<PAGE>
As filed with the Securities and Exchange Commission on October 23, 1998
Registration No. 333-56465
- ----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
(INCLUDING EXHIBITS)
PULASKI FINANCIAL CORP.
----------------------------------------------
(Exact name of registrant in its charter)
Delaware 6035 43-1816913
- ------------ --------------- --------------
(State or other jurisdiction (Primary SIC No.) (I.R.S. Employer
of incorporation Identification No.)
or organization)
12300 Olive Boulevard
St. Louis, Missouri
(314) 878-2210
-------------------------------------------------------------------------
(Address and telephone number of principal executive offices and place of
business)
Paul M. Aguggia, Esquire
Aaron M. Kaslow, Esquire
BREYER & AGUGGIA LLP
1300 I Street, N.W.
Suite 470 East
Washington, D.C. 20005
(202) 737-7900
---------------------------------------------------------------
(Name, address and telephone number of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this registration statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PROSPECTUS SUPPLEMENT
PULASKI FINANCIAL CORP.
(PROPOSED HOLDING COMPANY FOR PULASKI BANK)
BETWEEN 1,870,000 AND 2,909,500 SHARES OF COMMON STOCK
This Prospectus Supplement supplements and amends the Prospectus of Pulaski
Financial Corp. dated August 12, 1998, which you should read in conjunction
with this Prospectus Supplement. Capitalized terms used but not defined in this
Prospectus Supplement have the same meaning as they do in the Prospectus.
The purpose of this Prospectus Supplement is to amend the Prospectus to reflect
a decrease in the offering range as a result of current market prices of stocks
of publicly traded financial institutions and the level of subscriptions
received in the Subscription Offering and Direct Community Offering as of
September 18, 1998. In light of the new offering range, Pulaski Financial Corp.
is giving persons who subscribed for common stock in the Subscription Offering
or the Direct Community Offering the opportunity to maintain, increase, decrease
or cancel their orders. SUBSCRIBERS WHO DESIRE TO MAINTAIN OR CHANGE THEIR
ORIGINAL ORDERS MUST SIGN AND RETURN THE SUPPLEMENTAL ORDER FORM TO THE BANK NO
----
LATER THAN 12:00 NOON, CENTRAL TIME, __________, 1998.
IMPORTANT: FAILURE TO RETURN A SUPPLEMENTAL ORDER FORM WILL RESULT IN THE
AUTOMATIC CANCELLATION OF YOUR ORDER AND RETURN OF YOUR SUBSCRIPTION FUNDS
OR TERMINATION OF YOUR WITHDRAWAL AUTHORIZATION.
- --------------------------------------------------------------------------------
OFFERING SUMMARY
Price Per Share: $10.00
<TABLE>
<CAPTION>
Minimum Midpoint Maximum Maximum, as adjusted
----------- ----------- ----------- --------------------
<S> <C> <C> <C> <C>
Number of shares: 1,870,000 2,200,000 2,530,000 2,909,500
Gross offering proceeds: $18,700,000 $22,000,000 $25,300,000 $29,095,000
Estimated offering expenses: $ 834,000 $ 858,000 $ 882,000 $ 910,000
Estimated net proceeds: $17,866,000 $21,142,000 $24,418,000 $28,185,000
Estimated net proceeds per share: $ 9.55 $ 9.61 $ 9.65 $ 9.69
</TABLE>
The amount of common stock being offered in the conversion is based on an
updated independent appraisal of the market value of Pulaski Bank and Pulaski
Bancshares, M.H.C. after giving effect to the conversion. The independent
appraiser has stated that as of September 25, 1998 the market value of the
converted Pulaski Bank and Pulaski Bancshares, M.H.C. ranged from $25,487,250 to
$34,482,750. Based on this updated valuation and the 73.37% ownership interest
being sold in this offering, the minimum of the new offering range was set at
$18,700,000 and the maximum was set at $25,300,000. Subject to approval of the
Office of Thrift Supervision, an additional 15% above the maximum number of
shares may be sold.
- --------------------------------------------------------------------------------
THESE SECURITIES ARE NOT DEPOSITS OR ACCOUNTS AND ARE NOT INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
FOR A DISCUSSION OF CERTAIN RISKS THAT YOU SHOULD CONSIDER, SEE "UPDATED RISK
FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS SUPPLEMENT AND "RISK FACTORS"
BEGINNING ON PAGE 10 IN THE PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION, THE OFFICE OF THRIFT
SUPERVISION, NOR ANY STATE SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
For additional information, please contact the Bank's stock information center
at (314) 878-5200.
CHARLES WEBB & COMPANY,
a Division of Keefe, Bruyette & Woods, Inc.
The date of this Prospectus Supplement is ___________, 1998
<PAGE>
Throughout this Prospectus Supplement, Pulaski Bank, A Federal Savings Bank is
referred to as the "Bank", Pulaski Bancshares, M.H.C. is referred to as the
"MHC" and Pulaski Financial Corp. is referred to as the "Holding Company."
TABLE OF CONTENTS
Results of Special Meetings ............................ 3
Revised Valuation Range ................................ 3
Extension of Time Period to Complete
the Offering .......................................... 4
Resolicitation Procedures .............................. 5
Updated Risk Factors ................................... 6
Use of Proceeds ........................................ 7
Revised Dividend Policy ................................ 8
Capitalization ......................................... 9
Historical and Pro Forma Regulatory
Capital Compliance .................................... 11
Pro Forma Data ......................................... 12
Effect of the Conversion on the
Bank's Stockholders .................................. 17
Subscriptions by Executive Officers
and Directors ......................................... 18
Where You Can Find Additional
Information ........................................... 19
Index to Quarterly Financial
Information ........................................... 20
2
<PAGE>
RESULTS OF SPECIAL MEETINGS
At the Special Meeting of Members of the MHC held on September 28, 1998,
869,157 votes, or approximately 58.8% of the 1,477,796 votes eligible to be
cast, were voted in favor of the adoption of the Plan of Conversion and 48,283
votes, or approximately 3.2% of the total votes eligible to be cast, were voted
against adoption of the Plan of Conversion. Accordingly, the Plan of Conversion
was approved by more than the required majority of the total votes eligible to
be cast at the Special Meeting.
The Bank adjourned its Special Meeting of Stockholders on September 28, 1998
before taking a vote on the adoption of the Plan of Conversion. The Special
Meeting will be reconvened on __________, 1998.
REVISED VALUATION RANGE
The amount of common stock being offered in the conversion is based on an
independent appraisal of the estimated pro forma market value of the Bank and
the MHC after giving effect to the conversion. As described in the Prospectus,
RP Financial, the independent appraiser, estimated that, in its opinion, as of
July 24, 1998, the aggregate pro forma market value of the Bank and the MHC
ranged between $55,608,560 and $75,235,100 ("Estimated Valuation Range"). Based
on this valuation and the approximate 73.37% ownership interest being sold in
this offering, the Board of Directors of the Holding Company and the Bank
established an offering range of $40,800,000 to $55,200,000. At the close of the
Subscription Offering and the Direct Community Offering on September 18, 1998,
the Holding Company had received 1,306 subscriptions for a total of $6.7 million
of common stock, excluding the subscription of the ESOP, which is significantly
below the minimum of the offering range. As described in the Prospectus, OTS
regulations prohibit the consummation of a conversion unless the minimum number
of shares has been sold. See "THE CONVERSION -- Stock Pricing, Exchange Ratio
and Number of Shares to be Issued" in the Prospectus for a discussion of the
appraisal process.
RP Financial has prepared a revised appraisal which estimates that, as of
September 25, 1998, the aggregate pro forma market value of the Bank and the MHC
ranged between $25,487,250 and $34,482,750 ("Revised Estimated Valuation
Range"). The Revised Estimated Valuation Range reflects current stock market
conditions, including the overall decline in the stock market during August and
September and its impact on the market for thrifts and new issues, and the level
of subscriptions in the offering as of September 18, 1998. The decrease in the
valuation was not based on any material change in the earnings, assets or
financial condition of the Bank. The Boards of Directors of the Holding Company
and the Bank reviewed RP Financial's updated appraisal report, including the
methodology and the assumptions used by RP Financial, and determined that the
Revised Estimated Valuation Range was reasonable and adequate.
Based on the Revised Estimated Valuation Range and the approximate 73.37%
ownership interest being sold in this offering, the Boards of Directors of the
Holding Company and the Bank established a new offering range of $18,700,000 to
$25,300,000. Based on the $10.00 per share purchase price, the Holding Company
is offering between 1,870,000 and 2,530,000 shares. The change in the offering
range materially affects pro forma earnings per share and pro forma book value
per share. Updated information on the pro forma consolidated capitalization and
net earnings of the Holding Company after giving effect to the conversion is
provided in this Prospectus Supplement under the headings "PRO FORMA DATA" and
"CAPITALIZATION."
In light of the Revised Estimated Valuation Range and in accordance with OTS
regulations and the terms of the Subscription Offering and Direct Community
Offering as set forth in the Prospectus, the Holding Company and the Bank are
giving all subscribers the opportunity to maintain, increase, decrease or cancel
their original orders by so advising the Holding Company in writing no later
than 12:00 Noon, Central Time, on __________, 1998. See "RESOLICITATION
PROCEDURES."
3
<PAGE>
As described in the Prospectus, each share of Bank common stock held by the
Bank's public stockholders will be exchanged for shares of Holding Company
common stock pursuant to an Exchange Ratio that will result in the public
stockholders of the Bank owning in the aggregate approximately 26.63% of the
Holding Company. The final Exchange Ratio will be based on the percentage
ownership interest of the Bank's public stockholders in the Bank and the number
of shares sold in this offering and not on the market value of Bank common
stock. Based on the 2,105,840 shares of Bank common stock outstanding at the
date of this Prospectus Supplement, and assuming a minimum of 1,870,000 and a
maximum of 2,530,000 shares of Holding Company common stock are sold in the
offering, the Exchange Ratio is expected to range from approximately 1.0674 to
1.4442. If 2,909,500 shares of common stock are sold, the Exchange Ratio will
be 1.6608. The final Exchange Ratio will be adjusted if any options to purchase
shares of Bank common stock are exercised after the date of this Prospectus
Supplement and before the consummation of the conversion.
<TABLE>
<CAPTION>
Shares to be Sold Shares to be Exchanged Total Shares
in this for Bank of Common
Offering(1) Common Stock (1) Stock to be Exchange
-------------------------- ----------------------
Amount Percent Amount Percent Outstanding(1) Ratio(1)
------------ ------------ ----------- --------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Minimum..... 1,870,000 73.37% 678,725 26.63% 2,548,725 1.0674
Midpoint.... 2,200,000 73.37 798,500 26.63 2,998,500 1.2558
Maximum..... 2,530,000 73.37 918,275 26.63 3,448,275 1.4442
15% above
Maximum.... 2,909,500 73.37 1,056,016 26.63 3,965,516 1.6608
- ------------------------
</TABLE>
(1) Assumes that outstanding options to purchase 15,592 shares of Bank common
stock are not exercised before consummation of the conversion. If all
options are exercised, the percentages represented by the shares sold in
this offering and the shares issued in exchange for the Bank's common stock
would be 72.89% and 27.11%, respectively, and the Exchange Ratio would be
1.0607, 1.2478, 1.4350, and 1.6503, at the minimum, midpoint, maximum and
15% above the maximum of the Revised Estimated Valuation Range,
respectively.
The updated appraisal report of RP Financial has been filed as an exhibit to
the Holding Company's Registration Statement and the MHC's Application for
Conversion. See "WHERE YOU CAN FIND ADDITIONAL INFORMATION" for information on
how to obtain a copy of the updated appraisal report.
The total number of shares to be issued in the conversion may be increased
or decreased to reflect changes in market and financial conditions prior to the
close of the offering. In the event that the total number of shares sold is
less than 1,870,000 or more than 2,909,500 (15% above the maximum of the Revised
Estimated Valuation Range), for aggregate gross proceeds of less than
$18,700,000 or more than $29,095,000, subscribers will be offered further
opportunity to modify or cancel their subscriptions.
EXTENSION OF TIME PERIOD TO COMPLETE THE OFFERING
OTS regulations provide that the sale of the common stock must be completed
within 45 days following the termination of the subscription period, unless such
period is extended by the OTS. As a result of the need to resolicit all persons
who subscribed for shares in the Subscription Offering and Direct Community
Offering, the Bank and the Holding Company have obtained from the OTS an
extension of time to complete the offering. If the Bank does not complete the
offering by __________, 1998, either the Bank will return all funds with
interest and cancel all withdrawal authorizations or, if the Holding Company and
the Bank obtain a further extension of time to complete the offering, the
Holding Company and the Bank will again give all subscribers the right to
maintain, increase, decrease or cancel their subscriptions.
4
<PAGE>
RESOLICITATION PROCEDURES
As required by OTS regulations and the Plan of Conversion adopted by the
Bank and the MHC, the Holding Company is giving all subscribers in the
Subscription Offering and Direct Community Offering the opportunity to maintain
their original orders, to increase or decrease the number of shares subscribed
for or to cancel their original orders. Regardless of your original order, you
may now choose to:
(1) maintain your original order for the number of shares indicated on your
previously submitted stock order form;
(2) increase the number of shares subscribed for, subject to the maximum
purchase limitations;
(3) decrease the number of shares subscribed for, with any excess payment
to be refunded promptly or any excess authorization for withdrawal to
be canceled promptly; or
(4) cancel your order in its entirety, with any payment to be refunded with
interest thereon and any authorization for withdrawal to be canceled
promptly.
To maintain, increase, decrease or cancel your original order as provided
herein, you must return a completed and signed supplemental order form to any
office of the Bank by 12:00 Noon, Central Time, on _________, 1998. Once
received by the Bank, your supplemental order form may not be modified or
rescinded without the consent of the Bank unless the offering is further
extended beyond _________, 1998. IF YOU DO NOT RETURN A COMPLETED SUPPLEMENTAL
ORDER FORM OR IF IT IS RECEIVED BY THE BANK AFTER __________, 1998, YOUR
ORIGINAL ORDER WILL BE CANCELED AUTOMATICALLY AND YOUR FUNDS WILL BE RETURNED
PROMPTLY WITH INTEREST OR YOUR WITHDRAWAL AUTHORIZATION WILL BE TERMINATED.
Subscribers who desire to maintain their orders must return the supplemental
order form marked accordingly. Subscribers who desire to increase their orders
may do so by returning the supplemental order form along with full payment or
with a withdrawal authorization from a deposit account at the Bank for the
amount of additional shares ordered. Subscribers who desire to decrease or
cancel their orders may do so by returning the supplemental order form marked
accordingly, and they will receive a prompt refund with interest, or a reduction
in the amount of their withdrawal authorization, as applicable, for all or part
of their original order.
If an original stock order form contained more than one signature, the
supplemental order form should be signed by all persons who signed the original
stock order form. If all such persons do not sign the supplemental order form,
the Holding Company reserves the right to treat the supplemental order form as
invalid. Please call the stock information center if you have any questions.
Any necessary payment for additional subscribed shares may be made (1) in
cash if delivered in person at the Bank's stock information center, (2) by
check, bank draft or money order, or (3) by authorization of withdrawal from
deposit accounts maintained with the Bank. Interest will continue to be paid on
subscriptions made by cash, check, bank draft or money order at the Bank's
passbook rate of interest from the date the payment is received by the Bank
until the completion or termination of the conversion. If payment is made by
authorization of withdrawal from deposit accounts, the funds authorized to be
withdrawn will continue to accrue interest at the contractual rates until
completion or termination of the conversion but a hold will be placed on such
funds, thereby making them unavailable to the depositor until completion or
termination of the conversion. Appropriate means by which such withdrawals may
be authorized are contained in the supplemental order form.
Persons who have not subscribed for common stock as of the date of this
Prospectus Supplement may also be offered the opportunity to subscribe for
common stock until ________, 1998. Because all subscription rights terminated on
September 13, 1998, any qualifying depositor who submits an order for the first
time during the resolicitation period will be deemed to be a participant in the
Direct Community Offering.
5
<PAGE>
The minimum number of shares that you may purchase is 25. The Bank has
established the following additional purchase limitations:
1. No person (including all persons on a joint account) may purchase more
than 40,000 shares in the offering.
2. No person, either alone or together with associates or persons acting
in concert, may purchase shares in an amount that, when combined with
shares received in exchange for Bank common stock, exceeds 95,000
shares.
On September 24, 1998, the Bank's Board of Directors amended the Plan of
Conversion to reduce the overall purchase limitation from 125,000 shares to
95,000 shares. Subscribers whose original orders exceed the new overall purchase
limitation will receive a prompt refund of any excess payment or any excess
authorization for withdrawal will be canceled promptly.
Because OTS policy requires that the maximum purchase limitation include
shares to be received in exchange for shares of Bank common stock, if you own
shares of Bank common stock you may be limited in your ability to subscribe for
and purchase shares in this offering. See "THE CONVERSION--Limitations on
Purchases of Shares of Common Stock" in the Prospectus for further discussion of
the purchase limitations.
The Boards of Directors of the Bank and the MHC may, in their sole
discretion, increase the maximum purchase limitation set forth above up to 9.99%
of the shares of common stock sold in the conversion, provided that orders for
shares which exceed 5% of the shares of common stock sold in the conversion may
not exceed, in the aggregate, 10% of the shares sold in the conversion. The
Bank and the MHC do not intend to increase the maximum purchase limitation
unless market conditions are such that an increase in the maximum purchase
limitation is necessary to sell a number of shares in excess of the minimum of
the Revised Estimated Valuation Range. If the Boards of Directors decide to
increase the purchase limitations described above, persons who subscribed for
the maximum number of shares of common stock will be, and other large
subscribers in the discretion of the Holding Company and the Bank may be, given
the opportunity to increase their subscriptions accordingly, subject to the
rights and preferences of any person who has priority subscription rights.
In the event of an oversubscription, shares will be allocated in accordance
with the Plan of Conversion.
UPDATED RISK FACTORS
Before investing in the common stock please carefully consider the matters
discussed below in addition to the risk factors disclosed in the Prospectus.
The common stock is not a savings account or deposit and is not insured by the
FDIC or any other government agency.
RECENT PERFORMANCE OF CONVERSION OFFERINGS
RP Financial indicated that the basis for the Revised Estimated Valuation
Range was the current condition of the stock market and the level of
subscriptions in the offering as of September 18, 1998. Although the Revised
Estimated Valuation Range may make the common stock more attractive to investors
due to the lower number of shares offered and the decrease in the pro forma
price-to-book value ratio, the Holding Company cannot guarantee that if you
purchase shares in the conversion you will be able to sell your shares at or
above the $10.00 purchase price.
6
<PAGE>
POSSIBLE VOTING CONTROL BY MANAGEMENT AND EMPLOYEES
The 53,100 shares of common stock expected to be purchased by the Bank's
directors and executive officers and their associates in the conversion,
combined with shares such persons will receive in exchange for their shares of
Bank common stock and the shares expected to be awarded or sold to plan
participants under the ESOP, the 1999 MRDP, the 1999 Option Plan and the 1994
Option Plan, could ultimately result in management and employees and their
associates controlling up to approximately 23.8% of the outstanding shares of
the common stock (assuming the sale of 2,200,000 shares in the conversion and
that the shares issued under the 1999 MRDP, the 1999 Option Plan and the 1994
Option Plan are repurchased treasury shares) and could permit management to
benefit from certain statutory and regulatory provisions, as well as certain
provisions in the Holding Company's Certificate of Incorporation and Bylaws,
that tend to promote the continuity of existing management. If these individuals
were to act as a group or in concert with each other they could have significant
influence over the outcome of any stockholder vote requiring a majority vote and
in the election of directors and could effectively exercise veto power in
matters requiring the approval of stockholders, such as certain business
combinations. Management might thus have the power to authorize actions that
might be viewed as contrary to the best interests of non-affiliated holders of
the common stock and might have veto power over actions that such holders might
deem to be in their best interests. See "SUBSCRIPTIONS BY EXECUTIVE OFFICERS AND
DIRECTORS" and "MANAGEMENT OF THE BANK -- Executive Compensation" and
"RESTRICTIONS ON ACQUISITION OF THE HOLDING COMPANY" in the Prospectus.
RISK OF FURTHER DELAY IN CONSUMMATING THE CONVERSION
If the conversion is not completed by _________, 1998 as a result of changes
that lead to a material revision in the Revised Estimated Valuation Range and
the OTS consents to an extension of time to complete the conversion, there would
be another resolicitation offering. OTS regulations permit the OTS to grant one
or more time extensions, none of which shall exceed 90 days. Such extensions
may not go beyond September 28, 2000. In the resolicitation offering, all
subscribers would be mailed another supplement to the Prospectus and given
another opportunity to confirm, modify or cancel their subscriptions. Failure
to confirm affirmatively or modify would be deemed a cancellation and all
subscription funds, together with accrued interest, would be returned to the
subscriber, or if the subscriber authorized payment by withdrawal of funds on
deposit at the Bank, that authorization would terminate. If a subscriber
affirmatively confirms his subscription order during the resolicitation
offering, the Holding Company and the Bank would continue to hold the
subscriber's subscription funds until the expiration of the resolicitation
offering. All subscriptions held by the Holding Company and the Bank when the
resolicitation offering expires would be irrevocable without the consent of the
Holding Company and the Bank until the completion or termination of the
conversion.
USE OF PROCEEDS
The net proceeds from the sale of the common stock offered hereby are
estimated to range from $17.9 million to $24.4 million. If the Revised
Estimated Valuation Range is increased by 15%, net proceeds are estimated to be
$28.2 million. See "PRO FORMA DATA" for the assumptions used to arrive at such
amounts. The Holding Company has received approval from the OTS to contribute
50% of the net proceeds of the offering to the Bank.
7
<PAGE>
The following table presents the estimated net proceeds of the offering
based on the number of shares set forth below together with the amount to be
retained by the Holding Company and the amount to be contributed to the Bank.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1,870,000 2,200,000 2,530,000 2,909,500
Shares at Shares at Shares at Shares at
$10.00 $ 10.00 $ 10.00 $10.00
Per Share Per Share Per Share Per Share
--------- --------- --------- ---------
(in thousands)
Gross proceeds................... $18,700 $22,000 $25,300 $29,095
Less expenses.................... 834 858 882 910
------- ---------- ------- -------
Net proceeds..................... $17,866 $ 21,142 $24,418 $28,815
======= ========== ======= =======
Amount to be retained by the
Holding Company................. $ 8,933 $10,571 $12,209 $14,408
Amount to be contributed to the
Bank............................ $ 8,933 $10,571 $12,209 $14,408
</TABLE>
In connection with the conversion and the establishment of the ESOP,
the Holding Company intends to loan the ESOP the amount necessary to purchase 8%
of the shares of common stock sold in the conversion. The Holding Company's
loan to fund the ESOP may range from $1,496,000 to $2,024,000 based on the sale
of 149,600 shares to the ESOP (at the minimum of the Revised Estimated Valuation
Range) and 202,400 shares (at the maximum of the Revised Estimated Valuation
Range), respectively, at $10.00 per share. If 15% above the maximum of the
Revised Estimated Valuation Range, or 2,909,500 shares, are sold in the
conversion, the Holding Company's loan to the ESOP would be approximately
$2,327,600 (based on the sale of 232,760 shares to the ESOP). It is
anticipated that the ESOP loan will have a 15-year term with interest payable at
the prime rate as published in The Wall Street Journal on the closing date of
the conversion. The loan will be repaid principally from the Bank's
contributions to the ESOP and from any dividends paid on shares of common stock
held by the ESOP.
REVISED DIVIDEND POLICY
Upon completion of the conversion, the Holding Company's Board of
Directors will have the authority to declare dividends on the common stock,
subject to statutory and regulatory requirements. The Board of Directors of the
Holding Company intends to pay quarterly cash dividends on the common stock at
a rate that would initially result in a payout ratio of approximately 54%. Based
on the pro forma earnings under the Revised Estimated Valuation Range for the
nine months ended June 30, 1998, this would result in a quarterly dividend of
$0.13, $0.115, $0.10 and $0.09 at the minimum, midpoint, maximum and 15%
above the maximum of the Revised Estimated Valuation Range, respectively. The
Holding Company originally intended to achieve economic parity with the
dividends currently paid on the Bank's common stock. However, based on the pro
forma earnings under the Revised Estimated Valuation Range, this would have
resulted in a dividend payout that exceeded earnings. The Board of Directors
determined that such a policy was not prudent and intends to reduce the
dividend to a level that is more appropriate for the Holding Company's
earnings and that is more consistent with peer institutions. The first dividend
payment on the Holding Company's common stock is expected during January 1999.
8
<PAGE>
CAPITALIZATION
The following table presents the historical capitalization of the Bank
at June 30, 1998, and the pro forma consolidated capitalization of the Holding
Company after giving effect to the assumptions set forth under "PRO FORMA DATA,"
based on the sale of the number of shares of common stock at the minimum,
midpoint, maximum and maximum, as adjusted, of the Revised Estimated Valuation
Range. The shares that would be issued at the maximum, as adjusted, of the
Revised Estimated Valuation Range would be subject to receipt of OTS approval of
an updated appraisal confirming such valuation. A CHANGE IN THE NUMBER OF
SHARES TO BE ISSUED IN THE CONVERSION MAY MATERIALLY AFFECT PRO FORMA
CONSOLIDATED CAPITALIZATION.
<TABLE>
<CAPTION>
Holding Company
Pro Forma Consolidated Capitalization
Based Upon the Sale of
----------------------------------------
<S> <C> <C> <C> <C> <C>
Bank 1,870,000 2,200,000 2,530,000 2,909,500
Capitalization Shares at Shares at Shares at Shares at
as of $10.00 $10.00 $10.00 $10.00
June 30, 1998 Per Share(1) Per Share(1) Per Share(1) Per Share(2)
------------- ------------- ------------ ------------ ------------
(in thousands)
Deposits(3)............................. $156,434 $ 156,434 $ 156,434 $ 156,434 $ 156,434
FHLB advances........................... 1,900 1,900 1,900 1,900 1,900
-------- ---------- ---------- ---------- ----------
Total deposits and borrowed funds....... $158,334 $ 158,334 $ 158,334 $ 158,334 $ 158,334
======== ========== ========== ========== ==========
Stockholders' equity:
Preferred stock:
1,000,000 shares, $.01 par value
per share, authorized; none issued
or outstanding...................... $ -- $ -- $ -- $ -- $ --
Common stock:
25,000,000 shares, $.01 par value
per share, authorized; specified
number of shares assumed to be
issued and outstanding(4)........... 2,106 25 30 34 40
Additional paid-in capital............ 5,256 25,203 28,474 31,746 35,507
Retained earnings(5).................. 17,713 17,927 17,927 17,927 17,927
Less:
Common stock acquired
by ESOP(6)........................ -- (1,496) (1,760) (2,024) (2,328)
Common stock acquired
by 1994 MRDP...................... (87) (87) (87) (87) (87)
Common stock to be acquired
by 1999 MRDP(7)................... -- (748) (880) (1,012) (1,164)
-------- ---------- ---------- ---------- ----------
Total stockholders' equity............. $ 24,988 $ 40,824 $ 43,704 $ 46,584 $ 49,896
======== ========== ========== ========== ==========
</TABLE>
(footnotes on following page)
9
<PAGE>
- -------------------
(1) Does not reflect the possible increase in the Revised Estimated Valuation
Range to reflect material changes in the financial condition or results of
operations of the Bank or changes in market conditions or general financial,
economic and regulatory conditions, or the issuance of additional shares
under the 1999 Option Plan or 1994 Option Plan.
(2) This column represents the pro forma capitalization of the Holding Company
in the event the aggregate number of shares of common stock issued in the
conversion is 15% above the maximum of the Revised Estimated Valuation
Range. See "PRO FORMA DATA" and Footnote 1 thereto.
(3) Withdrawals from deposit accounts for the purchase of common stock are not
reflected. Such withdrawals will reduce pro forma deposits by the amounts
thereof.
(4) The Bank's authorized capital consists solely of 20,000,000 shares of common
stock, par value $1.00 per share, 1,000 shares of which will be issued to
the Holding Company, and 10,000,000 shares of preferred stock, no par value
per share, none of which will be issued in connection with the conversion.
(5) Pro forma retained earnings includes approximately $214,000 of retained
earnings of the MHC at June 30, 1998. Retained earnings are substantially
restricted by applicable regulatory capital requirements. Additionally, the
Bank will be prohibited from paying any dividend that would reduce its
regulatory capital below the amount in the liquidation account, which will
be established for the benefit of the Bank's Eligible Account Holders and
Supplemental Eligible Account Holders at the time of the conversion and
adjusted downward thereafter as such account holders reduce their balances
or cease to be depositors. See "THE CONVERSION -- Effects of Conversion on
Depositors and Borrowers of the Bank -- Liquidation Account" in the
Prospectus.
(6) Assumes that 8% of the common stock sold in the conversion will be acquired
by the ESOP in the conversion with funds borrowed from the Holding Company.
Under GAAP, the amount of common stock to be purchased by the ESOP
represents unearned compensation and is, accordingly, reflected as a
reduction of capital. As shares are released to ESOP participants'
accounts, a corresponding reduction in the charge against capital will
occur. Since the funds are borrowed from the Holding Company, the borrowing
will be eliminated in consolidation and no liability or interest expense
will be reflected in the consolidated financial statements of the Holding
Company. See "MANAGEMENT OF THE BANK -- Benefits -- Employee Stock Ownership
Plan" in the Prospectus.
(7) Assumes the purchase in the open market at $10.00 per share, pursuant to the
proposed 1999 MRDP, of a number of shares equal to 4% of the shares of
common stock issued in the conversion at the minimum, midpoint, maximum and
15% above the maximum of the Revised Estimated Valuation Range. The shares
are reflected as a reduction of stockholders' equity. See "RISK FACTORS --
Possible Dilutive Effect of Benefit Programs" and "MANAGEMENT OF THE BANK --
Benefits -- Management Recognition Plan" in the Prospectus. See also "PRO
FORMA DATA." The 1999 MRDP is subject to stockholder approval at a meeting
following consummation of the conversion.
10
<PAGE>
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE
The following table presents the Bank's historical and pro forma capital
position relative to its capital requirements at June 30, 1998. The amount of
capital infused into the Bank for purposes of the following table is 50% of the
net proceeds of the offering. For purpose of the table below, the amount
expected to be borrowed by the ESOP and the cost of the shares expected to be
acquired by the MRDP are deducted from pro forma regulatory capital. For a
discussion of the assumptions underlying the pro forma capital calculations
presented below, see "USE OF PROCEEDS," "CAPITALIZATION" and "PRO FORMA DATA."
The definitions of the terms used in the table are those provided in the capital
regulations issued by the OTS. For a discussion of the capital standards
applicable to the Bank, see "REGULATION -- Federal Regulation of Savings
Associations -- Capital Requirements" in the Prospectus.
<TABLE>
<CAPTION>
PRO FORMA AT JUNE 30, 1998
---------------------------------------
Minimum of Midpoint
Revised Estimated Revised Estimated
Valuation Range Valuation Range
--------------------- ----------------------
1,870,000 Shares 2,200,000 Shares
June 30, 1998 at $10.00 Per Share at $10.00 Per Share
--------------------- --------------------- ----------------------
Percent of Percent of Percent of
Adjusted Adjusted Adjusted
Total Total Total
Amount Assets (1) Amount Assets (1) Amount Assets (1)
------ ----------- ------ ---------- ------ ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
GAAP capital(2)............ $24,988 13.37% $31,891 16.33% $33,133 16.83%
Tangible capital(2)........ $24,922 13.34% $31,825 16.30% $33,067 16.81%
Tangible capital
requirement............... 2,803 1.50 2,929 1.50 2,951 1.50
------- ----- ------- ----- ------- -----
Excess..................... $22,119 11.84% $28,896 14.80% $30,116 15.31%
======= ===== ======= ===== ======= =====
Core capital(2)............ $24,922 13.34% $31,825 16.30% $33,067 16.81%
Core capital requirement(3) 7,474 4.00 7,810 4.00 7,870 4.00
------- ----- ------- ----- ------- -----
Excess..................... $17,448 9.34% $24,015 12.30% $25,197 12.81%
======= ===== ======= ===== ======= =====
Total capital(4)........... $25,650 24.56% $32,553 30.68% $33,795 31.76%
Risk-based
capital requirement....... 8,354 8.00 8,488 8.00 8,512 8.00
------- ----- ------- ----- ------- -----
Excess..................... $17,296 16.56% $24,065 22.68% $25,283 23.76%
======= ===== ======= ===== ======= =====
<CAPTION>
PRO FORMA AT JUNE 30, 1998
----------------------------------------------------------
Maximum of 15% above Maximum
Revised Estimated of Revised Estimated
Valuation Range Valuation Range
------------------------- -------------------------
2,530,000 Shares 2,909,500 Shares
at $10.00 Per Share at $10.00 Per Share
------------------------- -------------------------
Percent of Percent of
Adjusted Adjusted
Total Total
Amount Assets (1) Amount Assets (1)
------ ---------- ------ ---------
(Dollars in thousands)
<S> <C> <C> <C> <C>
GAAP capital(2)............ $34,375 17.33% $35,802 17.90%
Tangible capital(2)........ $34,309 17.30% $35,736 17.87%
Tangible capital
requirement............... 2,974 1.50 3,000 1.50
------- ----- ------- -----
Excess..................... $31,335 15.80% $32,736 16.37%
======= ===== ======= =====
Core capital(2)............ $34,309 17.30% $35,736 17.87%
Core capital requirement(3) 7,930 4.00 8,000 4.00
------- ----- ------- -----
Excess..................... $26,380 13.30% $27,736 13.87%
======= ===== ======= =====
Total capital(4)........... $35,037 32.83% $36,464 34.06%
Risk-based
capital requirement....... 8,537 8.00 8,564 8.00
------- ----- ------- -----
Excess..................... $26,500 24.83% $27,900 26.06%
======= ===== ======= =====
</TABLE>
- -------------------------
(1) Tangible capital levels and core capital levels are shown as a percentage
of adjusted total assets. Risk-based capital levels are shown as a
percentage of risk-weighted assets.
(2) Disallowed mortgage servicing assets account for the difference between
GAAP capital and each of tangible capital and core capital.
(3) Represents the core (Tier I) capital necessary to be deemed adequately
capitalized.
(4) Percentage represents total core and supplementary capital divided by total
risk-weighted assets. Assumes net proceeds are invested in assets that
carry a 20% risk-weighting.
11
<PAGE>
PRO FORMA DATA
Pursuant to the Plan of Conversion, the amount of common stock being
offered in the conversion is based on an independent appraisal of the estimated
pro forma market value of the Bank and the MHC after giving effect to the
conversion. The Revised Estimated Valuation Range as of September 25, 1998 is
from a minimum of $25.5 million to a maximum of $34.5 million with a midpoint of
$30.0 million. Based on this valuation and the approximate 73.37% ownership
interest being sold in this offering, the Boards of Directors of the Holding
Company and the Bank established an offering range of $18.7 million to $25.3
million, with a midpoint of $22.0 million. At a price per share of $10.00, this
results in a minimum number of shares of 1,870,000, a maximum number of shares
of 2,530,000 and a midpoint number of shares of 2,200,000. The actual net
proceeds from the sale of the common stock cannot be determined until the
conversion is completed. However, net proceeds set forth on the following table
are based upon the following assumptions: (i) Webb will receive fees of
approximately $134,000, $158,000, $182,000 and $210,000 at the minimum,
midpoint, maximum and 15% above the maximum of the Revised Estimated Valuation
Range, respectively (see "THE CONVERSION -- Plan of Distribution and Selling
Commissions" in the Prospectus); (ii) all of the common stock will be sold in
the Subscription and Direct Community Offerings; and (iii) conversion expenses,
excluding the fees paid to Webb, will total approximately $700,000 at each of
the minimum, midpoint, maximum and 15% above the Revised Estimated Valuation
Range. Actual expenses may vary from this estimate, and the fees paid will
depend upon the percentages and total number of shares sold in the Subscription
Offering, Direct Community Offering and Syndicated Community Offering and other
factors.
The following table summarizes the historical net income and retained
income of the Bank and the pro forma consolidated net income and stockholders'
equity of the Holding Company for the periods and at the dates indicated based
on the minimum, midpoint and maximum of the Revised Estimated Valuation Range
and based on a 15% increase in the maximum of the Revised Estimated Valuation
Range. The pro forma consolidated net income of the Bank for the nine months
ended June 30, 1998 and the year ended September 30, 1997 has been calculated as
if the conversion had been consummated at the beginning of each period and the
estimated net proceeds received by the Holding Company and the Bank had been
invested at 5.37% and 5.44% at the beginning of the period, respectively, which
represents the one-year U.S. Treasury Bill yield as of June 30, 1998 and
September 30, 1997. While OTS regulations provide for the use of a yield
representing the arithmetic average of the weighted average yield earned by the
Bank on its interest-earning assets and the rates paid on its deposits, the
Holding Company believes that the U.S. Treasury Bill yield represents a more
realistic yield on the investment of the conversion proceeds. As discussed
under "USE OF PROCEEDS," the Holding Company expects to retain 50% of the net
proceeds of the offering from which it will fund the ESOP loan. A pro forma
after-tax return of 3.38% and 3.43% is used for both the Holding Company and the
Bank for the nine months ended June 30, 1998 and the year ended September 30,
1997, respectively, after giving effect to an incremental combined federal and
state income tax rate of 37.0%. Historical and pro forma per share amounts have
been calculated by dividing historical and pro forma amounts by the number of
shares of common stock indicated in the footnotes to the table. Per share
amounts have been computed as if the common stock had been outstanding at the
beginning of the respective periods, but without any adjustment of per share
historical or pro forma stockholders' equity to reflect the earnings on the
estimated net proceeds.
No effect has been given to: (i) the shares to be reserved for issuance
under the Holding Company's 1999 Stock Option Plan, which is expected to be
voted upon by stockholders at a meeting following consummation of the
conversion; (ii) withdrawals from deposit accounts for the purpose of purchasing
common stock in the conversion; (iii) the issuance of shares from authorized but
unissued shares to the 1999 MRDP, which is expected to be voted upon by
stockholders at a meeting following consummation of the conversion; or (iv) the
establishment of a liquidation account for the benefit of Eligible Account
Holders and Supplemental Eligible Account Holders. See "MANAGEMENT OF THE BANK
- -- Benefits -- Stock Option Plan" and "THE CONVERSION -- Stock Pricing, Exchange
Ratio and Number of Shares to be Issued" in the Prospectus.
THE FOLLOWING PRO FORMA INFORMATION MAY NOT BE REPRESENTATIVE OF THE
FINANCIAL EFFECTS OF THE CONVERSION AT THE DATE ON WHICH THE CONVERSION ACTUALLY
OCCURS AND SHOULD NOT BE TAKEN AS INDICATIVE OF FUTURE RESULTS OF OPERATIONS.
STOCKHOLDERS' EQUITY REPRESENTS THE DIFFERENCE BETWEEN THE STATED AMOUNTS OF
CONSOLIDATED ASSETS AND
12
<PAGE>
LIABILITIES OF THE HOLDING COMPANY COMPUTED IN ACCORDANCE WITH GAAP.
STOCKHOLDERS' EQUITY HAS NOT BEEN INCREASED OR DECREASED TO REFLECT THE
DIFFERENCE BETWEEN THE CARRYING VALUE OF LOANS AND OTHER ASSETS AND MARKET
VALUE. STOCKHOLDERS' EQUITY IS NOT INTENDED TO REPRESENT FAIR MARKET VALUE NOR
DOES IT REPRESENT AMOUNTS THAT WOULD BE AVAILABLE FOR DISTRIBUTION TO
STOCKHOLDERS IN THE EVENT OF LIQUIDATION.
<TABLE>
<CAPTION>
At or For the Nine Months Ended June 30, 1998
----------------------------------------------------------------------
Minimum of Midpoint of Maximum of 15% Above
Revised Revised Revised Maximum of
Estimated Estimated Estimated Revised
Valuation Valuation Valuation Estimated
Range Range Range Valuation Range
----------- ------------ ----------- ---------------
1,870,000 2,200,000 2,530,000 2,909,500(1)
Shares Shares Shares Shares
at $10.00 at $10.00 at $10.00 at $10.00
Per Share Per Share Per Share Per Share
---------- ----------- ---------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Gross proceeds...................................... $ 18,700 $ 22,000 $ 25,300 $ 29,095
Less: estimated expenses............................ 834 858 882 910
---------- ---------- ---------- ----------
Estimated net proceeds.............................. 17,866 21,142 24,418 28,185
Less: Common stock acquired by ESOP................. (1,496) (1,760) (2,024) (2,328)
Less: Common stock to be acquired
by 1999 MRDP.................................... (748) (880) (1,012) (1,164)
---------- ---------- ---------- ----------
Net investable proceeds......................... $ 15,622 $ 18,502 $ 21,382 $ 24,694
========== ========== ========== ==========
Consolidated net income:
Historical......................................... $ 1,475 $ 1,475 $ 1,475 $ 1,475
Pro forma income on net proceeds(2)................ 396 469 543 627
Pro forma ESOP adjustments(3)...................... (47) (55) (64) (73)
Pro forma 1999 MRDP adjustments(4)................. (71) (83) (96) (110)
---------- ---------- ---------- ----------
Pro forma net income............................. $ 1,753 $ 1,806 $ 1,858 $ 1,919
========== ========== ========== ==========
Consolidated net income per share (5)(6):
Historical......................................... $ 0.61 $ 0.52 $ 0.45 $ 0.39
Pro forma income on net proceeds................... 0.17 0.17 0.17 0.17
Pro forma ESOP adjustments(3)...................... (0.02) (0.02) (0.02) (0.02)
Pro forma 1999 MRDP adjustments(4)................. (0.03) (0.03) (0.03) (0.03)
---------- ---------- ---------- ----------
Pro forma net income per share(7)................ $ 0.73 $ 0.64 $ 0.57 $ 0.51
========== ========== ========== ==========
Consolidated stockholders' equity (book value):
Historical......................................... $ 25,202 $ 25,202 $ 25,202 $ 25,202
Estimated net proceeds............................. 17,866 21,142 24,418 28,185
Less: Common stock acquired by ESOP................ (1,496) (1,760) (2,024) (2,328)
Less: Common stock to be acquired
by 1999 MRDP(4).................................. (748) (880) (1,012) (1,164)
---------- ---------- ---------- ----------
Pro forma stockholders' equity(8)................ $ 40,824 $ 43,704 $ 46,584 $ 49,896
========== ========== ========== ==========
Consolidated stockholders' equity per share(6)(9):
Historical(6)...................................... $ 9.89 $ 8.40 $ 7.31 $ 6.36
Estimated net proceeds............................. 7.01 7.06 7.08 7.10
Less: Common stock acquired by ESOP................ (0.59) (0.59) (0.59) (0.59)
Less: Common stock to be acquired
by 1999 MRDP(4).................................. (0.29) (0.29) (0.29) (0.29)
---------- ---------- ---------- ----------
Pro forma stockholders' equity per share(7)...... $ 16.02 $ 14.58 $ 13.51 $ 12.58
========== ========== ========== ==========
Purchase price as a percentage of pro forma
stockholders' equity per share..................... 62.42% 68.59% 74.02% 79.49%
Purchase price as a multiple of pro forma
net income per share (10).......................... 10.27x 11.72x 13.16x 14.71x
</TABLE>
(footnotes on following page)
13
<PAGE>
<TABLE>
<CAPTION>
At or For the Year Ended September 30, 1997
---------------------------------------------------------------------
Minimum of Midpoint of Maximum of 15% Above
Revised Revised Revised Maximum of
Estimated Estimated Estimated Revised
Valuation Valuation Valuation Estimated
Range Range Range Valuation Range
----------- ------------ ----------- ---------------
1,870,000 2,200,000 2,530,000 2,909,500(1)
Shares Shares Shares Shares
at $10.00 at $10.00 at $10.00 at $10.00
Per Share Per Share Per Share Per Share
---------- ----------- ---------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Gross proceeds...................................... $ 18,700 $ 22,000 $ 25,300 $ 29,095
Less: estimated expenses............................ 834 858 882 910
---------- ---------- ---------- ----------
Estimated net proceeds.............................. 17,866 21,142 24,418 28,185
Less: Common stock acquired by ESOP................. (1,496) (1,760) (2,024) (2,328)
Less: Common stock to be acquired
by 1999 MRDP................................... (748) (880) (1,012) (1,164)
---------- ---------- ---------- ----------
Net investable proceeds........................ $ 15,622 $ 18,502 $ 21,382 $ 24,694
========== ========== ========== ==========
Consolidated net income:
Historical......................................... $ 1,923 $ 1,923 $ 1,923 $ 1,923
Pro forma income on net proceeds(2)................ 535 634 733 846
Pro forma ESOP adjustments(3)...................... (63) (74) (85) (98)
Pro forma 1999 MRDP adjustments(4)................. (94) (111) (128) (147)
---------- ---------- ---------- ----------
Pro forma net income............................. $ 2,301 $ 2,372 $ 2,443 $ 2,524
========== ========== ========== ==========
Consolidated net income per share (5)(6):
Historical......................................... $ 0.80 $ 0.68 $ 0.59 $ 0.51
Pro forma income on net proceeds................... 0.23 0.23 0.23 0.23
Pro forma ESOP adjustments(3)...................... (0.03) (0.03) (0.03) (0.03)
Pro forma 1999 MRDP adjustments(4)................. (0.04) (0.04) (0.04) (0.04)
---------- ---------- ---------- ----------
Pro forma net income per share(7)................ $ 0.96 $ 0.84 $ 0.75 $ 0.67
========== ========== ========== ==========
Consolidated stockholders' equity (book value):
Historical......................................... $ 24,072 $ 24,072 $ 24,072 $ 24,072
Estimated net proceeds............................. 17,866 21,142 24,418 28,185
Less: Common stock acquired by ESOP................ (1,496) (1,760) (2,024) (2,328)
Less: Common stock to be acquired
by 1999 MRDP(4).................................. (748) (880) (1,012) (1,164)
---------- ---------- ---------- ----------
Pro forma stockholders' equity(8)................ $ 39,694 $ 42,574 $ 45,454 $ 48,766
========== ========== ========== ==========
Consolidated stockholders' equity per share(6)(9):
Historical(6)...................................... $ 9.44 $ 8.03 $ 6.98 $ 6.07
Estimated net proceeds............................. 7.01 7.05 7.08 7.11
Less: Common stock acquired by ESOP................ (0.59) (0.59) (0.59) (0.59)
Less: Common stock to be acquired
by 1999 MRDP(4).................................. (0.29) (0.29) (0.29) (0.29)
---------- ---------- ---------- ----------
Pro forma stockholders' equity per share(7)...... $ 15.57 $ 14.20 $ 13.18 $ 12.30
========== ========== ========== ==========
Purchase price as a percentage of pro forma
stockholders' equity per share..................... 64.23% 70.42% 75.87% 81.30%
Purchase price as a multiple of pro forma
net income per share............................... 10.42x 11.90x 13.33x 14.93x
</TABLE>
_____________________
(1) Gives effect to the sale of an additional 379,500 shares in the conversion,
which may be issued to cover an increase in the pro forma market value of
the Holding Company and the Bank as converted, without the resolicitation
of subscribers or any right of cancellation. The issuance of such
additional shares will be conditioned on a determination by RP Financial
that such issuance is compatible with its determination of the estimated
pro forma market value of the Bank and the MHC as converted. See "THE
CONVERSION -- Stock Pricing, Exchange Ratio and Number of Shares to be
Issued" in the Prospectus.
(2) No effect has been given to withdrawals from savings accounts for the
purpose of purchasing common stock in the conversion. Since funds on
deposit at the Bank may be withdrawn to purchase shares of common stock
(which
14
<PAGE>
will reduce deposits by the amount of such purchases), the net amount of
funds available to the Bank for investment following receipt of the net
proceeds of the conversion will be reduced by the amount of such
withdrawals.
(3) It is assumed that 8% of the shares of common stock sold in the offering
will be purchased by the ESOP. The funds used to acquire such shares will
be borrowed by the ESOP (at an interest rate equal to the prime rate as
published in The Wall Street Journal on the closing date of the conversion,
which rate is currently 8.25%) from the net proceeds from the offering
retained by the Holding Company. The amount of this borrowing has been
reflected as a reduction from gross proceeds to determine estimated net
investable proceeds. The Bank intends to make contributions to the ESOP in
amounts at least equal to the principal and interest requirement of the
debt. As the debt is paid down, stockholders' equity will be increased.
The Bank's payment of the ESOP debt is based upon equal installments of
principal over a 15-year period, assuming a combined federal and state
income tax rate of 37.0%. Interest income earned by the Holding Company
on the ESOP debt offsets the interest paid by the Bank on the ESOP loan.
No reinvestment is assumed on proceeds contributed to fund the ESOP.
Applicable accounting practices require that compensation expense for the
ESOP be based upon shares committed to be released and that unallocated
shares be excluded from earnings per share computations. The valuation of
shares committed to be released would be based upon the average market
value of the shares during the year, which, for purposes of this
calculation, was assumed to be equal to the $10.00 per share purchase
price. See "MANAGEMENT OF THE BANK -- Benefits -- Employee Stock Ownership
Plan" in the Prospectus.
(4) In calculating the pro forma effect of the 1999 MRDP, it is assumed that
the required stockholder approval has been received, that the shares were
acquired by the 1999 MRDP at the beginning of the period presented in open
market purchases at the $10.00 per share purchase price, that 20% of the
amount contributed was an amortized expense during such period, and that
the combined federal and state income tax rate is 37.0%. The issuance of
authorized but unissued shares of the common stock instead of open market
purchases would dilute the voting interests of existing stockholders by
approximately 2.8% and pro forma net income per share would be $0.71,
$0.63, $0.56 and $0.50 at the minimum, midpoint, maximum and 15% above the
maximum of the Revised Estimated Valuation Range, respectively, for the
nine months ended June 30, 1998, and $0.94, $0.82, $0.74 and $0.66 at the
minimum, midpoint, maximum and 15% above the maximum of the Revised
Estimated Valuation Range, respectively, for the year ended September 30,
1997, and pro forma stockholders' equity per share would be $15.85, $14.44,
$13.41 and $12.51 at the minimum, midpoint, maximum and 15% above the
maximum of the Revised Estimated Valuation Range, respectively, at June 30,
1998, and $15.42, $14.08, $12.81 and $12.23 at the minimum, midpoint,
maximum and 15% above the maximum of the Revised Estimated Valuation Range,
respectively, at September 30, 1997. Shares issued under the 1999 MRDP
vest 20% per year and for purposes of this table compensation expense is
recognized on a straight-line basis over each vesting period. In the event
the fair market value per share is greater than $10.00 per share on the
date shares are awarded under the 1999 MRDP, total 1999 MRDP expense would
increase. No effect has been given to the shares reserved for issuance
under the proposed 1999 Option Plan.
(5) Per share amounts are based upon shares outstanding of 2,406,605,
2,831,300, 3,255,995 and 3,744,394 at the minimum, midpoint, maximum and
15% above the maximum of the Revised Estimated Valuation Range,
respectively, for the nine months ended June 30, 1998, and 2,409,098,
2,834,233, 3,259,368, and 3,748,273 at the minimum, midpoint, maximum and
15% above the maximum of the Revised Estimated Valuation Range,
respectively, for the year ended September 30, 1997, which includes the
shares of common stock issued in the conversion less the number of shares
assumed to be held by the ESOP not committed to be released within the
first year following the conversion.
(6) Historical per share amounts have been computed as if the shares of common
stock expected to be issued in the conversion had been outstanding at the
beginning of the period or on the date shown, but without any adjustment of
historical net income or historical retained earnings to reflect the
investment of the estimated net proceeds of the sale of shares in the
conversion, the additional ESOP expense or the proposed 1999 MRDP expense,
as described above.
(7) No effect has been given to the issuance of additional shares pursuant to
options to granted pursuant to the 1999 Option Plan or to existing stock
options. If stockholders approve the 1999 Option Plan following the
conversion, the Holding Company will have reserved for issuance under the
1999 Option Plan authorized but unissued shares of common stock
representing an amount of shares equal to 10% of the shares sold in this
offerings. If all of these
15
<PAGE>
options were to be exercised utilizing authorized but unissued shares
rather than treasury shares which could be acquired, the voting interests
of existing stockholders would be diluted by approximately 7.0%. Assuming
stockholder approval of the 1999 Option Plan, and that all options under
the 1999 Option Plan were exercised at the end of the period at an exercise
price of $10.00 per share, pro forma net earnings per share would be $0.68,
$0.59, $0.53 and $0.48 at the minimum, midpoint, maximum and 15% above the
maximum of the Revised Estimated Valuation Range, respectively, for the
nine months ended June 30, 1998, and $0.89, $0.78, $0.70 and $0.62 at the
minimum, midpoint, maximum and 15% above the maximum of the Revised
Estimated Valuation Range, respectively, for the year ended September 30,
1997, and pro forma stockholders' equity per share would be $15.61, $14.26,
$13.27 and $12.41 at the minimum, midpoint, maximum and 15% above the
maximum of the Revised Estimated Valuation Range, respectively, at June 30,
1998 and $15.19, $13.91, $12.96 and $12.14 at the minimum, midpoint,
maximum and 15% above the maximum of the Revised Estimated Valuation Range,
respectively, at September 30, 1997. See "MANAGEMENT OF THE SAVINGS BANK -
- Benefits -- Stock Option Plans" and "RISK FACTORS -- Possible Dilutive
Effect of Benefit Programs" in the Prospectus.
(8) "Book value" represents the difference between the stated amounts of the
Bank's assets and liabilities. The amounts shown do not reflect the
liquidation account which will be established for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders in the
conversion, or the federal income tax consequences of the restoration to
income of the Bank's special bad debt reserves for income tax purposes
which would be required in the unlikely event of liquidation. See "THE
CONVERSION -- Effects of Conversion on Depositors and Borrowers of the
Bank" and "TAXATION" in the Prospectus. The amounts shown for book value
do not represent fair market values or amounts distributable to
stockholders in the unlikely event of liquidation.
(9) Per share amounts are based upon shares outstanding of 2,548,725,
2,998,500, 3,448,275 and 3,965,516 at the minimum, midpoint, maximum and
15% above the maximum of the Revised Estimated Valuation Range,
respectively.
(10) Annualized.
16
<PAGE>
EFFECT OF THE CONVERSION ON THE BANK'S STOCKHOLDERS
The following table illustrates the effect of the conversion on the public
stockholders of the Bank by setting forth selected comparative per share data
for the Bank on both an historical and a pro forma equivalent basis giving
effect to the conversion, assuming that at the minimum, midpoint, maximum and
15% above the maximum of the Revised Estimated Valuation Range, one share of
Bank common stock will be exchanged for 1.0674, 1.2558, 1.4442 and 1.6608 shares
of Holding Company common stock, respectively. Pro forma equivalent book value
per share and pro forma equivalent net income per share represent the pro forma
amounts set forth in the tables under "PRO FORMA DATA" above multiplied by the
foregoing Exchange Ratios. Pro forma equivalent dividends per share represent
the intended dividend payment set forth under "REVISED DIVIDEND POLICY" above
multiplied by the foregoing Exchange Ratios. This table should be read in
conjunction with the consolidated financial statements of the Bank, including
the notes thereto, appearing elsewhere in this prospectus. The following
information is not necessarily indicative of the results of operations or the
financial position that would have resulted had the conversion been consummated
at the beginning of the periods indicated.
<TABLE>
<CAPTION>
At or For the At or For the
Nine Months Ended Year Ended
June 30, 1998 September 30, 1997
----------------- ------------------
<S> <C> <C>
Book value per share
Historical........................................................ $11.87 $11.39
Pro forma equivalent:
At minimum of Revised Estimated Valuation Range................ 17.10 16.62
At midpoint of Revised Estimated Valuation Range............... 18.31 17.83
At maximum of Revised Estimated Valuation Range................ 19.51 19.03
At 15% above maximum of Revised Estimated Valuation Range...... 20.89 20.43
Basic net income per share
Historical........................................................ $ 0.70 $ 0.92
Pro forma equivalent:
At minimum of Revised Estimated Valuation Range................ 0.78 1.02
At midpoint of Revised Estimated Valuation Range............... 0.80 1.05
At maximum of Revised Estimated Valuation Range................ 0.82 1.08
At 15% above maximum of Revised Estimated Valuation Range...... 0.85 1.11
Dividends per share
Historical........................................................ $0.825 $ 1.03
Pro forma equivalent:
At minimum of Revised Estimated Valuation Range................ 0.42 0.56
At midpoint of Revised Estimated Valuation Range............... 0.43 0.56
At maximum of Revised Estimated Valuation Range................ 0.43 0.58
At 15% above maximum of Revised Estimated Valuation Range...... 0.44 0.59
</TABLE>
17
<PAGE>
SUBSCRIPTIONS BY EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth, for each director and executive officer of
the Bank (and their associates) and for all of the directors and executive
officers as a group, (i) shares of Holding Company common stock to be received
in exchange for shares of Bank common stock based upon the number of shares
owned as of June 30, 1998, (ii) proposed purchases of common stock, assuming
shares available to satisfy their subscriptions, and (iii) total shares of
Holding Company common stock to be held upon consummation of the conversion, in
each case assuming that 2,200,000 shares are sold at the midpoint of the Revised
Estimated Valuation Range. No individual has entered into a binding agreement
with respect to such intended purchases and, therefore, actual purchases could
be more or less than indicated below. Directors and executive officers and
their associates may not purchase in excess of 32% of the shares sold in the
conversion. Because OTS policy requires that the maximum purchase limitation
include shares to be received in exchange for shares of Bank common stock,
certain officers and directors of the Bank may be limited in their ability to
purchase shares in this offering.
<TABLE>
<CAPTION>
Number of
Shares Received
in Exchange Proposed Purchase of Total Common Stock
for Bank Common Stock to be Held
-------------------- -----------------------
Common Stock Number Number Percentage
(1)(2) Amount of Shares of Shares of Total
------- -------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Robert A. Ebel 28,506 $200,000 20,000 48,506 1.62%
Dr. Edward J. Howenstein 31,265 -- -- 31,265 1.04
William A. Donius 3,913 125,000 12,500 16,413 *
Michael J. Donius 4,540 100,000 10,000 14,540 *
E. Douglas Britt 16,175 50,000 5,000 21,175 *
Garland A. Dorn 4,940 25,000 2,500 7,440 *
Thomas F. Hack 12,846 10,000 1,000 13,846 *
Other Officers (4 persons) 24,397 21,000 2,100 26,497 *
------- -------- ------ -------
Total 126,582 $531,000 53,100 179,682 5.99%
======= ======== ====== =======
</TABLE>
________________
(*) Less than 1%.
(1) Includes shares of Holding Company common stock received in exchange for
shares of Bank common stock awarded pursuant to the 1994 MRDP that remain
subject to vesting. Excludes shares which may be received upon the exercise
of outstanding stock options granted under the 1994 Option Plan. Based
upon the Exchange Ratio of 1.2558 at the midpoint of the Revised Estimated
Valuation Range, the following persons named in the table would have
options to purchase common stock as follows: Mr. Ebel, 3,767 shares; Mr.
Howenstein, 3,767 shares; Mr. William Donius, 11,553 shares; Mr. Michael
Donius, 8,288 shares; Mr. Britt, 2,260 shares; Mr. Dorn, 1,255 shares;
Mr. Hack, 4,296 shares; and other officers, 14,466 shares.
(2) Does not include stock options that may be granted under the 1999 Option
Plan and shares that may be awarded under 1999 MRDP if such plans are
approved by stockholders. See "MANAGEMENT OF THE BANK -- Benefits" in the
Prospectus.
18
<PAGE>
WHERE YOU CAN FIND ADDITIONAL INFORMATION
The Holding Company has filed with the SEC a post-effective amendment
to its Registration Statement on Form S-1 (File No. 333-56465) with respect to
the shares of common stock offered hereby. This Prospectus Supplement is part
of the Registration Statement. As allowed by the SEC, this Prospectus
Supplement does not contain all the information that you can find in the
Registration Statement or the exhibits to the Registration Statement. You may
read and copy the Registration Statement at the SEC's public reference room in
Washington, D.C. You can request copies of these documents, upon payment of a
duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference rooms. The
Registration Statement is also available on the Internet at the SEC's World Wide
Web site at http://www.sec.gov.
The MHC has filed with the OTS a post-effective amendment to its
Application for Approval of Conversion. As allowed by the OTS, this Prospectus
Supplement omits certain information contained in such Application, including
the updated appraisal report. The Application may be inspected, without charge,
at the offices of the OTS, 1700 G Street, N.W., Washington, D.C. 20552 and at
the office of the Regional Director of the OTS at the OTS Midwest Regional
Office, 122 W. John Carpenter Freeway, Suite 600, Irving, Texas 75039.
You may obtain additional copies of the Prospectus from the Bank's
stock information center at 12300 Olive Boulevard, St. Louis, Missouri or by
calling (314) 878-5200.
INDEX TO QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C>
Financial Statements:
Consolidated Balance Sheets as of
June 30, 1998 and September 30, 1997 (unaudited).................... F-1
Consolidated Statements of Income for the
Three and Nine Months Ended June 30, 1998 and 1997 (unaudited)...... F-2
Consolidated Statements of Stockholders' Equity
Nine Months Ended June 30, 1998 (unaudited)......................... F-3
Consolidated Statements of Cash Flows for the
Nine Months Ended June 30, 1998 and 1997 (unaudited)................ F-4
Notes to Unaudited Consolidated Financial Statements....................... F-6
Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................... F-8
</TABLE>
19
<PAGE>
PULASKI BANK, A FEDERAL SAVINGS BANK AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------
JUNE 30, SEPTEMBER 30,
ASSETS 1998 1997
<S> <C> <C>
Cash and amounts due from depository institutions $ 2,542,082 $ 1,248,294
Federal funds sold and overnight deposits 15,000,000 5,000,000
-------------- -------------
Total cash and cash equivalents 17,542,082 6,248,294
Investments in debt securities held to maturity (market value, $14,270,406
and $16,071,484, at June 30, 1998 and September 30, 1997, respectively) 14,267,092 16,068,191
Mortgage-backed and related securities held to maturity (market value,
$6,156,137 and $6,647,107 at June 30, 1998 and September 30, 1997,
respectively) 5,880,577 6,361,708
Loans held for sale 14,621,524 14,384,480
Loans receivable, net of allowance for loan losses at June 30, 1998 and
September 30, 1997, respectively of $729,222 and $612,852 128,589,872 130,358,537
Federal Home Loan Bank stock - at cost 1,423,000 1,638,000
Real estate acquired in settlement of loans, net of allowance for losses of
$2,270 and $-0- at June 30, 1998 and September 30, 1997, respectively 12,860
Premises and equipment - net 1,933,326 1,808,809
Accrued interest receivable:
Investment securities 136,322 140,225
Mortgage-backed securities 44,685 49,468
Loans 862,627 925,708
Other 2,521 882
Other assets 1,600,286 1,434,430
-------------- -------------
TOTAL $ 186,916,774 $ 179,418,732
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 156,434,431 $ 148,672,221
Advances from Federal Home Loan Bank of Des Moines 1,900,000 2,200,000
Advance payments by borrowers for taxes and insurance 2,285,859 3,113,093
Accrued interest payable 41,187 262,833
Other liabilities 1,267,131 1,312,695
-------------- -------------
Total liabilities 161,928,608 155,560,842
-------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock - $1.00 par value per share, 10,000,000 shares, authorized;
none issued or outstanding
Common stock - $1.00 par value per share, 20,000,000 shares, authorized;
2,105,840 and 2,094,800 shares issued and outstanding
at June 30, 1998 and September 30, 1997, respectively 2,105,840 2,094,800
Additional paid-in capital 5,256,888 5,132,238
Unearned management recognition and development plan shares (87,400) (128,800)
Retained earnings, substantially restricted 17,712,838 16,759,652
-------------- -------------
Total stockholders' equity 24,988,166 23,857,890
-------------- -------------
TOTAL $ 186,916,774 $ 179,418,732
============== =============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
F-1
<PAGE>
PULASKI BANK, A FEDERAL SAVINGS BANK AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
THREE AND NINE MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------------ -------------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans $ 2,821,667 $ 2,842,793 $ 8,648,447 $ 8,382,350
Investment securities 211,546 295,563 686,877 825,864
Mortgage-backed and related securities 123,461 139,400 381,237 431,734
Other 242,809 118,002 531,119 385,061
-------------- ------------ -------------- ------------
Total interest income 3,399,483 3,395,758 10,247,680 10,025,009
INTEREST EXPENSE:
Deposits 1,755,447 1,713,356 5,232,193 5,095,072
Advances from Federal Home Loan Bank of Des Moines 30,369 34,616 99,600 125,598
-------------- ------------ -------------- ------------
Total interest expense 1,785,816 1,747,972 5,331,793 5,220,670
-------------- ------------ -------------- ------------
NET INTEREST INCOME 1,613,667 1,647,786 4,915,887 4,804,339
PROVISION FOR LOAN LOSSES 63,538 15,204 133,061 33,685
-------------- ------------ -------------- ------------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 1,550,129 1,632,582 4,782,826 4,770,654
-------------- ------------ ------------- ------------
OTHER INCOME:
Service charges on deposit accounts 48,276 18,384 100,814 55,669
Gains on sales of loans 203,170 114,303 483,908 271,346
Insurance commissions 79,672 37,766 161,953 88,160
Other 80,846 60,480 252,470 208,444
-------------- ------------ ------------- ------------
Total other income 411,964 230,933 999,145 623,619
-------------- ------------ ------------- ------------
OTHER EXPENSES:
Salaries and employee benefits 615,691 618,049 1,794,577 1,891,361
Occupancy and equipment expense 139,426 136,386 416,671 386,607
Federal insurance premiums 24,450 24,390 73,117 118,094
Outside data processing 63,364 61,585 183,022 178,781
Advertising 69,980 7,509 224,898 34,486
Professional services 54,089 41,043 229,988 134,006
Other 200,534 144,712 554,652 463,851
-------------- ------------ ------------- ------------
Total other expenses 1,167,534 1,033,674 3,476,925 3,207,186
-------------- ------------ ------------- ------------
INCOME BEFORE INCOME TAXES 794,559 829,841 2,305,046 2,187,087
INCOME TAXES 295,817 295,644 829,751 758,477
-------------- ------------ ------------- ------------
NET INCOME $ 498,74 $ 534,197 $ 1,475,295 $ 1,428,610
============== ============ ============= ============
BASIC EARNINGS PER SHARE $ 0.24 $ 0.26 $ 0.70 $ 0.68
============== ============ ============= ============
DILUTED EARNINGS PER SHARE $ 0.23 $ 0.25 $ 0.69 $ 0.68
============= ============ ============= ============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
F-2
<PAGE>
PULASKI BANK, A FEDERAL SAVINGS BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unearned
Management
Additional Recognition and
Common Paid-In Development Retained
Stock Capital Plan Shares Earnings Total
<S> <C> <C> <C> <C> <C>
BALANCE, SEPTEMBER 30, 1997 $ 2,094,800 $ 5,132,238 $ (128,800) $ 16,759,652 $ 23,857,890
First quarter dividends declared
($.275 per share)* (172,398) (172,398)
Second quarter dividends declared
($.275 per share)* (174,856) (174,856)
Third quarter dividends declared
($.275 per share)* (174,855) (174,855)
Stock options exercised 11,040 124,650 135,690
Amortization of management
recognition and development
plan shares 41,400 41,400
Net income 1,475,295 1,475,295
--------------- ----------- ------------- ------------- ------------
BALANCE, JUNE 30, 1998 $ 2,105,840 $ 5,256,888 $ (87,400) $ 17,712,838 $ 24,988,166
=============== =========== ============== ============= ============
</TABLE>
* Pulaski Bancshares, M.H.C. ("MHC"), which owns 1,470,000 of the outstanding
shares of common stock in the Bank, waived receipt thereby reducing the actual
dividend payment to the amount shown above.
See accompanying notes to unaudited consolidated financial statements.
F-3
<PAGE>
PULASKI BANK, A FEDERAL SAVINGS BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,475,295 $ 1,428,610
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, amortization and accretion:
Premises and equipment 211,148 197,362
Management recognition and development plan stock awards 41,400 41,400
Loan fees, discounts and premiums - net (91,270) (172,654)
Provision for loan losses 133,061 33,685
Provision for losses on real estate acquired in settlement of loans 14,873 14,653
Loss (gains) on sales of real estate acquired in settlement of loans 1,626 (15,908)
Originations of loans for sale to correspondent lenders (91,488,561) (46,977,092)
Proceeds from sales of loans to correspondent lenders 91,735,425 42,387,966
Gains on sales of loans (483,908) (271,346)
Decrease (increase) in accrued interest receivable 68,769 (74,685)
Decrease in accrued interest payable (221,646) (231,755)
Changes in other assets and liabilities (210,062) 162,905
-------------- --------------
Net adjustments (289,145) (4,905,469)
-------------- --------------
Net cash provided by (used in) operating activities 1,186,150 (3,476,859)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investment securities 17,010,000 10,000,000
Purchases of investment securities (14,845,219) (12,061,795)
Principal payments received on mortgage-backed and
related securities 482,712 866,650
Loan repayments in excess of originations 1,464,253 3,136,267
Proceeds from sales of real estate acquired in settlement
of loans 83,001 80,436
Net additions to premises and equipment (335,665) (329,057)
-------------- --------------
Net cash provided by investing activities 3,859,082 1,692,501
-------------- --------------
</TABLE>
(Continued)
F-4
<PAGE>
PULASKI BANK, A FEDERAL SAVINGS BANK AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------
1998 1997
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits $ 7,762,210 $ 2,266,209
Repayment of Federal Home Loan Bank advances (300,000) (800,000)
Decrease in advance payments by borrowers for taxes
and insurance (827,235) (829,508)
Dividends declared on common stock (522,109) (468,000)
Common stock issued under stock option plan 135,690
--------------- --------------
Net cash provided by financing activities 6,248,556 168,701
--------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 11,293,788 (1,615,657)
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR 6,248,294 9,022,158
--------------- --------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 17,542,082 $ 7,406,501
=============== ==============
ADDITIONAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest on deposits $ 5,453,839 $ 5,326,827
Interest on advances from the Federal Home Loan Bank
of Des Moines 99,600 125,598
Income taxes 895,814 166,190
NONCASH INVESTING ACTIVITIES - Real estate acquired
in settlement of loans $ 112,360 $ 4,075
=============== ==============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
(Concluded)
F-5
<PAGE>
PULASKI BANK, A FEDERAL SAVINGS BANK AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. The preceding unaudited consolidated financial statements include the
accounts of Pulaski Bank, A Federal Savings Bank (the "Bank") and its wholly-
owned subsidiaries, Pulaski Service Corporation and Pulaski Real Estate
Company. All significant intercompany accounts and transactions have been
eliminated.
In the opinion of management, the unaudited consolidated financial statements
contain all adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation of the financial condition of the Bank as
of June 30, 1998 and September 30, 1997 and the results of its operations for
the three and nine month periods ended June 30, 1998 and 1997. The results
of operations for the three month or nine month period ended June 30, 1998
are not necessarily indicative of the results which may be expected for the
entire fiscal year. These unaudited consolidated financial statements should
be read in conjunction with the audited consolidated financial statements of
the Bank for the year ended September 30, 1997 contained in the Bank's 1997
Annual Report to Stockholders which is filed as an exhibit to the Bank's
Annual Report on Form 10-KSB.
Certain balances reported in 1997 have been reclassified to conform to the
1998 presentation.
2. EARNINGS PER SHARE
EARNINGS PER SHARE - Basic earnings per share are determined by dividing net
income for the period by the weighted average number of common shares.
Diluted earnings per share considers the effects of dilution of earnings
after consideration of the stock options outstanding under the Bank's Stock
Option Plan.
A summary of the weighted average number of shares and weighted average
number of shares and common equivalent shares follows:
<TABLE>
<CAPTION>
Three Months Ended June 30, Nine Months Ended June 30,
---------------------------------- ----------------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Weighted average number of
shares 2,105,840 2,094,000 2,100,286 2,094,000
Common equivalent shares 32,303 17,467 33,064 13,534
------------- ------------ ------------- -----------
Weighted average number of
shares and common
equivalent shares 2,138,143 2,111,467 2,133,350 2,107,534
============= ============ ============= ===========
</TABLE>
3. PLAN OF CONVERSION AND STOCK ISSUANCE
On April 15, 1998, the Boards of Directors of Pulaski Bancshares, M.H.C. and
the Bank each adopted a Plan of Conversion and Agreement and Plan of
Reorganization (the "Plan") to convert Pulaski Bancshares, M.H.C. from a
federal mutual holding company to a Delaware corporation to become the
F-6
<PAGE>
parent company of the Bank. The new Delaware corporation known as Pulaski
Financial Corp. (`Holding Company") will exchange certain shares of its
common stock for the outstanding common stock of the Bank and will issue and
offer for sale certain additional shares of its common stock. The additional
shares of common stock of the new Delaware corporation will be offered to
eligible account holders of the Bank as of March 31, 1997, who will receive
nontransferable subscription rights to purchase these shares, as well as
certain other persons as provided for in the Plan. The amount and pricing of
the proposed stock offering will be based on an independent appraisal of the
Bank.
In connection with the proposed transaction, an application for conversion
was filed by Pulaski Bancshares, M.H.C. on June 9, 1998 with the Office of
Thrift Supervision (the "OTS") and a registration statement on Form S-1 was
filed on the same date by the Holding Company with the U.S. Securities and
Exchange Commission (the "SEC") with respect to the common stock to be issued
in the reorganization. The application has not yet been approved by the OTS,
and the registration statement has not yet been declared effective. After
receipt of the required regulatory approvals, the Plan will be submitted to
the members of Pulaski Bancshares, M.H.C. for approval by at least a majority
of the votes eligible to be cast at a special meeting and will also be
submitted to Bank's stockholders for approval at a special meeting. The
transaction is expected to be completed during the fourth quarter of fiscal
1998. Costs related to the conversion will be deferred and, upon conversion,
such costs and any additional costs will be charged against the proceeds from
the sale of the stock. As of June 30, 1998, deferred costs relating to the
conversion totaled approximately $208,000. If the conversion is terminated,
these deferred costs will be expensed to operations.
4. PROSPECTIVE IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
Statement of Financial Accounting Standards (SFAS) No. 132, Employers'
Disclosures About Pensions and Other Postretirement Benefits, was issued in
February 1998. This statement standardizes disclosure requirements for
pensions and other postretirement benefits and requires additional disclosure
on changes in benefit obligations and fair values of plan assets in order to
facilitate financial analysis. SFAS No. 132 is effective for fiscal years
beginning after December 15, 1997, with earlier application encouraged.
Adoption of this statement is not anticipated to have a significant effect
upon the presentation of the Bank's financial statements.
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,
was issued in June 1998. This statement establishes accounting and reporting
standards for derivative instruments and requires that all derivatives be
recognized as either assets or liabilities in the statement of financial
position. Under this standard, all derivative instruments should be measured
at fair value. Although the Bank has no intention of doing so, SFAS 133
allows an entity to transfer at the date of application of this statement any
held-to-maturity securities into the available-for-sale category or the
trading category. An entity would then be able in the future to designate a
security transferred into the available-for-sale category as a hedged item.
SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999; however, the Bank will early adopt this standard
effective October 1, 1998. Because the Bank does not invest in derivative
instruments or enter into hedging transactions, adoption of this statement is
not anticipated to have a significant effect on the Bank's financial position
or results of operations.
* * * * * *
F-7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Management's discussion and analysis of financial condition and results of
operations is intended to assist in understanding the financial condition and
results of operations of the Bank. The information contained in this section
should be read in conjunction with the unaudited consolidated financial
statements and accompanying notes thereto.
Certain statements in this quarterly report and throughout Management's
Discussion and Analysis of Financial Condition and Results of Operations are
"forward looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and involve known and unknown risk, uncertainties
and other factors that may cause the Bank's actual results, performance or
achievements to be materially different from the results, performance or
achievements expressed or implied by the forward looking statement. Factors
that impact such forward looking statements include, among others, changes in
general economic conditions, changes in interest rates and competition.
FINANCIAL CONDITION
Total assets at June 30, 1998 were $186.9 million, an increase of $7.5 million
from $179.4 million at September 30, 1997. The increase in total assets is
primarily attributable to an increase in cash and cash equivalents offset by
decreases in loans receivable and investment securities.
Loans held for sale were $14.4 million at September 30, 1997 and increased to
$14.6 million at June 30, 1998. The increase was due to greater volume of
lending due in part to increased refinancing of mortgage loans. Cash
equivalents increased as loan repayments and deposits were invested in overnight
funds. In management's opinion, the current "flat" yield curve (i.e., short-
term rates and long-term rates are relatively equal) does not provide sufficient
incentive to warrant maturity extension of the investment portfolio.
Investments in debt securities decreased from $16.1 million at September 30,
1997 to $14.2 million at June 30, 1998. This decrease was due to maturity of
investments and redemption, prior to maturity, of callable securities that
resulted from the declining interest rates.
Loans receivable decreased from $130.4 million at September 30, 1997 to $128.6
million at June 30, 1998. The decrease of $1.8 million is due to repayment of
loans exceeding originations and reflects the payoff of the Bank's largest loan,
totaling approximately $1.2 million during the nine month period ended June 30,
1998. In the current rate environment, the majority of the Bank's borrowers
preferred fixed rate loans, which are generally originated for sale in the
secondary market rather than retained in the Bank's portfolio.
Total liabilities at June 30, 1998 were $161.9 million, an increase of $6.3
million from $155.6 million at September 30, 1997. Deposits for the same period
increased from $148.7 million to $156.4 million, or $7.7 million. This growth
is as a result of the implementation of the high performance checking program,
which involves frequent direct mail advertisement and gifts for new checking
accounts. The number of new checking and money market accounts has increased
almost 47% since September 30, 1997. The Bank also believes that it has
benefited from the bank mergers and consolidations in the St. Louis market which
finds customers leaving larger institutions and obtaining services from a
smaller, personally oriented financial institution.
F-8
<PAGE>
Offsetting the increase in deposits, advances from the Federal Home Loan Bank of
Des Moines decreased $300,000 from $2.2 million at September 30, 1997 to $1.9
million at June 30, 1998. The $300,000 decrease is due to scheduled debt
service payments.
Total stockholders' equity at June 30, 1998 was $25.0 million, an increase of
$1.1 million over $23.9 million at September 30, 1997. The increase is
attributable to net income of $1.5 million offset by dividends declared and paid
to minority stockholders of $522,000. Also during the nine months ended June
30, 1998, stock options were exercised which resulted in capital contributions
totaling approximately $136,000.
NON-PERFORMING ASSETS AND DELINQUENCIES
Loans accounted for on a non-accrual basis amounted to $648,000 at June 30, 1998
as compared to $217,000 at September 30, 1997. The largest non-accrual loan
represents the Bank's interest ($227,000 at June 30, 1998) in a participation
loan in which the borrower has declared bankruptcy. The borrower is paying in
accordance with the terms of the bankruptcy court's ruling, and the interest
rate has been increased to 11.625% during the period of delinquency. Interest
income is only being recognized upon receipt of payment. Substantially all of
the remaining balance of non-accrual loans represents single-family residential
loans. Accruing loans that were contractually past due 90 days or more at June
30, 1998 amounted to $1.1 million of which $252,000 were FHA/VA government-
insured loans. Real estate acquired in settlement of loans, net of allowance
for losses, increased to $13,000 at June 30, 1998 from $-0- at September 30,
1997, and consisted of one single-family residence. The allowance for loan
losses was $729,000 at June 30, 1998, or .51% of total loans.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND
1997:
GENERAL
Net income for the three months ended June 30, 1998 was $499,000, or $0.23 per
share (diluted), compared to $534,000, or $0.25 per share (diluted) for the
three months ended June 30, 1997. The decrease in net income between the
periods was primarily the result of increases in the provision for loan losses
and other expenses, which were partially offset by an increase in other income
due to strong loan sales. Additionally, net income for the nine months ended
June 30, 1998 was $1,475,000, or $0.69 per share (diluted), compared to
$1,429,000, or $0.68 per share (diluted), for the nine months ended June 30,
1997. The increase in net income between the periods was primarily the result
of increases in net interest income and other income, which were partially
offset by increases in the provision for loan losses and other expenses.
INTEREST INCOME
Interest income increased $4,000 for the three months ended June 30, 1998
compared to the three months ended June 30, 1997. The increase resulted
primarily from an increase in interest on overnight deposits of $125,000, offset
by a decrease in interest on investments of $84,000 and a decrease in interest
on loans of $21,000. Interest income increased $223,000 for the nine months
ended June 30, 1998 compared to the nine months ended June 30, 1997. The
increase resulted from an increase in interest on loans of $266,000 and interest
on overnight deposits of $146,000, offset by a decrease in interest on
investments and mortgage-backed securities of $189,000.
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<PAGE>
Although interest on loans decreased during the quarter ended June 30, 1998, it
increased by $266,000 for the nine months ended June 30, 1998, compared to the
nine months ended June 30, 1997. The increase in the nine month period resulted
from an increase in the average balance of loans outstanding from $139.3 million
in 1997 to $143.3 million in 1998. The average yield on loans for the nine
month period remained relatively consistent at 8.03% in 1997 and 8.05% in 1998.
In contrast, the average yield on loans decreased to 7.98% for the quarter ended
June 30, 1998 from 8.13% for the same quarter in 1997. The average balance of
loans outstanding increased due to the increased volume of consumer lending. As
part of the Bank's interest rate risk policy, the majority of fixed-rate
mortgage loans are sold with servicing released.
Interest on overnight deposits increased as a result of the increase in average
balance to $17.9 million and $13.0 million for the three and nine months ended
June 30, 1998 from $8.7 million and $9.7 million for the three and nine months
ended June 30, 1997, with the weighted average interest rate increasing from
5.27% in 1997 to 5.44% in 1998. Excess liquidity has been invested in federal
funds because management believes the current "flat" yield curve provides
insufficient incentive for maturity extension.
The decrease in interest income on investment securities resulted from a
decrease in the average balance from $19.7 million and $18.7 million for the
three and nine months ended 1997 to $14.9 million and $15.5 million for the
three and nine months ended 1998 and a consistent average yield on these
investments of 5.9% in 1997 and 1998. The decrease in the average balances is a
reflection of the redemption, prior to maturity, of callable securities and
utilization of maturing securities to fund loan closings. At June 30, 1998, the
Bank's portfolio included $5.3 million of callable securities with a weighted
average rate of 5.97%. Callable securities carry the risk that if called prior
to maturity, the proceeds may be reinvested at lower interest rates or longer
terms.
INTEREST EXPENSE
Interest expense increased $38,000 for the three months ended June 30, 1998
compared to the three months ended June 30, 1997. The increase resulted
primarily from an increase in the average balance of deposits, from $148.6
million for the three months ended June 30, 1997 to $155 million for the three
months ended June 30, 1998 partially offset by a decrease in the weighted
average yield on deposits from 4.61% for the quarter ended June 30, 1997 to
4.53% for the quarter ended June 30, 1998. Interest expense increased $111,000
for the nine months ended June 30, 1998 compared to the nine months ended June
30, 1997. The increase resulted primarily from an increase in the average
balance of deposits, from $148.1 million for the nine months ended June 30, 1997
to $152.7 million for the nine months ended June 30, 1998 partially offset by a
decrease in the weighted average yield on deposits from 4.59% for the nine
months ended June 30, 1997 to 4.57% for the nine months ended June 30, 1998.
The increased deposit volume has resulted from the implementation of the high
performance checking program which involves frequent direct mail advertisement
and gifts for new checking accounts.
Interest on FHLB advances declined $4,000 and $26,000 for the three and nine
months ended June 30, 1998, respectively. These decreases are a result of the
decreased principal balance resulting from scheduled debt service payments.
PROVISION FOR LOAN LOSSES
The provision for loan losses is determined by management as the amount to be
added to the allowance for loan losses after net charge-offs have been deducted
to bring the allowance to a level which is considered adequate to absorb losses
inherent in the loan portfolio. Because management believes it adheres to
strict loan underwriting guidelines focusing on mortgage loans secured by one-
to-four-family residences, the
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Bank's historical loan loss experience has been low. No assurances, however, can
be given as to future loan loss levels.
The provision for loan losses for the three months ended June 30, 1998 and 1997
was $64,000 and $15,000, respectively. The provision for loan losses for the
nine months ended June 30, 1998 and 1997 was $133,000 and $34,000, respectively.
This increase reflects the increase in the Bank's investment in consumer credit
and non-conforming residential real estate loans. Non-conforming residential
real estate loans represent credit issued which does not meet Fannie-Mae lending
guidelines and therefore may not be pooled and securitized with other loans.
Although these type of loans are inherently more subject to default, management
believes that the credit risk is being adequately mitigated by more stringent
collection efforts and additional monitoring activities. Management believes
that the current level of allowance for loan losses is adequate to absorb
estimated losses inherent in the loan portfolio.
OTHER INCOME
Other income increased $181,000 and $376,000 for the three and nine months ended
June 30, 1998 in comparison to the three and nine months ended June 30, 1997.
These fluctuations are primarily due to increases in gains on sales of loans.
Year-to-date gains have increased due to loan volumes being approximately 96%
greater than last year.
In addition, for the three months ended June 30, 1998, service charges on
deposit accounts increased $30,000, commissions on sales of insurance products
increased $42,000, and miscellaneous other income increased $21,000. Such
increases for the nine months ended June 30, 1998, totaled $45,000 for service
charges on deposit accounts, $74,000 for commissions on sales of insurance
products, and $44,000 for miscellaneous other income.
OTHER EXPENSES
Other expenses increased $134,000 and $270,000 to $1.2 million and $3.5 million
for the three and nine months ended June 30, 1998, respectively. Aside from
advertising expenses and professional services, the other classifications of
other expenses remained relatively consistent.
Advertising expense increased $62,000 and $190,000 for the three and nine months
ended June 30, 1998 compared to the three and nine months ended June 30, 1997.
Advertising expense for the nine month period consisted of $20,000 of expense
related to the celebration of the Bank's seventy-fifth anniversary and $146,000
associated with the commencement of the checking account promotion. The
checking account promotion has been designed to last three years. The Bank
projects the first year promotional costs (consisting primarily of marketing
firm fees, postage and direct mailing expenses, etc.) to be approximately
$360,000 (including the costs incurred during the nine months ended June 30,
1998) with similar costs expected in each of the subsequent two years if the
promotion is continued. The goals of the promotion are (i) to increase the
percentage of transaction accounts to total deposits, thereby decreasing the
Bank's cost of funds and (ii) to increase other income through insufficient
funds charges, service charges and fees levied on checking accounts.
Professional services increased $96,000 from $134,000 for the nine months ended
June 30, 1997 to $230,000 for the nine months ended June 30, 1998. This
increase is attributable to certain consultative services provided to Bank
management including fees related to the high performance checking program.
Other
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<PAGE>
consulting services included fees for employee benefit consulting as well as
fees for development of a strategic business and management development program.
INCOME TAXES
The provision for income taxes remained consistent for the three months ended
June 30, 1998 in comparison to the three months ended June 30, 1997. The
provision for income taxes increased $71,000 for the nine months ended June 30,
1998 in comparison to the nine months ended June 30, 1997. The increase is
primarily attributable to increased levels of taxable income and a slight
increase in the Bank's effective tax rate.
ASSET AND LIABILITY MANAGEMENT
The Bank uses a net market value methodology as one method to measure its
interest rate risk exposure. This exposure is a measure of the potential
decline in the net portfolio value ("NPV") of the Bank based upon the effect of
an assumed 200 basis point increase or decrease in interest rates. NPV is the
present value of the expected net cash flows from the institution's assets,
liabilities and off-balance sheet contracts. Under OTS regulations, an
institution's "normal" level of interest rate risk in the event of this assumed
change in interest rates is a decrease in the institution's NPV in an amount not
exceeding 2% of the present value of its assets. On July 1, 1994, thrift
institutions with greater than "normal" interest rate exposure were required by
regulation to provide additional capital to meet their risk-based capital
requirement. Subsequently, the OTS indefinitely postponed its implementation of
these regulations. However, if implemented, savings institutions, such as the
Bank, with less than $300,000,000 in assets and risk-based capital in excess of
12% would not be subject to the final regulation. The Bank utilizes this
methodology as one way to monitor its interest rate risk and influence its
pricing strategy. Utilizing this measurement concept, at March 31, 1998, the
latest measurement date, the change in the Bank's net portfolio value as a
percent of the present value of its assets was a negative .7%. On this basis,
the Bank would not be considered as having "greater than normal" interest rate
exposure under OTS regulations.
LIQUIDITY AND CAPITAL RESOURCES
Federal regulations require the Bank to maintain minimum levels of liquid
assets. The required percentage has varied from time to time based upon
economic conditions and savings flows and is currently 4% of net withdrawable
savings deposits (as defined by OTS) and borrowings payable on demand or in one
year or less during the proceeding calendar month. Liquid assets for purposes
of this ratio include cash and cash equivalents and investment securities and
agency-issued collateralized mortgage obligations generally having maturities of
less than five years. The Bank attempts to maintain levels of liquidity in
excess of those required by regulation. Maintaining adequate levels of
liquidity reduces the Bank's balance sheet exposure to interest rate risk. At
June 30, 1998, the Bank's liquidity ratio (liquid assets as a percentage of net
withdrawable savings deposits and short-term borrowings) was 23.52%.
The Bank must also maintain adequate levels of liquidity to ensure the
availability of funds to satisfy loan commitments and deposit withdrawals. At
June 30, 1998, the Bank had outstanding commitments to originate loans of $5.9
million, and commitments to sell loans of $14.5 million. At the same date,
certificates of deposit which are scheduled to mature in one year or less
totaled $67.6 million. Based on prior experience, management believes the
majority of maturing certificates of deposit will remain with the Bank.
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<PAGE>
Management believes its ability to generate funds internally will satisfy its
liquidity requirements. If the Bank requires funds beyond its ability to
generate them internally, it has the ability to borrow funds from the FHLB-Des
Moines under a blanket agreement which assigns all investments in FHLB stock as
well as qualifying first mortgage loans equal to 150% of the outstanding
advances as collateral to secure the amounts borrowed. At June 30, 1998, the
Bank had approximately $73.6 million available to it under the above-mentioned
borrowing arrangement. At June 30, 1998, the Bank had $1.9 million in
outstanding advances from the FHLB-Des Moines.
The Bank cannot pay cash dividends in excess of the higher of (1) net income to
date during the calendar year plus one-half of surplus capital over regulatory
capital or amounts which would result in the Bank not maintaining adequate
capital requirements imposed by the OTS or (2) 75% of net income over the most
recent four quarter period. The MHC has received regulatory approval to waive
its right to receive cash dividends declared by the Bank for the quarterly
periods ending September 30, 1997, December 31, 1997, March 31, 1998 and June
30, 1998. Current OTS policy requires the amount of any waived dividends must
be considered as having been paid by the Bank for purposes of evaluating any
future proposed dividend payments.
The Bank is required to maintain specific amounts of capital pursuant to OTS
regulations on minimum capital standards. The OTS' minimum capital standards
generally require the maintenance of regulatory capital sufficient to meet each
of three tests, hereinafter described as the tangible capital requirement, the
core capital requirement and the risk-based requirement. The tangible capital
requirement provides for minimum tangible capital (defined as stockholders'
equity less all intangible assets) equal to 1.5% of adjusted total assets. The
core capital requirement provides for minimum core capital (tangible capital
plus certain forms of supervisory goodwill and other qualifying intangible
assets) equal to 3.0% of adjusted total assets. The risk-based capital
requirements provides for the maintenance of core capital plus a portion of
unallocated loss allowances equal to 8.0% of risk-weighted assets. In computing
risk-weighted assets the Bank multiplies the value of each asset on its balance
sheet by a defined risk-weighting factor (e.g., one- to four-family conventional
residential loans carry a risk-weighted factor of 50%).
At June 30, 1998, the Bank's tangible capital totaled $24.9 million, or 13.33%
of adjusted total assets, which exceeded the minimum 1.5% requirement by $22.1
million, or 11.83%. The Bank's core capital at June 30, 1998 totaled $24.9
million, or 13.33% of adjusted total assets, which was approximately $19.3
million, or 9.33% above the minimum requirement of 4%. The Bank's risk-based
capital at that date totaled $25.7 million, or 24.6% of risk weighted assets,
which is $17.3 million, or 16.6% above the 8% fully phased-in requirement.
EFFECT OF INFLATION AND CHANGING PRICES
The consolidated financial statements and related financial data presented
herein have been prepared in accordance with GAAP, which require the measurement
of financial position and operating results in terms of historical dollars,
without considering the change in the relative purchasing power of money over
time due to inflation. The impact of inflation is reflected in the increased
cost of the Bank's operations. Unlike most industrial companies, virtually all
the assets and liabilities of a financial institution are monetary in nature.
As a result, interest rates generally have a more significant impact on a
financial institution's performance than do 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.
F-13
<PAGE>
YEAR 2000
The year 2000 issue exists because many computer systems and applications use
two-digit date fields to designate a year. As the century date change occurs,
date-sensitive systems may recognize the year 2000 as 1900, or not at all. This
inability to recognize or properly treat the year 2000 may cause systems to
process financial and operational information incorrectly.
All of the material data processing of the Bank that could be affected by this
problem is provided by a third party service bureau. The Bank's service bureau
informed the Bank that it intends to complete its year 2000 adjustments by
October 1998 and to make its systems available for testing in November 1998.
The Bank has developed a year 2000 action plan that sights mission critical
dates and contingency options and created a committee of the Board of Directors
to analyze how the year 2000 will impact its operations and to monitor the
status of its vendors. The Bank will continue to monitor its status as well as
its service providers' status in their efforts to become year 2000 compliant.
The Bank does not believe that the costs associated with its actions and those
of its vendors will be material to the Bank. The Bank's service bureau will
make available certain software that will allow the Bank to test its critical
applications. The Bank's service bureau will make available a test system to
test various applications and the Bank's cost for participation in this
application will be $25,000. Other internal costs are not expected to exceed
$100,000 and will consist primarily of accelerating various hardware and
purchased software upgrades which generally would have been incurred in the
normal course of business. The costs for accomplishing the Bank's plans to
complete the year 2000 modifications and testing processes are based on
management's best estimates, which were derived utilizing numerous assumptions
of future events, including the continued availability of various resources,
third-party modification plans and other factors. However, there can be no
guarantee that these estimates will be achieved, and actual results could differ
from those plans. In the event the Bank's service bureau is unable to fulfill
its contractual obligations to the Bank, it could have a significant adverse
impact on the financial condition and results of operations of the Bank.
F-14
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution*
<TABLE>
<S> <C>
Legal fees and expenses..................... $225,000
Securities marketing firm legal fees........ 35,000
Securities marketing firm expenses.......... 10,000
EDGAR, printing, copying, postage, mailing.. 157,000
Appraisal/business plan fees and expenses... 45,000
Accounting fees............................. 150,000
Data processing fees and expenses........... 10,000
SEC filing fee.............................. 32,000
OTS filing fee.............................. 8,400
Blue sky legal fees and expenses............ 2,000
Other....................................... 25,600
--------
Total................................. $700,000
========
</TABLE>
*Estimated.
In addition to the above expenses, Charles Webb & Company will receive a
fee of 0.80% of the aggregate purchase price of the shares of common stock sold
in the Subscription Offering and the Direct Community Offering, excluding shares
purchased by the ESOP and by officers and directors of the Bank and their
associates. See "THE CONVERSION AND REORGANIZATION -- Plan of Distribution and
Selling Commissions."
Item 14. Indemnification of Officers and Directors
Article XVI of the Certificate of Incorporation of Pulaski Financial Corp.
requires indemnification of directors, officers and employees to the fullest
extent permitted by Delaware law.
Section 145 of the Delaware General Corporation Law sets forth
circumstances under which directors, officers, employees and agents may be
insured or indemnified against liability which they may incur in their
capacities:
145 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE.--(a) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at
II-1
<PAGE>
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
incurred by him any such capacity, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against such
liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agents, so that any
person who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had
continued.
II-2
<PAGE>
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Item 15. Recent Sales of Unregistered Securities.
Not Applicable
Item 16. Exhibits and Financial Statement Schedules
The exhibits filed as part of this Registration Statement are as
follows:
(a) List of Exhibits
1.1 - Form of proposed Agency Agreement among Pulaski Financial Corp.,
Pulaski Bank, a Federal Savings Bank, Pulaski Bancshares, M.H.C.
and Charles Webb & Company (a)
1.2 - Engagement Letter with Pulaski Bank, A Federal Savings Bank and
Charles Webb & Company (a)
2 - Amended Plan of Conversion and Agreement and Plan of Reorganization
of Pulaski Bancshares, M.H.C. and Pulaski Bank, A Federal Savings
Bank
3.1 - Certificate of Incorporation of Pulaski Financial Corp. (a)
3.2 - Bylaws of Pulaski Financial Corp. (a)
3.3 - Certificate of Amendment to Certificate of Incorporation of Pulaski
Financial Corp.
4 - Form of Certificate for Common Stock (a)
5 - Opinion of Breyer & Aguggia LLP regarding legality of securities
registered (a)
8.1 - Tax Opinion of Breyer & Aguggia LLP (a)
8.2 - Opinion of RP Financial, LC. as to the value of subscription rights
(a)
10.1 - Proposed Form of Employment Agreement for Executive Officers (a)
10.2 - Proposed Form of Severance Agreement for Senior Officers (a)
10.3 - Pulaski Bank, A Federal Savings Bank 401(k) Plan (a)
II-3
<PAGE>
10.4 - Proposed Form of Employee Stock Ownership Plan (a)
21 - Subsidiaries of Pulaski Financial Corp. (a)
23.1 - Consent of Deloitte & Touche LLP
23.2 - Consent of Breyer & Aguggia LLP as to its Tax Opinion (a)
23.3 - Consent of RP Financial, LC.
23.4 - Consent of Breyer & Aguggia LLP (a)
24 - Power of Attorney (a)
99.1 - Order Form (a)
99.2 - Solicitation and Marketing Materials (a)
99.3 - Appraisal Agreement with RP Financial, LC. (a)
99.4 - Updated Appraisal Report of RP Financial, LC. as of July 24, 1998
(a)
99.5 - Proxy Statement for Special Meeting of Members of Pulaski
Bancshares, M.H.C. (a)
99.6 - Proxy Statement for Special Meeting of Stockholders of Pulaski
Bank, A Federal Savings Bank (a)
99.7 - Updated Appraisal Report of RP Financial, LC. as of September 25,
1998 (P)
99.8 - Additional soliciting materials
99.9 - Supplement to Proxy Statement for Special Meeting of Stockholders
of Pulaski Bank, A Federal Savings Bank
_________
(a) Previously filed.
(P) Filed in paper pursuant to a continuing hardship exemption granted under
Rule 202 of Regulation S-T.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended ("Securities Act");
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information 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)
II-4
<PAGE>
and any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each post-
effective amendment as a new registration statement of the securities offered,
and the offering of the securities at that time shall be the initial bona fide
offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) The undersigned registrant hereby undertakes to provide the
underwriter at the closing specified in the underwriting agreement, certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer 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 liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer 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 small business
issuer 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.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amended Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in St. Louis, Missouri
on the 23rd day of October 1998.
PULASKI FINANCIAL CORP.
By: /s/ William A. Donius
---------------------------------------
William A. Donius
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amended Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ William A. Donius President, Chief Executive Officer October 23, 1998
- -------------------------------
William A. Donius and Director (Principal Executive Officer)
/s/ Thomas F. Hack Chief Financial Officer, Treasurer October 23, 1998
- -------------------------------
Thomas F. Hack and Director (Principal Financial and
Accounting Officer)
/s/ Michael J. Donius Executive Vice President, October 23, 1998
- -------------------------------
Michael J. Donius Chief Operating Officer and Director
/s/ Robert A. Ebel* Director October 23, 1998
- -------------------------------
Robert A. Ebel
/s/ E. Douglas Britt* Director October 23, 1998
- -------------------------------
E. Douglas Britt
/s/ Garland A. Dorn* Director October 23, 1998
- -------------------------------
Garland A. Dorn
/s/ Dr. Edward J. Howenstein* Director October 23, 1998
- -------------------------------
Dr. Edward J. Howenstein
</TABLE>
* By power of attorney dated June 9, 1998.
II-6
<PAGE>
EXHIBIT 2
PULASKI BANCSHARES, M.H.C.
PULASKI BANK, A FEDERAL SAVINGS BANK
AMENDED PLAN OF CONVERSION FROM MUTUAL HOLDING
COMPANY TO STOCK HOLDING COMPANY AND
AGREEMENT AND PLAN OF REORGANIZATION
I. General
-------
For purposes of this section, all capitalized terms have the meanings
ascribed to them in Section II unless otherwise defined herein.
Pulaski Bancshares, M.H.C., St. Louis, Missouri ("MHC") was formed on May
11, 1994 to act as the federally chartered mutual holding company for Pulaski
Bank, A Savings Bank, St. Louis, Missouri ("Savings Bank"), a Missouri chartered
stock savings and loan association. The Savings Bank subsequently converted to a
federally chartered stock savings bank and changed its name to Pulaski Bank, A
Federal Savings Bank. As of the date hereof, the MHC beneficially and of record
owns 1,470,000 shares of common stock, par value $1.00 per share, of the Savings
Bank ("Savings Bank Common Stock"), representing approximately 69.81% of the
outstanding voting stock of the Savings Bank, and the remaining 635,840 shares
of Savings Bank Common Stock, or 30.19%, are owned by persons other than the MHC
("Public Stockholders").
This Amended Plan of Conversion from Mutual Holding Company to Stock
Holding Company and Agreement and Plan of Reorganization ("Plan") provides for
the conversion of the MHC to the stock form of organization and the
reorganization of the Savings Bank as a wholly owned subsidiary of a newly
formed stock holding company (collectively, "Conversion and Reorganization").
The Boards of Directors of the MHC and the Savings Bank believe that the
Conversion and Reorganization is in the best interests of the MHC, the members
of the MHC, the Savings Bank and its stockholders. As a result of the Conversion
and Reorganization, the Savings Bank will be wholly owned by a stock holding
company, which is a more common structure and form of ownership than a mutual
holding company. The Board of Directors determined that the Plan equitably
provides for the interests of Members through the granting of subscription
rights and the establishment of a liquidation account and that consummation of
the Conversion and Reorganization would not adversely impact the stockholders'
equity of the Savings Bank.
The Conversion and Reorganization will provide the Savings Bank with a
larger capital base which will enhance its ability to pursue lending and
investment opportunities, as well as opportunities for growth and expansion. The
Conversion and Reorganization also will provide a more flexible operating
structure, which will enable the Savings Bank to compete more effectively with
other financial institutions. In addition, the Conversion and Reorganization
will raise additional equity capital for the Savings Bank. Finally, the
Conversion and Reorganization has been structured to reunite the accumulated
earnings and profits retained by the MHC with the retained earnings of the
Savings Bank through a tax-free reorganization.
Pursuant to the Plan, the Savings Bank will form a new first-tier
subsidiary which will be incorporated under state law as a stock corporation
("Holding Company"). The Holding Company will then form an interim federal stock
savings bank ("Interim B") as a wholly owned subsidiary. As described in greater
detail herein, simultaneously with the conversion of the MHC to an interim
federal stock savings bank ("Interim A"), the Savings Bank, MHC and Holding
Company will undergo a reorganization in which Interim A will merge with and
into the Savings Bank, Interim B will merge with and into the Savings Bank, the
Holding Company will become the parent company of the Savings Bank, and the
Holding Company will issue and sell its Conversion Stock pursuant to this Plan.
1
<PAGE>
On April 15, 1998, after careful study and consideration, the Boards of
Directors of the MHC and the Savings Bank adopted this Plan. On July 21, 1998,
and September 24, 1998, the Boards of Directors of the MHC and the Savings Bank
amended this Plan. The Plan must be approved by the affirmative vote of a
majority of the total number of votes eligible to be cast by Members of the MHC
at a special meeting to be called for that purpose and by the holders of at
least two-thirds of the shares of outstanding Savings Bank Common Stock eligible
to vote at an annual meeting of the Savings Bank Stockholders, or at a special
meeting of the Savings Bank Stockholders called for the purpose of submitting
the Plan for approval. Prior to the submission of the Plan to the Members and
the Public Stockholders for consideration, the Plan must be approved by the
Office of Thrift Supervision ("OTS").
II. Definitions
-----------
For the purposes of this Plan, the following terms have the following
meanings:
A. Acting in Concert: (i) Knowing participation in a joint activity or
-----------------
interdependent conscious parallel action towards a common goal whether or not
pursuant to an express agreement; or (ii) a combination or pooling of voting or
other interests in the securities of an issuer for a common purpose pursuant to
any contract, understanding, relationship, agreement or other arrangement,
whether written or otherwise. A Person (as defined herein) who acts in concert
with another Person ("other party") shall also be deemed to be acting in concert
with any Person who is also acting in concert with that other party, except that
any Tax-Qualified Employee Stock Benefit Plan will not be deemed to be acting in
concert with its trustee or a Person who serves in a similar capacity solely for
the purpose of determining whether stock held by the trustee and stock held by
the Tax-Qualified Employee Benefit Plan will be aggregated.
B. Associate: When used to indicate a relationship with any Person, means
---------
(i) any corporation or organization (other than the Primary Parties or a
majority-owned subsidiary of either thereof) of which such Person is an officer
or partner or is, directly or indirectly, the beneficial owner of ten percent or
more of any class of equity securities, (ii) any trust or other estate in which
such Person has a substantial beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity, except that it does not
include a Tax-Qualified Employee Stock Benefit Plan and (iii) any relative or
spouse of such Person, or any relative of such spouse, who has the same home as
such Person or who is a director or officer of any of the MHC, Savings Bank or
Holding Company or any of their subsidiaries.
C. Capital Stock: Any and all authorized capital stock of the Savings Bank.
-------------
D. Common Stock: Collectively, Conversion Stock and Exchange Stock.
------------
E. Conversion and Reorganization: Collectively, (i) the conversion of the
-----------------------------
MHC into an interim federal stock savings bank ("Interim A") and the
simultaneous merger of Interim A with and into the Savings Bank, with the
Savings Bank being the surviving institution; (ii) the merger of an interim
federal stock savings bank subsidiary of the Holding Company ("Interim B") with
and into the Savings Bank, with the Savings Bank being the surviving institution
and becoming a wholly owned subsidiary of the Holding Company; (iii) the
exchange of shares of Savings Bank Common Stock (other than those held by the
MHC which shall be canceled) for shares of Holding Company Common Stock; and
(iv) the issuance of Conversion Stock by the Holding Company as provided for in
this Plan.
F. Conversion Stock: Holding Company Common Stock offered and issued by the
----------------
Holding Company in the Offerings pursuant to this Plan.
G. Direct Community Offering: The offering of Conversion Stock for sale to
-------------------------
the public.
H. Eligibility Record Date: March 31, 1997.
-----------------------
I. Eligible Account Holder: Holder of a Qualifying Deposit on the
-----------------------
Eligibility Record Date.
2
<PAGE>
J. Exchange Ratio: The ratio (rounded to the nearest ten-thousandth) at which
--------------
shares of Holding Company Common Stock will be exchanged for shares of Savings
Bank Common Stock held by the Public Stockholders upon consummation of the
Conversion and Reorganization. The exact rate shall be determined by the MHC and
the Savings Bank at the time the Purchase Price (as defined in Section XI.B.) is
determined and shall equal the rate that will result in the Public Stockholders
owning in the aggregate approximately the same percentage of shares of common
stock of the Holding Company to be outstanding upon completion of the Conversion
and Reorganization as the percentage of Savings Bank Common Stock owned by them
in the aggregate immediately prior to consummation of the Conversion and
Reorganization, subject to any adjustments required by the OTS and before giving
effect to (i) the payment of cash in lieu of issuing fractional shares of
Holding Company Common Stock, and (ii) any shares of Conversion Stock purchased
by Public Stockholders or any Tax-Qualified Employee Stock Benefit Plans.
K. Exchange Stock: Holding Company Common Stock issued to the Public
--------------
Stockholders in exchange for Savings Bank Common Stock.
L. FDIC: Federal Deposit Insurance Corporation.
----
M. Form AC Application: The application submitted by the MHC to the OTS on OTS
-------------------
Form AC for approval of the Conversion and Reorganization.
N. H-(e)1 Application: The application submitted to the OTS on OTS Form H-(e)1
------------------
or, if applicable, OTS Form H-(e)1-S, for approval of the Holding Company
acquisition of all of the Capital Stock.
O. Holding Company: The corporation to be formed by the Savings Bank under
---------------
state law initially as a first tier, wholly owned subsidiary of the Savings
Bank. Upon completion of the Conversion, the Holding Company shall hold all of
the outstanding capital stock of the Savings Bank.
P. Holding Company Common Stock: The common stock, $0.01 par value per share,
----------------------------
of the Holding Company.
Q. Interim A: "Pulaski Interim "A" Bank, A Federal Savings Bank," which will
---------
be the interim federal stock savings bank resulting from the conversion of the
MHC to stock form immediately prior to the merger of Interim B into the Savings
Bank.
R. Interim B: "Pulaski Interim "B" Bank, A Federal Savings Bank," which will
---------
be formed as a wholly owned interim federal stock savings bank subsidiary of the
Holding Company, which will merge with and into the Savings Bank immediately
after the merger of Interim A into the Savings Bank.
S. Local Community: St. Louis, Missouri, St. Charles, Jefferson, Franklin and
---------------
St. Louis Counties, Missouri, and Jersey, St. Clair, Monroe and Madison
Counties, Illinois.
T. Market Maker: A dealer (i.e., any Person who engages directly or
------------
indirectly as agent, broker, or principal in the business of offering, buying,
selling, or otherwise dealing or trading in securities issued by another Person)
who, with respect to a particular security, (i) regularly publishes bona fide,
competitive bid and offer quotations in a recognized inter-dealer quotation
system or furnishes bona fide competitive bid and offer quotations on request
and (ii) is ready, willing and able to effect transactions in reasonable
quantities at its quoted prices with other brokers or dealers.
U. Member: Any Person qualifying as a member of the MHC pursuant to its
------
charter and bylaws.
V. MHC: Pulaski Bancshares, M.H.C., St. Louis, Missouri.
---
3
<PAGE>
W. Offerings: Collectively, the Subscription Offering, Direct Community
---------
Offering and Syndicated Community Offering.
X. Officer: An executive officer of any or all of the Primary Parties, which
-------
includes the Chief Executive Officer, President, Executive Vice President,
Senior Vice Presidents, Vice Presidents in charge of principal business
functions, Secretary, Controller, and any Person performing functions similar to
those performed by the foregoing persons.
Y. Order Form(s): Form(s) to be used to purchase Conversion Stock sent to
-------------
Eligible Account Holders and other parties eligible to purchase Conversion Stock
in the Subscription Offering.
Z. Other Member: A Member (other than an Eligible Account Holder or
------------
Supplemental Eligible Account Holder) at the close of business on the Voting
Record Date.
AA. Person: An individual, a corporation, a partnership, an association, a
------
joint-stock company, a trust (including Individual Retirement Accounts and KEOGH
Accounts), any unincorporated organization, a government or political
subdivision thereof or any other entity.
BB. Plan: This Plan of Conversion from Mutual Holding Company to Stock
----
Holding Company and Agreement and Plan of Reorganization, as originally adopted
by the Boards of Directors of the MHC and the Savings Bank, or as amended in
accordance with its terms.
CC. Primary Parties: Collectively, the MHC, the Savings Bank and the Holding
---------------
Company.
DD. Public Stockholder: Any Person who owns Savings Bank Common Stock, other
------------------
than the MHC, as of the Voting Record Date.
EE. Qualifying Deposit: The deposit balance in any Savings Account as of the
------------------
close of business on the Eligibility Record Date or the Supplemental Eligibility
Record Date, as applicable; provided, however, that no Savings Account with a
deposit balance of less than $50.00 shall constitute a Qualifying Deposit.
FF. Registration Statement: The registration statement on SEC Form S-1, or
----------------------
similar form, filed by the Holding Company with the SEC for the purpose of
registering the Conversion Stock under the Securities Act of 1933, as amended.
GG. Savings Account(s): Withdrawable deposit(s) in the Savings Bank,
------------------
including certificates of deposit, demand deposit accounts and non-interest-
bearing deposit accounts.
HH. Savings Bank: Pulaski Bank, A Federal Savings Bank, St. Louis, Missouri.
------------
II. Savings Bank Common Stock: The common stock of the Savings Bank, par
-------------------------
value $1.00 per share.
JJ. SEC: Securities and Exchange Commission.
---
KK. Special Meeting of Members: The special meeting of the Members, and any
--------------------------
adjournments thereof, held to consider and vote upon the Plan.
LL. Meeting of Stockholders: The meeting of the stockholders of the Savings
-----------------------
Bank, and any adjournments thereof, to be called and held for the purpose of
submitting the Plan for their approval. Such meeting may either be an annual or
special meeting.
4
<PAGE>
MM. Subscription Offering: The offering of Conversion Stock to Eligible
---------------------
Account Holders, Tax-Qualified Employee Stock Benefit Plans, Supplemental
Eligible Account Holders and Other Members under the Plan.
NN. Subscription Rights: Nontransferable, non-negotiable, personal rights
-------------------
of Eligible Account Holders, Tax-Qualified Employee Stock Benefit Plans,
Supplemental Eligible Account Holders and Other Members to purchase Conversion
Stock.
OO. Supplemental Eligibility Record Date: The last day of the calendar
------------------------------------
quarter preceding the approval of the Plan by the OTS.
PP. Supplemental Eligible Account Holder: Holder of a Qualifying Deposit
------------------------------------
in the Savings Bank (other than an Officer or director of the Savings Bank or
their Associates) on the Supplemental Eligibility Record Date.
QQ. Syndicated Community Offering: The offering for sale by a syndicate
-----------------------------
of broker-dealers to the general public of shares of Conversion Stock not
purchased in the Subscription Offering and the Direct Community Offering.
RR. Tax-Qualified Employee Stock Benefit Plan: Any defined benefit plan or
-----------------------------------------
defined contribution plan of the Savings Bank or Holding Company, such as an
employee stock ownership plan, bonus plan, profit-sharing plan or other plan,
which, with its related trust, meets the requirements to be "qualified" under
section 401 of the Internal Revenue Code. A "non-tax-qualified employee stock
benefit plan" is any defined benefit plan or defined contribution plan that is
not so qualified.
SS. Voting Record Date(s): The date(s) fixed by the Boards of Directors of
---------------------
the MHC and the Savings Bank according to OTS regulations for determining
eligibility to vote at the Special Meeting of Members and at the Meeting of
Stockholders.
III. General Procedure for Conversion and Reorganization
---------------------------------------------------
A. Conversion of MHC to an Interim Federal Stock Savings Bank and Merger
---------------------------------------------------------------------
of Such Interim Into the Savings Bank. The MHC will convert into Pulaski
- -------------------------------------
Interim "A" Bank, a Federal Savings Bank (i.e. "Interim A") and Interim A will
simultaneously merge with and into the Savings Bank, with the Savings Bank as
the surviving entity ("MHC Merger") pursuant to the Plan of Merger attached
hereto as Annex A. As a result of the MHC Merger, the Savings Bank Common Stock
held by the MHC will be canceled and Eligible Account Holders and Supplemental
Eligible Account Holders will be granted ratable interests in a liquidation
account, to be established in accordance with the procedures set forth in
Section XIV hereof.
B. Merger of a Second Interim Federal Stock Savings Bank into Savings
------------------------------------------------------------------
Bank and Exchange of Shares. Immediately after the MHC Merger, Pulaski Interim
- ---------------------------
"B" Bank, A Federal Savings Bank (i.e., Interim B) will merge with and into the
Savings Bank pursuant to the Plan of Reorganization attached hereto as Annex B,
and the separate existence of Interim B will cease ("Savings Bank Merger"). The
shares of the Holding Company Common Stock held by the Bank will be canceled.
The shares of common stock of Interim B held by the Holding Company will be
converted, on a one-to-one basis, into shares of Savings Bank Common Stock,
which will result in the Savings Bank becoming a wholly-owned subsidiary of the
Holding Company. The Public Stockholders will exchange their shares of Savings
Bank Common Stock for shares of Holding Company Common Stock based upon the
Exchange Ratio. In addition, all options to purchase shares of Savings Bank
Common Stock which are outstanding immediately prior to consummation of the
Conversion and Reorganization shall be converted to options to purchase shares
of Holding Company Common Stock, with the number of shares subject to the option
and the exercise price per share to be adjusted based upon the Exchange Ratio so
that the aggregate exercise price remains unchanged, and with the duration of
the option remaining unchanged. Upon consummation of the Conversion and
Reorganization, all of the Savings Bank Common Stock will be owned by the
Holding Company and the Public Stockholders will own the same percentage of the
Holding Company Common Stock as the percentage of the Savings Bank Common Stock
owned by them prior to the Conversion and
5
<PAGE>
Reorganization, before giving effect to cash paid in lieu of any fractional
interests of Savings Bank Common Stock and any shares of Conversion Stock
purchased by the Public Stockholders in the Offering or by the Tax-Qualified
Employee Stock Benefit Plans thereafter. The Holding Company will then sell the
Conversion Stock in the Offerings in accordance with this Plan.
Following consummation of the Conversion and Reorganization, voting rights
with respect to the Savings Bank shall be held and exercised exclusively by the
Holding Company as holder of the outstanding Savings Bank Common Stock. Voting
rights with respect to the Holding Company shall be held and exercised
exclusively by holders of the Holding Company Common Stock. As a result of the
MHC Merger, the separate existence of the MHC and the voting rights of Members
will cease.
IV. Steps Prior to Submission of the Plan to the Members and the Savings Bank
-------------------------------------------------------------------------
Stockholders for Approval
-------------------------
Prior to submission of the Plan to the Members and to the stockholders of
the Savings Bank for approval, the Plan must be approved by the OTS. Prior to
such regulatory approval:
A. The Boards of Directors of the MHC and the Savings Bank each shall adopt
the Plan by a vote of not less than two-thirds of their entire membership.
B. The MHC shall publish legal notice of the adoption of the Plan in a
newspaper having a general circulation in each community in which the MHC and
the Savings Bank maintains an office.
C. A press release relating to the proposed Conversion and Reorganization
may be submitted to the local media.
D. Copies of the Plan as adopted by the Boards of Directors of the MHC and
the Savings Bank shall be made available for inspection at each office of the
MHC and the Savings Bank.
E. The Savings Bank shall cause the Holding Company to be incorporated
under state law and the Board of Directors of the Holding Company shall concur
in the Plan by at least a two-thirds vote.
F. As soon as practicable following the adoption of this Plan, the MHC
shall file the Form AC Application, and the Holding Company shall file the
Registration Statement and the H-(e)1 Application. In addition, an application
to merge the MHC (following its conversion into an interim federal stock savings
bank) and the Savings Bank and an application to merge Interim B and the Savings
Bank shall both be filed with the OTS, either as exhibits to the H-(e)1
Application, or separately. Upon filing the Form AC Application, the MHC shall
publish legal notice thereof in a newspaper having a general circulation in each
community in which the MHC and the Savings Bank maintains an office and/or by
mailing a letter to each Member, and also shall publish such other notices of
the Conversion and Reorganization as may be required in connection with the H-
(e)1 Application and by the regulations and policies of the OTS.
G. The MHC and the Savings Bank shall obtain an opinion of their tax
advisors or a favorable ruling from the U.S. Internal Revenue Service which
shall state that the Conversion and Reorganization shall not result in any gain
or loss for federal income tax purposes to the Primary Parties or to Eligible
Account Holders, Supplemental Eligible Account Holders and Other Members.
Receipt of a favorable opinion or ruling is a condition precedent to completion
of the Conversion and Reorganization.
V. Special Meeting of Members
--------------------------
Subsequent to the approval of the Plan by the OTS, the Special Meeting
shall be scheduled in accordance with the MHC's Bylaws. Promptly after receipt
of approval and at least 20 days but not more than 45 days prior to the
6
<PAGE>
Special Meeting, the MHC shall distribute proxy solicitation materials to all
Members and beneficial owners of accounts held in fiduciary capacities where the
beneficial owners possess voting rights, as of the Voting Record Date. The proxy
solicitation materials shall include a copy of the proxy statement to be used in
connection with such solicitation and other documents authorized for use by the
regulatory authorities and may also include a copy of the Plan and/or a
prospectus ("Prospectus") as provided in Section VIII below. The MHC shall also
advise each Eligible Account Holder and Supplemental Eligible Account Holder not
entitled to vote at the Special Meeting of the proposed Conversion and
Reorganization and the scheduled Special Meeting, and provide a postage prepaid
card on which to indicate whether he wishes to receive a Prospectus, if the
Subscription Offering is not held concurrently with the proxy solicitation.
Pursuant to OTS regulations, an affirmative vote of not less than a
majority of the total outstanding votes of the Members is required for approval
of the Plan. Voting may be in person or by proxy at the Special Meeting of
Members. The OTS shall be notified promptly of the actions of the Members at the
Special Meeting of Members.
VI. Meeting of Stockholders
-----------------------
Subsequent to the approval of the Plan by the OTS, the Meeting of
Stockholders shall be scheduled in accordance with the Savings Bank's Bylaws at
which the Plan will be considered for approval. Promptly after receipt of
approval and at least 20 days but not more than 45 days prior to such meeting,
the Savings Bank shall distribute proxy solicitation materials to Savings Bank
stockholders and beneficial owners of Savings Bank Common Stock held in
fiduciary capacities where the beneficial owners possess voting rights, as of
the Voting Record Date. The proxy solicitation materials shall include a copy of
the proxy statement to be used in connection with such solicitation and other
documents authorized for use by the regulatory authorities and may also include
a copy of the Plan and/or a Prospectus as provided in Paragraph VIII below. The
Savings Bank shall also advise each holder of Savings Bank Common Stock entitled
to vote at the meeting of the proposed Conversion and Reorganization and the
scheduled meeting, and provide a postage prepaid card on which to indicate
whether he wishes to receive the Prospectus, if the Subscription Offering is not
held concurrently with the proxy solicitation.
Pursuant to OTS regulations, an affirmative vote of not less than two-
thirds of the total outstanding votes of the stockholders of the Savings Bank is
required for approval of the Plan. Furthermore, pursuant to OTS policy, the
affirmative vote of not less than a majority of the total outstanding votes of
the stockholders of the Savings Bank (except the MHC) present in person or by
proxy is required for approval of the Plan. Voting may be in person or by proxy
at the Meeting of Stockholders. The OTS shall be notified promptly of the
actions of the stockholders of the Savings Bank at the Meeting of Stockholders.
VII. Summary Proxy Statements
------------------------
The Proxy Statements furnished to Members and to stockholders of the
Savings Bank may be in summary form; provided that a statement is made in bold-
face type that a more detailed description of the proposed transaction may be
obtained by returning an enclosed postage prepaid card or other written
communication requesting supplemental information. Without prior approval of the
OTS, the Special Meeting and the meeting of the stockholders of the Savings Bank
shall not be held less than 20 days after the last day on which the supplemental
information statement is mailed to requesting Members or requesting stockholder
of the Savings Bank. The supplemental information statement may be combined with
the Prospectus if the Subscription Offering is commenced concurrently with or
during the proxy solicitation of Members for the Special Meeting or of the
stockholders of the Savings Bank for the Meeting of Stockholders.
VIII. Offering Documents
------------------
The Holding Company may commence the Subscription Offering and, provided
that the Subscription Offering has commenced, may commence the Direct Community
Offering concurrently with or during the proxy solicitation relating to the
Special Meeting of Members and the Meeting of Stockholders. The Holding Company
may close the
7
<PAGE>
Subscription Offering before such meetings, provided that the offer and sale of
the Conversion Stock shall be conditioned upon approval of the Plan by the
Members at the Special Meeting and by the stockholders of the Savings Bank at
the Meeting of Stockholders. The MHC's and the Savings Bank's proxy solicitation
materials may require Eligible Account Holders, Supplemental Eligible Account
Holders, Other Members and the Savings Bank Stockholder to return to the Savings
Bank by a reasonable certain date a postage prepaid card or other written
communication requesting receipt of a Prospectus with respect to the
Subscription Offering, provided that if the Prospectus is not mailed
concurrently with the proxy solicitation materials, the Subscription Offering
shall not be closed until the expiration of 30 days after the mailing of the
proxy solicitation materials. If the Subscription Offering is not commenced
within 45 days after the Special Meeting, the Savings Bank may transmit, not
more than 30 days prior to the commencement of the Subscription Offering, to
each Eligible Account Holder, Supplemental Eligible Account Holder and other
eligible subscribers who had been furnished with proxy solicitation materials a
notice which shall state that the Savings Bank is not required to furnish a
Prospectus to them unless they return by a reasonable date certain a postage
prepaid card or other written communication requesting the receipt of the
Prospectus.
Prior to commencement of the Subscription Offering, the Direct Community
Offering and the Syndicated Community Offering, the Holding Company shall file
the Registration Statement. The Holding Company shall not distribute the final
Prospectus until the Registration Statement containing same has been declared
effective by the SEC and the Prospectus has been declared effective by the OTS.
IX. Combined Subscription and Direct Community Offering
---------------------------------------------------
Instead of a separate Subscription Offering, all Subscription Rights may be
exercised by delivery of properly completed and executed Order Forms to the
Savings Bank or selling group utilized in connection with the Direct Community
Offering and the Syndicated Community Offering. If a separate Subscription
Offering is not held, orders for Conversion Stock in the Direct Community
Offering shall first be filled pursuant to the priorities and limitations stated
in Paragraph XI.C. below.
X. Consummation of the Conversion and Reorganization
-------------------------------------------------
The effective date of the Conversion and Reorganization shall be the date
upon which the last of the following actions occurs: (i) the filing of Articles
of Combination with the OTS with respect to the MHC Merger, (ii) the filing of
Articles of Combination with the OTS with respect to the Savings Bank Merger and
(iii) the closing of the issuance of the shares of Conversion Stock in the
Offerings. The filing of Articles of Combination relating to the MHC Merger and
the Savings Bank Merger and the closing of the issuance of shares of Conversion
Stock in the Offerings shall not occur until all requisite regulatory, Member
approval and approval of the stockholders of the Savings Bank have been
obtained, all applicable waiting periods have expired and sufficient
subscriptions and orders for the Conversion Stock have been received. It is
intended that the closing of the MHC Merger, the Savings Bank Merger and the
sale of shares of Conversion Stock in the Offerings shall occur consecutively
and substantially simultaneously.
After the Conversion and Reorganization, the Savings Bank will succeed to
all the rights, interests, duties and obligations of the Savings Bank before the
Conversion and Reorganization, including but not limited to all rights and
interests of the Savings Bank in and to its assets and properties, whether real,
personal or mixed. The Savings Bank will continue to be a member of the Federal
Home Loan Bank System and all its insured savings deposits will continue to be
insured by the FDIC to the extent provided by applicable law.
XI. Conversion Stock Offering
-------------------------
A. Number of Shares
----------------
The number of shares of Conversion Stock to be offered pursuant to the Plan
shall be determined initially by the Boards of Directors of the Primary Parties
in conjunction with the determination of the Purchase Price (as defined in
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Section XI.B. below). The number of shares to be offered may be subsequently
adjusted by the Board of Directors prior to completion of the Offerings.
B. Independent Evaluation and Purchase Price of Conversion Stock
-------------------------------------------------------------
All shares of Conversion Stock sold in the Conversion and Reorganization,
including shares sold in any Direct Community Offering, shall be sold at a
uniform price per share, and referred to herein as the "Purchase Price." The
Purchase Price shall be determined by the Board of Directors of the Primary
Parties immediately prior to the simultaneous completion of all such sales
contemplated by this Plan on the basis of the estimated pro forma market value
of the MHC, as converted, and the Savings Bank at such time. Such estimated pro
forma market value shall be determined for such purpose by an independent
appraiser on the basis of such appropriate factors not inconsistent with the
regulations of the OTS. Immediately prior to the Subscription Offering, a
subscription price range shall be established which shall vary from 15% above to
15% below the average of the minimum and maximum of the estimated price range.
The maximum subscription price (i.e., the per share amount to be remitted when
----
subscribing for shares of Conversion Stock) shall then be determined within the
subscription price range by the Board of Directors of the Primary Parties. The
subscription price range and the number of shares to be offered may be revised
after the completion of the Subscription Offering with OTS approval without a
resolicitation of proxies or Order Forms or both.
C. Method of Offering Shares
-------------------------
Subscription Rights shall be issued at no cost to Eligible Account Holders,
Tax-Qualified Employee Stock Benefit Plans, Supplemental Eligible Account
Holders and Other Members pursuant to priorities established by this Plan and
the regulations of the OTS. In order to effect the Conversion and
Reorganization, all shares of Conversion Stock proposed to be issued in
connection with the Conversion and Reorganization must be sold and, to the
extent that shares are available, no subscriber shall be allowed to purchase
less than 25 shares; provided, however, that if the purchase price is greater
than $20.00 per share, the minimum number of shares which must be subscribed for
shall be adjusted so that the aggregate actual purchase price required to be
paid for such minimum number of shares does not exceed $500.00. The priorities
established for the purchase of shares are as follows:
1. Category 1: Eligible Account Holders
-------------------------------------
a. Each Eligible Account Holder shall receive, without payment,
Subscription Rights entitling such Eligible Account Holder to purchase that
number of shares of Conversion Stock which is equal to the greater of the
maximum purchase limitation established for the Direct Community Offering,
one-tenth of one percent of the total offering or 15 times the product
(rounded down to the next whole number) obtained by multiplying the total
number of shares of Conversion Stock to be issued by a fraction of which
the numerator is the amount of the Qualifying Deposit of the Eligible
Account Holder and the denominator is the total amount of Qualifying
Deposits of all Eligible Account Holders. If the allocation made in this
paragraph results in an oversubscription, shares of Conversion Stock shall
be allocated among subscribing Eligible Account Holders so as to permit
each such account holder, to the extent possible, to purchase a number of
shares of Conversion Stock sufficient to make his total allocation equal to
100 shares of Conversion Stock or the total amount of his subscription,
whichever is less. Any shares of Conversion Stock not so allocated shall
be allocated among the subscribing Eligible Account Holders on an equitable
basis, related to the amounts of their respective Qualifying Deposits as
compared to the total Qualifying Deposits of all subscribing Eligible
Account Holders.
b. Subscription Rights received by Officers and directors of the
Primary Parties and their Associates, as Eligible Account Holders, based on
their increased deposits in the Savings Bank in the one-year period
preceding the Eligibility Record Date shall be subordinated to all other
subscriptions involving the exercise of Subscription Rights pursuant to
this Category.
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2. Category 2: Tax-Qualified Employee Stock Benefit Plans
------------------------------------------------------
a. Tax-Qualified Employee Stock Benefit Plans shall receive,
without payment, nontransferable Subscription Rights to purchase in the
aggregate up to 8% of the Conversion Stock, including shares of Conversion
Stock to be issued in the Conversion as result of an increase in the
estimated price range after commencement of the Subscription Offering and
prior to the completion of the Conversion. The Subscription Rights granted
to Tax-Qualified Stock Benefit Plans shall be subject to the availability
of shares of Conversion Stock after taking into account the shares of
Conversion Stock purchased by Eligible Account Holders; provided, however,
that in the event the number of shares offered in the Conversion is
increased to an amount greater than the maximum of the estimated price
range as set forth in the Prospectus ("Maximum Shares"), the Tax-Qualified
Employee Stock Benefit Plans shall have a priority right to purchase any
such shares exceeding the Maximum Shares up to an aggregate of 8% of the
Conversion Stock. Tax-Qualified Employee Stock Benefit Plans may use funds
contributed or borrowed by the Holding Company or the Association and/or
borrowed from an independent financial institution to exercise such
Subscription Rights, and the Holding Company and the Association may make
scheduled discretionary contributions thereto, provided that such
contributions do not cause the Holding Company or the Association to fail
to meet any applicable capital requirements.
3. Category 3: Supplemental Eligible Account Holders
--------------------------------------------------
a. In the event that the Eligibility Record Date is more than 15
months prior to the date of the latest amendment to the Form AC Application
filed prior to OTS approval, then, and only in that event, each
Supplemental Eligible Account Holder shall receive, without payment,
Subscription Rights entitling such Supplemental Eligible Account Holder to
purchase that number of shares of Conversion Stock which is equal to the
greater of the maximum purchase limitation established for the Direct
Community Offering, one-tenth of one percent of the total offering or 15
times the product (rounded down to the next whole number) obtained by
multiplying the total number of shares of Conversion Stock to be issued by
a fraction of which the numerator is the amount of the Qualifying Deposit
of the Supplemental Eligible Account Holder and the denominator is the
total amount of the Qualifying Deposits of all Supplemental Eligible
Account Holders.
b. Subscription Rights received pursuant to this category shall
be subordinated to Subscription Rights granted to Eligible Account Holders
and Tax-Qualified Employee Stock Benefit Plans.
c. Any Subscription Rights to purchase shares of Conversion Stock
received by an Eligible Account Holder in accordance with Category 1 shall
reduce to the extent thereof the Subscription Rights to be distributed
pursuant to this Category.
d. In the event of an oversubscription for shares of Conversion
Stock pursuant to this Category, shares of Conversion Stock shall be
allocated among the subscribing Supplemental Eligible Account Holders as
follows:
(1) Shares of Conversion Stock shall be allocated so as to
permit each such Supplemental Eligible Account Holder, to the extent
possible, to purchase a number of shares of Conversion Stock
sufficient to make his total allocation (including the number of
shares of Conversion Stock, if any, allocated in accordance with
Category Number 1) equal to 100 shares of Conversion Stock or the
total amount of his subscription, whichever is less.
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<PAGE>
(2) Any shares of Conversion Stock not allocated in
accordance with subparagraph (1) above shall be allocated among the
subscribing Supplemental Eligible Account Holders on an equitable
basis, related to the amounts of their respective Qualifying Deposits
as compared to the total Qualifying Deposits of all subscribing
Supplemental Eligible Account Holders.
4. Category 4: Other Members
--------------------------
a. Other Members shall receive, without payment, Subscription
Rights to purchase shares of Conversion Stock, after satisfying the
subscriptions of Eligible Account Holders, Tax-Qualified Employee Stock
Benefit Plans and Supplemental Eligible Account Holders pursuant to
Category Nos. l, 2 and 3 above, subject to the following conditions:
(1) Each such Other Member shall be entitled to subscribe for the
greater of the maximum purchase limitation established for the Direct
Community Offering or one-tenth of one percent of the total offering.
(2) In the event of an oversubscription for shares of Conversion
Stock pursuant to Category 4, the shares of Conversion Stock available
shall be allocated among the subscribing Other Members pro rata on the
basis of the amounts of their respective subscriptions.
D. Direct Community Offering and Syndicated Community Offering
-----------------------------------------------------------
1. Any shares of Conversion Stock not purchased through the
exercise of Subscription Rights set forth in Category Nos. 1 through 4 above may
be sold by the Holding Company to Persons under such terms and conditions as may
be established by the Savings Bank's Board of Directors with the concurrence of
the OTS. The Direct Community Offering may commence concurrently with or as soon
as possible after the completion of the Subscription Offering and must be
completed within 45 days after completion of the Subscription Offering, unless
extended with the approval of the OTS. No Person may purchase in the Direct
Community Offering more than 40,000 shares of Conversion Stock. The right to
purchase shares of Conversion Stock under this Category is subject to the right
of the Savings Bank or the Holding Company to accept or reject such orders in
whole or in part. In the event of an oversubscription for shares in this
Category, the shares available shall be allocated among prospective purchasers
pro rata on the basis of the amounts of their respective orders. The offering
price for which such shares are sold to the general public in the Direct
Community Offering shall be the Purchase Price.
2. Orders received in the Direct Community Offering first shall be filled
up to a maximum of 2% of the Conversion Stock and thereafter remaining shares
shall be allocated on an equal number of shares basis per order until all orders
have been filled.
3. The Conversion Stock offered in the Direct Community Offering shall be
offered and sold in a manner that will achieve the widest distribution thereof.
Preference shall be given in the Direct Community Offering first to the Public
Stockholders (who are not Eligible Account Holders, Supplemental Eligible
Account Holders or Other Members) and then to natural Persons and trusts of
natural Persons residing in the Local Community.
4. Subject to such terms, conditions and procedures as may be determined
by the Savings Bank and the Holding Company, all shares of Conversion Stock not
subscribed for in the Subscription Offering or ordered in the Direct Community
Offering may be sold by a syndicate of broker-dealers to the general public in a
Syndicated Community Offering. No Person may purchase in the Syndicated
Community Offering more
11
<PAGE>
than 40,000 shares of Conversion Stock. Each order for Conversion Stock in
the Syndicated Community Offering shall be subject to the absolute right of
the Savings Bank and the Holding Company to accept or reject any such order
in whole or in part either at the time of receipt of an order or as soon as
practicable after completion of the Syndicated Community Offering. The
Savings Bank and the Holding Company may commence the Syndicated Community
Offering concurrently with, at any time during, or as soon as practicable
after the end of the Subscription Offering and/or Direct Community Offering,
provided that the Syndicated Community Offering must be completed within 45
days after the completion of the Subscription Offering, unless extended by
the Savings Bank and the Holding Company with the approval of the OTS.
5. If for any reason a Syndicated Community Offering of shares of
Conversion Stock not sold in the Subscription Offering and the Direct
Community Offering cannot be effected, or in the event that any insignificant
residue of shares of Conversion Stock is not sold in the Subscription
Offering, Direct Community Offering or Syndicated Community Offering, the
Savings Bank and the Holding Company shall use their best efforts to obtain
other purchasers for such shares in such manner and upon such conditions as
may be satisfactory to the OTS.
6. In the event a Direct Community Offering or Syndicated Community
Offering do not appear feasible, the Savings Bank will immediately consult
with the OTS to determine the most viable alternative available to effect the
completion of the Conversion. Should no viable alternative exist, the Savings
Bank may terminate the Conversion with the concurrence of the OTS.
E. Limitations Upon Purchases
--------------------------
The following additional limitations and exceptions shall be imposed upon
purchases of shares of Conversion Stock:
1. No Person may purchase more than 40,000 shares of Conversion Stock
in the Conversion and Reorganization, including purchases in the Direct
Community Offering and the Syndicated Community Offering, except that Tax-
Qualified Employee Stock Benefit Plans may purchase up to 8% of the total
Conversion Stock issued in the Conversion and Reorganization and shares to be
held by the Tax-Qualified Employee Stock Benefit Plans and attributable to a
Person shall not be aggregated with other shares purchased directly by or
otherwise attributable to such Person.
2. The maximum number of shares of Conversion Stock which may be
subscribed for or purchased in all categories in the Conversion and
Reorganization by any Person together with any Associate or any group or
Persons Acting in Concert, when combined with any Exchange Stock received,
shall not exceed 95,000 shares of Common Stock, except that Tax-Qualified
Employee Stock Benefit Plans may purchase up to 8% of the total Conversion
Stock issued in the Conversion and Reorganization and shares held or to be
held by the Tax-Qualified Employee Stock Benefit Plans and attributable to a
Person shall not be aggregated with other shares purchased directly by or
otherwise attributable to such Person.
3. Officers and directors of the Primary Parties and Associates
thereof may not purchase in the aggregate more than 32% of the shares issued
in the Conversion and Reorganization, including any Exchange Stock received.
4. The Boards of Directors of the Primary Parties will not be deemed
to be Associates or a group of Persons Acting in Concert with other directors
or trustees solely as a result of membership on the Board of Directors.
5. The Boards of Directors of the Primary Parties, with the approval
of the OTS and without further approval of Members or stockholders of the
Savings Bank, may, as a result of market conditions and
12
<PAGE>
other factors, increase or decrease the purchase limitation described herein
or the number of shares of Conversion Stock to be sold in the Conversion and
Reorganization. The Boards of Directors of the Primary Parties may, in their
sole discretion, increase the maximum purchase limitation set forth above up
to 9.99% of the Conversion Shares sold in the Conversion and Reorganization,
provided that orders for shares which exceed 5% of the Conversion Shares sold
in the Conversion and Reorganization may not exceed, in the aggregate, 10% of
the shares sold in the Conversion and Reorganization. If the Primary Parties
increase the maximum purchase limitations or the number of shares of
Conversion Stock to be sold in the Conversion and Reorganization, the Primary
Parties are only required to resolicit Persons who subscribed for the maximum
purchase amount and may, in the sole discretion of the Primary Parties,
resolicit certain other large subscribers. If the Primary Parties decrease
the maximum purchase limitations or the number of shares of Conversion Stock
to be sold in the Conversion and Reorganization, the orders of any Person who
subscribed for the maximum purchase amount shall be decreased by the minimum
amount necessary so that such Person shall be in compliance with the then
maximum number of shares permitted to be subscribed for by such Person.
Because OTS policy requires the maximum purchase limitation contained in this
Plan to include Exchange Stock received in the Conversion and Reorganization,
certain of the Public Stockholders may be limited in their ability to purchase
Conversion Stock, or may even be prevented from purchasing shares of Conversion
Stock.
Notwithstanding anything to the contrary contained in this Plan, and except
as may be required by the OTS, Public Stockholders will not be required to sell
or divest any Holding Company Common Stock or be limited in receiving Exchange
Stock even if their percentage ownership of the Savings Bank Common Stock when
converted into Exchange Stock would exceed an applicable purchase limitation.
Each Person purchasing Conversion Stock in the Conversion and Reorganization
shall be deemed to confirm that such purchase does not conflict with the
purchase limitations under the Plan or otherwise imposed by law, rule or
regulation. In the event that such purchase limitations are violated by any
Person (including any Associate or group of Persons affiliated or otherwise
Acting in Concert with such Person), the Holding Company shall have the right to
purchase from such Person at the actual Purchase Price per share all shares
acquired by such Person in excess of such purchase limitations or, if such
excess shares have been sold by such Person, to receive from such Person the
difference between the actual Purchase Price per share paid for such excess
shares and the price at which such excess shares were sold by such Person. This
right of the Holding Company to purchase such excess shares shall be assignable
by the Holding Company.
F. Restrictions On and Other Characteristics of the Conversion Stock
-----------------------------------------------------------------
1. Transferability. Conversion Stock purchased by Officers and
---------------
directors of the Primary Parties shall not be sold or otherwise disposed of
for value for a period of one year from the effective date of Conversion and
Reorganization, except for any disposition (i) following the death of the
original purchaser or (ii) resulting from an exchange of securities in a
merger or acquisition approved by the regulatory authorities having
jurisdiction.
The Conversion Stock issued by the Holding Company to such Officers and
directors shall bear a legend giving appropriate notice of the one-year
holding period restriction. Said legend shall state as follows:
"The shares evidenced by this certificate are restricted
as to transfer for a period of one year from the date of
this certificate pursuant to Part 563b of the Rules and
Regulations of the Office of Thrift Supervision. These
shares may not be transferred prior thereto without a
legal opinion of counsel that said transfer is permissible
under the provisions of applicable laws and regulations."
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<PAGE>
In addition, the Holding Company shall give appropriate instructions
to the transfer agent of the Holding Company Common Stock with respect to
the foregoing restrictions. Any shares of Holding Company Common Stock
subsequently issued as a stock dividend, stock split or otherwise, with
respect to any such restricted stock, shall be subject to the same holding
period restrictions for such Persons as may be then applicable to such
restricted stock.
2. Subsequent Purchases by Officers and Directors. Without
----------------------------------------------
prior approval of the OTS, if applicable, Officers and directors of the
Savings Bank and officers and directors of the Holding Company, and their
Associates, shall be prohibited for a period of three years following
completion of the Conversion and Reorganization from purchasing outstanding
shares of Holding Company Common Stock, except from a broker or dealer
registered with the SEC. Notwithstanding this restriction, purchases
involving more than 1% of the total outstanding shares of Holding Company
Stock and purchases made and shares held by a Tax-Qualified or non-Tax-
Qualified Employee Stock Benefit Plan which may be attributable to such
directors and Officers may be made in negotiated transactions without OTS
permission or the use of a broker or dealer.
3. Repurchase and Dividend Rights. For a period of three years
------------------------------
following the consummation of the Conversion and Reorganization, any
repurchases of Holding Company Stock by the Holding Company from any Person
shall be subject to the then applicable rules and regulations and policies
of the OTS. The Savings Bank may not declare or pay a cash dividend on or
repurchase any of its Capital Stock if the result thereof would be to
reduce the regulatory capital of the Savings Bank below the amount required
for the liquidation account described in Paragraph XIV. Further, any
dividend declared or paid on the Capital Stock shall comply with the then
applicable rules and regulations of the OTS.
4. Voting Rights. After the Conversion and Reorganization, holders
-------------
of Savings Accounts in and obligors on loans of the Savings Bank will not
have voting rights in the MHC. Exclusive voting rights with respect to the
Holding Company shall be vested in the holders of Holding Company Stock;
holders of Savings Accounts in and obligors on loans of the Savings Bank
will not have any voting rights in the Holding Company except and to the
extent that such Persons become stockholders of the Holding Company, and
the Holding Company will have exclusive voting rights with respect to the
Savings Bank's Capital Stock.
G. Mailing of Offering Materials and Collation of Subscriptions
------------------------------------------------------------
The sale of all shares of Conversion Stock offered pursuant to the Plan
must be completed within 24 months after approval of the Plan at the Special
Meeting. After approval of the Plan by the OTS and the declaration of the
effectiveness of the Prospectus, the Holding Company shall distribute
Prospectuses and Order Forms for the purchase of shares of Conversion Stock in
accordance with the terms of the Plan.
The recipient of an Order Form shall be provided not less than 20 days nor
more than 45 days from the date of mailing, unless extended, properly to
complete, execute and return the Order Form to the Holding Company or the
Savings Bank. Self-addressed, postage prepaid, return envelopes shall accompany
all Order Forms when they are mailed. Failure of any eligible subscriber to
return a properly completed and executed Order Form within the prescribed time
limits shall be deemed a waiver and a release by such eligible subscriber of any
rights to purchase shares of Conversion Stock under the Plan.
The sale of all shares of Conversion Stock proposed to be issued in
connection with the Conversion and Reorganization must be completed within 45
days after the last day of the Subscription Offering, unless extended by the
Holding Company with the approval of the OTS.
14
<PAGE>
H. Method of Payment
-----------------
Payment for all shares of Conversion Stock may be made in cash, by check or
by money order, or if a subscriber has a Savings Account(s), such subscriber may
authorize the Savings Bank to charge the subscriber's Savings Account(s). The
Savings Bank shall pay interest at not less than the passbook rate on all
amounts paid in cash or by check or money order to purchase shares of Conversion
Stock in the Subscription Offering from the date payment is received until the
Conversion and Reorganization is completed or terminated. The Savings Bank is
not permitted knowingly to loan funds or otherwise extend any credit to any
Person for the purpose of purchasing Conversion Stock.
If a subscriber authorizes the Savings Bank to charge the subscriber's
Savings Account(s), the funds shall remain in the subscriber's Savings
Account(s) and shall continue to earn interest, but may not be used by such
subscriber until the Conversion and Reorganization is completed or terminated,
whichever is earlier. The withdrawal shall be given effect only concurrently
with the sale of all shares of Conversion Stock proposed to be sold in the
Conversion and Reorganization and only to the extent necessary to satisfy the
subscription at a price equal to the aggregate Purchase Price. The Savings Bank
shall allow subscribers to purchase shares of Conversion Stock by withdrawing
funds from certificate accounts held with the Savings Bank without the
assessment of early withdrawal penalties. In the case of early withdrawal of
only a portion of such account, the certificate evidencing such account shall be
canceled if the remaining balance of the account is less than the applicable
minimum balance requirement. In that event, the remaining balance shall earn
interest at the passbook rate.
I. Undelivered, Defective or Late Order Forms; Insufficient Payment
----------------------------------------------------------------
If an Order Form (i) is not delivered and is returned to the Holding
Company or the Savings Bank by the United States Postal Service (or the Holding
Company or Savings Bank is unable to locate the addressee); (ii) is not returned
to the Holding Company or Savings Bank, or is returned to the Holding Company or
Savings Bank after expiration of the date specified thereon; (iii) is
defectively completed or executed; or (iv) is not accompanied by the total
required payment for the shares of Conversion Stock subscribed for (including
cases in which the subscribers' Savings Accounts are insufficient to cover the
authorized withdrawal for the required payment), the Subscription Rights of the
Person to whom such rights have been granted shall not be honored and shall be
treated as though such Person failed to return the completed Order Form within
the time period specified therein. Alternatively, the Holding Company or Savings
Bank may, but shall not be required to, waive any irregularity relating to any
Order Form or require the submission of a corrected Order Form or the remittance
of full payment for the shares of Conversion Stock subscribed for by such date
as the Holding Company or Savings Bank may specify. Subscription orders, once
tendered, shall not be revocable. The Holding Company's and Savings Bank's
interpretation of the terms and conditions of the Plan and of the Order Forms
shall be final.
J. Members in Non-Qualified States or in Foreign Countries
-------------------------------------------------------
The Primary Parties will make reasonable efforts to comply with the
securities laws of all states in the United States in which persons entitled to
subscribe for stock pursuant to the Plan reside. However, the Primary Parties
are not required to offer stock in the Subscription Offering to any person who
resides in a foreign country or resides in a state of the United States with
respect to which (i) a small number of persons otherwise eligible to subscribe
for shares of Common Stock reside in such state; or (ii) the Primary Parties
determine that compliance with the securities laws of such state would be
impracticable for reasons of cost or otherwise, including but not limited to a
request or requirement that the Primary Parties or their officers, directors or
trustees register as a broker, dealer, salesman or selling agent, under the
securities laws of such state, or a request or requirement to register or
otherwise qualify the Subscription Rights or Common Stock for sale or submit any
filing with respect thereto in such state. Where the number of persons eligible
to subscribe for shares in one state is small relative to other states, the
Primary Parties will base their decision as to whether or not to offer the
Common Stock in such state on a number of factors, including the size of
accounts held by account holders in the state, the cost of reviewing the
registration and qualification requirements of the state (and of
15
<PAGE>
actually registering or qualifying the shares) or the need to register the
Holding Company, its officers, directors or employees as brokers, dealers or
salesmen.
XII. Post Conversion and Reorganization Filing and Market Making
-----------------------------------------------------------
In connection with the Conversion and Reorganization, the Holding Company
shall register the Common Stock with the SEC pursuant to the Securities Exchange
Act of 1934, as amended, and shall undertake not to deregister such Conversion
Stock for a period of three years thereafter.
The Holding Company shall use its best efforts to encourage and assist
Market Makers to establish and maintain a market for the shares of its stock.
The Holding Company shall also use its best efforts to list its stock on The
Nasdaq Stock Market or on a national or regional securities exchange.
XIII. Status of Savings Accounts and Loans Subsequent to Conversion and
-----------------------------------------------------------------
Reorganization
- --------------
All Savings Accounts shall retain the same status after Conversion and
Reorganization as these accounts had prior to Conversion and Reorganization.
Each Savings Account holder shall retain, without payment, a withdrawable
Savings Account(s) after the Conversion and Reorganization, equal in amount to
the withdrawable value of such holder's Savings Account(s) prior to Conversion
and Reorganization. All Savings Accounts will continue to be insured by the
Savings Association Insurance Fund of the FDIC up to the applicable limits of
insurance coverage. All loans granted by the Savings Bank shall retain the same
status after the Conversion and Reorganization as they had prior to the
Conversion and Reorganization. See Paragraph III.B. with respect to the
termination of voting rights of Members.
XIV. Liquidation Account
-------------------
After the Conversion and Reorganization, holders of Savings Accounts shall
not be entitled to share in any residual assets in the event of liquidation of
the Savings Bank. However, the Savings Bank shall, at the time of the Conversion
and Reorganization, establish a liquidation account in an amount equal to the
amount of dividends with respect to the Savings Bank Common Stock waived by the
MHC plus the greater of (i) the Savings Bank's total retained earnings as of the
date of the latest statement of financial condition contained in the final
offering circular used in connection with the Savings Bank's reorganization as a
majority owned subsidiary of the MHC, or (ii) 69.87% of the Savings Bank's total
stockholders' equity as of the date of the latest statement of financial
condition contained in the final Prospectus used in connection with the
Conversion and Reorganization. The function of the liquidation account shall be
to establish a priority on liquidation and, except as provided in Section
XI.F.3. above, the existence of the liquidation account shall not operate to
restrict the use or application of any of the net worth accounts of the Savings
Bank.
The liquidation account shall be maintained by the Savings Bank subsequent
to the Conversion and reorganization for the benefit of Eligible Account Holders
and Supplemental Eligible Account Holders who retain their Savings Accounts in
the Savings Bank. Each Eligible Account Holder and Supplemental Eligible Account
Holder shall, with respect to each Savings Account held, have a related inchoate
interest in a portion of the liquidation account balance ("subaccount").
The initial subaccount balance for a Savings Account held by an Eligible
Account Holder and/or a Supplemental Eligible Account Holder shall be determined
by multiplying the opening balance in the liquidation account by a fraction of
which the numerator is the amount of such holder's Qualifying Deposit in the
Savings Account and the denominator is the total amount of the Qualifying
Deposits of all Eligible Account Holders and Supplemental Eligible Account
Holders. Such initial subaccount balance shall not be increased, and it shall
be subject to downward adjustment as provided below.
If the deposit balance in any Savings Account of an Eligible Account
Holder or Supplemental Eligible Account Holder at the close of business on any
annual closing date subsequent to the Eligibility Record Date is less than the
16
<PAGE>
lesser of (i) the deposit balance in such Savings Account at the close of
business on any other annual closing date subsequent to the Eligibility Record
Date or the Supplemental Eligibility Record Date or (ii) the amount of the
Qualifying Deposit in such Savings Account on the Eligibility Record Date or the
Supplemental Eligibility Record Date, then the subaccount balance for such
Savings Account shall be adjusted by reducing such subaccount balance in an
amount proportionate to the reduction in such deposit balance. In the event of a
downward adjustment, such subaccount balance shall not be subsequently
increased, notwithstanding any increase in the deposit balance of the related
Savings Account. If any such Savings Account is closed, the related subaccount
balance shall be reduced to zero.
In the event of a complete liquidation of the Savings Bank, each Eligible
Account Holder and Supplemental Eligible Account Holder shall be entitled to
receive a liquidation distribution from the liquidation account in the amount of
the then current adjusted subaccount balance(s) for Savings Account(s) then held
by such holder before any liquidation distribution may be made to stockholders.
No merger, consolidation, bulk purchase of assets with assumptions of Savings
Accounts and other liabilities or similar transactions with another Federally-
insured institution in which the Savings Bank is not the surviving institution
shall be considered to be a complete liquidation. In any such transaction, the
liquidation account shall be assumed by the surviving institution.
XV. Regulatory Restrictions on Acquisition of Holding Company
---------------------------------------------------------
A. OTS regulations provide that for a period of three years following
completion of the Conversion and Reorganization, no Person (i.e, individual, a
group Acting in Concert, a corporation, a partnership, an association, a joint
stock company, a trust, or any unincorporated organization or similar company, a
syndicate or any other group formed for the purpose of acquiring, holding or
disposing of securities of an insured institution or its holding company) shall
directly, or indirectly, offer to purchase or actually acquire the beneficial
ownership of more than 10% of any class of equity security of the Holding
Company without the prior approval of the OTS. However, approval is not
required for purchases directly from the Holding Company or the underwriters or
selling group acting on its behalf with a view towards public resale, or for
purchases not exceeding 1% per annum of the shares outstanding. Civil penalties
may be imposed by the OTS for willful violation or assistance of any violation.
Where any Person, directly or indirectly, acquires beneficial ownership of more
than 10% of any class of equity security of the Holding Company within such
three-year period, without the prior approval of the OTS, stock of the Holding
Company beneficially owned by such Person in excess of 10% shall not be counted
as shares entitled to vote and shall not be voted by any Person or counted as
voting shares in connection with any matter submitted to the stockholders for a
vote. The provisions of this regulation shall not apply to the acquisition of
securities by Tax-Qualified Employee Stock Benefit Plans provided that such
plans do not have beneficial ownership of more than 25% of any class of equity
security of the Holding Company.
B. The Holding Company may provide in its articles of incorporation, or
similar document, a provision that, for a specified period of up to five years
following the date of the completion of the Conversion and Reorganization, no
Person shall directly or indirectly offer to acquire or actually acquire the
beneficial ownership of more than 10% of any class of equity security of the
Holding Company. Such provisions would not apply to acquisition of securities
by Tax-Qualified Employee Stock Benefit Plans provided that such plans do not
have beneficial ownership of more than 25% of any class of equity security of
the Holding Company. The Holding Company may provide in its articles of
incorporation, or similar document, for such other provisions affecting the
acquisition of its stock as shall be determined by its Board of Directors.
XVI. Directors and Officers of the Savings Bank
------------------------------------------
The Conversion and Reorganization is not intended to result in any change
in the directors or Officers of the Savings Bank. Each Person serving as a
director of the Savings Bank at the time of Conversion and Reorganization shall
continue to serve as a member of the Savings Bank's Board of Directors, subject
to the Savings Bank's Federal Stock Charter and Bylaws. The Persons serving as
Officers immediately prior to the Conversion and Reorganization will continue to
serve at the discretion of the Board of Directors in their respective capacities
as Officers of the Savings Bank. In connection with the Conversion and
Reorganization, the Savings Bank and the Holding Company may enter
17
<PAGE>
into employment agreements on such terms and with such officers as shall be
determined by the Boards of Directors of the Savings Bank and the Holding
Company.
XVII. Executive Compensation
----------------------
The Savings Bank and the Holding Company may adopt, subject to any
required approvals, executive compensation or other benefit programs, including
but not limited to compensation plans involving stock options, stock
appreciation rights, restricted stock grants, employee recognition programs and
the like.
XVIII. Amendment or Termination of Plan
--------------------------------
If necessary or desirable, the Plan may be amended by a two-thirds vote
of the Savings Bank's Board of Directors or the MHC's Board of Directors, at any
time prior to the Special Meeting of Members and the Meeting of Stockholders. At
any time thereafter, the Plan may be amended by a two-thirds vote of the
respective Boards of Directors only with the concurrence of the OTS. The Plan
may be terminated by a two-thirds vote of the Board of Directors at any time
prior to the Special Meeting of Members or the Meeting of Stockholders, and at
any time following such meetings with the concurrence of the OTS. In its
discretion, the Boards of Directors of the MHC and the Savings Bank may modify
or terminate the Plan upon the order of the regulatory authorities without a
resolicitation of proxies or another Special Meeting of Members or Meeting of
Stockholders.
In the event that mandatory new regulations pertaining to conversions are
adopted by the OTS prior to the completion of the Conversion and Reorganization,
the Plan shall be amended to conform to the new mandatory regulations without a
resolicitation of proxies or another Special Meeting of Members or another
Meeting of Stockholders. In the event that new conversion regulations adopted
by the OTS prior to completion of the Conversion and Reorganization contain
optional provisions, the Plan may be amended to utilize such optional provisions
at the discretion of the Board of Directors without a resolicitation of proxies
or another Special Meeting of Members or another Meeting of Stockholders.
By adoption of the Plan, the Members and the Savings Bank stockholders
authorize the Boards of Directors of the MHC and the Savings Bank to amend
and/or terminate the Plan under the circumstances set forth above.
XIX. Expenses of the Conversion and Reorganization
---------------------------------------------
The Primary Parties shall use their best efforts to assure that expenses
incurred in connection with the Conversion and Reorganization are reasonable.
XX. Contributions to Tax-Qualified Plans
------------------------------------
The Holding Company and/or the Savings Bank may make discretionary
contributions to the Tax-Qualified Employee Stock Benefit Plans, provided such
contributions do not cause the Savings Bank to fail to meet its regulatory
capital requirements.
* * *
18
<PAGE>
ANNEX A
-------
PLAN OF MERGER
This Plan of Merger, dated as of __________ ___, 1998, is made by and between
Pulaski Bancshares, M.H.C. ("MHC"), a federally chartered mutual holding
company, and Pulaski Bank, A Federal Savings Bank ("Savings Bank" or "Surviving
Corporation"), a federally chartered savings bank (collectively, the
"Constituent Corporations").
WITNESSETH:
WHEREAS, the MHC and the Savings Bank have adopted a Plan of Conversion from
Mutual Holding Company to Stock Holding Company and Agreement and Plan of
Reorganization ("Plan of Conversion") pursuant to which (i) the MHC will convert
to a federally-chartered interim stock savings bank and simultaneously merge
with and into the Savings Bank, with the Savings Bank as the surviving entity
("MHC Merger"), (ii) the Savings Bank and a newly-formed interim federal savings
bank will merge, pursuant to which the Savings Bank will become a wholly-owned
subsidiary of a newly formed stock corporation ("Holding Company") ("Savings
Bank Merger"), and (iii) the Holding Company will offer shares of its common
stock in the manner set forth in the Plan of Conversion (collectively, the
"Conversion and Reorganization"); and
WHEREAS, the MHC and the Savings Bank desire to provide for the terms and
conditions of the MHC Merger;
NOW, THEREFORE, the MHC and the Savings Bank hereby agree as follows:
1. EFFECTIVE DATE. The MHC Merger shall become effective on the date
specified in the endorsement of the Articles of Combination relating to the MHC
Merger by the Secretary of the Office of Thrift Supervision ("OTS") pursuant to
12 C.F.R. 552.13(k), or any successor thereto ("Effective Date").
2. THE MHC MERGER AND EFFECT THEREOF. Subject to the terms and conditions set
forth herein and the prior approval of the OTS of the Conversion and
Reorganization, as defined in the Plan of Conversion, and the expiration of all
applicable waiting periods, the MHC shall convert from the mutual form to a
federal interim stock savings bank and simultaneously merge with and into the
Savings Bank, which shall be the Surviving Corporation. Upon consummation of
the MHC Merger, the Surviving Corporation shall be considered the same business
and corporate entity as each of the Constituent Corporations and the Surviving
Corporation shall be subject to and be deemed to have assumed all of the
property, rights, privileges, powers, franchises, debts, liabilities,
obligations, duties and relationships of each of the Constituent Corporations
and shall have succeeded to all of each of their relationships, fiduciary or
otherwise, as fully and to the same extent as if such property, rights,
privileges, powers, franchises, debts, obligations, duties and relationships had
been originally acquired, incurred or entered into by the Surviving Corporation.
In addition, any reference to either of the Constituent Corporations in any
contract or document, whether executed or taking effect before or after the
Effective Date, shall be considered a reference to the Surviving Corporation if
not inconsistent with the other provisions of the contract or document; and any
pending action or other judicial proceeding to which either of the Constituent
Corporations is a party shall not be deemed to have abated or to have been
discontinued by reason of the MHC Merger, but may be prosecuted to final
judgment, order or decree in the same manner as if the MHC Merger had not
occurred or the Surviving Corporation may be substituted as a party to such
action or proceeding, and any judgment, order or decree may be rendered for or
against it that might have been rendered for or against either of the
Constituent Corporations if the MHC Merger had not occurred.
3. CANCELLATION OF SAVINGS BANK COMMON STOCK HELD BY THE MUTUAL HOLDING
COMPANY AND MEMBER INTERESTS; LIQUIDATION ACCOUNT.
Annex A-1
<PAGE>
(a) On the Effective Date: (i) each share of common stock, $1.00 par value
per share, of the Savings Bank ("Savings Bank Common Stock") issued and
outstanding immediately prior to the Effective Date and held by the MHC shall,
by virtue of the MHC Merger and without any action on the part of the holder
thereof, be canceled, (ii) the interests in the MHC of any person, firm or
entity who or which qualified as a member of the MHC in accordance with its
mutual charter and bylaws and the laws of the United States prior to the MHC's
conversion from mutual to stock form ("Members") shall, by virtue of the MHC
Merger and without any action on the part of any Member, be canceled, and (iii)
the Savings Bank shall establish a liquidation account on behalf of each
depositor member of the MHC as provided for in the Plan of Conversion.
(b) At or after the Effective Date and prior to the Savings Bank Merger,
each certificate or certificates theretofore, evidencing issued and outstanding
shares of Savings Bank Common Stock, other than any such certificate or
certificates held by the MHC, which shall be canceled, shall continue to
represent issued and outstanding shares of Savings Bank Common Stock.
4. RIGHTS OF DISSENT AND APPRAISAL ABSENT. No holder of Savings Bank
Common Stock shall have any dissenter or appraisal rights in connection with the
MHC Merger.
5. NAME OF SURVIVING CORPORATION. The name of the Surviving Corporation
shall be "Pulaski Bank, A Federal Savings Bank."
6. DIRECTORS OF THE SURVIVING CORPORATION. Upon and after the Effective
Date, until changed in accordance with the Charter and Bylaws of the Surviving
Corporation and applicable law, the number of directors of the Surviving
Corporation shall be seven. The names of those persons who, upon and after the
Effective Date, shall be directors of the Surviving Corporation are set forth
below. Each such director shall serve for the term which expires at the annual
meeting of stockholders of the Surviving Corporation in the year set forth after
his respective name, and until a successor is elected and qualified.
<TABLE>
<CAPTION>
Name Term Expires
---- ------------
<S> <C>
William A. Donius 1998
Robert A. Ebel 1998
Michael J. Donius 1999
E. Douglas Britt 1999
Garland A. Dorn 1999
Thomas F. Hack 2000
Dr. Edward J. Howenstein 2000
</TABLE>
The address of each director is 12300 Olive Boulevard, St. Louis, Missouri
63141.
7. OFFICERS OF THE SURVIVING CORPORATION. Upon and after the Effective
Date, until changed in accordance with the Federal Stock Charter and Bylaws of
the Surviving Corporation and applicable law, the officers of the Savings Bank
immediately prior to the Effective Date shall be the officers of the Surviving
Corporation.
8. OFFICES. Upon the Effective Date, all offices of the Savings Bank
shall be offices of the Surviving Corporation. As of the Effective Date, the
home office of the Surviving Corporation shall remain at 12300 Olive Boulevard,
St. Louis, Missouri, and the locations of the branch offices of the Surviving
Corporation shall be as follows:
4225 Bayless, St. Louis, Missouri 63123
6955 Parker Road, Florissant, Missouri 63033
3760 S. Grand, St. Louis, Missouri 63118
10756 Sunset Hills Plaza, St. Louis, Missouri 63127
Annex A-2
<PAGE>
9. CHARTER AND BYLAWS. On and after the Effective Date, the Charter of
the Savings Bank as in effect immediately prior to the Effective Date shall be
the Federal Stock Charter of the Surviving Corporation until amended in
accordance with the terms thereof and applicable law, except that the Federal
Stock Charter shall be amended to provide for the establishment of a liquidation
account in accordance with applicable the Plan of Conversion. On and after the
Effective Date, the Bylaws of the Savings Bank as in effect immediately prior to
the Effective Date shall be the Bylaws of the Surviving Corporation until
amended in accordance with the terms thereof and applicable law.
10. STOCKHOLDER AND MEMBER APPROVALS. The affirmative votes of the holders
of Savings Bank Common Stock and of the Members as set forth in the Plan of
Conversion shall be required to approve the Plan of Conversion, of which this
Plan of Merger is a part, on behalf of the Savings Bank and the MHC,
respectively.
11. ABANDONMENT OF PLAN. This Plan of Merger may be abandoned by either
the MHC or the Savings Bank at any time before the Effective Date in the manner
set forth in the Plan of Conversion.
12. AMENDMENTS. This Plan of Merger may be amended in the manner set forth
in the Plan of Conversion by a subsequent writing signed by the parties hereto
upon the approval of the Boards of Directors of the Constituent Corporations.
13. SUCCESSORS. This Agreement shall be binding on the successors of the
Constituent Corporations.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri, except to the extent
superseded by the laws of the United States.
IN WITNESS WHEREOF, the MHC and the Savings Bank have caused this Plan of
Merger to be executed by their duly authorized officers as of the day and year
first above written.
Attest: PULASKI BANCSHARES, M.H.C.
_____________________ By: _____________
Corporate Secretary President
Attest: PULASKI BANK,
A FEDERAL SAVINGS BANK
_____________________ By: _____________
Corporate Secretary President
Annex A-3
<PAGE>
ANNEX B
-------
PLAN OF REORGANIZATION
This Plan of Reorganization, dated as of _____________ ___, 1998, is made
by and among Pulaski Bank, A Federal Savings Bank ("Savings Bank" or the
"Surviving Corporation"), a federally chartered savings bank and majority owned
subsidiary of Pulaski Bancshares, M.H.C. ("MHC"), a federally chartered mutual
holding company; _______ _______________ ("Holding Company"), a Delaware
corporation organized by the Savings Bank; and Pulaski Interim "B" Bank, A
Federal Savings Bank ("Interim B"); a to-be formed interim federal stock savings
bank.
WITNESSETH:
WHEREAS, the Savings Bank has organized the Holding Company as a first-
tier, wholly owned subsidiary for the purpose of becoming the stock holding
company of the Savings Bank upon completion of the Conversion and Reorganization
as defined in the Plan of Conversion from Mutual Holding Company to Stock
Holding Company and Agreement and Plan of Reorganization ("Plan of Conversion")
adopted by the Boards of Directors of the MHC and the Savings Bank; and
WHEREAS, the MHC owns as of the date hereof _____% of the outstanding
common stock of the Savings Bank, par value $1.00 per share ("Savings Bank
Common Stock), will convert to a federally-chartered interim stock savings bank
and simultaneously merge with and into the Savings Bank pursuant to the Plan of
Conversion and the Plan of Merger included as Annex A thereto ("MHC Merger"),
pursuant to which all shares of Savings Bank Common Stock held by the MHC will
be canceled; and
WHEREAS, the formation of a stock holding company by the Savings Bank will
be facilitated by causing the Holding Company to become the sole stockholder of
a newly-formed interim stock savings bank ("Interim B") and then merge Interim B
with and into the Savings Bank, pursuant to which the Savings Bank will
reorganize as a wholly-owned subsidiary of the Holding Company
("Reorganization") and, in connection therewith, all outstanding shares of
Savings Bank Common Stock will be converted automatically into and become shares
of common stock of the Holding Company, par value $0.01 per share ("Holding
Company Common Stock"); and
WHEREAS, Interim B is being organized by the officers of the Savings Bank
as an interim Federal stock savings bank with the Holding Company as its sole
stockholder in order to effect the Reorganization; and
WHEREAS, the Savings Bank and Interim B ("Constituent Corporations") and
the Holding Company desire to provide for the terms and conditions of the
Reorganization.
NOW, THEREFORE, the Savings Bank, Interim B and the Holding Company hereby
agree as follows:
1. EFFECTIVE DATE. The Reorganization shall become effective on the date
specified in the endorsement of the articles of combination relating to the
Reorganization by the Office of Thrift Supervision ("OTS") pursuant to 12 C.F.R.
(S)552.13(k), or any successor thereto ("Effective Date").
2. THE MERGER AND EFFECT THEREOF. Subject to the terms and conditions set
forth herein and the prior approval of the OTS of the Conversion and the
Reorganization, as defined in the Plan of Conversion, and the expiration of all
applicable waiting periods, Interim B shall merge with and into the Savings
Bank, with the Savings Bank as the Surviving Corporation. Upon consummation of
the Reorganization, the Surviving Corporation shall be considered the same
business and corporate entity as each of the Constituent Corporations and
thereupon and thereafter all the property, rights, powers and franchises of each
of the Constituent Corporations shall vest in the Surviving Corporation and the
Surviving Corporation shall be subject to and be deemed to have assumed all of
the property, rights, privileges, powers, franchises, debts, liabilities,
obligations and duties of each of the Constituent Corporations and shall
Annex B-1
<PAGE>
have succeeded to all of each of their relationships, fiduciary or otherwise,
fully and to the same extent as if such property, rights, privileges, powers,
franchises, debts, obligations, duties and relationships had been (originally
acquired, incurred or entered into by the Surviving Corporation. In addition
any reference to either of the Constituent Corporations in any contract or
document, whether executed or taking effect before or after the Effective Date,
shall be considered a reference to the Savings Bank if not inconsistent with
the other provisions of the contract or document; and any pending action or
other judicial proceeding of which either of the Constituent Corporations is a
party shall not be deemed to have abated or to have been discontinued by reason
of the Reorganization, but may be prosecuted to final judgment, order or decree
in the same manner as if the Reorganization had not occurred or the Surviving
Corporation may be substituted as a party to such action or proceeding, and any
judgment, order or decree may be rendered for or against it that might have
been rendered for or against either of the Constituent Corporations if the
Reorganization had not occurred.
3. CONVERSION OF STOCK.
(a) On the Effective Date, (i) each share of Savings Bank Common Stock
issued and outstanding immediately prior to the Effective Date shall, by virtue
of the Reorganization and without any action on the part of the holder thereof,
be converted into the right to receive Holding Company Common Stock based on the
Exchange Ratio, as defined in the Plan of Conversion, plus the right to receive
cash in lieu of any fractional share interest, as determined in accordance with
Section 3(c) hereof, (ii) each share of common stock, par value $1.00 per share,
of Interim B ("Interim B Common Stock") issued and outstanding immediately prior
to the Effective Date shall, by virtue of the Reorganization and without any
action on the part of the holder thereof, be converted into one share of Savings
Bank Common Stock, and (ii) each share of Holding Company Common Stock issued
and outstanding immediately prior to the Effective Date shall, by virtue of the
Reorganization and without any action on the part of the holder thereof, be
canceled. By voting in favor of this Plan of Reorganization, the Holding
Company, as the sole stockholder of Interim B, shall have agreed (i) to issue
shares of Holding Company Common Stock in accordance with the terms hereof and
(ii) to cancel all previously issued and outstanding shares of Holding Company
Common Stock upon the effectiveness of the Reorganization.
(b) On and after the Effective Date, there shall be no registrations of
transfers on the stock transfer books of Interim B or the Savings Bank of shares
of Interim B Common Stock or Savings Bank Common Stock which were outstanding
immediately prior to the Effective Date.
(c) Notwithstanding any other provision hereof, no fractional shares of
Holding Company Common Stock shall be issued to holders of Savings Bank Common
Stock. In lieu thereof, the holder of shares of Savings Bank Common Stock
entitled to a fraction of a share of Holding Company Common Stock shall, at the
time of surrender of the certificate or certificates representing such holder
shares, receive an amount of cash equal to the product arrived at by multiplying
such fraction of a share of Holding Company Common Stock by the Purchase Price,
as defined in the Plan of Conversion. No such holder shall be entitled to
dividends, voting rights or any other rights in respect of any fractional share.
4. EXCHANGE OF SHARES.
(a) At or after the Effective Date, each holder of a certificate or
certificates theretofore evidencing issued and outstanding shares of Savings
Bank Common Stock, upon surrender of the same to an agent, duly appointed by the
Holding Company ("Exchange Agent"), shall be entitled to receive in exchange
therefor certificate(s) representing the number full shares of Holding Company
Common Stock for which the shares of Savings Bank Common Stock theretofore
represented by the certificate or certificates so surrendered shall have been
converted as provided in Section 3(a) hereof. The Exchange Agent shall mail to
each holder of record of an outstanding certificate which immediately prior to
the Effective Date evidenced shares of Savings Bank Common Stock, and which is
to be exchanged for Holding Company Common Stock as provided in Section 3(a)
hereof, a form of letter of transmittal which shall specify that delivery shall
be effected, and risk of loss and title to such certificate shall pass, only
upon delivery of such certificate
Annex B-2
<PAGE>
to the Exchange Agent advising such holder of the terms of the exchange effected
by the Reorganization and of the procedure for surrendering to the Exchange
Agent such certificate in exchange for certificate or certificates evidencing
Holding Company Common Stock.
(b) No holder of a certificate theretofore represent shares of Savings
Bank Common Stock shall be entitled to receive any dividends in respect of the
Holding Company Common Stock into which such shares shall have been converted by
virtue of the Bank Merger until the certificate representing such shares of
Savings Bank Common Stock is surrendered in exchange for certificates
representing shares of Holding Company Common Stock. In the event that dividends
are declared and paid by the Holding Company in respect of Holding Company
Common Stock after the Effective Date but prior to surrender of certificates
representing shares of Savings Bank Common Stock, dividends payable in respect
of shares of Holding Company Common Stock not then issued shall accrue (without
interest). Any such dividends shall be paid (without interest) upon surrender of
the certificates representing such shares of Savings Bank Common Stock. The
Holding Company shall be entitled, after the Effective Date, to treat
certificates representing shares of Savings Bank Common Stock as evidencing
ownership of the number of full shares of Holding Company Common Stock into
which the shares of Savings Bank Common Stock represented by such certificates
shall have been converted, notwithstanding the failure on the part of the holder
thereof to surrender such certificates.
(c) The Holding Company shall not be obligated to deliver a certificate or
certificates representing shares of Holding Company Common Stock to which a
holder of Savings Bank Common Stock would otherwise be entitled as a result of
the Reorganization until such holder surrenders the certificate or certificates
representing the shares of Savings Bank Common Stock for exchange as provided in
this Section 4, or, in default thereof, an appropriate Affidavit of Loss and
Indemnification Agreement and/or an indemnity bond as may be required in each
case by the Holding Company. If any certificate evidencing shares of Holding
Company Common Stock is to be issued in a name other than that in which the
Certificate evidencing Savings Bank Common Stock surrendered in exchanged
therefor is registered, it shall be a condition of the issuance thereof that the
certificate so surrendered shall be properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange pay to the
Exchange Agent any transfer or other tax required by reason of the issuance of a
certificate for shares of Holding Company Common Stock in any name other than
that of the registered holder of the certificate surrendered or otherwise
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not payable.
(d) If, between the date hereof and the Effective Date, the shares of
Savings Bank Common Stock shall be changed into a different number or class of
shares by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment or a stock dividend thereon
shall be declared with a record date within said period, the Exchange Ratio
specified in Section 3(a) hereof shall be adjusted accordingly.
5. RIGHTS OF DISSENT AND APPRAISAL ABSENT. No holders of Savings Bank
Common Stock shall have any dissenter or appraisal rights in connection with the
Reorganization.
6. NAME OF SURVIVING CORPORATION. The name of the Surviving Corporation
shall be "Pulaski Bank, A Federal Savings Bank."
7. DIRECTORS OF THE SURVIVING CORPORATION. Upon and after the Effective
Date, until changed in accordance with the Charter and Bylaws of the Surviving
Corporation and applicable law, the number of directors of the Surviving
Corporation shall be seven. The names of those persons who, upon and after the
Effective Date, shall be directors of the Surviving Corporation are set forth
below. Each such director shall serve for the term which expires at the annual
meeting of stockholders of the Surviving Corporation in the year set forth after
his respective name, and until a successor is elected and qualified.
Annex B-3
<PAGE>
<TABLE>
<CAPTION>
Name Term Expires
---- ------------
<S> <C>
William A. Donius 1998
Robert A. Ebel 1998
Michael J. Donius 1999
E. Douglas Britt 1999
Garland A. Dorn 1999
Thomas F. Hack 2000
Dr. Edward J. Howenstein 2000
</TABLE>
The address of each director is 12300 Olive Boulevard, St. Louis, Missouri
63141.
8. OFFICERS OF THE SURVIVING CORPORATION. Upon and after the Effective
Date, until changed in accordance with the Charter and Bylaws of the Surviving
Corporation and applicable law, the officers of the Savings Bank immediately
prior to the Effective Date shall be the officers of the Surviving Corporation.
9. OFFICES. Upon the Effective Date, all offices of the Savings Bank
shall be offices of the Surviving Corporation. As of the Effective Date, the
home office of the Surviving Corporation shall remain at 12300 Olive Street, St.
Louis, Missouri, and the locations of the branch offices of the Surviving
Corporation shall be as follows:
4225 Bayless, St. Louis, Missouri 63123
6955 Parker Road, Florissant, Missouri 63033
3760 S. Grand, St. Louis, Missouri 63118
10756 Sunset Hills Plaza, St. Louis, Missouri 63127
10. CHARTER AND BYLAWS. On and after the Effective Date, the Charter and
Bylaws of the Savings Bank as in effect immediately prior to the Effective Date
shall be the Charter and Bylaws of the Surviving Corporation until amended in
accordance with the terms thereof and applicable law.
11. SAVINGS ACCOUNTS. Upon the Effective Date, any savings accounts of
Interim, without reissue, shall be and become savings accounts of the Surviving
Corporation without change in their respective terms, including, without
limitation, maturity minimum required balances or withdrawal value.
12. STOCK COMPENSATION PLANS. By voting in favor of this Agreement, the
Holding Company shall have approved adoption of the Savings Bank's 1994 Stock
Option Plan and 1994 Management Development and Recognition Plan (collectively,
the "Plans") as plans of the Holding Company and shall have agreed to issue
Holding Company Common Stock in lieu of Savings Bank Common Stock pursuant to
the terms of such Plans. As of the Effective Date, rights outstanding under the
Plans shall be assumed by the Holding Company and thereafter shall be rights
only for shares of Holding Company Common Stock, with each such right being for
a number of shares of Holding Company Common Stock equal to the number of shares
of Savings Bank Common Stack that were available thereunder immediately prior to
the Effective Date times the Exchange Ratio, as defined in the plan of
conversion, and the price of each such right shall be adjusted to reflect the
Exchange Ratio and so that the aggregate purchase price of the right is
unaffected, but with no change in any other term or condition of such right. The
Holding Company shall make appropriate amendments to the Plans to reflect the
adoption of the Plans by the Holding Company without adverse effect upon the
rights outstanding thereunder.
13. STOCKHOLDER APPROVAL. The affirmative votes of the holders of Savings
Bank Common Stock set forth in the Plan of Conversion shall be required to
approve the Plan of Conversion and Agreement and Plan of Reorganization, of
which this Plan of Reorganization is a part, on behalf of the Savings Bank. The
approval of the Holding Company, as the sole holder of the Interim B Common
Stock, shall be required to approve the Plan of Conversion, of which this Plan
of Reorganization is a part, on behalf of Interim B.
Annex B-4
<PAGE>
14. REGISTRATION; OTHER APPROVALS. In addition to the approvals set forth
in Sections 1 and 13 hereof and in the Plan of Conversion, the obligations of
the parties hereto to consummate the Reorganization shall be subject to the
Holding Company Common Stock to be issued hereunder in exchange for Savings Bank
Common Stock being registered under the Securities Act of 1933, as amended, and
registered or qualified under applicable state securities laws, as well as the
receipt of all other approvals, consents or waivers as the parties may deem
necessary or advisable.
15. ABANDONMENT OF PLAN. This Plan of Reorganization may be abandoned by
either the Savings Bank or Interim B at any time before the Effective Date in
the manner set forth in the Plan of Conversion.
16. AMENDMENTS. This Plan of Reorganization may be amended in the manner
set forth in the Plan of Conversion by a subsequent writing signed by the
parties hereto upon the approval of the Board of Directors of each of the
parties hereto.
17. SUCCESSORS. This Plan of Reorganization shall be binding on the
successors of the parties hereto.
18. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri, except to the extent
superseded by the laws of the United States.
IN WITNESS WHEREOF, the Parties hereto have cause this Plan of
Reorganization to be duly executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
Attest: PULASKI BANK, A FEDERAL SAVINGS BANK
_____________________ By: __________________
Corporate Secretary President
Attest: PULASKI FINANCIAL CORP.
_____________________ By: __________________
Corporate Secretary President
Attest: PULASKI INTERIM "B" BANK,
A FEDERAL SAVINGS BANK
_____________________ By: __________________
Corporate Secretary President
Annex B-5
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Pulaski Financial Corp., a corporation organized and existing under and by
virtue of the General Corporation Law of the state of Delaware, does hereby
certify:
First: That the board of directors of said corporation, at a meeting duly
convened and held, adopted a resolution proposing and declaring advisable the
following amendment to the certificate of incorporation of said corporation:
"RESOLVED, that the Certificate of Incorporation of the corporation be
amended by changing Article thereof numbered "XI" so that, as amended, said
Article shall be and read as follows:
"ARTICLE XI
NOTICE FOR NOMINATIONS AND PROPOSALS
A. Nominations for the election of directors and proposals for any new
business to be taken up at any annual or special meeting of stockholders may be
made by the board of directors of the Corporation or by any stockholder of the
Corporation entitled to vote generally in the election of directors. In order
for a stockholder of the Corporation to make any such nominations and/or
proposals, he or she shall give notice thereof in writing, delivered or mailed
by first class United States mail, postage prepaid, to the Secretary of the
Corporation not less than sixty days nor more than ninety days prior to any such
meeting; provided, however, that if less than seventy-one days' notice or prior
public disclosure of the date of the meeting is given to stockholders, such
written notice shall be delivered or mailed, as prescribed, to the Secretary of
the Corporation not later than the close of the tenth day following the day on
which notice of the meeting was mailed to stockholders or such public disclosure
was made. Each such notice given by a stockholder with respect to nominations
for election of directors shall set forth (i) the name, age, business address
and, if known, residence address of each nominee proposed in such notice, (ii)
the principal occupation or employment of each such nominees, (iii) the number
of shares of stock of the Corporation which are beneficially owned by each such
nominee, (iv) such other information as would be required to be included in a
proxy statement soliciting proxies for the election of the proposed nominee
pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended,
including, without limitation, such person's written consent to being named in
the proxy statement as a nominee and to serving as a director, if elected, and
(v) as to the stockholder giving such notice (a) his name and address as they
appear on the Corporation's books and (b) the class and number of shares of the
Corporation which are beneficially owned by such stockholder. In addition, the
stockholder making such nomination shall promptly provide any other information
reasonably requested by the Corporation.
B. Each such notice given by a stockholder to the Secretary with respect
to business proposals to bring before a meeting shall set forth in writing as to
each matter: (i) a brief description
<PAGE>
of the business desired to be brought before the meeting and the reasons for
conducting such business at the meeting; (ii) the name and address, as they
appear on the Corporation's books, of the stockholder proposing such business;
(iii) the class and number of shares of the Corporation which are beneficially
owned by the stockholder; and (iv) any material interest of the stockholder in
such business. Notwithstanding anything in this Certificate to the contrary, no
business shall be conducted at the meeting except in accordance with the
procedures set forth in this Article.
C. The Chairman of the annual or special meeting of stockholders may, if
the facts warrant, determine and declare to the meeting that a nomination or
proposal was not made in accordance with the foregoing procedure, and, if the
Chairman should so determine, the Chairman shall so declare to the meeting and
the defective nomination or proposal shall be disregarded and laid over for
action at the next succeeding adjourned, special or annual meeting of the
stockholders taking place thirty days or more thereafter. This provision shall
not require the holding of any adjourned or special meeting of stockholders for
the purpose of considering such defective nomination or proposal.'"
Second: That thereafter, pursuant to a resolution of its board of
directors, a special meeting of the stockholders of said corporation was duly
called and held at which meeting the necessary number of shares as required by
the corporation's Certificate of Incorporation were voted in favor of the
amendment.
Third: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 of the General Corporation Law of the
State of Delaware.
Fourth: That the capital of said corporation will not be reduced under or
by reason of said amendment.
In witness whereof, said Pulaski Financial Corp. has caused this
certificate to be signed by William A. Donius, its President, and Michael J.
Donius, its Secretary, this 19th day of August 1998.
By /s/William A. Donius
---------------------
(Corporate Seal) William A. Donius
President
Attest:/s/ Michael J. Donius
----------------------
Michael J. Donius, Secretary
2
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors
Pulaski Financial Corp.
St. Louis, Missouri
We consent to the use in this Post-Effective Amendment No. 1 to the Registration
Statement of Pulaski Financial Corp. on Form S-1 of our report dated November 7,
1997, relating to the consolidated financial statements of Pulaski Bank, A
Federal Savings Bank and Subsidiaries, which appears in the Prospectus
constituting part of such Registration Statement. We also consent to the
reference to us under the heading "Experts" contained in such Prospectus.
/s/ DELOITTE & TOUCHE LLP
St. Louis, Missouri
October 22, 1998
<PAGE>
EXHIBIT 23.3
[LETTERHEAD OF RP FINANCIAL, LC. APPEARS HERE]
October 2, 1998
Board of Directors
Pulaski Bancshares, M.H.C.
Pulaski Bank, A Federal Savings Bank
12300 Olive Boulevard
St. Louis, Missouri 63141
Gentlemen:
We hereby consent to the use of our firm's name in the Application for
Conversion of Pulaski Bancshares, M.H.C., the mutual holding company for Pulaski
Bank, A Federal Savings Bank, St. Louis, Missouri and any amendment thereto, in
the Form S-1 Registration Statement and any amendments thereto and in the Form
H(e)1-S for Pulaski Financial Corp. We also hereby consent to the inclusion of,
summary of and references to our Appraisal Report, Appraisal Update Reports and
our letter regarding subscription rights in such filings including the
Prospectus and Prospectus Supplement of Pulaski Financial Corp.
Sincerely,
RP FINANCIAL, LC.
/s/ Gregory E. Dunn
Gregory E. Dunn
Senior Vice President
<PAGE>
Exhibit 99.8
[Letterhead of Pulaski Bank]
Dear Subscriber:
Thank you for subscribing for shares of Pulaski Financial Corp. and for your
patience as we have worked to complete our conversion in the midst of the recent
stock market turmoil. When we made our decision to convert from the mutual
holding company form in January of this year, we could not foresee the dramatic
market changes that occurred this summer and fall.
As you are probably aware, upon completion of the Subscription Offering and the
Direct Community Offering we did not receive sufficient subscriptions to close
the offering at the minimum of the offering range. After a review of market
conditions and the results of our initial offering, we determined to proceed
with the conversion. We believe that the fundamental reasons for the
conversion have not changed. As we described in our prospectus, the advantages
of the conversion are: (1) the stock holding company form of organization
provides greater flexibility to acquire other financial institutions and
diversify operations, (2) the offering will provide a larger capital base to
support the growth of Pulaski Bank, and (3) the larger number of shares
outstanding should permit a more active market for our stock.
In accordance with Pulaski Bank=s Plan of Conversion, our independent appraiser
updated its appraisal of the pro forma market value of Pulaski Bank. This
updated appraisal reflects a decrease in the offering range from 4,080,000 to
5,520,000 shares to 1,870,000 to 2,530,000 shares. The purchase price remains
at $10.00 per share. The reduction in the offering range reflects the current
condition of the stock market, not any material change in Pulaski Bank=s
earnings or operations. Information regarding the updated appraisal and its
effect on the anticipated pro forma book value and capitalization of Pulaski
Financial Corp. and Pulaski Bank as well as on the revised dividend policy of
Pulaski Financial Corp. is set forth in the enclosed Prospectus Supplement.
In view of this change, we are giving persons who subscribed for common stock
the opportunity to maintain their orders as originally submitted, or to
increase, decrease or cancel their orders. IF YOU WISH EITHER TO MAINTAIN OR
CHANGE YOUR ORDER, YOU MUST SIGN AND RETURN THE ENCLOSED SUPPLEMENTAL ORDER FORM
SO THAT WE RECEIVE IT NO LATER THAN 12:00 NOON, CENTRAL TIME, ON ___________,
1998. FAILURE TO RETURN THE SUPPLEMENTAL ORDER FORM WILL RESULT IN THE
AUTOMATIC CANCELLATION OF YOUR ORIGINAL ORDER AND EITHER (1) THE PROMPT RETURN
OF YOUR FUNDS WITH INTEREST OR (2) TERMINATION OF YOUR WITHDRAWAL AUTHORIZATION.
As indicated above, a Prospectus Supplement, including revised pro forma data,
is enclosed. You should read this material carefully before determining whether
to maintain or change your existing order.
We look forward to the completion of our conversion and having you as a
stockholder of Pulaski Financial Corp. If you have any questions concerning the
procedure to be followed in completing your supplemental order form, please call
us at (314) 878-5200. The Board of Directors and Management of Pulaski Bank and
Pulaski Financial Corp. appreciate your subscription and thank you for your
continued support.
Sincerely,
William A. Donius
President and Chief Executive Officer
THE SHARES OF COMMON STOCK BEING OFFERED IN THE CONVERSION ARE NOT SAVINGS
ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION
INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY. THIS IS NOT AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY STOCK. THE OFFER IS MADE ONLY BY THE
PROSPECTUS AND THE PROSPECTUS SUPPLEMENT.
<PAGE>
IMPORTANT - IMMEDIATE ACTION REQUIRED
PULASKI FINANCIAL CORP.
Supplemental Order Form
[Broker/Custodian/Customer 1 Name] [Order Number]
[Customer 2 Name/Addtl Info] [Original Shares]
[Address Line 1] [Paid By Check]
[Address Line 2] [Paid By Account]
[City, State [ZIP]] [Original Purchase]
Changes in the stock offering require that all persons who wish to purchase
shares in the Pulaski Financial Corp. offering must return this form by the date
specified below. If you desire to maintain or modify your existing order, you
MUST complete, sign and return to Pulaski Financial Corp. in the envelope
provided or at any branch of Pulaski Bank no later than 12:00 Noon, Central Time
on _____ __, 1998. IF YOU DO NOT RETURN THIS FORM, YOUR ORIGINAL ORDER WILL
AUTOMATICALLY BE CANCELLED. The minimum number of shares that may be purchased
is 25 and the maximum number of shares that may be purchased is 40,000 shares.
The number of shares to be offered is based on a valuation that is subject to
review prior to fulfilling any stock orders.
STOCK ELECTION Please complete the section that describes your choice.
(1) [_] MAINTAIN ORIGINAL NUMBER OF SHARES ORDERED No change in number of shares
ordered. (Go to Item #7)
(2) [_] DECREASE NUMBER OF SHARES Amount refunded will be based on a new number
of shares which is less than the original number of shares at the $10.00
per share price. (Go to Item #5)
(3) [_] INCREASE NUMBER OF SHARES Amount owed will be based on a new number of
shares which is greater than the original number of shares ordered at
the $10.00 offering price. (Go to Item #5)
(4) [_] CANCEL ORDER Cancel order and refund payment with interest or release
hold on deposit accounts. (Go to Item #7)
(5) RECALCULATION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Original Number of Shares _________ shares Revised Number of Shares ________ shares
Price Per Share $10.00 Price Per Share $10.00
Total Original Purchase (A) $_________ Total Revised Purchase (B) $________
</TABLE>
If (A) is greater than (B), the amount to be refunded to you or account hold
released is: $________ (Go to Item #7)
If (B) is greater than (A), the additional amount you owe is: $________ (Go
to Item #6)
(6) METHOD OF PAYMENT (FOR ADDITIONAL AMOUNT ONLY)
Enclosed is a check, bank draft or money order payable to Pulaski Financial
Corp. for $________
<TABLE>
<CAPTION>
<S> <C> <C>
ACCOUNT NUMBERS AMOUNT(S)
I authorize Pulaski Financial Corp. to make withdrawals from ----------------------- --------------
my Pulaski Bank account(s) shown below, and understand ----------------------- --------------
that the amounts will not be otherwise available for withdrawal. ----------------------- --------------
(NOTE: LIST ONLY the ADDITIONAL AMOUNT you want withdrawn.) TOTAL ADDITIONAL AMOUNT --------------
</TABLE>
(7) I (we) hereby authorize fulfillment of any requested changes in my (our)
order. Further, I (we) certify that any change in our order does not
conflict with the purchase limitations in the Plan of Conversion (as
described in the Prospectus Supplement) and that any additional shares being
subscribed for are for my (our) account only and that there is no present
agreement or understanding regarding subsequent sale or transfer of such
shares. IF NO SUPPLEMENTAL ORDER FORM IS RECEIVED PRIOR TO 12:00 NOON ON
_____ __, 1998, SUCH PURCHASER WILL BE DEEMED TO HAVE CANCELLED THEIR ORDER.
I (we) will take ownership of any additional shares in the form of ownership
designated by me (us) at the time of my (our) original order. All signatures
should appear exactly as on the original stock order form. The Supplemental
Order Form should be signed by all persons who signed the original stock
order form. If less than all signatories appear on this form, Pulaski
Financial Corp. reserves the right to treat the election as valid, but is
not obligated to do so. If separate order forms were submitted for stock to
be registered in separate titles, then a separate Supplemental Order Form
must be submitted for each order.
I (we) acknowledge receipt of the Prospectus dated August 12, 1998 and the
Prospectus Supplement dated _____ __, 1998.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------- -------- ----------------------------------------- --------
SIGNATURE (TITLE, IF APPLICABLE) DATE SIGNATURE (TITLE, IF APPLICABLE) DATE
- --------------------------------------------------------------------------------------------------------------
</TABLE>
IF YOU HAVE ANY QUESTIONS, PLEASE CALL THE STOCK INFORMATION CENTER AT
(314) 878-5200 BETWEEN 9:00 A.M. AND 5:00 P.M.
<PAGE>
Dear Shareholders:
Thank you for your patience as we have worked to complete our conversion in the
midst of the recent stock market turmoil. When we made our decision to convert
from the mutual holding company form in January of this year, we could not
foresee the dramatic market changes that occurred this summer and fall.
As you are probably aware, upon completion of the Subscription Offering and the
Direct Community Offering we did not receive sufficient subscriptions to close
the offering at the minimum of the offering range. After a review of market
conditions and the results of our initial offering, we determined to proceed
with the conversion. We believe that the fundamental reasons for the
conversion have not changed. As we described in our prospectus, the advantages
of the conversion are: (1) the stock holding company form of organization
provides greater flexibility to acquire other financial institutions and
diversify operations, (2) the offering will provide a larger capital base to
support the growth of Pulaski Bank, and (3) the larger number of shares
outstanding should permit a more active market for our stock.
In accordance with Pulaski Bank=s Plan of Conversion, our independent appraiser
updated its appraisal of the pro forma market value of Pulaski Bank. This
updated appraisal reflects a decrease in the offering range from 4,080,000 to
5,520,000 shares to 1,870,000 to 2,530,000 shares. The purchase price remains
at $10.00 per share. The reduction in the offering range reflects the current
condition of the stock market, not any material change in Pulaski Bank=s
earnings or operations. Information regarding the updated appraisal and its
effect on the anticipated pro forma book value and capitalization of Pulaski
Financial Corp. and Pulaski Bank as well as on the revised dividend policy of
Pulaski Financial Corp. is set forth in the enclosed Proxy Supplement.
The Special Meeting of Shareholders which was adjourned on September 28, 1998
will be reconvened on __________, 1998 for the purpose of voting on a proposal
to approve the Plan of Conversion. Please see the enclosed Proxy Supplement for
information on voting and proxy procedures.
We look forward to the completion of our conversion and having you as a
stockholder of Pulaski Financial Corp. If you have any questions, please call
us at (314) 878-5200. The Board of Directors and Management of Pulaski Bank
thank you for your continued support.
Sincerely,
William A. Donius
President and Chief Executive Officer
<PAGE>
EXHIBIT 99.9
PULASKI BANK, A FEDERAL SAVINGS BANK
12300 OLIVE BOULEVARD
ST. LOUIS, MISSOURI 63141
(314) 878-2210
-----------------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE RECONVENED ON , 1998
-----------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Special Meeting of Stockholders ("Special
Meeting") of Pulaski Bank, A Federal Savings Bank ("Bank") adjourned on
September 28, 1998 will be reconvened at the main office of the Bank, 12300
Olive Boulevard, St. Louis, Missouri, on ________, __________, 1998, at 4:00
p.m., Central Time, for the following purpose:
1. To consider and vote upon a proposal to approve a Plan of Conversion
from Mutual Holding Company to Stock Holding Company and Agreement and
Plan of Reorganization ("Plan of Conversion") adopted by Pulaski
Bancshares, M.H.C. (the "MHC") and the Bank, pursuant to which (i) the
MHC will convert to a federally chartered interim stock savings bank and
merge into the Bank, with the Bank being the surviving institution, (ii)
the Bank and a newly formed federally chartered interim stock savings
bank will merge, with the Bank being the surviving institution and
becoming a wholly-owned subsidiary of a newly formed stock corporation
named Pulaski Financial Corp. (the "Holding Company") and (iii) the
Holding Company will sell shares of its common stock to the public and
issue shares of its common stock in exchange for shares of the Bank's
common stock, all on and subject to the terms and conditions contained
therein; and
2. To consider and act upon such other matters as may properly come before
the Special Meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Special Meeting.
Any action may be taken on the foregoing proposal at the Special Meeting on
the date specified above, or on any date or dates to which, by further
adjournment, the Special Meeting may be adjourned. Pursuant to the Bank's
Bylaws, the Board of Directors has fixed the close of business on July 31, 1998
as the record date for the determination of the stockholders entitled to notice
of and to vote at the Special Meeting and any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
MICHAEL J. DONIUS
Secretary
St. Louis, Missouri
__________, 1998
<PAGE>
- --------------------------------------------------------------------------------
SUPPLEMENT TO PROXY STATEMENT
OF
PULASKI BANK, A FEDERAL SAVINGS BANK
12300 OLIVE BOULEVARD
ST. LOUIS, MISSOURI 63141
(314) 878-2210
- --------------------------------------------------------------------------------
SPECIAL MEETING OF STOCKHOLDERS
, 1998
- -------------------------------------------------------------------------------
This Supplement provides updated information with respect to the Special
Meeting of Stockholders of Pulaski Bank, A Federal Savings Bank ("Bank") to be
reconvened at the Bank's main office, 12300 Olive Boulevard, St. Louis,
Missouri, on _____________, 1998, at 4:00 p.m., Central Time.
The Notice of Special Meeting of Stockholders and Proxy Statement were
mailed on or about August 21, 1998 to all stockholders entitled to vote at the
Special Meeting. This Supplement was mailed on or about ________, 1998 to all
stockholders entitled to vote at the Special Meeting.
- -------------------------------------------------------------------------------
REVOCABILITY OF PROXIES
- -------------------------------------------------------------------------------
Stockholders who execute proxies retain the right to revoke them at any
time before they are voted. Stockholders may revoke any proxy by written notice
delivered in person or mailed to the Secretary of the Bank or by filing a proxy
bearing a later date prior to a vote being taken on a particular proposal at the
Special Meeting. Attendance at the Special Meeting will not automatically
revoke a proxy, but a stockholder of record in attendance may request a ballot
and vote in person, thereby revoking a prior granted proxy. If you have
previously returned your proxy and you do not wish to change your vote, no
action need be taken.
New proxy cards may be obtained upon oral or written request from Michael
J. Donius, Secretary of the Bank, at 12300 Olive Boulevard, St. Louis, Missouri
63141, telephone (314) 878-2210.
- -------------------------------------------------------------------------------
PURPOSE OF THIS SUPPLEMENT
- -------------------------------------------------------------------------------
The purpose of this Supplement is to provide stockholders of the Bank the
opportunity to review information regarding (1) the decrease in the offering
range for the stock offering by Pulaski Financial Corp. (the "Holding Company")
and the resulting decrease in the ratio at which shares of the Bank's common
stock will be exchanged for shares of the Holding Company's common stock and (2)
the change in the intended dividend policy of the Holding Company.
- --------------------------------------------------------------------------------
INCORPORATION BY REFERENCE
- --------------------------------------------------------------------------------
Each person receiving this Supplement is also receiving the Prospectus
Supplement of Pulaski Financial Corp. dated _______, 1998. Although such
Prospectus Supplement is incorporated herein by reference, this Supplement does
not constitute an offer to sell or a solicitation of an offer to buy the common
stock of the Holding Company. Such offer and solicitation is made only by the
Prospectus and Prospectus Supplement in such jurisdictions where it is lawful to
do so.
<PAGE>
The Bank urges you to read carefully the sections of the Prospectus
Supplement that describe the following:
(1) The revised offering range and resulting change in the exchange ratio
(see "THE REVISED VALUATION RANGE" in the Prospectus Supplement);
(2) The Holding Company's proposed dividend policy (See "REVISED DIVIDEND
POLICY" in the Prospectus Supplement);
(3) The impact of the conversion on the stockholders of the Bank (See"
EFFECT OF THE CONVERSION ON THE BANK'S STOCKHOLDERS" in the Prospectus
Supplement);
(4) The historical capitalization of the Bank and the pro forma
capitalization of the Holding Company (see "CAPITALIZATION" in the
Prospectus Supplement);
(5) The historical and pro forma capital compliance of the Bank (see
"HISTORICAL AND PRO FORMA CAPITAL COMPLIANCE" in the Prospectus
Supplement);
(6) Pro forma financial information with respect to the conversion (see
"PRO FORMA DATA" in the Prospectus Supplement);
(7) The Holding Company and the Bank's respective intended use of proceeds
of the offering (see "USE OF PROCEEDS" in the Prospectus Supplement);
and
(8) The interim consolidated financial statements of the Bank appearing in
the Prospectus Supplement.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors of the Bank is not aware of any business to come
before the Special Meeting other than those matters described in the Proxy
Statement as amended and supplemented by this Supplement. However, if any other
matters should properly come before the Special Meeting, it is intended that
executed proxies will be voted in respect thereof in accordance with the
judgment of the person or persons voting the proxies.
BY ORDER OF THE BOARD OF DIRECTORS
MICHAEL J. DONIUS
Secretary
St. Louis, Missouri
____________, 1998
2
