As filed with the Securities and Exchange Commission on _____, 1998
REGISTRATION NO.
===============================================================================
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
RFS BANCORP, INC.
(Name of small business issuer in its charter)
<TABLE>
<S> <C> <C>
U.S.A. 6035 Application Pending
(State or other jurisdiction of (Primary Standard Industrial Classification Code (I.R.S. Employer
incorporation or organization) Number) Identification No.)
</TABLE>
310 BroadwayRevere, MA 02151
(781) 284-7777
(Address and telephone number of principal executive offices)
Address of principal place of business or intended principal place of business)
----------------
Mr. James J. McCarthy
President and Chief Executive Officer
Revere Federal Savings
310 Broadway
Revere, MA 02151
(781) 284-7777
Copy to:
Richard A. Schaberg, Esq.
Thacher Proffitt & Wood
1700 Pennsylvania Avenue, N.W. Suite 800
Washington, D.C. 20006
(202) 347-8400
(Name and address, and telephone of agent for service)
---------------
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
Title of Each Class of Securities Amount to be Proposed Maximum Offering Proposed Maximum Amount of
to be Registered registered(1) Price Per Share (2) Aggregate Offering Price (2) Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $ 0.01 par value 590,496 shares $ 10.00 $5,904,960 $1742.00
===================================================================================================================================
</TABLE>
(1) Includes the maximum number of shares that may be issued in connection with
this offering.
(2) Estimated solely for the purpose of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
RFS BANCORP, INC.
Cross Reference Sheet showing location in the Prospectus of information required
by Items of Form SB-2:
REGISTRATION STATEMENT LOCATION OR HEADINGS IN
ITEM AND CAPTION PROSPECTUS
- --------------------------------------- ------------------------
1. Forepart of the Registration Outside Front Cover Page
Statement and Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Inside Front and Outside
Cover Pages of Prospectus Back Cover Pages
3. Summary Information and Risk Summary and Overview;Risk
Factors Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price The Reorganization--Stock
Pricing and Number of
Shares to be Issued
6. Dilution Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution Outside Front Cover Page;
The Reorganization; The
Offering -- Subscription
Rights -- Subscription
Offering -- Community
Offering -- Syndicated
Community Offering --
Marketing and Selling
Commissions
9. Description of Securities to be Certain Restrictions on
Registered Acquisition of the Bank;
Description of Capital
Stock
10. Interests of Named Experts and Not Applicable
Counsel
11. Information with Respect to the Outside Front Cover Page;
Registrant Selected Financial and
Other Data of the Bank;
Revere, MHC; RFS Bancorp,
Inc.;Revere Federal
Savings; Market for the
Common Stock;
Management's Discussion
and Analysis of Financial
Condition and Results of
Operations; Business of
the Company; Business of
the Bank; Regulation;
Management of the
Company; Management of
the Bank; The
Reorganization;
Description of Capital
Stock; Financial
Statements
12. Disclosure of Commission Position Not Applicable
on Indemnification for Securities
Act Liabilities
<PAGE>
PROSPECTUS
[LOGO]
PMS GREEN 554
RFS BANCORP, INC.
(Proposed Holding Company for Revere Federal Savings)
UP TO 590,496 SHARES OF COMMON STOCK
Revere Federal Savings and Loan Association ("Revere Federal Savings"), a
federal mutual savings association, is reorganizing into the mutual holding
company form of organization. As part of the reorganization, Revere Federal
Savings will convert to a stock savings bank and will become a wholly-owned
subsidiary of RFS Bancorp, Inc., a federal corporation. RFS Bancorp, Inc. will
become the majority-owned subsidiary of Revere, MHC, a federal mutual holding
company. RFS Bancorp, Inc. will issue a majority of its common stock to Revere,
MHC, and sell a minority of its common stock to the public. The shares of common
stock of RFS Bancorp, Inc. are being offered to the public under the terms of a
plan of reorganization that must be approved by members of Revere Federal
Savings and by the Office of Thrift Supervision. The reorganization will not go
forward if Revere Federal Savings does not receive these approvals, or if RFS
Bancorp, Inc. does not sell at least a minimum number of shares of its common
stock. Because the names of Revere Federal Savings, RFS Bancorp, Inc., and
Revere, MHC are so similar, we will refer to Revere Federal Savings as the
"Bank," we will refer to RFS Bancorp, Inc. as the "Stock Company," and we will
refer to Revere, MHC as the "Mutual Company."
TERMS OF OFFERING
An independent appraiser has estimated that the pro forma market value of
the Stock Company to be between $8.1 million to $12.6 million. Based on this
estimate, the Stock Company will issue between 807,500 and 1,256,374 shares of
common stock. We are selling 47% of these shares, or between 379,525 and 590,496
shares to the Bank's depositors, borrowers and the public and 53% of these
shares, or between 427,975 and 665,878 shares, to the Mutual Company. Subject to
regulatory approvals, we may increase the shares we issue in the reorganization
and sell in the offering. After the reorganization is completed, stockholders
other than the Mutual Company will own 47% of the shares of the common stock
outstanding. Based in these estimates, we are making the following offering of
shares of common stock.
<TABLE>
<CAPTION>
MINIMUM MIDPOINT MAXIMUM ADJUSTED
------- -------- ------- --------
<S> <C> <C> <C> <C>
Price per share $ 10.00 $ 10.00 $ 10.00 $ 10.00
Number of shares 379,525 446,500 513,475 590,496
Reorganization expenses $ 425,952 $ 438,473 $ 450,994 $ 465,366
Net proceeds $3,369,298 $4,026,527 $4,683,756 $5,439,594
Net proceeds per share $ 8.88 $ 9.02 $ 9.12 $ 9.21
</TABLE>
PLEASE REFER TO THE RISK FACTORS SECTION BEGINNING ON PAGE 16 OF THIS
PROSPECTUS.
THESE SECURITIES ARE NOT DEPOSITS OR ACCOUNTS AND ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, THE OFFICE OF
THRIFT SUPERVISION, THE FEDERAL DEPOSIT INSURANCE CORPORATION, NOR ANY STATE
SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED
THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Trident Securities, Inc. will use its best efforts to assist the Stock
Company in selling at least the minimum number of shares, but does not guarantee
that this number will be sold. All funds received from subscribers will be held
in an interest bearing savings account at the Bank until the completion or
termination of the Offering. We anticipate that the common stock (symbol "RFSB")
will be traded on the over-the-counter market with quotations available through
the OTC Bulletin Board.
For information on how to subscribe, call the Stock Information Center at
(781) ___-____.
--------------
Trident Securities, Inc.
--------------
The date of this Prospectus is ________, 1998.
<PAGE>
[ADD MAP]
[TO COME FROM RFS]
2
<PAGE>
TABLE OF CONTENTS
PAGE
----
QUESTIONS AND ANSWERS ABOUT THE STOCK OFFERING.............................
SUMMARY AND OVERVIEW.......................................................
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE BANK.................
RISK FACTORS...............................................................
REVERE, MHC................................................................
RFS BANCORP, INC...........................................................
REVERE FEDERAL SAVINGS.....................................................
USE OF PROCEEDS............................................................
DIVIDEND POLICY............................................................
MARKET FOR THE COMMON STOCK................................................
CAPITALIZATION.............................................................
SHARES TO BE PURCHASED BY MANAGEMENT ......................................
PRO FORMA DATA.............................................................
CONSOLIDATED STATEMENTS OF INCOME..........................................
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.........................
BUSINESS...................................................................
FEDERAL AND STATE TAXATION.................................................
REGULATION.................................................................
MANAGEMENT.................................................................
THE REORGANIZATION.........................................................
THE OFFERING...............................................................
CERTAIN RESTRICTIONS ON ACQUISITION OF THE BANK............................
DESCRIPTION OF CAPITAL STOCK...............................................
TRANSFER AGENT AND REGISTRAR...............................................
EXPERTS....................................................................
LEGAL AND TAX MATTERS......................................................
ADDITIONAL INFORMATION.....................................................
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS.................................
This document contains forward-looking statements which involve risks and
uncertainties. The Stock Company's actual results may differ significantly from
the results discussed in the forward-looking statements. Factors that might
cause such a different include, but are not limited to, those discussed in "Risk
Factors" section of this Prospectus.
3
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE STOCK OFFERING
Q: WHAT IS THE PURPOSE OF THE OFFERING?
A. We are selling shares of common stock so that we can raise capital to grow
and compete more effectively, and so that our depositors, customers,
employees, management and directors may obtain an equity ownership in the
Bank. As part of the reorganization, you will have the opportunity to
become a stockholder of the Stock Company, which will allow you to share
indirectly in the future earnings and growth of our Bank. The offering will
increase our capital for lending and investment activities. This will
better enable us to continue the expansion of our retail banking franchise
and to diversify operations. Further, as a stock bank operating through a
holding company structure, we will improve our future access to the capital
markets.
Q: HOW DO I ORDER THE STOCK?
A: You must complete and return the stock order form and certification to us
together with your payment, so that we receive it on or before 12:00 noon
on _______ 1998.
Q: HOW MUCH STOCK MAY I ORDER?
A. The minimum order is 25 shares (or $250). The maximum order for any
individual person, persons on a single account, or persons acting together
is 15,000 shares (or $150,000). We may decrease or increase the maximum
purchase limitation without notifying you. However, if we increase the
maximum purchase limitation, and you previously subscribed for the maximum
number of shares, you will be given the opportunity to subscribe for
additional shares.
Q: WHO WILL BE PERMITTED TO PURCHASE STOCK?
A: The stock will be offered on a priority basis to the following persons:
o Persons who had aggregate deposit accounts of at least $50 with the
Bank on December 31, 1996. Any remaining shares will be offered to:
o The Stock Company's employee stock ownership plan. Any remaining
shares will be offered to:
o Persons who had aggregate deposit accounts of at least $50 with the
Bank on September 30, 1998. Any remaining shares will be offered to:
o Persons who were depositors or borrowers with the Bank on ___________,
1998.
If the above persons do not subscribe for all of the shares, the remaining
shares will be offered to certain members of the general public, with
preference given to natural persons residing in Revere, Massachusetts.
4
<PAGE>
Q: WHAT HAPPENS IF THERE ARE NOT ENOUGH SHARES TO FILL ALL ORDERS?
A. If the offering is oversubscribed, we will allocate shares based on the
purchase priorities that we have adopted in the plan of reorganization and
stock issuance plan. These purchase priorities are in accordance with
regulations of the Office of Thrift Supervision. If the offering is
oversubscribed in a particular category, then shares will be allocated
among all subscribers in that category based on a formula that is described
in detail in "The Reorganization and Offering."
Q: AS A DEPOSITOR OF THE BANK, WHAT WILL HAPPEN IF I DO NOT ORDER ANY COMMON
STOCK?
A: You are not required to purchase common stock. Your deposit accounts,
certificate accounts and any loans you may have with the Bank will not be
affected by the reorganization.
Q: HOW DO I DECIDE WHETHER TO BUY STOCK IN THE OFFERING?
A: In order to make an informed investment decision, you should read this
entire prospectus, particularly the section titled "Risk Factors."
Q: WHO CAN HELP ANSWER ANY QUESTIONS I MAY HAVE ABOUT THE OFFERING?
If you have questions about the offering, you may contact:
STOCK INFORMATION CENTER
REVERE FEDERAL SAVINGS AND LOAN ASSOCIATION
310 BROADWAY
REVERE, MASSACHUSETTS 02151
(781) ___-____
5
<PAGE>
SUMMARY AND OVERVIEW
This is a summary of selected information from this document and does not
contain all the information that you need to know before making an informed
investment decision. To understand the offering fully, you should read carefully
this entire Prospectus, including the consolidated financial statements and the
notes to the consolidated financial statements of the Bank. References in this
document to the "Bank," "we," "us," or "our" refer to Revere Federal Savings. In
certain instances where appropriate, "us" or "our" refers collectively to RFS
Bancorp, Inc. and the Bank. References in this document to the "Stock Company"
refer to RFS Bancorp, Inc. References to the "Mutual Company" refer to Revere,
MHC.
THE REORGANIZATION AND OFFERING
The reorganization involves a number of steps, including the following:
o The Bank will establish the Stock Company and the Mutual
Company, neither of which will have any assets prior to the
completion of the reorganization.
o The Bank will convert from the mutual form of organization to
the capital stock form of organization and issue 100% of its
capital stock to the Stock Company.
o The Stock Company will issue between 807,500 and 1,256,374
shares of its common stock in the reorganization; 53% of these
shares (or between 427,975 shares and 665,878 shares) will be
issued to the Mutual Company, and 47% (or between 379,525
shares and 590,496 shares) will be sold to depositors, and
possibly the public.
o Membership interests that depositors and borrowers had in the
Bank will become membership interests in the Mutual Company.
As a result, former members of the Bank who controlled 100% of
the votes eligible to be cast by the Bank's members prior to
the reorganization will, through the Mutual Company, control
53% of the votes eligible to be cast by the Stock Company's
stockholders immediately following the reorganization.
DESCRIPTION OF THE MUTUAL HOLDING COMPANY STRUCTURE
The mutual holding company structure differs in significant respects from
the savings and loan holding company structure that is used in a standard mutual
to stock conversion. In a standard conversion, a converting mutual institution
or its newly-formed holding company usually sells 100% of its common stock in a
stock offering. A savings institution that converts from the mutual to stock
form of organization using the mutual holding company structure sells less than
half of its shares at the time of the reorganization. By doing so, a converting
institution using the mutual holding company structure will raise less than half
the capital that it would have raised in a standard mutual to stock conversion.
Because of this, the Stock Company and the Bank will only raise an amount of
capital which it believes it can prudently deploy.
The shares that are issued to the Mutual Company may be subsequently sold
to the Bank's depositors if the Mutual Company fully converts from the mutual to
the stock form or organization. See "Conversion of the Mutual Company to the
Stock Form of Organization." In addition, because the Mutual Company controls a
majority of the Stock Company's common stock, we believe that the reorganization
and offering will permit the Bank to achieve the benefits of a stock company
without a loss of control that often follows a standard conversion from mutual
to stock form. Sales of locally based, independent savings institutions to
larger,
6
<PAGE>
regional financial institutions can result in closed branches, fewer choices for
consumers, employee layoffs and the loss of community support for and
involvement by financial institutions.
Because the Mutual Company is a mutual corporation, its actions may not
necessarily always be in the best interests of the Stock Company's stockholders.
In making business decisions, the Mutual Company's Board of Directors will
consider a variety of constituencies, including the depositors of the Bank, the
employees of the Bank, and the communities in which the Bank operates. As the
majority stockholder of the Stock Company, the Mutual Company is also interested
in the continued success and profitability of the Bank and the Stock Company.
Consequently, the Mutual Company will act in a manner that furthers the general
interest of all of its constituencies, including, but not limited to, the
interest of the stockholders of the Stock Company. The Mutual Company believes
that the interests of the stockholders of the Stock Company, and those of the
Mutual Company's other constituencies, are in many circumstances the same, such
as the increased profitability of the Stock Company and the Bank and continued
service to the communities in which the Bank operates.
BUSINESS PURPOSES OF THE REORGANIZATION
The Board of Directors of the Bank has determined that the Reorganization
is in the best interest of the Bank and its members. The Bank believes that the
Reorganization will enable the Bank to compete more effectively with local
community banks and thrift institutions and with statewide and regional banks.
In particular, formation of the Stock Company as a subsidiary of the Mutual
Company will permit the Stock Company to issue Common Stock, which is a source
of capital not available to mutual savings banks.
The sale of Common Stock will provide the Bank with new equity capital,
which will support future deposit growth and expanded operations. The additional
capital raised by the Bank in the Offering will raise the Bank's legal lending
limit by 68.4%, allowing the Bank to originate larger balance loans in its
market area. The proceeds of the Offering will also enable the Bank to grow its
asset and deposit base by funding the construction and/or acquisition of one or
more additional branch locations, modernize and expand our delivery systems and
support our diversification into other financial services. The holding company
form of organization is expected to provide additional flexibility to diversify
the Bank's business activities through existing or newly formed subsidiaries, or
through acquisitions of or mergers with other financial institutions, as well as
other companies.
Furthermore, since the Bank is competing with local and regional banks not
only for customers, but also for employees, the Bank believes that the ability
of the Stock Company to issue Common Stock also will better afford it the
opportunity to attract and retain management and employees through various stock
benefit plans, including incentive stock option plans, stock award plans and
employee stock ownership plans.
REVERE FEDERAL SAVINGS
The Bank is a federally chartered mutual savings association which conducts
business from its main office in Revere, Massachusetts, which is located five
miles northeast of Boston, Massachusetts. The Bank's deposits are insured by the
FDIC to the maximum extent permitted by law. At June 30, 1998, the Bank had
total assets of $88.8 million, total deposits of $63.0 million and equity of
$6.4 million.
Formed in 1901, the Bank is a community-oriented savings institution whose
business consists of accepting deposits from customers and investing those funds
together with borrowings primarily in loans secured by one- to four-family
residences. The Bank also serves the needs of small businesses and retail
customers in its market area by originating commercial, commercial real estate,
construction and development and consumer loans.
7
<PAGE>
The Bank invests in Treasury and Federal agency securities, asset-backed
securities, mortgage-backed securities and other short term interest-bearing
deposits. The Bank's principal sources of funds are deposits, borrowings and
principal and interest payments on loans and investments. The principal source
of income is interest and dividends on loans and investment securities. The
Bank's principal expenses are interest paid on deposits, Federal Home Loan Bank
("FHLB") advances and general and administrative expenses.
Business Strategy. Historically, the primary focus of the Bank has been to
provide financing for single family housing in its market area of Revere,
Massachusetts and surrounding communities. Indeed, at September 30, 1995, over
96% of the Bank's loan portfolio consisted of one- to four-family residential
loans, and the Bank had no commercial real estate or commercial loans in its
portfolio. Beginning in 1996, the Bank began to make significant investments in
the human and technological resources necessary to create a platform for the
future growth and profitability of the Bank. This strategy was designed to
enhance the Bank's franchise value and strengthen earnings by diversifying its
product lines, thereby increasing the size of the Bank's loan portfolio as well
as its composition. Although the Bank believes the adoption of this strategy
will increase profitability over the longer term, increases in operating
expenses associated with this strategy will continue to put pressure on earnings
in the short term.
o Retail Banking and Customer Service. The Bank continues to focus on
expanding its residential lending and retail banking franchise and
increasing the number of households served within the Bank's market area.
For nearly 100 years, the Bank has served the needs of Revere and its
surrounding communities and remains the only bank headquartered in Revere.
The Bank's Board of Directors and its management are active in many
charitable organizations throughout Revere and the Bank's employees have
taken pride in providing hands on, personal service. The Bank views its
reputation as a service oriented institution which meets the needs of the
local community as one of its greatest assets. Given the increasing
consolidation in the financial services sector, the Bank believes that
expanding its market share for traditional community banking products will
enhance this reputation and provide inroads to new segments of the banking
market.
o Small Business Banking. The Bank views its entry into the small business
banking market as a natural outgrowth of its traditional community banking
services. Since 1996, the Bank has made a major commitment to small
business commercial lending (involving commercial and industrial loans and
commercial real estate loans) as a means to increase the yield on its loan
portfolio and attract lower cost transaction deposit accounts. The Bank has
worked to develop a niche of making commercial loans to the small and
medium sized companies in a wide variety of industries located in Revere
and elsewhere in the greater Boston area. In particular, the Bank has
expanded its lending to the business community surrounding the Logan
International Airport which comprises a growing sector of the Revere and
Chelsea markets. The Bank offers these businesses a variety of traditional
loan products and commercial services administered by the Bank's commercial
loan department which are designed to give business owners borrowing
opportunities for modernization, inventory, equipment, construction,
consolidation, real estate, working capital, vehicle purchases and the
refinancing of existing corporate debt. As a result of the Bank's efforts,
commercial business and commercial real estate loans have grown from zero
at September 30, 1995 to approximately $7.0 million at June 30, 1998.
o Branch Expansion. The Bank believes that a branch network is crucial to
increasing its market share in the traditional community banking and small
business banking arenas and that its lending and deposit gathering
activities are presently limited by the fact that it operates from only one
location. The Bank is currently negotiating for the purchase of its first
branch facility which the Bank believes is strategically located in a
stable and growing small business market. This branch location will
8
<PAGE>
emphasize convenience for the Bank's small business clients and be designed
to augment the Bank's small business lending activities. In the future, the
Bank expects to fund the construction and/or acquisition of one or more
additional branch locations either de novo, or by purchasing an existing
deposit base and/or location and to expand and renovate its main office to
allow the Bank's administrative functions to be performed in a single
facility. Expansion will facilitate greater services and increased loan
originations within the Bank's existing underwriting standards.
o Expanded Delivery Systems. The increased use of alternative delivery
channels has simplified and reduced the costs of financial transactions for
consumers, businesses and financial institutions. In addition to conducting
financial transactions at branch offices, customers are increasingly using
ATMs, online banking and online bill payment and electronic fund transfers
to communicate with financial services providers. The Bank has responded to
these market trends in several ways. First, since May 1997, the Bank has
offered its 24 hour telebanking product which provides its customers with
around the clock access to their accounts through the use of a touch tone
telephone. The Bank also has located an ATM at Logan Airport and is
currently in negotiations to open two additional ATMs in Revere and one ATM
in downtown Boston in the fall of 1998. Finally, the Bank plans to
introduce its home banking product which will give its customers access to
their accounts through the use of their personal computers in the first
quarter of 1999.
o Expansion of Product Lines. Regulatory changes and cross-sector
acquisitions have diminished the distinctions among various types of
financial institutions such as banks, insurance companies and securities
brokerage firms. Financial institutions today have the opportunity to
leverage their client base, expand their market share and compete for an
increased share of customers' financial services business by offering a
diverse range of products and services that formerly may have been offered
only by one particular type of financial institutions. Recognizing this
trend, the Bank intends to broaden its product line in order to better
serve its customers, expand customer relations and diversify its income
stream. In the near term, the Bank is contemplating offering various
uninsured investment products, including fixed-rate and variable annuities
and mutual funds, through relationships with third party broker-dealers
and/or money managers that would service both retail and small business
customers needs for investment products. The Bank also plans to investigate
opportunities presented by affiliations with insurance agencies over the
longer term. The Bank's strategy is to become a full service provider of
financial services, enhancing the Bank's ability to attract and retain both
retail and commercial customers.
The brief description of the Bank in this summary should be considered in
the context of the more detailed descriptions in this Prospectus, including
"Risk Factors."
THE OFFERING
We are offering a minimum of 379,525 shares and a maximum of 590,496 shares
of Common Stock in the Offering, which will expire at 12:00 noon, Eastern time,
on ________________, 1998 unless extended by us. Subject to the limitations set
forth herein and our right to reject certain orders in whole or in part (as
described under "The Offering -- Orders for Common Stock"), shares of Common
Stock are being offered in descending order of priority to (1) Eligible Account
Holders; (2) the ESOP; (3) Supplemental Eligible Account Holders; and (4) Other
Members. At any time during or after the subscription offering, the Bank may
offer shares to the general public, with a preference given to residents of
Revere, Massachusetts. Consummation of the Offering is subject to (i)
consummation of the Reorganization, which is conditioned on, among other things,
approval by the members and the OTS, (ii) the receipt of all required federal
approvals for the issuance of Common Stock in the Offering and (iii) the sale of
a minimum of 379,525 shares of Common Stock. No
9
<PAGE>
assurance can be given that we will be able to obtain all regulatory approvals
required to consummate the Reorganization.
Trident will provide financial advice to us in connection with the Offering
and will assist on a best efforts basis in the distribution of the Common Stock
in the Offering. Trident may also manage a selling group of broker-dealers,
which may include Trident, in a Syndicated Community Offering.
RESTRICTIONS ON TRANSFER OF SUBSCRIPTION RIGHTS AND SHARES
Prior to the completion of the Offering, no person may transfer or enter
into any agreement or understanding to transfer the legal or beneficial
ownership of the subscription rights issued under the Stock Issuance Plan or the
shares of Common Stock to be issued upon their exercise. Each person exercising
subscription rights will be required to certify that any purchase of Common
Stock will be solely for the purchaser's own account and that there is no
agreement or understanding regarding the sale or transfer of any shares
purchased as a result of the exercise. We will pursue any and all legal and
equitable remedies in the event we become aware of the transfer of subscription
rights and will not honor orders believed by us to involve the transfer of such
rights.
Following the Offering, there generally will be no restrictions on the
transfer or sale of shares by purchasers other than affiliates of the Bank and
Stock Company or members of the National Association of Securities Dealers, Inc.
PURCHASE LIMITATIONS
The Stock Issuance Plan provides that, except for the ESOP, no person,
together with associates of and persons acting in concert with such person, may
purchase more than $150,000 of the Common Stock offered in the Offering;
provided that we may in our sole discretion, and without further notice to or
solicitation of subscribers or other prospective purchasers, increase such
maximum purchase limitation to up to 5% of the number of shares offered in the
Offering, or decrease it to as low as 0.5% of the number of shares offered in
the Offering. If we increase such limitation, subscribers for the maximum amount
will be, and certain other large purchasers in our sole discretion may be, given
the opportunity to increase their orders up to the then applicable limit. We
would only adjust the maximum purchase limitation if business circumstances or
market conditions warrant such adjustment. No person may purchase fewer than 25
shares. The Bank's directors, officers and their "associates," may not purchase
in the aggregate more than 34% of the Common Stock sold in the Offering.
PURCHASE PRICE AND STOCK PRICING
We are offering the Common Stock at a fixed price of $10.00 per share. OTS
regulations require that the aggregate purchase price of all shares to be issued
in the Offering be consistent with an independent appraisal of the estimated pro
forma market value of the Bank immediately prior to the consummation of the
Offering. Based on the Independent Valuation, the estimated aggregate pro forma
market value of the Bank is $9.5 million. Such appraisal is not intended and
must not be construed as a recommendation of any kind as to the advisability of
purchasing shares of the Common Stock or as any form of assurance that, after
the Offering, such shares may be resold at or above the Purchase Price. The
Independent Valuation is based upon a number of factors and estimates derived
from those factors, all of which are subject to change from time to time. See
"The Reorganization" and "The Offering--Stock Pricing and Number of Shares to be
Issued."
10
<PAGE>
Based upon the Independent Valuation and in consultation with Trident, we
have established an offering range of between $3.8 million and $5.1 million,
subject to adjustment up to $5.9 million to reflect any increase in the
Independent Valuation (the "Offering Range"). We have established the Offering
Range to provide the maximum flexibility in raising capital. Based upon the
Independent Valuation, the shares that will be sold in the Offering as a
percentage of the number of shares that will be outstanding after the Offering
will be 47% at the minimum and maximum of the Offering Range.
The Independent Valuation and the Minority Ownership Interest may be
increased or decreased to reflect market and financial conditions immediately
prior to the time the Offering is consummated. A change in the Independent
Valuation will result in a corresponding increase or decrease in the Minority
Ownership Interest and may, at the discretion of the Bank, result in an increase
or decrease in the total number of shares being sold in the Offering. Regardless
of a change in the Independent Valuation, the maximum of the Offering Range will
not exceed 47% of the outstanding shares of Common Stock of the Stock Company.
We are not required to notify you of a change in the Independent Valuation
unless such change increases or decreases the Independent Valuation by more than
15%.
The Minority Ownership Interest will be determined as follows: (i) the
numerator will be the product of (x) the number of shares of Common Stock sold
in the Offering and (y) the Purchase Price ($10.00 per share); and (ii) the
denominator will be the updated valuation of the estimated pro forma market
value of the Bank immediately prior to conclusion of the Offering as determined
by RP Financial. Regardless of a change in the Independent Valuation, the
maximum shares sold in the Offering will not exceed 590,496 shares which, if the
Independent Valuation increases by 15%, would result in a Minority Ownership
Interest of 47%. The Minority Ownership Interest may decrease after the
conclusion of the Offering if the Stock Company purchases additional shares of
Common Stock in the open market.
PROPOSED PURCHASES BY MANAGEMENT
Directors and executive officers of the Bank as a group (11 persons) are
expected to purchase $907,000 of Common Stock in the Offering which, assuming
the issuance of the anticipated midpoint 446,500 shares, would represent 21.9%
of the Common Stock to be issued in the Offering. The ESOP intends to purchase
up to 8% of the shares of Common Stock to be issued in the Offering which at the
anticipated maximum is 41,078 shares.
BENEFITS TO MANAGEMENT AND DIRECTORS
Stock Based Benefit Plans. As early as six months to one year following the
completion of the Offering, the Stock Company intends to adopt certain
stock-based benefit plans. These benefit plans include stock option plans
providing for the grant of options to purchase shares of common stock equal to
10% of the Common Stock issued in the Offering (37,952 shares and 51,347 shares
at the minimum and maximum of the Offering Range, or an aggregate dollar amount
of $379,525 and $513,470, respectively, assuming an exercise price equal to the
Purchase Price of $10.00 per share) and restricted stock programs providing for
the grant of restricted stock awards of, in the aggregate, up to 4% of the
shares of Common Stock issued in the Offering, or 15,181 shares and 20,539
shares at the minimum and maximum of the Offering Range, respectively. Such
stock based benefit plans would have to be approved by a majority of the
Minority Stockholders at an annual or special meeting of stockholders, to be
held no earlier than six months after the completion of the Reorganization.
11
<PAGE>
USE OF PROCEEDS
The Stock Company will use the net proceeds from the offering as follows.
The percentages we use are estimates:
o 85% will be added to the Bank's capital in exchange for all of the capital
stock of the Bank.
o 8% will be loaned to the employee stock ownership plan to fund its purchase
of common stock.
o 7% will be retained for general corporate purposes.
The proceeds to be received by the Bank will be available for continued
expansion of the retail banking franchise through the opening of new branches,
deposit or bank acquisitions, continued growth in the loan portfolio, and the
purchase of investment and mortgage related securities, in addition to general
corporate purposes.
Net proceeds from the sale of the Common Stock are estimated to be between
$3.4 million and $4.7 million (or $5.4 million if the Independent Valuation is
increased by 15%) depending on the number of shares sold and the expenses of the
Offering. See "Pro Forma Data." Net proceeds will be used to support the Bank's
expansion of its small business lending and other financial services and to
expand the Bank's operations through the establishment of additional branch
locations either de novo or through acquisitions and for expansion and
renovation of the Bank's main office. The Bank is currently negotiating for the
purchase of a second location in an adjacent market which the Bank considers a
strong small business market. The estimated acquisition and renovation costs for
the building are approximately $600,000. On an interim basis, it is anticipated
that the net proceeds will be invested in instruments that qualify as short-term
liquidity for regulatory purposes until such proceeds can be deployed in longer
term investments. The Bank may also use such funds for other corporate purposes,
including the funding of the ESOP loan and the funding of other employee benefit
plans.
DIVIDENDS
The Board of Directors does not anticipate paying a dividend in the near
term. The Bank believes that its capital would be better deployed by expanding
its small business lending and other corporate purposes. Declarations of
dividends by the Board of Directors in the future will depend upon a number of
factors, including the amount of the net proceeds, investment opportunities
available to the Bank, capital requirements, regulatory limitations, the Bank's
financial condition and results of operations, tax considerations and general
economic conditions. There can be no assurance that dividends will be paid on
the Common Stock or that, if paid, such dividends will not be reduced or
eliminated in future periods.
PROSPECTUS DELIVERY AND PROCEDURE FOR PURCHASING COMMON STOCK
To ensure that eligible members are properly identified as to their stock
purchase priorities, such parties must list all deposit accounts on the order
form, giving all names on each deposit account and the account numbers at the
applicable date. THE FAILURE TO PROVIDE ACCURATE AND COMPLETE ACCOUNT
INFORMATION ON THE ORDER FORM MAY RESULT IN A REDUCTION OR ELIMINATION OF YOUR
ORDER.
Full payment by check, cash (except by mail), money order, bank draft or
withdrawal authorization (payment by wire will not be accepted) must accompany
an original order form. The Stock Company is not obligated to accept an order
submitted on photocopies or telecopied order forms. We will not accept order
forms if the certification appearing on the reverse side of the order form is
not executed. We are not required to deliver a prospectus and order form by any
means other than the U.S. postal service.
12
<PAGE>
MARKET FOR THE COMMON STOCK
We expect the Common Stock to be quoted on the OTC Bulletin Board under the
symbol "RFSB". Since the size of the offering is relatively small, it is
unlikely that an active and liquid trading market will develop and be
maintained. Investors should have a long-term investment intent. Persons
purchasing shares may not be able to sell their shares when they desire or sell
them at a price equal to or above $10.00.
IMPORTANT RISKS IN PURCHASING AND OWNING RFS BANCORP'S COMMON STOCK
Before you decide to purchase stock in the offering, you should read the
Risk Factors section on pages ____ to ____ of this prospectus, in addition to
the other sections of this prospectus.
The shares of common stock offered hereby:
o Are not deposit accounts;
o Are not insured or guaranteed by the FDIC, or any other government
agency; and
o Are not guaranteed by the Stock Company, the Mutual Company, or the
Bank.
The common stock is subject to investment risk, including the possible loss
of principal invested.
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<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE BANK
The selected consolidated financial and other data of the Bank set forth
below is derived in part from, and should be read in conjunction with, the
Consolidated Financial Statements of the Bank and Notes thereto presented
elsewhere in this Prospectus. The data presented for the nine months ended June
30, 1998 and 1997 was derived from unaudited consolidated financial statements
and reflect, in the opinion of management, all adjustments (consisting only of
normal recurring adjustments) which are necessary to present fairly the results
for such interim periods. Interim results at and for the nine months ended June
30, 1998 are not necessarily indicative of the results that may be expected for
the fiscal year ending September 30, 1998.
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT JUNE 30,-----------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
--------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA:
Total assets........................... $ 88,780 $ 86,920 77,898 67,732 59,910 50,953
Loans, net ............................ 46,825 41,175 33,046 21,273 20,579 22,158
Investments (1)........................ 34,146 40,790 41,120 42,054 35,747 19,341
Total deposits......................... 62,976 55,452 49,393 48,232 41,108 36,633
FHLB advances.......................... 19,284 25,104 22,712 13,818 13,482 10,000
Total equity........................... 6,374 6,039 5,447 5,277 4,819 4,093
Allowance for loan losses.............. 506 377 325 206 187 67
Non-performing loans................... 269 157 28 125 190 204
Non-performing assets.................. 269 157 28 125 298 332
</TABLE>
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
JUNE 30 FOR THE YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Interest and dividend income................... $ 5,007 $ 4,567 $ 6,180 $ 5,110 $ 4,447 $ 3,733 $ 3,267
Interest expense............................... 2,751 2,655 3,585 3,018 2,454 1,653 1,311
------- ------- ------- ------- ------- -------- -------
Net interest and dividend income............... 2,256 1,912 2,595 2,092 1,993 2,080 1,956
Provision (benefit) for loan losses............ 175 45 60 148 (2) 144 155
------- ------- ------- ------- ------- -------- -------
Net interest and dividend income after
provision (benefit) for loan losses.......... 2,081 1,867 2,535 1,944 1,995 1,936 1,801
Total noninterest income....................... 117 81 116 67 348 42 44
Total noninterest expense...................... 1,865 1,373 1,888 1,891 1,531 1,261 1,190
------- ------- ------- ------- ------- -------- -------
Income before income taxes..................... 333 575 763 120 812 717 655
Income taxes................................... 125 208 287 26 271 241 276
------- ------- ------- ------- ------- -------- -------
Net income..................................... $ 208 $ 367 $ 476 $ 94 $ 541 $ 476 $ 379
======= ======= ======= ======= ======= ======== =======
</TABLE>
(footnotes on next page)
14
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED
JUNE 30, AT OR FOR THE YEAR ENDED SEPTEMBER 30,
------------------------ ------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
SELECTED FINANCIAL RATIOS AND OTHER DATA(2)
PERFORMANCE RATIOS:
<S> <C> <C> <C> <C> <C> <C> <C>
Return on average assets.................... 0.31% 0.59% 0.56% 0.13% 0.86% 0.88% 0.89%
Return on average equity.................... 4.74 9.04 8.66 1.84 11.17 10.98 9.59
Average equity to average assets............ 6.60 6.49 6.52 7.13 7.69 8.00 9.24
Equity to total assets at end of period..... 7.18 6.37 6.95 6.99 7.79 8.04 8.03
Average interest rate spread................ 3.16 2.88 2.89 2.72 2.99 3.71 4.50
Net interest margin......................... 3.48 3.13 3.16 3.00 3.26 3.94 4.74
Average interest-earning assets to average
interest-bearing liabilities ............. 107.52 106.01 106.16 106.60 106.66 107.06 107.57
Total noninterest expense to average assets. 2.81 2.20 2.24 2.63 2.43 2.33 2.78
Efficiency ratio(3)......................... 78.63 68.89 69.64 87.59 65.36 59.43 59.50
REGULATORY CAPITAL RATIOS:
Tangible capital............................ 6.63 6.66 6.54 6.69 7.56 7.68 8.03
Core capital................................ 6.63 6.66 6.54 6.69 7.56 7.68 8.03
Risk-based capital.......................... 17.89 20.21 21.33 24.03 33.42 33.12 28.12
ASSET QUALITY RATIOS:
Non-performing loans as a percent
of loans.................................. 0.57 0.00 0.38 0.08 0.58 0.91 0.92
Non-performing assets as a percent
of total assets........................... 0.30 0.00 0.18 0.04 0.18 0.50 0.65
Allowance for loan losses as a percent
of loans ................................. 1.07 0.94 0.91 0.97 0.96 0.90 0.30
Allowance for loan losses as a percent
of non-performing loans .................. 188.12 N/A 240.03 1,159.67 164.86 98.33 32.76
NUMBER OF:
Loans outstanding........................... 834 717 775 569 440 436 487
Deposit accounts............................ 7,763 6,666 6,907 6,008 5,100 4,458 4,079
Full-service offices........................ 1 1 1 1 1 1 1
Full-time equivalent employees ............. 26 19 22 17 13 12 12
</TABLE>
- -------------
(1) The Association adopted Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS No. 115") as of September 30, 1994.
(2) Asset Quality Ratios and Regulatory Capital Ratios are end of period
ratios. With the exception of end of period ratios, all ratios are based on
average monthly balances during the indicated periods and are annualized
where appropriate.
(3) The efficiency ratio represents the ratio of noninterest expenses divided
by the sum of net interest income and noninterest income.
15
<PAGE>
RISK FACTORS
In addition to other information in this Prospectus, you should consider
carefully the following risk factors in evaluating an investment decision.
ANTICIPATED LOW RETURN ON EQUITY FOLLOWING REORGANIZATION
For the nine months ended June 30, 1998, the Bank's return on average
equity was 4.74%. On a pro forma basis, for the nine months ended June 30, 1998,
assuming the sale of the midpoint of 446,500 shares of Common Stock in the
Reorganization at the beginning of the fiscal year, the Company's return on
equity would have been 3.72%. With a relatively higher capital position as a
result of the Stock Issuance, and with the possible difficulty in finding good
quality loans in which to invest, it is unlikely that the Stock Company will be
able to immediately generate earnings to support its higher level of capital.
The Bank anticipates incurring acquisition and renovation costs associated with
a second location and ongoing noninterest expense to support the Bank's expanded
operations and services. In addition, the expenses associated with the ESOP, and
possible future benefit plans, along with other post-Reorganization expenses and
the expenses associated with having publicly traded stock, are also expected to
contribute to increased operating expenses (in comparison to past results of
operations). As a result, it is expected that the Stock Company's return on
equity initially will be lower than the Bank's historical levels and will be
below industry norms for stock banks. Consequently, investors expecting a return
on equity which will meet or exceed industry standards for the foreseeable
future should carefully evaluate and consider the risk of a subpar return on
equity.
GROWTH OF THE BANK'S COMMERCIAL LOAN AND COMMERCIAL REAL ESTATE LOAN PORTFOLIO
Beginning in 1996, our lending activities have increasingly emphasized
commercial and commercial real estate loans to small businesses in our market
area. At June 30, 1998, our total loan portfolio included commercial loans of
$2.8 million, or 5.9% of total loans and commercial real estate loans of $4.2
million or 8.8% of total loans. Commercial loans accounted for 13.5% and 0% of
our total loan originations during the fiscal years 1997 and 1996, respectively,
and commercial real estate loans accounted for 15.6% and 2.3% of our total loan
originations during the fiscal years 1997 and 1996, respectively. Additionally,
because we have originated most of our commercial and commercial real estate
loans within the past two years, the commercial and commercial real estate loan
portfolio is relatively unseasoned, and there can be no guarantee as to the
long-term performance of such loans.
We attempt to collateralize all of our commercial loans with real estate or
tangible commercial assets. Loans secured by commercial real estate properties
generally involve a higher degree of risk than the single-family mortgages that
we have traditionally emphasized. Because payments on loans secured by
commercial real estate properties are often dependent on the successful
operation or management of the properties, repayment of such loans may be
subject, to a greater extent, to adverse conditions in the real estate market or
the economy. Commercial and commercial real estate loans may also involve
relatively large loan balances to single borrowers or groups of related
borrowers. The repayment of commercial loans is typically dependent on the
successful operation and income stream of the borrower. Such loans can be
significantly affected by economic conditions. In addition, commercial and
commercial real estate lending generally requires substantially greater
oversight efforts compared to residential real estate lending.
GENERAL RISKS OF BRANCH EXPANSION AND GROWTH OPPORTUNITIES
Our future growth will depend on the success of increasing our loan
portfolio, expanding our product lines, opening de novo branches and/or the
success of any future branch acquisitions. The Bank's ability to
16
<PAGE>
increase the origination of small business loans and expand product lines will
depend on market conditions in the Bank's primary market area. The success of
the branching opportunities will, in turn, depend on a number of factors,
including, without limitation: our ability to integrate new branches into the
current operations of the Bank; our success in attracting customers and a
sufficient amount of deposits to make the new branches profitable; our ability
to control the incremental noninterest expenses from the new branches in a
manner that enables us to maintain a favorable overall efficiency ratio; our
ability to attract and retain the appropriate personnel to staff any new
branches; and our ability to earn acceptable levels of noninterest income from
any new branches.
COMPETITION
We face competition for both the deposits we accept and the loans we make.
We face direct competition from a number of financial institutions, such as
other savings institutions, commercial banks, credit unions and other providers
of financial services, many of which are significantly larger than us and,
therefore, have greater financial and marketing resources than we do. In
relation to some of our competitors and due to our size, we offer a more limited
product line.
POTENTIAL EFFECTS OF CHANGES IN INTEREST RATES AND THE CURRENT INTEREST RATE
ENVIRONMENT
Our results of operations and financial condition are significantly
affected by changes in interest rates. Our results of operations are
substantially dependent on our net interest income, which is the difference
between the interest income earned on our interest-earning assets and the
interest expense paid on our interest-bearing liabilities. Because, as a general
matter, our interest-bearing liabilities reprice or mature more quickly than our
interest-earning assets, an increase in interest rates generally would result in
a decrease in our average interest rate spread and net interest income.
Changes in interest rates also affect the value of our interest-earning
assets, and in particular our investment securities portfolio. Generally, the
value of investment securities fluctuates inversely with changes in interest
rates. At June 30, 1998, our securities portfolio totaled $34.1 million,
including $849,000 of securities available for sale. Unrealized gains and losses
on securities available for sale are reported as a separate component of equity.
Decreases in the fair value of securities available for sale therefore could
have an adverse affect on stockholders' equity.
We are also subject to reinvestment risk relating to interest rate
movements. Changes in interest rates can affect the average life of loans and
mortgage related securities. Decreases in interest rates can result in increased
prepayments of loans and mortgage related securities, as borrowers refinance to
reduce borrowing costs. Under these circumstances, we are subject to
reinvestment risk to the extent that we are not able to reinvest such
prepayments at rates that are comparable to the rates on the maturing loans or
securities.
DEPENDENCE ON KEY INDIVIDUALS
The Bank is dependent in large part on its ability to retain the services
of certain key personnel, including James J. McCarthy, President and Chief
Executive Officer and Anthony J. Patti, Executive Vice President and Chief
Financial Officer. The departure of either of them could have a material adverse
effect on the Bank's operations. The Bank intends to enter into employment
agreements with these officers. The Bank's continued success is also dependent
on its ability to retain and attract other qualified employees to meet the
Bank's needs.
17
<PAGE>
MINORITY PUBLIC OWNERSHIP
Voting Control of the Mutual Holding Company. Under regulations of the OTS,
the Plan of Reorganization and our governing corporate instruments, a majority
of the Stock Company's voting shares must be owned by the Mutual Company, and
the Mutual Company will own 53.0% of the Common Stock outstanding at the
completion of the Offering. The Mutual Company will be controlled by its
executive officers and directors, who initially will consist of persons who are
executive officers and directors of the Stock Company. Executive officers and
directors of the Stock Company will own 20.3% of the Common Stock outstanding at
the completion of the Offering (assuming shares are sold at the midpoint of the
Offering Range and that executive officers and directors receive all of the
shares for which they are expected to subscribe), and, based on such
assumptions, the Mutual Company and executive officers and directors as a group
would own 73.3% of the Common Stock outstanding at the conclusion of the
Offering. The Mutual Company will elect all members of the Board of Directors of
the Stock Company, and, with certain exceptions, will control the outcome of
matters presented to the stockholders of the Stock Company for resolution by
vote. The situations in which the Mutual Company may not control the outcome of
such vote include any stockholder vote to approve a restricted stock plan or
stock option plan instituted within one year of the Offering (which would
require the approval of a majority of the shares other than shares held by the
Mutual Company), any stockholder vote relating to the Mutual Company's
conversion from the mutual to the stock form of organization (which would
require the approval of a majority of shares other than shares held by the
Mutual Company and of two-thirds of all shares including shares held by the
Mutual Company), or any other stockholder vote in which the OTS may impose such
a requirement. The Mutual Company, acting through its Board of Directors, will
be able to control the business and operations of the Stock Company and the Bank
and will be able to prevent any challenge to the ownership or control of the
Stock Company by stockholders other than the Mutual Company ("Minority
Stockholders"). Although OTS regulations and the Plan of Reorganization permit
the Mutual Company to convert from the mutual to the capital stock form of
organization, there can be no assurance when, if ever, a conversion of the
Mutual Company will occur.
Provisions in the Stock Company's and the Bank's Governing Instruments. In
addition, certain provisions of the Stock Company's charter and bylaws,
particularly a provision limiting voting rights, as well as certain federal
regulations will assist the Stock Company in maintaining its status as an
independent publicly owned corporation. These provisions provide for, among
other things, staggered Boards of Directors, no cumulative voting for directors,
limits on the calling of special meetings of shareholders, and limits on the
ability to vote Common Stock in excess of 10% of outstanding shares (except as
to shares held by the Mutual Holding Company and the ESOP).
POTENTIAL DILUTION TO MINORITY STOCKHOLDERS RESULTING FROM ANY MUTUAL TO STOCK
CONVERSION
In the event of a full conversion to stock form, the Plan of Reorganization
provides that, subject to written OTS approval, (i) the stockholders of the
Stock Company will be entitled to exchange their shares of stock for shares of
the converted Mutual Company in a manner that is fair and reasonable to such
stockholders and subject to the stock purchase limitations of the OTS conversion
regulations (which may, as a condition to OTS approval of the Conversion
Transaction, in certain limited circumstances require certain insiders of the
Stock Company who have accumulated shares in excess of the stock purchase
limitations of the Conversion Transaction to divest such shares in connection
with such Conversion Transaction, and also potentially restrict or prohibit
additional purchases of Common Stock in the Conversion Transaction by other
stockholders that would be in excess of such stock purchase limitations), or
(ii) the Mutual Company may purchase all shares not owned by it simultaneously
with the consummation of the Conversion Transaction at the fair market value of
such shares. The OTS has recently modified its policy with respect to dividends
waived by mutual companies to require that, in the case of mutual to stock
conversions of recently-formed mutual companies such as the
18
<PAGE>
Mutual Company, the aggregate amount of cash dividends waived by a mutual
company must be considered when establishing a fair and reasonable basis for
exchanging subsidiary savings bank common stock for converted mutual company
common stock, and that the OTS will not permit a pro rata exchange if the Mutual
Company has waived the receipt of cash dividends paid by the subsidiary savings
institution. Accordingly, any waiver of dividends by the Mutual Company is
likely to result in an adjustment to the ratio pursuant to which shares of
Common Stock are exchanged for shares of the converted Mutual Company in a
Conversion Transaction, which adjustment will have the effect of diluting
Minority Stockholders' percentage ownership interest in Mutual Company shares.
POSSIBLE DILUTIVE EFFECT OF STOCK OPTIONS AND RESTRICTED STOCK PROGRAMS
We intend to establish an ESOP for the benefit of our employees, and no
sooner than six months after the Reorganization, we intend to establish, if
approved by the Minority Stockholders, stock option and restricted stock award
programs for the benefit of directors, officers and employees (hereinafter
"Stock Option Plans" and "Restricted Stock Programs"). The ESOP intends to
purchase up to 8% of the shares sold in the Offering with funds borrowed from
the Stock Company which loan will be repaid principally from the Bank's
contributions to the ESOP. Although the terms of the Stock Option Plans and the
awards to be made thereunder have not been determined, an amount equal to 10% of
the Common Stock issued in the Offering is expected to be reserved for issuance
under the Stock Option Plans. The Options Plans are expected to provide that the
shares that will be issued to option holders following the exercise of options
may be from authorized but unissued shares, treasury shares or shares purchased
on the open market. In no event will option exercises cause the Minority
Ownership Interest to exceed 50%. Assuming the sale of _________ shares, if all
of the options were to be exercised using authorized but unissued Common Stock,
the voting interests of existing stockholders would be diluted by
approximately_____%. The Restricted Stock Programs, if approved by the Minority
Stockholders of the Company, will acquire up to 4% of the shares of Common Stock
issued in the Offering (assuming OTS approval is obtained), either through open
market purchases, if permitted, or from the issuance of authorized but unissued
shares. If the Restricted Stock Programs are funded by the issuance of
authorized but unissued shares, the interests of existing shareholders would be
diluted by approximately____%. If the Stock Programs are funded by open market
purchases, the voting interests of existing shareholders would not be diluted
and assuming that the shares were acquired at the Purchase Price, the effect on
pro forma net earnings per share and stockholders' equity per share would be as
set forth under "Pro Forma Data."
ABSENCE OF ACTIVE AND LIQUID MARKET FOR COMMON STOCK
Due to the small size of the offering, it is highly unlikely that an active
trading market will develop and be maintained. If an active market does not
develop, you may not be able to sell your shares promptly or perhaps at all, or
sell your shares at a price equal to or above the price you paid for them. The
common stock may not be appropriate as a short-term investment.
TECHNOLOGY RISKS AND YEAR 2000 PROBLEM
The banking industry is undergoing rapid technological changes with
frequent introductions of new technology-driven products and services. In
addition to improving customer services, the effective use of technology
increases efficiency and enables financial institutions to reduce costs. Our
future success will depend, in part, on our ability to address the needs of
customers by using technology to provide products and services that will satisfy
customer demands, as well as to create additional efficiencies in the Bank's
operations. Many of our competitors have substantially greater resources than we
do to invest in technological improvements. There can be no assurance that we
will be able to effectively implement new technology-driven products and
services or be successful in marketing such products and services to the public.
19
<PAGE>
In addition, because of the demand for technology-driven products, banks
are contracting increasingly with outside vendors to provide data processing and
core banking functions. The use of technology-related products, services,
delivery channels, and processes expose a bank to various risks, particularly
transaction, strategic, reputation and compliance risk. Banks are generally
expected to successfully manage technology- related risks with all other risks
to ensure that a bank's risk management is integrated and comprehensive,
primarily through identifying, measuring, monitoring and controlling risks
associated with the use of technology. There can be no assurance we will be able
to successfully manage the risks associated with its increased dependence on
technology. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business."
The "Year 2000 Problem" centers on the inability of computer systems to
precisely recognize the year 2000. Many existing computer programs and systems
were originally programmed with six digit dates that provided only two digits to
identify the calendar year in the date field, without considering the upcoming
change in the century. Software, hardware, and equipment both within and outside
the Bank's direct control and with whom the Bank electronically or operationally
interfaces (e.g., third party vendors providing data processing, information
system management, maintenance of computer systems, and credit bureau
information) are likely to be affected. The Bank has taken steps to ensure that
such systems will properly recognize information when the year changes to 2000
and that it is in compliance with federal bank regulatory directives in this
area. Management of the Bank believes that the costs of addressing the Year 2000
Problems will not have a material adverse impact on the Bank's financial
position, results of operations, or cash flows in the future periods.
Nonetheless, the Bank's ability to predict the costs associated with Year 2000
compliance is subject to some uncertainties, and the Bank may incur additional
unexpected expenditures in connection with Year 2000 compliance.
FINANCIAL INSTITUTION REGULATION AND POSSIBLE LEGISLATION
The Bank is subject to extensive regulation and supervision as a federal
savings association. The regulatory authorities have extensive discretion in
connection with their supervision and enforcement activities and their
examination policies, including the imposition of restrictions on the operation
of a savings institution, the classification of assets by an institution and the
imposition of an increase in a savings institution's allowance for loan losses.
In addition, the Mutual Company, as a savings and loan holding company, will be
subject to extensive regulation and supervision. Any change in the regulatory
structure or the applicable statutes or regulations, whether by the OTS, the
FDIC or Congress, could have a material impact on the Mutual Company, the Stock
Company, the Bank, their operations or the Plan of Reorganization and Stock
Issuance Plan.
IRREVOCABILITY OF ORDERS; RISK OF DELAYED OR CANCELLED OFFERING
We expect to complete the Reorganization and Offering within the time
periods indicated in this Prospectus. However, consummation of the
Reorganization and Offering is conditioned on OTS approval of the Plan of
Reorganization which is expected, but has not yet been received. If OTS approval
is not received, all funds received from subscribers will be returned promptly
with interest and all withdrawal authorizations will be terminated. In addition,
it is possible, although not anticipated, that adverse market, economic or other
factors could significantly delay the completion of the Reorganization and
Offering and result in a delay in subscribers receiving their stock
certificates, increased Offering costs or changes in the Offering Range. The
Subscription Offering could be extended to ___________, 1998 and the Community
Offering extended to as late as__________, 1998, before subscribers would have
the right to modify or rescind their subscriptions. If the Subscription and
Community Offerings are extended beyond such dates, all subscribers will have
the right to modify or rescind their subscriptions and to have their
subscription funds returned promptly, with interest, or to have their withdrawal
authorization terminated.
20
<PAGE>
REVERE, MHC
The Bank has submitted a Notice of Mutual Company Reorganization and
Application for Approval of a Minority Stock Issuance by a Savings Association
Subsidiary of a Mutual Holding Company ("Notice") to the OTS pursuant to which
the Bank has requested approval to reorganize into the mutual holding company
structure. It is anticipated that the Bank will receive approval of the Notice;
however, it is unknown prior to actual receipt of OTS approval what conditions,
if any, the OTS may impose on the Reorganization. In the event the OTS approval
contains conditions which, in the opinion of the Board of Directors of the Bank,
are unacceptable, the Bank may determine to terminate the Reorganization and/or
the Offering and return all subscription funds collected in connection with the
Offering. As part of the Reorganization, the Bank will establish a federal
mutual holding company under the laws of the United States with the powers set
forth in its proposed charter and bylaws. Members of the Mutual Company
(consisting of depositors of the Bank) shall have sole authority to elect the
Board of Directors of the Mutual Company for so long as the Mutual Company
remains mutually owned. Initially, the Mutual Company's principal assets will be
the shares of Common Stock received in the Reorganization and up to $100,000 in
cash.
Immediately after consummation of the Reorganization, it is expected that
the Mutual Company's operations will consist of activities relating to its
investment in a majority of the Common Stock of the Stock Company and
maintenance of books and records relating to members of the Mutual Company. The
Mutual Company may accept dividends paid by the Stock Company in an amount
necessary to pay expenses. In addition, the Mutual Company may accept dividends
paid by the Stock Company to be used for other purposes, including purchasing
Common Stock from time to time in the open market or from the Stock Company. The
Mutual Company may participate in any such plan. There can be no assurances that
the Mutual Company will accept dividends paid by the Stock Company, or if such
dividends are accepted, that the Mutual Company will purchase shares of Common
Stock in the open market. Any Mutual Company purchases of Common Stock will
increase the percentage of the Stock Company's outstanding shares of Common
Stock held by the Mutual Company and increase the number of shares eligible to
be sold in any subsequent secondary offering or Conversion Transaction by the
Mutual Company.
The Mutual Company will be a mutual corporation chartered and regulated by
the OTS. The Mutual Company will be subject to the limitations and restrictions
imposed on savings institution mutual holding companies by Section 10(o)(5) of
HOLA. See "Regulation -- Regulation of the Mutual Company."
The Mutual Company's principal executive office will be located at 310
Broadway, Revere, Massachusetts 02151 and its telephone number will be (781)
284-7777.
RFS BANCORP, INC.
The Stock Company will be formed as a federal corporation and will own 100%
of the Bank's common stock. The Stock Company has not yet been formed, and
accordingly, its financial statements are not included in this Prospectus. The
OTS has approved an application for the Stock Company to become a savings and
loan holding company through the acquisition of all of the capital stock of the
Bank to be issued and outstanding upon completion of the Reorganization. The
Stock Company will have all of the powers set forth in its federal charter and
federal law and OTS regulations.
The Stock Company will retain up to 15% of the net proceeds of the
Offering. Part of the net proceeds will be used to fund a loan to the Bank's
ESOP, which is expected to purchase up to 8% of the Common Stock
21
<PAGE>
sold in the Offering. The remainder of the net proceeds will be used for general
corporate purposes. The holding company structure will provide the Stock Company
with greater flexibility than is currently available to the Bank to diversify
its business activities, either through newly-formed subsidiaries or through
acquisitions. The business activities of the Stock Company will be subject to
the same restrictions under federal law as the Mutual Company. The Stock Company
initially will not conduct any active business and does not intend to employ any
person other than its officers, although it may utilize the Bank's support staff
from time to time.
The Stock Company's executive office will be located at the administrative
offices of the Bank, at 310 Broadway, Revere, Massachusetts 02151. Its telephone
number will be (781) 284-7777.
REVERE FEDERAL SAVINGS
The Bank is a federally chartered mutual savings association which conducts
business from its main office located in Revere, Massachusetts, which is located
five miles northeast of Boston, Massachusetts. The Bank's deposits are insured
by the FDIC to the maximum extent permitted by law. At June 30, 1998, the Bank
had total assets of $88.8 million, total deposits of $63.0 million and equity of
$6.4 million.
The primary focus of the Bank is to provide financing for single family
housing and small businesses in its market area of Revere, Massachusetts. The
Bank originates one- to four-family residential mortgages and non-residential
commercial real estate, commercial, consumer and construction loans. The Bank
also invests its excess funds in Treasury and Federal agency securities,
mortgage-backed securities, asset-backed securities and other short term
interest-bearing deposits. The Bank's principal sources of funds are deposits,
borrowings and principal and interest payments on loans. The principal source of
income is interest on loans and investment securities. The Bank's principal
expenses are interest paid on deposits and employee compensation and benefits.
See "Business" on page ____.
The Bank's executive office will be located at the administrative offices
of the Bank, at 310 Broadway, Revere, Massachusetts 02151. Its telephone number
will be (781) 284-7777.
USE OF PROCEEDS
An amount equal to 85% of the net proceeds from the sale of the Common
Stock ($3.4 million at the midpoint of the Current Valuation Range) will be
added to the general funds of the Bank and used for general corporate purposes,
including the origination of loans, funding the construction and/or acquisition
costs of establishing new branch locations and renovating existing facilities,
and enhancing future access to capital markets. The Bank is currently
negotiating a purchase of a second location. The estimated acquisition and
renovation costs for the building are approximately $600,000. The Stock Company
will retain the balance of the funds for its initial capitalization, with a
portion of those funds ($357,200 at the midpoint of the Current Valuation Range)
being loaned to the ESOP to fund its purchase of Common Stock in the Offerings
following completion of the Offering. Subject to applicable limitations, the
Stock Company may also use available funds to repurchase shares of Common Stock
and for the payment of dividends. We expect that, in the interim, we will invest
all or part of the net proceeds in U.S. Government and Agency securities and
other short-term investments.
The total number of shares of the Common Stock to be issued in the
Reorganization cannot be stated with certainty at this time, because it will
depend upon the estimated pro forma market value of the Common Stock at the time
of sale. See "The Offering -- Stock Pricing and Number of Shares to be Issued."
However,
22
<PAGE>
the net proceeds to the Company would be approximately $3,669,327 based upon the
assumptions that (i) 446,500 shares of Common Stock are sold at a purchase price
per share of $10.00 for an aggregate of $4,465,000 (the midpoint of the Offering
Range) and (ii) the Offering expenses are $438,473 in the aggregate.
THE ACTUAL NET PROCEEDS MAY BE MORE OR LESS THAN THE ESTIMATED AMOUNT
BECAUSE THE TOTAL PROCEEDS FROM THE SALE OF THE COMMON STOCK MAY BE
SIGNIFICANTLY MORE OR LESS THAN THE MIDPOINT OF THE CURRENT VALUATION RANGE AND
BECAUSE ACTUAL REORGANIZATION EXPENSES MAY BE MORE OR LESS THAN THOSE CURRENTLY
EXPECTED.
DIVIDEND POLICY
The Board of Directors does not anticipate paying a dividend in the near
term. The Bank believes that its capital would be better deployed by expanding
its small business lending and other general corporate purposes. Declarations of
dividends by the Board of Directors in the future will depend upon a number of
factors, including the amount of the net proceeds, investment opportunities
available to the Bank, capital requirements, regulatory limitations, the Bank's
financial condition and results of operations, tax considerations and general
economic conditions. There can be no assurance that dividends will be paid on
the Common Stock or that, if paid, such dividends will not be reduced or
eliminated in future periods. If the Mutual Company elects not to waive receipt
of dividends from the Stock Company, the Stock Company will have reduced
flexibility as to the amount of dividends that can be paid. There can be no
assurance that dividends will in fact be paid on the Common Stock or that, if
paid, such dividends will not be reduced or eliminated in future periods. No
dividends will be paid as long as there is any impairment of capital.
The Stock Company will not be subject to OTS regulatory restrictions on the
payment of dividends although the source of such dividends depends in part upon
the receipt of dividends from the Bank. The Bank must provide the OTS with 30
days prior notice of its intention to make a capital distribution to the Stock
Company. OTS regulations in certain circumstances limit the amount of any
capital distribution by federal savings associations. In addition, the portion
of the Bank's earnings which has been appropriated for bad debt reserves and
deducted for federal income tax purposes cannot be used by the Bank to pay cash
dividends to the Stock Company without the payment of federal income taxes by
the Bank at the then current income tax rate on the amount deemed distributed,
which would include the amount of any federal income taxes attributable to the
distribution. The Stock Company does not contemplate any distribution by the
Bank that would result in a recapture of the Bank's bad debt reserve or
otherwise create federal tax liabilities. See "Federal and State
Taxation-Federal Taxation" and Note 8 to the Consolidated Financial Statements,
and "Regulation-Federal Regulation of Savings Institutions-Limitations on
Capital Distribution."
Additionally, in connection with the Reorganization, the Stock Company and
Bank have committed to the OTS that during the one-year period following the
consummation of the Reorganization, the Stock Company will not declare an
extraordinary dividend to stockholders which would be treated by recipient
stockholders as a tax-free return of capital for federal income tax purposes
without prior approval of the OTS.
MARKET FOR THE COMMON STOCK
As a newly organized company, the Stock Company has never issued capital
stock, and consequently there is no established market for the common stock.
Following the completion of the offering, it is anticipated that the common
stock (symbol: RFSB) will be traded on the over-the-counter market with
quotations available through the OTC Bulletin Board. Trident is expected to make
a market in the common stock by developing and maintaining historical stock
trading records, soliciting potential buyers and sellers and attempting to match
buy
23
<PAGE>
and sell orders. In connection with its market making activities, Trident may
buy or sell shares from time to time for its own account. However, Trident will
not be subject to any obligation with respect to such efforts. If the common
stock cannot be quoted and traded on the OTC Bulletin Board, it is expected that
the transactions in the common stock will be reported in the pink sheets of the
National Quotation Bureau, Inc.
The development of an active trading market depends on the existence of
willing buyers and sellers. Due to the small size of the offering, it is highly
unlikely that an active trading market will develop and be maintained. You could
have difficulty disposing of your shares and you should not view the shares as a
short-term investment. You may not be able to sell your shares at a price equal
to or above the price you paid for the shares.
24
<PAGE>
CAPITALIZATION
The following table presents the historical capitalization of the Bank at
June 30, 1998, and the pro forma capitalization of the Company after giving
effect to the Offering based upon the sale of the number of shares indicated in
the table and the other assumptions set forth under "Pro Forma Data." A change
in the number of shares to be sold in the Offering may materially affect such
pro forma capitalization.
<TABLE>
<CAPTION>
COMPANY PRO FORMA BASED UPON SALE AT $10.00 PER SHARE
BANK -----------------------------------------------------------
HISTORICAL MAXIMUM AS
CAPITALIZATION MINIMUM MIDPOINT MAXIMUM ADJUSTED
AS OF 379,525 466,500 513,475 590,496
JUNE 30, 1998 SHARES SHARES SHARES SHARES(1)
------------- ------ ------ ------ ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Deposits(2)........................... $ 62,976 $ 62,976 $ 62,976 $ 62,976 $ 62,976
Borrowed funds........................ 19,284 19,284 19,284 19,284 19,284
-------- -------- -------- -------- --------
Total deposits and borrowed funds..... $ 82,260 $ 82,260 $ 82,260 $ 82,260 $ 82,260
======== ======== ======== ======== ========
Stockholders' equity:
Common stock, $.01 par value,
5,000,000 shares authorized;
shares to be issued as reflected $ --- $ 8 $ 10 $ 11 $ 13
Additional paid-in capital(3)..... --- 3,361 4,017 4,673 5,427
Equity(4) ........................ 6,374 6,374 6,374 6,374 6,374
Less:
Common Stock acquired by ESOP(5). --- (304) (357) (411) (472)
Common Stock acquired by
Restricted Stock Program(6).... --- (152) (179) (205) (236)
-------- -------- ------- -------- --------
Total stockholders' equity............ $ 6,374 $ 9,287 $ 9,865 $ 10,442 $ 11,106
======== ======== ======= ======== ========
</TABLE>
- ---------------------------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Price Range of up to 15% as
a result of regulatory considerations or changes in market or general
financial and economic conditions following the commencement of the
Subscription Offering.
(2) Does not reflect withdrawals from deposit accounts for the purchase of
Common Stock in the Offering. Such withdrawals would reduce pro forma
deposits by the amount of such withdrawals.
(3) No effect has been given to the issuance of additional shares of Common
Stock pursuant to the Stock Company's Stock Option Plan intended to be
adopted by the Stock Company. An amount equal to 10% of the shares of
Common Stock issued in the Offering will be reserved for issuance upon the
exercise of options to be granted under the Stock Option Plan. See "Risk
Factors--Possible Dilutive Effect of Stock Option and Restricted Stock
Programs" and "Management--Benefits--Stock Option Plan."
(4) The retained earnings of the Bank will be substantially restricted after
the Reorganization. See "The Reorganization--Effects of the
Reorganization--Liquidation Rights" and "Regulation--Regulation of Federal
Savings Associations--Limitations on Capital Distributions."
(5) Assumes that 8% of the shares issued in connection with the Offering will
be purchased by the ESOP and that the funds used to acquire such shares
will be borrowed from the Stock Company. See "Use of Proceeds." The Common
Stock acquired by the ESOP is reflected as a reduction of stockholders'
equity. See "Management of the Bank--Benefits--Employee Stock Ownership
Plan and Trust" and Footnote 3 to the tables under "Pro Forma Data."
(6) Assumes that subsequent to the Reorganization, an amount equal to 4% of the
shares of Common Stock issued in the Offering, is purchased by the
Restricted Stock Program. The Common Stock purchased by the Stock Program
is reflected as a reduction of stockholders' equity. See "Risk
Factors--Possible Dilutive Effect of Stock Options and Restricted Stock
Programs," Footnote 4 to the tables under "Pro Forma Data" and
"Management--Benefits--Restricted Stock Program."
25
<PAGE>
SHARES TO BE PURCHASED BY MANAGEMENT
The following table sets forth, for each director of the Bank, for the
executive officers of the Bank as a group and for all directors and executive
officers as a group (including their associates) certain information as to the
number of shares of Common Stock which they have advised the Bank that they
intend to purchase. For purposes of the following table, it has been assumed
that 446,500 shares of Common Stock will be offered at $10.00 per share, the
midpoint of the Current Valuation Range (see "The Offering--Stock Pricing and
Number of Shares to be Issued") and that sufficient shares will be available to
satisfy subscriptions in all categories.
<TABLE>
<CAPTION>
AGGREGATE PURCHASE
TOTAL SHARES TOTAL PRICE OF
NAME OF COMMON STOCK PERCENTAGE PROPOSED PURCHASES
- --------------------------------------------- ------------------ ------------------ ----------------------------
<S> <C> <C> <C>
Arno P. Bommer............................. 9,200 2.1 $92,000
Ernest P. Becker........................... 1,000 0.2 10,000
Theodore E. Charles........................ 15,000 3.4 150,000
Anthony R. Conte........................... 3,500 0.8 35,000
Carmen R. Mattuchio........................ 15,000 3.4 150,000
James J. McCarthy.......................... 15,000 3.4 150,000
Michael O'Brien............................ 5,000 1.1 50,000
Angelo A. Todisco.......................... 2,000 0.4 20,000
John D. Verrengia.......................... 10,000 2.2 100,000
All other executive officers (2 persons)
as a group............................. 15,000 3.4 150,000
------ --- --------
Total shares to be purchased by
directors and executive officers....... 90,700 20.3% $907,000
====== ==== ========
</TABLE>
26
<PAGE>
PRO FORMA DATA
The actual net proceeds from the sale of the Common Stock cannot be
determined until the Offering is completed. However, net proceeds are currently
estimated to be between $3.4 million and $4.7 million (or $5.4 million in the
event the Independent Valuation is increased by 15%) based upon the following
assumptions: (i) the shares of Common Stock will be sold in the Subscription and
Community Offerings, as follows: (a) 8% will be sold to the ESOP; (b) an amount
equal to 4% will be awarded pursuant to the Restricted Stock Program (which may
be adopted no sooner than six months following the Offering) through authorized
but unissued shares; and (c) depositors, officers and directors of the Bank and
members of the general public will purchase all remaining shares; (ii) Trident
will receive a marketing fee equal to 2% of the aggregate dollar amount of the
shares sold in the Offering, Trident's total fees, consisting of advisory,
management and marketing fees will be at least $102,156, excluding shares
purchased by the ESOP, directors, officers, employees and immediate family of
directors and officers, for which there is no fee; (iii) no shares are sold in
the Syndicated Community Offering; and (iv) fixed expenses incurred in
connection with the Offering are estimated to be $375,000, including a $40,000
advisory and management fee payable to Trident.
Pro forma consolidated net income for the Stock Company for the nine months
ended June 30, 1998 and the year ended September 30, 1997 has been calculated
assuming the Common Stock had been sold at the beginning of the periods and the
net proceeds had been invested at an average yield of 5.38% for the period ended
September 30, 1997 and 5.37% for the period ended June 30, 1998, which
approximates the yield on short-term U.S. government securities. The yield on
short-term U.S. government securities, rather than an arithmetic average of the
average yield on interest-earning assets and average rate paid on deposits, has
been used to estimate income on net proceeds because it is believed that the
one-year U.S. Treasury bill rate is a more accurate estimate of the rate that
would be obtained on an investment of net proceeds from the Offering. The pro
forma after-tax yield or cost is assumed to be 3.30% for both the nine months
ended June 30, 1998 and the year ended September 30, 1997, based on an effective
tax rate of 39%. The effect of withdrawals from deposit accounts for the
purchase of Common Stock has not been reflected. Historical and pro forma per
share amounts have been calculated by dividing historical and pro forma amounts
by the indicated number of shares of Common Stock, as adjusted (in the case of
pro forma net earnings per share) to give effect to the purchase of shares by
the ESOP. Pro forma stockholders' equity amounts have been calculated as if the
Common Stock had been sold on June 30, 1998 and September 30, 1997,
respectively, and, accordingly, no effect has been given to the assumed earnings
effect of the transactions.
The following pro forma information may not be representative of the
financial effects of the foregoing transactions at the dates on which such
transactions actually occur and should not be taken as indicative of future
results of operations. Pro forma consolidated stockholders' equity represents
the difference between the stated amount of assets and liabilities of the Bank
computed in accordance with GAAP. The pro forma stockholders' equity is not
intended to represent the fair market value of the Common Stock and may be
greater than amounts that would be available for distribution to stockholders in
the event of liquidation.
The following table summarizes historical data of the Bank and pro forma
data of the Bank at or for the nine month period ended June 30, 1998 and the
fiscal year ended September 30, 1997, based on the assumptions set forth above
and in the table and should not be used as a basis for projections of market
value of the Common Stock following the Reorganization. The table below gives
effect to the restricted stock program (the "RRP"), which is expected to be
adopted by the Stock Company following the Reorganization and presented to
stockholders for approval at a meeting of stockholders to be held no earlier
than six months after completion of the Reorganization. No effect has been given
in the table to the possible issuance of additional shares reserved for future
issuance pursuant to the Stock Option Plans to be adopted by the Board of
Directors of the Bank, nor does book value give any effect to the liquidation
account to be established for the benefit of Eligible Account Holders and
Supplemental Eligible Account Holders or the bad debt reserve in liquidation.
27
<PAGE>
See "The Reorganization--Effects of Reorganization--Liquidation Rights" and
"Management--Benefits--Stock Option Plan."
<TABLE>
<CAPTION>
AT OR FOR THE NINE MONTHS ENDED JUNE 30, 1998
--------------------------------------------------------------------
MAXIMUM AS
MINIMUM MIDPOINT MAXIMUM ADJUSTED
379,525 SHARES 446,500 SHARES 513,475 SHARES 590,496 SHARES
AT $10.00 AT $10.00 AT $10.00 AT $10.00
PER SHARE PER SHARE PER SHARE PER SHARE(1)
----------------- ---------------- --------------- ----------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Gross Proceeds(2).............................. $ 3,795 $ 4,465 $ 5,135 $ 5,905
Less: Expenses............................... (426) (438) (451) (465)
------- ------- ------ ------
Estimated net proceeds...................... 3,369 4,027 4,684 5,440
Less: Common stock purchased by ESOP(3)..... (304) (357) (411) (472)
Less: Common stock purchased by RRP(4)...... (152) (179) (205) (236)
------- ------- ------- -------
Estimated net proceeds, adjusted............... $ 2,913 $ 3,491 $ 4,068 $ 4,732
======= ======= ======= =======
For the 9 months ended June 30, 1998
- ------------------------------------
Consolidated net income:
Historical income........................... $ 208 $ 208 $ 208 $ 208
Pro forma income on net proceeds............ 72 86 100 117
Pro forma ESOP adjustment(3)................ (14) (17) (19) (22)
Pro forma RRP adjustment(4)................. (14) (17) (19) (22)
------- ------- ------- -------
Pro forma net income...................... $ 252 $ 260 $ 270 $ 281
======= ======= ======= =======
Per share net income:
Historical income........................... $ 0.27 $ 0.23 $ 0.20 $ 0.17
Pro forma income on net proceeds............ 0.09 0.09 0.09 0.10
Pro forma ESOP adjustment(3)(5)............. (0.02) (0.02) (0.02) (0.02)
Pro forma RRP adjustment(4)................. (0.02) (0.02) (0.02) (0.02)
------- ------- ------- -------
Pro forma net income per share............ $ 0.32 $ 0.28 $ 0.25 $ 0.23
======= ======= ======= =======
At June 30, 1998
- --------------------------------------
Stockholders' equity:
Historical.................................. $ 6,374 $ 6,374 $ 6,374 $ 6,374
Estimated net proceeds...................... 3,369 4,027 4,684 5,440
Less: Common Stock acquired by ESOP(3)...... (304) (357) (411) (472)
Less: Common Stock acquired by RRP(4)....... (152) (179) (205) (236)
------- ------- ------- -------
Pro forma stockholders' equity............ $ 9,287 $ 9,865 $10,442 $11,106
======= ======= ======= ========
Stockholders' equity per share(6):
Historical.................................. $ 7.89 $ 6.71 $ 5.83 $ 5.07
Estimated net proceeds...................... 4.17 4.24 4.29 4.33
Less: Common Stock acquired by ESOP(3)...... (0.38) (0.38) (0.38) (0.38)
Less: Common Stock acquired by RRP(4)....... (0.19) (0.19) (0.19) (0.19)
------- ------- ------- -------
Pro forma stockholders' equity per share.. $ 11.49 $ 10.38 $ 9.55 $ 8.83
======= ======= ======= =======
Ratio of offering price to pro forma
net income per share (annualized)........... 23.26x 27.03x 30.30x 32.26x
------- ------- ------- -------
Offering price as a percentage of pro forma
stockholders' equity per share.............. 87.03% 96.34% 104.71% 113.25%
------- ------- -------- --------
</TABLE>
(footnotes on following page)
28
<PAGE>
(1) The Company reserves the right to issue up to a total of 590,496 shares at
$10.00 per share, or 15% above the maximum of the Offering Range. Unless
otherwise required by the OTS, subscribers will not be given the right to
modify their subscriptions unless the aggregate purchase price of the
Common Stock is increased to exceed $5,904,960 (i.e., 15% above the maximum
of the Offering Range.)
(2) Withdrawals from deposit accounts for the purchase of stock have not been
reflected in these adjustments. Management estimates that approximately 20%
of all subscription orders may utilize funds currently on deposit at the
Bank.
(3) Assumes 8% of the shares to be sold in the Offering are purchased by the
ESOP under all circumstances, and that the funds used to purchase such
shares are borrowed from the Stock Company. The approximate amount expected
to be borrowed by the ESOP is reflected in this table as a reduction of
capital. Although repayment of such debt will be secured solely by the
shares purchased by the ESOP, the Bank expects to make discretionary
contributions to the ESOP in an amount at least equal to the principal and
interest payments on the ESOP debt. Pro forma net income has been adjusted
to give effect to such contributions, based upon a fully amortizing debt
with a ten-year term. Since the Stock Company will be providing the ESOP
loan, only principal payments on the ESOP loan are reflected as employee
compensation and benefits expense. The provision of SOP 93-6 have been
applied for shares to be acquired by the ESOP and for purposes of computing
earnings per share. See "Management of the Bank -- Certain Benefit Plans
and Agreements -- Employee Stock Ownership Plan and Trust."
(4) Assumes a number of issued and outstanding shares of Common Stock equal to
4% of the Common Stock to be sold in the Offering will be purchased by a
restricted stock plan. The dollar amount of the Common Stock possibly to be
purchased by the restricted stock plan is based on the price per share in
the Offering and represents unearned compensation and is reflected as a
reduction of capital. Such amount does not reflect possible increases or
decreases in the value of such stock relative to the price per share of the
Offering. As the Bank accrues compensation expenses to reflect the vesting
of such shares pursuant to the restricted stock plan, the charge against
capital will be reduced accordingly. In the event the shares issued under
the restricted stock plan consist of shares of Common Stock newly issued
and the price per share in the Offering, the per share financial condition
and result of operations of the Company would be proportionately reduced
and to the extent the interest of existing stockholders would be diluted by
approximately 4.0%.
(5) The Bank intends to record compensation expense related to the ESOP in
accordance with SOP 93-6. As a result, to the extent the value of the
Common Stock appreciates over time, compensation expense related to the
ESOP will increase. SOP 93-6 also changes the earnings per share
computations for leveraged ESOPs to include as outstanding only shares that
have been committed to be released to participants. For purposes of the
preceding table, it was assumed that the number of ESOP shares were
committed to be released at June 30, 1998 and September 30, 1997.
(6) Stockholders' equity per share data is based upon 807,500, 950,000,
1,092,500 and 1,256,374 shares outstanding representing shares sold in the
offering, and shares purchased by the ESOP and Restricted Stock Program.
29
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED SEPTEMBER 30, 1997
-------------------------------------------
MAXIMUM AS
MINIMUM MIDPOINT MAXIMUM ADJUSTED
379,525 SHARES 446,500 SHARES 513,475 SHARES 590,496 SHARES
AT $10.00 AT $10.00 AT $10.00 AT $10.00
PER SHARE PER SHARE PER SHARE PER SHARE(1)
----------------- ---------------- ---------------- ----------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Gross Proceeds(2).............................. $ 3,795 $ 4,465 $ 5,135 $ 5,905
Less: Expenses ................................ (426) (438) (451) (465)
------- ------- ------- -------
Estimated net proceeds...................... 3,369 4,027 4,684 5,440
Less: Common stock purchased by ESOP(3)..... (304) (357) (411) (472)
Less: Common stock purchased by RRP(4)...... (152) (179) (205) (236)
------- ------- ------- -------
Estimated net proceeds, adjusted............... $ 2,913 $ 3,491 $ 4,068 $ 4,732
======= ======= ======= =======
For the 12 months ended September 30, 1997
- ------------------------------------------
Consolidated net income..................... $ 476 $ 476 $ 476 $ 476
Pro forma income on net proceeds............ 96 115 134 156
Pro forma ESOP adjustment(3)................ (19) (22) (25) (29)
Pro forma RRP adjustment(4)................. (19) (22) (25) (29)
------- ------- ------- -------
Pro forma net income...................... $ 534 $ 547 $ 560 $ 574
======= ======= ======= =======
Per share net income:
Historical income........................... $ 0.61 $ 0.52 $ 0.45 $ 0.39
Pro forma income on net proceeds............ 0.12 0.13 0.13 0.13
Pro forma ESOP adjustment(3)(5)............. (0.02) (0.02) (0.02) (0.02)
Pro forma RRP adjustment(4)................. (0.02) (0.02) (0.02) (0.02)
------- ------- ------- --------
Pro forma net income per share............ $ 0.69 $ 0.61 $ 0.54 $ 0.48
======= ======= ======= =======
At September 30, 1997
- ---------------------
Stockholders' equity:
Historical.................................. $ 6,039 $ 6,039 $ 6,039 $ 6,039
Estimated net proceeds...................... 3,369 4,027 4,684 5,440
Less: Common Stock acquired by ESOP(3)...... (304) (357) (411) (472)
Less: Common Stock acquired by RRP(4)....... (152) (179) (205) (236)
------- ------- ------- -------
Pro forma stockholders' equity............ $ 8,952 $ 9,530 $10,107 $ 10,771
======= ======= ======= ========
Stockholders' equity per share(6):
Historical.................................. $ 7.48 $ 6.36 $ 5.53 $ 4.81
Estimated net proceeds...................... 4.17 4.24 4.29 4.33
Less: Common Stock acquired by ESOP(3)...... (0.38) (0.38) (0.38) (0.38)
Less: Common Stock acquired by RRP(4)....... (0.19) (0.19) (0.19) (0.19)
-------- -------- ------- --------
Pro forma stockholders' equity per share.. $ 11.08 $ 10.03 $ 9.25 $ 8.57
======= ======= ======= ========
Ratio of offering price to pro forma
net income per share........................ 14.49x 16.39x 18.52x 20.83x
------- ------- ------- -------
Offering price as a percentage of pro forma
stockholders' equity per share.............. 90.25% 99.70% 108.11% 116.69%
------- ------- -------- --------
</TABLE>
(footnotes on following page)
30
<PAGE>
(1) The Company reserves the right to issue up to a total of 590,496 shares at
$10.00 per share, or 15% above the maximum of the Independent Valuation.
Unless otherwise required by the OTS, subscribers will not be given the
right to modify their subscriptions unless the aggregate purchase price of
the Common Stock is increased to exceed $5,904,960 (i.e., 15% above the
maximum of the Independent Valuation.)
(2) Withdrawals from deposit accounts for the purchase of stock have not been
reflected in these adjustments. Management estimates that approximately 20%
of all subscription orders may utilize funds currently on deposit at the
Bank.
(3) Assumes 8% of the shares to be sold in the Offering are purchased by the
ESOP under all circumstances, and that the funds used to purchase such
shares are borrowed from the Stock Company. The approximate amount expected
to be borrowed by the ESOP is reflected in this table as a reduction of
capital. Although repayment of such debt will be secured solely by the
shares purchased by the ESOP, the Bank expects to make discretionary
contributions to the ESOP in an amount at least equal to the principal and
interest payments on the ESOP debt. Pro forma net income has been adjusted
to give effect to such contributions, based upon a fully amortizing debt
with a ten-year term. Since the Stock Company will be providing the ESOP
loan, only principal payments on the ESOP loan are reflected as employee
compensation and benefits expense. The provision of SOP 93-6 have been
applied for shares to be acquired by the ESOP and for purposes of computing
earnings per share. See "Management of the Bank -- Certain Benefit Plans
and Agreements -- Employee Stock Ownership Plan and Trust."
(4) Assumes a number of issued and outstanding shares of Common Stock equal to
4% of the Common Stock to be sold in the Offering will be purchased by a
restricted stock plan. The dollar amount of the Common Stock possibly to be
purchased by the restricted stock plan is based on the price per share in
the Offering and represents unearned compensation and is reflected as a
reduction of capital. Such amount does not reflect possible increases or
decreases in the value of such stock relative to the price per share of the
Offering. As the Bank accrues compensation expenses to reflect the vesting
of such shares pursuant to the restricted stock plan, the charge against
capital will be reduced accordingly. In the event the shares issued under
the restricted stock plan consist of shares of Common Stock newly issued
and the price per share in the Offering, the per share financial condition
and result of operations of the Company would be proportionately reduced
and to the extent the interest of existing stockholders would be diluted by
approximately 4.0%.
(5) The Bank intends to record compensation expense related to the ESOP in
accordance with SOP 93-6. As a result, to the extent the value of the
Common Stock appreciates over time, compensation expense related to the
ESOP will increase. SOP 93-6 also changes the earnings per share
computations for leveraged ESOPs to include as outstanding only shares that
have been committed to be released to participants. For purposes of the
preceding table, it was assumed that the number of ESOP shares were
committed to be released at June 30, 1998 and September 30, 1997.
(6) Stockholders' equity per share data is based upon 807,500, 950,000,
1,092,500 and 1,256,374 shares outstanding representing shares sold in the
offering, and shares purchased by the ESOP and Restricted Stock Program.
31
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
The following Consolidated Statements of Income of the Bank for each of the
years in the three year period ended September 30, 1997 have been audited by
Shatswell, MacLeod & Company, P.C., independent certified public accountants,
whose report thereon appears elsewhere herein. These statements should be read
in conjunction with the consolidated financial statements and notes thereto
included elsewhere in this Prospectus. The Consolidated Statements of Income for
the nine month periods ended June 30, 1998 and 1997 are unaudited, but in the
opinion of management, reflect all adjustments necessary for a fair presentation
of the results for such periods. All such adjustments are of a normal recurring
nature. The results for the nine month period ended June 30, 1998 are not
necessarily indicative of the results of the Bank that may be expected for the
entire year.
<TABLE>
<CAPTION>
FOR THE NINE MONTHS FOR THE YEAR ENDED
ENDED JUNE 30, SEPTEMBER 30,
------------------------------------------------------------------
1998 1997 1997 1996 1995
------------------------------------------------------------------
(UNAUDITED)
Interest income:
<S> <C> <C> <C> <C> <C>
Interest and fees on loans...................... $ 2,874,611 $ 2,182,236 $ 3,026,756 $ 2,362,623 $ 1,793,215
Interest and dividends on securities:
Taxable interest and dividends................ 1,898,421 2,320,407 3,067,872 2,690,400 2,529,291
Other interest.................................. 234,399 63,977 85,681 57,446 124,236
----------- ----------- ----------- ----------- ------------
Total interest and dividend income............ 5,007,431 4,566,620 6,180,309 5,110,469 4,446,742
----------- ----------- ----------- ----------- -----------
Interest expense:
Interest on deposits............................ 1,696,613 1,514,063 2,058,688 1,969,730 1,686,004
Interest on advances from Federal Home Loan Bank 1,054,804 1,140,841 1,526,633 1,048,212 767,982
----------- ----------- ----------- ----------- -----------
Total interest expense........................ 2,751,417 2,654,904 3,585,321 3,017,942 2,453,986
----------- ----------- ----------- ----------- -----------
Net interest and dividend income.............. 2,256,014 1,911,716 2,594,988 2,092,527 1,992,756
Provision (benefit) for loan losses................ 174,500 45,000 60,000 148,500 (2,000)
----------- ----------- ----------- ----------- -----------
Net interest and dividend income after
provision (benefit) for loan losses......... 2,081,514 1,866,716 2,534,988 1,944,027 1,994,756
----------- ----------- ----------- ----------- -----------
Noninterest income:
Service charges on deposit accounts............. 102,884 68,264 93,483 51,512 40,633
Security gain................................... --- --- --- --- 294,531
Other income.................................... 14,124 12,716 22,982 15,131 12,827
----------- ----------- ----------- ----------- -----------
Total noninterest income...................... 117,008 80,980 116,465 66,643 347,991
----------- ----------- ----------- ----------- -----------
Noninterest expense:
Salaries and employee benefits.................. 902,584 666,169 919,443 752,042 628,619
Occupancy expense............................... 116,670 86,942 114,788 111,220 111,341
Equipment expense............................... 104,548 86,887 117,626 114,763 103,035
FDIC insurance.................................. 27,936 38,245 46,558 400,235 94,967
Advertising expense............................. 95,356 30,000 45,000 125,618 111,754
Office supplies expense......................... 72,093 47,023 59,188 49,304 32,320
Data processing expense......................... 111,736 77,615 107,801 78,011 64,042
Professional fees............................... 149,818 92,608 122,084 90,511 80,792
Other expense................................... 284,823 247,060 355,318 168,980 303,435
----------- ----------- ----------- ----------- -----------
Total noninterest expense..................... 1,865,564 1,372,549 1,887,806 1,890,684 1,530,305
----------- ----------- ----------- ----------- -----------
Income before income taxes.................... 332,958 575,147 763,647 119,986 812,442
Income taxes....................................... 124,979 208,234 287,245 25,579 271,097
----------- ----------- ----------- ----------- -----------
Net income.................................... $ 207,979 $ 366,913 $ 476,402 $ 94,407 $ 541,345
=========== =========== =========== =========== ===========
</TABLE>
See accompanying "Notes to Consolidated Financial Statements" presented
elsewhere in this Prospectus.
32
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is intended to assist readers in understanding and
evaluating the consolidated financial condition and results of operations of the
Bank. This review should be read in conjunction with the Bank's financial
statements and accompanying notes included elsewhere in this Prospectus. This
analysis provides an overview of the significant changes that occurred during
the periods presented.
GENERAL
Our operating results are primarily dependent upon net interest and
dividend income. Net interest income is the difference between income earned on
our loan and investment portfolio and our cost of funds which consists of
interest paid on deposits and borrowings. Operating results are also affected by
the provision for loan losses, securities sales activities and service charges
on deposit accounts as well as other fees. Our operating expenses consist of
salaries and employee benefits, occupancy and equipment expenses, professional
fees as well as marketing and other expenses. Results of operations are also
significantly affected by general economic and competitive conditions,
particularly changes in interest rates and government and regulatory policies.
ASSET/LIABILITY MANAGEMENT
We are also subject to interest rate risk to the degree that our
interest-bearing liabilities, primarily deposits with short and medium-term
maturities, mature or reprice at different rates than our interest-earning
assets. We believe it is critical to manage the relationship between interest
rates and the effect on our net portfolio value ("NPV"). This approach
calculates the difference between the present vlaue of expected cash flows from
assets and the present value of expected cash flows from liabilities, as well as
cash flows from off-balance sheet contracts. We manage assets and liabilities
within the context of the marketplace, regulatory limitations and within limits
established by our Board of Directors on the amount of change in NPV which is
acceptable given certain interest rate changes.
The OTS issued a regulation, which uses a net market value methodology to
measure the interest rate risk exposure of savings associations. Under this OTS
regulation, an institution's "normal" level of interest rate risk in the event
of an 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. Savings
associations with over $300 million in assets or less than a 12% risk-based
capital ratio are required to file OTS Schedule CMR. Data from Schedule CMR is
used by the OTS to calculate changes in NPV (and the related "normal" level of
interest rate risk) based upon certain interest rate changes (discussed below).
Associations which do not meet either of the filing requirements are not
required to file OTS Schedule CMR, but may do so voluntarily. As we do not meet
either of these requirements, we are not required to file Schedule CMR, although
we do so voluntarily. Under the regulation, associations which must file are
required to take a deduction (the interest rate risk capital component) from
their total capital available to calculate their risk based capital requirement
if their interest rate exposure is greater than "normal." The amount of that
deduction is one-half of the difference between (a) the institution's actual
calculated exposure to a 200 basis point interest rate increase or decrease
(whichever results in the greater pro forma decrease in NPV) and (b) its
"normal" level of exposure which is 2% of the present value of its assets.
33
<PAGE>
Presented below, as of June 30, 1998, is an analysis performed by the OTS of
our interest rate risk as measured by changes in NPV for instantaneous and
sustained parallel shifts in the yield curve, in 100 basis point increments, up
and down 400 basis points. Our exposure to interest rate risk results from the
concentration of fixed rate mortgage loans in our portfolio.
<TABLE>
<CAPTION>
Net Portfolio Value NPV as % of Present Value of Assets
Change --------------------------- ----------------------------------------------------
In Rates $ Amount $ Change % Change NPV Ratio Change
- -----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
+400 bp $ 6,520 $ (3,143) (33)% 7.79% (274) bp
+300 bp 7,531 (2,132) (22)% 8.78% (176) bp
+200 bp 8,466 (1,197) (12)% 9.63% (91) bp
+100 bp 9,243 (420) (4)% 10.28% (26) bp
0 bp 9,663 --- ---% 10.53% --- bp
-100 bp 9,795 132 1% 10.50% (4) bp
-200 bp 9,489 (174) (2)% 10.03% (50) bp
-300 bp 9,295 (368) (4)% 9.68% (86) bp
-400 bp 9,257 (406) (4)% 9.46% (107) bp
</TABLE>
- ---------------
* Basis points
As with any method of measuring interest rate risk, the methods of analysis
presented above have certain short comings. For example, although certain assets
and liabilities may have similar maturities or periods to repricing, they may
react in different degrees to changes in market interest rates. Also, the
interest rates on certain types of assets and liabilities may fluctuate in
advance of changes in market interest rates, while interest rates on other types
may lag behind changes in market rates. Additionally, certain assets, such as
adjustable-rate loans, have features which restrict changes in interest rates on
a short-term basis and over the life of the asset. Further, in the event of a
change in interest rates, expected rates of prepayments on loans and early
withdrawals from certificates could likely deviate significantly from those
assumed in calculating the table.
34
<PAGE>
AVERAGE BALANCES, INTEREST, YIELDS AND RATES
The following tables set forth certain information relating to the Bank at
and for the nine months ended June 30, 1998 and 1997 and for the years ended
September 30, 1997, 1996 and 1995, and reflects the average yield on assets and
average cost of liabilities for the periods indicated. Such yields and costs are
derived by dividing income or expense by the average balance of assets or
liabilities, respectively, for the periods shown. Average balances are derived
from average monthly balances. The yields include fees which are considered
adjustments to yields.
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED JUNE 30,
AT JUNE 30, --------------------------------------------------------------------
1998 1998 1997
---------------------------------------------------------------------------------------------
WEIGHTED AVERAGE AVERAGE
AVERAGE AVERAGE YIELD/ AVERAGE YIELD/
BALANCE YIELD (1) BALANCE INTEREST COST BALANCE INTEREST COST
------------ -------- --------- -------- ----- ----------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
INTEREST-EARNING ASSETS:
Interest-bearing deposits .......... $ 799 4.77% $ 478 $ 12 3.36% $ 427 $ 13 4.07%
Federal funds sold ................. 2,909 5.88 5,395 222 5.50 1,481 51 4.60
Investment securities(1) ........... 35,663 6.90 36,206 1,898 7.01 44,608 2,321 6.96
Loans(2) ........................... 46,825 8.02 44,483 2,875 8.64 35,050 2,182 8.32
------- ------ ------ ------- ---- ------- -------
Total interest-earning assets .... 86,196 7.45 86,562 5,007 7.73 81,566 4,567 7.49
Noninterest-earning assets ........... 2,584 2,307 ------- 2,038 -------
------- ------- -------
Total assets ..................... $88,780 $88,869 $83,604
======= ======= =======
LIABILITIES AND EQUITY:
INTEREST-BEARING LIABILITIES:
NOW accounts ....................... $ 4,526 1.07% $ 4,191 $ 33 1.05% $ 3,361 $ 25 0.99%
Regular savings accounts ........... 16,352 1.41 15,018 142 1.26 14,520 119 1.10
Money market accounts .............. 1,991 3.13 1,555 36 3.10 660 15 3.04
Time deposits ...................... 36,306 5.48 35,397 1,485 5.61 32,266 1,355 5.61
------- ------- ------- ---- ------- -------
Total interest-bearing deposits .. 59,175 3.94 56,161 1,696 4.04 50,807 1,514 3.98
Advances from FHLB ................. 19,284 5.45 24,344 1,055 5.79 26,137 1,141 5.84
------- ------- ------- ------- -------
Total interest-bearing liabilities 78,459 4.31 80,505 2,751 4.57 76,944 2,655 4.61
------- -------
Demand deposits ...................... 3,801 2,441 1,047
Other liabilities .................... 146 61 184
------- ------- -------
Total liabilities ................ 82,406 83,007 78,175
Equity ............................... 6,374 5,862 5,429
------- ------- -------
Total liabilities and equity ..... $88,780 $88,869 $83,604
======= ======= =======
Net interest income .................. $ 2,256 $1,912
======= ======
Net interest rate spread(3) .......... 3.16% 2.88%
==== ====
Net interest margin(4) ............... 3.14% 3.48% 3.13%
==== ==== ====
Ratio of interest-bearing assets to ..
interest-bearing liabilities....... 109.86% 107.52% 106.01%
====== ====== ======
</TABLE>
- -----------------
(1) Includes investment securities available-for-sale, held-to-maturity and
stock in FHLB-Boston.
(2) Amount is net of deferred loan origination fees, allowance for loan losses
and includes non-accrual loans.
(3) Net interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average cost of
interest-bearing liabilities.
(4) Net interest margin represents net interest income as a percentage of
average interest-earning assets.
35
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------------------
1997 1996 1995
----------------------------- ------------------------------ ------------------------------
AVERAGE AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST ALANCE INTEREST COST BALANCE INTEREST COST
------------ -------- ------- -------- ----------- -------- ------- ------------ --------
ASSETS: (DOLLARS IN THOUSANDS)
INTEREST-EARNING ASSETS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits......... $ 453 $ 16 3.53% $ 237 $ 14 5.91% $ 460 $ 25 5.43%
Federal funds sold................ 1,308 69 5.28 730 43 5.89 1,700 99 5.82
Investment securities(1).......... 44,092 3,068 6.96 40,908 2,690 6.58 38,341 2,529 6.60
Loans(2).......................... 36,324 3,027 8.33 27,849 2,363 8.49 20,568 1,794 8.72
-------- ------- -------- ------- -------- -------
Total interest-earning assets... 82,177 6,180 7.52 69,724 5,110 7.33 61,069 4,447 7.28
------- ------- -------
Noninterest-earning assets........ 2,144 2,078 1,936
-------- -------- --------
Total assets.................... $ 84,321 $ 71,802 $ 63,005
======== ======== ========
LIABILITIES AND EQUITY:
INTEREST-BEARING LIABILITIES:
NOW accounts...................... $ 3,443 35 1.02% $ 2,041 $ 23 1.13% $ 1,707 28 1.64%
Regular savings accounts.......... 14,548 161 1.11 14,743 157 1.06 15,436 230 1.49
Money market accounts............. 739 23 3.11 212 6 2.83 6 3.30
Time deposits..................... 32,634 1,839 5.64 30,763 1,784 5.79 26,660 1,428 5.35
-------- ------- -------- ------- -------- ------
Total interest-bearing deposits. 51,364 2,058 4.02 47,759 1,970 4.11 43,809 1,686 3.84
Advances from FHLB................ 26,044 1,527 5.86 17,648 1,048 5.94 13,445 768 5.71
-------- ------- -------- ------- -------- ------
Total interest-bearing liabilities 77,408 3,585 4.63 65,407 3,018 4.61 57,254 2,454 4.29
------- ------- ------
Demand deposits........................ 1,219 914 586
Other liabilities...................... 199 362 323
-------- -------- --------
Total liabilities............... 78,826 66,683 58,163
Equity................................. 5,495 5,119 4,842
-------- -------- --------
Total liabilities and equity.... $ 84,321 $ 71,802 $ 63,005
======== ======== ========
Net interest income.................... $ 2,595 $ 2,092 $ 1,993
======= ======= =======
Net interest rate spread(3)............ 2.89% 2.72% 2.99%
==== ==== ====
Net interest margin(4)................. 3.16% 3.00% 3.26%
==== ==== ====
Ratio of interest-earning assets to
interest-bearing liabilities...... 106.16% 106.60% 106.66%
====== ====== ======
</TABLE>
- ------------------
(1) Includes investment securities available-for-sale, held-to-maturity and
stock in FHLB-Boston.
(2) Amount is net of deferred loan origination fees, allowance for loan losses
and includes non-accrual loans.
(3) Net interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average cost of
interest-bearing liabilities.
(4) Net interest margin represents net interest income as a percentage of
average interest-earning assets.
36
<PAGE>
The following table analyzes the dollar amount of changes in interest
income and interest expense for major components of interest-earning assets and
interest-bearing liabilities. The table distinguishes between (i) changes
attributable to volume (changes in volume multiplied by the prior period's rate)
(ii) changes attributable to rate (changes in rate multiplied by the prior
period's volume) and (iii) mixed changes (changes in volume multiplied by
changes in rate).
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED YEAR ENDED SEPTEMBER 30, 1997 YEAR ENDED SEPTEMBER 30, 1996
JUNE 30, 1998 COMPARED TO COMPARED TO YEAR ENDED COMPARED TO YEAR ENDED
NINE MONTHS ENDED JUNE 30, 1997 SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
--------------------------------------------------------------------------------------------
INCREASE/(DECREASE) INCREASE/(DECREASE) INCREASE/(DECREASE)
DUE TO DUE TO DUE TO
---------------------- ----------------- -----------------------
VOLUME RATE NET VOLUME RATE NET VOLUME RATE NET
----------- -------- ------ -------- ------ ------- ------------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-bearing deposits............ $ 2 $ (3) $ (1) $ 4 $ (2) $ 2 $ (13) $ 2 $ (11)
Federal funds sold................... 159 12 171 30 (4) 26 (57) 1 (56)
Investment securities................ (440) 18 (422) 216 162 378 169 (8) 161
Loans, net........................... 607 86 693 705 (41) 664 616 (47) 569
------------------------------------------------------------------------------------------
Total interest-earning assets.... 328 113 441 955 115 1070 715 (52) 663
------------------------------------------------------------------------------------------
Interest-bearing liabilities:
NOW accounts......................... 6 2 8 14 (2) 12 8 (13) (5)
Regular savings accounts............. 4 19 23 (2) 6 4 (10) (63) (73)
Money market accounts................ 21 --- 21 16 1 17 --- 6 6
Time deposits........................ 131 (1) 130 98 (43) 55 231 125 356
------------------------------------------------------------------------------------------
Total deposits................... 162 20 182 126 (38) 88 229 55 284
FHLB advances........................ (78) (8) (86) 492 (13) 479 249 31 280
------------------------------------------------------------------------------------------
Total interest-bearing liabilities 84 12 96 618 (51) 567 478 86 564
------------------------------------------------------------------------------------------
Net change in net interest income...... $ 24 $ 101 $ 345 $ 337 $ 166 $ 503 $ 237 $ (138) $ 99
==========================================================================================
</TABLE>
37
<PAGE>
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1998 AND SEPTEMBER 30, 1997.
The Bank's total assets increased by $1.9 million or 2.2% to $88.8 million
at June 30, 1998 from $86.9 million at September 30, 1997. The Bank's asset
growth was comprised of an increase in the net loan portfolio of $5.7 million or
13.7%. Net loans totaled $46.8 million or 52.7% of total assets at June 30, 1998
as compared with $41.2 million at September 30, 1997. The increase in the loan
portfolio was funded by a decrease in investment securities, as $7.2 million of
agency bonds were called, as well as by an increase in deposits. The Bank, as a
part of its growth strategy, has begun to replace investment securities with
residential and commercial loans and FHLB advances with core deposits.
Total deposits increased by $7.5 million or 13.5% to $63.0 million at June
30, 1998 from $55.5 million at September 30, 1997. Total advances from the FHLB
decreased by $5.8 million or 23.1% to $19.3 million at June 30, 1998 from $25.1
million at September 30, 1997. Total equity increased by $335,000 or 5.6% to
$6.4 million at June 30, 1998 from $6.0 million at September 30, 1997 as a
result of net income of $208,000 and an increase in the net unrealized gain on
securities available for sale of $127,000.
COMPARISON OF THE OPERATING RESULTS FOR THE NINE MONTHS ENDED JUNE 30, 1998 AND
1997.
Net Income. The Bank's net income for the nine months ended June 30, 1998
was $208,000 as compared to $367,000 for the nine months ended June 30, 1997.
During the period, the net interest rate spread and net interest margin
increased 28 and 35 basis points, respectively. These improved ratios were
offset during the period by an increase in general and administrative expenses
to support the Bank's growth in retail and commercial lending. The return on
average assets for the nine months ended June 30, 1998 was 0.31% compared to
0.59% for the nine months ended June 30, 1997.
Interest and Dividend Income. Total interest and dividend income increased
by $441,000 or 9.6% to $5.0 million for the nine months ended June 30, 1998 from
$4.6 million for the nine months ended June 30, 1997. This increase was due to
an increase in average interest-earning assets of $5.0 million or 6.1% to $86.6
million at June 30, 1998 from $81.6 million at June 30, 1997. During this
period, the average balance of the loan portfolio increased $9.4 million or
26.8% and the average balance of the investment portfolio decreased $8.4 million
or 18.8%, as investment securities were redeployed to fund loan originations.
Accordingly, interest and dividend income on investment securities decreased by
$422,000 or 18.3% to $1.9 million for the nine months ended June 30, 1998 as
compared to $2.3 million for the nine months ended June 30, 1997. Interest
income on loans increased by $693,000 or 31.5% to $2.9 million for the nine
months ended June 30, 1998 as compared to $2.2 million for the nine months ended
June 30, 1997. The average yield on the loan portfolio increased to 8.64% for
the nine months ended June 30, 1998, as compared to 8.32% for the nine months
ended June 30, 1997, reflecting an increase in the amount of commercial and
commercial real estate loans.
Interest Expense. Total interest expense increased by $96,000 or 3.6% to
$2.8 million for the nine months ended June 30, 1998 from $2.7 million for the
nine months ended June 30, 1997. Average interest-bearing liabilities increased
by $3.6 million or 4.7% to $80.5 million at June 30, 1998 from $76.9 million at
June 30, 1997. During this period, the average balance of interest bearing
deposits increased $5.4 million or 10.6% and the average balance of FHLB
advances decreased $1.8 million or 6.9% as deposit growth replaced FHLB advances
as a source of funds. Deposit balances have increased as a result of offering
free checking products and certificate of deposit products with competitive
rates. Accordingly, interest expense on deposits increased $182,000 or 12.1% to
$1.7 million for the nine months ended June 30, 1998 from $1.5 million for the
nine months ended June 30, 1997. Interest expense on advances from the FHLB
decreased $86,000 or 7.8% to $1.1 million for the nine months ended June 30,
1998 from $1.1 million for the nine months ended June 30, 1997.
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Net Interest and Dividend Income. The Bank's net interest and dividend
income increased by $344,000 or 18.1% to $2.3 million for the nine months ended
June 30, 1998 from $1.9 million for the nine months ended June 30, 1997. The
increase in net interest income and dividend income was due to an increase in
interest-earning assets along with an increase in interest-bearing liabilities.
The average yield on interest-earning assets for the nine months ended June
30, 1998 was 7.73% which was an increase of 24 basis points from 7.49% for the
nine months ended June 30, 1997. The average rate paid on interest-bearing
liabilities for the nine months ended June 30, 1998 was 4.57% which was an
decrease of 4 basis points from 4.61% for the nine months ended June 30, 1997.
As a result of the Bank's strategy to restructure the balance sheet, the net
interest rate spread increased from 2.88% to 3.16% during the period and the net
interest margin improved from 3.13% to 3.48%.
Provision for Loan Losses. The allowance for loan losses is maintained
through the provision for loan losses which is a charge to operations. The
provision reflects management's assessment of potential losses and is based on a
review of the risk characteristics as well as the growth of the loan portfolio.
The Bank considers many factors in determining the level of the provision for
loan losses. Collateral value on a loan by loan basis, trends of loan
delinquencies, risk classification identified in the Bank's regular review of
individual loans, and economic conditions are major factors in establishing the
provision. The provision for loan losses increased by $130,000 or 288.9% to
$175,000 for the nine months ended June 30, 1998 from $45,000 for the nine
months ended June 30, 1997. The allowance for loan losses was $506,000 or 1.07%
of total loans at June 30, 1998 versus $370,000 or 0.94% of total loans at June
30, 1997. The increase in the provision is due to the overall increase in loan
volume and the increased focus on the origination of commercial real estate and
commercial loans. As the Bank continues to expand its small business lending,
additional increases to the provision are likely.
Noninterest Income. Noninterest income increased by $36,000 or 44.4% to
$117,000 for the nine months ended June 30, 1998 as compared to $81,000 for the
nine months ended June 30, 1997. The increase was primarily due to higher fee
income on an increased volume of retail checking and commercial demand deposit
accounts. The Bank anticipates increases to noninterest income as it continues
to expand the volume of its deposit relationships. It is also the Bank's goal to
increase its level of noninterest income by continually considering additional
sources of revenue.
Noninterest Expense. Noninterest expense increased by $493,000 or 35.2% to
$1.9 million for the nine months ended June 30, 1998 as compared to $1.4 million
for the nine months ended June 30, 1997. Salaries and employee benefits, the
largest component of noninterest expense, was $903,000 for the nine months ended
June 30, 1998 as compared to $666,000 for the nine months ended June 30, 1997,
an increase of $237,000 or 35.6%. This increase was primarily associated with an
increase of five full time equivalent employees to staff the commercial lending
and operations departments.
During the period, professional fees increased from $93,000 to $150,000 or
61.3% due to the added cost of outside loan review and certain legal and
consulting costs associated with the Bank's expansion. Occupancy expense
increased by $30,000 or 34.5% to $117,000 for the nine months ended June 30,
1998 as compared to $87,000 for the nine months ended June 30, 1997, with the
increase primarily related to additional space utilized for certain
administrative functions. Other increases were incurred in the areas of
equipment, data processing and advertising services, primarily related to the
expansion of the Bank's product lines and additional services. Annual operating
expenses are also expected to increase in future periods due to future branching
and product expansion and the increased cost of operating as a stock
institution.
Income Taxes. The net provision for income taxes amounted to $125,000 for
the nine months ended June 30, 1998 as compared to $208,000 for the nine months
ended June 30, 1997, resulting in effective tax rates of 37.5% and 36.2% for the
respective periods. The effective tax rate reflects the Bank's utilization of a
securities investment subsidiary to substantially reduce state income taxes.
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COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 1997 AND 1996.
The Bank's total assets increased by $9.0 million or 11.6% to $86.9 million
at September 30, 1997 from $77.9 million at September 30, 1996. The Bank's asset
growth reflected commencement of the Bank's emphasis on commercial and
commercial real estate lending and increased origination of commercial loans
during 1997. Net loans were $41.2 million or 47.4% of total assets at September
30, 1997 as compared to $33.0 million or 42.4% of total assets at September 30,
1996, representing an increase of $8.2 million or 24.8%. The increase in loans
was funded through FHLB borrowings and an increase in deposits. Investment
securities held by the Bank decreased by $330,000 or 0.8% to $40.8 million in
1997 from $41.1 million in 1996. Total deposits increased by $6.1 million or
12.3% to $55.5 million at September 30, 1997 from $49.4 million at September 30,
1996. Deposits increased due to the increased profile of the Bank resulting from
marketing efforts and the development of new deposit products which resulted in
new deposit relationships. Total advances from the FHLB of Boston were $25.1
million at September 30, 1997 compared $22.7 million at September 30, 1996.
Total equity increased by $592,000 or 11.0% to $6.0 million at September 30,
1997 from $5.4 million at September 30, 1996 as a result of net income of
$476,000 and an increase in the net unrealized gain on securities available for
sale of $116,000.
COMPARISON OF THE OPERATING RESULTS FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND
1996.
Net Income. The Bank's net income for the year ended September 30, 1997 was
$476,000 as compared to $94,000 for the year ended September 30, 1996. This
$382,000 or 406.4% increase in net income during the period was the result of an
increase of $591,000 in net interest and dividend income after provision for
loan losses, partially offset by an increase of $261,000 in income taxes. The
increase in net interest income was due to the expansion of the Bank's lending
activities and investment in higher yielding callable agency securities. During
the same period, the Bank's salaries and employee benefits increased due to the
higher compensation costs associated with the addition of employees to meet the
staffing needs of the commercial lending department and the establishment of an
operations department to handle increased customer service. The return on
average assets for the year ended September 30, 1997 was 0.56% compared to 0.13%
for the year ended September 30, 1996.
Interest and Dividend Income. Total interest and dividend income increased
by $1.1 million or 21.6% to $6.2 million for the year ended September 30, 1997
from $5.1 million for the year ended September 30, 1996. The increase in
interest and dividend income was a result of a higher level of loan originations
and increased investment in higher yielding callable agency securities, offset
by the decrease in the average rate of one- to four-family loans.
Interest Expense. Total interest expense increased by $567,000 or 18.9% to
$3.6 million for the year ended September 30, 1997 from $3.0 million for the
year ended September 30, 1996. Interest expense on deposits increased $89,000,
or 4.5%, from $2.0 million at September 30, 1996 to $2.1 million at September
30, 1997. Interest expense on advances from the FHLB increased $478,000, or
47.8%, from $1.0 million at September 30, 1996 to $1.5 million at September 30,
1997. Such advances were used in order to finance the acquisition of higher
yielding callable agency securities. Interest expense increased due to an
increase in overall deposit balances as well as the increase in FHLB advances.
Net Interest and Dividend Income. Net interest and dividend income for the
year ended September 30, 1997 was $2.6 million as compared to $2.1 million for
the year ended September 30, 1996. The $502,000 or 23.9% increase can be
attributed to an increased volume of loan originations and investment in higher
yielding callable agency securities and higher yielding commercial loans, offset
by additional borrowing expenses. The average yield on interest-earning assets
increased 19 basis points to 7.52% for the year ended September 30, 1997 from
7.33% for the year ended September 30, 1996, while the average cost of
interest-bearing liabilities increased by 2 basis points to 4.63% for the year
ended September 30, 1997 from 4.61% for the year ended September 30, 1996.
During this period, the Bank began originating commercial loans. As a result,
the net
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interest rate spread increased to 2.89% for the year ended September 30, 1997
from 2.72% for the year ended September 30, 1996 and the net interest margin
increased to 3.16% from 3.00% for the same periods.
Provision for Loan Losses. The provision for loan losses was $60,000 for
the year ended September 30, 1997 as compared to $148,000 for the year ended
September 30, 1996. The provision in 1996 was in response to the Bank's
commencement of small business lending. At September 30, 1997, the balance of
the allowance for loan losses was $377,000 or 0.91% of total loans. During the
year ended September 30, 1997, $8,000 was charged against the allowance for loan
losses. At September 30, 1996, the balance of the allowance for loan losses was
$325,000 or 0.97% of total loans. During the year ended September 30, 1996,
$29,000 was charged against the allowance for loan losses.
Noninterest Income. Noninterest income was $116,000 for the year ended
September 30, 1997 compared to $67,000 for the year ended September 30, 1996.
The $49,000 or 73.1% increase was primarily the result of a $42,000 increase in
service charges on deposit accounts and an $8,000 increase in other income.
These increases were due to the increase in transactional accounts.
Noninterest Expense. Noninterest expense for the year ended September 30,
1997 remained relatively stable when compared to the year ended September 30,
1996. While the amounts of noninterest expense were comparable, the 1996 period
includes a one-time charge in FDIC Insurance to recapitalize the SAIF deposit
insurance fund. During 1997, the decrease in deposit insurance expense was
offset by an increase of $167,000 in salaries and employee benefits resulting
from the addition of five employees in the commercial loan department and an
increase of $183,000 in other expenses. Annual operating expenses are also
expected to increase in future periods due to future branching and product
expansion and the increased cost of operating as a stock institution.
Income Taxes. Income tax expense was $287,000 for the year ended September
30, 1997 as compared to $26,000 for the year ended September 31, 1996, resulting
in an effective tax rate at September 30, 1997 of 37.6% compared to 21.3% for
the prior period.
IMPACT OF NEW ACCOUNTING STANDARDS
Accounting for Long Lived Assets. In March 1995, the FASB issued SFAS No.
121, "Accounting for Impairment of Long-Lived Assets and for Long Lived Assets
to be Disposed of" ("SFAS No. 121"). This Statement established accounting
standards for the impairment of long-lived assets, certain identifiable
intangibles and goodwill related to those assets to be held and used and for
long-lived assets and certain identifiable intangibles to be disposed of. The
Statement required that long-lived assets and certain identifiable intangibles
to be held and used by an institution be reviewed for impairment whenever events
change and circumstances indicate the carrying amount of the asset may not be
recoverable. This Statement became effective for the Bank on October 1, 1996.
Adoption of this Statement did not have a material impact on the earnings or
financial position of the Bank.
Accounting for Stock-Based Compensation. In November 1995, the FASB issued
SFAS No. 123, "Accounting for Stock Based Compensation" ("SFAS No. 123"). This
statement established financial accounting standards for stock-based employee
compensation plans. SFAS No. 123 permitted the Bank to choose either a new fair
value based method or the current Accounting Principles Board ("APB") Opinion 25
intrinsic value based method of accounting for its stock-based compensation
arrangements. SFAS No. 123 required pro forma disclosures of net earnings and
earnings per share computed as if the fair value based method had been applied
in financial statements of companies that continue to follow current practice in
accounting for such arrangements under APB Opinion 25. SFAS No. 123 applied to
all stock-based employee compensation plans in which an employer grants shares
of its stock or other equity instruments to employees except for employee stock
ownership plans. SFAS No. 123 also applied to plans in which the employer incurs
liabilities to employees in amounts based on the price of the employer's stock,
(e.g., Stock Option Plan, stock purchase plans, restricted
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stock plans and stock appreciation rights). The statement also specified the
accounting for transactions in which a company issues stock options or other
equity instruments for services provided by nonemployees or to acquire goods or
services from outside suppliers or vendors. The recognition provisions of SFAS
No. 123 for companies choosing to adopt the new fair value based method of
accounting for stock-based compensation arrangements will apply to all
transactions entered into in fiscal years that begin after December 15, 1995.
Any effect that this statement will have on the Stock Company will be applicable
upon the consummation of the Reorganization. The Stock Company intends to follow
the APB Opinion 25 method upon adoption, but will provide pro forma disclosure
as if the fair value method had been applied.
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. In June 1996 the FASB issued Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities "("SFAS No. 125"). This
Statement provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities based on
consistent application of a financial-components approach that focuses on
control. It distinguishes transfers of financial assets that are sales from
transfers that are secured borrowings. Under the financial-components approach,
after a transfer of financial assets, an entity recognizes all financial and
servicing assets it controls and liabilities it has incurred and does not
recognize financial assets it no longer controls and liabilities that have been
extinguished. The financial-components approach focuses on the assets and
liabilities that exist after the transfer. Many of these assets and liabilities
are components of financial assets that exited prior to the transfer. If a
transfer does not meet the criteria for a sale, the transfer is accounted for as
a secured borrowing with a pledge of collateral. The Statement is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after December 31, 1996, applied prospectively. Earlier or retroactive
application of this Statement is not permitted. The adoption of the non-deferred
provisions of this Statement as of January 1, 1997 did not have a material
impact on the Bank's consolidated financial statements. The Bank believes that
the impact of the adoption as of January 1, 1998 of the deferred provisions of
this Statement will not be material to its future consolidated financial
statements.
Reporting Comprehensive Income. In June 1997, the FASB issued SFAS No. 130,
"Reporting Comprehensive Income," ("SFAS No. 130"). This statement establishes
standards for reporting and display of comprehensive income and its components
(revenues, expenses, gains and losses) in a full set of general- purpose
financial statements. This statement requires that all items that are required
to be recognized under accounting standards as components of comprehensive
income be reported in a financial statement that is displayed with the same
prominence as other financial statements. This statement does not require a
specific format for that financial statement but requires that an enterprise
display an amount representing total comprehensive income for the period in that
financial statement. SFAS No. 130 requires that an enterprise (a) classify items
of other comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of a
statement of financial position. It does not address issues of recognition or
measurement for comprehensive income and its components. SFAS No. 130 is
effective for fiscal years beginning after December 31, 1997. Reclassification
of financial statements for earlier periods provided for comparative purposes is
required. The Bank does not expect that upon adoption, this statement will have
a material effect on its consolidated financial statements.
Disclosures about Segments of an Enterprise and Related Information. In
June 1997 the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," ("SFAS No. 131"). This Statement
establishes standards for the way public business enterprises report information
about operating segments in financial statements. SFAS No. 131 is effective for
financial statements for periods beginning after December 15, 1997. The Bank
does not expect that under this statement it will be required to report
additional information because its present organization consists of only one
operating segment as defined by the Statement.
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Other New Accounting Standards. SFAS No. 128 "Earnings per Share" ("SFAS
No. 128") is effective for periods ending after December 15, 1997. SFAS No. 129,
"Disclosure of Information about Capital Structure " ("SFAS No. 129") is
effective for periods ending after December 15, 1997. The Stock Company expects
that the adoption of these standards will not have a material impact on the
Stock Company's consolidated financial statements.
Disclosures about Pensions and Other Postretirement Benefits. In February
1998, the FASB issued SFAS No. 132, "Employers' Disclousres about Pensions and
Other Postretirement Benefits- an amendment of FASB Statements No. 87, 88 and
106" (SFAS No. 132) which revises employers' disclosures about pension and other
postretirement benefit plans, though it does not change the measurement or
recognition of those plans. The Bank will adopt SFAS No. 132 for the fiscal year
beginning on October 1, 1998. Adoption of this Statement will not have a
material impact on the Stock Company's or the Bank's financial position or
results of operations.
Accounting for Derivative Instruments and Hedging Activities. In June 1998
the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." ("SFAS No.133") This statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, (collectively referred to as derivatives.) It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. This statement is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. It is not expected that the adoption of
this statement will have a material impact on the Stock Company's financial
statements.
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of funds are deposits, proceeds from the principal and
interest payments on loans, debt and equity securities, and to a lesser extent,
borrowings and proceeds from the sale of fixed rate mortgage loans to the
secondary market. While maturities and scheduled amortization of loans and
securities are predictable sources of funds, deposit outflows, mortgage
prepayments, mortgage loan sales, and borrowings are greatly influenced by
general interest rates, economic conditions and competition.
Our primary investing activities are the origination of various types of
loans and the purchase of debt and equity securities. During the nine months
ended June 30, 1998 and the years ended September 30, 1997, 1996 and 1995, our
loan originations totaled $18.9 million, $14.4 million, $20.3 million and $4.7
million, respectively. These activities are funded primarily by deposit growth,
principal repayment of loans, and interest and dividend income from debt and
equity securities. Loan sales provide an additional source of liquidity,
totaling $6.0 million, $2.8 million, $3.4 million and $599,000 for the nine
months ended June 30, 1998 and the years ended September 30, 1997, 1996 and
1995, respectively.
We experienced a net increase in total deposits of $7.5 million, $6.1
million, $1.2 million, and $7.1 million for the nine months ended June 30, 1998
and the years ended September 30, 1997, 1996 and 1995, respectively. Deposit
flows are affected by the level of interest rates, the interest rates and
products offered by local competitors, and other factors.
We closely monitor our liquidity position on a daily basis. Excess
short-term liquidity is usually invested in overnight federal funds sold. In the
event we require funds beyond our ability to generate them internally,
additional sources of funds are available through the use of FHLB advances. At
June 30, 1998, we had $19.3 million outstanding in FHLB advances.
Loan commitments totaled $1.6 million at June 30, 1998, comprised of
$758,000 at variable rates and $810,000 at fixed rates. We anticipate that we
will have sufficient funds available to meet current loan commitments.
Certificates of deposit which are scheduled to mature in one year or less from
June 30, 1998,
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totaled $27.2 million. Based upon this experience and our current pricing
strategy, we believe that a significant portion of such deposits will remain
with the Bank.
In 1998, we plan to continue expanding our retail banking franchise by
opening a branch location. The acquisition and renovation of this office is
expected to cost approximately $600,000. Management anticipates it will have
sufficient funds available to meet its planned capital expenditures throughout
1998.
At June 30, 1998, we exceeded all of our regulatory capital requirements
with a tangible capital level of $5.9 million, or 6.63% of adjusted assets,
which is above the required level of $1.3 million, or 1.5% and total risk-based
capital of $6.3 million, or 17.89% of adjusted assets, which is above the
required level of $2.8 million, or 8.00%. See "Regulatory Capital Compliance"
and "Regulation - Regulatory Capital Requirements."
Our most liquid assets are cash, federal funds sold and interest-bearing
demand accounts. The level of these assets are dependent on our operating,
financing, lending and investing activities during any given period. At June 30,
1998, cash, federal funds sold and interest-bearing demand accounts totaled $4.5
million, or 5.1% of total assets.
YEAR 2000
The "Year 2000 Problem" centers on the inability of computer systems to
recognize the Year 2000. Many existing computer programs and systems were
originally programmed with six digit dates that provided only two digits to
identify the calendar year in the date field, without considering the upcoming
change in the century. With the impending millennium, these programs and
computers will recognize "00" as the year 1900 rather than the year 2000. Like
most financial service providers, the Bank and its operations may be
significantly affected by the Year 2000 Problem due to the nature of financial
information. Software, hardware, and equipment both within and outside the
Bank's direct control and with whom the Bank electronically or operationally
interfaces (e.g. third party vendors providing data processing, information
system management, maintenance of computer systems, and credit bureau
information) are likely to be affected. Furthermore, if computer systems are not
adequately changed to identify the Year 2000, many computer applications could
fail or create erroneous results. As a result, many calculations which rely on
the date field information, such as interest, payment or due dates and other
operating functions, will generate results which could be significantly
misstated, and the Bank could experience a temporary inability to process
transactions, send invoices or engage in similar normal business activities.
In addition, noninformation technology systems, such as equipment like
telephones, copiers and elevators may also contain embedded technology which
controls its operation and which may be effected by the Year 2000 Problem. When
the Year 2000 arrives, systems, including some of those with embedded chips, may
not work properly because of the way they store date information. They may not
be able to deal with the date 01/01/00, and may not be able to deal with
operational 'cycles' such as 'do X every 100 days'. Thus, even noninformation
technology systems may affect the normal operations of the Bank upon the arrival
of the Year 2000.
Under certain circumstances, failure to adequately address the Year 2000
Problem could adversely affect the viability of the Bank's suppliers and
creditors and the creditworthiness of its borrowers. Thus, if not adequately
addressed, the Year 2000 Problem could result in a significant adverse impact on
the Bank's products, services and competitive condition.
In order to address the Year 2000 issue and to minimize its potential
adverse impact, management has begun a process to identify areas that will be
affected by the Year 2000 Problem, assess its potential impact on the operations
of the Bank, monitor the progress of third party software vendors in addressing
the matter, test changes provided by these vendors, and develop contingency
plans for any critical systems which are not effectively reprogrammed. A
committee of senior officers of the Bank has been formed to evaluate the effects
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that the upcoming Year 2000 could have on computer programs utilized by the
Bank. The Bank's plan is divided into the five phases: (1) awareness - define
the problem, obtain executive level support and develop an overall strategy.
This phase was completed in September, 1997; (2) assessment - identify all
systems and the criticality of the systems. This phase was completed in
September, 1997; (3) renovation - program enhancements, hardware and software
upgrades, system replacements, and vendor certifications. This phase is in
process and with a scheduled completion date of December, 1998; (4) validation -
test and verify system changes and coordinate with outside parties. This phase
is in process with a scheduled completion date of December, 1998; and (5)
implementation - components certified as year 2000 compliant and moved to
production. This phase is in process with a scheduled completion date of
December, 1998.
Third party vendors provide the majority of software used by the Bank. All
of the Bank's vendors are aware of the Year 2000 situation, and each has assured
the Bank that it is currently working to have its software compliant by
December, 1998, and testing for the critical applications began in April, 1998.
This will enable the Bank to devote substantial time to the testing of the
upgraded systems prior to the arrival of the millennium. The Bank utilizes the
service of a third party vendor to provide the software which is used to process
and maintain most mortgage and deposit customer-related accounts. This vendor
has provided the Company with a software version which has been certified to be
Year 2000 compliant. Testing by the Bank is underway to verify compliance for
its application and usage. The Bank presently believes that with modifications
to existing software and conversions to new software, the Year 2000 Problem will
be mitigated without causing a material adverse impact on the operations of the
Bank. However, if such modifications and conversions are not made, or are not
completed timely, the Year 2000 Problem could have an impact on the operations
of the Bank.
The Bank's total Year 2000 project cost and estimates to complete include
the estimated costs and time associated with the impact of a third party's Year
2000 Problem, and are based on presently available information. However, there
can be no guarantee that the systems of other companies on which the Bank's
systems rely will be timely converted, or that a failure to convert by another
company or a conversion that is incompatible with the Bank's systems, would not
have material adverse effect on the Bank. The Bank believes it has no exposure
to contingencies related to the Year 2000 Problem for the products it has sold.
In addition, monitoring and managing the year 2000 project will result in
additional direct and indirect costs to the Bank and the Bank. Direct costs
include potential charges by third party software vendors for product
enhancements, costs involved in testing software products for year 2000
compliance, and any resulting costs for developing and implementing contingency
plans for critical software products which are not enhanced. Indirect costs will
principally consist of the time devoted by existing employees in monitoring
software vendor progress, testing enhanced software products and implementing
any necessary contingency plans. The Bank does not believe that such costs will
have a material effect on results of operations. Both direct and indirect costs
of addressing the Year 2000 Problem will be charged to earnings as incurred.
Such costs have not been material to date.
The costs of the project and the date on which the Bank plans to complete
the Year 2000 modifications are based on management's best estimates, which were
derived utilizing numerous assumptions of future events including the continued
availability of certain 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 materially from those plans. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, and similar uncertainties. The
Bank has not developed a contingency plan which would be implemented in the
unlikely event that it is not Year 2000 compliant. The Bank will continue to
closely monitor the progress of its Year 2000 compliance plan and will determine
by December 31, 1998 if the need for a contingency plan exists.
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IMPACT OF INFLATION AND CHANGING PRICES
The consolidated financial statements and accompanying footnotes have been
prepared in accordance with GAAP, which require the measurement of financial
position and operating results in terms of historical dollars without
consideration for changes in the relative purchasing power of money over time
due to inflation. The assets and liabilities of the Bank are primarily monetary
in nature and changes in market interest rates have a greater impact on the
Bank's performance than do the effects of inflation.
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BUSINESS
THE STOCK COMPANY
Prior to the Reorganization, the Stock Company will not transact any
material business. Following the Reorganization, in addition to directing,
planning and coordinating the business activities of the Bank, the Stock Company
will invest the proceeds of the Offering which are retained by it. See "Use of
Proceeds." Upon consummation of the Reorganization, the Stock Company will have
no significant assets other than the shares of the Bank's capital stock acquired
in the Reorganization, the loan receivable held with respect to its loan to the
ESOP and that portion of the net proceeds of the Offering retained by it, and
will have no significant liabilities. Cash flow to the Stock Company will be
dependent upon investment earnings from the net proceeds retained by it,
payments on the ESOP loan and any dividends received from the Bank. Initially,
the Stock Company will neither own nor lease any property, but will instead use
the premises, equipment and furniture of the Bank. At the present time, the
Stock Company does not intend to employ any persons other than its officers (who
are not anticipated to be separately compensated by the Stock Company), but will
utilize the support staff of the Bank from time to time. Additional employees
will be hired as appropriate to the extent the Stock Company expands its
business in the future. In the future, the Stock Company will consider using
some of the proceeds of the Offering retained by it to expand its operations in
its existing primary market and other nearby areas by acquiring other financial
institutions which could be merged with the Bank or operated as separate
subsidiaries. Presently, there are no agreements or understandings for expansion
of the Stock Company's operations.
THE BANK
The business of the Bank primarily consists of attracting savings deposits
from the general public and investing such deposits in mortgage loans secured by
single-family residential real estate, commercial real estate, commercial assets
and investment securities, including U.S. Government and Federal Agency
securities, asset- backed securities, FNMA, GNMA and FHLMC mortgaged-backed
securities and interest-earning deposits. The Bank's commercial and commercial
real estate borrowers are comprised of diverse small businesses, without a
particular concentration in any one industry. The Bank also makes consumer
loans, including home equity loans, automobile, loans on deposit accounts and
other consumer loans. The Bank offers both fixed-rate and adjustable-rate loans
and emphasizes the origination of residential real estate mortgage loans and
commercial loans with adjustable interest rates.
The Bank's principal sources of income are interest, dividends and fees on
loans and investments, and the Bank's principal expenses are interest paid on
deposit accounts, borrowings, and general operating expenses.
MARKET AREA
The Bank's office is located in Revere, Suffolk County, Massachusetts. The
City of Revere, containing approximately 43,000 residents, is located
approximately five miles from downtown Boston in the northern suburbs of Boston,
bounded by the towns of Chelsea, Everett, Malden and Lynn. The City of Revere is
easily accessible from downtown Boston via Route 1, Route 1A, Route 16 and other
state roads connecting the communities within the Logan Airport corridor
northeast of Boston. As an established metropolitan suburb, Revere consists
mostly of developed single- and multi-family properties within a network of
well-maintained neighborhoods. The Bank considers its primary market area for
deposit and loan generation to be the communities of Revere, Chelsea, Everett,
Malden and Lynn. The economic base of the Bank's market area is diversified and
includes a multitude of small businesses including air freight forwarding and
other businesses servicing Logan Airport. The majority of the Bank's lending and
deposit activity has historically been in Revere, although the commercial loan
department has been largely responsible for expanded business throughout Suffolk
County.
47
<PAGE>
Over the past few years, the regional economy in the Bank's primary market
area, based on economic indicators such as unemployment rates, residential and
commercial real estate values and vacancy rates and household income trends, has
strengthened considerably. Small business, technology and service firms, higher
education and tourism form the backbone of the economy of the greater Boston
metropolitan area.
BUSINESS STRATEGY
Historically, the primary focus of the Bank has been to provide financing
for single family housing in its market area of Revere, Massachusetts and
surrounding communities. Indeed, at September 30, 1995, over 96% of the Bank's
loan portfolio consisted of one- to four-family residential loans, and the Bank
had no commercial real estate or commercial loans in its portfolio. Beginning in
1996, the Bank began to make significant investments in the human and
technological resources necessary to create a platform for the future growth and
profitability of the Bank. This strategy was designed to enhance the Bank's
franchise value and strengthen earnings by diversifying its product lines,
thereby increasing the size of the Bank's loan portfolio as well as its
composition. Although the Bank believes the adoption of this strategy will
increase profitability over the longer term, increases in operating expenses
associated with this strategy will continue to put pressure on earnings in the
short term.
o Retail Banking and Customer Service. The Bank continues to focus on
expanding its residential lending and retail banking franchise and
increasing the number of households served within the Bank's market area.
For nearly 100 years, the Bank has served the needs of Revere and its
surrounding communities and remains the only bank headquartered in Revere.
The Bank's Board of Directors and its management are active in many
charitable organizations throughout Revere and the Bank's employees have
taken pride in providing hands on, personal service. The Bank views its
reputation as a service oriented institution which meets the needs of the
local community as one of its greatest assets. Given the increasing
consolidation in the financial services sector, the Bank believes that
expanding its market share for traditional community banking products will
enhance this reputation and provide inroads to new segments of the banking
markets.
o Small Business Banking. The Bank views its entry into the small business
banking market as a natural outgrowth of its traditional community banking
services. Since 1996, the Bank has made a major commitment to small
business commercial lending (involving commercial and industrial loans and
commercial real estate loans) as a means to increase the yield on its loan
portfolio and attract lower cost transaction deposit accounts. The Bank has
worked to develop a niche of making commercial loans to the small and
medium sized companies in a wide variety of industries located in Revere
and elsewhere in the greater Boston area. In particular, the Bank has
expanded its lending to the business community surrounding the Logan
International Airport which comprises a growing sector of the Revere and
Chelsea markets. The Bank offers these businesses a variety of traditional
loans products and commercial services administered by the Bank's
commercial loan department which are designed to give business owners
borrowing opportunities for modernization, inventory, equipment,
construction, consolidation, real estate, working capital, vehicle
purchases and the refinancing of existing corporate debt. In addition, in
order to better serve the unique financing needs of its commercial
customers, the Bank also offers specialized products such as direct courier
pick up for deposits. The Bank has also recently applied to become an
approved lender of the Small Business Administration to better serve the
needs of local businesses. The Bank has staffed its commercial lending
department with the addition of a senior commercial loan officer with
considerable commercial lending expertise in the Boston area and has
developed a staff to support the commercial loan department. The Bank has
recently added a second commercial lending officer to the small business
banking area and will add additional qualified employees as market
conditions warrant.
o Branch Expansion. The Bank believes that a branch network is crucial to
increasing its market share in the traditional community banking and small
business banking arenas and that its lending and deposit
48
<PAGE>
gathering activities are presently limited by the fact that it operates
from only one location. The Bank is currently negotiating for the purchase
of its first branch facility which the Bank believes is strategically
located in a stable and growing small business market. This branch location
will emphasize convenience for the Bank's small business clients and be
designed to augment the Bank's small business lending activities. In the
future, the Bank expects to fund the construction and/or acquisition of one
or more additional branch locations either de novo, or by purchasing an
existing deposit base and/or location and to expand and renovate its main
office to allow the Bank's administrative functions to be performed in a
single facility. Expansion will facilitate greater services and increased
loan originations within the Bank's existing underwriting standards.
o Expanded Delivery Systems. The increased use of alternative delivery
channels has simplified and reduced the costs of financial transactions for
consumers, businesses and financial institutions. In addition to conducting
financial transactions at branch offices, customers are increasingly using
ATMs, online banking and online bill payment and electronic fund transfers
to communicate with financial services providers. The Bank has responded to
these market trends in several ways. First, since May 1997, the Bank has
offered its 24 hour telebanking product which provides its customers with
around the clock access to their accounts through the use of a touch tone
telephone. The Bank also has located an ATM at Logan Airport and is
currently in negotiations to open two additional ATMs in Revere and one ATM
in downtown Boston in the fall of 1998. Finally, the Bank plans to
introduce its home banking product which will give its customers access to
their accounts through the use of their personal computers in the first
quarter of 1999.
o Expansion of Product Lines. Regulatory changes and cross-sector
acquisitions have diminished the distinctions among various types of
financial institutions such as banks, insurance companies and securities
brokerage firms. Financial institutions today have the opportunity to
leverage their client base, expand their market share and compete for an
increased share of customers' financial services business by offering a
diverse range of products and services that formerly may have been offered
only by one particular type of financial institution. Recognizing this
trend, the Bank intends to broaden its product line in order to better
serve its customers, expand customer relations and diversify its income
stream. In the near term, the Bank is contemplating offering various
uninsured investment products, including fixed-rate and variable annuities
and mutual funds, through relationships with third party broker-dealers
and/or money managers that would service both retail and small business
customers needs for investment products. The Bank also plans to investigate
opportunities presented by affiliations with insurance agencies over the
longer term. The Bank's strategy is to become a full service provider of
financial services, enhancing the Bank's ability to attract and retain both
retail and commercial customers.
LENDING ACTIVITIES
General. The Bank originates loans through its office located in Revere,
Massachusetts. The principal lending activities of the Bank are the origination
of conventional mortgage loans for the purpose of purchasing or refinancing
owner-occupied, one- to four-family residential properties and the origination
of commercial loans secured by commercial real estate and commercial assets. To
a lesser extent, the Bank also originates consumer loans, including home equity
and loans on deposit accounts, construction loans and multifamily residential
real estate loans.
The Bank's ten largest borrowing relationship, outstanding as of June 30,
1998, ranged from $380,000 to $603,000.
49
<PAGE>
The following table sets forth the composition of the Bank's mortgage
and other loan portfolios in dollar amounts and percentages at the dates
indicated.
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT JUNE 30, ------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------------------ ---------------- ---------------- ---------------- --------------- ---------------
PERCENT PERCENT PERCENT PERCENT PERCENT PERCENT
AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL
------ -------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage loans:
One- to four-family .......$34,495 72.79% $ 32,928 79.11% $ 30,046 89.84% $ 20,630 95.91%$ 20,349 97.85%$ 21,825 98.02%
Commercial real estate .... 4,157 8.77 2,577 6.19 460 1.38 -- -- -- -- -- --
Construction and land ..... 1,518 3.2 815 1.96 1,075 3.21 174 0.81 80 0.38 88 0.4
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total mortgage loans .... 40,170 84.76 36,320 87.26 31,581 94.43 20,804 96.72 20,429 98.23 21,913 98.42
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Commercial loans ............. 2,789 5.89 1,684 4.04 49 0.15 -- -- -- -- -- --
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Consumer loans:
Home equity lines ......... 3,301 6.96 2,761 6.63 1,303 3.9 364 1.69 30 0.14 -- --
Secured by deposit accounts 621 1.31 374 0.9 370 1.11 314 1.46 266 1.28 242 1.09
Auto loans ................ 425 0.90 413 0.99 121 0.36 -- -- -- -- -- --
Other consumer loans ...... 84 0.18 73 0.18 19 0.05 27 0.13 72 0.35 109 0.49
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total consumer loans .... 4,431 9.35 3,621 8.7 1,813 5.42 705 3.28 368 1.77 351 1.58
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total loans receivable .. 47,390 100.00% 41,625 100.00% 33,443 100.00% 21,509 100.00% 20,797 100.00% 22,264 100.00%
====== ====== ====== ====== ====== ======
LESS:
Allowance for loan losses . (506) (377) (325) (206) (187) (67)
Deferred loan origination
fees, net ............... (59) (73) (72) (30) (31) (39)
-------- -------- -------- ------- -------
Loans, net ..............$46,825 $ 41,175 $ 33,046 $ 21,273 $20,579 $22,158
======== ======== ======== ======== ======= =======
</TABLE>
50
<PAGE>
One- to Four-Family Residential Real Estate Lending. The primary emphasis
of the Bank's lending activity is the origination of conventional mortgage loans
on one- to four-family residential dwellings located in the Bank's primary
market area. As of June 30, 1998, loans on one- to four-family residential
properties accounted for 72.8% of the Bank's total loan portfolio.
The Bank's mortgage loan originations are for terms of up to 30 years,
amortized on a monthly basis with interest and principal due each month.
Residential real estate loans often remain outstanding for significantly shorter
periods than their contractual terms as borrowers may refinance or prepay loans
at their option, without penalty. Conventional residential mortgage loans
granted by the Bank customarily contain "due-on-sale" clauses which permit the
Bank to accelerate the indebtedness of the loan upon transfer of ownership of
the mortgaged property.
The Bank makes conventional mortgage loans and uses standard Federal
National Mortgage Association ("FNMA") documents, to allow for the sale of
qualifying loans in the secondary mortgage market. The Bank lends up to a
maximum loan-to-value ratio on mortgage loans secured by owner-occupied
properties of 100% of the lesser of the appraised value or purchase price of the
property, with the condition that private mortgage insurance is required on
loans with a loan-to-value ratio in excess of 80%. To a lesser extent, the Bank
originates non-conforming loans which are tailored for its local community, but
which may not satisfy the various requirements imposed by FNMA. On a limited
basis the Bank offers special products, including mortgage loans with a 100%
loan-to-value ratio without private mortgage insurance to customers with
co-signers or who have excellent credit and income, for which the Bank receives
a rate premium over conventional loans.
The Bank offers adjustable-rate mortgage loans with terms of up to 30
years. Adjustable-rate loans offered by the Bank include loans which reprice
every one, three, five or seven years and provide for an interest rate which is
based on the interest rate paid on U.S. Treasury securities of a corresponding
term, plus a margin of up to 2.75%. The Bank currently offers adjustable-rate
loans with initial rates below those which would prevail under the foregoing
computations, based upon the Bank's determination of market factors and
competitive rates for adjustable-rate loans in its market area. For
adjustable-rate loans, borrowers are qualified at the initial rate.
The Bank's adjustable-rate mortgages include limits on increases or
decreases of the interest rate of the loan. The interest rate may increase or
decrease by 2.0% per year and 6.0% over the life of the loan for all of the
Bank's adjustable rate mortgages. The retention of adjustable-rate mortgage
loans in the Bank's loan portfolio helps reduce the Bank's exposure to
fluctuations in interest rates. However, there are unquantifiable credit risks
resulting from potential increased costs to the borrower as a result of the
repricing of adjustable-rate mortgage loans. During periods of rising interest
rates, the risk of default on adjustable-rate mortgage loans may increase due to
the upward adjustment of interest cost to the borrower.
During the year ended September 30, 1997, the Bank originated $1.9 million
in adjustable-rate mortgage loans and $5.5 million in fixed-rate mortgage loans.
Of the fixed-rate loans originated, the Bank sold $2.1 million of fixed-rate
loans and retained $3.4 million of fixed-rate loans based on the rate of the
loans. Approximately 42% of all loan originations during fiscal 1997 were
refinancings of loans already in the Bank's loan portfolio. At June 30, 1998,
the Bank's loan portfolio included $9.8 million in adjustable-rate one- to
four-family residential mortgage loans or 20.8% of the Bank's total loan
portfolio, and $24.7 million in fixed-rate one- to four-family residential
mortgage loans, or 52.8% of the Bank's total loan portfolio.
51
<PAGE>
Commercial Real Estate Loans. The Bank originates commercial real estate
loans to finance the purchase of real property, which generally consists of
developed real estate. In underwriting commercial real estate loans,
consideration is given to the property's historical cash flow, current and
projected occupancy, location and physical condition. At June 30, 1998, the
Bank's commercial real estate loan portfolio consisted of 24 loans, totaling
$4.2 million, or 8.8% of total loans. The Bank's largest loan is a commercial
real estate loan with an outstanding balance of $494,000 at June 30, 1998
secured by a commercial property located in downtown Boston. The Bank's
commercial real estate loan portfolio is diverse, and does not have any
significant loan concentration by type of property or borrower.
Commercial real estate lending entails additional risks compared with one-
to four-family residential lending. Because payments on loans secured by
commercial real estate properties are often dependent on the successful
operation or management of the properties, repayment of such loans may be
subject, to a greater extent, to adverse conditions in the real estate market or
the economy. Also, commercial real estate loans typically involve large loan
balances to single borrowers or groups of related borrowers and the payment
experience on such loans is typically dependent on the successful operation of a
real estate project and/or the collateral value of the commercial real estate
securing the loan. See " Risk Factors--Growth of the Bank's Commercial Loan and
Commercial Real Estate Loan Portfolio."
Commercial Loans. In the past two years, the Bank has made a major
commitment to small business commercial lending. The Bank has worked to develop
a niche of making commercial loans to small and medium sized businesses in a
wide variety of industries located in the Bank's market area and has recently
applied to become an approved lender of the Small Business Administration. Small
business loans are expected to comprise a growing portion of the Bank's loan
portfolio in the future. At June 30, 1998, the Bank's commercial loan portfolio
consisted of 58 loans, totaling $2.8 million, or 5.9% of total loans.
Unless otherwise structured as a mortgage on commercial real estate, such
loans generally are limited to terms of five years or less. Substantially all
such commercial loans have variable interest rates tied to the prime rate as
reported in the Wall Street Journal. Whenever possible, the Bank collateralizes
these loans with a lien on commercial real estate, or alternatively, with a lien
on business assets and equipment and the personal guarantees from principals of
the borrower.
The Bank offers commercial services administered by the Bank's commercial
loan department which are designed to give business owners borrowing
opportunities for modernization, inventory, equipment, construction,
consolidation, real estate, working capital, vehicle purchases and the
refinancing of existing corporate debt. In addition, the Bank has tailored
certain products and services (such as courier pick up of deposits) to better
serve the unique needs of local businesses. The Bank has staffed its commercial
lending department with the addition of a senior commercial loan officer with
considerable commercial lending expertise in the Boston area and has developed a
staff to support the commercial loan department. The Bank has recently added a
second commercial lending officer to the small business banking area and will
add additional qualified employees as market conditions warrant.
Commercial loans are generally considered to involve a higher degree of
risk than residential mortgage loans because the collateral may be in the form
of intangible assets and/or inventory subject to market obsolescence. Commercial
loans may also involve relatively large loan balances to single borrowers or
groups of related borrowers, with the repayment of such loans typically
dependent on the successful operation and income stream of the borrower. Such
risks can be significantly affected by economic conditions. In addition,
commercial business lending generally requires substantially greater oversight
efforts compared to residential real estate lending. The Bank utilizes the
services of an outside consultant to conduct quarterly on-site reviews of the
commercial loan portfolio to ensure adherence to underwriting standards and
policy requirements.
52
<PAGE>
Consumer Loans. The Bank's consumer loans consist of home equity loans,
loans secured by deposits, and other consumer loans, including automobile loans.
At June 30, 1998, the consumer loan portfolio totaled $4.4 million or 9.4% of
total loans. Consumer loans (other than home equity loans) generally are offered
for terms of up to five years at fixed interest rates and do not exceed $25,000
individually.
The Bank's home equity loans are secured by available equity based on the
appraised value of owner-occupied one- to four-family residential property. Home
equity loans will be made for up to 80% of the appraised value of the property
(less the amount of the first mortgage). Home equity loans are offered at
adjustable rates. The adjustable interest rate is prime minus 0.5% for the first
year and the prime rate as reported in the Wall Street Journal for the remaining
life of the loan. The Bank's home equity loans generally have a five-year draw
(renewable for up to an additional five years) with a ten year repayment period.
At June 30, 1998, the Bank had $3.3 million in home equity loans with unused
credit available to existing borrowers of $2.0 million.
The Bank makes loans secured by deposit accounts up to 90.0% of the amount
of the depositor's savings account balance. The interest rate on the loan is
2.5% higher than the rate being paid on passbook accounts and 2.0% higher than
the rate being paid on Certificates of Deposit. The Bank also makes other
consumer loans, which may or may not be secured. The terms of such loans vary
depending on the collateral.
The Bank makes loans for automobiles, both new and used, directly to the
borrowers. The loans are generally limited to 80.0% of the purchase price or the
retail value listed by the National Automobile Dealers Book. The terms of the
loans are determined by the age and condition of the collateral. The Bank
obtains title to the vehicle and collision insurance policies are required on
all these loans.
Consumer loans are generally originated at higher interest rates than
residential mortgage loans but also tend to have a higher credit risk than
residential loans due to the loan being unsecured or secured by rapidly
depreciable assets. Despite these risks, the Bank's level of consumer loan
delinquencies generally has been low. No assurance can be given, however, that
the Bank's delinquency rate on consumer loans will continue to remain low in the
future, or that the Bank will not incur future losses on these activities.
Construction Loans. The Bank engages in a limited amount of construction
lending usually for the construction of single family residences or commercial
real estate. Most are construction/permanent loans to the future occupants,
structured to become permanent loans upon the completion of construction. All
construction loans are secured by first liens on the property. Loan proceeds are
disbursed as construction progresses and inspections warrant. Loans involving
construction financing present a greater risk than loans for the purchase of
existing homes, since collateral values and construction costs can only be
estimated at the time the loan is approved. Due to the small amount of
construction loans in the Bank's portfolio, the risk in this area is limited.
Origination, Sale and Servicing of Loans. The Bank's lending activities are
conducted through its office in Revere, Massachusetts. The Bank's ability to
originate loans is dependent upon the relative customer demand for fixed-rate or
adjustable-rate mortgage loans, which is affected by the current and expected
future levels of interest rates. The Bank is a qualified seller/servicer for
FNMA and has applied to be an approved SBA lender. Historically, the Bank sells
certain of its fixed-rate loans to FNMA based on liquidity needs and prevailing
market conditions. All of the Bank's sales to FNMA have been made with servicing
retained on the loans. At June 30, 1998, the Bank was servicing $18.3 million in
loans for FNMA.
Originations for the nine months ended June 30, 1998, compared to the prior
period, have increased due to the addition of a commercial lending officer. Loan
sales also increased during the same period. In January 1998, the Bank has also
entered into a participation agreement with a local bank for a commercial real
estate loan for the development of 14 single family homes on a fourteen acre
subdivision in Saugus,
53
<PAGE>
Massachusetts. The following table sets forth information with respect to
originations, sales of loans and principal repayments during the periods
indicated.
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED JUNE 30, FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C>
Beginning balance, loans, net ........... $ 41,175 $ 33,046 $ 33,046 $ 21,273 $ 20,579
-------- -------- -------- -------- --------
Loans originated:
Mortgage loans:
One- to four-family .............. 11,869 4,521 6,843 18,385 3,402
Commercial real estate ........... 1,000 1,799 2,245 463 --
Construction and land ............ 885 519 1,047 511 718
-------- -------- -------- -------- --------
Total mortgage loans ........... 13,754 6,839 10,135 19,359 4,120
Commercial loans ................... 1,627 1,310 1,946 -- --
Consumer loans ..................... 3,538 1,392 2,329 965 537
-------- -------- -------- -------- --------
Total loans originated ......... 18,919 9,541 14,410 20,324 4,657
-------- -------- -------- -------- --------
Total ................................ 60,094 42,587 47,456 41,597 25,236
Principal repayments and other, net ..... (7,263) (1,461) (3,463) (5,110) (3,385)
Loan charge-offs, net ................... (46) -- (8) (29) 21
Sale of mortgage loans, principal balance (5,960) (2,209) (2,810) (3,412) (599)
-------- -------- -------- -------- --------
Ending balance, loans, net .............. $ 46,825 $ 38,917 $ 41,175 $ 33,046 $ 21,273
======== ======== ======== ======== ========
</TABLE>
54
<PAGE>
The following table sets forth the dollar amounts in each loan category at
June 30, 1998 and September 30, 1997 that are due after June 30, 1999 and
September 30, 1998, and whether such loans have fixed or adjustable interest
rates.
<TABLE>
<CAPTION>
DUE AFTER JUNE 30, 1999
---------------------------------------------------------------------
FIXED ADJUSTABLE TOTAL
---------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Mortgage loans:
One-to four-family ........ $24,597 $ 122 $24,719
Commercial real estate .... 987 2,597 3,584
Construction and land ..... 811 382 1,193
------- ------- -------
Total mortgage loans .... 26,395 3,101 29,496
------- ------- -------
Commercial loans ............... 1,344 -- 1,344
------- ------- -------
Consumer loans:
Home equity lines ......... -- -- --
Secured by deposit accounts 117 -- 117
Auto loans ................ 445 -- 445
Other consumer loans ...... 5 -- 5
------- ------- -------
Total consumer loans .... 567 -- 567
------- ------- -------
Total loans ............. $28,306 $ 3,101 $31,407
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
DUE AFTER SEPTEMBER 30, 1998
----------------------------------------------------------------------
FIXED ADJUSTABLE TOTAL
----------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Mortgage loans:
One-to four-family ........ $23,882 $ 235 $24,117
Commercial real estate .... 915 1,436 2,351
Construction and land ..... 315 -- 315
------- ------- -------
Total mortgage loans .... 25,112 1,671 26,783
------- ------- -------
Commercial loans ............... 635 -- 635
------- ------- -------
Consumer loans:
Home equity lines ......... -- -- --
Secured by deposit accounts 352 -- 352
Auto loans ................ 428 -- 428
Other consumer loans ...... 36 -- 36
------- ------- -------
Total consumer loans .... 816 -- 816
------- ------- -------
Total loans ............. $26,563 $ 1,671 $28,234
======= ======= =======
</TABLE>
55
<PAGE>
Loan Commitments. The Bank generally makes loan commitments to borrowers
not exceeding 30 days. At June 30, 1998, the Bank had $1.6 million in loan
commitments outstanding, primarily for the origination of one- to four-family
residential real estate loans, commercial loans and commercial real estate
loans.
Loan Solicitation. Loan originations are derived from a number of sources,
including the Bank's existing customers, referrals, realtors, advertising and
"walk-in" customers at the Bank's office.
Loan Administration. Upon receipt of a loan application from a prospective
borrower, a credit report and verifications are ordered to verify specific
information relating to the loan applicant's employment, income and credit
standing. For all mortgage loans, an appraisal of real estate intended to secure
the proposed loan is obtained from an independent appraiser who has been
approved by the Bank's Board of Directors. Fire and casualty insurance are
required on all loans secured by improved real estate. Insurance on other
collateral is required unless waived by the Loan Approval Committee. The Board
of Directors of the Bank has the responsibility and authority for the general
supervision over the loan policies of the Bank. The Board has established
written lending policies for the Bank.
All residential and commercial real estate mortgages and commercial
business loans must be ratified by the Loan Approval Committee of the Bank's
Board of Directors. In addition, certain designated officers of the Bank have
authority to approve loans not exceeding specified levels, while the Loan
Approval Committee of the Board of Directors must approve loans in excess of (a)
$50,000 for commercial real estate loans; (b) $50,000 for commercial loans; (c)
loans over the current FNMA limit for residential mortgage loans; and (d)
$75,000 for consumer loans. All loans in excess of $250,000 must be ratified by
the Board of Directors as a whole.
Interest rates charged by the Bank on all loans are primarily determined by
competitive loan rates offered in its market area and interest rate costs of the
source of funding for the loan. The Bank generally charges an origination fee on
new mortgage loans. The origination fees, net of direct origination costs, are
deferred and amortized into income over the life of the loan. At June 30, 1998,
the amount of net deferred loan origination fees was $59,000.
56
<PAGE>
Loan Maturity and Repricing. The following tables shows the maturity or
period to repricing of the Bank's loan portfolio at June 30, 1998 and September
30, 1997. Loans that have adjustable rates are shown as being due in the period
during which the interest rates are next subject to change. The table does not
include prepayments or scheduled principal amortization.
<TABLE>
<CAPTION>
AT JUNE 30, 1998
---------------------------------------------------------------------------------
MORTGAGE LOANS
---------------------------------------------------------------------------------
ONE- TO FOUR- COMMERCIAL CONSTRUCTION
FAMILY REAL ESTATE AND LAND COMMERCIAL CONSUMER TOTAL
---------------------------------------------------------------------------------
Amount due: (In thousands)
<S> <C> <C> <C> <C> <C> <C>
One year or less .................. $ 9,776 $ 573 $ 325 $ 1,445 $ 3,864 $ 15,983
-------- -------- -------- -------- -------- --------
After one year:
More than one year to three years . 72 452 90 99 290 1,003
More than three years to five years 476 2,008 85 763 230 3,562
More than five years to ten years . 2,240 204 -- 425 -- 2,869
More than ten years to twenty years 6,551 920 150 57 47 7,725
More than twenty years ............ 15,380 -- 868 -- -- 16,248
-------- -------- -------- -------- -------- --------
Total due after one year ........ 24,719 3,584 1,193 1,344 567 31,407
-------- -------- -------- -------- -------- --------
Total amount due ................ $ 34,495 $ 4,157 $ 1,518 $ 2,789 $ 4,431 47,390
======== ======== ======== ======== ======== ========
Less:
Allowance for loan losses ......... (506)
Deferred loan origination fees, net (59)
--------
Loans, net ............................. $ 46,825
========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1997
---------------------------------------------------------------------------------
MORTGAGE LOANS
---------------------------------------------------------------------------------
ONE- TO FOUR- COMMERCIAL CONSTRUCTION
FAMILY REAL ESTATE AND LAND COMMERCIAL CONSUMER TOTAL
---------------------------------------------------------------------------------
Amount due: (In thousands)
<S> <C> <C> <C> <C> <C> <C>
One year or less .................. $ 8,811 $ 226 $ 500 $ 1,049 $ 2,805 $ 13,391
-------- -------- -------- -------- -------- --------
After one year:
More than one year to three years . 69 374 -- 105 252 800
More than three years to five years 495 1,016 113 471 262 2,357
More than five years to ten years . 1,746 362 -- -- -- 2,108
More than ten years to twenty years 6,131 599 -- 59 48 6,837
More than twenty years ............ 15,676 -- 202 -- 254 16,132
-------- -------- -------- -------- -------- --------
Total due after one year ........ 24,117 2,351 315 635 816 28,234
-------- -------- -------- -------- -------- --------
Total amount due ................ $ 32,928 $ 2,577 $ 815 $ 1,684 $ 3,621 41,625
======== ======== ======== ======== ======== ========
Less:
Allowance for loan losses ......... (377)
Deferred loan origination fees, net (73)
--------
Loans, net ............................. $ 41,175
========
</TABLE>
58
<PAGE>
Non-Performing Assets, Asset Classification and Allowances for Losses.
Management and the Loan Approval Committee of the Board of Directors perform a
monthly review of all delinquent loans and loans are placed on a nonaccrual
status when loans are 90 days past due or, in the opinion of management, the
collection of principal and interest are doubtful. One of the primary tools used
to manage and control problem loans is the Bank's "Watch- List," a listing of
all loans or commitments that are considered to have characteristics that could
result in loss to the Bank if not properly supervised. The list is managed by
the Loan Approval Committee which meets periodically to discuss the status of
the loans on the Watch List and to add or delete loans from the list.
Real estate acquired by the Bank as a result of foreclosure is classified
as other real estate owned until such time as it is sold. When such property is
acquired, it is recorded at the lower of the unpaid principal balance or its
fair value. Any required write-down of the loan to its fair value is charged to
the allowance for loan losses.
The following table set forth the Bank's non-performing assets at the dates
indicated.
<TABLE>
<CAPTION>
AT JUNE 30, AT SEPTEMBER 30,
-------------- ------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Non-performing loans:
Mortgage loans:
One-to four-family ............. $142 $ -- $ 144 $ 28 $ 125 $ 190 $ 203
Commercial real estate ......... -- -- -- -- -- -- --
Construction and land .......... -- -- -- -- -- -- --
------ ----- ------ -------- ------- ----- -----
Total mortgage loans ......... 142 -- 144 28 125 190 203
------ ----- ------ -------- ------- ----- -----
Commercial loans ................. 124 -- -- -- -- -- --
------ ----- ------ -------- ------- ----- -----
Consumer loans:
Home equity lines .............. -- -- -- -- -- -- --
Security by deposit accounts ... -- -- -- -- -- -- --
Auto loans ..................... -- -- -- -- -- -- --
Other consumer loans ........... 3 -- 13 -- -- -- 1
------ ----- ------ -------- ------- ----- -----
Total consumer loans ......... 3 -- 13 -- -- -- 1
------ ----- ------ -------- ------- ----- -----
Total non-performing loans(1) 269 -- 157 28 125 190 204
Other real estate owned, net ......... -- -- -- -- -- 108 128
------ ----- ------ -------- ------- ----- -----
Total non-performing assets(2) $ 269 $ -- $ 157 $ 28 $ 125 $ 298 $ 332
====== ===== ====== ======== ======= ===== =====
Allowance for loan losses
as a percent of loans(3) ......... 1.07% 0.94% 0.91% 0.97% 0.96% 0.90% 0.30%
====== ===== ====== ======== ======= ===== =====
Allowance for loan losses as a percent
of non-performing loans(4) ....... 188.12% N/A 240.03% 1,159.67% 164.86% 98.33% 32.76%
====== ====== ======== ======= ===== =====
Non-performing loans as a percent
of loans(3)(4) ................... 0.57% 0.00% 0.38% 0.08% 0.58% 0.91% 0.92%
====== ==== ====== ======== ======= ===== ====
Non-performing assets as a percent
of total assets(2) ............... 0.30% 0.00% 0.18% 0.04% 0.18% 0.50% 0.65%
====== ==== ====== ======== ======= ===== =====
</TABLE>
- -------------
(1) Non-performing loans at June 30, 1998 includes non-accrual loans of
$145,000 and loans past due 90 days or more and still accruing of $124,000.
For all other periods presented, the non-performing loans consisted
entirely of non-accrual loans.
(2) Non-performing assets consist of non-performing loans and other real estate
owned.
(3) Loans are presented before allowance for loan losses and deferred loan
origination fees, net.
(4) Non-performing loans consist of all loans 90 days or more past due and
other loans which have been identified by the Bank as presenting
uncertainty with respect to the collectibility of interest or principal.
59
<PAGE>
The following tables set forth delinquencies of the Bank's loan portfolio
by type of loan at the dates indicated:
<TABLE>
<CAPTION>
JUNE 30, 1998 AT SEPTEMBER 30, 1997
----------------------------------------- ------------------------------------------------
30-89 DAYS 90 DAYS OR MORE 30-89 DAYS 90 DAYS OR MORE
-------------------- ------------------- ------------------- ---------------------
NUMBER PRINCIPAL NUMBER PRINCIPAL NUMBER PRINCIPAL NUMBER PRINCIPAL
OF LOANS BALANCE OF LOANS BALANCE OF LOANS BALANCE OF LOANS BALANCE
-------- ------- -------- ------- -------- ------- -------- ---------
(DOLLARS IN THOUSANDS)
Mortgage loans:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
One-to four-family...... 4 $ 231 1 $ 142 8 $ 565 1 $ 144
Commercial real estate.. --- --- --- --- 1 100 --- ---
Construction and land... --- --- --- --- --- --- --- ---
----- --- ---- ------ ---- ------ ----- ------
Total mortgage loans. 4 231 1 142 9 665 1 144
---- ----- ---- ------ ---- ------ ---- ------
Commercial loans.................. 1 13 2 124 --- --- --- ---
---- ----- ---- ------ ---- ------ ------ ------
Consumer loans:
Home equity loans....... 1 8 --- --- 3 84 --- ---
Secured by savings ---
accounts............ 3 11 --- --- 1 7 --- ---
Auto loans.............. 2 8 --- --- --- --- --- ---
Other consumer loans.... 6 5 3 3 3 8 2 13
---- ----- ---- ---- ---- ------ ---- ------
Total consumer loans. 12 32 3 3 7 99 2 13
----- ------ ---- ---- ---- ----- ---- -----
Total loans....................... 17 $ 276 6 $ 269 16 $ 764 3 $ 157
===== ====== ==== ====== ==== ====== ==== ======
Delinquent loans to loans, net.... 0.59% 0.57% 1.86% 0.38%
======= ====== ======= ======
<CAPTION>
AT SEPTEMBER 30, 1996 AT SEPTEMBER 30, 1995
-------------------------------------------------------------------- -----------------------
30-89 DAYS 90 DAYS OR MORE 30-89 DAYS 90 DAYS OR MORE
--------------------------------- ----------------------------------------------------------
NUMBER PRINCIPAL NUMBER PRINCIPAL NUMBER PRINCIPAL NUMBER PRINCIPAL
OF LOANS BALANCE OF LOANS BALANCE LOANS BALANCE OF LOANS BALANCE
--------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Mortgage loans:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
One-to four-family ..... 8 $477 1 $ 28 8 $330 2 $125
Commercial real estate . -- -- -- -- -- -- -- --
Construction and land .. -- -- -- -- -- -- -- --
---- ---- ---- ---- ---- ---- ---- ----
Total mortgage loans 8 477 1 28 8 330 2 125
---- ---- ---- ---- ---- ---- ---- ----
Commercial loans ................. -- -- -- -- -- -- -- --
---- ---- ---- ---- ---- ---- ---- ----
Consumer loans:
Home equity loans ...... -- -- -- -- -- -- -- --
Secured by savings ..... --
accounts ........... 1 3 -- -- 2 6 -- --
Auto loans ............. -- -- -- -- -- -- -- --
Other consumer loans ... -- -- -- -- -- -- -- --
---- ---- ---- ---- ---- ---- ---- ----
Total consumer loans 1 3 -- -- 2 6 -- --
---- ---- ---- ---- ---- ---- ---- ----
Total loans ...................... 9 $480 1 $ 28 10 $336 2 $125
==== ==== ==== ==== ==== ==== ==== ====
Delinquent loans to loans, net ... 1.45% 0.08% 1.58% 0.58%
==== ==== ==== ====
</TABLE>
60
<PAGE>
During the year ended September 30, 1997, gross interest income of $12,000,
would have been recorded on loans accounted for on a nonaccrual basis if the
loans had been current throughout the period. Of this amount, $8,000 of interest
on such loans was included in income during the period. At June 30, 1998,
management was not aware of any loans not currently classified as nonaccrual, 90
days past due or restructured but which may be so classified in the near future
because of concerns over the borrower's ability to comply with repayment terms.
Federal regulations require each banking institution to classify its asset
quality on a regular basis. In addition, in connection with examinations of such
banking institutions, federal examiners have authority to identify problem
assets and, if appropriate, classify them. An asset is classified substandard if
it is determined to be inadequately protected by the current net worth and
paying capacity of the obligor or of the collateral pledged, if any. As a
general rule, the Bank will classify a loan as substandard if the Bank can no
longer rely on the borrower's income as the primary source for repayment of the
indebtedness and must look to secondary sources such as guarantors or
collateral. An asset is classified as doubtful if full collection is highly
questionable or improbable. An asset is classified as loss if it is considered
uncollectible, even if a partial recovery could be expected in the future. The
regulations also provide for a special mention designation, described as assets
which do not currently expose a banking institution to a sufficient degree of
risk to warrant classification but do possess credit deficiencies or potential
weaknesses deserving management's close attention. Assets classified as
substandard or doubtful require a banking institution to establish general
allowances for loan losses. If an asset or portion thereof is classified as a
loss, a banking institution must either establish specific allowances for loan
losses in the amount of the portion of the asset classified as a loss, or charge
off such amount. Examiners may disagree with a banking institution's
classifications and amounts reserved. If a banking institution does not agree
with an examiner's classification of an asset, it may appeal this determination
to the Regional Director of the OTS. At June 30, 1998, the Bank had $38,000 in
assets classified as special mention, doubtful or loss, and $144,000 in assets
designated as substandard.
In originating loans, the Bank recognizes that credit losses will occur and
that the risk of loss will vary with, among other things, the type of loan being
made, the creditworthiness of the borrower over the term of the loan, general
economic conditions and, in the case of a secured loan, the quality of the
security for the loan. It is management's policy to maintain an adequate general
allowance for loan losses based on, among other things, the Bank's and the
industry's historical loan loss experience, evaluation of economic conditions
and regular reviews of delinquencies and loan portfolio quality. Further, after
properties are acquired following loan defaults, additional losses may occur
with respect to such properties while the Bank is holding them for sale. The
Bank increases its allowances for loan losses and losses on other real estate
owned by charging provisions for losses against the Bank's income. Specific
reserves are also recognized against specific assets when management believes it
is warranted.
In the past few years, there has been a greater level of scrutiny by
regulatory authorities of the loan portfolios of financial institutions
undertaken as part of the examination of the institution by federal regulators.
Results of recent examinations indicate that these regulators may be applying
more conservative criteria in evaluating real estate market values, requiring
significantly increased provisions for potential loan losses. While the Bank
believes it has established its existing allowances for loan losses in
accordance with GAAP there can be no assurance that regulators, in reviewing the
Bank's loan portfolio, will not request the Bank to increase its allowance for
loan losses, thereby negatively affecting the Bank's financial condition and
earnings. Alternately, there can be no assurance that increases in the Bank's
allowance for loan losses will occur.
61
<PAGE>
The following table sets forth activity in the Bank's allowance for
loan losses and other ratios at or for the dates indicated.
<TABLE>
<CAPTION>
AT OR FOR THE NINE
MONTHS ENDED AT OR FOR THE YEAR ENDED SEPTEMBER 30,
JUNE 30,
--------------------------- -----------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------------- ------------- ------------ ------------ ------------ ----------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at beginning of period............ $ 377 $ 325 $ 325 $ 206 $ 187 $ 67 $161
----- ----- ----- ------ ----- ---- ----
Provision (benefit) for loan losses....... 175 45 60 148 (2) 144 155
----- ----- ----- ------ ----- ---- ----
Charge-offs:
Mortgage loans:
One-to four-family................... --- --- --- 16 --- 23 251
Commercial real estate............... --- --- --- --- --- --- ---
Construction and land................ --- --- --- --- --- --- ---
Commercial loans....................... --- --- --- --- --- --- ---
Consumer loans:
Home equity lines.................... --- --- --- --- --- --- ---
Secured by deposit accounts.......... --- --- --- --- --- --- ---
Auto loans........................... 40 --- --- --- --- --- ---
Other consumer loans................. 6 --- 8 13 --- 1 ---
--- ----- --- ------ ----- --- -----
Total charge-offs.................... 46 --- 8 29 --- 24 251
---- ----- --- ------ ----- ---- ----
Recoveries................................ --- --- --- --- 21 --- 2
----- ----- ----- ------ ----- ---- ---
Balance at end of period.................. $ 506 $ 370 $ 377 $ 325 $ 206 $187 $ 67
===== ===== ===== ====== ===== ==== ====
Ratio of net charge-offs to average loans
outstanding during the period(1)....... 0.14% 0.00% 0.02% 0.10% (0.10)% 0.11% 1.08%
==== ==== ===== ===== ===== ==== ====
Allowance for loan losses as a
percent of loans ...................... 1.07% 0.94% 0.91% 0.97% 0.96% 0.90% 0.3
===== ==== ==== ==== ==== ==== ===
Allowance for loan losses as a
percent of non-performing loans........ 188.12% N/A 240.03% 1,159.67% 164.86% 98.33% 32.76%
====== ====== ======== ====== ===== =====
</TABLE>
- --------------
(1) Ratio is annualized for the nine month periods.
62
<PAGE>
The following tables set forth the Bank's allowance for loan losses
allocated by loan category and the percent of loans in each category to total
loans at the dates indicated.
<TABLE>
<CAPTION>
AT JUNE 30, 1998 AT SEPTEMBER 30, 1997
---------------------------------------------------------------------------------------
PERCENT OF PERCENT OF
PERCENT OF LOANS IN PERCENT OF LOANS IN
ALLOWANCE EACH ALLOWANCE EACH
TO TOTAL CATEGORY TO TO TOTAL CATEGORY TO
AMOUNT ALLOWANCE TOTAL LOANS AMOUNT ALLOWANCE TOTAL LOANS
---------------------------------------------------------------------------------------
(Dollars in thousands)
Mortgage loans:
<S> <C> <C> <C> <C> <C> <C>
One-to four-family ............ $208 41.11% 72.79% $201 53.32% 79.11%
Commercial real estate ....... 68 13.44 8.77 35 9.28 6.19
Construction and land ......... 6 1.19 3.20 -- -- 1.96
---- ------ ------ ---- ------ ------
Total mortgage .............. 282 55.74 84.76 236 62.60 87.26
Commercial ......................... 79 15.61 5.89 39 10.34 4.04
Consumer loans ..................... 7 1.38 9.35 5 1.33 8.70
Unallocated ........................ 138 27.27 -- 97 25.73 --
---- -------- ------ ---- ------ ------
Total allowance for loan losses $506 100.00% 100.00% $377 100.00% 100.00%
==== ======== ====== ==== ====== ======
<CAPTION>
AT SEPTEMBER 30, 1996
------------------------------------------
PERCENT OF
PERCENT OF LOANS IN
ALLOWANCE EACH
TO TOTAL CATEGORY TO
AMOUNT ALLOWANCE TOTAL LOANS
------------------------------------------
(Dollars in thousands)
Mortgage loans:
<S> <C> <C> <C>
One-to four-family ............ $178 54.77% 89.84%
Commercial real estate ....... 7 2.15 1.38
Construction and land ......... -- -- 3.21
---- ------ ------
Total mortgage .............. 185 56.92 94.43
Commercial ......................... 1 0.31 0.15
Consumer loans ..................... 2 0.62 5.42
Unallocated ........................ 137 42.15 --
---- ------ ------
Total allowance for loan losses $325 100.00% 100.00%
==== ====== ======
</TABLE>
63
<PAGE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1995 AT SEPTEMBER 30, 1994
--------------------------------- --------------------------------------
PERCENT OF PERCENT OF
PERCENT OF LOANS IN PERCENT OF LOANS IN
ALLOWANCE EACH ALLOWANCE EACH
TO TOTAL CATEGORY TO TO TOTAL CATEGORY TO
AMOUNT ALLOWANCE TOTAL LOANS AMOUNT ALLOWANCE TOTAL LOANS
-------------------------------------------------------------------------
(Dollars in thousands)
Mortgage loans:
<S> <C> <C> <C> <C> <C> <C>
One-to four-family ....... $156 75.73% 95.91% $ 132 70.59% 97.85%
Commercial real estate .. -- -- -- -- -- --
Construction and land .... -- -- 0.81 -- -- 0.38
---- ------ ------ ---- ------ ------
Total mortgage ......... 156 75.73 96.72 132 70.59 98.23
Commercial .................... -- -- -- -- -- --
Consumer loans ................ -- -- 3.28 1 0.53 1.77
Unallocated ................... 50 24.27 -- 54 28.88 --
---- ------ ------ ---- ------ ------
Total allowance for loan
losses .............. $206 100.00% 100.00% $187 100.00% 100.00%
==== ====== ====== ==== ====== ======
<CAPTION>
AT SEPTEMBER 30, 1993
----------------------------------------------
PERCENT OF
PERCENT OF LOANS IN
ALLOWANCE EACH
TO TOTAL CATEGORY TO
AMOUNT ALLOWANCE TOTAL LOANS
----------------------------------------------
Mortgage loans:
<S> <C> <C> <C>
One-to four-family ....... $ 55 82.09% 98.02%
Commercial real estate .. -- -- --
Construction and land .... -- -- 0.40
---- ------ ------
Total mortgage ......... 55 82.09 98.42
Commercial .................... -- -- --
Consumer loans ................ 1 1.49 1.58
Unallocated ................... 11 16.42 --
---- ----- -----
Total allowance for loan
losses .............. $ 67 100.00% 100.00%
==== ====== ======
</TABLE>
64
<PAGE>
INVESTMENT ACTIVITIES
General. The Bank is required to maintain an amount of liquid assets
appropriate for its level of net savings withdrawals and current borrowings. It
has generally been the Bank's policy to maintain a liquidity portfolio in excess
of regulatory requirements. At June 30, 1998, the Bank's liquidity ratio was
7.43%. Liquidity levels may be increased or decreased depending upon the yields
on investment alternatives, management's judgment as to the attractiveness of
the yields then available in relation to other opportunities, management's
expectations of the level of yield that will be available in the future and
management's projections as to the short-term demand for funds to be used in the
Bank's loan origination and other activities.
Interest income from investments in various types of liquid assets provides
a significant source of revenue for the Bank. The Bank invests in U.S. Treasury
and Federal Agency securities, asset-backed securities and FNMA, GNMA and FHLMC
mortgage-backed securities. The balance of investment securities maintained by
the Bank in excess of regulatory requirements reflects management's historical
objective of maintaining liquidity at a level that assures the availability of
adequate funds, taking into account anticipated cash flows and available sources
of credit, for meeting withdrawal requests and loan commitments and making other
investments. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources" As part of its
business strategy, depending on market conditions, the Bank is restructuring its
balance sheet to increase the size of its loan portfolio relative to the
investment portfolio.
The Bank purchases securities through a primary dealer of U.S. Government
obligations or such other securities dealers authorized by the Board of
Directors and requires that the securities be delivered to a safekeeping agent
before the funds are transferred to the broker or dealer. The Bank purchases
investment securities pursuant to an investment policy established by the Board
of Directors.
Investment securities are recorded on the books of the Bank in accordance
with GAAP. The Bank does not purchase investment securities for trading.
Effective September 30, 1994, the Bank implemented SFAS No. 115. Available for
sale securities are reported at fair value with unrealized gains or losses
reported as a separate component of equity, net of tax effects. Held-to-maturity
securities are carried at amortized cost. Substantially all purchases of
investment securities conform to the Bank's interest rate risk policy.
65
<PAGE>
The following table sets forth activity in the Bank's mortgage-backed
securities held-to-maturity portfolio for the periods indicated.
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, SEPTEMBER 30,
------------------------ --------------------------------
1998 1997 1997 1996 1995
--------- -------- -------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Beginning balance .................... $ 25,144 $ 24,945 $ 24,945 $ 23,085 $ 21,183
Purchases ............................ -- 2,962 2,962 4,950 3,494
Maturities ........................... (52) -- -- -- --
Principal repayments ................. (3,442) (1,772) (2,737) (3,054) (1,568)
Premium and discount amortization, net (15) (22) (26) (36) (24)
-------- -------- -------- --------- ---------
Ending balance ....................... $ 21,635 $ 26,113 $ 25,144 $ 24,945 $ 23,085
======== ======== ======== ========= =========
</TABLE>
The following table sets forth certain information regarding the
amortized cost and fair value of the Bank's securities at the dates indicated.
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT JUNE 30, ---------------------------------------------------------
1998 1997 1996 1995
----------------------------------------------------------------------------
AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE COST VALUE COST VALUE
----------------------------------------------------------------------------
(In thousands)
Held-to-maturity:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment securities ......................... $ 6,499 $ 6,430 $ 9,202 $ 9,207 $ 8,500 $ 8,502 $12,552 $12,610
Mortgage-backed and mortgage-related securities 21,635 22,016 25,144 25,458 24,945 24,609 23,085 22,940
5,162 5,212 5,807 5,842 7,235 7,245 6,105 6,119
------- ------- ------- ------- ------- ------- ------- -------
Asset-backed securities ....................... 33,296 33,658 40,153 40,507 40,680 40,356 41,742 41,669
Available-for-sale(1) .............................. 24 849 24 636 24 441 24 312
------- ------- ------- ------- ------- ------- ------- -------
Total securities ............................ $33,320 $34,507 $40,177 $41,143 $40,704 $40,797 $41,766 $41,981
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
- ------------------
(1) Consists of marketable equity securities.
66
<PAGE>
The following table sets forth the amortized cost and fair value of the
Bank's mortgage-backed and mortgage-related securities, all of which were
classified as held-to-maturity at the dates indicated.
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT JUNE 30, -----------------------------------------------------------------
1998 1997 1996
------------------------------- ------------------------------------- ---------------------------
AMORTIZED PERCENT OF FAIR AMORTIZED PERCENT OF FAIR AMORTIZED PERCENT OF
COST TOTAL(1) VALUE COST TOTAL(1) VALUE COST TOTAL(1)
--------- ---------- ------------------------------------- ---------- --------------------------
(Dollars in thousands)
Mortgage-backed and mortgage-
related securities
Fixed rate:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GNMA .................... $14,203 65.65% $14,452 $15,851 63.04% $15,963 $ 13,910 55.76%
FHLMC ................... 191 0.88 201 238 0.95 250 300 1.20
------- ----- ------- ------- ----- ------- ------- ----------
Total fixed rate ...... 14,394 66.53 14,653 16,089 63.99 16,213 14,210 56.96
------- ----- ------- ------- ----- ------- ------- ----------
Adjustable rate:
GNMA .................... 6,451 29.82 6,565 7,910 31.46 8,085 9,282 37.21
FHLMC ................... 265 1.22 272 365 1.45 376 418 1.68
FNMA .................... 525 2.43 526 780 3.10 784 1,035 4.15
------- ----- ------- ------- ----- ------- ------- ----------
Total adjustable rate.. 7,241 33.47 7,363 9,055 36.01 9,245 10,735 43.04
------- ----- ------- ------- ----- ------- ------- ----------
Total mortgage-backed
and mortgage-related
securities .......... $21,635 100.00% $22,016 $25,144 100.00 $25,458 $24,945 100.00
======= ====== ======= ======= ====== ======= ======= ======
<CAPTION>
AT
SEPTEMBER 30, AT SEPTEMBER 30,
-------------------------------------------------
1996 1995
-------------------------------------------------
FAIR AMORTIZED PERCENT OF FAIR
VALUE COST TOTAL(1) VALUE
------------- ------------- --------------------
Mortgage-backed and mortgage-
related securities
Fixed rate:
<S> <C> <C> <C> <C>
GNMA .................... $13,489 $ 9,646 41.79% $ 9,385
FHLMC ................... 316 386 1.67 406
------- ------- --------- -------
Total fixed rate ...... 13,805 10,032 43.46 9,791
------- ------- --------- -------
Adjustable rate:
GNMA .................... 9,341 11,086 48.02 11,163
FHLMC ................... 427 601 2.60 611
FNMA .................... 1,036 1,366 5.92 1,375
------- ------- --------- -------
Total adjustable rate . 10,804 13,053 56.54 13,149
------- ------- --------- -------
Total mortgage-backed
and mortgage-related
securities .......... $24,609 $23,085 100.00% $22,940
======= ======= ====== =======
</TABLE>
- -----------------------
(1) Based on amortized cost.
67
<PAGE>
The following table sets forth certain information regarding the amortized
cost, fair value and weighted average rate of the Bank's mortgage-backed and
investment securities held-to-maturity at June 30, 1998, by remaining period to
contractual maturity. With respect to mortgage-backed securities, the entire
amount is reflected in the maturity period that includes the final security
payment date, and accordingly, no effect has been given to periodic repayments
or possible prepayments.
<TABLE>
<CAPTION>
AT JUNE 30, 1998
---------------------------------------------------------------------------------------------
MORE THAN ONE YEAR MORE THAN FIVE YEARS
ONE YEAR OR LESS TO FIVE YEARS TO TEN YEARS MORE THAN TEN YEARS
---------------------------------------------------------------------------------------------
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
---------------------------------------------------------------------------------------------
(In thousands)
Debt securities:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment securities(1) ........ $500 6.61% $ -- -- % $1,500 6.80% $ 4,500 7.02%
Mortgage-backed and mortgage-related
securities:
Fixed rate:
GNMA ........................ -- -- -- -- -- -- 14,203 7.28
FHLMC ....................... -- -- 31 7.88 90 8.30 70 10.46
Adjustable rate:
GNMA ........................ -- -- -- -- -- -- 6,451 7.05
FHLMC ....................... -- -- -- -- -- -- 265 7.06
FNMA ........................ 74 7.06 -- -- -- -- 451 6.90
Asset-backed securities ......... -- -- 527 9.39 262 8.17 4,372 6.94
------- ------- ------- -------
Total debt securities ....... $574 6.65% $ 558 9.27% $ 1,852 7.04% $30,312 7.16%
======= ======= ======= ======= ======== ======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
TOTAL
----------------------
WEIGHTED
CARRYING AVERAGE
AMOUNT YIELD
-----------------------
<S> <C> <C>
Debt securities:
Investment securities(1) ........ $6,500 6.99%
Mortgage-backed and mortgage-related
securities:
Fixed rate:
GNMA ........................ 14,203 7.28
FHLMC ....................... 191 9.42
Adjustable rate:
GNMA ........................ 6,451 7.05
FHLMC ....................... 265 7.06
FNMA ........................ 525 6.90
Asset-backed securities ........... 5,161 7.01
--------
Total debt securities ....... $33,296 7.16%
======== =======
</TABLE>
- -----------
(1) Consists of U.S. Treasury and government agency obligations.
68
<PAGE>
DEPOSIT ACTIVITY AND OTHER SOURCES OF FUNDS
General. Deposits are the primary source of the Bank's funds for lending
and other investment purposes. In addition to deposits, the Bank derives funds
from principal repayments and interest payments on loans and investments as well
as other sources arising from operations in the production of net earnings. Loan
repayments and interest payments are a relatively stable source of funds, while
deposit inflows and outflows are significantly influenced by general interest
rates and money market conditions. Borrowings may be used on a short-term basis
to compensate for reductions in the availability of funds from other sources, or
on a longer term basis for general business purposes.
Deposits. Deposits are attracted principally from within the Bank's primary
market area through the offering of a broad selection of deposit instruments,
including passbook savings, NOW accounts, demand deposits, money market accounts
and certificates of deposit. Deposit account terms vary, with the principal
differences being the minimum balance required, the time periods the funds must
remain on deposit and the interest rate.
The Bank's policies are designed primarily to attract deposits from local
residents and businesses rather than to solicit deposits from areas outside its
primary market. The Bank does not accept deposits from brokers due to the
volatility and rate sensitivity of such deposits. Interest rates paid, maturity
terms, service fees and withdrawal penalties are established by the Bank on a
periodic basis. Determination of rates and terms are predicated upon funds
acquisition and liquidity requirements, rates paid by competitors, growth goals
and federal regulations.
The Bank has a significant amount of regular savings accounts which the
Bank believes constitute "core deposits." In addition, since September 30, 1995,
the Bank has attracted $2.3 million in no-cost demand deposit accounts,
resulting from the increase in commercial customers during this time period, and
$5.2 million in NOW accounts and Money Market accounts, resulting from increased
marketing and competitive fee structure. At June 30, 1998, such accounts
represented approximately 16.4% of the Bank's total deposits compared to 5.9% at
September 30, 1995.
69
<PAGE>
The following table sets forth the distribution of the Bank's average
deposit accounts for the periods indicated and the weighted average interest
rates on each category of deposits presented. Averages for the periods presented
utilize month-end balances.
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
-----------------------------------------------------------------------------------------------
AT JUNE 30, 1998 1997 1996
----------------------------- --------------------------- ---------------------------------
PERCENT OF PERCENT OF PERCENT OF
TOTAL WEIGHTED TOTAL WEIGHTED TOTAL WEIGHTED
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
AMOUNT DEPOSITS RATE AMOUNT DEPOSITS RATE AMOUNT DEPOSITS RATE
------------------------------------------------------------------------------------------------
DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Demand deposits................. $2,441 4.17% ---% $ 1,219 2.23% ---% $ 914 1.88% ---%
Now accounts.................... 4,191 7.15 1.05 3,443 6.55 1.02 2,041 4.19 1.13
Regular savings accounts........ 15,018 25.63 1.26 14,548 27.67 1.11 14,743 30.29 1.06
Money market accounts........... 1,555 2.65 3.10 739 1.40 3.11 212 0.44 2.83
------ ----- -------- ------- ------- ------
Total..................... 23,205 39.6 1.22 19,949 37.94 1.17 17,910 36.80 1.09
------ ----- -------- ------- ------- ------
Time deposits:(1)
6 months or less............ 3,973 6.78 4.98 3,612 6.87 4.73 4,561 9.37 4.91
Over 6 months through 12 months 13,759 23.48 5.30 12,026 22.87 5.20 12,569 25.82 5.66
Over 12 through 36 months... 15,713 26.81 5.91 15,168 28.84 6.09 11,934 24.52 6.15
Over 36 months.............. 1,952 3.33 6.64 1,828 3.48 6.67 1,699 3.49 6.66
------ ----- -------- ------- ------- ------
Total time deposits....... 35,397 60.40 5.61 32,634 62.06 5.64 30,763 63.20 5.79
------ ----- -------- ------- ------- ------
Total average deposits.... $58,602 100.00% 3.87% $52,583 100.00% 4.02% $48,673 100.00% 4.11%
====== ====== ======== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
-----------------------------
AT SEPTEMBER 30, 1995
-----------------------------
PERCENT OF
TOTAL WEIGHTED
AVERAGE AVERAGE AVERAGE
AMOUNT DEPOSITS RATE
------------------------------
<S> <C> <C> <C>
Demand deposits................. $ 586 1.32% ---%
Now accounts.................... 1,707 3.85 1.64
Regular savings accounts........ 15,436 34.78 1.49
Money market accounts........... 6 0.01 3.30
--- ------
Total..................... 17,735 39.96 1.50
-------- -------
Time deposits:(1)
6 months or less............ 5,639 12.70 4.79
Over 6 months through 12 months 10,333 23.28 5.22
Over 12 through 36 months... 9,483 21.37 5.66
Over 36 months.............. 1,205 2.69 6.71
------- ------
Total time deposits....... 26,660 60.04 5.35
-------- -------
Total average deposits.... $ 44,395 100.00% 3.84
======== ======
</TABLE>
- --------------
(1) Based on remaining maturity of deposits.
For more information on the Bank's deposit accounts, see Note 6 of Notes
to Consolidated Financial Statements.
70
<PAGE>
The following table represents, by interest rate ranges, the amount of time
deposits outstanding at the dates indicated and the periods to maturity of the
certificates of deposit outstanding at June 30, 1998.
<TABLE>
<CAPTION>
PERIOD TO MATURITY AT JUNE 30, 1998
----------------------------------------------------------------
LESS THAN ONE TO FOUR TO
INTEREST RATE RANGE ONE YEAR THREE YEARS FIVE YEARS
- ---------------------------- ----------------- ---------------------- ----------------------
Time deposits: (In thousands)
<S> <C> <C> <C>
0 to 4.00%.............. $ 371 $ --- $ ---
4.01% to 5.00%.......... 10,680 141 ---
5.01% to 6.00%.......... 14,223 5,557 265
6.01% to 7.00%.......... 1,829 2,153 91
7.01% to 8.00%.......... 96 900 ---
8.01% to 9.00%.......... --- --- ---
Over 9.01%.............. --- --- ---
----- ----- -----
Total................. $ 27,199 $ 8,751 $ 356
======== ======= =====
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
------------------------------------------------------------
AT JUNE 30,
INTEREST RATE RANGE 1998 1997 1996 1995
- ---------------------------- ---------------------- ---------------------- ---------------------- -------------
Time deposits: (In thousands)
<S> <C> <C> <C> <C>
0 to 4.00%.............. $ 371 $ 187 $ 53 $ 702
4.01% to 5.00%.......... 10,821 9,912 11,515 4,434
5.01% to 6.00%.......... 20,045 17,698 12,255 12,665
6.01% to 7.00%.......... 4,073 2,420 2,802 6,938
7.01% to 8.00%.......... 996 4,501 4,516 5,560
8.01% to 9.00%.......... --- --- --- 152
Over 9.01%.............. --- --- --- ---
------- ------- ------- -------
Total................. $36,306 $34,718 $31,141 $30,451
======= ======= ======= =======
</TABLE>
71
<PAGE>
The following table presents the deposit activity of the Bank for the
periods indicated.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
FOR THE NINE MONTHS -------------------------------------------
ENDED JUNE 30, 1998 1997 1996 1995
---------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
Net deposits (withdrawals)........... $5,827 $4,000 $ (809) $5,438
Interest credited on deposit
accounts......................... 1,697 2,059 1,970 1,686
----- ----- ----- -----
Total increase in deposit
accounts......................... $7,524 $6,059 $1,161 $7,124
====== ====== ====== ======
</TABLE>
At June 30, 1998, the Bank had $9.6 million in jumbo certificates of
deposit (accounts in amounts over $100,000) maturing as follows:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
AMOUNT RATE
--------------------------------------------
(Dollars in thousands)
Maturity Period:
<S> <C> <C>
Within three months............................. $ 2,277 5.54%
After three but within six months........... 894 5.57
After six but within twelve months.......... 3,084 5.46
After twelve months......................... 3,394 6.03
--------
Total $ 9,649 5.69%
=========
</TABLE>
72
<PAGE>
Borrowings. Savings deposits historically have been the primary source of
funds for the Bank's lending and investment activities and for its general
business activities. The Bank is authorized, however, to use advances from the
FHLB to supplement its supply of lendable funds and to meet liquidity
requirements. Due to recent lending activity and demand for liquidity, the Bank
has utilized this borrowing power, and has received advances from the FHLB.
Advances from the FHLB are secured by the Bank's mortgage loans and investment
securities. The Bank had FHLB advances of $19.3 million outstanding at June 30,
1998.
The FHLB functions as a central reserve bank providing credit for savings
institutions and certain other financial institutions. As a member, the Bank is
required to own capital stock in the FHLB and is authorized to apply for
advances on the security of such stock and certain of its home mortgages and
other assets (principally, securities which are obligations of, or guaranteed by
the United States) provided certain standards related to creditworthiness have
been met.
Prior to 1997, the Bank supplemented deposits with borrowings in order to
grow its balance sheet. During such periods, the decision to leverage the Bank's
capital allowed it to earn wider spreads by investing borrowed funds in agency
securities than was possible if such funds were invested in single-family
residential mortgages. Upon its entry into the small business lending market in
1996, the Bank has used available liquidity to fund commercial loans with higher
spreads. In 1997, the FHLB called nine agency bonds for $7.2 million and the
Bank used such funds to pay down its borrowings. The Bank may continue to match
borrowings against investments after the Offering is consummated.
The following tables sets forth certain information regarding the Bank's
borrowed funds at or for the periods ended on the dates indicated:
<TABLE>
<CAPTION>
AT OR FOR THE NINE MONTHS AT OR FOR THE YEAR ENDED
ENDED JUNE 30, SEPTEMBER 30,
-------------------------- --------------------------
1998 1997 1997 1996 1998
-------------------------- --------------------------
(Dollars in thousands)
FHLB of Boston advances:
<S> <C> <C> <C> <C> <C>
Average balance outstanding ........ $24,344 $26,137 $26,044 $17,648 $13,445
Maximum amount outstanding at any
month-end during the period ...... 25,019 26,958 26,958 23,007 14,553
Balance outstanding at end of period 19,284 26,868 25,104 22,712 13,818
Weighted average interest rate
during the period ................ 5.79% 5.84% 5.86% 5.94% 5.71%
Weighted average interest rate at
end of period .................... 5.45% 5.86% 5.84% 5.81% 5.94%
</TABLE>
COMPETITION
The Bank experiences competition both in attracting and retaining savings
deposits and in the making of mortgage, commercial and other loans. Direct
competition for savings deposits primarily comes from larger commercial banks
and other savings institutions located in or near the Bank's primary market area
which often have significantly greater financial and technological resources
than the Bank. Additional significant competition for savings deposits comes
from credit unions, money market funds and brokerage firms.
73
<PAGE>
With regard to lending competition in the local market area, the Bank
experiences the most significant competition from the same institutions
providing deposit services, most of whom have placed an emphasis on real estate
lending as a line of business. In addition, the Bank competes with local and
regional mortgage companies, independent mortgage brokers and credit unions in
originating mortgage and non-mortgage loans. The primary factors in competing
for loans are interest rates and loan origination fees and the range of services
offered by the various financial institutions.
Competition from other financial institutions operating in the Bank's local
community includes a number of both large and small commercial banks and savings
institutions. As of June 30, 1998, the Bank's market share was approximately
14.0% of overall financial institution deposits in the City of Revere. The Bank
has experienced growth in deposits in recent years primarily due to an increased
emphasis on marketing products and services. However, competition remains high
in the marketplace.
PROPERTIES
The following table sets forth certain information at June 30, 1998
regarding the Bank's office facilities, which are owned by the Bank and certain
other information relating to its property at that date.
<TABLE>
<CAPTION>
YEAR COMPLETED SQUARE FOOTAGE BOOK VALUE
---------------------------------------------------------------
<S> <C> <C> <C>
Main Office: 310 Broadway
Revere, MA 1977 3,500 $449,000
</TABLE>
In addition to its main office, the Bank leases office space in an adjacent
building to house certain administrative personnel. The Bank also has a full
service ATM at Logan Airport. At June 30, 1998, the book value of the Bank's
computer equipment and other furniture, fixtures and equipment at its existing
offices totaled $760,000. For more information, see note 5 of the Notes to
Consolidated Financial Statements.
EMPLOYEES
At June 30, 1998, the Bank had 21 full-time and 8 part-time employees. None
of the Bank's employees is represented by a collective bargaining agreement.
Management of the Bank believes that it enjoys excellent relations with its
personnel.
LEGAL PROCEEDINGS
Although the Bank, from time to time, is involved in various legal
proceedings in the normal course of business, there are no material legal
proceedings to which the Bank, its directors or its officers is a party or to
which any of its property is subject.
SUBSIDIARY ACTIVITIES
The Bank's subsidiary, RFS Investment Corp., holds certain investments of
the Bank and is a tax- advantaged qualified "security corporation" under
Massachusetts law. The Bank's investment in its wholly-owned service
corporation, RFS Investments Corp., which was $24.5 million at June 30, 1998.
74
<PAGE>
FEDERAL AND STATE TAXATION
FEDERAL TAXATION
General. The following discussion is intended only as a summary and does
not purport to be a comprehensive description of the tax rules applicable to the
Bank, Mutual Company or Stock Company. For federal income tax purposes, the Bank
reports its income on the basis of a taxable year ending September 30, using the
accrual method of accounting, and is subject to federal income taxation in the
same manner as other corporations with some exceptions, including particularly
the Bank's tax reserve for bad debts, discussed below. Following the
Reorganization, the Bank and Stock Company will constitute an affiliated group
of corporations and, therefore, will be eligible to report their income on a
consolidated basis. Because Mutual Company will own less than 80% of the Common
Stock, it will not be a member of such affiliated group and will report its
income on a separate return.
Bad Debt Reserves. The Bank, as a "small bank" (one with assets having an
adjusted tax basis of $500 million or less) is permitted to maintain a reserve
for bad debts with respect to "qualifying loans," which, in general, are loans
secured by certain interests in real property, and to make, within specified
formula limits, annual additions to the reserve which are deductible for
purposes of computing the Bank's taxable income. Pursuant to the Small Business
Job Protection Act of 1996, the bank is now recapturing (taking into income)
over a multi-year period a portion of the balance of its bad debt reserve as of
September 30, 1996. Since the bank has already provided a deferred tax liability
equal to the amount of such recapture, the recapture will not adversely impact
the bank's financial condition or results of operations.
Distributions. To the extent that the Bank makes "non-dividend
distributions" to shareholders, such distributions will be considered to result
in distributions from the Bank's "base year reserve," i.e., it reserve as of
September 30, 1988, to the extent thereof and then from its supplemental reserve
for losses on loans, and an amount based on the amount distributed will be
included in the Bank's taxable income. Non-dividend distributions include
distributions in excess of the Bank's current and accumulated earnings and
profits, distributions in redemption of stock and distributions in partial or
complete liquidation. However, dividends paid out of the Bank's current or
accumulated earnings and profits, as calculated for federal income tax purposes,
will not constitute non-dividend distributions and, therefore, will not be
included in the Bank's income.
The amount of additional taxable income created from a non-dividend
distribution is equal to the lesser of the Bank's base year reserve and
supplemental reserve for losses on loans; or an amount that, when reduced by the
tax attributable to the income, is equal to the amount of the distribution.
Thus, in certain situations approximately one and one-half times the
non-dividend distribution would be includable in gross income for federal income
tax purposes, assuming a 34% federal corporate income tax rate.
Corporate Alternative Minimum Tax. The Internal Revenue Code of 1986, as
amended (the "Code"), imposes a tax ("AMT") on alternative minimum taxable
income ("AMTI") at a rate of 20%. Only 90% of AMTI can be offset by net
operating loss carryovers of which the Bank currently has none. AMTI is also
adjusted by determining the tax treatment of certain items in a manner that
negates the deferral of income resulting from the regular tax treatment of those
items. Thus, the Bank's AMTI is increased by an amount equal to 75% of the
amount by which the Bank's adjusted current earnings exceeds its AMTI
(determined without regard to this adjustment and prior to reduction for net
operating losses). Although the corporate environmental tax of 0.12% of the
excess of AMTI (with certain modifications) over $2.0 million has expired, under
current Administration proposals, such tax will be retroactively reinstated for
taxable years beginning after December 31, 1996 and before January 2008.
75
<PAGE>
Elimination of Dividends; Dividends Received Deduction. The Stock Company
may exclude from its income 100% of dividends received from the Bank as a member
of the same affiliated group of corporations. Because, following completion of
the Reorganization, Mutual Company will not be a member of such affiliated
group, it will not qualify for such 100% dividends exclusion, but will be
entitled to deduct 80% of the dividends it receives from Stock Company so long
as it owns more than 20% of the Common Stock.
STATE TAXATION
Prior to July, 1995, the Bank was subject to an annual Massachusetts excise
(income) tax equal to 12.54% of its pre-tax income. In 1995, legislation was
enacted to reduce the Massachusetts bank excise (income) tax rate and to allow
Massachusetts-based financial institutions to apportion income earned in other
states. Further, this legislation expands the applicability of the tax to
non-bank entities and out-of-state financial institutions. The Massachusetts
excise tax rate for co-operative banks is currently 11.32% of federal taxable
income, adjusted for certain items. It is anticipated that this rate will be
gradually reduced over the next few years so that the Bank's tax rate will
become 10.5% by March 31, 2000. Taxable income includes gross income as defined
under the Code, plus interest from bonds, notes and evidences of indebtedness of
any state, including Massachusetts, less deductions, but not the credits,
allowable under the provisions of the Code. No deductions, however, are allowed
for dividends received until July 1, 1999. In addition, carryforwards and
carrybacks of net operating losses are not allowed. As a "financial institution"
under Massachusetts law, the Company will be subject to an annual Massachusetts
excise (income) tax equal to 10.50% of its pre-tax income.
The Bank's active subsidiary, RFS Investments Corp., was established solely
for the purpose of acquiring and holding investments which are permissible for
banks to hold under Massachusetts law. RFS Investments Corporation is classified
with the Massachusetts Department of Revenue as a "security corporation" under
Massachusetts law, qualifying it to take advantage of the low 1.32% income tax
rate on gross income applicable to companies that are so classified.
76
<PAGE>
REGULATION
GENERAL
The Bank is subject to extensive regulation, examination, and supervision
by the OTS, as its chartering agency. The Bank's savings deposit accounts are
insured up to applicable limits by the FDIC, and the Bank is a member of the
FHLB of Boston. The Bank must file reports with the OTS concerning its
activities and financial condition, and it must obtain regulatory approvals
prior to entering into certain transactions, such as mergers with, or
acquisitions of, other depository institutions. The OTS conduct periodic
examinations to assess the Bank's compliance with various regulatory
requirements. This regulation and supervision establishes a comprehensive
framework of activities in which a savings association can engage and is
intended primarily for the protection of the insurance fund and depositors.
The OTS has significant discretion in connection with their supervisory and
enforcement activities and examination policies, including policies with respect
to the classification of assets and the establishment of adequate loan loss
reserves for regulatory purposes. Any change in such policies, whether by the
OTS or the Congress, could have a material adverse impact on the Mutual Company,
the Stock Company or the Bank.
The following discussion is intended to be a summary of the material
statutes and regulations applicable to savings associations and their holding
companies, and it does not purport to be a comprehensive description of all such
statutes and regulations.
REGULATION OF FEDERAL SAVINGS ASSOCIATIONS
Business Activities. The Bank derives its lending and investment powers
from the Home Owners' Loan Act, as amended (the "HOLA"), and the regulations of
the OTS thereunder. Under these laws and regulations, the Bank may invest in
mortgage loans secured by residential and commercial real estate, commercial and
consumer loans, certain types of debt securities and certain other assets. The
Bank may also establish service corporations that may engage in activities not
otherwise permissible for the Bank, including certain real estate equity
investments and securities and insurance brokerage. These investment powers are
subject to various limitations, including (a) a prohibition against the
acquisition of any corporate debt security that is not rated in one of the four
highest rating categories; (b) a limit of 400% of an association's capital on
the aggregate amount of loans secured by non-residential real estate property;
(c) a limit of 20% of an association's assets on the aggregate amount of
commercial loans, with the amount of commercial loans in excess of 10% of assets
being limited to small business loans; (d) a limit of 35% of an association's
assets on the aggregate amount of consumer loans and acquisitions of certain
debt securities; (e) a limit of 5% of assets on non-conforming loans (loans in
excess of the specific limitations of the HOLA); and (f) a limit of the greater
of 5% of assets or an association's capital on certain construction loans made
for the purpose of financing what is or is expected to become residential
property.
Loans to One Borrower. Under the HOLA, savings associations are generally
subject to the same limits on loans to one borrower as are imposed on national
banks. Generally, under these limits, a savings association may not make a loan
or extend credit to a single or related group of borrowers in excess of 15% of
the association's unimpaired capital and surplus. Additional amounts may be
lent, not in excess of 10% of unimpaired capital and surplus, if such loans or
extensions of credit are fully secured by readily-marketable collateral. Such
collateral is defined to include certain debt and equity securities and bullion,
but generally does not include real estate. At June 30, 1998, the Bank's
regulatory limit on loans to one borrower was $883,000. As a result of the
offering, the Bank's regulatory limit on loans to one borrower will increase to
$1,487,000 (at the midpoint of the current valuation range). At June 30, 1998,
the Bank's largest aggregate amount of loans
77
<PAGE>
to one borrower was $604,608, and the second largest borrower had an aggregate
balance of $585,752. The Bank is in compliance with all applicable limitations
on loans to one borrower.
QTL Test. The HOLA requires a savings association to meet a qualified
thrift lender, or "QTL" test. Under the QTL test, a savings association is
required to maintain at least 65% of its "portfolio assets" in certain
"qualified thrift investments" in at least nine months of the most recent
12-month period. "Portfolio assets" means, in general, an association's total
assets less the sum of (a) specified liquid assets up to 20% of total assets,
(b) goodwill and other intangible assets, and (c) the value of property used to
conduct the association's business. "Qualified thrift investments" includes
various types of loans made for residential and housing purposes, investments
related to such purposes, including certain mortgage-backed and related
securities, and loans for personal, family, household and certain other purposes
up to a limit of 20% of an association's portfolio assets. Recent legislation
broadened the scope of "qualified thrift investments" to include 100% of an
institution's credit card loans, education loans, and small business loans. A
savings association may also satisfy the QTL test by qualifying as a "domestic
building and loan association" as defined in the Internal Revenue Code of 1986.
At June 30, 1998, the Bank maintained 89.54% of its portfolio assets in
qualified thrift investments. The Bank had also met the QTL test in each of the
prior 12 months and was, therefore, a qualified thrift lender.
A savings association that fails the QTL test must either operate under
certain restrictions on its activities or convert to a bank charter. The initial
restrictions include prohibitions against (a) engaging in any new activity not
permissible for a national bank, (b) paying dividends not permissible under
national bank regulations, (c) obtaining new advances from any Federal Home Loan
Bank and (d) establishing any new branch office in a location not permissible
for a national bank in the association's home state. In addition, within one
year of the date that a savings association ceases to meet the QTL test, any
company controlling the association would have to register under, and become
subject to the requirements of, the Bank Holding Company Act of 1956, as amended
(the "BHC Act"). If the savings association does not requalify under the QTL
test within the three-year period after it failed the QTL test, it would be
required to terminate any activity and to dispose of any investment not
permissible for a national bank and would have to repay as promptly as possible
any outstanding advances from a Federal Home Loan Bank. A savings association
that has failed the QTL test may requalify under the QTL test and be free of
such limitations, but it may do so only once.
Capital Requirements. The OTS regulations require savings associations to
meet three minimum capital standards: a tangible capital ratio requirement of
1.5% of total assets as adjusted under the OTS regulations, a leverage ratio
requirement of 3% of core capital to such adjusted total assets and a risk-based
capital ratio requirement of 8% of core and supplementary capital to total
risk-weighted assets. The OTS and the federal banking regulators have proposed
amendments to their minimum capital regulations to provide that the minimum
leverage capital ratio for a depository institution that has been assigned the
highest composite rating of 1 under the Uniform Financial Institutions Ratings
System will be 3% and that the minimum leverage capital ratio for any other
depository institution will be 4%, unless a higher leverage capital ratio is
warranted by the particular circumstances or risk profile of the depository
institution. In determining compliance with the risk-based capital requirement,
a savings association must compute its risk-weighted assets by multiplying its
assets and certain off-balance sheet items by risk-weights, which range from 0%
for cash and obligations issued by the United States Government or its agencies
to 100% for consumer and commercial loans, as assigned by the OTS capital
regulation based on the risks OTS believes are inherent in the type of asset.
Tangible capital is defined, generally, as common stockholders' equity
(including retained earnings), certain non-cumulative perpetual preferred stock
and related earnings and minority interests in equity accounts of fully
consolidated subsidiaries, less intangibles (other than certain mortgage
servicing rights) and investments in and loans to subsidiaries engaged in
activities not permissible for a national bank. Core capital is defined
78
<PAGE>
similarly to tangible capital, but core capital also includes certain qualifying
supervisory goodwill and certain purchased credit card relationships.
Supplementary capital currently includes cumulative and other perpetual
preferred stock, mandatory convertible securities, subordinated debt and
intermediate preferred stock and the allowance for loan and lease losses. The
allowance for loan and lease losses includable in supplementary capital is
limited to a maximum of 1.25% of risk-weighted assets, and the amount of
supplementary capital that may be included as total capital cannot exceed the
amount of core capital.
The OTS has promulgated a regulation that requires a savings association
with "above normal" interest rate risk, when determining compliance with its
risk-based capital requirement, to hold additional capital to account for its
"above normal" interest rate risk. A savings association's interest rate risk is
measured by the decline in the net portfolio value of its assets (i.e., the
difference between incoming and outgoing discounted cash flows from assets,
liabilities and off-balance sheet contracts) resulting from a hypothetical 2%
increase or decrease in market rates of interest, divided by the estimated
economic value of the association's assets, as calculated in accordance with
guidelines set forth by the OTS. At the times when the 3-month Treasury bond
equivalent yield falls below 4%, an association may compute its interest rate
risk on the basis of a decrease equal to one-half of that Treasury rate rather
than on the basis of 2%. A savings association whose measured interest rate risk
exposure exceeds 2% would be considered to have "above normal" risk. The
interest rate risk component is an amount equal to one-half of the difference
between the association's measured interest rate risk and 2%, multiplied by the
estimated economic value of the association's assets. That dollar amount is
deducted from an association's total capital in calculating compliance with its
risk-based capital requirement. Any required deduction for interest rate risk
becomes effective on the last day of the third quarter following the reporting
date of the association's financial data on which the interest rate risk was
computed. The regulations authorize the Director of the OTS to waive or defer an
association's interest rate risk component on a case-by-case basis. The OTS has
indefinitely deferred the implementation of the interest rate risk component in
the computation of an institution's risk-based capital requirements. The OTS
continues to monitor the interest rate risk of individual institutions and
retains the right to impose additional capital requirements on individual
institutions. At June 30, 1998, the Bank was not required to maintain any
additional risk-based capital under this rule.
At June 30, 1998, the Bank met each of its capital requirements.
The table below presents the Bank's regulatory capital as compared to the
OTS regulatory capital requirements at June 30, 1998.
<TABLE>
<CAPTION>
TO BE WELL CAPITALIZED
UNDER-PROMPT
FOR CAPITAL CORRECTIVE ACTION
ACTUAL ADEQUACY PURPOSES PROVISIONS
--------------------------- ------------------------ ------------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------ ----- ------ ----- ------ -----
(DOLLARS IN THOUSANDS)
As of June 30, 1998 (unaudited)
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to Risk Weighted Assets).... $6,332 17.89% $2,831 >=8.0% $3,539 >=10.0%
Core Capital (to Adjusted Tangible Assets). 5,889 6.63 3,555 >=4.0 4,443 >=5.0
Tangible Capital (to Tangible Assets)...... 5,889 6.63 1,333 >=1.5 N/A N/A
Tier 1 Capital (to Risk Weighted Assets)... 5,889 16.64 N/A N/A 2,124 >=6.0
</TABLE>
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A reconciliation between the Bank's regulatory capital and GAAP capital at
June 30, 1998 is presented below.
<TABLE>
<S> <C>
Equity........................................................ $ 6,374,214
Less: Unrealized holding gain on securities
available-for-sale, net of taxes (485,503)
-------------
Tangible/core capital......................................... 5,888,711
Plus: Allowance for loan losses............................... 443,000
-------------
Total risk based capital...................................... $ 6,331,711
=============
</TABLE>
Limitation on Capital Distributions. OTS regulations currently impose
limitations upon capital distributions by a savings association, such as cash
dividends, payments to repurchase or otherwise acquire its shares, payments to
stockholders of another institution in a cash-out merger and other distributions
charged against capital. At least 30-days written notice must be given to the
OTS of a proposed capital distribution by a savings association, and capital
distributions in excess of specified earnings or by certain institutions are
subject to approval by the OTS. An association that has capital in excess of all
fully phased-in regulatory capital requirements before and after a proposed
capital distribution and that is not otherwise restricted in making capital
distributions, may, after prior notice but without the approval of the OTS, make
capital distributions during a calendar year equal to the greater of (a) 100% of
its net earnings to date during the calendar year plus the amount that would
reduce by one-half its "surplus capital ratio" (the excess capital over its
fully phased-in capital requirements) at the beginning of the calendar year, or
(b) 75% of its net earnings for the previous four quarters. Any additional
capital distributions would require prior OTS approval. In addition, the OTS can
prohibit a proposed capital distribution, otherwise permissible under the
regulation, if the OTS has determined that the association is in need of more
than normal supervision or if it determines that a proposed distribution by an
association would constitute an unsafe or unsound practice. Furthermore, under
the OTS prompt corrective action regulations, the Bank would be prohibited from
making any capital distribution if, after the distribution, the Bank failed to
meet its minimum capital requirements, as described above. See "-- Prompt
Corrective Regulatory Action." The OTS has proposed amendments of its capital
distribution regulations to reduce regulatory burdens on savings associations.
If adopted as proposed, certain savings associations will be permitted to pay
capital distributions within the amounts described above for Tier 1 institutions
without notice to, or the approval of, the OTS. However, a savings association
subsidiary of a savings and loan holding company, such as the Bank after the
Reorganization, will continue to have to file a notice unless the specific
capital distribution requires an application.
Liquidity. The Bank is required to maintain an average daily balance of
liquid assets (cash, certain time deposits, certain bankers' acceptances,
specified United States Government, state and federal agency obligations, shares
of certain mutual funds and certain corporate debt securities and commercial
paper) equal to a monthly average of not less than a specified percentage of its
net withdrawable deposit accounts plus short-term borrowings. This liquidity
requirement may be changed from time to time by the OTS to any amount within the
range of 4% to 10% depending upon economic conditions and the savings flows of
member institutions, and is currently 4%. Monetary penalties may be imposed for
failure to meet the liquidity requirement. The Bank's average liquidity ratio
for the month ended June 30, 1998 was 9.78% which exceeded the applicable
requirements. The Bank has never been subject to monetary penalties for failure
to meet its liquidity requirements.
Assessments. Savings associations are required by OTS regulation to pay
assessments to the OTS to fund the operations of the OTS. The general
assessment, paid on a semi-annual basis, is computed upon the
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savings association's total assets, including consolidated subsidiaries, as
reported in the association's latest quarterly Thrift Financial Report. During
January and July 1998, the Bank paid assessments of $14,272 and $14,911,
respectively.
The OTS has proposed amendments to its regulations that are intended to
assess savings associations on a more equitable basis. The proposed regulations
would base the assessment for an individual savings associaton on three
components: the size of the association, on which the basic assessment would be
based; the associaton's supervisory condition, which would result in percentage
increases for any savings institution with a composite rating of 3, 4 or 5 in
its most recent safety and soundness examination; and the complexity of the
association's operations, which would result in percentage increases for a
savings association that managed over $1 billion in trust assets, serviced for
others loans aggregating more than $1 billion, or had certain off-balance sheet
assets aggregating more than $1 billion. In order to avoid a disproportionate
impact on the smaller savings institutions, the OTS is proposing to permit the
portion of the assessment based on assets size either under the current
regulations or under the amended regulations. Management believes that, assuming
the proposed regulations are adopted as proposed, any change in its rate of OTS
assessments will not be material.
Branching. Subject to certain limitations, the HOLA and the OTS regulations
permit federally chartered savings associations to establish branches in any
state of the United States. The authority to establish such branches is
available (a) in states that expressly authorize branches of savings
associations located in another state or (b) to an association that qualifies as
a "domestic building and loan association" under the Internal Revenue Code of
1986, which imposes qualification requirements similar to those for a "qualified
thrift lender" under the HOLA. See "-- QTL Test." The authority for a federal
savings association to establish an interstate branch network would facilitate a
geographic diversification of the association's activities. This authority under
the HOLA and the OTS regulations preempts any state law purporting to regulate
branching by federal savings associations.
Community Reinvestment. Under the Community Reinvestment Act (the "CRA"),
as implemented by OTS regulations, a savings association has a continuing and
affirmative obligation consistent with its safe and sound operation to help meet
the credit needs of its entire community, including low and moderate income
neighborhoods. The CRA does not establish specific lending requirements or
programs for financial institutions nor does it limit an institution's
discretion to develop the types of products and services that it believes are
best suited to its particular community, consistent with the CRA. The CRA
requires the OTS, in connection with its examination of a savings association,
to assess the association's record of meeting the credit needs of its community
and to take such record into account in its evaluation of certain applications
by such association. The CRA also requires all institutions to make public
disclosure of their CRA ratings. The Bank received a "Satisfactory" CRA rating
in its most recent examination.
In April 1995, the OTS and the other federal banking agencies adopted
amendments revising their CRA regulations. Among other things, the amended CRA
regulations substitute for the prior process-based assessment factors a new
evaluation system that would rate an institution based on its actual performance
in meeting community needs. In particular, the proposed system would focus on
three tests: (a) a lending test, to evaluate the institution's record of making
loans in its assessment areas; (b) an investment test, to evaluate the
institution's record of investing in community development projects, affordable
housing, and programs benefitting low or moderate income individuals and
businesses; and (c) a service test, to evaluate the institution's delivery of
services through its branches, ATMs and other offices. The amended CRA
regulations also clarify how an institution's CRA performance would be
considered in the application process.
Transactions with Related Parties. The Bank's authority to engage in
transactions with its "affiliates" is limited by the OTS regulations and by
Sections 23A and 23B of the Federal Reserve Act (the "FRA"). In
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general, an affiliate of the Bank is any company that controls the Bank or any
other company that is controlled by a company that controls the Bank, excluding
the Bank's subsidiaries other than those that are insured depository
institutions. The OTS regulations prohibit a savings association including any
of its subsidiaries (a) from lending to any of its affiliates that is engaged in
activities that are not permissible for bank holding companies under Section
4(c) of the BHC Act and (b) from purchasing the securities of any affiliate
other than a subsidiary. Section 23A limits the aggregate amount of transactions
with any individual affiliate to 10% of the capital and surplus of the savings
association and also limits the aggregate amount of transactions with all
affiliates to 20% of the savings association's capital and surplus. Extensions
of credit to affiliates are required to be secured by collateral in an amount
and of a type described in Section 23A, and the purchase of low quality assets
from affiliates is generally prohibited. Section 23B provides that certain
transactions with affiliates, including loans and asset purchases, must be on
terms and under circumstances, including credit standards, that are
substantially the same or at least as favorable to the association as those
prevailing at the time for comparable transactions with non-affiliated
companies. In the absence of comparable transactions, such transactions may only
occur under terms and circumstances, including credit standards, that in good
faith would be offered to or would apply to non-affiliated companies.
The Bank's authority to extend credit to its directors, executive officers,
and 10% shareholders, as well as to entities controlled by such persons, is
currently governed by the requirements of Sections 22(g) and 22(h) of the FRA
and Regulation O of the FRB thereunder. Among other things, these provisions
require that extensions of credit to insiders (a) be made on terms that are
substantially the same as, and follow credit underwriting procedures that are
not less stringent than, those prevailing for comparable transactions with
unaffiliated persons and that do not involve more than the normal risk of
repayment or present other unfavorable features and (b) not exceed certain
limitations on the amount of credit extended to such persons, individually and
in the aggregate, which limits are based, in part, on the amount of the
association's capital. In addition, extensions of credit in excess of certain
limits must be approved by the association's Board of Directors.
Enforcement. Under the Federal Deposit Insurance Act (the "FDI Act"), the
OTS has primary enforcement responsibility over savings associations and has the
authority to bring enforcement action against all "institution-affiliated
parties," including any controlling stockholder or any stockholder, attorney,
appraiser or accountant who knowingly or recklessly participates in any
violation of applicable law or regulation or breach of fiduciary duty or certain
other wrongful actions that causes or is likely to cause a more than a minimal
loss or other significant adverse effect on an insured savings association.
Civil penalties cover a wide range of violations and actions and range from
$5,000 for each day during which violations of law, regulations, orders, and
certain written agreements and conditions continue, up to $1 million per day for
such violations if the person obtained a substantial pecuniary gain as a result
of such violation or knowingly or recklessly caused a substantial loss to the
institution. Criminal penalties for certain financial institution crimes include
fines of up to $1 million and imprisonment for up to 30 years. In addition,
regulators have substantial discretion to take enforcement action against an
institution that fails to comply with its regulatory requirements, particularly
with respect to its capital requirements. Possible enforcement actions range
from the imposition of a capital plan and capital directive to receivership,
conservatorship, or the termination of deposit insurance. Under the FDI Act, the
FDIC has the authority to recommend to the Director of OTS that enforcement
action be taken with respect to a particular savings association. If action is
not taken by the Director of the OTS, the FDIC has authority to take such action
under certain circumstances.
Standards for Safety and Soundness. Pursuant to the FDI Act, as amended by
FDICIA and the Riegle Community Development and Regulatory Improvement Act of
1994 (the "Community Development Act"), the OTS and the federal bank regulatory
agencies have adopted, effective August 9, 1995, a set of guidelines prescribing
safety and soundness standards pursuant to FDICIA, as amended. The guidelines
establish general standards relating to internal controls and information
systems, internal audit systems, loan documentation,
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credit underwriting, interest rate exposure, asset growth, asset quality,
earnings, and compensation, fees and benefits. In general, the guidelines
require, among other things, appropriate systems and practices to identify and
manage the risks and exposures specified in the guidelines. The guidelines
prohibit excessive compensation as an unsafe and unsound practice and describe
compensation as excessive when the amounts paid are unreasonable or
disproportionate to the services performed by an executive officer, employee,
director, or principal stockholder. In addition, the OTS adopted regulations
that authorize, but do not require, the OTS to order an institution that has
been given notice by the OTS that it is not satisfying any of such safety and
soundness standards to submit a compliance plan. If, after being so notified, an
institution fails to submit an acceptable compliance plan or fails in any
material respect to implement an accepted compliance plan, the OTS must issue an
order directing action to correct the deficiency and may issue an order
directing other actions of the types to which an undercapitalized association is
subject under the "prompt corrective action" provisions of FDICIA. If an
institution fails to comply with such an order, the OTS may seek to enforce such
order in judicial proceedings and to impose civil money penalties.
Real Estate Lending Standards. The OTS and the other federal banking
agencies adopted regulations to prescribe standards for extensions of credit
that (a) are secured by real estate or (b) are made for the purpose of financing
the construction of improvements on real estate. The OTS regulations require
each savings association to establish and maintain written internal real estate
lending standards that are consistent with safe and sound banking practices and
appropriate to the size of the association and the nature and scope of its real
estate lending activities. The standards also must be consistent with
accompanying OTS guidelines, which include loan-to-value ratios for the
different types of real estate loans. Associations are also permitted to make a
limited amount of loans that do not conform to the proposed loan-to-value
limitations so long as such exceptions are reviewed and justified appropriately.
The guidelines also describe the procedures to be followed for loans that would
be exceptions to the loan-to-value standards.
Prompt Corrective Regulatory Action. Under the OTS prompt corrective action
regulations, the OTS is required to take certain, and is authorized to take
other, supervisory actions against undercapitalized savings associations. For
this purpose, a savings association would be placed in one of five categories
based on the association's capital. Generally, a savings association is treated
as "well capitalized" if its ratio of total capital to risk-weighted assets is
at least 10.0%, its ratio of core capital to risk-weighted assets is at least
6.0%, its ratio of core capital to total assets is at least 5.0%, and it is not
subject to any order or directive by the OTS to meet a specific capital level. A
savings association will be treated as "adequately capitalized" if its ratio of
total capital to risk-weighted assets is at least 8.0%, its ratio of core
capital to risk-weighted assets is at least 4.0%, and its ratio of core capital
to total assets is at least 4.0% (3.0% if the association receives the highest
rating under the Uniform Financial Institutions Rating System). A savings
association that has a total risk-based capital of less than 8.0% or a leverage
ratio or a Tier 1 capital ratio that is less than 4.0% (3.0% leverage ratio if
the association receives the highest rating under the Uniform Financial
Institutions Rating System) is considered to be "undercapitalized." A savings
association that has a total risk-based capital of less than 6.0% or a Tier 1
risk-based capital ratio or a leverage ratio of less than 3.0% is considered to
be "significantly undercapitalized." A savings association that has a tangible
capital to assets ratio equal to or less than 2% is deemed to be "critically
undercapitalized." The elements of an association's capital for purposes of the
prompt corrective action regulations are defined generally as they are under the
regulations for minimum capital requirements. See "-- Capital Requirements."
The severity of the action authorized or required to be taken under the
prompt corrective action regulations increases as an association's capital
deteriorates within the three undercapitalized categories. All associations are
prohibited from paying dividends or other capital distributions or paying
management fees to any controlling person if, following such distribution, the
association would be undercapitalized. An undercapitalized association is
required to file a capital restoration plan within 45 days of the date the
association
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receives notice that it is within any of the three undercapitalized categories.
The OTS is required to monitor closely the condition of an undercapitalized
association and to restrict the asset growth, acquisitions, branching, and new
lines of business of such an association. Significantly undercapitalized
associations are subject to restrictions on compensation of senior executive
officers; such an association may not, without OTS consent, pay any bonus or
provide compensation to any senior executive officer at a rate exceeding the
officer's average rate of compensation (excluding bonuses, stock options and
profit-sharing) during the 12 months preceding the month when the association
became undercapitalized. A significantly undercapitalized association may also
be subject, among other things, supervisory orders to change the composition of
its Board of Directors or senior management, additional restrictions on
transactions with affiliates, restrictions on acceptance of deposits from
correspondent associations, further restrictions on asset growth, restrictions
on rates paid on deposits, direction to terminate or reduce activities deemed
risky, and any further operational restriction deemed necessary by the OTS.
If one or more grounds exist for appointing a conservator or receiver for
an association, the OTS may require the association to issue additional debt or
stock, sell assets, be acquired by a depository association holding company or
combine with another depository association. The OTS and the FDIC have a broad
range of grounds under which they may appoint a receiver or conservator for an
insured depository association. Under FDICIA, the OTS is required to appoint a
receiver (or with the concurrence of the FDIC, a conservator) for a critically
undercapitalized association within 90 days after the association becomes
critically undercapitalized or, with the concurrence of the FDIC, to take such
other action that would better achieve the purposes of the prompt corrective
action provisions. Such alternative action can be renewed for successive 90- day
periods. However, if the association continues to be critically undercapitalized
on average during the quarter that begins 270 days after it first became
critically undercapitalized, a receiver must be appointed, unless the OTS makes
certain findings with which the FDIC concurs and the Director of the OTS and the
Chairman of the FDIC certify that the association is viable. In addition, an
association that is critically undercapitalized is subject to more severe
restrictions on its activities, and is prohibited, without prior approval of the
FDIC from, among other things, entering into certain material transactions or
paying interest on new or renewed liabilities at a rate that would significantly
increase the association's weighted average cost of funds.
When appropriate, the OTS can require corrective action by a savings
association holding company under the "prompt corrective action" provisions of
FDICIA.
Insurance of Deposit Accounts. The Bank is a member of the SAIF, and the
Bank pays its deposit insurance assessments to the SAIF. The FDIC also maintains
another insurance fund, the Bank Insurance Fund (the "BIF"), which primarily
insures the deposits of banks and state chartered savings banks.
Pursuant to FDICIA, the FDIC established a new risk-based assessment system
for determining the deposit insurance assessments to be paid by insured
depository institutions. Under the assessment system, the FDIC assigns an
institution to one of three capital categories based on the institution's
financial information as of the reporting period ending seven months before the
assessment period. The three capital categories consist of (a) well capitalized,
(b) adequately capitalized, or (c) undercapitalized. The FDIC also assigns an
institution to one of three supervisory subcategories within each capital group.
The supervisory subgroup to which an institution is assigned is based on a
supervisory evaluation provided to the FDIC by the institution's primary federal
regulator and information that the FDIC determines to be relevant to the
institution's financial condition and the risk posed to the deposit insurance
funds. An institution's assessment rate depends on the capital category and
supervisory category to which it is assigned. Under the regulation, there are
nine assessment risk classifications (i.e., combinations of capital groups and
supervisory subgroups) to which different assessment rates are applied.
Assessment rates currently range from 0.0% of deposits for an institution in the
highest category (i.e., well-capitalized and financially sound, with no more
than a few minor weaknesses) to 0.27%
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of deposits for an institution in the lowest category (i.e., undercapitalized
and substantial supervisory concern). The FDIC is authorized to raise the
assessment rates as necessary to maintain the required reserve ratio of 1.25%.
As a result of the Deposit Insurance Funds Act of 1996 (the "Funds Act"), both
the BIF and the SAIF currently satisfy the reserve ratio requirement. If the
FDIC determines that assessment rates should be increased, institutions in all
risk categories could be affected. The FDIC has exercised this authority several
times in the past and could raise insurance assessment rates in the future. If
such action is taken by the FDIC, it could have an adverse effect on the
earnings of the Bank.
The Funds Act also amended the FDIA to expand the assessment base for the
payments on the FICO bonds. Beginning January 1, 1997, the assessment base for
the FICO bonds included the deposits of both BIF- and SAIF-insured institutions.
Until December 31, 1999, or such earlier date on which the last savings
association ceases to exist, the rate of assessment for BIF-assessable deposits
shall be one-fifth of the rate imposed on SAIF-assessable deposits. The annual
rate of assessments for the payments on the FICO bonds for the semi-annual
period beginning on July 1, 1998 was 0.0122% for BIF-assessable deposits and
0.0610% for SAIF-assessable deposits.
The Funds Act also provides for the merger of the BIF and SAIF on January
1, 1999, with such merger being conditioned upon the prior elimination of the
thrift charter. The Funds Act required the Secretary of the Treasury to conduct
a study of relevant factors with respect to the development of a common charter
for all insured depository institutions and abolition of separate charters for
banks and thrifts and to report the Secretary's conclusions and findings to the
Congress. The Secretary of the Treasury recommended to the Congress that the
separate charter for thrifts be eliminated only if other legislation is adopted
that permits bank holding companies to engage in certain non-financial
activities. However, the current version of bank modernization legislation, The
Financial Services Act of 1998, H.R. 10, which was passed by the U.S. House of
Representatives in May 1998 and is currently being considered by the U.S.
Senate, does not require thrift institutions to convert to bank charter.
Under the FDI Act, insurance of deposits may be terminated by the FDIC upon
a finding that the institution has engaged in unsafe or unsound practices, is in
an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC or the
OTS. The management of the Bank does not know of any practice, condition or
violation that might lead to termination of deposit insurance.
Federal Home Loan Bank System. The Bank is a member of the FHLB of Boston,
which is one of the regional Federal Home Loan Banks composing the Federal Home
Loan Bank System. Each Federal Home Loan Bank provides a central credit facility
primarily for its member institutions. The Bank, as a member of the FHLB of
Boston, is required to acquire and hold shares of capital stock in the FHLB of
Boston in an amount at least equal to the greater of 1% of the aggregate
principal amount of its unpaid residential mortgage loans and similar
obligations at the beginning of each year or 1/20 of its advances (borrowings)
from the FHLB of Boston. The Bank was in compliance with this requirement with
an investment in the capital stock of the FHLB of Boston at June 30, 1998, of
$1.5 million. Any advances from a Federal Home Loan Bank must be secured by
specified types of collateral, and all long-term advances may be obtained only
for the purpose of providing funds for residential housing finance.
The Federal Home Loan Banks are required to provide funds for the
resolution of insolvent thrifts and to contribute funds for affordable housing
programs. These requirements could reduce the amount of earnings that the
Federal Home Loan Banks can pay as dividends to their members and could also
result in the Federal Home Loan Banks imposing a higher rate of interest on
advances to their members. The FHLB of Boston paid dividends on the Bank's
capital stock of $91,000, $60,000 and $53,000 during the years ended September
30,
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1997, 1996 and 1995, respectively. If dividends were reduced, or interest on
future Federal Home Loan Bank advances increased, the Bank's net interest income
would likely also be reduced.
Federal Reserve System. The Bank is subject to provisions of the FRA and
the FRB's regulations pursuant to which depository institutions may be required
to maintain noninterest-earning reserves against their deposit accounts and
certain other liabilities. Currently, reserves must be maintained against
transaction accounts (primarily NOW and regular checking accounts). The FRB
regulations generally require that reserves be maintained in the amount of 3% of
the aggregate of transaction accounts up to $47.8 million. The amount of
aggregate transaction accounts in excess of $47.8 million are currently subject
to a reserve ratio of 10%, which ratio the FRB may adjust between 8% and 12%.
The FRB regulations currently exempt $4.7 million of otherwise reservable
balances from the reserve requirements, which exemption is adjusted by the FRB
at the end of each year. The Bank is in compliance with the foregoing reserve
requirements. Because required reserves must be maintained in the form of either
vault cash, a noninterest-bearing account at a Federal Reserve Bank, or a
pass-through account as defined by the FRB, the effect of this reserve
requirement is to reduce the Bank's interest-earning assets. The balances
maintained to meet the reserve requirements imposed by the FRB may be used to
satisfy liquidity requirements imposed by the OTS. Federal Home Loan Bank System
members are also authorized to borrow from the Federal Reserve "discount
window," but FRB regulations require such institutions to exhaust all Federal
Home Loan Bank sources before borrowing from a Federal Reserve Bank.
REGULATION OF THE HOLDING COMPANY
General. The Mutual Company and the Stock Company are holding companies
chartered pursuant to Section 10(o) of the HOLA. As such, the Mutual Company and
the Stock Company are registered with and subject to OTS examination and
supervision as well as certain reporting requirements. In addition, the OTS has
enforcement authority over the Mutual Company and the Stock Company and any of
its non-savings institution subsidiaries. Among other things, this authority
permits the OTS to restrict or prohibit activities that are determined to be a
serious risk to the financial safety, soundness, or stability of a subsidiary
savings institution. Unlike bank holding companies, federal mutual holding
companies are not subject to any regulatory capital requirements or to
supervision by the Federal Reserve System.
Restrictions Applicable to Activities of Mutual Holding Companies. Pursuant
to Section 10(o) of the HOLA, a mutual holding company, such as the Mutual
Company, and a federally chartered mid-tier holding company such as the Stock
Company may engage only in the following activities: (i) investing in the stock
of a savings institution; (ii) acquiring a mutual association through the merger
of such association into a savings institution subsidiary of such holding
company or an interim savings institution subsidiary of such holding company;
(iii) merging with or acquiring another holding company, one of whose
subsidiaries is a savings institution; (iv) investing in a corporation the
capital stock of which is available for purchase by a savings institution under
federal law or under the law of any state where the subsidiary savings
institution or associations have their home offices; (v) furnishing or
performing management services for a savings institution subsidiary of such
holding company; (vi) holding, managing, or liquidating assets owned or acquired
from a savings institution subsidiary of such company; (vii) holding or managing
properties used or occupied by a savings institution subsidiary of such company;
(viii) acting as trustee under a deed of trust; (ix) any other activity (a) that
the FRB, by regulation, has determined to be permissible for bank holding
companies under Section 4(c) of the BHC Act, unless the Director of the OTS, by
regulation, prohibits or limits any such activity for savings and loan holding
companies, or (b) in which multiple savings and loan holding companies were
authorized by regulation to directly engage on March 5, 1987; and (x)
purchasing, holding, or disposing of stock acquired in connection with a
qualified stock issuance if the purchase of such stock by such holding company
is approved by the Director of the OTS. If a mutual holding company acquires or
merges with another holding company, the holding company acquired or the holding
company resulting from such merger or acquisition may only
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invest in assets and engage in activities listed above, and it has a period of
two years to cease any non-conforming activities and divest any non-conforming
investments.
Restrictions Applicable to All Savings and Loan Holding Companies. The HOLA
prohibits a savings and loan holding company, including the Stock Company and
the Mutual Company, directly or indirectly, from acquiring (i) control (as
defined under HOLA) of another savings institution (or a holding company parent
thereof) without prior OTS approval; (ii) more than 5% of the voting shares of
another savings institution (or holding company parent thereof) that is not a
subsidiary, subject to certain exceptions; (iii) through merger, consolidation,
or purchase of assets, another savings institution or a holding company thereof,
or acquiring all or substantially all of the assets of such institution (or a
holding company thereof) without prior OTS approval; or (iv) control of any
depository institution not insured by the FDIC (except through a merger with and
into the holding company's savings institution subsidiary that is approved by
the OTS).
A savings and loan holding company may not acquire as a separate subsidiary
an insured institution that has a principal office outside of the state where
the principal office of its subsidiary institution is located, except (i) in the
case of certain emergency acquisitions (as defined under HOLA) approved by the
FDIC; (ii) if such holding company controls a savings institution subsidiary
that operated a home or branch office in such additional state as of March 5,
1987, or (iii) if the laws of the state in which the savings institution to be
acquired is located specifically authorize a savings institution chartered by
that state to be acquired by a savings institution chartered by the state where
the acquiring savings institution or savings and loan holding company is located
or by a holding company that controls such a state chartered association. The
conditions imposed upon interstate acquisitions by those states that have
enacted authorizing legislation vary. Some states impose conditions of
reciprocity, which have the effect of requiring that the laws of both the state
in which the acquiring holding company is located (as determined by the location
of its subsidiary savings institution) and the state in which the association to
be acquired is located, have each enacted legislation allowing its savings
institutions to be acquired by out-of-state holding companies on the condition
that the laws of the other state authorize such transactions on terms no more
restrictive than those imposed on the acquirer by the state of the target
association. Some of these states also impose regional limitations, which
restrict such acquisitions to states within a defined geographic region. Other
states allow full nationwide banking without any condition of reciprocity. Some
states do not authorize interstate acquisitions of savings institutions. In
evaluating an application by a holding company to acquire a savings institution,
the OTS must consider the financial and managerial resources and future
prospects of the company and savings institution involved, the effect of the
acquisition on the risk to the insurance funds, the convenience and needs of the
community, and competitive factors.
If the savings institution subsidiary of a federal mutual holding company
fails to meet the QTL test set forth in Section 10(m) of the HOLA and
regulations of the OTS, the holding company must register with the FRB as a bank
holding company under the BHC Act within one year of the savings institution's
failure to so qualify.
FEDERAL SECURITIES LAWS
The Common Stock to be issue in the Offering will be registered with the
SEC under the Exchange Act. The Stock Company will be subject to the
information, proxy solicitation, insider trading restrictions and other
requirements of the SEC under the Exchange Act.
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MANAGEMENT
The Board of Directors of the Bank is divided into three groups, each of
which contains approximately one-third of the Board. The directors are elected
for staggered three-year terms, or until their successors are elected and
qualified. One group of directors, consisting of Messrs. Todisco, Verrengia, and
Mattuchio has a term of office expiring at the first annual meeting of
stockholders; a second group, consisting of Messrs. McCarthy, Becker, and
O'Brien, has a term of office expiring at the second annual meeting of
stockholders; and a third group, consisting of Messrs. Bommer, Conte, and
Charles has a term of office expiring at the third annual meeting of
stockholders. Their names and biographical information are set forth under "--
Directors."
DIRECTORS
The following table sets forth certain information regarding the Board of
Directors of the Bank in its mutual form who will initially serve on the Board
of Directors of the Bank in its stock form and on the Board of Directors of the
Stock Company.
<TABLE>
<CAPTION>
CURRENT
DIRECTOR TERM
DIRECTORS AGE(1) POSITION SINCE EXPIRES
- ----------- ------- -------- -------- --------
<S> <C> <C> <C>
Ernest F. Becker....................... 68 Vice-Chairman 1977 2001
and Director
Arno P. Bommer......................... 71 Chairman of the 1955 2001
Board and Director
Theodore E. Charles.................... 55 Director 1997 2000
Anthony R. Conte....................... 50 Director 1988 2001
Carmen R. Mattuchio.................... 60 Director 1994 1999
James J. McCarthy...................... 37 President, Chief Executive 1989 2000
Officer and Director
J. Michael O'Brien..................... 45 Director 1997 2000
Angelo A. Todisco...................... 69 Director 1980 1999
John J. Verrengia...................... 42 Director 1994 1999
</TABLE>
- -------------
(1) At July 1, 1998.
BIOGRAPHICAL INFORMATION
Set forth below is certain information regarding the directors and
executive officers of the Bank. Unless otherwise indicated, each director and
executive officer has held his current occupation for the last five years.
Ernest F. Becker has been a director of the Bank since 1977. Mr. Becker, a
licensed engineer, served as Chief Engineer, Vice President and President of
Whitmore Company, an engineering company located in Revere, Massachusetts, from
1952 until his retirement in 1996.
Arno P. Bommer has served on the Board of Directors of the Bank since 1955.
He was elected to the position of Chairman of the Bank's Board of Directors in
1978. Mr. Bommer is a consultant to both the Massachusetts Dental Service
Corporation and the Division of Medical Assistance of the Commonwealth of
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Massachusetts. He is also a partner in Fanuiel Associates, which provides dental
office reviews throughout the Commonwealth of Massachusetts. Mr. Bommer is a
also a licensed dentist and had a private practice in Revere, Massachusetts
before his retirement in 1996.
Theodore E. Charles has been a director of the Bank since 1996. Mr. Charles
is the Chairman of the Board and Chief Executive Officer of Investors Capital
Holdings which is located in Lynnfield, Massachusetts. As Chairman and Chief
Executive Officer of Investors Capital Holdings, Mr. Charles is responsible for
supervising the brokerage and investment services provided by its affiliates,
Investors Capital Corporation, a brokerage concern registered with the National
Association of Securities Dealers and Eastern Point Advisors, registered
investment advisors.
Anthony R. Conte was elected to the Bank's Board of Directors in 1988. Mr.
Conte has been a practicing attorney since 1974. He is presently the Regional
Solicitor for the U.S. Department of the Interior, Northeast Region.
Carmen R. Mattuchio has served on the Board of Directors of the Bank since
1994. Mr. Mattuchio is the owner of Burnett & Moynihan, Inc., a building
materials supplier, located in Revere, Massachusetts. Mr. Mattuchio has been
self-employed by Burnett & Moynihan for the past 20 years.
James J. McCarthy has served as President and Chief Executive Officer of
the Bank since 1989. He has also served as a director of the Bank since 1989.
Prior to joining the Bank, Mr. McCarthy, a CPA, was employed by the predecessor
to Ernst & Young, Boston, Massachusetts, serving in a variety of audit
functions. Mr. McCarthy has also been employed by Pell Rudman & Company, a
Broker Dealer/Investment Advisor firm as a consultant with respect to accounting
and reporting to the NASD. Mr. McCarthy is on the Board of Directors of the
Massachusetts Bankers Association and is involved in many local Revere charities
and business organizations including the Revere Chamber of Commerce, Revere
Rotary and the Revere Partnership for Economic Development. Mr. McCarthy also
served as the Executive Committee Chairman of the Massachusetts Thrift Fund for
Economic Development until its dissolution in 1997.
J. Michael O'Brien has been a director of the Bank since 1997. He is the
President, Chief Executive Officer and a principal of Eagle Air Freight, a
domestic air freight provider, founded in 1981 and based in Chelsea,
Massachusetts. Mr. O'Brien is also the trustee and a principal of O'Brien Realty
Trust. O'Brien Realty Trust owns and leases warehouse and commercial office
space in Chelsea, Massachusetts.
Angelo A. Todisco was elected to the Board of Directors of the Bank in
1980. Mr. Todisco is a retired licensed public adjuster and serves as President
of DePiano & Todisco Adjusters, Inc. which appraises damages to residential and
commercial properties on behalf of its clients in connection with the settlement
of insurance claims.
John J. Verrengia has served on the Board of Directors of the Bank since
1994. Mr. Verrengia is a certified public accountant and is currently
self-employed as principal accountant of John J. Verrengia, CPA, a professional
corporation. Mr. Verrengia is also a registered investment advisor and provides
financial and investment advice to clients through Anchor Investments, a
consulting firm which he founded in 1992.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Anthony J. Patti, age 43, has been the Executive Vice President and Chief
Financial Officer of the Bank since 1992. He is responsible for the financial,
lending operations, information systems customer service and marketing functions
of the Bank on a day-to-day basis. Prior to joining the Bank, Mr. Patti served
as an
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Operations Specialist for the Resolution Trust Corporation. Mr. Patti has also
been employed by Home Owners Savings Bank, F.S.B., located in Boston,
Massachusetts where he served as a First Vice President and Controller and by
Andover Savings Bank, Andover, Massachusetts, where he served as Comptroller.
Judith E. Tenaglia, age 46, has been employed by the Bank for 21 years and
has been Treasurer of the Bank since 1991. Prior to becoming the Bank's
Treasurer, Ms. Tenaglia worked in the customer service department of the Bank.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Bank meets on a monthly basis and may have
additional special meetings upon request of the Chairman of the Board. During
the fiscal year ended September 30, 1997, the Board of Directors met 12 times.
No current director attended fewer than 75% of the total number of Board
meetings and no fewer than 75% of the total number of committee meetings of
which such director was a member.
The Board's Nominating Committee consists of Messrs. Bommer, McCarthy and
Becker, with Director Bommer serving as the Chairman of this Committee. This
Committee nominates individuals for election to the Bank's Board of Directors.
The Committee met three times during the fiscal year ended September 30, 1997.
The Board's Compensation Committee consists of Messrs. Becker, Charles,
McCarthy and Bommer and is chaired by Director Becker. The Compensation
Committee provides advice and recommendations to the Board in areas of employee
salaries and directors' compensation. This Committee met 5 times during the
fiscal year ended September 30, 1997.
The Audit Committee function is carried out by the entire Board of
Directors and is responsible for reviewing a number of periodic management
reports. It also reviews the annual audit and audit report prepared by the
independent accountants and recommends the appointment of the accountants.
The Executive Committee, under certain circumstances and to the extent
permitted by law, can exercise all powers of the Board of Directors when the
Board is not in session. The Executive Committee held 11 meetings in fiscal
1997. The present members of the Executive Committee are Messrs. Bommer
(Chairman), Becker and McCarthy.
It is anticipated that after the Reorganization, the Board of Directors of
the Bank in its stock form and/or the Board of Directors of the Stock Company
will establish committees which initially are identical in responsibilities and
composition to the committees of the Board of Directors of the Bank in its
mutual form.
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DIRECTORS' COMPENSATION
Fee Arrangements. Members of the Board of Directors of the Bank receive a
fee of $275 for attendance at each of the twelve regularly scheduled meetings of
the Board of Directors with the Chairman and Vice- Chairman receiving $300 for
each meeting attended. The directors also receive fees ranging from $25 to $50
per month for each committee meeting attended. The aggregate amount of
directors' fees paid during fiscal 1997 totaled $19,750 and the aggregate amount
of committee fees totaled $4,125. It is anticipated that members of the Board of
Directors of the Stock Company will not receive compensation for their services
on such Board but will participate in the Option and Restricted Stock Programs
expected to be implemented by the Stock Company for directors, officers,
executives and key employees following the completion of the Reorganization and
Offering.
EXECUTIVE COMPENSATION
Compensation Decisions. Decisions regarding the compensation of the Stock
Company's executives will be determined by the members of the Compensation
Committee to be established by the Board of Directors of the Stock Company
following the Reorganization. However, because directors employed by the Stock
Company who are appointed to serve on the Compensation Committee will not be
permitted to make decisions with respect to the compensation and benefits
payable to executives of the Stock Company, no interlocks will exist between
members of the Compensation Committee and the employees of the Stock Company.
Cash Compensation. The following table sets forth the cash compensation
paid by the Bank for services rendered in all capacities during the fiscal year
ended September 30, 1997 to the Chief Executive Officer of the Bank and all
other executive officers of the Bank who received compensation in excess of
$100,000 (each, a "Named Executive Officer") during such fiscal year.
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<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1)
- ----------------------------------------------------------------------------------------------------------===---------
OTHER ANNUAL LONG-TERM ALL OTHER
NAME AND FISCAL COMPENSATION INCENTIVE PLAN COMPENSATION
PRINCIPAL YEAR SALARY ($) BONUS ($) ($)(2) PAYOUT (3) ($)(4)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James J. McCarthy, 1997 112,013 4,039 -- -- 4,750
President and Chief
Executive Officer
Anthony J. Patti, 1997 92,474 3,400 -- -- 4,750
Executive Vice President
and Chief Financial
Officer
</TABLE>
- --------------------
(1) Under Annual Compensation, the column titled "Salary" includes the Named
Executive Officer's base salary including all payroll deductions for health
insurance under the Bank's health insurance plan and pre-tax contributions
to the Bank's 401(k) Plan.
(2) For the fiscal year ended September 30, 1997, there were no: (a) perquisites
with an aggregate value for each Named Executive Officer in excess of the
lesser of $50,000 or 10% of the total of the individual's salary and bonus
for the year; (b) payments of above-market preferential earnings on deferred
compensation; (c) payments of earnings with respect to long-term incentive
plans prior to settlement or maturation; or (d) preferential discounts on
stock.
(3) During the fiscal year ended September 30, 1997, the Bank did not maintain
any stock option, restricted stock or other long-term incentive compensation
plans.
(4) Reflects matching contributions made by the Bank under the 401(k) Plan.
EMPLOYMENT AGREEMENTS
Effective upon the Reorganization, the Bank, subject to non-objection from
the OTS, intends to enter into separate Employment Agreements with each of Mr.
McCarthy, Mr. Patti and Ms. Tenaglia ("Senior Executive(s)"). The Employment
Agreements will provide for initial terms of three years, in the case of Messrs.
McCarthy and Patti and two years in the case of Ms. Tenaglia. Commencing on the
first anniversary of the effective date of each Employment Agreement, and
continuing on each anniversary date thereafter, the Senior Executive's Agreement
may be extended, after review by the Bank's Board of Directors, for an
additional one-year period, so that the remaining term will be three years, in
the case of Messrs. McCarthy and Patti and two years, in the case of Ms.
Tenaglia. If the Senior Executive's Employment Agreement is not renewed, the
Agreement will expire in accordance with its terms. The current base salaries
for Mr. McCarthy, Mr. Patti and Ms. Tenaglia are $156,800 $104,047, and $56,778
respectively. The Employment Agreements provide for each Senior Executive's base
salary to be reviewed annually and it is anticipated that each Senior
Executive's base salary will be increased on the basis of his or her job
performance and the overall performance of the Bank. In addition to base salary,
each Employment Agreement provides for, among other things, participation in
stock, retirement and welfare benefit plans and eligibility for fringe benefits
applicable to executive personnel such as fees for club and organization
membership deemed appropriate by the Bank and the Senior Executive. The
Agreements provide for the termination of the Senior Executive by the Bank for
"cause" as defined in the Agreement at any time during the term. In the event
the Bank terminates a Senior Executive's employment for reasons other than for
"cause," or in the event of the Executive's resignation from the Bank upon (i)
failure to re-appoint, elect or re-elect the executive to his or her current
offices; (ii) a material change in the Senior Executive's functions, duties or
responsibilities, or relocation of the Senior Executive's principal place of
employment by more than 30 miles; (iii) a "change in control" of the Bank (as
defined below)
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such as its liquidation or dissolution; or (iv) a breach of the agreement by the
Bank, the Senior Executive, or in the event of death, his or her beneficiary
would be entitled to a lump sum cash payment in an amount equal to the remaining
base salary due to the Senior Executive at the time of termination that would
have been payable during the remaining term of the Executive's Employment
Agreement. In addition, the Employment Agreement for Mr. McCarthy provides for
him to receive, as additional severance, the highest cash bonus and the
additional contributions or benefits that he would have earned or accrued under
any employee benefit plans of the Bank or the Stock Company during the remaining
unexpired term of his Employment Agreement. As additional severance, all of the
Employment Agreements provide for the Bank to continue the Senior Executive's
life, health, dental and disability coverage for the remaining term of the
Executive's Employment Agreement.
The Bank's Employment Agreements will have restrictions on the aggregate
dollar amount of compensation and benefits payable to a Senior Executive in the
event of an employment termination following a "change in control" of the Bank.
In general, for purposes of the Employment Agreements and the plans maintained
by the Bank, a "change in control" will be deemed to occur when a person or
group of persons acting in concert acquires beneficial ownership of 25% or more
of any class of equity security, such as Common Stock of the Bank, or in the
event of a tender offer, exchange offer, merger or other form of business
combination, sale of assets or contested election of directors which results in
a "change in control" of the majority of the Board of Directors of the Bank.
If the total cash and benefits paid to a Senior Executive under an
Employment Agreement together with payments under other benefit plans following
a "change in control" constitutes an "excess parachute payment" under section
280G of the Internal Revenue Code of 1986 (the "Code"), the compensation payable
to the Senior Executive would be reduced (but not below zero) to avoid the
assessment of excise taxes on such excess parachute payments.
BENEFITS
Pension Plan. The Bank maintains a tax-qualified defined benefit plan
through the Financial Institutions Retirement Fund ("Pension Plan"). An employee
of the Bank who has attained age 21 and completed at least one year of service
with the Bank will be eligible to participate and accrue benefits under the
Plan. The Pension Plan provides an annual pension benefit for each participant,
including the Named Executive Officers, equal to 2.25% of the participant's
"average annual salary" multiplied by the participant's years of benefit
service, up to a maximum of 30 years. The Pension Plan defines "average annual
salary" to mean the average of a participant's salary over a five year period of
employment with the Bank during which the participant's salary was the highest.
A participant will become fully vested in the benefits that have accrued for him
under the Pension Plan after completion of five years of service with the Bank.
The Pension Plan provides for benefits to be paid in a straight life or joint
and survivor annuity; however, optional forms of benefits payment, such as lump
sum distributions, are also available under the Plan.
The Bank makes annual contributions to the Pension Plan in an amount
necessary to satisfy the actuarially determined minimum funding requirements of
the Code and the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). The assets of the Pension Plan are held in a separate trust
established by the Financial Institutions Retirement Fund.
Pension Plan Table. The following table sets forth the estimated annual
benefits payable under the Pension Plan upon a participant's normal retirement
at age 65, expressed in the form of a single life annuity and for the average
annual salary and years of credited service specified therein. The annual
benefits shown in the table assume the participant would receive his retirement
benefits under the Pension Plan in the form of a straight life annuity, upon
normal retirement, at age 65. The benefits provided under the Pension Plan are
not
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integrated with federal Social Security retirement benefits. Pursuant to the
terms of the Pension Plan, no more than a maximum of 30 years of service may be
recognized for benefit accrual purposes.
<TABLE>
<CAPTION>
YEARS OF SERVICE AND BENEFIT PAYABLE AT RETIREMENT
AVERAGE -------------------------------------------------------
ANNUAL SALARY 15 20 25 30
------------- ---- ---- ---- ---
<S> <C> <C> <C> <C>
$ 50,000 $ 16,900 $ 22,500 $ 28,100 $ 33,800
$ 75,000 $ 25,300 $ 33,800 $ 42,200 $ 50,600
$100,000 $ 33,800 $ 45,000 $ 56,300 $ 67,500
$125,000 $ 42,200 $ 56,300 $ 70,300 $ 84,400
$150,000 $ 50,600 $ 67,500 $ 84,400 $ 101,300
</TABLE>
As of June 30, 1998, Mr. McCarthy had 11 years and 5 months of credited
service and Mr. Patti had 5 years and 3 months of credited service for benefit
accrual purposes under the Pension Plan.
401(k) Plan. The Bank also maintains a tax-qualified 401(k) defined
contribution plan through the Financial Institutions Thrift Fund ("401(k)
Plan"). Generally, any employee of the Bank who has attained age 21 and
completed at least one year of service will be eligible to participate in the
401(k) Plan and make pre-tax deferrals from 1% to 15% of his annual
compensation, subject to limitations of the Code (for 1997, the annual limit was
$9,500; this limit was increased to $10,000 for 1998). The Bank makes matching
contributions of 50%, up to a maximum of 10% of the participant's salary each
year. Employees are always 100% fully vested in their pre-tax deferrals and
matching contributions made by the Bank.
In connection with the Reorganization, the Bank also intends to amend the
401(k) Plan to permit employer matching contributions to be made in shares of
Common Stock or cash, at the discretion of the Bank. In addition, the Bank
intends to amend the 401(k) Plan to establish an employer stock fund in order to
allow participants to invest their 401(k) Plan account balances in shares of
Common Stock in addition to the other investment alternatives available under
the 401(k) Plan. The assets of the employer stock fund will be held by an
independent corporate trustee to be appointed for the 401(k) Plan and allocated
to the accounts of individual participants. Participants will control the
exercise of voting and tender rights relating to the shares of Common Stock held
in their accounts in the 401(k) Plan. The Common Stock held by the 401(k) Plan
employer stock fund may be newly issued or treasury shares acquired from the
Stock Company or outstanding shares purchased in the open market or in privately
negotiated transactions.
Employee Stock Ownership Plan and Trust. The Stock Company intends to
implement a tax-qualified employee stock ownership plan ("ESOP") in connection
with the Reorganization. Employees with at least one year of employment with the
Bank and who have attained age 21 will be eligible to participate. As part of
the Reorganization, the ESOP intends to borrow funds from the Stock Company and
to use those funds to purchase a number of shares equal to up to 8.0% of the
Common Stock to be sold in the Offering. Collateral for the loan will be the
Common Stock purchased by the ESOP. The loan will be repaid principally from the
Bank's
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<PAGE>
contributions to the ESOP over a period of not less than ten years. It is
anticipated that the interest rate for the loan will be 8%.
Shares purchased by the ESOP will be held in a suspense account pending
allocation among eligible participants on an annual basis as the loan is repaid.
The ESOP will provide for the shares held in the suspense account to be released
in an amount proportional to the repayment of the ESOP loan and will be
allocated among ESOP participants on the basis of compensation in the year of
allocation. Participants in the ESOP will receive credit for service prior to
the effective date of the ESOP. A participant will become 100% vested in his
benefits after five years of service with the Bank or upon normal retirement (as
defined in the ESOP), disability or death. A participant who terminates
employment for reasons other than death, retirement, or disability prior to
completing five years of service with the Bank will forfeit his ESOP benefits.
Benefits will be payable in the form of Common Stock and/or cash upon death,
retirement, disability or separation from service. The Bank's contributions to
the ESOP will be subject to the loan terms and federal income tax law limits,
and, therefore, the aggregate dollar amount of the benefits payable under the
ESOP cannot be estimated at this time.
In connection with the establishment of the ESOP, the Stock Company will
establish a committee of nonemployee directors to administer the ESOP; it will
also appoint an independent corporate trustee for the ESOP trust. The ESOP
trustee, subject to its fiduciary duty, will be required to vote all allocated
shares held in the ESOP in accordance with the instructions of participating
employees. Under the ESOP, nondirected shares, and shares held in the suspense
account, will be voted in a manner calculated to most accurately reflect the
instructions the ESOP trustee has received from participants regarding the
allocated stock so long as such vote is in accordance with the provisions of
ERISA.
In addition to the provisions described above, the ESOP will also provide
for certain actions to occur upon a "change in control" of the Stock Company or
the Bank. The ESOP will provide that, if such "change in control" occurs, the
ESOP trustee will be directed to sell the shares of Common Stock held in the
ESOP's suspense account and to use the proceeds to repay the outstanding ESOP
loan. Following this action, the ESOP will provide for each eligible participant
to receive a final allocation of the shares of Common Stock, or the proceeds
received from the sale of such Stock, held in the ESOP's trust. Once the final
allocation of shares has been completed, the ESOP will provide for the automatic
termination of the plan to occur and for final distributions of account balances
to be made to participants and beneficiaries. Upon such "change in control," all
ESOP participants would automatically become 100% vested in their ESOP account
balances.
Benefit Restoration Plan. In connection with the Reorganization, the Stock
Company also intends to adopt the Benefit Restoration Plan of RFS Bancorp, Inc.
("BRP"). This Plan will provide eligible employees with the benefits that would
otherwise be due to them as participants in the Pension Plan, the 401(k) Plan
and the ESOP if such benefits were not limited under the Code.
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<PAGE>
The Stock Company intends to establish an irrevocable "grantor trust" to
hold the assets of the BRP. This trust would be funded with contributions of the
Stock Company to be made from time to time for the purpose of providing the
benefits under the BRP. The assets of the trust are considered to be part of the
general assets of the Stock Company and will be subject to the claims of its
general creditors. Earnings on the trust's assets will be taxable to the Stock
Company.
Stock Option Plan. At a meeting of the Stock Company's shareholders to be
held no earlier than six months after the completion of the Offering, the Board
of Directors intends to submit for shareholder approval stock option plans for
directors, officers and employees of the Bank and of the Stock Company
(collectively, the "Stock Option Plan"). If approved by the shareholders, Common
Stock in an aggregate amount equal to 10% of the shares sold in the Offering
would be reserved for issuance by the Stock Company upon the exercise of the
stock options granted under the Stock Option Plan. Ten percent of the shares
issued in the Offering would amount to 37,952 shares, 44,650 shares, 51,347
shares and 59,049 shares at the minimum, midpoint, maximum and adjusted maximum
of the Offering Range, respectively. No options would be granted under the Stock
Option Plan until the date on which shareholder approval is received.
It is anticipated that options would be granted for terms of 10 years (in
the case of incentive options) or 10 years and one day (in the case of
nonqualified options). The exercise price of the options granted under the Stock
Option Plan will be equal to the fair market value of the shares on the date the
stock options are granted. If the Stock Option Plan is adopted within one year
following the Offering, options will become exercisable at a rate of 20% at the
end of each 12 months of service with the Stock Company, commencing after the
date of grant, subject to early vesting in the event of death or disability.
Options granted under the Stock Option Plan, if adopted more than 12 months
after the Offering, would also become 100% vested upon normal retirement or a
change in control of the Bank or the Stock Company. Under OTS rules, if the
Stock Option Plan is adopted within the first 12 months after the Offering, no
individual officer can receive more that 25% of the awards under the plan, no
outside director can receive more than 5% of the awards under the plan, and all
outside directors as a group can receive no more than 30% of the awards under
the plan in the aggregate.
The Stock Option Plan would be administered by a Committee of nonemployee
members of the Stock Company's Board. In general, options granted under the
Stock Option Plan to employees may be "incentive stock options" which permit
certain beneficial tax treatment by the employee but would result in no tax
deduction for the Stock Company. Nonqualified stock options may also be granted
under the Stock Option Plan and this type of option award will be the only kind
of award available for grant to non-employee directors. In the event an option
recipient terminates his employment or service as an employee or director, the
options would terminate during certain specified periods.
Restricted Stock Program. At a meeting of the Company's shareholders to be
held no earlier than six months after the completion of the Offering, the Board
of Directors also intends to submit restricted stock award programs for the
benefit of directors, officers and employees of the Stock Company and the Bank
(collectively, the "Restricted Stock Program") for shareholder approval. The
Restricted Stock Program will provide eligible directors, officers and employees
of the Stock Company or the Bank with an ownership interest in the Stock Company
in a manner designed to encourage them to continue their service with the Bank
or the Stock Company. The Stock Company will contribute funds to the Restricted
Stock Program from time to time to enable it to acquire an aggregate amount of
Common Stock equal to up to 4% of the shares of Common Stock sold in the
Offering, either directly from treasury or open market purchases. Four percent
of the shares issued in the Offering would amount to 15,181 shares, 17,860
shares, 20,539 shares and 23,619 shares at the minimum, midpoint, maximum and
adjusted maximum of the Offering Range, respectively. In the event that
additional authorized but unissued shares are acquired by the Restricted Stock
Program after the Offering, the interests of existing shareholders would be
diluted. The executive officers and directors will be awarded
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<PAGE>
Common Stock under the Restricted Stock Program without having to pay cash
for the shares. No awards under the Restricted Stock Program would be made until
the date the Restricted Stock Program is approved by the Stock Company's
shareholders.
Awards under the Restricted Stock Program would be non-transferable and
non-assignable. If the Restricted Stock Program is adopted within one year
following the Offering, shares subject to an award would vest at the rate of 20%
per year. Awards would be adjusted for capital changes such as stock dividends
and stock splits. However, the Restricted Stock Program is also expected to
provide for awards to be 100% vested upon termination of an award holder's
employment or service due to death or disability, and if the Restricted Stock
Program is adopted more than 12 months after the Offering, the Program would
provide for awards to be 100% vested upon an award holder's normal retirement or
a change in control of the Bank or Stock Company. If the individual's employment
or service were to terminate for other reasons, the award recipient would
forfeit any non-vested award. If an award holder's employment or service is
terminated for cause (as would be defined in the Restricted Stock Program),
shares not already delivered under the Program would be forfeited. Under OTS
rules, if the Restricted Stock Program is adopted within the first 12 months
after the Offering, no individual officer can receive more than 25% of the
awards under the Program and no outside director can receive more than 30% of
the awards under the Program in the aggregate.
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THE REORGANIZATION
THE BOARD OF DIRECTORS OF THE BANK HAS ADOPTED THE PLAN OF REORGANIZATION
AND STOCK ISSUANCE PLAN SUBJECT TO THE APPROVAL OF THE OTS AND THE MEMBERS OF
THE BANK ENTITLED TO VOTE THEREON AND THE SATISFACTION OF CERTAIN OTHER
CONDITIONS. OTS APPROVAL DOES NOT CONSTITUTE A RECOMMENDATION OR ENDORSEMENT OF
EITHER THE PLAN OF REORGANIZATION OR THE STOCK ISSUANCE PLAN BY THE OTS.
GENERAL
The Bank's Board of Directors unanimously adopted the Plan and the OTS has
approved the Plan. Pursuant to the Plan, the Bank will reorganize into what is
called a "two-tier" mutual holding company structure. It is a two-tier structure
because it will have two levels of holding companies--a "mid-tier" stock holding
company and a "top-tier" mutual holding company. Under the terms of the Plan (i)
the Bank will form the Stock Company as a federal corporation; (ii) the Bank
will form the Mutual Company as a federal mutual holding company; (iii) the Bank
will reorganize into the capital stock form of organization and issue 100% of
the Bank's to-be outstanding common stock to the Stock Company; and (iv) the
Stock Company will issue shares of Common Stock to the public and the Mutual
Company. The number of shares of Common Stock sold to the public pursuant to
this Prospectus will be equal to 47% of the shares issued in the Reorganization,
and the number of shares issued to the Mutual Company will be equal to 53% of
the shares issued in the Reorganization. All of these steps are referred to in
this Prospectus as the "Reorganization," and the sale of 47% of the Common Stock
pursuant to this Prospectus is referred to as the "Offering." The two-tiered
mutual holding company structure is most easily understood by considering the
following diagram:
[GRAPHIC OMITTED]
It is anticipated that, pursuant to the Stock Issuance Plan, the Offering
will be consummated immediately following the Reorganization; however, the Bank
anticipates that it will consummate the Reorganization even if the Offering is
not completed immediately thereafter. For additional information concerning the
Offering, see "The Offering."
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For purposes of this discussion, references to the Stock Bank refer to the
Bank in the post-reorganization stock form. References to the Bank shall include
Revere Federal Savings in its current mutual form or in its post-reorganization
stock form, as indicated by the context.
PURPOSES OF THE REORGANIZATION
The Board of Directors of the Bank has determined that the Reorganization
is in the best interest of the Bank and its members, and has several business
purposes for effecting the proposed Reorganization.
Formation of the Stock Company as a subsidiary of the Mutual Company will
permit the Stock Company to issue Common Stock, which is a source of capital not
available to mutual savings banks. At the same time, the Bank's mutual form of
ownership will be preserved in the Mutual Company, and the Mutual Company, as a
mutual corporation, will control at least a majority of the Common Stock of the
Stock Company so long as the Mutual Company remains in existence. The
Reorganization will enable the Bank to achieve the benefits of a stock company
without a loss of control that often follows standard conversions from mutual to
stock form. Sales of locally based, independent savings institutions to larger,
regional financial institutions following such mutual to stock conversions can
result in closed branches, fewer choices for consumers, employee layoffs and the
loss of community support for and involvement by a financial institution. The
Bank is committed to being an independent, community-oriented institution, and
the Board of Directors believes that the Mutual Company structure is best suited
for this purpose. The Mutual Company structure also will give the Stock Company
flexibility to issue its Common Stock at various times and in varying amounts as
market conditions permit, rather than in a single stock offering. The
Reorganization will not foreclose the opportunity for the Mutual Company to
convert from mutual to stock form of organization in the future.
The Reorganization will also give the Bank greater flexibility to structure
and finance the expansion of our operations, including the potential acquisition
of other financial institutions, and to diversify into other financial services.
The holding company form of organization is expected to provide additional
flexibility to diversify the Bank's business activities through existing or
newly formed subsidiaries, or through acquisitions of or mergers with other
financial institutions, as well as other companies. Although we have no current
arrangements, understandings or agreements regarding any such opportunities, the
Stock Company will be in a position after the Reorganization, subject to
regulatory limitations and the Stock Company's financial position, to take
advantage of any such opportunities that may arise. Lastly, the Reorganization
will enable us to better manage our capital by giving us broader investment
opportunities through the holding company structure, and enable the Stock
Company to distribute capital to its stockholders in the form of dividends and
stock repurchases. Because only a minority of the Common Stock will be offered
for sale in the Offering, the Bank's current mutual form of ownership and its
ability to remain an independent savings bank and to provide community-oriented
financial services will be preserved through the mutual holding company
structure.
Contemporaneously with or immediately following the Reorganization, the
Stock Company expects to offer for sale up to 47% of its Common Stock in an
Offering at an aggregate price determined by an independent appraisal. The sale
of Common Stock will provide the Bank with new equity capital, which will
support future deposit growth and expanded operations. The ability to sell
Common Stock also will enable the Bank to increase capital in response to the
changing capital requirements of the federal banking agencies. While the Bank
currently meets or exceeds all regulatory capital requirements, the Board of
Directors believes that it is desirable for the Bank to increase its capital
position in view of the increasingly competitive and changing market and
regulatory conditions in which the Bank operates. The sale of Common Stock at
appropriate times, coupled with the accumulation of earnings (net of dividends)
from year to year, represents
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a means for the orderly preservation and expansion of the Bank's capital base,
and allows flexibility to respond to sudden and unanticipated capital needs. The
investment of the net proceeds of a stock offering also will provide additional
income to enhance further the Bank's future capital position.
The ability of the Stock Company to issue Common Stock also will enable
the Stock Company in the future to establish stock benefit plans for management
and employees, including incentive stock option plans, stock award plans and
employee stock ownership plans.
The formation of the Stock Company also will allow the Stock Company to
borrow funds, on a secured and unsecured basis, and to issue debt to the public
or in a private placement. The proceeds of any such borrowings or debt issuance
may be contributed to the Bank as core capital for regulatory capital purposes.
The Bank has not made a determination to borrow funds or issue debt at the
present time, and there can be no assurance when, if ever, any such borrowing or
debt issuance would occur, or whether it would be consummated on terms
satisfactory to the Stock Company.
The Board of Directors believes that these advantages outweigh the
potential disadvantages of the Mutual Company structure, which include: the
inability of the Bank to raise voting stock in excess of 49% of its estimated
pro forma market value so long as the Mutual Company remains in existence; the
more limited liquidity of the Common Stock, as compared to a standard
conversion; and the inability of stockholders other than the Holding Company to
obtain a majority ownership of the Bank which may result in the perpetuation of
the existing management and Board of Directors of the Bank. The Mutual Company
will be able to elect all members of the Board of Directors of the Bank, and
will be able to control the outcome of all matters presented to the stockholders
of the Bank for resolution by vote, except for matters which by regulation must
be approved by a majority of the Minority Stockholders, including certain
matters relating to stock compensation plans and certain votes regarding a
conversion to stock form by the Mutual Company. No assurance can be given that
the Mutual Company will not take action adverse to the interests of the Minority
Stockholders. For example, the Mutual Company could revise the dividend policy,
prevent the sale of control of the Bank, or defeat a candidate for the Board of
Directors of the Bank or other proposal put forth by the Minority Stockholders.
EFFECTS OF THE REORGANIZATION
General. After the Reorganization, the Bank will be authorized to exercise
any and all powers, rights and privileges of, and shall be subject to all
limitations applicable to, capital stock savings banks under federal law. The
initial Board of Directors of the Stock Company will be the existing Board of
Directors of the Bank. Thereafter, the holders of shares of the Stock Company's
voting stock will elect approximately one-third of the Stock Company's Board of
Directors annually. It is expected that present management of the Bank will
continue as the management of the Stock Company following the Reorganization.
The Reorganization will have no effect on the Bank's present business of
accepting deposits and investing its funds in loans and other investments
permitted by law. The Reorganization will not result in any change in the
existing services provided to depositors and borrowers, or in its existing
offices, management and staff. As is the case prior to the Reorganization, the
Bank after the Reorganization is completed will be subject to regulation,
supervision and examination by the OTS.
Accounts and Loans. Upon the effective date of the Reorganization, the
voting, ownership and liquidation rights of members of the Bank will become the
rights of members of the Mutual Company, subject to the conditions specified
below. Each deposit account in the Bank at the effective date will become a
deposit account in the Bank in the same amount and upon the same terms and
conditions, except that the
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holder of each such deposit account will have ownership and membership rights
with respect to the Mutual Company rather than the Bank for so long as such
holder maintains a deposit account with the Bank. All insured deposit accounts
of the Bank will continue to be federally insured up to the legal maximum by the
FDIC in the same manner as deposit accounts existing in the Bank immediately
prior to the Reorganization. Any new deposit accounts established with the Bank
after the Reorganization will create membership and liquidation rights in the
Mutual Company and will be federally insured up to the legal maximum by the
FDIC. All loans and other borrowings from the Bank shall retain the same status
with the Bank after the Reorganization as they had with the Bank immediately
prior to the Reorganization.
Voting Rights. As a federally chartered mutual savings bank, the Bank has
no authority to issue capital stock and, thus, no stockholders. Control of the
Bank in its mutual form is vested in the Board of Directors of the Bank,
one-third of the members of which are elected each year by the members of the
Bank. After the Reorganization, the members of the Board of Directors of the
Bank will become the members of the Board of Directors of the Stock Company and
will continue to be elected in staggered, three year terms. The affairs of the
Bank will be directed by its Board of Directors and all voting rights as to the
Bank will be vested exclusively in the holders of its outstanding voting stock.
Following the Reorganization, the Stock Company will have the power to
issue shares of Common Stock to persons other than the Mutual Company. However,
so long as the Mutual Company is in existence, the Mutual Company will be
required to own more than a majority of the Common Stock of the Stock Company.
By virtue of its majority ownership interest, the Mutual Company generally will
be able to elect all members of the Board of Directors of the Bank and generally
will be able to control the outcome of most matters presented to the
stockholders of the Bank for resolution by vote, excluding certain matters
related to stock compensation plans and certain votes regarding a conversion to
stock form by the Mutual Company.
As a federally chartered mutual holding company, the Mutual Company will
have no authorized capital stock and, thus, no stockholders. Holders of deposit
accounts in and borrowers of the Bank will become members of the Mutual Company
entitled to vote on all questions requiring action by the members of the Mutual
Company including, without limitation, election of directors of the Mutual
Company. In addition, all persons who become depositors of the Bank following
the Reorganization will have membership rights with respect to the Mutual
Company. Borrowers will not receive membership rights in connection with any new
borrowings made after the Reorganization.
Liquidation Rights. In the unlikely event of a voluntary or involuntary
liquidation, dissolution or winding-up of the Bank in its present mutual form
prior to the Reorganization, holders of deposit accounts in the Bank would be
entitled, pro rata to the value of their accounts, to distribution of any assets
of the Bank remaining after the claims of such depositors (to the extent of
their deposit balances) and all other creditors are satisfied. Following the
Reorganization, the holders of the Common Stock would be entitled to any assets
remaining upon a liquidation, dissolution or winding-up of the Bank and, except
through their liquidation interests in the Mutual Company, discussed below,
holders of deposit accounts in the Bank would have no interest in any such
assets.
In the event of a voluntary or involuntary liquidation, dissolution or
winding-up of the Mutual Company following consummation of the Reorganization,
holders of deposit accounts in the Bank would be entitled, pro rata to the value
of their accounts, to distribution of any assets of the Mutual Company remaining
after the claims of all creditors of the Holding Company are satisfied. The
Mutual Company will establish, upon the completion of the Reorganization, a
special "liquidation account" for the benefit of Eligible Account Holders and
Supplemental Eligible Account Holders in an amount equal to the net worth of the
Mutual Company as of that date. Each Eligible Account Holder and Supplemental
Eligible Account
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Holder, if he were to continue to maintain his deposit account at the Bank,
would be entitled, on a complete liquidation of the Mutual Company after the
Reorganization, to an interest in the liquidation account. Each Eligible Account
Holder and Supplemental Eligible Account Holder would have an initial interest
in such liquidation account for each deposit account, including regular
accounts, transaction accounts such as NOW accounts, money market deposit
accounts, and certificates of deposit, with a balance of $50 or more held in the
Bank on December 31, 1996 (with respect to an Eligible Account Holder) and June
30, 1998 (with respect to a Supplemental Eligible Account Holder) ("Qualifying
Deposit"). Each Eligible Account Holder and Supplemental Eligible Account Holder
will have a pro rata interest in the total liquidation account for each of his
deposit accounts based on the proportion that the balance of such person's
Qualifying Deposits on the Eligibility Record Date or Supplemental Eligibility
Record Date, respectively, bore to the total amount of all Qualifying Deposits
of all Eligible Account Holders and Supplemental Eligible Account Holders in the
Bank. For deposit accounts in existence at both dates separate subaccounts shall
be determined on the basis of the Qualifying Deposits in such deposit accounts
on each such record date.
If, however, on any annual closing date of the Bank, commencing October 1,
1998, the amount in any deposit account is less than the amount in such deposit
account on December 31, 1996 (with respect to an Eligible Account Holder) and
June 30, 1998 (with respect to a Supplemental Eligible Account Holder) or any
other annual closing date, then the interest in the liquidation account relating
to such deposit account would be reduced from time to time by the proportion of
any such reduction, and such interest will cease to exist if such deposit
account is closed. In addition, no interest in the liquidation account would
ever be increased despite any subsequent increase in the related deposit
account. Stockholders of the Bank will have no liquidation or other rights with
respect to the Holding Company in their capacities as such.
There currently are no plans to liquidate the Bank or the Mutual Company in
the future.
Subscription and Preemptive Rights. Under OTS regulations, depositors of
the Bank are entitled to priority subscription rights to purchase shares of
capital stock of the Mutual Company in the event that the Mutual Company fully
converts from mutual to stock form subsequent to the Reorganization. Holders of
the capital stock of the Stock Company shall not be entitled to preemptive
rights with respect to any shares of the Stock Company which may be issued.
FEDERAL AND STATE TAX CONSEQUENCES OF THE REORGANIZATION
In the following discussion, "Mutual Bank" refers to the Bank before the
Reorganization and "Stock Bank" refers to the Bank after the Reorganization. The
Reorganization will be effected as follows:]
(i) Mutual Bank will organize Mutual Company, which will initially be
organized in stock form and initially exist as Mutual Bank's wholly-owned
subsidiary.
(ii) Mutual Company will organize two wholly-owned subsidiaries, one of
which will be Stock Company, and the other of which will be an interim stock
savings bank ("Interim").
(iii) The following events will occur simultaneously pursuant to the Plan:
(A) Mutual Bank will exchange its charter for a federal stock savings bank
charter and thereby become Stock Bank (the "Conversion"); (B) Interim will merge
with and into Stock Bank with Stock Bank surviving; (C) Mutual Company will
cancel its stock and exchange its charter for a federal mutual holding company
charter and thereby become a mutual holding company the members of which (the
"Mutual Company Members") will be the former depositors in and borrowers of
Mutual Bank immediately prior to these transactions ("Mutual Bank Members"). As
a mutual entity, Mutual Company will not have any authorized capital stock. As a
result
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of the merger and charger exchanges, Stock Bank will become a wholly-owned
subsidiary of Mutual Company, and the Mutual Company Members will hold interests
in Mutual Company comparable to the interests they previously held in Mutual
Bank.
(iv) Mutual Company will then contribute all of the stock of Stock Bank to
Stock Company.
As a result of these transactions, Stock Bank will be a wholly-owned
subsidiary of Stock Company and Stock Company will be a wholly-owned subsidiary
of Mutual Company. In substance, upon the Conversion, the Mutual Bank Members
will constructively receive the stock of Stock Bank and will then exchange such
stock for membership interests in Mutual Company (the "Exchange"). The
Conversion is intended to be a tax-free reorganization under section
368(a)(1)(F) of the Internal Revenue Code of 1986 (the "Code"), and the Exchange
is intended to be a tax-tree exchange under Code section 351.
Under the Plan of Reorganization, consummation of the Reorganization is
conditioned on prior receipt by the Bank of (i) either an Internal Revenue
Service ruling or an opinion of counsel or tax advisor with respect to the
federal income tax consequences of the Reorganization, and (ii) an opinion of
counsel or tax advisor with respect to the Massachusetts tax consequences of the
Reorganization. Unlike private letter rulings,opinions of counsel are not
binding on the Internal Revenue Service or the State of Massachusetts, and
either agency could disagree with such opinions. In the event of such
disagreement, there can be no assurance that the Bank or the depositors would
prevail in a judicial proceeding. The Bank has not applied for an Internal
Revenue Service ruling, but will receive such an opinion of Thacher Proffitt &
Wood, based upon certain facts, representations and assumptions set forth in
such opinion that are consistent with the state of facts existing at the
effective time of the Reorganization. As regards to the Conversion, Thacher
Proffitt & Wood intends to issue an opinion that: (i) the Conversion will
constitute a reorganization under section 368(a)(1)(F) of the Code, and that the
Bank (in either its status as Mutual Bank or Stock Bank) will recognize no gain
or loss as a result of the Reorganization; (ii) the basis of each asset of
Mutual Bank held by Stock Bank immediately after the Conversion will be the same
as Mutual Bank's basis for such asset immediately prior to the Conversion; (iii)
the holding period of each asset of Mutual Bank held by Stock Bank immediately
after the Conversion will include the period during which such asset was held by
Mutual Bank prior to the Conversion; (iv) for purposes of Code section 381(b),
Stock Bank will be treated as if there had been no reorganization and,
accordingly, the taxable year of the Mutual Bank will not end on the effective
date of the Reorganization and the tax attributes of Mutual Bank (subject to
application of Code sections 381, 382, and 384), including Mutual Bank's bad
debt reserves and earnings and profits, will be taken into account by Stock Bank
as if the Reorganization had not occurred; (v) Mutual Bank Members will
recognize no gain or loss upon their constructive receipt of shares of Stock
Bank common stock solely in exchange for their interest (i.e., liquidation and
voting rights) in Mutual Bank; (vi) a Mutual Bank Member's basis in the shares
of Stock Bank common stock constructively received in the Conversion will be the
same as the basis of the Mutual Bank interest constructively surrendered in
exchange therefor; (vii) a Mutual Bank member's holding period for the shares of
Stock Bank common stock constructively received in the Conversion will include
the holding period of the Mutual Bank interest constructively surrendered in
exchange therefor; and (viii) no gain or loss will be recognized by depositors
of Mutual Bank upon the issuance to them of deposits in Stock Bank in the same
dollar amount as their deposits in Mutual Bank. As regards the Exchange, Thacher
Proffitt & Wood intends to issue an opinion that: (i) the Exchange will qualify
as an exchange of property for stock under Code section 351; (ii) the
shareholders of Stock Bank (the former Mutual Bank Members) will recognize no
gain or loss upon the transfer to Mutual Company of the shares of Stock Bank
common stock they constructively received in the Conversion in exchange for
interests (i.e., liquidation and voting rights) in Mutual Company; (iii) the
basis of the interest in Mutual Company received by each shareholder of Stock
Bnak in exchange for such shareholder's shares of Stock Bank common stock will
be equal to the basis of such shares of Stock Bank common stock; (iv) the
holding period of the interest in Mutual Company received
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by each shareholder of Stock Bank will, as of the date of the Exchange, be the
same as the holding period of the shares of Stock Bank common stock transferred
in exchange therefor, provided such shares of Stock Bank common stock were held
as a capital asset on the date of the Exchange; (v) Mutual Company will
recognize no gain or loss upon its receipt from the shareholders of Stock Bank
of shares of Stock Bank common stock in exchange for interests in Mutual
Company; (vi) Mutual Company's basis for each share of Stock Bank common stock
received from a shareholder of Stock Bank in exchange for an interest in Mutual
Company will be the equal to the basis of such share of common stock in the
hands of such Stock Bank shareholder; and (vii) Mutual Company's holding period
for each share of Stock Bank common stock received from a shareholder of Stock
Bank in exchange for an interest in Mutual Company will, as the date of the
Exchange, be the same as the holding period of such shares in the hands of such
Stock Bank shareholder. Thacher Proffitt & Wood also intends to opine that (i)
no gain or loss will be recognized by Stcok Company upon the sale of Common
Stock in the Offering; (ii) no gain or loss will be recognized by Eligible
Account Holders or Supplemental Eligible Account Holders upon the distribution
to them of nontransferable subscription rights to purchase shares Common Stock
in the Offering, provided that the amount to be paid for such shares is equal to
the fair market value of such shares; and (iii) the basis to the shareholders of
shares of Common Stock purchased in the Offering pursuant to such subscription
rights will be the amount paid therefor and the holding period for such shares
will begin on the date on which such subscription rights are exercised.
Shatswell, MacLeod & Company, P.C., intends to opine, subject to the
limitations and qualifications in its opinion, that, for purposes of the
Massachusetts corporate income tax, the Massachusetts income tax on savings
banks and the Massachusetts individual income tax, the Reorganization will not
be taxable transactions to the Bank (in either its status as Bank or Stock
Bank), the Stock Company, the Mutual Company, the stockholders of the Stock
Company or the depositors of the Bank.
Certain portions of both the federal and the state and local, if any, tax
opinions are based upon the letter of RP Financial that subscription rights
issued in connection with the Reorganization will have no value. In the letter
of RP Financial, which letter is not binding on the Service, the subscription
rights do not have any value, based on the fact that such rights are acquired by
the recipients without cost, are non-transferable and of short duration, and
afford the recipients the right only to purchase the common stock of the Stock
Bank at a price equal to its estimated fair market value, which will be the same
price as the purchase price for the unsubscribed shares of such common stock. If
the subscription rights granted to Eligible Account Holders, Supplemental
Eligible Account Holders or Other Members are deemed to have an ascertainable
value, such parties may realize taxable income upon the receipt or exercise of
the subscription rights in an amount equal to such value and the Mutual Company
may recognize gain on such distribution. Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members are encouraged to consult with their
own tax advisor as to the tax consequences in the event that such subscription
rights are deemed to have an ascertainable value.
ACCOUNTING CONSEQUENCES
The Reorganization will be accounted for at historical cost in a manner
similar to pooling of interest accounting in accordance with GAAP. Accordingly,
the carrying value of the Bank's assets, liabilities and equity will be
unaffected by the Reorganization and will be reflected in the Stock Company's
financial statements based on their historical amounts.
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CONDITIONS TO THE REORGANIZATION
Consummation of the Reorganization is subject to the receipt of all
requisite regulatory approvals, including various approvals of the OTS. No
assurance can be given that all regulatory approvals will be received. Receipt
of such approvals from the OTS will not constitute a recommendation or
endorsement of the Plan of Reorganization or the Offering by the OTS.
Consummation of the Reorganization also is subject to approval by a majority of
the total votes of the members to be cast at the Special Meeting, as well as the
receipt of rulings by the Service and/or opinions of counsel with respect to the
tax consequences of the Reorganization. See "--Federal and State Tax
Consequences of the Reorganization."
STOCK COMPENSATION PLANS
The Board of Directors of the Stock Company intends to adopt and seek
shareholder approval of one or more stock benefit plans for its employees,
officers and directors, including an ESOP, restricted stock programs and stock
option plans which will be authorized to purchase Common Stock, award Common
Stock and grant options for Common Stock. Specifically, the Board of Directors
of the Stock Company intends to establish the ESOP and authorize the ESOP and
any other tax-qualified employee stock benefit plans to purchase in the
aggregate up to 10% of the Common Stock issued in the Offering, as well as up to
8% of the Common Stock issued by the Mutual Company (excluding any shares of the
Stock Company exchanged for shares of the Holding Company) in the event of its
conversion to stock form in a Conversion Transaction. In addition, no sooner
than six months after the Reorganization, the Board of Directors of the Stock
Company intends to seek shareholder approval to award shares of Common Stock
pursuant to the Stock Programs, in an amount up to 4% of the number of shares of
Common Stock sold in the Offering. No sooner than six months after the
Reorganization, the Board of Directors of the Stock Company intends to seek
shareholder approval to grant stock options for a number of shares equal to up
to 10% of the Common Stock sold in the Offering.
No shares shall be issued pursuant to the Restricted Stock Programs unless
such plans shall have been presented to and approved by shareholders of the
Stock Company (excluding the Mutual Company), and no options shall be awarded
under the stock option plans described in this paragraph unless such stock
option plan shall have been presented to and approved by the Stock Company's
shareholders (excluding the Mutual Company). The exercise price of the options
permitted thereby shall be the fair value on the date such options are granted.
Shares sold to the ESOP or awarded pursuant to the Restricted Stock Programs,
and shares issued upon exercise of options, may be authorized but unissued
shares of the Stock Company's Common Stock, or shares of Common Stock purchased
by the Stock Company or such plan on the open market. See "Management of the
Bank --Benefits --Employee Stock Ownership Plan and Trust."
AMENDMENT OR TERMINATION OF THE PLAN OF REORGANIZATION
If necessary or desirable, the terms of the Plan of Reorganization may be
amended by a majority vote of the Bank's Board of Directors, at any time prior
to submission of the Plan of Reorganization and proxy materials to the members.
At any time after submission of the Plan of Reorganization and proxy materials
to the members, the Plan of Reorganization may be amended by a majority vote of
the Board of Directors only with the concurrence of the OTS. The Plan of
Reorganization may be terminated by a majority vote of the Board of Directors at
any time prior to the earlier of approval of the Plan of Reorganization by the
OTS and the date of the Special Meeting, and at any time thereafter with the
concurrence of the OTS. In its discretion, the Board of Directors may modify or
terminate the Plan of Reorganization upon the order of the regulatory
authorities or to conform to new mandatory regulations of the OTS, without a
resolicitation of proxies or another meeting of the members only if the OTS
concurs that such resolicitation is not required;
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however, any material amendment of the terms of the Plan of Reorganization that
relates to the Reorganization which occurs after the Special Meeting shall
require a resolicitation of members.
The Plan of Reorganization shall be terminated if the Reorganization is not
completed within 24 months from the date upon which the members of the Bank
approve the Plan of Reorganization, and may not be extended by the Bank or the
OTS.
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THE OFFERING
GENERAL
Concurrently with the Reorganization, the Stock Company is offering shares
of Common Stock to persons other than the Mutual Company. The Stock Company is
offering between a minimum of 379,525 shares and an anticipated maximum of
513,475 shares of Common Stock in the Offering (subject to adjustment to up to
590,496 shares in the event the estimated pro forma market value of the Bank has
increased at the conclusion of the Offering), which will expire at 12:00 noon,
Eastern time, on ________________ unless extended by the Stock Company. A
minimum purchase of 25 shares of Common Stock (minimum investment of $250) is
required.
The Offering will expire at 12:00 noon Eastern time, on _____________,
unless extended. Subscription funds may be held by the Bank for up to 45 days
after the last day of the Subscription Offering in order to consummate the
Reorganization and Offering and thus, unless waived by the Bank, all orders will
be irrevocable until _____________ In addition, the Reorganization and Offering
may not be consummated until the Bank receives approval from the OTS.
Consummation of the Reorganization and Offering will be delayed, and
resolicitation will be required, in the event the OTS does not issue a letter of
approval within 45 days after the last day of the Subscription Offering, or in
the event the OTS requires a material change to the Subscription and Community
Offerings prior to the issuance of its approval. Thus, in the event the
Reorganization and Offering is not consummated by ______________, subscribers
will have the right to modify or rescind their subscriptions and to have their
subscription funds returned with interest.
The Bank may cancel the Offering at any time, and orders for Common Stock
which have been submitted prior thereto are subject to cancellation under such
circumstances.
The OTS is expected to approve the Plan of Reorganization which is also
subject to the approval of the Bank's Members and the satisfaction of certain
other conditions. However, there is no assurance that OTS approval will be
obtained and if obtained OTS approval does not constitute a recommendation of
the Plan of Reorganization by the OTS. If OTS approval is not obtained, all
funds received will be promptly returned with interest at the Bank's passbook
rate and all withdrawal authorizations will be cancelled.
CONDUCT OF THE OFFERING
Subject to the limitations of the Stock Issuance Plan, shares of Common
Stock are being offered in descending order of priority in the Subscription
Offering to: (i) Eligible Account Holders; (ii) the ESOP; (iii) Supplemental
Eligible Account Holders; and (iv) Other Members. Any shares of Common Stock
that are not subscribed for in the Subscription Offering may be offered for sale
in a Community Offering commencing concurrently with the commencement of the
Subscription Offering and/or a Syndicated Community Offering.
The Bank shall have the right, in its sole discretion, to determine whether
prospective purchasers are "residents," "associates" or "acting in concert." All
such determinations are in the sole discretion of the Bank, and may be based on
whatever evidence the Bank chooses to use in making any such determination.
SUBSCRIPTION OFFERING
Non-transferable subscription rights to subscribe for the purchase of
Common Stock have been granted under the Stock Issuance Plan to the following
persons:
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PRIORITY (1): ELIGIBLE ACCOUNT HOLDERS. Each Eligible Account Holder
shall be given the opportunity to purchase up to $150,000
of Common Stock offered in the Offering; provided that the
Stock Company may, in its sole discretion and without
further notice to or solicitation of subscribers or other
prospective purchasers, increase such maximum purchase
limitation to 5% of the maximum number of shares offered in
the Offering or decrease such maximum purchase limitation
to 0.5% of the maximum number of shares offered in the
Offering, subject to the overall purchase limitation set
forth below. If there are insufficient shares available to
satisfy all subscriptions of Eligible Account Holders,
shares will be allocated to Eligible Account Holders so as
to permit each such subscribing Eligible Account Holder to
purchase a number of shares sufficient to make his total
allocation equal to the lesser of 100 shares or the number
of shares subscribed for. Thereafter, unallocated shares
will be allocated to remaining subscribing Eligible Account
Holders whose subscriptions remain unfilled in the same
proportion that each such subscriber's qualifying deposit
bears to the total amount of qualifying deposits of all
subscribing Eligible Account Holders, in each case on
December 31, 1996, whose subscriptions remain unfilled. To
ensure proper allocation of stock, each Eligible Account
Holder must list on his subscription Order Form all
accounts in which he had an ownership interest as of the
Eligibility Record Date.
PRIORITY (2): THE STOCK COMPANY'S TAX-QUALIFIED EMPLOYEE STOCK BENEFIT
PLANS. The tax- qualified employee stock benefit plans, if
any, shall be given the opportunity to purchase in the
aggregate up to 10% of the Common Stock issued in the
Offering. It is expected that the ESOP will purchase up to
8% of the Common Stock issued in the Offering. In the event
of an oversubscription in the Offering, the ESOP will have
a priority right to fill its subscription, in whole or in
part, or subscriptions for shares by the ESOP may be
satisfied, in whole or in part, out of authorized but
unissued shares of the Stock Company subject to the maximum
purchase limitations applicable to the ESOP and set forth
below, or may be satisfied, in whole or in part, through
open market purchases by the ESOP subsequent to the closing
of the Offering.
PRIORITY (3): SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS. To the extent there
are sufficient shares remaining after satisfaction of
subscriptions by Eligible Account Holders and the ESOP and
other tax-qualified employee stock benefit plans, if any,
each Supplemental Eligible Account Holder shall have the
opportunity to purchase up to $150,000 of Common Stock
offered in the Offering; provided that the Bank may, in its
sole discretion and without further notice to or
solicitation of subscribers or other prospective
purchasers, increase such maximum purchase limitation to 5%
of the maximum number of shares offered in the Offering or
decrease such maximum purchase limitation to 0.5% of the
maximum number of shares offered in the Offering subject to
the overall purchase limitations set forth below. In the
event Supplemental Eligible Account Holders subscribe for a
number of shares which, when added to the shares subscribed
for by Eligible Account Holders and the ESOP and other
tax-qualified employee stock benefit plans, if any, is in
excess of the total number of shares offered in the
Offering, the shares of Common Stock will be allocated
among subscribing Supplemental Eligible Account Holders
first so as to permit each subscribing Supplemental
Eligible Account Holder to purchase a number of shares
sufficient to make his total allocation equal to the lesser
of 100
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shares or the number of shares subscribed for. Thereafter,
unallocated shares will be allocated to each subscribing
Supplemental Eligible Account Holder whose subscription
remains unfilled in the same proportion that such
subscriber's qualifying deposits bear to the total amount
of qualifying deposits of all subscribing Supplemental
Eligible Account Holders, in each case on September 30,
1998, whose subscriptions remain unfilled. To ensure proper
allocation of stock each Supplemental Eligible Account
Holder must list on his subscription Order Form all
accounts and loans in which he had an ownership interest as
of the Supplemental Eligibility Date.
PRIORITY (4): OTHER MEMBERS. To the extent that there are sufficient
shares remaining after satisfaction of all subscriptions by
the Eligible Account Holders, the tax-qualified employee
stock benefit plans, and Supplemental Eligible Account
Holders, each Other Member shall have the opportunity to
purchase up to $150,000 of Common Stock offered in the
Offering; provided that the Bank may, in its sole
discretion and without further notice to or solicitation
of, subscribers or other prospective purchasers, increase
such maximum purchase limitation to 5% of the maximum
number of shares offered in the Offering or decrease such
maximum purchase limitation to 0.5% of the maximum number
of shares offered in the Offering, subject to the overall
purchase limitations set forth below. In the event Other
Members subscribe for a number of shares which, when added
to the shares subscribed for by Eligible Account Holders,
the tax-qualified employee stock benefit plans and
Supplemental Eligible Account Holders, is in excess of the
total number of shares offered in the Offering, the
subscriptions of such Other Members will be allocated among
subscribing Other Members on a pro rata basis based on the
size of such Other Members' orders. To ensure proper
allocation of stock each Other Member must list on his
subscription Order Form all accounts in which he had an
ownership interest as of the Voting Record Date.
COMMUNITY OFFERING
Any shares that remain available for purchase after satisfaction of all
subscriptions in the Subscription Offering may be offered for sale in a
Community Offering shares to certain members of the general public with
preference given first to residents of Revere, Massachusetts, subject to the
right of the Bank in its sole discretion to accept or reject any such orders, in
whole or in part, either at the time of receipt of the order, or as soon as
practicable following the completion of the Offering. Such persons, together
with associates of and persons acting in concert with such persons may purchase
up to $150,000 of Common Stock offered in the Community Offering.
In the event of an oversubscription for shares in the Community Offering,
shares may, at the sole discretion of the Bank, be allocated (to the extent
shares remain available) so that each such person may receive 1,000 shares, and
thereafter, on a pro rata basis to such persons based on the amount of their
respective subscriptions.
The terms "residence," "reside," "resided" or "residing" as used herein
with respect to any person shall mean any person who occupied a dwelling within
Revere, Massachusetts (the "Community"), has an intent to remain within the
Community for a period of time, and manifests the genuineness of that intent by
establishing an ongoing physical presence within the Community together with an
indication that such presence within the Community is something other than
merely transitory in nature. To the extent the person
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is a corporation or other business entity, the principal place of business or
headquarters shall be in the Community. To the extent a person is a personal
benefit plan, the circumstances of the beneficiary shall apply with respect to
this definition. In the case of all other benefit plans, the circumstances of
the trustee shall be examined for purposes of this definition. The Bank may
utilize deposit or loan records or such other evidence provided to it to make a
determination as to whether a person is a resident. In all cases, however, such
a determination shall be in the sole discretion of the Bank.
The Bank, in its sole discretion, may make reasonable efforts to comply
with the securities laws of any state in the United States in which its
depositors reside, and will only offer and sell the Common Stock in states in
which the offers and sales comply with such states' securities laws. However, no
person will be offered or allowed to purchase any Common Stock under the Stock
Issuance Plan if he resides in a foreign country or in a state of the United
States with respect to which any of the following apply: (i) a small number of
persons otherwise eligible to purchase shares under the Stock Issuance Plan
reside in such state or foreign country; (ii) the offer or sale of shares of
Common Stock to such persons would require the Bank or its employees to
register, under the securities laws of such state or foreign country, as a
broker or dealer or to register or otherwise qualify its securities for sale in
such state or foreign country; or (iii) such registration or qualification would
be impracticable for reasons of cost or otherwise.
The Board of Directors has the right to reject any order submitted by a
person whose representations the Board of Directors believes to be false or who
it otherwise believes, either alone or acting in concert with others, is
violating, evading, circumventing, or intends to violate, evade or circumvent
the terms and conditions of the Stock Issuance Plan.
SYNDICATED COMMUNITY OFFERING
Any shares of Common Stock not sold in the Subscription Offering or
Community Offering may be offered for sale to the general public by a selling
group (the "Selling Group") of broker-dealers ("Selected Dealers") to be managed
by Trident in a Syndicated Community Offering, subject to terms, conditions and
procedures as may be determined by the Bank in a manner that is intended to
achieve the widest distribution of the Common Stock subject to the rights of the
Stock Company to accept or reject in whole or in part all subscriptions in the
Syndicated Community Offering. The Bank may, in its sole discretion and without
further notice to or solicitation of subscribers or other purchasers, increase
such maximum purchase limitation to 5% of the maximum number of shares offered
in the Offering or decrease such maximum purchase limitation to 1% of the
maximum number of shares offered in the Offering subject to the overall purchase
limitations set forth below. However, the shares purchased in the Subscription
or Community Offering by any person together with an associate or group of
persons acting in concert shall be counted toward meeting the maximum purchase
limitations set forth below. Provided that the Subscription Offering has
commenced, the Bank may commence the Syndicated Community Offering at any time.
MARKETING AND SELLING COMMISSIONS
Directors and executive officers of the Bank, subject to any state
securities law limitations, may contact prospective investors personally, by
telephone and/or by individual mailings. Other employees of the Bank may
participate in the Offering in ministerial and clerical capacities. Directors
and executive officers of the Bank will not receive any additional compensation
for their efforts in connection with the Offering but may be reimbursed for
reasonable expenses, if any, incurred by them in connection with selling shares.
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The directors, officers and employees of the Bank who will be involved in
the Offering are expected to be exempt from the requirement to register with the
Securities and Exchange Commission ("SEC") as broker-dealers within the meaning
of Rule 3a4-1 under the Exchange Act. Such persons will qualify under the safe
harbor provisions of that rule on the basis of paragraphs (a)(4)(ii) and/or
(iii), i.e., management of the Bank expects that such persons either (i) will
perform substantial duties for the Bank in its business, will not otherwise be
broker-dealers and are not expected to participate in another offering in the
next 12 months or (ii) will limit their activities to preparing written
communications, responding to customer inquiries and/or performing ministerial
and clerical functions.
A stock information center will be established at the Bank's executive
office in Revere, Massachusetts (the "Stock Information Center") to assist in
answering questions concerning the Offering. Employees at the Bank's office will
take orders and forward them to the Stock Information Center, inform prospective
purchasers to direct their questions to the Stock Information Center and will
provide such persons with the telephone number of the Center. Completed stock
orders will be accepted by the Stock Information Center located at the Bank's
executive office.
To assist in the marketing of the Common Stock, the Bank has retained
Trident, which is a registered broker-dealer with the National Association of
Securities Dealers, Inc. (the "NASD"). For Trident's services, the Bank will pay
to it the following compensation: (i) a management fee of 0.5% of the total
dollar amount of stock sold in the offering in connection with specified
advisory and administrative services; (ii) a commission equal to 2.0% of the
dollar amount of Common Stock sold in the Offering without the assistance of
selected dealers, provided that no such fee shall be payable in connection with
the sale of Common Stock to officers and directors (including members of their
immediate families), employees and employee benefit plans of the Bank; (iii) a
management fee equal to 1.5% of the dollar amount of Common Stock sold by a
selling group of NASD member firms, which may include Trident, under a selected
dealers' agreement, which fee, along with the fee payable directly by the Bank
to selected dealers, shall not exceed 7% in the aggregate of the dollar amount
of the Common Stock sold in the Syndicated Community Offering. The Bank also has
agreed to reimburse Trident for its reasonable out-of-pocket expenses of up to
$18,000 (excluding reimbursable legal fees and expenses). The Bank has also
agreed to pay all other expenses of the offering including but not limited to
its attorneys' fees, National Association of Securities Dealers ("NASD") filing
fees, and fees of either Trident's attorneys or other attorneys relating to any
required state securities laws filings, transfer agent charges, telephone
charges, air freight, rental equipment, supplies, fees relating to auditing and
accounting and costs of printing all documents necessary in connection with
therewith.
The Bank has agreed to indemnify Trident, and its directors, officers,
employees and controlling persons, against liabilities and expenses arising out
of or based on any untrue or alleged untrue statement of a material fact or the
omission or alleged omission of a material fact required to be stated or
necessary to make not misleading any statement contained herein or in any other
document or communication utilized by the Bank in connection with the Offering,
and Trident similarly has agreed to indemnify the Bank and its directors,
officers, employees and controlling persons, with respect to material
misstatements or omissions relating to material specifically provided by Trident
for inclusion in the Prospectus.
STOCK PRICING AND NUMBER OF SHARES TO BE ISSUED
Pursuant to OTS regulations, the aggregate price at which shares of Common
Stock are sold in the Offering shall be based on a pro forma valuation of the
aggregate market value of the total amount of Common Stock to be outstanding
upon completion thereof, as determined by an independent valuation. The Bank has
retained RP Financial to make such a valuation. RP Financial is a financial
consulting firm experienced in the appraisal of savings institutions. RP
Financial will receive a fee of $20,000 for its
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appraisal, including subsequent updates, plus its reasonable out-of-pocket
expenses incurred in connection with the appraisal, not to exceed $5,000 unless
approved by the Bank. In addition, RP Financial will receive $7,500 for services
in connection with the preparation of the Bank's business plan. The Bank has
agreed to indemnify RP Financial under certain circumstances against liabilities
and expenses arising out of or based on any misstatement or untrue statement of
a material fact contained in the information supplied by the Bank to RP
Financial, except where RP Financial is determined to have been negligent or
engaged in willful misconduct in the preparation of its appraisal.
The Independent Valuation was prepared by RP Financial in reliance upon the
information contained in this Prospectus, including the Financial Statements of
the Bank. RP Financial also considered the following factors, among others: the
present and projected operating results and financial condition of the Bank and
the economic and demographic conditions in the Bank's existing market areas;
certain historical financial and other information relating to the Bank; a
comparative evaluation of the operating and financial statistics of the Bank
with those of other savings institutions and savings and loan holding companies;
the impact of the Offering on the Bank's equity and earnings potential; the
Bank's proposed dividend policy; the trading market for securities of comparable
institutions and general conditions in the markets for such securities; the
effects of the minority ownership represented by the Common Stock to be issued
in the Offering; the liquidity of the Common Stock after the Offering; as well
as the marketability of the Common Stock. In preparing the Independent
Valuation, RP Financial relied upon and assumed the accuracy and completeness of
financial and statistical information provided by the Bank. RP Financial did not
independently verify the financial statements and other information provided by
the Bank, or independently value their assets and liabilities.
RP Financial's valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing such shares. RP
Financial did not independently verify the Financial Statements and other
information provided by the Bank, nor did RP Financial value independently the
assets or liabilities of the Bank. The valuation considers the Bank as a going
concern and should not be considered as an indication of the liquidation value
of the Bank. Moreover, because such valuation is necessarily based upon
estimates and projections of a number of matters, all of which are subject to
change from time to time, no assurance can be given that persons purchasing such
shares in the Offering will thereafter be able to sell such shares at prices at
or above the Purchase Price or in the range of the foregoing valuation of the
pro forma market value thereof.
On the basis of the foregoing, RP Financial advised the Bank that, in its
opinion, the estimated aggregate pro forma market value of the Common Stock to
be outstanding upon completion of the Reorganization and the Offering was $9.5
million at August 21, 1998. Based on such Independent Valuation, and taking into
account that the Bank must be a majority-owned subsidiary of the Mutual Company
as long as the Mutual Company is in mutual form, the Stock Company is offering a
minimum of 379,525 shares and an anticipated maximum of 513,475 shares of Common
Stock in the Offering at $10.00 per share. Based on the Independent Valuation,
the 379,525 and 513,475 shares to be sold in the Offering represent 47.0% and
47.0% of the total amount of Common Stock to be outstanding upon completion of
the Offering, respectively. The Bank is prohibited from issuing shares of Common
Stock which would exceed a 49.9% Minority Ownership Interest.
In the event of a change in the Independent Valuation immediately prior to
consummation of the Offering, the Bank may adjust the Minority Ownership
Interest by increasing or decreasing the total number of shares of Common Stock
to be issued to the Mutual Company in the Reorganization and/or the number of
shares of Common Stock to be issued in the Offering. Increases or decreases in
the number of shares of Common Stock to be issued in the Reorganization and the
Offering as a result of a change in the Independent
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Valuation would be subject to applicable limitations on purchases of Common
Stock and, unless otherwise permitted by the Bank or required by the OTS, no
resolicitation of persons who ordered Common Stock in the Offering will be made
and such persons will not be permitted to modify or cancel their orders unless
the Independent Valuation changes to less than $8.1 million or greater than
$10.9 million. If the Independent Valuation is increased to reflect changes in
the estimated pro forma value of the Bank and the number of shares of Common
Stock to be issued in the Offering is not adjusted, the number of shares issued
to the Holding Company will increase to reflect the final Independent Valuation
and the Minority Ownership Interest will decrease. Conversely, a decrease in the
Independent Valuation under such circumstances will result in a decrease in the
number of shares issued to the Holding Company and an increase in the Minority
Ownership Interest.
In the event of an increase in the Independent Valuation up to $10.9
million immediately prior to consummation of the Offering, the Bank may, in its
discretion, choose to increase the number of shares of Common Stock issued in
the Offering to up to 590,496 shares without offering persons who subscribed for
shares an opportunity to increase, decrease or rescind their orders. If the
Independent Valuation increases to $10.9 million, the total number of shares of
Common Stock issued and outstanding, including shares issued to the Mutual
Company, upon consummation of the Offering would be 1,092,500. Under such
circumstances, if the Bank chose to increase the number of shares of Common
Stock offered in the Offering to 590,496 shares, the 590,496 shares would
represent a 47.0% Minority Ownership Interest. The final Minority Ownership
Interest percentage will be determined as follows: (i) the numerator will be the
product of (x) the number of shares of Common Stock sold in the Offering and (y)
the Purchase Price ($10.00 per share); and (ii) the denominator shall be the
final Independent Valuation of the estimated pro forma market value of the Bank
immediately upon conclusion of the Offering as determined by RP Financial.
EXCEPT AS OTHERWISE SET FORTH HEREIN, AN EXECUTED ORDER FORM, ONCE RECEIVED
BY THE BANK, MAY NOT BE MODIFIED, AMENDED OR RESCINDED WITHOUT THE CONSENT OF
THE BANK.
No sale of Common Stock may be consummated unless, prior to such
consummation, the Independent Appraiser confirms to the Bank and to the OTS
that, to the best knowledge of the Independent Appraiser, nothing of a material
nature has occurred which, taking into account all relevant factors, would cause
the Independent Appraiser to conclude that the aggregate price of the Common
Stock sold in the Offering is incompatible with its estimate of the aggregate
consolidated pro forma market value of the total amount of Common Stock to be
outstanding upon completion of the Offering. If such confirmation is not
received, the Bank may extend, modify or cancel the Offering, or take such other
action as the OTS may permit.
Copies of the Independent Valuation are on file and available for
inspection at the executive offices of the Bank, located at 310 Broadway,
Revere, Massachusetts 02151, at the Northeast Regional Office of the OTS,
located at 745 Atlantic Avenue, Boston, MA 02111 and at the main office of the
OTS, located at 1700 G Street, N.W., Washington, D.C. 20552. The Independent
Valuation is not intended, and must not be construed as, a recommendation of any
kind as to the advisability of purchasing shares of Common Stock.
LIMITATIONS ON PURCHASES OF COMMON STOCK
Purchases of Common Stock in the Offering will be subject to the following
purchase limitations:
a) The aggregate amount of outstanding Common Stock of the Stock Company
owned or controlled by persons other than the Mutual Company at the
close of the Offering shall be less than 50% of the Stock Company's
total outstanding Common Stock.
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b) No person, associate thereof, or group of persons acting in concert, may
purchase more than $150,000 of Common Stock offered in the Offering to
persons other than the Mutual Company, except that: (i) the Stock
Company may, in its sole discretion and without further notice to or
solicitation of subscribers or other prospective purchasers, increase
such maximum purchase limitation to 5% of the number of shares offered
in the Offering; (ii) tax-qualified employee stock benefit plans may
purchase up to 8% of the shares offered in the Offering; and (iii) for
purposes of this paragraph (b), shares to be held by the tax-qualified
employee stock benefit plan and attributable to a person shall not be
aggregated with other shares purchased directly by or otherwise
attributable to such person.
c) The aggregate amount of Common Stock acquired in the Offering by any
non-tax-qualified employee stock benefit plan or executive officer or
director of the Stock Company and his or her associates, exclusive of
any Common Stock acquired by such non-tax-qualified employee stock
benefit plan or executive officer or director and his or her associates
in the secondary market, shall not exceed 34% of the outstanding shares
of Common Stock held by persons other than the Mutual Company at the
close of the Offering. In calculating the number of shares held by an
executive officer or director or associate under the provisions of this
paragraph and paragraph (d) of this section, shares of Common Stock held
by any tax-qualified employee stock benefit plan of the Stock Bank that
are attributable to such person shall not be counted.
(d) The Board of Directors has the right to reject any order submitted by a
person whose representations the Board of Directors believes to be false
or who it otherwise believes, either alone or acting in concert with
others, is violating, evading or circumventing, or intends to violate,
evade or circumvent the terms and conditions of the Stock Issuance Plan.
In the event of an increase in the total number of shares offered in the
Offering due to an increase in Independent Valuation of up to 15% (the "Adjusted
Maximum"), the additional shares will be allocated in the following order or
priority in accordance with the Plan: (i) to fill the ESOP's subscription of 8%
of the Adjusted Maximum number of shares; (ii) in the event that there is an
oversubscription by Eligible Account Holders, to fill unfulfilled subscriptions
of Eligible Account Holders exclusive of the Adjusted Maximum; (iii) in the
event that there is an oversubscription by Supplemental Eligible Account
Holders, to fill unfulfilled subscriptions of Supplemental Eligible Account
Holders exclusive of the Adjusted Maximum; (iv) in the event that there is an
oversubscription by Other Members, to fill unfulfilled subscriptions of Other
Members exclusive of the Adjusted Maximum; and (v) to fill unfulfilled
subscriptions in the Community Offering to the extent possible exclusive of the
Adjusted Maximum.
For purposes of the foregoing limitations, the term "person" means any
corporation, partnership, trust, unincorporated association or any other entity
or a natural person and the term "associate," when used to indicate a
relationship with any person, means (i) a corporation or organization (other
than the Bank or the Holding Company) of which such person is a director,
officer or partner or is, directly or indirectly, the beneficial owner of 10% or
more of any class of equity securities; (ii) any trust or other estate in which
such person has a substantial beneficial interest or as to which such person
serves as trustee or in a similar fiduciary capacity; (iii) any relative or
spouse of such person, or any relative of such spouse, who has the same home as
such person or who is a director or officer of the Bank or a director or officer
of the Mutual Company; and (iv) any person acting in concert with any of the
persons or entities specified in clauses (i) through (iii).
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By purchasing shares in the Offering, each person will be deemed to confirm
that such purchase does not conflict with the purchase limitations set forth
above. Under the Stock Issuance Plan, the Stock Company shall have the right to
take any action as it may, in its sole discretion, deem necessary, appropriate
or advisable in order to monitor and enforce the terms, conditions, limitations
and restrictions contained in the Stock Issuance Plan and the terms, conditions
and representations contained in the accompanying Order Form, including, but not
limited to, the absolute right (subject only to any necessary regulatory
approvals or concurrence) to delay, terminate or refuse to consummate any sale
of Common Stock which it believes might violate, or is designed to, or is any
part of a plan to, violate, evade or circumvent such terms, conditions,
limitations, restrictions and representations. Any such action shall be final,
conclusive and binding on all persons and the Bank shall be free from any
liability to any person on account of any such action.
ORDERS FOR COMMON STOCK
In order to purchase shares of Common Stock in the Offering, an Order Form
with the required payment for each share subscribed must be received by the Bank
by 12:00 noon, Eastern time, on______ , 1998 Order Forms which are not received
by the Bank by such time or are executed defectively or are received without
full payment will not be accepted except as discussed below. An executed Order
Form once received by the Bank may not be modified, amended or rescinded without
the consent of the Bank. Each person ordering shares is required to represent
that he or she is purchasing such shares for his or her own account. The Bank
has the right to extend the Offering, as discussed under "-- Expiration Date"
below, or to waive or permit correction of incomplete or improperly executed
forms, but does not represent that it will do so.
Payment for Common Stock will be permitted to be made in any of the
following manners: (i) by check, bank draft or money order; (ii) or such
purchaser may pay for the shares subscribed for by authorizing the Bank to make
a withdrawal from the purchaser's passbook, money market or certificate account
at the Bank in an amount equal to the purchase price of such shares. Such
authorized withdrawal, whether from a savings, passbook or certificate account,
shall be without penalty as to premature withdrawal; (iii) if the authorized
withdrawal is from a certificate account ,and the remaining balance does not
meet the applicable minimum balance requirements, the certificate may, at the
Bank's discretion, be canceled at the time of withdrawal, without penalty, and
the remaining balance will earn interest at the passbook rate or be returned to
the depositor. Funds for which a withdrawal is authorized will remain in the
purchaser's Account but may not be used by the purchaser until the Common Stock
has been sold or the 45-day period (or such longer period as may be approved by
the applicable regulatory authorities) following the Stock Offering has expired,
whichever occurs first. Thereafter, the withdrawal will be given effect only to
the extent necessary to satisfy the subscription (to the extent it can be
filled) at the purchase price per share. Interest will continue to be earned on
any amounts authorized for withdrawal until such withdrawal is given effect. If
for any reason the Stock offering is not consummated, all payments made by
subscribers in the Stock Offering will be refunded to them with interest. In
case of amounts authorized for withdrawal from Deposit Accounts, refunds will be
made by canceling the authorization for withdrawal; (iv) Wire transfers as
payment for common stock will not be permitted or accepted as proper payment.
No Order Form is binding until accepted by the Stock Company following
expiration of the Offering. Pursuant to the terms of the Stock Issuance Plan,
the Bank may, in its sole discretion, reject any order in whole or in part
without liability to the prospective purchaser.
EXPIRATION DATE
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The Offering will terminate at 12:00 noon, Eastern time, on _________, 1998
unless extended by the Bank an additional 45 days, or if approved by the OTS for
an additional period after such 45 day extension (if so extended, the
"Expiration Date"). It is anticipated that in the event of a Syndicated
Community Offering, the Community Offering would be terminated. The Community
Offering or any Syndicated Community Offering must be completed within 45 days
after the close of the Subscription Offering, or____________________ , 1998
unless extended by the Bank with the approval of the OTS. If the Offering is not
completed within 90 days after the date the Prospectus is declared effective by
the SEC (by______ , 1998), all funds received will be returned promptly with
interest at the Bank's rate on passbook savings accounts and all withdrawal
authorizations will be cancelled or, if OTS approval of an extension of such
period has been obtained, all persons who ordered Common Stock in the Offering
may be given the right to increase, decrease or rescind their orders. No
extension may go beyond__________ , 1999.
RESTRICTIONS ON AGREEMENTS OR UNDERSTANDING REGARDING TRANSFER OF COMMON STOCK
TO BE PURCHASED IN THE OFFERING
Prior to the completion of the Reorganization and Offering, no member of
the Bank may transfer or enter into an agreement or understanding to transfer
the legal or beneficial ownership of the shares of Common Stock to be purchased
by such person in the Offering. Each depositor who submits an Order Form will be
required to certify that the purchase of Common Stock by such person is solely
for the purchaser's own account and there is no agreement or understanding
regarding the sale or transfer of such shares. The Bank and the Stock Company
intend to pursue any and all legal and equitable remedies in the event it
becomes aware of any such agreement or understanding, and will not honor orders
reasonably believed by the Bank to involve such an agreement or understanding.
CONDITIONS TO THE OFFERING
Consummation of the Offering is subject to: (i) consummation of the
Reorganization, which requires, without limitation, the receipt of various
approvals from the OTS, the approval of the Bank's members and the receipt of
rulings and/or opinions of the Service or counsel as to the tax consequences of
the Reorganization, (ii) the receipt of all required federal approvals for the
issuance of Common Stock in the Offering, including without limitation the
approval of the OTS, and (iii) the sale of a minimum of 379,525 shares of Common
Stock. In the event that conditions (i) and (ii) are not satisfied prior to
completion of the Offering, all funds received will be promptly returned with
interest at the Bank's passbook rate and all withdrawal authorizations will be
cancelled. In the event that condition (iii) is not met, i.e., if the minimum
amount of stock is not sold during the Subscription Offering, the Bank may
conduct a Community Offering and/or a Syndicated Community Offering.
Subscription funds may be held by the Bank for up to 45 days after the last day
of the Subscription Offering in order to consummate the Reorganization and
Offering. Thereafter, if the minimum is still not met, and no extension has been
granted to complete the Offering, then all funds received would be refunded with
interest and all withdrawal authorizations will be cancelled.
STOCK CERTIFICATES
Certificates representing shares issued in the Offering will be mailed to
the persons entitled thereto as soon as possible following consummation of the
Offering. Any certificates returned as undelivered will be held by the Stock
Company until claimed by the persons legally entitled thereto or otherwise
disposed of in accordance with applicable law. Until certificates for the Common
Stock are available and delivered to the purchasers after the Offering,
purchasers may not be able to sell the shares of Common Stock for which they
subscribe.
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<PAGE>
REQUIREMENTS FOLLOWING THE OFFERING FOR REGISTRATION, MARKET MAKING, ETC.
It is likely that there will be a limited market for the Common Stock sold
in the Offering, when and if such an Offering occurs, and purchasers must be
prepared to hold the Common Stock for an indefinite period of time. The Stock
Company shall register its Common Stock with the SEC pursuant to the Exchange
Act, and shall undertake not to deregister such Common Stock for a period of
three years thereafter.
Pursuant to OTS regulations, if the Bank has more than 100 holders of the
Common Stock at the close of the Offering, the Bank shall use its best efforts
to (i) encourage and assist a market maker to establish and maintain a market
for the Common Stock and (ii) list the Common Stock on a national or regional
securities exchange or to have quotations for that class of stock disseminated
on the Nasdaq quotation system. No assurance can be given, however, that the
Bank's stock will be quoted on the Nasdaq stock market or that an active and
liquid market for the Common Stock will develop. It is likely that the Bank's
Common Stock will be quoted and traded on the OTC Bulletin Board. Trident has
advised the Bank that, upon completion of the Offering, it intends to make a
market in the Common Stock. See "Market for the Common Stock."
RESTRICTIONS ON TRANSACTIONS IN COMMON STOCK BY MANAGEMENT
Under OTS regulations, for a period of three years following the Offering,
directors and officers of the Stock Company and their associates may not
purchase, without the prior written approval of the OTS, any Common Stock except
from a broker-dealer registered with the SEC. This prohibition shall not apply,
however, to (i) a negotiated transaction arrived at by direct negotiation
between buyer and seller and involving more than 1.0% of the outstanding Common
Stock and (ii) purchases of Common Stock made by and held by any tax-qualified
or non-tax-qualified employee stock benefit plan which may be attributable to
directors and officers of the Bank and their associates.
Common Stock purchased by executive officers, directors and their
associates in the Offering may not be resold for a period of at least one year
following the date of purchase, except in the case of death of the executive
officer or director or associate. Therefore, the shares of Common Stock issued
by the Bank to such persons shall bear a legend restricting sales for one year
following their purchase.
The above-described restrictions on transactions in the Common Stock shall
be in addition to any restrictions that may be imposed by federal and state
securities laws, such as the insider reporting and trading rules promulgated
pursuant to the Exchange Act.
RESTRICTIONS ON FINANCING
The Stock Company will not offer or sell any of the Common Stock proposed
to be issued in the Offering to any person whose purchase would be financed by
funds loaned, directly or indirectly, to the person by the Bank or any of its
affiliates.
CERTAIN RESTRICTIONS ON ACQUISITION OF THE BANK
GENERAL
The Plan of Reorganization provides for the reorganization of the Bank from
a federally chartered mutual savings bank into the Mutual Holding Company form
pursuant to the laws of the United States of
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<PAGE>
America, and the regulations of the OTS and, in connection therewith, provides
for a new Federal Stock Charter ("Charter") and Bylaws to be adopted by members
of the Bank.
The following discussion is a general summary of the OTS regulations and
other regulatory restrictions on the acquisition of the Common Stock. In
addition, the following discussion generally summarizes certain provisions of
the Charter and Bylaws of the Bank and the Stock Company and certain regulatory
provisions that may be deemed to have a potential "anti-takeover" effect.
FEDERAL LAW
The Change in Bank Control Act provides that no person, acting directly or
indirectly or through or in concert with one or more other persons, may acquire
control of a savings institution unless the OTS has been given 60 days prior
written notice. The HOLA provides that no company may acquire "control" of a
savings institution without the prior approval of the OTS. Any company that
acquires such control becomes a federal savings bank or a savings and loan
holding company subject to registration, examination and regulation by the OTS.
Pursuant to the federal regulations, control of a savings institution is
conclusively deemed to have been acquired by, among other things, the
acquisition of more than 25% of any class of voting stock of the institution or
the ability to control the election of a majority of the directors of an
institution. Moreover, control is presumed to have been acquired, subject to
rebuttal, upon the acquisition of more than 10% of any class of voting stock, or
of more than 25% of any class of stock, of a savings institution where certain
enumerated "control factors" are also present in the acquisition. The OTS may
prohibit an acquisition of control if (i) it would result in a monopoly or
substantially lessen competition, (ii) the financial condition of the acquiring
person might jeopardize the financial stability of the institution, or (iii) the
competence, experience or integrity of the acquiring person indicates that it
would not be in the interest of the depositors or of the public to permit the
acquisition of control by such person. The foregoing restrictions do not apply
to the acquisition of a savings institution's capital stock by one or more
tax-qualified employee stock benefit plans, provided that the plan or plans do
not have beneficial ownership in the aggregate of more than 25% of any class of
equity security of the savings institution.
OTS regulations governing standard conversions generally prohibit any
person from acquiring or making an offer to acquire, directly or indirectly,
beneficial ownership of more than 10% of the stock of any converted savings
institution without OTS approval. Although the Bank believes that these
restrictions in the standard conversion regulations of the OTS will be
applicable to the Bank, to the Bank's knowledge the OTS has not issued any
formal precedent to this effect.
MUTUAL COMPANY STRUCTURE
The Mutual Company structure could restrict the ability of stockholders of
the Bank to effect a change of control of management because the Mutual Company,
as long as it remains in the mutual form of organization, will control a
majority of the voting stock of the Stock Company. The Mutual Company will be
controlled by its Board of Directors, which will initially consist of the same
persons who are members of the Board of Directors of the Bank and the Stock
Company. The Mutual Company will be able to elect all members of the Board of
Directors of the Stock Company, and as a general matter, will be able to control
the outcome of all matters presented to the stockholders of the Stock Company
for resolution by vote, except for matters that require a vote greater than a
majority. The Mutual Company, acting through its Board of Directors, will be
able to prevent any challenge to the ownership or control of the Stock Company
by Minority Stockholders. Accordingly, a change in control of the Stock Company
and the Bank cannot occur unless the Mutual Company first converts to the stock
form of organization. Although OTS regulations and
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<PAGE>
policy and the Plan of Reorganization permit the Mutual Company to convert from
the mutual to the capital stock form of organization, the Board of Directors has
no current plan to do so.
THE STOCK COMPANY'S CHARTER AND BYLAWS
General. The following discussion is a general summary of the OTS
regulations and other regulatory restrictions on the acquisition of the common
stock and certain provisions of the Stock Company Charter and Bylaws relating to
stock ownership that might have a potential "anti-takeover" effect. The
following description of certain provisions of the Charter and Bylaws of the
Stock Company is necessarily general, and reference should be made in each case
to the Charter and Bylaws of the Bank, which are incorporated herein by
reference. See "Additional Information" as to how to obtain a copy of these
documents.
Classified Board of Directors. The Stock Company's Charter provides that
the Board of Directors of the Stock Company is required to be divided into three
classes as nearly equal in number as possible. The members of each class shall
be elected for a term of three years and until their successors are elected and
qualified. One class shall be elected by ballot annually. A classified Board of
Directors promotes continuity and stability of management of the Stock Company
but makes it more difficult for stockholders to change a majority of the
directors because it generally takes at least two annual elections of directors
for this to occur.
Limitation on Voting Rights. Section 8 of the Charter of the Bank provides
that, for a period of five years from the effective date of the Reorganization,
no person, except the Stock Company in forming a Holding Company or a
tax-qualified employee stock benefit program, shall directly or indirectly
acquire the beneficial ownership of more than 10% of any class of an equity
security of the Stock Company other than shares held by the Mutual Company. In
the event shares are acquired in violation of Section 8, all shares beneficially
owned by any person in excess of 10% shall be considered "excess shares" and
shall not be counted as shares entitled to vote and shall not be voted by any
person or counted as voting shares in connection with any matters submitted to
the stockholders for a vote.
Prohibition of Cumulative Voting. The absence of cumulative voting rights
for the election of directors for a period of five years from the effective date
of the Reorganization effectively means that the holders of a majority of the
shares voted at a meeting of stockholders may, if they so choose, elect all
directors elected at the meeting, thus precluding a Minority Stockholder from
obtaining representation on the Board of Directors unless the Minority
Stockholder is able to obtain the support of a majority.
Authorized but Unissued Shares of Capital Stock. Following the Offering,
the Stock Company will have authorized but unissued shares of preferred stock
and common stock. See "Description of Capital Stock." Although such shares could
be used by the Board of Directors of the Stock Company to render more difficult
or to discourage an attempt to obtain control of the Stock Company by means of a
merger, tender offer, proxy contest or otherwise, it is anticipated that such
uses will be unlikely given the Mutual Company must own a majority of the Common
Stock.
Ownership of Common Stock by Management. Directors and officers are
expected to purchase up to 90,700 shares of Common Stock in the Offering and are
expected to control the voting of 20.3% of the shares of Common Stock sold in
the Offering (at the maximum of the Offering Range), and may control the voting
of approximately 8% of the shares of common stock issued in the Offering through
the ESOP established in connection with the Offering (assuming that an
allocation has not been made under the ESOP). Under the terms of the ESOP, the
unallocated shares will be voted by the independent trustees for the ESOP
generally in the same proportion as the instructions received by the trustee
from participants voting their allocated shares. In addition, current officers
and directors of the Stock Company will also be officers and
119
<PAGE>
directors of the Mutual Company which, after the Reorganization and Offering,
will own 47.0% and 47.0% of the total number of shares outstanding at the
minimum and maximum, respectively, of the Offering Range.
Certain provisions of the Stock Company's Stock Option Plans and other
benefit plans provide for benefits and cash payments in the event of a change in
control of the Stock Company. The plans provide for accelerated vesting in the
event of a change in control. These provisions may have the effect of increasing
the cost of, and thereby discouraging, a future attempt to take over the Stock
Company, and thus generally may serve to perpetuate current management. The
Stock Option Plans and Restricted Stock Programs will be subject to approval by
the Minority Stockholders.
Indemnification. The Stock Company's Bylaws provide that it shall indemnify
every person who acts on behalf of the Stock Company, or serves as a director or
officer of the Stock Company, provided that such person acted in good faith and
in a manner he or she reasonably believed to be in, and not opposed to, the best
interest of the Stock Company, and with respect to any criminal proceeding such
person had no reason to believe his or her conduct was unlawful. The Bylaws also
provide that such indemnification shall be to the fullest extent permitted under
Massachusetts or federal law.
120
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
Upon consummation of the Reorganization, the Stock Company will be
authorized to issue 5,000,000 shares of Common Stock, par value $0.01 per share,
and 1,000,000 shares of serial preferred stock, no par value per share. The
consideration for the issuance of the shares shall be cash, tangible or
intangible property, labor or services actually performed for the Stock Company,
or any combination of the foregoing, and shall be paid in full before their
issuance and shall not be less than the par value. Upon payment of the purchase
price for the Common Stock, all such shares will be fully-paid, duly issued and
non-assessable. Subject to the approval required by any governing law, rule or
regulation, the Board of Directors is authorized to approve the issuance of
shares up to the amount authorized in the Charter of the Stock Company from time
to time without the approval of the Stock Company's stockholders. Under OTS
regulations, a majority of the issued and outstanding voting stock of the Stock
Company must be held at all times by the Mutual Company. THE COMMON STOCK OF THE
STOCK COMPANY WILL REPRESENT NON-WITHDRAWABLE CAPITAL, WILL NOT BE AN ACCOUNT OF
AN INSURABLE TYPE, AND WILL NOT BE INSURED BY THE FDIC OR ANY OTHER GOVERNMENT
AGENCY.
COMMON STOCK
Voting Rights. The holders of Common Stock shall possess exclusive voting
rights in the Stock Company. Each holder of shares of Common Stock shall be
entitled to one vote for each share held by such holder, except that for a
period of 5 years from the completion of the Reorganization, the Charter
eliminates voting rights with respect to those shares that are beneficially
owned by any person, other than the Mutual Company, in excess of 10% of the
Common Stock then outstanding. Also, for a period of 5 years from the completion
of the Reorganization, stockholders will not be permitted to cumulate their
votes in the election of directors. See "Certain Restrictions on Acquisition of
the Bank--The Bank's Charter and Bylaws--Limitation on Voting Rights."
Dividends. Whenever there shall have been paid, or declared and set aside
for payment, to the holders of the outstanding shares of any class of stock
having preference over the Common Stock as to payment of dividends, the full
amount of dividends and of sinking fund, retirement fund or other retirement
payments, if any, to which such holders are respectively entitled in preference
to the Common Stock, then dividends may be paid on the Common Stock and on any
class or series of stock entitled to participate therewith as to dividends out
of any assets legally available for the payment of dividends.
Liquidation. In the event of any liquidation, dissolution, or winding up of
the Stock Company, the holders of the Common Stock (and the holders of any class
or series of stock entitled to participate with the Common Stock in the
distribution of assets) shall be entitled to receive, in cash or in kind, the
assets of the Stock Company available for distribution remaining after: (i)
payment or provision for payment of the Stock Company's debts and liabilities;
(ii) distributions or provisions for distributions in settlement of any
liquidation account; and (iii) distributions or provisions for distributions to
holders of any class or series of stock having preference over the Common Stock
in the liquidation, dissolution, or winding up of the Stock Company. Each share
of Common Stock shall have the same relative rights as and be identical in all
respects with all the other shares of Common Stock.
Preemptive Rights; Redemption. Holders of Common Stock will not have
preemptive rights with respect to any additional shares of the Common Stock that
may be issued. Therefore, the Board of Directors may sell shares of capital
stock of the Bank without first offering such shares to existing stockholders of
the
121
<PAGE>
Stock Company. The Common Stock is not subject to call for redemption, and the
outstanding shares of Common Stock when issued and upon receipt by the Stock
Company of the full purchase price therefor will be fully paid and
non-assessable.
SERIAL PREFERRED STOCK
None of the 1,000,000 authorized shares of serial preferred stock of the
Stock Company will be issued in the Offering. Upon consummation of the
Reorganization, the Board of Directors of the Stock Company will be authorized,
without stockholder approval, to issue preferred stock and to fix and state
voting powers, designations, preferences or other special rights of such shares.
The preferred stock may be issued in distinctly designated series and may be
convertible into Common Stock. If and when issued, the serial preferred stock
may rank senior to the Common Stock as to dividend rights, liquidation
preferences, or both, and may have full, limited or no voting rights.
Accordingly, the issuance of preferred stock could adversely affect the voting
and other rights of holders of Common Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Registrar and
Transfer Company.
EXPERTS
The consolidated financial statements of the Bank and its subsidiary, as of
September 30, 1997 and 1996, and for each of the years in the three-year period
ended September 30, 1997, have been included herein in reliance upon the report,
appearing elsewhere herein, of Shatswell, MacLeod & Company, P.C., independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing.
RP Financial has consented to the publication herein of the summary of its
report to the Bank and Stock Company setting forth its opinion as to the
estimated pro forma market value of the Common Stock upon Reorganization and its
letter with respect to subscription rights.
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<PAGE>
LEGAL AND TAX MATTERS
Thacher Proffitt & Wood, Washington, D.C., special counsel to the Bank and
the Stock Company, will pass on the legality of the Common Stock and the federal
income tax consequences of the Reorganization. Massachusetts state tax
consequences of the Reorganization will be passed upon for the Bank by
Shatswell, MacLeod & Company, P.C. Certain legal matters will be passed upon for
Trident Securities, Inc., by Luse Lehman Gorman Pomerenk & Schick, P.C.,
Washington, D.C.
ADDITIONAL INFORMATION
The Stock Company has filed with the SEC a registration statement under the
Securities Act, with respect to the Common Stock offered hereby. As permitted by
the rules and regulations of the SEC, this Prospectus does not contain all the
information set forth in the registration statement. Such information can be
examined without charge at the public reference facilities of the SEC located at
450 Fifth Street, NW, Washington, D.C. 20549, and copies of such material can be
obtained from the SEC at prescribed rates. The SEC maintains a web site that
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC. The address of this web
site is http://www.sec.gov. The statements contained herein as to the contents
of any contract or other document filed as an exhibit to the registration
statement are, of necessity, brief descriptions thereof and are not necessary
complete but do contain all material information regarding such documents. Each
such statement is qualified by reference to such contract or document.
In connection with the Offering, the Stock Company will register the Common
Stock with the SEC under Section 12(g) of the Exchange Act; and , upon such
registration, the Stock Company and the holders of its Common Stock will become
subject to the proxy solicitation rules, reporting requirements and restrictions
on stock purchases and sales by directors, officers and greater than 10%
stockholders, the annual and periodic reporting and certain other requirements
of the Exchange Act. Under the Plan, the Stock Company has undertaken that it
will not terminate such registration for a period of at least three years
following the Reorganization.
The Bank has filed with the OTS a Notice of Mutual Company Reorganization
on Form MHC-1 and an Application for Approval of a Minority Stock Issuance on
Form MH2-C (the "Applications"). Pursuant to the rules and regulations of the
OTS, this Prospectus omits certain information contained in the Applications.
The Applications may be examined at the principal office of the OTS, 1700 G
Street, NW, Washington, D.C. 20552 and at the office of the Regional Director of
the Northeast Regional Office of the OTS located at 10 Exchange Place, 18th
Floor, Jersey City, NJ 07302. The Plan of Reorganization, Stock Issuance Plan,
Charter and Bylaws of the Bank, the Stock Company and the Mutual Company may be
obtained without charge by contacting the Bank's Corporate Secretary at (781)
284-7777. Copies of the Independent Valuation are available for inspection at
the Bank's main office, 310 Broadway, Revere, Massachusetts 02151.
A copy of the certificate of the incorporation and bylaws of the Stock
Company are available without charge from the Bank.
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<PAGE>
REVERE FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Auditors' Report F-2
Consolidated Balance Sheet as of June 30, 1998 (unaudited) and the
Consolidated Balance Sheets as of September 30, 1997 and 1996 F-3
Consolidated Statements of Income for the nine months ended June 30, 1998 and See "Consolidated Statements
1997 (unaudited), the Consolidated Income Statement for the year ended of Income" on page 32 of the
September 30, 1997, and the restated Consolidated Income Statements for the prospectus.
years ended September 30, 1996 and 1995
Consolidated Statement of Changes in Equity for the nine months ended June 30,
1998 (unaudited), the Consolidated Statement of Changes in Equity for the year
ended September 30, 1997, and the restated Consolidated Statements of Changes
in Equity for the years ended September 30, 1996 and 1995 F-4
Consolidated Statements of Cash Flows for the nine months ended June 30, 1998
and 1997 (unaudited), the Consolidated Statement of Cash Flows for the year
ended September 30, 1997, and the restated Consolidated Statements of Cash
Flows for the years ended September 30, 1996 and 1995 F-5
Notes to Consolidated Financial Statements F-7
</TABLE>
- ------------------
The financial statements for RFS Bancorp, Inc. have been omitted because RFS
Bancorp, Inc. has not yet issued any stock, has no liabilities, and has not
conducted any business other than of an organizational nature.
All schedules have been omitted either because they are not required, not
applicable, or are included in the Notes to Consolidated Financial Statements.
F-1
<PAGE>
[LETTERHEAD]
The Board of Directors
Revere Federal Savings and Loan Association
Revere, Massachusetts
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheets of Revere Federal
Savings and Loan Association and Subsidiary as of September 30, 1997 and 1996
and the related consolidated statements of income, changes in equity and cash
flows for each of the years in the three-year period ended September 30, 1997.
These consolidated financial statements are the responsibility of the
Association's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Revere
Federal Savings and Loan Association and Subsidiary as of September 30, 1997 and
1996 and the consolidated results of their operations and their cash flows for
each of the years in the three-year period ended September 30, 1997, in
conformity with generally accepted accounting principles.
The consolidated statements of income, changes in equity and cash flows for the
years ended September 30, 1996 and 1995 are restatements of previously issued
consolidated financial statements. The restatements were necessary to correct an
error in the consolidated financial statements originally issued. The correction
is described in the consolidated statements of changes in equity and Note 12.
/s/SHATSWELL, MacLEOD & COMPANY, P.C.
-------------------------------------
SHATSWELL, MacLEOD & COMPANY, P.C.
October 17, 1997, except for Note 13,
as to which the date is January 21, 1998
F-2
<PAGE>
REVERE FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
June 30, -----------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
ASSETS (unaudited)
Cash and due from banks $ 789,612 $ 558,622 $ 344,032
Interest bearing demand deposits with other banks 798,968 27,641 61,301
Federal funds sold 2,909,032 1,245,359 384,756
------------- ------------- --------------
Cash and cash equivalents 4,497,612 1,831,622 790,089
Investments in available-for-sale securities (at fair value) 849,564 636,380 440,708
Investments in held-to-maturity securities (fair values of
$33,657,615 as of June 30, 1998 (unaudited), $40,507,431
as of September 30, 1997 and $40,356,382 as of
September 30, 1996) 33,296,332 40,153,278 40,679,723
Federal Home Loan Bank stock, at cost 1,517,000 1,405,400 1,405,400
Loans, net 46,825,441 41,175,133 33,046,105
Premises and equipment, net of depreciation and amortization 972,325 951,887 860,428
Accrued interest receivable 640,200 702,142 564,158
Other assets 181,801 64,169 111,412
-------------- --------------- --------------
Total assets $88,780,275 $86,920,011 $77,898,023
=========== =========== ===========
LIABILITIES AND EQUITY
Demand deposits $ 3,801,140 $ 1,983,174 $ 1,043,553
Savings and NOW deposits 22,868,638 18,751,097 17,208,959
Time deposits 36,306,065 34,718,003 31,140,845
------------ ------------ ------------
Total deposits 62,975,843 55,452,274 49,393,357
Advances from Federal Home Loan Bank of Boston 19,284,394 25,104,420 22,711,955
Other liabilities 145,824 324,090 345,511
-------------- -------------- --------------
Total liabilities 82,406,061 80,880,784 72,450,823
------------ ------------ ------------
Commitments and contingencies
Equity:
Retained earnings 5,888,711 5,680,732 5,204,330
Net unrealized holding gain on available-for-sale
securities, net of taxes 485,503 358,495 242,870
-------------- -------------- --------------
Total equity 6,374,214 6,039,227 5,447,200
------------- ------------- -------------
Total liabilities and equity $88,780,275 $86,920,011 $77,898,023
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
<PAGE>
REVERE FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
<TABLE>
<CAPTION>
Net Unrealized
Holding Gain on
Retained Available-for-
Earnings Sale Securities Total
-------- --------------- -----
<S> <C> <C> <C>
Balance, September 30, 1994 $4,568,578 $250,663 $4,819,241
Net income, as previously reported 354,374 354,374
Restatement to correct for overaccrual of
FDIC insurance 186,971 186,971
------------ ------------
Net income, as restated 541,345 541,345
Net change in unrealized holding gain on
available-for-sale securities (83,287) (83,287)
----------------- ---------- ------------
Balance, September 30, 1995, as restated 5,109,923 167,376 5,277,299
Net income, as previously reported 281,378 281,378
Restatement to reflect reversal of
overaccrual of FDIC insurance in
fiscal year ending September 30, 1995 (186,971) (186,971)
----------- -----------
Net income, as restated 94,407 94,407
Net change in unrealized holding gain on
available-for-sale securities 75,494 75,494
------------------ ---------- -------------
Balance, September 30, 1996 5,204,330 242,870 5,447,200
Net income 476,402 476,402
Net change in unrealized holding gain on
available-for-sale securities 115,625 115,625
------------------ --------- ------------
Balance, September 30, 1997 5,680,732 358,495 6,039,227
Net income 207,979 207,979
Net change in unrealized holding gain on
available-for-sale securities 127,008 127,008
------------------ --------- ------------
Balance, June 30, 1998 (unaudited) $5,888,711 $485,503 $6,374,214
========== ======== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
<PAGE>
REVERE FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months
Ended June 30, For the Years Ended September 30,
-------------------------------------------------------------------------
1998 1997 1997 1996 1995
-------------------------------------------------------------------------
(unaudited) (As Restated)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 207,979 $ 366,913 $ 476,402 $ 94,407 $ 541,345
Adjustments to reconcile net income to net
cash provided by operating activities:
Security gain from sale of available-
for-sale security (294,531)
(Gain) loss on sales of loans, net 13,055 (3,988) 13,778 12,878 (3,080)
Amortization, net of accretion of securities 25,648 50,133 70,247 132,045 27,046
Forfeited deposit on fixed assets 1,000
Depreciation and amortization 112,846 93,787 126,211 121,791 113,500
Provision (benefit) for loan losses 174,500 45,000 60,000 148,500 (2,000)
Deferred tax expense (benefit) (60,801) (4,723) 7,141 10,959 (164,637)
Increase (decrease) in taxes payable (138,258) 299,640 340,347 (318,177) 39,311
(Increase) decrease in interest receivable 61,942 (107,233) (137,984) (71,816) (98,860)
Increase (decrease) in interest payable (1,828) (4) 848 (158,427) (26,224)
Increase (decrease) in accrued expenses (72,618) (339,045) (359,865) 249,568 121,556
(Increase) decrease in prepaid expenses (87,549) 4,360 22,218 (19,326) 5,159
Decrease in other assets 6,271 14,450 36,801 17,245 19,277
Increase (decrease) in other liabilities (27,291) (91,409) (89,939) 103,937 (2,550)
Change in deferred loan origination fees, net (14,482) (1,995) 212 43,213 (1,546)
-------------------------------------------------------------------
Net cash provided by operating activities 199,414 325,886 567,417 366,797 273,766
-------------------------------------------------------------------
Cash flows from investing activities:
Purchase of Federal Home Loan Bank stock (111,600) (627,700) (99,000)
Proceeds from sales of other real estate owned 3,100
Recoveries of previously charged off loans 21,241
Proceeds from sales of available-for-sale securities 317,577
Purchases of held-to-maturity securities (5,499,960) (11,315,230) (11,315,230) (8,591,714) (17,153,534)
Proceeds from maturities of held-to-maturity
securities 12,331,258 8,639,671 11,771,428 9,521,918 10,650,302
Net increase in loans (11,770,533) (8,100,763) (10,999,729) (15,388,342) (1,206,762)
Proceeds from sales of loans 5,947,152 2,191,216 2,796,711 3,411,133 602,245
Capital expenditures (133,284) (174,339) (230,446) (96,842) (239,412)
-------------------------------------------------------------------
Net cash provided by (used in) investing
activities 763,033 (8,759,445) (7,977,266) (11,771,547) (7,104,243)
-------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in demand deposits,
savings and NOW accounts 5,935,507 2,891,644 2,481,759 706,647 (883,633)
Net increase in time deposits 1,588,062 2,459,549 3,577,158 454,594 8,007,203
Advances from FHLB 12,500,000 26,300,000 31,100,000 12,871,000 7,911,283
Repayments of advances from FHLB (18,320,026) (22,143,692) (28,707,535) (3,976,703) (7,576,116)
-------------------------------------------------------------------
Net cash provided by financing activities 1,703,543 9,507,501 8,451,382 10,055,538 7,458,737
-------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 2,665,990 1,073,942 1,041,533 (1,349,212) 628,260
Cash and cash equivalents at beginning of period 1,831,622 790,089 790,089 2,139,301 1,511,041
-------------------------------------------------------------------
Cash and cash equivalents at end of period $ 4,497,612 $ 1,864,031 $ 1,831,622 $ 790,089 $2,139,301
===================================================================
</TABLE>
F-5
<PAGE>
REVERE FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
<TABLE>
<CAPTION>
For the Nine Months
Ended June 30, For the Years Ended September 30,
-------------------------------------------------------------------------
1998 1997 1997 1996 1995
-------------------------------------------------------------------------
(unaudited) (As Restated)
<S> <C> <C> <C> <C> <C>
Supplemental disclosures:
Interest paid $2,753,245 $2,654,908 $3,584,473 $3,176,369 $2,480,210
Income taxes (received) paid 324,038 (86,683) (60,243) 332,797 396,423
Loans originated from sales of other real
estate owned 104,500
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-6
<PAGE>
REVERE FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months Ended June 30, 1998 and 1997 (unaudited)
and the Years Ended September 30, 1997, 1996 and 1995
NOTE 1 - NATURE OF OPERATIONS
Revere Federal Savings and Loan Association (Association) is a federally
chartered mutual savings and loan association which was incorporated in 1901 and
is headquartered in Revere, Massachusetts. The Association is engaged
principally in the business of attracting deposits from the general public and
investing those deposits in residential and real estate loans, and in consumer
and small business loans.
NOTE 2 - ACCOUNTING POLICIES
The accounting and reporting policies of the Association and Subsidiary conform
to generally accepted accounting principles and predominant practices within the
savings institution industry. The consolidated financial statements were
prepared using the accrual method of accounting. The significant accounting
policies are summarized below to assist the reader in better understanding the
consolidated financial statements and other data contained herein.
PERVASIVENESS OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from the estimates.
BASIS OF PRESENTATION:
The consolidated financial statements include the accounts of the
Association and its wholly-owned subsidiary, RFS Investment
Corporation. All significant intercompany accounts and transactions
have been eliminated in the consolidation.
The data presented for the nine months ended June 30, 1998 and 1997
reflect, in the opinion of management, all adjustments (consisting only
of normal recurring adjustments) which are necessary to present fairly
the results for such interim periods. Interim results at and for the
nine months ended June 30, 1998 are not necessarily indicative of the
results that may be expected for the fiscal year ended September 30,
1998.
CASH AND CASH EQUIVALENTS:
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, cash items, due from banks and federal funds sold.
SECURITIES:
Investments in debt securities are adjusted for amortization of
premiums and accretion of discounts. Gains or losses on sales of
investment securities are computed on a specific identification basis.
F-7
<PAGE>
The Association classifies debt and equity securities into one of three
categories: held-to-maturity, available-for-sale, or trading. In
general, securities may be classified as held-to-maturity only if the
Association has the positive intent and ability to hold them to
maturity. Trading securities are defined as those bought and held
principally for the purpose of selling them in the near term. All other
securities must be classified as available-for-sale.
-- Held-to-maturity securities are measured at amortized cost
in the balance sheet. Unrealized holding gains and losses
are not included in earnings or in a separate component of
capital. They are merely disclosed in the notes to the
consolidated financial statements.
-- Available-for-sale securities are carried at fair value on
the balance sheet. Unrealized holding gains and losses are
not included in earnings, but are reported as a net amount
(less expected tax) in a separate component of capital until
realized.
-- Trading securities are carried at fair value on the balance
sheet. Unrealized holding gains and losses for trading
securities are included in earnings.
LOANS:
Loans receivable that management has the intent and ability to hold for
the foreseeable future or until maturity or payoff are reported at
their outstanding principal balances reduced by amounts due to
borrowers on unadvanced loans, any charge-offs, the allowance for loan
losses and any deferred fees or costs on originated loans, or
unamortized premiums or discounts on purchased loans.
Interest on loans is recognized on a simple interest basis.
Loan origination and commitment fees and certain direct origination
costs are deferred, and the net amount amortized as an adjustment of
the related loan's yield. The Association is amortizing these amounts
over the contractual life of the related loans using the straight-line
method.
Cash receipts of interest income on impaired loans is credited to
principal to the extent necessary to eliminate doubt as to the
collectibility of the net carrying amount of the loan. Some or all of
the cash receipts of interest income on impaired loans is recognized as
interest income if the remaining net carrying amount of the loan is
deemed to be fully collectible. When recognition of interest income on
an impaired loan on a cash basis is appropriate, the amount of income
that is recognized is limited to that which would have been accrued on
the net carrying amount of the loan at the contractual interest rate.
Any cash interest payments received in excess of the limit and not
applied to reduce the net carrying amount of the loan are recorded as
recoveries of charge-offs until the charge-offs are fully recovered.
ALLOWANCE FOR LOAN LOSSES:
An allowance is available for losses which may be incurred in the
future on loans in the current portfolio. The allowance is increased by
provisions charged to current operations and is decreased by loan
losses, net of recoveries. The allowance for loan losses is established
through a provision for loan losses based on management's evaluation of
the risks inherent in its loan portfolio and the general economy. The
allowance for loan losses is maintained at an amount management
considers adequate to cover estimated losses on loans which are deemed
probable and estimable based on information currently known to
management. The allowance is based upon a number of factors, including
current economic conditions, actual loss experience and industry
trends. The balance in the allowance for loan losses is considered
adequate by management to absorb any reasonably foreseeable loan
losses.
F-8
<PAGE>
As of October 1, 1995, the Association adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment
of a Loan," as amended by SFAS No. 118. According to SFAS No. 114 a
loan is impaired when, based on current information and events, it is
probable that a creditor will be unable to collect all amounts due
according to the contractual terms of the loan agreement. The Statement
requires that impaired loans be measured on a loan by loan basis by
either the present value of expected future cash flows discounted at
the loan's effective interest rate, the loan's observable market price,
or the fair value of the collateral if the loan is collateral
dependent.
The Statement is applicable to all loans, except large groups of
smaller balance homogeneous loans that are collectively evaluated for
impairment, loans that are measured at fair value or at the lower of
cost or fair value, leases, and convertible or nonconvertible
debentures and bonds and other debt securities. The Association
considers its residential real estate loans and consumer loans that are
not individually significant to be large groups of smaller balance
homogeneous loans.
Factors considered by management in determining impairment include
payment status, net worth and collateral value. An insignificant
payment delay or an insignificant shortfall in payment does not in
itself result in the review of a loan for impairment. The Association
applies SFAS No. 114 on a loan-by-loan basis. The Association does not
apply SFAS No. 114 to aggregations of loans that have risk
characteristics in common with other impaired loans. Interest on a loan
is not generally accrued when the loan becomes ninety or more days
overdue. The Association may place a loan on nonaccrual status but not
classify it as impaired, if (i) it is probable that the Association
will collect all amounts due in accordance with the contractual terms
of the loan or (ii) the loan is an individually insignificant
residential mortgage loan or consumer loan. Impaired loans are
charged-off when management believes that the collectibility of the
loan's principal is remote. Substantially all of the Association's
loans that have been identified as impaired have been measured by the
fair value of existing collateral.
The financial statement impact of adopting the provisions of this
Statement was not material.
PREMISES AND EQUIPMENT:
Premises and equipment are stated at cost, less accumulated
depreciation and amortization. Cost and related allowances for
depreciation and amortization of premises and equipment retired or
otherwise disposed of are removed from the respective accounts with any
gain or loss included in income or expense. Depreciation and
amortization are calculated principally on the straight-line method
over the estimated useful lives of the asset.
OTHER REAL ESTATE OWNED AND IN-SUBSTANCE FORECLOSURES:
Other real estate owned includes properties acquired through
foreclosure and properties classified as in-substance foreclosures in
accordance with Financial Accounting Standards Board Statement No. 15,
"Accounting by Debtors and Creditors for Troubled Debt Restructuring."
These properties are carried at the lower of cost or estimated fair
value less estimated costs to sell. Any writedown from cost to
estimated fair value required at the time of foreclosure or
classification as in-substance foreclosure is charged to the allowance
for loan losses. Expenses incurred in connection with maintaining these
assets, subsequent writedowns and gains or losses recognized upon sale
are included in other expense.
Beginning on October 1, 1995, in accordance with Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment
of a Loan," the Association classifies loans as in-substance
repossessed or foreclosed if the Association receives physical
possession of the debtor's assets regardless of whether formal
foreclosure proceedings take place.
F-9
<PAGE>
FAIR VALUES OF FINANCIAL INSTRUMENTS:
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments," requires that the Association
disclose estimated fair value for its financial instruments. Fair value
methods and assumptions used by the Association in estimating its fair
value disclosures are as follows:
Cash and cash equivalents: The carrying amounts reported in the balance
sheet for cash and federal funds sold approximate those assets' fair
values.
Securities (including mortgage-backed securities): Fair values for
securities are based on quoted market prices, where available. If
quoted market prices are not available, fair values are based on quoted
market prices of comparable instruments.
Loans receivable: For variable-rate loans that reprice frequently and
with no significant change in credit risk, fair values are based on
carrying values. The fair values for other loans are estimated using
discounted cash flow analyses, using interest rates currently being
offered for loans with similar terms to borrowers of similar credit
quality. The carrying amount of accrued interest approximates its fair
value.
Accrued interest receivable: The carrying amount of accrued interest
receivable approximates its fair value.
Deposit liabilities: The fair values disclosed for demand deposits
(e.g., interest and non-interest checking, passbook savings and money
market accounts) are, by definition, equal to the amount payable on
demand at the reporting date (i.e., their carrying amounts). Fair
values for fixed-rate certificate accounts are estimated using a
discounted cash flow calculation that applies interest rates currently
being offered on certificates to a schedule of aggregated expected
monthly maturities on certificate accounts.
Federal Home Loan Bank Advances: Fair values for FHLB advances are
estimated using a discounted cash flow technique that applies interest
rates currently being offered on advances to a schedule of aggregated
expected monthly maturities on FHLB advances.
Off-balance sheet instruments: The fair value of commitments to
originate loans is estimated using the fees currently charged to enter
similar agreements, taking into account the remaining terms of the
agreements and the present creditworthiness of the counterparties. For
fixed-rate loan commitments and the unadvanced portion of loans, fair
value also considers the difference between current levels of interest
rates and the committed rates. The fair value of letters of credit is
based on fees currently charged for similar agreements or on the
estimated cost to terminate them or otherwise settle the obligation
with the counterparties at the reporting date.
INCOME TAXES:
The Association recognizes income taxes under the asset and liability
method. Under this method, deferred tax assets and liabilities are
established for the temporary differences between the accounting basis
and the tax basis of the Association's assets and liabilities at
enacted tax rates expected to be in effect when the amounts related to
such temporary differences are realized or settled.
F-10
<PAGE>
NOTE 3 - SECURITIES
Debt and equity securities have been classified in the consolidated balance
sheets according to management's intent. The carrying amount of securities and
their approximate fair values are as follows:
<TABLE>
<CAPTION>
Gross
Amortized Unrealized
Cost Holding Fair
Basis Gains Value
----- ----- -----
<S> <C> <C> <C>
Available-for-sale securities (1):
June 30, 1998 (unaudited):
Marketable equity securities $23,870 $825,694 $849,564
======= ======== ========
September 30, 1997:
Marketable equity securities $23,870 $612,510 $636,380
======= ======== ========
September 30, 1996:
Marketable equity securities $23,870 $416,838 $440,708
======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
Cost Holding Holding Fair
Basis Gains Losses Value
----- ----- ------ -----
<S> <C> <C> <C> <C>
Held-to-maturity securities:
June 30, 1998 (unaudited):
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies $ 6,499,468 $ 9,088 $ 78,236 $ 6,430,320
Mortgage-backed securities 21,635,342 432,626 52,344 22,015,624
Asset-backed securities 5,161,522 50,149 5,211,671
------------- ----------- -------- -------------
$33,296,332 $491,863 $130,580 $33,657,615
=========== ======== ======== ===========
September 30, 1997:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies $ 9,202,078 $ 14,829 $ 10,155 $ 9,206,752
Mortgage-backed securities 25,144,248 452,634 138,681 25,458,201
Asset-backed securities 5,806,952 35,526 5,842,478
------------- ----------- -------- -------------
$40,153,278 $502,989 $148,836 $40,507,431
=========== ======== ======== ===========
September 30, 1996:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies $ 8,499,901 $ 26,815 $ 24,556 $ 8,502,160
Mortgage-backed securities 24,945,208 285,785 622,377 24,608,616
Asset-backed securities 7,234,614 10,992 7,245,606
------------- ----------- -------- -------------
$40,679,723 $323,592 $646,933 $40,356,382
=========== ======== ======== ===========
</TABLE>
(1) Marketable equity securities consists of common stock issued by
government-sponsored agencies.
Mortgage-backed securities are issued by GNMA, FHLMC or Fannie Mae, and are
backed by fixed-rate mortgages. Asset-backed securities are SBA loan pools.
F-11
<PAGE>
The scheduled maturities of held-to-maturity securities were as follows:
<TABLE>
<CAPTION>
Amortized
Cost Fair
Basis Value
----- -----
<S> <C> <C>
June 30, 1998 (unaudited):
Debt securities other than mortgage-backed and asset-backed securities:
Due within one year $ 499,507 $ 503,595
Due after five years through ten years 1,500,000 1,492,340
Due after ten years 4,499,961 4,434,385
Mortgage-backed securities 21,635,342 22,015,624
Asset-backed securities 5,161,522 5,211,671
------------- -------------
$33,296,332 $33,657,615
=========== ===========
September 30, 1997:
Debt securities other than mortgage-backed and asset-backed securities:
Due within one year $ 999,997 $ 1,000,080
Due after one year through five years 2,999,035 3,005,465
Due after five years through ten years 1,900,000 1,902,386
Due after ten years 3,303,046 3,298,821
Mortgage-backed securities 25,284,110 25,458,201
Asset-backed securities 5,667,090 5,842,478
------------- -------------
$40,153,278 $40,507,431
=========== ===========
</TABLE>
For the nine months ended June 30, 1998 and 1997, there were no sales of
available-for-sale securities. For the years ended September 30, 1997 and 1996,
there were no sales of available-for-sale securities. For the year ended
September 30, 1995, proceeds from the sale of an available-for-sale security
amounted to $317,577. The gross realized gain on the sale amounted to $294,531.
During the nine months ended June 30, 1998 and 1997 no held-to-maturity
securities were sold or transferred. During the years ended September 30, 1997,
1996 and 1995 no held-to-maturity securities were sold or transferred.
The Association had an investment in security, with an aggregate amortized cost
basis and fair value which exceeded 10% of equity as of June 30, 1998
(unaudited) and September 30, 1997 as follows:
<TABLE>
<CAPTION>
Description Amortized Cost Basis Fair Value
----------- -------------------- ----------
<S> <C> <C> <C>
June 30, 1998 (unaudited) FHLMC Stock $23,046 $847,134
September 30, 1997 FHLMC Stock $23,046 $634,500
</TABLE>
Investment securities pledged as of June 30, 1998, September 30, 1997 and 1996
amounted to $7,618,935 (unaudited), $6,155,162 and $2,500,000, respectively. The
securities were pledged to secure certain time deposits, $100,000 and over,
received from customers.
F-12
<PAGE>
NOTE 4 - LOANS
Loans consisted of the following:
<TABLE>
<CAPTION>
September 30,
----------------------------
June 30, 1998 1997 1996
----------------------------------------------
(unaudited)
<S> <C> <C> <C>
Mortgage loans:
One to-four family $34,495,102 $32,927,514 $30,046,234
Commercial real estate 4,157,223 2,577,312 460,416
Construction and land 1,517,507 814,963 1,075,368
------------- -------------- -------------
Total mortgage loans 40,169,832 36,319,789 31,582,018
------------ ------------ ------------
Commercial loans 2,789,098 1,684,387 48,852
------------- ------------- ---------------
Consumer loans:
Home equity lines 3,301,418 2,760,863 1,303,039
Secured by deposit accounts 621,108 373,686 369,632
Auto loans 424,739 413,193 121,419
Other consumer loans 83,726 72,978 18,550
--------------- --------------- ---------------
Total consumer loans 4,430,991 3,620,720 1,812,640
------------- ------------- -------------
Total loans receivable 47,389,921 41,624,896 33,443,510
Allowance for loan losses (506,053) (376,854) (324,708)
Deferred loan origination fees, net (58,427) (72,909) (72,697)
-------------- --------------- ---------------
Net loans $46,825,441 $41,175,133 $33,046,105
=========== =========== ===========
</TABLE>
Certain directors and executive officers of the Association were customers of
the Association during the nine months ended June 30, 1998. Total loans to such
persons and their companies amounted to $47,088 (unaudited) as of June 30, 1998.
During the nine months ended June 30, 1998 total payments amounted to $19,362
(unaudited) and principal advances amounted to $0 (unaudited). Certain directors
and executive officers of the Association were customers of the Association
during the year ended September 30, 1997. Total loans to such persons and their
companies amounted to $66,450 as of September 30, 1997. During the year ended
September 30, 1997 total payments amounted to $27,534 and principal advances
amounted to $43,020. Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
For the Nine Months For the Years
Ended June 30, Ended September 30,
--------------------------------------------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $376,854 $324,708 $324,708 $206,073 $186,832
Loans charged off (45,301) (7,854) (29,865)
Provision (benefit) for loan losses 174,500 45,000 60,000 148,500 (2,000)
Recoveries of previously charged off loans 21,241
------- ------ ------ ------- ------
Balance at end of period $506,053 $369,708 $376,854 $324,708 $206,073
======== ======== ======== ======== ========
</TABLE>
During the nine months ended June 30, 1998 (unaudited), the Association had no
loans that met the definition of an impaired loan in Statement of Financial
Accounting Standards No. 114. There were no impaired loans outstanding as of
June 30, 1998 (unaudited). During the years ended September 30, 1997 and 1996,
the Association had no loans that met the definition of an impaired loan in
Statement of Financial Accounting Standards No. 114. There were no impaired
loans outstanding as of September 30, 1997 and 1996.
F-13
<PAGE>
For the nine months ended June 30, 1998 and the fiscal years ended September 30,
1997 and 1996, the amount of interest income that was recognized on nonaccrual
loans was $4,936 (unaudited), $7,861 and $1,857, respectively. For the nine
months ended June 30, 1998 and the fiscal years ended September 30, 1997 and
1996, the amount of additional interest income that would have been recognized
on nonaccrual loans if such loans had continued to perform in accordance with
their contractual terms was $5,919 (unaudited), $4,370 and $1,080, respectively.
Statement of Financial Accounting Standards No. 122, "Accounting for Mortgage
Servicing Rights," (SFAS No. 122), became effective for the Association on
October 1, 1996. SFAS No. 122 was superseded by Statement of Financial
Accounting Standards No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," (SFAS No. 125) effective
for transfers and servicing occuring after December 31, 1996. In the nine months
ending June 30, 1998 the Bank sold mortgage loans totaling approximately
$5,960,000 (unaudited) and retained the servicing rights. In the fiscal year
ending September 30, 1997 the Bank sold mortgage loans totaling approximately
$2,810,000 and retained the servicing rights. The fair value of those rights
under SFAS No. 122 and SFAS No. 125 is not material and has not been recognized
in the financial statements for the nine months ended June 30, 1998 (unaudited)
or the year ended September 30, 1997.
NOTE 5 - PREMISES AND EQUIPMENT, NET OF DEPRECIATION AND AMORTIZATION
The following is a summary of premises and equipment:
<TABLE>
<CAPTION>
September 30, Estimated
------------------------------- Useful
June 30, 1998 1997 1996 Life
------------- -------------- -------------- ---------
(unaudited)
<S> <C> <C> <C>
Land $ 170,000 $ 170,000 $ 66,000
Buildings 448,932 448,932 448,932 50 years
Furniture and equipment 759,536 626,251 524,356 3-5 years
Renovations 389,309 389,309 389,309 3-20 years
------------ ------------ ------------
1,767,777 1,634,492 1,428,597
Accumulated depreciation and amortization (795,452) (682,605) (568,169)
------------ ------------ ------------
$ 972,325 $ 951,887 $ 860,428
=========== =========== ===========
</TABLE>
NOTE 6 - DEPOSITS
The aggregate amount of time deposit accounts (including CDs), each with a
minimum denomination of $100,000, was approximately $9,649,571 (unaudited),
$10,115,066 and $7,188,950 as of June 30, 1998, September 30, 1997 and 1996,
respectively. Deposits greater than $100,000 are not federally insured.
For time deposits as of June 30, 1998, the aggregate amount of maturities for
each of the following five years ended after June 30, and thereafter are:
(unaudited)
1999 $27,199,508
2000 6,994,822
2001 1,755,708
2002 182,763
2003 173,264
--------------
$36,306,065
==============
F-14
<PAGE>
For time deposits as of September 30, 1997, the aggregate amount of maturities
for each of the following five years ended after September 30, 1997 and
thereafter are:
1998 $25,825,666
1999 7,578,170
2000 1,034,830
2001 171,796
2002 107,541
--------------
$34,718,003
==============
NOTE 7 - ADVANCES FROM FEDERAL HOME LOAN BANK OF BOSTON
Advances consist of funds borrowed from the Federal Home Loan Bank of Boston
(FHLB).
The components of these borrowings are as follows as of June 30, 1998:
<TABLE>
<CAPTION>
Maturity Date Rate Principal
------------- ---- ---------
(unaudited)
<S> <C> <C>
July 10, 1998 5.75% $ 800,000
September 24, 2003, amortizing 5.36 2,937,061
November 3, 2003, amortizing 5.64 1,214,219
June 2, 2005, amortizing 6.64 3,833,114
January 8, 2008 4.99 7,500,000
June 25, 2008 5.01 3,000,000
-------------
$19,284,394
=============
</TABLE>
Maturities of advances from the Federal Home Loan Bank of Boston for the five
years ending after June 30, 1998 and thereafter are summarized as follows:
1999 $ 1,851,447
2000 1,214,306
2001 1,290,109
2002 1,368,450
2003 1,454,678
Thereafter 12,105,404
------------
$ 19,284,394
=============
The components of these borrowings are as follows as of September 30, 1997:
Maturity Date Rate Principal
--------------------------------- ----- ------------
October 23, 1997 5.71% $ 1,500,000
November 21, 1997 5.89 500,000
December 29, 1997 5.36 2,000,000
January 14, 1998 5.62 1,000,000
January 21, 1998 5.62 3,000,000
April 27, 1998 6.07 2,000,000
June 26, 1998 5.87 5,500,000
July 10, 1998 5.75 800,000
September 24, 2003, amortizing 5.36 3,299,482
November 3, 2003, amortizing 5.64 1,357,410
June 2, 2005, amortizing 6.64 4,147,528
-------------
$25,104,420
=============
F-15
<PAGE>
Maturities of advances from the Federal Home Loan Bank of Boston for the five
fiscal years ending after September 30, 1997 and thereafter are summarized as
follows:
1998 $17,400,270
1999 1,167,941
2000 1,237,860
2001 1,317,010
2002 1,397,191
Thereafter 2,584,148
-------------
$25,104,420
=============
Advances are secured by the Bank's stock in that institution, its residential
real estate mortgage portfolio and the remaining U.S. government and agencies
obligation not otherwise pledged.
NOTE 8 - INCOME TAXES
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
For the Nine Months For the Years
Ended June 30, Ended September 30,
-----------------------------------------------------------------
1998 1997 1997 1996 1995
---------- ---------- ----------- ---------- -------
(unaudited) (As Restated)
<S> <C> <C> <C> <C> <C>
Current:
Federal $157,600 $196,701 $259,454 $ (1,378) $413,264
State 28,180 16,256 20,650 15,998 22,470
---------- ---------- ---------- -------- ----------
185,780 212,957 280,104 14,620 435,734
--------- --------- --------- -------- ---------
Deferred:
Federal (46,263) (3,434) 2,545 46,073 (156,143)
State (14,538) (1,289) 4,596 (35,114) (8,494)
---------- ----------- ----------- -------- -----------
(60,801) (4,723) 7,141 10,959 (164,637)
---------- ----------- ----------- -------- ---------
Total income tax expense $124,979 $208,234 $287,245 $25,579 $271,097
======== ======== ======== ======= ========
</TABLE>
The following reconciles the income tax provision from the statutory rate to the
amount reported in the consolidated statements of income:
<TABLE>
<CAPTION>
For the Nine Months For the Years
Ended June 30, Ended September 30,
---------------------------------------------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
% of % of % of % of % of
Income Income Income Income Income
------ ------ ------ ------ ------
(unaudited) (As Restated)
<S> <C> <C> <C> <C> <C>
Federal income tax at statutory rate 34.0% 34.0% 34.0% 34.0% 34.0%
Increase (decrease) in tax resulting from:
Dividends received deduction (.4) (.2) (.2) (1.4) (.3)
Unallowable expenses and other adjustments 1.2 .7 1.7 .3 (1.7)
State tax, net of federal tax benefit 2.7 1.7 2.1 (11.6) 1.3
----- ----- ----- ---- -----
37.5% 36.2% 37.6% 21.3% 33.3%
===== ===== ===== ===== =====
</TABLE>
F-16
<PAGE>
The Association had gross deferred tax assets and gross deferred tax liabilities
as follows:
<TABLE>
<CAPTION>
September 30,
--------------------------
June 30, 1998 1997 1996
------------- ----------- --------
(unaudited)
<S> <C> <C> <C>
Deferred tax assets:
Allowance for loan losses $184,690 $121,358 $111,558
Loan origination fees 63,632 63,404 62,445
Estimated expenses 7,159 28,245 45,373
Investment writedown 1,526 1,526
Depreciation 21,257 7,560 9,627
Accrued pension expense 9,888 2,488
----------- ----------- ---------
Gross deferred tax assets 286,626 224,581 230,529
--------- --------- ---------
Deferred tax liabilities:
Unrealized gain on available-for-sale securities (340,191) (254,015) (173,968)
Deferred loan costs (34,538) (33,295) (32,102)
---------- ---------- -----------
Gross deferred tax liabilities (374,729) (287,310) (206,070)
--------- --------- ---------
Net deferred tax asset (liability) $ (88,103) $ (62,729) $ 24,459
========= ========= =========
</TABLE>
Deferred tax assets as of June 30, 1998 (unaudited), September 30, 1997 and 1996
have not been reduced by a valuation allowance because management believes that
it is more likely than not that the full amount of deferred tax assets will be
realized.
As of June 30, 1998 (unaudited) and September 30, 1997, the Association had no
operating loss and tax credit carryovers for tax purposes.
In prior years, the Association was allowed a special tax-basis bad debt
deduction under certain provisions of the Internal Revenue Code. As a result,
retained earnings of the Association as of June 30, 1998 and September 30, 1997
includes approximately $1,111,595 (unaudited) and $1,111,595 for which federal
and state income taxes have not been provided. Under the provisions of recent
federal income tax legislation, if the Association no longer qualifies as a bank
as defined in certain provision of the Internal Revenue Code, this amount will
be subject to recapture in taxable income ratably over six (6) years, subject to
a combined federal and state tax rate of approximately 41%.
NOTE 9 - FINANCIAL INSTRUMENTS
The Association is party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to originate loans. The
instruments involve, to varying degrees, elements of credit risk in excess of
the amount recognized in the balance sheets. The contract amounts of those
instruments reflect the extent of involvement the Association has in particular
classes of financial instruments.
The Association's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for loan commitments is represented by
the contractual amounts of those instruments. The Association uses the same
credit policies in making commitments and conditional obligations as it does for
on-balance sheet instruments.
F-17
<PAGE>
Commitments to originate loans are agreements to lend to a customer provided
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Association evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Association upon extension of credit, is based on
management's credit evaluation of the borrower. Collateral held varies, but may
include secured interests in mortgages, accounts receivable, inventory,
property, plant and equipment and income-producing properties.
Standby letters of credit are conditional commitments issued by the Association
to guarantee the performance by a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers.
Notional amounts of financial instrument liabilities with off-balance sheet
credit risk are as follows:
<TABLE>
<CAPTION>
September 30,
---------------------------------
June 30, 1998 1997 1996
------------- -------------- ---------------
(unaudited)
<S> <C> <C> <C>
Commitments to originate loans* $1,588,193 $3,786,000 $ 979,500
Unadvanced funds on construction loans 1,343,126 225,231 397,049
Unadvanced funds on home equity lines of credit 2,002,461 2,002,521 1,130,415
Unadvanced funds on commercial lines of credit 295,017
Standby letters of credit 50,000 50,000
------------- ------------- -----------
$5,278,797 $6,063,752 $ 2,506,964
========== ========== ===========
</TABLE>
* The range of rates for fixed rate loans included within commitments to
originate loans were 6.375% to 10.50% (unaudited), 6.875% to 8.50%, and 7.25% to
9.25% as of June 30, 1998, September 30, 1997 and 1996, respectively. The range
of terms for these fixed rate loans was four (unaudited) years to thirty
(unaudited) years, fifteen years to thirty years and fifteen years to thirty
years as of June 30, 1998, September 30, 1997 and 1996, respectively.
The estimated fair values of the Association's financial instruments, all of
which are held or issued for purposes other than trading, are as follows:
June 30, 1998
--------------------------------
Carrying
Amount Fair Value
------ ----------
Financial assets: (unaudited)
Cash and cash equivalents $ 4,497,612 $4,497,612
Available-for-sale securities 849,564 849,564
Held-to-maturity securities 33,296,332 33,657,615
Federal Home Loan Bank stock 1,517,000 1,517,000
Loans, net 46,825,441 48,172,000
Accrued interest receivable 640,200 640,200
Financial liabilities:
Deposits 62,975,843 63,228,000
Federal Home Loan Bank advances 19,284,394 19,254,000
F-18
<PAGE>
<TABLE>
<CAPTION>
September 30,
-------------------------------------------------------------------
1997 1996
-------------------------------------------------------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 1,831,622 $ 1,831,622 $ 790,089 $ 790,089
Available-for-sale securities 636,380 636,380 440,708 440,708
Held-to-maturity securities 40,153,278 40,507,431 40,679,723 40,356,382
Federal Home Loan Bank stock 1,405,400 1,405,400 1,405,400 1,405,000
Loans, net 41,175,133 41,753,000 33,046,105 32,968,000
Accrued interest receivable 702,142 702,142 564,158 564,158
Financial liabilities:
Deposits 55,452,274 55,785,000 49,393,357 49,793,000
Federal Home Loan Bank advances 25,104,420 25,035,000 22,711,955 22,436,000
</TABLE>
The carrying amounts of financial instruments shown in the above tables are
included in the consolidated balance sheets under the indicated captions.
Accounting policies related to financial instruments are described in Note 2.
The Association has no derivative financial instruments subject to the
provisions of SFAS No. 119, "Disclosure About Derivative Financial Instruments
and Fair Value of Financial Instruments."
NOTE 10 - PENSION PLAN
The Bank is a member of a multi employer comprehensive retirement program
sponsored by Financial Institutions Retirement Fund. The defined benefit pension
plan is a non-contributory plan available to each employee meeting service and
age requirements. Employees are eligible to participate in the Retirement Plan
after the completion of 12 consecutive months of employment with the Association
and the attainment of age 21. Hourly paid employees are excluded from
participation in the Plan. The Bank matches employee contributions to the 401(k)
plan at 50% of member's contribution up to 10% of their W-2 salary. The expenses
for the defined benefit and contribution plans are $20,445 (unaudited) and
$20,700 (unaudited), respectively, for the nine months ended June 30, 1998,
$23,816 (unaudited) and $18,817 (unaudited), respectively for the nine months
ended June 30, 1997 and $30,226 and $25,367, respectively for the year ended
September 30, 1997, $1,800 and $20,885, respectively for the year ended
September 30, 1996 and $1,800 and $21,894, respectively for the year ended
September 30, 1995.
NOTE 11 - REGULATORY MATTERS
The Association is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory - and possibly additional
discretionary - actions by regulators that, if undertaken, could have a direct
material effect on the Association's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Association must meet specific capital guidelines that involve quantitative
measures of the Association's assets, liabilities and certain off-balance-sheet
items as calculated under regulatory accounting practices. The Association's
capital amounts and classification are also subject to qualitative judgments by
the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Association to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier 1 capital (as defined in the regulations) to
risk-weighted assets (as defined), of Tier 1 capital (as defined) to adjusted
total assets (as defined) and Tangible capital (as defined) to Tangible assets
(as defined). Management believes, as of June 30, 1998 (unaudited) and September
30, 1997, that the Association meets all capital adequacy requirements to which
it is subject.
F-19
<PAGE>
As of September 30, 1997, the most recent notification from the Office of Thrift
Supervision categorized the Association as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized
the Association must maintain minimum total risk-based, Tier 1 risk-based, Tier
1 and Tangible capital ratios as set forth in the table. There are no conditions
or events since that notification that management believes have changed the
association's category.
The Association's actual capital amounts and ratios are also presented in the
table.
<TABLE>
<CAPTION>
Actual
------------------
Amount Ratio
------ -----
(Dollar Amounts in Thousands)
<S> <C> <C>
As of June 30, 1998 (unaudited):
Total Capital (to Risk Weighted Assets) $6,332 17.89%
Core Capital (to Adjusted Tangible Assets) 5,889 6.63
Tangible Capital (to Tangible Assets) 5,889 6.63
Tier 1 Capital (to Risk Weighted Assets) 5,889 16.64
As of September 30, 1997:
Total Capital (to Risk Weighted Assets) 6,035 21.33
Core Capital (to Adjusted Tangible Assets) 5,681 6.54
Tangible Capital (to Tangible Assets) 5,681 6.54
Tier 1 Capital (to Risk Weighted Assets) 5,681 20.08
As of September 30, 1996:
Total Capital (to Risk Weighted Assets) 5,490 24.03
Core Capital (to Adjusted Tangible Assets) 5,204 6.69
Tangible Capital (to Tangible Assets) 5,204 6.69
Tier 1 Capital (to Risk Weighted Assets) 5,204 22.78
To Be Well
Capitalized Under
For Capital Prompt Corrective
Adequacy Purposes: Action Provisions:
------------------ ----------------------
Amount Ratio Amount Ratio
------ ----- ------ -----
(Dollar Amounts in Thousands)
<S> <C> <C> <C> <C>
As of June 30, 1998 (unaudited):
Total Capital (to Risk Weighted Assets) $2,831 greater than or equal to 8.0% $3,539 greater than or equal to 10.0%
Core Capital (to Adjusted Tangible Assets) 3,555 greater than or equal to 4.0 4,443 greater than or equal to 5.0
Tangible Capital (to Tangible Assets) 1,333 greater than or equal to 1.5 N/A N/A
Tier 1 Capital (to Risk Weighted Assets) N/A N/A 2,124 greater than or equal to 6.0
As of September 30, 1997:
Total Capital (to Risk Weighted Assets) 2,263 greater than or equal to 8.0 2,829 greater than or equal to 10.0
Core Capital (to Adjusted Tangible Assets) 3,477 greater than or equal to 4.0 4,346 greater than or equal to 5.0
Tangible Capital (to Tangible Assets) 1,304 greater than or equal to 1.5 N/A N/A
Tier 1 Capital (to Risk Weighted Assets) N/A N/A 1,697 greater than or equal to 6.0
As of September 30, 1996:
Total Capital (to Risk Weighted Assets) 1,827 greater than or equal to 8.0 2,284 greater than or equal to 10.0
Core Capital (to Adjusted Tangible Assets) 3,111 greater than or equal to 4.0 3,889 greater than or equal to 5.0
Tangible Capital (to Tangible Assets) 1,167 greater than or equal to 1.5 N/A N/A
Tier 1 Capital (to Risk Weighted Assets) N/A N/A 1,371 greater than or equal to 6.0
</TABLE>
The following provides a reconciliation of the Association's equity to
regulatory capital:
<TABLE>
<CAPTION>
September 30,
June 30, -----------------------------
1998 1997 1996
---- ---- ----
(unaudited)
<S> <C> <C> <C>
Equity $6,374,214 $6,039,227 $5,447,200
Less: Unrealized holding gain on securities
available-for-sale, net of taxes (485,503) (358,495) (242,870)
------------ ------------ ------------
Tangible/core capital 5,888,711 5,680,732 5,204,330
Plus: Allowance for loan losses 443,000 354,000 286,000
------------ ------------ ------------
Total risk based capital $6,331,711 $6,034,732 $5,490,330
========== ========== ==========
</TABLE>
F-20
<PAGE>
NOTE 12 - PRIOR PERIOD ADJUSTMENTS
The Association has restated its previously issued 1996 and 1995 financial
statements to reflect an adjustment related to an overaccrual of FDIC insurance
in fiscal year September 30, 1995.
Previously reported retained earnings as of September 30, 1995 has been
increased by $186,971 and previously reported results of operations have been
changed as follows:
Year Ended September 30,
------------------------
1996 1995
---- ----
(In Thousands)
Income before income taxes:
As previously reported $ 409,244 $ 523,184
As restated 119,986 812,442
Net income:
As previously reported 281,378 354,374
As restated 94,407 541,345
Retained earnings:
As previously reported 5,204,330 4,922,952
As restated N/A 5,109,923
NOTE 13 - SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
Most of the Association's business activity is with customers located within the
state. There are no concentrations of credit to borrowers that have similar
economic characteristics. The majority of the Association's loan portfolio is
comprised of loans collateralized by real estate located in the state of
Massachusetts.
NOTE 14 - PLAN OF REORGANIZATION
On January 21, 1998 the Board of Directors of the Association approved a Plan of
Reorganization from Mutual Savings Association to Mutual Holding and Stock
Issuance (the "Plan") under which the Association will be reorganized from a
federally chartered mutual savings association into a mutual holding company
(the "MHC") under the laws of the United States of America and the regulations
of the Office of Thrift Supervision (the "O.T.S."). As part of the
reorganization and the Plan, the Association will convert to a federal stock
savings Association (the "Stock Association") and will establish a federal
corporation (the "Holding Company"). The Holding Company will be a
majority-owned subsidiary of the MHC and the Stock Association will be a
wholly-owned subsidiary of the Holding Company. Concurrently with the
reorganization, the Holding Company intends to offer for sale up to 49.9% of its
common stock to qualifying depositors and the tax-qualifying employee plans of
the Association, with any remaining shares offered to the public in a community
offering.
The Plan is subject to the approval of the O.T.S. and the majority of depositors
and borrowers entitled to vote.
After conversion, the Holding Company will not be able to declare or pay a cash
dividend on, or repurchase any of its common stock, if the effect thereof would
cause the regulatory capital of the Association to be reduced below the amount
required under O.T.S. rules and regulations.
NOTE 15 - RECLASSIFICATION
Certain amounts in the prior year have been reclassified to be consistent with
the current year's statement presentation.
F-21
<PAGE>
================================================================================
No person has been authorized to give any information or to make any
representation other than as contained in this prospectus and, if given or made,
such information or representation must not be relied upon as having been
authorized by the RFS Bancorp, Inc., or Revere Federal Savings and Loan
Association. This prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any security other than the shares of Common
Stock offered hereby to any person in any jurisdiction in which such offer or
solicitation is not authorized, or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation. Neither the delivery of this prospectus nor
any sale hereunder shall, under any circumstances, create any implication that
information herein is correct as of any time subsequent to the date hereof.
[Logo]
RFS BANCORP, INC.
(Proposed Holding Company for
Revere Federal Savings)
UP TO 590,496 SHARES
COMMON STOCK
($.01 PAR VALUE PER SHARE)
SUBSCRIPTION AND
COMMUNITY OFFERING
PROSPECTUS
TRIDENT SECURITIES, INC.
_______________, 1998
THESE SECURITIES ARE NOT DEPOSITS OR ACCOUNTS
AND ARE NOT FEDERALLY INSURED OR GUARANTEED.
Until _____________, 1998 or 25 days after the commencement of the offering
of Common Stock, all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
12 C.F.R. Section 545.121 of OTS Regulations sets forth the ability of a
federal savings & loan association to indemnify its officers and directors. This
section provides that a savings association shall indemnify any person against
whom an action is brought or threatened because that person is or was a
director, officer or employee of the association for: (1) any amount for which
that person become liable under a judgment if such action; and (2) reasonable
costs and expenses, including reasonable attorney's fees paid or incurred by
that person in defending or settling such action, or in enforcing his or her
rights under such section if he or she attains a favorable judgment in such
enforcement action.
Indemnification shall be made to such individuals if (1) final judgements
on the merits is in the individual's favor; or (2) in case of (i) settlement;
(ii) final judgement against the individual, or (iii) final judgement in the
individual's favor, other than on the merits, if a majority of the disinterested
directors determine that the individual was acting in good faith within the
scope of his or her employment or authority as he or she could have reasonable
perceived it under the circumstances and for a purpose her or she could
reasonably have believed under the circumstances was in the best interests of
the savings association or its members. The section also provides that no
indemnification may be made unless the association gives the OTS 60 days notice
of its intention to make such indemnification.
In addition to providing indemnification, under OTS Regulations, a savings
association may obtain insurance to protect in and its officers, directors and
employees from potential losses arising from claims against any of the for
alleged wrongful acts, or wrongful acts, committed in their capacity as
directors, officers or employees. However, the savings association may not
obtain insurance which provides for payment of losses of any person incurred as
a consequence of his or her willful or criminal misconduct.
Section 545.121 of OTS regulations is subject to and qualified by 12 U.S.C
ss. 1821(k) which provides in general that a director or officer of an insured
depository institution may be held personally liable for monetary damages by, on
behalf of, or at the request or direction of the Federal Deposit Insurance
Corporation in certain circumstances.
Article XIII of both the Stock Company's and the Bank's Bylaws provide that
it shall indemnify any person against whom an action is brought or threatened
because that person is or was a director, officer or employee of the Stock
Company for: (a) any amount for which that person becomes liable under a
judgment in such action; and (b) reasonable costs and expenses, including
reasonable attorneys' fees, actually paid or incurred by that person in
defending or settling such action, or in enforcing his or her rights under the
indemnification section of the bylaws if he or she attains a favorable judgment
in such enforcement action. These bylaw sections mirror OTS regulations as set
forth above.
Section 18 of the Bylaws of the Mutual Company provide that the Mutual
Company shall indemnify its officers, directors and employees to the fullest
extent permitted by the rules and regulations of the OTS at 12 C.F.R. ss.
545.121.
<PAGE>
The Bank is party to an Employment Agreement with each of Mr. James J.
McCarthy, Mr. Anthony J. Patti and Ms. Judith Tenaglia ("Senior Executives").
These Employment Agreements provide for the Company to indemnify the Senior
Executives to the fullest extent permitted under federal law.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
SEC Registration Fee (1).............................................. $ 1,742
OTS application fee and registration.................................. 14,400
National Association of Securities Dealers filing fee................. 1,100
OTC Electronic Bulletin Board Listing................................. 5,000
Printing, postage and mailing......................................... 50,000
Legal fees and expenses............................................... 150,000
Placement Agent's fees and commissions................................ 90,500
Placement Agent's expenses (excluding counsel fees)................... 40,000
Placement Agent's counsel fees and expenses........................... 30,000
Accounting fees and expenses.......................................... 40,000
Appraiser's fees and expenses (including preparing business plan)..... 24,000
Conversion agent fees and expenses.................................... 5,000
Certificate printing.................................................. 1,500
Blue Sky fees and expenses (including fees of counsel)................ 5,000
Miscellaneous......................................................... 8,850
---------
TOTAL................................................................. $ 465,350
=========
- ----------
(1) Actual expenses based upon the registration and sale of 590,496 shares each
at $10.00 per share. All other expenses are estimated.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
None.
-2-
<PAGE>
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The exhibits and financial statement schedules filed as a part of this
Registration Statement are as follows:
(A) LIST OF EXHIBITS. (Filed herewith unless otherwise noted.)
EXHIBIT NO. DESCRIPTION
----------- -----------
1.1 Engagement letter, dated December 22, 1997, between
Revere Federal Savings and Trident Securities, Inc.
*1.2 Draft Form of Agency Agreement
2.1 Plan of Reorganization from Mutual Savings Bank to Mutual
Holding Company and Stock Issuance Plan of Revere Federal
Savings
3.1 Federal Stock Charter of RFS Bancorp, Inc.
3.2 Bylaws of RFS Bancorp, Inc.
3.3 Federal Stock Charter of Revere Federal Savings Bank
3.4 Bylaws of Revere Federal Savings Bank
3.5 Federal Stock Charter of Revere, M.H.C.
3.6 Bylaws of Revere, M.H.C.
4.1 Federal Stock Charter of RFS Bancorp, Inc. (See Exhibit 3.1)
4.2 Bylaws of RFS Bancorp, Inc. (See Exhibit 3.2)
4.3 Form of Stock Certificate of RFS Bancorp, Inc.
5.1 Form of Opinion of Thacher Proffitt & Wood re: legality of
securities to be registered
8.1 Form of Opinion of Thacher Proffitt & Wood re: federal tax matters
*8.2 Form of Opinion of Shatswell, MacLeod & Company, P.C. re: state
and local tax matters
8.3 Letter from RP Financial regarding Subscription Rights
10.1(a) Form of Employee Stock Ownership Plan of RFS Bancorp, Inc.
10.1(b) Form of ESOP Trust Agreement
10.2 Form of Executive Employment Agreement, by and between James
J. McCarthy and Revere Federal Savings
-3-
<PAGE>
10.3 Form of Executive Employment Agreement, by and between
Anthony J. Patti and Revere Federal Savings
10.4 Form of Executive Employment Agreement, by and between Judith
Tenaglia and Revere Federal Savings
21.1 Subsidiaries of the Registrant
23.1 Consent of Thacher Proffitt & Wood (included in Exhibits
5.1 and 8.1 to this Registration Statement)
23.2 Consent of Shatswell MacLeod & Company, P.C.
23.4 Consent of RP Financial
24.1 Powers of Attorney (Included in Signature Page of this
Registration Statement)
27.1 Financial Data Schedule (only filed in electronic format)
99.1 Appraisal Report of RP Financial
*99.2 Draft Marketing Materials in connection with the Offering
- ----------
*To be filed by amendment.
(b) Financial Statement Schedules.
Financial statements of Revere Federal Savings as of and for the year
ended September 30, 1997 and as of and for the nine months ended June
30, 1998 (included in pp. F-1 -- F-21 of the Prospectus).
-4-
<PAGE>
ITEM 28. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the agent at the
closing specified in the Agency Agreement, certificates in such denominations
and registered in such names as required by the agent to permit prompt delivery
to each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
-5-
<PAGE>
SIGNATURES
In accordance with to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Revere, Commonwealth of Massachusetts, on August 31,
1998.
RFS BANCORP, INC.
By: /s/ James J. McCarthy
-------------------------------------
James J. McCarthy
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints James J. McCarthy and Richard A. Schaberg as the
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities to sign the Form SB-2 Registration Statement and any and all
amendments thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the U.S. Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ James J. McCarthy Director, President and Chief August 31, 1998
- ------------------------------------------ Executive Officer
James J. McCarthy (Principal executive officer)
/s/ Arno P. Bommer Chairman August 31, 1998
- ------------------------------------------
Arno P. Bommer
/s/ Ernest F. Becker Vice Chairman August 31, 1998
- ------------------------------------------
Ernest F. Becker
/s/ John J. Verrengia Director August 31, 1998
- ------------------------------------------
John J. Verrengia
/s/ Angelo A. Todisco Director August 31, 1998
- ------------------------------------------
Angelo A. Todisco
/s/ Anthony R. Conte Director August 31, 1998
- ------------------------------------------
Anthony R. Conte
/s/ Carmen R. Mattuchio Director August 31, 1998
- ------------------------------------------
Carmen R. Mattuchio
/s/ J. Michael O'Brien Director August 31, 1998
- ------------------------------------------
J. Michael O'Brien
/s/ Theodore E. Charles Director August 31, 1998
- ------------------------------------------
Theodore E. Charles
/s/ Anthony J. Patti Chief Financial Officer August 31, 1998
- ------------------------------------------ (Principal Accounting Officer)
Anthony J. Patti
</TABLE>
-6-
Exhibit 1.1
[TRIDENT SECURITIES, INC. LETTERHEAD]
Board of Directors
Revere Federal Savings and Loan Association
310 Broadway
Revere, Massachusetts 02151
RE: Mutual Holding Company Marketing Services
Gentlemen:
This letter sets forth the terms of the proposed engagement between Trident
Securities, Inc. ("Trident") and Revere Federal Savings and Loan Association
(the "Association") concerning Trident's investment banking services in
connection with the reorganization ("Reorganization") of the Association into a
mutual holding company ("MHC") and the issuance of shares of the stock savings
bank subsidiary of the MHC or its holding company in a community offering (the
"Offering").
Trident is prepared to assist the Association in connection with the offering of
shares of common stock of the MHC's stock savings bank subsidiary or its holding
company during the Offering as such terms are defined in the Association's Plan
of Mutual Holding Company Reorganization and Stock Issuance Plan (the "Plan").
It is expected that Trident will assist the Association in the Offering as
follows: (1) as financial advisor to Management, (2) targeting sales efforts in
the Association's local communities, (3) conducting information meetings for
prospective investors (as desired), (4) training and educating the Association's
management and employees regarding the mechanics and regulatory requirements of
the process, (5) providing support for the administration and processing of
orders and establishing a Stock Information Center on site in Revere, and (6)
acting as a market maker for the shares. The specific terms of the services
contemplated hereunder shall be set forth in a definitive Sales Agency Agreement
(the "Agreement") between Trident and the Association to be executed on the date
the Offering Circular is declared effective by the appropriate regulatory
authorities. The price of the shares during the Offering will be the price
established by the Association's Board of Directors, based upon an independent
appraisal as approved by the appropriate regulatory authorities, provided such
price is mutually acceptable to Trident and the Association.
At the appropriate time, Trident, in conjunction with its counsel will conduct
an examination of the relevant documents and records of the Association as
Trident and its counsel deem necessary and appropriate. The Association will
make all documents, records and other information deemed necessary by Trident or
its counsel available to them upon request.
For its services, Trident will receive the following compensation and
reimbursement from the Association:
1. A management fee in the amount of .50% of the total amount of stock
sold in the offering.
<PAGE>
Board of Directors
December 22, 1997
Page 2
2. A commission equal to two percent (2.0%) of the aggregate dollar
amount of capital stock sold in the subscription and community
offerings, excluding any shares of stock sold to the Association's
directors, executive officers, and the employee benefit plans.
Additionally, commissions will be excluded on those shares sold to
"Associates" of the Association's directors and executive officers.
The term "Associates" as used herein shall have the same meaning as
that found in the Association's Plan of Reorganization.
3. For stock sold by other NASD member firms under selected dealer's
agreements, the commission shall not exceed a fee to be agreed upon
jointly by Trident and the Association to reflect market requirements
at the time of the stock allocation in a Syndicated Community
Offering.
4. The foregoing fees and commissions are to be payable to Trident at
closing as defined in the Agreement to be entered into between the
Association and Trident.
5. Trident shall be reimbursed for out-of-pocket expenses incurred by
them and their counsel, whether or not the Agreement is consummated.
Trident's out-of-pocket expenses will not exceed $18,000 excluding
legal fees. The Association will forward to Trident a check in the
amount of $10,000 as an advance payment to defray the expenses of
Trident.
It further is understood that the Association will pay all other expenses of the
offering including but not limited to its attorneys' fees, National Association
of Securities Dealers ("NASD") filing fees, and fees of either Trident's
attorneys or other attorneys relating to any required state securities laws
filings, transfer agent charges, telephone charges, air freight, rental
equipment, supplies, fees relating to auditing and accounting and costs of
printing all documents necessary in connection with the foregoing. These
expenses are to be in addition to those enumerated in Paragraph (4) above.
For purposes of Trident's obligation to file certain documents and to make
certain representations to the NASD in connection with the reorganization, the
Association warrants that: (a) the Association has not privately placed any
securities within the last 18 months; (b) there have been no material dealings
within the last 12 months between the Association and any NASD member or any
person related to or associated with any such member; (c) none of the officers
or directors of the Association has any affiliation with the NASD; (d) except as
contemplated by this engagement letter with Trident, the Association has no
financial or management consulting contracts outstanding with any NASD member or
any person related to or associated with any such member; (e) the Association
has not granted Trident a right of first refusal with respect to the
underwriting of any future offering of the Association's stock; and, (f) there
has been no intermediary between Trident and the Association in connection with
the public offering of the Association's shares, and no NASD member or any
person related to or associated with any such member is being compensated in any
manner for providing such service.
The Association agrees to indemnify and hold harmless Trident and each person,
if any, who controls the firm against all losses, claims, damages or
liabilities, joint or several and all legal or
<PAGE>
Board of Directors
December 22, 1997
Page 3
other expenses reasonably incurred by them in connection with the investigation
or defense thereof (collectively, "Losses"), to which they may become subject
under securities laws or under the common law, that arise out of or are based
upon the reorganization or the engagement hereunder of Trident. If the foregoing
indemnification is unavailable for any reason, the Association agrees to
contribute to such Losses in the proportion that its financial interest in the
reorganization bears to that of the indemnified parties. If the agreement is
entered into with respect the common stock to be issued in the reorganization,
the Agreement will provide for indemnification, which will be in addition to any
rights that Trident or any other indemnified party may have at common law or
otherwise. The indemnification provision of this paragraph will be superseded by
the indemnification provisions of the Agreement entered into by the Association
and Trident.
This letter is merely a statement of intent and is not a binding legal agreement
except as to paragraph (5) above with regard to the obligation to reimburse
Trident for allocable expenses to be incurred prior to the execution of the
Agreement and the indemnity described in the preceding paragraph. While Trident
and the Association agree in principle to the contents hereof and propose to
proceed promptly, and in good faith, to work out the arrangements with respect
to the proposed offering, any legal obligations between Trident and the
Association shall be only as set forth in the duly executed Agreement. Such
Agreement shall be in form and content satisfactory to Trident and among other
things, there being in Trident's opinion no material adverse change in the
condition or obligations of the Association or no market conditions which might
render the sale of the shares by the Association hereby contemplated
inadvisable.
Please acknowledge your agreement to the foregoing by signing below and
returning to Trident one copy of this letter along with the advance payment of
$10,000. This proposal is open for your acceptance for a period of thirty (30)
days from the date hereof.
Yours very truly,
TRIDENT SECURITIES, INC.
By:
-------------------------------
Timothy E. Lavelle
Managing Director
Agreed and accepted this
day of , 1997
- ----- -----------
REVERE FEDERAL SAVINGS AND LOAN ASSOCIATION
By:
------------------------------
James J. McCarthy
President and CEO
<PAGE>
Exhibit I
TRIDENT SECURITIES, INC.'s COMMUNITY OFFERING SERVICES
PROGRAM FEATURES
Structuring and managing the sale of stock to Revere Federal's Eligible Account
Holders, Supplemental Eligible Account Holders and Other Members.
o Sales and marketing assistance
Trident will assign a team of experienced NASD-registered
professionals from our staff to remain on-site at the
Association throughout the stock offering. Trident will be
responsible for managing all aspects of the local Subscription
Offering. Each Trident senior staff member has successfully
managed at least 95 mutual to stock conversions over the past
eleven years.
Trident will participate in "due diligence" sessions with
management and assist in drafting the offering circular or
prospectus.
Trident will offer financial advice of a general nature as
well as specific recommendations with respect to ways of
enhancing the marketability of the stock at the local level.
Trident will draft and help design all supplementary marketing
materials including question and answer brochures,
advertisements, press releases and other corollary material.
Trident will work closely with management and the board of
directors to identify prospective investors who, in their
opinion, would make good long-term investors.
Trident will coordinate and conduct a series of community
meetings in an effort to educate and inform targeted
investors, customers and local residents about Revere Federal
in general and the risks and the merits of the investment in
particular.
Trident will prepare a slide presentation to be used at the
community meetings and will draft scripts for management. We
will also help prepare management for any questions they may
receive from the audience.
Trident will be available to discuss the merits of an
investment in Association on an individual basis with
prospective investors, or will accompany a member of Revere
Federal at their request.
<PAGE>
Administrative and Operational Support
o Establish and manage the Stock Information Center
Trident will help organize and supervise a Stock Information
Center, which will centralize all operational aspects of the
conversion and serve as the focal point for the flow of all
conversion related data and information.
Trident and its staff will work with members of the
Association's staff to process stock order forms, proxies and
routine correspondence and to answer routine telephone
inquires. Any non-routine questions of a financial or
investment nature will be handled by a Trident representative
in an effort to minimize any possibility of inappropriate
statements made by Revere Federal's personnel.
Trident will be responsible for maintaining accurate records
of all stock subscriptions and providing management with a
constant flow of information on the status of the offering.
All recordkeeping functions employ Trident's proprietary
conversion management software, developed exclusively for use
in community offering stock sales.
As manager of the Stock Information Center, Trident will also
supervise and assist Association in performing the following
functions:
- Maintain records of prospective investors and action
taken with respect to each.
- Coordinate the community meetings by maintaining
records of invitations and responses.
- Provide management with daily progress reports and make
sure that the subscription records are balanced daily.
- Provide proxy solicitation assistance (see section
below) and mail "proxygrams", if necessary.
- Provide your transfer agent with a final list of
subscribers at the conclusion of the conversion.
- Handle the allocation of shares in the event of an
oversubscription.
- Supply data for the calculation of interest and refund
checks, 1099 information (if requested) and otherwise
assist in the closing of the subscription/community
offering.
- Conduct periodic strategy sessions with management and
the board of directors to "fine tune" the marketing
effort and resolve any operational problems.
<PAGE>
Proxy Solicitation
o Assist Revere Federal in soliciting the required vote for the
special meeting of members.
Establish procedures for tabulating proxies and coordinating
this function with the Inspector of Election or Records
Manager.
Monitor the vote total and mail a "proxygram", if one is
required.
Make arrangements for and supervise a telephone solicitation,
if required.
Education and Training
o Provide extensive training which will ensure that officers,
directors and employees understand the conversion process and
encourage them to participate in the offering up to their level
of competence and comfort.
Trident will meet with the directors and senior management
regularly in the months preceding the commencement of the
offering to discuss organizational issues and to review
financial and investment considerations relating to the stock
sale.
Trident will conduct training sessions designed to familiarize
all employees with the mutual holding company reorganization
process and outline their roles and responsibilities.
Trident will provide training manuals which will serve as
reference material throughout the offering. Manuals will be
targeted to the level of the employee and will vary from
simple, easy to read handouts to sophisticated financial
models.
Trident will work closely with the board of directors,
senior management and branch managers to help them
understand the concerns most investors and customers will
have and how to best address them.
Market Making
o Trident will act as the Association's primary market maker once
the conversion is completed. We will assure that the Association
or its Holding Company qualifies to be quoted on NASDAQ's
"Bulletin Board."
<PAGE>
Financial Advisory Services
o Financial Advisory Services encompass a variety of services
intended to support the Association in the aftermarket. These
services include, but are not limited to:
- Establish an Investor Relations Program
- Assistance in developing press releases, quarterly reports and
shareholder letters
- Analyze and develop a plan for external growth opportunities
- Analyze and assist in business planning issues
- Evaluate and analyze business extension strategies
- Periodic "capital planning" sessions
- Advice on dividend policy and share repurchase programs
- Acting as agent in repurchasing shares for the Company or
purchasing shares for employee benefit plans
- Participation in our Annual Client Conference
EXHIBIT 2.1
PLAN OF REORGANIZATION
FROM MUTUAL SAVINGS BANK
TO MUTUAL HOLDING COMPANY
AND STOCK ISSUANCE PLAN
OF
REVERE FEDERAL
SAVINGS
<PAGE>
TABLE OF CONTENTS
1. Introduction............................................................-2-
2. Definitions.............................................................-2-
3. Business Purposes for the Reorganization................................-8-
4. Certain Effects of the Reorganization...................................-9-
5. Conditions to Implementation of the Reorganization.....................-11-
6. Special Meeting of Members.............................................-12-
7. Charter and Bylaws.....................................................-13-
8. Rights of Owners of the MHC............................................-13-
9. Conversion of MHC to Stock Form........................................-13-
10. Timing of the Reorganization and Sale of Capital Stock.................-15-
11. Number of Shares to be Offered.........................................-15-
12. Independent Valuation and Purchase Price of Shares ....................-15-
13. Method of Offering Shares and Rights to Purchase Stocks................-16-
14. Additional Limitations on Purchases of Common Stock....................-19-
15. Payment for Stock......................................................-21-
16. Manner of Exercising Subscription Rights Through Order Forms...........-22-
17. Undelivered, Defective or Late Order Form; Insufficient Payment........-23-
18. Completion of the Stock Offering.......................................-23-
19. Market for Common Stock................................................-23-
20. Stock Purchase by Management Persons After the Offering................-24-
<PAGE>
21. Resales of Stock by Management Persons.................................-24-
22. Restriction on Financing Stock Purchases...............................-24-
23. Stock Certificates.....................................................-24-
24. Stock Benefit Plans....................................................-24-
25. Post-Reorganization Filing and Market Making...........................-25-
26. Payment of Dividends and Repurchase of Stock...........................-25-
27. Reorganization and Stock Offering Expenses.............................-25-
28. Employment Agreements..................................................-26-
29. Interpretation.........................................................-26-
30. Amendment or Termination of the Plan...................................-26-
31. Severability...........................................................-27-
32. Miscellaneous..........................................................-27-
Exhibit A Charter and Bylaws of the Bank
Exhibit B Charter and Bylaws of the Holding Company
Exhibit C Charter and Bylaws of the Mutual Holding Company
<PAGE>
1. INTRODUCTION
The Board of Directors of Revere Federal Savings (the "Bank") has adopted
this Plan of Reorganization from Mutual Savings Bank to Mutual Holding Company
and Stock Issuance Plan (the "Plan") under which the Bank proposes to reorganize
from a federally chartered mutual savings association into a mutual holding
company (the "MHC") under the laws of the United States of America, and the
regulations of the Office of Thrift Supervision ("OTS"). As part of the
Reorganization and the Plan, the Bank will convert to a federal stock savings
bank (the "Stock Bank"), and will establish Revere, MHC (the "MHC") as a federal
corporation and RFS Bancorp, Inc. (the "Holding Company") also as a federal
corporation. The Holding Company will be a majority-owned subsidiary of the MHC
at all times so long as the MHC remains in existence, and the Stock Bank will be
a wholly-owned subsidiary of the Holding Company. Concurrently with the
Reorganization, the Holding Company intends to offer for sale up to 49.9% of its
Common Stock in the Stock Offering on a priority basis to qualifying depositors
and the Tax-Qualified Employee Plans of the Bank, with any remaining shares
offered to the public in a Community Offering.
2. DEFINITIONS
As used in this Plan, the terms set forth below have the following
meanings:
ACCOUNT(S): Withdrawable deposit(s) in the Bank, including
certificates of deposit.
ACTING IN CONCERT: The term "Acting in Concert" shall mean (i) knowing
participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement or
understanding; or (ii) a combination or pooling of voting or other interests in
the securities of an issuer for a common purpose pursuant to any contract,
understanding, relationship, agreement or other arrangement, whether written or
otherwise. A person or company which acts in concert with another Person or
company ("other party") shall also be deemed to be acting in concert with any
Person who is also acting in concert with that other party, except that any
Tax-Qualified Employee Stock Benefit Plan will not be deemed to be acting in
concert with its trustee or a person who serves in a similar capacity solely for
the purpose of determining whether stock held by the trustee and stock held by
the plan will be aggregated and participants or beneficiaries of any such
Tax-Qualified Employee Stock Benefit Plan will not be deemed to be acting in
concert solely as a result of their common interests as participants or
beneficiaries.
AFFILIATE: A Person who directly or indirectly, through one or more
intermediaries controls, is controlled by or is under common control with the
Person specified.
ASSOCIATE: The term "Associate," when used to indicate a relationship
with any Person, means: (i) any corporation or organization (other than the
Association or any majority-owned subsidiary thereof) of which such Person is an
officer or partner or is, directly or indirectly, either alone or with one or
more members of his or her immediate family, the beneficial
-2-
<PAGE>
owner of 10% or more of any class of equity securities; (ii) any trust or other
estate in which such Person has a substantial beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity (exclusive of
any tax-qualified employee stock benefit plan); or (iii) any relative or spouse
of such Person or any relative of such spouse, who has the same home as such
person or who is a director or officer of the Association or any affiliate
thereof.
The Holding Company, the MHC and the Bank may presume that certain Persons
are Acting in Concert based upon, among other things, joint account
relationships and the fact that such Persons have filed joint Schedules 13D with
the SEC with respect to other companies. When Persons act together for such a
common purpose, their group os deemed to have acquired their stock.
BANK: Revere Federal Savings
BYLAWS: The Bank's bylaws.
CAPITAL STOCK: Any and all authorized stock of the Stock Association.
CHARTER: The Bank's federal mutual savings and loan association
charter.
COMMON STOCK: All of the shares of common stock par value $.01 per
share, offered and issued by the Holding Company in the Reorganization pursuant
to the Plan. The Common Stock will not be insured by the Federal Deposit
Insurance Corporation.
COMMUNITY: The Massachusetts city of Revere.
COMMUNITY OFFERING: Offering for sale to certain residents of the
Community and thereafter members of the general public directly by the Bank, of
any shares of Common Stock not subscribed for in the Subscription Offering.
CONTROL: The possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether by
contract, through the ownership of voting securities of such Person, through the
ownership of voting securities of any company that possesses such power, or
otherwise. Control includes the terms "controlling," "controlled by" and "under
common control with".
ELIGIBLE ACCOUNT HOLDER: Any Person who had a Qualifying Deposit at
the Bank on the Eligibility Record Date.
EFFECTIVE DATE: The date upon which all necessary approvals have been
obtained to consummate the Reorganization, and the transfer of assets and
liabilities of the Bank to the Stock Bank is completed.
ELIGIBILITY RECORD DATE: December 31, 1996, the date established by
the Board of Directors of the Bank for determining Eligible Account Holders.
-3-
<PAGE>
EMPLOYEE: A person who is an Employee of the Bank at the date of the
Reorganization.
ESOP: The Stock Bank's employee stock ownership plan.
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
HOLA: The Home Owners' Loan Act of 1933, as amended.
HOLDING COMPANY: The federal corporation, which will own 100% of the
capital stock of the Bank and which will issue and sell its Common Stock
pursuant to this Plan.
INDEPENDENT APPRAISER: The appraiser retained by the Bank to prepare
an appraisal of the pro forma market value of the Bank. Such appraiser shall be
experienced and expert in the area of corporate appraisal and acceptable to the
OTS.
IRS: Internal Revenue Service.
MANAGEMENT PERSON: Any Officer or director of the Bank or any
Affiliate of the Bank, and any person acting in concert with any such Officer or
director.
MARKETING AGENT: The broker-dealer responsible for organizing and
managing the Stock Offering and sale of the Common Stock.
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, (1) regularly publishes bona fide
competitive bid and offer quotations on request and (2) is ready, willing and
able to effect transactions in reasonable quantities at his quoted prices with
other brokers or dealers.
MEMBERS: Any depositor or borrower that is entitled under the charter
of the Bank to vote on matters affecting the Bank, and any depositor or borrower
that is entitled under the charter of the MHC to vote on matters affecting the
MHC.
MHC: The Mutual Holding Company resulting from the Reorganization.
MINORITY STOCK OFFERING: One or more offerings of less than 50% in the
aggregate of the outstanding Common Stock of the Holding Company to persons
other than the MHC.
MINORITY STOCK HOLDER: Aby owner of the H.C.'s Common Stock, other
than the MHC.
NON-TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN: Any stock option, bonus
stock, or restricted stock plan or other employee benefit plan that is not a
"Tax-Qualified Employee Stock Benefit Plan" and that is maintained by the
Holding Company or the Stock Bank for the benefit
-4-
<PAGE>
of officers, employees, or directors of the Holding Company, the Stock Bank, or
any Affiliate of either of them and that, by its terms, is authorized or
required to purchase Common Stock.
NON-VOTING STOCK: Non-Voting Stock means any Capital Stock other than
Voting Stock.
NOTICE: The Notice of Mutual Holding Company Reorganization to be
submitted by the Bank to the OTS to notify the OTS of the Reorganization and the
Stock Offering.
OFFICER: An executive officer of the Bank, which includes the Chief
Executive Officer, President, Executive Vice Presidents, Senior Vice Presidents,
Vice Presidents in charge of principal business functions or who otherwise have
a policy-making function, Secretary, Treasurer and any other person performing
similar functions.
ORDER FORM: The form provided by the Bank that subscribers must use to
order Common Stock in the Subscription Offering and Community Offering.
OTHER MEMBER: Any person who is a Member of the Bank at the close of
business on the Voting Record Date who is not an Eligible Account Holder or a
Supplemental Eligible Account Holder.
OTS: The Office of Thrift Supervision and any successor thereto.
PARENT: Any company which directly or indirectly controls any other
company or companies.
PARTICIPANTS: Eligible Account Holders, Tax Qualified Employee Stock
Benefit Plans, Supplemental Eligible Account Holders and Other Members.
PERSON: A natural person, corporation, partnership, Bank, trust
(including trusts or custodial arrangements under an Individual Retirement
Account or qualified retirement plan), unincorporated organization, joint-stock
company, government or political subdivision thereof, or any other entity.
PLAN: This Plan of Reorganization from Mutual Savings Bank to Mutual
Holding Company.
PREFERRED STOCK: Preferred stock issuable by the Stock Bank pursuant
to its stock charter.
PROSPECTUS: The Prospectus to be used in offering the Common Stock in
the Subscription Offering, the Community Offering and any Syndicated Community
Offering or public offering.
PROXY STATEMENT: The document to be used to solicit proxies from
Members to vote at the Special Meeting.
-5-
<PAGE>
QUALIFYING DEPOSIT: The aggregate balance of Accounts of $50 or more
in the Bank at the close of business on the Eligibility Record Date. Accounts
with aggregate balances of less than $50 shall not constitute a Qualifying
Deposit.
REGULATIONS: The regulations of the OTS regarding mutual holding
companies.
REORGANIZATION: The reorganization of the Bank into the MHC and the
organization of the Holding Company as a subsidiary of the MHC and the Stock
Bank as a subsidiary of the Holding Company pursuant to this Plan.
REORGANIZATION NOTICE: A notice of proposed MHC reorganization that is
in the OTS form and contains the information required by the OTS.
RESIDENT: Any person who occupies a dwelling within the Community, has
a present intent to remain within the Community for a period of time, and
manifests the genuineness of that intent by establishing an ongoing physical
presence within the Community together with an indication that such presence
within the Community is something other than merely transitory in nature. To the
extent the person is a corporation or other business entity, the principal place
of business or headquarters shall be in the Community. To the extent a person is
a personal benefit plan, the circumstances of the beneficiary shall apply with
respect to this definition. In the case of all other benefit plans,
circumstances of the trustee shall be examined for purposes of this definition.
The Bank may utilize deposit or loan records or such other evidence provided to
it to make a determination as to whether a person is a resident. In all cases,
however, such a determination shall be in the sole discretion of the Bank.
SAIF: The Savings Association Insurance Fund, which is administered by
the FDIC.
SEC: The United States Securities and Exchange Commission.
SPECIAL MEETING: The Special Meeting of Members called for the purpose
of voting on the Plan.
STOCK BANK: The newly organized federally-chartered stock savings bank
subsidiary of the MHC resulting from the Reorganization.
STOCK BENEFIT PLAN: Any Tax-Qualified Employee Stock Benefit Plan or
any Non- Tax-Qualified Employee Stock Benefit Plan.
STOCK OFFERING: The offering of Common Stock of the Holding Company to
Persons other than the MHC, on a priority basis as set forth in Section 15 of
the Stock Issuance Plan subject to the other provisions of the Plan, including
without limitation the limitations on purchases of Common Stock set forth in
Section 16 thereof.
-6-
<PAGE>
SUBSCRIPTION OFFERING: The Offering of Common Stock of the Holding
Company to Participants.
SUBSIDIARY: Any company which is owned or controlled directly or
indirectly by a person, including any service corporation owned in whole or in
part by a savings Bank, or a subsidiary of such service organization.
SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER: Any person holding a Qualifying
Deposit on the Supplemental Eligibility Record Date, who is not an Eligible
Account Holder, a Tax- Qualified Employee Plan or an Officer or Director of the
Bank.
SUPPLEMENTAL ELIGIBILITY RECORD DATE: The supplemental record date for
determining who qualifies as a Supplemental Eligible Account Holder. The
Supplemental Eligibility Record Date shall be the last day of the calendar
quarter preceding the OTS's approval of the Reorganization.
SYNDICATED COMMUNITY OFFERING: The offering of Common Stock at the
discretion of the Board of Directors following or contemporaneously with the
Stock Offering through a syndicate of broker-dealers only to the extent shares
remain available for purchase after filling all orders in the Stock Offering.
Any Syndicated Community Offering shall be conducted in accordance with this
Plan and other standards established by the Board of Directors consistent with
OTS regulations.
TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN: Any defined benefit plan or
defined contribution plan such as an employee stock ownership plan, stock bonus
plan, profit-sharing plan or other plan that is maintained by the Holding
Company or the Stock Bank for the benefit of the officers or employees of the
Holding Company or the Stock Bank, or any Affiliate of either; that by its terms
is authorized or required to purchase Common Stock; and that, with its related
trusts, meets the requirements to be "qualified" under Section 401 of the
Internal Revenue Code. The Stock Bank may make scheduled discretionary
contributions to a tax-qualified employee stock benefit plan provided such
contributions do not cause the Stock Bank to fail to meet its regulatory capital
requirements.
VOTING MEMBERS: Those Members of the Bank qualifying as voting members
of the Bank pursuant to its Charter and Bylaws.
VOTING RECORD DATE: The date established by the Board of Directors of
the Bank in accordance with OTS regulations for determining which Members are
entitled to vote at the Special Meeting.
VOTING STOCK: Voting Stock means Common Stock or Preferred Stock, or
similar interests if the shares by statute, charter or in any manner, entitle
the holder:
(i) To vote for or to select directors of the Bank or Holding
Company; and
-7-
<PAGE>
(ii) To vote on or to direct the conduct of the operations or other
significant policies of the Bank or Holding Company.
3. BUSINESS PURPOSES FOR THE REORGANIZATION
The Bank has several business purposes for effecting the proposed
Reorganization. The Reorganization will structure the Bank in stock form, which
is used by commercial banks, most major business corporations and an increasing
number of savings banks and savings Banks. Formation of the Stock Bank as a
capital stock savings bank and the Holding Company as subsidiaries of the MHC
will permit the Holding Company to issue Capital Stock, which is a source of
capital not available to mutual savings banks. At the same time, the Bank's
mutual form of ownership will be preserved in the MHC, and the MHC, as a mutual
corporation, will at all times control at least a majority of the Voting Stock
of the Holding Company and the Stock Bank so long as the MHC remains in
existence. The Reorganization will enable the Bank to achieve the benefits of a
stock company without a loss of control that often follows standard conversions
from mutual to stock form. The Bank is committed to being an independent
community-oriented institution, and the Board of Directors believes that the
mutual holding company structure is best suited for this purpose. The mutual
holding company structure also will give the Holding Company flexibility to
issue its Capital Stock at various times and in varying amounts as market
conditions permit, rather than in a single stock offering. The Reorganization
will not foreclose the opportunity of the MHC to convert from the
mutual-to-stock form of organization in the future. Formation of a mutual
holding company is also expected to facilitate acquisitions and the
diversification of the Bank's activities.
The sale of Common Stock will provide the Stock Bank with new equity
capital, which will support future deposit growth and expanded operations. The
Board of Directors believes that it is desirable for the Bank to increase its
capital position in view of the increasingly competitive and changing market and
regulatory conditions in which the Bank operates. The sale of Common Stock at
appropriate times, coupled with the accumulation of earnings (net of dividends)
from year to year, represents a means for the orderly preservation and expansion
of the Bank's capital base, and allows flexibility to respond to sudden and
unanticipated capital needs. The temporary investment of the net proceeds of a
stock offering will also provide additional income to further enhance the Stock
Bank's future capital position.
The ability of the Holding Company to issue Common Stock also will enable
the Stock Bank to establish in the future stock benefit plans for management and
employees, including incentive stock option plans, stock award plans, and
employee stock ownership plans.
The formation of the Holding Company will also allow the Holding Company to
borrow funds, on a secured and unsecured basis, and to issue debt to the public
or in a private placement. The proceeds of any such borrowings or debt issuance
may be contributed to the Stock Bank as core capital for regulatory capital
purposes. The Bank has not made a determination to borrow funds or issue debt at
the present time, and there can be no assurance when, if ever, any such
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borrowing or debt issuance would occur, or whether it would be consummated on
terms satisfactory to the MHC.
4. CERTAIN EFFECTS OF THE REORGANIZATION
A. Organization of the Holding Companies and the Bank
As part of the Reorganization, the Bank will convert to a federal stock
savings bank, and will establish the Holding Company and the MHC as federal
corporations. The Reorganization will be effected as follows, or in any manner
approved by the OTS that is consistent with the purposes of this Plan and
applicable laws and regulations.
As part of the Reorganization: (i) the Bank will organize an interim stock
savings bank as a wholly-owned subsidiary ("Interim One"); (ii) Interim One will
organize an interim stock savings bank as a wholly-owned subsidiary ("Interim
Two"); (iii) Interim One will organize the Holding Company as a wholly-owned
subsidiary; (iv) the Bank will exchange its charter for a federal stock savings
bank charter to become the Stock Bank and Interim One will exchange its charter
for a federal mutual holding company charter to become the MHC; (v)
simultaneously with step (iv), Interim Two will merge with and into the Stock
Bank with the Stock Bank as the resulting institution; (vi) all of the initially
issued stock of the Stock Bank will be transferred to the MHC in exchange for
membership interests in the MHC; and (vii) the MHC will contribute the capital
stock of the Stock Bank to the Holding Company and the Stock Bank will become a
wholly-owned subsidiary of the Holding Company. Contemporaneously with the
Reorganization, the Holding Company will offer for sale in the Stock Offering
shares of Common Stock representing up to 49.9% the pro forma market value of
the Holding Company and the Bank. Upon the consummation of the Reorganization,
the legal existence of the Bank will not terminate, but the Stock Bank will be a
continuation of the Bank, and all property of the Bank, including its right,
title, and interest in all to all property of whatsoever kind and nature,
interest and asset of every conceivable value or benefit then existing or
pertaining to the Bank, or which would inure to the Bank immediately by
operation of law and without the necessity of any conveyance or transfer and
without any further act or deed, will vest in the Stock Bank. The Stock Bank
will have, hold, and enjoy the same in its right and fully and to the same
extent as the same was possessed, held, and enjoyed by the Bank. The Stock Bank
will continue to have, succeed to, and be responsible for all the rights,
liabilities and obligations of the Bank and will maintain its headquarters and
operations at the Bank's present locations.
Upon consummation of the Reorganization, substantially all of the assets
and liabilities (including the savings accounts, demand accounts, tax and loan
accounts, United States Treasury general accounts, or United States Treasury
Time Deposit Accounts, as defined in the OTS regulations) of the Bank shall
become the assets and liabilities of the Stock Bank, which will thereupon become
an operating savings bank subsidiary of the Holding Company and of the MHC. The
Bank will apply to the OTS to have the Holding Company receive or retain (as the
case may be) up to 50% of the net proceeds of the Stock Offering, or such other
amount as may be determined by the Board of Directors. The Stock Bank may
distribute additional capital to the
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Holding Company following the Reorganization, subject to the OTS regulations
governing capital distributions.
B. Effect on Deposit Accounts and Borrowings
Each deposit account in the Bank on the Effective Date will remain a
deposit account in the Stock Bank in the same amount and upon the same terms and
conditions, and will continue to be federally insured up to the legal maximum by
the FDIC in the same manner as deposit account existed in the Bank immediately
prior to the Reorganization. Upon consummation of the Reorganization, all loans
and other borrowings from the Bank shall retain the same status with the Stock
Bank after from the Bank shall retain the same status with the Stock Bank after
the Reorganization as they had with the Bank immediately prior to the
Reorganization.
C. The Bank
Upon completion of the Reorganization, the Stock Bank will be authorized to
exercise any and all powers, rights and privileges of, and will be subject to
all limitations applicable to, capital stock savings banks under federal law. A
copy of the proposed Charter and Bylaws of the Stock Bank is attached hereto as
Exhibit A and made a part of this Plan. The Reorganization will not result in
any reduction of the amount of retained earnings and general loss reserves will
be accounted for by the MHC, the Holding Company and the Stock Bank on a
consolidated basis in accordance with generally accepted accounting principles.
The initial members of the Board of Directors of the Stock Bank will be the
members of the existing Board of Directors of the Bank. The Stock Bank will be
wholly-owned by the Holding Company. The Holding Company will be wholly-owned by
its stockholders who will consist of the MHC and, initially, the persons who
purchase Common Stock in the Stock Offering. Upon the Effective Date of the
Reorganization, the voting and membership rights of Members will be transferred
to the MHC, subject to the conditions specified below.
D. The Holding Company
The Holding Company will be authorized to exercise any and all powers,
rights and privileges, and will be subject to all limitations applicable to
savings and loan holding companies and mutual holding companies under federal
law and regulations. The initial members of the Board of Directors of the
Holding Company will be appointed by the Bank. Thereafter, the voting
stockholders of the Holding Company will elect approximately one-third of the
Holding Company's directors annually. A copy of the proposed Charter and Bylaws
of the Holding Company is attached as Exhibit B and are made part of this Plan.
The Holding Company will have the power to issue shares of Common Stock to
persons other than the MHC. However, so long as the MHC is in existence, the MHC
will be required to own at least a majority of the Voting Stock of the Holding
Company. The Holding Company may issue any amount of Non-Voting Stock to persons
other than the MHC. The Holding
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Company will be authorized to undertake one or more Minority Stock Offerings of
less than 50% in the aggregate of the total outstanding Common Stock of the
Holding Company, and the Holding Company intends to offer for sale up to 49.9%
of its Common Stock in the Stock Offering.
E. The Mutual Holding Company
As a mutual corporation, the MHC will have no stockholders. The members of
the MHC will have exclusive voting authority as to all matters requiring a vote
of members under the Charter of the MHC. Persons who have membership rights with
respect to the Bank under its existing Charter immediately prior to the
Reorganization shall continue to have such rights solely with respect to the MHC
after Reorganization so long as such persons remain depositors or borrowers, as
the case may be, of the Bank after the Reorganization. In addition, all persons
who become depositors of the Stock Bank following the Reorganization will have
membership right with respect to the MHC. The rights and powers of the MHC will
be defined by the MHC's Charter and Bylaws (a copy of which is attached to this
Plan as Exhibit C and made a part hereof) and by the statutory and regulatory
provisions applicable to savings and loan holding companies and mutual holding
companies. In particular, the MHC shall be subject to the limitations and
restrictions imposed on savings and loan holding companies by Section 10(o)(5)
of the HOLA.
The initial members of the Board of Directors of the MHC will be the
existing Board of Directors of the Bank and any additional persons as may be
appointed by the Bank. Thereafter, approximately one-third of the directors of
the MHC will be elected annually by the members of the MHC who will consist of
the former Members of the Bank and all persons who become depositors of the Bank
after the Reorganization.
5. CONDITIONS TO IMPLEMENTATION OF THE REORGANIZATION
Consummation of the Reorganization is expressly conditioned upon prior
occurrence of the following:
A. Approval of the Plan by a majority of the Board of Directors of the
Bank.
B. A Reorganization Notice filed with the OTS and either:
(i) The OTS has given written notice of its intent not to disapprove
the Reorganization; or
(ii) Sixty days have passed since the OTS received the Reorganization
Notice and deemed it sufficient under 516.2(c) of the OTS
regulations, and the OTS has not given written notice that the
Reorganization is disapproved or extended for an additional 30
days, the period during which disapproval may be issued.
C. The Plan is submitted to the Members pursuant to a Proxy Statement and
form of proxy approved in advance by the OTS, and such Plan is
approved by a majority
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of the total votes of the Members eligible to be cast at a meeting
held at the call of the directors in accordance with the procedures
prescribed by the Bank's Charter and Bylaws.
D. All necessary approvals have been obtained from the OTS in connection
with the charter and bylaws of the MHC and the Stock Bank, and the
transfer of assets and liabilities of the Bank to the Stock Bank; and
all conditions specified or otherwise imposed by the OTS in connection
with the issuance of a notice of intent not to disapprove the Notice
have been satisfied; and if applicable, the FDIC has approved the
insurance of accounts of the Stock Bank.
E. Receipt by the Bank of either a private letter ruling of the Internal
Revenue Service or an opinion of the Bank's counsel as to the federal
income tax consequences of the Reorganization to the MHC, the Stock
Bank, the Bank and to the Bank's depositor and borrower members.
F. Receipt by the Bank of either a private letter ruling of the
Massachusetts Department of Revenue or an opinion of counsel or the
Bank's of Independent Public Accountants as to the Massachusetts tax
consequences of the Reorganization to the MHC, the Stock Bank and to
the Bank's Members.
6. SPECIAL MEETING OF MEMBERS
Subsequent to the approval of the Plan by the OTS, the Special Meeting
shall be scheduled in accordance with the Bank's Bylaws. Promptly after receipt
of approval and at least 20 days but not more than 45 days prior to the Special
Meeting, the Bank shall distribute proxy solicitation materials to all Members
and beneficial owners of accounts held in a fiduciary capacity where the
beneficial owner possesses voting rights as of the Voting Record Date. The proxy
solicitation materials shall include a Proxy Statement, other documents
authorized for use by the regulatory authorities, and a copy of the Plan which
will be made available to Members upon request. Pursuant to the 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. Each Member shall be entitled
to cast one vote in person or by proxy for every one thousand dollars ($1,000)
or fraction thereof, that such Member had on deposit as of the Voting Record
Date; provided, however, that no Member may cast more than one thousand (1,000)
votes under any circumstance. Members who are borrowers from the Bank shall be
entitled to one vote plus any additional votes to which they may be entitled as
depositors of the Bank. Voting may be in person or by proxy. The OTS shall be
notified promptly of the actions of the Members.
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7. CHARTER AND BYLAWS
Copies of the proposed Charter and Bylaws of the Stock Bank, the Holding
Company and the MHC are attached hereto as Exhibits A, B and C, respectively,
and are made a part of this Plan. By their approval of this Plan, the Voting
Depositors shall have approved and adopted the Charter and Bylaws of the Bank,
the Holding Company and the MHC.
The total shares of Common Stock authorized under the Holding Company
Charter will exceed the shares of Common Stock to be issued to the MHC and the
minority stockholders in the Reorganization. In addition, the Charter of the
Holding Company will include provisions that: (i) eliminate cumulative voting
for the election of directors; (ii) prohibit any person or group acting in
concert (other than the MHC) from voting shares in excess of 10% of the Common
Stock of the Holding Company; and (iii) prohibit persons other than the Board of
Directors of the Stock Bank from calling special meetings of the stockholders of
the Holding Company.
8. RIGHTS OF OWNERS OF THE MHC
Following the Reorganization, all persons who had membership or liquidation
rights with respect to the Bank as of the date of the Reorganization will
continue to have such rights solely with respect to the MHC. All existing
proxies granted by members of the Bank to the Board of Directors of the Bank
shall automatically become proxies granted to the Board of Directors of the MHC,
provided, however, such proxies may not be voted by the Board of Directors at
the Special Meeting to approve the Plan. In addition, all persons who become
depositors of the Stock Bank subsequent to the Reorganization also will have
membership and liquidation rights with respect to the MHC. In each case, no
person who ceases to be the holder of a deposit account with the Stock Bank
shall have any membership or liquidation rights with respect to the MHC.
Borrowers of the Stock Bank who were borrower members of the Bank at the time of
Reorganization will have the same membership rights in the MHC as they had in
the Bank immediately prior to the Reorganization for so long as their
pre-Reorganization borrowings remain outstanding. Borrowers will not receive
membership rights in connection with any new borrowings made after the
Reorganization.
9. CONVERSION OF MHC TO STOCK FORM
Following the completion of the Reorganization, the MHC may elect to
convert to stock form in accordance with applicable law (a "Conversion
Transaction"). There can be no assurance when, if ever, a Conversion Transaction
will occur, and the Board of Directors has no present intent or plan to
undertake a Conversion Transaction. If the Conversion Transaction does not
occur, the MHC will always own a majority of the Common Stock of the Holding
Company.
In a Conversion Transaction, the MHC would merge with and into the Stock
Bank or the Holding Company (at the discretion of the MHC), and certain
depositors of the Stock Bank would receive the right to subscribe for a number
of shares of common stock of the new stock holding company formed in connection
with the Conversion Transaction, as determined by the formula
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set forth in the following paragraphs. The additional shares of Common Stock of
the New Stock Holding Company issued in the Conversion Transaction would be sold
at their aggregate pro forma market value determined by an independent
appraisal.
Any Conversion Transaction shall be fair and equitable to Minority
Stockholders. In any Conversion Transaction, Minority Stockholders, if any, will
be entitled to maintain the same percentage ownership interest in the New Stock
Holding Company after the Conversion Transaction as their ownership interest in
the Holding Company immediately prior to the Conversion Transaction (i.e., the
Minority Ownership Interest), subject only to the following adjustments (if
required by federal or state law, regulation, or regulatory policy) to reflect:
(i) the cumulative effect of the aggregate amount of dividends waived by the
MHC; and (ii) the market value of assets of the MHC (other than common stock of
the Holding Company).
The adjustment referred to in clause (i) of the preceding paragraph above
would require that the Minority Ownership Interest be adjusted by multiplying
the Minority Ownership Interest by the following fraction:
(Holding Company stockholders' equity immediately prior to Conversion
Transaction) - (aggregate amount of dividends waived by MHC)
- --------------------------------------------------------------------------------
Holding Company stockholders' equity immediately prior to Conversion Transaction
The adjustment referred to in clause (ii) above would further adjust the
Minority Ownership Interest by multiplying the adjusted Minority Ownership
Interest by the following fraction:
(pro forma market value of New Stock Holding Company) - (market value of assets
of MHC other than Holding Company common stock)
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pro forma market value of New Stock Holding Company
At the sole discretion of the Board of Directors of the MHC and the Holding
Company, a Conversion Transaction may be effected in any other manner necessary
to qualify the Conversion Transaction as a tax-free reorganization under
applicable federal and state tax laws, provided such Conversion Transaction does
not diminish the rights and ownership interest of Minority Stockholders as set
forth in the preceding paragraphs. If a Conversion Transaction does not occur,
the MHC will always own a majority of the voting stock of the Holding Company.
Management of the Bank has no current intention to conduct a Conversion
Transaction.
A Conversion Transaction would require the approval of applicable federal
regulators, and would be presented to a vote of the members of the MHC. Federal
regulatory policy requires that in any Conversion Transaction the members of the
MHC will be accorded the same stock purchase priorities as if the MHC were a
mutual savings bank converting to stock form.
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10. TIMING OF THE REORGANIZATION AND SALE OF CAPITAL STOCK
The Bank intends to consummate the Reorganization as soon as feasible
following the receipt of all approvals referred to in Section 5 of the Plan. As
a stock subsidiary of the MHC, following the Reorganization the Holding Company
will be authorized to undertake one or more Minority Stock Offerings of less
than 50% in the aggregate of the total outstanding Common Stock of the Holding
Company. Subject to the approval of the OTS and the SEC, the Stock Bank intends
to commence the Stock Offering concurrently with the proxy solicitation of
Members.
The Bank may close the Stock Offering before the Special Meeting, provided
that the offer and sale of the Common Stock shall be conditioned upon approval
of the Plan by the Members at the Special Meeting. The Bank shall not distribute
the final stock Prospectus until such Prospectus has been declared effective by
the OTS.
The Stock Offering shall be conducted pursuant to the Stock Issuance Plan
in compliance with the OTS securities offering regulations contained at 12
C.F.R. ss.563g.
11. NUMBER OF SHARES TO BE OFFERED
The total number of shares (or range thereof) of Common Stock to be issued
and offered for sale pursuant to the Plan will be determined initially by the
Board of Directors of the Bank and the Board of Directors of the Holding Company
in conjunction with the determination of the Independent Appraiser. The number
of shares to be offered may be adjusted prior to completion of the Stock
Offering. The total number of shares of Common Stock that may be issued to
persons other than the MHC at the close of the Stock Offering must be no greater
than 49.9% of the issued and outstanding shares of Common Stock of the Holding
Company.
12. INDEPENDENT VALUATION AND PURCHASE PRICE OF SHARES
The total number of shares (and a range thereof) (the "Offering Range") of
Common Stock to be issued and offered for sale in the Stock Offering will be
determined jointly by the Board of Directors of the Bank and the Board of
Directors of the Holding Company immediately prior to the commencement of the
Subscription and Community Offerings, subject to adjustment thereafter if
necessitated by market or financial conditions, with the approval of the OTS. In
particular, the total number of shares may be increased by up to 15% of the
number of shares offered in the Subscription and Community Offerings if the
Estimated Valuation Range is increased subsequent to the commencement of the
Subscription and Community Offerings to reflect changes in market and financial
conditions.
All shares sold in the Stock Offering will be sold at a uniform price per
share referred to in this Plan as the Actual Subscription Price. The aggregate
purchase price for all shares of Common Stock will not be inconsistent with the
estimated consolidated pro forma market value of the Holding Company and the
Bank. The estimated consolidated pro forma market value of the Holding Company
and the Bank will be determined for such purpose by the Independent
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Appraiser. Prior to the commencement of the Subscription and Community
Offerings, an Estimated Valuation Range will be established, which range will
vary within 15% above to 15% below the midpoint of such range. The shares of
Common Stock being sold in the Stock Offering will represent a minority
ownership interest in the outstanding Common Stock of the Holding Company equal
to up to 49.9% of the estimated pro forma market value of the Common Stock based
upon the Independent Valuation. The percentage of Common Stock offered for sale
in the Stock Offering and Offering Range shall be determined by the Board of
Directors of the Holding Company and the Board of Directors of the Bank prior to
commencement of the Subscription and Community Offerings, and will be confirmed
upon completion of the Stock Offering.
The number of shares of Common Stock to be issued in the Stock Offering and
the purchase price per share may be increased or decreased by the Holding
Company. In the event that the aggregate purchase price of the Common Stock is
below the minimum of the Estimated Valuation Range, or materially above the
maximum of the Estimated Valuation Range, resolicitation of purchasers may be
required, provided that up to a 15% increase above the maximum of the Estimated
Valuation Range will not be deemed material so as to require a resolicitation.
Any such resolicitation shall be effected in such manner and within such time as
the Bank shall establish, with the approval of the OTS, if required. Up to a 15%
increase in the number of shares to be issued which is supported by an
appropriate change in the estimated pro forma market value of the Holding
Company will not be deemed to be material so as to require a resolicitation of
subscriptions. Based upon the Independent Valuation as updated prior to the
commencement of the Subscription and Community Offerings, the Board of Directors
of the Holding Company will fix the Actual Subscription Price. If there is a
Syndicated Community Offering of shares of Common Stock not subscribed for in
the Subscription and Community Offerings, the price per share at which the
Common Stock is sold in such Syndicated Community Offering shall be equal to the
Actual Subscription Price.
13. METHOD OF OFFERING SHARES AND RIGHTS TO PURCHASE STOCK
In descending order of priority, the opportunity to purchase Common Stock
shall be given in the Subscription Offering to: (1) Eligible Account Holders;
(2) Tax-Qualified Employee Plans; (3) Supplemental Eligible Account Holders; and
(4) Other Members. Any shares of Common Stock that are not subscribed for in the
Subscription Offering may be offered for sale in a Direct Community Offering.
The minimum purchase by an Person shall be 25 shares. The Holding Company may
use its discretion in determining whether prospective purchasers are
"residents," "associates, or "acting in concert" as defined in the Plan, and in
interpreting any and all other provisions of the Plan. All such determinations
are in the sole discretion of the Holding Company, and may be based on whatever
evidence the Holding Company chooses to use in making any such determination.
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A. SUBSCRIPTION OFFERING
PRIORITY 1: ELIGIBLE ACCOUNT HOLDERS. Each Eligible Account Holder shall be
given the opportunity to purchase up to $250,000 of Common Stock offered in the
Stock Offering; provided that the Holding Company may, in its sole discretion
and without further notice to or solicitation of subscribers or other
prospective purchasers, increase such maximum purchase limitation to 5% of the
maximum number of shares offered in the Stock Offering or decrease such maximum
purchase limitation to .5% of the maximum number of shares offered in the Stock
Offering, subject to the overall purchase limitation set forth in Section 16. If
there are insufficient shares available to satisfy all subscriptions of Eligible
Account Holders, shares will be allocated to Eligible Account Holders so as to
permit each such subscribing Eligible Account Holder to purchase a number of
shares sufficient to make his total allocation equal to the lesser of 100 shares
or the number of shares subscribed for. Thereafter, unallocated shares will be
allocated pro rata to remaining subscribing Eligible Account Holders whose
subscriptions remain unfilled in the same proportion that each such subscriber's
Qualifying Deposit bears to the total amount of Qualifying Deposits of all
subscribing Eligible Account Holders whose subscriptions remain unfilled. To
ensure proper allocation of stock, each Eligible Account Holder must list on his
subscription order form all accounts in which he had an ownership interest as of
the Eligibility Record Date.
In the event that the number of shares offered is increased as a result of
an increase in the Independent Valuation, the ESOP will have a priority right to
fill its subscription in whole or in part prior to all other subscriptions of
Eligible Account Holders.
PRIORITY 2: TAX-QUALIFIED EMPLOYEE PLANS. The Tax-Qualified Employee Plans
shall be given the opportunity to purchase in the aggregate up to 8% of the
Common Stock issued in the Stock Offering. In the event of an oversubscription
in the Stock Offering, subscriptions for shares by the Tax-Qualified Employee
Plans may be satisfied, in whole or in part, out of authorized but unissued
shares of the Holding Company subject to the maximum purchase limitations
applicable to such plans and set forth in Section 26, or may be satisfied, in
whole or in part, through open market purchases by the Tax-Qualified Employee
Plans subsequent to the closing of the Stock Offering.
PRIORITY 3: SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS. To the extent there are
sufficient shares remaining after satisfaction of subscriptions by Eligible
Account Holders and the Tax- Qualified Employee Plans, each Supplemental
Eligible Account Holder shall have the opportunity to purchase up to $250,000 of
Common Stock offered in the Stock Offering, provided that the Bank may, in its
sole discretion and without further notice to or solicitation of subscribers or
other prospective purchasers, increase such maximum purchase limitation to 5% of
the maximum number of shares offered in the Stock Offering or decrease such
maximum purchase limitation to 0.5% of the maximum number of shares offered in
the Stock Offering subject to the overall purchase limitations set forth in
Section 16. In the event Supplemental Eligible Account Holders subscribe for a
number of shares which, when added to the shares subscribed for by Eligible
Account Holders, and the Tax-Qualified Employee Plans, the shares of Common
Stock will be
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allocated among subscribing Supplemental Eligible Account Holders so as to
permit each subscribing Supplemental Eligible Account Holder to purchase a
number of shares sufficient to make his total allocation equal to the lesser of
100 shares or the number of shares subscribed for. Thereafter, unallocated
shares will be allocated to each subscribing Supplemental Eligible Account
Holder whose subscription remains unfilled in the same proportion that such
subscriber's Qualifying Deposits on the Supplemental Eligibility Record Date
bear to the total amount of Qualifying Deposits of all subscribing Supplemental
Eligible Account Holders whose subscriptions remain unfilled.
PRIORITY 4: OTHER MEMBERS. To the extent that there are sufficient shares
remaining after satisfaction of subscriptions by Eligible Account Holders, the
Tax-Qualified Employee Plans and Supplemental Eligible Account Holders, each
Other Member shall have the opportunity to purchase up to $250,000 of Common
Stock offered in the Stock Offering, provided that the Bank may, in its sole
discretion and without further notice to or solicitation of subscribers or other
prospective purchasers, increase such maximum purchase limitation to 5% of the
maximum number of shares offered in the Stock Offering or decrease such maximum
purchase limitation to .5% of the maximum number of shares offered in the Stock
Offering, subject to the overall purchase limitations set forth in Section 26.
In the event Other Members subscribe for a number of shares which, when added to
the shares subscribed for by the Eligible Account Holders, Tax- Qualified
Employee Plans and Supplemental Eligible Account Holders is in excess of the
total number of shares offered in the Stock Offering, the subscriptions of such
Other Members will be allocated among subscribing Other Members on a pro rata
basis based on the size of such Other Members' orders.
B. COMMUNITY OFFERING/PUBLIC OFFERING
Any shares of Common Stock not subscribed for in the Subscription Offering
may be offered for sale in a Community Offering. This will involve an offering
of all unsubscribed shares directly to the general public with a preference to
those natural persons residing in the Community. The Community Offering, if any,
may be for a period of not more than 45 days unless extended by the Holding
Company and the Bank, and shall commence concurrently with, during or promptly
after the Subscription Offering. The Holding Company and the Bank may use an
investment banking firm or firms on a best efforts basis to sell the
unsubscribed shares in the Subscription and Community Offering. The Holding
Company and the Bank may pay a commission or other fee to such investment
banking firm or firms as to the shares old by such firm or firms in the
Subscription and Community Offering and may also reimburse such firm or firms
for expenses incurred in connection with the sale. The Community Offering may
include a syndicated community offering managed by such investment banking firm
or firms. The Common Stock will be offered and sold in the Community Offering,
in accordance with OTS regulations, so as to achieve the widest distribution of
the Common Stock. No person, by himself or herself, or with an Associate or
group of Persons acting in concert, may subscribe for or purchase more than
$250,000 of Common Stock offered in the Community Offering.
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In the event of an oversubscription for shares in the Community Offering,
shares may, at the sole discretion of the Bank, be allocated (to the extent
shares remain available) so that each such person may receive 1,000 shares, and
thereafter, on a pro rata basis to such persons based on the amount of their
respective subscriptions.
The Bank and the Holding Company, in their sole discretion, may reject
subscriptions, in whole or in part, received from any Person under this Section
16(B).
C. SYNDICATED COMMUNITY OFFERING
Any shares of Common Stock not sold in the Subscription Offering or in the
Community Offering, if any, may be offered for sale to the general public by a
selling group of broker-dealers in a Syndicated Community Offering, subject to
terms, conditions and procedures, including the timing of the offering, as may
be determined by the Bank and the Holding Company in a manner that is intended
to achieve the widest distribution of the Common Stock subject to the rights of
the Holding Company to accept or reject in whole or in part all orders in the
Syndicated Community Offering. It is expected that the Syndicated Community
Offering would commence as soon as practicable after termination of the
Subscription Offering and the Direct Community Offering, if any. The Syndicated
Community Offering shall be completed within 45 days after the termination of
the Subscription Offering, unless such period is extended as provided herein.
The Syndicated Community Offering price and the underwriting discount in the
Syndicated Community Offering shall be determined by an underwriting agreement
between the Holding Company, the Bank and the underwriters. Such underwriting
agreement shall be filed with the SEC.
If for any reason a Syndicated Community Offering of unsubscribed shares of
Common Stock cannot be effected and any shares remain unsold after the
Subscription Offering and the Direct Community Offering, if any, the Boards of
Directors of the Holding Company and the Bank will seek to make other
arrangements for the sale of the remaining shares. Such other arrangements will
be subject to the approval of the SEC and to compliance with applicable
securities laws.
14. ADDITIONAL LIMITATIONS ON PURCHASES OF COMMON STOCK
Purchases of Common Stock in the Stock Offering will be subject to the
following purchase limitations:
A. The aggregate amount of outstanding Common Stock of the Holding
Company owned or controlled by persons other than MHC at the close of
the Stock Offering shall be less than 50% of the Holding Company's
total outstanding Common Stock.
B. No Person, Associate thereof, or group of person acting in concert,
may purchase more than $250,000 of Common Stock offered in the Stock
Offering to persons other than the MHC, except that: (i) the Holding
Company may, in its sole discretion and without further notice to or
solicitation of subscribers or other
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prospective purchasers, increase such maximum purchase limitation to
5% of the number of shares offered in the Stock Offering; (ii)
Tax-Qualified Employee Plans may purchase up to 8% of the shares
offered in the Stock Offering; and (iii) for purposes of this
subsection 17(B) shares to be held by any Tax-Qualified Employee Plan
and attributable to a person shall not be aggregated with other shares
purchased directly by or otherwise attributable to such person.
C. The aggregate amount of Common Stock acquired in the Stock Offering by
all Management Persons and their Associates, exclusive of any stock
acquired by such persons in the secondary market, shall not exceed 34%
of the outstanding shares of Common Stock of the Holding Company held
by persons other than the MHC at the close of the Stock Offering. In
calculating the number of shares held by Management Persons and their
Associates under this paragraph, shares held by any Tax-Qualified
Employee Benefit Plans of the Bank that are attributable to such
persons shall not be counted.
F. Notwithstanding any other provisions of this Plan, no person shall be
entitled to purchase any Common Stock to the extent such purchase
would be illegal under any federal law or state law or regulation or
would violate regulations or policies of the National Bank of
Securities Dealers, Inc., particularly those regarding free riding and
withholding. The Holding Company and/or its agents may ask for an
acceptable legal opinion from any purchaser as to the legality of such
purchase and may refuse to honor any purchase order if such opinion is
not timely furnished.
G. The Board of Directors of the Holding Company has the right in its
sole discretion to reject any order submitted by a person whose
representations the Board of Directors believes to be false or who it
otherwise believes, either alone or acting in concert with others, is
violating, circumventing, or intends to violate, evade or circumvent
the terms and conditions of this Plan.
Prior to the consummation of the Stock Offering, no person shall offer to
transfer, or enter into any agreement or understanding to transfer the legal or
beneficial ownership of any subscription rights or shares of Common Stock,
except pursuant to this Plan. Each person purchasing Common Stock shall be
deemed to confirm that such purchase does not conflict with the above purchase
limitations contained in this Plan.
EACH PERSON PURCHASING COMMON STOCK IN THE STOCK OFFERING WILL BE DEEMED TO
CONFIRM THAT PURCHASE DOES NOT CONFLICT WITH THE PURCHASE LIMITATIONS IN THIS
PLAN. ALL QUESTIONS CONCERNING WHETHER ANY PERSONS ARE ASSOCIATES OR A GROUP
ACTING IN CONCERT OR WHETHER ANY PURCHASE CONFLICTS WITH THE PURCHASE
LIMITATIONS IN THIS PLAN OR OTHERWISE VIOLATES ANY PROVISION OF THIS PLAN SHALL
BE DETERMINED BY THE BANK IN ITS SOLE DISCRETION. SUCH DETERMINATION SHALL BE
CONCLUSIVE, FINAL AND BINDING ON ALL PERSONS AND THE BANK MAY TAKE
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ANY REMEDIAL ACTION, INCLUDING WITHOUT LIMITATION REJECTING THE PURCHASE OR
REFERRING THE MATTER TO THE OTS FOR ACTION, AS IN ITS SOLE DISCRETION THE BANK
MAY DEEM APPROPRIATE.
15. PAYMENT FOR STOCK
All payments for Common Stock subscribed for or ordered in the Stock
Offering must be delivered in full to the Bank, together with a properly
completed and executed order form, faxes of the order forms will not be accepted
as properly completed and executed order forms or purchase order in the case of
the Syndicated Community Offering, on or prior to the expiration date specified
on the order form or purchase order, as the case may be, unless such date is
extended by the Bank; provided, that if the Employee Plans subscribe for shares
during the Subscription Offering, such plans will not be required to pay for the
shares at the time they subscribe but rather may pay for such shares of Common
Stock subscribed for by such plans at the Subscription Price upon consummation
of the Stock Offering, provided that, in the case of the ESOP there is in force
from the time of its subscription until the consummation of the Stock Offering,
a loan commitment to lend to the ESOP, at such time, the aggregated price of the
shares for which it subscribed. The Holding Company or the Bank may make
scheduled discretionary contributions to an Employee Plan provided such
contributions from the Bank, if any, do not cause the Bank to fail to meet its
regulatory capital requirement.
Payment for Common Stock will be permitted to be made in any of the
following manners: (i) by check, bank draft or money order; (ii) or such
purchaser may pay for the shares subscribed for by authorizing the Bank to make
a withdrawal from the purchaser's passbook, money market or certificate account
at the Bank in an amount equal to the purchase price of such shares. Such
authorized withdrawal, whether from a savings, passbook or certificate account,
shall be without penalty as to premature withdrawal; (iii) if the authorized
withdrawal is from a certificate account, and the remaining balance does not
meet the applicable minimum balance requirements, the certificate may, at the
Bank's discretion, be canceled at the time of withdrawal, without penalty, and
the remaining balance will earn interest at the passbook rate or be returned to
the depositor. Funds for which a withdrawal is authorized will remain in the
purchaser's Account but may not be used by the purchaser until the Common Stock
has been sold or the 45-day period (or such longer period as may be approved by
the applicable regulatory authorities) following the Stock Offering has expired,
whichever occurs first. Thereafter, the withdrawal will be given effect only to
the extent necessary to satisfy the subscription (to the extent it can be
filled) at the purchase price per share. Interest will continue to be earned on
any amounts authorized for withdrawal until such withdrawal is given effect. If
for any reason the Stock Offering is not consummated, all payments made by
subscribers in the Stock Offering will be refunded to them with interest. In
case of amounts authorized for withdrawal from Deposit Accounts, refunds will be
made by canceling the authorization for withdrawal; (iv) Wire transfers as
payment for common stock will not be permitted or accepted as proper payment.
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16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
As soon as practicable after the Prospectus prepared by the Holding Company
and the Bank has been declared effective by the SEC, copies of the Prospectus
and the order forms will be distributed to all Eligible Account Holders,
Supplemental Eligible Account Holders, the Employee Plans and Other Members at
their last known addresses appearing on the records of the Bank for the purposes
of subscribing for shares of Common Stock in the Subscription Offering and at
the discretion of the Board of the Bank will be made available for use by those
persons entitled to purchase in the Community Offering.
Each order form will be preceded or accompanied by the Prospectus
describing the Holding Company, the Bank, the Common Stock and the Subscription
and Community Offerings. Each order form will contain, among other things, the
following:
A. A specified date by which all order forms must be received by the
Bank, which date shall be not less than 20, nor more than 45 days,
following the date on which the order forms are mailed by the Bank,
and which date will constitute the termination of the Subscription
Offering;
B. The purchase price per share for shares of Common Stock to be sold in
the Subscription and Community Offerings;
C. A description of the minimum and maximum number of shares of Common
Stock that may be subscribed for pursuant to the exercise of
Subscription Rights or otherwise purchased in the Community Offering;
D. Instructions as to how the recipient of the order form is to indicate
thereon the number of shares of Common Stock for which such Person
elect to subscribe and the available alternative methods of payment
therefor;
E. An acknowledgment that the recipient of the order form has received a
final copy of the Prospectus prior to execution of the order form;
F. A statement indicating the consequences of failing to properly
complete and return the order form, including a statement to the
effect that all subscription rights are nontransferable, will be void
at the end of the Subscription Offering, and can only be exercised by
delivering to the Bank within the subscription period such properly
completed and executed order form, together with cash (if delivered in
person), check or money order in the full amount of the purchase price
as specified in the order form for the shares of Common Stock for
which the recipient elects to subscribe in the Subscription Offering
(or by authoring on the order form that the Bank withdraw said amount
from the subscriber's Deposit Account at the Bank); the subscription
rights of Eligible Account Holders, Supplemental Eligible Account
Holders and the ESOP are nontransferable. Certificates representing
shares of
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Common Stock purchased in the Subscription Offering must be registered
in the name of the Eligible Account Holder or Supplemental Eligible
Account Holder, as the case may be. Joint stock registration will be
allowed only in the qualifying deposit account is so registered; and
G. A statement to the effect that the executed order form, once received
by the Bank, may not be modified or amended by the subscriber without
the consent of the Bank.
Notwithstanding the above, the Bank and the Holding Company reserve the
right in their sole discretion to accept or reject orders received on
photocopied or facsimilied order forms.
17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT
In the event order forms (a) are not delivered and are returned to the Bank
by the United States Postal Service or the Bank is unable to locate the
addressee, (b) are not received back by the Bank or are received by the Bank
after the expiration date specified thereon, (c) are defectively filled out or
executed, (d) are not accompanied by the full required payment for the shares of
Common Stock subscribed for (including cases in which Accounts from which
withdrawals are authorized are insufficient to cover the amount of the required
payment), or (e) are not mailed pursuant to a "no mail" order placed in effect
by the account holder, the subscription rights of the Person to whom such rights
have been granted will lapse as though such Person failed to return the
contemplated order form within the time period specified thereon; provided, that
the Bank may, but will not be required to, waive any immaterial irregularity on
any order form or require the submission of corrected order forms or the
remittance of full payment for subscribed shares by such date as the Bank may
specify. The interpretation by the Bank of terms and conditions of this Plan and
of the order forms will be final, subject to the authority of the OTS.
18. COMPLETION OF THE STOCK OFFERING
The Stock Offering will be terminated if not completed within 90 days from
the date of approval by the OTS, unless an extension is approved by the OTS.
19. MARKET FOR COMMON STOCK
If at the close of the Stock Offering the Holding Company has more than 100
shareholders of any class of stock, the Holding Company shall use its best
efforts to:
(i) encourage and assist a market maker to establish and maintain a market
for that class of stock; and
(ii) list that class of stock on a national or regional securities
exchange, or on the Nasdaq system.
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<PAGE>
20. STOCK PURCHASES BY MANAGEMENT PERSONS AFTER THE OFFERING
For a period of three years after the proposed Stock Offering, no
Management Person or his or her Associates may purchase, without the prior
written approval of the OTS, any Common Stock of the Holding Company, except
from a broker-dealer registered with the SEC, except that the foregoing shall
not apply to:
A. Negotiated transactions involving more than 1% of the outstanding
stock in the class of stock; or
B. Purchases of stock made by and held by any Tax-Qualified or Non-Tax
Qualified Employee Plan of the Stock Bank or the Holding Company even
if such stock is attributable to Management Persons or their
Associates.
21. RESALES OF STOCK BY MANAGEMENT PERSONS
Common Stock purchased by Management Persons and their Associates in the
Stock Offering may not be resold for a period of at least one year following the
date of purchase, except in the case of death of the Management Person or
Associate.
22. RESTRICTION ON FINANCING STOCK PURCHASES
The Holding Company will not offer or sell any of the Common Stock proposed
to be issued to any person whose purchase would be financed by funds loaned to
the person by the Holding Company, the Bank or any of their affiliates.
23. STOCK CERTIFICATES
Each stock certificate shall bear a legend giving appropriate notice of the
restrictions set forth in Section 21 above. Appropriate instructions shall be
issued to the Holding Company's transfer agent with respect to applicable
restrictions on transfers of such stock. Any shares of stock issued as a stock
dividend, stock split or otherwise with respect to such restricted stock, shall
be subject to the same restrictions as apply to the restricted stock.
24. STOCK BENEFIT PLANS
The Board of Directors of the Bank and/or the Holding Company intend to
adopt one or more stock benefit plans for its employees, officers and directors,
including ESOP, stock award plans and stock option plans, which will be
authorized to purchase Common Stock and grant options for Common Stock. However,
only the Tax-Qualified Employee Plans will be permitted to purchase Common Stock
in the Stock Offering subject to the purchase priorities set forth in this Plan.
The Board of Directors of the Bank intends to establish the ESOP and authorize
the ESOP and any other Tax-Qualified Employee Plans to purchase in the aggregate
up to 8% of the Common Stock issued in the Stock Offering. The Stock Bank or the
Holding Company may make scheduled discretionary contributions to one or more
Tax-Qualified Employee Plans to purchase
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<PAGE>
Common Stock issued in the Stock Offering or to purchase issued and outstanding
shares of Common Stock or authorized but unissued shares of Common Stock
subsequent to the completion of the Stock Offering, provided such contributions
do not cause the Stock Bank to fail to meet any of its regulatory capital
requirements. This Plan specifically authorizes the grant and issuance by the
Holding Company of the following: (i) awards of Common Stock after the Stock
Offering pursuant to one or more stock recognition and award plans (the
"Recognition Plans") in an amount equal to up to 4% of the number of shares of
Common Stock issued in the Stock Offering; (ii) option to purchase a number of
shares of the Holding Company's Common Stock in an amount equal to up to 10% of
the number of shares of Common Stock issued in the Stock Offering, provided that
any forfeited option may be reissued, (iii) shares of Common Stock issued upon
exercise of such options, and (iv) Common Stock to one or more Tax-Qualified
Employee Plans, including the ESOP, at the closing of the Stock Offering or at
any time thereafter, in an amount equal to up to 8% of the number of shares of
Common Stock issued in the Stock Offering. Shares awarded to the Tax-Qualified
Employee Plans or pursuant to the Recognition Plans, and shares issued upon
exercise of options may be authorized but unissued shares of Common Stock, or
shares of Common Stock purchased by the Holding Company or such plans on the
open market. Any awards of Common Stock under the Recognition Plans and the
stock option plans will be subject to prior stockholder approval.
25. POST-REORGANIZATION FILING AND MARKET MAKING
It is likely that there will be a limited market for the Common Stock sold
in the Stock Offering, and purchasers must be prepared to hold the Common Stock
for an indefinite period of time. If the Holding Company has more than 35
stockholders of any class of stock, the Holding Company shall register its
Common Stock with the SEC pursuant to the Exchange Act, and shall undertake not
to deregister such Common Stock for a period of three years thereafter.
26. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
The Holding Company may not declare or pay a cash dividend on, or
repurchase any of, its Common Stock if the effect thereof would cause the
regulatory capital of the Bank to be reduced below the amount required under
(ss.567.2 of the OTS rules and regulations. Otherwise, the Holding Company may
declare dividends or make other capital contributions in accordance with
applicable laws and regulations. The MHC may from time to time purchase shares
of Common Stock on the open market. Subject to the approval of the OTS, the MHC
may waive its right to receive dividends declared by the Holding Company.
27. REORGANIZATION AND STOCK OFFERING EXPENSES
OTS regulations require that the expenses of any Stock Offering must be
reasonable. The Bank will use its best efforts to assure that the expenses
incurred by the Bank and the Holding Company in effecting the Reorganization and
the Stock Offering will be reasonable.
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<PAGE>
28. EMPLOYMENT AGREEMENTS
Following or contemporaneously with the Reorganization, the Bank and/or the
Holding Company may enter into employment arrangements with one or more
executive officers of the Bank and/or the Holding Company. It is anticipated
that any employment contracts entered into by the Bank and/or the Holding
Company will be for terms not exceeding three years and that such contracts will
provide for annual renewals of the term of the contracts, subject to approval by
the Board of Directors. The terms of such employment arrangements have not been
determined as of this time, but will be described in any Prospectus circulated
in connection with the Stock Offering and will be subject to and comply with all
regulations of the OTS.
29. INTERPRETATION
All interpretation of this Plan and application of its provision to
particular circumstances by a majority of the Board of Directors of the Bank
shall be final, subject to the authority of the OTS.
30. AMENDMENT OR TERMINATION OF THE PLAN
If necessary or desirable, the terms of the Plan may be substantially
amended by a majority vote of the Bank's Board of Directors as a result of
comments from regulatory authorities or otherwise, at any time prior to
submission of the Plan and proxy materials to the Members. At any time after
submission of the Plan and proxy materials to the Members, the terms of the Plan
that relate to the Reorganization may be amended by a majority vote of the Board
of Directors only with the concurrence of the OTS. Any and all terms of the Plan
relating to the Stock Offering may be amended by a majority vote of the Bank's
Board of Directors as a result of comments from regulatory authorities or
otherwise at any time prior to the approval of the Plan by the OTS and at any
time thereafter with the concurrence of the OTS. The Plan may be terminated by a
majority vote of the Board of Directors at any time prior to the earlier of
approval of the Plan by the OTS and the date of the Special Meeting, and may be
terminated by a majority vote of the Board of Directors at any time thereafter
with the concurrence of the OTS. In its discretion, the Board of Directors may
modify or terminate the Plan upon the order of the regulatory authorities
without a resolicitation of proxies or another meeting of the Members; however,
any material amendment of the terms of the Plan that relate to the
Reorganization which occur after the Special Meeting shall require a
resolicitation of Members.
The Plan shall be terminated if the Reorganization is not completed within
24 months from the date upon which the Members of the Bank approve the Plan, and
may not be extended by the Bank or the OTS.
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<PAGE>
31. SEVERABILITY
If any term, provision, covenant or restriction contained in this Plan is
held by a court or a federal or state regulatory agency of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions contained in this Plan shall remain in
full force and effect, and shall in no way be affected, impaired or invalidated.
32. MISCELLANEOUS
This Plan is to be governed by and construed in accordance with the laws of
the United States. None of the cover page, the table of contents, or the section
headings are to be considered a part of this Plan, but are included solely for
convenience of reference and shall in no way define, limit, extend, or describe
the scope or intent of any of the provisions hereof. Words in the singular
include the plural, and words in the plural include the singular. Except for
such rights as are set forth herein for Members, this Plan shall create no
rights in any Person.
Dated: January 21, 1998.
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PROPOSED STOCK HOLDING COMPANY CHARTER
RFS BANCORP, INC.
FEDERAL MHC SUBSIDIARY STOCK HOLDING COMPANY
SECTION 1: CORPORATE TITLE. The full corporate title of the MHC subsidiary
holding company is RFS Bancorp, Inc. (the "Company").
SECTION 2: DOMICILE. The domicile of the Company shall be located in the
City of Revere, County of Suffolk, in the Commonwealth of Massachusetts.
SECTION 3: DURATION. The duration of the Company is perpetual.
SECTION 4: PURPOSE AND POWERS. The purpose of the Company is to pursue any
or all of the lawful objectives of a federal mutual holding company chartered
under section 10(o) of the Home Owners' Loan Act, 12 U.S.C. 1467a(o), and to
exercise all of the express, implied, and incidental powers conferred thereby
and by all acts amendatory thereof and supplemental thereto, subject to the
Constitution and the laws of the United States as they are now in effect, or as
they may hereafter be amended, and subject to all lawful and applicable rules,
regulations, and orders of the Office of Thrift Supervision ("Office).
SECTION 5: CAPITAL STOCK. The total number of shares of all classes of the
capital stock that the Company has the authority to issue is 6,000,000 of which
5,000,000 shares shall be common stock, par value $.01 per share, and of which
1,000,000 shares shall be serial preferred stock, no par value per share. The
shares may be issued from time to time as authorized by the Board of Directors
without the approval of the stockholders, except as otherwise provided in this
Section 5 or to the extent that such approval is required by governing law,
rule, or regulation. The consideration for the issuance of the shares shall be
paid in full before their issuance and shall not be less than the par or stated
value. Neither promissory notes nor future services shall constitute payment or
part payment for the issuance of shares of the Stock Holding Company. The
consideration for the shares shall be cash, tangible or intangible property (to
the extent direct investment in such property would be permitted to the
Company), labor or services actually performed for the Company, or any
combination of the foregoing. In the absence of actual fraud in the transaction,
the value of such property, labor, or services, as determined by the Board of
Directors of the Company, shall be conclusive. Upon payment of such
consideration, such shares shall be deemed to be fully paid and nonassessable.
In the case of a stock dividend, that part of the retained earnings of the
Company which is transferred to common stock or paid-in capital accounts upon
the issuance of shares as a stock dividend shall be deemed to be the
consideration for their issuance.
Except for shares issued in the initial organization of the Company, no
shares of capital stock (including shares issuable upon conversion, exchange or
exercise of other securities) shall be issued, directly, or indirectly, to
officers, directors, or controlling persons (except for shares issued to the
parent mutual holding company) of the Company other than as part of a general
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public offering or as qualifying shares to a director, unless their issuance or
the plan under which they would be issued has been approved by a majority of the
total votes eligible to be cast at a legal meeting.
Nothing contained in Section 5 (or in any supplementary sections hereto)
shall entitle the holders of any class or series of capital stock to vote as a
separate class or series or to more than one vote per share, and there shall be
no cumulation of votes for the election of directors. Provided, that this
restriction on voting separately by class or series shall not apply:
(i) To any provision which would authorize the holders of preferred
stock, voting as a class or series, to elect some members of the
board of directors, less than a majority thereof, in the event of
default in the payment of dividends on any class or series of
preferred stock;
(ii) To any provision which would require the holders of preferred
stock, voting as a class or series, to approve the merger or
consolidation of the Company with another corporation or the
sale, lease, or conveyance (other than by mortgage or pledge) of
properties or business in exchange for securities of such other
corporation: Provided, that no provision may require such
approval for transactions undertaken with the assistance or
pursuant to the direction of the Office or the Federal Deposit
Insurance Corporation;
(iii)To any amendment which would adversely change the specific terms
of any class or series of capital stock as set forth in this
Section 5 (or in any supplementary sections hereto), including
any amendment which would create or enlarge any class or series
of capital stock ranking prior thereto in rights and preferences.
An amendment which increases the number of authorized shares of
any class or series of capital stock, or substitutes the
surviving savings bank in a merger or consolidation for the
Company, shall not be considered to be such an adverse change.
A description of the different classes and series if any, of the Company's
capital stock and a statement of the designations, and the relative rights,
preferences and limitations of the shares of each class of and series if any of
capital stock are as follows:
A. COMMON STOCK. Except as provided in this Section 5 (or in any
supplementary sections thereto) the holders of common stock shall exclusively
possess all voting power. Each holder of shares of common stock shall be
entitled to one vote for each share held by such holder.
Whenever there shall have been paid, or declared and set aside for payment,
to the holders of the outstanding shares of any class of stock having preference
over the common stock as to
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payment of dividends, the full amount of dividends and of sinking fund,
retirement fund or other retirement payments, if any, to which such holders are
respectively entitled in preference to the common stock, then dividends may be
paid on the common stock and on any class or series of stock entitled to
participate therewith as to dividends out of any assets legally available for
the payment of dividends.
In the event of any liquidation, dissolution, or winding up of the Company,
the holders of the common stock (and the holders of any class or series of stock
entitled to participate with the common stock in the distribution of assets)
shall be entitled to receive, in cash or in kind, the assets of the Company
available for distribution remaining after: (i) payment or provision for payment
of the Company's debts and liabilities; (ii) distributions or provision for
distributions in settlement of its liquidation account; and (iii) distributions
or provisions for distributions to holders of any class or series of stock
having preference over the common stock in the liquidation, dissolution, or
winding up of the Company. Each share of common stock shall have the same rights
and be identical in all respects with all the other shares of common stock.
B. PREFERRED STOCK. The Company may provide in supplementary sections to
its charter for one or more classes of preferred stock, which shall be
separately identified. The shares of any class may be divided into and issued in
series, with each series separately designated so as to distinguish the shares
thereof from the shares of all other series and classes. The terms of each
series shall be set forth in a supplementary section to the charter. All shares
of the same class shall be identical, except as to the following relative rights
and preferences, as to which there may be variations between different series:
(a) The distinctive serial designation and the number of shares
constituting such series;
(b) The dividend rate or the amount of dividends to be paid on the shares
of such series, whether dividends shall be cumulative and, if so, from
date(s), the payment date(s) for dividends, and the participating or
other special rights, if any, with respect to dividends;
(c) The voting powers, full or limited, if any, of shares of such series;
(d) Whether the shares of such series shall be redeemable and, if so, the
price(s) at which, and the terms and conditions of which, such shares
may be redeemed;
(e) The amount(s) payable upon the shares of such series in the event of
voluntary or in involuntary liquidation, dissolution, or winding up of
the Company;
(f) Whether the shares of such series shall be entitled to the benefit of
a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and if so entitled, the amount of such fund
and the manner of its application, including the price(s) at which
such shares may be redeemed or purchased through the application of
such fund;
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(g) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of stock of the
Company and, if so, the conversion price(s), or the rate(s) of
exchange, and the adjustments thereof, if any, at which such
conversion or exchange may be made, and any other terms and conditions
of such conversions or exchange;
(h) The price or other consideration for which the shares of such series
shall be issued; and;
(i) Whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of serial
preferred stock and whether such shares may be reissued as shares of
the same or any other series of serial preferred stock.
Each share of each series of serial preferred stock shall have the same
relative rights as and be identical in all respects with all the other shares of
the same series.
The board of directors shall have authority to divide, by the adoption of
supplementary charter sections, any authorized class of preferred stock into
series and, within the limitations set forth in this section and the remainder
of this charter, fix and determine the relative rights and preferences of the
shares of any series so established.
Prior to the issuance of any preferred shares of a series established by a
supplementary charter section adopted by the board of directors, the Company
shall file with the Secretary to the Office a dated copy of that supplementary
section of this charter establishing and designating the series and fixing and
determining the relative rights and preferences thereof.
SECTION 6: PREEMPTIVE RIGHTS. Holders of the capital stock of the Company
shall not be entitled to preemptive rights with respect to any shares of the
Company which may be issued.
SECTION 7: DIRECTORS. The Company shall be under the direction of a board
of directors. The authorized number of directors, as stated in the Company's
bylaws, shall not be fewer than five nor more than fifteen except when a greater
number is approved by the Director of the Office, or his or her delegate.
SECTION 8. BENEFICIAL OWNERSHIP LIMITATION. Notwithstanding anything
contained in the Stock Holding Company's charter or bylaws to the contrary, for
a period of five years from the date of the Bank's reorganization into a Mutual
Holding Company no person, other than the Mutual Holding Company, shall directly
or indirectly offer to acquire or acquire the beneficial ownership of more than
10 percent of any class of an equity security of the Stock Holding Company. This
limitation shall not apply to a transaction in which the Stock Holding Company
forms a holding company without change in the respective beneficial ownership
interests of its stockholders other than pursuant to the exercise of any
dissenter and appraisal rights, the purchase of shares by underwriters in
connection with a public offering, or the purchase of shares by a tax-
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<PAGE>
qualified employee stock benefit plan which is exempt from the approval
requirements under 574.3(c)(l)(vii) of the Office's regulations.
In the event shares are acquired in violation of this Section 8, all shares
beneficially owned by any person in excess of 10% shall be considered "excess
shares" and shall not be counted as shares entitled to vote and shall not be
voted by any person or counted as voting shares in connection with any matters
submitted to the stockholders for a vote.
For the purposes of this Section 8, the following definitions apply:
(1) The term "person" includes an individual, a group acting in concert, a
corporation, a partnership, an association, a joint stock company, a trust, an
unincorporated organization or similar company, a syndicate or any other group
formed for the purpose of acquiring, holding or disposing of the equity
securities of the Stock Holding Company.
(2) The term "offer" includes every offer to buy or otherwise acquire,
solicitation of an offer to sell, tender offer for, or request or invitation for
tenders of, a security or interest in a security for value.
(3) The term "acquire" includes every type of acquisition, whether affected
by purchase, exchange, operation of law or otherwise.
(4) The term "acting in concert" means (a) knowing participation in a joint
activity or conscious parallel action towards a common goal whether or not
pursuant to an express agreement, or (b) a combination or pooling of voting or
other interests in the securities of an issuer for a common purpose pursuant to
any contract, understanding, relationship, agreement or other arrangements,
whether written or otherwise.
SECTION 9. CUMULATIVE VOTING LIMITATION. Stockholders shall not be
permitted to cumulate their votes for election of directors for a period of five
years from the effective date of the Bank's reorganization into the Mutual
Holding Company.
SECTION 10. CALL FOR SPECIAL MEETING. For a period of five years from the
effective date of the Bank's reorganization into the Mutual Holding Company,
special meetings of stockholders relating to changes in control of the Stock
Holding Company or amendments to its charter shall be called only upon direction
of the Board of Directors.
SECTION 11: AMENDMENT OF CHARTER. Except as provided in Section 5, no
amendment, addition, alteration, change or repeal of this charter shall be made,
unless such is proposed by the board of directors of the Company, approved by
the shareholders by a majority of votes eligible to be cast at a legal meeting,
unless a higher vote is required, and approved or preapproved by the Office.
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<PAGE>
REVERE BANCORP, INC.
Attest: By:
--------------------------- -------------------------------------
Ernest F. Becker James J. McCarthy
Secretary President and Chief Executive Officer
OFFICE OF THRIFT SUPERVISION
Attest: By:
--------------------------- -------------------------------------
Secretary Director
Date:
---------------------------
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3.2 BYLAWS RFS BANCORP, INC.
<PAGE>
PROPOSED STOCK HOLDING COMPANY BYLAWS
RFS BANCORP, INC.
ARTICLE I - Home Office
The domicile of RFS Bancorp, Inc. (the "Stock Holding Company") shall be
located in City of Revere, County of Suffolk, in the Commonwealth of
Massachusetts.
ARTICLE II - STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All annual and special meetings of
stockholders shall be held at the domicile of the Stock Holding Company or at
such other place in the Commonwealth of Massachusetts as the Board of Directors
may determine.
SECTION 2. ANNUAL MEETING. A meeting of the stockholders of the Stock
Holding Company for the election of directors and for the transaction of any
other business of the Stock Holding Company shall be held annually within 150
days after the end of the Stock Holding Company's fiscal year on the third
Wednesday of January, if not a legal holiday, and if a legal holiday, then on
the next day following which is not a legal holiday, or at such other date and
time within the 150-day period as the Board of Directors may determine.
SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders for any
purpose or purposes, unless otherwise prescribed by the Federal Stock Charter of
the Stock Holding Company, may be called at any time by the chairman of the
board, the president, or a majority of the Board of Directors, and shall be
called by the chairman of the board, the president, or the secretary upon the
written request of the holders of not less than 10% of all of the outstanding
capital stock of the Stock Holding Company entitled to vote at the meeting. Such
written request shall state the purpose or purposes of the meeting and shall be
delivered to the home office of the Stock Holding Company addressed to the
chairman of the board, the president or the secretary.
SECTION 4. CONDUCT OF MEETINGS. Annual and special meetings shall be
conducted in accordance with the most current edition of Robert's Rules of Order
unless otherwise prescribed by regulations of the Office or these bylaws or the
board of directors adopts another written procedure for the conduct of meetings.
The board of directors shall designate, when present, either the chairman of the
board or president to preside at such meetings.
SECTION 5. NOTICE OF MEETINGS. Written notice stating the place, day, and
hour of the meeting and the purpose(s) for which the meeting is called shall be
delivered not fewer than 20 nor more than 50 days before the date of the
meeting, either personally or by mail, by or at the direction of the chairman of
the board, the president, or the secretary, directors or other persons calling
the meeting, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the mail,
addressed to the stockholder at the address as it appears on the stock transfer
books or records of the Stock Holding Company as of the record date prescribed
in Section 6 of this Article II with postage thereon prepaid. When
<PAGE>
any stockholders' meeting, either annual or special, is adjourned for 30 days or
more, notice of the adjourned meeting shall be given as in the case of an
original meeting. It shall not be necessary to give any notice of the time and
place of any meeting adjourned for less than 30 days or of the business to be
transacted at the meeting, other than an announcement at the meeting at which
such adjournment is taken.
SECTION 6. FIXING OF RECORD DATE. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment, or stockholders entitled to receive payment of any dividend, or
in order to make a determination of stockholders for any other proper purpose,
the Board of Directors shall fix in advance a date as the record date for any
such determination of stockholders. Such date in any case shall be not more than
60 days and, in case of a meeting of stockholders, not fewer than 10 days prior
to the date on which the particular action, requiring such determination of
stockholders, is to be taken. When a determination of stockholders entitled to
vote at any meeting of stockholders has been made as provided in this Section,
such determination shall apply to any adjournment thereof.
SECTION 7. VOTING LIST. At least 20 days before each meeting of the
stockholders, the officer or agent having charge of the stock transfer books for
shares of the Stock Holding Company shall make a complete list of the
stockholders entitled to vote at such meeting, or any adjournment thereof,
arranged in alphabetical order, with the address and the number of shares held
by each. This list of stockholders shall be kept on file at the home office of
the Stock Holding Company and shall be subject to inspection by any stockholder
or the stockholders's agent at any time during usual business hours for a period
of 20 days prior to such meeting. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to inspection by any
stockholder during the entire time of the meeting. The original stock transfer
book shall constitute prima facie evidence of the stockholders entitled to
examine such list or transfer books or to vote at any meeting of stockholders.
In lieu of making the shareholder list available for inspection by
shareholders as provided in the preceding paragraph, the board of directors may
elect to follow the procedures prescribed in ss. 552.6(d) of the Office's
regulations as now or hereafter in effect.
SECTION 8. QUORUM. A majority of the outstanding shares of the Stock
Holding Company entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than a majority of the
outstanding shares is represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to constitute less than a quorum. If a quorum is present,
the affirmative vote of the majority of the shares represented at the meeting
and entitled to vote on the subject matter shall be the act of the shareholders,
unless the vote of a greater number of shareholders voting together or voting by
classes is required by law or the charter. Directors, however, are elected by a
plurality of the votes cast at an election of directors.
<PAGE>
SECTION 9. PROXIES. At all meetings of stockholders, a stockholder may vote
by proxy executed in writing by the stockholder or by his or her duly authorized
attorney in fact. Proxies solicited on behalf of the management shall be voted
as directed by the stockholder or, in the absence of such direction, as
determined by a majority of the Board of Directors. No proxy shall be valid more
than eleven months from the date of its execution except for a proxy coupled
with an interest.
SECTION 10. VOTING OF SHARES IN THE NAME OF TWO OR MORE PERSONS. When
ownership stands in the name of two or more persons, in the absence of written
directions to the Stock Holding Company to the contrary, at any meeting of the
stockholders of the Stock Holding Company, any one or more of such stockholders
may cast, in person or by proxy, all votes to which such ownership is entitled.
In the event an attempt is made to cast conflicting votes, in person or by
proxy, by the several persons in whose names shares of stock stand, the vote or
votes to which those persons are entitled shall be cast as directed by a
majority of those holding such stock and present in person or by proxy at such
meeting, but no votes shall be cast for such stock if a majority cannot agree.
SECTION 11. VOTING OF SHARES OF CERTAIN HOLDERS. Shares standing in the
name of another corporation may be voted by any officer, agent, or proxy as the
bylaws of such corporation may prescribe, or, in the absence of such provision,
as the Board of Directors of such corporation may determine. Shares held by an
administrator, executor, guardian, or conservator may be voted by him or her,
either in person or by proxy, without a transfer of such shares into his or her
name. Shares standing in the name of a trustee may be voted by him or her,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him or her without a transfer of such shares into his or her name.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority to do so is contained in
an appropriate order of the court or other public authority by which such
receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the Stock Holding Company
nor shares held by another corporation, if a majority of the shares entitled to
vote for the election of directors of such other corporation are held by the
Stock Holding Company, shall be voted at any meeting, or counted in determining
the total number of outstanding shares at any given time for purposes of any
meeting.
SECTION 12. NO CUMULATIVE VOTING. Stockholders shall not be entitled to
cumulate their votes for election of directors.
SECTION 13. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the Board of Directors may appoint any persons other than nominees
for office as inspectors of election to act at such meeting or any adjournment
thereof. The number of inspector shall be either one or three. Any such
appointment shall not be altered at the meeting. If inspectors of
<PAGE>
election are not so appointed, the chairman of the board or the president may,
or on the request of not fewer than 10 percent of the votes represented at the
meeting shall, make such appointment at the meeting. If appointed at the
meeting, the majority of the votes present shall determine whether one or three
inspectors are to be appointed. In case any person appointed as inspector fails
to appear or fails or refuses to act, the vacancy may be filled by appointment
by the Board of Directors in advance of the meeting or at the meeting by the
chairman of the board or the president.
Unless otherwise prescribed by regulations of the Office, the duties of
such inspectors shall include: determining the number of shares of stock and the
voting power of each share, the shares represented at the meeting, the existence
of a quorum, and the authenticity, validity and effect of proxies; receiving
votes, ballots, or consents; hearing and determining all challenges and
questions in any way arising in connection with the rights to vote; counting and
tabulating all votes or consents; determining the result; and such acts as may
be proper to conduct the election or vote with fairness to all stockholders.
SECTION 14. NOMINATING COMMITTEE. The board of directors shall act as a
nominating committee for selecting the management nominees for election as
directors. Except in the case of a nominee substituted as a result of the death
or other incapacity of a management nominee, the nominating committee shall
deliver written nominations to the secretary at the principal executive offices
of the Stock Holding Company at least 20 days prior to the date of the annual
meeting. Upon delivery, such nominations shall be posted in a conspicuous place
in each office of the Stock Holding Company. No nominations for director except
those made by the nominating committee shall be voted upon at the annual meeting
unless other nominations by stockholders are made in writing and delivered to
the secretary at the principal executive offices of the Stock Holding Company at
least five (5) days prior to the date of the annual meeting. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or reelection as a director, (i) the name, age, business
address and residence address of such person, (ii) the principal occupation or
employment of such person, and (iii) such person's written consent to serve as a
director, if elected; and (b) as to the stockholder giving the notice (i) the
name and address of such stockholder and (ii) the class and number of shares of
the Stock Holding Company which are owned of record by such stockholder. At the
request of the board of directors, any person nominated by the board of
directors for election as a director shall furnish to the secretary that
information required to be set forth in a stockholder's notice of nomination
which pertains to the nominee together with the required written consents. Upon
delivery, such nominations shall be posted in a conspicuous place in each office
of the Stock Holding Company. Ballots bearing the names of all the persons
nominated by the nominating committee and by stockholders shall be provided for
use at the annual meeting. However, if the nominating committee shall fail or
refuse to act at least 20 days prior to the annual meeting, nominations for
directors may be made at the annual meeting by any stockholder entitled to vote
and shall be voted upon.
SECTION 15. NEW BUSINESS. At an annual meeting of stockholders, only such
business shall be conducted, and only such proposals shall be acted upon, as
shall have been properly brought before the meeting. For any business proposed
by management to be properly brought before the annual meeting, such business
shall be approved by the Board of Directors,
<PAGE>
either directly or through its approval of proxy solicitation materials related
thereto, and shall be stated in writing and filed with the secretary at least 5
days before the date of the annual meeting, and all business so stated, proposed
and filed shall be considered at the annual meeting. Any stockholder may make
any other proposal at the annual meeting and the same may be discussed and
considered but unless stated in writing and filed with the secretary at least
five (5) days before the meeting, such proposal shall be laid over for action at
an adjourned, special or annual meeting of the stockholders taking place 30 days
or more thereafter. This provision shall not prevent the consideration and
approval or disapproval at the annual meeting of reports of officers, directors,
and committees; but in connection with such reports, no new business shall be
acted upon at such annual meeting unless stated and filed as herein provided. A
stockholder's notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief description
of the proposal desired to be brought before the annual meeting, (b) the
business, as well as the name and address of such stockholder and the class and
number of shares of the Stock Holding Company which are owned of record by such
stockholder.
SECTION 16. INFORMAL ACTION BY STOCKHOLDERS. Any action required to be
taken at a meeting of the stockholders, or any other action which may be taken
at a meeting of the stockholders, may be taken without a meeting if consent in
writing, setting forth the action so taken, shall be given by all of the
stockholders entitled to vote with respect to the subject matter thereof.
ARTICLE III - BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the Stock Holding
Company shall be under the direction of its Board of Directors. The Board of
Directors shall annually elect a chairman of the board and a president from
among its members and shall designate, when present, either the chairman of the
board or the president to preside at its meetings.
SECTION 2. NUMBER AND TERM. The Board of Directors shall consist of eight
members and shall be divided into three classes as nearly equal in number as
possible. The members of each class shall be elected for a term of three years
and until their successors are elected and qualified. One class shall be elected
by ballot annually.
SECTION 3. REGULAR MEETINGS. A regular meeting of the Board of Directors
shall be held without other notice than this bylaw immediately after, and at the
same place as, the annual meeting of stockholders. The Board of Directors may
provide, by resolution, the time and place, within the Stock Holding Company's
normal lending territory, for the holding of additional regular meetings without
other notice than such resolution.
Members of the Board of Directors may participate in special meetings by
means of conference telephone or similar communications equipment by which all
persons participating in the meeting can hear each other. Such participation
shall constitute presence in person for all purposes, including the purpose of
compensation pursuant to Section 12 of this Article.
<PAGE>
SECTION 4. QUALIFICATION. Each director shall at all times be the
beneficial owner of not less than 100 shares of capital stock of the Stock
Holding Company unless the Stock Holding Company is a wholly owned subsidiary of
a holding company.
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called by or at the request of the chairman of the board, the president, or
one-third of the directors. The persons authorized to call special meetings of
the Board of Directors may fix any place, within the Stock Holding Company's
normal lending territory, as the place for holding any special meeting of the
Board of Directors called by such persons.
Directors may participate in special meetings by means of a conference telephone
or similar communications device through which all persons participating can
hear each other. Such participation shall constitute presence in person for all
purposes, including the purpose of compensation pursuant to Section 12 of this
Article.
SECTION 6. NOTICE. Written notice of any special meeting shall be given to
each director at least twenty-four (24) hours prior thereto when delivered
personally or by telegram or at least five days prior thereto when delivered by
mail at the address at which the director is most likely to be reached. Such
notice shall be deemed to be delivered when deposited in the mail so addressed,
with postage thereon prepaid if mailed or when delivered to the telegraph
company if sent by telegram. Any director may waive notice of any meeting by a
writing filed with the secretary. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any meeting of the Board of
Directors need be specified in the notice or waiver of notice of such meeting.
SECTION 7. QUORUM. A majority of the number of directors fixed by Section 2
of this Article III shall constitute a quorum for the transaction of business at
any meeting of the Board of Directors; but if less than such majority is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time. Notice of any adjourned meeting shall be given in the same manner
as prescribed by Section 6 of this Article III.
SECTION 8. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless a greater number is prescribed by regulation of the Office
or by these bylaws
SECTION 9. ACTION WITHOUT A MEETING. Any action required or permitted to be
taken by the Board of Directors at a meeting may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the directors.
SECTION 10. RESIGNATION. Any director may resign at any time by sending a
written notice of such resignation to the home office of the Stock Holding
Company addressed to the chairman of the board or the president. Unless
otherwise specified, such resignation shall take effect upon receipt thereof by
the chairman of the board or the president. More than three consecutive absences
from regular meetings of the Board of Directors, unless excused by
<PAGE>
resolution of the Board of Directors, shall automatically constitute a
resignation, effective when such resignation is accepted by the Board of
Directors.
SECTION 11. VACANCIES. Any vacancy occurring on the Board of Directors may
be filled by the affirmative vote of a majority of the remaining directors
although less than a quorum of the Board of Directors. A director elected to
fill a vacancy shall be elected to serve until the next election of directors by
the stockholders. Any directorship to be filled by reason of an increase in the
number of directors may be filled by election by the Board of Directors for a
term of office continuing only until the next election of directors by the
stockholders.
SECTION 12. COMPENSATION. Directors, as such, may receive a stated salary
for their services. By resolution of the Board of Directors, a reasonable fixed
sum, and reasonable expenses of attendance, if any, may be allowed for actual
attendance at each regular or special meeting of the Board of Directors. Members
of either standing or special committees may be allowed such compensation for
actual attendance at committee meetings as the Board of Directors may determine.
SECTION 13. PRESUMPTION OF ASSENT. A director of the Stock Holding Company
who is present at a meeting of the Board of Directors at which action on any
Stock Holding Company matter is taken shall be presumed to have assented to the
action taken unless his or her dissent or abstention shall be entered in the
minutes of the meeting or unless he or she shall file a written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the Stock Holding Company within five days after the date a copy of
the minutes of the meeting is received. Such right to dissent shall not apply to
a director who voted in favor of such action.
SECTION 14. REMOVAL OF DIRECTORS. At a meeting of stockholders called
expressly for that purpose, any director may be removed for cause by a vote of
the holders of a majority of the shares then entitled to vote at an election of
directors. Whenever the holders of the shares of any class are entitled to elect
one or more directors by the provisions of the charter or supplemental sections
thereto, the provisions of this Section shall apply, in respect to the removal
of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class and not to the vote of the outstanding shares
as a whole.
ARTICLE IV - EXECUTIVE AND OTHER COMMITTEES
SECTION 1. APPOINTMENTS. The board of directors, by resolution adopted by a
majority of the full board, may designate the chief executive officer and two or
more of the other directors to constitute an executive committee. The
designation of any committee pursuant to this Article IV and the delegation of
authority shall not operate to relieve the board of directors, or any director,
of any responsibility imposed by law or regulation.
SECTION 2. AUTHORITY. The executive committee, when the board of directors
is not in session, shall have and may exercise all of the authority of the board
of directors except to the extent, if any, that such authority shall be limited
by the resolution appointing the executive
<PAGE>
committee; and except also that the executive committee shall not have the
authority of the board of directors with reference to: the declaration of
dividends; the amendment of the charter or bylaws of the Stock Holding Company,
or recommending to the shareholders a plan of merger, consolidation, or
conversion; the sale, lease, or other disposition of all or substantially all of
the property and assets of the Stock Holding Company otherwise than in the usual
and regular course of its business; a voluntary dissolution of the Stock Holding
Company; a revocation of any of the foregoing; or the approval of a transaction
in which any member of the executive committee, directly or indirectly, has any
material beneficial interest.
SECTION 3. TENURE. Subject to the provisions of section 8 of this article
IV, each member of the executive committee shall hold office until the next
regular annual meeting of the board of directors following his or her
designation and until a successor is designated as a member of the executive
committee.
SECTION 4. MEETINGS. Regular meetings of the executive committee may be
held without notice at such times and places as t he executive committee may fix
from time to time by resolution. Special meetings of the executive committee may
be called by any member thereof upon not less than one day's notice stating the
place, date, and hour of the meeting, which notice may be written or oral. Any
member of the executive committee may waive notice of any meeting and no notice
of any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the executive committee need not state the business
proposed to be transacted at the meeting.
SECTION 5. QUORUM. A majority of the members of the executive committee
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the executive committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
SECTION 6. ACTION WITHOUT A MEETING. Any action required or permitted to be
taken by the executive committee at a meeting may be taken without a meeting if
a consent in writing, setting forth the action so taken, shall be signed by all
of the members of the executive committee.
SECTION 7. VACANCIES. Any vacancy in the executive committee may be filled
by a resolution adopted by a majority of the full board of directors.
SECTION 8. RESIGNATIONS AND REMOVAL. Any member of the executive committee
may be removed at any time with or without cause by resolution adopted by a
majority of the full board of directors. Any member of the executive committee
may resign from the executive committee at any time by giving written notice to
the president or secretary of the Stock Holding Company. Unless otherwise
specified, such resignation shall take effect upon its receipt; the acceptance
of such resignation shall not be necessary to make it effective.
SECTION 9. PROCEDURE. The executive committee shall elect a presiding
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these
<PAGE>
bylaws. It shall keep regular minutes of its proceedings and report the same to
the board of directors for its information at the meeting held next after the
proceedings shall have occurred.
SECTION 10. OTHER COMMITTEES. The board of directors may by resolution
establish an audit, loan, or other committee composed of directors as they may
determine to be necessary or appropriate for the conduct of the business of the
Stock Holding Company and may prescribe the duties, constitution, and procedures
thereof.
ARTICLE V - OFFICERS
SECTION 1. POSITIONS. The officers of the Stock Holding Company shall be a
president, one or more vice presidents, a secretary, and a treasurer, each of
whom shall be elected by the Board of Directors. The Board of Directors also may
designate the chairman of the board as an officer. The president shall be the
chief executive officer, unless the Board of Directors designates the chairman
of the board as chief executive officer. The president shall be a director of
the Stock Holding Company. The offices of the secretary and treasurer may be
held by the same person and a vice president may also be either the secretary or
the treasurer. The Board of Directors may designate one or more vice presidents
as executive vice president or senior vice president. The Board of Directors
also may elect or authorize the appointment of such other officers as the
business of the Stock Holding Company may require. The officers shall have such
authority and perform such duties as the Board of Directors may from time to
time authorize or determine. In the absence of action by the Board of Directors,
the officers shall have such powers and duties as generally pertain to their
respective offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the Stock Holding
Company shall be elected annually at the first meeting of the Board of Directors
held after each annual meeting of the stockholders. If the election of officers
is not held at such meeting, such election shall be held as soon thereafter as
possible. Each officer shall hold office until a successor has been duly elected
and qualified or until the officer's death, resignation, or removal in the
manner hereinafter provided. Election or appointment of an officer, employee, or
agent shall not of itself create contractual rights. The Board of Directors may
authorize the Stock Holding Company to enter into an employment contract with
any officer in accordance with regulations of the Office; but no such contract
shall impair the right of the Board of Directors to remove any officer at any
time in accordance with Section 3 of this Article V.
SECTION 3. REMOVAL. Any officer may be removed by the Board of Directors
whenever, in its judgment, the best interests of the Stock Holding Company will
be served thereby, but such removal, other than for cause, shall be without
prejudice to any contractual rights, if any, of the person so removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. REMUNERATION. The remuneration of the officers shall be fixed
from time to time by the Board of Directors.
<PAGE>
ARTICLE VI - CONTRACTS, LOANS, CHECKS, AND DEPOSITS
SECTION 1. CONTRACTS. To the extent permitted by regulations of the Office,
and except as otherwise prescribed by these bylaws with respect to certificates
for shares, the Board of Directors may authorize any officer, employee or agent
of the Stock Holding Company to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Stock Holding Company. Such
authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the Stock
Holding Company and no evidence of indebtedness shall be issued in its name
unless authorized by the Board of Directors. Such authority may be general or
confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts, or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the Stock Holding Company shall be signed by one or more officers, employees,
or agents of the Stock Holding Company in such manner as shall from time to time
be determined by the Board of Directors.
SECTION 4. DEPOSITS. All funds of the Stock Holding Company not otherwise
employed shall be deposited from time to time to the credit of the Stock Holding
Company in any duly authorized depositories as the Board of Directors may
select.
ARTICLE VII - CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
capital stock of the Stock Holding Company shall be in such form as shall be
determined by the Board of Directors and approved by the Office. Such
certificates shall be signed by the chief executive officer or by any other
officer of the Stock Holding Company authorized by the Board of Directors,
attested by the secretary or an assistant secretary, and sealed with the
corporate seal or a facsimile thereof. The signatures of such officers upon a
certificate may be facsimiles if the certificate is manually signed on behalf of
a transfer agent or a registrar, other than the Stock Holding Company itself or
one of its employees. Each certificate for shares of capital stock shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the Stock Holding
Company. All certificates surrendered to the Stock Holding Company for transfer
shall be canceled and no new certificate shall be issued until the former
certificate for a like number of shares has been surrendered and canceled,
except that in the case of a lost or destroyed certificate, a new certificate
may be issued upon such terms and indemnity to the Stock Holding Company as the
Board of Directors may prescribe.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of capital stock of the
Stock Holding Company shall be made only on its stock transfer books. Authority
for such transfer shall be given only by the holder of record thereof or by his
legal representative, who shall furnish proper evidence of such authority, or by
his attorney thereunto authorized by a duly executed power of attorney and filed
with the Stock Holding Company. Such transfer shall be made only on surrender
for cancellation of the certificate for such shares. The person in whose name
the
<PAGE>
shares of capital stock stand on the books of the Stock Holding Company shall be
deemed by the Stock Holding Company to be the owner for all purposes.
ARTICLE VIII - FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the Stock Holding Company shall end on the 30th day of
September. The Stock Holding Company shall be subject to an annual audit as of
the end of its fiscal year by independent public accountants appointed by and
responsible to the Board of Directors. The appointment of such accountants shall
be subject to annual ratification by the stockholders.
ARTICLE IX - DIVIDENDS
Subject only to the terms of the Stock Holding Company's charter and the
regulations and orders of the Office, the Board of Directors may, from time to
time, declare, and the Stock Holding Company may pay, dividends on its
outstanding shares of capital stock.
ARTICLE X - CORPORATE SEAL
The Board of Directors shall provide a Stock Holding Company seal which
shall be two concentric circles between which shall be the name of the Stock
Holding Company. The year of incorporation or an emblem may appear in the
center.
ARTICLE XI - AMENDMENTS
These bylaws may be amended in a manner consistent with regulations of the
Office and shall be effective after: (i) approval of the amendment by a majority
vote of the authorized board of directors, or by a majority vote of the votes
cast by the shareholders of the Stock Holding Company at any legal meeting, and
(ii) receipt of any applicable regulatory approval. When the Stock Holding
Company fails to meet its quorum requirements, solely due to vacancies on the
board, then the affirmative vote of a majority of the sitting board will be
required to amend the bylaws.
ARTICLE XII - AGE LIMITATIONS
SECTION 1. DIRECTORS. No person seventy (70) years of age or older shall be
eligible for election, reelection, appointment or reappointment to the Board. No
director shall serve as such beyond the annual meeting of the Stock Holding
Company immediately following the expiration of the full term during which the
director became seventy (70) years of age. This age limitation does not apply to
a director emeritus.
SECTION 2. OFFICERS. While the Stock Holding Company is not an employer
described in section 11(b) of the Age Discrimination in Employment Act of 1967,
as amended ("ADEA"), no officer of the Stock Holding Company, other than any
officer who is seventy (70) years of age or older as of the effective date of
these bylaws, shall continue to serve as an officer of the Stock Holding Company
beyond the end of the month in which his or her seventieth (70th)
<PAGE>
birthday occurs; provided, however, that any such officer shall, to the extent
specifically authorized by contract approved by, or by resolution of, a majority
of the entire Board, be eligible to continue to serve as an officer of the Stock
Holding Company on a year to year basis. While the Stock Holding Company is an
employer described in section 11(b) of ADEA, no officer of the Stock Holding
Company, other than any officer who is seventy (70) years of age or older as of
the effective date of these bylaws, who is described in section 12(c) of ADEA
shall continue to serve as an officer of the Stock Holding Company beyond the
end of the month in which his or her seventieth (70th) birthday occurs;
provided, however, that any such officer shall, to the extent specifically
authorized by contract approved by, or by resolution of, a majority of the
entire Board, be eligible to continue to serve as an officer of the Stock
Holding Company on a year to year basis.
ARTICLE XIII - INDEMNIFICATION
The Stock Holding Company shall indemnify its directors, officers and
employees in accordance with the following requirements:
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION. (a) The following
definitions apply for purposes of this Article XIII:
(i) Action. The term "action" means any judicial or administrative
proceeding, or threatened proceeding, whether civil, criminal or otherwise,
including any appeal or other proceeding for review;
(ii) Court. The term "court" includes, without limitation, any court
to which or in which any appeal or any proceeding for review is brought.
(iii) Final judgment. The term "final judgment" means a judgment,
decree or order that is not appealable or as to which the period for appeal
has expired with no appeal taken.
(iv) Settlement. The term "settlement" includes entry of a judgment by
consent or confession or a plea of guilty or nolo contendere.
(b) References in this Article XII to any individual or other person,
including any savings bank, shall include legal representatives, successors and
assigns thereof.
SECTION 2. INDEMNIFICATION. Subject to Sections 3 and 7 of this Article
XII, the Stock Holding Company shall indemnify any person against whom an action
is brought or threatened because that person is or was a director, officer or
employee of the Stock Holding Company for:
(a) Any amount for which that person becomes liable under a judgment
in such action; and
<PAGE>
(b) Reasonable costs and expenses, including reasonable attorneys'
fees, actually paid or incurred by that person in defending or settling
such action, or in enforcing his or her rights under this Article XIII if
he or she attains a favorable judgment in such enforcement action.
SECTION 3. REQUIREMENTS FOR INDEMNIFICATION. Indemnification shall be made
to such person under Section 2 of this Article XIII only if:
(a) Final judgment on the merits is in his or her favor; or
(b) In case of:
(i) settlement;
(ii) final judgment against him or her; or
(iii) final judgment in his or her favor, other than on the merits,
if a majority of the disinterested directors of the Stock Holding Company
determines that he or she was acting in good faith within the scope of his
or her employment or authority as he or she could have reasonably perceived
it under the circumstances and for a purpose he or she could reasonably
have believed under the circumstances was in the best interests of the
Stock Holding Company or its shareholders.
However, no indemnification shall be made unless the Stock Holding Company gives
the Office at least 60 days notice of its intention to make such
indemnification. Such notice shall state the facts on which the action arose,
the terms of any settlement and any disposition of the matter by a court. Such
notice, a copy thereof and a certified copy of the resolution containing the
required determination by the Board shall be sent to the Regional Director of
the Office, who shall promptly acknowledge receipt thereof. The notice period
shall run from the date of such receipt. No such indemnification shall be made
if the Office advises the Stock Holding Company in writing, within such notice
period, of his or her objection thereto.
SECTION 4. INSURANCE. The Stock Holding Company may obtain insurance to
protect it and its directors, officers and employees from potential losses
arising from claims against any of them for alleged wrongful acts, or wrongful
acts committed in their capacity as directors, officers or employees. However,
the Stock Holding Company may not obtain insurance that provides for payment of
losses of any person incurred as a consequence of his or her willful or criminal
misconduct.
SECTION 5. PAYMENT OF EXPENSES. If a majority of the directors of the Stock
Holding Company concludes that, in connection with an action, any person
ultimately may become entitled to indemnification under this Article XIII, the
directors may authorize payment of reasonable costs and expenses, including
reasonable attorneys' fees, arising from the defense or settlement of such
action. Nothing in this Section 5 shall prevent the directors of the Stock
<PAGE>
Holding Company from imposing such conditions on a payment of expenses as they
deem warranted and in the interests of the Stock Holding Company. Before making
advance payment of expenses under this Section 5, the Stock Holding Company
shall obtain an agreement that the Stock Holding Company will be repaid if the
person on whose behalf payment is made is later determined not to be entitled to
such indemnification.
SECTION 6. EXCLUSIVENESS OF PROVISIONS. The Stock Holding Company shall not
indemnify any person referred to in Section 2 of this Article XIII or obtain
insurance referred to in Section 4 of this Article XIII other than in accordance
with this Article XIII.
SECTION 7. STATUTORY LIMITATIONS. The indemnification provided for in
Section 2 of this Article XIII is subject to and qualified by 12 U.S.C. section
1821(k).
SECTION 8. SUBSEQUENT LEGISLATION OR REGULATION. If law and regulations
thereunder applicable to federal stock savings banks are amended to expand the
indemnifications permitted to directors and officers of the Stock Holding
Company, then the Stock Holding Company shall indemnify such persons to the
extent permitted by such applicable law and regulations, as so amended.
FEDERAL STOCK CHARTER
REVERE FEDERAL BANK
SECTION 1. CORPORATE TITLE. The full corporate title of the savings bank is
Revere Federal Savings Bank (the "Bank").
SECTION 2. OFFICE. The home office shall be located in Revere, in the
county of Suffolk, Commonwealth of Massachusetts.
SECTION 3. DURATION. The duration of the Bank is perpetual.
SECTION 4. PURPOSE AND POWERS. The purpose of the Bank is to pursue any or
all of the lawful objectives of a Federal savings bank chartered under Section 5
of the Home Owners' Loan Act and to exercise all of the express, implied, and
incidental powers conferred thereby and by all acts amendatory thereof and
supplemental thereto, subject to the Constitution and laws of the United States
as they are now in effect, or as they may hereafter be amended, and subject to
all lawful and applicable rules, regulations, and orders of the Office of Thrift
Supervision (the "Office").
SECTION 5. CAPITAL STOCK. The total number of shares of all classes of the
capital stock which the Bank has the authority to issue is 6,000,000 of which
5,000,000 shares shall be common stock, par value $.01 per share, and of which
1,000,000 shares shall be serial preferred stock, no par value per share. The
shares may be issued from time to time as authorized by the board of directors
without the approval of the stockholders, except as otherwise provided in this
Section 5 or to the extent that such approval is required by governing law,
rule, or regulation. The consideration for the issuance of the shares shall be
paid in full before their issuance and shall not be less than the par value.
Neither promissory notes nor future services shall constitute payment or part
payment for the issuance of shares of the Bank. The consideration for the shares
shall be cash, tangible or intangible property (to the extent direct investment
in such property would be permitted to the Bank), labor or services actually
performed for the Bank, or any combination of the foregoing. In the absence of
actual fraud in the transaction, the value of such property, labor, or services,
as determined by the board of directors of the Bank, shall be conclusive. Upon
payment of such consideration, such shares shall be deemed to be fully paid and
nonassessable. In the case of a stock dividend, that part of the surplus of the
Bank which is transferred to stated capital upon the issuance of shares as a
share dividend shall be deemed to be the consideration for their issuance.
Except for the initial offering of shares of the Bank, no shares of capital
stock (including shares issuable upon conversion, exchange or exercise of other
securities) shall be issued, directly or indirectly, to officers, directors, or
controlling persons of the Bank other than as part of a general public offering
or as qualifying shares to a director, unless their issuance or the plan under
which they would be issued has been approved by a majority of the total votes
eligible to be cast at a legal meeting.
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<PAGE>
Nothing contained in this Section 5 (or in any supplementary sections
hereto) shall entitle the holders of any class or series of capital stock to
vote as a separate class or series or to more than one vote per share except as
to the cumulation of votes for the election of directors; provided, that this
restriction on voting separately by class or series shall not apply:
(i) To any provision which would authorize the holders of preferred
stock, voting as a class or series, to elect some members of the board of
directors, less than a majority thereof, in the event of default in the payment
of dividends on any class or series of preferred stock;
(ii) To any provision which would require the holders of preferred
stock, voting as a class or series, to approve the merger or consolidation of
the Bank with another corporation or the sale, lease or conveyance (other than
by mortgage or pledge) of properties or business in exchange for securities of a
corporation other than the Bank if the preferred stock is exchanged for
securities of such other corporation; provided, that no provision may require
such approval for transactions undertaken with the assistance or pursuant to the
direction of the Office, the Federal Deposit Insurance Corporation, [or the
Resolution Trust Corporation];
(iii) To any amendment which would adversely change the specific terms
of any class or series of capital stock as set forth in this Section 5 (or in
any supplementary sections hereto), including any amendment which would create
or enlarge any class or series ranking prior thereto in rights and preferences.
An amendment which increases the number of authorized shares of any class or
series of capital stock, or substitutes the surviving savings bank in a merger
or consolidation for the Bank, shall not be considered to be such an adverse
change.
A description of the different classes and series (if any) of the Bank's
capital stock and a statement of the designations, and the relative rights,
preferences and limitations of the shares of each class of and series (if any)
of capital stock are as follows:
A. COMMON STOCK. Except as provided in this Section 5 (or in any
supplementary sections hereto) the holders of the common stock shall exclusively
possess all voting power. Each holder of shares of common stock shall be
entitled to one vote for each share held by such holder.
Whenever there shall have been paid, or declared and set aside for payment,
to the holders of the outstanding shares of any class of stock having preference
over the common stock as to payment of dividends, the full amount of dividends
and of sinking fund, retirement fund or other retirement payments, if any, to
which such holders are respectively entitled in preference to the common stock,
then dividends may be paid on the common stock and on any class or series of
stock entitled to participate therewith as to dividends out of any assets
legally available for the payment of dividends.
In the event of any liquidation, dissolution, or winding up of the Bank,
the holders of the common stock (and the holders of any class or series of stock
entitled to participate with the common stock in the distribution of assets)
shall be entitled to receive, in cash or in kind, the assets of the Bank
available for distribution remaining after: (i) payment or provision for payment
of the
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<PAGE>
Bank's debts and liabilities; (ii) distributions or provisions for distributions
in settlement of any liquidation account; and (iii) distributions or provisions
for distributions to holders of any class or series of stock having preference
over the common stock in the liquidation, dissolution, or winding up of the
Bank. Each share of common stock shall have the same relative rights as and be
identical in all respects with all the other shares of common stock.
B. PREFERRED STOCK. The Bank may provide in supplementary sections to its
charter for one or more classes of preferred stock, which shall be separately
identified. The shares of any class may be divided into and issued in series,
with each series separately designated so as to distinguish the shares thereof
from the shares of all other series and classes. The terms of each series shall
be set forth in a supplementary section to the charter. All shares of the same
class shall be identical except as to the following relative rights and
preferences, as to which there may be variations between different series:
(a) The distinctive serial designation and the number of shares
constituting such series;
(b) The dividend rate or the amount of dividends to be paid on the shares
of such series, whether dividends shall be cumulative and, if so, from which
date(s), the payment date(s) for dividends, and the participating or other
special rights, if any, with respect to dividends;
(c) The voting powers, full or limited, if any, of shares of such series;
(d) Whether the shares of such series shall be redeemable and, if so, the
price(s) at which, and the terms and conditions on which, such shares may be
redeemed;
(e) The amount(s) payable upon the shares of such series in the event of
voluntary or involuntary liquidation, dissolution, or winding up of the Bank;
(f) Whether the shares of such series shall be entitled to the benefit of a
sinking or retirement fund to be applied to the purchase or redemption of such
shares, and if so entitled, the amount of such fund and the manner of its
application, including the price(s) at which such shares may be redeemed or
purchased through the application of such fund;
(g) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of stock of the Bank and,
if so, the conversion price(s) or the rate(s) of exchange, and the adjustments
thereof, if any, at which such conversion or exchange may be made, and any other
terms and conditions of such conversion or exchange;
(h) The price or other consideration for which the shares of such series
shall be issued; and
(i) Whether the shares of such series which are redeemed or converted shall
have the status of authorized but unissued shares of serial preferred stock and
whether such shares may be reissued as shares of the same or any other series of
serial preferred stock.
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<PAGE>
Each share of each series of serial preferred stock shall have the same
relative rights as and be identical in all respects with all the other shares of
the same series.
The board of directors shall have authority to divide, by the adoption of
supplementary charter sections, any authorized class of preferred stock into
series and, within the limitations set forth in this section and the remainder
of this charter, fix and determine the relative rights and preferences of the
shares of any series so established.
Prior to the issuance of any preferred shares of a series established by a
supplementary charter section adopted by the board of directors, the Bank shall
file with the Secretary of the Office a dated copy of that supplementary section
of this charter establishing and designating the series and fixing and
determining the relative rights and preferences thereof.
SECTION 6. PREEMPTIVE RIGHTS. Holders of the capital stock of the Bank
shall not be entitled to preemptive rights with respect to any shares of the
Bank which may be issued.
SECTION 7. DIRECTORS. The Bank shall be under the direction of a board of
directors. The authorized number of directors, as stated in the Bank's bylaws,
shall not be fewer than five nor more than fifteen, except when a greater number
or lesser is approved by the Director of the Office, or his or her delegate.
SECTION 8. BENEFICIAL OWNERSHIP LIMITATION. Notwithstanding anything
contained in the Bank's charter or bylaws to the contrary, for a period of five
years from the date of this charter no person shall directly or indirectly offer
to acquire or acquire the beneficial ownership of more than 10 percent of any
class of an equity security of the Bank. This limitation shall not apply to a
transaction in which the Bank forms a holding company without change in the
respective beneficial ownership interests of its stockholders other than
pursuant to the exercise of any dissenter and appraisal rights, the purchase of
shares by underwriters in connection with a public offering, or the purchase of
shares by a tax-qualified employee stock benefit plan which is exempt from the
approval requirements under 574.3(c)(l)(vi) of the Office's regulations.
In the event shares are acquired in violation of this Section 8, all shares
beneficially owned by any person in excess of 10% shall be considered "excess
shares" and shall not be counted as shares entitled to vote and shall not be
voted by any person or counted as voting shares in connection with any matters
submitted to the stockholders for a vote.
For the purposes of this Section 8, the following definitions apply:
(1) The term "person" includes and individual, a group acting in concert, a
corporation,, a partnership, an association, a joint stock company, a trust, an
unincorporated organization or similar company, a syndicate or any other group
formed for the purpose of acquiring, holding or disposing of the equity
securities of the Bank.
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<PAGE>
(2) The term "offer" includes every offer to buy or otherwise acquire,
solicitation of an offer to sell, tender offer for, or request or invitation for
tenders of, a security or interest in a security for value.
(3) The term "acquire" includes every type of acquisition, whether affected
by purchase, exchange, operation of law or otherwise.
(4) The term "acting in concert" means (a) knowing participation in a joint
activity or conscious parallel action towards a common goal whether or not
pursuant to an express agreement, or (b) a combination or pooling of voting or
other interests in the securities of an issuer for a common purpose pursuant to
any contract, understanding, relationship, agreement or other arrangements,
whether written or otherwise.
SECTION 9. CUMULATIVE VOTING LIMITATION. Stockholders shall not be
permitted to cumulate their votes for election of directors.
SECTION 10. CALL FOR SPECIAL MEETINGS. Special meetings of stockholders
relating to changes in control of the Bank or amendments to its charter shall be
called only upon direction of the Board of Directors.
SECTION 11. DEPOSIT ACCOUNTS. In any situation in which the priority of the
accounts of the Bank is in controversy, all such accounts shall, to the extent
of their withdrawable value, be debts of the Bank having at least as high a
priority as the claims of general creditors of the Bank not having priority
(other than any priority arising or resulting from consensual subordination)
over other general creditors of the Bank.
SECTION 12. AMENDMENT OF CHARTER. Except as provided in Section 5 hereof,
no amendment addition, alteration, change, or repeal of this charter shall be
made, unless such is first proposed by the board of directors of the Bank, then
preliminarily approved by the Office, which preliminary approval may be granted
by the Office pursuant to regulations specifying preapproved charter amendments,
and thereafter approved by the stockholders by a majority of the total votes
eligible to be cast at a legal meeting. Any amendment, addition, alteration,
change, or repeal so acted upon shall be effective upon filing with the Office
in accordance with regulatory procedures or on such other date as the Office may
specify in its preliminary approval.
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<PAGE>
REVERE BANCORP, INC.
Attest: By:
--------------------------- -------------------------------------
Ernest F. Becker James J. McCarthy
Secretary President and Chief Executive Officer
OFFICE OF THRIFT SUPERVISION
Attest: By:
--------------------------- -------------------------------------
Secretary Director
Date:
---------------------------
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FEDERAL STOCK BYLAWS
REVERE FEDERAL BANK
ARTICLE I - Home Office
The home office of Revere Federal Bank (the "Bank") shall be located in
Revere, County of Suffolk, Commonwealth of Massachusetts.
ARTICLE II - STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All annual and special meetings of
stockholders shall be held at the home office of the Bank or at such other place
in the Commonwealth of Massachusetts as the board of directors may determine.
SECTION 2. ANNUAL MEETING. A meeting of the stockholders of the Bank for
the election of directors and for the transaction of any other business of the
Bank shall be held annually within 150 days after the end of the Bank's fiscal
year on the third Wednesday in January, if not a legal holiday, and if a legal
holiday, then on the next day following which is not a legal holiday, at 3:00
p.m., local time, or at such other date and time within such 150-day period as
the board of directors may determine.
SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders for any
purpose or purposes, unless otherwise prescribed by the regulations of the
Office of Thrift Supervision ("Office") or the Federal Stock Charter of the
Bank, may be called at any time by the chairman of the board, the president, or
a majority of the board of directors, and shall be called by the chairman of the
board, the president, or the secretary upon the written request of the holders
of not less than one-tenth of all of the outstanding capital stock of the Bank
entitled to vote at the meeting. Such written request shall state the purpose or
purposes of the meeting and shall be delivered to the home office of the Bank
addressed to the chairman of the board, the president, or the secretary.
SECTION 4. CONDUCT OF MEETINGS. The board of directors shall designate,
when present, either the chairman of the board or president to preside at such
meetings. The chairman of any annual or special meeting of the members shall,
unless prescribed by law or regulation, determine the order of the business and
the procedure at the meeting, including such regulation of the manner of voting
and the conduct of discussion as he or she shall deem appropriate.
SECTION 5. NOTICE OF MEETINGS. Written notice stating the place, day, and
hour of the meeting and the purpose(s) for which the meeting is called shall be
delivered not fewer than 20 nor more than 50 days before the date of the
meeting, either personally or by mail, by or at the direction of the chairman of
the board, the president, or the secretary, or the directors calling the
meeting, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the mail,
addressed to the stockholder at the
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<PAGE>
address as it appears on the stock transfer books or records of the Bank as of
the record date prescribed in Section 6 of this Article II with postage thereon
prepaid. When any stockholders' meeting, either annual or special, is adjourned
for 30 days or more, notice of the adjourned meeting shall be given as in the
case of an original meeting. It shall not be necessary to give any notice of the
time and place of any meeting adjourned for less than 30 days or of the business
to be transacted at the meeting, other than an announcement at the meeting at
which such adjournment is taken.
SECTION 6. FIXING OF RECORD DATE. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment, or stockholders entitled to receive payment of any dividend, or
in order to make a determination of stockholders for any other proper purpose,
the board of directors shall fix in advance a date as the record date for any
such determination of stockholders. Such date in any case shall be not more than
60 days and, in case of a meeting of stockholders, not fewer than 10 days prior
to the date on which the particular action, requiring such determination of
stockholders, is to be taken. When a determination of stockholders entitled to
vote at any meeting of stockholders has been made as provided in this Section,
such determination shall apply to any adjournment thereof.
SECTION 7. VOTING LIST. At least 20 days before each meeting of the
stockholders, the officer or agent having charge of the stock transfer books for
shares of the Bank shall make a complete list of the stockholders entitled to
vote at such meeting, or any adjournment thereof, arranged in alphabetical
order, with the address and the number of shares held by each. This list of
stockholders shall be kept on file at the home office of the Bank and shall be
subject to inspection by any stockholder at any time during usual business hours
for a period of 20 days prior to such meeting. Such list shall also be produced
and kept open at the time and place of the meeting and shall be subject to
inspection by any stockholder during the entire time of the meeting. The
original stock transfer book shall constitute prima facie evidence of the
stockholders entitled to examine such list or transfer books or to vote at any
meeting of stockholders.
In lieu of making the stockholders list available for inspection by
stockholders as provided in the preceding paragraph, the board of directors may
elect to follow the procedures prescribed in the Office's regulations as now or
hereafter in effect.
SECTION 8. QUORUM. A majority of the outstanding shares of the Bank
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of stockholders. If less than a majority of the outstanding shares
is represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The stockholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to constitute less than a quorum. If a quorum is present, the
affirmative vote of the majority of the shares represented at
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<PAGE>
the meeting and entitled to vote on the subject matter shall be the act of
shareholders, unless the vote of a greater number of shareholders voting
together or voting by classes is required by law or the Charter. Directors,
however, are elected by a plurality of the votes coast at an election of
directors.
SECTION 9. PROXIES. At all meetings of stockholders, a stockholder may vote
by proxy executed in writing by the stockholder or by his or her duly authorized
attorney in fact. Proxies may be given telephonically or electronically as long
as the holder uses a procedure for verifying the identify of the shareholders.
Proxies solicited on behalf of the management shall be voted as directed by the
stockholder or, in the absence of such direction, as determined by a majority of
the board of directors. No proxy shall be valid more than eleven months from the
date of its execution except for a proxy coupled with an interest.
SECTION 10. VOTING OF SHARES IN THE NAME OF TWO OR MORE PERSONS. When
ownership stands in the name of two or more persons, in the absence of written
directions to the Bank to the contrary, at any meeting of the stockholders of
the Bank, any one or more of such stockholders may cast, in person or by proxy,
all votes to which such ownership is entitled. In the event an attempt is made
to cast conflicting votes, in person or by proxy, by the several persons in
whose names shares of stock stand, the vote or votes to which those persons are
entitled shall be cast as directed by a majority of those holding such stock and
present in person or by proxy at such meeting, but no votes shall be cast for
such stock if a majority cannot agree.
SECTION 11. VOTING OF SHARES OF CERTAIN HOLDERS. Shares standing in the
name of another corporation may be voted by any officer, agent, or proxy as the
bylaws of such corporation may prescribe, or, in the absence of such provision,
as the board of directors of such corporation may determine. Shares held by an
administrator, executor, guardian, or conservator may be voted by him or her,
either in person or by proxy, without a transfer of such shares into his or her
name. Shares held in trust in an IRA or Keogh Account, however, may be voted by
the Bank if no other instructions are received. Shares standing in the name of a
trustee may be voted by him or her, either in person or by proxy, but no trustee
shall be entitled to vote shares held by him or her without a transfer of such
shares into his or her name. Shares standing in the name of a receiver may be
voted by such receiver, and shares held by or under the control of a receiver
may be voted by such receiver without the transfer thereof into his name if
authority to do so is contained in an appropriate order of the court or other
public authority by which such receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the Bank nor shares held
by another corporation, if a majority of the shares entitled to vote for the
election of directors of such other corporation are held by the Bank, shall be
voted at any meeting, or counted in determining the total number of outstanding
shares at any given time for purposes of any meeting.
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SECTION 12. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the board of directors may appoint any persons other than nominees
for office as inspectors of election to act at such meeting or any adjournment
thereof. The number of inspector shall be either one or three. Any such
appointment shall not be altered at the meeting. If inspectors of election are
not so appointed, the chairman of the board or the president may, or on the
request of not fewer than 10 percent of the votes represented at the meeting
shall, make such appointment at the meeting. If appointed at the meeting, the
majority of the votes present shall determine whether one or three inspectors
are to be appointed. In case any person appointed as inspector fails to appear
or fails or refuses to act, the vacancy may be filled by appointment by the
board of directors in advance of the meeting or at the meeting by the chairman
of the board or the president.
Unless otherwise prescribed by regulations of the Office, the duties of
such inspectors shall include: determining the number of shares of stock and the
voting power of each share, the shares represented at the meeting, the existence
of a quorum, and the authenticity, validity and effect of proxies; receiving
votes, ballots, or consents; hearing and determining all challenges and
questions in any way arising in connection with the rights to vote; counting and
tabulating all votes or consents; determining the result; and such acts as may
be proper to conduct the election or vote with fairness to all stockholders.
SECTION 13. NOMINATING COMMITTEE. The board of directors shall act as a
nominating committee for selecting the management nominees for election as
directors. Except in the case of a nominee substituted as a result of the death
or other incapacity of a management nominee, the nominating committee shall
deliver written nominations to the secretary at the principal executive offices
of the Bank at least 20 days prior to the date of the annual meeting. Upon
delivery, such nominations shall be posted in a conspicuous place in each office
of the Bank. No nominations for director except those made by the nominating
committee shall be voted upon at the annual meeting unless other nominations by
stockholders are made in writing and delivered to the secretary at the principal
executive offices of the Bank at least five (5) days prior to the date of the
annual meeting. Such stockholder's notice shall set forth (a) as to each person
whom the stockholder proposes to nominate for election or reelection as a
director, (i) the name, age, business address and residence address of such
person, (ii) the principal occupation or employment of such person, and (iii)
such person's written consent to serve as a director, if elected; and (b) as to
the stockholder giving the notice (i) the name and address of such stockholder
and (ii) the class and number of shares of the Bank which are owned of record by
such stockholder. At the request of the board of directors, any person nominated
by the board of directors for election as a director shall furnish to the
secretary that information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee together with the required written
consents. Upon delivery, such nominations shall be posted in a conspicuous place
in each office of the Bank. Ballots bearing the names of all the persons
nominated by the nominating committee and by stockholders shall be provided for
use at the annual meeting. However, if the nominating committee shall fail or
refuse to act at least 20 days prior to the annual meeting, nominations for
directors may be made at the annual meeting by any stockholder entitled to vote
and shall be voted upon.
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SECTION 14. NEW BUSINESS. At an annual meeting of stockholders, only such
business shall be conducted, and only such proposals shall be acted upon, as
shall have been properly brought before the meeting. For any business proposed
by management to be properly brought before the annual meeting, such business
shall be approved by the board of directors, either directly or through its
approval of proxy solicitation materials related thereto, and shall be stated in
writing and filed with the secretary at least 5 days before the date of the
annual meeting, and all business so stated, proposed and filed shall be
considered at the annual meeting. Any stockholder may make any other proposal at
the annual meeting and the same may be discussed and considered but unless
stated in writing and filed with the secretary at least 5 days before the
meeting, such proposal shall be laid over for action at an adjourned, special or
annual meeting of the stockholders taking place 30 days or more thereafter. A
stockholder's notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief description
of the proposal desired to be brought before the annual meeting, (b) the
business, as well as the name and address of such stockholder and the class and
number of shares of the Bank which are owned of record by such stockholder.
SECTION 15. INFORMAL ACTION BY STOCKHOLDERS. Any action required to be
taken at a meeting of the stockholders, or any other action which may be taken
at a meeting of the stockholders, may be taken without a meeting if consent in
writing, setting forth the action so taken, shall be given by all of the
stockholders entitled to vote with respect to the subject matter thereof.
ARTICLE III - BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the Bank shall be
under the direction of its board of directors. The board of directors shall
annually elect a chairman of the board and a president from among its members
and shall designate, when present, either the chairman of the board or the
president to preside at its meetings.
SECTION 2. NUMBER AND TERM. The board of directors shall consist of eight
members and shall be divided into three classes as nearly equal in number as
possible. The members of each class shall be elected for a term of three years
and until their successors are elected and qualified. One class shall be elected
by ballot annually.
SECTION 3. REGULAR MEETINGS. A regular meeting of the board of directors
shall be held without other notice than this bylaw immediately after, and at the
same place as, the annual meeting of stockholders. The board of directors may
provide, by resolution, the time and place, within the Bank's normal lending
territory, for the holding of additional regular meetings without other notice
than such resolution. Directors may participate in special meetings by means of
conference telephone or similar communications equipment by which all persons
participating in the meeting can hear each other. Such participation shall
constitute presence in person for all purposes.
SECTION 4. QUALIFICATION. Each director shall at all times be the
beneficial owner of not less than 100 shares of capital stock of the Bank unless
the Bank is a wholly owned subsidiary of a holding company.
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SECTION 5. SPECIAL MEETINGS. Special meetings of the board of directors may
be called by or at the request of the chairman of the board, the president, or
one-third of the directors. The persons authorized to call special meetings of
the board of directors may fix any place, within the Bank's normal lending
territory, as the place for holding any special meeting of the board of
directors called by such persons.
Members of the board of directors may participate in special meetings by
means of conference telephone or similar communications equipment by which all
persons participating in the meeting can hear each other. Such participation
shall constitute presence in person but shall not constitute attendance for the
purpose of compensation pursuant to Section 12 of this Article.
SECTION 6. NOTICE. Written notice of any special meeting shall be given to
each director at least twenty-four (24) hours prior thereto when delivered
personally or by telegram or at least five days prior thereto when delivered by
mail at the address at which the director is most likely to be reached. Such
notice shall be deemed to be delivered when deposited in the mail so addressed,
with postage thereon prepaid if mailed or when delivered to the telegraph
company if sent by telegram. Any director may waive notice of any meeting by a
writing filed with the secretary. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any meeting of the board of
directors need be specified in the notice or waiver of notice of such meeting.
SECTION 7. QUORUM. A majority of the number of directors fixed by Section 2
of this Article III shall constitute a quorum for the transaction of business at
any meeting of the board of directors; but if less than such majority is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time. Notice of any adjourned meeting shall be given in the same manner
as prescribed by Section 6 of this Article III.
SECTION 8. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless a greater number is prescribed by regulation of the Office
or by these bylaws.
SECTION 9. ACTION WITHOUT A MEETING. Any action required or permitted to be
taken by the board of directors at a meeting may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the directors.
SECTION 10. RESIGNATION. Any director may resign at any time by sending a
written notice of such resignation to the home office of the Bank addressed to
the chairman of the board or the president. Unless otherwise specified, such
resignation shall take effect upon receipt thereof by the chairman of the board
or the president. More than three consecutive absences from regular meetings of
the board of directors, unless excused by resolution of the board of directors,
shall automatically constitute a resignation, effective when such resignation is
accepted by the board of directors.
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SECTION 11. VACANCIES. Any vacancy occurring on the board of directors may
be filled by the affirmative vote of a majority of the remaining directors
although less than a quorum of the board of directors. A director elected to
fill a vacancy shall be elected to serve until the next election of directors by
the stockholders. Any directorship to be filled by reason of an increase in the
number of directors may be filled by election by the board of directors for a
term of office continuing only until the next election of directors by the
stockholders.
SECTION 12. COMPENSATION. Directors, as such, may receive a stated salary
for their services. By resolution of the board of directors, a reasonable fixed
sum, and reasonable expenses of attendance, if any, may be allowed for actual
attendance at each regular or special meeting of the board of directors. Members
of either standing or special committees may be allowed such compensation for
actual attendance at committee meetings as the board of directors may determine.
SECTION 13. PRESUMPTION OF ASSENT. A director of the Bank who is present at
a meeting of the board of directors at which action on any bank matter is taken
shall be presumed to have assented to the action taken unless his or her dissent
or abstention shall be entered in the minutes of the meeting or unless he or she
shall file a written dissent to such action with the person acting as the
secretary of the meeting before the adjournment thereof or shall forward such
dissent by registered mail to the secretary of the Bank within five days after
the date a copy of the minutes of the meeting is received. Such right to dissent
shall not apply to a director who voted in favor of such action.
SECTION 14. REMOVAL OF DIRECTORS. At a meeting of stockholders called
expressly for that purpose, any director may be removed for cause by a vote of
the holders of a majority of the shares then entitled to vote at an election of
directors. Whenever the holders of the shares of any class are entitled to elect
one or more directors by the provisions of the charter or supplemental sections
thereto, the provisions of this Section shall apply, in respect to the removal
of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class and not to the vote of the outstanding shares
as a whole.
ARTICLE IV - EXECUTIVE AND OTHER COMMITTEES
SECTION 1. APPOINTMENT. The board of directors, by resolution adopted by a
majority of the full board, may designate the chief executive officer and two or
more of the other directors to constitute an executive committee. The
designation of any committee pursuant to this Article IV and the delegation of
authority thereto shall not operate to relieve the board of directors, or any
director, of any responsibility imposed by law or regulation.
SECTION 2. AUTHORITY. The executive committee, when the board of directors
is not in session, shall have and may exercise all of the authority of the board
of directors, except to the extent, if any, that such authority shall be limited
by the resolution appointing the executive committee; and except also that the
executive committee shall not have the authority of the board of directors with
reference to: the declaration of dividends; the amendment of the charter or
bylaws of the Bank, or recommending to the stockholders a plan of merger,
consolidation, or
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conversion; the sale, lease, or other disposition of all or substantially all of
the property and assets of the Bank otherwise than in the usual and regular
course of its business; a voluntary dissolution of the Bank; a revocation of any
of the foregoing; or the approval of a transaction in which any member of the
executive committee, directly or indirectly, has any material beneficial
interest.
SECTION 3. TENURE. Subject to the provisions of Section 8 of this Article
IV, each member of the executive committee shall hold office until the next
regular annual meeting of the board of directors following his or her
designation and until a successor is designated as a member of the executive
committee.
SECTION 4. MEETINGS. Regular meetings of the executive committee may be
held without notice at such times and places as the executive committee may fix
from time to time by resolution. Special meetings of the executive committee may
be called by any member thereof upon not less than one day's notice stating the
place, date, and hour of the meeting, which notice may be written or oral. Any
member of the executive committee may waive notice of any meeting and no notice
of any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the executive committee need not state the business
proposed to be transacted at the meeting.
SECTION 5. QUORUM. A majority of the members of the executive committee
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the executive committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
SECTION 6. ACTION WITHOUT A MEETING. Any action required or permitted to be
taken by the executive committee at a meeting may be taken without a meeting if
a consent in writing, setting forth the action so taken, shall be signed by all
of the members of the executive committee.
SECTION 7. VACANCIES. Any vacancy in the executive committee may be filled
by a resolution adopted by a majority of the full board of directors.
SECTION 8. RESIGNATIONS AND REMOVAL. Any member of the executive committee
may be removed at any time with or without cause by resolution adopted by a
majority of the full board of directors. Any member of the executive committee
may resign from the executive committee at any time by giving written notice to
the president or secretary of the Bank. Unless otherwise specified thereon, such
resignation shall take effect upon its receipt; the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 9. PROCEDURE. The executive committee shall elect a presiding
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these bylaws. It shall keep regular minutes of its
proceedings and report the same to the board of directors for its information at
the meeting thereof held next after the proceedings shall have occurred.
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SECTION 10. OTHER COMMITTEES. The board of directors may by resolution
establish an audit, loan, or other committee composed of directors as they may
determine to be necessary or appropriate for the conduct of the business of the
Bank and may prescribe the duties, constitution, and procedures thereof.
ARTICLE V - OFFICERS
SECTION 1. POSITIONS. The officers of the Bank shall be a president, one or
more vice presidents, a secretary, and a treasurer, each of whom shall be
elected by the board of directors. The board of directors also may designate the
chairman of the board as an officer. The president shall be the chief executive
officer, unless the board of directors designates the chairman of the board as
chief executive officer. The president shall be a director of the Bank. The
offices of the secretary and treasurer may be held by the same person and a vice
president may also be either the secretary or the treasurer. The board of
directors may designate one or more vice presidents as executive vice president
or senior vice president. The board of directors also may elect or authorize the
appointment of such other officers as the business of the Bank may require. The
officers shall have such authority and perform such duties as the board of
directors may from time to time authorize or determine. In the absence of action
by the board of directors, the officers shall have such powers and duties as
generally pertain to their respective offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the Bank shall be
elected annually at the first meeting of the board of directors held after each
annual meeting of the stockholders. If the election of officers is not held at
such meeting, such election shall be held as soon thereafter as possible. Each
officer shall hold office until a successor has been duly elected and qualified
or until the officer's death, resignation, or removal in the manner hereinafter
provided. Election or appointment of an officer, employee, or agent shall not of
itself create contractual rights. The board of directors may authorize the Bank
to enter into an employment contract with any officer in accordance with
regulations of the Office; but no such contract shall impair the right of the
board of directors to remove any officer at any time in accordance with Section
3 of this Article V.
SECTION 3. REMOVAL. Any officer may be removed by the board of directors
whenever, in its judgment, the best interests of the Bank will be served
thereby, but such removal, other than for cause, shall be without prejudice to
any contractual rights, if any, of the person so removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
SECTION 5. REMUNERATION. The remuneration of the officers shall be fixed
from time to time by the board of directors.
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ARTICLE VI - CONTRACTS, LOANS, CHECKS, AND DEPOSITS
SECTION 1. CONTRACTS. To the extent permitted by regulations of the Office,
and except as otherwise prescribed by these bylaws with respect to certificates
for shares, the board of directors may authorize any officer, employee or agent
of the Bank to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Bank. Such authority may be general or confined
to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the Bank and no
evidence of indebtedness shall be issued in its name unless authorized by the
board of directors. Such authority may be general or confined to specific
instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts, or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the Bank shall be signed by one or more officers, employees, or agents of the
Bank in such manner as shall from time to time be determined by the board of
directors.
SECTION 4. DEPOSITS. All funds of the Bank not otherwise employed shall be
deposited from time to time to the credit of the Bank in any duly authorized
depositories as the board of directors may select.
ARTICLE VII - CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
capital stock of the Bank shall be in such form as shall be determined by the
board of directors and approved by the Office. Such certificates shall be signed
by the chief executive officer or by any other officer of the Bank authorized by
the board of directors, attested by the secretary or an assistant secretary, and
sealed with the corporate seal or a facsimile thereof. The signatures of such
officers upon a certificate may be facsimiles if the certificate is manually
signed on behalf of a transfer agent or a registrar, other than the Bank itself
or one of its employees. Each certificate for shares of capital stock shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the Bank. All
certificates surrendered to the Bank for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares has been surrendered and cancelled, except that in the case of a lost or
destroyed certificate, a new certificate may be issued upon such terms and
indemnity to the Bank as the board of directors may prescribe.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of capital stock of the
Bank shall be made only on its stock transfer books. Authority for such transfer
shall be given only by the holder of record thereof or by his legal
representative, who shall furnish proper evidence of such authority, or by his
attorney thereunto authorized by a duly executed power of attorney and filed
with the Bank. Such transfer shall be made only on surrender for cancellation of
the certificate for such shares. The person in whose name the shares of capital
stock stand on the books of the Bank shall be deemed by the Bank to be the owner
for all purposes.
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ARTICLE VIII - FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the Bank shall end on the 30th day of September of each
year. The Bank shall be subject to an annual audit as of the end of its fiscal
year by independent public accountants appointed by and responsible to the board
of directors. The appointment of such accountants shall be subject to annual
ratification by the stockholders.
ARTICLE IX - DIVIDENDS
Subject only to the terms of the Bank's charter and the regulations and
orders of the Office, the board of directors may, from time to time, declare,
and the Bank may pay, dividends on its outstanding shares of capital stock.
ARTICLE X - CORPORATE SEAL
The board of directors shall provide a Bank seal which shall be two
concentric circles between which shall be the name of the Bank. The year of
incorporation or an emblem may appear in the center.
ARTICLE XI - AMENDMENTS
These bylaws may be amended in a manner consistent with regulations of the
Office and shall be effective after: (i) approval of the amendment by a majority
vote of the authorized board of directors, or by a majority vote of the votes
cast by the stockholders of the Bank at any legal meeting, and (ii) receipt of
any applicable regulatory approval. If the Bank fails to meet its quorum
requirements, solely due to vacancies on the board, then the affirmative vote of
a majority of the sitting board will be required to amend the bylaws.
ARTICLE XII - AGE LIMITATIONS
(a) Directors. No person seventy (70) years of age or older shall be
eligible for election, reelection, appointment or reappointment to the Board. No
director shall serve as such beyond the annual meeting of the Bank immediately
following the expiration of the full term during which the director became
seventy (70) years of age. This age limitation does not apply to a director
emeritus.
(b) Officers. While the Bank is not an employer described in section 11(b)
of the Age Discrimination in Employment Act of 1967, as amended ("ADEA"), no
officer of the Bank, other than any officer who is seventy (70) years of age or
older as of the effective date of these bylaws, shall continue to serve as an
officer of the Bank beyond the end of the month in which his or her seventieth
(70th) birthday occurs; provided, however, that any such officer shall, to the
extent specifically authorized by contract approved by, or by resolution of, [a
majority] of the entire Board, be eligible to continue to serve as an officer of
the Bank on a year to year basis. While the Bank is an employer described in
section 11(b) of ADEA, no officer of the Bank, other than any officer who is
seventy (70) years of age or older as of the effective date of these bylaws,
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who is described in section 12(c) of ADEA shall continue to serve as an officer
of the Bank beyond the end of the month in which his or her seventieth (70th)
birthday occurs; provided, however, that any such officer shall, to the extent
specifically authorized by contract approved by, or by resolution of, a majority
of the entire Board, be eligible to continue to serve as an officer of the Bank
on a year to year basis.
ARTICLE XIII - INDEMNIFICATION
The Bank shall indemnify its directors, officers and employees in
accordance with the following requirements:
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION. (a) The following
definitions apply for purposes of this Article XII:
(i) Action. The term "action" means any judicial or administrative
proceeding, or threatened proceeding, whether civil, criminal or otherwise,
including any appeal or other proceeding for review;
(ii) Court. The term "court" includes, without limitation, any court
to which or in which any appeal or any proceeding for review is brought.
(iii) Final judgment. The term "final judgment" means a judgment,
decree or order that is not appealable or as to which the period for appeal
has expired with no appeal taken.
(iv) Settlement. The term "settlement" includes entry of a judgment by
consent or confession or a plea of guilty or nolo contendere.
(b) References in this Article XII to any individual or other person,
including any savings bank, shall include legal representatives, successors and
assigns thereof.
SECTION 2. INDEMNIFICATION. Subject to Sections 3 and 7 of this Article
XII, the Bank shall indemnify any person against whom an action is brought or
threatened because that person is or was a director, officer or employee of the
Bank for:
(a) Any amount for which that person becomes liable under a judgment
in such action; and
(b) Reasonable costs and expenses, including reasonable attorney's
fees, actually paid or incurred by that person in defending or settling
such action, or in enforcing his or her rights under this Article XII if he
or she attains a favorable judgment in such enforcement action.
SECTION 3. REQUIREMENTS FOR INDEMNIFICATION. Indemnification shall be made
to such person under Section 2 of this Article XII only if:
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(a) Final judgment on the merits is in his or her favor; or
(b) In case of:
(i) settlement;
(ii) final judgment against him or her; or
(iii) final judgment in his or her favor, other than on the merits,
if a majority of the disinterested directors of the Bank determines that he
or she was acting in good faith within the scope of his or her employment
or authority as he or she could have reasonably perceived it under the
circumstances and for a purpose he or she could reasonably have believed
under the circumstances was in the best interests of the Bank or its
shareholders.
However, no indemnification shall be made unless the Bank gives the Office at
least 60 days notice of its intention to make such indemnification. Such notice
shall state the facts on which the action arose, the terms of any settlement and
any disposition of the matter by a court. Such notice, a copy thereof and a
certified copy of the resolution containing the required determination by the
Board shall be sent to the District Director of the Office, who shall promptly
acknowledge receipt thereof. The notice period shall run from the date of such
receipt. No such indemnification shall be made if the Director of the Office
advises the Bank in writing, within such notice period, of his or her objection
thereto.
SECTION 4. INSURANCE. The Bank may obtain insurance to protect it and its
directors, officers and employees from potential losses arising from claims
against any of them for alleged wrongful acts, or wrongful acts committed in
their capacity as directors, officers or employees. However, the Bank may not
obtain insurance that provides for payment of losses of any person incurred as a
consequence of his or her willful or criminal misconduct.
SECTION 5. PAYMENT OF EXPENSES. If a majority of the directors of the Bank
concludes that, in connection with an action, any person ultimately may become
entitled to indemnification under this Article XII, the directors may authorize
payment of reasonable costs and expenses, including reasonable attorneys' fees,
arising from the defense or settlement of such action. Nothing in this Section 5
shall prevent the directors of the Bank from imposing such conditions on a
payment of expenses as they deem warranted and in the interests of the Bank.
Before making advance payment of expenses under this Section 5, the Bank shall
obtain an agreement that the Bank will be repaid if the person on whose behalf
payment is made is later determined not to be entitled to such indemnification.
SECTION 6. EXCLUSIVENESS OF PROVISIONS. The Bank shall not indemnify any
person referred to in Section 2 of this Article XIII or obtain insurance
referred to in Section 4 of this Article XIII other than in accordance with this
Article XIII.
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SECTION 7. STATUTORY LIMITATION. The indemnification provided for in
Section 2 of this Article XIII is subject to and qualified by 12 U.S.C.
ss.1821(k).
SECTION 8. SUBSEQUENT LEGISLATION OR REGULATION. If law and regulations
thereunder applicable to federal stock savings banks are amended to expand the
indemnification permitted to directors and officers of the Bank, then the Bank
shall indemnify such persons to the extent permitted by such applicable law and
regulations, as so amended.
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MUTUAL HOLDING COMPANY CHARTER
REVERE, M.H.C.
FEDERAL MUTUAL HOLDING COMPANY
SECTION 1: CORPORATE TITLE. The name of the mutual holding company hereby
chartered is Revere, M.H.C. (the "Mutual Company").
SECTION 2: DURATION. The duration of the Mutual Company is perpetual.
SECTION 3: PURPOSE AND POWERS. The purpose of the Mutual Company is to
pursue any or all of the lawful objectives of a federal mutual savings and loan
holding company chartered under section 10(o) of the Home Owners' Loan Act, 12
U.S.C. 1467a(o), and to exercise all of the express, implied, and incidental
powers conferred thereby and all acts amendatory thereof and supplemental
thereto, subject to the Constitution and the laws of the United States as they
are now in effect, or as they may hereafter be amended, and subject to all
lawful and applicable rules, regulations, and orders of the Office of Thrift
Supervision ("OTS").
SECTION 4: CAPITAL. The Mutual Company shall have no capital stock.
SECTION 5: MEMBERS. All holders of Revere Federal Bank's (the "Bank")
savings, demand, or other authorized accounts are members of the Mutual Company.
With respect to all questions requiring action by the members of the Mutual
Company, each holder of an account in the Bank shall be permitted to cast one
vote for each $100, or fraction thereof, of the withdrawal value of the member's
account. No member, however, shall cast more than 1,000 votes. Voting may be by
proxy, subject to the rules and regulations of the OTS. Any number of members
present and voting, represented in person or by proxy, at a regular or special
meeting of the members shall constitute a quorum. A majority of all votes cast
at any meeting of the members shall determine any question, subject to the rules
and regulations of the OTS. All accounts shall be nonassessable.
SECTION 6: DIRECTORS. The Mutual Company shall be under the direction of a
board of directors. The authorized number of directors shall not be fewer than
five nor more than 15, as fixed in the Mutual Company's bylaws, except that the
number of directors may be increased to a number greater than 15, or decreased
to a number less than 5 with the prior approval of the OTS. Each director of the
Mutual Company shall be a member of the Mutual Company. Members of the Mutual
Company shall elect the directors, provided that, in the event of a vacancy on
the board, the board of directors may fill such vacancy, if the members of the
Mutual Company fail to do so, by electing a director to serve until the next
annual meeting of members. Directors shall be elected for periods of three years
and until their successors are elected and qualified, except that provision
shall be made for the election of approximately one-third of the board each
year.
-1-
<PAGE>
SECTION 7: CAPITAL, SURPLUS, AND DISTRIBUTION OF EARNINGS. The Mutual
Company shall distribute net earnings to account holders of the Bank on such
basis and in accordance with such terms and conditions as may from time to time
be authorized by the Director of the OTS, provided that the Mutual Company may
establish minimum account balance requirements for account holders to be
eligible for distributions of earnings.
All holders of accounts of the Bank shall be entitled to equal distribution
of the assets of the Mutual Company, pro rata to the value of their accounts in
the Bank, in the event of a voluntary or involuntary liquidation, dissolution,
or winding up of the Mutual Company.
SECTION 8: AMENDMENT. Adoption of any preapproved charter amendment
pursuant to the OTS's rules and regulations shall be effective upon filing the
amendment with the OTS in accordance with regulatory procedures, after such
preapproved amendment has been submitted to and approved by the members at a
legal meeting. Any other amendment, addition, change or repeal of this charter
must be submitted to and preliminarily approved by the OTS prior to submission
to and approval by the members at a legal meeting. Any amendment, addition,
alteration, change, or repeal so acted upon and approved shall be effective upon
filing with the OTS in accordance with regulatory procedures.
REVERE M.H.C.
Attest: By:
--------------------------- -------------------------------------
Ernest F. Becker James J. McCarthy
Secretary President and Chief Executive Officer
OFFICE OF THRIFT SUPERVISION
Attest: By:
--------------------------- -------------------------------------
Secretary
Date:
---------------------------
-2-
3.6 BYLAWS OF REVERE, M.H.C.
<PAGE>
MUTUAL HOLDING COMPANY BYLAWS
REVERE, M.H.C.
SECTION 1. ANNUAL MEETING OF MEMBERS. The annual meeting of the members of
Revere, M.H.C. (the "Mutual Company") for the election of directors and for the
transaction of any other business of the Mutual Company shall be held, as
designated by the board of directors, at a location within the Commonwealth of
Massachusetts at 3:00 p.m., local time, on the third Wednesday in January of
each calendar year, if not a legal holiday, or if a legal holiday, then on the
next succeeding day not a legal holiday. The annual meeting may be held at such
other times on such day or at such other place in the Commonwealth of
Massachusetts as the board of directors may determine. At each annual meeting,
the officers shall make a full report of the financial condition of the Mutual
Company and of its progress for the preceding year and shall outline a program
for the succeeding year.
SECTION 2. SPECIAL MEETINGS OF MEMBERS. Special meetings of the members of
the Mutual Company may be called at any time by the president or the board of
directors and shall be called by the president, a vice president, or the
secretary upon the written request of members of record, holding in the
aggregate at least one-tenth of the capital of the Mutual Company. Such written
request shall state the purpose of the meeting and shall be delivered at the
principal place of business of the Mutual Company addressed to the president.
The chairman of any annual or special meeting of the members shall, unless
prescribed by law or regulation, determine the order of the business and the
procedure at such meeting, including such regulation of the manner of voting and
the conduct of discussion as he or she shall deem appropriate.
SECTION 3. NOTICE OF MEETING OF MEMBERS.
(a) Notice of each annual meeting shall be either published once a week for
the two successive calendar weeks (in each instance on any day of the week)
immediately prior to the week in which such annual meeting shall convene, in a
newspaper printed in the English language and of general circulation in the city
or county in which the principal place of business of the Mutual Company is
located, or mailed postage prepaid at least 15 days and not more than 45 days
prior to the date on which such annual meeting shall convene, to each of its
members of record at the last address appearing on the books of the Mutual
Company. Such notice shall state the name of the Mutual Company, the place of
the annual meeting, the date and time when it shall convene, and the matters to
be considered. A similar notice shall be posted in a conspicuous place in each
of the offices of the Mutual Company during the 14 days immediately preceding
the date on which such annual meeting shall convene. If any member, in person or
by authorized attorney, shall waive in writing notice of any annual meeting of
members, notice thereof need not be given to such member.
(b) Notice of each special meeting shall be either published once a week
for the two consecutive calendar weeks (in each instance on any day of the week)
immediately prior to the week in which such special meeting shall convene, in a
newspaper printed in the English language and of general circulation in the city
or county in which the principal place of business
-1-
<PAGE>
of the Mutual Company is located, or mailed postage prepaid at least 15 days and
not more than 45 days prior to the date on which such special meeting shall
convene to each of its members of record at the member's last address appearing
on the books of the Mutual Company. Such notice shall state the name of the
Mutual Company, the purpose(s) for which the meeting is called, the place of the
special meeting and the date and time when it shall convene. A similar notice
shall be posted in a conspicuous place in each of the offices of the Mutual
Company during the 14 days immediately preceding the date on which such special
meeting shall convene. If any member, in person or by authorized attorney, shall
waive in writing notice of any special meeting of members, notice thereof need
not be given to such member.
SECTION 4. FIXING OF RECORD DATE. For the purpose of determining members
entitled to notice of or to vote at any meeting of members or any adjournment
thereof, or in order to make a determination of members for any other proper
purpose, the board of directors shall fix in advance a record date for any such
determination of members. Such date shall be not more than 60 days nor fewer
than 10 days prior to the date on which the action, requiring such determination
of members, is to be taken. The members entitled to participate in any such
action shall be the members of record on the books of the Mutual Company on such
record date. The number of votes which each member shall be entitled to cast at
any meeting of the members shall be determined from the books of the Mutual
Company as of such record date. Any member as of such record date who ceases to
be a member prior to such meeting shall not be entitled to vote at that meeting.
SECTION 5. VOTING BY PROXY. Voting at any annual or special meeting of the
members may be by proxy pursuant to the rules and regulations of the Office of
Thrift Supervision ("Office"), provided, that no proxies shall be voted at any
meeting unless such proxies shall have been placed on file with the secretary of
the Mutual Company, for verification, prior to the convening of such meeting.
All proxies with a term greater than eleven months or solicited at the expense
of the Mutual Company must run to the board of directors as a whole, or to a
committee appointed by a majority of such board.
SECTION 6. COMMUNICATION BETWEEN MEMBERS. Communication between members
shall be subject to any applicable rules or regulations of the Office.
SECTION 7. NUMBER OF DIRECTORS. The number of directors of the Mutual
Company shall be eight.
SECTION 8. MEETINGS OF THE BOARD. The board of directors shall meet
regularly without notice at the principal place of business of the Mutual
Company at least once each month at an hour and date fixed by resolution of the
board, provided that the place of meeting may be changed by the directors.
Special meetings of the board may be held at any place specified in a notice of
such meeting and shall be called by the secretary upon the written request of
the chairman or of three directors. All special meetings shall be held upon at
least 24 hours written notice to each director unless notice is waived in
writing before or after such meeting. Such notice shall state the place, date,
time and purposes of such meeting. A majority of the authorized directors shall
constitute a quorum for the transaction of business. The act of a majority of
the
-2-
<PAGE>
directors present at any meeting at which there is a quorum shall be the act of
the board. Action may be taken without a meeting if unanimous written consent is
obtained for such action. The meetings shall be under the direction of a
chairman, appointed annually by the board, or in the absence of the chairman,
the meetings shall be under the direction of the president.
SECTION 9. OFFICERS, EMPLOYEES AND AGENTS. Annually at the meeting of the
board of directors of the Mutual Company next following the annual meeting of
the members of the Mutual Company, the board shall elect a president, one or
more vice presidents, a secretary, and treasurer; provided, that the offices of
president and secretary may not be held by the same person and a vice president
may also be the treasurer. The board may appoint such additional officers,
employees, and agents as it may from time to time determine. The term of office
of all officers shall be one year or until their respective successors are
elected and qualified; but any officer may be removed at any time by the board.
In the absence of designation from time to time of powers and duties by the
board, the officers shall have such powers and duties as generally pertain to
their respective offices.
SECTION 10. RESIGNATION OR REMOVAL OF DIRECTORS. Any director may resign at
any time by sending a written notice of such resignation to the office of the
Mutual Company delivered to the secretary. Unless otherwise specified therein
such resignation shall take effect upon receipt by the secretary. More than
three consecutive absences from regular meetings of the board, unless excused by
resolution of the board, shall automatically constitute a resignation, effective
when such resignation is accepted by the board.
At a meeting of members called expressly for that purpose, directors or the
entire board may be removed, only with cause, by a vote of the holders of a
majority of the shares then entitled to vote at an election of directors.
SECTION 11. POWERS OF THE BOARD. The board of directors shall have the
power:
(a) By resolution, to appoint from among its members and remove an
executive committee, which committee shall have and may exercise the powers of
the board between the meetings of the board, but no such committee shall have
the authority of the board to amend the charter or bylaws, adopt a plan of
merger, consolidation, dissolution, or provide for the disposition of all or
substantially all the property and assets of the Mutual Company. Such committee
shall not operate to relieve the board, or any member thereof, of any
responsibility imposed by law;
(b) To appoint and remove by resolution the members of such other
committees as may be deemed necessary and prescribe the duties thereof;
(c) To fix the compensation of directors, officers, and employees; and to
remove any officer or employee at any time with or without cause; and
(d) To exercise any and all of the powers of the Mutual Company not
expressly reserved by the charter to the members.
-3-
<PAGE>
SECTION 12. EXECUTION OF INSTRUMENTS, GENERALLY. All documents and
instruments or writings of any nature shall be signed, executed, verified,
acknowledged, and delivered by such officers, agents, or employees of the Mutual
Company or any one of them and in such manner as from time to time may be
determined by resolution of the board. All notes, drafts, acceptances, checks,
endorsements, and all evidences of indebtedness of the Mutual Company whatsoever
shall be signed by such officer or officers or such agent or agents of the
Mutual Company and in such manner as the board may from time to time determine.
Endorsements for deposit to the credit of the Mutual Company in any of its duly
authorized depositories shall be made in such manner as the board may from time
to time determine. Proxies to vote with respect to shares or accounts of other
associations or stock of other corporations owned by, or standing in the name
of, the Mutual Company may be executed and delivered from time to time on behalf
of the Mutual Company by the president or a vice president and the secretary or
an assistant secretary of the Mutual Company or by any other persons so
authorized by the board.
SECTION 13. NOMINATING COMMITTEE. The chairman, at least 30 days prior to
the date of each annual meeting, shall appoint a nominating committee of three
persons who are members of the Mutual Company. Such committee shall make
nominations for directors in writing and deliver to the secretary such written
nominations at least 15 days prior to the date of the annual meeting, which
nominations shall then be posted in a prominent place in the principal place of
business for the 15-day period prior to the date of the annual meeting. Provided
such committee is appointed and makes such nominations, no nominations for
directors except those made by the nominating committee shall be voted upon at
the annual meeting unless other nominations by members are made in writing and
delivered by the secretary of the Mutual Company at least 10 days prior to the
date of the annual meeting, which nominations shall then be posted in a
prominent place in the principal place of business for the 10-day period prior
to the date of the annual meeting. Ballots bearing the names of all persons
nominated by the nominating committee and by other members prior to the annual
meeting shall be provided for use by the members at the annual meeting. If at
any time the chairman shall fail to appoint such nominating committee, or the
nominating committee shall fail or refuse to act at least 15 days prior to the
annual meeting, nominations for directors may be made at the annual meeting by
any member and shall be voted upon.
SECTION 14. NEW BUSINESS. Any new business to be taken up at the annual
meeting, including any proposal to increase or decrease the number of directors
of the Mutual Company, shall be stated in writing and filed with the secretary
of the Mutual Company at least 30 days before the date of the annual meeting,
and all business so stated, proposed, and filed shall be considered at the
annual meeting; but no other proposal shall be acted upon at the annual meeting.
Any member may make any other proposal at the annual meeting and the same may be
discussed and considered; but unless stated in writing and filed with the
secretary 30 days before the meeting, such proposal shall be laid over for
action at an adjourned, special, or regular meeting of the members taking place
at least 30 days thereafter. This provision shall not prevent the consideration
and approval or disapproval at the annual meeting of the reports of officers and
committees, but in connection with such reports no new business shall be acted
upon at such annual meeting unless stated and filed as herein provided.
-4-
<PAGE>
SECTION 15. SEAL. The seal shall be two concentric circles between which
shall be the name of the Mutual Company. The year of incorporation, the word
"incorporated," or an emblem may appear in the center.
SECTION 16. AMENDMENT. Adoption of any bylaw amendment pursuant to the
Office's regulations, as long as consistent with applicable law, rules and
regulations, and which adequately addresses the subject and purpose of the
stated bylaw section, shall be effective upon filing with the Office in
accordance with the regulatory procedures after such amendment has been approved
by a two-thirds affirmative vote of the authorized board, or by a vote of the
members of the Mutual Company.
SECTION 17. AGE LIMITATIONS.
(a) Directors. No person seventy (70) years of age or older shall be
eligible for election, reelection, appointment or reappointment to the Board. No
director shall serve as such beyond the annual meeting of the Mutual Company
immediately following the expiration of the full term during which the director
became seventy (70) years of age. This age limitation does not apply to a
director emeritus.
(b) Officers. While the Mutual Company is not an employer described in
section 11(b) of the Age Discrimination in Employment Act of 1967, as amended
("ADEA"), no officer of the Mutual Company, other than any officer who is
seventy (70) years of age or older as of the effective date of these bylaws,
shall continue to serve as an officer of the Mutual Company beyond the end of
the month in which his or her seventieth (70th) birthday occurs; provided,
however, that any such officer shall, to the extent specifically authorized by
contract approved by, or by resolution of, a majority of the entire Board, be
eligible to continue to serve as an officer of the Mutual Company on a year to
year basis. While the Mutual Company is an employer described in section 11(b)
of ADEA, no officer of the Mutual Company, other than any officer who is seventy
(70) years of age or older as of the effective date of these bylaws, who is
described in section 12(c) of ADEA shall continue to serve as an officer of the
Mutual Company beyond the end of the month in which his or her seventieth (70th)
birthday occurs; provided, however, that any such officer shall, to the extent
specifically authorized by contract approved by, or by resolution of, a majority
of the entire Board, be eligible to continue to serve as an officer of the
Mutual Company on a year to year basis.
SECTION 18. INDEMNIFICATION. The Mutual Company shall indemnify its
directors, officers and employees to the fullest extent permitted by the rules
and regulations of the Office at 12 C.F.R. ss.545.121.
-5-
[FORM OF STOCK CERTIFICATE - FRONT SIDE]
NUMBER SHARES
RFS BANCORP, INC.
REVERE, MASSACHUSETTS
COMMON STOCK CUSIP______________
See reverse for certain definitions
This certifies that ____________________________ is the record holder
of_______________
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, $0.01 PAR VALUE
PER SHARE, OF
RFS BANCORP, INC.,
a corporation incorporated under the laws of the United States (the
"Corporation") . The shares evidenced by this Certificate are transferable only
on the stock-transfer books of the Corporation by the holder of record hereof,
in person or by attorney or legal representative, upon surrender of this
Certificate properly endorsed. THE STOCK EVIDENCED HEREBY IS NOT AN ACCOUNT OF
AN INSURABLE TYPE AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. This Certificate is not valid unless
countersigned and registered by the Transfer Agent and Registrar.
IN WITNESS HEREOF, the Corporation has caused this Certificate to be
executed by the facsimile signatures of its duly authorized officers and has
caused its facsimile seal to be affixed hereto.
Dated:
-------------------------------------
President and Chief Executive Officer
- ------------------------
Secretary
(SEAL)
Countersigned and Registered:
REGISTRAR AND TRANSFER COMPANY
By: Tranfer agent
and Registrar
<PAGE>
(FORM OF STOCK CERTIFICATE - BACK SIDE)
The shares represented by this certificate are issued subject to all the
provisions of the Charter and Bylaws of RFS BANCORP, INC. (the "Corporation"),
as from time to time amended (copies of which are on file at the principal
office of the Corporation), to all of which the holder by acceptance hereof
assents. The following description constitutes a summary of certain provisions
of, and is qualified in its entirety by reference to, the Charter.
The Charter of the Corporation contains certain provisions, applicable for
a period of five years from the date of Revere Federal Savings Bank's
reorganization into a Mutual Holding Company, that restrict persons, other than
the Mutual Holding Company, from directly or indirectly acquiring or holding, or
attempting to acquire or hold, the beneficial ownership of in excess of 10% of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors ("Voting Stock"). The Charter contains a
provision pursuant to which the shares beneficially held in excess of 10% the
Voting Stock of the Corporation are considered "excess shares" and shall not be
counted as shares entitled to vote and shall not be voted by any person or
counted as voting shares in connection with any matters submitted to the
stockholders for a vote. These restrictions are not applicable to underwriters
in connection with a public offering of the common stock, certain reorganization
transactions described in the Charter or to acquisitions of Voting Stock by the
Corporation, any majority-owned subsidiary of the Corporation, or any
tax-qualified employee stock benefit plan which is exempt from the approval
requirements under 574.3(c)(1)(vi) of the Office's regulations. Revere, M.H.C.
the federally chartered mutual holding company of the Corporation ("Mutual
Holding Company") will own in excess of 50% of the Common Stock of the
Corporation so long as the Mutual Holding Company remains in mutual form.
The Corporation is authorized to issue more than one class of stock,
including a class of Preferred Stock which may be issued in one or more series.
The Corporation will furnish to any stockholder, upon written request and
without charge, within five days after receipt of such request, a full statement
of the designations, preferences, limitations or relative rights of the shares
of each class authorized to be issued and, as to shares of Preferred Stock, the
variations in the relative rights and preferences between the shares of each
series so far as the same have been fixed and determined and the authority of
the Board of Directors to fix and determine the relative rights and preferences
of subsequent series.
The following abbreviations when used in the inscription on the face of
this certificate shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ...........Custodian................
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of survivorship and under Uniform Gifts to Minors
not as tenants in common Act..................................
(State)
</TABLE>
Additional abbreviations may also be used though not in
the above list.
For value received, __________________________________________________
hereby sell, assign and transfer unto shares of Common Stock evidenced by this
Certificate, and do hereby irrevocably constitute and appoint _____________ as
Attorney, to transfer the said shares on the books of the herein named
Corporation, with full power of substitution.
Date: Signature
--------------- -----------------------------------------
Signature
-----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the Certificate, in
every particular, without alteration or
enlargement, or any change whatsoever.
August __, 1998
RFS Bancorp, Inc.
c/o Revere Federal Savings
310 Broadway
Revere, Massachusetts 02151
Ladies and Gentlemen:
We have acted as special counsel to RFS Bancorp, Inc., a
federally-chartered corporation (the "Company"), in connection with the proposed
registration under the Securities Act of 1933, as amended, by the Company of an
aggregate of 590,496 shares of Common Stock, $0.01 par value per share of the
Company (the "Shares"), and the related preparation and filing by the Company
with the Securities and Exchange Commission of a Registration Statement on Form
SB-2 (the "Registration Statement") pursuant to the Plan of Reorganization from
Mutual Savings Bank to Mutual Holding Company and Stock Issuance Plan of Revere
Federal Savings (the "Plan"). In rendering the opinion set forth below, we do
not express any opinion concerning law other than the federal law of the United
States.
We have examined originals or copies, certified or otherwise identified, of
such documents, corporate records and other instruments, and have examined such
matters of law, as we have deemed necessary or advisable for purposes of
rendering the opinion set forth below. As to matters of fact, we have examined
and relied upon the representations of the Company contained in the Registration
Statement and, where we have deemed appropriate, representations or certificates
of officers of the Company or public officials. We have assumed the authenticity
of all documents submitted to us as originals, the genuineness of all
signatures, the legal capacity of natural persons and the conformity to the
originals of all documents submitted to us as copies. In making our examination
of any documents, we have assumed that all parties, other than the Company, had
the corporate power and authority to enter into and perform all obligations
thereunder, and, as to such parties, we have also assumed the due authorization
by all requisite action, the due execution and delivery of such documents, and
the validity and binding effect and enforceability thereof.
Based on the foregoing, we are of the opinion that the Shares have been
duly authorized and, when issued and exchanged as contemplated in the
Registration Statement and the Plan, will be validly issued and outstanding,
fully paid and non-assessable.
<PAGE>
RFS Bancorp, Inc.
August __, 1998 Page 2.
In rendering the opinion set forth above, we have not passed upon and do
not purport to pass upon the application of securities or "blue-sky" laws of any
jurisdiction (except federal securities laws).
This opinion is given solely for the benefit of the Company and investors
who purchase shares of common stock of pursuant to the Registration Statement,
and may not be relied upon by any other person or entity, nor quoted in whole or
in part, or otherwise referred to in any document without our express written
consent.
We consent to the filing of this opinion as an Exhibit to the Registration
Statement and to the reference to our name in the Prospectus contained in the
Registration Statement under the heading "Legal Matters."
Very truly yours,
THACHER PROFFITT & WOOD
By:
---------------------------
Richard A. Schaberg
Internet ID: @thacherproffitt.com
August , 1998
Revere Federal Savings and Loan Association
310 Broadway
Revere, MA 02151
Ladies and Gentlemen :
Dear Sirs:
You have requested our opinion regarding certain federal income tax
consequences of the proposed transactions (collectively, the "Reorganization"),
more fully described below, pursuant to which (i) Revere Federal Savings and
Loan Association (the "Bank") will convert from a federally chartered mutual
savings bank ("Mutual Bank") into a federally chartered stock savings bank
("Stock Bank") and become the wholly-owned subsidiary of RFS Bancorp, Inc., a
newly formed federal stock holding company ("Stock Company") and (ii) Stock
Company will become a majority-owned subsidiary of Revere MHC, a newly formed
federal mutual holding company ("Mutual Company"). These transactions and the
related sale of Common Stock, also discussed below, will be effected pursuant to
the Plan of Reorganization from Mutual Savings Bank to Mutual Holding Company
and Stock Issuance Plan adopted by the Board of Directors of Stock Bank on
January 21, 1998 (the "Plan"). The Reorganization and its component and related
transactions are described in the Plan and in the Prospectus filed with the
Office of Thrift Supervision in connection with the Reorganization and proposed
sale of common stock (the "Prospectus")]. We are rendering this opinion pursuant
to Section 6 of the Plan. All capitalized terms used but not defined in this
letter shall have the meanings assigned to them in the Plan or Prospectus.
<PAGE>
August , 1998 Page 2.
The Reorganization will be effected, pursuant to the Plan, as follows:
1. Mutual Bank will organize Mutual Company, which will initially be
organized in stock form and initially exist as Mutual Bank's wholly-owned
subsidiary.
2. Mutual Company will organize two wholly-owned subsidiaries, one of which
will be Stock Company, and the other of which will be an interim stock
savings bank ("Interim").
3. The following events will occur simultaneously pursuant to the Plan: (i)
Mutual Bank will exchange its charter for a federal stock savings bank
charter and thereby become Stock Bank (the "Conversion"); (ii) Interim will
merge with and into Stock Bank with Stock Bank surviving; (iii) Mutual
Company will cancel its stock and exchange its charter for a federal mutual
holding company charter and thereby become a mutual holding company the
members of which (the "Mutual Company Members") will be the former
depositors in and borrowers of Mutual Bank immediately prior to these
transactions ("Mutual Bank Members"). As a mutual entity, Mutual Company
will not have any authorized capital stock. As a result of the merger and
charter exchanges, Stock Bank will become a wholly-owned subsidiary of
Mutual Company, and the Mutual Company Members will hold interests in
Mutual Company comparable to the interests they previously held in Mutual
Bank.
4. Mutual Company will then contribute all of the stock of Stock Bank to
Stock Company.
As a result of these transactions, Stock Bank will be a wholly-owned
subsidiary of Stock Company and Stock Company will be a wholly-owned subsidiary
of Mutual Company. In substance, upon the Conversion and pursuant to the other
transactions described above, the Mutual Bank Members will constructively
receive the stock of Stock Bank and will then exchange such stock for membership
interests in Mutual Company (the "Exchange").
Simultaneously with the Reorganization, Stock Company will offer to sell
additional shares of its common stock pursuant to the Plan, with priority
subscription rights granted in descending order of priority to certain members
of Mutual Bank, the Bank's employee stock ownership plan, other members of
Mutual Bank and, perhaps, certain members of the general public.
In connection with the opinions expressed below, we have examined and
relied upon originals, or copies certified or otherwise identified to our
satisfaction, of the Plan and the Prospectus and of such corporate records of
the parties to the Reorganization as we have deemed appropriate. We have also
relied, without independent verification, upon the representations of Mutual
Bank contained in the Bank's letter to us letter dated , 1998. We have assumed
that such representations are true and that the parties to the Reorganization
will act in accordance with the Plan. In addition, we have made such
investigations of law as we have deemed appropriate to form a basis for the
opinions expressed below.
<PAGE>
, 1998 Page 3.
Based on and subject to the foregoing, it is our opinion that for federal
income tax purposes, under current law -
(a) as regards the Conversion:
(1) the Conversion will constitute a reorganization under section
368(a)(1)(F) of the Code, and the Bank (in either its status as Mutual Bank or
Stock Bank) will recognize no gain or loss as a result of the Reorganization;
(2) the basis of each asset of Mutual Bank held by Stock Bank immediately
after the Conversion will be the same as Mutual Bank's basis for such asset
immediately prior to the Conversion;
(3) the holding period of each asset of Mutual Bank held by Stock Bank
immediately after the Conversion will include the period during which such asset
was held by Mutual Bank prior to the Conversion;
(4) for purposes of Code section 381(b), Stock Bank will be treated as if
there had been no reorganization and, accordingly, the taxable year of the
Mutual Bank will not end on the effective date of the Reorganization and the tax
attributes of Mutual Bank (subject to application of Code sections 381, 382, and
384), including Mutual Bank's bad debt reserves and earnings and profits, will
be taken into account by Stock Bank as if the Reorganization had not occurred;
(5) Mutual Bank Members will recognize no gain or loss upon their
constructive receipt of shares of Stock Bank common stock solely in exchange for
their interest (i.e., liquidation and voting rights) in Mutual Bank;
(6) a Mutual Bank Member's basis in the shares of Stock Bank common stock
constructively received in the Conversion will be the same as the basis of the
Mutual Bank interest constructively surrendered in exchange therefor;
(7) a Mutual Bank Member's holding period for the shares of Stock Bank
common stock constructively received in the Conversion will include the holding
period of the Mutual Bank interest constructively surrendered in exchange
therefor; and
(8) no gain or loss will be recognized by depositors of Mutual Bank upon
the issuance to them of deposits in Stock Bank in the same dollar amount as
their deposits in Mutual Bank.
(b) as regards the Exchange:
(9) the Exchange will qualify as an exchange of property for stock under
Code section 351;
(10) the shareholders of Stock Bank (the former Mutual Bank Members) will
recognize no gain or loss upon the transfer to Mutual Company of the shares of
Stock Bank common stock they
<PAGE>
, 1998 Page 4.
constructively received in the Conversion in exchange for interests (i.e.,
liquidation and voting rights) in Mutual Company;
(11) the basis of the interest in Mutual Company received by each
shareholder of Stock Bank in exchange for such shareholder's shares of Stock
Bank common stock will be equal to the basis of such shares of Stock Bank common
stock;
(12) the holding period of the interest in Mutual Company received by each
shareholder of Stock Bank will, as of the date of the Exchange, be the same as
the holding period of the shares of Stock Bank common stock transferred in
exchange therefor, provided such shares of Stock Bank common stock were held as
a capital asset on the date of the Exchange;
(13) Mutual Company will recognize no gain or loss upon its receipt from
the shareholders of Stock Bank of shares of Stock Bank common stock in exchange
for interests in Mutual Company;
(14) Mutual Company's basis for each share of Stock Bank common stock
received from a shareholder of Stock Bank in exchange for an interest in Mutual
Company will be the equal to the basis of such share of common stock in the
hands of such Stock Bank shareholder; and
(15) Mutual Company's holding period for each share of Stock Bank common
stock received from a shareholder of Stock Bank in exchange for an interest in
Mutual Company will, as the date of the Exchange, be the same as the holding
period of such shares in the hands of such Stock Bank shareholder.
(c) as regards the offering under the Stock Issuance Plan:
(16) no gain or loss will be recognized by Stock Bank upon the sale of
shares of Stock Bank common stock under the Stock Issuance Plan;
(17) no gain or loss will be recognized by Eligible Account Holders or
Supplemental Eligible Account Holders upon the distribution to them of
nontransferable subscription rights to purchase shares of Stock Bank common
stock under to the Stock Issuance Plan, provided that the amount to be paid for
such shares is equal to the fair market value of such shares;
(18) the basis to the shareholders of shares of Stock Bank common stock
purchased under the Stock Issuance Plan pursuant to such subscription rights
will be the amount paid therefor and the holding period for such shares will
begin on the date on which such subscription rights are exercised.
In rendering our opinion in (17), above, and our opinion regarding the tax
basis of shares of Stock Bank common stock in (18), above, we have relied,
without independent verification, on the opinion of RP Financial, LC that the
nontransferable subscription rights have no value.
This opinion is given solely for the benefit of the parties to the Plan,
the shareholders of Stock Bank and Eligible Account Holders, Supplemental
Eligible Account Holders and other investors who purchase shares pursuant to the
Stock Issuance Plan, and may not be relied upon by any other party or
<PAGE>
, 1998 Page 5.
entity or referred to in any document without our express written consent. We
consent to the filing of this opinion as an exhibit to the Form MHC-1 to be
filed with the Office of Thrift Supervision and to the references to us in the
Prospectus under "The Reorganization - Federal and State Tax Consequences of the
Reorganization."
Very truly yours,
THACHER PROFFITT & WOOD
By:
EXHIBIT 8.3
September 4, 1998
Board of Directors
Revere Federal Savings and Loan Association
310 Broadway
Revere, Massachusetts 02151
Re: Plan of Conversion Subscription Rights
Gentlemen:
All capitalized terms not otherwise defined in this letter have the
meanings given such terms in the Plan of Reorganization and Plan of Stock
Issuance adopted by the Board of Directors of Revere Federal Savings and Loan
Association ("Revere Federal" or the "Bank"). Pursuant to the Plan of
Reorganization and Plan of Stock Issuance, Revere Federal will become a
wholly-owned subsidiary of RFS Bancorp, Inc. (the "Holding Company"), a Federal
corporation, and RFS Bancorp, Inc. will issue a majority of its common stock to
Revere, MHC (the "MHC"), and sell a minority of its common stock to the public.
We understand that in accordance with the Plan of Reorganization and Plan
of Stock Issuance subscription rights to purchase shares of Common Stock in the
Holding Company are to be issued to: (1) Eligible Account Holders; (2) the ESOP;
(3) Supplemental Eligible Account Holders; and (4) Other Members. Based solely
upon our observation that the subscription rights will be available to such
parties without cost, will be legally non-transferable and of short duration,
and will afford such parties the right only to purchase shares of Common Stock
at the same price as will be paid by members of the general public in the
Community Offering, but without undertaking any independent investigation of
state or federal law or the position of the Internal Revenue Service with
respect to this issue, we are of the belief that, as a factual matter:
(1) the subscription rights will have no ascertaninable market value; and,
(2) the price at which the subscription rights are exercisable will not be
more or less than the pro forma market value of the shares upon
issuance.
Changes in the local and national economy, the legislative and regulatory
environment, the stock market, interest rates, and other external forces (such
as natural disasters or significant world events) may occur from time to time,
often with great unpredictability and may materially impact the value of thrift
stocks as a whole or the Holding Company's value alone. Accordingly, no
assurance can be given that persons who subscribe to shares of Common Stock in
the Subscription Offering will thereafter be able to buy or sell such shares at
the same price paid in the Subscription Offering.
Very truly yours,
RP FINANCIAL, L.C.
James J. Oren
Senior Vice President
FORM OF
EMPLOYEE STOCK OWNERSHIP PLAN
OF RFS BANCORP, INC.
AND AFFILIATES
ADOPTED ON ____________, 1998
EFFECTIVE AS OF ___________, 1998
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Account.........................................................1
Section 1.2 Affiliated Employer.............................................1
Section 1.3 Allocation Compensation.........................................1
Section 1.4 Bank............................................................2
Section 1.5 Board...........................................................2
Section 1.6 Beneficiary.....................................................2
Section 1.7 Change in Control...............................................2
Section 1.8 Code............................................................2
Section 1.9 Committee.......................................................2
Section 1.10 Computation Period..............................................2
Section 1.11 Disability......................................................2
Section 1.12 Domestic Relations Order........................................2
Section 1.13 Effective Date..................................................3
Section 1.14 Eligibility Computation Period..................................3
Section 1.15 Eligible Employee...............................................3
Section 1.16 Eligible Participant............................................3
Section 1.17 Employee........................................................3
Section 1.18 Employer........................................................3
Section 1.19 Employment Commencement Date....................................3
Section 1.20 ERISA...........................................................3
Section 1.21 ESOP Contribution...............................................3
Section 1.22 Fair Market Value...............................................3
Section 1.23 Financed Share..................................................4
Section 1.24 Five Percent Owner..............................................4
Section 1.25 Forfeitures.....................................................4
Section 1.26 Former Participant..............................................4
Section 1.27 General Investment Account......................................4
Section 1.28 Highly Compensated Employee.....................................4
Section 1.29 Hour of Service.................................................5
Section 1.30 Investment Account..............................................5
Section 1.31 Investment Fund.................................................5
Section 1.32 Loan Repayment Account..........................................6
Section 1.33 Loan Repayment Contribution.....................................6
Section 1.34 Maternity or Paternity Leave....................................6
Section 1.35 Military Service................................................6
Section 1.36 Named Fiduciary.................................................6
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Page
Section 1.37 Officer.........................................................6
Section 1.38 One-Year Break in Service.......................................6
Section 1.39 Participant.....................................................6
Section 1.40 Plan............................................................6
Section 1.41 Plan Administrator..............................................7
Section 1.42 Plan Year.......................................................7
Section 1.43 Qualified Domestic Relations Order..............................7
Section 1.44 Qualified Participant...........................................7
Section 1.45 Retirement......................................................7
Section 1.46 Share...........................................................7
Section 1.47 Share Acquisition Loan..........................................7
Section 1.48 Share Investment Account........................................7
Section 1.49 Tender Offer....................................................7
Section 1.50 Total Compensation..............................................7
Section 1.51 Trust...........................................................8
Section 1.52 Trust Agreement.................................................8
Section 1.53 Trust Fund......................................................8
Section 1.54 Trustee.........................................................8
Section 1.55 Valuation Date..................................................8
Section 1.56 Vesting Computation Period......................................8
Section 1.57 Year of Eligibility Service.....................................8
Section 1.58 Year of Vesting Service.........................................8
ARTICLE II
PARTICIPATION
Section 2.1 Eligibility for Participation...................................9
Section 2.2 Commencement of Participation...................................9
Section 2.3 Termination of Participation....................................9
ARTICLE III
SPECIAL PROVISIONS
Section 3.1 Military Service...............................................10
Section 3.2 Maternity or Paternity Leave...................................10
Section 3.3 Adjustments to Years of Eligibility Service....................11
Section 3.4 Leave of Absence...............................................11
Section 3.5 Family and Medical Leave.......................................12
Section 3.6 Service with Uniformed Forces..................................12
ii
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Page
ARTICLE IV
CONTRIBUTIONS BY PARTICIPANTS NOT PERMITTED
Section 4.1 Contributions by Participants Not Permitted....................12
ARTICLE V
CONTRIBUTIONS BY THE EMPLOYER
Section 5.1 In General.....................................................12
Section 5.2 Loan Repayment Contributions...................................12
Section 5.3 ESOP Contributions.............................................13
Section 5.4 Time and Manner of Payment.....................................13
ARTICLE VI
SHARE ACQUISITION LOANS
Section 6.1 In General.....................................................14
Section 6.2 Collateral; Liability for Repayment............................14
Section 6.3 Loan Repayment Account.........................................15
Section 6.4 Release of Financed Shares.....................................15
Section 6.5 Restrictions on Financed Shares................................16
ARTICLE VII
ALLOCATION OF CONTRIBUTIONS
Section 7.1 Allocation Among Eligible Participants.........................17
Section 7.2 Allocation of Released Shares or Other Property................17
Section 7.3 Allocation of ESOP Contributions...............................17
Section 7.4 Retroactive Contributions for Returning Veterans...............17
ARTICLE VIII
LIMITATIONS ON ALLOCATIONS
Section 8.1 Optional Limitations on Allocations of Contributions...........18
Section 8.2 General Limitations on Contributions...........................18
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Page
ARTICLE IX
VESTING
Section 9.1 Vesting........................................................22
Section 9.2 Vesting on Death, Disability, Retirement or Change in Control..22
Section 9.3 Forfeitures on Termination of Employment.......................22
Section 9.4 Amounts Credited Upon Re-Employment............................22
Section 9.5 Allocation of Forfeitures......................................23
ARTICLE X
THE TRUST FUND
Section 10.1 The Trust Fund.................................................23
Section 10.2 Investments....................................................23
Section 10.3 Diversification of Investments.................................24
Section 10.4 Use of Commingled Trust Funds..................................25
Section 10.5 Management and Control of Assets...............................25
ARTICLE XI
VALUATION OF INTERESTS IN THE TRUST FUND
Section 11.1 Establishment of Investment Accounts...........................26
Section 11.2 Share Investment Accounts......................................26
Section 11.3 General Investment Accounts....................................26
Section 11.4 Valuation of Investment Accounts...............................26
Section 11.5 Annual Statements..............................................27
ARTICLE XII
SHARES
Section 12.1 Specific Allocation of Shares..................................27
Section 12.2 Dividends......................................................27
Section 12.3 Voting Rights..................................................28
Section 12.4 Tender Offers..................................................30
Section 12.5 Dissent and Appraisal Rights...................................32
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Page
ARTICLE XIII
PAYMENT OF BENEFITS
Section 13.1 In General.....................................................33
Section 13.2 Designation of Beneficiaries...................................33
Section 13.3 Distributions to Participants and Former Participants..........34
Section 13.4 Manner of Payment..............................................37
Section 13.5 Put Options....................................................37
Section 13.6 Right of First Refusal.........................................38
Section 13.7 Minimum Required Distributions.................................39
Section 13.8 Direct Rollover of Eligible Rollover Distributions.............40
Section 13.9 Valuation of Shares Upon Settlement to a Participant...........41
ARTICLE XIV
CHANGE IN CONTROL
Section 14.1 Definition of Change in Control................................42
Section 14.2 Vesting on Change of Control...................................43
Section 14.3 Repayment of Loan..............................................43
Section 14.4 Plan Termination After Change in Control.......................44
Section 14.5 Amendment of Article XIV.......................................44
ARTICLE XV
ADMINISTRATION
Section 15.1 Named Fiduciaries..............................................45
Section 15.2 Plan Administrator.............................................45
Section 15.3 Committee Responsibilities.....................................46
Section 15.4 Claims Procedure...............................................47
Section 15.5 Claims Review Procedure........................................48
Section 15.6 Allocation of Fiduciary Responsibilities
and Employment of Advisors.....................................48
Section 15.7 Other Administrative Provisions................................49
ARTICLE XVI
AMENDMENT, TERMINATION AND TAX QUALIFICATION
Section 16.1 Amendment and Termination by RFS Bancorp, Inc..................50
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Section 16.2 Amendment or Termination Other Than by RFS Bancorp, Inc........50
Section 16.3 Conformity to Internal Revenue Code............................50
Section 16.4 Contingent Nature of Contributions.............................51
ARTICLE XVII
SPECIAL RULES FOR TOP HEAVY PLAN YEARS
Section 17.1 In General.....................................................51
Section 17.2 Definition of Top Heavy Plan...................................52
Section 17.3 Determination Date.............................................52
Section 17.4 Cumulative Accrued Benefits....................................53
Section 17.5 Key Employees..................................................53
Section 17.6 Required Aggregation Group.....................................54
Section 17.7 Permissible Aggregation Group..................................54
Section 17.8 Special Requirements During Top Heavy Plan Years...............55
ARTICLE XVIII
MISCELLANEOUS PROVISIONS
Section 18.1 Governing Law..................................................56
Section 18.2 No Right to Continued Employment...............................56
Section 18.3 Construction of Language.......................................56
Section 18.4 Headings.......................................................56
Section 18.5 Merger with Other Plans........................................56
Section 18.6 Non-alienation of Benefits.....................................57
Section 18.7 Procedures Involving Domestic Relations Orders.................57
Section 18.8 Leased Employees...............................................58
Section 18.9 Status as an Employee Stock Ownership Plan.....................59
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<PAGE>
EMPLOYEE STOCK OWNERSHIP PLAN
OF RFS BANCORP, INC.
AND AFFILIATES
ARTICLE I
DEFINITIONS
The following definitions shall apply for the purposes of the Plan, unless
a different meaning is clearly indicated by the context:
SECTION 1.1 ACCOUNT means an account established for each Participant to
which is allocated such Participant's share, if any, of all Financed Shares and
other property that are re leased from the Loan Repayment Account in accordance
with section 6.4, together with his share, if any, of any ESOP Contributions
that may be made by the Employer.
SECTION 1.2 AFFILIATED EMPLOYER means any corporation which is a member of
a controlled group of corporations (as defined in section 414(b) of the Code)
that includes the Employer; any trade or business (whether or not incorporated)
that is under common control (as defined in section 414(c) of the Code) with the
Employer; any organization (whether or not incorporated) that is a member of an
affiliated service group (as defined in section 414(m) of the Code) that
includes the Employer; any leasing organization (as defined in section 414(n) of
the Code) to the extent that any of its employees are required pursuant to
section 414(n) of the Code to be treated as employees of the Employer; and any
other entity that is required to be aggregated with the Employer pursuant to
regulations under section 414(o) of the Code.
SECTION 1.3 ALLOCATION COMPENSATION during any period means the
compensation taken into account in determining the allocation of benefits and
contributions among Participants and consists of the aggregate compensation
received by an Employee from the Employer or any Affiliated Employer with
respect to such period as reported to the Internal Revenue Service as wages for
such period pursuant to section 6041(a) of the Code, plus the amount by which
such Employee's compensation with respect to such period has been reduced
pursuant to a compen sation reduction agreement under the terms of any of the
following plans which may be maintained by the Employer:
(a) a qualified cash or deferred arrangement described in section
401(k) of the Code;
(b) a salary reduction simplified employee pension plan described in
section 408(k) of the Code;
(c) a tax deferred annuity plan described in section 403(b) of the
Code; or
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(d) a cafeteria plan described in section 125 of the Code.
In no event, however, shall an Employee's Allocation Compensation for any
calendar year include any compensation in excess of $150,000, or any such other
amount as may be prescribed in accordance with regulations prescribed under
section 401(a)(17) of the Code. If there are less than twelve (12) months in the
Plan Year, the $150,000 limitation (as adjusted) shall be prorated by
multiplying such limitation by a fraction, the numerator of which is the number
of months in the Plan Year and the denominator of which is twelve (12).
SECTION 1.4 BANK means Revere Federal Savings and any successor thereto.
SECTION 1.5 BOARD means the Board of Directors of RFS Bancorp, Inc.
SECTION 1.6 BENEFICIARY means the person or persons designated by a
Participant or Former Participant or other person entitled to a benefit under
the Plan, or otherwise determined to be entitled to a benefit under the Plan. If
more than one person is designated, each shall have an equal share unless the
person making the designation directed otherwise. The word "person" includes an
individual, a trust, an estate or any other person that is permitted to be named
as a Beneficiary.
SECTION 1.7 CHANGE IN CONTROL means an event described in section 14.1.
SECTION 1.8 CODE means the Internal Revenue Code of 1986, as amended
(including the corresponding provisions of any succeeding law).
SECTION 1.9 COMMITTEE means the Committee described in section 15.3.
SECTION 1.10 COMPUTATION PERIOD means an Eligibility Computation Period or
a Vesting Computation Period.
SECTION 1.11 DISABILITY means a condition of total incapacity, mental or
physical, for further performance of duty with the Employer or any Affiliated
Employer, which the Plan Administrator shall have determined, on the basis of
competent medical evidence, is likely to be permanent.
SECTION 1.12 DOMESTIC RELATIONS ORDER means a judgment, decree or order
(including the approval of a property settlement) that is made pursuant to a
state domestic relations or community property law and relates to the provision
of child support, alimony payments, or marital property rights to a spouse,
child or other dependent of a Participant or Former Participant.
2
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SECTION 1.13 EFFECTIVE DATE means the first day of the calendar year in
which Revere Federal Savings converts from a mutual savings bank to a stock
savings bank.
SECTION 1.14 ELIGIBILITY COMPUTATION PERIOD means, with respect to any
person, (a) the 12-consecutive month period beginning on such person's
Employment Commencement Date and (b) each 12-consecutive month period that
begins on an anniversary of such person's Employment Commencement Date.
SECTION 1.15 ELIGIBLE EMPLOYEE means an Employee who is eligible for
participation in the Plan in accordance with Article II.
SECTION 1.16 ELIGIBLE PARTICIPANT means, for any Plan Year, an Employee who
is a Participant on the last day of such Plan Year and an Employee who was a
Participant during part of such Plan Year and whose participation ceased prior
to the last day of such Plan Year on account of his Retirement, Disability or
death.
SECTION 1.17 EMPLOYEE means any person, including an officer, who is
employed by the Employer or an Affiliated Employer.
SECTION 1.18 EMPLOYER means RFS Bancorp, Inc. and any successor thereto and
any Affiliated Employer which, with the prior written approval of the Board of
Directors of RFS Bancorp, Inc. and subject to such terms and conditions as may
be imposed by the Board of Directors of RFS Bancorp, Inc., shall adopt this
Plan.
SECTION 1.19 EMPLOYMENT COMMENCEMENT DATE means the date on which a person
first performs an Hour of Service, except that if an Employee separates from
service with the Employer, incurs a One-Year Break in Service and subsequently
returns to service with the Employer, his Employment Commencement Date shall be
the date on which he first performs an Hour of Service following the One-Year
Break in Service.
SECTION 1.20 ERISA means the Employee Retirement Income Security Act of
1974, as amended from time to time (including the corresponding provisions of
any succeeding law).
SECTION 1.21 ESOP CONTRIBUTION means Shares or amounts of money contributed
to the Plan by the Employer in accordance with section 5.3.
SECTION 1.22 FAIR MARKET VALUE on any date means:
(a) with respect to a Share:
(i) the final quoted sale price on the date in question (or, if there
is no reported sale on such date, on the last preceding date on which any
reported sale occurred) as
3
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reported in the principal consolidated reporting system with respect to
securities listed or admitted to trading on the principal United States
securities exchange on which like Shares are listed or admitted to trading;
or
(ii) if Shares are not listed or admitted to trading on any such
exchange, the closing bid quotation with respect to a Share on such date on
the Nasdaq Stock Market, or, if no such quotation is provided, on another
similar system, selected by the Plan Administrator, then in use; or
(iii) if sections 1.22(a)(i) and (ii) are not applicable, the fair
market value of a Share as determined by an appraiser independent of the
Employer and experienced and expert in the field of corporate appraisal.
(b) with respect to property other than Shares, the fair market value
determined in the manner determined by the Trustee.
SECTION 1.23 FINANCED SHARE means: (a) a Share that has been purchased with
the proceeds of a Share Acquisition Loan, that has been allocated to the Loan
Repayment Account in accordance with section 6.3 and that has not been released
in accordance with section 6.4; or (b) a Share that constitutes a dividend paid
with respect to a Share described in section 1.46, that has been allocated to
the Loan Repayment Account in accordance with section 6.3 and that has not been
released in accordance with section 6.4.
SECTION 1.24 FIVE PERCENT OWNER means, for any Plan Year, a person who,
during such Plan Year, owned (or was considered as owning for purposes of
section 318 of the Code): (a) more than 5% of the value of all classes of
outstanding stock of the Employer; or (b) stock possessing more than 5% of the
combined voting power of all classes of outstanding stock of the Employer.
SECTION 1.25 FORFEITURES means the amounts forfeited by Participants and
Former Participants on termination of employment prior to full vesting, pursuant
to section 9.3, less amounts credited because of re-employment, pursuant to
section 9.4.
SECTION 1.26 FORMER PARTICIPANT means a Participant whose participation in
the Plan has terminated pursuant to section 2.3.
SECTION 1.27 GENERAL INVESTMENT ACCOUNT means an Investment Account
established and maintained in accordance with Article XI.
SECTION 1.28 HIGHLY COMPENSATED EMPLOYEE means, for any Plan Year, an
Employee who:
4
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(a) at any time during such Plan Year or the immediately preceding
Plan Year was a Five Percent Owner; or
(b) during the immediately preceding Plan Year received Total
Compensation for such Plan Year in excess of $80,000 (or such higher amount
as may be permitted under section 414(q) of the Code) and, if the Employer
so elects, is a member of the group consisting of the top 20% of Employees
when ranked on the basis of Total Compensation paid to Employees during
such Plan Year.
The determination of who is a Highly Compensated Employee will be made in
accordance with section 414(q) of the Code and the regulations thereunder.
SECTION 1.29 HOUR OF SERVICE means:
(a) Each hour for which a person is paid, or entitled to payment, for
the performance of duties for the Bank or any Affiliated Employer. These
hours shall be credited to the person for the Computation Period or
Computation Periods in which the duties are performed; and
(b) Each hour for which a person is paid, or entitled to payment, by
the Bank or any Affiliated Employer on account of a period of time during
which no duties are per formed (irrespective of whether the employment
relationship has terminated) due to vaca tion, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty, or leave of
absence. No more than 501 Hours of Service shall be credited under this
section 1.29(b) for any single continuous period (whether or not such
period occurs in a single Computation Period). Hours under this section
1.29(b) shall be calculated and credited pursuant to section 2530.200b-2 of
the Department of Labor's regulations (or any successor regulation), which
are incorporated herein by reference; and
(c) Each hour for which back pay, irrespective of any mitigation of
damages, is either awarded or agreed to by the Bank or any Affiliated
Employer. The same Hours of Service shall not be credited both under
section 1.29(a) or (b), as the case may be, and under this section 1.29(c).
Hours under this section 1.29(c) shall be credited to the person for the
Computation Period or Computation Periods to which the award or agreement
pertains, rather than the Computation Period in which the award, agreement
or payment is made.
SECTION 1.30 INVESTMENT ACCOUNT means either a General Investment Account
or a Share Investment Account.
SECTION 1.31 INVESTMENT FUND means any one of the three or more funds as
may be established from time to time by the Plan Administrator which, together
with any and all Shares and other investments held under the Plan, constitute
the Trust Fund.
5
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SECTION 1.32 LOAN REPAYMENT ACCOUNT means an account established and
maintained in accordance with section 6.3.
SECTION 1.33 LOAN REPAYMENT CONTRIBUTION means amounts of money contributed
to the Plan by the Employer in accordance with section 5.2.
SECTION 1.34 MATERNITY OR PATERNITY LEAVE means a person's absence from
work for the Employer and all Affiliated Employers: (a) by reason of the
pregnancy of such person; (b) by reason of the birth of a child of such person;
(c) by reason of the placement of a child with the person in connection with the
adoption of such child by such person; or (d) for purposes of caring for a child
of such person immediately following the birth of the child or the placement of
the child with such person.
SECTION 1.35 MILITARY SERVICE means service in the armed forces of the
United States. It may also include, if and to the extent that the Board so
provides and if all Participants and Former Participants in like circumstances
are similarly treated, special service for the government of the United States
and other public service.
SECTION 1.36 NAMED FIDUCIARY means any person, committee, corporation or
organization as described in section 15.1.
SECTION 1.37 OFFICER means an Employee who is an administrative executive
in regular and continued service with the Employer or any Affiliated Employer;
provided, however, that at no time shall more than the lesser of (a) 50
Employees or (b) the greater of: (i) 3 Employees or (ii) 10% of all employees be
treated as Officers. The determination of whether an employee is to be
considered an Officer shall be made in accordance with section 416(i) of the
Code.
SECTION 1.38 ONE-YEAR BREAK IN SERVICE means, with respect to any person:
(a) for purposes of eligibility to participate, an Eligibility Computation
Period during which such person is credited with fewer than 501 Hours of Service
and (b) for purposes of vesting, a Vesting Computation Period during which such
person is credited with fewer than 501 Hours of Service.
SECTION 1.39 PARTICIPANT means any person who has satisfied the eligibility
requirements set forth in section 2.1, who has become a Participant in
accordance with section 2.2, and whose participation has not terminated under
section 2.3.
SECTION 1.40 PLAN means the Employee Stock Ownership Plan of RFS Bancorp,
Inc. and Affiliates, as amended from time to time. The Plan may be referred to
as the "Employee Stock Ownership Plan of RFS Bancorp, Inc. and Affiliates."
6
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SECTION 1.41 PLAN ADMINISTRATOR means any person, committee, corporation or
organization designated in section 15.2, or appointed pursuant to section 15.2,
to perform the responsibilities of that office.
SECTION 1.42 PLAN YEAR means the calendar year in which the Effective Date
occurs, and each calendar year thereafter.
SECTION 1.43 QUALIFIED DOMESTIC RELATIONS ORDER means a Domestic Relations
Order that: (a) clearly specifies (i) the name and last known mailing address of
the Participant or Former Participant and of each person given rights under such
Domestic Relations Order, (ii) the amount or percentages of the Participant's or
Former Participant's benefits under this Plan to be paid to each person covered
by such Domestic Relations Order, (iii) the number of payments or the period to
which such Domestic Relations Order applies, and (iv) the name of this Plan; and
(b) does not require the payment of a benefit in a form or amount that is (i)
not otherwise provided for under the Plan, or (ii) inconsistent with a previous
Qualified Domestic Relations Order.
SECTION 1.44 QUALIFIED PARTICIPANT means a Participant who has attained age
55 and who has been a Participant in the Plan for at least 10 years.
SECTION 1.45 RETIREMENT means: (a) any termination of participation in the
Plan at or after attainment of age 65; and (b) any retirement under an
applicable qualified defined benefit plan of the Employer as in effect from time
to time with entitlement to a normal or early retirement allowance.
SECTION 1.46 SHARE means a share of any class of stock issued by the
Employer or any Affiliated Employer; provided, however, that such share is a
"qualifying employer security" within the meaning section 409(l) of the Code and
section 407(d)(5) of ERISA.
SECTION 1.47 SHARE ACQUISITION LOAN means a loan obtained by the Trustee in
accordance with Article VI.
SECTION 1.48 SHARE INVESTMENT ACCOUNT means an Investment Account
established and maintained in accordance with Article XI.
SECTION 1.49 TENDER OFFER means a tender offer made to holders of any one
or more classes of Shares generally, or any other offer, made to holders of any
one or more classes of Shares generally, to purchase, exchange, redeem or
otherwise transfer Shares, whether for cash or other consideration.
SECTION 1.50 TOTAL COMPENSATION during any period means an Employee's
aggregate total compensation paid by the Employer and any Affiliated Employer
with respect to such period and reportable for federal income tax purposes
pursuant to section 6041(a) of the Code. In addition, solely for purposes of
identifying those Employees who are Highly
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Compensated Employees, each Employee's Total Compensation shall include any
amounts by which the Employee's compensation paid by the Employer or any
Affiliated Employer has been reduced pursuant to a compensation reduction
agreement under the terms of any qualified cash or deferred arrangement
described in section 401(k) of the Code, any salary reduction simplified
employee pension plan described in section 408(k) of the Code, any tax deferred
annuity plan des cribed in section 403(b) of the Code, or any cafeteria plan
described in section 125 of the Code. In no event, however, shall an Employee's
Total Compensation for any calendar year include any compensation in excess of
$150,000 (or such other amount as may be permitted under section 401(a)(17) of
the Code).
SECTION 1.51 TRUST means the legal relationship created by the Trust
Agreement pursuant to which the Trustee holds the Trust Fund in trust. The Trust
may be referred to as the "Employee Stock Ownership Plan Trust of RFS Bancorp,
Inc. and Affiliates."
SECTION 1.52 TRUST AGREEMENT means the agreement between RFS Bancorp, Inc.
and the Trustee therein named or its successors pursuant to which the Trust Fund
shall be held in trust.
SECTION 1.53 TRUST FUND means the corpus (consisting of contributions paid
over to the Trustee, and investments thereof), and all earnings, appreciations
or additions thereof and thereto, held by the Trustee under the Trust Agreement
in accordance with the Plan, less any depreciation thereof and any payments made
therefrom pursuant to the Plan.
SECTION 1.54 TRUSTEE means the Trustee of the Trust Fund from time to time
in office. The Trustee shall serve as Trustee until it is removed or resigns
from office and is re placed by a successor Trustee appointed in accordance with
the terms of the Trust Agreement.
SECTION 1.55 VALUATION DATE means the last business day of March, June,
September and December.
SECTION 1.56 VESTING COMPUTATION PERIOD means, with respect to any person,
the 12-month period beginning on such person's Employment Commencement Date and
each Plan Year beginning after such Employment Commencement Date.
SECTION 1.57 YEAR OF ELIGIBILITY SERVICE means, with respect to any person,
an Eligibility Computation Period during which such person receives credit for
at least 1,000 Hours of Service.
SECTION 1.58 YEAR OF VESTING SERVICE means, with respect to any person, a
Vesting Computation Period during which such person receives credit for at least
1,000 Hours of Service. If an Employee has credit for 1,000 Hours of Service in
the Vesting Computation Period that includes his Employment Commencement Date
and 1,000 Hours of Service in the first Vesting
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Computation Period that begins after his Employment Commencement Date, he shall
receive credit for two Years of Vesting Service even if such periods overlap.
ARTICLE II
PARTICIPATION
SECTION 2.1 ELIGIBILITY FOR PARTICIPATION.
(a) Only Eligible Employees may be or become Participants in the Plan.
An Employee shall be an Eligible Employee if he is a common law employee of
an Employer, has completed at least one Year of Eligibility Service and is
not excluded under section 2.1(b).
(b) An Employee is not an Eligible Employee if he:
(i) is an Employee who has waived any claim to participation in the
Plan; or
(ii) is an Employee or in a unit of Employees covered by a collective
bargaining agreement with the Employer where retirement benefits were the
subject of good faith bargaining, unless such agreement expressly provides
that Employees such as he be covered under the Plan; or
(iii) is a "leased employee" as defined in section 18.8(a).
SECTION 2.2 COMMENCEMENT OF PARTICIPATION.
Every Employee who is an Eligible Employee on the Effective Date shall
automatically become a Participant on the Effective Date. An Employee who
becomes an Eligible Employee after the Effective Date shall automatically become
a Participant on the first day of the month following the month in which he
becomes an Eligible Employee.
SECTION 2.3 TERMINATION OF PARTICIPATION.
Participation in the Plan shall cease, and a Participant shall become a
Former Participant, upon termination of employment with the Employer, death,
Disability or Retirement, failure to return to work upon the expiration of a
leave of absence granted by the Employer pursuant to section 3.4 or becoming an
Employee who is excluded under section 2.1(b) or distribution of the entire
vested interest in his Account.
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ARTICLE III
SPECIAL PROVISIONS
SECTION 3.1 MILITARY SERVICE.
In the case of a termination of employment of any Employee to enter
directly into Military Service, the entire period of his absence shall be
treated, for purposes of vesting and eligibility for participation (but not,
except as required by law, for purposes of eligibility to share in allocations
of contributions in accordance with Article VII), as if he had worked for the
Employer during the period of his absence. In the event of the re-employment of
such person by the Employer within a period of not more than six months:
(a) after he becomes entitled to release or discharge, if he has
entered into the armed forces; or
(b) after such service terminates, if he has entered into other
service defined as Military Service;
such period, also, shall be deemed to be Military Service.
SECTION 3.2 MATERNITY OR PATERNITY LEAVE.
(a) Subject to section 3.2(c), in the event of an Employee's absence
from work in the service of the Employer and all Affiliated Employers for a
period:
(i) that commences on or after October 1, 1985;
(ii) for which the person is not paid or entitled to payment by the
Employer or any Affiliated Employer; and
(iii) that constitutes Maternity or Paternity Leave;
then the rules of section 3.2(b) shall apply.
(b) In cases of absence described in section 3.2(a), solely for
purposes of determining whether a One-Year Break in Service has occurred,
the person shall be credited for the period of an absence described in
section 3.2(a) with the number of Hours of Service equal to the lesser of:
(i) (A) the number of Hours of Service that would have been credited
to the person if he had continued working for the Bank or an Affiliated
Employer during the period of such absence, or (B) if the number of Hours
of Service prescribed under section
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3.2(b)(i)(A) cannot be determined, 8 Hours of Service for each working day
during the period of absence; or
(ii) 501 Hours of Service.
Such credit shall be given during the Computation Period during which such
absence began, if necessary to prevent a One-Year Break in Service from
occurring during such Computation Period, and in all other cases, such
credit shall be given during the immediately following Computation Period.
(c) Notwithstanding anything in the Plan to the contrary, this section
3.2 shall not apply unless the person furnishes to the Plan Administrator
such information as the Plan Administrator may reasonably require in order
to establish (i) that the person's absence is one described in section
3.2(a), and (ii) the number of working days during such absence.
SECTION 3.3 ADJUSTMENTS TO YEARS OF ELIGIBILITY SERVICE.
The Years of Eligibility Service of an Employee who returns to the
employment of the Employer or any Affiliated Employer following a separation
from service shall include his Years of Eligibility Service prior to such
separation from service, and such an Employee shall be readmitted to
participation immediately upon his return to service if he is then an Eligible
Employee; provided, however, that if such separation from service includes a
One-Year Break in Service, such prior Years of Eligibility Service shall not be
included until he has completed one Year of Eligibility Service following his
return to service, and upon completion of such one Year of Eligibility Service,
he shall be readmitted to participation in the Plan with retroactive effect to
the date of his return to employment, if he is then an Eligible Employee, but he
shall not participate in any ESOP Contributions or Loan Repayment Contributions
allocated during the interim period.
SECTION 3.4 LEAVE OF ABSENCE.
In the event of temporary absence from work in the service of the Employer
and all Affiliated Employers for any period for which a Participant shall have
been granted a leave of absence by the Employer, the entire period of his
absence shall be treated for purposes of vesting and eligibility for
participation (but not for purposes of eligibility to share in the allocation of
con tributions in accordance with Article VII), as if he had worked for the
Employer during the period of his absence. Absence from work for a period
greater than, or failure to return to work upon the expiration of, the period of
leave of absence granted by the Employer shall terminate participation in the
Plan as of the date on which such period ended. In granting leaves of absence
for purposes of the Plan, all Employees in like circumstances shall be similarly
treated.
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SECTION 3.5 FAMILY AND MEDICAL LEAVE.
In the event of absence for a period recognized a family and medical leave
under the federal Family and Medical Leave Act of 1992, the period of such
absence shall be recognized for purposes of vesting and eligibility to
participate to the full extent required by law.
SECTION 3.6 SERVICE WITH UNIFORMED FORCES.
Periods of service with the uniformed forces of the United States shall be
treated in the manner required pursuant to section 414(u) of the Code.
ARTICLE IV
CONTRIBUTIONS BY PARTICIPANTS NOT PERMITTED
SECTION 4.1 CONTRIBUTIONS BY PARTICIPANTS NOT PERMITTED.
Participants shall not be required, nor shall they be permitted, to make
contributions to the Plan.
ARTICLE V
CONTRIBUTIONS BY THE EMPLOYER
SECTION 5.1 IN GENERAL.
Subject to the limitations of Article VIII, for each Plan Year, the
Employer shall contribute to the Plan the amount, if any, determined by the
Board, but in no event less than the amount described in section 5.2(a). The
amount contributed for any Plan Year shall be treated as a Loan Repayment
Contribution, an ESOP Contribution, or a combination thereof, in accordance with
the provisions of this Article V.
SECTION 5.2 LOAN REPAYMENT CONTRIBUTIONS.
For each Plan Year, a portion of the Employer's contributions, if any, to
the Plan for such Plan Year equal to the sum of:
(a) the minimum amount required to be added to the Loan Repayment
Account in order to provide adequate funds for the payment of the principal
and interest then required to be repaid under the terms of any outstanding
Share Acquisition Loan obtained by the Trustee; plus
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(b) the additional amount, if any, designated by the Committee to be
applied to the prepayment of principal or interest under the terms of any
outstanding Share Acquisition Loan obtained by the Trustee;
shall be treated as a Loan Repayment Contribution for such Plan Year. A Loan
Repayment Contribution for a Plan Year shall be allocated to the Loan Repayment
Account and shall be applied by the Trustee, in the manner directed by the
Committee, to the payment of accrued interest and to the reduction of the
principal balance of any Share Acquisition Loan obtained by the Trustee that is
outstanding on the date on which the Loan Repayment Contribution is made. To the
extent that a Loan Repayment Contribution for a Plan Year results in a release
of Financed Shares in accordance with section 6.4, such Shares shall be
allocated among the Accounts of Eligible Participants for such Plan Year in
accordance with section 7.2.
SECTION 5.3 ESOP CONTRIBUTIONS.
In the event that the amount of the Employer's contributions to the Plan
for a Plan Year exceeds the amount of the Loan Repayment Contributions for such
Plan Year, such excess shall be treated as an ESOP Contribution and shall be
allocated among the Accounts of the Eligible Participants for such Plan Year in
accordance with section 7.3.
SECTION 5.4 TIME AND MANNER OF PAYMENT.
(a) Payment of contributions made pursuant to this Article V shall be
made:
(i) in cash, in the case of a Loan Repayment Contribution; and
(ii) in cash, in Shares or in a combination of cash and Shares, in the
case of an ESOP Contribution.
(b) Contributions made pursuant to this Article V for a Plan Year
shall be paid to the Trust Fund on or before the due date (including any
extensions thereof) of the Employer's federal income tax return for its
taxable year during which such Plan Year ends. All such contributions shall
be allocated to the Accounts of the Eligible Participants, in the case of
an ESOP Contribution, or to the Loan Repayment Account, in the case of a
Loan Repayment Contribution, as soon as is practicable following the
payment thereof to the Trust Fund.
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ARTICLE VI
SHARE ACQUISITION LOANS
SECTION 6.1 IN GENERAL.
The Committee may, with the prior approval of the Board, direct the Trustee
to obtain a Share Acquisition Loan on behalf of the Plan, the proceeds of which
shall be applied on the earliest practicable date:
(a) to purchase Shares; or
(b) to make payments of principal or interest, or a combination of
principal and interest, with respect to such Share Acquisition Loan; or
(c) to make payments of principal and interest, or a combination of
principal and interest, with respect to a previously obtained Share
Acquisition Loan that is then outstanding.
Any such Share Acquisition Loan shall be obtained on such terms and conditions
as the Plan Administrator may approve; provided, however, that such terms and
conditions shall provide for the payment of interest at no more than a
reasonable rate and shall permit such Share Acquisition Loan to satisfy the
requirements of section 4975(d)(3) of the Code and section 408(b)(3) of ERISA.
SECTION 6.2 COLLATERAL; LIABILITY FOR REPAYMENT.
(a) The Committee may direct the Trustee to pledge, at the time a
Share Acquisition Loan is obtained, the following assets of the Plan as
collateral for such Share Acquisition Loan:
(i) any Shares purchased with the proceeds of such Share Acquisition
Loan and any earnings attributable thereto;
(ii) any Financed Shares then pledged as collateral for a prior Share
Acquisition Loan which is repaid with the proceeds of such Share
Acquisition Loan and any earnings attributable thereto; and
(iii) pending the application thereof to purchase Shares or repay a
prior Share Acquisition Loan, the proceeds of such Share Acquisition Loan
and any earnings attributable thereto.
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Except as specifically provided in this section 6.2(a), no assets of the Plan
shall be pledged as collateral for the repayment of any Share Acquisition Loan.
(b) No person entitled to payment under a Share Acquisition Loan shall
have any right to the assets of the Plan except for:
(i) Financed Shares that have been pledged as collateral for such
Share Acquisition Loan pursuant to section 6.2(a);
(ii) Loan Repayment Contributions made pursuant to section 5.2; and
(iii) earnings attributable to Financed Shares described in section
6.2(b)(i) and to Loan Repayment Contributions described in section
6.2(b)(ii).
Except in the event of a default or a refinancing pursuant to which an existing
Share Acquisition Loan is repaid, the aggregate amount of all payments of
principal and interest made by the Trustee with respect to all Share Acquisition
Loans obtained on behalf of the Plan shall at no time exceed the aggregate
amount of all Loan Repayment Contributions theretofore made plus the aggregate
amount of all earnings (other than dividends paid in the form of Shares)
attributable to Financed Shares and to such Loan Repayment Contributions.
(c) Any Share Acquisition Loan shall be without recourse against the
Plan and Trust.
SECTION 6.3 LOAN REPAYMENT ACCOUNT.
In the event that one or more Share Acquisition Loans shall be obtained, a
Loan Repayment Account shall be established under the Plan. The Loan Repayment
Account shall be credited with all Shares acquired with the proceeds of a Share
Acquisition Loan, all Loan Repayment Contributions and all earnings (including
dividends paid in the form of Shares) or appreciation attributable to such
Shares and Loan Repayment Contributions. The Loan Repayment Account shall be
charged with all payments of principal and interest made by the Trustee with
respect to any Share Acquisition Loan, all Shares released in accordance with
section 6.4 and all losses, depreciation or expenses attributable to Shares or
to other property credited thereto. The Financed Shares, as well as any earnings
thereon, shall be allocated to such Loan Repayment Account and shall be
accounted for separately from all other amounts contributed under the Plan.
SECTION 6.4 RELEASE OF FINANCED SHARES.
As of the last day of each Plan Year during which a Share Acquisition Loan
is outstanding, a portion of the Financed Shares purchased with the proceeds of
such Share Acquisition Loan and allocated to the Loan Repayment Account shall be
released. The number
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of Financed Shares released in any such Plan Year shall be equal to the amount
determined according to one of the following methods:
(a) by computing the product of: (i) the number of Financed Shares
purchased with the proceeds of such Share Acquisition Loan and allocated to
the Loan Repayment Account immediately before the release is effected;
multiplied by (ii) a fraction, the numerator of which is the aggregate
amount of the principal and interest payments (other than payments made
upon the refinancing of a Share Acquisition Loan as contemplated by section
6.1(c)) made with respect to such Share Acquisition Loan during such Plan
Year, and the denominator of which is the aggregate amount of all principal
and interest remaining to be paid with respect to such Share Acquisition
Loan as of the first day of such Plan Year; or
(b) by computing the product of: (i) the number of Financed Shares
purchased with the proceeds of such Share Acquisition Loan and allocated to
the Loan Repayment Account immediately before the release is effected;
multiplied by (ii) a fraction, the numerator of which is the aggregate
amount of the principal payments (other than payments made upon the
refinancing of a Share Acquisition Loan as contemplated by section 6.1(c))
made with respect to such Share Acquisition Loan during such Plan Year, and
the denominator of which is the aggregate amount of all of principal
remaining to be paid with respect to such Share Acquisition Loan as of the
first day of such Plan Year; provided, however, that the method described
in this section 6.4(b) may be used only if the Share Acquisition Loan does
not extend for a period in excess of 10 years after the date of origination
and only to the extent that principal payments on such Share Acquisition
Loan are made at least as rapidly as under a loan of like principal amount
with a like interest rate and term requiring level amortization of
principal and interest.
The method to be used shall be specified in the documents governing the Share
Acquisition Loan or, if not specified therein, prescribed by the Committee, in
its discretion. In the event that property other than, or in addition to,
Financed Shares shall be held in the Loan Repayment Account and pledged as
collateral for a Share Acquisition Loan, then the property to be released
pursuant to this section 6.4 shall be property having a Fair Market Value
determined by applying the method to be used to the Fair Market Value of all
property pledged as collateral for such Share Acquisition Loan; provided,
however, that no property other than Financed Shares shall be released pursuant
to this section 6.4 unless all Financed Shares have previously been released.
SECTION 6.5 RESTRICTIONS ON FINANCED SHARES.
Except to the extent required under any applicable law, rule or regulation,
no Shares purchased with the proceeds of a Share Acquisition Loan shall be
subject to a put, call or other option, or to any buy-sell or similar
arrangement, while held by the Trustee or when distri buted from the Plan. The
provisions of this section 6.5 shall continue to apply in the event that
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this Plan shall cease to be an employee stock ownership plan, within the meaning
of section 4975(e)(7) of the Code.
ARTICLE VII
ALLOCATION OF CONTRIBUTIONS
SECTION 7.1 ALLOCATION AMONG ELIGIBLE PARTICIPANTS.
Subject to the limitations of Article VIII, ESOP Contributions for a Plan
Year made in accordance with section 5.3 and Financed Shares and other property
that are released from the Loan Repayment Account for a Plan Year in accordance
with section 6.4 shall be allocated among the Eligible Participants for such
Plan Year, in the manner provided in this Article VII.
SECTION 7.2 ALLOCATION OF RELEASED SHARES OR OTHER PROPERTY.
Subject to the limitations of Article VIII, in the event that Financed
Shares or other property are released from the Loan Repayment Account for a Plan
Year in accordance with section 6.4, such released Shares or other property
shall be allocated among the Accounts of the Eligible Participants for the Plan
Year in the proportion that each such Eligible Participant's Allocation
Compensation for the portion of the Plan Year during which he was a Participant
bears to the aggregate Allocation Compensation of all Eligible Participants for
the portion of such Plan Year during which they were Eligible Participants.
SECTION 7.3 ALLOCATION OF ESOP CONTRIBUTIONS.
Subject to the limitations of Article VIII, in the event that the Employer
makes an ESOP Contribution for a Plan Year, such ESOP Contribution shall be
allocated among the Accounts of the Eligible Participants for such Plan Year in
the proportion that each such Eligible Participant's Allocation Compensation for
the portion of the Plan Year during which he was a Participant bears to the
aggregate Allocation Compensation of all Eligible Participants for the portion
of such Plan Year during which they were Eligible Participants.
SECTION 7.4 RETROACTIVE CONTRIBUTIONS FOR RETURNING VETERANS.
Notwithstanding anything in the Plan to the contrary, to the extent
required by section 414(u) of the Code, in the event of the reemployment, on or
after December 12, 1994, by the Employer of a Participant with statutory
reemployment rights following a period of service in the uniformed services of
the United States, such person shall be eligible for retroactive benefit
contributions or allocations under the Plan computed as though he or she had
continued working for an Employer during the period of uniformed service.
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ARTICLE VIII
LIMITATIONS ON ALLOCATIONS
SECTION 8.1 OPTIONAL LIMITATIONS ON ALLOCATIONS OF CONTRIBUTIONS.
If, for any Plan Year, the application of sections 7.2 and 7.3 would result
in more than one-third of the number of Shares or of the amount of money or
property to be allocated thereunder being allocated to the Accounts of Eligible
Participants for such Plan Year who are also Highly Compensated Employees for
such Plan Year, then the Committee may, but shall not be required to, direct
that this section 8.1 shall apply in lieu of sections 7.2 and 7.3. If the
Committee gives such a direction, then the Committee shall impose a maximum
dollar limitation on the amount of Allocation Compensation that may be taken
into account for each Eligible Participant. The dollar limitation which shall be
imposed shall be the limitation which produces the result that the aggregate
Allocation Compensation taken into account for Eligible Participants who are
Highly Compensated Employees, constitutes exactly one-third of the aggregate
Allocation Compensation taken into account for all Eligible Participants.
SECTION 8.2 GENERAL LIMITATIONS ON CONTRIBUTIONS.
(a) No amount shall be allocated to a Participant's Account under this
Plan for any Limitation Year, to the extent that such an allocation would
result in an Annual Addition of an amount greater than the lesser of (i)
$30,000 (or such other amount as is permissible under section 415(c)(1)(A)
of the Code, or (ii) 25% of the Participant's Total Compensation for such
Limitation Year.
(b) In the case of a Participant who may be entitled to benefits under
any qualified defined benefit plan (whether or not terminated) now in
effect or ever maintained by the Employer, such Participant's Annual
Additions under this Plan shall, in addition to the limitations provided
under section 8.2(a), be further limited so that for any Limitation Year
beginning prior to December 31, 1999, the sum of the Participant's Defined
Contribution Plan Fraction plus his Defined Benefit Plan Fraction does not
exceed 1.0 for any Limitation Year; provided, that this limitation shall
only apply if and to the extent that the benefits under the Employer's
Retirement Plan or any other defined contribution plan are not limited so
that such sum is not exceeded. In the case of a Participant who is entitled
to contributions under any other qualified defined contribution plan
maintained by the Employer, such Participant's Annual Additions under such
other plan or plans shall be limited to the extent necessary so that total
Annual Additions under all such plans and this Plan do not exceed the
limitations under this Article VIII before any limitation is applied under
this Plan. In the event that this Section 8.2 conflicts with such other
qualified defined benefit or qualified defined contribution plan or plans,
the Plan Administrator shall determine under which plan the Annual
Additions or benefits shall be limited.
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(c) For purposes of this section 8.2, the following special
definitions shall apply:
(i) Annual Addition means the sum of the following amounts allocated
on behalf of a Participant for a Limitation Year:
(A) all contributions by the Employer (including contributions
made under a salary reduction agreement pursuant to sections 401(k),
408(k) or 403(b) of the Code) under any qualified defined contribution
plan (other than this Plan) maintained by the Employer, as well as the
Participant's allocable share, if any, of any forfeitures under such
plans; plus
(B) (I) for Limitation Years that began prior to January 1, 1987,
the lesser of (1) 50% of the Participant's voluntary nondeductible
contributions to all qualified defined contribution plans maintained
by the Employer, or (2) the amount by which the Participant's
nondeductible voluntary contributions to such plans exceeds 6% of his
Total Compensation; and (II) for Limitation Years that begin after
December 31, 1986, all of the Participant's voluntary nondeductible
contributions to such plans; plus
(C) all ESOP Contributions under this Plan; plus
(D) except as hereinafter provided in this section 8.2(c)(i), a
portion of the Employer's Loan Repayment Contributions to the Plan for
such Limitation Year which bears the same proportion to the total
amount of the Employer's Loan Repayment Contributions for the
Limitation Year that the number of Shares (or the Fair Market Value of
property other than Shares) allocated to the Participant's Account
pursuant to section 7.2 or 8.1, whichever is applicable, bears to the
ag gregate number of Shares (or Fair Market Value of property other
than Shares) so allocated to all Participants for such Limitation
Year.
Notwithstanding section 8.2(c)(i)(D), if, for any Limitation Year, the
aggregate amount of ESOP Contributions allocated to the Accounts of the
individuals who are Highly Compensated Employees for such Limitation Year,
when added to such Highly Compensated Employees' allocable share of any
Loan Repayment Contributions for such Limitation Year, does not exceed
one-third of the total of all ESOP Contributions and Loan Repayment
Contributions for such Limitation Year, then that portion, if any, of the
Loan Repayment Contributions for such Limitation Year that is applied to
the payment of interest on a Share Acquisition Loan shall not be included
as an Annual Addition. In no event shall any Financed Shares, any dividends
or other earnings thereon, any proceeds of the sale thereof or any portion
of the value of the foregoing be included as an Annual Addition.
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(ii) Employer means RFS Bancorp, Inc. and all members of a controlled
group of corporations, as defined in section 414(b) of the Code, as
modified by section 415(h) of the Code, all commonly controlled trades or
businesses, as defined in section 414(c) of the Code, as modified by
section 415(h) of the Code, all affiliated service groups, as defined in
section 414(m) of the Code, of which RFS Bancorp, Inc. is a member, as well
as any leasing organization, as defined in section 18.8, that employs any
person who is considered an employee under section 18.8 and any other
entity that is required to be aggregated with the Employer pursuant to
regulations under section 414(o) of the Code.
(iii) Defined Benefit Plan Fraction means, for any Participant for any
Limitation Year, a fraction, the numerator of which is the Projected Annual
Benefit (determined as of the end of such Limitation Year) of the
Participant under any qualified defined benefit plans (whether or not
terminated) maintained by the Employer for the current and all prior
Limitation Years, and the denominator of which is as follows: (A) for
Limitation Years ending prior to January 1, 1983, the lesser of (I) the
dollar limitation in effect under section 415(b)(1) (A) of the Code for
such Limitation Year, or (II) the amount which may be taken into account
under section 415(b)(1)(B) of the Code with respect to such Par ticipant
for such Limitation Year; and (B) in all other cases, the lesser of (I)
(except as provided in section 17.8(b) for a Top Heavy Plan Year) the
product of 1.25 multiplied by the dollar limitation in effect under section
415(b)(1)(A) of the Code for such Limitation Year, or (II) the product of
1.4 multiplied by the amount which may be taken into account under section
415(b)(1)(B) of the Code with respect to such Participant for such
Limitation Year.
(iv) Defined Contribution Plan Fraction means, for any Participant for
any Limitation Year, a fraction (A) the numerator of which is the sum of
such Participant's Annual Additions (determined as of the end of such
Limitation Year) under this Plan and any other qualified defined
contribution plans (whether or not terminated) maintained by the Employer
for the current and all prior Limitation Years, and (B) the denominator of
which is as follows: (I) for Limitation Years ending prior to January 1,
1983, the sum of the lesser of the following amounts for such Limitation
Year and for each prior Limitation Year during which such Participant was
employed by the Employer: (1) the Maximum Permissible Amount for such
Limitation Year (without regard to section 415(c)(6) of the Code), or (2)
the amount which may be taken into account under section 415(c)(1)(B) of
the Code with respect to such Participant for such Limitation Year; and
(II) in all other cases, the sum of the lesser of the following amounts for
such Limitation Year and for each prior Limitation during which such
Participant was employed by the Employer: (1) (except as provided in
section 17.8(b) for a Top Heavy Plan Year) the product of 1.25 multiplied
by the Maximum Permissible Amount for such Limitation Year (determined
without regard to section 415(c)(6) of the Code), or (2) the product of 1.4
multiplied by the amount which may be taken into account under section
415(c)(1)(B) of the Code (or section 415(c)(7) of the Code, if applicable)
with respect to such Participant for such Limitation Year; provided,
however, that the Plan Administrator may, at his election, adopt the
transition
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rule set forth in section 415(e)(6) of the Code in making the computation
set forth in this section 8.2(c)(iv). If the sum of a Participant's Defined
Benefit Plan Fraction and Defined Contribution Plan Fraction exceeded 1.0
as of September 30, 1983, then such Participant's Defined Contribution Plan
Fraction shall be determined under regulations to be prescribed by the
Secretary of the Treasury so that the sum of the fractions does not exceed
1.0.
(v) Limitation Year means the Plan Year; provided, however, that if
the Employer changes the Limitation Year, the new Limitation Year shall
begin on a date within the Limitation Year in which the amendment is made.
(vi) Maximum Permissible Amount means (A) $25,000 (or such higher
amount as may be permitted under section 415(d) of the Code because of cost
of living increases) for Limitation Years beginning prior to January 1,
1983, and (B) the greater of (I) $30,000, or (II) 25% of the dollar
limitation in effect under section 415(b)(1)(A) of the Code for Limitation
Years beginning on or after January 1, 1983.
(vii) Projected Annual Benefit means a Participant's annual retirement
benefit (adjusted to the actuarial equivalent of a straight life annuity if
expressed in a form other than a straight life or qualified joint and
survivor annuity) under any qualified defined benefit plan maintained by
the Employer, whether or not terminated, assuming that the Participant will
continue employment until the later of current age or normal retirement age
under such plan, and that the Participant's Total Compensation for the
Limitation Year and all other relevant factors used to determine benefits
under such plan will remain con stant for all future Limitation Years.
(d) When a Participant's Annual Addition to this Plan must be reduced
to satisfy the limitations of section 8.2(a) or (b), such reduction shall
be applied first to ESOP Contributions; and second, if necessary, to Shares
allocated as a result of a Loan Repayment Contribution which are included
as an Annual Addition in such order as shall result in the smallest
reduction in the number of Shares allocable to the Participant's Account.
The amount by which any Participant's Annual Addition to this Plan is
reduced shall be allocated in accordance with Articles V and VII as a
contribution by the Employer in the next succeeding Limitation Year.
(e) Prior to determining a Participant's actual Total Compensation for
a Limitation Year, the Employer may determine the limitations under this
section 8.2 for a Participant on the basis of a reasonable estimation of
the Participant's Total Compensation for the Limitation Year that is
uniformly determined for all Participants who are similarly situated. As
soon as it is administratively feasible after the end of the Limitation
Year, the limitations of this section 8.2 shall be determined on the basis
of the Participant's actual Total Compensation for the Limitation Year.
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ARTICLE IX
VESTING
SECTION 9.1 VESTING.
Subject to the provisions of section 9.2, the balance credited
to each Employee's Account shall become vested in accordance with the following
schedule:
Years of Vested
Vesting Service Percentage
--------------- ----------
less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
SECTION 9.2 VESTING ON DEATH, DISABILITY, RETIREMENT OR CHANGE IN CONTROL.
Any previously unvested portion of the remainder of the balance credited to
the Account of a Participant or of a person who is a Former Participant solely
because he is excluded from participation under section 2.1(b) shall become
fully vested in him immediately upon attainment of age 65, or, if earlier, upon
the termination of his participation by reason of death, Disability, Retirement
or upon the occurrence of a Change in Control of the Employer.
SECTION 9.3 FORFEITURES ON TERMINATION OF EMPLOYMENT.
Upon the termination of employment of a Participant or Former Participant
for any reason other than death, Disability or Retirement, that portion of the
balance credited to his Account which is not vested at the date of such
termination shall be forfeited as of the last Valuation Date for the Plan Year
in which such termination of employment occurs. The proceeds of such
forfeitures, less amounts, if any, required to be credited because of
re-employment pursuant to section 9.4, shall be treated as Forfeitures and shall
be disposed of as provided in section 9.5.
SECTION 9.4 AMOUNTS CREDITED UPON RE-EMPLOYMENT.
If an Employee forfeited any amount of the balance credited to his Account
upon his termination of employment with the Employer, and is re-employed prior
to the occurrence of five consecutive One-Year Breaks in Service, then:
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(a) an amount equal to the Fair Market Value of the Shares forfeited,
determined as of the date of forfeiture; and
(b) the amount credited to his General Investment Account that was
forfeited, determined as of the date of forfeiture;
shall be credited back to his Account from the proceeds of forfeitures which are
redeemed pursuant to section 9.3 during the Plan Year in which he is
re-employed, unless such proceeds are insufficient, in which case the Employer
shall make an additional contribution in the amount of such deficiency.
SECTION 9.5 ALLOCATION OF FORFEITURES.
Any Forfeitures that occur during a Plan Year shall be used to reduce the
contributions required of the Employer under the Plan and shall be treated as
Loan Repayment Contributions and ESOP Contributions in the proportions
designated by the Committee in accordance with Article V.
ARTICLE X
THE TRUST FUND
SECTION 10.1 THE TRUST FUND.
The Trust Fund shall be held and invested under the Trust Agreement with
the Trustee. The provisions of the Trust Agreement shall vest such powers in the
Trustee as to invest ment, control and disbursement of the Trust Fund, and such
other provisions not inconsistent with the Plan, including provision for the
appointment of one or more "investment managers" within the meaning of section
3(38) of ERISA to manage and control (including acquiring and disposing of) all
or any of the assets of the Trust Fund, as the Board may from time to time
authorize. Except as required by ERISA, no bond or other security shall be
required of any Trustee at any time in office.
SECTION 10.2 INVESTMENTS.
Except to the extent provided to the contrary in section 10.3, the Trust
Fund shall be invested in:
(a) Shares;
(b) such Investment Funds as may be established from time to time by
the Committee; and
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(c) such other investments as may be permitted under the Trust
Agreement;
in such proportions as shall be determined by the Committee or, if so provided
under the Trust Agreement, as directed by one or more investment managers or by
the Trustee, in its discretion; provided, however, that the investments of the
Trust Fund shall consist primarily of Shares. Notwithstanding the immediately
preceding sentence, the Trustee may temporarily invest the Trust Fund in
short-term obligations of, or guaranteed by, the United States Government or an
agency thereof, or may retain uninvested, or sell investments to provide,
amounts of cash required for purposes of the Plan.
SECTION 10.3 DIVERSIFICATION OF INVESTMENTS.
(a) Notwithstanding section 10.2, each Qualified Participant may:
(i) during the first 90 days of each of the first four Plan Years to
begin after the Plan Year in which he first becomes a Qualified
Participant, elect that such percentage of the balance credited to his
Account as he may specify, but in no event more than 25% of the balance
credited to his Account, be invested in one or more of the Investment
Funds; and
(ii) during the first 90 days of the fifth Plan Year to begin after
the Plan Year in which he first becomes a Qualified Participant or of any
Plan Year thereafter, elect that such percentage of the balance credited to
his Account as he may specify, but in no event more than 50% of the balance
credited to his Account, be invested in one or more of the Investment
Funds.
For purposes of an election under this section 10.3, the balance credited to a
Participant's Account shall be the balance credited to his Account determined as
of the last Valuation Date to occur in the Plan Year immediately preceding the
Plan Year in which such election is made.
(b) An election made under section 10.3(a) shall be made in writing,
in the form and manner prescribed by the Plan Administrator, and shall be
filed with the Plan Administrator during the election period specified in
section 10.3(a). As soon as is practicable following the end of the
election period during which such election is made, the Plan Administrator
shall take such actions as are necessary to cause the specified percentage
of the balance credited to the Account of the Qualified Participant making
the election to be invested in the specified Investment Funds. Any
investments made pursuant to this section 10.3 shall be specifically
allocated to the General Investment Account of the Qualified Participant
for whom they are made.
(c) An election made under section 10.3(a) may be changed or revoked
at any time during the election period described in section 10.3(a) during
which it is initially
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made, during any subsequent election period described in section 10.3(a)
or, upon at least 15 days' advance written notice given in the form and
manner prescribed by the Plan Administrator, as of the first day of any
calendar quarter of any Plan Year that begins after the Participant first
becomes a Qualified Participant. In no event, however, shall any election
under this section 10.3 result in more than 25% of the balance credited to
the Par ticipant's Account being invested at the direction of the
Participant, if such election is made during a Plan Year to which section
10.3(a)(i) applies, or result in more than 50% of the balance credited to
the Participant's Account being invested at the direction of the
Participant, if such election is made during the Plan Year to which section
10.3(a)(ii) applies or thereafter.
SECTION 10.4 USE OF COMMINGLED TRUST FUNDS.
Subject to the provisions of the Trust Agreement, amounts held in the Trust
Fund may be invested in:
(a) any commingled or group trust fund described in section 401(a) of
the Code and exempt under section 501(a) of the Code; or
(b) any common trust fund exempt under section 584 of the Code
maintained exclusively for the collective investment of the assets of
trusts that are exempt under section 501(a) of the Code;
provided that the trustee of such commingled, group or common trust fund is a
bank or trust company.
SECTION 10.5 MANAGEMENT AND CONTROL OF ASSETS.
All assets of the Plan shall be held by the Trustee in trust for the
exclusive benefit of Participants, Former Participants and their Beneficiaries.
No part of the corpus or income of the Trust Fund shall be used for, or diverted
to, purposes other than for the exclusive benefit of Participants, Former
Participants and their Beneficiaries, and for defraying reasonable
administrative expenses of the Plan and Trust Fund. No person shall have any
interest in or right to any part of the earnings of the Trust Fund, or any
rights in, to or under the Trust Fund or any part of its assets, except to the
extent expressly provided in the Plan.
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ARTICLE XI
VALUATION OF INTERESTS IN THE TRUST FUND
SECTION 11.1 ESTABLISHMENT OF INVESTMENT ACCOUNTS.
The Plan Administrator shall establish, or cause to be established, for
each person for whom an Account is maintained a Share Investment Account and a
General Investment Account. Such Share Investment Accounts and General
Investment Accounts shall be maintained in accordance with this Article XI.
SECTION 11.2 SHARE INVESTMENT ACCOUNTS.
The Share Investment Account established for a person in accordance with
section 11.1 shall be credited with: (a) all Shares allocated to such person's
Account; (b) all Shares pur chased with amounts of money or property allocated
to such person's Account; (c) all dividends paid in the form of Shares with
respect to Shares credited to his Account; and (d) all Shares purchased with
amounts credited to such person's General Investment Account. Such Share
Investment Account shall be charged with all Shares that are sold or exchanged
to acquire other investments or to provide cash and with all Shares that are
distributed in kind.
SECTION 11.3 GENERAL INVESTMENT ACCOUNTS.
The General Investment Account that is established for a person in
accordance with section 11.1 shall be credited with: (a) all amounts, other than
Shares, allocated to such person's Account; (b) all dividends paid in a form
other than Shares with respect to Shares credited to such person's Share
Investment Account; (c) the proceeds of any sale of Shares credited to such
person's Share Investment Account; and (d) any earnings attributable to amounts
credited to such person's General Investment Account. Such General Investment
Account shall be charged with all amounts credited thereto that are applied to
the purchase of Shares, any losses or depreciation attributable to amounts
credited thereto, any expenses allocable thereto and any distributions of
amounts credited thereto.
SECTION 11.4 VALUATION OF INVESTMENT ACCOUNTS.
(a) The Plan Administrator shall determine, or cause to be determined,
the aggregate value of each person's Share Investment Account as of each
Valuation Date by multiplying the number of Shares credited to such Share
Investment Account on such Valuation Date by the Fair Market Value of a
Share on such Valuation Date.
(b) As of each Valuation Date, the Accounts of each Participant shall
be separately adjusted to reflect their proportionate share of any
appreciation or depreciation in the fair market value of the Investment
Funds, any income earned by the Investment
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Funds and any expenses incurred by the Investment Funds, as well as any
contributions, withdrawals or distributions and investment transfers not
posted as of the last Valuation Date.
SECTION 11.5 ANNUAL STATEMENTS.
There shall be furnished, by mail or otherwise, at least once in each Plan
Year to each person who would then be entitled to receive all or part of the
balance credited to any Account if the Plan were then terminated, a statement of
his interest in the Plan as of such date as shall be selected by the Plan
Administrator, which statement shall be deemed to have been accepted as correct
and be binding on such person unless the Plan Administrator receives written
notice to the contrary within 30 days after the statement is mailed or furnished
to such person.
ARTICLE XII
SHARES
SECTION 12.1 SPECIFIC ALLOCATION OF SHARES.
All Shares purchased under the Plan shall be specifically allocated to the
Share Investment Accounts of Participants, Former Participants and their
Beneficiaries in accordance with section 11.2, with the exception of Financed
Shares, which shall be allocated to the Loan Repayment Account.
SECTION 12.2 DIVIDENDS.
(a) Dividends paid with respect to Shares held under the Plan shall be
credited to the Loan Repayment Account, if paid with respect to Financed
Shares. Such dividends shall be: (i) applied to the payment of principal
and accrued interest with respect to any Share Acquisition Loan, if paid in
cash; or (ii) held in the Loan Repayment Account as Financed Shares for
release in accordance with section 6.4, if paid in the form of Shares.
(b) Dividends paid with respect to Shares allocated to a person's
Share Investment Account shall be credited to such person's Share
Investment Account. Cash dividends credited to a person's General
Investment Account shall be, at the direction of the Board, either: (i)
held in such General Investment Account and invested in accordance with
sections 11.2 and 11.3; (ii) distributed immediately to such person; (iii)
distributed to such person within 90 days of the close of the Plan Year in
which such dividends were paid; or (iv) used to make payments of principal
or interest on a Share Acquisition Loan; provided, however, that the Fair
Market Value of Financed Shares released from the Loan Repayment Account
equals or exceeds the amount of the dividend.
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SECTION 12.3 VOTING RIGHTS.
(a) Each person shall direct the manner in which all voting rights
appurtenant to Shares allocated to his Share Investment Account will be
exercised, provided that such Shares were allocated to his Share Investment
Account as of the applicable record date. Such person shall, for such
purpose, be deemed a "named fiduciary" within the meaning of section
402(a)(2) of ERISA. Such a direction shall be given by completing and
filing with the inspector of elections, the Trustee or such other person
who shall be independent of the Employer as the Committee shall designate,
at least 10 days prior to the date of the meeting of holders of Shares at
which such voting rights will be exercised, a written direction in the form
and manner prescribed by the Committee. The inspector of elections, the
Trustee or such other person designated by the Committee shall tabulate the
directions given on a strictly confidential basis, and shall provide the
Committee with only the final results of the tabulation. The final results
of the tabulation shall be followed by the Committee in directing the
Trustee as to the manner in which such voting rights shall be exercised.
The Committee shall make a reasonable effort to furnish, or cause to be
furnished, to each person for whom a Share Investment Account is maintained
all annual reports, proxy materials and other information known by the
Committee to have been furnished by the issuer of the Shares, or by any
solicitor of proxies, to the holders of Shares.
(b) To the extent that any person shall fail to give instructions with
respect to the exercise of voting rights appurtenant to Shares allocated to
his Share Investment Account:
(i) the Trustee shall, with respect to each matter to be voted upon:
(A) cast a number of affirmative votes equal to the product of (I) the
number of allocated Shares for which no written instructions have been
given, multiplied by (II) a fraction, the numerator of which is the number
of allocated Shares for which affirmative votes will be cast in accordance
with written instructions given as provided in section 12.3(a) and the
denominator of which is the aggregate number of affirmative and negative
votes which will be cast in accordance with written instructions given as
aforesaid, and (B) cast a number of negative votes equal to the excess (if
any) of (I) the number of allocated Shares for which no written
instructions have been given over (II) the number of affirmative votes
being cast with respect to such allocated Shares pursuant to section
12.3(b)(i)(A); or
(ii) if the Trustee shall determine that it may not, consistent with
its fiduciary duties, vote the allocated Shares for which no written
instructions have been given in the manner described in section 12.3(b)(i),
it shall vote such Shares in such manner as it, in its discretion, may
determine to be in the best interests of the persons to whose Share
Investment Accounts such Shares have been allocated.
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(c) (i) The voting rights appurtenant to Financed Shares shall be
exercised as follows with respect to each matter as to which holders of
Shares may vote:
(A) a number of votes equal to the product of (I) the total
number of votes appurtenant to Financed Shares allocated to the Loan
Repayment Account on the applicable record date; multiplied by (II) a
fraction, the numerator of which is the total number of affirmative
votes cast by Participants, Former Participants and the Beneficiaries
of deceased Former Participants with respect to such matter pursuant
to section 12.3(a) and the denominator of which is the total number of
affirmative and negative votes cast by Participants, Former
Participants and the Beneficiaries of deceased Former Participants,
shall be cast in the affirmative; and
(B) a number of votes equal to the excess of (I) the total number
of votes appurtenant to Financed Shares allocated to the Loan
Repayment Account on the applicable record date, over (II) the number
of affirmative votes cast pursuant to section 12.3(c)(i)(A) shall be
cast in the negative.
To the extent that the Financed Shares consist of more than one class of Shares,
this section 12.3(c)(i) shall be applied separately with respect to each class
of Shares.
(ii) If voting rights are to be exercised with respect to Financed
Shares as provided in section 12.3(c)(i)(A) and (B) at a time when there
are no Shares allocated to the Share Investment Accounts of Participants,
Former Participants and the Beneficiaries of deceased Former Participants,
then the voting rights appurtenant to Financed Shares shall be exercised as
follows with respect to each matter as to which holders of Shares may vote:
(A) Each person who is a Participant on the applicable record
date and who was a Participant on the last day of the Plan Year ending
on or immediately prior to such record date will be granted a number
of votes equal to the quotient, rounded to the nearest integral
number, of (I) such Participant's Allocation Com pensation for the
Plan Year ending on or immediately prior to such record date (or for
the portion of such Plan Year during which he was a Participant);
divided by (II) $1,000.00; and
(B) a number of votes equal to the product of (I) the total
number of Financed Shares allocated to the Loan Repayment Account on
the applicable record date; multiplied by (II) a fraction, the
numerator of which is the total number of votes that are cast in the
affirmative with respect to such matter pursuant to section
12.3(c)(ii)(A) and the denominator of which is the total number of
votes that are cast either in the affirmative or in the negative with
respect to such matter pursuant to section 12.3(c)(ii)(A), shall be
cast in the affirmative; and
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(C) a number of votes equal to the excess of (I) the total number
of Financed Shares allocated to the Loan Repayment Account on the
applicable record date, over (II) the number of affirmative votes cast
with respect to such matter pursuant to section 12.3(c)(ii)(B), shall
be cast in the negative.
To the extent that the Financed Shares consist of more than one class of Shares,
this section 12.3(c)(ii) shall be applied separately with respect to each class
of Shares.
SECTION 12.4 TENDER OFFERS.
(a) Each person shall direct whether Shares allocated to his Share
Investment Account will be delivered in response to any Tender Offer. Such
person shall, for such purpose, be deemed a "named fiduciary" within the
meaning of section 402(a)(2) of ERISA. Such a direction shall be given by
completing and filing with the Trustee or such other person who shall be
independent of the Employer as the Committee shall designate, at least 10
days prior to the latest date for exercising a right to deliver Shares
pursuant to such Tender Offer, a written direction in the form and manner
prescribed by the Committee. The Trustee or other person designated by the
Committee shall tabulate the directions given on a strictly confidential
basis, and shall provide the Plan Administrator with only the final results
of the tabulation. The final results of the tabulation shall be followed by
the Committee in directing the number of Shares to be delivered. The
Committee shall make a reasonable effort to furnish, or cause to be
furnished, to each person for whom a Share Investment Account is
maintained, all information known by the Committee to have been furnished
by the issuer or by or on behalf of any person making such Tender Offer, to
the holders of Shares in connection with such Tender Offer.
(b) To the extent that any person shall fail to give instructions with
respect to Shares allocated to his Share Investment Account:
(i) the Trustee shall (A) tender or otherwise offer for purchase,
exchange or redemption a number of such Shares equal to the product of (I)
the number of allocated Shares for which no written instructions have been
given, multiplied by (II) a fraction, the numerator of which is the number
of allocated Shares tendered or otherwise offered for purchase, exchange or
redemption in accordance with written instructions given as provided in
section 12.4(a) and the denominator of which is the aggregate number of
allocated Shares for which written instructions have been given as
aforesaid, and (B) withhold a number of Shares equal to the excess (if any)
of (I) the number of allocated Shares for which no written instructions
have been given over (II) the number of Shares being tendered or otherwise
offered pursuant to section 12.4(b)(i)(A); or
(ii) if the Trustee shall determine that it may not, consistent with
its fiduciary duties, exercise the tender or other rights appurtenant to
allocated Shares for which no written instructions have been given in the
manner described in section 12.4(b)(i), it shall
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tender, or otherwise offer, or withhold such Shares in such manner as it,
in its discretion, may determine to be in the best interests of the persons
to whose Share Investment Accounts such Shares have been allocated.
(c) In the case of any Tender Offer, any Financed Shares held in the
Loan Repayment Account shall be dealt with as follows:
(i) If such Tender Offer occurs at a time when there are no Shares
allocated to the Share Investment Accounts of Participants, Former
Participants and the Beneficiaries of deceased Former Participants, then
the disposition of the Financed Shares shall be deter mined as follows:
(A) each person who is a Participant on the applicable record
date and who was a Participant on the last day of the Plan Year ending
on or immediately prior to such record date will be granted a number
of tender rights equal to the quotient, rounded to the nearest
integral number, of (I) such Participant's Allocation Compensation for
the Plan Year ending on or immediately prior to such record date (or
for the portion of such Plan Year during which he was a Participant),
divided by (II) $1,000.00; and
(B) on the last day for delivering Shares or otherwise responding
to such Tender Offer, a number of Shares equal to the product of (I)
the total number of Financed Shares allocated to the Loan Repayment
Account on the last day of the effective period of such Tender Offer;
multiplied by (II) a fraction, the numerator of which is the total
number of tender rights exercised in favor of the delivery of Shares
in response to the Tender Offer pursuant to section 12.4(c)(i)(A) and
the denominator of which is the total number of tender rights that are
exercisable in response to the Tender Offer pursuant to section
12.4(c)(i)(A), shall be delivered in response to the Tender Offer; and
(C) a number of Shares equal to the excess of (I) the total
number of Financed Shares allocated to the Loan Repayment Account on
the last day of the effective period of such Tender Offer; over (II)
the number of Shares to be delivered in response to the Tender Offer
pursuant to section 12.4(c)(i)(B), shall be withheld from delivery.
(ii) If such Tender Offer occurs at a time when the voting rights
appurtenant to such Financed Shares are to be exercised in accordance with
section 12.3(c)(i), then:
(A) on the last day for delivering Shares or otherwise responding
to such Tender Offer, a number of Financed Shares equal to the product
of (I) the total number of Financed Shares allocated to the Loan
Repayment Account on the last day of the effective period of such
Tender Offer; multiplied by (II) a fraction, the
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numerator of which is the total number of Shares delivered from the
Share Invest ment Accounts of Participants, Former Participants and
the Beneficiaries of deceased Former Participants in response to such
Tender Offer pursuant to section 12.4(a), and the denominator of which
is the total number of Shares allocated to the Share Investment
Accounts of Participants, Former Participants and Beneficiaries of
deceased Former Participants immediately prior to the last day for
delivering Shares or otherwise responding to such Tender Offer, shall
be delivered; and
(B) a number of Financed Shares equal to the excess of (I) the
total number of Financed Shares allocated to the Loan Repayment
Account on the last day for delivering Shares or otherwise responding
to such Tender Offer; over (II) the number of Financed Shares to be
delivered pursuant to section 12.4(c)(ii)(A), shall be withheld from
delivery.
To the extent that the Financed Shares consist of more than one class of Shares,
this section 12.4(c) shall be applied separately with respect to each class of
Shares.
SECTION 12.5 DISSENT AND APPRAISAL RIGHTS.
(a) Each person shall have the right to direct the manner in which all
dissent and appraisal rights appurtenant to Shares allocated to his Share
Investment Account will be exercised. Such person shall, for such purpose,
be deemed a "named fiduciary" within the meaning of section 402(a)(2) of
ERISA. Such a direction shall be given by completing and filing with the
Trustee or such other person who shall be independent of the Employer as
the Committee shall designate, at least 10 days prior to the latest date
for exercising such dissent and appraisal rights, a written direction in
the form and manner prescribed by the Committee. The Trustee or other
person designated by the Committee shall tabulate the directions given on a
strictly confidential basis, and shall provide the Committee with only the
final results of the tabulation. The final results of the tabulation shall
be followed by the Committee in directing the Trustee as to the manner in
which such dissent and appraisal rights shall be exercised. The Committee
shall make a reasonable effort to furnish, or cause to be furnished, to
each person for whom a Share Investment Account is maintained, all
information known by the Committee to have been furnished by the issuer or
by or on behalf of any person to the holders of Shares in connection with
such dissent and appraisal rights.
(b) To the extent that any person for whom a Share Investment Account
is maintained shall fail to give instructions with respect to dissent and
appraisal rights appurtenant to Shares attributable to his interest, the
Committee shall direct the Trustee to exercise dissent and appraisal rights
as to those Shares in such manner as the Committee shall determine to be in
the best interest of the person to whom such Shares are attributable.
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ARTICLE XIII
PAYMENT OF BENEFITS
SECTION 13.1 IN GENERAL.
The balance credited to a Participant's or Former Participant's Account
under the Plan shall be paid only at the times, to the extent, in the manner and
to the persons provided in this Article XIII.
SECTION 13.2 DESIGNATION OF BENEFICIARIES.
(a) Subject to section 13.2(b), any person entitled to a benefit under
the Plan may designate a Beneficiary to receive any amount to which he is
entitled that remains undistributed on the date of his death. Such person
shall designate his Beneficiary (and may change or revoke any such
designation) in writing in the form and manner prescribed by the Plan
Administrator. Such designation, and any change or revocation thereof,
shall be effective only if received by the Plan Administrator prior to such
person's death and shall become irrevocable upon such person's death.
(b) A Participant or Former Participant who is married shall
automatically be deemed to have designated his spouse as his Beneficiary,
unless, prior to the time such designation would, under section 13.2(a),
become irrevocable:
(i) the Participant or Former Participant designates an additional or
a different Beneficiary in accordance with this section 13.2; and
(ii) (A) the spouse of such Participant or Former Participant consents
to such designation in a writing that acknowledges the effect of such
consent and is witnessed by a Plan representative or a notary public; or
(B) the spouse of such Participant or Former Participant has previously
consented to such designation by signing a written waiver of any right to
consent to any designation made by the Participant or Former Participant,
and such waiver acknowledged the effect of the waiver and was witnessed by
a Plan representative or a notary public; or (C) it is established to the
satisfaction of a Plan representative that the consent required under
section 13.2(b)(ii)(A) may not be obtained because such spouse cannot be
located or because of other circumstances permitted under regulations
issued by the Secretary of the Treasury.
(c) In the event that a Beneficiary entitled to payments hereunder
shall die after the death of the person who designated him but prior to
receiving payment of his entire interest in the Account of the person who
designated him, then such Beneficiary's interest in the Account of such
person, or any unpaid balance thereof, shall be paid as provided in section
13.3 to the Beneficiary who has been designated by the deceased
Beneficiary, or
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if there is none, to the executor or administrator of the estate of such
deceased Beneficiary, or if no such executor or administrator is appointed
within such time as the Plan Ad ministrator, in his sole discretion, shall
deem reasonable, to such one or more of the spouse and descendants and
blood relatives of such deceased Beneficiary as the Plan Administrator may
select. If a person entitled to a benefit under the Plan and any of the
Beneficiaries designated by him shall die in such circumstances that there
shall be substan tial doubt as to which of them shall have been the first
to die, for all purposes of the Plan, the person who made the Beneficiary
designation shall be deemed to have survived such Beneficiary.
(d) If no Beneficiary survives the person entitled to the benefit
under the Plan or if no Beneficiary has been designated by such person,
such benefit shall be paid to the executor or administrator of the estate
of such person, or if no such executor or administrator is appointed within
such time as the Plan Administrator, in his sole discretion, shall deem
reasonable, to such one or more of the spouse and descendants and blood
relatives of such deceased person as the Plan Administrator may select.
SECTION 13.3 DISTRIBUTIONS TO PARTICIPANTS AND FORMER PARTICIPANTS.
(a) (i) Subject to the provisions of section 13.7 with respect to
required minimum distributions, the vested portion of the balance credited
to a Participant's or a Former Participant's Account shall be distributed
to him commencing as of the last Valuation Date to occur in the Plan Year
in which the Participant or Former Participant terminates employment with
the Employer or attains age 65, whichever is later; unless the Participant
or Former Participant elects otherwise pursuant to section 13.3(a)(ii), and
the payment, or first in a series of payments, is actually made within
three months following such Valuation Date.
(ii) A Participant or Former Participant may, upon request on a form
provided by the Plan Administrator and filed with the Plan Administrator not
later than 15 days prior to the date on which his employment with the Employer
terminates, elect that his vested interest in his Account be paid commencing as
of any earlier or later Valuation Date after his termination of employment, but
in no event later than the last Valuation Date to occur in the calendar year in
which the Participant or Former Participant attains age 70 1/2, in which case
the payment, or first in a series of payments, shall be made within three months
following such Valuation Date.
(b) (i) Subject to section 13.3(b)(ii), the vested portion of the
balance credited to the Account of a Participant or Former Participant will
be paid to him, commencing as of the Valuation Date determined under
section 13.3(a), in substantially equal annual installments over a fixed
period equal to the greater of:
(A) five years; or
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(B) if the vested portion of the balance credited to the Account
of the Participant or Former Participant, determined as of the
Valuation Date determined under section 13.3(a), is greater than
$500,000 (or such larger amount as may be prescribed by the Secretary
of the Treasury pursuant to section 409(o) of the Code), the sum of
five years plus the lesser of (I) five additional years, or (II) one
additional year for each $100,000 (or fraction thereof) by which the
vested portion of the balance credited to the Participant's or Former
Participant's Account exceeds $500,000 (or such larger amount as may
be prescribed by the Secretary of the Treasury pursuant to section
409(o) of the Code).
(ii) A Participant or Former Participant may, upon request on a form
provided by the Plan Administrator and filed with the Plan Administrator
not later than 15 days prior to the date on which his employment
terminates, elect that the vested portion of the balance credited to his
Account be paid, commencing as of the Valuation Date determined under
section 13.3(a):
(A) in substantially equal annual installments over a fixed
period not to exceed the lesser of (I) 10 years, or (II) the life
expectancy of the Participant or Former Participant, or, if his
Beneficiary is a natural person, the joint life and last survivor
expectancy of the Participant or Former Participant and his
Beneficiary; or
(B) subject to section 13.4, in a lump sum payment.
(c) If any person entitled to a benefit under the Plan dies before his
entire benefit has been distributed to him, then the remainder of such
benefit shall be paid to the Beneficiary designated by him under section
13.2 either:
(i) in a lump sum distribution as of the Valuation Date next following
the date of his death, and the amount thereof shall be based upon the
vested portion of the balance credited to his Account as of such Valuation
Date; or
(ii) if, prior to the death of the Participant or Former Participant
whose vested Account is being distributed, an election pursuant to section
13.3(b)(ii)(B) is in effect for him, in a lump sum distribution as of the
Valuation Date specified in such election, or, if earlier, as of the latest
Valuation Date that would permit payment to be made within five years after
the Participant's or Former Participant's death, and the amount thereof
shall be based upon the vested portion of the balance credited to his
Account as of such Valuation Date; or
(iii) if, prior to the death of the Participant or Former Participant
whose vested Account is being distributed, an election pursuant to section
13.3(b)(ii)(A) is in effect for him:
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(A) over the period and at the times set forth in such election,
if distribution has begun prior to the Participant's or Former
Participant's death; or
(B) commencing at the time set forth in such election and over
the period set forth in such election (or, if less, over a period
equal to the life expectancy of the Beneficiary of the deceased
Participant or Former Participant), if the deceased Participant's or
Former Participant's spouse is his Beneficiary and distribution has
not begun prior to the deceased Participant's or Former Participant's
death; or
(C) commencing on the date specified in such election (or, if
earlier, the last Valuation Date that will permit payment to begin
within one year after the deceased Participant's or Former
Participant's death) and over the period set forth in such election
(or, if less, over a period equal to the life expectancy of the
Beneficiary of the deceased Participant or Former Participant), if the
deceased Participant's or Former Participant's Beneficiary is a
natural person other than his spouse and distribution has not begun
prior to the deceased Participant's or Former Participant's death;
and the amount thereof shall be based upon the vested portion of the
balance credited to his Account as of the Valuation Dates as of which
payments are determined; or
(iv) upon written application of the Beneficiary made in such form and
manner as the Plan Administrator may prescribe, at another time or in
another manner permitted under section 13.3(a) or (b), subject to the
following limitations:
(A) (I) If such Beneficiary is a natural person other than the
spouse of the deceased Participant or Former Participant whose vested
Account is being distributed, a distribution that commences within one
year after such deceased Participant's or Former Participant's death
shall be made over a fixed period that does not exceed the life
expectancy of such Beneficiary when distribution commences.
(II) If such Beneficiary is the spouse of the deceased
Participant or Former Participant whose vested Account is being
distributed, a distribution that commences no later than the later of:
(1) the date on which the deceased Participant or Former Participant
would have attained age 70 1/2 had he lived; or (2) the first
anniversary of the death of such deceased Participant or Former
Participant; shall be made over a fixed period that does not exceed
the life expectancy of such Beneficiary when distribution commences.
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(III) In all other cases where the spouse of the deceased Partici
pant or Former Participant whose vested Account is being distributed
is not the Beneficiary, payment must be completed within five years
after the death of such deceased Participant or Former Participant.
(B) In cases where distribution has commenced prior to the death
of the deceased Participant or Former Participant whose vested Account
is being distributed, distribution must be completed as least as
rapidly as under the method in effect prior to such deceased
Participant's or Former Participant's death.
SECTION 13.4 MANNER OF PAYMENT.
(a) Subject to section 13.4(b), payments of distributions made
pursuant to section 13.3 or section 13.7 shall be paid, in accordance with
the written direction of the person requesting the payment, in whole
Shares, in cash, or in a combination of cash and whole Shares. Such written
direction shall be given in such form and manner as the Plan Administrator
may prescribe. If no such direction is given, then payment shall be made in
the maximum number of whole Shares that may be acquired with the amount of
the payment, plus, if necessary, an amount of money equal to any remaining
amount of the payment that is less than the Fair Market Value of a whole
Share.
(b) No distribution of a lump sum payment shall be made in cash to the
extent that the making of such distribution, when combined with all other
distributions to be made in cash as of the same Valuation Date, would
require the sale of Shares constituting 1% or more of all outstanding
Shares; provided, however, that this section 13.4(b) shall not apply to or
in respect of a Participant or Former Participant:
(i) following such Participant's or Former Participant's termination
of employment with the Employer on account of his Retirement or Disability;
or
(ii) following such Participant's or Former Participant's 65th
birthday; or
(iii) following the death of such Participant or Former Participant.
SECTION 13.5 PUT OPTIONS.
(a) Except as provided otherwise in section 13.5(b), each Participant
or Former Participant to whom Shares are distributed under the Plan, each
Beneficiary of a deceased Participant or Former Participant, including the
estate of a deceased Participant or Former Participant, to whom Shares are
distributed under the Plan, and each person to whom such a Participant,
Former Participant or Beneficiary gives Shares that have been distributed
under the Plan shall have the right to require the Employer to purchase
from him all or any portion of such Shares. A person shall exercise such
right by delivering to the Employer
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a written notice, in such form and manner as the Employer may by written
notice to such person prescribe, setting forth the number of Shares to be
purchased by the Employer, the number of the stock certificate evidencing
such person's ownership of such Shares, and the effective date of purchase.
Such notice shall be given, and the effective date of the purchase
specified therein shall be, no later than the last day of the fifteenth
calendar month to begin after the date on which the Shares to be purchased
by the Employer were distributed from the Plan. As soon as practicable
following its receipt of such notice, the Employer shall take such actions
as are necessary to purchase the Shares specified in such notice at a price
per Share equal to the Fair Market Value of a Share determined as of the
effective date of the purchase.
(b) The Employer shall have no obligation to purchase any Share (i)
pursuant to a notice given, or on an effective date of purchase, after the
last day of the fifteenth calendar month to begin after the date on which
such Share was distributed from the Plan; (ii) following the earliest date
on which Shares are publicly traded on an established market; or (iii) if
the Employer is a "bank" within the meaning of section 581 of the Code and
is prohibited by law from redeeming or purchasing its own securities.
SECTION 13.6 RIGHT OF FIRST REFUSAL.
(a) For any period during which Shares are not publicly traded on any
established market, no person who owns Shares that were distributed from
the Plan, other than a person to whom such Shares were sold in compliance
with this section 13.6, shall sell such Shares to any person other than the
Employer without first offering to sell such Shares to the Employer (or
person designated by the Employer) in accordance with this section 13.6.
(b) In the event that a person to whom this section 13.6 applies shall
receive and desire to accept from a person other than the Employer a bona
fide offer to purchase Shares to which this section 13.6 applies, he shall
furnish to the Employer a written notice which shall:
(i) include a copy of such offer to purchase;
(ii) offer to sell to the Employer the Shares subject to such offer to
purchase at a price per Share that is equal to the greater of:
(A) the price per Share specified in such offer to purchase; or
(B) the Fair Market Value of a Share as of the date of purchase;
and otherwise upon the same terms and conditions as those specified in such
offer to purchase; and
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(iii) include an indication of his intention to accept such offer to
purchase if the Employer does not accept his offer to sell.
(c) The Employer shall have the right to purchase the Shares covered
by the offer to sell contained in a notice given pursuant to section
13.6(b), on the terms and conditions specified in such notice, by written
notice given to the party making the offer to sell not later than the
fourteenth day after the notice described in section 13.6(b) is given. If
the Employer does not give such a notice during the prescribed fourteen day
period, then the person owning such Shares may accept the offer to purchase
described in the notice.
SECTION 13.7 MINIMUM REQUIRED DISTRIBUTIONS.
(a) Required minimum distributions of a Participant's or Former
Participant's Account shall commence no later than:
(i) if the Participant or Former Participant is not a Five Percent
Owner at any time during the Plan Year ending in the calendar year in which
he attains age 70 1/2, the later of (A) the calendar year in which he
attains or attained age 70 1/2 or (B) the calendar year in which he
terminates employment with the Employer; or
(ii) if the Participant or Former Participant is or was a Five Percent
Owner at any time during the Plan Year ending in the calendar year in which
he attains age 70 1/2, the later of (A) the calendar year in which he
attains age 70 1/2 or (B) the calendar year in which he first becomes a
Five Percent Owner.
(b) The required minimum distributions contemplated by section 13.7(a)
shall be made as follows:
(i) The minimum required distribution to be made for the calendar year
for which the first minimum distribution is required shall be no later than
April 1st of the immediately following calendar year and shall be equal to
the quotient obtained by dividing (A) the vested balance credited to the
Participant's or Former Participant's Account as of the last Valuation Date
to occur in the calendar year immediately preceding the calendar year in
which the first minimum distribution is required (adjusted to account for
any additions thereto or subtractions therefrom after such Valuation Date
but on or before December 31st of such calendar year); by (B) the
Participant's or Former Participant's life expectancy (or, if his
Beneficiary is a natural person, the joint life and last survivor
expectancy of him and his Beneficiary); and
(ii) the minimum required distribution to be made for each calendar
year following the calendar year for which the first minimum distribution
is required shall be made no later than December 31st of the calendar year
for which the distribution is
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required and shall be equal to the quotient obtained by dividing (A) the
vested balance credited to the Participant's or Former Participant's
Account as of the last Valuation Date to occur in the calendar year prior
to the calendar year for which the distribution is required (adjusted to
account for any additions thereto or subtractions therefrom after such
Valuation Date but on or before December 31st of such calendar year and, in
the case of the distribution for the calendar year immediately following
the calendar year for which the first minimum distribution is required,
reduced by any distribution for the prior calendar year that is made in the
current calendar year); by (B) the Participant's or Former Participant's
life expectancy (or, if his Beneficiary is a natural person, the joint life
and last survivor expectancy of him and his Beneficiary).
For purposes of this section 13.7, the life expectancy of a Participant or
Former Participant (or the joint life and last survivor expectancy of a
Participant or Former Participant and his designated Beneficiary) for the
calendar year in which the Participant or Former Participant attains age 70 1/2
shall be determined on the basis of Tables V and VI, as applicable, of section
1.72-9 of the Income Tax Regulations as of the Participant's or Former
Participant's and Beneficiary's birthday in such year. Such life expectancy or
joint life and last survivor expectancy for any subsequent year shall be equal
to the excess of (1) the life expectancy or joint life and last survivor
expectancy for the year in which the Participant or Former Participant attains
age 70 1/2, over (2) the number of whole years that have elapsed since the
Participant or Former Participant attained age 70 1/2.
(c) Payment of the distributions required to be made to a Participant
or Former Participant under this section 13.7 shall be made in accordance
with section 13.4.
SECTION 13.8 DIRECT ROLLOVER OF ELIGIBLE ROLLOVER DISTRIBUTIONS.
(a) A Distributee may elect, at the time and in the manner prescribed
by the Plan Administer, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover.
(b) The following rules shall apply with respect to Direct Rollovers
made pursuant to this section 13.8:
(i) A Participant may only elect to make a Direct Rollover of an
Eligible Rollover Distribution if such Eligible Rollover Distribution (when
combined with other Eligible Rollover Distributions made or to be made in
the same calendar year) is reasonably expected to be at least $200;
(ii) If a Participant elects a Direct Rollover of a portion of an
Eligible Rollover Distribution, that portion must be equal to at least
$500; and
(iii) A Participant may not divide his or her Eligible Rollover
Distribution into separate distributions to be transferred to two or more
Eligible Retirement Plans.
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(c) For purposes of this section 13.8 and any other applicable section
of the Plan, the following definitions shall have the following meanings:
(i) "Direct Rollover" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
(ii) "Distributee" means an Employee or former Employee. In addition,
the Employee's or former Employee's surviving spouse and the Employee's
spouse or former spouse who is the alternate payee under a Qualified
Domestic Relations Order are considered Distributees with regard to the
interest of the spouse or former spouse.
(iii) "Eligible Retirement Plan" means an individual retirement
account described in section 408(a) of the Code, an individual retirement
annuity described in section 408(b) or the Code, an annuity plan described
in section 403(a) of the Code, or a qualified trust described in section
401(a) of the Code that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover Distribution to
the current or former spouse who is the alternative payee under a Qualified
Domestic Relations Order or to a surviving spouse, an Eligible Retirement
Plan is an individual retirement account or individual retirement annuity.
(iv) "Eligible Rollover Distribution" means any distribution of all or
any portion of the balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include: any distribution that is
one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectancies) of the
Distributee's designated Beneficiary, or for a specified period of ten
years or more; any distribution to the extent such distribution is required
under section 401(a)(9) of the Code; and the portion of any distribution
that is not includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities).
SECTION 13.9 VALUATION OF SHARES UPON SETTLEMENT TO A PARTICIPANT.
Notwithstanding any contrary provision in this Article XIII, in the event
that all or a portion of a payment of a distribution to a Participant is to be
made in cash, such Participant shall only be entitled to receive the proceeds of
the Shares allocated to his Account that are sold in connection with such
distribution and which are valued as of the date of such sale.
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ARTICLE XIV
CHANGE IN CONTROL
SECTION 14.1 DEFINITION OF CHANGE IN CONTROL.
A Change in Control of the Employer shall be deemed to have occurred upon
the happening of any of the following events:
(a) the occurrence of any event upon which any "person" (as such term
is used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended ("Exchange Act")), other than (A) a trustee or other fiduciary
holding securities under an employee benefit plan maintained for the
benefit of employees of RFS Bancorp, Inc.; (B) a corporation owned,
directly or indirectly, by the shareholders of RFS Bancorp, Inc. in
substantially the same proportions as their ownership of stock of RFS
Bancorp, Inc.; or (C) any group constituting a person in which employees of
RFS Bancorp, Inc. are substantial members, becomes the "beneficial owner"
(as defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities issued by RFS Bancorp, Inc. representing 25% or
more of the combined voting power of all of RFS Bancorp, Inc.'s then
outstanding securities; or
(b) the occurrence of any event upon which the individuals who on the
date the Plan is adopted are members of the Board, together with
individuals whose election by the Board or nomination for election by RFS
Bancorp, Inc.'s shareholders was approved by the affirmative vote of at
least two-thirds of the members of the Board then in office who were either
members of the Board on the date this Plan is adopted or whose nomination
or election was previously so approved, cease for any reason to constitute
a majority of the members of the Board, but excluding, for this purpose,
any such individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of
directors of RFS Bancorp, Inc. (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
(c) the shareholders of RFS Bancorp, Inc. approve either:
(i) a merger or consolidation of RFS Bancorp, Inc. with any other
corporation, other than a merger or consolidation following which both of
the following conditions are satisfied:
(A) either (1) the members of the Board of RFS Bancorp, Inc.
immediately prior to such merger or consolidation constitute at least
a majority of the members of the governing body of the institution
resulting from such merger or consolidation; or (2) the shareholders
of RFS Bancorp, Inc. own securities of the institution resulting from
such merger or consolidation representing 80% or
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more of the combined voting power of all such securities then
outstanding in substantially the same proportions as their ownership
of voting securities of RFS Bancorp, Inc. before such merger or
consolidation; and
(B) the entity which results from such merger or consolidation
expressly agrees in writing to assume and perform RFS Bancorp, Inc.'s
obligations under the Plan; or
(ii) a plan of complete liquidation of RFS Bancorp, Inc. or an
agreement for the sale or disposition by RFS Bancorp, Inc. of all or
substantially all of its assets; and
(d) any event that would be described in section 14.1(c)(i), or (ii)
if "Revere Federal Savings" were substituted for "RFS Bancorp, Inc."
therein, and "Board of Directors of Revere Federal Savings" were
substituted for "Board" therein; and
In no event, however, shall the transaction by which Revere Federal Savings
converts from a mutual savings bank to a stock savings bank, or any transaction
by which a company wholly owned by Revere Federal Savings becomes the parent
company of Revere Federal Savings be deemed a Change in Control. In addition, in
no event shall the second step reorganization of RFS Bancorp, Inc. in connection
with the Bank's conversion to stock ownership form be deemed a "Change in
Control."
SECTION 14.2 VESTING ON CHANGE OF CONTROL.
Upon the effective date of a Change in Control, the Account of each person
who would then, upon termination of the Plan, be entitled to a benefit, shall be
fully vested and nonforfeitable.
SECTION 14.3 REPAYMENT OF LOAN.
(a) Upon a Change in Control described in section 14.1(c) (or which
would be described in section 14.1(c) if "Revere Federal Savings" were
substituted for "RFS Bancorp, Inc." thereunder), the Committee shall direct
the Trustee to sell a sufficient number of Shares to repay any outstanding
Share Acquisition Loan in full. The proceeds of such sale shall be used to
repay such Share Acquisition Loan. After repayment of the Share Acquisition
Loan, all remaining Shares which had been unallocated (or the proceeds
thereof, if applicable) shall be allocated among the accounts of all
Participants who were employed by an Employer on the effective date of such
Change in Control. Such allocation of Shares or proceeds shall be credited
as of the date on which the Change in Control occurs to the Accounts of
each Participant who has not had a termination of participation under
section 2.3 as of such date (each, an "Affected Participant"), in
proportion to their Allocation Compensation, for the period, beginning on
the January 1 immediately preceding the date on which the Change in Control
occurs and ending on the date on which
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the Change in Control occurs. If any amount cannot be allocated to an
Affected Participant in the year of such Change in Control as a result of
the limitations of section 415 of the Code, the amounts will be allocated
in subsequent years to those persons who were Affected Participants and who
continue to be Participants in the Plan until finally distributed to
Affected Participants.
(b) In the event that the application of section 415 of the Code
prevents the allocation of all of the Shares or other assets released from
the Loan Repayment Account as provided in section 14.3(a) as of the
effective date of the Change in Control, each Affected Participant shall be
entitled to receive a supplemental benefit payment directly from the
Employer. The supplemental benefit payment to each Affected Participant
shall be an amount equal to the excess of:
(i) the total amount of Shares or other property that would be
allocated to such Affected Participant's Account under section 14.3(a) if
section 415 of the Code did not apply; over
(ii) the total of Shares or other property actually allocated to such
Affected Participant's Account under section 14.3(a).
Such payment (without offset for any allocations which may occur under this Plan
subsequent to the Change in Control) shall be made as soon as practicable, but
in any event within ten business days, after the effective date of the Change in
Control. This section 14.3(b) shall be treated as a separate, non-qualified
"excess benefit plan" within the meaning of section 3(34) of ERISA and shall be
interpreted, administered and enforced in a manner consistent with this
intention. To the extent that any Affected Participant is entitled to the same
or a similar payment under any other non-qualified plan, program or arrangement
of the Employer, any payment under this section 14.3(b) shall be coordinated
with the payments under such other non-qualified programs, plan or arrangements
in such manner as shall be determined by the Plan Administrator to be necessary
to prevent the duplication of benefits.
SECTION 14.4 PLAN TERMINATION AFTER CHANGE IN CONTROL.
After repayment of the loan and allocation of shares or proceeds as
provided in section 14.3, the Plan shall be terminated and all amounts shall be
distributed as soon as practicable.
SECTION 14.5 AMENDMENT OF ARTICLE XIV.
Article XIV of the Plan may not be amended after a Change in Control of the
Employer unless required by the Internal Revenue Service as a condition to the
continued treatment of the Plan as a tax-qualified plan under section 401(a) of
the Code.
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ARTICLE XV
ADMINISTRATION
SECTION 15.1 NAMED FIDUCIARIES.
The term "Named Fiduciary" shall mean (but only to the extent of the
responsi bilities of each of them) the Plan Administrator, the Committee, the
Board and the Trustee. This Article XV is intended to allocate to each Named
Fiduciary the responsibility for the prudent execution of the functions assigned
to him or it, and none of such responsibilities or any other responsibility
shall be shared by two or more of such Named Fiduciaries. Whenever one Named
Fiduciary is required by the Plan or Trust Agreement to follow the directions of
another Named Fiduciary, the two Named Fiduciaries shall not be deemed to have
been assigned a shared responsibility, but the responsibility of the Named
Fiduciary giving the directions shall be deemed his sole responsibility, and the
responsibility of the Named Fiduciary receiving those directions shall be to
follow them insofar as such instructions are on their face proper under
applicable law.
SECTION 15.2 PLAN ADMINISTRATOR.
There shall be a Plan Administrator, who shall be Revere Federal Savings,
or such Employee or officer as may be designated by the Board, as hereinafter
provided, and who shall, subject to the responsibilities of the Committee and
the Board, have the responsibility for the day-to-day control, management,
operation and administration of the Plan (except trust duties). The Plan
Administrator shall have the following responsibilities:
(a) To maintain records necessary or appropriate for the
administration of the Plan;
(b) To give and receive such instructions, notices, information,
materials, reports and certifications to the Trustee as may be necessary or
appropriate in the administration of the Plan;
(c) To prescribe forms and make rules and regulations consistent with
the terms of the Plan and with with the interpretations and other actions
of the Committee;
(d) To require such proof of age or evidence of good health of an
Employee, Participant or Former Participant or the spouse of either, or of
a Beneficiary as may be necessary or appropriate in the administration of
the Plan;
(e) To prepare and file, distribute or furnish all reports, plan
descriptions, and other information concerning the Plan, including, without
limitation, filings with the Secretary of Labor and communications with
Participants, Former Participants and other persons, as shall be required
of the Plan Administrator under ERISA;
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(f) To determine any question arising in connection with the Plan, and
the Plan Administrator's decision or action in respect thereof shall be
final and conclusive and binding upon the Employer, the Trustee,
Participants, Former Participants, Beneficiaries and any other person
having an interest under the Plan; provided, however, that any question
relating to an inconsistency or an omission in the Plan, or an
interpretation of the provisions of the Plan, shall be referred to the
Committee by the Plan Administrator and the decision of the Committee in
respect thereof shall be final;
(g) Subject to the provisions of section 15.5, to review and dispose
of claims under the Plan filed pursuant to section 15.4 and appeals filed
pursuant to section 15.5;
(h) If the Plan Administrator shall determine that by reason of
illness, senility, insanity, or for any other reason, it is undesirable to
make any payment to a Participant, Former Participant, Beneficiary or any
other person entitled thereto, to direct the application of any amount so
payable to the use or benefit of such person in any manner that he may deem
advisable or to direct in his discretion the withholding of any payment
under the Plan due to any person under legal disability until a
representative competent to receive such payment in his behalf shall be
appointed pursuant to law;
(i) To discharge such other responsibilities or follow such directions
as may be assigned or given by the Committee or the Board; and
(j) To perform any duty or take any action which is allocated to the
Plan Administrator under the Plan.
SECTION 15.3 COMMITTEE RESPONSIBILITIES.
There shall be a Committee consisting of not less than three persons, who
may, but need not be officers of the Bank and who shall be appointed by the
Board and serve at the pleasure of the Board. The Committee shall, subject to
the responsibilities of the Board, have the following responsibilities:
(a) To review the performance of the Plan Administrator;
(b) To hear and decide appeals, pursuant to the claims procedure
contained in section 15.5 of the Plan, taken from the decisions of the Plan
Administrator;
(c) To hear and decide questions, including the interpretation of the
Plan, as may be referred to the Committee by the Plan Administrator;
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(d) To review the performance of the Trustee and such investment
managers as may be appointed in or pursuant to the Trust Agreement in
investing, managing and controlling the assets of the Plan;
(e) To the extent required by ERISA, to establish a funding policy and
method consistent with the objectives of the Plan and the requirements of
ERISA, and to review such policy and method at least annually;
(f) To report and make recommendations to the Board regarding changes
in the Plan, including changes in the operation and management of the Plan
and removal and replacement of the Trustee and such investment managers as
may be appointed in or pursuant to the Trust Agreement;
(g) To designate an Alternate Plan Administrator to serve in the event
that the Plan Administrator is absent or otherwise unable to discharge his
responsibilities;
(h) To remove and replace the Plan Administrator or Alternate, or both
of them, and to fill a vacancy in either office;
(i) To the extent provided under and subject to the provisions of the
Trust Agreement, to appoint "investment managers" as defined in section
3(38) of ERISA to manage and control (including acquiring and disposing of)
all or any of the assets of the Plan;
(j) With the prior approval of the Board, to direct the Trustee to
obtain one or more Share Acquisition Loans;
(k) To develop and provide procedures and forms necessary to enable
Participants to give voting and tendering directions on a confidential
basis;
(l) To discharge such other responsibilities or follow such directions
as may be assigned or given by the Board; and
(m) To perform any duty or take any action which is allocated to the
Committee under the Plan.
The Committee shall have the power and authority necessary or appropriate to
carry out its responsibilities.
SECTION 15.4 CLAIMS PROCEDURE.
Any claim relating to benefits under the Plan shall be filed with the Plan
Administrator on a form prescribed by him. If a claim is denied in whole or in
part, the Plan
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Administrator shall give the claimant written notice of such denial, which
notice shall specifically set forth:
(a) The reasons for the denial;
(b) The pertinent Plan provisions on which the denial was based;
(c) Any additional material or information necessary for the claimant
to perfect his claim and an explanation of why such material or information
is needed; and
(d) An explanation of the Plan's procedure for review of the denial of
the claim.
In the event that the claim is not granted and notice of denial of a claim is
not furnished by the 30th day after such claim was filed, the claim shall be
deemed to have been denied on that day for the purpose of permitting the
claimant to request review of the claim.
SECTION 15.5 CLAIMS REVIEW PROCEDURE.
Any person whose claim filed pursuant to section 15.4 has been denied in
whole or in part by the Plan Administrator may request review of the claim by
the Committee, upon a form prescribed by the Plan Administrator. The claimant
shall file such form (including a statement of his position) with the Committee
no later than 60 days after the mailing or delivery of the written notice of
denial provided for in section 15.4, or, if such notice is not provided, within
60 days after such claim is deemed denied pursuant to section 15.4. The claimant
shall be permitted to review pertinent documents. A decision shall be rendered
by the Committee and communicated to the claimant not later than 30 days after
receipt of the claimant's written request for review. However, if the Committee
finds it necessary, due to special circumstances (for example, the need to hold
a hearing), to extend this period and so notifies the claimant in writing, the
decision shall be rendered as soon as practicable, but in no event later than
120 days after the claimant's request for review. The Committee's decision shall
be in writing and shall specifically set forth:
(a) The reasons for the decision; and
(b) The pertinent Plan provisions on which the decision is based.
Any such decision of the Committee shall be binding upon the claimant and the
Employer, and the Plan Administrator shall take appropriate action to carry out
such decision.
SECTION 15.6 ALLOCATION OF FIDUCIARY RESPONSIBILITIES
AND EMPLOYMENT OF ADVISORS.
Any Named Fiduciary may:
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(a) Allocate any of his or its responsibilities (other than trustee
responsibilities) under the Plan to such other person or persons as he or
it may designate, provided that such allocation and designation shall be in
writing and filed with the Plan Administrator;
(b) Employ one or more persons to render advice to him or it with
regard to any of his or its responsibilities under the Plan; and
(c) Consult with counsel, who may be counsel to the Employer.
SECTION 15.7 OTHER ADMINISTRATIVE PROVISIONS.
(a) Any person whose claim has been denied in whole or in part must
exhaust the administrative review procedures provided in section 15.5 prior
to initiating any claim for judicial review.
(b) No bond or other security shall be required of the Plan
Administrator, a member of the Committee or any officer or Employee of the
Employer to whom fiduciary responsibilities are allocated by a Named
Fiduciary, except as may be required by ERISA.
(c) Subject to any limitation on the application of this section
15.7(c) pursuant to ERISA, neither the Plan Administrator, nor any member
of the Committee, nor any officer or Employee of the Employer to whom
fiduciary responsibilities are allocated by a Named Fiduciary, shall be
liable for any act of omission or commission by himself or by another
person, except for his own individual willful and intentional malfeasance.
(d) The Plan Administrator or the Committee may, except with respect
to actions under section 15.5, shorten, extend or waive the time (but not
beyond 60 days) required by the Plan for filing any notice or other form
with the Plan Administrator or the Committee, or taking any other action
under the Plan.
(e) The Plan Administrator or the Committee may direct that the costs
of services provided pursuant to section 15.6, and such other reasonable
expenses as may be incurred in the administration of the Plan, shall be
paid out of the funds of the Plan unless the Employer shall pay them.
(f) Any person, group of persons, committee, corporation or
organization may serve in more than one fiduciary capacity with respect to
the Plan.
(g) Any action taken or omitted by any fiduciary with respect to the
Plan, including any decision, interpretation, claim denial or review on
appeal, shall be conclusive and binding on all interested parties and shall
be subject to judicial modification or reversal only to the extent it is
determined by a court of competent jurisdiction that such action or
omission was arbitrary and capricious and contrary to the terms of the
Plan.
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ARTICLE XVI
AMENDMENT, TERMINATION AND TAX QUALIFICATION
SECTION 16.1 AMENDMENT AND TERMINATION BY RFS BANCORP, INC.
The Employer expects to continue the Plan indefinitely, but specifically
reserves the right, in its sole discretion, at any time, by appropriate action
of the Board, to amend, in whole or in part, any or all of the provisions of the
Plan and to terminate the Plan at any time. Subject to the provisions of section
16.2, no such amendment or termination shall permit any part of the Trust Fund
to be used for or diverted to purposes other than for the exclusive benefit of
Participants, Former Participants, Beneficiaries or other persons entitled to
benefits, and no such amendment or termination shall reduce the accrued benefit
of any Participant, Former Participant, Beneficiary or other person who may be
entitled to benefits, without his consent. In the event of a termination or
partial termination of the Plan, or in the event of a complete discontinuance of
the Employer's contributions to the Plan, the Accounts of each affected person
shall forthwith become nonforfeitable and shall be payable in accordance with
the provisions of Article XIII.
SECTION 16.2 AMENDMENT OR TERMINATION OTHER THAN BY RFS BANCORP, INC.
In the event that a corporation or trade or business other than RFS
Bancorp, Inc. shall adopt this Plan, such corporation or trade or business
shall, by adopting the Plan, empower RFS Bancorp, Inc. to amend or terminate the
Plan, insofar as it shall cover employees of such corporation or trade or
business, upon the terms and conditions set forth in section 16.1; provided,
however, that any such corporation or trade or business may, by action of its
board of directors or other governing body, amend or terminate the Plan, insofar
as it shall cover employees of such corporation or trade or business, at
different times and in a different manner. In the event of any such amendment or
termination by action of the board of directors or other governing body of such
a corporation or trade or business, a separate plan shall be deemed to have been
established for the employees of such corporation or trade or business, and the
assets of such plan shall be segregated from the assets of this Plan at the
earliest practicable date and shall be dealt with in accordance with the
documents governing such separate plan.
SECTION 16.3 CONFORMITY TO INTERNAL REVENUE CODE.
The Employer has established the Plan with the intent that the Plan and
Trust will at all times be qualified under section 401(a) and exempt under
section 501(a) of the Code and with the intent that contributions under the Plan
will be allowed as deductions in computing the net income of the Employer for
federal income tax purposes, and the provisions of the Plan and Trust Agreement
shall be construed to effectuate such intentions. Accordingly, notwithstanding
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anything to the contrary hereinbefore provided, the Plan and the Trust Agreement
may be amended at any time without prior notice to Participants, Former
Participants, Beneficiaries or any other persons entitled to benefits, if such
amendment is deemed by the Board to be necessary or appropriate to effectuate
such intent.
SECTION 16.4 CONTINGENT NATURE OF CONTRIBUTIONS.
(a) All ESOP Contributions to the Plan are conditioned upon the
issuance by the Internal Revenue Service of a determination that the Plan
and Trust are qualified under section 401(a) of the Code and exempt under
section 501(a) of the Code. If the Employer applies to the Internal Revenue
Service for such a determination within 90 days after the date on which it
files its federal income tax return for its taxable year that includes the
last day of the Plan Year in which the Plan is adopted, and if the Internal
Revenue Service issues a determination that the Plan and Trust are not so
qualified or exempt, all ESOP Contributions made by the Employer prior to
the date of receipt of such a determination may, at the election of the
Employer, be returned to the Employer within one year after the date of
such determination.
(b) All ESOP Contributions and Loan Repayment Contributions to the
Plan are made upon the condition that such ESOP Contributions and Loan
Repayment Contributions will be allowed as a deduction in computing the net
income of the Employer for federal income tax purposes. To the extent that
any such deduction is disallowed, the amount disallowed may, at the
election of the Employer, be returned to the Employer within one year after
the deduction is disallowed.
(c) Any contribution to the Plan made by the Employer as a result of a
mistake of fact may, at the election of the Employer, be returned to the
Employer within one year after such contribution is made.
ARTICLE XVII
SPECIAL RULES FOR TOP HEAVY PLAN YEARS
SECTION 17.1 IN GENERAL.
As of the Determination Date for each Plan Year, the Plan Administrator
shall determine whether the Plan is a Top Heavy Plan in accordance with the
provisions of this Article XVII. If, as of such Determination Date, the Plan is
a Top Heavy Plan, then the Plan Year immediately following such Determination
Date shall be a Top Heavy Plan Year and the special provisions of this Article
XVII shall be in effect; provided, however, that if, as of the Determination
Date for the Plan Year in which the Effective Date occurs, the Plan is a Top
Heavy
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Plan, such Plan Year shall be a Top Heavy Plan Year, and the provisions of this
Article XVII shall be given retroactive effect for such Plan Year.
SECTION 17.2 DEFINITION OF TOP HEAVY PLAN.
(a) Subject to section 17.2(c), the Plan is a Top Heavy Plan if, as of
a Deter mination Date: (i) it is not a member of a Required Aggregation
Group, and (ii)(A) the sum of the Cumulative Accrued Benefits of all Key
Employees exceeds 60% of (B) the sum of the Cumulative Accrued Benefits of
all Employees (excluding former Key Employees), former Employees (excluding
former Key Employees and other former Employees who have not performed any
services for the Employer or any Affiliated Employer during the immediately
preceding five Plan Years), and their Beneficiaries.
(b) Subject to section 17.2(c), the Plan is a Top Heavy Plan if, as of
a Deter mination Date: (i) the Plan is a member of a Required Aggregation
Group, and (ii)(A) the sum of the Cumulative Accrued Benefits of all Key
Employees under all plans that are members of the Required Aggregation
Group exceeds 60% of (B) the sum of the Cumulative Accrued Benefits of all
Employees (excluding former Key Employees), former Employees (excluding
former Key Employees and other former Employees who have not performed any
services for the Employer or any Affiliated Employer during the im
mediately preceding five Plan Years), and their Beneficiaries under all
plans that are members of the Required Aggregation Group.
(c) Notwithstanding sections 17.2(a) and 17.2(b), the Plan is not a
Top Heavy Plan if, as of a Determination Date: (i) the Plan is a member of
a Permissible Aggregation Group, and (ii)(A) the sum of the Cumulative
Accrued Benefits of all Key Employees under all plans that are members of
the Permissible Aggregation Group does not exceed 60% of (B) the sum of the
Cumulative Accrued Benefits of all Employees (excluding former Key
Employees), former Employees (excluding former Key Employees and other
former Employees who have not performed any services for the Employer or
any Affiliated Employer during the immediately preceding five Plan Years),
and their Beneficiaries under all plans that are members of the Permissible
Aggregation Group.
SECTION 17.3 DETERMINATION DATE.
The Determination Date for the Plan Year in which the Effective Date occurs
shall be the last day of such Plan Year, and the Determination Date for each
Plan Year beginning after the Plan Year in which the Effective Date occurs shall
be the last day of the preceding Plan Year. The Determination Date for any other
qualified plan maintained by the Employer for a plan year shall be the last day
of the preceding plan year of each such plan, except that in the case of the
first plan year of such plan, it shall be the last day of such first plan year.
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SECTION 17.4 CUMULATIVE ACCRUED BENEFITS.
(a) An individual's Cumulative Accrued Benefits under this Plan as of
a Determination Date are equal to the sum of:
(i) the balance credited to such individual's Account under this Plan
as of the most recent Valuation Date preceding the Determination Date;
(ii) the amount of any ESOP Contributions or Loan Repayment
Contributions made after such Valuation Date but on or before the
Determination Date; and
(iii) the amount of any distributions of such individual's Cumulative
Accrued Benefits under the Plan during the five year period ending on the
Determination Date.
For purposes of this section 17.4(a), the computation of an individual's
Cumulative Accrued Benefits, and the extent to which distributions, rollovers
and transfers are taken into account, will be made in accordance with section
416 of the Code and the regulations thereunder.
(b) For purposes of this Plan, the term "Cumulative Accrued Benefits"
with respect to any other qualified plan, shall mean the cumulative accrued
benefits determined for purposes of section 416 of the Code under the
provisions of such plans.
(c) For purposes of determining the top heavy status of a Required
Aggregation Group or a Permissible Aggregation Group, the Cumulative
Accrued Benefits under this Plan and the Cumulative Accrued Benefits under
any other plan shall be determined as of the Determination Date that falls
within the same calendar year as the Determination Dates for all other
members of such Required Aggregation Group or Permissible Aggregation
Group.
SECTION 17.5 KEY EMPLOYEES.
(a) For purposes of the Plan, the term Key Employee means any employee
or former employee of the Employer or any Affiliated Employer who is at any
time during the current Plan Year or was at any time during the immediately
preceding four Plan Years:
(i) a Five Percent Owner;
(ii) a person who would be described in section 1.24 if the number
"1%" were substituted for the number "5%" in section 1.24 and who has an
annual Total Compen sation from the Employer and any Affiliated Employer of
more than $150,000;
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(iii) an Officer of the Employer or any Affiliated Employer who has an
annual Total Compensation greater than 50% of the amount in effect under
section 415(b)(1)(A) of the Code for any such Plan Year; or
(iv) one of the ten persons owning the largest interests in the
Employer and having an annual Total Compensation from the Employer or any
Affiliated Employer in excess of the dollar limitation in effect under
section 415(c)(1)(A) of the Code for such Plan Year.
(b) For purposes of section 17.5(a):
(i) for purposes of section 17.5(a)(iii), in the event the Employer or
any Affiliated Employer has more officers than are considered Officers, the
term Key Emplo yee shall mean those officers, up to the maximum number,
with the highest annual compensation in any one of the five consecutive
Plan Years ending on the Determination Date; and
(ii) for purposes of section 17.5(a)(iv), if two or more persons have
equal ownership interests in the Employer, each such person shall be
considered as having a larger ownership interest than any such person with
a lower annual compensation from the Employer or any Affiliated Employer.
(c) For purposes of section 17.5(a): (i) a person's compensation from
Affiliated Employers shall be aggregated, but his ownership interests in
Affiliated Employers shall not be aggregated; (ii) an employee shall only
be deemed to be an officer if he has the power and responsibility of a
person who is an officer within the meaning of section 416 of the Code; and
(iii) the term Key Employee shall also include the Beneficiary of a
deceased Key Employee.
SECTION 17.6 REQUIRED AGGREGATION GROUP.
For purposes of this Article XVII, a Required Aggregation Group shall
consist of (a) this Plan; (b) any other qualified plans maintained by the
Employer and any Affiliated Employers that cover Key Employees; and (c) any
other qualified plans that are required to be aggregated for purposes of
satisfying the requirements of sections 401(a)(4) or 410(b) of the Code.
SECTION 17.7 PERMISSIBLE AGGREGATION GROUP.
For purposes of this Article XVII, a Permissible Aggregation Group shall
consist of (a) the Required Aggregation Group and (b) any other qualified plans
maintained by the Employer and any Affiliated Employers; provided, however, that
the Permissible Aggregation Group must satisfy the requirements of sections
401(a)(4) and 410(b) of the Code.
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SECTION 17.8 SPECIAL REQUIREMENTS DURING TOP HEAVY PLAN YEARS.
(a) Notwithstanding any other provision of the Plan to the contrary,
for each Top Heavy Plan Year, in the case of a Participant (other than a
Key Employee) on the last day of such Top Heavy Plan Year who is not also a
participant in another qualified plan which satisfies the minimum
contribution and benefit requirements of section 416 of the Code with
respect to such Participant, the sum of the ESOP Contributions and Loan
Repayment Contributions made with respect to such Participant, when
expressed as a percentage of his Total Compensation for such Top Heavy Plan
Year, shall not be less than 3% of such Participant's Total Compensation
for such Top Heavy Plan Year or, if less, the highest combined rate,
expressed as a percentage of Total Compensation at which ESOP Contributions
and Loan Repayment Contributions were made on behalf of a Key Employee for
such Top Heavy Plan Year. The Employer shall make an additional
contribution to the Account of each Participant to the extent necessary to
satisfy the foregoing requirement.
(b) For any Top Heavy Plan Year, the number "1.0" shall be substituted
for the number "1.25" in sections 8.2(c)(iii) and 8.2(c)(iv), except that:
(i) this section 17.8(b) shall not apply to any individual for a Top
Heavy Plan Year that is not a Super Top Heavy Plan Year if the requirements
of section 17.8(a) would be satisfied for such Super Top Heavy Plan Year if
the number "4%" were substituted for the number 3% in section 17.8(a); and
(ii) this section 17.8(b) shall not apply to an individual for a Top
Heavy Plan Year if, during such Top Heavy Plan Year, there are no ESOP
Contributions or Loan Repayment Contributions allocated to such individual
under this Plan, there are no contributions under any other qualified
defined contribution plan maintained by the Employer, and there are no
accruals for such individual under any qualified defined benefit plan
maintained by the Employer.
For purposes of this section 17.8(b), the term Super Top Heavy Plan Year means a
Top Heavy Plan Year in which the Plan would meet the definitional requirements
of sections 17.2(a) or 17.2(b) if the term "90%" were substituted for the term
"60%" in sections 17.2(a), 17.2(b) and 17.2(c).
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ARTICLE XVIII
MISCELLANEOUS PROVISIONS
SECTION 18.1 GOVERNING LAW.
The Plan shall be construed, administered and enforced according to the
laws of the State of New York without giving effect to the conflict of laws
principles thereof, except to the extent that such laws are preempted by federal
law.
SECTION 18.2 NO RIGHT TO CONTINUED EMPLOYMENT.
Neither the establishment of the Plan, nor any provisions of the Plan or of
the Trust Agreement establishing the Trust Fund nor any action of the Committee,
the Plan Administrator or the Trustee, shall be held or construed to confer upon
any Employee any right to a continuation of employment by the Employer. The
Employer reserves the right to dismiss any Employee or otherwise deal with any
Employee to the same extent as though the Plan had not been adopted.
SECTION 18.3 CONSTRUCTION OF LANGUAGE.
Wherever appropriate in the Plan, words used in the singular may be read in
the plural, words used in the plural may be read in the singular, and words
importing the masculine gender may be read as referring equally to the feminine
and the neuter. Any reference to an Article or section number shall refer to an
Article or section of the Plan, unless otherwise indicated.
SECTION 18.4 HEADINGS.
The headings of Articles and sections are included solely for convenience
of reference. If there is any conflict between such headings and the text of the
Plan, the text shall control.
SECTION 18.5 MERGER WITH OTHER PLANS.
The Plan shall not be merged or consolidated with, nor transfer its assets
or liabilities to, any other plan unless each Participant, Former Participant,
Beneficiary and other person entitled to benefits, would (if that plan then
terminated) receive a benefit immediately after the merger, consolidation or
transfer which is equal to or greater than the benefit he would have been
entitled to receive if the Plan had terminated immediately before the merger,
consolidation or transfer.
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SECTION 18.6 NON-ALIENATION OF BENEFITS.
(a) Except as provided in section 18.6(b), the right to receive a
benefit under the Plan shall not be subject in any manner to anticipation,
alienation or assignment, nor shall such right be liable for or subject to
debts, contracts, liabilities or torts. Should any Participant, Former
Participant or other person attempt to anticipate, alienate or assign his
interest in or right to a benefit, or should any person claiming against
him seek to subject such interest or right to legal or equitable process,
all the interest or right of such Participant or Former Participant or
other person entitled to benefits in the Plan shall cease, and in that
event such interest or right shall be held or applied, at the direction of
the Plan Administrator, for or to the benefit of such Participant or Former
Participant, or other person or his spouse, children or other dependents in
such manner and in such proportions as the Plan Administrator may deem
proper. This prohibition on assignment shall also not apply to prevent a
benefit offset by any amount such Participant, Former Participant or
Beneficiary is required or ordered to pay to the Plan if:
(i) the order or requirement to pay arises: (A) under a judgment
issued on or after August 5, 1997 of conviction for a crime involving the
Plan; (B) under a civil judgment (including a consent order or decree)
entered by a court on or after August 5, 1997 in an action brought in
connection with a violation (or alleged violation) of part 4 of subtitle B
of title I of ERISA; or (C) pursuant to a settlement agreement entered into
on or after August 5, 1997 between the Participant, Former Participant or
Beneficiary and one or both of the United States Department of Labor and
the Pension Benefit Guaranty Corporation in connection with a violation (or
alleged violation) of part 4 of subtitle B of title I of ERISA by a
fiduciary or any other person; and
(ii) the judgment, order, decree or settlement agreement expressly
provides for the offset of all or part of the amount ordered or required to
be paid to the Plan against the Participant's, Former Participant's or
Beneficiary's benefits under the Plan.
(b) This section 18.6 shall not prohibit the Plan Administrator from
recognizing a Domestic Relations Order that is determined to be a Qualified
Domestic Relations Order in accordance with section 18.7.
SECTION 18.7 PROCEDURES INVOLVING DOMESTIC RELATIONS ORDERS.
Upon receiving a Domestic Relations Order, the Plan Administrator shall
segregate in a separate account or in an escrow account or separately account
for the amounts payable to any person pursuant to such Domestic Relations Order,
pending a determination whether such Domestic Relations Order constitutes a
Qualified Domestic Relations Order, and shall give notice of the receipt of the
Domestic Relations Order to the Participant or Former Participant and each other
person affected thereby. If, within 18 months after receipt of such Domestic
Relations Order, the Plan Administrator, a court of competent jurisdiction or
another appropriate authority
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determines that such Domestic Relations Order constitutes a Qualified Domestic
Relations Order, the Plan Administrator shall direct the Trustee to pay the
segregated amounts (plus any interest thereon) to the person or persons entitled
thereto under the Qualified Domestic Relations Order. If it is determined that
the Domestic Relations Order is not a Qualified Domestic Relations Order or if
no determination is made within the prescribed 18-month period, the segregated
amounts shall be distributed as though the Domestic Relations Order had not been
received, and any later determination that such Domestic Relations Order
constitutes a Qualified Domestic Relations Order shall be applied only with
respect to benefits that remain undistributed on the date of such determination.
The Plan Administrator shall be authorized to establish such reasonable
administrative procedures as he deems necessary or appropriate to administer
this section 18.7. This section 18.7 shall be construed and administered so as
to comply with the requirements of section 401(a)(13) of the Code.
SECTION 18.8 LEASED EMPLOYEES.
(a) Subject to section 18.8(b), a leased employee shall be treated as
an Employee for purposes of the Plan. For purposes of this section 18.8,
the term "leased employee" means any person (i) who would not, but for the
application of this section 18.8, be an Employee and (ii) who pursuant to
an agreement between the Employer and any other person ("leasing
organization") has performed for the Employer (or for the Employer and
related persons determined in accordance with section 414(n)(6) of the
Code), on a substantially full-time basis for a period of at least one
year, services performed under the primary direction or control of the
Employer.
(b) For purposes of the Plan:
(i) contributions or benefits provided to the leased employee by the
leasing organization which are attributable to services performed for the
Employer shall be treated as provided by the Employer; and
(ii) section 18.8(a) shall not apply to a leased employee if:
(A) the number of leased employees performing services for the
Employer does not exceed 20% of the number of the Employer's Employees
who are not Highly Compensated Employees; and
(B) such leased employee is covered by a money purchase pension
plan providing (I) a nonintegrated contribution rate of at least 10%
of the leased employ ee's compensation; (II) immediate participation;
(III) full and immediate vesting; and (IV) coverage for all of the
employees of the leasing organization (other than employees who
perform substantially all of their services for the leasing
organization).
58
<PAGE>
SECTION 18.9 STATUS AS AN EMPLOYEE STOCK OWNERSHIP PLAN.
It is intended that the Plan constitute an "employee stock ownership plan,"
as defined in section 4975(e)(7) of the Code and section 407(d)(6) of ERISA. The
Plan shall be construed and administered to give effect to such intent.
59
FORM OF
TRUST AGREEMENT
BETWEEN
RFS BANCORP, INC.
AND
[NAME OF TRUSTEE]
FOR THE
EMPLOYEE STOCK OWNERSHIP PLAN
OF RFS BANCORP, INC. AND AFFILIATES
----------------------------------
Entered into as of _________, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
TRUST FUND
<S> <C> <C>
Section 1.1 Trust Fund.............................................................................2
----------
Section 1.2 Collection of Contributions............................................................2
---------------------------
Section 1.3 Non-diversion of Funds.................................................................2
----------------------
ARTICLE II
INVESTMENT AND ADMINISTRATION
Section 2.1 In General.............................................................................3
----------
Section 2.2 Investment Funds.......................................................................3
----------------
Section 2.3 Appointment of Investment Manager......................................................3
---------------------------------
Section 2.4 Investment Decisions...................................................................4
--------------------
Section 2.5 Investment in Commingled Funds.........................................................5
------------------------------
Section 2.6 Liquidity..............................................................................6
---------
Section 2.7 Investment Directions by Participants..................................................6
-------------------------------------
Section 2.8 Trustee's Administrative Authority.....................................................6
----------------------------------
Section 2.9 Exercise of Voting Rights with Respect to Shares.......................................8
------------------------------------------------
Section 2.10 Response to Tender Offers and Similar Events...........................................8
--------------------------------------------
Section 2.11 Dissent and Appraisal Rights...........................................................9
----------------------------
Section 2.12 Share Acquisition Loans................................................................9
-----------------------
ARTICLE III
TRUSTEE, PLAN ADMINISTRATOR AND COMMITTEE
Section 3.1 Committee and Plan Administrator......................................................10
--------------------------------
Section 3.2 Trustee's Reliance....................................................................11
------------------
Section 3.3 Retention of Advisors.................................................................11
---------------------
Section 3.4 Liability under the Plan..............................................................11
------------------------
Section 3.5 Indemnification.......................................................................11
---------------
Section 3.6 Benefit Claims Limited to the Trust Fund..............................................12
----------------------------------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
ARTICLE IV
DISTRIBUTIONS FROM THE TRUST FUND
<S> <C> <C>
Section 4.1 In General............................................................................12
----------
Section 4.2 Direction by the Plan Administrator...................................................12
-----------------------------------
Section 4.3 Method of Payment.....................................................................13
-----------------
Section 4.4 Disputes..............................................................................13
--------
ARTICLE V
RESPONSIBILITIES
Section 5.1 General Standard of Care..............................................................13
------------------------
Section 5.2 No Liability for Acts of Others.......................................................13
-------------------------------
Section 5.3 Compliance with ERISA.................................................................14
---------------------
ARTICLE VI
TRUSTEE'S ACCOUNTS
Section 6.1 Accounts..............................................................................15
--------
Section 6.2 Valuation of Trust Fund...............................................................15
-----------------------
Section 6.3 Reports to the Plan Administrator.....................................................15
---------------------------------
Section 6.4 Right of Judicial Settlement..........................................................16
----------------------------
Section 6.5 Enforcement of Agreement..............................................................16
------------------------
ARTICLE VII
TAXES; COMPENSATION OF TRUSTEE
Section 7.1 Taxes.................................................................................16
-----
Section 7.2 Compensation of Trustee; Expenses.....................................................17
---------------------------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
ARTICLE VIII
RESIGNATION AND REMOVAL OF TRUSTEE
<S> <C> <C>
Section 8.1 Resignation or Removal of Trustee.....................................................17
---------------------------------
Section 8.2 Appointment of Successor..............................................................17
------------------------
Section 8.3 Succession............................................................................18
----------
Section 8.4 Successor Bound by Agreement..........................................................18
----------------------------
ARTICLE IX
AMENDMENT AND TERMINATION
Section 9.1 Amendment and Termination.............................................................18
-------------------------
ARTICLE X
MISCELLANEOUS
Section 10.1 Binding Effect; Assignability.........................................................19
-----------------------------
Section 10.2 Governing Law.........................................................................19
-------------
Section 10.3 Notices...............................................................................19
-------
Section 10.4 Severability..........................................................................20
------------
Section 10.5 Waiver................................................................................20
------
Section 10.6 Non-Alienation........................................................................21
--------------
Section 10.7 Qualified Plan and Trust..............................................................21
------------------------
Section 10.8 Return of Contributions...............................................................21
-----------------------
Section 10.9 Compliance with Securities Laws.......................................................22
-------------------------------
Section 10.10 Headings..............................................................................22
--------
Section 10.11 Party in Interest Information.........................................................22
-----------------------------
Section 10.12 Construction of Language..............................................................22
------------------------
Section 10.13 Counterparts..........................................................................22
------------
</TABLE>
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<PAGE>
TRUST AGREEMENT
FOR THE
EMPLOYEE STOCK OWNERSHIP PLAN
OF RFS BANCORP, INC. AND AFFILIATES
This AGREEMENT ("Agreement") is made and entered into as of __________,
1998, by and between RFS BANCORP, INC., a corporation organized under the laws
of the State of Delaware and having its executive offices at 310 Broadway,
Revere Massachusetts 02151 ("Company"), and [NAME OF TRUSTEE], a banking
corporation organized under the laws of the state of _________________ and
having an office at _________________________ ("Trustee").
W I T N E S S E T H :
WHEREAS, the Company has, by action of its Board of Directors, adopted the
Employee Stock Ownership Plan of RFS Bancorp, Inc. and Affiliates ("Plan"), an
employee benefit plan intended to be tax-qualified under section 401(a) of the
Internal Revenue Code of 1986, as amended ("Code"), for the exclusive benefit of
the Company's eligible employees and those employed by its participating
affiliates (collectively, the "Participants"); and
WHEREAS, the Company has, in accordance with the terms of the Plan,
appointed a Plan Administrator ("Plan Administrator") and a Committee
("Committee") to administer the Plan; and
WHEREAS, the Plan contemplates the establishment and the maintenance of a
trust, intended to be tax-exempt under section 501(a) of the Code, to which
contributions will be deposited from time to time to be held and invested in
accordance with the terms of this Agreement; and
WHEREAS, the Plan provides for the assets of such trust to be invested
primarily in shares of common stock of the Company ("Shares") and for the
Trustee to obtain a Share Acquisition Loan (as defined in section 2.12 herein)
for the purpose of purchasing such Shares;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Company and the Trustee hereby agree as follows:
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<PAGE>
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ARTICLE I
TRUST FUND
SECTION 1.1 TRUST FUND.
The Company hereby establishes with the Trustee a trust, pursuant to the
Plan, in which shall be deposited such Shares and such sums of money as shall
from time to time be paid or delivered to or deposited with the Trustee by or
with the approval of the Company in accordance with terms of the Plan and this
Trust Agreement. All such Shares and all such sums of money, all investments and
re-investments thereof and all earnings, appreciation and additions allocable
thereto, less losses, depreciation and expenses allocable thereto and any
payments made therefrom as authorized under the Plan or this Agreement shall
constitute the "Trust Fund". The Trust Fund shall be held, managed and
administered by the Trustee, IN TRUST, and dealt with in accordance with the
provisions of this Agreement and in accordance with any funding policy or
guidelines established under the Plan that are communicated in writing to the
Trustee.
SECTION 1.2 COLLECTION OF CONTRIBUTIONS.
The Trustee shall have no authority over and shall have no responsibility
for the administration of the Plan or for the collection of any contributions to
the Trust Fund required under the Plan, nor shall it have any authority to bring
any action or proceeding to enforce the collection of any such amount or to make
inquiry as to whether any such contributions received by it were properly
collected or computed in accordance with the terms of the Plan.
SECTION 1.3 NON-DIVERSION OF FUNDS.
Notwithstanding anything to the contrary contained in this Agreement or any
amendment hereto, no part of the Trust Fund other than such expenses and taxes
properly charged to the Trust Fund under the Plan or this Agreement shall be
used for or diverted to purposes other than for the exclusive benefit of Plan
Participants and their beneficiaries (including any alternate payee entitled to
benefits under the Plan pursuant to a qualified domestic relations order
described in section 414(p) of the Code ("Alternate Payee")).
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<PAGE>
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ARTICLE II
INVESTMENT AND ADMINISTRATION
SECTION 2.1 IN GENERAL.
The Trust Fund shall be held by the Trustee and shall be invested and
reinvested as hereinafter provided in this Article II, without distinction
between principal and income and without regard to the restrictions of the laws
of the Commonwealth of Massachusetts, or of any other jurisdiction relating to
the investment of trust funds. Subject to section 2.7, the Trust Fund shall be
invested at all times, pursuant to directions given in accordance with section
2.4, primarily in Shares.
SECTION 2.2 INVESTMENT FUNDS.
(a) The Trustee shall establish and maintain, for the investment of the
Trust Fund, such separate investment funds (individually, an "Investment Fund")
as the Company may request by written notice to the Trustee. In the absence of
such notice, the Trust Fund shall consist of a single Investment Fund.
(b) To the extent directed to do so pursuant to section 2.4, the Trustee
shall hold and invest amounts paid over to it pursuant to this Agreement in such
Investment Funds as shall have been established in accordance with section
2.2(a), and shall allocate amounts paid over to it among the Investment Funds in
the manner and in the proportion designated by the Plan Administrator pursuant
to the terms of the Plan. The Trustee shall also credit to each such Investment
Fund all earnings and appreciation allocable thereto and shall charge against
each such fund any depreciation, losses, expenses, payments and distributions
allocable thereto.
(c) The Trustee shall invest and reinvest amounts allocated to each
Investment Fund in accordance with such written investment criteria as shall be
established by the Committee and communicated in writing to the Trustee.
Notwithstanding any such investment criteria, the Trustee is authorized to
retain in an Investment Fund, for as long as it is deemed advisable by the
person responsible for directing the investment of the particular Investment
Fund, (i) any securities or other property received by means of a dividend,
distribution, exchange, conversion, liquidation or otherwise than by initial
purchase; and (ii) any investments which were authorized hereunder when made by
the Trustee.
SECTION 2.3 APPOINTMENT OF INVESTMENT MANAGER.
(a) The Committee may, in its discretion, appoint an investment manager
("Investment Manager") to direct the investment and reinvestment of all or any
portion of the Trust Fund. Any such Investment Manager shall either (i) be
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended ("Investment Advisers Act"); (ii) be a
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<PAGE>
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bank, as defined in the Investment Advisers Act; or (iii) be an insurance
company qualified to perform investment services under the laws of more than one
state.
(b) The Plan Administrator shall give written notice to the Trustee of the
appointment of an Investment Manager pursuant to section 2.3(a). Such notice
shall include: (i) a specification of the portion of the Trust Fund to which the
appointment applies; (ii) a certification by the Plan Administrator that the
Investment Manager satisfies the requirements of section 2.3(a)(i), (ii) or
(iii); (iii) a copy of the instruments appointing the Investment Manager and
evidencing the Investment Manager's acceptance of the appointment; (iv)
directions as to the manner in which the Investment Manager is authorized to
give instructions to the Trustee, including the persons authorized to give
instructions and the number of signatures required for any written instruction;
(v) an acknowledgment by the Investment Manager that it is a fiduciary of the
Plan; and (vi) if applicable, a certificate evidencing the Investment Manager's
current registration under the Investment Advisers Act. For purposes of this
Agreement, the appointment of an Investment Manager pursuant to this section 2.3
shall become effective as of the effective date specified in such notice, or, if
later, as of the date on which the Trustee receives proper notice of such
appointment.
(c) The Plan Administrator shall give written notice to the Trustee of the
resignation or removal of an Investment Manager previously appointed pursuant to
this section 2.3. From and after the date on which the Trustee receives such
notice, or, if later, the effective date of the resignation or removal specified
in such notice, the Committee shall be responsible, in accordance with this
section 2.3, for the investment and reinvestment of the portion of the Trust
Fund theretofore managed by such Investment Manager, until such time as a
successor Investment Manager has been duly appointed pursuant to this section
2.3.
SECTION 2.4 INVESTMENT DECISIONS.
(a) The Trustee shall invest and reinvest the Trust Fund as follows:
(i) in accordance with the directions of the Committee; or
(ii) to the extent that an Investment Manager is appointed to direct
the investment of any Investment Fund, in accordance with the directions of
such Investment Manager.
The Trustee shall be under no duty or obligation to review any investment to be
acquired, held or disposed of pursuant to directions of the Committee or any
Investment Manager nor to make any recommendation with respect to the
disposition or continued retention of any such investment. To the extent that
the Trustee is subject to direction by the Committee or an Investment Manager,
the Trustee shall have no liability or responsibility for its actions or
inaction pursuant to the direction of, or its failure to act in the absence of
directions from, the Committee or an Investment Manager, except to the extent
provided in section 5.2. To the extent that the Trustee is subject
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<PAGE>
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to direction by the Committee or an Investment Manager, the Company hereby
agrees to indemnify the Trustee and hold it harmless from and defend it against
any claim or liability which may be asserted against the Trustee by reason of
any action or inaction by it pursuant to a direction by the Committee or by an
Investment Manager or failing to act in the absence of any such direction.
(b) The Committee or an Investment Manager appointed pursuant to section
2.3 shall, from time to time, issue orders for the purchase or sale of
securities directly to a broker. Written notification of the issuance of each
such order shall be given promptly to the Trustee by the Committee or the
Investment Manager, and the execution of each such order shall be confirmed by
written advice to the Trustee by the broker. Such notification shall be
authority for the Trustee to pay for securities purchased against receipt
thereof and to deliver securities sold against payment therefor, as the case may
be.
(c) To the extent that neither the Committee nor an Investment Manager
furnishes directions as to the investment of any portion of the Trust Fund that
is subject to its direction, the Trustee shall invest and reinvest the Trust
Fund (i) in Shares and (ii) to the extent that it is not practicable to invest
and reinvest the Trust Fund in Shares, in any savings account, time or other
interest bearing deposit or in any other interest bearing obligation of any one
or more savings banks, savings and loan associations, banks and other financial
institutions, or any of them, including the Trustee or any subsidiary of the
Company, or, subject to section 2.5, in any commingled, common or group trust
fund at least 75% of the assets of which are invested in such savings accounts,
time or other interest bearing deposits or other interest bearing obligations.
(d) Subject to the preceding provisions of this section 2.4, the Trustee
shall have the power and authority to be exercised in its sole discretion at any
time and from time to time to issue and place orders for the purchase or sale of
securities directly with qualified brokers or dealers. Such orders may be placed
with such qualified brokers and/or dealers who also provide investment
information or other research or statistical services to the Trustee in its
capacity as a fiduciary or investment manager for other clients.
SECTION 2.5 INVESTMENT IN COMMINGLED FUNDS.
The Trustee may, if directed to do so by the Committee or an Investment
Manager or if authorized to do so pursuant to section 2.4, invest any amounts,
other than Shares, held by it under this Agreement in any commingled or group
trust fund described in section 401(a) of the Code and exempt under section
501(a) of the Code or in any common trust fund exempt under section 584 of the
Code, provided that such trust fund satisfies the requirements of this Agreement
applicable to such amounts and that the Trustee serves as trustee of such
commingled, group or common trust fund. To the extent that the Trust Fund is at
any time invested in any commingled, group or common trust fund, the declaration
of trust or other instrument pertaining to such fund and any amendments thereto
are hereby adopted as part of this Agreement and deemed to form a part of the
Plan. If there is any conflict between the provisions of this Agreement and such
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<PAGE>
-6-
declaration of trust or other instrument, then the terms of the declaration of
trust or other instrument of the commingled, group or common trust fund shall
govern.
SECTION 2.6 LIQUIDITY.
Notwithstanding any provisions of this Article II to the contrary, the
Trustee, in its sole discretion or as the Plan Administrator shall request, may
retain un-invested cash or cash balances, and sell, to provide cash or cash
balances, such investments in whatever portion of the Trust Fund that it may
deem advisable, without being required to pay interest thereon. Pending
investment, the Trustee, in its sole discretion, may temporarily invest any
funds held or received by it for investment in an investment fund established
hereunder in commercial paper or in obligations of, or guaranteed by, the United
States government or any of its agencies.
SECTION 2.7 INVESTMENT DIRECTIONS BY PARTICIPANTS.
Each Participant entitled thereto under the terms of the Plan ("Qualified
Participant") shall have the right to direct the allocation to the various
Investment Funds established hereunder to be made by the Trustee for a portion
of such Qualified Participant's account under the Plan. The Plan Administrator
shall by written notice furnish the Trustee with the investment directions for
each Qualified Participant's account in the Plan. The Trustee shall act in
accordance with the most recent directions it has received from the Plan
Administrator for each account and shall have no discretion over or
responsibility or liability for its actions taken in accordance with such
directions. The Company hereby agrees to indemnify and defend the Trustee and
hold it harmless from and against any claim asserted against or liability
imposed on the Trustee by reason of its having acted on any direction given by a
Qualified Participant with respect to his own account.
SECTION 2.8 TRUSTEE'S ADMINISTRATIVE AUTHORITY.
(a) In addition to and not by way of limitation of any other powers
conferred upon the Trustee by law or by other provisions of this Agreement, but
subject to the provisions of section 1.3 and this Article II, the Trustee is
authorized and empowered:
(i) subject to section 2.10, to sell, exchange, convey, transfer or
dispose of and also to grant options with respect to any property, whether
real or personal, at any time held by it, and any sale may be made by
private contract or by public auction, and for cash or upon credit, or
partly for cash and partly upon credit, and no person dealing with the
Trustee shall be bound to see to the application of the purchase money or
to inquire into the validity, expediency or propriety of any such sale or
other disposition;
(ii) to retain, manage, operate, repair and rehabilitate and to
mortgage or lease for any period any real estate held by it and, in its
discretion, cause to be formed any corporation or trust to hold title to
any such real property;
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<PAGE>
-7-
(iii) unless otherwise agreed to and subject to sections 2.9 and 2.10,
to vote in person or by proxy on any stocks, bonds, or other securities
held by it, to exercise any options appurtenant to any stocks, bonds or
other securities for the conversion thereof into other stocks, bonds or
securities, or to exercise any rights to subscribe for additional stocks,
bonds or other securities and to make any and all necessary payment
therefor and to enter into any voting trust;
(iv) with respect to any investment, subject to section 2.12, to join
in, dissent from, or oppose any action or inaction of any corporation, or
of the directors, officers or stockholders of any corporation, including,
without limitation, any reorganization, recapitalization, consolidation,
liquidation, sale or merger;
(v) to settle, adjust, compromise, or submit to arbitration any
claims, debts or damages due or owing to or from the Trust Fund; and
(vi) to deposit any property with any protective, reorganization or
similar committee, to delegate power thereto and to pay and agree to pay
part of its expenses and compensation and any assessments levied with
respect to any property so deposited.
In exercising such powers with respect to any portion of the Trust Fund that is
invested in the discretion of the Trustee or pursuant to section 2.4(c), the
Trustee shall act in its discretion. In exercising such powers with respect to
any portion of the Trust Fund that is invested pursuant to directions of the
Committee or of an Investment Manager, the Trustee shall act in accordance with
directions provided by the Committee or Investment Manager. The Trustee shall be
under no duty or obligation to review any action to be taken, nor to recommend
any action, pursuant to this section 2.8(a) with respect to any portion of the
Trust Fund that is under the direction of the Committee or an Investment
Manager. The Trustee shall have no liability or responsibility for its actions
or inaction pursuant to the direction of, or its failure to act in the absence
of directions from, the Committee or an Investment Manager, except to the extent
provided in section 5.2.
(b) In addition to and not by way of limitation of any other powers
conferred upon the Trustee by law or other provisions of this Agreement, but
subject to section 1.3 and this Article II, the Trustee is authorized and
empowered, in its discretion:
(i) to commence or defend suits or legal proceedings, and to represent
the Trust Fund in all suits or legal proceedings in any court or before any
other body or tribunal;
(ii) to register securities in its name or in the name of any nominee
or nominees with or without indication of the capacity in which the
securities shall be held, or to hold securities in bearer form, but the
books and records of the Trustee shall at all times show that such
investments are part of the Trust Fund;
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<PAGE>
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(iii) subject to section 2.11, to borrow or raise moneys for the
purposes of the Trust Fund from any lender, except the Trustee in its
individual capacity, and for any sum so borrowed to issue its promissory
note as Trustee and to secure the repayment thereof by pledging all or any
part of the Trust Fund, and no person lending money to the Trustee shall be
bound to see the application of the money loaned or to inquire into the
validity, expediency or propriety of any such borrowing;
(iv) to make distributions in cash or in Shares upon the direction of
the Committee and to make transfers of funds into and out of the Investment
Funds for value or upon the direction of the Plan Administrator;
(v) to employ such agents, counsel and accountants as the Trustee
shall deem advisable and to pay their reasonable expenses and compensation
from the Trust Fund;
(vi) to make, execute, acknowledge, and deliver any and all deeds,
leases, assignments and instruments; and
(vii) generally to do all acts, whether or not expressly authorized,
which the Trustee may deem necessary or desirable for the administration
and protection of the Trust Fund.
SECTION 2.9 EXERCISE OF VOTING RIGHTS WITH RESPECT TO SHARES.
The Committee shall direct the Trustee as to the manner of exercise of
voting rights appurtenant to Shares held in the Trust Fund. The Trustee shall
act in accordance with the directions that it receives from the Committee for
each matter as to which voting rights are to be exercised and shall refrain from
exercising the voting rights appurtenant to Shares held in the Trust Fund in the
absence of such directions. The Trustee shall have no discretion over or
responsibility or liability for its actions taken in accordance with such
directions, or for its failure to exercise such voting rights in the absence of
such directions. The Company hereby agrees to indemnify the Trustee and hold it
harmless from and defend it against any claim asserted against or liability
imposed on the Trustee by reason of its having acted on any direction given by
the Committee in accordance with this section 2.9 or failing to act in the
absence of any such direction.
SECTION 2.10 RESPONSE TO TENDER OFFERS AND SIMILAR EVENTS.
The Committee shall direct the Trustee as to the manner of exercise of any
rights to tender Shares held in the Trust Fund or otherwise act in response to
any tender offer with respect to Shares or any other offer to purchase,
exchange, redeem or otherwise transfer such Shares. The Trustee shall act in
accordance with the directions that it receives from the Committee for each
matter as to which such rights are to be exercised and shall refrain from taking
any action in response to such an offer in the absence of such directions. The
Trustee shall have no discretion over or responsibility or liability for its
actions taken in accordance with such direc-
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<PAGE>
-9-
tions, or for its failure to exercise such rights in the absence of such
directions. The Company hereby agrees to indemnify the Trustee and hold it
harmless from and defend it against any claim asserted against or liability
imposed on the Trustee by reason of its having acted on any direction given by
the Committee in accordance with this section 2.10 or failing to act in the
absence of any such direction.
SECTION 2.11 DISSENT AND APPRAISAL RIGHTS.
The Committee shall direct the Trustee as to the manner of exercise of any
dissent and appraisal rights appurtenant to Shares held in the Trust Fund. The
Trustee shall act in accordance with the directions that it receives from the
Committee for each matter as to which such rights are to be exercised and shall
refrain from taking any action in the absence of such directions. The Trustee
shall have no discretion over or responsibility or liability for its actions
taken in accordance with such directions, or for its failure to exercise such
rights in the absence of such directions. The Company hereby agrees to indemnify
the Trustee and hold it harmless from and defend it against any claim asserted
against or liability imposed on the Trustee by reason of its having acted on any
direction given by the Committee in accordance with this section 2.11 or failing
to act in the absence of any such direction.
SECTION 2.12 SHARE ACQUISITION LOANS.
(a) To the extent permitted by ERISA (including, without limitation,
Section 4975 of the Code) and by any regulations promulgated thereunder, the
Trustee shall, if directed to do so by the Committee, obtain a loan ("Share
Acquisition Loan") on behalf of the Plan and shall apply the proceeds of such
Share Acquisition Loan in the proportions directed by the Committee:
(i) to purchase Shares; or
(ii) to make payments of principal or interest, or a combination of
principal and interest, with respect to such Share Acquisition Loan; or
(iii) to make payments of principal and interest, or a combination of
principal and interest, with respect to a previously obtained Share
Acquisition Loan that is then outstanding.
Any such Share Acquisition Loan shall be on such terms and conditions as the
Committee may determine, and the Trustee shall have no duty or obligation to
inquire as to the expediency or propriety of any such Share Acquisition Loan or
any of the terms and conditions thereof.
(b) If directed to do so by the Committee, the Trustee shall execute a
promissory note, in its capacity as Trustee, evidencing the obligation of the
Plan to repay a Share
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<PAGE>
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Acquisition Loan and shall pledge, in such proportions as the Committee may
direct, the following assets of the Plan as collateral for such Share
Acquisition Loan:
(i) any Shares purchased with the proceeds of such Share Acquisition
Loan;
and
(ii) any Shares purchased with the proceeds of a previous Share
Acquisition Loan, provided that such previous Share Acquisition Loan is
repaid with the proceeds of the Share Acquisition Loan for which such
Shares are pledged.
Any Share Acquisition Loan shall be without recourse against the Plan or the
Trustee, and, except as specifically provided in this section 2.12, no assets of
the Plan shall be pledged as collateral for a Share Acquisition Loan.
(c) The Company shall contribute under the Plan amounts sufficient to pay
each installment of principal and interest on all Share Acquisition Loans
payable by the Trust pursuant to this Section and any loan agreement pertaining
to the Share Acquisition Loan on or before the date such installment is due and
to meet the obligations of the Trustee under the loan. The Trustee shall apply
the Company's contributions to the Trust Fund, the earnings on such
contributions, and the earnings with respect to Shares that shall have been
pledged as collateral for a Share Acquisition Loan, in such proportions as the
Committee may direct, to the payment of principal and interest with respect to
such Share Acquisition Loan.
(d) All Shares purchased with any Share Acquisition Loan shall be credited
to and held in a suspense account under the Trust until they shall be released
from such suspense account and allocated to the accounts of Plan Participants in
accordance with the Plan. The Plan Administrator shall at least annually advise
the Trustee of the number of Shares to be released from such suspense account,
as determined in accordance with the Plan.
ARTICLE III
TRUSTEE, PLAN ADMINISTRATOR AND COMMITTEE
SECTION 3.1 COMMITTEE AND PLAN ADMINISTRATOR.
The Company shall certify to the Trustee the names and specimen signatures
of the Plan Administrator and of the members of the Committee appointed by the
Company to administer the Plan and give directions to the Trustee. Such
certification shall include directions as to the number of signatures required
for any communication or direction to the Trustee. The Company shall promptly
give notice to the Trustee of changes in the identity of the Plan Administrator
or in the membership of the Committee. The Plan Administrator or the Committee
may also certify
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<PAGE>
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to the Trustee the name of any person, together with a specimen signature of any
such person, authorized to act for it in relation to the Trustee. The Plan
Administrator or the Committee shall promptly give notice to the Trustee of any
change in any person authorized to act on behalf of it. For all purposes under
this Agreement, until any such notice is received by the Trustee, the Trustee
shall be fully protected in assuming that the identity of the Plan
Administrator, the membership of the Committee and the authority of any person
certified to act in its behalf remain unchanged.
SECTION 3.2 TRUSTEE'S RELIANCE.
The Trustee may rely and act upon any certificate, notice or direction of
the Plan Administrator or the Committee, or of a person authorized to act on its
behalf, or of the Company or of an Investment Manager which the Trustee believes
to be genuine and to have been signed by the person or persons duly authorized
to sign such certificate, notice, or direction.
SECTION 3.3 RETENTION OF ADVISORS.
The Trustee may consult with legal counsel and other professional advisors
who may, but need not, be its counsel or advisors or counsel or advisors to the
Company, the Plan Administrator, the Committee, or any Plan Participant or
beneficiary, with respect to the meaning and construction of this Agreement or
its powers, obligations, and conduct hereunder. The Trustee shall be entitled to
reasonable reimbursement from the Trust Fund for such legal counsel's and other
professional advisors' fees. The Trustee shall not be deemed imprudent, and
shall be fully and completely protected, by reason of its taking or refraining
form taking any action in accordance with the opinion of counsel.
SECTION 3.4 LIABILITY UNDER THE PLAN.
The duties and obligations of the Trustee shall be limited to those
expressly set forth in this Agreement, notwithstanding any reference herein to
the Plan. The Trustee shall not be obliged to take or defend any action or
participate in or proceed with any suit or legal or administrative proceeding
which might subject it to substantial cost or expense or liability unless first
indemnified by the Company in an amount and by security satisfactory to it
against all losses, costs, damages and expenses which may result therefrom or be
occasioned thereby.
SECTION 3.5 INDEMNIFICATION.
The Company shall pay and shall protect, indemnify and save harmless the
Trustee and its officers, employees and agents from and against any and all
losses, liabilities (including liabilities for penalties), actions, suits,
judgments, demands, damages, costs and expenses (including reasonable attorneys'
fees and expenses) of any nature arising from or relating to any action or any
failure to act by the Trustee, its officers, employees and agents with respect
to the transactions contemplated by this Trust Agreement, including any claim
made by the Company
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or its successors that this Trust Agreement is invalid or ultra vires, except to
the extent that any such loss, liability, action, suit, judgment, demand,
damage, cost or expense is the result of the gross negligence of the Trustee
(determined by reference to customary trust company standards) /or willful
misconduct of the Trustee, its officers, employees or agents. The Trust assumes
no obligation or responsibility with respect to any action required by this
Trust Agreement on the part of the Company. The Company and the Trustee may, by
separate agreement, agree on terms by which the Company shall indemnify the
Trustee in connection with the Trustee's carrying out of its duties hereunder.
SECTION 3.6 BENEFIT CLAIMS LIMITED TO THE TRUST FUND.
The Trustee in its corporate capacity shall not be liable for claims for
benefits under the Plan; such claims shall be limited to the Trust Fund. The
Trust shall not be liable to make distributions or payments of any kind unless
sufficient funds are available therefor in the Trust Fund. The Trustee shall be
responsible only for such money and other property as are received by it as
Trustee under this Agreement.
ARTICLE IV
DISTRIBUTIONS FROM THE TRUST FUND
SECTION 4.1 IN GENERAL.
The Trustee shall make payments from the Trust Fund in such amounts, at
such times, and to such persons as the Plan Administrator may, from time to
time, direct.
SECTION 4.2 DIRECTION BY THE PLAN ADMINISTRATOR.
(a) A direction by the Plan Administrator to make a distribution from the
Trust Fund shall:
(i) be made in writing;
(ii) specify the amount of the payment or the number of Shares to be
distributed, the date such payment is to be made, the person to whom
payment is to be made, and the address to which the payment is to be sent;
and
(iii) be deemed to certify to the Trustee that such direction and any
payment pursuant thereto are authorized under the terms of the Plan and
applicable law.
(b) The Trustee shall be entitled to rely conclusively on the Plan
Administrator's certification of its authority to direct a payment without
independent investigation. The Trustee
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shall have no liability to any person with respect to payments made in
accordance with the provisions of this Article IV.
SECTION 4.3 METHOD OF PAYMENT.
Payments of money by the Trustee may be made by its check payable to the
order of the payee designated by the Plan Administrator and mailed to the
payee's address last furnished to the Trustee by the Plan Administrator, or, if
no such address has been so furnished, to the payee in care of the Company.
Distributions of Shares shall be made by causing the Company, or its transfer
agent, to issue to the distributee a stock certificate evidencing ownership of
the designated number of Shares. To the extent that any distribution of Shares
to any person requires the registration of such Shares under the securities or
blue sky laws of the United States or any state, or otherwise requires any
governmental approvals, the Company shall undertake to complete such
registration or obtain such approvals at its sole expense.
SECTION 4.4 DISPUTES.
If a dispute arises as to the payment of any funds or delivery of any
assets by the Trustee, the Trustee may withhold such payment or delivery until
the dispute is determined by a court of competent jurisdiction or finally
settled in writing by the parties concerned.
ARTICLE V
RESPONSIBILITIES
SECTION 5.1 GENERAL STANDARD OF CARE.
The Trustee, the Plan Administrator, the members of the Committee and any
Investment Manager shall at all times discharge their duties with respect to the
Trust Fund solely in the interest of the Plan Participants and their
beneficiaries (including any Alternate Payee) and with the care, skill,
prudence, and diligence that, under the circumstances prevailing, a prudent man
acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.
SECTION 5.2 NO LIABILITY FOR ACTS OF OTHERS.
(a) Subject to section 5.2(b), no "fiduciary" (as such term is defined in
section 3(21) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) under this Agreement shall be liable for an act or omission of
another person in carrying out any fiduciary responsibility where such fiduciary
responsibility is allocated to such other person by this Agreement or pursuant
to a procedure established in this Agreement except to the extent that:
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(i) such fiduciary participated knowingly in, or knowingly undertook
to conceal, an act or omission of such other person, knowing such act or
omission to be a breach of fiduciary responsibility;
(ii) such fiduciary, by his failure to comply with section 404(a)(1)
of ERISA in the administration of his specific responsibilities which give
rise to his status as a fiduciary, has enabled such other person to commit
a breach of fiduciary responsibility;
(iii) such fiduciary has knowledge of a breach of fiduciary
responsibility by such other person, unless he makes reasonable efforts
under the circumstances to remedy the breach; or
(iv) such fiduciary is a "named fiduciary" (as such term is defined in
section 402(a)(2) of ERISA) and has violated his duties under section
404(a)(1) of ERISA:
(A) with respect to the allocation of fiduciary responsibilities
among named fiduciaries or the designation of persons other than named
fiduciaries to carry out fiduciary responsibilities under this
Agreement;
(B) with respect to the establishment or implementation of
procedures for allocating fiduciary responsibilities among named
fiduciaries or for designating persons other than named fiduciaries to
carry out fiduciary responsibilities under this Agreement; or
(C) in continuing the allocation of fiduciary responsibilities
among named fiduciaries or the designation of persons other than named
fiduciaries to carry out fiduciary responsibilities under this
Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, the Trustee
shall have no liability or responsibility for an act or omission of an
Investment Manager appointed pursuant to section 2.3 in carrying out its
fiduciary responsibilities with respect to the Plan, unless the Trustee (i) by
its failure to comply with section 404(a)(1) of ERISA in the administration of
its specific responsibilities which give rise to its status as a fiduciary, has
enabled such Investment Manager to commit a breach of fiduciary responsibility,
or (ii) participated knowingly in, or knowingly undertook to conceal, an act or
omission of such Investment Manager, knowing such act or omission to be a breach
of fiduciary responsibility.
SECTION 5.3 COMPLIANCE WITH ERISA.
Notwithstanding anything in this Agreement, as amended from time to time,
to the contrary, no provision of this Agreement shall be construed so as to
violate the requirements of ERISA.
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ARTICLE VI
TRUSTEE'S ACCOUNTS
SECTION 6.1 ACCOUNTS.
The Trustee shall keep accurate and detailed accounts of all investments,
re- investments, receipts and disbursements, and other transactions hereunder,
and all such accounts and the books and records relating thereto shall be open
to inspection at all reasonable times by the Company or the Plan Administrator
or persons designated by them.
SECTION 6.2 VALUATION OF TRUST FUND.
The Trustee shall value or cause to be valued the Trust Fund and any
Investment Fund that has been established hereunder as of the last business day
of each calendar quarter ("Valuation Date"), and shall report to the Plan
Administrator the value of the Trust Fund and each Investment Fund as of such
date, within a reasonable time after the first day of the month next succeeding
each Valuation Date.
SECTION 6.3 REPORTS TO THE PLAN ADMINISTRATOR.
(a) Within 75 days following the last day of each fiscal year of the trust,
and within 75 days following the effective date of the resignation or removal of
the Trustee as provided in section 8.1, the Trustee shall render to the Plan
Administrator a written account setting forth all investments, receipts,
disbursements and other transactions affecting the Trust Fund or any Investment
Fund, which account shall be signed by the Trustee and mailed to the Plan
Administrator.
(b) The Plan Administrator shall notify the Trustee in writing of any
objection or exception to an account so rendered not later than 60 days
following the date on which the Account was mailed to the Plan Administrator,
whereupon the Plan Administrator and the Trustee shall cooperate in resolving
such objection or exception.
(c) If the Plan Administrator has not communicated in writing to the
Trustee within 60 days following the mailing of the account to the Plan
Administrator any exception or objection to the account, the account shall
become an account stated at the end of such 60 day period. If the Plan
Administrator does communicate such an exception or objection, as to which it
later becomes satisfied, the Plan Administrator shall thereupon indicate in
writing its approval of the account, or of the account as amended, and the
account shall thereupon become an account stated.
(d) Whenever an account shall have become an account stated as aforesaid,
such account shall be deemed to be finally settled and shall be conclusive upon
the Trustee, the
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Company and all persons having or claiming to have any interest in the Trust
Fund or under the Plan, and the Trustee shall be fully and completely discharged
and released to the same extent as if the account had been settled and allowed
by a judgment or decree of a court of competent jurisdiction in an action or
proceeding in which the Trustee, the Company, and all persons having or claiming
to have any interest in the Trust Fund or under the Plan were parties.
SECTION 6.4 RIGHT OF JUDICIAL SETTLEMENT.
Notwithstanding the provisions of section 6.3, the Trustee, the Plan
Administrator, and the Company, or any of them, shall have the right to apply at
any time to a court of competent jurisdiction for the judicial settlement of the
Trustee's account. In any such case, it shall be necessary to join as parties
thereto only the Trustee, the Plan Administrator and the Company; and any
judgment or decree which may be entered therein shall be conclusive upon all
persons having or claiming to have any interest in the Trust Fund or under the
Plan.
SECTION 6.5 ENFORCEMENT OF AGREEMENT.
To protect the Trust Fund from expenses which might otherwise be incurred,
the Company and the Plan Administrator shall have authority, either jointly or
severally, to enforce this Agreement on behalf of all persons claiming any
interest in the Trust Fund or under the Plan, and no other person may institute
or maintain any action or proceeding against the Trustee or the Trust Fund in
the absence of written authority from the Plan Administrator or a judgment of a
court of competent jurisdiction that in refusing authority the Plan
Administrator acted fraudulently or in bad faith.
ARTICLE VII
TAXES; COMPENSATION OF TRUSTEE
SECTION 7.1 TAXES.
Any taxes that may be imposed upon the Trust Fund or the income therefrom
shall be deducted from and charged against the Trust Fund or to the particular
Investment Funds to which such taxes are applicable. The Trustee shall notify
the Committee of any proposed or final assessments of taxes and may assume that
any such taxes are lawfully levied or assessed unless the Committee advises it
in writing to the contrary within fifteen days after receiving the above notice
from the Trustee. In such case, the Trustee, if requested by the Committee in
writing, shall contest the validity of such taxes in any manner deemed
appropriate by the Committee; the Company may itself contest the validity of any
such taxes, in which case the Committee shall so notify the Trustee and the
Trustee shall have no responsibility or liability respecting such contest. If
either party to this Agreement contests any such proposed levy or assessments,
the other party
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shall provide such information and cooperation as the party conducting the
contest shall reasonably request.
SECTION 7.2 COMPENSATION OF TRUSTEE; EXPENSES.
The Trustee shall receive for its services hereunder such compensation as
may be agreed upon in writing from time to time by the Company and the Trustee
and shall be reimbursed for its reasonable expenses, including counsel fees,
incurred in the performance of its duties hereunder. The Trustee shall deduct
from and charge against the Trust Fund such compensation and all such expenses
unless previously paid by the Company, except that all commissions paid in
connection with the acquisition or sale of Shares shall be paid by the Company.
Expenses of the Trust Fund, as well as compensation of the Trustee, that are not
paid by the Company and that are general in nature and not directly related to a
particular Investment Fund shall be charged to the Trust Fund and allocated to
each of the Investment Funds in the same proportion that the value of each such
Investment Fund bears to the value of the Trust Fund on the Valuation Date next
preceding the date of such payments. Any expenses directly related to a
particular Investment Fund that are not paid by the Company shall be charged to
such Investment Fund.
ARTICLE VIII
RESIGNATION AND REMOVAL OF TRUSTEE
SECTION 8.1 RESIGNATION OR REMOVAL OF TRUSTEE.
The Trustee may resign as trustee hereunder at any time by giving sixty
(60) days prior written notice to the Company. The Company may remove the
Trustee as trustee hereunder at any time by giving the Trustee prior written
notice of such removal, which shall include notice of the appointment of a
successor trustee. Such removal shall take effect not earlier than sixty (60)
days following receipt of such notice by the Trustee unless otherwise agreed
upon by the Trustee and the Company.
SECTION 8.2 APPOINTMENT OF SUCCESSOR.
In the event of the resignation or removal of the Trustee, a successor
trustee shall be appointed by the Company. Except as is otherwise provided in
section 8.1, such appointment shall take effect upon delivery to the Trustee of
an instrument so appointing the successor and an instrument of acceptance
executed by such successor, both of which instruments shall be duly acknowledged
before a notary public. If within 60 days after notice of resignation shall have
been given by the Trustee a successor shall not have been appointed as
aforesaid, the Trustee may apply to any court of competent jurisdiction for the
appointment of such successor.
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SECTION 8.3 SUCCESSION.
(a) Upon the appointment of a successor, the Trustee shall transfer and
deliver the Trust Fund to such successor; provided, however, that the Trustee
may reserve such sum of money as it shall in its sole discretion deem advisable
for payment of its fees and all expenses in connection with the settlement of
its account, and any balance of such reserve remaining after the payment of such
charges shall be paid over to the successor trustee. If such reserve shall be
insufficient to pay such charges, the Trustee shall be entitled to recover the
amount of any deficiency from the Company, from the successor trustee, or from
both.
(b) Upon the completion of the succession and the rendering of its final
accounts, the Trustee shall have no further responsibilities whatsoever under
this Agreement.
SECTION 8.4 SUCCESSOR BOUND BY AGREEMENT.
All the provisions of this Agreement shall apply to any successor trustee
with the same force and effect as if such successor had been originally named
herein as the trustee hereunder.
ARTICLE IX
AMENDMENT AND TERMINATION
SECTION 9.1 AMENDMENT AND TERMINATION.
(a) The Company may, at any time and from time to time, by instrument in
writing executed pursuant to authorization of its Board of Directors, (i) amend
in whole or in part any or all of the provisions of this Agreement, or (ii)
terminate this Agreement and the trust created hereby; provided, however, that
no amendment which affects the rights, duties or responsibilities of the Trustee
may be made without the Trustee's consent; and provided further that no such
amendment shall divert any part of the Trust Fund to purposes other than for the
exclusive benefit of the Plan Participants or their beneficiaries (including any
Alternate Payee) at any time prior to the satisfaction of all liabilities with
respect to such Participants and their beneficiaries under the Plan and this
Agreement.
(b) Any such amendment shall become effective upon receipt by the Trustee
of the instrument of amendment and endorsement thereon by the Trustee of its
consent thereto, if such consent is required. Any such termination shall become
effective upon the receipt by the Trustee of the instrument of termination;
thereafter the Trustee, upon the direction of the Plan Administrator, shall
liquidate the Trust Fund to the extent required for distribution and, after the
final account of the Trustee has been approved or settled, shall distribute the
balance of the Trust Fund remaining in its hands as directed by the Plan
Administrator, or in the absence of such
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direction, as may be directed by a judgment or decree of a court of competent
jurisdiction. Following any such termination, the powers of the Trustee
hereunder shall continue as long as any of the Trust Fund remains in its hands.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 BINDING EFFECT; ASSIGNABILITY.
This Agreement shall be binding upon, and the powers granted to the Company
and the Trustee, respectively, shall be exercisable by the respective successors
and assigns of the Company and the Trustee. Any corporation which shall, by
merger, consolidation, purchase, or otherwise, succeed to substantially all the
trust business of the Trustee shall, upon such succession and without any
appointment or other action by the Company, be and become successor trustee
hereunder.
SECTION 10.2 GOVERNING LAW.
Except to the extent that the federal law of the United States of America
is applicable, this Agreement and the trust created and the Trust Fund held
hereunder shall be inter preted, construed and administered in accordance with
the law of the Commonwealth of Massachusetts applicable to contracts to be
performed entirely within the Commonwealth of Massachusetts and between parties
all of whom are citizens and residents of such state. All contributions to the
Trust Fund shall be deemed to take place in the Commonwealth of Massachusetts.
SECTION 10.3 NOTICES.
Any communication requested or permitted to be given under this Agreement,
including any notice, direction, designation, certification, order, instruction,
or objection shall be in writing and signed by the person authorized under the
Plan to give the communication. The person receiving such a communication shall
be fully protected in acting in accordance therewith. Any notice required or
permitted to be given to a party hereunder shall be deemed given if in writing
and hand delivered or mailed, postage prepaid, certified mail, return receipt
requested, to such party at the following address or at such other address as
such party may by written notice specify:
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If to the Company:
RFS Bancorp, Inc.
310 Broadway
Revere, Massachusetts 02151
Attention: President and Chief Executive Officer
With copies to:
Thacher Proffitt & Wood
1500 K Street, N.W., Suite 200
Washington, D.C. 20005
Attention: Richard A. Schaberg, Esq.
If to the Trustee:
----------------------
----------------------
----------------------
Attention:
--------------------
With copies to:
----------------------
----------------------
----------------------
Attention:
--------------------
SECTION 10.4 SEVERABILITY.
The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of the remaining provisions.
SECTION 10.5 WAIVER.
Failure of any party to insist at any time or times upon strict compliance
with any provision of this Agreement shall not be a waiver of such provision at
such time or any later time
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unless in a writing designated as a waiver and signed by or on behalf of the
party against whom enforcement of the waiver is sought.
SECTION 10.6 NON-ALIENATION.
No interest, right or claim in or to any part of the Trust Fund or any
payment therefrom shall be assignable, transferable or subject to sale,
mortgage, pledge, hypothecation, commutation, anticipation, garnishment,
attachment, execution, or levy of any kind, and the Trustee and the Plan
Administrator shall not recognize any attempt to assign, transfer, sell,
mortgage, pledge, hypothecate, commute, or anticipate the same, except to the
extent required by law.
SECTION 10.7 QUALIFIED PLAN AND TRUST.
This Agreement and the trust hereby created are part of an employee benefit
plan which the Company intends shall be qualified under section 401(a) of the
Code and until advised to the contrary, the Trustee may assume that the Plan so
qualifies and that the trust is exempt from tax under section 501(a) of the
Code. However, any taxes that may be assessed on or in respect of the Trust Fund
shall be a charge against the Trust Fund. All contributions made prior to the
receipt by the Company of a determination from the Internal Revenue Service to
the effect that the trust forming part of the Plan is a qualified trust under
section 401(a) of the Code and that the trust is exempt from federal income tax
under section 501(a) of the Code shall be made on the express condition that
such a determination is received, and in the event that the Internal Revenue
Service determines that the trust and Plan are not so qualified, all
contributions made prior to the date of the receipt of such determination, after
giving effect to any income, gain or loss, less any compensation and expenses
properly chargeable thereto, shall be returned to the Company.
SECTION 10.8 RETURN OF CONTRIBUTIONS.
(a) In the event that any contribution to the Trust Fund by the Company
shall be the result of a mistake of fact, such contribution (after giving effect
to any income gain or loss, less any compensation or expenses properly
chargeable thereto) shall be returned to the Company promptly upon discovery of
the mistake of fact; provided, however, that no such return shall be made after
the first anniversary of the date of the contribution.
(b) In the event that a contribution to the Trust Fund by the Company shall
be conditioned upon its deductibility under the Code, the amount of such
contribution which shall have been disallowed as a deduction shall be returned
to the Company within one (1) year after the date on which it is disallowed.
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SECTION 10.9 COMPLIANCE WITH SECURITIES LAWS.
In the event that the Plan or any portion thereof, or any interest therein,
by virtue of investments made in Shares, shall be deemed to be a "security" for
purposes of the Securities Act of 1933, the Securities Exchange Act of 1934 or
any other federal or state law, for which there is no exemption from the
registration, reporting, blue sky or other requirements applicable to securities
under such laws, the Company shall, at its sole cost and expense, take all such
actions as are necessary or appropriate to comply with the requirements of such
laws. The Company hereby agrees to indemnify the Trustee and hold it harmless
from and against any claim or liability which may be asserted against the
Trustee by reason of any determination that the Plan or any portion thereof, or
any interest therein, constitutes such a security.
SECTION 10.10 HEADINGS.
The headings of Articles and sections are included solely for convenience
of reference. If there is any conflict between such headings and the text of the
Agreement, the text shall control.
SECTION 10.11 PARTY IN INTEREST INFORMATION.
The Company shall provide the Trustee with such information concerning the
relationship between any person or organization and the Plan as the Trustee
reasonably requests in order to determine whether such person or organization is
a party in interest with respect to the Plan within the meaning of Section 3(14)
of ERISA.
SECTION 10.12 CONSTRUCTION OF LANGUAGE.
Whenever appropriate in this Agreement, words used in the singular may be
read in the plural; words used in the plural may be read in the singular; and
words importing the masculine gender shall be deemed equally to refer to the
female gender or the neuter. Any reference to a section number shall refer to a
section of this Agreement, unless otherwise indicated.
SECTION 10.13 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument.
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IN WITNESS WHEREOF, the Company and the Trustee, respectively, have caused
this Agreement to be executed in their corporate names and their corporate seals
to be hereunto affixed and duly attested, on the dates indicated below their
respective signatures.
RFS BANCORP, INC.
By
-------------------------------------------
James J. McCarthy
Title: President and Chief Executive Officer
Date:
-------------------------------------------
ATTEST:
- -----------------------------------------
Secretary
[Seal]
[NAME OF TRUSTEE]
By
-------------------------------------
[Name]
Title:
-------------------------------------
Date:
-------------------------------------
ATTEST:
- -----------------------------------------
Secretary
[Seal]
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<PAGE>
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COMMONWEALTH OF MASSACHUSETTS)
: ss.:
COUNTY OF SUFFOLK )
On this ____ day of ___________________, 199___, before me personally came
JAMES J. MCCARTHY, to me known, who, being by me duly sworn, did depose and say
that he resides at 12 Magnolia Terrace, Stoneham, Massachusetts 02180; that he
is the President and Chief Executive Officer of RFS BANCORP, INC., the business
corporation described in and which executed the foregoing instrument; that he
knows the seal of said business corporation; that the seal affixed to said
instrument is such business corporation's seal; that it was so affixed by order
of the Board of Directors of said business corporation; and that he signed his
name thereto by like order.
-----------------------------------
Notary Public
COMMONWEALTH OF MASSACHUSETTS )
: ss.:
COUNTY OF SUFFOLK )
On this _____ day of _____________________, 199__, before me personally
came ___________________, to me known, who, being by me duly sworn, did depose
and say that he resides at _____________________, that he is ___________________
of [NAME OF TRUSTEE], the banking corporation described in and which executed
the foregoing instrument; that he knows the seal of said banking corporation;
that the seal affixed to said instrument is such seal; that it was so affixed by
order of the Board of Directors of said banking corporation; and that he signed
his name thereto by like order.
---------------------------
Notary Public
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FORM OF
REVERE FEDERAL SAVINGS
EXECUTIVE EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
______________, 1998, by and between REVERE FEDERAL SAVINGS, a savings
association organized and operating under the federal laws of the United States
and having an office at 310 Broadway, Revere, Massachusetts 02151 ("Bank") and
JAMES J. MCCARTHY, an individual residing at 12 Magnolia Terrace, Stoneham,
Massachusetts 02180 ("Executive").
W I T N E S S E T H :
WHEREAS, the Executive currently serves the Bank in the capacity of
President and Chief Executive Officer and is a member of its Board of Directors
("Board"); and
WHEREAS, effective as of the Effective Date of this Agreement (as defined
in section 28 hereof) and pursuant to the Plan of Reorganization dated January
10, 1998 (the "Plan of Reorganization"), the Bank has reorganized from a
federally chartered mutual savings bank to a federally chartered stock savings
bank and has become a wholly-owned subsidiary of RFS Bancorp, Inc. ("RFS
Bancorp"), a mid-tier stock holding company, which is majority owned by Revere
Bancorp, M.H.C., a mutual holding company; and
WHEREAS, the Bank desires to assure for itself the continued availability
of the Executive's services and the ability of the Executive to perform such
services with a minimum of personal distraction in the event of a pending or
threatened Change of Control (as hereinafter defined); and
WHEREAS, the Executive is willing to continue to serve the Bank on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions hereinafter set forth, the Bank and the Executive hereby agree as
follows:
SECTION 1. EMPLOYMENT.
The Bank agrees to continue to employ the Executive, and the Executive
hereby agrees to such continued employment, during the period and upon the terms
and conditions set forth in this Agreement.
<PAGE>
SECTION 2. EMPLOYMENT PERIOD; REMAINING UNEXPIRED EMPLOYMENT PERIOD.
(a) The terms and conditions of this Agreement shall be and remain in
effect during the period of employment established under this section 2
("Employment Period"). The Employment Period shall be for an initial term of
three years beginning on the Effective Date of this Agreement. Prior to the
first anniversary of the Effective Date of this Agreement and prior to each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Period. In such event, the Employment Period shall
be extended to the third anniversary of the relevant Anniversary Date. In no
event, however, shall any such extension take effect at a time when the
Executive could elect to resign pursuant to section 9(a)(i) or 11 and claim
severance benefits under section 9(b).
(b) For all purposes of this Agreement, the term "Remaining Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to section 2(a) of this Agreement) is then scheduled to expire.
(c) Nothing in this Agreement shall be deemed to prohibit the Bank from
terminating the Executive's employment at any time during the Employment Period
with or without notice for any reason; provided, however, that the relative
rights and obligations of the Bank and the Executive in the event of any such
termination shall be determined under this Agreement.
SECTION 3. DUTIES.
Executive shall serve as President and Chief Executive Officer of the Bank,
having such power, authority and responsibility and performing such duties as
are prescribed by or under the By-Laws of the Bank and as are customarily
associated with such positions. Executive shall devote his full business time
and attention (other than during weekends, holidays, approved vacation periods,
and periods of illness or approved leaves of absence) to the business and
affairs of the Bank and shall use his best efforts to advance the interests of
the Bank.
SECTION 4. CASH COMPENSATION.
In consideration for the services to be rendered by the Executive
hereunder, the Bank shall pay to him a salary at an initial annual rate
of_______________________________ ($_______), payable in approximately equal
installments in accordance with the Bank's customary payroll practices for
senior officers. The Board shall review the Executive's annual rate of salary at
such times during the Employment Period as it deems appropriate, but not less
frequently than once every twelve months, and may, in its discretion, approve an
increase in the Executive's annual rate of salary. In addition to salary, the
Executive may receive other cash compensation from the Bank for services
hereunder, including but not limited to, an annual cash bonus, at such
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times, in such amounts and on such terms and conditions as the Board may
determine from time to time.
SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS.
During the Employment Period, the Executive shall be treated as an employee
of the Bank and shall be entitled to participate in and receive benefits under
any and all qualified or non-qualified retirement, pension, savings,
profit-sharing or stock bonus plans, any and all group life, health (including
hospitalization, medical and major medical), dental, accident and long-term
disability insurance plans, and any other employee benefit and compensation
plans (including, but not limited to, any incentive compensation plans or
programs, stock option and appreciation rights plans and restricted stock plans)
as may from time to time be maintained by, or cover employees of, the Bank or
RFS Bancorp, in accordance with the terms and conditions of such employee ben
efit plans and programs and compensation plans and programs and consistent with
the Bank's customary practices. Nothing paid to the Executive under any such
plan or arrangement will be deemed to be in lieu of other compensation to which
the Executive is entitled under this Agreement.
SECTION 6. INDEMNIFICATION AND INSURANCE.
(a) During the Employment Period and for a period of six (6) years
thereafter, the Bank shall cause the Executive to be covered by and named as an
insured under any policy or contract of insurance obtained by it to insure its
directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Bank or service in
other capacities at the request of the Bank. The coverage provided to Executive
pursuant to this section 6 shall be of the same scope and on the same terms and
conditions as the coverage (if any) provided to other officers or directors of
the Bank.
(b) For as long as the Bank is subject to regulation by the Office of
Thrift Supervision ("OTS"), the Bank shall indemnify the Executive in accordance
with 12 Code of Federal Regulations ("C.F.R") ss.545.121. From and after the
earliest date on which the Bank is not subject to regulation by the OTS, to the
maximum extent permitted under applicable law, during the Employment Period and
for a period of six (6) years thereafter, the Bank shall indemnify Executive
against and hold him harmless from any costs, liabilities, losses and exposures
to the fullest extent and on the most favorable terms and conditions that
similar indemnification is offered to any director or officer of the Bank or any
subsidiary or affiliate thereof. This section 6(b) shall not be applicable where
section 18 is applicable.
SECTION 7. OUTSIDE ACTIVITIES.
Executive may serve as a member of the boards of directors of such
business, community and charitable organizations as he may disclose to and as
may be approved by the Board (which approval shall not be unreasonably
withheld); provided, however, that such service shall not materially interfere
with the performance of his duties under this Agreement. The Executive may also
engage in personal business and investment activities which do not materially
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interfere, and are not inconsistent with, the performance of his duties and
responsibilities hereunder; and, provided, further, however, that such
activities are not prohibited under 12 C.F.R. ss.ss.571.7 or 571.9 or any code
of conduct or investment or securities trading policy established by the Bank
and generally applicable to all similarly situated executives (including,
without limitation, any applicable conflict of interest policy adopted by the
Board as contemplated by 12 C.F.R. ss.571.7). Executive may also serve as an
officer or director of the RFS Bancorp or Revere Bancorp, M.H.C. upon such terms
and conditions as the Bank and the RFS Bancorp or Revere Bancorp, M.H.C. may
mutually agree upon, and such service shall not be deemed to materially
interfere with the Executive's performance of his duties hereunder or otherwise
result in a material breach of this Agreement. The Executive shall not receive
compensation from the Bank for service as an officer or director of either RFS
Bancorp or Revere Bancorp, M.H.C.
SECTION 8. WORKING FACILITIES AND EXPENSES.
Executive's principal place of employment shall be at the Bank's executive
offices at the address first above written, or at such other location within
Suffolk County at which the Bank shall maintain its principal executive offices,
or at such other location as the Bank and the Executive may mutually agree upon.
The Bank shall provide the Executive at his principal place of employment with a
private office, secretarial services, and other support services and facilities
suitable to his position with the Bank and necessary or appropriate in
connection with the per formance of his assigned duties under this Agreement.
The Bank shall reimburse Executive for his ordinary and necessary business
expenses, including, without limitation, all expenses associated with his
business use of an automobile, fees for memberships in such clubs and or
ganizations as the Executive and the Bank shall mutually agree are necessary and
appropriate for business purposes, and his travel and entertainment expenses
incurred in connection with the performance of his duties under this Agreement,
in each case upon presentation to the Bank of an itemized account of such
expenses in such form as the Bank may reasonably require.
SECTION 9. TERMINATION OF EMPLOYMENT WITH SEVERANCE BENEFITS.
(a) Executive shall be entitled to the severance benefits described in
section 9(b) herein in the event that his employment with the Bank terminates
during the Employment Period under any of the following circumstances:
(i) Executive's voluntary resignation from employment with the Bank
within ninety (90) days following:
(A) the failure of the Board to appoint or re-appoint or elect or
re-elect Executive to the position stated in section 3 of this
Agreement (or a more senior office of the Bank);
(B) in the event that the Executive is a member of the Board, the
failure of the stockholders of the Bank to elect or re-elect Executive
to the Board or the failure of the Board (or the nominating committee
thereof) to nominate the Executive for such election or re-election;
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(C) the expiration of a thirty (30) day period following the date
on which the Executive gives written notice to the Bank of its
material failure, whether by amendment of the Bank's Charter or
By-Laws, action of the Board or the Bank's stockholders or otherwise,
to vest in Executive the functions, duties, or responsibilities
prescribed in section 3 of this Agreement, unless, during such thirty
(30) day period, such failure is cured in a manner determined by
Executive, in his discretion, to be satisfactory; or
(D) the expiration of a thirty (30) day period following the date
on which Executive gives written notice to the Bank of its material
breach of any term, condition or covenant contained in this Agreement
(including, without limitation any reduction of Executive's rate of
base salary in effect from time to time and any change in the terms
and conditions of any compensation or benefit program in which
Executive participates which, either individually or together with
other changes, has a material adverse effect on the aggregate value of
his total compensation package), unless, during such thirty (30) day
period, such failure is cured in a manner determined by Executive, in
his discretion, to be satisfactory; or
(ii) subject to the provisions of section 10, the termination of
Executive's employment with the Bank for any other reason not described in
section 9(a) other than a termination of the Executive's employment for
"cause;"
then, the Bank shall provide the benefits and pay to Executive the amounts
described in section 9(b).
(b) Upon the termination of Executive's employment with the Bank under
circumstances described in section 9(a) of this Agreement, the Bank shall pay
and provide to Executive (or, in the event of his death, to his estate):
(i) the portion, if any, of the compensation (including, without
limitation, all items which constitute wages under applicable law and the
payment of which is not otherwise provided for under this section 9(b))
earned by the Executive through the date of the termination of his
employment with the Bank which remains unpaid as of such date, such payment
to be made at the time and in the manner prescribed by law applicable to
the payment of wages but in no event later than thirty (30) days after the
Executive's termination of employment;
(ii) the benefits, if any, to which he is entitled as a former
employee under the employee benefit plans and programs and compensation
plans and programs maintained for the benefit of the Bank's officers and
employees;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accident and long-term disability insurance
benefits, in addition to that
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provided pursuant to section 9(b)(ii), and after taking into account the
coverage provided by any subsequent employer, if and to the extent
necessary to provide for Executive, for the Remaining Unexpired Employment
Period, coverage equivalent to the coverage to which he would have been
entitled under such plans (as in effect on the date of his termination of
employment, or, if his termination of employment occurs after a Change of
Control, on the date of such Change of Control, whichever benefits are
greater), if he had continued working for the Company during the Remaining
Unexpired Employment Period at the highest annual rate of compensation
achieved during that portion of the Employment Period which is prior to
Executive's termination of employment with the Bank;
(iv) within thirty (30) days following his termination of employment
with the Bank, a lump sum payment, in an amount equal to the present value
of the salary that Executive would have earned if he had continued working
for the Bank during the Remaining Unexpired Employment Period at the
highest annual rate of salary achieved during that portion of the
Employment Period which is prior to Executive's termination of employment
with the Bank, where such present value is to be determined using a dis
count rate equal to the applicable short-term federal rate prescribed under
section 1274(d) of the Internal Revenue Code of 1986 ("Code"), compounded
using the compounding period corresponding to the Bank's regular payroll
periods for its officers, such lump sum to be paid in lieu of all other
payments of salary provided for under this Agreement in re spect of the
period following any such termination;
(v) within thirty (30) days following his termination of employment
with the Bank, a lump sum payment in an amount equal to the excess, if any,
of:
(A) the present value of the aggregate benefits to which he would
be entitled under any and all qualified and non-qualified defined
benefit pension plans maintained by, or covering employees of, the
Bank, if he were 100% vested thereunder and had continued working for
the Bank during the Remaining Unexpired Employment Period, such
benefits to be determined as of the date of termination of employment
by adding to the service actually recognized under such plans an
additional period equal to the Remaining Unexpired Employment Period
and by adding to the compensation actually recognized under such
plans, all amounts payable under sections 9(b)(i) and 9(b)(vii) to the
extent that such amounts would have been recognized under such plans
had the Executive remained in service during the Remaining Unexpired
Employment Period; over
(B) the present value of the benefits to which he is actually
entitled un der such defined benefit pension plans as of the date of
his termination;
where such present values are to be determined using the mortality tables
prescr ibed under section 415(b)(2)(E)(v) of the Code and a discount rate,
compounded monthly equal to the annualized rate of interest prescribed by
the Pension Benefit Guaranty Corporation for the valuation of immediate
annuities payable under
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terminating single-employer defined benefit plans for the month in which
Executive's termination of employment occurs ("Applicable PBGC Rate");
(vi) within thirty (30) days following his termination of employment
with the Bank, a lump sum payment in an amount equal to the present value
of the additional employer contributions (or if greater in the case of a
leveraged employee stock ownership plan or similar arrangement, the
additional assets allocable to him through debt service, based on the fair
market value of such assets at termination of employment) to which he would
have been entitled under any and all qualified and non-qualified defined
contribution plans maintained by, or covering employees of, the Bank, as if
he were 100% vested thereunder and had continued working for the Bank
during the Remaining Unexpired Em ployment Period at the highest annual
rate of compensation achieved during that portion of the Employment Period
which is prior to the Executive's termination of employment with the Bank,
and making the maximum amount of employee contributions, if any, re quired
under such plan or plans, such present value to be determined on the basis
of a discount rate, compounded using the compounding period that
corresponds to the frequency with which employer contributions are made to
the relevant plan, equal to the Applicable PBGC Rate; and
(vii) within thirty (30) days following his termination of employment
with the Company, the payments that would have been made to Executive under
any cash bonus or long-term or short-term cash incentive compensation plan
maintained by, or covering employees of, the Bank if he had continued
working for the Bank during the Remaining Unexpired Employment Period and
had earned the maximum bonus or incentive award in each calendar year that
ends during the Remaining Unexpired Employment Period, such payments to be
equal to the product of:
(A) the maximum percentage rate at which an award was ever
available to Executive under such incentive compensation plan;
multiplied by
(B) the salary that would have been paid to Executive during each
such calendar year at the highest annual rate of salary achieved
during that portion of the Employment Period which is prior to
Executive's termination of employment with the Bank,
such payments to be made (without discounting for early payment) within
thirty (30) days following the Executive's termination of employment;
The Bank and the Executive each hereby stipulate that the damages which may
be incurred by Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this section 9(b) constitute reasonable
damages under the circumstances and shall be payable without any requirement of
proof of actual damage and without regard to Executive's efforts, if any, to
mitigate damages. The Bank and the Executive further agree that the Bank may
condition the payments and benefits (if any) due under sections 9(b)(iii), (iv),
(v), (vi) and (vii) on the
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receipt of Executive's resignation from any and all positions which he holds as
an officer, director or committee member with respect to the Bank, RFS Bancorp,
Revere Bancorp, M.H.C., or any subsidiary or affiliate of any of them.
SECTION 10. TERMINATION WITHOUT ADDITIONAL BANK LIABILITY.
In the event that the Executive's employment with the Bank shall terminate
during the Employment Period on account of:
(a) the discharge of the Executive for "cause," which, for purposes of
this Agreement shall mean personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final cease and desist order, or
any material breach of this Agreement, in each case as measured against
standards generally prevailing at the relevant time in the savings and community
banking industry; provided, however, that the Executive shall not be deemed to
have been discharged for cause unless and until the following procedures shall
have been followed:
(i) the Board shall adopt a resolution duly approved by affirmative
vote of a majority of the entire Board at a meeting called and held for
such purpose calling for the Executive's termination for cause and setting
forth the purported grounds for such termination ("Proposed Termination
Resolution");
(ii) as soon as practicable, and in any event within five (5) days,
after adoption of such resolution, the Board shall furnish to the Executive
a written notice of termination which shall be accompanied by a certified
copy of the Proposed Termination Resolution ("Notice of Proposed
Termination");
(iii) the Executive shall be afforded a reasonable opportunity to make
oral and written presentations to the members of the Board, on his own
behalf, or through a repre sentative, who may be his legal counsel, to
refute the grounds set forth in the Proposed Termination Resolution at one
or more meetings of the Board to be held no sooner than fifteen (15) days
and no later than thirty (30) days after the Executive's receipt of the
Proposed Termination Notice ("Termination Hearings"); and
(iv) within ten (10) days following the end of the Termination
Hearings, the Board shall adopt a resolution duly approved by affirmative
vote of a majority of the entire Board at a meeting called and held for
such purpose (A) finding that in the good faith opinion of the Board the
grounds for termination set forth in the Proposed Termination Resolution
exist and (B) terminating the Executive's employment ("Termination
Resolution"); and
(v) as promptly as practicable, and in any event within one (1)
business day after adoption of the Termination Resolution, the Board shall
furnish to the Executive written notice of termination, which notice shall
include a copy of the Termination
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Resolution and specify an effective date of termination that is not later
than the date on which such notice is given;
(b) Executive's voluntary resignation from employment with the Company
for reasons other than those specified in section 9(a)(i);
(c) Executive's death; or
(d) a determination that Executive is eligible for long-term
disability benefits under the Bank's long-term disability insurance program or,
if there is no such program, under the federal Social Security Act;
then, the Bank shall have no further obligations under this Agreement, other
than the payment to Executive (or, in the event of his death, to his estate) of
the portion, if any, of the salary earned by the Executive through the date of
his termination of employment with the Bank which remains unpaid as of such date
and the provision of such other benefits, if any, to which he is entitled as a
former employee under the employee benefit plans and programs and compensation
plans and programs maintained by, or covering employees of, the Bank.
SECTION 11. TERMINATION UPON OR FOLLOWING A CHANGE OF CONTROL.
(a) A Change of Control of the Bank ("Change of Control") shall be
deemed to have occurred upon the happening of any of the following events:
(i) approval by the stockholders of the Bank of a transaction that
would result in the reorganization, merger or consolidation of the Bank,
respectively, with one or more other persons, other than a transaction
following which:
(A) at least 51% of the equity ownership interests of the entity
resulting from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended "Exchange Act") in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank; and
(B) at least 51% of the securities entitled to vote generally in
the election of directors of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the securities entitled to vote
generally in the election of directors of the Bank;
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(ii) the acquisition of all or substantially all of the assets of the
Bank or beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 25% or more of the outstanding securities of the
Bank entitled to vote generally in the election of directors by any person
or by any persons acting in concert, or approval by the stockholders of the
Bank of any transaction which would result in such an acquisition;
(iii) a complete liquidation or dissolution of the Bank, or approval
by the stockholders of the Bank of a plan for such liquidation or
dissolution; or
(iv) the occurrence of any event if, immediately following such event,
at least 50% of the members of the Board of the Bank do not belong to any
of the following groups:
(A) individuals who were members of the Board of the Bank on the
date of this Agreement; or
(B) individuals who first became members of the Board of the Bank
after the date of this Agreement either:
(I) upon election to serve as a member of the Board of the
Bank by affirmative vote of three-quarters of the members of such
Board, or of a nominating committee thereof, in office at the
time of such first election; or
(II) upon election by the stockholders of the Bank to serve
as a member of the Board of the Bank, but only if nominated for
election by affirmative vote of three-quarters of the members of
the Board, or of a nominating committee thereof, in office at the
time of such first nomination;
provided, however, that such individual's election or nomination did
not result from an actual or threatened election contest (within the
meaning of Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents (within the meaning of Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) other than by or on behalf of the
Board of the Bank;
In no event, however, shall a Change of Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Company, the Bank, or
any affiliate or subsidiary of either of them, by the Company, the Bank, or any
affiliate or subsidiary of either of them, or by any employee benefit plan
maintained by any of them. For purposes of this section 11(a), the term "person"
shall have the meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the
Exchange Act.
(b) In the event of a Change of Control, Executive shall be entitled
to the payments and benefits contemplated by section 9(b) in the event of his
termination employment
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with the Bank under any of the circumstances described in section 9(a) of this
Agreement or under any of the following circumstances:
(i) resignation, voluntary or otherwise, by the Executive at any time
during the Employment Period and within ninety (90) days following his
demotion, loss of title, office or significant authority or responsibility,
or following any reduction in any element of his package of compensation
and benefits;
(ii) resignation, voluntary or otherwise, by the Executive at any time
during the Employment Period and within ninety (90) days following any
relocation of his principal place of employment or any change in working
conditions at such principal place of employment which is embarrassing,
derogatory or otherwise materially adverse to the Executive;
(iii) resignation, voluntary or otherwise, by the Executive at any
time during the Employment Period following the failure of any successor to
the Bank in the Change of Control to include the Executive in any
compensation or benefit program maintained by it or covering any of its
executive officers, unless the Executive is already covered by a
substantially similar plan of the Bank which is at least as favorable to
him; or
(iv) resignation, voluntary or otherwise, for any reason whatsoever
following the expiration of a transition period of thirty days beginning on
the effective date of the Change of Control (or such longer period, not to
exceed ninety (90) days beginning on the effective date of the Change of
Control, as the Bank or its successor may reasonably request) to facilitate
a transfer of management responsibilities.
SECTION 12. COVENANT NOT TO COMPETE.
In the event of his termination of employment with the Bank prior to the
expiration of the Employment Period, for a period of one (1) year following the
date of his termination of employment with the Bank (or, if less, for the
Remaining Unexpired Employment Period), the Executive shall not, without the
written consent of the Bank, become an officer, employee, consultant, director
or trustee of any competitor (as herein defined) if in this capacity he would be
working for the competitor within a town contiguous to where the headquarters of
the Bank are located on the date of the Executive's termination of employment.
For this purpose, a "competitor" is any savings association, savings and loan
association, savings and loan holding company, bank or bank holding company, or
any direct or indirect subsidiary or affiliate of any such entity. This section
12 shall not apply if the Executive's employment is terminated without cause or
due to death or voluntary resignation as described in section 9(a). If the
Executive's employment shall be terminated on account of disability as provided
in section 10(d) of this Agreement, this section 12 shall not apply if (a) the
Executive first offers, by written notice, to accept a similar position with, or
perform similar services for, the Bank on substantially the same terms and
conditions proposed by the competitor and (b) the Bank declines to accept such
offer within ten (10) days after such notice is given.
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SECTION 13. CONFIDENTIALITY.
Unless he obtains the prior written consent of the Bank, the Executive
shall keep confidential and shall refrain from using for the benefit of himself,
or any person or entity other than the Bank or any entity which is a subsidiary
of the Bank or of which the Bank is a subsidiary, any material document or
information obtained from the Bank, or from its parent or subsidiaries, in the
course of his employment with any of them concerning their properties,
operations or business (unless such document or information is readily
ascertainable from public or published information or trade sources or has
otherwise been made available to the public through no fault of his own) until
the same ceases to be material (or becomes so ascertainable or available);
provided, however, that nothing in this section 13 shall prevent Executive, with
or without the Bank's consent, from participating in or disclosing documents or
information in connection with any judicial or administrative investigation,
inquiry or proceeding to the extent that such participation or disclosure is
required under applicable law.
SECTION 14. SOLICITATION.
Executive hereby covenants and agrees that, for a period of one (1) year
following his termination of employment with the Bank, he shall not, without the
written consent of the Bank, either directly or indirectly:
(a) solicit, offer employment to, or take any other action intended, or
that a reasonable person acting in like circumstances would expect, to have the
effect of causing any officer or employee of the Bank or any affiliate, as of
the date of this Agreement, of either of them, to terminate his or her
employment and accept employment or become affiliated with, or provide services
for compensation in any capacity whatsoever to, any savings association,
cooperative bank, credit union, savings and loan association, savings and loan
holding company, bank, bank holding company, or other institution engaged in the
business of accepting deposits and making loans, having its principal place of
business in a town contiguous to where the headquarters of the Bank are located,
as of the date of this Agreement;
(b) provide any information, advice or recommendation with respect to any
such officer or employee of any savings association, cooperative bank, credit
union, savings and loan association, savings and loan holding company, bank,
bank holding company, or other institution engaged in the business of accepting
deposits and making loans, having its principal place of business in a town
contiguous to where the headquarters of the Bank are located, as of the date of
this Agreement, that is intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any officer or
employee of the Bank or any affiliate, as of the date of this Agreement, of
either of them, to terminate his employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, any savings association, cooperative bank, credit union, savings and loan
association, savings and loan holding company, bank, bank holding company, or
other institution engaged in the business of accepting deposits and making
loans, having its principal place of business in a town contiguous to where the
headquarters of the Bank are located, as of the date of this Agreement; or
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(c) solicit, provide any information, advice or recommendation or take any
other action intended, or that a reasonable person acting in like circumstances
would expect, to have the effect of causing any customer of the Bank to
terminate an existing business or commercial relationship with the Bank.
SECTION 15. NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.
The termination of Executive's employment during the term of this Agreement
or thereafter, whether by the Bank or by Executive, shall have no effect on the
rights and obligations of the parties hereto under the Bank's qualified or
non-qualified retirement, pension, savings, thrift, profit-sharing or stock
bonus plans, group life, health (including hospitalization, medical and major
medical), dental, accident and long-term disability insurance plans or such
other employee benefit plans or programs, or compensation plans or programs, as
may be maintained by, or cover employees of, the Bank from time to time.
SECTION 16. SUCCESSORS AND ASSIGNS.
This Agreement will inure to the benefit of and be binding upon Executive,
his legal representatives and testate or intestate distributees, and the Bank
and its successors and assigns, including any successor by merger or
consolidation or a statutory receiver or any other person or firm or corporation
to which all or substantially all of the assets and business of the Bank may be
sold or otherwise transferred. Failure of the Bank to obtain from any successor
its express written assumption of the Bank's obligations hereunder at least
sixty (60) days in advance of the scheduled effective date of any such
succession shall be deemed a material breach of this Agreement unless cured
within ten (10) days after notice hereof by the Executive to the Bank.
SECTION 17. NOTICES.
Any communication required or permitted to be given under this Agreement,
including any notice, direction, designation, consent, instruction, objection or
waiver, shall be in writing and shall be deemed to have been given at such time
as it is delivered personally, or five (5) days after mailing if mailed, postage
prepaid, by registered or certified mail, return receipt requested, addressed to
such party at the address listed below or at such other address as one such
party may by written notice specify to the other party:
If to Executive:
Mr. James J. McCarthy
12 Magnolia Terrace
Stoneham, Massachusetts 02180
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If to the Bank:
Revere Federal Savings
310 Broadway
Revere, Massachusetts 02151
Attention: Board of Directors -- Non-Employee Directors
with a copy to:
Thacher Proffitt & Wood
1500 K Street, N.W., Suite 200
Washington, D.C. 20005
Attention: Richard A. Schaberg, Esq.
SECTION 18. INDEMNIFICATION FOR ATTORNEYS' FEES.
The Bank shall indemnify, hold harmless and defend Executive against
reasonable costs, including legal fees, incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved, as a
result of his efforts, in good faith, to defend or enforce the terms of this
Agreement; provided, however, that Executive shall have substantially prevailed
on the merits pursuant to a judgment, decree or order of a court of competent
jurisdiction or of an arbitrator in an arbitration proceeding. The determination
whether the Executive shall have substantially prevailed on the merits and is
therefore entitled to such indemnification, shall be made by the court or
arbitrator, as applicable. In the event of a settlement pursuant to a settlement
agreement, any indemnification payment under this section 18 shall be made only
after a determination by the members of the Board (other than the Executive and
any other member of the Board to which the Executive is related by blood or
marriage) that the Executive has acted in good faith and that such
indemnification payment is in the best interests of the Bank.
SECTION 19. SEVERABILITY.
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
SECTION 20. WAIVER.
Failure to insist upon strict compliance with any of the terms, covenants
or conditions hereof shall not be deemed a waiver of such term, covenant, or
condition. A waiver of any provision of this Agreement must be made in writing,
designated as a waiver, and signed by the party against whom its enforcement is
sought. Any waiver or relinquishment of any right
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<PAGE>
or power hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
SECTION 21. COUNTERPARTS.
This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one and the
same Agreement.
SECTION 22. GOVERNING LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the federal laws of the United States and, to the extent that
federal law is inapplicable, in accordance with the laws of the Commonwealth of
Massachusetts applicable to contracts entered into and to be performed entirely
within the Commonwealth of Massachusetts.
SECTION 23. HEADINGS AND CONSTRUCTION.
The headings of sections in this Agreement are for convenience of reference
only and are not intended to qualify the meaning of any section. Any reference
to a section number shall refer to a section of this Agreement, unless otherwise
stated.
SECTION 24. ENTIRE AGREEMENT; MODIFICATIONS.
This instrument contains the entire agreement of the parties relating to
the subject matter hereof, and supersedes in its entirety any and all prior
agreements, understandings or rep resentations relating to the subject matter
hereof. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
SECTION 25. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purposes of complying with
various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary, in no event
shall the aggregate amount of compensation payable to the Executive under
section 9(b) hereof (exclusive of amounts described in section 9(b)(i) or (ii))
exceed the three times the Executive's average annual compensation (within the
meaning of OTS Regulatory Bulletin 27a or any successor thereto) for the last
five consecutive calendar years to end prior to his termination of employment
with the Bank (or for his entire period of employment with the Bank if less than
five calendar years). The compensation payable to the Executive hereunder shall
be further reduced (but not below zero) if such reduction would avoid the
assessment of excise taxes on excess parachute payments (within the meaning of
section 280G of the Code).
(b) Notwithstanding anything herein contained to the contrary, any payments
to the Executive by the Bank, whether pursuant to this Agreement or otherwise,
are subject to and
-Page 15 of 18-
<PAGE>
conditioned upon their compliance with section 18(k) of the Federal Deposit
Insurance Act ("FDI Act"), 12 U.S.C. ss.1828(k), and any regulations promulgated
thereunder.
(c) Notwithstanding anything herein contained to the contrary, if the
Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to a notice
served under section 8(e)(3) or 8(g)(1) of the FDI Act, 12 U.S.C. ss.1818(e)(3)
or 1818(g)(1), the Bank's obligations under this Agreement shall be suspended as
of the date of service of such notice, unless stayed by appropriate proceedings.
If the charges in such notice are dismissed, the Bank, in its discretion, may
(i) pay to the Executive all or part of the compensation withheld while the
Bank's obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary, if the
Executive is removed and/or permanently prohibited from participating in the
conduct of the Bank's affairs by an order issued under section 8(e)(4) or
8(g)(1) of the FDI Act, 12 U.S.C. ss.1818(e)(4) or (g)(1), all prospective
obligations of the Bank under this Agreement shall terminate as of the effective
date of the order, but vested rights and obligations of the Bank and the
Executive shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if the Bank
is in default (within the meaning of section 3(x)(1) of the FDI Act, 12 U.S.C.
ss.1813(x)(1), all prospective obligations of the Bank under this Agreement
shall terminate as of the date of default, but vested rights and obligations of
the Bank and the Executive shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated, except to the
extent that a continuation of this Agreement is necessary for the continued
operation of the Bank: (i) by the Director of the OTS or his designee or the
Federal Deposit Insurance Corporation ("FDIC"), at the time the FDIC enters into
an agreement to provide assistance to or on behalf of the Bank under the
authority contained in section 13(c) of the FDI Act, 12 U.S.C. ss.1823(c); (ii)
by the Director of the OTS or his designee at the time such Director or designee
approves a supervisory merger to resolve problems related to the operation of
the Bank or when the Bank is determined by such Director to be in an unsafe or
unsound condition. The vested rights and obligations of the parties shall not be
affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
SECTION 26. EFFECTIVE DATE.
This Agreement shall become effective (the "Effective Date") upon the later
of the following two dates: (a) the effective date of the Bank's conversion from
a federally chartered mutual savings bank to a stock form savings bank pursuant
to the Plan of Reorganization or (b)
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<PAGE>
the date the OTS advises the Bank in writing that it either approves or has no
objection to the terms and conditions of this Agreement. The Bank and the
Executive each hereby acknowledge and agree that the terms of this Agreement
shall have no force or effect prior to such Effective Date.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
Executive has hereunto set his hand, all as of the day and year first above
written.
----------------------------
JAMES J. MCCARTHY
ATTEST: REVERE FEDERAL SAVINGS
By
----------------------------------
Secretary By
--------------------------
Name:
Title:
[Seal]
-Page 17 of 18-
<PAGE>
COMMONWEALTH OF MASSACHUSETTS )
: SS.:
COUNTY OF SUFFOLK )
On this ________ day of ____________________, 1998, before me personally
came JAMES J. MCCARTHY, to me known, and known to me to be the individual
described in the foregoing instrument, who, being by me duly sworn, did depose
and say that he resides at the address set forth in said instrument, and that he
signed his name to the foregoing instrument.
---------------------------
Notary Public
COMMONWEALTH OF MASSACHUSETTS )
: SS.:
COUNTY OF SUFFOLK )
On this ________ day of ____________________, 1998, before me personally
came _____________________________, to me known, who, being by me duly sworn,
did depose and say that he resides at
_____________________________________________________, that he is a member of
the Board of Directors of REVERE FEDERAL SAVINGS, the savings bank described in
and which executed the foregoing instrument; that he knows the seal of said
bank; that the seal affixed to said instrument is such seal; that it was so
affixed by order of the Board of Directors of said bank; and that he signed his
name thereto by like order.
---------------------------
Notary Public
-Page 18 of 18-
FORM OF
REVERE FEDERAL SAVINGS
EXECUTIVE EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
______________, 1998, by and between REVERE FEDERAL SAVINGS, a savings
association organized and operating under the federal laws of the United States
and having an office at 310 Broadway, Revere, Massachusetts 02151 ("Bank") and
ANTHONY J. PATTI, an individual residing at 18 Colony Brook Lane, Derry, New
Hampshire 03038 ("Executive").
W I T N E S S E T H :
WHEREAS, the Executive currently serves the Bank in the capacity of
Executive Vice President and Chief Financial Officer; and
WHEREAS, effective as of the Effective Date of this Agreement (as
defined in section 28 hereof) and pursuant to the Plan of Reorganization dated
January 10, 1998 (the "Plan of Reorganization"), the Bank has reorganized from a
federally chartered mutual savings bank to a federally chartered stock savings
bank and has become a wholly-owned subsidiary of RFS Bancorp, Inc. ("RFS
Bancorp"), a mid-tier stock holding company, which is majority owned by Revere
Bancorp, M.H.C., a mutual holding company; and
WHEREAS, the Bank desires to assure for itself the continued
availability of the Executive's services and the ability of the Executive to
perform such services with a minimum of personal distraction in the event of a
pending or threatened Change of Control (as hereinafter defined); and
WHEREAS, the Executive is willing to continue to serve the Bank on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions hereinafter set forth, the Bank and the Executive
hereby agree as follows:
SECTION 1. EMPLOYMENT.
The Bank agrees to continue to employ the Executive, and the Executive
hereby agrees to such continued employment, during the period and upon the terms
and conditions set forth in this Agreement.
<PAGE>
SECTION 2. EMPLOYMENT PERIOD; REMAINING UNEXPIRED EMPLOYMENT PERIOD.
(a) The terms and conditions of this Agreement shall be and remain in
effect during the period of employment established under this section 2
("Employment Period"). The Employment Period shall be for an initial term of
three years beginning on the Effective Date of this Agreement. Prior to the
first anniversary of the Effective Date of this Agreement and prior to each
anniversary date thereafter (each, an "Anniversary Date"), the Board of
Directors of the Bank ("Board") shall review the terms of this Agreement and the
Executive's performance of services hereunder and may, in the absence of
objection from the Executive, approve an extension of the Employment Period. In
such event, the Employment Period shall be extended to the third anniversary of
the relevant Anniversary Date. In no event, however, shall any such extension
take effect at a time when the Executive could elect to resign pursuant to
section 9(a)(i) or 11 and claim severance benefits under section 9(b).
(b) For all purposes of this Agreement, the term "Remaining Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to section 2(a) of this Agreement) is then scheduled to expire.
(c) Nothing in this Agreement shall be deemed to prohibit the Bank
from terminating the Executive's employment at any time during the Employment
Period with or without notice for any reason; provided, however, that the
relative rights and obligations of the Bank and the Executive in the event of
any such termination shall be determined under this Agreement.
SECTION 3. DUTIES.
Executive shall serve as Executive Vice President and Chief Financial
Officer of the Bank. In this capacity, the Executive shall have such power,
authority and responsibility and shall perform such duties as are prescribed by
or under the By-Laws of the Bank and as are customarily associated with such
positions. Executive shall devote his full business time and attention (other
than during weekends, holidays, approved vacation periods, and periods of
illness or approved leaves of absence) to the business and affairs of the Bank
and shall use his best efforts to advance the interests of the Bank.
SECTION 4. CASH COMPENSATION.
In consideration for the services to be rendered by the Executive
hereunder, the Bank shall pay to him a salary at an initial annual rate
of_______________________________ ($_______), payable in approximately equal
installments in accordance with the Bank's customary payroll practices for
senior officers. The Board shall review the Executive's annual rate of salary at
such times during the Employment Period as it deems appropriate, but not less
frequently than once every twelve months, and may, in its discretion, approve an
increase in the Executive's annual rate of salary. In addition to salary, the
Executive may receive other cash compensation
-Page 2 of 16-
<PAGE>
from the Bank for services hereunder, including but not limited to, an annual
cash bonus, at such times, in such amounts and on such terms and conditions as
the Board may determine from time to time.
SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS.
During the Employment Period, the Executive shall be treated as an
employee of the Bank and shall be entitled to participate in and receive
benefits under any and all qualified or non-qualified retirement, pension,
savings, profit-sharing or stock bonus plans, any and all group life, health
(including hospitalization, medical and major medical), dental, accident and
long-term disability insurance plans, and any other employee benefit and
compensation plans (including, but not limited to, any incentive compensation
plans or programs, stock option and appreciation rights plans and restricted
stock plans) as may from time to time be maintained by, or cover employees of,
the Bank or RFS Bancorp, in accordance with the terms and conditions of such
employee ben efit plans and programs and compensation plans and programs and
consistent with the Bank's customary practices. Nothing paid to the Executive
under any such plan or arrangement will be deemed to be in lieu of other
compensation to which the Executive is entitled under this Agreement.
SECTION 6. INDEMNIFICATION AND INSURANCE.
(a) During the Employment Period and for a period of six (6) years
thereafter, the Bank shall cause the Executive to be covered by and named as an
insured under any policy or contract of insurance obtained by it to insure its
directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Bank or service in
other capacities at the request of the Bank. The coverage provided to Executive
pursuant to this section 6 shall be of the same scope and on the same terms and
conditions as the coverage (if any) provided to other officers or directors of
the Bank.
(b) For as long as the Bank is subject to regulation by the Office of
Thrift Supervision ("OTS"), the Bank shall indemnify the Executive in accordance
with 12 Code of Federal Regulations ("C.F.R") ss.545.121. From and after the
earliest date on which the Bank is not subject to regulation by the OTS, to the
maximum extent permitted under applicable law, during the Employment Period and
for a period of six (6) years thereafter, the Bank shall indemnify Executive
against and hold him harmless from any costs, liabilities, losses and exposures
to the fullest extent and on the most favorable terms and conditions that
similar indemnification is offered to any director or officer of the Bank or any
subsidiary or affiliate thereof. This section 6(b) shall not be applicable where
section 18 is applicable.
SECTION 7. OUTSIDE ACTIVITIES.
Executive may serve as a member of the boards of directors of such
business, community and charitable organizations as he may disclose to and as
may be approved by the Board (which approval shall not be unreasonably
withheld); provided, however, that such service shall not materially interfere
with the performance of his duties under this Agreement. The
-Page 3 of 16-
<PAGE>
Executive may also engage in personal business and investment activities which
do not materially interfere, and are not inconsistent with, the performance of
his duties and responsibilities hereunder; and, provided, further, however, that
such activities are not prohibited under 12 C.F.R. ss.ss.571.7 or 571.9 or any
code of conduct or investment or securities trading policy established by the
Bank and generally applicable to all similarly situated executives (including,
without limitation, any applicable conflict of interest policy adopted by the
Board as contemplated by 12 C.F.R. ss.571.7). Executive may also serve as an
officer or director of the RFS Bancorp or Revere Bancorp, M.H.C. upon such terms
and conditions as the Bank and the RFS Bancorp or Revere Bancorp, M.H.C. may
mutually agree upon, and such service shall not be deemed to materially
interfere with the Executive's performance of his duties hereunder or otherwise
result in a material breach of this Agreement. The Executive shall not receive
compensation from the Bank for service as an officer or director of either RFS
Bancorp or Revere Bancorp, M.H.C.
SECTION 8. WORKING FACILITIES AND EXPENSES.
Executive's principal place of employment shall be at the Bank's
executive offices at the address first above written, or at such other location
within Suffolk County at which the Bank shall maintain its principal executive
offices, or at such other location as the Bank and the Executive may mutually
agree upon. The Bank shall provide the Executive at his principal place of
employment with a private office, secretarial services, and other support
services and facilities suitable to his position with the Bank and necessary or
appropriate in connection with the per formance of his assigned duties under
this Agreement. The Bank shall reimburse Executive for his ordinary and
necessary business expenses, including, without limitation, all expenses
associated with his business use of an automobile, fees for memberships in such
clubs and or ganizations as the Executive and the Bank shall mutually agree are
necessary and appropriate for business purposes, and his travel and
entertainment expenses incurred in connection with the performance of his duties
under this Agreement, in each case upon presentation to the Bank of an itemized
account of such expenses in such form as the Bank may reasonably require.
SECTION 9. TERMINATION OF EMPLOYMENT WITH SEVERANCE BENEFITS.
(a) Executive shall be entitled to the severance benefits described in
section 9(b) herein in the event that his employment with the Bank terminates
during the Employment Period under any of the following circumstances:
(i) Executive's voluntary resignation from employment with the Bank
within ninety (90) days following:
(A) the failure of the Board to appoint or re-appoint or elect or
re-elect Executive to the position stated in section 3 of this
Agreement (or a more senior office of the Bank);
(B) in the event that the Executive is a member of the Board, the
failure of the stockholders of the Bank to elect or re-elect Executive
to the Board or the
-Page 4 of 16-
<PAGE>
failure of the Board (or the nominating committee thereof) to nominate
the Executive for such election or re-election;
(C) the expiration of a thirty (30) day period following the date
on which the Executive gives written notice to the Bank of its
material failure, whether by amendment of the Bank's Charter or
By-Laws, action of the Board or the Bank's stockholders or otherwise,
to vest in Executive the functions, duties, or responsibilities
prescribed in section 3 of this Agreement, unless, during such thirty
(30) day period, such failure is cured in a manner determined by
Executive, in his discretion, to be satisfactory; or
(D) the expiration of a thirty (30) day period following the date
on which Executive gives written notice to the Bank of its material
breach of any term, condition or covenant contained in this Agreement
(including, without limitation any reduction of Executive's rate of
base salary in effect from time to time and any change in the terms
and conditions of any compensation or benefit program in which
Executive participates which, either individually or together with
other changes, has a material adverse effect on the aggregate value of
his total compensation package), unless, during such thirty (30) day
period, such failure is cured in a manner determined by Executive, in
his discretion, to be satisfactory; or
(ii) subject to the provisions of section 10, the termination of
Executive's employment with the Bank for any other reason not described in
section 9(a) other than a termination of the Executive's employment for
"cause;"
then, the Bank shall provide the benefits and pay to Executive the amounts
described in section 9(b).
(b) Upon the termination of Executive's employment with the Bank under
circumstances described in section 9(a) of this Agreement, the Bank shall pay
and provide to Executive (or, in the event of his death, to his estate):
(i) the portion, if any, of the compensation (including, without
limitation, all items which constitute wages under applicable law and the
payment of which is not otherwise provided for under this section 9(b))
earned by the Executive through the date of the termination of his
employment with the Bank which remains unpaid as of such date, such payment
to be made at the time and in the manner prescribed by law applicable to the
payment of wages but in no event later than thirty (30) days after the
Executive's termination of employment;
(ii) the benefits, if any, to which he is entitled as a former
employee under the employee benefit plans and programs and compensation
plans and programs maintained for the benefit of the Bank's officers and
employees;
-Page 5 of 16-
<PAGE>
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accident and long-term disability insurance
benefits, in addition to that provided pursuant to section 9(b)(ii), and
after taking into account the coverage provided by any subsequent employer,
if and to the extent necessary to provide for Executive, for the Remaining
Unexpired Employment Period, coverage equivalent to the coverage to which he
would have been entitled under such plans (as in effect on the date of his
termination of employment, or, if his termination of employment occurs after
a Change of Control, on the date of such Change of Control, whichever
benefits are greater), if he had continued working for the Company during
the Remaining Unexpired Employment Period at the highest annual rate of
compensation achieved during that portion of the Employment Period which is
prior to Executive's termination of employment with the Bank; and
(iv) within thirty (30) days following his termination of employment
with the Bank, a lump sum payment, in an amount equal to the present value
of the salary that Executive would have earned if he had continued working
for the Bank during the Remaining Unexpired Employment Period at the highest
annual rate of salary achieved during that portion of the Employment Period
which is prior to Executive's termination of employment with the Bank, where
such present value is to be determined using a dis count rate equal to the
applicable short-term federal rate prescribed under section 1274(d) of the
Internal Revenue Code of 1986 ("Code"), compounded using the compounding
period corresponding to the Bank's regular payroll periods for its officers,
such lump sum to be paid in lieu of all other payments of salary provided
for under this Agreement in re spect of the period following any such
termination.
The Bank and the Executive each hereby stipulate that the damages which may
be incurred by Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this section 9(b) constitute reasonable
damages under the circumstances and shall be payable without any requirement of
proof of actual damage and without regard to Executive's efforts, if any, to
mitigate damages. The Bank and the Executive further agree that the Bank may
condition the payments and benefits (if any) due under sections 9(b)(iii) and
(iv) on the receipt of Executive's resignation from any and all positions which
he holds as an officer, director or committee member with respect to the Bank,
RFS Bancorp, Revere Bancorp, M.H.C., or any subsidiary or affiliate of any of
them.
SECTION 10. TERMINATION WITHOUT ADDITIONAL BANK LIABILITY.
In the event that the Executive's employment with the Bank shall
terminate during the Employment Period on account of:
(a) the discharge of the Executive for "cause," which, for purposes of
this Agreement shall mean personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final cease and desist
-Page 6 of 16-
<PAGE>
order, or any material breach of this Agreement, in each case as measured
against standards generally prevailing at the relevant time in the savings and
community banking industry;
(b) Executive's voluntary resignation from employment with the Company
for reasons other than those specified in section 9(a)(i);
(c) Executive's death; or
(d) a determination that Executive is eligible for long-term
disability benefits under the Bank's long-term disability insurance program or,
if there is no such program, under the federal Social Security Act;
then, the Bank shall have no further obligations under this Agreement, other
than the payment to Executive (or, in the event of his death, to his estate) of
the portion, if any, of the salary earned by the Executive through the date of
his termination of employment with the Bank which remains unpaid as of such date
and the provision of such other benefits, if any, to which he is entitled as a
former employee under the employee benefit plans and programs and compensation
plans and programs maintained by, or covering employees of, the Bank.
(e) For purposes of section 10(a), no act or failure to act, on the
part of Executive, shall be considered "willful" unless it is done, or omitted
to be done, by Executive in bad faith or without reasonable belief that
Executive's action or omission was in the best interests of the Bank and its
affiliates. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the written advice of counsel
for the Bank shall be conclusively presumed to be done, or omitted to be done,
by Executive in good faith and in the best interests of the Bank. The cessation
of employment of Executive shall not be deemed to be for "cause" within the
meaning of section 10(a) unless and until there shall have been delivered to
Executive a copy of a resolution duly adopted by the affirmative vote of
three-fourths of the non-employee members of the Board at a meeting of the Board
called and held for such purpose, finding that, in the good faith opinion of the
Board, Executive is guilty of the conduct described in section 10(a) above, and
specifying the particulars thereof in detail.
SECTION 11. TERMINATION UPON OR FOLLOWING A CHANGE OF CONTROL.
(a) A Change of Control of the Bank ("Change of Control") shall be
deemed to have occurred upon the happening of any of the following events:
(i) approval by the stockholders of the Bank of a transaction that
would result in the reorganization, merger or consolidation of the Bank,
respectively, with one or more other persons, other than a transaction
following which:
(A) at least 51% of the equity ownership interests of the entity
resulting from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended "Exchange Act") in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3
-Page 7 of 16-
<PAGE>
promulgated under the Exchange Act) at least 51% of the outstanding
equity ownership interests in the Bank; and
(B) at least 51% of the securities entitled to vote generally in
the election of directors of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the securities entitled to vote
generally in the election of directors of the Bank;
(ii) the acquisition of all or substantially all of the assets of the
Bank or beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 25% or more of the outstanding securities of the
Bank entitled to vote generally in the election of directors by any person
or by any persons acting in concert, or approval by the stockholders of the
Bank of any transaction which would result in such an acquisition;
(iii) a complete liquidation or dissolution of the Bank, or approval
by the stockholders of the Bank of a plan for such liquidation or
dissolution; or
(iv) the occurrence of any event if, immediately following such event,
at least 50% of the members of the Board of the Bank do not belong to any of
the following groups:
(A) individuals who were members of the Board of the Bank on the
date of this Agreement; or
(B) individuals who first became members of the Board of the Bank
after the date of this Agreement either:
(I) upon election to serve as a member of the Board of the
Bank by affirmative vote of three-quarters of the members of such
Board, or of a nominating committee thereof, in office at the time
of such first election; or
(II) upon election by the stockholders of the Bank to serve as
a member of the Board of the Bank, but only if nominated for
election by affirmative vote of three-quarters of the members of
the Board, or of a nominating committee thereof, in office at the
time of such first nomination;
provided, however, that such individual's election or nomination did
not result from an actual or threatened election contest (within the
meaning of Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents (within the meaning of Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) other than by or on behalf of the
Board of the Bank;
-Page 8 of 16-
<PAGE>
In no event, however, shall a Change of Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Company, the Bank, or
any affiliate or subsidiary of either of them, by the Company, the Bank, or any
affiliate or subsidiary of either of them, or by any employee benefit plan
maintained by any of them. For purposes of this section 11(a), the term "person"
shall have the meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the
Exchange Act.
(b) In the event of a Change of Control, Executive shall be entitled
to the payments and benefits contemplated by section 9(b) in the event of his
termination employment with the Bank under any of the circumstances described in
section 9(a) of this Agreement or under any of the following circumstances:
(i) resignation, voluntary or otherwise, by the Executive at any time
during the Employment Period and within ninety (90) days following his
demotion, loss of title, office or significant authority or responsibility,
or following any reduction in any element of his package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive at any time
during the Employment Period and within ninety (90) days following any
relocation of his principal place of employment or any change in working
conditions at such principal place of employment which is embarrassing,
derogatory or otherwise materially adverse to the Executive;
(iii) resignation, voluntary or otherwise, by the Executive at any
time during the Employment Period following the failure of any successor to
the Bank in the Change of Control to include the Executive in any
compensation or benefit program maintained by it or covering any of its
executive officers, unless the Executive is already covered by a
substantially similar plan of the Bank which is at least as favorable to
him; or
(iv) resignation, voluntary or otherwise, for any reason whatsoever
following the expiration of a transition period of thirty days beginning on
the effective date of the Change of Control (or such longer period, not to
exceed ninety (90) days beginning on the effective date of the Change of
Control, as the Bank or its successor may reasonably request) to facilitate
a transfer of management responsibilities.
SECTION 12. COVENANT NOT TO COMPETE.
In the event of his termination of employment with the Bank prior to
the expiration of the Employment Period, for a period of one (1) year
following the date of his termination of employment with the Bank (or, if
less, for the Remaining Unexpired Employment Period), the Executive shall
not, without the written consent of the Bank, become an officer, employee,
consultant, director or trustee of any competitor (as herein defined) if in
this capacity he would be working for the competitor within a town
contiguous to where the headquarters of the Bank are located on the date of
the Executive's termination of employment. For this purpose, a "competitor"
is any savings association, savings and loan association, savings and loan
holding company, bank or bank holding company, or any direct or indirect
subsidiary or affiliate of any such entity. This section 12 shall not apply
if the Executive's employment is terminated without
-Page 9 of 16-
<PAGE>
cause or due to death or voluntary resignation as described in section 9(a). If
the Executive's employment shall be terminated on account of disability as
provided in section 10(d) of this Agreement, this section 12 shall not apply if
(a) the Executive first offers, by written notice, to accept a similar position
with, or perform similar services for, the Bank on substantially the same terms
and conditions proposed by the competitor and (b) the Bank declines to accept
such offer within ten (10) days after such notice is given.
SECTION 13. CONFIDENTIALITY.
Unless he obtains the prior written consent of the Bank, the Executive
shall keep confidential and shall refrain from using for the benefit of himself,
or any person or entity other than the Bank or any entity which is a subsidiary
of the Bank or of which the Bank is a subsidiary, any material document or
information obtained from the Bank, or from its parent or subsidiaries, in the
course of his employment with any of them concerning their properties,
operations or business (unless such document or information is readily
ascertainable from public or published information or trade sources or has
otherwise been made available to the public through no fault of his own) until
the same ceases to be material (or becomes so ascertainable or available);
provided, however, that nothing in this section 13 shall prevent Executive, with
or without the Bank's consent, from participating in or disclosing documents or
information in connection with any judicial or administrative investigation,
inquiry or proceeding to the extent that such participation or disclosure is
required under applicable law.
SECTION 14. SOLICITATION.
Executive hereby covenants and agrees that, for a period of one (1)
year following his termination of employment with the Bank, he shall not,
without the written consent of the Bank, either directly or indirectly:
(a) solicit, offer employment to, or take any other action intended,
or that a reasonable person acting in like circumstances would expect, to have
the effect of causing any officer or employee of the Bank or any affiliate, as
of the date of this Agreement, of either of them, to terminate his or her
employment and accept employment or become affiliated with, or provide services
for compensation in any capacity whatsoever to, any savings association,
cooperative bank, credit union, savings and loan association, savings and loan
holding company, bank, bank holding company, or other institution engaged in the
business of accepting deposits and making loans, having its principal place of
business in a town contiguous to where the headquarters of the Bank are located,
as of the date of this Agreement;
(b) provide any information, advice or recommendation with respect to
any such officer or employee of any savings association, cooperative bank,
credit union, savings and loan association, savings and loan holding company,
bank, bank holding company, or other institution engaged in the business of
accepting deposits and making loans, having its principal place of business in a
town contiguous to where the headquarters of the Bank are located, as of the
date of this Agreement, that is intended, or that a reasonable person acting in
like circumstances would expect, to have the effect of causing any officer or
employee of the Bank or any affiliate, as of the date of this Agreement, of
either of them, to terminate his employment and accept employment
-Page 10 of 16-
<PAGE>
or become affiliated with, or provide services for compensation in any capacity
whatsoever to, any savings association, cooperative bank, credit union, savings
and loan association, savings and loan holding company, bank, bank holding
company, or other institution engaged in the business of accepting deposits and
making loans, having its principal place of business in a town contiguous to
where the headquarters of the Bank are located, as of the date of this
Agreement; or
(c) solicit, provide any information, advice or recommendation or take
any other action intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any customer of the
Bank to terminate an existing business or commercial relationship with the Bank.
SECTION 15. NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.
The termination of Executive's employment during the term of this
Agreement or thereafter, whether by the Bank or by Executive, shall have no
effect on the rights and obligations of the parties hereto under the Bank's
qualified or non-qualified retirement, pension, savings, thrift, profit-sharing
or stock bonus plans, group life, health (including hospitalization, medical and
major medical), dental, accident and long-term disability insurance plans or
such other employee benefit plans or programs, or compensation plans or
programs, as may be maintained by, or cover employees of, the Bank from time to
time.
SECTION 16. SUCCESSORS AND ASSIGNS.
This Agreement will inure to the benefit of and be binding upon
Executive, his legal representatives and testate or intestate distributees, and
the Bank and its successors and assigns, including any successor by merger or
consolidation or a statutory receiver or any other person or firm or corporation
to which all or substantially all of the assets and business of the Bank may be
sold or otherwise transferred. Failure of the Bank to obtain from any successor
its express written assumption of the Bank's obligations hereunder at least
sixty (60) days in advance of the scheduled effective date of any such
succession shall be deemed a material breach of this Agreement unless cured
within ten (10) days after notice hereof by the Executive to the Bank.
SECTION 17. NOTICES.
Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:
If to Executive:
Mr. Anthony J. Patti
18 Colony Brook Lane
Derry, New Hampshire 03038
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<PAGE>
If to the Bank:
Revere Federal Savings
310 Broadway
Revere, Massachusetts 02151
Attention: Board of Directors -- Non-Employee Directors
with a copy to:
Thacher Proffitt & Wood
1500 K Street, N.W., Suite 200
Washington, D.C. 20005
Attention: Richard A. Schaberg, Esq.
SECTION 18. INDEMNIFICATION FOR ATTORNEYS' FEES.
The Bank shall indemnify, hold harmless and defend Executive against
reasonable costs, including legal fees, incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved, as a
result of his efforts, in good faith, to defend or enforce the terms of this
Agreement; provided, however, that Executive shall have substantially prevailed
on the merits pursuant to a judgment, decree or order of a court of competent
jurisdiction or of an arbitrator in an arbitration proceeding. The determination
whether the Executive shall have substantially prevailed on the merits and is
therefore entitled to such indemnification, shall be made by the court or
arbitrator, as applicable. In the event of a settlement pursuant to a settlement
agreement, any indemnification payment under this section 18 shall be made only
after a determination by the members of the Board (other than the Executive and
any other member of the Board to which the Executive is related by blood or
marriage) that the Executive has acted in good faith and that such
indemnification payment is in the best interests of the Bank.
SECTION 19. SEVERABILITY.
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
SECTION 20. WAIVER.
Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
-Page 12 of 16-
<PAGE>
SECTION 21. COUNTERPARTS.
This Agreement may be executed in two (2) or more counterparts, each
of which shall be deemed an original, and all of which shall constitute one and
the same Agreement.
SECTION 22. GOVERNING LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the federal laws of the United States and, to the extent that
federal law is inapplicable, in accordance with the laws of the Commonwealth of
Massachusetts applicable to contracts entered into and to be performed entirely
within the Commonwealth of Massachusetts.
SECTION 23. HEADINGS AND CONSTRUCTION.
The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section. Any
reference to a section number shall refer to a section of this Agreement, unless
otherwise stated.
SECTION 24. ENTIRE AGREEMENT; MODIFICATIONS.
This instrument contains the entire agreement of the parties relating
to the subject matter hereof, and supersedes in its entirety any and all prior
agreements, understandings or rep resentations relating to the subject matter
hereof. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
SECTION 25. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purposes of complying
with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary, in no
event shall the aggregate amount of compensation payable to the Executive under
section 9(b) hereof (exclusive of amounts described in section 9(b)(i) or (ii))
exceed the three times the Executive's average annual compensation (within the
meaning of OTS Regulatory Bulletin 27a or any successor thereto) for the last
five consecutive calendar years to end prior to his termination of employment
with the Bank (or for his entire period of employment with the Bank if less than
five calendar years). The compensation payable to the Executive hereunder shall
be further reduced (but not below zero) if such reduction would avoid the
assessment of excise taxes on excess parachute payments (within the meaning of
section 280G of the Code).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Bank, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C. ss.1828(k),
and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if the
Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to a notice
served under section 8(e)(3) or 8(g)(1) of the FDI Act, 12
-Page 13 of 16-
<PAGE>
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this Agreement
shall be suspended as of the date of service of such notice, unless stayed by
appropriate proceedings. If the charges in such notice are dismissed, the Bank,
in its discretion, may (i) pay to the Executive all or part of the compensation
withheld while the Bank's obligations hereunder were suspended and (ii)
reinstate, in whole or in part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary, if the
Executive is removed and/or permanently prohibited from participating in the
conduct of the Bank's affairs by an order issued under section 8(e)(4) or
8(g)(1) of the FDI Act, 12 U.S.C. ss.1818(e)(4) or (g)(1), all prospective
obligations of the Bank under this Agreement shall terminate as of the effective
date of the order, but vested rights and obligations of the Bank and the
Executive shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if the
Bank is in default (within the meaning of section 3(x)(1) of the FDI Act, 12
U.S.C. ss.1813(x)(1), all prospective obligations of the Bank under this
Agreement shall terminate as of the date of default, but vested rights and
obligations of the Bank and the Executive shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated, except to the
extent that a continuation of this Agreement is necessary for the continued
operation of the Bank: (i) by the Director of the OTS or his designee or the
Federal Deposit Insurance Corporation ("FDIC"), at the time the FDIC enters into
an agreement to provide assistance to or on behalf of the Bank under the
authority contained in section 13(c) of the FDI Act, 12 U.S.C. ss.1823(c); (ii)
by the Director of the OTS or his designee at the time such Director or designee
approves a supervisory merger to resolve problems related to the operation of
the Bank or when the Bank is determined by such Director to be in an unsafe or
unsound condition. The vested rights and obligations of the parties shall not be
affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
SECTION 26. EFFECTIVE DATE.
This Agreement shall become effective (the "Effective Date") upon the
later of the following two dates: (a) the effective date of the Bank's
conversion from a federally chartered mutual savings bank to a stock form
savings bank pursuant to the Plan of Reorganization or (b) the date the OTS
advises the Bank in writing that it either approves or has no objection to the
terms and conditions of this Agreement. The Bank and the Executive each hereby
acknowledge and agree that the terms of this Agreement shall have no force or
effect prior to such Effective Date.
-Page 14 of 16-
<PAGE>
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed
and Executive has hereunto set his hand, all as of the day and year first above
written.
-----------------------------------
ANTHONY J. PATTI
ATTEST: REVERE FEDERAL SAVINGS
By
--------------------------------
Secretary By
---------------------------------
Name:
Title:
[Seal]
-Page 15 of 16-
<PAGE>
COMMONWEALTH OF MASSACHUSETTS )
: SS.:
COUNTY OF SUFFOLK )
On this ________ day of ____________________, 1998, before me
personally came ANTHONY J. PATTI, to me known, and known to me to be the
individual described in the foregoing instrument, who, being by me duly sworn,
did depose and say that he resides at the address set forth in said instrument,
and that he signed his name to the foregoing instrument.
------------------------------
Notary Public
COMMONWEALTH OF MASSACHUSETTS )
: SS.:
COUNTY OF SUFFOLK )
On this ________ day of ____________________, 1998, before me
personally came _____________________________, to me known, who, being by me
duly sworn, did depose and say that he resides at
_____________________________________________________, that he is a member of
the Board of Directors of REVERE FEDERAL SAVINGS, the savings bank described in
and which executed the foregoing instrument; that he knows the seal of said
bank; that the seal affixed to said instrument is such seal; that it was so
affixed by order of the Board of Directors of said bank; and that he signed his
name thereto by like order.
------------------------------
Notary Public
-Page 16 of 16-
FORM OF
REVERE FEDERAL SAVINGS
EXECUTIVE EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
______________, 1998, by and between REVERE FEDERAL SAVINGS, a savings
association organized and operating under the federal laws of the United States
and having an office at 310 Broadway, Revere, Massachusetts 02151 ("Bank") and
JUDITH E. TENAGLIA, an individual residing at __________________, Massachusetts
_____ ("Executive").
W I T N E S S E T H :
WHEREAS, effective as of the Effective Date of this Agreement (as
defined in section 28 hereof) and pursuant to the Plan of Reorganization dated
January 10, 1998 (the "Plan of Reorganization"), the Bank has reorganized from a
federally chartered mutual savings bank to a federally chartered stock savings
bank and has become a wholly-owned subsidiary of RFS Bancorp, Inc. ("RFS
Bancorp"), a mid-tier stock holding company, which is majority owned by Revere
Bancorp, M.H.C., a mutual holding company; and
WHEREAS, the Executive is currently employed by the Bank and the Bank
desires to assure for itself the continued availability of the Executive's
services and the ability of the Executive to perform such services with a
minimum of personal distraction in the event of a pending or threatened Change
of Control (as hereinafter defined); and
WHEREAS, the Executive is willing to continue to serve the Bank on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions hereinafter set forth, the Bank and the Executive
hereby agree as follows:
SECTION 1. EMPLOYMENT.
The Bank agrees to continue to employ the Executive, and the Executive
hereby agrees to such continued employment, during the period and upon the terms
and conditions set forth in this Agreement.
<PAGE>
SECTION 2. EMPLOYMENT PERIOD; REMAINING UNEXPIRED EMPLOYMENT PERIOD.
(a) The terms and conditions of this Agreement shall be and remain in
effect during the period of employment established under this section 2
("Employment Period"). The Employment Period shall be for an initial term of two
years beginning on the Effective Date of this Agreement. Prior to the first
anniversary of the Effective Date of this Agreement and prior to each
anniversary date thereafter (each, an "Anniversary Date"), the Board of
Directors of the Bank ("Board") shall review the terms of this Agreement and the
Executive's performance of services hereunder and may, in the absence of
objection from the Executive, approve an extension of the Employment Period. In
such event, the Employment Period shall be extended to the second anniversary of
the relevant Anniversary Date. In no event, however, shall any such extension
take effect at a time when the Executive could elect to resign pursuant to
section 9(a)(i) or 11 and claim severance benefits under section 9(b).
(b) For all purposes of this Agreement, the term "Remaining Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to section 2(a) of this Agreement) is then scheduled to expire.
(c) Nothing in this Agreement shall be deemed to prohibit the Bank
from terminating the Executive's employment at any time during the Employment
Period with or without notice for any reason; provided, however, that the
relative rights and obligations of the Bank and the Executive in the event of
any such termination shall be determined under this Agreement.
SECTION 3. DUTIES.
Executive shall serve as an executive officer of the Bank and shall
report directly to the President and Chief Executive Officer ("CEO") and the
Executive Vice President and Chief Financial Offier ("CFO") of the Bank. In this
capacity, the Executive shall have such power, authority and responsibility and
shall perform such duties as may be assigned to her from time to time by the
CEO, the CFO or at their direction. Executive shall devote her full business
time and attention (other than during weekends, holidays, approved vacation
periods, and periods of illness or approved leaves of absence) to the business
and affairs of the Bank and shall use her best efforts to advance the interests
of the Bank.
SECTION 4. CASH COMPENSATION.
In consideration for the services to be rendered by the Executive
hereunder, the Bank shall pay to her a salary at an initial annual rate
of_______________________________ ($_______), payable in approximately equal
installments in accordance with the Bank's customary payroll practices for
senior officers. The Board of Directors ("Board") shall review the Executive's
annual rate of salary at such times during the Employment Period as it deems
appropriate, but not less frequently than once every twelve months, and may, in
its discretion, approve an increase in the Executive's annual rate of salary. In
addition to salary, the Executive
-Page 2 of 16-
<PAGE>
may receive other cash compensation from the Bank for services hereunder,
including but not limited to, an annual cash bonus, at such times, in such
amounts and on such terms and conditions as the Board may determine from time to
time.
SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS.
During the Employment Period, the Executive shall be treated as an
employee of the Bank and shall be entitled to participate in and receive
benefits under any and all qualified or non-qualified retirement, pension,
savings, profit-sharing or stock bonus plans, any and all group life, health
(including hospitalization, medical and major medical), dental, accident and
long-term disability insurance plans, and any other employee benefit and
compensation plans (including, but not limited to, any incentive compensation
plans or programs, stock option and appreciation rights plans and restricted
stock plans) as may from time to time be maintained by, or cover employees of,
the Bank or RFS Bancorp, in accordance with the terms and conditions of such
employee benefit plans and programs and compensation plans and programs and
consistent with the Bank's customary practices. Nothing paid to the Executive
under any such plan or arrangement will be deemed to be in lieu of other
compensation to which the Executive is entitled under this Agreement.
SECTION 6. INDEMNIFICATION AND INSURANCE.
(a) During the Employment Period and for a period of six (6) years
thereafter, the Bank shall cause the Executive to be covered by and named as an
insured under any policy or contract of insurance obtained by it to insure its
directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Bank or service in
other capacities at the request of the Bank. The coverage provided to Executive
pursuant to this section 6 shall be of the same scope and on the same terms and
conditions as the coverage (if any) provided to other officers or directors of
the Bank.
(b) For as long as the Bank is subject to regulation by the Office of
Thrift Supervision ("OTS"), the Bank shall indemnify the Executive in accordance
with 12 Code of Federal Regulations ("C.F.R") ss.545.121. From and after the
earliest date on which the Bank is not subject to regulation by the OTS, to the
maximum extent permitted under applicable law, during the Employment Period and
for a period of six (6) years thereafter, the Bank shall indemnify Executive
against and hold her harmless from any costs, liabilities, losses and exposures
to the fullest extent and on the most favorable terms and conditions that
similar indemnification is offered to any director or officer of the Bank or any
subsidiary or affiliate thereof. This section 6(b) shall not be applicable where
section 18 is applicable.
SECTION 7. OUTSIDE ACTIVITIES.
Executive may serve as a member of the boards of directors of such
business, community and charitable organizations as she may disclose to and as
may be approved by the Board (which approval shall not be unreasonably
withheld); provided, however, that such service shall not materially interfere
with the performance of her duties under this Agreement. The
-Page 3 of 16-
<PAGE>
Executive may also engage in personal business and investment activities which
do not materially interfere, and are not inconsistent with, the performance of
her duties and responsibilities hereunder; and, provided, further, however, that
such activities are not prohibited under 12 C.F.R. ss.ss.571.7 or 571.9 or any
code of conduct or investment or securities trading policy established by the
Bank and generally applicable to all similarly situated executives (including,
without limitation, any applicable conflict of interest policy adopted by the
Board as contemplated by 12 C.F.R. ss.571.7). Executive may also serve as an
officer or director of the RFS Bancorp or Revere Bancorp, M.H.C. upon such terms
and conditions as the Bank and the RFS Bancorp or Revere Bancorp, M.H.C. may
mutually agree upon, and such service shall not be deemed to materially
interfere with the Executive's performance of her duties hereunder or otherwise
result in a material breach of this Agreement. The Executive shall not receive
compensation from the Bank for service as an officer or director of either RFS
Bancorp or Revere Bancorp, M.H.C.
SECTION 8. WORKING FACILITIES AND EXPENSES.
Executive's principal place of employment shall be at the Bank's
executive offices at the address first above written, or at such other location
within Suffolk County at which the Bank shall maintain its principal executive
offices, or at such other location as the Bank and the Executive may mutually
agree upon. The Bank shall provide the Executive at her principal place of
employment with working facilities, including secretarial and other support
services, that are commensurate with her responsibilities to the Bank and
necessary or appropriate for the performance of her assigned duties under this
Agreement. The Bank shall reimburse Executive for her ordinary and necessary
business expenses, including, without limitation, all expenses associated with
her business use of an automobile, fees for memberships in such clubs and
organizations as the Executive and the Bank shall mutually agree are necessary
and appropriate for business purposes, and her travel and entertainment expenses
incurred in connection with the performance of her duties under this Agreement,
in each case upon presentation to the Bank of an itemized account of such
expenses in such form as the Bank may reasonably require.
SECTION 9. TERMINATION OF EMPLOYMENT WITH SEVERANCE BENEFITS.
(a) Executive shall be entitled to the severance benefits described in
section 9(b) herein in the event that her employment with the Bank terminates
during the Employment Period under any of the following circumstances:
(i) Executive's voluntary resignation from employment with the Bank
within ninety (90) days following:
(A) the failure of the Board to appoint or re-appoint or elect or
re-elect Executive to the position stated in section 3 of this
Agreement (or a more senior office of the Bank);
(B) in the event that the Executive is a member of the Board, the
failure of the stockholders of the Bank to elect or re-elect Executive
to the Board or the
-Page 4 of 16-
<PAGE>
failure of the Board (or the nominating committee thereof) to nominate
the Executive for such election or re-election;
(C) the expiration of a thirty (30) day period following the date
on which the Executive gives written notice to the Bank of its
material failure, whether by amendment of the Bank's Organization
Certificate or By-Laws, action of the Board or the Bank's stockholders
or otherwise, to vest in Executive the functions, duties, or
responsibilities prescribed in section 3 of this Agreement, unless,
during such thirty (30) day period, such failure is cured in a manner
determined by Executive, in her discretion, to be satisfactory; or
(D) the expiration of a thirty (30) day period following the date
on which Executive gives written notice to the Bank of its material
breach of any term, condition or covenant contained in this Agreement
(including, without limitation any reduction of Executive's rate of
base salary in effect from time to time and any change in the terms
and conditions of any compensation or benefit program in which
Executive participates which, either individually or together with
other changes, has a material adverse effect on the aggregate value of
her total compensation package), unless, during such thirty (30) day
period, such failure is cured in a manner determined by Executive, in
her discretion, to be satisfactory; or
(ii) subject to the provisions of section 10, the termination of
Executive's employment with the Bank for any other reason not described in
section 9(a) other than a termination of the Executive's employment for
"cause;"
then, the Bank shall provide the benefits and pay to Executive the amounts
described in section 9(b).
(b) Upon the termination of Executive's employment with the Bank under
circumstances described in section 9(a) of this Agreement, the Bank shall pay
and provide to Executive (or, in the event of her death, to her estate):
(i) the portion, if any, of the compensation (including, without
limitation, all items which constitute wages under applicable law and the
payment of which is not otherwise provided for under this section 9(b))
earned by the Executive through the date of the termination of her
employment with the Bank which remains unpaid as of such date, such payment
to be made at the time and in the manner prescribed by law applicable to the
payment of wages but in no event later than thirty (30) days after the
Executive's termination of employment;
(ii) the benefits, if any, to which she is entitled as a former
employee under the employee benefit plans and programs and compensation
plans and programs maintained for the benefit of the Bank's officers and
employees;
-Page 5 of 16-
<PAGE>
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accident and long-term disability insurance
benefits, in addition to that provided pursuant to section 9(b)(ii), and
after taking into account the coverage provided by any subsequent employer,
if and to the extent necessary to provide for Executive, for the Remaining
Unexpired Employment Period, coverage equivalent to the coverage to which
she would have been entitled under such plans (as in effect on the date of
her termination of employment, or, if her termination of employment occurs
after a Change of Control, on the date of such Change of Control, whichever
benefits are greater), if she had continued working for the Company during
the Remaining Unexpired Employment Period at the highest annual rate of
compensation achieved during that portion of the Employment Period which is
prior to Executive's termination of employment with the Bank; and
(iv) within thirty (30) days following her termination of employment
with the Bank, a lump sum payment, in an amount equal to the present value
of the salary that Executive would have earned if she had continued working
for the Bank during the Remaining Unexpired Employment Period at the highest
annual rate of salary achieved during that portion of the Employment Period
which is prior to Executive's termination of employment with the Bank, where
such present value is to be determined using a dis count rate equal to the
applicable short-term federal rate prescribed under section 1274(d) of the
Internal Revenue Code of 1986 ("Code"), compounded using the compounding
period corresponding to the Bank's regular payroll periods for its officers,
such lump sum to be paid in lieu of all other payments of salary provided
for under this Agreement in re spect of the period following any such
termination.
The Bank and the Executive each hereby stipulate that the damages which may
be incurred by Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this section 9(b) constitute reasonable
damages under the circumstances and shall be payable without any requirement of
proof of actual damage and without regard to Executive's efforts, if any, to
mitigate damages. The Bank and the Executive further agree that the Bank may
condition the payments and benefits (if any) due under sections 9(b)(iii) and
(iv) on the receipt of Executive's resignation from any and all positions which
she holds as an officer, director or committee member with respect to the Bank,
RFS Bancorp, Revere Bancorp, M.H.C., or any subsidiary or affiliate of any of
them.
SECTION 10. TERMINATION WITHOUT ADDITIONAL BANK LIABILITY.
In the event that the Executive's employment with the Bank shall
terminate during the Employment Period on account of:
(a) the discharge of the Executive for "cause," which, for purposes of
this Agreement shall mean personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final cease and desist
-Page 6 of 16-
<PAGE>
order, or any material breach of this Agreement, in each case as measured
against standards generally prevailing at the relevant time in the savings and
community banking industry.
(b) Executive's voluntary resignation from employment with the Company
for reasons other than those specified in section 9(a)(i);
(c) Executive's death; or
(d) a determination that Executive is eligible for long-term
disability benefits under the Bank's long-term disability insurance program or,
if there is no such program, under the federal Social Security Act;
then, the Bank shall have no further obligations under this Agreement, other
than the payment to Executive (or, in the event of her death, to her estate) of
the portion, if any, of the salary earned by the Executive through the date of
her termination of employment with the Bank which remains unpaid as of such date
and the provision of such other benefits, if any, to which she is entitled as a
former employee under the employee benefit plans and programs and compensation
plans and programs maintained by, or covering employees of, the Bank.
(e) For purposes of section 10(a), no act or failure to act, on the
part of Executive, shall be considered "willful" unless it is done, or omitted
to be done, by Executive in bad faith or without reasonable belief that
Executive's action or omission was in the best interests of the Bank and its
affiliates. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the written advice of counsel
for the Bank shall be conclusively presumed to be done, or omitted to be done,
by Executive in good faith and in the best interests of the Bank. The cessation
of employment of Executive shall not be deemed to be for "cause" within the
meaning of section 10(a) unless and until there shall have been delivered to
Executive a copy of a resolution duly adopted by the affirmative vote of
three-fourths of the non-employee members of the Board at a meeting of the Board
called and held for such purpose, finding that, in the good faith opinion of the
Board, Executive is guilty of the conduct described in section 10(a) above, and
specifying the particulars thereof in detail.
SECTION 11. TERMINATION UPON OR FOLLOWING A CHANGE OF CONTROL.
(a) A Change of Control of the Bank ("Change of Control") shall be
deemed to have occurred upon the happening of any of the following events:
(i) approval by the stockholders of the Bank of a transaction that
would result in the reorganization, merger or consolidation of the Bank,
respectively, with one or more other persons, other than a transaction
following which:
(A) at least 51% of the equity ownership interests of the entity
resulting from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended "Exchange Act") in substantially the same relative
proportions by persons who, immediately
-Page 7 of 16-
<PAGE>
prior to such transaction, beneficially owned (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) at least 51% of the
outstanding equity ownership interests in the Bank; and
(B) at least 51% of the securities entitled to vote generally in
the election of directors of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the securities entitled to vote
generally in the election of directors of the Bank;
(ii) the acquisition of all or substantially all of the assets of the
Bank or beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 25% or more of the outstanding securities of the
Bank entitled to vote generally in the election of directors by any person
or by any persons acting in concert, or approval by the stockholders of the
Bank of any transaction which would result in such an acquisition;
(iii) a complete liquidation or dissolution of the Bank, or approval
by the stockholders of the Bank of a plan for such liquidation or
dissolution; or
(iv) the occurrence of any event if, immediately following such event,
at least 50% of the members of the Board of the Bank do not belong to any of
the following groups:
(A) individuals who were members of the Board of the Bank on the
date of this Agreement; or
(B) individuals who first became members of the Board of the Bank
after the date of this Agreement either:
(I) upon election to serve as a member of the Board of the
Bank by affirmative vote of three-quarters of the members of such
Board, or of a nominating committee thereof, in office at the
time of such first election; or
(II) upon election by the stockholders of the Bank to serve
as a member of the Board of the Bank, but only if nominated for
election by affirmative vote of three-quarters of the members of
the Board, or of a nominating committee thereof, in office at the
time of such first nomination;
provided, however, that such individual's election or nomination did
not result from an actual or threatened election contest (within the
meaning of Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents (within the
-Page 8 of 16-
<PAGE>
meaning of Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) other than by or on behalf of the Board of the Bank;
In no event, however, shall a Change of Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Company, the Bank, or
any affiliate or subsidiary of either of them, by the Company, the Bank, or any
affiliate or subsidiary of either of them, or by any employee benefit plan
maintained by any of them. For purposes of this section 11(a), the term "person"
shall have the meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the
Exchange Act.
(b) In the event of a Change of Control, Executive shall be entitled
to the payments and benefits contemplated by section 9(b) in the event of her
termination employment with the Bank under any of the circumstances described in
section 9(a) of this Agreement or under any of the following circumstances:
(i) resignation, voluntary or otherwise, by the Executive at any time
during the Employment Period and within ninety (90) days following her
demotion, loss of title, office or significant authority or responsibility,
or following any reduction in any element of her package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive at any time
during the Employment Period and within ninety (90) days following any
relocation of her principal place of employment or any change in working
conditions at such principal place of employment which is embarrassing,
derogatory or otherwise materially adverse to the Executive;
(iii) resignation, voluntary or otherwise, by the Executive at any
time during the Employment Period following the failure of any successor to
the Bank in the Change of Control to include the Executive in any
compensation or benefit program maintained by it or covering any of its
executive officers, unless the Executive is already covered by a
substantially similar plan of the Bank which is at least as favorable to
her; or
(iv) resignation, voluntary or otherwise, for any reason whatsoever
following the expiration of a transition period of thirty days beginning on
the effective date of the Change of Control (or such longer period, not to
exceed ninety (90) days beginning on the effective date of the Change of
Control, as the Bank or its successor may reasonably request) to facilitate
a transfer of management responsibilities.
SECTION 12. COVENANT NOT TO COMPETE.
In the event of her termination of employment with the Bank prior to
the expiration of the Employment Period, for a period of one (1) year following
the date of her termination of employment with the Bank (or, if less, for the
Remaining Unexpired Employment Period), the Executive shall not, without the
written consent of the Bank, become an officer, employee, consultant, director
or trustee of any competitor (as herein defined) if in this capacity she would
-Page 9 of 16-
<PAGE>
be working for the competitor within a town contiguous to where the headquarters
of the Bank are located on the date of the Executive's termination of
employment. For this purpose, a "competitor" is any savings association, savings
and loan association, savings and loan holding company, bank or bank holding
company, or any direct or indirect subsidiary or affiliate of any such entity.
This section 12 shall not apply if the Executive's employment is terminated
without cause or due to death or voluntary resignation as described in section
9(a). If the Executive's employment shall be terminated on account of disability
as provided in section 10(d) of this Agreement, this section 12 shall not apply
if (a) the Executive first offers, by written notice, to accept a similar
position with, or perform similar services for, the Bank on substantially the
same terms and conditions proposed by the competitor and (b) the Bank declines
to accept such offer within ten (10) days after such notice is given.
SECTION 13. CONFIDENTIALITY.
Unless she obtains the prior written consent of the Bank, the
Executive shall keep confidential and shall refrain from using for the benefit
of himself, or any person or entity other than the Bank or any entity which is a
subsidiary of the Bank or of which the Bank is a subsidiary, any material
document or information obtained from the Bank, or from its parent or
subsidiaries, in the course of her employment with any of them concerning their
properties, operations or business (unless such document or information is
readily ascertainable from public or published information or trade sources or
has otherwise been made available to the public through no fault of her own)
until the same ceases to be material (or becomes so ascertainable or available);
provided, however, that nothing in this section 13 shall prevent Executive, with
or without the Bank's consent, from participating in or disclosing documents or
information in connection with any judicial or administrative investigation,
inquiry or proceeding to the extent that such participation or disclosure is
required under applicable law.
SECTION 14. SOLICITATION.
Executive hereby covenants and agrees that, for a period of one (1)
year following her termination of employment with the Bank, she shall not,
without the written consent of the Bank, either directly or indirectly:
(a) solicit, offer employment to, or take any other action intended,
or that a reasonable person acting in like circumstances would expect, to have
the effect of causing any officer or employee of the Bank or any affiliate, as
of the date of this Agreement, of either of them, to terminate her or her
employment and accept employment or become affiliated with, or provide services
for compensation in any capacity whatsoever to, any savings association,
cooperative bank, credit union, savings and loan association, savings and loan
holding company, bank, bank holding company, or other institution engaged in the
business of accepting deposits and making loans, having its principal place of
business in a town contiguous to where the headquarters of the Bank are located,
as of the date of this Agreement;
(b) provide any information, advice or recommendation with respect to
any such officer or employee of any savings association, cooperative bank,
credit union, savings and loan
-Page 10 of 16-
<PAGE>
association, savings and loan holding company, bank, bank holding company, or
other institution engaged in the business of accepting deposits and making
loans, having its principal place of business in a town contiguous to where the
headquarters of the Bank are located, as of the date of this Agreement, that is
intended, or that a reasonable person acting in like circumstances would expect,
to have the effect of causing any officer or employee of the Bank or any
affiliate, as of the date of this Agreement, of either of them, to terminate her
employment and accept employment or become affiliated with, or provide services
for compensation in any capacity whatsoever to, any savings association,
cooperative bank, credit union, savings and loan association, savings and loan
holding company, bank, bank holding company, or other institution engaged in the
business of accepting deposits and making loans, having its principal place of
business in a town contiguous to where the headquarters of the Bank are located,
as of the date of this Agreement; or
(c) solicit, provide any information, advice or recommendation or take
any other action intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any customer of the
Bank to terminate an existing business or commercial relationship with the Bank.
SECTION 15. NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.
The termination of Executive's employment during the term of this
Agreement or thereafter, whether by the Bank or by Executive, shall have no
effect on the rights and obligations of the parties hereto under the Bank's
qualified or non-qualified retirement, pension, savings, thrift, profit-sharing
or stock bonus plans, group life, health (including hospitalization, medical and
major medical), dental, accident and long-term disability insurance plans or
such other employee benefit plans or programs, or compensation plans or
programs, as may be maintained by, or cover employees of, the Bank from time to
time.
SECTION 16. SUCCESSORS AND ASSIGNS.
This Agreement will inure to the benefit of and be binding upon
Executive, her legal representatives and testate or intestate distributees, and
the Bank and its successors and assigns, including any successor by merger or
consolidation or a statutory receiver or any other person or firm or corporation
to which all or substantially all of the assets and business of the Bank may be
sold or otherwise transferred. Failure of the Bank to obtain from any successor
its express written assumption of the Bank's obligations hereunder at least
sixty (60) days in advance of the scheduled effective date of any such
succession shall be deemed a material breach of this Agreement unless cured
within ten (10) days after notice hereof by the Executive to the Bank.
SECTION 17. NOTICES.
Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
-Page 11 of 16-
<PAGE>
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:
If to Executive:
Ms. Judith E. Tenaglia
----------------------
----------------------
If to the Bank:
Revere Federal Savings
310 Broadway
Revere, Massachusetts 02151
Attention: Board of Directors -- Non-Employee Directors
--------------------------------------------
with a copy to:
Thacher Proffitt & Wood
1500 K Street, N.W., Suite 200
Washington, D.C. 20005
Attention: Richard A. Schaberg, Esq.
------------------------
SECTION 18. INDEMNIFICATION FOR ATTORNEYS' FEES.
The Bank shall indemnify, hold harmless and defend Executive against
reasonable costs, including legal fees, incurred by her in connection with or
arising out of any action, suit or proceeding in which she may be involved, as a
result of her efforts, in good faith, to defend or enforce the terms of this
Agreement; provided, however, that Executive shall have substantially prevailed
on the merits pursuant to a judgment, decree or order of a court of competent
jurisdiction or of an arbitrator in an arbitration proceeding. The determination
whether the Executive shall have substantially prevailed on the merits and is
therefore entitled to such indemnification, shall be made by the court or
arbitrator, as applicable. In the event of a settlement pursuant to a settlement
agreement, any indemnification payment under this section 18 shall be made only
after a determination by the members of the Board (other than the Executive and
any other member of the Board to which the Executive is related by blood or
marriage) that the Executive has acted in good faith and that such
indemnification payment is in the best interests of the Bank.
-Page 12 of 16-
<PAGE>
SECTION 19. SEVERABILITY.
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
SECTION 20. WAIVER.
Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
SECTION 21. COUNTERPARTS.
This Agreement may be executed in two (2) or more counterparts, each
of which shall be deemed an original, and all of which shall constitute one and
the same Agreement.
SECTION 22. GOVERNING LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the federal laws of the United States and, to the extent that
federal law is inapplicable, in accordance with the laws of the Commonwealth of
Massachusetts applicable to contracts entered into and to be performed entirely
within the Commonwealth of Massachusetts.
SECTION 23. HEADINGS AND CONSTRUCTION.
The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section. Any
reference to a section number shall refer to a section of this Agreement, unless
otherwise stated.
SECTION 24. ENTIRE AGREEMENT; MODIFICATIONS.
This instrument contains the entire agreement of the parties relating
to the subject matter hereof, and supersedes in its entirety any and all prior
agreements, understandings or rep resentations relating to the subject matter
hereof. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
SECTION 25. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purposes of complying
with various laws, rules and regulations applicable to the Bank:
-Page 13 of 16-
<PAGE>
(a) Notwithstanding anything herein contained to the contrary, in no
event shall the aggregate amount of compensation payable to the Executive under
section 9(b) hereof (exclusive of amounts described in section 9(b)(i) or (ii))
exceed the three times the Executive's average annual compensation (within the
meaning of OTS Regulatory Bulletin 27a or any successor thereto) for the last
five consecutive calendar years to end prior to her termination of employment
with the Bank (or for her entire period of employment with the Bank if less than
five calendar years). The compensation payable to the Executive hereunder shall
be further reduced (but not below zero) if such reduction would avoid the
assessment of excise taxes on excess parachute payments (within the meaning of
section 280G of the Code).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Bank, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C. ss.1828(k),
and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if the
Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to a notice
served under section 8(e)(3) or 8(g)(1) of the FDI Act, 12 U.S.C. ss.1818(e)(3)
or 1818(g)(1), the Bank's obligations under this Agreement shall be suspended as
of the date of service of such notice, unless stayed by appropriate proceedings.
If the charges in such notice are dismissed, the Bank, in its discretion, may
(i) pay to the Executive all or part of the compensation withheld while the
Bank's obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary, if the
Executive is removed and/or permanently prohibited from participating in the
conduct of the Bank's affairs by an order issued under section 8(e)(4) or
8(g)(1) of the FDI Act, 12 U.S.C. ss.1818(e)(4) or (g)(1), all prospective
obligations of the Bank under this Agreement shall terminate as of the effective
date of the order, but vested rights and obligations of the Bank and the
Executive shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if the
Bank is in default (within the meaning of section 3(x)(1) of the FDI Act, 12
U.S.C. ss.1813(x)(1), all prospective obligations of the Bank under this
Agreement shall terminate as of the date of default, but vested rights and
obligations of the Bank and the Executive shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated, except to the
extent that a continuation of this Agreement is necessary for the continued
operation of the Bank: (i) by the Director of the OTS or his designee or the
Federal Deposit Insurance Corporation ("FDIC"), at the time the FDIC enters into
an agreement to provide assistance to or on behalf of the Bank under the
authority contained in section 13(c) of the FDI Act, 12 U.S.C. ss.1823(c); (ii)
by the Director of the OTS or his designee at the time such Director or designee
approves a supervisory merger to resolve problems related to the operation of
the Bank or when the Bank is determined by such Director
-Page 14 of 16-
<PAGE>
to be in an unsafe or unsound condition. The vested rights and obligations of
the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
SECTION 26. EFFECTIVE DATE.
This Agreement shall become effective (the "Effective Date") upon the
later of the following two dates: (a) the effective date of the Bank's
conversion from a federally chartered mutual savings bank to a stock form
savings bank pursuant to the Plan of Reorganization or (b) the date the OTS
advises the Bank in writing that it either approves or has no objection to the
terms and conditions of this Agreement. The Bank and the Executive each hereby
acknowledge and agree that the terms of this Agreement shall have no force or
effect prior to such Effective Date.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed
and Executive has hereunto set her hand, all as of the day and year first above
written.
-----------------------------------
JUDITH E. TENAGLIA
ATTEST: REVERE FEDERAL SAVINGS
By
-------------------------------
Secretary By
---------------------------------
Name:
Title:
[Seal]
-Page 15 of 16-
<PAGE>
COMMONWEALTH OF MASSACHUSETTS )
: SS.:
COUNTY OF SUFFOLK )
On this ________ day of ____________________, 1998, before me
personally came JUDITH E. TENAGLIA, to me known, and known to me to be the
individual described in the foregoing instrument, who, being by me duly sworn,
did depose and say that she resides at the address set forth in said instrument,
and that she signed her name to the foregoing instrument.
---------------------------------
Notary Public
COMMONWEALTH OF MASSACHUSETTS )
:SS.:
COUNTY OF SUFFOLK )
On this ________ day of ____________________, 1998, before me
personally came _____________________________, to me known, who, being by me
duly sworn, did depose and say that she resides at
________________________________________________, that she is a member of the
Board of Directors of REVERE FEDERAL SAVINGS, the savings bank de scribed in and
which executed the foregoing instrument; that she knows the seal of said bank;
that the seal affixed to said instrument is such seal; that it was so affixed by
order of the Board of Directors of said bank; and that she signed her name
thereto by like order.
---------------------------------
Notary Public
-Page 16 of 16-
Exhibit 21.1 Subsidiaries of the Registrant
There are currently no subsidiaries of RFS Bancorp, Inc. (the
"Registrant"). Following the conversion of Revere Federal Savings (the "Bank")
from a federally chartered mutual savings bank to a federally chartered stock
savings bank and the issuance 100% of its capital stock to the Registrant, the
Bank will be a wholly-owned subsidiary of the Registrant.
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Revere Federal Savings and Loan Association
We consent to the use of our report included herein and to the reference to
our firm in the Form MHC-1, Form MHC-2 and Application on Form H-e(1) for Revere
Federal Savings, and any amendments thereto, and in the Prospectus, which is
part of the Registration Statement on Form SB- 2 for RFS Bancorp, under the
headings "Experts," "Legal and Tax Matters," "Federal and State Tax Consequences
of the Reorganization," and "Consolidated Statements of Income."
SHATSWELL, MacLEOD & COMPANY, P.C.
West Peabody, Massachusetts
September 4, 1998
EXHIBIT 23.3
September 4, 1998
Board of Directors
Revere Federal Savings and Loan Association
310 Broadway
Revere, Massachusetts 02151
Gentlemen:
We hereby consent to the use of our firm's name in the Form MHC-1, Form
MHC-2 and Application on Form H-e(1) for Revere Federal Savings and Loan
Association, Revere, Massachusetts, and any amendments thereto, and in the Form
SB-2 Registration Statement and any amendments thereto for RFS Bancorp, Inc. We
also hereby consent to the inclusion of, summary of and references to our
Appraisal Report and our letter concerning subscription rights in such filings
including the Prospectus of RFS Bancorp, Inc.
Sincerely,
RP FINANCIAL, L.C.
James J. Oren
Senior Vice President
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet and the statement of earnings of Revere Federal Savomgs for the
period at and ending June 30, 1998 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> $789,612
<INT-BEARING-DEPOSITS> 798,698
<FED-FUNDS-SOLD> 2,909,032
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 849,564
<INVESTMENTS-CARRYING> 33,296,332
<INVESTMENTS-MARKET> 33,657,615
<LOANS> 46,825,441
<ALLOWANCE> 506,053
<TOTAL-ASSETS> 88,780,275
<DEPOSITS> 62,975,843
<SHORT-TERM> 0
<LIABILITIES-OTHER> 145,824
<LONG-TERM> 19,284,394
0
0
<COMMON> 0
<OTHER-SE> 6,374,214
<TOTAL-LIABILITIES-AND-EQUITY> 88,780,275
<INTEREST-LOAN> 2,874,611
<INTEREST-INVEST> 1,898,421
<INTEREST-OTHER> 234,399
<INTEREST-TOTAL> 5,007,431
<INTEREST-DEPOSIT> 1,696,613
<INTEREST-EXPENSE> 2,751,417
<INTEREST-INCOME-NET> 2,256,014
<LOAN-LOSSES> 174,500
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,865,564
<INCOME-PRETAX> 332,958
<INCOME-PRE-EXTRAORDINARY> 332,958
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 207,979
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 2.62
<LOANS-NON> 145,000
<LOANS-PAST> 124,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 377,000
<CHARGE-OFFS> 46,000
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 506,053
<ALLOWANCE-DOMESTIC> 368,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 138,000
</TABLE>
CONVERSION APPRAISAL REPORT
MUTUAL HOLDING COMPANY STOCK OFFERING
REVERE FEDERAL SAVINGS
REVERE, MASSACHUSETTS
DATED AS OF:
AUGUST 21, 1998
PREPARED BY:
RP FINANCIAL, LC
1700 NORTH MOORE STREET
SUITE 2210
ARLINGTON, VIRGINIA 22209
<PAGE>
August 21, 1998
Board of Directors
Revere, MHC
Revere Federal Savings
310 Broadway
Revere, Massachusetts 02051
Gentlemen:
At your request, we have completed and hereby provide an independent
appraisal ("Appraisal") of the estimated pro forma market value of the Common
Stock which is to be offered in connection with the mutual-to-stock conversion
transaction described below.
This appraisal is furnished pursuant to the requirements of 563b.7 and has
been prepared in accordance with the "Guidelines for Appraisal Reports for the
Valuation of Savings and Loan Associations Converting from Mutual to Stock Form
of Organization" ("Valuation Guidelines") of the Office of Thrift Supervision
("OTS"), including the most recent revisions as of October 21, 1994, and
applicable regulatory interpretations thereof.
Description of Reorganization and Stock Issuance Plan
We understand that the Board of Directors of Revere, MHC, Revere,
Massachusetts (the "MHC") and the Board of Directors of Revere Federal Savings,
Revere, Massachusetts ("Revere Federal" or the "Bank") recently adopted a stock
issuance plan. Pursuant to the stock issuance plan, the Bank will reorganize
into what is called a "two-tier" mutual holding company structure. It is a
two-tier structure because it will have two levels of holding companies: a
"mid-tier" stock holding company and a "top-tier" mutual holding company. Under
the terms of the stock issuance plan: (i) the MHC will form RFS Bancorp, Inc.
("RFS Bancorp" or the "Holding Company") as a federal corporation; (ii) the MHC
will contribute 100 percent of the Bank's outstanding stock to the Holding
Company; and (iii) the Holding Company will issue shares of common stock to the
public and the MHC. The number of shares of common stock sold to the public will
equal 47 percent of the shares issued in the offering, and the number of shares
issued to the MHC will equal 53 percent of the shares issued in the offering.
It is anticipated that the public shares will be issued to the Bank's
Eligible Account Holders, the ESOP, Supplemental Eligible Account Holders and
Other Members. Any shares that are not sold in the Subscription offering may be
offered in the Community offering.
The aggregate amount of stock sold by the Holding Company cannot exceed the
appraised value of the Bank. Immediately following the offering, the primary
assets of the Holding Company will be the capital stock of the Bank and the net
offering proceeds remaining after contributing proceeds to the Bank in exchange
for 100 percent of the capital stock of the Bank. The Holding Company will
contribute at least 85 percent of the net offering proceeds in exchange for the
Bank's capital stock. The remaining net offering proceeds, retained at the
Holding Company, will be used to fund a loan to the ESOP with the remainder to
be used as general working capital.
<PAGE>
RP Financial, LC.
Board of Directors
August 21, 1998
Page 2
RP Financial, LC. ("RP Financial") is a financial consulting firm serving
the financial services industry nationwide that, among other things, specializes
in financial valuations and analyses of business enterprises and securities,
including the pro forma valuation for savings institutions converting from
mutual-to-stock form. The background and experience of RP Financial is detailed
in Exhibit V-1. We believe that, except for the fee we will receive for our
appraisal and assisting the Bank in the preparation of its business plan, we are
independent of the Bank and the other parties engaged by the Bank to assist in
the stock issuance process.
Valuation Methodology
In preparing our appraisal, we have reviewed the Bank's and the Holding
Company's regulatory applications, including the offering circular as filed with
the OTS and the Securities and Exchange Commission ("SEC"). We have conducted a
financial analysis of the Bank that has included a review of its audited
financial information for fiscal years ended September 30, 1995 through 1997 and
nine months ended June 30, 1998 and various unaudited information and internal
financial reports through June 30, 1998 and due diligence related discussions
with the Bank's management; Shatswell, MacLeod & Company, P.C., the Bank's
independent auditor; Thacher Proffitt and Wood, the Bank's stock issuance
counsel; and Trident Securities, Inc., the Bank's financial and marketing
advisors in connection with the Holding Company's stock offering. All
conclusions set forth in the Appraisal were reached independently from such
discussions. In addition, where appropriate, we have considered information
based on other available published sources that we believe are reliable. While
we believe the information and data gathered from all these sources are
reliable, we cannot guarantee the accuracy and completeness of such information.
We have investigated the competitive environment within which the Bank
operates and have assessed the Bank's relative strengths and weaknesses. We have
kept abreast of the changing regulatory and legislative environment for
financial institutions and analyzed the potential impact on the Bank and the
industry as a whole. We have analyzed the potential effects of conversion on the
Bank's operating characteristics and financial performance as they relate to the
pro forma market value. We have reviewed the economy in the Bank's primary
market area and have compared the Bank's financial performance and condition
with publicly-traded thrifts in mutual holding company form, as well as all
publicly-traded thrifts. We have reviewed conditions in the securities markets
in general and in the market for thrift stocks in particular, including the
market for existing thrift issues and the market for initial public offerings by
thrifts. We have considered the market for the stock of all publicly-traded
mutual holding companies. We have also considered the expected market for the
Bank's public shares. We have excluded from such analyses thrifts subject to
announced or rumored acquisition, mutual holding company institutions that have
announced their intent to pursue second step conversions, and/or those
institutions that exhibit other unusual characteristics.
Our Appraisal is based on the Bank's representation that the information
contained in the regulatory applications and additional information furnished to
us by the Bank, its independent auditors, legal counsel and other authorized
agents are truthful, accurate and complete. We did not independently verify the
financial statements and other information provided by the Bank, its independent
auditors, legal counsel and other authorized agents nor did we independently
value the assets or liabilities of the Bank. The valuation considers the Bank
only as a going concern and should not be considered as an indication of the
Bank's liquidation value.
<PAGE>
RP Financial, LC.
Board of Directors
August 21, 1998
Page 3
Our appraised value is predicated on a continuation of the current
operating environment for the Bank, the MHC and the Holding Company and for all
thrifts and their holding companies. Changes in the local, state and national
economy, the legislative and regulatory environment for financial institutions
and mutual holding companies, the stock market, interest rates, and other
external forces (such as natural disasters or significant world events) may
occur from time to time, often with great unpredictability, and may materially
impact the value of thrift stocks as a whole or the Bank's, the MHC's and
Holding Company's values alone. It is our understanding that there are no
current or long-term plans for pursuing a second step conversion or for selling
control of the Holding Company or the Bank following the offering. To the extent
that such factors can be foreseen, they have been factored into our analysis.
Pro forma market value is defined as the price at which RFS Bancorp's
stock, immediately upon completion of the offering, would change hands between a
willing buyer and a willing seller, neither being under any compulsion to buy or
sell and both having reasonable knowledge of relevant facts.
Valuation Conclusion
It is our opinion that, as of August 21, 1998, the estimated aggregate pro
forma market value of the shares to be issued immediately following the
offering, both shares issued publicly as well as to the MHC, was $9,500,000 at
the midpoint, equal to 950,000 shares issued at a per share value of $10.00.
Pursuant to conversion guidelines, the 15 percent offering range indicates a
minimum value of $8,075,000, and a maximum value of $10,925,000. Based on the
$10.00 per share offering price determined by the Boards, this valuation range
equates to an offering of 807,500 shares at the minimum to 1,092,500 shares at
the maximum. In the event that the appraised value is subject to an increase, up
to 1,256,375 shares may be issued at an issue price of $10.00 per share, for an
aggregate market value of $12,563,750, without a resolicitation. The Board of
Directors has established a public offering range such that the public ownership
of the Holding Company will constitute a 47 percent ownership interest of the
Holding Company, with the MHC owning the majority of the shares. Accordingly,
the offering range to the public of the minority stock will be $3,795,250 at the
minimum, $4,465,000 at the midpoint, $5,134,750 at the maximum and $5,904,960 at
the supermaximum.
Limiting Factors and Considerations
Our valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing shares of the
Common Stock. Moreover, because such valuation is necessarily based upon
estimates and projections of a number of matters, all of which are subject to
change from time to time, no assurance can be given that persons who purchase
shares of common stock in the offering will thereafter be able to buy or sell
such shares at prices related to the foregoing valuation of the pro forma market
value thereof.
RP Financial's valuation was determined based on the financial condition
and operations of the Bank as of June 30, 1998, the date of the financial data
included in the regulatory applications and prospectus.
RP Financial is not a seller of securities within the meaning of any
federal and state securities laws and any report prepared by RP Financial shall
not be used as an offer or solicitation with respect to the purchase or sale of
any securities. RP Financial maintains a policy which prohibits the company, its
principals or employees from purchasing stock of its client institutions.
<PAGE>
RP Financial, LC.
Board of Directors
August 21, 1998
Page 4
The valuation will be updated as provided for in the conversion regulations
and guidelines. These updates will consider, among other things, any
developments or changes in the Bank's financial performance and condition,
management policies, and current conditions in the equity markets for thrift
shares. These updates may also consider changes in other external factors which
impact value including, but not limited to: various changes in the legislative
and regulatory environment, the stock market and the market for thrift stocks,
and interest rates. Should any such new developments or changes be material, in
our opinion, to the valuation of the shares, appropriate adjustments to the
estimated pro forma market value will be made. The reasons for any such
adjustments will be explained in the update at the date of the release of the
update.
Respectfully submitted,
RP FINANCIAL, LC.
/s/ William E. Pommerening
William E. Pommerening
Chief Executive Officer
/s/ James J. Oren
James J. Oren
Senior Vice President
<PAGE>
RP Financial, LC.
TABLE OF CONTENTS
RFS BANCORP, INC.
REVERE FEDERAL SAVINGS
REVERE, MASSACHUSETTS
PAGE
DESCRIPTION NUMBER
CHAPTER ONE OVERVIEW AND FINANCIAL ANALYSIS
Introduction 1.1
Strategic Discussion 1.2
Balance Sheet Trends 1.4
Income and Expense Trends 1.8
Interest Rate Risk Management 1.10
Lending Activities and Strategy 1.11
Asset Quality 1.13
Funding Composition and Strategy 1.13
Subsidiary Operations 1.14
Legal Proceedings 1.14
CHAPTER TWO MARKET AREA
Introduction 2.1
National Economic Factors 2.2
Market Area Demographics 2.7
Economy 2.7
Deposit Trends and Competition 2.9
Summary 2.11
CHAPTER THREE PEER GROUP ANALYSIS
Peer Group Selection 3.1
Basis of Comparison 3.2
Selection of Peer Group 3.2
Financial Condition 3.6
Income and Expense Components 3.8
Loan Composition 3.11
Credit Risk 3.13
Interest Rate Risk 3.15
Summary 3.15
<PAGE>
TABLE OF CONTENTS
RFS BANCORP, INC.
REVERE FEDERAL SAVINGS
REVERE, MASSACHUSETTS
(CONTINUED)
PAGE
DESCRIPTION NUMBER
CHAPTER FOUR VALUATION ANALYSIS
Introduction 4.1
Appraisal Guidelines 4.1
RP Financial Approach to the Valuation 4.1
Valuation Analysis 4.2
1. Financial Condition 4.2
2. Profitability, Growth and Viability of Earnings 4.3
3. Asset Growth 4.5
4. Primary Market Area 4.6
5. Dividends 4.6
6. Liquidity of the Shares 4.8
7. Marketing of the Issue 4.9
A. The Public Market 4.9
B. The New Issue Market 4.15
C. The Acquisition Market 4.19
8. Management 4.19
9. Effect of Government Regulation and Regulatory Reform 4.20
Summary of Adjustments 4.20
Basis of Valuation - Fully-Converted Pricing Ratios 4.20
Valuation Approaches 4.21
1. Price-to-Earnings ("P/E") 4.24
2. Price-to-Book ("P/B") 4.24
3. Price-to-Assets ("P/A") 4.26
Valuation Conclusion 4.26
<PAGE>
RP Financial, LC.
LIST OF TABLES
RFS BANCORP, INC.
REVERE FEDERAL SAVINGS
REVERE, MASSACHUSETTS
TABLE
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
1.1 Historical Balance Sheets 1.5
1.2 Historical Income Statements 1.9
2.1 Major Employers 2.8
2.2 Market Area Unemployment Trends 2.9
2.3 Deposit Summary 2.10
3.1 Peer Group of Publicly-Traded Thrifts 3.5
3.2 Balance Sheet Composition and Growth Rates 3.7
3.3 Income as a Percent of Average Assets and Yields, Costs, Spreads 3.9
3.4 Loan Portfolio Composition and Related Information 3.12
3.5 Credit Risk Measured and Related Information 3.14
3.6 Interest Rate Risk Measured and Net Interest Income Volatility 3.16
4.1 Peer Group Market Area Comparative Analysis 4.7
4.2 Recent Conversions Completed 4.16
4.3 Market Pricing Comparatives 4.18
4.4 Calculation of Implied Per Share Data -- Incorporating
MHC Second Step Conversion 4.22
4.5 MHC Institutions -- Implied Pricing Ratios, Full Conversion Basis 4.24
4.6 Pricing Table: MHC Comparables 4.28
<PAGE>
RP Financial, LC.
Page 1.1
I. Overview and Financial Analysis
Revere Federal Savings and Loan Association ("Revere Federal" or the
"Bank") is a federally-chartered mutual savings institution operating from a
single office location in Revere, Suffolk County, Massachusetts. The Bank
considers its primary market for deposits to consist of the city of Revere, in
particular the areas surrounding the office location, and to a lesser extent the
rest of the northeastern Boston, Massachusetts metropolitan area. Lending
activities are also concentrated in the city of Revere, although additional
lending activities (in particular commercial lending), are performed in other
areas close to Revere (see ExhibityI-1). The Bank was chartered as a
Massachusetts mutual savings institution in 1901. The Bank is currently a member
of the Federal Home Loan Bank ("FHLB") system and is regulated by the Office of
Thrift Supervision (the "OTS"). The Bank's deposits are insured up to the
regulatory maximums by the Savings Association Insurance Fund ("SAIF") of the
Federal Deposit Insurance Corporation ("FDIC"). As of June 30, 1998, the Bank
maintained $88.8 million in assets, $63.0 million in deposits and $6.4 million
in equity, equal to 7.2 percent of assets.
The Bank's Board of Directors adopted a Plan of Reorganization pursuant to
which the Bank will reorganize into the federal mutual holding company form of
organization. As part of the reorganization, Revere Federal will become a
wholly-owned subsidiary of RFS Bancorp, Inc., a federal corporation, and RFS
Bancorp, Inc. (the "Holding Company") will issue a majority of its common stock
to Revere, MHC (the "MHC"), and sell a minority of its common stock to the
public. Concurrent with the Reorganization, the MHC will retain $100,000 for
initial capitalization, while the Holding Company will retain approximately 15
percent of the net conversion proceeds. Immediately after consummation of the
Reorganization, it is not anticipated that the MHC or the Holding Company will
engage in any business activity other than ownership of their respective
subsidiaries.
The assets and liabilities of the stock subsidiaries will be substantially
equivalent to those of Revere Federal prior to the Reorganization. The MHC will
own a controlling interest in the Holding Company of at least 51 percent, and
the Holding Company will be the sole subsidiary of the MHC. The Holding Company
will also own 100 percent of the Bank's outstanding stock.
<PAGE>
RP Financial, LC.
Page 1.2
Strategic Discussion
The Bank is a community-oriented financial institution dedicated to meeting
the borrowing, savings and financial services needs of its market area served.
The market area served by the Bank (the city of Revere, and to a lesser extent,
areas in close proximity to Revere), has been experiencing relatively stable
levels of population and households in recent years. The economy and employment
base is relatively diversified into most economic sectors, including services
and education. Located within the Boston metropolitan statistical area ("MSA"),
Revere Federal faces notable competition from a number of other community
oriented banks and savings banks, as well as from larger regional financial
institutions. In this operating environment the Bank has pursued a strategy of
increasing the asset base and expanding the number of products and services
available to customers in order to more effectively compete.
Throughout its history, the Bank has generally pursued a traditional
operating strategy of mortgage lending secured by 1-4 family residential
properties in the city of Revere and nearby areas in northern Suffolk County,
Massachusetts, funded with retail deposits. During the early 1990s, Revere
Federal pursued a leveraging strategy, utilizing maturity-matched FHLB advances
to purchase investment securities and MBS in order to gain additional interest
income with little increase in operating expenses. Due to lower spreads inherent
in leveraging, and as that a leverage strategy does not result in a customer
base for other retail banking activities, more recently the Bank ceased this
strategy, opting to concentrate on supplementing residential originations with
increased commercial real estate loans and commercial and industrial loans. The
Bank has thus recorded loan growth in recent periods, reflecting greater
marketing activities, competitive pricing and the more diversified lending
approach, primarily in the area of commercial real estate and commercial and
industrial loans. Such loan growth has been facilitated through hiring
experienced commercial loan officers, developing a more customer-oriented
approach and developing business relations with real estate brokers and
businesses. The recent increase in loans receivable has been funded internally
through a reduction in cash and investments and externally through deposit
growth and continued use of FHLB advances. The Bank sells a portion of the 1-4
family loan originations for interest rate risk management purposes. The Bank
expects the majority of its loan activity in the future to be within the Boston
metropolitan area, primarily north of the city of Boston.
The Bank's emphasis on originating 1-4 family permanent mortgage loans in
local and familiar markets and strong underwriting criteria on loans originated
has resulted in historically strong credit quality measures. The Bank's
allowance for loan losses relative to loans is also comparatively higher by
industry standards, as the Bank has added to the allowance recently, primarily
in view of the recent rapid loan portfolio growth (the portfolio has grown 120
percent since September 30, 1995) and an increased proportion of higher risk
weight loans (an increase from 4 to 27 percent of the loan portfolio since
September 30, 1995 while total loans grew by 120 percent). The ratio of
non-performing assets ("NPAs"), consisting of real estate owned and other
repossessed
<PAGE>
RP Financial, LC.
Page 1.3
assets, non-accruing loans, delinquent accruing loans and restructured loans to
assets has remained relatively low since fiscal 1993, and was 0.30 percent of
assets as of June 30, 1998.
The Bank's lending strategies to limit exposure to interest rate risk have
involved originating adjustable rate residential mortgage loans ("ARMs")
whenever feasible, adjustable rate commercial real estate loans and shorter-term
construction, commercial business and consumer loans. Liability strategies have
involved attempts to lengthen the maturity of deposits, and FHLB advances
utilized in recent periods to meet funds demands have been in general
maturity-matched or longer term advances. Revere Federal's one-year cumulative
gap position as of June 30, 1998 as calculated by the OTS was a negative 12
percent. Revere Federal anticipates the conversion proceeds will facilitate
improvement in the gap analysis as the net capital raised in the conversion will
increase the ratio of interest-earning assets ("IEA") to interest-bearing
liabilities ("IBL") and the proceeds will increase the proportion of
shorter-term or adjustable rate assets.
The Bank's main source of net income, the net interest margin, has remained
relatively stable over the past few years, with overall net interest income
increasing in step with the growth in assets. Core profitability has been
primarily affected by an increasing level of operating expenses that have been
incurred in connection with the Bank's growth in operations. The growth of the
commercial lending department since 1996 has increased personnel and other
expenses. Further improvement in core profitability has also been limited by
competitive pricing of deposits to stimulate growth. Future core profitability
is projected to improve with the reinvestment benefit of the new capital raised,
income benefits of recently expanded products and services and growth in assets
without a commensurate increase in operating expenses.
Revere Federal's Board of Directors has determined that a conversion to
mutual holding company form is an attractive business strategy for several
reasons. First, the new structure will provide the ability to diversify business
activities, provide greater flexibility in structuring acquisitions and increase
the future access to capital markets. Second, it will provide the capital
necessary to improve the overall competitive position of the Bank in its market
area, with regard to rates and services offered and ability to expand. Third,
the conversion may provide the opportunity for expanded local stock ownership
which could enhance the financial success of the Bank as local shareholders
promote the Bank's products and services. As disclosed in the prospectus, the
proceeds from stock conversion are anticipated to be invested as follows.
o Revere, MHC. The Bank intends to capitalize the MHC with $100,000 of
cash. The primary activity of the MHC will be ownership of the
majority interest in the Bank. Such cash is anticipated to be invested
in low risk investments.
<PAGE>
RP Financial, LC.
Page 1.4
o RFS Bancorp. Approximately 15 percent of the conversion proceeds will
be retained by RFS Bancorp, with the balance to be invested in the
Bank. Such holding company funds are anticipated to be invested
initially into high-quality short- to intermediate-term securities and
a loan to the Bank's ESOP to fund stock purchases in the conversion.
The Holding Company funds will be utilized for various corporate
purposes, including funding expansion through diversification or
acquisition, stock repurchase programs, funding stock purchases for
the MRP and/or payment of regular or special dividends, although there
are no specific plans at present.
o Revere. The net proceeds infused into the Bank will be exchanged for
all of the Bank's newly issued stock. The Bank's proceeds are
anticipated to initially be held in short-term cash and investments
until such funds are redeployed into lending and investment activities
consistent with the Bank's plan.
On a pro forma basis, Revere Federal is expected to have a capital ratio
above both regulatory requirements and industry averages. The Board of Directors
has determined to pursue a strategy of controlled growth in order to maintain
well-capitalized status, with growth expected to be funded primarily through
local retail deposit growth and continue use of borrowings.
Balance Sheet Trends
Table 1.1 shows key balance sheet items at the close of the last five
fiscal years and as of June 30, 1998. Revere Federal's audited financial
statements are incorporated by reference as Exhibit I-2, while historical key
operating ratios are presented in Exhibit I-3. From September 30, 1993 through
June 30, 1998, Revere Federal exhibited annual asset growth of 12.4 percent,
with the asset growth channelled primarily into increases in loans receivable. A
majority of the loan growth occurred subsequent to September 30, 1995, when the
previous leverage strategy was discontinued and the commercial real estate and
commercial lending departments were established and staffed. The Bank began
investing in mortgage-backed securities ("MBS") and certain investment
securities in the early 1990s as part of the leveraging strategy, however the
balance of such assets has fallen as a percent of the asset base since 1995,
with funds utilized in the lending operations. Revere Federal's annual deposit
growth totaled 12.1 percent, as the Bank has attracted new funds through a
combination of additional advertising and competitive rate offerings.
Borrowings, consisting of FHLB advances, have been used as a supplemental
funding source throughout the time period shown in Table 1.1 to support the
leveraging strategy and lending operations.
The balance of loans receivable increased consistently since fiscal 1994,
although the balance increased at an annual rate of 33 percent since September
30, 1995. Since that time, the Bank has been successful in expanding its
residential loan origination efforts in the local market, and has increased the
level of commercial real estate and commercial business loans. At June 30, 1998,
loans receivable totaled $46.8 million, or 52.7 percent of total assets. The
composition of the loan portfolio reflects the more recent diversified lending
strategy, as 1-4 family permanent loans constituted $34.5 million, or 72.8
percent of the gross loan portfolio at
<PAGE>
RP Financial, LC.
Table 1.1
Revere Federal Savings and Loan Association
Historical Balance Sheets
(Amount and Percent of Assets)
<TABLE>
<CAPTION>
As of September 30,
--------------------------------------------------------------------------------------------
1993 1994 1995 1996
--------------------- --------------------- --------------------- ----------------------
Amount Pct Amount Pct Amount Pct Amount Pct
------ --- ------ --- ------ --- ------ ---
($000) (%) ($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Amount of:
Assets $50,953 100.00% $59,910 100.00% $67,732 100.00% $77,898 100.00%
Cash and Investments 13,309 26.12% 16,754 27.97% 21,886 32.31% 18,371 23.58%
Loans Receivable (net) 22,158 43.49% 20,579 34.35% 21,273 31.41% 33,046 42.42%
Mortgage-Backed Securities (net) 14,258 27.98% 21,183 35.36% 23,085 34.08% 24,945 32.02%
Deposits 36,633 71.90% 41,108 68.62% 48,232 71.21% 49,393 63.41%
Borrowed Funds 10,000 19.63% 13,482 22.50% 13,818 20.40% 22,712 29.16%
Stockholders' Equity 4,093 8.03% 4,819 8.04% 5,090 7.51% 5,447 6.99%
AFS Adjustment -- -- 251 0.42% 167 0.25% 243 0.31%
Loans/Deposits 60.49% 50.06% 44.11% 66.90%
<CAPTION>
12/31/93-
As of September 30, 6/30/98
------------------------ As of June 30, Annual
1997 1998 Growth Rate
------------------------ -------------------- --------------
Amount Pct Amount Pct Pct
------ --- ------ ---
($000) (%) ($000) (%) (%)
<S> <C> <C> <C> <C> <C>
Total Amount of:
Assets $86,920 100.00% $88,780 100.00% 12.40%
Cash and Investments 18,883 21.72% 18,526 20.87% 7.21%
Loans Receivable (net) 41,175 47.37% 46,825 52.74% 17.06%
Mortgage-Backed Securities (net) 25,144 28.93% 21,635 24.37% 9.18%
Deposits 55,452 63.80% 62,976 70.93% 12.08%
Borrowed Funds 25,104 28.88% 19,284 21.72% 14.83%
Stockholders' Equity 6,039 6.95% 6,374 7.18% 9.77%
AFS Adjustment 358 0.41% 486 0.55% N/M
Loans/Deposits 74.25% 74.35%
</TABLE>
Source: Prospectus, audited financial reports and RP Financial calculations
<PAGE>
RP Financial, LC.
Page 1.6
June 30, 1998, a decline from 95.9 percent of the loan portfolio as of September
30, 1995. At the same date, construction/land loans totaled $1.5 million, or 3.2
percent of the loan portfolio. The largest expansion in the loan portfolio has
occurred in commercial real estate and commercial business loans, which totaled
$6.9 million, or 14.7ypercent of the loan portfolio, as Revere Federal has
targeted smaller commercial businesses in the market area for lending
opportunities. These loans are attractive for their higher yields,
shorter-terms, and higher average balances which require less personnel for
monitoring and servicing. Consumer loans totaled $4.4 million, or 9.4 percent of
loans receivable, including $3.3 million of real estate related home equity
loans. The Bank's commercial real estate and commercial business loans have been
originated primarily with local businesses in the area north of the city of
Boston.
The portfolio of cash and investment securities totaled $18.5 million, or
20.9 percent of assets, at June 30, 1998 (see Exhibit I-4). The cash and
investments portfolio consisted of cash and equivalents, including
interest-earning deposits in the FHLB of Boston ($4.5 million), U.S. Government
Agency securities ($6.5 million), FHLB stock ($1.5 million), SBA Securities
($5.1 million) and equity securities ($0.9 million). Prior to fiscal 1996, the
Bank purchased various investment securities funded in part with FHLB advances
as part of a leveraging strategy and classified such investments as
"Held-to-Maturity". The balance of cash and investments has remained relatively
stable since fiscal 1996 as the investments have not reached maturity and the
Bank has opted to invest newly generated funds into whole loans receivable.
Revere Federal also utilizes the portfolio of cash and investments for liquidity
purposes as part of the asset-liability management strategy. The Bank classifies
the equity securities, consisting of FHLMC and FNMA stock, as
"available-for-sale", and as of June 30, 1998, an unrealized pretax gain of
$826,000 was tax adjusted and added to stated equity on the Bank's audited
financial statements. A majority of the investment securities are held in an
investment subsidiary of the Bank, which is exempt from a substantial portion of
the state income tax burden. Going forward, the Bank intends to continue to
purchase generally low risk investments and the composition of the cash and
investments portfolio is not anticipated to change significantly, although the
level will initially increase on a post-conversion basis. Going forward, the
Bank intends to continue a focus on investment into whole loans, although
investment securities may be purchased with available funds.
MBS totaled $21.6 million at June 30, 1998, the second largest component of
interest-earning assets. The balance of MBS has declined since fiscal 1996, as
the Bank has opted to invest available funds into whole loans receivable. The
MBS portfolio consists of GNMA, FNMA and FHLMC pass-through certificates, which
carry both fixed and adjustable rate terms. Similar to the investment securities
portfolio, a majority of the MBS are held in a Bank subsidiary that is exempt
from state income taxes, providing higher effective yields to the Bank on a
consolidated basis. At the time of purchase, the fixed rate MBS were generally
maturity-matched with longer-term FHLB Advances. The entire MBS portfolio was
classified as "held-to-maturity" ("HTM") at June
<PAGE>
RP Financial, LC.
Page 1.7
30, 1998, and is carried on the balance sheet at historical cost. There was an
unrealized pre-tax gain of $381,000 as of June 30, 1998 in the MBS portfolio.
The Bank utilizes a portion of its MBS portfolio to satisfy regulatory liquidity
requirements, preferring to maintain such funds in MBS instead of lower yielding
cash and investments. Going forward, the Bank intends to limit reinvestment of
MBS, preferring to invest available funds into whole loans receivable.
As noted previously, deposits have traditionally met the majority of the
Bank's funding needs, and all of the Bank's deposits are generated through its
single office location. In the last several years, the Bank achieved growth in
deposits by attempting to be more visible in the local market area through
advertising and other marketing efforts and by offering competitive rates. This
strategy facilitated relatively strong deposit growth. Currently, savings rates
offered by Revere Federal are generally in line with the local competition, with
certificates of deposits ("CDs") accounting for the majority of total deposits.
The Bank has a portfolio of core deposits totaling approximately 40 percent of
deposits, providing a base of stable lower costing deposits for operations.
As stated previously, borrowings have also been used by the Bank for the
purpose of funding certain investment security purchases and, more recently,
loan originations. Since fiscal 1993, FHLB advances have ranged from a low of
$10.0 million at September 30, 1993 to $25.1 million as of September 30, 1997.
The Bank considers using borrowings based on funding needs and a comparison of
the cost of borrowings versus the cost of raising additional deposits. The
balance of borrowed funds declined by $5.8 million, or 23.2 percent over the
nine months ended June 30, 1998 as borrowings matured and were paid off with
available liquidity. During fiscal 1997, the Bank borrowed approximately. Going
forward, the Bank intends to continue using borrowings to support operations,
although deposits are expected to continue to comprise the majority of funding
liabilities.
Positive earnings from fiscal 1993 to June 30, 1998 and a positive
adjustment for FAS 122 resulted in an increase in the Bank's capital ratio to
$6.4 million, or 7.2 percent of assets, as of June 30, 1998. The Bank's capital
ratio declined from a high of 8.0 percent as of June 30, 1994, due to the
expansion of the asset base. Revere Federal is currently in compliance with
respect to all of its fully phased-in capital requirements. The addition of
conversion proceeds will enhance the Bank's capital position and strengthen
Revere Federal's competitive posture within its market area.
<PAGE>
RP Financial, LC.
Page 1.8
Income and Expense Trends
Table 1.2 displays the Bank's earnings over the past five fiscal years and
for the twelve months ended June 30, 1998 and reveals that earnings for those
periods have fluctuated between 0.13 and 0.89 percent of average assets, and
totaled 0.36 percent for the most recent twelve month period, a decrease from
the level in fiscal 1997. The more recent lower earnings, notwithstanding higher
levels of net interest income, have been attributable to higher operating
expenses incurred in connection with establishment and growth of the commercial
real estate and commercial lending department. The reinvestment of offering
proceeds is expected to improve net income in future periods.
Exhibit I-5 highlights the changes in the Bank's asset yields and cost of
funds over the most recent periods and as of June 30, 1998, which have
influenced the level of net interest income. Spreads widened by 15 basis points
between fiscal 1996 and the nine months ended June 30, 1998, as the higher
balances of higher yielding commercial real estate and commercial business
loans, along with increased investment in residential loans increased the Bank's
asset yields by 40 basis points, while the cost of funds declined by 4 basis
points. These trends indicate that the Bank has been successful improving the
net interest margin. Despite balance sheet repositioning, however, the Bank's
net interest income is still influenced by changes in interest rates.
Revere Federal has historically derived only moderate levels of income from
non-interest sources, which has provided some protection from changes in the net
interest margin due to interest rate fluctuations. For the most recent twelve
month period, non-interest operating income totaled $152,000, or 0.17 percent of
average assets, an 0.08 percent of average assets improvement from fiscal 1995.
A majority of this income results from the Bank's deposit base in the form of
various fees and charges on deposit accounts and transactions. A smaller portion
of this income is obtained from other miscellaneous retail banking sources.
Going forward, the Bank anticipates that non-interest income will remain
primarily related to the deposit base, although other income sources may be
developed.
Revere Federal's operating expenses have increased in the time period shown
in Table 1.2 due to the growth in the asset base and related operations,
including the establishment of the commercial real estate and commercial
business loan departments in 1996. Despite the strong asset growth and
utilization of FHLB advances to partially fund such growth, the operating
expense ratio has increased to a higher level as a percent of average assets.
The Bank's operating expenses are expected to initially increase following the
conversion as a result of the following items. The ESOP and RRP purchases in the
offering and in the year following conversion, respectively, will increase
annual expenses. In addition, as a full stock institution, the Bank will incur
additional legal, accounting, printing/mailing and related costs.
<PAGE>
RP Financial, LC.
Table 1.2
Revere Federal Savings and Loan Association
Historical Income Statements
<TABLE>
<CAPTION>
For the Year Ended September 30,
-------------------------------------------------------------------------
1993 1994 1995
----------------------- ----------------------- -----------------------
Amount Pct(1) Amount Pct(1) Amount Pct(1)
------ ------ ------ ------ ------ ------
($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C>
Interest Income $ 3,267 7.67% $ 3,733 6.90% $ 4,447 7.06%
Interest Expense (1,311) -3.08% (1,653) -3.06% (2,454) -3.90%
------- ----- ------- ----- ------- -----
Net Interest Income $ 1,956 4.59% $ 2,080 3.85% $ 1,993 3.17%
Provision for Loan Losses (155) -0.36% (144) -0.27% 2 0.00%
------- ----- ------- ----- ------- -----
Net Interest Income after Provisions $ 1,801 4.23% $ 1,936 3.58% $ 1,995 3.17%
Other Operating Income $ 44 0.10% $ 35 0.06% $ 53 0.08%
Operating Expense (1,190) -2.79% (1,261) -2.33% (1,530) -2.43%
------- ----- ------- ----- ------- -----
Net Operating Income $ 655 1.54% $ 710 1.31% $ 518 0.82%
Gain(Loss) on Sale of Assets $ 0 0.00% $ 7 0.01% $ 295 0.47%
SAIF Assessment 0 0.00% 0 0.00% $ 0 0.00%
------- ----- ------- ----- ------- -----
Net Non-Operating Income(Exp) $ 0 0.00% $ 7 0.01% $ 295 0.47%
Net Income Before Tax $ 655 1.54% $ 717 1.33% $ 812 1.29%
Income Taxes (276) -0.65% (241) -0.45% (271) -0.43%
------- ----- ------- ----- ------- -----
Net Inc(Loss) Before Extraordinary Items $ 379 0.89% $ 476 0.88% $ 541 0.86%
Cumulative Effect of Change in
Accounting For Income Taxes $ 0 0.00% $ 0 0.00% $ 0 0.00%
------- ----- ------- ----- ------- -----
Net Income (Loss) $ 379 0.89% $ 476 0.88% $ 541 0.86%
Adjusted Earnings
Net Operating Income $ 655 1.54% $ 710 1.31% $ 518 0.82%
Tax Effect (2) (276) -0.65% (239) -0.44% (173) -0.27%
------- ----- ------- ----- ------- -----
Adjusted Earnings $ 379 0.89% $ 471 0.87% $ 345 0.55%
Memo:
Efficiency Ratio 59.50% 59.62% 74.79%
Effective Tax Rate 42.14% 33.61% 33.37%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the Year Ended September 30,
---------------------------------------------- 12 Months Ended
1996 1997 June 30, 1998
---------------------- ---------------------- ----------------------
Amount Pct(1) Amount Pct(1) Amount Pct(1)
------ ------ ------ ------ ------ ------
($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C>
Interest Income $ 5,110 7.04% $ 6,180 7.26% $ 6,620 7.54%
Interest Expense (3,018) -4.16% (3,585) -4.21% (3,681) -4.19%
------- ----- ------- ----- ------- -----
Net Interest Income $ 2,093 2.88% $ 2,595 3.05% $ 2,939 3.35%
Provision for Loan Losses (149) -0.20% (60) -0.07% (190) -0.22%
------- ----- ------- ----- ------- -----
Net Interest Income after Provisions $ 1,944 2.68% $ 2,535 2.98% $ 2,749 3.13%
Other Operating Income $ 67 0.09% $ 116 0.14% $ 152 0.17%
Operating Expense (1,601) -2.21% (1,888) -2.22% (2,380) -2.71%
------- ----- ------- ----- ------- -----
Net Operating Income $ 409 0.56% $ 764 0.90% $ 522 0.59%
Gain(Loss) on Sale of Assets $ 0 0.00% $ 0 0.00% $ 0 0.00%
SAIF Assessment (289) -0.40% 0 0.00% 0 0.00%
------- ----- ------- ----- ------- -----
Net Non-Operating Income(Exp) ($ 289) -0.40% $ 0 0.00% $ 0 0.00%
Net Income Before Tax $ 120 0.17% $ 764 0.90% $ 522 0.59%
Income Taxes (26) -0.04% (287) -0.34% (204) -0.23%
------- ----- ------- ----- ------- -----
Net Inc(Loss) Before Extraordinary Items $ 94 0.13% $ 476 0.56% $ 317 0.36%
Cumulative Effect of Change in
Accounting For Income Taxes 0 0.00% 0 0.00% 0 0.00%
------- ----- ------- ----- ------- -----
Net Income (Loss) $ 94 0.13% $ 476 0.56% $ 317 0.36%
Adjusted Earnings
Net Operating Income $ 409 0.56% $ 764 0.90% $ 522 0.59%
Tax Effect (2) (87) -0.12% (287) -0.34% (204) -0.23%
------- ----- ------- ----- ------- -----
Adjusted Earnings $ 322 0.44% $ 476 0.56% $ 317 0.36%
Memo:
Efficiency Ratio 74.17% 69.62% 76.98%
Effective Tax Rate 21.32% 37.61% 39.15%
</TABLE>
(1) Ratios are as a percent of average assets.
(2) Based on effective tax rate for each year.
Source: Prospecus, audited financial reports and RP Financial calculations.
<PAGE>
RP Financial, LC.
Page 1.10
Provisions for loan losses have generally had a small impact on earnings in
recent years, although such provisions increased to $190,000, or 0.22 percent of
assets during the twelve months ended June 30, 1998, as Revere Federal added to
the allowance for loan losses in recognition of the growth in higher risk loans
such as commercial real estate and commercial business loans and the overall
growth in the loan portfolio. The Bank is budgeting provisions of $25,000 per
quarter in the future in order to increase the allowance for loan losses ("ALL")
ratio as a percent of loans receivable. As of June 30, 1998 the ALL balance was
equal to $506,000, or 1.07 percent of net loans receivable and 188 percent of
non-performing loans, as compared to $206,000, or 0.97 percent of net loans and
165 percent of non-performing loans at fiscal year end 1995 (see Exhibit I-6).
Since Revere Federal has historically classified the investment portfolio
as HTM, non-operating gains and losses have been limited since fiscal 1993.
During fiscal 1995, Revere Federal sold a portion of the investment in FHLMC
stock and recognized a pre-tax gain of $295,000, which was offset during fiscal
1996 by the required SAIF-assessment fee, which totaled $289,000. Other than a
small gain on the sale of a real estate owned property in fiscal 1994, there
have been no other gains or losses recorded by the Bank since fiscal 1993.
Revere Federal has incurred a tax liability in recent periods, including an
effective tax rate of 39 percent for the twelve months ended June 30, 1998. As
discussed previously, a substantial portion of the Bank's investment portfolio
is held in a subsidiary corporation which is subject to a significantly lower
state income tax rate, effectively lowering the Bank's overall tax rate.
Interest Rate Risk Management
Revere Federal attempts to manage exposure to interest rate fluctuations on
both the asset and liability side of the balance sheet, and has attempted to
enhance the interest sensitivity of its operations through several means,
including: (1)yincreasing the portfolio of ARMs held in the loan portfolio (both
residential and commercial real estate-related); (2)yholding short-term
investment securities, including adjustable rate MBS and SBA securities; (3)
increasing the balance of short-term to maturity commercial business loans and
consumer loans, including home equity loans; (4) extending whenever possible the
term to maturity of the certificate of deposit base; and, (5) increasing the
proportion of transaction accounts in the deposit base which are considered to
be less interest rate sensitive funds. Exhibit I-7 displays the distribution of
the Bank's fixed and adjustable rate loans.
Revere Federal monitors its exposure to interest rate risk using the OTS
calculation of the net portfolio value position for the Bank. As shown in
Exhibit I-8, according to the most recent calculation, the Bank's NPV under a
200 basis point increase in interest rates was a negative 12 percent, indicating
a level of interest rate risk. Although this measure is within the
Board-established limits of the Bank, Revere Federal is seeking to reduce
<PAGE>
RP Financial, LC.
Page 1.11
exposure to interest rate risk, and the reinvestment of conversion proceeds is
expected to contribute to reduced exposure.
Lending Activities and Strategy
The Bank's historical lending activities emphasize the origination of 1-4
family mortgage loans (see Exhibits I-9 and I-10, loan composition and
maturity). In recent periods, Revere Federal has also concentrated on loan
portfolio diversification by building portfolios of commercial real estate
loans, commercial business loans and non-mortgage loans in an effort to enhance
overall portfolio yields and expand the Bank's products and services offered.
Underscoring the change in portfolio composition, while gross loans increased
from $21.5 million at September 30, 1995 to $47.4 million at June 30, 1998, the
proportion of 1-4 family loans dropped from 95.9 percent of loans to 72.8
percent. The Bank's credit risk profile has increased over that time period
through limited seasoning on a large portion of the loan portfolio (primarily
the commercial real estate and commercial business portfolio), and increased
concentration of higher risk weight loans.
As of June 30, 1998, residential mortgage loans secured by 1-4 family
properties totaled $34.5 million, or 72.8 percent of total loans receivable. The
Bank originates both ARMs and fixed-rate residential mortgages (with
originations dependent upon customer preferences) with essentially all loans
underwritten to Federal National Mortgage Association ("FNMA") guidelines.
Residential loans made by the Bank are generally originated with maximum
loan-to-value ("LTV") ratios of 100 percent, with loans with LTV ratios in
excess of 80ypercent requiring private mortgage insurance ("PMI") coverage.
Fixed-rate mortgages are offered with maturities of up to 30 years, with a
portion of fixed rate residential loans sold in the secondary market (primarily
to the FNMA), and loans with shorter terms held in portfolio.
Approximately 21 percent of the Bank's 1-4 family residential mortgages
consisted of ARMs at June 30, 1998, which are retained for portfolio as part of
asset/liability management strategy. Revere Federal offers ARMs with one-,
three-, five- or seven-year adjustment periods that are indexed to the weekly
average rate on the corresponding U.S. Treasury securities, adjusted to a
constant maturity. The majority of ARMs are originated with annual adjustment
caps of 2.0 percent, lifetime adjustment caps of up to 6.0 percentage points,
and are not generally originated at discounted rates.
Revere Federal has recently increased the level of originations of
commercial real estate loans in order to diversify the loan portfolio and
increase overall asset yields. As of June 30, 1998, commercial real estate loans
totaled $4.2 million, or 8.8 percent of loans receivable. The Bank's commercial
real estate portfolio consists primarily of loans secured by the buildings and
real estate in which various small businesses conduct their operations, such as
small business operations, small office buildings, warehouses and office condos.
<PAGE>
RP Financial, LC.
Page 1.12
Commercial real estate loans originated by Revere Federal are predominantly
adjustable rate loans that generally have terms of up to 20 years, and are
indexed to the prime rate of interest or the U.S. Treasury rate of a similar
term as the adjustment period, which can extent up to a five year period. LTVs
on income property loans typically do not exceed 75 percent. The Bank seeks to
manage credit risk on such loans by lending primarily on local property, to
borrowers with whom management is familiar, and obtaining personal guarantees. A
portion of the commercial real estate loan portfolio consists of loans with
borrowers with whom the Bank's commercial loan officers have had prior business
relationships.
Commercial business loans also represent an area of recent loan portfolio
diversification, as Revere Federal strives to provide all financing needs for a
business customer (i.e. real estate loans and working capital or operating
loans). Since starting the commercial business loan department in 1995,
following the hiring of an experienced commercial loan officer, the Bank's
commercial business loans have grown from $0.2 million to $1.5 million as of
June 30, 1998. These loans are primarily made to local small businesses in the
area north of the city of Boston, and are attractive due to the higher yields
and shorter durations. The Bank has been able to increase the portfolio of such
loans due to personal contacts by Bank employees in the local communities.
Commercial business loans usually carry a floating rate indexed to the prime
rate, generally have a five year term, and are secured by assets such as
commercial real estate, inventory, equipment or other assets and guaranteed by
the principals. Revere Federal has also attempted to gain a deposit relationship
with the commercial business borrowers; this practice has helped build the
deposit base recently.
Construction loans totaled $1.5 million, or 3.2 percent of loans
receivable, at June 30, 1998, primarily for residential property. Most of the
construction loans are underwritten as construction/permanent loans to the
future occupants, structured to become permanent loans upon completion of the
construction. Construction loans are structured as interest-only during the
construction period, which generally equals six months. Construction/permanent
loans have maximum LTV ratios equal to the requirements of the permanent loans.
Revere Federal also offers consumer loans, including home equity loans,
which totaled $4.4 million, or 9.4 percent of gross loans receivable, at June
30, 1998. The Bank offers a variety of types of consumer loans, including loans
secured by deposit accounts, automobile and secured and unsecured personal
loans. Consumer loans are generally offered for terms of up to five years at
fixed interest rates, and Revere Federal will lend up to 90 percent of the
depositor's savings account balance, and up to 80 percent of the value of an
automobile. Home equity loans (actually lines of credit) represent an area of
growth for Revere Federal in recent years, and usually consist of equity loans
for up to 80 percent of the appraised value of a home, less the amount of the
first mortgage. Home equity loans are offered at adjustable rates of interest,
with the adjustable rate based on the prime rate of interest minus one half of
one percent in the first year and the prime rate for the remaining life of the
loan.
<PAGE>
RP Financial, LC.
Page 1.13
As shown in Exhibit I-11, Revere Federal's overall loan origination volume
increased from $10.8 million in 1995 to $44.7 million for the most recent twelve
months. The table highlights the Bank's increased emphasis on commercial real
estate and commercial business lending, with originations increasing from $0.4
million, or 4.1 percent, of loan originations in fiscal 1995 to $15.3 million,
or 34.3 percent of loan originations for fiscal 1997. Revere Federal has not
historically purchased loans, and has sold loans in the secondary market,
primarily to FNMA.
Asset Quality
Exhibit I-12 displays Revere Federal's NPAs from fiscal 1993 to June 30,
1998, and shows that the level of NPAs has remained relatively low over that
time period, ranging from 0.92 to 0.08 percent of total loans. The Bank had no
real estate owned ("REO") at June 30, 1998. As of June 30, 1998, the ratio of
NPAs to assets equaled 0.30 percent of assets, in comparison to 0.18 percent of
assets at fiscal year end 1995. At June 30, 1998, NPAs totaled $269,000 and
consisted of residential real estate, commercial and consumer loans on
non-accrual status or accruing and greater than 90 days delinquent. As of the
same date, the Bank maintained valuation allowances of $506,000, equal to 1.08
percent of loans receivable and 188 percent of NPAs. Revere Federal had
classified assets of $182,000 at June 30, 1998, all of which were classified as
substandard or special mention (see Exhibit I-13).
Funding Composition and Strategy
Exhibit I-14 provides data pertaining to Revere Federal's deposit
composition at fiscal year ends 1995 through June 30, 1998, utilizing average
balances. Revere Federal's deposits consist of CD accounts, which averaged $35.4
million, or 60 percent of total deposits, and a base of core deposits (passbook
accounts, NOW accounts, non-interest checking accounts, and MMDAs) which totaled
$23.2 million, or 40 percent of total deposits over that time period. Passbook
accounts were the largest component of core deposits and averaged $15.0 million,
or 25.6 percent of total deposits, for the nine months ended June 30, 1998,
followed by NOW accounts averaging $4.2 million, and demand accounts averaging
$2.4 million. Going forward, the Bank intends to try to increase the deposit
base to fund anticipated increases in lending operations.
CDs accounted for approximately 60.4 percent of Revere Federal's deposit
base over the nine months ended June 30, 1998. Approximately 75 percent of the
CD portfolio was scheduled to mature in one year or less. Jumbo CDs, which tend
to be more rate sensitive than lower balance CDs, accounted for $9.6 million, or
15.3 percent of deposits, at June 30, 1998. The level of jumbo CDs in the Bank's
CD portfolio is significant in that
<PAGE>
RP Financial, LC.
Page 1.14
jumbo CDs tend to be more rate sensitive than smaller denomination CDs,
increasing the Bank's interest rate risk to a degree.
Due to recent lending activity and the need for liquidity, the Bank has
utilized borrowings from the FHLB of Boston. These advances are secured by the
Bank's stock in the FHLB and a portion of Revere Federal's mortgage loans, and
are generally maturity-matched with certain investment securities and MBS, along
with providing funding for a portion of the lending operations. As of June 30,
1998, the Bank had FHLB advances of $19.3 million outstanding.
Subsidiary Operations
The Bank currently has one subsidiary operation. In 1993, the Bank formed
RFS Investment Corporation, a Massachusetts securities corporation to hold
investment securities. As of June 30, 1998, this subsidiary held approximately
$24.5 million of marketable equity securities and cash. Income from RFS
Investments is eligible for certain favorable state tax treatment pursuant to
state tax laws, and Revere Federal intends to continue to use this investment
vehicle in the future as part of the investment strategy. As of June 1998 the
entire balance was classified as HTM.
Legal Proceedings
Other than the routine legal proceedings that occur in the Bank's ordinary
course of business, the Bank is not involved in litigation which is expected to
have a material impact on the Bank's financial condition or operations.
<PAGE>
RP Financial, LC.
Page 2.1
II. MARKET AREA
Introduction
Revere Federal conducts operations out of a headquarters office in Revere,
Suffolk County, Massachusetts. Exhibit I-1 details the location of the Bank's
office, while Exhibit II-1 details the general characteristics of the Bank's
office. Suffolk County, located in eastern Massachusetts, consists primarily of
the city of Boston and includes several smaller cities to the north and east of
the city of Boston. Suffolk County is part of the
Boston-Worcester-Lawrence-Lowell-Brockton metropolitan statistical area ("MSA").
The city of Revere, containing approximately 39,000 residents, is located in the
northeastern suburbs of Boston, bounded by the towns of Saugus, Malden, Everett,
Chelsea, Lynn and Boston. As an older, inner suburb, Revere consists mostly of
developed properties within a network of neighborhoods. The city of Revere
represents the primary market area for deposit and loan generation as most of
the Bank's depositors and loan customers live in the areas surrounding the
office location. To a lesser extent, the Bank also originates loans in the
neighboring cities contiguous to Revere. The city of Chelsea, to the south of
Revere, represents an area with opportunities for Revere Federal, due to the
proximity of Chelsea to Logan International Airport and related commercial
enterprises that support or are related to airport operations.
The local Revere market area (zip code 02151), is home to a primarily
residential area with a smaller portion of businesses and commercial
enterprises. A majority of the residential neighborhoods were developed a number
of years ago, resulting in relatively aged housing stock. Given the residential
nature of Revere, a portion of Revere residents work in other cities within the
MSA, including Boston, 8 miles to the south. The areas encompassed by zip code
02151 have reported declining levels of population and households in recent
years, with the area experiencing a level of out-migration to outer suburbs,
where housing and land is less expensive and newer. Income levels in Revere are
generally in line with the averages for Suffolk County.
Competition from other financial institutions operating in the Revere area
includes a number of both large and small commercial banks and one savings
institution. The Bank maintains a market share of approximately 14 percent of
overall financial institution deposits in zip code 02151. The other financial
institutions are both locally-owned community-oriented and subsidiaries of
larger regional institutions. The Bank has experienced growth in deposits in
recent years primarily due to an increase in the number and types of products
and services offered, and an increased emphasis on marketing. However,
competition remains high in the marketplace.
<PAGE>
RP Financial, LC.
Page 2.2
Future business and growth opportunities will be partially influenced by
economic and demographic characteristics of the market served, particularly the
future growth and stability of the regional economy, demographic growth trends,
and the nature and intensity of the competitive environment for financial
institutions. These factors have been briefly examined in the following pages to
help determine the growth potential that exists, the relative economic health of
the market area and the relative impact on value.
National Economic Factors
Over the past year, national economic growth has been mixed. Economic data
released in August 1997 provided mixed signals of economic growth, as a decline
in the July unemployment rate and an unexpectedly sharp decline in the U.S.
trade deficit provided indications of a strengthening economy. At the same time,
a modest increase in the July consumer price index and a decline in July
wholesale prices suggested that inflation remained non-threatening. At the end
of August, the second quarter GDP was revised upward to a 3.6 percent annual
growth rate compared to a 2.2 percent original estimate. In early-September, a
slight increase in the August unemployment rate did little to alleviate
inflation concerns, as the employment data indicated that the job market
remained tight and wages continued to rise. Comparatively, only a slight
increase in the August consumer price index provided evidence that inflation
remained tame at the end of the third quarter. September unemployment data
served to further calm inflation fears in early-October, as the unemployment
rate was unchanged at 4.9 percent and fewer jobs than expected were added to the
economy.
At the beginning of the fourth quarter of 1997, inflation concerns became
more notable following congressional testimony by the Federal Reserve Chairman,
as he indicated that it would be difficult for the U.S. economy to maintain the
current balance between tight labor markets and low inflation. However, economic
data released in October and November provided mixed signals on the strength of
the economy. For example, a decline in the October unemployment rate to a
24-year low of 4.7 percent indicated a rapidly expanding economy, while,
comparatively, a decline in October retail sales suggested that the economy may
be slowing. Economic growth was also viewed as being contained by the upheaval
in Asian markets, based on expectations that international turmoil would result
in a drop in demand for U.S. exports. However, the threat of inflation was
rekindled in early-December on news of the November unemployment rate dropping
to 4.6 percent, as the tight labor market pushed hourly wages higher. Economic
data released in mid-December provided for a more favorable inflation outlook,
since the increase in November retail sales was well below economists
expectations and producer prices declined in November.
<PAGE>
RP Financial, LC.
Page 2.3
Inflation concerns were further eased in early-January 1998 on news that
U.S. manufacturing growth slowed in December and predictions by economists of
slower growth for the U.S. economy in 1998. However, December 1997 employment
data indicated robust economic growth, despite a 0.1 percent increase in the
December unemployment rate to 4.7 percent, as a higher than expected 370,000
jobs were added to the U.S. economy in December. The growing demand for labor
translated into a higher than expected increase in labor costs during the fourth
quarter of 1997. A 0.5 percent increase in industrial production for December
1997 and a 4.3 percent increase in the GDP for the fourth quarter of 1997
further suggested that the financial troubles in Asia had not diminished demand
for U.S. exports by the end of 1997. At the end of January 1998, inflation
concerns were diminished by the December durable goods orders report, which
showed only a slight increase after excluding the volatile transportation
sector. The January unemployment rate was unchanged at 4.7 percent, while the
number of jobs added to the economy was higher than expected. Other economic
data released in February 1998 generally signaled a stable economic environment.
Retail sales were up 0.1 percent in January 1998 versus 0.3 percent in December
1997, while the consumer price index for January was unchanged from December. At
the end of February fourth quarter GDP was revised downward to 3.9 percent,
signaling a possible slowdown in growth in the early part of 1998.
Economic data released in early-March 1998 provided mixed economic signals,
with a decline in the February unemployment rate to 4.6 percent being indicative
of a robust U.S. economy. However, the February employment data also reflected a
decline in manufacturing jobs, which suggested that the growth may not be
sustainable. A decline in February producer prices and plunging oil prices
further eased inflation concerns in mid-March 1998. However, the February CPI
reflected an accelerating economy, after factoring out the sharp decline in
energy prices, indicating that competition from cheap Asian imports hadn't yet
forced many U.S. companies to lower prices. At the end of March, data which
showed a record pace for new and existing home sales in February further
signaled a strong U.S. economy. Tight labor markets were a further indication of
the growing U.S. economy, as inflation adjusted wages for the lowest paid
workers started to rise in 1997, reversing a 25-year economic trend in the U.S.
economy. While the March employment data reflected a loss of jobs and an
increase in the unemployment rate to 4.7 percent from 4.6 percent in February,
the decline in economic activity was believed to be mostly weather-related. A
slower pace of economic growth was also indicated by a slight decline in March
retail sales and consumer prices stayed flat during March.
First quarter GDP growth of 4.2 percent signaled a strong pace of economic
growth, although inflation remained in-check. The favorable inflation data
included decelerating labor costs during the first quarter of 1998 compared to
the fourth quarter of 1997 and the price index for gross domestic purchases was
flat during the first quarter. The April 1998 employment data showed a
surprising decline in the unemployment rate to 4.3 percent,
<PAGE>
RP Financial, LC.
Page 2.4
the lowest level since February 1970. However, inflation concerns that were
raised by the sharp decline in the unemployment rate were somewhat eased by a
decline in manufacturing employment, suggesting that the economy may be slowing.
Comparatively, consumer prices rose 0.2 percent in April, which was the largest
increase in six months. Overall, however, the April economic data indicated that
inflation continued to be contained, as the annual core rate of inflation was
measured at just 2.1 percent.
Economic data for May 1998 generally indicated a robust economy, with most
segments of the economy experiencing continued growth. In fact some indicators
suggested that inflation may be creeping back into the economy, most notably a
0.3 percent increase in May consumer prices, a 0.9 percent in May retail sales
and a 0.6 percent in consumer spending during May. The favorable economic
environment was also reflected in the consumer confidence survey for June 1998,
which indicated that consumer confidence was at its higher level since June
1969. At the end of June, first quarter GDP growth was revised upward to a
stronger than expected 4.8 percent annual growth rate; however, much of the
growth was due to the build-up of inventories.
Inflation concerns eased in early-July 1998, as the June unemployment rate
rose to 4.5 percent compared to a a 4.3 percent rate in May. Other June economic
indicators, such as consumer prices, retail sales and industrial output, also
signaled a slowing pace of growth for the U.S. economy. The slow down was in
part attributable to the strikes against GM, most notable with respect to
industrial output, as well as the financial crisis in Asia. Most economists
predict that the brunt of Asia's financial crisis will hit the U.S. in the
second half of 1998 and into the first quarter of 1999.
Consistent with the mixed economic activity, interest rate trends have been
varied as well over the past year. A downward trend in interest rates became
more pronounced during July 1997, following the Federal Reserve's decision to
leave rates unchanged at its early-July meeting and the release of new economic
data that indicated inflation was under control. Slower economic growth
indicated by a second quarter GDP growth rate of 2.2 percent sustained the rally
in bond prices at the end of July. However, in early-August, the stronger than
expected job growth reflected in the July employment data and a falling U.S.
dollar against the yen and mark caused bond prices to tumble. After recovering
briefly on the favorable inflation readings reflected in the July wholesale and
retail prices, bond prices declined in late-August on news of the narrower than
expected June trade deficit. Bond prices rallied briefly at the end of August
and in early-September, due to technical pressures and economic data that showed
manufacturing growth cooled in August. Interest rates increased slightly in
mid-September, reflecting investor fears that the August economic data would
show a strengthening economy and higher prices. However, the low inflation
reading indicated by the August consumer price report ignited a bond market
rally, with the yield on the 30-year bond posting its second largest decline in
the 1990s on September 16,
<PAGE>
RP Financial, LC.
Page 2.5
1997. Bond prices approached their highest level in two years in early-October,
reflecting the stable inflation environment as confirmed by the September
unemployment data.
In mid-October 1997, renewed inflation fears raised by the tight labor
markets and growing expectations of a rate hike by the Federal Reserve provided
for an easing in bond prices. The sell-off in the global markets at the end of
October served to abbreviate the decline in bond prices, as skittish investors
dumped stocks in favor of bonds. The Federal Reserve's decision to leave
interest rates unchanged at its mid-November meeting, along with signs of
slowing economic growth indicated by a decline in October retail sales, served
to strengthen the advance in bond prices in mid-November as the yield on the
bellwether 30-year U.S. Treasury bond approached 6.0 percent. Renewed interest
in U.S. Treasury bonds by Japanese investors and fading concerns of inflation
provided for a stable bond market in late-November. The rally in bond prices was
not sustained in early-December, as bond prices declined on news of the
surprisingly strong jobs report for November. However, positive inflation news
indicated by the lower than expected increase in November retail sales and the
decline in November producer prices, as well as world market turmoil, served to
push the yield on the 30-year U.S. Treasury bond below 6.0 percent in
mid-December. Bond prices were further boosted in mid-December by the Federal
Reserve's decision to leave interest rates unchanged at its mid-December
meeting, while a flight to quality caused by lingering concerns over the
long-term stability of Asian financial markets sustained the advance in the bond
market in late-December.
Comments by the Federal Reserve Chairman of possible deflationary pressures
served to strengthen the bond market rally at the beginning of 1998. December
1997 economic data which generally showed a strong pace of economic growth
caused bond prices to retreat slightly in late-January 1998. Bonds rallied
briefly at the end of January, as the Federal Reserve indicated that it would
hold rates steady. In early-February, gains in the stock market translated into
a sell-off in bonds. However, despite the stronger than expected employment
report for January, bond prices edged higher following the release of the
employment data on the first Friday in February. The positive trend in bond
prices was sustained through mid-February, which was supported by economic data
which showed a slower pace of growth. Indications by the Federal Reserve
Chairman that the Federal Reserve would not cut rates soon pushed interest rates
slightly higher in late-February. However, the downward revision to fourth
quarter GDP boosted bond prices modestly at the end of February.
At the beginning of March 1998, signs of a strengthening U.S. economy
pushed the yield on the 30-year bond above 6.0 percent for the first time in
three months. However, the decline in bond prices was short-lived, as declining
oil prices and news of a 1.6 percent decline in February producer prices served
to edge the 30-year bond year back below 6.0 percent in mid-March. The 30-year
bond yield approached 6.0 percent again in late-March, as the economic strength
indicated by the new and existing home sales reports for February heightened
<PAGE>
RP Financial, LC.
Page 2.6
speculation that the Federal Reserve would raise interest rates. At its
late-March meeting the Federal Reserve elected to leave interest rates
unchanged, which along with the slight increase in the March unemployment rate,
provided for a mild rally in bond prices during late-March and early-April.
Indications of slower economic growth, such as a decline in March retail
sales, provided for a fairly stable interest rate environment through mid-April
1998. Speculation that the Federal Reserve was leaning towards increasing
interest rates triggered a sell-off in bonds during late-April, as the 30-year
bond yield moved above 6.0 percent. However, the downturn was abbreviated by the
favorable inflation data reflected for labor costs during the first quarter of
1998, which pushed the yield on the 30-year bond back below 6.0 percent at the
end of April. News of the sharp decline in the April unemployment rate
translated into slightly higher interest rates in early-May, reflecting concerns
that the tight labor market would result in higher labor costs. Comparatively,
interest rates edged lower in mid-May, with turmoil in the Asian markets and the
Federal Reserve's decision not to raise interest rates at its May meeting being
noted as reasons for the decline in interest rates. A flight to quality served
to preserve the positive trend in bond prices through the end of May, reflecting
worries about the Russian economy and tensions between India and Pakistan.
Asian economic worries and indications by the Federal Reserve Chairman that
an increase in interest rates was not imminent served to preserved the downward
trend in interest rates during the first half of June 1998. In mid-June the
bellwether 30-year Treasury bond yield approximated 5.65 percent, which was the
lowest yield recorded since the Treasury Department began issuing 30-year fixed
rate maturities in 1977. Interest rates spiked higher in mid-June, reflecting
inflation concerns prompted by the higher than expected increase in May consumer
prices. However, bond prices strengthened in late-June and early-July, as the
Federal Reserve elected not to increase rates at its early-July meeting and an
increase in the June unemployment rate eased inflation concerns. Despite the
favorable inflation readings indicated by the June economic data, bond yields
rose slightly in mid-July. The dip in bond prices was largely attributed to a
recovery in the yen, which reduced demand for U.S. Treasurys. Further unsettling
news from the world economic markets, in particular Asia and Japan, and the
bombing of the suspected terrorist operations in Sudan and Afghanistan, resulted
in declines in stock market prices in early and mid-August 1998, along with
increased demand for lower risk U.S. Treasury securities. During mid-August, the
yields on long-term U.S. Treasury securities reached historic lows of under 5.50
percent. As of August 21, 1998, one- and thirty-year U.S. Government bonds were
yielding 5.19 percent and 5.43 percent, respectively, versus comparative year
ago rates of 5.55 percent and 6.62 percent, respectively. Exhibit II-2 provides
historical interest rate trends from 1991 through August 21, 1998.
<PAGE>
RP Financial, LC.
Page 2.7
Market Area Demographics
Demographic growth trends in the primary market area of Suffolk County and
zip code 02151 have been measured by changes in population, number of households
and median household income and other data, with trends in those areas
summarized by the data presented in Exhibit II-3. Massachusetts, Boston MSA and
U.S. data is provided for comparative purposes, and trends in this data provide
some indication of future levels of business activities for financial
institutions.
The Bank's office is located in a relatively small market area in terms of
population, as zip code 02151 reported a total population of approximately
39,000 as of 1998. Since 1980, the primary market area zip code has experienced
declines in population and households, and the decline in population and
households is projected to continue through the year 2003. The lack of
demographic growth in Revere is generally reflective of outmigration of
residents as such individuals move to more outlying areas with lower cost and
newer housing stock. Suffolk County has also reported slight annual declines in
population and housing (minus 0.4 and minus 0.2 percent, respectively), in
contrast to statewide averages of positive 0.3 and 0.6 percent, respectively.
All of these figures, however, trail the national averages of approximately a
1.0 percent annual growth rate.
The market area zip code reported lower income levels in comparison to
statewide and national averages. Estimated per capita annual income for 1998 in
zip code 02151 was under $18,000, 2 percent less than the county-wide average
and 10 percent less than the state average. Median household income levels were
slightly higher than the county figures but lower than the state averages.
Income distribution levels are similar to per capita income figures, revealing
that zip code 02151 has a higher proportion of lower income households (below
$100,000 annually), reflecting the lower income nature of the area. Based on the
declining population trends and lower income levels, growth opportunities in the
primary market area counties can be expected to be limited, with growth
achievable through increased market share of local financial institution
deposits.
Economy
Most of the Bank's deposit gathering activities and a substantial portion
of the lending operations are conducted in the city of Revere, more specifically
zip code 02151. Employment in Revere is generally diversified, containing
employment in services, wholesale and retail trade and government. Table 2.1
below presents the major employers within the city of Revere, and Exhibit II-4
presents additional data concerning sources of personal income and employment
sectors. As shown by the list of employers in Table 2.1, the Bank's primary
market area of Revere City contains a relatively well diversified employment
base. In addition, the Revere City area has in process a number of additional
development projects, including six additional
<PAGE>
RP Financial, LC.
Page 2.8
hotels/motels, an assisted living care center, a Walgreens store, a Pep Boys
Automotive store, a Super Stop and Shop, a Showcase Cinema and a U.S. Postal
Facility. All of these projects are expected to be completed within the next two
years, and provide significant additional employment to the local economy.
Table 2.1
Revere Federal Savings and Loan Association
Major Employers
Employer Industry Employees
Trend Lines Wholesale Parts and Distribution 485
Wonderland Dogtrack 405
Stop & Shop Supermarket 285
Lighthouse Nursing Care Center Nursing Home 225
Shaw's Supermarket 210
Annemark Nursing Home Nursing Home 160
Mass General Hospital 140
Johnny's Foodmaster Supermarket 137
Oak Island Skilled Nursing Home Nursing Home 120
Showcase Cinema Movie Theater 100
Ames Department Store Retail Store 100
Source: Local Area Chamber of Commerce.
In recent years, the Bank's lending operations have expanded beyond the
Revere City limits to include other areas of the metropolitan region, including,
for example, the cities of Chelsea, Malden and Saugus. Logan International
Airport is located in East Boston, a portion of the city of Boston, which is
adjacent to Revere and Chelsea. These cities contain an active and growing
commercial business environment for financial institutions. The Bank has
previously targeted the area surrounding Logan International Airport as a source
of potential business, and fully intends to increase activities in that area.
Another indication of the economic situation in a local area is recent
unemployment data, and Table 2.2 displays unemployment data in the local market
area as of May 1997 and May 1998. Over the last year, the unemployment rates for
both Suffolk County and zip code 02151 have remained above statewide averages,
and the employment situation has improved in the most recent twelve month
period. All comparative unemployment rates are below the national averages,
indicating a level of strength to the local economy. The local market area's
unemployment situation was also assisted by the population declines which act to
lower the supply of available labor.
<PAGE>
RP Financial, LC.
Page 2.9
Table 2.2
Revere Federal Savings and Loan Association
Market Area Unemployment Trends
Region May 1997 May 1998
------ -------- --------
United States 4.7% 4.2%
Massachusetts 3.8 3.3
Suffolk County 4.1 3.6
Revere City 5.1 4.1
Source: U.S. Bureau of Labor Statistics.
Deposit Trends and Competition
The market area (defined as zip code 02151 for deposits), is characterized
by the presence of both locally-based and locally-owned financial institutions
and larger, regional institutions. Major competitors include financial
institutions such as BankBoston, N.A., Fleet National Bank, Citizens Bank of
Massachusetts, Boston Federal Savings Bank (holding company for The Broadway
National Bank of Chelsea) and East Boston Savings Bank.
Table 2.3 displays deposit market trends for the Commonwealth of
Massachusetts and the primary market area from June 30, 1995 to June 30, 1997.
Overall, financial institution deposits showed an increase statewide, with
commercial banks showing growth at a higher rate than savings institutions
(including FDIC-insured savings banks). This trend of increases in overall
deposits, similar to the rest of the nation, reflects the positive performance
of the overall economy in recent years that has led to increased levels of
personal income and personal wealth. Such increases, however, have been
mitigated in part by disintermediation whereby banking customers have also
placed available funds into other types of financial intermediaries such as
mutual funds, investment firms, brokerage houses, and insurance companies.
Deposit trends in Suffolk County exhibited much stronger growth trends than the
state, however savings institutions reported an overall decline in deposits in
Suffolk County. Commercial banks hold over 90 percent of financial institution
deposits in Suffolk County, compared to a lower 61 percent market share in the
state as a whole.
Deposit trends in zip code 02151 exhibited a lower rate of deposit
increase, as total deposits increased by 3.3 percent annually over the two year
period. The increase in deposits was recorded by both commercial banks and
savings institutions, with savings institutions recording a much higher growth
rate due to the addition of a branch office by East Boston Savings Bank. The
relatively low deposit growth may result from the declining
<PAGE>
-------------------------------------------------------------------
Table 2.3
Revere Federal Savings and Loan Association
Deposit Summary
-------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
As of June 30,
-------------------------------------------------------------------------
1995 1997
------------------------------------- --------------------------------- Deposit
Market Number of Market No. of Growth Rate
Deposits Share Branches Deposits Share Branches 1995-1997
(Dollars In Thousands) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
Commonwealth of Massachusetts $101,860,043 100.0% 1,929 $114,096,300 100.0% 1,904 5.8%
Commercial Banks 60,218,683 59.1% 1,015 69,959,881 61.3% 947 7.8%
Savings Institutions 41,641,360 40.9% 914 44,136,419 38.7% 957 3.0%
Suffolk County $ 33,993,056 100.0% 207 $ 48,301,065 100.0% 200 19.2%
Commercial Banks 29,572,612 87.0% 145 44,446,189 92.0% 136 22.6%
Savings Institutions 4,420,444 13.0% 62 3,854,876 8.0% 64 -6.6%
Revere FS&LA 47,295 0.1% 1 54,613 0.1% 1 7.5%
Zip Code 02151 $ 354,374 100.0% 6 $ 378,050 100.0% 7 3.3%
Commercial Banks 307,079 86.7% 5 311,206 82.3% 5 0.7%
Savings Institutions 47,295 13.3% 1 66,844 17.7% 2 18.9%
Revere FS&LA 47,295 13.3% 1 54,613 14.4% 1 7.5%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Source: FDIC; OTS.
<PAGE>
RP Financial, LC.
Page 2.11
population base and the competitive nature for deposits. Revere has recorded
increases in deposits over the time period shown in Table 2.3 at a rate higher
than the zip code average, resulting in an increase in deposit market share
since June 30, 1995. Data available subsequent to June 30, 1997 reveals a
continued increase in deposit funds for the Bank. This increase in deposits
reveals success in raising additional retail deposit funds for business
operations.
Summary
The overall condition of the primary market area can be characterized as
relatively stable in terms of population and household base. The local economy
is relatively diversified. In order to support the Bank's desired level of
business operations, lending activities have been pursued in a larger
geographical area consisting of the metropolitan area north of the city of
Boston, including a targeted area to the south in Chelsea. Going forward, in
view of the local demographic and economic trends and the numbers and types of
competitors in the market area, the competition for deposits is expected to
remain substantial, which will result in Revere Federal having to pay
competitive deposit rates to maintain local market share. The reinvestment of
stock proceeds from the conversion may mitigate to some extent the potentially
higher funding costs to attract deposits through anticipated loyalty of local
shareholders and referrals from local shareholders.
<PAGE>
RP Financial, LC.
Page 3.1
III. PEER GROUP ANALYSIS
This chapter presents an analysis of Revere Federal's operations versus a
group of comparable companies (the "Peer Group") selected from the universe of
all publicly-traded savings institutions. The primary basis of the pro forma
market valuation of Revere Federal is provided by these public companies.
Factors affecting the Bank's pro forma market value such as financial condition,
credit risk, interest rate risk, and recent operating results can be readily
assessed in relation to the Peer Group. Current market pricing of the Peer
Group, subject to appropriate adjustments to account for differences between
Revere Federal and the Peer Group, will then be used as a basis for the
valuation of Revere Federal's to-be-issued common stock.
Peer Group Selection
The mutual holding company form of ownership has been in existence in its
present form since 1991. As of the date of this appraisal, there were
approximately 22 publicly-traded institutions operating as subsidiaries of MHCs.
We believe there are a number of characteristics of MHC shares that make them
different from the shares of fully-converted companies. These factors include:
(1)lower aftermarket liquidity in the MHC shares since less than 50 percent of
the shares are available for trading; (2)guaranteed minority ownership interest,
with no opportunity of exercising voting control of the institution in the MHC
form of organization, thus limiting acquisition speculation in the stock price;
(3)the potential impact of "second step" conversions on the pricing of public
MHC institutions; (4)the regulatory policy regarding the dividend waiver by MHC
institutions; and (5)certain MHCs have formed or are forming middle-tier holding
companies, facilitating the ability for stock repurchases, thus improving the
liquidity of the stock on an interim basis. We believe that each of these
factors has an impact on the pricing of the shares of MHC institutions, and that
such factors are not reflected in the pricing of fully-converted public
companies.
Given the unique characteristic of the MHC form of ownership, RP Financial
concluded that the appropriate Peer Group for Revere Federal's valuation should
be comprised of the subsidiary institutions of mutual holding companies. The
Peer Group is consistent with the regulatory guidelines, and other recently
completed MHC transactions. Further, the Peer Group should be comprised of only
those MHC institutions whose common stock is either listed on a national
exchange or is NASDAQ listed, since the market for companies trading in this
fashion is regular and reported. We believe non-listed MHC institutions are
inappropriate for the Peer Group, since the trading activity for thinly-traded
stocks is typically highly irregular in terms of frequency and price and may not
be a reliable indicator of market value. We have excluded from the Peer Group
those public MHC institutions that are currently pursuing a "second step"
conversion and/or companies whose market prices appear to be distorted by
speculative factors or unusual operating conditions. The universe of all
publicly-
<PAGE>
RP Financial, LC.
Page 3.2
traded MHC institutions is included as Exhibit III-2. Institutions excluded from
the calculation of averages have been denoted with a footnote (7).
Basis of Comparison
This appraisal includes two sets of financial data and ratios for each
public MHC institution. The first set of financial data reflects the actual book
value, earnings, assets and operating results reported by the public MHC
institutions in its public filings inclusive of the minority ownership interest
outstanding to the public. The second set of financial data, discussed at length
in the following chapter, places all of the public MHC institutions on equal
footing by restating their financial data and pricing ratios on a
"fully-converted" basis assuming the sale of the majority shares held by the
MHCs in public offerings based on their respective current prices and standard
assumptions for a thrift conversion offering. Throughout the appraisal, the
adjusted figures will be specifically identified as being on a fully-converted
basis. Unless so noted, the figures referred to in the appraisal will be actual
financial data reported by the public MHC institutions.
Both sets of financial data have their specific use and applicability to
the appraisal. The actual financial data, as reported by the public MHC
institutions and reflective of the minority interest outstanding, will be used
primarily in this Chapter III to make financial comparisons between the Peer
Group and Revere Federal. The differences between the Peer Group's reported
financial data and the financial data of Revere Federal as a mutual institution
are not significant enough to distort the conclusions of the comparison (in
fact, such differences are greater in a standard conversion appraisal). The
adjusted financial data (fully-converted basis) will be more fully described and
quantified in the pricing analysis discussed in Chapter IV of the appraisal. The
fully-converted pricing ratios are considered critical to the valuation analysis
in Chapter IV, because they place each public MHC institution on a
fully-converted basis (making their pricing ratios comparable to the pro forma
valuation conclusion reached herein), eliminate distortion in pricing ratios
between public MHC institutions that have sold different percentage ownership
interests to the public, and reflect the actual pricing ratios (fully-converted
basis) being placed on public MHC institutions in the market today to reflect
the unique trading characteristics of public MHC institutions.
Selection of Peer Group
Under ideal circumstances, the Peer Group would be comprised of ten
publicly-traded Massachusetts-based MHC institutions with capital, earnings,
credit quality and interest rate risk comparable to Revere Federal. However, the
universe of 22 public MHC institutions only includes one institution
headquartered in Massachusetts (Brookline Bancorp). Out of the 22 public MHCs,
19 were included for the Peer Group. Pulaski
<PAGE>
RP Financial, LC.
Page 3.3
Bank of Missouri, Community Savings of Florida and First FSB of Souixland, IA
were excluded from the group, as the result of announcing plans to complete a
second-step conversion and, thus, its pricing ratios have become distorted in
anticipation of the second-step appraisal.
Unlike the universe of public companies, which includes approximately 360
public companies, the universe of public MHC institutions is small, thereby
limiting the prospects of a relatively comparable Peer Group. Nonetheless,
because the trading characteristics of public MHC institution shares are
significantly different from those of fully-converted companies, the universe of
19 public MHC institutions was the most appropriate group for this valuation.
Relying solely on full stock public companies for the Peer Group would not
capture the difference in current market pricing for public MHC institutions and
thus could lead to distorted valuation conclusions. The federal regulatory
agencies have previously concurred with this selection procedure of the Peer
Group for MHC valuations.
Potential shortcomings to using all 19 publicly-traded MHCs include the
variations in asset sizes, operating strategies, market areas (both regional and
local), and financial measures among the 19 public MHC institutions. Although we
considered these potential shortcomings in our analysis, RP Financial's ultimate
conclusion was that the size of the Peer Group was statistically meaningful
(i.e., there were enough institutions included to support meaningful
conclusions), the differences in financial and other characteristics among the
Peer Group members would, on average, be offsetting (i.e., the pricing reflected
in the exceptionally strong market in Florida would be offset by the weaker
market pricing of an institution operating in Iowa), and importantly the pricing
characteristics were more relevant than fully-converted institutions. To account
for differences between Revere Federal and the MHC Peer Group in reaching a
valuation conclusion, it will be necessary to make certain valuation
adjustments. The following discussion addresses financial similarities and
differences.
Table 3.1 on the following page lists key general characteristics of the
Peer Group companies. Although there are differences among several of the Peer
Group members, by and large they are well-capitalized and profitable
institutions and their decision to reorganize in MHC form itself suggests a
commonalty of operating philosophy. Importantly, the trading prices of the Peer
Group companies reflect the unique operating and other characteristics of public
MHC institutions. While the Peer Group is not exactly comparable to Revere
Federal, we believe such companies form a good basis for the valuation of Revere
Federal, subject to certain valuation adjustments.
In aggregate, the Peer Group companies maintain a slightly higher level of
capitalization relative to the universe of all public thrifts (14.21 percent of
assets versus 13.77 percent for the all public average), generate lower core
earnings (0.87 percent ROA versus 0.90 percent average for the all public
average), and generate a
<PAGE>
RP Financial, LC.
Page 3.4
lower core ROE (6.57 percent core ROE versus 7.81 percent for the all public
average). Please note that RP Financial has used core earnings in this
discussion to eliminate the effects of non-operating items.
The summary table below underscores the key differences, particularly in
the average pricing ratios between full stock and MHC institutions (both as
reported and on a fully-converted basis).
Publicly-Traded MHCs
(Excluding Announced
Second Steps)
-------------
Fully
All MHC Converted
Publicly-Traded Reported Basis
(Excluding MHCs) Basis (Pro Forma)
Financial Characteristics (Averages)
Assets ($Mil) $ 1,158 $ 1,055 $ 1,178
Equity/Assets (%) 13.77% 14.21% 23.52%
Core Return on Assets (%) 0.90 0.87 1.11
Core Return on Equity (%) 7.81 6.57 4.76
Pricing Ratios (Averages)(1)
Core Price/Earnings (x) 19.30x 26.68x 20.38x
Price/Book (%) 144.65% 188.39% 93.76%
Price/Assets (%) 18.02% 24.61% 21.68%
(1) Based on market prices as of August 21, 1998.
The following sections present a comparison of Revere Federal's financial
condition, income and expense trends, loan composition, interest rate risk and
credit risk versus the figures reported by the Peer Group. The conclusions drawn
from the comparative analysis are then factored into the valuation analysis
discussed in the final chapter.
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.1
Peer Group of Publicly-Traded Thrifts
September 3, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ -------
($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PBCT Peoples Bank, MHC of CT (41.2) (3) OTC Southwestern CT Div. 9,149 111 12-31 07/88 27.00 1,732
NWSB Northwest Bcrp MHC of PA (30.8 OTC Northwest PA Thrift 2,410 67 06-30 11/94 12.75 597
HARS Harris Fin. MHC of PA (24.9) OTC Harrisburg PA M.B. 2,260 33 12-31 01/94 17.75 603
FFFL Fidelity Bcsh MHC of FL (47.9) OTC Southeast FL Thrift 1,321 20 12-31 01/94 26.50 180
NBCP Niagara Bancorp of NY MHC(45.4 (3) OTC Northern NY Thrift 1,296 P 15 12/31 04/98 11.38 339
BRKL Brookline Bncp MHC of MA(47.0) OTC Brookline Thrift 817 5 08-31 03/98 12.75 371
LFED Leeds Fed Bksr MHC of MD (36.3 OTC Baltimore MD Thrift 299 1 06-30 05/94 17.50 91
BCSB BCSB Bankcorp MHC of MD (38.6) OTC Baltimore Thrift 274 P 6 12-31 07/98 11.38 70
ALLB Alliance Bank MHC of PA (19.9) OTC Southeast PA Thrift 273 7 12-31 03/95 21.25 70
WAYN Wayne Svgs Bks MHC of OH (48.2 OTC Central OH Thrift 260 6 03-31 06/93 22.25 55
SBFL SB Fngr Lakes MHC of NY (33.1) OTC Western NY Thrift 251 5 12-31 11/94 16.00 57
LIBB Liberty Bancorp MHC of NJ (47) OTC Northeast NJ Thrift 241 P 4 12-31 07/98 10.25 40
PHSB Ppls Home SB, MHC of PA (45.0) OTC Western PA Thrift 223 9 12-31 07/97 16.25 45
PBHC Pathfinder BC MHC of NY (45.2) (3) OTC Upstate NY Thrift 196 5 12-31 11/95 15.00 42
PLSK Pulaski SB, MHC of NJ (47.0) OTC New Jersey Thrift 191 6 12-31 04/97 14.88 31
GBNK Gaston Fed Bncp MHC of NC(47.0 OTC Southwest NC Thrift 171 P 4 9-30 04/98 12.50 56
JXSB Jcksnville SB,MHC of IL (45.6) OTC Central IL Thrift 170 4 12-31 04/95 16.75 32
SKBO First Carnegie MHC of PA(45.0) OTC Western PA Thrift 148 3 03-31 04/97 13.25 30
WCFB Wbstr Cty FSB MHC of IA (45.6) OTC Central IA Thrift 94 1 12-31 08/94 17.63 37
</TABLE>
NOTES: (1) Or most recent date available (M=March, S=September, D=December,
J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift,
M.B.=Mortgage Banker, R.E.=Real Estate Developer,
Div.=Diversified, and Ret.=Retail Banking.
(3) FDIC savings bank institution.
Source: Corporate offering circulars, data derived from information published in
SNL Securities Quarterly Thrift Report, and financial reports of
publicly-traded thrifts.
Date of Last Update: 09/03/98
<PAGE>
RP Financial, LC.
Page 3.6
Financial Condition
Table 3.2 shows comparative balance sheet measures for Revere Federal and
the Peer Group. Revere Federal's ratios reflect June 30, 1998 figures, while the
Peer Group's ratios reflect balances as March 31, 1998, unless otherwise
indicated for the Peer Group companies. Revere Federal's net worth base of 7.2
percent was below the Peer Group's average net worth ratio of 12.0 percent;
however, with the addition of stock proceeds, the Bank's pro forma capital
position (consolidated with the holding company) will likely be comparable to
the Peer Group's ratio. Revere Federal's capital consisted entirely of tangible
capital, while the Peer Group's capital included a modest amount of intangibles.
The increase in the Bank's capital position to be realized from the stock
offering will serve to enhance future earnings potential that may be realized
through leverage and lower funding costs. However, at the same time, the Bank's
higher pro forma capital position will likely result in a decline in return on
equity. Both the Bank's and the Peer Group's capital ratios reflected capital
surpluses over the regulatory capital requirements, with the Peer Group's ratios
currently indicating greater capital surpluses.
The interest-earning asset compositions for the Bank and the Peer Group
were somewhat similar, with loans constituting the bulk of interest-earning
assets for both Revere Federal and the Peer Group. The Peer Group's combined
level of loans and mortgage-backed securities was lower than the Bank's ratio
(72.0 percent of assets versus 77.1 percent for the Bank), as the Peer Group
maintained a higher concentration of loans but a lower level of mortgage-backed
securities relative to the Bank's measures. Comparatively, the Bank's cash and
investments-to-assets ratio was lower than the comparable ratio for Peer Group
(20.9 percent of assets versus 24.6 percent for the Peer Group). Overall, Revere
Federal's interest-earning assets amounted to 98.0 percent of assets, which was
higher than the comparative Peer Group ratio of 96.5 percent.
Revere Federal's funding liabilities reflected a funding strategy that was
similar to that of the Peer Group's funding composition. The Bank's deposits
equaled 70.9 percent of assets, which was below the Peer Group average of 74.8
percent. Borrowings were utilized to a slightly greater degree by Revere
Federal, as the Bank and the Peer Group posted borrowings-to-assets ratios of
21.7 percent and 9.4 percent, respectively. Subordinated debt represented a
nominal balance on the Peer Group's balance sheet, as the result of one Peer
Group company holding subordinated debt equal to 1.6 percent of assets. Total
interest-bearing liabilities maintained by the Bank and the Peer Group, as a
percent of assets, equaled 92.6 and 84.2 percent, respectively, with the Peer
Group's lower ratio being supported by maintenance of a higher capital position.
A key measure of balance sheet strength for a thrift institution is its
IEA/IBL ratio. Presently, the Peer Group's IEA/IBL ratio is slightly higher than
the Bank's ratio, based on respective ratios of 114.6 percent and 105.8 percent.
The additional capital realized from stock proceeds should serve to provide
Revere Federal
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.2
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of March 31, 1998
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
----------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref.Stock
----------- ------ ------ -------- -------- ------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revere Federal Savings of MA
- ----------------------------
June 30, 1998 20.9 52.7 24.4 70.9 21.7 0.0 7.2 0.0 7.2 0.0
SAIF-Insured Thrifts 19.1 67.1 10.5 69.2 15.1 0.2 13.4 0.3 13.1 0.0
All Public Companies 19.6 66.3 10.7 69.6 15.0 0.2 13.2 0.3 12.9 0.0
Comparable Group Average 24.5 59.2 12.8 74.8 9.4 0.1 12.3 0.3 12.0 0.0
Mid-Atlantic Companies 24.8 55.8 16.2 77.0 10.7 0.0 11.1 0.3 10.8 0.0
Mid-West Companies 17.6 71.2 8.0 81.5 2.6 0.0 14.6 0.0 14.6 0.0
New England Companies 30.7 63.1 0.1 65.0 11.5 0.8 21.2 0.7 20.6 0.0
Other Comparative Companies 27.2 57.4 12.7 60.8 10.4 0.0 7.1 0.1 7.0 0.0
Comparable Group
- ----------------
Florida Companies
- -----------------
FFFL Fidelity Bcsh MHC of FL (47.9) 5.4 68.1 22.7 69.8 19.5 0.0 6.7 0.2 6.5 0.0
Mid-Atlantic Companies
- ----------------------
ALLB Alliance Bank MHC of PA (19.9) 35.9 56.3 4.9 77.2 11.4 0.0 10.7 0.0 10.7 0.0
BCSB BCSB Bankcorp MHC of MD (38.6)(3) 20.7 63.0 14.4 88.4 0.0 0.0 9.9 0.0 9.9 0.0
SKBO First Carnegie MHC of PA(45.0) 14.4 45.8 36.7 52.1 29.4 0.0 16.9 0.0 16.9 0.0
HARS Harris Fin. MHC of PA (24.9) 55.9 40.2 0.1 50.4 39.9 0.0 8.1 0.8 7.3 0.0
LFED Leeds Fed Bksr MHC of MD (36.3 29.3 62.8 5.4 81.2 0.2 0.0 16.5 0.0 16.5 0.0
LIBB Liberty Bancorp MHC of NJ (47)(1)(3) 4.0 70.0 24.3 91.2 0.8 0.0 7.6 0.0 7.6 0.0
NBCP Niagara Bancorp of NY MHC(45.4 33.0 48.4 16.0 85.1 2.9 0.0 10.1 0.0 10.1 0.0
NWSB Northwest Bcrp MHC of PA (30.8 21.6 73.6 1.9 82.4 7.6 0.0 8.9 0.9 7.9 0.0
PBHC Pathfinder BC MHC of NY (45.2) 17.0 64.5 11.2 78.8 8.5 0.0 11.8 1.8 10.0 0.0
PHSB Ppls Home SB, MHC of PA (45.0) 19.6 44.2 33.1 78.1 8.3 0.0 12.8 0.0 12.8 0.0
PLSK Pulaski SB, MHC of NJ (47.0) 16.8 52.8 27.5 84.8 2.9 0.0 11.5 0.0 11.5 0.0
SBFL SB Fngr Lakes MHC of NY (33.1) 29.8 48.3 18.4 74.5 15.9 0.0 8.7 0.0 8.7 0.0
Mid-West Companies
- ------------------
JXSB Jcksnville SB,MHC of IL (45.6) 12.2 75.8 7.8 87.7 0.1 0.0 10.4 0.0 10.4 0.0
WAYN Wayne Svgs Bks MHC of OH (48.2 14.6 80.0 1.6 83.8 6.2 0.0 9.4 0.0 9.4 0.0
WCFB Wbstr Cty FSB MHC of IA (45.6) 25.8 57.9 14.7 73.0 1.5 0.0 24.0 0.0 24.0 0.0
New England Companies
- ---------------------
BRKL Brookline Bncp MHC of MA(47.0) 33.7 64.9 0.1 57.5 7.6 0.0 33.2 0.0 33.2 0.0
PBCT Peoples Bank, MHC of CT (41.2) 27.6 61.3 0.0 72.4 15.5 1.6 9.2 1.3 7.9 0.0
South-East Companies
- --------------------
GBNK Gaston Fed Bncp MHC of NC(47.0 49.0 46.8 2.8 51.9 1.2 0.0 7.5 0.0 7.5 0.0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet Annual Growth Rates Regulatory Capital
------------------------------------------------------------ -------------------------
Cash and Loans Borrows. Net Tng Net
Assets Investments & MBS Deposits &Subdebt Worth Worth Tangible Core Reg.Cap.
------ ----------- ------ -------- -------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revere Federal Savings of MA
- ----------------------------
June 30, 1998 2.86 -2.51 4.33 18.49 -29.65 7.46 7.46 6.63 6.63 17.89
SAIF-Insured Thrifts 15.17 9.71 13.36 8.77 16.45 5.08 5.13 11.18 11.28 22.95
All Public Companies 15.36 10.08 13.81 8.57 16.46 5.81 5.65 11.18 11.11 22.47
Comparable Group Average 14.17 9.71 9.77 6.40 22.05 11.34 8.72 12.36 12.97 26.34
Mid-Atlantic Companies 8.99 2.77 10.00 6.02 37.44 11.30 9.37 12.06 11.94 27.69
Mid-West Companies 2.46 21.76 -0.98 1.61 -15.32 4.27 4.27 16.52 14.51 28.57
New England Companies 20.88 35.31 11.01 9.12 4.20 33.20 14.29 8.20 17.20 13.00
Other Comparative Companies 56.06 5.59 23.24 13.12 9.38 11.21 10.01 11.60 11.60 22.91
Comparable Group
- ----------------
Florida Companies
- -----------------
FFFL Fidelity Bcsh MHC of FL (47.9) 42.48 5.59 45.08 23.87 NM 8.28 5.89 7.60 7.60 15.20
Mid-Atlantic Companies
- ----------------------
ALLB Alliance Bank MHC of PA (19.9) 14.27 12.96 16.78 11.28 49.32 6.71 6.71 NM 10.79 26.12
BCSB BCSB Bankcorp MHC of MD (38.6)(3) 5.94 17.16 2.64 4.78 NM 9.89 NM 7.71 7.71 16.58
SKBO First Carnegie MHC of PA(45.0) -8.86 -51.25 7.10 -12.05 -0.94 NM NM 16.80 16.80 52.20
HARS Harris Fin. MHC of PA (24.9) 16.31 31.37 0.36 -3.09 51.01 19.48 24.32 6.99 6.99 12.99
LFED Leeds Fed Bksr MHC of MD (36.3 6.07 7.48 4.09 5.53 -14.29 8.08 8.08 16.00 16.00 32.54
LIBB Liberty Bancorp MHC of NJ (47)(1)(3) 6.88 -29.70 9.47 4.81 NM 15.48 15.48 9.47 9.47 23.98
NBCP Niagara Bancorp of NY MHC(45.4 17.88 54.04 8.64 16.02 NM 16.42 16.42 19.10 19.10 35.63
NWSB Northwest Bcrp MHC of PA (30.8 20.63 32.78 17.22 22.32 18.34 9.87 4.54 NM NM NM
PBHC Pathfinder BC MHC of NY (45.2) 3.05 -25.03 11.89 -2.47 89.79 7.49 -8.93 NM NM NM
PHSB Ppls Home SB, MHC of PA (45.0) 8.77 3.30 11.72 -1.59 83.45 NM NM 12.25 12.25 29.66
PLSK Pulaski SB, MHC of NJ (47.0) -0.90 -33.69 10.48 8.88 NM NM NM 11.83 11.83 28.08
SBFL SB Fngr Lakes MHC of NY (33.1) 17.87 13.88 19.62 17.81 22.84 8.31 8.31 8.41 8.41 19.12
Mid-West Companies
- ------------------
JXSB Jcksnville SB,MHC of IL (45.6) 3.55 39.88 0.11 3.46 -30.42 4.34 4.34 NM 10.49 15.70
WAYN Wayne Svgs Bks MHC of OH (48.2 3.00 8.34 1.01 2.92 -0.22 5.67 5.67 9.63 9.63 17.50
WCFB Wbstr Cty FSB MHC of IA (45.6) 0.82 17.05 -4.05 -1.56 NM 2.80 2.80 23.41 23.41 52.50
New England Companies
- ---------------------
BRKL Brookline Bncp MHC of MA(47.0) 20.39 47.73 10.17 -4.12 -4.32 NM NM NM 26.20 NM
PBCT Peoples Bank, MHC of CT (41.2) 21.38 22.90 11.85 22.36 12.72 33.20 14.29 8.20 8.20 13.00
South-East Companies
- --------------------
GBNK Gaston Fed Bncp MHC of NC(47.0 69.64 NM 1.40 2.38 9.38 14.14 14.14 15.59 15.59 30.61
</TABLE>
(1) Financial information is for the quarter ending December 31, 1997.
(3) Growth rates have been annualized from available financial information.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.8
with an IEA/IBL ratio that is comparable to or slightly higher than currently
maintained by the Peer Group, as the interest-free capital realized in Revere
Federal's stock offering is expected to be deployed primarily into
interest-earning assets.
The growth rate section of Table 3.2 shows annual growth rates for key
balance sheet items. Revere Federal's growth rates are based on annualized
growth for the nine months ended June 30, 1998, while the Peer Group's growth
rates are based on annual growth for the 12 months ended March 31, 1998, or the
most recent period available. Asset growth rates of positive 2.86 percent and
positive 14.17 percent were posted by the Bank and the Peer Group, respectively.
Growth in loans accounted for most of the Bank's asset growth, while both
investments and MBS recorded declines. Growth in all major asset categories,
loans, MBS and investments accounted for most of the Peer Group's asset growth.
Given Revere Federal's current level of capital, Revere Federal's capacity to
leverage further is somewhat limited without the infusion of capital to be
realized from the minority stock offering, while the Peer Group maintains a
higher capital level for future leverage.
Deposit growth of 18.5 percent funded most of Revere Federal's asset
growth, which exceeded the Peer Group's deposit growth rate of 6.4 percent.
Borrowings declined at the Bank, offsetting the increase in deposits and
resulting in the much lower overall asset growth rate. Growth in borrowings was
also exhibited by the Peer Group companies, with the Peer Group posting a
borrowings growth rate of 22.1 percent. In fact, the Peer Group's borrowings
growth rate was somewhat understated, as the "NM" borrowings growth rates shown
for five of the Peer Group companies included companies with borrowings growth
rates in excess of 100 percent.
Capital growth rates posted by the Bank and the Peer Group equaled positive
7.5 percent and positive 11.3 percent, respectively, reflecting Revere Federal's
lower return on average assets. Dividend payments further reduced the Peer
Group's lower capital growth rate. Following the increase in capital realized
from stock offering proceeds, the Bank's capital growth rate will be depressed
by its higher pro forma capital position, as well as by possible dividend
payments and stock repurchases.
Income and Expense Components
Revere Federal and the Peer Group reported net income to average assets
ratios of 0.36 percent and 0.89 percent, respectively (see Table 3.3), based on
earnings for the twelve months ended June 30, 1998 for Revere, and March 31,
1998 for the Peer Group companies, unless otherwise indicated. The higher return
posted by the Peer Group was due primarily to lower operating expenses and
higher non-interest income. In terms of core earnings measures, the Bank
maintained a slightly higher net interest margin than the Peer
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.3
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended March 31, 1998
<TABLE>
<CAPTION>
Net Interest Income Other Income
---------------------------- -------------------
Loss NII Total
Net Provis. After Loan R.E. Other Other
Income Income Expense NII on IEA Provis. Fees Oper. Income Income
------ ------ ------- ------ ------- ------- ---- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revere Federal Savings of MA
----------------------------
June 30, 1998 0.36 7.54 4.19 3.35 0.22 3.13 0.00 0.00 0.17 0.17
SAIF-Insured Thrifts 0.90 7.40 4.14 3.27 0.13 3.14 0.10 0.01 0.31 0.42
All Public Companies 0.91 7.39 4.07 3.31 0.13 3.18 0.10 0.01 0.31 0.43
Comparable Group Average 0.89 7.13 3.96 3.18 0.10 3.07 0.14 0.00 0.25 0.39
Mid-Atlantic Companies 0.80 7.00 3.95 3.05 0.08 2.97 0.05 -0.01 0.21 0.26
Mid-West Companies 0.91 7.46 4.09 3.37 0.09 3.28 0.06 0.00 0.24 0.30
New England Companies 1.56 7.14 3.54 3.59 0.26 3.33 0.88 -0.01 0.46 1.32
Other Comparable Companies 0.73 7.40 4.18 3.23 0.12 3.10 0.08 0.01 0.27 0.00
Comparable Group
----------------
Florida Companies
-----------------
FFFL Fidelity Bcsh MHC of FL (47.9) 0.66 7.15 4.26 2.89 0.00 2.89 0.03 0.01 0.36 0.41
Mid-Atlantic Companies
----------------------
ALLB Alliance Bank MHC of PA (19.9) 0.80 7.24 3.83 3.40 0.06 3.34 0.00 0.00 0.23 0.23
BCSB BCSB Bankcorp MHC of MD (38.6)(3) 0.89 6.68 3.56 3.12 -0.11 3.23 0.09 0.00 0.14 0.23
SKBO First Carnegie MHC of PA(45.0) 0.65 6.77 4.12 2.65 0.04 2.61 0.00 0.00 0.06 0.06
HARS Harris Fin. MHC of PA (24.9) 0.89 7.10 4.71 2.39 0.06 2.33 0.09 0.04 0.23 0.36
LFED Leeds Fed Bksr MHC of MD (36.3 1.19 7.00 4.15 2.86 0.01 2.85 0.00 0.00 0.11 0.11
LIBB Liberty Bancorp MHC of NJ (47)(1) 0.65 6.26 3.74 2.52 0.08 2.44 0.00 0.00 0.19 0.19
NBCP Niagara Bancorp of NY MHC(45.4 0.87 6.49 3.54 2.95 0.12 2.83 0.16 0.00 0.32 0.48
NWSB Northwest Bcrp MHC of PA (30.8 0.95 7.74 4.17 3.57 0.17 3.40 0.13 0.00 0.17 0.30
PBHC Pathfinder BC MHC of NY (45.2) 0.91 7.36 3.62 3.75 0.14 3.61 0.03 0.00 0.46 0.49
PHSB Ppls Home SB, MHC of PA (45.0) 0.81 7.13 3.71 3.42 0.24 3.18 0.00 0.00 0.37 0.36
PLSK Pulaski SB, MHC of NJ (47.0) 0.63 7.09 4.08 3.00 0.07 2.93 0.07 -0.01 0.05 0.11
SBFL SB Fngr Lakes MHC of NY (33.1) 0.40 7.19 4.21 2.98 0.05 2.92 0.03 -0.09 0.21 0.15
Mid-West Companies
------------------
JXSB Jcksnville SB,MHC of IL (45.6) 0.58 7.64 4.32 3.32 0.20 3.12 0.19 0.00 0.26 0.44
WAYN Wayne Svgs Bks MHC of OH (48.2 0.73 7.56 4.36 3.21 0.02 3.18 0.00 0.00 0.24 0.24
WCFB Wbstr Cty FSB MHC of IA (45.6) 1.43 7.17 3.60 3.57 0.03 3.54 0.00 0.00 0.22 0.21
New England Companies
---------------------
BRKL Brookline Bncp MHC of MA(47.0) 1.93 7.69 3.68 4.01 0.00 4.01 0.01 0.01 0.15 0.17
PBCT Peoples Bank, MHC of CT (41.2) 1.18 6.58 3.41 3.17 0.52 2.65 1.75 -0.04 0.76 2.48
South-East Companies
--------------------
GBNK Gaston Fed Bncp MHC of NC(47.0 0.79 7.66 4.10 3.56 0.24 3.32 0.12 0.00 0.18 0.30
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
G&A/Other Exp. Non-Op. Items Yields, Costs, and Spreads
---------------- -------------- -------------------------
MEMO: MEMO:
G&A Goodwill Net Extrao. Yield Cost Yld-Cost Assets/ Effective
Expense Amort. Gains Items On Assets Of Funds Spread FTE Emp. Tax Rate
------- ------- ------- ------- --------- -------- ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revere Federal Savings of MA
----------------------------
June 30, 1998 2.71 0.00 0.00 0.00 7.73 4.57 3.16 3,551 39.15
SAIF-Insured Thrifts 2.19 0.02 0.05 0.00 7.53 4.74 2.79 4,232 37.09
All Public Companies 2.22 0.03 0.03 0.00 7.46 4.63 2.82 4,199 37.25
Comparable Group Average 2.20 0.02 0.12 0.00 7.43 4.64 2.79 4,436 36.66
Mid-Atlantic Companies 2.08 0.03 0.06 0.00 7.41 4.63 2.78 4,477 36.37
Mid-West Companies 2.26 0.00 0.13 0.00 7.70 4.85 2.84 3,030 37.10
New England Companies 2.65 0.02 0.42 0.00 7.46 4.29 3.16 5,922 35.32
Other Comparable Companies 2.39 0.02 0.14 0.00 7.12 4.68 2.44 4,809 39.08
Comparable Group
----------------
Florida Companies
-----------------
FFFL Fidelity Bcsh MHC of FL (47.9) 2.27 0.03 0.14 0.00 7.41 4.74 2.67 4,507 41.97
Mid-Atlantic Companies
----------------------
ALLB Alliance Bank MHC of PA (19.9) 2.38 0.00 0.00 0.00 7.49 4.34 3.15 3,637 33.40
BCSB BCSB Bankcorp MHC of MD (38.6)(3) 1.97 0.01 0.00 0.00 7.38 4.36 3.02 3,303 39.60
SKBO First Carnegie MHC of PA(45.0) 1.68 0.00 -0.17 0.00 6.98 5.05 1.93 7,796 61.56
HARS Harris Fin. MHC of PA (24.9) 1.73 0.11 0.25 0.00 7.37 5.19 2.18 4,051 37.25
LFED Leeds Fed Bksr MHC of MD (36.3 1.08 0.00 0.00 0.00 7.14 5.08 2.06 11,074 36.81
LIBB Liberty Bancorp MHC of NJ (47)(1) 1.68 0.00 0.06 0.00 7.19 4.57 2.61 4,942 36.06
NBCP Niagara Bancorp of NY MHC(45.4 2.03 0.00 0.07 0.00 7.37 4.43 2.94 3,548 35.04
NWSB Northwest Bcrp MHC of PA (30.8 2.13 0.07 0.00 0.00 7.97 4.67 3.30 2,802 36.96
PBHC Pathfinder BC MHC of NY (45.2) 2.98 0.12 0.26 0.00 7.92 4.14 3.79 2,725 30.40
PHSB Ppls Home SB, MHC of PA (45.0) 2.75 0.00 0.12 0.00 7.37 4.27 3.10 2,939 11.58
PLSK Pulaski SB, MHC of NJ (47.0) 2.03 0.00 0.00 0.00 7.30 4.79 2.52 4,059 37.98
SBFL SB Fngr Lakes MHC of NY (33.1) 2.50 0.00 0.09 0.00 7.45 4.69 2.76 2,851 39.77
Mid-West Companies
------------------
JXSB Jcksnville SB,MHC of IL (45.6) 2.89 0.00 0.31 0.00 7.98 4.93 3.05 2,020 40.22
WAYN Wayne Svgs Bks MHC of OH (48.2 2.42 0.00 0.09 0.00 7.83 4.85 2.98 2,598 34.01
WCFB Wbstr Cty FSB MHC of IA (45.6) 1.49 0.00 0.00 0.00 7.29 4.78 2.50 4,472 37.06
New England Companies
---------------------
BRKL Brookline Bncp MHC of MA(47.0) 1.22 0.00 0.01 0.00 7.80 4.79 3.01 9,182 35.07
PBCT Peoples Bank, MHC of CT (41.2) 4.08 0.04 0.83 0.00 7.12 3.80 3.32 2,663 35.57
South-East Companies
--------------------
GBNK Gaston Fed Bncp MHC of NC(47.0 2.52 0.00 0.14 0.00 6.83 4.62 2.21 5,110 36.19
</TABLE>
(1) Financial information is for the quarter ending December 31, 1997.
(3) Income and expense information has been annualized from available financial
information.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.10
Group. Non-operating items reflected income of 0.12 percent of average assets
for the Peer Group, while the Bank did not recorded any such income or expense.
The Bank's slightly stronger net interest margin resulted primarily from
maintaining a higher interest income ratio, offset by higher interest expense.
Revere Federal's higher interest income ratio was supported by maintaining a
higher level of interest-earning assets as a percent of total assets (98.0
percent versus 96.5 percent for the Peer Group), as well as a higher yield
earned on interest-earning assets (7.73 percent versus 7.43 percent for the Peer
Group). Revere Federal's higher yield earned on interest-earning assets was
supported by similar level of lending diversification into higher yielding and
higher risk types of lending, along with a substantial balance of higher
yielding fixed rate residential loans held in portfolio. The higher interest
expense ratio reported by the Bank was affected by the higher level of
interest-bearing liabilities maintained by the Bank (92.6 percent versus 84.2
percent for the Peer Group), offset by a slightly lower cost of funds (4.57
percent versus 4.64 percent for the Peer Group). Following the infusion of stock
proceeds, the Bank's comparative advantage with respect to maintaining a lower
interest expense ratio should increase due to the decline in the level of
interest-bearing liabilities being utilized to fund assets. Overall, Revere
Federal and the Peer Group reported net interest income to average assets ratios
of 3.35 percent and 3.18 percent, respectively.
In another key area of core earnings strength, the Bank maintained a higher
level of operating expenses than the Peer Group. For the period covered in Table
3.3, the Bank and the Peer Group recorded operating expense to average assets
ratios of 2.71 percent and 2.22 percent, respectively. Revere Federal's higher
operating expense ratio can in part be explained by its maintenance of a higher
number of employees for its asset size, as compared to the Peer Group companies
on average. Assets per full time equivalent employee equaled $3.6 million for
the Bank, versus a comparative measure of $4.4 million for the Peer Group.
Factors contributing to the Bank's relatively high staffing needs include
maintaining a fairly diversified operating strategy, including the recently
staffed commercial loan department. On a post-offering basis, the Bank's
operating expenses can be expected to increase with the addition of public
company reporting expenses and stock benefit plans, with such expenses already
impacting the Peer Group's operating expenses. At the same time, given the
Bank's recent history of strong growth, the additional capital realized from the
minority stock offering will support further growth and facilitate leveraging of
the Bank's existing operating expenses.
When viewed together, net interest income and operating expenses provide
considerable insight into a thrift's earnings strength, since those sources of
income and expenses are typically the most prominent components of earnings and
are generally more predictable than losses and gains realized from the sale of
assets or other non-recurring activities. In this regard, as measured by their
expense coverage ratios (net interest income divided by operating expenses), the
Bank's earnings strength was less than the Peer Group's. Expense coverage ratios
posted by Revere Federal and the Peer Group equaled 1.24x and 1.43x,
respectively. An expense coverage
<PAGE>
RP Financial, LC.
Page 3.11
ratio of greater than 1.0x indicates that an institution is able to sustain
pre-tax profitability without having to rely on non-interest sources of income.
Sources of non-interest operating income were a lower contributor to the
Bank's earnings in comparison to the Peer Group, with such income amounting to
0.17 percent and 0.39 percent of Revere Federal's and the Peer Group's average
assets, respectively. Taking non-interest operating income into account in
comparing the Bank's and the Peer Group's earnings, Revere Federal's efficiency
ratio (operating expenses, net of amortization of intangibles, as a percent of
the sum of non-interest operating income and net interest income) of 77.0
percent was less favorable than the Peer Group's efficiency ratio of 62.2
percent.
Loss provisions were a larger factor in the Bank's earnings, amounting to
0.22 percent and 0.10 percent of average assets for Revere Federal and the Peer
Group, respectively. Overall, the level of loan loss provisions established by
the Bank and the Peer Group were indicative of low credit risk operating
strategies, which, in turn, have provided generally favorable credit quality
measures for the Bank and the Peer Group.
Net gains realized from the sale of investments and loans were a larger
factor in the Peer Group's earnings, with such gains amounting to 0.12 percent
and 0.00 percent of average assets for the Peer Group and Revere Federal,
respectively. Such gains are subject to notable volatility due to fluctuations
in market and other interest rates, and, thus are not viewed as being a
recurring source of income for the Peer Group. Accordingly, the net gains
reflected in the Peer Group's earnings will be discounted in evaluating the
relative strengths and weaknesses of their respective earnings. Extraordinary
items were not a factor in either the Bank's or the Peer Group's earnings.
The Bank's and the Peer Group's pre-tax earnings were similarly impacted by
taxes, with Revere Federal and the Peer Group posting effective tax rates of
39.2 percent and 36.7 percent, respectively.
Loan Composition
Table 3.4 presents data related to the loan composition of Revere Federal
and the Peer Group. In comparison to the Bank, the Peer Group's portfolio
composition reflected a lower concentration of 1-4 family permanent mortgage
loans and mortgage-backed securities (78.7 percent versus 82.0 percent for the
Bank). The Bank's higher ratio was the result of maintaining a higher
concentration of mortgage-backed securities. While the Peer Group companies were
viewed as being primarily portfolio lenders, a couple of the Peer Group
companies maintained significant balances of loans serviced for others (Peoples
Bank of CT and Harris SB of PA). The Peer Group's average balance of loans
serviced for others equaled $220.3 million, or 20.9 percent of average assets,
which represents a recurring source of non-interest operating income similar to
the Bank's level
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.4
Loan Portfolio Composition and Related Information
Comparable Institution Analysis
As of March 31, 1998
<TABLE>
<CAPTION>
Portfolio Composition as a Percent of MBS and Loans
---------------------------------------------------------
1-4 Constr. 5+Unit Commerc. RWA/ Serviced Servicing
Institution MBS Family & Land Comm RE Business Consumer Assets For Others Assets
- ----------- ------ ------ ------ ------ ------ -------- ------ ---------- ------
(%) (%) (%) (%) (%) (%) (%) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revere Federal Savings of MA 31.60 50.39 2.22 6.07 4.07 6.47 39.87 18,417 0
SAIF-Insured Thrifts 15.10 62.60 5.61 11.08 6.16 1.63 54.20 443,816 4,411
All Public Companies 15.13 61.08 5.06 12.87 5.83 1.91 54.95 481,846 5,682
Comparable Group Average 12.71 65.94 2.54 7.82 8.73 3.00 51.95 220,348 1,514
Comparable Group
- ----------------
ALLB Alliance Bank MHC of PA (19.9) 3.71 78.68 1.70 11.00 3.69 0.00 43.60 661 0
BCSB BCSB Bankcorp MHC of MD (38.6) NA NA NA NA NA NA 60.96 6,945 0
BRKL Brookline Bncp MHC of MA(47.0) NA NA NA NA NA NA NA 1,274 0
FFFL Fidelity Bcsh MHC of FL (47.9) 17.25 66.22 8.91 5.23 4.66 2.20 56.68 64,209 394
SKBO First Carnegie MHC of PA(45.0) NA NA NA NA NA NA 32.34 48 0
GBNK Gaston Fed Bncp MHC of NC(47.0 NA NA NA NA NA NA 36.53 0 0
HARS Harris Fin. MHC of PA (24.9) 14.86 68.71 2.01 5.73 8.53 0.04 57.82 1,203,049 13,370
JXSB Jcksnville SB,MHC of IL (45.6) 10.91 57.54 0.98 9.10 16.55 4.96 69.62 100,667 498
LFED Leeds Fed Bksr MHC of MD (36.3 13.79 83.08 1.20 0.88 2.09 0.00 49.26 0 0
LIBB Liberty Bancorp MHC of NJ (47)(1) NA NA NA NA NA NA 48.67 337 0
NBCP Niagara Bancorp of NY MHC(45.4 NA NA NA NA NA NA 55.19 129,000 0
NWSB Northwest Bcrp MHC of PA (30.8 4.40 73.72 3.56 2.88 12.06 4.62 50.82 89,703 0
PBHC Pathfinder BC MHC of NY (45.2) 15.44 63.13 1.51 11.73 2.76 5.74 60.51 0 0
PBCT Peoples Bank, MHC of CT (41.2) 0.01 46.87 4.02 13.79 22.51 12.16 81.15 2,541,696 14,500
PHSB Ppls Home SB, MHC of PA (45.0) NA NA NA NA NA NA 43.76 0 0
PLSK Pulaski SB, MHC of NJ (47.0) NA NA NA NA NA NA 43.17 0 0
SBFL SB Fngr Lakes MHC of NY (33.1) 32.74 43.28 0.89 8.61 12.10 2.70 43.37 11,267 0
WAYN Wayne Svgs Bks MHC of OH (48.2 0.19 86.35 3.11 6.60 5.46 0.59 54.78 37,765 0
WCFB Wbstr Cty FSB MHC of IA (45.6) 26.50 57.70 0.07 10.43 5.61 0.00 46.88 0 0
</TABLE>
(1) Financial information is for the quarter ending December 31, 1997.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.13
of 20.7 percent of assets. Revere Federal's loans serviced for others totaled
$18.4 million. With the exception of Peoples Bank and Harris SB, loan servicing
intangibles were not a significant balance sheet item for the Peer Group
companies.
As indicated by the higher percentages of 1-4 family loans and
mortgage-backed securities maintained by Revere Federal, the Bank exhibited a
slightly lower degree of lending diversification into higher risk types of
loans. Revere Federal's lending diversification has consisted primarily of
commercial real estate and commercial business loans (10.1 percent of loans and
MBS), followed by consumer loans (6.5 percent of loans and MBS). Commercial
business and commercial real estate/multi-family loans also represented the
primary areas of lending diversification for the Peer Group, totaling 16.6
percent of the Peer Group's loan and MBS portfolio, respectively. Construction
and land loans were a similar, and more minor area of lending diversification
for the Bank and Peer Group, with such loans equaling 2.2 percent and 2.5
percent of Revere Federal's and the Peer Group's loan and MBS portfolios,
respectively. Revere Federal's risk weighted assets-to-assets ratio of 39.87
percent was lower than the Peer Group's ratio of 51.95 percent, as the
comparability of the Bank's and the Peer Group's risk weighted assets-to-assets
ratios indicates that the Revere Federal's higher proportion of MBS reduced the
risk-weighted assets ratio. Overall, the Bank's and the Peer Group's risk
weighted assets-to-assets ratios were both lower than the comparative ratio of
55.5 percent for all publicly-traded thrifts.
Credit Risk
Overall, the Peer Group's credit risk exposure appeared to be somewhat
higher than the Bank's, although with both the Bank's and the Peer Group's
credit quality measures being representative of fairly limited credit risk
exposure. As shown in Table 3.5, the Peer Group's ratio of non-performing
assets-to-assets (REO, non-accruing loans and accruing loans more than 90 days
past due) was higher than the Bank's ratio (0.52 percent versus 0.30 percent for
the Bank). In addition, the Peer Group's non-performing loans-to-loans ratio was
higher than the Bank's ratio (0.58 percent versus 0.31 percent for the Bank),
since that measure does not include accruing loans that are more than 90 days
past due. Accruing loans that are more than 90 days past due accounted for 46.1
percent of the Bank's non-accruing loans and accruing loans that are more than
90 days past due, as of June 30, 1998. Loss reserve ratios were generally
stronger for the Bank, as Revere Federal maintained a higher level of loss
reserves as a percent of non-performing assets (188.1 percent versus 157.33
percent for the Peer Group) and as percent of loans (1.08 percent versus 0.88
percent for the Peer Group). Net loan charge-offs were a comparable factor in
the Bank's and the Peer Group's earnings, equaling 0.10 percent of loans
receivable for both.
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.5
Credit Risk Measures and Related Information
Comparable Institution Analysis
As of March 31, 1998 or Most Recent Date Available
<TABLE>
<CAPTION>
NPAs & Rsrves/
REO/ 90+Del/ NPLs/ Rsrves/ Rsrves/ NPAs & Net Loan NLCs/
Institution Assets Assets Loans Loans NPLs 90+Del Chargoffs Loans
- ----------- ------ ------ ------ ------ ------ -------- --------- ----------
(%) (%) (%) (%) (%) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revere Federal Savings of MA 0.00 0.30 0.31 1.08 348.97 188.10 46 0.10
SAIF-Insured Thrifts 0.25 0.59 0.64 0.80 202.56 149.32 267 0.09
All Public Companies 0.23 0.60 0.67 0.87 206.31 159.02 297 0.09
Comparable Group Average 0.17 0.52 0.58 0.88 190.77 157.33 494 0.10
Comparable Group
- ----------------
ALLB Alliance Bank MHC of PA (19.9) 0.82 1.06 0.31 0.88 278.91 45.21 300 0.78
BCSB BCSB Bankcorp MHC of MD (38.6) 0.06 NA 0.53 0.56 106.92 NA 2 0.00
BRKL Brookline Bncp MHC of MA(47.0) 0.28 0.60 0.51 2.37 465.41 251.07 0 0.00
FFFL Fidelity Bcsh MHC of FL (47.9) 0.06 0.27 0.34 0.34 99.40 78.51 103 0.05
SKBO First Carnegie MHC of PA(45.0) 0.00 0.59 NA 0.80 NA 64.19 0 0.00
GBNK Gaston Fed Bncp MHC of NC(47.0 0.12 0.50 0.55 0.96 174.10 132.06 0 0.00
HARS Harris Fin. MHC of PA (24.9) 0.33 0.66 0.83 0.97 117.59 60.54 354 0.15
JXSB Jcksnville SB,MHC of IL (45.6) 0.17 0.68 0.68 0.59 87.67 65.11 93 0.29
LFED Leeds Fed Bksr MHC of MD (36.3 0.00 0.03 0.05 0.29 560.82 560.82 0 0.00
LIBB Liberty Bancorp MHC of NJ (47)(1) 0.05 0.35 0.47 0.45 95.89 82.98 0 0.00
NBCP Niagara Bancorp of NY MHC(45.4 0.00 0.29 0.57 1.07 189.19 188.17 84 0.05
NWSB Northwest Bcrp MHC of PA (30.8 0.14 0.50 0.48 0.82 169.80 123.26 462 0.00
PBHC Pathfinder BC MHC of NY (45.2) 0.58 1.30 1.09 0.63 57.58 32.06 15 0.00
PBCT Peoples Bank, MHC of CT (41.2) 0.15 0.70 1.00 1.72 172.09 156.79 7,800 0.55
PHSB Ppls Home SB, MHC of PA (45.0) 0.00 0.32 0.66 1.31 199.84 173.78 162 0.00
PLSK Pulaski SB, MHC of NJ (47.0) 0.04 0.63 1.11 0.97 87.69 82.57 0 0.00
SBFL SB Fngr Lakes MHC of NY (33.1) 0.06 0.32 0.52 0.89 171.61 141.95 13 0.04
WAYN Wayne Svgs Bks MHC of OH (48.2 0.34 0.49 0.17 0.36 208.50 58.18 0 0.00
WCFB Wbstr Cty FSB MHC of IA (45.6) 0.05 0.07 NA 0.69 NA 534.72 0 0.00
</TABLE>
(1) Financial information is for the quarter ending December 31, 1997.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.15
Interest Rate Risk
Table 3.6 reflects various key ratios highlighting the relative interest
rate risk exposure of the Bank versus the Peer Group companies. In terms of
balance sheet composition, Revere Federal's interest rate risk characteristics
were considered to be slightly less favorable than the Peer Group's. In
particular, Revere Federal's lower capital position and lower IEA/IBL ratio
indicate a greater dependence on the yield-cost spread to sustain the net
interest margin. However, Revere Federal's lower level of non-interest earning
assets was a positive consideration in terms of capacity to generate interest
income. On a pro forma basis, the infusion of stock proceeds should serve to
increase the Bank's equity-to-assets ratio and IEA/IBL ratio to levels that are
comparable to the comparative Peer Group ratios.
To analyze interest rate risk associated with the net interest margin, we
reviewed quarterly changes in net interest income as a percent of average assets
for Revere Federal and the Peer Group. In general, the relative fluctuations in
both the Bank's and the Peer Group's net interest income to average assets
ratios were considered to be fairly limited and, thus, based on the interest
rate environment that prevailed during the period covered in Table 3.6, neither
Revere Federal or the Peer Group were viewed as having significant interest rate
risk exposure in their respective net interest margins. Revere Federal reported
generally positive trends in the net interest margin in recent periods, as
interest income increased due to higher loan yields. The stability of the Bank's
net interest margin should be enhanced by the infusion of stock proceeds, as
interest rate sensitive liabilities will be funding a lower portion of Revere
Federal's assets.
Summary
Based on the above analysis, RP Financial concluded that the Peer Group
forms a reasonable basis for determining the pro forma market value of Revere
Federal. Due to the limited number of publicly-traded MHCs in today's market,
there are some significant differences between the Bank and certain Peer Group
members. Those areas where substantial differences exist, such as disparate
asset sizes, different market areas, market capitalization and other variations
will be addressed in the form of valuation adjustments to the extent necessary.
For these reasons, and because the Peer Group members all share the unique
characteristics of mutual holding company ownership, RP Financial concluded that
the Peer Group pricing (full conversion basis) will serve as a sound basis in
deriving a pro forma market value for Revere Federal.
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.6
Interest Rate Risk Measures and Net Interest Income Volatility
Comparable Institution Analysis
As of March 31, 1998 or Most Recent Date Available
<TABLE>
<CAPTION>
Balance Sheet Measures
--------------------------
Non-Earn. Quarterly Change in Net Interest Income
----------------------------------------------------------
Equity/ IEA/ Assets/
Institution Assets IBL Assets 03/31/98 12/31/97 09/30/97 06/30/97 03/31/97 12/31/96
- ----------- ------ ------ ------ -------- -------- -------- -------- -------- --------
(%) (%) (%) (change in net interest income is annualized in basis points)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revere Federal Savings of MA 7.2 105.8 2.0 19 12 -6 N/A N/A N/A
SAIF-Insured Thrifts 13.1 115.1 3.2 -0 -3 -4 2 0 5
All Public Companies 12.8 114.7 3.3 -1 -3 -4 1 0 5
Comparable Group Average 12.0 116.8 3.4 -5 -9 1 -3 7 4
Comparable Group
- ----------------
ALLB Alliance Bank MHC of PA (19.9) 10.7 109.6 2.9 -24 11 -2 11 11 4
BCSB BCSB Bankcorp MHC of MD (38.6) 9.9 110.9 1.9 -12 NA NA NA NA NA
BRKL Brookline Bncp MHC of MA(47.0) 33.2 151.7 1.3 -4 -1 4 -41 NA NA
FFFL Fidelity Bcsh MHC of FL (47.9) 6.5 107.8 3.8 -13 -25 -6 -13 -3 -5
SKBO First Carnegie MHC of PA(45.0) 16.9 118.8 3.1 1 2 -4 14 30 NA
GBNK Gaston Fed Bncp MHC of NC(47.0 7.5 185.5 1.5 -72 -8 6 12 NA NA
HARS Harris Fin. MHC of PA (24.9) 7.3 106.5 3.8 40 -28 -8 1 -12 28
JXSB Jcksnville SB,MHC of IL (45.6) 10.4 109.1 4.1 17 -22 11 -30 7 4
LFED Leeds Fed Bksr MHC of MD (36.3 16.5 119.9 2.4 -5 -1 -11 4 11 6
LIBB Liberty Bancorp MHC of NJ (47)(1) 7.6 106.9 1.6 NA -32 6 -2 NA NA
NBCP Niagara Bancorp of NY MHC(45.4 10.1 110.6 2.7 -12 -2 -8 -3 8 NA
NWSB Northwest Bcrp MHC of PA (30.8 7.9 107.9 2.9 8 -13 -19 7 7 -3
PBHC Pathfinder BC MHC of NY (45.2) 10.0 106.1 7.3 -14 -12 5 4 20 NA
PBCT Peoples Bank, MHC of CT (41.2) 7.9 99.3 11.1 18 -34 23 -30 11 31
PHSB Ppls Home SB, MHC of PA (45.0) 12.8 112.1 3.1 -17 4 28 0 NA NA
PLSK Pulaski SB, MHC of NJ (47.0) 11.5 110.6 2.9 -1 -2 9 19 -12 -6
SBFL SB Fngr Lakes MHC of NY (33.1) 8.7 106.8 3.5 -7 2 -5 -3 -13 5
WAYN Wayne Svgs Bks MHC of OH (48.2 9.4 107.0 3.8 -4 -5 4 6 -5 -4
WCFB Wbstr Cty FSB MHC of IA (45.6) 24.0 132.0 1.6 7 4 -9 -9 31 -14
</TABLE>
(1) Financial information is for the quarter ending December 31, 1997.
NA=Change is greater than 100 basis points during the quarter.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 4.1
IV. VALUATION ANALYSIS
Introduction
This chapter presents the valuation analysis and methodology used to
determine Revere Federal's estimated pro forma market value for purposes of
pricing the minority stock. The valuation incorporates the appraisal methodology
promulgated by the OTS for standard conversions and mutual holding company
offerings, particularly regarding selection of the Peer Group, fundamental
analysis on both the Bank and the Peer Group, and determination of the Bank's
pro forma market value utilizing the market value approach.
Appraisal Guidelines
The OTS written appraisal guidelines, originally released in October 1983
and updated in late-1994, specify the market value methodology for estimating
the pro forma market value of an institution. As previously noted, the appraisal
guidelines for MHC offerings is somewhat different, particularly in the Peer
Group selection process. Specifically, the regulatory agencies have indicated
that the Peer Group should be based on the pro forma fully-converted pricing
characteristics of publicly-traded MHCs, rather than on already fully-converted
publicly-traded stock thrifts, given the unique differences in stock pricing of
MHCs and fully-converted stock thrifts. Pursuant to this methodology: (1)ya peer
group of comparable publicly-traded institutions is selected; (2)ya financial
and operational comparison of the subject company to the peer group is conducted
to discern key differences; and (3)ythe pro forma market value of the subject
company is determined based on the market pricing of the peer group, subject to
certain valuation adjustments based on key differences.
RP Financial Approach to the Valuation
The valuation analysis herein complies with such regulatory approval
guidelines. Accordingly, the valuation incorporates a detailed analysis based on
the Peer Group, discussed in Chapter III, which constitutes "fundamental
analysis" techniques. The valuation incorporates a "technical analysis" of
recently completed stock offerings of comparable MHCs, including the aftermarket
trading of such offerings. In this regard, there has been limited new MHC
activity, so this analysis is rather limited. It should be noted that these
valuation analyses, based on either the Peer Group or the recent MHC
transactions, cannot possibly fully account for all the market forces which
impact trading activity and pricing characteristics of a stock on a given day.
The pro forma market value determined herein is a preliminary value for the
Bank's to-be-issued stock. Throughout the MHC process, RP Financial will: (1)
review changes in the Bank's operations and financial condition; (2) monitor the
Bank's operations and financial condition relative to the Peer Group to identify
any
<PAGE>
RP Financial, LC.
Page 4.2
fundamental changes; (3) monitor the external factors affecting value including,
but not limited to, local and national economic conditions, interest rates, and
the stock market environment, including the market for thrift stocks; and
(4) monitor pending MHC offerings, and to a lesser extent, conversion offerings,
both regionally and nationally. If material changes should occur prior to
closing the offering, RP Financial will evaluate, in conjunction with the Bank,
if updated valuation reports should be prepared reflecting such changes and
their related impact on value, if any. RP Financial will also prepare a final
valuation update at the closing of the offering to determine if the prepared
valuation analysis and resulting range of value continues to be appropriate.
The appraised value determined herein is based on the current market and
operating environment for the Bank and for all thrifts. Subsequent changes in
the local and national economy, the legislative and regulatory environment, the
stock market, interest rates, and other external forces (such as natural
disasters or major world events), which may occur from time to time (often with
great unpredictability) may materially impact the market value of all thrift
stocks, including Revere Federal, the market value of the stocks of public MHC
institutions, or Revere Federal's value alone. To the extent a change in factors
impacting the Bank's value can be reasonably anticipated and/or quantified, RP
Financial has incorporated the estimated impact into its analysis.
Valuation Analysis
A fundamental analysis discussing similarities and differences relative to
the Peer Group was presented in Chapter III. The following sections summarize
the key differences between the Bank and the Peer Group and how those
differences affect the pro forma valuation. Emphasis is placed on the specific
strengths and weaknesses of the Bank relative to the Peer Group in such key
areas as financial condition, profitability, growth and viability of earnings,
asset growth, primary market area, dividends, liquidity of the shares, marketing
of the issue, management, and the effect of government regulations and/or
regulatory reform. We have also considered the market for thrift stocks, in
particular new issues, to assess the impact on value of Revere Federal coming to
market at this time.
1. Financial Condition
The financial condition of an institution is an important determinant in pro
forma market value, because investors typically look to such factors as
liquidity, capital, asset composition and quality, and funding sources in
assessing investment attractiveness. The similarities and differences in the
Bank's and the Peer Group's financial strength are noted as follows:
o Overall A/L Composition. Loans funded by retail deposits were the
primary components of both Revere Federal's and the Peer Group's
balance sheets. The Peer Group's interest-earning asset composition
exhibited a higher concentration of loans, while the Bank reported a
higher
<PAGE>
RP Financial, LC.
Page 4.3
proportion of investment in MBS. The Peer Group reported greater loan
portfolio diversification into higher risk types of loans. Overall,
these characteristics translated into a higher risk weighted
assets-to-asset ratio for the Peer Group. Revere Federal's funding
composition reflected a lower concentration of deposits and a higher
concentration of borrowings relative to the comparative Peer Group
ratios. Overall, as a percent of assets, the Bank maintained a higher
level of interest-earning assets but a much higher level of
interest-bearing liabilities, which resulted in a more favorable
IEA/IBL ratio for the Peer Group. However the infusion of stock
proceeds will serve to address the Bank's lower IEA/IBL ratio. For
valuation purposes, RP Financial concluded no adjustment was warranted
for the Bank's overall asset/liability composition.
o Credit Quality. Both the Bank's and the Peer Group's credit quality
measures were indicative of fairly limited credit risk exposure. The
Bank maintained lower levels of non-performing assets as a percent of
total assets, along with a higher level of loss reserves as percent of
non-performing assets and as a percent of loans. The Peer Group's
greater diversification into higher risk types of lending was offset
by the relativley unseasoned nature of Revere Federal's commercial
real estate and commercial business loan portfolios. Overall, in light
of the Bank's generally higher reserve levels and a lower
risk-weighted assets-assets ratios, the credit risk exposure
associated with Revere Federal's balance sheet was viewed as being
slightly less than the Peer Group's and, thus, RP Financial concluded
that a slight upward adjustment was warranted for the Bank's credit
quality.
o Balance Sheet Liquidity. The Bank operated with a higher level of cash
and investment securities relative to the Peer Group (20.9 percent of
assets versus 24.5 percent for the Peer Group), although a substantial
majority of Revere Federal's investment portfolio is classified as
HTM. In addition, Revere Federal's MBS portfolio is also classified as
HTM. The Bank's future borrowing capacity was considered to be less
than the Peer Group's, in light of the higher level of borrowings
currently maintained by the Bank. Overall, balance sheet liquidity for
the Bank was considered to be slightly less favorable for the Bank
and, thus, RP Financial concluded that a slight downward adjustment
was warranted for the Bank's balance sheet liquidity.
o Funding Liabilities. Retail deposits served as the primary
interest-bearing source of funds for the Bank and the Peer Group, with
borrowings being utilized to a higher degree by the Bank than the Peer
Group. Overall, the Bank currently maintains a higher level of
interest-bearing liabilities than the Peer Group (92.6 percent of
assets versus 84.2 percent for the Peer Group), which was attributable
to Revere Federal's lower capital position. Following the stock
offering, the increase in Revere Federal's capital position will
address the lower level of interest-bearing liabilities currently
maintained by the Peer Group. Accordingly, RP Financial concluded that
no adjustment was warranted for Revere Federal's funding composition.
<PAGE>
RP Financial, LC.
Page 4.4
o Capital. The Bank operates with a lower pre-conversion capital ratio
than the Peer Group, 7.2 percent and 12.0 percent of assets,
respectively. This disadvantage will be addressed by the stock
offering, which will provide Revere Federal with a pro forma capital
position that can be expected to be comparable to the Peer Group's
equity-to-assets ratio. Accordingly, RP Financial concluded that no
adjustment was warranted for the Bank's capital position.
On balance, the characteristics of the Bank's and the Peer Group's financial
conditions were not materially different in most respects for valuation
purposes. Accordingly, we concluded that no valuation adjustment was warranted
for the Bank's financial strength.
2. Profitability, Growth and Viability of Earnings
Earnings are a key factor in determining pro forma market value, as the
level and risk characteristics of an institution's earnings stream and the
prospects and ability to generate future earnings heavily influence the multiple
the investment community will pay for earnings. The major factors considered in
the valuation are described below.
o Reported Earnings. The Bank recorded lower earnings on a ROAA basis
(0.36 percent of average assets versus 0.89 percent for the Peer
Group). The Bank reported no non-operating income or expense items,
while the Peer Group reported a minor level of non-operating income.
Exclusive of the gains, the Peer Group's earnings remained stronger
than the Bank's. The Peer Group's stronger earnings resulted from
maintenance of a lower level of operating expenses and a higher level
of non-interest income, which was partially offset by the Bank's
higher net interest margin. Revere Federal also recorded higher loan
loss provisions over the most recent 12 month period. Reinvestment of
stock proceeds into interest-earning assets will serve to increase the
Bank's earnings, with the benefit of reinvesting proceeds expected to
be somewhat offset by higher operating expenses associated with
operating as a stock institution and the implementation of the stock
benefit plans. Overall, a moderate downward adjustment to the Bank's
valuation was warranted for this factor, as Revere Federal's lower
reported earnings were substantially below the Peer Group levels.
o Core Earnings. Both the Bank's and the Peer Group's earnings were
derived largely from recurring sources, including net interest income,
operating expenses, and non-interest operating income. In these
measures, the Bank operated with a slighlty higher net interest
margin, a higher operating expense ratio and a lower level of
non-interest operating income. These items translated into a lower
expense coverage ratio (1.24x versus 1.43x for the Peer Group).
Likewise, due to the Bank's higher level of operating expenses, the
Peer Group's efficiency ratio was more favorable than the Bank's (62.2
percent versus 77.0 percent for the Bank). Loss provisions had a
greater impact on the Bank's earnings, even though the Peer Group
exhibited comparatively lower reserve coverage ratios than the Bank's
measures. Overall, these measures, notwithstanding the expected
earnings benefits the Bank should realized from the redeployment of
stock proceeds into interest-earning assets, which will somewhat be
negated by expenses associated with the stock benefit plans and
operating as a stock institution, indicate that Revere Federal's core
earnings were not as strong as Peer Group's and a moderate downward
adjustment was warranted for the Bank's core earnings.
o Interest Rate Risk. Quarterly changes in the Bank's and the Peer
Group's net interest income to average assets ratios indicated a
similar degree of interest rate risk exposure in their respective
<PAGE>
RP Financial, LC.
Page 4.5
net interest margins, with both the Bank's and the Peer Group's net
interest margins exhibiting fairly limited quarterly fluctuations
during the most recent twelve month period. Other measures of interest
rate risk, such as capital ratios, IEA/IBL ratios, and the level of
non-interest earning assets-to-total assets were generally more
favorable for the Peer Group, although the Bank maintained a lower
level of non-interest earning assets as compared to the Peer Group's
ratio. On a pro forma basis, the infusion of stock proceeds can be
expected to address the Bank's lower capital position and lower
IEA/IBL ratio, as well as enhance the stability of the Bank's net
interest margin through the reinvestment of stock proceeds into
interest-earning assets. Accordingly, RP Financial concluded that the
interest rate risk associated with the Bank's earnings was comparable
to the Peer Group's, and no adjustment was warranted for valuation
purposes.
o Credit Risk. Over the most recent twelve month period, loan loss
provisions were a higher factor in Revere Federal's earnings in
comparison to the Peer Group. Lending diversification into higher risk
types of loans was more notable for the Peer Group, although the
Bank's portfolio of higher risk loans was relatively unseasoned,
indicating higher future potential risk. The Peer Group's
interest-earning asset composition reflected a higher concentration of
loans and cash and investments, offset by a lower level of MBS. The
Peer Group's credit quality measures were considered to be less
favorable than Revere Federal's, based on the Peer Group's lower level
of loss reserves as a percent of problem assets and total loans.
Overall, RP Financial concluded that the credit risk exposure
associated with the Bank's earnings was similar to the Peer Group's,
and no adjustment was warranted for valuation purposes.
o Earnings Growth Potential. Several factors were considered in
assessing earnings growth potential. The higher expected pro forma
capital position is expected to enable the Bank to continue expansion
in the asset base. The expected continued emphasis on higher risk
lending such as commercial real estate and commercial business lending
should provide additional earnings growth. However, expectations of
continued growth in operating expenses and the relatively uncertain
cost of acquiring new deposit funds for lending result in the Bank's
earnings appearing to have less upside potential than the Peer Group.
o Return on Equity. Following the infusion of stock proceeds, the Bank's
pro forma capital position will be comparable to or higher than the
Peer Group's equity-to-assets ratio. Likewise, as the result of the
increase in the Bank's capital position, Revere Federal's pro forma
ROE is expected to be lower than the Peer Group's ROE. Therefore, RP
Financial concluded that a slight down adjustment was warranted for
the Bank's ROE.
Overall, Revere Federal's earnings characteristics were considered to be
less favorable than the Peer Group's. Accordingly, RP Financial concluded that a
moderate downward valuation adjustment was warranted for profitability, growth
and viability of the Bank's earnings.
3. Asset Growth
Revere Federal exhibited a lower asset growth rate than the Peer Group
during the period covered in our comparative analysis (positive 2.9 percent
versus positive 14.2 percent for the Peer Group). While the Bank's current
capacity to sustain a higher growth rate than the Peer Group is somewhat limited
by its lower capital
<PAGE>
RP Financial, LC.
Page 4.6
position, Revere Federal's pro forma capital position will provide the Bank with
comparable leverage capacity as maintained by the Peer Group. On balance, we
believe no adjustment was warranted for this factor.
4. Primary Market Area
The general condition of a financial institution's market area has an
impact on value, as future success is in part dependent upon opportunities for
profitable activities in the local market area. Operating in the northern Boston
metropolitan area, the Bank faces significant competition for loans and deposits
from larger financial institutions, who provide a broader array of services and
have significantly larger branch networks than maintained by the Bank. Revere
Federal's primary market area for deposits and loans is considered to be the
city of Revere and contiguous areas. Demographic trends in the local market area
indicate a relatively stable environment for the Bank's primary market area, as
measured by slight population and household declines during the 1990s. Per
capita and household income measures indicate that the Bank operates in a
relatively moderate income market area in comparison to statewide averages,
which is viewed as a limiting factor in terms of supporting growth
opportunities.
In general, the Peer Group companies operate in less populous markets than
served by the Bank. Population growth rates in the markets served by the Peer
Group companies were on average more favorable than the primary market area
served by the Bank. On average, the Peer Group companies maintained a larger
deposit market share than the Bank, indicating a competitive advantage for the
Peer Group companies in terms of the degree of competition faced for deposits.
Summary demographic and deposit market share data for the Bank and the Peer
Group companies is provided in Table 4.1. Overall, the faster growing market
area and competitive advantage maintained by the Peer Group companies in terms
of deposit market share served by the Peer Group resulted in a comparable
advantage for the Peer Group. However, the larger population base available to
the Bank in the local market area offsets these other factors. Therefore, we
concluded that no adjustment was warranted for the Bank's primary market area.
5. Dividends
While the Board has not indicated its intention to commence payment of a
cash dividend following the stock offering, Revere Federal's pro forma
capitalization and profitability would position the Bank to have the capacity to
pay cash dividends. Future declarations of dividends by the Board of Directors
will depend upon a number of factors, including investment opportunities, growth
objectives, financial condition, profitability, tax considerations, minimum
capital requirements, regulatory limitations, stock market characteristics and
general economic conditions. As publicly-traded thrifts' capital levels and
profitability have improved and as weak institutions have been resolved, the
proportion of institutions with cash dividend policies has increased. Fifteen
<PAGE>
RP Financial, LC.
Table 4.1
Peer Group Market Area Comparative Analysis
<TABLE>
<CAPTION>
Per Capita Income
Population Proj. ----------------- Deposit
----------------- Pop. 1990-97 1997-2002 % State Market
Institution County 1990 1997 2002 % Change % Change Median Age Amount Average Share(1)
- ----------- ------ ---- ---- ---- -------- -------- ---------- ------ ------- --------
(000) (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Bank MHC of PA Delaware 548 547 547 -0.1% -0.1% 36.6 22,326 123.9% 2.7%
BCSB Bankcorp MHC of MD Baltimore 692 724 743 4.7% 2.6% 37.4 21,564 100.1% 2.0%
Brookline Bncrp MHC of MA Norfolk 616 641 658 4.0% 2.7% 36.8 24,273 119.5% 5.2%
Fidelity FSB, MHC of FL Palm Beach 864 1,012 1,115 17.2% 10.1% 40.9 21,754 126.2% 3.8%
First Carnegie MHC of PA Allegheny 1,336 1,286 1,252 -3.8% -2.6% 38.8 18,708 103.9% 0.2%
Gaston Bancorp MHC of NC Gaston 175 184 190 5.0% 3.3% 35.0 17,027 97.2% 9.6%
Harris SB MHC of PA Dauphin 238 248 255 4.2% 2.8% 37.4 18,993 105.4% 6.6%
Jacksonville SB MHC of IL Morgan 36 36 36 -0.4% -0.3% 36.1 16,672 84.5% 19.7%
Leeds FSB MHC of MD Baltimore 692 721 741 4.2% 2.8% 37 21,680 102.1% 2.0%
Liberty Bancorp MHC of NJ MIddlesex 672 714 740 6.3% 3.7% 35.3 24,920 102.2% 1.0%
Niagara Bancorp MHC of NY Niagara 221 221 221 0.1% 0.1% 36.2 13,239 71.5% 13.9%
Northwest Bancorp MHC of PA Warren 45 44 44 -1.2% -0.9% 38.3 15,543 86.3% 26.6%
Pathfinder BC MHC of NY Oswego 122 126 128 3.1% 2.1% 32.1 12,294 66.4% 18.2%
People Home SB MHC of PA Beaver 186 187 187 0.3% 0.2% 39.2 13,741 76.3% 7.9%
Peoples Bank MHC of CT Fairfield 828 836 842 1.1% 0.7% 37.4 27,087 129.1% 24.5%
Pulaski SB MHC of NJ Union 494 498 501 0.9% 0.6% 37.2 24,441 101.0% 0.5%
SB of Finger Lakes MHC of NY Ontario 95 100 104 5.3% 3.5% 35.7 15,101 81.6% 13.1%
Wayne S&L Co MHC of OH Wayne 101 110 115 8.2% 5.2% 34.1 16,017 92.9% 10.8%
Webster City FSB MHC of IA Hamilton 16 16 16 0.4% 0.0% 39.1 16,204 98.7% 24.1%
-- -- -- ---- ---- ---- ------ ----- -----
AVERAGES: 420 434 444 3.1% 1.9% 36.9 19,031 98.4% 10.1%
MEDIANS: 238 248 255 3.1% 2.1% 37.0 18,708 100.1% 7.9%
REVERE FEDERAL SAVINGS OF MA SUFFOLK 664 643 637 -3.2% -0.9% 32.8 18,345 91.8% 0.1%
</TABLE>
(1) Total institution deposits in headquarters county as percent of total county
deposits.
Sources: CACI, SNL Securities
<PAGE>
RP Financial, LC.
Page 4.8
out of the 19 institutions in the Peer Group pay regular cash dividends, with
implied dividend yields ranging from 1.24 percent to 3.77 percent. Peer Group
companies which completed stock offerings during 1998 accounted for three out of
the four companies that did not reflect payment of a cash dividend. The average
dividend yield on the stocks of the Peer Group institutions was 1.62 percent as
of August 21, 1998, representing an average earnings payout ratio of 13.07
percent (see Table 4.6). As of August 21, 1998, approximately 80 percent of all
publicly-traded thrifts (non-MHC institutions) have adopted cash dividend
policies (see Exhibit IV-1) exhibiting an average yield of 2.14 percent and an
average payout ratio of 37.33 percent. The dividend paying thrifts generally
maintain higher than average profitability ratios, facilitating their ability to
pay cash dividends.
Our valuation adjustment for dividends for Revere Federal as an MHC also
considered the regulatory policy with regard to waiver of dividends by the MHC.
Under current policy, any waiver of dividends by the MHC may require the
minority stockholders' ownership interest to be reduced in a "second step"
conversion to reflect the cumulative waived dividend account. Currently, those
institutions in the Peer Group who are subject to OTS oversight and formed their
MHCs prior to the current dividend waiver policy that became effective February
1, 1995 are not subject to the dividend waiver issue in a second step conversion
(i.e. they are "grandfathered"), except in the case of special dividends or
regular dividends that are deemed "excessive" and were waived by the MHC. The
practice of the majority of public MHC institutions in the Peer Group has been
for the MHC to waive its right to the dividend. Revere Federal has indicated
that, in the case of Revere, MHC, the MHC also intends to waive its right to the
dividend. Revere Federal will be subject to the current policy with regard to
dividend waivers, while seven of the Peer Group members are not currently
subject to such a policy (due to "grandfathering").
The Holding Company has the capacity to pay a dividend comparable to the
Peer Group based on pro forma capitalization and profitability. Accordingly, we
concluded that a slight downward adjustment was warranted for purposes of
dividends relative to the Peer Group, based on the comparative advantage
maintained by some of the Peer Group companies with respect to the dividend
waiver issue.
6. Liquidity of the Shares
The Peer Group is by definition composed of companies that are traded in
the public markets, and all of the Peer Group members trade on the NASDAQ
system. Typically, the number of shares outstanding and market capitalization
provides an indication of how much liquidity there will be in a particular
stock. The market capitalization of the Peer Group companies, based on the
shares issued and outstanding to public shareholders (i.e., excluding the
majority ownership interest owned by the respective MHCs) ranged from $13.7
million to $746.1 million as of August 21, 1998, with average and median market
values of $92.5 million and $26.4 million, respectively. The public shares
issued and outstanding to the public shareholders of the Peer Group
<PAGE>
RP Financial, LC.
Page 4.9
members ranged from approximately 650,000 to 27.6 million, with average and
median shares outstanding of approximately 5.2 million and 1.9 million,
respectively. The Bank's minority stock offering is expected to result in shares
outstanding that will be lower than the Peer Group median, while Revere
Federal's market capitalization will be less than comparative Peer Group median.
Accordingly, we anticipate that the liquidity in the Bank's stock will be less
compared to most of the Peer Group companies' stocks. However, it is anticipated
that the Holding Company's stock will be listed on NASDAQ, which will provide
for a certain degree of liquidity in the stock. Overall, we concluded a slight
downward adjustment was warranted for this factor.
7. Marketing of the Issue
Three separate markets exist for thrift stocks: (1) the after-market for
public companies, both fully-converted stock companies and MHCs, in which
trading activity is regular and investment decisions are made based upon
financial condition, earnings, capital, ROE, dividends and future prospects;
(2) the new issue market in which converting thrifts are evaluated on the basis
of the same factors but on a pro forma basis without the benefit of prior
operations as a publicly-held company and stock trading history; and (3) the
thrift acquisition market. All three of these markets were considered in the
valuation of the Bank's to-be-issued stock.
A. The Public Market
The value of publicly-traded thrift stocks is easily measurable, and
is tracked by most investment houses and related organizations. Exhibit IV-1
provides pricing and financial data on all publicly-traded thrifts. In general,
thrift stock values react to market stimuli such as interest rates, inflation,
perceived industry health, projected rates of economic growth, regulatory issues
and stock market conditions in general. Exhibit IV-2 displays historical stock
market trends for various indices and includes historical stock price index
values for thrifts and commercial banks. Exhibit IV-3 displays historical stock
price indices for thrifts only.
In terms of assessing general stock market conditions, the stock
market has generally trended higher over the past year. A decline in the July
1997 unemployment rate reversed the positive bond and stock market trends in
early-August, as inflation concerns became more prominent. A declining dollar
against the yen and mark sharpened the decline in bond prices, with the 30-year
U.S. Treasury bond yield increasing from 6.32 percent at the end of July to 6.66
percent as of August 8, 1997. The sell-off in bonds pulled stock prices lower as
well. While bond prices firmed in mid-August, notable volatility was evident in
the stock market. The Dow Jones Industrial Average ("DJIA") moved at least 100
points for five consecutive days from August 18, 1997 through August 21, 1997,
which set a record for volatility. Profit worries among some of the large blue
chip companies and mixed inflation readings were factors contributing to the
roller-coaster performance of the stock market. Despite strengthening bond
prices, stocks traded lower through the end of August. Bond prices moved
<PAGE>
RP Financial, LC.
Page 4.10
higher on inflation data which showed that prices stayed low during the second
quarter, even though second quarter GDP growth was revised upward to an annual
rate of 3.6 percent compared to an original estimate of 2.2 percent.
Volatility returned to the stock market in early-September, with the
DJIA posting a record breaking point increase of 257.36 on September 2, 1997.
The rally was sparked by economic data that indicated manufacturing growth
slowed in August, thereby easing investors' inflation worries. However, the
rally was not sustained, as the DJIA pulled back following the one day rally.
The pull back was largely attributed to profit worries, which more than offset
favorable inflation news indicated by a slight increase in the national
unemployment rate for August (4.9 percent in August versus 4.8 percent in July).
Stocks fluctuated in a narrow trading range in mid-September, in anticipation of
third quarter earnings and August economic data. The low inflation reading
indicated by the August consumer price index sent stock and bond prices sharply
higher on September 16, 1997, with the DJIA posting a 175 point increase and the
yield on the 30-year U.S. Treasury bond posting its second largest decline in
the 1990s. Uncertainty over third quarter earnings provided for a mixed stock
market performance towards the end of September, while generally favorable
inflation readings pushed interest rates to their lowest level in two years. The
release of September employment data on October 3, 1997 caused bond and stock
prices to soar in early trading activity, as the September unemployment rate was
unchanged at 4.9 percent and fewer jobs than expected were added to the economy
during September. However, most of the initial gains were erased by news of
rising tensions between Iraq and Iran.
Congressional testimony by the Federal Reserve Chairman, in which he
indicated that it would be difficult to maintain the current balance between
tight labor markets and low inflation, caused stock and bond prices to skid in
mid-October 1997. Disappointing third quarter earnings in the technology sector
sharpened the sell-off in the stock market, with the Dow Jones Industrial
Average posting consecutive losses of more than 1.0 percent on October 16 and
17.
Stocks bounced back in early-week trading the following week,
reflecting positive third quarter earnings surprises posted by some of the blue
chip stocks. However, the recovery was abbreviated by global selling pressure,
which was led by the decline in the Hong Kong stock market, as the DJIA posted a
two-day loss approximating 320 points on October 23 and 24, 1997. The sell-off
in the world financial markets turned into a rout on the following Monday, with
a 5.8 percent decline in the Hong Kong stock market fueling the largest ever
point decline in the DJIA. On October 27, the DJIA declined 554 points or 7.2
percent. While the selling was broad based, technology stocks sensitive to Asian
demand experienced some of the sharpest declines. The turmoil in the stock
market provided for a sharp rally in U.S. Treasury bonds, reflecting a flight to
quality by skittish investors. The stock market recovered strongly the day after
the record breaking point decline, as the DJIA
<PAGE>
RP Financial, LC.
Page 4.11
surged a record breaking 337 points on October 28. Comparatively, bond prices
declined sharply on October 28, as investors pulled out of the Treasury market
to reinvest into the stock market.
Market conditions remained uneven through the week ended October 31,
1997, which was followed by a soaring stock market on November 3, 1997. The DJIA
posted a 232 point increase on November 3, which was supported by a resurgence
in the Hong Kong market. Following the one day rally, volatility returned to the
stock market through mid-November. The market's uneven performance was largely
attributable to the ongoing influence of the international markets, particularly
the Asian and Latin American markets. In mid-November, the yield on the 30-year
bellwether Treasury issue approached 6.0 percent, its lowest level since
February 1996. Advances in the bond market provided for a generally positive
stock market environment in the second half of November, with bank and
technology issues being among the strongest performers. Renewed confidence that
the Asian governments would control the region's financial problems furthered
the stock market rally in early-December. Despite a sell-off in the bond market
caused by the November unemployment rate dropping to its lowest level since
October 1973, the DJIA showed surprising strength and closed almost 99 points
higher on December 5, 1997. Stocks declined the following week, as earnings
concerns, particularly in the technology sector, overshadowed a rally in the
bond market. Positive inflation news and world market turmoil caused investors
to dump stocks in favor of bonds, which served to push the yield on the
bellwether 30-year Treasury bond below 6.0 percent in mid-December. Bond prices
were also boosted by the Federal Reserve's decision to leave interest rates
unchanged at its mid-December meeting, which also provided for a modest recovery
in the stock market. In late-December, investors dumped stocks on earnings
concerns, while a flight to quality pushed bond prices higher. The stock market
surged higher at year end, as worries about South Korea's financial crisis
eased.
Led by a rally in the bond market, stocks continued to move higher at
the beginning of 1998. However, turmoil in the Asian markets and the uncertain
outlook for fourth quarter earnings provided for an uneven stock market through
most of January and into early-February. For example, the Dow Jones Industrial
Average ("DJIA") plunged 222 points on January 9, 1998, due to fourth quarter
profit worries and economic turmoil in Southeast Asia. Comparatively, a rally in
the Asian markets propelled the DJIA 201 points higher on February 2, 1998. In
general, a rebound in the Asian markets and favorable fourth quarter earnings
served to the push the stock market higher during the second half of January and
into early-February. In contrast, bond prices edged lower over the same time
period, as the labor market remained tight as indicated by a sharp increase in
labor costs during the fourth quarter of 1997 and a larger than expected
increase in the number of jobs added during December 1997.
Strength primarily in technology stocks pushed the DJIA to a record
high for the first time in six months on February 10, 1998. The rally was
sustained through mid-February, as the DJIA established six
<PAGE>
RP Financial, LC.
Page 4.12
consecutive new highs through February 18, 1998. Strong earnings and
expectations that profitability was not as badly hurt by the Asian crisis as
feared served as the basis for the rally in technology stocks. Stable interest
rates and few signs of inflation preserved the positive market environment
through the end of February, with blue chip stocks leading the advance.
At the beginning of March 1998, signs of a strengthening economy
pushed the 30-year bellwether bond above 6.0 percent for the first time in three
months. Earnings concerns, particularly in the technology sector, provided for
an uneven stock market in early-March. Despite a decline in the February
unemployment rate to 4.6 percent, bond prices advanced on news of a loss of jobs
in the manufacturing sector and stocks moved higher as technology issues
rallied. Both bond and stock prices benefitted from plunging oil prices in
mid-March, as further new highs were established in the DJIA and the yield on
30-year bond moved back below 6.0 percent. In late-March 1998, stocks drifted
lower due to first quarter earnings worries and uncertainty over the outcome of
the Federal Reserve's meeting at the end of March.
Stocks and bonds moved higher in early-April 1998, following the
Federal Reserve's decision not to raise interest rates. Aided by the $82.9
billion merger agreement between Travelers Group and Citicorp, the Dow Jones
Industrial Average closed above 9000 for the first time on April 6, 1998. The
positive trend in stocks strengthened through mid-April, reflecting a more
bullish outlook for technology stocks and expectations of further consolidation
among financial stocks punctuated by BankAmerica's merger pact with NationsBank
in a deal valued at $60 billion and Banc One's proposed $30 billion merger with
FirstChicago. Profit taking and speculation that the Federal Reserve was leaning
towards raising interest rates provided for a late-April sell-off in both stocks
and bonds. The threat of higher interest rates pushed the 30-year bellwether
bond back above 6.0 percent in late-April, its highest level since early-March.
Economic data for May 1998 generally indicated a robust economy, with
most segments of the economy experiencing continued growth. In fact some
indicators suggested that inflation may be creeping back into the economy, most
notably a 0.3 percent increase in May consumer prices, a 0.9 percent increase in
May retail sales and a 0.6 percent in consumer spending during May. The
favorable economic environment was also reflected in the consumer confidence
survey for June 1998, which indicated that consumer confidence was at its higher
level since June 1969. At the end of June, first quarter GDP growth was revised
upward to a stronger than expected 4.8 percent annual growth rate; however, much
of the growth was due to the build-up of inventories.
Inflation concerns eased in early-July 1998, as the June unemployment
rate rose to 4.5 percent compared to a a 4.3 percent rate in May. Other June
economic indicators, such as consumer prices, retail sales and industrial
output, also signaled a slowing pace of growth for the U.S. economy. Second
quarter GDP growth of 1.4 percent was the slowest pace of growth recorded in
three years. The July unemployment rate was unchanged
<PAGE>
RP Financial, LC.
Page 4.13
at 4.5 percent, although there was a significant decline in manufacturing jobs
during July. Most of the decline in manufacturing jobs was related to the GM
strike and, to a lesser extent, the Asian financial crisis. The limited threat
of inflation was further indicated by the Consumer Price Index for July, which
reflected a modest 0.2 percent increase compared to June. These positive factors
about the U.S. economy resulted in the DJIA reaching an all-time high above 9300
on July 17, 1998. However, increased concerns out the severity of Asia's
financial crisis, and when such effects will hit the U.S. resulted in declines
in the stock market. Continued economic turmoil in Asia and, during August,
Russia's faltering economy, caused stocks to slide further. On August 21, 1998,
the DJIA closed at 8533.7, a decline of approximately 9 percent from the middle
of July 1998, and an increase of 8.2 percent from one year ago.
Similar to the overall stock market, the market for thrift stocks has
generally been favorable during the past twelve months. Thrift prices generally
declined during the first half of August 1997, due to higher interest rates and
profit taking. From July 31, 1997 to August 15, 1997, the SNL Index declined by
3.7 percent. Thrift prices recovered modestly during the second half of August,
as the Federal Reserve left short-term interest rates unchanged at its August
meeting. Thrift stocks participated in the one day stock market rally on
September 2, 1997, as evidenced by a 1.95 percent increase in the SNL Index.
News of NationsBank's proposed acquisition of Barnett Banks for more than four
times its book value appears to have further contributed to the one day run-up
in thrift prices. In contrast to the overall stock market, thrift prices
continued to move higher following the one day rally in the DJIA. Stable
interest rates and acquisition news sustained the positive market for thrift
issues. The decline in interest rates following the release of the August
consumer price index in mid-September served to further the rally in thrift
prices. During late-September and early-October, interest rate sensitive issues
in general benefited from the declining interest rate environment and
expectations of strong third quarter earnings.
The upward trend in thrift prices stalled in mid-October 1997, as
interest rates moved higher following warnings by the Federal Reserve Chairman
of inflation creeping back into the economy due to the tight labor markets.
Thrift stocks gyrated in conjunction with the overall market in late-October,
with the SNL index declining by 5.2 percent on October 27 and increasing by 2.4
percent on October 28. Thrift prices further recovered on October 29, which was
supported by a rally in the bond market. Aided by the favorable interest rate
climate, thrift stocks posted further gains in early-November and then retreated
modestly in mid-November. Thrift and bank issues declined on concerns that a
slowing U.S. economy could lead to weaker loan demand and higher delinquency
rates. However, led by the strengthening bond market, thrift and bank issues
moved higher during late-November and early-December. Acquisition news also
contributed to the upturn in bank and thrift prices, as two major bank
acquisitions were announced for relatively high price-to-book multiples. First
Union Corp.'s proposed acquisition of CoreStates Financial ($47 billion in
assets) was for 539 percent of book value,
<PAGE>
RP Financial, LC.
Page 4.14
while First American Corporation's proposed acquisition for Deposit Guaranty
Corporation ($6.8 billion in assets) was for 419 percent of book value. Those
deals, along with speculation of possible other major thrift and bank
acquisitions, filtered into the prices of bank and thrift issues in general.
Concern of relatively high valuations somewhat offset the declining interest
rate environment, as thrift issues traded in a narrow range in mid-December.
Thrift prices moved higher at the close of 1997, as interest rates continued to
decline.
The positive trend in thrift prices was not sustained at the beginning
of 1998, as thrift prices moved sharply lower during early-January trading. From
January 2, 1998 to January 9, 1998, the SNL Index for all publicly-traded
thrifts declined from 810.5 to 720.2, or 11.1 percent. The sell-off in thrift
stocks was prompted by concerns that the flattening yield curve would put
pressure on earnings, particularly among institutions which maintained high
concentrations of mortgage loans. Thrift prices recovered somewhat during the
second half of January, with the upward trend becoming more pronounced in
early-February. Fourth quarter earnings, which generally met expectations, and
acquisition news led the recovery in thrift prices. The ongoing trend of
consolidation was highlighted by the proposed merger between First Nationwide
Holdings ($30.9 billion in assets) and Golden State Bancorp ($16.0 billion in
assets), which was announced in early-February. Stable interest rates and
acquisitions provided for a mildly positive increase in thrift stocks during the
balance of February.
Thrift issues continued to edge higher during the first half of March
1998, reflecting improving fundamentals and improving expectations of favorable
first quarter earnings. The announcement of Washington Mutual's acquisition of
H.F. Ahmanson for 390 percent of book value on March 17, 1998 provided a more
notable boost to thrift prices, particularly the stocks of the California-based
institutions. Thrift issues traded in a narrow range in late-March 1998,
reflecting uncertainty over the possibility of higher interest rates and
forthcoming first quarter earnings.
The Federal Reserve's decision to leave interest rates unchanged at
its late-March meeting, along with the mega mergers occurring within the
financial services sector, provided for a positive trend in thrift prices during
the first half of April 1998. However, bank and thrift issues experienced
selling pressure in late-April, reflecting speculation of higher interest rates
which triggered a sell-off in the overall market. Likewise, thrift stocks
followed the overall market higher in early-May, as the inflation data contained
in the first quarter growth numbers provided for an improved interest rate
outlook. Speculation of higher interest rates translated into a fairly flat
market for thrift issues through mid-May. Thrift stocks eased lower in late-May,
reflecting the decline in the overall stock market. Thrift stocks followed the
general stock market throughout June and July of 1998, reaching highs during
mid-July and declining sharply as the overall stock market declined in early
August 1998. Further unsettling news from the world economic markets, in
particular Asia and Japan, and the bombing of the suspected terrorist operations
in Sudan and Afghanistan, resulted in declines in stock market prices in early
and
<PAGE>
RP Financial, LC.
Page 4.15
mid-August 1998, along with increased demand for lower risk U.S. Treasury
securities. Thrift and Bank stock prices declined as worries spread about
exposure of the U.S. banking industry to overseas crisis. On August 21, 1998,
the SNL Index for all publicly-traded thrifts closed at 702.1, a decrease of
13.8 percent from the beginning of the year.
B. The New Issue Market
In addition to thrift stock market conditions in general, the
new issue market for converting thrifts is also an important consideration in
determining the Bank's pro forma market value. The new issue market is separate
and distinct from the market for seasoned stock thrifts in that the pricing
ratios for converting issues are computed on a pro forma basis, specifically:
(1) the numerator and denominator are both impacted by the conversion offering
amount, unlike existing stock issues in which price change affects only the
numerator; and (2) the pro forma pricing ratio incorporates assumptions
regarding source and use of proceeds, effective tax rates, stock plan purchases,
etc. which impact pro forma financials, whereas pricing for existing issues are
based on reported financials. The distinction between pricing of converting and
existing issues is perhaps no clearer than in the case of the price/tangible
book ("P/TB") ratio in that the P/TB ratio of a converting thrift will typically
always result in a discount to tangible book value whereas in the current market
for existing thrifts the P/TB reflects a premium to tangible book value.
Therefore, it is appropriate to also consider the market for new issues, both at
the time of the conversion and in the aftermarket.
In general, the market environment for converting thrift issues
was highly receptive throughout 1997, with most converting issues being
oversubscribed and trading higher in initial trading activity. To date, the
positive market environment for converting thrift issues has been sustained
during 1998, although prices have declined somewhat in recent weeks in line with
the overall stock market. Since early-May 1998, standard conversion offerings
completed and began trading have exhibited an average price increase of 25.4
percent on the first day of trading, compared to increases in excess of 50
percent that were prevalent in the recent past.
As shown in Table 4.2, the average one week change in price for
standard conversion offerings completed during the latest three month period
ending July 23, 1998 equaled positive 29.9 percent. The average pro forma
price/tangible book and core price/earnings ratios of the recent standard
conversions was
<PAGE>
RP Financial, LC.
Table 4.2
Pricing Characteristics and After-Market Trends
Recent Conversions Completed (Last Three Months)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional Information Pre-Conversion Data
----------------------------------- Offering Information Contribution to
Financial Info. Asset Quality Charitable Found.
- ------------------------------------------------------------------------------------------------------------------------------------
Conversion Equity/ NPAs/ Res. Gross %of Exp./ % of
Institution State Date Ticker Assets Assets Assets Cov. Proc. Mid. Proc. Form Offering
- ----------- ----- ---- ------ ------ ------ ------ ---- ----- --- ---- ---- --------
($Mil) (%) (%)(2) (%) ($Mil) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Standard Conversions
- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CFS Bancorp, Inc. IN* 07/24/98 CITZ $1,267 7.68% 0.97% 43% $178.5 132% 1.8% Stock 1.70%
Carnegie Financial Corp. PA 07/13/98 Pink $ 17 7.05% 3.12% 233% $ 2.4 132% 10.9% N.A. N.A.
United Community Financial OH 07/09/98 UCFC 1,049 13.73% 0.98% 59% 334.7 132% 1.3% N.A. N.A.
PCB Holding Company IN 07/02/98 Pink 22 9.51% 0.00% N.M. 4.0 132% 7.9% N.A. N.A.
Hudson River Bancorp NY* 07/01/98 HRBT 665 10.13% 2.66% 46% 173.4 132% 1.7% N.A. N.A.
First Kansas Financial Corp. KS 06/29/98 FKAN 94 7.36% 0.05% 398% 15.5 132% 3.2% N.A. N.A.
Anson Bancorp, Inc. NC 06/26/98 Pink 21 18.46% 1.25% 37% 5.9 89% 8.3% N.A. N.A.
BOC Financial Corp. NC 05/01/98 Pink 25 17.99% 0.19% 64% 9.3 132% 4.9% N.A. N.A.
AVERAGES - STANDARD CONVERSIONS: $ 395 11.49% 1.15% 126% $ 90.5 127% 5.0% N.A. N.A.
MEDIANS - STANDARD CONVERSIONS: $ 60 9.82% 0.98% 59% $ 12.4 132% 4.1% N.A. N.A.
Second-Step Conversions
- -----------------------
Homestead Financial, Inc. LA* 07/20/98 HSTD $ 62 9.72% 0.97% 43% $ 11.2 132% 4.1% N.A. N.A.
PSB Bancorp PA* 07/17/98 PSBI $ 134 11.58% 0.27% 133% $ 16.1 115% 3.0% N.A. N.A.
Thistle Group Holdings PA 07/14/98 THTL 281 10.41% 0.27% 133% 78.6 100% 1.7% N.A. N.A.
AVERAGES - 2ND STEP CONVERSIONS $ 159 10.57% 0.50% 103% $ 35.3 116% 2.9% N.A. N.A.
MEDIANS - 2ND STEP CONVERSIONS: $ 134 10.41% 0.27% 133% $ 16.1 115% 3.0% N.A. N.A.
AVERAGES - ALL CONVERSIONS: $ 331 11.24% 0.98% 119% $ 75.4 124% 4.4% N.A. N.A.
MEDIANS - ALL CONVERSIONS: $ 94 10.13% 0.97% 62% $ 15.5 132% 3.2% N.A. N.A.
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional Information Insider Purchases Pro Forma Data
--------------------------------------
Pricing Ratios(4) Financial Charac.
- ---------------------------------------------------------------------------------- --------------------------------------
Benefit Plans Initial
Conversion Recog. Mgmt.& Dividend Core
Institution State Date Ticker ESOP Plans Dirs. Yield P/TB P/E(5) P/A ROA TE/A ROE
- ----------- ----- ---- ------ ---- ----- ----- ----- ---- ------ --- --- ---- ---
(%) (%) (%)(3) (%) (%) (x) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Standard Conversions
- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CFS Bancorp, Inc. IN* 07/24/98 CITZ 8.0% 4.0% 3.3% 0.00% 91.9% 28.0 16.0% 0.6% 16.3% 3.6%
Carnegie Financial Corp. PA 07/13/98 Pink 8.0% 4.0% 12.8% 0.00% 79.2% N.M. 12.9% N.M. 16.3% N.M.
United Community Financial OH 07/09/98 UCFC 8.0% 4.0% 0.1% 0.00% 80.2% 17.4x 25.9% 1.5% 32.3% 4.6%
PCB Holding Company IN 07/02/98 Pink 0.0% 4.0% 6.7% 0.00% 71.0% 22.2 15.6% 0.7% 21.9% 3.2%
Hudson River Bancorp NY* 07/01/98 HRBT 8.0% 4.0% 1.6% 0.00% 82.0% 21.4 21.9% 0.9% 26.7% 3.3%
First Kansas Financial Corp. KS 06/29/98 FKAN 8.0% 4.0% 5.7% 0.00% 77.2% 16.3 14.4% 0.9% 18.7% 4.7%
Anson Bancorp, Inc. NC 06/26/98 Pink 0.0% 4.0% 9.2% 0.00% 64.7% 19.9 22.2% 1.1% 34.3% 3.3%
BOC Financial Corp. NC 05/01/98 Pink 8.0% 4.0% 3.1% 0.00% 76.4% 31.4 28.7% 0.9% 37.5% 2.4%
AVERAGES - STANDARD CONVERSIONS: 6.0% 4.0% 5.3% 0.00% 77.8% 22.4X 19.7% 0.9% 25.5% 3.6%
MEDIANS - STANDARD CONVERSIONS: 8.0% 4.0% 4.5% 0.00% 78.2% 21.4X 19.0% 0.9% 24.3% 3.3%
Second-Step Conversions
- -----------------------
Homestead Financial, Inc. LA* 07/20/98 HSTD 8.0% 4.0% 2.9% 2.00% 96.1% 28.2x 20.8% 0.7% 21.7% 3.4%
PSB Bancorp PA* 07/17/98 PSBI 8.0% 4.0% 3.3% 0.00% 106.3% 27.1x 21.1% 0.8% 19.8% 3.9%
Thistle Group Holdings PA 07/14/98 THTL 8.0% 4.0% 5.6% 0.00% 92.7% 19.0 25.8% 1.4% 27.8% 4.9%
AVERAGES - 2ND STEP CONVERSIONS 8.0% 4.0% 3.9% 0.67% 98.4% 24.8X 22.6% 1.0% 23.1% 4.1%
MEDIANS - 2ND STEP CONVERSIONS: 8.0% 4.0% 3.3% 0.00% 96.1% 27.1X 21.1% 0.8% 21.7% 3.9%
AVERAGES - ALL CONVERSIONS: 6.5% 4.0% 4.9% 0.18% 83.4% 23.1X 20.5% 1.0% 24.8% 3.7%
MEDIANS - ALL CONVERSIONS: 8.0% 4.0% 3.3% 0.00% 80.2% 21.8X 21.1% 0.9% 21.9% 3.5%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional Information Post-IPO Pricing Trends
-------------------------------------------------------------
Closing Price:
- ----------------------------------------------------- -------------------------------------------------------------
First After After
Conversion IPO Trading % First % First %
Institution State Date Ticker Price Day Change Week(6) Change Month(7) Change
- ----------- ----- ---- ------ ----- --- ------ ------- ------ -------- ------
($) ($) (%) ($) (%) ($) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Standard Conversions
- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CFS Bancorp, Inc. IN* 07/24/98 CITZ $10.00 $11.44 14.4% $11.44 14.4% $11.44 14.4%
Carnegie Financial Corp. PA 07/13/98 Pink $10.00 $11.81 18.1% $11.81 18.1% $10.25 2.5%
United Community Financial OH 07/09/98 UCFC 10.00 15.00 50.0% 16.00 60.0% 17.38 73.8%
PCB Holding Company IN 07/02/98 Pink 10.00 11.50 15.0% 12.12 21.2% 10.75 7.5%
Hudson River Bancorp NY* 07/01/98 HRBT 10.00 12.56 25.6% 13.50 35.0% 12.75 27.5%
First Kansas Financial Corp. KS 06/29/98 FKAN 10.00 12.31 23.1% 12.25 22.5% 12.38 23.8%
Anson Bancorp, Inc. NC 06/26/98 Pink 10.00 12.00 20.0% 12.06 20.6% 12.37 23.7%
BOC Financial Corp. NC 05/01/98 Pink 10.00 13.68 36.8% 14.75 47.5% 13.25 32.5%
Averages - Standard Conversions: $10.00 $12.54 25.4% $12.99 29.9% $12.57 25.7%
Medians - Standard Conversions: $10.00 $12.16 21.6% $12.19 21.9% $12.37 23.7%
Second-Step Conversions
- -----------------------
Homestead Financial, Inc. LA* 07/20/98 HSTD $10.00 $ 9.31 -6.9% $ 9.31 -6.9% $ 9.31 -6.9%
PSB Bancorp PA* 07/17/98 PSBI $10.00 $ 9.19 -8.1% $ 9.19 -8.1% $ 9.19 -8.1%
Thistle Group Holdings PA 07/14/98 THTL 10.00 9.94 -0.6% 9.81 -1.9% 9.81 -1.9%
Averages - 2nd Step Conversions $10.00 $ 9.48 -5.2% $ 9.44 -5.6% $ 9.44 -5.6%
Medians - 2nd Step Conversions: $10.00 $ 9.31 -6.9% $ 9.31 -6.9% $ 9.31 -6.9%
Averages - All Conversions: $10.00 $11.70 17.0% $12.02 20.2% $11.72 17.2%
Medians - All Conversions: $10.00 $11.81 18.1% $12.06 20.6% $11.44 -5.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Note: * - Appraisal performed by RP Financial; "NT" - Not Traded; "NA" - Not Applicable, Not Available.
(1) Non-OTS regulated thrift. (5) Excludes impact of special SAIF assessment on earnings.
(2) As reported in summary pages of prospectus. (6) Latest price if offering less than one week old.
(3) As reported in prospectus. (7) Latest price if offering more than one week but less than one month
(4) Does not take into account the adoption of SOP 93-6. old.
(8) Simultaneously converted to commercial bank charter. July 23, 1998
</TABLE>
<PAGE>
RP Financial, LC.
Page 4.17
77.8 percent and 22.4 times, respectively. With the exception of one
transaction, the conversions that have began trading since early-May 1998 were
all closed at the top of the super range.
In examining the current pricing characteristics of
institutions completing their conversions during the last three months (see
Tabley4.3), we note a difference exists in their pricing ratios compared to the
universe of all publicly-traded thrifts. Specifically, the current average P/B
ratio of the conversions completed in the most recent three month period of
91.90 percent reflects a discount of 36.7 percent from the average P/B ratio of
all publicly-traded thrifts (equal to 145.22 percent), and the 22.28 times core
P/E ratio of the recent conversions was at a 14.3 percent premium to the all
public average core P/E ratio of 19.50 times. The pricing ratios of the better
capitalized but lower earning (based on return on equity measures) recently
converted thrifts suggest that the investment community has determined to
discount their stocks on a book basis until the earnings improve through
redeployment and leveraging of the proceeds over the longer term.
Similar to the market for converting thrifts, the five
publicly-traded MHC offerings that have been completed during 1998 (Brookline
Bancorp of MA - March 1998, Niagra Bancorp of NY - April 1998, Gaston Federal
Bancorp of NC - April 1998, BCSB Bankcorp of MD - July 1998 and Liberty Bancorp
of NJ - July 1998) have experienced a generally favorable market reception as
well. Based on August 21, 1998 market prices, the trading prices of these five
MHC offerings have appreciated in price by 10.1 percent from their respective
IPO prices, although the prices of these recently converted thrifts have
declined in recent periods. Notwithstanding the initial price increases, the
most recent data suggests a broad sell off in MHC issues, as the SNL MHC index
has declined by 19.0 percent since June 30, 1998 (from 1123.2 at June 30, 1998
to 909.4 at August 21, 1998). The anticipated investor interest in MHC offerings
is expected to be low.
In determining our valuation adjustment for marketing of the
issue, we considered trends in both the overall thrift market and the new issue
market. The overall market for thrift stocks is considered to be moderately
strong, as thrift stocks are currently exhibiting pricing ratios that are above
historical levels, yet have declined in the most recent several weeks in step
with the overall stock market. Investor interest in the new issue market during
most of 1998 has been favorable, as the majority of recently completed offerings
have been oversubscribed and have recorded price increases in initial
post-conversion trading activity. Conditions in the new issue market for MHC
shares have also been favorable, based on the positive market reception that has
been experienced by the five publicly-traded MHC offerings completed during
1998, but the most recent stock price trends suggest greatly diminished interest
currently.
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.3
Market Pricing Comparatives
Prices As of August 21, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------- Pricing Ratios(3) Dividends(4)
--------------- Core Book ----------------------------------- ----------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------- ------ -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 17.90 151.22 0.90 13.30 18.68 141.77 18.05 145.22 19.50 0.31 1.78 30.71
Special Selection Grouping(8) 10.47 152.29 0.47 11.30 23.21 91.90 22.01 91.90 22.28 0.11 1.35 0.00
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CITZ CFS Bancorp, Inc. of IN 10.00 227.27 0.40 10.88 27.78 91.91 16.00 91.91 25.00 0.00 0.00 0.00
FKAN First Kansas Financial of KS 11.31 17.58 0.61 12.95 18.54 87.34 16.32 87.34 18.54 0.00 0.00 0.00
HSTD Homestead Bancorp, Inc. of LA 8.44 12.47 0.36 10.40 23.44 81.15 17.58 81.15 23.44 0.80 9.48 NM
HRBT Hudson River Bancorp Inc of NY 12.00 208.06 0.47 12.20 29.27 98.36 26.30 98.36 25.53 0.00 0.00 0.00
PSBI PSB Bancorp Inc. of PA 7.75 24.03 0.37 9.41 20.95 82.36 16.32 82.36 20.95 0.00 0.00 0.00
THTL Thistle Group Holdings of PA 9.00 81.00 0.53 10.79 16.98 83.41 23.19 83.41 16.98 0.00 0.00 0.00
UCFC United Community Fin. of OH 14.81 495.62 0.58 12.47 25.53 118.77 38.38 118.77 25.53 0.00 0.00 0.00
<CAPTION>
Financial Characteristics(6)
-------------------------------------------------------
Total Equity/ NPAs/ Reported Core
Financial Institution Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------ ------- ------- ------- ------- ------- -------
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 1,069 14.05 0.60 0.93 7.90 0.88 7.42
Special Selection Grouping(8) 600 23.49 0.64 0.96 4.05 0.99 4.17
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CITZ CFS Bancorp, Inc. of IN 1,421 17.41 0.67 0.58 3.31 0.64 3.68
FKAN First Kansas Financial of KS 108 18.69 0.05 0.88 4.71 0.88 4.71
HSTD Homestead Bancorp, Inc. of LA 71 21.66 0.27 0.75 3.46 0.75 3.46
HRBT Hudson River Bancorp Inc of NY 815 26.74 1.66 0.90 3.36 1.03 3.85
PSBI PSB Bancorp Inc. of PA 147 19.81 NA 0.78 3.93 0.78 3.93
THTL Thistle Group Holdings of PA 349 27.80 0.22 1.37 4.91 1.37 4.91
UCFC United Community Fin. of OH 1,291 32.31 0.98 1.50 4.65 1.50 4.65
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month data,
adjusted to omit non-operating items (including the SAIF assessment) on a
tax effected basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/CORE = Price to estimated core earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month estimated core
earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month earnings and average equity and assets balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
(8) Includes Converted Last 3 Mths (no MHC);
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 4.19
C. The Acquisition Market
Also considered in the valuation was the potential impact on
Revere Federal's stock price of recently completed and pending acquisitions of
other savings institutions operating in Massachusetts. As shown in Exhibit IV-4,
there were nine Massachusetts thrifts acquired during 1997 and year-to-date
1998, and there are currently three acquisitions pending of Massachusetts
savings institutions.
Under other circumstances, the existence of thrift acquisition
activity in the Bank's market area might warrant an upward adjustment to value
to account for the likelihood of investors placing an acquisition premium on the
stock. However, the acquisition activity in Revere Federal's market was deemed
to have a minimal valuation impact for three reasons. First, Revere Federal's
Board of Directors has stated their intention to remain independent following
the stock offering, a factor underscored by the Board's decision to reorganize
into MHC form. Second, Revere Federal could not become an acquisition target for
at least one year following a second step conversion, pursuant to current
conversion regulations. Finally, the Bank has no immediate intentions to pursue
a "second step" conversion.
* * * * * * * * * * *
In determining our valuation adjustment for marketing of the
issue, we considered trends in both the overall thrift market, the new issue
market including the new issue market for MHC shares, and the acquisition market
(which we considered to be not highly applicable to the Bank's valuation).
Taking these factors and trends into account, RP Financial concluded that a
moderate downward adjustment was appropriate in the valuation analysis for
purposes of marketing of the issue.
8. Management
Revere Federal's management team has experience and expertise in all of the
key areas of the Bank's operations. Exhibit IV-5 provides summary resumes of
Revere Federal's Board of Directors and executive management. While the Bank
does not have the resources to develop a great deal of management depth, given
its asset size and the impact it would have on operating expenses, management
and the Board have been effective in implementing an operating strategy that can
be well managed by the Bank's present management structure.
Similarly, the returns, capital positions, and other operating measures of
the Peer Group companies are indicative of well-managed financial institutions,
which have Boards and management teams that have been effective in implementing
competitive operating strategies. Therefore, on balance, we concluded no
valuation adjustment relative to the Peer Group was appropriate for this factor.
<PAGE>
RP Financial, LC.
Page 4.20
9. Effect of Government Regulation and Regulatory Reform
In summary, as a SAIF-insured savings institution operating in the MHC form
of ownership, Revere Federal will operate in substantially the same regulatory
environment as the Peer Group members -- all of whom are adequately capitalized
institutions and are operating with no apparent restrictions. Exhibit IV-6
reflects the Bank's pro forma regulatory capital ratios. The one difference
noted between Revere Federal and the Peer Group was in the area of regulatory
policy regarding dividend waivers (see the discussion above for "Dividends").
The Bank and a majority of the Peer Group members are subject to minority
dilution in a second step conversion because of the current dividend waiver
policy, while a minority of the Peer Group companies are not subject to the
current policy regarding dividend waivers as the result of "grandfathering"
under the previous OTS guidelines. Because a downward adjustment was already
applied for this factor in the "Dividends" section of this appraisal, no further
adjustment has been applied for the effect of government regulation and
regulatory reform.
Summary of Adjustments
Overall, based on the factors discussed above, we concluded that the Bank's
pro forma market value should be discounted relative to the Peer Group as
follows:
<TABLE>
<CAPTION>
Key Valuation Parameters: Valuation Adjustment
- ------------------------- --------------------
<S> <C>
Financial Condition No Adjustment
Profitability, Growth and Viability of Earnings Moderate Downward
Asset Growth No Adjustment
Primary Market Area No Adjustment
Dividends Slight Downward
Liquidity of the Shares Slight Downward
Marketing of the Issue Moderate Downward
Management No Adjustment
Effect of Government Regulations and Regulatory Reform No Adjustment
</TABLE>
Basis of Valuation. Fully-Converted Pricing Ratios
As indicated in Chapter III, the valuation analysis included in this
section places all of the public MHC institutions on equal footing by restating
their financial data and pricing ratios on a "fully-converted" basis. We believe
there are a number of characteristics of MHC shares that make them different
from the shares of fully-converted companies. These factors include: (1) lower
aftermarket liquidity in the MHC shares since less than 50 percent of the shares
are available for trading; (2) guaranteed minority ownership interest, with no
chance of exercising voting control of the institution; (3) no possibility of
acquisition speculation to support stock prices; (4) the impact of "second step"
conversions on the pricing of MHC institutions; and (5) the current regulatory
<PAGE>
RP Financial, LC.
Page 4.21
policy regarding the waiver of dividends by MHC institutions. The above
characteristics of MHC shares have provided MHC shares with different trading
characteristics versus fully-converted companies. To account for the unique
trading characteristics of MHC shares, RP Financial has placed the financial
data and pricing ratios of the Peer Group on a fully-converted basis to make
them comparable for valuation purposes. Using the per share and pricing
information of the Peer Group on a fully-converted basis accomplishes two
things. First, such figures eliminate the distortions resulting when trying to
compare institutions that have a different public ownership interests
outstanding. Secondly, such an analysis provides ratios that are comparable to
the pricing information of fully-converted public companies, and more
importantly, are directly applicable to determining the pro forma market value
range of the 100 percent ownership interest in Revere Federal as an MHC.
To calculate the fully-converted pricing information for MHCs, the reported
financial information for the public MHCs was adjusted as follows: (1) a second
step conversion was assumed, with all shares owned by the MHC assumed to be sold
at the August 21, 1998 trading price; (2) the gross proceeds from such a sale
were adjusted to reflect reasonable offering expenses and standard stock based
benefit plan parameters that would be factored into a "second step" conversion
of MHC institutions; and (3) book value per share and earnings per share figures
for the public MHCs were adjusted by the impact of the assumed second step
conversion, resulting in an estimation of book value per share and earnings per
share figures on a fully-converted basis. Since they place the public MHC
institutions on a fully-converted basis using the same approach as utilized in
the several second step conversions completed to date, these per share figures
(fully-converted basis) are comparable to the per share financial information
reported by fully-converted public companies and can form the basis for
estimating the pro forma market value range of a 100 percent ownership interest
in Revere Federal. Table 4.4 on the following page shows the calculation of per
share financial data (fully-converted basis) for each of the 19 public MHC
institutions that form the Peer Group.
Valuation Approaches
In applying the accepted valuation methodology promulgated by the OTS and
adopted by the FDIC, i.e., the pro forma market value approach, we considered
the three key pricing ratios in valuing Revere Federal's to-be-issued stock --
price/earnings ("P/E"), price/book ("P/B"), and price/assets ("P/A") approaches
- -- all performed on a pro forma basis including the effects of the conversion
proceeds. In computing the pro forma impact of the conversion and the related
pricing ratios, we have incorporated the valuation parameters disclosed in
Revere Federal's offering circular for reinvestment rate, the effective tax rate
and stock benefit plan assumptions (summarized in ExhibitsyIV-7 and IV-8).
Pursuant to the minority stock offering, we have also incorporated the valuation
parameters disclosed in Revere Federal's offering circular for offering
expenses. The assumptions utilized in the pro forma analysis in calculating the
Bank's full conversion value are described more fully below.
<PAGE>
TABLE 4.4
CALCULATION OF IMPLIED PER SHARE DAT -- INCORPORATING MHC SECOND STEP CONVERSION
COMPARABLE INSTITUTION ANALYSIS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
CURRENT OWNERSHIP CURRENT PER SHARE DATA (MHC RATIOS)
-------------------------- ---------------------------------------------------
TOTAL PUBLIC MHC CORE BOOK TANGIBLE
SHARES SHARES SHARES EPS EPS VALUE BOOK ASSETS
-------- -------- -------- --------- --------- --------- ---------- ----------
(000) (000) (000) ($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Publicly-Traded MHC Institutions
ALLB Alliance Bank MHC of PA (19.9) ... 3,273 650 2,623 0.62 0.62 8.93 8.93 83.33
BCSB BCSB Bankcorp MHC of MD (38.6). 6,117 2,361 3,756 0.36 0.36 7.28 7.28 44.74
BRKL Brookline Bncp MHC of MA (47.0)... 29,095 13,675 15,420 0.47 0.47 9.33 9.33 28.09
FFFL Fidelity Bcsh MHC of FL (47.9) ... 6,802 3,260 3,542 1.07 0.92 13.01 12.62 194.16
GBNK Gaston Fed Bncp MHC of NC (47.0) 4,497 2,113 2,384 0.43 0.43 8.56 8.56 38.07
HARS Harris Fin. MHYC of PA (24.9) .... 33,965 8,442 25,523 0.55 0.45 5.41 4.86 66.55
JXSB Jcksnville SB, MHC of IL (45.6) .. 1,908 869 1,039 0.51 0.33 9.23 9.23 88.91
LFED Leeds Fed Bksr HHC of MD (36.3)... 5,182 1,883 3,299 0.66 0.66 9.52 9.52 57.70
LIBB Liberty Bancorp MHC of NJ (47) ... 3,901 1,834 2,067 0.69 0.69 8.30 8.30 61.70
NBCP Niagara Bancorp. NY MHC (45.4) ... 29,756 13,502 16,254 0.48 0.46 8.31 8.31 43.56
NWSB Northwest Bcrp MHC of PA (30.8)... 46,841 14,438 32,403 0.44 0.44 4.55 4.07 51.44
PBCT Peoples Bank, MHC of CT (41.2) ... 64,130 27,633 36,497 1.49 0.80 13.17 11.28 142.67
PBHC Pathfinder BC MHC of NY (45.2) ... 2,831 1,279 1,552 0.62 0.50 8.15 6.91 69.30
PHSB Ppls Home SB, MHC of PA (45.0) ... 2,760 1,242 1,518 0.63 0.56 10.33 10.33 80.94
PLSK Pulaski SB, MHC of NJ (47.0) ..... 2,108 990 1,118 0.55 0.55 10.44 10.44 90.50
SBFL SB Fngr Lakes MHC of NY (33.1) ... 3,570 1,180 2,390 0.26 0.22 6.10 6.10 70.26
SKBO First Carnegie MHC of PA (45.0) .. 2,300 1,035 1,265 0.42 0.50 10.86 10.86 64.41
WAYN Wayne Svgs Bks MHC of OH (48.2) 2,486 1,197 1,289 0.74 0.68 9.83 9.83 104.49
WCFB Wbstr Cty FSB MHC of IA (45.6).... 2,114 962 1,152 0.64 0.64 10.67 10.67 44.43
<CAPTION>
IMPACT OF SECOND STEP CONVERSION
-----------------------------------------------
SHARE GROSS NET INCR. NET INCR.
PRICE PROCDS(1) CAPTIAL(2) INCOME(3)
---------- ----------- ------------ -----------
($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C>
Publicly-Traded MHC Institutions
ALLB Alliance Bank MHC of PA (19.9) ... 21.25 55,739 47,935 1,468
BCSB BCSB Bankcorp MHC of MD (38.6). 11.38 42,743 36,759 1,126
BRKL Brookline Bncp MHC of MA (47.0)... 12.75 196,605 169,080 5,177
FFFL Fidelity Bcsh MHC of FL (47.9) ... 26.50 93,863 80,722 2,472
GBNK Gaston Fed Bncp MHC of NC (47.0) 12.50 29,800 25,628 785
HARS Harris Fin. MHYC of PA (24.9) .... 17.75 453,033 389,609 11,930
JXSB Jcksnville SB, MHC of IL (45.6) .. 16.75 17,403 14,967 458
LFED Leeds Fed Bksr HHC of MD (36.3)... 17.50 57,733 49,650 1,520
LIBB Liberty Bancorp MHC of NJ (47) ... 10.25 21,187 18,221 558
NBCP Niagara Bancorp. NY MHC (45.4) ... 11.38 184,971 159,075 4,871
NWSB Northwest Bcrp MHC of PA (30.8)... 12.75 413,138 355,299 10,880
PBCT Peoples Bank, MHC of CT (41.2) ... 27.00 985,419 847,460 25,950
PBHC Pathfinder BC MHC of NY (45.2) ... 15.00 23,280 20,021 613
PHSB Ppls Home SB, MHC of PA (45.0) ... 16.25 24,668 21,214 650
PLSK Pulaski SB, MHC of NJ (47.0) ..... 14.88 16,636 14,307 438
SBFL SB Fngr Lakes MHC of NY (33.1) ... 16.00 38,240 32,886 1,007
SKBO First Carnegie MHC of PA (45.0) .. 13.25 16,761 14,415 441
WAYN Wayne Svgs Bks MHC of OH (48.2) 22.25 28,680 24,665 755
WCFB Wbstr Cty FSB MHC of IA (45.6).... 17.63 20,310 17,466 535
<CAPTION>
PRO FORMA PER SHARE DATA (FULLY CONVERTED)
------------------------------------------
CORE BOOK TANGIBLE
EPS EPS VALUE BOOK ASSETS
--------- -------- ------- ---------- --------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Publicly-Traded MHC Institutions
ALLB Alliance Bank MHC of PA (19.9) ... 1.07 1.07 23.58 23.58 97.98
BCSB BCSB Bankcorp MHC of MD (38.6) ... 0.54 0.54 13.29 13.29 50.75
BRKL Brookline Bncp MHC of MA (47.0)... 0.65 0.65 15.14 15.14 33.90
FFFL Fidelity Bcsh MHC of FL (47.9) ... 1.43 1.28 24.88 24.49 206.03
GBNK Gaston Fed Bncp MHC of NC (47.0) . 0.60 0.60 14.26 14.26 43.77
HARS Harris Fin. MHYC of PA (24.9) .... 0.90 0.80 16.88 16.33 78.02
JXSB Jcksnville SB, MHC of IL (45.6) .. 0.75 0.57 17.07 17.07 96.75
LFED Leeds Fed Bksr HHC of MD (36.3)... 0.95 0.95 19.10 19.10 67.28
LIBB Liberty Bancorp MHC of NJ (47) ... 0.83 0.83 12.97 12.97 66.37
NBCP Niagara Bancorp. NY MHC (45.4) ... 0.64 0.62 13.66 13.66 48.91
NWSB Northwest Bcrp MHC of PA (30.8)... 0.67 0.67 12.14 11.66 59.03
PBCT Peoples Bank, MHC of CT (41.2) ... 1.89 1.20 26.38 24.49 155.88
PBHC Pathfinder BC MHC of NY (45.2) ... 0.84 0.72 15.22 13.98 76.37
PHSB Ppls Home SB, MHC of PA (45.0) ... 0.87 0.80 18.02 18.02 88.63
PLSK Pulaski SB, MHC of NJ (47.0) ..... 0.76 0.76 17.23 17.23 97.29
SBFL SB Fngr Lakes MHC of NY (33.1) ... 0.54 0.50 15.31 15.31 70.47
SKBO First Carnegie MHC of PA (45.0) .. 0.61 0.69 17.13 17.13 70.68
WAYN Wayne Svgs Bks MHC of OH (48.2) .. 1.04 0.98 19.75 19.75 114.41
WCFB Wbstr Cty FSB MHC of IA (45.6).... 0.89 0.89 18.93 18.93 52.69
</TABLE>
- ----------
(1) Gross proceeds calculated as stock price multiplied by the number of shares
owned by the mutual holding company (i.e., non-public shares).
(2) Net increase in capital reflects gross proceeds less offering expenses,
contra-equity account for leveraged ESOP and deferred compensation account
for restricted stock plan:
Offering expense percent 2.00
ESOP percent purchase 8.00
Recognition plan percent 4.00
(3) Net increase in earnings reflects after-tax reinvestment income (assumes
ESOP and recognition plan do not generate reinvestment income), less
after-tax ESOP amortization and recognition plan vesting:
After-tax reinvestment 4.29
ESOP loan term (years) 10
Recog. plan vesting (yrs) 5
Effective tax rate 34.00
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
<PAGE>
RP Financial, LC.
Page 4.23
o Conversion Expenses. Estimated conversion expenses have been provided
by the Bank, and are estimated to total $438,000 at the midpoint of
the valuation range.
o Effective Tax Rate. The Bank, in consultation with its outside
auditors, has determined the marginal effective tax rate on the net
reinvestment benefit of the conversion proceeds to be 41 percent.
o Reinvestment Rate. The pro forma section in the prospectus
incorporates a 5.37 percent reinvestment rate, equivalent to the one
year U.S. Treasury rate prevailing as of June 30, 1998.
o Stock Benefit Plans. The assumptions for the stock benefit plans,
i.e., the Employee Stock Ownership Plan ("ESOP") and Recognition Plan
("Recognition Plan"), are consistent with the structure as approved by
the Bank's Board and the disclosure in the pro forma section of the
prospectus. Specifically, the ESOP is assumed to purchase 8 percent of
the stock in conversion at the initial public offering price, with the
Holding Company funded ESOP loan amortized on a straight-line basis
over 10 years. The Recognition Plan is assumed to purchase 4 percent
of the stock in the aftermarket at a price equivalent to the initial
public offering price.
In our estimate of value, we assessed the relationship of the pro forma
pricing ratios relative to the Peer Group and the recent conversions.
RP Financial's valuation placed an emphasis on the following:
o P/E Approach. The P/E approach is generally the best indicator of
long-term value for a stock. Given the similarities between the Bank's
and the Peer Group's earnings composition and overall financial
condition, the P/E approach was carefully considered in this
valuation. At the same time, since reported earnings for the Peer
Group included certain unusual operating items, we also made
adjustments to earnings to arrive at a core earnings estimate and the
resulting price/core earnings ratio.
o P/B Approach. P/B ratios have generally served as a useful benchmark
in the valuation of thrift stocks, with the greater determinant of
long term value being earnings. RP Financial considered the P/B
approach to be a reliable indicator of value given current market
conditions, particularly the market for new conversions (many of the
recent conversions have reported not meaningful P/E ratios).
o P/A Approach. P/A ratios are generally a less reliable indicator of
market value, as investors do not place significant weight on the size
of total assets as a determinant of market value. Investors place
significantly greater weight on book value and earnings, which have
received greater weight in our valuation analysis. Furthermore, this
approach as set forth in the regulatory valuation guidelines does not
take into account the amount of stock purchases funded by deposit
withdrawals, thus understating the pro forma P/A ratio. At the same
time, the P/A ratio is an indicator of franchise value, and, in the
case of highly capitalized institutions, the high P/A ratios may limit
the investment community's willingness to pay market multiples for
earnings or book value when ROE is expected to be low.
The Bank has adopted Statement of Position ("SOP") 93-6, which will cause
earnings per share computations to be based on shares issued and outstanding
excluding unreleased ESOP shares. For purposes of preparing the pro forma
pricing analyses, we have reflected all shares issued in the offering, including
all ESOP
<PAGE>
RP Financial, LC.
Page 4.24
shares, to capture the full dilutive impact, particularly since the ESOP shares
are economically dilutive, receive dividends and can be voted. However, we did
consider the impact of the adoption of SOP 93-6 in the valuation.
Based on the application of the three valuation approaches, taking into
consideration the valuation adjustments discussed above, RP Financial concluded
that the pro forma market value of a 100 percent interest in the Bank's
conversion stock was $9,500,000 at the midpoint, equal to 950,000 shares issued
at a per share value of $10.00 for the public shares.
1. Price-to-Earnings ("P/E"). The application of the P/E valuation method
requires calculating the Bank's pro forma market value by applying a valuation
P/E multiple (fully-converted basis) to the pro forma earnings base. Ideally,
the pro forma earnings base is composed principally of the Bank's recurring
earnings base, that is, earnings adjusted to exclude any one-time non-operating
items, plus the estimated after-tax earnings benefit of the reinvestment of net
conversion proceeds. Revere Federal's reported earnings were $317,000 for the
twelve months ended June 30, 1998, and did not include any items that were
deemed non-recurring in nature. Thus, for purposes of the valuation, the Bank's
core earnings were determined to equal $317,000 for the twelve months ended June
30, 1998. (Note: see Exhibit IV-9 for the adjustments applied to the Peer
Group's earnings in the calculation of core earnings).
Based on Revere Federal's reported and estimated core earnings, and
incorporating the impact of the pro forma assumptions discussed previously, the
Bank's pro forma core P/E multiple (fully-converted basis) at the $9,500,000
midpoint value was 19.86 times, which provided for a premium of 1.3 percent
relative to the Peer Group's average core P/E multiple (fully-converted basis)
of 19.61 times (see Table 4.5). The earnings multiple is consistent when taken
in context with the valuation adjustments outlined earlier as well as taking
into consideration the resulting P/B ratio.
2. Price-to-Book ("P/B"). The application of the P/B valuation method
requires calculating the Bank's pro forma market value by applying a valuation
P/B ratio (fully-converted basis) to Revere Federal's pro forma book value
(fully-converted basis). Based on the $9.5 million midpoint valuation, Revere
Federal's pro forma P/B ratio was 66.45 percent. In comparison to the average
P/B ratio for the Peer Group of 93.76 percent, Revere Federal's ratio was
discounted by 29.1 percent. RP Financial considered the discount under the P/B
approach to be reasonable, in light of the previously referenced valuation
adjustments and the nature of the calculation of the P/B ratio which
mathematically results in a ratio discounted to book value. Additionally, the
discounted P/B ratio is also warranted by the likelihood that speculation of a
second step conversion may be having an upward influence on the current stock
prices of some of the Peer Group companies. Comparatively, as a newly formed
MHC, speculation of a second step conversion is not expected to have a material
influence on the Bank's stock price.
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.5
Public Market Pricing
Revere FS&LA of Revere, RA and the Comparables As of August 21, 1998
<TABLE>
<CAPTION>
Market Per Share Data Pricing Ratios(3) Dividends(4)
Capitalization Core Book
Price/ Market 12-Mth Value/ Amount/ Payout
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revere FS&LA of Revere,
Superrange 10.00 $ 12.56 0.42 13.50 23.53 74.06 12.64 74.06 23.53 0.00 0.00 0.00
Range Maximum 10.00 10.93 0.46 14.22 21.67 70.32 11.15 70.32 21.67 0.00 0.00 0.00
Range Midpoint 10.00 9.50 0.50 15.05 19.86 66.45 9.82 66.45 19.86 0.00 0.00 0.00
Range Minimum 10.00 8.08 0.56 16.17 17.85 61.86 8.46 61.86 17.85 0.00 0.00 0.00
SAIF-Insured Thrifts(7)
Averages 17.90 151.22 0.90 13.30 18.68 141.77 18.05 145.22 19.50 0.31 1.78 30.71
Medians -- -- -- -- 17.82 126.95 17.09 129.68 19.11 -- -- --
All Non-MHC State of HA(7)
Averages 21.16 84.13 1.31 14.19 15.60 160.35 15.42 164.31 17.13 0.37 1.86 29.72
Medians -- -- -- -- 13.97 157.68 15.31 158.85 16.87 -- -- --
Averages 16.47 235.70 0.80 17.42 19.61 93.76 21.68 95.14 20.38 0.30 1.62 32.65
Medians -- -- -- -- 19.62 91.62 20.13 91.62 20.09 -- -- --
ALLB Alliance Bank MHC of PA (19.9) 21.25 69.55 1.07 23.58 19.86 90.12 21.69 90.12 19.86 0.36 1.69 33.64
BCSB BCSB Bankcorp MHC of MD (38.6) 11.38 69.61 0.54 13.29 21.07 85.63 22.42 85.63 21.07 0.00 0.00 0.00
BRKL Brookline Bncp MHC of HA(47.0) 12.75 370.96 0.65 15.14 19.62 84.21 37.61 84.21 19.62 0.20 1.57 30.77
FFFL Fidelity Bcsh MHC of FL (47.9) 26.50 180.25 1.28 24.88 18.53 106.51 12.86 108.21 20.70 1.00 3.77 NM
SKBO First Carnegie MHC of PA(45.0) 13.25 30.48 0.69 17.13 21.72 77.35 18.75 77.35 19.20 0.30 2.26 43.48
GBNK Gaston Fed Bncp MHC of NC(47.0 12.50 56.21 0.60 14.26 20.83 87.66 28.56 87.66 20.83 0.20 1.60 33.33
HARS Harrls Fin. MHC of PA (24.9) 17.75 602.88 0.80 16.88 19,72 105.15 22.75 108.70 22.19 0.22 1.24 27.50
JXSB Jcksnvllle SB,MHC of IL (45.6) 16.75 31.96 0.57 17.07 22.33 98.13 17.31 98.13 29.39 0.30 1.79 52.63
LFED Leeds Fed Bksr MHC of MD (36.3 17.50 90.69 0.95 19.10 18.42 91.62 26.01 91.62 18.42 0.56 3.20 58.95
LIBB Liberty Bancorp MHC of NJ (47) 10.25 39.99 0.83 12.97 12.35 79.03 15.44 79.03 12.35 0.00 0.00 0.00
NBCP Niagara Bancorp of NY MHC(45.4 11.38 338.62 0.62 13.66 17.78 83.31 23.27 83.31 18,35 0.00 0.00 0.00
NWSB Northwest Bcrp MHC of PA (30.8 12.75 597.22 0.67 12.14 19.03 105.02 21.60 109.35 19.03 0.16 1.25 23.88
PBHC Pathfinder BC MHC of NY (45.2) 15.00 42.47 0.72 15.22 17.86 98.55 19.64 107.30 20.83 0.20 1.33 27.78
PBCT Peoples Bank, MHC of CT (41.2) 27.00 1731.51 1.20 26.38 14.29 102.35 17.32 110.25 22.50 0.84 3.11 70.00
PHSB Ppls Home SB, MHC of PA (45.0) 16.25 44.85 0.80 18.02 18.68 90.18 18.33 90.18 20.31 0.28 1.72 35.00
PLSK Pulaski SB, MHC of NJ (47.0) 14.88 31.37 0.76 17.23 19.58 86.36 15.29 86.36 19.58 0.30 2.02 39,47
SBFL SB Fngr Lakes MNC of NY (33.1) 16.00 57.12 0.50 15.31 29.63 104.51 20.13 104.51 NH 0.24 1.50 48.00
WAYN Wayne Svgs Bks MHC of OH (48.2 22.25 55.31 0.98 19.75 21.39 112.66 19.45 112.66 22.70 0.62 2.79 63.27
WCFB Wbstr Cty FSB MHC of IA (45.6) 17.63 37.27 0.89 18.93 19.81 93.13 33.46 93.13 19.81 0.00 0.00 0.00
<CAPTION>
Financial Characteristics(6)
Total Equity/ NPAs/ Reported Core
Assets Assets Assets ROA ROE ROA ROE
<S> <C> <C> <C> <C> <C> <C> <C>
Revere FS&LA of Revere,
Superrange 99 17.07 0.27 0.54 3.15 0.54 3.15
Range Maximum 98 15.86 0.27 0.51 3.24 0.51 3.24
Range Midpoint 97 14.78 0.28 0.49 3.35 0.49 3.35
Range Minimum 95 13.68 0.28 0.47 3.47 0.47 3.47
SAIF-Insured Thrifts(7)
Averages 1,069 14.05 0.60 0.93 7.90 0.88 7.42
Medians -- -- -- -- -- -- --
All Non-MHC State of HA(7)
Averages 611 10.47 0.41 1.12 12.36 1.02 11.03
Medians -- -- -- -- -- -- --
Averages 1,178 23.52 0.52 1.18 5.11 1.11 4.76
Medians -- -- -- -- -- -- --
ALLB Alliance Bank MHC of PA (19.9) 321 24.07 1.06 1.16 4.57 1.16 4.57
BCSB BCSB Bankcorp MHC of MD (38.6) 310 26.19 NA 1.06 4.06 1.06 4.06
BRKL Brookline Bncp MHC of HA(47.0) 986 44.66 0.60 2.15 5.85 2.15 5.85
FFFL Fidelity Bcsh MHC of FL (47.9) 1,401 12.08 0.27 0.82 5.85 0.74 5.24
SKBO First Carnegie MHC of PA(45.0) 163 24.24 0.59 0.85 3.78 0.97 4.28
GBNK Gaston Fed Bncp MHC of NC(47.0 197 32.58 0.50 1.37 4.21 1.37 4.21
HARS Harrls Fin. MHC of PA (24.9) 2,650 21.64 0.66 1.22 5.46 1.09 4.85
JXSB Jcksnvllle SB,MHC of IL (45.6) 185 17.64 0.68 0.79 4.44 0.60 3.37
LFED Leeds Fed Bksr MHC of MD (36.3 349 28.39 0.03 1.45 5,07 1.45 5.07
LIBB Liberty Bancorp MHC of NJ (47) 259 19.54 0.35 1.25 6.40 1.25 6.40
NBCP Niagara Bancorp of NY MHC(45.4 1,455 27.93 0.29 1.31 4.69 1.27 4.54
NWSB Northwest Bcrp MHC of PA (30.8 2,765 20.57 0.50 1.24 5.62 1.24 5.62
PBHC Pathfinder BC MHC of NY (45.2) 216 19.93 1.30 1.11 5.57 0.95 4.77
PBCT Peoples Bank, MHC of CT (41.2) 9,997 16.92 0.70 1.36 7.78 0.86 4.94
PHSB Ppls Home SB, MHC of PA (45.0) 245 20.33 0.32 1.02 5.33 0.94 4.90
PLSK Pulaski SB, MHC of NJ (47.0) 205 17.71 0.63 0.81 4.70 0.81 4.70
SBFL SB Fngr Lakes MNC of NY (33.1) 284 19.27 0.32 0.73 3.57 0.68 3.30
WAYN Wayne Svgs Bks MHC of OH (48.2 284 17.26 0.49 0.93 5.33 0.87 5.03
WCFB Wbstr Cty FSB MHC of IA (45.6) 111 35.93 0.07 1.68 4.74 1.68 4.74
</TABLE>
(1) Current stock price of minority stock. Average of High/Low or Bid/Ask price
per share.
(2) EPS (estimated core earnings) is based on reported trailing twelve month
data, adjusted to omit non-operating gains and losses (including the SAIF
assessment) on a tax effected basis. Public MHC data reflects additional
earnings from reinvestment of proceeds of second step conversion.
3) P/E - Price to Earnings; P/B - Price to Book; P/A - Price to Assets; P/TB -
Price to Tangible Book; and P/CORE - Price to Core Earnings. Ratios are pro
forma assuming a second step conversion to full stock form.
4) Indicated twelve month dividend, based on last quarterly dividend declared.
5) Indicated twelve month dividend as a percent of trailing twelve month
estimated core earnings (earnings adjusted to reflect second step
conversion).
6) ROA (return on assets) and ROE (return on equlty) are Indicated ratios
based on trailing twelvemEnth earnings and average equlty and assets
balances.
7) Excludes from averages and medians those companies the subject of actual or
rumored acquisition activities or unusual operating characteristics.
8) Figures estimated by RP Financial to reflect a second step conversion of
the MHC to full stock form.
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
<PAGE>
RP Financial, LC.
Page 4.26
RP Financial also considered the P/B ratios of the most recent MHC
conversions in its valuation analysis. The five publicly-traded MHC offerings
completed during 1998 as of August 21, 1998 were trading at an average P/B ratio
of 84.0 percent. At the midpoint value of $9,500,000, Revere Federal's pro forma
P/B ratio (fully-converted basis) of 66.45 percent was discounted by 20.9
percent from the average P/B ratio of those five companies.
3. Price-to-Assets ("P/A"). The P/A valuation methodology determines market
value by applying a valuation P/A ratio (fully-converted basis) to the Bank's
pro forma asset base, conservatively assuming no deposit withdrawals are made to
fund stock purchases. In all likelihood there will be deposit withdrawals, which
results in understating the pro forma P/A ratio which is computed herein. At the
midpoint of the valuation range, Revere Federal's full conversion value equaled
9.82 percent of pro forma assets. Comparatively, the Peer Group companies
exhibited an average P/A ratio (fully-converted basis) of 21.68 percent, which
implies a 54.7 percent discount being applied to the Bank's pro forma P/A ratio
(fully-converted basis).
* * * * * * * * * *
We believe that the Bank's pricing discounts relative to the Peer Group are
appropriately reflective of the valuation adjustments discussed above.
Valuation Conclusion
Based on the foregoing, it is our opinion that, as of August 21, 1998, the
estimated aggregate pro forma market value of the shares to be issued
immediately following the conversion, both shares issued publicly as well as to
the MHC, was $9,500,000 at the midpoint, equal to 950,000 shares offered at a
per share value of $10.00. Pursuant to conversion guidelines, the 15 percent
offering range indicates a minimum value of $8,075,000, and a maximum value of
$10,925,000. Based on the $10.00 per share offering price determined by the
Board, this valuation range equates to total shares outstanding of 807,500 at
the minimum and 1,092,500 at the maximum. In the event the appraised value is
subject to an increase, the aggregate pro forma market value may be increased up
to a supermaximum value of $12.564 million without a resolicitation. Based on
the $10.00 per share offering price, the supermaximum value would result in
total shares outstanding of 1,256,375. The Board of Directors has established a
public offering range such that the public ownership of the Holding Company will
constitute a 47 percent ownership interest. Accordingly, the offering to the
public of the minority stock will equal $3,795,250 at the minimum, $4,465,000 at
the midpoint, $5,134,750 at the maximum and $5,904,960 at the supermaximum. The
pro forma valuation calculations relative to the Peer Group (fully-converted
basis) are shown in Table 4.5 and
<PAGE>
RP Financial, LC.
Page 4.27
are detailed in Exhibit IV-7 and Exhibit IV-8; the pro forma valuation
calculations relative to the Peer Group based on reported financials are shown
in Table 4.6 and are detailed in Exhibits IV-10 and IV-11.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.6
Public Market Pricing
Revere Federal Savings of MA and the Comparables
As of August 21, 1998
<TABLE>
<CAPTION>
Market Per Share Data Pricing Ratios(3) Dividends(4)
Capitalization --------------- ---------------------------------- ----------------------
--------------- Core Book
Price/ Market 12-Mth Value/ Amount/ Payout
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
------- ------- ------- ------- ------ ------ ------- ------ ------- ------- ----- --------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X) ($) (%) (%)
Revere FS&LA of Revere, MA
- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Superrange 10.00 $5.90 0.33 8.76 30.70 114.16 13.45 114.16 30.70 0.00 0.00 0.00
Range Maximum 10.00 5.13 0.36 9.47 27.62 105.64 11.78 105.64 27.62 0.00 0.00 0.00
Range Midpoint 10.00 4.47 0.40 10.28 24.77 97.29 10.31 97.29 24.77 0.00 0.00 0.00
Range Minimum 10.00 3.80 0.46 11.38 21.73 87.89 8.82 87.89 21.73 0.00 0.00 0.00
SAIF-Insured Thrifts(7)
- -----------------------
Averages 17.90 151.22 0.90 13.30 18.68 141.77 18.05 145.22 19.50 0.31 1.78 30.71
Medians --- --- --- --- 17.82 126.95 17.09 129.68 19.11 --- --- ---
Comparable Group Averages
- -------------------------
Averages 16.47 92.53 0.54 9.05 24.81 188.39 24.81 186.56 26.68 0.30 1.62 13.07
Medians --- --- --- --- 26.15 181.47 22.77 181.47 27.34 --- --- ---
Comparable Group
- ----------------
ALLB Alliance Bank MHC of PA (19.9) 21.25 13.81 0.62 8.93 NM 237.96 25.50 237.96 NM 0.36 1.69 11.53
BCSB BCSB Bankcorp MHC of MD (38.6) 11.38 26.87 0.36 7.28 NM 156.32 25.44 156.32 NM 0.00 0.00 0.00
BRKL Brookline Bncp MHC of MA(47.0) 12.75 174.36 0.47 9.33 27.13 136.66 45.39 136.66 27.13 0.20 1.57 20.00
FFFL Fidelity Bcsh MHC of FL (47.9) 26.50 86.39 0.92 13.01 24.77 203.69 13.65 209.98 28.80 1.00 3.77 NM
SKBO First Carnegie MHC of PA(45.0) 13.25 13.71 0.50 10.86 NM 122.01 20.57 122.01 26.50 0.30 2.26 27.00
GBNK Gaston Fed Bncp MHC of NC(47.0 12.50 26.41 0.43 8.56 29.07 146.03 32.83 146.03 29.07 0.20 1.60 21.85
HARS Harris Fin. MHC of PA (24.9) 17.75 149.85 0.45 5.41 NM 328.10 26.67 NM NM 0.22 1.24 12.15
JXSB Jcksnville SB,MHC of IL (45.6) 16.75 14.56 0.33 9.23 NM 181.47 18.84 181.47 NM 0.30 1.79 NM
LFED Leeds Fed Bksr MHC of MD (36.3 17.50 32.95 0.66 9.52 26.52 183.82 30.33 183.82 26.52 0.56 3.20 NM
LIBB Liberty Bancorp MHC of NJ (47) 10.25 18.80 0.69 8.30 14.86 123.49 16.61 123.49 14.86 0.00 0.00 0.00
NBCP Niagara Bancorp of NY MHC(45.4 11.38 153.65 0.46 8.31 23.71 136.94 26.12 136.94 24.74 0.00 0.00 0.00
NWSB Northwest Bcrp MHC of PA (30.8 12.75 184.08 0.44 4.55 28.98 280.22 24.79 313.27 28.98 0.16 1.25 11.21
PBHC Pathfinder BC MHC of NY (45.2) 15.00 19.19 0.50 8.15 24.19 184.05 21.65 217.08 30.00 0.20 1.33 18.07
PBCT Peoples Bank, MHC of CT (41.2) 27.00 746.09 0.80 13.17 18.12 205.01 18.92 239.36 NM 0.84 3.11 NM
PHSB Ppls Home SB, MHC of PA (45.0) 16.25 20.18 0.56 10.33 25.79 157.31 20.08 157.31 29.02 0.28 1.72 22.50
PLSK Pulaski SB, MHC of NJ (47.0) 14.88 14.73 0.55 10.44 27.05 142.53 16.44 142.53 27.05 0.30 2.02 25.62
SBFL SB Fngr Lakes MHC of NY (33.1) 16.00 18.88 0.22 6.10 NM 262.30 22.77 262.30 NM 0.24 1.50 NM
WAYN Wayne Svgs Bks MHC of OH (48.2 22.25 26.63 0.68 9.83 NM 226.35 21.29 226.35 NM 0.62 2.79 NM
WCFB Wbstr Cty FSB MHC of IA (45.6) 17.63 16.96 0.64 10.67 27.55 165.23 39.68 165.23 27.55 0.00 0.00 0.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial Characteristics(6)
--- -----------------------------------------------------
Reported Core
Total Equity/ NPAs/ --------------- ---------------
Assets Assets Assets ROA ROE ROA ROE
- ------- ------- ------- ------- ------- ------- -------
($Mil) (%) (%) (%) (%) (%) (%)
Revere Federal Savings of MA
- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Superrange 93 11.78 0.29 0.44 3.72 0.44 3.72
Range Maximum 93 11.15 0.29 0.43 3.82 0.43 3.82
Range Midpoint 92 10.59 0.29 0.42 3.93 0.42 3.93
Range Minimum 92 10.03 0.29 0.41 4.04 0.41 4.04
SAIF-Insured Thrifts(7)
- -----------------------
Averages 1,069 14.05 0.60 0.93 7.90 0.88 7.42
Medians --- --- --- --- --- --- ---
Comparable Group Averages
- -------------------------
Averages 1,055 14.21 0.52 0.94 7.33 0.87 6.57
Medians --- --- --- --- --- --- ---
Comparable Group
- ----------------
ALLB Alliance Bank MHC of PA (19.9) 273 10.72 1.06 0.80 7.09 0.80 7.09
BCSB BCSB Bankcorp MHC of MD (38.6) 274 16.27 NA 0.80 4.95 0.80 4.95
BRKL Brookline Bncp MHC of MA(47.0) 817 33.21 0.60 1.92 8.85 1.92 8.85
FFFL Fidelity Bcsh MHC of FL (47.9) 1,321 6.70 0.27 0.66 8.52 0.57 7.32
SKBO First Carnegie MHC of PA(45.0) 148 16.86 0.59 0.65 4.26 0.77 5.08
GBNK Gaston Fed Bncp MHC of NC(47.0 171 22.48 0.50 1.13 5.02 1.13 5.02
HARS Harris Fin. MHC of PA (24.9) 2,260 8.13 0.66 0.88 10.96 0.72 8.96
JXSB Jcksnville SB,MHC of IL (45.6) 170 10.38 0.68 0.59 5.64 0.38 3.65
LFED Leeds Fed Bksr MHC of MD (36.3 299 16.50 0.03 1.18 7.20 1.18 7.20
LIBB Liberty Bancorp MHC of NJ (47) 241 13.45 0.35 1.12 8.31 1.12 8.31
NBCP Niagara Bancorp of NY MHC(45.4 1,296 19.08 0.29 1.10 5.78 1.06 5.54
NWSB Northwest Bcrp MHC of PA (30.8 2,410 8.85 0.50 0.95 10.14 0.95 10.14
PBHC Pathfinder BC MHC of NY (45.2) 196 11.76 1.30 0.91 7.74 0.73 6.24
PBCT Peoples Bank, MHC of CT (41.2) 9,149 9.23 0.70 1.18 13.45 0.63 7.22
PHSB Ppls Home SB, MHC of PA (45.0) 223 12.76 0.32 0.81 7.30 0.72 6.49
PLSK Pulaski SB, MHC of NJ (47.0) 191 11.54 0.63 0.63 5.86 0.63 5.86
SBFL SB Fngr Lakes MHC of NY (33.1) 251 8.68 0.32 0.40 4.39 0.34 3.72
WAYN Wayne Svgs Bks MHC of OH (48.2 260 9.41 0.49 0.72 7.72 0.66 7.10
WCFB Wbstr Cty FSB MHC of IA (45.6) 94 24.02 0.07 1.43 6.09 1.43 6.09
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) EPS (core basis) is based on actual trailing twelve month data, adjusted to
omit the impact of non-operating items (including the SAIF assessment) on a
tax effected basis, and is shown on a pro forma basis where appropriate.
(3) P/E = Price to Earnings; P/B = Price to Book; P/A = Price to Assets; P/TB =
Price to Tangible Book; and P/CORE = Price to Core Earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated twelve month dividend as a percent of trailing twelve month
estimated core earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and total
assets balances.
(7) Excludes from averages and medians those companies the subject of actual or
rumored acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been
obtained from sources we believe are reliable, but we cannot guarantee
the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
EXHIBITS
<PAGE>
RP Financial, LC.
LIST OF EXHIBITS
Exhibit
Number Description
I-1 Map of Office Location
I-2 Revere Federal's Audited Financial Statements
I-3 Key Operating Ratios
I-4 Investment Portfolio Composition
I-5 Yields and Costs
I-6 Loan Loss Allowance Activity
I-7 Fixed Rate and Adjustable Rate Loans
I-8 Gap Analysis
I-9 Loan Portfolio Composition
I-10 Contractual Maturity By Loan Type
I-11 Loan Originations, Purchases, and Sales
I-12 Non-Performing Assets
I-13 Classified Assets
I-14 Deposit Composition
II-1 List of Branch Offices
II-2 Historical Interest Rates
II-3 Demographic/Economic Reports
II-4 Sources of Personal Income/Employment Sectors
III-1 General Characteristics of Publicly-Traded Institutions
III-2 MHC Peer Institutions
<PAGE>
RP Financial, LC.
LIST OF EXHIBITS(continued)
IV-1 Stock Prices: August 21, 1998
IV-2 Historical Stock Price Indices
IV-3 Historical Thrift Stock Indices
IV-4 Market Area Acquisition Activity
IV-5 Directors and Management Summary Resumes
IV-6 Pro Forma Regulatory Capital Ratios
IV-7 Pro Forma Analysis Sheet-Full Conversion Basis
IV-8 Pro Forma Effect of Conversion Proceeds-Full Conversion Basis
IV-9 Peer Group Core Earnings Analysis
IV-10 Pro Forma Analysis Sheet-MHC Basis
IV-8 Pro Forma Effect of Conversion Proceeds-MHC Basis
V-1 Firm Qualifications Statement
<PAGE>
EXHIBIT I-1
Revere Federal Savings
Map of Office Location
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT I-2
Revere Federal Savings
Audited Financial Statements
[Incorporated by Reference]
<PAGE>
EXHIBIT I-3
Revere Federal Savings
Key Operating Ratios
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED
JUNE 30, AT OR FOR THE YEAR ENDED SEPTEMBER 30,
------------------------ ------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
SELECTED FINANCIAL RATIOS AND OTHER DATA(2)
PERFORMANCE RATIOS:
<S> <C> <C> <C> <C> <C> <C> <C>
Return on average assets.................... 0.31% 0.59% 0.56% 0.13% 0.86% 0.88% 0.89%
Return on average equity.................... 4.74 9.04 8.66 1.84 11.17 10.98 9.59
Average equity to average assets............ 6.60 6.49 6.52 7.13 7.69 8.00 9.24
Equity to total assets at end of period..... 7.18 6.37 6.95 6.99 7.79 8.04 8.03
Average interest rate spread................ 3.16 2.88 2.89 2.72 2.99 3.71 4.50
Net interest margin......................... 3.48 3.13 3.16 3.00 3.26 3.94 4.74
Average interest-earning assets to average
interest-bearing liabilities ............. 107.52 106.01 106.16 106.60 106.66 107.06 107.57
Total noninterest expense to average assets. 2.81 2.20 2.24 2.63 2.43 2.33 2.78
Efficiency ratio(3)......................... 78.63 68.89 69.64 87.59 65.36 59.43 59.50
REGULATORY CAPITAL RATIOS:
Tangible capital............................ 6.63 6.66 6.54 6.69 7.56 7.68 8.03
Core capital................................ 6.63 6.66 6.54 6.69 7.56 7.68 8.03
Risk-based capital.......................... 17.89 20.21 21.33 24.03 33.42 33.12 28.12
ASSET QUALITY RATIOS:
Non-performing loans as a percent
of loans.................................. 0.57 0.00 0.38 0.08 0.58 0.91 0.92
Non-performing assets as a percent
of total assets........................... 0.30 0.00 0.18 0.04 0.18 0.50 0.65
Allowance for loan losses as a percent
of loans ................................. 1.07 0.94 0.91 0.97 0.96 0.90 0.30
Allowance for loan losses as a percent
of non-performing loans .................. 188.12 N/A 240.03 1,159.67 164.86 98.33 32.76
NUMBER OF:
Loans outstanding........................... 834 717 775 569 440 436 487
Deposit accounts............................ 7,763 6,666 6,907 6,008 5,100 4,458 4,079
Full-service offices........................ 1 1 1 1 1 1 1
Full-time equivalent employees ............. 26 19 22 17 13 12 12
</TABLE>
- -------------
(1) The Association adopted Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS No. 115") as of September 30, 1994.
(2) Asset Quality Ratios and Regulatory Capital Ratios are end of period
ratios. With the exception of end of period ratios, all ratios are based on
average monthly balances during the indicated periods and are annualized
where appropriate.
(3) The efficiency ratio represents the ratio of noninterest expenses divided
by the sum of net interest income and noninterest income.
<PAGE>
EXHIBIT I-4
Revere Federal Savings
Investment Portfolio Composition
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT JUNE 30, ---------------------------------------------------------
1998 1997 1996 1995
----------------------------------------------------------------------------
AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE COST VALUE COST VALUE
----------------------------------------------------------------------------
(In thousands)
Held-to-maturity:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment securities ......................... $ 6,499 $ 6,430 $ 9,202 $ 9,207 $ 8,500 $ 8,502 $12,552 $12,610
Mortgage-backed and mortgage-related securities 21,635 22,016 25,144 25,458 24,945 24,609 23,085 22,940
5,162 5,212 5,807 5,842 7,235 7,245 6,105 6,119
------- ------- ------- ------- ------- ------- ------- -------
Asset-backed securities ....................... 33,296 33,658 40,153 40,507 40,680 40,356 41,742 41,669
Available-for-sale(1) .............................. 24 849 24 636 24 441 24 312
------- ------- ------- ------- ------- ------- ------- -------
Total securities ............................ $33,320 $34,507 $40,177 $41,143 $40,704 $40,797 $41,766 $41,981
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
- ------------------
(1) Consists of marketable equity securities.
<PAGE>
EXHIBIT I-5
Revere Federal Savings
Yields and Costs
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED JUNE 30,
AT JUNE 30, --------------------------------------------------------------------
1998 1998 1997
---------------------------------------------------------------------------------------------
WEIGHTED AVERAGE AVERAGE
AVERAGE AVERAGE YIELD/ AVERAGE YIELD/
BALANCE YIELD (1) BALANCE INTEREST COST BALANCE INTEREST COST
------------ -------- --------- -------- ----- ----------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
INTEREST-EARNING ASSETS:
Interest-bearing deposits .......... $ 799 4.77% $ 478 $ 12 3.36% $ 427 $ 13 4.07%
Federal funds sold ................. 2,909 5.88 5,395 222 5.50 1,481 51 4.60
Investment securities(1) ........... 35,663 6.90 36,206 1,898 7.01 44,608 2,321 6.96
Loans(2) ........................... 46,825 8.02 44,483 2,875 8.64 35,050 2,182 8.32
------- ------ ------ ------- ---- ------- -------
Total interest-earning assets .... 86,196 7.45 86,562 5,007 7.73 81,566 4,567 7.49
Noninterest-earning assets ........... 2,584 2,307 ------- 2,038 -------
------- ------- -------
Total assets ..................... $88,780 $88,869 $83,604
======= ======= =======
LIABILITIES AND EQUITY:
INTEREST-BEARING LIABILITIES:
NOW accounts ....................... $ 4,526 1.07% $ 4,191 $ 33 1.05% $ 3,361 $ 25 0.99%
Regular savings accounts ........... 16,352 1.41 15,018 142 1.26 14,520 119 1.10
Money market accounts .............. 1,991 3.13 1,555 36 3.10 660 15 3.04
Time deposits ...................... 36,306 5.48 35,397 1,485 5.61 32,266 1,355 5.61
------- ------- ------- ---- ------- -------
Total interest-bearing deposits .. 59,175 3.94 56,161 1,696 4.04 50,807 1,514 3.98
Advances from FHLB ................. 19,284 5.45 24,344 1,055 5.79 26,137 1,141 5.84
------- ------- ------- ------- -------
Total interest-bearing liabilities 78,459 4.31 80,505 2,751 4.57 76,944 2,655 4.61
------- -------
Demand deposits ...................... 3,801 2,441 1,047
Other liabilities .................... 146 61 184
------- ------- -------
Total liabilities ................ 82,406 83,007 78,175
Equity ............................... 6,374 5,862 5,429
------- ------- -------
Total liabilities and equity ..... $88,780 $88,869 $83,604
======= ======= =======
Net interest income .................. $ 2,256 $1,912
======= ======
Net interest rate spread(3) .......... 3.16% 2.88%
==== ====
Net interest margin(4) ............... 3.14% 3.48% 3.13%
==== ==== ====
Ratio of interest-bearing assets to ..
interest-bearing liabilities....... 109.86% 107.52% 106.01%
====== ====== ======
</TABLE>
- -----------------
(1) Includes investment securities available-for-sale, held-to-maturity and
stock in FHLB-Boston.
(2) Amount is net of deferred loan origination fees, allowance for loan losses
and includes non-accrual loans.
(3) Net interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average cost of
interest-bearing liabilities.
(4) Net interest margin represents net interest income as a percentage of
average interest-earning assets.
<PAGE>
EXHIBIT I-5
Revere Federal Savings
Yields and Costs
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------------------
1997 1996 1995
----------------------------- ------------------------------ ------------------------------
AVERAGE AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST ALANCE INTEREST COST BALANCE INTEREST COST
------------ -------- ------- -------- ----------- -------- ------- ------------ --------
ASSETS: (DOLLARS IN THOUSANDS)
INTEREST-EARNING ASSETS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits......... $ 453 $ 16 3.53% $ 237 $ 14 5.91% $ 460 $ 25 5.43%
Federal funds sold................ 1,308 69 5.28 730 43 5.89 1,700 99 5.82
Investment securities(1).......... 44,092 3,068 6.96 40,908 2,690 6.58 38,341 2,529 6.60
Loans(2).......................... 36,324 3,027 8.33 27,849 2,363 8.49 20,568 1,794 8.72
-------- ------- -------- ------- -------- -------
Total interest-earning assets... 82,177 6,180 7.52 69,724 5,110 7.33 61,069 4,447 7.28
------- ------- -------
Noninterest-earning assets........ 2,144 2,078 1,936
-------- -------- --------
Total assets.................... $ 84,321 $ 71,802 $ 63,005
======== ======== ========
LIABILITIES AND EQUITY:
INTEREST-BEARING LIABILITIES:
NOW accounts...................... $ 3,443 35 1.02% $ 2,041 $ 23 1.13% $ 1,707 28 1.64%
Regular savings accounts.......... 14,548 161 1.11 14,743 157 1.06 15,436 230 1.49
Money market accounts............. 739 23 3.11 212 6 2.83 6 3.30
Time deposits..................... 32,634 1,839 5.64 30,763 1,784 5.79 26,660 1,428 5.35
-------- ------- -------- ------- -------- ------
Total interest-bearing deposits. 51,364 2,058 4.02 47,759 1,970 4.11 43,809 1,686 3.84
Advances from FHLB................ 26,044 1,527 5.86 17,648 1,048 5.94 13,445 768 5.71
-------- ------- -------- ------- -------- ------
Total interest-bearing liabilities 77,408 3,585 4.63 65,407 3,018 4.61 57,254 2,454 4.29
------- ------- ------
Demand deposits........................ 1,219 914 586
Other liabilities...................... 199 362 323
-------- -------- --------
Total liabilities............... 78,826 66,683 58,163
Equity................................. 5,495 5,119 4,842
-------- -------- --------
Total liabilities and equity.... $ 84,321 $ 71,802 $ 63,005
======== ======== ========
Net interest income.................... $ 2,595 $ 2,092 $ 1,993
======= ======= =======
Net interest rate spread(3)............ 2.89% 2.72% 2.99%
==== ==== ====
Net interest margin(4)................. 3.16% 3.00% 3.26%
==== ==== ====
Ratio of interest-earning assets to
interest-bearing liabilities...... 106.16% 106.60% 106.66%
====== ====== ======
</TABLE>
- ------------------
(1) Includes investment securities available-for-sale, held-to-maturity and
stock in FHLB-Boston.
(2) Amount is net of deferred loan origination fees, allowance for loan losses
and includes non-accrual loans.
(3) Net interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average cost of
interest-bearing liabilities.
(4) Net interest margin represents net interest income as a percentage of
average interest-earning assets.
<PAGE>
EXHIBIT I-6
Revere Federal Savings
Loan Loss Allowance Activity
<TABLE>
<CAPTION>
AT OR FOR THE NINE
MONTHS ENDED AT OR FOR THE YEAR ENDED SEPTEMBER 30,
JUNE 30,
--------------------------- -----------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------------- ------------- ------------ ------------ ------------ ----------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at beginning of period............ $ 377 $ 325 $ 325 $ 206 $ 187 $ 67 $161
----- ----- ----- ------ ----- ---- ----
Provision (benefit) for loan losses....... 175 45 60 148 (2) 144 155
----- ----- ----- ------ ----- ---- ----
Charge-offs:
Mortgage loans:
One-to four-family................... --- --- --- 16 --- 23 251
Commercial real estate............... --- --- --- --- --- --- ---
Construction and land................ --- --- --- --- --- --- ---
Commercial loans....................... --- --- --- --- --- --- ---
Consumer loans:
Home equity lines.................... --- --- --- --- --- --- ---
Secured by deposit accounts.......... --- --- --- --- --- --- ---
Auto loans........................... 40 --- --- --- --- --- ---
Other consumer loans................. 6 --- 8 13 --- 1 ---
--- ----- --- ------ ----- --- -----
Total charge-offs.................... 46 --- 8 29 --- 24 251
---- ----- --- ------ ----- ---- ----
Recoveries................................ --- --- --- --- 21 --- 2
----- ----- ----- ------ ----- ---- ---
Balance at end of period.................. $ 506 $ 370 $ 377 $ 325 $ 206 $187 $ 67
===== ===== ===== ====== ===== ==== ====
Ratio of net charge-offs to average loans
outstanding during the period(1)....... 0.14% 0.00% 0.02% 0.10% (0.10)% 0.11% 1.08%
==== ==== ===== ===== ===== ==== ====
Allowance for loan losses as a
percent of loans ...................... 1.07% 0.94% 0.91% 0.97% 0.96% 0.90% 0.3
===== ==== ==== ==== ==== ==== ===
Allowance for loan losses as a
percent of non-performing loans........ 188.12% N/A 240.03% 1,159.67% 164.86% 98.33% 32.76%
====== ====== ======== ====== ===== =====
</TABLE>
- --------------
(1) Ratio is annualized for the nine month periods.
<PAGE>
EXHIBIT I-7
Revere Federal Savings
Fixed Rate and Adjustable Rate Loans
<TABLE>
<CAPTION>
DUE AFTER JUNE 30, 1999
---------------------------------------------------------------------
FIXED ADJUSTABLE TOTAL
---------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Mortgage loans:
One-to four-family ........ $24,597 $ 122 $24,719
Commercial real estate .... 987 2,597 3,584
Construction and land ..... 811 382 1,193
------- ------- -------
Total mortgage loans .... 26,395 3,101 29,496
------- ------- -------
Commercial loans ............... 1,344 -- 1,344
------- ------- -------
Consumer loans:
Home equity lines ......... -- -- --
Secured by deposit accounts 117 -- 117
Auto loans ................ 445 -- 445
Other consumer loans ...... 5 -- 5
------- ------- -------
Total consumer loans .... 567 -- 567
------- ------- -------
Total loans ............. $28,306 $ 3,101 $31,407
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
DUE AFTER SEPTEMBER 30, 1998
----------------------------------------------------------------------
FIXED ADJUSTABLE TOTAL
----------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Mortgage loans:
One-to four-family ........ $23,882 $ 235 $24,117
Commercial real estate .... 915 1,436 2,351
Construction and land ..... 315 -- 315
------- ------- -------
Total mortgage loans .... 25,112 1,671 26,783
------- ------- -------
Commercial loans ............... 635 -- 635
------- ------- -------
Consumer loans:
Home equity lines ......... -- -- --
Secured by deposit accounts 352 -- 352
Auto loans ................ 428 -- 428
Other consumer loans ...... 36 -- 36
------- ------- -------
Total consumer loans .... 816 -- 816
------- ------- -------
Total loans ............. $26,563 $ 1,671 $28,234
======= ======= =======
</TABLE>
<PAGE>
EXHIBIT I-8
Revere Federal Savings
Gap Analysis
<TABLE>
<CAPTION>
Net Portfolio Value NPV as % of Present Value of Assets
Change --------------------------- ----------------------------------------------------
In Rates $ Amount $ Change % Change NPV Ratio Change
- -----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
+400 bp $ 6,520 $ (3,143) (33)% 7.79% (274) bp
+300 bp 7,531 (2,132) (22)% 8.78% (176) bp
+200 bp 8,466 (1,197) (12)% 9.63% (91) bp
+100 bp 9,243 (420) (4)% 10.28% (26) bp
0 bp 9,663 --- ---% 10.53% --- bp
-100 bp 9,795 132 1% 10.50% (4) bp
-200 bp 9,489 (174) (2)% 10.03% (50) bp
-300 bp 9,295 (368) (4)% 9.68% (86) bp
-400 bp 9,257 (406) (4)% 9.46% (107) bp
</TABLE>
<PAGE>
EXHIBIT I-9
Revere Federal Savings
Loan Portfolio Composition
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT JUNE 30, ------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------------------ ---------------- ---------------- ---------------- --------------- ---------------
PERCENT PERCENT PERCENT PERCENT PERCENT PERCENT
AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL
------ -------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage loans:
One- to four-family .......$34,495 72.79% $ 32,928 79.11% $ 30,046 89.84% $ 20,630 95.91%$ 20,349 97.85%$ 21,825 98.02%
Commercial real estate .... 4,157 8.77 2,577 6.19 460 1.38 -- -- -- -- -- --
Construction and land ..... 1,518 3.2 815 1.96 1,075 3.21 174 0.81 80 0.38 88 0.4
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total mortgage loans .... 40,170 84.76 36,320 87.26 31,581 94.43 20,804 96.72 20,429 98.23 21,913 98.42
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Commercial loans ............. 2,789 5.89 1,684 4.04 49 0.15 -- -- -- -- -- --
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Consumer loans:
Home equity lines ......... 3,301 6.96 2,761 6.63 1,303 3.9 364 1.69 30 0.14 -- --
Secured by deposit accounts 621 1.31 374 0.9 370 1.11 314 1.46 266 1.28 242 1.09
Auto loans ................ 425 0.90 413 0.99 121 0.36 -- -- -- -- -- --
Other consumer loans ...... 84 0.18 73 0.18 19 0.05 27 0.13 72 0.35 109 0.49
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total consumer loans .... 4,431 9.35 3,621 8.7 1,813 5.42 705 3.28 368 1.77 351 1.58
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total loans receivable .. 47,390 100.00% 41,625 100.00% 33,443 100.00% 21,509 100.00% 20,797 100.00% 22,264 100.00%
====== ====== ====== ====== ====== ======
LESS:
Allowance for loan losses . (506) (377) (325) (206) (187) (67)
Deferred loan origination
fees, net ............... (59) (73) (72) (30) (31) (39)
-------- -------- -------- ------- -------
Loans, net ..............$46,825 $ 41,175 $ 33,046 $ 21,273 $20,579 $22,158
======== ======== ======== ======== ======= =======
</TABLE>
<PAGE>
EXHIBIT I-10
Revere Federal Savings
Contractual Maturity By Loan Type
<TABLE>
<CAPTION>
AT JUNE 30, 1998
---------------------------------------------------------------------------------
MORTGAGE LOANS
---------------------------------------------------------------------------------
ONE- TO FOUR- COMMERCIAL CONSTRUCTION
FAMILY REAL ESTATE AND LAND COMMERCIAL CONSUMER TOTAL
---------------------------------------------------------------------------------
Amount due: (In thousands)
<S> <C> <C> <C> <C> <C> <C>
One year or less .................. $ 9,776 $ 573 $ 325 $ 1,445 $ 3,864 $ 15,983
-------- -------- -------- -------- -------- --------
After one year:
More than one year to three years . 72 452 90 99 290 1,003
More than three years to five years 476 2,008 85 763 230 3,562
More than five years to ten years . 2,240 204 -- 425 -- 2,869
More than ten years to twenty years 6,551 920 150 57 47 7,725
More than twenty years ............ 15,380 -- 868 -- -- 16,248
-------- -------- -------- -------- -------- --------
Total due after one year ........ 24,719 3,584 1,193 1,344 567 31,407
-------- -------- -------- -------- -------- --------
Total amount due ................ $ 34,495 $ 4,157 $ 1,518 $ 2,789 $ 4,431 47,390
======== ======== ======== ======== ======== ========
Less:
Allowance for loan losses ......... (506)
Deferred loan origination fees, net (59)
--------
Loans, net ............................. $ 46,825
========
</TABLE>
<PAGE>
EXHIBIT I-10
Revere Federal Savings
Contractual Maturity By Loan Type
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1997
---------------------------------------------------------------------------------
MORTGAGE LOANS
---------------------------------------------------------------------------------
ONE- TO FOUR- COMMERCIAL CONSTRUCTION
FAMILY REAL ESTATE AND LAND COMMERCIAL CONSUMER TOTAL
---------------------------------------------------------------------------------
Amount due: (In thousands)
<S> <C> <C> <C> <C> <C> <C>
One year or less .................. $ 8,811 $ 226 $ 500 $ 1,049 $ 2,805 $ 13,391
-------- -------- -------- -------- -------- --------
After one year:
More than one year to three years . 69 374 -- 105 252 800
More than three years to five years 495 1,016 113 471 262 2,357
More than five years to ten years . 1,746 362 -- -- -- 2,108
More than ten years to twenty years 6,131 599 -- 59 48 6,837
More than twenty years ............ 15,676 -- 202 -- 254 16,132
-------- -------- -------- -------- -------- --------
Total due after one year ........ 24,117 2,351 315 635 816 28,234
-------- -------- -------- -------- -------- --------
Total amount due ................ $ 32,928 $ 2,577 $ 815 $ 1,684 $ 3,621 41,625
======== ======== ======== ======== ======== ========
Less:
Allowance for loan losses ......... (377)
Deferred loan origination fees, net (73)
--------
Loans, net ............................. $ 41,175
========
</TABLE>
<PAGE>
EXHIBIT I-11
Revere Federal Savings
Loan Originations, Purchases, and Sales
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED JUNE 30, FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C>
Beginning balance, loans, net ........... $ 41,175 $ 33,046 $ 33,046 $ 21,273 $ 20,579
-------- -------- -------- -------- --------
Loans originated:
Mortgage loans:
One- to four-family .............. 11,869 4,521 6,843 18,385 3,402
Commercial real estate ........... 1,000 1,799 2,245 463 --
Construction and land ............ 885 519 1,047 511 718
-------- -------- -------- -------- --------
Total mortgage loans ........... 13,754 6,839 10,135 19,359 4,120
Commercial loans ................... 1,627 1,310 1,946 -- --
Consumer loans ..................... 3,538 1,392 2,329 965 537
-------- -------- -------- -------- --------
Total loans originated ......... 18,919 9,541 14,410 20,324 4,657
-------- -------- -------- -------- --------
Total ................................ 60,094 42,587 47,456 41,597 25,236
Principal repayments and other, net ..... (7,263) (1,461) (3,463) (5,110) (3,385)
Loan charge-offs, net ................... (46) -- (8) (29) 21
Sale of mortgage loans, principal balance (5,960) (2,209) (2,810) (3,412) (599)
-------- -------- -------- -------- --------
Ending balance, loans, net .............. $ 46,825 $ 38,917 $ 41,175 $ 33,046 $ 21,273
======== ======== ======== ======== ========
</TABLE>
<PAGE>
EXHIBIT I-12
Revere Federal Savings
Non-Performing Assets
<TABLE>
<CAPTION>
AT JUNE 30, AT SEPTEMBER 30,
-------------- ------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Non-performing loans:
Mortgage loans:
One-to four-family ............. $142 $ -- $ 144 $ 28 $ 125 $ 190 $ 203
Commercial real estate ......... -- -- -- -- -- -- --
Construction and land .......... -- -- -- -- -- -- --
------ ----- ------ -------- ------- ----- -----
Total mortgage loans ......... 142 -- 144 28 125 190 203
------ ----- ------ -------- ------- ----- -----
Commercial loans ................. 124 -- -- -- -- -- --
------ ----- ------ -------- ------- ----- -----
Consumer loans:
Home equity lines .............. -- -- -- -- -- -- --
Security by deposit accounts ... -- -- -- -- -- -- --
Auto loans ..................... -- -- -- -- -- -- --
Other consumer loans ........... 3 -- 13 -- -- -- 1
------ ----- ------ -------- ------- ----- -----
Total consumer loans ......... 3 -- 13 -- -- -- 1
------ ----- ------ -------- ------- ----- -----
Total non-performing loans(1) 269 -- 157 28 125 190 204
Other real estate owned, net ......... -- -- -- -- -- 108 128
------ ----- ------ -------- ------- ----- -----
Total non-performing assets(2) $ 269 $ -- $ 157 $ 28 $ 125 $ 298 $ 332
====== ===== ====== ======== ======= ===== =====
Allowance for loan losses
as a percent of loans(3) ......... 1.07% 0.94% 0.91% 0.97% 0.96% 0.90% 0.30%
====== ===== ====== ======== ======= ===== =====
Allowance for loan losses as a percent
of non-performing loans(4) ....... 188.12% N/A 240.03% 1,159.67% 164.86% 98.33% 32.76%
====== ====== ======== ======= ===== =====
Non-performing loans as a percent
of loans(3)(4) ................... 0.57% 0.00% 0.38% 0.08% 0.58% 0.91% 0.92%
====== ==== ====== ======== ======= ===== ====
Non-performing assets as a percent
of total assets(2) ............... 0.30% 0.00% 0.18% 0.04% 0.18% 0.50% 0.65%
====== ==== ====== ======== ======= ===== =====
</TABLE>
- -------------
(1) Non-performing loans at June 30, 1998 includes non-accrual loans of
$145,000 and loans past due 90 days or more and still accruing of $124,000.
For all other periods presented, the non-performing loans consisted
entirely of non-accrual loans.
(2) Non-performing assets consist of non-performing loans and other real estate
owned.
(3) Loans are presented before allowance for loan losses and deferred loan
origination fees, net.
(4) Non-performing loans consist of all loans 90 days or more past due and
other loans which have been identified by the Bank as presenting
uncertainty with respect to the collectibility of interest or principal.
<PAGE>
EXHIBIT I-13
Revere Federal Savings
Classified Assets
Federal regulations require each banking institution to classify its asset
quality on a regular basis. In addition, in connection with examinations of such
banking institutions, federal examiners have authority to identify problem
assets and, if appropriate, classify them. An asset is classified substandard if
it is determined to be inadequately protected by the current net worth and
paying capacity of the obligor or of the collateral pledged, if any. As a
general rule, the Bank will classify a loan as substandard if the Bank can no
longer rely on the borrower's income as the primary source for repayment of the
indebtedness and must look to secondary sources such as guarantors or
collateral. An asset is classified as doubtful if full collection is highly
questionable or improbable. An asset is classified as loss if it is considered
uncollectible, even if a partial recovery could be expected in the future. The
regulations also provide for a special mention designation, described as assets
which do not currently expose a banking institution to a sufficient degree of
risk to warrant classification but do possess credit deficiencies or potential
weaknesses deserving management's close attention. Assets classified as
substandard or doubtful require a banking institution to establish general
allowances for loan losses. If an asset or portion thereof is classified as a
loss, a banking institution must either establish specific allowances for loan
losses in the amount of the portion of the asset classified as a loss, or charge
off such amount. Examiners may disagree with a banking institution's
classifications and amounts reserved. If a banking institution does not agree
with an examiner's classification of an asset, it may appeal this determination
to the Regional Director of the OTS. At June 30, 1998, the Bank had $38,000 in
assets classified as special mention, doubtful or loss, and $144,000 in assets
designated as substandard.
<PAGE>
EXHIBIT I-14
Revere Federal Savings
Deposit Composition
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
-----------------------------------------------------------------------------------------------
AT JUNE 30, 1998 1997 1996
----------------------------- --------------------------- ---------------------------------
PERCENT OF PERCENT OF PERCENT OF
TOTAL WEIGHTED TOTAL WEIGHTED TOTAL WEIGHTED
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
AMOUNT DEPOSITS RATE AMOUNT DEPOSITS RATE AMOUNT DEPOSITS RATE
------------------------------------------------------------------------------------------------
DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Demand deposits................. $2,441 4.17% ---% $ 1,219 2.23% ---% $ 914 1.88% ---%
Now accounts.................... 4,191 7.15 1.05 3,443 6.55 1.02 2,041 4.19 1.13
Regular savings accounts........ 15,018 25.63 1.26 14,548 27.67 1.11 14,743 30.29 1.06
Money market accounts........... 1,555 2.65 3.10 739 1.40 3.11 212 0.44 2.83
------ ----- -------- ------- ------- ------
Total..................... 23,205 39.6 1.22 19,949 37.94 1.17 17,910 36.80 1.09
------ ----- -------- ------- ------- ------
Time deposits:(1)
6 months or less............ 3,973 6.78 4.98 3,612 6.87 4.73 4,561 9.37 4.91
Over 6 months through 12 months 13,759 23.48 5.30 12,026 22.87 5.20 12,569 25.82 5.66
Over 12 through 36 months... 15,713 26.81 5.91 15,168 28.84 6.09 11,934 24.52 6.15
Over 36 months.............. 1,952 3.33 6.64 1,828 3.48 6.67 1,699 3.49 6.66
------ ----- -------- ------- ------- ------
Total time deposits....... 35,397 60.40 5.61 32,634 62.06 5.64 30,763 63.20 5.79
------ ----- -------- ------- ------- ------
Total average deposits.... $58,602 100.00% 3.87% $52,583 100.00% 4.02% $48,673 100.00% 4.11%
====== ====== ======== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
-----------------------------
AT SEPTEMBER 30, 1995
-----------------------------
PERCENT OF
TOTAL WEIGHTED
AVERAGE AVERAGE AVERAGE
AMOUNT DEPOSITS RATE
------------------------------
<S> <C> <C> <C>
Demand deposits................. $ 586 1.32% ---%
Now accounts.................... 1,707 3.85 1.64
Regular savings accounts........ 15,436 34.78 1.49
Money market accounts........... 6 0.01 3.30
--- ------
Total..................... 17,735 39.96 1.50
-------- -------
Time deposits:(1)
6 months or less............ 5,639 12.70 4.79
Over 6 months through 12 months 10,333 23.28 5.22
Over 12 through 36 months... 9,483 21.37 5.66
Over 36 months.............. 1,205 2.69 6.71
------- ------
Total time deposits....... 26,660 60.04 5.35
-------- -------
Total average deposits.... $ 44,395 100.00% 3.84%
======== ======
</TABLE>
- --------------
(1) Based on remaining maturity of deposits.
<PAGE>
EXHIBIT II-1
Revere Federal Savings
List of Office Location
<TABLE>
<CAPTION>
YEAR COMPLETED SQUARE FOOTAGE BOOK VALUE
---------------------------------------------------------------
<S> <C> <C> <C>
Main Office: 310 Broadway
Revere, MA 1977 3,500 $449,000
</TABLE>
<PAGE>
EXHIBIT II-2
HISTORICAL INTEREST RATES(1)
<TABLE>
<CAPTION>
Prime 90 Day One Year 30 Year
Year/Qtr. Ended Rate T-Bill T-Bill T-Bond
--------------- ---- ------- ------- -------
<S> <C> <C> <C> <C> <C>
1991: Quarter 1 8.75% 5.92% 6.24% 8.26%
Quarter 2 8.50% 5.72% 6.35% 8.43%
Quarter 3 8.00% 5.22% 5.38% 7.80%
Quarter 4 6.50% 3.95% 4.10% 7.47%
1992: Quarter 1 6.50% 4.15% 4.53% 7.97%
Quarter 2 6.50% 3.65% 4.06% 7.79%
Quarter 3 6.00% 2.75% 3.06% 7.38%
Quarter 4 6.00% 3.15% 3.59% 7.40%
1993: Quarter 1 6.00% 2.95% 3.18% 6.93%
Quarter 2 6.00% 3.09% 3.45% 6.67%
Quarter 3 6.00% 2.97% 3.36% 6.03%
Quarter 4 6.00% 3.06% 3.59% 6.34%
1994: Quarter 1 6.25% 3.56% 4.44% 7.09%
Quarter 2 7.25% 4.22% 5.49% 7.61%
Quarter 3 7.75% 4.79% 5.94% 7.82%
Quarter 4 8.50% 5.71% 7.21% 7.88%
1995: Quarter 1 9.00% 5.86% 6.47% 7.43%
Quarter 2 9.00% 5.57% 5.63% 6.63%
Quarter 3 8.75% 5.42% 5.68% 6.51%
Quarter 4 8.50% 5.09% 5.14% 5.96%
1996: Quarter 1 8.25% 5.14% 5.38% 6.67%
Quarter 2 8.25% 5.16% 5.68% 6.87%
Quarter 3 8.25% 5.03% 5.69% 6.92%
Quarter 4 8.25% 5.18% 5.49% 6.64%
1997: Quarter 1 8.50% 5.32% 6.00% 7.10%
Quarter 2 8.50% 5.17% 5.66% 6.78%
Quarter 3 8.50% 5.10% 5.44% 6.40%
Quarter 4 8.50% 5.34% 5.48% 5.92%
1998: Quarter 1 8.50% 5.12% 5.39% 5.93%
Quarter 2 8.50% 4.99% 5.37% 5.63%
August 21, 1998 8.50% 4.98% 5.19% 5.43%
</TABLE>
(1) End of period data.
Source: SNL Securities.
<PAGE>
EXHIBIT II-3
Demographic/Economic Reports
<PAGE>
ZIP CODE DEMOGRAPHIC REPORT
ZIP Code 02151
Post Office Name REVERE
MA
Population
- ----------
1980 42,423
1990 42,786
1998 38,874
2003 38,198
Population Growth Rate -1.2
Households
- ----------
1990 17,438
1998 16,035
2OO3 15,926
Household Growth Rate -1
Average Household Size 2.4
Families
- --------
1990 11,151
1998 9,923
Family Growth Rate -1.4
Race 1990 1998
- ---- ---- ----
% White 93.2 89.2
% Black 1.4 2.5
% Asian
/Pacific Isl. 3.7 5.5
% Hispanic* 3.8 5.8
1998 Age Distribution
- ---------------------
0-4 6.2
5-9 6.2
10-14 4.9
15-19 4.6
20-24 5.7
25-44 32.9
45--64 22.8
65-84 14.8
85+ 1.8
18+ 80.1
Median Age
- ----------
1990 36.1
1998 38.2
Male/Female Ratio 94.6
Per Capita Income $17,995
1998 Household Income*
- ----------------------
BASE 16,035
% greater than $15K 21.5
% $15K-25K 13
% $25K-50K 32.3
% $50K-100K 27.5
% $100K-150K 4.8
% >$150K 0.9
Median Household Income
- -----------------------
1998 $36,O57
2003 $38,218
1998 Average Disposable Income
- ------------------------------
Total $30,814
Householder greater than 35 $31,152
Householder 35-44 $34,O82
Householder 45-54 $37,484
Householder 55-64 $38,094
Householder 65+ $19,518
Spending Potential Index*
- -------------------------
Auto Loan 98
Home Loan 99
Investments 112
Retirement Plans 96
Home Repair 101
Lawn & Garden 98
Remodeling 87
Appliances 97
Electronics 92
Furniture 102
Restaurants 99
Sporting Goods 97
Theater/Concerts 102
Toys 8, Hobbies 99
Travel 110
Video Rental 98
Apparel 100
Auto Aftermarket 97
Health Insurance 102
Pets & Supplies 98
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current
dollars, including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- --------------------------------------------------------------------------------
<PAGE>
STATE DEMOGRAPHIC REPORT
STATE 25
STATE NAME MASSACHUSETTS
Population
- ----------
1980 5,737,093
1990 6,016,425
1998 6,148,792
2003 6,235,143
Population Growth Rate 0.3
Households
- ----------
1990 2,247,110
1998 2,368,215
2003 2,448,273
Household Growth Rate 0.6
Average Household Size 2.5
Families
- --------
1990 1,514,746
1998 1,561,172
Family Growth Rate 0.4
Race 1990 1998
- ---- ---- ----
% White 89.8 87.2
% Black 5 5.8
% Asian
/Pacific Isl. 2.4 3.5
% Hispanic* 4.8 6.1
1998 Age Distribution
- ---------------------
04 6.3
5-9 7
10-14 6.3
15-19 6.1
2O-24 6
2544 33.2
45-~4 21
65-84 12.3
85+ 1.8
18+ 77.3
Median Age
- ----------
1990 33.6
1998 36.1
Male/Female Ratio 93.4
Per Capita Income $19,978
1998 Household Income*
- ----------------------
BASE 2,368,150
% less than $15K 16.9
% $15K-25K 11.6
% $25K-50K 31.4
% $50K-100K 31
% $100K-150K 6.4
% greater than $150K 2.8
Median Household Income
- -----------------------
1998 $41,488
2003 $44,507
1998 Averaqe Disposable Income
- ------------------------------
Total $36,042
Householder greater than 35 $32,669
Householder 35-44 $40,847
Householder 45-54 $47,65O
Householder 55-64 $42,582
Householder 65+ $20,898
SPENDING POTENTIAL INDEX*
Auto Loan 102
Home Loan 109
Investments 111
Retirement Plans 109
Home Repair 99
Lawn & Garden 100
Remodeling 93
Appliances 100
Electronics 101
Furniture 107
RESTAURANTS 107
Sporting Goods 104
Theater/Concerts 108
Toys & Hobbies 104
Travel 113
Video Rental 100
Apparel 110
Auto Aftermarket 104
Health Insurance 102
Pets & Supplies 103
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current
dollars, including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for
a product or service, multiplied by 100.
- --------------------------------------------------------------------------------
<PAGE>
MSA DEMOGRAPHIC REPORT
MSA 1123
MSA NAME BOSTON-WOR-LAW-LW-BR
Population
- ----------
1980 5,336,242
1990 5,685,998
1998 5,864,713
2003 5,980,698
Population Growth Rate 0.4
Households
- ----------
1990 2,111,440
1998 2,244,336
2003 2,332,087
Household Growth Rate 0.7
Average Household Size 2.53
Families
- --------
1990 1,432,816
1998 1,491,759
Family Growth Rate 0.5
Race 1990 1998
- ---- ---- ----
% White 90.6 88.2
% Black 4.6 5.3
% Asian
/Pacific Isl. 2.5 3.6
% Hispanic* 4.3 5.5
1998 Age Distribution
- ---------------------
O-4 6.3
5-9 7.1
10-14 6.4
15-19 6
20-24 6
25-44 34
45-64 20.9
65-84 11.5
85+ 1.7
18+ 77
Median Age
- ----------
1990 33.2
1998 35.7
MALE/FEMALE RATIO 94.1
Per Capita Income $20,424
1998 Household Income*
- ----------------------
Base 2,244,287
% less than $15K 15.7
% $15K-25K 11
% $25K-50K 31.3
% $50K-100K 32.3
% $100K-150K 6.7
% greater than $150K 2.9
Median Household Income
- -----------------------
1998 $43,024
2O03 $46,111
1998 Average Disposable Income
Total $37,415
Householder less than 35 $34,033
Householder 35-44 $42,O93
Householder 45-54 $48,897
Householder 55-64 $43,604
Householder 65+ $21,305
Spending Potential Index*
- -------------------------
Auto Loan 103
Home Loan 111
Investments 110
Retirement Plans 110
Home Repair 99
Lawn & Garden 100
Remodeling 93
Appliances 100
Electronics 102
Furniture 108
Restaurants 108
Sporting Goods 105
Theater/Concerts 108
Toys & Hobbies 105
Travel 113
Video Rental 101
Apparel 111
Auto Aftermarket 105
Health Insurance 102
Pets & Supplies 104
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current
dollars, including an adjustmen! for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACl from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for
a product or service, multiplied by 100.
- --------------------------------------------------------------------------------
<PAGE>
COUNTY DEMOGRAPHIC REPORT
STATE/COUNTY 25025
COUNTY NAME SUFFOLK MA
Population
- ----------
1980 650,142
1990 663,906
1998 642,698
2003 636,805
1998 Average Disposable Income
- -------------------------------
Total $31,497
Householder less than 35 $30,347 Population Growth Rate -0.4
Householder 35-44 $35,255 Households
Householder 45-54 $38,900 ----------
Householder 55-64 $36,481
Householder 65+ $19,884
1990 264,061
1998 258,813
2003 259,175
Household Growth Rate -0.2
Average Household Size 2.34
Families
- --------
1990 138,177
1998 131,534
Family Growth Rate -0.6
1998 Age Distribution
- ---------------------
0-4 6.4
5-9 6.2
10-14 5.1
15-19 6.5
20-24 9.1
25-44 37.1
45-64 17.5
65-84 10.5
85+ 1.6
18+ 79.8
Median Age
- ----------
1990 30.8
1998 32.8
Male Female Ratio 93.5
Per Capita Income $18,345
Race 1990 1998
- ---- ---- ----
% White 66.1 59.2
% Black 22.5 26
% Asian
/Pacific Isl. 5 7
% Hispanic* 11 13.5
1998 Household Income*
- ----------------------
Base 258,796
% less than $15K 23.1
% $15K-25K 13.7
% $25K-50K 31
% $501'(-100K 25.1
% $100K-150K 5
% greater than $150K 2.1
Median Household Income
- -----------------------
1998 $34,301
2003 $36,377
Spending Potential Index*
- -------------------------
Auto Loan 97
Home Loan 106
Investments 106
Retirement Plans 98
Home Repair 98
Lawn & Garden 94
Remodeling 86
Appliances 95
Electronics 94
Furniture 102
Restaurants 97
Sporting Goods 97
Theater/Concerts 99
Toys & Hobbies 95
Travel 110
Video Rental 99
Apparel 102
Auto Aftermarket 99
Health Insurance 96
Pets & Supplies 99
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current
dollars, including an adjustmen! for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for
a product or service, multiplied by 100.
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT II-4
Sources of Personal Income/Employment Sectors
<PAGE>
PERSONAL INCOME BY MAJOR SOURCE AND EARNINGS BY INDUSTRY 1/
for States and counties
(thousands of dollars}
Massachusetts [25.000]
<TABLE>
<CAPTION>
Item 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income by place of residence
Personal income (thousands of dollars} 141,629,206 147,305,222 152,471,825 159,030,895 170,038,696
Nonfarm personal income 141,454,043 147,120,444 152,276,042 158,877,284 169,884,249
Farm income 2/ 175,163 184,778 195,783 153,611 154,447
Population (number of personsl 3/ 5,999,263 5,997,894 6,017,414 6,042,073 6,071,078
Per capita personal income (dollars} 23,608 24,559 25,358 26,321 28,008
Derivation of personal income
Earnings by place of work 100,727,163 106,734,364 110,888,890 116,250,016 123,970,025
Less: Personal cont. for social insurance 6,400,017 6,620,513 6,925,135 7,397,375 7,889,677
Plus: Adjustment for residence 5/ -2,179,658 -2,299,613 -2,477,547 -2,680,861 -2,875,250
Equals: Net earnings by place of residence 92,147,488 97,804,238 101,486,208 106,171,780 113,205,098
Plus: Dividends, interest, and rent 6/ 26,884,324 25,868,271 26,648,979 27,713,176 30,001,069
Plus: Transfer payments 22,597,394 23,632,713 24,336,638 25,145,939 26,832,529
Earnings by place of work
Components of earnings
Wage and salary disbursements 82,398,849 86,122,657 89,222,306 93,383,223 99,575,276
Other labor income 9,573,306 10,279,783 10,983,133 11,466,265 12,099,852
Proprietors' income 7/ 8,755,008 10,331,924 10,683,451 11,400,528 12,294,897
Farm proprietors' income 96,728 109,025 112,860 72,154 63,298
Nonfarmproprietors' income 8,658,280 10,222,899 10,570,591 11,328,374 12,231,599
Earnings by industry
Farm earnings 175,163 184,778 195,783 153,611 154,447
Nonfarm earnings 1 00,552,000 106,549,586 110,693,107 116,096,405 123,815,578
Private earnings 87,940,986 93,747,352 97,222,028 102,018,769 109,227,603
Ag. serv., forestry, fishing, and other 571,826 571,802 553,630 570,903 614,113
Agricultural serzioes 386,252 411,334 423,746 458,278 492,153
Forestry, fishing, and other 8/ 185,574 160,468 129,884 112,625 121,960
Forestry 1,993 1,936 631 785 811
Fishing 183,581 158,532 129,253 111,840 121,149
Other 8/ 0 0 0 0 0
Mining 65,961 75,302 77,810 84,475 84,209
Metal mining 121 (L) (L) (L) (D)
Coal mining 16,663 23,529 24,682 23,361 24,753
Oil and gas extraction 2,251 2,800 3,113 3,840 (D)
Nonmetallic minerals, except fuels 46,926 48,950 50,037 57,313 55,411
Construction 4,307,686 4,391,857 4,747,072 5,355,064 5,524,823
General building contractors 1,069,645 974,039 1,023,667 1,180,302 1,215,057
Heavy construction contractors 360,083 434,718 497,790 564,066 631,080
Special trade contractors 2,877,958 2,983,100 3,225,615 3,610,696 3,678,686
Manufacturing 20,309,944 20,788,059 20,692,414 21,128,400 22,012,191
Durable goods 14,311,258 14,495,534 14,199,631 14,292,553 14,912,366
Lumber and wood products 116,506 123,591 127,826 135,696 154,327
Furniture and fixtures 127,012 142,679 149,699 159,101 155,438
Stone, clay, and glass products 316,969 352,906 349,506 366,218 393,419
Primary metal industries 375,407 375,473 366,624 393,730 410,113
Fabricated metal products 1,617,315 1,635,988 1,654,202 1,730,676 1,888,293
Industrial machinery and equipment 3,732,297 3,904,549 3,734,857 3,601,403 3,665,211
Electronic and other electric equipment 3,024,432 3,022,856 2,873,673 3,003,508 3,271,200
Motor vehicles and equipment 31,627 50,458 51,841 59,788 56,930
Other transportation equipment 1,315,520 1,265,121 1,215,190 1,101,404 1,102,742
Instruments and related products 3,111,607 3,064,044 3,083,216 3,122,109 3,181,195
Miscellaneous manufacturing industries 542,566 557,869 592,997 618,920 633,498
Ordnance 9/ (N) (N) {N) (N) (N)
Nondurable goods 5,998,686 6,292,525 6,492,783 6,835,847 7,099,825
Food and kindred products 669,477 702,677 728,247 746,799 774,622
Tobacco products 268 325 404 356 371
Textile mill products 467,669 519,123 529,701 564,581 574,210
Apparel and other textile products 375,432 397,302 392,664 388,551 377,628
Paper and allied products 776,646 809,942 814,837 840,833 864,523
Printing and publishing 1,850,230 1,867,203 1,914,662 2,038,351 2,168,880
Chemicals and allied products 871,878 947,840 932,319 1,029,352 1,024,103
Petroleum and coal products 79,179 98,195 107,348 106,912 112,964
Rubber and misc. plastics products 739,465 791,733 912,418 959,411 1,058,035
Leather and leather products 168,442 158,185 160,183 160,701 144,489
</TABLE>
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA05.2 August 1997 BUREAU OF ECONOMIC ANALYSIS
<PAGE>
PERSONAL INCOME BY MAJOR SOURCE AND EARNINGS BY INDUSTRY 1/
for States and counties
{thousands of dollars)
Massachusetts [25.000]
<TABLE>
<CAPTION>
Item 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Transportation and public utilities 5,428,458 5,764,903 6,128,798 6,386,994 6,625,136
Railroad transportation 117,801 134,868 133,117 139,929 154,460
Trucking and warehousing 965,509 1,019,076 1,089,315 1,175,504 1,239,955
Water transportation 117,411 101,041 88,872 (D) (D)
Other transportation 1,205,694 1,306,274 1,364,825 (D) (D)
Local and interurban passenger transit 343,352 364,312 386,704 432,082 479,879
Transportation by air 535,930 587,165 589,833 581,778 567,272
Pipelines, except natural gas 670 704 788 (D) (D)
Transportation services 325,742 354,093 387,500 402,262 428,328
Communications 1,550,623 1,619,569 1,649,524 1,694,833 1,748,348
Electric, gas, and sanitary services 1,471,420 1,584,075 1,803,145 1,864,425 1,912,592
Wholesale trade 6,804,647 7,155,008 7,198,759 7,668,132 8,385,550
Retail trade 9,100,029 9,432,250 9,634,069 10,100,229 10,645,861
Building materials and garden equipment 458,689 455,107 433,715 492,302 519,461
General merchandise stores 831,545 893,663 915,842 853,682 912,020
Food stores 1,570,371 1,581,754 1,570,067 1,624,587 1,702,810
Automotive dealers and service stations 1,101,308 1,124,797 1,193,914 1,298,585 1,346,339
Apparel and accessory stores 687,460 711,573 733,136 740,591 744,500
Home furniture and furnishings stores 501,152 492,177 497,179 558,749 597,564
Eating and drinking places 2,167,759 2,287,569 2,391,658 2,511,825 2,672,491
Miscellaneous retail 1,781,745 1,885,610 1,898,558 2,019,908 2,150,676
Finance, insurance, and real estate 8,196,578 9,290,694 9,964,861 10,599,412 11,580,579
Depository & non-depository institutions 2,338,232 2,555,793 2,705,567 2,860,537 3,000,814
Other finance, insurance, & real estate 5,858,346 6,734,901 7,259,294 7,738,875 8,579,765
Security & commodity brokers & services 1,686,989 2,156,643 2,495,121 2,697,290 3,254,431
Insurance carriers 2,154,174 2,286,941 2,324,957 2,460,969 2,532,439
Insurance agents, brokers, and services 1,066,155 1,054,565 1,099,098 1,185,001 1,255,882
Real estate 714,003 960,378 1,156,996 1,227,755 1,318,253
Combined real estate, insurance, etc. 10/ (N) (N) (N) (N) (N)
Holding and other investment companies 237,025 276,374 183,122 167,860 218,760
Services 33,155,857 36,277,477 38,224,615 40,125,160 43,755,141
Hotels and other lodging places 713,187 772,598 786,705 812,346 859,203
Personal services 848,850 925,215 1,018,512 1,059,131 1,088,364
Private households 167,257 183,159 192,293 194,508 208,068
Business services 5,577,890 6,284,041 6,638,527 7,328,604 8,733,992
Auto repair, services, and parking 659,255 685,406 753,056 819,211 878,745
Miscellaneous repair services 328,189 361,206 397,646 338,151 378,506
Amusement and recreation services 670,039 827,691 803,618 853,440 899,369
Motion pictures 208,016 225,460 237,880 224,477 251,772
Health services 10,367,997 11,435,092 12,060,623 12,638,174 13,309,984
Legal services 2,528,048 2,672,360 2,759,801 2,810,237 2,914,776
Educational services 3,407,297 3,524,762 3,688,124 3,812,707 4,033,732
Social services 11/ 1,206,164 1,314,507 1,448,595 1,542,064 1,655,610
Museums, botanical, zoological gardens 79,573 82,767 87,154 91,995 87,474
Membership organizations 763,567 720,819 767,184 802,332 852,048
Engineering and management services 12/ 5,230,269 5,798,740 6,127,791 6,271,065 6,998,702
Miscellaneous services 400,259 463,654 457,106 546,720 604,796
Government and government enterprises 12,611,014 12,802,234 13,471,079 14,077,636 14,587,975
Federal, civilian 2,238,477 2,261,257 2,524,004 2,580,728 2,628,894
Military 507,974 512,976 473,162 421,908 396,981
State and local 9,864,563 10,028,001 10,473,913 11,074,990 11,562,100
State 3,403,211 3,406,301 3,662,803 3,897,406 3,974,027
Local 6,461,352 6,621,700 6,811,110 7,177,584 7,588,073
</TABLE>
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA05.2 August 1997 BUREAU OF ECONOMIC ANALYSIS
<PAGE>
PERSONAL INCOME BY MAJOR SOURCE AND EARNINGS BY INDUSTRY 1/
for States and counties
(thousands of dollars)
Suffolk, Massachusetts [25.025]
<TABLE>
<CAPTION>
Item 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income by place of residence
Personal income (thousands of dollars) 16,528,594 17,045,610 17,724,049 18,535,162 19,890,786
Nonfarm personal income 16,528,594 17,045,610 17,724,049 18,535,162 19,890,786
Farm income 2/ 0 0 0 0 0
Population (number of persons) 3/ 649,263 640,005 639,522 639,017 647,570
Per capita personal income (dollars) 25,457 26,634 27,715 29,006 30,716
Derivation of personal income
Earnings by place of work 22,458,213 24,256,460 25,435,257 26,680,532 28,747,720
Less: Personal cont. for social insurance 1,391,427 1,469,133 1,543,395 1,642,715 1,765,841
Plus: Adjustment for residence 5/ -10,736,096 -11,716,703 -12,447,441 -13,047,725 -14,162,009
Equals: Net earnings by place of residence 10,330,690 11,070,624 11,444,421 11,990,092 12,819,870
Plus: Dividends, interest, and rent 6/ 2,966,365 2,734,284 2,935,011 3,085,868 3,349,966
Plus: Transfer payments 3,231,539 3,240,702 3,344,617 3,459,202 3,720,950
Earnings by place of work
Components of earnings
Wage and salary disbursements 18,760,490 20,037,164 20,962,645 21,871,230 23,569,174
Other labor income 2,015,479 2,202,185 2,377,394 2,499,352 2,669,266
Proprietors' income 7/ 1,682,244 2,017,111 2,095,218 2,309,950 2,509,280
Farm proprietors' income 0 0 0 0 0
Nonfarm proprietors' income 1,682,244 2,017,111 2,095,218 2,309,950 2,509,280
Earnings by industry
Farm earnings 0 0 0 0 0
Nonfarm earnings 22,458,213 24,256,460 25,435,257 26,680,552 28,747,720
Private earnings 19,009,658 20,811,602 21,790,050 22,822,422 24,742,021
Ag. serv., forestry, fishing, and other 32,020 30,232 30,523 31,882 26,832
Agricultural services 25,165 25,480 26,344 27,961 22,991
Forestry, fishing, and other 8/ 6,855 4,752 4,179 3,921 3,841
Forestry 357 398 (L) (L) (L)
Fishing 6,498 4,354 4,185 3,917 3,833
Other 8/ 0 0 0 0 0
Mining 2,825 4,435 4,988 4,838 5,124
Metal mining 0 0 0 0 0
Coal mining 2,637 4,143 4,641 4,393 4,654
Oil and gas extraction 152 280 338 438 462
Nonmetallic minerals, except fuels (L) (L) (L) (L) (L)
Construction 509,979 552,320 610,481 703,899 785,651
General building contractors 164,685 162,240 177,622 203,122 217,751
Heavy construction contractors 31,435 72,255 85,419 106,175 171,950
Special trade contractors 313,859 317,825 347,440 394,602 395,950
Manufacturing 1,320,134 1,316,818 1,397,150 1,493,549 1,606,525
Durable goods 612,590 591,970 623,793 676,113 732,563
Lumber and wood products (D) 4,062 4,223 4,960 3,551
Furniture and fixtures 8,636 12,666 13,690 13,136 7,716
Stone, clay, and glass products 11,242 12,603 14,516 14,787 20,375
Primary metal industries 20,150 20,558 21,373 20,822 5,933
Fabricated metal products 277,222 273,928 288,595 335,003 384,857
Industrial machinery and equipment 52,354 46,274 43,573 47,292 43,123
Electronic and other electric equipment 105,370 78,431 76,190 75,534 82,878
Motor vehicles and equipment 0 (D) (D) (D] 129
Other transportation equipment (D) (D) (D} (D) 1,822
Instruments and related products 99,813 109,499 122,147 124,974 147,038
Miscellaneous manufacturing industries 24,234 24,493 30,534 31,717 35,141
Ordnance 9/ (N) (N) (N) (N) (N)
Nondurable goods 707,544 724,848 773,357 817,436 873,962
Food and kindred products 76,338 81,739 90,468 92,587 98,612
Tobacco products 0 0 0 0 0
Textile mill products 5,929 6,210 6,639 7,909 8,217
Apparel and other textile products 83,634 84,192 84,129 83,066 81,251
Paper and allied products (D) (D) (D) (D) (D)
Printing and publishing 456,193 435,510 467,950 496,360 517,447
Chemicals and allied products 49,243 63,894 72,105 83,704 105,602
Petroleum and coal products (D) (D) (D) (O) (D)
Rubber and misc. plastics products 12,399 27,222 31,719 33,242 40,021
Leather and leather products 5,104 1,842 2,438 2,201 2,329
</TABLE>
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA05.2 August 1997 BUREAU OF ECONOMIC ANALYSIS
<PAGE>
PERSONAL INCOME BY MAJOR SOURCE AND EARNINGS BY INDUSTRY 1/
for States and counties
(thousands of dollars)
Suffolk, Massachusetts [25.025]
<TABLE>
<CAPTION>
Item 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Transportation and public utilities 1,690,276 1,901,507 1,958,904 2,036,948 2,099,313
Railroad transportation 48,183 54,940 54,462 57,547 63,523
Trucking and warehousing 107,949 123,469 129,875 142,178 156,587
Water transportation 29,580 28,763 31,325 35,224 32,386
Other transportation 670,228 740,208 740,026 731,753 747,700
Local and interurban passenger transit 66,590 76,266 75,993 86,500 109,836
Transportation by air 466,989 507,036 500,806 478,179 462,078
Pipelines, except natural gas 0 0 0 0 0
Transportation services 126,649 156,906 163,227 167,074 175,786
Communications 527,469 596,565 576,710 569,562 571,561
Electric, gas, and sanitary services 306,867 357,562 426,506 500,684 527,556
Wholesale trade 793,063 815,848 809,835 798,421 925,469
Retail trade 1,156,970 1,193,755 1,185,599 1,223,715 1,249,228
Building materials and garden equipment 27,323 23,548 19,024 22,790 23,655
General merchandise stores 97,123 101,562 96,354 86,231 76,798
Food stores 200,214 205,607 193,707 184,765 168,861
Automotive dealers and service stations 66,899 65,377 62,522 65,392 63,533
Apparel and accessory stores 89,157 94,324 105,480 104,499 106,111
Home furniture and furnishings stores 44,515 39,313 37,170 42,657 45,353
Eating and drinking places 412,067 430,644 456,005 495,514 539,931
Miscellaneous retail 219,672 233,380 215,337 221,867 224,986
Finance, insurance, and real estate 4,103,777 4,667,128 5,039,480 5,381,692 6,115,025
Depository & non-depository institutions 847,221 932,490 975,430 1,074,269 1,221,899
Other finance, insurance, & real estate 3,256,556 3,734,638 4,064,050 4,307,423 4,893,126
Security & commodity brokers & services 1,479,016 1,904,984 2,179,478 2,329,691 2,867,815
Insurance carriers 956,302 940,835 957,196 1,005,429 1,026,521
Insurance agents, brokers, and services 254,993 265,665 255,790 279,764 271,612
Real estate 388,970 413,483 463,281 500,535 510,571
Combined real estate, insurance, etc. 10/ (N) (N) (N) (N) (N)
Holding and other investment companies 177,275 209,671 208,305 192,004 216,607
Services 9,400,614 10,329,559 10,753,090 11,147,478 11,928,854
Hotels and other lodging places 300,496 338,061 332,352 343,464 366,054
Personal services 116,322 124,731 140,215 141,251 149,717
Private households 25,669 28,112 29,517 29,858 31,941
Business services 1,063,939 1,162,999 1,213,405 1,385,062 1,577,103
Auto repair, services, and parking 125,450 127,155 128,019 129,923 141,907
Miscellaneous repair services 22,152 22,503 26,314 23,896 24,674
Amusement and recreation services 243,439 309,667 295,952 295,310 317,132
Motion pictures 54,636 58,434 60,944 56,973 63,358
Health services 2,858,457 3,270,296 3,421,870 3,476,533 3,582,597
Legal services 1,502,890 1,561,861 1,634,473 1,666,865 1,741,561
Educational services 914,103 944,067 987,409 1,044,705 1,105,948
Social services 11/ 298,894 335,508 365,307 360,121 376,073
Museums, botanical, zoological gardens 45,388 46,639 49,946 55,324 46,007
Membership organizations 199,692 178,269 181,468 181,642 201,876
Engineering and management services 12/ 1,551,060 1,735,262 1,808,324 1,817,342 2,049,873
Miscellaneous services 78,007 85,995 77,575 139,209 153,033
Government and government enterprises 3,448,555 3,444,858 3,645,207 3,858,110 4,005,699
Federal, civilian 751,850 750,714 850,364 885,864 906,737
Military 66,431 60,575 60,173 58,928 58,588
State and local 2,630,274 2,633,569 2,734,670 2,913,318 3,040,374
State 1,576,569 1,575,235 1,738,368 1,893,979 1,969,121
Local 1,053,705 1,058,334 996,302 1,019,339 1,071,253
</TABLE>
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA05.2 August 1997 BUREAU OF ECONOMIC ANALYSIS
<PAGE>
Footnotes for table CA05
Personal Income by major source and Earnings by Industry
1/ 1969-74 based on 1967 SIC. 1975-87 based on 1972 SIC. 1988-95 based on 1987
SIC.
2/ Farm income consists of proprietors' net income; the cash wages,
pay-in-kind, and other labor income of hired farm workers; end the salaries
of officers of corporate farms.
3/ Census Bureau midyear population estimates. Estimates for 1990-95 reflect
county population estimates available as of March 1997. The population
estimates for the United States, Utah, and Cache, UT, 1991-94, have been
adjusted by BEA for consistency with a special, upward adjustment made by
the Census Bureau to its 1995 estimate for Cache County. Additionally, as a
result of special and test censuses conducted in 1995, the Census Bureau
reduced substantially the 1995 population estimates for Yuma, AZ; DeSoto,
I.A; Dorchester, SC; and Montgomery, TN, but made no adjustments to the
estimates for the other years. For these counties, BEA was unable to make
adjustments to the population estimates in time for this release, and the
estimates of per capita personal income are discontinuous between 1994 and
1995. BEA's further adjustments to the population estimates for 1991-94
will be reflected in the release of State per capita personal income on
SeptemDer 19, 1997 and in the release of local area per capita personal
income in the Spring of 1998.
4/ Personal contributions for social insurance are included in earnings by
type and industry but excluded from personal income.
5/ The adjustment for residence is the net inflow of the earnings of interarea
commuters. For the United States, it consists of adjustments for border
workers: Earnings of U.S. residents commuting outside U.S. borders to work
less earnings of foreign residents commuting inside U.S. borders to work
and of certain Caribbean seasonal workers.
6/ Includes the capital consumption adjustment for rental income of persons.
7/ Includes the inventory valuation and capital consumption adjustments.
8/ "Other" consists of wage and salary disbursements of U.S. residents
employed by international organizations and foreign embassies and
consulates in the United States.
9/ Under the 1972 Standard Industrial Classification, ordnance was
reclassified to four 2-digit industries: fabricated metal products;
electronic equipment, except computer equipment; transportation equipment;
and instruments and related products.
10/ Under the 1987 Standard Industrial Classification, combined real estate,
insurance, etc., was reclassified to four 2-digit industries: nondepository
credit institutions; insurance agents, brokers, and services; real estate;
and legal se~;ices.
11/ Social services is new under the 1972 Standard Industrial Classification;
it consists of establishments previously classified under hotels, health
services, educational se~;ices, membership organizations, and miscellaneous
services.
12/ Engineering and management services is new under the 1987 Standard
Industrial Classification; it consists of establishments previously
classified under business services and miscellaneous services.
13/ Estimates for 1979 forward reflect Alaska Census Areas as defined in the
1980 Decennial Census; those for prior years reflect Alaska Census
Divisions as defined in the 1970 Decennial Census. Estimates from 1988
forward separate Aleutian Islands Census Area into Aleutians East Borough
end Aleutians West Census Area. Estimates for 1991 forward separate Denall
Borough from Yukon-Koyukuk Census Area and Lake and Peninsula Borough from
Dillinqham Census Area. Estimates from 1993 forward separate
Skagway-Yakutat-Angoon Census Area into Skaqwa(Y)-~oenah-Anqoon Census Area
and Yakutat Borough.
14/ Cibola, N~ was separated from Valencia in June 1981, Put in these
estimates, Valencia includes Cibola through the end of 1981.
15/ La Paz county, AZ was separated from Yuma county on January 1, 1982. The
Yuma, AZ MSA contains La Paz, AZ through 1982.
16/ Shawano, WI and Menominee, WI are ccmDined as Shewane (incl. Menominee), WI
for the years prior to 1989.
E The estimate shown here constitutes the major portion of the true estimate.
<PAGE>
(D) Not shown to avoid disclosure of confidential information. Estimates are
included in totals.
(L) Less than $50,000. Estimates are included in totals.
(N) Data not availaDle for this year.
<PAGE>
FULL-TIME AND PART-TIME EMPLOYEES BY MAJOR INDUSTRY 1/
for States and counties
(number of jobs)
Massachusetts [25.000]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Item 1991 1992 1993 1994 1995
Employment by place of work
Total full- and part-time employment 3,494,927 3,525,426 3,587,035 3,660,161 3,739,475
By type
Wage and salary employment 2,989,002 2,965,438 3,018,307 3,076,393 3,148,459
Proprietors' employment 505,925 559,988 568,728 583,768 591,016
Farm proprietors' employment 6,534 6,519 5,816 5,566 5,382
Nonfarm proprietors' employment 499,391 553,469 562,912 578,202 585,634
By industry
Farm employment 12,506 12,351 11,620 11,521 10,965
Nonfarm employment 3,482,421 3,513,075 3,575,415 3,648,640 3,728,510
Private employment 3,045,497 3,084,831 3,143,415 3,220,662 3,296,927
Ag. serv., forestry, fishing, and other 3/ 29,252 29,431 32,441 33,981 35,276
Mining 2,308 2,436 2,391 2,567 2,537
Construction 139,172 142,552 147,838 158,277 162,979
Manufacturing 497,102 479,332 468,143 464,688 461,069
Transportation and public utilities 139,588 138,055 142,680 147,738 148,064
Wholesale trade 170,993 170,805 167,349 171,664 179,014
Retail trade 553,676 561,658 568,840 588,241 602,491
Finance, insurance, and real estate 296,454 287,584 291,684 301,940 298,174
Services 1,216,952 1,272,978 1,322,049 1,351,566 1,407,323
Government and government enterprises 436,924 428,244 432,000 427,978 431,583
Federal, civilian 60,452 59,571 59,688 58,680 57,879
Military 40,718 38,448 36,473 31,303 29,119
State and local 335,754 330,225 335,839 337,995 344,585
State 117,561 115,446 115,381 114,708 116,166
Local 218,193 214,779 220,458 223,287 228,419
</TABLE>
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA25 August 1997 BUREAU OF ECONOMIC ANALYSIS
<PAGE>
FULL-TIME AND PART-TIME EMPLOYEES BY MAJOR INDUSTRY 1/
for States and counties
(number of jobs)
Suffolk, MassachuseTts [25.025]
<TABLE>
<CAPTION>
Item 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Employment by place of work
Total full- and part-time employment 613,601 610,746 629,028 641,695 652,737
By type
Wage and salary employment 568,885 563,763 576,964 589,932 600,594
Proprietors' employment 44,716 46,983 52,064 51,763 52,143
Farm proprietors' employment 0 0 0 0 0
Nonfarm proprietors' employment 2/ 44,716 46,983 52,064 51,763 52,143
By industry
Farm employment 0 0 0 0 0
Nonfarm employment 613,601 610,746 629,028 641,695 652,737
Private employment 511,858 512,899 529,033 542,493 551,864
Ag. serv., forestry, fishing, and other 3/ 1,131 1,168 1,234 1,312 1,147
Mining 231 187 178 162 162
Construction 12,440 12,009 12,781 13,869 14,956
Manufacturing 32,368 30,401 31,462 32,221 31,815
Transportation and public utilities 36,066 37,232 37,289 37,829 37,856
Wholesale trade 19,152 18,402 17,869 17,765 18,771
ReTail trade 62,024 62,498 63,270 66,242 66,807
Finance, insurance, and real estate 91,892 88,008 88,952 93,935 94,404
Services 256,554 262,994 275,998 279,158 285,946
Government and government enterprises 101,743 97,847 99,995 99,202 100,873
Federal, civilian 18,127 17,236 18,469 18,271 18,252
Military 4,940 4,369 4,261 3,800 3,~37
State and local 78,676 76,242 77,265 77,131 78,984
State 47,419 46,104 47,057 47,852 49,098
Local 31,257 30,138 30,208 29,279 29,886
</TABLE>
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA25 August 1997 BUREAU OF ECONOMIC ANALYSIS
<PAGE>
Footnotes for Table CA25
Total Full- and Part-time Employment by Major Industry
1/ 1969-74 based on 1967 SIC. 1975-87 based on 1972 SIC. 1988-95 baseQ on 1987
SIC.
2/ Excludes limited partners.
3/ "Other" consists of the number of jobs held by U.S. residents employed by
international organizations and foreign embassies and consulates in the
United States.
4/ Cibola, NM was separated from Valencia in June 1981, but in these estimates
Valencia includes Cibola through the en~ of 1981.
5/ La Paz county, AZ was separated from Yuma county on January 1, 1983. The
Yuma, AZ MSA includes La ?az, AZ throuqh 1982.
6/ Estimates for 1979 forward reflect Alaska Census Areas as defined in the
1980 Decennial Census; those for prior years reflect Alaska Census
Divisions as defined in the 1970 Decennial Census. Estimates from 1988
forward separate Aleutian Islands Census Area into Aleutians East Borough
and Aleutians West Census Area. Estimates for 1991 for~ard separate Denall
Borough from Yukon-Koyukuk Census Area and Lake and Peninsula ~OrdUgh from
Oillingham Census Area. Estimates from 1993 forward separate
Skagway-Yakutat-Angoon Census Area into Skacway-Hoonah-Anqoon Census Area
and Yakutat Borough.
7/ Shawand, WT and Menominee, WI are combined as Shawand {incl. Menominee), WI
for the years prior to 1989.
E Estimate shown constitutes the major portion of the true estimate.
(D) Not shown to avoid disclosure of confidential information. Estimates are
included in totals.
(L) Less than 10 jobs. Estimates are included in totals.
(N) Data not available for this year.
<PAGE>
REGIONAL ECONOMIC PROFILE
for States and counties
Massachusetts [25.000]
<TABLE>
<CAPTION>
Item 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Place of residence profile
Personal income (thousands of dollars) 141,629,206 147,305,222 152,471,825 159,030,895 170,038,696
Nonfarm personal income 141,454,043 147,120,444 152,276,042 158,877,284 169,884,249
Farm income 175,163 184,778 195,783 153,611 154,447
Derivation of personal income
Net earnings 1/ 92,147,488 97,804,238 101,486,208 106,171,780 113,205,098
Transfer payments 22,597,394 23,632,713 24,336,638 25,145,939 26,832,529
Income maintenance 2/ 1,748,699 1,950,805 2,028,240 2,059,937 2,077,080
Unemployment insurance 1,356,253 1,705,787 1,215,634 882,758 777,171
Retirement and other 19,492,442 19,976,121 21,092,764 22,203,244 23,978,278
Dividends, interest, and rent 26,884,324 25,868,271 26,648,979 27,713,176 30,001,069
Population (number of persons) 3/ 5,999,263 5,997,894 6,017,414 6,042,073 6,071,078
Per capita incomes (dollars) 4/
Per capita personal income 23,608 24,559 25,338 26,321 28,008
Per capita net earnings 15,360 16,306 16,865 17,572 18,647
Per capita transfer payments 3,767 3,940 4,044 4,162 4,420
Per capita income maintenance 291 325 337 341 342
Per capita unemployment insurance 226 284 202 146 128
Per capita retirement & other 3,249 3,331 3,505 3,675 3,950
Per capita dividends, interest, & rent 4,481 4,313 4,429 4,587 4,942
Place of work profile
Total earnings (place of work, $000} 100,727,163 106,734,364 110,888,890 116,250,016 123,970,025
Wages and salary disbursements 82,398,849 86,122,657 89,222,306 93,383,223 99,575,276
Other labor income 9,573,306 10,279,783 10,983,133 11,466,265 12,099,852
Proprietors' income 8,755,008 10,331,924 10,683,451 11,400,528 12,294,897
Nonfarm proprietors' income 8,658,280 10,222,899 10,570,591 11,328,374 12,231,599
Farm proprietors' income 96,728 109,025 112,860 72,154 63,298
Total full- and part- time employment 3,494,927 3,525,426 3,587,035 3,660,161 3,739,475
Wage and salary jobs 2,989,002 2,965,438 3,018,307 3,076,393 3,148,459
Number of proprietors 505,925 559,988 568,728 583,768 591,016
Number of nonfarm proprietors /5 499,391 553,469 562,912 578,202 585,634
NumDer of farm proprietors 6,534 6,519 5,816 5,566 5,382
Average earnings per job (dollars) 28,821 30,276 30,914 31,761 33,152
Wage & salary earnings per job 27,567 29,042 29,560 30,355 31,627
Average earnings per nonfarm proprietor 17,338 18,471 18,778 19,592 20,886
</TABLE>
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA30 August 1997 BUREAU OF ECONOMIC ANALYSIS
<PAGE>
REGIONAL ECONOMIC PROFILE
for States and counties
Suffolk, Massachusetts [25.025]
<TABLE>
<CAPTION>
Item 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Place of residence profile
Personal income (thousands of dollars) 16,528,594 17,045,610 17,724,049 18,535,162 19,890,786
Nonfarm personal income 16,528,594 17,045,610 I7,724,049 18,535,162 19,890,786
Farm income 0 0 0 0 0
Derivation of personal income
Net earnings 1/ 10,330,690 11,070,624 11,444,421 11,990,092 12,819,870
Transfer payments 3,231,539 3,240,702 3,344,617 3,459,202 3,720,950
Income maintenance 2/ 369,978 410,420 424,953 431,829 437,173
Unemployment insurance 146,532 178,396 127,874 93,801 86,786
Retirement and other 2,715,029 2,651,886 2,791,790 2,933,572 3,196,991
Dividends, interest, and rent 2,966,365 2,734,284 2,935,011 3,085,868 3,349,966
Population (number of persons) 3/ 649,263 640,005 639,522 639,017 647,570
Per capita incomes (dollars) 4/
Per capita personal income 25,457 26,634 27,715 29,006 30,716
Per capita net earnings 15,911 17,298 17,895 18,763 19,797
Per capita transfer payments 4,977 5,064 5,230 5,413 5,746
Per capita income maintenance 570 641 664 676 675
Per capita unemployment insurance 226 279 200 147 134
Per capita retirement & other 4,182 4,144 4,365 4,591 4,937
Per capita dividends, interest, & rent 4,569 4,272 4,589 4,829 5,173
Place of work profile
Total earnings (place of work, $000) 22,458,213 24,256,460 25,435,257 26,680,532 28,747,720
Wages and salary disbursements 18,760,490 20,037,164 20,962,645 21,871,230 23,569,174
Other labor income 2,015,479 2,202,185 2,377,394 2,499,352 2,669,266
Proprietors' income 1,682,244 2,017,111 2,095,218 2,309,950 2,509,280
Nonfarm proprietors' income 1,682,244 2,017,111 2,095,218 2,309,950 2,509,280
Farm proprietors' income 0 0 0 0 0
Total full- and part- time employment 613,601 610,746 629,028 641,695 652,737
Wage and salary jobs 568,885 563,763 576,964 589,932 600,594
Number of proprietors 44,716 46,983 52,064 51,763 52,143
Number of nonfarm proprietors /5 44,716 46,983 52,064 51,763 52,143
Number of farm proprietors 0 0 0 0 0
Average earnings per job (dollars) 36,601 39,716 40,436 41,578 44,042
Wage & salary earnings per job 32,978 35,542 36,333 37,074 39,243
Average earnings per nonfarm proprietor 37,621 42,933 40,243 44,626 48,123
</TABLE>
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA30 August 1997 BUREAU OF ECONOMIC ANALYSIS
<PAGE>
Footnotes for Table CA30, Regional Economic Profiles
1/ Total earnings less personal contributions for social insurance adjusted to
place of residence.
2/ Consists largely of supplemental security income payments, payments to
families with dependent children (AFDC), general assistance payments, food
stamp payments, and other assistance payments, including emergency
assistance.
3/ Census Bureau midyear population estimates. Estimates for 1990-95 reflect
county population estimates available as of March 1997. The population
estimates for the United States, Utah, and Cache, UT, 1991-94, have been
adjusted by BEA for consistency with a special, upward adjustment made by
the Census Bureau to its 1995 estimate for Cache County. Additionally, as a
result of special and test censuses conducted in 1995, the Census Bureau
reduced substantially the 1995 population estimates for Yuma, AZ; DeSoto,
LA; Dorchester, SC; and Montgome~t, TN, but made no adjustments to the
estimates for the other years. For these counties, BEA was unable to make
adjustments to the population estimates in time for this release, and the
estimates of per capita personal income are discontinuous between 1994 and
1995. BEA's further adjustments to the population estimates for 1991-94
will be reflected in the release of State per capita personal income on
September 19, 1997 and in the release of local area per capita personal
income in the Spring of 1998.
4/ Type of income divided by population yields a per capita for that type of
income.
5/ Excludes limited partners.
6/ Cibola, NM was separated from Valencia in June 1981, but in these estimates
Valencia includes Cibo!a through the end of 1981.
7/ La Paz county, AZ was separated from Yuma county on January 1, 1983. The
Yuma, AZ MSA includes La Paz, AZ through 1982.
8/ Estimates for 1979 forward reflect Alaska Census Areas as defined in the
1980 Decennial Census; those for prior years reflect Alaska Census
Divisions as defined in the 1970 Decennial Census. Estimates from 1988
forward separate Aleutian Islands Census Area into Aleutians East Borough
and Aleutians West Census Area. Estimates for 1991 forward separate Deneli
Borough from Yukon-Koyukuk Census Area and Lake and Peninsula Borough from
Dillingham Census Area. Estimates from 1993 forward separate
Skagway-Yakutat-Angoon Census Area into Skagway-Hoonah-Angoon Census Area
and Yakutat Borough.
9/ Shawand, W~ and Menominee, WI are cornDined as Shawand (incl. Menominee},
WI for the years prior to 1989.
(L) Less than $50,000 or less than 10 jobs, as appropriate. Estimates are
included in totals.
(N) Data not available for this year.
<PAGE>
EXHIBIT III-1
General Characteristics of Publicly-Traded Institutions
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September 3, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C>
California Companies
--------------------
AHM Ahmanson and Co. H.F. of CA NYSE Nationwide M.B. 54,519 371 12-31 10/72 58.50 6,596
GDW Golden West Fin. Corp. of CA NYSE Nationwide M.B. 39,669 249 12-31 05/59 85.00 4,895
GSB Golden State Bancorp of CA NYSE California Div. 16,029 D 178 06-30 10/83 20.56 1,141
DSL Downey Financial Corp. of CA NYSE Southern CA Thrift 5,872 85 12-31 01/71 27.13 762
BVCC Bay View Capital Corp. of CA OTC San Francisco CA M.B. 5,342 37 12-31 05/86 22.38 454
BPLS Bank Plus Corp. of CA OTC Los Angeles CA R.E. 4,220 37 12-31 / 10.25 199
FED FirstFed Fin. Corp. of CA NYSE Los Angeles CA R.E. 4,067 24 12-31 12/83 18.50 392
WES Westcorp Inc. of Orange CA NYSE California Div. 3,813 26 12-31 05/86 9.75 257
PFFB PFF Bancorp of Pomona CA OTC Southern CA Thrift 2,812 23 03-31 03/96 17.50 284
HEMT HF Bancorp of Hemet CA OTC Southern CA Thrift 1,066 19 06-30 06/95 15.00 96
HTHR Hawthorne Fin. Corp. of CA OTC Southern CA Thrift 1,047 6 12-31 / 16.75 53
ITLA ITLA Capital Corp of CA (3) OTC Los Angeles CA R.E. 1,011 6 12-31 10/95 19.50 150
QCBC Quaker City Bancorp of CA OTC Los Angeles CA R.E. 860 8 06-30 12/93 17.25 101
PROV Provident Fin. Holdings of CA OTC Southern CA M.B. 765 10 06-30 06/96 19.75 96
HBNK Highland Bancorp of CA OTC Los Angeles CA R.E. 556 7 12-31 / 41.00 95
MBBC Monterey Bay Bancorp of CA OTC West Central CA Thrift 403 7 12-31 02/95 16.00 63
SGVB SGV Bancorp of W. Covina CA OTC Los Angeles CA Thrift 401 8 06-30 06/95 16.00 38
LFCO Life Financial Corp of CA OTC Southern CA Thrift 387 5 12-31 / 9.25 61
BYFC Broadway Fin. Corp. of CA OTC Los Angeles CA Thrift 128 3 12-31 01/96 9.72 9
Florida Companies
-----------------
BANC BankAtlantic Bancorp of FL OTC Southeastern FL M.B. 3,526 60 12-31 11/83 11.44 420
OCN Ocwen Financial Corp. of FL NYSE Southeast FL Div. 3,421 1 12-31 / 18.25 1,109
BKUNA BankUnited Fin. Corp. of FL OTC Miami FL Thrift 3,327 16 09-30 12/85 10.63 189
FFPB First Palm Beach Bancorp of FL OTC Southeast FL Thrift 1,791 47 09-30 09/93 39.63 204
FFFL Fidelity Bcsh MHC of FL (47.9) OTC Southeast FL Thrift 1,321 20 12-31 01/94 26.50 180
HARB Harbor Florida Bancshrs of FL OTC Eastern FL Thrift 1,284 23 09-30 03/98 11.50 354
CMSV Commty. Svgs, MHC of FL (48.5) OTC Southeast FL Thrift 761 21 12-31 10/94 28.50 145
FFLC FFLC Bancorp of Leesburg FL OTC Central FL Thrift 409 9 12-31 01/94 18.00 67
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September 3, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C>
DME Dime Bancorp, Inc. of NY (3) NYSE NY,NJ,FL M.B. 22,024 91 12-31 08/86 26.38 2,995
SVRN Sovereign Bancorp, Inc. of PA OTC PA,NJ,DE M.B. 18,097 150 12-31 08/86 15.13 2,306
GPT GreenPoint Fin. Corp. of NY (3) NYSE New York City NY Thrift 13,228 74 12-31 01/94 32.88 2,742
ASFC Astoria Financial Corp. of NY OTC New York City NY Thrift 10,895 61 12-31 11/93 43.25 1,147
LISB Long Island Bancorp, Inc of NY OTC Long Island NY M.B. 6,296 35 09-30 04/94 48.56 1,174
ICBC Independence Comm Bnk Cp of NY OTC New York City Thrift 5,223 34 March 03/98 13.19 1,003
ALBK ALBANK Fin. Corp. of Albany NY OTC Upstate NY,MA,VT Thrift 4,089 108 12-31 04/92 60.00 793
ROSE T R Financial Corp. of NY (3) OTC New York City NY Thrift 4,006 15 12-31 06/93 33.25 583
RSLN Roslyn Bancorp, Inc. of NY (3) OTC Long Island NY M.B. 3,707 8 12-31 01/97 18.63 771
SIB Staten Island Bancorp of NY (3) NYSE New York City NY Thrift 2,671 16 12-31 12/97 19.31 871
NWSB Northwest Bcrp MHC of PA (30.8 OTC Northwest PA Thrift 2,410 67 06-30 11/94 12.75 597
CMSB Commonwealth Bancorp Inc of PA OTC Philadelphia PA M.B. 2,390 56 12-31 06/96 16.75 259
HARS Harris Fin. MHC of PA (24.9) OTC Harrisburg PA M.B. 2,260 33 12-31 01/94 17.75 603
RELY Reliance Bancorp, Inc. of NY OTC New York City NY Thrift 2,180 30 06-30 03/94 29.25 280
HAVN Haven Bancorp of Woodhaven NY OTC New York City NY Thrift 2,018 33 12-31 09/93 21.50 190
QCSB Queens County Bancorp of NY (3) OTC New York City NY Thrift 1,622 11 12-31 11/93 40.56 606
DCOM Dime Community Bancorp of NY (3) OTC New York City NY Thrift 1,577 15 06-30 06/96 23.00 280
JSB JSB Financial, Inc. of NY (3) NYSE New York City NY Thrift 1,564 13 12-31 06/90 49.44 486
WSFS WSFS Financial Corp. of DE (3) OTC Wilmington Div. 1,535 16 12-31 11/86 17.88 224
OCFC Ocean Fin. Corp. of NJ OTC Eastern NJ Thrift 1,518 10 12-31 07/96 16.94 263
PFSB PennFed Fin. Services of NJ OTC Northern NJ Thrift 1,469 18 06-30 07/94 14.44 136
RCBK Richmond County Fin Corp of NY OTC New York City Thrift 1,464 13 June 02/98 15.06 398
TSBS Peoples Bancorp Inc of NJ (3) OTC Central NJ Thrift 1,308 P 14 12-31 04/98 8.13 295
NBCP Niagara Bancorp of NY MHC(45.4 (3) OTC Northern NY Thrift 1,296 P 15 12/31 04/98 11.38 339
YFED York Financial Corp. of PA OTC PA,MD Thrift 1,218 22 06-30 02/84 19.25 173
FSLA First Source Bancorp of NJ OTC Eastern NJ Thrift 1,192 P 17 12-31 04/98 8.94 284
MFSL Maryland Fed. Bancorp of MD OTC Southern MD Thrift 1,192 27 02-28 06/87 38.56 253
FFIC Flushing Fin. Corp. of NY (3) OTC New York City NY Thrift 1,078 7 12-31 11/95 23.25 182
PVSA Parkvale Financial Corp of PA OTC Southwestern PA Thrift 1,055 29 06-30 07/87 32.13 166
ESBF ESB Financial Corp of PA OTC Western PA Thrift 946 11 12-31 06/90 16.50 93
GAF GA Financial Corp. of PA AMEX Pittsburgh PA Thrift 818 13 12-31 03/96 16.88 122
HRBT Hudson River Bancorp Inc of NY OTC Southeast NY Thrift 815 P 11 03-31 07/98 12.00 214
SFIN Statewide Fin. Corp. of NJ OTC Northern NJ Thrift 671 16 12-31 10/95 19.00 84
FMCO FMS Financial Corp. of NJ OTC Southern NJ Thrift 669 20 12-31 12/88 12.00 86
FBBC First Bell Bancorp of PA OTC Pittsburgh PA Thrift 665 7 12-31 06/95 17.50 114
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September 3, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Companies (continued)
----------------------------------
FSNJ Bayonne Banchsares of NJ OTC Northern NJ Thrift 646 4 03-31 08/97 14.94 136
THRD TF Financial Corp. of PA OTC PA, NJ Thrift 639 14 12-31 07/94 24.00 77
LVSB Lakeview Financial of NJ OTC Northern NJ Thrift 620 8 07-31 12/93 21.25 106
PULS Pulse Bancorp of S. River NJ OTC Central NJ Thrift 540 4 09-30 09/86 29.00 90
AHCI Ambanc Holding Co., Inc. of NY (3) OTC East-Central NY Thrift 520 12 12-31 12/95 15.06 62
PFNC Progress Financial Corp. of PA OTC Southeastern PA Thrift 485 10 12-31 07/83 16.00 84
NEP Northeast PA Fin. Corp of PA AMEX Northeast PA Thrift 443 10 DEC 04/98 12.19 78
CNY Carver Bancorp, Inc. of NY AMEX New York, NY Thrift 437 7 03-31 10/94 11.63 27
RARB Raritan Bancorp of Raritan NJ (3) OTC Central NJ Thrift 419 6 12-31 03/87 28.00 66
FSBI Fidelity Bancorp, Inc. of PA OTC Southwestern PA Thrift 403 8 09-30 06/88 20.25 40
FKFS First Keystone Fin. Corp of PA OTC Philadelphia PA Thrift 385 5 09-30 01/95 14.00 34
PBCI Pamrapo Bancorp, Inc. of NJ OTC Northern NJ Thrift 381 10 12-31 11/89 28.00 80
WSBI Warwick Community Bncrp of NY (3) OTC Southeast NY Thrift 371 4 05-31 12/97 14.25 94
FOBC Fed One Bancorp of Wheeling WV OTC Northern WV,OH Thrift 368 11 12-31 01/95 38.00 91
HARL Harleysville SB of PA OTC Southeastern PA Thrift 368 4 09-30 08/87 30.25 51
LFBI Little Falls Bancorp of NJ OTC New Jersey Thrift 355 6 12-31 01/96 16.00 40
THTL Thistle Group Holdings of PA OTC Philadelphia Thrift 349 P 6 12-31 07/98 9.00 81
YFCB Yonkers Fin. Corp. of NY OTC Yonkers NY Thrift 344 4 09-30 04/96 16.06 45
CVAL Chester Valley Bancorp of PA OTC Southeastern PA Thrift 344 7 06-30 03/87 31.50 73
PHFC Pittsburgh Home Fin Corp of PA OTC Pittsburgh PA Thrift 338 9 09-30 04/96 16.00 32
EQSB Equitable FSB of Wheaton MD OTC Central MD Thrift 335 4 09-30 09/93 28.25 35
FBER 1st Bergen Bancorp of NJ OTC Northern NJ Thrift 316 4 12-31 04/96 14.75 38
FIBC Financial Bancorp, Inc. of NY OTC New York City NY Thrift 310 5 09-30 08/94 36.81 63
LFED Leeds Fed Bksr MHC of MD (36.3 OTC Baltimore MD Thrift 299 1 06-30 05/94 17.50 91
WVFC WVS Financial Corp. of PA OTC Pittsburgh PA Thrift 298 5 06-30 11/93 15.75 57
CATB Catskill Fin. Corp. of NY (3) OTC Albany NY Thrift 296 4 09-30 04/96 15.75 71
IFSB Independence FSB of DC OTC Washington DC Ret. 275 2 12-31 06/85 16.38 21
BCSB BCSB Bankcorp MHC of MD (38.6) OTC Baltimore Thrift 274 P 6 12-31 07/98 11.38 70
WSB Washington SB, FSB of MD AMEX Southeastern MD Thrift 274 5 12-31 / 5.69 25
ALLB Alliance Bank MHC of PA (19.9) OTC Southeast PA Thrift 273 7 12-31 03/95 21.25 70
WYNE Wayne Bancorp, Inc. of NJ OTC Northern NJ Thrift 272 5 12-31 06/96 31.50 63
SKAN Skaneateles Bancorp Inc of NY (3) OTC Northwest NY Thrift 258 9 12-31 06/86 17.00 25
SBFL SB Fngr Lakes MHC of NY (33.1) OTC Western NY Thrift 251 5 12-31 11/94 16.00 57
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September 3, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Companies (continued)
----------------------------------
LIBB Liberty Bancorp MHC of NJ (47) OTC Northeast NJ Thrift 241 P 4 12-31 07/98 10.25 40
HRBF Harbor Federal Bancorp of MD OTC Baltimore MD Thrift 231 9 03-31 08/94 18.25 34
ESBK Elmira Svgs Bank (The) of NY (3) OTC NY,PA Thrift 230 6 12-31 03/85 26.00 19
PHSB Ppls Home SB, MHC of PA (45.0) OTC Western PA Thrift 223 9 12-31 07/97 16.25 45
LARL Laurel Capital Group of PA OTC Southwestern PA Thrift 217 6 06-30 02/87 20.00 44
CRSB Crusader Holding Corp of PA OTC Philadephia Thrift 202 2 12-31 / 14.50 56
PBHC Pathfinder BC MHC of NY (45.2) (3) OTC Upstate NY Thrift 196 5 12-31 11/95 15.00 42
PEEK Peekskill Fin. Corp. of NY OTC Southeast NY Thrift 196 3 06-30 12/95 15.75 46
PLSK Pulaski SB, MHC of NJ (47.0) OTC New Jersey Thrift 191 6 12-31 04/97 14.88 31
SFED SFS Bancorp of Schenectady NY OTC Eastern NY Thrift 175 4 12-31 06/95 27.50 33
AFED AFSALA Bancorp, Inc. of NY OTC Central NY Thrift 166 5 09-30 10/96 17.88 24
PRBC Prestige Bancorp of PA OTC Southwestern PA Thrift 161 4 12-31 06/96 16.00 17
SKBO First Carnegie MHC of PA(45.0) OTC Western PA Thrift 148 3 03-31 04/97 13.25 30
PSBI PSB Bancorp Inc. of PA (3) OTC Philadelphia Thrift 147 P 6 12-31 07/98 7.75 24
TPNZ Tappan Zee Fin., Inc. of NY OTC Southeast NY Thrift 129 1 03-31 10/95 19.50 29
GOSB GSB Financial Corp. of NY (3) OTC Southeast NY Thrift 119 2 09-30 07/97 13.50 30
WHGB WHG Bancshares of MD OTC Baltimore MD Thrift 118 5 09-30 04/96 11.00 15
AFBC Advance Fin. Bancorp of WV OTC Northern Neck WV Thrift 111 2 06-30 01/97 15.75 17
USAB USABancshares, Inc of PA (3) OTC Philadelphia PA Thrift 103 1 12-31 / 11.50 23
ALBC Albion Banc Corp. of Albion NY OTC Western NY Thrift 73 2 09-30 07/93 9.75 7
PWBK Pennwood Bancorp, Inc. of PA OTC Pittsburgh PA Thrift 46 3 06-30 07/96 12.31 9
Mid-West Companies
------------------
COFI Charter One Financial of OH OTC OH,MI,NY Div. 19,457 221 12-31 01/88 28.50 3,638
CFB Commercial Federal Corp. of NE NYSE NE,CO,KS,OK,IA M.B. 8,529 108 06-30 12/84 25.88 1,088
SPBC St. Paul Bancorp, Inc. of IL OTC Chicago IL Div. 4,583 52 12-31 05/87 21.56 741
MAFB MAF Bancorp, Inc. of IL OTC Chicago IL Thrift 3,511 21 12-31 01/90 21.00 474
FLGS Flagstar Bancorp, Inc of MI OTC MI Thrift 2,564 19 12/31 / 26.75 366
ABCW Anchor Bancorp Wisconsin of WI OTC Wisconsin M.B. 1,999 35 03-31 07/92 42.38 378
DNFC D&N Financial Corp. of MI OTC Northern MI Ret. 1,868 37 12-31 02/85 22.25 204
FISB First Indiana Corp. of IN OTC Central IN M.B. 1,688 26 12-31 08/83 23.38 299
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September 3, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
------------------------------
STFR St. Francis Cap. Corp. of WI OTC Milwaukee WI Thrift 1,648 23 09-30 06/93 39.50 202
FTFC First Fed. Capital Corp. of WI OTC Southern WI M.B. 1,580 49 12-31 11/89 16.00 296
ABCL Alliance Bancorp, Inc. of IL OTC Chicago IL M.B. 1,537 14 12-31 07/92 21.50 246
CITZ CFS Bancorp, Inc. of IN OTC IN,IL Thrift 1,421 P 24 12-31 07/98 10.00 227
UCFC United Community Fin. of OH OTC Youngstown Thrift 1,291 P 14 12-31 07/98 14.81 496
JSBA Jefferson Svgs Bancorp of MO OTC St. Louis MO,TX Thrift 1,242 32 12-31 04/93 20.25 203
METF Metropolitan Fin. Corp. of OH OTC Northeast OH Thrift 990 15 12-31 / 13.63 96
OFCP Ottawa Financial Corp. of MI OTC Western MI Thrift 915 26 12-31 08/94 24.13 138
CFSB CFSB Bancorp of Lansing MI OTC Central MI Thrift 846 17 12-31 06/90 22.50 184
HMNF HMN Financial, Inc. of MN OTC Southeast MN Thrift 732 7 12-31 06/94 15.25 83
HOMF Home Fed Bancorp of Seymour IN OTC Southern IN Thrift 705 16 06-30 01/88 25.25 130
SFSL Security First Corp. of OH OTC Northeastern OH R.E. 686 14 03-31 01/88 21.00 165
FNGB First Northern Cap. Corp of WI OTC Northeast WI Thrift 677 19 12-31 12/83 12.63 112
MSBK Mutual SB, FSB of Bay City MI OTC Michigan M.B. 657 22 12-31 07/92 9.31 40
FFYF FFY Financial Corp. of OH OTC Youngstown OH Thrift 645 10 06-30 06/93 34.75 139
EMLD Emerald Financial Corp. of OH OTC Cleveland OH Thrift 616 14 12-31 / 12.00 123
AVND Avondale Fin. Corp. of IL OTC Chicago IL Ret. 607 5 12-31 04/95 14.25 44
FDEF First Defiance Fin.Corp. of OH OTC Northwest OH Thrift 578 10 12-31 10/95 12.63 103
CAFI Camco Fin. Corp. of OH OTC Eastern OH M.B. 576 11 12-31 / 17.00 93
FFSX First FSB MHC Sxld of IA(46.3) OTC Western IA Thrift 571 13 06-30 07/92 32.50 92
HFFC HF Financial Corp. of SD OTC South Dakota Thrift 570 19 06-30 04/92 19.44 85
HFGI Harrington Fin. Group of IN OTC Eastern IN Thrift 553 4 06-30 / 9.69 32
FFOH Fidelity Financial of OH OTC Cincinnati OH Thrift 540 12 12-31 03/96 14.25 80
FCBF FCB Fin. Corp. of Neenah WI OTC Eastern WI Thrift 518 13 03-31 09/93 29.50 114
CBCI Calumet Bancorp of Chicago IL OTC Chicago IL Thrift 490 5 12-31 02/92 29.25 92
FBCI Fidelity Bancorp of Chicago IL OTC Chicago IL Thrift 484 5 09-30 12/93 24.00 68
PERM Permanent Bancorp, Inc. of IN OTC Southwest IN Thrift 439 11 03-31 04/94 13.50 56
HALL Hallmark Capital Corp. of WI OTC Milwaukee WI Thrift 421 3 06-30 01/94 13.25 39
PVFC PVF Capital Corp. of OH OTC Cleveland OH R.E. 419 9 06-30 12/92 15.75 63
FFHH FSF Financial Corp. of MN OTC Southern MN Thrift 411 11 09-30 10/94 17.13 50
FFKY First Fed. Fin. Corp. of KY OTC Central KY Thrift 407 8 06-30 07/87 24.75 102
CASH First Midwest Fin., Inc. of OH OTC IA,SD R.E. 406 12 09-30 09/93 19.13 50
KNK Kankakee Bancorp, Inc. of IL AMEX Illinois Thrift 399 9 12-31 01/93 29.88 41
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September 3, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
------------------------------
EFC EFC Bancorp Inc of IL AMEX Southeast IL Thrift 391 P 6 DEC 04/98 11.25 84
FMBD First Mutual Bancorp Inc of IL OTC Central IL Thrift 390 14 12-31 07/95 17.13 60
ASBI Ameriana Bancorp of IN OTC Eastern IN,OH Thrift 389 8 12-31 03/87 18.50 60
INBI Industrial Bancorp of OH OTC Northern OH Thrift 374 10 12-31 08/95 19.38 97
HBEI Home Bancorp of Elgin IL OTC Northern IL Thrift 369 4 12-31 09/96 14.50 99
EFBI Enterprise Fed. Bancorp of OH OTC Cincinnati OH Thrift 366 5 09-30 10/94 28.00 62
WOFC Western Ohio Fin. Corp. of OH OTC Western OH Thrift 365 10 12-31 07/94 22.63 52
HBFW Home Bancorp of Fort Wayne IN OTC Northeast IN Thrift 353 9 09-30 03/95 28.63 67
FFFD North Central Bancshares of IA OTC Central IA Thrift 333 4 12-31 03/96 18.25 57
WFI Winton Financial Corp. of OH AMEX Cincinnati OH R.E. 324 S 5 09-30 08/88 14.13 57
FSFF First SecurityFed Fin of IL OTC Chicago, IL Thrift 323 5 12-31 10/97 14.00 90
WCBI WestCo Bancorp, Inc. of IL OTC Chicago IL Thrift 319 1 12-31 06/92 28.00 70
PFDC Peoples Bancorp of Auburn IN OTC Northeastern IN Thrift 301 7 09-30 07/87 21.00 70
GFCO Glenway Financial Corp. of OH OTC Cincinnati OH Thrift 300 5 06-30 11/90 21.75 50
MFBC MFB Corp. of Mishawaka IN OTC Northern IN Thrift 291 5 09-30 03/94 24.00 38
CBK Citizens First Fin.Corp. of IL AMEX Central IL Thrift 280 7 12-31 05/96 16.25 41
WAYN Wayne Svgs Bks MHC of OH (48.2 OTC Central OH Thrift 260 6 03-31 06/93 22.25 55
FBCV 1st Bancorp of Vincennes IN OTC Southwestern IN M.B. 260 2 06-30 04/87 45.00 49
EBI Equality Bancorp, Inc. of MO AMEX St Louis Thrift 256 3 03-31 12/97 13.88 35
OHSL OHSL Financial Corp. of OH OTC Cincinnati, OH Thrift 251 5 12-31 02/93 15.50 39
GFED Guaranty Fed Bancshares of MO OTC Southwest MO Thrift 246 4 06-30 12/97 12.63 79
FFHS First Franklin Corp. of OH OTC Cincinnati OH Thrift 232 7 12-31 01/88 16.00 29
LARK Landmark Bancshares, Inc of KS OTC Central KS Thrift 231 5 09-30 03/94 22.06 34
MFFC Milton Fed. Fin. Corp. of OH OTC Southwest OH Thrift 227 3 09-30 10/94 13.50 30
HFBC HopFed Bancorp of KY OTC Southwest KY Thrift 221 5 09-30 02/98 17.50 71
CMRN Cameron Fin. Corp. of MO OTC Northwest MO Thrift 221 3 09-30 04/95 17.25 42
LSBI LSB Fin. Corp. of Lafayette IN OTC Central IN Thrift 216 4 12-31 02/95 31.00 30
FFBZ First Federal Bancorp of OH OTC Eastern OH Thrift 212 6 09-30 07/92 12.00 38
BFFC Big Foot Fin. Corp. of IL OTC Chicago IL Thrift 209 3 06-30 12/96 15.75 40
WEFC Wells Fin. Corp. of Wells MN OTC Southcentral MN Thrift 209 8 12-31 04/95 18.38 35
MBLF MBLA Financial Corp. of MO OTC Northeast MO Thrift 207 2 06-30 06/93 19.25 24
NEIB Northeast Indiana Bncrp of IN OTC Northeast IN Thrift 200 3 12-31 06/95 21.13 35
FFWC FFW Corporation of Wabash IN OTC Central IN Thrift 199 4 06-30 04/93 18.00 26
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September 3, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
------------------------------
FFED Fidelity Fed. Bancorp of IN OTC Southwestern IN Thrift 197 4 06-30 08/87 5.88 18
PFED Park Bancorp of Chicago IL OTC Chicago IL Thrift 197 3 12-31 08/96 17.94 43
MARN Marion Capital Holdings of IN OTC Central IN Thrift 193 2 06-30 03/93 22.75 39
HMLK Hemlock Fed. Fin. Corp. of IL OTC Chicago IL Thrift 191 3 12-31 04/97 16.63 33
PULB Pulaski Bk,SB MHC of MO (29.8) OTC St. Louis MO Thrift 184 5 09-30 05/94 28.16 59
BWFC Bank West Fin. Corp. of MI OTC Southeast MI Thrift 180 3 06-30 03/95 12.25 32
EGLB Eagle BancGroup of IL OTC Central IL Thrift 180 3 12-31 07/96 18.00 21
FBSI First Bancshares, Inc. of MO OTC Southcentral MO Thrift 178 6 06-30 12/93 13.31 29
JXSB Jcksnville SB,MHC of IL (45.6) OTC Central IL Thrift 170 4 12-31 04/95 16.75 32
FFWD Wood Bancorp of OH OTC Northern OH Thrift 165 7 06-30 08/93 16.25 43
MWBI Midwest Bancshares, Inc. of IA OTC Southeast IA Thrift 159 4 12-31 11/92 13.50 14
SMBC Southern Missouri Bncrp of MO OTC Southeast MO Thrift 157 8 06-30 04/94 16.63 25
QCFB QCF Bancorp of Virginia MN OTC Northeast MN Thrift 154 2 06-30 04/95 29.63 40
MIFC Mid Iowa Financial Corp. of IA OTC Central IA Thrift 147 7 09-30 10/92 13.75 24
GTPS Great American Bancorp of IL OTC East Central IL Thrift 146 3 12-31 06/95 19.00 30
RIVR River Valley Bancorp of IN OTC Southeast IN Thrift 134 6 12-31 12/96 16.88 20
FKKY Frankfort First Bancorp of KY OTC Frankfort KY Thrift 133 3 06-30 07/95 14.56 24
CLAS Classic Bancshares, Inc. of KY OTC Eastern KY Thrift 131 3 03-31 12/95 16.50 21
WEHO Westwood Hmstd Fin Corp of OH OTC Cincinnati OH Thrift 130 2 12-31 09/96 11.88 30
CFKY Columbia Financial of KY OTC NorthCentral KY Thrift 127 P 5 12-31 04/98 13.50 36
PTRS Potters Financial Corp of OH OTC Northeast OH Thrift 127 4 12-31 12/93 14.50 14
FFSL First Independence Corp. of KS OTC Southeast KS Thrift 124 2 09-30 10/93 12.25 12
HFSA Hardin Bancorp of Hardin MO OTC Western MO Thrift 121 3 03-31 09/95 17.38 14
NBSI North Bancshares of Chicago IL OTC Chicago IL Thrift 118 2 12-31 12/93 12.25 15
CBES CBES Bancorp, Inc. of MO OTC Western MO Thrift 116 2 06-30 09/96 19.50 18
ASBP ASB Financial Corp. of OH OTC Southern OH Thrift 115 1 06-30 05/95 12.75 21
BDJI First Fed. Bancorp. of MN OTC Northern MN Thrift 113 5 09-30 04/95 15.50 15
DCBI Delphos Citizens Bancorp of OH OTC Northwest OH Thrift 113 1 09-30 11/96 16.25 30
FTNB Fulton Bancorp, Inc. of MO OTC Central MO Thrift 110 2 06-30 10/96 18.00 31
MONT Montgomery Fin. Corp. of IN OTC Westcentral IN Thrift 109 4 06-30 07/97 10.31 17
HFFB Harrodsburg 1st Fin Bcrp of KY OTC Central KY Thrift 109 2 09-30 10/95 15.00 29
UCBC Union Community Bancorp of IN OTC W.Central IN Thrift 108 1 12-31 12/97 13.00 40
FKAN First Kansas Financial of KS OTC Kansas City subs Thrift 108 P 6 12-31 06/98 11.31 18
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September 3, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
------------------------------
AMFC AMB Financial Corp. of IN OTC Northwest IN Thrift 106 4 12-31 04/96 15.75 14
PSFC Peoples Sidney Fin. Corp of OH OTC WestCentral OH Thrift 106 1 06-30 04/97 19.63 35
CIBI Community Inv. Bancorp of OH OTC NorthCentral OH Thrift 102 3 06-30 02/95 13.25 18
FTSB Fort Thomas Fin. Corp. of KY OTC Northern KY Thrift 102 2 09-30 06/95 13.63 20
FFDF FFD Financial Corp. of OH OTC Northeast OH Thrift 100 1 06-30 04/96 16.75 24
NWEQ Northwest Equity Corp. of WI OTC Northwest WI Thrift 99 3 03-31 10/94 17.44 14
THR Three Rivers Fin. Corp. of MI AMEX Southwest MI Thrift 98 4 06-30 08/95 17.75 15
CNSB CNS Bancorp, Inc. of MO OTC Central MO Thrift 98 5 12-31 06/96 14.75 24
LXMO Lexington B&L Fin. Corp. of MO OTC West Central MO Thrift 95 1 09-30 06/96 15.00 15
WCFB Wbstr Cty FSB MHC of IA (45.6) OTC Central IA Thrift 94 1 12-31 08/94 17.63 37
HZFS Horizon Fin'l. Services of IA OTC Central IA Thrift 93 3 06-30 06/94 15.00 13
HHFC Harvest Home Fin. Corp. of OH OTC Southwest OH Thrift 91 3 09-30 10/94 14.75 13
SOBI Sobieski Bancorp of S. Bend IN OTC Northern IN Thrift 90 3 06-30 03/95 15.75 12
SFFC StateFed Financial Corp. of IA OTC Des Moines IA Thrift 90 2 06-30 01/94 12.75 20
LOGN Logansport Fin. Corp. of IN OTC Northern IN Thrift 89 1 12-31 06/95 14.75 19
PCBC Perry Co. Fin. Corp. of MO OTC EastCentral MO Thrift 86 1 09-30 02/95 20.00 17
PSFI PS Financial of Chicago IL OTC Chicago IL Thrift 84 1 12-31 11/96 12.13 24
PFFC Peoples Fin. Corp. of OH OTC Northeast OH Thrift 82 2 09-30 09/96 12.00 16
KYF Kentucky First Bancorp of KY AMEX Central KY Thrift 82 2 06-30 08/95 14.00 17
HLFC Home Loan Financial Corp of OH OTC Central Ohio Thrift 80 0 03/98 14.88 33
MSBF MSB Financial, Inc of MI OTC Southcentral MI Thrift 79 2 06-30 02/95 14.50 19
HCFC Home City Fin. Corp. of OH OTC Southwest OH Thrift 76 1 06-30 12/96 14.63 13
CKFB CKF Bancorp of Danville KY OTC Central KY Thrift 63 1 12-31 01/95 17.38 15
NSLB NS&L Bancorp, Inc of Neosho MO OTC Southwest MO Thrift 61 2 09-30 06/95 17.38 12
MRKF Market Fin. Corp. of OH OTC Cincinnati OH Thrift 58 2 09-30 03/97 13.00 17
FLKY First Lancaster Bncshrs of KY OTC Central KY Thrift 53 1 06-30 07/96 13.75 13
CSBF CSB Financial Group Inc of IL OTC Centralia IL Thrift 48 2 09-30 10/95 10.63 9
RELI Reliance Bancshares Inc of WI OTC Milwaukee WI Thrift 44 1 06-30 04/96 9.38 22
HWEN Home Financial Bancorp of IN OTC Central IN Thrift 41 1 06-30 07/96 8.25 8
New England Companies
---------------------
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September 3, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C>
New England Companies (continued)
---------------------------------
PBCT Peoples Bank, MHC of CT (41.2) (3) OTC Southwestern CT Div. 9,149 111 12-31 07/88 27.00 1,732
WBST Webster Financial Corp. of CT OTC Central CT Thrift 7,559 84 12-31 12/86 27.25 1,044
PHBK Peoples Heritage Fin Grp of ME (3) OTC ME,NH,MA Div. 7,310 141 12-31 12/86 19.25 1,686
SISB SIS Bancorp, Inc. of MA (3) OTC Central MA Div. 1,794 25 12-31 02/95 42.50 296
ANDB Andover Bancorp, Inc. of MA (3) OTC MA,NH M.B. 1,386 12 12-31 05/86 33.13 215
FESX First Essex Bancorp of MA (3) OTC MA,NH Div. 1,293 15 12-31 08/87 19.00 144
FAB FirstFed America Bancorp of MA AMEX MA,RI M.B. 1,282 13 03-31 01/97 17.00 141
MDBK Medford Bancorp, Inc. of MA (3) OTC Eastern MA Thrift 1,120 16 12-31 03/86 38.50 172
BFD BostonFed Bancorp of MA AMEX Boston MA M.B. 1,032 10 12-31 10/95 19.25 104
DIBK Dime Financial Corp. of CT (3) OTC Central CT Thrift 1,016 11 12-31 07/86 31.69 168
FFES First Fed of E. Hartford CT OTC Central CT Thrift 991 12 12-31 06/87 31.00 85
MECH MECH Financial Inc of CT (3) OTC Hartford CT Thrift 946 14 12-31 06/96 28.00 148
MASB MassBank Corp. of Reading MA (3) OTC Eastern MA Thrift 929 15 12-31 05/86 45.00 162
PBKB People's Bancshares of MA (3) OTC Southeastern MA Thrift 862 14 12-31 10/86 18.75 62
BRKL Brookline Bncp MHC of MA(47.0) OTC Brookline Thrift 817 5 08-31 03/98 12.75 371
NSSY NSS Bancorp of CT (3) OTC Southwest CT Thrift 669 8 12-31 06/94 48.50 115
BKC American Bank of Waterbury CT (3) AMEX Western CT Thrift 651 14 12-31 12/81 23.63 111
MWBX MetroWest Bank of MA (3) OTC Eastern MA Thrift 647 12 12-31 10/86 7.00 100
ABBK Abington Bancorp of MA (3) OTC Southeastern MA M.B. 550 8 12-31 06/86 16.75 59
SWCB Sandwich Bancorp of MA (3) OTC Southeastern MA Thrift 527 11 12-31 07/86 60.25 123
BKCT Bancorp Connecticut of CT (3) OTC Central CT Thrift 480 3 12-31 07/86 17.88 91
CEBK Central Co-Op. Bank of MA (3) OTC Eastern MA Thrift 376 8 03-31 10/86 21.00 41
WRNB Warren Bancorp of Peabody MA (3) OTC Eastern MA R.E. 373 6 12-31 07/86 10.94 86
NMSB Newmil Bancorp, Inc. of CT (3) OTC Western CT Thrift 370 15 06-30 02/86 12.00 46
LSBX Lawrence Savings Bank of MA (3) OTC Northeastern MA Thrift 355 5 12-31 05/86 13.25 57
NHTB NH Thrift Bancshares of NH OTC Central NH Thrift 321 10 12-31 05/86 15.50 32
NBN Northeast Bancorp of ME (3) AMEX Eastern ME Thrift 311 11 06-30 08/87 13.63 30
BYS Bay State Bancorp of MA (3) NYSE Brookline Thrift 290 P 0 DEC 03/98 24.25 61
ANE Alliance Bncp of New Eng of CT (3) AMEX Northern CT Thrift 247 7 12-31 12/86 12.25 31
IPSW Ipswich SB of Ipswich MA (3) OTC Northwest MA Thrift 238 6 12-31 05/93 13.50 32
HIFS Hingham Inst. for Sav. of MA (3) OTC Eastern MA Thrift 232 5 12-31 12/88 26.75 35
HPBC Home Port Bancorp, Inc. of MA (3) OTC Southeastern MA Thrift 226 2 12-31 08/88 24.25 45
MYST Mystic Financial of MA (3) OTC Medford Thrift 188 3 06-30 01/98 13.63 37
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September 3, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C>
New England Companies (continued)
---------------------------------
KSBK KSB Bancorp of Kingfield ME (3) OTC Western ME M.B. 155 8 12-31 06/93 16.50 21
FCME First Coastal Corp. of ME (3) OTC Southern ME Thrift 150 7 12-31 / 12.00 16
MFLR Mayflower Co-Op. Bank of MA (3) OTC Southeastern MA Thrift 136 4 04-30 12/87 22.13 20
NTMG Nutmeg FS&LA of CT OTC Eastern CT M.B. 112 3 12-31 / 11.88 13
FCB Falmouth Bancorp, Inc. of MA (3) AMEX Southeast MA Thrift 105 2 09-30 03/96 18.00 26
MCBN Mid-Coast Bancorp of ME OTC Eastern ME Thrift 63 2 03-31 11/89 9.00 6
North-West Companies
--------------------
WFSL Washington Federal, Inc. of WA OTC Western US Thrift 5,634 104 09-30 11/82 24.88 1,305
IWBK Interwest Bancorp of WA OTC Western WA Div. 2,091 39 09-30 / 25.00 392
STSA Sterling Financial Corp. of WA OTC WA,OR M.B. 1,888 41 12-31 / 20.25 154
FWWB First Savings Bancorp of WA OTC Central WA Thrift 1,154 20 03-31 11/95 22.50 263
KFBI Klamath First Bancorp of OR OTC Southern OR Thrift 994 33 09-30 10/95 17.50 174
HRZB Horizon Financial Corp. of WA (3) OTC Northwest WA Thrift 547 12 03-31 08/86 14.75 110
FMSB First Mutual SB of Bellevue WA (3) OTC Western WA M.B. 451 S 8 12-31 12/85 13.69 58
CASB Cascade Financial Corp. of WA OTC Seattle WA Thrift 435 11 06-30 09/92 14.00 60
HFWA Heritage Financial Corp of WA OTC NW Washington Thrift 323 10 06-30 01/98 12.13 118
RVSB Riverview Bancorp of WA OTC Southwest WA Thrift 273 9 03-31 10/97 13.00 80
OTFC Oregon Trail Fin. Corp. of OR OTC Baker City Thrift 263 7 03-31 10/97 14.00 66
TSBK Timberland Bancorp of WA OTC Grays Harbor Thrift 261 5 06-30 01/98 14.63 97
FBNW FirstBank Corp of Clarkston WA OTC West. WA/East ID Thrift 184 5 03-31 07/97 17.75 35
EFBC Empire Federal Bancorp of MT OTC Southern MT Thrift 111 3 12-31 01/97 13.25 33
South-East Companies
--------------------
BNKU Bank United Corp. of TX OTC TX,AZ Thrift 13,109 71 09-30 08/96 38.25 1,209
FFCH First Fin. Holdings Inc. of SC OTC Charleston SC Div. 1,858 34 09-30 11/83 19.88 271
FLFC First Liberty Fin. Corp. of GA OTC Georgia M.B. 1,355 31 09-30 12/83 19.25 257
EBSI Eagle Bancshares of Tucker GA OTC Atlanta GA Thrift 1,149 14 03-31 04/86 21.50 125
HFNC HFNC Financial Corp. of NC OTC Charlotte NC Thrift 979 10 06-30 12/95 11.75 202
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September 3, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C>
South-East Companies (continued)
--------------------------------
CNIT Cenit Bancorp of Norfolk VA OTC Southeastern VA Thrift 734 19 12-31 08/92 21.25 106
CFCP Coastal Fin. Corp. of SC OTC South Carolina Thrift 583 9 09-30 09/90 19.00 119
FFBH First Fed. Bancshares of AR OTC Northern AR Thrift 570 13 12-31 05/96 22.00 107
FSPT FirstSpartan Fin. Corp. of SC OTC Northwestern SC Thrift 503 7 06-30 07/97 36.63 156
TSH Teche Holding Company of LA AMEX Southern LA Thrift 407 9 09-30 04/95 17.00 58
PFSL Pocahontas Bancorp of AR OTC Northeast AR Thrift 401 6 09-30 04/98 8.56 57
COOP Cooperative Bancshares of NC OTC Eastern NC Thrift 381 16 12-31 08/91 15.00 45
FSTC First Citizens Corp of GA OTC Western GA M.B. 352 D 9 03-31 03/86 29.50 82
CAVB Cavalry Bancorp of TN OTC Murfreesburg Thrift 351 0 Sept 03/98 20.00 151
SBAN SouthBanc Shares Inc. of SC OTC Northwest SC Thrift 335 P 6 09-30 04/98 17.63 76
HBSC Heritage Bancorp, Inc of SC OTC Laurens Thrift 312 P 4 Sept 04/98 17.50 81
UFRM United FSB of Rocky Mount NC OTC Eastern NC M.B. 306 13 12-31 07/80 17.75 58
SOPN First Svgs Bancorp of NC OTC Central NC Thrift 300 5 06-30 01/94 24.00 89
ANA Acadiana Bancshares, Inc of LA AMEX Southern LA Thrift 294 5 12-31 07/96 20.25 51
CFTP Community Fed. Bancorp of MS OTC Northeast MS Thrift 254 2 09-30 03/96 16.75 74
FLAG Flag Financial Corp of GA OTC Western GA M.B. 248 D 4 12-31 12/86 14.00 72
HCBB HCB Bancshares of Camden AR OTC Southern AR Thrift 222 7 06-30 05/97 13.00 34
SSFC South Street Fin. Corp. of NC (3) OTC South Central NC Thrift 217 2 09-30 10/96 9.00 42
ESX Essex Bancorp of Norfolk VA AMEX VA,NC M.B. 193 4 12-31 07/90 2.69 3
FTF Texarkana Fst. Fin. Corp of AR AMEX Southwest AR Thrift 185 5 09-30 07/95 26.13 45
CFFC Community Fin. Corp. of VA OTC Central VA Thrift 184 4 03-31 03/88 13.00 33
FFDB FirstFed Bancorp, Inc. of AL OTC Central AL Thrift 181 8 03-31 11/91 12.00 29
GSFC Green Street Fin. Corp. of NC OTC Southern NC Thrift 178 3 09-30 04/96 13.50 55
FGHC First Georgia Hold. Corp of GA OTC Southeastern GA Thrift 175 7 09-30 02/87 11.00 53
GBNK Gaston Fed Bncp MHC of NC(47.0 OTC Southwest NC Thrift 171 P 4 9-30 04/98 12.50 56
SZB SouthFirst Bancshares of AL AMEX Central AL Thrift 162 2 09-30 02/95 17.38 17
BFSB Bedford Bancshares, Inc. of VA OTC Southern VA Thrift 153 3 09-30 08/94 13.38 31
HBS Haywood Bancshares, Inc. of NC (3) AMEX Northwest NC Thrift 152 4 12-31 12/87 20.25 25
CCFH CCF Holding Company of GA OTC Atlanta GA Thrift 143 5 12-31 07/95 20.50 18
PDB Piedmont Bancorp, Inc. of NC AMEX Central NC Thrift 133 1 06-30 12/95 9.88 27
GSLA GS Financial Corp. of LA OTC New Orleans LA Thrift 129 3 12-31 04/97 13.38 44
CFNC Carolina Fincorp of NC (3) OTC Southcentral NC Thrift 118 4 06-30 11/96 10.13 19
SSM Stone Street Bancorp of NC AMEX Central NC Thrift 111 2 12-31 04/96 16.88 31
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September 3, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C>
South-East Companies (continued)
--------------------------------
TWIN Twin City Bancorp, Inc. of TN OTC Northeast TN Thrift 110 3 12-31 01/95 13.19 16
SRN Southern Banc Company of AL AMEX Northeast AL Thrift 106 4 06-30 10/95 14.63 18
CENB Century Bancorp, Inc. of NC OTC Charlotte NC Thrift 104 1 06-30 12/96 13.63 17
UTBI United Tenn. Bancshares of TN OTC Eastern TN Thrift 75 2 12-31 01/98 12.13 18
SCBS Southern Commun. Bncshrs of AL OTC NorthCentral AL Thrift 72 1 09-30 12/96 16.00 18
HSTD Homestead Bancorp, Inc. of LA OTC Tangipahoa Paris Thrift 71 P 2 12-31 07/98 8.44 12
PEDE Great Pee Dee Bancorp of SC OTC Northeast SC Thrift 69 1 06-30 12/97 11.50 25
SSB Scotland Bancorp, Inc. of NC AMEX S. Central NC Thrift 61 2 09-30 04/96 9.13 17
SCCB S. Carolina Comm. Bnshrs of SC OTC Central SC Thrift 46 3 06-30 07/94 22.00 13
MBSP Mitchell Bancorp, Inc. of NC OTC Western NC Thrift 37 1 06-30 07/96 17.13 16
South-West Companies
--------------------
CBSA Coastal Bancorp of Houston TX OTC Houston TX M.B. 2,966 37 12-31 / 20.25 153
FBHC Fort Bend Holding Corp. of TX OTC Eastcentral TX M.B. 317 6 03-31 06/93 20.75 38
JXVL Jacksonville Bancorp of TX OTC East Central TX Thrift 237 6 09-30 04/96 17.13 41
ETFS East Texas Fin. Serv. of TX OTC Northeast TX Thrift 121 2 09-30 01/95 14.25 22
GUPB GFSB Bancorp, Inc of Gallup NM OTC Northwest NM Thrift 118 1 06-30 06/95 13.88 17
AABC Access Anytime Bancorp of NM OTC Eastern NM Thrift 114 3 12-31 08/86 9.75 12
Western Companies (Excl CA)
---------------------------
WSTR WesterFed Fin. Corp. of MT OTC Montana Thrift 1,023 36 06-30 01/94 18.63 104
UBMT United Fin. Corp. of MT OTC Central MT Thrift 96 D 4 12-31 09/86 24.75 42
HCBC High Country Bancorp of CO OTC Salida Thrift 92 2 12-31 12/97 12.25 16
TRIC Tri-County Bancorp of WY OTC Southeastern WY Thrift 89 2 12-31 09/93 12.00 14
CRZY Crazy Woman Creek Bncorp of WY OTC Northeast WY Thrift 62 1 09-30 03/96 14.63 14
Other Areas
-----------
</TABLE>
NOTES: (1) Or most recent date available (M=March, S=September, D=December,
J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift, M.B.=Mortgage
Banker, R.E.=Real Estate Developer, Div.=Diversified, and
Ret.=Retail Banking.
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September 3, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C>
(3) FDIC savings bank.
</TABLE>
Source: Corporate offering circulars, SNL Securities Quarterly Thrift Report,
and financial reports of publicly Traded Thrifts.
Date of Last Update: 09/03/98
<PAGE>
EXHIBIT III-2
MHC Peer Institutions
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-2
Market Pricing Comparatives
Prices As of August 21, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------- Pricing Ratios(3) Dividends(4)
--------------- Core Book --------------------------------------- --------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
- --------------------- ------ ------- ------- ------- ------- ------- ------- ------- -------- ------- ------ -----
($) ($Mil) ($) ($) (X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 17.95 150.82 0.90 13.31 18.72 142.07 18.05 145.73 19.54 0.32 1.78 30.66
Special Selection Grouping(8) 17.28 90.04 0.57 9.32 25.06 190.18 24.19 191.64 26.77 0.31 1.62 13.49
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
ALLB Alliance Bank MHC of PA (19.9) 21.25 13.81 0.62 8.93 NM 237.96 25.50 237.96 NM 0.36 1.69 11.53
BCSB BCSB Bankcorp MHC of MD (38.6) 11.38 26.87 0.36 7.28 NM 156.32 25.44 156.32 NM 0.00 0.00 0.00
BRKL Brookline Bncp MHC of MA(47.0) 12.75 174.36 0.47 9.33 27.13 136.66 45.39 136.66 27.13 0.20 1.57 20.00
CMSV Commty. Svgs, MHC of FL (48.5)(7) 28.50 70.40 0.95 16.11 27.67 176.91 19.11 176.91 30.00 0.90 3.16 NM
FFFL Fidelity Bcsh MHC of FL (47.9) 26.50 86.39 0.92 13.01 24.77 203.69 13.65 209.98 28.80 1.00 3.77 NM
SKBO First Carnegie MHC of PA(45.0) 13.25 13.71 0.50 10.86 NM 122.01 20.57 122.01 26.50 0.30 2.26 27.00
FFSX First FSB MHC Sxld of IA(46.3) 32.50 42.67 1.17 14.50 28.02 224.14 16.16 283.10 27.78 0.48 1.48 18.97
GBNK Gaston Fed Bncp MHC of NC(47.0 12.50 26.41 0.43 8.56 29.07 146.03 32.83 146.03 29.07 0.20 1.60 21.85
HARS Harris Fin. MHC of PA (24.9) 17.75 149.85 0.45 5.41 NM 328.10 26.67 NM NM 0.22 1.24 12.15
JXSB Jcksnville SB,MHC of IL (45.6) 16.75 14.56 0.33 9.23 NM 181.47 18.84 181.47 NM 0.30 1.79 NM
LFED Leeds Fed Bksr MHC of MD (36.3 17.50 32.95 0.66 9.52 26.52 183.82 30.33 183.82 26.52 0.56 3.20 NM
LIBB Liberty Bancorp MHC of NJ (47) 10.25 18.80 0.69 8.30 14.86 123.49 16.61 123.49 14.86 0.00 0.00 0.00
NBCP Niagara Bancorp of NY MHC(45.4 11.38 153.65 0.46 8.31 23.71 136.94 26.12 136.94 24.74 0.00 0.00 0.00
NWSB Northwest Bcrp MHC of PA (30.8 12.75 184.08 0.44 4.55 28.98 280.22 24.79 313.27 28.98 0.16 1.25 11.21
PBHC Pathfinder BC MHC of NY (45.2) 15.00 19.19 0.50 8.15 24.19 184.05 21.65 217.08 30.00 0.20 1.33 18.07
PBCT Peoples Bank, MHC of CT (41.2) 27.00 746.09 0.80 13.17 18.12 205.01 18.92 239.36 NM 0.84 3.11 NM
PHSB Ppls Home SB, MHC of PA (45.0) 16.25 20.18 0.56 10.33 25.79 157.31 20.08 157.31 29.02 0.28 1.72 22.50
PULB Pulaski Bk,SB MHC of MO (29.8)(7) 28.16 17.57 0.78 11.70 29.64 240.68 32.30 240.68 NM 1.10 3.91 NM
PLSK Pulaski SB, MHC of NJ (47.0) 14.88 14.73 0.55 10.44 27.05 142.53 16.44 142.53 27.05 0.30 2.02 25.62
SBFL SB Fngr Lakes MHC of NY (33.1) 16.00 18.88 0.22 6.10 NM 262.30 22.77 262.30 NM 0.24 1.50 NM
WAYN Wayne Svgs Bks MHC of OH (48.2 22.25 26.63 0.68 9.83 NM 226.35 21.29 226.35 NM 0.62 2.79 NM
WCFB Wbstr Cty FSB MHC of IA (45.6) 17.63 16.96 0.64 10.67 27.55 165.23 39.68 165.23 27.55 0.00 0.00 0.00
<CAPTION>
Financial Characteristics(6)
----------------------------------------------------------
Total Equity/ NPAs/ Reported Core
Financial Institution Assets Assets Assets ROA ROE ROA ROE
- --------------------- -------- ------- ------- ------- ------- ------- -------
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 1,067 14.03 0.59 0.93 7.90 0.88 7.43
Special Selection Grouping(8) 1,031 13.86 0.52 0.93 7.38 0.86 6.66
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
ALLB Alliance Bank MHC of PA (19.9) 273 10.72 1.06 0.80 7.09 0.80 7.09
BCSB BCSB Bankcorp MHC of MD (38.6) 274 16.27 NA 0.80 4.95 0.80 4.95
BRKL Brookline Bncp MHC of MA(47.0) 817 33.21 0.60 1.92 8.85 1.92 8.85
CMSV Commty. Svgs, MHC of FL (48.5)(7) 761 10.80 0.27 0.74 6.58 0.68 6.07
FFFL Fidelity Bcsh MHC of FL (47.9) 1,321 6.70 0.27 0.66 8.52 0.57 7.32
SKBO First Carnegie MHC of PA(45.0) 148 16.86 0.59 0.65 4.26 0.77 5.08
FFSX First FSB MHC Sxld of IA(46.3) 571 7.21 0.46 0.68 8.31 0.69 8.38
GBNK Gaston Fed Bncp MHC of NC(47.0 171 22.48 0.50 1.13 5.02 1.13 5.02
HARS Harris Fin. MHC of PA (24.9) 2,260 8.13 0.66 0.88 10.96 0.72 8.96
JXSB Jcksnville SB,MHC of IL (45.6) 170 10.38 0.68 0.59 5.64 0.38 3.65
LFED Leeds Fed Bksr MHC of MD (36.3 299 16.50 0.03 1.18 7.20 1.18 7.20
LIBB Liberty Bancorp MHC of NJ (47) 241 13.45 0.35 1.12 8.31 1.12 8.31
NBCP Niagara Bancorp of NY MHC(45.4 1,296 19.08 0.29 1.10 5.78 1.06 5.54
NWSB Northwest Bcrp MHC of PA (30.8 2,410 8.85 0.50 0.95 10.14 0.95 10.14
PBHC Pathfinder BC MHC of NY (45.2) 196 11.76 1.30 0.91 7.74 0.73 6.24
PBCT Peoples Bank, MHC of CT (41.2) 9,149 9.23 0.70 1.18 13.45 0.63 7.22
PHSB Ppls Home SB, MHC of PA (45.0) 223 12.76 0.32 0.81 7.30 0.72 6.49
PULB Pulaski Bk,SB MHC of MO (29.8)(7) 184 13.42 NA 1.11 8.38 0.91 6.88
PLSK Pulaski SB, MHC of NJ (47.0) 191 11.54 0.63 0.63 5.86 0.63 5.86
SBFL SB Fngr Lakes MHC of NY (33.1) 251 8.68 0.32 0.40 4.39 0.34 3.72
WAYN Wayne Svgs Bks MHC of OH (48.2 260 9.41 0.49 0.72 7.72 0.66 7.10
WCFB Wbstr Cty FSB MHC of IA (45.6) 94 24.02 0.07 1.43 6.09 1.43 6.09
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month data,
adjusted to omit non-operating items (including the SAIF assessment) on a
tax effected basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/CORE = Price to estimated core earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month estimated core
earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month earnings and average equity and assets balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
(8) Includes MHC Institutions;
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been
obtained from sources we believe are reliable, but we cannot guarantee
the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
EXHIBIT IV-1
Stock Prices:
As of August 21, 1998
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A
Weekly Thrift Market Line - Part One
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHC)
- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(285) 18.00 7,466 157.3 23.41 15.80 18.31 -1.48 11.47 -8.10
NYSE Traded Companies(8) 30.75 39,352 1,417.5 44.71 28.28 31.36 -3.64 -4.21 -19.20
AMEX Traded Companies(22) 15.76 3,354 50.1 20.91 14.70 15.91 -0.60 2.25 -10.65
NASDAQ Listed OTC Companies(255) 17.88 7,013 134.4 23.08 15.58 18.19 -1.50 12.72 -7.57
California Companies(18) 22.80 14,594 519.6 30.67 20.34 23.07 -1.57 2.96 -11.40
Florida Companies(6) 18.24 25,809 390.4 24.64 16.03 18.35 -0.92 4.92 -18.66
Mid-Atlantic Companies(57) 18.12 10,967 183.8 23.77 15.80 18.35 -1.07 11.31 -8.91
Mid-West Companies(131) 17.67 5,318 110.2 22.64 15.32 17.91 -1.04 12.61 -7.70
New England Companies(7) 18.70 8,374 203.7 25.13 17.54 18.93 -1.93 4.37 -12.91
North-West Companies(11) 17.81 11,557 245.1 22.76 16.70 18.43 -3.35 12.03 0.22
South-East Companies(44) 17.56 4,475 96.0 23.02 15.25 17.98 -2.08 13.81 -5.44
South-West Companies(6) 15.05 2,788 49.0 19.23 13.29 15.36 -1.80 14.87 -12.40
Western Companies (Excl CA)(5) 16.45 2,142 38.0 22.10 16.28 17.73 -6.79 3.70 -17.59
Thrift Strategy(240) 17.45 5,136 95.8 22.57 15.41 17.73 -1.32 11.20 -7.78
Mortgage Banker Strategy(27) 22.73 21,047 564.1 30.14 19.43 22.98 -2.00 14.81 -12.29
Real Estate Strategy(8) 19.43 8,482 136.7 24.59 15.15 19.98 -2.85 22.83 6.28
Diversified Strategy(7) 20.49 46,406 1,067.9 29.52 19.02 21.34 -3.85 -6.37 -20.65
Retail Banking Strategy(3) 17.63 4,499 89.4 23.42 14.69 18.00 -1.46 17.17 -10.66
Companies Issuing Dividends(229) 18.54 7,245 166.0 24.13 16.19 18.85 -1.43 10.49 -9.61
Companies Without Dividends(56) 15.85 8,342 122.9 20.55 14.26 16.12 -1.67 15.43 -1.96
Equity/Assets less than 6%(21) 18.34 18,952 360.2 24.91 15.27 18.86 -2.91 16.25 -9.03
Equity/Assets 6-12%(123) 19.67 7,881 204.5 25.51 16.67 20.02 -1.52 15.02 -9.69
Equity/Assets greater than 12%(141) 16.52 5,417 86.8 21.38 15.13 16.75 -1.23 7.72 -6.58
Converted Last 3 Mths (no MHC)(6) 10.93 14,346 173.7 12.49 10.01 11.10 -1.15 9.27 19.66
Actively Traded Companies(30) 24.73 27,206 733.3 32.97 21.92 24.98 -1.58 12.17 -14.13
Market Value Below $20 Million(56) 13.80 1,118 14.7 18.10 12.48 13.89 -0.41 4.36 -11.32
Holding Company Structure(257) 18.32 7,338 160.1 23.86 16.13 18.64 -1.52 11.00 -8.16
Assets Over $1 Billion(58) 22.40 25,006 578.3 30.02 19.90 22.99 -2.74 10.04 -10.53
Assets $500 Million-$1 Billion(37) 19.72 5,935 106.8 24.99 16.74 20.11 -1.87 13.25 -8.04
Assets $250-$500 Million(69) 18.56 3,601 61.1 23.64 15.88 18.78 -1.27 17.99 -3.84
Assets less than $250 Million(121) 15.15 1,738 25.7 19.72 13.56 15.33 -0.88 8.11 -9.25
Goodwill Companies(113) 19.46 13,646 275.0 25.55 16.82 19.85 -1.67 13.98 -8.79
Non-Goodwill Companies(171) 17.13 3,458 82.4 22.13 15.19 17.38 -1.34 9.94 -7.70
Acquirors of FSLIC Cases(8) 32.96 30,789 1,355.4 43.56 30.12 33.23 -1.65 9.44 -10.61
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
Market Averages. SAIF-Insured Thrifts(no MHC
- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(285) 0.97 0.92 13.58 13.17 120.52
NYSE Traded Companies(8) 2.16 1.77 18.29 17.88 248.85
AMEX Traded Companies(22) 0.82 0.78 14.00 13.68 111.21
NASDAQ Listed OTC Companies(255) 0.95 0.91 13.42 13.01 118.05
California Companies(18) 1.46 1.37 16.56 15.82 222.74
Florida Companies(6) 0.96 0.57 11.07 10.57 139.88
Mid-Atlantic Companies(57) 1.00 0.97 13.11 12.39 134.57
Mid-West Companies(131) 0.92 0.88 13.75 13.47 108.87
New England Companies(7) 1.16 1.10 13.11 12.62 178.53
North-West Companies(11) 0.95 0.86 12.77 12.37 95.97
South-East Companies(44) 0.87 0.83 13.09 12.90 94.68
South-West Companies(6) 1.16 1.14 12.49 12.09 152.16
Western Companies (Excl CA)(5) 0.84 0.85 15.03 14.26 90.36
Thrift Strategy(240) 0.94 0.90 13.76 13.41 111.82
Mortgage Banker Strategy(27) 1.23 1.18 13.20 12.18 184.83
Real Estate Strategy(8) 1.29 1.19 11.69 11.29 162.39
Diversified Strategy(7) 1.17 0.76 10.23 10.01 126.08
Retail Banking Strategy(3) 0.40 0.26 13.88 13.36 205.51
Companies Issuing Dividends(229) 1.02 0.95 13.74 13.28 120.25
Companies Without Dividends(56) 0.78 0.80 12.91 12.74 121.62
Equity/Assets less than 6%(21) 1.08 1.14 10.19 9.63 207.51
Equity/Assets 6-12%(123) 1.13 1.03 13.10 12.40 152.18
Equity/Assets greater than 12%(141) 0.82 0.79 14.49 14.36 80.48
Converted Last 3 Mths (no MHC)(6) 0.47 0.49 11.62 11.62 50.48
Actively Traded Companies(30) 1.50 1.56 14.47 13.83 179.72
Market Value Below $20 Million(56) 0.73 0.66 12.71 12.66 91.06
Holding Company Structure(257) 0.99 0.93 13.80 13.39 121.28
Assets Over $1 Billion(58) 1.35 1.28 13.85 12.75 183.55
Assets $500 Million-$1 Billion(37) 1.03 0.96 13.33 12.84 136.62
Assets $250-$500 Million(69) 0.99 0.95 13.98 13.63 121.15
Assets less than $250 Million(121) 0.77 0.72 13.30 13.23 85.94
Goodwill Companies(113) 1.10 1.02 13.31 12.28 146.84
Non-Goodwill Companies(171) 0.90 0.86 13.76 13.76 104.24
Acquirors of FSLIC Cases(8) 2.34 2.25 20.42 19.63 256.95
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1996 or 1997.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public
(non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded
companies, and RP Financial, Inc. calculations. The information
provided in this report has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(56) 20.19 12,179 276.7 26.37 17.32 20.73 -2.32 14.71 -10.86
NYSE Traded Companies(5) 30.45 50,883 1,431.1 38.25 26.93 30.89 -0.83 26.81 -1.99
AMEX Traded Companies(5) 17.55 2,424 44.7 23.20 14.89 17.85 -1.75 16.49 -8.43
NASDAQ Listed OTC Companies(46) 19.28 8,733 166.9 25.33 16.47 19.87 -2.56 13.06 -12.21
California Companies(1) 19.50 7,697 150.1 24.00 17.38 19.75 -1.27 9.86 1.30
Mid-Atlantic Companies(20) 22.08 21,084 522.5 28.07 18.94 22.48 -1.27 18.70 -9.63
New England Companies(30) 20.04 7,091 135.9 26.29 16.88 20.73 -3.06 18.12 -8.57
North-West Companies(2) 14.22 5,866 84.3 19.71 14.17 14.94 -4.84 -1.34 -21.45
South-East Companies(3) 13.13 2,611 28.9 20.96 12.42 13.31 -1.52 -29.15 -35.96
Thrift Strategy(44) 20.44 8,283 194.6 26.54 17.65 20.98 -2.24 14.61 -10.08
Mortgage Banker Strategy(6) 20.85 28,408 686.5 28.00 16.91 21.29 -2.11 16.63 -17.11
Real Estate Strategy(2) 15.22 7,801 118.3 19.19 13.07 15.25 0.25 16.12 -1.79
Diversified Strategy(4) 18.71 35,884 684.4 25.50 16.46 19.83 -5.46 11.25 -15.06
Companies Issuing Dividends(45) 20.53 14,118 324.0 27.05 17.61 21.10 -2.46 12.56 -13.03
Companies Without Dividends(11) 18.75 4,035 78.2 23.50 16.10 19.20 -1.69 23.74 -1.76
Equity/Assets less than 6%(4) 19.13 32,941 828.3 26.27 15.13 19.66 -3.23 22.49 -14.79
Equity/Assets 6-12%(34) 21.96 10,280 254.2 28.11 18.40 22.71 -3.06 15.98 -10.75
Equity/Assets greater than 12%(18) 17.47 10,730 191.7 23.48 16.02 17.67 -0.88 10.86 -10.17
Converted Last 3 Mths (no MHC)(1) 7.75 3,101 24.0 11.27 6.80 7.88 -1.65 13.97 -31.23
Actively Traded Companies(15) 25.86 19,948 480.8 33.43 21.81 26.95 -3.84 16.75 -11.15
Market Value Below $20 Million(4) 17.57 1,224 18.6 23.60 14.95 18.22 -2.52 2.48 -23.80
Holding Company Structure(43) 20.24 9,878 201.6 26.18 17.43 20.78 -2.14 14.76 -9.48
Assets Over $1 Billion(18) 26.38 31,772 775.1 33.54 22.30 27.23 -2.96 17.59 -8.18
Assets $500 Million-$1 Billion(10) 21.12 5,784 101.8 27.17 17.98 22.02 -3.90 12.63 -12.22
Assets $250-$500 Million(12) 16.80 3,923 60.7 22.40 14.91 17.10 -1.80 17.05 -13.64
Assets less than $250 Million(16) 16.07 1,977 27.8 21.77 13.82 16.31 -1.26 11.11 -10.78
Goodwill Companies(29) 20.76 18,989 431.2 27.01 17.41 21.32 -2.23 19.72 -10.67
Non-Goodwill Companies(27) 19.61 5,369 122.2 25.73 17.23 20.15 -2.40 9.70 -11.06
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(56) 1.24 1.16 13.29 12.84 126.55
NYSE Traded Companies(5) 1.49 1.46 20.77 18.92 137.03
AMEX Traded Companies(5) 1.18 1.02 12.88 12.47 114.17
NASDAQ Listed OTC Companies(46) 1.22 1.15 12.44 12.16 126.78
California Companies(1) 1.70 1.70 13.37 13.33 131.35
Mid-Atlantic Companies(20) 1.08 1.05 14.45 13.83 124.74
New England Companies(30) 1.40 1.27 12.72 12.33 136.35
North-West Companies(2) 1.07 1.05 9.21 9.21 89.69
South-East Companies(3) 0.88 0.91 13.11 12.92 76.72
Thrift Strategy(44) 1.23 1.15 14.08 13.69 125.44
Mortgage Banker Strategy(6) 1.33 1.23 11.66 10.95 147.02
Real Estate Strategy(2) 1.25 1.27 9.29 9.27 89.24
Diversified Strategy(4) 1.19 1.13 8.31 7.37 125.68
Companies Issuing Dividends(45) 1.24 1.15 13.08 12.54 129.86
Companies Without Dividends(11) 1.26 1.22 14.16 14.11 112.67
Equity/Assets less than 6%(4) 1.32 0.96 8.38 7.77 168.97
Equity/Assets 6-12%(34) 1.48 1.40 12.81 12.24 148.69
Equity/Assets greater than 12%(18) 0.83 0.82 15.16 14.97 80.23
Converted Last 3 Mths (no MHC)(1) 0.37 0.37 9.41 9.41 47.49
Actively Traded Companies(15) 1.80 1.61 15.97 15.31 166.37
Market Value Below $20 Million(4) 1.14 1.10 14.75 14.70 159.74
Holding Company Structure(43) 1.21 1.14 13.59 13.29 120.59
Assets Over $1 Billion(18) 1.47 1.42 15.06 14.07 142.17
Assets $500 Million-$1 Billion(10) 1.54 1.31 13.51 13.26 154.62
Assets $250-$500 Million(12) 1.10 1.05 12.15 11.89 112.27
Assets less than $250 Million(16) 0.97 0.93 12.25 12.11 107.61
Goodwill Companies(29) 1.29 1.18 13.16 12.27 140.62
Non-Goodwill Companies(27) 1.19 1.15 13.41 13.41 112.49
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1996 or 1997.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public
(non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded
companies, and RP Financial, Inc. calculations. The information
provided in this report has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 17.18 9,398 51.9 24.29 14.81 17.19 -0.61 18.21 -7.55
BIF-Insured Thrifts(3) 17.79 32,239 306.3 28.09 16.40 17.90 -0.71 18.65 -13.38
NASDAQ Listed OTC Companies(22) 17.28 12,824 90.0 24.86 15.05 17.30 -0.62 18.27 -8.43
Florida Companies(2) 26.50 6,802 86.4 35.38 24.88 25.50 3.92 8.16 -18.46
Mid-Atlantic Companies(12) 14.80 11,884 55.6 22.35 12.64 14.98 -1.14 18.32 -11.03
Mid-West Companies(5) 22.28 2,337 25.2 29.13 18.03 21.72 2.04 21.68 -10.33
New England Companies(2) 19.88 46,613 460.2 29.56 19.88 19.91 -0.11 12.84 -0.72
South-East Companies(1) 12.50 4,497 26.4 18.06 12.50 14.00 -10.71 25.00 25.00
Thrift Strategy(20) 16.71 8,799 50.3 23.79 14.55 16.73 -0.68 17.32 -7.16
Mortgage Banker Strategy(1) 17.75 33,965 149.8 27.88 12.00 17.75 0.00 55.43 -10.71
Diversified Strategy(1) 27.00 64,130 746.1 41.13 27.00 27.06 -0.22 -1.82 -28.95
Companies Issuing Dividends(18) 18.43 13,412 99.0 27.12 15.74 18.45 -0.72 20.91 -11.68
Companies Without Dividends(4) 12.66 10,472 54.1 15.83 12.29 12.69 -0.23 7.71 4.56
Equity/Assets 6-12%(12) 20.24 15,523 119.7 30.12 16.46 20.08 -0.31 25.98 -16.05
Equity/Assets >12%(10) 13.65 9,525 53.8 18.44 13.32 13.90 -1.76 8.85 0.88
Holding Company Structure(4) 14.72 9,744 54.6 21.21 12.40 14.94 -0.99 21.85 -6.07
Assets Over $1 Billion(5) 19.08 36,299 264.0 27.88 17.13 18.94 0.33 18.42 -10.82
Assets $500 Million-$1 Billion(3) 22.63 15,968 108.5 28.49 18.88 21.38 4.17 28.75 14.93
Assets $250-$500 Million(5) 17.68 4,126 23.8 25.98 14.32 17.98 -1.59 27.62 -10.56
Assets less than $250 Million(9) 14.56 2,802 18.1 21.38 13.25 14.83 -1.81 9.71 -11.45
Goodwill Companies(7) 20.41 23,361 179.3 28.59 17.33 19.97 1.30 23.72 -10.96
Non-Goodwill Companies(15) 15.59 7,150 42.0 22.85 13.82 15.86 -1.66 15.33 -7.07
MHC Institutions(22) 17.28 12,824 90.0 24.86 15.05 17.30 -0.62 18.27 -8.43
MHC Converted Last 3 Months(2) 10.82 5,009 22.8 12.16 10.57 10.82 0.07 8.15 8.15
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 0.60 0.57 9.23 8.97 80.64
BIF-Insured Thrifts(3) 0.86 0.59 9.88 8.83 85.18
NASDAQ Listed OTC Companies(22) 0.64 0.57 9.32 8.95 81.32
Florida Companies(2) 1.07 0.92 13.01 12.62 194.16
Mid-Atlantic Companies(12) 0.52 0.50 8.18 7.99 65.37
Mid-West Companies(5) 0.76 0.71 11.06 10.30 109.74
New England Companies(2) 0.98 0.64 11.25 10.31 85.38
South-East Companies(1) 0.43 0.43 8.56 8.56 38.07
Thrift Strategy(20) 0.60 0.57 9.33 9.04 78.73
Mortgage Banker Strategy(1) 0.55 0.45 5.41 4.86 66.55
Diversified Strategy(1) 1.49 0.80 13.17 11.28 142.67
Companies Issuing Dividends(18) 0.66 0.58 9.49 9.02 89.50
Companies Without Dividends(4) 0.54 0.54 8.64 8.64 48.61
Equity/Assets 6-12%(12) 0.73 0.61 9.39 8.70 105.70
Equity/Assets greater 12%(10) 0.53 0.53 9.24 9.24 51.52
Holding Company Structure(4) 0.63 0.58 8.65 8.34 69.76
Assets Over $1 Billion(5) 0.81 0.61 8.89 8.23 99.68
Assets $500 Million-$1 Billion(3) 0.81 0.82 11.92 10.41 114.61
Assets $250-$500 Million(5) 0.53 0.51 8.33 8.33 72.10
Assets less than $250 Million(9) 0.56 0.53 9.57 9.41 67.28
Goodwill Companies(7) 0.81 0.66 9.44 8.36 110.00
Non-Goodwill Companies(15) 0.55 0.52 9.26 9.26 65.88
MHC Institutions(22) 0.64 0.57 9.32 8.95 81.32
MHC Converted Last 3 Months(2) 0.52 0.52 7.79 7.79 53.22
</TABLE>
<PAGE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1996 or 1997.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public
(non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded
companies, and RP Financial, Inc. calculations. The information
provided in this report has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AHM Ahmanson and Co. H.F. of CA(8) 58.50 112,748 6,595.8 82.81 50.13 59.69 -1.99 14.41 -12.61
BYS Bay State Bancorp of MA* 24.25 2,535 61.5 32.63 23.38 23.63 2.62 21.25 21.25
CFB Commercial Federal Corp. of NE 25.88 42,056 1,088.4 38.19 25.13 26.38 -1.90 -4.15 -27.22
DME Dime Bancorp, Inc. of NY* 26.38 113,533 2,995.0 32.69 18.63 26.25 0.50 37.47 -12.79
DSL Downey Financial Corp. of CA 27.13 28,105 762.5 35.00 20.48 30.63 -11.43 30.24 0.18
FED FirstFed Fin. Corp. of CA 18.50 21,215 392.5 26.94 15.94 20.31 -8.91 9.60 -4.54
GSB Golden State Bancorp of CA(8) 20.56 55,485 1,140.8 41.81 20.56 22.31 -7.84 -27.55 -45.09
GDW Golden West Fin. Corp. of CA 85.00 57,591 4,895.2 114.25 80.38 82.50 3.03 4.62 -13.10
GPT GreenPoint Fin. Corp. of NY* 32.88 83,383 2,741.6 42.63 29.34 33.81 -2.75 3.46 -9.37
JSB JSB Financial, Inc. of NY* 49.44 9,833 486.1 59.69 44.50 51.25 -3.53 10.95 -1.24
OCN Ocwen Financial Corp. of FL 18.25 60,772 1,109.1 30.38 18.00 18.38 -0.71 -15.86 -28.26
SIB Staten Island Bancorp of NY* 19.31 45,130 871.5 23.63 18.81 19.50 -0.97 60.92 -7.78
WES Westcorp Inc. of Orange CA 9.75 26,374 257.1 23.50 9.75 9.94 -1.91 -49.69 -42.24
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 20.25 2,505 50.7 25.63 20.25 22.00 -7.95 -5.81 -13.39
ANE Alliance Bncp of New Eng of CT* 12.25 2,493 30.5 16.08 11.00 12.50 -2.00 4.97 11.36
BKC American Bank of Waterbury CT* 23.63 4,687 110.8 32.56 17.88 23.88 -1.05 26.03 -3.08
BFD BostonFed Bancorp of MA 19.25 5,393 103.8 24.88 18.50 18.75 2.67 -2.23 -12.02
CNY Carver Bancorp, Inc. of NY 11.63 2,314 26.9 17.13 11.63 12.13 -4.12 -10.54 -28.43
CBK Citizens First Fin.Corp. of IL 16.25 2,526 41.0 22.38 16.00 17.13 -5.14 -2.29 -19.75
EFC EFC Bancorp Inc of IL 11.25 7,491 84.3 14.94 11.25 11.38 -1.14 12.50 12.50
EBI Equality Bancorp, Inc. of MO 13.88 2,518 34.9 16.00 12.50 13.31 4.28 38.80 -4.28
ESX Essex Bancorp of Norfolk VA(8) 2.69 1,059 2.8 7.94 1.75 2.88 -6.60 43.09 -31.73
FCB Falmouth Bancorp, Inc. of MA* 18.00 1,455 26.2 23.88 16.88 18.50 -2.70 5.08 -12.20
FAB FirstFed America Bancorp of MA 17.00 8,272 140.6 23.25 16.75 16.88 0.71 -10.81 -22.30
GAF GA Financial Corp. of PA 16.88 7,220 121.9 22.25 15.13 16.13 4.65 -5.59 -10.59
HBS Haywood Bancshares, Inc. of NC* 20.25 1,250 25.3 24.00 19.00 20.50 -1.22 6.58 -10.00
KNK Kankakee Bancorp, Inc. of IL 29.88 1,380 41.2 37.75 29.00 30.88 -3.24 0.84 -20.85
KYF Kentucky First Bancorp of KY 14.00 1,240 17.4 15.88 12.38 14.25 -1.75 14.29 -6.29
NBN Northeast Bancorp of ME* 13.63 2,237 30.5 19.50 9.67 13.88 -1.80 39.79 -28.26
NEP Northeast PA Fin. Corp of PA 12.19 6,427 78.3 16.00 12.19 12.69 -3.94 21.90 21.90
PDB Piedmont Bancorp, Inc. of NC 9.88 2,751 27.2 11.63 9.50 10.00 -1.20 -9.19 -9.19
SSB Scotland Bancorp, Inc. of NC 9.13 1,914 17.5 19.25 8.13 9.00 1.44 -51.95 -8.15
SZB SouthFirst Bancshares of AL 17.38 967 16.8 22.75 16.00 17.63 -1.42 6.11 -23.60
SRN Southern Banc Company of AL 14.63 1,230 18.0 19.13 14.25 14.56 0.48 -5.61 -17.58
SSM Stone Street Bancorp of NC 16.88 1,843 31.1 22.50 16.75 16.75 0.78 -21.49 -23.93
TSH Teche Holding Company of LA 17.00 3,439 58.5 23.50 17.00 17.38 -2.19 -6.85 -25.27
FTF Texarkana Fst. Fin. Corp of AR 26.13 1,738 45.4 30.63 22.25 26.88 -2.79 16.13 4.52
THR Three Rivers Fin. Corp. of MI 17.75 825 14.6 23.50 15.63 15.75 12.70 8.36 -18.39
WSB Washington SB, FSB of MD 5.69 4,421 25.2 9.50 5.69 5.69 0.00 -17.30 -37.20
WFI Winton Financial Corp. of OH 14.13 4,014 56.7 20.63 7.88 14.94 -5.42 77.96 38.67
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 45.00 1,092 49.1 45.50 22.06 44.25 1.69 108.43 53.64
FBER 1st Bergen Bancorp of NJ 14.75 2,585 38.1 20.75 14.75 17.63 -16.34 -20.27 -22.90
AFED AFSALA Bancorp, Inc. of NY(8) 17.88 1,319 23.6 20.75 15.75 18.00 -0.67 10.03 -7.12
ALBK ALBANK Fin. Corp. of Albany NY(8) 60.00 13,222 793.3 74.63 38.00 60.31 -0.51 55.32 16.64
AMFC AMB Financial Corp. of IN 15.75 916 14.4 19.38 14.50 15.75 0.00 5.00 -0.82
ASBP ASB Financial Corp. of OH 12.75 1,635 20.8 16.75 12.31 12.50 2.00 2.00 -3.77
ABBK Abington Bancorp of MA* 16.75 3,532 59.2 22.25 14.63 17.50 -4.29 16.48 -20.24
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C>
AHM Ahmanson and Co. H.F. of CA(8) 3.50 3.30 26.34 19.38 483.55
BYS Bay State Bancorp of MA* 1.05 1.05 23.66 23.66 114.26
CFB Commercial Federal Corp. of NE 1.43 1.68 14.02 12.26 202.79
DME Dime Bancorp, Inc. of NY* 1.29 1.04 11.45 9.37 193.99
DSL Downey Financial Corp. of CA 1.80 1.84 15.87 15.69 208.93
FED FirstFed Fin. Corp. of CA 1.23 1.19 10.96 10.88 191.72
GSB Golden State Bancorp of CA(8) 1.89 2.04 17.44 15.73 288.89
GDW Golden West Fin. Corp. of CA 6.48 6.50 48.88 48.88 688.81
GPT GreenPoint Fin. Corp. of NY* 1.70 1.76 15.34 8.56 158.64
JSB JSB Financial, Inc. of NY* 2.99 2.66 37.88 37.88 159.05
OCN Ocwen Financial Corp. of FL 1.39 0.27 7.36 6.98 56.29
SIB Staten Island Bancorp of NY* 0.43 0.79 15.51 15.11 59.19
WES Westcorp Inc. of Orange CA 0.63 -0.84 12.62 12.59 144.57
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 1.17 1.10 17.97 17.97 117.17
ANE Alliance Bncp of New Eng of CT* 0.87 0.51 7.91 7.72 99.21
BKC American Bank of Waterbury CT* 1.75 1.47 12.53 12.13 138.94
BFD BostonFed Bancorp of MA 1.30 1.10 15.06 14.52 191.28
CNY Carver Bancorp, Inc. of NY 0.45 0.40 15.36 14.82 189.05
CBK Citizens First Fin.Corp. of IL 0.78 0.49 15.33 15.33 110.79
EFC EFC Bancorp Inc of IL 0.56 0.56 12.42 12.42 52.24
EBI Equality Bancorp, Inc. of MO 0.49 0.03 10.26 10.26 101.49
ESX Essex Bancorp of Norfolk VA(8) -0.20 -0.19 0.03 -0.14 182.29
FCB Falmouth Bancorp, Inc. of MA* 0.68 0.54 16.19 16.19 72.26
FAB FirstFed America Bancorp of MA 0.82 0.69 15.35 15.35 154.96
GAF GA Financial Corp. of PA 1.16 1.09 15.87 15.73 113.31
HBS Haywood Bancshares, Inc. of NC* 1.76 1.76 18.06 17.49 121.60
KNK Kankakee Bancorp, Inc. of IL 2.20 2.14 27.92 23.23 289.48
KYF Kentucky First Bancorp of KY 0.79 0.78 11.24 11.24 65.97
NBN Northeast Bancorp of ME* 0.82 0.81 9.72 8.83 138.86
NEP Northeast PA Fin. Corp of PA -0.60 0.37 13.07 13.07 68.99
PDB Piedmont Bancorp, Inc. of NC 0.57 0.57 7.77 7.77 48.28
SSB Scotland Bancorp, Inc. of NC 0.50 0.50 7.91 7.91 32.02
SZB SouthFirst Bancshares of AL 0.70 0.65 16.91 16.49 167.82
SRN Southern Banc Company of AL 0.42 0.42 14.95 14.84 85.95
SSM Stone Street Bancorp of NC 0.80 0.80 16.85 16.85 60.21
TSH Teche Holding Company of LA 1.09 1.08 16.38 16.38 118.43
FTF Texarkana Fst. Fin. Corp of AR 1.79 1.76 16.19 16.19 106.32
THR Three Rivers Fin. Corp. of MI 1.01 0.94 16.08 16.02 118.86
WSB Washington SB, FSB of MD 0.44 0.30 5.21 5.21 61.87
WFI Winton Financial Corp. of OH 0.80 0.66 5.80 5.68 80.84
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 1.82 1.24 21.44 21.09 237.69
FBER 1st Bergen Bancorp of NJ 0.82 0.82 14.30 14.30 122.28
AFED AFSALA Bancorp, Inc. of NY(8) 0.91 0.93 15.26 15.26 125.80
ALBK ALBANK Fin. Corp. of Albany NY(8) 3.32 3.29 27.74 21.70 309.29
AMFC AMB Financial Corp. of IN 1.11 0.63 16.35 16.35 115.94
ASBP ASB Financial Corp. of OH 0.66 0.65 10.68 10.68 70.28
ABBK Abington Bancorp of MA* 1.26 1.07 9.79 8.90 155.67
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AABC Access Anytime Bancorp of NM 9.75 1,217 11.9 13.00 6.37 10.25 -4.88 47.28 -11.36
AFBC Advance Fin. Bancorp of WV 15.75 1,074 16.9 20.88 15.63 15.88 -0.82 0.00 -9.38
ALBC Albion Banc Corp. of Albion NY 9.75 752 7.3 14.17 7.75 8.69 12.20 25.81 -26.86
ABCL Alliance Bancorp, Inc. of IL 21.50 11,435 245.9 29.25 20.75 22.00 -2.27 1.18 -18.87
ALLB Alliance Bank MHC of PA (19.9) 21.25 3,273 13.8 39.00 16.75 21.25 0.00 25.89 -31.45
AHCI Ambanc Holding Co., Inc. of NY* 15.06 4,105 61.8 20.00 14.13 16.00 -5.87 -3.65 -19.68
ASBI Ameriana Bancorp of IN 18.50 3,253 60.2 22.00 17.75 18.50 0.00 0.00 -6.94
ABCW Anchor Bancorp Wisconsin of WI 42.38 8,920 378.0 46.50 26.25 42.50 -0.28 54.78 16.49
ANDB Andover Bancorp, Inc. of MA* 33.13 6,481 214.7 39.88 23.80 34.50 -3.97 39.79 2.89
ASFC Astoria Financial Corp. of NY 43.25 26,531 1,147.5 62.50 43.25 45.06 -4.02 -7.74 -22.42
AVND Avondale Fin. Corp. of IL 14.25 3,060 43.6 18.88 14.13 14.38 -0.90 -1.32 -12.31
BCSB BCSB Bankcorp MHC of MD (38.6) 11.38 6,117 26.9 12.63 11.25 11.50 -1.04 13.80 13.80
BKCT Bancorp Connecticut of CT* 17.88 5,114 91.4 25.00 15.00 19.75 -9.47 20.16 -14.86
BPLS Bank Plus Corp. of CA 10.25 19,387 198.7 16.13 9.50 10.38 -1.25 -7.57 -18.84
BNKU Bank United Corp. of TX 38.25 31,596 1,208.5 56.00 35.88 40.13 -4.68 3.71 -21.84
BWFC Bank West Fin. Corp. of MI 12.25 2,624 32.1 17.50 10.83 11.38 7.64 13.95 -24.05
BANC BankAtlantic Bancorp of FL 11.44 36,676 419.6 17.00 10.63 11.00 4.00 -10.69 -31.70
BKUNA BankUnited Fin. Corp. of FL 10.63 17,786 189.1 18.50 10.63 11.13 -4.49 -12.37 -31.02
BVCC Bay View Capital Corp. of CA 22.38 20,276 453.8 38.00 22.13 22.13 1.13 -12.88 -38.26
FSNJ Bayonne Banchsares of NJ(8) 14.94 9,094 135.9 17.38 11.63 15.25 -2.03 21.76 11.66
BFSB Bedford Bancshares, Inc. of VA 13.38 2,298 30.7 17.38 11.50 14.00 -4.43 11.50 -21.29
BFFC Big Foot Fin. Corp. of IL 15.75 2,513 39.6 23.94 14.50 15.75 0.00 -7.35 -25.00
BYFC Broadway Fin. Corp. of CA 9.72 933 9.1 12.73 9.72 9.72 0.00 -4.61 -20.78
BRKL Brookline Bncp MHC of MA(47.0) 12.75 29,095 174.4 17.98 12.75 12.75 0.00 27.50 27.50
CBES CBES Bancorp, Inc. of MO 19.50 940 18.3 26.00 17.38 20.75 -6.02 9.06 -12.36
CCFH CCF Holding Company of GA 20.50 895 18.3 24.00 15.00 20.50 0.00 34.34 1.84
CITZ CFS Bancorp, Inc. of IN 10.00 22,727 227.3 11.44 10.00 10.38 -3.66 0.00 0.00
CFSB CFSB Bancorp of Lansing MI 22.50 8,167 183.8 28.75 15.76 23.50 -4.26 41.42 -5.70
CKFB CKF Bancorp of Danville KY 17.38 843 14.7 21.25 16.50 16.50 5.33 -9.71 -6.05
CNSB CNS Bancorp, Inc. of MO 14.75 1,645 24.3 21.50 14.75 15.00 -1.67 -10.61 -28.05
CSBF CSB Financial Group Inc of IL 10.63 821 8.7 14.00 10.50 10.50 1.24 -11.42 -21.26
CBCI Calumet Bancorp of Chicago IL 29.25 3,145 92.0 39.00 27.17 30.25 -3.31 7.66 -12.03
CAFI Camco Fin. Corp. of OH 17.00 5,481 93.2 20.67 11.83 17.75 -4.23 43.70 0.00
CMRN Cameron Fin. Corp. of MO 17.25 2,434 42.0 22.19 16.69 17.25 0.00 -1.43 -15.85
CFNC Carolina Fincorp of NC* 10.13 1,906 19.3 18.88 9.63 10.13 0.00 -43.34 -45.24
CASB Cascade Financial Corp. of WA 14.00 4,266 59.7 16.00 9.60 13.50 3.70 40.00 32.08
CATB Catskill Fin. Corp. of NY* 15.75 4,486 70.7 19.13 15.75 16.00 -1.56 -3.08 -16.58
CAVB Cavalry Bancorp of TN 20.00 7,538 150.8 25.25 19.25 19.75 1.27 100.00 100.00
CNIT Cenit Bancorp of Norfolk VA 21.25 4,997 106.2 28.58 16.42 21.63 -1.76 25.00 -19.81
CEBK Central Co-Op. Bank of MA* 21.00 1,965 41.3 33.50 19.25 22.00 -4.55 7.69 -26.32
CENB Century Bancorp, Inc. of NC(8) 13.63 1,271 17.3 39.00 13.63 14.00 -2.64 -47.23 -51.75
COFI Charter One Financial of OH 28.50 127,635 3,637.6 36.38 25.00 27.88 2.22 11.85 -9.70
CVAL Chester Valley Bancorp of PA 31.50 2,327 73.3 37.00 20.95 31.25 0.80 37.80 7.69
CLAS Classic Bancshares, Inc. of KY 16.50 1,300 21.5 21.50 13.88 15.63 5.57 17.86 -1.49
CBSA Coastal Bancorp of Houston TX 20.25 7,563 153.2 26.67 18.75 21.25 -4.71 1.25 -12.90
CFCP Coastal Fin. Corp. of SC 19.00 6,256 118.9 20.50 14.72 18.75 1.33 2.37 3.37
CFKY Columbia Financial of KY 13.50 2,671 36.1 17.13 13.00 14.00 -3.57 35.00 35.00
CMSB Commonwealth Bancorp Inc of PA 16.75 15,474 259.2 24.25 16.50 17.75 -5.63 -2.22 -15.74
CMSV Commty. Svgs, MHC of FL (48.5)(8) 28.50 5,100 70.4 40.75 27.13 30.25 -5.79 7.55 -19.45
CFTP Community Fed. Bancorp of MS 16.75 4,398 73.7 21.00 16.00 16.13 3.84 -5.63 -17.28
CFFC Community Fin. Corp. of VA 13.00 2,569 33.4 16.38 10.75 14.44 -9.97 19.49 -5.87
CIBI Community Inv. Bancorp of OH 13.25 1,335 17.7 15.25 9.83 13.00 1.92 29.27 23.03
COOP Cooperative Bancshares of NC 15.00 3,027 45.4 25.00 13.00 14.75 1.69 13.21 -38.78
CRZY Crazy Woman Creek Bncorp of WY 14.63 939 13.7 20.00 14.38 15.88 -7.87 1.74 -2.47
CRSB Crusader Holding Corp of PA 14.50 3,833 55.6 17.86 14.05 15.00 -3.33 N.A. N.A.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
AABC Access Anytime Bancorp of NM 1.28 1.19 7.58 7.58 93.71
AFBC Advance Fin. Bancorp of WV 0.89 0.84 14.52 14.52 103.04
ALBC Albion Banc Corp. of Albion NY 0.45 0.42 8.28 8.28 96.94
ABCL Alliance Bancorp, Inc. of IL 1.09 1.11 11.55 11.42 134.42
ALLB Alliance Bank MHC of PA (19.9) 0.62 0.62 8.93 8.93 83.33
AHCI Ambanc Holding Co., Inc. of NY* 0.62 0.50 14.80 14.80 126.63
ASBI Ameriana Bancorp of IN 1.16 0.99 13.90 13.64 119.43
ABCW Anchor Bancorp Wisconsin of WI 2.30 2.05 14.34 14.12 224.14
ANDB Andover Bancorp, Inc. of MA* 2.11 2.06 16.95 16.95 213.78
ASFC Astoria Financial Corp. of NY 2.73 2.51 32.67 23.12 410.67
AVND Avondale Fin. Corp. of IL -1.53 -1.10 15.07 15.07 198.25
BCSB BCSB Bankcorp MHC of MD (38.6) 0.36 0.36 7.28 7.28 44.74
BKCT Bancorp Connecticut of CT* 1.22 1.05 9.42 9.42 93.82
BPLS Bank Plus Corp. of CA 0.62 0.72 9.57 8.76 217.68
BNKU Bank United Corp. of TX 3.29 3.13 20.67 18.68 414.91
BWFC Bank West Fin. Corp. of MI 0.41 0.33 8.93 8.93 68.73
BANC BankAtlantic Bancorp of FL 0.73 0.31 5.92 4.96 96.15
BKUNA BankUnited Fin. Corp. of FL 0.36 0.28 8.20 7.11 187.06
BVCC Bay View Capital Corp. of CA 0.68 1.06 19.17 12.27 263.44
FSNJ Bayonne Banchsares of NJ(8) 0.48 0.48 10.85 10.85 71.04
BFSB Bedford Bancshares, Inc. of VA 0.72 0.72 8.86 8.86 66.64
BFFC Big Foot Fin. Corp. of IL 0.44 0.38 15.24 15.24 83.36
BYFC Broadway Fin. Corp. of CA 0.64 0.44 13.94 13.94 137.67
BRKL Brookline Bncp MHC of MA(47.0) 0.47 0.47 9.33 9.33 28.09
CBES CBES Bancorp, Inc. of MO 1.17 0.97 17.63 17.63 123.86
CCFH CCF Holding Company of GA 0.18 -0.16 12.93 12.93 159.85
CITZ CFS Bancorp, Inc. of IN 0.36 0.40 10.88 10.88 62.51
CFSB CFSB Bancorp of Lansing MI 1.37 1.25 8.00 8.00 103.60
CKFB CKF Bancorp of Danville KY 1.36 1.03 15.84 15.84 74.22
CNSB CNS Bancorp, Inc. of MO 0.54 0.50 14.63 14.63 59.28
CSBF CSB Financial Group Inc of IL 0.30 0.26 13.52 12.76 58.44
CBCI Calumet Bancorp of Chicago IL 3.25 3.26 27.27 27.27 155.89
CAFI Camco Fin. Corp. of OH 1.18 0.89 10.39 9.75 105.01
CMRN Cameron Fin. Corp. of MO 1.00 0.98 18.86 18.86 90.75
CFNC Carolina Fincorp of NC* 0.55 0.63 13.89 13.89 62.16
CASB Cascade Financial Corp. of WA 0.73 0.69 7.12 7.12 101.90
CATB Catskill Fin. Corp. of NY* 0.85 0.84 15.45 15.45 65.97
CAVB Cavalry Bancorp of TN 0.62 0.43 13.23 13.23 46.54
CNIT Cenit Bancorp of Norfolk VA 1.28 1.19 10.11 9.32 146.97
CEBK Central Co-Op. Bank of MA* 1.55 1.20 18.72 17.00 191.38
CENB Century Bancorp, Inc. of NC(8) 1.06 1.06 14.58 14.58 82.12
COFI Charter One Financial of OH 1.14 1.57 11.23 10.54 152.44
CVAL Chester Valley Bancorp of PA 1.43 1.30 12.80 12.80 147.77
CLAS Classic Bancshares, Inc. of KY 0.78 0.98 15.70 13.46 100.86
CBSA Coastal Bancorp of Houston TX 1.89 1.94 14.61 12.60 392.20
CFCP Coastal Fin. Corp. of SC 1.03 0.85 5.62 5.62 93.23
CFKY Columbia Financial of KY 0.44 0.43 13.42 13.42 47.46
CMSB Commonwealth Bancorp Inc of PA 1.00 0.75 14.10 11.27 154.48
CMSV Commty. Svgs, MHC of FL (48.5)(8) 1.03 0.95 16.11 16.11 149.14
CFTP Community Fed. Bancorp of MS 0.60 0.58 13.67 13.67 57.77
CFFC Community Fin. Corp. of VA 0.70 0.70 9.93 9.89 71.58
CIBI Community Inv. Bancorp of OH 0.68 0.68 8.37 8.37 76.21
COOP Cooperative Bancshares of NC 0.75 0.68 9.62 9.62 126.01
CRZY Crazy Woman Creek Bncorp of WY 0.79 0.79 15.49 15.49 65.69
CRSB Crusader Holding Corp of PA 0.74 0.68 5.78 5.78 52.82
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DNFC D&N Financial Corp. of MI 22.25 9,157 203.7 29.75 16.93 23.63 -5.84 29.21 -16.04
DCBI Delphos Citizens Bancorp of OH 16.25 1,848 30.0 24.25 15.94 16.00 1.56 -1.16 -21.69
DCOM Dime Community Bancorp of NY* 23.00 12,177 280.1 29.31 18.56 23.75 -3.16 21.05 -3.16
DIBK Dime Financial Corp. of CT(8)* 31.69 5,294 167.8 37.00 26.88 30.75 3.06 13.18 3.90
ESBF ESB Financial Corp of PA 16.50 5,665 93.5 20.00 14.21 17.00 -2.94 10.81 -5.71
EGLB Eagle BancGroup of IL 18.00 1,177 21.2 21.13 16.50 18.50 -2.70 9.09 -4.66
EBSI Eagle Bancshares of Tucker GA 21.50 5,806 124.8 27.25 16.13 22.50 -4.44 30.30 -2.27
ETFS East Texas Fin. Serv. of TX 14.25 1,539 21.9 16.25 12.50 13.44 6.03 14.00 -9.98
ESBK Elmira Svgs Bank (The) of NY* 26.00 727 18.9 32.25 21.91 27.75 -6.31 17.43 -13.33
EMLD Emerald Financial Corp. of OH 12.00 10,274 123.3 16.00 6.75 11.50 4.35 71.43 8.50
EFBC Empire Federal Bancorp of MT 13.25 2,480 32.9 18.25 13.25 14.11 -6.09 -15.87 -22.65
EFBI Enterprise Fed. Bancorp of OH 28.00 2,211 61.9 35.00 19.50 29.13 -3.88 40.85 -11.11
EQSB Equitable FSB of Wheaton MD 28.25 1,223 34.5 34.00 18.75 28.25 0.00 50.67 6.60
FCBF FCB Fin. Corp. of Neenah WI 29.50 3,857 113.8 34.00 26.50 29.50 0.00 7.74 0.00
FFDF FFD Financial Corp. of OH 16.75 1,445 24.2 24.00 14.75 17.50 -4.29 11.67 -6.94
FFLC FFLC Bancorp of Leesburg FL 18.00 3,742 67.4 23.50 16.95 18.00 0.00 0.84 -17.24
FFWC FFW Corporation of Wabash IN 18.00 1,458 26.2 21.50 14.00 18.38 -2.07 23.03 -5.26
FFYF FFY Financial Corp. of OH 34.75 4,011 139.4 36.88 26.88 35.88 -3.15 24.11 4.89
FMCO FMS Financial Corp. of NJ 12.00 7,203 86.4 16.67 8.42 13.25 -9.43 42.52 1.44
FFHH FSF Financial Corp. of MN 17.13 2,933 50.2 21.25 17.00 17.13 0.00 -3.82 -18.19
FOBC Fed One Bancorp of Wheeling WV(8) 38.00 2,402 91.3 45.50 20.00 38.88 -2.26 80.95 38.18
FBCI Fidelity Bancorp of Chicago IL 24.00 2,833 68.0 26.00 21.25 24.31 -1.28 12.25 -6.36
FSBI Fidelity Bancorp, Inc. of PA 20.25 1,974 40.0 28.00 16.80 20.00 1.25 17.73 -12.72
FFFL Fidelity Bcsh MHC of FL (47.9) 26.50 6,802 86.4 35.38 24.88 25.50 3.92 8.16 -18.46
FFED Fidelity Fed. Bancorp of IN 5.88 3,127 18.4 10.50 5.75 5.88 0.00 -33.78 -42.97
FFOH Fidelity Financial of OH 14.25 5,598 79.8 19.88 12.50 15.38 -7.35 -12.31 -8.06
FIBC Financial Bancorp, Inc. of NY(8) 36.81 1,707 62.8 37.63 19.50 36.00 2.25 88.77 52.55
FBSI First Bancshares, Inc. of MO 13.31 2,214 29.5 17.50 11.00 13.00 2.38 9.73 -14.84
FBBC First Bell Bancorp of PA 17.50 6,525 114.2 21.63 15.63 17.38 0.69 4.48 -7.89
SKBO First Carnegie MHC of PA(45.0) 13.25 2,300 13.7 21.00 13.25 13.63 -2.79 -12.43 -29.33
FSTC First Citizens Corp of GA 29.50 2,795 82.5 35.50 20.83 29.00 1.72 40.48 -13.24
FCME First Coastal Corp. of ME* 12.00 1,361 16.3 15.75 10.75 12.00 0.00 12.89 -19.35
FDEF First Defiance Fin.Corp. of OH 12.63 8,158 103.0 16.25 12.63 13.00 -2.85 -15.80 -21.06
FESX First Essex Bancorp of MA* 19.00 7,562 143.7 26.13 16.75 21.25 -10.59 10.92 -18.28
FFSX First FSB MHC Sxld of IA(46.3)(8) 32.50 2,840 42.7 39.00 25.00 30.00 8.33 30.00 2.36
FFES First Fed of E. Hartford CT 31.00 2,743 85.0 42.25 31.00 31.38 -1.21 -6.06 -16.78
BDJI First Fed. Bancorp. of MN 15.50 998 15.5 22.00 14.00 16.50 -6.06 9.39 -29.55
FFBH First Fed. Bancshares of AR 22.00 4,871 107.2 30.25 20.50 22.63 -2.78 4.12 -7.37
FTFC First Fed. Capital Corp. of WI 16.00 18,519 296.3 18.38 11.88 16.13 -0.81 33.33 -5.55
FFKY First Fed. Fin. Corp. of KY 24.75 4,130 102.2 28.75 20.50 24.88 -0.52 19.28 8.79
FFBZ First Federal Bancorp of OH 12.00 3,151 37.8 14.50 9.13 12.00 0.00 21.46 13.64
FFCH First Fin. Holdings Inc. of SC 19.88 13,632 271.0 27.00 15.50 22.13 -10.17 27.19 -25.15
FFHS First Franklin Corp. of OH 16.00 1,783 28.5 20.83 12.50 14.50 10.34 20.03 -23.19
FGHC First Georgia Hold. Corp of GA 11.00 4,799 52.8 15.75 5.00 10.63 3.48 112.77 73.78
FFSL First Independence Corp. of KS 12.25 957 11.7 15.63 11.50 11.63 5.33 -3.92 -12.50
FISB First Indiana Corp. of IN 23.38 12,781 298.8 30.00 17.08 22.91 2.05 35.22 -7.26
FKAN First Kansas Financial of KS 11.31 1,554 17.6 12.50 10.88 11.00 2.82 13.10 13.10
FKFS First Keystone Fin. Corp of PA 14.00 2,413 33.8 21.75 13.75 14.25 -1.75 3.70 -21.70
FLKY First Lancaster Bncshrs of KY 13.75 947 13.0 16.38 13.19 14.25 -3.51 -9.84 -13.74
FLFC First Liberty Fin. Corp. of GA 19.25 13,369 257.4 25.50 14.50 21.00 -8.33 28.33 -9.75
CASH First Midwest Fin., Inc. of OH 19.13 2,614 50.0 24.88 17.75 19.63 -2.55 10.07 -14.98
FMBD First Mutual Bancorp Inc of IL(8) 17.13 3,531 60.5 25.00 15.00 17.19 -0.35 8.76 -31.48
FMSB First Mutual SB of Bellevue WA* 13.69 4,244 58.1 20.17 13.58 14.50 -5.59 -1.01 -26.00
FNGB First Northern Cap. Corp of WI 12.63 8,859 111.9 14.00 12.38 12.88 -1.94 -4.68 -9.79
FFPB First Palm Beach Bancorp of FL 39.63 5,136 203.5 44.94 32.25 39.50 0.33 20.53 -8.12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
DNFC D&N Financial Corp. of MI 1.63 1.44 11.10 11.01 203.95
DCBI Delphos Citizens Bancorp of OH 0.93 0.93 15.21 15.21 60.94
DCOM Dime Community Bancorp of NY* 0.96 0.90 15.55 13.52 129.52
DIBK Dime Financial Corp. of CT(8)* 2.94 2.92 15.57 15.20 191.99
ESBF ESB Financial Corp of PA 1.03 1.03 12.01 10.72 166.91
EGLB Eagle BancGroup of IL 0.50 0.25 17.56 17.56 153.11
EBSI Eagle Bancshares of Tucker GA 1.24 1.25 12.87 12.87 197.98
ETFS East Texas Fin. Serv. of TX 0.45 0.41 13.70 13.70 78.59
ESBK Elmira Svgs Bank (The) of NY* 1.39 1.47 19.63 19.63 315.97
EMLD Emerald Financial Corp. of OH 0.64 0.59 4.95 4.89 59.94
EFBC Empire Federal Bancorp of MT 0.65 0.65 16.39 16.39 44.59
EFBI Enterprise Fed. Bancorp of OH 1.03 0.88 16.47 16.06 165.37
EQSB Equitable FSB of Wheaton MD 1.85 1.79 14.20 14.20 273.97
FCBF FCB Fin. Corp. of Neenah WI 1.51 1.12 19.42 19.42 134.24
FFDF FFD Financial Corp. of OH 1.09 0.49 15.43 15.43 69.28
FFLC FFLC Bancorp of Leesburg FL 1.01 0.95 13.88 13.88 109.21
FFWC FFW Corporation of Wabash IN 1.26 1.22 13.06 11.98 136.29
FFYF FFY Financial Corp. of OH 1.95 1.92 21.05 21.05 160.72
FMCO FMS Financial Corp. of NJ 0.75 0.75 5.52 5.47 92.83
FFHH FSF Financial Corp. of MN 1.10 1.07 14.57 14.57 140.15
FOBC Fed One Bancorp of Wheeling WV(8) 1.29 1.28 17.21 16.52 153.07
FBCI Fidelity Bancorp of Chicago IL 0.36 1.07 18.44 18.41 170.96
FSBI Fidelity Bancorp, Inc. of PA 1.41 1.39 13.96 13.96 204.11
FFFL Fidelity Bcsh MHC of FL (47.9) 1.07 0.92 13.01 12.62 194.16
FFED Fidelity Fed. Bancorp of IN -0.25 -0.19 4.28 4.28 63.14
FFOH Fidelity Financial of OH 0.87 0.84 11.64 10.31 96.54
FIBC Financial Bancorp, Inc. of NY(8) 1.62 1.58 16.43 16.36 181.66
FBSI First Bancshares, Inc. of MO 0.82 0.81 10.79 10.33 80.37
FBBC First Bell Bancorp of PA 1.15 1.11 11.43 11.43 101.86
SKBO First Carnegie MHC of PA(45.0) 0.42 0.50 10.86 10.86 64.41
FSTC First Citizens Corp of GA 2.20 1.99 12.72 10.17 126.02
FCME First Coastal Corp. of ME* 0.94 0.82 11.09 11.09 110.23
FDEF First Defiance Fin.Corp. of OH 0.66 0.63 12.49 12.49 70.79
FESX First Essex Bancorp of MA* 1.36 1.23 12.05 10.62 171.03
FFSX First FSB MHC Sxld of IA(46.3)(8) 1.16 1.17 14.50 11.48 201.13
FFES First Fed of E. Hartford CT 2.07 2.29 24.99 24.99 361.28
BDJI First Fed. Bancorp. of MN 0.77 0.77 12.35 12.35 113.39
FFBH First Fed. Bancshares of AR 1.11 1.05 17.29 17.29 117.10
FTFC First Fed. Capital Corp. of WI 1.00 0.76 6.12 5.81 85.33
FFKY First Fed. Fin. Corp. of KY 1.52 1.48 13.03 12.34 98.63
FFBZ First Federal Bancorp of OH 0.58 0.58 5.12 5.11 67.17
FFCH First Fin. Holdings Inc. of SC 1.11 1.08 8.67 8.67 136.31
FFHS First Franklin Corp. of OH 1.05 0.91 12.04 11.99 130.31
FGHC First Georgia Hold. Corp of GA 0.38 0.38 2.96 2.76 36.57
FFSL First Independence Corp. of KS 0.79 0.79 12.07 12.07 130.09
FISB First Indiana Corp. of IN 1.41 1.07 12.23 12.09 132.07
FKAN First Kansas Financial of KS 0.61 0.61 12.95 12.95 69.29
FKFS First Keystone Fin. Corp of PA 1.13 1.00 10.64 10.64 159.62
FLKY First Lancaster Bncshrs of KY 0.51 0.51 14.91 14.91 55.97
FLFC First Liberty Fin. Corp. of GA 0.74 0.77 7.45 6.81 101.35
CASH First Midwest Fin., Inc. of OH 1.10 0.99 16.33 14.54 155.31
FMBD First Mutual Bancorp Inc of IL(8) 0.37 0.29 15.64 12.11 110.52
FMSB First Mutual SB of Bellevue WA* 1.03 1.01 7.22 7.22 106.30
FNGB First Northern Cap. Corp of WI 0.71 0.66 8.48 8.48 76.42
FFPB First Palm Beach Bancorp of FL 1.79 1.14 22.79 22.30 348.79
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FWWB First Savings Bancorp of WA 22.50 11,699 263.2 25.97 21.14 23.00 -2.17 -0.49 -10.00
FSFF First SecurityFed Fin of IL 14.00 6,408 89.7 17.25 14.00 15.25 -8.20 40.00 -11.11
FSLA First Source Bancorp of NJ 8.94 31,740 283.8 13.93 6.51 9.00 -0.67 34.44 -35.82
SOPN First Svgs Bancorp of NC 24.00 3,711 89.1 26.00 20.25 23.25 3.23 14.29 -5.88
FBNW FirstBank Corp of Clarkston WA 17.75 1,984 35.2 23.75 16.00 18.88 -5.99 -1.39 -5.99
FFDB FirstFed Bancorp, Inc. of AL 12.00 2,434 29.2 15.94 8.27 14.50 -17.24 45.10 11.01
FSPT FirstSpartan Fin. Corp. of SC 36.63 4,253 155.8 47.25 35.00 37.25 -1.66 2.46 -8.99
FLAG Flag Financial Corp of GA 14.00 5,175 72.5 19.38 9.67 16.38 -14.53 42.42 -2.30
FLGS Flagstar Bancorp, Inc of MI 26.75 13,670 365.7 28.38 17.75 27.25 -1.83 39.83 35.10
FFIC Flushing Fin. Corp. of NY* 23.25 7,810 181.6 29.88 20.00 23.25 0.00 14.81 -2.64
FBHC Fort Bend Holding Corp. of TX(8) 20.75 1,817 37.7 28.00 16.00 20.00 3.75 34.92 -4.60
FTSB Fort Thomas Fin. Corp. of KY 13.63 1,474 20.1 15.75 10.69 13.50 0.96 27.50 -11.38
FKKY Frankfort First Bancorp of KY 14.56 1,619 23.6 22.94 13.75 14.75 -1.29 -23.37 -17.41
FTNB Fulton Bancorp, Inc. of MO 18.00 1,701 30.6 26.50 15.75 18.00 0.00 -13.25 -18.66
GUPB GFSB Bancorp, Inc of Gallup NM 13.88 1,201 16.7 17.00 12.33 14.25 -2.60 9.55 -1.42
GSLA GS Financial Corp. of LA 13.38 3,267 43.7 21.00 13.25 13.25 0.98 -13.00 -36.29
GOSB GSB Financial Corp. of NY* 13.50 2,248 30.3 18.94 12.75 12.75 5.88 -7.72 -25.25
GBNK Gaston Fed Bncp MHC of NC(47.0 12.50 4,497 26.4 18.06 12.50 14.00 -10.71 25.00 25.00
GFCO Glenway Financial Corp. of OH 21.75 2,282 49.6 24.25 12.25 22.63 -3.89 67.31 16.00
GTPS Great American Bancorp of IL 19.00 1,588 30.2 23.00 17.00 21.38 -11.13 8.57 0.00
PEDE Great Pee Dee Bancorp of SC 11.50 2,202 25.3 17.38 11.50 11.50 0.00 15.00 -28.70
GSFC Green Street Fin. Corp. of NC 13.50 4,083 55.1 20.75 13.50 13.50 0.00 -21.74 -26.03
GFED Guaranty Fed Bancshares of MO 12.63 6,228 78.7 14.44 9.65 13.00 -2.85 28.35 -1.94
HCBB HCB Bancshares of Camden AR 13.00 2,645 34.4 16.13 12.75 13.50 -3.70 -3.70 -10.34
HEMT HF Bancorp of Hemet CA 15.00 6,369 95.5 18.25 14.75 16.00 -6.25 0.81 -14.29
HFFC HF Financial Corp. of SD 19.44 4,395 85.4 24.17 14.67 21.25 -8.52 29.60 10.02
HFNC HFNC Financial Corp. of NC(8) 11.75 17,193 202.0 16.81 11.25 11.63 1.03 -22.95 -18.97
HMNF HMN Financial, Inc. of MN 15.25 5,430 82.8 21.67 14.00 14.00 8.93 -8.52 -29.63
HALL Hallmark Capital Corp. of WI 13.25 2,934 38.9 18.00 10.63 14.13 -6.23 20.45 -22.06
HRBF Harbor Federal Bancorp of MD 18.25 1,863 34.0 23.41 17.27 18.25 0.00 4.95 -20.51
HARB Harbor Florida Bancshrs of FL 11.50 30,740 353.5 13.50 7.74 12.06 -4.64 47.06 4.36
HFSA Hardin Bancorp of Hardin MO 17.38 816 14.2 20.00 16.50 17.00 2.24 5.33 -4.77
HARL Harleysville SB of PA 30.25 1,675 50.7 35.00 25.75 30.00 0.83 11.01 10.00
HFGI Harrington Fin. Group of IN 9.69 3,276 31.7 13.75 9.63 10.50 -7.71 -20.90 -25.46
HARS Harris Fin. MHC of PA (24.9) 17.75 33,965 149.8 27.88 12.00 17.75 0.00 55.43 -10.71
HFFB Harrodsburg 1st Fin Bcrp of KY 15.00 1,930 29.0 18.00 14.38 15.38 -2.47 0.00 -10.45
HHFC Harvest Home Fin. Corp. of OH 14.75 879 13.0 16.75 11.75 13.25 11.32 25.53 -6.35
HAVN Haven Bancorp of Woodhaven NY 21.50 8,849 190.3 28.75 18.31 20.03 7.34 15.84 -4.44
HTHR Hawthorne Fin. Corp. of CA 16.75 3,170 53.1 24.00 15.63 16.75 0.00 3.08 -16.79
HMLK Hemlock Fed. Fin. Corp. of IL 16.63 1,965 32.7 19.00 15.06 16.81 -1.07 8.13 -2.92
HBSC Heritage Bancorp, Inc of SC 17.50 4,629 81.0 22.38 17.38 17.88 -2.13 16.67 16.67
HFWA Heritage Financial Corp of WA 12.13 9,755 118.3 15.94 12.13 12.56 -3.42 21.30 21.30
HCBC High Country Bancorp of CO 12.25 1,323 16.2 15.50 12.25 13.50 -9.26 22.50 -20.97
HBNK Highland Bancorp of CA 41.00 2,329 95.5 43.50 26.50 41.50 -1.20 54.72 25.19
HIFS Hingham Inst. for Sav. of MA* 26.75 1,304 34.9 37.00 23.63 26.25 1.90 13.83 -6.96
HBEI Home Bancorp of Elgin IL(8) 14.50 6,856 99.4 19.13 14.13 14.88 -2.55 -15.94 -18.90
HBFW Home Bancorp of Fort Wayne IN 28.63 2,351 67.3 37.63 21.38 28.25 1.35 33.91 -2.95
HCFC Home City Fin. Corp. of OH 14.63 905 13.2 22.75 14.31 14.75 -0.81 -7.11 -20.92
HOMF Home Fed Bancorp of Seymour IN 25.25 5,139 129.8 33.75 19.83 26.25 -3.81 22.16 -2.88
HWEN Home Financial Bancorp of IN 8.25 929 7.7 9.75 7.44 7.88 4.70 7.28 -10.81
HLFC Home Loan Financial Corp of OH 14.88 2,248 33.5 16.75 14.00 14.00 6.29 48.80 48.80
HPBC Home Port Bancorp, Inc. of MA* 24.25 1,842 44.7 27.63 19.50 24.25 0.00 19.75 4.84
HSTD Homestead Bancorp, Inc. of LA 8.44 1,478 12.5 9.31 3.41 8.31 1.56 -15.60 46.78
HFBC HopFed Bancorp of KY 17.50 4,034 70.6 21.88 16.00 17.50 0.00 75.00 75.00
HZFS Horizon Fin'l. Services of IA 15.00 880 13.2 16.88 9.44 16.00 -6.25 58.90 25.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
FWWB First Savings Bancorp of WA 1.12 1.04 12.84 11.90 98.65
FSFF First SecurityFed Fin of IL 0.46 0.72 14.59 14.55 50.45
FSLA First Source Bancorp of NJ 0.41 0.41 7.72 7.72 37.57
SOPN First Svgs Bancorp of NC 1.40 1.40 18.61 18.61 80.79
FBNW FirstBank Corp of Clarkston WA 0.86 0.52 15.13 15.13 92.50
FFDB FirstFed Bancorp, Inc. of AL 0.68 0.68 7.24 6.67 74.56
FSPT FirstSpartan Fin. Corp. of SC 1.58 1.57 31.12 31.12 118.35
FLAG Flag Financial Corp of GA 0.39 0.27 4.26 4.26 47.92
FLGS Flagstar Bancorp, Inc of MI 1.83 1.83 9.77 9.46 187.56
FFIC Flushing Fin. Corp. of NY* 1.14 1.14 17.56 16.89 138.09
FBHC Fort Bend Holding Corp. of TX(8) 1.11 0.79 11.78 11.09 174.25
FTSB Fort Thomas Fin. Corp. of KY 0.82 0.82 10.87 10.87 68.93
FKKY Frankfort First Bancorp of KY 0.20 0.65 13.96 13.96 82.34
FTNB Fulton Bancorp, Inc. of MO 0.75 0.58 15.06 15.06 64.45
GUPB GFSB Bancorp, Inc of Gallup NM 0.79 0.79 12.14 12.14 98.40
GSLA GS Financial Corp. of LA 0.57 0.51 16.49 16.49 39.61
GOSB GSB Financial Corp. of NY* 0.39 0.37 14.88 14.88 52.87
GBNK Gaston Fed Bncp MHC of NC(47.0 0.43 0.43 8.56 8.56 38.07
GFCO Glenway Financial Corp. of OH 1.11 1.12 12.60 12.49 131.66
GTPS Great American Bancorp of IL 0.58 0.58 16.88 16.88 92.09
PEDE Great Pee Dee Bancorp of SC 0.33 0.33 14.19 14.19 31.45
GSFC Green Street Fin. Corp. of NC 0.69 0.69 15.59 15.59 43.57
GFED Guaranty Fed Bancshares of MO 0.39 0.38 11.21 11.21 39.55
HCBB HCB Bancshares of Camden AR 0.25 0.25 14.45 14.28 83.79
HEMT HF Bancorp of Hemet CA -0.07 0.21 13.15 11.16 167.33
HFFC HF Financial Corp. of SD 1.41 1.31 12.62 12.62 129.79
HFNC HFNC Financial Corp. of NC(8) 0.70 0.48 9.82 9.82 56.97
HMNF HMN Financial, Inc. of MN 1.06 0.75 15.65 14.55 134.83
HALL Hallmark Capital Corp. of WI 0.95 0.90 11.02 11.02 143.47
HRBF Harbor Federal Bancorp of MD 0.90 0.86 15.74 15.74 124.07
HARB Harbor Florida Bancshrs of FL 0.47 0.45 8.28 8.19 41.78
HFSA Hardin Bancorp of Hardin MO 1.07 0.92 16.52 16.52 148.47
HARL Harleysville SB of PA 2.08 2.08 14.63 14.63 219.46
HFGI Harrington Fin. Group of IN -0.03 0.08 7.47 7.47 168.84
HARS Harris Fin. MHC of PA (24.9) 0.55 0.45 5.41 4.86 66.55
HFFB Harrodsburg 1st Fin Bcrp of KY 0.77 0.77 14.92 14.92 56.38
HHFC Harvest Home Fin. Corp. of OH 0.63 0.63 11.73 11.73 103.39
HAVN Haven Bancorp of Woodhaven NY 1.12 1.11 12.89 12.86 228.02
HTHR Hawthorne Fin. Corp. of CA 2.80 3.29 14.05 14.05 330.25
HMLK Hemlock Fed. Fin. Corp. of IL 0.87 0.87 15.74 15.74 97.21
HBSC Heritage Bancorp, Inc of SC 0.78 0.78 19.41 19.41 67.43
HFWA Heritage Financial Corp of WA 0.37 0.19 9.53 9.53 33.09
HCBC High Country Bancorp of CO 0.53 0.53 13.64 13.64 69.73
HBNK Highland Bancorp of CA 2.90 2.53 18.71 18.71 238.59
HIFS Hingham Inst. for Sav. of MA* 2.10 2.10 16.84 16.84 177.69
HBEI Home Bancorp of Elgin IL(8) 0.36 0.36 13.95 13.95 53.82
HBFW Home Bancorp of Fort Wayne IN 1.25 1.22 18.09 18.09 150.30
HCFC Home City Fin. Corp. of OH 1.02 1.02 15.68 15.68 84.39
HOMF Home Fed Bancorp of Seymour IN 1.94 1.57 12.62 12.28 137.22
HWEN Home Financial Bancorp of IN 0.42 0.33 8.03 8.03 44.64
HLFC Home Loan Financial Corp of OH 0.37 0.37 13.82 13.82 35.49
HPBC Home Port Bancorp, Inc. of MA* 1.63 1.81 11.98 11.98 122.53
HSTD Homestead Bancorp, Inc. of LA 0.36 0.36 10.40 10.40 48.02
HFBC HopFed Bancorp of KY 0.65 0.65 14.26 14.26 54.89
HZFS Horizon Fin'l. Services of IA 0.90 0.69 9.60 9.60 105.35
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HRZB Horizon Financial Corp. of WA* 14.75 7,488 110.4 19.25 14.75 15.38 -4.10 -1.67 -16.90
HRBT Hudson River Bancorp Inc of NY 12.00 17,854 208.1 13.69 11.94 12.44 -3.54 20.00 20.00
ITLA ITLA Capital Corp of CA* 19.50 7,697 150.1 24.00 17.38 19.75 -1.27 9.86 1.30
ICBC Independence Comm Bnk Cp of NY 13.19 76,044 1,003.0 19.13 13.00 13.44 -1.86 31.90 31.90
IFSB Independence FSB of DC 16.38 1,281 21.0 21.63 13.00 16.00 2.37 23.62 -3.65
INBI Industrial Bancorp of OH 19.38 5,015 97.2 25.00 14.75 18.63 4.03 31.39 9.18
IWBK Interwest Bancorp of WA 25.00 15,668 391.7 31.33 24.50 26.68 -6.30 -4.47 -0.68
IPSW Ipswich SB of Ipswich MA* 13.50 2,390 32.3 20.75 11.50 14.50 -6.90 16.08 -18.18
JXVL Jacksonville Bancorp of TX 17.13 2,422 41.5 23.25 16.50 17.63 -2.84 2.27 -26.32
JXSB Jcksnville SB,MHC of IL (45.6) 16.75 1,908 14.6 25.50 13.00 16.25 3.08 28.85 -16.25
JSBA Jefferson Svgs Bancorp of MO 20.25 10,030 203.1 31.88 16.25 23.44 -13.61 23.63 -1.22
KSBK KSB Bancorp of Kingfield ME* 16.50 1,259 20.8 22.50 12.50 16.50 0.00 29.41 -26.67
KFBI Klamath First Bancorp of OR 17.50 9,917 173.5 24.25 17.00 17.44 0.34 -7.89 -18.60
LSBI LSB Fin. Corp. of Lafayette IN 31.00 954 29.6 32.00 19.52 31.50 -1.59 57.84 14.22
LVSB Lakeview Financial of NJ 21.25 4,978 105.8 28.75 16.13 22.75 -6.59 28.79 -16.67
LARK Landmark Bancshares, Inc of KS 22.06 1,549 34.2 29.25 21.25 22.06 0.00 2.60 -11.33
LARL Laurel Capital Group of PA 20.00 2,191 43.8 23.50 14.33 19.00 5.26 34.86 -7.71
LSBX Lawrence Savings Bank of MA* 13.25 4,327 57.3 19.31 11.36 14.31 -7.41 17.78 -19.11
LFED Leeds Fed Bksr MHC of MD (36.3 17.50 5,182 33.0 23.50 16.33 17.00 2.94 7.16 -19.54
LXMO Lexington B&L Fin. Corp. of MO 15.00 1,009 15.1 17.88 15.00 15.03 -0.20 -6.25 -15.49
LIBB Liberty Bancorp MHC of NJ (47) 10.25 3,901 18.8 11.69 9.88 10.13 1.18 2.50 2.50
LFCO Life Financial Corp of CA(8) 9.25 6,556 60.6 25.38 9.25 10.88 -14.98 -42.19 -26.76
LFBI Little Falls Bancorp of NJ 16.00 2,478 39.6 22.25 15.38 16.00 0.00 -7.57 -21.95
LOGN Logansport Fin. Corp. of IN 14.75 1,262 18.6 19.63 13.50 15.00 -1.67 8.22 -18.06
LISB Long Island Bancorp, Inc of NY(8) 48.56 24,183 1,174.3 67.63 38.63 50.50 -3.84 25.12 -2.16
MAFB MAF Bancorp, Inc. of IL 21.00 22,577 474.1 28.83 20.33 22.13 -5.11 0.38 -10.94
MBLF MBLA Financial Corp. of MO 19.25 1,251 24.1 30.63 19.25 20.25 -4.94 -18.09 -36.89
MECH MECH Financial Inc of CT* 28.00 5,295 148.3 31.81 22.50 28.50 -1.75 24.44 7.44
MFBC MFB Corp. of Mishawaka IN 24.00 1,590 38.2 30.38 21.00 23.75 1.05 14.29 -21.00
MSBF MSB Financial, Inc of MI 14.50 1,338 19.4 17.73 11.82 14.00 3.57 18.17 -16.04
MARN Marion Capital Holdings of IN 22.75 1,704 38.8 29.50 22.25 22.75 0.00 -1.09 -16.14
MRKF Market Fin. Corp. of OH 13.00 1,336 17.4 20.25 12.75 13.75 -5.45 -8.00 -16.83
MFSL Maryland Fed. Bancorp of MD(8) 38.56 6,572 253.4 42.25 21.50 40.00 -3.60 73.30 10.17
MASB MassBank Corp. of Reading MA* 45.00 3,593 161.7 54.25 37.88 48.00 -6.25 16.49 -5.52
MFLR Mayflower Co-Op. Bank of MA* 22.13 900 19.9 27.50 17.50 23.00 -3.78 22.94 -17.27
MDBK Medford Bancorp, Inc. of MA* 38.50 4,455 171.5 44.25 30.25 40.75 -5.52 23.20 -1.91
MWBX MetroWest Bank of MA* 7.00 14,252 99.8 9.50 6.19 7.25 -3.45 6.71 -22.22
METF Metropolitan Fin. Corp. of OH 13.63 7,051 96.1 18.88 9.00 12.88 5.82 50.44 -12.06
MIFC Mid Iowa Financial Corp. of IA(8) 13.75 1,735 23.9 13.75 9.00 12.25 12.24 42.78 19.57
MCBN Mid-Coast Bancorp of ME 9.00 713 6.4 14.00 8.33 10.00 -10.00 4.90 -10.00
MWBI Midwest Bancshares, Inc. of IA 13.50 1,051 14.2 19.50 11.29 13.50 0.00 19.57 -26.03
MFFC Milton Fed. Fin. Corp. of OH 13.50 2,237 30.2 17.00 13.00 13.00 3.85 -0.95 -12.22
MBSP Mitchell Bancorp, Inc. of NC(8) 17.13 931 15.9 18.50 16.00 17.88 -4.19 2.27 0.76
MBBC Monterey Bay Bancorp of CA 16.00 3,923 62.8 21.40 13.30 16.56 -3.38 17.65 2.56
MONT Montgomery Fin. Corp. of IN 10.31 1,653 17.0 13.63 10.31 11.50 -10.35 -13.22 -19.95
MSBK Mutual SB, FSB of Bay City MI 9.31 4,290 39.9 14.63 9.31 10.00 -6.90 -12.42 -28.38
MYST Mystic Financial of MA* 13.63 2,711 37.0 18.56 13.38 13.63 0.00 36.30 36.30
NHTB NH Thrift Bancshares of NH 15.50 2,095 32.5 22.75 15.50 16.00 -3.13 -8.18 -24.39
NSLB NS&L Bancorp, Inc of Neosho MO 17.38 686 11.9 19.50 17.13 17.50 -0.69 -6.71 -7.94
NSSY NSS Bancorp of CT(8)* 48.50 2,378 115.3 58.75 33.13 49.50 -2.02 38.57 28.48
NMSB Newmil Bancorp, Inc. of CT* 12.00 3,834 46.0 14.63 11.00 12.25 -2.04 -2.04 -7.69
NBCP Niagara Bancorp of NY MHC(45.4* 11.38 29,756 153.7 17.00 11.38 11.50 -1.04 13.80 13.80
NBSI North Bancshares of Chicago IL 12.25 1,265 15.5 18.83 12.25 12.75 -3.92 -17.90 -31.49
FFFD North Central Bancshares of IA 18.25 3,126 57.0 24.88 16.63 18.25 0.00 8.96 -8.20
NEIB Northeast Indiana Bncrp of IN 21.13 1,650 34.9 22.75 16.75 22.00 -3.95 26.15 -4.52
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
HRZB Horizon Financial Corp. of WA* 1.10 1.09 11.20 11.20 73.07
HRBT Hudson River Bancorp Inc of NY 0.41 0.47 12.20 12.20 45.63
ITLA ITLA Capital Corp of CA* 1.70 1.70 13.37 13.33 131.35
ICBC Independence Comm Bnk Cp of NY 0.29 0.32 12.48 11.75 68.68
IFSB Independence FSB of DC 1.09 0.45 15.46 13.99 214.32
INBI Industrial Bancorp of OH 1.05 1.05 12.29 12.29 74.58
IWBK Interwest Bancorp of WA 1.29 1.09 9.02 8.88 133.46
IPSW Ipswich SB of Ipswich MA* 1.06 0.80 5.25 5.25 99.40
JXVL Jacksonville Bancorp of TX 1.39 1.39 14.42 14.42 97.90
JXSB Jcksnville SB,MHC of IL (45.6) 0.51 0.33 9.23 9.23 88.91
JSBA Jefferson Svgs Bancorp of MO 0.98 0.87 11.84 9.50 123.81
KSBK KSB Bancorp of Kingfield ME* 1.20 1.20 9.56 8.31 122.83
KFBI Klamath First Bancorp of OR 0.86 0.86 15.05 13.81 100.25
LSBI LSB Fin. Corp. of Lafayette IN 1.73 1.55 19.06 19.06 226.48
LVSB Lakeview Financial of NJ 1.76 0.88 12.11 8.26 124.48
LARK Landmark Bancshares, Inc of KS 1.61 1.40 21.07 21.07 149.30
LARL Laurel Capital Group of PA 1.38 1.36 10.52 10.52 98.94
LSBX Lawrence Savings Bank of MA* 2.02 1.99 9.14 9.14 82.06
LFED Leeds Fed Bksr MHC of MD (36.3 0.66 0.66 9.52 9.52 57.70
LXMO Lexington B&L Fin. Corp. of MO 0.69 0.69 16.88 15.84 93.67
LIBB Liberty Bancorp MHC of NJ (47) 0.69 0.69 8.30 8.30 61.70
LFCO Life Financial Corp of CA(8) 2.16 2.25 8.93 8.93 59.06
LFBI Little Falls Bancorp of NJ 0.75 0.72 14.63 13.51 143.44
LOGN Logansport Fin. Corp. of IN 1.00 1.02 13.30 13.30 70.52
LISB Long Island Bancorp, Inc of NY(8) 2.17 1.75 23.31 23.11 260.34
MAFB MAF Bancorp, Inc. of IL 1.68 1.63 12.04 10.68 155.52
MBLF MBLA Financial Corp. of MO 1.54 1.53 22.38 22.38 165.83
MECH MECH Financial Inc of CT* 2.49 2.49 17.14 17.14 178.65
MFBC MFB Corp. of Mishawaka IN 1.37 1.34 21.52 21.52 182.79
MSBF MSB Financial, Inc of MI 0.89 0.79 9.91 9.91 59.35
MARN Marion Capital Holdings of IN 1.43 1.43 23.22 22.73 112.99
MRKF Market Fin. Corp. of OH 0.48 0.48 15.25 15.25 43.23
MFSL Maryland Fed. Bancorp of MD(8) 1.13 1.59 15.89 15.74 181.38
MASB MassBank Corp. of Reading MA* 2.93 2.65 29.80 29.39 258.68
MFLR Mayflower Co-Op. Bank of MA* 1.66 1.49 14.40 14.19 150.58
MDBK Medford Bancorp, Inc. of MA* 2.65 2.50 23.23 22.00 251.48
MWBX MetroWest Bank of MA* 0.54 0.53 3.27 3.27 45.37
METF Metropolitan Fin. Corp. of OH 0.93 0.82 5.42 5.01 140.36
MIFC Mid Iowa Financial Corp. of IA(8) 0.88 0.96 7.50 7.49 84.75
MCBN Mid-Coast Bancorp of ME 0.67 0.62 7.49 7.49 88.38
MWBI Midwest Bancshares, Inc. of IA 1.26 1.10 10.40 10.40 150.96
MFFC Milton Fed. Fin. Corp. of OH 0.63 0.56 11.50 11.50 101.35
MBSP Mitchell Bancorp, Inc. of NC(8) 0.54 0.54 15.60 15.60 39.67
MBBC Monterey Bay Bancorp of CA 0.44 0.41 12.00 11.22 102.76
MONT Montgomery Fin. Corp. of IN 0.50 0.50 12.05 12.05 66.02
MSBK Mutual SB, FSB of Bay City MI -2.01 -0.71 7.76 7.76 153.06
MYST Mystic Financial of MA* 0.52 0.48 13.20 13.20 69.27
NHTB NH Thrift Bancshares of NH 1.36 1.25 12.38 10.76 153.03
NSLB NS&L Bancorp, Inc of Neosho MO 0.59 0.59 16.74 16.62 89.13
NSSY NSS Bancorp of CT(8)* 2.82 3.20 22.82 22.21 281.19
NMSB Newmil Bancorp, Inc. of CT* 0.74 0.74 8.60 8.60 96.58
NBCP Niagara Bancorp of NY MHC(45.4* 0.48 0.46 8.31 8.31 43.56
NBSI North Bancshares of Chicago IL 0.44 0.42 10.73 10.73 93.66
FFFD North Central Bancshares of IA 1.21 1.21 16.42 14.29 106.47
NEIB Northeast Indiana Bncrp of IN 1.36 1.36 16.20 16.20 121.40
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NWSB Northwest Bcrp MHC of PA (30.8 12.75 46,841 184.1 18.00 10.38 12.88 -1.01 16.54 -9.77
NWEQ Northwest Equity Corp. of WI 17.44 825 14.4 22.25 16.00 17.63 -1.08 5.70 -15.95
NTMG Nutmeg FS&LA of CT 11.88 1,077 12.8 12.50 7.69 12.13 -2.06 44.00 13.14
OHSL OHSL Financial Corp. of OH 15.50 2,496 38.7 18.38 11.63 16.00 -3.13 33.28 14.81
OCFC Ocean Fin. Corp. of NJ 16.94 15,534 263.1 20.00 16.63 17.38 -2.53 -0.35 -9.07
OTFC Oregon Trail Fin. Corp. of OR 14.00 4,695 65.7 18.50 14.00 15.50 -9.68 40.00 -19.45
OFCP Ottawa Financial Corp. of MI 24.13 5,717 138.0 30.91 20.87 23.88 1.05 14.47 -21.93
PFFB PFF Bancorp of Pomona CA 17.50 16,214 283.7 21.50 17.00 17.25 1.45 -10.26 -11.97
PSFI PS Financial of Chicago IL 12.13 2,019 24.5 22.38 11.25 11.38 6.59 -19.13 -45.80
PSBI PSB Bancorp Inc. of PA* 7.75 3,101 24.0 11.27 6.80 7.88 -1.65 13.97 -31.23
PVFC PVF Capital Corp. of OH 15.75 3,990 62.8 18.83 12.67 16.34 -3.61 10.53 17.01
PBCI Pamrapo Bancorp, Inc. of NJ 28.00 2,843 79.6 32.38 20.75 25.50 9.80 28.74 2.75
PFED Park Bancorp of Chicago IL 17.94 2,418 43.4 19.75 16.38 17.69 1.41 9.52 -3.70
PVSA Parkvale Financial Corp of PA 32.13 5,173 166.2 35.00 23.40 33.00 -2.64 35.00 -6.19
PBHC Pathfinder BC MHC of NY (45.2)* 15.00 2,831 19.2 26.13 10.83 15.13 -0.86 43.95 -25.00
PEEK Peekskill Fin. Corp. of NY 15.75 2,896 45.6 18.25 15.75 16.50 -4.55 -3.08 -5.97
PFSB PennFed Fin. Services of NJ 14.44 9,386 135.5 19.00 14.38 14.88 -2.96 -2.10 -15.70
PWBK Pennwood Bancorp, Inc. of PA 12.31 697 8.6 17.44 11.50 12.31 0.00 0.98 -16.88
PBKB People's Bancshares of MA* 18.75 3,316 62.2 27.75 15.88 19.63 -4.48 16.24 -17.58
TSBS Peoples Bancorp Inc of NJ* 8.13 36,325 295.3 11.83 7.22 8.44 -3.67 10.61 -31.28
PFDC Peoples Bancorp of Auburn IN 21.00 3,357 70.5 25.00 15.67 21.50 -2.33 21.74 -4.55
PBCT Peoples Bank, MHC of CT (41.2)* 27.00 64,130 746.1 41.13 27.00 27.06 -0.22 -1.82 -28.95
PFFC Peoples Fin. Corp. of OH 12.00 1,352 16.2 19.00 11.00 11.00 9.09 -30.96 -20.69
PHBK Peoples Heritage Fin Grp of ME* 19.25 87,565 1,685.6 26.50 18.13 20.00 -3.75 2.67 -16.30
PSFC Peoples Sidney Fin. Corp of OH 19.63 1,785 35.0 24.38 15.50 19.75 -0.61 22.69 9.79
PERM Permanent Bancorp, Inc. of IN 13.50 4,130 55.8 18.25 11.38 13.38 0.90 16.08 -13.24
PCBC Perry Co. Fin. Corp. of MO 20.00 828 16.6 25.00 20.00 20.00 0.00 -2.44 -17.12
PHFC Pittsburgh Home Fin Corp of PA 16.00 1,969 31.5 20.81 14.50 14.63 9.36 -17.44 -11.11
PFSL Pocahontas Bancorp of AR 8.56 6,685 57.2 11.43 6.46 8.69 -1.50 40.56 -22.60
PTRS Potters Financial Corp of OH 14.50 951 13.8 22.25 12.00 14.88 -2.55 19.54 -27.50
PHSB Ppls Home SB, MHC of PA (45.0) 16.25 2,760 20.2 22.13 15.88 17.00 -4.41 1.56 -13.93
PRBC Prestige Bancorp of PA 16.00 1,052 16.8 22.07 14.78 16.00 0.00 5.12 -7.99
PFNC Progress Financial Corp. of PA 16.00 5,246 83.9 21.67 12.93 17.25 -7.25 28.31 1.85
PROV Provident Fin. Holdings of CA 19.75 4,854 95.9 24.25 19.25 20.31 -2.76 2.60 -9.73
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 28.16 2,106 17.6 51.00 22.13 32.00 -12.00 22.43 -10.26
PLSK Pulaski SB, MHC of NJ (47.0) 14.88 2,108 14.7 24.50 14.00 14.88 0.00 -12.47 -22.70
PULS Pulse Bancorp of S. River NJ(8) 29.00 3,120 90.5 30.50 20.50 29.00 0.00 41.46 10.98
QCFB QCF Bancorp of Virginia MN 29.63 1,365 40.4 31.75 25.00 30.00 -1.23 16.20 -0.40
QCBC Quaker City Bancorp of CA 17.25 5,827 100.5 21.25 15.80 16.75 2.99 4.55 1.47
QCSB Queens County Bancorp of NY* 40.56 14,941 606.0 47.13 34.17 41.00 -1.07 18.15 0.15
RARB Raritan Bancorp of Raritan NJ* 28.00 2,373 66.4 30.25 22.25 27.75 0.90 25.84 0.00
RELY Reliance Bancorp, Inc. of NY 29.25 9,565 279.8 42.25 29.25 31.00 -5.65 -3.31 -20.15
RELI Reliance Bancshares Inc of WI(8) 9.38 2,371 22.2 10.13 8.06 9.50 -1.26 8.69 -1.26
RCBK Richmond County Fin Corp of NY 15.06 26,424 397.9 19.75 14.81 15.50 -2.84 50.60 50.60
RIVR River Valley Bancorp of IN 16.88 1,190 20.1 20.75 16.25 17.50 -3.54 0.78 -9.97
RVSB Riverview Bancorp of WA 13.00 6,186 80.4 19.13 9.91 15.13 -14.08 29.22 -26.76
RSLN Roslyn Bancorp, Inc. of NY* 18.63 41,400 771.3 30.50 18.31 18.50 0.70 -22.38 -19.87
SCCB S. Carolina Comm. Bnshrs of SC 22.00 580 12.8 24.50 21.25 22.00 0.00 -0.59 -2.22
SBFL SB Fngr Lakes MHC of NY (33.1) 16.00 3,570 18.9 24.75 9.75 17.13 -6.60 64.10 0.00
SFED SFS Bancorp of Schenectady NY(8) 27.50 1,208 33.2 27.75 19.00 27.00 1.85 41.24 2.31
SGVB SGV Bancorp of W. Covina CA 16.00 2,348 37.6 19.38 15.00 15.25 4.92 1.59 -9.86
SISB SIS Bancorp, Inc. of MA(8)* 42.50 6,962 295.9 52.63 29.25 43.25 -1.73 41.06 5.75
SWCB Sandwich Bancorp of MA(8)* 60.25 2,043 123.1 64.50 32.00 60.50 -0.41 78.52 36.93
SFSL Security First Corp. of OH(8) 21.00 7,864 165.1 27.88 17.38 22.00 -4.55 9.09 0.57
SKAN Skaneateles Bancorp Inc of NY* 17.00 1,445 24.6 22.25 14.75 16.25 4.62 13.33 -23.18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NWSB Northwest Bcrp MHC of PA (30.8 0.44 0.44 4.55 4.07 51.44
NWEQ Northwest Equity Corp. of WI 1.36 1.27 13.96 13.96 119.68
NTMG Nutmeg FS&LA of CT 0.53 0.37 6.04 6.04 103.56
OHSL OHSL Financial Corp. of OH 0.82 0.76 10.61 10.61 100.63
OCFC Ocean Fin. Corp. of NJ 0.90 0.90 13.90 13.90 97.75
OTFC Oregon Trail Fin. Corp. of OR 0.67 0.67 14.33 14.33 56.06
OFCP Ottawa Financial Corp. of MI 1.34 1.24 13.53 11.09 160.13
PFFB PFF Bancorp of Pomona CA 0.99 0.93 15.68 15.52 173.45
PSFI PS Financial of Chicago IL 0.45 0.76 11.55 11.55 41.52
PSBI PSB Bancorp Inc. of PA* 0.37 0.37 9.41 9.41 47.49
PVFC PVF Capital Corp. of OH 1.29 1.22 7.56 7.56 104.99
PBCI Pamrapo Bancorp, Inc. of NJ 1.73 1.67 17.20 17.11 134.17
PFED Park Bancorp of Chicago IL 0.67 0.71 16.25 16.25 81.62
PVSA Parkvale Financial Corp of PA 2.10 2.10 15.95 15.87 204.04
PBHC Pathfinder BC MHC of NY (45.2)* 0.62 0.50 8.15 6.91 69.30
PEEK Peekskill Fin. Corp. of NY 0.66 0.67 15.54 15.54 67.63
PFSB PennFed Fin. Services of NJ 1.18 1.15 11.26 9.76 156.52
PWBK Pennwood Bancorp, Inc. of PA 0.53 0.63 12.21 12.21 66.57
PBKB People's Bancshares of MA* 1.59 0.70 9.54 9.21 259.95
TSBS Peoples Bancorp Inc of NJ* 0.37 0.37 8.73 9.03 36.02
PFDC Peoples Bancorp of Auburn IN 1.30 1.30 13.51 13.51 89.56
PBCT Peoples Bank, MHC of CT (41.2)* 1.49 0.80 13.17 11.28 142.67
PFFC Peoples Fin. Corp. of OH 0.79 0.30 11.64 11.64 60.81
PHBK Peoples Heritage Fin Grp of ME* 0.87 0.87 5.60 4.26 83.48
PSFC Peoples Sidney Fin. Corp of OH 0.71 0.71 14.87 14.87 59.12
PERM Permanent Bancorp, Inc. of IN 0.64 0.62 10.33 10.23 106.32
PCBC Perry Co. Fin. Corp. of MO 1.04 1.03 19.69 19.69 103.96
PHFC Pittsburgh Home Fin Corp of PA 1.12 0.95 12.77 12.62 171.82
PFSL Pocahontas Bancorp of AR 0.36 0.35 8.70 8.70 59.94
PTRS Potters Financial Corp of OH 1.03 1.00 11.59 11.59 133.10
PHSB Ppls Home SB, MHC of PA (45.0) 0.63 0.56 10.33 10.33 80.94
PRBC Prestige Bancorp of PA 0.70 0.68 15.00 15.00 152.64
PFNC Progress Financial Corp. of PA 0.71 0.64 5.10 4.52 92.41
PROV Provident Fin. Holdings of CA 1.02 0.50 17.47 17.47 157.51
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 0.95 0.78 11.70 11.70 87.19
PLSK Pulaski SB, MHC of NJ (47.0) 0.55 0.55 10.44 10.44 90.50
PULS Pulse Bancorp of S. River NJ(8) 1.81 1.83 14.43 14.43 173.08
QCFB QCF Bancorp of Virginia MN 1.90 1.88 19.98 19.98 112.89
QCBC Quaker City Bancorp of CA 1.08 1.05 12.92 12.92 147.59
QCSB Queens County Bancorp of NY* 1.50 1.47 11.34 11.34 108.59
RARB Raritan Bancorp of Raritan NJ* 1.66 1.63 13.31 13.14 176.49
RELY Reliance Bancorp, Inc. of NY 1.95 2.05 20.26 13.98 227.89
RELI Reliance Bancshares Inc of WI(8) 0.20 0.20 9.31 9.31 18.63
RCBK Richmond County Fin Corp of NY 0.09 0.74 12.21 12.16 55.40
RIVR River Valley Bancorp of IN 1.08 0.96 15.35 15.14 112.48
RVSB Riverview Bancorp of WA 0.63 0.61 9.87 9.55 44.16
RSLN Roslyn Bancorp, Inc. of NY* 1.07 1.02 15.01 14.94 89.53
SCCB S. Carolina Comm. Bnshrs of SC 0.80 0.80 16.27 16.27 79.84
SBFL SB Fngr Lakes MHC of NY (33.1) 0.26 0.22 6.10 6.10 70.26
SFED SFS Bancorp of Schenectady NY(8) 0.92 0.89 17.95 17.95 145.22
SGVB SGV Bancorp of W. Covina CA 0.66 0.75 13.47 13.30 170.81
SISB SIS Bancorp, Inc. of MA(8)* 1.56 2.00 18.41 18.41 257.68
SWCB Sandwich Bancorp of MA(8)* 2.44 2.35 20.83 20.17 257.72
SFSL Security First Corp. of OH(8) 1.18 1.18 8.22 8.11 87.17
SKAN Skaneateles Bancorp Inc of NY* 1.11 1.09 12.44 12.12 178.27
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SOBI Sobieski Bancorp of S. Bend IN 15.75 764 12.0 24.25 15.75 17.25 -8.70 -3.08 -22.72
SSFC South Street Fin. Corp. of NC* 9.00 4,676 42.1 20.00 8.63 9.31 -3.33 -50.68 -52.63
SBAN SouthBanc Shares Inc. of SC 17.63 4,306 75.9 23.76 13.68 17.63 0.00 27.29 -17.07
SCBS Southern Commun. Bncshrs of AL 16.00 1,137 18.2 20.75 14.00 16.00 0.00 0.76 -12.33
SMBC Southern Missouri Bncrp of MO 16.63 1,484 24.7 23.25 16.63 17.94 -7.30 -3.59 -18.88
SVRN Sovereign Bancorp, Inc. of PA 15.13 152,393 2,305.7 22.19 12.24 15.88 -4.72 22.02 -12.49
STFR St. Francis Cap. Corp. of WI 39.50 5,111 201.9 50.75 33.88 40.00 -1.25 13.67 -21.78
SPBC St. Paul Bancorp, Inc. of IL 21.56 34,357 740.7 28.50 21.38 23.00 -6.26 -7.27 -17.87
SFFC StateFed Financial Corp. of IA 12.75 1,566 20.0 15.00 11.00 12.75 0.00 15.91 -13.56
SFIN Statewide Fin. Corp. of NJ 19.00 4,397 83.5 26.69 18.75 19.75 -3.80 1.33 -20.83
STSA Sterling Financial Corp. of WA 20.25 7,606 154.0 27.63 17.88 19.88 1.86 12.50 -6.90
ROSE T R Financial Corp. of NY* 33.25 17,529 582.8 44.75 26.50 35.50 -6.34 19.82 0.00
THRD TF Financial Corp. of PA 24.00 3,192 76.6 30.00 19.25 24.63 -2.56 23.84 -20.00
TPNZ Tappan Zee Fin., Inc. of NY(8) 19.50 1,478 28.8 22.63 17.00 19.38 0.62 17.26 4.00
THTL Thistle Group Holdings of PA 9.00 9,000 81.0 10.06 9.00 9.00 0.00 -10.00 -10.00
TSBK Timberland Bancorp of WA 14.63 6,613 96.7 18.50 14.25 15.75 -7.11 46.30 46.30
TRIC Tri-County Bancorp of WY 12.00 1,167 14.0 16.50 11.38 12.00 0.00 4.90 -20.00
TWIN Twin City Bancorp, Inc. of TN 13.19 1,241 16.4 15.50 13.00 13.06 1.00 -1.05 -14.90
USAB USABancshares, Inc of PA* 11.50 2,002 23.0 13.31 5.81 11.50 0.00 80.25 53.33
UCBC Union Community Bancorp of IN 13.00 3,042 39.5 15.81 13.00 13.50 -3.70 30.00 -11.14
UCFC United Community Fin. of OH 14.81 33,465 495.6 17.94 14.81 15.44 -4.08 48.10 48.10
UFRM United FSB of Rocky Mount NC(8) 17.75 3,283 58.3 21.00 10.50 16.75 5.97 47.92 -9.58
UBMT United Fin. Corp. of MT 24.75 1,698 42.0 31.50 24.75 26.50 -6.60 N.A. N.A.
UTBI United Tenn. Bancshares of TN 12.13 1,455 17.6 16.00 12.13 12.25 -0.98 21.30 21.30
WHGB WHG Bancshares of MD 11.00 1,389 15.3 19.00 11.00 11.00 0.00 -27.30 -41.33
WSFS WSFS Financial Corp. of DE* 17.88 12,525 223.9 23.88 14.50 18.25 -2.03 20.16 -10.60
WVFC WVS Financial Corp. of PA 15.75 3,617 57.0 20.13 13.44 15.50 1.61 16.67 -10.66
WRNB Warren Bancorp of Peabody MA* 10.94 7,905 86.5 14.38 8.75 10.75 1.77 22.37 -4.87
WSBI Warwick Community Bncrp of NY* 14.25 6,607 94.1 18.00 14.13 14.13 0.85 42.50 -18.01
WFSL Washington Federal, Inc. of WA 24.88 52,447 1,304.9 30.29 23.98 25.38 -1.97 2.30 -12.95
WYNE Wayne Bancorp, Inc. of NJ 31.50 2,013 63.4 37.06 21.00 32.75 -3.82 29.90 17.76
WAYN Wayne Svgs Bks MHC of OH (48.2 22.25 2,486 26.6 30.00 17.50 23.00 -3.26 27.14 -15.59
WCFB Wbstr Cty FSB MHC of IA (45.6) 17.63 2,114 17.0 22.00 16.63 17.63 0.00 0.74 -11.85
WBST Webster Financial Corp. of CT 27.25 38,327 1,044.4 36.25 25.00 27.38 -0.47 9.00 -18.05
WEFC Wells Fin. Corp. of Wells MN 18.38 1,879 34.5 22.00 15.75 17.75 3.55 13.95 2.80
WCBI WestCo Bancorp, Inc. of IL(8) 28.00 2,486 69.6 30.50 25.75 27.00 3.70 7.69 2.75
WSTR WesterFed Fin. Corp. of MT 18.63 5,585 104.0 27.00 18.63 20.75 -10.22 -14.34 -26.94
WOFC Western Ohio Fin. Corp. of OH 22.63 2,298 52.0 29.25 22.63 23.38 -3.21 -5.71 -15.81
WEHO Westwood Hmstd Fin Corp of OH 11.88 2,559 30.4 18.13 11.88 12.25 -3.02 -22.76 -30.12
FFWD Wood Bancorp of OH 16.25 2,669 43.4 27.00 12.20 16.25 0.00 23.11 -13.56
YFCB Yonkers Fin. Corp. of NY 16.06 2,772 44.5 22.00 15.75 16.00 0.37 -7.59 -16.57
YFED York Financial Corp. of PA 19.25 8,968 172.6 27.25 16.81 19.00 1.32 -0.77 -25.24
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
SOBI Sobieski Bancorp of S. Bend IN 0.64 0.64 16.58 16.58 117.60
SSFC South Street Fin. Corp. of NC* 0.32 0.33 7.37 7.37 46.40
SBAN SouthBanc Shares Inc. of SC 0.73 0.73 17.01 17.01 77.85
SCBS Southern Commun. Bncshrs of AL 0.70 0.70 10.10 10.10 63.72
SMBC Southern Missouri Bncrp of MO 0.76 0.72 17.79 17.79 106.09
SVRN Sovereign Bancorp, Inc. of PA 0.40 0.61 5.85 5.02 118.75
STFR St. Francis Cap. Corp. of WI 2.54 2.44 25.80 23.05 322.42
SPBC St. Paul Bancorp, Inc. of IL 1.44 1.41 12.46 12.41 133.40
SFFC StateFed Financial Corp. of IA 0.70 0.70 10.14 10.14 57.20
SFIN Statewide Fin. Corp. of NJ 1.25 1.24 14.99 14.97 152.50
STSA Sterling Financial Corp. of WA 1.26 1.10 13.91 12.96 248.25
ROSE T R Financial Corp. of NY* 2.09 1.85 14.05 14.05 228.52
THRD TF Financial Corp. of PA 1.47 1.24 15.97 13.45 200.33
TPNZ Tappan Zee Fin., Inc. of NY(8) 0.75 0.70 14.75 14.75 87.51
THTL Thistle Group Holdings of PA 0.53 0.53 10.79 10.79 38.81
TSBK Timberland Bancorp of WA 0.58 0.55 12.70 12.70 39.54
TRIC Tri-County Bancorp of WY 0.77 0.80 12.03 12.03 76.49
TWIN Twin City Bancorp, Inc. of TN 0.90 0.74 11.34 11.34 88.93
USAB USABancshares, Inc of PA* 0.07 0.12 6.40 6.36 51.22
UCBC Union Community Bancorp of IN 0.47 0.47 14.22 14.22 35.53
UCFC United Community Fin. of OH 0.58 0.58 12.47 12.47 38.59
UFRM United FSB of Rocky Mount NC(8) 0.53 0.35 6.98 6.98 93.10
UBMT United Fin. Corp. of MT 0.80 0.80 14.52 14.52 56.69
UTBI United Tenn. Bancshares of TN 0.57 0.57 13.92 13.92 51.58
WHGB WHG Bancshares of MD 0.48 0.49 14.37 14.37 85.29
WSFS WSFS Financial Corp. of DE* 1.34 1.30 7.27 7.23 122.52
WVFC WVS Financial Corp. of PA 1.02 1.03 9.05 9.05 82.34
WRNB Warren Bancorp of Peabody MA* 0.80 0.83 5.20 5.20 47.13
WSBI Warwick Community Bncrp of NY* 0.31 0.30 12.94 12.94 56.13
WFSL Washington Federal, Inc. of WA 2.09 2.05 14.41 13.33 107.42
WYNE Wayne Bancorp, Inc. of NJ 0.92 0.92 17.15 17.15 135.13
WAYN Wayne Svgs Bks MHC of OH (48.2 0.74 0.68 9.83 9.83 104.49
WCFB Wbstr Cty FSB MHC of IA (45.6) 0.64 0.64 10.67 10.67 44.43
WBST Webster Financial Corp. of CT 1.36 1.37 10.43 9.20 197.22
WEFC Wells Fin. Corp. of Wells MN 1.23 1.17 16.10 16.10 111.46
WCBI WestCo Bancorp, Inc. of IL(8) 1.93 1.77 19.82 19.82 128.37
WSTR WesterFed Fin. Corp. of MT 1.33 1.33 19.46 15.60 183.20
WOFC Western Ohio Fin. Corp. of OH 0.11 0.15 23.32 21.82 159.02
WEHO Westwood Hmstd Fin Corp of OH 0.32 0.51 11.67 11.67 50.75
FFWD Wood Bancorp of OH 0.88 0.76 8.16 8.16 61.82
YFCB Yonkers Fin. Corp. of NY 1.09 1.06 16.36 16.36 124.05
YFED York Financial Corp. of PA 1.15 0.93 11.91 11.91 135.79
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B
Weekly Thrift Market Line - Part Two
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(285) 14.03 13.79 0.93 7.96 5.15 0.88 7.47 0.60 148.60 0.80
NYSE Traded Companies(8) 8.19 7.91 1.09 13.43 6.75 0.56 8.63 0.81 126.82 1.45
AMEX Traded Companies(22) 14.43 14.29 0.84 6.07 4.99 0.83 5.73 0.51 189.29 0.76
NASDAQ Listed OTC Companies(255) 14.15 13.89 0.93 7.99 5.12 0.89 7.60 0.60 146.27 0.79
California Companies(18) 7.96 7.60 0.61 8.60 6.02 0.54 8.07 1.45 104.33 1.33
Florida Companies(6) 10.45 10.01 1.13 12.12 5.27 0.60 6.54 0.49 119.55 0.83
Mid-Atlantic Companies(57) 11.53 11.15 0.82 8.55 5.35 0.83 8.42 0.63 113.48 0.93
Mid-West Companies(131) 14.75 14.55 0.95 7.28 4.91 0.91 6.96 0.55 154.05 0.68
New England Companies(7) 7.48 7.20 0.70 9.58 6.27 0.64 8.82 0.48 185.95 0.99
North-West Companies(11) 18.22 17.88 1.17 9.41 5.13 1.04 8.33 0.36 232.41 0.80
South-East Companies(44) 17.36 17.22 1.05 7.73 4.76 0.99 7.24 0.60 156.12 0.78
South-West Companies(6) 11.26 11.16 0.98 10.41 7.89 0.95 10.17 0.34 182.35 0.55
Western Companies (Excl CA)(5) 19.02 18.60 1.04 6.03 5.30 1.05 6.09 0.37 194.20 0.93
Thrift Strategy(240) 15.10 14.88 0.95 7.54 5.22 0.92 7.20 0.57 150.35 0.74
Mortgage Banker Strategy(27) 7.54 6.96 0.74 9.74 4.29 0.67 9.27 0.63 151.84 0.95
Real Estate Strategy(8) 7.37 7.13 0.87 12.11 6.52 0.80 11.26 1.36 104.70 1.62
Diversified Strategy(7) 8.61 8.39 1.19 13.88 5.92 0.66 9.00 0.62 137.62 1.18
Retail Banking Strategy(3) 6.75 6.51 0.20 4.45 1.08 0.14 3.35 0.88 99.04 1.36
Companies Issuing Dividends(229) 14.04 13.76 0.96 8.06 5.33 0.90 7.45 0.56 148.86 0.76
Companies Without Dividends(56) 14.01 13.88 0.80 7.54 4.42 0.79 7.56 0.79 147.52 0.97
Equity/Assets less than 6%(21) 5.02 4.76 0.55 11.05 4.77 0.59 11.78 1.11 99.79 0.95
Equity/Assets 6-12%(123) 8.85 8.46 0.82 9.59 5.58 0.74 8.63 0.63 143.99 0.89
Equity/Assets greater than 12%(141) 19.82 19.69 1.08 6.09 4.84 1.05 5.84 0.50 159.81 0.70
Converted Last 3 Mths (no MHC)(6) 24.10 24.10 1.00 4.07 4.41 1.03 4.21 0.64 117.50 0.92
Actively Traded Companies(30) 9.45 9.11 0.95 10.91 5.26 0.98 11.65 0.82 139.36 0.94
Market Value Below $20 Million(56) 15.44 15.39 0.89 5.97 5.23 0.82 5.44 0.59 142.00 0.67
Holding Company Structure(257) 14.07 13.83 0.94 7.95 5.18 0.89 7.48 0.62 144.31 0.79
Assets Over $1 Billion(58) 9.23 8.67 0.85 10.77 5.77 0.79 10.05 0.78 123.56 0.99
Assets $500 Million-$1 Billion(37) 10.62 10.25 0.87 8.57 4.51 0.80 8.02 0.56 148.85 0.87
Assets $250-$500 Million(69) 13.63 13.40 0.92 7.98 5.24 0.89 7.59 0.49 172.16 0.81
Assets less than $250 Million(121) 17.50 17.42 0.99 6.45 5.00 0.94 6.04 0.58 149.28 0.68
Goodwill Companies(113) 10.48 9.83 0.86 9.48 5.47 0.80 8.75 0.67 128.69 0.89
Non-Goodwill Companies(171) 16.26 16.26 0.98 7.02 4.96 0.93 6.69 0.56 162.25 0.74
Acquirors of FSLIC Cases(8) 8.98 8.50 1.00 11.71 6.85 0.95 11.19 0.77 66.05 0.63
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(285) 18.40 138.72 17.62 142.94 19.18 0.32 1.78 29.89
NYSE Traded Companies(8) 14.99 170.58 14.48 177.81 14.69 0.21 0.78 12.10
AMEX Traded Companies(22) 18.61 117.23 16.35 119.09 19.43 0.32 2.02 32.20
NASDAQ Listed OTC Companies(255) 18.48 139.85 17.82 144.21 19.25 0.32 1.79 30.22
California Companies(18) 15.65 129.81 10.16 137.23 16.24 0.15 0.64 13.59
Florida Companies(6) 20.46 168.88 17.56 181.57 22.25 0.24 1.15 23.96
Mid-Atlantic Companies(57) 17.73 144.23 15.16 148.70 19.09 0.30 1.58 28.46
Mid-West Companies(131) 18.58 134.84 18.07 138.06 19.30 0.32 1.82 29.62
New England Companies(7) 16.83 152.28 10.75 160.64 17.08 0.39 2.12 33.15
North-West Companies(11) 19.41 147.44 22.87 152.29 20.40 0.31 1.64 32.73
South-East Companies(44) 20.16 144.44 21.81 148.10 20.79 0.39 2.36 39.32
South-West Companies(6) 12.06 120.87 13.06 125.30 12.13 0.26 1.61 27.06
Western Companies (Excl CA)(5) 17.81 110.04 21.87 114.78 17.66 0.47 2.63 36.34
Thrift Strategy(240) 18.67 131.31 18.24 134.22 19.29 0.33 1.88 30.86
Mortgage Banker Strategy(27) 17.19 186.44 13.94 203.38 19.35 0.27 1.26 26.35
Real Estate Strategy(8) 15.56 171.09 12.58 175.48 16.58 0.18 0.79 13.16
Diversified Strategy(7) 17.64 209.75 17.89 215.64 18.70 0.39 1.84 33.58
Retail Banking Strategy(3) 14.34 133.65 8.58 137.91 15.45 0.15 0.81 17.60
Companies Issuing Dividends(229) 18.40 141.40 17.85 146.12 19.32 0.40 2.23 37.69
Companies Without Dividends(56) 18.41 127.88 16.71 130.10 18.51 0.00 0.00 0.00
Equity/Assets less than 6%(21) 16.49 188.57 9.60 192.44 16.23 0.15 0.72 12.82
Equity/Assets 6-12%(123) 17.31 157.63 13.76 165.91 18.58 0.32 1.64 26.78
Equity/Assets greater than 12%(141) 19.71 115.26 22.12 116.44 20.15 0.34 2.07 35.35
Converted Last 3 Mths (no MHC)(6) 23.59 93.49 22.96 93.49 22.51 0.13 1.58 0.00
Actively Traded Companies(30) 16.06 182.51 16.42 192.96 17.17 0.42 1.76 30.96
Market Value Below $20 Million(56) 19.13 111.93 16.52 112.22 20.23 0.31 2.26 33.48
Holding Company Structure(257) 18.40 138.99 17.78 143.08 19.23 0.33 1.81 30.83
Assets Over $1 Billion(58) 17.40 167.85 14.50 181.61 18.15 0.32 1.40 25.13
Assets $500 Million-$1 Billion(37) 17.05 159.60 15.57 167.48 18.76 0.32 1.56 28.01
Assets $250-$500 Million(69) 18.27 138.70 17.53 139.09 18.87 0.30 1.58 28.30
Assets less than $250 Million(121) 19.39 118.80 19.73 119.44 19.99 0.32 2.14 34.04
Goodwill Companies(113) 17.75 155.50 15.06 166.72 18.75 0.33 1.61 26.29
Non-Goodwill Companies(171) 18.75 128.51 19.25 128.51 19.42 0.31 1.90 32.49
Acquirors of FSLIC Cases(8) 14.86 156.86 14.06 166.21 14.81 0.47 1.88 27.17
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded
companies, and RP Financial, Inc. calculations. The information
provided in this report has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(56) 12.25 11.95 1.06 10.57 6.13 1.02 9.89 0.61 213.42 1.25
NYSE Traded Companies(5) 17.26 16.06 1.09 8.14 4.53 1.17 8.39 1.01 106.47 0.96
AMEX Traded Companies(5) 12.25 11.93 1.07 10.32 6.60 0.91 8.61 1.08 111.06 1.15
NASDAQ Listed OTC Companies(46) 11.65 11.47 1.05 10.89 6.26 1.01 10.23 0.51 238.26 1.29
California Companies(1) 10.18 10.15 1.43 13.50 8.72 1.43 13.50 1.07 139.44 1.75
Mid-Atlantic Companies(20) 14.66 14.27 0.92 8.00 4.65 0.92 7.91 0.72 128.44 1.13
New England Companies(30) 9.93 9.66 1.14 12.85 7.09 1.05 11.55 0.59 255.48 1.41
North-West Companies(2) 11.06 11.06 1.28 12.54 7.49 1.27 12.35 0.07 989.94 1.07
South-East Companies(3) 17.69 17.54 1.01 5.73 5.89 1.06 5.96 0.32 152.62 0.52
Thrift Strategy(44) 13.28 13.04 1.04 9.71 5.96 1.00 9.01 0.57 204.59 1.18
Mortgage Banker Strategy(6) 8.58 8.12 0.99 12.21 6.55 0.93 11.33 0.61 320.76 1.15
Real Estate Strategy(2) 10.61 10.59 1.58 14.91 8.02 1.61 15.22 1.17 111.47 1.69
Diversified Strategy(4) 6.56 5.74 1.06 16.14 6.39 1.02 15.56 0.88 156.70 2.00
Companies Issuing Dividends(45) 11.89 11.53 1.06 10.82 6.04 1.01 10.01 0.62 207.33 1.18
Companies Without Dividends(11) 13.75 13.72 1.07 9.54 6.53 1.06 9.42 0.55 239.12 1.52
Equity/Assets less than 6%(4) 5.20 4.89 0.96 18.04 7.18 0.73 13.53 0.87 103.77 1.44
Equity/Assets 6-12%(34) 8.76 8.38 1.12 12.71 6.98 1.06 12.04 0.71 232.16 1.41
Equity/Assets greater than 12%(18) 19.62 19.48 0.98 5.34 4.47 1.00 5.51 0.37 205.92 0.92
Converted Last 3 Mths (no MHC)(1) 19.81 19.81 0.78 3.93 4.77 0.78 3.93 0.00 0.00 0.46
Actively Traded Companies(15) 10.20 9.80 1.27 13.45 7.39 1.18 12.09 0.40 213.98 1.08
Market Value Below $20 Million(4) 12.05 12.01 0.84 8.00 6.53 0.83 7.66 0.45 289.91 1.35
Holding Company Structure(43) 13.20 12.99 1.06 9.94 5.92 1.03 9.40 0.52 212.07 1.27
Assets Over $1 Billion(18) 12.18 11.54 1.12 11.00 5.55 1.11 10.73 0.69 154.88 1.26
Assets $500 Million-$1 Billion(10) 9.29 9.15 1.12 12.86 7.26 1.00 10.85 0.56 190.05 1.30
Assets $250-$500 Million(12) 12.20 12.05 1.12 10.98 6.74 1.08 10.60 0.65 245.39 1.46
Assets less than $250 Million(16) 13.82 13.70 0.92 8.69 5.69 0.88 8.05 0.53 264.02 1.04
Goodwill Companies(29) 10.80 10.22 0.97 10.59 6.08 0.93 9.70 0.82 144.47 1.24
Non-Goodwill Companies(27) 13.69 13.69 1.15 10.55 6.18 1.11 10.09 0.41 285.36 1.25
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHCs)
- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(56) 16.73 157.05 17.45 156.41 17.75 0.36 1.72 28.51
NYSE Traded Companies(5) 19.86 160.45 23.85 160.59 22.03 0.55 1.52 36.22
AMEX Traded Companies(5) 16.44 141.40 16.15 146.96 17.11 0.41 2.17 32.74
NASDAQ Listed OTC Companies(46) 16.45 158.54 16.85 157.17 17.26 0.33 1.69 27.06
California Companies(1) 11.47 145.85 14.85 146.29 11.47 0.00 0.00 0.00
Mid-Atlantic Companies(20) 19.44 148.74 20.08 149.99 20.17 0.41 1.53 32.37
New England Companies(30) 15.22 169.58 15.60 167.43 16.73 0.34 1.71 25.75
North-West Companies(2) 13.35 160.65 16.53 160.65 13.54 0.32 2.22 29.71
South-East Companies(3) 19.35 102.39 17.45 103.61 18.29 0.41 3.26 38.86
Thrift Strategy(44) 17.15 145.56 17.90 146.23 18.21 0.38 1.76 29.58
Mortgage Banker Strategy(6) 15.65 180.54 14.50 196.34 17.11 0.29 1.34 20.84
Real Estate Strategy(2) 12.57 178.12 19.03 178.34 12.33 0.18 1.65 22.50
Diversified Strategy(4) 16.48 249.12 16.25 213.11 17.11 0.37 1.97 33.57
Companies Issuing Dividends(45) 17.13 162.97 17.49 162.38 18.28 0.45 2.13 35.47
Companies Without Dividends(11) 14.71 132.76 17.28 133.13 15.16 0.00 0.00 0.00
Equity/Assets less than 6%(4) 14.58 232.50 12.25 247.39 20.69 0.26 1.40 18.69
Equity/Assets 6-12%(34) 15.26 172.63 15.50 169.20 15.96 0.40 1.79 28.45
Equity/Assets greater than 12%(18) 20.50 115.18 21.87 117.01 20.63 0.32 1.67 30.93
Converted Last 3 Mths (no MHC)(1) 20.95 82.36 16.32 82.36 20.95 0.00 0.00 0.00
Actively Traded Companies(15) 14.65 179.17 16.91 173.96 16.95 0.50 2.03 30.20
Market Value Below $20 Million(4) 15.81 116.82 12.53 117.39 15.81 0.42 2.11 34.47
Holding Company Structure(43) 17.22 152.05 18.35 150.72 18.15 0.36 1.70 29.29
Assets Over $1 Billion(18) 18.28 179.22 20.15 172.46 19.57 0.53 1.81 36.44
Assets $500 Million-$1 Billion(10) 14.48 164.76 14.44 168.82 16.21 0.31 1.88 26.57
Assets $250-$500 Million(12) 15.31 149.02 16.70 151.68 15.96 0.24 1.41 21.65
Assets less than $250 Million(16) 17.48 138.41 16.83 140.71 17.86 0.32 1.77 26.58
Goodwill Companies(29) 16.20 164.91 16.09 164.27 18.42 0.34 1.61 27.25
Non-Goodwill Companies(27) 17.26 148.87 18.82 148.87 16.99 0.38 1.82 29.82
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded
companies, and RP Financial, Inc. calculations. The information
provided in this report has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 13.95 13.75 0.90 7.09 3.54 0.87 6.72 0.47 159.83 0.82
BIF-Insured Thrifts(3) 13.36 12.32 1.06 8.99 4.62 0.81 6.33 0.76 125.67 1.14
NASDAQ Listed OTC Companies(22) 13.86 13.53 0.93 7.38 3.71 0.86 6.66 0.52 154.44 0.87
Florida Companies(2) 6.70 6.50 0.66 8.52 4.04 0.57 7.32 0.27 78.51 0.34
Mid-Atlantic Companies(12) 12.88 12.59 0.85 7.00 3.65 0.82 6.63 0.55 141.41 0.80
Mid-West Companies(5) 12.75 12.38 0.86 6.94 3.39 0.79 6.30 0.43 190.09 0.57
New England Companies(2) 21.22 20.56 1.55 11.15 4.60 1.28 8.04 0.65 203.93 2.05
South-East Companies(1) 22.48 22.48 1.13 5.02 3.44 1.13 5.02 0.50 132.06 0.96
Thrift Strategy(20) 14.44 14.19 0.92 6.84 3.64 0.88 6.50 0.50 159.82 0.81
Mortgage Banker Strategy(1) 8.13 7.30 0.88 10.96 3.10 0.72 8.96 0.66 60.54 0.97
Diversified Strategy(1) 9.23 7.91 1.18 13.45 5.52 0.63 7.22 0.70 156.79 1.72
Companies Issuing Dividends(18) 12.78 12.37 0.88 7.65 3.52 0.80 6.77 0.57 133.03 0.91
Companies Without Dividends(4) 18.20 18.20 1.11 6.28 4.44 1.10 6.22 0.24 268.62 0.69
Equity/Assets 6-12%(12) 9.33 8.73 0.76 8.16 3.49 0.65 6.88 0.64 86.05 0.80
Equity/Assets greater than 12%(10) 19.40 19.40 1.13 6.42 3.97 1.13 6.39 0.34 248.47 0.94
Holding Company Structure(4) 13.42 12.98 0.96 7.39 4.60 0.89 6.80 0.61 90.35 0.63
Assets Over $1 Billion(5) 10.40 9.74 0.96 9.77 4.06 0.79 7.84 0.48 121.45 0.98
Assets $500 Million-$1 Billion(3) 20.21 19.46 1.30 8.58 3.63 1.30 8.62 0.53 176.72 1.51
Assets $250-$500 Million(5) 12.32 12.32 0.78 6.27 2.96 0.76 6.01 0.48 201.54 0.60
Assets less than $250 Million(9) 15.41 15.18 0.91 6.28 3.97 0.86 5.84 0.55 145.93 0.80
Goodwill Companies(7) 9.74 8.80 0.87 9.15 3.85 0.73 7.60 0.65 92.25 0.81
Non-Goodwill Companies(15) 16.08 16.08 0.96 6.42 3.63 0.93 6.15 0.46 183.14 0.89
MHC Institutions(22) 13.86 13.53 0.93 7.38 3.71 0.86 6.66 0.52 154.44 0.87
MHC Converted Last 3 Months(2) 14.86 14.86 0.96 6.63 4.95 0.96 6.63 0.35 82.98 0.51
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 25.97 192.80 24.53 190.49 26.66 0.31 1.64 38.01
BIF-Insured Thrifts(3) 22.01 175.33 22.23 197.79 27.37 0.35 1.48 29.54
NASDAQ Listed OTC Companies(22) 25.06 190.18 24.19 191.64 26.77 0.31 1.62 36.42
Florida Companies(2) 24.77 203.69 13.65 209.98 28.80 1.00 3.77 0.00
Mid-Atlantic Companies(12) 24.44 192.92 23.08 186.64 25.96 0.22 1.35 33.71
Mid-West Companies(5) 27.78 199.30 23.99 214.04 27.66 0.35 1.51 33.40
New England Companies(2) 22.62 170.83 32.16 188.01 27.13 0.52 2.34 49.46
South-East Companies(1) 29.07 146.03 32.83 146.03 29.07 0.20 1.60 46.51
Thrift Strategy(20) 25.64 181.70 24.34 188.99 26.77 0.29 1.55 34.74
Mortgage Banker Strategy(1) 0.00 328.10 26.67 0.00 0.00 0.22 1.24 40.00
Diversified Strategy(1) 18.12 205.01 18.92 239.36 0.00 0.84 3.11 56.38
Companies Issuing Dividends(18) 25.96 201.35 23.49 203.95 28.08 0.39 2.02 48.56
Companies Without Dividends(4) 22.04 145.50 26.96 145.50 22.38 0.00 0.00 0.00
Equity/Assets 6-12%(12) 25.19 225.07 20.61 231.34 28.52 0.43 2.00 47.23
Equity/Assets greater than 12%(10) 24.95 147.53 28.56 147.53 25.67 0.17 1.15 25.62
Holding Company Structure(4) 20.92 167.71 21.42 175.97 23.20 0.21 1.03 10.75
Assets Over $1 Billion(5) 23.89 230.79 22.03 224.89 27.51 0.44 1.88 33.18
Assets $500 Million-$1 Billion(3) 27.57 180.40 30.77 209.88 27.45 0.34 1.52 41.97
Assets $250-$500 Million(5) 26.52 213.35 25.07 213.35 26.52 0.36 1.84 29.03
Assets less than $250 Million(9) 24.75 152.76 23.34 156.89 26.29 0.20 1.34 38.50
Goodwill Companies(7) 24.82 225.93 21.04 236.52 28.89 0.41 1.74 34.40
Non-Goodwill Companies(15) 25.21 170.93 25.88 170.93 25.83 0.26 1.55 37.64
MHC Institutions(22) 25.06 190.18 24.19 191.64 26.77 0.31 1.62 36.42
MHC Converted Last 3 Months(2) 14.86 139.91 21.02 139.91 14.86 0.00 0.00 0.00
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded
companies, and RP Financial, Inc. calculations. The information
provided in this report has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AHM Ahmanson and Co. H.F. of CA(8) 5.45 4.01 0.81 18.46 5.98 0.76 17.41 1.72 52.05 1.33
BYS Bay State Bancorp of MA* 20.71 20.71 0.92 4.44 4.33 0.92 4.44 0.71 122.32 1.06
CFB Commercial Federal Corp. of NE 6.91 6.05 0.81 12.92 5.53 0.96 15.18 0.78 86.50 0.88
DME Dime Bancorp, Inc. of NY* 5.90 4.83 0.72 12.67 4.89 0.58 10.22 1.03 50.85 0.69
DSL Downey Financial Corp. of CA 7.60 7.51 0.87 12.03 6.63 0.89 12.30 0.84 65.10 0.60
FED FirstFed Fin. Corp. of CA 5.72 5.67 0.63 12.25 6.65 0.61 11.85 0.84 256.41 2.80
GSB Golden State Bancorp of CA(8) 6.04 5.44 0.66 11.63 9.19 0.71 12.55 0.86 100.48 1.12
GDW Golden West Fin. Corp. of CA 7.10 7.10 0.95 14.36 7.62 0.95 14.41 0.97 63.28 0.86
GPT GreenPoint Fin. Corp. of NY* 9.67 5.40 1.07 10.71 5.17 1.11 11.08 2.54 33.98 1.22
JSB JSB Financial, Inc. of NY* 23.82 23.82 1.88 7.89 6.05 1.67 7.02 0.16 238.05 0.54
OCN Ocwen Financial Corp. of FL 13.08 12.40 2.84 24.09 7.62 0.55 4.68 NA NA 1.31
SIB Staten Island Bancorp of NY* 26.20 25.53 0.86 5.00 2.23 1.59 9.19 0.61 87.17 1.27
WES Westcorp Inc. of Orange CA 8.73 8.71 0.45 4.96 6.46 -0.60 -6.61 0.60 162.80 2.22
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 15.34 15.34 1.07 6.43 5.78 1.00 6.04 0.29 320.59 1.26
ANE Alliance Bncp of New Eng of CT* 7.97 7.78 0.89 12.20 7.10 0.52 7.15 0.53 229.26 1.84
BKC American Bank of Waterbury CT* 9.02 8.73 1.33 15.35 7.41 1.11 12.89 2.10 42.28 1.50
BFD BostonFed Bancorp of MA 7.87 7.59 0.72 8.46 6.75 0.61 7.16 0.17 413.47 0.84
CNY Carver Bancorp, Inc. of NY 8.12 7.84 0.25 2.99 3.87 0.22 2.65 NA NA 1.28
CBK Citizens First Fin.Corp. of IL 13.84 13.84 0.72 5.11 4.80 0.45 3.21 0.67 54.73 0.45
EFC EFC Bancorp Inc of IL 23.77 23.77 1.07 4.51 4.98 1.07 4.51 0.53 57.48 0.42
EBI Equality Bancorp, Inc. of MO 10.11 10.11 0.55 6.76 3.53 0.03 0.41 0.36 37.97 0.37
ESX Essex Bancorp of Norfolk VA(8) 0.02 -0.08 -0.11 NM -7.43 -0.11 NM 1.26 76.64 1.11
FCB Falmouth Bancorp, Inc. of MA* 22.41 22.41 1.02 4.33 3.78 0.81 3.44 NA NA 0.65
FAB FirstFed America Bancorp of MA 9.91 9.91 0.62 5.39 4.82 0.52 4.54 0.29 293.25 1.24
GAF GA Financial Corp. of PA 14.01 13.88 1.09 7.25 6.87 1.03 6.81 0.24 75.96 0.46
HBS Haywood Bancshares, Inc. of NC* 14.85 14.38 1.46 10.18 8.69 1.46 10.18 0.60 82.40 0.66
KNK Kankakee Bancorp, Inc. of IL 9.64 8.02 0.86 8.00 7.36 0.84 7.78 1.12 53.91 0.97
KYF Kentucky First Bancorp of KY 17.04 17.04 1.13 6.76 5.64 1.11 6.68 0.18 263.19 0.76
NBN Northeast Bancorp of ME* 7.00 6.36 0.67 9.52 6.02 0.66 9.41 1.08 90.28 1.12
NEP Northeast PA Fin. Corp of PA 18.94 18.94 -0.93 -6.80 -4.92 0.57 4.19 0.23 182.16 0.72
PDB Piedmont Bancorp, Inc. of NC 16.09 16.09 1.24 7.56 5.77 1.24 7.56 0.71 102.48 0.89
SSB Scotland Bancorp, Inc. of NC 24.70 24.70 1.47 5.01 5.48 1.47 5.01 NA NA 0.57
SZB SouthFirst Bancshares of AL 10.08 9.83 0.55 4.66 4.03 0.51 4.33 1.56 29.54 0.74
SRN Southern Banc Company of AL 17.39 17.27 0.49 2.86 2.87 0.49 2.86 NA NA 0.19
SSM Stone Street Bancorp of NC 27.99 27.99 1.38 4.56 4.74 1.38 4.56 NA NA 0.64
TSH Teche Holding Company of LA 13.83 13.83 0.93 6.90 6.41 0.92 6.84 0.18 460.90 0.98
FTF Texarkana Fst. Fin. Corp of AR 15.23 15.23 1.76 11.38 6.85 1.73 11.19 0.12 445.58 0.67
THR Three Rivers Fin. Corp. of MI 13.53 13.48 0.88 6.44 5.69 0.81 5.99 1.00 48.12 0.74
WSB Washington SB, FSB of MD 8.42 8.42 0.73 8.64 7.73 0.50 5.89 NA NA 1.02
WFI Winton Financial Corp. of OH 7.17 7.03 1.05 14.60 5.66 0.86 12.04 NA NA NA
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 9.02 8.87 0.75 8.79 4.04 0.51 5.99 1.84 30.69 0.77
FBER 1st Bergen Bancorp of NJ 11.69 11.69 0.74 5.38 5.56 0.74 5.38 0.96 111.28 2.41
AFED AFSALA Bancorp, Inc. of NY(8) 12.13 12.13 0.75 5.81 5.09 0.77 5.93 0.33 205.73 1.42
ALBK ALBANK Fin. Corp. of Albany NY(8) 8.97 7.02 1.16 12.73 5.53 1.15 12.62 0.85 84.14 1.04
AMFC AMB Financial Corp. of IN 14.10 14.10 1.02 6.92 7.05 0.58 3.93 0.19 214.55 0.52
ASBP ASB Financial Corp. of OH 15.20 15.20 0.96 6.17 5.18 0.94 6.08 0.14 513.38 1.03
ABBK Abington Bancorp of MA* 6.29 5.72 0.86 12.70 7.52 0.73 10.79 0.14 353.60 0.77
AABC Access Anytime Bancorp of NM 8.09 8.09 1.45 18.31 13.13 1.35 17.02 0.08 535.05 0.67
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AHM Ahmanson and Co. H.F. of CA(8) 16.71 222.10 12.10 301.86 17.73 0.88 1.50 25.14
BYS Bay State Bancorp of MA* 23.10 102.49 21.22 102.49 23.10 0.00 0.00 0.00
CFB Commercial Federal Corp. of NE 18.10 184.59 12.76 211.09 15.40 0.22 0.85 15.38
DME Dime Bancorp, Inc. of NY* 20.45 230.39 13.60 281.54 25.37 0.20 0.76 15.50
DSL Downey Financial Corp. of CA 15.07 170.95 12.99 172.91 14.74 0.32 1.18 17.78
FED FirstFed Fin. Corp. of CA 15.04 168.80 9.65 170.04 15.55 0.00 0.00 0.00
GSB Golden State Bancorp of CA(8) 10.88 117.89 7.12 130.71 10.08 0.00 0.00 0.00
GDW Golden West Fin. Corp. of CA 13.12 173.90 12.34 173.90 13.08 0.50 0.59 7.72
GPT GreenPoint Fin. Corp. of NY* 19.34 214.34 20.73 NM 18.68 0.64 1.95 37.65
JSB JSB Financial, Inc. of NY* 16.54 130.52 31.08 130.52 18.59 1.60 3.24 53.51
OCN Ocwen Financial Corp. of FL 13.13 247.96 32.42 261.46 NM 0.00 0.00 0.00
SIB Staten Island Bancorp of NY* NM 124.50 32.62 127.80 24.44 0.32 1.66 74.42
WES Westcorp Inc. of Orange CA 15.48 77.26 6.74 77.44 NM 0.20 2.05 31.75
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 17.31 112.69 17.28 112.69 18.41 0.44 2.17 37.61
ANE Alliance Bncp of New Eng of CT* 14.08 154.87 12.35 158.68 24.02 0.20 1.63 22.99
BKC American Bank of Waterbury CT* 13.50 188.59 17.01 194.81 16.07 0.80 3.39 45.71
BFD BostonFed Bancorp of MA 14.81 127.82 10.06 132.58 17.50 0.40 2.08 30.77
CNY Carver Bancorp, Inc. of NY 25.84 75.72 6.15 78.48 29.08 0.00 0.00 0.00
CBK Citizens First Fin.Corp. of IL 20.83 106.00 14.67 106.00 NM 0.00 0.00 0.00
EFC EFC Bancorp Inc of IL 20.09 90.58 21.54 90.58 20.09 0.00 0.00 0.00
EBI Equality Bancorp, Inc. of MO 28.33 135.28 13.68 135.28 NM 0.24 1.73 48.98
ESX Essex Bancorp of Norfolk VA(8) NM NM 1.48 NM NM 0.00 0.00 NM
FCB Falmouth Bancorp, Inc. of MA* 26.47 111.18 24.91 111.18 NM 0.24 1.33 35.29
FAB FirstFed America Bancorp of MA 20.73 110.75 10.97 110.75 24.64 0.20 1.18 24.39
GAF GA Financial Corp. of PA 14.55 106.36 14.90 107.31 15.49 0.56 3.32 48.28
HBS Haywood Bancshares, Inc. of NC* 11.51 112.13 16.65 115.78 11.51 0.60 2.96 34.09
KNK Kankakee Bancorp, Inc. of IL 13.58 107.02 10.32 128.63 13.96 0.48 1.61 21.82
KYF Kentucky First Bancorp of KY 17.72 124.56 21.22 124.56 17.95 0.50 3.57 63.29
NBN Northeast Bancorp of ME* 16.62 140.23 9.82 154.36 16.83 0.21 1.54 25.61
NEP Northeast PA Fin. Corp of PA NM 93.27 17.67 93.27 NM 0.00 0.00 NM
PDB Piedmont Bancorp, Inc. of NC 17.33 127.16 20.46 127.16 17.33 0.48 4.86 NM
SSB Scotland Bancorp, Inc. of NC 18.26 115.42 28.51 115.42 18.26 0.20 2.19 40.00
SZB SouthFirst Bancshares of AL 24.83 102.78 10.36 105.40 26.74 0.60 3.45 NM
SRN Southern Banc Company of AL NM 97.86 17.02 98.58 NM 0.35 2.39 NM
SSM Stone Street Bancorp of NC 21.10 100.18 28.04 100.18 21.10 0.46 2.73 57.50
TSH Teche Holding Company of LA 15.60 103.79 14.35 103.79 15.74 0.50 2.94 45.87
FTF Texarkana Fst. Fin. Corp of AR 14.60 161.40 24.58 161.40 14.85 0.56 2.14 31.28
THR Three Rivers Fin. Corp. of MI 17.57 110.39 14.93 110.80 18.88 0.44 2.48 43.56
WSB Washington SB, FSB of MD 12.93 109.21 9.20 109.21 18.97 0.10 1.76 22.73
WFI Winton Financial Corp. of OH 17.66 243.62 17.48 248.77 21.41 0.25 1.77 31.25
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 24.73 209.89 18.93 213.37 NM 0.27 0.60 14.84
FBER 1st Bergen Bancorp of NJ 17.99 103.15 12.06 103.15 17.99 0.28 1.90 34.15
AFED AFSALA Bancorp, Inc. of NY(8) 19.65 117.17 14.21 117.17 19.23 0.28 1.57 30.77
ALBK ALBANK Fin. Corp. of Albany NY(8) 18.07 216.29 19.40 276.50 18.24 0.84 1.40 25.30
AMFC AMB Financial Corp. of IN 14.19 96.33 13.58 96.33 25.00 0.28 1.78 25.23
ASBP ASB Financial Corp. of OH 19.32 119.38 18.14 119.38 19.62 0.40 3.14 60.61
ABBK Abington Bancorp of MA* 13.29 171.09 10.76 188.20 15.65 0.20 1.19 15.87
AABC Access Anytime Bancorp of NM 7.62 128.63 10.40 128.63 8.19 0.00 0.00 0.00
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AFBC Advance Fin. Bancorp of WV 14.09 14.09 0.90 5.94 5.65 0.85 5.61 0.60 51.29 0.35
ALBC Albion Banc Corp. of Albion NY 8.54 8.54 0.48 5.58 4.62 0.45 5.20 0.47 72.86 0.45
ABCL Alliance Bancorp, Inc. of IL 8.59 8.50 0.89 9.74 5.07 0.91 9.92 0.13 240.27 0.47
ALLB Alliance Bank MHC of PA (19.9) 10.72 10.72 0.80 7.09 2.92 0.80 7.09 1.06 45.21 0.88
AHCI Ambanc Holding Co., Inc. of NY* 11.69 11.69 0.50 4.16 4.12 0.41 3.36 0.60 120.40 1.26
ASBI Ameriana Bancorp of IN 11.64 11.42 0.96 8.54 6.27 0.82 7.29 0.56 54.99 0.43
ABCW Anchor Bancorp Wisconsin of WI 6.40 6.30 1.06 16.55 5.43 0.94 14.75 0.58 180.99 1.29
ANDB Andover Bancorp, Inc. of MA* 7.93 7.93 1.06 13.16 6.37 1.04 12.85 0.38 195.38 1.00
ASFC Astoria Financial Corp. of NY 7.96 5.63 0.81 10.32 6.31 0.75 9.49 0.45 72.22 0.77
AVND Avondale Fin. Corp. of IL 7.60 7.60 -0.78 -9.51 -10.74 -0.56 -6.84 1.25 84.71 2.83
BCSB BCSB Bankcorp MHC of MD (38.6) 16.27 16.27 0.80 4.95 3.16 0.80 4.95 NA NA 0.56
BKCT Bancorp Connecticut of CT* 10.04 10.04 1.43 13.71 6.82 1.23 11.80 0.61 181.32 2.10
BPLS Bank Plus Corp. of CA 4.40 4.02 0.31 6.79 6.05 0.36 7.89 1.75 69.27 1.79
BNKU Bank United Corp. of TX 4.98 4.50 0.87 17.22 8.60 0.82 16.38 0.68 50.76 0.46
BWFC Bank West Fin. Corp. of MI 12.99 12.99 0.66 4.68 3.35 0.53 3.76 0.58 28.97 0.24
BANC BankAtlantic Bancorp of FL 6.16 5.16 0.90 15.08 6.38 0.38 6.40 0.81 100.62 1.12
BKUNA BankUnited Fin. Corp. of FL 4.38 3.80 0.27 6.74 3.39 0.21 5.24 0.46 37.03 0.21
BVCC Bay View Capital Corp. of CA 7.28 4.66 0.39 6.08 3.04 0.60 9.47 0.38 218.38 1.06
FSNJ Bayonne Banchsares of NJ(8) 15.27 15.27 0.72 5.61 3.21 0.72 5.61 0.44 96.50 0.92
BFSB Bedford Bancshares, Inc. of VA 13.30 13.30 1.19 8.45 5.38 1.19 8.45 0.21 232.62 0.60
BFFC Big Foot Fin. Corp. of IL 18.28 18.28 0.52 2.95 2.79 0.45 2.55 0.09 150.75 0.28
BYFC Broadway Fin. Corp. of CA 10.13 10.13 0.48 4.66 6.58 0.33 3.20 1.15 68.56 0.97
BRKL Brookline Bncp MHC of MA(47.0) 33.21 33.21 1.92 8.85 3.69 1.92 8.85 0.60 251.07 2.37
CBES CBES Bancorp, Inc. of MO 14.23 14.23 1.04 6.29 6.00 0.86 5.22 NA NA 0.58
CCFH CCF Holding Company of GA 8.09 8.09 0.14 1.36 0.88 -0.13 -1.21 0.36 137.94 0.68
CITZ CFS Bancorp, Inc. of IN 17.41 17.41 0.58 3.31 3.60 0.64 3.68 0.67 42.30 0.81
CFSB CFSB Bancorp of Lansing MI 7.72 7.72 1.32 17.10 6.09 1.20 15.61 0.21 272.22 0.64
CKFB CKF Bancorp of Danville KY 21.34 21.34 1.87 8.18 7.83 1.42 6.19 0.54 40.24 0.24
CNSB CNS Bancorp, Inc. of MO 24.68 24.68 0.91 3.68 3.66 0.84 3.41 0.07 569.23 0.57
CSBF CSB Financial Group Inc of IL 23.13 21.83 0.51 2.22 2.82 0.44 1.92 1.13 34.83 0.69
CBCI Calumet Bancorp of Chicago IL 17.49 17.49 2.08 12.70 11.11 2.09 12.74 1.21 99.71 1.56
CAFI Camco Fin. Corp. of OH 9.89 9.28 1.26 13.11 6.94 0.95 9.89 0.72 39.75 0.34
CMRN Cameron Fin. Corp. of MO 20.78 20.78 1.16 5.38 5.80 1.14 5.27 1.06 67.46 0.87
CFNC Carolina Fincorp of NC* 22.35 22.35 0.92 4.05 5.43 1.06 4.64 0.14 283.77 0.51
CASB Cascade Financial Corp. of WA 6.99 6.99 0.78 11.77 5.21 0.73 11.13 0.54 171.37 1.07
CATB Catskill Fin. Corp. of NY* 23.42 23.42 1.33 5.33 5.40 1.31 5.27 0.22 282.65 1.43
CAVB Cavalry Bancorp of TN 28.43 28.43 1.48 7.18 3.10 1.02 4.98 0.05 NA 1.26
CNIT Cenit Bancorp of Norfolk VA 6.88 6.34 0.90 12.76 6.02 0.83 11.86 0.19 316.10 0.75
CEBK Central Co-Op. Bank of MA* 9.78 8.88 0.86 8.65 7.38 0.67 6.70 0.40 188.70 1.00
CENB Century Bancorp, Inc. of NC(8) 17.75 17.75 1.33 4.81 7.78 1.33 4.81 0.37 144.73 0.82
COFI Charter One Financial of OH 7.37 6.91 0.88 12.53 4.00 1.21 17.25 0.38 148.17 0.84
CVAL Chester Valley Bancorp of PA 8.66 8.66 1.03 11.92 4.54 0.93 10.83 0.33 274.00 1.23
CLAS Classic Bancshares, Inc. of KY 15.57 13.35 0.77 5.13 4.73 0.97 6.44 0.29 216.16 0.92
CBSA Coastal Bancorp of Houston TX 3.73 3.21 0.49 13.93 9.33 0.50 14.30 0.49 61.08 0.62
CFCP Coastal Fin. Corp. of SC 6.03 6.03 1.23 19.92 5.42 1.01 16.44 0.48 188.30 1.31
CFKY Columbia Financial of KY 28.28 28.28 0.93 3.28 3.26 0.91 3.20 0.40 63.42 0.48
CMSB Commonwealth Bancorp Inc of PA 9.13 7.30 0.67 7.17 5.97 0.51 5.38 0.41 97.65 0.66
CMSV Commty. Svgs, MHC of FL (48.5)(8) 10.80 10.80 0.74 6.58 3.61 0.68 6.07 0.27 133.22 0.52
CFTP Community Fed. Bancorp of MS 23.66 23.66 1.18 4.32 3.58 1.15 4.17 0.28 78.26 0.41
CFFC Community Fin. Corp. of VA 13.87 13.82 1.01 7.37 5.38 1.01 7.37 1.30 48.66 0.71
CIBI Community Inv. Bancorp of OH 10.98 10.98 0.94 8.14 5.13 0.94 8.14 0.56 98.23 0.66
COOP Cooperative Bancshares of NC 7.63 7.63 0.63 8.22 5.00 0.57 7.46 0.08 330.28 0.34
CRZY Crazy Woman Creek Bncorp of WY 23.58 23.58 1.28 5.18 5.40 1.28 5.18 0.13 355.84 0.92
CRSB Crusader Holding Corp of PA 10.94 10.94 1.84 32.74 5.10 1.69 30.09 0.96 44.19 0.50
DNFC D&N Financial Corp. of MI 5.44 5.40 0.87 15.81 7.33 0.77 13.97 0.50 113.36 0.83
DCBI Delphos Citizens Bancorp of OH 24.96 24.96 1.58 5.87 5.72 1.58 5.87 0.64 15.93 0.12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AFBC Advance Fin. Bancorp of WV 17.70 108.47 15.29 108.47 18.75 0.32 2.03 35.96
ALBC Albion Banc Corp. of Albion NY 21.67 117.75 10.06 117.75 23.21 0.12 1.23 26.67
ABCL Alliance Bancorp, Inc. of IL 19.72 186.15 15.99 188.27 19.37 0.44 2.05 40.37
ALLB Alliance Bank MHC of PA (19.9) NM 237.96 25.50 237.96 NM 0.36 1.69 58.06
AHCI Ambanc Holding Co., Inc. of NY* 24.29 101.76 11.89 101.76 NM 0.24 1.59 38.71
ASBI Ameriana Bancorp of IN 15.95 133.09 15.49 135.63 18.69 0.64 3.46 55.17
ABCW Anchor Bancorp Wisconsin of WI 18.43 295.54 18.91 300.14 20.67 0.40 0.94 17.39
ANDB Andover Bancorp, Inc. of MA* 15.70 195.46 15.50 195.46 16.08 0.72 2.17 34.12
ASFC Astoria Financial Corp. of NY 15.84 132.38 10.53 187.07 17.23 0.80 1.85 29.30
AVND Avondale Fin. Corp. of IL NM 94.56 7.19 94.56 NM 0.00 0.00 NM
BCSB BCSB Bankcorp MHC of MD (38.6) NM 156.32 25.44 156.32 NM 0.00 0.00 0.00
BKCT Bancorp Connecticut of CT* 14.66 189.81 19.06 189.81 17.03 0.54 3.02 44.26
BPLS Bank Plus Corp. of CA 16.53 107.11 4.71 117.01 14.24 0.00 0.00 0.00
BNKU Bank United Corp. of TX 11.63 185.05 9.22 204.76 12.22 0.64 1.67 19.45
BWFC Bank West Fin. Corp. of MI 29.88 137.18 17.82 137.18 NM 0.24 1.96 58.54
BANC BankAtlantic Bancorp of FL 15.67 193.24 11.90 230.65 NM 0.10 0.87 13.70
BKUNA BankUnited Fin. Corp. of FL 29.53 129.63 5.68 149.51 NM 0.00 0.00 0.00
BVCC Bay View Capital Corp. of CA NM 116.74 8.50 182.40 21.11 0.40 1.79 58.82
FSNJ Bayonne Banchsares of NJ(8) NM 137.70 21.03 137.70 NM 0.25 1.67 52.08
BFSB Bedford Bancshares, Inc. of VA 18.58 151.02 20.08 151.02 18.58 0.32 2.39 44.44
BFFC Big Foot Fin. Corp. of IL NM 103.35 18.89 103.35 NM 0.00 0.00 0.00
BYFC Broadway Fin. Corp. of CA 15.19 69.73 7.06 69.73 22.09 0.19 1.95 29.69
BRKL Brookline Bncp MHC of MA(47.0) 27.13 136.66 45.39 136.66 27.13 0.20 1.57 42.55
CBES CBES Bancorp, Inc. of MO 16.67 110.61 15.74 110.61 20.10 0.48 2.46 41.03
CCFH CCF Holding Company of GA NM 158.55 12.82 158.55 NM 0.64 3.12 NM
CITZ CFS Bancorp, Inc. of IN 27.78 91.91 16.00 91.91 25.00 0.00 0.00 0.00
CFSB CFSB Bancorp of Lansing MI 16.42 281.25 21.72 281.25 18.00 0.52 2.31 37.96
CKFB CKF Bancorp of Danville KY 12.78 109.72 23.42 109.72 16.87 0.54 3.11 39.71
CNSB CNS Bancorp, Inc. of MO 27.31 100.82 24.88 100.82 29.50 0.30 2.03 55.56
CSBF CSB Financial Group Inc of IL NM 78.62 18.19 83.31 NM 0.00 0.00 0.00
CBCI Calumet Bancorp of Chicago IL 9.00 107.26 18.76 107.26 8.97 0.00 0.00 0.00
CAFI Camco Fin. Corp. of OH 14.41 163.62 16.19 174.36 19.10 0.39 2.29 33.05
CMRN Cameron Fin. Corp. of MO 17.25 91.46 19.01 91.46 17.60 0.28 1.62 28.00
CFNC Carolina Fincorp of NC* 18.42 72.93 16.30 72.93 16.08 0.24 2.37 43.64
CASB Cascade Financial Corp. of WA 19.18 196.63 13.74 196.63 20.29 0.00 0.00 0.00
CATB Catskill Fin. Corp. of NY* 18.53 101.94 23.87 101.94 18.75 0.37 2.35 43.53
CAVB Cavalry Bancorp of TN NM 151.17 42.97 151.17 NM 0.20 1.00 32.26
CNIT Cenit Bancorp of Norfolk VA 16.60 210.19 14.46 228.00 17.86 0.40 1.88 31.25
CEBK Central Co-Op. Bank of MA* 13.55 112.18 10.97 123.53 17.50 0.32 1.52 20.65
CENB Century Bancorp, Inc. of NC(8) 12.86 93.48 16.60 93.48 12.86 0.68 4.99 64.15
COFI Charter One Financial of OH 25.00 253.78 18.70 270.40 18.15 0.56 1.96 49.12
CVAL Chester Valley Bancorp of PA 22.03 246.09 21.32 246.09 24.23 0.44 1.40 30.77
CLAS Classic Bancshares, Inc. of KY 21.15 105.10 16.36 122.59 16.84 0.32 1.94 41.03
CBSA Coastal Bancorp of Houston TX 10.71 138.60 5.16 160.71 10.44 0.32 1.58 16.93
CFCP Coastal Fin. Corp. of SC 18.45 338.08 20.38 338.08 22.35 0.28 1.47 27.18
CFKY Columbia Financial of KY NM 100.60 28.45 100.60 NM 0.28 2.07 63.64
CMSB Commonwealth Bancorp Inc of PA 16.75 118.79 10.84 148.62 22.33 0.32 1.91 32.00
CMSV Commty. Svgs, MHC of FL (48.5)(8) 27.67 176.91 19.11 176.91 30.00 0.90 3.16 NM
CFTP Community Fed. Bancorp of MS 27.92 122.53 28.99 122.53 28.88 0.32 1.91 53.33
CFFC Community Fin. Corp. of VA 18.57 130.92 18.16 131.45 18.57 0.28 2.15 40.00
CIBI Community Inv. Bancorp of OH 19.49 158.30 17.39 158.30 19.49 0.24 1.81 35.29
COOP Cooperative Bancshares of NC 20.00 155.93 11.90 155.93 22.06 0.00 0.00 0.00
CRZY Crazy Woman Creek Bncorp of WY 18.52 94.45 22.27 94.45 18.52 0.40 2.73 50.63
CRSB Crusader Holding Corp of PA 19.59 250.87 27.45 250.87 21.32 0.00 0.00 0.00
DNFC D&N Financial Corp. of MI 13.65 200.45 10.91 202.09 15.45 0.20 0.90 12.27
DCBI Delphos Citizens Bancorp of OH 17.47 106.84 26.67 106.84 17.47 0.24 1.48 25.81
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DCOM Dime Community Bancorp of NY* 12.01 10.44 0.83 6.19 4.17 0.78 5.80 0.39 189.26 1.27
DIBK Dime Financial Corp. of CT(8)* 8.11 7.92 1.70 21.03 9.28 1.69 20.89 0.28 406.83 3.15
ESBF ESB Financial Corp of PA 7.20 6.42 0.69 9.08 6.24 0.69 9.08 0.60 83.44 1.34
EGLB Eagle BancGroup of IL 11.47 11.47 0.34 2.87 2.78 0.17 1.43 0.73 75.47 0.82
EBSI Eagle Bancshares of Tucker GA 6.50 6.50 0.78 10.06 5.77 0.78 10.15 1.20 49.97 0.78
ETFS East Texas Fin. Serv. of TX 17.43 17.43 0.60 3.31 3.16 0.54 3.01 0.41 46.61 0.38
ESBK Elmira Svgs Bank (The) of NY* 6.21 6.21 0.44 7.04 5.35 0.47 7.45 0.82 81.26 0.85
EMLD Emerald Financial Corp. of OH 8.26 8.16 1.09 13.91 5.33 1.01 12.83 0.30 86.50 0.32
EFBC Empire Federal Bancorp of MT 36.76 36.76 1.47 4.00 4.91 1.47 4.00 0.01 NA 0.41
EFBI Enterprise Fed. Bancorp of OH 9.96 9.71 0.78 6.96 3.68 0.67 5.95 0.06 333.77 0.30
EQSB Equitable FSB of Wheaton MD 5.18 5.18 0.72 14.02 6.55 0.69 13.56 NA NA NA
FCBF FCB Fin. Corp. of Neenah WI 14.47 14.47 1.24 8.45 5.12 0.92 6.26 0.22 327.68 0.98
FFDF FFD Financial Corp. of OH 22.27 22.27 1.73 7.25 6.51 0.78 3.26 0.08 329.27 0.40
FFLC FFLC Bancorp of Leesburg FL 12.71 12.71 0.98 7.27 5.61 0.92 6.83 0.26 192.43 0.59
FFWC FFW Corporation of Wabash IN 9.58 8.79 1.01 10.46 7.00 0.98 10.12 NA NA NA
FFYF FFY Financial Corp. of OH 13.10 13.10 1.27 9.35 5.61 1.25 9.21 0.51 82.43 0.56
FMCO FMS Financial Corp. of NJ 5.95 5.89 0.90 14.40 6.25 0.90 14.40 0.70 68.77 1.07
FFHH FSF Financial Corp. of MN 10.40 10.40 0.83 7.46 6.42 0.81 7.26 0.20 123.88 0.37
FOBC Fed One Bancorp of Wheeling WV(8) 11.24 10.79 0.86 7.69 3.39 0.86 7.63 0.36 111.72 0.90
FBCI Fidelity Bancorp of Chicago IL 10.79 10.77 0.21 1.99 1.50 0.62 5.92 0.24 45.86 0.14
FSBI Fidelity Bancorp, Inc. of PA 6.84 6.84 0.74 10.90 6.96 0.73 10.74 0.17 330.68 1.05
FFFL Fidelity Bcsh MHC of FL (47.9) 6.70 6.50 0.66 8.52 4.04 0.57 7.32 0.27 78.51 0.34
FFED Fidelity Fed. Bancorp of IN 6.78 6.78 -0.34 -5.64 -4.25 -0.26 -4.29 0.38 613.16 2.77
FFOH Fidelity Financial of OH 12.06 10.68 0.92 7.30 6.11 0.89 7.05 0.26 121.33 0.40
FIBC Financial Bancorp, Inc. of NY(8) 9.04 9.01 0.94 10.24 4.40 0.92 9.99 NA NA NA
FBSI First Bancshares, Inc. of MO 13.43 12.85 1.10 7.89 6.16 1.09 7.80 1.31 23.38 0.36
FBBC First Bell Bancorp of PA 11.22 11.22 1.09 10.37 6.57 1.05 10.01 0.05 191.03 0.13
SKBO First Carnegie MHC of PA(45.0) 16.86 16.86 0.65 4.26 3.17 0.77 5.08 0.59 64.19 0.80
FSTC First Citizens Corp of GA 10.09 8.07 1.91 19.64 7.46 1.73 17.77 1.17 86.37 1.39
FCME First Coastal Corp. of ME* 10.06 10.06 0.85 8.90 7.83 0.75 7.77 0.24 650.60 2.55
FDEF First Defiance Fin.Corp. of OH 17.64 17.64 0.95 4.84 5.23 0.91 4.62 0.29 171.18 0.62
FESX First Essex Bancorp of MA* 7.05 6.21 0.84 11.62 7.16 0.76 10.51 0.45 191.23 1.48
FFSX First FSB MHC Sxld of IA(46.3)(8) 7.21 5.71 0.68 8.31 3.57 0.69 8.38 0.46 102.36 0.64
FFES First Fed of E. Hartford CT 6.92 6.92 0.58 8.73 6.68 0.64 9.66 0.33 84.42 1.30
BDJI First Fed. Bancorp. of MN 10.89 10.89 0.68 6.36 4.97 0.68 6.36 0.18 202.30 0.78
FFBH First Fed. Bancshares of AR 14.77 14.77 0.99 6.58 5.05 0.94 6.22 0.85 20.75 0.23
FTFC First Fed. Capital Corp. of WI 7.17 6.81 1.19 17.61 6.25 0.90 13.38 0.23 212.49 0.75
FFKY First Fed. Fin. Corp. of KY 13.21 12.51 1.63 12.00 6.14 1.59 11.68 0.53 84.57 0.52
FFBZ First Federal Bancorp of OH 7.62 7.61 0.90 11.79 4.83 0.90 11.79 0.54 190.00 1.19
FFCH First Fin. Holdings Inc. of SC 6.36 6.36 0.88 14.03 5.58 0.85 13.65 1.16 56.67 0.80
FFHS First Franklin Corp. of OH 9.24 9.20 0.82 9.01 6.56 0.71 7.80 0.90 49.39 0.69
FGHC First Georgia Hold. Corp of GA 8.09 7.55 1.13 13.67 3.45 1.13 13.67 1.65 37.32 0.71
FFSL First Independence Corp. of KS 9.28 9.28 0.66 6.58 6.45 0.66 6.58 0.56 95.21 0.72
FISB First Indiana Corp. of IN 9.26 9.15 1.15 12.08 6.03 0.87 9.17 1.11 125.92 1.65
FKAN First Kansas Financial of KS 18.69 18.69 0.88 4.71 5.39 0.88 4.71 0.05 327.59 0.43
FKFS First Keystone Fin. Corp of PA 6.67 6.67 0.77 11.25 8.07 0.68 9.96 1.22 36.94 0.87
FLKY First Lancaster Bncshrs of KY 26.64 26.64 1.03 3.44 3.71 1.03 3.44 1.70 18.91 0.36
FLFC First Liberty Fin. Corp. of GA 7.35 6.72 0.77 10.36 3.84 0.80 10.78 0.77 132.28 1.51
CASH First Midwest Fin., Inc. of OH 10.51 9.36 0.73 6.66 5.75 0.66 5.99 1.94 37.96 1.19
FMBD First Mutual Bancorp Inc of IL(8) 14.15 10.96 0.32 2.39 2.16 0.25 1.87 0.33 115.88 0.48
FMSB First Mutual SB of Bellevue WA* 6.79 6.79 1.01 15.06 7.52 0.99 14.77 0.11 989.94 1.26
FNGB First Northern Cap. Corp of WI 11.10 11.10 0.97 8.62 5.62 0.90 8.01 0.12 400.84 0.54
FFPB First Palm Beach Bancorp of FL 6.53 6.39 0.53 8.19 4.52 0.34 5.22 0.51 59.41 0.50
FWWB First Savings Bancorp of WA 13.02 12.06 1.20 8.69 4.98 1.11 8.07 0.43 164.95 1.03
FSFF First SecurityFed Fin of IL 28.92 28.84 1.03 5.32 3.29 1.61 8.33 0.34 170.99 0.94
FSLA First Source Bancorp of NJ 20.55 20.55 1.09 5.31 4.59 1.09 5.31 0.35 159.84 1.04
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DCOM Dime Community Bancorp of NY* 23.96 147.91 17.76 170.12 25.56 0.40 1.74 41.67
DIBK Dime Financial Corp. of CT(8)* 10.78 203.53 16.51 208.49 10.85 0.48 1.51 16.33
ESBF ESB Financial Corp of PA 16.02 137.39 9.89 153.92 16.02 0.36 2.18 34.95
EGLB Eagle BancGroup of IL NM 102.51 11.76 102.51 NM 0.00 0.00 0.00
EBSI Eagle Bancshares of Tucker GA 17.34 167.06 10.86 167.06 17.20 0.64 2.98 51.61
ETFS East Texas Fin. Serv. of TX NM 104.01 18.13 104.01 NM 0.20 1.40 44.44
ESBK Elmira Svgs Bank (The) of NY* 18.71 132.45 8.23 132.45 17.69 0.64 2.46 46.04
EMLD Emerald Financial Corp. of OH 18.75 242.42 20.02 245.40 20.34 0.14 1.17 21.88
EFBC Empire Federal Bancorp of MT 20.38 80.84 29.72 80.84 20.38 0.32 2.42 49.23
EFBI Enterprise Fed. Bancorp of OH 27.18 170.01 16.93 174.35 NM 1.00 3.57 NM
EQSB Equitable FSB of Wheaton MD 15.27 198.94 10.31 198.94 15.78 0.00 0.00 0.00
FCBF FCB Fin. Corp. of Neenah WI 19.54 151.91 21.98 151.91 26.34 0.88 2.98 58.28
FFDF FFD Financial Corp. of OH 15.37 108.55 24.18 108.55 NM 0.30 1.79 27.52
FFLC FFLC Bancorp of Leesburg FL 17.82 129.68 16.48 129.68 18.95 0.36 2.00 35.64
FFWC FFW Corporation of Wabash IN 14.29 137.83 13.21 150.25 14.75 0.42 2.33 33.33
FFYF FFY Financial Corp. of OH 17.82 165.08 21.62 165.08 18.10 0.80 2.30 41.03
FMCO FMS Financial Corp. of NJ 16.00 217.39 12.93 219.38 16.00 0.12 1.00 16.00
FFHH FSF Financial Corp. of MN 15.57 117.57 12.22 117.57 16.01 0.50 2.92 45.45
FOBC Fed One Bancorp of Wheeling WV(8) 29.46 220.80 24.83 230.02 29.69 0.62 1.63 48.06
FBCI Fidelity Bancorp of Chicago IL NM 130.15 14.04 130.36 22.43 0.00 0.00 0.00
FSBI Fidelity Bancorp, Inc. of PA 14.36 145.06 9.92 145.06 14.57 0.36 1.78 25.53
FFFL Fidelity Bcsh MHC of FL (47.9) 24.77 203.69 13.65 209.98 28.80 1.00 3.77 NM
FFED Fidelity Fed. Bancorp of IN NM 137.38 9.31 137.38 NM 0.20 3.40 NM
FFOH Fidelity Financial of OH 16.38 122.42 14.76 138.22 16.96 0.32 2.25 36.78
FIBC Financial Bancorp, Inc. of NY(8) 22.72 224.04 20.26 225.00 23.30 0.50 1.36 30.86
FBSI First Bancshares, Inc. of MO 16.23 123.35 16.56 128.85 16.43 0.12 0.90 14.63
FBBC First Bell Bancorp of PA 15.22 153.11 17.18 153.11 15.77 0.40 2.29 34.78
SKBO First Carnegie MHC of PA(45.0) NM 122.01 20.57 122.01 26.50 0.30 2.26 71.43
FSTC First Citizens Corp of GA 13.41 231.92 23.41 290.07 14.82 0.32 1.08 14.55
FCME First Coastal Corp. of ME* 12.77 108.21 10.89 108.21 14.63 0.00 0.00 0.00
FDEF First Defiance Fin.Corp. of OH 19.14 101.12 17.84 101.12 20.05 0.36 2.85 54.55
FESX First Essex Bancorp of MA* 13.97 157.68 11.11 178.91 15.45 0.56 2.95 41.18
FFSX First FSB MHC Sxld of IA(46.3)(8) 28.02 224.14 16.16 283.10 27.78 0.48 1.48 41.38
FFES First Fed of E. Hartford CT 14.98 124.05 8.58 124.05 13.54 0.68 2.19 32.85
BDJI First Fed. Bancorp. of MN 20.13 125.51 13.67 125.51 20.13 0.00 0.00 0.00
FFBH First Fed. Bancshares of AR 19.82 127.24 18.79 127.24 20.95 0.28 1.27 25.23
FTFC First Fed. Capital Corp. of WI 16.00 261.44 18.75 275.39 21.05 0.28 1.75 28.00
FFKY First Fed. Fin. Corp. of KY 16.28 189.95 25.09 200.57 16.72 0.60 2.42 39.47
FFBZ First Federal Bancorp of OH 20.69 234.38 17.87 234.83 20.69 0.14 1.17 24.14
FFCH First Fin. Holdings Inc. of SC 17.91 229.30 14.58 229.30 18.41 0.42 2.11 37.84
FFHS First Franklin Corp. of OH 15.24 132.89 12.28 133.44 17.58 0.30 1.88 28.57
FGHC First Georgia Hold. Corp of GA 28.95 NM 30.08 NM 28.95 0.00 0.00 0.00
FFSL First Independence Corp. of KS 15.51 101.49 9.42 101.49 15.51 0.30 2.45 37.97
FISB First Indiana Corp. of IN 16.58 191.17 17.70 193.38 21.85 0.48 2.05 34.04
FKAN First Kansas Financial of KS 18.54 87.34 16.32 87.34 18.54 0.00 0.00 0.00
FKFS First Keystone Fin. Corp of PA 12.39 131.58 8.77 131.58 14.00 0.20 1.43 17.70
FLKY First Lancaster Bncshrs of KY 26.96 92.22 24.57 92.22 26.96 0.60 4.36 NM
FLFC First Liberty Fin. Corp. of GA 26.01 258.39 18.99 282.67 25.00 0.30 1.56 40.54
CASH First Midwest Fin., Inc. of OH 17.39 117.15 12.32 131.57 19.32 0.48 2.51 43.64
FMBD First Mutual Bancorp Inc of IL(8) NM 109.53 15.50 141.45 NM 0.32 1.87 NM
FMSB First Mutual SB of Bellevue WA* 13.29 189.61 12.88 189.61 13.55 0.20 1.46 19.42
FNGB First Northern Cap. Corp of WI 17.79 148.94 16.53 148.94 19.14 0.36 2.85 50.70
FFPB First Palm Beach Bancorp of FL 22.14 173.89 11.36 177.71 NM 0.70 1.77 39.11
FWWB First Savings Bancorp of WA 20.09 175.23 22.81 189.08 21.63 0.36 1.60 32.14
FSFF First SecurityFed Fin of IL NM 95.96 27.75 96.22 19.44 0.00 0.00 0.00
FSLA First Source Bancorp of NJ 21.80 115.80 23.80 115.80 21.80 0.18 2.01 43.90
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SOPN First Svgs Bancorp of NC 23.04 23.04 1.78 7.65 5.83 1.78 7.65 0.18 109.36 0.29
FBNW FirstBank Corp of Clarkston WA 16.36 16.36 1.03 7.72 4.85 0.62 4.67 0.39 160.81 0.78
FFDB FirstFed Bancorp, Inc. of AL 9.71 8.95 0.93 9.56 5.67 0.93 9.56 1.41 41.95 0.90
FSPT FirstSpartan Fin. Corp. of SC 26.29 26.29 1.33 6.93 4.31 1.32 6.88 0.38 111.34 0.51
FLAG Flag Financial Corp of GA 8.89 8.89 0.88 9.49 2.79 0.61 6.57 1.33 65.46 1.22
FLGS Flagstar Bancorp, Inc of MI 5.21 5.04 1.30 21.55 6.84 1.30 21.55 2.26 20.60 0.53
FFIC Flushing Fin. Corp. of NY* 12.72 12.23 0.93 6.62 4.90 0.93 6.62 0.31 198.69 1.00
FBHC Fort Bend Holding Corp. of TX(8) 6.76 6.36 0.65 10.16 5.35 0.46 7.23 0.41 123.80 0.90
FTSB Fort Thomas Fin. Corp. of KY 15.77 15.77 1.23 7.71 6.02 1.23 7.71 1.93 30.61 0.65
FKKY Frankfort First Bancorp of KY 16.95 16.95 0.25 1.31 1.37 0.80 4.26 NA NA 0.08
FTNB Fulton Bancorp, Inc. of MO 23.37 23.37 1.22 5.01 4.17 0.95 3.88 0.70 126.01 1.06
GUPB GFSB Bancorp, Inc of Gallup NM 12.34 12.34 0.91 6.67 5.69 0.91 6.67 0.37 86.67 0.54
GSLA GS Financial Corp. of LA 41.63 41.63 1.43 3.76 4.26 1.28 3.37 0.12 260.11 0.74
GOSB GSB Financial Corp. of NY* 28.14 28.14 0.73 3.54 2.89 0.69 3.36 0.09 NA NA
GBNK Gaston Fed Bncp MHC of NC(47.0 22.48 22.48 1.13 5.02 3.44 1.13 5.02 0.50 132.06 0.96
GFCO Glenway Financial Corp. of OH 9.57 9.49 0.86 9.12 5.10 0.87 9.20 0.19 184.71 0.41
GTPS Great American Bancorp of IL 18.33 18.33 0.66 3.24 3.05 0.66 3.24 0.08 484.87 0.47
PEDE Great Pee Dee Bancorp of SC 45.12 45.12 1.05 2.33 2.87 1.05 2.33 0.73 65.48 0.59
GSFC Green Street Fin. Corp. of NC 35.78 35.78 1.59 4.46 5.11 1.59 4.46 0.07 216.10 0.19
GFED Guaranty Fed Bancshares of MO 28.34 28.34 1.12 5.49 3.09 1.09 5.34 0.35 241.97 1.05
HCBB HCB Bancshares of Camden AR 17.25 17.04 0.33 1.99 1.92 0.33 1.99 0.44 150.91 1.38
HEMT HF Bancorp of Hemet CA 7.86 6.67 -0.04 -0.54 -0.47 0.13 1.62 NA NA NA
HFFC HF Financial Corp. of SD 9.72 9.72 1.09 11.48 7.25 1.01 10.67 0.53 239.17 1.62
HFNC HFNC Financial Corp. of NC(8) 17.24 17.24 1.34 7.36 5.96 0.92 5.05 0.53 131.75 0.86
HMNF HMN Financial, Inc. of MN 11.61 10.79 0.92 6.94 6.95 0.65 4.91 0.09 449.77 0.61
HALL Hallmark Capital Corp. of WI 7.68 7.68 0.67 9.13 7.17 0.64 8.65 0.33 163.10 0.82
HRBF Harbor Federal Bancorp of MD 12.69 12.69 0.75 5.86 4.93 0.72 5.60 0.32 65.53 0.33
HARB Harbor Florida Bancshrs of FL 19.82 19.60 1.25 11.35 4.09 1.20 10.87 0.43 208.24 1.27
HFSA Hardin Bancorp of Hardin MO 11.13 11.13 0.77 6.54 6.16 0.66 5.62 0.14 145.30 0.40
HARL Harleysville SB of PA 6.67 6.67 1.01 15.25 6.88 1.01 15.25 NA NA 0.79
HFGI Harrington Fin. Group of IN 4.42 4.42 -0.02 -0.40 -0.31 0.05 1.06 0.18 40.45 0.22
HARS Harris Fin. MHC of PA (24.9) 8.13 7.30 0.88 10.96 3.10 0.72 8.96 0.66 60.54 0.97
HFFB Harrodsburg 1st Fin Bcrp of KY 26.46 26.46 1.36 5.11 5.13 1.36 5.11 0.55 66.83 0.48
HHFC Harvest Home Fin. Corp. of OH 11.35 11.35 0.62 5.35 4.27 0.62 5.35 0.09 144.19 0.25
HAVN Haven Bancorp of Woodhaven NY 5.65 5.64 0.53 9.13 5.21 0.53 9.05 0.45 132.08 0.97
HTHR Hawthorne Fin. Corp. of CA 4.25 4.25 0.97 21.94 16.72 1.14 25.78 6.67 18.16 1.31
HMLK Hemlock Fed. Fin. Corp. of IL 16.19 16.19 1.00 5.57 5.23 1.00 5.57 0.06 625.00 0.84
HBSC Heritage Bancorp, Inc of SC 28.79 28.79 1.16 4.02 4.46 1.16 4.02 0.44 57.25 0.38
HFWA Heritage Financial Corp of WA 28.80 28.80 1.11 5.92 3.05 0.57 3.04 0.12 761.93 1.28
HCBC High Country Bancorp of CO 19.56 19.56 0.84 5.87 4.33 0.84 5.87 0.45 167.06 0.94
HBNK Highland Bancorp of CA 7.84 7.84 1.30 17.04 7.07 1.13 14.86 1.84 88.38 2.06
HIFS Hingham Inst. for Sav. of MA* 9.48 9.48 1.25 13.13 7.85 1.25 13.13 0.17 396.87 0.90
HBEI Home Bancorp of Elgin IL(8) 25.92 25.92 0.70 2.57 2.48 0.70 2.57 0.28 107.27 0.35
HBFW Home Bancorp of Fort Wayne IN 12.04 12.04 0.86 6.70 4.37 0.84 6.54 0.10 402.90 0.43
HCFC Home City Fin. Corp. of OH 18.58 18.58 1.29 6.57 6.97 1.29 6.57 0.59 97.81 0.63
HOMF Home Fed Bancorp of Seymour IN 9.20 8.95 1.44 16.54 7.68 1.17 13.38 0.59 100.21 0.71
HWEN Home Financial Bancorp of IN 17.99 17.99 0.94 5.32 5.09 0.74 4.18 1.10 68.52 0.93
HLFC Home Loan Financial Corp of OH 38.94 38.94 1.30 5.70 2.49 1.30 5.70 0.29 92.92 0.39
HPBC Home Port Bancorp, Inc. of MA* 9.78 9.78 1.47 14.04 6.72 1.63 15.59 0.26 453.64 1.38
HSTD Homestead Bancorp, Inc. of LA 21.66 21.66 0.75 3.46 4.27 0.75 3.46 0.27 119.47 0.69
HFBC HopFed Bancorp of KY 25.98 25.98 1.12 10.32 3.71 1.12 10.32 0.11 107.86 0.23
HZFS Horizon Fin'l. Services of IA 9.11 9.11 0.91 9.24 6.00 0.70 7.08 0.92 45.20 0.69
HRZB Horizon Financial Corp. of WA* 15.33 15.33 1.56 10.02 7.46 1.54 9.93 0.02 NA 0.88
HRBT Hudson River Bancorp Inc of NY 26.74 26.74 0.90 3.36 3.42 1.03 3.85 1.66 58.37 1.87
ITLA ITLA Capital Corp of CA* 10.18 10.15 1.43 13.50 8.72 1.43 13.50 1.07 139.44 1.75
ICBC Independence Comm Bnk Cp of NY 18.17 17.11 0.42 2.32 2.20 0.47 2.56 0.60 135.71 1.34
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SOPN First Svgs Bancorp of NC 17.14 128.96 29.71 128.96 17.14 1.00 4.17 71.43
FBNW FirstBank Corp of Clarkston WA 20.64 117.32 19.19 117.32 NM 0.32 1.80 37.21
FFDB FirstFed Bancorp, Inc. of AL 17.65 165.75 16.09 179.91 17.65 0.28 2.33 41.18
FSPT FirstSpartan Fin. Corp. of SC 23.18 117.71 30.95 117.71 23.33 0.60 1.64 37.97
FLAG Flag Financial Corp of GA NM 328.64 29.22 328.64 NM 0.24 1.71 61.54
FLGS Flagstar Bancorp, Inc of MI 14.62 273.80 14.26 282.77 14.62 0.28 1.05 15.30
FFIC Flushing Fin. Corp. of NY* 20.39 132.40 16.84 137.66 20.39 0.36 1.55 31.58
FBHC Fort Bend Holding Corp. of TX(8) 18.69 176.15 11.91 187.11 26.27 0.40 1.93 36.04
FTSB Fort Thomas Fin. Corp. of KY 16.62 125.39 19.77 125.39 16.62 0.25 1.83 30.49
FKKY Frankfort First Bancorp of KY NM 104.30 17.68 104.30 22.40 0.80 5.49 NM
FTNB Fulton Bancorp, Inc. of MO 24.00 119.52 27.93 119.52 NM 0.24 1.33 32.00
GUPB GFSB Bancorp, Inc of Gallup NM 17.57 114.33 14.11 114.33 17.57 0.30 2.16 37.97
GSLA GS Financial Corp. of LA 23.47 81.14 33.78 81.14 26.24 0.28 2.09 49.12
GOSB GSB Financial Corp. of NY* NM 90.73 25.53 90.73 NM 0.12 0.89 30.77
GBNK Gaston Fed Bncp MHC of NC(47.0 29.07 146.03 32.83 146.03 29.07 0.20 1.60 46.51
GFCO Glenway Financial Corp. of OH 19.59 172.62 16.52 174.14 19.42 0.44 2.02 39.64
GTPS Great American Bancorp of IL NM 112.56 20.63 112.56 NM 0.44 2.32 NM
PEDE Great Pee Dee Bancorp of SC NM 81.04 36.57 81.04 NM 0.36 3.13 NM
GSFC Green Street Fin. Corp. of NC 19.57 86.59 30.98 86.59 19.57 0.48 3.56 69.57
GFED Guaranty Fed Bancshares of MO NM 112.67 31.93 112.67 NM 0.00 0.00 0.00
HCBB HCB Bancshares of Camden AR NM 89.97 15.51 91.04 NM 0.20 1.54 NM
HEMT HF Bancorp of Hemet CA NM 114.07 8.96 134.41 NM 0.00 0.00 NM
HFFC HF Financial Corp. of SD 13.79 154.04 14.98 154.04 14.84 0.00 0.00 0.00
HFNC HFNC Financial Corp. of NC(8) 16.79 119.65 20.62 119.65 24.48 0.32 2.72 45.71
HMNF HMN Financial, Inc. of MN 14.39 97.44 11.31 104.81 20.33 0.24 1.57 22.64
HALL Hallmark Capital Corp. of WI 13.95 120.24 9.24 120.24 14.72 0.00 0.00 0.00
HRBF Harbor Federal Bancorp of MD 20.28 115.95 14.71 115.95 21.22 0.47 2.58 52.22
HARB Harbor Florida Bancshrs of FL 24.47 138.89 27.53 140.42 25.56 0.26 2.26 55.32
HFSA Hardin Bancorp of Hardin MO 16.24 105.21 11.71 105.21 18.89 0.56 3.22 52.34
HARL Harleysville SB of PA 14.54 206.77 13.78 206.77 14.54 0.00 0.00 0.00
HFGI Harrington Fin. Group of IN NM 129.72 5.74 129.72 NM 0.12 1.24 NM
HARS Harris Fin. MHC of PA (24.9) NM 328.10 26.67 NM NM 0.22 1.24 40.00
HFFB Harrodsburg 1st Fin Bcrp of KY 19.48 100.54 26.61 100.54 19.48 0.40 2.67 51.95
HHFC Harvest Home Fin. Corp. of OH 23.41 125.75 14.27 125.75 23.41 0.44 2.98 69.84
HAVN Haven Bancorp of Woodhaven NY 19.20 166.80 9.43 167.19 19.37 0.30 1.40 26.79
HTHR Hawthorne Fin. Corp. of CA 5.98 119.22 5.07 119.22 5.09 0.00 0.00 0.00
HMLK Hemlock Fed. Fin. Corp. of IL 19.11 105.65 17.11 105.65 19.11 0.32 1.92 36.78
HBSC Heritage Bancorp, Inc of SC 22.44 90.16 25.95 90.16 22.44 0.30 1.71 38.46
HFWA Heritage Financial Corp of WA NM 127.28 36.66 127.28 NM 0.16 1.32 43.24
HCBC High Country Bancorp of CO 23.11 89.81 17.57 89.81 23.11 0.00 0.00 0.00
HBNK Highland Bancorp of CA 14.14 219.13 17.18 219.13 16.21 0.50 1.22 17.24
HIFS Hingham Inst. for Sav. of MA* 12.74 158.85 15.05 158.85 12.74 0.56 2.09 26.67
HBEI Home Bancorp of Elgin IL(8) NM 103.94 26.94 103.94 NM 0.40 2.76 NM
HBFW Home Bancorp of Fort Wayne IN 22.90 158.26 19.05 158.26 23.47 0.32 1.12 25.60
HCFC Home City Fin. Corp. of OH 14.34 93.30 17.34 93.30 14.34 0.36 2.46 35.29
HOMF Home Fed Bancorp of Seymour IN 13.02 200.08 18.40 205.62 16.08 0.40 1.58 20.62
HWEN Home Financial Bancorp of IN 19.64 102.74 18.48 102.74 25.00 0.10 1.21 23.81
HLFC Home Loan Financial Corp of OH NM 107.67 41.93 107.67 NM 0.00 0.00 0.00
HPBC Home Port Bancorp, Inc. of MA* 14.88 202.42 19.79 202.42 13.40 0.80 3.30 49.08
HSTD Homestead Bancorp, Inc. of LA 23.44 81.15 17.58 81.15 23.44 0.80 9.48 NM
HFBC HopFed Bancorp of KY 26.92 122.72 31.88 122.72 26.92 0.00 0.00 0.00
HZFS Horizon Fin'l. Services of IA 16.67 156.25 14.24 156.25 21.74 0.18 1.20 20.00
HRZB Horizon Financial Corp. of WA* 13.41 131.70 20.19 131.70 13.53 0.44 2.98 40.00
HRBT Hudson River Bancorp Inc of NY 29.27 98.36 26.30 98.36 25.53 0.00 0.00 0.00
ITLA ITLA Capital Corp of CA* 11.47 145.85 14.85 146.29 11.47 0.00 0.00 0.00
ICBC Independence Comm Bnk Cp of NY NM 105.69 19.21 112.26 NM 0.00 0.00 0.00
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IFSB Independence FSB of DC 7.21 6.53 0.51 7.05 6.65 0.21 2.91 NA NA 0.42
INBI Industrial Bancorp of OH 16.48 16.48 1.49 8.59 5.42 1.49 8.59 0.30 159.91 0.54
IWBK Interwest Bancorp of WA 6.76 6.65 1.04 15.60 5.16 0.88 13.18 0.67 80.89 0.88
IPSW Ipswich SB of Ipswich MA* 5.28 5.28 1.24 22.32 7.85 0.94 16.84 0.80 92.60 0.94
JXVL Jacksonville Bancorp of TX 14.73 14.73 1.46 9.84 8.11 1.46 9.84 NA NA NA
JXSB Jcksnville SB,MHC of IL (45.6) 10.38 10.38 0.59 5.64 3.04 0.38 3.65 0.68 65.11 0.59
JSBA Jefferson Svgs Bancorp of MO 9.56 7.67 0.78 8.70 4.84 0.69 7.72 0.74 72.40 0.73
KSBK KSB Bancorp of Kingfield ME* 7.78 6.77 0.98 12.55 7.27 0.98 12.55 1.74 52.91 1.14
KFBI Klamath First Bancorp of OR 15.01 13.78 0.98 5.90 4.91 0.98 5.90 0.05 356.52 0.26
LSBI LSB Fin. Corp. of Lafayette IN 8.42 8.42 0.82 9.44 5.58 0.74 8.46 1.20 58.59 0.80
LVSB Lakeview Financial of NJ 9.73 6.64 1.69 16.30 8.28 0.84 8.15 0.96 70.27 1.47
LARK Landmark Bancshares, Inc of KS 14.11 14.11 1.09 7.70 7.30 0.95 6.69 0.25 196.35 0.66
LARL Laurel Capital Group of PA 10.63 10.63 1.43 13.68 6.90 1.40 13.48 0.32 263.07 1.20
LSBX Lawrence Savings Bank of MA* 11.14 11.14 2.46 25.31 15.25 2.42 24.94 0.24 389.46 1.74
LFED Leeds Fed Bksr MHC of MD (36.3 16.50 16.50 1.18 7.20 3.77 1.18 7.20 0.03 560.82 0.29
LXMO Lexington B&L Fin. Corp. of MO 18.02 16.91 0.95 4.20 4.60 0.95 4.20 0.48 130.50 0.95
LIBB Liberty Bancorp MHC of NJ (47) 13.45 13.45 1.12 8.31 6.73 1.12 8.31 0.35 82.98 0.45
LFCO Life Financial Corp of CA(8) 15.12 15.12 4.90 32.78 23.35 5.10 34.14 2.02 18.00 0.47
LFBI Little Falls Bancorp of NJ 10.20 9.42 0.58 4.85 4.69 0.55 4.66 0.33 108.65 0.82
LOGN Logansport Fin. Corp. of IN 18.86 18.86 1.49 7.78 6.78 1.52 7.94 0.26 103.45 0.36
LISB Long Island Bancorp, Inc of NY(8) 8.95 8.88 0.87 9.64 4.47 0.70 7.77 0.86 61.26 0.91
MAFB MAF Bancorp, Inc. of IL 7.74 6.87 1.12 14.46 8.00 1.09 14.03 0.54 81.33 0.55
MBLF MBLA Financial Corp. of MO 13.50 13.50 0.88 6.81 8.00 0.87 6.76 0.55 59.37 0.50
MECH MECH Financial Inc of CT* 9.59 9.59 1.54 15.45 8.89 1.54 15.45 0.46 296.39 2.14
MFBC MFB Corp. of Mishawaka IN 11.77 11.77 0.84 6.44 5.71 0.82 6.30 0.11 131.25 0.18
MSBF MSB Financial, Inc of MI 16.70 16.70 1.55 9.26 6.14 1.38 8.22 0.79 62.16 0.53
MARN Marion Capital Holdings of IN 20.55 20.12 1.34 6.15 6.29 1.34 6.15 1.02 105.99 1.25
MRKF Market Fin. Corp. of OH 35.28 35.28 1.13 3.21 3.69 1.13 3.21 0.39 24.64 0.16
MFSL Maryland Fed. Bancorp of MD(8) 8.76 8.68 0.62 7.11 2.93 0.88 10.01 0.65 61.91 0.49
MASB MassBank Corp. of Reading MA* 11.52 11.36 1.15 10.58 6.51 1.04 9.57 0.20 131.93 0.84
MFLR Mayflower Co-Op. Bank of MA* 9.56 9.42 1.15 12.01 7.50 1.04 10.78 0.59 144.01 1.49
MDBK Medford Bancorp, Inc. of MA* 9.24 8.75 1.08 11.95 6.88 1.01 11.28 0.18 338.34 1.19
MWBX MetroWest Bank of MA* 7.21 7.21 1.30 17.65 7.71 1.27 17.32 0.64 236.24 2.16
METF Metropolitan Fin. Corp. of OH 3.86 3.57 0.74 18.94 6.82 0.66 16.70 1.45 42.45 0.77
MIFC Mid Iowa Financial Corp. of IA(8) 8.85 8.84 1.16 12.57 6.40 1.26 13.71 0.14 161.66 0.44
MCBN Mid-Coast Bancorp of ME 8.47 8.47 0.78 9.17 7.44 0.72 8.48 0.69 79.42 0.70
MWBI Midwest Bancshares, Inc. of IA 6.89 6.89 0.89 12.79 9.33 0.78 11.17 0.66 43.79 0.48
MFFC Milton Fed. Fin. Corp. of OH 11.35 11.35 0.68 5.39 4.67 0.61 4.79 0.41 67.74 0.40
MBSP Mitchell Bancorp, Inc. of NC(8) 39.32 39.32 1.44 3.47 3.15 1.44 3.47 1.54 34.72 0.72
MBBC Monterey Bay Bancorp of CA 11.68 10.92 0.42 3.68 2.75 0.39 3.43 0.55 112.07 1.08
MONT Montgomery Fin. Corp. of IN 18.25 18.25 0.80 4.71 4.85 0.80 4.71 1.06 15.75 0.19
MSBK Mutual SB, FSB of Bay City MI 5.07 5.07 -1.31 -22.89 -21.59 -0.46 -8.09 0.09 312.66 0.54
MYST Mystic Financial of MA* 19.06 19.06 0.73 5.82 3.82 0.67 5.38 0.08 824.00 0.90
NHTB NH Thrift Bancshares of NH 8.09 7.03 0.90 11.49 8.77 0.83 10.56 1.00 95.48 1.21
NSLB NS&L Bancorp, Inc of Neosho MO 18.78 18.65 0.68 3.49 3.39 0.68 3.49 0.19 41.67 0.14
NSSY NSS Bancorp of CT(8)* 8.12 7.90 1.00 12.36 5.81 1.14 14.02 NA NA 1.27
NMSB Newmil Bancorp, Inc. of CT* 8.90 8.90 0.84 8.77 6.17 0.84 8.77 0.46 297.15 2.98
NBCP Niagara Bancorp of NY MHC(45.4* 19.08 19.08 1.10 5.78 4.22 1.06 5.54 0.29 188.17 1.07
NBSI North Bancshares of Chicago IL 11.46 11.46 0.46 3.43 3.59 0.44 3.28 NA NA 0.27
FFFD North Central Bancshares of IA 15.42 13.42 1.14 7.37 6.63 1.14 7.37 0.12 662.09 1.03
NEIB Northeast Indiana Bncrp of IN 13.34 13.34 1.19 8.35 6.44 1.19 8.35 0.41 159.71 0.73
NWSB Northwest Bcrp MHC of PA (30.8 8.85 7.91 0.95 10.14 3.45 0.95 10.14 0.50 123.26 0.82
NWEQ Northwest Equity Corp. of WI 11.66 11.66 1.15 9.96 7.80 1.08 9.30 1.73 28.33 0.60
NTMG Nutmeg FS&LA of CT 5.83 5.83 0.51 8.77 4.46 0.36 6.13 NA NA 0.53
OHSL OHSL Financial Corp. of OH 10.54 10.54 0.86 7.94 5.29 0.80 7.36 0.16 134.65 0.32
OCFC Ocean Fin. Corp. of NJ 14.22 14.22 0.95 6.13 5.31 0.95 6.13 0.40 114.22 0.80
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
IFSB Independence FSB of DC 15.03 105.95 7.64 117.08 NM 0.25 1.53 22.94
INBI Industrial Bancorp of OH 18.46 157.69 25.99 157.69 18.46 0.60 3.10 57.14
IWBK Interwest Bancorp of WA 19.38 277.16 18.73 281.53 22.94 0.53 2.12 41.09
IPSW Ipswich SB of Ipswich MA* 12.74 257.14 13.58 257.14 16.88 0.16 1.19 15.09
JXVL Jacksonville Bancorp of TX 12.32 118.79 17.50 118.79 12.32 0.50 2.92 35.97
JXSB Jcksnville SB,MHC of IL (45.6) NM 181.47 18.84 181.47 NM 0.30 1.79 58.82
JSBA Jefferson Svgs Bancorp of MO 20.66 171.03 16.36 213.16 23.28 0.28 1.38 28.57
KSBK KSB Bancorp of Kingfield ME* 13.75 172.59 13.43 198.56 13.75 0.10 0.61 8.33
KFBI Klamath First Bancorp of OR 20.35 116.28 17.46 126.72 20.35 0.36 2.06 41.86
LSBI LSB Fin. Corp. of Lafayette IN 17.92 162.64 13.69 162.64 20.00 0.40 1.29 23.12
LVSB Lakeview Financial of NJ 12.07 175.47 17.07 257.26 24.15 0.25 1.18 14.20
LARK Landmark Bancshares, Inc of KS 13.70 104.70 14.78 104.70 15.76 0.00 0.00 0.00
LARL Laurel Capital Group of PA 14.49 190.11 20.21 190.11 14.71 0.60 3.00 43.48
LSBX Lawrence Savings Bank of MA* 6.56 144.97 16.15 144.97 6.66 0.00 0.00 0.00
LFED Leeds Fed Bksr MHC of MD (36.3 26.52 183.82 30.33 183.82 26.52 0.56 3.20 NM
LXMO Lexington B&L Fin. Corp. of MO 21.74 88.86 16.01 94.70 21.74 0.30 2.00 43.48
LIBB Liberty Bancorp MHC of NJ (47) 14.86 123.49 16.61 123.49 14.86 0.00 0.00 0.00
LFCO Life Financial Corp of CA(8) 4.28 103.58 15.66 103.58 4.11 0.00 0.00 0.00
LFBI Little Falls Bancorp of NJ 21.33 109.36 11.15 118.43 22.22 0.24 1.50 32.00
LOGN Logansport Fin. Corp. of IN 14.75 110.90 20.92 110.90 14.46 0.44 2.98 44.00
LISB Long Island Bancorp, Inc of NY(8) 22.38 208.32 18.65 210.13 27.75 0.80 1.65 36.87
MAFB MAF Bancorp, Inc. of IL 12.50 174.42 13.50 196.63 12.88 0.28 1.33 16.67
MBLF MBLA Financial Corp. of MO 12.50 86.01 11.61 86.01 12.58 0.60 3.12 38.96
MECH MECH Financial Inc of CT* 11.24 163.36 15.67 163.36 11.24 0.00 0.00 0.00
MFBC MFB Corp. of Mishawaka IN 17.52 111.52 13.13 111.52 17.91 0.34 1.42 24.82
MSBF MSB Financial, Inc of MI 16.29 146.32 24.43 146.32 18.35 0.30 2.07 33.71
MARN Marion Capital Holdings of IN 15.91 97.98 20.13 100.09 15.91 0.88 3.87 61.54
MRKF Market Fin. Corp. of OH 27.08 85.25 30.07 85.25 27.08 0.28 2.15 58.33
MFSL Maryland Fed. Bancorp of MD(8) NM 242.67 21.26 244.98 24.25 0.45 1.17 39.82
MASB MassBank Corp. of Reading MA* 15.36 151.01 17.40 153.11 16.98 0.00 0.00 0.00
MFLR Mayflower Co-Op. Bank of MA* 13.33 153.68 14.70 155.95 14.85 0.80 3.62 48.19
MDBK Medford Bancorp, Inc. of MA* 14.53 165.73 15.31 175.00 15.40 0.80 2.08 30.19
MWBX MetroWest Bank of MA* 12.96 214.07 15.43 214.07 13.21 0.20 2.86 37.04
METF Metropolitan Fin. Corp. of OH 14.66 251.48 9.71 272.06 16.62 0.00 0.00 0.00
MIFC Mid Iowa Financial Corp. of IA(8) 15.63 183.33 16.22 183.58 14.32 0.08 0.58 9.09
MCBN Mid-Coast Bancorp of ME 13.43 120.16 10.18 120.16 14.52 0.20 2.22 29.85
MWBI Midwest Bancshares, Inc. of IA 10.71 129.81 8.94 129.81 12.27 0.32 2.37 25.40
MFFC Milton Fed. Fin. Corp. of OH 21.43 117.39 13.32 117.39 24.11 0.60 4.44 NM
MBSP Mitchell Bancorp, Inc. of NC(8) NM 109.81 43.18 109.81 NM 0.40 2.34 74.07
MBBC Monterey Bay Bancorp of CA NM 133.33 15.57 142.60 NM 0.12 0.75 27.27
MONT Montgomery Fin. Corp. of IN 20.62 85.56 15.62 85.56 20.62 0.22 2.13 44.00
MSBK Mutual SB, FSB of Bay City MI NM 119.97 6.08 119.97 NM 0.00 0.00 NM
MYST Mystic Financial of MA* 26.21 103.26 19.68 103.26 28.40 0.20 1.47 38.46
NHTB NH Thrift Bancshares of NH 11.40 125.20 10.13 144.05 12.40 0.60 3.87 44.12
NSLB NS&L Bancorp, Inc of Neosho MO 29.46 103.82 19.50 104.57 29.46 0.50 2.88 NM
NSSY NSS Bancorp of CT(8)* 17.20 212.53 17.25 218.37 15.16 0.52 1.07 18.44
NMSB Newmil Bancorp, Inc. of CT* 16.22 139.53 12.42 139.53 16.22 0.00 0.00 0.00
NBCP Niagara Bancorp of NY MHC(45.4* 23.71 136.94 26.12 136.94 24.74 0.00 0.00 0.00
NBSI North Bancshares of Chicago IL 27.84 114.17 13.08 114.17 29.17 0.40 3.27 NM
FFFD North Central Bancshares of IA 15.08 111.14 17.14 127.71 15.08 0.32 1.75 26.45
NEIB Northeast Indiana Bncrp of IN 15.54 130.43 17.41 130.43 15.54 0.34 1.61 25.00
NWSB Northwest Bcrp MHC of PA (30.8 28.98 280.22 24.79 313.27 28.98 0.16 1.25 36.36
NWEQ Northwest Equity Corp. of WI 12.82 124.93 14.57 124.93 13.73 0.00 0.00 0.00
NTMG Nutmeg FS&LA of CT 22.42 196.69 11.47 196.69 NM 0.20 1.68 37.74
OHSL OHSL Financial Corp. of OH 18.90 146.09 15.40 146.09 20.39 0.50 3.23 60.98
OCFC Ocean Fin. Corp. of NJ 18.82 121.87 17.33 121.87 18.82 0.48 2.83 53.33
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OTFC Oregon Trail Fin. Corp. of OR 25.56 25.56 1.20 7.06 4.79 1.20 7.06 0.18 206.22 0.57
OFCP Ottawa Financial Corp. of MI 8.45 6.93 0.87 10.07 5.55 0.81 9.32 0.50 79.48 0.46
PFFB PFF Bancorp of Pomona CA 9.04 8.95 0.60 6.07 5.66 0.56 5.70 1.06 79.87 1.36
PSFI PS Financial of Chicago IL 27.82 27.82 1.09 3.18 3.71 1.85 5.37 0.41 50.85 0.37
PSBI PSB Bancorp Inc. of PA* 19.81 19.81 0.78 3.93 4.77 0.78 3.93 NA NA 0.46
PVFC PVF Capital Corp. of OH 7.20 7.20 1.33 18.67 8.19 1.26 17.66 0.69 95.38 0.74
PBCI Pamrapo Bancorp, Inc. of NJ 12.82 12.75 1.32 10.26 6.18 1.27 9.91 1.66 35.55 1.03
PFED Park Bancorp of Chicago IL 19.91 19.91 0.90 4.12 3.73 0.95 4.37 0.07 390.63 0.67
PVSA Parkvale Financial Corp of PA 7.82 7.78 1.08 13.97 6.54 1.08 13.97 0.43 279.67 1.56
PBHC Pathfinder BC MHC of NY (45.2)* 11.76 9.97 0.91 7.74 4.13 0.73 6.24 1.30 32.06 0.63
PEEK Peekskill Fin. Corp. of NY 22.98 22.98 1.03 4.11 4.19 1.05 4.17 0.79 43.03 1.41
PFSB PennFed Fin. Services of NJ 7.19 6.24 0.80 11.08 8.17 0.78 10.80 0.44 40.82 0.25
PWBK Pennwood Bancorp, Inc. of PA 18.34 18.34 0.77 4.22 4.31 0.92 5.01 1.44 58.95 1.15
PBKB People's Bancshares of MA* 3.67 3.54 0.76 16.97 8.48 0.33 7.47 0.35 149.48 0.88
TSBS Peoples Bancorp Inc of NJ* 24.24 25.07 1.03 4.24 4.55 1.03 4.24 0.60 76.21 0.90
PFDC Peoples Bancorp of Auburn IN 15.08 15.08 1.50 9.86 6.19 1.50 9.86 0.18 172.98 0.36
PBCT Peoples Bank, MHC of CT (41.2)* 9.23 7.91 1.18 13.45 5.52 0.63 7.22 0.70 156.79 1.72
PFFC Peoples Fin. Corp. of OH 19.14 19.14 1.30 6.83 6.58 0.49 2.59 0.15 151.61 0.30
PHBK Peoples Heritage Fin Grp of ME* 6.71 5.10 1.22 16.57 4.52 1.22 16.57 NA NA 1.25
PSFC Peoples Sidney Fin. Corp of OH 25.15 25.15 1.24 5.56 3.62 1.24 5.56 1.10 35.55 0.44
PERM Permanent Bancorp, Inc. of IN 9.72 9.62 0.61 6.46 4.74 0.60 6.26 0.18 223.89 0.75
PCBC Perry Co. Fin. Corp. of MO 18.94 18.94 1.03 5.46 5.20 1.02 5.41 NA NA 0.16
PHFC Pittsburgh Home Fin Corp of PA 7.43 7.34 0.79 8.24 7.00 0.67 6.99 1.24 33.90 0.75
PFSL Pocahontas Bancorp of AR 14.51 14.51 0.62 7.76 4.21 0.61 7.54 0.26 159.98 0.88
PTRS Potters Financial Corp of OH 8.71 8.71 0.80 9.07 7.10 0.78 8.81 0.32 541.52 2.35
PHSB Ppls Home SB, MHC of PA (45.0) 12.76 12.76 0.81 7.30 3.88 0.72 6.49 0.32 173.78 1.31
PRBC Prestige Bancorp of PA 9.83 9.83 0.52 4.79 4.38 0.51 4.66 0.35 79.16 0.41
PFNC Progress Financial Corp. of PA 5.52 4.89 0.83 15.78 4.44 0.75 14.22 0.79 90.50 1.16
PROV Provident Fin. Holdings of CA 11.09 11.09 0.74 5.81 5.16 0.36 2.85 1.04 73.18 0.89
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 13.42 13.42 1.11 8.38 3.37 0.91 6.88 NA NA 0.51
PLSK Pulaski SB, MHC of NJ (47.0) 11.54 11.54 0.63 5.86 3.70 0.63 5.86 0.63 82.57 0.97
PULS Pulse Bancorp of S. River NJ(8) 8.34 8.34 1.07 13.16 6.24 1.08 13.31 0.46 78.83 1.33
QCFB QCF Bancorp of Virginia MN 17.70 17.70 1.68 9.63 6.41 1.66 9.53 1.22 67.47 1.92
QCBC Quaker City Bancorp of CA 8.75 8.75 0.76 8.74 6.26 0.74 8.50 1.11 80.77 1.13
QCSB Queens County Bancorp of NY* 10.44 10.44 1.47 12.55 3.70 1.44 12.30 0.50 110.42 0.64
RARB Raritan Bancorp of Raritan NJ* 7.54 7.45 0.99 13.02 5.93 0.97 12.78 0.43 186.77 1.14
RELY Reliance Bancorp, Inc. of NY 8.89 6.13 0.90 10.70 6.67 0.95 11.25 0.40 88.82 0.91
RELI Reliance Bancshares Inc of WI(8) 49.97 49.97 1.03 2.11 2.13 1.03 2.11 NA NA 0.60
RCBK Richmond County Fin Corp of NY 22.04 21.95 0.19 1.11 0.60 1.53 9.09 0.37 124.25 1.12
RIVR River Valley Bancorp of IN 13.65 13.46 0.93 7.27 6.40 0.83 6.46 0.55 158.30 1.03
RVSB Riverview Bancorp of WA 22.35 21.63 1.53 8.47 4.85 1.48 8.20 0.28 137.60 0.63
RSLN Roslyn Bancorp, Inc. of NY* 16.77 16.69 1.32 7.11 5.74 1.26 6.78 0.23 281.89 2.01
SCCB S. Carolina Comm. Bnshrs of SC 20.38 20.38 1.01 4.23 3.64 1.01 4.23 1.26 50.34 0.82
SBFL SB Fngr Lakes MHC of NY (33.1) 8.68 8.68 0.40 4.39 1.63 0.34 3.72 0.32 141.95 0.89
SFED SFS Bancorp of Schenectady NY(8) 12.36 12.36 0.64 5.13 3.35 0.62 4.96 0.84 56.89 0.60
SGVB SGV Bancorp of W. Covina CA 7.89 7.79 0.38 5.10 4.13 0.43 5.80 NA NA 0.48
SISB SIS Bancorp, Inc. of MA(8)* 7.14 7.14 0.69 9.61 3.67 0.89 12.32 0.27 471.43 2.63
SWCB Sandwich Bancorp of MA(8)* 8.08 7.83 0.98 12.21 4.05 0.95 11.76 0.36 220.94 1.16
SFSL Security First Corp. of OH(8) 9.43 9.30 1.39 14.86 5.62 1.39 14.86 0.62 122.36 0.83
SKAN Skaneateles Bancorp Inc of NY* 6.98 6.80 0.64 9.27 6.53 0.63 9.10 1.74 57.15 1.23
SOBI Sobieski Bancorp of S. Bend IN 14.10 14.10 0.58 3.93 4.06 0.58 3.93 0.29 77.82 0.28
SSFC South Street Fin. Corp. of NC* 15.88 15.88 0.64 2.97 3.56 0.66 3.06 0.23 91.68 0.40
SBAN SouthBanc Shares Inc. of SC 21.85 21.85 0.94 4.29 4.14 0.94 4.29 0.37 153.09 0.99
SCBS Southern Commun. Bncshrs of AL 15.85 15.85 1.10 6.93 4.38 1.10 6.93 0.19 602.29 1.69
SMBC Southern Missouri Bncrp of MO 16.77 16.77 0.70 4.28 4.57 0.66 4.06 1.49 55.77 1.08
SVRN Sovereign Bancorp, Inc. of PA 4.93 4.23 0.45 9.93 2.64 0.68 15.14 0.57 104.60 1.07
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OTFC Oregon Trail Fin. Corp. of OR 20.90 97.70 24.97 97.70 20.90 0.20 1.43 29.85
OFCP Ottawa Financial Corp. of MI 18.01 178.34 15.07 217.58 19.46 0.36 1.49 26.87
PFFB PFF Bancorp of Pomona CA 17.68 111.61 10.09 112.76 18.82 0.00 0.00 0.00
PSFI PS Financial of Chicago IL 26.96 105.02 29.21 105.02 15.96 0.48 3.96 NM
PSBI PSB Bancorp Inc. of PA* 20.95 82.36 16.32 82.36 20.95 0.00 0.00 0.00
PVFC PVF Capital Corp. of OH 12.21 208.33 15.00 208.33 12.91 0.00 0.00 0.00
PBCI Pamrapo Bancorp, Inc. of NJ 16.18 162.79 20.87 163.65 16.77 1.12 4.00 64.74
PFED Park Bancorp of Chicago IL 26.78 110.40 21.98 110.40 25.27 0.00 0.00 0.00
PVSA Parkvale Financial Corp of PA 15.30 201.44 15.75 202.46 15.30 0.60 1.87 28.57
PBHC Pathfinder BC MHC of NY (45.2)* 24.19 184.05 21.65 217.08 30.00 0.20 1.33 32.26
PEEK Peekskill Fin. Corp. of NY 23.86 101.35 23.29 101.35 23.51 0.36 2.29 54.55
PFSB PennFed Fin. Services of NJ 12.24 128.24 9.23 147.95 12.56 0.14 0.97 11.86
PWBK Pennwood Bancorp, Inc. of PA 23.23 100.82 18.49 100.82 19.54 0.28 2.27 52.83
PBKB People's Bancshares of MA* 11.79 196.54 7.21 203.58 26.79 0.56 2.99 35.22
TSBS Peoples Bancorp Inc of NJ* 21.97 93.13 22.57 90.03 21.97 0.10 1.23 27.03
PFDC Peoples Bancorp of Auburn IN 16.15 155.44 23.45 155.44 16.15 0.44 2.10 33.85
PBCT Peoples Bank, MHC of CT (41.2)* 18.12 205.01 18.92 239.36 NM 0.84 3.11 56.38
PFFC Peoples Fin. Corp. of OH 15.19 103.09 19.73 103.09 NM 0.60 5.00 NM
PHBK Peoples Heritage Fin Grp of ME* 22.13 343.75 23.06 NM 22.13 0.44 2.29 50.57
PSFC Peoples Sidney Fin. Corp of OH 27.65 132.01 33.20 132.01 27.65 0.28 1.43 39.44
PERM Permanent Bancorp, Inc. of IN 21.09 130.69 12.70 131.96 21.77 0.24 1.78 37.50
PCBC Perry Co. Fin. Corp. of MO 19.23 101.57 19.24 101.57 19.42 0.50 2.50 48.08
PHFC Pittsburgh Home Fin Corp of PA 14.29 125.29 9.31 126.78 16.84 0.24 1.50 21.43
PFSL Pocahontas Bancorp of AR 23.78 98.39 14.28 98.39 24.46 0.24 2.80 66.67
PTRS Potters Financial Corp of OH 14.08 125.11 10.89 125.11 14.50 0.00 0.00 0.00
PHSB Ppls Home SB, MHC of PA (45.0) 25.79 157.31 20.08 157.31 29.02 0.28 1.72 44.44
PRBC Prestige Bancorp of PA 22.86 106.67 10.48 106.67 23.53 0.17 1.06 24.29
PFNC Progress Financial Corp. of PA 22.54 313.73 17.31 NM 25.00 0.15 0.94 21.13
PROV Provident Fin. Holdings of CA 19.36 113.05 12.54 113.05 NM 0.00 0.00 0.00
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 29.64 240.68 32.30 240.68 NM 1.10 3.91 NM
PLSK Pulaski SB, MHC of NJ (47.0) 27.05 142.53 16.44 142.53 27.05 0.30 2.02 54.55
PULS Pulse Bancorp of S. River NJ(8) 16.02 200.97 16.76 200.97 15.85 0.80 2.76 44.20
QCFB QCF Bancorp of Virginia MN 15.59 148.30 26.25 148.30 15.76 0.00 0.00 0.00
QCBC Quaker City Bancorp of CA 15.97 133.51 11.69 133.51 16.43 0.00 0.00 0.00
QCSB Queens County Bancorp of NY* 27.04 NM 37.35 NM 27.59 1.00 2.47 66.67
RARB Raritan Bancorp of Raritan NJ* 16.87 210.37 15.86 213.09 17.18 0.60 2.14 36.14
RELY Reliance Bancorp, Inc. of NY 15.00 144.37 12.84 209.23 14.27 0.72 2.46 36.92
RELI Reliance Bancshares Inc of WI(8) NM 100.75 50.35 100.75 NM 0.00 0.00 0.00
RCBK Richmond County Fin Corp of NY NM 123.34 27.18 123.85 20.35 0.24 1.59 NM
RIVR River Valley Bancorp of IN 15.63 109.97 15.01 111.49 17.58 0.22 1.30 20.37
RVSB Riverview Bancorp of WA 20.63 131.71 29.44 136.13 21.31 0.24 1.85 38.10
RSLN Roslyn Bancorp, Inc. of NY* 17.41 124.12 20.81 124.70 18.26 0.34 1.83 31.78
SCCB S. Carolina Comm. Bnshrs of SC 27.50 135.22 27.56 135.22 27.50 0.64 2.91 NM
SBFL SB Fngr Lakes MHC of NY (33.1) NM 262.30 22.77 262.30 NM 0.24 1.50 NM
SFED SFS Bancorp of Schenectady NY(8) 29.89 153.20 18.94 153.20 NM 0.32 1.16 34.78
SGVB SGV Bancorp of W. Covina CA 24.24 118.78 9.37 120.30 21.33 0.00 0.00 0.00
SISB SIS Bancorp, Inc. of MA(8)* 27.24 230.85 16.49 230.85 21.25 0.00 0.00 0.00
SWCB Sandwich Bancorp of MA(8)* 24.69 289.25 23.38 298.71 25.64 1.40 2.32 57.38
SFSL Security First Corp. of OH(8) 17.80 255.47 24.09 258.94 17.80 0.36 1.71 30.51
SKAN Skaneateles Bancorp Inc of NY* 15.32 136.66 9.54 140.26 15.60 0.28 1.65 25.23
SOBI Sobieski Bancorp of S. Bend IN 24.61 94.99 13.39 94.99 24.61 0.32 2.03 50.00
SSFC South Street Fin. Corp. of NC* 28.13 122.12 19.40 122.12 27.27 0.40 4.44 NM
SBAN SouthBanc Shares Inc. of SC 24.15 103.64 22.65 103.64 24.15 0.48 2.72 65.75
SCBS Southern Commun. Bncshrs of AL 22.86 158.42 25.11 158.42 22.86 0.30 1.88 42.86
SMBC Southern Missouri Bncrp of MO 21.88 93.48 15.68 93.48 23.10 0.50 3.01 65.79
SVRN Sovereign Bancorp, Inc. of PA NM 258.63 12.74 301.39 24.80 0.08 0.53 20.00
</TABLE>
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of August 21, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STFR St. Francis Cap. Corp. of WI 8.00 7.15 0.80 9.98 6.43 0.77 9.59 0.19 219.19 0.88
SPBC St. Paul Bancorp, Inc. of IL 9.34 9.30 1.09 12.10 6.68 1.06 11.85 0.31 239.56 1.03
SFFC StateFed Financial Corp. of IA 17.73 17.73 1.26 7.11 5.49 1.26 7.11 NA NA NA
SFIN Statewide Fin. Corp. of NJ 9.83 9.82 0.81 8.45 6.58 0.80 8.38 0.47 95.71 0.89
STSA Sterling Financial Corp. of WA 5.60 5.22 0.54 10.94 6.22 0.47 9.55 0.52 128.59 1.09
ROSE T R Financial Corp. of NY* 6.15 6.15 0.99 15.97 6.29 0.88 14.13 0.53 70.19 0.68
THRD TF Financial Corp. of PA 7.97 6.71 0.75 7.45 6.13 0.63 6.28 0.31 97.87 0.86
TPNZ Tappan Zee Fin., Inc. of NY(8) 16.86 16.86 0.88 5.18 3.85 0.83 4.83 NA NA 1.23
THTL Thistle Group Holdings of PA 27.80 27.80 1.37 4.91 5.89 1.37 4.91 0.22 98.57 0.76
TSBK Timberland Bancorp of WA 32.12 32.12 1.63 10.60 3.96 1.55 10.05 NA NA 0.91
TRIC Tri-County Bancorp of WY 15.73 15.73 1.01 6.58 6.42 1.05 6.84 NA NA 1.01
TWIN Twin City Bancorp, Inc. of TN 12.75 12.75 1.04 8.06 6.82 0.85 6.63 0.37 27.12 0.14
USAB USABancshares, Inc of PA* 12.50 12.42 0.20 2.08 0.61 0.35 3.56 1.08 49.32 0.90
UCBC Union Community Bancorp of IN 40.02 40.02 1.44 5.52 3.62 1.44 5.52 0.33 99.15 0.40
UCFC United Community Fin. of OH 32.31 32.31 1.50 4.65 3.92 1.50 4.65 0.98 58.70 0.94
UFRM United FSB of Rocky Mount NC(8) 7.50 7.50 0.60 8.13 2.99 0.40 5.37 1.16 83.92 1.15
UBMT United Fin. Corp. of MT 25.61 25.61 1.31 5.53 3.23 1.31 5.53 0.42 156.46 1.02
UTBI United Tenn. Bancshares of TN 26.99 26.99 1.01 6.08 4.70 1.01 6.08 0.57 148.60 1.27
WHGB WHG Bancshares of MD 16.85 16.85 0.64 3.27 4.36 0.66 3.34 0.65 41.31 0.46
WSFS WSFS Financial Corp. of DE* 5.93 5.90 1.11 20.21 7.49 1.08 19.61 1.30 122.16 3.26
WVFC WVS Financial Corp. of PA 10.99 10.99 1.28 11.10 6.48 1.29 11.21 0.20 308.46 1.17
WRNB Warren Bancorp of Peabody MA* 11.03 11.03 1.73 16.33 7.31 1.80 16.94 1.27 83.50 1.62
WSBI Warwick Community Bncrp of NY* 23.05 23.05 0.55 2.40 2.18 0.53 2.32 0.52 75.47 0.79
WFSL Washington Federal, Inc. of WA 13.41 12.41 1.92 15.33 8.40 1.88 15.04 0.70 60.38 0.57
WYNE Wayne Bancorp, Inc. of NJ 12.69 12.69 0.70 5.37 2.92 0.70 5.37 0.80 103.99 1.18
WAYN Wayne Svgs Bks MHC of OH (48.2 9.41 9.41 0.72 7.72 3.33 0.66 7.10 0.49 58.18 0.36
WCFB Wbstr Cty FSB MHC of IA (45.6) 24.02 24.02 1.43 6.09 3.63 1.43 6.09 0.07 534.72 0.69
WBST Webster Financial Corp. of CT 5.29 4.66 0.79 15.08 4.99 0.80 15.19 0.41 149.68 1.14
WEFC Wells Fin. Corp. of Wells MN 14.44 14.44 1.13 7.89 6.69 1.08 7.51 0.28 154.67 0.48
WCBI WestCo Bancorp, Inc. of IL(8) 15.44 15.44 1.53 9.93 6.89 1.41 9.10 0.44 63.73 0.37
WSTR WesterFed Fin. Corp. of MT 10.62 8.52 0.75 7.02 7.14 0.75 7.02 0.49 97.44 0.74
WOFC Western Ohio Fin. Corp. of OH 14.66 13.72 0.07 0.47 0.49 0.09 0.63 1.29 74.24 1.36
WEHO Westwood Hmstd Fin Corp of OH 23.00 23.00 0.61 2.28 2.69 0.97 3.64 0.19 119.15 0.25
FFWD Wood Bancorp of OH 13.20 13.20 1.42 11.21 5.42 1.23 9.68 0.16 243.12 0.48
YFCB Yonkers Fin. Corp. of NY 13.19 13.19 0.97 6.85 6.79 0.94 6.66 0.15 208.94 0.61
YFED York Financial Corp. of PA 8.77 8.77 0.88 10.08 5.97 0.71 8.15 2.25 31.83 0.90
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STFR St. Francis Cap. Corp. of WI 15.55 153.10 12.25 171.37 16.19 0.56 1.42 22.05
SPBC St. Paul Bancorp, Inc. of IL 14.97 173.03 16.16 173.73 15.29 0.60 2.78 41.67
SFFC StateFed Financial Corp. of IA 18.21 125.74 22.29 125.74 18.21 0.20 1.57 28.57
SFIN Statewide Fin. Corp. of NJ 15.20 126.75 12.46 126.92 15.32 0.52 2.74 41.60
STSA Sterling Financial Corp. of WA 16.07 145.58 8.16 156.25 18.41 0.00 0.00 0.00
ROSE T R Financial Corp. of NY* 15.91 236.65 14.55 236.65 17.97 0.80 2.41 38.28
THRD TF Financial Corp. of PA 16.33 150.28 11.98 178.44 19.35 0.48 2.00 32.65
TPNZ Tappan Zee Fin., Inc. of NY(8) 26.00 132.20 22.28 132.20 27.86 0.28 1.44 37.33
THTL Thistle Group Holdings of PA 16.98 83.41 23.19 83.41 16.98 0.00 0.00 0.00
TSBK Timberland Bancorp of WA 25.22 115.20 37.00 115.20 26.60 0.24 1.64 41.38
TRIC Tri-County Bancorp of WY 15.58 99.75 15.69 99.75 15.00 0.44 3.67 57.14
TWIN Twin City Bancorp, Inc. of TN 14.66 116.31 14.83 116.31 17.82 0.40 3.03 44.44
USAB USABancshares, Inc of PA* NM 179.69 22.45 180.82 NM 0.00 0.00 0.00
UCBC Union Community Bancorp of IN 27.66 91.42 36.59 91.42 27.66 0.34 2.62 72.34
UCFC United Community Fin. of OH 25.53 118.77 38.38 118.77 25.53 0.00 0.00 0.00
UFRM United FSB of Rocky Mount NC(8) NM 254.30 19.07 254.30 NM 0.24 1.35 45.28
UBMT United Fin. Corp. of MT NM 170.45 43.66 170.45 NM 1.00 4.04 NM
UTBI United Tenn. Bancshares of TN 21.28 87.14 23.52 87.14 21.28 0.00 0.00 0.00
WHGB WHG Bancshares of MD 22.92 76.55 12.90 76.55 22.45 0.32 2.91 66.67
WSFS WSFS Financial Corp. of DE* 13.34 245.94 14.59 247.30 13.75 0.12 0.67 8.96
WVFC WVS Financial Corp. of PA 15.44 174.03 19.13 174.03 15.29 0.60 3.81 58.82
WRNB Warren Bancorp of Peabody MA* 13.68 210.38 23.21 210.38 13.18 0.36 3.29 45.00
WSBI Warwick Community Bncrp of NY* NM 110.12 25.39 110.12 NM 0.00 0.00 0.00
WFSL Washington Federal, Inc. of WA 11.90 172.66 23.16 186.65 12.14 0.92 3.70 44.02
WYNE Wayne Bancorp, Inc. of NJ NM 183.67 23.31 183.67 NM 0.20 0.63 21.74
WAYN Wayne Svgs Bks MHC of OH (48.2 NM 226.35 21.29 226.35 NM 0.62 2.79 NM
WCFB Wbstr Cty FSB MHC of IA (45.6) 27.55 165.23 39.68 165.23 27.55 0.00 0.00 0.00
WBST Webster Financial Corp. of CT 20.04 261.27 13.82 296.20 19.89 0.44 1.61 32.35
WEFC Wells Fin. Corp. of Wells MN 14.94 114.16 16.49 114.16 15.71 0.60 3.26 48.78
WCBI WestCo Bancorp, Inc. of IL(8) 14.51 141.27 21.81 141.27 15.82 0.68 2.43 35.23
WSTR WesterFed Fin. Corp. of MT 14.01 95.73 10.17 119.42 14.01 0.50 2.68 37.59
WOFC Western Ohio Fin. Corp. of OH NM 97.04 14.23 103.71 NM 1.00 4.42 NM
WEHO Westwood Hmstd Fin Corp of OH NM 101.80 23.41 101.80 23.29 0.40 3.37 NM
FFWD Wood Bancorp of OH 18.47 199.14 26.29 199.14 21.38 0.36 2.22 40.91
YFCB Yonkers Fin. Corp. of NY 14.73 98.17 12.95 98.17 15.15 0.00 0.00 0.00
YFED York Financial Corp. of PA 16.74 161.63 14.18 161.63 20.70 0.52 2.70 45.22
</TABLE>
<PAGE>
EXHIBIT IV-2
HISTORICAL STOCK PRICE INDICES(1)
<TABLE>
<CAPTION>
SNL SNL
NASDAQ Thrift Bank
Year/Qtr. Ended DJIA S&P 500 Composite Index Index
- --------------- ------ ------- --------- ----- -----
<S> <C> <C> <C> <C> <C>
1991: Quarter 1 2881.1 375.2 482.3 125.5 66.0
Quarter 2 2957.7 371.2 475.9 130.5 82.0
Quarter 3 3018.2 387.9 526.9 141.8 90.7
Quarter 4 3168.0 417.1 586.3 144.7 103.1
1992: Quarter 1 3235.5 403.7 603.8 157.0 113.3
Quarter 2 3318.5 408.1 563.6 173.3 119.7
Quarter 3 3271.7 417.8 583.3 167.0 117.1
Quarter 4 3301.1 435.7 677.0 201.1 136.7
1993: Quarter 1 3435.1 451.7 690.1 228.2 151.4
Quarter 2 3516.1 450.5 704.0 219.8 147.0
Quarter 3 3555.1 458.9 762.8 258.4 154.3
Quarter 4 3754.1 466.5 776.8 252.5 146.2
1994: Quarter 1 3625.1 445.8 743.5 241.6 143.1
Quarter 2 3625.0 444.3 706.0 269.6 152.6
Quarter 3 3843.2 462.6 764.3 279.7 149.2
Quarter 4 3834.4 459.3 752.0 244.7 137.6
1995: Quarter 1 4157.7 500.7 817.2 278.4 152.1
Quarter 2 4556.1 544.8 933.5 313.5 171.7
Quarter 3 4789.1 584.4 1,043.5 362.3 195.3
Quarter 4 5117.1 615.9 1,052.1 376.5 207.6
1996: Quarter 1 5587.1 645.5 1,101.4 382.1 225.1
Quarter 2 5654.6 670.6 1,185.0 387.2 224.7
Quarter 3 5882.2 687.3 1,226.9 429.3 249.2
Quarter 4 6442.5 737.0 1,280.7 483.6 280.1
1997: Quarter 1 6583.5 757.1 1,221.7 527.7 292.5
Quarter 2 7672.8 885.1 1,442.1 624.5 333.3
Quarter 3 7945.3 947.3 1,685.7 737.5 381.7
Quarter 4 7908.3 970.4 1,570.4 814.1 414.9
1998: Quarter 1 8799.8 1101.8 1,835.7 869.3 456.1
Quarter 2 8952.0 1133.8 1,894.7 833.5 457.7
August 21, 1998 8533.7 1081.2 1,797.6 702.1 407.2
</TABLE>
(1) End of period data.
Sources: SNL Securities; Wall Street Journal.
<PAGE>
EXHIBIT IV-3
Historical Thrift Stock Indices
INDEX VALUES
<TABLE>
<CAPTION>
INDEX VALUES PERCENT CHANGE SINCE
------------ --------------------
07/31/98 1 MONTH YTD LTM 1 MONTH YTD LTM
-------- ------- --- --- ------- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
All Pub. Traded Thrifts 783.7 833.5 814.1 682.2 -5.98 -3.74 14.88
MHC Index 1.018.0 1.123.2 1,179.9 751.6 -9.37 -13.72 35.45
INSURANCE INDICES
SAIFThrifts 735.0 784.7 764.4 606.6 -6.34 -3.85 21.16
BIF Thrifts 949.0 1.003.3 984.4 904.1 -5.41 -3.59 4.97
STOCK EXCHANGE INDICES
AMEX Thrifts 241.7 252.6 255.4 197.1 -4.33 -5.36 22.65
NYSE Thrifts 499.2 539.4 521.3 418.7 -7.45 -4.25 19.23
OTC Thrifts 879.7 930.4 911.5 777.9 -5.45 -3.49 13.10
GEOGRAPHIC INDICES
Mid-Atlantic Thrifts 1,724.1 1.806.1 1,735.2 1.337.6 -4.54 -0.64 28.90
Midwestern Thrifts 1,826.7 1,883.4 1,832.9 1,455.5 -3.01 -0.34 25.51
New England Thrifts 731.8 767.8 778.3 593.0 -4.69 -5.97 23.42
Southeastern Thrifts 704.7 770.7 776.0 606.8 -8.56 -9.18 16.13
Southwestern Thrifts 510.0 539.1 533.5 418.4 -5.39 -4.40 21.91
Western Thrifts 733.2 797.8 778.8 725.6 -8.11 -5.86 1.05
ASSET SIZE INDICES
Less than $250M 829.1 855.0 869.9 723.8 -3.03 -4.70 14.55
$250M to $500M 1,262.6 1,305.4 1,312.3 1,012.6 -3.28 -3.79 24.69
$500M to 61B 832.2 851.6 846.8 669.1 -2.28 -1.73 24.37
$1B to $5B 945.4 1,015.9 956.8 745.8 -6.94 -1.19 26.77
Over $5B 486.9 521.1 512.3 451.2 -6.56 -4.94 7.92
COMPARATIVE INDICES
Bow Jones Industrials 8,883.3 8.952.0 7,908.3 8.222.6 -0.77 12.33 8.03
S&P 500 1,120.7 1,133.8 970.4 954.3 -1.16 15.48 17.43
</TABLE>
All SNL indices are market-value weighted: i.e.. an institutions effect on an
index is proportionate to that institution's market capitalization. All SNL
thrift indices, except for the SNL MHC index, began at 100 on March 30, 1984 The
SNL MHC index began at 201.082 on Dec. 31, 1992, the level of the SNL Thrift
Index on that date. On March 30, 1984, the S&P 500 closed at 159.2 and the Dow
Jones Industrials stood at 1164,9.
Mid-Atlamic: DE, DC, MD, NJ, NY, PA, PR; Midwest: IA. IL. IN. KS. KY. MI. MN.
MO. ND. NE. OH. SD. WI
New England: CT, MA, ME, NH, RI, VT; Southeast: AL, AR, FL, GA, MS, NC, SC, TN,
VA,WA;
Southwest: Co, LA, NM, OK, TX, UT; West: AZ, AK, CA, HI, ID, MT, NV, OR, WA. WY
<PAGE>
EXHIBIT IV-4
MASSACHUSETTS THRIFT MERGER AND ACQUISITION ACTIVITY
1997 TO PRESENT
<TABLE>
<CAPTION>
Seller Financials at Announcement
-------------------------------------------------------
Total Total YTD YTD NPAs Rsrvs/
Annd Comp Assets Equity ROAA ROAE Assets NPLs
Date Date Buyer ST Seller ST ($000) (%) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
07/20/98 Pending Peoples Heritage Fin ME SIS Bancorp, Inc. MA 1,793,968 7.15 0.93 13.13 0.42 345.56
02/02/98 Pending 1855 Bancorp MA Sandwich Bancorp MA 518,697 7.84 0.98 12.38 0.56 176.50
12/15/97 08/07/98 UST Corp MA Affiliated Cmty Bncp MA 1,128,579 9.71 1.10 11.22 0.34 218.71
12/10/97 07/21/98 UST Corp MA Somerset Svgs Bk MA 520,339 6.60 1.15 18.72 5.91 31.60
10/23/97 02/27/98 Eastern Bank Corp MA Emerald Isle Bncp MA 443,503 6.99 0.88 12.59 0.17 416.26
12/15/97 01/01/98 Country Bank for Sav MA Leicester Savings Bk MA 31,249 3.65 -3.44 -74.83 5.75 51.12
05/28/97 10/31/97 South Weymouth SB MA Weymouth SB MA 173,557 8.24 0.62 7.73 0.45 190.73
02/26/97 07/22/97 MASSBANK Corporation MA Glendale Co-Op Bank MA 36,947 16.23 0.75 4.73 0 NA
09/10/96 05/01/97 Berkshire Cnty SB MA Great Barrington SB MA 274,165 13.93 1.49 10.26 0.63 122.04
11/04/96 03/04/97 Citizens Fin'l Group RI Grove Bank MA 598,507 6.49 0.91 14.35 0.58 128.33
11/01/96 02/21/97 Bay State FSB MA Union FS&LA MA 38,797 7.45 -0.16 -2.23 0.59 73.01
08/30/96 01/03/97 UST Corp MA Walden Bancorp, Inc. MA 1,051,743 8.07 1.14 12.18 0.91 150.25
08/27/96 01/02/97 Grove Bank MA Greater Boston Bk MA 150,167 7.76 0.37 4.72 1.49 259.68
Average 520,017 8.47 0.52 3.46 1.37 180.32
Median 443,503 7.76 0.91 11.22 0.58 163.38
<CAPTION>
Deal Terms and Pricing at Announcement
------------------------------------------
Deal Deal Deal
Annd Comp Value Pr/Shr Consid. Pr/Bk
Date Date Buyer ST Seller ST ($M) ($) Type (%)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/20/98 Pending Peoples Heritage Fin ME SIS Bancorp, Inc. MA 427.1 57.236 Com Stock 312.77
02/02/98 Pending 1855 Bancorp MA Sandwich Bancorp MA 131.1 64.000 Com Stock 295.89
12/15/97 08/07/98 UST Corp MA Affiliated Cmty Bncp MA 277.0 39.921 Com Stock 231.02
12/10/97 07/21/98 UST Corp MA Somerset Svgs Bk MA 95.9 5.629 Com Stock 273.25
10/23/97 02/27/98 Eastern Bank Corp MA Emerald Isle Bncp MA 76.7 33.000 Cash 239.48
12/15/97 01/01/98 Country Bank for Sav MA Leicester Savings Bk MA NA NA NA NA
05/28/97 10/31/97 South Weymouth SB MA Weymouth SB MA NA NA NA NA
02/26/97 07/22/97 MASSBANK Corporation MA Glendale Co-Op Bank MA 7.2 28.000 Cash 115.46
09/10/96 05/01/97 Berkshire Cnty SB MA Great Barrington SB MA NA NA NA NA
11/04/96 03/04/97 Citizens Fin'l Group RI Grove Bank MA 91.8 51.000 Cash NA
11/01/96 02/21/97 Bay State FSB MA Union FS&LA MA NA NA NA NA
08/30/96 01/03/97 UST Corp MA Walden Bancorp, Inc. MA 165.9 30.875 Com Stock 168.90
08/27/96 01/02/97 Grove Bank MA Greater Boston Bk MA 18.0 27.561 Mixture 138.62
Average 143.4 37.469 221.92
Median 95.9 33.000 235.25
<CAPTION>
Deal Terms and Pricing at Announcement
--------------------------------------
Deal Pr/ Deal Pr/Deal Pr/TgBkPr/
Annd Comp Tg Bk 4-Qtr Assets CoreDp
Date Date Buyer ST Seller ST (%) EPS(x) (%) (%)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/20/98 Pending Peoples Heritage Fin ME SIS Bancorp, Inc. MA 312.77 32.34 23.81 24.67
02/02/98 Pending 1855 Bancorp MA Sandwich Bancorp MA 306.51 26.12 25.27 24.00
12/15/97 08/07/98 UST Corp MA Affiliated Cmty Bncp MA 232.23 22.94 24.54 26.57
12/10/97 07/21/98 UST Corp MA Somerset Svgs Bk MA 273.25 18.16 18.43 15.19
10/23/97 02/27/98 Eastern Bank Corp MA Emerald Isle Bncp MA 239.48 21.02 17.29 14.66
12/15/97 01/01/98 Country Bank for Sav MA Leicester Savings Bk MA NA NA NA NA
05/28/97 10/31/97 South Weymouth SB MA Weymouth SB MA NA NA NA NA
02/26/97 07/22/97 MASSBANK Corporation MA Glendale Co-Op Bank MA 115.46 24.56 19.49 4.22
09/10/96 05/01/97 Berkshire Cnty SB MA Great Barrington SB MA NA NA NA NA
11/04/96 03/04/97 Citizens Fin'l Group RI Grove Bank MA NA NA NA NA
11/01/96 02/21/97 Bay State FSB MA Union FS&LA MA NA NA NA NA
08/30/96 01/03/97 UST Corp MA Walden Bancorp, Inc. MA 196.16 16.16 15.77 11.38
08/27/96 01/02/97 Grove Bank MA Greater Boston Bk MA 138.62 9.33 10.77 5.17
Average 226.81 21.33 19.42 15.73
Median 235.86 21.98 18.96 14.93
</TABLE>
Source: SNL Securities, LC.
<PAGE>
EXHIBIT IV-5
Revere Federal Savings
Directors and Management Summary Resumes
Ernest F. Becker has been a director of the Bank since 1977. Mr. Becker, a
licensed engineer, served as Chief Engineer, Vice President and President of
Whitmore Company, an engineering company located in Revere, Massachusetts, from
1952 until his retirement in 1996.
Arno P. Bommer has served on the Board of Directors of the Bank since 1955.
He was elected to the position of Chairman of the Bank's Board of Directors in
1978. Mr. Bommer is a consultant to both the Massachusetts Dental Service
Corporation and the Division of Medical Assistance of the Commonwealth of
Massachusetts. He is also a partner in Fanuiel Associates, which provides dental
office reviews throughout the Commonwealth of Massachusetts. Mr. Bommer is a
also a licensed dentist and had a private practice in Revere, Massachusetts
before his retirement in 1996.
Theodore E. Charles has been a director of the Bank since 1996. Mr. Charles
is the Chairman of the Board and Chief Executive Officer of Investors Capital
Holdings which is located in Lynnfield, Massachusetts. As Chairman and Chief
Executive Officer of Investors Capital Holdings, Mr. Charles is responsible for
supervising the brokerage and investment services provided by its affiliates,
Investors Capital Corporation, a brokerage concern registered with the National
Association of Securities Dealers and Eastern Point Advisors, registered
investment advisors.
Anthony R. Conte was elected to the Bank's Board of Directors in 1988. Mr.
Conte has been a practicing attorney since 1974. He is presently the Regional
Solicitor for the U.S. Department of the Interior, Northeast Region.
Carmen R. Mattuchio has served on the Board of Directors of the Bank since
1994. Mr. Mattuchio is the owner of Burnett & Moynihan, Inc., a building
materials supplier, located in Revere, Massachusetts. Mr. Mattuchio has been
self-employed by Burnett & Moynihan for the past 20 years.
James J. McCarthy has served as President and Chief Executive Officer of
the Bank since 1989. He has also served as a director of the Bank since 1989.
Prior to joining the Bank, Mr. McCarthy, a CPA, was employed by the predecessor
to Ernst & Young, Boston, Massachusetts, serving in a variety of audit
functions. Mr. McCarthy has also been employed by Pell Rudman & Company, a
Broker Dealer/Investment Advisor firm as a consultant with respect to accounting
and reporting to the NASD. Mr. McCarthy is on the Board of Directors of the
Massachusetts Bankers Association and is involved in many local Revere charities
and business organizations including the Revere Chamber of Commerce, Revere
Rotary and the Revere Partnership for Economic Development. Mr. McCarthy also
served as the Executive Committee Chairman of the Massachusetts Thrift Fund for
Economic Development until its dissolution in 1997.
J. Michael O'Brien has been a director of the Bank since 1997. He is the
President, Chief Executive Officer and a principal of Eagle Air Freight, a
domestic air freight provider, founded in 1981 and based in Chelsea,
Massachusetts. Mr. O'Brien is also the trustee and a principal of O'Brien Realty
Trust. O'Brien Realty Trust owns and leases warehouse and commercial office
space in Chelsea, Massachusetts.
<PAGE>
EXHIBIT IV-5
Revere Federal Savings
Directors and Management Summary Resumes
Angelo A. Todisco was elected to the Board of Directors of the Bank in
1980. Mr. Todisco is a retired licensed public adjuster and serves as President
of DePiano & Todisco Adjusters, Inc. which appraises damages to residential and
commercial properties on behalf of its clients in connection with the settlement
of insurance claims.
John J. Verrengia has served on the Board of Directors of the Bank since
1994. Mr. Verrengia is a certified public accountant and is currently
self-employed as principal accountant of John J. Verrengia, CPA, a professional
corporation. Mr. Verrengia is also a registered investment advisor and provides
financial and investment advice to clients through Anchor Investments, a
consulting firm which he founded in 1992.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Anthony J. Patti, age 43, has been the Executive Vice President and Chief
Financial Officer of the Bank since 1992. He is responsible for the financial,
lending operations, information systems customer service and marketing functions
of the Bank on a day-to-day basis. Prior to joining the Bank, Mr. Patti served
as an Operations Specialist for the Resolution Trust Corporation. Mr. Patti has
also been employed by Home Owners Savings Bank, F.S.B., located in Boston,
Massachusetts where he served as a First Vice President and Controller and by
Andover Savings Bank, Andover, Massachusetts, where he served as Comptroller.
Judith E. Tenaglia, age 46, has been employed by the Bank for 21 years and
has been Treasurer of the Bank since 1991. Prior to becoming the Bank's
Treasurer, Ms. Tenaglia worked in the customer service department of the Bank.
<PAGE>
EXHIBIT IV-6
Revere Federal Savings
Pro Forma Regulatory Capital Ratios
<TABLE>
<CAPTION>
COMPANY PRO FORMA BASED UPON SALE AT $10.00 PER SHARE
BANK -----------------------------------------------------------
HISTORICAL MAXIMUM AS
CAPITALIZATION MINIMUM MIDPOINT MAXIMUM ADJUSTED
AS OF 379,525 466,500 513,475 590,496
JUNE 30, 1998 SHARES SHARES SHARES SHARES(1)
------------- ------ ------ ------ ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Deposits(2)........................... $ 62,976 $ 62,976 $ 62,976 $ 62,976 $ 62,976
Borrowed funds........................ 19,284 19,284 19,284 19,284 19,284
-------- -------- -------- -------- --------
Total deposits and borrowed funds..... $ 82,260 $ 82,260 $ 82,260 $ 82,260 $ 82,260
======== ======== ======== ======== ========
Stockholders' equity:
Common stock, $.01 par value,
5,000,000 shares authorized;
shares to be issued as reflected $ --- $ 8 $ 10 $ 11 $ 13
Additional paid-in capital(3)..... --- 3,361 4,017 4,673 5,427
Equity(4) ........................ 6,374 6,374 6,374 6,374 6,374
Less:
Common Stock acquired by ESOP(5). --- (304) (357) (411) (472)
Common Stock acquired by
Restricted Stock Program(6).... --- (152) (179) (205) (236)
-------- -------- ------- -------- --------
Total stockholders' equity............ $ 6,374 $ 9,287 $ 9,865 $ 10,442 $ 11,106
======== ======== ======= ======== ========
</TABLE>
- ---------------------------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Price Range of up to 15% as
a result of regulatory considerations or changes in market or general
financial and economic conditions following the commencement of the
Subscription Offering.
(2) Does not reflect withdrawals from deposit accounts for the purchase of
Common Stock in the Offering. Such withdrawals would reduce pro forma
deposits by the amount of such withdrawals.
(3) No effect has been given to the issuance of additional shares of Common
Stock pursuant to the Stock Company's Stock Option Plan intended to be
adopted by the Stock Company. An amount equal to 10% of the shares of
Common Stock issued in the Offering will be reserved for issuance upon the
exercise of options to be granted under the Stock Option Plan. See "Risk
Factors--Possible Dilutive Effect of Stock Option and Restricted Stock
Programs" and "Management--Benefits--Stock Option Plan."
(4) The retained earnings of the Bank will be substantially restricted after
the Reorganization. See "The Reorganization--Effects of the
Reorganization--Liquidation Rights" and "Regulation--Regulation of Federal
Savings Associations--Limitations on Capital Distributions."
(5) Assumes that 8% of the shares issued in connection with the Offering will
be purchased by the ESOP and that the funds used to acquire such shares
will be borrowed from the Stock Company. See "Use of Proceeds." The Common
Stock acquired by the ESOP is reflected as a reduction of stockholders'
equity. See "Management of the Bank--Benefits--Employee Stock Ownership
Plan and Trust" and Footnote 3 to the tables under "Pro Forma Data."
(6) Assumes that subsequent to the Reorganization, an amount equal to 4% of the
shares of Common Stock issued in the Offering, is purchased by the
Restricted Stock Program. The Common Stock purchased by the Stock Program
is reflected as a reduction of stockholders' equity. See "Risk
Factors--Possible Dilutive Effect of Stock Options and Restricted Stock
Programs," Footnote 4 to the tables under "Pro Forma Data" and
"Management--Benefits--Restricted Stock Program."
<PAGE>
EXHIBIT IV-7
PRO FORMA ANALYSIS SHEET
Revere Federal Savings Bank
Prices as of August 21, 1998
<TABLE>
<CAPTION>
SAIF-Insured
Peer Group Massachusetts Companies Institutions
Subject @ ---------------- ----------------------- ------------
Price Multiple Symbol Midpoint Mean Median Mean Median Mean
-------------- ------ -------- ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
Price/Reported Earnings Multiple = P/E 19.86 x 19.61x 19.62x 17.77x 13.97x 18.68x
Price/Core Earnings Multiple = P/CE 19.86 x 20.38x 20.09x 21.07x 15.87x 19.50x
Price/Book Ratio = P/B 66.45% 93.76% 91.62% 119.29% 157.68% 141.77%
Price/Tangible Book Ratio = P/TB 66.45% 95.14% 91.62% 121.66% 158.85% 145.22%
Price/Assets Ratio = P/A 9.82% 21.68% 20.13% 10.52% 15.31% 18.05%
</TABLE>
<TABLE>
<CAPTION>
Valuation Parameters
--------------------
<S> <C> <C> <C>
Pre-Conv. Reported Earnings(Y) $317,000 ESOP Stock Purchases (E) 8.00%(5)
Pre-Conversion Core Earnings $317,000 Cost of ESOP Borrowings (S) 0.00%(4)
Pre-Conversion Book Value (B) $6,374,214 ESOP Amortization (T) 10.00 years
Pre-Conv. Tang. Book Value (B) $6,374,214 RRP Amount (M) 4.00%
Pre-Conversion Assets (A) $88,780,275 RRP Vesting (N) 5.00 years (5)
Reinvestment Rate (2)(R) 3.17% Percentage Sold (PCT) 100.00%
Est. Conversion Expenses (3)(X) 4.62%
Tax rate (TAX) 41.00%
</TABLE>
Calculation of Pro Forma Value After Conversion
- -----------------------------------------------
1. V= P/E * (Y) V= $9,500,000
---------------------------------------------------
1 - P/E * PCT * ((1-X-E-M-F)*R - (1-TAX)*E/T - (1-TAX)*M/N)
2. V= P/B * (B+Z) V= $9,500,000
----------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A * (A+Z) V= $9,500,000
----------------------
1 - P/A * PCT * (1-X-E-M-F)
<TABLE>
<CAPTION>
Aggregate
Shares Sold to Price Per Gross Offering Total Shares Market Value
Conclusion Public Share Proceeds Issued of Stock Issued
- ----------- -------------- --------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Minimum 807,500 10.00 $8,075,000 807,500 8,075,000
Midpoint 950,000 10.00 9,500,000 950,000 9,500,000
Maximum 1,092,500 10.00 10,925,000 1,092,500 10,925,000
Supermaximum 1,256,375 10.00 12,563,750 1,256,375 12,563,750
</TABLE>
- --------------------------------------------------------------------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 5.37 percent, and a tax rate of
41.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) No cost is applicable since holding company will fund the ESOP loan.
(5) ESOP and MRP amortize over 10 years and 5 years, respectively; amortization
tax effected at 41.00 percent.
<PAGE>
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Revere Federal Savings
At the Minimum
<TABLE>
<S> <C>
1. Offering Proceeds $8,075,000
Less: Estimated Offering Expenses 425,952
-------
Net Conversion Proceeds $7,649,048
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $7,649,048
Less: Non-Cash Stock Purchases (1) 969,000
-------
Net Proceeds Reinvested $6,680,048
Estimated net incremental rate of return 3.17%
-----
Earnings Increase $211,644
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 38,114
Less: Recognition Plan Vesting (4) 38,114
------
Net Earnings Increase $135,416
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $317,000 $135,416 $452,416
12 Months ended June 30, 1998 (core) $317,000 $135,416 $452,416
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $6,374,214 $6,680,048 $13,054,262
June 30, 1998 (Tangible) $6,374,214 $6,680,048 $13,054,262
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $88,780,275 $6,680,048 $95,460,323
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 4.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is
tax-effected at a 41.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
41.00 percent.
<PAGE>
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Revere Federal Savings
At the Midpoint
<TABLE>
<S> <C>
1. Offering Proceeds $9,500,000
Less: Estimated Offering Expenses 438,473
-------
Net Conversion Proceeds $9,061,527
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $9,061,527
Less: Non-Cash Stock Purchases (1) 1,140,000
---------
Net Proceeds Reinvested $7,921,527
Estimated net incremental rate of return 3.17%
-----
Earnings Increase $250,978
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 44,840
Less: Recognition Plan Vesting (4) 44,840
------
Net Earnings Increase $161,298
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $317,000 $161,298 $478,298
12 Months ended June 30, 1998 (core) $317,000 $161,298 $478,298
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $6,374,214 $7,921,527 $14,295,741
June 30, 1998 (Tangible) $6,374,214 $7,921,527 $14,295,741
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $88,780,275 $7,921,527 $96,701,802
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 4.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is
tax-effected at a 41.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
41.00 percent.
<PAGE>
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Revere Federal Savings
At the Maximum
1. Offering Proceeds $10,925,000
Less: Estimated Offering Expenses 450,994
-------
Net Conversion Proceeds $10,474,006
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $10,474,006
Less: Non-Cash Stock Purchases (1) 1,311,000
---------
Net Proceeds Reinvested $9,163,006
Estimated net incremental rate of return 3.17%
-----
Earnings Increase $290,312
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 51,566
Less: Recognition Plan Vesting (4) 51,566
------
Net Earnings Increase $187,180
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $317,000 $187,180 $504,180
12 Months ended June 30, 1998 (core) $317,000 $187,180 $504,180
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $6,374,214 $9,163,006 $15,537,220
June 30, 1998 (Tangible) $6,374,214 $9,163,006 $15,537,220
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $88,780,275 $9,163,006 $97,943,281
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 4.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is
tax-effected at a 41.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
41.00 percent.
<PAGE>
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Revere Federal Savings
At the Supermaximum Value
1. Offering Proceeds $12,563,750
Less: Estimated Offering Expenses 465,366
-------
Net Conversion Proceeds $12,098,384
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $12,098,384
Less: Non-Cash Stock Purchases (1) 1,507,650
---------
Net Proceeds Reinvested $10,590,734
Estimated net incremental rate of return 3.17%
-----
Earnings Increase $335,546
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 59,301
Less: Recognition Plan Vesting (4) 59,301
------
Net Earnings Increase $216,944
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $317,000 $216,944 $533,944
12 Months ended June 30, 1998 (core) $317,000 $216,944 $533,944
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $6,374,214 $10,590,734 $16,964,948
June 30, 1998 (Tangible) $6,374,214 $10,590,734 $16,964,948
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $88,780,275 $10,590,734 $99,371,009
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 4.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is
tax-effected at a 41.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
41.00 percent.
<PAGE>
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
EXHIBIT IV-9
Core Earnings Analysis
Comparable Institution Analysis
For the Twelve Months Ended March 31, 1998
<TABLE>
<CAPTION>
Estimated
Net Income Less: Net Tax Effect Less: Extd Core Income Estimated
to Common Gains(Loss) @ 34% Items to Common Shares Core EPS
---------- ----------- ---------- ---------- ---------- ---------- -------
($000) ($000) $000) ($000) ($000) ($000) ($)
Comparable Group
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLB Alliance Bank MHC of PA (19.9) 2,014 0 0 0 2,014 3,273 0.62
BCSB BCSB Bankcorp MHC of MD (38.6)(P) -- -- -- -- -- 6,117 0.36
BRKL Brookline Bncp MHC of MA(47.0) 13,726 -78 27 0 13,675 29,095 0.47
FFFL Fidelity Bcsh MHC of FL (47.9) 7,277 -1,566 532 0 6,243 6,802 0.92
SKBO First Carnegie MHC of PA(45.0) 969 259 -88 0 1,140 2,300 0.50
GBNK Gaston Fed Bncp MHC of NC(47.0(P) -- -- -- -- -- 4,497 0.43
HARS Harris Fin. MHC of PA (24.9) 18,811 -5,261 1,789 0 15,339 33,965 0.45
JXSB Jcksnville SB,MHC of IL (45.6) 969 -511 174 0 632 1,908 0.33
LFED Leeds Fed Bksr MHC of MD (36.3 3,432 -2 1 0 3,431 5,182 0.66
LIBB Liberty Bancorp MHC of NJ (47)(P) -- -- -- -- -- 3,901 0.69
NBCP Niagara Bancorp of NY MHC(45.4(P) -- -- -- -- -- 29,756 0.46
NWSB Northwest Bcrp MHC of PA (30.8 20,533 -37 13 0 20,509 46,841 0.44
PBHC Pathfinder BC MHC of NY (45.2) 1,751 -497 169 0 1,423 2,831 0.50
PBCT Peoples Bank, MHC of CT (41.2) 95,800 -67,500 22,950 0 51,250 64,130 0.80
PHSB Ppls Home SB, MHC of PA (45.0) 1,725 -262 89 0 1,552 2,760 0.56
PLSK Pulaski SB, MHC of NJ (47.0) 1,161 0 0 0 1,161 2,108 0.55
SBFL SB Fngr Lakes MHC of NY (33.1) 933 -218 74 0 789 3,570 0.22
WAYN Wayne Svgs Bks MHC of OH (48.2 1,849 -237 81 0 1,693 2,486 0.68
WCFB Wbstr Cty FSB MHC of IA (45.6) 1,345 0 0 0 1,345 2,114 0.64
</TABLE>
(P) Pro forma financial data reflective of new conversion.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
EXHIBIT IV-10
PRO FORMA ANALYSIS SHEET
Revere Federal Savings Bank
Prices as of August 21, 1998
<TABLE>
<CAPTION>
SAIF-Insured
Peer Group Massachusetts Companies Institutions
Subject @ -------------- ------------------------ -----------
Price Multiple Symbol Midpoint Mean Median Mean Median Mean
- -------------- ------ -------- ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
Price/Reported Earnings Multiple = P/E 24.77x 24.81x 26.15x 15.60x 13.97x 18.68x
Price/Core Earnings Multiple = P/CE 24.77x 26.68x 27.34x 17.13x 15.87x 19.50x
Price/Book Ratio = P/B 97.29% 188.39% 181.47% 160.35% 157.68% 141.77%
Price/Tangible Book Ratio = P/TB 97.29% 186.56% 181.47% 164.31% 158.85% 145.22%
Price/Assets Ratio = P/A 10.31% 24.61% 22.77% 15.42% 15.31% 18.05%
Valuation Parameters
- --------------------
Pre-Conv. Reported Earnings(Y) $315,131 ESOP Stock Purchases (E) 8.00%(5)
Pre-Conversion Core Earnings $315,131 Cost of ESOP Borrowings(S) 0.00%(4)
Pre-Conversion Book Value (B) $6,274,000 ESOP Amortization (T) 10.00 years
Pre-Conv. Tang. Book Value $6,274,000 RRP Amount (M) 4.00%
Pre-Conversion Asset (A) $88,680,000 RRP Vesting (N) 5.00 years(5)
Reinvestment Rate (2)(R) 3.17% Percentage Sold (PCT) 47.00%
Est. Conversion Expenses (3)(X) 9.82%
Tax rate (TAX) 41.00%
</TABLE>
Calculation of Pro Forma Value After Conversion
- -----------------------------------------------
1. V= P/E * (Y) V= $9,500,000
---------------------------------------------------
1 - P/E * PCT * ((1-X-E-M-F)*R - (1-TAX)*E/T - (1-TAX)*M/N)
2. V= P/B=* (B+Z) V= $9,500,000
----------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A=* (A+Z) V= $9,500,000
----------------------------
1 - P/A * PCT * (1-X-E-M-F)
<TABLE>
<CAPTION>
Aggregate
Shares Issued to Shares Sold to Price Per Gross Offering Total Shares Market Value
Conclusion MHC Public Share Proceeds Issued of Stock Issued
- ---------- --- ------ ----- -------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Minimum 427,975 379,525 10.00 $3,795,250 379,525 3,795,250
Midpoint 503,500 446,500 10.00 4,465,000 446,500 4,465,000
Maximum 579,025 513,475 10.00 5,134,750 513,475 5,134,750
Supermaximum 665,879 590,496 10.00 5,904,963 590,496 5,904,963
</TABLE>
- ---------------------------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 5.37 percent, and a tax rate of
41.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) No cost is applicable since holding company will fund the ESOP loan.
(5) ESOP and MRP amortize over 7 years and 5 years, respectively; amortization
tax effected at 41.00 percent.
<PAGE>
Exhibit IV-11
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Revere Federal Savings
At the Minimum
<TABLE>
<S> <C>
1. Offering Proceeds $3,795,250
Estimated Offering Expenses 425,952
-------
Net Conversion Proceeds $3,369,298
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $3,369,298
Less: Non-Cash Stock Purchases (1) 455,430
Net Proceeds Reinvested $2,913,868
Estimated net incremental rate of return 3.17%
-----
Earnings Increase $92,320
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 17,914
Less: Recognition Plan Vesting (4) 17,914
------
Net Earnings Increase $56,493
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported, tax-effected) $315,131 $56,493 $371,624
12 Months ended June 30, 1998 (core, tax-effected) $315,131 $56,493 $371,624
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $6,274,000 $2,913,868 $9,187,868
June 30, 1998 (Tangible) $6,274,000 $2,913,868 $9,187,868
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $88,680,000 $2,913,868 $91,593,868
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 4.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 7 years, amortization expense is
tax-effected at a 41.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
41.00 percent.
<PAGE>
Exhibit IV-11
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Revere Federal Savings
At the Midpoint
<TABLE>
<S> <C>
1. Offering Proceeds $4,465,000
Less: Estimated Offering Expenses 438,473
-------
Net Conversion Proceeds $4,026,527
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $4,026,527
Less: Non-Cash Stock Purchases (1) 535,800
Net Proceeds Reinvested $3,490,727
Estimated net incremental rate of return 3.17%
-----
Earnings Increase $110,597
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 21,075
Less: Recognition Plan Vesting (4) 21,075
------
Net Earnings Increase $68,447
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported, tax-effected) $315,131 $68,447 $383,578
12 Months ended June 30, 1998 (core, tax-effected) $315,131 $68,447 $383,578
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $6,274,000 $3,490,727 $9,764,727
June 30, 1998 (Tangible) $6,274,000 $3,490,727 $9,764,727
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $88,680,000 $3,490,727 $92,170,727
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 4.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3 ESOP borrowings are amortized over 7 years, amortization expense is
tax-effected at a 41.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
41.00 percent.
<PAGE>
Exhibit IV-11
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Revere Federal Savings
At the Maximum
1. Offering Proceeds $5,134,750
Less: Estimated Offering Expenses 450,994
-------
Net Conversion Proceeds $4,683,756
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $4,683,756
Less: Non-Cash Stock Purchases (1) 616,170
Net Proceeds Reinvested $4,067,586
Estimated net incremental rate of return 3.17%
-----
Earnings Increase $128,873
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 24,236
Less: Recognition Plan Vesting (4) 24,236
------
Net Earnings Increase $80,401
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported, tax-effected) $315,131 $80,401 $395,532
12 Months ended June 30, 1998 (core, tax-effected) $315,131 $80,401 $395,532
Before Net Cash After
4. Pro Forma Net Worth Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $6,274,000 $4,067,586 $10,341,586
June 30, 1998 (Tangible) $6,274,000 $4,067,586 $10,341,586
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $88,680,000 $4,067,586 $92,747,586
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 4.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 7 years, amortization expense is
tax-effected at a 41.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
41.00 percent.
<PAGE>
Exhibit IV-11
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Revere Federal Savings
At the Supermaximum Value
1. Offering Proceeds $5,904,963
Less: Estimated Offering Expenses 465,366
-------
Net Conversion Proceeds $5,439,597
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $5,439,597
Less: Non-Cash Stock Purchases (1) 708,596
Net Proceeds Reinvested $4,731,001
Estimated net incremental rate of return 3.17%
-----
Earnings Increase $149,892
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 27,871
Less: Recognition Plan Vesting (4) 27,871
------
Net Earnings Increase $94,149
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported, tax-effected) $315,131 $94,149 $409,280
12 Months ended June 30, 1998 (core, tax-effected) $315,131 $94,149 $409,280
Before Net Cash After
4.Pro Forma Net Worth Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $6,274,000 $4,731,001 $11,005,001
June 30, 1998 (Tangible) $6,274,000 $4,731,001 $11,005,001
Before Net Cash After
5. Pro Forma Assets Conversion Proceeds Conversion
---------- -------- ----------
June 30, 1998 $88,680,000 $4,731,001 $93,411,001
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 4.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 7 years, amortization expense is
tax-effected at a 41.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
41.00 percent.
<PAGE>
EXHIBIT V-1
RP Financial, LC.
Firm Qualifications Statement
<PAGE>
FIRM QUALIFICATION STATEMENT
RP Financial provides financial and management consulting and valuation services
to the financial services industry nationwide, particularly federally-insured
financial institutions. RP Financial establishes long-term client relationships
through its wide array of services, emphasis on quality and timeliness, hands-on
involvement by our principals and senior consulting staff, and careful
structuring of strategic plans and transactions. RP Financial's staff draws from
backgrounds in consulting, regulatory agencies and investment banking, thereby
providing our clients with considerable resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's strategic and capital planning services are designed to provide
effective workable plans with quantifiable results. Through a program known as
SAFE (Strategic Alternatives Financial Evaluations), RP Financial analyzes
strategic options to enhance shareholder value or other established objectives.
Our planning services involve conducting situation analyses; establishing
mission statements, strategic goals and objectives; and identifying strategies
for enhancement of franchise value, capital management and planning, earnings
improvement and operational issues. Strategy development typically includes the
following areas: capital formation and management, asset/liability targets,
profitability, return on equity and market value of stock. Our proprietary
financial simulation model provides the basis for evaluating the financial
impact of alternative strategies and assessing the feasibility/compatibility of
such strategies with regulations and/or other guidelines.
MERGER AND ACQUISITION SERVICES
RP Financial's merger and acquisition (M&A) services include targeting
candidates and potential acquirors, assessing acquisition merit, conducting
detailed due diligence, negotiating and structuring transactions, preparing
merger business plans and financial simulations, rendering fairness opinions and
assisting in implementing post-acquisition strategies. Through our financial
simulations, comprehensive in-house data bases, valuation expertise and
regulatory knowledge, RP Financial's M&A consulting focuses on structuring
transactions to enhance shareholder returns.
VALUATION SERVICES
RP Financial's extensive valuation practice includes valuations for a variety of
purposes including mergers and acquisitions, mutual-to-stock conversions, ESOPs,
subsidiary companies, mark-to-market transactions, loan and servicing
portfolios, non-traded securities, core deposits, FAS 107 (fair market value
disclosure), FAS 122 (loan servicing rights) and FAS 123 (stock options). Our
principals and staff are highly experienced in performing valuation appraisals
which conform with regulatory guidelines and appraisal industry standards. RP
Financial is the nation's leading valuation firm for mutual-to-stock conversions
of thrift institutions.
OTHER CONSULTING SERVICES AND DATA BASES
RP Financial offers a variety of other services including branching strategies,
feasibility studies and special research studies, which are complemented by our
quantitative and computer skills. RP Financial's consulting services are aided
by its in-house data base resources for commercial banks and savings
institutions and proprietary valuation and financial simulation models.
YEAR 2000 SERVICES
RP Financial, through a relationship with a computer research and development
company with a proprietary methodology, offers Year 2000 advisory and conversion
services to financial institutions which are more cost effective and less
disruptive than most other providers of such service.
RP Financial's Key Personnel (Years of Relevant Experience)
Ronald S. Riggins, Managing Director (18)
William E. Pommerening, Managing Director (14)
Gregory E. Dunn, Senior Vice President (16)
James P. Hennessey, Senior Vice President (13)
James J. Oren, Senior Vice President (11)
