15 6.51 6.50 1.15 6.51 NA NA NA
SFIN Statewide Fin. Corp. of NJ 9.72 9.70 0.79 8.16 7.22 0.75 7.83 0.47 95.71 0.89
STSA Sterling Financial Corp. of WA 5.09 2.00 0.36 7.02 5.60 0.43 8.45 0.52 128.59 1.09
ROSE T R Financial Corp. of NY* 6.23 6.23 1.02 16.37 7.96 0.87 13.95 0.53 70.19 0.68
THRD TF Financial Corp. of PA 7.49 6.36 0.70 7.48 7.83 0.56 6.02 0.31 97.87 0.86
THTL Thistle Group Holdings of PA 27.80 27.80 1.37 4.91 6.24 1.37 4.91 0.22 98.57 0.76
TSBK Timberland Bancorp of WA 32.34 32.34 1.79 9.12 5.41 1.69 8.57 3.10 21.28 0.91
TRIC Tri-County Bancorp of WY 16.45 16.45 1.00 6.40 6.61 1.03 6.57 NA NA 1.01
TWIN Twin City Bancorp, Inc. of TN 12.67 12.67 1.02 7.92 6.85 0.82 6.41 0.37 27.12 0.14
USAB USABancshares, Inc of PA* 9.74 9.68 0.59 6.21 3.06 0.73 7.64 1.08 49.32 0.90
UCBC Union Community Bancorp of IN 40.02 40.02 1.44 5.52 4.27 1.44 5.52 0.33 99.15 0.40
UCFC United Community Fin. of OH 32.31 32.31 1.50 4.65 4.10 1.50 4.65 0.51 72.00 0.95
UFRM United FSB of Rocky Mount NC(8) 7.75 7.75 0.62 8.37 3.39 0.52 7.03 1.16 83.92 1.15
UBMT United Fin. Corp. of MT 14.74 14.25 0.66 4.49 3.40 0.66 4.49 0.42 156.46 1.02
UTBI United Tenn. Bancshares of TN 27.03 27.03 1.36 7.63 6.07 1.36 7.63 0.57 148.60 1.27
WHGB WHG Bancshares of MD 15.28 15.28 0.58 3.18 4.18 0.58 3.18 0.65 41.31 0.46
WSFS WSFS Financial Corp. of DE* 6.15 6.12 1.12 19.60 8.50 1.08 18.88 1.30 122.16 3.26
WVFC WVS Financial Corp. of PA 11.10 11.10 1.20 10.72 6.34 1.30 11.60 0.20 308.46 1.17
WRNB Warren Bancorp of Peabody MA* 10.49 10.49 1.71 16.06 7.90 1.71 16.06 1.27 83.50 1.62
WSBI Warwick Community Bncrp of NY* 23.05 23.05 -0.64 -2.78 -3.10 0.69 3.01 NA NA NA
WFSL Washington Federal, Inc. of WA 13.90 12.91 1.96 15.11 9.53 1.90 14.68 0.70 60.38 0.57
WYNE Wayne Bancorp, Inc. of NJ 12.77 12.77 0.70 5.45 3.21 0.67 5.28 0.80 103.99 1.18
WAYN Wayne Svgs Bks MHC of OH (48.2 9.53 9.53 0.71 7.52 3.44 0.64 6.80 0.49 58.18 0.36
WCFB Wbstr Cty FSB MHC of IA (45.6) 23.41 23.41 1.40 5.95 4.13 1.40 5.95 0.07 534.72 0.69
WBST Webster Financial Corp. of CT 5.97 5.06 0.68 12.40 5.64 0.76 13.94 0.41 149.68 1.14
WEFC Wells Fin. Corp. of Wells MN 15.37 15.37 1.19 8.14 7.58 1.10 7.56 0.28 154.67 0.48
WCBI WestCo Bancorp, Inc. of IL(8) 15.66 15.66 1.50 9.70 6.61 1.40 9.09 0.44 63.73 0.37
WSTR WesterFed Fin. Corp. of MT 10.73 8.75 0.72 6.77 7.03 0.72 6.77 0.49 97.44 0.74
WOFC Western Ohio Fin. Corp. of OH 14.52 13.58 0.07 0.51 0.58 0.06 0.43 1.29 74.24 1.36
WEHO Westwood Hmstd Fin Corp of OH 20.58 20.58 0.69 2.79 3.39 1.11 4.49 0.19 119.15 0.25
FFWD Wood Bancorp of OH 13.57 13.57 1.43 11.15 5.93 1.16 9.02 0.16 243.12 0.48
YFCB Yonkers Fin. Corp. of NY 10.29 10.29 0.88 6.79 6.90 0.80 6.15 0.15 208.94 0.61
YFED York Financial Corp. of PA 8.89 8.89 0.84 9.60 6.14 0.66 7.54 2.25 31.83 0.90
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SPBC St. Paul Bancorp, Inc. of IL 13.81 155.92 14.96 156.54 14.30 0.60 3.02 41.67
SFFC StateFed Financial Corp. of IA 15.38 97.37 17.44 97.37 15.38 0.20 2.00 30.77
SFIN Statewide Fin. Corp. of NJ 13.84 115.44 11.22 115.60 14.44 0.52 3.10 42.98
STSA Sterling Financial Corp. of WA 17.84 114.24 5.82 290.31 14.84 0.00 0.00 0.00
ROSE T R Financial Corp. of NY* 12.56 191.52 11.93 191.52 14.74 0.80 2.86 35.87
THRD TF Financial Corp. of PA 12.77 109.70 8.22 129.28 15.85 0.48 2.70 34.53
THTL Thistle Group Holdings of PA 16.04 78.78 21.90 78.78 16.04 0.00 0.00 0.00
TSBK Timberland Bancorp of WA 18.48 96.19 31.11 96.19 19.65 0.24 1.94 35.82
TRIC Tri-County Bancorp of WY 15.13 94.26 15.51 94.26 14.74 0.44 3.83 57.89
TWIN Twin City Bancorp, Inc. of TN 14.61 115.15 14.59 115.15 18.06 0.40 3.08 44.94
USAB USABancshares, Inc of PA* NM 129.77 12.63 130.57 26.56 0.00 0.00 0.00
UCBC Union Community Bancorp of IN 23.40 77.36 30.96 77.36 23.40 0.34 3.09 72.34
UCFC United Community Fin. of OH 24.36 113.31 36.62 113.31 24.36 0.00 0.00 0.00
UFRM United FSB of Rocky Mount NC(8) 29.46 231.42 17.94 231.42 NM 0.24 1.45 42.86
UBMT United Fin. Corp. of MT 29.38 131.80 19.43 136.39 29.38 1.00 4.26 NM
UTBI United Tenn. Bancshares of TN 16.46 84.53 22.85 84.53 16.46 0.00 0.00 0.00
WHGB WHG Bancshares of MD 23.91 75.76 11.58 75.76 23.91 0.00 0.00 0.00
WSFS WSFS Financial Corp. of DE* 11.76 209.97 12.92 211.08 12.21 0.12 0.75 8.82
WVFC WVS Financial Corp. of PA 15.78 167.87 18.64 167.87 14.58 0.60 3.92 61.86
WRNB Warren Bancorp of Peabody MA* 12.66 201.79 21.17 201.79 12.66 0.36 3.55 45.00
WSBI Warwick Community Bncrp of NY* NM 89.88 20.72 89.88 29.82 0.16 1.38 NM
WFSL Washington Federal, Inc. of WA 10.50 151.05 20.99 162.65 10.80 0.92 4.13 43.40
WYNE Wayne Bancorp, Inc. of NJ NM 166.00 21.20 166.00 NM 0.20 0.69 21.51
WAYN Wayne Svgs Bks MHC of OH (48.2 29.11 213.78 20.36 213.78 NM 0.62 2.92 NM
WCFB Wbstr Cty FSB MHC of IA (45.6) 24.21 141.86 33.20 141.86 24.21 0.00 0.00 0.00
WBST Webster Financial Corp. of CT 17.74 159.89 9.54 188.62 15.78 0.44 1.92 34.11
WEFC Wells Fin. Corp. of Wells MN 13.19 108.55 16.68 108.55 14.19 0.60 3.58 47.24
WCBI WestCo Bancorp, Inc. of IL(8) 15.13 142.47 22.31 142.47 16.15 0.68 2.37 35.79
WSTR WesterFed Fin. Corp. of MT 14.23 94.20 10.11 115.55 14.23 0.00 0.00 0.00
WOFC Western Ohio Fin. Corp. of OH NM 91.94 13.35 98.29 NM 1.00 4.82 NM
WEHO Westwood Hmstd Fin Corp of OH 29.53 104.63 21.53 104.63 18.33 0.40 3.76 NM
FFWD Wood Bancorp of OH 16.85 177.51 24.10 177.51 20.83 0.36 2.40 40.45
YFCB Yonkers Fin. Corp. of NY 14.49 103.96 10.70 103.96 15.98 0.00 0.00 0.00
YFED York Financial Corp. of PA 16.29 149.84 13.31 149.84 20.74 0.52 2.85 46.43
</TABLE>
<PAGE>
EXHIBIT 2
Peer Group Core Earnings Analysis
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Core Earnings Analysis
Comparable Institution Analysis
For the Twelve Months Ended June 30, 1998
<TABLE>
<CAPTION>
Estimated
Net Income Less: Net Tax Effect Less: Extd Core Income Estimated
to Common Gains(Loss) @ 34% Items to Common Shares Core EPS
---------- ----------- ---------- ---------- ---------- ---------- -------
($000) ($000) $000) ($000) ($000) ($000) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Comparable Group
- ----------------
ABBK Abington Bancorp of MA 4,520 -1,673 569 0 3,416 3,532 0.97
BKC American Bank of Waterbury CT 8,543 -2,050 697 0 7,190 4,687 1.53
ANDB Andover Bancorp, Inc. of MA 15,768 -594 202 0 15,376 6,481 2.37
BFD BostonFed Bancorp of MA 7,128 -2,158 734 0 5,704 5,393 1.06
FESX First Essex Bancorp of MA 10,487 -2,218 754 0 9,023 7,562 1.19
FFES First Fed of E. Hartford CT 5,835 715 -243 0 6,307 2,743 2.30
FAB FirstFed America Bancorp of MA 6,867 -1,997 679 0 5,549 8,272 0.67
MECH MECH Financial Inc of CT 8,603 -109 37 0 8,531 5,295 1.61
MASB MassBank Corp. of Reading MA 10,785 -2,273 773 0 9,285 3,593 2.58
MDBK Medford Bancorp, Inc. of MA 11,953 -916 311 0 11,348 4,455 2.55
MWBX MetroWest Bank of MA 7,750 -175 60 0 7,635 14,252 0.54
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
EXHIBIT 3
Pro Forma Analysis Sheet
<PAGE>
PRO FORMA ANALYSIS SHEET
Compass Bank for Savings
Prices as of September 4, 1998
Assumes a 6.4000 Exchange Ratio for SWCB Shares
<TABLE>
<CAPTION>
All Savings
Peer Group Massachusetts Companies Institutions
Subject -------------------------- ------------------------- --------------
Price Multiple Symbol @ Midpoint(1) Mean Median Mean Median Mean
- -------------- ------ ------------- ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio = P/E 13.30 x 12.31x 11.81x 13.06x 11.82x 17.02x
Price-core earnings ratio = P/CE 13.93 x 13.89x 13.52x 15.57x 13.79x 17.83x
Price-book ratio = P/B 99.52% 138.42% 139.32% 138.60% 130.58% 128.54%
Price-tangible book ratio = P/TB 100.53% 145.94% 156.16% 143.73% 131.58% 133.58%
Price-assets ratio = P/A 15.36% 11.52% 12.80% 13.20% 12.80% 16.05%
</TABLE>
<TABLE>
<CAPTION>
Valuation Parameters
- --------------------
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $18,093,000 ESOP Stock Purchases (E) 8.00% (5)
Pre-Conversion Book Value (B) $153,377,000 Cost of ESOP Borrowings (S) 0.00%
Pre-Conv. Tang. Book Value (B) $150,486,000 ESOP Amortization (T) 20.00 years
Pre-Conversion Assets (A) $1,732,717,000 RRP Amount (M) 0.00%
Reinvestment Rate (2)(R) 3.22% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 4.49% SWCB Shares and Acct. Adj. (F) 3.22%
Tax rate (TAX) 40.00% Exchange Shares (SH) 79.29%
Funds Invested into Fixed Assets (FA) 12.50%
Tax Benefit (Z) 0
Percentage Sold (PCT) 100.00%
</TABLE>
<TABLE>
<CAPTION>
Calculation of Pro Forma Value After Conversion
- -----------------------------------------------
<S> <C> <C>
1. V= P/E * (Y) V= $286,862,317
-----------------------------------------------------
1 - P/E * PCT * ((1-X-M-SH)*R - (1-TAX)*E/T)
`
2. V= P/B * (B+Z) V= $286,862,317
------------------
1 - P/B * PCT * (1-X-E-M-F-SH)
3. V= P/A * (A+Z) V= $286,862,317
------------------
1 - P/A * PCT * (1-X-E-M-F-SH)
</TABLE>
<TABLE>
<CAPTION>
Shares Aggregate
Shares Sold to Price Per Gross Offering Exchange Shares Issued To Total Shares Market Value
Conclusion Public Share Proceeds Issued to SCWB Foundation Issued of Stock Issued
- --------- - ------ ----- -------- -------------- ---------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum 13,600,000 10.00 $136,000,000 12,686,232 0 26,286,232 262,862,317
Midpoint 16,000,000 10.00 160,000,000 12,686,232 0 28,686,232 286,862,317
Maximum 18,400,000 10.00 184,000,000 12,686,232 0 31,086,232 310,862,317
Supermaximum 21,160,000 10.00 211,600,000 12,686,232 0 33,846,232 338,462,317
</TABLE>
- ---------------------------------------------------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 5.37 percent, and a tax rate of
40.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) ESOP loan will be funded internally by Seacoast.
(5) ESOP amortizes over 20 years; amortization expenses tax effected at 40.00
percent.
<PAGE>
PRO FORMA ANALYSIS SHEET
Compass Bank for Savings
Prices as of September 4, 1998
Assumes a 4.7407 Exchange Ratio for SWCB Shares
<TABLE>
<CAPTION>
All Savings
Peer Group Massachusetts Companies Institutions
Subject -------------------------- ------------------------- --------------
Price Multiple Symbol @ Midpoint(1) Mean Median Mean Median Mean
- -------------- ------ ------------- ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio = P/E 11.77 x 12.31x 11.81x 13.06x 11.82x 17.02x
Price-core earnings ratio = P/CE 12.33 x 13.89x 13.52x 15.57x 13.79x 17.83x
Price-book ratio = P/B 88.14% 138.42% 139.32% 138.60% 130.58% 128.54%
Price-tangible book ratio = P/TB 89.03% 145.94% 156.16% 143.73% 131.58% 133.58%
Price-assets ratio = P/A 13.60% 11.52% 12.80% 13.20% 12.80% 16.05%
</TABLE>
<TABLE>
<CAPTION>
Valuation Parameters
- --------------------
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $18,093,000 ESOP Stock Purchases (E) 8.00% (5)
Pre-Conversion Book Value (B) $153,377,000 Cost of ESOP Borrowings (S) 0.00%
Pre-Conv. Tang. Book Value (B) $150,486,000 ESOP Amortization (T) 20.00 years
Pre-Conversion Assets (A) $1,732,717,000 RRP Amount (M) 0.00%
Reinvestment Rate (2)(R) 3.22% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 4.49% SWCB Shares and Acct. Adj. (F) 3.22%
Tax rate (TAX) 40.00% Exchange Shares (SH) 58.78%
Funds Invested into Fixed Assets (FA) 12.50%
Tax Benefit (Z) 0
Percentage Sold (PCT) 100.00%
</TABLE>
<TABLE>
<CAPTION>
Calculation of Pro Forma Value After Conversion
- -----------------------------------------------
<S> <C> <C>
1. V= P/E * (Y) V= $254,049,282
------------------------------------------------------
1 - P/E * PCT * ((1-X-M-SH)*R - (1-TAX)*E/T)
`
2. V= P/B * (B+Z) V= $254,049,282
-------------------
1 - P/B * PCT * (1-X-E-M-F-SH)
3. V= P/A * (A+Z) V= $254,049,282
-------------------
1 - P/A * PCT * (1-X-E-M-F-SH)
</TABLE>
<TABLE>
<CAPTION>
Shares Aggregate
Shares Sold to Price Per Gross Offering Exchange Shares Issued To Total Shares Market Value
Conclusion Public Share Proceeds Issued to SCWB Foundation Issued of Stock Issued
- ---------- ------ ----- -------- -------------- ---------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum 13,600,000 10.00 $136,000,000 9,404,928 0 23,004,928 230,049,282
Midpoint 16,000,000 10.00 160,000,000 9,404,928 0 25,404,928 254,049,282
Maximum 18,400,000 10.00 184,000,000 9,404,928 0 27,804,928 278,049,282
Supermaximum 21,160,000 10.00 211,600,000 9,404,928 0 30,564,928 305,649,282
</TABLE>
- ---------------------------------------------------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 5.37 percent, and a tax rate of
40.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) ESOP loan will be funded internally by Seacoast.
(5) ESOP amortizes over 20 years; amortization expenses tax effected at 40.00
percent.
<PAGE>
EXHIBIT 4
Pro Forma Effect of Conversion Proceeds
<PAGE>
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Compass Bank for Savings
At the Minimum
<TABLE>
<S> <C>
1. Offering Proceeds $136,000,000
Less: Estimated Offering Expenses 6,956,700
------------
Net Conversion Proceeds $129,043,300
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $129,043,300
Less: Proceeds Invested in Non-Earning Fixed Assets 20,000,000
Less: Non-Cash Stock Purchases (1) 10,880,000
------------
Net Proceeds Reinvested $98,163,300
Estimated net incremental rate of return 3.22%
------------
Earnings Increase $3,162,822
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 326,400
Less: Recognition Plan Vesting 0
------------
Net Earnings Increase $2,836,422
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended July 31, 1998 (reported) $18,093,000 $2,836,422 $20,929,422
12 Months ended July 31, 1998 (core) $17,114,000 $2,836,422 $19,950,422
<CAPTION>
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
<S> <C> <C> <C> <C>
July 31, 1998 $153,377,000 $118,163,300 ($5,158,000) $266,382,300
July 31, 1998 (Tangible) $150,486,000 $118,163,300 ($5,158,000) $263,491,300
<CAPTION>
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
<S> <C> <C> <C> <C>
July 31, 1998 $1,732,717,000 $118,163,300 ($5,158,000) $1,845,722,300
</TABLE>
(1) Includes ESOP stock purchases equal to 8.0 percent of the offering.
(2) ESOP loan will be funded internally by Seacoast.
(3) ESOP borrowings are amortized over 20 years, amortization expense is
tax-effected at a 40.00 percent rate.
(4) Reflects impact of elimination of SWCB shares owned by Compass.
<PAGE>
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Compass Bank for Savings
At the Midpoint
<TABLE>
<S> <C>
1. Offering Proceeds $160,000,000
Less: Estimated Offering Expenses 7,177,500
------------
Net Conversion Proceeds $152,822,500
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $152,822,500
Less: Proceeds Invested in Non-Earning Fixed Assets 20,000,000
Less: Non-Cash Stock Purchases (1) 12,800,000
------------
Net Proceeds Reinvested $120,022,500
Estimated net incremental rate of return 3.22%
------------
Earnings Increase $3,867,125
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 384,000
Less: Recognition Plan Vesting 0
------------
Net Earnings Increase $3,483,125
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended July 31, 1998 (reported) $18,093,000 $3,483,125 $21,576,125
12 Months ended July 31, 1998 (core) $17,114,000 $3,483,125 $20,597,125
<CAPTION>
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
<S> <C> <C> <C> <C>
July 31, 1998 $153,377,000 $140,022,500 ($5,158,000) $288,241,500
July 31, 1998 (Tangible) $150,486,000 $140,022,500 ($5,158,000) $285,350,500
<CAPTION>
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
<S> <C> <C> <C> <C>
July 31, 1998 $1,732,717,000 $140,022,500 ($5,158,000) $1,867,581,500
</TABLE>
(1) Includes ESOP stock purchases equal to 8.0 percent of the offering.
(2) ESOP loan will be funded internally by Seacoast.
(3) ESOP borrowings are amortized over 20 years, amortization expense is
tax-effected at a 40.00 percent rate.
(4) Reflects impact of elimination of SWCB shares owned by Compass.
<PAGE>
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Compass Bank for Savings
At the Maximum Value
<TABLE>
<S> <C>
1. Offering Proceeds $184,000,000
Less: Estimated Offering Expenses 7,398,300
------------
Net Conversion Proceeds $176,601,700
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $176,601,700
Less: Proceeds Invested in Non-Earning Fixed Assets 20,000,000
Less: Non-Cash Stock Purchases (1) 14,720,000
------------
Net Proceeds Reinvested $141,881,700
Estimated net incremental rate of return 3.22%
------------
Earnings Increase $4,571,428
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 441,600
Less: Recognition Plan Vesting 0
------------
Net Earnings Increase $4,129,828
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended July 31, 1998 (reported) $18,093,000 $4,129,828 $22,222,828
12 Months ended July 31, 1998 (core) $17,114,000 $4,129,828 $21,243,828
<CAPTION>
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
<S> <C> <C> <C> <C>
July 31, 1998 $153,377,000 $161,881,700 ($5,158,000) $310,100,700
July 31, 1998 (Tangible) $150,486,000 $161,881,700 ($5,158,000) $307,209,700
<CAPTION>
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
<S> <C> <C> <C> <C>
July 31, 1998 $1,732,717,000 $161,881,700 ($5,158,000) $1,889,440,700
</TABLE>
(1) Includes ESOP stock purchases equal to 8.0 percent of the offering.
(2) ESOP loan will be funded internally by Seacoast.
(3) ESOP borrowings are amortized over 20 years, amortization expense is
tax-effected at a 40.00 percent rate.
(4) Reflects impact of elimination of SWCB shares owned by Compass.
<PAGE>
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Compass Bank for Savings
At the Supermaximum Value
<TABLE>
<S> <C>
1. Offering Proceeds $211,600,000
Less: Estimated Offering Expenses 7,652,220
------------
Net Conversion Proceeds $203,947,780
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $203,947,780
Less: Proceeds Invested in Non-Earning Fixed Assets 20,000,000
Less: Non-Cash Stock Purchases (1) 16,928,000
------------
Net Proceeds Reinvested $167,019,780
Estimated net incremental rate of return 3.22%
------------
Earnings Increase $5,381,377
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 507,840
Less: Recognition Plan Vesting 0
------------
Net Earnings Increase $4,873,537
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended July 31, 1998 (reported) $18,093,000 $4,873,537 $22,966,537
12 Months ended July 31, 1998 (core) $17,114,000 $4,873,537 $21,987,537
<CAPTION>
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
<S> <C> <C> <C> <C>
July 31, 1998 $153,377,000 $187,019,780 ($5,158,000) $335,238,780
July 31, 1998 (Tangible) $150,486,000 $187,019,780 ($5,158,000) $332,347,780
<CAPTION>
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Other Adjust. (4) Conversion
---------- -------- ----------------- ----------
<S> <C> <C> <C> <C>
July 31, 1998 $1,732,717,000 $187,019,780 ($5,158,000) $1,914,578,780
</TABLE>
(1) Includes ESOP stock purchases equal to 8.0 percent of the offering.
(2) ESOP loan will be funded internally by Seacoast.
(3) ESOP borrowings are amortized over 20 years, amortization expense is
tax-effected at a 40.00 percent rate.
(4) Reflects impact of elimination of SWCB shares owned by Compass.
<PAGE>
EXHIBIT 5
Firm Qualifications Statement
<PAGE>
[letterhead]
RP FINANCIAL, LC.
- --------------------------------------------------
Financial Services Industry Consultants
FIRM QUALIFICATION STATEMENT
RP Financial provides financial and management consulting and valuation services
to the financial services industry nationwide, particularly federally-insured
financial institutions. RP Financial establishes long-term client relationships
through its wide array of services, emphasis on quality and timeliness, hands-on
involvement by our principals and senior consulting staff, and careful
structuring of strategic plans and transactions. RP Financial's staff draws from
backgrounds in consulting, regulatory agencies and investment banking, thereby
providing our clients with considerable resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's strategic and capital planning services are designed to provide
effective workable plans with quantifiable results. Through a program known as
SAFE (Strategic Alternatives Financial Evaluations), RP Financial analyzes
strategic options to enhance shareholder value or other established objectives.
Our planning services involve conducting situation analyses; establishing
mission statements, strategic goals and objectives; and identifying strategies
for enhancement of franchise value, capital management and planning, earnings
improvement and operational issues. Strategy development typically includes the
following areas: capital formation and management, asset/liability targets,
profitability, return on equity and market value of stock. Our proprietary
financial simulation model provides the basis for evaluating the financial
impact of alternative strategies and assessing the feasibility/compatibility of
such strategies with regulations and/or other guidelines.
MERGER AND ACQUISITION SERVICES
RP Financial's merger and acquisition (M&A) services include targeting
candidates and potential acquirors, assessing acquisition merit, conducting
detailed due diligence, negotiating and structuring transactions, preparing
merger business plans and financial simulations, rendering fairness opinions and
assisting in implementing post-acquisition strategies. Through our financial
simulations, comprehensive in-house data bases, valuation expertise and
regulatory knowledge, RP Financial's M&A consulting focuses on structuring
transactions to enhance shareholder returns.
VALUATION SERVICES
RP Financial's extensive valuation practice includes valuations for a variety of
purposes including mergers and acquisitions, mutual-to-stock conversions, ESOPs,
subsidiary companies, mark-to-market transactions, loan and servicing
portfolios, non-traded securities, core deposits, FAS 107 (fair market value
disclosure), FAS 122 (loan servicing rights) and FAS 123 (stock options). Our
principals and staff are highly experienced in performing valuation appraisals
which conform with regulatory guidelines and appraisal industry standards. RP
Financial is the nation's leading valuation firm for mutual-to-stock conversions
of thrift institutions.
OTHER CONSULTING SERVICES AND DATA BASES
RP Financial offers a variety of other services including branching strategies,
feasibility studies and special research studies, which are complemented by our
quantitative and computer skills. RP Financial's consulting services are aided
by its in-house data base resources for commercial banks and savings
institutions and proprietary valuation and financial simulation models.
YEAR 2000 SERVICES
RP Financial, through a relationship with a computer research and development
company with a proprietary methodology, offers Year 2000 advisory and conversion
services to financial institutions which are more cost effective and less
disruptive than most other providers of such service.
RP Financial's Key Personnel (Years of Relevant Experience)
Ronald S. Riggins, Managing Director (18)
William E. Pommerening, Managing Director (14)
Gregory E. Dunn, Senior Vice President (16)
James P. Hennessey, Senior Vice President (13)
James J. Oren, Senior Vice President (11)
- --------------------------------------------------------------------------------
Washington Headquarters
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
<PAGE>
RP FINANCIAL, LC.
Rosslyn Center
1700 North Moore Street, Suite 2210
Arlington, VA 22209
Telephone: (703) 528-1700
Fax No.: (703) 528-1788
